Staff Report on the Definitions of “Security-Based Swap Dealer” and “Major Security- Based Swap Participant” (SIFMA and ISDA)

Summary

SIFMA and the International Swaps and Derivatives Association, Inc. (ISDA) (together the Associations) ¹ provided comments to the U.S. Securities and Exchange Commission (SEC) on the Staff Report ² related to the Definitions of "Security-Based Swap Dealer" and "Major Security-Based Swap Participant."

Excerpt

The Associations appreciate the SEC's action in January 2026 to extend the existing de minimis thresholds to May 8, 2028. ³ This action appropriately recognizes the effectiveness of the current framework, and for the reasons outlined below, the Associations encourage the Commission to maintain the existing de minimis thresholds for credit default swaps ("CDS") that constitute security-based swaps ("SBS") and non-CDS SBS.

Below, we detail our support for maintaining the current de minimis thresholds for both CDS and non-CDS activity and address several related considerations bearing on the appropriate calibration of the thresholds, including the SEC's continued inclusion of "arranged, negotiated, or executed" transactions and the ongoing review of the product scope for SBS. We also urge the Commission to eliminate ongoing regulatory uncertainty by establishing permanent thresholds rather than subjecting them to periodic review and associated potential reduction.

I. The SEC's Data Supports that the Current Thresholds Should Not Be Lowered

The data presented in the Staff Report supports maintaining the current de minimis thresholds for both CDS and non-CDS activity. Across both product categories, the Commission's own findings show that registered SBSDs already account for the overwhelming majority of dealing activity, such that the existing thresholds already bring substantially all economically significant activity within the SEC's regulatory perimeter.

In the context of CDS activity, data presented in the Staff Report supports the Associations' viewpoint that the threshold should be maintained at $8 billion. The Commission's own analysis demonstrated that registered Security-Based Swap Dealers ("SBSDs") were counterparties on at least one side of 99% of new trade activity in 2024; meaning only 1% of total new trade activity involved non-registered entities. ⁴ This illustrates that the present regulatory threshold is appropriate, as it captures nearly all CDS activity. The concentration is equally pronounced when activity is measured on a dealing basis: registered SBSDs accounted for 94% or $2.8 trillion of a total of $3 trillion in potential SBS dealing activity in CDS during the review period, compared to only 6% or $190 billion accounted for by unregistered SBSDs. ⁵