Staff Report on the Definitions of “Security-Based Swap Dealer” and “Major Security-Based Swap Participant”

Official abstract: The Securities and Exchange Commission directed staff to prepare and is now publishing a report examining the effect and application of the definitions of "security-based swap dealer" and "major security-based swap participant." Those definitions include an exception from designation as a security-based swap dealer for an entity that engages in a de minimis quantity of security-based swap dealing, as well as separate thresholds below which an entity would not become a major security-based swap participant. As provided in the Commission's rules, nine months after publication of this report and after considering any public comments received, the Commission may by order either terminate the phase-in period for the de minimis thresholds, thereby allowing thresholds of $3 billion for credit default swaps that constitute security-based swaps and $150 million for non-credit default swaps that constitute security-based swaps to take effect and replace the current phase-in thresholds of $8 billion and $400 million, respectively, or propose different thresholds through rulemaking; however, the Commission has issued an order providing a temporary exemption that has the effect of continuing to apply the phase-in thresholds of $8 billion and $400 million until May 8, 2028. The public is invited to comment on all aspects of this report, which may inform the Commission's consideration of potential changes to the de minimis exception and the rules further defining the terms "security-based swap dealer" and "major security-based swap participant."