Security Based Swap Law and Legal Definition

The term "security-based swap" means any agreement, contract, or transaction that:

a. is a swap under the Commodity Exchange Act; and

b. is based on an index that is a narrow-based security index, including any interest therein or on the value thereof; or a single security or loan, including any interest therein or on the value thereof; or the occurrence, nonoccurrence, or extent of the occurrence of an event relating to a single issuer of a security or the issuers of securities in a narrow-based security index, provided that such event directly affects the financial statements, financial condition, or financial obligations of the issuer. [15 USCS § 78c].