Proposed Guidance and Exemptions to Clarify Treatment of Security-Based Swaps Under the Exchange Act

The following guidance and exemptions relating to the treatment of security-based swaps (“SBS”) as “securities” under the Securities Exchange Act of 1934 (the “Exchange Act”) and rules of the Securities and Exchange Commission (“SEC”) thereunder are proposed to provide legal certainty to the SBS markets and account for the SBS-specific provisions of the Exchange Act and SEC rules thereunder.

The proposed exemptions would apply on a permanent basis, replacing the temporary exemptions set forth in Release No. 34-71485 and relating to pending SBS rulemakings (the “Linked Temporary Exemptions”), as well as those that generally were not directly related to a specific SBS rulemaking (the “Unlinked Temporary Exemptions”). Because the Unlinked Temporary Exemptions are currently, under Release No. 34-82626, set to expire on February 5, 2019, an additional extension of that exemption will be necessary to provide an orderly transition to the more limited range of exemptions proposed below, most of which should take effect on the registration compliance date for SBS dealers and major SBS participants. In addition, the Linked Temporary Exemptions should continue to apply until the relevant compliance dates set forth in Release No. 34-71485, even if they are not covered by one of the exemptions proposed below, and those compliance dates should take into account the expiration of those exemptions where
relevant.1

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