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Statement Regarding Security-Based Swap Rules

Commissioner Daniel M. Gallagher and Commissioner Michael S. Piwowar

Sept. 25, 2015

Recently, Commissioner Aguilar issued a statement calling for the Commission to complete its rules governing the security-based swap market.[1]  We wholeheartedly agree that the Commission needs to prioritize the finalization of these rules.  Although we have many reservations about the construct and purported benefits of Title VII of the Dodd-Frank Act,[2] we strongly believe that the Commission must finish its work in this area, especially given that the CFTC completed its rules almost two years ago.  Despite the excellent work of the staff, there are quite a few rules left to finalize, including those related to clearing and execution facilities, capital, margin, segregation, recordkeeping, and business conduct.  Instead of focusing on completing those rules, the Commission has been asked to consider wholly political Dodd-Frank rules such as the pay ratio proposal.  We believe it is important for the Commission to finalize the Title VII rules because the derivatives markets need regulatory certainty.  The lack of final rules has created a void that impacts Main Street as much as Wall Street.  And, once these rules are finalized, the Commission can and should focus its attention on non-mandated endeavors squarely within the SEC's core mission of protecting investors, facilitating capital formation, and maintaining fair orderly and efficient markets.  The Commission has regrettably wasted all too much time over the last five years prioritizing rules that do nothing to advance this mission. We hope the Commission will make a positive pivot, but based on reports of upcoming rulemakings such as universal proxy and resource extraction, we will not believe it until we see it.

[1] Commissioner Luis A. Aguilar, Finishing the Work of Regulating Security-Based Derivatives (Sept. 16, 2015), available at

[2] Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), Pub. L. 111-203, § 410 (2010).

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