United States: SEC Adopts Security-Based Swap Transaction Reporting Amendments And Guidance

Last Updated: July 20 2016
Article by Nihal S. Patel

Most Read Contributor in United States, August 2018

At an open meeting, the SEC voted to adopt amendments and guidance related to its rules concerning the regulatory reporting and public dissemination of security-based swap transactions ("Regulation SBSR").

The adopted amendments follow the SEC's initial adoption of Regulation SBSR in February 2015. The newly amended regulation will, among other things:

  • require a platform – i.e., a national securities exchange or security-based swap execution facility ("SEF") that is registered with the SEC or exempt from registration – to report a security-based swap ("SBS") executed on such platform that will be submitted to clearing;
  • require a registered clearing agency to report any SBS to which it is a counterparty;
  • require registered security-based swap data repositories ("SDRs") to provide the SBS transaction data that they are obligated to disseminate publicly to users of the information on a non-fee-charging basis;
  • extend Regulation SBSR's regulatory reporting and public dissemination requirements to additional types of cross-border security-based swaps; and
  • provide guidance regarding the application of Regulation SBSR to prime brokerage transactions and the allocation of cleared security-based swaps.

In a statement at the open meeting, SEC Chair Mary Jo White indicated that the SEC intends to complete its security-based swap dealer rulemaking requirements under Title VII by the end of this year.

The final amendments will become effective 60 days after their publication in the Federal Register. Compliance with Regulation SBSR will involve the following conditions:

  • The bulk of the reporting requirements will specify compliance on the later of (1) six months after the first SDR that can accept reports in the relevant asset class registers with the SEC or (2) one month after the registration compliance date for SBS dealers. The same compliance date would apply to certain requirements that are applicable to SDRs.
  • The public dissemination requirements will specify compliance three months after the first compliance date.
  • The reporting of "historical" security-based swaps will be required two months after the second compliance date.

Commentary / Nihal Patel

The two Regulation SBSR adopting releases comprise over 1,000 pages. The regulation is comprehensive. Clearly, the SEC has learned lessons from the CFTC's implementation process and is attempting to address some of the questions that arose for the CFTC. For example, the SEC provides lengthy guidance on (i) reporting security-based swaps that involve allocation (pp. 127-140) and (ii) prime brokerage transactions (pp. 140-152). In each of these situations, CFTC staff was forced to provide guidance immediately after the reporting rules went live.

Notably, one amendment affects the SEC application of its "arranged, negotiated or executed" concept to the reporting of transactions. The amendment states that reporting is required in transactions between two non-U.S. persons (and not guaranteed by U.S. persons) if one of the entities is dealing (but unregistered) and the SBS is "arranged, negotiated or executed" by personnel in a U.S. branch or office. In adopting this regulation, the SEC acknowledges (at p. 173) that this concept likely will affect only four foreign dealers. That acknowledgement begs the question: how can such a collective burden (i.e., the reporting infrastructure) be justified as a minimization of systemic risk in the case of four firms doing a small amount of business – especially when those firms and their counterparties will take their underlying financial risk with them to their country of origin?

The final amendments were adopted with strong support from all of the SEC Commissioners, who seemed to be pushing for the completion of the rules. Commissioner Kara M. Stein noted that, before the crisis, "[n]o one understood where the risk resided or how concentrated exposures were." Similarly, Commissioner Michael S. Piwowar supported the compliance schedule but commented that delaying the rule involves risks, since "[o]ne of the greatest lessons we learned during the financial crisis was that both regulators and the public did not understand the risks posed by the [OTC derivatives] markets." Commissioner Piwowar criticized Chair White pointedly: the Commissioners "have no idea," he said, "when final rules on capital and margin will make their way onto the [SEC's] agenda." He also mentioned bipartisan calls for completion (which were voiced first by Commissioners Stein and Aguilar, and then by Commissioners Piwowar and Gallagher), and questioned why those calls "have not been enough to influence the Chair into prioritizing our Title VII mandates."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions