Compliance staff at banks and companies that deal in swaps use this when they check, for each type of transaction, where to register as a swap dealer or similar, and which agency writes the margin and capital rules.

Two federal agencies share the regulation of US derivatives. The Commodity Futures Trading Commission (CFTC) is an independent agency established by the Commodity Exchange Act (CEA). It regulates futures and swaps12. The Securities and Exchange Commission (SEC) is an agency established by the Securities Exchange Act of 1934 (the Exchange Act), and it has authority over securities3.

The CEA defines the CFTC's jurisdiction. The CFTC has exclusive jurisdiction over transactions that are traded or executed on a designated contract market, a swap execution facility, or another board of trade, exchange, or market. The covered transactions are contracts of sale of a commodity for future delivery and swaps. There are exceptions, including those in Title VII of the Dodd-Frank Act. This provision does not take away authority that other laws give to the SEC4.

Title VII of the Dodd-Frank Act gives the SEC authority to regulate security-based swaps and their registrants56. The two definitions of swap and security-based swap decide which agency a transaction belongs to.

The statutory text was checked against the versions published as of October 3, 2026, and the CFR rules against the versions as of October 1, 2026.

Swaps and security-based swaps

A swap under the CEA broadly covers options based on the value of interest rates, currencies, commodities, securities, indexes, and similar items, as well as contingent payments and exchanges of future payments. The statutory definition gives examples including an interest rate swap, a cross-currency swap, a credit default swap, a total return swap, and an equity swap7. The definition of a swap excludes commodity futures, options on securities that are subject to the securities laws, and certain contracts for the sale of securities8.

Under the Exchange Act definition, a security-based swap is, in principle, a swap that is based on any of rows 1 to 3 of the table below9. A transaction that meets the definition only because it refers to certain exempted securities is excluded from security-based swaps, unless it has the character of an option10.

What the transaction is based on Category Regulating agency
The value of a single security or loan (example: an equity swap that tracks the price of one stock) Security-based swap SEC
A narrow-based security index Security-based swap SEC
An event relating to a single issuer, or to issuers in a narrow-based security index, that directly affects the financial condition or obligations of the issuer Security-based swap SEC
Interest rates, currencies, commodities, broad-based indexes, and anything else outside the three rows above (example: an interest rate swap) Swap (not security-based) CFTC

The two definitions fit together. The CEA excludes security-based swaps from swaps (mixed swaps are outside that exclusion). The Exchange Act defines as security-based swaps those swaps that would fall into rows 1 to 3 of the table if that exclusion did not exist89. "Swap" in the Exchange Act has the same meaning as in the CEA11.

Unless Title VII provides otherwise, it does not give the CFTC authority to regulate security-based swaps and their registrants, or the SEC authority to regulate swaps and their registrants6. The detailed criteria for whether an index is a "narrow-based security index" are in the Exchange Act definition12.

Mixed swaps and joint rulemaking

Mixed swaps

A mixed swap is a transaction that meets the definition of a security-based swap and is also based on the value of something other than a single security or a narrow-based security index (interest rates, currencies, commodities, broad-based indexes, and so on)13.

In a rule the CFTC and SEC published jointly in 2012, examples of mixed swaps include a transaction that refers to both the share price of an oil company and the price of oil. Two other examples are a transaction that refers to a portfolio of both securities and commodities (where the securities part is not a broad-based index), and a transaction that pays according to the higher of the movements of a security and a commodity14.

A mixed swap is both a security-based swap and a swap. This is because the CEA, when it excludes security-based swaps from swaps, does not apply the exclusion to mixed swaps814. In their 2012 release, the two agencies said they consider the scope of mixed swaps to be narrow, covering only a small part of the Title VII transactions14.

The Dodd-Frank Act requires the two agencies to prescribe the regulation of mixed swaps jointly15. The agencies' mixed swap rules set out the following two treatments1617.

The first applies to a transaction that is not traded on an exchange or similar venue, is not routed to clearing at a clearing organization, and has a party registered with both the CFTC and the SEC, for example as a swap dealer. For this transaction, all of the securities laws apply, together with only certain provisions of the CEA (examination, reporting to a swap data repository, capital, position limits, and others)1617.

The second applies to all other mixed swap transactions. A person who wants to list, trade, or clear one can ask the two agencies for a joint order under a procedure the rules set out. The order may provide that compliance with either the CEA or the Exchange Act, rather than both, is enough where their provisions run in parallel1618. Where there is no joint rule or order, both the CEA and Exchange Act provisions that Title VII sets out are understood to apply18.

