Harvard Law School Forum on Corporate Governance and Financial Regulation:  SEC Re-Proposes Rules on Arranging, Negotiating or Executing Security-Based Swaps, Annette L. Nazareth, Davis Polk & Wardwell LLP,  June 21, 2015

“On May 13, 2015, the SEC published proposed amendments and re-proposed rules on the application of certain Title VII requirements to cross-border security-based swap activities of non-U.S. persons based on U.S. conduct. The proposed rules would modify numerous prior SEC proposals and final rules, including the May 2013 proposed rules on the cross-border application of security-based swap regulations, the August 2014 final cross-border definitions and de minimis rules and the March 2015 reporting final rules. Notably, the proposed rules would:

• replace the SEC’s prior proposed cross-border conduct standard—“transactions conducted within the United States”—with a standard based on dealing activity of non-U.S. persons that is arranged, negotiated or executed by personnel (or personnel of an agent) located in a U.S. branch or office (“U.S.-Located Personnel”);
• amend the SEC’s final rules on calculating the de minimis threshold to incorporate the revised cross-border conduct standard to determine whether a non-U.S. person engaged in dealing activity must register as a security-based swap dealer;
• generally apply the proposed external business conduct rules (other than those relating to diligent supervision) to non-U.S. persons based on location of conduct, while applying risk-based rules, such as mandatory clearing and trade execution, based on the identity of the counterparties holding the risk; and
• amend the scope of the security-based swap reporting rules to include certain transactions involving non-U.S. persons that are: (i) entered into by non-U.S. persons in connection with dealing activity and that are arranged, negotiated or executed by a party’s personnel located in the United States, (ii) executed on U.S.-located trading platforms, and (iii) effected by or through registered broker-dealers, including registered security-based swap execution facilities (“SBSEFs”)….”