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The SEC adopted amendments that extend the expiration date of interim final rules providing exemptions for "security-based swaps that prior to July 16, 2011 were security-based swap agreements and are defined as 'securities' under the Securities Act and the Exchange Act." Without the exemption, security-based swaps would be subject to the ordinary provisions of the securities laws (such as the prospectus-delivery requirement, or the requirement that the swaps be issued subject to a qualified indenture). The final amendments were published in the Federal Register and are effective immediately.
The final amendments extend the expiration dates of the interim final rules from February 11, 2017 to February 11, 2018. The extension applies to the following rules: interim final Securities Act Rule 240; interim final Securities Exchange Act Rules 12a-11 and 12h-1(i); and interim final Trust Indenture Act Rule 4d-12.
Commentary / Nihal Patel
As the SEC notes in an economic analysis that accompanies the final amendments, the extension will maintain the "status quo" while the SEC continues to develop rules governing security-based swap activities. It remains to be seen how the SEC will handle those rulemaking initiatives under new leadership, though both of the current commissioners went on record last year as urging the SEC to prioritize its Title VII rulemaking.
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