SEC Proposes Business Conduct Standards For Security-Based Swaps

On June 29th, the SEC proposed regulations governing certain business conduct requirements for security-based swap (SBS) dealers and major security-based swap participants. The proposed rule includes specific requirements for SBS Dealers when doing business with a ?special entity,? which is defined to include an employee benefit plan. These provisions of the proposed rule require SBS Dealers to deal with employee benefit plans that are special entities in a manner that may trigger ERISA fiduciary status for SBS Dealers, under the DOL?s fiduciary proposal.

In response, SEC staff states that it has been ?consulting with the staff of the Department of Labor, and will continue to do so, concerning the potential interface between ERISA and the business conduct requirements of the Dodd-Frank Act.? Specifically, the SEC will consult with DOL staff to address concerns raised by the impact of DOL?s fiduciary proposal on the Proposed Rule in order to permit both SBS Dealers and pension plans to ?rely on security-based swaps to manage risk and reduce volatility.?

Read SEC's proposal.

Source: http://regreformtracker.aba.com/2011/06/sec-proposes-business-conduct-standards.html

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