What qualifies as an eligible contract participant?

An eligible contract participant (ECP) is an entity or individual allowed to engage in certain financial transactions that are not open to the average investor. ECPs are often corporations, partnerships, organizations, trusts, brokerage firms, or investors that have total assets in the millions.

Do you have to be an eligible contract participant to trade futures?

Yes. A borrower must be an “eligible contract participant,” as defined in section 1a(18) of the Commodity Exchange Act (“CEA”), in order to use an interest rate swap to hedge interest rate risk incurred by that borrower in a commercial lending transaction.

Do you have to be an ECP to trade a swap?

The Dodd-Frank Act makes it unlawful for a person who is not an ECP to enter into a swap other than on or subject to the rules of a designated contract market (DCM).

Are security-based swap dealer eligible contract participant?

the security-based swaps may be purchased only by “eligible contract participants” and the reports do not represent the initiation (or reinitiation) of publication of reports regarding such issuer or its securities.

What is ex pit?

Of or relating to a futures transaction that takes place away from the trading floor. For example, a person long a futures contract on coffee may agree to take delivery of the commodity from an investor who is short an identical contract.

What is a qualified ECP guarantor?

“Qualified ECP Guarantor” means at any time each Loan Party with total assets exceeding $10,000,000 or that qualifies at such time as an “eligible contract participant” under the Commodity Exchange Act and can cause another Person to qualify as an “eligible contract participant” at such time under Section 1a(18)(A)(v)( …

What is a swap participant?

A Major Swap Participant is a person or entity that maintains a substantial net position in swaps, exclusive of hedging for commercial risk, or whose positions creates such significant exposure to others that it requires monitoring.

What is a major security-based swap participant?

A person that is a major security-based swap participant in general shall be deemed to be a major security-based swap participant with respect to each security-based swap it enters into, regardless of the category of the security-based swap or the person’s activities in connection with the security-based swap, unless …

What is Expit in trading?

Definition. The term ex-pit transaction refers to a commodity transaction that takes place away from the floor of the exchange where it would normally occur. Ex-pit transactions typically involve the cash market and a private deal between two hedgers.

What is sled pricing?

With Single Line Entry of Differential Spreads (Sleds), CME Clearing allows simple futures calendar spreads to be matched at a differential price in FEC+. This allows buyers and sellers to set their leg prices as they see fit.

What is a swap guarantee?

Swap Guarantee means a guarantee from the Borrower to the Agent on behalf of the Swap Lenders in respect of the Secured Swap Obligations of any of the Restricted Subsidiaries.

What is a swap obligation?

“Swap Obligation” means, with respect to any Credit Party, any obligation to pay or perform under any agreement, contract, or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

Who is a major swap participant?

Definition of “Major Swap Participant” (MSP) A person whose outstanding swaps create “substantial counterparty exposure that could have serious adverse effects on the financial stability of the United States banking system or financial markets.”

Who is a security based swap dealer?

Designation under Title VII of the Dodd-Frank Act for an entity that engages in a large notional amount of security-based swap (SBS) activity.

What is a securities based swap?

— The term “security-based swap” includes any agreement, contract, or transaction that is as described in subparagraph (A) and also is based on the value of 1 or more interest or other rates, currencies, commodities, instruments of indebtedness, indices, quantitative measures, other financial or economic interest or …

What are SLED contracts?

State, Local and Education Contract Opportunities Procurement. Selling to state, local, and education (SLED) government agencies can be a tough task if you don’t know how to approach the market and present your product or service.

What is the difference between closing price and settlement price?

Closing price of any scrip on any day is the weighted average price of last 30 minutes of trading for that day. But daily settlement is only for future contracts and daily settlement price is based on closing price of futures contract.

What are the risks associated with swap contracts?

In swap contracts, there are two most basic forms of risk: price risk and default risk. The price risk arises due to the movement of the underlying index so that the default free present value of the future payments changes.

What is the difference between a forward contract and a swap contract?

A forward contract is a contract that promises delivery of the underlying asset, at a specified future date of delivery, at an agreed upon price stated in the contract. A swap is a contract made between two parties that agree to swap cash flows on a date set in the future.

How do swap contracts work?

A swap is an agreement for a financial exchange in which one of the two parties promises to make, with an established frequency, a series of payments, in exchange for receiving another set of payments from the other party. These flows normally respond to interest payments based on the nominal amount of the swap.

Who is the beneficiary of a guaranteed swap counterparty?

The Beneficiary (e.g., the bank making the loan to the borrower) verifies that the Guarantor and Guaranteed Swap Counterparty satisfy all of these conditions. As a final point of clarification, the no-action relief provides market participants with certainty that the OGC will not recommend that the CFTC bring enforcement actions under the CEA.

Does a swap guarantor qualify as an ECP?

Yes, in CFTC Letter 12-17, the OGC reiterated the requirement that every Guarantor of a swap must qualify as an ECP.

Who is an “eligible contract participant”?

A borrower must be an “eligible contract participant,” as defined in section 1a (18) of the Commodity Exchange Act (“CEA”), in order to use an interest rate swap to hedge interest rate risk incurred by that borrower in a commercial lending transaction. Why is that the case?

What is an’eligible contract participant (ECP)?

What is an ‘Eligible Contract Participant’. An eligible contract participant (ECP) is a group or individual allowed to engage in financial transactions not open to retail customers.

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