The U.S. Securities and Exchange Commission has opened the possibility of raising a fixed-dollar qualification limit for a narrow group of security-based swap dealers from $50 billion to $100 billion. Its 28 October notice follows a request made two days earlier by Mizuho Capital Markets. The Commission is soliciting views before any subsequent order, so the notice does not itself double the cap or relax requirements across the entire brokerage and derivatives industry.[1][2]
Rule 18a-10 allows eligible stand-alone security-based swap dealers that are also registered as swap dealers with the Commodity Futures Trading Commission to use an alternative compliance mechanism. Under that mechanism, qualifying firms can meet specified CFTC capital, margin, segregation, recordkeeping and reporting rules instead of some parallel SEC requirements. The policy is directed at institutions whose predominant business is swaps rather than security-based swaps.[1]
Qualification is not governed by the $50 billion figure alone. The outstanding gross notional of the security-based swap book must be below the lesser of the fixed-dollar ceiling and 10% of the combined gross notional across swaps and security-based swaps. Other conditions concern registration status, exemption eligibility and disclosures to counterparties. Doubling the dollar component would leave the percentage test intact, meaning it would not make every institution with less than $100 billion of security-based swaps eligible.[1]
What the proposed $100 billion limit would—and would not—change
The existing $50 billion fixed-dollar ceiling followed a three-year transition at $250 billion. Mizuho told the SEC that its security-based swap activity had represented less than 0.25% of its combined derivatives gross notional between 2022 and 2024, and 1.47% of the active trade count. Those figures are the applicant's description of its business, not measurements independently established for every firm using the mechanism.[1]
Mizuho argues that moving its security-based swap book to a different affiliated dealing entity if it outgrew the current limit could impose material capital and operational costs. Its submission estimates approximately $1.5 billion of additional required capital in a contemplated transfer scenario. This is a contingent estimate from the company, not a cost already incurred or an SEC finding about the necessary capital of the industry.[1]
Scope of SEC Rule 18a-10 consultation
| Qualification measure | Current rule | Potential outcome |
|---|---|---|
| Fixed-dollar gross notional ceiling | $50 billion | $100 billion, if subsequently ordered |
| Relative gross notional condition | 10% of combined swaps/SBS | Unchanged by the contemplated dollar increase |
| Eligible businesses | Qualifying stand-alone cross-registered dealers | Same specialised category |
| Legal status | Existing enforceable rule | SEC notice seeking comment |
The SEC says it is considering a $100 billion cap after reviewing activity levels among users of the alternative mechanism. Comment is invited for 30 days following publication of the notice in the Federal Register. That future publication date determines the deadline; assuming a fixed calendar day from the 28 October SEC release would be misleading. A change, if eventually ordered, would concern a specialist cross-registered dealer population, not ordinary retail forex leverage, spread levels or customer margin accounts.[1]
Sources & further reading
- Exchange Act Release 34-106759, notice under Rule 18a-10 U.S. Securities and Exchange Commission · 28 Oct 2026 · Accessed 31 Oct 2026
- Other Commission Orders, Notices, and Information U.S. Securities and Exchange Commission · 28 Oct 2026 · Accessed 31 Oct 2026