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