US SEC to unveil swaps dealers proposals

* CFTC has already proposed swap dealer rules

* SEC swap proposals expected to apply to banks

By Rachelle Younglai

WASHINGTON, Dec 3 (BestGrowthStock) – U.S. regulators are expected
to unveil proposals on Friday that will determine which firms
will be forced to hold more cash to deal in the lucrative
over-the-counter derivatives market.

The proposals will define who will be subject to more
scrutiny from the Securities and Exchange Commission, which has
new-found power to police the estimated $600 trillion market.

That means Wall Street firms that dominate the market will
be subject to additional capital and margin requirements as
swap dealers and major swaps participants.

JPMorgan Chase (JPM.N: ), Bank of America (BAC.N: ), Goldman
Sachs (GS.N: ), Citigroup (C.N: ) and Morgan Stanley (MS.N: ) (Read more about the money market today. )
together held about $171 trillion in over-the-counter swaps at
mid-year, data shows.

The Commodity Futures Trading Commission, which like the
SEC now has authority to regulate the market, already laid out
its plans to supervise swap trading.

The CFTC on Wednesday proposed rules which effectively
divide those who trade swaps into three categories with tiered
levels of regulation. The intention is to limit systemic risk
stemming from the heavy concentration among a handful of big
participants. [ID:nN01142605]

Those proposals, other derivatives rules and other sweeping
financial reforms required under the Dodd-Frank legislation are
designed to plug regulatory gaps exposed by the 2007-09
financial crisis.

The SEC punted this week on defining rules for swap
execution facilities (SEFs), which will eventually become one
of the venues where swaps will trade.

The swaps, private transactions between two parties, are
used by companies, municipalities and others to hedge risk such
as fluctuating commodity prices.

The SEC has already proposed rules for the centers that
will store the swap trading data, as well as plans to mitigate
conflicts of interests at venues that will handle the swaps.
(Editing by Dave Zimmerman)

US SEC to unveil swaps dealers proposals