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October 19, 2018

SEC reopened comment period and/or requested additional comments on proposals related to various requirements for Security-Based Swap Dealers (SBSDs), Major Security-Based Swap Participants (MSBSPs), and broker-dealers. Comments should be submitted by November 19, 2018.

SEC is requesting additional comment on the proposed amendment that would establish an additional capital requirement for SBSDs that do not have a prudential regulator. In addition, SEC reopened the comment period and requested additional comment (including potential modifications to proposed rule language) on the proposed amendments and new rules that would: 

  • Establish capital, margin, and segregation requirements for SBSDs and MSBSPs that do not have a prudential regulator
  • Raise minimum net capital requirements and establish liquidity requirements for broker-dealers that are permitted to use internal models when computing net capital (ANC broker-dealers) 
  • Establish the cross-border treatment of security-based swap capital, margin, and segregation requirements

Earlier, in October 2012, SEC had proposed amendments and new rules to establish capital and margin requirements for SBSDs and MSBSPs that do not have a prudential regulator, segregation requirements for SBSDs, and establish notification requirements for SBSDs and MSBSPs relating to segregation, in addition to raising the minimum net capital requirements and establishing liquidity requirements for broker-dealers permitted to use internal models when computing net capital. SEC has extended the comment period once, in addition to reopening it once. Moreover, in May 2013, SEC had proposed provisions to establish the cross-border treatment of security-based swap capital, margin, and segregation requirements. SEC received a number of comment letters in response to the 2012 and 2013 Proposals. Finally, in April 2014, SEC proposed an additional non-bank SBSD capital requirement. SEC received one comment letter in response to the 2014 proposal.

Since publication of the 2012 Proposals, SEC has adopted other rules related to the regulation of the over-the-counter (OTC) derivatives markets pursuant to Title VII of the Dodd-Frank Act. In addition, the prudential regulators and CFTC have adopted or proposed rules under Title VII of the Dodd-Frank Act that are relevant to the Proposals. SEC has carefully considered the comment letters and SEC believes it is prudent to reopen the comment period for the Proposals in light of these comments and regulatory developments. SEC believes the public should have the opportunity to provide comment on the potential economic effects of the Proposals in light of regulatory and market developments since they were published. SEC is also seeking comments on certain aspects of the Proposals for which further information would be particularly helpful to SEC. In particular, SEC is seeking comment on potential rule language that would modify rule text that was in the Proposals. Comment letters received by SEC previously need not be re-submitted, as they will continue to be a part of the public comment file for this rulemaking and considered by SEC.

 

Related Links 

Comment Due Date: November 19, 2018

Keywords: Americas, US, Banking, Securities, Security-based Swaps, Swap Dealers, Swap Participants, Cross-border Treatment, Capital Requirements, Dodd Frank Act, SEC

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