SBSR Adopting Release FR 3-19-15

Vol. 80

Thursday,

No. 53

March 19, 2015

Part III

Securities and Exchange Commission

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17 CFR Part 242
Regulation SBSR—Reporting and Dissemination of Security-Based Swap
Information; Final Rule

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
FOR FURTHER INFORMATION CONTACT:

SECURITIES AND EXCHANGE
COMMISSION
17 CFR Part 242
[Release No. 34–74244; File No. S7–34–10]
RIN 3235–AK80

Regulation SBSR—Reporting and
Dissemination of Security-Based Swap
Information
Securities and Exchange
Commission.
ACTION: Final rule.
AGENCY:

In accordance with Section
763 and Section 766 of Title VII (‘‘Title
VII’’) of the Dodd-Frank Wall Street
Reform and Consumer Protection Act
(the ‘‘Dodd-Frank Act’’), the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) is adopting Regulation
SBSR—Reporting and Dissemination of
Security-Based Swap Information
(‘‘Regulation SBSR’’) under the
Securities Exchange Act of 1934
(‘‘Exchange Act’’). Regulation SBSR
provides for the reporting of securitybased swap information to registered
security-based swap data repositories
(‘‘registered SDRs’’) or the Commission,
and the public dissemination of
security-based swap transaction,
volume, and pricing information by
registered SDRs. Registered SDRs are
required to establish and maintain
certain policies and procedures
regarding how transaction data are
reported and disseminated, and
participants of registered SDRs that are
registered security-based swap dealers
or registered major security-based swap
participants are required to establish
and maintain policies and procedures
that are reasonably designed to ensure
that they comply with applicable
reporting obligations. Regulation SBSR
contains provisions that address the
application of the regulatory reporting
and public dissemination requirements
to cross-border security-based swap
activity as well as provisions for
permitting market participants to satisfy
these requirements through substituted
compliance. Finally, Regulation SBSR
will require a registered SDR to register
with the Commission as a securities
information processor.
DATES: Effective Date: May 18, 2015.
Compliance Date: For Rules 900, 907,
and 909 of Regulation SBSR, the
compliance date is the effective date.
For Rules 901, 902, 903, 904, 905, 906,
and 908 of Regulation SBSR,
compliance dates are being proposed in
a separate release, 34–74245 (February
11, 2015).

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SUMMARY:

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Michael Gaw, Assistant Director, at
(202) 551–5602; Natasha Cowen, Special
Counsel, at (202) 551–5652; Yvonne
Fraticelli, Special Counsel, at (202) 551–
5654; George Gilbert, Special Counsel,
at (202) 551–5677; David Michehl,
Special Counsel, at (202) 551–5627;
Geoffrey Pemble, Special Counsel, at
(202) 551–5628; Mia Zur, Special
Counsel, at (202) 551–5638; all of the
Division of Trading and Markets,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–7010.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
A. Summary of Final Regulation SBSR
B. Role of Registered SDRs
C. Unique Identification Codes
D. Public Dissemination and Block Trades
E. Cross-Border Issues
F. Compliance Dates
II. Information Required To Be Reported
A. Primary Trade Information—Rule 901(c)
1. Description of Re-Proposed Rule
2. Discussion of Final Rule 901(c) and
Response to Comments
a. General Approach to Required
Information
b. Rule 901(c)(1)
i. Elimination of the Reference to Equity
Derivatives
ii. Product ID
iii. Rule 901(c)(1)(i)
iv. Rules 901(c)(1)(ii) and (iii)
v. Rule 901(c)(1)(iv)
vi. Rule 901(c)(1)(v)
c. Rule 901(c)(2)
d. Rule 901(c)(3)
e. Rule 901(c)(4)
f. Rule 901(c)(5)
g. Rule 901(c)(6)
h. Rule 901(c)(7)
B. Rule 901(d)—Secondary Trade
Information
1. Description of Proposed and ReProposed Rule
2. Final Rule 901(d)
3. Discussion of Final Rule 901(d) and
Response to Comments
a. Rule 901(d)(1)—Counterparty IDs
b. Rule 901(d)(2)—Additional UICs
i. Branch ID and Execution Agent ID
ii. Revised Defined Terms in Rule 901(d)(2)
iii. Response to Comments
c. Rule 901(d)(3)—Payment Stream
Information
d. Rule 901(d)(4)—Titles and Dates of
Agreements
e. Rule 901(d)(5)—Other Data Elements
f. Rule 901(d)(6)—Submission to Clearing
g. Rule 901(d)(7)—Indication of Use of
End-User Exception
h. Rule 901(d)(8)—Description of
Settlement Terms
i. Rule 901(d)(9)—Platform ID
j. Rule 901(d)(10)—Transaction ID of Any
Related Transaction
k. Information That Is Not Required by
Rule 901(d)
C. Reporting of Historical Security-Based
Swaps

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1. Statutory Basis and Proposed Rule
2. Final Rule and Discussion of Comments
Received
III. Where To Report Data
A. All Reports Must Be Submitted to a
Registered SDR
B. Duties of Registered SDR Upon
Receiving Transaction Reports
1. Rule 901(f)—Time Stamps
2. Rule 901(g)—Transaction IDs
IV. How To Report Data—Rules 901(h) and
907
A. Introduction
B. Rules 907(a)(1), 907(a)(2), and 901(h)—
Data Elements and Formats
C. Rule 907(a)(6)—Ultimate Parent IDs and
Counterparty IDs
V. Who Reports—Rule 901(a)
A. Proposed and Re-Proposed Rule 901(a)
B. Final Rule 901(a)
1. Reporting Hierarchy
2. Other Security-Based Swaps
C. Discussion of Comments and Basis for
Final Rule
1. Application of the Reporting Hierarchy
to Sides
2. Reporting by Agents
3. Reporting Clearing Transactions
4. Reporting by a Platform
5. Reporting of a Security-Based Swap
Resulting From a Life Cycle Event
VI. Public Dissemination—Rule 902
A. Background
B. Registered SDR’s Duty To Disseminate—
Rule 902(a)
1. Format of Disseminated Data
2. Timing of Public Dissemination
3. Dissemination of Life Cycle Events
4. Correction of Minor Drafting Error
5. Use of Agents by a Registered SDR To
Carry out the Public Dissemination
Function
C. Definition of ‘‘Publicly Disseminate’’
D. Exclusions From Public
Dissemination—Rule 902(c)
1. Discussion of Final Rule
2. Other Exclusions From Public
Dissemination Sought by Commenters
a. Customized Security-Based Swaps
b. Inter-Affiliate Transactions
c. Security-Based Swaps Entered Into in
Connection With a Clearing Member’s
Default
d. Total Return Security-Based Swaps
e. Transactions Resulting From Portfolio
Compression
f. Thinly Traded Products
E. Dissemination of Block Transactions—
Rule 902(b)
F. The Embargo Rule—Rule 902(d)
G. Condition Flags—Rule 907(a)(4)
VII. Block Trades and the Interim Phase of
Regulation SBSR
A. Proposed Rules Regarding Block Trades
B. Potential Impact on Liquidity
1. T+24 Hour Reporting for All
Transactions
2. Reporting Timeframe for Trades
Executed Prior to Weekends or U.S.
Federal Holidays
3. Other Revisions To Accommodate the
Interim Approach
4. Dissemination of Notional Amount
5. Analysis Period
VIII. Reporting and Public Dissemination of
Security-Based Swaps Involving
Allocation

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
A. Discussion of Comments Received and
Application of Regulation SBSR
B. Example: Reporting and Public
Dissemination for an Uncleared Bunched
Order Execution
1. Reporting the Executed Bunched Order
2. Reporting the Allocations
IX. Inter-Affiliate Security-Based Swaps
A. Background and Summary of Final Rule
B. Discussion of Comments
1. Regulatory Reporting of Inter-Affiliate
Security-Based Swaps
2. Public Dissemination of Inter-Affiliate
Security-Based Swaps
X. Rule 903—Use of Codes
A. Proposed Treatment of Coded
Information
B. Comments Received and Final Rule 903
1. Relocation of UIC Provisions Into Rule
903
2. Comments Regarding UICs and Final
Rule 903(a)
3. Comments on Proposed Rule 903 and
Final Rule 903(b)
C. Policies and Procedures of Registered
SDRs Relating to UICs
XI. Operating Hours of Registered SDRs—
Rule 904
XII. Subsequent Revisions to Reported
Security-Based Swap Information
A. Reporting Life Cycle Events—Rule
901(e)
1. Description of Proposal and Re-Proposal
2. Final Rules Relating to Life Cycle Events
and Response to Comments
a. General Comment and Definition of
‘‘Life Cycle Event’’
b. Final Rule 901(e)(1)
c. Final Rule 901(e)(2)
d. Reporting Timeframe for Life Cycle
Events
e. Re-Proposed Rule 901(e)(2)
f. Additional Comments Regarding Life
Cycle Event Reporting
B. Error Corrections—Rule 905
C. Policies and Procedures for Reporting
Life Cycle Events and Corrections
XIII. Other Duties of Participants
A. Duties of Non-Reporting Sides To
Report Certain Information—Rule 906(a)
B. Duty To Provide Ultimate Parent and
Affiliate Information to Registered
SDRs—Rule 906(b)
C. Policies and Procedures of Registered
Security-Based Swap Dealers and Major
Security-Based Swap Participants To
Support Reporting—Rule 906(c)
XIV. Other Aspects of Policies and
Procedures of Registered SDRs
A. Public Availability of Policies and
Procedures
B. Updating of Policies and Procedures
C. Provision of Certain Reports to the
Commission
XV. Rule 908—Cross-Border Reach of
Regulation SBSR
A. General Considerations
B. Definition of ‘‘U.S. Person’’
C. Scope of Security-Based Swap
Transactions Covered by Requirements
of Regulation SBSR—Rule 908(a)
1. Transactions Involving a Direct
Counterparty That Is a U.S. Person
2. Transactions Conducted Through a
Foreign Branch or Office
3. Transactions Guaranteed by a U.S.
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4. Transactions Accepted for Clearing by a
U.S. Clearing Agency
5. Transactions Involving a Registered
Security-Based Swap Dealer or
Registered Major Security-Based Swap
Participant That Is Not a U.S. Person
6. No Final Rule Regarding Transactions
Conducted Within the United States
D. Limitations on Counterparty Reporting
Obligations—Rule 908(b)
E. Substituted Compliance—Rule 908(c)
1. General Considerations
2. Substituted Compliance Procedure—
Rule 908(c)(2)(i)
3 Security-Based Swaps Eligible for
Substituted Compliance—Rule 908(c)(1)
4. Requests for Substituted Compliance—
Rule 908(c)(2)(ii)
5 Findings Necessary for Substituted
Compliance—Rule 908(c)(2)(iii)
a. Data Element Comparability—Rule
908(c)(2)(iii)(A)
b. Timeframe of Reporting and Public
Dissemination—Rule 908(c)(2)(iii)(B)
c. Direct Electronic Access—Rule
908(c)(2)(iii)(C)
d. Trade Repository Capabilities—Rule
908(c)(2)(iii)(D)
e. Memoranda of Understanding—Rule
908(c)(2)(iv)
f. Modification or Withdrawal of
Substituted Compliance Order
6. Consideration of Regulatory Reporting
and Public Dissemination in the
Commission’s Analysis of Substituted
Compliance
XVI. Other Cross-Border Issues
A. Foreign Public Sector Financial
Institutions
B. Foreign Privacy Laws Versus Duty To
Report Counterparty IDs
C. Antifraud Authority
D. International Coordination Generally
XVII. Rule 909—SIP Registration
XVIII. Constitutional Questions About
Reporting and Public Dissemination
XIX. What Happens If There Are Multiple
SDRs?
XX. Section 31 Fees
XXI. Paperwork Reduction Act
A. Definitions—Rule 900
B. Reporting Obligations—Rule 901
1. Summary of Collection of Information
2. Use of Information
3. Respondents
4. Total Initial and Annual Reporting and
Recordkeeping Burdens
a. Baseline Burdens
b. Burdens of Final Rule 901
5. Recordkeeping Requirements
6. Collection of Information Is Mandatory
7. Confidentiality of Responses to
Collection of Information
C. Public Dissemination of Transaction
Reports—Rule 902
1. Summary of Collection of Information
2. Use of Information
3. Respondents
4. Total Initial and Annual Reporting and
Recordkeeping Burdens
5. Recordkeeping Requirements
6. Collection of Information Is Mandatory
7. Confidentiality of Responses to
Collection of Information
D. Coded Information—Rule 903
1. Summary of Collection of Information

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2. Use of Information
3. Respondents
4. Total Initial and Annual Reporting and
Recordkeeping Burdens
5. Recordkeeping Requirements
6. Collection of Information Is Mandatory
7. Confidentiality of Responses to
Collection of Information
E. Operating Hours of Registered SDRs—
Rule 904
1. Summary of Collection of Information
2. Use of Information
3. Respondents
4. Total Initial and Annual Reporting and
Recordkeeping Burdens
5. Recordkeeping Requirements
6. Collection of Information Is Mandatory
7. Confidentiality of Responses to
Collection of Information
F. Correction of Errors in Security-Based
Swap Information—Rule 905
1. Summary of Collection of Information
2. Use of Information
3. Respondents
4. Total Initial and Annual Reporting and
Recordkeeping Burdens
5. Recordkeeping Requirements
6. Collection of Information Is Mandatory
7. Confidentiality of Responses to
Collection of Information
G. Other Duties of Participants—Rule 906
1. Summary of Collection of Information
2. Use of Information
3. Respondents
4. Total Initial and Annual Reporting and
Recordkeeping Burdens
a. For Registered SDRs
b. For Participants
i. Rule 906(a)
ii. Rule 906(b)
iii. Rule 906(c)
5. Recordkeeping Requirements
6. Collection of Information Is Mandatory
7. Confidentiality of Responses to
Collection of Information
H. Policies and Procedures of Registered
SDRs—Rule 907
1. Summary of Collection of Information
2. Use of Information
3. Respondents
4. Total Initial and Annual Reporting and
Recordkeeping Burdens
5. Recordkeeping Requirements
6. Collection of Information Is Mandatory
7. Confidentiality of Responses to
Collection of Information
I. Cross-Border Matters—Rule 908
1. Summary of Collection of Information
2. Use of Information
3. Respondents
4. Total Initial and Annual Reporting and
Recordkeeping Burdens
5. Recordkeeping Requirements
6. Collection of Information Is Mandatory
7. Confidentiality of Responses to
Collection of Information
J. Registration of SDRs as Securities
Information Processors—Rule 909
XXII. Economic Analysis
A. Broad Economic Considerations
B. Baseline
1. Current Security-Based Swap Market
a. Security-Based Swap Market
Participants
i. Participant Domiciles
ii. Current Estimates of Dealers and Major
Participants

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iii. Security-Based Swap Data Repositories
b. Security-Based Swap Transaction
Activity
c. Counterparty Reporting
d. Sources of Security-Based Swap
Information
2. Global Regulatory Efforts
a. Dealer and Major Swap Participant
Definitions for Cross-Border SecurityBased Swaps
b. International Regulatory Developments
3. Cross-Market Participation
C. Programmatic Costs and Benefits of
Regulation SBSR
1. Regulatory Reporting
a. Programmatic Benefits
b. Programmatic Costs
i. Reporting Security-Based Swap
Transactions to a Registered SDR—Rule
901
ii. Registered SDRs—Receipt and
Processing of Security-Based Swap
Transactions—Rule 901
2. Public Dissemination
a. Programmatic Benefits
b. Programmatic Costs
c. Alternative Approaches to Public
Dissemination
3. Interim Phase for Reporting and Public
Dissemination
a. Programmatic Benefits
b. Programmatic Costs
4. Use of UICs
a. Programmatic Benefits
b. Programmatic Costs
5. Cross-Border Aspects of Regulation
SBSR
a. Programmatic Benefits
b. Programmatic Costs
c. Assessment Costs
6. Other Programmatic Effects of
Regulation SBSR
a. Operating Hours of Registered SDRs—
Rule 904
b. Error Reporting—Rule 905
c. Other Participants’ Duties—Rule 906
d. Registered SDR Policies and
Procedures—Rule 907
e. SIP Registration by Registered SDRs—
Rule 909
7. Definitions—Rule 900
D. Effects on Efficiency, Competition, and
Capital Formation
1. Introduction
2. Regulatory Reporting
3. Public Dissemination
4. Implementation of Regulatory Reporting
and Public Dissemination
a. Role of Registered SDRs
b. Interim Phase of Reporting Requirements
and Block Rules
c. Use of UICs and Rule 903
d. Rules Assigning the Duty To Report
e. Embargo Rule
5. Impact of Cross-Border Aspects of
Regulation SBSR
a. General Considerations
b. Regulatory Reporting and Public
Dissemination
c. Substituted Compliance
E. Aggregate Quantifiable Total Costs
XXIII. Regulatory Flexibility Act Certification
XXIV. Statutory Basis and Text of Final Rules

I. Introduction
The Commission is adopting
Regulation SBSR, which implements the

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requirements for regulatory reporting
and public dissemination of securitybased swap transactions set forth in
Title VII of the Dodd-Frank Act.1 The
Dodd-Frank Act was enacted, among
other reasons, to promote the financial
stability of the United States by
improving accountability and
transparency in the financial system.2
The 2008 financial crisis highlighted
significant issues in the over-thecounter (‘‘OTC’’) derivatives markets,
which experienced dramatic growth in
the years leading up to the financial
crisis and are capable of affecting
significant sectors of the U.S. economy.
Title VII of the Dodd-Frank Act provides
for a comprehensive new regulatory
framework for swaps and security-based
swaps, by, among other things: (1)
Providing for the registration and
comprehensive regulation of swap
dealers, security-based swap dealers,
major swap participants, and major
security-based swap participants; (2)
imposing clearing and trade execution
requirements on swaps and securitybased swaps, subject to certain
exceptions; (3) creating recordkeeping,
regulatory reporting, and public
dissemination requirements for swaps
and security-based swaps; and (4)
enhancing the rulemaking and
enforcement authorities of the
Commission and the Commodity
Futures Trading Commission (‘‘CFTC’’).
The Commission initially proposed
Regulation SBSR in November 2010.3 In
May 2013, the Commission re-proposed
the entirety of Regulation SBSR as part
of the Cross-Border Proposing Release 4
and re-opened the comment period for
all of its other outstanding Title VII
rulemakings.5
The Commission received 86
comments that were specifically
directed to the comment file (File No.
S7–34–10) for the Regulation SBSR
Proposing Release, of which 38 were
comments submitted in response to the
re-opening of the comment period.6 Of
the comments directed to the comment
file (File No. S7–02–13) for the Cross1 Public

Law 111–203, 124 Stat. 1376 (2010).
Public Law 111–203, Preamble.
3 See Securities Exchange Act Release No. 63346
(November 19, 2010), 75 FR 75207 (December 2,
2010) (‘‘Regulation SBSR Proposing Release’’).
4 See Securities Exchange Act Release No. 69490
(May 1, 2013), 78 FR 30967 (May 23, 2013) (‘‘CrossBorder Proposing Release’’).
5 See Securities Exchange Act Release No. 69491
(May 1, 2013), 78 FR 30799 (May 23, 2013).
6 However, one comment that was specifically
directed to the comment file for the Regulation
SBSR Proposing Release exclusively addressed
issues related to clearing ‘‘debt swaps.’’ See Hamlet
Letter. Because the subject matter of this comment
letter is beyond the scope of Regulation SBSR, the
Commission is not addressing this comment.
2 See

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Border Proposing Release, six
referenced Regulation SBSR
specifically, while many others
addressed cross-border issues generally,
without specifically referring to
Regulation SBSR. The Commission also
has considered other comments
germane to regulatory reporting and/or
public dissemination of security-based
swaps that were submitted in other
contexts. The comments discussed in
this release are listed in the Appendix
to the release.
The Commission is now adopting
Regulation SBSR largely as re-proposed,
with certain revisions suggested by
commenters or designed to clarify the
rules. In addition, in separate releases,
as discussed below, the Commission
also is adopting rules relating to SDR
registration, duties, and core principles
(the ‘‘SDR Adopting Release’’) 7 and is
proposing certain rules, amendments,
and guidance relating to Regulation
SBSR (‘‘Regulation SBSR Proposed
Amendments Release’’).8 The principal
aspects of Regulation SBSR—which, as
adopted, consists of ten rules, Rules 900
to 909 under the Exchange Act 9—are
briefly described immediately below. A
detailed discussion of each rule within
Regulation SBSR, as well as how these
rules interact with the rules in the SDR
Adopting Release, follows in the body of
this release.10
A. Summary of Final Regulation SBSR
Rule 900, as adopted, sets forth the
definitions used throughout Regulation
SBSR. The defined terms are discussed
in connection with the rules in which
they appear.
Rule 901(a), as adopted, assigns the
reporting obligation for all securitybased swaps except for the following:
(1) Clearing transactions; 11 (2) securitybased swap transactions executed on a
platform 12 that will be submitted to
clearing; (3) transactions where there is
no U.S. person, registered security7 See Securities Exchange Act Release No. 74246
(February 11, 2015).
8 See Securities Exchange Act Release No. 74245
(February 11, 2015).
9 15 U.S.C. 78a et seq. All references in this
release to the Exchange Act refer to the Securities
Exchange Act of 1934.
10 If any of the provisions of these rules, or the
application thereof to any person or circumstance,
is held to be invalid, such invalidity shall not affect
other provisions or application of such provisions
to other persons or circumstances that can be given
effect without the invalid provision or application.
11 A ‘‘clearing transaction’’ is defined as ‘‘a
security-based swap that has a registered clearing
agency as a direct counterparty.’’ See Rule 900(g).
12 A ‘‘platform’’ is defined as a ‘‘national
securities exchange or security-based swap
execution facility that is registered or exempt from
registration.’’ See Rule 900(v); infra note 199 and
accompanying text (discussing the definition of
‘‘platform’’).

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
based swap dealer, or registered major
security-based swap participant on
either side; and (4) transactions where
there is no registered security-based
swap dealer or registered major securitybased swap participant on either side
and there is a U.S. person on only one
side. For purposes of this release, the
Commission uses the term ‘‘covered
transactions’’ to refer to all securitybased swaps other than those listed in
the four categories above; all covered
transactions shall be reported in the
manner set forth in Regulation SBSR, as
adopted. For covered transactions, Rule
901(a) assigns the duty to report to one
side of the transaction (the ‘‘reporting
side’’). The ‘‘reporting hierarchy’’
established in Rule 901(a) is based,
where possible, on the registration
status (e.g., registration as a securitybased swap dealer or major securitybased swap participant) of the direct
and indirect counterparties to the
transaction. In the Regulation SBSR
Proposed Amendments Release, the
Commission is proposing amendments
to Rule 901(a) that would impose
reporting obligations for security-based
swaps in categories one and two above
(i.e., clearing transactions and securitybased swap transactions executed on a
platform and that will be submitted to
clearing).
Rule 901(b), as adopted, provides that
if there is no registered security-based
swap data repository (‘‘SDR’’) that will
accept the report, the reporting side
must report the transaction to the
Commission.13
Rule 901(c) sets forth the primary
trade information and Rule 901(d) sets
forth the secondary trade information
that must be reported. For most
transactions, the Rule 901(c)
information will be publicly
disseminated. Information reported
pursuant to Rule 901(d) is for regulatory
purposes only and will not be publicly
disseminated.
Rule 901(e) requires the reporting of
life cycle events to the entity to which
the original transaction was reported.
Rule 901(i) requires reporting, to the
extent the information is available, of
security-based swaps entered into before
the date of enactment of the Dodd-Frank
Act (‘‘pre-enactment security-based
swaps’’) and security-based swaps
entered into after the date of enactment
but before Rule 901 becomes fully
operative (‘‘transitional security-based
swaps’’).
13 A ‘‘registered security-based swap data
repository’’ is defined as ‘‘a person that is registered
with the Commission as a security-based swap data
repository pursuant to Section 13(n) of the
Exchange Act (15 U.S.C. 78m(n)) and any rules or
regulations thereunder.’’ See Rule 900(ff).

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B. Role of Registered SDRs
Rule 902(a) requires a registered SDR
to publicly disseminate a transaction
report immediately upon receipt of
information about a security-based
swap, except in certain limited
circumstances. Pursuant to Rule 902(a),
the published transaction report must
consist of all the information reported
pursuant to Rule 901(c), plus any
condition flag contemplated by the
registered SDR’s policies and
procedures that are required by Rule
907. Rule 901(f) requires a registered
SDR to timestamp any information
submitted to it pursuant to Rule 901(c),
(d), (e), or (i), and Rule 901(g) requires
a registered SDR to assign a transaction
ID to each security-based swap.
Rule 907(a) requires a registered SDR
to establish and maintain written
policies and procedures that detail how
it will receive and publicly disseminate
security-based swap transaction
information. For example, Rule
907(a)(1) requires policies and
procedures that enumerate the specific
data elements of a security-based swap
that must be reported to the registered
SDR, including the data elements
specified in Rules 901(c) and 901(d).
Rule 907(a)(2) requires policies and
procedures that specify one or more
acceptable data formats, connectivity
requirements, and other protocols for
submitting information. Rules 907(a)(3)
and 907(a)(4) require policies and
procedures for assigning condition flags
to the appropriate transaction reports. In
addition, Rule 907(c) requires a
registered SDR to make its policies and
procedures available on its Web site.
Rule 907(e) requires a registered SDR
to provide to the Commission, upon
request, information or reports related to
the timeliness, accuracy, and
completeness of data reported to it
pursuant to Regulation SBSR and the
registered SDR’s policies and
procedures established thereunder.
Finally, Rule 909 requires a registered
SDR also to register with the
Commission as a securities information
processor (‘‘SIP’’).
C. Unique Identification Codes
Rule 903 requires a registered SDR to
use ‘‘unique identification codes’’
(‘‘UICs’’) to specifically identify a
variety of persons and things. The
following UICs are specifically required
by Regulation SBSR: Counterparty ID,
product ID, transaction ID, broker ID,
branch ID, trading desk ID, trader ID,
platform ID, and ultimate parent ID.
Rule 906(b) requires each participant
of a registered SDR to provide the
registered SDR with information

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14567

sufficient to identify the participant’s
ultimate parent(s) and any affiliate(s) of
the participant that are also participants
of the registered SDR.
Rule 903(a) provides that, if an
internationally recognized standardssetting system (‘‘IRSS’’) meeting certain
criteria is recognized by the
Commission and has assigned a UIC to
a person, unit of a person, or product (or
has endorsed a methodology for
assigning transaction IDs), that UIC
must be used by all registered SDRs and
their participants in carrying out duties
under Regulation SBSR. If the
Commission has not recognized an
IRSS—or if the Commission-recognized
IRSS has not assigned a UIC to a
particular person or thing—the
registered SDR is required to assign a
UIC using its own methodology.
Additionally, Rule 903(a) provides that,
if the Commission has recognized such
a system that assigns UICs to persons,
each participant of a registered SDR
shall obtain a UIC from or through that
system for identifying itself, and each
participant that acts as a guarantor of a
direct counterparty’s performance of
any obligation under a security-based
swap that is subject to Rule 908(a) shall,
if the direct counterparty has not
already done so, obtain a UIC for
identifying the direct counterparty from
or through that system, if that system
permits third-party registration without
a requirement to obtain prior permission
of the direct counterparty. As discussed
further in Section X(B)(2), infra, the
Commission recognizes the Global LEI
System (‘‘GLEIS’’), administered by the
Regulatory Oversight Committee
(‘‘ROC’’), as meeting the criteria
specified in Rule 903. The Commission
may, on its own initiative or upon
request, evaluate other IRSSs and decide
whether to recognize such other
systems.
D. Public Dissemination and Block
Trades
Section 13(m)(1)(B) of the Exchange
Act 14 authorizes the Commission ‘‘to
make security-based swap transaction
and pricing data available to the public
in such form and at such times as the
Commission determines appropriate to
enhance price discovery.’’ Section
13(m)(1)(C) of the Exchange Act 15
identifies four categories of securitybased swaps and authorizes the
Commission ‘‘to provide by rule for the
public availability of security-based
swap transaction, volume, and pricing
data.’’ Section 13(m)(1)(C) further
provides that, with respect to each of
14 15
15 15

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U.S.C. 78m(m)(1)(B).
U.S.C. 78m(m)(1)(C).

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these four categories of security-based
swaps, ‘‘the Commission shall require
real-time public reporting for such
transactions.’’ Section 13(m)(1)(D) of the
Exchange Act 16 provides that the
Commission may require registered
entities (such as registered SDRs) to
publicly disseminate the security-based
swap transaction and pricing data
required to be reported under Section
13(m) of the Exchange Act. Finally,
Section 13(n)(5)(D)(ii) of the Exchange
Act 17 requires SDRs to provide securitybased swap information ‘‘in such form
and at such frequency as the
Commission may require to comply
with public reporting requirements.’’
Under Rule 902, as adopted, a
registered SDR must, immediately upon
receiving a transaction report of a
security-based swap, publicly
disseminate the primary trade
information of that transaction, along
with any condition flags.
In addition, Section 13(m)(1)(E) of the
Exchange Act 18 requires the
Commission rule for real-time public
dissemination of cleared security-based
swaps to: (1) ‘‘specify the criteria for
determining what constitutes a large
notional security-based swap
transaction (block trade) for particular
markets and contracts’’; and (2) ‘‘specify
the appropriate time delay for reporting
large notional security-based swap
transactions (block trades) to the
public.’’ Section 13m(1)(E)(iv) of the
Exchange Act 19 requires the
Commission rule for real-time public
dissemination of security-based swaps
that are not cleared at a registered
clearing agency but reported to a
registered SDR to contain provisions
that ‘‘take into account whether the
public disclosure [of transaction and
pricing data for security-based swaps]
will materially reduce market
liquidity.’’
As discussed in detail below, in
response to the comments received and
in light of the fact that the Commission
has not yet proposed block thresholds,
the Commission is adopting final rules
that require all security-based swaps—
regardless of their notional amount—to
be reported to a registered SDR at any
point up to 24 hours after the time of
execution.20 The registered SDR will be
required, as with all other
dissemination-eligible transactions, to
16 15

U.S.C. 78m(m)(1)(D).
U.S.C. 78m(n)(5)(D)(ii).
18 15 U.S.C. 13m(m)(1)(E).
19 15 U.S.C. 13m(m)(1)(E)(iv).
20 As discussed in more detail in Section VII(B),
infra, if reporting would take place on a nonbusiness day (i.e., a Saturday, Sunday or U.S.
federal holiday), reporting would instead be
required by the same time on the next business day.
17 15

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publicly disseminate a report of the
transaction immediately and
automatically upon receipt of the
information from the reporting side.
Although the Commission is adopting
final rules relating to regulatory
reporting and public dissemination of
security-based swaps, it intends for the
rules relating to public dissemination to
apply only on an interim basis. This
interim approach is designed to address
the concerns of commenters who
believed that a public dissemination
regime with inappropriately small block
trade thresholds could harm market
liquidity, and who argued that market
participants would need an extended
phase-in period to achieve real-time
reporting. In connection with its future
rulemaking about block thresholds, the
Commission anticipates seeking public
comment on issues related to block
trades. Given the establishment of this
interim phase, the Commission is not
adopting any other proposed rules
relating to block trades.

United States must be reported to a
registered SDR, regardless of the
registration status or U.S. person status
of the counterparties and regardless of
where the transaction is executed.
In the Cross-Border Proposing
Release, the Commission proposed a
new paragraph (c) to Rule 908, which
contemplated a regime for allowing
‘‘substituted compliance’’ for regulatory
reporting and public dissemination with
respect to individual foreign
jurisdictions. Under this approach,
compliance with the foreign
jurisdiction’s rules could be substituted
for compliance with the Commission’s
Title VII rules, in this case Regulation
SBSR. Final Rule 908(c) allows
interested parties to request a
substituted compliance determination
with respect to a foreign jurisdiction’s
regulatory reporting and public
dissemination requirements, and sets
forth the standards that the Commission
would use in determining whether the
foreign requirements were comparable.

E. Cross-Border Issues
Regulation SBSR, as initially
proposed, included Rule 908, which
addressed when Regulation SBSR
would apply to cross-border securitybased swaps and counterparties of
security-based swaps. The Commission
re-proposed Rule 908 with substantial
revisions as part of the Cross-Border
Proposing Release. The Commission is
now adopting Rule 908 substantially as
re-proposed with some modifications, as
discussed in Section XV, infra.21
Under Rule 908, as adopted, any
security-based swap involving a U.S.
person, whether as a direct counterparty
or as a guarantor, must be reported to a
registered SDR, regardless of where the
transaction is executed.22 Furthermore,
any security-based swap involving a
registered security-based swap dealer or
registered major security-based swap
participant, whether as a direct
counterparty or as a guarantor, also
must be reported to a registered SDR,
regardless of where the transaction is
executed. In addition, any securitybased swap that is accepted for clearing
by a registered clearing agency having
its principal place of business in the

F. Compliance Dates
For Rules 900, 907, and 909 of
Regulation SBSR, the compliance date is
the effective date of this release. For
Rules 901, 902, 903, 904, 905, 906, and
908 of Regulation SBSR, a new
compliance schedule is being proposed
in the Regulation SBSR Proposed
Amendments Release. Accordingly,
compliance with Rules 901, 902, 903,
904, 905, 906, and 908 is not required
until the Commission establishes
compliance dates for those rules.
Rules 910 and 911, as proposed and
re-proposed, would have established
compliance dates and imposed certain
restrictions, respectively, during
Regulation SBSR’s phase-in period. For
reasons discussed in the Regulation
SBSR Proposed Amendments Release,
the Commission has determined not to
adopt Rule 910 or 911.23

21 The Commission anticipates seeking further
public comment on the application of Regulation
SBSR to: (1) Security-based swaps where there is no
U.S. person, registered security-based swap dealer,
or registered major security-based swap participant
on either side; and (2) transactions where there is
no registered security-based swap dealer or
registered major security-based swap participant on
either side and there is a U.S. person on only one
side.
22 See also Section II(B)(3) and note 139, infra
(describing the type of guarantees that could cause
a transaction to be subject to Regulation SBSR).

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II. Information Required To Be
Reported
A. Primary Trade Information—Rule
901(c)
1. Description of Re-Proposed Rule
Rule 901(c), as re-proposed, would
have required the reporting of the
following primary trade information in
real time, which information would
23 Thus, Regulation SBSR, as adopted, consists of
Rules 900 through 909 under the Exchange Act.
Conforming changes have been made throughout
Regulation SBSR to replace references to
‘‘§§ 242.900 through 242.911’’ to ‘‘§§ 242.900
through 242.909.’’ In addition, the defined terms
‘‘registration date’’ and ‘‘phase-in period’’ which
appeared in re-proposed Rules 910 and 911,
respectively, are not being defined in final Rule
900.

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
then be publicly disseminated: (1) The
asset class of the security-based swap
and, if the security-based swap is an
equity derivative, whether it is a total
return swap or is otherwise designed to
offer risks and returns proportional to a
position in the equity security or
securities on which the security-based
swap is based; (2) information that
identifies the security-based swap
instrument and the specific asset(s) or
issuer(s) of any security on which the
security-based swap is based; (3) the
notional amount(s), and the currenc(ies)
in which the notional amount(s) is (are)
expressed; (4) the date and time, to the
second, of execution, expressed using
Coordinated Universal Time (UTC); (5)
the effective date; (6) the scheduled
termination date; (7) the price; (8) the
terms of any fixed or floating rate
payments, and the frequency of any
payments; (9) whether or not the
security-based swap will be cleared by
a clearing agency; (10) if both
counterparties to a security-based swap
are registered security-based swap
dealers, an indication to that effect; (11)
if applicable, an indication that the
transaction does not accurately reflect
the market; and (12) if the securitybased swap is customized to the extent
that the information in items (1) through
(11) above does not provide all of the
material information necessary to
identify such customized security-based
swap or does not contain the data
elements necessary to calculate the
price, an indication to that effect.
2. Discussion of Final Rule 901(c) and
Response to Comments

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a. General Approach to Required
Information
Rules 901(c) and 901(d), as adopted,
require the reporting of general
categories of information, without
enumerating specific data elements that
must be reported, except in limited
cases. The Commission has made minor
revisions to the introductory language of
Rule 901(c).24
24 The first sentence of re-proposed Rule 901(c),
which would have required real-time public
dissemination of certain data elements, would have
stated, in relevant part, ‘‘For any security-based
swap that must be publicly disseminated pursuant
to §§ 242.902 and 242.908 and for which it is the
reporting side, the reporting side shall report the
following information . . .’’ The information
required to be reported pursuant to Rule 901(c)
must be reported for all covered transactions, even
though Rule 902(c) provides that certain securitybased swap transactions are not subject to public
dissemination. Accordingly, the Commission is not
including in final Rule 901(c) the phrase ‘‘For any
security-based swap that must be publicly
disseminated pursuant to §§ 242.902 and 242.908
and for which it is the reporting side . . .’’ In
addition, as discussed in Section VII(B)(1), infra,
Rule 901(c), as adopted, provides that the reporting

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In addition, Rule 907(a)(1), as
adopted, requires each registered SDR to
establish, maintain, and make publicly
available policies and procedures that,
among other things, specify the data
elements that must be reported.25
Commenters expressed mixed views
regarding this approach. One
commenter expressed the view that
‘‘any required data should be clearly
established by the Commission in its
rules and not decided in part by
[SDRs].’’ 26 This commenter further
asked the Commission to clarify that
any additional fields provided by
registered SDRs for reporting would be
optional.27 Two commenters, however,
supported the Commission’s approach
of providing registered SDRs with the
authority to define relevant fields on the
basis of general guidelines as set by the
SEC.28 One of these commenters noted
that it would be difficult for the
Commission to specify the securitybased swap data fields because securitybased swaps are complex products that
may require a large number of data
fields to be electronically confirmed.29
In addition, the commenter stated that
electronic methods for processing
existing and new security-based swaps
continue to be developed; accordingly,
the commenter stated that establishing a
detailed list of reportable fields for each
category of security-based swap would
be impracticable because such a system
‘‘will be outdated with every new
product launch or change in market
practice,’’ and would result in a
‘‘regulatory scheme that is continuously
lagging behind the market.’’ 30 The
commenter cautioned, however, that the
Commission must assure that there is
consistency among the data fields
collected and reported by registered
SDRs in the same asset class so that it
would be possible to consolidate the
data.31
The Commission shares the
commenter’s concerns about the
potential difficulties of consolidating

14569

data if there are multiple registered
SDRs in the same asset class and each
establishes different data elements for
information that must be reported.
Enumerating specific data elements
required to be reported could help to
promote consistency among the data
fields if there are multiple registered
SDRs in the same asset class. In
addition, as discussed more fully below,
such an approach would be more
consistent with the approach taken by
the CFTC’s swap reporting rules. The
Commission also acknowledges the
comment that the Commission’s rules,
rather than the policies and procedures
of a registered SDR, should specify the
information required to be reported.
However, the Commission believes on
balance that establishing broad
categories of required information will
more easily accommodate new types of
security-based swaps and new
conventions for capturing and reporting
transaction data. The Commission
agrees with the commenter who
expressed the view that a rule that
attempted to enumerate the required
data elements for each category of
security-based swap could become
outdated with each new product,
resulting in a regulatory framework that
constantly lagged the market and would
need to be updated.32 The Commission
believes that a standards-based
approach will more easily accommodate
new security-based swap reporting
protocols or languages, as well as new
market conventions, including new
conventions for describing the data
elements that must be reported.
One group of commenters noted that
the CFTC provided greater specificity
regarding the information to be
reported.33 Several commenters
generally urged the Commission and the
CFTC to establish consistent reporting
obligations to reduce the cost of
implementing both agencies’ reporting
rules.34
32 See

side shall report the information specified in Rule
901(c) within the timeframe specified by Rule
901(j).
25 See infra Section V.
26 ISDA IV at 8.
27 See id. at 9.
28 See MarkitSERV I at 10; Barnard I at 2 (also
supporting the proposed categories of information
that would be required to be reported for public
dissemination).
29 See MarkitSERV I at 9–10. The commenter
stated, for example, that the confirmation for a new
‘‘standard’’ credit default swap (‘‘CDS’’) would
contain 35 to 50 data fields, depending on the
structure of the CDS, and the confirmation for other
CDS products and life cycle events combined
would require a total of 160 data fields. See id. at
note 37.
30 MarkitSERV I at 10.
31 See MarkitSERV I at 10.

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id.
ISDA/SIFMA I at 6.
34 See Better Markets I at 2; Cleary II at 3, 21 note
61 (noting that a consistent approach between the
two agencies would address the reporting of mixed
swaps); ISDA/SIFMA I at 6; J.P. Morgan Letter at 14;
ISDA IV at 1–2 (generally urging that the
Commission align, wherever possible and practical,
with the CFTC reporting rules). The last commenter
also noted that reporting of mixed swaps will be
difficult if Regulation SBSR requires a different
reporting counterparty from the CFTC’s swap data
reporting rules or if transaction identifiers are not
conformed to the CFTC approach, see ISDA IV at
4, 11, and urged the Commission to coordinate with
the CFTC on a uniform approach to the time of
execution for mixed swaps, see id. at 14. A mixed
swap is a swap that is subject to both the
jurisdiction of the CFTC and SEC, and, absent a
joint order of the CFTC and SEC with respect to the
mixed swap, as described in Rule 3a67–4(c) under
33 See

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The Commission agrees that it would
be beneficial to harmonize, to the extent
practicable, the information required to
be reported under Regulation SBSR and
under the CFTC’s swap reporting rules.
However, the Commission believes that
it is possible to achieve a significant
degree of consistency without including
in final Rule 901 a detailed list of
required data elements for each
security-based swap. Rather than
enumerating a comprehensive list of
required data elements in the rule itself,
Rule 901 identifies broad categories of
information in the rule, and a registered
SDR’s policies and procedures are
required to identify specific data
elements that must be reported. The
Commission believes that the flexibility
afforded by Rule 901 will facilitate
harmonization of reporting protocols
and elements between the CFTC and
SEC reporting regimes. In identifying
the specific data elements that must be
reported, a registered SDR could, in
some instances, require reporting of the
same data elements that are required to
be reported pursuant to the CFTC’s
swap reporting rules, provided that
those data elements include the
information required under Rules 901(c)
and 901(d). In some cases, however, the
differences between the asset classes
under the Commission’s jurisdiction
and those under the CFTC’s jurisdiction
will require a registered SDR’s policies
and procedures to specify the reporting
of data elements different from those
required under the CFTC’s rules.
The Commission recognizes that
enumerating the specific data elements
required to be reported would be more
consistent with the approach taken by
the CFTC’s swap reporting rules.
Nevertheless, the Commission believes
that the flexibility afforded by the
category-based approach in adopted
Rule 901(c) could facilitate
harmonization. Accordingly, Rule
901(c), as adopted, continues to require
the reporting of broad categories of
security-based swap information to
registered SDRs, without enumerating
each data element required to be
reported (with a few exceptions,
described below).
b. Rule 901(c)(1)
Rule 901(c)(1), as re-proposed, would
have required reporting of the asset
class of a security-based swap and, if the
security-based swap is an equity
derivative, whether it is a total return
swap or is otherwise designed to offer
risks and returns proportional to a
the Exchange Act, is subject to the applicable
reporting and dissemination rules adopted by the
CFTC and SEC.

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position in the equity security or
securities on which the security-based
swap is based. As described in detail
below, the Commission is making
several revisions to Rule 901(c)(1) in
response to comments. Among other
things, these revisions clarify the final
rules and eliminate certain unnecessary
elements and redundancies. Final Rule
901(c)(1), however, does not expand on
the types of data elements that must be
reported.
i. Elimination of the Reference to Equity
Derivatives
The Commission is eliminating the
reference to equity derivatives in final
Rule 901(c)(1). Under Regulation SBSR,
as proposed and re-proposed, it would
have been necessary to identify total
return swaps and other security-based
swaps designed to offer risks and
returns proportional to a position in an
equity security or securities, because
those security-based swaps would not
have been eligible for a block trade
exception.35 However, because the
Commission is not adopting block
thresholds or other rules relating to the
block trade exception at this time, it is
not necessary to identify security-based
swaps that are not eligible for a block
trade exception during the first, interim
phase of Regulation SBSR.36
Accordingly, the Commission is not
including in final Rule 901(c)(1) any
requirement to identify a security-based
swap as a total return swap or a
security-based swap otherwise designed
to offer risks and returns proportional to
a position in the equity security or
securities on which the security-based
swap is based.
ii. Product ID
Final Rule 901(c)(1) requires the
reporting of the product ID 37 of a
security-based swap, if one is available.
If the security-based swap has no
product ID, or if the product ID does not
include the information enumerated in
Rule 901(c)(1)(i)–(v), then the
35 Rule 907(b)(2)(i), as proposed and re-proposed,
would have prohibited a registered SDR from
designating as a block trade any security-based
swap that is an equity total return swap or is
otherwise designed to offer risks and returns
proportional to a position in the equity security or
securities on which the security-based swap is
based. As noted in the Regulation SBSR Proposing
Release, there is no delay in the reporting of block
transactions for equity securities in the United
States. Re-proposed Rule 907(b)(2)(i) was designed
to discourage market participants from evading
post-trade transparency in the equity securities
markets by using synthetic substitutes in the
security-based swap market. See Regulation SBSR
Proposing Release, 75 FR 75232.
36 See infra Section VII.
37 See Rule 900(bb) (defining ‘‘product ID’’ as ‘‘the
UIC assigned to a product’’).

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information specified in subparagraphs
(i)–(v) of Rule 901(c)(1) (discussed
below) must be reported. Rule 901(c)(1)
is designed to simplify the reporting
process for security-based swaps that
have a product ID by utilizing the
product ID in lieu of each of the
categories of data enumerated in Rule
901(c)(1)(i)–(v).
The Commission believes that the
product ID will provide a standardized,
abbreviated, and accurate means for
identifying security-based swaps that
share certain material economic terms.
In addition, the reporting and public
dissemination of the product ID could
enhance transparency because a
transaction report that used a single
identifier for the product traded could
be easier to read than a transaction
report that identified the product traded
through information provided in
numerous individual data fields. For
example, market observers would be
able to discern quickly that transaction
reports including the same product ID
related to trades of the same product.
Product IDs also could facilitate risk
management and assist relevant
authorities in analyzing systemic risk
and conducting market surveillance.
Furthermore, the Commission believes
that the development of security-based
swaps with standardized terms could
facilitate the development of product
IDs that would readily identify the
terms of these transactions.
Re-proposed Rule 901(c)(2) would
have required reporting of information
that identifies the security-based swap
instrument and the specific asset(s) or
issuer(s) of any security on which the
security-based swap is based. Proposed
Rule 900 defined ‘‘security-based swap
instrument’’ to mean ‘‘each securitybased swap in the same asset class, with
the same underlying reference asset,
reference issuer, or reference index.’’ 38
In the context of final Rule 901(c), the
requirement to report the product ID, if
one is available, replaces, among other
things, the requirement in re-proposed
Rule 901(c)(2) to report information that
identifies the security-based swap
instrument and the specific asset(s) or
issuer(s) of any security on which the
security-based swap is based. For a
security-based swap that has no product
ID, Rule 901(c)(1)(i), as adopted,
requires reporting of information that
identifies the security-based swap,
including the asset class of the securitybased swap and the specific underlying
reference asset(s), reference issuer(s), or
reference index. Because the
38 This definition was re-proposed in the CrossBorder Proposing Release without change as Rule
900(dd).

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information that was included in the
definition of security-based swap
instrument—i.e., the asset class and the
underlying reference asset, issuer, or
index—will be reported pursuant to
adopted Rule 901(c)(1)(i) or included in
the product ID, it is no longer necessary
to separately define ‘‘security-based
swap instrument.’’ Thus, final Rule 900
no longer contains a definition of
security-based swap instrument.
Although Rule 900, as proposed,
defined the term ‘‘product ID,’’ it did
not separately propose to define the
term ‘‘product.’’ 39 Moreover, the
original definition of the term ‘‘unique
identification code’’ included the term
‘‘product,’’ again without defining it.40
The Commission is now adopting a
specific definition of the term
‘‘product.’’ Final Rule 900(aa) defines
‘‘product’’ as ‘‘a group of security-based
swap contracts each having the same
material economic terms except those
relating to price and size.’’ Accordingly,
the definition of ‘‘product ID’’ in
adopted Rule 900(bb) is revised to mean
‘‘the UIC assigned to a product.’’
The key aspect of the term ‘‘product’’
is the classifying together of a group of
security-based swap contracts that have
the same material economic terms, other
than those relating to price and size.
The assignment of product IDs to groups
of security-based swaps with the same
material economic terms, other than
those relating to price and size, is
designed to facilitate more efficient and
accurate transaction reporting by
allowing reporting of a single product ID
in place of the separate data categories
contemplated by Rule 901(c)(1)(i)–(v).
Product IDs also will make
disseminated transaction reports easier
to read, and will assist the Commission
and other relevant authorities in
monitoring for systemic risk and
conducting market surveillance.
Although the price and size of a
security-based swap are material terms
of the transaction—and thus must be
reported, along with many other
material terms, to a registered SDR
pursuant to Rules 901(c) and 901(d)—
they do not help distinguish one
39 Rule 900, as proposed, defined ‘‘product ID’’ to
mean ‘‘the UIC assigned to a security-based swap
instrument.’’ As discussed above, Rule 900, as
proposed, defined ‘‘security-based swap
instrument’’ to mean ‘‘each security-based swap in
the same asset class, with the same underlying
reference asset, reference issuer, or reference
index.’’ Both of these definitions were re-proposed
in the Cross-Border Proposing Release without
change as Rules 900(x) and 900(dd), respectively.
40 Rule 900, as proposed, defined UIC as ‘‘the
unique identification code assigned to a person,
unit of a person, or product . . .’’ (emphasis
added). This definition was re-proposed in the
Cross-Border Proposing Release without change as
Rule 900(nn).

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product from another. The same product
can be traded with different prices and
with different notional amounts. Thus,
by way of example and not of limitation,
if otherwise materially similar securitybased swaps have different currencies of
denomination, underlying assets, or
settlement terms, they are different
products for purposes of Regulation
SBSR and should have different product
IDs. An indicium of whether two or
more security-based swaps between the
same direct counterparties are the same
product is whether they could be
compressed or netted together to
establish a new position (e.g., by a
clearing agency or portfolio
compression service).41 If they cannot
be compressed or netted, this suggests
that there are material differences
between the terms of the security-based
swaps that do not permit the risks to be
fully offset.
The fact that the Commission is
requiring products to be distinguished
for purposes of regulatory reporting and
public dissemination even if a single
material economic term differentiates
one from another would not prevent the
Commission and market participants
from analyzing closely related products
on a more aggregate basis. For example,
products that were otherwise identical
but for different currencies of
denomination could still be grouped
together to understand the gross amount
of exposure created by these related
products (factoring in exchange rates).
However, a product ID system that was
not granular enough to separate
products based on individual material
differences would make it difficult or
impossible to analyze positions based
solely on those individual differences.
For example, if a product ID system
permitted otherwise similar securitybased swaps with different currencies of
denomination to be considered as the
same product, it would not be possible
to observe risk aggregations according to
their particular currencies.42
Similarly, the Commission believes
that otherwise materially identical
security-based swaps with different
dates of expiration are different
products and therefore must have
different product IDs. Delineating
products by, among other things, date of
expiration will assist the Commission
and other relevant authorities in
developing a more precise analysis of
risk exposure over time. This feature of
41 See TriOptima Letter at 2, 5–6 (explaining the
portfolio compression process for uncleared swaps).
42 See ISDA/SIFMA at 10 (recommending that the
definition of ‘‘security-based swap instrument’’
provide for more granular distinctions between
different types of transactions within a single asset
class).

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14571

the ‘‘product’’ definition is different
from the approach taken in the
originally proposed definition of
‘‘security-based swap instrument,’’
which specifically rejected distinctions
based on tenor.43
In connection with these
requirements, the Commission notes the
part of the ‘‘product’’ definition
referring to a product as ‘‘a group of
security-based swap contracts’’ (plural).
If a group of security-based swap
contracts is sufficiently standardized
such that they all share the same
material economic terms (other than
price and size), a registered SDR should
treat them as the same product and
assign them the same product ID. A
product could be evidenced, for
example, by the fact that a clearing
agency makes the group of securitybased swap contracts eligible for
clearing and will net multiple
transactions in that group of contracts
into a single open position. In contrast,
a security-based swap that has a
combination of material economic terms
unlike any other security-based swap
would not be part of a product group,
and the Commission believes that it
would be impractical to require
registered SDRs to assign a product ID
to each of these unique security-based
swaps. For such a security-based swap,
the transaction ID would be sufficient to
identify the security-based swap in the
registered SDR’s records and would
serve the same purpose as a product ID.
The product ID is one type of UIC. As
discussed more fully in Section X, infra,
Rule 903(a), as adopted, requires a
registered SDR to use a UIC, including
a product ID, assigned by an IRSS, if an
IRSS has been recognized by the
Commission and issues that type of UIC.
If an IRSS that can issue product IDs has
not been recognized by the Commission,
Rule 903(a) requires a registered SDR to
assign a product ID to that product
using its own methodology. Similarly,
final Rule 907(a)(5) requires a registered
SDR to establish and maintain written
policies and procedures for assigning
UICs in a manner consistent with Rule
903, which establishes standards for the
use of UICs.44
One commenter noted that, although
there likely will be global standards for
identification codes for certain data
43 The Commission is not expressing a view as to
whether products with different tenors might or
might not be considered together to constitute a
class of securities required to be registered under
Section 12 of the Exchange Act. See Section 12(a)
of the Exchange Act, 15 U.S.C. 78l(a); Section
12(g)(1) of the Exchange Act, 15 U.S.C. 78l(g); Rule
12g–1 under the Exchange Act, 17 CFR 240.12g–1.
44 See infra Section X(C) (discussing a registered
SDR’s policies and procedures relating to UICs).

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fields, such as the LEI, some global
identifiers will not exist.45 The
commenter believed that requiring
registered SDRs to create identifiers
would ‘‘result in bespoke
implementation among’’ registered
SDRs that would be of limited value
absent an industry standard.46 The
commenter recommended that the
Commission consider postponing a
requirement to establish identifiers
‘‘until an international taxonomy exists
that can be applied consistently.’’ 47
The Commission agrees that a system
of internationally recognized product
IDs would be preferable to a process
under which registered SDRs assign
their own product IDs to the same
product. Nonetheless, the Commission
believes that the use of product IDs,
even product IDs created by registered
SDRs rather than by an IRSS, could
simplify security-based swap
transaction reporting and facilitate
regulatory oversight of the securitybased swap market. In addition, the
Commission believes that the
requirement for registered SDRs to
assign product IDs could provide
additional incentive for security-based
swap market participants to develop
industry-wide product IDs.48
One commenter stated that
‘‘[i]ndustry utilities should be
considered for assigning unique IDs for
transactions, products, and legal
entities/market participants.’’ 49 As
45 See

DTCC V at 14.

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46 Id.
47 Id. The use of identifiers is discussed more
fully in connection with Rule 903. See infra Section
X.
48 In this regard, the Commission notes that one
commenter stated that a ‘‘newly formed ISDA crossproduct data working group, with representatives
from sell side and buy side institutions, will look
at proposed solutions and the practical implications
of unique identifiers for the derivatives industry.’’
The commenters stated, further, that ‘‘ISDA is
committed to provide product identifiers for OTC
derivatives products that reflect the FpML standard.
. . . In the first instance, this work will focus on
product identifiers for cleared products. ISDA/
FpML is currently working on a pilot project with
certain derivative clearing houses to provide a
normalized electronic data representation through a
FpML document for each OTC product listed and/
or cleared. This work will include the assignment
of unique product identifiers.’’ ISDA/SIFMA I at 8–
9. In addition, the Commission notes that ISDA has
issued a white paper that discusses ways of creating
unique identifiers for individual products. See
ISDA, ‘‘Product Representation for Standardized
Derivatives’’ (April 14, 2011), available at http://
www2.isda.org/functional-areas/technologyinfrastructure/data-and-reporting/identifiers/upiand-taxonomies/ (last visited September 22, 2014),
at 4 (stating that one goal of the white paper is to
‘‘[s]implif[y] . . . the trade processing and reporting
architecture across the marketplace for the
standardized products, as market participants will
be able to abstract the trade economics through
reference data instead of having to specify them as
part of each transaction’’).
49 ISDA/SIFMA I at 8.

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discussed in Section X(B)(2), infra, the
Commission is recognizing the Global
LEI System (‘‘GLEIS’’), an industry
utility administered by the Regulatory
Oversight Committee (‘‘ROC’’), as
meeting the criteria specified in Rule
903, as adopted. The GLEIS and this
comment are discussed in Section
X(B)(2), infra.
iii. Rule 901(c)(1)(i)
Rule 901(c)(1) requires that, if a
security-based swap has no product ID,
or if the product ID does not include the
information identified in Rule
901(c)(1)(i)–(v), the information
specified in Rule 901(c)(1)(i)–(v) must
be reported. Final Rule 901(c)(1)(i)–(v)
incorporates, with some modifications,
information that would have been
required under paragraphs (c)(1), (2),
(5), (6), (8), and (12) of re-proposed Rule
901, and re-proposed Rule 901(d)(1)(iii).
Rule 901(c)(1)(i), as adopted,
generally requires the reporting of
information that would have been
required to be reported under reproposed Rules 901(c)(1) and 901(c)(2).
Re-proposed Rule 901(c)(1) would have
required, in part, reporting of the asset
class of a security-based swap.50 Reproposed Rule 901(c)(2) would have
required the reporting of information
identifying the security-based swap
instrument and the specific asset(s) or
issuer(s) on which the security-based
swap is based. Re-proposed Rule
900(dd) would have defined ‘‘securitybased swap instrument’’ as ‘‘each
security-based swap in the same asset
class, with the same underlying
reference asset, reference issuer, or
reference index.’’ Rule 901(c)(1)(i), as
adopted, requires the reporting of
information that identifies the securitybased swap, including the asset class of
the security-based swap and the specific
underlying reference asset(s), reference
issuer(s), or reference index. Although
the defined term ‘‘security-based swap
instrument’’ is being deleted from
Regulation SBSR for the reasons
discussed in Section VII(B)(3), infra,
final Rule 901(c)(1)(i) retains the
requirement to report the underlying
reference asset(s), reference issuer(s), or
50 ‘‘Asset class’’ is defined as ‘‘those securitybased swaps in a particular broad category,
including, but not limited to, credit derivatives and
equity derivatives.’’ See Rule 900(b), as adopted. As
proposed and re-proposed, the definition of ‘‘asset
class’’ also would have included loan-based
derivatives. However, because loan-based
derivatives can be viewed as a form of credit
derivative, the Commission has removed the
reference to loan-based derivatives as a separate
asset class and adopted the definition noted above.
This revision aligns the definition of ‘‘asset class’’
used in Regulation SBSR with the definition used
in the SDR Adopting Release.

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reference index for the security-based
swap, as well as the asset class of the
security-based swap.
The Commission received no
comments regarding the information
required to be reported in Rule
901(c)(1)(i). As stated in the Regulation
SBSR Proposing Release, the
Commission believes that the reporting
and public dissemination of information
relating to the asset class of the securitybased swap would provide market
participants with basic information
about the type of security-based swap
(e.g., credit derivative or equity
derivative) being traded.51 Similarly, the
Commission believes that information
identifying the specific reference
asset(s), reference issuer(s), or reference
index of any security on which the
security-based swap is based is
fundamental to understanding the
transaction being reported, and that a
transaction report that lacked such
information would not be meaningful.52
Accordingly, Rule 901(c)(1)(i), as
adopted, includes the requirement to
report this information.
iv. Rules 901(c)(1)(ii) and (iii)
Re-proposed Rules 901(c)(5) and
901(c)(6) would have required the
reporting of, respectively, the effective
date of the security-based swap and the
scheduled termination date of the
security-based swap. These
requirements are incorporated into
adopted Rules 901(c)(1)(ii) and (iii),
which require the reporting of,
respectively, the effective date of the
security-based swap and the scheduled
termination date of the security-based
swap. The Commission received no
comments regarding the reporting of
this information. As stated in the
Regulation SBSR Proposing Release, the
Commission believes that information
specifying the effective date and the
scheduled termination date of the
security-based swap is fundamental to
understanding the transaction being
reported, and that a transaction report
that lacked such information would not
be meaningful.53 Accordingly, final
Rules 901(c)(1)(ii) and (iii) include the
requirement to report the effective date
and the scheduled termination date,
respectively, of the security-based swap.
v. Rule 901(c)(1)(iv)
Re-proposed Rule 901(c)(8) would
have required the reporting of any fixed
or floating rate payments of a securitybased swap, and the frequency of any
payments. Re-proposed Rule
51 See

75 FR 75213.
id. at 75214.
53 See id.
52 See

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901(d)(1)(iii) would have required the
reporting of the amount(s) and
currenc(ies) of any up-front payment(s)
and a description of the terms and
contingencies of the payment streams of
each direct counterparty to the other. In
the Regulation SBSR Proposing Release,
the Commission noted that the terms of
any fixed or floating rate payments and
the frequency of any payments are
among the terms that would be
fundamental to understanding a
security-based swap transaction.54 One
commenter echoed the importance of
information concerning the payment
streams of security-based swaps.55
Another commenter stated that
proposed Rule 901(d)(1)(iii) was unclear
about the proposed form of the
description of the terms and
contingencies of the payment streams,
and that the requirements of proposed
Rule 901(d)(1)(iii) appeared to be
duplicative of proposed Rule
901(d)(1)(v), which would have required
reporting of the data elements necessary
for a person to determine the market
value of the transaction.56 The
commenter also suggested that the
Commission consider the utility of
requiring reporting of the terms of fixed
or floating rate payments, as required by
re-proposed Rule 901(c)(8).57
The Commission continues to believe
that, for a security-based swap that
provides for periodic exchange of cash
flows, information concerning those
payment streams is fundamental to
understanding the terms of the
transaction. The Commission
acknowledges, however, that reproposed Rules 901(c)(8), 901(d)(1)(iii),
and 901(d)(v) contained overlapping
requirements concerning the payment
streams of a security-based swap.
Accordingly, the Commission is revising
Rules 901(c) and 901(d) to streamline
and clarify the information required to
be reported with respect to the payment
streams of a security-based swap.
Specifically, final Rule 901(c)(1)(iv)
requires the reporting of any
standardized fixed or floating rate
payments, and the frequency of any
such payments. As discussed more fully
54 See

id.
Benchmark Letter at 1 (stating that ‘‘[t]he
reference data set [for a security-based swap] must
include standard attributes necessary to derive cash
flows and any contingent claims that can alter or
terminate payments of these contracts. . . . Without
these critical pieces of information, users of the
trade price dissemination service will be unable to
accurately assess reported values’’).
56 See DTCC II at 10. See also DTCC V at 12
(requesting additional clarity with respect to the
requirement to report the contingencies of the
payments streams of each direct counterparty to the
other).
57 See DTCC V at 11.

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55 See

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in Section II(C)(3)(d), infra, final Rule
901(d)(3) requires the reporting of
information concerning the terms of any
fixed or floating rate payments, or
otherwise customized or nonstandardized payment streams,
including the frequency and
contingencies of any such payments, to
the extent that this information has not
been reported pursuant to Rule
901(c)(1). Thus, Rule 901(c)(1)(iv)
requires the reporting of information
concerning standardized payment
streams, while Rule 901(d)(3) requires
the reporting of information concerning
customized payment streams. In
addition, as discussed more fully below,
final Rule 901(d)(5) requires reporting of
any additional data elements included
in the agreement between the
counterparties that are necessary for a
person to determine the market value of
the transaction, to the extent that such
information has not already been
reported pursuant to Rule 901(c) or
other provisions of Rule 901(d). The
Commission believes that these changes
to Rules 901(c) and 901(d) will avoid
potential redundancies in the reporting
requirements and will clarify the
information required to be reported with
respect to the payment streams of a
security-based swap.
Like other primary trade information
reported pursuant to Rule 901(c),
information about standardized
payment streams reported pursuant to
Rule 901(c)(1)(iv) will be publicly
disseminated. The Commission
envisions that, rather than
disseminating such information as
discrete elements, this information
could be inherent in the product ID of
a security-based swap that has a product
ID. Information concerning nonstandard payment streams that is
reported pursuant to Rule 901(d)(3), like
other secondary trade information, will
be available for regulatory purposes but
will not be publicly disseminated. Reproposed Rule 901(c)(8) would have
required reporting of the terms of any
fixed or floating rate payments,
standardized or non-standardized, and
the frequency of such payments, and reproposed Rule 902(a) would have
required the public dissemination of
that information. In addition, as noted
above, one commenter discussed the
importance of the availability of
information concerning payment
streams.58 Nonetheless, the Commission
believes that public dissemination of the
non-standard payment terms of a
customized security-based swap would
be impractical, because a bespoke
transaction by definition could have
58 See

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such unique terms that it would be
difficult to reflect the full material terms
using any standard dissemination
protocol. In addition, it is not clear that
the benefits of publicly disseminating
information concerning these nonstandard payment streams would justify
the costs of disseminating the
information. However, the Commission
will have access to regulatory reports of
such transactions, which should
facilitate regulatory oversight and assist
relevant authorities in monitoring the
exposures of security-based swap
market participants. Accordingly, Rule
901(d)(3), as adopted, requires the
reporting of information concerning the
terms of any non-standard fixed or
floating rate payments, or otherwise
customized or non-standardized
payment streams, including the
frequency and contingencies of any
such payments.
One commenter expressed the view
that, without further clarification,
market participants could adopt
different interpretations of the
requirement in re-proposed Rule
901(c)(8) to report the terms of fixed or
floating rate payments, resulting in
inconsistent reporting to registered
SDRs; the commenter recommended,
therefore, limiting the reportable fields
to tenor and frequency, where
applicable.59
The Commission shares the
commenter’s concerns that, without
guidance, market participants could
adopt different interpretations of the
requirement to report the terms of fixed
or floating rate payments. The
Commission notes, however, that final
Rules 907(a)(1) and 907(a)(2) require a
registered SDR to establish and maintain
written policies and procedures that
enumerate the specific data elements
that must be reported and that specify
the protocols for submitting
information, respectively. The
Commission believes that, read together,
Rules 907(a)(1) and 907(a)(2) provide
registered SDRs with flexibility to
determine the appropriate conventions
for reporting these data elements,
including the terms of a security-based
swap’s fixed or floating rate payments.
Thus, although Rule 901(c) itself does
not specify the precise manner for
reporting a security-based swap’s fixed
or floating rate payments, the policies
and procedures of registered SDRs must
do so. The Commission notes, further,
that final Rule 906(c), among other
things, requires SDR participants that
are registered security-based swap
dealers and registered major securitybased swap participants to establish,
59 See

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maintain, and enforce written policies
and procedures that are reasonably
designed to ensure that they comply
with any obligations to report
information to a registered SDR in a
manner consistent with Regulation
SBSR.
vi. Rule 901(c)(1)(v)
Re-proposed Rule 901(c)(12) would
have required a reporting side to
indicate, if applicable, that the
information reported under
subparagraphs (1)–(11) of re-proposed
Rule 901(c) for a customized securitybased swap does not provide all of the
material information necessary to
identify the customized security-based
swap or does not contain the data
elements necessary to calculate its price.
The Commission is adopting the
substance of re-proposed Rule
901(c)(12) and locating it in final Rule
901(c)(1)(v). Rule 901(c)(1)(v), as
adopted, provides that, if a securitybased swap is customized to the extent
that the information provided in
paragraphs (c)(1)(i) through (iv) of Rule
901 does not provide all of the material
information necessary to identify such
customized security-based swap or does
not contain the data elements necessary
to calculate the price, the reporting side
must include a flag to that effect. As
discussed more fully in Section VI(G),
infra, the registered SDRs should
develop a condition flag to identify
bespoke transactions because absent
such a flag, users of public reports of
bespoke transactions might receive a
distorted impression of the market.
One commenter argued that ‘‘publicly
disseminated data for trades with a nonstandard feature flag activated will be of
limited usefulness and could be
misleading.’’ 60 The commenter
expressed the view that dissemination
of information regarding highly
structured transactions should not occur
until an analysis regarding the impact
and potential for misleading the
investing public has been conducted.61
A second commenter, however,
endorsed the approach being adopted by
the Commission.62 The Commission
acknowledges the concerns that the
dissemination of transaction reports for
highly customized trades could be
misleading or of limited usefulness.
However, as discussed more fully in
Section VI(D)(2)(a), infra, the
Commission believes that public
dissemination of the key terms of a
60 DTCC

II at 9.
id.
62 See Cleary II at 16 (recommending ‘‘public
reporting of a few key terms of a customized
swap . . . [with] some indication that the
transaction is customized’’).
61 See

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customized security-based swap, even
without all of the details of the
transaction, could provide useful
information to market observers,
including information concerning the
pricing of similar products and
information relating to the relative
number and aggregate notional amounts
of transactions in bespoke products
versus standardized products. In
addition, the Commission believes that
the condition flag signaling that the
transaction is a customized trade, and
therefore that the reported information
does not provide all of the details of the
transaction, will minimize the potential
for confusion and help to assure that the
publicly disseminated reports of these
transactions are not misleading. For
these reasons, the Commission is
declining, at this time, to undertake the
study recommended by the commenter.
A third commenter indicated that
Rule 901 should go further and require
reporting of additional information
necessary to calculate the price of a
security-based swap that is so
customized that the price cannot be
calculated from the reported
information.63 The Commission
generally agrees that transaction reports
of customized security-based swaps
should be as informative and useful as
possible. However, it is not clear that
the benefits of publicly disseminating
all of the detailed and potentially
complex information that would be
necessary to calculate the price of a
highly customized security-based swap
would justify the costs of disseminating
that information. Accordingly, Rule
901(c)(1)(v), as adopted, does not
require reporting of this information,
and it will not be publicly
disseminated.64
This commenter also expressed
concern that a ‘‘composite’’ securitybased swap composed of two swaps
grafted together could be used to avoid
reporting requirements; the commenter
recommended that, if at least one of the
transactions could be disaggregated and
63 See

Better Markets I at 7.
Commission notes that Rule 901(d)(5)
requires the reporting of any additional data
elements included in the agreement between the
counterparties that is necessary to determine the
market value of a transaction. Although this
information will not be publicly disseminated, it
will be available to the Commission and other
relevant authorities. Such relevant authorities are
enumerated in Section 13(n)(5)(G) of the Exchange
Act, 15 U.S.C. 78m(n)(5)(G), which requires an SDR,
upon request, to make available all data obtained
by the SDR, including individual counterparty trade
and position data, to each appropriate prudential
regulator, the Financial Stability Oversight Council,
the CFTC, the Department of Justice, and any other
person that the Commission determines to be
appropriate, including foreign financial supervisors,
foreign central banks, and foreign ministries.
64 The

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reported in a format so that its price
could be calculated, Regulation SBSR
should require that the security-based
swap be disaggregated and the
component parts be reported
separately.65 In considering the
commenter’s concern the Commission
notes the following:
To begin, the Commission
understands that market participants
may execute so-called ‘‘package trades’’
that are composed of multiple
components, or ‘‘legs,’’ some of which
may be security-based swaps. Though
such package trades are executed at a
single price, each leg is separately
booked and processed. In these cases,
Regulation SBSR does in fact require a
reporting side to separately report (and
for the SDR to separately disseminate)
each security-based swap component of
the package trade.66
However, if a market participant
combines the economic elements of
multiple instruments into one securitybased swap contract, Regulation SBSR
requires a single report of the
transaction. The Commission
understands the commenter’s concerns
regarding potential attempts to evade
the post-trade transparency
requirements. Such efforts could
undermine Regulation SBSR’s goals of
promoting transparency and efficiency
in the security-based swap markets and
impede the Commission’s ability to
oversee those markets. The Commission
does not believe, however, that either a
registered SDR or a reporting side
should be required to disaggregate a
customized security-based swap if it
consists of a single contract
incorporating elements of what
otherwise might have been two or more
65 See Better Markets I at 7 (‘‘This enhancement
to the Proposed Rules is particularly important with
respect to SBS comprised of two swaps grafted
together. Such composite SBS can be used to avoid
reporting requirements. Even worse they can be
used to obfuscate the real financial implications of
a transaction. Accordingly, if an SBS can be
disaggregated into two or more transactions, and at
least one of those disaggregated transactions can be
reported in a format so that price can be calculated,
then the rules should require that the SBS be
disaggregated and reported in that form’’); Better
Markets II at 3 (stating that complex transactions
must be broken down into meaningful
components); Better Markets III at 4–5 (stating that
the Commission should require reporting of data on
disaggregated customized security-based swaps).
66 In addition, as discussed more fully in Section
VI(G), infra, in developing its policies and
procedures, a registered SDR should consider
requiring participants to identify the individual
component security-based swaps of such a trade as
part of a package transaction, and should consider
disseminating reports of the individual securitybased swap components of the package trade with
a condition flag that identifies them as part of a
package trade. Absent such a flag, observers of
public reports of package transactions might obtain
a distorted view of the market.

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security-based swaps. In the absence of
evidence of a significant amount of such
‘‘composite’’ security-based swap
transactions and structuring other than
through package trades, the Commission
does not at this time believe that
devising protocols for disseminating
them in a disaggregated fashion would
be practical. Importantly, however, and
as discussed more fully in Section
VI(D)(2)(a), infra, the primary trade
information of any complex or bespoke
security-based swap, including
‘‘composite’’ security-based swaps as
described by the commenter, will be
publicly disseminated, as required by
Rule 902(a), including the specific
underlying reference asset(s), reference
issuer(s), or reference index for the
transaction, as required by Rule
901(c)(1).67 The Commission believes
that the public dissemination of the
primary trade information, even without
all of the material economic terms of the
transaction that could affect its pricing,
could provide market observers with
useful information, including
information concerning the pricing of
similar products and the relative
number and aggregate notional amounts
of transactions in complex and other
bespoke transactions versus transactions
in standardized products. The
Commission further notes that since all
of the material economic terms of a
‘‘composite’’ security-based swap must
be reported to a registered SDR,
including the data elements required by
Rule 901(d),68 the Commission itself
will have complete access to these
details.69
67 One commenter stated its view that
‘‘proprietary baskets’’ should qualify as nondisseminated information, and requested that
Regulation SBSR specifically recognize this as an
example of non-disseminated information. See
ISDA IV at 17 (stating that reportable security-based
swaps may include customized narrow-based
baskets that a counterparty deems proprietary to its
business and for which public disclosure would
compromise its anonymity and negatively impact
its trading activity). Rule 902(a), as adopted,
requires a registered SDR to publicly disseminate,
for each transaction, the primary trade information
required to be reported by Rule 901(c), as adopted,
which includes the specific underlying reference
asset(s), reference issuer(s), or reference index. The
Commission continues to believe that the primary
trading terms of a security-based swap should be
disseminated to help facilitate price discovery. See
infra Section VI(A).
68 See infra Section II(B)(3)(e) (discussing
requirement in Rule 901(d)(5) that, to the extent not
provided pursuant to other provisions of Rules
901(c) and 901(d), all data elements included in the
agreement between the counterparties that are
necessary for a person to determine the market
value of the transaction must be reported).
69 See infra Section V(B)(1) (noting that the
Commission anticipates proposing for public
comment detailed specifications of acceptable
formats and taxonomies that would facilitate an
accurate interpretation, aggregation, and analysis by
the Commission of security-based swap data

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The commenter also expressed the
view that Regulation SBSR should
clearly define the meaning of a securitybased swap that is so customized that its
price is not ascertainable.70 The
Commission does not believe that it is
necessary to further define the term
‘‘customized security-based swap’’ for
purposes of Rule 901(c)(1)(v). The
condition flag required under adopted
Rule 901(c)(1)(v) will notify market
participants that the security-based
swap being reported does not have a
product ID and is customized to the
extent that the information provided in
Rules 901(c)(1)(i)–(iv) does not provide
all of the material information necessary
to identify the security-based swap or
does not contain the data elements
necessary to calculate the price. Thus,
market participants will know that a
customized security-based swap
transaction was executed, and that the
information reported pursuant to Rules
901(c)(1)(i)–(iv) provides basic but
limited information about the
transaction. The Commission believes,
further, that Rule 901(c)(1)(v) provides
clear guidance with respect to when a
transaction is customized to the extent
that the reporting side must attach a
condition flag that identifies the
transaction as a bespoke transaction,
i.e., when the information reported
pursuant to Rules 901(c)(1)(i)–(iv) does
not provide all of the material
information necessary to identify the
security-based swap or does not contain
the data elements necessary to calculate
the price. Accordingly, the Commission
does not believe that it is necessary, at
this time, to further define what
constitutes a customized security-based
swap for purposes of Regulation SBSR.
c. Rule 901(c)(2)
Re-proposed Rule 901(c)(4) would
have required reporting of the date and
time, to the second, of the execution of
a security-based swap, expressed using
Coordinated Universal Time (‘‘UTC’’).71
submitted to it by an SDR); supra Section
II(A)(2)(b)(v) (explaining that the Commission will
have access to regulatory reports of bespoke
security-based swap transactions, which should
facilitate regulatory oversight and assist relevant
authorities in monitoring the exposures of securitybased swap market participants).
70 See Better Markets I at 7 (‘‘The Proposed Rules
also represent a critically important opportunity to
shed light on the nature of ‘customized’ swaps.
Since the inception of the debate over disclosure
and clearing in connection with financial
regulation, the concept of the ‘customized’ or
‘bespoke’ transactions has figured prominently, yet
these terms remain poorly understood in real world
terms. The Proposed Rules should clearly define the
meaning of SBS that are so customized that price
is not ascertainable’’).
71 UTC is defined by the International
Telecommunication Union (ITU–R) and is

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14575

In the Regulation SBSR Proposing
Release, the Commission stated that
information concerning the time of
execution would allow security-based
swap transactions to be ordered
properly, and would provide the
Commission with a detailed record of
when a security-based swap was
executed.72 The Commission further
noted that, without the time of
execution, market participants and
relevant authorities would not know
whether the transaction reports that
they are seeing reflect the current state
of the market.73 In both the proposal
and the re-proposal, the Commission
defined ‘‘time of execution’’ to mean
‘‘the point at which the counterparties
to a security-based swap become
irrevocably bound under applicable
law.’’ 74
One commenter expressed the view
that time of execution should be
reported at least to the second, and by
finer increments where practicable.75 A
second commenter raised timestamp
issues in connection with proposed
Rule 901(f), which would have required
a registered SDR to timestamp
transaction information submitted to it
under Rule 901. The commenter stated
that especially for markets for which
there are multiple security-based swap
execution facilities and markets where
automated, algorithmic trading occurs,
‘‘the sequencing of trade data for
transparency and price discovery, as
well as surveillance and enforcement
purposes, will require much smaller
increments of time-stamping.’’ 76 The
commenter urged the Commission to
revise proposed Rule 901(f) to require a
registered SDR to time stamp
information that it receives in
increments shorter than one second,
stating that time stamps shorter than
one second are technologically feasible,
affordable, and in use.77
The Commission understands that
trading in the security-based swap
market does not yet occur as fast or as
frequently as in the equities market,
which makes recording the time of
security-based swap executions in
subsecond increments less necessary for
surveillance purposes. While some
market participants may have the
capacity to record trades in subsecond
intervals, others may not. Given the
maintained by the International Bureau of Weights
and Measures (BIPM). See http://www.itu.int/net/
newsroom/wrc/2012/reports/atomic_time.aspx (last
visited September 22, 2014).
72 See 75 FR 75213.
73 See id.
74 See re-proposed Rule 900(ff).
75 See Barnard I at 2.
76 Better Markets I at 9.
77 See id.

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potential costs of requiring all market
participants to utilize subsecond
timestamps, the Commission believes
that it is not necessary or appropriate at
this time to require reporting of the time
of execution in subsecond increments.78
Accordingly, the Commission is
adopting Rule 901(c)(4) as proposed and
re-proposed, but renumbering it as final
Rule 901(c)(2). The Commission will
continue to monitor developments in
the security-based swap market and
could in the future reconsider whether
reporting time of execution in
subseconds would be appropriate.
One commenter discussed the time of
execution for a voice trade in the
context of proposed Rule 910(a), which
addressed the reporting of preenactment security-based swaps.79 The
commenter noted that in the Regulation
SBSR Proposing Release, the
Commission stated that ‘‘proposed Rule
910(a) would not require reporting
parties to report any data elements (such
as the time of execution) that were not
readily available. Therefore, proposed
Rule 910(a) would not require reporting
parties to search for or reconstruct any
missing data elements.’’ 80 The
commenter disagreed with this assertion
in the context of voice trades, stating
that the time of entry of the voice trade
into the system is typically provided,
but not the actual execution time of the
trade. The commenter stated that
‘‘[p]roviding the actual execution time
in the case of voice trades would then
prove extremely challenging and
invasive for the marketplace.’’ 81
Similarly, one commenter requested
that the ‘‘Commission clarify that
participants are not required to provide
trade execution time information for
pre-enactment security-based swap
transactions and that going-forward,
such information need only be provided
when industry-wide time stamping
practices are implemented.’’ 82
With respect to these concerns, the
Commission notes, first, that it is not
adopting Rule 910, but is proposing a
new compliance schedule for Rules 901,
902, 903, 904, 905, 906, and 908 of
Regulation SBSR in the Regulation
SBSR Proposed Amendments Release.
The Commission emphasizes, however,
that proposed Rule 910(a) would not
have required market participants to
report information for a pre-enactment
security-based swap that was not readily
78 However, a registered SDR could, in its policies
and procedures, allow its participants to report
using subsecond timestamps.
79 As discussed in Section I(F), supra, the
Commission is not adopting Rule 910.
80 See 75 FR 75278–79.
81 ISDA/SIFMA I at 11.
82 ISDA I at 5.

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available, or to reconstruct that
information. Thus, Rule 910(a), as
proposed, would not have required
market participants to provide the time
of execution for an orally negotiated
pre-enactment security-based swap,
unless such information was readily
available. Likewise, final Rule 901(i)
does not require reporting of the date
and time of execution for an orally
negotiated pre-enactment or transitional
security-based swap, unless such
information is readily available.83
However, for all other security-based
swaps, including voice trades, final Rule
901(c)(2) requires reporting of the date
and time of execution, to the second, of
the security-based swap. The
Commission noted in the Regulation
SBSR Proposing Release that trades
agreed to over the phone would need to
be systematized by being entered in an
electronic system that assigns a time
stamp to report the date and time of
execution of a security-based swap.84
The Commission continues to believe
that it is consistent with Congress’
intent for orally negotiated securitybased swap transactions to be
systematized as quickly as possible.85
The Commission notes, further, that
market participants also must report the
time of execution for voice-executed
trades in other securities markets (e.g.,
equities and corporate bonds).86
Knowing the date and time of execution
of a security-based swap is important for
reconstructing trading activity and for
market surveillance purposes.
Accordingly, the Commission continues
to believe that the regulatory interest in
having information regarding the date
and time of execution for all securitybased swaps, including orally
negotiated security-based swaps,
justifies the burden on market
participants of recording and reporting
this information.
In addition, the Commission is
adopting, as proposed and re-proposed,
the requirement for all times of
execution reported to and recorded by
registered SDRs to be in UTC. In the
Regulation SBSR Proposing Release, the
Commission explained its reasons for
proposing to require that the date and
83 For pre-enactment and transitional securitybased swaps, final Rule 901(i) requires reporting of
the information required under Rules 901(c) and
901(d), including the date and time of execution,
only to the extent that such information is available.
84 See 75 FR 75213.
85 See id.
86 See, e.g., FINRA Rule 6230(c)(8) (requiring
transactions reported to TRACE to include the time
of execution); FINRA Rule 6622(c)(5) (requiring
last-sale reports for transactions in OTC Equity
Securities and Restricted Securities to include the
time of execution expressed in hours, minutes, and
seconds).

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time of execution be expressed in
UTC.87 The Commission noted that
security-based swaps are traded
globally, and expected that many
security-based swaps subject to the
Commission’s reporting and
dissemination rules would be executed
between counterparties in different time
zones. In the absence of a uniform time
standard, it might not be clear whether
the date and time of execution were
being expressed from the standpoint of
the time zone of the first counterparty,
the second counterparty, or the
registered SDR. Mandating a common
standard for expressing date and time
would alleviate any potential confusion
as to when the security-based swap was
executed. The Commission believed that
UTC was an appropriate and well
known standard suitable for purposes of
reporting the time of execution of
security-based swaps. The Commission
received no comments regarding the use
of UTC for reporting the time of
execution. For the reasons set out in the
Regulation SBSR Proposing Release, the
Commission continues to believe that
UTC is appropriate for security-based
swap transaction reporting.
Accordingly, the Commission is
adopting this requirement as proposed
and re-proposed.
Finally, the Commission is adopting
the definition of ‘‘time of execution’’ as
proposed and re-proposed, and
renumbering it as final Rule 900(ii). One
commenter stated that the time at which
a transaction becomes legally binding
may not be the same for all products.88
The commenter further noted that, in
some cases primary terms are not
formed until the security-based swap is
confirmed, and that the full terms of a
total return swap might not be formed
until the end of the day ‘‘and therefore
the [total return swap] is not executed
and confirmed until the end of the
day.’’ 89 A second commenter stated that
‘‘the obligation to report should not be
triggered until price, size, and other
transaction terms required to be
reported are available.’’ 90 The
Commission understands the concerns
of these commenters and believes that
the definition of ‘‘time of execution’’
provides sufficient flexibility to address
these commenters’ concerns. For
example, if the key terms of a securitybased swap, such as price or size, are so
indefinite that they cannot be reported
to a registered SDR until some time after
87 See
88 See

75 FR 75213.
ISDA/SIFMA I at 7.

89 Id.
90 Cleary II at 6. See also ISDA/SIFMA I at 15
(‘‘for some transaction types . . . the price or size
of the transaction cannot be determined at the time
the swap is negotiated’’); ISDA IV at 10.

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the counterparties agree to preliminary
terms, the counterparties may not have
executed the security-based swap under
applicable law. Alternatively, even if
the counterparties determine that their
preliminary agreement constitutes an
execution, the reporting timeframe
adopted herein, which will allow a
security-based swap to be reported at
any point up to 24 hours after the time
of execution, should address the
concerns raised by the commenters.
A third commenter urged the
Commission to revise the definition to
equate time of execution with ‘‘the time
of execution of the confirmation.’’ 91
The Commission declines to do so.
While confirmation is an important
aspect of post-trade processing,
performance of the actions necessary to
confirm a transaction is within the
discretion of the counterparties and
their agents. Defining the ‘‘time of
execution’’ to mean the time that a
confirmation is issued could create
incentives for counterparties to delay
confirmation and thus the reporting of
the transaction. The Commission notes
that Section 13(m)(1)(A) of the Exchange
Act 92 defines ‘‘real-time public
reporting’’ as reporting certain securitybased swap data ‘‘as soon as
technologically practicable after the
time at which the security-based swap
transaction has been executed.’’ The
Commission believes this provision is
most appropriately implemented by
linking obligations to the time at which
the counterparties become bound to the
terms of the transaction—i.e., the time of
execution—rather than some indefinite
point in the future, such as the time
when the confirmation is issued.

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d. Rule 901(c)(3)
Re-proposed Rule 901(c)(7) would
have required the reporting of the price
of a security-based swap. Re-proposed
Rule 901(d)(1)(iii) would have required
the reporting of the ‘‘amount(s) and
curren(cies) of any up-front payment(s)
and a description of the terms and
contingencies of the payment streams of
each direct counterparty to the other.’’
Final Rule 901(c)(3) combines these
elements and requires the reporting of
‘‘[t]he price, including the currency in
which the price is expressed and the
amount(s) and currenc(ies) of any upfront payments.’’ 93 The Commission
believes that including in final Rule
901(c)(3) the explicit requirement to
report the currency in which the price
91 MFA

I at 5.
U.S.C. 78m(m)(1)(A).
93 Cf. Section II(B)(3)(c), infra (describing Rule
901(d), which enumerates data elements that will
not be subject to public dissemination).
92 15

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is expressed will help to clarify the
information required to be reported.94
Re-proposed Rule 901(c)(3) is being renumbered as final Rule 901(c)(4).95
Rule 901(c)(3), as adopted, requires
the reporting of the amount(s) and
currenc(ies) of any up-front payments, a
requirement that was included in reproposed Rule 901(d)(1)(iii). The
Commission believes that information
concerning the amount(s) and
currenc(ies) of any up-front payment(s)
will help regulators and market
observers understand the reported price
of a security-based swap, and that the
public dissemination of this information
will further the transparency goals of
Title VII. The Commission also believes
that Rule 901(c) will be simpler if all
considerations relating to the price are
consolidated into a single provision.
Accordingly, Rule 901(c)(3), as adopted,
requires the reporting and public
dissemination of the amount(s) and
currenc(ies) of any up-front payment(s)
along with other pricing information for
the security-based swap.
As discussed in the Regulation SBSR
Proposing Release, the price of a
security-based swap could be expressed
in terms of the commercial conventions
used in that asset class.96 The
Commission recognized that the price of
a security-based swap generally might
not be a simple number, as with stocks,
but would likely be expressed in terms
of the quoting conventions of the
security-based swap. For example, a
credit default swap could be quoted in
terms of the economic spread—which is
variously referred to as the ‘‘traded
spread,’’ ‘‘quote spread,’’ or ‘‘composite
spread’’—expressed as a number of
basis points per annum. Alternately, a
credit default swap might be quoted in
terms of prices representing a discount
or premium over par.97 In contrast, an
equity or loan total return swap might
be quoted in terms of a LIBOR-based
floating rate payment, expressed as a
floating rate plus a fixed number of
basis points.98 As discussed further in
Section IV, infra, final Rule 907(a)(1)
requires a registered SDR to establish,
maintain, and make publicly available
policies and procedures that specify the
data elements of a security-based swap
94 The addition of the reference to currency also
is consistent with re-proposed Rule 901(c)(3),
which would have required reporting of the
notional amount(s) of the security-based swap and
the currenc(ies) in which the notional amount(s) is
expressed.
95 See infra Section II(B)(2)(b)(vi)(e).
96 See 75 FR 75214. Final Rule 900(z) defines
‘‘price’’ to mean ‘‘the price of a security-based swap
transaction, expressed in terms of the commercial
conventions used in the asset class.’’
97 See id.
98 See id.

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that must be reported, including
elements that constitute the price. The
Commission believes that, because of
the many different conventions that
exist to express the price in various
security-based swap markets and new
conventions that might arise in the
future, registered SDRs should have
flexibility to select appropriate
conventions for denoting the price of
different security-based swap products.
One commenter expressed concern
that disseminating prices of margined
and unmargined transactions together
could mislead the market about the
intrinsic prices of the underlying
contracts.99 Noting that the CFTC
proposed a field for ‘‘additional price
notation’’ that would be used to provide
information, including margin, that
would help market participants evaluate
the price of a swap, the commenter
recommended that the Commission and
the CFTC harmonize their approaches to
assure that the market has an accurate
picture of prices.100 The Commission
agrees that publicly disseminated
transaction reports should be as
informative as possible. However, the
Commission believes, at this time, that
it could be impractical to devise
additional data fields for describing the
potentially complex margin
requirements governing a security-based
swap. Furthermore, it could be difficult
if not impossible to attribute a portion
of the price to a particular margin
arrangement when the overall price
represents the aggregation of a number
of different factors into a single variable.
The Commission notes that the bespoke
flag required by Rule 901(c)(1)(v) is
designed to inform market observers
when a security-based swap is
customized to the extent that the other
data elements required by Rule 901(c)(1)
do not provide all of the material
information necessary to identify the
security-based swap or provide
sufficient information to calculate the
price.
Another commenter expressed
concern that disseminating the terms of
the floating rate payment for an equity
swap, which is often comprised of a
benchmark rate plus or minus a spread
and thus contains information about the
direction of a customer transaction
(positive spreads indicate a customer
long swap and negative spreads indicate
a customer short swap) may harm
customers by offering other market
participants the opportunity to
anticipate their execution strategy.101
99 See

CCMR I at 4.
id.
101 See ISDA IV at 17.
100 See

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The commenter believes that the spread
value should thus be masked for equity
security-based swaps when disclosing
the price or terms of the floating rate
payment.102 As noted above, the
Commission believes that publicly
disseminated transaction reports should
be as informative as possible. The
floating rate payment of an equity
security-based swap, including the
spread, is an important part of the price
of an equity security-based swap, and as
such the Commission continues to
believe that it should be disseminated.
Not disseminating this information
would undermine one of the key aspects
of public dissemination, namely price
discovery. The Commission further
understands that in other markets—such
as the cash equity market and the bond
market—similar information is
publically disclosed or can be inferred
from public market data, which informs
on the direction of the customer
transaction.103
e. Rule 901(c)(4)
Re-proposed Rule 901(c)(3) would
have required reporting of the notional
amount(s) and the currenc(ies) in which
the notional amount(s) is expressed. The
Commission is adopting this rule as reproposed, but re-numbering it as Rule
901(c)(4).
The Commission received two
comments regarding the reporting and
public dissemination of the notional
amount of a security-based swap. One
commenter believed that, ‘‘in the case of
some asset classes, there is not a
universal definition of the notional
amount of the trade. This is particularly
the case where the notional amount is
not confirmable information.’’ 104 To
address this issue, the commenter
recommended that the Commission
provide guidelines, such as those
developed by the Federal Reserve Bank
of New York, for reporting the notional
amount of a security-based swap.105
As discussed below, final Rules
907(a)(1) and 907(a)(2) require a

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102 See

id.
103 In the bond markets, the side of the customer
is reported on TRACE. See http://www.finra.org/
Industry/Compliance/MarketTransparency/TRACE/
Announcements/P039007. In the cash equity
markets, the side of the initiator of a transaction is,
for many exchanges, provided as a data element on
direct data feeds. It can also be inferred according
to whether the trade was executed at the bid or
offer.
104 ISDA/SIFMA I at 12.
105 See id. The commenter refers to the guidelines
included under ‘‘Line Item Instructions for
Derivatives and Off-Balance-Sheet Item Schedule
HC–L’’ in the Board of Governors of the Federal
Reserve System’s ‘‘Instructions for Preparation of
Consolidated Financial Statements for Bank
Holding Companies Reporting Form FR Y–9C.’’ See
ISDA/SIFMA I at 12, note 13.

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registered SDR to establish and maintain
written policies and procedures that
enumerate the specific data elements
that must be reported and that specify
the protocols for submitting
information, respectively. The
Commission believes that, read together,
Rules 907(a)(1) and 907(a)(2) provide
registered SDRs with flexibility to
determine the appropriate conventions
for reporting all required data elements,
including the notional amount. Thus,
although Rule 901(c) itself does not
specify the precise manner for reporting
a security-based swap’s notional
amount, the policies and procedures of
registered SDRs must do so. The
Commission believes that a registered
SDR could choose to incorporate the
guidance noted by the commenter, or
other appropriate guidance, into its
policies and procedures for reporting
notional amounts.
Another commenter suggested that
the Commission, to mitigate adverse
impacts on market liquidity, should—
like the CFTC—adopt masking
thresholds, rather than requiring public
dissemination of the precise notional
amount of a security-based swap
transaction.106 The commenter noted
that FINRA’s Trade Reporting and
Compliance Engine (‘‘TRACE’’)
system 107 uses masking conventions,
and suggested applying that approach to
the swap and security-based swap
markets by ‘‘computing how much
market risk is represented by the TRACE
masking thresholds and using those
numbers to map the masking thresholds
into other asset classes.’’ 108
The Commission appreciates the
commenter’s concerns regarding the
uncertainty of the potential effects of
public dissemination of security-based
swap transaction reports on liquidity in
the security-based swap market. As
discussed further in Section VII, infra,
the rules adopted in this release will
allow the reporting, on an interim basis,
of a security-based swap transaction at
any time up to 24 hours after the time
of execution (or, if 24 hours after the
time of execution would fall on a day
that is not a business day, by the same
time on the next day that is a business
day). This timeframe is designed in part
to minimize potential adverse impacts
of public dissemination on liquidity
106 See J.P. Morgan Letter at 12. See also ISDA IV
at 16 (recommending the use of a notional cap in
each asset class).
107 TRACE is a FINRA facility to which FINRA
member firms must report over-the-counter
transactions in eligible fixed income securities. See
generally http://www.finra.org/Industry/
Compliance/MarketTransparency/TRACE/ (last
visited September 22, 2014).
108 Id. at 13.

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during the interim phase of Regulation
SBSR’s implementation, as market
participants grow accustomed to
operating in a more transparent
environment. Accordingly, the
Commission does not believe that it is
necessary at this time to adopt a
masking convention for purposes of
reporting and publicly disseminating
the notional amount of security-based
swap transactions.109
f. Rule 901(c)(5)
Rule 901(c)(10), as proposed and reproposed, would have required the
reporting side to indicate whether both
counterparties to a security-based swap
are security-based swap dealers. In the
Regulation SBSR Proposing Release, the
Commission stated its preliminary belief
that such an indication would enhance
transparency and provide more accurate
information about the pricing of
security-based swap transactions.110
The Commission noted, further, that
prices of security-based swap
transactions involving a dealer and nondealer are typically ‘‘all-in’’ prices that
include a mark-up or mark-down, while
interdealer transactions typically do not.
Thus, the Commission believed that
requiring an indication of whether a
security-based swap was an interdealer
transaction or a transaction between a
dealer and a non-dealer counterparty
would enhance transparency by
allowing market participants to more
accurately assess the reported price of a
security-based swap.111
Commenters expressed mixed views
regarding this proposed requirement.
One commenter supported a
requirement to include the counterparty
type in security-based swap transaction
reports.112 Another commenter,
however, recommended that the
Commission eliminate the interdealer
indication because ‘‘[e]xcluding this
field from the information required to be
reported to [a registered SDR] in real
time will bring the scope of required
109 The Commission anticipates soliciting
comment on issues relating to block trades,
including the possibility of utilizing masking
thresholds, at a later date. See infra Section VII.
110 See 75 FR 75214.
111 See id.
112 See Benchmark Letter at 2. The commenter
also suggested that it would be useful to include an
entry for ‘‘end user,’’ similar to the ‘‘Producer/
Merchant/Producer/User’’ designation used in
agricultural futures reports. See id. The
Commission does not believe, at this time, that it
is necessary to require a specific end-user
indication. Under final Rule 901(c)(5), a transaction
involving two registered security-based swap
dealers must have an indication to that effect. An
observer of a transaction report without that
indicator will be able to infer that the transaction
involved at least one side that does not have a
registered security-based swap dealer.

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data in line with existing dissemination
functionality.’’ 113 A third commenter
expressed concern that disseminating
information that both counterparties are
security-based swap dealers would
reduce the anonymity of participants,
ultimately resulting in ‘‘worse pricing
and reduced liquidity for end-users.’’ 114
The Commission believes that
publicly disseminating an indication of
whether both sides of a security-based
swap are registered security-based swap
dealers would enhance transparency in
the security-based swap market by
helping market participants to assess the
reported price of a security-based swap.
Although the Commission understands
the concerns about potential burdens
that could result from changes to
existing dissemination practices, the
required indicator should not impose
significant burdens. Furthermore, the
Commission believes that any potential
burden created by requiring the
indicator will be justified by the
transparency benefits of publicly
disseminating this information. The
Commission notes that flagging
transactions between two registered
security-based swap dealers does indeed
provide information to the public that
the transaction involved two dealers,
thus restricting the set of possible
counterparties. However, since a
majority of security-based swap
transactions presently have a dealer as
one of the counterparties, an interdealer
flag is unlikely to enable market
observers to identify counterparties to
particular transactions. Also, although
there is a limited group of entities that
likely would be required to register as
security-based swap dealers that are
currently active in the security-based
swap market, this number is more than
two.115 The Commission also notes that
in the bond market interdealer
transactions are flagged as part of
TRACE’s public dissemination of
corporate bond trades. Therefore, the
Commission does not believe that
flagging transactions between two
registered security-based swap dealers
would ultimately result in ‘‘worse
pricing and reduced liquidity for endusers.’’ 116
The Commission, therefore, is
adopting this requirement as final Rule
901(c)(5), with one revision. The
Commission has added the word
‘‘registered’’ before the term ‘‘security113 DTCC

V at 11.
IV at 16.
115 Historical data reviewed by the Commission
suggest that, among an estimated 300 reporting
sides, approximately 50 are likely to be required to
register with the Commission as security-based
swap dealers. See infra Section XXI(B)(3).
116 See ISDA IV at 16.
114 ISDA

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based swap dealer.’’ Therefore, the final
rule requires an indication only when
there is a registered security-based swap
dealer on both sides of the transaction.
As discussed further below, the
Commission seeks to avoid imposing
costs on market participants for
assessing whether or not they are
security-based swap dealers solely for
purposes of Regulation SBSR.117
Therefore, counterparties would have to
be identified for purposes of Rule
901(c)(5), as adopted, only if they are
registered security-based swap dealers.
g. Rule 901(c)(6)
Re-proposed Rule 901(c)(9) would
have required the reporting side to
indicate whether or not a security-based
swap would be cleared by a clearing
agency. This requirement is being
adopted substantially as proposed but
numbered as Rule 901(c)(6), with an
additional clarification, described
below. In the Regulation SBSR
Proposing Release, the Commission
noted that the use of a clearing agency
to clear a security-based swap could
affect the price of the security-based
swap because counterparty credit risk
might be diminished significantly if the
security-based swap were centrally
cleared.118 Thus, the Commission
preliminarily believed that information
concerning whether a security-based
swap would be cleared would provide
market participants with information
that would be useful in assessing the
reported price of the security-based
swap, thereby enhancing price
discovery.119 One commenter agreed,
stating that it ‘‘will likely also be
necessary to identify whether a price is
associated with a bilateral trade or a
cleared trade . . . as these distinctions
may well have price impacts.’’ 120
The Commission continues to believe
that information concerning whether a
security-based swap will be cleared is
useful in assessing the price of the
security-based swap and will facilitate
understanding of how risk exposures
may change after the security-based
swap is executed. Accordingly, final
Rule 901(c)(6) requires the reporting
side to indicate ‘‘whether the direct
counterparties intend that the securitybased swap will be submitted to
clearing.’’ Reporting of whether the
direct counterparties intend that the
security-based swap will be submitted
to clearing, rather than whether the
security-based swap will be cleared, as
117 See

infra notes 284 to 285 and accompanying

text.
75 FR 75214.
id.
120 Cleary II at 20, note 56.

originally proposed, more accurately
reflects the process of entering into and
clearing a security-based swap
transaction. It may not be known, when
the transaction is reported, whether a
registered clearing agency will in fact
accept the security-based swap for
clearing. The Commission received no
comments on this issue. The
Commission believes, however, that the
modified language enhances the
administration of the rule.
The Commission notes that, in some
cases, the identity of the registered
clearing agency that clears a securitybased swap could be included in the
product ID of a security-based swap. If
the identity of the registered clearing
agency is included in the product ID, no
information would have to be separately
reported pursuant to Rule 901(c)(6).
h. Rule 901(c)(7)
Re-proposed Rule 901(c)(11) would
have required a reporting side to
indicate, if applicable, that a securitybased swap transaction does not
accurately reflect the market. In the
Regulation SBSR Proposing Release, the
Commission noted that, in some
instances, a security-based swap
transaction might not reflect the current
state of the market.121 This could occur,
for example, in the case of a late
transaction report, which by definition
would not represent the current state of
the market, or in the case of an interaffiliate transfer or assignment, where
the new counterparty might not have an
opportunity to negotiate the terms,
including the price, of taking on the
position.122 The Commission believed
that there might not be an arm’s length
negotiation of the terms of the securitybased swap transaction, and
disseminating a transaction report
without noting that fact would be
inimical to price discovery.
Accordingly, Rule 901(c)(11), as
proposed and as re-proposed, would
have required a reporting side to note
such circumstances in its transaction
report to the registered SDR.
Rule 907(a)(4), as proposed and as reproposed, would have required a
registered SDR to establish and maintain
written policies and procedures that
describe, among other things, how a
reporting side would report securitybased swap transactions that, in the
estimation of the registered SDR, do not
accurately reflect the market. The
Commission noted its expectation that
these policies and procedures would
require, among other things, different

118 See
119 See

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121 See
122 See

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indicators being applied in different
situations.123
One commenter suggested that Rule
901 should require the counterparties to
a security-based swap to disclose
specific reasons why a security-based
swap does not accurately reflect the
market because it would not be possible
to understand the reported prices
without that information.124 The
commenter also stated that the
Commission, rather than registered
SDRs, should specify the indicators
used for such transaction reports.125
The Commission agrees in general
that an effective regime for public
dissemination should provide market
observers with appropriate information
to assist them in understanding the
disseminated transaction information.
The Commission also agrees with the
commenter that it could be useful to
market observers to provide more
specific information about particular
characteristics of or circumstances
surrounding a transaction that could
affect its price discovery value.
Therefore, after careful consideration,
the Commission is adopting the
substance of re-proposed Rule
901(c)(11), but is modifying the rule text
to reflect final Rule 907(a)(4), and is
renumbering the requirement as Rule
901(c)(7). Rule 901(c)(7), as adopted,
requires reporting of any applicable
flag(s) pertaining to the transaction that
are specified in the policies and
procedures of the registered SDR to
which the transaction will be reported.
Rule 907(a)(4)(i) requires a registered
SDR to establish and maintain written
policies and procedures for ‘‘identifying
characteristic(s) of a security-based
swap, or circumstances associated with
the execution of a security-based swap,
that could, in the fair and reasonable
estimation of a registered security-based
swap data repository, cause a person
without knowledge of these
characteristic(s) or circumstance(s) to
receive a distorted view of the market.’’
A registered SDR also must establish
flags to denote these characteristic(s) or
circumstance(s).126 As discussed in
Section VI(G), infra, the Commission
generally believes that a registered SDR
should consider providing condition
flags identifying the following: Interaffiliate security-based swaps;
transactions resulting from netting or
compression exercises; transactions
resulting from a ‘‘forced trading
123 See

id. at 75215.
Better Markets I at 6.
125 See id. at 7 (‘‘Such disclosure should not be
left to the discretion of the SDRs, but should instead
be required by the rules’’).
126 See Rule 907(a)(4)(ii).
124 See

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session’’ conducted by a clearing
agency; transactions reported late;
transactions resulting from the default
of a clearing member; and package
trades. The Commission believes that
these condition flags, and others that
registered SDRs may adopt in the future,
should provide additional information
that will help to prevent market
observers from receiving a distorted
view of the market. The Commission
believes, further, that these condition
flags address the commenter’s
recommendation that security-based
swap transaction reports identify the
specific reasons why a transaction does
not accurately reflect the market.
The Commission disagrees, however,
with the commenter’s suggestion that a
Commission rule rather than the
policies and procedures of a registered
SDR should identify the specific
characteristics or circumstances that
must be reported to prevent a
transaction report from presenting a
distorted view of the market. The
Commission continues to believe that
requiring registered SDRs to develop,
maintain, and require the use of
condition flags, and to modify them as
needed, will facilitate the development
of a flexible reporting regime that is
better able to respond quickly to
changing conditions in the securitybased swap market. This flexibility will
help to assure that reported transaction
information remains meaningful as the
security-based swap market evolves
over time.
B. Rule 901(d)—Secondary Trade
Information
1. Description of Proposed and ReProposed Rule
Rule 901(d)(1), as proposed and as reproposed, would have required the
reporting of certain secondary trade
information concerning a security-based
swap. Information reported pursuant to
Rule 901(d)(1) would be available to
regulatory authorities only and would
not be publicly disseminated. Rule
901(d)(1), as re-proposed, would have
required the reporting of the following
secondary trade information to a
registered SDR: (1) The participant ID of
each counterparty; (2) as applicable, the
broker ID, desk ID, and trader ID of the
direct counterparty on the reporting
side; (3) the amount(s) and currenc(ies)
of any up-front payment(s) and a
description of the terms and
contingencies of the payment streams of
each direct counterparty to the other; (4)
the title of any master agreement, or any
other agreement governing the
transaction (including the title of any
document governing the satisfaction of

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margin obligations), incorporated by
reference and the date of any such
agreement; (5) the data elements
necessary for a person to determine the
market value of the transaction; (6) if
applicable, and to the extent not
provided pursuant to Rule 901(c), the
name of the clearing agency to which
the security-based swap will be
submitted for clearing; (7) if the
security-based swap is not cleared,
whether the exception in Section 3C(g)
of the Exchange Act 127 was invoked; (8)
if the security-based swap is not cleared,
a description of the settlement terms,
including whether the security-based
swap is cash-settled or physically
settled, and the method for determining
the settlement value; and (9) the venue
where the security-based swap was
executed.128
As discussed in the Regulation SBSR
Proposing Release, the Commission
believed that the information required
to be reported by proposed Rule 901(d)
would facilitate regulatory oversight and
monitoring of the security-based swap
market by providing comprehensive
information regarding security-based
swap transactions and trading
activity.129 The Commission believed,
further, that this information would
assist the Commission in detecting and
investigating fraud and trading abuses
in the security-based swap market.130
Re-proposed Rule 901(d)(2) specified
timeframes for reporting the secondary
trade information required to be
reported under Rule 901(d)(1). Rule
901(d)(2), as re-proposed, would have
required the reporting of secondary
trade information promptly, but in no
event later than: (1) 15 minutes after the
time of execution of a security-based
swap that is executed and confirmed
electronically; (2) 30 minutes after the
time of execution for a security-based
swap that is confirmed electronically
but not executed electronically; or (3) 24
hours after the time of execution for a
security-based swap that is not executed
or confirmed electronically.
2. Final Rule 901(d)
As discussed more fully below, the
Commission is adopting Rules 901(d)(1)
127 15

U.S.C. 78c–3(g).
901(d)(1), as re-proposed, was
substantially similar to Rule 901(d)(1), as proposed,
but made several technical changes. Rule 901(d)(1),
as re-proposed, revised the rule to add references
to the reporting side, the direct counterparty on the
reporting side, and secondary trade information.
129 See 75 FR 75217. Furthermore, to the extent
that the Commission receives information that is
reported under Rule 901(d), the Commission
anticipates that it will keep such information
confidential, to the extent permitted by law. See id.
at note 59.
130 See id.
128 Rule

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
substantially as re-proposed, although it
is making several clarifying and
technical changes to address issues
raised by commenters.
The Commission is not adopting the
15-minute, 30-minute, and 24-hour
timeframes in re-proposed Rule
901(d)(2). Instead, final Rule 901(d)
requires a reporting side to report the
information required under Rule 901(d)
within the timeframes specified by Rule
901(j).131 Because re-proposed Rule
901(d)(2) is not being adopted, reproposed Rule 901(d)(1) is renumbered
as final Rule 901(d), and re-proposed
Rules 901(d)(1)(i)–(ix), which would
identify the categories of secondary
trade information required to be
reported, are renumbered as final Rules
901(d)(1)–(9).
Rule 901(d), as adopted, requires the
reporting side to report the following
secondary trade information: (1) The
counterparty ID or execution agent ID of
each counterparty, as applicable; (2) as
applicable, the branch ID, broker ID,
execution agent ID, trader ID, and
trading desk ID of the direct
counterparty on the reporting side; (3) to
the extent not provided pursuant to
Rule 901(c)(1), the terms of any fixed or
floating rate payments, including the
terms and contingencies of any such
payments; (4) for a security-based swap
that is not a clearing transaction, the
title and date of any master agreement,
collateral agreement, margin agreement,
or any other agreement incorporated by
reference into the security-based swap
contract; (5) to the extent not provided
pursuant to Rule 901(c) or other
provisions of Rule 901(d), any
additional elements included in the
agreement between the counterparties
that are necessary for a person to
determine the market value of the
transaction; (6) if applicable, and to the
extent not provided pursuant to Rule
901(c), the name of the registered
clearing agency to which the securitybased swap will be submitted for
clearing; (7) if the direct counterparties
do not intend to submit the securitybased swap to clearing, whether they
have invoked the exception in Section
3C(g) of the Exchange Act; (8) to the
extent not provided pursuant to other
provisions of Rule 901(d), if the direct
counterparties do not submit the
security-based swap to clearing, a
description of the settlement terms,
including whether the security-based
swap is cash-settled or physically
settled, and the method for determining
131 Rule 901(j), which specifies the timeframe for
reporting of the information enumerated in Rules
901(c) and 901(d), is discussed in Section VII(B)(1)
infra.

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the settlement value; (9) the platform ID,
if applicable; and (10) if the securitybased swap arises from the allocation,
termination, novation, or assignment of
one or more existing security-based
swaps, the transaction ID of the
allocated, terminated, assigned, or
novated security-based swap(s), except
in the case of a clearing transaction that
results from the netting or compression
of other clearing transactions.
3. Discussion of Final Rule 901(d) and
Response to Comments
a. Rule 901(d)(1)—Counterparty IDs
In the Regulation SBSR Proposing
Release, the Commission expressed the
view that a registered SDR ‘‘must have
a systematic means to identify and
track’’ all persons involved in the
security-based swap transactions
reported to that registered SDR.132 The
Commission intended to accomplish
this, in part, through proposed Rule
901(d)(1)(i), which would have required
the reporting party to report the
participant ID of each counterparty to a
registered SDR.133 As proposed in Rule
900, ‘‘participant ID’’ would have been
defined as ‘‘the UIC assigned to a
participant’’ 134 and ‘‘participant’’
would have encompassed: (1) A U.S.
person that is a counterparty to a
security-based swap that is required to
be reported to a registered SDR; or (2)
a non-U.S. person that is a counterparty
to a security-based swap that is (i)
required to be reported to a registered
SDR; and (ii) executed in the United
States or through any means of
interstate commerce, or cleared through
a clearing agency that has its principal
place of business in the United States.
Re-proposed Rule 901(d)(1)(i) would
have required the reporting side to
report the participant ID of each
counterparty to a security-based swap.
Re-proposed Rule 900(s) would have
defined ‘‘participant’’ as ‘‘a person that
is a counterparty to a security-based
swap that meets the criteria of
§ 242.908(b).’’ Under re-proposed Rule
900(s), the following types of person
would have met the criteria of Rule
908(b): (1) U.S. persons; (2) securitybased swap dealers and major securitybased swap participants; and (3)
counterparties to a transaction
132 75

FR 75217.
infra Section X (discussing use of LEIs).
134 The definition of ‘‘participant ID’’ was reproposed, without change, in re-proposed Rule
900(s). The UIC is the unique identification code
assigned to a person, unit of a person, product, or
transaction. See Rule 900(qq). As discussed more
fully in Section IV, infra, final Rule 907(a)(5)
requires a registered SDR to establish and maintain
policies and procedures for assigning UICs in a
manner consistent with adopted Rule 903.
133 See

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14581

‘‘conducted within the United
States.’’ 135
The Commission received no
comments on re-proposed Rule
901(d)(1)(i), but has determined to
adopt, as final Rule 901(d)(1), a
modified rule that will, in the
Commission’s estimation, better
accomplish the objective of ensuring
that a registered SDR can identify each
counterparty to a security-based swap.
As re-proposed, the reporting side
would have been required to report the
participant ID of its counterparty only if
the counterparty met the definition of
‘‘participant,’’ which would have been
limited by Rule 908(b). Under the reproposed definition of ‘‘participant,’’
some counterparties to security-based
swaps would not have become
participants of the registered SDRs that
receive reports of those security-based
swaps under Rule 901(a). For example,
if a U.S. person security-based swap
dealer entered into a security-based
swap with a non-U.S. person private
fund in a transaction that is not
conducted within the United States, the
security-based swap dealer would have
been a participant of the registered SDR
to which the security-based swap is
reported pursuant to Rule 901(a), but
the private fund would not. In this
circumstance, Rule 901(d)(1)(i), as reproposed, would not have provided a
mechanism for the reporting of the
private fund’s identity to the registered
SDR; because the private fund would
not have been a participant of that
registered SDR it would not have
received a ‘‘participant ID.’’
The Commission believes that it is
necessary and appropriate for a
registered SDR to obtain identifying
information for all counterparties to
security-based swaps that are subject to
Regulation SBSR. Without this
information being reported to a
registered SDR, the Commission’s
ability to oversee the security-based
swap market could be impaired because
the Commission might not be able to
determine the identity of each
counterparty to a security-based swap
reported to a registered SDR pursuant to
Regulation SBSR.
Final Rule 901(d)(1) addresses this
concern by requiring the reporting side
to report ‘‘the counterparty ID or the
execution agent ID of each counterparty,
as applicable.’’ The Commission is
adopting, as Rule 900(j), the term
‘‘counterparty ID,’’ which means ‘‘the
UIC assigned to a counterparty to a
135 See Cross-Border Proposing Release, 78 FR
31065 (discussing re-proposed Rule 908(b)).

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security-based swap.’’ 136 A
‘‘counterparty’’ is a person that is a
direct or indirect counterparty of a
security-based swap.137 A ‘‘direct
counterparty’’ is a person that is a
primary obligor on a security-based
swap,138 and an ‘‘indirect counterparty’’
is a guarantor of a direct counterparty’s
performance of any obligation under a
security-based swap such that the direct
counterparty on the other side can
exercise rights of recourse against the
indirect counterparty in connection
with the security-based swap; for these
purposes a direct counterparty has
rights of recourse against a guarantor on
the other side if the direct counterparty
has a conditional or unconditional
legally enforceable right, in whole or in
part, to receive payments from, or
otherwise collect from, the guarantor in
connection with the security-based
swap.139 Thus, the definition of
‘‘counterparty ID’’ encompasses UICs
that identify all direct and indirect
counterparties to a security-based swap,
136 The Commission is not adopting the reproposed definition of ‘‘participant ID’’ as this term
is not used in Regulation SBSR, as adopted.
137 See Rule 900(i).
138 See Rule 900(k).
139 See Rule 900(p). Re-proposed Rule 900(o)
would have defined ‘‘indirect counterparty’’ to
mean ‘‘a guarantor of a direct counterparty’s
performance of any obligation under a securitybased swap.’’ The Commission is adopting,
consistent with the approach it took in the crossborder context, a modified definition of ‘‘indirect
counterparty’’ to clarify the type of guarantor
relationship that would cause a person to become
an indirect counterparty for purposes of Regulation
SBSR. See Securities Exchange Act Release
No.72472 (June 25, 2014), 79 FR 47278, 47316–17
(August 12, 2014) (‘‘Cross-Border Adopting
Release’’). Final Rule 900(p) defines ‘‘indirect
counterparty’’ to mean a guarantor of a direct
counterparty’s performance of any obligation under
a security-based swap such that the direct
counterparty on the other side can exercise rights
of recourse against the indirect counterparty in
connection with the security-based swap; for these
purposes, a direct counterparty has rights of
recourse against a guarantor on the other side if the
direct counterparty has a conditional or
unconditional legally enforceable right, in whole or
in part, to receive payments from, or otherwise
collect from, the guarantor in connection with the
security-based swap. Thus, under final Rule 900(p),
a person becomes an indirect counterparty to a
security-based swap if the guarantee offered by the
person permits a direct counterparty on the other
side of the transaction to exercise rights of recourse
against the person in connection with the securitybased swap. The Commission believes that, if a
recourse guarantee exists, it is reasonable to assume
that the other side of the transaction would look
both to the direct counterparty and its guarantor(s)
for performance on the security-based swap. If the
direct counterparty fails to fulfill its payment
obligations on the security-based swap, its
guarantor would be obligated to make the required
payments. As noted in the Cross-Border Adopting
Release, such rights may arise in a variety of
contexts. The meaning of the terms ‘‘guarantee,’’
‘‘recourse,’’ and any related terms used in
Regulation SBSR is the same as the meaning of
those terms in the Cross-Border Adopting Release
and the rules adopted therein.

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even if a particular counterparty is not
a participant of a registered SDR.140
The Commission believes final Rule
901(d)(1) will accomplish the
Commission’s objective of obtaining
identifying information for all
counterparties to a security-based swap
and improve regulatory oversight and
surveillance of the security-based swap
market. The counterparty ID will allow
registered SDRs, the Commission, and
other relevant authorities to track
activity by a particular market
participant and facilitate the aggregation
and monitoring of that market
participant’s security-based swap
positions.
The Commission also is adopting a
requirement in Rule 901(d)(1)(i) for the
reporting side to report the ‘‘execution
agent ID’’ as applicable.141 This
situation could arise if the identity of a
counterparty is not known at the time of
execution.142 In this circumstance, the
reporting side would report the
execution agent ID because it would not
know the counterparty ID.
Regulation SBSR requires reporting of
the UIC of each counterparty to a
security-based swap.143 One commenter
stated that ‘‘each series or portfolio
within each trust should be given its
own LEI/UCI number to address
possible confusion between series or
portfolios within the same trust. Each
portfolio is distinct with its own
separate assets and liabilities.’’ 144 The
Commission agrees with this commenter
and notes that Rule 901(d)(1) requires
the reporting of the UIC for each
counterparty to a security-based swap,
whether not the counterparty is a legal
person.145 If a counterparty is an entity
other than a legal person, such as a
series or portfolio within a trust, or an
account, Rule 901(d)(1) requires the
140 The process for obtaining UICs, including
counterparty IDs, is described in Section X, infra.
141 See infra Section II(C)(3)(b)(i) (discussing
execution agent ID).
142 The Commission believes the reporting side
may not know the counterparty ID of the other side
if, for example, the security-based swap will be
allocated after execution. Section VIII describes
how Regulation SBSR applies to security-based
swaps involving allocation.
143 See Rule 901(d)(1); Rule 907(a)(5) (requiring a
registered SDR to have written policies and
procedures for assigning UICs in a manner
consistent with Rule 903).
144 Institutional Investors Letter at 6.
145 Consequently, the word ‘‘person,’’ as used in
this release, includes any counterparty to a securitybased swap, including a counterparty that is not a
legal person. Cf. Cross-Border Adopting Release, 79
FR 47312 (providing that an account, whether
discretionary or not, of a U.S. person also is a U.S.
person—even though accounts generally are not
considered separate legal persons—and noting that
this prong of the ‘‘U.S. person’’ definition focuses
on the party that actually bears the risk arising from
a security-based swap transaction).

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reporting of the UIC that identifies that
counterparty.
Finally, the Commission notes that
although it is not adopting a definition
of ‘‘participant ID,’’ the concept of a
‘‘participant’’ is still utilized in
Regulation SBSR. Rule 900(u), as
adopted, defines ‘‘participant,’’ with
respect to a registered SDR, as ‘‘a
counterparty, that meets the criteria of
§ 242.908(b), of a security-based swap
that is reported to that registered
security-based swap data repository to
satisfy an obligation under
§ 242.901(a).’’ 146 The adopted
definition makes clear that a person
becomes a participant of a particular
registered SDR only if the person meets
the criteria of Rule 908(b) and is a
counterparty to a security-based swap
that is reported to that registered SDR
on a mandatory basis. A counterparty
would not become a participant of all
registered SDRs as a result of being a
counterparty to a security-based swap
that is subject to Regulation SBSR and
reported to a particular registered SDR
as required by Rule 901(a). The adopted
definition also clarifies that a
counterparty would not become a
participant of a registered SDR as a
result of any non-mandatory report 147
submitted to that registered SDR.148
Similarly, a counterparty that meets the
criteria of Rule 908(b) would not
become a participant of any registered
SDR if the security-based swap is
reported pursuant to a substituted
compliance determination under Rule
908(c), because such a security-based
swap would not be reported to a
registered SDR pursuant to Rule 901(a).
The final definition of ‘‘participant’’ is
less comprehensive than the reproposed definition because Rule
908(b), as adopted, is narrower than
Rule 908(b), as re-proposed. As
discussed in Section XV(D), infra, final
Rule 908(b) includes U.S. persons,
registered security-based swap dealers,
and registered major security-based
146 Re-proposed Rule 900(s) would have defined
‘‘participant’’ as ‘‘a person that is a counterparty to
a security-based swap that meets the criteria of
§ 242.908(b).’’
147 See infra Section VI(D)(1) (discussing nonmandatory reports).
148 Assume, for example, that Fund X is a U.S.
person and engages in a single uncleared securitybased swap with a registered security-based swap
dealer. Further assume that the registered securitybased swap dealer, who has the duty to report the
transaction under the reporting hierarchy, elects to
submit the required transaction report to SDR P,
and also submits a non-mandatory report of the
transaction to SDR Q. Fund X is now a participant
of SDR P but not of SDR Q. Under Rule 900(u),
Fund X would not become a participant of SDR Q
unless and until it enters into a future securitybased swap that is reported on a mandatory basis
to SDR Q.

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swap participants. The Commission is
not at this time taking action on the
prong of re-proposed Rule 908(b) that
would have caused a person to become
a participant solely by being a
counterparty to a security-based swap
that is a transaction conducted within
the United States. As a result, fewer
non-U.S. persons are likely to ‘‘meet the
criteria of Rule 908(b),’’ as adopted,
because a non-U.S. person that is a
counterparty of a security-based swap
would meet the criteria of final Rule
908(b) only if that counterparty is a
registered security-based swap dealer or
a registered major security-based swap
participant. Thus, only a U.S. person, a
registered security-based swap dealer, or
a registered major security-based swap
participant could be a ‘‘participant’’
under Regulation SBSR.
b. Rule 901(d)(2)—Additional UICs
Rule 901(d)(1)(ii), as re-proposed,
would have required reporting of, as
applicable, the broker ID, desk ID, and
trader ID of the direct counterparty on
the reporting side. The Commission
preliminarily believed that the reporting
of this information would help to
promote effective oversight,
enforcement, and surveillance of the
security-based swap market by the
Commission and other relevant
authorities.149 The Commission noted,
for example, that this information
would allow regulators to track activity
by a particular participant, a particular
desk, or a particular trader. In addition,
relevant authorities would have greater
ability to observe patterns and
connections in trading activity, or
examine whether a trader had engaged
in questionable activity across different
security-based swap products. Such
identifiers also would facilitate
aggregation and monitoring of the
positions of security-based swap
counterparties, which could be of
significant benefit for systemic risk
management.150
Adopted Rule 901(d)(2) modifies reproposed Rule 901(d)(1)(ii) in certain
respects. First, final Rule 901(d)(2)
replaces the defined term ‘‘desk ID’’
with the defined term ‘‘trading desk ID.’’
Second, final Rule 901(d)(2) now
includes a requirement to report the
branch ID and the execution agent ID of
the direct counterparty on the reporting
side, in addition to the broker ID,
trading desk ID, and trader ID. In
conjunction with this requirement, final
Rule 900 includes the new defined
terms ‘‘branch ID’’ and ‘‘execution agent
149 See Regulation SBSR Proposing Release, 75 FR
75217.
150 See id.

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ID.’’ Third, final Rule 900 includes a
revised definition of ‘‘trader ID.’’ Thus,
final Rule 901(d)(2) requires reporting
of, ‘‘[a]s applicable, the branch ID,
broker ID, execution agent ID, trader ID,
and trading desk ID of the direct
counterparty on the reporting side.’’ 151
i. Branch ID and Execution Agent ID
Rule 901(d)(2), as adopted, requires
the reporting of, as applicable, the
branch ID and execution agent ID of the
direct counterpart on the reporting side,
in addition to the broker ID, trader ID,
and trading desk ID of the direct
counterparty on the reporting side. The
‘‘branch ID’’ is the ‘‘UIC assigned to a
branch or other unincorporated office of
a participant.’’ 152 The Commission did
not include a requirement to report the
branch ID in Rule 901(d), as proposed
or as re-proposed. However, the
Commission now believes that it is
appropriate to include in Regulation
SBSR a new concept of the branch ID
and require reporting of the branch ID,
when a transaction is conducted
through a branch, as part of Rule
901(d)(2), as adopted. Reporting of the
branch ID, where applicable, will help
identify the appropriate sub-unit within
a large organization that executed a
security-based swap (if a transaction
were in fact conducted through that subunit). This information also will
facilitate the aggregation and monitoring
of security-based swap transactions by
branch, at the level of the registered
SDR and potentially within the firm
itself.
Final Rule 901(d)(2) also includes
another UIC, the ‘‘execution agent ID,’’
that was not included in the proposal or
re-proposal. Rule 900(m), as adopted,
provides that the execution agent ID is
the ‘‘UIC assigned to any person other
than a broker or trader that facilitates
the execution of a security-based swap
on behalf of a direct counterparty.’’ The
Commission initially proposed to
require reporting of the broker ID in
order to obtain a record of an agent that
facilitates a transaction, if there is such
an agent. The Commission now
recognizes, however, that entities other
than registered brokers could act as
agents in a security-based swap
transaction. For example, an asset
151 As discussed in greater detail in Section
XIII(A), infra, Rule 906(a), as adopted, requires
reporting to a registered SDR of the branch ID,
broker ID, execution agent ID, trader ID, and trading
desk ID, as applicable, of a direct counterparty to
a security-based swap that is not the reporting side.
Thus, Rules 901(d)(2) and 906(a) together require
reporting, as applicable, of the branch ID, broker ID,
execution agent ID, trader ID, and trading desk ID
of each direct counterparty to a security-based
swap.
152 See Rule 900(d).

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manager could be acting as an agent on
behalf of a fund counterparty but likely
would not be a broker-dealer. The
definition of ‘‘execution agent ID’’ is
designed to encompass the entities in
addition to brokers that may act as
agents for security-based swap
counterparties. The broker ID,153 which
also must be reported under final Rule
901(d)(2), will identify a registered
broker, if any, that intermediates a
security-based swap transaction
between two direct counterparties and
itself is not a counterparty to the
transaction.
The Commission believes that
obtaining information about a broker or
execution agent, if any, involved in the
transaction will provide regulators with
a more complete understanding of the
transaction and could provide useful
information for market surveillance
purposes. The Commission notes that
some security-based swap transactions
may involve multiple agents. For
example, an asset manager could use a
broker to facilitate the execution of a
security-based swap on behalf of one or
more of the funds that it advises. In that
case, final Rule 901(d) would require
reporting of the counterparty ID of the
direct counterparty (the fund), the
execution agent ID (for the asset
manager), and the broker ID (of the
broker that intermediated the
transaction).
ii. Revised Defined Terms in Rule
901(d)(2)
Rule 901(d)(1)(ii), as re-proposed,
would have required the reporting of,
among other things, the desk ID of the
direct counterparty on the reporting
side. Rule 900(i), as re-proposed, would
have defined ‘‘desk ID’’ as the UIC
assigned to the trading desk of a
participant or of a broker of a
participant. Rule 900, as re-proposed,
did not include a definition of ‘‘desk.’’
Final Rule 901(d)(2) requires the
reporting of the ‘‘trading desk ID,’’
rather than the ‘‘desk ID.’’ Accordingly,
the defined term ‘‘desk ID’’ is being
replaced in Rule 900 with the defined
term ‘‘trading desk ID,’’ which Rule
900(ll) defines as ‘‘the UIC assigned to
the trading desk of a participant.’’
Unlike re-proposed Rule 900, which
provided no definition of the term
‘‘desk,’’ final Rule 900(kk) provides a
definition of the term ‘‘trading desk.’’
Specifically, final Rule 900(kk) defines
‘‘trading desk’’ to mean, ‘‘with respect to
a counterparty, the smallest discrete
unit of organization of the participant
153 ‘‘Broker ID’’ is defined as ‘‘the UIC assigned
to a person acting as a broker for a participant.’’ See
Rule 900(e).

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that purchases or sells financial
instruments for the account of the
participant or an affiliate thereof.’’ The
Commission believes that adding a
definition of ‘‘trading desk’’ will help to
clarify the rule by describing the type of
structure within an enterprise that must
receive a trading desk ID. The ‘‘trading
desk ID’’ concept is designed to identify,
within a large organization, the smallest
discrete unit that initiated a securitybased swap transaction. Requiring the
reporting of the trading desk ID will
assist regulators in monitoring the
activities and exposures of market
participants. The trading desk ID could,
among other things, facilitate
investigations of suspected
manipulative or abusive trading
practices.154
Final Rule 901(d)(2) also requires
reporting of, if applicable, the trader ID
of the direct counterparty on the
reporting side. Re-proposed Rule
900(gg) would have defined ‘‘trader ID’’
as ‘‘the UIC assigned to a natural person
who executes security-based swaps.’’
This definition would encompass a
direct counterparty that executed a
security-based swap, as well as a trader
acting as agent that executes a securitybased swap on behalf of a direct
counterparty. The Commission did not
intend for the definition of ‘‘trader ID’’
to include both direct counterparties
(whose counterparty IDs must be
provided pursuant to Rule 901(d)(1))
and traders acting in an agency capacity
that execute security-based swaps on
behalf of a direct counterparty. To
narrow the definition of ‘‘trader ID’’ so
that it includes only traders that execute
security-based swaps on behalf of direct
counterparties, final Rule 900(jj) defines
‘‘trader ID’’ as ‘‘the UIC assigned to a
natural person who executes one or
more security-based swaps on behalf of
a direct counterparty.’’ The direct
154 The trading desk ID also might allow relevant
authorities to determine whether a particular
trading desk is engaging in activity that could
disrupt the security-based swap markets. For
example, in early 2012, a trading desk of JPMorgan
Chase and Company known as the Chief Investment
Office executed transactions in synthetic credit
derivatives that declined in value by at least $6.2
billion later in the year. According to the report of
the United States Senate Permanent Subcommittee
on Investigations, these trades, which were
unknown to the bank’s regulators, were ‘‘so large in
size that they roiled world credit markets.’’ Report
of the United States Senate Permanent
Subcommittee on Investigations, JPMorgan Chase
Whale Trades: A Case History of Derivatives Risks
and Abuses (March 15, 2013), available at http://
www.hsgac.senate.gov/subcommittees/
investigations/hearings/chase-whale-trades-a-casehistory-of-derivatives-risks-and-abuses (last visited
October 7, 2014). The existence of a trading desk
ID could, in the future, facilitate the ability of
relevant authorities to detect this type of trading
activity.

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counterparty would be the person,
account, or fund that is the direct
counterparty to the security-based swap
that employs the trader.
iii. Response to Comments
One commenter supported the
proposed requirement for reporting
broker ID, desk ID, and trader ID, stating
that these UICs would ‘‘give regulators
a capability to aggregate position and
trade data in multiple ways including
by individual trader to spot
concentration risk and insider
trading.’’ 155 A second commenter
argued that desk structures change
relatively frequently and personnel
often rotate or transfer to other firms;
therefore, the effort to maintain trader
ID and desk ID information in a
registered SDR could exceed its
usefulness.156 The commenter also
indicated that information regarding the
desk ID and trader ID would be
available from a firm’s audit trail.157
The Commission questions whether
consistent and robust information about
a firm’s desk and trader activity is
available from firms’ audit trails. Even
if it were, the Commission believes that
reporting of the trader ID and the
trading desk ID—as well as the branch
ID, broker ID, and execution agent ID—
will help to assure that information
concerning the persons involved in the
intermediation and execution of a
security-based swap is readily available
to the Commission and other relevant
authorities. This information could
assist in monitoring and overseeing the
security-based swap market and
facilitate investigations of suspected
manipulative or abusive trading
practices.
Two other commenters raised issues
with requiring reporting of broker,
trader, and trading desk IDs.158 One of
these commenters believed that
reporting these UICs would require
‘‘great cost and effort’’ from firms,
including the costs associated with
establishing and maintaining UICs in
the absence of a global standard.159 The
155 GS1 Letter at 39 (also stating that these
elements ‘‘would be most critical for performing
trading oversight and compliance functions such as
trading ahead analysis, assessing trader price
collusion, analyzing audit trail data from multiple
derivatives markets as well as underlying cash
markets . . . Also, lack of unique, unambiguous
and universal identification of broker, desks and
traders was one of the significant deterrents to
analyzing the May 6, 2010 flash crash’’). Another
commenter generally supported the information
required to be reported pursuant to Rule 901(d). See
Barnard I at 2.
156 See DTCC II at 11.
157 See id.
158 See ISDA III at 2; ISDA IV at 8; ISDA/SIFMA
at 11.
159 ISDA III at 2; ISDA IV at 8.

