US SEC unveils rules to better oversee the execution of security-based swaps


WASHINGTON, April 6 (Reuters) – A U.S. market regulator voted on Wednesday to propose new rules that would require platforms that execute securities swap transactions to register with the agency in a bid to increase the transparency of OTC derivatives. market.

The U.S. Securities and Exchange Commission’s (SEC) proposals would fulfill a mandate under the Dodd-Frank Financial Reform Act, passed in the aftermath of the 2007-2009 global financial crisis, to bring clearer oversight to the opaque multi-trillion dollar derivatives market. , says the agency.

The measures, which are out for public comment, would require platforms known as swaps execution facilities (SEFs) to register with the SEC and see the agency more tightly regulate platforms that trade swaps. based on titles.

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Wednesday’s set of proposals, known as the Regulatory Exchange Execution, was passed unanimously by the agency’s three Democratic officials and its only Republican commissioner.

They would better align the SEC rules with a similar but more sweeping rule introduced by the Commodities Future Trading Commission (CFTC).

While the CFTC oversees all financial contracts in which two counterparties agree to exchange or “swap” payments with each other as a result of changes in interest rates or commodity prices, the rules of the SEC would focus on security-based swaps or credit default swaps. .

SEC Chairman Gary Gensler said the rules would bring buyers and sellers together with transparent pricing before trading, reduce risk in the market and ultimately protect investors.

The new SEC proposals would see SEFs implement a version of the so-called trade execution requirement – ​​and its cross-border application – that makes it illegal to engage in a swap transaction unless it is first submitted for clearing to a derivatives clearing organization.

The move is intended to mitigate conflicts of interest in newly registered SEFs, exchanges and clearing agencies and would promote competition and market integrity, the SEC said.

The measures would not apply to platforms already registered with the SEC as a clearing agency and those whose operations are designed to improve the accuracy of end-of-day valuations, he added.

Industry groups have welcomed new proposals from the SEC to strengthen the regulatory framework.

Providing broader access to all market participants and harmonizing the regulatory framework with the CFTC would promote “more fair, open, competitive and transparent markets”, said Bryan Corbett, who heads the Managed Funds Association, a Washington-based group. representing hedge funds.

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Reporting by Katanga Johnson in Washington; Editing by Michelle Price, Mark Potter, Kirsten Donovan and Nick Macfie

Our standards: The Thomson Reuters Trust Principles.

Katanga Johnson

Washington-based journalist covering U.S. regulation at the Securities and Exchange Commission and the Consumer Financial Protection Bureau, previously e3xperience in Ecuador, alumnus of Morehouse College and the Medill School of Journalism at Northwestern University.


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