SEC Seeks Feedback on Swap Dealer Rules Extension
Published Date: 7/15/2025
Notice
Summary
The SEC wants to keep the rules for certain nonbank swap dealers the same but is asking for your thoughts before extending them. These dealers must follow specific risk and capital rules, send notices about money moves, and file loan agreements early. No big changes or costs are expected, but comments are open now to keep things smooth and safe.
Analyzed Economic Effects
7 provisions identified: 1 benefits, 6 costs, 0 mixed.
Use of Internal VaR Models
Stand-alone security-based swap dealers (SBSDs) may apply to the SEC to use internal value-at-risk (VaR) models to compute net capital under Rule 18a-1 (17 CFR 240.18a-1). SBSDs authorized to use internal models must review and update those models and run back-tests to verify model performance.
Required Internal Risk Controls
Stand-alone SBSDs must comply with certain requirements of Exchange Act Rule 15c3-4, including establishing, documenting, and maintaining internal risk management controls to manage market, credit, leverage, liquidity, legal, and operational risks.
30-Day Filing for Subordinated Loans
Stand-alone SBSDs must file two copies of any proposed subordinated loan agreement (including nonconforming agreements) with the Commission at least 30 days before the proposed execution date under paragraph (c)(5) of Appendix D to Rule 18a-1.
Third-Party Custodian Collateral Option
A nonbank SBSD may treat collateral held by a third-party custodian as if the SBSD holds it for initial margin purposes if it executes an account control agreement and keeps written documentation that the agreement would be held legal, valid, binding, and enforceable under applicable law (paragraph (c)(1)(ix)(C)).
Mandatory Information Collection and Cost Estimates
The information collection under Rule 18a-1 is mandatory and aims to ensure stand-alone SBSDs maintain sufficient liquidity and allow Commission monitoring. The notice estimates aggregate initial burden of 4,310 hours and $2,772,334 in initial costs, aggregate annual burden of 28,933 hours, and aggregate annual cost burden of $3,732,600; written comments are requested by September 15, 2025.
Industry Sector Rules for Haircuts
Stand-alone SBSDs that do not use internal models must use a documented, reasonable industry sector classification system to calculate haircuts on credit default swaps under paragraph (c)(1)(vi)(B)(1)(iii) of Rule 18a-1.
Notices for Equity Withdrawals
Under paragraph (h) of Rule 18a-1, stand-alone SBSDs are required to provide the Commission with written notices regarding equity withdrawals.
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