---
kind: "section"
citation: "7 U.S.C. § 6s"
title: "7"
title_heading: "Agriculture"
number: "6s"
heading: "Registration and regulation of swap dealers and major swap participants"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/7/6s"
units:
  - "Chapter 1 — Commodity Exchanges"
---

# §6s. Registration and regulation of swap dealers and major swap participants

- (a) **Registration—**
  - (1) **Swap dealers—** It shall be unlawful for any [person](/usc/7/1a.md?p=38) to act as a [swap dealer](/usc/7/1a.md?p=49-A) unless the [person](/usc/7/1a.md?p=38) is registered as a [swap dealer](/usc/7/1a.md?p=49-A) with the [Commission](/usc/7/1a.md?p=8).
  - (2) **Major swap participants—** It shall be unlawful for any [person](/usc/7/1a.md?p=38) to act as a [major swap participant](/usc/7/1a.md?p=33-A) unless the [person](/usc/7/1a.md?p=38) is registered as a [major swap participant](/usc/7/1a.md?p=33-A) with the [Commission](/usc/7/1a.md?p=8).
- (b) **Requirements—**
  - (1) **In general—** A [person](/usc/7/1a.md?p=38) shall register as a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) by filing a registration application with the [Commission](/usc/7/1a.md?p=8).
  - (2) **Contents—**
    - (A) **In general—** The application shall be made in such form and manner as prescribed by the [Commission](/usc/7/1a.md?p=8), and shall contain such information, as the [Commission](/usc/7/1a.md?p=8) considers necessary concerning the business in which the applicant is or will be engaged.
    - (B) **Continual reporting—** A [person](/usc/7/1a.md?p=38) that is registered as a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) shall continue to submit to the [Commission](/usc/7/1a.md?p=8) reports that contain such information pertaining to the business of the [person](/usc/7/1a.md?p=38) as the [Commission](/usc/7/1a.md?p=8) may require.
  - (3) **Expiration—** Each registration under this section shall expire at such time as the [Commission](/usc/7/1a.md?p=8) may prescribe by rule or regulation.
  - (4) **Rules—** Except as provided in subsections [(d)](#d) and [(e)](#e), the [Commission](/usc/7/1a.md?p=8) may prescribe rules applicable to [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A), including rules that limit the activities of [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A).
  - (5) **Transition—** Rules under this section shall provide for the registration of [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A) not later than 1 year after July 21, 2010.
  - (6) **Statutory disqualification—** Except to the extent otherwise specifically provided by rule, regulation, or order, it shall be unlawful for a [swap dealer](/usc/7/1a.md?p=49-A) or a [major swap participant](/usc/7/1a.md?p=33-A) to permit any [person](/usc/7/1a.md?p=38) associated with a [swap dealer](/usc/7/1a.md?p=49-A) or a [major swap participant](/usc/7/1a.md?p=33-A) who is subject to a statutory disqualification to effect or be involved in effecting [swaps](/usc/7/1a.md?p=47-A) on behalf of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A), if the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) knew, or in the exercise of reasonable care should have known, of the statutory disqualification.
- (c) **Dual registration—**
  - (1) **Swap dealer—** Any [person](/usc/7/1a.md?p=38) that is required to be registered as a [swap dealer](/usc/7/1a.md?p=49-A) under this section shall register with the [Commission](/usc/7/1a.md?p=8) regardless of whether the [person](/usc/7/1a.md?p=38) also is a depository institution or is registered with the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) as a [security-based swap dealer](/usc/7/1a.md?p=43).
  - (2) **Major swap participant—** Any [person](/usc/7/1a.md?p=38) that is required to be registered as a [major swap participant](/usc/7/1a.md?p=33-A) under this section shall register with the [Commission](/usc/7/1a.md?p=8) regardless of whether the [person](/usc/7/1a.md?p=38) also is a depository institution or is registered with the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) as a [major security-based swap participant](/usc/7/1a.md?p=32).
- (d) **Rulemakings—**
  - (1) **In general—** The [Commission](/usc/7/1a.md?p=8) shall adopt rules for [persons](/usc/7/1a.md?p=38) that are registered as [swap dealers](/usc/7/1a.md?p=49-A) or [major swap participants](/usc/7/1a.md?p=33-A) under this section.
  - (2) **Exception for prudential requirements—**
    - (A) **In general—** The [Commission](/usc/7/1a.md?p=8) may not prescribe rules imposing prudential requirements on [swap dealers](/usc/7/1a.md?p=49-A) or [major swap participants](/usc/7/1a.md?p=33-A) for which there is a [prudential regulator](/usc/7/1a.md?p=39).
    - (B) **Applicability—** [Subparagraph (A)](#d-2-A) does not limit the authority of the [Commission](/usc/7/1a.md?p=8) to prescribe rules as directed under this section.
- (e) **Capital and margin requirements—**
  - (1) **In general—**
    - (A) **Swap dealers and major swap participants that are banks—** Each registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) for which there is a [prudential regulator](/usc/7/1a.md?p=39) shall meet such minimum capital requirements and minimum initial and variation margin requirements as the [prudential regulator](/usc/7/1a.md?p=39) shall by rule or regulation prescribe under [paragraph (2)(A)](#e-2-A).
    - (B) **Swap dealers and major swap participants that are not banks—** Each registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) for which there is not a [prudential regulator](/usc/7/1a.md?p=39) shall meet such minimum capital requirements and minimum initial and variation margin requirements as the [Commission](/usc/7/1a.md?p=8) shall by rule or regulation prescribe under [paragraph (2)(B)](#e-2-B).