Three questions to sort a transaction, with examples

Applying the definitions so far to a transaction, in order, gives the figure below.

YesNoDoes it meet the CEA swapdefinition?Not covered inthis figureYesNoBased on one security orloan, a narrow securityindex, or one issuer'sevent?Swap, notsecurity-based(CFTC)YesNoAlso based on rates,currencies,commodities, or othervalues?Security-basedswap (SEC)Mixed swap (joint rules)
Figure 1How swaps, security-based swaps, and mixed swaps are sorted
Figure description

The figure classifies swaps, security-based swaps, and mixed swaps through three questions. A no to the first means the transaction is outside this figure. A no to the second means a non-security-based swap regulated by the CFTC, a no to the third means a security-based swap regulated by the SEC, and a yes means a mixed swap, handled under joint rules of the two authorities. The first question does not consider the CEA provision that excludes security-based swaps from swaps. An event relating to a single issuer is limited to one that directly affects the financial condition or obligations of that issuer (row 3 of the table of swaps and security-based swaps). This classification is the general rule, and the exclusion for transactions that refer only to exempted securities and the detailed criteria for narrow-based security indexes apply separately.

Consider a hypothetical example in which the CEA provision excluding security-based swaps from swaps and the exclusion for exempted securities, among others, are set aside. Row 3 is a real example given in the joint rule.

Example transaction Application Result
An equity swap a bank enters into that tracks the price of one stock It meets the swap definition (equity swaps are among its examples) and is based on a single security. It is not based on any other value Security-based swap (SEC)
An interest rate swap It meets the swap definition. It is not based on a single security, a narrow-based security index, or an event relating to a single issuer Swap, not security-based (CFTC)
A transaction that refers to both an oil company's share price and the price of oil It is based on a single security and also on the value of a commodity (an example of a mixed swap given in the joint rule)14 Mixed swap (the two agencies' joint rules)

Joint rulemaking

Because two agencies regulate similar transactions separately, the Dodd-Frank Act asks them to coordinate in three ways. First, before starting a rule or order, each agency consults the other agency and the prudential regulators, and tries to ensure regulatory consistency and comparability to the extent possible19. Second, the agencies treat products and entities that are similar in function or economic character in a similar way. Identical treatment is not required20. Third, the two agencies jointly define swaps, security-based swaps, the dealers and major participants in each, and other terms, and jointly prescribe the rules for mixed swaps2115.

The 2012 final rule (77 FR 48208) is the joint final rule for the third point. It sets the definitions of products such as swaps and the mixed swap rules. The definitions of dealers and others are set in a separate rule22.

The role of prudential regulators

Prudential regulators

The prudential regulators are the federal agencies that oversee certain types of registrants, such as banks, among swap dealers and other registrants. The CEA names five of them, and the Exchange Act uses the term with the same meaning2324.

Agency Entities it mainly supervises (examples)
Board of Governors of the Federal Reserve System State banks that are members of the Federal Reserve System, bank holding companies, and others
Office of the Comptroller of the Currency National banks, federal savings associations, and others
Federal Deposit Insurance Corporation State banks that are not members of the Federal Reserve System and others
Farm Credit Administration Institutions chartered under the Farm Credit Act
Federal Housing Finance Agency Entities set by statute (the statute says "regulated entity")

The CEA definition decides, for each of swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants, which of the five agencies in the table is responsible23. A banking group under one bank holding company can therefore have different responsible agencies for the bank itself and for a subsidiary that must register.

The agencies that write the margin and capital rules

Registrants are subject to capital rules, and to rules on initial margin and variation margin for swaps and security-based swaps that are not cleared at a clearing organization25. Who writes these rules depends on whether the registrant has a prudential regulator.

Registrant Agency that writes the rules for swaps Agency that writes the rules for security-based swaps
A registrant with a prudential regulator (a bank, for example) The prudential regulator, jointly, in consultation with the CFTC and SEC26 The prudential regulator, in consultation with the CFTC and SEC27
A registrant without one The CFTC26 The SEC. The SEC's rule applies to registrants that do not have a prudential regulator2728

The CFTC's rule calls a registrant without a prudential regulator a "covered swap entity"29.

The CFTC cannot write rules that impose prudential requirements on a registrant that has a prudential regulator30.

