U.S. regulators are considering requiring market participants to engage in at least $8 billion worth of transactions such as credit default swaps before registering as swap dealers under the Dodd-Frank Act, two individuals briefed on the potential rule told Bloomberg.
Organizations falling under these regulations would need to establish higher capital reserves, according to Reuters. Swaps dealers would also be subject to additional standards for business conduct.
The sources who spoke with Bloomberg said that the exact aggregate gross notional value of swaps transactions that should be executed before a firm must register as a swaps dealer is being discussed by both the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).
Reuters reports that the CFTC originally proposed using a minimum requirement of $100 million in transactions in 2010, and the regulator stated as recently as March that it might impose a threshold of $3 billion.
Various industry participants have voiced their opposition to the adoption of these minimum trading volume requirements, stating that they will distort markets, according to Bloomberg. Shell Energy North America LP has told the futures regulator that its hedging activities could be hindered if these registration requirements are imposed.
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