  - (2) **Rules—**
    - (A) **Swap dealers and major swap participants that are banks—** The [prudential regulators](/usc/7/1a.md?p=39), in consultation with the [Commission](/usc/7/1a.md?p=8) and the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8), shall jointly adopt rules for [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A), with respect to their activities as a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A), for which there is a [prudential regulator](/usc/7/1a.md?p=39) imposing—
      - (i) capital requirements; and
      - (ii) both initial and variation margin requirements on all [swaps](/usc/7/1a.md?p=47-A) that are not cleared by a registered [derivatives clearing organization](/usc/7/1a.md?p=15-A).
    - (B) **Swap dealers and major swap participants that are not banks—** The [Commission](/usc/7/1a.md?p=8) shall adopt rules for [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A), with respect to their activities as a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A), for which there is not a [prudential regulator](/usc/7/1a.md?p=39) imposing—
      - (i) capital requirements; and
      - (ii) both initial and variation margin requirements on all [swaps](/usc/7/1a.md?p=47-A) that are not cleared by a registered [derivatives clearing organization](/usc/7/1a.md?p=15-A).
    - (C) **Capital—** In setting capital requirements for a [person](/usc/7/1a.md?p=38) that is designated as a [swap dealer](/usc/7/1a.md?p=49-A) or a [major swap participant](/usc/7/1a.md?p=33-A) for a single type or single class or category of [swap](/usc/7/1a.md?p=47-A) or activities, the [prudential regulator](/usc/7/1a.md?p=39) and the [Commission](/usc/7/1a.md?p=8) shall take into account the risks associated with other types of [swaps](/usc/7/1a.md?p=47-A) or classes of [swaps](/usc/7/1a.md?p=47-A) or categories of [swaps](/usc/7/1a.md?p=47-A) engaged in and the other activities conducted by that [person](/usc/7/1a.md?p=38) that are not otherwise subject to regulation applicable to that [person](/usc/7/1a.md?p=38) by virtue of the status of the [person](/usc/7/1a.md?p=38) as a [swap dealer](/usc/7/1a.md?p=49-A) or a [major swap participant](/usc/7/1a.md?p=33-A).
  - (3) **Standards for capital and margin—**
    - (A) **In general—** To offset the greater risk to the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) and the financial system arising from the use of [swaps](/usc/7/1a.md?p=47-A) that are not cleared, the requirements imposed under [paragraph (2)](#e-2) shall—
      - (i) help ensure the safety and soundness of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A); and
      - (ii) be appropriate for the risk associated with the non-[cleared swaps](/usc/7/1a.md?p=7) held as a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-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/7/1a.md?p=8) to set financial responsibility rules for a [futures commission merchant](/usc/7/1a.md?p=28-A) or [introducing broker](/usc/7/1a.md?p=31-A) registered pursuant to [section 6f(a) of this title](/usc/7/6f.md?p=a) (except for [section 6f(a)(3) of this title](/usc/7/6f.md?p=a-3)) in accordance with [section 6f(b) of this title](/usc/7/6f.md?p=b); or
        - (II) of the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) to set financial responsibility rules for a [broker](/usc/7/499a.md?p=b-7) or [dealer](/usc/7/499a.md?p=b-6) registered pursuant to section 15(b) of the [Securities](/usc/7/1a.md?p=41) Exchange Act of 1934 ([15 U.S.C. 78o(b)](/usc/15/78o.md?p=b)) (except for [section 15(b)(11)](/usc/7/15.md) of that Act ([15 U.S.C. 78o(b)(11)](/usc/15/78o.md?p=b-11))[^1] in accordance with section 15(c)(3) of the [Securities](/usc/7/1a.md?p=41) Exchange Act of 1934 ([15 U.S.C. 78o(c)(3)](/usc/15/78o.md?p=c-3)).
      - (ii) **Futures commission merchants and other dealers—** A [futures commission merchant](/usc/7/1a.md?p=28-A), [introducing broker](/usc/7/1a.md?p=31-A), [broker](/usc/7/499a.md?p=b-7), or [dealer](/usc/7/499a.md?p=b-6) shall maintain sufficient capital to comply with the stricter of any applicable capital requirements to which such [futures commission merchant](/usc/7/1a.md?p=28-A), [introducing broker](/usc/7/1a.md?p=31-A), [broker](/usc/7/499a.md?p=b-7), or [dealer](/usc/7/499a.md?p=b-6) is subject to under this chapter or the [Securities](/usc/7/1a.md?p=41) Exchange Act of 1934 ([15 U.S.C. 78a](/usc/15/78a.md) et seq.).
    - (C) **Margin requirements—** In prescribing margin requirements under this subsection, the [prudential regulator](/usc/7/1a.md?p=39) with respect to [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A) for which it is the [prudential regulator](/usc/7/1a.md?p=39) and the [Commission](/usc/7/1a.md?p=8) with respect to [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A) for which there is no [prudential regulator](/usc/7/1a.md?p=39) shall permit the use of noncash collateral, as the regulator or the [Commission](/usc/7/1a.md?p=8) determines to be consistent with—
      - (i) preserving the financial integrity of [markets](/usc/7/198.md?p=1) trading [swaps](/usc/7/1a.md?p=47-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/7/1a.md?p=39), the [Commission](/usc/7/1a.md?p=8), and the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) shall periodically (but not less frequently than annually) consult on minimum capital requirements and minimum initial and variation margin 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 requirements, including the use of non cash collateral, for—
