Collateral swap trades
Subpart L of the Commission's regulations (“Segregation of Assets Held as Collateral in Uncleared Swap Transactions” consisting of Regulations 23.700 through 23.704) was published in the Federal Register on November 6, 2013 and became effective January 6, 2014. The main implication of collateralization is that the credit risk on the swap transaction becomes minimal, similar to exchange-traded futures contracts. To be sure, futures require initial margin accounts by both counterparties to provide an additional buffer to potential default loss. traded on a swap execution facility (SEF) or similar platform. Other categories of swaps are not subject to these requirements, however, and can be executed and maintained bilaterally. Most swaps are required to be reported to a swap data repository (SDR) and are subject to recordkeeping requirements.