SEC Commissioner Aguilar: Protecting Our Economy Demands Adequate Capital and Margin Requirements for Security-Based Swaps

SEC Commissioner Luis A. Aguilar delivered a speech in which he expressed support for the proposal as seeking to achieve four broad goals. These goals are as set out below:

• The rules would augment the financial stability of nonbank security-based swap dealers and nonbank major security-based swap participants by setting minimum capital requirements for these entities, and by imposing minimum liquidity requirements on those dealers that calculate net capital using models.
• The rules seek to prevent the build-up of large, AIG-style, uncollateralized exposures in uncleared security-based swaps by imposing margin requirements for transactions in these instruments.
• The rules seek to protect counterparties of security-based swap dealers by setting requirements for the segregation of excess securities collateral and net funds owed to the counterparties, so that this property can be identified and returned to the counterparties in the event a dealer goes bust.
• The rules would enhance the future financial stability of "alternative net capital" firms by substantially increasing the minimum dollar amounts of required net capital and tentative net capital and by imposing minimum liquidity requirements.