Final SEC Rules on Business Conduct Standards for Security-Based Swap Dealers and Major Security-Based Swap Participants
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- On May 13, 2016, the Federal Register published the final rules of the Securities and Exchange Commission (“SEC”) on business conduct standards and chief compliance officer (“CCO”) requirements for Security-Based Swap Dealers (“SBSDs”) and Major Security-Based Swap Participants (“MSBSPs”).
- The final rules impose a number of duties on SBSDs and MSBSPs, including a duty to conduct "know your counterparty" due diligence, material information disclosure requirements and fair dealing requirements in communication with counterparties. An enhanced protection system is further mandated for transactions between SBSDs and MSBSPs with certain "Special Entities" such as ERISA plans, governmental entities, governmental plans and endowments.
- The compliance date of the final rules will only commence after the SEC finalizes other regulations applicable to SBSDs and MSBSPs, such as registration, capital and margin rules.