SEC and CFTC Seek Comment on Key Dodd-Frank Swap Definitions

On June 18, 2026, the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) (together, the Commissions), as part of their broader commitment to regulatory harmonization, jointly issued a Request for Comment (the Joint RFC)¹ soliciting public input on two critical areas of the swaps and security-based swaps (SBS) regulatory framework under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Title VII)²: (a) potential ways to draw clearer regulatory lines with respect to innovative products that implicate both Commissions’ regulatory interests and (b) alternative compliance approaches that could permit compliance with one commission’s framework to satisfy substantially similar requirements of the other commission’s framework.

For market participants, the Joint RFC presents an important opportunity to seek greater certainty regarding the classification and regulation of products that may fall near the jurisdictional boundary between the CFTC and SEC and to advocate for approaches that could reduce duplicative or inconsistent compliance obligations.

The Joint RFC represents the first comprehensive revisitation of the foundational 2012 Product Definitions Adopting Release (the Product Definitions),³ in which the Commissions jointly adopted rules and interpretations further defining “swap,” “security-based swap,” “mixed swap,” and “security-based swap agreement” under Title VII. Many interpretive questions were left unresolved at that time, and subsequent developments — particularly in digital assets, tokenized instruments, event contracts, and decentralized finance (DeFi) — have rendered additional guidance increasingly important.

The Joint RFC follows the March 11, 2026 memorandum of understanding between the SEC and CFTC regarding harmonization in areas of common regulatory interest (the MOU), which committed the Commissions to clarify product definitions through joint interpretations and rulemakings and to facilitate alternative compliance and enable a path for appropriately tailored and regulated “super apps."⁴

The Joint RFC poses 15 specific questions organized into three sections: Definitional Clarity (Questions 1–11), Alternative Compliance (Questions 12–15), and a General Request for Comment and Data.

Comments must be received by August 24, 2026.

Background

The Product Definitions Release

Title VII established a comprehensive regulatory framework for swaps and security-based swaps, allocating regulatory authority between the CFTC and the SEC. Under that framework, the CFTC has primary regulatory authority over “swaps,” the SEC has primary regulatory authority over “security-based swaps,” and the Commissions share jurisdiction over the narrow category of “mixed swaps.” In August 2012, the Commissions jointly adopted rules and interpretations further defining “swap,” “security-based swap,” “mixed swap,” and “security-based swap agreement.”

The Swap Definition

The Commodity Exchange Act (CEA) defines “swap” broadly to include, among other things, any agreement, contract, or transaction that satisfies one or more of six prongs: (i) puts, calls, caps, floors, collars, or similar options; (ii) event contracts based on occurrence, nonoccurrence, or extent of events with potential financial, economic, or commercial consequence; (iii) executory basis contracts providing for exchange of payments based on value or level of interests, rates, currencies, commodities, securities, indices, or other financial or economic interests. The definition was deliberately expansive.

The Security-Based Swap Definition

The Securities Exchange Act of 1934 (Exchange Act) defines “security-based swap” as a “swap” based on (i) an index that is a narrow-based security index (NBSI), including any interest therein or on the value thereof (the SBS NBSI Prong); (ii) a single security or loan, including any interest therein or on the value thereof (the SBS Single Security Prong); or (iii) the occurrence, nonoccurrence, or extent of an event relating to a single issuer or issuers in an NBSI, provided that such event directly affects the financial statements, financial condition, or financial obligations of the issuer (the SBS Event Contract Prong).

Exclusions From the Swap Definition

The CEA excludes from the swap definition — and therefore the security-based swap definition —certain instruments that otherwise might satisfy one or more of the six prongs, including any put, call, straddle, option, or privilege on any security subject to the Securities Act of 1933 (Securities Act) and the Exchange Act; any note, bond, or evidence of indebtedness that is a security; nonfinancial commodity or security forwards intended to be physically settled; futures; security futures products; and security-based swaps (other than mixed swaps).

Mixed Swaps

A “mixed swap” contains elements of both a swap and a security-based swap. The Commissions have stated that the scope of mixed swaps is, and is intended to be, narrow. Mixed swaps are subject to joint SEC/CFTC regulation.

