US SEC Chairman Says Agency to Revive Swap Regulation Effort

WASHINGTON, July 21 (Reuters) – The United States Securities and Exchange Commission is expected to step up efforts to draft “overdue” rules for the registration and regulation of securities swap execution facilities, said Wednesday President Gary Gensler.

In a prepared speech, Gensler said he wanted the SEC to harmonize these derivatives rules with those already in place at the Commodity Futures Trading Commission. He also stressed that any crypto token or similar product that is priced below the value of the securities must comply with securities laws, even when offered on a decentralized platform.

“These platforms – whether in the decentralized or centralized financial space – are implicated by securities laws and must operate within the framework of our securities regime,” he said in a speech delivered to the American Bar Association.

On swaps, Gensler’s remarks breathe new life into a long-standing SEC plan to enforce stricter oversight on the securities portion of the derivatives market, as mandated by the Dodd-Frank financial reform law of 2010. The CFTC has most of the oversight responsibility for derivatives, but the SEC has fallen behind in its efforts to draft the rules required for the relatively small portion of the securities derivatives market.

Gensler said he had asked SEC staff to harmonize its rules with those already in place at the CFTC, a process that will likely see the SEC release a proposed new rule for public comment. The SEC first proposed rules for securities swap execution facilities in 2011.

Gensler said combining the SEC rules with the CFTC regime would be an effective approach, as many companies affected by the new SEC rules are already operating under CFTC regulations.

Reporting by Pete Schroeder Editing by Chizu Nomiyama and Tomasz Janowski

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