Notice2026-00523
Order Granting Temporary Exemptive Relief, Pursuant to Section 36(a)(1) of the Securities Exchange Act of 1934, From Certain Aspects of Rule 3a71-2(a)(1)
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Published
January 14, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 9 (Wednesday, January 14, 2026)</title>
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[Federal Register Volume 91, Number 9 (Wednesday, January 14, 2026)]
[Notices]
[Pages 1576-1578]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-00523]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104573]
Order Granting Temporary Exemptive Relief, Pursuant to Section
36(a)(1) of the Securities Exchange Act of 1934, From Certain Aspects
of Rule 3a71-2(a)(1)
January 9, 2026.
I. Introduction
Title VII of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (``Dodd-Frank Act'') established a statutory
framework to reduce risk, increase transparency, and promote market
integrity within the financial system by, among other things, providing
for the registration and regulation of security-based swap dealers
(``SBSDs'') and major security-based swap participants.\1\ Section
3(a)(71) \2\ of the Securities Exchange Act of 1934 (``Exchange
Act''),\3\ which was added by Title VII of the Dodd-Frank Act, defines
the term ``security-based swap dealer'' and provides in relevant part
that the Commission shall exempt from designation as an SBSD an entity
that engages in a de minimis quantity of security-based swap dealing in
connection with transactions with or on behalf of its customers.\4\
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\1\ Public Law 111-203, 124 Stat. 1376 (2010).
\2\ 15 U.S.C. 78c(a)(71).
\3\ 15 U.S.C. 78a et seq.
\4\ See 15 U.S.C. 78c(a)(71)(D).
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In 2012, the Commission adopted 17 CFR 240.3a71-2 (``Rule 3a71-2'')
under the Exchange Act, which provides that to qualify for this de
minimis exception all security-based swap positions connected with the
person's and its affiliates' dealing activity over the immediately
preceding twelve months must fall below one of three separate
thresholds, as applicable.\5\ Two of the thresholds are subject to
temporarily higher, phase-in levels of aggregate gross notional amounts
of de minimis security-based swap dealing activity.\6\ As set forth in
Rule 3a71-2(a)(1)(i), for credit default swaps (``CDSs'') that
constitute security-based swaps, the de minimis threshold is an
aggregate gross notional amount of no more than $3 billion, subject to
a phase-in level of an aggregate gross notional amount of no more than
$8 billion.\7\ As set forth in Rule 3a71-2(a)(1)(ii), for security-
based swaps that do not constitute CDSs, the de minimis threshold is an
aggregate gross notional amount of no more than $150 million, subject
to a phase-in level of an aggregate gross notional amount of no more
than $400 million.\8\
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\5\ See Rule 3a71-2(a); Further Definition of ``Swap Dealer,''
``Security-Based Swap Dealer,'' ``Major Swap Participant,'' ``Major
Security-Based Swap Participant'' and ``Eligible Contract
Participant,'' Release No. 34-66868 (Apr. 27, 2012), 77 FR 30596,
30726-27 (May 23, 2012) (``Intermediaries Adopting Release'').
\6\ The higher phase-in levels of de minimis security-based swap
dealing activity are not available to the extent that a person
engages in security-based swap dealing activity with counterparties
that are natural persons, other than natural persons who qualify as
eligible contract participants by virtue of section
1a(18)(A)(xi)(II) of the Commodity Exchange Act, 7 U.S.C.
1a(18)(A)(xi)(II). See Rule 3a71-2(a)(2)(i).
\7\ Rule 3a71-2(a)(1)(i).
\8\ Rule 3a71-2(a)(1)(ii).
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The phase-in period for these de minimis security-based swap
dealing activity thresholds ends on the ``phase-in termination date.''
\9\ In 2022, the Commission announced that the phase-in termination
date is November 8, 2026 (the ``default phase-in termination date''),
absent additional Commission action pursuant to Rule 3a71-
2(a)(2)(ii)(A),\10\ as discussed below. The Commission calculated the
default phase-in termination date pursuant to a formula specified in
Rule 3a71-2(a)(2)(ii)(B), which provided that the phase-in termination
date will be five years after the ``data collection initiation date,''
which the Commission established, pursuant to Rule 3a71-2(a)(2)(iii),
as November 8, 2021.\11\
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\9\ Rule 3a71-2(a)(2)(i).
\10\ See Data Collection Initiation Date and Contingent Phase-In
Termination Date for the De Minimis Notional Thresholds of Security-
Based Swap Dealing, Release No. 34-94896 (May 11, 2022), 87 FR 29986
(May 17, 2022).
\11\ Rule 3a71-2(a)(2)(ii)(B).
