SEC Staff at the Division of Trading and Markets issued guidance designed to help non-U.S. swap dealers and participants request substituted compliance under a foreign jurisdiction.
According to the Division staff, the guidance helps non-U.S. security-based swap dealers and major security-based swap participants seeking to defer to a foreign jurisdiction's requirements rather than the Exchange Act Section 15F. The guidance is intended to help applicants by (i) posing relevant questions regarding the relevant foreign requirements in comparison with the Exchange Act requirements and (ii) explaining the relevant Exchange Act requirements in detail.
Specifically, the staff provided information to non-U.S. swap dealers and participants on:
- risk control, specifying the related (i) capital, (ii) margin, (iii) risk management system, and (iv) trade acknowledgment and verification requirements;
- recordkeeping and reporting, highlighting the (i) record creation, (ii) record maintenance, and (iii) reporting and notice requirements;
- internal supervision and compliance, including the (i) supervision, (ii) conflict of interest and (iii) chief compliance officer requirements;
- counterparty protection regarding (i) fair and balanced communications, (ii) disclosure of certain risks, characteristics, incentives and conflicts, (iii) daily mark disclosure, (iv) "know your counterparty", (v) suitability of recommendations and (vi) disclosure of clearing rights requirements; and
- additional requirements concerning (i) eligible contract participant verification and (ii) special entities and political contributions.