Does the current version of Dodd Frank ban speculative positions in non-exchange cleared (OTC) swaps? It does not refer to any specific type of swap. But my current understanding of the bill is that it attempts to control the kinds of speculation that caused the huge losses during the last financial crisis. Part of those losses were swaps and other derivatives that were entered into by financial institutions as a way to sell off risk or make bets with capital that would not have been possible except through those instruments.
‘(A) STANDARD FOR CLEARING- It shall be unlawful for any person to engage in a swap unless that person submits such swap for clearing to a derivatives clearing organization that is registered under this Act or a derivatives clearing organization that is exempt from registration under section 5b(j) of this Act.‘(B) this Act if the swap is required to be cleared.
See Full bill text of H.R.4173 Dodd-Frank Wall Street Reform and Consumer Protection Act and scroll down to Sec 722.
The way I read this, Swaps are regulated and deemed to not be an insurance product. i.e. regulated as a security, not insurance. I believe this forces them to be exchange-traded.