The SEC today proposed rules that are intended to mitigate conflicts of interest for security-based swap clearing agencies, security-based swap execution facilities, and national securities exchanges that post security-based swaps or make them available for trading.

"The concern about conflicts of interest stems from the fact that the [OTC] derivatives markets have a relatively high concentration of market activity through a limited number of dealers who earn significant revenues from their transactions." 
"By creating a structure that would promote more independent voices within clearing organizations and trading venues, this proposed rule is intended to make these entities less susceptible to promoting the interests of a few participants."  -- SEC Chairman Mary Schapiro.

The SEC's proposed rules - known as Proposed Regulation MC - require security-based swap clearing agencies, security-based SEFs and security-based swap exchanges to adopt ownership and voting limitations as well as certain governance requirements. 

The SEC also expressed the view that, prior to passage of Dodd-Frank, the OTC derivatives market was largely unregulated [C-I: "and lawless"].  The new law fills a number of significant regulatory gaps and gives the SEC important new tools to better protect investors.

To access the announcement /fact sheet, click onto:  [ SEC PR 10-190, 10/13 ]

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