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Under Rule 3a71-2(a)(2)(ii)(A), the Commission may terminate the
phase-in period and establish a phase-in termination date, which would
replace the default phase-in termination date, after the publication in
the Federal Register of a Commission staff report addressing the rules
and interpretations further defining the Exchange Act's definition of
the term ``security-based swap dealer,'' including the de minimis
exception to that definition.\12\
[[Page 1577]]
Specifically, nine months after the publication of the report in the
Federal Register, the Commission may by order either: (i) terminate the
phase-in period for the de minimis thresholds; or (ii) provide notice
of its determination that it is necessary or appropriate in the public
interest to propose through rulemaking an alternative to the $3 billion
and $150 million de minimis thresholds. The Commission's order in
either case shall establish a phase-in termination date which would
replace the default phase-in termination date.\13\ If the Commission
does not establish a phase-in termination date as discussed above, the
phase-in period will terminate on November 8, 2026.
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\12\ See 17 CFR 240.3a71-2A (``Rule 3a71-2A''). As appropriate,
based on the availability of data and information, the report
generally should assess topics including whether any of the de
minimis thresholds should be increased or decreased. See Rule 3a71-
2A(a)(1). Following the completion of the report, the report shall
be published in the Federal Register for public comment. See Rule
3a71-2A(c). The Commission also directed staff to address in this
report the rules and interpretations further defining the Exchange
Act's definition of the term ``major security-based swap
participant,'' to which the de minimis thresholds in Rule 3a71-2 do
not apply. See Rule 3a71-2A.
\13\ See Rule 3a71-2(a)(2)(ii)(A).
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II. Discussion and Exemptive Relief
The Commission has not yet published a report prepared by
Commission staff examining the effect and application of the
definitions of ``security-based swap dealer'' and ``major security-
based swap participant'' pursuant to Rule 3a71-2A.\14\ As explained
above, nine months after publication of the staff report, the
Commission may by order either terminate the phase-in period for the de
minimis thresholds or provide notice of its determination that it is
necessary or appropriate in the public interest to propose through
rulemaking an alternative to the $3 billion and $150 million de minimis
thresholds. The phase-in period will otherwise terminate on the default
phase-in termination date of November 8, 2026. The staff report is
currently in progress and its publication has been delayed; therefore,
it is possible that, pursuant to Rule 3a71-2(a)(2)(ii), the Commission
may alter the de minimis thresholds based on the staff report and
public comments thereon after November 8, 2026, or otherwise change the
phase-in termination date.
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\14\ Rule 3a71-2A(b) provides that the staff report should be
completed no later than three years following the data collection
initiation date established pursuant to Rule 3a71-2(a)(2)(iii).
Three years following the data collection initiation date was
November 8, 2024.
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The requirement to register as an SBSD due to meeting the de
minimis thresholds is based on the immediately preceding twelve-month
period.\15\ As a result, market participants may have begun counting
their transactions towards the $3 billion and $150 million, rather than
the $8 billion and $400 million, de minimis thresholds starting on
November 8, 2025. Absent exemptive relief, market participants who are
not yet registered with the Commission as SBSDs would either have to
manage their activities to stay below those de minimis thresholds or
begin expending efforts and resources to prepare for registration and
compliance with the SBSD regime that may prove unnecessary should the
Commission, pursuant to Rule 3a71-2(a)(2)(ii)(A), determine to set the
de minimis thresholds at levels above $3 billion and $150 million,
respectively, or otherwise change the phase-in termination date.
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\15\ See Rule 3a71-2(a)(1).
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When adopting these provisions under Rule 3a71-2(a), the Commission
stated its intent that the Commission should have sufficient time after
the staff report is published to receive and review public comment on
the report, and to draw conclusions regarding establishing the phase-in
termination date or proposing potential changes to the rule
implementing the de minimis exception, in a way that also promotes the
orderly and predictable termination of the phase-in period.\16\
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\16\ See Intermediaries Adopting Release, 77 FR at 30641.
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To facilitate the orderly and predictable termination of the phase-
in period,\17\ the Commission is providing until May 8, 2028, a
temporary exemption, pursuant to section 36(a) of the Exchange Act,
from Rules 3a71-2(a)(1)(i) and 3a71-2(a)(1)(ii). Under this exemption,
a person that is not currently registered as a security-based swap
dealer and that exceeds the de minimis thresholds in Rules 3a71-
2(a)(1)(i) and 3a71-2(a)(1)(ii) of $3 billion and $150 million,
respectively, shall be deemed not to be an SBSD, and therefore shall
not be subject to section 15F of the Exchange Act, provided that the
security-based swap positions connected with the dealing activity in
which the person--or any other entity controlling, controlled by or
under common control with the person--engages over the course of the
immediately preceding twelve months have an aggregate gross notional
amount of no more than (a) $8 billion with regard to CDSs that
constitute security-based swaps and (b) $400 million with regard to
non-CDSs that constitute security-based swaps. The effect of this
exemption is to continue to apply the phase-in de minimis thresholds
for CDSs and non-CDSs that constitute security-based swaps until May 8,
2028. Similarly, to ensure the thresholds are consistent for
registration and de-registration, the Commission is providing a
temporary exemption for a registered SBSD applying to withdraw its
registration pursuant to Rule 3a71-2(c) to the extent that the
security-based swap positions connected with the dealing activity in
which the SBSD--or any other entity controlled, controlled by or under
common control with the SBSD--engages over the course of the
immediately preceding twelve months have an aggregate gross notional
amount of (a) over $3 billion but no more than $8 billion with regard
to CDSs that constitute security-based swaps and (b) over $150 million
but no more than $400 million with regard to non-CDSs that constitute
security-based swaps until May 8, 2028.\18\
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\17\ See id.
