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SIFMA and ISDA Submit Comments to the SEC Regarding Regulation SBSR

SIFMA and ISDA (together, the "Associations") submitted a comment letter to the SEC. In the letter, the Associations discussed the proposed rules, rule amendments and guidance in Regulation SBSR.

The Associations noted that ISDA had submitted comments previously; however, because of an administrative error, the rule text of Final SBSR and Proposed SBSR were finalized and approved before full SEC staff review. The Associations stated that their most recent comment letter is intended to reiterate and further clarify any remaining concerns about the SBSR requirements.

The letter outlines the Associations' request for the SEC to either revise SBSR or sequence the timing of its Title VII regulations in order to remedy the following areas of concern:

  • Sequencing. The Associations state that the compliance date for reporting under SBSR should succeed registration requirements for security-based swap dealers ("SBSDs") and major security-based swap participants ("MSBSPs"). Additionally, either registration for clearing agencies and platforms should precede reporting, or impacted SBSs should be excluded from reporting requirements in advance of such registration;
  • Compliance Dates. The Associations suggest a longer implementation period in order for market participants to plan, implement, and test reporting approaches and data specific to SBSR, and to develop new identifiers as well. Additionally, the Associations state that non-live pre-enactment and transitional security-based swaps ("SBSs") should have an additional three-month phased compliance date for reporting subsequent to reporting commencement and dealer registration;
  • Reporting Side. According to the Associations, the status of an indirect counterparty (i) should not be relevant to reporting side determination and (ii) should only factor into reporting side determination if neither of the direct counterparties is a registered SBSD or MSBSP, if indirect counterparties are not taken out of the reporting side hierarchy;
  • Cross-Border Scope. The Associations recommend limiting the definition of "Indirect Counterparties" to encompass only U.S. person guarantors, since the guarantee of a SBS transaction by a non-U.S. person regardless of whether such non-U.S. person is a registered SBSD or MSBSP does not implicate any U.S. concerns, nor does it import any risk into the United States. According to the Associations, cross-border differences between the CFTC Rules and SBSR should be minimized to reduce complexity and increase efficiency; and
  • Data Privacy. The Associations state that reasonable accommodations should be made to avoid forcing parties to choose to comply with one of two or more conflicting jurisdictional laws.

The Associations request feedback and clarification on certain SBSR requirements that pertain to (i) prime brokerage, (ii) clearing transactions, (iii) platform trades, and (iv) bunched orders and allocations.

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