Company: PDCC
Filing Date: 2025-07-18
Form Type: N-2
Source: 0001214659-25-010613
Chunk: 221

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-07-18
Form: N-2
Chunk 221
---
 only with counterparties that the Adviser believes to be creditworthy.

| 11 |

The swap market is a relatively
new market for which regulations are still being developed. The Dodd-Frank Act has substantially altered and increased the regulation
of swaps. Swaps are broadly defined in the Dodd-Frank Act, CFTC rules and SEC rules, and also include commodity options and non-deliverable
forwards. Additionally, the Dodd-Frank Act divided the regulation of swaps between commodity swaps (such as swaps on interest rates, currencies,
physical commodities, broad based stock indexes, and broad based credit default swap indexes), regulated by the CFTC, and security based
swaps (such as equity swaps and single name credit default swaps), regulated by the SEC. The CFTC will determine which categories of swaps
will be required to be traded on regulated exchange-like platforms, such as swap execution facilities, and which will be required to be
centrally cleared. Cleared swaps must be cleared through futures commission merchants registered with the CFTC, and such futures commission
merchants will be required to collect margin from customers for such cleared swaps. Additionally, all swaps are subject to reporting to
a swap data repository. Dealers in swaps are required to register with the CFTC as swap dealers and are required to comply with extensive
regulations regarding their external and internal business conduct practices, regulatory capital requirements, and rules regarding the
holding of counterparty collateral.

Highly Volatile Markets.
The prices of derivative instruments, including swaps, futures and options, can be highly volatile. Price movements of swaps, forward,
futures and other derivative contracts in which the Company’s assets may be invested are influenced by, among other things, interest
rates, changing supply and demand relationships, trade, fiscal, monetary and exchange control programs and policies of governments, and
national and international political and economic events and policies. In addition, governments from time to time intervene, directly
and by regulation, in certain markets, particularly those in currencies, financial instruments, futures and options. Such intervention
often is intended directly to influence prices and may, together with other factors, cause all of such markets to move rapidly in the
same direction because of, among other things, interest rate fluctuations. Securities or commodities exchanges typically have the right
to suspend or limit trading in any instrument traded on the exchanges. A suspension could render it impossible for the Adviser to liquidate
positions and could thereby expose the Company to losses.

Repurchase Ag