\18\ See Rule 3a71-2(c) (A currently registered SBSD may apply
to withdraw that registration, while continuing to engage in
security-based swap dealing activity in reliance on Rule 3a71-2, so
long as that person has been registered as an SBSD for at least 12
months and satisfies the conditions of the paragraph (a) of the de
minimis exception.).
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Section 36 of the Exchange Act, subject to certain limitations,
authorizes the Commission to conditionally or unconditionally exempt
any person, security, or transaction, or any class or classes of
persons, securities, or transactions, from any provision or provisions
of the Exchange Act, or of any rule or regulation thereunder, to the
extent that such exemption is necessary or appropriate in the public
interest, and is consistent with the protection of investors.\19\
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\19\ 15 U.S.C. 78mm.
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This temporary exemption is necessary or appropriate in the public
interest and consistent with the protection of investors because it
will help to facilitate an effective and orderly implementation of the
applicable requirements of Rule 3a71-2(a) in a way that promotes the
orderly and predictable termination of the phase-in period \20\ while
preventing entities from incurring potentially unnecessary burdens,
depending upon any action the Commission may take to address the de
minimis thresholds and the phase-in termination date pursuant to Rule
3a71-2(a)(2)(ii)(A). Effectively extending the phase-in period by 18
months by preventing the lower de minimis thresholds in Rule 3a71-
2(a)(1) from going into effect before the Commission has the
opportunity to consider the staff report and public comments thereon,
is in the public interest because it would (1) prevent the potential
for multiple changes to the de minimis thresholds in relatively quick
succession, which
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could impose burdens that later prove unnecessary, and (2) allow time
for the Commission to take the staff report and public comments thereon
into consideration in assessing the appropriate de minimis thresholds.
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\20\ See Intermediaries Adopting Release, 77 FR at 30641.
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The additional time provided by a temporary exemption strikes an
appropriate balance between continuing the implementation of Title VII
of the Dodd-Frank Act and ensuring an orderly termination of the phase-
in period.
III. Conclusion
Accordingly, it is hereby ordered, pursuant to section 36(a) of the
Exchange Act, that the Commission grants temporary exemptive relief, as
set forth in this order, from Rules 3a71-2(a)(1)(i) and 3a71-
2(a)(1)(ii), such that a person that is not currently registered as a
security-based swap dealer and that exceeds the de minimis thresholds
in Rules 3a71-2(a)(1)(i) and 3a71-2(a)(1)(ii) of $3 billion and $150
million, respectively, shall be deemed not to be an SBSD, and therefore
shall not be subject to section 15F of the Exchange Act, provided that
the security-based swap positions connected with the dealing activity
in which the person--or any other entity controlling, controlled by or
under common control with the person--engages over the course of the
immediately preceding twelve months have an aggregate gross notional
amount of no more than (a) $8 billion with regard to CDSs that
constitute security-based swaps and (b) $400 million with regard to
non-CDSs that constitute security-based swaps, absent additional
Commission action, until May 8, 2028.
It is further ordered, pursuant to section 36(a) of the Exchange
Act, that the Commission grants temporary exemptive relief, as set
forth in this order, from Rules 3a71-2(a)(1)(i) and 3a71-2(a)(1)(ii) to
the extent referenced as a condition in Rule 3a71-2(c), such that a
person who currently is registered as a security-based swap dealer may
apply to withdraw that registration so long as that person has been
registered as a security-based swap dealer for at least twelve months
and exceeds the de minimis thresholds in Rules 3a71-2(a)(1)(i) and
3a71-2(a)(1)(ii) of $3 billion and $150 million, respectively, provided
that the security-based swap positions connected with the dealing
activity in which the person--or any other entity controlling,
controlled by or under common control with the person--engages over the
course of the immediately preceding twelve months have an aggregate
gross notional amount of no more than (a) $8 billion with regard to
CDSs that constitute security-based swaps and (b) $400 million with
regard to non-CDSs that constitute security-based swaps, absent
additional Commission action, until May 8, 2028.
By the Commission.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2026-00523 Filed 1-13-26; 8:45 am]
BILLING CODE 8011-01-P
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