External Meetings: Definitions Meeting with ISDA

ISDA elaborated on the position in its comment letter dated Feb. 22, 2011 (Comment No. 27904) that a swap dealer test based on whether a person makes two-way markets would resolve ambiguities in the definition, because it encompasses in a single concept all four prongs of the definition.~ISDA believes the “regular business” exception should apply where a person does not make a regular practice of acting as a swap dealer.  Also, if a person only responds to requests-for-quotation regarding swaps, it is not a swap dealer.~ISDA also made the point that a person who only enters into swaps with other dealers or MSPs, shouldn’t be a swap dealer because all the goals of the Dodd-Frank Act would be satisfied by applying the statute to the swap dealers that enter into swaps with persons other than other dealers or MSPs.~ISDA said that persons acting as aggregators and those facilitating customer demand to only a limited extent  might be dealers, but only if they engage in two-way market activity.  The Commissions should consider the costs of dealer status and, ultimately, since smaller market participants must hedge their positions with swap dealers, the goals of the Dodd-Frank Act would be met.~ISDA also expressed concerns about the extraterritorial scope of the Dodd-Frank Act.