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Friday, March 29, 2024 | Back issues
Courthouse News Service Courthouse News Service

The SEC Plans Stricter Rules for Swap Agencies

WASHINGTON (CN) - The Securities and Exchange Commission plans to propose new rules to further regulate important clearing agencies or those involved in security-based swaps, stated an agency press release Wednesday.

The rules would apply to clearing agencies designated as systemically important by the Financial Stability Oversight Council and clearing agencies involved in complex transactions, such as security-based swaps.

Clearing agencies covered by the proposed rules would be subject to new requirements regarding their financial risk management, operations, governance, and disclosures to market participants and the public. The proposal also would establish procedures for the Commission to apply the new requirements to additional clearing agencies.

A securities clearing agency generally acts as a middleman between the parties to a securities transaction, performing a range of services, such as ensuring that funds and securities are correctly transferred between parties and, in some cases, assuming the risks of a party defaulting on a transaction.

Whether a clearing agency is systemically important is based on the value of its transactions, the exposure of its counterparties, relationships with other clearing agencies or payment, clearing or settlement activities, and the effect that the failure of the agency would have on the financial market.

The Dodd-Frank Wall Street Reform and Consumer Protection Act called for more regulation of certain SEC-registered clearing agencies.

The public will have 60 days to comment on the proposed rules after they are published in the Federal Register.

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