Unresolved Questions From 2012

In 2012, the Commissions believed that extensive further definition of the terms by rule was not necessary but acknowledged that the definitions “could be read to include certain types of agreements, contracts, and transactions that previously have not been considered swaps or security-based swaps.” The Commissions declined to elaborate on the full range of interpretive issues, and market participants observed at the time that the Product Definitions left many unanswered questions. Practitioners have spent the past 14 years parsing the Product Definitions in an attempt to determine the intent of the Commissions with respect to many types of instruments.

Among the unresolved questions left by the Commissions in 2012:

1. Forward contract vs. swap, especially physical commodity contracts with embedded volumetric optionality. The Product Definitions state that nonfinancial commodity forwards are outside the swap definition when intended to be physically settled, tying that analysis to the CFTC’s historical “commercial merchandising transaction” and “facts and circumstances” approach. But the Product Definitions also confirmed that commodity options were swaps, and they created a multifactor path for forwards with embedded price or volumetric optionality to remain excluded forwards. That leaves uncertainty about contracts involving swing rights, peaking supply, tolling, capacity, storage, transportation, evergreen terms, book-outs, liquidated damages, and nominal or zero delivery. The ambiguity was real enough that the CFTC later issued a clarification of the embedded-volumetric-optionality interpretation. Notwithstanding the clarification, ambiguity remains.
2. Environmental products. The Product Definitions sought to preserve the treatment of ordinary physical markets beyond the scope of the Title VII regulatory regime but did so through examples and conditions rather than concrete rules. Questions remain for innovative energy, carbon, renewable-energy-credit, and power-market structures.
3. Insurance vs. swap; guarantees of swaps vs. guarantees of SBS. The Product Definitions created an insurance safe harbor but made clear that the safe harbor was non-exclusive and that products outside it require further analysis. This left uncertainty for nontraditional insurance, financial guaranty products, reinsurance agreements, and products provided by nontraditional providers or insurers outside the United States.
4. Interest rate vs. yield vs. security-based exposure. The Product Definitions distinguished instruments based solely on interest rates or other monetary rates from instruments based on the yield, price, or value of a single security, loan, or narrow-based security index. In practice, however, “rate” and “yield” may be used inconsistently, creating uncertainty for constant-maturity references, yield curves, mortgage/security-derived rates, foreign sovereign debt references, instruments with resets tied to securities, and instruments whose fixed economic terms were informed by securities but do not vary over the life of the trade.
5. Total return swaps and “incidental” financing or currency components. A total return swap on a single security, loan, or narrow-based security index is generally an SBS, and a normal financing leg does not by itself make an instrument a mixed swap. But if the financing or currency component creates additional risk exposure unrelated to financing, the instrument may become a mixed swap. The line between “incidental financing” and a separate rate, currency, or commodity exposure is not clear.
   
   The so-called “quanto/compo” distinction illustrates the problem: A quanto equity swap can be treated as an SBS if currency risk is merely incidental to the dealer’s hedge, while a compo equity swap is a mixed swap because the parties take both equity and currency exposure. That makes product classification depend heavily on drafting, payment mechanics, purpose, and whether a nonsecurity exposure is embedded in the parties’ obligations or only in the dealer’s hedge.
6. Narrow-based vs. broad-based security index, especially index credit default swaps and bespoke indices. Classification can depend on complex tests involving, among other factors, the number of names, concentration, affiliation, public information availability, exempted securities, asset-backed securities, loan borrowers, third-party index providers, bespoke indices, and index methodology. Timing questions also remain, particularly where amendments, discretionary changes, substitutions, corporate actions, or predetermined index rules may require reassessment.
7. Mixed swaps: narrow category but potentially severe consequences. The Product Definitions state that mixed swaps are intended to be a narrow category, but classification as a mixed swap can be significant because such instruments may be subject to joint CFTC/SEC regulation. The definitions include a relief framework, but uncertainty remains as to its application.
8. Consumer and commercial arrangements. The Product Definitions state that ordinary consumer and commercial arrangements historically not treated as swaps should not become swaps merely because they contain variable pricing, caps, collars, escalation clauses, or embedded interest-rate features. But the listed examples are not exhaustive, and unlisted arrangements are evaluated case by case.
9. Participations. Under the Product Definitions, the CFTC and SEC provided guidance regarding certain loan participations. However, as new products have developed and the market for participations has evolved to include participations in swaps and other types of financial products, the existing guidance is not relevant, creating uncertainty for market participants.
10. Label, documentation, and International Swaps and Derivatives Association form usage. The Product Definitions make clear that labels are not dispositive but also indicate that documentation may be relevant. This leaves uncertainty regarding the weight the Commissions may give to ISDA forms, master agreements, confirmations, collateral terms, termination events, and market-standard documentation when economic substance points in another direction.
    
    This issue is especially important where a master agreement contains default or termination events tied to a counterparty that is itself an issuer of securities. The Product Definitions state that those standard terms do not by themselves make an instrument a mixed swap, but nonstandard payment or trigger terms may still affect classification.
11. Antievasion. The CFTC adopted a principles-based antievasion approach that looks beyond form, label, and documentation and can treat willfully evasive transactions as swaps. This creates uncertainty when legitimate structuring for business, tax, accounting, liquidity, or operational reasons could be viewed as evasion. The SEC did not adopt parallel antievasion rules for SBS in the Product Definitions.
12. Classification procedure and timing. The Product Definitions create a process for requesting a public joint interpretation with respect to product classification, but the process itself creates practical issues: The Commissions get a review period, requests and outcomes become public at the end of the process, and the Commissions rejected the idea that parties could trade based on a good-faith self-classification while awaiting a joint interpretation. For novel products, this means parties may face a choice between a lengthy delay and public disclosure of product details, or proceeding with classification risk.

Key Topic Areas in the Request for Comments

The Joint RFC organizes its 15 questions into two substantive sections — Definitional Clarity and Alternative Compliance — plus a general request for data-driven input. We address each topic area below, with analysis of the key opportunities for market participants.

A. Event Contracts and Innovative Products (Questions 1–3)

The Commissions ask what types of event contracts or other innovative products have raised interpretive questions for market participants, and whether additional principled, objective criteria are needed to distinguish between swaps, mixed swaps, security-based swaps, or instruments excluded from the swap definition. They also ask whether the Commissions should issue new or revised rules or interpretations to address innovations and whether additional regulatory clarity is necessary with respect to the exclusions from the swap definition.

Significance for market participants: The Commissions explicitly acknowledge that “market participants are raising questions about whether certain event contracts are swaps, SBS, or mixed swaps, or types of instruments that fall within statutory exclusions from the ‘swap’ definition.” This is a direct invitation for market participants to identify specific products and propose classification frameworks. The Product Definitions left many classification questions open, and the intervening 14 years have seen the emergence of novel event contract platforms, prediction markets, and digital asset derivatives that test the boundaries of the existing framework.

B. “Any Interest” in a Security (Question 4)

The Commissions ask whether there is a need for greater clarity regarding when a swap, option (including any put, call, straddle, option, or privilege), or future is based on “any interest” in a security or group or index of securities, particularly when the swap, option, or future is not based on the “value” of that security or group or index of securities.

Significance for market participants: This is one of the most subtle and commercially significant interpretive questions in the Title VII framework. The Product Definitions release drew distinctions between instruments with rates set at execution (which may be “based on” but not “linked to” a security) versus floating rates that “directly mimic” a security’s yield. The distinction determines whether an instrument is a swap (CFTC-regulated) or a security-based swap (SEC-regulated), with significant consequences for registration, reporting, clearing, and margin requirements.

C. NBSI Issues (Question 5)

The Commissions ask whether additional clarity is needed regarding when a swap is based on “an index that is [an NBSI] including any interest therein or on the value thereof.” They specifically ask whether the Commissions should further address the characterization of contracts referring to potential changes in the composition of an NBSI, as opposed to changes in the price or value of an NBSI. The Commissions also ask whether the existing tolerance period and grace period rules for products referencing securities indexes that transition between narrow-based and broad-based should be revised or clarified.

