SEC Division Of Trading And Markets Issues FAQ On SBS Reporting – Finance and Banking
United States:
SEC Division Of Trading And Markets Issues FAQ On SBS Reporting
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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
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.
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