SBS

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On December 18, 2020, the Securities and Exchange Commission announced the creation of a joint venture among multiple SEC divisions and offices to coordinate roles related to the regulation of security-based swaps (SBS) and provide oversight of entities that will be required to register with the SEC (SBS entities).
Continue Reading SEC Announces New Internal Security-Based Swaps Joint Venture

On July 22, the Commodity Futures Trading Commission adopted rules (Final Rules) that set minimum financial capital requirements for swap dealers (SDs) and major swap participants (MSPs) that are not subject to prudential regulation (each, a “Covered Swap Entity” or CSE). The capital requirements were originally proposed in 2016, as explained in more detail here.

The core financial require
Continue Reading CFTC Adopts Final Capital Requirements for Swap Dealers

On May 22, the Financial Industry Regulatory Authority (FINRA) issued an open invitation for member firms and other interested parties to provide views and information about the security-based swap (SBS) market, with particular focus on broker-dealer SBS activities and the application of FINRA rules to those activities. The invitation, which is not a mandatory information request, includes the following questions:
Continue Reading FINRA Requests Comments on Security-Based Swaps

On September 19, the Securities and Exchange Commission adopted a package of new final rules and rule amendments dealing with recordkeeping and reporting requirements for security-based swap dealers (SBS dealers). In general, the SEC is requiring SBS dealers to create and maintain records with respect to security based-swaps in a manner consistent with current recordkeeping and record retention rules that apply to broker-dealers. The SEC is, however, providing alternate compliance mechanisms that will allow an SBS dealer that also is a swap dealer but is not a broker-dealer to comply with Commodity Futures Trading Commission (CFTC) rules instead and will allow a non-US SBS dealer to request permission to comply with its home country rules.
Continue Reading SEC Issues Security-Based Swap Recordkeeping and Reporting Rules

On October 11, the Securities and Exchange Commission demonstrated renewed interest in completing the regulatory regime for security-based swaps (SBS) by re-opening the comment periods for a number of SBS rules that were previously proposed but never adopted. Specifically, the SEC is requesting further comment on the following proposals:
Continue Reading SEC Reopens Comment Period for Unfinished Security-Based Swap Rules

The Security Exchange Commission has added an additional piece to its array of cross-border rules for security-based swaps (SBS). The new rule confirms that, consistent with the position taken by the Commodities Futures Trading Commission with respect to cross-border swaps, a non-US person must include in its de minimis calculations for security-based swap dealer registration any non-cleared “dealing” SBS it executes with a non-US-person counterparty if the swap is “arranged, negotiated or executed” by personnel of the non-US person located in a US branch or office or by agents of the non-US person located in a U.S. branch or office.
Continue Reading SEC Adopts Additional Rule for Cross-Border Security-Based Swaps