---
kind: "section"
citation: "17 C.F.R. § 23.440"
title: "17"
number: "23.440"
heading: "Requirements for swap dealers acting as advisors to Special Entities."
url: "https://uscodex.org/cfr/17/23.440"
---

# §23.440. Requirements for swap dealers acting as advisors to Special Entities.

- (a) **Acts as an advisor to a Special Entity.** For purposes of this section, a swap dealer “acts as an advisor to a Special Entity” when the swap dealer recommends a swap or trading strategy involving a swap that is tailored to the particular needs or characteristics of the Special Entity.
- (b) **Safe harbors.** A swap dealer will not “act as an advisor to a Special Entity” within the meaning of [paragraph (a)](#a) of this section if:
  - (1) With respect to a Special Entity that is an employee benefit plan as defined in [§ 23.401(h)(3)](/cfr/17/23.401.md?p=h-3):
    - (i) The Special Entity represents in writing that it has a fiduciary as defined in section 3 of the Employee Retirement Income Security Act of 1974 ([29 U.S.C. 1002](/usc/29/1002.md)) that is responsible for representing the Special Entity in connection with the swap transaction;
    - (ii) The fiduciary represents in writing that it will not rely on recommendations provided by the swap dealer; and
    - (iii) **The Special Entity represents in writing—**
      - (A) That it will comply in good faith with written policies and procedures reasonably designed to ensure that any recommendation the Special Entity receives from the swap dealer materially affecting a swap transaction is evaluated by a fiduciary before the transaction occurs; or
      - (B) That any recommendation the Special Entity receives from the swap dealer materially affecting a swap transaction will be evaluated by a fiduciary before that transaction occurs; or
  - (2) **With respect to any Special Entity—**
    - (i) The swap dealer does not express an opinion as to whether the Special Entity should enter into a recommended swap or trading strategy involving a swap that is tailored to the particular needs or characteristics of the Special Entity;
    - (ii) **The Special Entity represents in writing that—**
      - (A) The Special Entity will not rely on recommendations provided by the swap dealer; and
      - (B) The Special Entity will rely on advice from a qualified independent representative within the meaning of [§ 23.450](/cfr/17/23.450.md); and
    - (iii) The swap dealer discloses to the Special Entity that it is not undertaking to act in the best interests of the Special Entity as otherwise required by this section.
- (c) **Requirements.** A swap dealer that acts as an advisor to a Special Entity shall comply with the following requirements:
  - (1) **Duty.** Any swap dealer that acts as an advisor to a Special Entity shall have a duty to make a reasonable determination that any swap or trading strategy involving a swap recommended by the swap dealer is in the best interests of the Special Entity.
  - (2) **Reasonable efforts.** Any swap dealer that acts as an advisor to a Special Entity shall make reasonable efforts to obtain such information as is necessary to make a reasonable determination that any swap or trading strategy involving a swap recommended by the swap dealer is in the best interests of the Special Entity, including information relating to:
    - (i) The financial status of the Special Entity, as well as the Special Entity's future funding needs;
    - (ii) The tax status of the Special Entity;
    - (iii) The hedging, investment, financing, or other objectives of the Special Entity;
    - (iv) The experience of the Special Entity with respect to entering into swaps, generally, and swaps of the type and complexity being recommended;
    - (v) Whether the Special Entity has the financial capability to withstand changes in market conditions during the term of the swap; and
    - (vi) Such other information as is relevant to the particular facts and circumstances of the Special Entity, market conditions, and the type of swap or trading strategy involving a swap being recommended.
- (d) **Reasonable reliance on representations of the Special Entity.** As provided in [§ 23.402(d)](/cfr/17/23.402.md?p=d), the swap dealer may rely on written representations of the Special Entity to satisfy its requirement in [paragraph (c)(2)](#c-2) of this section to make “reasonable efforts” to obtain necessary information.
- (e) **Exceptions.** This section shall not apply with respect to a transaction that is:
  - (1) Initiated with a counterparty whose identity is not known to the swap dealer prior to execution on a designated contract market, a swap execution facility, or a trading facility currently exempted from registration as a swap execution facility by the Commission pursuant to section 5h(g) of the Act;
  - (2) An A-ITBC Swap; or
  - (3) An ITBC Swap initiated by a Special Entity on a designated contract market, a swap execution facility, or a trading facility currently exempted from registration as a swap execution facility by the Commission pursuant to section 5h(g) of the Act, in each case with a swap dealer who does not know the Special Entity status of its counterparty prior to execution.

## Notes

### Source

Source: 90 FR 61252, Dec. 30, 2025, unless otherwise noted.

### Authority

Authority: 7 U.S.C. 1a, 2, 6, 6a, 6b, 6b-1, 6c, 6p, 6r, 6s, 6t, 9, 9a, 12, 12a, 13b, 13c, 16a, 18, 19, 21. Section 23.160 also issued under 7 U.S.C. 2(i); Sec. 721(b), Pub. L. 111-203, 124 Stat. 1641 (2010).

### Source

Source: 77 FR 2628, Jan. 19, 2012, unless otherwise noted.