The Securities and Exchange Commission is seeking public comment on the order in which new rules regulating the derivatives market should take effect. The call for feedback was part of a policy statement released on June 11.

Title VII of the Dodd-Frank Act establishes a framework to regulate over-the-counter derivatives, authorizing the Commodity Futures Trading Commission to regulate “swaps,” and the SEC to regulate “security-based swaps.” The legislation requires that the regulators write rules that address mandatory clearing, the operation of security-based swap and swap execution facilities and data repositories, capital and margin requirements and business conduct standards for security-based swap and swap dealers and major participants, and regulatory access to — and public transparency for — information regarding security-based swap and swap transactions.

The SEC's policy statement does not estimate when rules would be put in place, focusing instead on a “roadmap,” the sequence in which they would take effect. The phased-in approach is intended to avoid the disruption that could occur if all the new rules took effect simultaneously.

SEC Chairman Mary Schapiro set the stage for Monday's announcement during testimony before the U.S. Senate's Committee on Banking, Housing, and Urban Affairs on May 22.

“The Commission also is continuing to develop a policy statement regarding how the substantive requirements under Title VII within its jurisdiction will be put into effect,” she said. “This policy statement would be designed to establish an appropriate and workable sequence and timeline for the implementation of these rules. As a purely practical matter, certain of these rules will need to go into effect before others can be implemented, and market participants will need a reasonable, but not excessive, period of time in which to comply with the new rules applicable to security-based swaps. This statement should give market participants a degree of clarity as to how the Commission, in general, is thinking of ordering the compliance dates of the various sets of rules under Title VII.”

Also to be addressed is the timing of the expiration of the temporary relief the SEC previously granted to securities-based swaps market participants. The relief exempts these market participants from certain provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Trust Indenture Act of 1939. Much of this relief is due to expire when certain final rules under Title VII become effective.

Comments can be submitted online, by e-mail using rule-comments@sec.gov. (include File Number S7-05-12 on the subject line), and through the Federal Rulemaking portal.Paper comments can be sent, in triplicate, to: Elizabeth M. Murphy, secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090. Submissions should refer to File No. S7-05-12.

Only one method should be used when submitting comments. All documents will be made available for public review.