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commenter also noted that not all of
these identifiers are required to be
reported in other jurisdictions.160 In a
joint comment letter with another trade
association, this commenter also stated
that, because these UICs are not
currently reported by any participants
in the OTC derivatives markets, ‘‘[t]he
industry will need to develop standards
and appropriate methodology to
effectively report this information.’’ 161
This comment expressed concern that
the proposed requirement ‘‘will create
significant ‘noise’ as a result of booking
restructuring events (due to either
technical or desk reorganization
considerations). We therefore
recommend that such information be
either excluded, or that participants
report the Desk ID and Trader ID
associated with the actual trade or
lifecycle events, but not those resulting
from internal reorganization events.’’ 162
The Commission recognizes that,
currently, UICs for branches, execution
agents, trading desks, and individual
traders are generally not in use. While
the Commission agrees with the
commenters that there could be a
certain degree of cost and effort
associated with establishing and
maintaining UICs, the Commission
believes that such costs have already
been taken into account when
determining the costs of Regulation
SBSR.163 The costs of developing such
UICs are included in the costs for Rule
901 (detailing the data elements that
must be reported) and Rule 907
(detailing the requirement that SDRs
develop policies and procedures for the
reporting of the required data elements).
The Commission confirms that these
UICs must be reported pursuant to Rule
901(d)(2) only in connection with the
original transaction.164
160 See ISDA IV at 8 (stating that ‘‘[u]nder EMIR
rules, broker ID is required, but not desk ID or
trader ID. In Canada, only broker ID is required, but
we note that reporting entities are struggling with
the availability of an LEI to identify brokers that
have not been subject to a mandate to obtain one’’).
See also ISDA III at 2.
161 ISDA/SIFMA at 11.
162 Id. See also ISDA IV at 8 (‘‘We suggest that the
Commission eliminate broker ID, desk ID and trader
ID from the list of reportable secondary trade
information. If the Commission wants to retain
these fields we strongly believe a cost-benefit
analysis should be conducted’’).
163 See infra Section XXII(C)(1) (providing the
economic analysis of these requirements).
164 Thus, a participant would not be required to
‘‘re-report’’ a transaction to the registered SDR if, for
example, the trader who executed the transaction
leaves the firm some time afterwards. However, the
participant will be subject to the policies and
procedures of the registered SDR for, among other
things, assigning UICs in a manner consistent with
Rule 903. See infra Section IV. Those policies and
procedures could include a requirement for the
participant to regularly notify the registered SDR

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c. Rule 901(d)(3)—Payment Stream
Information
Rule 901(d)(1)(iii), as proposed and
re-proposed, would have required the
reporting side to report the amount(s)
and currenc(ies) of any up-front
payment(s) and a description of the
terms and contingencies of the payment
streams of each direct counterparty to
the other. The Commission stated that
this requirement would include, for a
credit default swap, an indication of the
counterparty purchasing protection, the
counterparty selling protection, and the
terms and contingencies of their
payments to each other; and, for other
security-based swaps, an indication of
which counterparty is long and which is
short.165 The Commission noted that
this information could be useful to
regulators in investigating suspicious
trading activity.166
One commenter stated the view that
proposed Rule 901(d)(1)(iii) was
duplicative of proposed Rule
901(d)(1)(v), which would require
reporting of the data elements necessary
to determine the market value of a
transaction.167 The commenter stated,
further, that proposed Rule 901(d)(1)(iii)
was unclear about the required form of
the description of the terms and
contingencies of the payment streams,
and requested further clarification of
this proposed requirement.168
The Commission agrees with the
commenter’s concerns regarding the
need to clarify the information required
to be reported under these provisions of
Rule 901. Accordingly, the Commission
is revising adopted Rule 901(d)(3) to
require the reporting, to the extent not
provided pursuant to Rule 901(c)(1), of
the terms of any fixed or floating rate
payments, or otherwise customized or
non-standardized payment streams,
including the frequency and
contingencies of any such payments.169
As discussed above, adopted Rule
901(c)(1)(iv) requires the reporting side
to report the terms of any standardized
fixed or floating rate payments, and the
frequency of any such payments.170 To
about changes in persons or business units
requiring a UIC.
165 See Regulation SBSR Proposing Release, 75 FR
75218, note 62.
166 See id.
167 See DTCC II at 10.
168 See DTCC II at 10; DTCC V at 12.
169 As discussed above, the requirement to report
the amount(s) and currenc(ies) of any up-front
payments now appears in Rule 901(c)(3), rather
than in Rule 901(d). Rule 901(c)(3), as adopted,
requires reporting of the price of a security-based
swap, including the currency in which the price is
expressed and the amount(s) and currenc(ies) of any
up-front payments.
170 If information concerning the terms and
frequency of any regular fixed or floating rate

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the extent that a security-based swap
includes fixed or floating rate payments
that do not occur on a regular schedule
or are otherwise customized or nonstandardized, final Rule 901(d)(3)
requires the reporting of the terms of
those payments, including the
frequency and contingencies of the
payments. The Commission believes
that the changes to final Rule 901(d)(3)
make clear that Rule 901(d)(3) requires
reporting of customized or nonstandardized payment streams, in
contrast to the standardized payment
streams required to be reported
pursuant to Rule 901(c)(1)(iv). The
terms required to be reported could
include, for example, the frequency of
any resets of the interest rates of the
payment streams. The terms also could
include, for a credit default swap, an
indication of the counterparty
purchasing protection and the
counterparty selling protection, and, for
other security-based swaps, an
indication of which counterparty is long
and which counterparty is short. The
Commission believes that information
concerning the non-standard payment
streams of a security-based swap could
be useful to the Commission or other
relevant authorities in assessing the
nature and extent of counterparty
obligations and risk exposures. The
Commission believes that the changes
made to Rule 901(d)(3) will help clarify
the information required to be reported
under the rule and will eliminate any
redundancy between the information
required to be reported under Rules
901(c)(1)(iv) and 901(d)(3).
In addition, as discussed more fully
below, the Commission is revising reproposed Rule 901(d)(1)(v), which is
renumbered as final Rule 901(d)(5), to
indicate that Rule 901(d)(5) requires the
reporting of additional data elements
necessary to determine the market value
of a transaction only to the extent that
the information has not been reported
pursuant to Rule 901(c) or other
provisions of Rule 901(d). The
Commission believes that these changes
address the concern that Rule
901(d)(i)(iii) was duplicative of Rule
901(d)(1)(v).
d. Rule 901(d)(4)—Titles and Dates of
Agreements
Rule 901(d)(1)(iv), as proposed, would
have required reporting of the title of
any master agreement, or any other
payments is included in the product ID for the
security-based swap, the reporting side is required
to report only the product ID, and would not be
required to separately report the terms and
frequency of any regular fixed or floating rate
payments in addition to the product ID. See Rule
901(c)(1); Section III(B)(2)(b)(ii), supra.

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agreement governing the transaction
(including the title of any document
governing the satisfaction of margin
obligations), incorporated by reference
and the date of any such agreement.
Rule 901(d)(1)(v), as proposed, would
have required reporting of the data
elements necessary for a person to
determine the market value of the
transaction. The Commission noted that
proposed Rule 901(d)(1)(v) would
require, for a security-based swap that is
not cleared, information related to the
provision of collateral, such as the title
and date of the relevant collateral
agreement. The Commission
preliminarily believed that these
requirements, together with other
information required to be reported
under Rule 901(d), would facilitate
regulatory oversight of counterparties by
providing information concerning
counterparty obligations.171 The
Commission re-proposed Rules
901(d)(1)(iv) and 901(d)(1)(v) without
revision in the Cross-Border Proposing
Release.
In proposing Rules 901(d)(1)(iv) and
901(d)(1)(v), the Commission balanced
the burdens associated with reporting
entire agreements against the benefits of
having information about these
agreements, and proposed to require
reporting only of the title and date of
such master agreements and any other
agreement governing the transaction.
Similarly, the Commission indicated
that proposed Rule 901(d)(1)(v) would
require the reporting of the title and
date of any collateral agreements
governing the transaction.172
One commenter disagreed with the
Commission’s proposed approach. This
commenter expressed the view that
Regulation SBSR should be more
explicit in requiring reports of
information concerning collateral and
margin for use by regulators because
this information would be important for
risk assessment and other purposes.173
The Commission agrees that it is
important for regulatory authorities to
have access to information concerning
the collateral and margin associated
with security-based swap transactions.
The Commission also is mindful,
171 See Regulation SBSR Proposing Release, 75 FR
75218.
172 See id. at 75218, note 63.
173 See Better Markets I at 7–8 (arguing that, to
facilitate oversight, security-based swap
counterparties should be required to report the core
data elements of their collateral arrangements,
including, at a minimum: (1) The parties to the
agreement; (2) the thresholds for forbearance of
posted collateral applicable to each party; (3) the
triggers applicable to each party that would require
immediate funding (termination of forbearance);
and (4) the methodology for measuring counterparty
credit risk); Better Markets III at 4–5.

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however, that requiring the reporting of
detailed information concerning the
master agreement and other documents
governing security-based swaps could
impose significant burdens on market
participants. In addition, the
Commission notes that one commenter
on proposed Regulation SBSR stated
that it would not be possible, in all
cases, to identify the collateral
associated with a particular securitybased swap transaction because
collateral is calculated, managed, and
processed at the portfolio level rather
than at the level of individual
transactions.174
In light of these considerations, the
Commission believes that, for securitybased swaps that are not clearing
transactions, requiring reporting of the
title and date of any master agreement,
collateral agreement, margin agreement,
or any other agreement incorporated by
reference into the security-based swap
contract—but not the agreements
themselves or detailed information
concerning the agreements—will
facilitate regulatory oversight of the
security-based swap market by
providing regulators with a more
complete understanding of a securitybased swap counterparty’s obligations
while not imposing significant burdens
on market participants. The
Commission anticipates that, if a
situation arose where the Commission
or another relevant authority needed to
consult information about a transaction
contained in one of the related
agreements, the Commission could
request the agreement from one of the
security-based swap counterparties.
Knowing the title and date of the
agreement will assist relevant
authorities in identifying the agreement
and thereby expedite the process of
obtaining the necessary information.
One commenter argued that the ‘‘level
of change’’ necessary to incorporate the
titles and dates of master agreements
into individual trade messages was
excessive and recommended that the
trade level reference continue to follow
174 See ISDA/SIFMA I at 14–15. Specifically, the
commenter stated that the calculation of exposure
collateral ‘‘is performed at a netted portfolio level
and cannot be broken down to the transaction
level—it is simply not possible to identify the
specific exposure collateral or the ‘exposure’
associated with any particular transaction.’’ See id.
at 14. The commenter noted, further, that the
independent amount, an optional additional
amount of collateral that two counterparties may
negotiate, ‘‘may be specified at transaction level, at
portfolio level, at some intermediate level (a
combination of product type, currency and
maturity, for instance), and possible a hybrid of all
three. Therefore it may or may not be possible to
identify the [independent amount] associated with
a particular transaction, but as a general matter this
association cannot be reliably made.’’ See id. at 15.

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the current process of referencing the
lowest level governing document, which
would permit the identification of all of
the other relevant documents.175
Another commenter questioned the
value of requiring reporting of the title
and date of party level agreements.176
This commenter stated that, because
other jurisdictions do not require
reporting of the ‘‘title and date of a
Credit Support Agreement or other
similar document (‘‘CSA’’) governing
the collateral arrangement between the
parties . . . global trade repositories do
not currently have fields to support
separate reporting of data pertaining to
the CSA from those which define the
master agreement. Equally challenging
is firms’ ability to report data pertaining
to the CSA as the terms of these
agreements are not readily reportable in
electronic format nor could this be
easily or accurately achieved.’’ 177
Noting that other global regulators have
limited their trade reporting
requirements to the relevant date and
type of the master agreement, the
commenter believed that the
information required to be reported
should be limited to the identification of
party level master agreements that
govern all of the derivatives transactions
between the parties, and should not
include master confirmations or other
documentation that is used to facilitate
confirmation of the security-based
swap.178
The Commission understands that
reporting the titles and dates of
agreements for individual securitybased swap transactions may require
some modification of current practices.
However, the Commission believes that
it is important for regulators to know
such titles and dates so that the
Commission and other relevant
authorities would know where to obtain
further information about the
obligations and exposures of securitybased swap counterparties, as necessary.
The Commission believes that requiring
reporting of the titles and dates of
master agreements and other agreements
governing a transaction—but not the
agreements themselves or detailed
information concerning the
agreements—would provide regulators
with access to necessary information
without creating an unduly burdensome
reporting obligation. Therefore, the
Commission is adopting Rule
901(d)(1)(iv) substantially as proposed
and re-proposed, while renumbering it
final Rule 901(d)(4). With respect to the
175 See
176 See

DTCC II at 11.
ISDA IV at 8.

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e. Rule 901(d)(5)—Other Data Elements
Rule 901(d)(1)(v), as re-proposed,
would have required reporting of the
data elements necessary for a person to
determine the market value of a
transaction. The Commission is
adopting Rule 901(d)(1)(v) substantially
179 See

DTCC V at 12.
Regulation SBSR Proposing Release, 75 FR
75218, note 63.

177 Id.
178 See

commenter’s concern regarding the
difficulty of reporting the terms of the
documentation governing a securitybased swap, the Commission
emphasizes that final Rule 901(d)(4)
requires reporting only of the titles and
dates of the documents specified in Rule
901(d)(4), but not the terms of these
agreements.
The commenter also requested
additional clarity regarding the
proposed requirement generally.179 As
discussed above, Rule 901(d)(1)(iv), as
proposed and re-proposed, would have
required reporting of ‘‘the title of any
master agreement, or any other
agreement governing the transaction
(including the title of any document
governing the satisfaction of margin
obligations), incorporated by reference
and the date of any such agreement.’’
The proposed rule also would have
required reporting of the title and date
of any collateral agreements governing
the transaction.180 Although the rule, as
proposed and re-proposed, would have
required reporting of the title and date
of any master agreement, margin
agreement, collateral agreement, and
any other document governing the
transaction that is incorporated by
reference, the Commission agrees that it
would be useful to state more precisely
the information required to be reported
and to clarify the scope of the rule. Rule
901(d)(4), as adopted, requires reporting
of, ‘‘[f]or a security-based swap that is
not a clearing transaction, the title and
date of any master agreement, collateral
agreement, margin agreement, or any
other agreement incorporated by
reference into the security-based swap
contract.’’ The new language makes
clear that Rule 901(d)(4) applies only to
security-based swaps that are not
clearing transactions (i.e., security-based
swaps that do not have a registered
clearing agency as a direct
counterparty). Any such agreements
relating to a clearing transaction would
exist by operation of the rules of the
registered clearing agency, and therefore
do not need to be reported pursuant to
Regulation SBSR because the
Commission could obtain information
from the registered clearing agency as
necessary.

180 See

id.

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
as re-proposed, but renumbering it as
Rule 901(d)(5) and making certain
technical and clarifying changes in
response to comments.
As discussed above, re-proposed Rule
901(d)(1)(iii) would have required
reporting of the amount(s) and
currenc(ies) of any up-front payments
and the terms and contingencies of the
payment streams of each direct
counterparty to the other. One
commenter believed that re-proposed
Rule 901(d)(1)(iii) was duplicative of reproposed Rule 901(d)(1)(v),181 and
asked the Commission to provide
additional clarity on what re-proposed
Rule 901(d)(1)(v) requires.182 To address
these comments, the Commission is
revising adopted Rule 901(d)(5) to
require the reporting, to the extent not
required pursuant to Rule 901(c) or
other provisions of Rule 901(d), of any
additional data elements included in the
agreement between the counterparties
that are necessary for a person to
determine the market value of the
transaction.
Another commenter expressed
concern that the requirements of reproposed Rule 901(d)(1)(v) were vague,
‘‘leaving reporting parties and trade
repositories with the task of establishing
the reportable data with potentially
different result.’’ 183 This commenter
recommended that Commission revise
the rule to clarify the requirement to
report ‘‘(i) the mark-to-market value and
currency code and (ii) the date and time
of the valuation in Coordinated
Universal Time . . .’’ 184 Further,
because information necessary to
determine the market value of a
transaction ‘‘is determined as part of
end of day processes,’’ the commenter
requested that the timeframe for
reporting data pertaining to market
value be based on the end of the day on
which the relevant data was
determined.185
In response to these concerns, the
Commission emphasizes that neither
Regulation SBSR, as proposed and reproposed, nor Regulation SBSR, as
adopted, requires the reporting of the
market value of a security-based swap
(although the negotiated price of the
actual transaction is required to be
reported), either on a one-time or
ongoing basis.186 As noted above, final
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181 See

DTCC II at 10.
DTCC V at 12.
183 ISDA IV at 9.
184 Id.
185 See id.
186 In contrast, the CFTC’s swap data reporting
rules require reporting parties to report the market
value of swap transactions to a CFTC-registered
swap data repository on a daily basis. See 17 CFR
45.4(a)(2).
182 See

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Rule 901(d)(5) requires reporting, to the
extent not required pursuant to Rule
901(c) or other provisions of Rule
901(d), of any additional data elements
included in the agreement between the
counterparties that are necessary to
determine the market value of the
transaction. This refers to all of the
contractual terms and conditions of a
security-based swap that a party would
need to perform its own calculation of
the market value of the security-based
swap using its own market data.
Although the reporting side must
include, as part of the initial transaction
report, the information necessary to
determine the market value of the
transaction, Regulation SBSR does not
require the reporting side to take the
additional step of calculating and
reporting the market value of the
transaction, nor does it require the
reporting side to provide any market
data that would be needed to calculate
the market value of the transaction.
Rule 901(d)(5) is designed to help to
ensure that all of the material terms of
the agreement between the
counterparties that is necessary to
determine the market value of a
security-based swap are available to the
Commission and other relevant
authorities.187 The Commission
continues to believe that this
requirement will facilitate regulatory
oversight by giving relevant authorities
the information necessary to value an
entity’s security-based swap positions
and calculate the exposure resulting
from those positions. However, the final
language of Rule 901(d)(5) is designed to
eliminate any overlap with other
provisions of Rule 901(c) or 901(d). For
example, if a security-based swap has a
product ID, the Commission presumes
that all information necessary to
identify the security-based swap and
determine the market value of the
transaction could be derived from the
product ID (or the identification
information behind that particular
product ID). Therefore, it would not be
necessary to report any additional
information pursuant to Rule 901(d)(5)
for a security-based swap for which a
product ID is reported.
In addition, the Commission is further
clarifying the rule by making a technical
change to indicate that final Rule
901(d)(5) requires the reporting only of
data elements ‘‘included in the
agreement between the counterparties.’’
The Commission believes that the rule
as proposed and re-proposed—which
187 This could include—by way of example and
not of limitation—information about interest rate
features, commodities, or currencies that are part of
the security-based swap contract.

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14587

did not include this phrase—could have
been interpreted to require the reporting
of information external to the agreement
between the counterparties that could
have helped determine the market value
of the security-based swap (e.g., the
levels of supply and demand in the
market for the security-based swap). The
Commission intended, however, to
require reporting only of information
included in the agreement between the
counterparties, not of general market
information. Accordingly, final Rule
901(d)(5) requires the reporting only of
data elements ‘‘included in the
agreement between the counterparties’’
that are necessary for a person to
determine the market value of the
transaction.
Finally, one commenter believed that
proposed Rule 901(d)(1)(v) should
require reporting only of the full terms
of a security-based swap as laid out in
the trade confirmation.188 Although the
Commission agrees that the full terms of
a trade confirmation could, in some
cases, provide the data elements
included in the agreement between the
counterparties that are necessary to
determine the market value of a
transaction, the Commission notes that
the information required to be reported
pursuant Rule 901(d)(5) would not
necessarily be limited to information
included in the trade confirmation. Not
all market participants observe the same
conventions for confirming their trades.
The Commission understands that
confirmations for some types of trades
are significantly more standardized than
others. Some trades may have critical
terms included in other documentation,
such as master confirmation agreements
or credit support annexes. Moreover,
confirmation practices in the future may
differ from current confirmation
practices. The Commission believes,
therefore, that restricting information
reported in accordance with Rule
901(d)(5) to the information included in
the confirmation would not provide the
Commission and other relevant
authorities with sufficient information
regarding the market value of a securitybased swap.
f. Rule 901(d)(6)—Submission to
Clearing
Rule 901(d)(1)(vi), as re-proposed,
would have required reporting of the
following data element: ‘‘If the securitybased swap will be cleared, the name of
the clearing agency.’’ This information
would allow the Commission to verify,
if necessary, that a security-based swap
was cleared, and to identify the clearing
agency that cleared the transaction. The
188 See

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Commission received no comments on
this provision and is adopting it
substantially as re-proposed, with minor
clarifying changes and renumbered as
Rule 901(d)(6). Rule 901(d)(6), as
adopted, requires reporting of the
following: ‘‘If applicable, and to the
extent not provided pursuant to
paragraph (c) of this section, the name
of the clearing agency to which the
security-based swap will be submitted
for clearing.’’
For some security-based swaps, the
name of the clearing agency that clears
the security-based swap could be
inherent in the product ID. Rule
901(d)(6), as adopted, clarifies that the
name of the clearing agency to which
the security-based swap will be
submitted for clearing need not be
reported if that information is inherent
in the product ID. In addition, the new
language regarding whether the
security-based swap will be submitted
for clearing reflects the possibility that
a clearing agency could reject the
security-based swap for clearing after it
has been submitted. The Commission
believes that it would be useful to know
the name of the clearing agency to
which the transaction is submitted, even
if the clearing agency rejects the
transaction.

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g. Rule 901(d)(7)—Indication of Use of
End-User Exception
Rule 901(d)(1)(vii), as re-proposed,
would have required reporting of
whether a party to the transaction
invoked the so-called ‘‘end user
exception’’ from clearing, which is
contemplated in Section 3C(g) of the
Exchange Act.189 Section 3C(g)(6) of the
Exchange Act 190 provides for the
Commission to request information from
persons that invoke the exception. The
Commission preliminarily believed that
requiring reporting of whether the
exception was invoked in the case of a
particular security-based swap would
assist the Commission in monitoring use
of the exception.191
189 15 U.S.C. 78c–3(g). Section 3C(g)(1) of the
Exchange Act provides that the general clearing
mandate set forth in Section 3C(a)(1) of the
Exchange Act will not apply to a security-based
swap if one of the counterparties to the securitybased swap: (1) Is not a financial entity; (2) is using
security-based swaps to hedge or mitigate
commercial risk; and (3) notifies the Commission,
in a manner set forth by the Commission, how it
generally meets if financial obligations associated
with entering into non-cleared security-based
swaps. The application of Section 3C(g)(1) is solely
at the discretion of the security-based swap
counterparty that satisfies these conditions. See
Securities Exchange Act Release No. 63556
(December 15, 2010), 75 FR 79992 (December 21,
2010).
190 15 U.S.C. 78c–3(g)(6).
191 See Regulation SBSR Proposing Release, 75 FR
75218.

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One commenter argued that the
Commission should not use the trade
reporting mechanism ‘‘to police the enduser exception.’’ 192 The commenter
expressed concern with an end user
having to certify eligibility with each
transaction and stated that ‘‘it is
illogical that filings by swap dealers
should determine the eligibility of the
end user.’’ 193 The Commission
acknowledges the commenter’s
concerns but believes that they are
misplaced. Re-proposed Rule
901(d)(1)(vii) would not require
reporting of any information as to the
end user’s eligibility to invoke the
exception for a specific transaction;
instead, it would require reporting only
of the fact of the exception being
invoked. The Commission could then
obtain information from a registered
SDR regarding instances of the
exception being invoked and could
determine, as necessary, whether to
further evaluate whether the exception
had been invoked properly. The
Commission does not believe that it is
necessary or appropriate to require
information about the end user’s
eligibility to invoke the exception to be
reported under Rule 901(d). Therefore,
the Commission has determined to
adopt Rule 901(d)(1)(vii) as re-proposed,
but is renumbering it as Rule 901(d)(7).
h. Rule 901(d)(8)—Description of
Settlement Terms
Rule 901(d)(1)(viii), as re-proposed,
would have required, for a securitybased swap that is not cleared, a
description of the settlement terms,
including whether the security-based
swap is cash-settled or physically
settled, and the method for determining
the settlement value. In the Regulation
SBSR Proposing Release, the
Commission stated its preliminary belief
that this information would assist
relevant authorities in monitoring the
exposures and obligations of securitybased swap market participants.194 One
commenter expressed the view that the
settlement terms could be derived from
other data fields and thus recommended
deletion of this data element, or in the
alternative, requested additional clarity
on what would be required pursuant to
this provision.195
Re-proposed Rule 901(d)(1)(viii) is
being adopted substantially as reproposed but renumbered as final Rule
901(d)(8) and now includes certain
revisions that respond to the commenter
and clarify the operation of the rule.
Letter at 3.
at 4.
194 See 75 FR 75218.
195 See DTCC V at 12.

Rule 901(d)(8), as adopted, requires:
‘‘[t]o the extent not provide pursuant to
other provisions of this paragraph (d), if
the direct counterparties do not submit
the security-based swap to clearing, a
description of the settlement terms,
including whether the security-based
swap is cash-settled or physically
settled, and the method for determining
the settlement value.’’ The Commission
believes that the final rule makes clear
that there is no requirement to report
information concerning the settlement
terms of an uncleared security-based
swap if the information was reported
pursuant to another provision of Rule
901(d). Similarly, there is no
requirement to report the settlement
terms pursuant to Rule 901(d)(8) if the
settlement terms are inherent in the
product ID. Final Rule 901(d)(8) is
designed to facilitate regulatory
oversight by providing the Commission
and other relevant authorities with
information necessary to understand the
exposures of security-based swap
counterparties.
i. Rule 901(d)(9)—Platform ID
Rule 901(d)(1)(ix), as re-proposed,
would have required reporting of the
venue where a security-based swap was
executed. This would include, if
applicable, an indication that a securitybased swap was executed bilaterally in
the OTC market.196 This information
could be useful for a variety of
purposes, including studying the
development of security-based swap
execution facilities (‘‘SB SEFs’’) or
conducting more detailed surveillance
of particular security-based swap
transactions. In the latter case, the
Commission or another relevant
authority would find it helpful to know
the execution venue, from which it
could obtain additional information as
appropriate.
One commenter, in discussing the
entity that should assign transaction
IDs, suggested that linking a trade to a
particular platform potentially could
result in the unintentional disclosure of
the identities of the counterparties.197
The Commission notes that information
concerning the venue where a securitybased swap was executed, like all
secondary trade information reported
under Rule 901(d), is not required to be,
and thus may not be, publicly
disseminated. Because the platform ID
may not be publicly disseminated, there
is no potential for it to unintentionally

192 Cravath
193 Id.

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196 See Regulation SBSR Proposing Release, 75 FR
75218.
197 See DTCC II at 15–16.

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
identify the counterparties to the
transaction.
The Commission continues to believe
that information identifying the venue
where a security-based swap was
executed, whether on a trading platform
or in the OTC market, is necessary
information for relevant authorities to
conduct surveillance in the securitybased swap market and understand
developments in the security-based
swap market generally. Therefore, the
Commission is adopting the rule
substantially as re-proposed and
renumbering it as final Rule 901(d)(9).
One commenter asked the
Commission to clarify that re-proposed
Rule 901(d)(1)(ix) would require
reporting only of execution platforms
required to register with the
Commission or the CFTC.198 The
Commission believes that final Rule
901(d)(9) largely accomplishes this
result. Specifically, the Commission has
revised Rule 901(d)(9) to require
reporting, if applicable, of the ‘‘platform
ID,’’ rather than the ‘‘execution venue’’
more broadly. To implement this
requirement, the Commission also is
adopting a definition of ‘‘platform.’’
Final Rule 900(v) defines a ‘‘platform’’
as ‘‘a national securities exchange or a
security-based swap execution facility
that is registered or exempt from
registration.’’ 199 Rule 900(w) defines
‘‘platform ID’’ as the UIC assigned to the
platform on which a security-based
swap is executed. The platform ID, like
other UICs, must be assigned as
198 See

ISDA IV at 9.
Commission believes that transactions
occurring on a registered SB SEF as well as an
exempt SB SEF should be reported to a registered
SDR. Certain entities that currently meet the
definition of ‘‘security-based swap execution
facility’’ are not yet registered with the Commission
and will not have a mechanism for registering until
the Commission adopts final rules governing the
registration and core principles of SB SEFs. These
entities currently operate pursuant to an exemption
from certain otherwise applicable provisions of the
Exchange Act. See Securities Exchange Act Release
No. 34–64678 (June 15, 2011), 76 FR 36287, 36292–
93 (June 22, 2011) (Temporary Exemptions and
Other Temporary Relief, Together With Information
on Compliance Dates for New Provisions of the
Securities Exchange Act of 1934 Applicable to
Security-Based Swaps). In addition, the
Commission has raised the possibility of granting
exemptions to certain foreign security-based swap
markets that otherwise would meet the definition
of ‘‘security-based swap execution facility.’’ See
Cross-Border Proposing Release, 78 FR 31056 (‘‘The
Commission preliminarily believes that it may be
appropriate to consider an exemption as an
alternative approach to SB SEF registration
depending on the nature or scope of the foreign
security-based swap market’s activities in, or the
nature or scope of the contacts the foreign securitybased swap market has with, the United States’’).
The adopted definition of ‘‘platform’’ requires such
entities to be identified in SDR transaction reports
and thus will enable the Commission and other
relevant authorities to observe transactions that
occur on such exempt SB SEFs.

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199 The

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provided in Rule 903. The Commission
believes that this approach makes clear
that other entities that may be involved
in executing transactions, such as interdealer brokers, are not considered
platforms for purposes of this reporting
requirement.200
j. Rule 901(d)(10)—Transaction ID of
Any Related Transaction
Regulation SBSR, as proposed and reproposed, was designed to obtain
complete and accurate reporting of
information regarding a security-based
swap from its execution through its
termination or expiration. In the
Regulation SBSR Proposing Release, the
Commission noted that maintaining an
accurate record of the terms of a
security-based swap would require
reporting of life cycle event information
to a registered SDR.201 The term ‘‘life
cycle event’’ includes terminations,
novations, and assignments of existing
security-based swaps.202 As discussed
in greater detail in Sections V(C)(5) and
VIII(A), infra, a new security-based
swap may arise following the allocation,
termination, novation, or assignment of
an existing security-based swap, and
that the reporting side for the new
security-based swap must report the
transaction to a registered SDR.203 The
Commission believes that it should be
able to link any new security-based
swaps that arise from the termination,
novation, or assignment of an existing
security-based swap to the original
transaction. For example, when a single
security-based swap is executed as a
bunched order and then allocated
among multiple counterparties, the
Commission and other relevant
authorities should be able to link the
allocations to the executed bunched
order.204 The ability to link a securitybased swap that arises from an
200 Consistent with Rule 901(d)(9), a registered
SDR could create a single identifier for transactions
that are not executed on a national securities
exchange or a SB SEF that is registered or exempt
from registration.
201 See 75 FR 75220. The Commission re-affirmed
the importance of life cycle event reporting for
security-based swaps in the Cross-Border Proposing
Release. See 75 FR 31068.
202 See infra Section XXI(A) (discussing the
definition of ‘‘life cycle events’’).
203 Certain terminations, such as the termination
of an alpha upon acceptance for clearing, result in
the creation of new security-based swaps (e.g., the
beta and gamma). Similarly, security-based swaps
that are terminated during netting or compression
exercises result in the creation of new securitybased swaps. Regardless of the circumstances, if a
security-based swap arises from the termination of
an existing security-based swap, the reporting side
for the new security-based swap must report the
transaction to a registered SDR as required by Rule
901(a).
204 See infra Section VIII (explaining the
application of Regulation SBSR to security-based
swaps involving allocations).

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allocation, termination, novation, or
assignment back to the original securitybased swap(s) will help to assure that
the Commission and relevant authorities
have an accurate and current
representation of counterparty
exposures.
To facilitate the Commission’s ability
to map a resulting security-based swap
back to the original transaction—
particularly if the original transaction
and the resulting transaction(s) are
reported to different registered SDRs—
the Commission is adopting Rule
901(d)(10), which requires the reporting
side for a security-based swap that
arises from an allocation, termination,
novation, or assignment of one or more
existing security-based swaps, to report
‘‘the transaction ID of the allocated,
terminated, assigned, or novated
security-based swap(s), except in the
case of a clearing transaction that results
from the netting or compression of other
clearing transactions.’’ 205 The
Commission does not believe that it is
necessary to require reporting of the
transaction ID for clearing transactions
that result from other clearing
transactions because clearing
transactions occur solely within the
registered clearing agency and are used
by the registered clearing agency to
manage the positions of clearing
members and, possibly their clients.
Thus, it would not be necessary for
regulatory authorities to have the ability
to link together clearing transactions
that result from other clearing
transactions.
k. Information That Is Not Required by
Rule 901(d)
One commenter, responding to a
question in the Regulation SBSR
Proposing Release,206 stated that the
Commission should not require
reporting of the purpose of a securitybased swap because it could reveal
proprietary information, and because
the parties to a security-based swap
often will have several reasons for
executing the transaction.207 The
Commission agrees that counterparties
could have multiple reasons for entering
into a security-based swap, and that
requiring reporting of a particular
reason could be impractical.
Furthermore, different sides to the same
transactions would likely have different
reasons for entering into it. The
205 See infra Section V(B) (discussing the
definition of ‘‘clearing transaction’’).
206 See 75 FR 75218 (question 39).
207 See ISDA/SIFMA I at 12. See also Barnard I
at 2 (stating that the commenter was ‘‘not
convinced’’ that the Commission should require
reporting of the purpose of a security-based swap
transaction).

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Commission notes, further, that it did
not propose to require reporting of the
purpose of the security-based swap and
Rule 901, as adopted, does not include
a requirement to report this information.
Two commenters recommended that
the Commission require reporting of
valuation data on an ongoing basis.208
The Commission emphasizes that it did
not propose to require the reporting of
valuation data in either the Regulation
SBSR Proposing Release or the CrossBorder Proposing Release, and that it is
not adopting such a requirement at this
time.209 However, the Commission will
continue to assess the reporting and
public dissemination regime under
Regulation SBSR and could determine
to propose additional requirements,
such as the reporting of valuations, as
necessary or appropriate. In addition,
the Commission notes that the data
elements required under Rules 901(c)
and 901(d) are designed to allow the
public, the Commission, other relevant
authorities, or a data analytics firm
engaged by a relevant authority, to
calculate the market value of a securitybased swap at the time of execution of
the trade.210
C. Reporting of Historical SecurityBased Swaps
1. Statutory Basis and Proposed Rule

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Section 3C(e)(1) of the Exchange
Act 211 requires the Commission to
adopt rules providing for the reporting
to a registered SDR or to the
Commission of security-based swaps
entered into before the date of
enactment of Section 3C (i.e., July 21,
2010). By its terms, this provision is not
limited to security-based swaps that
were still open as of the date of
208 See DTCC II at 10; Markit I at 3. A third
commenter, discussing the Commission’s proposed
rules governing recordkeeping and reporting
requirements for security-based swap dealers, major
security-based swap participants, and brokerdealers (Securities Exchange Act Release No. 34–
71958 (April 17, 2014), 79 FR 25194 (May 2, 2014)),
urged the Commission to provide guidance
regarding the methods these entities should use to
produce valuation information). See Levin Letter at
3–4. A fourth commenter asked the Commission to
confirm that there is no requirement to report
valuation data on a daily basis, provided that there
has been no change in the data. See ISDA IV at 11.
209 See also Section II(B)(3)(e), supra.
210 See Rule 901(d)(5) (requiring reporting of any
additional data elements included in the agreement
between the counterparties, to the extent not
already provided under another provision of Rule
901(c) or 901(d), that are necessary for a person to
determine the market value of the transaction);
Regulation SBSR Proposing Release, 75 FR 75218
(‘‘the reporting of data elements necessary to
calculate the market value of a transaction would
allow regulators to value an entity’s [security-based
swap] positions and calculate the exposure
resulting from those provisions’’).
211 15 U.S.C. 78c–3(e)(1).

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enactment of the Dodd-Frank Act. In the
Regulation SBSR Proposing Release, the
Commission took the preliminary view
that an attempt to collect many years’
worth of transaction-level securitybased swap data (including data on
terminated or expired security-based
swaps) would not enhance the goal of
price discovery, nor would it be
particularly useful to relevant
authorities or market participants in
implementing a forward-looking
security-based swap reporting and
dissemination regime.212 The
Commission also took the preliminary
view that collecting, reporting, and
processing all such data would involve
substantial costs to market participants
with little potential benefit.
Accordingly, the Commission proposed
to limit the reporting of security-based
swaps entered into prior to the date of
enactment to only those security-based
swaps that had not expired as of the
date of enactment of the Dodd-Frank
Act (‘‘pre-enactment security-based
swaps’’).
In addition, Section 3C(e)(2) of the
Exchange Act 213 requires the
Commission to adopt rules that provide
for the reporting of security-based swaps
entered into on or after the date of
enactment of Section 3C (‘‘transitional
security-based swaps’’).214
The Commission proposed Rule 901(i)
to implement both of these statutory
requirements. Rule 901(i), as proposed,
would have required a reporting party to
report all of the information required by
Rules 901(c) and 901(d) for any preenactment security-based swap or
transitional security-based swap
(collectively, ‘‘historical security-based
swaps’’), to the extent such information
was available. Thus, Rule 901(i), as
proposed and re-proposed, would have
required the reporting only of securitybased swaps that were open on or
executed after the date of enactment
(July 21, 2010). The Commission further
proposed that historical security-based
swaps would not be subject to public
dissemination. In the Cross-Border
Proposing Release, the Commission reproposed Rule 901(i) in its entirety with
only one technical revision, to replace
the term ‘‘reporting party’’ with
‘‘reporting side.’’
212 See

75 FR 75223–24.
U.S.C. 78c 3(e)(2).
214 See Regulation SBSR Proposing Release, 75 FR
75224. See also re-proposed Rule 900(kk) (defining
‘‘transitional security-based swap’’ to mean ‘‘any
security-based swap executed on or after July 21,
2010, and before the effective reporting date’’).
213 15

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2. Final Rule and Discussion of
Comments Received
As adopted, Rule 901(i) states: ‘‘With
respect to any pre-enactment securitybased swap or transitional securitybased swap in a particular asset class,
and to the extent that information about
such transaction is available, the
reporting side shall report all of the
information required by [Rules 901(c)
and 901(d)] to a registered securitybased swap data repository that accepts
security-based swaps in that asset class
and indicate whether the security-based
swap was open as of the date of such
report.’’ In adopting Rule 901(i), the
Commission is making minor changes to
the rule as re-proposed in the CrossBorder Proposing Release. The
Commission has added the clause ‘‘in a
particular asset class’’ following
‘‘transitional security-based swap’’ and
the clause ‘‘to a registered securitybased swap data repository that accepts
security-based swaps in that asset
class.’’ The security-based swap market
is segregated into different asset classes,
and an SDR might choose to collect and
maintain data for only a single asset
class. These new clauses clarify that a
reporting side is not obligated to report
historical security-based swaps in a
particular asset class to a registered SDR
that does not accept security-based
swaps in that asset class. A reporting
side’s duty to report a historical
security-based swap in a particular asset
class arises only when there exists a
registered SDR that accepts securitybased swaps in that asset class.
The Commission also is adopting the
definition of ‘‘pre-enactment securitybased swap’’ as proposed and reproposed.215 Further, the Commission is
adopting the definition of ‘‘transitional
security-based swap’’ substantially as
proposed and re-proposed, with one
clarifying change and a technical
revision to eliminate the obsolete term
‘‘effective reporting date.’’ 216 Rule
215 See

Rule 900(y).
term ‘‘effective reporting date’’ was used
in the compliance schedule set out in re-proposed
Rule 910, which the Commission is not adopting.
The ‘‘effective reporting date,’’ would have been
defined to mean, with respect to a registered [SDR],
the date six months after the registration date. The
‘‘registration date’’ would have been defined to
mean, with respect to a registered SDR, ‘‘the date
on which the Commission registers the securitybased swap data repository, or, if the Commission
registers the security-based swap data repository
before the effective date of §§ 242.900 through
242.911, the effective date of §§ 242.900 through
242.911.’’ See re-proposed Rules 900(l) and 900(bb),
respectively. The Commission is making a
conforming change to delete the defined terms
‘‘effective reporting date’’ and ‘‘registration date’’
from final Rule 900. As noted in Section I(F) above,
the Commission is proposing a new compliance
schedule for Rules 901, 902, 903, 904, 905, 906, and
216 The

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900(nn), as adopted, defines
‘‘transitional security-based swap’’ to
mean ‘‘a security-based swap executed
on or after July 21, 2010, and before the
first date on which trade-by-trade
reporting of security-based swaps in that
asset class to a registered security-based
swap data repository is required
pursuant to §§ 242.900 through
242.909.’’ Thus, only those securitybased swaps that were open as of the
date of enactment (July 21, 2010) or
opened thereafter must be reported. The
Commission continues to believe that
the costs of reporting security-based
swaps that terminated or expired before
July 21, 2010, would not justify any
potential benefits, particularly given the
difficulty of assembling records
concerning these transactions after
many years. One commenter specifically
agreed with the Commission’s proposal
to limit reporting of security-based
swaps entered into prior to the date of
enactment only to those that had not
expired as of that date.217
However, this commenter also
expressed concern that a blanket
requirement to report all pre-enactment
security-based swaps ‘‘risks doublecounting and presenting a distorted
view of certain markets.’’ 218 In
particular, the commenter indicated that
compression exercises and tri-party
novations raised concerns regarding the
potential for double-counting. The
Commission shares the commenter’s
concern that double-counting could
create a distorted view of the securitybased swap market. Therefore, the
Commission is adding new language at
the end of the Rule 901(i) which
provides that the reporting side of a preenactment or transitional security-based
swap must ‘‘indicate whether the
security-based swap was open as of the
date of such report.’’ This information is
necessary to allow a registered SDR to
calculate a participant’s open positions
established before the time trade-bytrade reporting becomes mandatory for
a particular asset class.
The commenter also stated that
‘‘inter-affiliate security-based swaps
should not be subject to reporting.’’ 219
The Commission disagrees with this
suggestion. As described in Section IX,
infra, the Commission believes
generally that inter-affiliate securitybased swaps should be subject to
regulatory reporting and public
dissemination. The Commission thus
believes that pre-enactment inter908 of Regulation SBSR in the Regulation SBSR
Proposed Amendments Release.
217 See ISDA I at 2, note 1.
218 Id. at 4.
219 ISDA I at 5.

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affiliate security-based swaps also
should be subject to regulatory
reporting, assuming that such securitybased swaps were opened after the date
of enactment or still open as of the date
of enactment. The Commission notes,
however, that no information reported
pursuant to Rule 901(i) will be publicly
disseminated.
Having access to information
regarding historical security-based
swaps will help the Commission and
other relevant authorities continue to
develop a baseline understanding of
positions and risk in the security-based
swap market, starting on the date of
enactment of the Dodd-Frank Act,
which contemplates the regime for
regulatory reporting of all security-based
swaps. These transaction reports will
provide a benchmark against which to
assess the development of the securitybased swap market over time, and help
the Commission to prepare reports that
it is required to provide to Congress.
One commenter, while generally
supporting the Commission’s proposal
to require reporting of historical
security-based swaps to a registered
SDR, argued that only open contracts
should be reported.220 The Commission
partially agrees with this comment and
thus, as noted above, is requiring
reporting of only pre-enactment
security-based swaps that were open as
of the date of enactment. However, the
Commission believes that all securitybased swaps entered into on or after the
date of enactment should be reported—
even if they expired or were terminated
before trade-by-trade reporting becomes
mandatory—and that the reporting side
should indicate whether the securitybased swap was open as of the date of
such report. While reporting of
terminated or expired transitional
security-based swaps is not necessary
for the calculation of market
participants’ open positions, this
information will assist the Commission
and other relevant authorities to create,
for surveillance purposes, at least a
partial audit trail 221 of transactions
executed after the date of enactment
and, more generally, to analyze market
developments since the date of
enactment.
This commenter also argued that
security-based swaps ‘‘only [in] their
current state should need to be reported,
without additional information like
220 See

DTCC II at 17.
Commission notes that Rule 901(i) by its
terms requires the reporting of historical securitybased swaps only ‘‘to the extent such information
is available.’’ Thus, if information about terminated
or expired transitional security-based swaps no
longer exists, it would not be required to be
reported under Rule 901(i).
221 The

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14591

execution time.’’ 222 A second
commenter expressed concern that the
reporting requirements for historical
security-based swaps could require
parties to modify existing trades that
occurred in a heretofore unregulated
market in order to comply with Rule
901(i).223 A third commenter expressed
concern that ‘‘[t]he submission of nonelectronic transaction confirmations [for
pre-enactment security-based swaps]
will be extremely burdensome for
reporting entities,’’ 224 and
recommended instead that the
Commission ‘‘permit the reporting in a
common electronic format of the
principal electronic terms’’ of each such
pre-enactment security-based swap.225
For several reasons, the Commission
believes that Rule 901(i) strikes a
reasonable balance between the burdens
placed on security-based swap
counterparties and the policy goal of
enabling the Commission and other
relevant authorities to develop a
baseline understanding of
counterparties’ security-based swap
positions. First, the Commission notes
that Rule 901(i) requires reporting of the
data elements set forth in Rules 901(c)
and 901(d) only to the extent such
information is available. The
Commission does not expect, nor is it
requiring, reporting sides to create or recreate data related to historical securitybased swaps. Thus, if the time of
execution of a historical security-based
swap was not recorded by the
counterparties, it is not required to be
reported under Rule 901(i). Similarly,
Rule 901(i) does not require
counterparties to modify existing
transactions in any way to ensure that
all data fields are complete. By limiting
the reporting requirement to only that
information that is available, the
Commission is acknowledging that, for
historical security-based swaps, certain
information contemplated by Rules
901(c) and 901(d) may not be available.
The Commission generally believes that
the benefits of requiring security-based
swap counterparties to reconstruct the
missing data elements—including, for
example, the time of execution—
potentially several years after the time
of execution—would not justify the
costs.
222 DTCC II at 17. See also ISDA I at 5 (requesting
that the Commission clarify that market participants
are not required to provide trade execution time
information for pre-enactment security-based swap
transactions).
223 See Roundtable Letter at 11 (stating that ‘‘any
effort to alter the terms or documentation of existing
swaps would be resource intensive with potentially
significant negative consequences’’).
224 Deutsche Bank Letter at 2.
225 Id. at 3.

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The Commission agrees with the
commenter who argued that providing
large volumes of non-electronic
confirmations to registered SDRs is not
desirable, and that the Commission
instead should require reporting in a
‘‘common electronic format.’’ 226 As
discussed in Section IV, infra, Rules
907(a)(1) and 907(a)(2) require
registered SDRs to establish and
maintain policies and procedures that
enumerate the specific data elements
and the acceptable data formats for
transaction reporting, including of
historical security-based swaps. The
Commission expects that registered
SDRs and their participants will consult
regarding the most efficient and cost
effective ways to report the transaction
information required by Rule 901(i).
Furthermore, to the extent that
information regarding a historical
security-based swap already has been
reported to a person that will register
with the Commission as an SDR—or to
a person that itself will not seek
registration as an SDR but will transfer
the historical security-based swap
information to an affiliate that registers
as an SDR—Rule 901(i) would be
satisfied, and would not require
resubmission of that information to the
registered SDR.227
Finally, the Commission notes an
issue relating to the reporting of the
counterparty ID of historical securitybased swaps. As commenters have
discussed,228 certain foreign
jurisdictions have privacy laws or
blocking statutes that may prohibit the
disclosure of the identity of a
counterparty to a financial transaction,
such as a security-based swap
transaction. Thus, the reporting side of
a cross-border security-based swap
could face a dilemma: Comply with
Regulation SBSR and report the identity
of the counterparty and thereby violate
the foreign law, or comply with the
foreign law by withholding the identity
of the counterparty and thereby violate
Regulation SBSR. As discussed in
Section XVI(B), infra, the Commission
will consider requests for exemptions
from the requirement under Rule 901(i)
to report the identity of a counterparty
with respect to historical security-based
swaps.
226 Deutsche

Bank Letter at 2–3.
commenter, DTCC, noted that the Trade
Information Warehouse could provide an affiliate
that will seek registration as an SDR with
information related to security-based swaps that
were previously reported to the Trade Information
Warehouse. See DTCC II at 17.
228 See infra note 956.
227 One

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III. Where To Report Data
A. All Reports Must Be Submitted to a
Registered SDR
Section 13A(a)(1) of the Exchange
Act 229 provides that ‘‘[e]ach securitybased swap that is not accepted for
clearing by any clearing agency or
derivatives clearing organization shall
be reported to—(A) a registered securitybased swap data repository described in
Section 13(n); or (B) in the case in
which there is no security-based swap
data repository that would accept the
security-based swap, to the
Commission.’’ Section 13(m)(1)(G) of
the Exchange Act 230 provides that
‘‘[e]ach security-based swap (whether
cleared or uncleared) shall be reported
to a registered security-based swap data
repository.’’ Rule 901(b) implements
these statutory requirements.
Rule 901(b), as re-proposed, would
have required reporting of the securitybased swap transaction information
required under Regulation SBSR ‘‘to a
registered security-based swap data
repository or, if there is no registered
security-based swap data repository that
would accept the information, to the
Commission.’’ In addition, Rule 13n–
5(b)(1)(ii) under the Exchange Act,
adopted as part of the SDR Adopting
Release, requires an SDR that accepts
reports for any security-based swap in a
particular asset class to accept reports
for all security-based swaps in that asset
class that are reported to the SDR in
accordance with certain SDR policies
and procedures. In view of this
requirement under Rule 13n–5(b)(1)(ii)
and the statutory requirement in Section
13(m)(1)(G) that all security-based
swaps, whether cleared or uncleared,
must be reported to a registered SDR,
the Commission does not anticipate that
any security-based swaps will be
reported directly to the Commission.
Some commenters noted the potential
advantages of designating a single
registered SDR for each asset class.231
Another commenter, however, believed
that a diverse range of options for
reporting security-based swap data
would benefit the market and market
229 15

U.S.C. 78m–1(a)(1).
U.S.C. 78m(m)(1)(G).
231 See DTCC II at 14–15 (noting the potential for
fragmentation of data and overstatement of net open
interest and net exposure if security-based swaps in
the same asset class are reported to multiple
registered SDRs); ISDA/SIFMA I at note 12 (stating
that the designation of a single registered SDR per
asset would provide valuable efficiencies because
there would be no redundancy of platforms or need
for additional data aggregation, which would
reduce the risk of errors associated with
transmitting, aggregating, and analyzing data from
multiple sources).
230 15

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participants.232 These comments
concerning the development of multiple
registered SDRs are discussed in Section
XIX, infra. No commenters opposed
Rule 901(b), and the Commission is
adopting Rule 901(b) with technical
modifications to clarify the rule.233
B. Duties of Registered SDR Upon
Receiving Transaction Reports
1. Rule 901(f)—Time Stamps
Rule 901(f), as re-proposed, provided
that ‘‘[a] registered security-based swap
data repository shall time stamp, to the
second, its receipt of any information
submitted to it pursuant to paragraph
(c), (d), (e), or (i) of this section.’’ The
Commission preliminarily believed that
this requirement would help regulators
to evaluate certain trading activity.234
For example, a reporting side’s pattern
of submitting late transaction reports
could be an indicator of weaknesses in
the reporting side’s internal compliance
processes. Accordingly, the Commission
preliminarily believed that the ability to
compare the time of execution with the
time of receipt of the report by the
registered SDR could be an important
component of surveillance activity
conducted by relevant authorities.
One commenter, noting that proposed
Rule 901(f) would require timestamping to the nearest second, argued
that ‘‘[t]ime-stamping increment should
be as small as technologically
practicable, but in any event no longer
than fractions of milliseconds.’’ 235 The
commenter expressed the view that,
especially in markets with multiple SB
SEFs or where algorithmic trading
occurs, ‘‘the sequencing of trade data for
transparency and price discovery, as
well as surveillance and enforcement
purposes, will require much smaller
increments of time-stamping.’’ 236 The
Commission notes, however, that Rule
901(f) is designed to allow the
Commission to learn when a transaction
has been reported to a registered SDR,
not when the transaction was executed.
The interim phase of applying
Regulation SBSR allows transactions to
232 See

MFA I at 6.
901(b), as re-proposed, would have
required reporting of the security-based swap
transaction information required under Regulation
SBSR ‘‘to a registered security-based swap data
repository or, if there is no registered security-based
swap data repository that would accept the
information, to the Commission.’’ Final Rule 901(b)
provides: ‘‘If there is no registered security-based
swap data repository that will accept the report
required by § 242.901(a), the person required to
make such report shall instead provide the required
information to the Commission.’’
234 See Regulation SBSR Proposing Release, 75 FR
75221.
235 Better Markets I at 9.
236 Id.
233 Rule

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be reported up to 24 hours after time of
execution. The Commission believes
that no purpose would be served by
knowing the moment of reporting to the
subsecond. Instead, the Commission
believes that this comment is germane
instead to the reporting of time of
execution. Therefore, the Commission
has considered this comment in
connection with Rule 901(c)(2) rather
than with Rule 901(f).237
The Commission continues to believe
that requiring a registered SDR to
timestamp, to the second, its receipt of
any information pursuant to paragraphs
(c), (d), (e), or (i) of Rule 901 is
appropriate, and is adopting Rule 901(f)
as re-proposed. Rule 901(f) will allow
the Commission to compare the time of
execution against the time of receipt by
the registered SDR to ascertain if a
transaction report has been submitted
late.

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2. Rule 901(g)—Transaction IDs
Rule 901(g), as proposed and reproposed, would have provided that
‘‘[a] registered security-based swap data
repository shall assign a transaction ID
to each security-based swap.’’ The
transaction ID was defined in both the
proposal and re-proposal as ‘‘the unique
identification code assigned by a
registered security-based swap data
repository to a specific security-based
swap.’’ The Commission preliminarily
believed that a unique transaction ID
would allow registered SDRs, regulators,
and counterparties to more easily track
a security-based swap over its duration
and would facilitate the reporting of life
cycle events and the correction of errors
in previously reported security-based
swap information.238 The transaction ID
of the original security-based swap
would allow for the linking of the
original report to a report of a life cycle
event. Similarly, the transaction ID
would be required to be included on an
error report to identify the transaction to
which the error report pertained.
In proposing Rule 901(g), the
Commission preliminarily believed that,
because each transaction is unique, it
would not be necessary or appropriate
to look to an internationally recognized
standards setting body for assigning
such identifiers.239 Instead, proposed
Rule 901(g) would have required a
registered SDR to use its own
methodology for assigning transaction
IDs.240
237 See

supra notes 76 and 77 and accompanying

text.
238 See Regulation SBSR Proposing Release, 75 FR
75221.
239 See id.
240 See id.

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Two commenters generally supported
use of the transaction ID.241 One
commenter stated that transaction IDs
would allow for a complete audit trail,
permit the observation of concentrations
of trading and risk exposure at the
transaction level, and facilitate more
timely analysis of market events.242 The
second commenter agreed that a
transaction ID would be essential for
reporting life cycle event and secondary
trade information, as well as corrections
to reported information.243
Commenters expressed mixed views
regarding the entity that should assign
the transaction ID. One commenter
stated that a platform should assign the
transaction ID to assure that the
identifier is assigned at the earliest
point in the life of a transaction.244 A
second commenter suggested that
registered SDRs should assign
transaction IDs,245 or have the flexibility
to accept transaction IDs already
generated by the reporting side or to
assign transaction IDs when requested
to do so.246 A third commenter
expressed concern that registered SDRs
would assign transaction IDs in a nonstandard manner, which could hinder
regulators’ ability to gather transaction
data across registered SDRs to
reconstruct an audit trail.247 A fourth
commenter, a trade association,
recommended that security-based swaps
be identified by a Unique Trade
Identifier (‘‘UTI’’) created either by the
reporting side or by a platform
(including an execution venue or an
affirmation or middleware or electronic
241 See

GS1 Proposal at 42; DTCC II at 15.
GS1 Proposal at 42 (also stating that
transaction IDs would benefit internal compliance
departments and self-regulatory organizations).
243 See DTCC II at 15. Another commenter
believed that proposed Regulation SBSR would
require public dissemination of the transaction ID,
and argued that the transaction ID should not be
publicly disseminated, as it could compromise the
identity of the counterparties to the security-based
swap. The commenter suggested instead that an
SDR could create a separate identifier solely for
purposes of public dissemination. See ISDA IV at
17. Under Regulation SBSR, as adopted, the
transaction ID is not a data element of securitybased swap transaction that is required to be
publicly disseminated. Thus, registered SDRs must
identify transactions in public reports without
using the transaction ID. See infra Section XII(C)
(discussing requirement for registered SDRs to
establish and maintain policies and procedures for
disseminating life cycle events).
244 See Tradeweb Letter at 5.
245 DTCC II at 16 (arguing that this approach
would ‘‘eliminate any unintentional disclosure
issues which stem from linking a trade to a specific
SEF, potentially increasing the instances of
unintended identification of the trade parties’’).
246 See DTCC V at 14.
247 See GS1 Proposal at 42–43 (recommending an
identification system that would allow
counterparties, participants, SB SEFs, and
registered SDRs to assign transaction IDs to specific
transactions).
242 See

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14593

confirmation platform) on behalf of the
parties.248 This commenter noted that it
has worked with market participants to
develop a standard for creating and
exchanging a single unique transaction
identifier suitable for global
reporting.249
After careful consideration, the
Commission has determined to adopt
Rule 901(g) with modifications to
respond to concerns raised by the
commenters. Final Rule 901(g) provides
that a registered SDR ‘‘shall assign a
transaction ID to each security-based
swap, or establish or endorse a
methodology for transaction IDs to be
assigned by third parties.’’ The
Commission is also making a
conforming change to the definition of
‘‘transaction ID.’’ Final Rule 900(mm)
defines ‘‘transaction ID’’ as ‘‘the UIC
assigned to a specific security-based
swap transaction.’’ As re-proposed,
‘‘transaction ID’’ would have been
defined as ‘‘the unique identification
code assigned by a registered securitybased swap data repository to a specific
security-based swap.’’ 250 By eliminating
the reference to a UIC ‘‘assigned by a
registered security-based swap data
repository,’’ the revised definition
contemplates that a third party could
assign a transaction ID under Regulation
SBSR. However, because the
Commission believes that the registered
SDR is in the best position to promote
the necessary uniformity for UICs that
will be reported to it, the reporting side
would be permitted to report a
transaction ID generated by a third party
only if the third party had employed a
methodology for generating transaction
IDs that had been established or
endorsed by the registered SDR.
Rule 901(g), as adopted, provides
flexibility by requiring a registered SDR
either to assign a transaction ID itself or
to establish or endorse a methodology
for assigning transaction IDs. Thus,
under adopted Rule 901(g), an SB SEF,
248 See

ISDA III at 2.
id. In a subsequent comment letter, this
commenter indicated that it ‘‘strongly believe[s] the
party reporting the SBS should assign or provide
the Transaction ID’’ rather than a registered SDR.
ISDA IV at 11 (stating that ‘‘many SBS already have
been reported to other global jurisdictions for which
a . . . UTI (including a CFTC Unique Swap
Identifier) has already been assigned by one of the
parties or a central execution, affirmation or
confirmation platform in accordance with industry
standard practices for trade identifiers that have
developed in the absence of a global regulatory
standard. For the sake of efficiency and in
consideration of global data aggregation, we
recommend that the Commission allow a reporting
party to use the UTI already established for a SBS
for further reporting under SBSR and acknowledge
that trades subject to reporting under SBSR may be
assigned a trade identifier in accordance with
existing industry UTI practices’’).
250 See re-proposed Rule 900(jj).
249 See

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a counterparty, or another entity could
assign a transaction ID, provided that it
assigned the transaction ID using a
methodology established or endorsed by
the registered SDR. This approach will
allow market participants to determine
the most efficient and effective
procedures for assigning transaction IDs
and will accommodate the use of
different processes that might be
appropriate in different
circumstances.251 For example, an SB
SEF might generate the transaction ID
for a security-based swap executed on
its facilities (provided the SB SEF does
so using a methodology established or
endorsed by the registered SDR 252),
while a registered SDR or security-based
swap dealer counterparty might
generate the transaction ID for a
security-based swap that is not executed
on an SB SEF.
IV. How To Report Data—Rules 901(h)
and 907

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A. Introduction
Designing a comprehensive system of
transaction reporting and post-trade
transparency for security-based swaps
involves a constantly evolving market,
thousands of participants, and
potentially millions of transactions. The
Commission does not believe that it is
necessary or appropriate to specify by
rule every detail of how this system
should operate. On some matters, there
may not be a single correct approach for
carrying out the purposes of Title VII’s
requirements for regulatory reporting
and public dissemination of securitybased swap transactions.
The Commission believes that
registered SDRs will play an important
role in developing, operating, and
improving the system for regulatory
reporting and public dissemination of
security-based swaps. Registered SDRs
251 This approach will allow a platform to assign
the transaction ID in certain cases, as recommended
by a commenter. See Tradeweb Letter at 5.
252 Thus, the Commission only partially agrees
with the commenter who believed that the
registered SDR should assign transaction IDs, in
order to ‘‘eliminate any unintentional disclosure
issues which stem from linking a trade to a specific
SEF, potentially increasing the instances of
unintended identification of the trade parties.’’
DTCC II at 16. The Commission shares the
commenter’s concern that the transaction ID not
result in the unintended identification of the
counterparties. However, this would not require
that the registered SDR itself issue the transaction
ID in all cases; the registered SDR could allow
submission of transaction IDs generated by third
parties (such as SB SEFs or counterparties),
provided that the registered SDR endorsed the
methodology whereby third parties can generate
transaction IDs. Furthermore, the Commission notes
that the transaction ID is not a data element
required by Rule 901(c) and thus it should not be
publicly disseminated—so market observers should
not be able to learn the transaction ID in any case.

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are at the center of the market
infrastructure, as the Dodd-Frank Act
requires all security-based swaps,
whether cleared or uncleared, to be
reported to them.253 Accordingly, the
Commission believes that some
reasonable flexibility should be given to
registered SDRs to carry out their
functions—for example, to specify the
formats in which counterparties must
report transaction data to them,
connectivity requirements, and other
protocols for submitting information.
Furthermore, the Commission
anticipates that counterparties will
make suggestions to registered SDRs for
altering and improving their practices,
or developing new policies and
procedures to address new products or
circumstances, consistent with the
requirements set out in Regulation
SBSR.
Accordingly, proposed Rule 907
would have required each registered
SDR to establish and maintain written
policies and procedures addressing
various aspects of security-based swap
transaction reporting. Proposed Rules
907(a)(1) and 907(a)(2) would have
required a registered SDR to establish
policies and procedures enumerating
the specific data elements that must be
reported, the acceptable data formats,
connectivity requirements, and other
protocols for submitting information;
proposed Rule 907(a)(3) would have
required a registered SDR to establish
policies and procedures for reporting
errors and correcting previously
submitted information; proposed Rule
907(a)(4) would have required a
registered SDR to establish policies and
procedures for, among other things,
reporting and publicly disseminating
life cycle events and transactions that
do not reflect the market; proposed Rule
907(a)(5) would have required a
registered SDR to establish policies and
procedures for assigning UICs; proposed
Rule 907(a)(6) would have required a
registered SDR to establish policies and
procedures for obtaining ultimate parent
and affiliate information from its
participants; and proposed Rule 907(b)
would have required a registered SDR to
establish policies and procedures for
calculating and publicizing block trade
thresholds. The Commission also
proposed to require registered SDRs to
make their policies and procedures
publicly available on their Web sites,
and to update them at least annually.254
Rule 901(h), as proposed and reproposed, would have required reports
to be made to a registered SDR ‘‘in a
format required by the registered
253 See
254 See

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security-based swap data repository,
and in accordance with any applicable
policies and procedures of the registered
security-based swap data repository.’’
Furthermore, because all securitybased swaps must be reported to a
registered SDR, registered SDRs are
uniquely positioned to know of any
instances of untimely, inaccurate, or
incomplete reporting. Therefore,
proposed Rule 907(e) would have
required registered SDRs to have the
capacity to provide the Commission
with reports related to the timeliness,
accuracy, and completeness of the data
reported to them.
The Commission re-proposed Rule
907 as part of the Cross-Border
Proposing Release with only minor
conforming changes.255 Rule 901(h) was
re-proposed without revision.
B. Rules 907(a)(1), 907(a)(2), and
901(h)—Data Elements and Formats
The comments addressing Rule 907
were generally supportive of providing
flexibility to registered SDRs to develop
policies and procedures.256 One
commenter stated, for example, that
overly prescriptive rules for how data is
reported will almost certainly result in
less reliable or redundant data flowing
into an SDR when higher quality data is
available. In this commenter’s view, the
Commission should not prescribe the
exact means of reporting for SDRs to
meet regulatory obligations, and SDRs
should be afforded the flexibility to
devise the most efficient, effective, and
reliable methods of furnishing the
Commission with the complete set of
data necessary to fulfill regulatory
obligations.257 The Commission is
adopting Rule 907 with some revisions
noted below.
Final Rule 907(a)(1) requires a
registered SDR to establish and maintain
written policies and procedures that
‘‘enumerate the specific data elements
of a security-based swap that must be
reported, which shall include, at a
minimum, the data elements specified
in [Rules 901(c) and 901(d)].’’ The
Commission revised Rule 907(a)(1) to
make certain non-substantive changes
and to move the requirement to
establish policies and procedures for life
cycle event reporting from final Rule
907(a)(1) to final Rule 907(a)(3).258 Final
255 As initially proposed, Rule 907 used the term
‘‘reporting party.’’ As described in the Cross-Border
Proposing Release, the term ‘‘reporting party’’ was
replaced with ‘‘reporting side’’ in Rule 907 and
throughout Regulation SBSR.
256 See DTCC IV at 5. See also Barnard I at 3.
257 See DTCC IV at 5.
258 As initially proposed, Rule 907(a)(1) would
have required policies and procedures that
enumerate the specific data elements of a security-

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Rule 907(a)(2) requires a registered SDR
to establish and maintain written
policies and procedures that ‘‘specify
one or more acceptable data formats
(each of which must be an open-source
structured data format that is widely
used by participants), connectivity
requirements, and other protocols for
submitting information.’’ The
Commission is adopting Rule 907(a)(2)
as re-proposed.
The Commission continues to believe
that it is neither necessary nor
appropriate to mandate a fixed schedule
of data elements to be reported, or a
single format or language for reporting
such elements to a registered SDR. The
Commission anticipates that industry
standards for conveying information
about security-based swap transactions
will evolve over time, and the approach
taken in Rule 907 is designed to allow
Regulation SBSR’s reporting
requirements to evolve with them. The
Commission further anticipates that
security-based swap products with
novel contract terms could be developed
in the future. Establishing, by
Commission rule, a fixed schedule of
data elements risks becoming obsolete,
as new data elements—as yet
unspecified—could become necessary to
reflect the material economic terms of
such products. Final Rules 907(a)(1) and
907(a)(2) give registered SDRs the duty,
but also the flexibility, to add, remove,
or amend specific data elements or to
adjust the required reporting protocols
over time in a way that captures all of
the material terms of a security-based
swap while minimizing the reporting
burden on its participants.259 One
commenter supported this approach,
stating that ‘‘[a] registered SDR should
have the flexibility to specify acceptable
formats, connectivity requirements and
other protocols for submitting
information.’’ 260 The commenter added
that ‘‘[m]arket practice, including the
based swap or life cycle event that a reporting party
must report. In addition, proposed Rule 907(a)(4)
would have required a registered SDR to establish
policies and procedures for reporting and publicly
disseminating life cycle events, among other things.
The Commission is consolidating the requirements
to establish policies and procedures for reporting
life cycle events in final Rule 907(a)(3). See infra
Section XII(C). The Commission also revised Rule
907(a)(1) so that the final rule text refers to the data
elements ‘‘that must be reported,’’ rather than the
data elements that a reporting side must report.
259 While an SDR would have flexibility regarding
the data elements and the protocols for reporting to
the SDR, pursuant to Rule 13n–4(a)(5), which is
being adopted in the SDR Adopting Release, the
data provided by an SDR to the Commission must
‘‘be in a form and manner acceptable to the
Commission. . . .’’ The Commission anticipates
that it will specify the form and manner that will
be acceptable to it for the purposes of direct
electronic access.
260 See DTCC II at 20.

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structure of confirmation messages and
detail of economic fields, evolve over
time, and the SDR should have the
capability to adopt and set new
formats.’’ 261 The Commission
anticipates that feedback and ongoing
input from participants will help
registered SDRs to craft appropriate
policies and procedures regarding data
elements and reporting protocols.
The same commenter, in a subsequent
comment letter, expressed concern that
market participants could adopt
different interpretations of the
requirement to report payment stream
information, which could result in
inconsistent reporting to registered
SDRs.262 The Commission notes that
final Rule 907(a)(1) requires a registered
SDR to enumerate the specific data
elements of a security-based swap that
must be reported, and final 907(a)(2)
requires a registered SDR, among other
things, to specify acceptable data
formats for submitting required
information. Because Rules 907(a)(1)
and 907(a)(2) provide a registered SDR
with the authority to identify the
specific data elements that must be
reported with respect to the payment
streams of a security-based swap and
the format for reporting that
information, the Commission does not
believe that market participants will
have flexibility to adopt inconsistent
interpretations of the information
required to be reported with respect to
payment streams. Instead, persons with
the duty to report transactions will be
required to provide the payment stream
information using the specific data
elements and formats specified by the
registered SDR.
One commenter argued that a uniform
electronic reporting format is essential,
and was concerned that Rules 901(h)
and 907(a)(2) would permit multiple
formats and connectivity requirements
for the submission of data to a registered
SDR.263 The Commission considered the
alternative of requiring a single
reporting language or protocol for
conveying information to registered
SDRs, and three commenters
encouraged the use of the FpML
standard.264 While FpML could be a
standard deemed acceptable by a
registered SDR pursuant to Rule
907(a)(2), the Commission does not
believe that it is necessary or
appropriate at this time for the
Commission itself to require FpML as
the only permissible standard by which
261 Id.
262 See

DTCC V at 11.
Better Markets I at 4.
264 See DTCC II at 16; ISDA I at 4; ISDA/SIFMA
I at 8.
263 See

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14595

reporting sides report transaction data to
a registered SDR.265 The Commission is
concerned that adopting a regulatory
requirement for a single standard for
reporting security-based swap
transaction information to registered
SDRs could result in unforeseen adverse
consequences, particularly if that
standard proves incapable of being used
to carry information about all of the
material data elements of all securitybased swaps, both those that exist now
and those that might be created in the
future. Thus, the Commission has
adopted an approach that permits
registered SDRs to select their own
standards for how participants must
report data to those SDRs. The
Commission agrees with the commenter
who recommended that all acceptable
data formats should be open-source
structured data formats.266 The
Commission believes that any reporting
languages or protocols adopted by
registered SDRs must be open-source
structured data formats that are widely
used by participants, and that
information about how to use any such
language or protocol is freely and
openly available.267
The Commission believes that,
however registered SDRs permit their
participants to report security-based
swap transaction data to the SDRs, those
SDRs should be able to provide to the
Commission normalized and uniform
data, so that the transaction data can
readily be used for regulatory purposes
without the Commission itself having to
cleanse or normalize the data.268
265 But

see infra note 268.
Barnard Letter at 3.
267 One commenter argued that the Commission
should not require registered SDRs to support all
connectivity methods, as the costs to do so would
be prohibitive. See DTCC II at 20. Under Rule
907(a)(2), as adopted, a registered SDR need not
support all connectivity methods or data formats. A
registered SDR may elect to support only one data
format, provided that it is ‘‘an open-source
structured data format that is widely used by
participants.’’
268 See SDR Adopting Release, Section
VI(D)(2)(c)(ii) (‘‘data provided by an SDR to the
Commission must be in a form and manner
acceptable to the Commission . . . [T]he form and
manner with which an SDR provides the data to the
Commission should not only permit the
Commission to accurately analyze the data
maintained by a single SDR, but also allow the
Commission to aggregate and analyze data received
from multiple SDRs. The Commission continues to
consider whether it should require the data to be
provided to the Commission in a particular format.
The Commission anticipates that it will propose for
public comment detailed specifications of
acceptable formats and taxonomies that would
facilitate an accurate interpretation, aggregation,
and analysis of [security-based swap] data by the
Commission. The Commission intends to maximize
the use of any applicable current industry standards
for the description of [security-based swap] data,
build upon such standards to accommodate any
266 See

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However, it does not follow that
information must be submitted to a
registered SDR using a single electronic
reporting format. The Commission
believes that a registered SDR should be
permitted to make multiple reporting
formats available to its participants if it
chooses, provided that the registered
SDR can quickly and easily normalize
and aggregate the reported data in
making it accessible to the Commission
and other relevant authorities. If a
registered SDR is not willing or able to
normalize data submitted pursuant to
multiple data formats, then its policies
and procedures under Rule 907(a)(2)
should prescribe a single data format for
participants to use to submit data to the
registered SDR.
The Commission believes that the
policies and procedures of a registered
SDR, required by Rule 907(a)(1), likely
will need to explain the method for
reporting if all the security-based swap
transaction data required by Rules
901(c) and 901(d) are being reported
simultaneously, and how to report if
responsive data are being provided at
separate times.269 One way to
accomplish this would be for the
registered SDR to link the two reports by
the transaction ID, which could be done
by providing the reporting side with the
transaction ID after the reporting side
reports the information required by Rule
901(c). The reporting side would then
include the transaction ID with its
submission of data required by Rule
901(d), thereby allowing the registered
SDR to match the report of the Rule
additional data fields as may be required, and
develop such formats and taxonomies in a
timeframe consistent with the implementation of
[security-based swap] data reporting by SDRs. The
Commission recognizes that as the [security-based
swap] market develops, new or different data fields
may be needed to accurately represent new types
of [security-based swaps], in which case the
Commission may provide updated specifications of
formats and taxonomies to reflect these new
developments. Until such time as the Commission
adopts specific formats and taxonomies, SDRs may
provide direct electronic access to the Commission
to data in the form in which the SDRs maintain
such data’’).
269 Regulation SBSR, as proposed and reproposed, contemplated two ‘‘waves’’ of reporting:
The Rule 901(c) information would have been
required to be reported in real time, while the Rule
901(d) information could have been provided later
(depending on the type of transaction, perhaps as
much as one day after time of execution). However,
because Regulation SBSR, as adopted, requires both
sets of information to be reported within 24 hours
of execution, the Commission anticipates that many
reporting sides will choose to report both sets of
information in only a single transaction report.
Under Rule 901, as adopted, a reporting side is not
prohibited from reporting the Rule 901(c)
information before the Rule 901(d) information,
provided that the policies and procedures of the
registered SDR permit this outcome, and both sets
of information are reported within the timeframes
specified in Rule 901(j).

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901(c) data and the subsequent report of
the Rule 901(d) data.
Finally, Rule 901(h), as re-proposed,
would have provided: ‘‘A reporting side
shall electronically transmit the
information required under this section
in a format required by the registered
security-based swap data repository,
and in accordance with any applicable
policies and procedures of the registered
security-based swap data repository.’’
The Commission received only one
comment on Rule 901(h), which is
addressed above.270 The Commission is
adopting Rule 901(h) as re-proposed,
with two minor revisions to clarify the
rule. First, the rule text has been revised
to refer to ‘‘A’’ reporting side instead of
‘‘The’’ reporting side. Accordingly, the
Commission has revised Rule 901(h) to
refer to the registered SDR to which a
reporting side reports transactions.
Second, Rule 901(h), as adopted, does
not include the phrase ‘‘and in
accordance with any applicable policies
and procedures of the registered
security-based swap data repository.’’
The Commission believes that it is
sufficient for the rule to state that the
reporting side must report the
transaction information ‘‘in a format
required by’’ the registered SDR.271
C. Rule 907(a)(6)—Ultimate Parent IDs
and Counterparty IDs
As originally proposed, Rule 907(a)(6)
would have required a registered SDR to
establish and maintain written policies
and procedures ‘‘[f]or periodically
obtaining from each participant
information that identifies the
participant’s ultimate parent(s) and any
other participant(s) with which the
counterparty is affiliated, using ultimate
parent IDs and participant IDs’’
(emphasis added). The Commission reproposed Rule 907(a)(6) with the word
‘‘participant’’ in place of the word
‘‘counterparty.’’ Re-proposed Rule
907(a)(6) would have required a
registered SDR to establish and maintain
written policies and procedures for
periodically obtaining from each
participant information that identifies
the participant’s ultimate parent(s) and
any other participant(s) with which the
counterparty is affiliated, using ultimate
parent IDs and participant IDs. The
Commission received one comment
relating to Rule 907(a)(6), which
suggested that parent and affiliate
270 See

supra note 263 and accompanying text.
noted above, the Commission anticipates
that it will propose for public comment detailed
specifications of acceptable formats and taxonomies
that would facilitate an accurate interpretation,
aggregation, and analysis by the Commission of
security-based swap data submitted to it by an SDR.
See supra note 268.
271 As

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information could be maintained by a
market utility rather than by one or
more registered SDRs.272
The Commission notes that
Regulation SBSR neither requires nor
prohibits the development of a market
utility for parent and affiliate
information. Regulation SBSR requires a
registered SDR to obtain parent and
affiliate information from its
participants and to maintain it, whether
or not a market utility exists. Regulation
SBSR does not prohibit SDR
participants from storing parent and
affiliate information in a market utility
or from having the market utility report
such information to a registered SDR as
agent on their behalf, so long as the
information is provided to the registered
SDR in a manner consistent with
Regulation SBSR and the registered
SDR’s policies and procedures.
The Commission is adopting Rule
907(a)(6) substantially as re-proposed,
with a technical change to replace the
word ‘‘counterparty’’ with the word
‘‘participant’’ and a conforming change
to replace the reference to ‘‘participant
IDs’’ with a reference to ‘‘counterparty
IDs.’’ Thus, final Rule 907(a)(6) requires
a registered SDR to establish and
maintain written policies and
procedures ‘‘[f]or periodically obtaining
from each participant information that
identifies the participant’s ultimate
parent(s) and any participant(s) with
which the participant is affiliated, using
ultimate parent IDs and counterparty
IDs’’ (emphasis added).
V. Who Reports—Rule 901(a)
A. Proposed and Re-Proposed Rule
901(a)
Section 13(m)(1)(F) of the Exchange
Act 273 provides that parties to a
security-based swap (including agents of
parties to a security-based swap) shall
be responsible for reporting securitybased swap transaction information to
the appropriate registered entity in a
timely manner as may be prescribed by
the Commission. Section 13(m)(1)(G) of
the Exchange Act 274 provides that each
security-based swap, ‘‘whether cleared
or uncleared,’’ shall be reported to a
registered SDR. Section 13A(a)(3) of the
Exchange Act 275 specifies the party
obligated to report a security-based
swap that is not accepted for clearing by
any clearing agency or derivatives
clearing organization. Rule 901(a), as
adopted, assigns to specific persons the
duty to report certain security-based
swaps to a registered SDR, thereby
272 See

GS1 Proposal at 44.
U.S.C. 78m(m)(1)(F).
274 15 U.S.C. 78m(m)(1)(G).
275 15 U.S.C. 78mA(a)(3).
273 15

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
implementing Sections 13(m)(1)(F),
13(m)(1)(G), and 13A(a)(3) of the
Exchange Act. In addition, in the
Regulation SBSR Proposed
Amendments Release, the Commission
is proposing revisions to Rule 901(a), as
adopted, to further implement these
provisions of the Exchange Act as they
apply to clearing transactions (as
defined below) and transactions
executed on platforms and that will be
submitted to clearing.
As originally proposed, Rule 901(a)
would have assigned reporting duties
exclusively to one of the direct
counterparties to a security-based swap
based on the nationality of the
counterparties. The original proposal
contemplated three scenarios: Both
direct counterparties are U.S. persons,
only one direct counterparty is a U.S.
person, or neither direct counterparty is
a U.S. person.276 Under the original
proposal, if only one counterparty to a
security-based swap is a U.S. person,
the U.S. person would have been the
reporting party. If neither counterparty
is a U.S. person (and assuming the
security-based swap is subject to
Regulation SBSR), the counterparties
would have been required to select the
reporting party. Where both
counterparties to a security-based swap
are U.S. persons, the reporting party
would have been determined according
to the following hierarchy:
(i) If only one counterparty is a
security-based swap dealer or major
security-based swap participant, the
security-based swap dealer or major
security-based swap participant would
be the reporting party.
(ii) If one counterparty is a securitybased swap dealer and the other
counterparty is a major security-based
swap participant, the security-based
swap dealer would be the reporting
party.
(iii) With respect to any other
security-based swap, the counterparties
to the security-based swap would be
required to select the reporting party.
Under Rule 901(a) as originally
proposed, for a security-based swap
between: (1) A non-registered U.S.
person; and (2) a security-based swap
dealer or major security-based swap
participant that is a non-U.S. person, the
non-registered U.S. person would have
been the reporting party. The
Commission preliminarily believed that,
as between a U.S. person and a non-U.S.
person, it was more appropriate to
assign the duty to report to the U.S.
person, even if the non-U.S. person was
276 See proposed Rules 901(a)(1)–(3); Regulation
SBSR Proposing Release, 75 FR 75211.

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a security-based swap dealer or major
security-based swap participant.277
In the Cross-Border Proposing
Release, the Commission revised
proposed Rule 901(a) in two significant
ways. First, the Commission proposed
to expand the scope of Regulation SBSR
to require reporting (and, in certain
cases, public dissemination) of any
security-based swap that has a U.S.
person acting as guarantor of one of the
direct counterparties, even if neither
direct counterparty is a U.S. person. To
effectuate this requirement, the CrossBorder Proposing Release added the
following new defined terms: ‘‘direct
counterparty,’’ ‘‘indirect counterparty,’’
‘‘side,’’ and ‘‘reporting side.’’ A ‘‘side’’
was defined to mean a direct
counterparty of a security-based swap
and any indirect counterparty that
guarantees the direct counterparty’s
performance of any obligation under the
security-based swap.278 The
Commission revised proposed Rule
901(a) to assign the duty to report to a
‘‘reporting side,’’ rather than a specific
counterparty. Re-proposed Rule 901(a)
generally preserved the reporting
hierarchy of Rule 901(a), as originally
proposed, while incorporating the
‘‘side’’ concept to reflect the possibility
that a security-based swap might have
an indirect counterparty that is better
suited for carrying out the reporting
duty than a direct counterparty. Thus,
Rule 901(a), as re-proposed in the CrossBorder Proposing Release, would have
assigned the reporting obligation based
on the status of each person on a side
(i.e., whether any person on the side is
a security-based swap dealer or major
security-based swap participant), rather
than the status of only the direct
counterparties. Second, the Commission
proposed to expand the circumstances
in which a security-based swap dealer
277 See Regulation SBSR Proposing Release, 75 FR
75211.
278 See re-proposed Rule 900(ee); Cross-Border
Proposing Release, 78 FR 31211. The Commission
is adopting this term in Rule 900(hh) with a minor
modification to more clearly incorporate the
definition of ‘‘indirect counterparty.’’ Final 900(hh)
defines ‘‘side’’ to mean ‘‘a direct counterparty and
any guarantor of that direct counterparty’s
performance who meets the definition of indirect
counterparty in connection with the security-based
swap.’’ Final Rule 900(p) defines ‘‘indirect
counterparty’’ to mean ‘‘a guarantor of a direct
counterparty’s performance of any obligation under
a security-based swap such that the direct
counterparty on the other side can exercise rights
of recourse against the indirect counterparty in
connection with the security-based swap; for these
purposes a direct counterparty has rights of
recourse against a guarantor on the other side if the
direct counterparty has a conditional or
unconditional legally enforceable right, in whole or
in part, to receive payments from, or otherwise
collect from, the guarantor in connection with the
security-based swap.’’

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14597

or major security-based swap
participant that is not a U.S. person
would incur the duty to report a
security-based swap.
Under Rule 901(a), as originally
proposed, a non-U.S. person that is a
direct counterparty to a security-based
swap that was not executed in the
United States or through any means of
interstate commerce never would have
had a duty to report the security-based
swap, even if the non-U.S. person was
a security-based swap dealer or major
security-based swap participant or was
guaranteed by a U.S. person. As reproposed in the Cross-Border Proposing
Release, Rule 901(a) re-focused the
reporting duty primarily on the status of
the counterparties, rather than on their
nationality or place of domicile. Under
re-proposed Rule 901(a), the nationality
of the counterparties would determine
who must report only if neither side
included a security-based swap dealer
or major security-based swap
participant. In such case, if one side
included a U.S. person while the other
side did not, the side with the U.S.
person would have been the reporting
side. Similar to the original proposal,
however, if both sides included a U.S.
person or neither side included a U.S.
person, the sides would have been
required to select the reporting side.
B. Final Rule 901(a)
Rule 901(a), as adopted, establishes a
‘‘reporting hierarchy’’ that specifies the
side that has the duty to report a
security-based swap.279 The reporting
side, as determined by the reporting
hierarchy, is required to submit the
information required by Regulation
SBSR to a registered SDR.280 The
reporting side may select the registered
SDR to which it makes the required
279 However, Rule 901(a) does not address who
has the reporting duty for the following types of
security-based swaps: (1) A clearing transaction; (2)
a security-based swap that is executed on a platform
and that will be submitted to clearing; (3) a
security-based swap where neither side includes a
registered security-based swap dealer, a registered
major security-based swap participant, or a U.S.
person; and (4) a security-based swap where one
side consists of a non-registered U.S. person and the
other side consists of a non-registered non-U.S.
person.
280 Final Rule 900(gg) defines ‘‘reporting side’’ to
mean ‘‘the side of a security-based swap identified
by § 242.901(a)(2).’’ Rule 900(cc), as re-proposed,
would have defined ‘‘reporting side’’ to mean ‘‘the
side of a security-based swap having the duty to
report information in accordance with §§ 242.900
through 911 to a registered security-based swap
data repository, or, if there is no registered securitybased swap data repository that would receive the
information, to the Commission.’’ Final Rule
900(gg) modifies the definition to define the
reporting side by reference to final Rule 901(a),
which identifies the person that will be obligated
to report a security-based swap to a registered SDR
under various circumstances.

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report. However, with respect to any
particular transaction, all information
required to be reported by Rule
901(a)(2)(ii), as adopted, must be
reported to the same registered SDR. In
the Regulation SBSR Proposed
Amendments Release, issued as a
separate release, the Commission is
proposing additional provisions of Rule
901(a) that would assign reporting
responsibilities for clearing transactions
and platform-executed security-based
swaps that will be submitted to clearing.
The Commission also anticipates
soliciting further comment on reporting
duties for a security-based swap where
neither side includes a registered
security-based swap dealer or major
security-based swap participant and
neither side includes a U.S. person or
only one side includes a U.S. person.281
1. Reporting Hierarchy

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Final Rule 901(a)(2)(ii) adopts the
reporting hierarchy largely as proposed
in the Cross-Border Proposing Release,
but limits its scope. The reporting
hierarchy in Rule 901(a), as proposed
and as re-proposed in the Cross-Border
Proposing Release, did not contain
separate provisions to address reporting
responsibilities for two kinds of
security-based swaps that are described
in the Regulation SBSR Proposed
Amendments Release: Clearing
transactions and security-based swaps
that are executed on a platform and that
will be submitted to clearing. The
Regulation SBSR Proposed
Amendments Release solicits comment
on proposed rules that address the
reporting of these types of securitybased swaps. The reporting hierarchy in
Rule 901(a)(2)(ii), as adopted, applies to
security-based swaps that are covered
transactions.282 The reporting hierarchy
is designed to locate the duty to report
with counterparties who are most likely
to have the resources and who are best
able to support the reporting function.
Specifically, final Rule 901(a)(2)(ii)
provides that, for a covered transaction,
the reporting side will be as follows:
(A) If both sides of the security-based
swap include a registered security-based
swap dealer, the sides shall select the
reporting side.
(B) If only one side of the securitybased swap includes a registered
281 The

Commission notes that Rule 901(a), as
adopted, does address how the reporting duty is
assigned when both sides include a U.S. person and
neither side includes a registered security-based
swap dealer or a registered major security-based
swap participant. In that case, the sides would be
required to select which is the reporting side. See
Rule 901(a)(2)(ii)(E)(1).
282 See supra notes 11–12 and accompanying text.

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security-based swap dealer, that side
shall be the reporting side.
(C) If both sides of the security-based
swap include a registered major
security-based swap participant, the
sides shall select the reporting side.
(D) If one side of the security-based
swap includes a registered major
security-based swap participant and the
other side includes neither a registered
security-based swap dealer nor a
registered major security-based swap
participant, the side including the
registered major security-based swap
participant shall be the reporting side.
(E) If neither side of the securitybased swap includes a registered
security-based swap dealer or registered
major security-based swap participant:
(1) If both sides include a U.S. person,
the sides shall select the reporting side.
(2) [Reserved].283
The following examples explain the
operation of final Rule 901(a)(2)(ii). For
each example, assume that the relevant
security-based swap is not executed on
a platform.
• Example 1. A non-registered U.S.
person executes a security-based swap
with a registered security-based swap
dealer that is a non-U.S. person. Neither
283 This provision, as set forth in the Cross-Border
Proposing Release, would have provided: ‘‘If
neither side of the security-based swap includes a
security-based swap dealer or major security-based
swap participant: (i) If both sides include a U.S.
person or neither side includes a U.S. person, the
sides shall select the reporting side. (ii) If only one
side includes a U.S. person, that side shall be the
reporting side.’’ The Commission anticipates
seeking further comment on how Title VII should
apply to non-U.S. persons who engage in certain
security-based swap activities in the United States,
particularly dealing activities. Accordingly, the
Commission is not deciding at this time how
Regulation SBSR will apply to (1) transactions
where there is no U.S. person, registered securitybased swap dealer, or registered major securitybased swap participant on either side; and (2)
transactions where there is no registered securitybased swap dealer or registered major securitybased swap participant on either side and there is
a U.S. person on only one side. One commenter
recommended that this proposed part of the
hierarchy be revised to refer only to cases where
both sides are U.S. persons, as the commenter did
not believe that a security-based swap for which
neither party is a security-based swap dealer, major
security-based swap participant, or a U.S. person
would be subject to reporting under Regulation
SBSR. See ISDA IV at 19. As discussed, the
Commission is not adopting this provision of
proposed Rule 901(a). The Commission anticipates
seeking further comment on how Title VII should
apply to non-U.S. persons who engage in certain
security-based swap activities in the United States,
particularly dealing activities, and is not deciding
at this time how Regulation SBSR will apply to
transactions where there is no U.S. person,
registered security-based swap dealer, or registered
major security-based swap participant on either
side. The Commission notes that, under final Rule
908(a)(1)(ii), a security-based swap is subject to
regulatory reporting and public dissemination if it
was accepted for clearing by a clearing agency
having its principal place of business in the United
States. See infra Section XV(C)(4).

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side has a guarantor. The registered
security-based swap dealer is the
reporting side.
• Example 2. Same facts as Example
1, except that the non-registered U.S.
person is guaranteed by a registered
security-based swap dealer. Because
both sides include a person that is a
registered security-based swap dealer,
the sides must select which is the
reporting side.
• Example 3. Two private funds
execute a security-based swap. Both
direct counterparties are U.S. persons,
neither is guaranteed, and neither is a
registered security-based swap dealer or
registered major security-based swap
participant. The sides must select which
is the reporting side.
In Rule 901(a)(2)(ii), as adopted, the
Commission has included the word
‘‘registered’’ before each instance of the
terms ‘‘security-based swap dealer’’ and
‘‘major security-based swap
participant.’’ A person is a securitybased swap dealer or major securitybased swap participant if that person
meets the statutory definition of that
term, regardless of whether the person
registers with the Commission.284 A
person meeting one of those statutory
definitions must register with the
Commission in that capacity. However,
persons meeting one of the statutory
definitions cannot register in the
appropriate capacity until the
Commission adopts registration rules for
these classes of market participant. The
Commission has proposed but not yet
adopted registration rules for securitybased swap dealers and major securitybased swap participants. Thus,
currently, there are no registered
security-based swap dealers even
though many market participants act in
a dealing capacity in the security-based
swap market.
Including the word ‘‘registered’’
before each instance of the terms
‘‘security-based swap dealer’’ and
‘‘major security-based swap participant’’
in final Rule 901(a)(2)(ii) means that it
will not be necessary for a person to
evaluate whether it meets the definition
of ‘‘security-based swap dealer’’ or
‘‘major security-based swap participant’’
solely in connection with identifying
which counterparty must report a
284 See Section 3(a)(71) of the Exchange Act, 15
U.S.C. 78c(a)(71) (defining ‘‘security-based swap
dealer’’); Section 3(a)(67) of the Exchange Act, 15
U.S.C. 78c(a)(67) (defining ‘‘major security-based
swap participant’’). See also 17 CFR 240.3a71–2
(describing the time at which a person will be
deemed to be a security-based swap dealer); 17 CFR
240.3a67–8 (describing the time at which a person
will be deemed to be a major security-based swap
participant).

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security-based swap under Regulation
SBSR.285
A result of the Commission’s
determination to apply duties in Rule
901(a)(2)(ii) based on registration status
rather than on meeting the statutory
definition of ‘‘security-based swap
dealer’’ or ‘‘major security-based swap
participant’’ is that, until such persons
register with the Commission as such,
all covered transactions will fall within
Rule 901(a)(2)(ii)(E). In other words,
under the adopted reporting hierarchy,
because neither side of the securitybased swap includes a registered
security-based swap dealer or registered
major security-based swap participant,
the sides shall select the reporting side.

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2. Other Security-Based Swaps
Rule 901(a), as proposed and reproposed in the Cross-Border Proposing
Release, did not differentiate between
platform-executed security-based swaps
and other types of security-based swaps
in assigning the duty to report.
Similarly, the proposed and re-proposed
rule would have assigned reporting
obligations without regard to whether a
particular security-based swap was
cleared or uncleared.286 In the
Regulation SBSR Proposing Release, the
Commission expressed a preliminary
view that cleared and uncleared
security-based swaps should be subject
to the same reporting procedures.287
The Commission preliminarily believed
that security-based swap dealers and
major security-based swap participants
generally should be responsible for
reporting security-based swap
transactions of all types, because they
are more likely than other
counterparties to have appropriate
systems in place to facilitate
reporting.288
Commenters raised a number of
concerns about the application of the
reporting hierarchy to platformexecuted security-based swaps that will
be submitted to clearing and clearing
transactions.289 The Commission has
285 As the Commission noted in the Cross-Border
Adopting Release, the assessment costs for making
such evaluations are likely to be substantial. See
Cross-Border Adopting Release, 79 FR 47330–34.
The Commission’s approach here is consistent with
the approach described in the Cross-Border
Adopting Release, where the Commission noted
that security-based swap dealers and major
security-based swap participants ‘‘will not be
subject to the requirements applicable to those
dealers and major participants until the dates
provided in the applicable final rules.’’ 79 FR
47368. See also Intermediary Definitions Adopting
Release, 77 FR 30700.
286 See 75 FR 75211.
287 See id.
288 See id.
289 See infra Section V(C) for an overview of these
comments. A detailed summary of and response to

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determined that final resolution of these
issues would benefit from further
consideration and public comment.
Accordingly, in the Regulation SBSR
Proposed Amendments Release, the
Commission is proposing amendments
to Rule 901(a) that would assign the
reporting obligation for clearing
transactions and platform-executed
security-based swaps that will be
submitted to clearing.
To differentiate between securitybased swaps that are subject to the
reporting hierarchy in Rule 901(a)(2)(ii)
and those that are not, the Commission
is defining a new term, ‘‘clearing
transaction,’’ in Rule 900(g). A ‘‘clearing
transaction’’ is ‘‘a security-based swap
that has a registered clearing agency as
a direct counterparty.’’ 290 This
definition encompasses all securitybased swaps that a registered clearing
agency enters into as part of its securitybased swap clearing business. The
definition includes, for example, any
security-based swaps that arise if a
registered clearing agency accepts a
security-based swap for clearing, as well
as any security-based swaps that arise as
part of a clearing agency’s internal
processes, such as security-based swaps
used to establish prices for cleared
products and security-based swaps that
result from netting other clearing
transactions of the same product in the
same account into an open position.291
Two models of clearing—an agency
model and a principal model—are
currently used in the swap markets. In
the agency model, which predominates
in the U.S. swap market, a swap that is
accepted for clearing—often referred to
in the industry as an ‘‘alpha’’—is
terminated and replaced with two new
swaps, known as ‘‘beta’’ and ‘‘gamma.’’
The Commission understands that,
under the agency model, one of the
these comments appears in the Regulation SBSR
Proposed Amendments Release.
290 In connection with the definition of ‘‘clearing
transaction,’’ the Commission is adopting a
definition of ‘‘registered clearing agency.’’ Final
Rule 900(ee) defines ‘‘registered clearing agency’’ to
mean ‘‘a person that is registered with the
Commission as a clearing agency pursuant to
section 17A of the Exchange Act (15 U.S.C.
78q–1) and any rules or regulations thereunder.’’ In
addition, the Commission is not adopting reproposed Rule 900(h), which would have defined
the term ‘‘derivatives clearing organization’’ to have
the same meaning as provided under the
Commodity Exchange Act. This term is not used in
Regulation SBSR, as adopted, so the Commission is
not including a definition of the term in Rule 900.
291 Under Rule 900(g), a security-based swap that
results from clearing is an independent securitybased swap and not a life cycle event of a securitybased swap that is submitted to clearing. Thus, Rule
901(e), which addresses the reporting of life cycle
events, does not address what person has the duty
to report the clearing transactions that arise when
a security-based swap is accepted for clearing.

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direct counterparties to the alpha
becomes a direct counterparty to the
beta, and the other direct counterparty
to the alpha becomes a direct
counterparty to the gamma. The clearing
agency would be a direct counterparty
to each of the beta and the gamma.292
This release uses the terms ‘‘alpha,’’
‘‘beta,’’ and ‘‘gamma’’ in the same way
that they are used in the agency model
of clearing in the U.S. swap market.293
The Commission notes that, under
Regulation SBSR, an alpha is not a
‘‘clearing transaction,’’ even though it is
submitted for clearing, because it does
not have a registered clearing agency as
a direct counterparty.294
292 If both direct counterparties to the alpha are
clearing members, the direct counterparties would
submit the transaction to the clearing agency
directly and the resulting beta would be between
the clearing agency and one clearing member, and
the gamma would be between the clearing agency
and the other clearing member. The Commission
understands, however, that, if the direct
counterparties to the alpha are a clearing member
and a non-clearing member (a ‘‘customer’’), the
customer’s side of the trade would be submitted for
clearing by a clearing member acting on behalf of
the customer. When the clearing agency accepts the
alpha for clearing, one of the resulting swaps—in
this case, assume the beta—would be between the
clearing agency and the customer, with the
customer’s clearing member acting as guarantor for
the customer’s trade. The other resulting swap—the
gamma—would be between the clearing agency and
the clearing member that was a direct counterparty
to the alpha. See, e.g., Byungkwon Lim and Aaron
J. Levy, ‘‘Contractual Framework for Cleared
Derivatives: The Master Netting Agreement
Between a Clearing Customer Bank and a Central
Counterparty,’’ 10 Pratt’s Journal of Bankruptcy
Law (October 2014) 509, 515–17 (describing the
clearing model for swaps in the United States).
293 In the principal model of clearing, which the
Commission understands is used in certain foreign
swap markets, a customer is not a direct
counterparty of the clearing agency. Under this
model, a clearing member would clear a securitybased swap for a customer by entering into a backto-back swap with the clearing agency: The clearing
member would become a direct counterparty to a
swap with the customer, and then would become
a counterparty to an offsetting swap with the
clearing agency. In this circumstance, unlike in the
agency model of clearing, the swap between the
direct counterparties might not terminate upon
acceptance for clearing.
294 This release does not address the application
of Section 5 of the Securities Act of 1933, 15 U.S.C.
77a et seq. (‘‘Securities Act’’), to security-based
swap transactions that are intended to be submitted
to clearing (e.g., alpha transactions, in the agency
model of clearing). Rule 239 under the Securities
Act, 17 CFR 230.239, provides an exemption for
certain security-based swap transactions involving
an eligible clearing agency from all provisions of
the Securities Act, other than the Section 17(a) antifraud provisions. This exemption does not apply to
security-based swap transactions not involving an
eligible clearing agency, including a transaction that
is intended to be submitted to clearing, regardless
of whether the security-based swaps subsequently
are cleared by an eligible clearing agency. See
Exemptions for Security-Based Swaps Issued By
Certain Clearing Agencies, Securities Act Release
No. 33–9308 (March 30, 2012), 77 FR 20536 (April
5, 2012).

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C. Discussion of Comments and Basis
for Final Rule
The Commission requested and
received comment on a wide range of
issues related to Rule 901(a), as
proposed and re-proposed in the CrossBorder Proposing Release. As described
in more detail below, commenters
addressed a number of topics, including
the application of Rule 901(a) to sides
rather than direct counterparties, the
role of agents in the reporting process,
the application of Rule 901(a) to cleared
security-based swaps, and the types of
entities that should be required to report
security-based swaps.

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1. Application of the Reporting
Hierarchy to Sides
The Commission received a number
of comments on the reporting hierarchy
in proposed Rule 901(a).295 As
described in the Cross-Border Proposing
Release, a number of commenters
objected to the reporting hierarchy in
Rule 901(a), as originally proposed, on
the grounds that it would unfairly
impose reporting burdens on nonregistered U.S.-person counterparties
that enter into security-based swaps
with non-U.S.-person security-based
swap dealers or major security-based
swap participants.296 In the CrossBorder Proposing Release, the
Commission re-proposed a modified
reporting hierarchy in response to the
commenters’ concerns.297
The Commission believes that a nonregistered person should not incur the
duty to report a security-based swap
when a registered security-based swap
dealer or registered major security-based
swap participant, directly or indirectly,
is on the other side of the transaction,
and is adopting the reporting hierarchy
in Rule 901(a)(2)(ii) to effect this result.
Rule 901(a), as adopted, is designed to
assign reporting duties to the person
best positioned to discharge those
duties. The Commission believes that
registered security-based swap dealers
and registered major security-based
swap participants, regardless of whether
295 See ISDA/SIFMA I at 19; DTCC II at 8; ICI I
at 5 (stating that security-based swap dealers are the
only market participants that currently have the
standardization necessary to report the required
security-based swap data); SIFMA I at 3 (arguing
that an end user should not incur higher transaction
costs or potential legal liabilities depending on the
domicile of its counterparty); Vanguard Letter at 6
(stating that non-U.S. person security-based swap
dealers and major security-based swap participants
would be more likely to have appropriate systems
in place to facilitate reporting than unregistered
counterparties).
296 See Cross-Border Proposing Release, 78 FR
31066. See also note 295, supra (describing the
relevant comments).
297 See re-proposed Rule 901(a); Cross-Border
Proposing Release, 78 FR 31066, 31212.

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they are U.S. persons, will have greater
technological capability than nonregistered persons to report securitybased swaps as required by Regulation
SBSR. Accordingly, the Commission is
adopting the reporting hierarchy in Rule
901(a)(2)(ii) largely as re-proposed to
give registered security-based swap
dealers and registered major securitybased swap participants reporting
obligations, regardless of whether they
are U.S. persons. Furthermore, the
Commission believes that it is
appropriate to assign the duty to report
to the side that includes a non-U.S.
person registered security-based swap
dealer or major security-based swap
participant, even as an indirect
counterparty, if neither the direct or
indirect counterparty on the other side
includes a registered security-based
swap dealer or a registered major
security-based swap participant. The
fact that a person is a registered
security-based swap dealer or registered
major security-based swap participant
implies that the person has substantial
contacts with the U.S. security-based
swap market and thus would
understand that it could incur
significant regulatory duties arising
from its security-based swap business,
or has voluntarily registered and chosen
to undertake the burdens associated
with such registration. The fact that a
person is a registered security-based
swap dealer or registered major securitybased swap participant also implies that
the person has devoted substantial
infrastructure and administrative
resources to its security-based swap
business, and thus would be more likely
to have the capability to carry out the
reporting function than a non-registered
counterparty.
In response to the Cross-Border
Proposing Release, one commenter
raised concerns about burdens that the
re-proposed reporting hierarchy might
place on U.S. persons.298 This
commenter noted that certain non-U.S.
persons might engage in security-based
swap dealing activities in the United
States below the de minimis threshold
for security-based swap dealer
registration. The commenter expressed
the view that an unregistered non-U.S.
person that is acting in a dealing
capacity likely would have ‘‘greater
technological capability and resources
available to fulfill the reporting
function’’ than an unregistered U.S.
person that is not acting in a dealing
capacity.299 The commenter suggested
that, when an unregistered U.S. person
enters into a security-based swap with
298 See
299 See

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an unregistered non-U.S. person that is
acting in a dealing capacity, it ‘‘would
be more efficient and fair’’ to allow the
counterparties to choose the reporting
side than to assign the reporting
obligation to the unregistered U.S.
person.300
The Commission acknowledges these
comments. The Commission did not
propose, and is not adopting, rules that
would permit counterparties to choose
to impose reporting burdens on the
unregistered non-U.S. person that is
acting in a dealing capacity in this
scenario. The Commission believes that
the issue of whether the counterparties
should be able to choose the reporting
side when an unregistered non-U.S.
person acts in a dealing capacity with
respect to a security-based swap
involving an unregistered U.S. person
would benefit from further comment.
Accordingly, Rule 901(a)(2)(ii), as
adopted, does not assign a reporting
side for security-based swaps involving
an unregistered non-U.S. person and an
unregistered U.S. person.
Other commenters focused on the
Commission’s proposal to introduce the
‘‘side’’ concept to the reporting
hierarchy. In response to the CrossBorder Proposing Release, three
comments recommended that direct
counterparties bear reporting duties,
rather than sides (i.e., that guarantors of
direct counterparties not incur reporting
responsibilities).301 One of these
commenters recommended that a nonU.S. company that provides its U.S.
affiliate with a guarantee should not be
subject to reporting responsibilities
because the non-U.S. company would
be outside the Commission’s
jurisdiction.302 Another commenter
noted that non-U.S. guarantors should
not cause a security-based swap to
become reportable.303 The Commission
generally agrees with these comments.
As discussed in more detail in Section
XV(C)(5), infra, Rule 908(a) of
Regulation SBSR makes clear that a nonU.S. person guarantor would not cause
a security-based swap to become
reportable, unless the guarantor is a
registered security-based swap dealer or
a registered major security-based swap
participant.304 Moreover, Rule 908(b)
300 See
301 See

id.
JSDA Letter at 6; ISDA III; ISDA IV at

3–4.
302 See

JSDA Letter at 6.
ISDA IV at 4 (recommending that the
Commission should not include non-U.S. person
guarantors in the definition of ‘‘indirect
counterparty’’).
304 Section XV(C)(5), infra, explains why the
Commission has determined that security-based
swaps having non-U.S. person guarantors that are
registered as security-based swap dealers or major
303 See

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provides that, notwithstanding any
other provision of Regulation SBSR, a
non-U.S. person guarantor of a securitybased swap that is reportable would not
incur any obligation under Regulation
SBSR, including a reporting obligation
under Rule 901(a)(2)(ii), unless the
guarantor is a registered security-based
swap dealer or a registered major
security-based swap participant. Thus,
for a security-based swap involving, on
one side, the guaranteed U.S. affiliate of
an unregistered non-U.S. person, only
the guaranteed U.S. affiliate could incur
reporting obligations under Regulation
SBSR.305
The Commission disagrees with the
broader point made by the commenters,
however, and continues to believe that
it is appropriate to adopt a final rule
that places the reporting duty on the
reporting side, rather than on a specific
counterparty on the reporting side. The
Commission notes that Rule 908(b)—
which is discussed in more detail in
Section XV, infra—limits the types of
counterparties that incur obligations
under Regulation SBSR to U.S. persons,
registered security-based swap dealers,
and registered major security-based
swap participants. A person that does
not fall within one of the categories
enumerated in Rule 908(b) incurs no
duties under Regulation SBSR.
Accordingly, there may be situations
where the direct counterparty on the
reporting side—rather than the indirect
counterparty, as in the commenter’s
example—would not fall within Rule
908(b) and therefore would incur no
obligation under Regulation SBSR.306
There will be cases where all
counterparties on the reporting side fall
within Rule 908(b). In these cases, Rule
901(a)(2)(ii), as adopted, provides
reasonable flexibility to the
counterparties on the reporting side to
determine the specific person who will
carry out the function of reporting the
security-based swap on behalf of the
reporting side. As stated in the CrossBorder Proposing Release, the
Commission ‘‘understands that many
reporting parties already have
established linkages to entities that may
register as registered SDRs, which could
significantly reduce the out-of-pocket
costs associated with establishing the
security-based swap participants should be
reportable under Regulation SBSR.
305 If the non-U.S. person guarantor is a registered
security-based swap dealer or major security-based
swap participant, the exclusion in Rule 908(b)
would not apply, and both the direct and indirect
counterparties would jointly incur the duty to
report.
306 Rule 908(a) describes when Regulation SBSR
applies to a security-based swap having at least one
side that includes a non-U.S. person. See infra
Section XV(C).

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reporting function.’’ 307 A reporting side
could leverage these existing linkages,
even if the entity that has established
connectivity to the registered SDR is an
indirect counterparty to the transaction.
The other commenters argued that
incorporating indirect counterparties
into current reporting practices could
take considerable effort, because these
practices, developed for use with the
CFTC’s swap data reporting regime, do
not consider the registration status of
indirect counterparties.308 The
commenter recommended that the
industry should be permitted to use
existing reporting party determination
logic because negotiating the identity of
the reporting side on a trade-by-trade
basis would not be feasible.309
Furthermore, one commenter noted that
there is no industry standard source for
information about indirect
counterparties. As a result, ‘‘despite the
requirement for participants to [provide]
this information to [a registered SDR],
there is a chance that the parties . . .
could come up with a different answer
as to which of them is associated with
an indirect counterparty.’’ 310
The Commission acknowledges these
commenters’ concerns, but continues to
believe that it is appropriate for the
reporting hierarchy to take into account
both the direct and indirect
counterparties on each side. Even
without an industry standard source for
information about indirect
counterparties, counterparties to
security-based swaps will need to know
the identity and status of any indirect
counterparties on a trade-by-trade basis
to determine whether the transaction is
subject to Regulation SBSR under final
Rule 908(a).311 By considering the status
of indirect counterparties when
assigning reporting obligations,
Regulation SBSR is designed to reduce
reporting burdens on non-registered
persons without imposing significant
new costs on other market participants,
even though market participants may
need to modify their reporting
workflows. The Commission believes
that market participants could adapt the
mechanisms they develop for purposes
of adhering to Rule 908(a) to facilitate
compliance with the reporting hierarchy
in Rule 901(a)(2)(ii). For example, the
documentation for the relevant security307 78 FR 31066 (citing Regulation SBSR
Proposing Release, 75 FR 75265).
308 See ISDA III; ISDA IV at 3–4 (noting also that
Canada’s swap data reporting regime resembles the
CFTC’s swap data reporting regime in so far as it
does not consider the status of indirect
counterparties).
309 See ISDA III.
310 Id. See also ISDA IV at 3–4.
311 See infra Section XV.

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14601

based swap could alert both direct
counterparties to the fact that one
counterparty’s obligations under the
security-based swap are guaranteed by a
registered security-based swap dealer or
registered major security-based swap
participant. The counterparties can use
that information to identify which side
would be the reporting side for purposes
of Regulation SBSR.
The Commission further believes that
incorporating indirect counterparties
into current reporting workflows is
unlikely to cause substantial disruption
to existing reporting logic because the
status of an indirect counterparty likely
will alter reporting practices in few
situations. Most transactions in the
security-based swap market today
involve at least one direct counterparty
who is likely to be a security-based
swap dealer.312 In such case, the current
industry practice of determining the
reporting side based only on the status
of direct counterparties is likely to
produce a result that is consistent with
Rule 901.313 The Commission
understands that, in the current
security-based swap market, market
participants that are likely to be nonregistered persons transact with each
other only on rare occasions. In these
circumstances, the status of an indirect
counterparty could cause one side to
become the reporting side, rather than
leaving the choice of reporting side to
the counterparties. For example, if a
registered security-based swap dealer or
registered major security-based swap
participant guarantees one side of such
a trade, the side including the nonregistered person and the guarantor
would, under Rule 901(a)(2), be the
reporting side. The Commission
believes that, if a registered securitybased swap dealer or registered major
security-based swap participant is
willing to accept the responsibility of
guaranteeing the performance of duties
312 See Cross-Border Adopting Release, 79 FR
47293 (noting that transactions between two ISDArecognized dealers represent the bulk of trading
activity in the single-name credit default swap
market).
313 Assume, for example, that a security-based
swap dealer executes a transaction with a nonregistered person, and that current industry
practices default the reporting obligation to the
security-based swap dealer. This result is consistent
with Rule 901(a)(2)(ii)(B), which states that the side
including the registered security-based swap dealer
will be the reporting side for such transactions.
Assume, however, that the non-registered direct
counterparty is guaranteed by another registered
security-based swap dealer. Because both sides
include a registered security-based swap dealer,
Rule 901(a)(2)(ii)(A) requires the sides to select the
reporting side. Agreeing to follow current industry
practices—and locating the duty on the side that
has the direct counterparty that is a registered
security-based swap dealer—would be consistent
with Rule 901(a)(2)(ii)(A).

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under a security-based swap contract, it
should also be willing to accept the
responsibility of having to report that
security-based swap to satisfy
Regulation SBSR. In any event, the
Commission believes that, if a
guarantor’s security-based swap
activities are extensive enough that it
must register as a security-based swap
dealer or major security-based swap
participant, it would have systems in
place to ensure that it complies with the
regulatory obligations attendant to such
registration, including any reporting
obligations for security-based swaps.
Finally, one commenter requested
that the Commission provide guidance
that reporting parties could follow when
the reporting hierarchy instructs them to
select the reporting side.314 The
Commission does not believe at this
time that it is necessary or appropriate
for the Commission itself to provide
such guidance, because the
determination of which counterparty is
better positioned to report these
security-based swaps is likely to depend
on the facts and circumstances of the
particular transaction and the nature of
the counterparties. Rule 901(a)(2)(ii), as
adopted, instructs the sides to select the
reporting side only when the two sides
are of equal status (i.e., when both sides
include a registered security-based swap
dealer or when neither side includes a
registered security-based swap dealer or
registered major security-based swap
participant). The Commission
understands that, under existing
industry conventions, market
participants who act in a dealing
capacity undertake the reporting
function. Thus, the Commission
believes that Rule 901(a)(2)(ii), as
adopted, is not inconsistent with these
current industry practices. Furthermore,
the Commission would not be averse to
the development and use of new or
additional industry standards that create
a default for which side would become
the reporting side in case of a ‘‘tie,’’
provided that both sides agree to use
such standards.
2. Reporting by Agents
In the Regulation SBSR Proposing
Release, the Commission noted that
Rule 901(a) would not prevent a
reporting party from entering into an
agreement with a third party to report a
security-based swap on behalf of the
reporting party.315 Several commenters
strongly supported the use of third-party
agents to report security-based swaps.316
314 See

Better Markets I at 10.
75 FR 75211.
316 See Barnard I at 2; DTCC II at 7; DTCC III at
13 (allowing third-party service providers to report
315 See

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Four commenters addressed the types
of entities that may wish to report
security-based swaps on behalf of
reporting parties. One commenter stated
that platforms, clearing agencies,
brokers, and stand-alone data reporting
vendors potentially could provide
reporting services to security-based
swap counterparties.317 Another
commenter requested that the
Commission clarify that a security-based
swap counterparty that was not the
reporting party under Rule 901(a) would
be able to agree contractually to report
a security-based swap on behalf of the
reporting party under Rule 901(a).318 A
third commenter noted that many
market participants will look to thirdparty service providers to streamline the
reporting process.319 One commenter,
however, recommended that the
Commission should consider limiting
the use of third-party reporting service
providers to SB SEFs or other reporting
market intermediaries, such as
exchanges, because allowing
unregulated third parties with
potentially limited experience could
lead to incomplete or inaccurate
security-based swap reporting.320
Although the Commission agrees that
security-based swap transaction
information must be reported in a
timely and accurate manner to fulfill the
transparency and oversight goals of Title
VII, the Commission does not believe
that it is necessary, at this time, to allow
only regulated intermediaries to perform
reporting services on behalf of a
reporting side. The Commission
believes that reporting sides have a
strong incentive to ensure that agents
who report on their behalf have the
capability and dedication to perform
this function. In this regard, the
Commission notes that any reporting
side who contracts with a third party,
including the non-reporting side, to
report a security-based swap transaction
on its behalf would retain the obligation
to ensure that the information is
provided to a registered SDR in the
manner and form required under
Regulation SBSR. Thus, a reporting side
security-based swaps would reduce the regulatory
burden on counterparties and would assure prompt
compliance with reporting obligations); ISDA/
SIFMA I at 17 (noting that portions of the OTC
derivatives market likely would rely on third-party
agents to meet their reporting obligations);
MarkitSERV I at 9; MarkitSERV II at 7–8;
MarkitSERV III at 4–5.
317 See ISDA/SIFMA I at 17 (explaining that there
likely would be competition to provide reporting
services and that market participants would be able
to contract with appropriate vendors to obtain the
most efficient allocation of reporting
responsibilities).
318 See SIFMA I at 2, note 3.
319 See MarkitSERV IV at 3.
320 See Tradeweb Letter at 4–5.

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could be held responsible if its agent
reported a security-based swap
transaction to a registered SDR late or
inaccurately.
In addition, the Commission believes
that allowing entities other than
regulated intermediaries to provide
reporting services to reporting persons
could enhance competition and foster
innovation in the market for post-trade
processing services. This could, in turn,
encourage more efficient reporting
processes to develop over time as
technology improves and the market
gains experience with security-based
swap transaction reporting.
Accordingly, Rule 901(a), as adopted,
does not limit the types of entities that
may serve as reporting agents on behalf
of reporting sides of security-based
swaps. Furthermore, nothing in Rule
901(a), as adopted, prohibits the
reporting side from using the nonreporting side to report as agent on its
behalf.321
3. Reporting Clearing Transactions
In establishing proposed reporting
obligations, Regulation SBSR, as
proposed and as re-proposed, did not
differentiate between cleared and
uncleared security-based swaps.
Accordingly, cleared and uncleared
security-based swaps would have been
treated in the same manner for purposes
of reporting transactions to a registered
SDR. Multiple commenters addressed
the reporting of cleared and uncleared
security-based swaps. Two commenters
supported the Commission’s proposal to
assign reporting obligations for cleared
security-based swaps through the
reporting hierarchy in all
circumstances.322 These commenters
noted that the Commission’s proposal
would allow security-based swap
counterparties, rather than clearing
agencies, to choose the registered SDR
that receives data about their securitybased swaps.323 Other commenters
objected to the proposal on statutory
and operational grounds.324 Two
commenters argued that Title VII’s
security-based swap reporting
provisions and Regulation SBSR should
321 See

SIFMA I at 2, note 3.
DTCC VI at 8–9; MarkitSERV III at 4–5.
See also DTCC VII passim (suggesting operational
difficulties that could arise if a person who is not
a counterparty to a security-based swap has the
duty to report); DTCC VIII (noting that ‘‘there has
been a long held view that the SEC proposed model
[for security-based swap data reporting] provides
for a better defined process flow approach that
achieves data quality, assigns proper ownership of
who should report, and provides the most cost
efficiencies for the industry as a whole’’).
323 See DTCC VI at 8–9; MarkitSERV III at 3–5.
324 See CME/ICE Letter at 2–4; ICE Letter at 2–5;
CME II at 4; ISDA IV at 5.
322 See

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not extend to clearing transactions.325 In
the alternative, they argued that, if the
Commission requires clearing
transactions to be reported to a
registered SDR, the clearing agency that
clears a security-based swap should
have the duty to report the associated
clearing transactions to a registered SDR
of its choice because, ‘‘in contrast to
uncleared [security-based swaps], the
Clearing Agency is the sole party who
holds the complete and accurate record
of transactions and positions for cleared
[security-based swaps] and in fact is the
only entity capable of providing
accurate and useful positional
information on cleared [security-based
swaps] for systemic risk monitoring
purposes.’’326
After careful consideration of the
comments, the Commission has
determined not to apply the reporting
hierarchy in Rule 901(a)(2)(ii), as
adopted, to clearing transactions.327 In
the Regulation SBSR Proposed
Amendments Release, the Commission
is proposing to revise Rule 901(a) to
assign reporting duties for clearing
transactions.328 However, the reporting
hierarchy in Rule 901(a)(2)(ii), as
adopted, applies to alpha transactions
that are not executed on a platform.329
One commenter expressed the view
that reporting the alpha ‘‘adds little or
no value to an analysis of market
exposure since it is immediately
replaced by the beta and gamma and
cannot exist unless the swap is
cleared.’’ 330 This commenter argued,
therefore, that alpha transactions should
not be reported to registered SDRs. The
Commission disagrees with this
comment, and believes instead that
having a record of all alphas at
registered SDRs will ensure that
registered SDRs receive complete
information about security-based swap
transactions that are subject to the Title
325 See

CME/ICE Letter at 2, 4; CME II at 4.
Letter at 3–4. See also ICE Letter at
2–5 (arguing that a clearing agency would be wellpositioned to issue a termination message for a
swap that has been accepted for clearing and
subsequently report the security-based swaps that
result from clearing); DTCC X (arguing for allowing
the reporting side to determine which SDR to report
to for cleared security-based swaps); ISDA IV at 5
(expressing the view that ‘‘the clearing agency is
best-positioned to report cleared [security-based
swaps] timely and accurately as an extension of the
clearing process’’).
327 As stated above, a clearing transaction is a
security-based swap that has a registered clearing
agency as a direct counterparty.
328 Rule 901(a), as adopted, reserves Rule
901(a)(2)(i) for assigning reporting obligations for
clearing transactions.
329 Reporting requirements for platform-executed
alphas are discussed in Section V(C)(4), infra, and
in the Regulation SBSR Proposed Amendments
Release.
330 ISDA IV at 6.

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VII reporting requirement. This
requirement is designed, in part, to
provide valuable information about the
types of counterparties active in the
security-based swap market.
Reconstructing this information from
records of betas and gammas would be
less efficient and potentially more prone
to error than requiring reports of the
alpha in the first instance. Furthermore,
requiring reporting of the alpha
transaction eliminates the need to
address issues that would arise if there
is a delay between the time of execution
of the alpha and the time that it is
submitted to clearing, or if the
transaction is rejected by the clearing
agency.
This commenter also stated that, if the
alpha is reported, the ‘‘key to improving
data quality is to have a single party
responsible for reporting a cleared
transaction, and thus with respect to
whether reporting for purposes of public
dissemination and/or reporting to a
[registered SDR], the clearing agency
should be responsible for the alpha once
it is accepted for clearing.’’ 331 This
commenter believed that this approach
allows the data pertaining to the
execution of the alpha to be more easily
and accurately linked to the resulting
beta and gamma.332 The Commission
also sees the importance in being able
to link information about the alpha to a
related beta and gamma. However, the
Commission does not believe that
relying solely on the clearing agency to
report transaction information is the
only or the more appropriate way to
address this concern. As discussed in
Section II(B)(3)(j), supra, the
Commission is adopting in Rule
901(d)(10) a requirement that the reports
of new security-based swaps (such as a
beta and gamma) that result from the
allocation, termination, novation, or
assignment of one or more existing
security-based swaps (such as an alpha)
must include the transaction ID of the
allocated, terminated, assigned, or
novated security-based swap(s). This
requirement is designed to allow the
Commission and other relevant
authorities to link related transactions
across different registered SDRs.
4. Reporting by a Platform
Commenters expressed mixed views
regarding reporting by platforms. Some
commenters, addressing Rule 901(a) as
originally proposed, recommended that
the Commission require a platform to
report security-based swaps executed on
331 Id.
332 Id.

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14603

or through its facilities.333 One of these
commenters stated that a platform
would be in the best position to ensure
the accurate and timely reporting of a
transaction executed on its facilities.334
Another commenter expressed the view
that having platforms report securitybased swaps would facilitate economies
in the marketplace by reducing the
number of reporting entities.335
Four commenters, however,
recommended that the Commission not
impose reporting requirements on
platforms.336 Three of these commenters
argued that certain practical
considerations militate against assigning
reporting duties to platforms.337
Specifically, these commenters believed
that a platform might not have all of the
information required to be reported
under Rules 901(c) and 901(d).338 These
commenters further noted that, even if
a platform could report the execution of
a security-based swap, it would lack
information about life cycle events.339
The third commenter stated that it could
be less efficient for a platform to report
than to have counterparties report.340
After careful consideration of the
issues raised by the commenters, the
Commission has determined not to
apply the reporting hierarchy in Rule
901(a)(2)(ii), as adopted, to platformexecuted transactions that will be
submitted to clearing. In the Regulation
SBSR Proposed Amendments Release,
the Commission is proposing to assign
reporting duties for platform-executed
security-based swaps that will be
333 See ICI I at 5; Tradeweb Letter at 3–4;
Vanguard Letter at 2, 7.
334 See Tradeweb Letter at 3. This commenter also
stated that the counterparties to a transaction
executed on a platform should be relieved of any
reporting obligations because they would not be in
a position to control or confirm the accuracy of the
information reported or to control the timing of the
platform’s reporting. See id. at 3–4.
335 See Vanguard Letter at 7.
336 See ISDA/SIFMA I at 18; ISDA IV at 7;
MarkitSERV III at 4; WMBAA II at 6.
337 See ISDA/SIFMA I at 18; ISDA IV at 7;
WMBAA II at 6.
338 See id.
339 See WMBAA II at 6 (observing that it would
take a platform at least 30 minutes to gather and
confirm the accuracy of all required information
and recommending that the reporting party should
be able to contract with a SB SEF to report a
security-based swap on its behalf); ISDA/SIFMA I
at 17–18 (noting that a platform may not know
whether a security-based swap submitted for
clearing had been accepted for clearing); ISDA IV
at 7 (noting that certain aspects of the CFTC regime
for reporting bilateral swaps executed on facility
have been challenging due to the difficulty for SEFs
to know and report certain trade data that is not
essential to the trade execution, and because of the
shared responsibility for reporting since the SEF/
DCM is responsible for the initial creation data
reporting and the SD/MSP is responsible for the
continuation data reporting).
340 See MarkitSERV III at 4.

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submitted to clearing.341 If the securitybased swap will not be submitted to
clearing, the platform would have no
reporting obligation, and the reporting
hierarchy in final Rule 901(a)(2)(ii)
would apply.342 The Commission notes
that Section 13A(a)(3) of the Exchange
Act provides that, for a security-based
swap not accepted by any clearing
agency, one of the counterparties must
report the transaction. The reporting
hierarchy of final Rule 901(a)(2)(ii)
implements that provision and clarifies
which side has the duty to report. The
Commission believes that, in the case of
security-based swaps that will not be
submitted to clearing, the counterparties
either will know each other’s identity at
the time of execution or the they will
learn this information from the platform
immediately or shortly after
execution,343 which will allow them to
determine which side will incur the
duty to report under Rule 901(a)(2)(ii),
as adopted.
5. Reporting of a Security-Based Swap
Resulting From a Life Cycle Event
Rule 901(e)(1)(i) requires the reporting
side for a security-based swap to report
a life cycle event of that security-based
swap—such as a termination, novation,
or assignment—to the registered SDR to
which it reported the original
transaction.344 Certain life cycle events
may result in the creation of a new
security-based swap. The Commission is

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341 Rule

901(a), as adopted, reserves Rule
901(a)(1) for assigning reporting obligations for
platform-executed security-based swaps that will be
submitted to clearing.
342 See ISDA IV at 7 (recommending that for a
bilateral transaction executed on a platform that is
not intended for clearing, one of the counterparties
should be responsible for reporting, per the
proposed reporting hierarchy).
343 Market participants typically are unwilling to
accept the credit risk of an unknown counterparty
and therefore generally would not execute a
security-based swap anonymously, unless the
transaction would be cleared. Based on discussions
with market participants, however, the Commission
understands that certain temporarily registered
CFTC SEFs offer ‘‘work-up’’ sessions that allow for
anonymous execution of uncleared swaps in a
limited circumstance. In a ‘‘work-up’’ session, after
a trade is executed, other SEF participants may be
given the opportunity to execute the same product
at the same price. In a typical work-up session, the
SEF would ‘‘flash’’ the execution to other SEF
participants, who could then submit long or short
interest to trade at the same price. The Commission
understands that such interest could be submitted
anonymously, and that a participant in a work-up
session must agree to accept the credit risk of any
other participant, if the work-up is conducted in a
product that is not cleared. The Commission
understands that the platform will inform each
participant that executes a trade of the identity of
its counterparty shortly after completion of the
work-up session.
344 However, a reporting side is not required to
report whether or not a security-based swap has
been accepted for clearing. See infra Section XII(A)
(discussing life cycle event reporting).

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modifying Rule 901(a) to identify the
reporting side for this new securitybased swap.345
Rule 901(e), as adopted, identifies the
reporting side for a life cycle event. Rule
901(e) does not, however, address who
will be the reporting side for a new
security-based swap that arises from a
life cycle event (such as a termination)
of an existing security-based swap.346
To identify the reporting side for the
new security-based swap, the
Commission is modifying the
introductory language of final Rule
901(a) to provide that a ‘‘security-based
swap, including a security-based swap
that results from the allocation,
termination, novation, or assignment of
another security-based swap, shall be
reported’’ as provided in the rest of the
rule.347 This change responds to a
commenter who suggested that
reporting obligations be reassessed upon
novation based on the current
registration status of the remaining party
and the new party to the security-based
swap.348 The reporting side designated
by Rule 901(a) for the new transaction
could be different from the reporting
side for the original transaction.349 The
345 Security-based swaps resulting from an
allocation are discussed in greater detail in Section
VIII(A) infra.
346 As re-proposed, paragraphs (1) and (2) of Rule
901(e) would have identified the reporting side for
a security-based swap resulting from a life cycle
event, if the reporting side for the initial securitybased swap ceased to be a counterparty to the
security-based swap resulting from the life cycle
event. The Commission believes that these
proposed provisions are unnecessary in light of the
reporting hierarchy in Rule 901(a). Therefore, as
described above, the Commission has determined
that security-based swap counterparties should use
the reporting hierarchy in Rule 901(a) to determine
the reporting side for all security-based swaps,
including security-based swaps that result from a
life cycle event to another security-based swap.
347 As proposed, this introductory language read
‘‘[t]he reporting party shall be as follows.’’ In the
Cross-Border Proposing Release, the Commission
proposed to modify this language to be ‘‘[t]he
reporting side for a security-based swap shall be as
follows.’’
348 See ISDA IV at 7.
349 Assume, for example, that a registered
security-based swap dealer and a hedge fund
execute a security-based swap. The execution does
not occur on a platform and the transaction will not
be submitted to clearing. Under Rule
901(a)(2)(ii)(B), as adopted, the registered securitybased swap dealer is the reporting side for the
transaction. Assume further that three days after
execution the registered security-based swap dealer
and the hedge fund agree that the registered
security-based swap dealer will step out of the trade
through a novation and will be replaced by a
registered major security-based swap participant.
Pursuant to Rule 901(e), as adopted, the registered
security-based swap dealer would be required to
report the novation to the same registered SDR that
received the initial report of the security-based
swap. At this point, the transaction between the
registered security-based swap dealer and the hedge
fund is complete and the registered security-based
swap dealer would have no further reporting

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reporting side for the new securitybased swap would be required to report
the transaction within 24 hours of the
time of creation of the new securitybased swap.350
Rule 901(d)(10) requires the reporting
side for the new security-based swap to
report the transaction ID of the original
security-based swap as a data element of
the transaction report for the new
security-based swap.351 The
Commission believes that this
requirement will allow the Commission
and other relevant authorities to link the
report of a new security-based swap that
arises from the allocation, termination,
novation, or assignment of an existing
security-based swap to the original
security-based swap. As a result of these
links, the Commission believes that it is
not necessary or appropriate to require
that a security-based swap that arises
from the allocation, termination,
novation, or assignment of an existing
security-based swap be reported to the
same registered SDR that received the
transaction report of the original
transaction. Thus, the reporting side for
a security-based swap that arises as a
result of the allocation, termination,
novation, or assignment of an existing
security-based swap could report the
resulting new security-based swap to a
registered SDR other than the registered
SDR that received the report of the
original security-based swap.
VI. Public Dissemination—Rule 902
A. Background
In addition to requiring regulatory
reporting of all security-based swaps,
Regulation SBSR seeks to implement
Congress’s mandate for real-time public
dissemination of all security-based
swaps. Section 13(m)(1)(B) of the
Exchange Act authorizes the
Commission ‘‘to make security-based
obligations with respect to the transaction. Under
Rule 901(a)(2)(ii)(D), as adopted, the registered
major security-based swap participant is the
reporting side for the security-based swap that
results from the novation of the transaction between
the registered security-based swap dealer and the
hedge fund. The registered major security-based
swap participant is the reporting side for the
resulting transaction.
350 If the time that is 24 hours after the time of
the creation of the new security-based swap would
fall on a day that is not a business day, the report
of the new security-based swap would be due by
the same time on the next day that is a business
day. See Rule 901(j).
351 Rule 901(d)(10) provides that if a ‘‘securitybased swap arises from the allocation, termination,
novation, or assignment of one or more existing
security-based swaps,’’ the reporting side must
report ‘‘the transaction ID of the allocated,
terminated, assigned, or novated security-based
swap(s), except in the case of a clearing transaction
that results from the netting or compression of other
clearing transactions.’’ See supra Section II(C)(3)(k)
(discussing Rule 901(d))(10)).

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swap transaction and pricing data
available to the public in such form and
at such times as the Commission
determines appropriate to enhance price
discovery.’’ 352 Section 13(m)(1)(C) of
the Exchange Act 353 authorizes the
Commission to provide by rule for the
public availability of security-based
swap transaction, volume, and pricing
data as follows:
(1) With respect to those securitybased swaps that are subject to the
mandatory clearing requirement
described in Section 3C(a)(1) of the
Exchange Act (including those securitybased swaps that are excepted from the
requirement pursuant to Section 3C(g)
of the Exchange Act),354 the
Commission shall require real-time
public reporting for such
transactions; 355
(2) With respect to those securitybased swaps that are not subject to the
mandatory clearing requirement
described in Section 3C(a)(1) of the
Exchange Act, but are cleared at a
registered clearing agency, the
Commission shall require real-time
public reporting for such transactions;
(3) With respect to security-based
swaps that are not cleared at a registered
clearing agency and which are reported
to a SDR or the Commission under
Section 3C(a)(6),356 the Commission
352 15 U.S.C. 78m(m)(1)(B). Section 13m(1)(E) of
the Exchange Act, 15 U.S.C. 78m(m)(1)(E), requires
the Commission rule for real-time public
dissemination of security-based swap transactions
to: (1) ‘‘specify the criteria for determining what
constitutes a large notional security-based swap
transaction (block trade) for particular markets and
contracts’’ and (2) ‘‘specify the appropriate time
delay for reporting large notional security-based
swap transactions (block trades) to the public.’’ The
treatment of block trades is discussed in Section
VII, infra.
353 15 U.S.C. 78m(m)(1)(C).
354 15 U.S.C. 78c–3(g).
355 Section 3C(a)(1) of the Exchange Act, 15
U.S.C. 78c–3(a)(1), provides that it shall be
unlawful for any person to engage in a securitybased swap unless that person submits such
security-based swap for clearing to a clearing
agency that is registered under the Exchange Act or
a clearing agency that is exempt from registration
under the Exchange Act if the security-based swap
is required to be cleared. Section 3C(g)(1) of the
Exchange Act, 15 U.S.C. 78c–3(g)(1), provides that
requirements of Section 3C(a)(1) will not apply to
a security-based swap if one of the counterparties
to the security-based swap (1) is not a financial
entity; (2) is using security-based swaps to hedge or
mitigate commercial risk; and (3) notifies the
Commission, in a manner set forth by the
Commission, how it generally meets its financial
obligations associated with entering into noncleared security-based swaps.
356 The reference in Section 13(m)(1)(C)(iii) of the
Exchange Act to Section 3C(a)(6) of the Exchange
Act is incorrect. Section 3C of the Exchange Act
does not contain a paragraph (a)(6). See generally
Am. Petroleum Institute v. SEC, 714 F.3d 1329,
1336–37 (DC Cir 2013) (explaining that ‘‘[t]he Dodd
Frank Act is an enormous and complex statute, and
it contains’’ a number of ‘‘scriveners’ errors’’).

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shall require real-time public reporting
for such transactions, in a manner that
does not disclose the business
transactions and market positions of any
person; and
(4) With respect to security-based
swaps that are determined to be
required to be cleared under Section
3C(b) of the Exchange Act but are not
cleared, the Commission shall require
real-time public reporting for such
transactions.357
Furthermore, Section 13(m)(1)(D) of
the Exchange Act 358 authorizes the
Commission to require registered
entities (such as registered SDRs) to
publicly disseminate the security-based
swap transaction and pricing data
required to be reported under Section
13(m) of the Exchange Act. Finally,
Section 13(n)(5)(D)(ii) of the Exchange
Act 359 requires SDRs to provide
security-based swap information ‘‘in
such form and at such frequency as the
Commission may require to comply
with public reporting requirements.’’
In view of these statutory provisions,
the Commission proposed Rule 902—
Public Dissemination of Transaction
Reports. In the Regulation SBSR
Proposing Release, the Commission
expressed its belief that the best
approach would be to require market
participants to report transaction
information to a registered SDR and
require registered SDRs to disseminate
that information to the public.360 Many
commenters expressed general support
for public dissemination of securitybased swap information.361 In addition,
357 Section 3C(b)(1) of the Exchange Act requires
the Commission to review on an ongoing basis each
security-based swap, or any group, category, type,
or class of security-based swap to make a
determination that such security-based swap, or
group, category, type, or class of security-based
swap should be required to be cleared.
358 15 U.S.C. 78m(m)(1)(D).
359 15 U.S.C. 78m(n)(5)(D)(ii).
360 See 75 FR 75227.
361 See Barnard I at 3 (recommending full posttrade transparency as soon as technologically and
practically feasible, with an exemption to permit
delayed reporting of block trades); CII Letter at 2
(‘‘the transparency resulting from the
implementation of the proposed rules would not
only lower systemic risk and strengthen regulatory
oversight, but also, importantly for investors,
enhance the price discovery function of the
derivatives market’’); DTCC II at 17–18 (noting that
the proposed rules are designed to balance the
benefits of post-trade transparency against the
potentially higher costs of transferring or hedging
a position following the dissemination of a report
of a block trade); Ethics Metrics Letter at 3 (last-sale
reporting of security-based swap transactions will
‘‘provide material information to eliminate
inefficiencies in pricing [financial holding
company] debt and equity in the U.S. capital
markets’’); FINRA Letter at 1 (stating that the
proposed trade reporting and dissemination
structure, and the information it would provide to
regulators and market participants, are vital to
maintaining market integrity and investor

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14605

as discussed more fully below, the
Commission received a large number of
comments addressing specific aspects of
public dissemination of transaction
reports.362
The current market for security-based
swaps is opaque. Dealers know about
order flow that they execute, and may
know about other dealers’ transactions
in certain instances, but information
about executed transactions is not
widespread. Market participants—
particularly non-dealers—have to rely
primarily on their understanding of the
market’s fundamentals to arrive at a
price at which they would be willing to
assume risk. The Commission believes
that, by reducing information
asymmetries between dealers and nondealers and providing more equal access
to all post-trade information in the
security-based swap market, post-trade
transparency could help reduce implicit
transaction costs and promote greater
price efficiency.363 The availability of
post-trade information also could
encourage existing market participants
to increase their activity in the market
and encourage new participants to join
the market—and, if so, increase
liquidity and competition in the
security-based swap market. In addition,
all market participants will have more
comprehensive information with which
to make trading and valuation
determinations.
Security-based swaps are complex
derivative products, and there is no
single accepted way to model a securitybased swap for pricing purposes. The
Commission believes that post-trade
pricing and volume information will
allow valuation models to be adjusted to
reflect how other market participants
have valued a security-based swap
product at a specific moment in time.
Public dissemination of last-sale
protection); Getco Letter at 3 (noting that in the
absence of accurate and timely post-trade
transparency for most security-based swap
transactions only major dealers will have pricing
information and therefore new liquidity providers
will not participate in the security-based swap
market); ICI I at 1–2 (stating that market
transparency is a key element in assuring the
integrity and quality of the security-based swap
market); Markit I at 4 (stating that security-based
swap data should be made available on a non-delay
basis to the public, media, and data vendors); MFA
I at 1 (supporting the reporting of security-based
swap transaction data to serve the goal of market
transparency); SDMA I at 4 (‘‘Post-trade
transparency is not only a stated goal of the DoddFrank Act it is also an instrumental component in
establishing market integrity. By creating real time
access to trade information for all market
participants, confidence in markets increases and
this transparency fosters greater liquidity’’);
ThinkNum Letter passim; Shatto Letter passim.
362 See infra notes 377 to 386 and accompanying
text and Section VI(D).
363 See infra Section XXII(C)(2)(a). See also infra
note 1255 (discussing implicit transaction costs).