        - (I) [swap dealers](/usc/7/1a.md?p=49-A); and
        - (II) [major swap participants](/usc/7/1a.md?p=33-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), including the initial and variation margin requirements imposed by rules adopted pursuant to paragraphs [(2)(A)(ii)](#e-2-A-ii) and [(2)(B)(ii)](#e-2-B-ii), shall not apply to a [swap](/usc/7/1a.md?p=47-A) in which a counterparty qualifies for an exception under [section 2(h)(7)(A) of this title](/usc/7/2.md?p=h-7-A), or an exemption issued under [section 6(c)(1) of this title](/usc/7/6.md?p=c-1) from the requirements of [section 2(h)(1)(A) of this title](/usc/7/2.md?p=h-1-A) for cooperative entities as defined in such exemption, or satisfies the criteria in [section 2(h)(7)(D) of this title](/usc/7/2.md?p=h-7-D).
- (f) **Reporting and recordkeeping—**
  - (1) **In general—** Each registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A)—
    - (A) shall make such reports as are required by the [Commission](/usc/7/1a.md?p=8) by rule or regulation regarding the transactions and positions and financial condition of the registered [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A);
    - (B)
      - (i) for which there is a [prudential regulator](/usc/7/1a.md?p=39), shall keep books and records of all activities related to the business as a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) in such form and manner and for such period as may be prescribed by the [Commission](/usc/7/1a.md?p=8) by rule or regulation; and
      - (ii) for which there is no [prudential regulator](/usc/7/1a.md?p=39), shall keep books and records in such form and manner and for such period as may be prescribed by the [Commission](/usc/7/1a.md?p=8) by rule or regulation;
    - (C) shall keep books and records described in [subparagraph (B)](#f-1-B) open to inspection and examination by any representative of the [Commission](/usc/7/1a.md?p=8); and
    - (D) shall keep any such books and records relating to [swaps](/usc/7/1a.md?p=47-A) defined in [section 1a(47)(A)(v) of this title](/usc/7/1a.md?p=47-A-v) open to inspection and examination by the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8).
  - (2) **Rules—** The [Commission](/usc/7/1a.md?p=8) shall adopt rules governing reporting and recordkeeping for [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A).
- (g) **Daily trading records—**
  - (1) **In general—** Each registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) shall maintain daily trading records of the [swaps](/usc/7/1a.md?p=47-A) of the registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) and all related records (including related cash or forward transactions) and recorded communications, including electronic mail, instant messages, and recordings of telephone [calls](/usc/7/1a.md?p=36), for such period as may be required by the [Commission](/usc/7/1a.md?p=8) by rule or regulation.
  - (2) **Information requirements—** The daily trading records shall include such information as the [Commission](/usc/7/1a.md?p=8) shall require by rule or regulation.
  - (3) **Counterparty records—** Each registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) shall maintain daily trading records for each counterparty in a manner and form that is identifiable with each [swap](/usc/7/1a.md?p=47-A) transaction.
  - (4) **Audit trail—** Each registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) shall maintain a complete audit trail for conducting comprehensive and accurate trade reconstructions.
  - (5) **Rules—** The [Commission](/usc/7/1a.md?p=8) shall adopt rules governing daily trading records for [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A).
- (h) **Business conduct standards—**
  - (1) **In general—** Each registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) shall conform with such business conduct standards as prescribed in [paragraph (3)](#h-3) and as may be prescribed by the [Commission](/usc/7/1a.md?p=8) by rule or regulation that relate to—
    - (A) fraud, manipulation, and other abusive practices involving [swaps](/usc/7/1a.md?p=47-A) (including [swaps](/usc/7/1a.md?p=47-A) that are offered but not entered into);
    - (B) diligent supervision of the business of the registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A);
    - (C) adherence to all applicable position limits; and
    - (D) such other matters as the [Commission](/usc/7/1a.md?p=8) determines to be appropriate.
  - (2) **Responsibilities with respect to special entities—**
    - (A) **Advising special entities—** A [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) that acts as an advisor to a special entity regarding a [swap](/usc/7/1a.md?p=47-A) shall comply with the requirements of subparagraph (4) with respect to such Special Entity.
    - (B) **Entering of swaps with respect to special entities—** A [swap dealer](/usc/7/1a.md?p=49-A) that enters into or [offers](/usc/7/1a.md?p=36) to enter into [swap](/usc/7/1a.md?p=47-A)[^2] with a Special Entity shall comply with the requirements of subparagraph (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/7/198.md?p=5), [State](/usc/7/198.md?p=5) agency, city, county, municipality, or other political subdivision of a [State](/usc/7/198.md?p=5);
      - (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/7/1a.md?p=8) shall—
    - (A) establish a duty for a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) to verify that any counterparty meets the eligibility standards for an [eligible contract participant](/usc/7/1a.md?p=18);
