Most Hedge Funds Should Escape New Swaps Regulation, ISDA Says

Most hedge funds and money managers shouldn’t fall under new derivatives rules being written by U.S. regulators, according to the International Swaps and Derivatives Association, a trade and lobbying group.

The Commodity Futures Trading Commission and the Securities and Exchange Commission are responsible for writing the new rules governing $615 trillion in over-the-counter derivatives. They should find hedge funds and money managers don’t meet the criteria of a firm that “maintains a substantial position in swaps,” using leverage that creates “substantial counterparty exposure,” ISDA said today. That’s how the new law defines the so-called major swap participant.