Security-Based Swap

This Issue in United States

Concept of Security-Based Swap in Futures Trading

In this context of financial law, the following is a definition of Security-Based Swap: Any agreement, contract, or transaction that otherwise meets the definition of a swap but is also designated a security by the Securities Exchange Act of 1934. In practice, security-based swaps base their payments on variables that are closely tied to the major categories of securities that are regulated by the SEC, including swaps based on a single equity or debt security, single name credit default swaps, or swaps based on narrow-based security indexes. See 7 USC 1a(42).