The SEC final rules governing security-based swap activity in a cross-border context and the associated deadlines were published in the Federal Register.

As previously covered, the final amendments will, among other things:

  • provide guidance as to when security-based swap transactions are considered to have been "arranged" or "negotiated" by U.S. personnel (including as to what it means to provide "market color"), while requiring that such transactions be reported (other than for certain inter-dealer security-based swaps);

  • provide two alternative amendments to SEA Rule 3a71-3 to add an exception to "arranged, negotiated or executed" ("ANE") requirements where the U.S. personnel are employees of (i) a registered security-based swap dealer ("SBSD") or (ii) a registered broker-dealer;

  • establish a cap on certain inter-dealer ANE activities of $50 billion;

  • amend the certification and opinion of counsel requirements in SEA Rule 15Fb2-4, and extend the filing time for SBSDs to submit certification and opinion of counsel;

  • amend SEC Rule of Practice 194 to exclude certain non-U.S. employees involved only in soliciting business from non-U.S. persons from the application of statutory disqualification provisions; and

  • modify recordkeeping requirements for SBSDs relating to questionnaires or applications for employment under proposed SEA Rule 18a-5 to provide that (1) SBSDs are not required to maintain a questionnaire for a person excluded from the prohibition in SEA Section 15F(b)(6) and (2) certain information that may not be available under applicable law need not be obtained.

Effective and Compliance Dates:

  • The final rule is effective on April 6, 2020 (the "Effective Date").

  • The compliance date for registration of SBSDs will be October 6, 2021 (the "Registration Compliance Date").

  • The compliance date for amendments to Rule 3a71-3 will be two months prior to the Registration Compliance Date.

  • The compliance date for amendments to Rules 18a-5 and 15Fb2-1 will be the Registration Compliance Date.

  • The compliance date for amendments to Rule 0-13 and Rule of Practice 194 will be the Effective Date.

  • The compliance date for a number of other SBS rules will be the Registration Compliance Date, including (i) segregation, capital and margin, (ii) SBSD recordkeeping and reporting, (iii) business conduct standards and (iv) trade acknowledgment and verification requirements.

  • Reporting: The release provides that, for four years after the compliance date for Regulation SBSR ("Reporting and Dissemination of Security-Based Swap Information") for an asset class, certain reporting rules will not provide a basis for enforcement action.


Given that the rules took some time to be published in the Federal Register (they were initially put out by the SEC in mid-December), the SBSD registration is somewhat later than initially anticipated. October 6, 2021 is the target date.