---
kind: "section"
citation: "15 U.S.C. § 78o–10"
title: "15"
title_heading: "Commerce and Trade"
number: "78o–10"
heading: "Registration and regulation of security-based swap dealers and major security-based swap participants"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/15/78o-10"
units:
  - "Chapter 2B — Securities Exchanges"
---

# §78o–10. Registration and regulation of security-based swap dealers and major security-based swap participants

- (a) **Registration—**
  - (1) **Security-based swap dealers—** It shall be unlawful for any [person](/usc/15/78c.md?p=a-9) to act as a [security-based swap dealer](/usc/15/78c.md?p=a-71-A) unless the [person](/usc/15/78c.md?p=a-9) is registered as a [security-based swap dealer](/usc/15/78c.md?p=a-71-A) with the [Commission](/usc/15/78c.md?p=a-15).
  - (2) **Major security-based swap participants—** It shall be unlawful for any [person](/usc/15/78c.md?p=a-9) to act as a [major security-based swap participant](/usc/15/78c.md?p=a-67-A) unless the [person](/usc/15/78c.md?p=a-9) is registered as a [major security-based swap participant](/usc/15/78c.md?p=a-67-A) with the [Commission](/usc/15/78c.md?p=a-15).
- (b) **Requirements—**
  - (1) **In general—** A [person](/usc/15/78c.md?p=a-9) shall register as a [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) by filing a registration application with the [Commission](/usc/15/78c.md?p=a-15).
  - (2) **Contents—**
    - (A) **In general—** The application shall be made in such form and manner as prescribed by the [Commission](/usc/15/78c.md?p=a-15), and shall contain such information, as the [Commission](/usc/15/78c.md?p=a-15) considers necessary concerning the business in which the [applicant](/usc/15/7a.md?p=3) is or will be engaged.
    - (B) **Continual reporting—** A [person](/usc/15/78c.md?p=a-9) that is registered as a [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) shall continue to submit to the [Commission](/usc/15/78c.md?p=a-15) reports that contain such information pertaining to the business of the [person](/usc/15/78c.md?p=a-9) as the [Commission](/usc/15/78c.md?p=a-15) may require.
  - (3) **Expiration—** Each registration under this section shall expire at such time as the [Commission](/usc/15/78c.md?p=a-15) may prescribe by rule or regulation.
  - (4) **Rules—** Except as provided in subsections [(d)](#d) and [(e)](#e), the [Commission](/usc/15/78c.md?p=a-15) may prescribe rules applicable to [security-based swap dealers](/usc/15/78c.md?p=a-71-A) and [major security-based swap participants](/usc/15/78c.md?p=a-67-A), including rules that limit the activities of non-[bank](/usc/15/78c.md?p=a-6) [security-based swap dealers](/usc/15/78c.md?p=a-71-A) and [major security-based swap participants](/usc/15/78c.md?p=a-67-A).
  - (5) **Transition—** Not later than 1 year after July 21, 2010, the [Commission](/usc/15/78c.md?p=a-15) shall issue rules under this section to provide for the registration of [security-based swap dealers](/usc/15/78c.md?p=a-71-A) and [major security-based swap participants](/usc/15/78c.md?p=a-67-A).
  - (6) **Statutory disqualification—** Except to the extent otherwise specifically provided by rule, regulation, or order of the [Commission](/usc/15/78c.md?p=a-15), it shall be unlawful for a [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or a [major security-based swap participant](/usc/15/78c.md?p=a-67-A) to permit any [person associated with](/usc/15/78c.md?p=a-63) a [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or a [major security-based swap participant](/usc/15/78c.md?p=a-67-A) who is subject to a statutory disqualification to effect or be involved in effecting [security-based swaps](/usc/15/78c.md?p=a-68-A) on behalf of the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A), if the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) knew, or in the exercise of reasonable care should have known, of the statutory disqualification.
- (c) **Dual registration—**
  - (1) **Security-based swap dealer—** Any [person](/usc/15/78c.md?p=a-9) that is required to be registered as a [security-based swap dealer](/usc/15/78c.md?p=a-71-A) under this section shall register with the [Commission](/usc/15/78c.md?p=a-15), regardless of whether the [person](/usc/15/78c.md?p=a-9) also is registered with the Commodity Futures Trading [Commission](/usc/15/78c.md?p=a-15) as a [swap dealer](/usc/15/78c.md?p=a-76).
  - (2) **Major security-based swap participant—** Any [person](/usc/15/78c.md?p=a-9) that is required to be registered as a [major security-based swap participant](/usc/15/78c.md?p=a-67-A) under this section shall register with the [Commission](/usc/15/78c.md?p=a-15), regardless of whether the [person](/usc/15/78c.md?p=a-9) also is registered with the Commodity Futures Trading [Commission](/usc/15/78c.md?p=a-15) as a [major swap participant](/usc/15/78c.md?p=a-66).
- (d) **Rulemaking—**
  - (1) **In general—** The [Commission](/usc/15/78c.md?p=a-15) shall adopt rules for [persons](/usc/15/78c.md?p=a-9) that are registered as [security-based swap dealers](/usc/15/78c.md?p=a-71-A) or [major security-based swap participants](/usc/15/78c.md?p=a-67-A) under this section.
  - (2) **Exception for prudential requirements—**
    - (A) **In general—** The [Commission](/usc/15/78c.md?p=a-15) may not prescribe rules imposing prudential requirements on [security-based swap dealers](/usc/15/78c.md?p=a-71-A) or [major security-based swap participants](/usc/15/78c.md?p=a-67-A) for which there is a [prudential regulator](/usc/15/78c.md?p=a-74).
    - (B) **Applicability—** [Subparagraph (A)](#d-2-A) does not limit the authority of the [Commission](/usc/15/78c.md?p=a-15) to prescribe rules as directed under this section.
- (e) **Capital and margin requirements—**
  - (1) **In general—**
    - (A) **Security-based swap dealers and major security-based swap participants that are banks—** Each registered [security-based swap dealer](/usc/15/78c.md?p=a-71-A) and [major security-based swap participant](/usc/15/78c.md?p=a-67-A) for which there is not a [prudential regulator](/usc/15/78c.md?p=a-74) shall meet such minimum capital requirements and minimum initial and variation [margin](/usc/15/78c.md?p=a-57-A) requirements as the [prudential regulator](/usc/15/78c.md?p=a-74) shall by rule or regulation prescribe under [paragraph (2)(A)](#e-2-A).
    - (B) **Security-based swap dealers and major security-based swap participants that are not banks—** Each registered [security-based swap dealer](/usc/15/78c.md?p=a-71-A) and [major security-based swap participant](/usc/15/78c.md?p=a-67-A) for which there is not a [prudential regulator](/usc/15/78c.md?p=a-74) shall meet such minimum capital requirements and minimum initial and variation [margin](/usc/15/78c.md?p=a-57-A) requirements as the [Commission](/usc/15/78c.md?p=a-15) shall by rule or regulation prescribe under [paragraph (2)(B)](#e-2-B).
  - (2) **Rules—**
    - (A) **Security-based swap dealers and major security-based swap participants that are banks—** The [prudential regulators](/usc/15/78c.md?p=a-74), in consultation with the [Commission](/usc/15/78c.md?p=a-15) and the Commodity Futures Trading [Commission](/usc/15/78c.md?p=a-15), shall adopt rules for [security-based swap dealers](/usc/15/78c.md?p=a-71-A) and [major security-based swap participants](/usc/15/78c.md?p=a-67-A), with respect to their activities as a [swap dealer](/usc/15/78c.md?p=a-76) or [major swap participant](/usc/15/78c.md?p=a-66), for which there is a [prudential regulator](/usc/15/78c.md?p=a-74) imposing—
      - (i) capital requirements; and
      - (ii) both initial and variation [margin](/usc/15/78c.md?p=a-57-A) requirements on all [security-based swaps](/usc/15/78c.md?p=a-68-A) that are not cleared by a registered [clearing agency](/usc/15/78c.md?p=a-23-A).
    - (B) **Security-based swap dealers and major security-based swap participants that are not banks—** The [Commission](/usc/15/78c.md?p=a-15) shall adopt rules for [security-based swap dealers](/usc/15/78c.md?p=a-71-A) and [major security-based swap participants](/usc/15/78c.md?p=a-67-A), with respect to their activities as a [swap dealer](/usc/15/78c.md?p=a-76) or [major swap participant](/usc/15/78c.md?p=a-66), for which there is not a [prudential regulator](/usc/15/78c.md?p=a-74) imposing—
      - (i) capital requirements; and
      - (ii) both initial and variation [margin](/usc/15/78c.md?p=a-57-A) requirements on all [swaps](/usc/15/78c.md?p=a-69) that are not cleared by a registered [clearing agency](/usc/15/78c.md?p=a-23-A).
    - (C) **Capital—** In setting capital requirements for a [person](/usc/15/78c.md?p=a-9) that is designated as a [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or a [major security-based swap participant](/usc/15/78c.md?p=a-67-A) for a single type or single class or category of [security-based swap](/usc/15/78c.md?p=a-68-A) or activities, the [prudential regulator](/usc/15/78c.md?p=a-74) and the [Commission](/usc/15/78c.md?p=a-15) shall take into account the risks associated with other types of [security-based swaps](/usc/15/78c.md?p=a-68-A) or classes of [security-based swaps](/usc/15/78c.md?p=a-68-A) or categories of [security-based swaps](/usc/15/78c.md?p=a-68-A) engaged in and the other activities conducted by that [person](/usc/15/78c.md?p=a-9) that are not otherwise subject to regulation applicable to that [person](/usc/15/78c.md?p=a-9) by virtue of the status of the [person](/usc/15/78c.md?p=a-9).
  - (3) **Standards for capital and margin—**
    - (A) **In general—** To offset the greater risk to the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) and the financial system arising from the use of [security-based swaps](/usc/15/78c.md?p=a-68-A) that are not cleared, the requirements imposed under [paragraph (2)](#e-2) shall—
      - (i) help ensure the safety and soundness of the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A); and
      - (ii) be appropriate for the risk associated with the non-cleared [security-based swaps](/usc/15/78c.md?p=a-68-A) held as a [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A).
    - (B) **Rule of construction—**
      - (i) **In general—** Nothing in this section shall limit, or be construed to limit, the authority—
        - (I) of the [Commission](/usc/15/78c.md?p=a-15) to set [financial responsibility rules](/usc/15/78c.md?p=a-40) for a [broker or dealer](/usc/15/78c.md?p=h-2) registered pursuant to [section 78o(b)](/usc/15/78o.md?p=b) of this title (except for [section 78o(b)(11)](/usc/15/78o.md?p=b-11) thereof) in accordance with [section 78o(c)(3)](/usc/15/78o.md?p=c-3) of this title; or
        - (II) of the Commodity Futures Trading [Commission](/usc/15/78c.md?p=a-15) to set [financial responsibility rules](/usc/15/78c.md?p=a-40) for a futures [commission](/usc/15/78c.md?p=a-15) merchant or introducing [broker](/usc/15/78c.md?p=a-4-A) registered pursuant to section 4f(a) of the Commodity Exchange Act [[7 U.S.C. 6f(a)](/usc/7/6f.md?p=a)] (except for section 4f(a)(3) [[7 U.S.C. 6f(a)(3)](/usc/7/6f.md?p=a-3)] thereof) in accordance with section 4f(b) of the Commodity Exchange Act [[7 U.S.C. 6f(b)](/usc/7/6f.md?p=b)].
      - (ii) **Futures commission merchants and other dealers—** A futures [commission](/usc/15/78c.md?p=a-15) merchant, introducing [broker](/usc/15/78c.md?p=a-4-A), [broker](/usc/15/78c.md?p=a-4-A), or [dealer](/usc/15/78c.md?p=a-5-A) shall maintain sufficient capital to comply with the stricter of any applicable capital requirements to which such futures [commission](/usc/15/78c.md?p=a-15) merchant, introducing [broker](/usc/15/78c.md?p=a-4-A), [broker](/usc/15/78c.md?p=a-4-A), or [dealer](/usc/15/78c.md?p=a-5-A) is subject to under this chapter or the Commodity Exchange Act [[7 U.S.C. 1](/usc/7/1.md) et seq.].
    - (C) **Margin requirements—** In prescribing [margin](/usc/15/78c.md?p=a-57-A) requirements under this subsection, the [prudential regulator](/usc/15/78c.md?p=a-74) with respect to [security-based swap dealers](/usc/15/78c.md?p=a-71-A) and [major security-based swap participants](/usc/15/78c.md?p=a-67-A) that are depository institutions, and the [Commission](/usc/15/78c.md?p=a-15) with respect to [security-based swap dealers](/usc/15/78c.md?p=a-71-A) and [major security-based swap participants](/usc/15/78c.md?p=a-67-A) that are not depository institutions shall permit the use of noncash collateral, as the regulator or the [Commission](/usc/15/78c.md?p=a-15) determines to be consistent with—
      - (i) preserving the financial integrity of markets trading [security-based swaps](/usc/15/78c.md?p=a-68-A); and
      - (ii) preserving the stability of the United States financial system.
    - (D) **Comparability of capital and margin requirements—**
      - (i) **In general—** The [prudential regulators](/usc/15/78c.md?p=a-74), the [Commission](/usc/15/78c.md?p=a-15), and the [Securities](/usc/15/78c.md?p=a-10) and [Exchange](/usc/15/78c.md?p=a-1) [Commission](/usc/15/78c.md?p=a-15) shall periodically (but not less frequently than annually) consult on minimum capital requirements and minimum initial and variation [margin](/usc/15/78c.md?p=a-57-A) requirements.
      - (ii) **Comparability—** The entities described in [clause (i)](#e-3-D-i) shall, to the maximum extent practicable, establish and maintain comparable minimum capital requirements and minimum initial and variation [margin](/usc/15/78c.md?p=a-57-A) requirements, including the use of noncash collateral, for—
        - (I) [security-based swap dealers](/usc/15/78c.md?p=a-71-A); and
        - (II) [major security-based swap participants](/usc/15/78c.md?p=a-67-A).
  - (4) **Applicability with respect to counterparties—** The requirements of paragraphs [(2)(A)(ii)](#e-2-A-ii) and [(2)(B)(ii)](#e-2-B-ii) shall not apply to a [security-based swap](/usc/15/78c.md?p=a-68-A) in which a counterparty qualifies for an exception under [section 78c–3(g)(1) of this title](/usc/15/78c–3.md?p=g-1) or satisfies the criteria in [section 78c–3(g)(4) of this title](/usc/15/78c–3.md?p=g-4).
- (f) **Reporting and recordkeeping—**
  - (1) **In general—** Each registered [security-based swap dealer](/usc/15/78c.md?p=a-71-A) and [major security-based swap participant](/usc/15/78c.md?p=a-67-A)—
    - (A) shall make such reports as are required by the [Commission](/usc/15/78c.md?p=a-15), by rule or regulation, regarding the transactions and positions and financial condition of the registered [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A);
    - (B)
      - (i) for which there is a [prudential regulator](/usc/15/78c.md?p=a-74), shall keep books and [records](/usc/15/78c.md?p=a-37) of all activities related to the business as a [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) in such form and manner and for such period as may be prescribed by the [Commission](/usc/15/78c.md?p=a-15) by rule or regulation; and
      - (ii) for which there is no [prudential regulator](/usc/15/78c.md?p=a-74), shall keep books and [records](/usc/15/78c.md?p=a-37) in such form and manner and for such period as may be prescribed by the [Commission](/usc/15/78c.md?p=a-15) by rule or regulation; and
    - (C) shall keep books and [records](/usc/15/78c.md?p=a-37) described in [subparagraph (B)](#f-1-B) open to inspection and examination by any representative of the [Commission](/usc/15/78c.md?p=a-15).
  - (2) **Rules—** The [Commission](/usc/15/78c.md?p=a-15) shall adopt rules governing reporting and recordkeeping for [security-based swap dealers](/usc/15/78c.md?p=a-71-A) and [major security-based swap participants](/usc/15/78c.md?p=a-67-A).
- (g) **Daily trading records—**
  - (1) **In general—** Each registered [security-based swap dealer](/usc/15/78c.md?p=a-71-A) and [major security-based swap participant](/usc/15/78c.md?p=a-67-A) shall maintain daily trading [records](/usc/15/78c.md?p=a-37) of the [security-based swaps](/usc/15/78c.md?p=a-68-A) of the registered [security-based swap dealer](/usc/15/78c.md?p=a-71-A) and [major security-based swap participant](/usc/15/78c.md?p=a-67-A) and all related [records](/usc/15/78c.md?p=a-37) (including related cash or forward transactions) and recorded communications, including electronic mail, instant messages, and recordings of telephone calls, for such period as may be required by the [Commission](/usc/15/78c.md?p=a-15) by rule or regulation.
  - (2) **Information requirements—** The daily trading [records](/usc/15/78c.md?p=a-37) shall include such information as the [Commission](/usc/15/78c.md?p=a-15) shall require by rule or regulation.
  - (3) **Counterparty records—** Each registered [security-based swap dealer](/usc/15/78c.md?p=a-71-A) and [major security-based swap participant](/usc/15/78c.md?p=a-67-A) shall maintain daily trading [records](/usc/15/78c.md?p=a-37) for each counterparty in a manner and form that is identifiable with each [security-based swap](/usc/15/78c.md?p=a-68-A) transaction.
  - (4) **Audit trail—** Each registered [security-based swap dealer](/usc/15/78c.md?p=a-71-A) and [major security-based swap participant](/usc/15/78c.md?p=a-67-A) shall maintain a complete audit trail for conducting comprehensive and accurate trade reconstructions.
  - (5) **Rules—** The [Commission](/usc/15/78c.md?p=a-15) shall adopt rules governing daily trading [records](/usc/15/78c.md?p=a-37) for [security-based swap dealers](/usc/15/78c.md?p=a-71-A) and [major security-based swap participants](/usc/15/78c.md?p=a-67-A).
- (h) **Business conduct standards—**
  - (1) **In general—** Each registered [security-based swap dealer](/usc/15/78c.md?p=a-71-A) and [major security-based swap participant](/usc/15/78c.md?p=a-67-A) shall conform with such business conduct standards as prescribed in [paragraph (3)](#h-3) and as may be prescribed by the [Commission](/usc/15/78c.md?p=a-15) by rule or regulation that relate to—
    - (A) fraud, manipulation, and other abusive practices involving [security-based swaps](/usc/15/78c.md?p=a-68-A) (including [security-based swaps](/usc/15/78c.md?p=a-68-A) that are offered but not entered into);
    - (B) diligent supervision of the business of the registered [security-based swap dealer](/usc/15/78c.md?p=a-71-A) and [major security-based swap participant](/usc/15/78c.md?p=a-67-A);
    - (C) adherence to all applicable position limits; and
    - (D) such other matters as the [Commission](/usc/15/78c.md?p=a-15) determines to be appropriate.
  - (2) **Responsibilities with respect to special entities—**
    - (A) **Advising special entities—** A [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) that acts as an advisor to[^1] special entity regarding a [security-based swap](/usc/15/78c.md?p=a-68-A) shall comply with the requirements of [paragraph (4)](#h-4) with respect to such special entity.
    - (B) **Entering of security-based swaps with respect to special entities—** A [security-based swap dealer](/usc/15/78c.md?p=a-71-A) that enters into or offers to enter into[^1] [security-based swap](/usc/15/78c.md?p=a-68-A) with a special entity shall comply with the requirements of [paragraph (5)](#h-5) with respect to such special entity.
    - (C) **Special entity defined—** For purposes of this subsection, the term “special entity” means—
      - (i) a Federal agency;
      - (ii) a [State](/usc/15/78c.md?p=a-16), [State](/usc/15/78c.md?p=a-16) agency, city, county, municipality, or other political subdivision of a [State](/usc/15/78c.md?p=a-16) or;
      - (iii) any employee benefit plan, as defined in section 3 of the Employee Retirement Income Security Act of 1974 ([29 U.S.C. 1002](/usc/29/1002.md));
      - (iv) any governmental plan, as defined in section 3 of the Employee Retirement Income Security Act of 1974 ([29 U.S.C. 1002](/usc/29/1002.md)); or
      - (v) any endowment, including an endowment that is an organization described in [section 501(c)(3) of title 26](/usc/26/501.md?p=c-3).
  - (3) **Business conduct requirements—** Business conduct requirements adopted by the [Commission](/usc/15/78c.md?p=a-15) shall—
    - (A) establish a duty for a [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) to verify that any counterparty meets the eligibility standards for an [eligible contract participant](/usc/15/78c.md?p=a-65);
    - (B) require disclosure by the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) to any counterparty to the transaction (other than a [security-based swap dealer](/usc/15/78c.md?p=a-71-A), [major security-based swap participant](/usc/15/78c.md?p=a-67-A), [security-based swap dealer](/usc/15/78c.md?p=a-71-A), or [major security-based swap participant](/usc/15/78c.md?p=a-67-A)) of—
      - (i) information about the material risks and characteristics of the [security-based swap](/usc/15/78c.md?p=a-68-A);
      - (ii) any material incentives or conflicts of interest that the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) may have in connection with the [security-based swap](/usc/15/78c.md?p=a-68-A); and
      - (iii)
        - (I) for cleared [security-based swaps](/usc/15/78c.md?p=a-68-A), upon the request of the counterparty, receipt of the daily mark of the transaction from the appropriate derivatives clearing organization; and
        - (II) for uncleared [security-based swaps](/usc/15/78c.md?p=a-68-A), receipt of the daily mark of the transaction from the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or the [major security-based swap participant](/usc/15/78c.md?p=a-67-A);
    - (C) establish a duty for a [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) to communicate in a fair and balanced manner based on principles of fair dealing and good faith; and
    - (D) establish such other standards and requirements as the [Commission](/usc/15/78c.md?p=a-15) may determine are appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of this chapter.
  - (4) **Special requirements for security-based swap dealers acting as advisors—**
    - (A) **In general—** It shall be unlawful for a [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A)—
      - (i) to employ any [device](/usc/15/55.md?p=d), scheme, or artifice to defraud any special entity or prospective customer who is a special entity;
      - (ii) to engage in any transaction, practice, or course of business that operates as a fraud or deceit on any special entity or prospective customer who is a special entity; or
      - (iii) to engage in any act, practice, or course of business that is fraudulent, deceptive, or manipulative.
    - (B) **Duty—** Any [security-based swap dealer](/usc/15/78c.md?p=a-71-A) that acts as an advisor to a special entity shall have a duty to act in the best interests of the special entity.
    - (C) **Reasonable efforts—** Any [security-based swap dealer](/usc/15/78c.md?p=a-71-A) 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 [security-based swap](/usc/15/78c.md?p=a-68-A) recommended by the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) is in the best interests of the special entity, including information relating to—
      - (i) the financial status of the special entity;
      - (ii) the tax status of the special entity;
      - (iii) the investment or financing objectives of the special entity; and
      - (iv) any other information that the [Commission](/usc/15/78c.md?p=a-15) may prescribe by rule or regulation.
  - (5) **Special requirements for security-based swap dealers as counterparties to special entities—**
    - (A) **In general—** Any [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) that offers to or enters into a [security-based swap](/usc/15/78c.md?p=a-68-A) with a special entity shall—
      - (i) comply with any duty established by the [Commission](/usc/15/78c.md?p=a-15) for a [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A), with respect to a counterparty that is an [eligible contract participant](/usc/15/78c.md?p=a-65) within the meaning of subclause (I) or (II) of clause (vii) of section 1a(18) of the Commodity Exchange Act [[7 U.S.C. 1a(18)](/usc/7/1a.md?p=18)], that requires the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) to have a reasonable basis to believe that the counterparty that is a special entity has an independent representative that—
        - (I) has sufficient knowledge to evaluate the transaction and risks;
        - (II) is not subject to a statutory disqualification;
        - (III) is independent of the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A);
        - (IV) undertakes a duty to act in the best interests of the counterparty it represents;
        - (V) makes appropriate disclosures;
        - (VI) will provide written representations to the special entity regarding fair pricing and the appropriateness of the transaction; and
        - (VII) in the case of employee benefit plans subject to the Employee Retirement Income Security act[^2] of 1974 [[29 U.S.C. 1001](/usc/29/1001.md) et seq.], is a fiduciary as defined in [section 3](/usc/15/3.md) of that Act ([29 U.S.C. 1002](/usc/29/1002.md)); and
      - (ii) before the initiation of the transaction, disclose to the special entity in writing the capacity in which the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) is acting.
    - (B) **Commission authority—** The [Commission](/usc/15/78c.md?p=a-15) may establish such other standards and requirements under this paragraph as the [Commission](/usc/15/78c.md?p=a-15) may determine are appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of this chapter.
  - (6) **Rules—** The [Commission](/usc/15/78c.md?p=a-15) shall prescribe rules under this subsection governing business conduct standards for [security-based swap dealers](/usc/15/78c.md?p=a-71-A) and [major security-based swap participants](/usc/15/78c.md?p=a-67-A).
  - (7) **Applicability—** This subsection shall not apply with respect to a transaction that is—
    - (A) initiated by a special entity on an [exchange](/usc/15/78c.md?p=a-1) or [security-based swaps](/usc/15/78c.md?p=a-68-A) execution [facility](/usc/15/78c.md?p=a-2); and
    - (B) the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) does not know the identity of the counterparty to the transaction.
- (i) **Documentation standards—**
  - (1) **In general—** Each registered [security-based swap dealer](/usc/15/78c.md?p=a-71-A) and [major security-based swap participant](/usc/15/78c.md?p=a-67-A) shall conform with such standards as may be prescribed by the [Commission](/usc/15/78c.md?p=a-15), by rule or regulation, that relate to timely and accurate confirmation, processing, netting, documentation, and valuation of all [security-based swaps](/usc/15/78c.md?p=a-68-A).
  - (2) **Rules—** The [Commission](/usc/15/78c.md?p=a-15) shall adopt rules governing documentation standards for [security-based swap dealers](/usc/15/78c.md?p=a-71-A) and [major security-based swap participants](/usc/15/78c.md?p=a-67-A).
- (j) **Duties—** Each registered [security-based swap dealer](/usc/15/78c.md?p=a-71-A) and [major security-based swap participant](/usc/15/78c.md?p=a-67-A) shall, at all times, comply with the following requirements:
  - (1) **Monitoring of trading—** The [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) shall monitor its trading in [security-based swaps](/usc/15/78c.md?p=a-68-A) to prevent violations of applicable position limits.
  - (2) **Risk management procedures—** The [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) shall establish robust and professional risk management systems adequate for managing the day-to-day business of the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A).
  - (3) **Disclosure of general information—** The [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) shall disclose to the [Commission](/usc/15/78c.md?p=a-15) and to the [prudential regulator](/usc/15/78c.md?p=a-74) for the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A), as applicable, information concerning—
    - (A) terms and conditions of its [security-based swaps](/usc/15/78c.md?p=a-68-A);
    - (B) [security-based swap](/usc/15/78c.md?p=a-68-A) trading operations, mechanisms, and practices;
    - (C) financial integrity protections relating to [security-based swaps](/usc/15/78c.md?p=a-68-A); and
    - (D) other information relevant to its trading in [security-based swaps](/usc/15/78c.md?p=a-68-A).
  - (4) **Ability to obtain information—** The [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) shall—
    - (A) establish and enforce internal systems and procedures to obtain any necessary information to perform any of the functions described in this section; and
    - (B) provide the information to the [Commission](/usc/15/78c.md?p=a-15) and to the [prudential regulator](/usc/15/78c.md?p=a-74) for the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A), as applicable, on request.
  - (5) **Conflicts of interest—** The [security-based swap dealer](/usc/15/78c.md?p=a-71-A) and [major security-based swap participant](/usc/15/78c.md?p=a-67-A) shall implement conflict-of-interest systems and procedures that—
    - (A) establish structural and institutional safeguards to ensure that the activities of any [person](/usc/15/78c.md?p=a-9) within the firm relating to research or analysis of the price or market for any [security-based swap](/usc/15/78c.md?p=a-68-A) or acting in a role of providing clearing activities or making determinations as to accepting clearing customers are separated by appropriate informational partitions within the firm from the review, pressure, or oversight of [persons](/usc/15/78c.md?p=a-9) whose involvement in pricing, trading, or clearing activities might potentially bias their judgment or supervision and contravene the core principles of open access and the business conduct standards described in this chapter; and
