Uncleared Security-Based Swaps: SEC Proposes Rules Requiring the Application of Risk Mitigation Techniques to Uncleared Portfolios of Security-Based Swaps

Sullivan & Cromwell LLP - January 17, 2019
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On December 19, 2018, the Securities and Exchange Commission proposed rules requiring the application of risk mitigation techniques to uncleared portfolios of security-based swaps by registered security-based swap dealers and registered major security-based swap participants (“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 trading relationship documentation with each of its counterparties prior to, or contemporaneously with, executing a security-based swap transaction.