The SEC issued rule proposals related to the mandatory clearing of security-based swaps pursuant to the Dodd-Frank Act. The first proposal relates primarily to the processes by which a clearing agency submits to the SEC a proposal for a security-based swap that the clearing agency intends to clear, but also addresses the filing responsibilities of clearing agencies that are designated as systemically important and the process by which self-regulatory organizations seek approval of rule changes from the SEC. The second proposal relates to the “end-user clear exception” from mandatory clearing of security-based swaps that applies where one party to a security-based swap is not a financial entity, is using security-based swaps to hedge or mitigate commercial risk, and notifies the SEC how it generally meets its financial obligations associated with entering into non-cleared security-based swaps. Comments on the first proposal are due 45 days after its publication in the Federal Register. Comments on the second proposal are due by February 4, 2011.
Alert December 21, 2010