The latest adoption of rules explains how clearing agencies will provide information to the SEC about security-based swaps that the clearing agencies plan to accept for clearing, thus helping the watchdog to establish whether such security-based swaps are required to be cleared.
The US regulator said that the rules were required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which called for a new regulatory framework for trading in over-the-counter derivatives, including swap agreements.
The Dodd-Frank Wall Street Reform and Consumer Protection Act provide an inclusive framework for regulating the over-the-counter swaps markets.
Title VII of the Dodd-Frank Act mandates that security-based swap transactions must be cleared through a clearing agency, if the SEC determines that it must be cleared – unless an exception applies.
SEC Chairman Mary Schapiro said this is an important step in laying the groundwork for the SEC’s ability to determine which security-based swap contracts are required to be cleared.
"This step advances a major goal of the Dodd-Frank Act and the commitment of the G-20 countries to reduce systemic risk by increasing the clearing of over-the-counter derivatives," Schapiro added.
The regulator has also implemented certain rules, which makes it necessary to submit advance notice of changes to their rules, procedures, or operations if the changes could materially affect the nature or level of risk at those clearing agencies.
The SEC said that through clearing agencies, it would be able to monitor transactions, including prices and positions taken by traders.