    - (B) address such other issues as the [Commission](/usc/15/78c.md?p=a-15) determines to be appropriate.
  - (6) **Antitrust considerations—** Unless necessary or appropriate to achieve the purposes of this chapter, the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) shall not—
    - (A) adopt any process or take any action that results in any unreasonable restraint of trade; or
    - (B) impose any material anticompetitive burden on trading or clearing.
  - (7) **Rules—** The [Commission](/usc/15/78c.md?p=a-15) shall prescribe rules under this subsection governing duties of [security-based swap dealers](/usc/15/78c.md?p=a-71-A) and [major security-based swap participants](/usc/15/78c.md?p=a-67-A).
- (k) **Designation of chief compliance officer—**
  - (1) **In general—** Each [security-based swap dealer](/usc/15/78c.md?p=a-71-A) and [major security-based swap participant](/usc/15/78c.md?p=a-67-A) shall designate an individual to serve as a chief compliance officer.
  - (2) **Duties—** The chief compliance officer shall—
    - (A) report directly to the [board](/usc/15/78c.md?p=a-73) or to the senior officer of the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A);
    - (B) review the compliance of the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) with respect to the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) and [major security-based swap participant](/usc/15/78c.md?p=a-67-A) requirements described in this section;
    - (C) in consultation with the [board](/usc/15/78c.md?p=a-73) of [directors](/usc/15/78c.md?p=a-7), a body performing a function similar to the [board](/usc/15/78c.md?p=a-73), or the senior officer of the organization, resolve any conflicts of interest that may arise;
    - (D) be responsible for administering each policy and procedure that is required to be established pursuant to this section;
    - (E) ensure compliance with this chapter (including regulations) relating to [security-based swaps](/usc/15/78c.md?p=a-68-A), including each rule prescribed by the [Commission](/usc/15/78c.md?p=a-15) under this section;
    - (F) establish procedures for the remediation of noncompliance issues identified by the chief compliance officer through any—
      - (i) compliance office review;
      - (ii) look-back;
      - (iii) internal or external audit finding;
      - (iv) self-reported error; or
      - (v) validated complaint; and
    - (G) establish and follow appropriate procedures for the handling, management response, remediation, retesting, and closing of noncompliance issues.
  - (3) **Annual reports—**
    - (A) **In general—** In accordance with rules prescribed by the [Commission](/usc/15/78c.md?p=a-15), the chief compliance officer shall annually prepare and sign a report that contains a description of—
      - (i) the compliance of the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major swap participant](/usc/15/78c.md?p=a-66) with respect to this chapter (including regulations); and
      - (ii) each policy and procedure of the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) of the chief compliance officer (including the code of ethics and conflict of interest policies).
    - (B) **Requirements—** A compliance report under [subparagraph (A)](#k-3-A) shall—
      - (i) accompany each appropriate financial report of the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) that is required to be furnished to the [Commission](/usc/15/78c.md?p=a-15) pursuant to this section; and
      - (ii) include a certification that, under penalty of law, the compliance report is accurate and complete.
- (l) **Enforcement and administrative proceeding authority—**
  - (1) **Primary enforcement authority—**
    - (A) **Securities and Exchange Commission—** Except as provided in subparagraph [(B)](#l-1-B), [(C)](#l-1-C), or [(D)](#l-1-D), the [Commission](/usc/15/78c.md?p=a-15) shall have primary authority to enforce subtitle B, and the amendments made by subtitle B of the Wall Street Transparency and Accountability Act of 2010, with respect to any [person](/usc/15/78c.md?p=a-9).
    - (B) **Prudential regulators—** The [prudential regulators](/usc/15/78c.md?p=a-74) shall have exclusive authority to enforce the provisions of [subsection (e)](#e) and other prudential requirements of this chapter (including risk management standards), with respect to [security-based swap dealers](/usc/15/78c.md?p=a-71-A) or [major security-based swap participants](/usc/15/78c.md?p=a-67-A) for which they are the [prudential regulator](/usc/15/78c.md?p=a-74).
    - (C) **Referral—**
      - (i) **Violations of nonprudential requirements—** If the [appropriate Federal banking agency](/usc/15/78c.md?p=a-72) for [security-based swap dealers](/usc/15/78c.md?p=a-71-A) or [major security-based swap participants](/usc/15/78c.md?p=a-67-A) that are depository institutions has cause to believe that such [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) may have engaged in conduct that constitutes a violation of the nonprudential requirements of this section or rules adopted by the [Commission](/usc/15/78c.md?p=a-15) thereunder, the agency may recommend in writing to the [Commission](/usc/15/78c.md?p=a-15) that the [Commission](/usc/15/78c.md?p=a-15) initiate an enforcement proceeding as authorized under this chapter. The recommendation shall be accompanied by a written explanation of the concerns giving rise to the recommendation.
      - (ii) **Violations of prudential requirements—** If the [Commission](/usc/15/78c.md?p=a-15) has cause to believe that a [securities](/usc/15/78c.md?p=a-10)-based [swap dealer](/usc/15/78c.md?p=a-76) or major [securities](/usc/15/78c.md?p=a-10)-based [swap](/usc/15/78c.md?p=a-69) [participant](/usc/15/78c.md?p=a-24) that has a [prudential regulator](/usc/15/78c.md?p=a-74) may have engaged in conduct that constitute[^3] a violation of the prudential requirements of [subsection (e)](#e) or rules adopted thereunder, the [Commission](/usc/15/78c.md?p=a-15) may recommend in writing to the [prudential regulator](/usc/15/78c.md?p=a-74) that the [prudential regulator](/usc/15/78c.md?p=a-74) initiate an enforcement proceeding as authorized under this chapter. The recommendation shall be accompanied by a written explanation of the concerns giving rise to the recommendation.
