Compliance Update: SEC Adopts Cross-Border Security-based Swap Rules for U.S. Activity

Judges Gavel_Wht BKGD_LROn February 10, the Securities and Exchange Commission (SEC) voted to adopt rules that require a non-U.S. company that uses personnel located in a U.S. branch or office to arrange, negotiate, or execute a security-based swap (SBS) transaction in connection with its dealing activity to include that transaction in determining whether it is required to register as a security-based swap dealer. The rules, adopted under by the Dodd-Frank Wall Street Reform and Consumer Protection Act, would help ensure that both U.S. and foreign dealers are subject to Title VII of the Act when they engage in security-based swap dealing activity in the United States.

“The rules should improve transparency and enhance stability and oversight in the security-based swap market, while reducing potential competitive disparities, lessening the likelihood of market fragmentation, and mitigating the risk that may flow into U.S. financial markets,” said SEC Chairperson Mary Jo White.

The final rules are effective 60 days after publication in the Federal Register, but compliance is not required until the latest of either 12 months following publication in the Federal Register or the SBS Entity Counting Date, which was specified in the SBS Entity Registration Adopting Release.

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