SEC Finalizes Capital and Margin Requirements for Security-Based Swaps
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
Related Links
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
Featured Experts
Laurent Birade
Advises U.S. and Canadian financial institutions on risk and finance integration, CCAR/DFAST stress testing, IFRS9 and CECL credit loss reserving, and credit risk practices.
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Pierre-Etienne Chabanel
Brings expertise in technology and software solutions around banking regulation, whether deployed on-premises or in the cloud.
Previous Article
OJK Amends Circular on Monthly Reports by Shariah EntitiesRelated Articles
APRA Consults on Standard for Reporting of COVID-19 Loans
APRA issued a letter to authorized deposit-taking institutions announcing its intent to formalize the capital measures and reporting requirements for COVID-19 loans through temporary legislative instruments.
EBA Consults Industry on Use and Uptake of Regtech Solutions Across EU
EBA is inviting relevant stakeholders, such as financial institutions and information and communication technology (ICT) third-party providers, to share their views and experience on the use of regtech solutions through its regtech industry survey.
FCA Finalizes Guidance to Extend Measures for Insurers Amid COVID
FCA finalized the guidance extending measures to help customers that hold insurance and premium finance products and are in temporary financial difficulty because of COVID-19 crisis.
BoE Clarifies Approach to Treatment of Payment Holidays on Form PL
BoE published a statistical notice (Notice 2020/9) explaining the approach for treatment of payment holidays on the profit and loss return or Form PL.
FASB to Conduct Post-Implementation Review of CECL Standard
FASB announced the launch of its new Post-Implementation Review (PIR) web portal.
EBA Guidance on Impact of CRR Quick-Fix on Reporting and Disclosures
EBA revised the draft implementing technical standards on supervisory reporting as part of the reporting framework 3.0.
ECB Examines ICAAP Practices of Banks in EU
ECB published report that presents a summary of the analysis conducted on the internal capital adequacy assessment process (ICAAP) practices of a sample of 37 "significant" banks.
EC Proposes to Amend Rules for Financial Benchmarks
EC published a proposal for a regulation that amends the Benchmarks Regulation (2016/1011) regarding the exemption of certain third-country foreign-exchange benchmarks and the designation of replacement benchmarks for certain benchmarks in cessation.
PRA Suspends Relevant Guidance Levels on Fixed Rate Lending Limits
PRA published a letter from Mel Beaman, the Director for UK Deposit Takers, to suspend the relevant guidance levels on fixed rate lending limits in the “Specialist Sourcebook” for an initial period of six months, running from August 01, 2020 to January 31, 2021.
BoE Provides Reporting Update on Form AS and Form FV
BoE updated the known issues document for the statistical reporting Forms AS and FV.
