On April 29, the Securities and Exchange Commission proposed several changes to its rules for applying the swaps-related provisions of Dodd-Frank to non-U.S. entities that conduct dealing activity in the U.S.
The proposed rules, which all five SEC commissioners voted for, would add an important element to the SEC’s framework for regulating cross-border trading in swaps that fall under the SEC’s jurisdiction. These swaps include equity swaps and credit default swaps based on individual corporations.
According to a summary prepared by SEC staff, the proposed rules would apply certain Dodd-Frank requirements if a non-U.S. dealer “arranges, negotiates or executes” any trades using its personnel in the U.S. Those requirements include trade reporting standards and swap dealer threshold calculations, but in contrast to the CFTC’s rules in this area, mandatory clearing or mandatory trading requirements would not apply.
SEC Chairman Mary Jo White said she hopes that the proposal will be a “significant step” in U.S. regulation of cross-border trading despite the differences with the CFTC’s approach. The deadline for submitting comments is July 13.