February 15, 2019 – Federal Register Recent Federal Regulation Documents

In this document, the Commission amends its part 36 jurisdictional separations rules by extending for up to six years the freeze of separations category relationships and allocation factors that it originally adopted in 2001. As a result, the freeze will remain in effect until the earlier of December 31, 2024, or the completion of comprehensive reform of the part 36 jurisdictional separations rules. The Commission also amends its part 36 jurisdictional separations rules by providing rate-of-return carriers that elected to freeze their separations category relationships in 2001 a one-time opportunity to unfreeze and update those relationships so that they can categorize their costs based on current circumstances.

The Securities and Exchange Commission (``SEC'' or ``Commission'') is proposing rules that would require the application of specific risk mitigation techniques to portfolios of security-based swaps not submitted for clearing. In particular, the proposal would establish requirements for each registered security-based swap dealer (``SBS dealer'') and each registered major security-based swap participant (``major SBS participant'') (each SBS dealer and each major SBS participant hereafter referred to as an ``SBS Entity'' and together referred to as ``SBS Entities'') with respect to, among other things, reconciling outstanding security-based swaps with applicable counterparties on a periodic basis, engaging in certain forms of portfolio compression exercises, as appropriate, and executing written security-based swap trading relationship documentation with each of its counterparties prior to, or contemporaneously with, executing a security-based swap transaction. In addition, the Commission is proposing an interpretation to address the application of the portfolio reconciliation, portfolio compression, and trading relationship documentation requirements to cross-border security-based swap activities and is proposing to amend Rule 3a71-6 to address the potential availability of substituted compliance in connection with those requirements. Moreover, the proposed rules would make corresponding changes to the recordkeeping, reporting, and notification requirements applicable to SBS Entities. Finally, the Commission is requesting comment on how certain aspects of the proposed rules address how a security-based swap data repository (``SDR'') could potentially satisfy its obligation to verify the terms of each security-based swap with both counterparties to the transaction.