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SEC Proposes Actions to Improve Cross-Border Application of Security-Based Swap Requirements

(HedgeCo.Net) The Securities and Exchange Commission is proposing a new package of rule amendments and interpretive guidance to improve the framework for regulating cross-border security-based swaps transactions and market participants.

The proposals are intended to improve the regulatory framework by pragmatically addressing implementation issues and efficiency concerns, and in some cases further harmonizing the regulatory regime governing security-based swaps administered by the Commission with the regulatory regime governing swaps administered by the Commodity Futures Trading Commission (CFTC).

“First, I would like to thank Commissioner Peirce for her leadership on this proposing release. Today’s proposals reflect an important step forward in the Commission’s efforts to stand up the Dodd-Frank Title VII regulatory regime. These proposals preserve important investor and market protections, while at the same time addressing several of the practical implementation challenges that have been identified,” said SEC Chairman Jay Clayton. “Also, I want to thank our colleagues at the SEC as well as CFTC Chairman Giancarlo, Commissioner Quintenz and their colleagues for their efforts and commitment to interagency cooperation.”

Today’s proposing release addresses four key areas:

the use of transactions that have been “arranged, negotiated, or executed” by personnel located in the United States as a trigger for regulating security-based swaps and market participants
the requirement that non-U.S. resident security-based swap dealers and major security-based swap participants certify and provide an opinion of counsel that the Commission can access their books and records and conduct onsite inspections and examinations
the cross-border application of statutory disqualification provisions
the questionnaires or employment applications that security-based swap dealers and major security-based swap participants must maintain with regard to their foreign associated persons

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