Pursuant to a legislative requirement, GAO reviewed the Securities and Exchange Commission's (SEC) new rule on over-the-counter (OTC) derivatives. GAO noted that: (1) the rule would adopt the regulatory framework that allows U.S. securities firms to establish separately capitalized entities to conduct OTC derivatives business; (2) the rule would permit these non-broker-dealer entities to deal in both security and non-security derivative instruments in competition with U.S. banks and off-shore firms; (3) SEC asserts that regulation is intended in part to improve the efficiency and competitiveness of U.S. securities firms that are active in global OTC derivatives markets; and (4) SEC complied with the applicable requirements in promulgating the rule.