(Bloomberg) — The U.S. Securities and Exchange Commission plans next week to release its plan for scrutinizing the kinds of complex stock derivatives transactions that fueled the collapse of Bill Hwang’s Archegos Capital Management.
The SEC will propose new rules that mark the agency’s biggest policy response yet to the Archegos debacle that blindsided the regulator earlier this year. The blow-up exposed the lack of visibility the Wall Street regulator has into security-based swaps transactions despite being required by Congress in 2010 to oversee the asset class.
SEC Chairman Gary Gensler, who cracked down on the derivatives while leading the Commodity Futures Trading Commission after the financial crisis, has vowed to increase oversight since taking over in April. The agency has been weighing rules to make hedge funds, family offices and other money managers disclose big derivative bets on stocks in quarterly SEC filings, and is looking to publish aggregate data on the securities that underlie investment firms’ swap positions, Gensler said in September.
According to a notice on the SEC’s website, the agency on Dec. 15 will consider:
- Re-proposing a rule to prohibit fraud and manipulation tied to security-based swaps
- New rules focused on the conduct of chief compliance officers for security-based swaps dealers and major traders
- Requiring reporting of large security based swaps positions
If the agency’s five commissioners including Gensler vote next week to propose the new equity swaps regulations, the public would have a chance to provide feedback that the SEC would need to take into account before finalizing the plan.
In addition to the new derivatives rules, the agency is also planning to consider a slate of rules focused on money markets, stock buyback disclosures and insider trading.
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