July 5, 2022

Volume XII, Number 186

Advertisement
Advertisement
Advertisement

SEC Issues Rule Proposal for Security-Based Swap Execution Facilities

On April 6, 2022, the SEC proposed a new regulatory framework for the registration and regulation of security-based swap execution facilities (SBSEFs). The proposed Regulation SE under Section 3D of the Securities Exchange Act of 1934 is a key step in completing one of the few remaining pieces of outstanding Dodd-Frank swaps regulation.

  • Under proposed Regulation SE, the SEC would: establish a new framework for the registration and regulation of SBSEFs;

  • adopt exemptions from the definition of “exchange” under the Exchange Act for SBSEFs that provide execution only for security-based swaps;

  • adopt exemptions from certain requirements applicable to “brokers” under the Exchange Act for registered SBSEFs; and

  • adopt new rules of practice to allow persons who are aggrieved by certain actions by an SBSEF to apply for review by the SEC.

In developing the proposed new rules, the SEC stated that it seeks to harmonize as closely as practicable with parallel CFTC rules that govern swap execution facilities and CFTC swap trade execution generally. The SEC notes that it expects to promote consistency between proposed Regulation SE and existing rules under the Exchange Act.

As part of the new proposal, the SEC noted that it previously proposed rules regarding SBSEFs in three separate releases between 2010 and 2013. However, given the length of time that has passed since those proposed rules were issued and the significant market changes that have taken place in the interim, the SEC is withdrawing all previously proposed rules, rule amendments and interpretations regarding SBSEFs effective as of the publication date of Regulation SE in the Federal Register. This includes (1) Regulation MC (relating to conflicts between clearing agencies, SBSEFs and exchanges trading security-based swaps), (2) the 2011 release for SBSEF registration and regulation, and (3) aspects of an SEC cross-border proposal relating to SBSEFs and trade execution.

The SEC’s proposing release is available here. The public comment period will remain open until the later of 30 days after publication in the Federal Register or June 5, 2022.

© 2022 Vedder PriceNational Law Review, Volume XII, Number 126
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

Juan M. Arciniegas, Vedder Price, derivatives, structured products and futures
Shareholder

Juan M. Arciniegas is a Shareholder at Vedder Price and a member of the Investment Services group in the firm’s Chicago office.

Mr. Arciniegas works primarily as a derivatives lawyer and has significant experience in the market for over-the-counter (OTC) derivatives, structured products and futures. He advises on every stage throughout the life cycle of a derivatives transaction, from conducting pre-trade regulatory due diligence to negotiating transactional documentation and advising on post-trade reporting and recordkeeping obligations. This...

312-609-7655
Jacob Tiedt,Vedder Price law firm investment services attorney
Shareholder

Jacob C. Tiedt is a Shareholder at Vedder Price and a member of the Investment Services group.

Mr. Tiedt’s practice includes the representation of registered mutual funds, closed-end funds and exchange-traded funds; private funds; investment advisers; and other financial institutions on a broad range of regulatory, governance and compliance matters. Mr. Tiedt regularly counsels clients on matters relating to SEC registration, disclosure and compliance; shareholder solicitation; NYSE, Nasdaq and FINRA regulation; corporate governance; and board administration. Mr....

312-609-7697
Advertisement
Advertisement
Advertisement