SEC Statement on Certain Provisions of Business Conduct Standards

CFTC, in 2012, adopted business conduct rules for swap dealers and major swap participants. To assist the swaps industry in implementing and complying with the CFTC’s Business Conduct Rules, industry participants developed standardized counterparty relationship. In 2016, pursuant to Section 15F of the Securities Exchange Act of 1934, SEC adopted final rules imposing business conduct standards for security-based swap dealers and major security-based swap participants. SEC endeavored to harmonize its rules with analogous CFTC requirements where possible to create efficiencies for entities that have already established infrastructure for compliance with analogous CFTC requirements. In certain instances, however, the SEC requirements and the associated representations, which would be required under standardized counterparty relationship documentation, diverge from those of the analogous CFTC requirements, which are reflected in the existing standardized counterparty relationship documentation. Market participants have expressed concerns about practical compliance difficulties presented by certain differences. 

The SEC statement is intended to minimize potential market disruptions to the existing counterparty relationships resulting solely from documentation implementation issues that may arise when security-based swap dealers and major security-based swap participants are required to register with SEC. Upon registration with SEC, entities that are also registered with CFTC will be required to comply with both the SEC Business Conduct Standards as well as the analogous rules adopted by CFTC in 2012. 

Related Links

• Press Release
• Statement (PDF)

Effective Date: November 06, 2018

Keywords: Americas, US, Securities, SBSD, MSBSP, Business Conduct, CFTC, SEC