On December 18, the Securities and Exchange Commission adopted some amendments to its rules concerning the cross-border application of certain security-based swap requirements under the Securities Exchange Act of 1934 and issued a statement that it will be allowing some time-limited relief for reporting parties when security-based swap reporting goes into effect.

The amendments are intended to address issues raised concerning the SEC’s previous cross-border rulemakings and, more generally, to enhance the effectiveness and efficiency of those rules. The amendments deal chiefly with 1) the definitions of “arrange” and “negotiate” as they relate to swaps involving non-US dealer personnel in the United States; and 2) opinion and certification requirements applicable to the registration of a non-US person as a security-based swap dealer.

The amendments will become effective on the later of March 1, 2020 or 60 days after publication of the adopting release in the Federal Register.

The adoption of these amendments fulfills the last condition to the phased roll-out of the full suite of security-based swap rules and sets up the following expected security-based swap rule compliance dates (assuming that March 1 is in fact the effective date of the amendments):

  • Security-Based Swap Dealer Registration Compliance Date — September 1, 2021 (18 months after March 1, 2020). However, registration is not required until the end of the second calendar month following the month in which an entity crosses a security-based swap de minimis threshold, so the earliest date for registration of any security-based swap dealer will be September 30, 2021 if it exceeds a threshold in July 2021.
  • Security-Based Swap De Minimis Counting Compliance Date — July 1, 2021 (two months before the Security-Based Swap Dealer Registration Compliance Date). Security-based swaps in existence before this date do not count towards the security-based swap de minimis thresholds of $8 billion for credit-default swaps, $400 million for other types of security-based swaps or $25 million of security-based swaps with special entities.
  • Security-Based Swap Reporting Compliance Date for any Security-Based Swap Asset Class — The later of 1) 6 months after the registration date of the first swap data repository to accept transaction reports for that asset class; and 2) October 1, 2021. However, the SEC is providing specific no action relief applicable for 4 years after the registration date of the first swap data repository. This will provide parties with some time-limited leeway to comply with the swap reporting rules instead of the security-based swap reporting rules.

The December 18 release is available here.