Who regulates OTC derivatives in us?

Who regulates OTC derivatives in us?

U.S. Securities and Exchange Commission Today at the SEC and in government agencies around the world, regulators are shaping the rules that will govern the way over-the-counter derivatives are transacted.

Why should OTC derivatives be regulated?

Third, derivatives are regulated because while derivatives can be useful for hedging, they are also ideal instruments for speculation. Derivatives speculation in turn is linked with a variety of economic ills—including increased systemic risk when derivatives speculators go bust.

Can banks take your money under the Dodd-Frank Act?

The Dodd-Frank Act. The law states that a U.S. bank may take its depositors’ funds (i.e. your checking, savings, CD’s, IRA & 401(k) accounts) and use those funds when necessary to keep itself, the bank, afloat.

What is the purpose of the Dodd-Frank Act?

The most far reaching Wall Street reform in history, Dodd-Frank will prevent the excessive risk-taking that led to the financial crisis. The law also provides common-sense protections for American families, creating new consumer watchdog to prevent mortgage companies and pay-day lenders from exploiting consumers.

What is a Dodd-Frank swap?

The Dodd-Frank Act divides regulatory authority over swap agreements between the CFTC and SEC (though the prudential regulators, such as the Federal Reserve Board, also have an important role in setting capital and margin for swap entities that are banks).

Which financial products are regulated under Title VII of the Dodd-Frank Act?

Under Title VII, these are: Non-security-based swaps, referred to as swaps (see Non-Security-Based Swaps (Swaps)), generally regulated by the Commodity Futures Trading Commission (CFTC). Security-based swaps, or SBS (see Security-Based Swaps), generally regulated by the Securities and Exchange Commission (SEC).

Why OTC derivatives must be cleared?

Mandatory clearing of certain OTC derivatives is thought to ensure greater stability of the markets in major crisis scenarios.

Who is exempt from Dodd-Frank?

The Dodd-Frank Act exempts from registration “foreign private advisers,” or an investment adviser that (i) has no place of business in the U.S., (ii) has, in total, fewer than 15 clients in the U.S. and investors in the U.S. in private funds advised by the adviser, (iii) has aggregate assets under management …

Are US derivatives regulated?

US regulation of derivatives The regulation of financial derivatives in the US is handled by both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The parties to financial derivative contracts are regulated by the Financial Industry Regulatory Authority (FINRA).

What are examples of OTC derivatives?

Types of OTC Derivatives Examples of interest rate OTC derivatives include LIBOR, Swaps, US Treasury bills, Swaptions and FRAs. Commodity derivatives: The underlying are physical commodities like wheat or gold.