Title VII Overview: Regulation of Over-the-Counter Swaps Markets

American Bankers Association Contact

Cecelia Calaby (202) 663-5325

Dechert LLP Author

Matthew Kerfoot (212) 641-5694


Title VII establishes a new regulatory framework for the OTC derivatives markets, with particular focus on:

  • Prohibiting the Fed or the FDIC from providing Federal assistance to insured depository institutions involved in the swaps markets, as swap dealers, subject to exceptions for certain types of swaps activities, but allowing a broad range of swaps activities by a non-bank affiliate of an insured depository institution in a holding company organization, subject to certain restrictions;
  • Requiring clearing and exchange trading for derivatives contracts that are eligible for clearing and accepted by newly established derivatives clearing organizations;
  • Imposing new capital and margin requirements and various reporting obligations on OTC swap dealers ("swap dealers") and most large OTC swap participants ("major swap participants"); and
  • Requiring swap dealers and most major swap participants, depending on whether their derivatives business involves securities or commodities, to register with the SEC or the CFTC (together the SEC and the CFTC are referred to as the "Commissions").

For ease of reference, the terms "swap," "swap dealer" and "major swap participant" will be used to include, respectively, the terms "security-based swap," "security-based swap dealer" and "major security-based swap participant," unless the context otherwise distinguishes the terms.

The following links provide expanded analysis within this section: