The SEC voted to adopt amendments to SEA Rule 3a71-3 that affect a non-U.S. firm with personnel located in a U.S. branch or office who are used to "arrange, negotiate, or execute" ("ANE") a security-based swap ("SBS") transaction in connection with the firm's dealing activity ("ANE Transaction"). The amended cross border rule requires these non-U.S. firms to count such transactions when determining whether the firm's threshold of dealing requires it to register as an SBS dealer. The SEC also adopted changes to related rules.
The final rule will become effective 60 days after publication in the Federal Register, but compliance is not required until the later of either 12 months following publication in the Federal Register or the "SBS Entity Counting Date" (two months prior to the registration compliance date – which itself will occur six months after the SEC adoption of a number of substantive rules governing SBS dealer activities).
The SEC did not adopt aspects of the proposal relating to the implications of ANE Transactions beyond SBS dealer registration (i.e., whether business conduct and other requirements would be implicated). Instead, it reopened the comment periods for those aspects of the proposal.
The SEC indicated that the final rule amendments are "generally consistent with [the] proposal." A Cadwalader memorandum summarizing the SEC proposal is available here.