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U.S. Securities and Exchange Commission

Speech by SEC Chairman:
Statement at SEC Open Meeting: Item 2 — Registration of Securities-Based Swap Dealers and Major Security-Based Swap Participants


SEC Chairman Mary Schapiro

U.S. Securities and Exchange Commission

Washington, D.C.
October 12, 2011

We will next consider a proposal that would establish registration rules for security-based swap dealers and major security-based swap participants.

As with our prior proposals regarding security-based swaps, today’s proposal stems from Title VII of the Dodd-Frank Act. Among other things, the Act authorizes the Commission to put in place a regulatory framework for entities that effect transactions in these derivatives.

Registering the major market participants in the largely unregulated security-based swap markets is a critical step toward better protecting investors. Today’s proposal draws from our experience with registration rules regarding broker-dealers — rules that are familiar to many market participants.

However, there are some differences. For instance, today’s proposal would require that a senior officer of each security-based swap registrant provide a certification to the Commission. That proposed certification would provide assurance as to the registrant’s financial, operational, and compliance capabilities. We ask a series of detailed questions about this approach, and whether there are other ways to fulfill the purpose of such a certification.

Additionally, although the proposed rules and forms are not identical to those proposed by the CFTC for a number of reasons, they are similar in many significant ways. Importantly, both proposed registration regimes would provide for a conditional or phased implementation to allow firms to register even before full compliance is required.

In addition, firms that must register with both the CFTC and the SEC would — under the proposal — be able to prepare a shortened registration form.

After proposing all of the key rules under Title VII, we intend to seek public comment on a detailed implementation plan that will permit a roll-out of the new securities-based swap requirements in a logical, progressive, and efficient manner, while minimizing unnecessary disruption and costs to the markets. We expect to propose the last of the Title VII rules — rules regarding capital, margin, segregation, and recordkeeping requirements for security-based swaps — in the near future, as well as a proposed approach to address cross-border security-based swap transactions and the regulatory treatment of non-U.S. persons who act in capacities regulated under the Dodd-Frank Act.

Before I turn to David Blass from the Division of Trading and Markets to discuss the proposed rules, I would like to thank David, as well as Joe Furey, Bonnie Gauch, Darren Vieira, and Nathaniel Stankard from the Division of Trading and Markets for their hard work on this rulemaking.

I also would like to thank Meridith Mitchell, Paula Jenson and Uzma Wahhab from the Office of General Counsel; Jennifer Marietta-Westberg, Scott Bauguess, Jeff Naumann and Charles Dale from the Division of Risk, Strategy, and Financial Innovation; Norm Champ, John Polise, Juanita Bishop-Hamlet, Judy Lee, and Christine Sibille from the Office of Compliance Inspections and Examinations; Jeffrey Cohan in the Office of the Chief Accountant; Jason Anthony in the Division of Enforcement; and Kathleen Kelley in the Office of International Affairs.

And finally, of course, I would like to thank my colleagues on the Commission and their counsels for their work and comments on the proposed rules.

And now I will turn it over to David to hear more about the Division’s recommendations.



Modified: 10/12/2011