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    SEC Finalizes Capital and Margin Requirements for Security-Based Swaps

    August 22, 2019

    SEC adopted a package of rules and rule amendments to establish capital, margin, and segregation requirements for security-based swaps, under Title VII of the Dodd-Frank Act. These and other rules previously adopted by SEC are designed to enhance the risk-mitigation practices of firms that stand at the center of the security-based swap market, thus protecting their counterparties and reducing risk to the overall market. The rules will become effective on October 21, 2019.

    These rules address the following four key areas:

    • They establish minimum capital requirements for security-based swap dealers and major security-based swap participants, for which there is no prudential regulator (non-bank security-based swap dealers and major security-based swap participants). They also increase the minimum net capital requirements for broker-dealers that use internal models to compute net capital (ANC broker-dealers). In addition, they establish capital requirements tailored to security-based swaps and swaps for broker-dealers that are not registered as an security-based swap dealer or major security-based swap participant to the extent they trade these instruments.
    • They establish margin requirements for non-bank security-based swap dealers and major security-based swap participants with respect to non-cleared security-based swaps.
    • They establish segregation requirements for security-based swap dealers and stand-alone broker-dealers for cleared and non-cleared security-based swaps.
    • They amend the existing cross-border rule of SEC to provide a means to request substituted compliance with respect to the capital and margin requirements for foreign security-based swap dealers and major security-based swap participants and provide guidance on how SEC will evaluate requests for substituted compliance.

    The compliance date for the rule amendments and new rules is 18 months after the later date of the following:

    • The effective date of the final rules establishing recordkeeping and reporting requirements for security-based swap dealers and major security-based swap participants, or
    • The effective date of the final rules addressing the cross-border application of certain security-based swap requirements


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    Effective Date: October 21, 2019

    Keywords: Americas, US, Banking, Securities, Capital Requirements, Dodd-Frank Act, Security-Based Swaps, Margin Requirements, Segregation Requirements, Reporting, Swap Dealers, Swap Participants, Cross-Border Treatment, SEC

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