Swap Dealers and Major Swap Participants Regulation - Comment Letter - SIFMA - August 29, 2011

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Dodd-Frank Timeline, Business Conduct Standards for Security-Based Swap Dealers and Major Security-Based Swap Participants, SEC
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Business Conduct Standards for Security-Based Swap Dealers and Major Security-Based Swap Participants
August 29, 2011

SIFMA addresses in its letter concerns regarding the "best interests" standard, the exclusion of certain special entities, disclosure rules, ERISA fiduciary classifications, and pay-to-play rules, among other things.


  • "The Asset Management Group of SIFMA (AMG) believes that, absent clarification of the specific types of conduct giving rise to the “best interests” duty, this proposed standard may include a broad range of normal commercial activities, potentially leading SBS Dealers who do not intend to take on this heightened duty to restrict their communications with Special Entities to providing only the most generic information or to reduce their participation in security-based swaps transactions with Special Entities (including those that would help Special Entities to hedge their portfolios)."
  • "In order to rely upon the exclusion from advisor status with respect to a Special Entity to which it makes a recommendation, an SBS Dealer would be required to have 'a reasonable basis to believe' that the Special Entity has a qualified independent representative that, among other qualifications, '[h]as sufficient knowledge to evaluate the transaction and risks.' The AMG believes that it would be unnecessary, costly and ultimately counterproductive to require an SBS Dealer to undertake an independent due diligence investigation to determine whether a Special Entity’s representative has sufficient knowledge to evaluate the transaction before it may rely upon the exclusion. Such a requirement would effectively impose upon the SBS Dealer a duty to second guess the Special Entity's own assessment of its representative and provide the SBS Dealer with the ability to trump a Special Entity’s choice of asset manager."


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