15 USC 78c-5 - Segregation of assets held as collateral in security-based swap transactions

U.S Code last checked for updates: Nov 22, 2024

§ 78c–5.

Segregation of assets held as collateral in security-based swap transactions

(a)

Registration requirement

(b)

Cleared security-based swaps

(1)

Segregation required

(2)

Commingling prohibited

(c)

Exceptions

(1)

Use of funds

(A)

In general

(B)

Withdrawal

(2)

Commission action

(d)

Permitted investments

(e)

Prohibition

(f)

Segregation requirements for uncleared security-based swaps

(1)

Segregation of assets held as collateral in uncleared security-based swap transactions

(A)

Notification

(B)

Segregation and maintenance of funds

At the request of a counterparty to a security-based swap that provides funds or other property to a security-based swap dealer or major security-based swap participant to margin, guarantee, or secure the obligations of the counterparty, the security-based swap dealer or major security-based swap participant shall—

(i)

segregate the funds or other property for the benefit of the counterparty; and

(ii)

in accordance with such rules and regulations as the Commission may promulgate, maintain the funds or other property in a segregated account separate from the assets and other interests of the security-based swap dealer or major security-based swap participant.

(2)

Applicability

The requirements described in paragraph (1) shall—

(A)

apply only to a security-based swap between a counterparty and a security-based swap dealer or major security-based swap participant that is not submitted for clearing to a clearing agency; and

(B)

(i)

not apply to variation margin payments; or

(ii)

not preclude any commercial arrangement regarding—

(I)

the investment of segregated funds or other property that may only be invested in such investments as the Commission may permit by rule or regulation; and

(II)

the related allocation of gains and losses resulting from any investment of the segregated funds or other property.

(3)

Use of independent third-party custodians

The segregated account described in paragraph (1) shall be—

(A)

carried by an independent third-party custodian; and

(B)

designated as a segregated account for and on behalf of the counterparty.

(4)

Reporting requirement

(g)

Bankruptcy

(June 6, 1934, ch. 404, title I, § 3E, as added Pub. L. 111–203, title VII, § 763(d), July 21, 2010, 124 Stat. 1774.)

cite as: 15 USC 78c-5