Definition of a “major swap participant” could be floated as early as November

That is according to a Bloomberg article quoting Goldman Sachs analyst Daniel Harris. Hedge funds, insurance companies and some mutual funds (aside from the big banks, which are almost certainly the intended main target) will be anxiously awaiting such definitions to see whether they will be included and how such definitions (and the accompanying regulation) will affect their activities going forward.

The need for such definitions come after the new financial regulatory reform bill, or the Dodd-Frank  Wall Street Reform and Consumer Protection Act of 2010, was signed into law last month mandating (among many other things) a definition to be implemented by next July.

Many associations and analysts have been  doing their own analysis and summaries of the bill from various perspectives so there is likely to be much debate as draft rules and definitions are floated for comment over the next few months.

Other countries have already released their own proposed definitions for “swap participants” or the like and are seeking their own feedback from public and industry. The Reserve Bank of India (RBI), for example, just released their definition for what they called “credit default swap market participant” a couple weeks ago in a set of rules designed to govern CDS trading in India. RBI divided the definition into 2 sets of groups which they defined as “End-users” and “Market Makers”. Both would be regulated but by a different set of rules and restrictions (i.e. End-users would only be allowed to hedge risk, or buy CDS).