Significance for market participants: The Commissions have adopted rules establishing tolerance periods (45 business days over three consecutive months) and three-month grace periods for index migration, modeled on security futures rules. Notably, at least one commenter in 2012 sought to extend the grace period from three months to six months, but the Commissions declined that request. The Joint RFC’s explicit inquiry into whether these rules should be revised or clarified signals that the Commissions are open to extended transition periods.

D. Single Security Prong and Event Contract Prong (Questions 6–7)

Regarding the SBS Single Security Prong (Question 6), the Commissions ask whether additional clarity is necessary regarding when a swap is based on “a single security or loan, including any interest therein or on the value thereof.” Regarding the SBS Event Contract Prong (Question 7), the Commissions ask whether additional clarity is necessary regarding when an event “directly affects” the financial statements, financial condition, or financial obligations of an issuer and how any further clarifications should relate to the Commissions’ rules and guidance on credit default swaps.

Significance for market participants: The SBS Event Contract Prong is particularly important as new product types — including digital asset-related instruments, tokenized securities, and structured products referencing issuer-specific events — increasingly test the boundaries of this definition. The Product Definitions release addressed credit default swaps under this prong but left considerable room for interpretive questions with respect to novel instruments.

E. Event Contracts Referencing Securities and the Securities Option Exclusion (Question 8)

The Commissions ask whether an event contract that settles by reference to a security or group or index of securities should be considered a “put, call, straddle, option, or privilege on” a security — and thus excluded from the definitions of both “swap” and “security-based swap.” They ask about the characteristics of event contracts based on a security or index that are swaps or SBS, that distinguish them from options on securities, “including in particular binary options that already trade as standardized options on securities on national securities exchanges.”

Significance for market participants: This is a critical boundary question between the event contract/swap universe and the securities universe. The answer determines whether an instrument is regulated as a swap or SBS under Title VII (with corresponding dealer registration, clearing, margin, and reporting requirements) or as a securities option under the Securities Act and Exchange Act. Market participants should consider what functional and structural characteristics should distinguish event contracts from binary options on securities.

F. Notes, Bonds, and Evidence of Indebtedness Exclusion (Question 9)

The Commissions ask whether, in light of innovative products and product structures, there is a need to further clarify whether a particular instrument is a note, bond, or evidence of indebtedness that is a security (and thus excluded from the swap definition) instead of a swap or SBS. They specifically ask what consideration should be given to whether the instrument is issued pursuant to an indenture qualified under the Trust Indenture Act of 1939 and whether the terms of the instrument reflect a lender-borrower relationship.

Significance for market participants: The structured notes market relies heavily on this exclusion. The Product Definitions acknowledged the existing structured notes market but did not provide extensive guidance on the boundary between structured notes and swaps. As innovative product structures blur traditional lines between debt instruments and derivatives — including tokenized notes and DeFi lending protocols — additional clarity is commercially important.

G. Commodity and Security Forwards and Physical Settlement (Question 10)

The Commissions ask whether they should provide additional clarity as to the meaning of “for deferred shipment or delivery, so long as the transaction is intended to be physically settled” in the exclusion from the definition of “swap.” In the Product Definitions, the Commissions explicitly declined to provide a bright-line test for determining whether a security forward is “intended to be physically settled,” calling it a “facts and circumstances” determination.

Significance for market participants: Market participants have long sought greater certainty on this point. One commenter in 2012 specifically requested a test for bona fide intent to deliver, and the Commissions declined. The inclusion of this question represents an opportunity for market participants to propose workable standards, particularly for complex energy structures like virtual power purchase agreements. A bright-line test or safe harbor would provide meaningful regulatory certainty for the securities lending, repo, and forward delivery markets.

H. Futures, Security Futures, and Perpetual Contracts (Question 11)

The Commissions ask whether there is a need for greater clarity regarding the treatment of futures, including security futures, in the context of innovative markets. They specifically ask whether a cash-settled “perpetual” contract referencing an equity security could be treated as a security future and what effects the introduction of such products could have on liquidity formation, price discovery, and hedging activity, particularly with regard to the derivatives and underlying cash equity markets.

Significance for market participants: This is a forward-looking question clearly aimed at crypto-native and DeFi-inspired perpetual contract structures that have proliferated in offshore markets. Perpetual futures are among the most actively traded instruments in digital asset markets but have no clear regulatory classification under the existing U.S. framework when they reference equity securities. The Commissions’ inquiry into their effects on liquidity and price discovery suggests an openness to accommodating these structures within a regulated framework.

