In an important step in the ongoing regulation of the market for security-based swaps (both individually and in the plural, “SBS”), last month the Securities and Exchange Commission (“SEC”) issued its final business conduct rules (the “SEC Conduct Rules”) for security-based swap dealers (each, an “SBSD”) and major security-based swap participants (each, an “MSBSP”). This Client Alert highlights the most significant features of those rules.

The SEC Conduct Rules are generally (though not entirely) consistent with certain of the business conduct rules that the Commodity Futures Trading Commission (“CFTC”) finalized for the swaps market in 2012. For that reason, the substance of the SEC Conduct Rules should be generally familiar to many dealers and other market participants. Moreover, it should be possible for the industry to facilitate compliance with the SEC Conduct Rules, to the extent that those rules address dealings with counterparties, by means similar to the protocol by which the industry facilitated compliance with corresponding CFTC external business conduct rules.