Major Swap Participant

This Issue in United States

Concept of Major Swap Participant (MSP) in Futures Trading

In this context of financial law, the following is a definition of Major Swap Participant (MSP): A designation in the Commodity Exchange Act as amended by the Dodd-Frank Act for large traders in swap markets that are not swap dealers. There are three parts to the Dodd-Frank Act definition. A person that satisfies any one of them is an MSP:: 1) A person that maintains a ‘substantial position’ in any of the major swap categories, excluding positions held for hedging or mitigating commercial risk and positions maintained by certain employee benefit plans for hedging or mitigating risks in the operation of the plan.; (b) A person whose outstanding swaps create ‘substantial counterparty exposure that could have serious adverse effects on the financial stability of the United States banking system or financial markets.’; (c) Any ‘financial entity’ that is ‘highly leveraged relative to the amount of capital such entity holds and that is not subject to capital requirements established by an appropriate Federal banking agency’ and that maintains a ‘substantial position’ in any of the major swap categories. A similar definition applies to security-based swaps. For details see 77 Fed. Reg. 30596 (May 23, 2012). See 7 USC 1a(33).