SEC Issues Roadmap on Sequence of Adoption of Dodd-Frank Derivatives Regulations

The SEC issued a policy statement describing the order in which it expects new rules regulating the derivatives market would take effect. The statement covers final rules to be adopted by the SEC under Title VII of the Dodd-Frank Act. SEC Chair Mary Schapiro had presaged the issuance of the policy statement in recent testimony before the Senate Banking Committee. Title VII of the Dodd-Frank Act establishes a comprehensive framework to regulate over-the-counter derivatives, authorizing the Commodity Futures Trading Commission to regulate swaps, and the SEC to regulate security-based swaps.

The SEC is requesting public comment on its plan to phase in final rules regulating security-based swaps and security-based swap market participants. The policy statement does not estimate when the rules would be put in place, but describes the sequence in which they would take effect. The phased-in approach is intended to avoid the disruption that could occur if all the new rules took effect simultaneously. To date, the Commission has proposed nearly all the rules required under the Act and already has begun to adopt those rules.

Chairman Schapiro described the policy statement as a roadmap to market participants and the public on how the SEC expect to implement the various regulatory requirements for the OTC derivatives market. The public comment on the SEC's anticipated sequencing of the regulations is 60 days.