SEC Division Of Trading And Markets Issues FAQ On SBS Reporting

In a newly issued FAQ, the SEC Division of Trading and Markets addressed implementation questions on Regulation SBSR ("Regulatory Reporting and Public Dissemination of Security-Based Swap Information").

The Division stated, among other things, that:

• security-based swap ("SBS") market participants that rely on the SEC's no-action statement permitting reporting in accordance with CFTC Rules may not also rely on delaying reporting under the 24-hour requirement of SEC Rule 901(j) ("Interim timeframe for reporting");
• a registered clearing organization is a self-regulatory organization, and, therefore, must enforce compliance by its members with its rules pursuant to SEC Rule 906(c) ("Policies and procedures to support reporting compliance"), including obtaining all required trade information (such as data to be reported as to an SBS later cleared);
• swap data repositories ("SDRs") may offer functionality to report historical SBSs before the compliance date of April 14, 2022 (which could be used, e.g., in the case of a "historical" SBS that has a life-cycle event after the November 8, 2021, compliance date for reporting new SBSs to an SDR);
• firms may not "double report" an SBS (i.e., firms must agree who will report, including for historical SBSs);
• even as to historical SBSs, firms must attempt to ascertain whether U.S. personnel were involved in "arranging, negotiating, or executing" the transaction in order to determine whether reporting is required or who must report;
• firms relying on the no-action statement to determine whether reporting is required, may, in certain circumstances, look to whether the transaction would need to be reported based on relevant CFTC rules; and
• the SEC will follow the CFTC interpretive guidance on CFTC Rules Parts 43 ("Real-Time Public Reporting") and 45 ("Swap Data Recordkeeping and Reporting Requirements") as to persons who are complying with the CFTC's trade reporting rules rather than those of the SEC.

Commentary

Given the deadlines for reporting coming up in roughly two weeks, firms should closely review the guidance. Certain aspects of this FAQ suggests diligence obligations as to SBSs that may be surprising to some.

Primary Sources

1. Frequently Asked Questions on Regulation SBSR Implementation

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.