The Securities and Exchange Commission has begun a wave of Dodd-Frank Act-mandated rulemaking aimed at closing the regulatory gaps in the over-the-counter derivatives market and giving investors better information about the loans backing asset-backed securities.
The reform law requires the Commission to issue a slew of rules to bring the complex derivatives products—which have been blamed for playing a major part in the financial crisis—under the U.S. regulatory umbrella. Under the Act, the SEC regulates OTC derivatives that are “security-based swaps.” The Commodity Futures Trading Commission, which has authority to regulate “swaps,” has issued comparable rulemaking to address oversight of non-security based swaps.
