SEC Updates Exemptions On Security-Based Swap Activities

The SEC updated certain exemptions and granted certain additional exemptions for security-based swap ("SBS") activities related to SBSs also being "securities" under the federal securities laws.

In its Order, the SEC reviewed a number of exemptions the SEC has provided on SBS activity since the adoption of Dodd-Frank. The SEC made the following specific changes to previously granted relief:

• Foreign Brokers or Dealers. The SEC granted relief from broker-dealer registration to foreign brokers or dealers that (1) engage in SBS dealing with eligible contract participants and (2) engage in (a) Rule 15a-6-compliant securities activities or (b) securities activities that "lack a U.S. jurisdictional nexus." According to the SEC, this relief was granted to clarify a potential issue stemming from the fact that a foreign broker-dealer may be considered a "broker" or "dealer" for certain purposes under the Exchange Act.