    - (B) require disclosure by the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) to any counterparty to the transaction (other than a [swap dealer](/usc/7/1a.md?p=49-A), [major swap participant](/usc/7/1a.md?p=33-A), [security-based swap dealer](/usc/7/1a.md?p=43), or [major security-based swap participant](/usc/7/1a.md?p=32)) of—
      - (i) information about the material risks and characteristics of the [swap](/usc/7/1a.md?p=47-A);
      - (ii) any material incentives or conflicts of interest that the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) may have in connection with the [swap](/usc/7/1a.md?p=47-A); and
      - (iii)
        - (I) for [cleared swaps](/usc/7/1a.md?p=7), upon the request of the counterparty, receipt of the daily mark of the transaction from the appropriate [derivatives clearing organization](/usc/7/1a.md?p=15-A); and
        - (II) for uncleared swaps, receipt of the daily mark of the transaction from the [swap dealer](/usc/7/1a.md?p=49-A) or the [major swap participant](/usc/7/1a.md?p=33-A);
    - (C) establish a duty for a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-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/7/1a.md?p=8) 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 swap dealers acting as advisors—**
    - (A) **In general—** It shall be unlawful for a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A)—
      - (i) to [employ](/usc/7/499a.md?p=b-10) any device, scheme, or artifice to defraud any Special Entity or prospective [customer](/usc/7/24.md?p=b) 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](/usc/7/24.md?p=b) 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 [swap dealer](/usc/7/1a.md?p=49-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 [swap dealer](/usc/7/1a.md?p=49-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 [swap](/usc/7/1a.md?p=47-A) recommended by the [swap dealer](/usc/7/1a.md?p=49-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/7/1a.md?p=8) may prescribe by rule or regulation.
  - (5) **Special requirements for swap dealers as counterparties to special entities—**
    - (A) Any [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) that [offers](/usc/7/1a.md?p=36) to enter or enters into a [swap](/usc/7/1a.md?p=47-A) with a Special Entity shall—
      - (i) comply with any duty established by the [Commission](/usc/7/1a.md?p=8) for a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A), with respect to a counterparty that is an [eligible contract participant](/usc/7/1a.md?p=18) within the meaning of subclause (I) or (II) of clause (vii) of [section 1a(18)](/usc/7/1a.md?p=18)[^3] of this title, that requires the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-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 [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-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[^4] of 1974 [[29 U.S.C. 1001](/usc/29/1001.md) et seq.], is a fiduciary as defined in [section 3](/usc/29/3.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 [swap dealer](/usc/7/1a.md?p=49-A) is acting; and
    - (B) the [Commission](/usc/7/1a.md?p=8) may establish such other standards and requirements as the [Commission](/usc/7/1a.md?p=8) 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/7/1a.md?p=8) shall prescribe rules under this subsection governing business conduct standards for [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A).
  - (7) **Applicability—** This section shall not apply with respect to a transaction that is—
    - (A) initiated by a Special Entity on an [exchange](/usc/7/1a.md?p=1-D) or [swap execution facility](/usc/7/1a.md?p=50); and
    - (B) one in which the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) does not know the identity of the counterparty to the transaction.
- (i) **Documentation standards—**
  - (1) **In general—** Each registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) shall conform with such standards as may be prescribed by the [Commission](/usc/7/1a.md?p=8) by rule or regulation that relate to timely and accurate confirmation, processing, netting, documentation, and valuation of all [swaps](/usc/7/1a.md?p=47-A).
  - (2) **Rules—** The [Commission](/usc/7/1a.md?p=8) shall adopt rules governing documentation standards for [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A).
- (j) **Duties—** Each registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) at all times shall comply with the following requirements:
  - (1) **Monitoring of trading—** The [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) shall monitor its trading in [swaps](/usc/7/1a.md?p=47-A) to prevent violations of applicable position limits.
  - (2) **Risk management procedures—** The [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) shall establish robust and professional risk management systems adequate for managing the day-to-day business of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A).
  - (3) **Disclosure of general information—** The [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) shall disclose to the [Commission](/usc/7/1a.md?p=8) and to the [prudential regulator](/usc/7/1a.md?p=39) for the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A), as applicable, information concerning—
    - (A) terms and conditions of its [swaps](/usc/7/1a.md?p=47-A);
    - (B) [swap](/usc/7/1a.md?p=47-A) trading operations, mechanisms, and practices;
    - (C) financial integrity protections relating to [swaps](/usc/7/1a.md?p=47-A); and
    - (D) other information relevant to its trading in [swaps](/usc/7/1a.md?p=47-A).
