Nearwater Capital announces that Nearwater Capital Markets, Limited has received preliminary SEC approval as a security based swap dealer
This approval makes Nearwater Capital Markets the only standalone security based swap dealer with the SEC as its primary and sole regulator.
DUBLIN, July 14, 2022 /PRNewswire/ -- Nearwater Capital, LP ("Nearwater'), a specialty finance company established in 2017 and a leading provider of financing solutions to major financial institutions, announced today that its affiliate, Nearwater Capital Markets, Limited's ("Nearwater Capital Markets") application for registration with the Securities and Exchange Commission ("SEC") as a security based swap dealer has been accepted and conditionally approved. This approval makes Nearwater Capital Markets the only standalone security based swap dealer with the SEC as its primary and sole regulator.
Nearwater believes that registering with the SEC is necessary to comply with the requirements of Title VII of the Dodd-Frank Act and is also consistent with the regulatory direction of the SEC requiring greater transparency into, and oversight of, the security based swaps market. Futher, registering with the SEC as a security based swap dealer allows Nearwater Capital Markets to operate confidently from a regulatory perspective and that being registered and regulated makes it the preeminent swap trading partner for its counterparties. Nearwater Capital Markets registration will also eliminate any reputational risk for its counterparties that may otherwise arise from dealing with unregistered market participants.
Nearwater Capital Markets will have a narrowly focused business model, transacting only with other registered swap dealers to help them better support their client-facing activities. Demonstrating its commitment to be the preeminent swap trading partner, Nearwater Capital Markets has assembled a premier Board of Directors comprised of seasoned regulatory and business professionals who will provide oversight and expertise to this business.
"Nearwater sees this as a tremendous opportunity to bring an alternative regulated trading counterparty to assist major banks in fulfilling their clients' objectives" said James Peterson, Managing Partner of Nearwater and Senior Officer of Nearwater Capital Markets. "Our registration not only accrues value for Nearwater Capital Markets in terms of greater certainty of regulatory compliance, but also accrues benefits for our trading counterparties in terms of the confidence that comes from transacting with a regulated, capitalized counterparty. As a registered security based swap dealer we have built a robust compliance, risk management, and financial reporting infrastructure, which is overseen by, and known to, the SEC."
The rules requiring registration of dealers in security based swaps is a key component of the security-based swap regulatory regime established by the Dodd-Frank Act and has been phasing in since it was enacted in 2010. The most significant and foundational of the rules to go into effect is the requirement for any person or firm acting in a dealing capacity where such activities exceed certain thresholds to register with the SEC as a security based swap dealer by November 1st, 2021. To date, 47 firms have registered with the SEC, most of whom are global banks and their dealer affiliates.
Security based swaps were at the center of the Archegos Capital Management collapse in April 2021, which resulted in losses of more than $10 billion for banks and their dealers and spurred the SEC to hasten its pace of regulation of this once opaque, unregulated segment of the market with proposals for increased public post-trade reporting and security-based swap specific anti-fraud provisions.
"We are pleased to have had our application to be a security based swap dealer conditionally approved by the SEC. This comes after nearly three years of infrastructure build and represents a significant commitment of capital and investment in people and technology, but it's well worth it," stated Mr. Peterson.
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SOURCE Nearwater Capital