Each prudential regulator issues its own rules31. Taking the Comptroller of the Currency's rule as an example, its scope covers both uncleared swaps and uncleared security-based swaps32. How margin is calculated, and how Japanese and foreign rules that overlap are handled, are covered in Margin Requirements for Uncleared Derivatives.

Registration and how the rules are divided

The agency that takes the registration

Swap dealers and major swap participants register with the CFTC. Security-based swap dealers and major security-based swap participants register with the SEC. Carrying on that business without registering is unlawful25.

A person that must register both as a swap dealer and as a security-based swap dealer registers with both. A person that must register as a swap dealer registers with the CFTC, even if it is a depository institution or is registered with the SEC as a security-based swap dealer33. A person that must register as a security-based swap dealer likewise registers with the SEC, even if it is registered with the CFTC as a swap dealer34.

Telling transactions apart

Which agency's rules apply to a transaction depends first on what the transaction is based on. Commodity futures and swaps fall under the CFTC, security-based swaps under the SEC, and mixed swaps under the two agencies' joint rules and orders. An option on a security that is subject to the securities laws is not a swap and is governed by the securities laws instead496158. Capital rules and margin rules for uncleared transactions then also depend on whether the registrant has a prudential regulator2627.

The order for finding the agency from a transaction's name is covered in Overview of Derivatives Regulation in the US.

Implementation and transition

Date Type What happened
August 13, 2012 Publication The joint final rule on swaps, security-based swaps, mixed swaps, and related matters was published in the Federal Register22
October 12, 2012 Effective date This rule took effect. The compliance date was the same day, with exceptions

The compliance date has an exception. The date on which the security-based swap definition applies in connection with certain interim exemptions under the securities laws was February 11, 201335.

What this article does not cover

The detailed criteria for a narrow-based security index and the detailed interpretation of the joint final rule text are not covered on this page.

Notes

  1. 7 U.S.C. § 2(a)(2)(A). Establishes the CFTC as an independent executive agency. ↩

  2. 7 U.S.C. § 6s(a)(1)(2). ↩ ↩2

  3. 15 U.S.C. § 78d(a). Establishes the SEC. ↩

  4. 7 U.S.C. § 2(a)(1)(A). The CFTC's exclusive jurisdiction (transactions traded or executed on a designated contract market, a swap execution facility, or another board of trade, exchange or market), its exceptions, and the statement that the SEC's and other agencies' authority is not limited. ↩ ↩2

  5. 15 U.S.C. § 78o-10(a)(1)(2). ↩ ↩2

  6. Public Law 111-203 § 712(b)(1)(2) (15 U.S.C. § 8302(b)). Unless otherwise provided, Title VII does not give the CFTC or the SEC authority to regulate the other agency's transactions and registrants. ↩ ↩2 ↩3

  7. 7 U.S.C. § 1a(47)(A)(i)–(iii), (vi) (definition of swap; (iii) gives examples including interest rate swaps, currency swaps (the statutory term; the text calls them cross-currency swaps), credit default swaps, total return swaps, and equity swaps). ↩

  8. 7 U.S.C. § 1a(47)(B) (exclusions). (i) is contracts of sale of a commodity for future delivery and options on them, (iii) is options on securities subject to the securities laws, (v) is the sale of securities at a fixed price, and (x) is security-based swaps other than mixed swaps. ↩ ↩2 ↩3 ↩4

  9. 15 U.S.C. § 78c(a)(68)(A). (i) requires a swap under the CEA (disregarding the exclusion in § 1a(47)(B)(x) of the CEA), and (ii) sets out what the swap is based on ((I) a narrow-based security index, (II) a single security or loan, (III) events relating to a single issuer and similar). ↩ ↩2 ↩3

  10. 15 U.S.C. § 78c(a)(68)(C). A transaction that meets the definition only because it is based on, or settles by delivery of, an exempted security as referred to in section 3(a)(12) of the Act as in effect on January 11, 1983 (excluding municipal securities), is excluded from security-based swaps unless it has the character of a put, call or other option. ↩

  11. 15 U.S.C. § 78c(a)(69) ("swap" has the meaning given in section 1a of the CEA). ↩

  12. 15 U.S.C. § 78c(a)(55)(B)–(C) (definition of narrow-based security index and the exclusion criteria). ↩

  13. 15 U.S.C. § 78c(a)(68)(D) (mixed swap). Section 1a(47)(D) of the CEA has the same content. ↩

