Securities Regulation Daily SEC formalizes process for regulators to get security-based swaps data
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Monday, August 29, 2016

SEC formalizes process for regulators to get security-based swaps data

By Mark S. Nelson, J.D.

The SEC has for the second time in a week adopted new final rules without an open meeting. Today’s release impacts security-based swap data repositories and regulatory access to data held by these entities. The release amends Exchange Act Rule 13n-4 by filling gaps left open by the Commission’s prior security-based swap rulemakings. The new provisions are effective 60 days after publication in the Federal Register (Release No. 34-78716, August 29, 2016).

Specifically, the list of duties applicable to security-based swap data repositories in Rule 13n-4(b) is expanded to include an obligation to make available to federal and foreign swaps regulators requested security-based swap data, which includes counterparty trade and position data. Regulators mentioned in the new provision include the Fed, the FSOC, and the CFTC.

The data would be provided on a confidential basis after notifying the Commission of any request. Moreover, there must be in place a memorandum of understanding about confidentiality between the Commission and the regulator. The notification requirement is also subject to Rule 13n-4’s new paragraph (d).

"Regulators must have timely, reliable access to data repositories in order to carry out their oversight responsibilities and reduce threats to financial stability, increase transparency, and improve the integrity of the market," said SEC Chair Mary Jo White.

The security-based swaps requirements originated in the 2010 Dodd-Frank Act reforms, but some of the Commission’s latest security-based swaps changes for regulatory access are rooted in a legislative fix enacted late last year via the Fixing America’s Surface Transportation (FAST) Act. Several amendments to the Commodity Exchange Act and the Exchange Act clarified that the sharing of swap and security-based swap data with regulators requires a confidentiality agreement, not an indemnity agreement.

Indemnification requirements originally imposed by the Dodd-Frank Act had been criticized because they could hinder global regulation of swaps and result in significant legal costs. The FAST Act amendments became effective as if they had been enacted by the Dodd-Frank Act.

The release is No. 34-78716.

MainStory: TopStory Derivatives DoddFrankAct ExchangesMarketRegulation FinancialIntermediaries RiskManagement Swaps

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