Security-Based Swap Reporting – SEC Proposes Regulation SBSR

  • Date: November 27, 2010
  • Source: Admin


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.
Regulation SBSR
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. 
Obligations of the parties to the swap under Regulation SBSR
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
Swaps that come under SEC’s Jurisdiction
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. 
SEC has been into rulemaking in respect of the following:
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
Mandating registration of municipal advisors with SEC


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