SEC Specifies Financial Reporting Conditions for Non-U.S. SBSDs

The SEC issued an Order (the "Order") specifying the conditions that a non-U.S. security-based swap dealer ("SBSD") relying on substituted compliance must satisfy when filing certain financial reports under SEA Rule 18a-7 ("SBSD Reports"). (The SEC previously granted substituted compliance for firms based in Germany, France, Spain, Switzerland and the United Kingdom.)

According to the SEC, a non-U.S. SBSD that is not prudentially regulated must file within 35 calendar days of the end of each month a FOCUS Report Part II, supplying the information highlighted in the Report as attached as Appendix A to the Order. For a prudentially regulated entity, FOCUS Report Part IIC must be filed within 35 days after the end of each quarter, and include the information highlighted in the Report as attached as Appendix B to the Order.

The SEC stated that the non-U.S. SBSD must:

• present the information on FOCUS Report Part II or IIC at the entity level of the relevant entity on the same basis (consolidated or unconsolidated) as it presents information in financial reports filed in its home jurisdiction;

• complete the Regulatory Capital section of FOCUS Report Part IIC in accordance with the reporting requirements of its home jurisdiction;

• identify the accounting principles used in the memo field for certain line items; and

• report the information as provided in the relevant FOCUS Report instructions, (i) unless inconsistent with the conditions of the Order or (ii) consistent with home-jurisdiction requirements, if the instructions reference bank "Call Reports," and the firm does not file such reports.