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United States Code (Last Updated: May 24, 2014) |
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Title 15. COMMERCE AND TRADE |
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Chapter 2B. SECURITIES EXCHANGES |
§ 78o–10. Registration and regulation of security-based swap dealers and major security-based swap participants
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(a) Registration (1) Security-based swap dealers It shall be unlawful for any person to act as a security-based swap dealer unless the person is registered as a security-based swap dealer with the Commission.
(2) Major security-based swap participants It shall be unlawful for any person to act as a major security-based swap participant unless the person is registered as a major security-based swap participant with the Commission.
(b) Requirements (1) In general A person shall register as a security-based swap dealer or major security-based swap participant by filing a registration application with the Commission.
(2) Contents (A) In general The application shall be made in such form and manner as prescribed by the Commission, and shall contain such information, as the Commission considers necessary concerning the business in which the applicant is or will be engaged.
(B) Continual reporting A person that is registered as a security-based swap dealer or major security-based swap participant shall continue to submit to the Commission reports that contain such information pertaining to the business of the person as the Commission may require.
(3) Expiration Each registration under this section shall expire at such time as the Commission may prescribe by rule or regulation.
(4) Rules Except as provided in subsections (d) and (e), the Commission may prescribe rules applicable to security-based swap dealers and major security-based swap participants, including rules that limit the activities of non-bank security-based swap dealers and major security-based swap participants.
(5) Transition Not later than 1 year after
July 21, 2010 , the Commission shall issue rules under this section to provide for the registration of security-based swap dealers and major security-based swap participants.(6) Statutory disqualification Except to the extent otherwise specifically provided by rule, regulation, or order of the Commission, it shall be unlawful for a security-based swap dealer or a major security-based swap participant to permit any person associated with a security-based swap dealer or a major security-based swap participant who is subject to a statutory disqualification to effect or be involved in effecting security-based swaps on behalf of the security-based swap dealer or major security-based swap participant, if the security-based swap dealer or major security-based swap participant knew, or in the exercise of reasonable care should have known, of the statutory disqualification.
(c) Dual registration (1) Security-based swap dealer Any person that is required to be registered as a security-based swap dealer under this section shall register with the Commission, regardless of whether the person also is registered with the Commodity Futures Trading Commission as a swap dealer.
(2) Major security-based swap participant Any person that is required to be registered as a major security-based swap participant under this section shall register with the Commission, regardless of whether the person also is registered with the Commodity Futures Trading Commission as a major swap participant.
(d) Rulemaking (1) In general The Commission shall adopt rules for persons that are registered as security-based swap dealers or major security-based swap participants under this section.
(2) Exception for prudential requirements (A) In general The Commission may not prescribe rules imposing prudential requirements on security-based swap dealers or major security-based swap participants for which there is a prudential regulator.
(B) Applicability Subparagraph (A) does not limit the authority of the Commission to prescribe rules as directed under this section.
(e) Capital and margin requirements (1) In general (A) Security-based swap dealers and major security-based swap participants that are banks Each registered security-based swap dealer and major security-based swap participant for which there is not a prudential regulator shall meet such minimum capital requirements and minimum initial and variation margin requirements as the prudential regulator shall by rule or regulation prescribe under paragraph (2)(A).
(B) Security-based swap dealers and major security-based swap participants that are not banks Each registered security-based swap dealer and major security-based swap participant for which there is not a prudential regulator shall meet such minimum capital requirements and minimum initial and variation margin requirements as the Commission shall by rule or regulation prescribe under paragraph (2)(B).
(2) Rules (A) Security-based swap dealers and major security-based swap participants that are banks The prudential regulators, in consultation with the Commission and the Commodity Futures Trading Commission, shall adopt rules for security-based swap dealers and major security-based swap participants, with respect to their activities as a swap dealer or major swap participant, for which there is a prudential regulator imposing— (i) capital requirements; and (ii) both initial and variation margin requirements on all security-based swaps that are not cleared by a registered clearing agency. (B) Security-based swap dealers and major security-based swap participants that are not banks The Commission shall adopt rules for security-based swap dealers and major security-based swap participants, with respect to their activities as a swap dealer or major swap participant, for which there is not a prudential regulator imposing— (i) capital requirements; and (ii) both initial and variation margin requirements on all swaps that are not cleared by a registered clearing agency. (C) Capital In setting capital requirements for a person that is designated as a security-based swap dealer or a major security-based swap participant for a single type or single class or category of security-based swap or activities, the prudential regulator and the Commission shall take into account the risks associated with other types of security-based swaps or classes of security-based swaps or categories of security-based swaps engaged in and the other activities conducted by that person that are not otherwise subject to regulation applicable to that person by virtue of the status of the person.
(3) Standards for capital and margin (A) In general To offset the greater risk to the security-based swap dealer or major security-based swap participant and the financial system arising from the use of security-based swaps that are not cleared, the requirements imposed under paragraph (2) shall— (i) help ensure the safety and soundness of the security-based swap dealer or major security-based swap participant; and (ii) be appropriate for the risk associated with the non-cleared security-based swaps held as a security-based swap dealer or major security-based swap participant. (B) Rule of construction (i) In general Nothing in this section shall limit, or be construed to limit, the authority— (I) of the Commission to set financial responsibility rules for a broker or dealer registered pursuant to section 78o(b) of this title (except for section 78o(b)(11) thereof) in accordance with section 78o(c)(3) of this title; or (II) of the Commodity Futures Trading Commission to set financial responsibility rules for a futures commission merchant or introducing broker registered pursuant to section 4f(a) of the Commodity Exchange Act [7 U.S.C. 6f(a)] (except for section 4f(a)(3) [7 U.S.C. 6f(a)(3)] thereof) in accordance with section 4f(b) of the Commodity Exchange Act [7 U.S.C. 6f(b)]. (ii) Futures commission merchants and other dealers A futures commission merchant, introducing broker, broker, or dealer shall maintain sufficient capital to comply with the stricter of any applicable capital requirements to which such futures commission merchant, introducing broker, broker, or dealer is subject to under this chapter or the Commodity Exchange Act [7 U.S.C. 1 et seq.].
(C) Margin requirements In prescribing margin requirements under this subsection, the prudential regulator with respect to security-based swap dealers and major security-based swap participants that are depository institutions, and the Commission with respect to security-based swap dealers and major security-based swap participants that are not depository institutions shall permit the use of noncash collateral, as the regulator or the Commission determines to be consistent with— (i) preserving the financial integrity of markets trading security-based swaps; and (ii) preserving the stability of the United States financial system. (D) Comparability of capital and margin requirements (i) In general The prudential regulators, the Commission, and the Securities and Exchange Commission shall periodically (but not less frequently than annually) consult on minimum capital requirements and minimum initial and variation margin requirements.
(ii) Comparability The entities described in clause (i) shall, to the maximum extent practicable, establish and maintain comparable minimum capital requirements and minimum initial and variation margin requirements, including the use of noncash collateral, for— (I) security-based swap dealers; and (II) major security-based swap participants. (f) Reporting and recordkeeping (1) In general Each registered security-based swap dealer and major security-based swap participant— (A) shall make such reports as are required by the Commission, by rule or regulation, regarding the transactions and positions and financial condition of the registered security-based swap dealer or major security-based swap participant; (B) (i) for which there is a prudential regulator, shall keep books and records of all activities related to the business as a security-based swap dealer or major security-based swap participant in such form and manner and for such period as may be prescribed by the Commission by rule or regulation; and (ii) for which there is no prudential regulator, shall keep books and records in such form and manner and for such period as may be prescribed by the Commission by rule or regulation; and (C) shall keep books and records described in subparagraph (B) open to inspection and examination by any representative of the Commission. (2) Rules The Commission shall adopt rules governing reporting and recordkeeping for security-based swap dealers and major security-based swap participants.
(g) Daily trading records (1) In general Each registered security-based swap dealer and major security-based swap participant shall maintain daily trading records of the security-based swaps of the registered security-based swap dealer and major security-based swap participant and all related records (including related cash or forward transactions) and recorded communications, including electronic mail, instant messages, and recordings of telephone calls, for such period as may be required by the Commission by rule or regulation.
(2) Information requirements The daily trading records shall include such information as the Commission shall require by rule or regulation.
(3) Counterparty records Each registered security-based swap dealer and major security-based swap participant shall maintain daily trading records for each counterparty in a manner and form that is identifiable with each security-based swap transaction.
(4) Audit trail Each registered security-based swap dealer and major security-based swap participant shall maintain a complete audit trail for conducting comprehensive and accurate trade reconstructions.
(5) Rules The Commission shall adopt rules governing daily trading records for security-based swap dealers and major security-based swap participants.
(h) Business conduct standards (1) In general Each registered security-based swap dealer and major security-based swap participant shall conform with such business conduct standards as prescribed in paragraph (3) and as may be prescribed by the Commission by rule or regulation that relate to— (A) fraud, manipulation, and other abusive practices involving security-based swaps (including security-based swaps that are offered but not entered into); (B) diligent supervision of the business of the registered security-based swap dealer and major security-based swap participant; (C) adherence to all applicable position limits; and (D) such other matters as the Commission determines to be appropriate. (2) Responsibilities with respect to special entities (A) Advising special entities A security-based swap dealer or major security-based swap participant that acts as an advisor to (C)(i), the prudential regulator may initiate an enforcement proceeding.