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information also will aid dealers in
deriving better quotations, because they
will know the prices at which other
market participants have traded. Lastsale information also will aid end users
and other non-registered entities in
evaluating current quotations by
allowing them to request additional
information if a dealer’s quote differs
from the prices of the most recent
transactions. Furthermore, smaller
market participants that view last-sale
information will be able to test whether
quotations offered by dealers before the
last sale were close to the price at which
the last sale was executed. In this
manner, post-trade transparency will
promote price competition and more
efficient price discovery in the securitybased swap market.
The Commission is adopting Rule 902
with certain modifications and technical
changes discussed in more detail below.
Final Rule 902(a) sets forth the basic
duty of a registered SDR to publicly
disseminate transaction reports. Final
Rule 902(c) sets forth certain types of
security-based swaps and certain other
information about security-based swaps
that a registered SDR shall not publicly
disseminate. Final Rule 902(d), the socalled ‘‘Embargo Rule,’’ is designed to
promote fair access to information about
executed security-based swaps.364
Rule 902(b), as proposed and reproposed, would have established a
mechanism for registered SDRs to
publicly disseminate transaction reports
of block trades. As discussed in more
detail in Section VII, infra, the
Commission is not adopting thresholds
for determining what constitutes a block
trade. Accordingly, the Commission
believes that it is not necessary or
appropriate at this time to adopt rules
specifically addressing the public
dissemination of block trades.

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B. Registered SDR’s Duty To
Disseminate—Rule 902(a)
Rule 902(a), as proposed and reproposed, would have required a
registered SDR to publicly disseminate
a transaction report of any securitybased swap immediately upon receipt of
transaction information about the
security-based swap, except in the case
of a block trade.365 Further, Rule 902(a),
364 Final Rule 902(d) provides that ‘‘[n]o person
shall make available to one or more persons (other
than a counterparty or post-trade processor)
transaction information relating to a security-based
swap before the primary trade information about
the security-based swap is submitted to a registered
security-based swap data repository.’’
365 The Commission recognized, however, that
there may be circumstances when a registered
SDR’s systems might be unavailable for publicly
disseminating transaction data. In such cases,
proposed Rule 902(a) would have required a

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as initially proposed, provided that the
transaction report would consist of ‘‘all
the information reported by the
reporting party pursuant to § 242.901,
plus any indicator or indicators
contemplated by the registered securitybased swap data repository’s policies
and procedures that are required by
§ 242.907.’’ Rule 902(a) was revised and
re-proposed as part of the Cross-Border
Proposing Release to add that a
registered SDR would not have an
obligation to publicly disseminate
certain types of cross-border securitybased swaps that are required to be
reported but not publicly
disseminated.366
Commenters generally were
supportive of the Commission’s
approach of requiring registered SDRs to
be responsible for public dissemination
of security-based swap transaction
reports.367 One commenter, for example,
stated that allowing other types of
entities to have the regulatory duty to
disseminate data could lead to undue
complications for market
participants.368 In addition, the
commenter expressed the view that realtime public dissemination of securitybased swap data is a ‘‘core function’’ of
registered SDRs, and that permitting
only registered SDRs to publicly
disseminate security-based swap data
would help to assure the accuracy and
completeness of the data.369 However,
one commenter appeared to recommend
that a clearing agency should be
responsible for public dissemination of
‘‘relevant pricing data for a securitybased swap subject to clearing.’’ 370
The Commission has carefully
analyzed the comments and is adopting
registered SDR to disseminate the transaction data
immediately upon its re-opening. See Regulation
SBSR Proposing Release, 75 FR 75228. Rule 904 of
Regulation SBSR deals with hours of operation of
registered SDRs and related operational procedures.
See infra Section XI.
366 This carve-out was necessitated by reproposed Rule 908(a), which contemplated
situations where a security-based swap would be
required to be reported to a registered SDR but not
publicly disseminated. See 78 FR 31060.
367 See FINRA Letter at 5; DTCC II at 18 (stating
that SDRs should be able to disseminate data
effectively and should be the sole source of data
dissemination); DTCC IV at 4; MarkitSERV I at
7–8 (stating that only registered SDRs, or their
agents, should be permitted to disseminate securitybased swap data); Thomson Reuters Letter at 6–7
(stating that publication and dissemination of
security-based swap transaction information should
be the responsibility of registered SDRs rather than
SB SEFs).
368 See DTCC II at 18.
369 See DTCC IV at 4.
370 See ISDA IV at 6 (stating that ‘‘as regards
public dissemination of relevant pricing data for a
SBS subject to clearing, such reporting should be
done by the clearing agency when a SBS is accepted
for clearing and the clearing agency reports for the
beta and gamma’’).

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the approach of requiring public
dissemination through registered SDRs.
The Commission believes that this
approach will promote efficiency in the
security-based swap market, or at least
limit inefficiency.371 Section
13(m)(1)(G) of the Exchange Act 372
provides that ‘‘[e]ach security-based
swap (whether cleared or uncleared)
shall be reported to a registered
security-based swap data repository.’’
Thus, security-based swaps would have
to be reported to registered SDRs
regardless of the mechanism that the
Commission chooses for public
dissemination. By requiring registered
SDRs to carry out the task of public
dissemination, the Commission will not
require reporting steps beyond those
already required by the Exchange Act.
Furthermore, the Commission believes
that assigning registered SDRs the duty
to publicly disseminate will help
promote efficiency and consistency of
post-trade information. Market
observers will not have to obtain market
data from potentially several other
sources—such as SB SEFs, clearing
agencies, or the counterparties
themselves—to have a full view of
security-based swap market activity.
1. Format of Disseminated Data
In the Regulation SBSR Proposing
Release, the Commission acknowledged
that multiple uniquely formatted data
feeds could impair the ability of market
participants to receive, understand, or
compare security-based swap
transaction data and thus undermine its
value.373 Furthermore, the Commission
suggested that one way to address that
issue would be to dictate the exact
format and mode of providing required
security-based swap data to the public,
while acknowledging various problems
with that approach.374 The Commission
proposed, however, to identify in
proposed Rules 901(c) and 901(d) the
categories of information that would be
required to be reported, and to require
registered SDRs to establish and
maintain policies and procedures that,
among other things, would specify the
data elements that would be required to
be reported.375 The Commission
preliminarily believed that this
approach would promote the reporting
of uniform, material information for
each security-based swap, while
providing flexibility to account for
371 See

infra Section XXII(B)(2).
U.S.C. 78m(m)(1)(G).
373 See 75 FR 75227.
374 See id.
375 See id. at 75213.
372 15

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changes to the security-based swap
market over time.376
Two commenters generally supported
the Commission’s approach of providing
registered SDRs with the flexibility to
define the relevant data fields.377
However, one commenter stated that the
final rules should clearly identify the
data fields that will be publicly
disseminated.378 Another commenter
emphasized the importance of
presenting security-based swap
information in a format that is useful for
market participants, and expressed
concern that proposed Regulation SBSR
did ‘‘nothing to ensure that the data
amassed by individual SDRs is
aggregated and disseminated in a form
that is genuinely useful to traders and
regulators and on a nondiscriminatory
basis.’’ 379 This commenter further
believed that to provide meaningful
price discovery, data must be presented
in a format that allows market
participants to view it in near-real time,
fits onto the limited space available on
their trading screens, and allows them
to view multiple markets
simultaneously.380
The Commission has carefully
considered these comments and
continues to believe that it is not
necessary or appropriate at this time for
the Commission to dictate the format
and mode of public dissemination of
security-based swap transaction
information by registered SDRs.
Therefore, Rule 902(a), as adopted,
provides registered SDRs with the
flexibility to set the format and mode of
dissemination through its policies and
procedures, as long as the reports of
security-based swaps that it publicly
disseminates include the information
required to be reported by Rule 901(c),
plus any ‘‘condition flags’’
contemplated by the registered SDR’s
policies and procedures under Rule
907.381 The Commission notes that it
376 See

id.
Barnard I at 2 (stating that the categories
of information required to be reported under the
proposed rules should be ‘‘complete and sufficient
so that its dissemination will enhance transparency
and price discovery’’); MarkitSERV I at 10
(expressing support for the Commission’s ‘‘proposal
to provide [registered] SDRs with the authority to
define the relevant fields on the basis of general
guidelines as set out by the SEC’’).
378 See ISDA/SIFMA I at 10. See also ISDA IV at
9 and Section II(2)(a), supra, for a response.
379 Better Markets II at 2–3 (also arguing that the
Commission should require disclosure of the
component parts of a complex transaction to
prevent market participants from avoiding
transparency by creating complex composite
transactions).
380 See Better Markets I at 3; Better Markets II
at 4.
381 The Commission notes that final Rule 902(a)
references ‘‘condition flags,’’ rather than ‘‘indicator

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377 See

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anticipates proposing for public
comment detailed specifications of
acceptable formats and taxonomies that
would facilitate an accurate
interpretation, aggregation, and analysis
by the Commission of security-based
swap data submitted to it by an SDR.
The Commission intends to maximize
the use of any applicable current
industry standards for the description of
security-based swap data, and build
upon such standards to accommodate
any additional data fields as may be
required.
2. Timing of Public Dissemination
Rule 902(a), as re-proposed, would
have required a registered SDR to
publicly disseminate a transaction
report of a security-based swap
immediately upon (1) receipt of
information about the security-based
swap from a reporting side, or (2) reopening following a period when the
registered SDR was closed, unless the
security-based swap was a block trade
or a cross-border security-based swap
that was required to be reported but not
publicly disseminated. One commenter
agreed with the proposed requirement,
stating that reported security-based
swap transaction information ‘‘should
be made available on a non-delayed
basis to the public, media, and data
vendors.’’ 382
The Commission is adopting the
requirement contained in Rule 902(a), as
re-proposed, that a registered SDR must
disseminate a transaction report of a
security-based swap ‘‘immediately upon
receipt of information about the
security-based swap, or upon re-opening
following a period when the registered
security-based swap data repository was
closed.’’ 383 ‘‘Immediately,’’ as used in
this context, implies a wholly
automated process to accept the
incoming information, process the
information to assure that only
information required to be disseminated
is disseminated, and disseminate a trade
report through electronic means.
3. Dissemination of Life Cycle Events
Rule 902(a), as adopted, provides that,
in addition to transaction reports of
security-based swaps, a registered SDR
‘‘shall publicly disseminate . . . a life
cycle event or adjustment due to a life
cycle event.’’ Rule 902(a), as proposed
and re-proposed, did not specifically
refer to such information, but, as noted
in the Regulation SBSR Proposing
or indicators,’’ as was proposed, to conform with
Rule 907, as adopted.
382 Markit I at 4.
383 See infra Section XI (discussing Rule 904,
which deals with hours of operation of registered
SDRs and related operational procedures).

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14607

Release, proposed Rule 907(a)(4) would
have required a registered SDR to
‘‘establish and maintain written policies
and procedures describing how
reporting parties shall report—and,
consistent with the enhancement of
price discovery, how the registered SDR
shall publicly disseminate—reports of,
and adjustments due to, life cycle
events.’’ 384 One commenter argued that
the Commission should limit public
dissemination to new trading activity
and should exclude maintenance or life
cycle events.385 The Commission
disagrees, and believes instead that, if
information about a security-based swap
is publicly disseminated but
subsequently one or more of the
disseminated data elements is revised
due to a life cycle event (or an
adjustment due to a life cycle event), the
revised information would provide
market observers a more accurate
understanding of the market. The
Commission, therefore, is clarifying
Rule 902(a) to make clear the
requirement to disseminate life cycle
events. Final Rule 902(a) provides, in
relevant part, that a registered SDR
‘‘shall publicly disseminate a
transaction report of the security-based
swap or a life cycle event or adjustment
due to a life cycle event immediately
upon receipt.’’ 386
4. Correction of Minor Drafting Error
Rule 902(a), as initially proposed and
re-proposed, provided that the
transaction report that is publicly
disseminated ‘‘shall consist of all the
information reported pursuant to Rule
901, plus any indicator or indicators
contemplated by the registered securitybased swap data repository’s policies
and procedures that are required by
Rule 907’’ (emphasis added). However,
in the Regulation SBSR Proposing
Release, the Commission specified that
the transaction report that is
disseminated should consist of all the
information reported pursuant to Rule
384 Regulation SBSR Proposing Release, 75 FR
75237.
385 See ISDA/SIFMA I at 12. See also ISDA IV at
13 (arguing that only life cycle events that result in
a change to the price of a security-based swap
should be subject to public dissemination, and
requesting that ‘‘any activity on a [security-based
swap] that does not affect the price of the reportable
[security-based swap]’’ be excluded from public
dissemination).
386 To enhance the usefulness of a public
transaction report of a life cycle event, final Rule
907(a)(3) requires a registered SDR to have policies
and procedures for appropriately flagging public
reports of life cycle events. See infra Section XII(C).
This requirement is designed to promote
transparency by allowing market observers to
distinguish original transactions from life cycle
events.

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901(c).387 The statement from the
preamble of the Regulation SBSR
Proposing Release is correct. The
Commission did not intend for all of the
information reported pursuant to Rule
901 to be publicly disseminated;388 this
would include, for example, regulatory
data reported pursuant to Rule 901(d)
and information about historical
security-based swaps reported pursuant
to Rule 901(i). The Commission is
correcting this drafting error so that
final Rule 902(a) explicitly states that
the ‘‘transaction report shall consist of
all the information reported pursuant to
§ 242.901(c), plus any condition flags
contemplated by the registered securitybased swap data repository’s policies
and procedures that are required by
§ 242.907’’ (emphasis added).
5. Use of Agents by a Registered SDR To
Carry Out the Public Dissemination
Function
One commenter discussed the
appropriateness of third-party service
providers carrying out the public
dissemination function on behalf of
registered SDRs.389 The Commission
believes that, in the same way that
reporting sides may engage third-party
agents to report transactions on their
behalf, registered SDRs may engage
third-party providers to carry out the
public dissemination function on their
behalf. In both cases, the entity with the
legal duty would remain responsible for
compliance with Regulation SBSR if its
agent failed to carry out the function in
a manner stipulated by Regulation
SBSR. Thus, reporting sides and
registered SDRs should engage only
providers that have the capacity and
reliability to carry out those duties.

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C. Definition of ‘‘Publicly Disseminate’’
In the Regulation SBSR Proposing
Release, the Commission defined
‘‘publicly disseminate’’ in Rule 900 to
mean ‘‘to make available through the
Internet or other electronic data feed
that is widely accessible and in
machine-readable electronic format.’’
The Commission re-proposed this
definition renumbering it Rule 900(y),
in the Cross-Border Proposing Release.
The Commission received no
comment letters directly discussing the
proposed definition, although as noted
above many commenters commented on
various other aspects of public
dissemination, including the format of
disseminated data 390 and timing of
387 See

75 FR 75212–13.
comments specifically noted this lack of
clarity. See ISDA/SIFMA I at 12; ISDA IV at 14.
389 See MarkitSERV I at 7–8.
390 See supra Section VII(B)(1).
388 Two

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public dissemination.391 The
Commission is adopting the definition
of ‘‘publicly disseminate’’ as proposed
and re-proposed. The Commission
continues to believe that, to satisfy the
statutory mandate for public
dissemination, security-based swap
transaction data must be widely
accessible in a machine-readable
electronic format. These data are too
numerous and complex for direct
human consumption and thus will have
practical use only if they can be
downloaded and read by computers.
The definition of ‘‘publicly
disseminate’’ recognizes the Internet as
one, but not the only, possible
electronic medium to make these data
available to the public.
D. Exclusions From Public
Dissemination—Rule 902(c)
1. Discussion of Final Rule
Rule 902(c), as proposed and reproposed, set forth three kinds of
information that a registered SDR would
be prohibited from disseminating. First,
in Rule 902(c)(1), the Commission
proposed that a registered SDR would
be prohibited from disseminating the
identity of any counterparty to a
security-based swap. This would
implement Section 13(m)(1)(E)(i) of the
Exchange Act,392 which requires the
Commission’s rule providing for the
public dissemination of security-based
swap transaction and pricing
information to ensure that ‘‘such
information does not identify the
participants.’’ The Commission received
three comments that generally urged the
Commission to ensure the anonymity of
security-based swap counterparties,
either through non-dissemination of the
identity of any counterparty or by
limiting public dissemination of other
data elements they believed could lead
to disclosure of counterparties’
identities.393 To address the
391 See

supra Section VII(B)(2).
U.S.C. 13m(m)(1)(E)(i). This section is
applicable to security-based swaps that are subject
to Sections 13(m)(1)(C)(i) and (ii) of the Exchange
Act—i.e., security-based swaps that are subject to
the mandatory clearing requirement in Section
3C(a)(1) and security-based swaps that are not
subject to the mandatory clearing requirement in
Section 3C(a)(1) but are cleared.
393 See Deutsche Bank Letter at 6 (asking the SEC
and CFTC to impose strict requirements on an
SDR’s handling, disclosure, and use of identifying
information); DTCC II at 9 (noting that trading
volume in most single name credit derivatives is
‘‘extremely thin’’ and disclosing small data
samples, particularly from narrow time periods,
may not preserve the anonymity of the trading
parties); ISDA/SIFMA I at 12; MFA I at 2 (arguing
that participant IDs should not be included in any
publicly disseminated transaction report to protect
identities and proprietary trading strategies of
security-based swap market participants).
392 15

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commenters’ concerns, the Commission
is adopting Rule 902(c)(1) as proposed
and re-proposed, with one conforming
change.394 Final Rule 902(c)(1)
explicitly prohibits a registered SDR
from disseminating the identity of any
counterparty. Further, Rule 902(a)
explicitly provides for the public
dissemination of a transaction report
that consists only of ‘‘the information
reported pursuant to § 242.901(c), plus
any condition flags contemplated by the
registered security-based swap data
repository’s policies and procedures
that are required by § 242.907.’’ Limiting
the publicly disseminated trade report
to these specific data elements is
designed to further avoid disclosure of
any counterparty’s identity, including
the counterparty ID of a counterparty,
even in thinly-traded markets.395
Second, the Commission proposed in
Rule 902(c)(2) that, with respect to a
security-based swap that is not cleared
at a clearing agency and that is reported
to a registered SDR, a registered SDR
would be prohibited from disseminating
any information disclosing the business
transactions and market positions of any
person. This would implement Section
13(m)(1)(C)(iii) of the Exchange Act,396
which provides that, with respect to the
security-based swaps that are not
cleared and which are reported to an
SDR or the Commission, ‘‘the
Commission shall require real-time
public reporting . . . in a manner that
does not disclose the business
transactions and market positions of any
person.’’ The Commission received no
comments that directly addressed
proposed Rule 902(c)(2), although one
commenter noted that ‘‘all market
participants have legitimate interests in
the protection of their confidential and
identifying financial information.’’ 397
By prohibiting a registered SDR from
disseminating any information
disclosing the business transactions and
market positions of any person, the
Commission believes that Rule 902(c)(2)
will help preserve the confidential
information of market participants, in
394 Re-proposed Rule 902(c)(1) would have
prohibited a registered SDR from publicly
disseminating the identity of either counterparty to
a security-based swap. Final Rule 902(c)(1)
prohibits a registered SDR from publicly
disseminating the identity of any counterparty to a
security-based swap. Final Rule 900(i) defines
counterparty to mean ‘‘a person that is a direct
counterparty or indirect counterparty of a securitybased swap.’’ This conforming change to Rule
902(c)(1) makes clear that a registered SDR may not
publicly disseminate the identity of any
counterparty—direct or indirect—of a securitybased swap.
395 See infra Section VI(D)(1)(f) (discussing public
dissemination of thinly-traded products).
396 15 U.S.C. 13(m)(1)(C)(iii).
397 Deutsche Bank Letter at 6.

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addition to implementing Section
13(m)(1)(C)(iii) of the Exchange Act.
Accordingly, the Commission is
adopting Rule 902(c)(2) as proposed and
re-proposed.
Third, the Commission preliminarily
believed that it would be impractical
and unnecessary for a registered SDR to
publicly disseminate reports of
historical security-based swaps reported
pursuant to Rule 901(i), and therefore
included this exclusion in proposed
Rule 902(c)(3).398 The Commission
received no comments regarding
proposed Rule 902(c)(3). The
Commission continues to believe that it
would be impractical for a registered
SDR to publicly disseminate reports of
historical security-based swaps reported
pursuant to Rule 901(i). Accordingly,
the Commission is adopting Rule
902(c)(3) as proposed and re-proposed.
The Commission calls particular
attention to the relationship between
Rules 901(i), 901(e), and 902. Rule
901(i) requires reporting of historical
security-based swaps to a registered
SDR. Rule 902(c)(3) provides that the
initial transaction reported pursuant to
Rule 901(i) shall not be publicly
disseminated. A historical securitybased swap might remain open after
market participants are required to
begin complying with the requirement
in Rule 901(e) to report life cycle
events.399 If a life cycle event of a
historical security-based swap relating
to any of the primary trade
information—i.e., the data elements
enumerated in Rule 901(c)—occurs after
public dissemination is required for
security-based swaps in a particular
asset class, Rule 902(a) would require
the registered SDR to publicly
disseminate a report of that life cycle
event, plus any condition flags required
by the registered SDR’s policies and
procedures under Rule 907. In other
words, Rule 902(c)(3)’s exclusion from
public dissemination for historical
security-based swaps applies only to the
initial transaction, not to any life cycle
event of that historical security-based
swap relating to the primary trade
information that occurs after public
dissemination in that asset class is
required. Therefore, life cycle events
relating to the primary trade information
of historical security-based swaps must,
after the public dissemination
requirement goes into effect, be publicly
disseminated.400
398 75

FR 75286.
Regulation SBSR Proposed Amendments
Release, Section VII (proposing a new compliance
schedule for Regulation SBSR).
400 For example, a termination of a historical
security-based swap—occurring after public
dissemination in that asset class becomes
399 See

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At the same time, correcting an error
in the Rule 901(c) information relating
to a historical security-based swap
would not trigger public dissemination
of a corrected report. Rule 905 applies
to all information reported pursuant to
Regulation SBSR, including historical
security-based swaps that must be
reported pursuant to Rule 901(i). Rule
905(b)(2) requires the registered SDR to
publicly disseminate a correction of a
transaction only if the corrected
information falls within Rule 901(c) and
the transaction previously was subject
to a public dissemination requirement.
Historical security-based swaps are not
subject to the public dissemination
requirement; therefore, corrections to
Rule 901(c) information in historical
security-based swaps are not subject to
public dissemination either.
Rule 902(a), as proposed, would have
provided that a registered SDR shall
publicly disseminate a transaction
report of a security-based swap reported
to it, ‘‘[e]xcept in the case of a block
trade.’’ Rule 902(a), as re-proposed,
would have retained the exception for
block trades and added a second
exception, for ‘‘a trade that is required
to be reported but not publicly
disseminated.’’ 401 In final Regulation
SBSR, the Commission is revising Rules
902(a) and 902(c) to consolidate into a
single rule—Rule 902(c)—all the types
of security-based swaps and the kinds of
information that a registered SDR is
prohibited from disseminating.
Therefore, Rule 902(a), as adopted, now
provides that a registered SDR shall
publicly disseminate a transaction
report of a security-based swap ‘‘except
as provided in paragraph (c) of this
section.’’
In addition to adopting subparagraphs
(1), (2), and (3) of Rule 902(c), as
proposed and re-proposed, the
Commission is modifying Rule 902(c) to
expand the number of exclusions from
public dissemination from three to
seven. First, the Commission is adding
Rule 902(c)(4), which prohibits a
registered SDR from disseminating a
non-mandatory report, and is adding a
new Rule 900(r) to define ‘‘nonmandatory report’’ as any information
provided to a registered SDR by or on
required—would have to be publicly disseminated.
A termination represents the change in the notional
amount of the transaction from a positive amount
to zero. Because the notional amount is a Rule
901(c) element, the termination of the historical
security-based swap would have to be publicly
disseminated.
401 This second exception was necessitated by
revisions to Rule 908 made in the Cross-Border
Proposing Release that would have provided that
certain cross-border security-based swaps would be
subject to regulatory reporting but not public
dissemination. See 78 FR 31215.

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14609

behalf of a counterparty other than as
required by Regulation SBSR. Situations
may arise when the same transaction
may be reported to two separate
registered SDRs. This could happen, for
example, if the reporting side reports a
transaction to one registered SDR, as
required by Rule 901, but the other side
elects to submit the same transaction
information to a second registered SDR.
The Commission has determined that
any non-mandatory report should be
excluded from public dissemination
because the mandatory report of that
transaction will have already been
disseminated, and the Commission
seeks to avoid distorting the market by
having two public reports issued for the
same transaction.402
Second, the Commission is adding
Rule 902(c)(5), which prohibits a
registered SDR from disseminating any
information regarding a security-based
swap that is subject to regulatory
reporting but not public dissemination
under final Rule 908(a) of Regulation
SBSR.403 Rule 902(a), as re-proposed,
would have prohibited a registered SDR
from publicly disseminating
information concerning a cross-border
security-based swap that is required to
be reported but not publicly
disseminated. The Commission received
no comments on this specific provision,
and is relocating it from re-proposed
Rule 902(a) to final Rule 902(c)(5). Rule
902(c)(5), as adopted, will prohibit a
registered SDR from disseminating
‘‘[a]ny information regarding a securitybased swap that is required to be
reported pursuant to §§ 242.901 and
242.908(a)(1) but is not required to be
publicly disseminated pursuant to
§ 242.908(a)(2).’’
Third, the Commission is adding Rule
902(c)(6), which prohibits a registered
SDR from disseminating any
information regarding certain types of
clearing transactions.404 Regulation
SBSR, as proposed and re-proposed, did
not provide any exemption from public
dissemination for clearing transactions.
However, the Commission has
determined that publicly disseminating
reports of clearing transactions that arise
from the acceptance of a security-based
swap for clearing by a registered
clearing agency or that result from
netting other clearing transactions
would be unlikely to further Title VII’s
transparency objectives. Any securitybased swap transaction, such as an
402 See infra Section XIX (explaining how a
registered SDR can determine whether the report it
receives is a non-mandatory report).
403 See infra Section XV(A).
404 Rule 900(f) defines ‘‘clearing transaction’’ as
‘‘a security-based swap that has a registered clearing
agency as a direct counterparty.’’

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alpha, that precedes a clearing
transaction must be publicly
disseminated. Clearing transactions,
such as the beta and the gamma, that
result from clearing a security-based
swap or from netting clearing
transactions together do not have price
discovery value because they are
mechanical steps taken pursuant to the
rules of the clearing agency. Therefore,
the Commission believes that nondissemination of these clearing
transactions is appropriate in the public
interest and consistent with the
protection of investors.
Fourth, the Commission is adding
Rule 902(c)(7), which prohibits a
registered SDR from disseminating any
information regarding the allocation of a
security-based swap. As discussed in
more detail in Section VIII, infra, the
Commission has determined that, to
comply with this prohibition, a
registered SDR will satisfy its public
dissemination obligations for a securitybased swap involving allocation by
disseminating only the aggregate
notional amount of the executed
bunched order that is subsequently
allocated. The Commission believes that
this is an appropriate means of public
dissemination, because the price and
size of the executed bunched order were
negotiated as if the transaction were a
single large trade, rather than as
individual smaller trades. In the
Commission’s view, public
dissemination of the allocations would
not enhance price discovery because the
allocations are not individually
negotiated.405 Furthermore, although
the Commission has taken the approach
in other situations of requiring public
dissemination of the transaction but
with a condition flag to explain the
special circumstances related to the
transaction,406 for the reasons stated
above, the Commission does not believe
that this approach is appropriate here.
405 The size in which a transaction is executed
could significantly affect the price of the securitybased swap. Thus, all other things being equal, the
price negotiated for a large trade could be
significantly different from the price negotiated for
a small trade. Publicly disseminating the prices of
small trades that are allocated from the bunched
order execution might not provide any price
discovery value for another small trade if it were
to be negotiated individually. Nor does the
Commission believe that publicly disseminating the
prices and sizes of the allocations would provide
any more price discovery than a single print of the
bunched order execution, because the allocations
result from a single negotiation for the bunched
order size. However, if ‘‘child’’ transactions of a
larger ‘‘parent’’ transaction are priced differently
from the parent transaction, these child transactions
would not fall within the exclusion in Rule
902(c)(7).
406 See infra Section IX (discussing requirements
for public dissemination of inter-affiliate securitybased swaps).

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Rule 902(c)(7)’s exception to public
dissemination for the individual
allocations also is designed to address
commenter concerns that publicly
disseminating the sizes of individual
allocations could reveal the identities or
business strategies of fund groups that
execute trades on behalf of multiple
client funds.407 For similar reasons,
Rule 902(c)(7), as adopted, prohibits a
registered SDR from publicly
disseminating the fact that an initial
security-based swap has been
terminated and replaced with several
smaller security-based swaps as part of
the allocation process.408 The
Commission believes that any marginal
benefit of publicly disseminating this
type of termination event would not be
justified by the potential risk to the
identity or business strategies of fund
groups that execute trades on behalf of
multiple client funds.409
Registered SDRs will need to rely on
the information provided by reporting
sides to determine whether Rule 902(c)
excludes a particular report from public
dissemination. As described in more
detail in Section VI(G), Rule
907(a)(4)(iv) requires a registered SDR,
among other things, to establish and
maintain written policies and
procedures directing its participants to
apply to the transaction report a
condition flag designated by the
registered SDR to indicate when the
report of a transaction covered by Rule
902(c) should not be publicly
disseminated.410 A registered SDR
would not be liable for a violation of
Rule 902(c) if it disseminated a report of
a transaction that fell within Rule 902(c)
if the reporting side for that transaction
407 See MFA I at 2–3 (‘‘we are concerned that
post-allocation [security-based swap] data, if
publicly disseminated, will allow any of the fund’s
counterparties to identify transactions that the fund
executed with others. Counterparties are often
aware of an investment manager’s standard fund
allocation methodology and therefore, reporting
transactions at the allocated level with trade
execution time will make evident an allocation
scheme that other participants can easily associate
with a particular investment manager’’).
408 Ordinarily, the termination of a security-based
swap that has been publicly disseminated would
itself be an event that must be publicly
disseminated. See Rule 902(a) (generally providing
that a registered SDR shall publicly disseminate a
transaction report of a security-based swap ‘‘or a life
cycle event or adjustment due to a life cycle event’’
immediately upon receiving an appropriate
transaction report).
409 For the reasons noted above, the Commission
believes that it is necessary or appropriate in the
public interest, and is consistent with the
protection of investors, to exclude these types of
information from public dissemination under
Regulation SBSR.
410 Rule 907(a)(4) provides registered SDRs with
some discretion in determining how a reporting
side must flag reported data that will be excluded
from public dissemination. See infra Section VI(G).

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failed to appropriately flag the
transaction as required by Rule
907(a)(4).
2. Other Exclusions From Public
Dissemination Sought by Commenters
Several commenters advanced
arguments against public dissemination
of various types of security-based
swaps. The Commission notes at the
outset that the statutory provisions that
require public dissemination of
security-based swap transactions state
that all security-based swaps shall be
publicly disseminated.
a. Customized Security-Based Swaps
Several commenters expressed the
view that transaction information
regarding customized security-based
swaps should not be publicly
disseminated because doing so would
not enhance price discovery, would be
of limited use to the public, or could be
confusing or misleading to market
observers.411 However, one commenter
urged the Commission to require public
dissemination of all of the information
necessary to calculate the price of a
customized security-based swap.412
Section 13(m)(1)(C) of the Exchange
Act413 authorizes the Commission to
provide by rule for the public
availability of security-based swap
transaction, volume, and pricing data
for four types of security-based swaps,
which together comprise the complete
universe of potential security-based
swaps. With respect to ‘‘security-based
swaps that are not cleared at a registered
clearing agency and which are reported
to a security-based swap data
repository’’—which category would
include customized or bespoke security411 See Barclays Letter at 3; Cleary II at 6, 16
(stating that public reporting of customized
security-based swaps would not aid price
discovery, and that the Commission should require
the public dissemination of key terms of a
customized transaction and an indication that it is
customized); DTCC II at 9 (noting the difficulty of
comparing price data across transactions that are
non-standard and have different terms); ISDA/
SIFMA I at 11 (stating that customized securitybased swaps provide little to no price discovery
value and should not be subject to public
dissemination); MFA I at 3 (arguing that Congress
did not intend to require public dissemination of
comprehensive information for customized
security-based swaps and that price discovery
serves a purpose only if there is a broad market for
the relevant transaction, which is not the case with
customized security-based swaps).
412 See Better Markets I at 7; Better Markets II at
3 (stating that many transactions characterized as
too complex for reporting or dissemination are, in
fact, composites of more straightforward
transactions, and that there should be disclosure of
information concerning these components to
provide meaningful transparency and to prevent
market participants from avoiding disclosure by
creating composite transactions).
413 15 U.S.C. 13(m)(1)(C)(iii).

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based swaps—Section 13(m)(1)(C)
provides that ‘‘the Commission shall
require real-time public reporting for
such transactions, in a manner that does
not disclose the business transactions
and market positions of any person’’
(emphasis added).
The Commission does not believe that
the commenters who argued against
disseminating reports of bespoke
transactions have provided sufficient
justification for an exception to public
dissemination. To the contrary, the
Commission believes that dissemination
of transaction reports of customized
security-based swaps could still provide
useful information to market observers.
Although all of the material elements of
a bespoke transaction necessary to
understand the market value might not
be publicly disseminated, it is an
overstatement to argue categorically that
bespoke transactions would have no
price discovery value, as certain
commenters suggested.414 The
disseminated price could, for example,
still have an anchoring effect on price
expectations for future negotiations in
similar or related products, even in
thinly-traded markets. Furthermore,
even if it is difficult to compare price
data across customized transactions, by
disseminating reports of all bespoke
transactions, market observers can
understand the relative number and
aggregate notional amounts of
transactions in bespoke products versus
standardized products.
The Commission recognizes, however,
that market observers should have
information that permits them to readily
distinguish transactions in standardized
products from transactions in bespoke
security-based swaps. Accordingly, Rule
901(c)(1)(v) provides that, when
reporting a transaction to a registered
SDR, the reporting side must attach a
flag to indicate whether a security-based
swap is customized to the extent that
the other information provided pursuant
to Rule 901(c) does not provide all of
the material information necessary to
identify the security-based swap or does
not contain the data elements necessary
to calculate the price of the securitybased swap. In addition, final Rule
907(a)(4) requires a registered SDR to
establish policies and procedures
concerning the use of appropriate flags
on disseminated transaction reports that
are designed to assist market observers
in interpreting the relevance of a
transaction.
b. Inter-Affiliate Transactions
Several commenters argued that the
Commission should not require public
414 See

supra note 411.

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dissemination of inter-affiliate securitybased swaps. Issues relating to
regulatory reporting and public
dissemination of inter-affiliate
transactions are discussed in Section IX,
infra.

were to promulgate such an exception
in the future. The Commission intends
to revisit the commenter’s concern in
connection with its consideration of
block thresholds and other potential
rules relating to block trades.

c. Security-Based Swaps Entered Into in
Connection With a Clearing Member’s
Default
One commenter argued that reports of
security-based swaps effected in
connection with a clearing agency’s
default management processes following
the default of a clearing member should
not be publicly disseminated in real
time.415 This commenter believed that
public dissemination of these
transactions could undermine a clearing
agency’s default management processes
and have a negative effect on market
stability, particularly because a default
likely would occur during stressed
market conditions. Accordingly, the
commenter recommended that reports
of security-based swaps entered into in
connection with a clearing agency’s
default management processes be made
available to the Commission in real time
but not publicly disseminated until after
the default management processes have
been completed, as the Commission
determines appropriate.
The Commission believes that, at
present, the commenter’s concerns are
addressed by the Commission’s
approach for the interim phase of
Regulation SBSR, which offers reporting
sides up to 24 hours after the time of
execution to report a security-based
swap.416 The Commission believes that
this approach strikes an appropriate
balance between promoting post-trade
transparency and facilitating the default
management process, and is broadly
consistent with the commenter’s
suggestion to allow for public
dissemination after the default
management process has been
completed. Further, the commenter
suggested that such transactions
typically occur in large size; thus,
transactions entered into by surviving
clearing members might qualify for any
block exception, if the Commission

d. Total Return Security-Based Swaps
Three commenters argued that there
should be no public dissemination of
total return security-based swaps
(‘‘TRSs’’), which offer risks and returns
proportional to a position in a security,
securities, or loan(s) on which a TRS is
based.417 One of these commenters
argued that ‘‘TRS pricing information is
of no value to the market because it is
driven by many considerations
including the funding levels of the
counterparties to the TRS and therefore
may not provide information about the
underlying asset for the TRS.’’ 418
Another commenter suggested that the
fact that TRSs are hedged in the cash
market, where trades are publicly
disseminated, would mitigate the
incremental price discovery benefit of
public dissemination of the TRSs.419
Similarly, a third commenter argued
that requiring public dissemination of
an equity TRS transaction would not
enhance transparency, and could
confuse market participants, because the
hedging transactions are already
publicly disseminated.420
The Commission has carefully
considered these comments but believes
that these commenters have not
provided sufficient justification to
support a blanket exclusion from public
dissemination for TRSs. The
Commission believes, rather, that
market observers should be given an
opportunity to decide how to interpret
the relevance of a disseminated trade to
the state of the market, and reiterates
that relevant statutory provisions state
that all security-based swaps shall be
publicly disseminated. These statutory
provisions do not by their terms
distinguish such public dissemination

415 See LCH.Clearnet Letter at 2 (explaining that,
to manage a defaulting clearing member’s portfolio,
a clearing agency would rely on its non-defaulting
members to provide liquidity for a small number of
large transactions that would be required to hedge
the defaulting member’s portfolio, and the ability of
non-defaulting members to provide liquidity for
these transactions would be impaired if the
transactions were reported publicly before the
members had an opportunity to mitigate the risks
of the transactions).
416 See Rule 901(j); Section VII(B), infra. If 24
hours after the time of execution would fall on a
day that is not a business day, reporting would be
required by the same time on the next day that is
a business day.

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417 See Barclays Letter at 2–3; Cleary II at 13–14;
ISDA/SIFMA I at 13.
418 ISDA/SIFMA I at 13.
419 See Cleary II at 13–14. The primary concern
of this commenter with respect to equity TRSs was
the proposed exclusion of equity TRSs from the
reporting delay for block trades. See id. The
Commission expects to consider this comment in
connection with its consideration of rules for block
trades.
420 See Barclays Letter at 3. The commenter also
expressed more general concerns regarding the
potential consequences of reduced liquidity in the
equity TRS market, noting that if liquidity in the
equity TRS market is impaired, liquidity takers
could migrate away from a diversified universe of
security-based swap counterparties to a more
concentrated group of prime brokers, which could
increase systemic risk by concentrating large risk
positions with a small number of prime brokers. See
Barclays Letter at 8.

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based on particular characteristics of a
security-based swap.
The Commission also has considered
the argument advanced by one of the
commenters that requiring
instantaneous public dissemination of
an equity TRS transaction could confuse
market participants, because the
hedging transactions are already
publicly disseminated.421 The
Commission disagrees that
dissemination of both transactions (i.e.,
the initial transaction and the hedge)
would cause confusion. In other
securities markets, public dissemination
of initial transactions and their hedges
occur on a regular basis.422 Valuable
information could be obtained by
observing whether transactions in
related products executed close in time
have the same or different prices.423 The
commenter who expressed concerns
about potential negative consequences
of reduced liquidity in the equity TRS
market provided no evidence to support
its claim.424
e. Transactions Resulting From Portfolio
Compression
One group of commenters argued that
transactions resulting from portfolio
compression exercises do not reflect
trading activity, contain no market
information, and thus should be
excluded from public dissemination.425
One member of that group requested
clarification that only trades
representing the end result of a netting
or compression would need to be
reported. This commenter expressed the
view that publicly disseminating
original transactions as well as the
transactions that result from netting or
compression would result in doublecounting and could present a distorted
view of the market.426
The Commission recognizes that
portfolio compression is designed to
mitigate risk between counterparties by
reducing gross exposures, and any new
421 See

Barclays Letter at 3.
example, a trade in a listed single-stock
option is frequently hedged by a trade in the
underlying stock. Each trade is disseminated via the
relevant consolidated tape.
423 For example, a difference in prices between an
equity TRS and the underlying securities might
suggest mispricing of either leg of the trade,
signaling to market participants the existence of
economic rents they could subsequently compete
away. Additionally, price discrepancies also could
be related to fees or liquidity premiums charged by
equity TRS dealers. See infra Section XXII(B)(2)(a).
424 See Barclays Letter at 8.
425 See ISDA/SIFMA I at 12. See also DTCC II at
20 (stating, with respect to portfolio compression
activities, that ‘‘an exact pricing at individual trade
level between parties is not meaningful and,
therefore, these transactions should not be
disseminated’’); ISDA IV at 13.
426 See ISDA I at 4–5.

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security-based swaps executed as a
result reflect existing net exposures and
might not afford market participants an
opportunity to negotiate new terms.
Nevertheless, there may be some value
in allowing market observers to see how
often portfolio compressions occur and
how much net exposure is left after
much of the gross exposure is
terminated. Furthermore, it is possible
that new positions arising from a
compression exercise could be repriced,
and thus offer new and useful pricing
information to market observers.
Therefore, the Commission is not
convinced that there would be so little
value in disseminating such
transactions that they all should be
excluded from public dissemination,
even though the original transactions
that are netted or compressed may
previously have been publicly
disseminated. With respect to the
commenter’s concern regarding doublecounting, the Commission notes that
Rule 907(a)(4) requires a registered SDR
to have policies and procedures for
flagging special circumstances
surrounding certain transactions, which
could include transactions resulting
from portfolio compression. The
Commission believes that market
observers should have the ability to
assess reports of transactions resulting
from portfolio compressions, and that a
condition flag identifying a transaction
as the result of a portfolio compression
exercise would help to avoid doublecounting.
f. Thinly Traded Products
Three commenters expressed concern
about the potential impact of real-time
public dissemination on thinly traded
products.427 One of these commenters
suggested that ‘‘security-based swaps
traded by fewer than ten market makers
per month should be treated as illiquid
and subject to public reporting only on
a weekly basis.’’ 428 The Commission
disagrees with this suggestion. In other
classes of securities—e.g., listed equity
securities, OTC equity securities, listed
options, corporate bonds, municipal
bonds—all transactions are
disseminated in real time, and there is
no delayed reporting for products that
have only a limited number of market
makers. The Commission is not aware of
characteristics of the security-based
swap market that are sufficiently
different from those other markets to
warrant delayed reporting because of
the number of market makers.
427 See Bachus/Lucas Letter at 2; ISDA IV at 14;
UBS Letter at 1. These comments also are discussed
in Section VII(B) infra.
428 UBS Letter at 1, note 5.

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Furthermore, given the high degree of
concentration in the U.S. security-based
swap market, many products have fewer
than ten market makers. Thus, the
commenter’s suggestion—if accepted by
the Commission—could result in
delayed reporting for a substantial
percentage of security-based swap
transactions, which would run counter
to Title VII’s goal of having real-time
public dissemination for all securitybased swaps (except for block trades).
Finally, as noted above, the Title VII
provisions that mandate public
dissemination on a real-time basis do
not make any exception for securitybased swaps based on the number of
market makers.
Another commenter expressed
concern that mandating real-time
reporting of thinly-traded products and
illiquid markets could increase the price
of entering into a derivatives contract to
hedge risk by facilitating speculative
front-running.429 Another commenter
expressed concern about the impact of
real-time post-trade transparency for
illiquid security-based swaps on pretrade transparency that currently exists
in the form of indicative prices provided
by dealers to their clients (known as
‘‘runs’’).430 This commenter requested
that the Commission provide illiquid
security-based swaps with an exception
from real-time reporting and instead
allow for delays roughly commensurate
with the trading frequency of the
security-based swap.431 Under the
adopted rules, counterparties generally
will have up to 24 hours after the time
of execution to report security-based
swap transactions. This reporting
timeframe is designed, in part, to
minimize the potential for market
disruption resulting from public
dissemination of any security-based
swap transaction during the interim
phase of Regulation SBSR. The
Commission anticipates that, during the
interim period, it will collect and
analyze data concerning the sizes of
transactions that potentially affect
liquidity in different segments of the
market in connection with considering
block thresholds.
429 See

Bachus/Lucas Letter at 2.
ISDA IV at 14 (expressing concern that the
combination of name-attributed runs and a rapidly
disseminated set of post-trade information would
make it relatively easy for many participants to
reconstruct the identity of parties to a particular
transaction, which may reduce dealers’ willingness
to disseminate pre-trade price information in the
form of runs, thereby reducing pre-trade
transparency).
431 See id.
430 See

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E. Dissemination of Block
Transactions—Rule 902(b)
Rule 902(b), as proposed and reproposed, would have required a
registered SDR to publicly disseminate
a transaction report for a block trade
(except for the notional amount of the
transaction) immediately upon receipt
of the information about the block trade
from the reporting party, along with the
transaction ID and an indicator that the
report represented a block trade. Rule
902(b) would further have required the
registered SDR to disseminate a
complete transaction report for the
block trade, including the full notional
amount of the transaction, within
specified timeframes ranging from eight
to 26 hours after execution, depending
on the time when the security-based
swap was executed. Thus, under Rule
902(b), as proposed and re-proposed,
market participants would learn the
price of a security-based swap block
trade in real time, and would learn the
full notional amount of the transaction
on a delayed basis.432
For the reasons discussed in detail in
Section VII(B), infra, the Commission is
not adopting Rule 902(b).
F. The Embargo Rule—Rule 902(d)
Rule 902(d), as proposed, would have
provided that ‘‘[n]o person other than a
registered security-based swap data
repository shall make available to one or
more persons (other than a
counterparty) transaction information
relating to a security-based swap before
the earlier of 15 minutes after the time
of execution of the security-based swap;
or the time that a registered securitybased swap data repository publicly
disseminates a report of that securitybased swap.’’ In other words, the
information about the security-based
swap transaction would be
‘‘embargoed’’ until a registered SDR has
in fact publicly disseminated a report of
the transaction (or until such time as a
transaction should have been publicly
disseminated). Rule 902(d) is also
referred to as the ‘‘Embargo Rule.’’ Rule
902(d) was not revised as part of the
Cross-Border Proposing Release, and
was re-proposed in exactly the same
form as had been initially proposed.
Under Regulation SBSR, only
registered SDRs must publicly
disseminate security-based swap
transaction data to the public. However,
other persons with knowledge of a
transaction—the counterparties
themselves or the venue on which a
transaction is executed—also might
432 The only difference between Rule 902(b) as
proposed and as re-proposed was that the term
‘‘reporting party’’ was changed to ‘‘reporting side.’’

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wish to disclose information about the
transaction to third parties (whether for
commercial benefit or otherwise). An
unfair competitive advantage could
result if some market participants could
obtain security-based swap transaction
information before others. Regulation
SBSR, by carrying out the Congressional
mandate to publicly disseminate all
security-based swap transactions, is
intended to reduce information
asymmetries in the security-based swap
market and to provide all market
participants with better information—
and better access to information—to
make investment decisions. Therefore,
the Commission proposed Rule 902(d),
which would have imposed a partial
and temporary restriction on sources of
security-based swap transaction
information other than registered SDRs.
Three commenters supported the
view that market participants (including
SB SEFs) should not be permitted to
distribute their security-based swap
transaction information before such
information is disseminated by a
registered SDR.433 However, three other
commenters strongly opposed the
proposed Embargo Rule.434 Other
commenters expressed a concern that
the proposed Embargo Rule would make
it more difficult for SB SEFs to offer

433 See Markit II at 4 (stating that if SB SEFs were
permitted to disseminate data elements of a
security-based swap transaction, confusion and data
fragmentation would inevitably result, which
would ultimately undermine the goal of increased
transparency); Barnard I at 4 (stating that market
participants should be prohibited from distributing
their market data prior to the dissemination of that
data by a registered SDR to prevent the
development of a two-tier market); ISDA IV at 17
(stating that ‘‘it is unclear why any person should
be allowed to make the data available to another
market data source ahead of the time that [an SDR]
is allowed to publicly disseminate such
transaction,’’ and recommending that proposed
Rule 902(d) be revised to refer only to the time that
an SDR disseminates a report of the security-based
swap).
434 See GFI Letter at 2; SDMA II at 4; WMBAA
Letter at 8–9.

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14613

‘‘work-up’’ 435 functionality.436 This
‘‘work-up’’ process, according to one of
the commenters, is designed to foster
liquidity in the security-based swap
market and to facilitate the execution of
larger-sized transactions.437
The Commission has carefully
reviewed the comments received and
has determined to revise the Embargo
Rule to provide that the act of sending
a report to a registered SDR—not the act
of the registered SDR actually
disseminating it—releases the embargo.
Rule 902(d), as adopted, provides: ‘‘No
person shall make available to one or
more persons (other than a counterparty
or a post-trade processor) transaction
information relating to a security-based
swap before the primary trade
information about the security-based
swap is sent to a registered securitybased swap data repository’’ (emphasis
added).
The Commission agrees with the
majority of commenters that it would be
beneficial for security-based swap
market participants to have the ability to
disseminate and receive transaction data
without being constrained by the time
when a registered SDR disseminates the
transaction information. The
Commission understands that, in some
cases, entities that are likely to become
SB SEFs may want to broadcast trades
executed electronically across their
platforms to all subscribers, because
knowing that two counterparties have
executed a trade at a particular price
can, in some cases, catalyze trading by
other counterparties at the same price.
Allowing dissemination of transaction
information to occur simultaneously
435 See GFI Letter at 3 (‘‘A typical workup
transaction begins when two market participants
agree to transact at a certain price and quantity. The
transaction does not necessarily end there,
however, and the two participants then have the
opportunity to transact further volume at the
already-established price. Thereafter, other market
participants may join the trade and transact with
either the original counterparties to the trade or
with other firms if they agree to trade further
volume at the established price’’); SDMA II at 3
(‘‘Trade work ups are a common practice in which
the broker looks for additional trading interest at
the same time a trade is occurring—or ‘‘flashing’’
on the screen—in the same security at the same
price. The ability to view the price of a trade as it
is occurring is critical to broker’s ability to locate
additional trading interest. The immediate flash to
the marketplace increases the probability that
additional buyers and sellers, of smaller or larger
size, will trade the same security at the same time
and price’’); WMBAA II at 3 (‘‘Work-up enables
traders to assess the markets in real-time and make
real-time decisions on trading activity, without the
fear of moving the market one way or another’’).
436 See GFI Letter at 3; SDMA II at 3 (if ‘‘the SB
SEF is prohibited from ‘flashing’ the price of a trade
as it occurs and the brokers must wait until after
the SB SDR has disclosed the price, the broker’s
window of opportunity to locate additional trading
interest will close’’); WMBAA II at 3.
437 See GFI Letter at 3.

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with transmission to a registered SDR
will allow SB SEF participants to see
last-sale information for the particular
markets on which they are trading,
which could facilitate the work-up
process and thus enhance price
discovery.
One commenter expressed concern,
however, that permitting the
distribution of market data prior to
dissemination of the information by a
registered SDR could result in the
development of a two-tier market.438
Although the Commission generally
shares the commenter’s concern about
information asymmetries, the
Commission does not believe that Rule
902(d), as adopted, raises that concern.
Certain market participants might learn
of a completed transaction before others
who rely on public dissemination
through a registered SDR. However, the
time lag is likely to be very small
because Rule 902(a) requires a registered
SDR to publicly disseminate a
transaction report ‘‘immediately upon
receipt of information about the
security-based swap.’’ The Commission
understands that, under the current
market structure, trading in securitybased swaps occurs for the most part
manually (rather than through
algorithmic means) and infrequently.
Thus, obtaining knowledge of a
completed transaction through private
means a short time before others learn
of the transaction from a registered SDR
is unlikely, for the foreseeable future, to
provide a significant advantage.
Furthermore, as discussed above
regarding the ‘‘work-up’’ process, the
most likely recipients of direct
information about the completed
transaction are other participants of the
SB SEF. Thus, an important segment of
the market—i.e., competitors of the
counterparties to the original
transaction in the work up who are most
likely to have an interest in trading the
same or similar products—are still
benefitting from post-trade
transparency, even if it comes via the
work-up process on the SB SEF rather
than through a registered SDR.
Two commenters raised arguments
related to the ownership of the securitybased swap transaction data and were
concerned that the proposed Embargo
Rule would place improper restrictions
on the use of security-based swap
market data.439 One of these
commenters recommended that the
Commission revise the Embargo Rule
‘‘in such a way that . . . the securitybased swap counterparties and SB SEFs
[would] continue to have the ability to
438 See
439 See

Barnard I at 4.
WMBAA II at 8; Tradeweb Letter II at 6.

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market and commercialize their own
proprietary data.’’ 440 The other
commenter recommended that the
Commission make clear that nothing in
the final rules is intended ‘‘to impose or
imply any limit on the ability of market
participants . . . to use and/or
commercialize data they create or
receive in connection with the
execution or reporting of swap data.’’ 441
The Commission declines to revise
Rule 902(d) in the manner suggested by
these commenters. As the Commission
notes in the SDR Adopting Release, ‘‘the
issue of who owns the data is not
particularly clear cut, particularly when
value is added to it.’’ 442 If the
Commission were to revise the rule in
the manner suggested by commenters, it
would seem to make a presumption
about who owns the data, which may be
viewed as the Commission favoring one
business model over another. As further
noted in the SDR Adopting Release, the
Commission does not support any
particular business model 443 and,
therefore, does not believe it is
necessary or appropriate to revise the
rule as suggested by these commenters.
As originally proposed, the Embargo
Rule had an exception for disseminating
the transaction information to
counterparties, as the counterparties to
the transaction should be allowed to
receive information about their own
security-based swap transactions
irrespective of whether such
information has been reported to or
disseminated by a registered SDR.
However, two commenters noted that
SB SEFs also will need to provide
transaction data to entities involved in
post-trade processing, irrespective of
whether the embargo has been lifted.444
The Commission recognizes that, after a
trade is executed, there are certain
440 WMBAA

II at 8.
Letter II at 6.
442 SDR Adopting Release, Section VI(D)(3)(c)(iii)
(citing difficulties associated with determining
ownership of data as one of several reasons for not
adopting, at this time, a rule prohibiting an SDR
and its affiliates from using, for commercial
purposes, security-based swap data that the SDR
maintains without obtaining express written
consent from both counterparties to the securitybased swap transaction or the reporting party). See
also Securities Exchange Act Release 63825
(February 2, 2011), 76 FR 10948 (February 28, 2011)
at 10961–7 (‘‘SB SEF Proposing Release’’)
(discussing the proposed imposition of certain
requirements on SB SEFs with respect to services
provided and fees charged).
443 See SDR Adopting Release, Section III(D)
(discussing business models of SDRs).
444 See BlackRock Letter at 9; ISDA IV at 17
(recommending a carve-out from Rule 902(d) for
third-party service providers that one or both
counterparties use for execution, confirmation,
trade reporting, portfolio reconciliation and other
services that do not include the public
dissemination of security-based swap data).
441 Tradeweb

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entities that perform post-trade
services—such as matching,
confirmation, and reporting—that may
need to receive the transaction
information before it is sent to a
registered SDR. For example, a third
party could not act as agent in reporting
a transaction to a registered SDR on
behalf of a reporting side if it could not
receive information about the executed
transaction before it was submitted to
the registered SDR. In the Regulation
SBSR Proposing Release, the
Commission stated that counterparties
to a security-based swap could rely on
agents to report security-based swap
data on their behalf.445 Without an
exception, such use of agents could be
impeded, an action the Commission did
not intend. Accordingly, the
Commission is revising the Embargo
Rule to add an explicit exception for
‘‘post-trade processors.’’ The
Commission is also adding a new
paragraph (x) to final Rule 900, which
defines ‘‘post-trade processor’’ as ‘‘any
person that provides affirmation,
confirmation, matching, reporting, or
clearing services for a security-based
swap transaction.’’
Finally, one commenter
recommended a carve-out from Rule
902(d) not only for counterparties, but
also for their affiliates, ‘‘to allow for
internal communication of SBS
data.’’ 446 Rule 902(d)—as proposed, reproposed, and adopted—includes a
carve-out for counterparties, which
could include affiliates, to the extent
that an affiliate is an indirect
counterparty as defined in Rule 900.
The Commission continues to believe
that it is necessary for counterparties to
know when they have executed a trade.
The Commission further notes that Rule
902(d), as adopted, contains an
exception for post-trade processors,447
which could include post-trade
processors that are affiliates of the
counterparties. Thus, Rule 902(d) would
not prohibit a counterparty to a securitybased swap transaction from providing
the transaction information to an
affiliate before providing it to a
registered SDR, if that affiliate will serve
as the counterparty’s agent for reporting
the transaction to the registered SDR.
However, Rule 902—as proposed, reproposed, and adopted—includes no
broad carve-out for all affiliates of the
counterparties. The Commission does
not see a basis for allowing such a broad
445 See

75 FR 75211–12.
IV at 17.
447 See Rule 900(x) (defining ‘‘post-trade
processor’’ as ‘‘any person that provides
affirmation, confirmation, matching, reporting, or
clearing services for a security-based swap
transaction’’).
446 ISDA

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exception for all affiliates, which could
undermine the purpose of Rule 902(d),
as discussed above.
G. Condition Flags—Rule 907(a)(4)
Rule 907(a)(4), as originally proposed,
would have required a registered SDR to
establish and maintain written policies
and procedures ‘‘describing how
reporting parties shall report and,
consistent with the enhancement of
price discovery, how the registered
security-based swap depository shall
publicly disseminate, reports of, and
adjustments due to, life cycle events;
security-based swap transactions that do
not involve an opportunity to negotiate
any material terms, other than the
counterparty; and any other securitybased swap transactions that, in the
estimation of the registered securitybased swap data depository, do not
accurately reflect the market.’’ The
Commission re-proposed Rule 907(a)(4)
in the Cross-Border Proposing Release
with only minor technical revisions.448
One commenter expressed the view
that a registered SDR should have the
flexibility to determine and apply
special indicators.449 Another
commenter suggested that, to be
meaningfully transparent, securitybased swap transaction data should
include ‘‘condition flags’’ comparable to
those used in the bond market.450 As
discussed more fully below, the
Commission agrees that such ‘‘condition
flags’’ could provide additional
transparency to the security-based swap
market. The Commission believes that
the condition flags that registered SDRs
will develop pursuant to final Rule
907(a)(4) could provide information
similar to the information provided by
the condition flags used in the bond
market. The registered SDR’s condition
flags could include, for example, flags
indicating that a security-based swap
was an inter-affiliate transaction or a
transaction entered into as part of a
trade compression.
A third commenter suggested that a
registered SDR should not have
discretion to determine whether a
particular transaction reflects the
market, as the registered SDR may not
have sufficient information to make
such a determination.451 The
Commission agrees with the commenter
that a registered SDR may not have
sufficient information to ascertain
whether a particular transaction ‘‘do[es]
not accurately reflect the market,’’ as
448 The Commission changed the words
‘‘reporting parties’’ to ‘‘reporting sides’’ and
‘‘depository’’ to ‘‘repository.’’
449 See Barnard I at 3.
450 See MarkitSERV I at 10.
451 See DTCC II at 20.

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would have been required under Rule
907(a)(4), as originally proposed.
Therefore, the Commission will not
require the registered SDR to have
policies and procedures for attaching an
indicator that merely conveys that the
transaction, in the estimation of the
registered SDR, does not accurately
reflect the market.
Instead, the Commission believes that
requiring the registered SDR to provide
information about any special
circumstances associated with a
transaction report could help market
observers better understand the report
and enhance transparency. For example,
Rule 901(c)(1)(v), as adopted, requires a
reporting side to attach a flag if a
security-based swap is customized to
the extent that other information
provided for the swap does not provide
all of the material information necessary
to identify the customized securitybased swap or does not contain the data
elements necessary to calculate the
price.452 In addition, Rule 905(b)(2), as
adopted, requires a registered SDR that
receives a correction to information that
it previously disseminated publicly to
publicly disseminate a corrected
transaction report with an indication
that the report relates to a previously
disseminated transaction.453
The Commission, therefore, is
adopting Rule 907(a)(4) with certain
additional language to respond to the
comments and to clarify how Rule
907(a)(4) should apply in circumstances
contemplated by but not fully addressed
in the original proposal or the reproposal. The Commission has revised
Rule 907(a)(4) as follows: New
subparagraph (i) requires the registered
SDR to have policies and procedures for
‘‘identifying characteristic(s) of a
security-based swap, or circumstances
associated with the execution or
reporting of the security-based swap,
that could, in the fair and reasonable
estimation of the registered securitybased swap data repository, cause a
person without knowledge of these
characteristic(s) or circumstances to
receive a distorted view of the market.’’
This language retains the idea that the
appropriate characteristics or
circumstances remain ‘‘in the estimation
of’’ the registered SDR, but requires the
SDR’s exercise of this discretion to be
‘‘fair and reasonable’’ to emphasize that
the estimation should not result in flags
that would not allow market observers
to better understand the transaction
reports that are publicly disseminated.
Rule 907(a)(4)(i), as adopted, also
widens the scope of transactions to
452 See
453 See

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infra Section XX(B).

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14615

which the provision applies.454 This
provision grants a registered SDR the
flexibility to determine which special
circumstances require flags and to
change that determination over time, if
warranted.455 Subparagraph (ii)
provides that the registered SDR’s
policies and procedures must
‘‘establish[ ] flags to denote such
characteristic(s) or circumstance(s),’’
explicitly incorporating the concept of
condition flags suggested by the
commenter.456 Subparagraph (iii)
requires policies and procedures
‘‘directing participants to apply such
flags, as appropriate, in their reports’’ to
the registered SDR. Finally,
subparagraph (iv) requires these policies
and procedures to address, in part,
‘‘applying such flags to disseminated
reports to help to prevent a distorted
view of the market.’’
The Commission also is adopting Rule
907(a)(4) with certain additional
language in subparagraph (iv) that
clarifies the handling of security-based
swap information that is required to be
reported under Rule 901 but which a
registered SDR is required by Rule
902(c) not to publicly disseminate. As
noted above, even in the initial
proposal, the Commission contemplated
that certain information would fall into
this category.457 Rule 907(a), as
originally proposed, would have
required a registered SDR to establish
and maintain policies and procedures
that addressed, among other things, the
public dissemination of security-based
swap data. Carrying out that duty in a
manner consistent with Rule 902—and,
in particular, with Rule 902(c)—will
necessarily require a registered SDR to
differentiate reported information that is
required to be publicly disseminated
from reported information that is
454 This revision to Rule 907(a)(4) also removes
the references to public dissemination of life cycle
events that were proposed and re-proposed. These
references have been relocated to final Rule
907(a)(3). Rule 907(a)(3), as proposed and reproposed, addressed only the reporting and public
dissemination of error reports. Life cycle events are
similar to error reports in that they reflect new
information that relates to a previously executed
security-based swap. Therefore, Rule 907(a)(3), as
adopted, now requires a registered SDR to have
policies and procedures for ‘‘specifying procedures
for reporting life cycle events and corrections to
previously submitted information, making
corresponding updates or corrections to transaction
records, and applying an appropriate flag to the
transaction report to indicate that the report is an
error correction required to be disseminated by
[Rule 905(b)(2)] or is a life cycle event, or any
adjustment due to a life cycle event, required to be
disseminated by [Rule 902(a)].’’ See infra Section
XII(C).
455 See Barnard I at 3.
456 See MarkitSERV I at 10.
457 See Regulation SBSR Proposing Release, 75 FR
75234–35.

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required not to be publicly
disseminated.458 The new language in
final Rule 907(a)(4)(iv)(B) calls attention
to this particular requirement. Rule
907(a)(4)(iv)(B), as adopted, requires the
registered SDR to have policies and
procedures for suppressing from public
dissemination a transaction referenced
in Rule 902(c).459
In addition to the requirements for
indications in the case of error reports
or bespoke transactions, the
Commission believes that registered
SDRs generally should include the
following in its list of condition flags:
• Inter-affiliate security-based swaps.
As discussed in detail in Section VI(D),
infra, the Commission is not exempting
inter-affiliate transactions from public
dissemination. However, the
Commission believes it could be
misleading if market observers did not
understand that a transaction involves
affiliated counterparties.
• Transactions resulting from netting
or compression exercises.460 The
458 One commenter noted its view that Rule
907(a)(4), as proposed, seemed to delegate to the
discretion of the SDR whether and how certain
security-based swap activity would be publicly
disseminated, and requested that the Commission
clearly establish in Regulation SBSR that certain
security-based swap activity is not subject to public
dissemination. See ISDA IV at 13. The Commission
believes that the rules as adopted do clearly
establish what security-based swap activity is not
subject to public dissemination. Rule 902(a), as
adopted, requires the registered SDR to publicly
disseminate a transaction report of a security-based
swap, or a life cycle event or adjustment due to a
life cycle event, immediately upon receipt of
information about the security-based swap, except
as provided in Rule 902(c). Rule 902(c) provides a
list of information and types of security-based swap
transactions that a registered security-based swap
shall not disseminate. See supra Section VI(D).
459 Under Rule 907(a)(4)(iv), the registered SDR’s
policies and procedures must direct the reporting
side to apply appropriate flags to transaction
reports. In the case of a report falling within Rule
902(c), the reporting side for the relevant
transaction is required to use the flag that signals
to the registered SDR that the report should not be
publicly disseminated. The Commission notes that
Rule 907(a)(4) affords registered SDRs some
discretion to determine precisely how a reporting
side must flag reported data that will be excluded
from public dissemination under Rule 902(c). For
example, a registered SDR may determine not to
require a specific ‘‘do not disseminate’’ tag for
historical security-based swaps if it is clear from
context that they are historical security-based swaps
and not current transactions. As described in
Section VI(D) above, the Commission does not
believe that a registered SDR would violate Rule
902(c) if it disseminated a report of a transaction
that fell within Rule 902(c) if the reporting side fails
to appropriately flag the transaction.
460 This applies only to transactions resulting
from netting or compression exercises other than
through a registered clearing agency. Security-based
swaps resulting from netting or compression
exercises carried out by a registered clearing agency
are not subject to public dissemination. See Rule
902(c)(6). See also supra Section VI(D)(1)
(explaining Rule 902(c)(6)); Section VI(D)(2)(v)
(explaining why the Commission believes that
transactions resulting from portfolio compression—

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Commission believes that market
observers should be made aware that
these transactions are related to
previously existing transactions and
generally do not represent new risks
being assumed by the counterparties.
• Transactions resulting from a
‘‘forced trading session’’ conducted by a
clearing agency.461 The Commission
believes that it would be helpful for
market observers to understand that
such transactions may not be available
to market participants outside of the
forced trading session.
• Transactions reported more than 24
hours after execution. The Commission
believes that there is price discovery
value in disseminating the transaction
report, particularly in cases where there
are few or no other recent last-sale
reports in that product. However, all
market observers should understand
that the report is no longer timely and
thus may not reflect the current market
at the time of dissemination.
• Transactions resulting from default
of a clearing member. The Commission
believes that the fact that the transaction
was necessitated by a clearing agency’s
need to have surviving clearing
members assume the positions of a
defaulting clearing member is important
information about understanding the
transaction and market conditions
generally.
• Package trades. ‘‘Package trade’’ is
a colloquial term for a multi-legged
transaction of which a security-based
swap constitutes one or more legs.
Market observers should be made aware
that the reported price of a securitybased swap that is part of a package
trade might reflect other factors—such
other than clearing transactions—should be
publicly disseminated).
461 Entities that the Commission previously
exempted from certain Exchange Act requirements,
including clearing agency registration, have
informed the Commission that they undertake
‘‘forced trading’’ sessions in order to promote
accuracy in the end-of-day valuation process. See,
e.g., Securities Exchange Act Release No. 59527
(March 6, 2009), 74 FR 10791, 10796 (March 12,
2009) (Order Granting Temporary Exemptions
Under the Securities Exchange Act of 1934 in
Connection With Request on Behalf of ICE U.S.
Trust LLC Related to Central Clearing of Credit
Default Swaps, and Request for Comments)
(describing ‘‘forced trading sessions’’ conducted by
a clearing agency as follows: ‘‘ICE Trust represents
that, in connection with its clearing and risk
management process, it will calculate an end-of-day
settlement price for each Cleared CDS in which an
ICE Trust Participant has a cleared position, based
on prices submitted by ICE Trust Participants. As
part of this mark-to-market process, ICE Trust will
periodically require ICE Trust Participants to
execute certain CDS trades at the applicable endof-day settlement price. Requiring ICE Trust
Participants to trade CDS periodically in this
manner is designed to help ensure that such
submitted prices reflect each ICE Trust Participant’s
best assessment of the value of each of its open
positions in Cleared CDS on a daily basis’’).

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as the exchange of an instrument that is
not a security-based swap—that are not
reflected in the transaction report of the
security-based swap itself.
This list is by way of example and not
of limitation. There are likely to be other
types of transactions or circumstances
associated with particular transactions
that may warrant a condition flag. The
Commission anticipates that each
registered SDR will revise its list over
time as the security-based swap market
evolves and registered SDRs and market
participants gain greater insight into
how to maximize the effectiveness of
publicly disseminated transaction
reports.
VII. Block Trades and the Interim
Phase of Regulation SBSR
Section 13m(1)(E) of the Exchange
Act 462 requires the Commission rule for
real-time public dissemination of
security-based swap transactions to: (1)
‘‘Specify the criteria for determining
what constitutes a large notional
security-based swap transaction (block
trade) for particular markets and
contracts’’ and (2) ‘‘specify the
appropriate time delay for reporting
large notional security-based swap
transactions (block trades) to the
public.’’ In addition, Section
13m(1)(E)(iv) of the Exchange Act 463
requires the Commission rule for realtime public dissemination of securitybased swap transactions to contain
provisions that ‘‘take into account
whether the public disclosure [of
transaction and pricing data for
security-based swaps] will materially
reduce market liquidity.’’ 464
As discussed further below, the
Commission is neither proposing nor
adopting rules relating to block trades at
this time. However, the rules, as
adopted, establish an interim phase of
Regulation SBSR. During this first
phase, as described below, reporting
sides—with certain minor exceptions—
will have up to 24 hours (‘‘T+24 hours’’)
after the time of execution to report a
transaction. The registered SDR that
receives the transaction information
would then be required to publicly
462 15

U.S.C. 78m(m)(1)(E).
U.S.C. 78m(m)(1)(E)(iv).
464 These statutory mandates apply only with
respect to cleared security-based swaps. The DoddFrank Act does not require the Commission to
specify block thresholds or dissemination delays or
to take into account how public disclosure will
materially reduce market liquidity with respect to
uncleared security-based swaps. For security-based
swaps that are not cleared but are reported to an
SDR or the Commission under Section 3C(a)(6) of
the Exchange Act, ‘‘the Commission shall require
real-time public reporting for such transactions, in
a manner that does not disclose the business
transactions and market positions of any person.’’
15 U.S.C. 78m(1)(C)(iii).
463 15

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disseminate a report of the transaction
immediately thereafter.
The Commission recognizes that the
introduction of mandated post-trade
transparency in the security-based swap
market could have a significant impact
on market participant behavior and the
provision of liquidity. The interim
phase is designed, among other things,
to generate information about how
market participants behave in an
environment with post-trade
transparency. Furthermore, once the
first phase is implemented, reporting
sides will be required under Regulation
SBSR to report, among other things, the
time of execution of their security-based
swap transactions. As described in a
staff analysis of the inventory
management of dealers in the market for
single-name CDS based on transaction
data from DTCC–TIW, security-based
swap transaction data currently stored
in DTCC–TIW include the time of
reporting, but not the time of the
execution.465 Having the execution time
instead of only the reporting time will
enable staff to perform a more robust
and granular analysis of any hedging
that may or may not occur within the
first 24-hour period after execution.
After collecting and analyzing data that
are more granular and reflect the
reactions of market participants to T+24
hour post-trade transparency, the
Commission anticipates that it will
undertake further rulemaking to propose
and adopt rules related to block trades
and the reporting and public
dissemination timeframe for non-block
trades.
A. Proposed Rules Regarding Block
Trades
The Commission did not propose
specific thresholds for block trades in
the Regulation SBSR Proposing Release.
Instead, the Commission described
general criteria that it would consider
when setting specific block trade
thresholds in the future.466 The
Commission stated that it ‘‘preliminarily
believes that the general criteria for
what constitutes a large notional
security-based swap transaction must be
specified in a way that takes into
account whether public disclosure of
such transactions would materially
reduce market liquidity, but presumably
should be balanced by the general
mandate of Section 13(m)(1) of the
Exchange Act, which provides that data
465 See ‘‘Inventory risk management by dealers in
the single-name credit default swap market’’
(October 17, 2014) at 5, available at http://
www.sec.gov/comments/s7-34-10/s73410-184.pdf
(‘‘Hedging Analysis’’).
466 See Regulation SBSR Proposing Release, 75 FR
75228.

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on security-based swap transactions
must be publicly disseminated in real
time, and in a form that enhances price
discovery.’’ 467 The Commission further
stated: ‘‘For post-trade transparency to
have a negative impact on liquidity,
market participants would need to be
affected in a way that either: (1)
Impacted their desire to engage in
subsequent transactions unrelated to the
first; or (2) impacted their ability to
follow through with further actions after
the reported transaction has been
completed that they feel are a necessary
consequence of the reported
transaction.’’ 468
The Commission noted, with respect
to the first case, that post-trade
dissemination of transaction prices
could lead to narrower spreads and
reduce participants’ willingness to
trade. However, the Commission noted
that liquidity could be enhanced if
market participants increased their
trading activity as a result of the new
information. Because it would be
difficult, if not impossible, to estimate
with certainty which factor would
prevail in the evolving security-based
swap market, the Commission was
guided by the general mandate of
Section 13(m)(1) and the Commission’s
preliminary belief that even in illiquid
markets, transaction prices form the
foundation of price discovery.469
Therefore, the Commission proposed
that prices for block trades be
disseminated in the same fashion as
prices for non-block transactions.
The Commission noted that, in the
second case, counterparties may intend
to take further action after an initial
transaction for hedging purposes. The
Commission believed that, for a
transaction that was sufficiently large,
disseminating the size of such a
transaction could signal to the market
that there is the potential for another
large transaction in a particular securitybased swap or related security.470
Therefore, in order to give the market
time to absorb any subsequent
transactions, the Commission stated that
it preliminarily believed that the size of
a sufficiently large transaction should be
suppressed for a certain period of time
to provide time for subsequent
transactions.471
In the Regulation SBSR Proposing
Release, the Commission noted a variety
of metrics that could be used to
determine whether a security-based
swap transaction should be considered
467 Id.

at 75228–29.
at 75229.
469 See id.
470 See id.
471 See id.
468 Id.

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14617

a block trade.472 They included: (1) The
absolute size of the transaction; (2) the
size of the transaction relative to other
similar transactions; (3) the size of the
transaction relative to some measure of
overall volume for that security-based
swap instrument; and (4) the size of the
transaction relative to some measure of
overall volumes for the security or
securities underlying the security-based
swap.473 The Commission stated that
the metric should be chosen in a way
that minimizes inadvertent signaling to
the market of potential large follow-on
transactions.474
Although the Commission did not
propose block thresholds, the
Commission did propose two ‘‘waves’’
of public dissemination of block trades
for when it had adopted block
thresholds. Rule 902(b), as proposed
and re-proposed, would have required a
registered SDR to publicly disseminate
a transaction report of a security-based
swap that constitutes a block trade
immediately upon receipt of
information about the block trade from
the reporting party. The transaction
report would have been required to
consist of all the information reported
pursuant to Rule 901(c)—except for the
notional amount—plus the transaction
ID and an indicator that the report
represents a block trade. The second
wave would have required the
registered SDR to publicly disseminate
a complete transaction report for the
block trade (including the transaction ID
and the full notional amount) between
8 and 26 hours after the execution of the
block trade. Thus, under Rule 902(b), as
proposed and re-proposed, market
participants would have learned the
price and all other primary trade
472 The Commission considered several tests
including a percentage test (the top N-percent of
trade would be considered block) and set forth data
from the Depository Trust Clearing Corporation
(‘‘DTCC’’) regarding single-name corporate CDS and
single name sovereign CDS. The Commission noted
that the observed trade sizes would suggest certain
cut-off points when considering single-name
corporate CDS or sovereigns as a whole. The
Commission also noted, however, that there may
still be differences in liquidity between individual
corporates and sovereigns, as well as linkages
between the underlying cash markets and the CDS
markets that a simple percentage or threshold test
would not capture. In addition, the Commission’s
Division of Risk, Strategy, and Financial Innovation
(which has been renamed the Division of Economic
and Risk Analysis) prepared an analysis of several
different block trade criteria in January 2011, based
on the same DTCC data. The analysis examined
fixed minimum notional amount thresholds;
dynamic volume-based thresholds based on the
aggregate notional amount of all executions in a
CDS instrument over the past 30 calendar days; and
a combination of dynamic volume-based thresholds
and fixed minimum thresholds of $10 and $25
million, respectively. See id. at 75230–31.
473 See id.
474 See id.

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information (except notional amount)
about a block trade in real time, and the
full notional amount of the transaction
on a delayed basis.475 Registered SDRs
would have been responsible for
calculating the specific block thresholds
based on the formula established by the
Commission and publicizing those
thresholds, but the Commission
emphasized that a registered SDR would
be performing ‘‘mechanical, nonsubjective calculations’’ when
determining block trade thresholds.476
The Commission proposed and reproposed a variety of other provisions
related to block trades. Proposed Rule
900 defined ‘‘block trade’’ to mean a
large notional security-based swap
transaction that satisfied the criteria in
Rule 907(b). Proposed Rule 907(b)
would have required a registered SDR to
establish and maintain written policies
and procedures for calculating and
publicizing block trade thresholds for
security-based swaps in accordance
with the criteria and formula for
determining block size specified by the
Commission. Proposed Rule 907(b)(2)
also would have provided that a
registered SDR should not designate as
a block trade: (1) Any security-based
swap that is an equity total return swap
or is otherwise designed to offer risks
and returns proportional to a position in
the equity security or securities on
which the security-based swap is based;
or (2) any security-based swap
contemplated by Section 13(m)(1)(C)(iv)
of the Exchange Act.477

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B. Potential Impact on Liquidity
The Commission received several
comments addressing the issue of
timing for public dissemination and the
potential impact of public
dissemination on liquidity. The
commenters vary significantly in their
views on this issue. One commenter
stated that the proposed timeframes for
publicly disseminating security-based
swap transaction reports would not
materially reduce market liquidity.478
Another commenter, however,
expressed the view that ‘‘[t]here is
insufficient liquidity in the single-name
475 Rule 902(b)(3), as proposed and re-proposed,
would have provided that, if a registered SDR was
closed when it otherwise would be required to
disseminate information concerning a block trade,
the registered SDR would be required to
disseminate the information immediately upon reopening.
476 See Regulation SBSR Proposing Release, 75 FR
75228.
477 15 U.S.C. 78m(m)(1)(C)(iv) (‘‘With respect to
security-based swaps that are determined to be
required to be cleared under section 78c–3(b) of this
title but are not cleared, the Commission shall
require real-time public reporting for such
transactions’’).
478 See Barnard I at 2.

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credit default swap market to support
real-time public dissemination of nonblock transaction data for all but a
handful of instruments without creating
price moving events.’’ 479 A third
commenter expressed concern that realtime security-based swap reporting, ‘‘if
implemented without adequate
safeguards, could unnecessarily increase
the price of entering into a derivatives
contract to hedge risk’’ 480 and
cautioned that requiring real-time
reporting of thinly traded products in
illiquid markets in an effort to compel
derivatives to trade similarly to
exchange-listed products represented ‘‘a
fundamentally flawed approach that
demonstrates a lack of understanding of
the existing market structure.’’ 481 A
fourth commenter expressed concern
about the impact of real-time post-trade
transparency for illiquid security-based
swaps on pre-trade transparency that
currently exists in the form of indicative
prices provided by dealers to their
clients (known as ‘‘runs’’).482 This
commenter requested that the
Commission provide illiquid securitybased swaps with an exception from
real-time reporting and instead allow for
delays roughly commensurate with the
trading frequency of the security-based
swap.483
In addition, several commenters
raised concerns about the effect of an
improperly designed block trade
regime.484 One commenter stated that
an appropriate block exemption is
critical to the successful
implementation of Title VII.485 Several
commenters expressed the view that
improper block thresholds or definitions
would adversely impact liquidity.486
479 UBS

Letter at 1.
Letter at 2.

480 Bachus/Lucas
481 Id.

482 See ISDA IV at 14 (expressing concern that the
combination of name-attributed runs and a rapidly
disseminated set of post-trade information would
make it relatively easy for many participants to
reconstruct the identity of parties to a particular
transaction, which might reduce dealers’
willingness to disseminate pre-trade price
information in the form of runs, thereby reducing
pre-trade transparency).
483 See id., note 21 (stating, for example, that a
24-hour delay would be appropriate for a securitybased swap that trades, on average, once per day,
and security-based swap that trades 10 times per
day could be reported in real time).
484 See Barclays Letter at 8; BlackRock Letter at
8, note 10; Cleary I at 10–11; Cleary II at 2;
Institutional Investors Letter at 4; ISDA/SIFMA I at
2; ISDA/SIFMA Block Trade Study at 6; ISDA/
SIFMA II at 8; J.P. Morgan Letter at 5; WMBAA I
at 3.
485 See ISDA/SIFMA I at 2.
486 See Barclays Letter at 8 (stating that overly
broad block trade thresholds could adversely
impact the liquidity and pricing of security-based
swaps); J.P. Morgan Letter at 5 (stating that liquidity
may be significantly reduced if too few trades
receive block treatment); BlackRock Letter at 8, note

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One commenter noted that the SEC and
CFTC’s proposed block trade rules
would adversely impact liquidity.487 By
contrast, one commenter recommended
that the Commission consider that
increased transparency of trades that are
large relative to the liquidity of the
product may attract new entrants to the
market and may result in increased
liquidity.488
The Commission has considered these
comments as well as the statutory
requirement that the Commission rule
for public dissemination of securitybased swap transactions contain
provisions that ‘‘take into account
whether the public disclosure [of
transaction and pricing data for
security-based swaps] will materially
reduce market liquidity.’’ 489 The
Commission is adopting these final
rules for regulatory reporting and public
dissemination of security-based swaps
with a view toward implementing
additional rules in one or more
subsequent phases to define block
thresholds and to revisit the timeframes
for reporting and public dissemination
of block and non-block trades. This
approach is designed to increase posttrade transparency in the security-based
swap market—even in its initial phase—
while generating new data that could be
studied in determining appropriate
block thresholds after the initial phase.
The Commission also considered
several comments related to the timing
of public dissemination and believes
that at present the commenters’
concerns are appropriately addressed by
the Commission’s adoption of T+24
hour reporting during the interim phase.
During this phase, the reporting side
will have up to 24 hours after the time
of execution of a security-based swap
transaction to report it to a registered
10 (expressing concern that it could become
infeasible for market participants to enter into block
trades for some products if the Commissions fail to
balance liquidity and price transparency correctly);
Institutional Investors Letter at 4 (noting, with
specific reference to the CFTC’s proposed rules, that
the benefits of large trades could be negated, and
institutional investors’ costs increased, if block
trade sizes were set too high); ISDA/SIFMA II at 8
(stating that an overly restrictive definition of block
trade has great potential to adversely affect the
ability to execute and hedge large transactions);
WMBAA I at 3 (expressing the view that block trade
thresholds ‘‘be set at such a level that trading may
continue without impacting market participants’
ability to exit or hedge their trades’’).
487 See Cleary II at 2.
488 See GETCO Letter at 1–2.
489 15 U.S.C. 78m(m)(1)(E). However, this
mandate applies only with respect to cleared
security-based swaps. No provision of Title VII
requires the Commission to specify block
thresholds or dissemination delays, or to take into
account how public disclosure will materially
reduce market liquidity, for uncleared securitybased swaps.

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
SDR, regardless of its notional
amount.490 The registered SDR will be
required, for all dissemination-eligible
transactions,491 to publicly disseminate
a report of the transaction immediately
upon receipt of the information. Even
with the T+24 reporting of transactions,
the Commission anticipates being able
to collect significant new information
about how market participants behave
in an environment with post-trade
transparency, which will inform the
Commission’s analysis and effort to
determine what block thresholds and
time delays may be appropriate.
In developing a regulatory regime for
post-trade transparency in the securitybased swap market, the Commission is
cognizant of rules adopted by the CFTC
to provide for post-trade transparency in
the swap market. Commission staff
analyzed the effect of the adoption of
post-trade transparency in the swap
market, which is regulated by the
CFTC.492 That analysis shows no
discernible empirical evidence of
economically meaningful effects of the
introduction of post-trade transparency
in the swap market at this time. In
particular, the study did not find
negative effects such as reduced trading
activity. Based on this analysis, the
Commission believes that post-trade
transparency does not seem to have a
negative effect on liquidity and market
activity in the swap market.493

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1. T+24 Hour Reporting for All
Transactions
The Commission initially proposed to
require reporting to a registered SDR of
the primary trade information of all
security-based swaps ‘‘as soon as
technologically practicable, but in no
490 For a security-based swap that is subject to
regulatory reporting and public dissemination
solely by operation of Rule 908(a)(1)(ii), however,
a reporting side is required to report the
information required under Rules 901(c) and 901(d)
within 24 hours of acceptance for clearing. See Rule
901(j); Section XV(C)(4), infra.
491 See Rule 902(c) (setting forth certain types of
security-based swaps that are not to be publicly
disseminated).
492 See ‘‘Analysis of post-trade transparency
under the CFTC regime’’ (October 17, 2014),
available at http://www.sec.gov/comments/s7-3410/s73410-183.pdf (‘‘Analysis of Post-Trade
Transparency’’). See also infra Sections
XXII(C)(2)(b), XXII(C)(2)(c), XXII(C)(3)(a), and
XXII(D)(4)(b). The one comment that the
Commission received on the Analysis of Post-Trade
Transparency did not directly address the staff’s
analysis. This comment is discussed in notes 688
and 1011, infra.
493 See Analysis of Post-Trade Transparency at 1
(‘‘While we acknowledge that there are significant
differences between the index [credit default swap]
market and the security-based swap market, the
data analysis presented here may enhance the
Commission’s understanding of the potential
economic effects of mandated post-trade
transparency in the security-based swap market’’).

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event later than 15 minutes after the
time of execution of the security-based
swap transaction.’’ 494 For all
dissemination-eligible transactions
other than block trades, the registered
SDR would have been required to
publicly disseminate a report of the
transaction immediately and
automatically upon receipt of the
transaction. As proposed, block trades
would have been subject to two-part
dissemination: (1) An initial report with
suppressed notional amount
disseminated in real-time; and (2) a full
report including notional amount
disseminated between 8 to 26 hours
after execution.495
Commenters expressed mixed views
regarding the proposed reporting
timeframes. Two commenters generally
supported them.496 However, several
commenters stated that, at least in the
near term, it would be difficult to
comply with the reporting timeframes as
proposed.497 One of these commenters
argued, for example, that the benefits of
providing security-based swap
information within minutes of
execution did not outweigh the
infrastructure costs of building a
mechanism to report in real time,
particularly given the likelihood of
errors.498 Another commenter expressed
concern that ‘‘the 15 minute limit is not
technologically practicable under
494 See Rules 901(c) and 900 (definition of ‘‘real
time’’), as originally proposed.
495 Rule 902(b)(1), as proposed and re-proposed,
would have provided: ‘‘If the security-based swap
was executed on or after 05:00 UTC and before
23:00 UTC of the same day, the transaction report
[for the block trade] (including the transaction ID
and the full notional amount) shall be disseminated
at 07:00 UTC of the following day.’’ Proposed Rule
902(b)(2) would have provided: ‘‘If the securitybased swap was executed on or after 23:00 UTC and
up to 05:00 UTC of the following day, the
transaction report (including the transaction ID and
the full notional size) shall be disseminated at 13:00
UTC of that following day.’’ Those block trades
executed at the end of each window would receive
an 8 hour dissemination delay and those blocks
executed at 5:00 UTC would receive a 26 hour
dissemination delay. The delay for all other block
trades would vary between 8 and 26 hours,
depending on the time of execution.
496 See FINRA Letter at 2 (supporting the
Commission’s proposal to require reporting as soon
as technologically practicable, but in no event later
than 15 minutes after the time of execution);
Barnard I at 3 (recommending full post-trade
transparency as soon as technologically and
practicably feasible, with an exemption permitting
delayed reporting for block trades).
497 See DTCC II at 9–10; ICI I at 4–5; ISDA III at
1 (‘‘Not all market participants have the ability to
report within 15 or 30 minutes of execution’’);
MarkitSERV I at 9 (‘‘complying with a strict 15minute deadline even for non-electronically
executed or confirmed trades will require
significant additional implementation efforts by the
industry at a time when resources are already
stretched in order to meet other requirements under
the [Dodd-Frank Act]’’); MFA I at 5.
498 See MFA I at 5.

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14619

existing communications and data
infrastructure.’’ 499
Commenters also advocated that the
Commission phase-in reporting
deadlines over time, similar to the
implementation model for TRACE, to
allow regulators to assess the impact of
post-trade transparency on the securitybased swap market.500 One commenter
noted that phased-in implementation
would allow regulators to assess the
impact of transparency on the securitybased swap market and make
adjustments, if necessary, to the timing
of dissemination and the data that is
disseminated.501 Other commenters
echoed the belief that a phased
approach would allow the Commission
to assess the impact of public reporting
on liquidity in the security-based swap
market, monitor changes in the market,
and adjust the reporting rules, if
necessary.502
Three commenters recommended a
24-hour delay for reporting block
trades,503 and one recommended a delay
of at least five days with an indefinite
delay of full notional size.504 Of those
commenters, two also suggested that the
delay could be reduced or refined after
the Commission gathers additional
information about the security-based
swap market.505 In contrast, two
commenters recommended block delays
as short as 15 minutes.506 In addition,
499 ICI

I at 4.
Barnard I at 4; CCMR I at 2; Cleary II at
18–21; DTCC II at 9–10, 24–25; DTCC III at 10;
DTCC IV at 8–9; Roundtable Letter at 4–9; FINRA
Letter at 4–5; Institutional Investors Letter at 3;
ISDA/SIFMA I at 9–10; ISDA/SIFMA Block Trade
Study at 2, 7; MarkitSERV I at 9–10; MFA
Recommended Timeline at 1; UBS Letter at 2–3;
WMBAA III at 4–6. Based on its experience with
industry-wide processes, one commenter suggested
that there could be a ‘‘shake-out’’ period during
which problems with reported data could surface.
The commenter urged the Commission to consider
this possibility and provide a means to assure that
information is of high quality before dissemination
is permitted. See DTCC II at 9–10.
501 See FINRA Letter at 5. See also ISDA/SIFMA
Block Trade Study at 2 (stating that phased
implementation would provide regulators with time
to test and refine preliminary standards).
502 See CCMR I at 2; Cleary II at 19; ISDA/SIFMA
Block Trade Study at 2; UBS Letter at 2.
503 See ICI I at 3; SIFMA I at 5 (‘‘a 24-hour delay
would better ensure that block liquidity providers
are able to offset their risk regardless of the time
during the trading day at which the block is
executed’’); Vanguard Letter at 4; Viola Letter at 2
(‘‘At a minimum, the data in question should be
delayed from the public reporting requirements at
least one (1) day after the trade date’’). Cf. Phoenix
Letter at 4 (recommending end-of-day
dissemination of block trades).
504 See ISDA IV at 16.
505 See ICI I at 3–4; Vanguard Letter at 4, note 3.
506 See Better Markets I at 5–6 and at 4–5 (stating
that no compelling economic justification exists for
delaying the immediate public dissemination of any
data regarding block trades, and that the minimum
duration of any delay in reporting block trades
500 See

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several commenters opposed two-part
transaction reporting for block trades.
These commenters believed that all
information about a block trade,
including the notional amount of the
transaction, should be subject to a
dissemination delay to provide liquidity
providers with adequate time to hedge
their positions.507 Two commenters
recommended initially setting block
sizes low and over time collecting data
to determine an appropriate block trade
size.508
In addition, Commission staff has
undertaken an analysis of the inventory
management of dealers in the market for
single-name CDS based on transaction
data from DTCC–TIW.509 The analysis,
in line with prior studies of hedging in
this market,510 shows that, after most
large transactions between a dealer and
customer are executed, dealers do not
appear to hedge resulting exposures by
executing offsetting transactions (either
with other dealers or other customers)
in the same single-name CDS. In
instances where dealers appear to hedge
resulting exposures following a large
trade in single-name CDS written on the
same reference entity, they generally do
so within a maximum of 24 hours after
executing the original trade.
One commenter responded to this
analysis, asserting that dealers, rather
than hedging security-based swap
should be ‘‘far shorter’’ than the delays included in
Regulation SBSR); Better Markets III at 4–5; SDMA
Letter at 2.
507 See Cleary II at 12 (even without disclosure of
the notional amount, observers may be able to infer
information about a trade and predict subsequent
hedging activity); Goldman Sachs Letter at 6
(disclosure of the fact that a block trade occurred
could still impact liquidity); ICI I at 2
(recommending a delay of all block trade
information); ISDA/SIFMA I at 3 (delaying
disclosure of notional amount is only a ‘‘partial
solution’’); SIFMA I at 3–4 (all block trade
information should be delayed, otherwise
immediate trade signaling could harm end users);
Vanguard Letter at 2, 4 (all block trades should be
delayed 24 hours, and establishment of a block
regime should be delayed until the Commission has
had time to assess how reporting affects the
market).
508 See Institutional Investors Letter at 4; MFA
Recommended Timeline at 4.
509 See Hedging Analysis.
510 See Kathryn Chen, et al., Federal Reserve Bank
of New York Staff Report, An Analysis of CDS
Transactions: Implications for Public Reporting
(September 2011), available at http://
www.newyorkfed.org/research/staff_reports/
sr517.html, last visited September 22, 2014. See
also http://www.dtcc.com/repository-otc-data.aspx,
last visited September 22, 2014. This study uses an
earlier sample of DTCC–TIW transaction data to
identify hedging of transactions in single-name
CDS. They find little evidence of hedging via
offsetting trades in the same instrument and
conclude by saying that ‘‘requiring same day
reporting of CDS trading activity may not
significantly disrupt same day hedging activity,
since little such activity occurs in the same
instrument.’’

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exposures using offsetting transactions
in the same instruments, might choose
instead to hedge their security-based
swap exposures in related assets, and
that these types of hedging behaviors
were not measured in the Commission
staff analysis. The commenter further
suggested that the use of cross-market
hedges could be particularly important
for transactions in single-name CDS that
are especially illiquid.511 The
Commission acknowledges that the
staff’s analysis was limited to sameinstrument hedging.512 However, the
Commission notes that, to the extent
that security-based swap positions can
be hedged using other assets—as the
commenter suggests—these additional
opportunities would suggest that dealers
would likely need less time to hedge
than if hedging opportunities existed
only within the security-based swap
market.
In view of these comments and the
staff analysis, the Commission is
modifying Regulation SBSR’s
timeframes for reporting security-based
swap transaction information as follows.
First, Rules 901(c) and 901(d), as
adopted, require reporting sides to
report the information enumerated in
those rules ‘‘within the timeframe
specified in paragraph (j) of this
section’’—i.e., by Rule 901(j). Rule
901(j), as adopted, provides that the
reporting timeframe for Rules 901(c) and
901(d) shall be ‘‘within 24 hours after
the time of execution (or acceptance for
clearing in the case of a security-based
swap that is subject to regulatory
reporting and public dissemination
solely by operation of
§ 242.908(a)(1)(ii)), or, if 24 hours after
the time of execution or acceptance for
clearing, as applicable, would fall on a
day that is not a business day, by the
same time on the next day that is a
511 See ISDA IV at 15 (stating that ‘‘participants
may enter into risk mitigating transactions using
other products that are more readily available at the
time of the initial trade (for example CD index
product [sic], CDS in related reference entities,
bonds or loans issued by the reference entity or a
related entity, equities or equity options)’’). In
addition, the commenter stated that it ‘‘interprets
the data in the study to imply that such temporary
hedges in other asset classes (rather than offsetting
transactions in the precise reference entity
originally traded) are the norm for an illiquid
market.’’ See id.
512 See Chen et al., supra note 510, at 6. Like the
Chen et al. report, which was cited by the
commenter, the Commission staff analysis did not
incorporate data that would allow it to identify
hedging in corporate bonds or equities, because
appropriate data were not available. The commenter
did not provide any analysis, rationale, or data
demonstrating how public dissemination of a
single-name CDS transaction within 24 hours
would negatively impact a dealer from being able
to hedge this exposure in another market, such as
a broad-based CDS index.

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business day.’’ Under Rule 902(a), as
adopted, the registered SDR that
receives the transaction report from the
reporting side is required, as proposed
and re-proposed, to publicly
disseminate a report of that transaction
immediately upon receipt. The
Commission believes that this approach
will improve post-trade transparency
and respond to commenters’ concerns.
In particular, the Commission believes
that this approach addresses concerns
relating to potential market impact, the
ability to report in real time, and the
length of delay for dissemination of
block trade information.513 Thus, the
T+24 hour approach is designed to
improve post-trade transparency in the
security-based swap market in the near
term, while generating additional data
that the Commission can evaluate in
considering appropriate treatment of
block trades.
At this time, the Commission is not
adopting the provisions of proposed and
re-proposed Rule 902 that would have
provided for real-time public
dissemination of non-block trades.
However, the Commission is adopting,
substantially as proposed and reproposed, what was originally designed
to be the second wave of block
dissemination—i.e., disseminating the
full trade details, including the true
notional amount, at one of two points in
the day (either 07:00 or 13:00 UTC) after
an initial report of the transaction
(without the notional amount) had been
disseminated in real time.514 The
Commission is now simplifying that
approach by eliminating the idea of
‘‘batch dissemination’’ at two points
during the day, and instead allowing for
T+24 hour reporting for all transactions,
regardless of the time of execution.
Furthermore, in the absence of a
standard to differentiate block from nonblock transactions, the Commission
believes that it is appropriate to require
the same T+24 hour reporting for all
transactions.515
This interim phase is designed to
allow the accumulation of empirical
513 Although two commenters advocated shorter
block trade delays, the Commission believes that it
would be prudent to allow for the accumulation of
additional data about the effect of post-trade
transparency on the security-based swap market
before considering shorter reporting and
dissemination timeframes for block trades. The
Commission may consider shorter timeframes in the
future but believes that it is neither necessary nor
appropriate to adopt these commenters’
recommendations at this time.
514 See Rule 902(b), as proposed and re-proposed.
515 As discussed in more detail in Section
VII(B)(3), infra, if 24 hours after the time of
execution would fall on a non-business day (i.e., a
Saturday, Sunday, or U.S. federal holiday),
reporting would instead be required by the same
time on the next business day.

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data and is consistent with various
comments that emphasized the need for
further study and analysis of empirical
data prior to establishing block trading
rules.516 Several commenters noted that
implementing the rules requiring
reporting to registered SDRs prior to the
block trading rules would provide
security-based swap transaction data (in
addition to historical data) that could be
used in the formation of block trade
thresholds.517 One of these commenters
stated, for example, that it would be
premature to adopt block trade
thresholds prior to the commencement
of reporting to registered SDRs because
SDR reporting would increase the
amount of information available across
various markets and asset classes.518
Commenters also recommended several
methods for obtaining and analyzing
empirical data,519 including
independent academic research520 and a
review of a statistically significant data
516 See ABC Letter at 7–8; CCMR I at 4 (‘‘The
Commission should set the thresholds low at first
in order to collect data that will enable them to
make informed decisions about the final delay and
threshold determinations’’); Institutional Investors
Letter at 4–5 (stating, in reference to the CFTC’s
proposed rules, that the marketplace currently lacks
sufficient collection and analysis of swap trading
data to establish block trade thresholds); ICI II at 8
(‘‘We agree with the SEC that it should defer its
proposed rulemaking regarding block thresholds
until after SDRs register with the SEC and the SEC
begins to receive and analyze data required to be
reported under the final rules or until after SB swap
transaction information begins to be publicly
reported’’); MFA I at 4 (recommending that the
Commission study and obtain empirical evidence to
determine block trade definitions for each asset
class to assure that the final rules do not disrupt
the markets or reduce liquidity); ISDA/SIFMA I at
4–5 (recommending significant detailed research,
including independent academic research, before
determining block size thresholds and reporting
delays for particular security-based swap
transactions); ISDA/SIFMA II at 8 (stating that
market-based research and analysis should be
employed to provide the basis for the determination
of well-calibrated block trading exemption rules);
SIFMA II at 8 (‘‘Until a liquid SBS trading market
develops on SB–SEFs and exchanges, the
Commission will not be able to make informed
decisions on the definition of a block or an
appropriate public reporting time frame. For the
same reason, real-time reporting should be
implemented gradually. Block trade thresholds
should be set at a low level at first, such that many
trades are treated as blocks, and raised slowly by
the Commission when doing so is supported by
market data’’). But see SDMA Letter at 3 (stating
that swap transaction data are available today and
block trade thresholds could be established without
delay).
517 See Institutional Investors Letter at 4
(recommending that the CFTC collect market data
for one year before adopting rules relating to block
trades); MFA II, Recommended Timeline at 4;
WMBAA III at 6; FIA/FSF/ISDA/SIFMA Letter at 6.
518 See FIA/FSF/ISDA/SIFMA Letter at 6, note 6.
519 See ISDA/SIFMA I at 4; Goldman Sachs Letter
at 5.
520 See ISDA/SIFMA I at 4.

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set for each security-based swap
category.521
Although more data and analyses
about executed transactions are now
available than when the Commission
originally issued the Regulation SBSR
Proposing Release,522 these data provide
limited insights into how post-trade
transparency might affect market
behavior if executed transactions were
to become publicly known on a realtime or near-real-time basis.523 The
Commission has information from
DTCC–TIW about most CDS trades over
the past few years 524 and can analyze
the frequency of execution and the
notional trade sizes. However, the
Commission believes that these data
permit only speculative inferences
about the potential market impact of
those trades being made public.
Currently, there is little post-trade
transparency in the security-based swap
market, so the current trading generally
is informed only imperfectly, if at all,
about earlier trading.
Several aspects of the Commission’s
adopted rules are designed to help
facilitate the collection of data relating
to how post-trade transparency affects
market behavior. The Commission is
adopting, as re-proposed, the
requirement that the trade report
include the time of execution and the
requirement that the registered SDR
mark the time that it receives the trade
report. These requirements are designed
to help inform the Commission as to the
length of time between the execution of
a transaction and when the transaction
is reported to a registered SDR, which
should provide useful data to the
521 See Goldman Sachs Letter at 5 (stating that the
Commission could obtain the necessary data by
asking large dealers to provide information on a
confidential basis and supplementing that
information with data obtained from a survey of
other market participants).
522 See, e.g., Chen et al., supra note 510.
523 See ICI II at 8 (‘‘Any data on which the SEC
could rely currently to develop a methodology for
determining minimum block trade sizes will not
adequately represent or reflect the swaps market
once the Dodd-Frank requirements (including
public reporting of swap data) are fully
implemented’’). Two commenters pointed to
evidence suggesting negative effects of post-trade
transparency in other securities markets. See ISDA/
SIFMA Block Trade Study at 4–5 (stating that some
studies had concluded that transparency had
negatively impacted markets, including the
Canadian stock markets and the London Stock
Exchange); J.P. Morgan Letter at 2–4 (stating that
anecdotal evidence reported in one study supported
the view that institutional customers experienced
less deep markets as a result of TRACE reporting,
and that adverse impacts could be more substantial
for CDS).
524 See http://www.dtcc.com/repository-otcdata.aspx (last visited September 22, 2014) for a
description of aggregated data disseminated by
DTCC. See also infra Section XXII(B)(1) for a
description of transaction data obtained by the
Commission.

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Commission in analyzing trends in
reporting timeframes. These timeframes
would provide some insight into the
beliefs of market participants regarding
the length of the reporting delay that
they deem necessary to minimize the
market impact of a transaction.
Observing trades being reported to a
registered SDR with varying delays after
execution could provide the
Commission with greater insight as to
what market participants consider to be
market-impacting trades. Further, the
Commission believes that this approach
would address, during the interim
phase, the concerns of the commenters
who believed that a public
dissemination regime with
inappropriately low block trade
thresholds could harm market liquidity,
and those who argued that market
participants would need an extended
period of time to comply with the
requirements to report within shorter
timeframes.
Although any participant could take
the full 24 hours to report a given trade,
there may be incentives to submit trade
reports in substantially less than 24
hours. The Commission understands
that, in some cases, entities that are
likely to become SB SEFs (‘‘pre-SEFs’’)
may want to broadcast trades executed
electronically across their platforms to
all subscribers in order to catalyze
trading by other counterparties at the
same price.525 This ‘‘work-up’’ process,
according to a commenter, is designed
to foster liquidity in the security-based
swap market and to facilitate the
execution of larger-sized transactions.526
If pre-SEFs and their participants want
to continue their current practices and
broadcast a subset of their executed
trades across the platform in real time
to facilitate work-ups, they will be
subject to Rule 902(d), which embargos
transaction information until the
information is transmitted to a
registered SDR.527 Therefore, any preSEF or user of a pre-SEF that wants to
continue to have real-time information
about a completed trade broadcast as
part of a work-up must ensure that the
initial transaction is reported to a
registered SDR no later than the time at
which it is broadcast to users of the preSEF.
In response to commenters who
advocated shorter reporting time frames
or block trade delays, the Commission
notes that it anticipates further refining
the reporting timeframes when it
proposes and implements final block
525 See supra Section VI(F) (discussing Embargo
Rule).
526 See GFI Letter at 3.
527 See supra Section VI(F).

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trade rules, at which point reporting
sides will have had more time to test
and implement their reporting systems
and processes. This approach was
recommended by several
commenters.528

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2. Reporting Timeframe for Trades
Executed Prior to Weekends or U.S.
Federal Holidays
While most transactions will have 24
hours within which to be reported, Rule
901(j) also provides that, ‘‘if 24 hours
after the time of execution would fall on
a day that is not a business day, [the
transaction must be reported] by the
same time on the next day that is a
business day.’’ The Commission’s intent
is to afford security-based swap
counterparties—during the interim
phase—the equivalent of at least an
entire business day to hedge their
positions, if they so desire, before the
transaction must be reported and
publicly disseminated. Without
clarifying that, during the interim phase,
reporting requirements fall only on
business days, for a transaction
executed on the day before a weekend
or holiday, the counterparties would
have less than the number of business
hours of a regular business day to hedge
a transaction if reporting were required
within 24 hours of execution.
The Commission is also adopting a
definition of ‘‘business day’’ to clarify
the ‘‘not a business day’’ provision.
‘‘Business day’’ is defined in Rule 900(f)
as ‘‘a day, based on U.S. Eastern Time,
other than a Saturday, Sunday, or a U.S.
federal holiday.’’ Counterparties to the
trade may be in different time zones
and/or jurisdictions; in the absence of
Rule 900(f) there could be confusion
about whether the ‘‘not a business day’’
provision referred to the jurisdiction
and time zone of one side or the
jurisdiction and time zone of the other.
Because Regulation SBSR is designed to
implement Title VII’s regulatory
reporting and public dissemination
requirements for the U.S. security-based
swap market, the Commission is
528 See Institutional Investors Letter at 4
(recommending that the CFTC collect market data
for one year before adopting rules relating to block
trades); MFA II, Recommended Timeline at 4;
WMBAA III at 6; FIA/FSF/ISDA/SIFMA Letter at 6
(appropriate block trade thresholds, and therefore
real-time reporting requirements, can be established
only after the commencement of SDR reporting to
regulators and careful analysis of security-based
swap market transaction data). This approach is
also broadly consistent with the implementation of
the TRACE system, which shortened reporting
requirements over time. Several commenters
recommended a phased reporting approach
analogous to TRACE. See CCMR I at 2; Cleary II at
20; DTCC II at 9–10; FINRA Letter at 4–5; ISDA/
SIFMA I at 10; ISDA/SIFMA Block Trade Study at
2; UBS Letter at 2–3; WMBAA II at 5.

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designating U.S. Eastern Time (which
may be either Eastern Standard Time or
Eastern Daylight Time) as the time zone
on which the reporting side should base
its reporting for purposes of Rules 900(f)
and 901(j). The Commission also is
excluding U.S. federal holidays from the
definition of ‘‘business day.’’ The
following examples are designed to help
explain the application of this
provision:
• Example 1. A trader executes a
trade at 04:59 UTC on Friday (11:59
p.m. EST on Thursday). This particular
Friday is not a U.S. federal holiday. The
reporting side must report by 04:59 UTC
on Saturday (11:59 p.m. EST on Friday).
• Example 2. A trader executes a
trade at 05:01 UTC on Friday (12:01 a.m.
EST on Friday). The reporting side must
report by 05:01 UTC on Monday (12:01
a.m. EST on Monday), provided that
this particular Monday is not a U.S.
federal holiday.
• Example 3. A trader executes a
trade at 14:42 UTC on Friday (9:42 a.m.
EST on Friday). The reporting side must
report by 14:42 UTC on Monday (9:42
a.m. EST on Monday), provided that
this particular Monday is not a U.S.
federal holiday.
• Example 4. A trader executes a
trade at 13:42 UTC on Friday (9:42 a.m.
EDT on Friday). The following Monday
is Labor Day, a U.S. federal holiday. The
reporting party must report by 13:42
UTC on Tuesday (9:42 a.m. EDT on
Tuesday).
• Example 5. A trader executes a
trade at 16:45 UTC on Wednesday,
November 26, 2014 (11:45 a.m. EST on
Wednesday, November 26, 2014).
Thursday, November 27, 2014 is
Thanksgiving, a U.S. federal holiday.
The reporting party must report by
16:45 UTC on Friday, November 28,
2014 (11:45 a.m. EST on Friday,
November 28, 2014).
• Example 6. A trader executes a
trade at 16:45 UTC on a Wednesday
(11:45 a.m. EST on Wednesday).
Thursday is not a U.S. federal holiday,
but a large blizzard causes emergency
closures in New York City and several
other U.S. cities. The reporting party
must report by 16:45 UTC on Thursday
(11:45 a.m. EST on Thursday).
3. Other Revisions To Accommodate the
Interim Phase
In addition to the changes noted
above, the Commission is adopting the
following technical changes to
Regulation SBSR to implement the
interim phase of reporting and public
dissemination. First, the Commission is
not adopting certain sections of rule text
that referred to block trades and
marking those sections as ‘‘Reserved.’’

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Rule 900(c), as re-proposed, would have
defined a ‘‘block trade’’ as a large
notional security-based swap
transaction that meets the criteria set
forth in proposed Rule 907(b). Rule
907(b), as proposed and re-proposed,
would have required a registered SDR to
establish and maintain policies and
procedures ‘‘for calculating and
publicizing block trade thresholds for
all security-based swap instruments
reported to the registered security-based
swap data repository in accordance with
the criteria and formula for determining
block size as specified by the
Commission.’’ Rule 907(b), as proposed
and re-proposed, also would have
excluded equity TRS instruments and
any security-based swap contemplated
by Section 13(m)(1)(C)(iv) of the
Exchange Act 529 from the definition of
‘‘block trade.’’ Because the Commission
anticipates soliciting public comment
on block thresholds and other rules
related to block trades—including what
role (if any) registered SDRs should play
in calculating those thresholds—the
Commission is not at this time defining
the term ‘‘block trade’’ in Rule 900(c) or
adopting Rule 907(b). Similarly, because
the Commission is not at this time
adopting the requirement to report in
real time, the Commission is not
adopting a definition of ‘‘real time’’ in
Rule 900.
Second, the Commission has
determined not to utilize the term
‘‘security-based swap instrument’’ 530 in
Regulation SBSR. The Commission
devised the original definition of
‘‘security-based swap instrument’’ in
connection with its overall analysis of
the block trade issue. In the Regulation
SBSR Proposing Release, the
Commission stated its preliminary belief
that it would not be appropriate to
establish different block trade
thresholds for similar instruments with
different maturities. Thus, the proposed
definition of ‘‘security-based swap
instrument’’ did not include any
distinction based on tenor or date until
expiration.531
One commenter discussed the
concept of security-based swap
instruments in the context of its overall
discussion of block trade issues.532 The
commenter argued that a different block
size threshold would have to be
529 15

U.S.C. 78m(m)(1)(C)(iv).
Rule 900 would have defined
‘‘security-based swap instrument’’ to mean ‘‘each
security-based swap in the same asset class, with
the same underlying reference asset, reference
issuer, or reference index.’’ This definition was
included, without change, in re-proposed Rule
900(dd).
531 See 75 FR 75231.
532 See CCMR I at 3.
530 Proposed

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
calculated for each category of securitybased swap instrument, so the
boundaries of those categories would
greatly impact market participants’
ability to engage in block trading. The
commenter recommended, therefore,
that instruments be classified in as few
categories as possible.533 Another
commenter argued that the definition of
‘‘security-based swap instrument’’
‘‘should provide for more granular
distinctions between different types of
transaction within a single asset class to
avoid grouping together transactions
with quite different characteristics.’’ 534
The Commission anticipates soliciting
public comment on block trade
thresholds at a later date. Because the
initial intent of the term ‘‘security-based
swap instrument’’ was to delineate
separate categories of security-based
swaps that could have separate block
trade thresholds, the Commission is not
adopting the term ‘‘security-based swap
instrument’’ at this time. The
Commission anticipates soliciting
public comment on whether and how to
establish different categories of securitybased swaps—and what, if any, block
thresholds and dissemination delays
will apply to those different categories—
when it solicits comment on block
thresholds.
Further, proposed Rule 902(b) would
have specified the delay for
dissemination of certain information
about block trades to the public as well
as what information a registered SDR
should disseminate immediately.
Because the Commission anticipates
that it will re-propose all aspects of
Regulation SBSR as they pertain to
block trades, the Commission is not
adopting Rule 902(b) at this time.
Rules 901(j), as adopted, require the
reporting of both primary and secondary
trade information, respectively, for a
security-based swap no later than 24
hours after the time of execution (or
acceptance for clearing in the case of a
security-based swap that is subject to
regulatory reporting and public
dissemination solely by operation of
Rule 908(a)(1)(ii)), or, if 24 hours after
the time of execution or acceptance for
clearing, as applicable, would fall on a
day that is not a business day, by the
same time on the next day that is a
business day. Re-proposed Rule
901(d)(2) would have required the
reporting side to report what final Rule
901(d) now terms the ‘‘secondary trade
information’’ promptly, but in any
event, no later than: (1) 15 minutes after
the time of execution for a securitybased swap that is executed and
533 See

id.

534 ISDA/SIFMA

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confirmed electronically; (2) 30 minutes
after the time of execution for a securitybased swap that is confirmed
electronically but not executed
electronically; or (3) 24 hours after the
time of execution for a security-based
swap that is not executed or confirmed
electronically. In proposing these
reporting timeframes, the Commission
recognized that the amount of time
required for counterparties to report the
information required under proposed
Rule 901(d)(1) depended upon, among
other things, the extent to which the
security-based swap was customized
and whether the security-based swap
was executed or confirmed
electronically or manually.535
Generally, commenters’ views
regarding the regulatory reporting
timeframes in proposed Rule 901(d)(2)
were mixed. While some commenters
expressed concerns that the proposed
timeframes were too lenient or
incentivized slower technologies,536
other commenters expressed the view
that the reporting timeframes in
proposed Rule 901(d)(2) were not
practicable.537 One of these commenters
noted the likelihood of errors if
reporting timeframes were too short.538
Another commenter urged the
Commission to strike an appropriate
balance between speed and accuracy in
establishing timeframes for regulatory
reporting.539 One commenter suggested
that, initially, the Rule 901(d) regulatory
reporting timeframes should be set
closer to current market capability, with
electronically confirmable trades
reported within 24 hours.540 This
535 See Regulation SBSR Proposing Release, 75 FR
75219. The Commission believed that the
information required under Rule 901(d)(1) would be
available relatively quickly for a security-based
swap that was executed and confirmed
electronically because most of the required
information would already be in an electronic
format. On the other hand, the Commission
recognized that, for security-based swaps that are
not executed or confirmed electronically, additional
time might be needed to systematize the
information required under Rule 901(d)(1) and put
it into the appropriate format. See id.
536 See Better Markets I at 9 (noting that
technology that would permit reporting within
much shorter timeframes is widely available, and
that market participants routinely adhere to much
shorter timeframes for their own business and
internal reporting); Tradeweb Letter at 5 (different
reporting timeframes based on the method of
execution potentially could create incentives for
market participants not to take advantage of
available technology); SDMA I at 3 (stating, with
reference to the CFTC’s proposed rules, that
different reporting timeframes based on method of
execution could create a ‘race to the slowest’ among
swap execution facilities, with market participants
favoring slower-reporting swap execution facilities
over more efficient and transparent facilities).
537 See MFA Letter at 5; DTCC II at 12.
538 See MFA Letter at 5.
539 See ISDA/SIFMA I at 9.
540 See DTCC II at 12.

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commenter recommended a phase-in
period to allow reporting parties to
develop the necessary reporting
capabilities, after which time shorter
timeframes could be implemented.541
The Commission is not adopting the
reporting timeframes proposed in Rule
901(d)(2), and is therefore renumbering
Rule 901(d)(1) as Rule 901(d).542
Because Rule 901(j), as adopted, allows
reporting sides up to 24 hours to report
the primary trade information pursuant
to Rule 901(c) (or until the same time on
the next business day if the trade occurs
less than 24 hours before a weekend or
federal holiday), the Commission
believes that it is appropriate also to
modify the timeframe for reporting the
secondary trade information set forth in
Rule 901(d) to harmonize with the Rule
901(c) requirement. Although both the
primary and secondary trade
information must be reported within 24
hours of the time of execution or
acceptance for clearing, as applicable (or
until the same time on the next business
day if the trade occurs less than 24
hours before a weekend or federal
holiday), Rule 901 does not require that
all of the information enumerated in
Rules 901(c) and 901(d) be provided in
a single trade report. Thus, a reporting
side could, if permitted by the policies
and procedures of the relevant
registered SDR, make an initial report of
the primary trade information followed
by a subsequent report containing
secondary trade information, so long as
both reports were provided within the
timeframe prescribed by Rule 901(j).543
The Commission acknowledges the
issues raised by the commenters
regarding the proposed reporting
timeframes, and, in particular, the
concerns that unreasonably short
reporting timeframes would result in the
submission of inaccurate transaction
information. The Commission believes
that the 24-hour reporting timeframe
being adopted in Rule 901(j) strikes an
appropriate balance, for the interim
phase, between the need for prompt
reporting of security-based swap
transaction information and allowing
541 See

id.
supra Section II(C)(2).
543 However, the registered SDR’s policies and
procedures adopted under Rule 907(a)(1) generally
should explain to reporting sides how to report if
all the security-based swap transaction data
required by Rules 901(c) and 901(d) is being
reported simultaneously, and how to report if
responsive data are being provided at separate
times. In the latter case, the registered SDR should
provide the reporting side with the transaction ID
after the reporting side reports the information
required by Rule 901(c). The reporting side would
then include the transaction ID with its submission
of data required by Rule 901(d), thereby allowing
the registered SDR to match the Rule 901(c) report
with the subsequent Rule 901(d) report.
542 See

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reporting entities sufficient time to
develop fast and robust reporting
capability. The Commission notes that
some commenters supported a 24-hour
reporting timeframe as consistent with
existing industry reporting capability,544
and believes that this timeframe
addresses commenters’ concerns that
some elements of the required
information might not be available
within the initially proposed reporting
timeframes.545
Finally, Rule 901(d)(2), as proposed
and re-proposed, would have
established reporting timeframes based
on whether a security-based swap is
executed and/or confirmed
electronically. The term ‘‘confirm’’
appeared only in Rule 901(d)(2), as
proposed and re-proposed.546 Because
this term does not appear in Rule
901(d)(2), as adopted, the Commission
has determined not to adopt a definition
for the term ‘‘confirm’’ in final Rule
900.547
4. Dissemination of Notional Amount
The Commission is mindful of
comments expressing concern about
dissemination of the full notional
amount for block trades.548 For
example, two commenters expressed the
view that disseminating the notional
amount of a block trade could
jeopardize the anonymity of the
counterparties.549 One commenter, who
noted that TRACE never requires the
544 See

DTCC II at 12; MFA at 5.
Cleary II at 15–16.
546 Rule 900(e), as re-proposed, defined ‘‘confirm’’
as ‘‘the production of a confirmation that is agreed
to by the parties to be definitive and complete and
that has been manually, electronically, or, by some
other legally equivalent means, signed.’’
547 One commenter suggested that the
Commission use the term ‘‘issued,’’ rather than
‘‘confirm’’ to better reflect existing market practice
with respect to confirming the terms of a securitybased swap. See ISDA IV at 10. The deletion of the
term ‘‘confirm’’ from Regulation SBSR, as adopted,
addresses this concern.
548 See Cleary II at 13 (‘‘we would recommend
that the SEC gather further data on the costs and
benefits of disclosing notional size before requiring
such disclosure for all transactions’’); ISDA/SIFMA
I at 5 (size of a block trade transaction should not
be disclosed at any time); ISDA/SIFMA II at 8
(same); ISDA/SIFMA Block Trade Study at 26–27
(noting that reporting of notional amounts of block
trades will hamper the execution of large-sized
trades and recommending dissemination of capped
volume information); Phoenix Letter at 3; SIFMA I
at 5; UBS Letter at 2 (arguing actual notional
amount of an illiquid security-based swap would
provide information to the market about potential
hedging activity); WMBAA II at 7 (arguing that
dissemination of the full notional amount could
jeopardize the anonymity of counterparties to the
trade).
549 See WMBAA II at 7 (also noting that the result
may be that counterparties are less willing to engage
in large transactions); Phoenix Letter at 3 (stating
that reporting block trades at the same time as nonblock trades could jeopardize the anonymity of the
block trade).

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dissemination of the exact notional
amount of block transactions, suggested
that the Commission had not fully
explained its rationale for not adopting
this approach for security-based
swaps.550 Numerous commenters
supported dissemination of the notional
amount of block trades through a
‘‘masking’’ or ‘‘size plus’’ convention
comparable to that used by TRACE, in
which transactions larger than a
specified size would be reported as
‘‘size plus.’’ 551
Under Rule 902(a), as adopted, a
registered SDR is required to publicly
disseminate (for all disseminationeligible transactions 552), immediately
upon receipt of the transaction report,
all of the elements required by Rule
901(c), including the true notional
amount of the transaction (as opposed to
a ‘‘capped’’ or ‘‘bucketed’’ notional
amount). The Commission believes the
T+24 hour approach during the interim
phase should address commenters’
concerns about disseminating the true
notional amount of a transaction,
including concerns about preserving the
anonymity of counterparties.553 One
commenter expressed concern about
reporting blocks and non-blocks in the
same timeframe, which, the commenter
stated, would prevent market
participants from being able to hedge
the trade.554 The Commission believes
that a 24-hour timeframe for reporting of
transaction information should address
any concerns about disseminating the
true notional amount of any transaction
and allow market participants who
choose to hedge adequate time to
accomplish a majority of their hedging
activity before transaction data is
publicly disseminated.555 During the
interim phase when no transaction must
be reported in less than 24 hours after
execution, the Commission will be able
to collect and analyze transaction
information to develop an
550 See

Cleary II at 13.
WMBAA II at 7; ISDA/SIFMA I at 5; ISDA/
SIFMA Block Trade Study at 2, 26–27; Vanguard
Letter at 5; Goldman Sachs Letter at 6; SIFMA I at
5; J.P. Morgan Letter at 12–13; MFA I at 4; MFA III
at 8; UBS Letter at 2; FIA/FSF/ISDA/SIFMA Letter
at 6; Phoenix Letter at 3; ISDA IV at 16.
552 See Rule 902(c) (requiring that certain types of
security-based swaps not be publicly disseminated).
553 One commenter appears to agree generally
with this approach. See J.P. Morgan Letter at 14
(‘‘ ‘un-masked’ trade-by-trade notional amounts
should eventually be disseminated . . . in order to
facilitate analysis of market trends by market
participants and the academic community’’).
554 See Phoenix Letter at 3.
555 The Commission further notes that equity total
return swaps are synthetic substitutes for positions
in the underlying equity security or securities;
therefore, the Commission believes that it would
not be appropriate to allow masking for a synthetic
substitute when there is no masking exceptions to
public dissemination in the cash equities markets.
551 See

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understanding of how market
participants are reacting to the
introduction of mandated post-trade
transparency. The Commission expects
to study, among other things, the
frequency with which security-based
swap market participants transact in
non-standard notional amounts, and
will attempt to observe whether the
market reacts differently to last-sale
prints of any non-standard sizes versus
more conventional sizes. Based on such
data and analysis, the Commission
anticipates considering whether it may
be appropriate to establish notional caps
or rounding conventions in
disseminated reports.
5. Analysis Period
As discussed in Section XXII(C)(3)(a),
infra, during the interim phase, the
Commission will have access to more
useful data about how different securitybased swap trades of different sizes and
with different reporting delays might be
affecting subsequent behavior in the
market, as well as any additional data
and analysis that might be submitted by
third parties.556 Furthermore, once
implemented, reporting sides will be
required under Regulation SBSR to
submit their security-based swap
execution times to a registered SDR. As
noted above, security-based swap
transaction data currently stored in
DTCC–TIW includes the time of
reporting but not the time of the
execution.557 Having the execution time
instead of only the reporting time will
allow a more robust and granular
analysis of any hedging that may or may
not occur within the first 24-hour period
after execution.
The Commission is directing its staff
to use data collected during the interim
phase to publish a report for each asset
class of security-based swaps assessing
the impact of post-trade transparency on
that asset class. The Appendix to Rule
901 of Regulation SBSR sets forth the
guidelines for these reports, which must
be completed no later than two years
following the initiation of public
dissemination of SBS transaction data
by the first registered SDR in each asset
class.558
The completion of the staff’s report
for an asset class will mark the
beginning of an analysis period, during
which the Commission anticipates
556 See ICI II at 7 (‘‘We also support the SEC reopening for comment certain issues related to block
trades—such as the required time delays—in
connection with the future SEC proposal regarding
how to define block trades’’).
557 See Hedging Analysis at 5.
558 See infra Section XXII(C)(3)(a) (describing the
importance of conducting additional data analysis
during the interim phase).

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considering the report, any public
comments received on the report, and
any other relevant data and information,
including the Commission’s original
proposal to define ‘‘real time’’ in the
context of Section 13(m) of the
Exchange Act to mean ‘‘as soon as
technologically practicable, but in no
event later than 15 minutes after the
time of execution of a security-based
swap transaction.’’ 559 Based on this
analysis, the Commission anticipates
that it will prepare a proposal that
would address, among other things: (1)
The criteria for determining what
constitutes a large notional securitybased swap transaction (block trade) for
particular markets and contracts; and (2)
the appropriate time delay for
disseminating large notional securitybased swap transactions (block trades)
to the public.560 The Commission
believes that the approach of studying
security-based swap market activity
once post-trade transparency is
implemented, but before adopting block
trade rules, accords with the
recommendations of several
commenters.561
559 See Regulation SBSR Proposing Release, 75 FR
75284.
560 See 15 U.S.C. 78m(m)(1)(E)(ii)–(iii). The
Commission anticipates that these proposed rules
also would address certain issues raised by
commenters during the comment period for
Regulation SBSR. For example, several commenters
proposed calculation methodologies for block trade
thresholds. See, e.g., Goldman Sachs Letter at 4–6;
ISDA/SIFMA I at 4; Better Markets I at 6; WMBAA
II at 3; ISDA/SIFMA Block Trade Study at 26;
Cleary II at 14 (supporting various tests or
methodologies for establishing block trade
thresholds). Commenters suggested various
approaches for how often block thresholds should
be updated. See ISDA/SIFMA I at 5 (stating that
block trade thresholds should be updated at least
every three months because liquidity in the OTC
markets may change quickly); ISDA/SIFMA II at 8
(stating that the block trading exemption rules
should be updated quarterly); ISDA/SIFMA Block
Trade Study at 2 (stating that the reporting rules
should be re-evaluated regularly to ensure that they
reflect the changing characteristics of the market);
ICI I at 3 (stating that block trade thresholds would
need to be reviewed more than once a year to
remain meaningful); WMBAA II at 5
(recommending that block trade thresholds be
updated at appropriate intervals); MFA III at 8
(stating that an SB SEF’s swap review committee
should periodically determine what constitutes a
‘‘block’’ for each security-based swap or securitybased swap class that the SF SEF trades). See also
Barclays Letter at 5 (generally supporting a 30calendar-day look-back for determining block size
thresholds).
561 See Institutional Investors Letter at 4
(recommending that the CFTC collect market data
for one year before adopting rules relating to block
trades); MFA II, Recommended Timeline at 4;
WMBAA III at 6; FIA/FSF/ISDA/SIFMA Letter at 6
(appropriate block trade thresholds, and therefore
real-time reporting requirements, can be established
only after the commencement of SDR reporting to
regulators and careful analysis of security-based
swap market transaction data). This approach is
also broadly consistent with the implementation of
the TRACE system, which shortened reporting

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VIII. Reporting and Public
Dissemination of Security-Based Swaps
Involving Allocation
This section explains the application
of Regulation SBSR to certain securitybased swaps executed by an asset
manager on behalf of multiple clients—
transactions involving what are
sometimes referred to as ‘‘bunched
orders.’’ 562 To execute a bunched order,
an asset manager negotiates and
executes a security-based swap with a
counterparty, typically a security-based
swap dealer, on behalf of multiple
clients. The bunched order could be
executed on- or off-platform. The asset
manager would allocate a fractional
amount of the aggregate notional
amount of the transaction to each client,
either at the time of execution or some
time after execution. Allocation results
in the termination of the executed
bunched order and the creation of new
security-based swaps between the
security-based swap dealer and the
accounts managed by the asset
manager.563 By executing a bunched
order, the asset manager avoids having
to negotiate the account-level
transactions individually, and obtains
exposure for each account on the same
terms (except, perhaps, for size).
A. Discussion of Comments Received
and Application of Regulation SBSR
In response to the Regulation SBSR
Proposing Release, one commenter
stated that asset managers commonly
use bunched orders and allocations in
the OTC derivatives market, and
recommended that publicly
disseminating the execution of a
bunched order—without the allocation
information—would satisfy the
transparency objective of Title VII and
requirements over time. Several commenters
recommended a phased reporting approach
analogous to TRACE. See CCMR I at 2; Cleary II at
20; DTCC II at 9–10; FINRA Letter at 4–5; ISDA/
SIFMA I at 10; ISDA/SIFMA Block Trade Study at
2; UBS Letter at 2–3; WMBAA II at 5.
562 The Commission recognizes that market
participants may use a variety of other terms to refer
to such transactions, including ‘‘blocks,’’ ‘‘parent/
child’’ transactions, and ‘‘splits.’’ The Commission
has determined to use a single term, ‘‘bunched
orders,’’ for purposes of this release, as this appears
to be a widely accepted term. See, e.g., ‘‘Bunched
orders challenge SEFs,’’ MarketsMedia (March 25,
2014), available at http://marketsmedia.com/
bunched-orders-challenge-sefs/ (last visited
September 22, 2014); ‘‘Cleared bunched trades
could become mandatory rule,’’ Futures and
Options World (October 31, 2013) (available at
http://www.fow.com/3273356/Cleared-bunchedtrades-could-become-mandatory-rule.html (last
visited September 22, 2014).
563 In aggregate, the notional amount of the
security-based swaps that result from the allocation
is the same as the notional amount of the executed
bunched order.

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be consistent with TRACE reporting.564
The commenter also expressed the view
that the reporting party for a bunched
order execution should be obligated to
report allocation information, which
would be necessary to indicate the final
placement of risk derived from the
initial trade.565 The discussion below
explains how Regulation SBSR’s
regulatory reporting and public
dissemination requirements apply to
executed bunched orders that are
subject to the reporting hierarchy in
Rule 901(a)(2)(ii) and the security-based
swaps that result from the allocation of
these transactions, to the extent that the
resulting security-based swaps are not
cleared. The Regulation SBSR Proposed
Amendments Release is proposing
guidance for reporting platformexecuted bunched orders that will be
submitted to clearing and security-based
swaps that result from the allocation of
a bunched order if the resulting
security-based swaps are cleared.
Regulation SBSR requires bunched
order executions to be reported like
other security-based swaps. The
reporting side for a bunched order
execution subject to the reporting
hierarchy in Rule 901(a)(2)(ii) 566 must
report the information required by Rules
901(c) and 901(d) for the bunched order
execution, including the notional
amount of the bunched order execution,
to a registered SDR.567 The information
described in final Rule 901(c) will be
publicly disseminated under final Rule
902(a), like any other security-based
swap transaction that does not fall
within the enumerated exceptions to
public dissemination in Rule 902(c).568
The Commission believes that it is
appropriate to enhance price discovery,
and thus consistent with the statutory
provisions governing public
dissemination of security-based swaps,
to require public dissemination of a
single transaction report showing the
aggregate notional amount of the
bunched order execution (i.e., the size
564 See ISDA/SIFMA I at 7–8. See also ISDA IV
at 10, 13 (asserting that the bunched order
execution could be disseminated publicly, but that
post-allocation activities should be excluded from
public dissemination).
565 See id. at 8.
566 See supra Section V. A bunched order
execution will be subject to this reporting hierarchy
unless it is executed on a platform and submitted
to clearing.
567 Rule 901(d)(1) requires the reporting side for
a security-based swap to report ‘‘the counterparty
ID or the execution agent ID of each counterparty,
as applicable.’’ The Commission notes that an asset
manager acts as an execution agent for the clients
that receive allocations of an executed bunched
order.
568 See supra Section VI.

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prior to allocation).569 The public
thereby will know the full size of the
bunched order execution and that this
size was negotiated at a single price.
The reporting side for a bunched order
execution also must report life cycle
events for the bunched order
execution—including the termination of
the executed bunched order that result
from its allocation—to the registered
SDR that receives the initial report of
the transaction.
When a bunched order execution is
allocated, new security-based swaps are
created that must be reported to a
registered SDR pursuant to Rule 901(a).
To clarify that point, the introductory
language to final Rule 901(a) states that
a ‘‘security-based swap, including a
security-based swap that results from
the allocation, termination, novation, or
assignment of another security-based
swap, shall be reported’’ as provided in
the rest of the rule.570 Reporting of the
security-based swaps resulting from the
allocation of a bunched order execution
should assure that the Commission and
other relevant authorities know the final
placement of risk that results from the
bunched order execution.571 As with
any other security-based swap, the
reporting side for a security-based swap
resulting from an allocation is
determined by Rule 901(a). Also, as
with any other security-based swap, the
reporting side must make the required
report within 24 hours of the time that
the new security-based swap is
created—not within 24 hours of the time
of execution of the original bunched
order.572 Under Rule 901(d)(10), the
reporting side for a security-based swap
resulting from an allocation must report
the transaction ID of the executed
569 See 15 U.S.C. 13(m)(1)(B) (authorizing the
Commission to make security-based swap
transaction and pricing data available to the public
‘‘in such form and at such times as the Commission
determines appropriate to enhance price
discovery’’).
570 See supra Section V(C)(5).
571 As stated above, allocation also results in the
termination of the bunched order execution, which
is a life cycle event of the original transaction. This
life cycle event must be reported, in accordance
with Rule 901(e), to the registered SDR that receives
the report of the original bunched order execution.
572 If 24 hours after the time of allocation would
fall on a day that is not a business day, the report
of the security-based swaps resulting from the
allocation would be due by the same time on the
next day that is a business day. See Rule 901(j). One
commenter requested that Regulation SBSR reflect
that the timeframe for reporting security-based
swaps resulting from a bunched order execution
commence upon receipt of the identity of the
counterparties to the bunched order execution by
the reporting party during its own business hours.
See ISDA IV at 10. The Commission believes that
the requirement that the reporting side make the
required report within 24 hours of the time that the
new security-based swap is created is responsive to
this comment.

