More than 200 global financial firms may qualify as swap dealers under new OTC derivatives regulations being drafted by the CFTC, according to Chairman Gary Gensler.  The designation would impose prescribed capital requirements to back trades, mandate the use of clearinghouses for most transactions and require a higher level of oversight than other market users. 

The makeup of swaps dealers may mimic the self-imposed category of “primary member” of the International Swaps and Derivatives Association (ISDA), an industry trade and lobbying group, Gensler said in prepared remarks he’s scheduled to deliver to the group today in New York.  All told, 209 out of ISDA's 830 members are ‘primary members.’  Under ISDA’s bylaws, a firm is only eligible for primary member status if it deals in derivatives for purposes other than ‘risk hedging or asset or liability management.’

ISDA primary members include the largest swap dealers - e.g., JPMorgan Chase, Deutsche Bk, Goldman Sachs, China Construction Bank, Citadel LLC, Cargill Inc., BP Plc and OAO Gazprombank.  Other likely swap dealers include affiliates of U.S. financial firms being forced to spin off derivatives business from the deposit-taking units of commercial banks.

For further information, click onto:  [ Bloomberg, 9/16 ]