On Wednesday, the Securities and Exchange Commission is expected to finally unveil proposed rules regarding capital, margin, and segregation requirements for security-based swap dealers and major security-based swap participants.

As directed by the Dodd-Frank, the SEC's rules are to be separate from, but coordinated with, those hammered out nearly a year ago by the Commodity Futures Trading Commission and banking regulators. SEC rulemaking will focus specifically on firms dealing in securities-based swaps, including over-the-counter derivatives.

A public meeting in advance of a vote on the proposed rulemaking begins at 10 a.m. at the Commission's Washington D.C. headquarters.

The past several days have been busy ones for regulators as they continue to struggle with Dodd-Frank Act derivatives market mandates.

It came down to the wire, but late afternoon on Oct. 12, the day a flurry of new swaps requirements were to go into effect, the CFTC's Division of Swap Dealer and Intermediary Oversight (DSIO) granted a deadline extension [to Oct. 20] for determining the treatment of agricultural commodities when making needed calculations to determine the applicability of new swap dealer and major swap participant definitions.

Agricultural and exempt commodities traders transitioning from swaps to futures contracts, in particular through large futures exchanges like CME Group, will have until at least Dec. 31 before their positions count toward new swap dealer registration requirements. Escaping that $8 billion threshold is the motivation for those transitions.

“The fact that market participants are fleeing the Commission's swap regulations is proof that the Commission has not developed clear and cost-effective rules," Commissioner Scott O'Malia said in a statement. “The Commission should never have gotten to the point where it was forced to issue such last-minute piecemeal relief. [It] has promulgated thousands of pages of rulemakings in isolation and then resorting to this flurry of hurried staff interpretations in order to provide some measure of temporary comfort to the market.”

Others also benefited from the hasty extensions. DSIO issued a similar no-action letter addressing the calculations by foreign entities of swaps for purposes of the swap dealer and major swap participant definitions.

In July, the Commission published proposed cross-border interpretive guidance that offered a definition of the term “U.S. person” that encompassed both those located domestically and abroad. The definition was intended to provide clarity in making the determinations required under the swap dealer and major swap participant definitions.

The CFTC will forego enforcement action against foreign entities for failure to include a swap executed prior to Dec. 31, 2012 (or, if it comes first, the effective date of a definition of “U.S. person” in a final exemptive order) in calculations required under the swap dealer and major swap participant definitions.

Also among the flurry of no-action letters issued, was temporary relief from certain requirements in the de minimis exception from the definition of the term swap dealer for Utility Special Entities. This allows non-financial entities active in the energy markets to deal in swaps with publicly-owned, government-owned or federal agency utilities with an aggregate gross notional amount of up to $800 million per year and not be required to register as swap dealers. Under the Commission's current rules, an entity that enters into swaps connected with its dealing activities with “special entities” must register as a swap dealer if the aggregate gross notional amount of the swaps is more than $25 million per year.

The move came in response to a petition from a coalition of utility companies that sought to hedge their risks, but found counterparties reluctant to enter into swaps with the utility special entities because of the $25 million limitation.

DSIO also provided time-limited relief from the obligation to include any foreign exchange swap or foreign exchange forward for purposes of determining a major swap participant, or swap dealer if the Secretary of the Treasury decides, at a later date, to exempt such swaps or forwards from the definition of the term “swap” under the Commodity Exchange Act.