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bunched order as part of the report of
the new security-based swap.573 This
requirement will allow the Commission
and other relevant authorities to link a
report of a bunched order execution to
the smaller security-based swaps that
result from the allocation of the
bunched order execution. Because these
related transactions can be linked across
registered SDRs using the transaction ID
of the bunched order execution, the
Commission believes that it is not
necessary or appropriate to require that
the security-based swaps resulting from
the allocation be reported to the same
registered SDR that received the
transaction report of the original
transaction.
The Commission agrees with the
commenters who recommended that
publicly disseminating the execution of
a bunched order—without the allocation
information—would satisfy the
transparency objective of Title VII.574
Therefore, Regulation SBSR does not
require a registered SDR to publicly
disseminate reports of the new securitybased swaps that result from an
allocation. In fact, as described above,
Rule 902(c)(7), as adopted, prohibits a
registered SDR from disseminating
‘‘[a]ny information regarding the
allocation of a security-based swap.’’ 575
This approach also accords with the
recommendation of the commenter who
urged that the aggregate notional
amount prior to allocation be
disseminated, rather than the individual
transaction sizes, in order to preserve
anonymity of the asset manager and its
clients.576
The Commission notes that Rule
907(a)(1), as adopted, requires a
registered SDR to establish and maintain
policies and procedures that, among
other things, enumerate the specific data
elements of a security-based swap that
must be reported. Registered SDRs
should consider describing, as part of
these policies and procedures, the
means by which persons with a duty to
report bunched order executions—and
the new security-based swaps that result
573 Rule 901(d)(10), as adopted, provides that, if
a ‘‘security-based swap arises from the allocation,
termination, novation, or assignment of one or more
existing security-based swaps,’’ the reporting side
must report ‘‘the transaction ID of the allocated,
terminated, assigned, or novated security-based
swap(s),’’ subject to one exception that would not
apply to an allocation that is not submitted for
clearing.
574 See ISDA/SIFMA I at 7–8; ISDA IV at 10, 13.
575 See supra Section VI(D).
576 See MFA I at 2–3 (‘‘Counterparties are often
aware of an investment manager’s standard fund
allocation methodology and therefore, reporting
transactions at the allocated level . . . will make
evident an allocation scheme that other participants
can easily associate with a particular investment
manager’’).

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from the allocation—must report the
information required by Rules 901(c)
and 901(d).
B. Example: Reporting and Public
Dissemination for an Uncleared
Bunched Order Execution
The following example demonstrates
how Regulation SBSR applies to a
bunched order execution that will not
be cleared and the security-based swaps
that result from the allocation of that
bunched order execution. Assume that
an asset manager, acting on behalf of
several investment fund clients,
executes a bunched order with a
registered security-based swap dealer.
Assume that the transaction is not
submitted to clearing and there are no
indirect counterparties on either side.
The execution of the bunched order
could occur either on a platform or not.
1. Reporting the Executed Bunched
Order
Under Rule 901(a)(2)(ii), as adopted,
the registered security-based swap
dealer is the reporting side for the
bunched order execution because only
one side of the transaction includes a
registered security-based swap dealer.
Under final Rules 901(c) and 901(d), the
registered security-based swap dealer
has up to 24 hours after the time of
execution of the bunched order to report
all applicable primary and secondary
trade information to a registered SDR.
The registered security-based swap
dealer must report the entire notional
amount of the executed bunched order
as part of the Rule 901(c) primary trade
information.577 Rule 902(a) requires the
registered SDR to publicly disseminate
a single last-sale print showing the
aggregate notional amount of the
bunched order execution immediately
upon receiving the report from the
registered security-based swap dealer.
2. Reporting the Allocations
Regulation SBSR also requires
reporting to a registered SDR of the
security-based swaps that result from
allocation of the bunched order
execution.578 As the reporting side for
the executed bunched order, the
registered security-based swap dealer
must make a life cycle event report, in
accordance with Rule 901(e), to notify
the registered SDR that received the
report of the executed bunched order
577 See Rule 901(c)(4) (requiring reporting of the
notional amount of a security-based swap and the
currency in which the notional amount is
denominated).
578 See Rule 901(a) (requiring that a securitybased swap, ‘‘including a security-based swap that
results from the allocation, termination, novation,
or assignment of another security-based swap shall
be reported’’ as provided in the rest of the rule).

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that the trade has been allocated, which
terminates the security-based swap.
Pursuant to Rule 901(a)(2)(ii), the
registered security-based swap dealer
also is the reporting side for each
security-based swap resulting from
allocation of the bunched order
execution because only one side of the
transaction includes a registered
security-based swap dealer.579 If the
asset manager provides the allocation
information to the registered securitybased swap dealer prior to or
contemporaneous with the bunched
order execution, the registered securitybased swap dealer could report the
bunched order execution and the
security-based swaps that result from its
allocation to a registered SDR at the
same time.580 If the asset manager does
not provide the allocation information
to the registered security-based swap
dealer until some time after execution of
the bunched order, the registered
security-based swap dealer must report
each security-based swap resulting from
the allocation within 24 hours of the
allocation. In either case, the reports of
the security-based swaps resulting from
the allocation of the bunched order
execution must include the
counterparty IDs of each investment
fund and the notional amount of each
security-based swap resulting from the
allocation. In either case, Rule
901(d)(10) requires each report of a
security-based swap resulting from the
allocation to include the transaction ID
of the bunched order execution so that
the Commission and other relevant
authorities will have the ability to link
each resulting transaction with the
initial bunched order execution.
IX. Inter-Affiliate Security-Based
Swaps
A. Background and Summary of Final
Rule

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Regulation SBSR, as initially
proposed, did not contemplate any
exception from reporting for interaffiliate security-based swaps. In the
Regulation SBSR Proposing Release, the
Commission expressed the preliminary
view that a report of an inter-affiliate
security-based swap should be publicly
disseminated with an indicator
identifying the transaction as an inter579 The

Commission assumes that the investment
funds would not be registered security-based swap
dealers for purposes of these examples.
580 Even though the reports could be made at the
same time, Rule 901(a) requires a report of a
bunched order execution and an associated
allocation to be maintained as separate records by
a registered SDR because the execution of the
bunched order and the allocations are separate
reportable security-based swap transactions.

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affiliate security-based swap.581 The
Commission noted that, for such
transactions, ‘‘there might not be an
arm’s length negotiation over the terms
of the [security-based swap] transaction,
and disseminating a report of the
transaction without noting that fact
would be inimical to price
discovery.’’ 582 Rule 907(a)(4), as
proposed, would have required a
registered SDR to establish and maintain
written policies and procedures
describing, among other things, how
reporting parties would report—and
consistent with the enhancement of
price discovery, how the registered SDR
would publicly disseminate—securitybased swap transactions that do not
involve an opportunity to negotiate any
material terms, other than the
counterparty.583
The Commission received several
comments regarding inter-affiliate
security-based swaps in response to the
Regulation SBSR Proposing Release and
discussed those comments in the CrossBorder Proposing Release.584 Although
the Cross-Border Proposing Release did
not propose to revise any portion of
Regulation SBSR with regard to the
treatment of inter-affiliate securitybased swaps, the Commission provided
some preliminary thoughts on how
Regulation SBSR could be applied to
them, particularly as regards to public
dissemination, in a manner that could
address commenters’ concerns without
taking the step of suppressing all interaffiliate transactions from public
dissemination.585 In response to the
Cross-Border Proposing Release, the
Commission received additional
comments, described below, regarding
the application of Regulation SBSR to
inter-affiliate security-based swaps.
Regulation SBSR, as adopted, applies
to all security-based swaps, including
inter-affiliate security-based swaps. The
Commission has considered, but is not
adopting, any exemption from
Regulation SBSR’s regulatory reporting
or public dissemination requirements
for inter-affiliate security-based swaps.
Therefore, Rules 901(c) and 901(d)
require reporting of inter-affiliate
security-based swaps; Rule 901(i)
requires reporting of historical interaffiliate security-based swaps; and Rule
902 requires public dissemination of
inter-affiliate security-based swaps.
Furthermore, Rule 907(a)(4) requires a
registered SDR to establish and maintain
policies and procedures that, among
581 See

75 FR 75214–15.
at 75215.
583 See id. at 75237.
584 See 78 FR 31069–72.
585 See id. at 31071–72.
582 Id.

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14627

other things, identify characteristics of
or circumstances associated with the
execution or reporting of a securitybased swap that could, in the fair and
reasonable estimation of the registered
SDR, cause a person without knowledge
of such characteristics or circumstances
to receive a distorted view of the
market. As discussed in Section VI(G),
supra, the Commission generally
believes that a registered SDR should
establish a flag for inter-affiliate
security-based swaps to help market
observers better understand the
information that is publicly
disseminated.
B. Discussion of Comments
1. Regulatory Reporting of Inter-Affiliate
Security-Based Swaps
Most of the comments relating to
inter-affiliate security-based swaps, in
response to both the initial proposal and
the Cross-Border Proposing Release
(which re-proposed Regulation SBSR in
its entirety), pertained to public
dissemination. However, one
commenter stated that, because interaffiliate transactions should not be
publicly disseminated, it also should be
unnecessary to ‘‘collect’’ information
about them.586 Another commenter on
the Regulation SBSR Proposing Release
argued that, for a foreign entity
registered as a bank holding company
and subject to the consolidated
supervision of the Federal Reserve
System, the reporting of inter-affiliate
transactions would be superfluous
because the Federal Reserve has ‘‘ample
authority to monitor transactions among
affiliates,’’ 587 suggesting that even
regulatory reporting of inter-affiliate
security-based swaps should not be
necessary.588 In the Cross-Border
Proposing Release, the Commission
specifically asked whether commenters
believed that cross-border inter-affiliate
security-based swaps should be
excluded from the regulatory reporting
requirements of Regulation SBSR and, if
so, under what circumstances such
security-based swaps should be
excluded.589 No commenters on the
Cross-Border Proposing Release
responded to this particular question
pertaining to regulatory reporting.
586 Cravath

Letter at 9.
Banks Letter at 5.
588 See also Multiple Associations IV at 6 (stating
that ‘‘many of the transaction-based requirements in
Title VII, such as . . . trade reporting rules,
generally do not further legislative or regulatory
purposes when applied to inter-affiliate swaps,’’ but
without specifying whether the comment was with
respect to regulatory reporting, public
dissemination, or both).
589 See 78 FR 31072.
587 Japanese

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The Commission continues to believe
that the Commission and other relevant
authorities should have ready access to
information about the specific
counterparties that hold positions in all
security-based swaps subject to
Regulation SBSR. While it is true that
the Federal Reserve or perhaps another
relevant authority might exercise
consolidated supervision over a group,
such supervision might not provide the
Commission and other relevant
authorities with current and specific
information about security-based swap
positions held by the group’s
subsidiaries. As a result, it would likely
be more difficult for relevant authorities
to conduct general market analysis or
surveillance of market behavior, and
could present difficulties during a crisis,
when ready access to accurate and
timely information about specific risk
exposures might be crucial.
Furthermore, the statutory provisions
that require regulatory reporting of
security-based swap transactions state
that ‘‘each’’ security-based swap shall be
reported; these statutory provisions do
not by their terms limit the reporting
requirement to transactions having
particular characteristics (such as being
negotiated at arm’s length).590 Even
absent these constraints, for the reasons
described above, the Commission does
not believe that an exemption from
regulatory reporting for these
transactions would be appropriate.
Therefore, Regulation SBSR subjects
inter-affiliate security-based swaps to
regulatory reporting.591

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2. Public Dissemination of Inter-Affiliate
Security-Based Swaps
As discussed below, some
commenters raised concerns regarding
590 Section 13A(a)(1) of the Exchange Act, 15
U.S.C. 78m–1(a)(1), provides that each securitybased swap that is not accepted for clearing shall
be subject to regulatory reporting. Section
13(m)(1)(G) of the Exchange Act, 15 U.S.C.
78m(m)(1)(G), provides that each security-based
swap (whether cleared or uncleared) shall be
reported to a registered SDR.
591 In addition, one group of commenters
acknowledged that ‘‘a number of rules that apply to
the core operations of a registered entity will
perforce apply to such entity’s inter-affiliate swap
transactions and could further Dodd-Frank policy
purposes.’’ Multiple Associations Letter at 9. These
commenters stated that inter-affiliate transactions
would need to be taken into account in calculating
an entity’s capital requirements, and that internal
recordkeeping requirements are essential to the
oversight of the security-based swap business. See
id. The Commission notes that regulatory reporting
of all security-based swaps, including inter-affiliate
security-based swaps, will assist the Commission
and other relevant authorities in overseeing
compliance with these capital and recordkeeping
requirements, as the regulatory report of an entity’s
security-based swap activity could provide an
external check of the internal records of such
entities’ positions and activities.

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the public dissemination of interaffiliate security-based swaps. After
carefully considering the issues raised
by these commenters, the Commission
has determined to adopt Regulation
SBSR with no exemption from the
public dissemination requirements for
inter-affiliate security-based swaps.
As a preliminary matter, the
Commission notes that, once a securitybased swap transaction has been
reported to a registered SDR, the
counterparties assume no additional
burdens associated with public
dissemination of the transaction. That
function will be carried out solely by
the registered SDR. Thus, requiring
registered SDRs to publicly disseminate
security-based swaps, including interaffiliate security-based swaps, will not
increase the compliance burden on
security-based swap counterparties.
One commenter argued that interaffiliate security-based swaps should
not be subject to public dissemination
because ‘‘public reporting could confuse
market participants with irrelevant
information’’ and suggested that ‘‘the
Commissions collect data on these
transactions but not require
dissemination to the public at large.’’ 592
Another commenter stated that an interaffiliate transaction ‘‘does not contain
any additional price information beyond
that contained in the transaction with
the customer.’’ 593 One group of
commenters argued that publicly
disseminating inter-affiliate transactions
‘‘will distort the establishment of
position limits, analysis of open
interest, determinations of block trade
thresholds and performance of other
important regulatory analysis, functions
and enforcement activities that require
an accurate assessment of the [securitybased] swaps market.’’ 594 These
commenters stated, further, that interaffiliate security-based swaps ‘‘could be
required to be publicly reported in
multiple jurisdictions, even though they
are not suitable for reporting in any
jurisdiction.’’ 595
An accurate assessment of the
security-based swap market will be
necessary for a wide range of functions,
potentially including—as noted by this
592 Cleary II at 17. See also SIFMA/FIA/
Roundtable Letter at A–44 (stating that ‘‘real-time
reporting of inter-affiliate [security-based swaps]
. . . would distort market information and thus
have a detrimental market and commercial
impact’’).
593 ISDA/SIFMA I at 13. See also ISDA IV at 13
(recommending that inter-affiliate trades should not
be subject to public dissemination).
594 Multiple Associations Letter at 11–12. See also
ISDA I at 5 (stating, in the context of pre-enactment
security-based swaps, that inter-affiliate securitybased swaps should not be subject to reporting).
595 Multiple Associations Letter at 16.

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group of commenters—analysis of open
interest and the establishment of block
trade thresholds.596 The Commission
believes that users of security-based
swap market data—whether regulators,
SDRs, market participants, or the public
at large—should have an accurate and
undistorted view of the market.
However, it does not follow that public
dissemination of inter-affiliate securitybased swaps will necessarily prevent an
accurate assessment of the securitybased swap market.
The need to distinguish reports of
initial transactions from subsequent
inter-affiliate transactions exists
whether or not the latter are publicly
disseminated. As noted above, the
Commission is requiring each registered
SDR to adopt, among others, policies
and procedures for flagging transaction
reports that have special
circumstances.597 This flagging
mechanism is designed to provide
regulators with a more accurate view of
the security-based swap market, and the
same mechanism can be applied to
publicly disseminated last-sale reports
to give market observers the same view.
The Commission continues to believe
that the commenters’ concerns about the
potentially limited price discovery
value of inter-affiliate security-based
swaps can be addressed through the
public dissemination of relevant data
that flags such limitations, rather than
suppressing these transactions from
public dissemination entirely.
Additionally, even if the report of an
initial security-based swap transaction
has been publicly disseminated in
another jurisdiction, the Commission
believes that it would be preferable to
disseminate a report of the subsequent
inter-affiliate transaction with an
appropriate condition flag rather than
suppressing a report of the inter-affiliate
596 See

id. at 11–12.
policies and procedures could address
not only reporting of whether a security-based swap
is an inter-affiliate transaction, but also whether the
initial security-based swap was executed in a
jurisdiction with public dissemination
requirements. This could be either the United States
or another jurisdiction that imposes last-sale
transparency requirements similar to those in
Regulation SBSR. Further, these policies and
procedures also could address whether to indicate
the approximate time when the initial securitybased swap was executed. For example, there could
be condition flags for the initial security-based
swap having been executed within the past 24
hours, between one and seven days before, or longer
than seven days before. An indication that the
initial trade was executed less than 24 hours before
could provide significant price discovery value,
while an indication that the initial trade was
executed over a week before could, all things being
equal, have less. However, even information about
a trade executed over a week ago (or more) could
have price discovery value for security-based swaps
that trade infrequently.
597 These

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transaction from public dissemination
through a registered SDR. Public
dissemination of such a transaction by
a registered SDR would help to assure
that information concerning the
transaction was readily available to
participants in the U.S. market and
other market observers.
One group of commenters argued that
‘‘use of inter-affiliate [security-based
swaps] not only allows risks to reside
where they are more efficiently
managed, but it also has a net positive
effect on an institution’s assets and
liquidity, as well as on its efficiency in
deploying capital. For these reasons, we
believe that there should be an interaffiliate exemption from the public
dissemination requirements.’’ 598
Another commenter raised similar
concerns, arguing that ‘‘public reporting
of inter-affiliate transactions could
seriously interfere with the internal risk
management practices of a corporate
group’’ and that ‘‘[p]ublic disclosure of
a transaction between affiliates could
prompt other market participants to act
in a way that would prevent the
corporate group from following through
with its risk management strategy by, for
instance, causing adverse price
movements in the market that the riskcarrying affiliate would use to
hedge.’’ 599 The Commission agrees
generally that corporate groups should
engage in appropriate risk management
practices. However, the Commission
does not agree that Regulation SBSR, as
adopted, is inimical to effective risk
management. The Commission notes
that, during the first phase of Regulation
SBSR, all security-based swaps—
regardless of size—must be reported
within 24 hours from the time of
execution and—except with regard to
transactions falling within Rule 902(c)—
immediately publicly disseminated. As
discussed in Section VII, supra, this
reporting timeframe is designed, in part,
to minimize any potential for market
disruption resulting from public
dissemination of any security-based
swap transaction during the interim
phase of Regulation SBSR. The
Commission anticipates that, during the
interim period, it will collect and
analyze data concerning the sizes of
transactions that potentially affect
liquidity in the market. If the
Commission ultimately determines that
some form of block trade exception to
real-time public dissemination is
appropriate, an inter-affiliate securitybased swap of block size would be able
to avail itself of that exception. The
Commission sees no basis for
598 SIFMA/FIA/Roundtable
599 Cleary

Letter at A–44.

II at 17.

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concluding, at this time, that interaffiliate security-based swaps are more
difficult to hedge than other types of
security-based swaps, or that the
hedging of these transactions presents
unique concerns that would not also
arise in connection with the hedging of
a security-based swap that was not an
inter-affiliate transaction. Therefore, the
Commission does not agree with the
commenters’ concern that public
dissemination of inter-affiliate securitybased swaps will impede the ability of
corporate groups to hedge.
Another group of commenters argued
that ‘‘affiliates often enter into these
swaps on terms linked to an external
trade being hedged. If markets have
moved before the inter-affiliate trade is
entered into on the SEF or reported as
an off-exchange trade, market
participants could also misconstrue the
market’s true direction and depth.’’ 600
This comment suggests that last-sale
reports of transactions that appear out of
the order in which the transactions in
fact occurred could mislead market
observers. The Commission shares this
concern but does not conclude that the
appropriate response is to suppress all
inter-affiliate transactions from public
dissemination. The Commission
believes instead that this issue can be
addressed by requiring the
dissemination of the date and time of
execution on the last-sale report.601 This
requirement is designed to allow market
observers to construct a time-sequenced
record of all transactions in the securitybased swap market and thereby
counteract the possibility that certain
transactions could be reported and
publicly disseminated out of the order
in which they were in fact executed.
Some commenters stated that interaffiliate security-based swaps ‘‘are
typically risk transfers with no market
impact.’’ 602 This statement does not
exclude the possibility that some interaffiliate security-based swaps might
have a market impact. The Commission
sees no basis to conclude at this time
that inter-affiliate security-based swaps
do not provide price discovery value or
other useful information to market
observers. Market observers might be
able to discern useful information from
the last-sale reports of some interaffiliate security-based swaps, and the
Commission believes that market
observers should be given the
opportunity to do so—particularly given
the Title VII mandate that all security600 See

Multiple Associations Letter at 12.
Rule 901(c)(2).
602 SIFMA/FIA/Roundtable Letter at A–44;
Multiple Associations Letter at 11 (emphasis
added).
601 See

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14629

based swaps shall be publicly
disseminated. The value of this
information to market observers is
unknown at this time, because market
observers have never before had the
opportunity to view comprehensive lastsale information from the security-based
swap market. Suppressing all interaffiliate security-based swaps from
public dissemination would eliminate
any potential that market observers
could develop ways to utilize this
information. Thus, under the final rules,
market observers who wish to evaluate
the entire record of transactions,
including inter-affiliate transactions,
will have the opportunity to do so. As
discussed above, the Commission
disagrees with the commenters who
argued that ‘‘[r]equiring real-time
reporting of inter-affiliate [securitybased swaps] . . . would distort market
information and thus have a detrimental
market and commercial impact.’’ 603
Because such transactions will be
flagged, market observers can simply—
if they wish—remove from their
analysis any transactions having an
inter-affiliate flag.
The Commission sees one
circumstance where public
dissemination of an inter-affiliate
transaction could have significant price
discovery value: When the initial
transaction is effected in a foreign
jurisdiction without a public
dissemination requirement and is not
otherwise subject to public
dissemination under Regulation SBSR,
and the subsequent inter-affiliate
transaction—between one of the original
counterparties and one of its affiliate—
would be publicly disseminated if it fell
within Rule 908(a)(1). Commenters’
views that public dissemination of an
inter-affiliate transaction would be
duplicative and distorting are premised
on the view that the initial transaction
is, in fact, publicly disseminated, which
may not always be the case.604
Therefore, public dissemination of the
subsequent inter-affiliate transaction
might be the only way for the market to
obtain any pricing information about the
related pair of transactions.605 In the
Cross-Border Proposing Release, the
Commission specifically noted this
603 SIFMA/FIA/Roundtable

Letter at A–44.
Multiple Associations Letter at 12 (‘‘The
market-facing swaps already will have been
reported and therefore, to require that inter-affiliate
swaps also be reported will duplicate
information’’).
605 In addition, even if the initial transaction is
publicly disseminated, the Commission does not
believe that publicly disseminating the second,
inter-affiliate transaction would cause observers to
obtain a distorted view of the market, as long as the
second transaction is flagged as an inter-affiliate
transaction. See supra Section VI(G).
604 See

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circumstance and requested comment
on it.606 No commenters responded.
Finally, one commenter on the CrossBorder Proposing Release argued that
the Commission should propose a
comprehensive rule regarding interaffiliate security-based swaps ‘‘before
finalizing the substantive underlying
rules governing the SBS markets.’’ 607
The commenter reasoned that ‘‘a
separate proposed rule, like the CrossBorder Proposal, is necessary to ensure
that market participants are accorded
sufficient opportunity to comment on
the interplay between the Commission’s
proposed rules and inter-affiliate
trades.’’ 608
The Commission notes that
Regulation SBSR, as initially proposed,
did not contemplate any exception for
inter-affiliate security-based swaps, and
the Regulation SBSR Proposing Release
discussed at various points how
proposed Regulation SBSR would apply
to inter-affiliate transactions.609 The
Commission received comments
regarding the reporting of inter-affiliate
transactions in response to both the
Regulation SBSR Proposing Release and
the Cross-Border Proposing Release.
Commenters on the Cross-Border
Proposing Release’s discussion of the
application of Regulation SBSR to interaffiliate security-based swaps did not
raise any new issues that had not
already been raised in response to the
Regulation SBSR Proposing Release. In
addition, as noted above, the
Commission discussed in the CrossBorder Proposing Release the comments
regarding inter-affiliate transactions
submitted in response to the Regulation
SBSR Proposing Release.610 After
carefully considering all of these
comments, the Commission believes
that commenters had sufficient
opportunity to present their views on
inter-affiliate transactions in Regulation
SBSR and therefore it is appropriate at
this time to adopt final rules relating to
regulatory reporting and public
dissemination of security-based swaps,
including inter-affiliate security-based
swaps.
X. Rule 903—Use of Codes
Regulation SBSR, as adopted, permits
or, in some instances, requires securitybased swap counterparties to report
coded information to registered SDRs.
These codes, known as unique
identification codes (‘‘UICs’’), will be
used to identify products, transactions,
606 See

78 FR 31072.

607 SIFMA/FIA/Roundtable

A. Proposed Treatment of Coded
Information
As initially proposed, Regulation
SBSR would have established a process
for assigning UICs in Rule 900 and
addressed the standards for using coded
information in Rule 903. Proposed Rule
900 would have provided that a ‘‘unique
identification code’’ or ‘‘UIC’’ would be
the unique code assigned to a person,
unit of a person, or product by or on
behalf of an internationally recognized
standards-setting body (‘‘IRSB’’) that
imposes fees and usage restrictions that
are fair and reasonable and not
unreasonably discriminatory. The
proposed definition of ‘‘UIC’’ further
would have provided that, if there
existed no IRSB meeting these criteria,
a registered SDR would have been
required to assign all necessary UICs
using its own methodology. Similarly, if
an IRSB meeting the criteria existed but
had not assigned a relevant UIC, the
registered SDR would have been
required to assign that UIC using its
own methodology. When the
Commission re-proposed Regulation
SBSR as part of the Cross-Border
Proposing Release, it designated the
definition of ‘‘UIC’’ as re-proposed Rule
900(nn) but made no changes to the
substance of the definition.612
Rule 903, as originally proposed,
would have permitted the use of codes
in place of certain data elements for
purposes of reporting and publicly
disseminating the information required
under proposed Rules 901 and 902 of
Regulation SBSR, provided that the
information to interpret such codes is
‘‘widely available on a non-fee basis.’’
When the Commission re-proposed Rule
903, it replaced the term ‘‘reporting
party’’ with ‘‘reporting side’’ but
otherwise made no substantive revisions
to the rule.613
611 See

Letter at A–28.

608 Id.

at A–30.
75 FR 75215, 75234, 75237.
610 See 78 FR 31069–72.
609 See

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and legal entities, as well as certain
business units and employees of legal
entities.611 Rule 903 of Regulation SBSR
establishes standards for assigning and
using coded information in securitybased swap reporting and dissemination
to help ensure that codes are assigned
in an orderly manner and that
regulators, market participants, and the
public are able to interpret coded
information stored and disseminated by
registered SDRs.

19:31 Mar 18, 2015

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supra Section II (describing UICs that
must be reported to registered SDRs pursuant to
Regulation SBSR).
612 See 78 FR 31211–12.
613 See id. at 31213.

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B. Comments Received and Final Rule
903
1. Relocation of UIC Provisions Into
Rule 903
Final Rule 903 is divided into
paragraphs (a) and (b). Rule 903(a) sets
out the requirements that registered
SDRs must follow when assigning UICs.
Similar requirements were initially
proposed as part of the definition of
‘‘UIC’’ in Rule 900, and re-proposed
without revision in Rule 900(nn). The
Commission now believes that it would
be more consistent with the overall
structure of Regulation SBSR to move
any substantive requirements from the
definitions rule (Rule 900) and into an
operative rule. Therefore, the
Commission’s substantive requirements
for a registered SDR’s use of UICs are
now located in final Rule 903.614 As
described below, the Commission is
adopting these requirements
substantially as proposed, but with
certain changes as described below. In
particular, Rule 903(a), as adopted,
includes new language regarding
Commission recognition of international
systems for assigning UICs. In addition,
final Rule 903(a) provides that, if the
Commission has recognized such a
system that assigns UICs to persons,
each participant of a registered SDR
shall obtain a UIC from or through that
system for identifying itself, and each
participant that acts as a guarantor of a
direct counterparty’s performance of
any obligation under a security-based
swap that is subject to Rule 908(a) shall,
if the direct counterparty has not
already done so, obtain a UIC for
identifying the direct counterparty from
or through that system, if that system
permits third-party registration without
a requirement to obtain prior permission
of the direct counterparty.
Final Rule 903(b) imposes certain
restrictions on how coded information
may be reported and publicly
disseminated. Rule 903(b) substantially
incorporates the earlier versions of Rule
903, with certain conforming and
technical changes described below.
2. Comments Regarding UICs and Final
Rule 903(a)
The Commission received several
comments on the proposed rules
relating to UICs and the development of
internationally recognized LEIs
generally. One commenter expressed
concern that, absent a methodology
614 Accordingly, the Commission is now adopting
a simplified definition of ‘‘UIC.’’ See Rule 900(qq)
(defining ‘‘UIC’’ as ‘‘a unique identification code
assigned to a person, unit of a person, product, or
transaction’’). See also infra Section X(B)(2)
(discussing final Rule 903(a)).

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outlined by a standard-setting body,
multiple UICs could be assigned by
different regulators to the same financial
entity, thereby creating compliance
burdens, operational difficulties, and
opportunities for confusion.615 Another
commenter believed that, absent
internationally recognized LEIs,
requiring SDR-specific UICs would
create inconsistencies among different
SDRs.616 This commenter recommended
that the Commission postpone this
requirement until an international
taxonomy exists that can be applied
consistently.617 A third commenter
stated that it is imperative that a single
source of reference data and
unambiguous identifiers be
established.618 A fourth commenter
argued that ‘‘[s]ignificant progress in
establishing the GLEIS has been made to
date, and the time for further expanding
the use of the LEI through rulemaking
is favorable.’’ 619 A fifth commenter
noted that the CFTC’s swap reporting
rules require the use of LEIs and urged
the Commission, for the sake of clarity
and consistency, to replace its reference
to ‘‘unique counterparty identifiers’’
with ‘‘Legal Entity Identifiers,’’ unless
the Commission’s rule was intended to
include identifiers beyond LEIs.620 A
sixth commenter suggested that the
rules reflect primary use of the LEI as a
party identifier and the need to use an
LEI ‘‘when available,’’ recognizing that
a reporting party may request but cannot
compel its counterparties to obtain an
LEI.621
The Commission is adopting in Rule
903(a) the provisions relating to the
process for assigning UICs largely as
615 See

ICI I at 6.
DTCC V at 14 (also noting that, while
global standards for identification codes are likely
to exist for some data fields, certain global
identifiers will not exist).
617 See id. See also Bloomberg Letter at 1 (‘‘an
identifier system should be comprehensive and
global’’).
618 See Benchmark Letter at 1.
619 See letter from Kenneth E. Bentsen, Jr.,
President and CEO, SIFMA, to the Honorable Jacob
J. Lew, Chairman, Financial Stability Oversight
Council, dated April 11, 2014, available at http://
www.sifma.org/newsroom/2014/sifma_pushes_for_
broad_use_of_leis_to_promote_financial_stability/
(last visited January 13, 2015). In a prior comment
letter, this commenter recommended that ‘‘industry
utilities’’ be considered for assigning unique IDs for
legal entities/market participants, as well as for
transactions and products. See ISDA/SIFMA I at 8.
See also SWIFT Letter at 2 (expressing support for
a global standard for identifying security-based
swap market participants); DTCC X (stating that
there has been significant adoption globally on
transaction ID, product ID, and LEI standards).
620 See Levin Letter at 4.
621 See ISDA IV at 12. Regulation SBSR, as
adopted, does not compel a counterparty on a
reporting side to a security-based swap to obtain an
LEI for a counterparty on the other side of the
transaction.

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616 See

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proposed and re-proposed, but—
reflecting the comments described
above—is including two new
requirements: (1) That the Commission
recognize an IRSS before the use of UICs
from that IRSS becomes mandatory
under Regulation SBSR; and (2) that, if
the Commission has recognized an IRSS
that assigns UICs to persons, each
participant of a registered SDR shall
obtain a UIC from or through that IRSS.
As noted below, the Commission is
recognizing the GLEIS as an IRSS for
assigning LEIs. Final Rule 903(a) states:
‘‘If an internationally recognized
standards-setting system that imposes
fees and usage restrictions on persons
that obtain UICs for their own usage that
are fair and reasonable and not
unreasonably discriminatory and that
meets the requirements of paragraph (b)
of this section is recognized by the
Commission and has assigned a UIC to
a person, unit of a person, or product (or
has endorsed a methodology for
assigning transaction IDs), the registered
security-based swap data repository
shall employ that UIC (or methodology
for assigning transaction IDs). If no such
system has been recognized by the
Commission, or a recognized system has
not assigned a UIC to a particular
person, unit of a person, or product (or
has not endorsed a methodology for
assigning transaction IDs), the registered
security-based swap data repository
shall assign a UIC to that person, unit
of person, or product using its own
methodology (or endorse a methodology
for assigning transaction IDs). If the
Commission has recognized such a
system that assigns UICs to persons,
each participant of a registered securitybased swap data repository shall obtain
a UIC from or through that system for
identifying itself, and each participant
that acts as a guarantor of a direct
counterparty’s performance of any
obligation under a security-based swap
that is subject to § 242.908(a) shall, if
the direct counterparty has not already
done so, obtain a UIC for identifying the
direct counterparty from or through that
system, if that system permits thirdparty registration without a requirement
to obtain prior permission of the direct
counterparty.’’ 622
The Commission shares commenters’
desire to have identifiers that are widely
recognized, which would increase
efficiency at both the SDR and market
participant level. To avoid confusion
about when an IRSS meets the standards
of Rule 903, the Commission has
modified the rule to provide that UICs
622 See infra Section X(B)(3) (explaining the
Commission’s rationale for adopting final Rule
903(a)).

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14631

issued by a particular IRSS would not
become mandatory under Regulation
SBSR unless the Commission has
recognized the IRSS. As detailed below,
the Commission is recognizing the
GLEIS, applying the standards provided
in Rule 903. The Commission will apply
the standards provided in Rule 903 to
any future assessment of whether an
IRSS should be recognized as a provider
of UICs for purposes of Regulation
SBSR. Specifically, the Commission will
consider whether the IRSS imposes fees
and usage restrictions on persons that
obtain UICs for their own usage that are
fair and reasonable and not
unreasonably discriminatory, and
whether the information necessary to
interpret the codes assigned by or
through the IRSS is widely available to
users of the information on a non-fee
basis and without usage restrictions.623
Since Regulation SBSR was initially
proposed in 2010, significant strides
have been made in the development of
a globally recognized LEI. The
Commission hereby recognizes the
GLEIS, which operates under a
regulatory oversight committee
(‘‘ROC’’), as an internationally
recognized standards-setting system
(‘‘IRSS’’) 624 that meets the requirements
of Rule 903 of Regulation SBSR. The
Commission notes that the LEI
Regulatory Oversight Committee (‘‘LEI
ROC’’) currently includes members that
are official bodies from over 40
jurisdictions.625 LEIs are being issued by
over 30 pre-local operating units (‘‘preLOUs’’) around the globe, including the
Global Markets Entity Identifier
(‘‘GMEI’’) Utility in the United States.626
Furthermore, the Commission believes
that the GLEIS imposes fees and usage
restrictions on persons that obtain UICs
623 See infra Section X(B)(3) (discussing final
Rule 903(b)).
624 Regulation SBSR, as proposed and reproposed, would have employed the term
‘‘internationally recognized standards-setting body’’
rather than ‘‘internationally recognized standardssetting system,’’ which is used in Regulation SBSR,
as adopted. The Commission made this revision to
better reflect the process of LEI issuance. LEIs are
being assigned by a number of different bodies in
different jurisdictions being coordinated through a
global system, rather than by a single body.
625 The Commission is a member of the Executive
Committee of the LEI ROC. The LEI ROC is a standalone committee established pursuant to
recommendations by the Financial Stability Board
(‘‘FSB’’) that was subsequently endorsed by the
Group of 20 nations. See Financial Stability Board
(‘‘FSB’’), A Global Legal Entity Identifier for
Financial Markets (June 8, 2012), available at
http://www.leiroc.org/publications/gls/roc_
20120608.pdf (last visited September 22, 2014);
http://www.treasury.gov/resource-center/
international/g7-g20/Documents/G20%20
Ministerial%20Communique%20November%204-52012-Mexico%20City.pdf (last visited September
22, 2014).
626 See https://www.gmeiutility.org/index.jsp.

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for their own usage that are fair and
reasonable and not unreasonably
discriminatory under Rule 903(a).627
The Commission also understands that
the GLEIS does not impose any fees for
usage of or access to its LEIs, and that
all of the associated reference data
needed to understand, process, and
utilize the LEIs are widely and freely
available and not subject to any usage
restrictions.628 Therefore, the
Commission believes that the LEIs
issued by or through the GLEIS meet the
standards of Rule 903(b), which are
discussed in the section immediately
below. The Commission also notes that
it would expect to revisit its recognition
of the GLEIS if the GLEIS were to
modify its operations in a manner that
causes it no longer to meet the standards
of Rule 903. The Commission believes
that the provisions of Rule 903—
coupled with the Commission’s
recognition of the GLEIS—will facilitate
the reporting and analysis of securitybased swap transaction data, because (1)
each participant of a registered SDR
must be identified using the same LEI
for all transactions reported pursuant to
Regulation SBSR, and regardless of
which registered SDR holds records of
its transactions, and (2) a participant,
when it acts as guarantor of a direct
counterparty to a security-based swap
that is subject to Rule 908(b), is required
to obtain an LEI from or through the
GLEIS if the direct counterparty does
not already have an LEI and if the
system permits third-party registration
without a requirement to obtain prior
permission of the direct counterparty.629
627 See FSB, A Global Legal Entity Identifier for
Financial Markets, at 20 (‘‘Fees, where and when
imposed, should be modest and set on a non-profit
cost-recovery basis’’) and at 20, note 20 (‘‘It is
possible that some jurisdictions could be willing to
fund the LEI issuance from public sources and
provide LEIs to its local entities free of charge’’). As
of December 26, 2014, the cost of obtaining an LEI
from the GMEI Utility was $200, plus a $20
surcharge for the LEI Central Operating Unit. The
annual cost of maintaining an LEI from the GMEI
Utility was $100, plus a $20 surcharge for the LEI
Central Operating Unit. See https://
www.gmeiutility.org/frequentlyAskedQuestions.jsp.
628 See, e.g., http://www.financialstability
board.org/wp-content/uploads/r_120608.pdf?page_
moved=1, at 9 (‘‘Access to the LEI and associated
reference data will be free and open to all users, and
there should be no ‘bundling’ of other services
alongside the LEI by providers which forces users
to pay directly or indirectly for the LEI’’). In
addition, LEI information can be downloaded at no
cost from pre-LOU Web sites. See, e.g., https://
www.gmeiutility.org/ (providing a link for
downloading an FTP file containing LEI
information).
629 The Commission understands that the GLEIS
permits one firm to register a second firm when the
first firm has a controlling interest over the second.
See https://www.gmeiutility.org/frequentlyAsked
Questions.jsp (‘‘Who can register an entity for the
LEI?’’).

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As noted above, one commenter
recommended that, for clarity and
consistency with the CFTC’s swap
reporting rules, the Commission refer to
LEIs, rather than UICs, unless the
Commission intended to include
identifiers beyond LEIs.630 Although the
Commission agrees that the use of the
term ‘‘LEI’’ would provide greater
consistency with the CFTC’s rules,
Regulation SBSR continues to refer to
UICs, rather than LEIs, for two reasons.
First, as the commenter suggested, the
term ‘‘UIC’’ in Regulation SBSR
includes identifiers in addition to LEIs,
such as identifiers for products,
transactions, business units of legal
entities (i.e., branches and trading
desks), and individual traders.631
Second, the GLEIS does not extend to
natural persons or sub-legal entity
business units, such as a branches and
trading desks. Because at present the
Commission has not recognized an IRSS
for these types of UICs, a registered SDR
is required to assign UICs to these
entities using its own methodology.
Thus, because Regulation SBSR refers to
identifiers in addition to LEIs,
Regulation SBSR continues to refer to
UICs rather than LEIs.
The Commission acknowledges that,
under final Rule 903(a), different
registered SDRs could, in theory, assign
different UICs to the same person, unit
of a person, or product. Inconsistent
UICs could require the Commission and
other relevant authorities to map the
UICs assigned by one registered SDR to
the corresponding UICs assigned by
other registered SDRs to obtain a
complete picture of the market activity
pertaining to a particular person or
business unit.632 Although mapping
may present certain challenges, the
Commission believes that this approach
is better than the likely alternative of
having market participants assign UICs
630 See

Levin Letter at 4.
900(qq), as adopted, defines UIC to mean
‘‘a unique identification code assigned to a person,
unit of a person, product, or transaction.’’
632 To avoid this possibility with respect to the
identification of legal persons that are participants
of at least one registered SDR, the Commission has
recognized the GLEIS—by or through which LEIs
are issued—as an IRSS that meets the criteria of
Rule 903. The Commission is requiring that, if the
Commission has recognized such a system that
assigns UICs to persons, each participant of a
registered SDR shall obtain a UIC from or through
that system. The Commission notes that a single
person may act in various capacities in the securitybased swap market. For example, a person could be
a direct counterparty with respect to some
transactions while acting as a broker with respect
to other transactions. If that person is a participant
of a registered SDR, that person must obtain an LEI
from or through the GLEIS to identify itself in all
applicable security-based swap transaction reports,
regardless of the capacity in which the person acted
with respect to a particular transaction.
631 Rule

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to identify persons, units of persons, or
products according to their own
methodologies.633 In other words, the
Commission believes that UICs, even if
they are SDR-specific, will provide a
streamlined way of reporting,
disseminating, and interpreting
security-based swap information.634 The
Commission believes that requiring
registered SDRs to develop their own
UICs—but only for UICs that are not
assigned by or through an IRSS that has
been recognized by the Commission—
will result in less confusion than the
currently available alternatives, such as
allowing each reporting side to utilize
its own nomenclature conventions,
which would subsequently have to be
normalized by registered SDRs
themselves or by the Commission.
The Commission further understands
that, at this time, neither the GLEIS nor
any other IRSS has assigned product IDs
or established a methodology for
assigning transaction IDs. Therefore, a
registered SDR also is required under
Rule 903(a) to assign, or endorse a
methodology for assigning, product IDs
and transaction IDs. One commenter
recommended that ‘‘industry utilities’’
be considered for assigning unique IDs,
including transaction IDs and product
IDs.635 With respect to product IDs, Rule
903(a) provides a registered SDR with
flexibility to assign a product ID created
by an industry utility, in the absence of
an IRSS recognized by the Commission
that issues product IDs. Thus, if an
industry utility developed product
IDs,636 a registered SDR could endorse
that industry utility as the means for
assigning such product IDs, and require
use of those product IDs for reporting
and publicly dissemination transaction
information in its policies and
procedures required by Rule 907(a).
With respect to transaction IDs, a
registered SDR—in the absence of an
IRSS recognized by the Commission that
has endorsed a methodology for
assigning transaction IDs—is required to
633 The Commission notes, however, that
Regulation SBSR does not prohibit one registered
SDR from utilizing the UICs that were originally
assigned by another SDR.
634 See infra Section XIX (discussing regulatory
implications of having multiple registered SDRs).
635 See ISDA/SIFMA I at 8. See also ISDA IV at
12 (requesting that the Commission acknowledge
the ISDA OTC Taxonomy as an acceptable product
ID for reporting under Regulation SBSR and
recognize that reporting parties, as opposed to
SDRs, are generally best positioned to assign these
values). In the context of the development of
product IDs, the Commission is not at this time
making any determination as to whether the ISDA
OTC Taxonomy system constitutes an IRSS under
Regulation SBSR, or whether the product IDs issued
under the ISDA OTC Taxonomy system meet the
criteria of Rule 903.
636 See id.

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assign transaction IDs or endorse a
methodology for assigning transaction
IDs.637 A number of commenters
recommended that Regulation SBSR
permit transaction IDs generated by
persons other than a registered SDR.638
The Commission generally agrees with
these comments, and has revised the
UIC provisions relating to transaction
IDs as follows. Although Rule 900, as
proposed and re-proposed, would have
defined ‘‘transaction ID’’ as ‘‘the unique
identification code assigned by
registered security-based swap data
repository to a specific security-based
swap,’’ the definition of ‘‘UIC’’ in
proposed Rule 900(nn) did not mention
transaction IDs. The final definition of
‘‘UIC’’ includes transaction IDs in
addition to identification codes for
persons, units of persons, and products.
The final definition of ‘‘transaction ID’’
is ‘‘the UIC assigned to a specific
security-based swap transaction,’’
without the limitation that it be
assigned by a registered SDR. The
Commission agrees with these
commenters that requiring a registered
SDR to use transaction IDs assigned
only by a registered SDR would not be
practical. The Commission believes that
it would be more efficient and
consistent with current practice in the
security-based swap market to allow
transaction IDs to be assigned at or
shortly after execution, by a
counterparty, platform, or post-trade
processor. Final Rule 903(a) includes
language that contemplates that an IRSS
or registered SDR may ‘‘endorse a
methodology for assigning transaction
IDs.’’ This formulation makes clear that
transaction IDs need not be assigned by
an IRSS or registered SDR itself, but can
be assigned by security-based swap
counterparties, platforms, or post-trade
processors using the IRSS’s or registered
SDR’s methodology. Any entity that
assigns the transaction ID must do so in
accordance with the methodology
endorsed by a recognized IRSS or, in the
absence of a recognized IRSS that has
endorsed a methodology for assigning
transaction IDs, by the registered SDR
that will receive the report of the
transaction.639
637 See Rule 903(a). See also supra Section
III(B)(2) (discussing transaction IDs).
638 See DTCC V at 14 (recommending that the
Commission allow flexibility for a registered SDR
to accept transaction IDs already generated by the
reporting side or to assign transaction IDs where
such request is made); ISDA III at 2; ISDA IV at 11;
Tradeweb Letter at 5 (arguing that SB SEFs and
exchanges should be permitted to assign transaction
IDs).
639 See Rule 903(a). Thus, for example, a
counterparty or platform must not generate 40character transaction IDs if the registered SDR

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Two commenters addressed the types
of entities that can act as IRSSs. One of
these commenters recommended that
for-profit entities be permitted to act as
reference data registration
authorities,640 while the other
commenter argued that LEIs should be
issued by a not-for-profit entity that
operates on the principle of cost
recovery, and that the industry should
determine the appropriate model for
cost recovery.641 The Commission does
not believe that it is necessary or
appropriate to specify the type of
entity—for-profit or non-profit—that can
establish or operate an IRSS. Whichever
the case, final Rule 903(a) specifies that
the UICs issued by an IRSS may be used
under Regulation SBSR only if the IRSS
that imposes fees and usage restrictions
that are fair and reasonable and not
unreasonably discriminatory and that
meets the criteria of Rule 903(b) has
been recognized by the Commission. In
other words, the overall character of the
IRSS’s operation does not matter for
purposes of compliance with Regulation
SBSR (i.e., whether it is a for-profit or
non-profit entity) so long as any fees
and usage restrictions imposed with
respect to UICs meets the requirements
of Rule 903(a). In addition, any codes
used as, or as part of, UICs under
Regulation SBSR must meet the
standards of Rule 903(b), which are
described below.
3. Comments on Proposed Rule 903 and
Final Rule 903(b)
Commenters expressed differing
views regarding whether the providers
of UICs—and product IDs in
particular—should be able to charge fees
for the codes or for the information
necessary to interpret the codes. One
commenter supported the proposed
requirement that information necessary
to interpret reported or publicly
disseminated codes be available free of
charge.642 However, a second
commenter—a provider of product
identification codes for security-based
swaps—stated that Regulation SBSR
should not require product identifiers to
be freely available.643 This commenter
noted that maintaining a reliable
identification system for security-based
swaps requires a substantial level of
requires and can accept only 32-character
transaction IDs.
640 See GS1 Proposal at 53.
641 See ISDA/SIFMA I at 8.
642 See Barnard I at 3 (noting that making this
information available for free could eliminate
confusion).
643 See Markit I at 6 (stating that identifier
systems provided on an automated basis and/or for
free ‘‘generally are not adequate for the intended
goals’’).

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14633

investment, and recommended that the
providers of product identification
codes be permitted to charge
commercially reasonable fees for
developing and maintaining the
codes.644 A third commenter
recommended that existing licensing
codes be used for product IDs to the
extent possible, because using existing
codes would be easier for registered
SDRs; the use of new codes would
require ongoing maintenance and the
development of specific processes for
reporting, which could result in poorer
quality data submissions.645
After careful consideration of these
comments, the Commission continues to
believe that the information necessary to
interpret any codes used by registered
SDRs must be ‘‘widely available on a
non-fee basis.’’ Thus, the Commission is
adopting this key feature of Rule 903(b)
as proposed and re-proposed. A primary
goal of Title VII is to use reporting and
public dissemination of security-based
swap data as a means of monitoring
risks and increasing transparency, both
to regulators and the public, of the
security-based swap markets. If the
transaction data that are reported and
publicly disseminated contain codes
and the information necessary to
interpret such codes is not widely
available on a non-fee basis, these Title
VII goals could be frustrated. In the
absence of Rule 903(b), a registered SDR
could require—or acquiesce in the use
of—proprietary, fee-based identification
codes, thereby requiring all users of the
security-based swap market data to pay
the code creator, directly or indirectly,
for the information necessary to
interpret the codes. Users of the data
also might be subject to usage
restrictions imposed by the code creator.
Currently, the security-based swap
market data typically include fee-based
codes, and all market participants and
market observers must pay license fees
and agree to various usage restrictions to
644 See

id.
DTCC II at 16. The commenter supported
the continued use of existing license codes,
including the Markit Reference Entity Database
(‘‘RED’’)TM codes currently used in trade
confirmations for credit derivatives and the Reuters
Instrument Codes (‘‘RIC’’) used in electronic
messages for equity derivatives. The commenter
further noted that without RED codes, the
description of a reference entity in submitted data
could vary, even in minor ways (e.g., the
punctuation used in an abbreviation), creating
difficulties for the SDR that would be required to
correctly identify the reference entity. This
commenter also suggested that the Commission
adopt a rule that would provide existing licensing
codes at a reduced cost for small volume market
participants. As described below, final Rule 903(b)
permits the use of codes in security-based swap
reports under Regulation SBSR only if the
information necessary to interpret the codes is
widely available on a non-fee basis.
645 See

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obtain the information necessary to
interpret the codes. The Commission
believes that allowing continuation of
the status quo would not satisfy the
Title VII mandate to increase securitybased swap market transparency
through public dissemination. If
information to understand embedded
codes is not widely available on a nonfee basis, information asymmetries
would likely continue to exist between
large market participants who pay for
the codes and others market
participants. One commenter suggested
that alternatives could be developed to
the status quo of using fee-based codes
in security-based swap market data.646
The Commission welcomes the
development of such alternatives, and
believes that Rule 903(b), as adopted,
will likely encourage such development.
Furthermore, the Commission
believes that the public dissemination
requirements in Title VII should allow
observers of the market to incorporate
the information contained in public
reports of security-based swaps into any
decisions they might take regarding
whether and how to participate in the
market (or even to avoid participation),
and for intermediaries in the market to
incorporate this information to provide
better advice to their clients about the
market. The Commission does not
believe that these objectives would be
advanced if the ability of market
participants to understand public
reports of security-based swap
transactions were conditioned on
agreeing to pay fees to a code creator.
The Commission similarly believes that
subjecting the public’s use of this
information to restrictions imposed by a
code creator also could frustrate the
objectives of public dissemination. In
addition, allowing continuation of the
status quo would retard the ability of
the Commission and other relevant
authorities to obtain and analyze
comprehensive security-based swap
information.
The Commission recognizes the
usefulness of codes. They make
reporting more efficient because
providing just one code—a product ID,
for example—can eliminate the need to
report multiple data elements
individually. Codes also facilitate the
standardized representation of securitybased swap data and thereby make
646 See Bloomberg Letter at 2. This commenter
stated that it would be possible to develop a public
domain symbology for security-based swap
reference entities that relied on products in the
public domain to ‘‘provide an unchanging, unique,
global and inexpensive identifier.’’ According to
this commenter, its proprietary symbology product
for securities could provide a starting point for a
security-based swap symbology product.

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reporting (and understanding reported
data) more reliable and efficient.647
With respect to product IDs specifically,
the Commission believes that unless an
IRSS has been recognized by the
Commission and can assign product IDs,
registered SDRs should be free to choose
between using an existing mechanism
for assigning product IDs—assuming it
is consistent with Rule 903(b)—and
developing a new product classification
system. If all existing product
identification codes require users of the
transaction information to pay a fee,
then a registered SDR may not require
or permit use of those codes for
reporting and public dissemination. The
registered SDR would be required to
issue UICs using its own methodology
and make the information necessary to
interpret those codes available on a nonfee basis.
In light of the requirement in Rule
903(b) that the information necessary to
interpret coded information be widely
available on a non-fee basis, it would be
inconsistent with the rule for a
registered SDR to permit information to
be reported pursuant to Rule 901, or to
publicly disseminate information
pursuant to Rule 902, using codes in
place of certain data elements if the
registered SDR imposes, or permits the
imposition of, any usage restrictions on
the disseminated information. The
purpose of Rule 903(b) is to help ensure
that the public is able to utilize the lastsale information provided by Regulation
SBSR without limitation or expense.
The commenter that provides product
identification codes for security-based
swaps also noted that proposed
Regulation SBSR would allow an IRSB
that develops counterparty identifiers to
charge fees, and believed that providers
of product IDs should receive
comparable treatment.648 In response to
this comment, the Commission believes
that it is appropriate to make minor
revisions to the rule language to clarify
its original intent and thereby eliminate
any apparent contradiction between the
two paragraphs of Rule 903. When the
Commission originally proposed that an
IRSB could impose fees and usage
restrictions as long as they were fair and
reasonable and not unreasonably
discriminatory, the Commission
intended that language to apply to
persons that obtain UICs for their own
usage (such as a legal entity that seeks
647 For example, in the absence of an LEI,
different persons might refer to a particular legal
entity as ‘‘XYZ,’’ ‘‘XYZ Corp.’’, or ‘‘XYZ
Corporation.’’ Confusion about whether all of these
terms refer to same entity would be minimized, if
not wholly eliminated, if all parties referred to the
entity using the same code (e.g., ‘‘ABCD12345’’).
648 See Markit Letter at 6.

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to identify itself as a counterparty when
engaging in security-based swap
transactions), not ultimate users of the
information (such as third parties who
might wish to enter into a securitybased swap with that entity as the
reference entity). The Commission
believes that this distinction is
consistent with international efforts to
develop a global LEI.649
In Rule 903(a), as adopted, the
Commission is inserting after the words
‘‘fees and usage standards’’ the new
words ‘‘on persons that obtain UICs for
their own usage.’’ 650 This language
clarifies that it is consistent with Rule
903(a) for a registered SDR to accept
codes for which the code creator
assesses fair and reasonable fees on
market participants that need to identify
themselves, their agents, or parts of their
organizations when engaging in
financial activities. For example, Rule
903(a) would permit a registered SDR to
charge participants that need to acquire
UICs that are assigned by registered
SDRs, such as counterparty IDs,
ultimate parent IDs, branch IDs, trading
desk IDs, and trader IDs.
In Rule 903(b), as adopted, the
Commission is inserting the words ‘‘to
users of the information’’ immediately
649 See Charter of the Regulator Oversight
Committee for the Global Legal Entity Identifier
(LEI) System (November 5, 2012), http://
www.leiroc.org/publications/gls/roc_20121105.pdf
(last visited September 22, 2014) (‘‘ROC Charter’’).
The ROC Charter provides that the mission of the
ROC is ‘‘to uphold the governance principles of and
to oversee the Global LEI System, in the broad
public interest.’’ Id. at 1. The ROC Charter further
provides that, in protecting the broad public
interest, the objectives of the ROC include ‘‘open
and free access to publicly available data from the
Global LEI System,’’ and specifically includes the
following principle: ‘‘all public data should be
readily available on a continuous basis, easily and
widely accessible using modern technology, and
free of charge.’’ Id. at 2 (emphasis added). At the
same time, the ROC Charter states that ‘‘any entities
required, or eligible, to obtain an LEI [must be] able
to acquire one under open and non-discriminatory
terms.’’ Id. One such term is that ‘‘fees, where and
when imposed by the [Central Operating Unit], are
set on a non-profit cost-recovery basis.’’ Id.
650 Final Rule 903(a) thus provides: ‘‘If an
internationally recognized standards-setting system
that imposes fees and usage restrictions on persons
that obtain UICs for their own usage that are fair
and reasonable and not unreasonably
discriminatory is recognized by the Commission
and has assigned a UIC to a person, unit of a person,
or product (or has endorsed a methodology for
assigning transaction IDs), the registered securitybased swap data repository shall employ that UIC
(or methodology for assigning transaction IDs). If no
such system has been recognized by the
Commission, or a recognized system has not
assigned a UIC to a particular person, unit of a
person, or product (or has not endorsed a
methodology for assigning transaction IDs), the
registered security-based swap data repository shall
assign a UIC to that person, unit of person, or
product using its own methodology (or endorse a
methodology for assigning transaction IDs)’’
(emphasis added).

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after the phrase ‘‘widely available.’’ 651
The users of information referred to in
final Rule 903(b) could include the
Commission, other relevant authorities,
or any person who wishes to view or
utilize the publicly disseminated
security-based swap transaction data for
any purpose. As noted above, the
Commission does not believe that access
to this information should be impeded
by having to pay fees or agree to usage
restrictions in order to understand any
coded information that might be
contained in the transaction data.
The Commission notes that Rule
903(b) prevents registered SDRs and
code creators from impeding a person’s
ability to obtain the information
necessary to interpret coded information
used in reporting or public
dissemination under Regulation SBSR.
Rule 903(b) is not intended to prevent
a registered SDR from charging for its
SDR services. To the contrary, registered
SDRs are expressly permitted to charge
fees for their SDR services that are fair
and reasonable and not unreasonably
discriminatory.652
The Commission notes that it is
making an additional revision to the
language in re-proposed in Rule 903 to
conform final Rule 903(b) to the
Commission’s original intent and to
avoid any potential conflict with final
Rule 901(h). Rule 901(h), as adopted,
provides that the reporting side shall
electronically transmit the information
required under Rule 901 to a registered
SDR ‘‘in a format required by the
registered [SDR].’’ Under re-proposed
Rule 903, the reporting side could
‘‘provide information to a registered
[SDR] . . . using codes in place of
certain data elements.’’ 653 This
language in re-proposed 903 could have
been read to give the reporting side
discretion to select what codes it could
use for reporting transaction
651 Final Rule 903(b) thus provides: ‘‘A registered
security-based swap data repository may permit
information to be reported pursuant to § 242.901,
and may publicly disseminate that information
pursuant to § 242.902, using codes in place of
certain data elements, provided that the information
necessary to interpret such codes is widely
available to users of the information on a non-fee
basis’’ (emphasis added).
652 See Rule 13n–4(c)(1)(i) under the Exchange
Act, which is part of the SDR Adopting Release. But
see Regulation SBSR Proposed Amendments
Release, Section VI (proposing to prohibit SDRs
from charging fees for publicly disseminating
regulatorily mandated transaction data).
653 Specifically, re-proposed Rule 903 provided
that ‘‘The reporting side may provide information
to a registered security-based swap data repository
pursuant to § 242.901 and a registered securitybased swap data repository may publicly
disseminate information pursuant to § 242.902
using codes in place of certain data elements,
provided that the information necessary to interpret
such codes is widely available on a non-fee basis.’’

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information to a registered SDR., The
Commission has revised final Rule
903(b) to more clearly reflect its original
intent: That reporting sides shall report
information in a format required by the
registered SDR.654 Thus, Rule 903(b), as
adopted, provides that a registered SDR
‘‘may permit information to be reported
. . . using codes in place of certain data
elements.’’ The Commission believes
that final Rule 903(b), read together with
final Rule 901(h), makes clear that a
reporting side may provide coded
information to a registered SDR only to
the extent permitted by the registered
SDR and only in a format required by
the SDR. Therefore, the reporting side
may not exercise its own discretion
when selecting codes to use in its
reports to the registered SDR, regardless
of whether the codes otherwise comport
with Rule 903.
Finally, one commenter expressed
concern that, although Regulation SBSR,
as initially proposed, would have
required that the information necessary
to interpret codes be made available for
free, the proposal would not have
prevented a code creator from charging
for other uses.655 In this commenter’s
view, ‘‘[a] widely used identifier can
become a de facto standard for anyone
doing business in the relevant
marketplace. This creates the potential
for abuse, defeating the entire purpose
of promoting the broad availability of
identifiers.’’ 656 This commenter
believed instead that, ‘‘[a]s long as all
market participants have the unfettered
freedom to introduce alternative
identifiers and to map those identifiers
to the standard, however, multiple,
competing identifiers can provide an
inexpensive solution.’’ 657 The
Commission shares the commenter’s
concern that identification codes not
become a tool for monopolistic abuse.
This is why the Commission is requiring
in Rule 903(b) that, if such codes will
be used for reporting or publicly
disseminating security-based swap
transaction data, ‘‘the information
necessary to interpret such codes [must
be] widely available to users of the
information on a non-fee basis.’’ Thus,
the Commission does not believe it will
be necessary for market participants to
introduce alternative identifiers,
654 See supra Section IV (discussing Rule 901(h)).
See also Rule 907(a)(5) (requiring a registered SDR
to establish and maintain policies and procedures
for assigning UICs in a manner consistent with Rule
903); Rule 907(a)(2) (requiring a registered SDR to
establish and maintain policies and procedures that
specify, among other things, protocols for
submitting information, including but not limited to
UICs).
655 See Bloomberg Letter at 2.
656 Id.
657 Id.

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although Regulation SBSR would not
prohibit them from doing so.
C. Policies and Procedures of Registered
SDRs Relating to UICs
As proposed and re-proposed, Rule
907(a)(5) would have required a
registered SDR to establish and maintain
written policies and procedures for
assigning: (1) A transaction ID to each
security-based swap that is reported to
it; and (2) UICs established by or on
behalf of an IRSB that imposes fees and
usage restrictions that are fair and
reasonable and not unreasonably
discriminatory (or, if no standardssetting body meets these criteria or a
standards-setting body meets these
criteria but has not assigned a UIC to a
particular person, unit of a person, or
product, assigning a UIC using its own
methodology).
The Commission received several
comments, noted above, that discussed
utilization of UICs generally and
considered them in connection with
Rule 907(a)(5).658 The Commission also
received a comment that generally
encouraged the Commission to adopt a
convention for assigning unique IDs and
incorporating a pilot or early adopter
program for certain products and
participants that would allow for endto-end testing and proof of concept.659
As discussed above, the Commission
believes that UICs—even if utilized on
an SDR-specific basis in the absence of
UICs issued by a recognized IRSS—will
create a more consistent and transparent
system for reporting and analyzing
security-based swap transactions.
Therefore, the Commission continues to
believe that it is important for registered
SDRs to have policies and procedures
providing for the issuance of such UICs
and is adopting a modified version of
Rule 907(a)(5) that requires registered
SDRs to establish written policies and
procedures ‘‘[f]or assigning UICs in a
manner consistent with [Rule 903].’’
This is a conforming change to be
consistent with the Commission’s
decision to locate the substantive
requirements for the assignment of UICs
in Rule 903.660 With respect to the
comment received, the Commission
believes that market participants can
work with entities that are likely to
register with the Commission as SDRs
on pilot programs for certain products
and conventions for assigning UICs.
However, the Commission does not
believe it would be appropriate for the
Commission itself to adopt such
658 See

supra notes 615 to 618 and accompanying

text.
659 See
660 See

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conventions; the Commission believes
instead that greater expertise in coding
data will reside in the industry and, in
particular, at registered SDRs. The
Commission further believes that Rule
900(qq), which defines ‘‘UIC,’’ and Rule
903, which establishes standards for the
use of UICs provide adequate
parameters for the development of a UIC
system. The Commission believes that
allowing the industry to develop
conventions for assigning UICs will
likely result in a more efficient and
flexible UIC regime than if the
Commission were to adopt such
conventions itself.
XI. Operating Hours of Registered
SDRs—Rule 904
Title VII of the Dodd-Frank Act does
not explicitly address or prescribe the
hours of operation of the reporting and
public dissemination regime that it
requires. The security-based swap
market is global in nature, and securitybased swaps are executed throughout
the world and at any time of the day. In
light of the global nature of the securitybased swap market, the Commission
believes that the public interest is
served by requiring near-continuous
reporting and public dissemination of
security-based swap transactions, no
matter where or when they are executed
(subject to the cross-border rules
discussed in Section XV, infra).
Furthermore, having a near-continuous
reporting and public dissemination
regime would reduce the incentive for
market participants to defer execution of
security-based swap transactions until
after regular business hours to avoid
post-trade transparency. Accordingly,
the Commission proposed Rule 904,
which would have required a registered
SDR to design its systems to allow for
near-continuous receipt and
dissemination of security-based swap
data. A registered SDR would have been
permitted to establish ‘‘normal closing
hours’’ and to declare, on an ad hoc
basis, ‘‘special closing hours,’’ subject to
certain requirements. Rule 904 was not
revised as part of the Cross-Border
Proposing Release, and was re-proposed
in exactly the same form as initially
proposed.
As discussed below, three
commenters addressed proposed Rule
904. The Commission has carefully
reviewed the comments received and
has determined to adopt Rule 904, as
proposed and re-proposed, subject to
one conforming change, as discussed
below.661
661 In addition, the Commission is making a
technical conforming change to revise the title of
the rule to refer to ‘‘registered’’ SDRs.

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Rule 904, as adopted, requires a
registered SDR to have systems in place
to receive and disseminate information
regarding security-based swap data on a
near-continuous basis, with certain
exceptions. First, under final Rule
904(a), a ‘‘registered SDR may establish
normal closing hours when, in its
estimation, the U.S. market and major
foreign markets are inactive.’’ Second,
under final Rule 904(b), a registered
SDR ‘‘may declare, on an ad hoc basis,
special closing hours to perform system
maintenance that cannot wait until
normal closing hours.’’ Rule 904(b)
further provides that a registered SDR
shall, ‘‘to the extent reasonably possible
under the circumstances, avoid
scheduling special closing hours during
[periods] when, in its estimation, the
U.S. market and major foreign markets
are most active.’’ Rules 904(a) and
904(b) each require the registered SDR
to provide participants and the public
with reasonable advance notice of its
normal closing hours and special
closing hours, respectively.
Rule 904(c) specifies requirements for
handling and disseminating reported
data during a registered SDR’s normal
and special closing hours. During
normal closing hours and, to the extent
reasonably practicable during special
closing hours, a registered SDR is
required to ‘‘have the capability to
receive and hold in queue’’ the
transaction data that it receives.
Pursuant to Rule 904(d), immediately
upon system re-opening following
normal closing hours or special closing
hours (assuming it was able to hold
incoming data in queue), the registered
SDR is required to publicly disseminate
any transaction data required to be
reported under Rule 901(c) that it
received and held in queue. Finally,
pursuant to Rule 904(e), if the registered
SDR could not, while it was closed,
receive and hold in queue reported
information, it would be required,
immediately upon resuming normal
operations, to send a notice to all
participants that it had resumed normal
operations but could not, while closed,
receive and hold in queue such
transaction information. Therefore, any
participant that had an obligation to
report information—but was unable to
do so because of the registered SDR’s
inability to receive and hold data in
queue—would be required upon
notification by the registered SDR to
promptly report the information to the
registered SDR.
As proposed and re-proposed, Rule
904(e) would have provided that if a
participant could not fulfil a reporting
obligation due to a registered SDR’s
inability to receive and hold data in

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queue, the participant would be
required to report the information
‘‘immediately’’ upon receiving a
notification that the registered SDR has
resumed normal operations. The
Commission has decided to replace the
word ‘‘immediately’’ with the word
‘‘promptly’’ in the final rule because
‘‘promptly’’ emphasizes the need for
information to be submitted without
unreasonable delay while affording
participants a practical degree of
flexibility. In general, the Commission
believes that submitting a required
report ‘‘promptly’’ implies ‘‘as soon as
practicable.’’
The three commenters that addressed
Rule 904 were generally supportive of
the goal of promoting transparency and
price discovery though a regime of
continuous reporting and public
dissemination,662 although one of these
commenters pointed out the need for
registered SDRs to close periodically to
perform necessary system
maintenance.663 Two of these
commenters also suggested alternative
operating hours and procedures for
registered SDRs.664 One commenter
stated that the requirements that a
registered SDR have normal closing
hours only when neither U.S. nor
international markets are active, and
should continue to receive the relevant
transaction data and hold them in queue
even when the registered SDR is closed
for normal or ad hoc special closing
hours, exceeded the capabilities of
currently existing reporting
infrastructures. The commenter argued
that such requirements would increase
the risk of infrastructure failure because
SDRs would not have adequate time to
maintain and update their systems.665
This commenter suggested that, if
systems are required to be available on
a 24-hour basis, the Commission should
define operating hours to be 24 hours
from Monday to Friday, and consider
allowing additional closing hours either
‘‘when markets are less active’’ or
‘‘when only less active markets are
open.’’ 666
The Commission believes there are
compelling reasons to implement a
system of reporting and public
dissemination that, in general, operates
near-continuously. As discussed above,
662 See

Barnard I at 3; Markit I at 1; DTCC II

at 1.
663 See

Markit I at 4.
Markit I at 4–5; DTCC II at 19–20; DTCC
IV at 4 (recommending that SDRs operate on a
24/6.5 basis to reflect the global nature of the
financial markets and process transactions in real
time, while also maintaining multiple levels of
operational redundancy and data security).
665 See Markit I at 4.
666 Markit I at 4–5.
664 See

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the Commission believes that requiring
near-continuous reporting and public
dissemination of security-based swaps—
except for when, in the estimation of a
registered SDR, the U.S. market and
major foreign markets are inactive—will
serve the public interest and reduce
incentives for market participants to
trade outside of regular business hours.
The Commission, however, recognizes
the need for a registered SDR to have
closing hours to maintain and update its
systems, and Rules 904(a) and 904(b), as
adopted, specifically allow registered
SDRs to have normal and special closing
hours. Further, while Rule 904(b) states
that a registered SDR should avoid
scheduling special closing hours during
a time when, in its estimation, the U.S.
and major foreign markets are most
active, the Commission notes that a
registered SDR is required to do so only
‘‘to the extent reasonably possible under
the circumstances.’’ As such, the
Commission believes that Rules 904(a)
and 904(b) provide sufficient flexibility
to registered SDRs in determining their
closing times to perform the necessary
maintenance procedures. The
Commission does not believe it would
be appropriate to require registered
SDRs to operate 24 hours only from
Monday to Friday, as the commenter
suggests, as certain major foreign
markets may be active during hours that
fall within the weekend in the United
States.
The Commission recognizes the
commenter who asserted that the
proposed requirement for a registered
SDR to receive and hold in the queue
the data required to be reported during
its closing hours ‘‘exceeds the
capabilities of currently-existing
reporting infrastructures.’’ 667 The
Commission notes that this comment
was submitted in January 2011. Since
that time, however, provisionally
registered CFTC SDRs that are likely
also to register as SDRs with the
Commission appear to have developed
the capability of receiving and holding
data in queue during their closing
hours.668 Accordingly, the Commission
believes that it is appropriate to require
registered SDRs to hold data in queue
during their closing hours should help
to prevent market disruptions by
enabling reporting sides for security667 Markit

I at 4.
e.g., DDR Rulebook, Section 7.1 (DDR
System Accessibility) (‘‘Data submitted during DDR
System down time is stored and processed once the
service has resumed’’), available at http://
www.dtcc.com/∼/media/Files/Downloads/legal/
rules/DDR_Rulebook.pdf (last visited October 7,
2014).
668 See,

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based swaps to report transactions at all
times.
XII. Subsequent Revisions to Reported
Security-Based Swap Information
A. Reporting Life Cycle Events—Rule
901(e)
1. Description of Proposal and ReProposal
Rule 901(e), as proposed and reproposed, would have required the
reporting of certain life cycle event
information. ‘‘Life cycle event’’ was
defined in the proposal and re-proposal
to mean ‘‘with respect to a securitybased swap, any event that would result
in a change in the information reported
to a registered security-based swap data
repository under § 242.901, including a
counterparty change resulting from an
assignment or novation; a partial or full
termination of the security-based swap;
a change in the cash flows originally
reported; for a security-based swap that
is not cleared, any change to the
collateral agreement; or a corporate
action affecting a security or securities
on which the security-based swap is
based (e.g., merger, dividend, stock
split, or bankruptcy). Notwithstanding
the above, a life cycle event shall not
include the scheduled expiration of the
security-based swap, a previously
described and anticipated interest rate
adjustment (such as a quarterly rate
adjustment), or other event that does not
result in any change to the contractual
terms of the security-based swap.’’
Re-proposed Rule 901(e) would have
provided that ‘‘For any life cycle event,
and any adjustment due to a life cycle
event, that results in a change to
information previously reported
pursuant to Rule 901(c), 901(d), or
901(i), the reporting side shall promptly
provide updated information reflecting
such change to the entity to which it
reported the original transaction, using
the transaction ID,’’ subject to two
exceptions. Under Rule 901(e)(1), as reproposed, if the reporting side ceased to
be a counterparty to the security-based
swap due to any assignment or novation
and if the new side included a U.S.
person, a security-based swap dealer, or
a major security-based swap participant,
the new side would be the reporting
side following the assignment or
novation. Under re-proposed Rule
901(e)(2), if the new side did not
include a U.S. person, a security-based
swap dealer, or a major security-based
swap participant, the other side would
be the reporting side following the
assignment or novation.
In proposing Rule 901(e), the
Commission preliminarily believed that
the reporting of life cycle event

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information would provide regulators
with access to information about
significant changes that occur over the
duration of a security-based swap.669
The Commission also stated that the
reporting of life cycle event information
would help to assure that regulators
have accurate and up-to-date
information concerning outstanding
security-based swaps and the current
obligations and exposures of securitybased swap counterparties.670
In determining the entity that would
be required to report life cycle event
information, the Commission’s
approach in proposing and re-proposing
Rule 901(e) was that, generally, the
person who originally reported the
initial transaction would have the
responsibility to report any subsequent
life cycle event.671 However, if the life
cycle event were an assignment or
novation that removed the original
reporting party, either the new
counterparty or the remaining original
counterparty would have to be the
reporting party.672
In re-proposing Regulation SBSR, the
Commission included the new concept
of a ‘‘reporting side,’’ which would have
included the direct counterparty and
any indirect counterparty. The CrossBorder Proposing Release also proposed
to impose greater duties to report
transactions on non-U.S. person
security-based swap dealers or major
security-based swap participants.
Accordingly, the Commission reproposed Rule 901(e) to provide that the
duty to report would switch to the other
side only if the new side did not include
a U.S. person (as in the originally
proposed rule) or a security-based swap
dealer or major security-based swap
participant. The Commission
preliminarily believed that, if the new
side included a security-based swap
dealer or major security-based swap
participant, the new side should retain
the duty to report. This approach was
designed to align reporting duties with
the market participants that the
Commission believed would be better
669 See Regulation SBSR Proposing Release, 75 FR
75220.
670 See id. In a separate rulemaking, the
Commission is adopting a rule that will require a
registered SDR to establish, maintain, and enforce
written policies and procedures reasonably
designed to calculate positions for all persons with
open security-based swaps for which the SDR
maintains records. See SDR Adopting Release
(adopting Rule 13n–5(b)(2) under the Exchange
Act).
671 See Cross-Border Proposing Release, 78 FR
31068.
672 Rule 901(e), as initially proposed, would have
provided that the new counterparty would be the
reporting party if it is a U.S. person; the other
original counterparty would become the reporting
party if the new counterparty is not a U.S. person.

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suited to carrying them out, because
non-U.S. person security-based swap
dealers and major security-based swap
participants likely would have taken
significant steps to establish and
maintain the systems, processes and
procedures, and staff resources
necessary to report security-based
swaps.673
2. Final Rules Relating to Life Cycle
Events and Response to Comments
a. General Comment and Definition of
‘‘Life Cycle Event’’

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One commenter expressed support for
the requirement to report life cycle
event information, stating that the
reporting of life cycle event information
was necessary for detailed market
regulation and for prudential and
central bank regulation.674 The
commenter noted that ‘‘[m]any life cycle
events are price-forming or significantly
change the exposures under a
trade. . . .’’ 675 In subsequent comment
letters, this commenter stated that the
definition of ‘‘life cycle event’’ was
overly broad, and that life cycle events
should be limited to those that impact
the counterparties to or the pricing of
the security-based swap.676 Specifically,
the commenter suggested that the
Commission define ‘‘life cycle event’’ to
mean ‘‘an event that would result in a
change in the counterparty or price of a
security-based swap reported to the
registered [SDR].’’ 677 However, another
commenter believed that the proposed
definition was ‘‘clear, sufficient, and
complete.’’ 678
After careful consideration, the
Commission is adopting the definition
of ‘‘life cycle event’’ in Rule 900(q)
substantially as re-proposed, but with
certain minor modifications to respond
to comments and to clarify the original
intent of the rule.679 First, the
673 See Cross-Border Proposing Release, 78 FR
31068.
674 See DTCC II at 13.
675 See id.
676 See DTCC V at 11; DTCC VI at 9.
677 DTCC VI at 9.
678 Barnard I at 3.
679 Rule 900(q), as adopted, defines ‘‘life cycle
event’’ to mean ‘‘with respect to a security-based
swap, any event that would result in a change in
the information reported to a registered securitybased swap data repository under § 242.901(c), (d)
or (i), including: An assignment or novation of the
security-based swap; a partial or full termination of
the security-based swap; a change in the cash flows
originally reported; for a security-based swap that
is not a clearing transaction, any change to the title
or date of any master agreement, collateral
agreement, margin agreement, or any other
agreement incorporated by reference into the
security-based swap contract; or a corporate action
affecting a security or securities on which the
security-based swap is based (e.g., a merger,
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Commission is making a technical
change to the definition to indicate that
a life cycle event refers to any event that
would result in a change in the
information reported ‘‘under
§ 242.901(c), (d), or (i),’’ rather than any
event that would result in a change in
the information reported ‘‘under
§ 242.901’’ (as re-proposed). This
technical change will conform the
definition of ‘‘life cycle event’’ to the
requirements of Rule 901(e), as reproposed and as adopted, which
requires the reporting of a change to
information previously reported
pursuant to paragraph (c), (d), or (i) of
Rule 901. By defining ‘‘life cycle event’’
in this manner, the Commission aims to
ensure that information reported
pursuant to Rules 901(c), (d), and (i) is
updated as needed, so that the data
maintained by registered SDRs remains
current for the duration of a securitybased swap. This requirement should
help to ensure that the data accessible
to the Commission through registered
SDRs accurately reflects the current
state of the market. Therefore, the
Commission does not believe that it is
appropriate to limit the definition of
‘‘life cycle event’’ to post-execution
events that impact the counterparties to
or the pricing of a security-based swap,
as suggested by the commenter.680
Although the final definition of ‘‘life
cycle event’’ encompasses these types of
events, it also encompasses other
information reported pursuant to Rules
901(c), 901(d), or 901(i).
One commenter asked that the
Commission remove the reference to
‘‘dividends’’ in the definition of ‘‘life
cycle event’’ because dividends ‘‘are
contract intrinsic events that do not
result in a change to the contractual
terms of the SBS and therefore, should
not be defined as reportable life cycle
events.’’ 681 The Commission does not
believe that it is necessary to revise the
definition of ‘‘life cycle event’’ as the
commenter suggests. As indicated
above, the definition of ‘‘life cycle
event’’ provides, in relevant part, that a
life cycle event includes ‘‘any event that
would result in a change in the
information reported to a registered
[SDR] . . . including . . . a corporate
Notwithstanding the above, a life cycle event shall
not include the scheduled expiration of the
security-based swap, a previously described and
anticipated interest rate adjustment (such as a
quarterly interest rate adjustment), or other event
that does not result in any change to the contractual
terms of the security-based swap.’’
680 See DTCC VI at 9. See also DTCC II at 13
(stating that ‘‘[m]any life cycle events are priceforming or significantly change the exposures under
a trade. . . . The current definition supports
reporting of these events’’).
681 ISDA IV at 11.

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action affecting a security or securities
on which the security-based swap is
based (e.g., a merger, dividend, stock
split, or bankruptcy)’’ (emphasis added).
Thus, a regular payment of a dividend
that does not require a restatement of
the terms of the security-based swap
would not constitute a life cycle event.
However, other actions involving
dividends could be life cycle events. For
example, the distribution of a stock
dividend that required an adjustment to
the notional terms of an equity securitybased swap—or any other corporate
action related to dividends that resulted
in a modification of one or more terms
of the security-based swap—would be a
life cycle event and therefore would
have to be reported pursuant to Rule
901(e).
Second, the Commission is clarifying
that a life cycle event includes ‘‘an
assignment or novation of the securitybased swap,’’ instead of ‘‘a counterparty
change resulting from an assignment or
novation.’’ The Commission notes that,
while assignments and novations
necessarily include a counterparty
change, assignments and novations also
may involve modifications to other
terms of the security-based swap
reported pursuant to paragraphs (c), (d),
or (i) of Rule 901. These modifications
are the type of changes that the
Commission believes should be reported
to a registered SDR; therefore, the
Commission is modifying the definition
of ‘‘life cycle event’’ to clarify this view.
Third, the Commission is making a
technical change to the definition to
indicate that a life cycle event includes,
for a security-based swap that is not a
clearing transaction, ‘‘any change to the
title or date of any master agreement,
collateral agreement, margin agreement,
or any other agreement incorporated by
reference into the security-based swap
contract.’’ As re-proposed, the definition
of ‘‘life cycle event’’ would have
included, ‘‘for a security-based swap
that is not cleared, any change to the
collateral agreement.’’ One commenter
questioned the need to include a
reference to a change in the collateral
agreement in the definition of ‘‘life cycle
event’’ because ‘‘collateral agreement
terms are not among the data required
to be reported upon execution.’’ 682 The
Commission agrees with the commenter
that collateral agreement terms are not
682 DTCC VI at 9. Another commenter stated that
the parties to a collateral agreement rarely modify
their agreement over its life, and that any change
to a collateral agreement would require extensive
negotiation between the counterparties.
Accordingly, the commenter believed that the cost
of establishing reporting processes to detect and
report changes to a collateral agreement would
outweigh the usefulness of reporting them. See
ISDA/SIFMA I at 16.

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required to be reported, and the
definition of ‘‘life cycle event’’ in final
Rule 900(q) no longer refers to changes
in the collateral agreement. To assure
that Rule 901(e) operates as intended,
the Commission has modified the
definition of ‘‘life cycle event’’ in final
Rule 900(q) to reference, with respect to
a security-based swap that is not a
clearing transaction, the same terms that
must be reported pursuant to Rule
901(d)(4).683 Thus, if there were a
change in the title or date of a master
agreement, collateral agreement, margin
agreement, or other agreement
incorporated by reference into a
security-based swap contract, such a
change would be a ‘‘life cycle event’’ as
defined in final Rule 900(q), and final
Rule 901(e) would require reporting of
that change.
Finally, two commenters argued that
the ‘‘Commission’s classification of a
swap being accepted for clearing as a
life cycle event is inconsistent with the
operations of a Clearing Agency’’
because clearing may require the
‘‘termination of the pre-existing alpha
swap in order to create two new, unique
swaps.’’ 684 The Commission agrees that
any security-based swap that results
from clearing an alpha should not be
considered a life cycle event of the
alpha, although the termination of the
alpha would be such a life cycle
event.685 The Commission believes that
the new term ‘‘clearing transaction’’
makes clear that security-based swaps
that result from clearing (e.g., betas and
gammas in the agency model) are
independent security-based swaps, not
life cycle events of the security-based
683 Final Rule 901(d)(4) requires, for a securitybased swap that is not a clearing transaction,
reporting of the title and date of any master
agreement, collateral agreement, margin agreement,
or other agreement incorporated by reference in the
security-based swap contract.
684 CME/ICE Letter at 3. As discussed in Section
V, supra, in the agency model of clearing, and
sometimes in the principal model as well,
acceptance of an alpha for clearing terminates the
alpha.
685 See Securities Exchange Act Release No.
66703 (March 30, 2012), 77 FR 20536–37 (April 5,
2012) (noting that ‘‘when a security-based swap
between two counterparties . . . is executed and
submitted for clearing, the original contract is
extinguished and replaced by two new contracts
where the [clearing agency] is the buyer to the seller
and the seller to the buyer’’). This treatment also
would be consistent with CFTC regulations. See 17
CFR 39.12(b)(6) (CFTC rule providing that
derivatives clearing organizations that clear swaps
must have rules providing that, among other things,
‘‘upon acceptance of a swap by the derivatives
clearing organization for clearing: (i) The original
swap is extinguished; [and] (ii) The original swap
is replaced by an equal and opposite swap between
the derivatives clearing organization and each
clearing member acting as principal for a house
trade or acting as agent for a customer trade’’).

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swap that is submitted to clearing (e.g.,
alpha security-based swaps).
b. Final Rule 901(e)(1)
As described above, re-proposed Rule
901(e) would have required the
reporting side to promptly report any
life cycle event, or any adjustment due
to a life cycle event, that resulted in a
change to information previously
reported pursuant to Rule 901(c), (d), or
(i) to the entity to which it reported the
original transaction, using the
transaction ID. Rule 901(e), as proposed
and re-proposed, also included
provisions for determining which
counterparty would report the life cycle
event. The Commission is adopting a
modified version of Rule 901(e) to
address comments received and to
implement certain technical changes.
The Commission also has changed the
title of the rule from ‘‘Duty to report any
life cycle event of a security-based
swap’’ in the re-proposal to ‘‘Reporting
of life cycle events’’ in the final rule. In
addition, final Rule 901(e) provides that
a life cycle event or adjustment due to
a life cycle event must be reported
within the timeframe specified in Rule
901(j).
Although the definition of ‘‘life cycle
event’’ would encompass the
disposition of a security-based swap
that has been submitted to clearing (e.g.,
whether, under the agency model of
clearing, the alpha security-based swap
has been accepted for clearing or
rejected by the clearing agency), the
Commission believes that it is
appropriate to address the reporting of
this specific type of life cycle event in
the context of the Regulation SBSR
Proposed Amendments Release, which
address a number of topics regarding the
reporting of security-based swaps that
will be submitted to clearing or that
have been cleared. Accordingly, final
Rule 901(e)(1)(i) indicates that the
reporting side shall not have a duty to
report whether or not a security-based
swap has been accepted for clearing or
terminated by a clearing agency, and
instead provides that ‘‘A life cycle
event, and any adjustment due to a life
cycle event, that results in a change to
information previously reported
pursuant to paragraph (c), (d), or (i) of
this section shall be reported by the
reporting side, except that the reporting
side shall not report whether or not a
security-based swap has been accepted
for clearing.’’
c. Final Rule 901(e)(2)
Re-proposed Rule 901(e) would have
required the reporting side to include
the transaction ID in a life cycle event
report, and to report life cycle event

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information to the entity to which it
reported the original transaction. Final
Rule 901(e)(2) retains both of these
requirements.686 The Commission
believes that including the transaction
ID in a life cycle event report will help
to ensure that it is possible to link the
report of a life cycle event to the report
of the initial security-based swap of
which it is a life cycle event. One
commenter supported the requirement
to report life cycle events to the same
entity that received the original
transaction report.687 The commenter
stated that requiring a single registered
SDR to receive, store, and report, where
appropriate, all relevant information
related to a given security-based swap
throughout its life cycle would help to
prevent fragmentation and ensure that
corrections to previously reported data
could be easily identified by the
public.688 The Commission generally
agrees with these views, and final Rule
901(e)(2) retains the requirement to
report life cycle events to the same
entity to which the original transaction
was reported.
d. Reporting Timeframe for Life Cycle
Events
Rule 901(e), as proposed and reproposed, would have required life
cycle events to be reported by the
reporting side ‘‘promptly.’’ Two
commenters believed that it was
appropriate to require that life cycle
events be reported ‘‘promptly.’’ 689 One
of these commenters also stated that life
cycle events could require different
processing times based on the nature of
the event, and asked the Commission to
clarify the meaning of ‘‘promptly’’ with
respect to life cycle event reporting.690
In particular, the commenter stated that
‘‘the term ‘promptly,’ . . . without
further explanation, may be interpreted
by reporting parties differently for
similar events and processes,
particularly in a market where certain
processes have historically taken a
686 Final Rule 901(e)(2) provides that ‘‘All reports
of life cycle events and adjustments due to life cycle
events shall be reported within 24 hours of the time
of occurrence of the life cycle event to the entity
to which the original security-based swap
transaction was reported and shall include the
transaction ID of the original transaction.’’
687 See MarkitSERV I at 8.
688 See id. See also DTCC IX at 2.
689 See Barnard I at 3; DTCC II at 13.
690 See DTCC II at 13. The commenter stated that
life cycle events that are price-forming events
subject to confirmation could be reported within
the same timeframes as initial reports of these
events. However, the commenter indicated that life
cycle events resulting from other processes, such as
corporate actions or credit events, ‘‘where many
trades will be impacted simultaneously and
processing may be manual or automated,’’ would
require different amounts of time to report. See id.

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number of days to effect.’’ 691 This
commenter also suggested that the
Commission revise Rule 901(e) to allow
for the flexibility of reporting life cycle
events either event-by-event or through
one daily submission that would
include multiple events.692 Another
commenter stated that the required time
for reporting both life cycle events and
corrections should be stronger and more
specific than the proposed requirement
that they be reported ‘‘promptly.’’ 693
After careful consideration, the
Commission does not believe that it
would be appropriate to require life
cycle events or adjustments due to life
cycle events to be reported more quickly
than the time within which information
relating to the original transaction must
be reported. As noted in Section
VII(B)(3), supra, final Rule 901(j)
provides that the transaction
information required by Rules 901(c)
and 901(d) generally must be reported
within 24 hours of the time of
execution. Similarly, Rule 901(j)
provides that the reporting timeframe
for Rule 901(e) shall be 24 hours after
the occurrence of the life cycle event or
the adjustment due to the life cycle
event. The Commission believes that 24
hours should provide sufficient time to
report life cycle events even if the
processing of some of these events is not
yet fully automated.694 The Commission
691 DTCC

II at 13.
DTCC V at 11. See also ISDA III
(requesting that ‘‘reporting parties be allowed to
report lifecycle events either intra-day or as an endof day [sic] update to the terms of the [securitybased swap]’’). Further, one commenter noted that
the CFTC rules allow a life cycle event to be
reported either as event data on the same day as the
event occurs or daily as ‘‘state data,’’ and that nonswap dealers or non-major swap participants may
report these events either as life cycle event data or
as state data no later than the end of the first
business day following the event. See ISDA IV at
11. This commenter requested that the Commission
confirm in its rules that the same approach and
timelines may be applied to meet the requirements
of Regulation SBSR. The Commission notes that
Rules 901(e) and 901(j), as adopted, provide for
reporting of a life cycle event or an adjustment due
to a life cycle event within 24 hours after the
occurrence of the life cycle event or the adjustment
due to the life cycle event. The Commission notes,
further, that Rule 901(e)(1) requires the reporting of
a life cycle event, and any adjustment due to a life
cycle event, that results in a change to information
previously reported pursuant to Rule 901(c), 901(d),
or 901(i). Thus, Rule 901(e)(1) contemplates the
reporting of the specific changes to previously
reported information. Reports of life cycle events,
therefore, must clearly identify the nature of the life
cycle event for each security-based swap. It is not
sufficient merely to re-report all of the terms of the
security-based swap each day without identifying
which data elements have changed. However,
Regulation SBSR would not prevent a registered
SDR from developing for its members a mechanism
or other service that automates or facilitates the
production of life cycle events from state data.
693 See Better Markets I at 9.
694 See DTCC II at 13. The Commission also
believes that the 24-hour timeframe for reporting

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believes, further, that specifying a time
within which life cycle event
information must be reported will
address the commenter’s concern that
reporting sides could adopt different
interpretations of the reporting
timeframe. The Commission notes that
it anticipates soliciting comment on the
timeframe for reporting life cycle events,
adjustments, and clearing transactions
in the future, when it considers block
thresholds and time delays.
e. Re-Proposed Rule 901(e)(2)
The Commission has determined not
to adopt re-proposed Rule 901(e)(2),
which would have specified the
reporting side following an assignment
or novation of the security-based
swap.695 One commenter noted that,
under the current market practice for
reporting novations, the reporting party
is re-determined based on the current
status of the parties.696 This commenter
noted that the current practice allows
the reporting party logic to be consistent
for new as well as novated trades, and
recommended that the Commission use
a consistent methodology for reporting
of new trades and novations. The
Commission agrees that using a single
methodology for assigning reporting
obligations would be administratively
easier than using one methodology
when a security-based swap is first
executed and a different methodology
when the counterparties change as a
result of an assignment or novation. As
the Commission explained above,697 it
has determined that the reporting side
following an assignment or novation
will be determined using the procedures
in Rule 901(a).
f. Additional Comments Regarding Life
Cycle Event Reporting
One commenter believed that life
cycle events should be reported using
standard market forms, such as the trade
life cycle events will allow reporting sides to
determine whether to report life cycle events on an
intra-day or end-of-day basis. See DTCC V at 11;
ISDA III. Reports of life cycle events, however, must
clearly identify the nature of the life cycle event for
each security-based swap. It is not sufficient merely
to re-report all of the terms of the security-based
swap each day without identifying which data
elements have changed. See also note 692 supra.
695 Re-proposed Rule 901(e)(2) would have
provided that the duty to report life cycle event
information following an assignment or novation
would switch to the other side only if the new side
did not include a U.S. person (as in the originally
proposed rule) or a security-based swap dealer or
major security-based swap participant. As the
Commission explained in the Cross-Border
Proposing Release, if the new side included a
security-based swap dealer or major security-based
swap participant, the new side should retain the
duty to report. See 78 FR 31068.
696 See ISDA III.
697 See supra Section V(C)(5).

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confirmation for novations and early
terminations, and the exercise notice for
an exercise.698 Contrary to the
commenter’s suggestion, the
Commission believes that registered
SDRs should be responsible for
specifying the precise manner and
format for reporting data. Moreover, the
Commission understands that standard
market forms may exist for some, but
not all, of the life cycle events that must
be reported under Regulation SBSR.
Therefore, the Commission has
determined not to prescribe a format for
reporting sides to report life cycle event
information. Instead, Rule 907(a)(3), as
adopted, requires a registered SDR to
establish and maintain written policies
and procedures that specify how
reporting sides are to report life cycle
events and corrections to previously
submitted information, for making
corresponding updates or corrections to
transaction records, and for applying an
appropriate flag to these transaction
reports.699
One commenter stated that it was
critical for the SEC and the CFTC to
adopt consistent regulatory approaches
‘‘[i]n the life cycle event model across
asset classes.’’ 700 The Commission
agrees that would be useful for the
Commissions to adopt consistent
approaches to the reporting of life cycle
event information to the extent possible.
The Commission believes that
Regulation SBSR’s approach to life cycle
event reporting is broadly consistent
with the approach taken by the CFTC.
For example, because the agencies have
adopted similar definitions, the life
cycle event information required to be
reported under the rules of both
agencies is substantially similar.701 In
addition, both agencies’ rules require
that life cycle events be reported to the
same entity that received the report of
the original transaction, and both
agencies’ rules require the entity that
reports the initial transaction to also
report life cycle events for the
transaction. The Commission notes that
a registered SDR that accepts transaction
reports for both swaps and securitybased swaps could establish policies
and procedures for reporting life cycle
events of security-based swaps that are
comparable to its policies and
698 See

DTCC II at 13.
infra Section XII(C).
700 ISDA/SIFMA I at 6.
701 See CFTC Rule 45.1, 17 CFR 45.1. The
Commissions’ ongoing reporting requirements
differ, however, with respect to the reporting of
valuation information. The CFTC’s rules require
reporting of valuation data as well as life cycle
event data. As discussed in above in Section
II(B)(3)(k), the Commission is not requiring
reporting of valuation data for security-based
swaps.
699 See

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procedures for reporting life cycle
events of swaps, provided that its
policies and procedures for reporting
life cycle events of security-based swaps
comply with the requirements of
Regulation SBSR.
Another commenter expressed the
view that Regulation SBSR ‘‘should
clarify what shall be reported as the
time of execution for a life cycle event
for purposes of public
dissemination.’’ 702 The commenter
stated that the CFTC requires market
participants to report the execution time
of the original trade as the execution
time for a life cycle event for the trade.
The commenter suggested that, under
this approach, ‘‘the data that is publicly
disseminated for lifecycle events may
not be that meaningful to the public as
it does not include any indication of the
point in time the reported price has
been traded.’’ 703 The commenter stated,
further, that the time of execution for a
life cycle event for purposes of public
dissemination ‘‘should be the date and
time such price-forming event is
agreed.’’ 704
As discussed in Section VII(B)(3),
supra, final Rule 901(j) provides that the
reporting timeframe for a life cycle
event shall be 24 hours after the
occurrence of the life cycle event or the
adjustment due to the life cycle event.
Final Rule 902(a) requires a registered
SDR to publicly disseminate a
transaction report of a life cycle event,
or adjustment due to a life cycle event,
immediately upon receipt of the
information. Thus, under Regulation
SBSR, a life cycle event, or an
adjustment due to a life cycle event,
must be reported and publicly
disseminated within 24 hours after the
occurrence of the life cycle event or
adjustment due to the life cycle event.
The Commission believes that together
these requirements will provide market
observers with certain information
concerning the time when the life cycle
event occurred. However, the
Commission notes that Regulation
SBSR, as proposed and re-proposed, did
not require the reporting or public
dissemination of the time of execution
of a life cycle event, and Regulation
SBSR, as adopted, likewise includes no
such requirements.
B. Error Corrections—Rule 905
As the Commission noted in the
Regulation SBSR Proposing Release, any
system for transaction reporting must
accommodate the possibility that certain
data elements may be incorrectly
702 ISDA

IV at 13 (emphasis in original).

703 Id.
704 Id.

at 13–14.

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reported.705 Therefore, the Commission
proposed Rule 905 to establish
procedures for correcting errors in
reported and disseminated securitybased swap information.
In the Cross-Border Proposing
Release, the Commission modified
proposed Rule 905 slightly to
correspond with certain new provisions
in re-proposed Rule 908, which
contemplated that certain types of crossborder security-based swaps would be
required to be reported but not publicly
disseminated. Rule 905 was re-proposed
to clarify that, if a registered SDR
receives corrected information relating
to a previously submitted transaction
report, it would be required to publicly
disseminate a corrected transaction
report only if the initial security-based
swap were subject to the public
dissemination requirement.706 The
Commission also made certain other
technical and conforming changes,707
but otherwise re-proposed Rule 905 was
substantially similar to proposed Rule
905.
As discussed below, the Commission
received several comments on proposed
Rule 905. After consideration of the
comments, the Commission has
determined to adopt Rule 905 with
certain minor editorial revisions.708
Rule 905(a) applies to any
counterparty to a security-based swap
that discovers an error in the
information reported with respect to
that security-based swap. If a nonreporting side discovers the error, the
non-reporting side shall promptly notify
the reporting side of the error. Once the
reporting side receives notification of
the error from the non-reporting side, or
if the reporting side discovers the error
on its own, the reporting side must
promptly submit an amended report—
705 See

75 FR 75236.
discussed above in Section VI, Rule 902
requires a registered SDR to immediately publicly
disseminate a transaction report of a security-based
swap, or a life cycle event or adjustment due to a
life cycle event. If a security-based swap falls into
the category of regulatory reporting but not public
dissemination, there would be no need to publicly
disseminate the correction because the initial
security-based swap was not publicly disseminated.
707 The Commission modified the language from
‘‘counterparty’’ or ‘‘party’’ to ‘‘side’’ in the reproposal of Rule 905. Additional minor changes
were made for clarification such as inserting
‘‘transaction’’ in Rule 905(a)(1) and changing an ‘‘a’’
to ‘‘the’’ in Rule 905(b)(1). Re-proposed Rule 905
also substitutes the word ‘‘counterparties’’—which
is a defined term in Regulation SBSR—for the word
‘‘parties,’’ which was used in the initial proposal
but was not a defined term.
708 For example, the title of final Rule 905(a) is
‘‘Duty to correct,’’ rather than ‘‘Duty of
counterparties to correct.’’ In addition, the
Commission is deleting a reference to ‘‘securitybased swap transaction’’ from Rule 905(a)(2), as
well as a reference to ‘‘reporting side’’ in Rule
905(b)(1).’’
706 As

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containing corrected data—to the
registered SDR that received the
erroneous transaction report. The
reporting side must submit the report
required by Rule 905(a) in a manner
consistent with the policies and
procedures of the registered SDR that
are contemplated by Rule 907(a)(3).709
Rule 905(b) details the responsibilities
of a registered SDR to correct
information and re-disseminate
corrected information, where
appropriate. If a registered SDR either
discovers an error in the security-based
swap information or receives
notification of an error from a reporting
side, the registered SDR is required to
verify the accuracy of the terms of the
security-based swap and, following such
verification, promptly correct the
information in its system. If the
erroneous information contains any
primary trade information enumerated
in Rule 901(c) (and the transaction is
dissemination-eligible 710), the
registered SDR must publicly
disseminate a corrected transaction
report of the security-based swap
promptly following verification of the
trade by the counterparties to the
security-based swap, with an indication
that the report relates to a previously
disseminated transaction.711
Three commenters were generally
supportive of the proposed error
reporting procedures. One commenter
believed that publicly disseminating
error reports would ‘‘increase
confidence in the integrity of the
markets.’’ 712 Another commenter stated
that it supported ‘‘the objective of
prompt correction of errors by the
reporting party.’’ 713 A third commenter
expressed support for requiring a
reporting party to correct previously
reported erroneous data, and agreed that
it was appropriate for a non-reporting
counterparty to have the obligation to
notify the reporting party of an error of
which it is aware.714
709 See

infra Section XII(C).
Rule 902(c) (listing certain transactions
that a registered SDR may not publicly
disseminate).
711 See Rule 905(b)(2). When verifying
information pursuant to Rule 905(b), a registered
SDR must comply with the standards of Rule
13n–5. In particular, Rule 13n–5(b)(1)(iii) provides
that an SDR ‘‘shall establish, maintain, and enforce
written policies and procedures reasonably
designed to satisfy itself that the transaction data
that has been submitted to the security-based swap
data repository is complete and accurate, and
clearly identifies the source for each trade side and
the pairing method (if any) for each transaction in
order to identify the level of quality of the
transaction data.’’
712 Barnard I at 3.
713 ISDA/SIFMA I at 9.
714 See MFA I at 5.
710 See

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The third commenter also sought
guidance regarding the application of
Rule 905 if a dispute arose between a
reporting side and non-reporting side
concerning whether a report was, in
fact, erroneous.715 The commenter
urged the Commission to provide in its
final rule that, if corrected information
is not promptly reported to the
registered SDR because of a dispute over
whether an error exists, the nonreporting party side may itself report the
disputed data to the registered SDR; the
commenter believed that, in such cases,
the Commission should oblige the
registered SDR to review promptly the
disputed data with the
counterparties.716
The Commission notes that, in a
separate release, it is adopting Rule
13n–5(b)(6) under the Exchange Act,
which requires an SDR to establish
procedures and provide facilities
reasonably designed to effectively
resolve disputes over the accuracy of the
transaction data and positions that are
recorded in the SDR.717 As the
Commission notes in adopting that rule,
only the parties to a dispute can resolve
it. Thus, the SDR itself is not required
to resolve the dispute, although the
Commission believes that SDRs must
provide processes to facilitate
resolution, which would improve the
quality and accuracy of the securitybased swap data that the SDR holds.
The Commission is interpreting the term
‘‘error’’ in final Rule 905 as one which
both sides to the transaction would
reasonably regard as such. If the
counterparties dispute whether an error
exists, then the counterparties can use
an SDR’s procedures and facilities
established under Rule 13n–5(b)(6) to
attempt to resolve the dispute. If the
dispute-resolution process under Rule
13n–5(b)(6) yielded agreement that an
error exists, then Rule 905 would
require the counterparties to correct the
error.718
The third commenter also asked the
Commission, in the context of Rule 905,
to clarify that the reporting is for
715 See

id.
id.
717 See SDR Adopting Release.
718 In the context of trade reporting, one
commenter stated: ‘‘Confirmation processes are
designed to identify when economic terms to trades
have changed, distinguishing between expected
events under an existing confirmation and
amendments of economic terms due to the
modification in terms . . . The trade confirmation
is a bilateral process in which both parties agree to
the confirmation, thereby ensuring any errors in the
original data are corrected.’’ DTCC II at 5. The
Commission believes that this comment supports
the approach taken above, that counterparties to a
transaction do not incur duties under Rule 905
unless an error is detected that both sides would
regard as such.

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716 See

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informational purposes and does not
affect the terms of the trade; otherwise,
‘‘[a]bsent some mechanism to make the
report nonbinding pending a dispute,
the correction mechanics in the
Proposed Rule will result in the
reporting party (typically the SBS
dealer) prevailing in any dispute.’’ 719
The Commission does not believe that
reporting of an error in previously
submitted security-based swap
transaction information can change the
terms of the trade. Reporting is designed
to capture the terms of the trade, not to
establish such terms. The Commission’s
expectation, however, is that the report
of a security-based swap provided to
and held by a registered SDR will
reflect, fully and accurately, the terms of
the trade agreed to by the
counterparties. If a counterparty
becomes aware that the record held by
the registered SDR does not accurately
reflect the terms of the trade, that
counterparty incurs a duty under Rule
905 to take action to have that record
corrected.
A fourth commenter argued that the
specific root cause of such amendments
(for example a booking error or a trade
amendment between parties) could be
omitted.720 The Commission notes that
Rule 905 does not require the reporting
side to include the root cause of the
error. This commenter also urged the
Commission to clarify that reporting
parties are not responsible for data that
are inaccurately transcribed or
corrupted after submission to the
registered SDR. The Commission notes
that the obligations under Rule 905
attach to a counterparty to a securitybased swap only after that counterparty
‘‘discovers’’ the error or, if the
counterparty is the reporting side, after
it ‘‘receives notification’’ of the error
from the non-reporting side.721 Thus, a
security-based swap counterparty incurs
no duty under Rule 905 if its transaction
data are inaccurately transcribed or
corrupted after submission to the
registered SDR unless the counterparty
discovers the inaccurate transcription or
corruption. Thus, under Rule 905, a
counterparty would incur no duty to
correct data errors of which it is
unaware.722
719 Id.

at 5–6.
ISDA/SIFMA I at 9.
721 Rule 905(a).
722 The registered SDR, however, must comply
with Rule 13n–5(b)(1)(iii) under the Exchange Act,
which provides, in relevant part: ‘‘Every securitybased swap data repository shall establish,
maintain, and enforce written policies and
procedures reasonably designed to satisfy itself that
the transaction data that has been submitted to the
security-based swap data repository is complete and
accurate.’’
720 See

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Finally, a fifth commenter believed
that Rule 905 should provide an error
reporting timeframe that is stronger and
more specific than the proposed
requirement that such reports be
submitted ‘‘promptly.’’ 723 The
Commission continues to believe that
‘‘promptly’’ is an appropriate standard
because it emphasizes the need for
corrections to be submitted without
unreasonable delay while affording
reporting sides a practical degree of
flexibility
C. Policies and Procedures for Reporting
Life Cycle Events and Corrections
Rule 907(a)(3), as originally proposed,
would have required a registered SDR to
establish and maintain written policies
and procedures for ‘‘specifying how
reporting parties are to report
corrections to previously submitted
information in its records that is
subsequently discovered to be
erroneous, and applying an appropriate
indicator to any transaction report
required to be disseminated by [Rule
905(b)(2)] that the report relates to a
previously disseminated transaction.’’
Rule 907(a)(3), as re-proposed, would
have required a registered SDR to
establish and maintain written policies
and procedures for ‘‘specifying how
reporting sides are to report corrections
to previously submitted information,
making corrections to information in its
records that is subsequently discovered
to be erroneous, and applying an
appropriate indicator to any report
required to be disseminated by [Rule
905(b)(2)] that the report relates to a
previously disseminated transaction.’’
The Commission received no adverse
comment on Rule 907(a)(3) and is
adopting it as re-proposed with a slight
modification. Rule 907(a)(3), as adopted,
requires a registered SDR to establish
and maintain policies and procedures
for ‘‘specifying procedures for reporting
life cycle events and corrections to
previously submitted information,
making corresponding updates or
corrections to transaction records, and
applying an appropriate flag to the
transaction report to indicate that the
report is an error correction required to
be disseminated by [Rule 905(b)(2)] or is
a life cycle event, or any adjustment due
to a life cycle event, required to be
disseminated by [Rule 902(a)]’’
(emphasis added). The Commission is
adding to final Rule 907(a)(3) the
explicit requirement that a registered
SDR establish and maintain policies and
procedures regarding the reporting and
flagging of life cycle events. The
Commission believes that these
723 See

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
additions will improve the ability of the
Commission and other relevant
authorities to identify and analyze life
cycle events of security-based swaps.
In the case of a life cycle event or
error correction, the initial transaction
has already been reported to the
registered SDR, and the subsequent
report involves some type of revision to
the previously submitted report. The
Commission seeks to have the ability to
observe a security-based swap
transaction throughout its life, which
requires the ability to connect
subsequently reported events to the
original transaction. The Commission
also seeks to avoid mistaking life cycle
events or corrections of previously
submitted reports for new transactions,
which could result in overcounting the
gross notional amount of the securitybased swap market or subsets thereof.
Therefore, the Commission believes that
registered SDRs must have appropriate
policies and procedures that stipulate
how reporting sides must report such
follow-on events, and how the
registered SDR itself can distinguish
them and record them properly.
Just as the Commission believes that
a registered SDR should be given
reasonable flexibility to enumerate
specific data elements to be reported
and the method for reporting them, the
Commission also believes that a
registered SDR should be given
reasonable flexibility regarding the
handling of corrections to previously
submitted information. As discussed
above, final Rule 905 does not require
the reporting side to report the cause of
an error.724 Nor does Rule 905 set forth
a specific procedure for how a registered
SDR must accept a report of a life cycle
event or error correction. Accordingly, a
registered SDR’s policies and
procedures under Rule 907(a)(3) could
require resubmission of the entire
record with or without an indication of
which elements in that record had been
revised. Alternatively, a registered
SDR’s policies and procedures could
require a submission of only the data
element or elements that had been
revised. The Commission notes,
however, that Rule 905(b)(2) requires a
registered SDR to publicly disseminate
a corrected transaction report of a
security-based swap, if erroneously
reported information relates to a
security-based swap that had been
publicly disseminated and falls into any
of the categories of information
enumerated in Rule 901(c). Therefore, a
registered SDR will need to have a
means of identifying changes in
reported data so that it can identify the
724 See

supra note 721 and accompanying text.

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changed element or elements in the
publicly disseminated correction report.
The Commission notes that Rule
907(a)(3) requires a registered SDR’s
policies and procedures also to address
how the registered SDR will apply an
appropriate condition flag to any
corrected transaction report that must be
re-disseminated. Market observers
should be able to understand that a
transaction report triggered by Rule
905(b)(2) or Rule 902(a) does not
represent a new transaction, but merely
a revision to a previous transaction.
Without an indication to that effect,
market observers could misunderstand
the true state of the market.725 To
provide observers with a clear view of
the market, public reports of life cycle
events should allow observers to
identify the security-based swap subject
to the life cycle event. The Commission
notes, however, that registered SDRs
may not use the transaction ID for this
function because the transaction ID is
not a piece of ‘‘information reported
pursuant to [Rule 901(c)]’’ or a
condition flag.726 Moreover, the
Commission believes that knowledge of
the transaction ID should remain
limited to counterparties, infrastructure
providers, and their agents, and should
not be widely known. Knowledge of the
transaction ID by additional parties
could raise data integrity issues, as such
additional parties could accidentally or
even intentionally submit ‘‘false
corrections’’ to the registered SDR
regarding transactions to which they
were never a counterparty. This could
damage the otherwise accurate record of
the original transaction. Screening out
improperly submitted ‘‘corrections’’—or
repairing damage to the registered SDR’s
records that a false correction might
cause—could become a significant and
unwanted burden on registered SDRs.
Therefore, registered SDRs, in their
policies and procedures under Rule
907(a)(3), will need to use some means
other than the transaction ID to indicate
that a publicly disseminated report
triggered by Rule 905(b)(2) or Rule
725 One such condition flag could be for voided
trades. There may be scenarios in which a securitybased swap is executed (or thought to be executed),
subsequently reported to a registered SDR, and
publicly disseminated by that SDR—but later
voided or canceled for some reason. For example,
a transaction might be submitted to clearing but
rejected by the clearing agency, and the
counterparties could deem their agreement to be
void ab initio. In this situation, the Commission
believes the registered SDR could satisfy its
obligation to publicly disseminate under Regulation
SBSR by including a condition flag that the
previously disseminated transaction report had
been voided or canceled.
726 See Rule 902(a).

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14643

902(a) pertains to a previously
disseminated transaction.727
XIII. Other Duties of Participants
A. Duties of Non-Reporting Sides To
Report Certain Information—Rule
906(a)
The Commission believes that a
registered SDR generally should
maintain complete information for each
security-based swap reported to the
registered SDR, including UICs for both
sides of a transaction. Although
Regulation SBSR generally takes the
approach of requiring only one side to
report the majority of the transaction
information,728 the Commission
recognizes that it might not be feasible
or desirable for the reporting side to
report to a registered SDR all of the UICs
of the non-reporting side. To address
this issue, the Commission proposed
Rule 906(a), which would provide a
means for a registered SDR to obtain
UICs from the non-reporting side.
Rule 906(a), as initially proposed,
would have established procedures
designed to ensure that a registered SDR
obtains UICs for both direct
counterparties to a security-based swap.
As initially proposed, Rule 906(a)
would have required a registered SDR to
identify any security-based swap
reported to it for which the registered
SDR does not have the participant ID
and (if applicable) the broker ID, desk
ID, and trader ID of each counterparty.
The registered SDR would have been
required to send a report once a day to
each of its participants identifying, for
each security-based swap to which that
727 For example, DTCC Data Repository, LLC
(‘‘DDR’’) utilizes an Event Identifier (‘‘EID’’) to
maintain the integrity of a transaction throughout
its lifecycle and enable public identification of
events, including corrections, which occur with
respect to the transaction. See DDR Rulebook,
Section 4.1 at http://dtcc.com/∼/media/Files/
Downloads/legal/rules/DDR_Rulebook.ashx, last
visited September 22, 2014. The EID is separate
from the Unique Swap Identifiers (‘‘USI’’), which is
the CFTC-equivalent of the transaction ID. See also
ISDA/SIFMA I at 10 (recommending that initial
trades should carry a ‘‘primary reference number’’
when disseminated, ‘‘and all amendments of that
trade would then produce iterations of the original
reference number’’).
728 Section 13A(a)(3) of the Exchange Act, 15
U.S.C. 78m–1(a)(1), stipulates which counterparty
must report a security-based swap that is not
accepted by any clearing agency or derivatives
clearing organization. That provision does not
contemplate reporting by the other direct
counterparty. Title VII does not stipulate who
should report cleared security-based swaps.
However, Section 13(m)(1)(F) of the Exchange Act,
15 U.S.C. 78m(m)(1)(F), provides that ‘‘[p]arties to
a security-based swap (including agents of the
parties to a security-based swap) shall be
responsible for reporting security-based swap
transaction information to the appropriate
registered entity in a timely manner as may be
prescribed by the Commission.’’

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participant is a counterparty, the
security-based swap(s) for which the
registered SDR lacks participant IDs and
(if applicable) a broker ID, desk ID, or
trader ID. The participant would have
been required to provide the missing
information within 24 hours of
receiving this report from the registered
SDR.
When the Commission re-proposed
Regulation SBSR as part of the CrossBorder Proposing Release, it made
conforming changes to Rule 906(a) to
reflect the introduction of the ‘‘reporting
side’’ concept and to clarify that the
participant ID, broker ID, desk ID, and
trader ID must be reported only for
direct counterparties.729
The Commission has decided to adopt
Rule 906(a) substantially as re-proposed,
with conforming changes related to
including branch ID and execution
agent ID among the UICs that must be
provided to the registered SDR 730 and
other minor technical changes.731
729 See

78 FR 31214.
discussed above, see supra Section II(C),
the Commission has added ‘‘branch ID’’ and
‘‘execution agent ID’’ to the UICs required to be
reported under Regulation SBSR. The Commission
believes that reporting the branch ID and the
execution agent ID for both counterparties to a
security-based swap, if applicable, to a registered
SDR will assist the Commission and other relevant
authorities in overseeing the security-based swap
market. Accordingly, the Commission has included
branch ID and execution agent ID as UICs that
registered SDRs must obtain pursuant to Rule
906(a).
731 The Commission has determined to use the
term ‘‘counterparty ID’’ rather than ‘‘participant ID’’
and to use the term ‘‘trading desk ID’’ rather than
‘‘desk ID’’ throughout Regulation SBSR. See supra
Sections II(B)(3)(b) and II(C)(3)(c). In addition, the
Commission has inserted the word ‘‘direct’’
immediately before each instance of the word
‘‘counterparty.’’ When the Commission re-proposed
Rule 906(a), it made conforming changes to reflect
the introduction of the ‘‘reporting side’’ concept
and to clarify that relevant UICs for the nonreporting side must be reported only for direct
counterparties. The word ‘‘counterparty’’ occurs in
two places in final Rule 906(a), but the re-proposed
rule inserted ‘‘direct’’ before ‘‘counterparty’’ only
after the first occurrence. Final Rule 906(a) inserts
‘‘direct’’ before ‘‘counterparty’’ both times that the
word ‘‘counterparty’’ is used. Final Rule 906(a) also
includes modifications that clarify that the term
‘‘participant,’’ as used in Rule 906(a), means a
participant in a registered SDR. The Commission
has made similar modifications throughout final
Rule 906. The Commission also is revising the final
sentence of Rule 906(a) to clarify that the
participant referred to in that sentence is a
participant of a registered SDR, and to clarify that
a participant that receives a Rule 906(a) report from
a registered SDR is responsible for providing
missing UIC information for its side of each
security-based swap referenced in the report. The
participant is not responsible for providing any
missing UIC information pertaining to the other
side of the transaction. Accordingly, the last
sentence of Rule 906(a) states: ‘‘A participant of a
registered security-based swap data repository that
receives such a report shall provide the missing
information with respect to its side of each securitybased swap referenced in the report to the
registered security-based swap data repository

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The Commission received two
comment letters from the same
commenter addressing proposed Rule
906(a). The first letter, which responded
to the initial proposal, stated that
regulators must have the UICs of both
counterparties to a security-based swap
to accurately track exposures.732 The
commenter believed that, ideally, this
process would be supported
electronically and that the use of thirdparty services should meet this
requirement.733
The Commission generally shares the
commenter’s view that registered SDRs
should maintain UICs for both sides of
a security-based swap.734 The
Commission notes that Rule 901(d)
requires the reporting side to report the
branch ID, broker ID, execution agent
ID, trader ID, and trading desk ID—as
applicable—only for the direct
counterparty on its side. Rule 901(d)(1)
requires the reporting side to report only
the counterparty ID or execution agent
ID, as applicable, of a counterparty on
the other side. The Commission could
have required the reporting side to
provide UIC information for both sides
of the transaction, but this would
obligate a non-reporting side to furnish
its UIC information to the reporting side
so that the additional UICs could be
reported by the reporting side. There are
circumstances where a non-reporting
side might be unable or unwilling to
provide its UIC information to the
reporting side. Therefore, the
Commission is instead requiring the
registered SDR to obtain these UICs
from the non-reporting side through the
Rule 906(a) process.735 Obtaining UICs
within 24 hours.’’ In addition, the Commission is
revising the rule to refer to execution agents to
conform to Rule 901(d)(1)(i). Finally, to more
accurately reflect the requirements of the rule, the
Commission is changing the title of the rule to
‘‘Identifying missing UIC information.’’
732 See DTCC II at 16. This commenter also
suggested that desk IDs and trader IDs should not
be required to be reported due to the fact that desk
structures are changed relatively frequently and
traders often rotate to different desks or transfer to
different firms. See DTCC II at 11. This suggestion
is addressed above in Section II(C)(3)(c).
733 See DTCC II at 16.
734 However, if the non-reporting side for the
security-based swap does not meet the definition of
‘‘participant’’ in Rule 900(u), Rule 906(a) would not
require the registered SDR to request UIC
information from the non-reporting side. This result
is consistent with the Regulation SBSR Proposing
Release. See 75 FR 75240 (‘‘Thus, the Commission
anticipates that there would be some SBSs reported
to and captured by a registered SDR where only one
counterparty of the SBS is a participant’’).
735 Rule 906(a) provides: ‘‘A registered securitybased swap data repository shall identify any
security-based swap reported to it for which the
registered security-based swap data repository does
not have the counterparty ID and (if applicable) the
broker ID, branch ID, execution agent ID, trading
desk ID, and trader ID of each direct counterparty.

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for both sides will enhance the
Commission’s ability to carry out its
responsibility to oversee the securitybased swap market, because the
Commission will be able to identify
individual traders and business units
that are involved in security-based swap
transactions.736
In a subsequent comment letter, in
response to the re-proposal of
Regulation SBSR, the same commenter
expressed concern that Rule 906(a)
could require a registered SDR to send
reports to and obtain information from
persons who might not be participants
of that registered SDR.737 More
generally, this commenter suggested
that registered SDRs should not police
security-based swap reports for
deficiencies or unpopulated data fields
in any manner that requires the
registered SDR to take affirmative action
to obtain information.738
The Commission disagrees with the
commenter’s suggestion that registered
SDRs should have no duty to review the
completeness of security-based swap
reports or obtain missing information
from participants. To the contrary, the
Commission believes that registered
SDRs are best situated to review
reported data for completeness because
they have a statutory and regulatory
duty to accept and maintain securitybased swap data, as prescribed by the
Commission.739 Imposing an affirmative
duty on registered SDRs to verify the
completeness of reported data and to
Once a day, the registered security-based swap data
repository shall send a report to each participant of
the registered security-based swap data repository
or, if applicable, an execution agent, identifying, for
each security-based swap to which that participant
is a counterparty, the security-based swap(s) for
which the registered security-based swap data
repository lacks counterparty ID and (if applicable)
broker ID, branch ID, execution agent ID, desk ID,
and trader ID. A participant of a registered securitybased swap data repository that receives such a
report shall provide the missing information with
respect to its side of each security-based swap
referenced in the report to the registered securitybased swap data repository within 24 hours.’’ Rule
900(u) defines ‘‘participant,’’ with respect to a
registered SDR, as ‘‘a counterparty, that meets the
criteria of § 242.908(b), of a security-based swap
that is reported to that registered security-based
swap data repository to satisfy an obligation under
§ 242.901(a).’’
736 Nothing in Regulation SBSR prevents a nonreporting side from voluntarily providing all of its
applicable UICs to the reporting side, so that the
reporting side could, as agent, report all of the nonreporting side’s UICs together with the rest of the
data elements required by Rules 901(c) and 901(d).
If this were to occur, the registered SDR would not
need to send a Rule 906(a) report to the nonreporting side inquiring about the non-reporting
side’s missing UICs.
737 See DTCC V at 13. As noted above, however,
Rule 906(a), as adopted, requires the registered SDR
to obtain UIC information only from non-reporting
sides that are participants of that registered SDR.
738 See DTCC V at 13.
739 See 15 U.S.C. 78m(n)(5).

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obtain missing data should increase the
reliability of data maintained by
registered SDRs while decreasing the
possibility of registered SDRs providing
incomplete reports to relevant
authorities. This, in turn, will facilitate
oversight of the security-based swap
market, which is a primary objective
Title VII.
Rule 906(a) requires registered SDRs
to communicate with participants that
are not reporting sides under Regulation
SBSR. As discussed above, these
communications are required to ensure
that a registered SDR maintains
complete UIC information for both sides
of each security-based swap transaction
that is reported to the registered SDR.
The Commission recognizes that some
non-reporting sides may not wish to
connect directly to a registered SDR
because they may not want to incur the
costs of establishing a direct connection.
Rule 906(a) does not prescribe the
means registered SDRs must use to
obtain information from non-reporting
sides. As a result, registered SDRs have
broad discretion to establish a
methodology for notifying non-reporting
sides of missing UIC information and
obtaining UIC reports from the nonreporting side. For example, a registered
SDR could send notifications and
receive reports via email, in accordance
with its policies and procedures.740
Registered SDRs should consider
allowing non-reporting sides to provide
the information required by Rule 906(a)
in a minimally-burdensome manner.
Historical security-based swaps must
be reported to a registered SDR pursuant
to Rule 901(i). The Commission
acknowledges that broker IDs, branch
IDs, execution agent IDs, trading desk
IDs, and trader IDs do not yet exist and
will not exist until assigned by
registered SDRs. Therefore, these UICs
are not data elements applicable to
historical security-based swaps.
Accordingly, registered SDRs are not
required under Rule 906(a) to identify
these UICs as missing or to
communicate to non-reporting side
participants that they are missing, and
non-reporting side participants are not
required by Rule 906(a) to provide these
UICs to a registered SDR with respect to
any historical security-based swaps.
B. Duty To Provide Ultimate Parent and
Affiliate Information to Registered
SDRs—Rule 906(b)
To assist the Commission and other
relevant authorities in monitoring
systemic risk, a registered SDR should
be able to identify and calculate the
740 See supra Section IV (discussing Rule
907(a)(2)).

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security-based swap exposures of its
participants on an enterprise-wide
basis.741 Therefore, the Commission
proposed Rule 906(b), which would
have required each participant of a
registered SDR to provide to the
registered SDR information sufficient to
identify its ultimate parent(s) and any
affiliate(s) of the participant that also are
participants of the registered SDR.
Proposed Rule 906(b) would have
required a person to provide parent and
affiliate information to a registered SDR
immediately upon becoming a
participant.742 Proposed Rule 906(b)
also would have required a participant
to promptly notify the registered SDR of
any changes to reported parent or
affiliate information.
The Commission also proposed rules
to define the relationships that could
give rise to reporting obligations under
Rule 906(b). Proposed Rule 900 would
have defined an ‘‘affiliate’’ as ‘‘any
person that, directly or indirectly,
controls, is controlled by, or is under
common control with, a person’’ and
‘‘control’’ as ‘‘the possession, direct or
indirect, of the power to direct or cause
the direction of the management and
policies of a person, whether through
the ownership of voting securities, by
contract, or otherwise.’’ 743 The
Commission also proposed definitions
of ‘‘parent’’ and ‘‘ultimate parent’’ to
identify particular categories of
affiliated entities based on a person’s
ability to control an affiliate.
Specifically, proposed Rule 900 would
have defined ‘‘parent’’ to mean ‘‘a legal
person that controls a participant’’ and
‘‘ultimate parent’’ as ‘‘a legal person that
controls a participant and that itself has
no parent.’’ The Commission also
proposed to define ‘‘ultimate parent ID’’
as ‘‘the UIC assigned to an ultimate
parent of a participant.’’
The Commission re-proposed the
definitions of ‘‘affiliate,’’ ‘‘control,’’
741 The Commission notes that Rule 13n–5(b)(2)
under the Exchange Act provides: ‘‘Every securitybased swap data repository shall establish,
maintain, and enforce written policies and
procedures reasonably designed to calculate
positions for all persons with open security-based
swaps for which the security-based swap data
repository maintains records.’’
742 The policies and procedures of a registered
SDR will establish on-boarding procedures for
participants.
743 Proposed Rule 900 further would have
provided that a person would be presumed to
control another person if the person: ‘‘(1) [i]s a
director, general partner or officer exercising
executive responsibility (or having similar status or
functions); (2) [d]irectly or indirectly has the right
to vote 25 percent or more of a class of voting
securities or has the power to sell or direct the sale
of 25 percent or more of a class of voting securities;
or (3) [i]n the case of a partnership, has the right
to receive, upon dissolution, or has contributed, 25
percent or more of the capital.’’

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14645

‘‘parent,’’ ‘‘ultimate parent,’’ and
‘‘ultimate parent ID,’’ and Rule 906(b)
without change in the Cross-Border
Proposing Release.744
After considering the comments
received, which are discussed below,
the Commission is adopting Rule 906(b),
as proposed and re-proposed, subject to
two clarifying changes.745 Obtaining
ultimate parent and affiliate information
will assist the Commission in
monitoring enterprise-wide risks related
to security-based swaps. If participants
are not required to identify which of
their affiliates also are participants of a
particular registered SDR, the
Commission or other relevant
authorities might be unable to calculate
the security-based swap exposures of
that ownership group using data held in
the registered SDR. As a result, systemic
risk might build undetected within an
ownership group, even if all securitybased swaps for that enterprise were
reported to the same registered SDR.
The lack of transparency regarding OTC
derivatives exposures within the same
ownership group was one of the factors
that hampered regulators’ ability to
respond to the financial crisis of 2007–
08.746
The Commission believes that a
reasonable means of monitoring
security-based swap positions on a
group-wide basis is by requiring each
participant of a registered SDR to
provide information sufficient to
identify the participant’s ultimate
parent(s) and any affiliate(s) of the
participant that also are participants of
the registered SDR, using ultimate
parent IDs and counterparty IDs.747 Rule
744 See 78 FR 31210–11. The definition of
‘‘affiliate’’ was re-proposed as Rule 900(a). The
definitions of ‘‘control,’’ ‘‘parent,’’ and ‘‘ultimate
parent’’ were re-proposed as Rules 900(f), 900(r),
and 900(ll), respectively. Re-proposed Rule
900(mm) contained the definition of ‘‘ultimate
parent ID.’’
745 Specifically, the Commission is modifying
Rule 906(b) to clarify that the term ‘‘participant,’’
means a participant in a registered SDR. The
Commission also is replacing the term ‘‘participant
ID’’ with ‘‘counterparty ID.’’
746 See Financial Crisis Inquiry Commission,
‘‘The Financial Crisis Inquiry Report: Final Report
of the National Commission on the Causes of the
Financial and Economic Crisis in the United
States,’’ January 2011, at xxi, available at: http://
www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPOFCIC.pdf, last visited September 22, 2014
(explaining that relevant authorities ‘‘lacked a full
understanding of the risks and interconnections in
the financial markets’’ prior to and during the
financial crisis, including, among other things, the
exposures created by Lehman Brothers’ derivatives
contracts).
747 Among other things, Rule 906(b) should
enable the Commission and other relevant
authorities to identify quickly security-based swaps
of a corporate group that have been reported to the
registered SDR, including security-based swaps

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906(b), as adopted, imposes an
affirmative obligation on participants of
a registered SDR to provide this
ownership and affiliation information to
a registered SDR immediately upon
becoming a participant of that SDR. The
participant also must notify the
registered SDR promptly of any changes
to that information. To minimize
burdens on participants and to align the
burdens as closely as possible with the
purpose behind the requirement, Rule
906(b) does not require a participant of
a registered SDR to provide information
to the registered SDR about all of its
affiliates, but only those that are also
participants of the same registered SDR.
The Commission received three
comments addressing proposed Rule
906(b).748 One commenter supported
the proposed rule, stating that parent
and affiliate information, along with
other information required to be
reported by Regulation SBSR, is critical
to providing regulators with a
comprehensive view of the swaps
market and assuring that publicly
reported data is accurate and
meaningful.749 This commenter further
stated that registered SDRs should have
the power to obtain parent and affiliate
information from firms, because this
information would help to illustrate the
full group level exposures of firms and
the impact of the failure of any
participant.750 The Commission
generally agrees with the commenter’s
points and continues to believe that
identifying security-based swap
exposures within an ownership group is
critical to monitoring market activity
and detecting potential systemic risks.
The existence of data vendors that
provide parent and affiliate information
may reduce any burdens on participants
associated with reporting such
information to a registered SDR,751 but
the Commission does not view this as
an adequate substitute for having the
information reported to and readily
available from registered SDRs. Title
VII’s regulatory reporting requirement is
designed to allow the Commission and
other relevant authorities to have access
to comprehensive information about
security-based swap activity in
registered SDRs. The Commission
believes that it would be inimical to that
end for relevant authorities to have all
held by securitization vehicles that are controlled
by financial institutions.
748 See DTCC II at 13–14; ICI I at 6; GS1 Proposal
at 43–44.
749 See DTCC II at 13–14.
750 See id. at 17. This commenter believed that a
registered SDR likely would obtain parent and
affiliate information from a data vendor and allow
participants to review and approve the data.
751 See id.

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the transaction information in registered
SDRs but be forced to rely on
information from outside of registered
SDRs to link positions held by affiliates
within the same corporate group.
Two commenters suggested
clarifications or modifications to the
proposed rule.752 One commenter
expressed concerns about how Rule
906(b) would apply to agents, noting
that investment advisers frequently
execute a single security-based swap
transaction on behalf of multiple
accounts and allocate the notional
amount of the transaction among these
accounts at the end of the day.753 The
commenter stated that advisers often do
not know all of the affiliates of their
clients and, as a result, might be unable
to comply with Rule 906(b).754 The
commenter recommended that ‘‘the
Commission clarify that an adviser that
has implemented reasonable policies
and procedures to obtain the required
information about affiliates and
documented its efforts to obtain the
information from its clients be deemed
to have satisfied [Rule 906(b) of]
Regulation SBSR.’’ 755
The Commission believes that it is
unnecessary to modify Rule 906(b) in
response to this comment. The
Commission notes that Rule 906(b)
imposes no obligations on an execution
agent, such as an investment adviser
that executes a single security-based
swap on behalf of multiple accounts and
allocates the notional amount of the
transaction among those accounts at the
end of the day. Rather, it would be the
counterparty itself that would have the
responsibility under Rule 906(b).
Another commenter expressed the
view that the information required to be
reported by Rule 906(b) should be
placed in prescribed XBRL templates or
other such input mechanisms that
would capture this information at its
source for all downstream processes in
the financial supply chain to use.756 The
Commission has determined not to
specify the manner or format in which
security-based swap counterparties
must provide ultimate parent and
affiliate information to a registered SDR.
The Commission believes that it would
be preferable to allow each registered
SDR to determine a suitable way to
receive and maintain ultimate parent
and affiliate information about its
participants. The Commission notes that
Rule 907(a)(6), as adopted, requires a
registered SDR to establish and maintain
752 See

ICI I at 6; GS1 Proposal at 43–44.
ICI I at 6, note 9.
754 See id.
755 Id.
756 See GS1 Proposal at 43.
753 See

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written policies and procedures for
periodically obtaining from each
participant information that identifies
the participant’s ultimate parent(s) and
any other participant(s) with which the
counterparty is affiliated, using ultimate
parent IDs and counterparty IDs.757
The Commission received three
comments on the definitions of
‘‘control’’ and ‘‘affiliate.’’ 758 No
commenters specifically addressed the
definitions of ‘‘parent,’’ ‘‘ultimate
parent,’’ or ‘‘ultimate parent ID.’’ After
carefully evaluating these comments,
the Commission is adopting the
definitions of ‘‘affiliate,’’ ‘‘control,’’
‘‘parent,’’ ‘‘ultimate parent,’’ and
‘‘ultimate parent ID’’ as proposed and
re-proposed.759
One commenter stated its view that
the proposed definition of ‘‘control’’
was improper.760 This commenter
believed that the proposed 25%
threshold for presuming control was too
low, and that obtaining the information
required by Rule 906(b) from entities
with which a security-based swap
market participant has less than a
majority ownership relationship would
be overly burdensome, and, in some
cases, not practicable.761 The
commenter recommended that the
Commission amend the definition to
presume control based on no less than
majority ownership.762
The Commission disagrees that, for
purposes of Regulation SBSR, control
should be presumed to exist only if
there is majority ownership. Rule 906(b)
is designed to assist the Commission
and other relevant authorities in
monitoring group-wide security-based
swap exposures by enabling a registered
SDR to provide them with the
information necessary to calculate
positions in security-based swaps held
within the same ownership group that
are reported to that registered SDR. If
the Commission were to adopt
definitions of ‘‘control’’ and ‘‘affiliate’’
that were based on majority ownership,
757 As originally proposed, Rule 907(a)(6) would
have required a registered SDR to establish and
maintain written policies and procedures ‘‘[f]or
periodically obtaining from each participant
information that identifies the participant’s ultimate
parent(s) and any other participant(s) with which
the counterparty is affiliated, using ultimate parent
IDs and participant IDs’’ (emphasis added). The
Commission re-proposed Rule 907(a)(6) with the
word ‘‘participant’’ in place of the word
‘‘counterparty.’’
758 See DTCC II at 17; Multiple Associations
Letter at 7–8; SIFMA I at 6.
759 Final Rule 900(a) defines ‘‘affiliate,’’ while the
definitions of ‘‘control,’’ ‘‘parent,’’ ‘‘ultimate
parent’’ and ‘‘ultimate parent ID’’ are in Rules
900(h), 900(t), 900(oo), and 900(pp), respectively.
760 See SIFMA I at 6.
761 See id.
762 See id.

