The U.S. Securities and Exchange Commission (SEC) has posted a proposed rule that could shape swaps governance systems.
The SEC is writing major new swaps market regulations to implement the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act, which defines the term “swap” and will require large financial institutions to conduct many swaps trades through clearinghouses, exchanges or other entities.
The act calls for the SEC to oversee “securities-based swaps” and the Commodity Futures Trading Commission (CFTC) to oversee other types of swaps.
The draft rule, Proposed Regulation MC, is supposed to “mitigate potential conflicts of interest that could exist at these entities,” SEC officials say in a preamble to the proposed rule.
Draft provisions deal with matters such as ownership, voting, and governance policies involving entities that involved with securities-based swaps.
Insurance groups and the SEC are still trying to define what the exact scope of SEC’s involvement in regulation of swaps at insurers and insurance holding companies will be, but the SEC