Proposed new U.S. rules for cross-border swaps aim to bolster market oversight and transparency by setting out how trades that involve both U.S. and foreign securities dealers should be treated by the U.S. regulatory regime.

The U.S. Securities and Exchange Commission (SEC) is proposing new rules that will set requirements for cross-border transactions involving security-based swaps. Among other things, the new rules will require foreign dealers that use U.S. personnel to arrange, negotiate, or execute a transaction to include these transactions in determining whether the foreign firm is required to register as a security-based swap dealer in the U.S.

Previous U.S. reforms established thresholds for cross-border activity that set out when a foreign dealer has to register in the U.S.

The new proposals also establish when these sorts of transactions would be subject to the reporting and public disclosure requirements under SEC regulations; and, if the foreign firm is a registered security-based swap dealer, these trades will be subject to certain U.S. business conduct standards too.

“These proposed rules are critical for the SEC’s oversight responsibilities,” said SEC chair Mary Jo White. “The rules will help ensure that both U.S. and non-U.S. dealers are subject to our registration, reporting, public dissemination and business conduct requirements when they engage in security-based swap activity in the United States, resulting in increased transparency and enhanced stability and oversight.”

SEC commissioner, Kara Stein, expressed support for the proposals.

“Counting security-based swaps transactions towards the registration requirement is important,” she said. “Registration ultimately triggers important oversight and financial responsibility obligations, especially related to margin. Those components are essential for improving the resiliency of the swaps marketplace.”

“In addition, the requirement for public dissemination brings significant amounts of transparency. This is fundamental to investor protection and ensuring an orderly, fair, and efficient marketplace. Public dissemination may be one of the most important parts of this rule. It should allow market participants to help patrol the markets and keep in check the build-up of large or abusive positions, such as the London Whale or Abacus-type trades,” she added.

The proposals are out for a 60-day comment period.