SEC Chair Gensler Highlights Upcoming Requirements for Security-Based Swap Dealers and Major Security-Based Swap Participants: SEC Chair Gary Gensler’s Remarks Before ABA Committee Remind Market Participants of Upcoming Regulatory Changes for Security-Based Swap Dealers and Major Security-Based Swap Participants

Sullivan & Cromwell LLP - September 14, 2021
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In remarks before the American Bar Association’s (“ABA”) Derivatives and Futures Law Committee, Securities and Exchange Commission (“SEC”) Chair Gary Gensler highlighted the upcoming compliance dates for rules under which security-based swap dealers (“SBSDs”) and major security-based swap participants (“major SBSPs”; and, together with SBSDs, “SBS Entities”) will have to register with the SEC and comply with SEC rules applicable to SBSDs. Recent guidance provides that affected market participants should assess whether they meet the relevant thresholds to register as an SBSD or a major SBSP with the SEC. In particular, a person whose dealing activity in security-based swaps engaged in on or after August 6, 2021 exceeds the de minimis threshold will be required to register with the SEC as an SBSD by November 1, 2021. However, once a person meets the definition of an SBSD by exceeding the de minimis threshold, a transitional period, running until two months after the end of the month in which the person crosses the de minimis threshold, applies before the person must register and comply with the SBSD rules. Other market participants that, as a result of their security-based swap activities as of September 30, 2021, meet the major SBSP definition by exceeding the de minimis threshold, must register with the SEC by December 1, 2021. However, similar to the transitional period afforded to SBSDs, a person who meets the definition of a major SBSP by exceeding the de minimis threshold is also granted a transitional period before it is required to register and comply with the applicable rules, running from two months after the end of the quarter in which the person’s activities cross the de minimis threshold. In addition, both SBSDs and major SBSPs must also comply with certain other rules by October 6, 2021, as described below.

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