SEC adopts new requirements under the Dodd-Frank Act
26 June 2019 Washington DC
Image: Shutterstock
The Securities and Exchange Commission (SEC) has adopted a series of regulations and requirements under Title VII of the Dodd-Frank Act.
The new requirements will affect security-based swap dealers (SBSDs) and swap market participants and aim to develop risk mitigation practices.
The rules in question under title VII establish minimum capital requirements for SBSDs (and increase the requirements for broker-dealers using internal models to calculate net capital), establish margin requirements for nonbank SBSDs, and establish segregation requirements for SBSDs and individual broker-dealers for both cleared and non-cleared security-based swaps.
Furthermore, the new regulations amend the SEC’s existing cross-border rules relating to compliance requests for capital and margin requirements for foreign SBSDs.
Jay Clayton, chairman of the SEC, commented: “These rules help ensure that the firms who are at the centre of the SBSD market manage counterparty risk appropriately and in so doing protect investors and the market more generally.”
He continued: “Our colleagues at the SEC, including our teams in the division of trading and markets and the division of economic and risk analysis, brought their extensive knowledge and expertise to bear in crafting these rules.”
Commissioner Hester Peirce added: “These final rules are designed to ensure the financial integrity of dealers at the centre of the critically important security-based swap market and represent an enormous effort on the part of our staff.”
The new requirements will affect security-based swap dealers (SBSDs) and swap market participants and aim to develop risk mitigation practices.
The rules in question under title VII establish minimum capital requirements for SBSDs (and increase the requirements for broker-dealers using internal models to calculate net capital), establish margin requirements for nonbank SBSDs, and establish segregation requirements for SBSDs and individual broker-dealers for both cleared and non-cleared security-based swaps.
Furthermore, the new regulations amend the SEC’s existing cross-border rules relating to compliance requests for capital and margin requirements for foreign SBSDs.
Jay Clayton, chairman of the SEC, commented: “These rules help ensure that the firms who are at the centre of the SBSD market manage counterparty risk appropriately and in so doing protect investors and the market more generally.”
He continued: “Our colleagues at the SEC, including our teams in the division of trading and markets and the division of economic and risk analysis, brought their extensive knowledge and expertise to bear in crafting these rules.”
Commissioner Hester Peirce added: “These final rules are designed to ensure the financial integrity of dealers at the centre of the critically important security-based swap market and represent an enormous effort on the part of our staff.”
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