The whole world: SEC Moving Ahead on the British Compliance Designation, French-Substituted
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SEC move forward on the determination of compliance of the proposed substitution for UK and French regulated companies registering as security-based exchange dealers (“SBSD”).
SEC the proposed order for British companies came in response to application filed by the UK Financial Conduct Authority (“FCA”) in accordance with SEA Rules 3a71-6 (“Reimbursed compliance for security-based swap dealers and major security-based swap participants”). The SEC reopened the comment period for determination of compliance of the proposed substitution For application submitted by the Autorité des Marchés Financiers (or “AMF”) and the Prudential Control and Resolution Authority (or “ACPR”).
The FCA requires surrogate compliance with requirements under the Exchange Act Section 15F (“Registration and Regulations for Security Based Swap Dealers and Primary Security Based Swap Participants”) regarding (i) risk control, (ii) recording and reporting, (iii) internal monitoring and compliance, and (iv) counterparty protection.
Under the proposed order, surrogate compliance will be provided subject to a number of conditions, including the following:
- Portfolio appraisal disputes will be reported directly to the SEC, based on UK time requirements;
- a company needs to (i) retain assets it is allowed in SEA Rules 18a-1 (“Net Capital Requirements for Security-Based Exchange Dealers who Are Not Prudent Regulators”), having implemented the “applicable haircut” under Basel capital standards, (ii) list quarterly records, (iii) retain $ 100 million of equity capital, as defined in the Basel capital standard, and (iv) incorporating the most recent report on financial conditions;
- a conformance exception will be available for non-specialized entities that are “per se professional client” according to UK requirements;
- SEC’s various listing and retention requirements (including format) will continue to apply;
- The SEC’s financial and operational reporting requirements will continue to apply; and
- SBSD must submit certain regulatory notices to the SEC which are required under local law.
Comments regarding proposed orders must be submitted within 25 days of their publication on the Federal Register.
- SEC Press Release: SEC Issues Notice of Proposed Substitute Compliance Filings and Proposed Alternate Compliance Orders for Great Britain and Reopens Comment Periods for Notices and Proposed Replacement Compliance Orders for France
The contents of this article are intended to provide general guidance on the subject matter. Specialist advice should be sought about your particular circumstances.
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