Introduction -

On October 18, 2012, the Securities and Exchange Commission (the “SEC”) issued Release No. 34-68071 containing its proposed rules (the “Proposed Rules”) relating to the capital, margin and segregation requirements with respect to security-based swaps (“SBSs”) for security-based swap dealers (“SBSDs”) and major security-based swap participants (“MSBSPs”). The capital and margin requirements of the Proposed Rules apply to SBSDs and MSBSPs that are not subject to the supervision of a prudential regulator whereas the segregation requirements apply to all SBSDs and MSBSPs. The Proposed Rules also affect broker-dealers whether or not they are SBSDs. The original comment period for the Proposed Rules expired 60 days following publication in the Federal Register; the SEC recently extended that comment period until February 22, 2013.

Proposed Rules — Capital Requirements -

Capital Requirements for SBSDs -

The Proposed Rules establish minimum capital requirements by amending Rule 15c3-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and creating new Rule 18a-1 of the Exchange Act. SBSDs would be required to comply with a net liquid assets test modeled on the broker-dealer capital requirements of Rule 15c3-1 although the SEC is seeking comments on alternative approaches. Pursuant to the Proposed Rules, the minimum capital requirements differ for stand-alone SBSDs and SBSDs dually registered as broker-dealers (“Broker-dealer SBSDs”). The minimum capital requirements for an SBSD also vary depending on whether such SBSD had been approved by the SEC to use internal models in calculating its regulatory capital (the “Approved Internal Models”).

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© White & Case LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.