On May 4, 2009, Senators Carl Levin (D-Mich.) and Susan Collins (R-Maine) introduced legislation entitled “Authorizing the Regulation of Swaps Act” to authorize federal financial regulators to regulate swap agreements, including credit default swaps, equity swaps, commodity swaps, and other categories of swaps. The regulators specified in the proposed legislation include the Commodity Futures Trading Commission (CFTC), Federal Deposit Insurance Corporation, Federal Reserve Board, National Credit Union Administration, Comptroller of the Currency, Office of Thrift Supervision, and Securities and Exchange Commission (SEC). Any regulator seeking to regulate swap agreements must consult and cooperate with the other federal financial regulators so as to achieve consistency in regulatory treatment of swap agreements.
The legislation would not require that swap agreements be traded on an exchange or other trading platform. However, swap agreements traded on or cleared through a securities exchange or clearing agency would be within the exclusive jurisdiction of the SEC, and swap agreements traded on or cleared through a futures trading facility would be within the exclusive jurisdiction of the CFTC.
Statutory provisions in the Commodity Futures Modernization Act of 2000 which preclude regulation of many categories of swap agreements would be removed by the legislation. The definition of swap agreement would be retained.
The legislation introduced by Senators Levin and Collins joins two other pieces of proposed legislation regarding derivatives: the Derivatives Markets Transparency and Accountability Act of 2009 introduced by Representative Peterson (D-Minn) and the Derivatives Trading Integrity Act of 2009 introduced by Senator Harkin (D-Iowa).