    - (D) **Backstop enforcement authority—**
      - (i) **Initiation of enforcement proceeding by prudential regulator—** If the [Commission](/usc/15/78c.md?p=a-15) does not initiate an enforcement proceeding before the end of the 90-day period beginning on the date on which the [Commission](/usc/15/78c.md?p=a-15) receives a written report under subsection[^4] (C)(i), the [prudential regulator](/usc/15/78c.md?p=a-74) may initiate an enforcement proceeding.
      - (ii) **Initiation of enforcement proceeding by Commission—** If the [prudential regulator](/usc/15/78c.md?p=a-74) does not initiate an enforcement proceeding before the end of the 90-day period beginning on the date on which the [prudential regulator](/usc/15/78c.md?p=a-74) receives a written report under subsection[^4] (C)(ii), the [Commission](/usc/15/78c.md?p=a-15) may initiate an enforcement proceeding.
  - (2) **Censure, denial, suspension; notice and hearing—** The [Commission](/usc/15/78c.md?p=a-15), by order, shall censure, place limitations on the activities, functions, or operations of, or revoke the registration of any [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) that has registered with the [Commission](/usc/15/78c.md?p=a-15) pursuant to [subsection (b)](#b) if the [Commission](/usc/15/78c.md?p=a-15) finds, on the record after notice and opportunity for hearing, that such censure, placing of limitations, or revocation is in the public interest and that such [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A), or any [person associated with](/usc/15/78c.md?p=a-63) such [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) effecting or involved in effecting transactions in [security-based swaps](/usc/15/78c.md?p=a-68-A) on behalf of such [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A), whether prior or subsequent to becoming so associated—
    - (A) has committed or omitted any act, or is subject to an order or finding, enumerated in subparagraph [(A)](#l-4-A), (D), or (E) of paragraph (4) of [section 78o(b)](/usc/15/78o.md?p=b) of this title;
    - (B) has been convicted of any offense specified in [subparagraph (B)](#l-2-B) of such [paragraph (4)](#l-4) within 10 years of the commencement of the proceedings under this subsection;
    - (C) is enjoined from any action, conduct, or practice specified in [subparagraph (C)](#l-2-C) of such [paragraph (4)](#l-4);
    - (D) is subject to an order or a final order specified in subparagraph (F) or (H), respectively, of such [paragraph (4)](#l-4); or
    - (E) has been found by a [foreign financial regulatory authority](/usc/15/78c.md?p=a-52) to have committed or omitted any act, or violated any foreign statute or regulation, enumerated in subparagraph (G) of such [paragraph (4)](#l-4).
  - (3) **Associated persons—** With respect to any [person](/usc/15/78c.md?p=a-9) who is associated, who is seeking to become associated, or, at the time of the alleged misconduct, who was associated or was seeking to become associated with a [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) for the purpose of effecting or being involved in effecting [security-based swaps](/usc/15/78c.md?p=a-68-A) on behalf of such [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A), the [Commission](/usc/15/78c.md?p=a-15), by order, shall censure, place limitations on the activities or functions of such [person](/usc/15/78c.md?p=a-9), or suspend for a period not exceeding 12 months, or bar such [person](/usc/15/78c.md?p=a-9) from being associated with a [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A), if the [Commission](/usc/15/78c.md?p=a-15) finds, on the record after notice and opportunity for a hearing, that such censure, placing of limitations, suspension, or bar is in the public interest and that such [person](/usc/15/78c.md?p=a-9)—
    - (A) has committed or omitted any act, or is subject to an order or finding, enumerated in subparagraph [(A)](#l-4-A), (D), or (E) of paragraph (4) of [section 78o(b)](/usc/15/78o.md?p=b) of this title;
    - (B) has been convicted of any offense specified in [subparagraph (B)](#l-3-B) of such [paragraph (4)](#l-4) within 10 years of the commencement of the proceedings under this subsection;
    - (C) is enjoined from any action, conduct, or practice specified in [subparagraph (C)](#l-3-C) of such [paragraph (4)](#l-4);
    - (D) is subject to an order or a final order specified in subparagraph (F) or (H), respectively, of such [paragraph (4)](#l-4); or
    - (E) has been found by a [foreign financial regulatory authority](/usc/15/78c.md?p=a-52) to have committed or omitted any act, or violated any foreign statute or regulation, enumerated in subparagraph (G) of such [paragraph (4)](#l-4).
  - (4) **Unlawful conduct—** It shall be unlawful—
    - (A) for any [person](/usc/15/78c.md?p=a-9) as to whom an order under [paragraph (3)](#l-3) is in effect, without the consent of the [Commission](/usc/15/78c.md?p=a-15), willfully to become, or to be, associated with a [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) in contravention of such order; or
    - (B) for any [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) to permit such a [person](/usc/15/78c.md?p=a-9), without the consent of the [Commission](/usc/15/78c.md?p=a-15), to become or remain a [person associated with](/usc/15/78c.md?p=a-63) the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) in contravention of such order, if such [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) knew, or in the exercise of reasonable care should have known, of such order.

