Regulators Finally Ask the Room: "So… What Even Is a Swap?" 🧾

The US Commodity Futures Trading Commission and the Securities and Exchange Commission issued a rare joint request for public input on potential opportunities to further update, clarify, and harmonize derivatives product definitions, the agencies said this week. The financial regulators are seeking comments on topics including the definitions of swaps and security-based swaps and how mixed swaps and emerging products should be treated.

According to the joint notice, the CFTC and SEC will also accept public input on potential clarity on regulatory definitions, areas of alternative compliance, and jurisdictional and interpretive questions. The initiative is directed at addressing gaps and overlaps in the oversight of futures, swaps, and other derivatives products under existing US law.

The move comes amid an active dispute over digital asset derivatives oversight. The CME Group has filed suit against the CFTC and CFTC Chair Mike Selig over the agency's approval of crypto perpetuals, a case that has sharpened attention on how regulators categorize novel crypto-linked products. The joint request is positioned as a step toward resolving those questions through public comment rather than litigation.

The agencies framed the request as an effort to clean up ambiguities created by Title VII of Dodd-Frank, the 2010 statute that established the current framework for derivatives oversight. "Today's joint request for public comment presents an opportunity to address longstanding ambiguities within Title VII of Dodd-Frank that have grown alongside increasingly complex and innovative products," the regulators said, noting that input from market participants will inform any future rulemaking.

Comments will be accepted through the public comment process, with the agencies indicating they will review submissions before determining next steps on definitions, harmonization, and the treatment of emerging products including those tied to cryptocurrencies. The CFTC and SEC did not provide a specific timeline for publishing a proposed rule.