The SEC’s final rule regarding price quotes and research reports relating to security-based swaps

Abstract

PurposeThis paper aims to summarize the requirements of a new US Securities and Exchange Commission (SEC) rule regarding certain communications relating to security-based swaps in the context of the SEC’s ongoing efforts to establish its regulatory regime for such swaps.Design/methodology/approachThis paper provides a close analysis of an SEC final rule that provides that certain communications relating to security-based swaps will not constitute “offers” for purposes of Section 5 of the Securities Act of 1933, under which generally offers or sales of a security must be registered or made pursuant to an exemption from registration. The paper also analyzes the prospects for a general exemption from registration requirements for security-based swaps involving eligible contract participants, and it places the final rule in the context of the SEC’s broader efforts to establish its final rules for security-based swaps.FindingsIn addition to detailing the requirements of the final rule, this paper concludes that it is unlikely that the SEC will decide, generally, to exempt many security-based swaps from registration requirements, and that it is likely that a significant amount of time will elapse before the SEC finalizes most of its remaining rules for security-based swaps.Originality/valueThis paper contains valuable information regarding the regulation of security-based swaps in the context of securities regulation and the SEC’s other rules for such swaps.