SEC Finalizes Capital, Margin And Segregation Requirements

As a further step towards the implementation of its security-based swap regime, the Securities and Exchange Commission (SEC) has adopted a number of long-awaited capital, margin and segregation requirements for security-based swap dealers (SBSDs) and major security-based swap participants (MSBSPs).¹ The SEC has also provided alternative procedures under which certain swap dealers registered with the Commodity Futures Trading Commission (CFTC) and foreign SBSDs and MSBSPs can request substituted compliance from the SEC with respect to the requirements.

The final rules were adopted in accordance with Title VII of the Dodd-Frank Wall Street Reform and Protection Act, which established a framework for the regulation of swaps and security-based swaps, among other things. The SEC's final rules differ in significant respects from the requirements applicable to swap dealers under CFTC rules² and rules adopted by the prudential regulators.³ Although they have been finalized,