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External Meetings: Definitions Meeting with Gavilon

5/11/2011 2:00 PM
II. Definitions

XIX. Agricultural Swaps

CFTC Staff:
Mark Fajfar

Julian Hammar

David Aron

Christopher Cummings

Steve Kane

Rose Troia

Don Heitman

Greg Kuserk

Bruce Fekrat

Ryne Miller
Dennis Stieren (Gavilon LLC)

Ed Prosser (Gavilon LLC)

Lance Kotschwar (Gavilon LLC)

Scott Parsons (Delta Strategy Group)

Graham Harper (Delta Strategy Group)

Jeff Dinwoodie (SEC)

Josh Kans (SEC)
Gavilon LLC

Delta Strategy Group
  • In the meeting, Gavilon said that the final rule defining “swap dealer” should clarify when a company that uses swaps for more than one purpose would be deemed a swap dealer.  In particular, Gavilon explained that it uses swaps primarily to hedge commercial risks related to its agricultural commodity and energy commodity businesses, but that it also occasionally uses swaps to seek a proprietary profit.  Gavilon said the final definition should provide that a company would not necessarily be a swap dealer simply because it uses swaps for purposes other than to hedge commercial risk, and that the final definition should account for the difficulty of pinpointing precisely the purpose of each swap a company may use.  Gavilon also said that the de minimis exception from the swap dealer definition should allow for meaningful use of swaps for various business purposes without necessarily requiring registration as a swap dealer.