SEC Issues Exemptions Affecting SBS Intermediaries

The SEC issued an order extending exemptions from compliance with two statutory provisions applicable to security-based swap ("SBS") intermediaries until the compliance date for registration of such intermediaries. In a public statement, Commissioner Aguilar said that these temporary extensions are necessary to prevent unwarranted market disruptions caused by regulatory uncertainty.

On June 15, 2011, the SEC issued an order granting temporary exemptions and exceptions from compliance with certain provisions of the Exchange Act applicable to security-based swaps. The Temporary Exemptions Order provided, among other things, a temporary exemption from Exchange Act Section 3E(f) for security-based swap dealers and major security-based swap participants (together, "SBS Entities"), and a temporary and limited exception from Exchange Act Section 15F(b)(6) with respect to persons then currently associated with SBS Entities.

The SEC is extending the exemption from Section 3E(f) and the exception from Section 15F(b)(6) until the compliance date in order to establish a process allowing SBS Entities to register (and withdraw from registration) with the SEC. In addition, the SEC is specifying when the related exemption from Section 29(b) will expire with respect to SBS contracts that involve violations of Sections 3E(f) or 15F(b)(6).