SEC Proposes New Rules to Increase Accountability

The Securities and Exchange Commission (SEC) proposed new rules regarding security-based swaps as well as rules to improve the oversight of investment advisers. The goal of these rules is to increase and strengthen the oversight, accountability and transparency of various market activities, the SEC said.

By improving the oversight of investment advisers, the SEC would implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act that require registration by advisers to hedge funds, increase the asset threshold for advisers to register and require reporting by certain advisers exempt from SEC registration. The SEC also voted to propose amendments to rules to require investment advisers to disclose more information about the private funds they manage.

“The enhanced information envisioned by these proposed rules would better enable both regulators and the investing public to assess the risk profile of an investment adviser and its private funds,” said SEC Chair Mary L. Schapiro in a press release.

The SEC also voted unanimously on a proposal that would require security-based swap data repositories to register with the SEC. The Dodd-Frank act generally authorizes the SEC to regulate security-based swaps and this, the agency said, will ensure that the repositories retain and maintain complete records of transactions that can be accessed by regulators. Schapiro said that transaction-level data has not been widely available or recorded in the swaps market in the past.

Finally, the SEC proposed new rules regarding how security-based swap transactions should be reported and publicly disseminated.

“This proposal lays out who must do security-based swap reporting, what information must be reported, and where and when it must be reported,” Schapiro said. “These rules would provide for post-trade transparency in the security-based swap markets, and are designed to provide all market participants access to transaction information at the same time.”

The SEC is seeking public comment on all three proposed rules within the next 45 days.