  - (4) **Ability to obtain information—** The [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-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/7/1a.md?p=8) and to the [prudential regulator](/usc/7/1a.md?p=39) for the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A), as applicable, on request.
  - (5) **Conflicts of interest—** The [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-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/7/1a.md?p=38) within the firm relating to research or analysis of the price or [market](/usc/7/198.md?p=1) for any [commodity](/usc/7/1a.md?p=9) or [swap](/usc/7/1a.md?p=47-A) or acting in a role of providing clearing activities or making determinations as to accepting clearing [customers](/usc/7/24.md?p=b) are separated by appropriate informational partitions within the firm from the review, pressure, or oversight of [persons](/usc/7/1a.md?p=38) 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/7/1a.md?p=8) determines to be appropriate.
  - (6) **Antitrust considerations—** Unless necessary or appropriate to achieve the purposes of this chapter, a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-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/7/1a.md?p=8) shall prescribe rules under this subsection governing duties of [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A).
- (k) **Designation of chief compliance officer—**
  - (1) **In general—** Each [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-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/7/1a.md?p=5) or to the senior officer of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A);
    - (B) review the compliance of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) with respect to the [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) requirements described in this section;
    - (C) in consultation with the [board](/usc/7/1a.md?p=5) of directors, a body performing a function similar to the [board](/usc/7/1a.md?p=5), 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 [swaps](/usc/7/1a.md?p=47-A), including each rule prescribed by the [Commission](/usc/7/1a.md?p=8) 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/7/1a.md?p=8), the chief compliance officer shall annually prepare and sign a report that contains a description of—
      - (i) the compliance of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) with respect to this chapter (including regulations); and
      - (ii) each policy and procedure of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-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 [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) that is required to be furnished to the [Commission](/usc/7/1a.md?p=8) pursuant to this section; and
      - (ii) include a certification that, under penalty of law, the compliance report is accurate and complete.
- (l) **Segregation requirements—**
  - (1) **Segregation of assets held as collateral in uncleared swap transactions—**
    - (A) **Notification—** A [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) shall be required to notify the counterparty of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) at the beginning of a [swap](/usc/7/1a.md?p=47-A) transaction that the counterparty has the right to require segregation of the funds or other property supplied to margin, guarantee, or secure the obligations of the counterparty.
    - (B) **Segregation and maintenance of funds—** At the request of a counterparty to a [swap](/usc/7/1a.md?p=47-A) that provides funds or other property to a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) to margin, guarantee, or secure the obligations of the counterparty, the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) shall—
      - (i) segregate the funds or other property for the benefit of the counterparty; and
      - (ii) in accordance with such rules and regulations as the [Commission](/usc/7/1a.md?p=8) may promulgate, maintain the funds or other property in a segregated account separate from the assets and other interests of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A).
  - (2) **Applicability—** The requirements described in [paragraph (1)](#l-1) shall—
    - (A) apply only to a [swap](/usc/7/1a.md?p=47-A) between a counterparty and a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) that is not submitted for clearing to a [derivatives clearing organization](/usc/7/1a.md?p=15-A); and
    - (B)
      - (i) not apply to variation margin payments; or
      - (ii) not preclude any commercial arrangement regarding—
        - (I) the investment of segregated funds or other property that may only be invested in such investments as the [Commission](/usc/7/1a.md?p=8) may permit by rule or regulation; and
        - (II) the related allocation of gains and losses resulting from any investment of the segregated funds or other property.
  - (3) **Use of independent third-party custodians—** The segregated account described in [paragraph (1)](#l-1) shall be—
    - (A) carried by an independent third-party custodian; and
    - (B) designated as a segregated account for and on behalf of the counterparty.
  - (4) **Reporting requirement—** If the counterparty does not choose to require segregation of the funds or other property supplied to margin, guarantee, or secure the obligations of the counterparty, the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) shall report to the counterparty of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) on a quarterly basis that the back office procedures of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) relating to margin and collateral requirements are in compliance with the agreement of the counterparties.

