Alert March 08, 2011

SEC Reopens Comment Period on Ownership Limitations and Governance Requirements for Security-Based Swap Clearing Agencies, Security-Based Swap Execution Facilities, and National Securities Exchanges with Respect to Security-Based Swaps under Regulation MC

The SEC reopened the period for public comment on proposed Regulation MC under the Securities Exchange Act of 1934, which would impose certain restrictions  with respect to the ownership and voting interests in and the governance of clearing agencies that clear security-based swaps (“security-based swap clearing agencies”), security-based swap execution facilities (“SB SEFs”), and national securities exchanges that post or make available for trading security-based swaps (“SBS exchanges”).  The proposal put forward two alternatives, one that would impose different degrees of voting and governance restrictions on security-based swap clearing agencies and a second that would impose ownership and governance limitations on SB SEFs and SBS exchanges.  The SEC has reopened the comment period in order to allow further public comment in light of two subsequent rule proposals: (a) a proposal regarding the (i) definition of “security-based swap execution facility” and (ii) the registration and regulation of SB SEFs; and (b) proposed rules regarding the registration of clearing agencies and standards for the operation and governance of clearing agencies.  The reopened comment period ends on April 29, 2011.