SEC Updates Cleared CDS Exemptions

The SEC adopted changes to the exemptions for certain clearing agencies and broker-dealer/futures commission merchants concerning the portfolio margining of swaps and security-based swaps ("SBS") that are cleared credit default swaps ("CDS"). The exemption supersedes and replaces the SEC's December 2012 Order Granting Conditional Exemptions under the Securities Exchange Act of 1934 in Connection with Portfolio Margining of Swaps and Security-Based Swaps  (or the "December 2012 Order").

As previously covered, the exemption is applicable to (i) clearing agencies that are dually registered with the SEC and the CFTC as clearing agencies and derivatives clearing organizations ("clearing agencies / DCOs") and (ii) broker-dealers that are dually registered with the SEC and CFTC as broker-dealers and futures commission merchants (each, a "BD/FCM").