SEC issues new and amended requirements for security-based swap dealers and broker-dealers

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Jun 21, 2019

On June 21, 2019, the Securities Exchange Commission (SEC) issued a final rule, “Capital, Margin, and Segregation Requirements for Security-Based Swap Dealers and Major Security-Based Swap Participants and Capital and Segregation Requirements for Broker-Dealers.”

According to the SEC’s press release, the final rule:

  • Establishes “minimum capital requirements for security-based swap dealers [SBSDs] and major security-based swap participants [MSBSPs] for which there is not a prudential regulator (nonbank SBSDs and MSBSPs). They also increase the minimum net capital requirements for broker-dealers that use internal models to compute net capital (ANC broker-dealers).  In addition, they establish capital requirements tailored to security-based swaps and swaps for broker-dealers that are not registered as an SBSD or MSBSP to the extent they trade these instruments.” 
  • Establishes “margin requirements for nonbank SBSDs and MSBSPs with respect to non-cleared security-based swaps.”
  • Establishes “segregation requirements for SBSDs and stand-alone broker-dealers for cleared and non-cleared security-based swaps.”
  • Amends “the Commission’s existing cross-border rule to provide a means to request substituted compliance with respect to the capital and margin requirements for foreign SBSDs and MSBSPs, and provide guidance discussing how the Commission will evaluate requests for substituted compliance.” 

For more information, see the press release and final rule on the SEC’s Web site.

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