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participants would be required to
identify fewer entities as affiliates, even
if certain indicia of affiliation were
present. The Commission believes that,
to carry out its oversight function for the
security-based swap market, it should
err on the side of inclusion rather than
exclusion when considering which
positions are part of the same ownership
group for general oversight purposes.
The Commission also notes that the
definition of ‘‘control’’ as adopted in
Rule 900(h) is consistent with the
definition used in other Commission
rules and forms,763 so market
participants should be accustomed to
applying this definition in the conduct
of their business activities. Furthermore,
the CFTC’s swap data reporting rules
employ a materially similar definition of
‘‘control’’ for purposes of determining
whether two market participants are
affiliated with each other.764 If the
Commission were to adopt a different
definition of ‘‘control,’’ market
participants would need to determine
their affiliates under both sets of rules,
thereby imposing what the Commission
believes would be unnecessary costs on
market participants.
One commenter suggested that the
Commission and the CFTC use a
consistent definition of ‘‘affiliate’’
throughout the Title VII rulemakings 765
and recommended that the Commission
and CFTC use the definition of
‘‘affiliated group’’ in the Commissions’
proposed joint rulemaking to further
define the terms swap dealer, securitybased swap dealer, major swap
participant, major security-based swap
participant, and eligible contract
participant (‘‘Entity Definitions
Proposing Release’’).766 The
763 See, e.g., Rule 300(f) of Regulation ATS under
the Exchange Act, 17 CFR 242.300(f); Rule 19g2–
1(b)(2) under the Exchange Act, 17 CFR 240.19g2–
1(b)(2); Form 1 (Application for, and Amendments
to Application for, Registration as a National
Securities Exchange or Exemption from Registration
Pursuant to Section 5 of the Exchange Act); Form
BD (Uniform Application for Broker-Dealer
Registration). See also Rule 3a55–4(b)(2) under the
Exchange Act, 17 CFR 240.3a55–4(b)(2) (defining
control to mean ownership of 20% or more of an
issuer’s equity, or the ability to direct the voting of
20% or more of the issuer’s voting equity).
764 See 17 CFR 45.6(a) (defining ‘‘control’’ in the
context of the CFTC’s LEI system); 17 CFR
45.6(e)(2).
765 See Multiple Associations Letter at 7–8.
766 Securities Exchange Act Release No. 63452
(December 7, 2010), 75 FR 80174 (December 21,
2010). In the Entity Definitions Proposing Release,
‘‘affiliated group’’ would have been used to describe
the range of counterparties that a security-based
swap market participant would need to count for
purposes of determining whether it qualified for a
de minimis exception from the definition of
‘‘security-based swap dealer.’’ For purposes of the
Entity Definitions Proposing Release, the
Commissions stated that an affiliated group would
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Commission does not believe it is
appropriate to adopt, for purposes of
Regulation SBSR, the definition of
‘‘affiliated group’’ that was proposed in
the Entity Definitions Proposing
Release. The final rules defining ‘‘swap
dealer,’’ ‘‘security-based swap dealer,’’
‘‘major swap participant,’’ ‘‘major
security-based swap participant,’’ and
‘‘eligible contract participant’’ (‘‘Final
Entity Definition Rules’’) did not adopt
a definition of ‘‘affiliated group.’’ 767
When the Commission and CFTC
adopted the Final Entity Definition
Rules they specifically rejected the
notion that an ‘‘affiliated group’’ should
include only those entities that report
information or prepare financial
statements on a consolidated basis as a
prerequisite for being affiliated because
they did not believe that whether or not
two entities are affiliated should change
according to changes in accounting
standards.768 The Commission
continues to believe that changes in
accounting standards should not
determine whether two entities are
affiliated and therefore declines to adopt
the definition of ‘‘affiliated group’’ that
it proposed in the Entity Definitions
Proposing Release.
C. Policies and Procedures of Registered
Security-Based Swap Dealers and
Registered Major Security-Based Swap
Participants To Support Reporting—
Rule 906(c)
For the security-based swap reporting
requirements established by the DoddFrank Act to achieve the objectives of
enhancing price transparency and
providing regulators with access to data
to help carry out their oversight
responsibilities, the information that
participants provide to registered SDRs
must be reliable. Ultimately, the
majority of security-based swaps likely
will be reported by registered securitybased swap dealers and registered major
security-based swap participants. The
Commission believes that requiring
these participants to adopt policies and
procedures to address their securitybased swap reporting obligations will
increase the accuracy and reliability of
the transaction reports that they submit
to registered SDRs.
Proposed Rule 906(c) would have
required a participant that is a securitybased swap dealer or major securitybased swap participant to establish,
maintain, and enforce written policies
and procedures that are reasonably
common control and that reports information or
prepares its financial statements on a consolidated
basis.’’ See 75 FR 80180, note 43.
767 Securities Exchange Act Release No. 66868
(April 27, 2012), 77 FR 30596 (May 23, 2012).
768 See id. at 30625.

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14647

designed to ensure that the participant
complies with any obligations to report
information to a registered SDR in a
manner consistent with Regulation
SBSR and the policies and procedures
of any registered SDR of which it is a
participant. The policies and procedures
contemplated by proposed Rule 906(c)
were intended to promote complete and
accurate reporting of security-based
swap information by participants that
are security-based swap dealers and
major security-based swap participants,
consistent with their obligations under
the Dodd-Frank Act and Regulation
SBSR. Proposed Rule 906(c) also would
have required a security-based swap
dealer or major security-based swap
participant to review and update its
policies and procedures at least
annually. The Commission re-proposed
Rule 906(c) without change as part of
the Cross-Border Proposing Release.769
The one commenter who addressed this
aspect of Regulation SBSR stated that
proposed Rule 906(c) is ‘‘a necessary
part of risk governance and
compliance.’’ 770
The Commission agrees and is
adopting Rule 906(c), largely as
proposed and re-proposed, subject to
two modifications.771 As proposed and
re-proposed, Rule 906(c) would have
required security-based swap dealers
and major security-based swap
participants to establish, maintain, and
enforce written policies and procedures
to support security-based swap
transaction reporting. As discussed
above, Rule 906(c), as adopted, imposes
this duty only on registered securitybased swap dealers and registered major
security-based swap participants.772
Second, Rule 906(c), as adopted, does
not include the phrase ‘‘and the policies
and procedures of any registered
security-based swap data repository of
which it is a participant.’’ The
Commission believes that it is sufficient
to require that the policies and
procedures of registered security-based
swap dealers and registered major
security-based swap participants be
reasonably designed to ensure
compliance with the reporting
769 See

78 FR 31214.
I at 3.
771 The Commission also revised Rule 906(c), to
clarify that the term ‘‘participant’’ means a
participant of a registered SDR.
772 See supra Section V(B)(1) (explaining that,
during the period before the Commission has
adopted rules for the registration of security-based
swap dealers and major security-based swap
participants, the Commission seeks to avoid
imposing costs on market participants who
otherwise would have to assess whether they are
security-based swap dealers or major security-based
swap participants).
770 Barnard

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obligations under Regulation SBSR.773
Additionally, the Commission
anticipates that SDRs will enter into
contractual arrangements with reporting
sides for the reporting of transactions
required to be reported under
Regulation SBSR, and that such
arrangements likely will stipulate the
various rights and obligations of the
parties when reporting security-based
swap transactions.
Rule 906(c) is designed to promote
greater accuracy and completeness of
reported security-based swap
transaction data by requiring the
participants that will bear substantial
reporting obligations under Regulation
SBSR to adopt policies and procedures
that are reasonably designed to ensure
that their reports are accurate and
reliable. If these participants do not
have written policies and procedures for
carrying out their reporting duties,
compliance with Regulation SBSR
might depend too heavily on key
individuals or ad hoc and unreliable
processes. The Commission, therefore,
believes that registered security-based
swap dealers and registered major
security-based swap participants should
be required to establish written policies
and procedures which, because they are
written and can be shared throughout
the organization, should be independent
of any specific individuals. Requiring
such participants to adopt and maintain
written policies and procedures relevant
to their reporting responsibilities, as
required under Rule 906(c), should help
to improve the degree and quality of
overall compliance with the reporting
requirements of Regulation SBSR.
Periodic review of the policies and
procedures, as required by Rule 906(c),
should help ensure that these policies
and procedures remain well functioning
over time.
The value of requiring policies and
procedures in promoting regulatory
compliance is well-established. Internal
control systems have long been used to
strengthen the integrity of financial
reporting. For example, Congress
recognized the importance of internal
control systems in the Foreign Corrupt
Practices Act, which requires public
companies to maintain a system of
internal accounting controls.774 Brokerdealers also must maintain policies and
procedures for various purposes.775 The
773 The Commission notes that a reporting side is
also required to electronically transmit information
required under Regulation SBSR to a registered SDR
in a format required by that SDR. See Rule 901(h);
note 268, supra, and accompanying text.
774 See 15 U.S.C. 78m(b)(2)(B).
775 See, e.g., FINRA Conduct Rule 3010(b)
(requiring FINRA member broker-dealers to
establish and maintain written procedures ‘‘that are

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Commission believes that requiring each
registered security-based swap dealer
and registered major security-based
swap participant to adopt and maintain
written policies and procedures
designed to promote compliance with
Regulation SBSR is consistent with
Congress’s goals in adopting the DoddFrank Act.
The policies and procedures required
by Rule 906(c) could address, among
other things: (1) The reporting process
and designation of responsibility for
reporting security-based swap
transactions; (2) the process for
systematizing orally negotiated securitybased swap transactions; (3) order
management system outages or
malfunctions, and when and how backup systems are to be used in connection
with required reporting; (4) verification
and validation of all information
relating to security-based swap
transactions reported to a registered
SDR; (5) a training program for
employees responsible for securitybased swap transaction reporting; (6)
control procedures relating to securitybased swap transaction reporting and
designation of personnel responsible for
testing and verifying such policies and
procedures; and (7) reviewing and
assessing the performance and
operational capability of any third party
that carries out any duty required by
Regulation SBSR on behalf of the
registered security-based swap dealer or
registered major security-based swap
participant.776
XIV. Other Aspects of Policies and
Procedures of Registered SDRs
A. Public Availability of Policies and
Procedures
Rule 907(c), as proposed and reproposed, would have required a
registered SDR to make its policies and
procedures publicly available on its
Web site. The Commission did not
receive any comments on Rule 907(c)
and is adopting it as proposed and reproposed. This public availability
requirement will allow all interested
parties to understand how the registered
SDR is utilizing the flexibility it has in
operating the transaction reporting and
dissemination system. Being able to
review the current policies and
procedures will provide an opportunity
for participants to make suggestions to
reasonably designed to achieve compliance with
applicable securities laws and regulations, and with
the applicable Rules of [the NASD]’’); FINRA
Conduct Rule 3012 (requiring FINRA member
broker-dealers to establish and maintain written
supervisory procedures to ensure that internal
policies and procedures are followed and achieve
their intended objectives).
776 See 75 FR 75234.

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the registered SDR for altering and
improving those policies and
procedures, in light of new products or
circumstances, consistent with the
principles set out in Regulation SBSR.
B. Updating of Policies and Procedures
Proposed Rule 907(d) would have
required a registered SDR to ‘‘review,
and update as necessary, the policies
and procedures required by [Regulation
SBSR] at least annually.’’ Proposed Rule
907(d) also would have required the
registered SDR to indicate the date on
which its policies and procedures were
last reviewed. The Cross-Border
Proposing Release re-proposed Rule
907(d) without revision.
The Commission did not receive any
comments on Rule 907(d) and is
adopting it as proposed and reproposed. The Commission continues to
believe that a registered SDR should
periodically review its policies and
procedures to ensure that they remain
well-functioning over time. The
Commission also continues to believe
that requiring registered SDRs to
indicate the date on which their policies
and procedures were last reviewed will
allow regulators and SDR participants to
understand which version of the
policies and procedures are current. A
registered SDR could satisfy this
obligation by, for example, noting when
individual sections were last updated or
by reissuing the entirety of the policies
and procedures with an ‘‘as of’’ date.
The Commission notes that, regardless
of the method chosen and although only
the most current version of a registered
SDR’s policies and procedures must be
publicly available pursuant to Rule 907,
the registered SDR must retain prior
versions of those policies and
procedures for regulatory purposes
pursuant to Rule 13n–7(b) under the
Exchange Act,777 as adopted by the
Commission.778 These records would
help the Commission, if conducting a
review of a registered SDR’s past
actions, to understand what policies and
procedures were in force at the time.
C. Provision of Certain Reports to the
Commission
Under Title VII, the Commission is
responsible for regulating and
overseeing the security-based swap
market, including the trade reporting
obligations imposed by Regulation
777 17 CFR 240.13n–7(b)(1) (‘‘Every security-based
swap data repository shall keep and preserve at
least one copy of all documents, including all
documents and policies and procedures required by
the Act and the rules and regulations thereunder’’).
778 See SDR Adopting Release.

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SBSR.779 The Commission believes that,
to carry out this responsibility, it will be
necessary to obtain from each registered
SDR information related to the
timeliness, accuracy, and completeness
of data reported to the registered SDR by
the SDR’s participants. Required data
submissions that are untimely,780
inaccurate,781 or incomplete 782 could
compromise the regulatory data that the
Commission would utilize to carry out
its oversight responsibilities.
Furthermore, required data submissions
that are untimely, inaccurate, or
incomplete could diminish the value of
publicly disseminated reports that are
meant to promote transparency and
price discovery.
Accordingly, the Commission
proposed and re-proposed Rule 907(e),
which would have required a registered
SDR to ‘‘have the capacity to provide to
the Commission, upon request,
information or reports related to the
timeliness, accuracy, and completeness
of data reported to it’’ pursuant to
Regulation SBSR and the registered
SDR’s policies and procedures. The sole
commenter on this provision agreed that
an SDR should be able to ‘‘readily
provide the Commission with any
relevant information,’’ but noted that an
SDR might not be in the best position to
confirm the accuracy of the trade
information it receives.783 The
commenter believed that ultimate
responsibility for the submission of
accurate and complete information
belongs with the reporting side, and that
Rule 907(e) should be revised to reflect
that an SDR’s information will ‘‘only be
as timely, accurate, and complete as
provided to it by parties to the
trade.’’ 784
The Commission is adopting Rule
907(e) with a minor revision. The final
779 Under Title VII, registered SDRs are not selfregulatory organizations and thus lack the
enforcement authority that self-regulatory
organizations have over their members under the
Exchange Act. Any information or reports requested
by the Commission under Rule 907(e) would assist
the Commission in examining for and enforcing
compliance with Regulation SBSR by reporting
parties.
780 For example, a registered SDR would be able
to determine that a reporting side had reported late
if the date and time of submission were more than
24 hours after the date and time of execution
reported by the reporting side (or, if 24 hours after
the time of execution would have fallen on a day
that was not a business day, then after that same
time on the next business day). See Rule 901(j).
781 Some examples of clearly inaccurate data
would include using lettered text in a field that
clearly requires a number (or vice versa), or using
a UIC that corresponds to no valid LEI or to a UIC
issued or endorsed by the registered SDR.
782 An example of an incomplete report would be
leaving one or more required reporting fields blank.
783 DTCC V at 14.
784 Id.

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rule provides that a registered SDR
‘‘shall provide, upon request,
information or reports . . .’’ rather than,
as proposed and re-proposed, that a
registered SDR ‘‘shall have the capacity
to provide . . .’’ This language better
conveys the Commission’s expectation
that, not only must a registered SDR
have the capacity to provide the
relevant information or reports, it must
in fact provide such information or
reports when the Commission requests.
The Commission believes that this
revision accords with the commenter
who stated that an SDR should be able
to ‘‘readily provide the Commission
with any relevant information.’’ 785
However, the Commission is not
revising Rule 907(e) to reflect that an
SDR’s information will ‘‘only be as
timely, accurate, and complete as
provided to it by parties to the trade,’’
as requested by the commenter.786 The
Commission appreciates that there
could be certain data elements
submitted by reporting sides that a
registered SDR could not reasonably be
expected to know are inaccurate. For
example, if the reporting side submits a
valid trader ID for trader X when in fact
the transaction was carried out by trader
Y, the Commission would not expect a
Rule 907(e) report provided by a
registered SDR to reflect this fact. The
Commission notes, however, that Rule
13n–5(b)(1)(iii) under the Exchange Act
requires an SDR to ‘‘establish, maintain,
and enforce written policies and
procedures reasonably designed to
satisfy itself that the transaction data
that has been submitted to the securitybased swap data repository is complete
and accurate.’’ Thus, the Commission
could require a registered SDR to
include in a Rule 907(e) report any
instances where a reporting side
reported a trader ID that fails the SDR’s
validation rules, because the SDR is in
a position to know which trader IDs
(and other UICs) are consistent with
UICs assigned to traders of its
participants.787
XV. Rule 908—Cross-Border Reach of
Regulation SBSR
Security-based swap business
currently takes place across national
borders, with agreements negotiated and
executed between counterparties in
different jurisdictions (which might
then be booked and risk-managed in
785 See

note 783, supra.

786 Id.
787 See also Section 13(n)(5)(B) of the Exchange
Act, 15 U.S.C. 78m(n)(5)(B) (requiring an SDR to
‘‘confirm with both counterparties to the securitybased swap the accuracy of the data that was
submitted’’); Rule 13n–4(b)(3) under the Exchange
Act (implementing that requirement).

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still other jurisdictions).788 Given the
global nature of the market and to help
ensure an effective regime for regulatory
reporting and public dissemination of
security-based swap transactions under
Title VII, it is important that Regulation
SBSR identify which transactions in this
global market will be subject to these
Title VII requirements. Regulation
SBSR, as initially proposed in
November 2010, included Rule 908,
which sought to address the crossborder application of the regulatory
reporting and public dissemination
requirements. In the Cross-Border
Proposing Release, issued in May 2013,
the Commission re-proposed Rule 908
with substantial revisions. Commenters’
views on re-proposed Rule 908 and the
final rule, as adopted by the
Commission, are discussed in detail
below, following a discussion of the
Commission’s approach to cross-border
application of its authority under Title
VII and the Exchange Act generally.
A. General Considerations
As stated in the Cross-Border
Adopting Release, the Commission
continues to believe that a territorial
approach to the application of Title
VII—including the requirements relating
to regulatory reporting and public
dissemination of security-based swap
transactions—is appropriate.789 This
approach, properly understood, is
grounded in the text of the relevant
statutory provisions and is designed to
help ensure that the Commission’s
application of the relevant provisions is
consistent with the goals that the statute
was intended to achieve.790 Once the
Commission has identified the activity
regulated by the statutory provision, it
then determines whether a person is
engaged in conduct that the statutory
provision regulates and whether this
conduct occurs within the United
States.791
788 Security-based swap market data indicates
that many security-based swap transactions involve
activity in more than one jurisdiction. See infra
Section XXII(B)(1)(b) (noting that data in the Trade
Information Warehouse reveals that approximately
13% of price-forming transactions in North
American single-name CDS transaction from
January 2008 to December 2013 were between two
U.S.-domiciled counterparties; 48% of such
transactions were cross-border transactions between
a U.S.-domiciled counterparty and a foreigndomiciled counterparty; and an additional 39%
were between two foreign-domiciled
counterparties).
789 See 79 FR 47287.
790 See Morrison v. Nat’l Australia Bank, Ltd., 130
S. Ct. 2869, 2884 (2010) (identifying focus of
statutory language to determine what conduct was
relevant in determining whether the statute was
being applied to domestic conduct).
791 When the statutory text does not describe the
relevant activity with specificity or provides for

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Under the foregoing analysis, when a
U.S. person enters into a security-based
swap, the security-based swap
necessarily exists at least in part within
the United States. The definition of
‘‘U.S. person’’—adopted in the CrossBorder Adopting Release and
incorporated by reference into
Regulation SBSR—is intended, in part,
to identify those persons for whom it is
reasonable to infer that a significant
portion of their financial and legal
relationships is likely to exist within the
United States, and that it is therefore
reasonable to conclude that risk arising
from their security-based swap activities
could manifest itself within the United
States, regardless of the location of their
counterparties, given the ongoing nature
of the obligations that result from
security-based swap transactions.792
Under its territorial approach, the
Commission seeks to apply Title VII’s
regulatory reporting and public
dissemination requirements in a
consistent manner to differing
organizational structures that serve
similar economic purposes, and thereby
avoid creating different regulatory
outcomes for differing legal
arrangements that raise similar policy
considerations and pose similar
economic risks to the United States.793
Therefore, as discussed in the CrossBorder Adopting Release, this territorial
application of Title VII requirements
extends to the activities of U.S. person
conducted through a foreign branch or
office 794 and to the activities of a nonU.S. person for which the U.S. person
provides a recourse guarantee.795
The Commission further notes that
Section 15F(f)(1)(A) of the Exchange
Act 796 provides that each registered
security-based swap dealer and major
security-based swap participant ‘‘shall
make such reports as are required by the
Commission, by rule or regulation,
regarding the transactions and positions
and financial condition of the registered
further Commission interpretation of statutory
terms or requirements, this analysis may require the
Commission to identify through interpretation of
the statutory text the specific activity that is
relevant under the statute or to incorporate prior
interpretations of the relevant statutory text. See
Cross-Border Adopting Release, 79 FR 47287
(explaining the Commission’s approach to
interpreting Title VII requirements).
792 See 79 FR 47288–89. As discussed below, the
Commission is adopting a definition of ‘‘U.S.
person’’ in Regulation SBSR that cross-references
the definition adopted as part of the Cross-Border
Adopting Release.
793 See id. at 47344.
794 See id. at 47289.
795 See id. at 47289–90.
796 15 U.S.C. 78o–10(f)(1)(A).

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security-based swap dealer or major
security-based swap participant.’’ 797
Finally, the Commission seeks to
minimize the potential for duplicative
or conflicting regulations. The
Commission recognizes the potential for
market participants who engage in
cross-border security-based swap
activity to be subject to regulation under
Regulation SBSR and parallel rules in
foreign jurisdictions in which they
operate. To address this possibility, the
Commission—as described in detail
below—is adopting a ‘‘substituted
compliance’’ framework. The
Commission may issue a substituted
compliance determination if it finds that
the corresponding requirements of the
foreign regulatory system are
comparable to the relevant provisions of
Regulation SBSR, and are accompanied
by an effective supervisory and
enforcement program administered by
the relevant foreign authorities.798 The
availability of substituted compliance is
designed to reduce the likelihood of
cross-border market participants being
subject to potentially conflicting or
duplicative reporting requirements.
B. Definition of ‘‘U.S. Person’’
In the Regulation SBSR Proposing
Release, the Commission proposed to
define ‘‘U.S. person’’ as ‘‘a natural
person that is a U.S. citizen or U.S.
resident or a legal person that is
organized under the corporate laws of
any part of the United States or has its
principal place of business in the
United States.’’ 799 In the Cross-Border
Proposing Release, the Commission
introduced a new definition of ‘‘U.S.
person’’ that it proposed to use in all
797 In addition, Section 30(c) of the Exchange Act,
15 U.S.C. 78dd(c), authorizes the Commission to
apply Title VII to persons transacting a business
‘‘without the jurisdiction of the United States’’ if
they contravene rules that the Commission has
prescribed as ‘‘necessary or appropriate to prevent
the evasion of any provision’’ of Title VII. As the
Commission stated in the Cross-Border Adopting
Release, Section 30(c) does not require a finding
that actual evasion has occurred or is occurring to
invoke the Commission’s authority to reach activity
‘‘without the jurisdiction of the United States’’ or
to limit application of Title VII to security-based
swap activity ‘‘without the jurisdiction of the
United States’’ only to business that is transacted
in a way that is purposefully intended to evade
Title VII. See 79 FR 47291. The focus of this
provision is not whether such rules impose Title VII
requirements only on entities engaged in activity
that is consciously evasive, but whether the rules
are generally ‘‘necessary or appropriate’’ to prevent
potential evasion of Title VII. The Commission
therefore disagrees with the commenter who stated
that the Commission ‘‘should not adopt an
extraterritorial regulatory framework premised on
the assumption that activities conducted outside
the U.S. will be undertaken abroad for the purpose
of evasion.’’ Cleary III at 5.
798 See Rule 908(c). See also infra Section XV(E).
799 Rule 900 as initially proposed. See also
Regulation SBSR Proposing Release, 75 FR 75284.

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Title VII rulemakings to promote
consistency and transparency, which
differed from the initially proposed
definition in certain respects. Reproposed Rule 900(pp) would have
defined ‘‘U.S. person’’ by crossreferencing proposed Rule 3a71–3(a)(7),
which would have defined ‘‘U.S.
person’’ as:
(i) Any natural person resident in the
United States;
(ii) any partnership, corporation,
trust, or other legal person organized or
incorporated under the laws of the
United States or having its principal
place of business in the United States;
and
(iii) any account (whether
discretionary or non-discretionary) of a
U.S. person.800
The Commission received extensive
comment on this proposed definition of
‘‘U.S. person’’ and responded to those
comments in the Cross-Border Adopting
Release.801
The Commission adopted a definition
of ‘‘U.S. person’’ in the Cross-Border
Adopting Release as Rule 3a71–3(a)(4)
under the Exchange Act, which reflects
a territorial approach to the application
of Title VII.802 The Commission believes
that using the same definition of ‘‘U.S.
person’’ in multiple Title VII rules could
benefit market participants by
eliminating complexity that might result
from the use of different definitions for
different Title VII rules. Accordingly,
final Rule 900(ss) of Regulation SBSR
defines ‘‘U.S. person’’ to have the same
meaning as in Rule 3a71–3(a)(4). Rule
3a71–3(a)(4)(i) defines ‘‘U.S. person’’ as:
(1) A natural person resident in the
United States; 803 (2) a partnership,
corporation, trust, investment vehicle,
or other legal person organized,
incorporated, or established under the
laws of the United States or having its
principal place of business 804 in the
800 See Cross-Border Proposing Release, 78 FR
31207.
801 See 79 FR 47303–13. These comments focused
on the proposed definition generally and did not
address the application of the definition to
Regulation SBSR.
802 See Cross-Border Adopting Release, 79 FR
47308, note 255.
803 Rule 3a71–3(a)(5) under the Exchange Act, 17
CFR 240.3a71–3(a)(4), defines ‘‘United States’’ as
the United States of America, its territories and
possessions, any State of the United States, and the
District of Columbia.
804 Rule 3a71–3(a)(4)(ii) under the Exchange Act,
17 CFR 240.3a71–3(a)(4)(ii), defines ‘‘principal
place of business’’ as the location from which the
officers, partners, or managers of the legal person
primarily direct, control, and coordinate the
activities of the legal person. With respect to an
externally managed investment vehicle, this
location is the office from which the manager of the
vehicle primarily directs, controls, and coordinates
the investment activities of the vehicle. See also
Cross-Border Adopting Release, 79 FR 47308

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United States; (3) an account (whether
discretionary or non-discretionary) of a
U.S. person; or (4) any estate of a
decedent who was a resident of the
United States at the time of death. As
discussed in the Cross-Border Adopting
Release, the Commission believes that a
definition of ‘‘U.S. person’’ that focused
solely on whether a legal person is
organized, incorporated, or established
in the United States could encourage
some entities to move their place of
incorporation to a non-U.S. jurisdiction
to avoid complying with Title VII, while
maintaining their principal place of
business in the United States.805
By incorporating Rule 3a71–3(a)(4) by
reference, Regulation SBSR also
incorporates subparagraph (iv) of Rule
3a71–3(a)(4), which allows a person to
rely on a counterparty’s representation
that the counterparty is not a U.S.
person, unless such person knows or
has reason to know that the
representation is inaccurate. As
explained in the Cross-Border Adopting
Release,806 Rule 3a71–3(a)(4)(iv) reflects
a constructive knowledge standard for
reliance. Under this standard, a
counterparty is permitted to rely on a
representation, unless such person
knows or has reason to know that it is
inaccurate. A person would have reason
to know the representation is not
accurate if a reasonable person should
know, under all of the facts of which the
person is aware, that it is not
accurate.807 Expressly permitting market
participants to rely on such
representations in the ‘‘U.S. person’’
definition should help facilitate the
determination of which side to a
security-based swap is the reporting
side and mitigate challenges that could
arise in determining a counterparty’s
U.S.-person status under the final
rule.808 It permits the party best
(discussing the Commission’s rationale for adopting
the ‘‘principal place of business’’ test).
805 See id., 79 FR 47309, note 262 (‘‘The final
definition of ‘principal place of business’ will help
ensure that entities do not restructure their business
by incorporating under foreign law while
continuing to direct, control, and coordinate the
operations of the entity from within the United
States, which would enable them to maintain a
significant portion of their financial and legal
relationships within the United States while
avoiding application of Title VII requirements to
such transactions’’).
806 See id. at 47313.
807 To the extent that a person has knowledge of
facts that could lead a reasonable person to believe
that a counterparty may not be a U.S. person under
the definition, it might need to conduct additional
diligence before relying on the representation. See
id. at 47313, note 302.
808 As discussed below, under Rule 908(a), the
U.S.-person status of the counterparties to a
security-based swap is one factor in determining
whether the security-based swap is subject to
Regulation SBSR. If a security-based swap is subject

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positioned to make this determination
to perform an analysis of its own U.S.person status and convey, in the form of
a representation, the results of that
analysis to its counterparty. Such
representations should help reduce the
potential for inconsistent classification
and treatment of a person by its
counterparties and promote uniform
application of Title VII.809
Rule 3a71–3(a)(4)(iii)—and thus
Regulation SBSR—provides that the
term ‘‘U.S. person’’ does not include the
International Monetary Fund, the
International Bank for Reconstruction
and Development, the Inter-American
Development Bank, the Asian
Development Bank, the African
Development Bank, the United Nations;
their agencies and pension plans; and
any other similar international
organizations and their agencies and
pension plans. Therefore, a securitybased swap involving any such
institution, for that fact alone, will not
be subject to regulatory reporting or
public dissemination under Regulation
SBSR.810 However, as discussed in
Section XVI(A), infra, a security-based
swap transaction involving such an
institution could be subject to regulatory
reporting and/or public dissemination,
depending on the domicile and
registration status of the other side of
the transaction.
Finally, similar to the approach taken
by the Commission in the Cross-Border
Adopting Release for purposes of the de
minimis calculation,811 a change in a
counterparty’s U.S.-person status after a
security-based swap is executed would
not affect the original transaction’s
treatment under Regulation SBSR.
However, if that person were to enter
into another security-based swap
following its change in status, any
duties required by Regulation SBSR
would be determined according to the
new status of that person at the time of
the second security-based swap.
to Regulation SBSR, the U.S.-person status of the
counterparties may influence the determination of
the reporting side under Rule 901(a)(2)(ii). See
supra Section V(B).
809 The final rule permitting reliance on
representations with respect to a counterparty’s
U.S.-person status applies only to the definition of
‘‘U.S. person’’ as used in Regulation SBSR and does
not apply to any determination of a person’s U.S.person status under any other provision of the
federal securities laws, including Commission
rules, regulations, interpretations, or guidance.
810 See infra Section XV(C) (discussing when a
security-based swap is subject to regulatory
reporting and public dissemination).
811 See 79 FR 47313, note 300.

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C. Scope of Security-Based Swap
Transactions Covered by Requirements
of Regulation SBSR—Rule 908(a)
1. Transactions Involving a Direct
Counterparty That Is a U.S. Person
Under both the proposal and reproposal, any security-based swap that
had a direct counterparty that is a U.S.
person would have been subject to both
regulatory reporting and public
dissemination, regardless of the
registration status or domicile of any
counterparty on the other side of the
transaction. Commenters generally did
not object to this aspect of the proposal
and the re-proposal.812
Final Rule 908(a)(1)(i) provides, in
relevant part, that a security-based swap
shall be subject to regulatory reporting
and public dissemination if ‘‘[t]here is a
direct . . . counterparty that is a U.S.
person on either or both sides of the
transaction.’’ Thus, any security-based
swap that has a direct counterparty that
is a U.S. person is subject to both
regulatory reporting and public
dissemination, regardless of the
registration status or domicile of any
counterparty on the other side of the
transaction. This determination is
consistent with the territorial
application of Title VII described above,
because any security-based swap that
has a U.S.-person direct counterparty
exists at least in part within the United
States. One purpose of the rule is to
allow the Commission and other
relevant authorities to access, for
regulatory and supervisory purposes, a
record of each such transaction. A
second purpose of the rule is to carry
out the Title VII mandate for public
dissemination of security-based swap
transactions. The transparency benefits
of requiring public dissemination of
security-based swaps involving at least
one U.S.-person direct counterparty
would inure to other U.S. persons and
the U.S. market generally, as other
participants in the U.S. market are likely
to transact in the same or related
instruments.
812 Some commenters supported a cross-border
jurisdictional regime that would apply securitybased swap regulation on the basis of whether a
direct counterparty to a security-based swap is a
U.S. person. See, e.g., JFMC Letter at 5; JSDA Letter
at 3–4; AFR Letter at 4, 13–14. These commenters
did not, however, raise this suggestion specifically
in the context of Regulation SBSR. See also IIB
Letter at 11 (observing that a status-based test for
jurisdictional application would be more
appropriate than a territorial approach based on the
location of conduct). The Cross-Border Adopting
Release addressed these comments. See 79 FR
47302–06.

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2. Transactions Conducted Through a
Foreign Branch or Office
Rule 908(a), as initially proposed,
treated foreign branches and offices of
U.S. persons as integral parts of the U.S.
person itself.813 Therefore, Rule 908(a),
as initially proposed, would not have
treated a security-based swap
transaction executed by or through a
foreign branch or office of a U.S. person
any differently than any other
transaction executed by the U.S. person.
In the Cross-Border Proposing
Release, the Commission revised its
approach to transactions conducted
through a foreign branch. Although all
transactions conducted through a
foreign branch or office would have
been subject to regulatory reporting, reproposed Rule 908(a)(2)(iii) would have
provided an exception to public
dissemination for transactions
conducted through a foreign branch
when the other side is a non-U.S. person
who is not a security-based swap
dealer.814 In proposing this exception to
public dissemination for such
transactions conducted through a
foreign branch, the Commission stated
that it was ‘‘concerned that, if it did not
take this approach, non-U.S. market
participants might avoid entering into
security-based swaps with the foreign
branches of U.S. banks so as to avoid
their security-based swaps being
publicly disseminated.’’ 815 However,
Rule 908(a)(2) would have subjected a
transaction conducted through a foreign
branch to public dissemination if there
was, on the other side, a U.S. person
(including a foreign branch) 816 or a
security-based swap dealer.817
One commenter expressed the view
that foreign branches should be treated
the same as non-U.S.-person securitybased swap dealers for purposes of
public dissemination, and that securitybased swaps between two non-U.S.
persons, between a non-U.S. person and
a foreign branch, and between two
813 See Regulation SBSR Proposing Release, 75 FR
75240 (‘‘Because a branch or office has no separate
legal existence under corporate law, the branch or
office would be an integral part of the U.S. person
itself’’).
814 In the Cross-Border Proposing Release, the
term ‘‘transaction conducted through a foreign
branch’’ was defined in re-proposed Rule 900(hh)
to cross-reference the definition of that term in
proposed Rule 3a71–3(a)(4) under the Exchange
Act, and the term ‘‘foreign branch’’ was defined in
re-proposed Rule 900(n) to cross-reference the
definition of foreign branch in proposed Rule 3a71–
3(a)(1). In the Cross-Border Adopting Release, the
Commission adopted the term ‘‘foreign branch’’ as
proposed and adopted the term ‘‘transaction
conducted through a foreign branch’’ with certain
modifications. See 79 FR 47322.
815 Cross-Border Proposing Release, 78 FR 31063.
816 See re-proposed Rule 908(a)(2)(ii).
817 See re-proposed Rule 908(a)(2)(iv).

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foreign branches should not be subject
to public dissemination.818 Another
commenter, however, stated that ‘‘it
should be expected that most
jurisdictions would seek to apply their
rules to transactions between two of
their own domiciled persons, despite
some of the activity being conducted
abroad.’’ 819 A third commenter
recommended that the exception to
public dissemination for foreign
branches be eliminated, so that securitybased swaps between a foreign branch
and any non-U.S. person would be
subject to public dissemination.820
As noted above, the Commission is
adopting the requirement that any
security-based swap transaction having
a direct counterparty that is a U.S.
person, including a security-based swap
conducted through a foreign branch,
shall be subject to regulatory reporting.
The Commission has determined not to
adopt the proposed exception from
public dissemination for certain
transactions conducted through a
foreign branch. Thus, under Rule
908(a)(1)(i), as adopted, any securitybased swap transaction conducted
through a foreign branch is subject to
both regulatory reporting and public
dissemination. Under the territorial
approach to the application of Title VII
requirements discussed above, a foreign
branch has no separate existence from
the U.S. person itself. Therefore, any
security-based swap transaction
conducted through a foreign branch is a
security-based swap executed by the
U.S. person itself, and any securitybased swap executed by a U.S. person
exists at least in part within the United
States.821 The Title VII requirements for
regulatory reporting and public
dissemination apply to all securitybased swap transactions that exist in
whole or in part within the United
States, unless an exception applies.
Upon further consideration, the
Commission believes that the exception
818 See

SIFMA/FIA/Roundtable Letter at A–43.
Letter at 9. The commenter also noted that
‘‘EMIR [the European Markets Infrastructure
Regulation] would apply to transactions between
the U.S. branches of two entities established in the
EU,’’ id., and thus appeared to suggest that U.S.
regulation should apply to transactions between
two foreign branches of U.S. persons.
820 See Better Markets IV at 23.
821 See Cross-Border Adopting Release, 79 FR
47289 (describing the application of the securitybased swap dealer de minimis threshold with
respect to foreign branches or offices of U.S.
persons). The Commission notes that a transaction
conducted by a U.S. person through any other office
that does not have a separate legal identity from the
U.S. person, even if such office does not meet the
definition of ‘‘foreign branch’’ in Rule 3a71–3(a)(2)
of the Exchange Act, also is a transaction conducted
by the U.S. person directly, and thus is subject to
regulatory reporting and public dissemination
under Rule 908(a)(1)(i), as adopted.
819 IIB

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from public dissemination for foreign
branches in Rule 908(a), as re-proposed,
is not warranted. Granting an exception
to public dissemination for certain
transactions conducted through a
foreign branch could have created
incentives for some U.S. persons to
utilize foreign branches to evade Title
VII’s public dissemination
requirements.822 This could be the case
particularly in a foreign jurisdiction that
does not apply rules for public
dissemination to all or some
transactions conducted through foreign
branches operating within that
jurisdiction. Thus, the Commission
disagrees with the commenter who
expressed the view that foreign
branches should be treated the same as
non-U.S. person security-based swap
dealers for purposes of public
dissemination,823 and that securitybased swaps between two non-U.S.
persons, between a non-U.S. person and
a foreign branch, and between two
foreign branches should not be subject
to public dissemination.824
3. Transactions Guaranteed by a U.S.
Person
Regulation SBSR, as initially
proposed, did not impose reporting
requirements based on whether a U.S.
person acts as a guarantor of a securitybased swap. As re-proposed, however,
Rule 908(a)(1)(ii) would have required
regulatory reporting of any securitybased swap that had a U.S.-person
guarantor, even when no direct
counterparty was a U.S. person.825 In
addition, Rule 908(a)(2), as re-proposed,
would have required public
dissemination of some, but not all,
transactions having a U.S.-person
indirect counterparty. Re-proposed Rule
908(a)(2)(ii) would have provided, in
822 Under Rule 908(a)(2)(iii), as re-proposed,
public dissemination would have applied to a
security-based swap between a U.S. person direct
counterparty and a non-U.S. person (other than a
security-based swap dealer) unless the U.S. person
conducted the transaction through a foreign branch.
Thus, the U.S. person could have directed a nonU.S.-person counterparty to interact only with its
foreign branch staff, which would have made the
transaction eligible for the exception provided by
re-proposed Rule 908(a)(2)(iii).
823 As discussed in Section XV(C)(6), infra, if a
transaction involving a registered security-based
swap dealer or registered major security-based swap
participant does not fall within Rule 908(a)(1), Rule
908(a)(2), as adopted, subjects that transaction to
regulatory reporting but not public dissemination.
824 See SIFMA/FIA/Roundtable Letter at A–43.
825 Also in the Cross-Border Proposing Release,
the Commission proposed new terms ‘‘direct
counterparty’’ and ‘‘indirect counterparty’’ to
distinguish the primary obligor on the securitybased swap from the person who guarantees the
primary obligor’s performance, respectively. The
Commission also proposed the term ‘‘side’’ to refer
to the direct counterparty and any guarantor of the
direct counterparty. See 78 FR 31211.

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relevant part, that a security-based swap
is subject to public dissemination if
there is an indirect counterparty that is
a U.S. person on each side of the
transaction.826 Re-proposed Rule
908(a)(2)(iv) would have provided, in
relevant part, that a transaction where
one side includes a U.S.-person
(including an indirect counterparty that
is a U.S. person) and the other side
includes a non-U.S. person that is a
security-based swap dealer would be
subject to public dissemination.
However, a transaction would have been
excepted from public dissemination if
one side consisted of a non-U.S.-person
direct counterparty and a U.S.-person
guarantor, where neither is a securitybased swap dealer or major securitybased swap participant, and the other
side includes no counterparty that is a
U.S. person, security-based swap dealer,
or major security-based swap
participant (a ‘‘covered cross-border
transaction’’).827
Commenters generally did not object
to the Commission’s proposal to subject
transactions between direct
counterparties who are U.S. persons to
regulatory reporting or public
dissemination. However, commenters
expressed mixed views about extending
regulatory reporting and public
dissemination requirements to
transactions involving U.S.-person
guarantors.828 One of these commenters
stated that a guarantee of a securitybased swap transaction by a U.S. person
should not affect whether the
transaction is subject to regulatory
reporting or public dissemination,
because there is too tenuous a nexus to
justify applying Regulation SBSR on the
basis of the guarantee alone.829 Another
commenter recommended that a
security-based swap between two nonU.S. persons be subject to Commission
regulation only where the transaction is
‘‘guaranteed by a U.S. person for a
significant value.’’ 830 A third
commenter, however, recommended
that the Commission apply Title VII
rules to transactions in which the risk
flows back to a U.S. entity, including
826 The Commission noted in the Cross-Border
Proposing Release that, where U.S. persons have an
interest on both sides of a transaction, even if
indirectly, the transaction generally should be
subject to Title VII’s public dissemination
requirement. See 78 FR 31062.
827 As used in this release, a ‘‘covered crossborder transaction’’ refers to a transaction that
meets the description above and will not be
submitted to clearing at a registered clearing agency
having its principal place of business in the United
States.
828 See SIFMA/FIA/Roundtable Letter at A–41;
ESMA Letter at 3; AFR Letter at 4, 13–14.
829 See SIFMA/FIA/Roundtable Letter at A–41.
830 ESMA Letter at 3.

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transactions involving guaranteed
foreign subsidiaries and branches of
U.S. entities.831
The Commission is adopting, as reproposed, in Rule 908(a)(1)(ii) the
requirement that any transaction
involving a U.S.-person guarantor is
subject to regulatory reporting. The
Commission has determined to continue
to consider whether to carve out
covered cross-border transactions from
public dissemination. Thus, Rule
908(a)(1)(i), as adopted, requires public
dissemination of all security-based swap
transactions having a U.S.-person
guarantor.832 This approach is
consistent with the territorial approach
to applying Title VII requirements,
described above. A security-based swap
with a U.S.-person indirect counterparty
is economically equivalent to a securitybased swap with a U.S.-person direct
counterparty, and both kinds of
security-based swaps exist, at least in
part, within the United States. As the
Commission observed in the CrossBorder Adopting Release, the presence
of a U.S. guarantor facilitates the
activity of the non-U.S. person who is
guaranteed and, as a result, the securitybased swap activity of the non-U.S.
person cannot reasonably be isolated
from the U.S. person’s activity in
providing the guarantee.833 The
financial resources of the U.S.-person
guarantor could be called upon to
satisfy the contract if the non-U.S.
person fails to meet its obligations.
Thus, the extension of a guarantee is
economically equivalent to a transaction
831 See AFR Letter at 4, 13–14 (noting that the
geographic location of the entities ultimately
responsible for security-based swap liabilities
should determine the application of the
Commission’s rules implementing the Dodd-Frank
Act). Another commenter stated that the proposed
definition of ‘‘indirect counterparty’’ in Regulation
SBSR implies that an indirect counterparty can
cause a trade to be subject to reporting even in cases
where the direct counterparties to the trade would
not lead to the conclusion that the trade is
reportable. The commenter recommended that the
Commission amend the definition of ‘‘indirect
counterparty’’ to make it clear that its scope is
limited to U.S.-person guarantors and not all
guarantors, to be consistent with the intent
demonstrated by the Commission in the preamble
where reference is made to U.S.-person guarantors.
See ISDA IV at 4. Although the Commission has not
amended the definition of ‘‘indirect counterparty’’
in this manner, such an amendment is not
necessary because Rule 908(a)(i), as adopted,
effectively reaches the same result. Rule 908(a)(i)
provides that a security-based swap will be subject
to regulatory reporting and public dissemination if
there is a direct or indirect counterparty that is a
U.S. person on either or both sides of the
transaction.
832 As discussed below, compliance with Rule
908(a)(1)(i) is not required until the Commission
establishes a compliance date for this provision.
833 See 79 FR 47289 (discussing dealing
transactions of non-U.S. persons that are subject to
recourse guarantees by their U.S. affiliates).

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entered into directly by the U.S.-person
guarantor. Accordingly, Rule
908(a)(1)(i), as adopted, provides that a
security-based swap shall be subject to
regulatory reporting and public
dissemination if ‘‘[t]here is a direct or
indirect counterparty that is a U.S.
person on either or both sides of the
transaction’’ (emphasis added). The
Commission disagrees with the
commenter who stated that a guarantee
of a security-based swap transaction by
a U.S. person should not affect whether
the transaction is subject to regulatory
reporting or public dissemination,
because there is too tenuous a nexus to
justify applying Regulation SBSR on the
basis of the guarantee alone.834 Under
the territorial approach described above,
any security-based swap guaranteed by
a U.S. person exists at least in part
within the United States, which triggers
the application of Title VII
requirements. The Commission believes
that this is true regardless of whether a
particular guarantee is ‘‘for a significant
value.’’ 835 Furthermore, if the
Commission does not require regulatory
reporting of security-based swaps that
are guaranteed by U.S. persons—in
addition to security-based swaps having
a U.S.-person direct counterparty—the
Commission and other relevant
authorities could be less likely to detect
potential market abuse or the build-up
of potentially significant risks within
individual firms or groups or more
widespread systemic risks to the U.S.
financial system.
The Commission anticipates seeking
additional comment on whether or not
to except covered cross-border
transactions from public dissemination
in the future. Furthermore, as discussed
in the proposed compliance schedule
for Rules 901, 902, 903, 904, 905, 906,
and 908 of Regulation SBSR set forth in
the Regulation SBSR Proposed
Amendments Release, the Commission
is proposing to defer the compliance
date for Rule 908(a)(1)(i) with respect to
the public dissemination of covered
cross-border transactions until such
time as the Commission has received
and considered comment on such an
exception. Thus, although covered
cross-border transactions are subject to
public dissemination under Rule
908(a)(1)(i), as adopted, there would be
no public dissemination of any such
transaction until the Commission
considers whether these transactions
should be excepted from public
dissemination.
834 See
835 See

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4. Transactions Accepted for Clearing by
a U.S. Clearing Agency
Re-proposed Rules 908(a)(1)(iv) and
908(a)(2)(v) would have required
regulatory reporting and public
dissemination, respectively, of securitybased swaps that are ‘‘cleared through a
clearing agency having its principal
place of business in the United States.’’
One commenter agreed that ‘‘DoddFrank’s reporting requirements should
apply to any transaction that . . . was
cleared through a registered clearing
organization having its principal place
of business in the U.S.’’ 836 Two other
commenters objected.837 One of these
commenters observed that Regulation
SBSR could require regulatory reporting
and public dissemination of transaction
information before the transaction is
submitted for clearing; as a result,
circumstances could arise where the
sides would not know whether a
particular security-based swap is subject
to regulatory reporting and public
dissemination until after reporting
deadlines have passed.838 The other
commenter argued that the proposed
requirement might discourage market
participants from clearing transactions
in the United States, which would be
contrary to the objective of reducing
systemic risk.839 Another commenter
argued that a transaction between two
non-U.S. persons that is cleared through
a clearing agency having its principal
place of business in the United States
should not be subject to public
dissemination, ‘‘although the clearing
agency can provide information for
regulatory purposes.’’ 840
The Commission is adopting Rule
908(a)(1)(ii) with two modifications.
The rule, as adopted, provides that a
security-based swap shall be subject to
regulatory reporting and public
dissemination if ‘‘[t]he security-based
swap is accepted for clearing by a
clearing agency having its principal
place of business in the United States.’’
Rule 908(a)(1)(ii), as adopted, is
consistent with the territorial approach
discussed above. Just as a security-based
swap to which a U.S. person is a direct
or indirect counterparty exists, at least
in part, within the United States, a
security-based swap that is accepted for
clearing by a clearing agency having its
principal place of business in the
836 Id.

at 4.
CME II at 5; SIFMA/FIA/Roundtable Letter

837 See

at A–42.
838 See CME II at 5.
839 See SIFMA/FIA/Roundtable Letter at A–42.
840 ISDA/SIFMA I at 19. The Regulation SBSR
Proposed Amendments Release addresses the issue
of whether registered clearing agencies should be
required to report security-based swap transaction
information to a registered SDR.

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United States also exists, at least in part,
within the United States. Such
acceptance creates ongoing obligations
that are borne by a U.S. person and thus
are properly viewed as existing within
the United States.841
The Commission acknowledges the
concerns of the commenter who
observed that Regulation SBSR, as reproposed, could have required
regulatory reporting and public
dissemination of transaction
information before the transaction is
submitted for clearing.842 Currently,
clearing in the security-based swap
market is voluntary. Therefore,
counterparties—if they decide to clear a
transaction at all—might not submit the
transaction to a clearing agency until
some time after it is executed. The final
rule reflects the Commission’s view
that, if a security-based swap is subject
to regulatory reporting and public
dissemination solely because of Rule
908(a)(1)(ii),843 the duty to report the
trade is not triggered by the execution
of the security-based swap but rather by
the registered clearing agency’s
acceptance of the transaction for
clearing.844 The Commission believes
that it would not be appropriate to link
the reporting requirement to the time of
execution, because the registered
clearing agency’s acceptance of the
transaction for clearing might not take
place until several days after the time of
execution.
The Commission disagrees with the
commenter who argued that a
transaction between two non-U.S.
persons that is cleared through a
clearing agency having its principal
place of business in the United States
should not be subject to public
dissemination, ‘‘although the clearing
agency can provide information for
regulatory purposes.’’ 845 The
841 See Cross-Border Adopting Release, 79 FR
47302–03, note 186 (explaining that security-based
swap activity that ‘‘results in a transaction
involving a U.S. counterparty creates ongoing
obligations that are borne by a U.S. person, and thus
is properly viewed as occurring within the United
States’’).
842 See CME II at 5.
843 A transaction also could be subject to
regulatory reporting and public dissemination
because it meets the first prong of Rule 908(a)(1):
It could have a U.S. person on either or both sides
of the transaction. Such a transaction must be
reported within 24 hours after the time of
execution, regardless of whether the transaction is
accepted for clearing. See Rule 901(j).
844 See supra Sections II(A)(2)(a) and II(B)(2)
(explaining that Rule 901(j) provides that the
reporting timeframes applicable to Rules 901(c) and
901(d) are triggered by acceptance for clearing, not
the time of execution, if a security-based swap is
subject to regulatory reporting and public
dissemination solely by operation of Rule
908(a)(1)(ii)).
845 ISDA/SIFMA I at 19.

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Commission believes that such
transactions—subject to the
modifications to the rule text noted
above—should be subject to both
regulatory reporting and public
dissemination and therefore is not
adopting the this commenter’s
recommendation. For the reasons
described above, the Commission
believes that such transactions exist at
least in part within the United States;
therefore, Title VII’s requirements for
both regulatory reporting and public
dissemination properly apply to such
transactions. This approach will permit
the Commission and other relevant
authorities the ability to observe in a
registered SDR all of the alpha
transactions that have been accepted by
a registered clearing agency having its
principal place of business in the
United States and to carry out oversight
of security-based swaps that exist at
least in part within the United States.
Furthermore, the Commission believes
that public dissemination of such
transactions will have value to
participants in the U.S. security-based
swap market, who are likely to trade the
same or similar products, as these
products have been made eligible for
clearing by a registered clearing agency
having its principal place of business in
the United States.846
Furthermore, the Commission
disagrees with the commenter who
argued that requiring regulatory
reporting and public dissemination of
transactions cleared through a U.S.
clearing agency is likely to discourage
market participants from clearing
transactions in the United States.847 The
Commission questions whether the
commenters’ assertion would in fact
come to pass. Market participants are
likely to consider multiple factors when
deciding whether and where to clear a
security-based swap. These factors
could include the cost of clearing, the
846 Another commenter argued that, if the
Commission applied Regulation SBSR to securitybased swaps involving non-U.S. counterparties that
nevertheless are cleared through a clearing agency
having its principal place of business in the United
States, the Commission could require reporting of
such transactions to a registered SDR ‘‘without
exercising further jurisdiction over’’ the transaction.
Socie´te´ Ge´ne´rale Letter at 12. The commenter
believed that ‘‘[t]his solution would provide the
Commission and U.S. market participants with
information about swaps cleared in the United
States without conflicting with foreign regulatory
schemes.’’ Id. The Commission’s decision to require
such transactions to be reported and publicly
disseminated pursuant to Regulation SBSR does not
necessarily indicate that they will be subjected to
other requirements of Title VII. The Commission
intends to address the scope of each of those
requirements, including their applicability to the
types of transactions identified by this commenter,
in subsequent rulemakings.
847 See SIFMA/FIA/Roundtable Letter at A–42.

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
types of products that can be cleared,
the safeguards that clearing agencies put
in place for customer funds, and
clearing agency policies on netting and
margin. Commenters offered no support
for the assertion that the application of
regulatory reporting and public
dissemination requirements to
transactions that are accepted for
clearing by a U.S. clearing agency would
be a deciding or even a significant factor
in whether to clear or the choice of
clearing agency. Even if this assertion
were true, however, the Commission
believes that it is appropriate, for the
reasons discussed above, to subject
these transactions to regulatory
reporting and public dissemination.
Finally, the Commission recognizes
that the reporting hierarchy in Rule
901(a)(2)(ii), as adopted, does not assign
reporting obligations for two kinds of
cross-border transaction: (1) A
transaction where there is no U.S.
person, registered security-based swap
dealer, or registered major securitybased swap participant on either side;
and (2) a transaction where there is no
registered security-based swap dealer or
registered major security-based swap
participant on either side and there is a
U.S. person on only one side. If such a
transaction is accepted for clearing by a
registered clearing agency having its
principal place of business in the
United States, neither side—under
Regulation SBSR as adopted by the
Commission—is required to report the
transaction to a registered SDR.
However, as described in Section V(B),
supra, the Commission anticipates
soliciting further comment on how
Regulation SBSR should be applied to
transactions involving unregistered nonU.S. persons, including how reporting
duties should be assigned for the two
kinds of transaction noted above.

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5. Transactions Involving a Registered
Security-Based Swap Dealer or
Registered Major Security-Based Swap
Participant That Is Not a U.S. Person
Under re-proposed Rule 908(a)(1)(iii),
a security-based swap would have been
subject to regulatory reporting if there is
a direct or indirect counterparty that is
a security-based swap dealer or major
security-based swap participant on
either side of the transaction, regardless
of the counterparties’ place of domicile
and regardless of the place of execution
of the transaction. Under Rule 908(a), as
initially proposed, a counterparty’s
status as a security-based swap dealer or
major security-based swap participant
would not by itself have triggered

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reporting obligations for a particular
security-based swap.848
One commenter recommended
expanding the public dissemination
requirement to include security-based
swaps that occur outside the United
States between a non-U.S. person
security-based swap dealer and a nonU.S. person that is not guaranteed by a
U.S. person,849 and between two nonU.S. person security-based swap
dealers.850
Rule 908(a)(2), as adopted, provides:
‘‘A security-based swap that is not
included within paragraph (a)(1) of this
section shall be subject to regulatory
reporting but not public dissemination
if there is a direct or indirect
counterparty on either or both sides of
the transaction that is a registered
security-based swap dealer or a
registered major security-based swap
participant.’’ 851 Thus, a security-based
swap between a non-U.S. person
registered security-based swap dealer or
registered major security-based swap
participant and another non-U.S. person
(which could include another non-U.S.
person registered security-based swap
dealer or registered major security-based
swap participant), and where neither
direct counterparty is guaranteed by a
U.S. person, would be subject to
regulatory reporting but not public
dissemination. This treatment of
security-based swaps involving nonU.S. person registered security-based
swap dealers and non-U.S. person
registered major security-based swap
participants is generally consistent with
re-proposed Rule 908(a); the language of
final Rule 908(a)(2) is designed to clarify
that outcome.852
The Commission is not at this time
taking the view that a security-based
swap involving a registered securitybased swap dealer or registered major
848 See proposed Rule 908(a); Regulation SBSR
Proposing Release, 75 FR 75239–40.
849 See Better Markets IV at 23.
850 See id. at 24.
851 A security-based swap involving a U.S.-person
that is registered as a security-based swap dealer or
major security-based swap participant is included
in Rule 908(a)(1) and is thus subject to both
regulatory reporting and public dissemination. A
security-based swap between a non-U.S. person that
is registered as a security-based swap dealer or
major security-based swap participant and a U.S.
person (including a foreign branch or office) also is
included in Rule 908(a)(1).
852 Rule 908(a)(1)(iii), as re-proposed, would have
required regulatory reporting of a security-based
swap having a direct or indirect counterparty that
is a registered security-based swap dealer or
registered major security-based swap participant on
either side of the transaction. However, Rule
908(a)(2), as re-proposed, did not list the existence
of a registered security-based swap dealer or
registered major security-based swap participant on
either side of the transaction, for that reason alone,
as triggering public dissemination.

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14655

security-based swap participant, for that
reason alone, exists within the United
States. Therefore, the Commission is not
subjecting any transactions involving a
non-U.S.-person registered securitybased swap dealer or registered major
security-based swap participant, for its
registration status alone, to any
requirement under Regulation SBSR
based on a territorial application of Title
VII. However, the Commission is
requiring non-U.S.-person registered
security-based swap dealers and
registered major security-based swap
participants to report their securitybased swap transactions pursuant to
Rule 908(a)(2).853 Requiring reporting to
a registered SDR of all transactions
entered into by registered security-based
swap dealers and registered major
security-based swap participants will
provide the Commission and other
relevant authorities with important
information to help with the assessment
of their positions and financial
condition.854 Such information could in
turn assist the Commission and other
relevant authorities in assessing and
addressing potential systemic risks
caused by these security-based swap
positions, or in detecting insider trading
or other market abuse.
The Commission notes that a non-U.S.
person that is registered as a securitybased swap dealer or major securitybased swap participant, when reporting
a transaction that falls within Rule
908(a)(2), must comply with the policies
and procedures of the registered SDR
regarding how to flag the transaction as
not subject to public dissemination. The
Commission would not view a
registered SDR as acting inconsistent
with Rule 902 for publicly
disseminating a security-based swap
that falls within Rule 908(a)(2) if the
reporting side had failed to
appropriately flag the transaction.
6. No Final Rule Regarding Transactions
Conducted Within the United States.
Under re-proposed Rule 908(a)(1)(i), a
security-based swap would have been
subject to regulatory reporting if it was
a transaction conducted within the
853 See Section 15F(f)(1)(A) of the Exchange Act,
15 U.S.C. 78o–10(f)(1)(A) (providing that each
registered security-based swap dealer and major
security-based swap participant ‘‘shall make such
reports as are required by the Commission, by rule
or regulation, regarding the transactions and
positions and financial condition of the registered
security-based swap dealer or major security-based
swap participant’’).
854 In the Cross-Border Proposing Release, the
Commission noted its longstanding view that an
entity that has registered with the Commission
subjects itself to the entire regulatory system
governing such regulated entities. See 78 FR 30986.

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United States.855 Re-proposed Rule
908(a)(1)(i) preserved the principle—but
not the specific language—from the
initial proposal that a security-based
swap would be subject to regulatory
reporting if it is executed in the United
States.856 When the Commission reproposed Rule 908(a)(1)(i) in the CrossBorder Proposing Release, the
Commission expressed concern that the
language in the Regulation SBSR
Proposing Release could have required
a security-based swap to be reported if
it had only the slightest connection with
the United States.857
Re-proposed Rules 908(a)(1)(i) and
908(a)(2)(i) would have subjected a
security-based swap transaction to
Regulation SBSR’s regulatory reporting
and public dissemination requirements,
respectively, if the security-based swap
was a ‘‘transaction conducted within the
United States.’’ Commenters expressed
divergent views regarding this
provision 858 and, after careful
consideration, the Commission has
decided not to adopt re-proposed Rule
908(a)(1)(i) or 908(a)(2)(i) at this time.
As discussed above, the Commission
anticipates seeking additional public
comment on whether and, if so, how
regulatory reporting and public
dissemination requirements should be
applied to transactions involving nonU.S. persons when they engage in
conduct within the United States.859
855 A security-based swap would be a
‘‘transaction conducted within the United States’’ if
it is solicited, negotiated, executed, or booked
within the United States, by or on behalf of either
counterparty to the transaction, regardless of the
location, domicile, or residence status of either
counterparty to the transaction. See proposed Rule
240.3a71–3(a)(5) under the Exchange Act; CrossBorder Proposing Release, 78 FR 31297; reproposed Rule 900(ii). The word ‘‘counterparty’’ as
used within this term would have the same
meaning as ‘‘direct counterparty’’ in re-proposed
Rule 900(j) of Regulation SBSR. See Cross-Border
Proposing Release, 78 FR 31061.
856 Rule 908(a), as initially proposed, would have
required regulatory reporting of any security-based
swap that is ‘‘executed in the United States or
through any means of interstate commerce.’’ See
Regulation SBSR Proposing Release, 75 FR 75287.
857 See 78 FR 31061.
858 See ABA Letter at 3; Citadel Letter at 1–2;
Cleary III at 28; IAA Letter at 6; IIB Letter at 9;
SIFMA/FIA/Roundtable Letter at A–42; Pearson
Letter at 2; FOA Letter at 7–8; JFMC Letter at 4–
5; ISDA IV at 18.
859 In addition, the Commission has authority to
promulgate rules, including additional regulatory
requirements, applicable to persons transacting a
business in security-based swaps ‘‘without the
jurisdiction of the United States’’ when ‘‘necessary
or appropriate’’ to prevent evasion of the provisions
of Title VII of the Dodd-Frank Act. The Commission
is not necessarily exercising the full extent of its
authorities today but will be monitoring for gaps in
reporting of swaps outside the United States that
could be an evasion of the Commission’s rules and
regulations. See Section 30(c) of the Exchange Act,
15 U.S.C. 78dd(c).

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D. Limitations on Counterparty
Reporting Obligations—Rule 908(b)
As-proposed, Rule 908(b) would have
provided that, notwithstanding any
other provision of Regulation SBSR, a
direct or indirect counterparty to a
security-based swap would not incur
any obligation under Regulation SBSR
unless the counterparty is:
(1) A U.S. person;
(2) a security-based swap dealer or
major security-based swap participant;
or
(3) a counterparty to a transaction
conducted within the United States.
The Commission received no
comments that specifically addressed
re-proposed Rule 908(b).860
At this time, the Commission is
adopting only the first two prongs of
Rule 908(b). Thus, Rule 908(b), as
adopted, provides that, notwithstanding
any other provision of Regulation SBSR,
a person shall not incur any obligation
under Regulation SBSR unless it is a
U.S. person, a registered security-based
swap dealer, or a registered major
security-based swap participant. As
discussed above, U.S. persons can be
subjected to requirements under Title
VII because their transactions, whether
undertaken directly or indirectly, exist
at least in part within the United States.
Furthermore, registered security-based
swap dealers and registered major
security-based swap participants are
required to report their security-based
swap transactions.861
Rule 908(b) is designed to specify the
types of persons that will incur duties
under Regulation SBSR. If a person does
not come within any of the categories
enumerated by Rule 908(b), it would not
incur any duties under Regulation
SBSR. Under Rule 908(b), as adopted, a
non-U.S. person incurs no duties under
Regulation SBSR unless it is a registered
security-based swap dealer or registered
major security-based swap participant.
The Commission believes that this
modification will reduce assessment
costs and provide greater legal certainty
to counterparties engaging in crossborder security-based swaps. The
Commission anticipates soliciting
additional public comment on whether
regulatory reporting and/or public
dissemination requirements should be
extended to transactions occurring
within the United States between nonU.S. persons and, if so, which non-U.S.
860 However, several commenters argued that
specific requirements under Regulation SBSR
should not apply to certain kinds of counterparties
in certain circumstances. All of these comments are
discussed in relation to Rule 908(a) in the section
immediately above.
861 See supra Section XV(C)(5), note 853 and
accompanying text.

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persons should incur reporting duties
under Regulation SBSR.
E. Substituted Compliance—Rule 908(c)
1. General Considerations
The security-based swap market is
global in scope, and relevant authorities
around the globe are in the process of
adopting security-based swap reporting
and public dissemination requirements
within their jurisdictions. Once these
new requirements are finalized and take
effect, market participants that engage in
security-based swap transactions
involving more than one jurisdiction
could be subject to conflicting or
duplicative reporting or public
dissemination obligations. As initially
proposed, Regulation SBSR did not
contemplate that the reporting and
public dissemination requirements
associated with cross-border securitybased swaps could be satisfied by
complying with the rules of a foreign
jurisdiction instead of U.S. rules. Thus,
in many cases, counterparties to a
security-based swap would have been
required to comply with proposed
Regulation SBSR even if reporting of a
security-based swap also was required
under the rules of a foreign jurisdiction.
As discussed in the Cross-Border
Proposing Release,862 a number of
commenters urged the Commission to
allow compliance with comparable
home country requirements to substitute
for compliance with the parallel U.S.
requirements.863 In response to those
comments and recognizing that other
jurisdictions may implement regulatory
reporting and public dissemination
regimes for security-based swaps that
are comparable to the requirements set
forth in Title VII and Regulation SBSR,
the Commission re-proposed Rule 908
in the Cross-Border Proposing Release to
include a new paragraph (c). Rule
908(c), as re-proposed, would have
permitted, under certain conditions,
substituted compliance for regulatory
reporting and public dissemination
requirements relating to security-based
swaps. The Commission preliminarily
believed that the availability of
substituted compliance would reduce
the likelihood that market participants
would be subject to potentially
conflicting or duplicative sets of rules
while still meeting the statutory and
policy objectives of Title VII. Reproposed Rule 908(c) would have
862 See

78 FR 31092.
e.g., Cleary III at 15–16; Davis Polk I at
7, 11; Davis Polk II at 21–22; Socie´te´ Ge´ne´rale Letter
at 11; CCMR II at 2. See also Cross-Border Adopting
Release, 79 FR 47357–58 (discussing several
comments relating to substituted compliance issues
generally).
863 See,

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specified the security-based swaps that
would be eligible for substituted
compliance and would have established
procedures for market participants to
request, and for the Commission to
issue, substituted compliance orders.
As discussed in detail below, the
Commission is adopting Rule 908(c)
substantially as re-proposed, with minor
modifications also described below. The
Commission believes in general that, if
a foreign jurisdiction applies a
comparable system for the regulatory
reporting and public dissemination of
security-based swaps, it would be
appropriate to consider permitting
affected market participants to comply
with the foreign requirements to satisfy
the comparable requirements of
Regulation SBSR. Where the
Commission finds that a foreign
jurisdiction’s reporting and public
dissemination requirements are
comparable to those implemented by
the Commission, Rule 908(c) provides
that the Commission may make a
substituted compliance determination
with respect to such jurisdiction for
these requirements. The Commission
believes that permitting substituted
compliance could reduce the likelihood
that market participants would be
subject to conflicting or duplicative
regulation with respect to a securitybased swap transaction.
In adopting Rule 908(c), the
Commission is not making any
assessment at this time regarding
whether any foreign jurisdiction’s
requirements for regulatory reporting
and public dissemination of securitybased swaps are comparable to
Regulation SBSR. Furthermore, because
the analysis of any particular foreign
jurisdiction would be very fact specific,
it is impractical for the Commission to
opine at this time on whether specific
aspects of a foreign system would or
would not allow the Commission to
make a comparability determination. In
view of the many technical differences
that could exist between the
Commission’s Title VII rules and
parallel requirements in other
jurisdictions, the Commission stated in
the Cross-Border Proposing Release that
‘‘the Commission would endeavor to
take a holistic approach in making
substituted compliance
determinations—that is, we would
ultimately focus on regulatory outcomes
as a whole with respect to the
requirements within the same category
rather than a rule-by-rule
comparison.’’ 864 The Commission
continues to believe that this approach
to comparability is appropriate, and
864 78

FR 31085–86.

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intends to focus on regulatory outcomes
as a whole when considering whether to
make a comparability determination.
2. Substituted Compliance Procedure—
Rule 908(c)(2)(i)
Rule 908(c)(2)(i), as re-proposed,
would have allowed the Commission,
conditionally or unconditionally, by
order, to make a substituted compliance
determination regarding regulatory
reporting and public dissemination with
respect to a foreign jurisdiction ‘‘if that
foreign jurisdiction’s requirements for
regulatory reporting and public
dissemination of security-based swaps
are comparable to otherwise applicable
requirements’’ under Regulation SBSR.
A number of commenters endorsed
the Commission’s proposal to permit
substituted compliance with Regulation
SBSR.865 One of these commenters
noted, for example, that substituted
compliance would reduce burdens on
businesses in the United States and
elsewhere without weakening oversight,
thus allowing firms to use funds more
efficiently.866 However, two
commenters recommended that the
Commission narrow the proposed
availability of substituted compliance.
One of these commenters stated that the
Commission’s proposed controls on
substituted compliance would be
inadequate.867 The commenter further
stated that, although substituted
compliance potentially has a legitimate
role to play in a cross-border regulatory
regime, the greater the scope for
substituted compliance, the stricter the
controls should be on the ability to
substitute foreign rules for U.S. rules.868
The other commenter stated that the
Cross-Border Proposing Release failed to
provide an adequate legal or policy
justification for allowing substituted
compliance.869 This commenter
believed that, rather than using
substituted compliance, the
Commission should exercise its
exemptive authority sparingly and only
upon finding an actual conflict exists
with a particular foreign regulation.870
The Commission has carefully
considered these comments and
determined to adopt Rule 908(c)(2)(i) as
re-proposed, with one modification, as
described in Section XV(E)(3), infra.
865 See

ESMA Letter at 2–3; FOA Letter at 2–3;
IIF Letter at 1–2; JSDA Letter at 2; MFA/AIMA
Letter at 5–7.
866 See IIF Letter at 3.
867 See AFR Letter at 8.
868 See id.
869 See Better Markets IV at 3, 24–25 (noting that
the Commission’s duty is to protect investors and
the public consistent with congressional policy, not
to minimize the costs, burdens, or inconvenience
that regulation imposes on industry).
870 See id. at 26.

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Permitting substituted compliance
should reduce the likelihood that
market participants face duplicative or
contradictory reporting or public
dissemination requirements, and
thereby decrease costs and
administrative burdens on market
participants without compromising the
regulatory goals of Title VII. The
requirements for substituted compliance
are designed to ensure that the Title VII
requirements for regulatory reporting
and public dissemination of securitybased swaps are being satisfied, albeit
through compliance with the rules of a
foreign jurisdiction rather than the
specific provisions of Regulation SBSR.
3. Security-Based Swaps Eligible for
Substituted Compliance—Rule 908(c)(1)
Rule 908(c)(1), as re-proposed, would
have provided that compliance with the
regulatory reporting and public
dissemination requirements in Sections
13(m) and 13A of the Exchange Act, and
the rules and regulations thereunder,
may be satisfied by compliance with the
rules of a foreign jurisdiction that is the
subject of a substituted compliance
order issued by the Commission,
provided that at least one of the direct
counterparties to the security-based
swap is either a non-U.S. person or a
foreign branch, and the transaction is
not solicited, negotiated, or executed
within the United States. Thus, under
re-proposed Rule 908(c)(1), certain
kinds of security-based swaps would
not have been eligible for substituted
compliance even if they were subject to
reporting and public dissemination
requirements in a foreign
jurisdiction.871 Specifically, a securitybased swap between two U.S. persons
would not have been eligible for
substituted compliance with respect to
regulatory reporting and public
dissemination, even if the securitybased swap was solicited, negotiated,
and executed outside the United
States.872 Furthermore, re-proposed
Rule 908(c)(1) would not have allowed
for the possibility of substituted
compliance with respect to regulatory
reporting and public dissemination if
the relevant direct counterparty that was
871 If the rules of a foreign jurisdiction did not
apply to the security-based swap, there would be
no need to consider the possibility of substituted
compliance, because there would be no foreign
rules that could substitute for the applicable U.S.
rules.
872 As noted in the Cross-Border Proposing
Release, this assumed that neither U.S. person is
acting through a foreign branch. If either or both
U.S. persons is acting through a foreign branch, the
security-based swap between those U.S. persons
would have been eligible for substituted compliance
under Rule 908(c)(1), as re-proposed. See 78 FR
31093–94, note 1149.

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either a non-U.S. person or foreign
branch (or its agent)—regardless of place
of domicile—solicited, negotiated, or
executed a security-based swap from
within the United States.
The Commission received two
comment letters in response to reproposed Rule 908(c)(1), both of which
addressed the proposal to limit
substituted compliance availability to
security-based swaps that are not
solicited, negotiated, or executed in the
United States.873 One of these
commenters recommended that the
Commission remove this requirement
altogether.874 The other commenter
noted that, as a general matter, it is
virtually impossible to determine on a
trade-by-trade basis whether each
specific contact with a counterparty or
potential counterparty has some nexus
to the United States, and urged the
Commission to subject security-based
swaps to Title VII regulation solely
according to whether counterparties are
U.S. persons.875
In response to these comments, the
Commission has decided to adopt a
modified version of Rule 908(c)(1) that
does not condition substituted
compliance eligibility on the location of
execution, negotiation, or solicitation of
a particular transaction.876 Under Rule
908(c)(1), as adopted, a security-based
swap is eligible for substituted
compliance with respect to regulatory
reporting and public dissemination if at
least one of the direct counterparties to
the security-based swap is either a nonU.S. person or a foreign branch. Thus,
Rule 908(c)(1) permits a security-based
swap between a U.S. person and the
New York branch of a foreign bank (i.e.,
a non-U.S. person with operations
inside the United States) to be eligible
for substituted compliance, provided
that a substituted compliance order is in
effect with respect to the home country
of the foreign bank that operates the
U.S. branch. The standard in Rule
908(c)(1), as adopted, is consistent with
873 See ISDA II at 5; SIFMA/FIA/Roundtable
Letter at 3–4. A third commenter expressed the
view that any swap involving a U.S. person and a
non-U.S. person should be eligible for substituted
compliance. See CCMR II at 2–3.
874 See ISDA II at 5.
875 See SIFMA/FIA/Roundtable Letter at 3–4. This
commenter did not raise this comment expressly in
the context of Rule 908(c)(1), however.
876 Rule 908(c)(1), as adopted, provides:
‘‘Compliance with the regulatory reporting and
public dissemination requirements in sections
13(m) and 13A of the Act (15 U.S.C. 78m(m) and
78m–1), and the rules and regulations thereunder,
may be satisfied by compliance with the rules of a
foreign jurisdiction that is the subject of a
Commission order described in paragraph (c)(2) of
this section, provided that at least one of the direct
counterparties to the security-based swap is either
a non-U.S. person or a foreign branch.’’

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the Commission’s decision not to
impose, at this time, reporting or public
dissemination requirements based
solely on whether a transaction is
conducted within the United States.
Regarding which security-based
swaps are eligible for the possibility of
substituted compliance, the
Commission believes that, if at least one
direct counterparty to a security-based
swap is a foreign branch or a non-U.S.
person (even if the non-U.S. person is a
registered security-based swap dealer or
registered major security-based swap
participant, or is guaranteed by a U.S.
person), the security-based swap should
be eligible for consideration for a
substituted compliance determination
under Regulation SBSR. This approach
recognizes that a transaction involving a
foreign branch or a non-U.S. person
faces the possibility of being subject to
reporting requirements in multiple
jurisdictions (the United States and
another jurisdiction whose rules may
govern the transaction). The approach
adopted by the Commission of allowing
any transaction involving a foreign
branch or non-U.S. person to be eligible
to be considered for substituted
compliance is designed to limit
disincentives for non-U.S. persons to
transact security-based swaps with U.S.
persons by allowing for the possibility
that compliance with the rules of a
foreign jurisdiction could be substituted
for compliance with the specific
provisions of Regulation SBSR when the
non-U.S. person transacts with a U.S.
person. This approach also would allow
for a reasonable minimization of
reporting burdens on foreign branches
and non-U.S. persons in situations
where the local jurisdiction in which
they operate does not offer the
possibility of substituted compliance.
4. Requests for Substituted
Compliance—Rule 908(c)(2)(ii)
Rule 908(c)(2)(ii), as re-proposed,
would have established the process for
market participants to follow when
applying for a substituted compliance
determination: ‘‘Any person that
executes security-based swaps that
would, in the absence of a substituted
compliance order, be required to be
reported pursuant to [Regulation SBSR]
may file an application, pursuant to the
procedures set forth in § 240.0–13 of
this chapter, requesting that the
Commission make a substituted
compliance determination regarding
regulatory reporting and public
dissemination with respect to a foreign
jurisdiction the rules of which also
would require reporting and public
dissemination of those security-based
swaps. Such application shall include

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the reasons therefor and such other
information as the Commission may
request.’’
A number of commenters
recommended that the Commission
permit foreign regulators, as well as
market participants, to file an
application for a substituted compliance
determination.877 Some of these
commenters noted that foreign
regulatory authorities would be wellpositioned to describe their regulatory
frameworks and manner of supervision,
and, in any event, their involvement
would be needed to negotiate the
memorandum of understanding that the
Commission proposed to require as a
precondition of granting a substituted
compliance order.878 One commenter
also stated that the CFTC’s Cross-Border
Guidance 879 contemplates accepting
applications for substituted compliance
from non-U.S. regulators.880 Two
commenters suggested that substituted
compliance applications should be
submitted by foreign regulatory
authorities, rather than individual
firms.881
The Commission is adopting Rule
908(c)(2)(ii) largely as re-proposed, with
a few minor revisions. First, consistent
with the adoption of Rule 0–13 in the
Cross-Border Adopting Release, the
Commission has revised Rule
908(c)(2)(ii) to permit foreign financial
regulatory authorities to submit
applications for substituted compliance
determinations on behalf of market
participants subject to their
jurisdictions.882
877 See ABA Letter at 5; ICI II at 11; IIB Letter at
27; IIF Letter at 4; ISDA II at 4; JFMC Letter at 7–
8; FOA Letter at 4 (noting that the Commission
should begin discussions with the European
Commission to establish an agreed approach for the
coordinated oversight of the transatlantic securitybased swap markets); SIFMA/FIA/Roundtable
Letter at A–36.
878 See ICI II at 11; ISDA II at 4. Re-proposed Rule
908(c)(2)(iv), described below, would have required
the Commission to enter into a supervisory and
enforcement memorandum of understanding or
other agreement with the relevant foreign
regulator(s) prior to issuing a substituted
compliance order covering a foreign jurisdiction.
879 Interpretive Guidance and Policy Statement
Regarding Compliance with Certain Swap
Regulations, 78 FR 45292 (July 26, 2013).
880 See ISDA II at 4.
881 See ESMA Letter at 3 (recommending that
comparability determinations should be requested
at the European Union-level, rather than by
individual firms); JSDA Letter at 2. See also Pearson
Letter at 3 (recommending that the review of a
foreign regime be conducted in cooperation solely
with the relevant foreign regulators or legislators,
not firms).
882 See 79 FR 47358 (‘‘We are persuaded that
allowing foreign regulators to submit such requests
would promote the completeness of requests and
promote efficiency in the process for considering
such requests, in light of foreign regulators’
expertise regarding their domestic regulatory
system, including the effectiveness of their

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Second, Rule 908(c)(2)(ii), as reproposed, would have permitted filing
by any ‘‘person that executes securitybased swaps.’’ Read literally, this
language in the re-proposed rule could
have permitted persons who are not
subject to Regulation SBSR to seek a
substituted compliance determination.
The Commission seeks to limit the
scope of persons who can apply for
substituted compliance determinations
to foreign financial regulators and
parties that would be subject to
Regulation SBSR, because these persons
have the greatest knowledge about the
foreign jurisdiction in question.
Moreover, in the case of market
participants active in that jurisdiction,
they will be directly impacted by
potentially overlapping rules and thus
have the greatest interest in making the
strongest case for substituted
compliance. Accordingly, Rule
908(c)(2)(ii), as adopted, permits a
‘‘party that potentially would comply
with requirements under [Regulation
SBSR] pursuant to a substituted
compliance order,’’ 883 or the relevant
foreign financial regulatory authority or
authorities in that jurisdiction,884 to file
an application requesting a substituted
compliance determination.885
Third, the Commission has
determined not to include the final
sentence of re-proposed Rule
908(c)(2)(ii)—‘‘[s]uch application shall
include the reasons therefor and such
other information as the Commission
may request’’—in final Rule
compliance and enforcement mechanisms, and to
allow for a single point of contact to facilitate the
consideration of substituted compliance requests
associated with the jurisdiction’’).
883 This could be either a U.S. person or a nonU.S. person that engages in activity in that
jurisdiction.
884 This formulation of final Rule 908(c)(2)(ii)
closely follows the language of Rule 0–13(a) under
the Exchange Act, 17 CFR 240.0–13(a), which
provides in relevant part that an application for
substituted compliance must be submitted to the
Commission ‘‘by a party that potentially would
comply with requirements under the Exchange Act
pursuant to a substituted compliance order, or by
the relevant foreign financial regulatory authority or
authorities.’’
885 Thus, the Commission disagrees with the
commenters who argued that substituted
compliance applications should be submitted only
by foreign regulatory authorities, rather than
individual firms. See ESMA Letter at 3; JSDA Letter
at 2. Although obtaining information from foreign
regulatory authorities could be an important aspect
of the substituted compliance review, the
Commission sees no basis for denying individual
firms that might comply with requirements of
Regulation SBSR pursuant to a substituted
compliance order the ability to request substituted
compliance and thereby initiate that review. See
Cross-Border Adopting Release, 79 FR 47358 (‘‘We
are not . . . foreclosing the ability of a market
participant itself to submit a request that it be able
to comply with Exchange Act requirements
pursuant to a substituted compliance order’’).

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908(c)(2)(ii). Rule 0–13(e) under the
Exchange Act, as adopted in the CrossBorder Adopting Release, provides
detailed requirements regarding the
information required to be submitted
(e.g., supporting documentation,
including information regarding
applicable regulatory requirements,
compliance monitoring by foreign
regulators, and applicable precedent).886
In light of the cross-reference to Rule 0–
13 in final Rule 908(c)(2)(ii), the last
sentence of re-proposed Rule
908(c)(2)(ii) is unnecessary and
therefore is not included in final Rule
908(c)(2)(ii).
5. Findings Necessary for Substituted
Compliance—Rule 908(c)(2)(iii)
Rule 908(c)(2)(iii), as re-proposed,
would have provided that, in making a
substituted compliance determination
with respect to a foreign jurisdiction,
the Commission shall take into account
such factors as it determines are
appropriate, such as the scope and
objectives of the relevant foreign
regulatory requirements, as well as the
effectiveness of the supervisory
compliance program administered, and
the enforcement authority exercised, by
the foreign financial regulatory
authority to support oversight of its
regulatory reporting and public
dissemination system for security-based
swaps. Furthermore, Rule 908(c)(2)(iii),
as re-proposed, would have provided
that the Commission would not make a
substituted compliance determination
with respect to regulatory reporting and
public dissemination unless the
Commission found that the relevant
foreign regulatory regime provided for
the reporting and public dissemination
of comparable data elements in a
manner and timeframe comparable to
those required by Regulation SBSR.887
As a prerequisite to any substituted
compliance determination, re-proposed
Rule 908(c)(2)(iii) also would have
required that the Commission have
direct electronic access to the securitybased swap data held by the trade
repository or foreign regulatory
authority.888 Lastly, re-proposed Rule
908(c)(2)(iii) would have required the
Commission to find that any trade
repository or foreign regulatory
authority in the foreign jurisdiction is
subject to requirements regarding data
collection and maintenance; systems
capacity, resiliency, and security; and
886 See id. In addition, Rule 0–13(h) requires the
Commission to publish in the Federal Register a
notice that a complete application has been
submitted.
887 See Cross-Border Proposing Release, 78 FR
31215.
888 See id.

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14659

recordkeeping that are comparable to
the requirements imposed on registered
SDRs.889
The Commission has determined to
adopt Rule 908(c)(2)(iii) as re-proposed,
subject to two minor changes, one in
each of Rules 908(c)(2)(iii)(B) and
908(c)(2)(iii)(D), which are discussed
below. Final Rule 908(c)(2)(iii) provides
that, in making a substituted
compliance determination, the
Commission shall take into account
such factors that it determines are
appropriate, which include but are not
limited to the scope and objectives of
the relevant foreign regulatory
requirements, as well as the
effectiveness of the supervisory
compliance program administered, and
the enforcement authority exercised, by
the foreign financial regulatory
authority to support oversight of its
regulatory reporting and public
dissemination system for security-based
swaps. The rule further provides that
the Commission shall not make such a
substituted compliance determination
unless it finds that:
(A) The data elements that are
required to be reported pursuant to the
rules of the foreign jurisdiction are
comparable to those required to be
reported pursuant to Rule 901;
(B) The rules of the foreign
jurisdiction require the security-based
swap to be reported and publicly
disseminated in a manner and a
timeframe comparable to those required
by Regulation SBSR (or, in the case of
transactions that are subject to
regulatory reporting but not public
dissemination, the rules of the foreign
jurisdiction require the security-based
swaps to be reported in a manner and
timeframe comparable to those required
by Regulation SBSR);
(C) The Commission has direct
electronic access to the security-based
swap data held by a trade repository or
foreign regulatory authority to which
security-based swaps are reported
pursuant to the rules of that foreign
jurisdiction; and
(D) Any trade repository or foreign
regulatory authority in the foreign
jurisdiction that receives and maintains
required transaction reports of securitybased swaps pursuant to the laws of that
foreign jurisdiction is subject to
requirements regarding data collection
and maintenance; systems capacity,
integrity, resiliency, availability, and
security; and recordkeeping that are
comparable to the requirements
imposed on security-based swap data
889 See

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repositories by the Commission’s rules
and regulations.890
Although no commenters discussed
the appropriateness of considering the
examination and enforcement practices
of foreign regulators in making a
substituted compliance determination
for Regulation SBSR specifically, a
number of commenters addressed the
general concept of considering actual
practices in the foreign jurisdiction as
part of the substituted compliance
determination. Certain commenters
generally supported the retention by the
Commission of the authority to decline
to make a comparability finding based
on the substantive enforcement of
foreign regulatory regimes.891 Two of
these commenters noted, however, that
supervisory practices differ significantly
among jurisdictions.892 One of these
commenters stated: ‘‘This lack of
commonality should not be assumed to
be a defect in supervisory standards;
common objectives may be reached
through differing means.’’ 893 This
commenter expressed the general view,
however, that ‘‘a general, high-level
inquiry into the existence of an
examination and enforcement process
and institutions to support it arguably
should inform views about the
comparability of outcomes.’’ 894
The Commission agrees that the
examination and enforcement practices
of each foreign jurisdiction will need to
be evaluated on a case-by-case basis,
and anticipates that it will consider
whether the regulatory protections
provided in that jurisdiction’s securitybased swap markets are substantially
realized through sufficiently vigorous
supervision and enforcement. While the
Commission believes that common
objectives may be reached through
differing means, the Commission also
believes that compliance with a foreign
jurisdiction’s rules for reporting and
public dissemination of security-based
swaps should be a substitute for
compliance with the U.S. rules only
when the foreign jurisdiction has a
reporting and public dissemination
regime comparable to that of the United
States. This determination must
consider actual practices and
implementation as well as written laws
and regulations of the foreign
jurisdiction.
890 See Rule 908(c)(2)(iii)(A)–(D), as adopted, and
infra note 910.
891 See ABA Letter at 5; AFR Letter at 12; Better
Markets IV at 3, 29–32; ISDA II at 6.
892 See FOA Letter at 6; ISDA II at 6.
893 ISDA II at 6.
894 Id.

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a. Data Element Comparability—Rule
908(c)(2)(iii)(A)
The Commission received several
comments regarding the data element
comparability determination required
by what is now final Rule
908(c)(2)(iii)(A). Two commenters
recommended that the Commission
determine whether a foreign jurisdiction
has comparable security-based swap
reporting requirements based on a
holistic review of that jurisdiction’s
regulations and the local market
environment.895 Some commenters
suggested that the Commission should
determine whether the security-based
swap reporting framework of a foreign
jurisdiction is designed to achieve the
G–20 goals of transparency in the
derivatives markets.896
The Commission is adopting reproposed Rule 908(c)(2)(iii)(A) without
revision. Under the final rule, the
foreign jurisdiction must require
reporting of data elements comparable
to those required under Rule 901 of
Regulation SBSR for the Commission to
make a comparability determination. If
the data elements required by the
foreign jurisdiction are not comparable,
important information about a securitybased swap might not be captured by
the foreign trade repository or foreign
regulatory authority. This could create
gaps or inconsistencies in the
information available to the
Commission and impair the
Commission’s ability to monitor the
security-based swap market. As noted in
Section XV(E)(1), supra, the
Commission generally agrees with the
commenters who expressed the view
that the Commission should take a
‘‘holistic’’ or ‘‘outcomes-based’’ view of
another jurisdiction’s rules when
making a substituted compliance
determination, rather than conduct a
895 See JFMC Letter at 7; ISDA II at 8. Other
commenters expressed a general preference for a
holistic review of a relevant jurisdiction’s securitybased swap regulatory regime but did not expressly
reference Regulation SBSR in this context. See, e.g.,
SIFMA/FIA/Roundtable Letter at A–37–A–38;
Pearson Letter at 3; IIF Letter at 5; ICI II at 11; JFMC
Letter at 1; MFA/AIMA Letter at 5 (observing that
a line-by-line or rule-by-rule analysis would place
a significant burden on the Commission, and
potentially result in disjointed regulation); ABA
Letter at 5.
896 See ICI II at 12; ISDA II at 8 (noting also that
jurisdictions may choose to establish goals and
requirements that are ancillary to the G–20
regulatory goals, but these ancillary requirements
should not become a barrier to an effective crossborder compliance regime that furthers the G–20
goals). With respect to security-based swap
reporting, the ‘‘G–20 goals’’ referenced by these
commenters were articulated in the Leaders’
Statement at the Pittsburgh Summit (September 24–
25, 2009), available at: https://www.g20.org/sites/
default/files/g20_resources/library/Pittsburgh_
Declaration.pdf, last visited September 22, 2014.

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‘‘line-by-line’’ or ‘‘rule-by-rule’’
analysis. At this time, the Commission
does not believe that it is sufficient to
consider only whether the data elements
required by the foreign regulatory
regime are designed to achieve the
objectives of the G–20 with respect to
reporting. The G–20 objectives are a
high-level set of principles designed to
guide jurisdictions in adopting reforms
for the OTC derivatives markets.
Therefore, the Commission believes that
it is necessary and appropriate to
consider whether the data elements
reported under that jurisdiction’s rules
are comparable to those required under
Rule 901 of Regulation SBSR—not
whether they are comparable to the G–
20 standards—in deciding whether to
grant a substituted compliance
determination. If the Commission took
the opposite view, it would be difficult
to conclude that the oversight and
transparency goals of Title VII were
being satisfied through compliance with
the rules of the foreign jurisdiction in
lieu of Regulation SBSR.897
b. Timeframe of Reporting and Public
Dissemination—Rule 908(c)(2)(iii)(B)
The Commission also is adopting Rule
908(c)(2)(iii)(B) as re-proposed, subject
to certain conforming changes.898 Rule
908(c)(2)(iii)(B), as adopted, provides
that the Commission shall not issue a
substituted compliance determination
unless the relevant foreign jurisdiction
requires security-based swaps to be
reported and publicly disseminated ‘‘in
897 One commenter urged the Commission to
‘‘replace the apparently subjective ‘outcomes-based’
standard for comparison with a more rigorous and
objective standard based on the underlying rules.’’
AFR Letter at 9. For the reasons noted above, the
Commission is adopting a ‘‘comparable’’ standard,
rather than the type of review suggested by the
commenter. This commenter further stated:
‘‘Another reason that ‘outcomes-based’ assessment
may not be adequate is that the inter-operability of
different rule sets may be critical to the
effectiveness of the overall international regime
. . . this is the case for standardization of data
formats in reporting, and may also be true for
various risk management elements that must be
standardized across a global financial institution.’’
Id. at 10. The Commission intends to work with
foreign regulatory authorities to develop more
uniform data standards to allow maximum
aggregability while minimizing market participant
costs and burdens that would result from having to
report in different jurisdictions using different data
standards and formats.
898 As re-proposed, this rule would have provided
that the Commission shall not make a substituted
compliance determination unless it finds that the
‘‘rules of the foreign jurisdiction require the
security-based swap to be reported and publicly
disseminated in a manner and a timeframe
comparable to those required by §§ 242.900 through
242.911.’’ As discussed previously, Regulation
SBSR, as adopted, consists of Rules 900 through
909 under the Exchange Act. Therefore, the
reference in re-proposed Rule 908(c)(2)(iii)(B) to
‘‘§§ 242.900 through 242.911’’ is being revised to
read: ‘‘§§ 242.900 through 242.909.’’

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a manner and a timeframe comparable
to those required by [Regulation
SBSR].’’ Given the Title VII
requirements that all security-based
swaps be reported to a registered SDR
and that security-based swaps be
publicly disseminated in real time, the
Commission believes that allowing
substituted compliance with the rules of
a foreign jurisdiction that has reporting
timeframes and dissemination outcomes
not comparable to those in the United
States would run counter to the
objectives and requirements of Title VII.
If the Commission allowed substituted
compliance for such a jurisdiction, the
Commission might have access to less
regulatory data about the security-based
swap market, or price discovery could
be less efficient, than would have been
the case if Regulation SBSR applied in
its entirety. Thus, for example, the
Commission generally does not
anticipate permitting substituted
compliance with respect to regulatory
reporting and public dissemination
under Rule 908(c) if a foreign
jurisdiction does not (among other
things) impose public dissemination
requirements for all security-based
swaps on a trade-by-trade basis.899
Thus, the Commission disagrees with
the commenter who suggested that a
non-U.S. public dissemination regime
that disseminates data on an aggregate
basis should be deemed comparable to
Regulation SBSR.900
One commenter stated that
‘‘[c]omparability should be addressed
flexibly with respect to public
dissemination, recognizing that in
certain jurisdictions’ [sic] transparency
obligations are linked to use of a trading
venue and fall on the venue.’’ 901
899 Although the Commission is requiring
reporting and public dissemination of securitybased swaps within 24 hours of the time of
execution during the first initial phase of
Regulation SBSR, see Rule 901(j), the Commission
anticipates considering provisions to implement the
Title VII requirement for real-time public
dissemination. Therefore, the Commission would
view a foreign jurisdiction’s regime for public
dissemination of security-based swaps as
comparable only if it (1) had rules providing for
real-time public dissemination of all security-based
swaps currently, or (2) was following a comparable
process of moving to real-time public dissemination
for all security-based swaps in phases.
900 See JSDA Letter at 2. Another commenter
requested that the Commission determine that
Japan has comparable security-based swap
reporting standards. See JFMC Letter at 8. This
comment is beyond the scope of this rulemaking.
However, after Regulation SBSR becomes effective,
market participants in this jurisdiction that would
rely on a substituted compliance determination, or
their regulators, may submit a request for
substituted compliance with respect to regulatory
reporting and public dissemination if they believe
that the rules in that jurisdiction satisfy the criteria
for substituted compliance described in Rule 908(c).
901 ISDA II at 9.

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Another commenter recommended that
the Commission should not determine
that a foreign jurisdiction lacks
comparable security-based swap
reporting rules based on technical
differences in the timeframes for, or
manner of, reporting.902 Whether the
Commission grants a substituted
compliance determination will depend
on the facts and circumstances
pertaining to a particular request. Thus,
it is difficult to address concerns such
as those raised by these two commenters
in the abstract. As the Commission
noted in Section XV(E)(1), supra, it will
assess comparability in a holistic
manner rather than on a rule-by-rule
basis.
c. Direct Electronic Access—Rule
908(c)(2)(iii)(C)
The Commission also is adopting Rule
908(c)(2)(iii)(C) as re-proposed. Rule
908(c)(2)(iii)(C) provides that the
Commission may not issue a substituted
compliance order with respect to
regulatory reporting and public
dissemination in a foreign jurisdiction
unless ‘‘[t]he Commission has direct
electronic access to the security-based
swap data held by a trade repository or
foreign regulatory authority to which
security-based swaps are reported
pursuant to the rules of that foreign
jurisdiction.’’ 903 Commenters expressed
differing views regarding the direct
electronic access requirement in reproposed Rule 908(c)(2)(iii)(C). One
commenter expressed support for the
proposed requirement, believing that
direct electronic access is a critical
element for adequate monitoring of risks
to U.S. financial stability.904 However,
two commenters objected to the
proposed direct electronic access
requirement.905 One of these
commenters suggested that the
Commission should not require direct
electronic access at this time, but should
instead wait for the ‘‘FSB’’ to develop
plans ‘‘to produce and share globally
aggregated trade repository data that
902 See

ICI II at 12.
Rule 900(l), as adopted, ‘‘direct
electronic access’’ has the same meaning as in Rule
13n–4(a)(5) under the Exchange Act, discussed in
the SDR Adopting Release. Rule 13n–4(a)(5) defines
‘‘direct electronic access’’ to mean access, which
shall be in a form and manner acceptable to the
Commission, to data stored by an SDR in an
electronic format and updated at the same time as
the SDR’s data is updated so as to provide the
Commission or any of its designees with the ability
to query or analyze the data in the same manner
that the SDR can query or analyze the data.
904 See AFR Letter at 9 (noting that the
Commission should seek to analyze data from
foreign repositories in conjunction with U.S.sourced data to determine the swap exposure of an
entity on a global basis).
905 See IIF Letter at 7; ISDA II at 8.
903 Under

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14661

authorities need for monitoring systemic
risks.’’ 906 Another commenter ‘‘urge[d]
the Commission to take into account the
issue of foreign jurisdictions’ privacy
laws before imposing a blanket
requirement that [the Commission] have
direct electronic access.’’ 907
After carefully considering the
comments received, the Commission
continues to believe that requiring
direct electronic access to securitybased swap data held by a trade
repository or foreign regulatory
authority is a necessary part of any
substituted compliance determination.
Thus, the Commission does not believe
that it should rely instead on the FSB or
other international bodies developing
arrangements for trade repositories and
relevant authorities to share information
across jurisdictions. While these crossborder information-sharing
arrangements are important, and the
Commission will continue to participate
in such efforts, granting substituted
compliance without direct electronic
access would not be consistent with the
underlying premise of substituted
compliance: That a comparable
regulatory result is reached through
compliance with foreign rules rather
than with the corresponding U.S. rules.
If the Commission were to grant
substituted compliance for a foreign
jurisdiction where the Commission did
not have direct electronic access to the
facility to which security-based swap
transactions of that jurisdiction are
reported, the Commission might not
have access to transaction information
for portions of the security-based swap
market that it otherwise would have the
ability to surveil.908 If the Commission
were to rely solely on international
information-sharing agreements, it
could face substantial delays before a
foreign trade repository or foreign
regulatory authority, even acting
expeditiously, could compile and make
available to the Commission data
relating to a substantial volume of
transactions. Delays in obtaining such
data could compromise the ability of the
Commission to supervise security-based
swap market participants, or to share
information with other relevant U.S.
authorities in a timely fashion. Thus,
906 Id. at 8. The second commenter did not offer
a rationale for its opposition to the proposed direct
electronic access requirement. See IIF Letter at 7.
907 SIFMA/FIA/Roundtable Letter at A–46 (stating
that over a dozen jurisdictions have been identified
where local law prohibits the disclosure of client
names to non-local regulators that do not have an
information-sharing treaty or agreement in place
with the local regulator, some of which cannot be
satisfied by counterparty consent).
908 See supra note 788 (providing statistics
regarding the amount of cross-border trading in the
security-based swap market).

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the Commission believes that direct
electronic access to security-based swap
data held by the foreign trade repository
or foreign regulatory authority to which
security-based swap transactions are
reported in the foreign jurisdiction must
be a prerequisite to issuing a substituted
compliance order with respect to
Regulation SBSR applying to that
jurisdiction.
The Commission has taken into
consideration the comment that certain
jurisdictions have privacy laws or
blocking statutes that could, in certain
cases, render a foreign trade repository
or foreign regulatory authority unable to
provide the Commission with direct
electronic access to transaction
information that would include the
identity of the counterparties. The
Commission is not persuaded that this
consideration should remove direct
electronic access as a requirement for
substituted compliance under
Regulation SBSR. Indeed, if foreign
privacy laws result in the Commission
having less than comparable access to
the security-based swap transaction data
held at a foreign trade repository or
foreign regulatory authority than the
Commission otherwise would have if no
substituted compliance order were in
effect, then the premise of substituted
compliance would not be met. Although
foreign regulatory authorities would
likely have access to information about
security-based swap transactions that
exist at least in part in their
jurisdictions, these authorities might
lack the ability to share this information
with the Commission. As a result, it
could be difficult if not impossible for
the Commission or any other relevant
authority, foreign or domestic, to
observe the build-up of systemic risks
created by the global security-based
swap activity of U.S. persons. In sum,
the Commission believes that, if it does
not have direct electronic access to the
transaction information reported to the
foreign trade repository or foreign
regulatory authority, substituted
compliance would not yield a
comparable outcome and the
requirements of Rule 908(c)(2) would
not be met.909 The Commission believes
that, in this situation, the specific
requirements of Regulation SBSR
should continue to apply; if necessary
supervisory information cannot be
obtained via direct electronic access to
the security-based swap data held by a
foreign trade repository or foreign
regulatory authority, then such
transactions must continue to be
909 See also infra Section XVI(A) (addressing the
impact of foreign privacy laws on Regulation
SBSR).

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reported to a registered SDR, from
which the Commission can obtain such
information.
d. Trade Repository Capabilities—Rule
908(c)(2)(iii)(D)
The Commission received no
comments on Rule 908(c)(2)(iii)(D) and
is adopting that rule as re-proposed,
with certain minor changes. Final Rule
908(c)(2)(iii)(D) provides that the
Commission shall not make a
substituted compliance determination
with respect to regulatory reporting and
public dissemination unless it finds that
‘‘[a]ny trade repository or foreign
regulatory authority in the foreign
jurisdiction that receives and maintains
required transaction reports of securitybased swaps pursuant to the laws of that
foreign jurisdiction is subject to
requirements regarding data collection
and maintenance; systems capacity,
integrity, resiliency, availability, and
security; and recordkeeping that are
comparable to the requirements
imposed on security-based swap data
repositories by the Commission’s rules
and regulations’’ (emphasis added). In
the re-proposed rule, the highlighted
language would have read ‘‘. . . by
§§ 240.13n–5 through 240.13n–7 of this
chapter.’’ Because requirements
imposed on registered SDRs relating to
data collection and maintenance;
systems capacity, integrity, resiliency,
availability, and security; and
recordkeeping could be imposed by
Commission rules and regulations other
than or in addition to Rules 13n–5
through 13n–7 under the Exchange Act,
the Commission believes that it would
be more appropriate to use the broader
language in the text of final Rule
908(c)(2)(iii)(D). The Commission
continues to believe that, to allow
substituted compliance for regulatory
reporting and public dissemination with
respect to a foreign jurisdiction, any
entity in that foreign jurisdiction that is
required to receive and maintain
security-based swap transaction data
must have protections and operability
standards comparable to those imposed
on SEC-registered SDRs.
In addition, the re-proposed rule
would have required, in relevant part,
that—in connection with a substituted
compliance determination—the foreign
trade repository or foreign regulatory
authority must be subject to
requirements for ‘‘systems capacity,
resiliency, and security’’ that are
comparable to parallel U.S.
requirements. That provision in final
Rule 908(c)(2)(iii)(D) now states,
‘‘systems capacity, integrity, resiliency,
availability, and security.’’ The addition
of ‘‘integrity’’ and ‘‘availability’’ to

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characterize the expected operational
capability of the foreign trade repository
or foreign regulatory authority is
derived from a parallel change that the
Commission made in adopting final
Rule 13n–6 under the Exchange Act that
applies to SEC-registered SDRs.910
Because these standards apply to SECregistered SDRs, the Commission
believes that it is appropriate for Rule
908(c)(2)(iii)(D) to include them as
elements necessary for a finding that a
foreign trade repository or foreign
regulatory authority is subject to
comparable regulatory duties.
e. Memoranda of Understanding—Rule
908(c)(2)(iv)
Rule 908(c)(2)(iv), as re-proposed,
would have required that, before issuing
a substituted compliance order relating
to regulatory reporting and public
dissemination with respect to a foreign
jurisdiction, the Commission shall have
entered into a supervisory and
enforcement memorandum of
understanding (‘‘MOU’’) or other
arrangement with the relevant foreign
financial regulatory authority or
authorities under such foreign financial
regulatory system addressing oversight
and supervision of the applicable
security-based swap market. No
commenters addressed this proposed
requirement.
The Commission is adopting Rule
908(c)(2)(iv) with certain minor
revisions. First, the Commission is
modifying the rule to indicate that a
substituted compliance determination
may require the Commission to enter
into more than one MOU or other
arrangement with a foreign authority.
Second, the Commission has modified
the rule to provide that such MOUs or
other arrangements would ‘‘address[ ]
supervisory and enforcement
cooperation and other matters arising
under the substituted compliance
determination.’’ 911 These clarifications
are designed to facilitate discussions
between the Commission and relevant
foreign regulators.
The Commission expects that any
grant of substituted compliance would
be predicated on the presence of
enforcement MOUs or other
arrangements that provide formal
mechanisms by which the Commission
can request assistance and obtain
documents and information from
foreign authorities regarding
enforcement matters involving
securities. Substituted compliance also
may be expected to be predicated on the
presence of supervisory MOUs or other
910 See

SDR Adopting Release, note 831.
908(c)(2)(iv).

911 Rule

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arrangements that provide formal
mechanisms by which the Commission
can request assistance and obtain nonpublic information from foreign
authorities related to the oversight of
dually regulated entities. As a result,
such MOUs or other arrangements
should help the Commission ensure
compliance with Title VII requirements
for regulatory reporting and public
dissemination.
In addition, any grant of substituted
compliance may be conditioned upon
the Commission entering into other
MOUs or arrangements that address
additional matters specific to the
substituted compliance determination.
Such MOUs or other arrangements,
among other respects, may be expected
to help promote the effectiveness of
substituted compliance by providing
mechanisms by which the Commission
may request information and/or monitor
for circumstances where the foreign
regime may no longer be comparable to
the counterpart Title VII requirements
(due, for example, to changes in the
substantive legal framework of the
foreign regime that are inconsistent with
the understandings that underpinned
the Commission’s initial grant of
substituted compliance). In addition,
such MOUs or other arrangements may
provide mechanisms by which the
Commission could request information
and monitor the effectiveness of the
enforcement and supervision
capabilities of the appropriate foreign
regulator(s). More generally, such MOUs
or other arrangements can provide
mechanisms by which the Commission
could obtain information relevant to the
assessment of comparability.
f. Modification or Withdrawal of
Substituted Compliance Order
Rule 908(c)(2)(v), as re-proposed,
would have provided that the
Commission may, on its own initiative,
modify or withdraw a substituted
compliance order with respect to
regulatory reporting and public
dissemination in a foreign jurisdiction,
at any time, after appropriate notice and
opportunity for comment. The
Commission is adopting Rule
908(c)(2)(v) as re-proposed, without
revision.
Situations can arise where it would be
necessary or appropriate to modify or
withdraw a substituted compliance
order. A modification or withdrawal
could be necessary if, after the
Commission issues a substituted
compliance order, the facts or
understandings on which the
Commission relied when issuing that
order are no longer true. The
Commission believes, therefore, that it

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is appropriate to establish a mechanism
whereby it could, at any time and on its
own initiative, modify or withdraw a
previously issued substituted
compliance order with respect to
regulatory reporting and public
dissemination, after appropriate notice
and opportunity for comment. Having
made a comparability determination,
the Commission should have the ability
to periodically review the determination
and decide whether the substituted
compliance determination should
continue to apply.912 The Commission
could determine to condition a
substituted compliance order on an
ongoing duty to disclose relevant
information. Thus, the Commission
generally agrees with the commenter
who argued that persons making use of
substituted compliance should be
responsible for informing the
Commission if factors on which the
Commission relied in making the
determination change in any material
way.913
Two commenters generally supported
the re-proposed Rule 908(c)(2)(v)
requirement for the Commission to
publish for comment proposed
withdrawals or modifications.914
Several commenters also recommended
that any final decision by the
Commission to modify or withdraw a
comparability determination should
include a phase-in period to provide
market participants adequate
opportunity to make necessary
adjustments to their compliance systems
and processes.915 The Commission
generally agrees with these comments,
and believes that all affected persons
should have appropriate notice of the
introduction, withdrawal, or
modification of a substituted
compliance order so as to minimize
undue disruptions in the market. The
Commission will address phase-in
issues and timeframes on a case-by-case
basis—in the relevant order that
introduces, modifies, or withdraws
substituted compliance—depending on
the facts and circumstances of the
particular situation.

6. Consideration of Regulatory
Reporting and Public Dissemination in
the Commission’s Analysis of
Substituted Compliance
When the Commission re-proposed
Rule 908(c) in the Cross-Border
Proposing Release, it expressed a
preliminary view that regulatory
reporting and public dissemination
should be considered together in the
Commission’s analysis of whether to
permit substituted compliance.916 If the
Commission were to adopt that
approach, security-based swap
transactions would not be eligible for
substituted compliance if there were
comparable foreign rules in one area but
not the other. In other words, a foreign
jurisdiction that has comparable rules
for regulatory reporting of securitybased swap transactions but not
comparable rules for public
dissemination of such transactions
would not have been eligible for
substituted compliance under
Regulation SBSR.
Three commenters suggested that the
Commission consider making separate
substituted compliance determinations
for regulatory reporting and public
dissemination.917 One of these
commenters expressed the view that
making separate determinations is
appropriate because regulatory reporting
and public dissemination serve distinct
goals.918 This commenter also argued
that, due to the significant costs
associated with documentation,
procedures, and technological systems
necessary to comply with reporting
regimes, the possibility of separate
substituted compliance determinations
for regulatory reporting and public
dissemination could substantially
reduce costs for non-U.S. market
participants while still achieving the
Commission’s important market
surveillance and transparency goals.919
One of the other commenters argued
that ‘‘[d]ifferences among jurisdictions
in the timing of reporting . . . should be
evaluated in light of systemic risk and
market supervisory objectives, rather
than policies of facilitating price
discovery.’’ 920 The commenter
concluded, therefore, that ‘‘[s]uch
flexibility should include the potential
for separate determinations regarding
916 See

912 The

Commission made a similar statement in
the Cross-Border Proposing Release. See 78 FR
31089. Three commenters agreed with the
statement. See AFR Letter at 12; Better Markets IV
at 30; IIF Letter at 4, 7.
913 See Better Markets IV at 29, 32.
914 See ABA Letter at 6; ISDA II at 9.
915 See FOA Letter at 5; IIF Letter at 7; SIFMA/
FIA/Roundtable Letter at A–37.

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78 FR 31096.
IIB Letter at 25; ISDA II at 9; SIFMA/FIA/
Roundtable Letter at A–45.
918 See IIB Letter at 25 (‘‘regulatory reporting
provides the Commission with the tools for market
surveillance and oversight of its regulated markets,
while public dissemination is designed to provide
the market, rather than regulators, real-time price
transparency’’).
919 See id.
920 ISDA II at 9.
917 See

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regulatory reporting and public
dissemination requirements.’’ 921
Notwithstanding these comments, the
Commission continues to believe that—
subject to one exception described
below—regulatory reporting and public
dissemination should be considered
together for purposes of substituted
compliance under Rule 908(c). Even if
regulatory reporting and public
dissemination serve different policy
goals, the Commission believes that
treating regulatory reporting and public
dissemination separately would not
further those goals as effectively as
considering these requirements together.
The Commission agrees with the
commenters who argued that regulatory
reporting serves important market
oversight goals.922 However, the
Commission disagrees that these
objectives should be pursued ‘‘rather
than policies of facilitating price
discovery.’’ 923 Title VII requires the
Commission to pursue both sets of
policy goals. If the Commission were to
permit substituted compliance for
regulatory reporting but not for public
dissemination, certain transactions
could be reported to a foreign trade
repository or a foreign regulatory
authority in lieu of a registered SDR but
would (in theory) still be subject to the
Regulation SBSR’s public dissemination
requirements in Rule 902. Under
Regulation SBSR, registered SDRs are
charged with publicly disseminating
information about security-based swap
transactions. To carry out its public
dissemination function, a registered
SDR must obtain data about securitybased swap transactions that Regulation
SBSR requires it to publicly
disseminate. If this data were reported
to a foreign trade repository or foreign
regulatory authority under the terms of
a substituted compliance order, it would
be impractical, if not impossible, for a
registered SDR to disseminate that
transaction data, as required under Rule
902. In other words, because the
registered SDR needs a report of the
transaction from the reporting side in
order to carry out public dissemination,
no purpose would be served—and
indeed public dissemination could be
compromised—by removing the duty to
report the transaction to a registered
SDR in lieu of the duty to report it to
the foreign trade repository or foreign
regulatory authority.924 The
921 Id.
922 Id.;

IIB Letter at 25.
II at 9.
924 The Commission specifically raised this issue
in the Cross-Border Proposing Release and asked
how public dissemination could be carried out if
substituted compliance were in effect for regulatory
923 ISDA

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Commission continues to believe that it
is impractical and unnecessary to devise
an alternate method of public
dissemination for security-based swaps
that are reported in a foreign
jurisdiction pursuant to a substituted
compliance order. The Commission
concludes, therefore, that a foreign
jurisdiction’s regulatory reporting and
public dissemination requirements—
subject to one exception described
immediately below—shall be
considered together for purposes of
evaluating comparability for purposes of
a substituted compliance determination
under Rule 908(c).
One commenter argued that the
Commission should be able to issue a
substituted compliance order solely in
respect of regulatory reporting that
would apply to cross-border securitybased swaps that are subject to
regulatory reporting but not public
dissemination under Regulation
SBSR.925 Under Rule 908(a), as adopted,
there is one kind of security-based swap
that is subject to regulatory reporting
but not public dissemination: A
transaction with a non-U.S. person that
is registered as a security-based swap
dealer or major security-based swap
participant on one side and no U.S.
person on the other side. Upon further
consideration, the Commission agrees
with the commenter and is adopting
Rule 908(c) with certain revisions that
will allow the Commission to issue a
substituted compliance order with
respect to regulatory reporting but not
public dissemination with respect to
this subset of cross-border transactions.
The Commission has added a second
sentence to the language in re-proposed
Rule 908(c)(2)(i) to carry out this aim.926
The Commission also revised one prong
of re-proposed Rule 908(c)(iii) to
exclude consideration of the reporting
timeframes for public dissemination in
cases where the Commission is
considering a substituted compliance
request with respect to cross-border
transactions that are, under Regulation
SBSR, subject to regulatory reporting
but not public dissemination. The
Commission believes that offering the
possibility of substituted compliance for
these kinds of cross-border transactions
could reduce compliance burdens for
affected persons without reducing the
reporting but not for public dissemination. See 78
FR 31096.
925 See IIB Letter at 25 (‘‘the separate possibility
of substituted compliance for either regulatory
reporting or public dissemination could
substantially reduce costs for non-U.S. market
participants while still achieving the Commission’s
important market surveillance and transparency
goals’’).
926 Rule 908(c)(2)(i).

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capability of the Commission and other
relevant authorities to oversee the
security-based swap market.
XVI. Other Cross-Border Issues
A. Foreign Public Sector Financial
Institutions
In response to the Regulation SBSR
Proposing Release, six commenters
expressed concern about applying the
requirements of Title VII to the activities
of foreign public sector financial
institutions (‘‘FPSFIs’’), such as foreign
central banks and multilateral
development banks.927 One commenter,
the European Central Bank (‘‘ECB’’),
noted that security-based swaps entered
into by the Federal Reserve Banks are
excluded from the definition of ‘‘swap’’
in the Commodity Exchange Act
(‘‘CEA’’) 928 and that the functions of
foreign central banks and the Federal
Reserve are broadly comparable. The
ECB argued, therefore, that securitybased swaps entered into by foreign
central banks should likewise be
excluded from the definition of
‘‘swap.’’ 929 A second commenter, the
World Bank (representing the
International Bank for Reconstruction
and Development, the International
Finance Corporation, and other
multilateral development institutions of
which the United States is a member)
also argued generally that the term
‘‘swap’’ should be defined to exclude
any transaction involving a multilateral
development bank.930 The World Bank
further noted that EMIR—the E.U.
counterpart to Title VII of the DoddFrank Act—would expressly exclude
multilateral development banks from its
coverage.931
The ECB and BIS stated that foreign
central banks enter into security-based
swaps solely in connection with their
public mandates, which require them to
927 See BIS Letter passim; CEB at 2, 4; ECB Letter
passim; ECB Letter II passim; EIB Letter passim;
Nordic Investment Bank Letter at 1; World Bank
Letter I passim.
928 Section 1a(47)(B)(ix) of the CEA, 7 U.S.C.
1a(47)(B)(ix), excludes from the definition of
‘‘swap’’ any agreement, contract, or transaction a
counterparty of which is a Federal Reserve Bank,
the federal government, or a federal agency that is
expressly backed by the full faith and credit of the
United States. A security-based swap includes any
swap, as defined in the CEA, that is based on,
among other things, a narrow-based index or a
single security or loan. See Section 3(a)(68) of the
Exchange Act, 15 U.S.C. 78c3(a)(68).
929 See ECB Letter I at 2; ECB Letter II at 2. See
also EIB Letter at 1; Nordic Development Bank at
1.
930 See World Bank Letter I at 6–7.
931 See id. at 4. See also EIB Letter at 7 (‘‘As a
matter of comity, actions by U.S. financial
regulators should be consistent with the laws of
other jurisdictions that provide exemption from
national regulation for government-owned
multinational developments such as the [EIB]’’).

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act confidentially in certain
circumstances.932 The ECB argued in
particular that public disclosure of its
market activities could compromise its
ability to take necessary actions and
‘‘could cause signaling effects to other
market players and finally hinder the
policy objectives of such actions.’’ 933
Another commenter, the Council of
Europe Development Banks (‘‘CEB’’),
while opposing application of Title VII
requirements to multilateral
development banks generally, did not
object to the CFTC and SEC preserving
their authority over certain aspects of
their transactions, such as by imposing
reporting requirements.934 Similarly, the
World Bank believed that the definition
of ‘‘swap’’ could be qualified by a
requirement that counterparties would
treat such transactions as swaps solely
for reporting purposes.935
In the Cross-Border Proposing
Release, the Commission sought
additional information to assist with
analysis of this issue and asked a
number of questions, including
questions relating to how active FPSFIs
are in the security-based swap market
generally; the extent to which FPSFIs
engage in security-based swap activity
with U.S. persons; whether there are
any characteristics of FPSFI activity in
the security-based swap market that
could make it easier for market
observers to detect an FPSFI as a
counterparty or that could make it easier
to detect an FPSFI’s business
transactions or market positions; and
whether there are steps that the
Commission could take to minimize
such information leakage short of
suppressing all FPSFI trades from
public dissemination.936 The
Commission specifically requested that
commenters on this issue focus on the
security-based swap market, not the
market for other swaps. In addition,
commenters were requested to answer
only with respect to security-based
swap activity that would be subject to
Regulation SBSR, and not with respect
to activity that, because of other factors,
would not be subject to Regulation
SBSR in any case.937
Only a few commenters on the CrossBorder Proposing Release responded to
any of these questions or offered
additional comments on FPSFI issues
related to Regulation SBSR. One
commenter, FMS-Wertmanagement
932 See

BIS Letter at 4–5; ECB Letter I at 3.
Letter I at 3. See also ECB Letter II at 2.
934 See CEB Letter at 4. However, the CEB did not
state a view as to whether FPSFI trades should be
subject to post-trade transparency.
935 See World Bank Letter I at 7.
936 See 78 FR 31074.
937 See id.
933 ECB

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(‘‘FMS’’), an instrumentality of the
government of the Federal Republic of
Germany that manages certain legacy
financial portfolios, stated that securitybased swaps form only a small portion
of its overall derivatives portfolio, and
that it does not enter into any new
security-based swaps ‘‘except with the
purpose of restructuring existing
security-based swaps within the limits
of its winding-up strategy.’’ 938 This
commenter, however, did not provide
an opinion regarding how any
provisions of Regulation SBSR would
affect its operations; instead, the
primary opinion expressed in the
comment was that FPSFIs such as FMS
should not be required to register as
security-based swap dealers or major
security-based swap participants and be
subject to the attendant requirements.939
Another commenter, KfW
Bankengruppe (‘‘KfW’’), is also an
instrumentality of the Federal Republic
of Germany and engages in
‘‘promotional lending
opportunities.’’ 940 KfW indicated that it
has in the past engaged in a small
number of security-based swap
transactions but none recently.941 Like
FMS, KfW argued that FPSFIs should
not be subject to regulation as securitybased swap dealers or major securitybased swap participants and did not
otherwise comment on any issues
specific to Regulation SBSR.942 A third
commenter, the World Bank, stated that,
‘‘We do not object to reporting of our
transactions by U.S. counterparties or
non-U.S. counterparties that are
independently required to be registered
with the Commission. Our concern is
limited to ensuring that non-U.S.
counterparties that are otherwise not
subject to regulation could become
subject to certain requirements solely
because a transaction with us could be
deemed to be a ‘Transaction conducted
within the United States.’ We are
amenable to any solution that fixes this
problem.’’ 943 A fourth commenter
agreed with the World Bank, arguing
that the term ‘‘transaction conducted
within the United States,’’ which as
938 FMS

Letter at 8. See also IDB Letter at 1
(noting that IDB does not currently enter into
security-based swaps but that it may do so in the
future, and expressing concern about applying the
requirements of Title VII to the activities of FPSFIs).
939 See id. at 8–11.
940 KfW Letter at 1.
941 KfW indicated, for example, that between
2009 and 2012 it engaged in only four new trades
to acquire credit protection, all in 2011; that the last
time it had sold credit protection was in 2009; and
that as of 2012 the outstanding notional amount of
the credit protection it had purchased was zero. See
id. at Annex A.
942 See id. at 1–6.
943 World Bank Letter at 6, note 11.

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proposed in the Cross-Border Proposing
Release would trigger the regulatory
reporting requirement, should be
modified to exclude transactions with
FPSPIs.944
The Commission believes that a
security-based swap to which an FPSFI
is a counterparty (‘‘FPSFI trade’’) should
not, on that basis alone, be exempt from
regulatory reporting. By the same token,
however, the Commission also believes
that a security-based swap to which an
FPSFI is a counterparty—even if
headquartered in the United States—
should not, on that basis alone, be
subject to regulatory reporting. All
FPSFIs, even FPSFIs that are based in
the United States, are deemed non-U.S.
persons under the Commission’s Title
VII rules.945 As with any other securitybased swap transaction having a direct
counterparty that is a non-U.S. person,
a transaction involving an FPSFI as a
direct counterparty would be subject to
Regulation SBSR’s regulatory reporting
requirements only if it met one of the
conditions in Rule 908(a)(1). Thus, a
transaction between an FPSFI and a U.S.
person would be subject to regulatory
reporting.946 However, a transaction
between an FPSFI and a non-U.S.
person would be subject to regulatory
reporting only if the non-U.S. person is
a registered security-based swap dealer
or a registered major security-based
swap participant or is guaranteed by a
U.S. person, a registered security-based
swap dealer, or a registered major
security-based swap participant.947 As
noted above,948 the Commission has
declined to adopt the term ‘‘transaction
conducted within the United States,’’
which was proposed in the Cross-Border
Proposing Release. In the Conduct ReProposal, the Commission anticipates
soliciting additional comment on such
transactions as they relate to regulatory
reporting and public dissemination
under Regulation SBSR.
Regulatory reporting of FPSFI trades
involving, on the other side, a U.S.
person, a registered security-based swap
dealer, or a registered major securitybased swap participant will facilitate
944 See

Sullivan Letter at 18–19.
Rule 3a71–3(a)(4)(iii) under the Exchange
Act (specifically excluding from the term ‘‘U.S.
person’’ the International Monetary Fund, the
International Bank for Reconstruction and
Development, the Inter-American Development
Bank, the Asian Development Bank, the African
Development Bank, the United Nations, and their
agencies, affiliates, and pension plans, and any
other similar international organizations, their
agencies, affiliates, and pension plans).
946 See Rule 908(a)(1) (requiring regulatory
reporting of a security-based swap where there is a
direct or indirect counterparty that is a U.S. person
on either side of the transaction).
947 See Rule 901(a)(1)(i) and (ii).
948 See supra Section XV(C)(3)(iv).
945 See

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the Commission’s ability to carry out
our regulatory oversight responsibilities
with respect to registered entities, U.S.
persons, and the U.S. security-based
swap market more generally. The
Commission notes that this approach
was endorsed by the World Bank and
another commenter in response to the
original Regulation SBSR Proposing
Release.949
Finally, the Commission does not
believe that a sufficient basis exists to
support an exemption from public
dissemination for FPSFI trades. The
Commission is aware of no
characteristics of security-based swap
transactions executed by FPSFIs that
indicate that an exemption from the
public dissemination requirements of
Regulation SBSR would be appropriate.
No commenters suggested that FPSFIs
use security-based swaps differently
from other market participants or that
publicly disseminating FPSFI trades
would provide an inaccurate view of the
market. Moreover, based on the
comments received, it appears that that
FPSFI participation in the securitybased swap market—rather than the
swap market generally—is extremely
limited.950 Thus, if security-based swap
activity consists of such a small portion
of FPSFI activities, it is less apparent
that an exemption is warranted; the
harm that would result from
disseminating security-based swap
transactions—assuming such harm
exists—would, all other things being
equal, be less the fewer such
transactions there are. The Commission
notes, in any event, that Regulation
SBSR contains provisions relating to
public dissemination that are designed
to protect the identity of security-based
swap counterparties 951 and prohibit a
registered SDR (with respect to
uncleared security-based swaps) from
disclosing the business transactions and
market positions of any person.952 The
Commission also notes that, during the
interim phase of Regulation SBSR, no
transaction must be reported before 24
hours after execution. This approach is
designed to minimize any adverse
market impact of publicly disseminating
any security-based swap transactions,
when the Commission has not yet
949 See CEB Letter at 4; World Bank Letter I at 7
(stating that, although swaps involving FPSFIs as
counterparties generally should be exempt from the
definition of ‘‘swap,’’ they should be treated as
swaps solely for reporting purposes).
950 See BIS Letter at 3 (stating that the BIS
generally does not transact security-based swaps
such as credit default swaps or equity derivatives);
KfW Letter at Annex A; FMS Letter at 8.
951 See Rule 902(c)(1) (requiring a registered SDR
not to disseminate the identity of any counterparty
to a security-based swap).
952 See Rule 902(c)(2).

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proposed and adopted block trades
thresholds and the associated
dissemination delays for the benefit of
all counterparties, including FPSFIs.
Given these potential protections for all
security-based swap counterparties, not
just FPSFIs, the Commission does not at
this time see a basis to exempt FPSFI
trades from public dissemination.
B. Foreign Privacy Laws Versus Duty To
Report Counterparty IDs
Rule 901(d), as adopted, sets forth the
data elements that must be reported to
a registered SDR for regulatory
purposes. One such element is the
‘‘counterparty ID’’ of each counterparty,
which will enable the Commission to
determine every person who is a
counterparty, direct or indirect, to a
security-based swap. The Commission
believes that it could be necessary to
assess the positions and trading activity
of any counterparty in order to carry out
its regulatory duties for market
oversight.953 Since only one side of the
transaction is required to report, the
reporting side is required to provide the
counterparty ID of any counterparty on
the other side.954 Without this
requirement, the registered SDR would
not have a record of the identity of the
other side.
Some commenters cautioned that U.S.
persons might be restricted from
complying with such a requirement in
cases where a security-based swap is
953 The Commission and other relevant
authorities have a strong interest in being able to
monitor the risk exposures of U.S. persons,
particularly those involved in the security-based
swap market, as the failure or financial distress of
a U.S. person could impact other U.S. persons and
the U.S. economy as a whole. The Commission and
other relevant authorities also have an interest in
obtaining information about non-U.S.
counterparties that enter into security-based swaps
with U.S. persons, because the ability of such nonU.S. counterparties to perform their obligations
under those security-based swaps could impact the
financial soundness of U.S. persons. See, e.g., S.
Comm. on Banking, Hous., & Urban Affairs, The
Restoring American Financial Stability Act of 2010,
S. Rep. No. 111–176, at 32 (‘‘As a key element of
reducing systemic risk and protecting taxpayers in
the future, protections must include comprehensive
regulation and rules for how the OTC derivatives
market operates. Increasing the use of central
clearinghouses, exchanges, appropriate margining,
capital requirements, and reporting will provide
safeguards for American taxpayers and the financial
system as a whole’’) (emphasis added).
954 However, as described above in Section
II(C)(3)(b), the reporting side might not know the
counterparty ID of a counterparty by the time it
must report the transaction (e.g., if the trade is to
be allocated to a series of funds, and the fund
manager has not yet determined the allocation). In
such case, the reporting side would know the
identity of the execution agent acting for the funds
and thus would be required to report the execution
agent ID instead of the counterparty ID with the
initial transaction report.

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executed outside the United States.955
One of these commenters stated, for
example, that the London branch of a
U.S. person would need its
counterparty’s consent to identify that
party under U.K. law.956 The
commenter noted that, in this case, the
reporting party is located in a
jurisdiction where applicable local law
restricts the reporting party from
reporting the identity of a counterparty.
The same commenter added that, in a
similar transaction executed by a Paris
branch of a U.S. firm, French law
requires the branch to obtain the
consent of the counterparty every time
that it wants to report that
counterparty’s identity.957 Another of
these commenters urged the
Commission to ‘‘consider carefully and
provide for consistency with, foreign
privacy laws, some of which carry
criminal penalties for wrongful
disclosure of information,’’ 958 but did
not provide further detail. A third
commenter argued, without further
explanation, that allowing substituted
compliance when both parties are not
domiciled in the United States could
avoid problems with foreign privacy
laws conflicting with U.S. reporting
requirements.959
In the Cross-Border Proposing
Release, the Commission stated that it
sought to understand more precisely
if—and, if so, how—requiring a party to
report the transaction pursuant to
Regulation SBSR (including disclosure
of the other side’s identity to a
registered SDR) might cause it to violate
local law in a foreign jurisdiction where
it operates. Before determining whether
any exception to reporting the
counterparty’s counterparty ID might be
necessary or appropriate, the
955 See DTCC Letter II at 21; ISDA/SIFMA Letter
I at 20. In addition, two comments on the
Commission’s interim final temporary rule on the
reporting of security-based swaps entered into
before July 21, 2010, Securities Exchange Act
Release No. 63094 (October 13, 2010), 75 FR 64643
(October 20, 2010), made similar points. See
Deutsche Bank Letter at 5 (‘‘In some cases,
dissemination or disclosure of [counterparty]
information could lead to severe civil or criminal
penalties for those required to submit information
to an SDR pursuant to the Interim Final Rules.
These concerns are particularly pronounced
because of the expectation that Reportable Swap
data will be reported, on a counterparty identifying
basis, to SDRs, which will be non-governmental
entities, and not directly to the Commissions’’);
ISDA I at 6 (‘‘In many cases, counterparties to crossborder security-based swap transactions will face
significant legal and reputational obstacles to the
reporting of such information. Indeed, disclosure of
such information may lead to civil penalties in
some jurisdictions and even criminal sanctions in
other jurisdictions’’).
956 See DTCC Letter II at 21.
957 See id.
958 ISDA/SIFMA Letter I at 20.
959 See Cleary II at 17–18.

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
Commission sought additional
information about any such foreign
privacy laws and asked a number of
questions about this issue.960
In response to the questions, one
commenter listed specific provisions in
foreign laws that would prevent the
reporting side from identifying its
foreign counterparty.961 Another
commenter noted that reporting parties
could face issues with identifying the
counterparty if ‘‘either (i) consent is
required for disclosing trade data to the
Commission and such consent has not
or cannot be obtained or (ii) a
counterparty consent is not sufficient to
overcome the data privacy
restrictions.’’ 962 This commenter
requested that the Commission
‘‘recognize in [Regulation SBSR] the
necessity for reporting parties to redact/
mask counterparty-identifying
information’’ if they reasonably believe
that disclosure of such information may
violate the laws of another
jurisdiction.963 Commenters did not
suggest any rule text for a possible
exemption from proposed Rule
901(d)(1)(i) or discuss the effects of
granting substituted compliance on
avoiding foreign legal barriers to
reporting.
Based on the comment received as
well as other sources consulted,964 the
Commission understands that some
laws and regulations exist in foreign
jurisdictions that may limit or prevent
reporting of counterparty ID to an SECregistered SDR pursuant to Regulation
SBSR. These types of restrictions may
include privacy laws, which generally
restrict disclosure of certain identifying
information about a natural person or
entity,965 and so-called ‘‘blocking
960 See

78 FR 31073.
IIB Letter at 19, note 45.
962 ISDA IV at 19.
963 Id.
964 See letter from Robert Pickel, Chief Executive
Officer, ISDA, to David A. Stawick, Secretary,
CFTC, dated August 27, 2012 (‘‘ISDA CFTC
Letter’’), passim, available at www2.isda.org/
attachment/NjY2NQ==/Comment%20Letter%20%20CFTC%20Reporting%20O
bligations%20Cross%20Border%20FINAL
%20082712.pdf (last visited January 13, 2015)
(discussing a survey of privacy laws in a number
of foreign jurisdictions); FSB OTC Derivatives
Working Group (ODWG), OTC Derivatives Market
Reforms: Fifth Progress Report on Implementation
(April 15, 2013); Seventh Progress Report on
Implementation (April 8, 2014); OTC Derivatives
Regulators Group (ODRG), Report on Agreed
Understandings to Resolving Cross-Border
Conflicts, Inconsistencies, Gaps And Duplicative
Requirements (August 2013); ODRG, Report on
Cross-Border Implementation Issues (September
2013).
965 The Commission understands that the privacy
law limitations on disclosure of certain identifying
information related to natural persons or entities
can usually (but not always) be overcome by
counterparty consent to such disclosure. Even

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961 See

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statutes’’ (including secrecy laws) which
typically prevent the disclosure of
information relating to third parties
and/or foreign governments.966 Several
jurisdictions with possible legal and
regulatory barriers also have reported
that they are in the process of modifying
their legislation and regulations to
remove such barriers.967 Therefore, it is
difficult for the Commission to assess
the extent to which legal and regulatory
barriers will continue to exist that
would hinder the ability of parties to
meet the reporting requirement of
Regulation SBSR.
The Commission recognizes that
security-based swap counterparties that
will incur the duty to report preenactment and transactional securitybased swaps pursuant to Rule 901(i)
may have entered into some of those
transactions with counterparties in
jurisdictions that have privacy laws or
blocking statutes that may prohibit these
reporting sides from disclosing the
identities of these foreign
counterparties. At the time that these
transactions were executed, there was
no regulatory requirement to report the
identity of the counterparty under the
United States securities laws. Therefore,
the Commission believes that it would
be inappropriate to compel a reporting
side to disclose the identity of a
counterparty to a historical securitybased swap now, if such disclosure
would violate applicable foreign law
and the reporting side could not
reasonably have foreseen a future
conflict with applicable U.S. law. The
Commission will consider requests from
reporting sides for exemptions, pursuant
to Section 36 of the Exchange Act,968
from the requirement to report
counterparty IDs of historical securitybased swaps executed up to the last day
before the effective date of these final
rules. Any such request should be filed
pursuant to Rule 0–12 under the
Exchange Act 969 and include: (1) The
name of the jurisdiction or jurisdictions
which the requester believes prohibit it
from being able to carry out the duty
under Rule 901(i) of reporting the
identity of a counterparty; and (2) a
where express consent resolves any outstanding
privacy law issues, obtaining consent from the
necessary counterparties may require market
education and additional time to implement. See
ISDA CFTC Letter at 8.
966 The Commission understands that blocking
statue barriers to reporting normally cannot be
waived by the person or entity that is the subject
of the information, though the person or entity may,
in some circumstances, apply for an exemption to
report certain information. See id.
967 See ODWG Seventh Progress Report, supra
note 965, at 10.
968 15 U.S.C. 78mm.
969 17 CFR 240.0–12.

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14667

discussion of the laws of the jurisdiction
or jurisdictions that prohibit such
reporting, and why compliance with the
duty to report the counterparty ID under
Rule 901(i) is limited or prohibited.970
Upon the effective date of these final
rules, every security-based swap
counterparty that is the reporting side
for one or more security-based swaps
will eventually have to report, among
other things, the identity of each of its
counterparties.971
C. Antifraud Authority
The provisions of Regulation SBSR
and the interpretive guidance discussed
above relate solely to the applicability of
the security-based swap regulatory
reporting and public dissemination
requirements under Title VII. Regulation
SBSR does not limit the cross-border
reach of the antifraud provisions or
other provisions of the federal securities
laws that are not addressed by this
release.972
In Section 929P(b) of the Dodd-Frank
Act,973 Congress added provisions to the
federal securities laws confirming the
Commission’s broad cross-border
antifraud authority.
In the Cross-Border Adopting Release,
the Commission adopted Rule 250.1
970 For example, to support an exemption request,
the requester should consider discussing whether
obtaining waivers from its counterparties is an
acceptable practice under the law of the foreign
jurisdiction.
971 The rules adopted in this release will be
effective 60 days after publication in the Federal
Register. For Rules 900, 907, and 909, the
compliance date is the same as the effective date.
The Commission is proposing a new compliance
schedule for Rules 901, 902, 903, 904, 905, 906, and
908 of Regulation SBSR. See Regulation SBSR
Proposed Amendments Release, Section VII. Market
participants will not have to comply with the
requirements in those rules—such as the
requirement in Rule 901(i) to report historical
security-based swaps—until certain dates that will
be specified when the Commission takes final
action on the proposed compliance schedule.
972 For example, security-based swaps, as
securities, are subject to the provisions of the
Securities Act and the rules and regulations
thereunder applicable to securities. The Securities
Act requires that any offer and sale of a security
must either be registered under the Securities Act,
see Section 5 of the Securities Act, 15 U.S.C. 77e,
or made pursuant to an exemption from
registration, see, e.g., Sections 3 and 4 of the
Securities Act, 15 U.S.C. 77c and 77d. In addition,
the Securities Act requires that any offer to sell,
offer to buy or purchase, or sale of a security-based
swap to any person who is not an eligible contract
participant must be registered under the Securities
Act. See Section 5(e) of the Securities Act, 15 U.S.C.
77e(e). Because of the statutory language of Section
5(e), exemptions from this requirement in Sections
3 and 4 of the Securities Act are not available.
973 The antifraud provisions of the securities laws
include Section 17(a) of the Securities Act, 15
U.S.C. 77q(a); Sections 9, 10(b), 14(e), and 15(c)(1)–
(2) and (7) of the Exchange Act, 15 U.S.C. 78i, 78j,
78n, 78o(c)(1)–(2); Section 206 of the Investment
Advisers Act of 1940, 15 U.S.C. 80b–6; and any rule
or regulation of the Commission promulgated under
these statutory provisions.

