The U.S. Securities and Exchange Commission (SEC) is considering a new Regulation SE under the Securities Exchange Act of 1934 regarding security-based swap execution facilities (SBSEFs).
The rule would create a regime for the registration and regulation of SBSEFs. The new regulatory framework was one of the major reforms required under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) relating to the over-the-counter derivatives market.
“This proposal would increase the transparency and integrity of the traditionally opaque over-the-counter security-based swap market, fulfilling a mandate under the Dodd-Frank Act of 2010 to register and regulate the platforms that trade these instruments,” SEC Chair Gary Gensler said, indicating the proposal would also create a framework for the registration of security-based swap execution facilities, based upon the 14 core principles for the entities spelled out in the Dodd-Frank Act.
“This framework would harmonize with the swap execution facility framework promulgated by our sibling agency, the Commodity Futures Trading Commission,” he said.
Per the SEC, the public comment period is slated to remain open for 60 days after publication of the proposing release on the SEC’s website or 30 days following publication of the proposing release in the Federal Register, whichever period is longer.
The proposed action would implement the Exchange Act’s trade execution requirement for security-based swaps and address the cross-border application of that requirement, if adopted, the SEC said.
The effort would additionally promote consistency between proposed Regulation SE and existing rules under the Exchange Act.