The Wall Street Transparency and Accountability Act of 2010 is Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Subtitles A and B of the Act deal with the regulation of over-the-counter derivatives. Hedge funds that meet certain specified criteria will experience a radical and costly change in the way they trade derivatives.
Under the derivatives provisions, both bank and nonbank major participants in the derivatives markets, which include hedge funds, will be designated as either swap dealers or major swap participants. They will also be made subject to registration, capital, margin, clearing, reporting and recordkeeping requirements.
Swap Dealer
A hedge fund that previously was considered to be a bank customer will now be categorized as a swap dealer if, among other alternative criteria, it regularly enters into swaps with counterparties as an ordinary course of business for its own account.
If a hedge fund ....