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations

under the Exchange Act,974 which sets
forth the Commission’s interpretation of
its cross-border authority.975 Rule
250.1(a) provides that the antifraud
provisions of the securities laws apply
to: ‘‘(1) Conduct within the United
States that constitutes significant steps
in furtherance of the violation; or (2)
Conduct occurring outside the United
States that has a foreseeable substantial
effect within the United States.’’
Nothing in this Regulation SBSR limits
the broad cross-border application of the
anti-fraud provisions as set forth in Rule
250.1.
D. International Coordination Generally
Several commenters urged the
Commission to coordinate their efforts
to implement Title VII requirements
with those of foreign regulators who
also are imposing new requirements on
the OTC derivatives markets.976 For
example, one commenter urged the SEC
and CFTC ‘‘to harmonize their real-time
reporting regimes with each other and
with those of comparable international
regulators.’’ 977 Similarly, a second
commenter stated that the SEC and
CFTC ‘‘should work with foreign
regulators that plan to create their own
real-time reporting regimes to
harmonize their requirements regarding
the timing of dissemination and the data
to be disseminated.’’ 978 The same
commenter urged the SEC and CFTC ‘‘to
continue their efforts in establishing a
globally harmonized approach to
creating [LEIs].’’ 979 Other commenters
believed generally that global
coordination is necessary to develop
LEIs and other identification codes.980
The Commission agrees broadly with
these commenters that international
coordination will be helpful in
developing robust and efficient regimes
for regulating cross-border securitybased swap activity and overseeing the
security-based swap market. The
Commission is cognizant of its duty
974 17

CFR 250.1.
Cross-Border Adopting Release, 79 FR

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975 See

47360.
976 See, e.g., Cleary III at 36; Markit III at 2;
SIFMA I at 5–6; WMBAA III at 3 (‘‘U.S. regulations
also need to be in harmony with regulations of
foreign jurisdictions’’); NGFP Letter at 1–2; AFGI
Letter at 1 (urging the Commission to ensure the
consistent regulation of financial guaranty insurers);
CDEU Letter at 2; PensionsEurope Letter at 1–2
(urging the Commission to avoid conflicts with
European regulatory requirements); Barnard II at 1–
2; Six Associations Letter at 1–2 (expressing general
support for coordination among regulators with
respect to the regulation of swaps and securitybased swaps); CCMR II, passim.
977 SIFMA I at 5–6.
978 Markit III at 2.
979 Id. at 4–5.
980 See Benchmark at 1; Bloomberg Letter at 1;
DTCC V at 14.

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under Section 752(a) of the Dodd-Frank
Act 981 and remains committed to
engaging in bilateral and multilateral
discussions with foreign regulatory
authorities to carry out this goal. The
Commission staff has consulted and
coordinated with the CFTC, prudential
regulators,982 and foreign regulatory
authorities consistent with the
consultation provisions of the DoddFrank Act,983 and more generally as part
of its domestic and international
coordination efforts. The Commission
staff has participated in numerous
bilateral and multilateral discussions
with foreign regulatory authorities
addressing the regulation of OTC
derivatives.984 Through these
discussions and the Commission’s
participation in various international
task forces and working groups, it has
gathered information about foreign
regulatory reform efforts and discussed
the possibility of conflicts and gaps, as
well as inconsistencies and
duplications, between U.S. and foreign
981 15 U.S.C. 8325 (‘‘In order to promote effective
and consistent global regulation of swaps and
security-based swaps, the Commodity Futures
Trading Commission, the Securities and Exchange
Commission, and the prudential regulators . . . as
appropriate, shall consult and coordinate with
foreign regulatory authorities on the establishment
of consistent international standards with respect to
the regulation (including fees) of swaps’’).
982 The term ‘‘prudential regulator’’ is defined in
Section 1a(39) of the CEA, 7 U.S.C. 1a(39), and that
definition is incorporated by reference in Section
3(a)(74) of the Exchange Act, 15 U.S.C. 78c(a)(74).
983 Section 712(a)(2) of the Dodd-Frank Act
provides in part that the Commission shall ‘‘consult
and coordinate to the extent possible with the
Commodity Futures Trading Commission and the
prudential regulators for the purposes of assuring
regulatory consistency and comparability, to the
extent possible.’’
984 Senior representatives of OTC derivatives
market regulators from G20 jurisdictions have met
on a number of occasions to discuss international
coordination of OTC derivatives regulations,
including as part of the OTC Derivatives Regulators
Group. See, e.g., Report of the OTC Derivatives
Regulators Group on Cross-Border Implementation
Issues (March 2014), available at https://
www.g20.org/sites/default/files/g20_resources/
library/Report%20of%20the%20OTC%20
Derivatives%20Regulators%20Group%20on%20
Cross-Border%20Implementation%20Issues.pdf;
Joint Press Statement of Leaders on Operating
Principles and Areas of Exploration in the
Regulation of the Cross-Border OTC Derivatives
Market (December 4, 2012), available at http://
www.sec.gov/news/press/2012/2012-251.htm; Joint
Statement on Regulation of OTC Derivatives
Markets (May 7, 2012), available at: http://
www.sec.gov/news/press/2012/2012-85.htm; Joint
Statement on Regulation of OTC Derivatives
Markets (December 9, 2011), available at: http://
www.sec.gov/news/press/2011/2011-260.htm, each
last visited September 22, 2014. The Commission
participates in the FSB’s Working Group on OTC
Derivatives Regulation (‘‘ODWG’’), both on its own
behalf and as the representative of the International
Organization of Securities Commissions (‘‘IOSCO’’),
which is co-chair of the ODWG. The Commission
also serves as one of the co-chairs of the IOSCO
Task Force on OTC Derivatives Regulation.

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regulatory regimes. The Commission has
taken and will continue to take these
discussions into consideration in
developing rules, forms, and
interpretations for implementing Title
VII of the Dodd-Frank Act.
XVII. Rule 909—SIP Registration
Section 3(a)(22)(A) of the Exchange
Act 985 defines a SIP as ‘‘any person
engaged in the business of (i) collecting,
processing, or preparing for distribution
or publication, or assisting, participating
in, or coordinating the distribution or
publication of, information with respect
to transactions in or quotations for any
security (other than an exempted
security) or (ii) distributing or
publishing (whether by means of a
ticker tape, a communications network,
a terminal display device, or otherwise)
on a current and continuing basis,
information with respect to such
transactions or quotations.’’ Securitybased swaps are securities under the
Exchange Act.986 Because Regulation
SBSR requires registered SDRs to collect
security-based swap transaction reports
from participants and to distribute data
from such reports, registered SDRs will
be SIPs for purposes of the Exchange
Act.
Section 11A(c)(1) of the Exchange
Act 987 provides that the Commission
may prescribe rules requiring SIPs to,
among other things, assure ‘‘the fairness
and usefulness of the form and
content’’ 988 of the information that they
disseminate, and to assure that ‘‘all
other persons may obtain on terms
which are not unreasonably
discriminatory’’ the transaction
information published or distributed by
SIPs.989 Section 11A(c)(1) applies
regardless of whether a SIP is registered
with the Commission as such.
The provisions of Section 11A(b)(5)
and11A(b)(6) of the Exchange Act,
however, apply only to registered SIPs.
Requiring a registered SDR to register
with the Commission as a SIP would
subject that entity to Section 11A(b)(5)
of the Exchange Act,990 which requires
a registered SIP to notify the
Commission whenever it prohibits or
limits any person’s access to its services.
Upon its own motion or upon
application by any aggrieved person, the
Commission could review the registered
SIP’s action.991 If the Commission finds
that the person has been discriminated
985 15

U.S.C. 78c(a)(22)(A).
15 U.S.C. 78c(a)(10).
987 15 U.S.C. 78k–1(c)(1).
988 15 U.S.C. 78k–1(c)(1)(B).
989 15 U.S.C. 78k–1(c)(1)(D).
990 15 U.S.C. 78k–1(b)(5).
991 See 15 U.S.C. 78k–1(b)(5)(A)
986 See

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against unfairly, it could require the SIP
to provide access to that person.992
Section 11A(b)(6) of the Exchange Act
also authorizes the Commission to take
certain regulatory action as may be
necessary or appropriate against a
registered SIP.993
Section 11A(b)(1) of the Exchange
Act 994 provides that a SIP not acting as
the ‘‘exclusive processor’’ 995 of any
information with respect to quotations
for or transactions in securities is
exempt from the requirement to register
with the Commission as a SIP unless the
Commission, by rule or order,
determines that the registration of such
SIP ‘‘is necessary or appropriate in the
public interest, for the protection of
investors, or for the achievement of the
purposes of [Section 11A].’’ An SDR
does not engage on an exclusive basis
on behalf of any national securities
exchange or registered securities
association in collecting, processing, or
preparing for distribution or publication
any information with respect to
transactions or quotations in securities;
therefore, an SDR does not fall under
the statutory definition of ‘‘exclusive
processor.’’
To subject an SDR to the requirements
of Sections 11A(b)(5) and 11A(b)(6), the
Commission would need, by rule or
order, to make the determination under
Section 11A(b)(1) noted above.
Accordingly, the Commission proposed
Rule 909 to require a registered SDR
also to register with the Commission as
a SIP on existing Form SIP. The
Commission requested comment on this
proposed requirement, and whether it
should combine Form SIP and Form
992 See

15 U.S.C. 78k–1(b)(5)(B).
15 U.S.C. 78k–1(b)(6) (providing that the
Commission, by order, may censure or place
limitations upon the activities, functions, or
operations of any registered SIP or suspend for a
period not exceeding 12 months or revoke the
registration of the SIP, if the Commission finds, on
the record after notice and opportunity for hearing,
that such censure, placing of limitations,
suspension, or revocation is in the public interest,
necessary or appropriate for the protection of
investors or to assure the prompt, accurate, or
reliable performance of the functions of such SIP,
and that such SIP has violated or is unable to
comply with any provision of this title or the rules
or regulations thereunder).
994 15 U.S.C. 78k–1(b)(1).
995 15 U.S.C. 78c(a)(22)(B) (defining ‘‘exclusive
processor’’ as any securities information processor
or self-regulatory organization which, directly or
indirectly, engages on an exclusive basis on behalf
of any national securities exchange or registered
securities association, or any national securities
exchange or registered securities association which
engages on an exclusive basis on its own behalf, in
collecting, processing, or preparing for distribution
or publication any information with respect to (1)
transactions or quotations on or effected or made by
means of any facility of such exchange or (2)
quotations distributed or published by means of any
electronic system operated or controlled by such
association).

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SDR to create a joint registration form.
In the Cross-Border Proposing Release,
the Commission re-proposed Rule 909
without revision.
The Commission believes that
requiring registered SDRs to register as
SIPs will help to ensure fair access to
important security-based swap
transaction data reported to and
publicly disseminated by them. The
Commission believes that the additional
authority over a registered SDR/SIP
provided by Sections 11A(b)(5) and
11A(b)(6) of the Exchange Act will
ensure that these entities offer securitybased swap market data on terms that
are fair and reasonable and not
unreasonably discriminatory. Therefore,
the Commission believes that registering
SDRs as SIPs is necessary or appropriate
in the public interest, for the protection
of investors, or for the achievement of
the purposes of Section 11A of the
Exchange Act. Section 11A of the
Exchange Act establishes broad goals for
the development of the securities
markets and charges the Commission
with establishing rules and policies that
are designed to further these objectives.
Section 11A(a) states, among other
things, that it is in the public interest
and appropriate for the protection of
investors and the maintenance of fair
and orderly markets to assure
economically efficient execution of
securities transactions; the availability
to brokers, dealers, and investors of
information with respect to quotations
for and transactions in securities; and an
opportunity for investors’ orders to be
executed without the participation of a
dealer. Requiring registered SDRs also to
register with the Commission as SIPs is
designed to help achieve these
objectives in the still-developing
security-based swap market.
One commenter stated that, because
of the duplicative nature of the
information required by Form SDR and
Form SIP, the Commission should
combine the two forms so that an SDR
could register as both an SDR and a SIP
using only one form.996 As an
alternative, the commenter suggested
that an SDR be permitted to use either
Form SDR or Form SIP to register as
both an SDR and a SIP.997
Rule 909, as re-proposed, stated that
‘‘[a] registered security-based swap data
repository shall also register with the
Commission as a securities information
processor on Form SIP.’’ For reasons
discussed in the SDR Adopting Release,
the Commission agrees that Form SDR
should be revised to accommodate SIP
996 See
997 See

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id.

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14669

registration.998 Accordingly, Rule 909,
as adopted, eliminates the reference to
Form SIP and states instead that ‘‘[a]
registered security-based swap data
repository shall also register with the
Commission as a securities information
processor on Form SDR.’’ There are no
filing requirements in addition to the
Form SDR for a person to register as
both a SIP and an SDR.
XVIII. Constitutional Questions About
Reporting and Public Dissemination
One commenter argued that the
reporting and dissemination
requirements of Regulation SBSR could
violate the First and Fifth Amendments
to the Constitution by compelling ‘‘noncommercial speech’’ without satisfying
a strict scrutiny standard and by
‘‘taking’’ transaction and/or holding
data without just compensation.999
As a preliminary matter, the
Commission presumes ‘‘that Congress
acted constitutionally when it passed
the statute.’’ 1000 Furthermore, the
Commission has carefully considered
the commenter’s arguments and
pertinent judicial precedent, and
believes that the commenter does not
raise any issue that would preclude the
Commission’s adoption of Regulation
SBSR’s regulatory reporting and public
dissemination requirements
substantially as proposed and reproposed. The Commission does not
believe that the public dissemination
requirements of Regulation SBSR violate
the First Amendment. Under the federal
securities laws, the Commission
imposes a number of requirements that
compel the provision of information to
the Commission itself or to the public.
The Supreme Court has suggested that
only limited scrutiny under the First
Amendment applies to securities
regulation, and that the government
permissibly regulates ‘‘public
expression by issuers of and dealers in
998 See SDR Adopting Release, Section
VI(A)(1)(c). Form SDR is being adopted by the
Commission as part of the SDR Adopting Release.
Form SDR will be used by SIPs that also register
as SDRs. Form SIP will continue to be used by
applicants for registration as SIPs not seeking to
become dually registered as an SDR and a SIP, and
for amendments by registered SIPs that are not
dually registered as an SDR and a SIP.
999 See Viola Letter at 3–4.
1000 See Nebraska v. EPA, 331 F.3d 995, 997 (D.C.
Cir. 2003) (‘‘Agencies do not ordinarily have
jurisdiction to pass on the constitutionality of
federal statutes.’’) (citing Thunder Basin Coal Co. v.
Reich, 510 U.S. 200, 215 (1994)); Todd v. SEC, 137
F.2d 475, 478 (6th Cir. 1943) (same); William J.
Haberman, 53 SEC 1024, 1029 note 14 (1998)
(‘‘[W]e have no power to invalidate the very statutes
that Congress has directed us to enforce.’’) (citing
Milton J. Wallace, 45 SEC 694, 697 (1975); Walston
& Co., 5 SEC 112, 113 (1939)).

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securities.’’ 1001 And in other contexts,
the required disclosure of purely factual
and uncontroversial information has
also been subjected to only limited First
Amendment scrutiny.1002
Nor does the Commission believe that
public dissemination requirements of
Regulation SBSR violate the Fifth
Amendment. To constitute a regulatory
taking, the government action must (1)
affect a property interest, and (2) go ‘‘too
far’’ in so doing.1003 The Supreme Court
has identified several factors to be
considered in determining whether the
government action goes too far, such as
‘‘the character of the governmental
action, its economic impact, and its
interference with reasonable
investment-backed expectations.’’ 1004
The requirements at issue here directly
advance the government’s legitimate
interest in enhancing price discovery
by, among other things, reducing
information asymmetries, enhancing
transparency, and improving confidence
in the market. The character of the
government action, therefore, weighs
against Rule 902(a) being a taking. The
Commission further believes that the
regulatory reporting and public
dissemination requirements of
Regulation SBSR do not impose an
unconstitutional economic impact 1005
or interfere with reasonable investmentbacked expectations. Regulation SBSR
does not interfere with market
participants’ reasonable investmentbacked expectations because the
financial markets are an industry with a
long tradition of regulation focused on
promoting disclosure of information to
investors. Businesses that operate in an
industry with a history of regulation
have no reasonable expectation that
regulation will not be strengthened to
1001 See, e.g., Paris Adult Theatre I v. Slaton, 413
U.S. 49, 64 (1973) (stating also that the First
Amendment does not ‘‘preclude[ ] States from
having ‘blue sky’ laws to regulate what sellers of
securities may write or publish . . . ’’). See also
SEC v. Wall St. Pub. Inst., Inc., 851 F.2d 365, 373
(D.C. Cir. 1988) (‘‘Speech relating to the purchase
and sale of securities . . . forms a distinct category
of communications’’ in which ‘‘the government’s
power to regulate [speech about securities] is at
least as broad as with respect to the general rubric
of commercial speech’’).
1002 See, e.g., Rumsfeld v. Forum for Academic
and Institutional Rights, Inc., 547 U.S. 47, 61–62
(2006); Am. Meat Inst. v. U.S. Dep’t of Agric., 760
F.3d 18, 21–22 (D.C. Cir. 2014); N.Y. State Rest.
Ass’n v. N.Y. City Bd. of Health, 556 F.3d 114, 132
(2d Cir. 2009) (citing Nat’l Elec. Mfrs. Ass’n v.
Sorrell, 272 F.3d 104, 113–115 (2d Cir. 2001)).
1003 See Ruckleshaus v. Monsanto Co., 467 U.S.
986, 1000–01, 1005 (1984).
1004 Id. at 1005 (quoting PruneYard Shopping
Center v. Robins, 447 U.S. 74, 83 (1980)).
1005 See District Intown Properties Ltd. P’ship v.
District of Columbia, 198 F.3d 874, 883 (D.C. Cir.
1999) (requiring a Fifth Amendment claim to ‘‘put
forth striking evidence of economic effects’’).

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achieve established legislative ends.1006
Although security-based swaps did not
become securities and thus did not
become fully subject to the regulatory
regime for securities regulation until
after passage of the Dodd-Frank Act, the
Commission believes that the economic
similarity of markets in securities and
security-based swaps strongly suggests
that market participants could have
anticipated regulation at a future date.
Furthermore, the Commission believes
that the commenter has provided no
argument to support the proposition
that the mere fact that security-based
swaps were not fully subject to the
Exchange Act until passage of the DoddFrank Act necessarily implies that it
was unconstitutional for Congress to
amend the Exchange Act to cover these
securities.
XIX. What happens if there are
multiple SDRs?
The provisions of Title VII that
amended the Exchange Act to require
the registration of security-based swap
data repositories do not require that
there be only a single SDR; in fact, these
provisions contemplate that there could
be multiple SDRs registered with the
Commission.1007 Therefore, no
provision of Regulation SBSR, as
adopted, is designed to require or
promote the use of only a single SDR.
The Commission believes, however, that
it must consider how the Title VII goals
of monitoring and reducing systemic
risk and promoting transparency in the
security-based swap market will be
achieved if there are multiple registered
SDRs.
One commenter believed that a
diverse range of options for reporting
security-based swap data would benefit
the market and market participants.1008
However, other commenters raised
various concerns with having multiple
registered SDRs. Two commenters
recommended that the Commission
designate a single registered SDR per
1006 District Intown Properties Ltd. P’ship v.
District of Columbia, 198 F.3d 874, 884 (D.C. Cir.
1999); see also Ruckelshaus v. Monsanto Co., 467
U.S. 986, 1008–09 (1984) (finding no reasonable
investment-backed expectations because ‘‘the
possibility was substantial’’ in an industry long
‘‘the focus of great public concern and significant
government regulation’’ that Congress ‘‘would find
disclosure to be in the public interest’’); Maine
Educ. Ass’n Benefits Trust v. Cioppa, 695 F.3d 154–
156 (1st Cir. 2012) (finding no reasonable
investment-backed expectations because the Maine
legislature’s ‘‘continued expansion of this right of
access’’ to information about insurance plans to a
type of plan not covered by previous statutes
providing a right of access was ‘‘reasonably
foreseeable’’ in light of ‘‘the historically heavy and
continuous regulation of insurance in Maine’’).
1007 See Section 13(n) of the Exchange Act, 15
U.S.C. 78m.
1008 See MFA Letter at 6.

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asset class.1009 Similarly, a third
commenter stated that ‘‘the Commission
should consider designating one
[registered SDR] per SBS asset class to
act as the industry consolidator of SBS
data for the Commission and for the
purpose of public reporting.’’ 1010 This
commenter also recommended that all
life cycle events be reported to the same
registered SDR that received the original
transaction report and that registered
SDRs be required to accept all securitybased swaps in an asset class to further
reduce fragmentation of data across
multiple SDRs.
Another commenter warned of the
risks of security-based swaps being
reported to multiple SDRs, stating that,
‘‘[u]nless data fragmentation can be
avoided, the primary lessons of the 2008
financial crisis, as related to OTC
derivatives trading, will not have been
realistically or adequately taken into
account.’’ 1011 This commenter noted
the ‘‘large one-way trades put on by AIG
in mortgage related credit derivatives’’
and stated that ‘‘if AIG had chosen to try
to hide [its] trades by reporting to
multiple repositories, these systemically
risky positions would not have been
discovered absent a ‘super repository’
that aggregated the trade level data of
the various reporting repositories in a
manner as to detect the large one-way
aggregate positions.’’ 1012 The same
commenter stated in a subsequent
comment letter that, if there are
multiple registered SDRs, the
‘‘Commission should take such action as
is necessary to eliminate any
overstatements of open interest or other
inaccuracies that may result from
having broader market data published
from separate SDRs.’’ 1013 One option
suggested by this commenter was
utilizing Section 13(n)(5)(D)(i) of the
Exchange Act,1014 which requires an
1009 See ISDA I at 4; ISDA/SIFMA I at 9, note 12
(noting that, with a single SDR, there would be no
redundancy of platforms, no need for additional
levels of data aggregation for each asset class,
reduced risk of errors, and greater transparency).
1010 MarkitSERV I at 8. The commenter also urged
the Commission to ‘‘ensure that there is consistency
between the fields that different SBS SDRs in the
same asset class would collect and report in order
to lay the foundation for the data to be
consolidatable.’’ Id. See also DTCC IX at 3. See
supra Section II(B)(2) for discussion of the
Commission’s approach to ensure consistency.
Another commenter also noted that ‘‘if there is
more than one registered SDR for an asset class, it
may prove difficult for the Commission to ensure
that all registered SDRs calculate the same block
thresholds for the same SBS instruments.’’ WMBAA
II at 4. As discussed in more detail above in Section
VII, the Commission is not yet adopting or
proposing block trade rules.
1011 See DTCC II at 15.
1012 Id.
1013 DTCC IV at 5.
1014 15 U.S.C. 78m(n)(5)(D)(i).

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SDR to ‘‘provide direct electronic access
to the Commission (or any designee of
the Commission, including another
registered entity).’’ The commenter
explained that, using this authority,
‘‘the Commission could designate one
[SDR] as the recipient of information
from other [SDRs] in order to have
consolidation and direct electronic
access for the Commission.’’ 1015
Four commenters urged the
Commission to mandate the
consolidation of publicly disseminated
security-based swap data.1016 One of
these commenters stated that ‘‘in order
to most effectively increase
transparency in the swaps markets, it
will be important for the real-time
swaps data to be available on a
consolidated basis.’’ 1017 The second
commenter believed that a central
consolidator or the Commission must
have the authority to compel all
participants, including registered SDRs,
to submit data to assure that there is a
single, comprehensive, and accurate
source for security-based swap data.1018
A third commenter, citing the regime for
producing consolidated public
information in the U.S. equity markets,
stated that ‘‘there is no obvious reason
why a similar regime could not succeed
for security-based swaps.’’ 1019 In
addition, this commenter believed that
‘‘the ideal approach would be
collaboration by the SEC and the CFTC
to create (or facilitate the direct creation
of) a single, central system that performs
these data dissemination
functions.’’ 1020 The fourth commenter
cautioned that the failure to make realtime data available on a consolidated
basis would especially disadvantage less
frequent and smaller users of the
transaction data, who would not be able
to obtain an accurate view of market
activity because of the cost and
complexity of accessing multiple data
sources.1021
The Commission shares the concerns
of these commenters. The regulatory
goals underpinning the Title VII

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1015 DTCC

I at 7.
1016 See Barnard I at 3; Better Markets II at 6;
FINRA Letter at 5; MarkitSERV I at 7.
1017 MarkitSERV I at 7.
1018 See FINRA Letter at 5 (also noting that
mandating the consolidation of security-based swap
transaction data would help to assure uniformity,
thereby promoting market integrity and investor
protection).
1019 Better Markets II at 6. However, the
commenter cautioned that the security-based swap
data dissemination regime must avoid the direct
data feeds that have developed in the equity
markets because these data feeds allow ‘‘highfrequency traders to bypass the aggregation and
dissemination procedure, at the expense of retail
and other investors.’’ Id.
1020 Id. at 4.
1021 See MarkitSERV I at 7–8.

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requirements for regulatory reporting
and public dissemination of securitybased swap transaction information
could be frustrated if the information
cannot be easily aggregated and
normalized. The Commission notes,
however, that the statutory provisions
allow for the possibility of multiple
SDRs.1022 The Commission therefore
seeks to develop a regulatory framework
that would accommodate multiple
SDRs, but mitigates the undesirable
fragmentation of regulatory data that
would come from incompatible data
standards.
At the same time, the Commission
generally agrees with the commenter
who stated that the ‘‘Commission
should take such action as is necessary
to eliminate any overstatements of open
interest or other inaccuracies that may
result from having broader market data
published from separate SDRs.’’ 1023 The
requirement that all life cycle events
must be reported to the same registered
SDR that received the report of the
initial transaction is designed to
minimize some potential problems of
having multiple registered SDRs, such
as overstating open interest. Although
the reporting side can choose the
registered SDR to which to report the
initial transaction, all subsequent life
cycle events must then be reported to
that registered SDR. The Commission
believes that this requirement will
facilitate its ability to track securitybased swaps over their duration and
minimize instances of double counting
the same economic activity, which
could occur if the records of life cycle
event reports did not indicate their
relationship to earlier occurring
transactions.1024
Similarly, the Commission is adopting
Rules 902(c)(4) and 907(a)(4) to address
potential issues arising from nonmandatory reports (which could include
duplicate reports of transactions
reported to a second SDR when a
mandatory report has already been
1022 In the Regulation SBSR Proposing Release,
the Commission stated that requiring registered
SDRs to be the registered entities with the duty to
disseminate security-based swap transaction
information—rather than, for example, SB SEFs,
clearing agencies, or the counterparties
themselves—would produce some degree of
mandated consolidation of that information and
help to provide consistency in the form of the
reported information. See 75 FR 75227. However,
the Commission acknowledges that this approach
cannot guarantee consolidation of the published
data because of the possibility of multiple registered
SDRs.
1023 DTCC IV at 5.
1024 Thus, the Commission concurs with the
commenter who recommended that all life cycle
events be reported to the same registered SDR that
received the original transaction report. See
MarkitSERV I at 8.

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14671

provided to a first SDR). Rule 902(c)(4)
prohibits a registered SDR from publicly
disseminating a report of a nonmandatory transaction; this requirement
is designed to prevent market observers
from over-estimating the true amount of
market activity, which could occur if
the same transaction was disseminated
by two SDRs. Rule 907(a)(4) requires
registered SDRs to establish and
maintain policies and procedures,
among other things, for how
participants must identify nonmandatory reports to the SDR, so that
the SDR will be able to avoid publicly
disseminating them.
The Commission believes that
problems associated with the existence
of multiple registered SDRs can be
minimized to the extent that such SDRs
refer to the same persons or things in
the same manner. Thus, final Rule 903
provides that, if an IRSS that meets
certain criteria is recognized by the
Commission and has assigned a UIC to
a person, unit of a person, or product,
all registered SDRs must use that UIC in
carrying out their responsibilities under
Regulation SBSR. As discussed in
Section X(B)(2), supra, the Commission
has recognized the GLEIS—through
which LEIs can be obtained—as an IRSS
that meets the criteria of Rule 903.
Therefore, if an entity has an LEI issued
by or through the GLEIS, that LEI must
be used for all purposes under
Regulation SBSR. Furthermore, Rule
903(a)—in connection with the
Commission’s recognition of the
GLEIS—requires all persons who are
participants of at least one registered
SDR to obtain an LEI from or through
the GLEIS for use under Regulation
SBSR, and each participant that acts as
a guarantor of a direct counterparty’s
performance of any obligation under a
security-based swap that is subject to
Rule 908(a) shall, if the direct
counterparty has not already done so,
obtain a UIC for identifying the direct
counterparty from or through that
system, if that system permits thirdparty registration without a requirement
to obtain prior permission of the direct
counterparty.
The Commission is particularly
hopeful that a robust system for product
IDs could greatly improve the usability
of security-based swap data, both for
regulators and for market observers that
obtain publicly disseminated
transaction information. The product ID
could minimize administrative burdens
by rendering unnecessary the separate
reporting of several data elements.
Product IDs also should more easily
distinguish standardized from nonstandardized products and, thus, should

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facilitate aggregation of the public feeds
issued from different registered SDRs.
The Commission did not propose to
take any specific actions towards
consolidation of the security-based
swap data disseminated by different
registered SDRs. As the Commission
stated in the Regulation SBSR Proposing
Release, it considered mandating one
consolidated reporting entity to
disseminate all security-based swap
transaction data for each asset class by
requiring each registered SDR in an
asset class to provide all of its securitybased swap data to a ‘‘central processor’’
that would also be a registered SDR.1025
The Commission noted that there is
substantial precedent for this approach
in the equity markets, where market
participants may access a consolidated
quote for national markets system
securities and a consolidated tape
reporting executed transactions. The
Commission stated, however, that such
approach ‘‘may not be warranted given
the present [security-based swap]
market structure.’’ 1026
The Commission continues to believe
there is no need at this time to require
consolidation of the publicly
disseminated security-based swap
data.1027 Although it is likely that there
will be multiple registered SDRs, it is
unclear at present the extent to which
each will be publicly disseminating a
significant number of transactions.1028
Furthermore, the Commission currently
believes that, to the extent that there are
different SDR data feeds that warrant
consolidation and that such feeds
cannot readily be aggregated by market
observers themselves, certain market
data vendors may be able to do so for
commercially reasonable fees. As
different SDRs register with the
Commission and these SDRs implement
Regulation SBSR, the Commission will
monitor the situation and consider
taking such action as it deems necessary
in order to better carry about the Title
VII policy of promoting greater
1025 See

75 FR 75227.

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1026 Id.
1027 In response to the commenter who
recommended requiring registered SDRs to accept
all security-based swaps in an asset class to reduce
fragmentation of data, the Commission notes that
Rule 13n–5(b)(1)(ii) under the Exchange Act,
adopted as part of the SDR Adopting Release,
requires an SDR that accepts reports for any
security-based swap in a particular asset class to
accept reports for all security-based swaps in that
asset class that are reported to the SDR in
accordance with that SDR’s policies and
procedures.
1028 The Commission notes that, under Rule
902(c)(6), most clearing transactions will not be
publicly disseminated. Therefore, to the extent that
a registered SDR receives only clearing transactions,
it would likely be required to publicly disseminate
few if any security-based swap transactions.

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transparency in the security-based swap
market.
The Commission also acknowledges
the recommendation made by one
commenter to use Section 13(n)(5)(D)(i)
of the Exchange Act to direct all
regulatory reports received by multiple
registered SDRs into a single
‘‘aggregator’’ SDR.1029 The Commission
believes that Rule 13n–4(b)(5), as
adopted,1030 helps to address these
concerns. Rule 13n–4(b)(5) requires an
SDR to provide the Commission with
direct electronic access to the data
stored by the SDR. As stated in the SDR
Adopting Release:
data [provided by an SDR to the Commission]
must be in a form and manner acceptable to
the Commission . . . [T]he form and manner
with which an SDR provides the data to the
Commission should not only permit the
Commission to accurately analyze the data
maintained by a single SDR, but also allow
the Commission to aggregate and analyze
data received from multiple SDRs.1031

Thus, the Commission does not
believe that it is necessary or
appropriate at this time to direct
registered SDRs to provide their
transaction data to a single ‘‘aggregator’’
SDR, because the SDR rules are
designed to facilitate the Commission’s
ability to aggregate information directly.
As registered SDRs and their
participants develop experience with
the Regulation SBSR reporting regime
and the Commission develops
experience with overseeing that regime,
the Commission may consider reevaluating the need for or the
desirability of an aggregator SDR in the
future.
XX. Section 31 Fees
In the Regulation SBSR Proposing
Release,1032 the Commission also
proposed certain amendments to Rule
1029 See DTCC I at 7 (‘‘Under Section 13 of the
Exchange Act . . . security-based swap data
repositories shall ‘provide direct electronic access
to the Commission (or any designee of the
Commission, including another registered entity.’
Under this authority, the Commission could
designate one security-based swap data repository
as the recipient of information from other security
based-swap data repositories in order to have
consolidation and direct access for the
Commission’’) (citation omitted).
1030 See SDR Adopting Release, Section
VI(D)(2)(c)(ii).
1031 See id. The SDR Adopting Release states,
further, that ‘‘[t]he Commission recognizes that as
the [security-based swap] market develops, new or
different data fields may be needed to accurately
represent new types of [security-based swap data],
in which case the Commission may provide
updated specifications of formats and taxonomies to
reflect these new developments. Therefore, the
Commission intends to publish guidance, as
appropriate, on the form and manner that will be
acceptable to it for the purposes of direct electronic
access’’ (internal citations omitted).
1032 See 75 FR 75245–46.

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31 under the Exchange Act,1033 which
governs the calculation and collection of
fees and assessments owed by selfregulatory organizations to the
Commission pursuant to Section 31 of
the Exchange Act.1034
Section 991 of the Dodd-Frank Act
amended Section 31(e)(2) of the
Exchange Act to provide that certain
fees and assessments required under
Section 31 will be required to be paid
by September 25, rather than September
30.1035 Therefore, the Commission
proposed to make a corresponding
change to the definition of ‘‘due date’’
in Rule 31(a)(10)(ii) under the Exchange
Act 1036 by replacing a reference to
‘‘September 30’’ with a reference to
‘‘September 25.’’
The Commission also proposed to
exempt security-based swap
transactions from the application of
Section 31 transaction fees. Section
31(c) of the Exchange Act 1037 requires
a national securities association to pay
fees based on the ‘‘aggregate dollar
amount of sales transacted by or through
any member of such association
otherwise than on a national securities
exchange of securities . . . registered on
a national securities exchange or subject
to prompt last sale reporting pursuant to
the rules of the Commission or a
registered national securities
association.’’ Pursuant to Section 761(a)
of the Dodd-Frank Act,1038 securitybased swaps are securities.1039
Accordingly, when security-based swap
transactions become subject to prompt
last-sale reporting pursuant to the rules
of the Commission, the members of a
national securities association that effect
sales of security-based swaps other than
on an exchange would become liable for
Section 31 fees for any such sales.1040
Because of certain potential difficulties
in fairly and evenly applying Section 31
fees for sales of security-based
swaps,1041 the Commission proposed to
exercise its authority under Section
31(f) of the Exchange Act 1042 to exempt
1033 17

CFR 240.31.
U.S.C. 78ee.
991 of the Dodd Frank Act provides,
in relevant part: ‘‘(1) AMENDMENTS.—Section 31
of the Securities Exchange Act of 1934 (15 U.S.C.
78ee) is amended . . . in subsection (e)(2), by
striking ‘September 30’ and inserting ‘September
25’.’’
1036 17 CFR 240.31(a)(10)(ii).
1037 15 U.S.C. 78ee(c).
1038 15 U.S.C. 78c(a)
1039 See 15 U.S.C. 78c(a)(10).
1040 A national securities exchange also would be
liable for fees in connection with any transactions
in security-based swaps executed on its market. See
15 U.S.C. 78ee(b).
1041 See Regulation SBSR Proposing Release, 75
FR 75245–46.
1042 15 U.S.C. 78ee(f) (‘‘The Commission, by rule,
may exempt any sale of securities or any class of
1034 15

1035 Section

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all such sales from the application of
Section 31 fees. To carry out that
objective, the Commission proposed to
add a new subparagraph (ix) to Rule
31(a)(11), which defines the term
‘‘exempt sale,’’ to include as an exempt
sale ‘‘[a]ny sale of a security-based
swap.’’ The Commission also proposed
to add a new paragraph (19) to Rule
31(a) to provide a definition for the term
‘‘security-based swap.’’
One commenter submitted two
comment letters on this aspect of the
proposal relating to Rule 31.1043
The Commission is not adopting these
proposed revisions to Rule 31(a). As
discussed above, the Commission is not
yet requiring that security-based swap
transactions be publicly disseminated in
real time. Because security-based swaps
are not yet subject to prompt last-sale
reporting pursuant to the rules of the
Commission or a national securities
association,1044 sales of security-based
swaps are not yet subject to Section 31
fees. In the future, the Commission
anticipates soliciting public comment
on block thresholds and the timeframe
in which non-block security-based swap
transactions must be publicly
disseminated. At such time, when
implementation of prompt last-sale
public dissemination of security-based
swap transactions would subject them
to Section 31 fees, the Commission can
revisit whether to adopt the proposed
exemption for security-based swaps
from Section 31 fees.

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XXI. Paperwork Reduction Act
Certain provisions of Regulation SBSR
contain ‘‘collection of information
requirements’’ within the meaning of
the Paperwork Reduction Act of 1995
(‘‘PRA’’).1045 The Commission
published notices requesting comment
on the collection of information
requirements relating to Regulation
SBSR, as originally proposed, in the
sales of securities from any fee or assessment
imposed by this section, if the Commission finds
that such exemption is consistent with the public
interest, the equal regulation of markets and brokers
and dealers, and the development of a national
market system.’’).
1043 See OneChicago I at 2–3 (arguing that,
because ‘‘exchange for physical’’ (‘‘EFP’’)
transactions conducted on OneChicago are
economically similar to security-based swap
transactions, EFP transactions also should be
exempt from Section 31 fees or, alternatively, that
security-based swaps should be subject to Section
31 fees); OneChicago II (same).
1044 See supra Section VII (discussing phased
approach to public dissemination and block trades,
which will permit security-based swap transactions
to be reported any time up to 24 hours after the time
of execution (or, if 24 hours after the time of
execution would fall on a day that is not a business
day, by the same time on the next day that is a
business day) during the first phase).
1045 44 U.S.C. 3501 et seq.

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Regulation SBSR Proposing Release 1046
and, as re-proposed, in the Cross-Border
Proposing Release 1047 and submitted
relevant information to the Office of
Management and Budget (‘‘OMB’’) for
review in accordance with the PRA.1048
The titles for the collections are: (1)
Rule 901—Reporting Obligations—For
Reporting Sides; (2) Rule 901—
Reporting Obligations—For Registered
SDRs; (3) Rule 902—Public
Dissemination of Transaction Reports;
(4) Rule 904—Operating Hours of
Registered Security-Based Swap Data
Repositories; (5) Rule 905—Correction
of Errors in Security-Based Swap
Information—For Reporting Sides; (6)
Rule 905—Correction of Errors in
Security-Based Swap Information—
Non-Reporting Sides; (7) Rule 906(a)—
Other Duties of All Participants—For
Registered SDRs; (8) Rule 906(a)—Other
Duties of All Participants—For NonReporting Sides; (9) Rule 906(b)—Other
Duties of All Participants—For All
Participants; (10) Rule 906(c)—Other
Duties of All Participants—For Covered
Participants; (11) Rule 907—Policies
and Procedures of Registered SecurityBased Swap Data Repositories; and (12)
Rule 908(c)—Substituted Compliance
(OMB Control No. 3235–0718).
Compliance with these collections of
information requirements is mandatory.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
agency displays a currently valid
control number.
The Commission is adopting
Regulation SBSR, which contains these
12 collections of information, largely as
re-proposed, with certain revisions
suggested by commenters or designed to
clarify the rules.1049 The rules, as
adopted, establish a ‘‘reporting
hierarchy’’ that specifies the side that
has the duty to report a security-based
swap that is a covered transaction 1050
and provides for public dissemination
of security-based swap transaction
information (except as provided in Rule
902(c)). Registered SDRs are required to
establish and maintain certain policies
and procedures regarding how
transaction data are reported and
disseminated, and participants of
registered SDRs that are registered
1046 See Regulation SBSR Proposing Release, 75
FR 75251–61.
1047 See Cross-Border Proposing Release, 78 FR
31115–18.
1048 44 U.S.C. 3507; 5 CFR 1320.11.
1049 In addition, the Commission, in separate
releases, is adopting rules relating to SDR
registration, duties, and core principles and
proposing amendments to Regulation SBSR.
1050 See supra notes 11–12 and accompanying
text.

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14673

security-based swap dealers or
registered major security-based swap
participants are required to establish
and maintain policies and procedures
that are reasonably designed to ensure
that they comply with applicable
reporting obligations. Regulation SBSR
also requires a person that registers with
the Commission as an SDR also to
register with the Commission as a SIP.
The hours and costs associated with
complying with Regulation SBSR
constitute reporting and cost burdens
imposed by each collection of
information. Certain estimates (e.g., the
number of reporting sides, the number
of non-reporting sides, the number of
participants, and the number of
reportable events 1051 pertaining to a
security-based swap transaction)
contained in the Commission’s earlier
PRA assessments have been updated to
reflect the rule text of Regulation SBSR,
as adopted, as well as additional
information and data now available to
the Commission, as discussed in further
detail below. The Commission believes
that the methodology used for
calculating the re-proposed paperwork
burdens set forth in the Cross-Border
Proposing Release is appropriate and
has received no comments to the
contrary. The revised paperwork
burdens estimated by the Commission
herein are consistent with those made in
connection with the re-proposal of
Regulation SBSR, which was included
in the Cross-Border Proposing Release.
However, as described in more detail
below, certain estimates have been
modified, as necessary, to conform to
the adopted rules and to reflect the most
recent data available to the Commission.
The Commission requested comment
on the collection of information
requirements included in both the
Regulation SBSR Proposing Release and
the Cross-Border Proposing Release. As
noted above, the Commission received
86 comment letters on the Regulation
SBSR Proposing Release and six
comment letters on the Cross-Border
Proposing Release that specifically
referenced Regulation SBSR. Although
the comment letters did not specifically
address the Commission’s estimates for
the proposed collection of information
requirements, views of commenters
relevant to the Commission’s analysis of
burdens, costs, and benefits of
Regulation SBSR are discussed below.
The rules containing these specific
collections of information are discussed
further below.
1051 A reportable event includes both an initial
security-based swap transaction, required to be
reported pursuant to Rule 901(a), as well as a life
cycle event, the reporting of which is governed by
Rule 901(e).

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A. Definitions—Rule 900
Rule 900 sets forth definitions of
various terms used in Regulation SBSR.
In the Regulation SBSR Proposing
Release, the Commission stated its belief
that Rule 900, since it contains only
definitions of relevant terms, would not
be a ‘‘collection of information’’ within
the meaning of the PRA.1052 Although
Rule 900, as adopted, contains revisions
to re-proposed Rule 900, including
additions and deletions of certain
defined terms and modification of
others, the Commission continues to
believe that Rule 900 does not constitute
a ‘‘collection of information’’ within the
meaning of the PRA.

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B. Reporting Obligations—Rule 901
Rule 901, as adopted, sets forth
various requirements relating to the
reporting of covered transactions. Rule
901 of Regulation SBSR, as adopted,
contains ‘‘collection of information
requirements’’ within the meaning of
the PRA. The title of this collection is
‘‘Rule 901—Reporting Obligations.’’
1. Summary of Collection of Information
Title VII of the Dodd-Frank Act
amended the Exchange Act to require
the reporting of security-based swap
transactions. Accordingly, the
Commission is adopting Rule 901 under
the Exchange Act to implement this
requirement. Rule 901 specifies, with
respect to each reportable event
pertaining to covered transactions, who
is required to report, what data must be
reported, when it must be reported,
where it must be reported, and how it
must be reported. Rule 901(a), as
adopted, establishes a ‘‘reporting
hierarchy’’ that specifies the side that
has the duty to report a security-based
swap that is a covered transaction.1053
The reporting side, as determined by the
reporting hierarchy, is required to
submit the information required by
Regulation SBSR to a registered SDR.
The reporting side may select the
registered SDR to which it makes the
required report.
Pursuant to Rule 901(b), as adopted,
if there is no registered SDR that will
accept the report required by Rule
901(a), the person required to make the
report must report the transaction to the
Commission. Rule 901(c) sets forth the
primary trade information and Rule
901(d) sets forth the secondary trade
information that must be reported.
Under the final rules, covered
transactions—regardless of their
1052 See Regulation SBSR Proposing Release, 75
FR 75246.
1053 See supra notes 11–12 and accompanying
text.

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notional amount—must be reported to a
registered SDR at any point up to 24
hours after the time of execution, or, in
the case of a security-based swap that is
subject to regulatory reporting and
public dissemination solely by
operation of Rule 908(a)(1)(ii), within 24
hours after the time of acceptance for
clearing.1054 Except as required by Rule
902(c), the information reported
pursuant to Rule 901(c) must be
publicly disseminated. Information
reported pursuant to Rule 901(d) is for
regulatory purposes only and will not be
publicly disseminated.
Rule 901(e) requires the reporting of
life cycle events, and adjustments due to
life cycle events, within 24 hours of the
time of occurrence, to the entity to
which the original transaction was
reported. The report must contain the
transaction ID of the original
transaction.
In addition to the reporting duties that
reporting sides incur under Rule 901,
Rule 901 also imposes certain duties on
a registered SDR that receives securitybased swap transaction data. Rule 901(f)
requires a registered SDR to timestamp,
to the second, any information
submitted to it pursuant to Rule 901,
and Rule 901(g) requires a registered
SDR to assign a transaction ID to each
security-based swap, or establish or
endorse a methodology for transaction
IDs to be assigned by third parties. Rule
901(h) requires reporting sides to
electronically transmit the information
required by Rule 901 in a format
required by the registered SDR.
Rule 901(i) requires reporting of preenactment security-based swaps and
transitional security-based swaps to the
extent that information about such
transactions is available.
As detailed in Sections II to V, supra,
in adopting Rule 901, the Commission
has made certain changes to Rule 901,
both as originally proposed and as reproposed in the Cross-Border Proposing
Release, in response to comments or in
order to clarify various provisions. The
Commission believes that these changes
do not substantially alter the underlying
1054 See supra Section VII(B)(1) (discussing Rule
901(j) and the rationale for 24-hour reporting
timeframe). In addition, as discussed in more detail
in Section VII(B), supra, if 24 hours after the time
of execution would fall on a non-business day (i.e.,
a Saturday, Sunday, or U.S. federal holiday),
reporting would be required by the same time on
the next business day. As discussed in Section
XV(C)(4), supra, Rule 908(a)(1)(ii), as adopted,
provides that a security-based swap that is subject
to regulatory reporting and public dissemination
solely by operation of Rule 908(a)(1)(ii)—i.e.,
because the security-based swap has been accepted
for clearing by a clearing agency having its
principal place of business in the United States—
must be reported within 24 hours of acceptance for
clearing.

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method of computing the paperwork
burdens, but do result in changes to the
number of impacted entities and the
number to transactions covered by the
rules, thus impacting the paperwork
burden totals that were previously
estimated for Rule 901.
2. Use of Information
The security-based swap transaction
information required to be reported
pursuant to Rule 901 will be used by
registered SDRs, market participants,
the Commission, and other relevant
authorities. The information reported by
reporting sides pursuant to Rule 901
will be used by registered SDRs to
publicly disseminate reports of securitybased swap transactions, as well as to
offer a resource for the Commission and
other relevant authorities to obtain
detailed information about the securitybased swap market. Market participants
will use the public market data feed,
among other things, to assess the current
market for security-based swaps and to
assist in the valuation of their own
positions. The Commission and other
relevant authorities will use information
about security-based swap transactions
reported to and held by registered SDRs
to monitor and assess systemic risks, as
well as for market surveillance
purposes.
3. Respondents
Rule 901(a) assigns reporting duties
for covered transactions. In the CrossBorder Proposing Release, the
Commission revised its preliminary
estimate to 300 respondents.1055 The
Commission continues to believe that it
is reasonable to use 300 as an estimate
of ‘‘reporting sides’’ (as that term was
used in the Cross-Border Proposing
Release).
The Commission notes that, since
issuing the Regulation SBSR Proposing
Release, the Commission has obtained
additional and more granular data
regarding participation in the securitybased swap market from DTCC–TIW.
These historical data suggest that,
among the 300 reporting sides,
approximately 50 are likely to be
required to register with the
Commission as security-based swap
dealers and approximately five are
likely to register as major security-based
swap participants.1056 These data
further suggest that these 55 reporting
sides likely will account for the vast
majority of recent security-based swap
transactions and reports and that there
1055 See Cross-Border Proposing Release, 78 FR
31113 (lowering the estimate of reporting sides from
1,000 to 300).
1056 See id. at 31103.

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are only a limited number of securitybased swap transactions that do not
include at least one of these larger
counterparties on either side.1057
Rule 901 imposes certain duties on
registered SDRs. In the Regulation SBSR
Proposing Release, the Commission
preliminarily estimated that the number
of registered SDRs would not exceed
ten, an estimate that was affirmed in the
Cross-Border Proposing Release.1058 The
Commission continues to believe that it
is reasonable to estimate ten registered
SDR respondents for the purpose of
estimating collection of information
burdens for Regulation SBSR.
4. Total Initial and Annual Reporting
and Recordkeeping Burdens
Pursuant to Rule 901, covered
transactions must be reported to a
registered SDR or to the Commission.
Together, sections (a), (b), (c), (d), (e),
(h), and (j) of Rule 901 set forth the
parameters that govern how reporting
sides report covered transactions. Rule
901(i) addresses the reporting of preenactment and transitional securitybased swaps. These reporting
requirements impose initial and ongoing
burdens on reporting sides. The
Commission believes that these burdens
will be a function of, among other
things, the number of reportable events
and the data elements required to be
reported for each such event. Rule 901(f)
requires a registered SDR to the time
stamp, to the second, all reported
information, and Rule 901(g) requires a
registered SDR to assign a transaction ID
to each security-based swap, or establish
or endorse a methodology for
transaction IDs to be assigned by third
parties. These requirements impose
initial and ongoing burdens on
registered SDRs.
a. Baseline Burdens

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In the Regulation SBSR Proposing
Release, the Commission estimated that
respondents would face three categories
of burdens to comply with Rule 901.1059
First, each entity that would incur a
duty to report security-based swap
transactions pursuant to Regulation
1057 As a result, the Commission generally will
continue to use 300 as an estimate of the number
of reporting sides. In cases where a rule is more
limited in its application, for example Rule 906(c),
the Commission may use a different number that
reflects some subset of the estimated 300 reporting
sides. See also Cross-Border Adopting Release, 79
FR 47300 (stating that 55 firms might register as
security-based swap dealers or major security-based
swap participants).
1058 See Regulation SBSR Proposing Release, 75
FR 75247; See also Cross-Border Proposing Release,
78 FR 31113.
1059 See Regulation SBSR Proposing Release, 75
FR 75248.

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SBSR (a ‘‘reporting party’’ 1060) would
likely have to develop an internal order
and trade management system (‘‘OMS’’)
capable of capturing the relevant
transaction information.1061 Second,
each such entity would have to
implement a reporting mechanism.1062
Third, each such entity would have to
establish an appropriate compliance
program and support for the operation
of any OMS and reporting
mechanism.1063 In the Regulation SBSR
Proposing Release, the Commission
preliminarily estimated that the initial,
aggregate annualized burden associated
with Rule 901 would be 1,438 hours per
reporting party—for a total of 1,438,300
hours for all reporting parties—in order
to develop an OMS, implement a
reporting mechanism, and establish an
appropriate compliance program and
support system.1064 The Commission
preliminarily estimated that the ongoing
aggregate annualized burden associated
with Rule 901 would be 731 hours per
reporting party, for a total of 731,300
hours for all reporting parties.1065 The
Commission further estimated that the
initial aggregate annualized dollar cost
burden on reporting parties associated
with Rule 901 would be $201,000 per
reporting party, for a total of
$201,000,000 for all reporting
parties.1066
b. Burdens of Final Rule 901
For Reporting Sides. The reporting
hierarchy is designed to place the duty
to report covered transactions on
counterparties who are most likely to
have the resources and who are best
able to support the reporting function.
Reporting sides that fall under the
reporting hierarchy in Rule 901(a)(2)(ii)
incur certain burdens as a result thereof
with respect to their reporting of
covered transactions. As stated above,
the Commission believes that an
estimate of 300 reporting sides that
would incur the duty to report under
Regulation SBSR is reasonable for
1060 In the Regulation SBSR Proposing Release,
the Commission proposed the term ‘‘reporting
party’’ to describe the entity with the duty to report
a particular security-based swap transaction. See 75
FR 75211. In the Cross-Border Proposing Release,
the Commission revised the term ‘‘reporting party’’
to ‘‘reporting side’’ as part of the re-proposal of
Regulation SBSR. See 78 FR 31059.
1061 See Regulation SBSR Proposing Release, 75
FR 75248.
1062 See id.
1063 See id.
1064 See id. at 75250.
1065 See id.
1066 See id. In the Cross-Border Proposing
Release, the Commission noted that the Regulation
SBSR Proposing Release incorrectly stated this total
as $301,000 per reporting party. The correct number
is $201,000 per reporting party ($200,000+$1,000).
See 78 FR 31113, note 1259.

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14675

estimating collection of information
burdens under the PRA. This estimate
includes all of those persons that incur
a reporting duty under Regulation
SBSR, as adopted, including registered
security-based swap dealers and
registered major security-based swap
participants. This estimate also includes
some smaller counterparties to securitybased swaps that could incur a reporting
duty, but many fewer than estimated in
the PRA of the Regulation SBSR
Proposing Release.
As discussed in more detail in Section
V, supra, Rule 901(a)(2)(ii) adopts the
reporting hierarchy set forth in the
Cross-Border Proposing Release, but
limits its application to uncleared
transactions. The Commission believes,
however, that this limitation will not
materially change the number of
reporting sides for PRA purposes, as
there likely would be a significant
overlap between the approximately 300
reporting sides reporting uncleared
transactions and those reporting other
security-based swaps.
In the Regulation SBSR Proposing
Release, the Commission preliminarily
estimated that there would be 15.5
million reportable events associated
with security-based swap transactions
per year.1067 In the Cross-Border
Proposing Release, in addition to
lowering its estimate of the number of
reporting sides from 1,000 to 300, the
Commission also revised its estimate of
the number of reportable events to
approximately 5 million.1068 Since
issuing the Cross-Border Proposing
Release, however, the Commission has
obtained additional and more granular
data regarding participation in the
security-based swap market from
DTCC–TIW. As a result, the
Commission is now further revising its
estimate of the number of reportable
events. Accordingly, the Commission
now estimates that there will be
approximately 3 million reportable
events per year under Rule 901, as
adopted.1069 The Commission further
1067 See Regulation SBSR Proposing Release, 75
FR 75248.
1068 See Cross-Border Proposing Release, 78 FR
31114.
1069 According to data published by the Bank for
International Settlements, the global notional
amount outstanding in equity forwards and swaps
as of December 2013 was $2.28 trillion. The
notional amount outstanding in single-name CDS
was approximately $11.32 trillion, in multi-name
index CDS was approximately $8.75 trillion, and in
multi-name, non-index CDS was approximately
$950 billion. See Semi-annual OTC derivatives
statistics at end-December 2013 (June 2014), Table
19, available at http://www.bis.org/statistics/
dt1920a.pdf (last visited September 22, 2014). For
the purposes of this analysis, the Commission
assumes that multi-name index CDS are not narrow-

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estimates that approximately 2 million
of these reportable events will consist of
uncleared transactions (i.e., those
transactions that will be reported to a
registered SDR by the reporting sides).
The Commission noted in the CrossBorder Proposing Release, and
continues to believe, that the reduction
in the estimate of the number of
reportable events per year is likely a
result of several factors.1070
The Commission believes that, once a
respondent’s reporting infrastructure
and compliance systems are in place,
the burden of reporting each individual
reportable event will be small when
compared to the burdens of establishing
the reporting infrastructure and
compliance systems.1071 As stated
above, the Commission estimates that 2
million of the 3 million total reportable
events would consist of the initial
reporting of security-based swaps as
well as the reporting of any life cycle
events. The Commission estimates that
of the 2 million reportable events,
approximately 900,000 would involve
the reporting of new security-based
swap transactions, and approximately
1,100,000 would involve the reporting
of life cycle events under Rule 901(e).
The Commission estimates that Rule
901(a) would result in reporting sides
having a total burden of 4,500 hours
attributable to the initial reporting of
security-based swaps by reporting sides
to registered SDRs under Rules 901(c)
based index CDS and, therefore, are not securitybased swaps. The Commission also assumes that all
instruments reported as equity forwards and swaps
are security-based swaps, potentially resulting in
underestimation of the proportion of the securitybased swap market represented by single-name
CDS. Based on those assumptions, single-name CDS
appear to constitute roughly 82% of the securitybased swap market. Although the BIS data reflect
the global OTC derivatives market, and not just the
U.S. market, the Commission believes that it is
reasonable to assume these ratios would be similar
in the U.S. market. The Commission now estimates
that there were approximately 2.26 million singlename CDS transactions in 2013. Because singlename CDS appear to constitute roughly 78% of the
security-based swap market, the Commission now
estimates that there are approximately 3 million
security-based swap transactions (i.e., 2,260,000/
0.78=2,898,329 reportable events).
1070 See 78 FR 31115.
1071 In the Regulation SBSR Proposing Release,
the Commission preliminarily estimated that
reporting specific security-based swap transactions
to a registered SDR—separate from the establishing
of infrastructure and compliance systems that
support reporting—would impose an annual
aggregate cost of approximately $5,400,000. See 75
FR 75265. The Commission further estimated that
Rule 901 would impose an aggregate total first-year
cost of approximately $1,039,000,000 and an
ongoing annualized aggregate cost of approximately
$703,000,000. See id. at 75280. See also CrossBorder Proposing Release, 78 FR 31115 (stating the
Commission’s preliminary belief that the reporting
of a single reportable event would be de minimis
when compared to the burdens of establishing the
reporting infrastructure and compliance systems).

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and 901(d) over the course of a year.1072
The Commission further estimates that
reporting sides would have a total
burden of 5,500 hours attributable to the
reporting of life cycle events under Rule
901(e) over the course of a year.1073
Therefore, the Commission believes that
Rule 901, as adopted, would result in a
total reporting burden for reporting
sides under Rules 901(c) and (d) along
with the reporting of life cycle events
under Rule 901(e) of 10,000 burden
hours per year. The Commission
continues to believe that many
reportable events will be reported
through electronic means and that the
ratio of electronic reporting to manual
reporting is likely to increase over time.
The Commission continues to believe
that the bulk of the burden hours
estimated above will be attributable to
manually reported transactions. Thus,
reporting sides that capture and report
transactions electronically will likely
incur bear fewer burden hours than
those reporting sides that capture and
report transactions manually.
Based on the foregoing, the
Commission estimates that Rule 901, as
adopted, will impose an estimated total
first-year burden of approximately 1,394
hours 1074 per reporting side for a total
first-year burden of 418,200 hours for all
reporting sides.1075 The Commission
estimates that Rule 901, as adopted, will
impose ongoing annualized aggregate
1072 In the Regulation SBSR Proposing Release,
the Commission estimated that it would take
approximately 0.005 hours for each security-based
swap transaction to be reported. See 75 FR 75249,
note 195. The Commission calculates the following:
((900,000 × 0.005)/(300 reporting sides)) = 15
burden hours per reporting side or 4,500 total
burden hours attributable to the initial reporting of
security-based swaps.
1073 In the Regulation SBSR Proposing Release,
the Commission estimated that it would take
approximately 0.005 hours for each security-based
swap transaction to be reported. See 75 FR 75249,
note 195. The Commission calculates the following:
((1,100,000 × 0.005)/(300 reporting sides)) = 18.33
burden hours per reporting side or 5,500 total
burden hours attributable to the reporting of life
cycle events under Rule 901(e).
1074 The Commission derived its estimate from
the following: (355 hours (one-time hourly burden
for establishing and OMS) + 172 hours (one-time
hourly burden for establishing security-based swap
reporting mechanisms) + 180 hours (one-time
hourly burden for compliance and ongoing support)
= 707 hours (one-time total hourly burden). See
Regulation SBSR Proposing Release, 75 FR 75248–
50, notes 186, 194, and 201. (436 hours (annualongoing hourly burden for internal order
management) + 33.3 hours (revised annual-ongoing
hourly burden for security-based swap reporting
mechanisms) + 218 hours (annual-ongoing hourly
burden for compliance and ongoing support) =
687.3 hours (one-time total hourly burden. See id.
at 75248–50, notes 187 and 201 (707 one-time
hourly burden + 687 revised annual-ongoing hourly
burden = 1,394 total first-year hourly burden).
1075 The Commission derived its estimate from
the following: (1,394 hours per reporting side × 300
reporting sides) = 418,200 hours.

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burdens of approximately 687 hours 1076
per reporting side for a total aggregate
annualized cost of 206,100 hours for all
reporting sides.1077 The Commission
further estimates that Rule 901, as
adopted, will impose initial and
ongoing annualized dollar cost burdens
of $201,000 per reporting side, for total
aggregate initial and ongoing annualized
dollar cost burdens of $60,300,000.1078
For Registered SDRs. In the
Regulation SBSR Proposing Release, the
Commission set forth estimated burdens
on registered SDRs related to Rule
901.1079 The Commission continues to
believe that these estimated burdens are
reasonable.
Rule 901(f) requires a registered SDR
to time-stamp, to the second,
information that it receives. Rule 901(g)
requires a registered SDR to assign a
unique transaction ID to each securitybased swap it receives or establish or
endorse a methodology for transaction
IDs to be assigned by third parties. The
Commission continues to believe that
such design elements will pose some
additional burdens to incorporate in the
context of designing and building the
technological framework that will be
required of an SDR to become
registered.1080 Therefore, the
Commission estimates that Rules 901(f)
and 901(g) will impose an initial onetime aggregate burden of 1,200 burden
hours, which corresponds to 120 burden
hours per registered SDR.1081 This
figure is based on an estimate of ten
registered SDRs, which the Commission
continues to believe is reasonable.
Once operational, these elements of
each registered SDR’s system will have
to be supported and maintained.
Accordingly, the Commission estimates
that Rule 901(f) and 901(g) will impose
1076 See Cross-Border Proposing Release, 78 FR
31112–15.
1077 The Commission derived its estimate from
the following: (687 hours per reporting side × 300
reporting sides) = 206,100 hours.
1078 The Commission derived its estimate from
the following: ($201,000 per reporting side × 300
reporting sides) = $60,300,000. See Cross-Border
Proposing Release, 78 FR 31113–15. The
Commission originally estimated this burden based
on discussions with various market participants.
See Regulation SBSR Proposing Release, 75 FR
75247–50.
1079 See 75 FR 75250–51.
1080 The Commission has adopted additional
rules under the Exchange Act relating to the duties,
data collection and maintenance requirements, and
automated systems requirements of SDRs. See SDR
Adopting Release.
1081 See Regulation SBSR Proposing Release, 75
FR 75250. This figure is based on discussions with
various market participants and is calculated as
follows: [((Sr. Programmer at 80 hours) + (Sr.
Systems Analyst at 20 hours) + (Compliance
Manager at 8 hours) + (Director of Compliance at
4 hours) + (Compliance Attorney at 8 hours)) × (10
registered SDRs)] = 1,200 burden hours, which is
120 hours per registered SDR.

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an annual aggregate burden of 1,520
burden hours, which corresponds to 152
burden hours per registered SDR.1082
This figure represents an estimate of the
burden for a registered SDR for support
and maintenance costs for the registered
SDR’s systems to time stamp incoming
submissions and assign transaction IDs.
Thus, the Commission estimates that
the first-year aggregate annualized
burden on registered SDRs associated
with Rules 901(f) and 901(g) will be
2,720 burden hours, which corresponds
to 272 burden hours per registered
SDR.1083 Correspondingly, the
Commission estimates that the ongoing
aggregate annualized burden associated
with Rules 901(f) and 901(g) will be
1,520 burden hours, which corresponds
to 152 burden hours per registered
SDR.1084 The above burden estimates
pertaining to Rules 901(f) and 901(g) are
identical to those set forth in the
Regulation SBSR Proposing Release.1085
Since Regulation SBSR, as adopted,
requires reporting for only covered
transactions, registered SDRs will be
required to receive, process, and
potentially disseminate a smaller
number of security-based swaps than
originally envisioned. Because the bulk
of an SDR’s burdens and costs under
Regulation SBSR are not transactionbased, however, the Commission has
determined that the burden and cost
estimates set forth in the Cross-Border
Proposing Release remain valid for the
purposes of the PRA.
In addition, the Commission
recognizes that, since the publication of
the Regulation SBSR Proposing Release,
many entities already have spent
considerable time and resources
building the infrastructure that will
support reporting of security-based
swaps. Indeed, some reporting is
already occurring voluntarily.1086 As a
result, the Commission notes that the
burdens and costs calculated herein
could be greater than those actually
incurred by affected parties as a result
1082 See Regulation SBSR Proposing Release, 75
FR 75250. This figure is based on discussions with
various market participants as follows: [((Sr.
Programmer at 60 hours) + (Sr. Systems Analyst at
48 hours) + (Compliance Manager at 24 hours) +
(Director of Compliance at 12 hours) + (Compliance
Attorney at 8 hours)) × (10 SDRs)] = 1,520 burden
hours, which is 152 hours per registered SDR.
1083 See Regulation SBSR Proposing Release, 75
FR 75250. This figure is based on the following:
[(1,200) + (1,520)] = 2,720 burden hours, which
corresponds to 272 burden hours per registered
SDR.
1084 See supra note 1083.
1085 See Regulation SBSR Proposing Release, 75
FR 75250.
1086 DTCC currently compiles information on the
credit default swap market. See http://
www.dtcc.com/about/businesses-and-subsidiaries/
ddr-us.aspx (last visited September 22, 2014).

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of the adoption of Regulation SBSR.
Nonetheless, the Commission believes
that its estimates represent a reasonable
upper bound of the actual burdens and
costs required to comply with
Regulation SBSR.
5. Recordkeeping Requirements
Rule 13n–5(b)(4) under the Exchange
Act requires an SDR to maintain the
transaction data and related identifying
information that it collects for not less
than five years after the applicable
security-based swap expires, and
historical positions for not less than five
years.1087 Accordingly, security-based
swap transaction reports received by a
registered SDR pursuant to Rule 901
will be required to be retained by the
registered SDR for not less than five
years.
6. Collection of Information Is
Mandatory
Each collection of information
discussed above is mandatory.
7. Confidentiality of Responses to
Collection of Information
For the majority of security-based
swap transactions, all of the information
collected pursuant to Rule 901(c) will be
widely available to the public because
these transactions will be publicly
disseminated by a registered SDR
pursuant to Rule 902. However, certain
security-based swaps are not subject to
Rule 902’s public dissemination
requirement; 1088 therefore, information
about these transactions will not be
publicly available. In addition, reporting
sides must provide certain information
about security-based swap transactions
pursuant to Rule 901(d). Rule 901(d)
information is for regulatory purposes
and will not be publicly disseminated.
An SDR, pursuant to Section 13(n)(5)
of the Exchange Act and Rules 13n–
4(b)(8) and 13n–9 thereunder, must
maintain the privacy of security-based
swap information,1089 including
information reported pursuant to Rule
901(d) of Regulation SBSR, as well as
information about a security-based swap
transaction reported pursuant to Rule
901(c) where the transaction falls into a
category enumerated in Rule 902(c). To
the extent that the Commission receives
these kinds of information under
Regulation SBSR, such information will
be kept confidential, subject to the
provisions of applicable law.
1087 See

SDR Adopting Release, Section VI(E)(4).
supra Section VI(D).
1089 See SDR Adopting Release, Sections VI(D)(2)
and VI(I)(1).
1088 See

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14677

C. Public Dissemination of Transaction
Reports—Rule 902
Rule 902(a), as adopted, requires a
registered SDR to publicly disseminate
a transaction report immediately upon
receipt of information about a securitybased swap, or a life cycle event or
adjustment due to a life cycle event (or
upon re-opening following a period
when the registered SDR was closed),
except in certain limited circumstances
described in Rule 902(c). A published
transaction report must consist of all the
information reported pursuant to Rule
901(c), plus any condition flags required
by the policies and procedures of the
registered SDR to which the transaction
is reported. Certain provisions of Rule
902 of Regulation SBSR contain
‘‘collection of information
requirements’’ within the meaning of
the PRA. The title of this collection is
‘‘Rule 902—Public Dissemination of
Transaction Reports.’’
1. Summary of Collection of Information
As adopted, Rule 902(a) generally
requires that a registered SDR publicly
disseminate a transaction report for each
security-based swap transaction, or a
life cycle event or adjustment due to a
life cycle, immediately upon receipt of
information about the security-based
swap submitted by a reporting side
pursuant to Rule 901(c). The transaction
report must contain all of the
information reported pursuant to Rule
901(c) along with any condition flags
required by the policies and procedures
of the registered SDR to which the
transaction is reported.1090 If its systems
are unavailable to publicly disseminate
these transaction data immediately
upon receipt, the registered SDR is
required to disseminate the transaction
data immediately upon re-opening. Rule
902(a), as adopted, provides registered
SDRs with the authority and discretion
to establish the content, format, and
mode of dissemination through its
policies and procedures, as long as it
does so in compliance with the
information required to be disseminated
by Rule 901(c).
Rule 902(b), as proposed and reproposed, addressed how a registered
SDR would be required to publicly
disseminate transaction reports of block
trades. As discussed in more detail
above, the Commission is not adopting
Rule 902(b).
Rule 902(c), as adopted, prohibits a
registered SDR from disseminating: (1)
The identity of any counterparty to a
security-based swap; (2) with respect to
a security-based swap that is not cleared
1090 See

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at a registered clearing agency and that
is reported to a registered SDR, any
information disclosing the business
transactions and market positions of any
person; (3) any information regarding a
security-based swap reported pursuant
to Rule 901(i); (4) any non-mandatory
report; (5) any information regarding a
security-based swap that is required to
be reported pursuant to Rule 901 and
Rule 908(a)(1) but is not required to be
publicly disseminated pursuant to Rule
908(a)(2); (6) any information regarding
certain clearing transactions; and (7) any
information regarding the allocation of a
security-based swap.
Rule 902(d) provides that no person
shall make available to one or more
persons (other than a counterparty or a
post-trade processor) transaction
information relating to a security-based
swap before the reporting side transmits
the primary trade information about the
security-based swap to a registered SDR.
2. Use of Information
The public dissemination
requirements contained in Rule 902 are
designed to promote post-trade
transparency of security-based swap
transactions.
3. Respondents
The collection of information
associated with the Rule 902 will apply
to registered SDRs. As noted above, the
Commission believes that an estimate of
ten registered SDRs is reasonable for
purposes of its analysis of burdens
under the PRA.

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4. Total Initial and Annual Reporting
and Recordkeeping Burdens
Rule 13n–5(b) sets forth requirements
for collecting and maintaining
transaction data that each SDR will be
required to follow.1091 The SDR
Adopting Release describes the relevant
burdens and costs that complying with
Rule 13n–5(b) will entail.1092
In the Regulation SBSR Proposing
Release, the Commission stated its
preliminary belief that a registered SDR
would be able to integrate the capability
to publicly disseminate security-based
swap transaction reports required under
Rule 902 as part of its overall system
development for transaction data.1093
Based on discussions with industry
participants, the Commission estimates
that, to implement and comply with the
public dissemination requirement of
Rule 902, each registered SDR will incur
a burden equal to an additional 20% of
1091 See

SDR Adopting Release, Section VI(E)(1).
SDR Adopting Release, Section VII(D)(2).
1093 See Regulation SBSR Proposing Release, 75
FR 75252.
1092 See

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the first-year and ongoing burdens
discussed in the SDR Registration
Proposing Release.1094 This estimate
was first proposed in the Regulation
SBSR Proposing Release and reiterated
in the Cross-Border Proposing Release,
and the Commission believes that it
remains valid.1095
Based on the above, the Commission
estimates that the initial one-time
aggregate burden imposed by Rule 902
for development and implementation of
the systems needed to disseminate the
required transaction information,
including the necessary software and
hardware, will be approximately 8,400
hours and a dollar cost of $2 million for
each registered SDR, which aggregates
to 84,000 hours and a dollar cost of $20
million for all SDR respondents.1096 In
addition, the Commission estimates that
annual aggregate burden (initial and
ongoing) imposed by the Rule 902 will
constitute approximately 5,040 hours
and a dollar cost of $1.2 million for each
registered SDR, which aggregates to
50,400 hours and a dollar cost of $12
million for all SDR respondents.1097
Thus, the Commission estimates that the
total first-year (initial) aggregate
annualized burden on registered SDRs
associated with public dissemination
requirement under Rule 902 will be
approximately 134,400 hours and a
dollar cost of $32 million, which
corresponds to a burden of 13,440 hours
and a dollar cost of $3.2 million for each
registered SDR.1098
1094 See Regulation SBSR Proposing Release, 75
FR 75252. See also SDR Adopting Release, Section
VII(D)(2). This estimate was based on discussions
with industry members and market participants,
including entities that may register as SDRs under
Title VII, and includes time necessary to design and
program a registered SDR’s system to calculate and
disseminate initial and subsequent trade reports.
1095 See Regulation SBSR Proposing Release, 75
FR 75252. See also Cross-Border Proposing Release,
78 FR 31198.
1096 See SDR Adopting Release, Section VII(D)(2)
for the total burden associated with establishing
SDR technology systems. The Commission derived
this estimated burden from the following:
[((Attorney at 1,400 hours) + (Compliance Manager
at 1,600 hours) + (Programmer Analyst at 4,000
hours) + (Senior Business Analyst at 1,400 hours))
× (10 registered SDRs)] = 84,000 burden hours,
which corresponds to 8,400 hours per registered
SDR.
1097 See SDR Adopting Release, Section VII(D)(2)
for the total ongoing annual burdens associated
with operating and maintaining SDR technology
systems. The Commission derived this estimated
burden from the following: [((Attorney at 840 hours)
+ (Compliance Manager at 960 hours) +
(Programmer Analyst at 2,400 hours) + (Senior
Business Analyst at 840 hours)) × (10 registered
SDRs)] = 50,400 burden hours, which corresponds
to 5,040 hours per registered SDR.
1098 These estimates are based on the following:
[(84,000 one-time burden hours) + (50,400 annual
burden hours)] = 134,400 burden hours, which
corresponds to 13,440 hours per registered SDR;
[($20 million one-time dollar cost burden) + ($12

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5. Recordkeeping Requirements
Pursuant to Rule 13n–7(b) under the
Exchange Act, a registered SDR is
required to keep and preserve at least
one copy of all documents, including all
documents and policies and procedures
required by the Exchange Act and the
rules or regulations thereunder, for a
period of not less than five years, the
first two years in a place that is
immediately available to representatives
of the Commission for inspection and
examination.1099 This requirement
encompasses all security-based swap
transaction reports disseminated by a
registered SDR pursuant to Rule 902 and
are required to be retained for not less
than five years.
6. Collection of Information Is
Mandatory
Each collection of information
discussed above Is mandatory.
7. Confidentiality of Responses to
Collection of Information
Most of the information required
under Rule 902 will be widely available
to the public to the extent it is
incorporated into security-based swap
transaction reports that are publicly
disseminated by a registered SDR
pursuant to Rule 902. However, Rule
902(c) prohibits public dissemination of
certain kinds of transactions and certain
kinds of transaction information. An
SDR, pursuant to Sections 13(n)(5) of
the Exchange Act and Rules 13n–4(b)(8)
and 13n–9 thereunder will be under an
obligation to maintain the privacy of
this security-based swap
information.1100 To the extent that the
Commission receives confidential
information pursuant to this collection
of information, such information must
be kept confidential, subject to the
provisions of applicable law.
D. Coded Information—Rule 903
Regulation SBSR, as adopted, permits
or, in some instances, requires securitybased swap counterparties to report
coded information to registered SDRs
using UICs. These UICs will be used to
identify products, transactions, and
persons, as well as certain business
units and employees of legal
persons.1101 Rule 903 establishes
standards for assigning and using coded
information in security-based swap
million annual dollar cost burden)] = $32 million
cost burden, which corresponds to $3.2 million per
registered SDR.
1099 See SDR Adopting Release, Section VI(G)(2).
1100 See SDR Adopting Release, Sections VI(D)(2)
and VI(I)(1).
1101 See supra Section II (describing UICs that
must be reported to registered SDRs pursuant to
Regulation SBSR).

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
reporting and dissemination to help
ensure that codes are assigned in an
orderly manner and that relevant
authorities, market participants, and the
public are able to interpret coded
information stored and disseminated by
registered SDRs.
In the Regulation SBSR Proposing
Release, the Commission stated its belief
that Rule 903 would not be a ‘‘collection
of information’’ within the meaning of
the PRA because the rule would merely
permit reporting parties and registered
SDRs to use codes in place of certain
data elements, subject to certain
conditions.1102 In re-proposing Rule 903
in the Cross-Border Proposing Release,
the Commission made only technical
and conforming changes to Rule 903 to
incorporate the use of the term
‘‘side.’’ 1103 Rule 903, as adopted,
includes a requirement that, if the
Commission has recognized an IRSS
that assigns UICs to persons, each
participant of a registered SDR shall
obtain a UIC from or through that
IRSS.1104 Because the Commission also
is recognizing the GLEIS—which issues
LEIs—as an IRSS, any person who is a
participant of one or more registered
SDRs will have to obtain an LEI from or
through the GLEIS. Therefore, the
Commission now believes that Rule 903
constitutes a ‘‘collection of information’’
within the meaning of the PRA. The title
of this collection is ‘‘Rule 903—Coded
Information.’’

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1. Summary of Collection of Information
Rule 903(a) provides that, if an IRSS
that meets certain criteria is recognized
by the Commission and has assigned a
UIC to a person, unit of a person, or
product (or has endorsed a methodology
for assigning transaction IDs), all
registered SDRs must use that UIC in
carrying out their responsibilities under
Regulation SBSR. If no such system has
been recognized by the Commission, or
if such a system has not assigned a UIC
to a particular person, unit of a person,
or product (or has not endorsed a
methodology for assigning transaction
IDs), the registered SDR must assign a
UIC to that person, unit of a person, or
product using its own methodology (or
endorse a methodology for assigning
transaction IDs). The following UICs are
contemplated by Regulation SBSR:
Branch ID, broker ID, counterparty ID,
execution agent ID, platform ID, product
ID, trader ID, trading desk ID,
transaction ID, and ultimate parent ID.
1102 See

Regulation SBSR Proposing Release, 75
FR 75252–53.
1103 See Cross-Border Proposing Release, 78 FR
31117.
1104 See supra Section X(B)(2).

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UICs are intended to allow registered
SDRs and the Commission and other
relevant authorities to aggregate
transaction information across a variety
of vectors. For example, the trader ID
will allow the Commission and other
relevant authorities to identify all trades
carried out by an individual trader. The
product ID will allow the Commission
and other relevant authorities to identify
all transactions in a particular securitybased swap product. The transaction ID
will allow counterparties and the
registered SDR to link a series of life
cycle events to each other and to the
original transaction. As discussed in
Section X(B)(2), supra, the Commission
has recognized the GLEIS as an IRSS
that meets the criteria of Rule 903.
Therefore, if an entity has an LEI issued
by or through the GLEIS, that LEI must
be used for all purposes under
Regulation SBSR. Furthermore, each
participant that acts as a guarantor of a
direct counterparty’s performance of
any obligation under a security-based
swap that is subject to § 242.908(a)
shall, if the direct counterparty has not
already done so, obtain a UIC for
identifying the direct counterparty from
or through that system, if that system
permits third-party registration without
a requirement to obtain prior permission
of the direct counterparty.
2. Use of Information
The information provided pursuant to
Rule 903 is necessary to for any person
who is a participant of at least one
registered SDR to be identified by an LEI
for reporting purposes under Regulation
SBSR.
3. Respondents
Rule 903 applies to any person who
is a participant of at least one registered
SDR. The Commission estimates that
there may be up to 4,800 security-based
swap counterparties that are
participants of one or more registered
SDRs.1105 The Commission recognizes
that, since the publication of the
Regulation SBSR Proposing Release,
many persons who are likely to become
participants of one or more registered
SDRs already have LEIs issued by or
through the GLEIS. As a result, the
burdens and costs actually incurred by
participants as a result of the adoption
of Regulation SBSR are likely to be less
than the burdens and costs calculated
herein. Specifically, as discussed in
further detail in Section XXII(C)(4)(b),
1105 As noted in Section XXII(B)(1), infra, the
available data do not include transactions between
two foreign security-based swap market participants
on foreign underlying reference entities. As a result,
this estimate may not include certain foreign
counterparties to security-based swaps.

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infra, based on transaction data from
DTCC–TIW, the Commission believes
that no fewer than 3,500 of
approximately 4,800 accounts that
participated in the market for singlename CDS in 2013 currently have
LEIs.1106 The Commission assumes that
no market participants that currently
have LEIs would continue to maintain
their LEIs in the absence of Rule 903(a)
in order to arrive at an upper bound on
the ongoing costs associated with Rule
903(a). The Commission believes that
this is a conservative approach, since
regulators in certain other jurisdictions
mandate the use of an LEI.1107
Consequently, the Commission
estimates, for purposes of the PRA, that
there may be as many as 1,300
participant respondents who will need
to obtain an LEI and as many as 4,800
participants who will need to maintain
an LEI.1108
4. Total Initial and Annual Reporting
and Recordkeeping Burdens
The Commission estimates that firstyear aggregate burden imposed by Rule
903 will be 1,300 hours, which
corresponds to 1 hour per participant, to
account for the initial burdens of
obtaining an LEI.1109 The Commission
estimates that the ongoing burden
imposed by Rule 903 will be 4,800
hours, which corresponds to 1 hour per
participant, to account for ongoing
1106 Some counterparties reported in the
transaction data may be guarantors of other nonU.S.-person-direct counterparties and, if so, may be
responsible for obtaining and maintaining more
than one LEI. As such, precisely quantifying the
number of LEIs required by Rule 903(a) is not
possible at this time. However, because many of
these direct non-U.S.-person counterparties are
likely from jurisdictions where regulators mandate
the use of LEIs, the Commission believes that these
counterparties will already have registered LEIs and
will continue to maintain them.
1107 The European Market Infrastructure
Regulation requires use of codes to identify
counterparties. See ‘‘Trade Reporting’’ (available at:
http://www.esma.europa.eu/page/Trade-reporting)
(last visited January 10, 2015).
1108 In the Regulation SBSR Proposing Release,
the Commission used an estimate of 5,000
participant respondents that might incur reporting
duties under Regulation SBSR. This estimate
included an estimated 1,000 entities regularly
engaged in the CDS marketplace as well as 4,000
potential security-based swap counterparties that
were expected to transact security-based swaps less
frequently but that nonetheless would be
considered ‘‘participants.’’ See Regulation SBSR
Proposing Release, 75 FR 75254. Based on more
recent data, the Commission has revised the
estimated number of participant respondents to
4,800. The Commission notes that registered
security-based swap dealers and major securitybased swap participants will, for some transactions,
be the non-reporting side and are therefore included
in this estimate.
1109 This figure is based on the following:
[Compliance Attorney at 1 hour/year) × (1,300
participants)] = 1,300 burden hours.

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administration of the LEI.1110 In
addition, for these participants, the
assignment of an LEI will entail both
one-time and ongoing costs assessed by
local operation units (‘‘LOUs’’) of the
GLEIS. The current cost for registering
a new LEI is approximately $220, with
an additional cost of $120 per year for
maintaining an LEI.1111 For those
participants that do not already have an
LEI, the initial one-time cost would be
$286,000, or $220 per participant.1112
All participants would be required to
maintain their LEI resulting in an
annual cost of $576,000, or $120 per
participant.1113
5. Recordkeeping Requirements
The applications that participants
must complete in order to obtain an LEI
issued by or through the GLEIS are not
subject to any specific recordkeeping
requirements for participants, to the
extent that these participants are nonregistered persons.1114 The Commission
expects, however, that in the normal
course of their business a participant of
a registered SDR would keep records of
the information entered in connection
with its LEI application, such as the
participant’s legal name, registered
address, headquarters address, and the
entity’s legal form.
6. Collection of Information Is
Mandatory
Each collection of information
discussed above is mandatory.
7. Confidentiality of Responses to
Collection of Information

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The Commission believes that
information submitted by participants
in order to obtain an LEI issued by or
through the GLEIS generally will be
public.
1110 This figure is based on the following:
[(Compliance Attorney at 1 hour/year) × (4,800
participants)] = 4,800 burden hours.
1111 See ‘‘GMEI Utility: Frequently Asked
Questions’’ (available at: https://
www.gmeiutility.org/frequentlyAskedQuestions.jsp,
detailing registration and maintenance costs for
LEIs issued by GMEI, an endorsed pre-LOU of the
interim GLEIS) (last visited January 4, 2015).
1112 This figure is based on the following: [($220
registration cost) × (1,300 participants not currently
registered)] = $286,000.
1113 This figure is based on the following: [($120
annual maintenance cost) × (4,800 participants not
currently registered)] = $576,000. The Commission
notes that, for those participants obtaining an LEI
in the first year, the annual maintenance cost will
be incurred beginning in the year following
registration.
1114 See Securities Exchange Act Release No.
71958 (April 17, 2014), 79 FR 25193 (May 2, 2014)
(‘‘SD/MSP Recordkeeping Proposing Release’’)
(proposing recordkeeping and reporting
requirements for security-based swap dealers, major
security-based swap participants, and brokerdealers).

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E. Operating Hours of Registered
SDRs—Rule 904
Rule 904, as adopted, requires a
registered SDR to have systems in place
to continuously receive and disseminate
information regarding security-based
swap data with certain exceptions.
Certain provisions of Rule 904 contain
‘‘collection of information
requirements’’ within the meaning of
the PRA. The title of this collection is
‘‘Rule 904—Operating Hours of
Registered SDRs.’’
1. Summary of Collection of Information
Rule 904 requires a registered SDR to
operate continuously, subject to two
exceptions. First, under Rule 904(a) a
registered SDR may establish normal
closing hours during periods when, in
its estimation, the U.S. market and
major foreign markets are inactive. A
registered SDR is required to provide
reasonable advance notice to
participants and to the public of its
normal closing hours. Second, under
Rule 904(b) a registered SDR may
declare, on an ad hoc basis, special
closing hours to perform system
maintenance that cannot wait until
normal closing hours. A registered SDR
is required, to the extent reasonably
possible under the circumstances, to
avoid scheduling special closing hours
during when, in its estimation, the U.S.
market and major foreign markets are
most active; and provide reasonable
advance notice of its special closing
hours to participants and to the public.
Rule 904(c) specifies requirements for
handling and disseminating reported
data during a registered SDR’s normal
and special closing hours. During
normal closing hours and, to the extent
reasonably practicable, during special
closing hours, a registered SDR is
required to have the capability to
receive and hold in queue transaction
data it receives.1115 Pursuant to Rule
904(d), immediately upon system reopening, the registered SDR is required
to publicly disseminate any transaction
data required to be reported under Rule
901(c) that it received and held in
queue, in accordance with the
requirements of Rule 902. Pursuant to
Rule 904(e), if a registered SDR cannot
hold in queue transaction data to be
reported, immediately upon re-opening
the SDR is required to send a message
to all participants that it has resumed
normal operations. Thereafter, any
participant that had an obligation to
report transaction information to the
registered SDR, but could not due to the
registered SDR’s inability to receive and
1115 See

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hold in queue such transaction
information, must promptly report the
information to the registered SDR.1116
The Commission originally stated its
belief that there were not any costs or
burdens applicable to participants as a
result of Rule 904(e).1117 The
Commission continues to believe that
this conclusion is appropriate.
Specifically, the Commission believes
that the process by which the registered
SDR will notify participants that it has
resumed operations would be
automated. As a result, the Commission
believes that the costs associated with
building out the systems necessary for
such notifications have already been
accounted for in the costs of developing
the registered SDRs systems associated
with the receipt of security-based swap
information under Rule 901.1118 As a
result, the Commission continues to
believe that Rule 904(e) is not a
collection of information for
participants.
2. Use of Information
The information provided pursuant to
Rule 904 is necessary to allow
participants and the public to know the
normal and special closing hours of the
registered SDR, and to allow
participants to take appropriate action
in the event that the registered SDR
cannot accept security-based swap
transaction reports from
participants.1119
3. Respondents
Rule 904 applies to all registered
SDRs. As noted above, the Commission
estimates that there will be ten
registered SDRs.
4. Total Initial and Annual Reporting
and Recordkeeping Burdens
The Commission continues to
estimate that that the one-time, initial
burden, as well as ongoing annualized
burden for each registered SDR
associated with Rule 904 will be only
minor additional burden beyond that
necessary to ensure its basic operating
capability under both Regulation SBSR
and the SDR Registration Rules. The
Commission estimates that the annual
aggregate burden (first-year and
ongoing) imposed by Rule 904 will be
1116 See
1117 See

Rule 904(e).
Regulation SBSR Proposing Release, 75

FR 75253.
1118 See id.
1119 The Commission does not believe that Rule
904(c) will result in any burden within the meaning
of the PRA. Rule 904(c) does not create new or
additional duties to report security-based swap
transactions.

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360 hours, which corresponds to 36
hours per registered SDR.1120
One commenter asserted that the
proposed requirement for a registered
SDR to receive and hold in the queue
the data required to be reported during
its closing hours ‘‘exceeds the
capabilities of currently-existing
reporting infrastructures.’’ 1121 However,
the Commission notes that this
comment was submitted in January
2011; since the receipt of this comment,
provisionally registered CFTC SDRs that
are likely also to register as SDRs with
the Commission appear to have
developed the capability of receiving
and holding data in queue during their
closing hours.1122 Thus, the
Commission continues to believe that
requiring registered SDRs to hold data
in queue during their closing hours
would not create a significant burden
for registered SDRs.
The Commission does not believe
Rule 904 imposes any separate
collection of information on participants
of registered SDRs not already
accounted for under Rule 901.1123 Any
respondent unable to report to a
registered SDR, because such registered
SDR was unable to receive the
transaction report, would have to delay
the submission of the transaction report.
The Commission does not believe that
the number of transaction reports
impacted by this requirement would
impact the burdens contained in this
PRA.

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5. Recordkeeping Requirements
Rule 13n–7(b) under the Exchange
Act requires an SDR to keep and
preserve at least one copy of all
documents, including all documents
and policies and procedures required by
the Exchange Act and the rules or
regulations thereunder, for a period of
not less than five years, the first two
years in a place that is immediately
available to representatives of the
Commission for inspection and
1120 See Regulation SBSR Proposing Release, 75
FR 75253. This figure is based on the following:
[(Operations Specialist at 3 hours/month) × (12
months/year) × (10 registered SDRs)] = 360 burden
hours.
1121 Markit I at 4.
1122 See, e.g., DDR Rulebook, Section 7.1 (DDR
System Accessibility) (‘‘Data submitted during DDR
System down time is stored and processed once the
service has resumed’’), available at http://
www.dtcc.com/∼/media/Files/Downloads/legal/
rules/DDR_Rulebook.pdf (last visited October 7,
2014).
1123 The requirement in Rule 904(e) for
participants to report information to the registered
SDR upon receiving a notice that the registered SDR
resumed its normal operations is already
considered as part of the participant’s reporting
obligations under Rule 901 and thus is already
included in the burden estimate for Rule 901.

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examination.1124 This requirement
encompasses notices issued by a
registered SDR to its participants under
Rule 904.
6. Collection of Information Is
Mandatory
Each collection of information
discussed above is mandatory.
7. Confidentiality of Responses to
Collection of Information
Any notices issued by a registered
SDR to its participants, such as the
notices required under Rule 904, would
be publicly available.
F. Correction of Errors in Security-Based
Swap Information—Rule 905
Rule 905, as adopted, establishes
procedures for correcting errors in
reported and disseminated securitybased swap information.
Certain provisions of Rule 905 of
Regulation SBSR contain ‘‘collection of
information requirements’’ within the
meaning of the PRA. The title of this
collection is ‘‘Rule 905—Correction of
Errors in Security-Based Swap
Information.’’
1. Summary of Collection of Information
Rule 905 establishes duties for
security-based swap counterparties and
registered SDRs to correct errors in
information that previously has been
reported.
Counterparty Reporting Error. Under
Rule 905(a)(1), where a side that was not
the reporting side for a security-based
swap transaction discovers an error in
the information reported with respect to
such security-based swap, the
counterparty must promptly notify the
reporting side of the error. Under Rule
905(a)(2), where a reporting side for a
security-based swap transaction
discovers an error in the information
reported with respect to a security-based
swap, or receives notification from its
counterparty of an error, the reporting
side must promptly submit to the entity
to which the security-based swap was
originally reported an amended report
pertaining to the original transaction.
The amended report must be submitted
to the registered SDR in a manner
consistent with the policies and
procedures of the registered SDR
required pursuant to Rule 907(a)(3).
Duty of Registered SDR to Correct.
Rule 905(b) sets forth the duties of a
registered SDR relating to corrections. If
the registered SDR either discovers an
error in a transaction on its system or
receives notice of an error from a
reporting side, Rule 905(b)(1) requires
1124 See

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14681

the registered SDR to verify the accuracy
of the terms of the security-based swap
and, following such verification,
promptly correct the erroneous
information contained in its system.
Rule 905(b)(2) further requires that, if
such erroneous information relates to a
security-based swap that the registered
SDR previously disseminated and falls
into any of the categories of information
enumerated in Rule 901(c), the
registered SDR must publicly
disseminate a corrected transaction
report of the security-based swap
promptly following verification of the
trade by the counterparties to the
security-based swap, with an indication
that the report relates to a previously
disseminated transaction.
2. Use of Information
The security-based swap transaction
information required to be reported
pursuant to Rule 905 will be used by
registered SDRs, participants, the
Commission, and other relevant
authorities. Participants will be able to
use such information to evaluate and
manage their own risk positions and
satisfy their duties to report corrected
information to a registered SDR. A
registered SDR will need the required
information to correct security-based
swap transaction records, in order to
maintain an accurate record of a
participant’s positions as well as to
disseminate corrected information. The
Commission and other relevant
authorities will need the corrected
information to have an accurate
understanding of the market for
surveillance and oversight purposes.
3. Respondents
Rule 905 applies to all participants of
registered SDRs. As noted above, the
Commission estimates that there will be
approximately 300 reporting sides that
incur the duty to report security-based
swap transactions pursuant to Rule 901.
In addition, the Commission estimates
that there may be up to 4,800 securitybased swap counterparties that are
participants of one or more registered
SDRs. Because any of these
counterparties who are participants
could become aware of errors in their
reported transaction data, the
Commission estimates that there may be
as many as 4,800 respondents for
purposes of the PRA.
Rule 905 also applies to registered
SDRs. As noted above, the Commission
estimates there will be ten registered
SDRs.

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4. Total Initial and Annual Reporting
and Recordkeeping Burdens
The duty to promptly submit
amended transaction reports to the
appropriate registered SDR after
discovery of an error, as required under
Rule 905(a)(2), will impose burdens on
reporting sides. The duty to promptly
notify the relevant reporting side after
discovery of an error, as required under
Rule 905(a)(1), will impose burdens on
non-reporting-side participants.
With respect to reporting sides, the
Commission believes that Rule 905(a)
will impose an initial, one-time burden
associated with designing and building
the reporting side’s reporting system to
be capable of submitting amended
security-based swap transactions to a
registered SDR. The Commission
believes that designing and building
appropriate reporting system
functionality to comply with Rule
905(a)(2) will be a component of, and
represent an incremental ‘‘add-on’’ to,
the cost to build a reporting system and
develop a compliance function as
required under Rule 901. Based on
discussions with industry participants,
the Commission estimates this
incremental burden to be equal to 5% of
the one-time and annual burdens
associated with designing and building
a reporting system that is in compliance
with Rule 901, plus 10% of the
corresponding one-time and annual
burdens associated with developing the
reporting side’s overall compliance
program required under Rule 901. This
estimate is based on similar calculations
contained in the Regulation SBSR
Proposing Release,1125 updated to
reflect new estimates relating to the
number of reportable events and the
number of reporting sides. Thus, for
reporting sides, the Commission
estimates that Rule 905(a) will impose
an initial (first-year) aggregate burden of
15,015 hours, which is 50.0 burden
hours per reporting side,1126 and an
ongoing aggregate annualized burden of
7,035 hours, which is 23.5 burden hours
per reporting side.1127
1125 See Regulation SBSR Proposing Release, 75
FR 75254.
1126 See Regulation SBSR Proposing Release, 75
FR 75254–55. This figure is calculated as follows:
[(((172 burden hours for one-time development of
reporting system) × (0.05)) + ((33 burden hours
annual maintenance of reporting system) × (0.05))
+ ((180 burden hours one-time compliance program
development) × (0.1)) + ((218 burden hours annual
support of compliance program) × (0.1))) × (300
reporting sides)] = 15,015 burden hours, which is
50 burden hours per reporting side. The burden
hours for annual maintenance of the reporting
system has been updated to reflect new information
on the number of reportable events. See supra note
1075.
1127 See Regulation SBSR Proposing Release, 75
FR 75254–55. This figure is calculated as follows:

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The Commission believes that the
actual submission of amended
transaction reports required under Rule
905(a)(2) will not result in a material
burden because this will be done
electronically though the reporting
system that the reporting side must
develop and maintain to comply with
Rule 901. The overall burdens
associated with such a reporting system
are addressed in the Commission’s
analysis of Rule 901.
With regard to non-reporting-side
participants, the Commission believes
that Rule 905(a) will impose an initial
and ongoing burden associated with
promptly notifying the relevant
reporting party after discovery of an
error as required under Rule 905(a)(1).
The Commission estimates that the
annual burden will be 998,640 hours,
which corresponds to 208.05 burden
hours per non-reporting-side
participant.1128 This figure is based on
the Commission’s estimate of (1) 4,800
participants; and (2) 1 transaction per
day per non-reporting-side
participant.1129 The burdens of Rule 905
on reporting sides and non-reportingside participants will be reduced to the
extent that complete and accurate
information is reported to registered
SDRs in the first instance pursuant to
Rule 901.
Rule 905(b) requires a registered SDR
to develop protocols regarding the
reporting and correction of erroneous
information. The Commission believes,
however, that this duty would represent
only a minor extension of other duties
for which the Commission is estimating
burdens, and consequently, will not
impose substantial additional burdens
on a registered SDR. A registered SDR
will be required to have the ability to
collect and maintain security-based
swap transaction reports and update
[(((33 burden hours annual maintenance of
reporting system) × (0.05)) + ((218 burden hours
annual support of compliance program) × (0.1))) ×
(300 reporting sides)] = 7,035 burden hours, which
is 23.5 burden hours per reporting side. The burden
hours for annual maintenance of the reporting
system has been updated to reflect new information
on the number of reportable events. See supra note
1075.
1128 This burden was calculated using the same
methodology as was used in the Regulation SBSR
Proposing Release, updated to account for new
estimates of the number of error notifications
resulting from updates in the number of reportable
events. See Regulation SBSR Proposing Release, 75
FR 75255. This figure is based on the following:
[(1.14 error notifications per non-reporting-side
participant per day) × (365 days/year) ×
(Compliance Clerk at 0.5 hours/report) × (4,800
participants)] = 998,640 burden hours, which
corresponds to 208.05 burden hours per nonreporting-side participant.
1129 This figure is based on the following:
[((2,000,000 estimated annual security-based swap
transactions) / (4,800 participants)) / (365 days/
year)] = 1.14 transactions per day, on average.

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relevant records under the rules adopted
in the SDR Adopting Release. Likewise,
a registered SDR must have the capacity
to disseminate additional, corrected
security-based swap transaction reports
under Rule 902. The burdens associated
with Rule 905—including systems
development, support, and
maintenance—are addressed in the
Commission’s analysis of those other
rules. Thus, the Commission believes
that Rule 905(b) will impose only an
incremental additional burden on
registered SDRs. The Commission
estimates that developing and publicly
providing the necessary procedures will
impose on each registered SDR an initial
one-time burden on each registered SDR
of approximately 730 burden hours.1130
The Commission estimates that to
review and update such procedures on
an ongoing basis will impose an annual
burden on each SDR of approximately
1,460 burden hours.1131
Accordingly, the Commission
estimates that the initial (first-year)
aggregate annualized burden on
registered SDRs under Rule 905 will be
21,900 burden hours, which
corresponds to 2,190 burden hours for
each registered SDR.1132 The
Commission further estimates that the
ongoing aggregate annualized burden on
registered SDRs under Rule 905 will be
14,600 burden hours, which
corresponds to 1,460 burden hours for
each registered SDR.1133 This estimated
burden is consistent with what the
Commission proposed in the Regulation
SBSR Proposing Release.
5. Recordkeeping Requirements
Security-based swap transaction
reports received pursuant to Rule 905
are subject to Rule 13n–5(b)(4) under
the Exchange Act. This rule requires an
SDR to maintain the transaction data
and related identifying information for
not less than five years after the
1130 See Regulation SBSR Proposing Release, 75
FR 75255. This figure is based on the following:
[(Sr. Programmer at 80 hours) + (Compliance
Manager at 160 hours) + (Compliance Attorney at
250 hours) + (Compliance Clerk at 120 hours) + (Sr.
System Analyst at 80 hours) + (Director of
Compliance at 40 hours)] = 730 burden hours.
1131 See Regulation SBSR Proposing Release, 75
FR 75255. This figure is based on the following:
[(Sr. Programmer at 160 hours) + (Compliance
Manager at 320 hours) + (Compliance Attorney at
500 hours) + (Compliance Clerk at 240 hours) + (Sr.
System Analyst at 160 hours) + (Director of
Compliance at 80 hours)] = 1,460 burden hours.
1132 This figure is based on the following: [(730
burden hours to develop protocols) + (1,460 burden
hours annual support)) × (10 registered SDRs)] =
21,900 burden hours, which corresponds to 2,190
burden hours per registered SDR.
1133 This figure is based on the following: [(1,460
burden hours annual support) × (10 registered
SDRs)] = 14,600 burden hours, which corresponds
to 1,460 burden hours per registered SDR.

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applicable security-based swap expires
and historical positions for not less than
five years.1134
With respect to information
disseminated by a registered SDR in
compliance with Rule 905(b)(2), Rule
13n–7(b) under the Exchange Act
requires an SDR to keep and preserve at
least one copy of all documents,
including all policies and procedures
required by the Exchange Act and the
rules or regulations thereunder, for a
period of not less than five years, the
first two years in a place that is
immediately available to representatives
of the Commission for inspection and
examination.1135 This requirement
encompasses amended security-based
swap transaction reports disseminated
by the registered SDR.
6. Collection of Information Is
Mandatory
Each collection of information
discussed above is mandatory.

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7. Confidentiality of Responses to
Collection of Information
Information collected pursuant to
Rule 905 will be widely available to the
extent that it corrects information
previously reported pursuant to Rule
901(c) and incorporated into securitybased swap transaction reports that are
publicly disseminated by a registered
SDR pursuant to Rule 902. Most of the
information required under Rule 902
will be widely available to the public to
the extent it is incorporated into
security-based swap transaction reports
that are publicly disseminated by a
registered SDR pursuant to Rule 902.
However, Rule 902(c) prohibits public
dissemination of certain kinds of
transactions and certain kinds of
transaction information. An SDR,
pursuant to Sections 13(n)(5) of the
Exchange Act and Rules 13n–4(b)(8) and
13n–9 thereunder is required to
maintain the privacy of this securitybased swap information. To the extent
that the Commission receives
confidential information pursuant to
this collection of information, such
information will be kept confidential,
subject to the provisions of applicable
law.
G. Other Duties of Participants—Rule
906
Rule 906(a), as adopted, establishes
procedures designed to ensure that a
registered SDR obtains UICs for both
counterparties to a security-based swap.
Rule 906(b) requires each participant of
a registered SDR to provide to the
1134 See
1135 See

SDR Adopting Release, Section VI(E)(4).
SDR Adopting Release, Section VI(G)(2).

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registered SDR information sufficient to
identify its ultimate parent(s) and any
affiliate(s) of the participant that also are
participants of the registered SDR. Rule
906(c) requires each participant that is
a registered security-based swap dealer
or registered major security-based swap
participant to establish, maintain, and
enforce written policies and procedures
(updated at least annually) that are
reasonably designed to ensure
compliance with any security-based
swap transaction reporting obligations
in a manner consistent with Regulation
SBSR.
Certain provisions of Rule 906 of
Regulation SBSR contain ‘‘collection of
information requirements’’ within the
meaning of the PRA. The title of this
collection is ‘‘Rule 906—Duties of All
Participants.’’
Although the Commission is adopting
Rule 906 with certain minor changes
from the version re-proposed in the
Cross-Border Proposing Release, these
changes do not increase the number of
respondents to Rule 906 or affect the
estimated burdens on respondents to
Rule 906. Therefore, the Commission is
not revising its estimate of the burdens
associated with Rule 906.
1. Summary of Collection of Information
Rule 906(a) sets forth a procedure
designed to ensure that a registered SDR
obtains relevant UICs for both sides of
a security-based swap, not just of the
reporting side. Rule 906(a) requires a
registered SDR to identify any securitybased swap reported to it for which the
registered SDR does not have a
counterparty ID and (if applicable)
broker ID, trading desk ID, and trader ID
of each counterparty. Rule 906(a) further
requires the registered SDR, once a day,
to send a report to each participant
identifying, for each security-based
swap to which that participant is a
counterparty, the security-based swap(s)
for which the registered SDR lacks
counterparty ID and (if applicable)
broker ID, trading desk ID, and trader
ID. A participant that receives such a
report must provide the missing ID
information to the registered SDR
within 24 hours.
Rule 906(b) requires each participant
of a registered SDR to provide the
registered SDR with information
sufficient to identify the participant’s
ultimate parent(s) and any affiliate(s) of
the participant that are also participants
of the registered SDR.
Rule 906(c) requires each participant
that is a registered security-based swap
dealer or registered major security-based
swap participant to establish, maintain,
and enforce written policies and
procedures that are reasonably designed

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14683

to ensure compliance with any securitybased swap transaction reporting
obligations in a manner consistent with
Regulation SBSR. In addition, Rule
906(c) requires each such participant to
review and update its policies and
procedures at least annually.
2. Use of Information
The information required to be
provided by participants pursuant to
Rule 906(a) will complete missing
elements of security-based swap
transaction reports so that the registered
SDR has, and can make available to the
Commission and other relevant
authorities, accurate and complete
records for reported security-based
swaps.
Rule 906(b) will be used to ensure
that the registered SDR has, and can
make available to the Commission and
other relevant authorities, group-wide
security-based swap position
information. This information will assist
the Commission and other relevant
authorities with monitoring systemic
risks in the security-based swap market.
The policies and procedures required
under Rule 906(c) will be used by
participants to aid in their compliance
with Regulation SBSR, and also used by
the Commission as part of its ongoing
efforts to monitor and enforce
compliance with the federal securities
laws, including Regulation SBSR.
3. Respondents
Rules 906(a) and 906(b) apply to all
participants of registered SDRs. Based
on the information currently available to
the Commission, the Commission now
believes that there may be up to 4,800
participants.1136 Rule 906(c) applies to
participants that are registered securitybased swap dealers or registered major
security-based swap participants. The
Commission estimates that there will be
55 registered security-based swap
dealers and registered major securitybased swap dealers.
Rule 906 also imposes certain duties
on registered SDRs. As noted above, the
Commission estimates that there will be
ten registered SDRs.
4. Total Initial and Annual Reporting
and Recordkeeping Burdens
a. For Registered SDRs
Rule 906(a) requires a registered SDR,
once a day, to send a report to each
participant identifying, for each
security-based swap to which that
1136 The Commission originally estimated that
there would be up to 5,000 participants. As
discussed above, based on more updated and
granular information available to the Commission,
this estimate has been revised. See Regulation SBSR
Proposing Release, 75 FR 75256.

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participant is a counterparty, any
security-based swap(s) for which the
registered SDR lacks counterparty ID
and (if applicable) broker ID, trading
desk ID, and trader ID. The Commission
estimates that there will be a one-time,
initial burden of 112 burden hours for
a registered SDR to create a report
template and develop the necessary
systems and processes to produce a
daily report required by Rule 906(a).1137
Further, the Commission estimates that
there will be an ongoing annualized
burden of 308 burden hours for a
registered SDR to generate and issue the
daily reports, and to enter into its
systems the ID information supplied by
participants in response to the daily
reports.1138
Accordingly, the Commission
estimates that the initial aggregate
annualized burden for registered SDRs
under Rule 906(a) will be 4,200 burden
hours for all SDR respondents, which
corresponds to 420 burden hours per
registered SDR.1139 The Commission
estimates that the ongoing aggregate
annualized burden for registered SDRs
under Rule 906(a) will be 3,080 burden
hours, which corresponds to 308 burden
hours per registered SDR.1140
b. For Participants

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i. Rule 906(a)
Rule 906(a) requires any participant of
a registered SDR that receives a report
from that registered SDR to provide the
missing UICs to the registered SDR
within 24 hours. Because all SDR
participants will likely be the nonreporting side for at least some
transactions to which they are a
counterparty, the Commission believes
that all participants will be impacted by
Rule 906(a). The Commission estimates
1137 See Regulation SBSR Proposing Release, 75
FR 75256. The Commission has derived the total
estimated burdens based on the following estimates,
which are based on the information provided to the
Commission: (Senior Systems Analyst at 40 hours)
+ (Sr. Programmer at 40 hours) + (Compliance
Manager at 16 hours) + (Director of Compliance at
8 hours) + (Compliance Attorney at 8 hours) = 112
burden hours.
1138 See Regulation SBSR Proposing Release, 75
FR 75256–57. The Commission has derived the total
estimated burdens based on the following estimates,
which are based on the information provided to the
Commission: (Senior Systems Analyst at 24 hours)
+ (Sr. Programmer at 24 hours) + (Compliance Clerk
at 260 hours) = 308 burden hours.
1139 See Regulation SBSR Proposing Release, 75
FR 75256–57. The Commission derived its estimate
from the following: [(112 + 308 burden hours) × (10
registered SDRs)] = 4,200 burden hours, which
corresponds to 420 burden hours per registered
SDR.
1140 See Regulation SBSR Proposing Release, 75
FR 75256–57. The Commission derived its estimate
from the following: [(308 burden hours) × (10
registered SDRs)] = 3,080 burden hours, which
corresponds to 308 burden hours per registered
SDR.

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that the initial and ongoing annualized
burden under Rule 906(a) for all
participants will be 199,728 burden
hours, which corresponds to 41.6
burden hours per participant.1141 This
figure is based on the Commission’s
estimates of (1) 4,800 participants; and
(2) approximately 1.14 transactions per
day per participant.1142
ii. Rule 906(b)
Rule 906(b) requires every participant
to provide the registered SDR an initial
parent/affiliate report and subsequent
reports, as needed. The Commission
estimates that there will be 4,800
participants, that each participant will
connect to two registered SDRs on
average, and that each participant will
submit two reports each year.1143
Accordingly, the Commission estimates
that the initial and ongoing aggregate
annualized burden associated with Rule
906(b) will be 9,600 burden hours,
which corresponds to 2 burden hours
per participant.1144 The aggregate
burden represents an upper estimate for
all participants; the actual burden will
likely decrease because certain larger
participants are likely to have multiple
affiliates, and one member of the group
could report ultimate parent and
affiliate information on behalf of all of
its affiliates at the same time.
b. For Covered Participants
Rule 906(c) requires each participant
that is a registered security-based swap
dealer or registered major security-based
swap participant (each, a ‘‘covered
participant’’) to establish, maintain, and
enforce written policies and procedures
that are reasonably designed to ensure
compliance with any security-based
swap transaction reporting obligations
1141 This burden was calculated using the same
methodology as was used in the Regulation SBSR
Proposing Release, updated to account for new
estimates of the number of missing information
reports resulting from updates in the number of
reportable events. See Regulation SBSR Proposing
Release, 75 FR 75256–57. This figure is based on
the following: [(1.14 missing information reports
per participant per day) × (365 days/year) ×
(Compliance Clerk at 0.1 hours/report) × (4,800
participants) = 199,728 burden hours, which
corresponds to 41.6 burden hours per participant.
1142 This figure is based on the following:
[((2,000,000 estimated annual security-based swap
transactions) / 4,800 participants)) / (365 days/
year)] = 1.14 transactions per day, or approximately
1 transaction per day.
1143 The Commission estimates that, during the
first year, each participant will submit an initial
report and one update report and, in subsequent
years, will submit two update reports.
1144 See Regulation SBSR Proposing Release, 75
FR 75257. This figure is based on the following:
[(Compliance Clerk at 0.5 hours per report) × (2
reports/year/SDR connection) × (2 SDR
connections/participant) × (4,800 participants)] =
9,600 burden hours, which corresponds to 2 burden
hours per participant.

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in a manner consistent with Regulation.
Rule 906(c) also requires the review and
updating of such policies and
procedures at least annually. The
Commission estimates that the one-time,
initial burden for each covered
participant to adopt written policies and
procedures as required under Rule
906(c) will be approximately 216
burden hours.1145 As discussed in the
Regulation SBSR Proposing Release,1146
this figure is based on the estimated
number of hours to develop a set of
written policies and procedures,
program systems, implement internal
controls and oversight, train relevant
employees, and perform necessary
testing. In addition, the Commission
estimates the burden of maintaining
such policies and procedures, including
a full review at least annually, as
required by Rule 906(c), will be
approximately 120 burden hours for
each covered participant.1147 This figure
includes an estimate of hours related to
reviewing existing policies and
procedures, making necessary updates,
conducting ongoing training,
maintaining internal controls systems,
and performing necessary testing.
Accordingly, the Commission estimates
that the initial aggregate annualized
burden associated with Rule 906(c) will
be 18,480 burden hours, which
corresponds to 336 burden hours per
covered participant.1148 The
Commission estimates that the ongoing
aggregate annualized burden associated
with Rule 906(c) will be 6,600 burden
hours, which corresponds to 120 burden
hours per covered participant.1149
Therefore, the Commission estimates
that the total initial aggregate
annualized burden associated with Rule
906 will be 232,008 burden hours,1150
1145 See Regulation SBSR Proposing Release, 75
FR 75257. This figure is based on the following:
[(Sr. Programmer at 40 hours) + (Compliance
Manager at 40 hours) + (Compliance Attorney at 40
hours) + (Compliance Clerk at 40 hours) + (Sr.
Systems Analyst at 32 hours) + (Director of
Compliance at 24 hours)] = 216 burden hours per
covered participant.
1146 See Regulation SBSR Proposing Release, 75
FR 75257.
1147 See Regulation SBSR Proposing Release, 75
FR 75257. This figure is based on the following:
[(Sr. Programmer at 8 hours) + (Compliance
Manager at 24 hours) + (Compliance Attorney at 24
hours) + (Compliance Clerk at 24 hours) + (Sr.
Systems Analyst at 16 hours) + (Director of
Compliance at 24 hours)] = 120 burden hours per
covered participant.
1148 This figure is based on the following: [(216
+ 120 burden hours) × (55 covered participants)] =
18,480 burden hours.
1149 This figure is based on the following: [(120
burden hours) × (55 covered participants)] = 6,600
burden hours.
1150 This figure is based on the following: [(4,200
burden hours for registered SDRs under Rule
906(a)) + (199,728 burden hours for participants

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and the total ongoing aggregate
annualized burden will be 219,008
burden hours for all participants.1151
5. Recordkeeping Requirements
The daily reports that participants
complete in order to provide missing
UICs to a registered SDR pursuant to
Rule 906(a) and the initial parent/
affiliate reports and subsequent reports
required by Rule 906(b) are not subject
to any specific recordkeeping
requirements for participants to the
extent that these participants are nonregistered persons.1152 With regard to
these reports, as well as any other
information that a registered SDR may
receive from participants pursuant to
Rule 906, Rule 13n–5(b)(4) requires an
SDR to maintain this information for not
less than five years after the applicable
security-based swap expires.1153
The Commission has proposed but
not yet adopted recordkeeping
requirements for registered securitybased swap dealers and registered major
security-based swap participants.1154
6. Collection of Information Is
Mandatory
Each collection of information
discussed above is mandatory.
7. Confidentiality of Responses to
Collection of Information
The collection of information required
by Rule 906 will not be widely
available. To the extent that the
Commission receives confidential
information pursuant this collection of
information, such information will be
kept confidential, subject to applicable
law.

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H. Policies and Procedures of Registered
SDRs—Rule 907
Rule 907, as adopted, requires each
registered SDR to establish and maintain
policies and procedures addressing
various aspects of Regulation SBSR
under Rule 906(a)) + (9,600 burden hours for
participants under Rule 906(b)) + (18,480 burden
hours for covered participants under Rule 906(c))]
= 232,008 burden hours.
1151 This figure is based on the following: [(3,080
burden hours for registered SDRs under proposed
Rule 906(a)) + (199,728 burden hours for
participants under proposed Rule 906(a)) + (9,600
burden hours for participants under proposed Rule
906(b)) + (6,600 burden hours for covered
participants under proposed Rule 906(c))] = 219,008
burden hours.
1152 See Securities Exchange Act Release No.
71958 (April 17, 2014), 79 FR 25193 (May 2, 2014)
(‘‘SD/MSP Recordkeeping Proposing Release’’)
(proposing recordkeeping and reporting
requirements for security-based swap dealers, major
security-based swap participants, and brokerdealers).
1153 See SDR Adopting Release, Section VI(E)(4).
1154 See SD/MSP Recordkeeping Proposing
Release, 79 FR 25193.

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compliance. Certain provisions of Rule
907 of Regulation SBSR contain
‘‘collection of information
requirements’’ within the meaning of
the PRA. The title of this collection is
‘‘Rule 907—Policies and Procedures of
Registered SDRs.’’
1. Summary of Collection of Information
Rule 907(a) requires a registered SDR
to establish and maintain written
policies and procedures that detail how
it will receive and publicly disseminate
security-based swap transaction
information. Rule 907(a)(4) requires
policies and procedures for assigning
‘‘special circumstances’’ flags to the
necessary transaction reports.
Rule 907(c) requires a registered SDR
to make its policies and procedures
available on its Web site. Rule 907(d)
requires a registered SDR to review, and
update as necessary, the policies and
procedures that it is required to have by
Regulation SBSR at least annually. Rule
907(e) requires a registered SDR to
provide to the Commission, upon
request, information or reports related to
the timeliness, accuracy, and
completeness of data reported to it
pursuant to Regulation SBSR and the
registered SDR’s policies and
procedures established thereunder.
2. Use of Information
The policies and procedures required
under Rules 907(a) and 907(b) will be
used by reporting sides to understand
the specific data elements of securitybased swap transactions that they must
report and the specific data formats and
other reporting protocols that they will
be required to use. These policies and
procedures will be used generally by
registered SDRs to aid in their
compliance with Regulation SBSR, and
also by the Commission as part of its
ongoing efforts to monitor and enforce
compliance with the federal securities
laws, including Regulation SBSR.
Finally, any information or reports
provided to the Commission pursuant to
Rule 907(e) will be used by the
Commission to assess the timeliness,
accuracy, and completeness of reported
transaction data and assist the
Commission’s efforts to enforce
applicable security-based swap
reporting rules.
3. Respondents
Rule 907 applies to registered SDRs.
As noted above, the Commission
estimates that there will be ten
registered SDRs.

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4. Total Initial and Annual Reporting
and Recordkeeping Burdens
The Commission estimates that the
one-time, initial burden for a registered
SDR to adopt written policies and
procedures as required under Rule 907
will be approximately 15,000 hours.1155
As discussed in the Regulation SBSR
Proposing Release, this figure is based
on the estimated number of hours to
develop a set of written policies and
procedures, program systems,
implement internal controls and
oversight, train relevant employees, and
perform necessary testing.1156 In
addition, the Commission estimates the
annual burden of maintaining such
policies and procedures, including a full
review at least annually, making
available its policies and procedures on
the registered SDR’s Web site, and
information or reports on noncompliance, as required under Rule
907(e), will be approximately 30,000
hours for each registered SDR.1157 As
discussed in the Regulation SBSR
Proposing Release, this figure includes
an estimate of hours related to
reviewing existing policies and
procedures, making necessary updates,
conducting ongoing training,
maintaining relevant systems and
internal controls systems, performing
necessary testing, monitoring
participants, and compiling data.
The Commission estimates that the
initial annualized burden associated
with Rule 907 will be approximately
45,000 hours per registered SDR, which
corresponds to an initial annualized
aggregate burden of approximately
450,000 hours.1158 The Commission
1155 See Regulation SBSR Proposing Release, 75
FR 75259. This figure is based on the following:
[(Sr. Programmer at 1,667 hours) + (Compliance
Manager at 3,333 hours) + (Compliance Attorney at
5,000 hours) + (Compliance Clerk at 2,500 hours)
+ (Sr. System Analyst at 1,667 hours) + (Director of
Compliance at 833 hours)] = 15,000 burden hours
per registered SDR. These burdens are the result of
Rule 907 only and do not account for any burdens
that result from the SDR Rules. Such burdens are
addressed in a separate release. See SDR Adopting
Release, Section VII.
1156 See Regulation SBSR Proposing Release, 75
FR 75259. This figure also includes time necessary
to design and program systems and implement
policies and procedures to assign certain UICs, as
required by Rule 907(a)(5).
1157 See Regulation SBSR Proposing Release, 75
FR 75259. This figure is based on the following:
[(Sr. Programmer at 3,333 hours) + (Compliance
Manager at 6,667 hours) + (Compliance Attorney at
10,000 hours) + (Compliance Clerk at 5,000 hours)
+ (Sr. System Analyst at 3,333 hours) + (Director of
Compliance at 1,667 hours)] = 30,000 burden hours
per registered SDR.
1158 This figure is based on the following:
[((15,000 burden hours per registered SDR) +
(30,000 burden hours per registered SDR)) × (10
registered SDRs)] = 450,000 initial annualized
aggregate burden hours during the first year.

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estimates that the ongoing annualized
burden associated with Rule 907 will be
approximately 30,000 hours per
registered SDR,1159 which corresponds
to an ongoing annualized aggregate
burden of approximately 300,000
hours.1160
5. Recordkeeping Requirements
Rule 13n–7(b) under the Exchange
Act requires an SDR to keep and
preserve at least one copy of all
documents, including all documents
and policies and procedures required by
the Exchange Act and the rules or
regulations thereunder, for a period of
not less than five years, the first two
years in a place that is immediately
available to representatives of the
Commission for inspection and
examination. This requirement will
encompass policies and procedures
established by a registered SDR
pursuant to Rule 907, and any
information or reports provided to the
Commission pursuant to Rule 907(e).
6. Collection of Information Is
Mandatory
Each collection of information
discussed is mandatory.
7. Confidentiality of Responses to
Collection of Information
All of the policies and procedures
required by Rule 907 will have to be
made available by a registered SDR on
its Web site and will not, therefore, be
confidential. Any information obtained
by the Commission from a registered
SDR pursuant to Rule 907(e) relating to
the timeliness, accuracy, and
completeness of data reported to the
registered SDR will be kept confidential
subject to the provisions of applicable
law.
I. Cross-Border Matters—Rule 908

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Rule 908(a), as adopted, defines when
a security-based swap transaction will
be subject to regulatory reporting and/or
public dissemination. Specifically, Rule
908(a)(1)(i), as adopted, provides that a
security-based swap shall be subject to
regulatory reporting and public
dissemination if ‘‘[t]here is a direct or
indirect counterparty that is a U.S.
1159 See Regulation SBSR Proposing Release, 75
FR 75259. This figure is based on the following:
[(Sr. Programmer at 3,333 hours) + (Compliance
Manager at 6,667 hours) + (Compliance Attorney at
10,000 hours) + (Compliance Clerk at 5,000 hours)
+ (Sr. System Analyst at 3,333 hours) + (Director of
Compliance at 1,667 hours)] = 30,000 burden hours
per registered SDR.
1160 See Regulation SBSR Proposing Release, 75
FR 75259. This figure is based on the following:
[(30,000 burden hours per registered SDR) × (10
registered SDRs)] = 300,000 ongoing, annualized
aggregate burden hours.

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person on either or both sides of the
transaction.’’ Rule 908(a)(1)(ii), as
adopted, provides that a security-based
swap shall be subject to regulatory
reporting and public dissemination if
‘‘[t]he security-based swap is submitted
to a clearing agency having its principal
place of business in the United States.’’
Rule 908(a)(2), as adopted, provides that
a security-based swap not included
within the above provisions would be
subject to regulatory reporting but not
public dissemination ‘‘if there is a direct
or indirect counterparty on either or
both sides of the transaction that is a
registered security-based swap dealer or
a registered major security-based swap
participant.’’
Regulation 908(b), as adopted, defines
when a person might incur obligations
under Regulation SBSR. Specifically,
Rule 908(b) provides that,
notwithstanding any other provision of
Regulation SBSR, a person shall not
incur any obligation under Regulation
SBSR unless it is a U.S. person, a
registered security-based swap dealer or
registered major security-based swap
participant.
Rules 908(a) and 908(b) do not impose
any collection of information
requirements. To the extent that a
security-based swap transaction or
counterparty is subject to Rule 908(a) or
908(b), respectively, the collection of
information burdens are calculated as
part of the underlying rule (e.g., Rule
901, which imposes the basic duty to
report security-based swap transaction
information).
Rule 908(c), as adopted, sets forth the
requirements surrounding requests for
substituted compliance. As adopted,
Rule 908(c)(1) sets forth the general rule
that compliance with the regulatory
reporting and public dissemination
requirements in sections 13(m) and 13A
of the Act (15 U.S.C. 78m(m) and 78m–
1), and the rules and regulations
thereunder, may be satisfied by
compliance with the rules of a foreign
jurisdiction that is the subject of a
Commission order described in Rule
908(c)(2), provided that at least one of
the direct counterparties is either a nonU.S. person or a foreign branch.
Rule 908(c) contains ‘‘collection of
information requirements’’ within the
meaning of the PRA. The title of this
collection is ‘‘Rule 908(c)—Substituted
Compliance.’’
1. Summary of Collection of Information
A party that potentially would
comply with requirements under
Regulation SBSR pursuant to a
substituted compliance order or any
foreign financial regulatory authority or
authorities supervising such a person’s

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security-based swap activities, may file
an application requesting that the
Commission make a substituted
compliance determination pursuant to
Rule 0–13 under the Exchange Act.1161
Such entity will be required to provide
the Commission with any supporting
documentation as the Commission may
request, in addition to information that
the entity believes is necessary for the
Commission to make a determination,
such as information demonstrating that
the requirements applied in the foreign
jurisdiction are comparable to the
Commission’s and describing the
methods used by relevant foreign
financial regulatory authorities to
monitor compliance with those
requirements.
2. Use of Information
The Commission will use the
information collected pursuant to Rule
908(c)(2)(ii) to evaluate requests for
substituted compliance with regard to
regulatory reporting and public
dissemination of security-based swaps.
3. Respondents
In the Cross-Border Proposing
Release, the Commission preliminarily
estimated that requests for substituted
compliance determinations might arise
in connection with security-based swap
market participants and transactions in
up to 30 discrete jurisdictions.1162
Because only a small number of
jurisdictions have substantial OTC
derivatives markets and are
implementing OTC derivatives reforms,
the Commission preliminarily estimated
that it would receive approximately ten
requests in the first year for substituted
compliance determinations with respect
to regulatory reporting and public
dissemination pursuant to Rule
908(c)(2)(ii), and two requests each
subsequent year.1163 Although the range
of entities that are allowed to submit
applications for substituted compliance
has increased, the Commission does not
believe that this warrants a change in its
estimate of the number of requests that
the Commission will receive. The
Commission continues to believe that
other considerations will determine the
number of applications that it will
receive, such as which jurisdictions
have regulatory structures similar
enough to the Commission’s as to merit
1161 See 17 CFR 200.0–13; Cross-Border Adopting
Release, 79 FR 47357–60.
1162 See Cross-Border Proposing Release, 78 FR
31109–10.
1163 See id. at 31110. Rule 908(c)(2)(ii), as
adopted, allows ‘‘[a] party that potentially would
comply with requirements under [Regulation SBSR]
. . . or any foreign financial regulatory authority or
authorities supervising such a person’s securitybased swap activities may file an application.’’

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a request and the number of entities
potentially impacted by Regulation
SBSR.
4. Total Initial and Annual Reporting
and Recordkeeping Burdens

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Rule 908(c)(2)(ii), as adopted, applies
to any person that requests a substituted
compliance determination with respect
to regulatory reporting and public
dissemination of security-based swaps.
In connection with each request, the
requesting party must provide the
Commission with any supporting
documentation that the entity believes
is necessary for the Commission to make
a determination, including information
demonstrating that the requirements
applied in the foreign jurisdiction are
comparable to the Commission’s and
describing the methods used by relevant
foreign financial regulatory authorities
to monitor compliance with those
requirements. The Commission initially
estimated, in the Cross-Border
Proposing Release, that the total
paperwork burden associated with
submitting a request for a substituted
compliance determination with respect
to regulatory reporting and public
dissemination will be approximately
1,120 hours, plus $1,120,000 for 14
requests.1164 This estimate includes all
collection burdens associated with the
request, including burdens associated
with analyzing whether the regulatory
requirements of the foreign jurisdiction
impose a comparable, comprehensive
system for the regulatory reporting and
public dissemination of all securitybased swaps. Furthermore, this estimate
assumes that each request will be
prepared de novo, without any benefit
of prior work on related subjects. The
Commission notes, however, that as
such requests are developed with
respect to certain jurisdictions, the cost
of preparing such requests with respect
to other foreign jurisdictions could
decrease.1165
Assuming ten requests in the first
year, the Commission staff estimated an
aggregated burden for the first year will
be 800 hours, plus $800,000 for the
1164 The Commission staff estimates that the
paperwork burden associated with making a
substituted compliance request pursuant to Rule
908(c)(2)(ii) will be approximately 80 of in-house
counsel time, plus $80,000 for the services of
outside professionals (based on 200 hours of
outside counsel time × $400). See id., Cross-Border
Proposing Release, 78 FR 31110
1165 If and when the Commission grants a request
for substituted compliance, subsequent applications
might be able to leverage work done on the initial
application. However, the Commission is unable to
estimate the amount by which the cost could
decrease without knowing the extent to which
different jurisdictions have similar regulatory
structures.

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services of outside professionals.1166
The Commission preliminarily
estimated that it would receive 2
requests for substituted compliance
determinations pursuant to Rule
908(c)(2)(ii) in each subsequent year.
Assuming the same approximate time
and costs, the aggregate burden for each
year following the first year will be up
to 160 hours of company time and
$160,000 for the services of outside
professionals.1167
5. Recordkeeping Requirements
Rule 908(c)(2)(ii) does not impose any
recordkeeping requirements on entities
that submit requests for a substituted
compliance determination. The
Commission has proposed but not yet
adopted recordkeeping requirements for
registered security-based swap dealers.
6. Collection of Information Is
Mandatory
The collection of information
discussed above is mandatory for any
entity seeking a substituted compliance
determination from the Commission
regarding regulatory reporting and
public dissemination of security-based
swaps.
7. Confidentiality of Responses to
Collection of Information
The Commission generally intends to
make public the information submitted
to it pursuant to any request for a
substituted compliance determination
under Rule 908(c)(2)(ii), including
supporting documentation provided by
the requesting party. However, a
requesting party may submit a
confidential treatment request pursuant
to Rule 24b–2 under the Exchange Act
to object to public disclosure.
J. Registration of SDRs as Securities
Information Processors—Rule 909
Rule 909 requires a registered SDR
also to register with the Commission as
a SIP on Form SDR. Previously, in the
Regulation SBSR Proposing Release, the
Commission had proposed the use of a
1166 The Commission staff estimates that the
paperwork burden associated with making a
substituted compliance request pursuant to Rule
242.908(c)(2)(ii) will be up to approximately 800
hours (80 hours of in-house counsel time × 10
respondents), plus $800,000 for the services of
outside professionals (based on 200 hours of
outside counsel time × $400 × 10 respondents). See
Cross-Border Proposing Release, 78 FR 31110.
1167 The Commission staff estimates that the
paperwork burden associated with making a
substituted compliance request pursuant to Rule
242.908(c)(2)(ii) would be up to approximately 160
hours (80 hours of in-house counsel time × 2
respondents) + plus $160,000 for the services of
outside professionals (based on 200 hours of
outside counsel time × $400 × 2 respondents). See
Cross-Border Proposing Release, 78 FR 31110.

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14687

separate form, Form SIP. Based on the
use of that form, the Commission stated
in the Regulation SBSR Proposing
Release that Rule 909 contained
‘‘collection of information
requirements’’ within the meaning of
the PRA and thus, the Commission
preliminarily estimated certain burdens
on registered SDRs that would result
from Rule 909.1168 As a result of the
consolidation of SDR and SIP
registration on a single form, the
Commission now believes that Rule 909
does not constitute a separate
‘‘collection of information’’ within the
meaning of the PRA.1169
XXII. Economic Analysis
The Commission is sensitive to the
economic consequences and effects,
including costs and benefits, of its rules.
Some of these costs and benefits stem
from statutory mandates, while others
are affected by the discretion exercised
in implementing the mandates. The
following economic analysis identifies
and considers the costs and benefits—
including the effects on efficiency,
competition, and capital formation—
that may result from the rules, as
adopted . These costs and benefits are
discussed below and have informed the
policy choices described throughout
this release.
The Dodd-Frank Act amended the
Exchange Act to require the regulatory
reporting and public dissemination of
all security-based swaps. To implement
these requirements, Regulation SBSR
requires that all security-based swaps to
be reported to a registered SDR, and
requires the registered SDR immediately
to disseminate a subset of that
information to the public. Regulation
SBSR specifies the security-based swap
information that must be reported, who
has the duty to report, and the
timeframes for reporting and
disseminating information. Regulation
SBSR also requires registered SDRs to
establish policies and procedures
governing the reporting and
dissemination process, including
procedures for utilizing unique
identification codes for legal entities,
units of legal entities (such as branches,
trading desks, and individual traders),
products, and transactions. In the
Regulation SBSR Proposing Release, the
Commission highlighted certain
overarching benefits to the securitybased swap markets that it preliminarily
believed would result from the adoption
of Regulation SBSR. These potential
1168 See Regulation SBSR Proposing Release, 75
FR 75261.
1169 See SDR Adopting Release, Section
VI(A)(1)(c).

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benefits include, generally, improved
market quality, improved risk
management, greater efficiency, and
improved Commission oversight.1170
In the Cross-Border Proposing
Release, the Commission re-proposed
Regulation SBSR in its entirety and
considered the changes to the initial
assessments of costs and benefits
associated with the re-proposed rules. In
doing so, the Commission explained
that Regulation SBSR is intended to
further the goals highlighted in the
Regulation SBSR Proposing Release,
while further limiting, to the extent
practicable, the overall costs to the
security-based swap market associated
with regulatory reporting and public
dissemination in cross-border
situations.1171 The adopted rules are
designed to limit overall costs by
imposing reporting duties and the
associated costs on those parties who
are most likely to have the necessary
infrastructure in place to carry out the
reporting function.1172 As the
Commission noted, many of the
revisions set forth in the re-proposal
were suggested by commenters to the
initial proposal and were designed,
among other things, to better align
reporting duties with larger entities that
have greater resources and capability to
report and to reduce the potential for
duplicative reporting. The Commission
stated that the revisions should help to
limit, to the extent practicable, the
overall costs to the security-based swap
market associated with reporting in
cross-border situations.1173
The Commission is now adopting
Regulation SBSR, with certain revisions
discussed in Sections I through XVII,
supra.
In assessing the economic impact of
the rules, the Commission refers to the
broader costs and benefits associated

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1170 See

Regulation SBSR Proposing Release, 75
FR 75261–62.
1171 See Cross-Border Proposing Release, 78 FR
31196–97.
1172 While certain parties that generally will have
the heaviest duties to report transactions (e.g.,
registered security-based swap dealers and
registered major security-based swap participants)
will incur costs, the costs of those parties generally
will be lower than they would be for other parties
(e.g., non-dealers) because those parties may
already have the necessary infrastructure in place
to report transactions and they will benefit from
economies of scale due to the high volume of
transactions that flows through them compared to
other parties. Although security-based swap dealers
and major security-based swap participants might
pass on these costs, at least in part, to their nonreporting counterparties, the costs that are passed
on to non-reporting parties are likely to be lower
than the costs that the non-reporting parties would
face if they had direct responsibility to report these
transactions.
1173 See Cross-Border Proposing Release, 78 FR
31192.

