On August 22, 2019, the Securities and Exchange Commission’s (SEC’s) long awaited Dodd-Frank Act security-based swap (SBS) capital, margin and segregation rules for SBS dealers (SBSD) were published in the Federal Register. Relative to earlier proposals, the final rules softened the impact of the capital requirements and more closely aligned margin and segregation requirements with other regimes. The impact of the capital rules depends on the type of entity booking SBS and whether the entity is approved to use internal models. In addition to increased capital requirements for certain firms, we see the greatest impact for all SBSD coming from the margin and segregation requirements.
This regulatory brief discusses key impacts of the finalized SBS rules along with actions firms can take to prepare for SBSD registration.
A publication of PwC's financial services regulatory practice