SEC Extends Swap Rules: Big Firms Keep Calm
Published Date: 7/15/2025
Notice
Summary
The SEC wants to keep the rules for certain big financial players called nonbank major security-based swap participants (MSBSPs) the same, making sure they keep enough money and manage risks well. This affects up to 5 firms, who’ll spend about 2,000 hours setting up risk controls and 250 hours each year keeping them updated. No big changes or new costs, just a heads-up to keep the system running smoothly!
Analyzed Economic Effects
6 provisions identified: 0 benefits, 6 costs, 0 mixed.
Must Keep Positive Tangible Net Worth
If you are a nonbank major security-based swap participant (nonbank MSBSP), Rule 18a-2 requires you to have and maintain positive tangible net worth at all times. This requirement applies to the up to 5 nonbank MSBSP firms the SEC estimates may register.
Required Risk Management Controls
Nonbank MSBSPs must establish, document, and maintain systems of internal risk management controls covering market, credit, leverage, liquidity, legal, and operational risks and must comply with Exchange Act Rule 15c3-4. The SEC expects these requirements to apply to up to 5 nonbank MSBSP firms.
Large Implementation Time Burden
The SEC estimates each nonbank MSBSP will spend about 2,000 hours to implement the required risk management system (5 firms = 10,000 hours one-time). Annualized over 3 years this is about 3,333 hours industry-wide, plus an ongoing 250 hours per firm per year (1,250 hours industry-wide), for a total annualized recordkeeping hour burden of about 4,583 hours per year.
Consultant Fees for Implementation
The SEC estimates each firm will hire outside consultants for about 200 hours at about $596 per hour, costing approximately $119,200 per firm one-time (5 firms = $596,000 industry-wide), annualized to approximately $198,667 per year over 3 years.
Total Annualized Industry Cost Burden
The SEC totals the annualized industry-wide recordkeeping and external costs at approximately $327,834 per year when consultant and IT costs are combined and annualized over 3 years.
Estimated Information Technology Costs
Nonbank MSBSPs may incur IT start-up costs; the SEC estimates about $16,000 in one-time hardware/software costs per firm (5 firms = $80,000 industry-wide, annualized to ~$26,667/year) and ongoing IT costs averaging $20,500 per firm per year (5 firms = $102,500 industry-wide), for an annualized IT cost total of about $129,167 per year.
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