Comment Letter to SEC and CFTC on Proposed Rules Defining ‘Swap,’ ‘Security-Based Swap,’ and ‘Security-Based Swap Agreement,’ and Guidance on Mixed Swaps and Security-Based Swap Agreement Recordkeeping

July 22, 2011

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Topics: Commodity Futures Trading Commission CFTC, Securities and Exchange Commission, SEC, further definitions of swap, Security-Based Swap, security-based swap agreement, mixed swaps, security-based swap agreement recordkeeping, forward contract exclusion, commodities, 1993 energy exemption, loan participants, OTC derivatives, systemic risk, book-out contracts, market participants, nonfinancial commodity, security, deferred shipment, delivery, physically settled, physical commodity, energy commodities, oil, alternative delivery procedures, loan participations, direct or indirect ownership, beneficial ownership interest, true participation, Federal Securities Laws, netting, loan markets, participation agreements, assignment and assumption agreements, grantor, participant, Loan Syndications and Trading Association, LSTA, loan market association, LMA, lender of record, loan agreement, loan payments, true sale, bankruptcy estate, current debtor-creditor relationship, true participants, loan total return swaps, total return receiver, total return payer, reference loan, synthetic exposure, loan transfer mechanism, primary loan markets, secondary loan markets, exchange trading, central clearing, capital, margin, reporting, recordkeeping, business conduct requirements, eligible contract participants, material non-public information, private market, antifraud liabilities, loan arrangers, alternative transfer structure, syndicated loan market, institutional investors, liquidity, U.S. domiciled counterparties, non-U.S. counterparties,
From: MFA, Stuart J. Kaswell

To:

David A. Stawick, Commodity Futures Trading Commission, CFTC
The Securities and Exchange Commission

MFA submitted comments to the SEC and CFTC in response to their request for comments on their proposal on the Further definition of swap, security-based swap, and security-based swap agreement; mixed swaps; security-based swap agreement recordkeeping. In our letter we supported the CFTCs consistent interpretation of the Forward Contract Exclusion and requested for some further clarification; and raised concerns on the interpretive guidance on the treatment of loan participations. We believe loan participations should not be considered as a security-based swap and provided the Commissions with proposed interpretative guidance on loan participations.

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