SEC Adopts Certain Final Rules Relating to Cross-Border Security-Based Swap Activities

August 11, 2014

The U.S. Securities and Exchange Commission (SEC) adopted its final rules on the definition of the term “U.S. person” solely for purposes of certain aspects of cross-border security-based swap activities (Final Rules) on July 9, 2014. A “security-based swap” is essentially a swap based on a single security, a single loan, a narrow-based security index, or an event relating to a single issuer of a security or the issuer of securities in a narrow-based security index (such as a credit default swap). The Final Rules have been anticipated since the U.S. Commodity Futures Trading Commission (CFTC) published its “U.S. person” definition guidance in July 2013 that applies solely for purposes of cross-border commodity interest “swaps.” The terms “security-based swap” and “swap” are intended to cover the universe of swaps. For a comparison of the CFTC and SEC “U.S. person” definitions, please see Appendix A below. For a more detailed discussion of the CFTC’s definition of U.S. person, please refer to the Dechert OnPoint, CFTC Issues Cross-Border Swaps Regulation Guidance and Exemptive Order.

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