## Footnotes

[^1]: So in original. Probably should be followed by “a”.
[^2]: So in original. Probably should be capitalized.
[^3]: So in original. Probably should be “constitutes”.
[^4]: So in original. Probably should be “subparagraph”.

## Source credit

(June 6, 1934, ch. 404, title I, § 15F, as added Pub. L. 111–203, title VII, § 764(a), July 21, 2010, 124 Stat. 1784; amended Pub. L. 114–1, title III, § 302(b), Jan. 12, 2015, 129 Stat. 28.)

## Notes

### Editorial Notes

### References in Text

This chapter, referred to in subsecs. (e)(3)(B)(ii), (j)(5)(A), (6), (k)(2)(E), (3)(A)(i), and (l)(1)(B), (C), was in the original “this title”, and this chapter, referred to in subsec. (h)(3)(D), (5)(B), was in the original “this Act”. See References in Text note set out under section 78a of this title.

The Commodity Exchange Act, referred to in subsec. (e)(3)(B)(ii), is act Sept. 21, 1922, ch. 369, 42 Stat. 998, which is classified generally to chapter 1 (§ 1 et seq.) of Title 7, Agriculture. For complete classification of this Act to the Code, see section 1 of Title 7 and Tables.

The Employee Retirement Income Security Act of 1974, referred to in subsec. (h)(5)(A)(i)(VII), is Pub. L. 93–406, Sept. 2, 1974, 88 Stat. 829, which is classified principally to chapter 18 (§ 1001 et seq.) of Title 29, Labor. For complete classification of this Act to the Code, see Short Title note set out under section 1001 of Title 29 and Tables.

Subtitle B of the Wall Street Transparency and Accountability Act of 2010, referred to in subsec. (l)(1)(A), is subtitle B (§§ 761–774) of title VII of Pub. L. 111–203, July 21, 2010, 124 Stat. 1754, which enacted this section and subchapter II (§ 8341 et seq.) of chapter 109 and sections 78c–3 to 78c–5, 78j–2, and 78m–1 of this title, amended sections 77b, 77b–1, 77e, 77q, 78c, 78c–1, 78f, 78i, 78j, 78m, 78o, 78p, 78q–1, 78t, 78u–1, 78u–2, 78bb, 78dd, 78mm, 80a–2, and 80b–2 of this title, enacted provisions set out as a note under section 77b of this title, and amended provisions set out as a note under section 78c of this title. For complete classification of subtitle B to the Code, see Tables.

### Amendments

2015—Subsec. (e)(4). Pub. L. 114–1 added par. (4).

### Statutory Notes and Related Subsidiaries

### Effective Date

Section effective on the later of 360 days after July 21, 2010, or, to the extent a provision of subtitle B (§§ 761–774) of title VII of Pub. L. 111–203 requires a rulemaking, not less than 60 days after publication of the final rule or regulation implementing such provision of subtitle B, see section 774 of Pub. L. 111–203, set out as an Effective Date of 2010 Amendment note under section 77b of this title.