The US Securities and Exchange Commission (SEC) is forming a security-based swaps joint venture responsible for coordinating functions related to the regulation of security-based swaps (SBS) and oversight of certain entities that will be required to register with the regulator.
As of November 2021, security-based swaps entities must register with the SEC and will be subject to various requirements, which, among others things, include capital, margin and segregation.
They will also be required to report their security-based swaps transaction data, which will be used for various regulatory purposes, such as monitoring the build-up and concentration of risk exposures, preventing fraud, systemic risk supervision and resolving issues and positions after an institution fails.
Peter Driscoll, director of the division of examinations at the SEC, says: “The SBS joint venture will enable the commission to identify key risks in the SBS market and provide guidance to assist dealers in managing them for better compliance with our regulatory regime implemented pursuant to Title VII of Dodd Frank.”
SEC divisions and offices will be joining for the venture which will be co-lead by Vivi Mazarakis, an acting assistant director in the division of examinations, and Carol McGee, who is the assistant director for the office of derivatives policy in the division of trading and markets.
Participation from staff across the agency will also include the division of enforcement, the division of economic risk and analysis, the office of international affairs and the office of the chief data officer.
The joint venture will be an important part of the agency’s efforts to regulate and oversee the SBS market, says the SEC.
The Commodity Futures Trading Commission (CFTC) oversees other types of swaps such as commodities, currency, and interest rates.
The SEC has also implemented the security-based swaps regulatory regime, which was established by Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Title VII of the Dodd-Frank Act established a comprehensive framework for regulating the over-the-counter swaps markets, with authority divided between the SEC and the CFTC.
SEC chairman Jay Clayton says: “Under the demonstrated leadership and expertise of Vivi and Carol, this cross-agency approach will greatly enhance the agency’s ability to oversee the SBS market and SBS entities, including by enhancing coordination with the CFTC and other regulators.”
Brett Redfearn, director of the division of trading and markets, SEC, adds: “The complexity of regulating the SBS market requires knowledge, commitment, and a multi-division and office approach.
“This effort demonstrates the commission’s commitment to the SBS regime and I am confident that Carol and Vivi will do an outstanding job of ensuring that the Commission is prepared for the November 2021 deadline.”
Image: Andrey_Popov/adobe.stock.com 