The SEC on Wednesday recommended establishing registration rules for security-based swaps dealers and major swap participants that also would allow those that are subject to enforcement actions to appeal penalties that ban them from swaps activity.
If ultimately approved by the commission, the rules would allow the Securities and Exchange Commission to directly oversee over-the-counter swaps that derive their underlying value from equity or debt products.
The proposed rules, approved in a 3-2 vote, would implement a directive in the Dodd-Frank Wall Street Reform and Consumer Protection Act that required swaps-execution facilities to register with the SEC. Dodd-Frank also allowed the agency to establish rules for how firms can apply for enforcement waivers.
The proposal also establishes a formal process for the SEC to cancel or revoke swaps dealers’ registration.
In a statement, SEC Commissioner Kara M. Stein, who voted in favor of the proposal, said, “The filings and certifications are a good starting point for the commission’s examination and supervision of this new class of registrants.”
Commissioner Michael S. Piwowar endorsed the registration rules but said the SEC should follow the waiver guidelines of the Commodity Futures Trading Commission, which grants them only to individuals and not entities. However, he said he could have supported waivers for both individuals and entities if each waiver request were put up for a full commission vote, which is not required under the proposal.
The proposal will be open for public comment for 60 days following publication in the Federal Register, expected to be later this week.