SEC establishes new reporting requirements for security-based swap dealers

The Securities and Exchange Commission (SEC) is setting new recordkeeping and reporting requirements for security-based swap dealers.

© Shutterstock

Under the updated rules, companies will be required to create and retain fundamental business records to document and track their operations. This will help the SEC ability monitor them for compliance and reduce risk to the market. The amendments come under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).

“I once again would like to thank Commissioner Peirce for her excellent leadership of our efforts to stand up the Dodd-Frank Title VII regulatory regime. These rules will help the Commission ensure compliance with rules designed to promote financial responsibility and investor protection,” SEC Chairman Jay Clayton said. “Also, I want to thank our colleagues at the SEC, including in the Division of Trading and Markets and the Division of Economic Risk and Analysis, as well as CFTC Chairman Tarbert, Commissioner Quintenz and their colleagues, for their efforts and commitments to inter-agency cooperation.”

Specifically, these rules establish record-making requirements for security-based swap dealers (SBSDs) and major security-based swap participants (MSBSPs). They also set record preservation requirements for SBSDs and MSBSPs. Further, they establish periodic reporting and annual audit requirements for SBSDs and MSBSPs and set early warning notification requirements. In addition, they put in place security count requirements for SBSDs that are not registered as broker-dealers and amend the SEC’s existing cross-border rule to provide a means to request substituted compliance. Finally, they amend a rule that permits certain SBSDs that are registered as swap dealers to comply with CFTC requirements in place of Commission requirements.

“With these rules that we finalized, the Commission has taken another important step toward the registration and regulation of security-based swap dealers and major security-based swap participants and the full implementation of the regulatory framework mandated by Congress in Title VII of the Dodd-Frank Act. These rules reflect the hard work of our staff in Trading and Markets and DERA and are the product of ongoing close cooperation with our colleagues at the CFTC, including Chairman Tarbert and Commissioner Quintenz,” SEC Commissioner Hester Peirce said. “I am particularly pleased to see the alternative compliance mechanisms built into the final rule.”