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with the application of the adopted
rules as ‘‘programmatic’’ costs and
benefits. These include the costs and
benefits of applying the substantive
Title VII requirements to the reporting
of transactions by market participants,
as well as to the functions performed by
infrastructure participants (such as
SDRs) in the security-based swap
market. In several places the
Commission also considers how the
programmatic costs and benefits might
change when comparing the adopted
approach to other alternatives suggested
by comment letters. The Commission’s
analysis also considers ‘‘assessment’’
costs—those that arise from current and
future market participants expending
resources to determine whether they are
subject to Regulation SBSR, and could
incur expenses in making this
determination even if they ultimately
are not subject to rules for which they
made an assessment.
The Commission’s analysis also
recognizes that certain market
participants are subject to Regulation
SBSR while potentially also being
subject to requirements imposed by
other regulators. Concurrent, and
potentially duplicative or conflicting,
regulatory requirements could be
imposed on persons because of their
resident or domicile status or because of
the place their security-based swap
transactions are conducted. Rule 908(c)
establishes a mechanism whereby
market participants who would be
subject to both Regulation SBSR and a
foreign regulatory regime could, subject
to certain conditions, ‘‘substitute
compliance’’ with the foreign regulatory
regime for compliance with Regulation
SBSR.
A. Broad Economic Considerations
Among the primary economic
considerations for promulgating the
rules on the regulatory reporting and
public dissemination of security-based
swap information are the risks to
financial stability posed by securitybased swap activity and exposures and
the effect that the level of transparency
in the security-based swap market may
have on market participants’ ability to
efficiently execute trades. For example,
on one hand, an increased level of
transparency may make trading more
efficient since market participants have
additional information on which to base
their trading decisions. On the other
hand, if post-trade transparency makes
hedging of large trades or trades in
illiquid securities more difficult, it may

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make execution of these trades less
efficient.1174
As the Commission has noted
previously,1175 the security-based swap
market allows participants
opportunities for efficient risk sharing.
By transacting in security-based swaps,
firms can lay off financial and
commercial risks that they are unwilling
to bear to counterparties who may be
better-equipped to bear them. Risk
transfer is accomplished through
contractual obligations to exchange cash
flows with different risk characteristics.
These opportunities for risk sharing,
however, also represent opportunities
for risk transmission through a variety
of channels. For instance, a credit event
that triggers a large payout to one
counterparty by a seller of credit
protection, may render that protection
seller unable to meet other payment
obligations, placing its other
counterparties under financial strain. In
addition to the risk of sequential
counterparty default, security-based
swap relationships can transmit risks
across asset classes and jurisdictional
boundaries through liquidity and asset
price channels.
Unlike most other securities
transactions, security-based swaps
entail ongoing financial obligations
between counterparties during the life
of a transaction that could span several
years. As a result of these ongoing
obligations, market participants are
exposed not only to the market risk of
assets that underlie a security-based
swap contract, but also to the credit risk
of their counterparties until the
transaction is terminated. These
exposures create a web of financial
relationships in which the failure of a
single large firm active in the securitybased swap market can have
consequences beyond the firm itself. A
default by such a firm, or even the
perceived lack of creditworthiness of
that firm, could produce contagion
through sequential counterparty default
or reductions in liquidity, willingness to
extend credit, and valuations for
financial instruments.1176
Currently, the security-based swap
market is an OTC market without
standardized reporting or public
1174 See Analysis of Post-Trade Transparency, in
which Commission staff describes the effects of
post-trade transparency on relatively illiquid swaps.
1175 See Cross-Border Adopting Release, 79 FR
47283–85.
1176 See, e.g., Markus K. Brunnermeier and Lasse
Heje Pedersen, ‘‘Market Liquidity and Funding
Liquidity,’’ Review of Financial Studies (2009);
Denis Gromb and Dimitri Vayanos, ‘‘A Model of
Financial Market Liquidity,’’ Journal of the
European Economic Association (2010).

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
dissemination requirements.1177 Market
participants observe only the details of
transactions for which they are a
counterparty, and there is no
comprehensive and widely available
source of information about transactions
after they occur (post-trade
transparency). As a result, the ability of
a market participant to evaluate a
potential transaction depends on its
own transaction history and indicative
(non-binding) quotes that it may obtain
through fee-based services, and OTC
market participants with the largest
order flow have an informational
advantage over other market
participants. The value of private
information to large dealers may, in
part, explain why security-based swap
market participants do not have
sufficient incentive to voluntarily
implement post-trade transparency.1178
Additionally, unless all market
participants are subject to reporting
rules, market participants who may
prefer a more transparent market
structure may not believe that the
benefits of disseminating data about
their own limited order flow justifies
the costs associated with building and
paying for the necessary infrastructure
to support public dissemination of
transaction information.
The discussion below presents an
overview of the OTC derivatives
markets, a consideration of the general
costs and benefits of the regulatory
reporting and public dissemination
requirements, and a discussion of the
costs and benefits of each rule within
Regulation SBSR. The economic
analysis concludes with a discussion of
the potential effects of Regulation SBSR,
as adopted, on efficiency, competition,
and capital formation.

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B. Baseline
To assess the economic impact of the
final rules described in this release, the
Commission is using as a baseline the
security-based swap market as it exists
at the time of this release, including
applicable rules adopted by the
Commission but excluding rules that
have been proposed but not yet
finalized. The analysis includes the
1177 There is voluntary reporting as well as
voluntary clearing, as discussed in Section XXII(B).
However, transaction level information is not made
public through these channels. Only limited
information (e.g., trading volume and notional
outstanding) is available publicly on an aggregate
basis, and often with a delay.
1178 Throughout Section XXII, the term ‘‘dealers’’
refers to security-based swap market participant
that engage in dealing activities while the term
‘‘registered dealers’’ are those required to register
with the Commission. See Intermediary Definitions
Adopting Release, 77 FR 30596; Cross-Border
Adopting Release, 79 FR 47277.

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statutory and regulatory provisions that
currently govern the security-based
swap market pursuant to the DoddFrank Act. The Commission also has
considered, where appropriate, the
impacts on market practice of other
regulatory regimes.
1. Current Security-Based Swap Market
The Commission’s analysis of the
state of the current security-based swap
market is based on data obtained from
DTCC–TIW, particularly data regarding
the activity of market participants in the
single-name credit default swap (CDS)
market during the period from 2008 to
2013. Some of the Commission staff’s
analysis regarding the impact of CFTC
trade reporting rules entails the use of
open positions and transaction activity
data for index credit default swap
(index CDS) and single-name CDS
during the period from July 1, 2011 to
June 30, 2013, obtained from the DTCC–
TIW and through the DTCC public Web
site of weekly stock and volume
reports.1179 The data for index CDS
encompasses CDS on both broad-based
security indices and narrow-based
security indices, and ‘‘security-based
swap’’ in relevant part encompasses
swaps based on single securities or on
narrow-based security indices.1180
While other trade repositories may
collect data on transactions in total
return swaps on equity and debt, the
Commission does not currently have
access to such data for these products
(or other products that are securitybased swaps). As such, the Commission
is unable to analyze security-based
swaps other than those described above.
However, the Commission believes that
the single-name CDS data are
representative of the market and
therefore can directly inform the
analysis of the state of the current
security-based swap market.1181
The Commission believes that the
data underlying its analysis provides
reasonably comprehensive information
regarding the single-name CDS
transactions and composition of the
single-name CDS market participants.
The Commission notes that the data
available from DTCC–TIW do not
encompass those CDS transactions that
both: (1) Do not involve U.S.
1179 The DTCC public Web site can be found at
http://www.dtcc.com/repository-otc-data.aspx, last
visited September 22, 2014. See also Analysis of
Post-Trade Transparency.
1180 See Section 3(a)(68) of the Exchange Act. See
also Product Definitions Adopting Release, 77 FR
48208.
1181 See Cross-Border Proposing Release, 78 FR
31120.

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14689

counterparties 1182; and (2) are based on
reference entities domiciled outside the
United States (non-U.S. reference
entities). Notwithstanding this
limitation, the Commission believes that
the DTCC–TIW data provide
information that is sufficient for the
purpose of identifying the types of
market participants active in the
security-based swap market and the
general characteristics of transactions
within that market.1183
a. Security-Based Swap Market
Participants
The available data supports the
characterization of the security-based
swap market as one that relies on
intermediation by a small number of
entities that engage in dealing activities.
In addition to this small number of
dealing entities, thousands of other
participants appear as counterparties to
security-based swap contracts in the
sample, and include, but are not limited
to, investment companies, pension
funds, private (hedge) funds, sovereign
entities, and industrial companies. Most
non-dealer users of security-based
swaps do not directly engage in the
trading of swaps with other non-dealers,
but use dealers, banks, or investment
advisers as intermediaries or agents to
establish their positions. Based on an
analysis of the counterparties to trades
reported to the DTCC–TIW, there are
1,800 entities that engaged directly in
trading between November 2006 and
December 2013.
Table 1, below, highlights that close
to three-quarters of these entities
(DTCC-defined ‘‘firms’’ shown in
DTCC–TIW, which are referred to here
as ‘‘transacting agents’’) were identified
as investment advisers, of which
approximately 40% (about 30% of all
transacting agents) were registered
investment advisers under the
Investment Advisers Act of 1940.1184
Although investment advisers comprise
the vast majority of transacting agents,
the transactions that they executed
account for only 9.7% of all single-name
CDS trading activity reported to the
DTCC–TIW, measured by number of
1182 The Commission notes that DTCC–TIW’s
entity domicile determinations may not reflect the
definition of ‘‘U.S. person’’ in Rule 900(ss).
1183 Commission staff estimates, using data from
2013, that the transaction data include 77% of all
single-name CDS transactions reported to DTCC–
TIW.
1184 See 15 U.S.C. 80b1–80b21. Transacting agents
engage in the security-based swap market, without
relying on an intermediary, on behalf of principals.
For example, a university endowment may hold a
position in a security-based swap that is built up
by an investment adviser that transacts on the
endowment’s behalf. In this case, the university
endowment is a principal that uses the investment
adviser as a transacting agent.

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations

transaction-sides.1185 The vast majority
of transactions (84.1%) measured by
number of transaction-sides were

executed by ISDA-recognized
dealers.1186

TABLE 1—THE NUMBER OF TRANSACTING AGENTS BY COUNTERPARTY TYPE AND THE FRACTION OF TOTAL TRADING
ACTIVITY, FROM NOVEMBER 2006 THROUGH DECEMBER 2013, REPRESENTED BY EACH COUNTERPARTY TYPE

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Transacting agents

Number

Investment Advisers ........................................................................................................................
—SEC registered .............................................................................................................................
Banks ...............................................................................................................................................
Pension Funds .................................................................................................................................
Insurance Companies ......................................................................................................................
ISDA-Recognized Dealers 1187 ........................................................................................................
Other ................................................................................................................................................

1,347
529
256
29
36
17
115

Total ..........................................................................................................................................

1,800

Percent
74.8
29.4
14.2
1.6
2.0
0.9
6.4
100

Transaction
share
(%)
9.7
5.9
5.0
0.1
0.2
84.1
1.0
100

Principal holders of CDS risk
exposure are represented by ‘‘accounts’’
in the DTCC–TIW.1188 The staff’s
analysis of these accounts in DTCC–TIW
shows that the 1,800 transacting agents
classified in Table 1 represent over
10,054 principal risk holders. Table 2,
below, classifies these principal risk
holders by their counterparty type and
whether they are represented by a
registered or unregistered investment

adviser.1189 For instance, 256 banks in
Table 1 allocated transactions across
369 accounts, of which 30 were
represented by investment advisers. In
the remaining 339 instances, banks
traded for their own accounts.
Meanwhile, 17 ISDA-recognized dealers
in Table 1 allocated transactions across
69 accounts.
Among the accounts, there are 1,086
special entities 1190 and 636 investment

companies registered under the
Investment Company Act.1191 Private
funds comprise the largest type of
account holders that the Commission
was able to classify, and although not
verified through a recognized database,
most of the funds that could not be
classified appear to be private funds.1192

1185 Each transaction has two transaction sides,
i.e., two transaction counterparties.
1186 The 1,800 entities included all DTCC-defined
‘‘firms’’ shown in DTCC–TIW as transaction
counterparties that report at least one transaction to
DTCC–TIW as of December 2013. The staff in the
Division of Economic and Risk Analysis classified
these firms, which are shown as transaction
counterparties, by machine matching names to
known third-party databases and by manual
classification. This is consistent with the
methodology used in the re-proposal. See CrossBorder Proposing Release, 78 FR 31120 note 1304.
Manual classification was based in part on searches
of the EDGAR and Bloomberg databases, the
Commission’s Investment Adviser Public
Disclosure database, and a firm’s public Web site
or the public Web site of the account represented
by a firm. The staff also referred to ISDA protocol
adherence letters available on the ISDA Web site.
1187 For the purpose of this analysis, the ISDArecognized dealers are those identified by ISDA as

belonging to the G14 or G16 dealer group during the
period: JP Morgan Chase NA (and Bear Stearns),
Morgan Stanley, Bank of America NA (and Merrill
Lynch), Goldman Sachs, Deutsche Bank AG,
Barclays Capital, Citigroup, UBS, Credit Suisse AG,
RBS Group, BNP Paribas, HSBC Bank, Lehman
Brothers, Socie´te´ Ge´ne´rale, Credit Agricole, Wells
Fargo, and Nomura. See, e.g., http://www.isda.org/
c_and_a/pdf/ISDA-Operations-Survey-2010.pdf
(last visited September 22, 2014).
1188 ‘‘Accounts’’ as defined in the DTCC–TIW
context are not equivalent to ‘‘accounts’’ in the
definition of ‘‘U.S. person’’ provided by Rule 3a71–
3(a)(4)(i)(C) under the Exchange Act. They also do
not necessarily represent separate legal persons.
One entity or legal person may have multiple
accounts. For example, a bank may have one DTCC
account for its U.S. headquarters and one DTCC
account for one of its foreign branches.
1189 Unregistered investment advisers include all
investment advisers not registered under the

Investment Advisers Act and may include
investment advisers registered with a state or a
foreign authority.
1190 See Section 15F(h)(2)(C) of the Exchange Act,
15 U.S.C. 78o–10(h)(2)(C) (defining ‘‘special entity’’
to include a federal agency; a state, state agency,
city, county, municipality, or other political
subdivision of a state; any employee benefit plan;
any governmental plan; or any endowment).
1191 There remain over 4,000 DTCC ‘‘accounts’’
unclassified by type. Although unclassified, each
was manually reviewed to verify that it was not
likely to be a special entity and instead was likely
to be an entity such as a corporation, an insurance
company, or a bank.
1192 Private funds for the purpose of this analysis
encompass various unregistered pooled investment
vehicles, including hedge funds, private equity
funds, and venture capital funds.

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14691

TABLE 2—THE NUMBER AND PERCENTAGE OF ACCOUNT HOLDERS—BY TYPE—WHO PARTICIPATE IN THE SECURITYBASED SWAP MARKET THROUGH A REGISTERED INVESTMENT ADVISER, AN UNREGISTERED INVESTMENT ADVISER, OR
DIRECTLY AS A TRANSACTING AGENT, FROM NOVEMBER 2006 THROUGH DECEMBER 2013
Account holders by type

Number

Represented by an unregistered investment adviser

Participant is transacting
agent 1193

Private Funds ...........................................
DFA Special Entities ................................
Registered Investment Companies ..........
Banks (non-ISDA-recognized dealers) ....
Insurance Companies ..............................
ISDA-Recognized Dealers .......................
Foreign Sovereigns ..................................
Non-Financial Corporations .....................
Finance Companies .................................
Other/Unclassified ....................................

2,914
1,086
636
369
224
69
63
57
10
4,626

1,395
1,050
620
25
144
0
45
39
5
3,130

48%
97%
97%
7%
64%
0%
71%
68%
50%
68%

1,496
12
14
5
21
0
2
3
0
1,294

51%
1%
2%
1%
9%
0%
3%
5%
0%
28%

23
24
2
339
59
69
16
15
5
200

1%
2%
0%
92%
26%
100%
25%
26%
50%
4%

All ......................................................

10,054

6,453

64%

2,847

28%

752

7%

i. Participant Domiciles
The security-based swap market is
global in scope, with counterparties
located across multiple jurisdictions. A

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Represented by a registered investment adviser

U.S.-based holding company may
conduct dealing activity through a
foreign subsidiary that faces both U.S.
and foreign counterparties, and the

foreign subsidiary may be guaranteed by
its parent, making the parent
responsible for performance under these
security-based swaps.

1193 This column reflects the number of
participants who are also trading for their own
accounts.

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As depicted in Figure 1, over time a
greater share of accounts entering the
market either have a foreign domicile, or
have a foreign domicile while being
managed by a U.S. person. The increase
in foreign accounts may reflect an
increase in participation by foreign
accountholders while the increase in
foreign accounts managed by U.S.
persons may reflect the flexibility with
which market participants can
restructure their market participation in
response to regulatory intervention,
competitive pressures, and other
1194 Following publication of the Warehouse
Trust Guidance on CDS data access, DTCC–TIW
surveyed market participants, asking for the
physical address associated with each of their
accounts (i.e., where the account is organized as a
legal entity). This is designated the registered office
location by the DTCC–TIW. When an account does
not report a registered office location, the
Commission has assumed that the settlement
country reported by the investment adviser or
parent entity to the fund or account is the place of
domicile. This treatment assumes that the registered
office location reflects the place of domicile for the
fund or account.

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stimuli. There are, however, alternative
explanations for the shifts in new
account domicile that can be observed
in Figure 1. Changes in the domicile of
new accounts through time may reflect
improvements in reporting by market
participants to DTCC–TIW.1195
Additionally, because the data include
only accounts that are domiciled in the
United States, transact with U.S.domiciled counterparties, or transact in
single-name CDS with U.S. reference
entities, changes in the domicile of new
accounts may reflect increased
transaction activity between U.S. and
non-U.S. counterparties.
ii. Current Estimates of Dealers and
Major Participants
In its economic analysis of rules
defining ‘‘security-based swap dealer’’
and ‘‘major security-based swap
participant,’’ the Commission noted,
using DTCC–TIW data for the year
1195 See

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ending in December 2012, that it
expected 202 entities to engage in dealer
de minimis analysis.1196 Further, the
Commission’s analysis of single-name
CDS transactions data suggested that
only a subset of these entities engage in
dealing activity and estimated 50
registered dealers as an upper bound
based on the threshold for the de
minimis exception adopted in that
release.1197 The Commission also
undertook an analysis of the number of
security-based swap market participants
likely to register as major security-based
swap participants, and estimated a
range of between zero and five such
participants.1198 Based on data for the
1196 See Cross-Border Adopting Release, 79 FR
47331.
1197 Id. at 47296, note 150 (describing the
methodology employed by the Commission to
estimate the number of potential security-based
swap dealers).
1198 Id. at 47297, note 153 (describing the
methodology employed by the Commission to
estimate the number of potential major securitybased swap participants).

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
year ending in December 2013, the
Commission continues to believe that 50
represents an upper bound on the
number of dealers expected to register
and between zero and five major
participants will register. As a result of
further experience with the DTCC–TIW
data, the Commission now estimates,
based on data for the year ending in
December 2013, that the number of
participants likely to engage in dealer de
minimis analysis is approximately 170.
Forty-eight of these participants are
domiciled outside of the United States
and have $2 billion in transactions with
U.S. counterparties or that otherwise
may have to be counted for purposes of
the de minimis analysis.
iii. Security-Based Swap Data
Repositories
There are currently no SDRs
registered with the Commission.
However, the CFTC has provisionally
registered four swap data repositories to
accept credit derivatives. The
Commission believes that these entities
may register with the Commission as
SDRs. Because most participants in the
security-based swap market also
participate in the swap market,1199 other
persons might, in the future, seek to
register with both the CFTC and the
Commission as SDRs. In addition, once
a swap data repository has established
infrastructure sufficient to allow it to

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1199 See

infra Section XXII(B)(3).

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register with the CFTC, the costs for it
to also register with the Commission as
an SDR and adapt its business for
security-based swap activity will likely
be low relative to the costs for a wholly
new entrant.
b. Security-Based Swap Transaction
Activity
Single-name CDS contracts make up
the vast majority of security-based swap
products and most are written on
corporate issuers, corporate debt
securities, sovereign countries, or
sovereign debt securities (reference
entities and reference securities). Figure
2, below, describes the percentage of
global, notional transaction volume in
U.S. single-name CDS reported to the
DTCC–TIW between January 2008 and
December 2013, separated by whether
transactions are between two ISDArecognized dealers (interdealer
transactions) or whether a transaction
has at least one non-dealer counterparty.
The level of trading activity with
respect to U.S. single-name CDS in
terms of notional volume has declined
from more than $6 trillion in 2008 to
less than $3 trillion in 2013.1200 While
1200 The start of this decline predates the
enactment of the Dodd-Frank Act and the proposal
of rules thereunder. For the purpose of establishing
an economic baseline, this seems to indicate that
CDS market demand shrank prior to the enactment
of the Dodd-Frank Act, and therefore the causes of
trading volume declines may be independent of
those related to the development of security-based

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14693

notional volume has declined over the
past six years, the share of interdealer
transactions has remained fairly
constant and interdealer transactions
continue to represent the bulk of trading
activity, whether measured in terms of
notional value or number of transactions
(see Figure 2).
The high level of interdealer trading
activity reflects the central position of a
small number of dealers who each
intermediate trades among many
hundreds of counterparties. While the
Commission is unable to quantify the
current level of trading costs for singlename CDS, it appears that the market
power enjoyed by dealers as a result of
their small number and the large
proportion of order flow they privately
observe is a key determinant of trading
costs in this market.
swap market regulation. If the security-based swap
market experiences further declines in trading
activity, it would be difficult to identify the effects
of the newly-developed security-based swap market
regulation apart from changes in trading activity
that may be due to natural market forces or the
anticipation of (or reaction to) proposed (or
adopted) Title VII requirements. These estimates
differ from previous estimates as a result of staff
experience with transaction-level data provided by
DTCC–TIW. First, the aggregate level of transaction
activity presented in Figure 2 more accurately
reflects the notional amounts associated with
partial assignments and terminations of existing
security-based swap contracts. Second, the
treatment of assignments in Figure 2 includes the
counterparty type (dealer or non-dealer) of
counterparties vacating trades in assignments as
well as those entering.

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Against this backdrop of declining
North American corporate single-name
CDS activity, about half of the trading
activity in North American corporate
single-name CDS reflected in the set of
data that the Commission analyzed was
between counterparties domiciled in the
United States and counterparties
domiciled abroad. Basing counterparty
domicile on the self-reported registered
office location of the DTCC–TIW
accounts, the Commission estimates that
only 13% of the global transaction
volume by notional volume between
2008 and 2013 was between two U.S.domiciled counterparties, compared to
48% entered into between one U.S.domiciled counterparty and a foreigndomiciled counterparty and 39%
entered into between two foreigndomiciled counterparties (see Figure
3).1201
When the domicile of DTCC–TIW
accounts are instead defined according
to the domicile of their ultimate parents,
headquarters, or home offices (e.g.,
classifying a foreign branch or foreign

1201 See

subsidiary of a U.S. entity as domiciled
in the United States), the fraction of
transactions entered into between two
U.S.-domiciled counterparties increases
to 29%, and to 53% for transactions
entered into between a U.S.-domiciled
counterparty and a foreign-domiciled
counterparty.
Differences in classifications across
different definitions of domicile
illustrate the effect of participant
structures that operate across
jurisdictions. Notably, the proportion of
activity between two foreign-domiciled
counterparties drops from 39% to 18%
when domicile is defined as the
ultimate parent’s domicile. As noted
earlier, foreign subsidiaries of U.S.
persons, foreign branches of U.S.
persons, and U.S. subsidiaries of foreign
persons, and U.S. branches of foreign
persons may transact with U.S. and
foreign counterparties. However, this
decrease in share suggests that the
activity of foreign subsidiaries of U.S.
persons and foreign branches of U.S.
persons is generally higher than the

activity of U.S. subsidiaries of foreign
persons and U.S. branches of foreign
persons.
By either of those definitions of
domicile, the data indicate that a large
fraction of North American corporate
single-name CDS transaction volume is
entered into between counterparties
domiciled in two different jurisdictions
or between counterparties domiciled
outside the United States. For the
purpose of establishing an economic
baseline, this observation indicates that
a large fraction of security-based swap
activity would be affected by the scope
of any cross-border approach we take in
applying the Title VII requirements.
Further, the large fraction of North
American corporate single-name CDS
transactions between U.S.-domiciled
and foreign-domiciled counterparties
also highlights the extent to which
security-based swap activity transfers
risk across geographical boundaries,
both facilitating risk sharing among
market participants and allowing for
risk transmission between jurisdictions.

supra notes 788 and 1183.

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations

14695

Figure 3: The fraction of notional volume in North American corporate single-name CDS
between (1) two U.S.-domiciled accounts, (2) one U.S.-domiciled account and one non-U.S.domiciled account, and (3) two non-U.S.-domiciled accounts, computed from January 2008
through December 2013.
Single Name CDS Transactions by Domicile
(% of notional volume, 2008 - 2013)
60%
50%
40%
30%
20%
10%
0%
US-Foreign

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• Registered office location

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US-US

Parent company domicile

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Foreign-Foreign

Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations

Figures 4 and 5 present the frequency
distribution of trades by size for two
subsamples of transactions observed in
2013. A salient feature of the trade size

distribution is that trades tend to be
clustered at ‘‘round’’ numbers: $1
million, $5 million, $10 million, etc.
While large and very large trades do

occur, less than 1% of the transactions
in our sample were for notional
amounts greater than $100 million.

1202 The left-most bar, labeled ‘‘0’’, represents the
number of trades with notional values greater than
$0 and less than $1 million, while the next bar

represents the number of trades with notional
values greater than or equal to $1 million and less
than $2 million, and so on. The right-most bar,

labeled ‘‘30’’, represents the number of trades with
notional values of exactly $30 million.

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1203 The left-most bar, labeled ‘‘30’’, represents
the number of trades with notional values greater
than $30 and less than $50 million, while the next
bar represents the number of trades with notional
values greater than or equal to $50 million and less
than $70 million, and so on. The right-most bar,
labeled ‘‘710’’, represents the number of trades with
notional value greater than $710 million.
1204 See ‘‘ISDA CDS Marketplace: Exposures and
Activity’’ (available at http://
www.isdacdsmarketplace.com/exposures_and_
activity (last visited September 22, 2014).

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clearing requirement in the single-name
CDS market, market participants may
choose to clear transactions voluntarily.
However, neither voluntary reporting
nor voluntary clearing results in data
that are available to the public on a
trade-by-trade basis.
In the Regulation SBSR Proposing
Release, the Commission preliminarily
estimated that there would be 1,000
reporting parties 1205 and 15.5 million
reportable events per year.1206 In the
Cross-Border Proposing Release, the
Commission revised its estimate of the
number of reporting sides from 1,000 to
300 and revised its estimate of the
number of reportable events from 15.5
million to approximately 5 million.1207
These revised estimates were a result of
the Commission obtaining additional
and more granular data regarding
participation in the security-based swap
market from DTCC–TIW. As discussed
75 FR 75247.
1206 See id. at 75248.
1207 See 78 FR 31114.

above, since issuing the Cross-Border
Proposing Release, the Commission has
obtained additional and even more
granular data regarding participation in
the security-based swap market from
DTCC–TIW. As a result, the
Commission is now further revising its
estimate of the number of reportable
events. Accordingly, the Commission
now estimates that 300 reporting sides
will be required to report an aggregate
total of approximately 3 million
reportable events per year under Rule
901, as adopted.1208

TABLE 3—TRADE REPORTS BY
TRANSACTION TYPE, 2013
Count
Interdealer .............................
Dealer—Non-Dealer .............
Clearinghouse .......................

1,231,796
482,860
546,041

Total ...............................

2,260,577

1205 See

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c. Counterparty Reporting
While there is no mandatory reporting
requirement for the single-name CDS
market yet, virtually all market
participants voluntarily report their
trades to DTCC–TIW, in some cases
with the assistance of post-trade
processors, which maintains a legal
record of transactions.1204 Among other
things, this centralized record-keeping
facilitates settlement of obligations
between counterparties when a default
event occurs as well as bulk transfers of
positions between accounts at a single
firm or between firms. In addition,
while there is not yet a mandatory

14697

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d. Sources of Security-Based Swap
Information
There currently is no robust, widely
accessible source of information about
individual security-based swap
transactions. Nevertheless, market
participants can gather certain limited
information for the single-name
CDS 1209 market from a variety of
sources. First, indicative quotes can be
obtained through market data vendors
such as Bloomberg or Markit. These
quotes typically do not represent firm
commitments to buy or sell protection
on particular reference entities. Since
there is no commitment to buy or sell
associated with indicative quotes, there
are fewer incentives for market
participants that post indicative quotes
to quote prices that accurately reflect
the fundamental value of the asset to be
traded. However, market participants
can glean information from indicative
quotes that may inform their trading.
Second, there is limited, publiclydisseminated information about
security-based swap market activity
presented at an aggregate level. As
mentioned above, market participants
sometimes voluntarily clear their
transactions, e.g., through ICE Clear
Credit.1210 To support their risk
management activities, clearing agencies
compute and disseminate information
such as end-of-day prices and
aggregated volume to their clearing
members. ICE Clear Credit also provides
aggregated volume data.1211
Additionally, some large multilateral
organizations periodically report
measures of market activity. For
example, the Bank for International
Settlements (‘‘BIS’’) reports gross
notional outstanding for single-name
CDS and equity forwards and swaps
semiannually.1212
Finally, market intermediaries may
draw inferences about security-based
swap market activity from observing
their customers’ order flow or through
1209 Regulation SBSR would also cover equity
swaps (other than broad-based equity index swaps).
However, the Commission has access to limited
information concerning the equity swap market. As
a result, the Commission’s analysis is largely
focused on the single-name CDS market, for which
the Commission has information.
1210 Based on the transaction data from the
DTCC–TIW, Commission staff has estimated that,
during the three-year period from January 2011
until December 2013, approximately 21% of all
transactions in CDS with North American singlename corporate reference entities and
approximately 21% of all transactions in CDS with
European single-name corporate reference entities
were cleared.
1211 Available at https://www.theice.com/
marketdata/reports/98 (last visited October 20,
2014).
1212 Available at http://www.bis.org/statistics/
derstats.htm (last visited October 20, 2014).

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inquiries made by other market
participants who seek liquidity. This
source of information is most useful for
market participants with a large market
share. As noted above, the ability to
observe a larger amount of order flow
allows for more precise estimates of
demand.
The paucity of publicly-available
security-based swap data suggests a
number of frictions that likely
characterize the current state of
efficiency, competition, and capital
formation in the security-based swap
market. As noted in Section XXII(A),
without public dissemination of
transaction information, security-based
swap market participants with the
largest order flow have an informational
advantage over smaller competitors and
counterparties. Moreover, as suggested
by Table 1, there is a great deal of
heterogeneity in the level of order flow
observed by market participants, with a
small group of large dealers
participating in most transactions.
These large market participants can use
this advantage to consolidate their own
market power by strategically filling
orders when it is to their advantage and
leaving less profitable trades to
competitors.
Asymmetric information and dealer
market power can result in financial
market inefficiencies. With only a small
number of liquidity suppliers competing
for order flow, bid-ask spreads in the
market may be wider than they would
be under perfect competition between a
larger number of liquidity suppliers. If
this is the case, then it is possible that
certain non-dealers who might
otherwise benefit from risk-sharing
afforded by security-based swap
positions may avoid participating in the
market because it is too costly for them
to do so. For instance, if wide bid-ask
spreads in the CDS market reduced the
level of credit risk hedging by market
participants, the result could be an
inefficient allocation of credit risk in the
economy as a whole. Additionally,
financial market participants may avoid
risk-sharing opportunities in the
security-based swap market if they
determine that lack of oversight by
relevant authorities leaves the market
prone to disruption. For example, if the
threat of sequential counterparty default
reduces security-based swap dealers’
liquidity, then market participants may
reduce their participation if they
perceive a high risk that they will be
unable to receive the contractual cash
flows associated with their securitybased swap positions. These sources of
inefficiency can adversely affect capital
formation if an inability for lenders and
investors to efficiently hedge their

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economic exposures diminishes their
willingness to fund certain borrowers
and issuers with risky but profitable
investing opportunities.
Lack of publicly-available transaction
information could affect capital
formation in other ways. Information
about security-based swap transactions
can be used as input into valuation
models. For example, the price of a
single-name CDS contract can be used to
produce estimates of default risk for a
particular firm and these estimates can,
in turn, be used by managers and
investors to value the firm’s projects. In
the absence of last-sale information in
the CDS market, market participants
may build models of default risk using
price data from other markets. They
may, for instance, look to the firm’s
bond and equity prices, the prices of
swaps that may have similar default risk
exposure, or to the prices of comparable
assets more generally.
2. Global Regulatory Efforts
a. Dealer and Major Swap Participant
Definitions for Cross-Border SecurityBased Swaps
The Commission adopted final rules
governing the application of the
‘‘security-based swap dealer’’ and
‘‘major security-based swap participant’’
definitions with respect to cross-border
security-based swap activity and
exposures.1213 The final rules generally
require, among other things, that nonU.S. persons assess whether their
dealing activities with and exposures
against U.S. persons or with recourse
guarantees against U.S. persons rise
above de minimis levels.1214 In the
Cross-Border Adopting Release, the
Commission discussed the costs that
non-U.S. persons would incur in order
to perform this assessment and the
likely number of participants whose
activity and exposures would likely be
large enough to make such an
assessment prudent.1215 These costs
included amounts related to collecting,
analyzing, and monitoring
representations about the U.S.-person
status of counterparties, and whether
particular transactions had recourse
guarantees against U.S. persons.1216
b. International Regulatory
Developments
International efforts to coordinate the
regulation of the OTC derivatives
markets are underway, and suggest that
many foreign participants will face
1213 See Cross-Border Adopting Release, 79 FR
47278.
1214 See id. at 47301.
1215 See id. at 47315.
1216 See id. at 47332.

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
substantive regulation of their securitybased swap activities that resemble
rules the Commission is implementing.
In 2009, leaders of the Group of 20
(‘‘G20’’)—whose membership includes
the United States, the European Union,
and 18 other countries—called for
global improvements in the functioning,
transparency, and regulatory oversight
of OTC derivatives markets.1217 In
subsequent summits, the G20 leaders
have reiterated their commitment to
OTC derivatives regulatory reform and
encouraged international consultation
in developing standards for these
markets.1218 The FSB is a forum for
international coordination of OTC
derivatives reform and provides
progress reports to the G20.1219
Jurisdictions with major OTC
derivatives markets have taken steps
toward substantive regulation of these
markets, though the pace of regulation
varies. Rulemaking and legislation has
focused on four general areas: Post-trade
reporting and public dissemination of
transaction data, moving OTC
derivatives onto centralized trading
platforms, clearing of OTC derivatives,
and margin requirements for OTC
derivatives transactions.
Transaction reporting requirements
have entered into force in Europe,
Australia, Singapore, and Japan, with
other jurisdictions in the process of
proposing legislation and rules to
implement these requirements. For
example, in Canada, Ontario, Quebec,
and Manitoba have transaction reporting
requirements in force, while other
provinces have proposed rules in that
area. The European Union is currently
considering updated rules for markets in
financial instruments that will address
derivatives market transparency and
trading derivatives on regulated trading
platforms.
3. Cross-Market Participation

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A single-name CDS contract covers
default events for a single reference
1217 See G20 Meeting, Pittsburgh, United States,
September 2009, available at: http://
www.treasury.gov/resource-center/international/g7g20/Documents/pittsburgh_summit_leaders_
statement_250909.pdf (last visited September 22,
2014).
1218 See, e.g., G20 Meeting, St. Petersburg, Russia,
September 2013, para. 71, available at https://
www.g20.org/sites/default/files/g20_resources/
library/Saint_Petersburg_Declaration_ENG_0.pdf
(last visited September 22, 2014); G20 Meeting,
Cannes, France, November 2011, available at
https://www.g20.org/sites/default/files/g20_
resources/library/Declaration_eng_Cannes.pdf (last
visited September 22, 2014).
1219 The FSB has published seven progress
reports on OTC derivatives markets reform
implementation that are available at http://
www.financialstabilityboard.org/list/fsb_
publications/index.htm.

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entity or reference security. These
entities and securities are often part of
broad-based indices on which market
participants write index CDS. Index
CDS contracts make payouts that are
contingent on the default of one or more
index components and allow
participants to gain exposure to the
credit risk of the basket of reference
entities that comprise the index, which
is a function of the credit risk of the
index components. As a result of this
construction, a default event for a
reference entity that is an index
component will result in payoffs on
both single-name CDS written on the
reference entity and index CDS written
on indices that contain the reference
entity. Because of this relationship
between the payoffs of single-name and
index CDS, prices of these products
depend upon one another.
Because payoffs associated with these
single-name CDS and index CDS are
dependent, hedging opportunities exist
across these markets. Participants who
sell protection on reference entities
through a series of single-name CDS
transactions can lay off some of the
credit risk of their resulting positions by
buying protection on an index that
includes those reference entities.
Entities that are active in one market are
likely to be active in the other.
Commission staff analysis of
approximately 4,200 DTCC–TIW
accounts that participated in the market
for single-name CDS in 2013 revealed
that approximately 2,200 of those
accounts, or 52%, also participated in
the market for index CDS. Of the
accounts that participated in both
markets, data regarding transactions in
2013 suggest that, conditional on an
account transacting in notional volume
of index CDS in the top third of
accounts, the probability of the same
account landing in the top third of
accounts in terms of single-name CDS
notional volume is approximately 62%;
by contrast, the probability of the same
account landing in the bottom third of
accounts in terms of single-name CDS
notional volume is only 15%.
The CFTC’s cross-border guidance
and swap reporting rules have likely
influenced the information that market
participants collect and maintain about
the swap transactions they enter into
and the counterparties that they
face.1220 Compliance with the CFTC’s
cross-border guidance and swap
1220 See ‘‘Interpretive Guidance and Policy
Statement Regarding Compliance With Certain
Swap Regulations’’ (July 17, 2013), 78 FR 45292
(July 26, 2013) (‘‘CFTC Cross-Border Guidance’’).
See also Sec. Indus. & Fin. Mkts. Ass’n v. CFTC,
Civil Action No. 13–1916 (PLF), slip op. at 89
(D.D.C. September 16, 2014).

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14699

reporting rules would require swap
counterparties to collect and maintain
data items required by the CFTC
regulation if they had not done so
before. To the extent that the same or
similar information is needed to comply
with Regulation SBSR, market
participants can use infrastructure
already in place as a result of CFTC
regulation to comply with Regulation
SBSR and the costs to these market
participants would be reduced.
Commenters generally expressed
concern about potential differences
between CFTC rules and rules
promulgated by the Commission.1221 In
adopting Regulation SBSR, the
Commission has been cognizant of the
parallel rules imposed by the CFTC and
the costs that would be imposed on
market participants that must comply
with both agencies’ rules.
C. Programmatic Costs and Benefits of
Regulation SBSR
The Commission preliminarily
identified certain benefits of Regulation
SBSR in both the Regulation SBSR
Proposing Release and the Cross-Border
Proposing Release. After careful
consideration of all the issues raised by
commenters, the Commission continues
to believe that Regulation SBSR will
result in certain benefits. These include
promoting price discovery and lowering
trading costs by improving the level of
information to all market participants
and by providing a means for the
Commission and relevant authorities to
gain a better understanding of the
trading behaviors of participants in the
security-based swap market and to
identify large counterparty
exposures.1222 Additionally, the
Commission believes that Regulation
SBSR will improve risk management by
those market participants that choose to
supplement their existing risk
management programs with publicly
disseminated data. Risk management
relies on accurate pricing, and valuation
models generally yield better estimates
with last-sale information being
available as input.
1221 See,

e.g., SIFMA/FIA/Roundtable Letter at 3.
Sections XXII(B)(1)(b), XXII(C)(2), and
XXII(D)(2)(b). See also Amy K. Edwards, Lawrence
Harris, & Michael S. Piwowar, Corporate Bond
Market Transparency and Transaction Costs, J. of
Fin., Vol. 62, at 1421–1451 (2007). It should be
noted that Michael Piwowar, one of the co-authors
of the first article cited, is currently an SEC
Commissioner, and Amy Edwards, another of that
article’s co-authors, currently serves as an Assistant
Director in the Commission’s Division of Economic
and Risk Analysis.
1222 See

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1. Regulatory Reporting
a. Programmatic Benefits
Rule 901, as adopted, requires all
security-based swaps that are covered
transactions 1223 to be reported to a
registered SDR, establishes a ‘‘reporting
hierarchy’’ that determines which side
must report the transaction, and sets out
the data elements that must be reported.
The Commission believes that requiring
regulatory reporting of covered
transactions will yield a number of
benefits. First, Rule 901 will provide a
means for the Commission and other
relevant authorities to gain a better
understanding of the security-based
swap market,1224 including the size and
scope of that market, as the Commission
would have access to transaction data
held by any registered SDR. The
Commission and other relevant
authorities can analyze the securitybased swap market and potentially
identify exposure to risks undertaken by
individual market participants or at
various levels of aggregation, as well as
credit exposures that arise between
counterparties. Additionally, regulatory
reporting will help the Commission and
other relevant authorities in the
valuation of security-based swaps. For
example, an improved ability of relevant
authorities to value security-based swap
exposures may assist these authorities
in assessing compliance with rules
related to capital requirements by
entities that maintain such exposures on
their balance sheets. Taken together,
regulatory data will enable the
Commission and other relevant
authorities to conduct robust monitoring
of the security-based swap market for
potential risks to financial markets and
financial market participants.
Second, data reported pursuant to
Rule 901 should improve relevant
authorities’ ability to oversee the
security-based swap market to detect,
deter, and punish market abuse. The
Commission and other relevant
authorities will be able, for example, to
observe trading activity at the level of
both trading desk and individual trader,
using trading desk IDs and trader IDs,
respectively. While the Commission
acknowledges commenters’ concerns
regarding the costs associated with
establishing and maintaining UICs, it
has considered these costs in light of its
belief that aggregation of the
information contained in registered
SDRs using appropriate UICs—such as
broker ID, trader ID, and trading desk
1223 See

supra notes 11–12 and accompanying

text.
1224 Such relevant authorities are enumerated in
Section 13(n)(5)(G) of the Exchange Act, 15 U.S.C.
78m(n)(5)(G). See supra note 64.

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ID—will facilitate the ability of the
Commission and other relevant
authorities to examine for
noncompliance and pursue enforcement
actions, as appropriate.1225
Rule 901 could result in benefits by
encouraging the creation and
widespread use of generally accepted
standards for reference information by
security-based swap market participants
and infrastructure providers (such as
SDRs and clearing agencies). For
example, Rule 901(c)(1) requires the
reporting of a product ID, for securitybased swaps that can be categorized as
belonging to a product group. The
development and wider usage of
product IDs could result in greater
efficiencies for market participants,
infrastructure providers, and regulators,
as identifying information about
security-based swap products can be
conveyed with a single ID code in place
of several, perhaps dozens, of separate
data elements. The development and
wider usage of UICs generally will
provide market participants with a more
reliable means of identifying to each
other the same products, persons, units
of persons, and transactions. The costs
associated with misidentifying these
aspects of a transaction include
additional time and resources spent to
reconcile differing data elements across
transaction records. Misidentification
could also result in the cancellation of
a transaction if, for example, it reveals
disagreement between counterparties
about the economic attributes of the
transaction, such as the reference
obligation underlying a CDS contract.
UICs also could lead to greater
regulatory efficiencies, as the
Commission and other relevant
authorities would have greater ability to
aggregate transactions along a number of
different vectors. Relevant authorities
will have greater ability to observe
patterns and connections in trading
activity, such as whether a trader had
engaged in questionable trading activity
across different security-based swap
products. The reporting of this
information will facilitate more effective
oversight, enforcement, and surveillance
of the security-based swap market by
the Commission and other relevant
authorities. These identifiers also will
facilitate aggregation and monitoring of
the positions of security-based swap
counterparties, which could be of
significant benefit to the Commission
and other relevant authorities.
The time stamp and transaction ID
requirements under Rules 901(f) and
901(g), respectively, should facilitate
data management by the registered SDR,
1225 See

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as well as market supervision and
oversight by the Commission and other
regulatory authorities. The transaction
ID required by Rule 901(g) also will
provide an important benefit by
facilitating the linking of subsequent,
related security-based swap transactions
that may be submitted to a registered
SDR (e.g., a transaction report regarding
a security-based swap life cycle event,
or report to correct an error in a
previously submitted report).
Counterparties, the registered SDR, the
Commission, and other relevant
authorities also will benefit by having
the ability to track changes to a securitybased swap over the life of the contract,
as each change can be linked to the
initially reported transaction using the
transaction ID.
By requiring reporting of preenactment and transitional securitybased swap transactions to the extent
the information is available, Rule 901(i)
will provide the Commission and other
relevant authorities with insight as to
outstanding notional size, number of
transactions, and number and type of
participants in the security-based swap
market. To the extent pre-enactment and
transitional security-based swap
transaction information is available and
reported, Rule 901(i) may contribute to
the development of a well regulated
market for security-based swaps by
providing a benchmark against which to
assess the development of the securitybased swap market over time. The data
reported pursuant to Rule 901(i) also
could help the Commission prepare the
reports that it is required to provide to
Congress. At the same time, Rule 901(i)
limits the scope of the transactions, and
the information pertaining to those
transactions, that must be reported in a
manner designed to minimize undue
burdens on security-based swap
counterparties. First, Rule 901(i)
requires reporting only of those
security-based swaps that were open as
of the date of enactment (July 21, 2010)
or opened thereafter. As discussed in
Section II(C)(2), supra, Rule 901(i)
requires reporting of the information
required by Rules 901(c) and 901(d)
only to the extent such information is
available. Finally, the duty to report
historical security-based swaps in a
particular asset class is triggered only
when there exists a registered SDR that
can accept security-based swaps in that
asset class.

supra notes 160 and 162.

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b. Programmatic Costs

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i. Reporting Security-Based Swap
Transactions to a Registered SDR—Rule
901
The security-based swap reporting
requirements contained in Rule 901 will
impose initial and ongoing costs on
reporting sides.1226 The Commission
continues to believe that certain of these
costs would be a function of the number
of reportable events and the data
elements required to be submitted for
each reportable event. The Commission
continues to believe that security-based
swap market participants will face three
categories of costs to comply with Rule
901. First, each reporting side will likely
have to establish and maintain an
internal OMS capable of capturing
relevant security-based swap transaction
information so that it could be reported.
Second, each reporting side will have to
implement a reporting mechanism.
Third, each reporting side will have to
establish an appropriate compliance
program and support for operating any
OMS and reporting mechanism.1227
Such systems and mechanisms would
likely be necessary to report data within
the timeframe set forth in Rule 901(j), as
it is unlikely that manual processes
could capture and report the numerous
required data elements relating to a
security-based swaps. Many market
participants may already have OMSs in
place to facilitate voluntary reporting of
security-based swap transactions or
clearing activity. As a result, any
additional costs related to systems and
infrastructure will be limited to those
reporting sides that either invest in new
systems or must upgrade existing
systems to meet minimum requirements
for reporting. To the extent that the cost
estimates discussed below do not take
this cost limiting fact into account, they
are an upper bound for the estimated
costs.
Although the Commission initially
estimated that there would be 1,000
reporting sides,1228 in the Cross-Border
Proposing Release the Commission
revised that estimate to 300.1229 No
comments were received on the number
of entities that would be reporting sides
1226 Certain estimates used throughout this
Section XXII (e.g., the number of impacted entities,
the number of reportable events, and the hourly
cost rates used for each job category) have been
updated from those estimated in the Cross-Border
Proposing Release to reflect the rule text of
Regulation SBSR, as adopted, as well as additional
information and data now available to the
Commission.
1227 See also Regulation SBSR Proposing Release,
75 FR 75264.
1228 See id. at 75247.
1229 See Cross-Border Proposing Release, 78 FR
31113.

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under Regulation SBSR. The
Commission notes that, since issuing
the Regulation SBSR Proposing Release,
the Commission has obtained additional
and more granular data regarding its
estimate of the number of reporting
sides. These historical data suggest that,
among these 300 reporting sides,
approximately 50 are likely to be
required to register with the
Commission as security-based swap
dealers and up to five are likely to
register as major security-based swap
participants.1230 These data further
suggest that these 55 potential
registrants likely will account for the
vast majority of recent security-based
swap transactions and transaction
reports that will need to be reported by
reporting sides, and that there are only
a limited number of security-based swap
transactions that do not include at least
one of these potential registrants on
either side.1231
The Commission estimates that
internal order management costs related
to Rule 901 will result in initial onetime aggregate costs of approximately
$30,600,000, which corresponds to
approximately $102,000 for each
reporting side.1232 The Commission
continues to estimate that the cost to
establish and maintain connectivity to a
registered SDR to facilitate the reporting
required by Rule 901 would impose an
annual (first-year and ongoing) aggregate
cost of approximately $60,000,000,
which corresponds to $200,000 for each
reporting side.1233 The Commission
1230 See

id. at 31103.
a result, the Commission generally will
use 300 as an estimate of the number of reporting
sides for §§ 900–909 of Regulation SBSR. In cases
where a rule is more limited in its application, for
example Rule 906(c), the Commission may use a
different number that reflects some subset of the
estimated 300 reporting sides.
1232 This estimate is based on the following: [((Sr.
Programmer (160 hours) at $303 per hour) + (Sr.
Systems Analyst (160 hours) at $260 per hour) +
(Compliance Manager (10 hours) at $283 per hour)
+ (Director of Compliance (5 hours) at $446 per
hour) + (Compliance Attorney (20 hours) at $334
per hour)) × 300 reporting sides)] = $30,546,000, or
approximately $30,600,000, or approximately
$102,000 per reporting side. See Regulation SBSR
Proposing Release, 75 FR 75264. These estimates
have been adjusted to reflect the Commission’s new
estimate of the number of reporting sides. All
hourly cost figures are based upon data from
SIFMA’s Management & Professional Earnings in
the Securities Industry 2013 (modified by the SEC
staff to account for an 1800-hour-work-year and
multiplied by 5.35 to account for bonuses, firm size,
employee benefits, and overhead).
1233 This estimate is based on discussions of
Commission staff with various market participants,
as well as the Commission’s experience regarding
connectivity between securities market participants
for data reporting purposes. The Commission
derived the total estimated expense from the
following: ($100,000 hardware- and softwarerelated expenses, including necessary backup and
redundancy, per SDR connection) × (2 SDR
1231 As

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14701

continues to estimate, as a result of
having to establishing a reporting
mechanism for security-based swap
transactions, reporting sides will
experience certain development, testing
and support costs. Such costs would
amount to an initial one-time aggregate
cost of approximately $14,700,000,
which corresponds to an initial onetime cost of approximately $49,000 for
each reporting side.1234 The
Commission estimates that internal
order management costs related to Rule
901 will impose ongoing annual
aggregate costs of approximately
$23,100,000, which corresponds to
approximately $77,000 per reporting
side.1235 In addition, the Commission
estimates that all reporting sides will
incur an initial and ongoing aggregate
annual cost of $300,000, which
corresponds to $1,000 for each reporting
side.1236
The Commission, in the Regulation
SBSR Proposing Release, estimated that
reporting specific security-based swap
transactions to a registered SDR as
required by Rule 901 will impose an
annual aggregate cost (first-year and
ongoing) of approximately $5,400 for
each reporting party.1237 This estimate
was revised in the Cross-Border
Proposing Release and this adopting
release to reflect improved information
connections per reporting side) × (300 reporting
sides) = $60,000,000, or $200,000 per reporting
side. See Regulation SBSR Proposing Release, 75 FR
75265. These estimates have been adjusted to reflect
the Commission’s new estimate of the number of
reporting sides.
1234 This figure is based on discussions with
various market participants and is calculated as
follows: [((Sr. Programmer (80 hours) at $303 per
hour) + (Sr. Systems Analyst (80 hours) at $260 per
hour) + (Compliance Manager (5 hours) at $283 per
hour) + (Director of Compliance (2 hours) at $446
per hour) + (Compliance Attorney (5 hours) at $334
per hour) × (300 reporting sides)] = $14,705,100, or
approximately $14,700,000, or approximately
$49,000 per reporting side. See Regulation SBSR
Proposing Release, 75 FR 75265, adjusted to reflect
the Commission’s new estimate of the number of
reporting sides.
1235 This estimate is based on the following: [((Sr.
Programmer (32 hours) at $303 per hour) + (Sr.
Systems Analyst (32 hours) at $260 per hour) +
(Compliance Manager (60 hours) at $283 per hour)
+ (Compliance Clerk (240 hours) at $64 per hour)
+ (Director of Compliance (24 hours) at $446 per
hour) + (Compliance Attorney (48 hours) at $334
per hour)) × 300 reporting sides)] = $23,127,600, or
approximately $23,100,000, or approximately
$77,000 per reporting side. See Regulation SBSR
Proposing Release, 75 FR 75264–5, adjusted to
reflect the Commission’s new estimate of the
number of reporting sides.
1236 This estimate is based on discussion of
Commission staff with various market participants
and is calculated as follows: [$250/gigabyte of
storage capacity × (4 gigabytes of storage) × (300
reporting sides)] = $300,000, or $1,000 per reporting
side. See Regulation SBSR Proposing Release, 75 FR
75265, adjusted to reflect the Commission’s new
estimate of the number of reporting sides.
1237 See Regulation SBSR Proposing Release, 75
FR 75208, notes 195 and 299.

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relating to the number of transactions
and reporting sides. The Commission
believes that the cost of reporting initial
security-based swap transactions under
Rule 901(c) will be approximately
$340,000, or approximately $1,100 per
reporting side.1238 The Commission
further believes that the cost of
reporting life cycle events under Rule
901(e) will be approximately $415,000,
or approximately $1,400 per reporting
side.1239 As a result, the Commission
believes that the total cost (first-year and
ongoing) of reporting security-based
swap transactions under Rule 901, as
adopted, will be approximately
$750,000, or $2,500 per reporting
side.1240
The Commission estimates that
designing and implementing an
appropriate compliance and support
program will impose an initial one-time
aggregate cost of approximately
$16,200,000, which corresponds to a
cost of approximately $54,000 for each
reporting side.1241
1238 The Commission believes that 900,000 of the
2 million reportable events will be the result of
reporting the initial security-based swap transaction
under Rule 901(c). As a result, the Commission
estimates: ((900,000 × 0.005 hours per transaction)/
(300 reporting sides)) = 15 burden hours per
reporting side, or 4,500 total burden hours. The
resulting cost of such reporting would be:
[((Compliance Clerk (7.5 hours) at $64 per hour) +
(Sr. Computer Operator (7.5 hours) at $87 per hour))
× (300 reporting sides)] = approximately $340,000,
or $1,133 per reporting side.
1239 The Commission believes that 1,100,000 of
the 2 million reportable events will be the result of
reporting life cycle events under Rule 901(e). As a
result, the Commission estimates: ((1,100,000 ×
0.005 hours per transaction)/(300 reporting sides))
= 18.33 burden hours per reporting side, or 5,500
total burden hours. The resulting cost of such
reporting would be: [((Compliance Clerk (9.17
hours) at $64 per hour) + (Sr. Computer Operator
(9.17 hours) at $87 per hour)) × (300 reporting
sides)] = approximately $415,000, or $1,383 per
reporting side.
1240 The Commission believes that the per
reportable event transaction cost will not change
and that only approximately 2 million of these
events will be reported by the reporting sides. As
a result, the Commission now estimates: ((2 million
× 0.005 hours per transaction)/(300 reporting sides))
= 33.3 burden hours per reporting side, or 10,000
total burden hours. The Commission therefore
estimates the total cost to be: [((Compliance Clerk
(16.7 hours) at $64 per hour) + (Sr. Computer
Operator (16.7 hours) at $87 per hour)) × (300
reporting sides)] = approximately $750,000, or
$2,500 per reporting side. See Regulation SBSR
Proposing Release, 75 FR 75208, notes 195 and 299.
These estimates have been adjusted to reflect the
Commission’s new estimates of the number of
reporting sides and number of reportable events.
1241 This figure is based on discussions with
various market participants and is calculated as
follows: [((Sr. Programmer (100 hours) at $303 per
hour) + (Sr. Systems Analyst (40 hours) at $260 per
hour) + (Compliance Manager (20 hours) at $283
per hour) + (Director of Compliance (10 hours) at
$446 per hour) + (Compliance Attorney (10 hours)
at $334 per hour) × (300 reporting sides)] =
approximately $16,200,000, or $54,000 per
reporting side. See Regulation SBSR Proposing

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The Commission estimates that
maintaining its compliance and support
program would impose an ongoing
annual aggregate cost of approximately
$11,550,000, which corresponds to a
cost of approximately $38,500 for each
reporting side.1242
Summing these costs, the Commission
estimates that the initial, aggregate
annual costs associated with Rule 901
would be approximately $157,200,000,
which corresponds to approximately
$524,000 per reporting side.1243 The
Commission estimates that the ongoing
aggregate annual costs associated with
Rule 901 will be approximately
$95,700,000, which corresponds to
approximately $319,000 per reporting
side.1244
The Commission continues to believe
that the costs associated with required
reporting pursuant to Regulation SBSR
could represent a barrier to entry for
new, smaller firms that might not have
the ability to comply with the proposed
reporting requirements or for whom the
expected benefits of compliance might
not justify the costs of compliance. To
the extent that Regulation SBSR might
deter new firms from entering the
security-based swap market, this would
be a cost of the regulation and could
negatively impact competition.
Nevertheless, the Commission continues
to believe that the reporting
requirements will not impose
insurmountable barriers to entry, as
firms that are reluctant to acquire and
build reporting infrastructure could
Release, 75 FR 75266. These estimates have been
adjusted to reflect the Commission’s new estimate
of the number of reporting sides.
1242 This figure is based on discussions with
various market participants and is calculated as
follows: [((Sr. Programmer (16 hours) at $303 per
hour) + (Sr. Systems Analyst (16 hours) at $260 per
hour) + (Compliance Manager (30 hours) at $283
per hour) + (Compliance Clerk (120 hours) at $64
per hour) + (Director of Compliance (12 hours) at
$446 per hour) + (Compliance Attorney (24 hours)
at $334 per hour) × (300 reporting sides)] =
$11,563,800, or approximately $11,550,000, or
approximately $38,500 per reporting side. See
Regulation SBSR Proposing Release, 75 FR 75266.
These estimates have been adjusted to reflect the
Commission’s new estimate of the number of
reporting sides.
1243 This estimate is based on the following:
(($102,000 + $200,000 + $49,000 + $2,500 + $54,000
+ $77,000 + $1,000 + $38,500) × (300 reporting
sides)) = $157,200,000, which corresponds to
approximately $524,000 per reporting side. See
Regulation SBSR Proposing Release, 75 FR 75264–
6. These estimates have been adjusted to reflect the
Commission’s new estimate of the number of
reporting sides.
1244 This estimate is based on the following:
(($200,000 + $2,500 + $77,000 + $1,000 + $38,500)
× (300 reporting sides)) = $95,700,000, or
approximately $319,000 per reporting side. See
Regulation SBSR Proposing Release, 75 FR 75264–
66. These estimates have been adjusted to reflect
the Commission’s new estimate of the number of
reporting sides.

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engage with third-party service
providers to carry out any reporting
duties incurred under Regulation
SBSR.1245
In the Cross-Border Proposing
Release, the Commission stated its
preliminary belief that the
infrastructure-related costs identified in
the Regulation SBSR Proposing Release
associated with Rule 901, on a perentity basis, would remain largely
unchanged as a result of the re-proposal.
The Commission preliminarily
estimated and continues to believe that
the marginal burden of reporting
additional transactions once a
respondent’s reporting infrastructure
and compliance systems are in place
would be de minimis when compared to
the costs of putting those systems in
place and maintaining them over time.
This is because the only additional costs
of reporting an individual transaction
would be entering the required data
elements into the firm’s OMS, which
could subsequently deliver the required
transaction information to a registered
SDR. In many cases, particularly with
increased standardization of
instruments and use of electronic
trading, transaction information could
more frequently be generated and
maintained in electronic form, which
could then be provided to a registered
SDR through wholly automated
processes. The Commission does not
believe that the additional changes
made to Rule 901 in this adopting
release will have any measureable
impact on the costs previously
discussed in both the Regulation SBSR
Proposing Release and the Cross-Border
Proposing Release. As a result, the
Commission believes that these
previous estimates remain applicable.
In the Cross-Border Proposing
Release, the Commission noted that
each reporting side would be required to
report, on average, more security-based
swap transactions than envisioned
under the original proposal. The
Commission further noted that smaller
unregistered counterparties, that would
have been required to report a small
number of security-based swap
transactions under the original proposal
would, under re-proposed Rule 901(a),
be less likely to have to incur reporting
duties under Regulation SBSR, and thus
less likely to have to incur the initial
infrastructure-related costs of
reporting.1246 The Commission noted its
1245 See also Regulation SBSR Proposing Release,
75 FR 75266.
1246 The Commission notes, however, that nonreporting sides would be required to provide certain
information about a reportable transaction. See Rule
906(a), as originally proposed (requiring reporting,
if applicable, of participant ID, broker ID, trading

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preliminary agreement with certain
commenters 1247 that basing the
reporting duty primarily on status as a
security-based swap dealer or major
security-based swap participant rather
than on whether or not the entity is a
U.S. person would, in the aggregate,
reduce costs to the security-based swap
market.
In the Cross-Border Proposing
Release, the Commission noted two
additional factors that could serve to
limit the average per-transaction costs
across all affected entities. First, to the
extent that security-based swap
instruments become more standardized
and trade more frequently on electronic
platforms (rather than manually), the act
of reporting transactions to a registered
SDR should become less costly. These
trends are likely to reduce the number
of transactions that would necessitate
the manual capture of bespoke data
elements, which is likely to take more
time and be more expensive than
electronic capture. Second, the larger
entities that would incur additional
reporting duties under re-proposed
Rules 901(a) and 908(a)(1)(iii)—i.e.,
non-U.S. person security-based swap
dealers and major security-based swap
participants—can benefit from certain
economies of scale in carrying out
reporting duties that might elude
smaller, unregistered counterparties.
The Commission continues to believe
that these factors could limit the average
per-transaction costs across all affected
entities. However, the extent of these
effects is difficult to quantify. It is
difficult to predict how many
transactions each reporting side will
report under manual versus electronic
capture. Furthermore, the Commission
currently does not have information
about the exact reporting systems and
the associated cost structures of
reporting sides. Therefore, while the
Commission has considered the likely
effects of electronic trade capture and
more concentrated reporting obligations
qualitatively, as above, the Commission
is not able to quantify these effects.
After reviewing comment letters
received in response to the Regulation
SBSR Proposing Release and the CrossBorder Proposing Release, as well as
evaluating the most recent data
available to the Commission, the
desk ID, and trader ID). See also Regulation SBSR
Proposing Release, 75 FR 75221 (discussing
rationale for proposed Rule 906(a)).
1247 See, e.g., DTCC II at 8; ICI Letter at 5; Cleary
III at 31. See also Vanguard Letter at 6; Cleary III
at 28 (stating that requiring U.S. end users to report
security-based swaps entered into with non-U.S.
person security-based swap dealers would be
unduly burdensome for end users and could
negatively impact the competitiveness of affected
U.S. markets).

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Commission believes that these cost
estimates, as adjusted to account for
more recent data on the number of
reporting sides, remain valid. The
Commission has received no comments
to the contrary.
ii. Registered SDRs—Receipt and
Processing of Security-Based Swap
Transactions—Rule 901
Rule 901, as adopted, requires all
security-based swaps that are covered
transactions 1248 to be reported to a
registered SDR, establishes a ‘‘reporting
hierarchy’’ that determines which side
must report the transaction, and sets out
the data elements that must be reported.
Together, sections (a), (b), (c), (d), (e),
and (h) of Rule 901 set forth the
parameters that govern how reporting
sides must report security-based swap
transactions. Rule 901(i) addresses the
reporting of pre-enactment and
transitional security-based swaps.
In both the Regulation SBSR
Proposing Release and the Cross-Border
Proposing Release, the Commission
discussed the potential costs to
registered SDRs resulting from Rule 901.
The Commission preliminarily
estimated that the number of registered
SDRs would not exceed ten in both
releases. No comments discussed the
potential number of entities that might
register with the Commission as SDRs
and incur duties under Regulation
SBSR. The Commission continues to
believe that it is reasonable to estimate
ten registered SDRs for purposes of
evaluating the costs and benefits of
Regulation SBSR.
As discussed above, Rule 901 imposes
certain minor, additional requirements
on registered SDRs, in addition to the
major duties imposed on SDRs by Rules
902 and 907 of Regulation SBSR and the
rules adopted as part of the SDR
Adopting Release. Rule 901(f) requires a
registered SDR to time stamp, to the
lowest second increment practicable but
in any event no greater than a second,
its receipt of any information submitted
to it pursuant to Rules 901(c), (d), or (e).
Rule 901(g) requires a registered SDR to
assign a transaction ID to each securitybased swap reported or establish or
endorse a methodology for transaction
IDs to be assigned by third parties.
Consequently, the Commission
estimates that Rules 901(f) and 901(g)
will impose an initial aggregate onetime cost of approximately $360,000,
which corresponds to $36,000 per
registered SDR.1249 With regard to
1248 See

supra notes 11–12 and accompanying

text.
1249 This figure is calculated follows: [((Sr.
Programmer (80 hours) at $303 per hour) + (Sr.

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ongoing costs, the Commission
estimates that Rules 901(f) and 901(g)
would impose an ongoing aggregate
annual cost of $455,000, which
corresponds to $45,500 per registered
SDR.1250 This figure represents an
estimate of the support and
maintenance costs for the time stamp
and transaction ID assignment elements
of a registered SDR’s systems.
The Commission estimates that the
initial aggregate annual cost associated
with Rules 901(f) and 901(g) will be
approximately $815,000, which
corresponds to $81,500 per registered
SDR.1251 The above costs per registered
SDR are generally consistent with those
set forth in the Cross-Border Proposing
Release. It is possible, however, that the
costs may be lower than previously
estimated, as the Commission is now
estimating fewer reportable events per
year (5 million in the Cross-Border
Proposing Release versus 2 million
events to be reported by the reporting
sides).1252 In addition, to the extent that
those persons planning on registering as
SDRs have already expended resources
in anticipation of the adoption of
Regulation SBSR and as a result of
CFTC regulations that are already in
place, the costs to become a registered
SDR could be significantly lower. As a
result, the Commission’s estimates
should be viewed as an upper bound of
the potential costs of Regulation SBSR.
After reviewing comment letters
received in response to the Regulation
SBSR Proposing Release and CrossBorder Proposing Release, as well as
evaluating the most recent data
available to the Commission, the
Systems Analyst (20 hours) at $260 per hour) +
(Compliance Manager (8 hours) at $283 per hour)
+ (Director of Compliance (4 hours) at $446 per
hour) + (Compliance Attorney (8 hours) at $334 per
hour) × (10 registered SDRs)] = $361,600, or
approximately $360,000. All hourly cost figures are
based upon data from SIFMA’s Management &
Professional Earnings in the Securities Industry
2013 (modified by the SEC staff to account for an
1,800-hour-work-year and multiplied by 5.35 to
account for bonuses, firm size, employee benefits,
and overhead). See also Regulation SBSR Proposing
Release, 75 FR 75266, note 309.
1250 This figure is calculated as follows: [((Sr.
Programmer (60 hours) at $303 per hour) + (Sr.
Systems Analyst (48 hours) at $260 per hour) +
(Compliance Manager (24 hours) at $283 per hour)
+ (Director of Compliance (12 hours) at $446 per
hour) + (Compliance Attorney (8 hours) at $334 per
hour) × (10 registered SDRs)] = $454,760, or
approximately $455,000. See also Regulation SBSR
Proposing Release, 75 FR 75266, note 310.
1251 This figure is based on the following:
(($36,160 + $45,476) × (10 registered SDRs) =
$816,360, or approximately $815,000, which
corresponds to $81,636, or approximately $81,500
per registered SDR. See also Regulation SBSR
Proposing Release, 75 FR 75266, note 311.
1252 See supra Section XXII (PRA discussion
revising the Commission’s estimate of the number
of reportable events).

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Commission continues to believe that its
overall approach to the estimate of costs
imposed on registered SDRs remain
valid. The Commission received no
comments to the contrary.
2. Public Dissemination
Rule 902 requires the public
dissemination of security-based swap
transaction information. Rule 902(a), as
adopted, sets out the core requirement
that a registered SDR, immediately upon
receipt of a transaction report of a
security-based swap or life cycle event,
must publicly disseminate information
about the security-based swap or life
cycle event, plus any condition flags
contemplated by the registered SDR’s
policies and procedures that are
required by Rule 907.
a. Programmatic Benefits
There are benefits to public
dissemination of security-based swap
information, as is required by Rule 902.
Among other things, by reducing
information asymmetries, post-trade
transparency has the potential to
facilitate price discovery and price
competition,1253 lower implicit
transaction costs,1254 improve valuation
of security-based swap products, and
increase liquidity in the security-based
swap market.1255
Requiring public dissemination of
security-based swap transactions will
provide all market participants and
market observers with more extensive
and more accurate information upon
which to make trading and valuation
determinations. In the absence of posttrade transparency, larger dealers
possess private information in the form
of transactions prices and volumes, and
larger dealers enjoy a greater
informational advantage than smaller
dealers. As noted above in Section
XXII(B), the bulk of security-based swap
activity is dealer-intermediated. Nondealers and small dealers who perceive
the informational advantage of their
counterparties may be less willing to
trade. By reducing the information
advantage of large dealers, the public
1253 See

Edwards, et al., supra note 1223 supra.
noted in Section XXII(B)(1)(b), dealing
activity in the single-name CDS market is
concentrated among a small number of firms that
each enjoy informational advantages as a result of
the large quantity of order flow they privately
observe. Implicit transaction costs are the difference
between the transaction price and the fundamental
value, which could reflect adverse selection or
could reflect compensation for inventory risk. In
addition to these implicit transaction costs,
security-based swap market participants may face
explicit transaction costs such as commissions and
other fees that dealers might charge non-dealers for
access to the market.
1255 See infra Section XXII(D)(2)(b). See also
Regulation SBSR Proposing Release, 75 FR 75267.

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dissemination of security-based swap
data may improve the negotiating
position of smaller market participants
such as non-dealers and small dealers,
allowing them to access liquidity and
risk sharing opportunities in the
security-based swap market at lower
implicit transaction costs.
While the Commission has not yet
adopted rules governing trading of
security-based swaps on centralized
venues such as exchanges and SB SEFs,
post-trade transparency may have
particular benefits for exchange or SB
SEF trading.1256 In particular, providers
of liquidity can use publicly
disseminated transaction data as a key
input into their orders and quotations,
thereby increasing the efficiency of
price formation. Market participants
seeking liquidity can use recent last-sale
prices in the same or similar products
as a basis for initiating negotiations with
liquidity providers. Liquidity seekers
also can use public dissemination of
other market participants’ recent
transactions in the same or similar
products to evaluate the quality of
quotes being offered or the quality of an
execution given by a liquidity provider.
Furthermore, public dissemination of all
transactions may suggest to all market
participants profitable opportunities to
offer or take liquidity, based on the
prices at which recent transactions were
effected.
Moreover, the Commission believes
that post-trade pricing and volume
information could allow valuation
models to be adjusted to reflect how
security-based swap counterparties have
valued a security-based swap product at
a specific moment in time. Post-trade
transparency of security-based swap
transactions also could improve market
participants’ and market observers’
ability to value security-based swaps,
especially in opaque markets or markets
with low liquidity where recent
quotations or last-sale prices may not
exist or, if they do exist, may not be
widely available. For example, a singlename CDS contract that expires in five
years may yield information relevant for
pricing other five-year CDS on the same
firm, and will also provide information
on default probabilities that may help
price other CDS on the same firm with
different maturities, or on other firms in
the same industry.
By improving valuations, post-trade
transparency of security-based swap
transactions could contribute to more
1256 The size of benefits arising from the use of
publicly disseminated transaction data for SB SEF
trading depend on the trading models that SB SEFs
support pursuant to rules ultimately adopted by the
Commission. See SB SEF Proposing Release, 76 FR
10948.

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efficient capital allocation. In particular,
under the post-trade transparency
regime of Regulation SBSR, market
observers, whether or not they engage in
the security-based swap transactions,
could use information produced and
aggregated by the security-based swap
market as an input to both real
investment decisions as well as
financial investments in related markets
for equity and debt.1257 Improved
valuation, together with more efficient
prices, that may arise as a result of
publicly disseminated transaction
information, could directly contribute to
efficiency of capital allocation by firms
whose obligations are referenced by
security-based swaps.
A number of studies of the corporate
bond market have found that post-trade
transparency, resulting from the
introduction of TRACE, has reduced
implicit transaction costs.1258 Post-trade
transparency could have the same effect
in the security-based swap market. The
Commission acknowledges that the
differences between the security-based
swap market and other securities
markets might be sufficiently great that
post-trade transparency might not have
the same effects in the security-based
swap market.1259 Nevertheless,
similarities in the way the securitybased swap market and corporate bond
market are structured—both markets
evolved as dealer-centric OTC markets
with limited pre- or post-trade
transparency—suggest that some of the
benefits that result from post-trade
transparency in the corporate bond
market also would arise in the securitybased swap market as well.
Public dissemination of securitybased swap transactions is also designed
to promote better valuation of securitybased swaps themselves, as well as of
underlying and related assets. In
1257 See Philip Bond, Alex Edmans, and Itay
Goldstein, ‘‘The Real Effects of Financial Markets,’’
Annual Review of Financial Economics, Vol. 4
(October 2012) (reviewing the theoretical literature
on the feedback between financial market price and
the real economy). See also Sugato Chakravarty,
Huseyin Gulen, and Stewart Mayhew, ‘‘Informed
Trading in Stock and Option Markets,’’ Journal of
Finance, Vol. 59, No. 3 (2004) (estimating that the
proportion of information about underlying stocks
revealed first in option markets ranges from 10% to
20%).
1258 See, e.g., Edwards, et al., supra note 1223;
Hendrik Bessembinder, William F. Maxwell, &
Kumar Venkataraman, Market Transparency,
Liquidity Externalities, and Institutional Trading
Costs in Corporate Bonds, J. of Fin. Econ., Vol. 82,
at 251–288 (2006).
1259 In the Regulation SBSR Proposing Release,
the Commission requested comment on whether
post-trade transparency would have a similar effect
on the security-based swap market as it has in other
securities markets—and if not, why not. No
commenters responded to the Commission’s
request.

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transparent markets with sufficient
liquidity, valuations generally can be
derived from recent quotations and/or
last-sale information. However, in
opaque markets or markets with low
liquidity—such as the current market
for security-based swaps—recent
quotations or last-sale information may
not exist for many products or, if they
do exist, may not be widely
available.1260 Therefore, market
participants holding assets that trade in
opaque markets or markets with low
liquidity frequently rely instead on
pricing models to value their positions.
These models could be imprecise or be
based on assumptions subject to the
evaluator’s discretion. Thus, market
participants holding the same or similar
assets but using different valuation
models might arrive at significantly
different valuations.
All other things being equal, valuation
models—particularly for assets in
illiquid markets, such as corporate
bonds or security-based swaps—that
include last-sale information in the
valuation models generally will be more
informative than models that do not or
cannot include such inputs. Models
without such inputs could be imprecise
or be based on assumptions subject to
the evaluator’s discretion without
having last-sale information to help
identify or correct flawed assumptions.
As discussed in Section XXII(B)(1)(d),
valuation models typically have many
inputs even in the absence of last-sale
information. However, in general,
models improve if the information set is
broadened to include additional data
related to fundamental value, and lastsale information is of particular
relevance for pricing models. Research
suggests that post-trade transparency
helps reduce the range of valuations of
assets that trade infrequently,1261 and it
is likely that the security-based swap
market participants and market
observers will devise means to
incorporate last-sale reports of the asset
to be valued, reports of related assets, or
reports of benchmark products that
include the asset to be valued or closely
related assets into their valuation
models. This should result in more
accurate valuations of security-based
swaps generally, as all market
participants and market observers
would have the benefit of knowing how
counterparties to a security-based swap
1260 See

supra Section XXII(B)(1)(b) (describing
current level of trading activity and liquidity in the
security-based swap market).
1261 See Gjergji Cici, Scott Gibson, and John J.
Merrick, Jr., ‘‘Missing the Marks? Dispersion in
Corporate Bond Valuations Across Mutual Funds,’’
Journal of Financial Economics, Volume 101, Issue
1 (July 2011), at 206–26.

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valued the security-based swap at a
specific moment in the recent past.
In addition, post-trade transparency of
security-based swaps that are CDS
should promote better valuation of debt
instruments and better understanding of
the creditworthiness of debt issuers
generally. CDS are contracts that offer
protection against events of default by a
debt issuer, such as a bankruptcy, debt
restructuring, or a failure to pay. All
other things being equal, CDS protection
on a more creditworthy issuer costs less
than CDS protection on a less
creditworthy issuer. Furthermore, the
cost of CDS protection on a single issuer
may change over time: If the issuer’s
financial position strengthens, it is less
likely to default on its debt and the cost
of CDS protection on the issuer
generally will decrease; if the issuer’s
financial condition weakens, the cost of
CDS protection on the issuer generally
will increase. Mandatory post-trade
transparency of CDS transactions will
offer market participants and market
observers the ability to assess the
market’s view of the creditworthiness of
entities underlying CDS contracts,
which often are large and systemically
significant debt issuers. Currently, lastsale information of CDS transactions
generally is known only to the
participants involved in a transaction
(such as dealers who execute with
clients and brokers who may be
involved in negotiating transactions).
Public dissemination of security-based
swap transactions—both CDS and
equity-based swaps—as required by
Regulation SBSR, will reduce the
information asymmetry between
insiders who are involved in particular
transactions and all others, and is thus
designed to promote greater price
efficiency in security-based swap
markets, the related index swap
markets, and the markets for the
underlying securities.1262
Public dissemination of transactions
in CDS that are based on reference
entities that issue TRACE-eligible debt
securities should reinforce the pricing
signals derived from individual
transactions in debt securities generated
by TRACE. Since prices in debt
securities of an issuer and prices of CDS
with that debt security as reference
entity are related, any pricing signal
received as a result of a trade in one
asset market may inform prices in the
other. In addition, if prices of debt
securities in TRACE and last-sale
information of related CDS are not
1262 See, e.g., Chakravarty, et al., note 1258, supra
(estimating that the proportion of information about
underlying stocks revealed first in option markets
ranges from 10 to 20%).

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consistent with each other, market
participants may avail themselves of
arbitrage opportunities across these two
markets, thereby aligning the respective
prices and enhancing price efficiency in
both markets. Similarly, public
dissemination of transactions in singlename security-based swaps should
reinforce the pricing signals derived
from public dissemination of
transactions in index swaps, where the
index includes those individual
securities. In addition, post-trade
transparency of security-based swap
CDS under Regulation SBSR should
indirectly bring greater transparency
into the market for debt instruments
(such as sovereign debt securities) that
are not subject to mandatory public
dissemination through TRACE or any
other means by providing indirect
pricing information. For example, lastsale information for CDS referencing
sovereign debt may inform prices of the
underlying sovereign debt.
b. Programmatic Costs
Market participants may experience
costs as a result of revealing the true
size of their trades if public
dissemination of this information makes
it more difficult to hedge their positions.
Further, public dissemination of true
transaction sizes could result in higher
costs if it allows market participants to
infer the identities of particular
counterparties. Thus, some commenters
have argued for dissemination of the
notional amount of block trades through
a ‘‘masking’’ or ‘‘size plus’’ convention
comparable to that used by TRACE, in
which transactions larger than a
specified size would be reported as
‘‘size plus.’’ 1263 The Commission
considered this alternative, but has
elected to require a registered SDR to
publicly disseminate (for all
dissemination-eligible transactions 1264),
immediately upon receipt of the
transaction report, all of the elements
required by Rule 901(c), including the
true notional amount of the transaction.
The Commission notes, first of all, that
a dissemination cap could deprive the
market of important information about
overall exposure. With a cap in place,
market participants would not have
information about the true size of very
large trades, thereby reducing the
precision with which they could
1263 See WMBAA II at 7; ISDA/SIFMA I at 5;
ISDA/SIFMA Block Trade Study at 2, 26–27;
Vanguard Letter at 5; Goldman Sachs Letter at 6;
SIFMA I at 5; J.P. Morgan Letter at 12–13; MFA I
at 4; MFA III at 8; UBS Letter at 2; FIA/FSF/ISDA/
SIFMA Letter at 6.
1264 See Rule 902(c) (requiring that certain types
of security-based swaps not be publicly
disseminated).

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estimate the level of risk arising from
those large trades. Furthermore, as
noted above in Section VII(B)(4), the
Commission believes that a 24-hour
timeframe for reporting of transaction
information during the interim phase of
Regulation SBSR should address any
concerns about disseminating the true
notional amount of any transaction and
give market participants who choose to
hedge adequate time to accomplish a
majority of their hedging activity 1265
before transaction data are publicly
disseminated. During the interim phase,
the Commission will be able to collect
and analyze transaction information to
develop an understanding of how
market participants are reacting to the
introduction of mandated post-trade
transparency.
Under Rule 902(a), a registered SDR
will be required to publicly disseminate
a condition flag indicating whether two
counterparties to a security-based swap
are registered security-based swap
dealers. The Commission received one
comment expressing concern that
disseminating such information would
reduce the anonymity of counterparties,
ultimately resulting in ‘‘worse pricing
and reduced liquidity for endusers.’’ 1266 Public dissemination of this
information will indicate that a
transaction involved two counterparties
that are dealers. Although flagging
transactions between two registered
security-based swap dealers does indeed
provide information to the public that
the transaction involved two dealers,
thus restricting the set of possible
counterparties, the Commission believes
that, since the majority of transactions
in the security-based swap market are
between dealers, market observers are
unlikely to be able to identify particular
counterparties using this information.
Another potential cost of post-trade
transparency is that it may increase
inventory risks. Dealers often enter
trades with their customers as a
liquidity supplier. Dealers trying to
hedge inventory following a trade might
be put in a weaker bargaining position
relative to subsequent counterparties if
transactions prices and volumes are
publicly-disseminated. With mandated
post-trade transparency, the market will
see when a large transaction or a
transaction in an illiquid security occurs
and is aware that the dealer who took
the other side may attempt to hedge the
resulting position. As a result, other
market participants may change their
1265 Market participants typically hedge only a
small fraction of large trades and, if they hedge,
they tend to do so within one day. See Hedging
Analysis.
1266 ISDA IV at 16.

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pricing unfavorably for the dealer,
making it more expensive for the dealer
to hedge its position. Dealers could
respond either by raising the liquidity
premium charged to their clients or
refusing to accommodate such trades.
Such behavior could lead to lower
trading volume or reduce the ability of
certain market participants to manage
risk, either of which could adversely
affect all market participants. An
increase in post-trade transparency
could also drive trades to other markets
or instruments that offer the opacity
desired by traders, which could increase
fragmentation, since trading would
occur at more trading centers, or
potentially reduce liquidity. This
possibility is consistent with the
argument that large, informed traders
may prefer a less transparent trading
environment that allows them to
minimize the price impact of their
trades. Public dissemination of securitybased swap transaction information,
therefore, could cause certain market
participants to trade less frequently or to
exit the market completely. A reduction
in market activity by these participants,
especially if they are large, informed
traders, could have an adverse effect on
market liquidity.
We are currently unable to quantify
the costs associated with market exit or
reduced liquidity that might result from
post-trade transparency. This is due to
two factors: (1) Lack of robust data; and
(2) lack of experimental conditions
necessary for identifying the impact of
post-trade transparency on the costs of
hedging. As noted above, Commission
staff has undertaken a study that
attempts to identify instances of hedging
behavior by dealers in the single-name
CDS market. Subject to the data
limitations described in the study, the
low levels of such behavior suggest that,
in aggregate, post-trade transparency is
unlikely to drive down liquidity or
increase the liquidity premium charged
by dealers to non-dealers as a result of
increasing the cost of hedging.1267
Commission staff has also undertaken a
study of the effects of the introduction
of mandatory post-trade transparency in
the index CDS market pursuant to CFTC
rules. Subject to the data limitations in
the study, and the fact that the securitybased swap and the swap markets are
related but not identical, staff found
little empirical evidence that the
introduction of mandatory post-trade
transparency in the index CDS market
resulted in reduced trading activity,
liquidity, or risk exposure in the index
CDS market.1268 Moreover, studies of
1267 See
1268 See

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the corporate bond market, another
largely OTC market, do not find
evidence of market exit or reduced
liquidity associated with posttransparency.1269
Another potential cost of post-trade
transparency as required under Rule 902
is that market observers could
misinterpret or place undue importance
on particular last-sale information that
might not accurately reflect the market.
For example, if a large market
participant failed, it could be required
to liquidate its portfolio at ‘‘fire sale’’
prices. If market observers were not
aware of any unusual conditions
surrounding particular transaction
prints, they might interpret fire sale
prices to indicate changes to the
economic fundamentals of securitybased swap positions that they hold. If
some of these market participants mark
down the value of their portfolios, the
result could be additional margin calls
and further market stress. In these
circumstances, use of valuation models
that include last-sale data, but do not
condition those data on the information
about unusual conditions could lead to
market de-stabilization.1270
Rule 902(a) requires a registered SDR
to publicly disseminate a transaction
report of any security-based swap
immediately upon receipt of transaction
information about the security-based
swap, except in in certain limited
circumstances.1271 The published
transaction report must consist of all the
information reported pursuant to Rule
901(c), plus the execution time stamp
and any necessary flags required by the
registered SDR to which the transaction
is reported.
Implementing and complying with
the public dissemination requirement of
Rule 902 will add 20% to the start-up
and ongoing operational expenses that
would otherwise be required of a
registered SDR.1272 In particular, the
Commission continues to estimate that
the initial one-time aggregate costs for
development and implementation of the
systems needed to disseminate the
required transaction information would
be $20,000,000, which corresponds to
$2,000,000 per registered SDR. Further,
the Commission continues to estimate
that aggregate annual costs for systems
and connectivity upgrades associated
1269 See

supra note 1259.
e.g., Brunnermeier and Pedersen; Gromb
and Vayanos, note 1177, supra.
1271 See supra Section VI(D). In addition,
registered SDRs shall not publicly disseminate
reports of pre-enactment or transitional securitybased swaps.
1272 See SDR Adopting Release, Section VIII(D)(2).
See also Regulation SBSR Proposing Release, 75 FR
75269.
1270 See,

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with public dissemination would be
approximately $12,000,000, which
corresponds to $1,200,000 per registered
SDR. Thus the initial aggregate costs
associated with Rule 902 are estimated
to be $32,000,000, which corresponds to
$3,200,000 per registered SDR. To the
extent that those market participants
planning on registering as SDRs have
already expended resources if they
voluntarily report their transactions or
because they are registered SDRs with
the CFTC, the costs to become a
registered SDR could be significantly
lower. As a result, the Commission’s
estimates should be viewed as an upper
bound of the potential costs of
Regulation SBSR.
c. Alternative Approaches to Public
Dissemination
The Commission considered
alternative approaches to the public
dissemination of transactions
information. First, the Commission has
considered, but is not adopting, an
exemption from Regulation SBSR’s
regulatory reporting or public
dissemination requirements for interaffiliate security-based swaps, although
the Commission generally believes that
a registered SDR should consider
establishing a flag for inter-affiliate
security-based swaps to help market
observers better understand the
information that is publicly
disseminated.1273
Commenters had raised concerns
about the public dissemination of interaffiliate transactions, comments that the
Commission carefully considered in its
adoption of Rule 902.1274 As an
example, one commenter argued that
‘‘public reporting of inter-affiliate
transactions could seriously interfere
with the internal risk management
practices of a corporate group’’ and that
‘‘[p]ublic disclosure of a transaction
between affiliates could prompt other
market participants to act in a way that
would prevent the corporate group from
following through with its risk
management strategy by, for instance,
causing adverse price movements in the
market that the risk-carrying affiliate
would use to hedge.’’ 1275 As stated
above, the Commission agrees generally
that corporate groups should engage in
appropriate risk management practices.
However, the Commission does not
agree that Regulation SBSR, as adopted,
is inimical to effective risk management.
The Commission notes that, during the
interim phase of Regulation SBSR, all
security-based swaps—regardless of
supra Sections VI(D) and VI(G).
supra Section XI(B).
1275 Cleary II at 17.

size—must be reported within 24 hours
from the time of execution and—except
with regard to transactions falling
within Rule 908(a)(2)—immediately
publicly disseminated. As discussed in
Section VII above, this reporting
timeframe is designed, in part, to
minimize any potential for market
disruption resulting from public
dissemination of any security-based
swap transaction during the interim
phase of Regulation SBSR. The
Commission anticipates that, during the
interim period, it will collect and
analyze data concerning the sizes of
transactions that potentially affect
liquidity in the market. The
Commission sees no basis for
concluding, at this time, that interaffiliate security-based swaps are more
difficult to hedge than other types of
security-based swaps, or that the
hedging of these transactions presents
unique concerns that would not also
arise in connection with the hedging of
a security-based swap that was not an
inter-affiliate transaction. Therefore, the
Commission does not agree with the
commenters’ concern that public
dissemination of inter-affiliate securitybased swaps will impede the ability of
corporate groups to hedge.
Second, the Commission considered
other mechanisms for public
dissemination, but has determined not
to adopt any of them.1276 In the
Regulation SBSR Proposing Release, the
Commission discussed a ‘‘first touch’’
approach to public dissemination,
whereby a security-based swap dealer or
major security-based swap participant
that is a counterparty to a security-based
swap would be responsible for
dissemination. Under a ‘‘modified first
touch’’ approach, a platform on which
a transaction was effected would be
required to publicly disseminate a
transaction occurring on its market.
However, under either of these alternate
approaches, market observers would be
required to obtain and consolidate
information from potentially dozens of
different sources. As the Commission
stated in the Regulation SBSR Proposing
Release: ‘‘Requiring registered SDRs to
be the registered entities with the duty
to disseminate information would
produce some degree of mandated
consolidation of [security-based swap]
transaction data and help to provide
consistency in the form of the reported
information. This approach is designed
to limit the costs and difficulty to
market participants of obtaining and
assembling data feeds from multiple
venues that might disseminate

1273 See
1274 See

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1276 See Regulation SBSR Proposing Release, 75
FR 75227–28.

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14707

information using different
formats.’’ 1277
Moreover, even though the alternative
approaches noted above would allow
market participants to circumvent
registered SDRs while fulfilling the
public dissemination requirement,
neither alternative would reduce costs
to market participants, since reporting
sides would be required to report
transactions to an SDR to fulfil the
regulatory reporting requirement. The
Commission received no comments that
disagreed with the proposed approach
imposing the duty to disseminate
security-based swap transaction
information on registered SDRs, and has
adopted it as proposed.
3. Interim Phase for Reporting and
Public Dissemination
As discussed in more detail above, the
rules, as adopted, establish an interim
phase of Regulation SBSR. During this
interim phase, all covered
transactions—regardless of their
notional size—must be reported to a
registered SDR no later than 24 hours
after the time of execution.1278 The
registered SDR will be required to
publicly disseminate a report of the
transaction immediately upon receipt of
the information, except for the
information described in Rule 902(c).
Commission staff has undertaken an
analysis of the inventory management of
dealers in the market for single-name
CDS based on transaction data from
DTCC–TIW.1279 The analysis shows
that, when large trades in single-name
CDS are hedged using offsetting trades
in the single-name CDS with the same
reference entity, the majority of hedging
activity takes places within one day.1280
The Commission acknowledges the
concerns of a commenter that this
analysis does not consider hedging
activity that might occur between
1277 Id.
1278 If reporting would take place on a nonbusiness day (i.e., a Saturday, Sunday, or U.S.
federal holiday), then reporting would be required
by the same time on the next day that is a business
day.
1279 See Hedging Analysis.
1280 The Commission staff analysis represents an
update and extension of earlier work by staff of the
Federal Reserve Bank of New York (Chen et al.),
which identified same-day and next-day sameinstrument dealer hedging activity within a threemonth (May 1, 2010–July 31, 2010) sample of
DTCC–TIW transaction data. Similar to the
Commission staff analysis, these authors’ results
suggest that ‘‘large customer CDS trades are not
typically hedged via offsetting trades in the same
instrument soon after they have been transacted.’’
The authors conclude by saying that ‘‘requiring
same day reporting of CDS trading activity may not
significantly disrupt same day hedging activity,
since little such activity occurs in the same
instrument.’’ See Chen et al., supra note 510, at 17.

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markets.1281 For example, dealers may
use index CDS contracts to hedge
exposures in single-name CDS.
However, the Commission notes that the
presence of hedging opportunities in
other markets—particularly more liquid
markets such as the market for index
CDS—may increase the speed with
which dealers are able to hedge
security-based swap exposures, and may
limit the extent to which public
dissemination of transaction data with
24 hours of execution impairs their
ability to hedge large exposures.1282
The same commenter further argued
that, if single-name CDS on a reference
entity trade infrequently, dealers may
not have opportunities to hedge using
the same instrument in a short period of
time.1283 The Commission
acknowledges that some market
participants may take more than 24
hours to hedge exposures that result
from large transactions in security-based
swaps. As noted below, if a liquidity
provider engages in a large trade in an
illiquid security but cannot hedge its
inventory risk within 24 hours, the
result could be higher costs for liquidity
provision. However, based on
supplemental staff analysis of singlename CDS transaction data, the vast
majority of large CDS transactions in the
Hedging Analysis were written on
reference entities with transaction
1281 See ISDA IV at 15 (stating that ‘‘participants
may enter into risk mitigating transactions using
other products that are more readily available at the
time of the initial trade (for example CD index
product [sic], CDS in related reference entities,
bonds or loans issued by the reference entity or a
related entity, equities or equity options)).’’ The
commenter further ‘‘interprets the data in the study
to imply that such temporary hedges in other asset
classes (rather than offsetting transactions in the
precise reference entity originally traded) are the
norm for an illiquid market.’’ Id.
1282 The Commission notes that the impact of
cross-market hedging may depend on the market
characteristics for hedging assets. If dealers use
corporate bonds to hedge large single-name CDS
exposures, then the relative illiquidity of the
corporate bond market may make dealers’ ability to
hedge sensitive to public dissemination of singlename CDS transaction information. However, the
commenter did not provide support for the
proposition that dealers rely on the corporate bond
or equity markets to hedge single-name CDS
exposure. Appropriate data are not currently
available to the Commission. By contrast, if dealers
use more liquid assets to hedge—such as index
CDS—then the relative liquidity of the market for
hedging assets may make it less likely that dealers’
orders are identified as hedging demand. This, in
turn, reduces the likelihood that dealers will face
higher costs of hedging as a result of public
dissemination of the original security-based swap
transaction.
1283 See id. (stating that ‘‘If a reference entity
trades less frequently than once per day, and a
particular reference entity/maturity combination
trades less frequently than that, it is unlikely that
a dealer could hedge a large transaction using CDS
in the same reference entity even over a period of
five days’’).

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activity occurring more than once per
day, on average.1284 Hence, based on the
available data, the Commission does not
conclude that the liquidity of the singlename CDS included in the Hedging
Analysis was insufficient to allow
dealers ample opportunities to hedge
exposures within five days. Taking into
consideration staff analysis and
comments on this analysis, the
Commission continues to believe that a
24-hour time frame for reporting of
transaction information should allow
market participants who choose to
hedge adequate time to accomplish a
majority of their hedging activity before
transaction data is publicly
disseminated.
Although any reporting side could
take a full 24 hours to report a given
trade under the interim phase, the final
rules may provide incentives for
reporting sides to submit trade reports
in substantially less than 24 hours. In
particular, as discussed above in Section
VII(B)(1), because Rule 902(d) embargos
transaction information until the
information is transmitted to a
registered SDR, any SB SEF that wants
to continue the use of work-ups must
ensure that transactions are reported to
a registered SDR no later than the time
at which a completed transaction is
broadcast to the users of the SB SEF.
Reporting sides may choose to report
trades in less than 24 hours because
their gains from work-ups exceed costs
stemming from public dissemination.
a. Programmatic Benefits
The Commission notes that the
interim phase of Regulation SBSR will
result in increased transparency in the
security-based swap market, as
compared to the current market. Several
commenters expressed concern that a
public dissemination regime with
improper block trade thresholds could
harm market liquidity.1285 A phased
approach seeks to create some measure
of post-trade transparency in the
1284 In response to this comment, Commission
staff examined the average trading frequency and
volume of the reference entities represented in the
sample of large transactions relative to reference
entities in the overall sample. According to this
supplemental analysis, for over 90% of the
reference entities in the sample of ‘‘seed
transactions’’ (as defined in the Hedging Analysis,)
transaction activity took place, on average, one or
more times per day between April 2013 and March
2014. Commission staff also examined transaction
activity in the six-month period prior to the sample
used in the Hedging Analysis to avoid confounding
its measures of trading activity with the large
transactions and subsequent hedging activity it
identified within the original study period. In the
six months prior to April 2013, approximately 85%
of reference entities in the sample of seed
transactions were involved in transaction activity
an average of one or more times per day.
1285 See supra note 486.

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security-based swap market while
avoiding the creation of inappropriate
block standards.
This interim phase will afford the
Commission the opportunity to use data
made available by registered SDRs to
consider the potential impact, across
different security-based swap asset
classes, of various public dissemination
times on transaction costs, hedging
activity, and price efficiency for trades
involving a range of notional amounts in
instruments of varying liquidity.1286
Analysis of additional data is important
for two key reasons. First, while the
Commission has used available data to
inform its current approach to
regulatory reporting, the Commission
expects the market to evolve in response
to substantive regulation pursuant to
Regulation SBSR and other Title VII
rulemaking. In particular, additional
post-trade transparency afforded by the
interim phase may alter market
participants’ trading strategies in ways
that will likely affect what constitutes
an appropriate block trade threshold in
an environment with post-trade
transparency. Such changes to the
regulatory environment for securitybased swap transactions make
additional data analysis critical to
robust determination of block
thresholds and associated dissemination
delays.
Second, the Commission believes that
data elements such as reporting and
execution time stamps required under
Rule 901 will make data collected from
registered SDRs more suitable than
currently available data for examining
relationships between reporting delays,
notional amounts and other variables of
economic interest. For example, as
noted by Commission staff in its
analysis of inventory risk management
in the security-based swap market,
although the CDS transaction data
currently available to the Commission
includes both the date and time at
which DTCC received and recorded the
transaction, only the date of the
execution is reported to DTCC, and not
the actual time of the execution.1287
Under Regulation SBSR, Commission
staff will be able to identify not only the
execution time, to the second, but also
the length of time between when a
transaction is executed and when a
registered SDR receives the associated
transaction report.
Accordingly, the Commission is
directing its staff to issue a report, for
1286 See ISDA IV at 15 (noting that liquidity of
CDS contracts on a reference entity may be a
determinant of the risk management strategies of
dealers attempting to hedge exposures generated
when they engage in single-name CDS transactions).
1287 See Hedging Analysis.

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
each asset class, regarding block
thresholds and dissemination delays for
large notional security-based swap
transactions in each asset class. The
reports are intended to inform the
Commission’s specification of criteria
for determining what constitutes a block
trade and the appropriate time delay for
reporting block trades. The Commission
will take into account the reports, along
with public comment on the reports, in
determining block thresholds and
associated reporting delays.
Each report will be linked to the
availability of data from registered SDRs
in that each report must be complete no
later than two years following the
initiation of public dissemination from
the first registered SDR in that asset
class. The Commission believes that this
timeframe is necessary for a thorough
analysis of the transaction data. First, a
two-year timeframe will help ensure
that Commission staff’s econometric
analysis will have statistical power
sufficient to draw clear conclusions
about the effects of notional amount and
reporting delay on price impact,
hedging activity, and price efficiency.
Second, the Commission believes that
this timeframe is sufficiently large to
capture seasonal effects, such as
periodic ‘‘rolls’’, that may affect trading
behavior in the security-based swap
market. Finally, a sufficiently long
timeframe increases the likelihood that
Commission staff can separate potential
market impacts resulting from the
introduction of mandated post-trade
transparency from short-term
macroeconomic trends and shocks that
also could affect market behavior.
While allowing time for data
gathering and analysis by Commission
staff that will inform the Commission
about appropriate block thresholds and
reporting delays, the interim approach
to reporting and public dissemination
may moderate the economic effects
flowing from public dissemination of
transaction data. By providing reporting
sides up to 24 hours during the interim
phase of Regulation SBSR in which to
report their transactions, market
observers will experience delays in
obtaining information about market
activity compared to an alternative
policy of implementing a requirement
for real-time reporting and public
dissemination at the present time. For
example, if there is a spike in activity
or a significant price movement in a
particular security-based swap product,
market observers might not become
aware of this until 24 hours afterwards.
Larger dealers that observe more order
flow and execute more transactions than
other market participants would, during
the interim phase, continue to enjoy an

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informational advantage over others
who are not yet aware of recently
executed transactions.
b. Programmatic Costs
While the Commission has considered
whether there could be a reduction in
the programmatic benefits of public
dissemination associated with providing
too much time before a security-based
swap transaction must be reported and
publicly disseminated, the Commission
also has considered that 24 hours might
be too little time for liquidity providers
to manage inventory risk. If a liquidity
provider who engages in a large trade,
or in a trade in an illiquid security,
cannot offset the risk within 24 hours,
the costs for providing liquidity could
rise, resulting in less liquidity provision
(i.e., less size provided at the desired
price, or the same size provided at
worse prices). This result might be
avoided in a regulatory environment
offering a longer delay between the time
of execution of a security-based swap
and the time that it must be reported
and publicly disseminated.
4. Use of UICs
Rule 903(a) provides that, if an IRSS
meeting certain criteria is recognized by
the Commission and issues a UIC, that
UIC must be used by all registered SDRs
and their participants in carrying out
duties under Regulation SBSR. Under
Rule 903(a), if the Commission has
recognized such an IRSS that assigns
UICs to persons, each participant of a
registered SDR shall obtain a UIC from
or through that system. If no IRSS that
can issue particular types of UICs has
been recognized, the registered SDR is
required to assign such UICs using its
own methodology.
The following UICs are specifically
required by Regulation SBSR:
Counterparty ID, product ID, transaction
ID, broker ID, branch ID, trading desk
ID, trader ID, execution agent ID,
platform ID, and ultimate parent ID. The
security-based swap market data
typically include fee-based codes, and
all market participants and market
observers must pay license fees and
agree to various usage restrictions to
obtain the information necessary to
interpret the codes. Under Rule 903(b),
a registered SDR may permit
information to be reported pursuant to
Rule 901, and may publicly disseminate
that information pursuant to Rule 902,
using codes in place of certain data
elements only if the information
necessary to interpret those codes is
widely available to users of the
information on a non-fee basis.

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14709

a. Programmatic Benefits
UICs will provide market participants
that use a common registered SDR with
a uniform way to refer to their
counterparties and other persons or
business units that might be involved in
a transaction (such as brokers, trading
desks, and individual traders). UICs are
designed to allow registered SDRs,
relevant authorities, and other users of
data to quickly and reliably aggregate
security-based swap transaction
information by UIC along several
dimensions (e.g., by product, by
individual trader, or by corporate group
(i.e., entities having the same ultimate
parent)). The requirement for a
registered SDR to refer to each person,
unit of a person, product, or transaction
with a single identifying code is
designed to facilitate the performance of
market analysis studies, surveillance
activities, and systemic risk monitoring
by relevant authorities through the
streamlined presentation of securitybased swap transaction data. These
benefits apply on an SDR level, as each
registered SDR is required to assign
UICs using its own methodology if a
relevant UIC is not available from an
IRSS.
To the extent that multiple SDRs use
the same UICs, these benefits would
apply across SDRs. In particular,
because the Commission has recognized
the GLEIS—through which LEIs can be
obtained—as an IRSS that meets the
criteria of Rule 903, if an entity has an
LEI issued by or through the GLEIS,
then that LEI must be used for all
purposes under Regulation SBSR. The
Commission believes that this will
facilitate aggregation by relevant
authorities for surveillance and
monitoring purposes. Nevertheless, the
Commission acknowledges potential
impediments to uniformity of UICs
across registered SDRs. While registered
SDRs are required to use an LEI issued
by the GLEIS to identify a counterparty
to a reported transaction, this
requirement extends to only those
counterparties that have been assigned
an LEI by the GLEIS. Under Rule 903(a),
these counterparties will include all
SDR participants that are U.S. persons,
including special entities and
investment advisers, as well as all SDR
participants that are registered securitybased swap dealers and registered major
security-based swap participants.
Additionally, these counterparties will
include non-U.S. subsidiaries of U.S.
persons, when their performance under
security-based swaps is guaranteed by a
U.S. affiliate. For a person who is a
counterparty to a security-based swap
reported on a mandatory basis to a

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registered SDR, who does not meet these
conditions, and who has not obtained
an LEI from the GLEIS, a registered SDR
will be required to assign a UIC to that
market participant using its own
methodology. For such counterparties,
this could result in the proliferation of
multiple UIC assignments for the same
entity to the extent that they are
counterparties to security-based swaps
that are reported across several SDRs
that each assign a unique UIC.
This could pose challenges to the
relevant authorities and other users of
data to quickly and reliably aggregate
security-based swap transaction
information, and potentially impede the
performance of market analysis studies
and surveillance activities. In particular,
mapping the unique identifiers across
SDRs would entail a manual process of
connecting like entities initially, and
maintaining such a mapping over time
to the extent that an entity’s
organizational structure changes in a
way that requires a change to the UIC.
This manual process could slow or
introduce errors into the analysis of
transaction activity or economic
exposures of such counterparties.
Requiring all participants and the
entities to which they provide
guarantees to utilize LEIs under
Regulation SBSR should minimize these
potential difficulties. Using the same
LEI for these counterparties across all
registered SDRs eliminates the need for
such mapping.
Even absent uniformity of UICs, the
use of such codes by a registered SDR
and its participants could give rise to
other significant potential benefits. The
use of codes could improve the accuracy
of the trade reporting system by
streamlining the provision of data to the
registered SDR. The product ID, for
example, replaces several data elements
that otherwise would have to be
reported separately, thus enforcing the
internal consistency of those data
elements and reducing the likelihood of
reporting errors.
In adopting Rule 903, the Commission
has considered not only the benefits of
using unique identification codes
generally, but also the benefits of
ensuring that such codes can be readily
understood. Rule 903(b), as adopted,
provides that a registered SDR may
permit the use of codes in place of
certain data elements for use in
regulatory reporting and public
dissemination of security-base swap
transaction information only if the
information necessary to interpret such
codes is widely available to users of the
information on a non-fee basis. This
provision is intended to prevent any
person who develops identification

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codes that might be used for the
reporting or public dissemination of
security-based swap transactions to
charge fees or require other
compensation from market participants,
registered SDRs, other market
infrastructure providers, and users of
security-based swap data. Open access
to UICs will promote the usage of public
information about the security-based
swap market, thereby furthering the
statutory goals of Title VII. Rule 903(b)
eliminates the possibility that market
participants could be compelled to
include fee-based codes in the
transaction information that they are
required to provide to a registered SDR,
or that registered SDRs could be
compelled to pay fees to code creators
to be able to interpret the transaction
information that is reported to them, or
that market observers are compelled to
pay fees to code creators to be able to
interpret the security-based swap
transaction information that is publicly
disseminated. Rule 903(b) is designed to
reduce barriers to entry into the
security-based swap market 1288 by
counterparties as well as service
providers, because it minimizes the
need for them to pay fees to code
creators as a cost of entry.
b. Programmatic Costs
Rule 903 could also impose certain
costs on current security-based swap
market participants. Currently, private
coding systems exist in the securitybased swap market.1289 To the extent
that owners of these private coding
systems do not make information to
understand these codes widely available
on a non-fee basis, Rule 903 would
prohibit the use of such codes in the
reporting or public dissemination of
security-based swap transaction
information carried out pursuant to
Regulation SBSR. As a result of Rule
903, owners of these coding systems
that otherwise might be used to report
security-based swap transaction
information will be restricted in their
ability to profit from utilization of their
codes for reporting under Regulation
SBSR, although such codes could still
1288 The fees that a new entrant would have to
pay for the use of fee-based codes are a cost that
may deter a potential market participant from
entering the security-based swap market. Currently,
there is no mandated post-trade transparency and
the security-based swap market is an OTC market
and opaque, which is a barrier to enter for the
market, as new entrants are at an informational
disadvantage compared to established market
participants, especially large dealers with
significant order flow.
1289 The Commission is aware of one such
product identification system that involves six-digit
reference entity identifiers and three-digit reference
obligations identifiers as well as a standard threedigit maturity identifier.

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be used for other purposes. To the
extent that these owners currently
generate revenue through fees charged
to users of security-based swap data,
Rule 903 could lower their revenues and
cause them to increase revenues from
other sources, including from those
entities that wish to have identifiers
assigned to them. Thus, Rule 903 may
result in a reallocation of the costs
associated with developing and
maintaining UICs from users of data to
producers of data.
Further, to the extent that market
participants who currently utilized feebased codes must reconfigure their
systems and internal processes to use
other codes (such as those issued by a
registered SDR) that are compliant with
Rule 903(b), the costs of such
reconfiguration can be attributed to Rule
903(b). One commenter believed that
reporting these UICs would require
‘‘great cost and effort’’ from firms,
including the costs associated with
establishing and maintaining UICs in
the absence of a global standard.1290 The
Commission also acknowledges
commenter concerns that there could be
a certain degree of cost and effort
associated with incorporating new UICs
into firms’ internal processes and
record-keeping systems.1291 However,
the Commission believes that these
costs are justified in the context of the
programmatic benefits discussed in
Section XXII(C)(4)(a), supra, such as the
ability of relevant authorities to easily
aggregate transaction reports on a
variety of dimensions. The costs of
developing such UICs are included in
the discussion of the implementation of
Rules 901 (detailing the data elements
that must be reported 1292) and 907
(detailing the requirement that SDRs
develop policies and procedures for the
reporting of the required data
elements 1293).
Any person who is a participant of a
registered SDR must obtain an LEI from
or through the GLEIS. Based on
transaction data from DTCC–TIW, the
Commission believes that no fewer than
3,500 of approximately 4,800 accounts
that participated in the market for
single-name CDS in 2013 currently have
LEIs and are likely to maintain these
LEIs in the absence of Regulation
1290 See

ISDA III at 2.
supra Section XXII(C)(1)(c); Section
XXII(E)(1)(a) (detailing the data elements that must
be reported); Section XXII(C)(6)(d) (detailing the
requirement that SDRs develop policies and
procedures for the reporting of the required data
elements). See also note 160, supra.
1292 See supra Section XXII(C)(1).
1293 See supra Section XXII(C)(6)(d).
1291 See

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SBSR.1294 Therefore, the Commission
believes that no more than
approximately 1,300 DTCC–TIW
accounts will have to obtain LEIs in
order to comply with Rule 903(a). For
these participants, the assignment of an
LEI will result in one-time costs
assessed by local operation units
(‘‘LOUs’’) of the GLEIS associated with
registering a new LEI. In addition to
registration costs, LOUs assess an
annual fee for LEI maintenance. The
Commission assumes that no market
participants that currently have LEIs
would continue to maintain their LEIs
in the absence of Rule 903(a) in order to
arrive at an upper bound on the ongoing
costs associated with Rule 903(a).
The prices for registering a new LEI
and maintaining an existing LEI vary by
LOU. Commission staff collected
registration and maintenance charges for
nearly all of the pre-LOUs currently
endorsed by the interim GLEIS.1295
Based on these charges, the Commission
estimates a per-entity registration cost of
between $84 and $220 and a per-entity
maintenance cost of between $48 and
$156.1296
The Commission is aware of two
factors that may reduce these costs over
time. First, the GLEIS operates on a costrecovery model. If the marginal cost of
an LEI is low, then an increase in the
volume of LEIs will reduce the average
cost of obtaining an LEI. These cost
savings will be passed through to
market participants in the form of lower
prices. Second, the ability of market
participants to port LEIs to the LOU of
their choice will result in competitive
pressure that may limit the prices that
LOUs are able to charge for services.
The governance system of the GLEIS is
in place to help ensure that these
economic factors will be operative.
The Commission expects that, in
addition to the costs of obtaining an LEI
from an LOU, each entity that registers
a new LEI as a result of Rule 903(a) will
incur start-up and ongoing
administrative costs of no more than
$334 per year.1297 The Commission
1294 See supra note 1109. Commission staff used
counterparty information provided by Avox to
match account numbers in the DTCC–TIW 2013
transactions data to their LEIs. Of 4,760
participating accounts, 3,533 had LEI information
in their Avox counterparty record.
1295 See ‘‘Endorsed Pre-LOUs of the Interim
Global Legal Entity Identifier System (GLEIS)’’,
January 2, 2015 (available at http://www.leiroc.org/
publications/gls/lou_20131003_2.pdf).
1296 Commission staff converted all foreign
currency amounts to U.S. dollars and added taxes
and surcharges where these amounts were
available.
1297 This estimate is based on one hour of a
compliance attorney at $334 per hour and is based
upon data from SIFMA’s Management &
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believes, therefore, that the upper bound
on aggregate costs to market participants
arising from the obligation to obtain an
LEI lies between $500,000 and $700,000
in the first year and between $1,600,000
and $2,100,000 in subsequent years.1298
5. Cross-Border Aspects of Regulation
SBSR
Rule 908(a)(1), as adopted, identifies
the security-based swaps that will be
subject to regulatory reporting and
public dissemination. Rule 908(a)(2), as
adopted, identifies the security-based
swaps that will be subject to regulatory
reporting but will not be publicly
disseminated. Rule 908(b) provides that
non-U.S. persons (except for non-U.S.
persons that are registered securitybased swap dealers or registered major
security-based swap participants) have
no duties under Regulation SBSR. Rule
908(c) provides that the Title VII
requirements relating to regulatory
reporting and public dissemination of
security-based swaps may be satisfied
by compliance with the rules of a
foreign jurisdiction if the Commission
determines that the jurisdiction has
requirements that are comparable to
those of Regulation SBSR.
As discussed further in Section
XXII(D), the security-based swap market
is a global market characterized by a
high level of interconnectedness and
significant information asymmetries.
Because U.S. market participants and
transactions regulated under Title VII
are a subset of the overall global
security-based swap market and the
swap markets more generally, concerns
surrounding risk and liquidity
spillovers are part of the framework in
which the Commission analyzes the
effects of these rules. Additionally,
relevant authorities in other
jurisdictions are currently engaged in
implementing their own regulatory
reforms of the OTC derivatives markets.
Because a large portion of securitybased swap activity involves both U.S.person and non-U.S. person
counterparties, a key consideration in
the Commission’s analysis of the
2013 (modified by the SEC staff to account for an
1,800-hour-work-year and multiplied by 5.35 to
account for bonuses, firm size, employee benefits,
and overhead).
1298 The lower end of the range for costs in the
first year is calculated as: [(LEI Registration) $84 +
(Administration) $334] × 1,300 participants =
$543,400. The upper end of the range for costs in
the first year is calculated as: [(LEI Registration)
$220 + (Administration) $334] × 1,300 participants
= $720,200. The lower end of the range for costs in
subsequent years is calculated as: [(LEI
Maintenance) $48 + (Administration) $334] × 4,800
participants = $1,833,600. The upper end of the
range for costs in subsequent years is calculated as:
[(LEI Maintenance) $156 + (Administration) $334]
× 4,800 participants = $2,352,000.

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economic effects of these rules is the
extent to which their application
complements or conflicts with rules
promulgated by foreign regulators.
a. Programmatic Benefits
Rule 908 provides that a transaction
will be subject to regulatory reporting if
there is a direct or indirect counterparty
on either or both sides that is a U.S.
person, a registered security-based swap
dealer, or a registered major securitybased swap participant, or if the
transaction is submitted to a clearing
agency having its principal place of
business in the United States.
The Commission anticipates that
regulatory data that it receives from
registered SDRs will aid in its
understanding of counterparty
relationships in the global securitybased swap market that are most likely
to affect the U.S. financial markets.
Such market data will allow the
Commission to view, for example, large
security-based swap exposures of U.S.
persons, registered security-based swap
dealers, registered major security-based
swap participants, and U.S. clearing
agencies that could have the potential to
destabilize U.S. financial markets.
Moreover, because registered securitybased swap dealers and members of U.S.
clearing agencies are likely to
participate in other asset markets,
regulatory reporting could help the
Commission estimate the risk that a
corporate event could impair the ability
of these market participants to trade in
other asset markets. An improved ability
to measure such risks could help the
Commission evaluate the ability of the
Title VII regulatory regime to limit the
risk of contagion between the securitybased swap market and other asset
markets.
A second key programmatic benefit of
regulatory reporting is that it would aid
the Commission in detecting and taking
appropriate action against market abuse.
With comprehensive data on transaction
volumes and prices involving U.S.
persons, the Commission could help
ensure that all market participants are
able to benefit from the risk-sharing
afforded by the security-based swap
market on fair terms.
Finally, security-based swap
transaction data reported to registered
SDRs would aid the Commission and
other relevant authorities in enforcing
other Title VII rules and deter
noncompliance. For example, the CrossBorder Adopting Release set forth de
minimis levels of activity and exposures
above which market participants would
have to either register as security-based
swap dealers or as major security-based

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swap participants.1299 Regulatory
reporting could help deter participants
that engage in high transaction volume
with counterparties that are expected to
have a significant portion of their
financial and legal relationships exist
within the United States from avoiding
the obligation to register with the
Commission when their activity
surpasses these thresholds.
Rule 908(a)(2) determines the scope of
transactions subject to public
dissemination requirements. A securitybased swap must be publicly
disseminated if there is a direct or
indirect counterparty that is a U.S.
person on either or both sides of the
transaction, or if the transaction is
submitted to a clearing agency having
its principal place of business in the
United States. Certain of the
programmatic benefits of public
dissemination are similar to those of
regulatory reporting. For instance,
public dissemination of transaction
prices will enable U.S. persons to
compare a quote provided by a
registered security-based swap dealer
against recent transaction prices for
security-based swaps referencing the
same or similar underlying entities. In
addition, market participants will be
able to analyze whether the price they
paid for credit protection is
commensurate with prices revealed by
transaction activity immediately
following their transaction. In both of
these cases, public dissemination
enables market participants to evaluate
the quality of the prices that dealers
offer, providing registered securitybased swap dealers with additional
incentives to quote narrower spreads.
Rule 908(c) provides that the Title VII
requirements relating to regulatory
reporting and public dissemination of
security-based swaps may be satisfied
by compliance with the rules of a
foreign jurisdiction if the Commission
determines that the jurisdiction has
requirements that are comparable to
those of Regulation SBSR. In addition,
to the extent that a market participant is
able to take advantage of a substituted
compliance determination made under
Rule 908(c), the Commission does
believe some cost reduction may be
realized. If a market participant does not
report to an SDR registered with the
Commission, such market participant
(whether it be a reporting side or not)
would be able to avoid those costs
detailed in this adopting release. A
market participant evaluating whether
or not to take advantage of substituted
compliance would consider these
1299 See Cross-Border Adopting Release, 79 FR
47301.

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potential cost reductions along with the
costs it would incur in assessing the
feasibility of substituted compliance
and meeting any conditions attached to
a substituted compliance determination
by the Commission.1300 While, the
Commission is, at this time, unable to
estimate the net savings—as no
substituted compliance determinations
have been made—the highest level of
savings possible for a reporting side that
avails itself of substituted compliance is
the aggregate cost of regulatory reporting
under the final rules.1301
b. Programmatic Costs
Rules 908(a)(1) and (2) require
regulatory reporting of transactions that
involve U.S. person counterparties, are
submitted to U.S. clearing agencies, or
that involve registered security-based
swap dealers or registered major
security-based swap participants.
Other jurisdictions are developing
rules relating to post-trade transparency
for security-based swaps at different
paces. The Commission is mindful that,
in the near term and until full
implementation of post-trade
transparency requirements in the other
jurisdictions that are comparable to
those in Regulation SBSR, Rule
908(a)(1) may intensify incentives for
non-U.S. market participants to avoid
contact with U.S. counterparties
(whether acting directly or as guarantors
of non-U.S. persons) in an effort to
avoid the public dissemination
requirements. This could result in
reduced liquidity for U.S. market
participants.1302
The Commission cannot readily
quantify the costs that might result from
reduced market access for U.S. persons
or counterparties whose security-based
swap activities benefit from recourse to
U.S. persons because the Commission
does not know what rules other
jurisdictions may implement or the
times at which they may implement
their rules. However, while the
Commission has not quantified these
costs, it assessed them qualitatively and
considered them in formulating the
scope for requirements under the final
rules.1303
As discussed in Section XXII(C)(5),
supra, the Commission believes that
most of the costs related to the crossborder application of Regulation SBSR
1300 See Cross-Border Proposing Release, 78 FR
31202.
1301 See supra Section XXII(C)(1) (discussing the
quantifiable costs of regulatory reporting).
1302 The efficiency implications for public
dissemination of cross-border activity is discussed
in Section XXII(D)(4)(b), infra.
1303 See Cross-Border Adopting Release, 79 FR
47278–372 (discussing recourse guarantees).

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are subsumed in the costs of Rules 901
and 902, with one exception.
Specifically, requests for a substituted
compliance determination would result
in costs of preparing such requests. The
Commission estimates the costs of
submitting a request pursuant to Rule
908(c) would be approximately
$110,000.1304 The Commission further
estimates that it will receive 10 requests
in the first year and two requests each
subsequent year, for a total cost in the
first year of $1,100,000 and a total cost
in each subsequent year of $220,000.
Once such request is made, however,
other market participants in the same
jurisdiction that wish to rely on
substituted compliance with respect to
regulatory reporting and public
dissemination would be able to rely on
the Commission’s substituted
compliance determination. Accordingly,
the assessment costs would only need to
be incurred once with respect to the
same area of a foreign regulatory system.
c. Assessment Costs
The Commission believes that the
assessment costs associated with
determining the status of counterparties
and the location of transactions should
be primarily one-time costs of
establishing a practice or compliance
procedure. As discussed in the CrossBorder Proposing Release,1305 the
1304 This estimate is based on information
indicating that the average costs associated with
preparing and submitting an application to the
Commission for an order for exemptive relief under
Section 36 of the Exchange Act in accordance with
the procedures set forth in Rule 0–12 under the
Exchange Act, 17 CFR 240.0–12. A substituted
compliance request contemplated by Rule 908(c)
would be made under Rule 0–13 under the
Exchange Act, which sets forth procedures similar
to those used by the Commission in considering
exemptive order applications under Section 36. The
Commission estimates that preparation of a request
would require approximately 80 hours of in-house
counsel time and 200 hours of outside counsel time.
Such estimate takes into account the time required
to prepare supporting documents necessary for the
Commission to make a substituted compliance
determination, including, without limitation,
information regarding applicable requirements
established by the foreign financial regulatory
authority or authorities, as well as the methods
used by the foreign financial regulatory authority or
authorities to monitor compliance with these rules.
Based upon data from SIFMA’s Management &
Professional Earnings in the Securities Industry
2013 (modified by the SEC staff to account for an
1,800-hour work-year and multiplied by 5.35 to
account for bonuses, firm size, employee benefits,
and overhead), the Commission estimates that the
average national hourly rate for an in-house
attorney is $380. The Commission estimates the
costs for outside legal services to be $400 per hour.
Accordingly, the Commission estimates the total
cost to submit a request for a substituted
compliance determination to be approximately
$110,000 ($30,400 (based on 80 hours of in-house
counsel time × $380) + $80,000 (based on 200 hours
of outside counsel time × $400)).
1305 See Cross-Border Proposing Release, 78 FR
31202.

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assessment costs associated with the
substituted compliance would, in part,
flow from the assessment of whether the
counterparties to a security-based swap
transaction satisfy the conditions of
Rule 908(a). This assessment may be
done by an in-house counsel reviewing
readily ascertainable information. The
Commission believes that the cost
involved in making such assessment
should not exceed one hour of in-house
counsel’s time or $380.1306
The Commission believes that market
participants will likely incur costs
arising from the need to identify and
maintain records concerning the status
of their counterparties and the location
of any clearing agency used. The
Commission anticipates that potential
applicants for substituted compliance
are likely to request representations
from their transaction counterparties to
determine the counterparties’ status.
The Commission believes that the
assessment costs associated with
determining the status of counterparties
should be primarily one-time costs of
establishing a practice or compliance
procedure of requesting and collecting
representations from trading
counterparties and maintaining the
representations collected as part of the
recordkeeping procedures and limited
ongoing costs associated with requesting
and collecting representations.1307 As
discussed in the Cross-Border Proposing
Release, the Commission believes that
such one-time costs would be
approximately $15,160.1308 The
Commission believes that requesting
and collecting representations would be
part of the standardized transaction
process reflected in the policies and
procedures regarding security-based
swap sales and trading practices and
should not result in separate assessment
costs.1309 To the extent that market
participants have incurred costs relating
to similar or same assessments for other
Title VII requirements, their assessment
costs with respect to substituted
compliance may be less.

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6. Other Programmatic Effects of
Regulation SBSR
a. Operating Hours of Registered SDRs—
Rule 904
Paragraphs (c) to (e) of Rule 904
specify requirements for receiving,
handling, and disseminating reported
data during a registered SDR’s normal
and special closing hours. The
Commission believes that these
provisions will provide benefits in that
1306 See

id., note 1954.
id. at 31203.
1308 See id.
1309 See id., note 1957.

they clarify how security-based swaps
executed while a registered SDR is in
normal or special closing hours would
be reported and disseminated. The
Commission believes that the costs of
requirements under these rules will be
related to providing notice to
participants of its normal and special
closing hours and to provide notice to
participants that the SDR is available to
accept transaction data after its system
is unavailable.
One commenter asserted that the
proposed requirement for a registered
SDR to receive and hold in the queue
the data required to be reported during
its closing hours ‘‘exceeds the
capabilities of currently-existing
reporting infrastructures.’’ 1310 However,
the Commission notes that this
comment was submitted in January
2011; since the receipt of this comment,
swap data repositories that are
provisionally registered with the CFTC
that are likely also to register as SDRs
with the Commission appear to have
developed the capability of receiving
and holding data in queue during their
closing hours.1311 Thus, the
Commission continues to believe that
requiring registered SDRs to hold data
in queue during their closing hours
would not create a significant burden
for registered SDRs.
Rule 904, as adopted, requires a
registered SDR to have systems in place
to receive and disseminate information
regarding security-based swap data on a
near-continuous basis, except during
‘‘normal closing hours’’ and ‘‘special
closing hours.’’ A registered SDR will be
permitted to establish ‘‘normal closing
hours,’’ which may occur only when, in
the estimation of the registered SDR, the
U.S. markets and other major markets
are inactive. In addition, a registered
SDR will be permitted to declare, on an
ad hoc basis, special closing hours to
perform routine system maintenance,
subject to certain requirements. The reproposal of Regulation SBSR in the
Cross-Border Proposing Release only
made minor technical changes to Rule
904.
The Commission continues to believe
that a registered SDR will not incur
significant costs in connection with
Rule 904. The requirement for a
registered SDR to provide reasonable
advance notice to participants and to
the public of its normal and special
closing hours, and to provide notice to
participants that the SDR is available to
accept transaction data after its system
was unavailable will likely entail only
a modest annual cost. The Commission

1307 See

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1311 See

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supra note 668.

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14713

estimates that the ongoing aggregate
annual cost would be $45,000, which
corresponds to $4,500 per registered
SDR.1312
The Commission does not believe
there are significant one-time costs
related to Rule 904. The Commission
believes that, other than the costs
related to the notice provisions cited
above, any additional costs are
subsumed in the costs associated with
Rules 901 and 902. For example, the
requirement for reporting sides to report
information to the registered SDR upon
receiving a notice that the registered
SDR has resumed its normal operations
would be part of the reporting sides’
reporting obligations under Rule 901.
The requirement to disseminate
transaction reports held in queue should
not present any costs in addition to
those already contained in Rule 902.
The Commission believes that the
systems of the SDR would already have
to account for system upgrades and
maintenance, power outages, system
overloads or other malfunctions or
contingencies and as a result there
would not be any additional
quantifiable costs to also account for
normal closing hours. Furthermore, to
the extent that market participants have
already expended resources in
anticipation of the adoption of
Regulation SBSR, the costs could be
significantly lower. As a result, the
Commission’s estimates should be
viewed as an upper bound of the
potential costs of Regulation SBSR.
After reviewing comment letters
received in response to the Regulation
SBSR Proposing Release and the CrossBorder Proposing Release, the
Commission continues to believe that
these cost estimates pertaining to Rule
904, as adopted, remain valid. The
Commission has received no comments
to the contrary.
b. Error Reporting—Rule 905
Rule 905 requires any counterparty to
a security-based swap that discovers an
error in previously-reported information
to take action to ensure that corrected
information is provided to the registered
SDR to which the initial transaction was
reported. The rule also requires a
registered SDR to verify any error
reports that it receives and correct and,
if necessary, publicly disseminate a
corrected transaction report. This rule
should enhance the overall reliability of
security-based swap transaction data
that must be maintained by registered
1312 The Commission derived this number as
follows: [(Operations Specialist (36 hours) at $125
per hour) × (10 registered SDRs)] = $45,000, which
corresponds to $4,500 per registered SDR.

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SDRs. For registered SDRs, the ability to
verify disputed information, process a
transaction report cancellation, accept a
new security-based swap transaction
report, and update relevant records are
all capabilities that the registered SDR
must implement to comply with its
obligations under Regulation SBSR.
Likewise, to comply with Rule 905, a
registered SDR must disseminate a
corrected transaction report in instances
where the initial report included
erroneous primary trade information.
This will allow market observers to
receive updated transaction information
from the same source that publicly
disseminated the original transaction
and allow them to integrate updated
transaction information into their
understanding of the security-based
swap market.
Requiring participants to promptly
correct erroneous transaction
information should help ensure that the
Commission and other relevant
authorities have an accurate view of
risks in the security-based swap market.
Correcting inaccurate security-based
swap transaction data held by a
registered SDR also could benefit market
participants by helping them to
accurately value the security-based
swaps they carry on their books.
The Commission believes that the
costs of requirements under these rules
will be related to developing and
publicly providing the necessary
protocols for carrying out error
correction and reporting.
Rule 905(a), as adopted, establishes
procedures for correcting errors in
reported and disseminated securitybased swap information, recognizing
that any system for transaction reporting
must accommodate for the possibility
that certain data elements may be
incorrectly reported. Rule 905(b), as
adopted, sets forth the duties of a
registered SDR to verify disputed
information and make necessary
corrections. If the registered SDR either
discovers an error in a transaction on its
system or receives notice of an error
from a counterparty, Rule 905(b)(1)
requires the registered SDR to verify the
accuracy of the terms of the securitybased swap and, following such
verification, promptly correct the
erroneous information contained in its
system. Rule 905(b)(2) will further
require that, if the erroneous transaction
information contained any data that fall
into the categories enumerated in Rule
901(c) as information required to be
reported, the registered SDR would be
required to publicly disseminate a
corrected transaction report of the
security-based swap promptly following
verification of the trade by the

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counterparties to the security-based
swap.
The Commission continues to believe
that promptly submitting an amended
transaction report to the appropriate
registered SDR after discovery of an
error as required under Rule 905(a)(2)
will impose costs on reporting sides.
Likewise, the Commission continues to
believes that promptly notifying the
relevant reporting side after discovery of
an error as required under Rule
905(a)(1) will impose costs on nonreporting-party participants.
With respect to reporting side, the
Commission continues to believe that
Rule 905(a) will impose an initial, onetime cost associated with designing and
building the reporting entity’s reporting
system to be capable of submitting
amended security-based swap
transactions to a registered SDR. In
addition, reporting sides will face
ongoing costs associated with
supporting and maintaining the error
reporting function.1313
The Commission continues to believe
that designing and building appropriate
reporting system functionality to
comply with Rule 905(a)(2) will be a
component of, and represent an
incremental ‘‘add-on’’ to, the cost to
build a reporting system and develop a
compliance function as required under
Rule 901.
The Commission estimates this
incremental burden to be equal to 5% of
the one-time and annual costs
associated with designing and building
a reporting system that is in compliance
with Rule 901,1314 plus 10% of the
corresponding one-time and annual
costs associated with developing the
reporting side’s overall compliance
program required under Rule 901.1315
Thus, for reporting sides, the
Commission estimates that Rule 905(a)
will impose an initial (first-year)
aggregate cost of $3,547,500, which is
approximately $11,825 per reporting
side,1316 and an ongoing aggregate
1313 The Commission continues to believe that the
actual submission of amended transaction reports
required under Rule 905(a)(2) would not result in
material, independent costs because this would be
done electronically though the reporting system
that the reporting party must develop and maintain
to comply with Rule 901. The costs associated with
such a reporting system are addressed in the
Commission’s analysis of Rule 901. See supra
Section XXII(C)(1)(b).
1314 See Regulation SBSR Proposing Release, 75
FR 75271–72.
1315 See id.
1316 This figure is calculated as follows:
[((($49,000 one-time reporting system development
costs) × (0.05)) + (($2,500 annual maintenance of
reporting system) × (0.05)) + (($54,000 one-time
compliance program development) × (0.1)) +
(($38,500 annual support of compliance program) ×
(0.1))) × (300 reporting sides)] = $3,547,500, or
$11,825 per reporting side.

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annual cost of $1,192,500, which is
approximately $4,000 per reporting
side.1317
With regard to participants who are
not assigned the duty to report a
particular transaction, the Commission
believes that Rule 905(a) will impose an
initial and ongoing cost associated with
promptly notifying the relevant
reporting side after discovery of an error
as required under Rule 905(a)(1). The
Commission estimates that such annual
cost will be approximately $64,000,000,
which corresponds to approximately
$13,000 per participant.1318 This figure
is based on the Commission’s estimates
of (1) 4,800 participants; and (2) 1.14
transactions per day per participant.1319
Rule 905 also imposes duties on
security-based swap counterparties and
registered SDRs to correct errors in
reported and disseminated information.
The costs associated with establishing
these capabilities, including systems
development, support, and
maintenance, are largely addressed in
the Commission’s analysis of those
rules.1320 The Commission estimates
that to develop and publicly provide the
necessary protocols for carrying out
these functions would impose on each
registered SDR a cost of approximately
$200,000.1321 The Commission
estimates that to review and update
such protocols will impose an annual
cost on each registered SDR of
$400,000.1322
Accordingly, the Commission
estimates that the initial aggregate
1317 This figure is calculated as follows: [((($2,500
annual maintenance of reporting system) × (0.05))
+ ((38,500 annual support of compliance program)
× (0.1))) × (300 reporting sides)] = $1,192,500, or
approximately $4,000 per reporting side.
1318 This figure is based on the following: [(1.14
error notifications per non-reporting-side
participant per day) × (365 days/year) ×
(Compliance Clerk (0.5 hours/report) at $64 per
hour) × (4,800 participants)] = $63,912,960, or
approximately $64,000,000, which corresponds to
approximately $13,000 per participant.
1319 This figure is based on the following: [((2
million estimated annual security-based swap
transactions)/(4,800 participants))/(365 days/year)]
= 1.14 transactions per day.
1320 See SDR Adopting Release, Sections VIII and
IX.
1321 This figure is based on the following: [(Sr.
Programmer (80 hours) at $303 per hour) +
(Compliance Manager (160 hours) at $283 per hour)
+ (Compliance Attorney (250 hours) at $334 per
hour) + (Compliance Clerk (120 hours) at $64 per
hour) + (Sr. Systems Analyst (80 hours) at $260 per
hour) + (Director of Compliance (40 hours) at $446
per hour) = $199,340, or approximately $200,000
per registered SDR.
1322 This figure is based on the following: [(Sr.
Programmer (160 hours) at $303 per hour) +
(Compliance Manager (320 hours) at $283 per hour)
+ (Compliance Attorney (500 hours) at $334 per
hour) + (Compliance Clerk (240 hours) at $64 per
hour) + (Sr. Systems Analyst (160 hours) at $260
per hour) + (Director of Compliance (80 hours) at
$446 per hour)] = $398,680, or approximately
$400,000 per registered SDR.

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annual cost on registered SDRs under
Rule 905, as adopted, will be
approximately $6,000,000, which
corresponds to approximately $600,000
for each registered SDR.1323 The
Commission further estimates that the
ongoing aggregate annual cost on
registered SDRs under Rule 905, as
adopted, will be approximately
$4,000,000, which corresponds to
approximately $400,000 for each
registered SDR.
c. Other Participants’ Duties—Rule 906
Rule 906(a) requires a registered SDR
to send a notice to security-based swap
counterparties that are participants of
that SDR about any UIC information
missing from transaction reports. Rule
906(a) also obligates such participants to
provide the missing UIC information to
the registered SDR upon receipt of such
notice. Rule 906(a) is designed to enable
a registered SDR to obtain a complete
record of the necessary information for
each security-based swap transaction
and thereby enable the Commission and
other relevant authorities to obtain a
comprehensive picture of security-based
swap transactions, which will facilitate
surveillance and supervision of the
security-based swap markets. More
complete security-based swap records
may provide the Commission necessary
information to investigate specific
transactions and market participants.
Rule 906(b) is designed to enhance
the Commission’s ability to monitor and
surveil the security-based swap markets
by requiring each participant of a
registered SDR to report the identity of
its ultimate parent and any affiliates that
also are participants of that registered
SDR. Obtaining this ultimate parent and
affiliate information will be helpful for
understanding the risk exposures of not
only individual participants, but also for
related participants operating within a
larger financial group. The Commission
expects these costs of requiring
participants to provide ultimate parent
and affiliate information to registered
SDRs will be modest and, in any event,
believes that the costs of providing this
information are justified. Having
information on the ultimate parent and
affiliate would enhance the ability of the
Commission to monitor security-based
swap exposures within ownership
groups, allowing it to better assess the
overall risk exposure of these groups.
The Commission is also attempting to
reduce these burdens by requiring
1323 This figure is based on the following:
[($199,340 to develop protocols) + ($398,680 for
annual support)) × (10 registered SDRs)] =
$5,980,200, or approximately $6,000,000, which
corresponds to approximately $600,000 per
registered SDR.

