SEC Adopts Swaps Regulation Including CEO and CCO Certifications
The SEC adopted new rules implementing a registration and regulatory regime for security-based swap dealers (SWDs) and major security-based swap participants (SWPs), as required by the Dodd-Frank Act. The rules include a series of registration forms depending upon the nature of the entity. The new regime requires annual certifications by (i) a senior officer that the firm has adopted written policies and procedures reasonably designed to prevent violations of the securities laws and (ii) a Chief Compliance Officer that no person involved is subject to a statutory disqualification. The new rules go into effect 60 days after publication. For complete definitions of SWDs and SWPs subject to the new rules, see the SEC’s release last year titled “Application of “Security-Based Swap Dealer” and “Major Security-Based Swap Participant” Definitions to Cross-Border Security-Based Swap Activities” (https://www.sec.gov/rules/final/2014/34-72472.pdf).
OUR TAKE: The SEC has imposed a complete regulatory regime on a previously unregulated market segment. Firms will need to engage compliance teams and lawyers to implement and comply.