US regulators seek input on derivatives definitions
The Securities and Exchange Commission and Commodity Futures Trading Commission have launched a 60-day consultation to harmonise product definitions and clarify jurisdictional lines under Title VII of the Dodd-Frank Act.
The US Securities and Exchange Commission and the Commodity Futures Trading Commission have issued a joint request for public comment aimed at updating, clarifying, and harmonising derivatives product definitions and interpretive issues. The initiative forms part of an ongoing evaluation by both agencies to determine whether current regulatory frameworks appropriately reflect evolving market structures, financial products, and trading practices.
The request targets ambiguities within Title VII of the Dodd-Frank Act, which established the regulatory framework for derivatives and specifically addresses swap regulation and oversight. Historically, jurisdictional overlaps and definitional uncertainties between the two bodies have created confusion for market participants regarding which agency regulates specific financial products.
SEC Chairman Paul S. Atkins described the clarification on Title VII definitional issues, including event-based products, as long overdue. He stated that through good-faith cooperation, the agencies aim to create a level playing field where established firms and new entrants can compete and innovate on equal footing, regardless of whether they are registered with the SEC or CFTC.
CFTC Chairman Michael S. Selig characterised the joint request as an opportunity to address longstanding ambiguities that have stifled fair competition and responsible innovation. He acknowledged the partnership with the SEC and Chairman Atkins in working to further clarify jurisdictional lines and enhance cooperation between the two agencies.
The agencies are seeking input on how current definitions and jurisdictional frameworks align with evolving financial products and trading practices. While the specific topics for public comment are identified within the agencies’ request, they are not explicitly listed in the source material. The public comment period will remain open for 60 days following publication of the request in the Federal Register.
The timeline for when any resulting regulatory changes will be implemented has not been specified. The Dodd-Frank Act was enacted in 2010, and this recent move marks the latest effort by the SEC and CFTC to refine the rules governing the derivatives market.
