On April 5, the Securities and Exchange Commission voted to take two actions in the implementation of security-based swap regulation under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).
Substituted compliance is a mechanism that allows the SEC to determine that certain participants in US security-based swap markets may satisfy certain requirements under the Securities Exchange Act of 1934 (Exchange Act) by complying with comparable non-US requirements. Under the SEC’s substituted compliance regime, the SEC may determine that registered non-US security-based swap dealers and registered non-US major security-based swap participants may satisfy certain requirements under Exchange Act section 15F and the rules and regulations thereunder by complying with comparable non-US requirements.
The SEC published a notice of application and proposed substituted compliance order in response to an application from the K Financial Conduct Authority (FCA). The FCA application seeks substituted compliance for UK-regulated firms based on compliance with UK requirements. The proposed substituted compliance order for the United Kingdom provides that certain UK-regulated firms that are also registered with the SEC as security-based swap dealers and major security-based swap participants conditionally may satisfy certain requirements under the exchange by complying with comparable UK requirements.
In addition, the SEC re-opened the comment period on the notice of application and proposed substituted compliance order in relation to the application by France’s Autorité des Marchés Financiers (AMF) and Autorité de Contrôle Prudentiel et de Résolution (ACPR).
The public comment period is open for 25 days following publication in the Federal Register.