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7.7 Rulemaking on Conflicts of Interest

<< Title VII Overview

7.7 Rulemaking on Conflicts of Interest

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            7.7.       Rulemaking on Conflicts of Interest

                        7.7.1.    What Safeguards are in place to Mitigate Conflicts of Interest in DCOs, SEFs and Contract Markets?       Title VII requires that, within 180 days after the date of effectiveness of the Act, the Commissions must adopt rules that may include numerical limits on the control of, or the voting rights with respect to, any DCO that clears swaps, or SEF or contract market that posts swaps or makes swaps available for trading by a BHC with total consolidated assets of $50 billion or more, a Significant Nonbank, an affiliate of such a BHC or Significant Nonbank, a swap dealer, a major swap participant or associated persons of a swap dealer or major swap participant.[§726]

            In adopting the foregoing rules, the Commission must consider any conflicts of interest arising from the amount of equity owned by a single investor, the ability to vote, cause the vote of, or withhold votes entitled to be cast on any matters by the holders of the ownership interest, and the governance arrangements of any DCO, SEF or contract market.

The SEC and CFTC are required to issue rules within 180 days of the effectiveness of Title VII to mitigate potential conflicts between owners of DCOs, SEFs and contract markets.