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SEC imposes transparency rules for SDRs
16 January 2015 Washington DC
Reporter: Stephanie Palmer

Image: Shutterstock
The US Securities Exchange Commission (SEC) has introduced two new sets of rules designed to increase transparency in the security-based swap market.

Security-based swap data repositories (SDRs) will be required to register with the SEC, and to maintain records of their transactions to be assessed by regulators. They will also have to comply with reporting and public dissemination requirements for transaction data, however, exemptions will be in place for some non-US SDRs.

In addition, the new Regulation SBSR outlines the information that must be reported and publicly disseminated.

Under the regulation, securities-based swap counterparties must use the global legal identifier system to obtain the codes that will identify them while reporting data.

Registered SDRs will not be able to charge fees or impose usage restrictions for users of publicly disseminated security-based swap transaction data.

While some existing rules are being adopted for SDRs, amendments mean that these rules will apply to certain securities based swaps that were not previously addressed.

With regards to cross-border security-based swap activity, the rules allow room for market participants to fulfil their reporting obligations through a comparable regulator in a different jurisdiction.

SEC chair Mary Jo White said: “These rules go to the core of derivatives reform by establishing a strong foundation for transparency and efficiency in the market.”

She added: “They provide a powerful framework for trade reporting and the public dissemination of information that addresses blind spots exposed by the financial crisis.”

SDRs will be obliged to implement and maintain policies and procedures for compliance with the new rules, and the SEC will provide a compliance schedule for the various sections.

These new mandates are implemented under the Dodd-Frank Act. Rules will become effective 60 days after they are published on the federal register, and compliance will be mandatory 365 days after publication.

Steve Luparello, director of the SEC’s Division of Trading and Markets, said: “We carefully considered comments received and the workability of the rules and rule proposal in the context of the existing CFTC regimes for swap data repositories, swap data reporting and public dissemination.”

“Today’s measures are robust and appropriately tailored to the security-based swap market.”
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