After last-minute wrangling that underscored the strain facing agencies trying to implement the biggest financial regulatory overhaul since the Great Depression, the proposal defined which firms will be subject to capital and margin requirements as swap dealers and major swaps participants.
An exempt commodity must have a book value less than $100m (£64m), have fewer than 15 swap counterparties, and less than 20 swaps as a dealer in less than a year.
It is expected that only certain commodity hedgers can enter into swap agreements.
The law also defines a “major swap participant”, or firms with large swap positions.
The law also gives major swap participants status to participants with “substantial counterparty exposure” that may cause economic risk.
Congress meant this clause to avoid a repeat of AIG’s failure, caused by swaps and high leveraging.