Security-Based Swap Reporting – SEC Proposes Regulation SBSR

The Securities & Exchange Commission is to propose new rules on the modus operandi of reporting and publicly disseminating security-based swap transactions. Security-based swaps are swaps based on a single security or loan or a narrow-based group or index of securities or events relating to a single issuer or issuers of securities in a narrow-based security index.

 

The rules are proposed under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Called Regulation SBSR, the rules will improve transparency in the security-based swap market and honor the mandates of the Dodd-Frank Act. The SEC is seeking public comment on the rules for a period of 45 days following its publication in the Federal Register.

 

Earlier, to enhance transparency in the security-based swap market, Congress established centralized recordkeeping facilities called security-based swap data repositories. To facilitate reporting and dissemination of the information, Regulation SBSR (proposed Rules 900 through 911) requires these registered repositories to register with SEC as information processors and establish procedures concerning the security-based swap transaction data that needs to be reported and disseminated. The repository should publicly disseminate some of that information in a timely manner. Parties who report to the registered repositories and who are registered as security-based swap dealers or major security-based swap participants should, in turn, define procedures to ensure that they comply with the reporting obligations cast on them. As for block trades, the SEC will propose and solicit comment on the general criteria needed to determine block trade thresholds. It will not propose actual thresholds now. The rules will exempt security-based swaps from the calculation of fees under Section 31 of the Exchange Act. 

 

Parties to the swap should report information about each transaction to the registered security-based swap data repository. 

Regulation SBSR will specify the categories of information to be reported to the repository in real time and publicly disseminated. 

Regulation SBSR will specify additional categories of information to be reported to the repository for regulatory purposes but not for public dissemination. 

Regulation SBSR requires the reporting of events that leads to changes in previously reported information about a transaction

Regulation SBSR will identify which counterparty to a transaction should report information to the repository

 

 

SEC has authority over security-based swaps.    The Commodity Futures Trading Corporation (CFTC) has primary regulatory authority over all other swaps. CFTC and SEC share authority over mixed swaps which are security-based swaps with a commodity component. 

 

CFTC is proposing similar rules with respect to the reporting and public dissemination of information related to swaps that fall under its jurisdiction. 

 

 

Prevention of fraud in security-based swaps

Resolution of conflicts in security-based swaps

Reporting of pre-enactment security-based swaps

Enhancement of disclosure in asset-backed securities (ABS)

Rewarding whistleblowers

Say-on-Pay

Mandating registration of municipal advisors with SEC

 

Sources: