SEC’s swap dealer registration and waiver rulemakings

August 2015

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On August 5th, the Securities and Exchange Commission (SEC) issued both a final and proposed rule toward establishing the agency’s supervisory framework for security-based swap dealers (SBSD) and major security-based swap participants.

The final rule, adopted unanimously, lays out the requirements for SBSD registration with the SEC, including that a senior officer certify that the SBSD has implemented reasonably designed policies and procedures to prevent violations of federal securities law. The proposed rule, adopted in a 3-2 vote, establishes the process for obtaining a waiver from “statutory disqualification” (i.e., disqualification from the SBS market due to legal violations) for individuals and entities associated with the SBSD.

  1. SBSD registration will not be required until 6 months after the SEC’s outstanding derivatives rulemakings are finalized.

  2. The SEC did not provide clarity as to whether compliance with its derivatives rules will be required after, or simultaneous with, registration.

  3. The SEC places a clearer responsibility than the CFTC did for a senior officer to certify that policies and procedures are reasonably designed.

  4. Dealers that are already registered with the CFTC will be able to use short-forms for SBSD registration.

  5. The SEC, unlike the CFTC, asserts that supervisors of middle office personnel are subject to “statutory disqualification.”

  6. The SEC also, unlike the CFTC, subjects entities to “statutory disqualification,” but proposes a process for them to obtain waivers.

  7. The SEC is under no obligation to decide whether or not to grant a waiver.

  8. The proposal will apply disqualifications and waivers from the CFTC, NFA, and self-regulatory organizations to SBSDs.

  9. The proposal is unusually controversial.

  10. Beyond the SEC’s upcoming final derivatives rules, additional regulatory change will complicate dealers’ implementation efforts.

This First take elaborates on these key points.

Contact us

Dan Ryan
Banking and Capital Markets Leader, PwC US
Tel: +1 (646) 471 8488

Alison Gilmore
Asset and Wealth Management Marketing Leader, PwC US
Tel: +1 (646) 471 0588

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