## Footnotes

[^1]: So in original. Probably should be followed by a third closing parenthesis.
[^2]: So in original. Probably should be preceded by “a”.
[^3]: So in original. Probably should be “section 1a(18)(A)”.
[^4]: So in original. Probably should be “Act”.

## Source credit

(Sept. 21, 1922, ch. 369, § 4s, as added and amended Pub. L. 111–203, title VII, §§ 724(c), 731, July 21, 2010, 124 Stat. 1684, 1703; Pub. L. 114–1, title III, § 302(a), Jan. 12, 2015, 129 Stat. 28.)

## Notes

### Editorial Notes

### References in Text

The Securities Exchange Act of 1934, referred to in subsec. (e)(3)(B)(ii), is act June 6, 1934, ch. 404, 48 Stat. 881, which is classified principally to chapter 2B (§ 78a et seq.) of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see section 78a of Title 15 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.

### Amendments

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

2010—Subsec. (l). Pub. L. 111–203, § 724(c), added subsec. (l).

### Statutory Notes and Related Subsidiaries

### Effective Date

Section and amendment by Pub. L. 111–203 effective on the later of 360 days after July 21, 2010, or, to the extent a provision of subtitle A (§§ 711–754) 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 A, see section 754 of Pub. L. 111–203, set out as an Effective Date of 2010 Amendment note under section 1a of this title.

### Implementation

Pub. L. 114–1, title III, § 303, Jan. 12, 2015, 129 Stat. 28, provided that: “The amendments made by this title to the Commodity Exchange Act [amending this section] shall be implemented— without regard to— chapter 35 of title 44, United States Code; and the notice and comment provisions of section 553 of title 5, United States Code; through the promulgation of an interim final rule, pursuant to which public comment will be sought before a final rule is issued; and such that paragraph (1) shall apply solely to changes to rules and regulations, or proposed rules and regulations, that are limited to and directly a consequence of such amendments.”