SUMMARY
On December 19, 2018, the Securities and Exchange Commission (“SEC”) proposed rules requiring the application of risk mitigation techniques to uncleared portfolios of security-based swaps by registered security-based swap dealers (“SBSDs”) and registered major security-based swap participants (“MSBSPs” and collectively with SBSDs, “SBS Entities”). The proposed rules would require SBS Entities to:
- periodically reconcile outstanding security-based swaps with applicable counterparties;
- engage in portfolio compression exercises; and
- execute written security-based swap (“SBS”) trading relationship documentation with each of its counterparties prior to, or contemporaneously with, executing an SBS transaction.
