Third, the Working Group is considering a special set of legal certainty questions faced by swaps that involve securities governed by the federal securities laws. Therefore, the market for swaps based on non-exempt securities is based on a conclusion that these instruments are not futures contracts. Statements in the CFTC's Concept Release cast doubt on this conclusion. Treasury believes that a more permanent legislative clarification of the status of these instruments is necessary. The derivatives market has grown and evolved without resolving these CEA jurisdictional issues, but this arrangement is fragile.
Markets operate best in an environment of legal certainty.
Market participants must be able to ascertain readily the regulatory requirements that apply to them and have confidence in the enforceability of their own obligations and those of their counterparties. The President Working Group on Financial Markets is also addressing, as part of its report on derivatives, a number of other topics related to derivatives markets. Many of these topics were raised by the CFTC in its Concept Release. Market manipulation . The Working Group is studying whether regulation is appropriate to deter any potential manipulation that may exist in the OTC derivatives market.