SEC Commissioners Press for Completion of SEC Rules Governing Security-Based Swaps

In a public statement released by the SEC, Commissioners Daniel Gallagher and Michael Piwowar urged the SEC to prioritize the finalization of its rules governing the security-based swap market, echoing another recent statement by Commissioner Aguilar.

The Commissioners pointed to the wide range of rules remaining to be finalized, including those related to clearing and execution facilities, capital, margin, segregation, recordkeeping, and business conduct. They argued that finalization of these rules is important because the derivatives markets need regulatory certainty. Additionally, they stated that the lack of final rules has created a void that “impacts Main Street as much as Wall Street.”

The Commissioners asserted that once these rules are finalized, the SEC can and should focus its attention on non-mandated endeavors squarely within the SEC’s core mission of protecting investors, facilitating capital formation, and maintaining fair, orderly and efficient markets. They expressed that the SEC has “wasted all too much time” prioritizing rules that do nothing to advance this mission. They hope that the SEC will make a “positive pivot” going forward.

Lofchie Comment: It is certainly the case that Congress has adopted too many statutory requirements for the SEC to adopt rules implementing them all within the required time period and thus, there is more than good reason for the SEC to have fallen behind in its rulemaking obligations. That conceded, the Commissioners are certainly right that the SEC has adopted rules governing matters such as conflict minerals and compensation disclosure (which are “political” rules having nothing to do with the primary purposes of the Exchange Act), while there are issues that actually matter to the financial markets that have been left unaddressed.