  14. 77 FR 48208, Part IV.A "Scope of the Category of Mixed Swap." It is the basis for the scope of mixed swaps and for the three examples in the text (an oil company's shares and the price of oil, a portfolio of securities and commodities, and a transaction that pays according to the higher of the movements of a security and a commodity). ↩ ↩2 ↩3 ↩4

  15. Public Law 111-203 § 712(a)(8). Requires the CFTC and SEC, in consultation with the Board of Governors of the Federal Reserve System, to jointly prescribe the regulation of mixed swaps. ↩ ↩2 ↩3

  16. 17 CFR 1.9(b)(c). (b) covers a mixed swap that is not traded on an exchange or routed to clearing and has a party registered with both, and applies the CEA provisions in (b)(1)(i)–(vi) together with the securities laws. (c) sets out the procedure that decides the treatment of all other mixed swaps. ↩ ↩2 ↩3

  17. 17 CFR 240.3a68-4(b) (the SEC's rule with the same content). ↩ ↩2

  18. 77 FR 48208, Part IV.B "Regulation of Mixed Swaps." Paragraph 1 covers the structure of the rule, paragraph 2 the treatment of transactions with a party registered with both, and paragraph 3 the application of both sets of provisions where there is no joint rule or order, and the procedure for requesting a joint order. ↩ ↩2

  19. Public Law 111-203 § 712(a)(1)(2) (15 U.S.C. § 8302(a)). Requires each of the CFTC and SEC to consult the other agency and the prudential regulators. (a)(6) requires the two commissions to take the prudential regulators' views into account. ↩

  20. Public Law 111-203 § 712(a)(7)(A)(B) (similar treatment; joint rules or orders that are identical are not required). ↩

  21. Public Law 111-203 § 712(d)(1)(2)(A). Requires the two agencies, in consultation with the Board of Governors of the Federal Reserve System, to jointly prescribe the definitions. ↩

  22. 77 FR 48208 (August 13, 2012), the opening SUMMARY and DATES. The effective date is October 12, 2012. ↩ ↩2

  23. 7 U.S.C. § 1a(39) (definition of prudential regulator). (A) is the Board, (B) the Office of the Comptroller of the Currency, (C) the Federal Deposit Insurance Corporation, (D) the Farm Credit Administration, and (E) the Federal Housing Finance Agency. The "examples" in the table are partial, and the statute lists more of what each agency covers. ↩ ↩2

  24. 15 U.S.C. § 78c(a)(74) (prudential regulator has the meaning given in section 1a of the CEA). ↩

  25. 7 U.S.C. § 6s(e)(2)(A)(B), 15 U.S.C. § 78o-10(e)(2)(A)(B). (i) is the capital rules, and (ii) is the margin rules for transactions that are not cleared. The wording in § 78o-10 is "all security-based swaps" in (A)(ii) and "all swaps" in (B)(ii). ↩

  26. 7 U.S.C. § 6s(e)(1)(2)(A)(B) (CEA section 4s(e)). (2)(A) covers swaps of registrants with a prudential regulator, and (2)(B) covers swaps of registrants without one. ↩ ↩2 ↩3

  27. 15 U.S.C. § 78o-10(e)(2)(A)(B) (Exchange Act section 15F(e)). (2)(A) covers security-based swaps of registrants with a prudential regulator, and (2)(B) covers security-based swaps of registrants without one. ↩ ↩2 ↩3

  28. 17 CFR 240.18a-3, the title and paragraph (a). The title says "non-cleared security-based swap," which shows that the SEC's margin rule covers uncleared transactions. ↩

  29. 17 CFR 23.151 (definition of covered swap entity). The CFTC's margin rules for swaps are in 17 CFR 23.150–23.161 (23.150 sets the scope). ↩

  30. 7 U.S.C. § 6s(d)(2)(A). ↩

  31. The Comptroller of the Currency is 12 CFR Part 45, the Board of Governors of the Federal Reserve System is Part 237 (Regulation KK), the Federal Deposit Insurance Corporation is Part 349, the Farm Credit Administration is Part 624, and the Federal Housing Finance Agency is Part 1221. ↩

  32. 12 CFR 45.1(b)(c). ↩

  33. 7 U.S.C. § 6s(c)(1)(2) (dual registration). ↩

  34. 15 U.S.C. § 78o-10(c)(1)(2). This paragraph has no condition about depository institutions. ↩

  35. 77 FR 48208, Part IX "Effective Date and Implementation." The compliance date is October 12, 2012, with exceptions. The date on which the security-based swap definition is used in connection with the application of certain interim exemptions under the securities laws is February 11, 2013. ↩