On May 11, 2022, the SEC announced that the thresholds for the de minimis exemption from registration as a security-based swap dealer (SBSD) under Exchange Act Rules 3a71-2 and 3a71-2A (17 C.F.R. § 240.3a71-2.) would lower on November 8, 2026. A de minimis exemption provides that an entity can avoid registration as an SBSD if its security-based swap (SBS) dealing activity falls below a certain threshold (17 C.F.R. §§ 1.3 and 240.3a71-1; see Practice Note, US Derivatives Regulation: Swap Dealer and SBSD Registration Thresholds: De Minimis Exemption from Designation as a Security-Based Swap Dealer).

To qualify for the de minimis exemption, all of the person’s and its affiliates’ SBS dealing activity over the immediately preceding 12 months must fall below either of three separate thresholds. Two of the thresholds are subject to higher, phase-in threshold levels of aggregate gross notional amounts of de minimis SBS dealing activity that will lower on November 8, 2026. As of that date, the de minimis threshold for designation as SBSD lowers as follows:

Under Exchange Act Rule 3a71-2(a)(2)(ii)(A), the SEC has the authority to issue an order establishing the phase-in termination date, and if the phase-in termination date has not been previously established by an SEC order, the phase-in termination date will be November 8, 2026, which is five years after the data collection initiation date, which occurred on November 8, 2021. The lower threshold is expected to result in more SBSD registrations, as more entities will be captured.

For additional resources on SBS rules and regulations under US law, see US Derivatives Regulation: Security-Based Swaps (SBS) Toolkit.