(ii) Initiation of enforcement proceeding by Commission If the prudential regulator does not initiate an enforcement proceeding before the end of the 90-day period beginning on the date on which the prudential regulator receives a written report under subsection 4 (C)(ii), the Commission may initiate an enforcement proceeding.
(2) Censure, denial, suspension; notice and hearing The Commission, by order, shall censure, place limitations on the activities, functions, or operations of, or revoke the registration of any security-based swap dealer or major security-based swap participant that has registered with the Commission pursuant to subsection (b) if the Commission finds, on the record after notice and opportunity for hearing, that such censure, placing of limitations, or revocation is in the public interest and that such security-based swap dealer or major security-based swap participant, or any person associated with such security-based swap dealer or major security-based swap participant effecting or involved in effecting transactions in security-based swaps on behalf of such security-based swap dealer or major security-based swap participant, whether prior or subsequent to becoming so associated— (A) has committed or omitted any act, or is subject to an order or finding, enumerated in subparagraph (A), (D), or (E) of paragraph (4) of section 78o(b) of this title; (B) has been convicted of any offense specified in subparagraph (B) of such paragraph (4) within 10 years of the commencement of the proceedings under this subsection; (C) is enjoined from any action, conduct, or practice specified in subparagraph (C) of such paragraph (4); (D) is subject to an order or a final order specified in subparagraph (F) or (H), respectively, of such paragraph (4); or (E) has been found by a foreign financial regulatory authority to have committed or omitted any act, or violated any foreign statute or regulation, enumerated in subparagraph (G) of such paragraph (4). (3) Associated persons With respect to any person who is associated, who is seeking to become associated, or, at the time of the alleged misconduct, who was associated or was seeking to become associated with a security-based swap dealer or major security-based swap participant for the purpose of effecting or being involved in effecting security-based swaps on behalf of such security-based swap dealer or major security-based swap participant, the Commission, by order, shall censure, place limitations on the activities or functions of such person, or suspend for a period not exceeding 12 months, or bar such person from being associated with a security-based swap dealer or major security-based swap participant, if the Commission finds, on the record after notice and opportunity for a hearing, that such censure, placing of limitations, suspension, or bar is in the public interest and that such person— (A) has committed or omitted any act, or is subject to an order or finding, enumerated in subparagraph (A), (D), or (E) of paragraph (4) of section 78o(b) of this title; (B) has been convicted of any offense specified in subparagraph (B) of such paragraph (4) within 10 years of the commencement of the proceedings under this subsection; (C) is enjoined from any action, conduct, or practice specified in subparagraph (C) of such paragraph (4); (D) is subject to an order or a final order specified in subparagraph (F) or (H), respectively, of such paragraph (4); or (E) has been found by a foreign financial regulatory authority to have committed or omitted any act, or violated any foreign statute or regulation, enumerated in subparagraph (G) of such paragraph (4). (4) Unlawful conduct It shall be unlawful— (A) for any person as to whom an order under paragraph (3) is in effect, without the consent of the Commission, willfully to become, or to be, associated with a security-based swap dealer or major security-based swap participant in contravention of such order; or (B) for any security-based swap dealer or major security-based swap participant to permit such a person, without the consent of the Commission, to become or remain a person associated with the security-based swap dealer or major security-based swap participant in contravention of such order, if such security-based swap dealer or major security-based swap participant knew, or in the exercise of reasonable care should have known, of such order.
References In Text
This chapter, referred to in subsecs. (e)(3)(B)(ii), (j)(5)(A), (6), (k)(2)(E), (3)(A)(i), and (l)(1)(B), (C), was in the original “this title”, and this chapter, referred to in subsec. (h)(3)(D), (5)(B), was in the original “this Act”. See References in Text note set out under section 78a of this title.
The Commodity Exchange Act, referred to in subsec. (e)(3)(B)(ii), is act Sept. 21, 1922, ch. 369, 42 Stat. 998, which is classified generally to chapter 1 (§ 1 et seq.) of Title 7, Agriculture. For complete classification of this Act to the Code, see section 1 of Title 7 and Tables.
The Employee Retirement Income Security Act of 1974, referred to in subsec. (h)(5)(A)(i)(VII), is Pub. L. 93–406,
Subtitle B of the Wall Street Transparency and Accountability Act of 2010, referred to in subsec. (l)(1)(A), is subtitle B (§§ 761–774) of title VII of Pub. L. 111–203,
Effective Date
Section effective on the later of 360 days after