I. Alternative Compliance Framework (Questions 12–15)

The Commissions ask whether, where trading in economically related or functionally similar product classes implicates both agencies’ regulatory interests, compliance with one commission’s regulatory framework could appropriately satisfy substantially similar requirements of the other (“alternative compliance”). They further ask under what circumstances the Commissions should pursue joint or coordinated notice registration, tailored rules, rules of procedure, tailored trade reporting rules, deemed filing, or other joint or coordinated approaches to facilitate alternative compliance.

The Commissions also ask what considerations should guide surveillance, examination, and enforcement under an alternative compliance approach, how enhanced sharing of information and data could help fulfill regulatory mandates, and how the Commissions could best deter market manipulation and trading on material nonpublic information under such a regime.

Significance for market participants: This section reflects the MOU’s commitment to “facilitate alternative compliance and enable a path for appropriately tailored and regulated ‘super apps.’” An alternative compliance regime could be significant for dually regulated entities and products — potentially reducing duplicative registration, reporting, and compliance burdens for entities that operate across the swap/SBS boundary. Swap dealers that also deal in security-based swaps, trading platforms that list both types of instruments, and clearing organizations that clear both product types would all benefit significantly.

Opportunities for Market Participants: Areas of Potential Reconsideration

The Joint RFC creates an opportunity for market participants both to urge the Commissions to reconsider positions they previously declined to adopt and to address interpretive questions raised by products, market structures, and technologies that have developed since the Product Definitions were adopted in 2012. The most useful comments are likely to be those that translate these issues into concrete examples, proposed standards, or data regarding the practical consequences of existing uncertainty.

Market participants should consider advocacy in the following areas where the agencies may now be receptive to change:

• Bright-line test for physical settlement of nonfinancial commodity and security forwards. The Commissions explicitly declined to provide such a test in 2012, opting for a facts-and-circumstances approach. The Joint RFC’s specific inquiry into whether additional clarity should be provided signals a willingness to reconsider.
• Extended grace periods for index migration. At least one commenter in 2012 sought to extend the grace period from three months to six months for products based on an index that transitions between narrow-based and broad-based. The Commissions denied this request.
• Clearer treatment of structured notes vs. swaps. The boundary between structured notes (excluded from the swap definition as securities) and economically equivalent swap transactions has remained uncertain, creating compliance challenges for issuers and dealers.
• Regulatory treatment of guarantees of swaps and SBS. In 2012, the CFTC interpreted guarantees of swaps as an integral part of the swap itself, while the SEC treated a guarantee of an SBS as a separate security. This divergence has created practical difficulties that an alternative compliance framework could address.
• Expansion and clarification of the insurance safe harbor.In 2012, the CFTC and SEC adopted a non-exclusive safe harbor to carve certain insurance products out of the broad “swap” definition.However, the safe harbor is limited to only insurers and reinsurers that are organized and licensed or permitted to offer their reinsurance products in the United States.Given the prevalence of non-US insurers in the insurance and reinsurance markets, this territorial limitation has created interpretive challenges and recharacterization risk for various insurance-related transactions.
• The process for requesting joint interpretations. Practitioners have described the existing process as “not market-sensitive or market-friendly.” A streamlined, predictable mechanism for obtaining joint guidance would benefit all market participants.
• Clarification of the event contract/security option boundary. As event contract platforms and prediction markets grow, the line between event contracts (swaps or SBS) and options on securities (excluded from both definitions) requires defined criteria.
• Treatment of novel digital asset and tokenized financial instruments. The emergence of tokenized securities, DeFi derivatives, and onchain automated systems has created classification uncertainty that the existing framework does not adequately address. The Joint RFC’s explicit reference to “onchain, automated systems” that are “increasingly blurring traditional jurisdictional lines” acknowledges this gap.

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The Joint RFC represents a significant opportunity for market participants to shape the regulatory framework governing swaps and security-based swaps at a moment when both Commissions have signaled clear willingness to revisit longstanding interpretive positions.

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