Meeting Date:
Thursday, March 31, 2011
CFTC Staff:
David Aron
Natalie Markman Radhakrishnan
Steve Kane
Christopher Cummings
Organization(s):
Nomura
Citi
Goldman Sachs
Credit Suisse
Bank of America/Merrill Lynch
Mayer Brown
External Attendees:
Angie Karna (Nomura)
Silas Findley (Citi)
Paarag Sarva (Goldman Sachs)
Joe Hamilton (Credit Suisse)
Annah Kim (Bank of America/Merrill Lynch)
Kate Lamburn (Bank of America/Merrill Lynch)
Josh Cohn (Mayer Brown)
Josh Kans (SEC)
Gregg Berman (SEC)
Jeff Dinwoodie (SEC)
Richard Grant (SEC)
Andrew Blake (SEC)
Additional Information:
ISDA elaborated on the position in its comment letter dated Feb. 22, 2011 (Comment No. 27904) that a swap dealer test based on whether a person makes two-way markets would resolve ambiguities in the definition, because it encompasses in a single concept all four prongs of the definition.
ISDA believes the “regular business” exception should apply where a person does not make a regular practice of acting as a swap dealer. Also, if a person only responds to requests-for-quotation regarding swaps, it is not a swap dealer.
ISDA also made the point that a person who only enters into swaps with other dealers or MSPs, shouldn’t be a swap dealer because all the goals of the Dodd-Frank Act would be satisfied by applying the statute to the swap dealers that enter into swaps with persons other than other dealers or MSPs.
ISDA said that persons acting as aggregators and those facilitating customer demand to only a limited extent might be dealers, but only if they engage in two-way market activity. The Commissions should consider the costs of dealer status and, ultimately, since smaller market participants must hedge their positions with swap dealers, the goals of the Dodd-Frank Act would be met.
ISDA also expressed concerns about the extraterritorial scope of the Dodd-Frank Act.