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participants to report the identity only
of their ultimate parent(s) but not any
intermediate parent(s). The Commission
further notes that a participant is not
required to provide any information
about an affiliate, other than its
counterparty ID.1324 The participant is
not required to provide any transaction
or other information on the affiliate’s
behalf.
Rule 906(c) is designed to enhance the
overall reliability security-based swap
transaction data that is required to be
reported to a registered SDR pursuant to
Rule 901 by requiring registered
security-based swap dealers and
registered major security-based swap
participants to establish, maintain, and
enforce written policies and procedures
addressing compliance with Regulation
SBSR. Rule 901(a) should result in
reliable reporting of security-based swap
transaction data by requiring key
participants to focus internal procedures
on the reporting function. Reliable
reporting would benefit counterparties,
relevant authorities, and the market
generally, by reducing the likelihood of
errors in regulatory and publicly
disseminated data. This could allow
relevant authorities and the public to
have confidence in the data and
minimize the need to make corrections
in the future.
The Commission believes that the
costs of requirements under these rules
will be related to developing the written
policies and procedures necessary to
satisfy Rule 901’s reporting
requirements. Once development is
complete, SDRs will face ongoing costs
associated with maintaining and
enforcing these policies and procedures.
Rule 906(a) requires a registered SDR,
once a day, to send a report to each
participant identifying, for each
security-based swap to which that
participant is a counterparty, any
security-based swap(s) for which the
registered SDR lacks counterparty ID
and (if applicable) broker ID, trading
desk ID, and trader ID. Rule 906(a)
requires a participant that receives such
a report to provide the missing
information to the registered SDR
within 24 hours. Rule 906(b) requires
participants to provide a registered SDR
with information identifying the
participant’s affiliate(s) that are also
participants of the registered SDR, as
well as its ultimate parent(s).
1324 The Commission does not believe that the
change in Rule 906(b) from ‘‘participant ID’’ to
‘‘counterparty ID’’ will result in any change in the
cost to participants. The information to be provided
is similar in scope and will, in the Commission’s
estimation, better accomplish the objective of
ensuring that a registered SDR can identify each
counterparty to a security-based swap.

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Additionally, under Rule 906(b),
participants are required to promptly
notify the registered SDR of any changes
to the information previously provided.
Rule 906(c) requires a participant that is
a registered security-based swap dealer
or registered major security-based swap
participant to establish, maintain, and
enforce written policies and procedures
that are reasonably designed to ensure
compliance with any security-based
swap transaction reporting obligations
in a manner consistent with Regulation
SBSR.
Rule 906(a) requires a participant that
receives a daily report from a registered
SDR to provide the missing UICs to the
registered SDR within 24 hours. The
Commission believes that Rule 906(a)
will result in an initial and ongoing
aggregate annual cost for all participants
since even participants that are the
reporting side for some transactions will
be the non-reporting side for other
transactions. The Commission estimates
that Rule 906(a) will result in an initial
and ongoing aggregate annual cost for
participants of approximately
$12,800,000, which corresponds to a
cost of approximately $2,700 per
participant.1325 This figure was based
on the Commission’s preliminary
estimates of (1) 4,800 participants and
(2) 1.14 transactions per day per
participant.1326
Rule 906(b) requires every participant
to provide a registered SDR an initial
parent/affiliate report, using ultimate
parent IDs and counterparty IDs, and
updating that information, as necessary.
The Commission continues to believe
that the cost for each participant to
submit an initial or update report will
be $32.1327 The Commission estimates
that each participant will submit two
reports each year.1328 In addition, the
Commission estimates that there may be
4,800 security-based swap participants
and that each one may connect to two
registered SDRs. Accordingly, the
Commission estimates that the initial
and ongoing aggregate annual cost
1325 This figure is based on the following: [(1.14
missing information reports per participant per day)
× (365 days/year) × (Compliance Clerk (0.1 hours)
at $64 per hour) × (4,800 participants)] =
$12,782,592, or approximately $12,800,000, which
corresponds to approximately $2,700 per
participant.
1326 This figure is based on the following: [((2
million estimated annual security-based swap
transactions)/(4,800 participants))/(365 days/year)]
= 1.14 transactions per day. See supra Section XXI.
1327 This figure is based on the following:
[(Compliance Clerk (0.5 hours) at $64 per hour) ×
(1 report)] = $32.
1328 During the first year, the Commission
believes each participant would submit its initial
report and one update report. In subsequent years,
the Commission estimates that each participant
would submit two update reports.

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associated with Rule 906(b) will be
$614,400, which corresponds to $128
per participant.1329
Rule 906(c) requires each participant
of a registered SDR that is a registered
security-based swap dealer or registered
major security-based swap participant to
establish, maintain, and enforce written
policies and procedures that are
reasonably designed to ensure
compliance with any security-based
swap transaction reporting obligations
in a manner consistent with Regulation
SBSR.1330 Rule 906(c) also requires the
review and updating of such policies
and procedures at least annually. The
Commission continues to estimate that
developing and implementing written
policies and procedures as required
under the Rule 906 could result in a
one-time initial cost to each registered
security-based swap dealer or registered
major security-based swap participant of
approximately $58,000.1331 This figure
includes the estimated cost to develop
a set of written policies and procedures,
program systems, implement internal
controls and oversight, train relevant
employees, and perform necessary
testing.1332 In addition, the Commission
estimates that the annual cost to
maintain such policies and procedures,
including a full review at least annually,
as required under the adopted rule, will
be approximately $34,000 for each
registered security-based swap dealer or
registered major security-based swap
participant.1333 This figure is based on
an estimate of the cost to review existing
policies and procedures, make any
necessary updates, conduct ongoing
training, maintain relevant systems and
1329 This figure is based on the following: [($32/
report) × (2 reports/year/registered SDR connection)
× (2 registered SDR connections/participant) ×
(4,800 participants)] = $614,400, which corresponds
to $128 per participant.
1330 As is explained in the Paperwork Reduction
Act discussion, the Commission estimates that there
will be approximately 50 registered security-based
swap dealers and 5 registered major security-based
swap participants for a total of 55 respondents. See
supra Section XXII(C)(1)(b)(i).
1331 The Commission derived its estimate from
the following: [(Sr. Programmer (40 hours) at $303
per hour) + (Compliance Manager (40 hours) at
$283 per hour) + (Compliance Attorney (40 hours)
at $334 per hour) + (Compliance Clerk (40 hours)
at $64 per hour) + (Sr. Systems Analyst (32 hours)
at $260 per hour) + (Director of Compliance (24
hours) at $446 per hour)] = $58,384, or
approximately $58,000 per covered participant.
1332 See Cross-Border Proposing Release, 78 FR
30994, note 256.
1333 The Commission derived its estimate from
the following: [(Sr. Programmer (8 hours) at $303
per hour) + (Compliance Manager (24 hours) at
$283 per hour) + (Compliance Attorney (24 hours)
at $334 per hour) + (Compliance Clerk (24 hours)
at $64 per hour) + (Sr. Systems Analyst (16 hours)
at $260 per hour) + (Director of Compliance (24
hours) at $446 per hour)] = $33,632, or
approximately $34,000 per covered participant.

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internal controls systems, and perform
necessary testing.
Accordingly, the Commission
estimates that the initial aggregate
annual cost associated with Rule 906(c)
would be approximately $5,060,000,
which corresponds to $92,000 per
covered participant.1334 The
Commission further estimates that the
ongoing aggregate annual cost
associated with Rule 906(c) will be
approximately $1,870,000, which
corresponds to $34,000 per covered
participant.1335
Rule 906(a) requires a registered SDR,
once a day, to send a report to each
participant identifying, for each
security-based swap to which that
participant is a counterparty, the
security-based swap(s) for which the
registered SDR lacks counterparty ID
and (if applicable) broker ID, branch ID,
execution agent ID, trading desk ID, and
trader ID. Under Rule 906(a), a
participant that receives such a report
will be required to provide the missing
ID information to the registered SDR
within 24 hours.
The Commission believes that each
registered SDR would face a one-time,
initial cost of approximately $33,000 to
create a report template and develop the
necessary systems and processes to
produce a daily report required by Rule
906(a).1336 The Commission further
believes that there will be an ongoing
annual cost for a registered SDR to
generate and issue the daily reports, and
to enter into its systems the ID
information supplied by participants in
response to the daily reports, of
approximately $30,000.1337
The Commission continues to
estimate that the initial aggregate annual
cost for registered SDRs associated with
Rule 906(a) would be approximately
$630,000, which corresponds to $63,000
per registered SDR.1338 The Commission
1334 The Commission derived its estimate from
the following: [($58,000 + $34,000) × (55 covered
participants)] = $5,060,000, or approximately
$92,000 per covered participant.
1335 The Commission derived its estimate from
the following: [($34,000) × (55 covered
participants)] = $1,870,000.
1336 The Commission derived its estimate from
the following: [(Senior Systems Analyst (40 hours)
at $260 per hour) + (Sr. Programmer (40 hours) at
$303 per hour) + (Compliance Manager (16 hours)
at $283 per hour) + (Director of Compliance (8
hours) at $446 per hour) + (Compliance Attorney (8
hours) at $334)] = $33,288, or approximately
$33,000 per registered SDR.
1337 The Commission derived its estimate from
the following: [(Senior Systems Analyst (24 hours)
at $260 per hour) + (Sr. Programmer (24 hours) at
$303 per hour) + (Compliance Clerk (260 hours) at
$64 per hour)] = $30,152, or approximately $30,000
per registered SDR.
1338 The Commission derived its estimate from
the following: [($33,288 + $30,152) × (10 registered
SDRs)] = $634,400, or approximately $630,000,

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estimates that the ongoing aggregate
annual cost for registered SDRs
associated with Rule 906(a) will be
approximately $300,000, which
corresponds to $30,000 per for
registered SDR.
d. Registered SDR Policies and
Procedures—Rule 907
Rule 907(a) requires a registered SDR
to establish and maintain written
policies and procedures with respect to
the receipt, reporting, and
dissemination of security-based swap
transaction data pursuant to Regulation
SBSR. Under Rules 907(a)(1) and (2), a
registered SDR’s policies and
procedures must specify the data
elements of a security-based swap that
must be reported and the reporting
format that must be used for submitting
information. Under Rule 907(a)(3), the
registered SDR’s policies and
procedures must specify procedures for
reporting life cycle events and
corrections to previously submitted
information. Rule 907(a)(4) requires
policies and procedures for flagging
transactions having special
characteristics. Rules 907(a)(5) requires
policies and procedures for assigning
UICs in a manner consistent with Rule
903. Rule 907(a)(6) requires policies and
procedures for periodically obtaining
from each of its participants the
ultimate parent and affiliate information
required to be submitted to the SDR by
Rule 906(b).
By requiring SDRs to establish and
maintain policies and procedures
pursuant to Rule 907(a)(1), SDRs likely
will have to consult with their
participants in devising flexible and
efficient methods of obtaining high
quality transaction data from market
participants. This rule allows SDRs to
adjust their policies and procedures as
market conventions and technologies
change. For example, registered SDRs
will have the flexibility to incorporate
new reporting methodologies more
quickly. In addition, Rule 907(a)(1)
should reduce the likelihood that
financial innovation that leads to a new
security-based swap products will
disrupt regulatory reporting and public
dissemination of transaction
information related to the new product.
At the same time, the Commission
believes that there are benefits to
enforcing minimum standards for
reporting transaction information,
standards that will be established as a
result of the requirement that SDRs
develop policies and procedures in
accordance with Rule 907. As noted in
which corresponds to $63,440, or approximately
$63,000 per registered SDR.

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
Section XXII(B)(1)(a)(iii), the
Commission anticipates that a small
number of registered SDRs will serve
the security-based swap market. These
SDRs may enjoy market power relative
to their participants, and we believe that
imposing minimum standards on them
is reasonable to mitigate the risk that
imperfect competition leads to low
quality data collection.
Further, the requirement in Rule
907(c) that a registered SDR make
publicly available on its Web site the
policies and procedures required by
Regulation SBSR will allow the public
to better understand and interpret the
data publicly disseminated by SDRs. For
example, under Rule 907(a)(4)(i), a
registered SDR will have policies and
procedures that identify the
characteristics of a security-based swap
that could, in the fair and reasonable
estimation of the registered SDR, cause
a person without knowledge of these
characteristics to receive a distorted
view of the market. Making publicly
available a description of the flags that
it requires will allow the public to
interpret the flags they observe in
publicly disseminated data. Rule 907(d)
requires registered SDRs to review, and
update as necessary, the policies and
procedures required by Regulation
SBSR at least annually, and indicate the
date on which they were last reviewed.
Finally, Rule 907(e) requires a
registered SDR to provide to the
Commission, upon request, information
or reports related to the timeliness,
accuracy, and completeness of data
reported to the registered SDR pursuant
to Regulation SBSR and the registered
SDR’s policies and procedures
established thereunder. Rule 907(e) will
assist the Commission in examining for
compliance with Regulation SBSR and
in bringing enforcement or other
administrative actions as necessary or
appropriate. Required data submissions
that are untimely, inaccurate, or
incomplete could diminish the value of
publicly disseminated reports that are
designed to promote transparency and
price discovery.
The Commission believes that the
costs of requirements under Rule 907(a)
are related to developing policies and
procedures. Rules 907(c) and 907(d)
require a registered SDR to update its
policies and procedures as necessary
and to post these policies and
procedures on its Web site. Rule 907(e)
requires a registered SDR to provide the
Commission with information related to
the timeliness, accuracy, and
completeness of data reported to it
pursuant to Regulation SBSR and the
registered SDR’s policies and
procedures established thereunder.

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Under Regulation SBSR, registered
SDRs have the flexibility to determine
the precise means through which they
will accept reports of security-based
swap transaction data. Rather than
setting—by rule—a fixed schedule of
data elements that must be reported as
well as the specific reporting language
or reporting protocols that must be used,
Regulation SBSR instead requires
registered SDRs to establish and
maintain policies and procedures that
detail these requirements. Persons
seeking to register as SDRs may have
ongoing discussions with their
participants—both before and after
registration—about the appropriate
means of permitting reporting in a
manner that captures all the elements
required by Rule 901 while minimizing
the administrative burden on reporting
sides. Also, the data elements necessary
to understand a trade could evolve over
time as new contracts are developed, or
that the most efficient means of
reporting also could evolve as new
technologies or reporting languages are
devised. In light of these considerations,
the Commission believes that registered
SDRs and, to the extent that SDRs seek
discussion with them, market
participants will be in a better position
to define the necessary reporting
elements over time as the security-based
swap market evolves.
As discussed above in Section IV, the
Commission considered the alternative
of requiring reporting parties to use a
single reporting language or protocol in
submitting data to registered SDRs, and
three commenters encouraged the use of
the FpML standard.1339
While specifying a single, acceptable
standard would remove any ambiguity
surrounding data formats that reporting
parties could use for transaction reports,
the Commission has chosen not to adopt
such an approach, for three reasons.
First, market participants may have
preferences over the different opensource structured data formats available.
By allowing registered SDRs to choose
from among formats widely used by
participants, the adopted approach
allows SDRs to coordinate with their
participants to select standards that
allow reporting parties to efficiently
carry out their obligations under Rule
901. Second, allowing SDRs flexibility
in the formats they accept should help
ensure that they can accommodate
innovations in the security-based swap
market that lead to changes in data
elements that must be reported under
Rule 901. Third, the Commission
believes that, so long as registered SDRs
1339 See

DTCC II at 16; ISDA I at 4; ISDA/SIFMA

can make security-based swap
transaction data accessible to the
Commission using a uniform format and
taxonomy, it may not be necessary to
require reporting sides to report
transaction data to registered SDRs
using a single format or taxonomy. This
approach gives a registered SDR the
opportunity to differentiate its services
by offering reporting sides the ability to
report using different formats and
taxonomies, if the SDR can convert
these transaction reports into the
uniform format and taxonomy pursuant
to which the Commission will require
the SDR to make transaction data
accessible to the Commission.
The Commission believes that ten
registered SDRs will be subject to Rule
907, and that developing and
implementing written policies and
procedures as required under Rule 907,
will result in an initial, one-time cost to
each registered SDR of approximately
$4,100,000.1340 This figure includes the
estimated cost to develop a set of
written policies and procedures,
program systems, implement internal
controls and oversight, train relevant
employees, perform necessary testing,
monitor participants, and compile data.
In addition, the Commission believes
that its estimate for maintaining such
policies and procedures, including a full
review at least annually; making its
policies and procedures publicly
available on its Web site; and providing
the Commission, upon request,
information or reports related to the
timeliness, accuracy, and completeness
of data reported to it pursuant to
Regulation SBSR, and the registered
SDR’s policies and procedures is
reasonable. As a result, the Commission
believes its preliminary estimate of
approximately $8,200,000 for each
registered SDR is valid.1341 This figure
1340 The Commission derived its estimate from
the following: [(Sr. Programmer (1,667 hours) at
$303 per hour) + (Compliance Manager (3,333
hours) at $283 per hour) + (Compliance Attorney
(5,000 hours) at $334 per hour) + (Compliance Clerk
(2,500 hours) at $64 per hour) + (Sr. Systems
Analyst (1,667 hours) at $260 per hour) + (Director
of Compliance (833 hours) at $446 per hour)] =
$4,083,278, or approximately $4,100,000 per
registered SDR. The Commission believes that
potential SDRs that have similar policies and
procedures in place may find that these costs would
be lower, while potential SDRs that do not have
similar policies and procedures in place may find
that the potential costs would be higher.
1341 The Commission derived its estimate from
the following: [(Sr. Programmer (3,333 hours) at
$303 per hour) + (Compliance Manager (6,667
hours) at $283 per hour) + (Compliance Attorney
(10,000 hours) at $334 per hour) + Compliance
Clerk (5,000 hours) at $64 per hour) + (Sr. Systems
Analyst (3,333 hours) at $260 per hour) + (Director
of Compliance (1,667 hours) at $446 per hour)] =
$8,166,722, or approximately $8,200,000 per

I at 8.

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is based on an estimate of the cost to
review existing policies and procedures,
make necessary updates, conduct
ongoing training, maintain relevant
systems and internal controls systems,
perform necessary testing, monitor
participants, and collect data.1342
Accordingly, the Commission estimates
that the initial annual cost associated
with Rule 907 will be approximately
$12,250,000 per registered SDR, which
corresponds to an initial annual
aggregate cost of approximately
$122,500,000.1343 The Commission
estimates that the ongoing annual cost
associated with Rule 907 will be
approximately $8,200,000 per registered
SDR, which corresponds to an ongoing
annual aggregate cost of approximately
$82,000,000.1344 These figures are
based, in part, on the Commission’s
experience with other rules that require
entities to establish and maintain
compliance with policies and
procedures.1345
Finally, the Commission continues to
believe that the Rule 907(e) requirement
that a registered SDR must provide to
the Commission, upon request, such
information as the Commission
determines necessary or appropriate for
the Commission to perform the duties of
the Commission, registered SDRs will
incur costs. The Commission notes,
however, that any such costs are already
covered by rules governing SDRs
adopted in the SDR Adopting Release
and, thus, do not need to be separately
considered here. Specifically, Rule 13n–
5(b) requires a registered SDR to
establish, maintain, and enforce written
policies and procedures reasonably
registered SDR. The Commission believes that
potential SDRs that have similar policies and
procedures in place may find that these costs would
be lower, while potential SDRs that do not have
similar policies and procedures in place may find
that the potential costs would be higher.
1342 In the Regulation SBSR Proposing Release,
the Commission also included ‘‘calculate and
publish block trade thresholds’’ as one of the items
in the list of items that an SDR would need to
undertake on an ongoing basis with respect to its
policies and procedures under Rule 907. See
Regulation SBSR Proposing Release, 75 FR 75276–
77. Although the Commission is not adopting Rule
907(b) at this time, the costs discussed herein
pertain to all of the policies and procedures of a
registered SDR. The Commission does not believe
that not adopting Rule 907(b), which applies only
to policies and procedures relating to block trades,
would have had a measureable impact on the costs
related to developing the policies and procedures
of the registered SDR. As a result, the Commission
believes that its cost estimate continues to be valid.
1343 The Commission derived its estimate from
the following: [((4,083,278) + ($8,166,722)) × (10
registered SDRs)] = $122,500,000, or approximately
$123,000,000.
1344 The Commission derived its estimate from
the following: [($8,166,722) × (10 registered SDRs)]
= $81,667,220, or approximately $82,000,000.
1345 See Cross-Border Proposing Release, 78 FR
30994, note 256.

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designed to satisfy itself that the
transaction data that has been submitted
to the SDR is complete and accurate,
and also to ensure that the transaction
data and positions that it maintains are
complete and accurate.1346 The
Commission further believes that these
capabilities will enable a registered SDR
to provide the Commission information
or reports as may be requested pursuant
to Rule 907(e). The Commission
believes that Rule 907(e) will not
impose any costs on a registered SDR
beyond those imposed by Rule 13n–
5(b). Furthermore, to the extent that
market participants have already
expended resources in anticipation of
the adoption of Regulation SBSR, the
costs could be significantly lower. As a
result, the Commission’s estimates
should be viewed as an upper bound of
the potential costs of Regulation SBSR.
After reviewing comment letters
received in response to the Regulation
SBSR Proposing Release and the CrossBorder Proposing Release, as well as
evaluating the most recent data
available to the Commission, the
Commission continues to believe that
these cost estimates related to Rule 907,
as adopted, remain valid.
e. SIP Registration by Registered SDRs—
Rule 909
Rule 909 requires a registered SDR to
register with the Commission as a SIP.
SIP registration of a registered SDR will
help ensure fair access to important
security-based swap transaction data
reported to and publicly disseminated
by the registered SDR. Specifically,
requiring a registered SDR to register
with the Commission as a SIP will
subject it to Section 11A(b)(5) of the
Exchange Act,1347 which provides that a
registered SIP must notify the
Commission whenever it prohibits or
limits any person’s access to its services.
If the Commission finds that the person
has been discriminated against unfairly,
the Commission can require the SIP to
provide access to that person.1348
Section 11A(b)(6) of the Exchange
Act 1349 also provides the Commission
authority to take certain regulatory
action as may be necessary or
appropriate against a registered SIP.1350
Potential users of security-based swap
market data will benefit from the
Commission having the additional
authority over a registered SDR/SIP
provided by Sections 11A(b)(5) and
1346 See SDR Adopting Release, Rules 13n–
5(b)(1)(iii) and 13n–5(b)(3).
1347 15 U.S.C. 78k–1(b)(5).
1348 See 15 U.S.C. 78k–1(b)(5)(B).
1349 15 U.S.C. 78k–1(b)(6).
1350 See supra note 994.

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11A(b)(6) to help ensure that these
persons offer their security-based swap
market data on terms that are fair and
reasonable and not unreasonably
discriminatory.
Because the Commission is adopting
a revised Form SDR that incorporates
certain requests for information derived
from Form SIP and will not require
submission of a separate Form SIP, all
programmatic costs of completing Form
SDR are included in the Commission’s
SDR Adopting Release.1351 As proposed
and re-proposed, Regulation SBSR
would have required the use of a
separate form, existing Form SIP, for
this purpose. In response to comments,
however, the Commission is adopting a
revised Form SDR that incorporates
certain requests for information derived
from Form SIP, and will not require
submission of a separate Form SIP. All
programmatic costs of completing Form
SDR are scored in the SDR Adopting
Release.1352 Therefore, final Rule 909
itself imposes no programmatic costs on
registered SDRs.
7. Definitions—Rule 900
The Commission believes that Rule
900 will not entail any material costs to
market participants. Rule 900 defines
terms used in Regulation SBSR and does
not, in itself, impose any obligations or
duties. To the extent that the scope of
a particular definition subjects a person
to one or more provisions of Regulation
SBSR, the costs and benefits of that rule
are assessed (and, where feasible,
calculated) in light of the scope of
persons affected. With respect to the
definition of ‘‘U.S. person,’’ the
Commission believes that the
Commission’s Title VII rules would
benefit from having the same terms
throughout and could, therefore, reduce
assessment costs for market participants
that might be subject to these rules.
D. Effects on Efficiency, Competition,
and Capital Formation
1. Introduction
Section 3(f) of the Exchange Act 1353
requires the Commission, whenever it
engages in rulemaking and is required to
consider or determine whether an action
is necessary or appropriate in the public
interest, also to consider, in addition to
the protection of investors, whether the
action would promote efficiency,
competition, and capital formation
(‘‘ECCF’’). In addition, Section 23(a)(2)
of the Exchange Act 1354 requires the
Commission, when making rules under
1351 See

SDR Adopting Release, Section VIII(D)(1).
id.
1353 15 U.S.C. 78c(f).
1354 15 U.S.C. 78w(a)(2).
1352 See

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
the Exchange Act, to consider the
impact of such rules on competition.
Section 23(a)(2) also prohibits the
Commission from adopting any rule that
would impose a burden on competition
not necessary or appropriate in
furtherance of the purposes of the
Exchange Act.
Regulation SBSR’s effects on
efficiency, competition, and capital
formation are often closely related to
one another, and it is difficult to
distinguish between the effects of the
final rules on each of these elements.
For example, elements of a securitybased swap market structure that foster
competition between liquidity suppliers
may result in narrower spreads and
higher trading volume, eventually
resulting in greater price efficiency.
Similarly, a security-based swap market
that provides low-cost opportunities for
firms to hedge commercial and financial
risks as a result of low implicit
transaction costs may encourage capital
formation by allowing these firms to
share risks with market participants that
are better able to bear them, thereby
reducing their need to engage in
precautionary savings. However, as the
last example indicates, the final rules’
effects on capital formation often arise
indirectly through their effects on
efficiency and competition.
The following discussion of the
effects of Regulation SBSR on efficiency,
competition, and capital formation
considers the regime that Regulation
SBSR establishes for regulatory
reporting and public dissemination as
well as the particular means of
implementation that the Commission
has chosen, relative to alternative means
of implementation considered. Because
the various elements of these rules will
affect the behavior of counterparties,
infrastructure providers, and market
participants in general, the Commission
has considered the economic effects at
each of these levels, including cases in
which policy alternatives that may be
privately efficient for individual actors,
may nevertheless fail to be efficient for
the overall market.
Regulation SBSR establishes a regime
for regulatory reporting and public
dissemination of security-based swap
transaction data. Under the final rules,
the Commission and other relevant
authorities will have access to detailed
information about security-based swap
transaction activity and about the risk
exposures of security-based swap
counterparties to both reference entities
and to each other. At the same time, the
public will enjoy unprecedented access
to pricing and volume data of securitybased swap transactions. Post-trade
transparency in the security-based swap

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market will reduce information
asymmetries, thereby allowing even
small counterparties to base their
trading decisions on information about
activity in the broader market, which
they would not be able to observe
without post-trade transparency.
Moreover, public dissemination of
security-based swap transactions could
be used as an input to economic
decisions in other markets (e.g., the
corporate equity or bond markets).
2. Regulatory Reporting
As a result of the final rules, the
Commission and other relevant
authorities will have access, through
registered SDRs, to comprehensive
information about the security-based
swap market. This information should
improve relevant authorities’ ability to
oversee the security-based swap market
both for systemic risk purposes and to
detect, deter, and address market abuse.
Regulatory access to security-based
swap data will facilitate monitoring of
risk exposures with implications for
financial stability that market
participants do not internalize. For
example, Regulation SBSR will provide
relevant authorities with visibility into
the security-based swap positions of a
participant’s ultimate parent. Regulation
SBSR also will allow relevant
authorities to detect unusual activity at
a very granular level, by trading desk or
even individual trader. Similarly, by
filtering exposures to single-name CDS
via the product ID, relevant authorities
will be able to better understand any
potential risk to financial stability that
could arise if a corporate default triggers
CDS payouts between counterparties.
Information about the activity and
exposures of security-based swap
market participants could allow the
Commission or other relevant
authorities to take actions that reduce
the likelihood of disruption to the
smooth functioning of financial markets
or to reduce the magnitude of such
disruptions when they do occur.1355 If
such disruptions also impair capital
formation by reducing the ability or
willingness of financial intermediaries
or other market participants to borrow
or lend, then market oversight that
reduces financial instability may also
facilitate capital formation.
The opacity of the security-based
swap market can contribute to
uncertainty during periods of financial
crisis. In the absence of information
about the outstanding obligations
between counterparties to security1355 See supra Section XXII(B)(1)(d) (describing
current state of efficiency in the security-based
swap market).

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14719

based swaps, financial market
participants may face uncertainty over
the extent to which large financial
institutions are exposed to each other’s
credit risk. This environment may create
incentives for financial market
participants to reduce risk exposures
and seek safer assets (such as cash or
Treasury securities), which could lead
to a significant reduction in investment
in capital goods.1356 Under a robust
regime of regulatory reporting, the
Commission and other relevant
authorities will have greater means to
identify the extent of the relevant
exposures and the interrelatedness of
risks in the security-based swap market,
which could be particularly important
in times of financial stress. Providing
relevant authorities access to
information about outstanding
obligations that result from securitybased swap activity could allow these
authorities to assist in the event of
counterparty default. This knowledge
could reduce market participants’
uncertainty in times of stress, if, for
example, it suggests to them a more
orderly wind-down of risk exposures of
the defaulting counterparty. To the
extent that reduced uncertainty results
in more efficient risk-sharing it may
reduce market participants’ demand for
safe assets, as described above, and
hence may improve the environment for
capital formation.
Regulatory reporting will also enable
the Commission and other relevant
authorities to improve their monitoring
of market practices. This could have
direct effects on competition in the
security-based swap market. Absent
regulation by the Commission and other
relevant authorities, potential market
participants may consider the potential
costs of market abuse to be a barrier that
discourages their entry into the securitybased swap market. The knowledge that
the Commission and other relevant
authorities are able to conduct
surveillance on the basis of regulatory
reporting may lower their barriers to
entry since surveillance and the
resulting increased probability of
detection may deter potential market
abuse in the security-based swap
market. This could result in broader
participation and improved efficiency,
competition, and capital formation due
to the availability of more risk-sharing
opportunities between market
participants.
1356 If financial market participants invest their
money in cash or Treasury securities, rather than
riskier assets such as stocks or corporate bonds, this
may make it more difficult for companies to raise
capital and invest in capital goods.

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3. Public Dissemination
Regulation SBSR establishes a
requirement for public dissemination of
security-based swap transaction
information. Currently, public access to
security-based swap transaction
information is limited to aggregate
pricing and volume data made available
by clearing agencies and DTCC–TIW, as
well as infrequent reporting by large
multilateral organizations. There is no
comprehensive or widely available
source of transaction-by-transaction
pricing and volume information.
The Commission believes that public
availability of pricing and volume data
for individual security-based swaps, as
required by Title VII, should promote
efficiency and competition by enabling
information produced by activity in the
security-based swap markets to be used
as an input to myriad economic
decisions, when currently limited
transaction information is generally
available only to large dealers who
observe customer order flow.1357 Thus,
smaller market participants, being able
to view all security-based swap
transactions disseminated by registered
SDRs, can observe from recently
executed prices whether there may be
profitable opportunities to enter the
market, thereby increasing competition.
In addition, a firm may use information
about the pricing of CDS written on its
debt to decide on the appropriate
opportunity cost of capital to apply to
the cash flows of new investment
projects, thereby promoting efficiency.
Similarly, a lender may use information
about credit risk embedded in the
pricing of CDS written on a borrower’s
existing debt to inform the lender’s
decision of whether or not to extend
additional financing, thereby also
promoting efficiency.
As discussed in Section XXII(C)(2)(a),
public dissemination of security-based
swap transactions also may promote
better valuation of underlying and
related assets by allowing for the
inclusion of last-sale information into
valuation models. Models without the
input of last-sale information could be
imprecise or be based on assumptions
subject to the evaluator’s discretion
without having last-sale information to
help identify or correct flawed
assumptions. As a result, otherwise
identical market participants holding
the same asset but using different
valuation models might arrive at
significantly different valuations. This
could result in these market participants
1357 See supra Section XXII(B)(1)(d) (discussing
sources of security-based swap information and
efficiency in the current security-based swap
market).

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developing very different views of their
risk exposures, resulting in inefficient
economic decisions. The Commission
anticipates that market observers will
incorporate last-sale information that is
publicly disseminated by registered
SDRs into their valuation models for the
same and related assets. Such last-sale
information will assist them in
developing and validating their pricing
models and improve the accuracy of the
valuations that they use for a variety of
purposes, such as making new
investment decisions or managing the
risk of existing positions. Efficient
allocation of capital relies on accurate
valuation of asset prices. Overvaluation
of assets could result in a misallocation
of capital, as investors seek to purchase
or hold an asset that cannot deliver the
anticipated risk-adjusted return. By the
same token, undervalued assets
represent investment opportunities that
might go unpursued, because investors
do not realize that a more attractive riskadjusted return may be available. To the
extent that post-trade transparency
enables asset valuations to move closer
to their fundamental values, capital
should be more efficiently allocated.
Information revealed through public
dissemination of security-based swap
transaction details takes on two key
characteristics. First, use of a piece of
information by one economic agent does
not necessarily preclude use of the same
information by another. Second, once
information is made public under
Regulation SBSR, it is, by definition,
non-excludable. Dissemination cannot
be limited only to those that have direct
access to the information (such as
dealers who observe significant order
flow) or to larger market participants
who are willing to pay for the
information. These characteristics make
it difficult for parties who report
transaction data to capture the value
that market participants and market
observers may gain from receipt of
publicly disseminated security-based
swap data. As a result, public
dissemination of security-based swap
transaction information is prone to
inefficient supply—for example, parties
have an incentive to make incomplete
reports of their activity. By establishing
minimum requirements for what is
reported and publicly disseminated, the
Commission believes that Regulation
SBSR will limit the degree of this
inefficient supply.
Public dissemination will also likely
affect efficiency and competition within
the security-based market. A primary
economic effect of the final rules on
public dissemination of transaction
information is to reduce the degree of
information asymmetry between market

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participants. Information asymmetries
are currently endemic in the securitybased swap market. Large dealers can
observe a significant amount of order
flow provided by their customers and
know the prices at which their various
customers have traded with them. Other
market participants, including the
customers of large dealers, generally do
not know the prices that other market
participants have paid or would be
willing to pay for particular securitybased swaps, what products are being
transacted, or in what volumes. Large
dealers collectively, who are able to
observe their customers’ orders and
executions, may be able use this
information to adjust the prices that
they quote to extract profits at the
expense of their customers.1358
Customers, with very limited ability to
obtain information about the prices or
sizes of others’ transactions, are in an
inferior bargaining position to the
dealers that they face. To the extent that
dealer private information counters the
incentives for market participants to
efficiently share risks using securitybased swaps, it represents a dead-weight
loss and not a simple reallocation of
gains from trade between dealers and
their customers.1359 Post-trade
transparency increases the bargaining
power of customers because knowledge
of last-sale prices in the same or similar
instruments allows them to establish a
baseline for negotiations with any
dealer.
Post-trade transparency in other
financial markets has been shown to
improve competition and efficiency by
decreasing implicit transaction costs
and improving the bargaining power of
investors and other non-dealers. For
example, a number of studies of the
corporate bond market have found that
post-trade transparency, resulting from
the introduction of FINRA’s TRACE
system, reduced implicit transaction
costs.1360 Reduced implicit transaction
costs could encourage market entry,
particularly of smaller dealers and nondealers, and potentially increase risk
sharing and price competition, thereby
promoting efficiency. To the extent that
the current security-based swap market
1358 See,

e.g., Bessembinder et al., supra note

1259.
1359 A dead-weight loss means that the economy
in aggregate is worse off. If market participants do
not share risks efficiently as a result of their inferior
bargaining position relative to dealers, then risks
are not transferred to those market participants who
are in the best position to bear them. A dead-weight
loss results when the benefits that accrue to dealers
as a result of their private information are less than
the costs of inefficient risk sharing, or when dealers
do not benefit at the equal expense of other market
participants.
1360 See Edwards, et al., supra note 1223.

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is similar to the corporate bond market
prior to the introduction of TRACE,
post-trade transparency could have
similar effects in the security-based
swap market.1361
Regulation SBSR will permit all
market observers for the first time to see
last-sale information of security-based
swap transactions, thereby reducing the
information asymmetry between dealers
and non-dealers.1362 Non-dealers may
be able to use publicly disseminated
information to negotiate more favorable
prices from dealers or to decline to enter
into security-based swaps offered at
unfavorable prices, thereby improving
the efficiency of risk sharing in the
security-based swap market.
Additionally, public dissemination
could assist dealers in deriving better
quotations, as knowledge of the prices
and volumes at which other market
participants have executed transactions
could serve as a valuable input for
quotations in the same or similar
instruments.1363 As a result, dealers will
have a better sense of the market and
may not need to build large margins into
their quotations to compensate for
uncertainty in providing quotations.
Increased competition from new
entrants and quotations that more
accurately reflect fundamental value
could lead to lower implicit transaction
costs for security-based swaps, which
will encourage efficient risk sharing and
promote price efficiency.1364
The Commission recognizes, however,
that the final rules will not eliminate
entirely the informational advantage of
large intermediaries. These market
participants will still have the
advantage of seeing order flows or
inquiries that are not ultimately
executed and disseminated. They also
will be able to see their completed
transactions against customers in real
time, while market observers who
consume the transaction data that is
publicly disseminated by registered
SDRs might not—during the interim
phase of Regulation SBSR—learn of
these transactions until up to 24 hours
after they are executed. In addition, an
executing intermediary may derive an
informational advantage from knowing
the identities of both its counterparties
1361 In the Regulation SBSR Proposing Release,
the Commission requested comment on whether
post-trade transparency would have a similar effect
on the security-based swap market as it has in other
securities markets—and if not, why not. See 75 FR
75226. No commenters responded to the
Commission’s request.
1362 A similar information asymmetry, but to a
lesser and varying degree, exists between larger and
smaller dealers, and it would also be reduced.
1363 See supra Section XXII(B)(2)(a) (discussing
the benefits of improved valuation).
1364 See Edwards, et al., supra note 1223.

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and other customers who submit orders
or make inquiries about liquidity.
The Commission also acknowledges
that implementing post-trade
transparency in the security-based swap
market could cause some market
participants to execute fewer securitybased swaps in the U.S. market or to
exit the U.S. market completely and
execute their transactions in foreign
markets instead. To the extent that such
events occur, these could be viewed as
costs of the final rules that could have
a detrimental impact on efficiency,
competition, and capital formation. For
example, certain market participants
that are currently active in the market
might not find it desirable for
information about their security-based
swaps to be publicly known. If market
participants respond to the final rules
by reducing their trading activity or
exiting the market, or if the final rules
raise barriers to entry, the result could
be reduced competition between the
remaining market participants. Besides
reduced price competition, exit by
certain participants from the market also
could result in a less efficient allocation
of credit risk. This could have
implications for capital formation if
market participants engage in
precautionary savings and selfinsurance rather than hedging their risks
by using capital resources offered by
third parties through security-based
swaps.1365
Public dissemination of securitybased swap transactions also may
promote efficient valuation of various
financial instruments. As a result of the
final rules, all market participants and
market observers will have the benefit of
knowing how counterparties to a
particular security-based swap valued
the security-based swap at a specific
moment in the recent past, and can
incorporate this last-sale information
into their own valuations for that
security-based swap, as well as any
related or underlying instrument.1366 To
the extent that last-sale information
results in valuations that are more
informationally efficient, they may help
improve financial stability by making
risk management by financial
institutions more efficient. This in turn
could enhance the ability of market
participants to accurately measure
1365 The Commission notes there are also
plausible cases in which Regulation SBSR might
increase the efficiency of risk allocation while also
reducing transaction volume. Market participants
might determine, as a result of observing publicly
disseminated price and volume data, that engaging
in a security-based swap transaction is an
inefficient means of managing financial or
commercial risks.
1366 See supra Section XXII(C)(2).

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financial exposures to each of their
counterparties.
Public dissemination of securitybased swap transaction information
could improve the efficiency of the
security-based swap market through
more efficient deployment of assets
used as collateral for security-based
swap transactions. Appropriate
collateral allocation is dependent on
accurate valuation of security-based
swaps. As the value of a security-based
swap changes, the likelihood of one
party having to make a payout to the
other party also changes, which could
impact the amount of collateral that one
counterparty owes to the other. Hence,
misvaluation of a security-based swap
contract could lead to inefficient
allocation of collateral across
counterparties. To the extent that public
dissemination of security-based swap
transactions will help enable better
valuations, instances of
overcollateralization or
undercollateralization should decrease.
Furthermore, the better investors can
judge the performance of collective
investment vehicles because of better
valuations, the more efficiently they can
allocate their investment capital among
available funds.
Post-trade transparency of securitybased swaps should promote more
efficient valuation of securities on
which security-based swaps are based.
A clear example of this is the market for
single-name CDS, where post-trade
transparency may lead to better
estimates of the creditworthiness of debt
issuers. All other things being equal,
CDS protection on a more creditworthy
issuer costs less than CDS protection on
a less creditworthy issuer. Furthermore,
the cost of CDS protection on a single
issuer may change over time, reflecting,
in part, the financial position of the
issuer. Mandatory post-trade
transparency of CDS transactions will
offer market participants and market
observers the ability to dynamically
assess the market’s view of the
creditworthiness of the reference
entities that underlie CDS contracts,
thus promoting efficiency in the market
for cash bonds. For example, public
dissemination of transactions in CDS on
reference entities that issue TRACEeligible debt securities will help
reinforce the pricing signals derived
from individual transactions in debt
securities generated by TRACE. Market
participants can arbitrage disparities in
prices reflected in TRACE and as
suggested in last-sale information of
related CDS, helping create more overall
efficiency in the market for credit.
Similarly, public dissemination of
transactions in single-name CDS should

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reinforce the pricing signals derived
from public dissemination of index CDS
transactions. Post-trade transparency of
security-based swap CDS under
Regulation SBSR could indirectly bring
greater transparency into the market for
debt instruments (such as sovereign
debt securities) that are not subject to
mandatory public dissemination
through TRACE or any other means.
Finally, business owners and
managers can use information gleaned
from the publicly disseminated securitybased swap transaction data to make
more-informed investment decisions in
physical assets and capital goods, as
opposed to investment in financial
assets, thereby promoting efficient
resource allocation and capital
formation in the real economy.
Transparent security-based swap prices
may also make it easier for firms to
obtain new financing for business
opportunities, by providing information
and reducing uncertainty about the
value and profitability of a firm’s
investments.1367
4. Implementation of Regulatory
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a. Role of Registered SDRs
In adopting Regulation SBSR, the
Commission has attempted to design the
duties of registered SDRs to promote
efficiency of the reporting and public
dissemination requirements and thereby
minimize any adverse impacts on
competition and capital formation. At
the same time, the Commission
acknowledges that, to the extent that the
final rules place regulatory obligations
on registered SDRs, these obligations
may constitute a barrier to entry that, at
the margin, reduces competition
between registered SDRs. Regulation
SBSR requires a registered SDR to
publicly disseminate specified
information about reported securitybased swap transactions immediately
upon receipt. The Commission believes
that this requirement will help promote
an efficient allocation of public
dissemination responsibilities for a
number of reasons. First, registered
SDRs—because of their role in the
regulatory reporting function—already
possess all of the information necessary
to carry out public dissemination and
would not have to collect additional
information from other parties. Second,
placing the duty to publicly disseminate
on registered SDRs eliminates the need
for the development of other
infrastructure and mechanisms for
public dissemination of security-base
swap transaction information in
1367 See

Bond, et al., note 1258, supra.

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addition to the infrastructure that is
required to support regulatory
reporting.1368 Third, users of publicly
disseminated security-based swap data
will be required to consolidate
transaction data from only a small
number of registered SDRs, rather than
a potentially larger number of
dissemination agents that might exist
under an alternative regime. Under
Rules 907(a)(1) and 907(a)(2), registered
SDRs have the flexibility to determine
the precise means through which they
will accept reports of security-based
swap transaction data. This degree of
flexibility has implications for the
efficiency of data collection. Registered
SDRs could choose to innovate and
adopt new reporting formats that could
lower costs to market participants while
maintaining the required level of
information and data integrity.
Moreover, in an effort to attract
business, registered SDRs could decide
to accept data from market participants
in a wide variety of formats, taking on
additional data management and
systems burdens. Indeed, such an
outcome could represent an efficient
allocation of the costs of data
management, in which a handful of
registered SDRs invest in technologies
to transform data rather than
approximately 300 reporting sides
making similar changes to their systems
in an effort to provide identical reports
to each SDR. The Commission
acknowledges, however, that the same
features that support a market structure
that yields only a handful of registered
SDRs could temper the incentives of
these registered SDRs to compete on
reporting efficiency. For example,
registered SDRs could decide to accept
data from customers in only one specific
format. The Commission further
anticipates efficiency gains if data
elements necessary to understand a
trade evolve over time as new securitybased swap contracts are developed.
Additionally, this approach may
support competition among securitybased swap counterparties by
maintaining low barriers to entry with
respect to reporting obligations under
Regulation SBSR.
Further, the final rules do not
presume a market structure for
registered SDRs. On one hand, this
means that market participants, the
Commission, and other relevant
authorities cannot rely on efficiency
gains from receiving security-based
swap transaction data from a single,
consolidated source, but must instead
consolidate fragmented data from
multiple SDRs. On the other hand, a
1368 See

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monopoly in the market for SDR
services could preclude innovations that
may lead to higher quality outputs or
lower costs for reporting parties, SDR
participants more generally, the
Commission, and other relevant
authorities.
b. Interim Phase of Reporting
Requirements and Block Rules
As discussed above in Section VII, the
Commission is adopting rules for
regulatory reporting and public
dissemination of security-based swaps
that are intended only as the interim
phase of implementation of these Title
VII requirements. At a later date, the
Commission anticipates seeking
additional comment on potential block
thresholds and associated block rules
(such as the time delay for
disseminating block trades and the time
period for the mandatory reporting and
public dissemination of non-block
trades).
Immediately implementing a
complete regime that includes block
trade thresholds and final reporting
timeframes could improve efficiency,
competition, and capital formation by
increasing price transparency in the
security-based swap market sooner.
Several commenters, however, argued
that requiring post-trade transparency
for security-based swaps with
incorrectly designed block trade
thresholds could significantly damage
the market,1369 and the Commission is
concerned that disruptions to the
market that could result from
establishing block trading rules without
the benefit of comprehensive data
analysis could cause certain market
participants to limit their security-based
swap activity or to withdraw from the
market entirely. This in turn could lead
to reduced competition, higher prices,
and inefficient allocations of risk and
capital.
Currently, there are no data that can
be used to directly assess the impact of
mandated post-trade transparency of
security-based swap transactions on
market behavior, because there is no
widely available post-trade data to
which the security-based swap market
can react.1370 The Commission
anticipates that the initial phase of
Regulation SBSR will yield at least some
useful data about how much time
market participants believe they need to
hedge transactions and how other
1369 See

supra note 486.
Commission’s economic analysis of the
effects of post-trade transparency on the securitybased swap market has included indirect evidence
from the swap market and from the security-based
swap market. See Analysis of Post-Trade
Transparency; Hedging Analysis.
1370 The

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market participants react when they see
transactions of different sizes with
different delays after the time of
execution. The phased approach is
designed to introduce mandatory posttrade transparency in the security-based
swap market while allowing the
Commission sufficient time to gather
and analyze data regarding potential
block thresholds and dissemination
delays.
The Commission acknowledges that
allowing up to 24 hours for reporting a
security-based swap means that market
participants not involved in that
particular transaction, and other market
observers, will not have access to
information about the transactions for
up to 24 hours after the initial
execution, depending upon the specific
time when the transaction is reported.
This delay could impact the
development of more vigorous price
competition in the security-based swap
market because market participants who
are involved in transactions would have
access to potentially market-moving
information up to 24 hours before those
who are not. The Commission believes,
however, that allowing up to 24 hours
for transactions to be reported and
publicly disseminated still represents a
significant improvement over the status
quo, where market participants report
transactions to data repositories only on
a voluntary basis and information about
transaction is not publicly
disseminated.
c. Use of UICs and Rule 903
Regulation SBSR requires the use of
several UICs in the reporting of securitybased swap transactions. Use of UICs
improves efficiency of data intake by
registered SDRs and data analysis by
relevant authorities and other users of
data, as the reported security-based
swap transaction information can be
readily aggregated by UIC along several
dimensions (e.g., product ID, trading
desk ID, or trader ID). The efficiency
gain in aggregation applies primarily at
the SDR level in cases where the SDR
uses its own UICs that are not otherwise
applied at other SDRs (assuming that no
IRSS exists to provide such UICs). To
the extent that multiple SDRs were to
use the same UICs—because they use
UICs provided by an IRSS, such as the
GLEIS, or because SDRs agree to
recognize UICs assigned by another
SDR 1371—the efficiency gain would
1371 For

example, assume that a person becomes
a participant of a registered SDR and obtains UICs
for its trading desks and individual traders from
that SDR. Later, that person becomes a participant
at a second registered SDR. The second SDR could
issue its own set of UICs for this person’s trading
desks and individual traders, or it could recognize

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extend to aggregation across SDRs,
although this is not required under
Regulation SBSR. The efficiency gains
described in this section may be limited
to regulatory reporting and only extend
to public dissemination to the extent
that the relevant information is being
publicly disseminated. Additionally,
minimizing the operational risks arising
from inconsistent identification of
persons, units of persons, products, or
transactions by counterparties and
market infrastructure providers would
enhance efficiency.
Under Rule 903(b), as adopted, a
registered SDR may permit information
to be reported to it, and may publicly
disseminate information, using codes in
place of certain data elements only if the
information necessary to interpret such
codes is widely available to users of the
information on a non-fee basis. If
information to understand embedded
codes is not widely available on a nonfee basis, information asymmetries
would likely continue to exist between
large market participants who pay for
the codes and other market participants.
Rents paid for the use of codes could
decrease transparency and increase
barriers to entry to the security-based
swap market, because the cost of
necessary licenses may reduce the
incentives for smaller potential market
participants to enter the market.
Preventing this barrier to entry from
forming should help promote
competition by facilitating the entry of
new market participants.
One commenter suggested that
alternatives could be developed to the
status quo of using fee-based codes in
security-based swap market data.1372
The Commission welcomes the
development of such alternatives, and
believes that Rule 903(b), as adopted,
may encourage such development.
d. Rules Assigning the Duty To Report
Rule 901(a) assigns the reporting
obligation for security-based swaps
other than clearing transactions and
platform-executed transactions that are
submitted to clearing. The reporting
hierarchy in Rule 901(a) is designed to
increase efficiency for market
participants, as well as the Commission
and other relevant authorities, by
locating the duty to report with
counterparties who are most likely to
have the resources and who are best
and permit use of the same UICs that had been
assigned by the first registered SDR.
1372 See Bloomberg Letter at 2 (stating that it
would be possible to develop a public domain
symbology for security-based swap reference
entities that relied on products in the public
domain to ‘‘provide an unchanging, unique, global
and inexpensive identifier’’).

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able to support the reporting function.
Furthermore, Rule 901(a) seeks to
increase efficiency by leveraging
existing infrastructure to support
security-based swap reporting, where
practicable.
The Commission anticipates that the
majority of security-based swaps
covered by Rule 901(a), as adopted, will
include a registered security-based swap
dealer or registered major security-based
swap participant on at least one side.
Many of the entities that are likely to
register as security-based swap dealers
or major security-based swap
participants already have committed
time and resources building the
infrastructure to support reporting
security-based swaps and some
reporting to DTCC–TIW is occurring on
a voluntary basis.1373 Moreover, many
such entities currently report swaps
pursuant to the CFTC’s swap data
reporting rules. Rule 901(a) is designed,
as much as practicable, to allow these
market participants to use these existing
reporting capabilities and to minimize
the chance that a market participant
with limited involvement in the
security-based swaps market might
incur the duty to report. This approach
could lead to lower barriers to entry into
the market compared to the approach
contemplated in the SBSR Proposing
Release.1374 Also, by reducing
infrastructure costs imposed on smaller
market participants, this approach also
could promote competition by reducing
the likelihood that these smaller
entrants without existing reporting
capabilities would be required to incur
fixed costs necessary to develop
reporting capabilities. Finally, to the
extent that non-registered persons are
not required to devote resources to
support transaction reporting—because
reporting is carried out instead by
registered security-based swap dealers
and registered major security-based
swap participants who, due to
economies of scale and the presence of
existing reporting capabilities, are likely
to face relatively lower costs of
reporting—such resources could be put
to more efficient uses.1375
The Commission recognizes that this
approach puts smaller market
participants on the same rung of the
hierarchy with entities that likely meet
1373 As discussed in Section XXII(B)(1), supra, the
data in DTCC–TIW are self-reported and the vast
majority of trades involves at least one dealer as a
counterparty. Further, both transaction
counterparties submit records for confirmation,
covering all likely registrants.
1374 See Cross-Border Proposing Release, 78 FR
31194.
1375 See supra Section XXII(C) (discussing the
costs that reporting sides are likely to incur).

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the definition of ‘‘security-based swap
dealer’’ and will have to register with
the Commission as such in the future.
In theory, this could force these smaller
market participants into a negotiation
with the ‘‘likely dealers,’’ because Rule
901(a)(2)(ii)(E)(1) requires both sides to
select the reporting side. The
Commission believes that this outcome
will be unlikely in practice. The
Commission understands that voluntary
reporting practices in the security-based
swap market are broadly consistent with
the principle behind the reporting
hierarchy in Rule 901(a)(2)(ii): That the
more sophisticated market participant
should report the transaction. Moreover,
market participants who are active in
the security-based swap market are
likely also to be active in the swap
market, where CFTC rules have
established a reporting hierarchy that
assigns the heaviest reporting duties to
swap dealers and major swap
participants.1376 Because practices have
already been established for larger
market participants to assume reporting
duties, it is likely that these practices
will be applied in the security-based
swap market even before the
Commission adopts registration rules for
security-based swap dealers and major
security-based swap participants.
One of the general principles
underlying Rule 901(a) is that, if a
person has the duty to report
information under Regulation SBSR, it
should also have the ability to choose
the registered SDR to which it reports.
The Commission believes that this
approach will promote efficiency and
competition, because it enables each
person with a duty to report a securitybased swap to connect and report
transactions to the registered SDR (or
SDRs) that offer it the highest quality
services and/or the lowest fees to the
extent that there is more than one SDR.
Two commenters believed that the
Commission could promote competition
by allowing a counterparty to a securitybased swap—typically a security-based
swap dealer—to choose the registered
SDR that receives information reported
under Regulation SBSR.1377 The
Commission agrees with the views of
the commenters that allowing a
counterparty to choose the registered
SDR that received information reported
under Regulation SBSR could promote
competition. Rule 901(a), as adopted,
reflects this approach by allowing the
1376 See 17 CFR 45.8 (providing a hierarchy for
regulatory reporting of swaps); 17 CFR 43.3(a).
1377 See DTCC VI at 8–9; DTCC VIII; MarkitSERV
III at 4–5.

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person with the duty to report to choose
the registered SDR to which it reports.
Finally, the Commission believes that,
if Rule 901(a) affects capital formation at
all, it would be in only a limited and
indirect way. The Commission does not
see—and no commenter has presented
any evidence to suggest—that the
economic considerations of how, where,
and by whom security-based swap
transactions will be reported to
registered SDRs will have any direct
bearing on how, how often, and at what
prices market participants might be
willing to transact. As mentioned above,
by placing the reporting duty on the
person with the most direct access to
required information, Rule 901(a) is
designed to minimize reporting
burdens, which could facilitate a more
efficient allocation of capital by
reducing expenditures on security-based
swap reporting infrastructure.
e. Embargo Rule
Rule 902(d), the Embargo Rule,
prohibits the release of security-based
swap transaction information to persons
(other than a counterparty or post-trade
processor) until that information has
been transmitted to a registered SDR.
The Embargo Rule is designed to
promote competition among market
participants in the security-based swap
market by prohibiting persons who
obtain knowledge of a security-based
swap transaction shortly after execution
from providing information about that
transaction to third parties before that
information is provided to a registered
SDR so that it can be publicly
disseminated. In the absence of the
Embargo Rule, selected third parties
who are told about executions could
obtain an informational advantage
relative to other market participants,
reducing the ability of these other
market participants to compete in the
market. The potential benefits of
Regulation SBSR with respect to
competition would suffer in the absence
of the Embargo Rule, because market
participants who gain earlier access to
information could maintain a high
degree of information asymmetry in the
market.
Rule 902(d), as adopted, includes a
carve-out for post-trade processors, such
as entities involved in comparing or
clearing transactions. This carve-out is
designed to promote efficiency in the
processing of security-based swap
transactions by recognizing that the
policy goals of the Embargo Rule are not
served by impeding the ability of
security-based swap counterparties to
obtain post-trade processing services.
Post-trade processors must obtain
information about a transaction to carry

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out their functions, even if the
transaction has not yet been reported to
a registered SDR. In the absence of the
carve-out, efficiency could be harmed if
post-trade processors were barred from
obtaining information about the
transaction until it had been publicly
disseminated by a registered SDR.
Without this carve-out, Regulation SBSR
could cause the services and functions
provided by post-trade processors to be
delayed. This could result in a
disruption of current market practices,
where post-trade processors provide a
variety of services to security-based
swap counterparties, and thus a
reduction in security-based swap market
efficiency.
5. Impact of Cross-Border Aspects of
Regulation SBSR
a. General Considerations
The security-based swap market is
global in nature, and dealers and other
market participants are highly
interconnected within this global
market. This interconnectedness
provides a myriad of paths for liquidity
and risk to move throughout the
financial system and makes it difficult,
in many cases, to precisely identify the
impact of a particular entity’s activity
on financial stability or liquidity. As a
corollary to this, it is difficult to isolate
risk and liquidity problems to one
geographical segment of the market.
Further, as we noted in Section
XXII(B)(1), security-based swap market
participants in one jurisdiction can
conduct activity through branches or
subsidiaries located in another. These
features of the market form the basis of
the Commission’s analysis of the effects
of rule 908 on competition, efficiency
and capital formation.
b. Regulatory Reporting and Public
Dissemination
Rule 908(a) generally applies
regulatory reporting and public
dissemination requirements depending
on the characteristics of the
counterparties involved in a transaction.
The regulatory reporting requirement
allows the Commission and other
relevant authorities the ability to
monitor risk and conduct market
surveillance. Because the security-based
swap market represents a conduit
through which financial risks from
foreign markets can manifest themselves
in the United States, the Commission
believes that it is appropriate to focus
on those transactions that are likely to
serve as routes for risk transmission to
the United States, either because a
direct or indirect counterparty is a U.S.
person, is registered with the

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Commission as a security-based swap
dealer or major security-based swap
participant, or if the transaction is
submitted to a clearing agency having
its principal place of business within
the United States. A regulatory reporting
requirement that did not include within
its scope such transactions would
provide the Commission with such an
incomplete view of transaction activity
with potential to undermine the
stability of U.S. financial markets that it
would likely undermine the beneficial
effects of a regulatory requirement on
efficiency, competition and capital
formation.
Under Regulation SBSR, as adopted,
many of the provisions of Regulation
SBSR will apply to a cross-border
security-based swap if one of the direct
counterparties, even if a non-U.S.
person, is guaranteed by a U.S. person.
For example, Rule 908(a)(1)(i) requires
regulatory reporting of a security-based
swap if there is a direct or indirect
counterparty that is a U.S. person on
either or both sides of the transaction.
Because guarantees extended by U.S.
persons on transactions executed abroad
can nevertheless import risk into the
United States, regulatory reporting of
security-based swaps should extend to
any security-based swap transaction
having an indirect counterparty (i.e., a
guarantor) that is a U.S. person. This
will improve the Commission’s ability
to monitor risks posed by activity
guaranteed by U.S. persons and, as a
result, reduce any adverse impacts on
efficiency, competition, and capital
formation that might arise without this
ability or that might arise from attempts
by certain market participants to shift
activity into guaranteed foreign
subsidiaries in order to evade
Regulation SBSR.
Under the approach taken in this
release, market participants could avoid
regulatory reporting and public
dissemination requirements by shifting
activity into unguaranteed foreign
subsidiaries, assuming there was no
other basis for Regulation SBSR to
apply, such as the direct counterparty
being a U.S. person. Thus, the
Commission’s action in distinguishing
between guaranteed and unguaranteed
foreign subsidiaries of U.S. parent
entities could affect how these parent
entities allocate capital across the
organization. For example, a U.S. parent
could separately capitalize a foreign
subsidiary to engage in transactions
with non-U.S. persons. If the U.S. parent
takes such action solely as a response to
Title VII regulation, it is unlikely that
such a move would improve the
efficiency with which the parent
allocates its capital.

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The primary economic effects of
public dissemination of transaction
information are related to improving
market transparency. Rule 908(a)
defines a scope of transactions subject to
this requirement in the cross-border
context that considers the benefits of
public dissemination, including effects
on efficiency, competition, and capital
formation. The scope defined by Rule
908(a) also considers the potential costs
that market participants could incur if
counterparties restructure their
operations so that their activity falls
outside of the scope of Regulation SBSR
and continues in a more opaque market.
Such a response could result in lessened
competition in the security-based swap
market within the United States, less
efficient risk-sharing and pricing, and
impaired capital formation.
The public dissemination
requirements under Regulation SBSR
could affect the behavior of foreign
market participants in ways that reduce
market access for U.S. persons. For
example, some non-U.S. persons might
seek to minimize their contact with U.S.
persons in an effort to avoid having
their transactions publicly
disseminated. Moreover, to the extent
that the Commission’s rules treat the
foreign business of U.S. persons and
non-U.S. persons differently from their
respective U.S. business, market
participants could perceive an incentive
to restructure their business to separate
their foreign and U.S. operations.
Programmatic benefits of this scope,
beyond those already noted as benefits
of regulatory reporting, are related to the
ability of market observers to condition
their beliefs about the security-based
swap market on realized transaction
prices.1378 Post-trade transparency in
the U.S. security-based swap market
could have spillover benefits in foreign
markets, even if those foreign markets
impose no (or only limited) post-trade
transparency requirements.1379 Posttrade transparency provided by
Regulation SBSR will make transaction
data available to any market observer in
the world. These data will also allow
global market observers to use securitybased swap prices as an input for
valuation models and trading decisions
1378 The effects of public dissemination are
discussed more generally in Section XXII(C)(2); the
economic effects of Rule 908 that relate to
efficiency, competition, and capital formation are
examined in Section XXII(D)(4)(i).
1379 See Edwards, et al., supra note 1223.
(presenting a model implying, and finding
empirical evidence in TRACE data for, what the
authors term a ‘‘liquidity externality,’’ i.e.,
improved market quality in certain securities that
were not yet TRACE-eligible, when related
securities had become subject to TRACE post-trade
transparency).

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14725

for the same or related instruments,
thereby improving the efficiency of
these processes.1380
Relevant authorities in other
jurisdictions are currently engaged in
implementing their own regulatory
reforms of the OTC derivatives markets
that could apply to participants in those
foreign markets. Regulatory differences
among jurisdictions in the global
security-based swap markets could
create incentives for business
restructuring. To the extent that such
restructuring results from regulatory
incentives rather than economic
fundamentals, efficiency in the real
economy could be reduced. Conflicting
regulations or unnecessary duplication
of regulation also might lead to
fragmented markets.1381
Even if the substance of statutory and
regulatory efforts across jurisdictions is
comparable, different jurisdictions may
impose new regulatory requirements on
different timelines. To the extent that
these timelines or the underlying
requirements differ, market participants
might have the opportunity to take
advantage of these differences by
making strategic choices, at least in the
short term, with respect to their
transaction counterparties and business
models. For example, at a larger scale,
firms may choose whether to participate
in or withdraw from the U.S. securitybased swap market. As a result of exits,
registered security-based swap dealers
that are U.S. persons might have less
access to foreign markets, unless they
were to restructure their business to
conduct foreign transactions through
unguaranteed foreign subsidiaries
whose transactions with non-U.S.
persons would not be subject to the
regulatory reporting and public
dissemination under Regulation SBSR.
These potential restructurings could
impact competition in the U.S. market.
On one hand, the ability to restructure
one’s business rather than exit the U.S.
market entirely to avoid application of
Title VII to an entity’s non-U.S.
operations could reduce the number of
entities that exit the market, thus
1380 See supra Section XXII(C)(2)(a) (discussing
the benefits of improved valuation).
1381 See, e.g., Arnoud W.A. Boot, Silva Dezelan,
and Todd T. Milbourn, ‘‘Regulatory Distortions in
a Competitive Financial Services Industry,’’ Journal
of Financial Services Research, Vol. 17, No. 1 (2000)
(showing that, in a simple industrial organization
model of bank lending, a change in the cost of
capital resulting from regulation results in a greater
loss of profits when regulated banks face
competition from non-regulated banks than when
regulations apply equally to all competitors); Victor
Fleischer, ‘‘Regulatory Arbitrage,’’ 89 Texas Law
Review 227 (March 4, 2010) (discussing how, when
certain firms are able to choose their regulatory
structure, regulatory burdens are shifted onto those
entities that cannot engage in regulatory arbitrage).

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mitigating the negative effects on
competition described above. On the
other hand, non-registered U.S. persons
may find that the only non-U.S. person
registered security-based swap dealers
that are willing to deal with them are
those whose security-based swap
business is sufficiently large to afford
the compliance costs associated with
regulatory reporting and public
dissemination requirements. To the
extent that smaller dealers have an
incentive to exit the market, the overall
level of competition in the market could
decline.
The Commission is mindful that, in
the near term and until full
implementation of comparable
requirements for regulatory reporting
and public dissemination of securitybased swaps in other jurisdictions, the
rules may generate incentives for market
participants to restructure and reduce
contact with U.S. market participants.
As a result, for example, U.S. market
participants seeking to hedge risk could
face higher prices for hedging or fewer
opportunities to hedge at all, which
could impede capital formation.
Another result could be inefficiency in
risk allocation, because those market
participants who are best placed to take
on risks shared through security-based
swap activity might be discouraged from
doing so because of perceived necessity
to avoid regulatory reporting and public
dissemination requirements under Title
VII. Furthermore, U.S. market
participants that are able to restructure
their business across national
boundaries to avoid regulation are likely
to be the largest financial institutions
that can bear the greatest risks. The
remaining firms will likely be smaller
and have less capital with which to offer
liquidity to the market.
Restructuring of business lines to take
advantage of low-transparency regimes
also would impede transparency, as
fewer transactions would be subject to
public dissemination under Regulation
SBSR. Market participants who had
relocated abroad would still be able to
free-ride on price formation generated
by the public dissemination of others’
transactions in the same or similar
instruments while not contributing any
transactions of their own. The value of
regulatory reporting and public
dissemination in the U.S. market would
be reduced to the extent that liquidity
migrates to jurisdictions that are lesstransparent.1382
1382 By the same token, regulatory reporting and
public dissemination in the U.S. security-based
swap market could have spillover benefits in
foreign markets that trade the same or similar
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c. Substituted Compliance
Rule 908(c) provides that the Title VII
requirements relating to regulatory
reporting and public dissemination of
security-based swaps may be satisfied
by compliance with the rules of a
foreign jurisdiction if the Commission
issues an order determining that the
jurisdiction has requirements that
comparable to those of Regulation
SBSR. Rule 908(c) is designed to
promote efficiency, competition, and
capital formation in the security-based
swap market, to the extent practical,
given the state of regulatory reform of
the OTC derivatives market being
applied by specific foreign jurisdictions.
The Commission believes a regulatory
regime that allows for substituted
compliance under comparable foreign
rules promotes efficiency by reducing
the need for certain market participants
to double report security-based swaps
(i.e., once to a foreign trade repository
or foreign regulatory authority and again
to a registered SDR). Substituted
compliance also has the potential to
improve market and price efficiency by
reducing or even eliminating instances
of the same transaction being publicly
disseminated under two separate
systems. The Commission assumes that
market observers will obtain and utilize
last-sale information about securitybased swaps from any available sources
around the globe. Without substituted
compliance, a security-based swap that
met the jurisdictional requirements of
Rule 908(a)(2) of Regulation SBSR as
well as the public dissemination rules of
a foreign jurisdiction would be publicly
disseminated in both jurisdictions. It
might be difficult or impossible for
market observers to understand that the
two trade reports represent the same
transaction, which would thus distort
their view of the market. If the
Commission were to issue a substituted
compliance order with respect to that
jurisdiction, market observers would see
only a single report (emanating from the
foreign jurisdiction) of that transaction.
While the rules governing substituted
compliance are not designed to promote
efficiency at the regulatory level, they
are designed at least to minimize
detractions from regulatory efficiency.
Under substituted compliance, certain
cross-border transactions that otherwise
would be reported to an SEC-registered
SDR would instead be reported to a
foreign trade repository or foreign
regulatory authority. Final Rule 908(c)
requires, among other things, direct
electronic access to the foreign securitybased swap data in order to make a
markets impose no (or only limited) requirements.
See supra note 1259.

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substituted compliance determination.
However, there could be some
difficulties in normalizing and
aggregating the data from SEC-registered
SDRs with the data from the foreign
trade repositories or foreign regulatory
authorities.
Overall, the Commission believes
that, on balance, there will be certain
positive impacts on efficiency from
allowing substituted compliance. The
principle behind this approach is that
the Commission would grant substituted
compliance with respect to regulatory
reporting and public dissemination of
security-based swaps in another
jurisdiction only if the requirements of
that jurisdiction are comparable to
otherwise applicable requirements in
Regulation SBSR. If a foreign
jurisdiction does not have a comparable
regime for regulatory reporting and
public dissemination of security-based
swaps, allowing the possibility of
substituted compliance could, on
balance, erode any impacts of
Regulation SBSR on efficiency, to the
extent that the foreign jurisdiction’s
regulatory outcomes for regulatory
reporting and public dissemination
differ from those under Regulation
SBSR. This result could be viewed as
privately efficient by market
participants who might otherwise
restructure their activities to avoid
public dissemination. However, the
result also would be that many
transactions with significant
connections to the U.S. market would
remain opaque, thus reducing
opportunities for greater price
competition and price discovery.
Moreover, granting substituted
compliance in such cases could provide
incentives for foreign jurisdictions to
impose lower regulatory standards for
security-based swaps than those
mandated by Title VII. Under the rules,
as adopted, the Commission may not
grant substituted compliance unless the
foreign jurisdiction’s rules are
comparable to otherwise applicable
requirements.
Under Rule 908(c), the Commission
could make a determination of
comparability for regulatory reporting
and public dissemination either
separately or together. A few
commenters argued that the
Commission should separate them,
which would, for example, permit
substituted compliance for regulatory
reporting for a foreign jurisdiction, but
not for public dissemination.1383 The
Commission agrees with the
commenter’s suggestions and has
determined to take such an approach.
1383 See

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Permitting substituted compliance for
regulatory reporting but not for public
dissemination might be privately
efficient for firms, who would be
obligated to report transactions to a
foreign jurisdiction for regulatory
purposes, but would be obligated to
only report to a registered SDR only
those data elements necessary for public
dissemination under Regulation SBSR.
The Commission could, for instance,
permit transactions to be reported into
a foreign jurisdiction with no or only
limited public dissemination
requirements.
One commenter correctly pointed out
that there are a few classes of securitybased swap for which Regulation SBSR
requires regulatory reporting but not
public dissemination and argued,
therefore, that the Commission should
permit itself to grant substituted
compliance for regulatory reporting only
(and not public dissemination) for these
classes.1384 The Commission agrees
with the commenter and is adopting
Rule 908(c) with certain revisions that
will allow the Commission to issue a
substituted compliance order with
respect to regulatory reporting but not
public dissemination in such cases.1385
This revision should increase the scope
of transactions that may enjoy the
efficiency benefits of substituted
compliance discussed above.
E. Aggregate Quantifiable Total Costs
Based on the foregoing, the
Commission estimates that Regulation
SBSR will impose an initial one-time
cost of approximately $194,500,000 on
all entities.1386 The Commission
estimates that Regulation SBSR will
impose a total ongoing annual aggregate
cost of approximately $275,500,000 for
all entities.1387 With regard to registered
1384 See

IIB Letter at 25. See also Rule 902(c).
supra Section XV(E)(6).
1386 The Commission derived its estimate from
the following: [($360,000 (Rule 901 one-time costs
on registered SDRs)) + ($20,000,000 (Rule 902 onetime costs on registered SDRs)) + ($2,000,000 (Rule
905 one-time costs on registered SDRs)) + ($330,000
(Rule 906 one-time costs on registered SDRs)) +
($41,000,000 (Rule 907 one-time costs on registered
SDRs)) + ($3,190,000 (Rule 906 one-time costs on
covered participants) + ($121,800,000 (Rule 901
one-time costs on reporting sides) + ($720,200 (Rule
903 one-time costs on SDR participants)) +
($3,547,500 (Rule 905 one-time costs on reporting
sides) + ($1,540,000 (Rule 908(c) one-time costs on
requesting entities)] = $194,487,700, or
approximately $194,500,000.
1387 The Commission derived its estimate from
the following: [($455,000 (Rule 901 ongoing annual
costs on registered SDRs)) + ($12,000,000 (Rule 902
ongoing annual costs on registered SDRs)) +
($45,000 (Rule 904 ongoing annual costs on
registered SDRs)) + ($4,000,000 (Rule 905 ongoing
annual costs on registered SDRs)) + ($300,000 (Rule
906 ongoing annual costs on registered SDRs)) +
($82,000,000 (Rule 907 ongoing annual costs on
registered SDRs)) + ($1,870,000 (Rule 906 ongoing

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1385 See

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SDRs, the Commission estimates that
Regulation SBSR will impose an initial
aggregate one-time cost of
approximately $63,700,000,1388 and an
ongoing aggregate annual cost of
approximately $98,800,000.1389
XXIII. Regulatory Flexibility Act
Certification
The Regulatory Flexibility Act
(‘‘RFA’’) requires federal agencies, in
promulgating rules, to consider the
impact of those rules on small entities.
Section 603(a) of the Administrative
Procedure Act,1390 as amended by the
RFA, generally requires the Commission
to undertake a regulatory flexibility
analysis of all proposed rules, or
proposed rule amendments, to
determine the impact of such
rulemaking on ‘‘small entities.’’ 1391
Section 605(b) of the RFA 1392 states that
this requirement shall not apply to any
proposed rule or proposed rule
amendment which, if adopted, would
not have a significant economic impact
on a substantial number of small
entities.
In developing the final rules
contained in Regulation SBSR, the
Commission has considered their
potential impact on small entities. For
purposes of Commission rulemaking in
annual costs on covered participants)) +
($95,700,000 (Rule 901 ongoing annual costs on
reporting sides)) + ($2,352,000 (Rule 903 one-time
costs on SDR participants)) + ($1,192,500 (Rule 905
ongoing annual costs on reporting sides)) +
($64,000,000 (Rule 905 ongoing annual costs on
non-reporting sides)) + ($13,400,000 (Rule 906
ongoing annual costs on all participants)) +
($1,540,000 (Rule 908(c) costs of requests in the first
year)] = $275,444,500 or approximately
$275,500,000.
1388 The Commission derived its estimate from
the following: [($360,000 (Rule 901 one-time costs
on registered SDRs)) + ($20,000,000 (Rule 902 onetime costs on registered SDRs)) + ($2,000,000 (Rule
905 one-time costs on registered SDRs)) + ($330,000
(Rule 906 one-time costs on registered SDRs)) +
($41,000,000 (Rule 907 one-time costs on registered
SDRs))] = $63,690,000 or approximately
$63,700,000.
1389 The Commission derived its estimate from
the following: [($455,000 (Rule 901 ongoing annual
costs on registered SDRs)) + ($1,000,000 (Rule 902
ongoing annual costs on registered SDRs)) +
($45,000 (Rule 904 ongoing annual costs on
registered SDRs)) + ($4,000,000 (Rule 905 ongoing
annual costs on registered SDRs)) + ($300,000 (Rule
906 ongoing annual costs on registered SDRs)) +
($82,000,000 (Rule 907 ongoing annual costs on
registered SDRs))] = $98,800,000.
1390 5 U.S.C. 603(a).
1391 Although Section 601(b) of the RFA defines
the term ‘‘small entity,’’ the statute permits agencies
to formulate their own definitions. The Commission
has adopted definitions for the term ‘‘small entity’’
for the purposes of Commission rulemaking in
accordance with the RFA. Those definitions, as
relevant to this proposed rulemaking, are set forth
in Rule 0–10 under the Exchange Act, 17 CFR
240.0–10. See Securities Exchange Act Release No.
18451 (January 28, 1982), 47 FR 5215 (February 4,
1982) (File No. AS–305).
1392 5 U.S.C. 605(b).

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14727

connection with the RFA, a small entity
includes: (1) When used with reference
to an ‘‘issuer’’ or a ‘‘person,’’ other than
an investment company, an ‘‘issuer’’ or
‘‘person’’ that, on the last day of its most
recent fiscal year, had total assets of $5
million or less; 1393 or (2) a broker-dealer
with total capital (net worth plus
subordinated liabilities) of less than
$500,000 on the date in the prior fiscal
year as of which its audited financial
statements were prepared pursuant to
Rule 17a–5(d) under the Exchange
Act,1394 or, if not required to file such
statements, a broker-dealer with total
capital (net worth plus subordinated
liabilities) of less than $500,000 on the
last day of the preceding fiscal year (or
in the time that it has been in business,
if shorter); and is not affiliated with any
person (other than a natural person) that
is not a small business or small
organization.1395
The Regulation SBSR Proposing
Release stated that, based on input from
security-based swap market participants
and its own information, the
Commission preliminarily believed that
the majority of security-based swap
transactions have at least one
counterparty that is either a securitybased swap dealer or major securitybased swap participant, and that these
entities, whether registered brokerdealers or not, would exceed the
thresholds defining ‘‘small entities’’ set
out above.1396 Thus, the Commission
noted that it preliminarily believed that
neither of these types of entities would
likely qualify as small entities for
purposes of the RFA.1397 Moreover, in
the Regulation SBSR Proposing Release,
the Commission noted that, even in
cases where one of the counterparties to
a security-based swap was outside of the
categories of security-based swap dealer
or major security-based swap
participant, the Commission
preliminarily did not believe any such
entities would be ‘‘small entities’’ as
defined in Commission Rule 0–10.1398
In this regard, the Commission noted
that feedback from industry participants
and the Commission’s own information
about the security-based swap market
(including a survey conducted by the
Office of the Comptroller of the
Currency) indicated that only persons or
entities with assets significantly in
excess of $5 million participate in the
1393 See

17 CFR 240.0–10(a).
CFR 240.17a–5(d).
1395 See 17 CFR 240.0–10(c).
1396 See Regulation SBSR Proposing Release, 75
FR 75282.
1397 See id.
1398 See id. at 75283.
1394 17

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security-based swap market.1399 As a
result, the Commission stated its
preliminarily belief that the vast
majority of, if not all, security-based
swap transactions are between large
entities for purposes of the RFA.1400
Similarly, in the Regulation SBSR
Proposing Release, the Commission
stated its preliminarily belief that the
entities likely to register as SDRs would
not be small entities.1401 Based on input
from security-based swap market
participants and its own information,
the Commission stated its preliminarily
belief that most if not all the registered
SDRs would be part of large business
entities, and that all registered SDRs
would have assets exceeding $5 million
and total capital exceeding
$500,000.1402 On this basis, the
Commission preliminarily believed that
the number of security-based swap
transactions involving a small entity as
that term is defined for purposes of the
RFA would be de minimis and that no
aspect of proposed Regulation SBSR
would be likely to alter the type of
counterparties presently engaging in
security-based swap transactions.1403
Therefore, the Commission
preliminarily did not believe that
proposed Regulation SBSR would
impact any small entities.1404
As a result, in the Regulation SBSR
Proposing Release, the Commission
certified that Regulation SBSR would
not have a significant economic impact
on a substantial number of small entities
for purposes of the RFA and requested
written comments regarding this
certification.1405 Specifically, the
Commission requested that commenters
describe the nature of any impact on
small entities, indicate whether they
believe that participants and registered
SDRs are unlikely to be small entities,
and provide empirical data to support
their responses.1406 The Commission
did not receive any comments contrary
to its conclusion.
The Commission continues to believe
that few if any security-based swap
counterparties that would incur duties
under Regulation SBSR, as adopted, are
‘‘small entities’’ as defined in
Commission Rule 0–10. Feedback from
industry participants and the
Commission’s own information about
the security-based swap market indicate
that only persons or entities with assets
1399 See

id.
id.
1401 See id.
1402 See id.
1403 See id.
1404 See id.
1405 See id.
1406 See id.
1400 See

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significantly in excess of $5 million
participate in the security-based swap
market.1407 The Commission continues
to believe that the vast majority of, if not
all, security-based swap transactions are
between large entities for purposes of
the RFA.
Based on input from security-based
swap market participants and its own
information, the Commission continues
to believe that registered SDRs would be
part of large business entities, and that
all registered SDRs would have assets
exceeding $5 million and total capital
exceeding $500,000. Therefore, the
Commission continues to believe that
none of the registered SDRs would be
small entities.
The Commission believes that the
number of security-based swap
transactions involving a small entity as
that term is defined for purposes of the
RFA would be de minimis. Moreover,
the Commission does not believe that
any aspect of Regulation SBSR would be
likely to alter the type of counterparties
presently engaging in security-based
swap transactions. Therefore, the
Commission does not believe that
Regulation SBSR would impact any
small entities.
For the foregoing reasons, the
Commission certifies that Regulation
SBSR would not have a significant
economic impact on a substantial
number of small entities for purposes of
the RFA.
XXIV. Statutory Basis and Text of Final
Rules
Pursuant to the Exchange Act, 15
U.S.C. 78a et seq., and particularly
Sections 3C(e), 11A(b), 13(m)(1), 13A(a),
23(a)(1), 30(c), and 36(a), 15 U.S.C. 78c–
3(e), 78k–1(b), 78m(m)(1), 78m–1(a),
78w(a)(1), 78dd(c), and 78mm(a)
thereof, the Commission is adopting
Rules 900, 901, 902, 903, 904, 905, 906,
907, 908, and 909 under the Exchange
Act.
List of Subjects in 17 CFR Part 242
Brokers, Reporting and recordkeeping
requirements, Securities.
In accordance with the foregoing,
Title 17, Chapter II of the Code of
Federal Regulations is amended as
follows:
PART 242—REGULATIONS M, SHO,
ATS, AC, NMS, AND SBSR AND
CUSTOMER MARGIN REQUIREMENTS
FOR SECURITY FUTURES
1. The authority citation for part 242
continues to read as follows:

■

1407 See id. See also Cross-Border Proposing
Release, 78 FR 31205.

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Authority: 15 U.S.C. 77g, 77q(a), 77s(a),
78b, 78c, 78g(c)(2), 78i(a), 78j, 78k–l(c), 78l,
78m, 78n, 78o(b), 78o(c), 78o(g), 78q(a),
78q(b), 78q(h), 78w(a), 78dd–1, 78mm, 80a–
23, 80a–29, and 80a–37, unless otherwise
noted.

2. The heading for part 242 is revised
as set forth above.
■ 3. Add §§ 242.900, 242.901, 242.902,
242.903, 242.904, 242.905, 242.906,
242.907, 242.908, and 242.909 under an
undesignated center heading to read as
follows:
■

Regulation SBSR—Regulatory
Reporting and Public Dissemination of
Security-Based Swap Information
Sec.
242.900 Definitions
242.901 Reporting obligations.
242.902 Public dissemination of transaction
reports.
242.903 Coded information.
242.904 Operating hours of registered
security-based swap data repositories.
242.905 Correction of errors in securitybased swap information.
242.906 Other duties of participants.
242.907 Policies and procedures of
registered security-based swap data
repositories.
242.908 Cross-border matters.
242.909 Registration of security-based swap
data repository as a securities
information processor.
§ 242.900

Definitions.

Terms used in §§ 242.900 through
242.909 that appear in Section 3 of the
Exchange Act (15 U.S.C. 78c) have the
same meaning as in Section 3 of the
Exchange Act and the rules or
regulations thereunder. In addition, for
purposes of Regulation SBSR
(§§ 242.900 through 242.909), the
following definitions shall apply:
(a) Affiliate means any person that,
directly or indirectly, controls, is
controlled by, or is under common
control with, a person.
(b) Asset class means those securitybased swaps in a particular broad
category, including, but not limited to,
credit derivatives and equity
derivatives.
(c) [Reserved].
(d) Branch ID means the UIC assigned
to a branch or other unincorporated
office of a participant.
(e) Broker ID means the UIC assigned
to a person acting as a broker for a
participant.
(f) Business day means a day, based
on U.S. Eastern Time, other than a
Saturday, Sunday, or a U.S. federal
holiday.
(g) Clearing transaction means a
security-based swap that has a
registered clearing agency as a direct
counterparty.
(h) Control means, for purposes of
§§ 242.900 through 242.909, the

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Federal Register / Vol. 80, No. 53 / Thursday, March 19, 2015 / Rules and Regulations
possession, direct or indirect, of the
power to direct or cause the direction of
the management and policies of a
person, whether through the ownership
of voting securities, by contract, or
otherwise. A person is presumed to
control another person if the person:
(1) Is a director, general partner or
officer exercising executive
responsibility (or having similar status
or functions);
(2) Directly or indirectly has the right
to vote 25 percent or more of a class of
voting securities or has the power to sell
or direct the sale of 25 percent or more
of a class of voting securities; or
(3) In the case of a partnership, has
the right to receive, upon dissolution, or
has contributed, 25 percent or more of
the capital.
(i) Counterparty means a person that
is a direct counterparty or indirect
counterparty of a security-based swap.
(j) Counterparty ID means the UIC
assigned to a counterparty to a securitybased swap.
(k) Direct counterparty means a
person that is a primary obligor on a
security-based swap.
(l) Direct electronic access has the
same meaning as in § 240.13n–4(a)(5) of
this chapter.
(m) Exchange Act means the
Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.), as amended.
(n) Execution agent ID means the UIC
assigned to any person other than a
broker or trader that facilitates the
execution of a security-based swap on
behalf of a direct counterparty.
(o) Foreign branch has the same
meaning as in § 240.3a71–3(a)(1) of this
chapter.
(p) Indirect counterparty means a
guarantor of a direct counterparty’s
performance of any obligation under a
security-based swap such that the direct
counterparty on the other side can
exercise rights of recourse against the
indirect counterparty in connection
with the security-based swap; for these
purposes a direct counterparty has
rights of recourse against a guarantor on
the other side if the direct counterparty
has a conditional or unconditional
legally enforceable right, in whole or in
part, to receive payments from, or
otherwise collect from, the guarantor in
connection with the security-based
swap.
(q) Life cycle event means, with
respect to a security-based swap, any
event that would result in a change in
the information reported to a registered
security-based swap data repository
under § 242.901(c), (d), or (i), including:
An assignment or novation of the
security-based swap; a partial or full
termination of the security-based swap;

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a change in the cash flows originally
reported; for a security-based swap that
is not a clearing transaction, any change
to the title or date of any master
agreement, collateral agreement, margin
agreement, or any other agreement
incorporated by reference into the
security-based swap contract; or a
corporate action affecting a security or
securities on which the security-based
swap is based (e.g., a merger, dividend,
stock split, or bankruptcy).
Notwithstanding the above, a life cycle
event shall not include the scheduled
expiration of the security-based swap, a
previously described and anticipated
interest rate adjustment (such as a
quarterly interest rate adjustment), or
other event that does not result in any
change to the contractual terms of the
security-based swap.
(r) Non-mandatory report means any
information provided to a registered
security-based swap data repository by
or on behalf of a counterparty other than
as required by §§ 242.900 through
242.909.
(s) Non-U.S. person means a person
that is not a U.S. person.
(t) Parent means a legal person that
controls a participant.
(u) Participant, with respect to a
registered security-based swap data
repository, means a counterparty, that
meets the criteria of § 242.908(b), of a
security-based swap that is reported to
that registered security-based swap data
repository to satisfy an obligation under
§ 242.901(a).
(v) Platform means a national
securities exchange or security-based
swap execution facility that is registered
or exempt from registration.
(w) Platform ID means the UIC
assigned to a platform on which a
security-based swap is executed.
(x) Post-trade processor means any
person that provides affirmation,
confirmation, matching, reporting, or
clearing services for a security-based
swap transaction.
(y) Pre-enactment security-based
swap means any security-based swap
executed before July 21, 2010 (the date
of enactment of the Dodd-Frank Act
(Pub. L. 111–203, H.R. 4173)), the terms
of which had not expired as of that date.
(z) Price means the price of a securitybased swap transaction, expressed in
terms of the commercial conventions
used in that asset class.
(aa) Product means a group of
security-based swap contracts each
having the same material economic
terms except those relating to price and
size.
(bb) Product ID means the UIC
assigned to a product.

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(cc) Publicly disseminate means to
make available through the Internet or
other electronic data feed that is widely
accessible and in machine-readable
electronic format.
(dd) [Reserved].
(ee) Registered clearing agency means
a person that is registered with the
Commission as a clearing agency
pursuant to section 17A of the Exchange
Act (15 U.S.C. 78q–1) and any rules or
regulations thereunder.
(ff) Registered security-based swap
data repository means a person that is
registered with the Commission as a
security-based swap data repository
pursuant to section 13(n) of the
Exchange Act (15 U.S.C. 78m(n)) and
any rules or regulations thereunder.
(gg) Reporting side means the side of
a security-based swap identified by
§ 242.901(a)(2).
(hh) Side means a direct counterparty
and any guarantor of that direct
counterparty’s performance who meets
the definition of indirect counterparty
in connection with the security-based
swap.
(ii) Time of execution means the point
at which the counterparties to a
security-based swap become irrevocably
bound under applicable law.
(jj) Trader ID means the UIC assigned
to a natural person who executes one or
more security-based swaps on behalf of
a direct counterparty.
(kk) Trading desk means, with respect
to a counterparty, the smallest discrete
unit of organization of the participant
that purchases or sells security-based
swaps for the account of the participant
or an affiliate thereof.
(ll) Trading desk ID means the UIC
assigned to the trading desk of a
participant.
(mm) Transaction ID means the UIC
assigned to a specific security-based
swap transaction.
(nn) Transitional security-based swap
means a security-based swap executed
on or after July 21, 2010, and before the
first date on which trade-by-trade
reporting of security-based swaps in that
asset class to a registered security-based
swap data repository is required
pursuant to §§ 242.900 through 242.909.
(oo) Ultimate parent means a legal
person that controls a participant and
that itself has no parent.
(pp) Ultimate parent ID means the
UIC assigned to an ultimate parent of a
participant.
(qq) Unique Identification Code or
UIC means a unique identification code
assigned to a person, unit of a person,
product, or transaction.
(rr) United States has the same
meaning as in § 240.3a71–3(a)(5) of this
chapter.

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(ss) U.S. person has the same meaning
as in § 240.3a71–3(a)(4) of this chapter.

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§ 242.901

Reporting obligations.

(a) Assigning reporting duties. A
security-based swap, including a
security-based swap that results from
the allocation, termination, novation, or
assignment of another security-based
swap, shall be reported as follows:
(1) [Reserved].
(2) All other security-based swaps. For
all security-based swaps other than
platform-executed security-based swaps
that will be submitted to clearing, the
reporting side shall provide the
information required by §§ 242.900
through 242.909 to a registered securitybased swap data repository. The
reporting side shall be determined as
follows:
(i) [Reserved].
(ii) Security-based swaps other than
clearing transactions. (A) If both sides of
the security-based swap include a
registered security-based swap dealer,
the sides shall select the reporting side.
(B) If only one side of the securitybased swap includes a registered
security-based swap dealer, that side
shall be the reporting side.
(C) If both sides of the security-based
swap include a registered major
security-based swap participant, the
sides shall select the reporting side.
(D) If one side of the security-based
swap includes a registered major
security-based swap participant and the
other side includes neither a registered
security-based swap dealer nor a
registered major security-based swap
participant, the side including the
registered major security-based swap
participant shall be the reporting side.
(E) If neither side of the securitybased swap includes a registered
security-based swap dealer or registered
major security-based swap participant:
(1) If both sides include a U.S. person,
the sides shall select the reporting side.
(2) [Reserved].
(b) Alternate recipient of securitybased swap information. If there is no
registered security-based swap data
repository that will accept the report
required by § 242.901(a), the person
required to make such report shall
instead provide the required
information to the Commission.
(c) Primary trade information. The
reporting side shall report the following
information within the timeframe
specified in paragraph (j) of this section:
(1) The product ID, if available. If the
security-based swap has no product ID,
or if the product ID does not include the
following information, the reporting
side shall report:
(i) Information that identifies the
security-based swap, including the asset

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class of the security-based swap and the
specific underlying reference asset(s),
reference issuer(s), or reference index;
(ii) The effective date;
(iii) The scheduled termination date;
(iv) The terms of any standardized
fixed or floating rate payments, and the
frequency of any such payments; and
(v) If the security-based swap is
customized to the extent that the
information provided in paragraphs
(c)(1)(i) through (iv) of this section does
not provide all of the material
information necessary to identify such
customized security-based swap or does
not contain the data elements necessary
to calculate the price, a flag to that
effect;
(2) The date and time, to the second,
of execution, expressed using
Coordinated Universal Time (UTC);
(3) The price, including the currency
in which the price is expressed and the
amount(s) and currenc(ies) of any upfront payments;
(4) The notional amount(s) and the
currenc(ies) in which the notional
amount(s) is expressed;
(5) If both sides of the security-based
swap include a registered security-based
swap dealer, an indication to that effect;
(6) Whether the direct counterparties
intend that the security-based swap will
be submitted to clearing; and
(7) If applicable, any flags pertaining
to the transaction that are specified in
the policies and procedures of the
registered security-based swap data
repository to which the transaction will
be reported.
(d) Secondary trade information. In
addition to the information required
under paragraph (c) of this section, for
each security-based swap for which it is
the reporting side, the reporting side
shall report the following information
within the timeframe specified in
paragraph (j) of this section:
(1) The counterparty ID or the
execution agent ID of each counterparty,
as applicable;
(2) As applicable, the branch ID,
broker ID, execution agent ID, trader ID,
and trading desk ID of the direct
counterparty on the reporting side;
(3) To the extent not provided
pursuant to paragraph (c)(1) of this
section, the terms of any fixed or
floating rate payments, or otherwise
customized or non-standard payment
streams, including the frequency and
contingencies of any such payments;
(4) For a security-based swap that is
not a clearing transaction, the title and
date of any master agreement, collateral
agreement, margin agreement, or any
other agreement incorporated by
reference into the security-based swap
contract;

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(5) To the extent not provided
pursuant to paragraph (c) of this section
or other provisions of this paragraph (d),
any additional data elements included
in the agreement between the
counterparties that are necessary for a
person to determine the market value of
the transaction;
(6) If applicable, and to the extent not
provided pursuant to paragraph (c) of
this section, the name of the clearing
agency to which the security-based
swap will be submitted for clearing;
(7) If the direct counterparties do not
intend to submit the security-based
swap to clearing, whether they have
invoked the exception in Section 3C(g)
of the Exchange Act (15 U.S.C. 78c–
3(g));
(8) To the extent not provided
pursuant to the other provisions of this
paragraph (d), if the direct
counterparties do not submit the
security-based swap to clearing, a
description of the settlement terms,
including whether the security-based
swap is cash-settled or physically
settled, and the method for determining
the settlement value; and
(9) The platform ID, if applicable.
(10) If the security-based swap arises
from the allocation, termination,
novation, or assignment of one or more
existing security-based swaps, the
transaction ID of the allocated,
terminated, assigned, or novated
security-based swap(s), except in the
case of a clearing transaction that results
from the netting or compression of other
clearing transactions.
(e) Reporting of life cycle events. (1)(i)
Generally. A life cycle event, and any
adjustment due to a life cycle event, that
results in a change to information
previously reported pursuant to
paragraph (c), (d), or (i) of this section
shall be reported by the reporting side,
except that the reporting side shall not
report whether or not a security-based
swap has been accepted for clearing.
(ii) [Reserved]
(2) All reports of life cycle events and
adjustments due to life cycle events
shall, within the timeframe specified in
paragraph (j) of this section, be reported
to the entity to which the original
security-based swap transaction was
reported and shall include the
transaction ID of the original
transaction.
(f) Time stamping incoming
information. A registered security-based
swap data repository shall time stamp,
to the second, its receipt of any
information submitted to it pursuant to
paragraph (c), (d), (e), or (i) of this
section.
(g) Assigning transaction ID. A
registered security-based swap data

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repository shall assign a transaction ID
to each security-based swap, or establish
or endorse a methodology for
transaction IDs to be assigned by third
parties.
(h) Format of reported information. A
reporting side shall electronically
transmit the information required under
this section in a format required by the
registered security-based swap data
repository to which it reports.
(i) Reporting of pre-enactment and
transitional security-based swaps. With
respect to any pre-enactment securitybased swap or transitional securitybased swap in a particular asset class,
and to the extent that information about
such transaction is available, the
reporting side shall report all of the
information required by paragraphs (c)
and (d) of this section to a registered
security-based swap data repository that
accepts security-based swaps in that
asset class and indicate whether the
security-based swap was open as of the
date of such report.
(j) Interim timeframe for reporting.
The reporting timeframe for paragraphs
(c) and (d) of this section shall be 24
hours after the time of execution (or
acceptance for clearing in the case of a
security-based swap that is subject to
regulatory reporting and public
dissemination solely by operation of
§ 242.908(a)(1)(ii)), or, if 24 hours after
the time of execution or acceptance, as
applicable, would fall on a day that is
not a business day, by the same time on
the next day that is a business day. The
reporting timeframe for paragraph (e) of
this section shall be 24 hours after the
occurrence of the life cycle event or the
adjustment due to the life cycle event.

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Appendix to 17 CFR 242.901 Reports
Regarding the Establishment of Block
Thresholds and Reporting Delays for
Regulatory Reporting of Security-Based
Swap Transaction Data
This appendix sets forth guidelines
applicable to reports that the Commission
has directed its staff to make in connection
with the determination of block thresholds
and reporting delays for security-based swap
transaction data. The Commission intends to
use these reports to inform its specification
of the criteria for determining what
constitutes a large notional security-based
swap transaction (block trade) for particular
markets and contracts; and the appropriate
time delay for reporting large notional
security-based swap transactions (block
trades) to the public in order to implement
regulatory requirements under Section 13 of
the Act (15 U.S.C. 78m). In producing these
reports, the staff shall consider securitybased swap data collected by the
Commission pursuant to other Title VII rules,
as well as any other applicable information
as the staff may determine to be appropriate
for its analysis.

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(a) Report topics. As appropriate, based on
the availability of data and information, the
reports should address the following topics
for each asset class:
(1) Price impact. In connection with the
Commission’s obligation to specify criteria
for determining what constitutes a block
trade and the appropriate reporting delay for
block trades, the report generally should
assess the effect of notional amount and
observed reporting delay on price impact of
trades in the security-based swap market.
(2) Hedging. In connection with the
Commission’s obligation to specify criteria
for determining what constitutes a block
trade and the appropriate reporting delay for
block trades, the report generally should
consider potential relationships between
observed reporting delays and the incidence
and cost of hedging large trades in the
security-based swap market, and whether
these relationships differ for interdealer
trades and dealer to customer trades.
(3) Price efficiency. In connection with the
Commission’s obligation to specify criteria
for determining what constitutes a block
trade and the appropriate reporting delay for
block trades, the report generally should
assess the relationship between reporting
delays and the speed with which transaction
information is impounded into market prices,
estimating this relationship for trades of
different notional amounts.
(4) Other topics. Any other analysis of
security-based swap data and information,
such as security-based swap market liquidity
and price volatility, that the Commission or
the staff deem relevant to the specification of:
(i) The criteria for determining what
constitutes a large notional security-based
swap transaction (block trade) for particular
markets and contracts; and
(ii) The appropriate time delay for
reporting large notional security-based swap
transactions (block trades).
(b) Timing of reports. Each report shall be
complete no later than two years following
the initiation of public dissemination of
security-based swap transaction data by the
first registered SDR in that asset class.
(c) Public comment on the report.
Following completion of the report, the
report shall be published in the Federal
Register for public comment.
§ 242.902 Public dissemination of
transaction reports.

(a) General. Except as provided in
paragraph (c) of this section, a registered
security-based swap data repository
shall publicly disseminate a transaction
report of a security-based swap, or a life
cycle event or adjustment due to a life
cycle event, immediately upon receipt
of information about the security-based
swap, or upon re-opening following a
period when the registered securitybased swap data repository was closed.
The transaction report shall consist of
all the information reported pursuant to
§ 242.901(c), plus any condition flags
contemplated by the registered securitybased swap data repository’s policies
and procedures that are required by
§ 242.907.

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(b) [Reserved].
(c) Non-disseminated information. A
registered security-based swap data
repository shall not disseminate:
(1) The identity of any counterparty to
a security-based swap;
(2) With respect to a security-based
swap that is not cleared at a registered
clearing agency and that is reported to
the registered security-based swap data
repository, any information disclosing
the business transactions and market
positions of any person;
(3) Any information regarding a
security-based swap reported pursuant
to § 242.901(i);
(4) Any non-mandatory report;
(5) Any information regarding a
security-based swap that is required to
be reported pursuant to §§ 242.901 and
242.908(a)(1) but is not required to be
publicly disseminated pursuant to
§ 242.908(a)(2);
(6) Any information regarding a
clearing transaction that arises from the
acceptance of a security-based swap for
clearing by a registered clearing agency
or that results from netting other
clearing transactions; or
(7) Any information regarding the
allocation of a security-based swap.
(d) Temporary restriction on other
market data sources. No person shall
make available to one or more persons
(other than a counterparty or a posttrade processor) transaction information
relating to a security-based swap before
the primary trade information about the
security-based swap is sent to a
registered security-based swap data
repository.
§ 242.903

Coded information.

(a) If an internationally recognized
standards-setting system that imposes
fees and usage restrictions on persons
that obtain UICs for their own usage that
are fair and reasonable and not
unreasonably discriminatory and that
meets the criteria of paragraph (b) of this
section is recognized by the
Commission and has assigned a UIC to
a person, unit of a person, or product (or
has endorsed a methodology for
assigning transaction IDs), the registered
security-based swap data repository
shall employ that UIC (or methodology
for assigning transaction IDs). If no such
system has been recognized by the
Commission, or a recognized system has
not assigned a UIC to a particular
person, unit of a person, or product (or
has not endorsed a methodology for
assigning transaction IDs), the registered
security-based swap data repository
shall assign a UIC to that person, unit
of person, or product using its own
methodology (or endorse a methodology
for assigning transaction IDs). If the

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Commission has recognized such a
system that assigns UICs to persons,
each participant of a registered securitybased swap data repository shall obtain
a UIC from or through that system for
identifying itself, and each participant
that acts as a guarantor of a direct
counterparty’s performance of any
obligation under a security-based swap
that is subject to § 242.908(a) shall, if
the direct counterparty has not already
done so, obtain a UIC for identifying the
direct counterparty from or through that
system, if that system permits thirdparty registration without a requirement
to obtain prior permission of the direct
counterparty.
(b) A registered security-based swap
data repository may permit information
to be reported pursuant to § 242.901,
and may publicly disseminate that
information pursuant to § 242.902, using
codes in place of certain data elements,
provided that the information necessary
to interpret such codes is widely
available to users of the information on
a non-fee basis.

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§ 242.904 Operating hours of registered
security-based swap data repositories.

A registered security-based swap data
repository shall have systems in place to
continuously receive and disseminate
information regarding security-based
swaps pursuant to §§ 242.900 through
242.909, subject to the following
exceptions:
(a) A registered security-based swap
data repository may establish normal
closing hours during periods when, in
its estimation, the U.S. market and
major foreign markets are inactive. A
registered security-based swap data
repository shall provide reasonable
advance notice to participants and to
the public of its normal closing hours.
(b) A registered security-based swap
data repository may declare, on an ad
hoc basis, special closing hours to
perform system maintenance that
cannot wait until normal closing hours.
A registered security-based swap data
repository shall, to the extent reasonably
possible under the circumstances, avoid
scheduling special closing hours during
periods when, in its estimation, the U.S.
market and major foreign markets are
most active; and provide reasonable
advance notice of its special closing
hours to participants and to the public.
(c) During normal closing hours, and
to the extent reasonably practicable
during special closing hours, a
registered security-based swap data
repository shall have the capability to
receive and hold in queue information
regarding security-based swaps that has
been reported pursuant to §§ 242.900
through 242.909.

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(d) When a registered security-based
swap data repository re-opens following
normal closing hours or special closing
hours, it shall disseminate transaction
reports of security-based swaps held in
queue, in accordance with the
requirements of § 242.902.
(e) If a registered security-based swap
data repository could not receive and
hold in queue transaction information
that was required to be reported
pursuant to §§ 242.900 through 242.909,
it must immediately upon re-opening
send a message to all participants that
it has resumed normal operations.
Thereafter, any participant that had an
obligation to report information to the
registered security-based swap data
repository pursuant to §§ 242.900
through 242.909, but could not do so
because of the registered security-based
swap data repository’s inability to
receive and hold in queue data, must
promptly report the information to the
registered security-based swap data
repository.
§ 242.905 Correction of errors in securitybased swap information.

(a) Duty to correct. Any counterparty
to a security-based swap that discovers
an error in information previously
reported pursuant to §§ 242.900 through
242.909 shall correct such error in
accordance with the following
procedures:
(1) If a side that was not the reporting
side for a security-based swap
transaction discovers an error in the
information reported with respect to
such security-based swap, the
counterparty shall promptly notify the
reporting side of the error; and
(2) If the reporting side discovers an
error in the information reported with
respect to a security-based swap, or
receives notification from its
counterparty of an error, the reporting
side shall promptly submit to the entity
to which the security-based swap was
originally reported an amended report
pertaining to the original transaction
report. If the reporting side reported the
initial transaction to a registered
security-based swap data repository, the
reporting side shall submit an amended
report to the registered security-based
swap data repository in a manner
consistent with the policies and
procedures contemplated by
§ 242.907(a)(3).
(b) Duty of security-based swap data
repository to correct. A registered
security-based swap data repository
shall:
(1) Upon discovery of an error or
receipt of a notice of an error, verify the
accuracy of the terms of the securitybased swap and, following such

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verification, promptly correct the
erroneous information regarding such
security-based swap contained in its
system; and
(2) If such erroneous information
relates to a security-based swap that the
registered security-based swap data
repository previously disseminated and
falls into any of the categories of
information enumerated in § 242.901(c),
publicly disseminate a corrected
transaction report of the security-based
swap promptly following verification of
the trade by the counterparties to the
security-based swap, with an indication
that the report relates to a previously
disseminated transaction.
§ 242.906

Other duties of participants.

(a) Identifying missing UIC
information. A registered security-based
swap data repository shall identify any
security-based swap reported to it for
which the registered security-based
swap data repository does not have the
counterparty ID and (if applicable) the
broker ID, branch ID, execution agent
ID, trading desk ID, and trader ID of
each direct counterparty. Once a day,
the registered security-based swap data
repository shall send a report to each
participant of the registered securitybased swap data repository or, if
applicable, an execution agent,
identifying, for each security-based
swap to which that participant is a
counterparty, the security-based swap(s)
for which the registered security-based
swap data repository lacks counterparty
ID and (if applicable) broker ID, branch
ID, execution agent ID, desk ID, and
trader ID. A participant of a registered
security-based swap data repository that
receives such a report shall provide the
missing information with respect to its
side of each security-based swap
referenced in the report to the registered
security-based swap data repository
within 24 hours.
(b) Duty to provide ultimate parent
and affiliate information. Each
participant of a registered security-based
swap data repository shall provide to
the registered security-based swap data
repository information sufficient to
identify its ultimate parent(s) and any
affiliate(s) of the participant that also are
participants of the registered securitybased swap data repository, using
ultimate parent IDs and counterparty
IDs. Any such participant shall
promptly notify the registered securitybased swap data repository of any
changes to that information.
(c) Policies and procedures of
registered security-based swap dealers
and registered major security-based
swap participants. Each participant of a
registered security-based swap data

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repository that is a registered securitybased swap dealer or registered major
security-based swap participant shall
establish, maintain, and enforce written
policies and procedures that are
reasonably designed to ensure that it
complies with any obligations to report
information to a registered securitybased swap data repository in a manner
consistent with §§ 242.900 through
242.909. Each such participant shall
review and update its policies and
procedures at least annually.

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§ 242.907 Policies and procedures of
registered security-based swap data
repositories.

(a) General policies and procedures.
With respect to the receipt, reporting,
and dissemination of data pursuant to
§§ 242.900 through 242.909, a registered
security-based swap data repository
shall establish and maintain written
policies and procedures:
(1) That enumerate the specific data
elements of a security-based swap that
must be reported, which shall include,
at a minimum, the data elements
specified in § 242.901(c) and (d);
(2) That specify one or more
acceptable data formats (each of which
must be an open-source structured data
format that is widely used by
participants), connectivity
requirements, and other protocols for
submitting information;
(3) For specifying procedures for
reporting life cycle events and
corrections to previously submitted
information, making corresponding
updates or corrections to transaction
records, and applying an appropriate
flag to the transaction report to indicate
that the report is an error correction
required to be disseminated by
§ 242.905(b)(2), or is a life cycle event,
or any adjustment due to a life cycle
event, required to be disseminated by
§ 242.902(a);
(4) For:
(i) Identifying characteristic(s) of a
security-based swap, or circumstances
associated with the execution or
reporting of the security-based swap,
that could, in the fair and reasonable
estimation of the registered securitybased swap data repository, cause a
person without knowledge of these
characteristic(s) or circumstance(s), to
receive a distorted view of the market;
(ii) Establishing flags to denote such
characteristic(s) or circumstance(s);
(iii) Directing participants that report
security-based swaps to apply such
flags, as appropriate, in their reports to
the registered security-based swap data
repository; and
(iv) Applying such flags:

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(A) To disseminated reports to help to
prevent a distorted view of the market;
or
(B) In the case of a transaction
referenced in § 242.902(c), to suppress
the report from public dissemination
entirely, as appropriate;
(5) For assigning UICs in a manner
consistent with § 242.903; and
(6) For periodically obtaining from
each participant information that
identifies the participant’s ultimate
parent(s) and any participant(s) with
which the participant is affiliated, using
ultimate parent IDs and counterparty
IDs.
(b) [Reserved].
(c) Public availability of policies and
procedures. A registered security-based
swap data repository shall make the
policies and procedures required by
§§ 242.900 through 242.909 publicly
available on its Web site.
(d) Updating of policies and
procedures. A registered security-based
swap data repository shall review, and
update as necessary, the policies and
procedures required by §§ 242.900
through 242.909 at least annually. Such
policies and procedures shall indicate
the date on which they were last
reviewed.
(e) A registered security-based swap
data repository shall provide to the
Commission, upon request, information
or reports related to the timeliness,
accuracy, and completeness of data
reported to it pursuant to §§ 242.900
through 242.909 and the registered
security-based swap data repository’s
policies and procedures thereunder.
§ 242.908

Cross-border matters.

(a) Application of Regulation SBSR to
cross-border transactions. (1) A
security-based swap shall be subject to
regulatory reporting and public
dissemination if:
(i) There is a direct or indirect
counterparty that is a U.S. person on
either or both sides of the transaction;
or
(ii) The security-based swap is
accepted for clearing by a clearing
agency having its principal place of
business in the United States.
(2) A security-based swap that is not
included within paragraph (a)(1) of this
section shall be subject to regulatory
reporting but not public dissemination
if there is a direct or indirect
counterparty on either or both sides of
the transaction that is a registered
security-based swap dealer or a
registered major security-based swap
participant.
(b) Limitation on obligations.
Notwithstanding any other provision of
§§ 242.900 through 242.909, a person

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14733

shall not incur any obligation under
§§ 242.900 through 242.909 unless it is:
(1) A U.S. person; or
(2) A registered security-based swap
dealer or registered major security-based
swap participant.
(c) Substituted compliance—(1)
General. Compliance with the
regulatory reporting and public
dissemination requirements in sections
13(m) and 13A of the Act (15 U.S.C.
78m(m) and 78m–1), and the rules and
regulations thereunder, may be satisfied
by compliance with the rules of a
foreign jurisdiction that is the subject of
a Commission order described in
paragraph (c)(2) of this section,
provided that at least one of the direct
counterparties to the security-based
swap is either a non-U.S. person or a
foreign branch.
(2) Procedure. (i) The Commission
may, conditionally or unconditionally,
by order, make a substituted compliance
determination regarding regulatory
reporting and public dissemination of
security-based swaps with respect to a
foreign jurisdiction if that jurisdiction’s
requirements for the regulatory
reporting and public dissemination of
security-based swaps are comparable to
otherwise applicable requirements. The
Commission may, conditionally or
unconditionally, by order, make a
substituted compliance determination
regarding regulatory reporting of
security-based swaps that are subject to
§ 242.908(a)(2) with respect to a foreign
jurisdiction if that jurisdiction’s
requirements for the regulatory
reporting of security-based swaps are
comparable to otherwise applicable
requirements.
(ii) A party that potentially would
comply with requirements under
§§ 242.900 through 242.909 pursuant to
a substituted compliance order or any
foreign financial regulatory authority or
authorities supervising such a person’s
security-based swap activities may file
an application, pursuant to the
procedures set forth in § 240.0–13 of
this chapter, requesting that the
Commission make a substituted
compliance determination regarding
regulatory reporting and public
dissemination with respect to a foreign
jurisdiction the rules of which also
would require reporting and public
dissemination of those security-based
swaps.
(iii) In making such a substituted
compliance determination, the
Commission shall take into account
such factors as the Commission
determines are appropriate, such as the
scope and objectives of the relevant
foreign regulatory requirements, as well
as the effectiveness of the supervisory

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compliance program administered, and
the enforcement authority exercised, by
the foreign financial regulatory
authority to support oversight of its
regulatory reporting and public
dissemination system for security-based
swaps. The Commission shall not make
such a substituted compliance
determination unless it finds that:
(A) The data elements that are
required to be reported pursuant to the
rules of the foreign jurisdiction are
comparable to those required to be
reported pursuant to § 242.901;
(B) The rules of the foreign
jurisdiction require the security-based
swap to be reported and publicly
disseminated in a manner and a
timeframe comparable to those required
by §§ 242.900 through 242.909 (or, in
the case of transactions that are subject
to § 242.908(a)(2) but not to
§ 242.908(a)(1), the rules of the foreign
jurisdiction require the security-based
swap to be reported in a manner and a
timeframe comparable to those required
by §§ 242.900 through 242.909);
(C) The Commission has direct
electronic access to the security-based
swap data held by a trade repository or
foreign regulatory authority to which
security-based swaps are reported
pursuant to the rules of that foreign
jurisdiction; and
(D) Any trade repository or foreign
regulatory authority in the foreign
jurisdiction that receives and maintains
required transaction reports of securitybased swaps pursuant to the laws of that
foreign jurisdiction is subject to
requirements regarding data collection
and maintenance; systems capacity,
integrity, resiliency, availability, and
security; and recordkeeping that are
comparable to the requirements
imposed on security-based swap data
repositories by the Commission’s rules
and regulations.
(iv) Before issuing a substituted
compliance order pursuant to this
section, the Commission shall have
entered into memoranda of
understanding and/or other
arrangements with the relevant foreign
financial regulatory authority or
authorities under such foreign financial
regulatory system addressing
supervisory and enforcement
cooperation and other matters arising
under the substituted compliance
determination.
(v) The Commission may, on its own
initiative, modify or withdraw such
order at any time, after appropriate
notice and opportunity for comment.

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§ 242.909 Registration of security-based
swap data repository as a securities
information processor.

A registered security-based swap data
repository shall also register with the
Commission as a securities information
processor on Form SDR (§ 249.1500 of
this chapter).
By the Commission.
Dated: February 11, 2015.
Brent J. Fields,
Secretary.
Note: The following appendix will not
appear in the Code of Federal Regulations:

Appendix
Reopening of Comment Periods for Certain
Rulemaking Releases and Policy Statement
Applicable to Security-Based Swaps
Proposed Pursuant to the Securities
Exchange Act of 1934 and the Dodd-Frank
Wall Street Reform and Consumer
Protection Action
[Release No. 34–69491; File No. S7–34–10]
http://www.sec.gov/comments/s7-34-10/
s73410.shtml
• Email message from Larry E. Thompson,
Managing Director and General Counsel,
Depository Trust & Clearing Corporation
(‘‘DTCC’’), to Stephen Luparello, SEC,
dated December 10, 2014 (‘‘DTCC X’’).
• Letter from Marisol Collazo, Chief
Executive Officer, DTCC Data Repository
US LLC, to Elizabeth M. Murphy,
Secretary, SEC, dated November 14, 2014
(‘‘DTCC IX’’).
• Letter from Angie Karna, Managing
Director, Legal, Nomura Global Financial
Products, Inc., to Brent J. Fields, Secretary,
SEC, dated September 10, 2014 (‘‘NGFP
Letter’’)
• Letter from Carl Levin, Chairman, U.S.
Senate Permanent Subcommittee on
Investigations, to Kevin M. O’Neill, Deputy
Secretary, SEC, dated July 3, 2014 (‘‘Levin
Letter’’).
• Email message from Christopher Young,
Director, U.S. Public Policy, ISDA, to
Thomas Eady, SEC, dated March 27, 2014
(‘‘ISDA III’’).
• Email message from Marisol Collazo, Chief
Executive Officer, DTCC Data Repository
US LLC, to Thomas Eady and Michael J.
Gaw, SEC, dated March 24, 2014 (with
attached letters submitted to the CFTC
regarding CME Rule 1001) (‘‘DTCC VIII’’).
• Email message from Marisol Collazo, Chief
Executive Officer, DTCC Data Repository
US LLC, to Thomas Eady, SEC, dated
March 21, 2014 (with attached message
submitted to the CFTC (‘‘DTCC VII’’).
• Letter from Kim Taylor, President,
Clearing, CME Group, and Kara L. Dutta,
General Counsel, ICE Trade Vault (‘‘ICE’’),
LLC, to Elizabeth M. Murphy, Secretary,
Commission, dated November 19, 2013
(‘‘CME/ICE Letter’’).
• Letter from Kara L. Dutta, General Counsel,
ICE Trade Vault, LLC, to Elizabeth M.
Murphy, Secretary, Commission, dated
September 23, 2013 (‘‘ICE Letter’’).

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• Letter from Matti Leppa¨la¨, Secretary
General/CEO, PensionsEurope, to Elizabeth
M. Murphy, Secretary, Commission, dated
September 3, 2013 (‘‘PensionsEurope
Letter’’).
• Letter from Americans for Financial
Reform, to Elizabeth Murphy, Secretary,
Commission, dated August 22, 2013 (‘‘AFR
Letter’’).
• Letter from Anne-Marie Leroy, Senior Vice
President and Group General Counsel,
World Bank, and Fady Zeidan, Acting
Deputy/General Counsel, International
Finance Corporation, to Elizabeth M.
Murphy, Secretary, Commission, dated
August 21, 2013 (‘‘World Bank Letter’’).
• Letter from Futures and Options
Association, dated August 21, 2013 (‘‘FOA
Letter’’).
• Letter from Kenneth E. Bentsen, Jr.,
President, Securities Industry and
Financial Markets Association (‘‘SIFMA’’);
Walt Lukken, President & Chief Executive
Officer, Futures Industry Association
(‘‘FIA’’); and Richard M. Whiting,
Executive Director and General Counsel,
The Financial Services Roundtable
(‘‘Roundtable’’), to Elizabeth M. Murphy,
Secretary, Commission, dated August 21,
2013 (‘‘SIFMA/FIA/Roundtable Letter’’).
• Letter from Per Sjo¨berg, Chief Executive
Officer, and Christoffer Mohammar,
General Counsel, TriOptima AB, to
Elizabeth M. Murphy, Secretary,
Commission, dated August 21, 2013
(‘‘TriOptima Letter’’).
• Letter from Larry E. Thompson, General
Counsel, DTCC, to Elizabeth M. Murphy,
Secretary, SEC, dated August 21, 2013
(‘‘DTCC VI’’).
• Letter from Jeff Gooch, Head of Processing,
Markit, Chair and CEO, MarkitSERV, to
Elizabeth M. Murphy, Secretary,
Commission, dated August 21, 2013
(‘‘MarkitSERV IV’’).
• Letter from Coalition for Derivatives EndUsers, to Elizabeth M. Murphy, Secretary,
Commission, dated August 21, 2013
(‘‘CDEU Letter’’).
• Letter from Kathleen Cronin, Senior
Managing Director, General Counsel, CME
Group Inc., to Elizabeth M. Murphy,
Secretary, Commission, dated August 21,
2013 (‘‘CME II’’).
• Letter from Sarah A. Miller, Chief
Executive Officer, Institute of International
Bankers (‘‘IIB’’), to Elizabeth M. Murphy,
Secretary, Commission, dated August 21,
2013 (‘‘IIB Letter’’).
• Letter from Sullivan & Cromwell LLP, to
Elizabeth M. Murphy, Secretary,
Commission, dated August 21, 2013
(‘‘Sullivan Letter’’).
• Letter from S2014

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SBSR—Reporting and Dissemination of
Security-Based Swap Information
[Release No. 34–63346; File No. S7–34–10]
http://www.sec.gov/comments/s7-34-10/
s73410.shtml
• Letter from Thomas G. McCabe, Chief
Operating Officer, OneChicago, to
Elizabeth M. Murphy, Secretary,
Commission, dated March 1, 2013
(‘‘OneChicago II’’).
• Letter from Elizabeth K. King, Head of
Regulatory Affairs, GETCO, to Elizabeth M.
Murphy, Secretary, Commission, dated
March 21, 2012 (‘‘GETCO Letter’’).
Letter from Michael Hisler, Co-Founder,
Swaps & Derivatives Market Association
(‘‘SDMA’’), to Elizabeth M. Murphy,
Secretary, Commission, dated October 19,
2011 (‘‘SDMA II’’).
• Letter from the ABA Securities
Association, American Council of Life
Insurers, FSR, FIA, IIB, ISDA, and SIFMA
to David A. Stawick, Secretary, CFTC;
Jennifer J. Johnson, Secretary, Federal
Reserve Board; Robert E. Feldman,
Executive Secretary, FDIC; Gary K. Van
Meter, Director, Office of Regulatory
Policy, Farm Credit Administration;
Elizabeth M. Murphy, Secretary,
Commission; Office of the Comptroller of
the Currency; and Alfred M. Pollard,
General Counsel, Federal Housing Finance
Agency, dated September 8, 2011
(‘‘Multiple Associations Letter’’).
• Letter from Scott Pintoff, General Counsel,
GFI Group, Inc. (‘‘GFI’’), to Elizabeth M.
Murphy, Secretary, Commission, dated
July 12, 2011 (‘‘GFI Letter).
• Letter from Larry E. Thompson, General
Counsel, the Depository Trust & Clearing
Corporation (‘‘DTCC’’), to the Honorable
Mary L. Schapiro, Chairman, Commission,
and the Honorable Gary Gensler,
Chairman, CFTC, dated June 3, 2011
(‘‘DTCC IV’’).
• Letter from Stephen Merkel, Chairman,
Wholesale Markets Brokers’ Association
Americas (‘‘WMBAA’’), to the Honorable
Mary L. Schapiro, Chairman, Commission,
and the Honorable Gary Gensler,
Chairman, CFTC, dated June 3, 2011
(‘‘WMBAA III’’). [NOTE: This comment
letter is in fact dated ‘‘June 3, 2010,’’ but
the Commission deems the true date to be
June 3, 2011. The comment letter
references proposed Regulation SBSR,
which the Commission issued in
November 2010, and thus the comment
could not have been submitted in June
2010.]
• Letter from John R. Gidman, Association of
Institutional Investors, to David A.
Stawick, Secretary, CFTC, and Elizabeth M.
Murphy, Secretary, Commission, dated
June 2, 2011 (‘‘Institutional Investors
Letter’’). [Note: This comment letter is in
fact dated ‘‘June 2, 2010,’’ but the
Commission deems the true date to be June
2, 2011. The comment letter references
proposed Regulation SBSR, which the
Commission issued in November 2010, and
thus the comment could not have been
submitted in June 2010.]

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• Letter from Chris Koppenheffer, SDMA, to
David A. Stawick, Secretary, CFTC, and
Elizabeth M. Murphy, Secretary,
Commission, dated June 1, 2011 (‘‘SDMA
I’’).
• Letter from Richard M. Whiting, Executive
Director and General Counsel, FSR, to
David A. Stawick, Secretary, CFTC, and
Elizabeth M. Murphy, Secretary,
Commission, dated May 12, 2011
(‘‘Roundtable Letter’’).
• Letter from Davis Polk & Wardwell LLP on
behalf of The Bank of Tokyo-Mitsubishi
UFJ. Ltd., Mizuho Corporate Bank, Ltd.,
and Sumitomo Mitsui Banking
Corporation, to David A. Stawick,
Secretary, CFTC, Elizabeth M. Murphy,
Secretary, Commission, and Jennifer L.
Johnson, Secretary, Federal Reserve Board,
dated May 6, 2011 (‘‘Japanese Banks
Letter’’).
• Letter from Richard H. Baker, President
and Chief Executive Officer, MFA, to the
Honorable Mary L. Schapiro, Chairman,
Commission, dated March 24, 2011 (‘‘MFA
II’’), and attached ‘‘MFA Recommended
Timeline for Adoption and Implementation
of Final Rules Pursuant to Title VII of the
Dodd-Frank Act’’ (‘‘MFA Recommended
Timeline’’).
• Letter from Davis Polk & Wardwell LLP on
behalf of Barclays Bank PLC, PNP Paribas
S.A., Credit Suisse AG, Deutsche Bank AG,
HSBS, Nomura Securities International,
Inc., Rabobank Nederland, Royal Bank of
Canada, The Royal Bank of Scotland
Group, PLC, Socie´te´ Ge´ne´rale, The
Toronto-Dominion Bank, and UBS AG, to
David A. Stawick, Secretary, CFTC,
Elizabeth M. Murphy, Secretary,
Commission, and Jennifer L. Johnson,
Secretary, Federal Reserve Board, dated
February 17, 2011 (‘‘Davis Polk II’’).
• Letter from Robert Carpenter, President
and Chief Executive Officer, GS1 U.S.,
Miguel A. Lopera, Chief Executive Officer,
GS1 Global, and Allan D. Grody, President,
Financial Inter Group, to Elizabeth
Murphy, Secretary, Commission, dated
February 14, 2011 (‘‘GS1 Letter’’) and ‘‘GS1
& Financial InterGroup Response to
Securities & Exchange Commission’’ (‘‘GS1
Proposal’’).
• Letter from Edward J. Rosen, Cleary
Gottlieb Steen & Hamilton LLP, on behalf
of Bank of America Merrill Lynch, BNP
Paribas, Citi, Credit Agricole Corporate and
Investment Bank, Credit Suisse Securities
(USA), Deutsche Bank AG, Morgan
Stanley, Nomura Securities International,
Inc., PNC Bank, Socie´te´ General, UBS
Securities LLC, and Wells Fargo &
Company, to Elizabeth M. Murphy,
Secretary, Commission, and David A.
Stawick, Secretary, CFTC, dated February
14, 2011 (‘‘Cleary II’’).
• Letter from Charles Llewellyn, Regional
Legal Counsel—Americas, Society for
Worldwide Interbank Financial
Telecommunication SCRL (‘‘SWIFT’’), to
the Commission, dated February 14, 2011
(‘‘SWIFT Letter’’).
• Letter from Patrick Durkin, Managing
Director, Barclays Capital Inc. (‘‘Barclays’’),
to Elizabeth M. Murphy, Secretary,
Commission, dated February 11, 2010

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(‘‘Barclays Letter’’). [Note: This comment
letter is in fact dated ‘‘February 11, 2010,’’
but the Commission deems the true date to
be February 11, 2011. The comment letter
references proposed Regulation SBSR,
which the Commission issued in
November 2010, and thus the comment
could not have been submitted in February
2010.]
Letter from Daniel G. Viola, Partner, Sadis
& Goldberg LLP, to the CFTC and the
Commission, dated February 7, 2011
(‘‘Viola Letter’’).
Letter from Andrew Downes, Managing
Director, UBS Investment Bank, and James
B. Fuqua, Managing Director, UBS
Securities LLC, to Elizabeth M. Murphy,
Secretary, Commission, dated February 7,
2011 (‘‘UBS Letter’’).
Letter from Cravath, Swaine & Moore, LLP,
to Elizabeth M. Murphy, Secretary,
Commission, dated February 6, 2011
(‘‘Cravath Letter’’).
Letter from Richard G. Ketchum, Chairman
and Chief Executive Officer, Financial
Industry Regulatory Authority (‘‘FINRA’’),
to Elizabeth M. Murphy, Secretary,
Commission, dated January 27, 2011
(‘‘FINRA Letter’’).
Letter from David G. Downey, Chief
Executive Officer, OneChicago, LLC, to
Elizabeth M. Murphy, Secretary,
Commission, dated January 26, 2011
(‘‘OneChicago I’’).
Letter from Dennis M. Kelleher, President
and Chief Executive Officer, Stephen W.
Hall, Securities Specialist, and Wallace C.
Turbeville, Derivatives Specialist, Better
Markets, Inc. (‘‘Better Markets’’), to
Elizabeth M. Murphy, Secretary,
Commission, dated January 24, 2011
(‘‘Better Markets II’’).
Letter from Kevin Gould, President, Markit
North America, Inc., to Elizabeth M.
Murphy, Secretary, Commission, dated
January 24, 2011 (‘‘Markit I’’).
Letter from Jeff Gooch, Chief Executive
Officer, MarkitSERV LLC, to Elizabeth M.
Murphy, Secretary, Commission, dated
January 24, 2011 (‘‘MarkitSERV I’’).
Letter from Naphtali M. Hamlet, dated
January 22, 2011 (‘‘Hamlet Letter’’).
Letter from Dennis M. Kelleher, President
and Chief Executive Officer, Wallace C.
Turbeville, Derivatives Specialist, and
Stephen W. Hall, Better Markets, to
Elizabeth M. Murphy, Secretary,
Commission, dated January 18, 2011
(‘‘Better Markets I’’).
Letter from Craig S. Donohue, Chief
Executive Officer, CME Group, Inc., to
Elizabeth M. Murphy, Secretary,
Commission, dated January 18, 2011
(‘‘CME I’’).
Letter from Larry E. Thompson, General
Counsel, DTCC, dated January 18, 2011
(‘‘DTCC II’’).
Letter from Beckwith B. Miller, Chief
Executive Officer, Ethics Metrics LLC, to
Elizabeth M. Murphy, Secretary,
Commission, dated January 18, 2011
(‘‘Ethics Metrics Letter’’).
Letter from Karrie McMillan, General
Counsel, ICI, to Elizabeth M. Murphy,
Secretary, Commission, dated January 18,
2011 (‘‘ICI I’’).

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• Letter from Robert Pickel, Executive Vice
Chairman, ISDA, and Kenneth E. Bentsen,
Jr., Executive Vice President, Public Policy
and Advocacy, SIFMA, to Elizabeth M.
Murphy, Secretary, Commission, dated
January 18, 2011 (‘‘ISDA/SIFMA I’’), and
accompanying study, ‘‘Block trade
reporting for over-the-counter derivatives
markets’’ (‘‘ISDA/SIFMA Block Trade
Study’’).
• Letter from Roger Liddell, Chief Executive,
LCH.Clearnet Group Limited, to Elizabeth
M. Murphy, Secretary, Commission, dated
January 18, 2011 (‘‘LCH.Clearnet Letter’’).
• Letter from Stuart J. Kaswell, Executive
Vice President, Managing Director, and
General Counsel, Managed Funds
Association, to Elizabeth M. Murphy,
Secretary, Commission, dated January 18,
2011 (‘‘MFA I’’).
• Letter from Timothy W. Cameron,
Managing Director, Asset Management
Group, SIFMA, to Elizabeth M. Murphy,
Secretary, Commission, dated January 18,
2011 (‘‘SIFMA I’’).
• Letter from Lee H. Olesky, Chief Executive
Officer, and Douglas L. Friedman, General
Counsel, Tradeweb Markets LLC, to
Elizabeth M. Murphy, Secretary,
Commission, dated January 18, 2011
(‘‘Tradeweb Letter’’).
• Letter from Gus Sauter, Managing Director
and Chief Investment Officer, and John
Hollyer, Principal and Head of Risk
Management and Strategy Analysis,
Vanguard, to Elizabeth M. Murphy,
Secretary, Commission, dated January 18,
2011 (‘‘Vanguard Letter’’).
• Letter from Julian Harding, Chairman,
WMBAA, to Elizabeth M. Murphy,
Secretary, Commission, dated January 18,
2011 (‘‘WMBAA II’’).
• Letter from R. Martin Chavez, Managing
Director, Goldman, Sachs & Co., David A.
Stawick, Secretary, CFTC, and Elizabeth M.
Murphy, Secretary, Commission, dated
January 18, 2011 (‘‘Goldman Sachs
Letter’’).
• Letter from R. Glenn Hubbard, Co-Chair,
John L. Thornton, Co-Chair, and Hal S.
Scott, Director, Committee on Capital
Markets Regulation, David A. Stawick,
Secretary, CFTC, and Elizabeth M.
Murphy, Secretary, Commission, dated
January 18, 2011 (‘‘CCMR I’’).
• Letter from Adam Litke, Bloomberg L.P., to
Elizabeth M. Murphy, Secretary,
Commission, dated January 14, 2011
(‘‘Bloomberg Letter’’).
• Letter from Laurel Leitner, Senior Analyst,
Council of Institutional Investors, to
Elizabeth M. Murphy, Secretary,
Commission, dated January 13, 2011 (‘‘CII
Letter’’).
• Letter from Jeremy Barnum, Managing
Director, and Don Thompson, Managing
Director and Associate General Counsel,
J.P. Morgan, David A. Stawick, Secretary,
CFTC, and Elizabeth M. Murphy,
Secretary, Commission, dated January 12,
2011 (‘‘J.P. Morgan Letter’’).
• Letter from Davis Polk & Wardwell LLP on
behalf of Barclays Bank PLC, PNP Paribas
S.A., Deutsche Bank AG, Royal Bank of
Canada, The Royal Bank of Scotland
Group, PLC, Socie´te´ Ge´ne´rale, UBS AG, to

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David A. Stawick, Secretary, CFTC,
Elizabeth M. Murphy, Secretary,
Commission, and Jennifer L. Johnson,
Secretary, Federal Reserve Board, dated
January 11, 2011 (‘‘Davis Polk I’’).
Letter from Suzanne H. Shatto, dated
January 1, 2011 (‘‘Shatto Letter’’).
Letter from Spencer Bachus, Ranking
Member, Committee on Financial Services,
and Frank Lucas, Ranking Member,
Committee on Agriculture, U.S. House of
Representatives, to The Honorable Timothy
Geithner, Secretary, Department of
Treasury, the Honorable Gary Gensler,
Chairman, CFTC, the Honorable Mary
Schapiro, Chairman, Commission, and the
Honorable Ben Bernanke, Chairman,
Federal Reserve, dated December 16, 2010
(‘‘Bachus/Lucas Letter’’).
Letter from Chris Barnard, dated December
3, 2010 (‘‘Barnard I’’).
Letter from Laura J. Schisgall, Managing
Director and Senior Counsel, Socie´te´
Ge´ne´rale, to Ananda Radhakrishnan,
Director, Division of Clearing and
Intermediary Oversight, CFTC, John M.
Ramsay, Deputy Director, Division of
Trading and Markets, SEC, Mark E. Van
Der Weide, Senior Associate Director,
Federal Reserve Board, dated November
23, 2010 (‘‘Socie´te´ Ge´ne´rale Letter’’).
Letter from Julian Harding, WMBAA,
David A. Stawick, Secretary, CFTC, and
Elizabeth M. Murphy, Secretary,
Commission, dated November 19, 2010
(‘‘WMBAA I’’).

Comments on Statement of General Policy
on the Sequencing of the Compliance Dates
for Final Rules Applicable to Security-Based
Swaps Adopted Pursuant to the Securities
Exchange Act of 1934 and the Dodd-Frank
Wall Street Reform and Consumer
Protection Act
[Release No. 34–67177; File No. S7–05–12[
http://www.sec.gov/comments/s7-05-12/
s70512.shtml
• Letter from Kenneth E. Bentsen, Jr.,
Executive Vice President, Public Policy
and Advocacy, SIFMA, to Elizabeth M.
Murphy, Secretary, Commission, dated
August 13, 2012 (‘‘SIFMA II’’).
Comments on Cross-Border Security-Based
Swap Activities; Re-Proposal of Regulation
SBSR and Certain Rules and Forms Relating
to the Registration of Security-Based Swap
Dealers and Major Security-Based Swap
Participants
[Release No. 34–69490; File No. S7–02–13]
http://www.sec.gov/comments/s7-02-13/
s70213.shtml
• Letter from Karel Engelen, Senior Director,
Head of Data, Reporting & FpML, ISDA, to
Elizabeth M. Murphy, Secretary,
Commission, dated November 14, 2014
(‘‘ISDA IV’’).
• Letter from Catherine T. Dixon, Chair,
Federal Regulation of Securities
Committee, American Bar Association, to
Elizabeth M. Murphy, Secretary,
Commission, dated October 2, 2013 (‘‘ABA
Letter’’).
• Letter from Adam C. Cooper, Senior
Managing Director and Chief Legal Officer,

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Citadel LLC, to Elizabeth M. Murphy,
Secretary, Commission, dated August 21,
2013 (‘‘Citadel Letter’’).
• Letter from R. Glenn Hubbard, John L.
Thornton, Co-Chairs, and Hal S. Scott,
Director, Committee on Capital Markets
Regulation, to Elizabeth M. Murphy,
Secretary, Commission, and Gary Barnett,
Director, CFTC, dated August 17, 2013
(‘‘CCMR II’’).
• Letter from Robert Pickel, ISDA, to
Elizabeth M. Murphy, Secretary,
Commission, dated August 14, 2013
(‘‘ISDA II’’).
• Letter from Masaaki Tanaka, Deputy
President, Mitsubishi UFJ Financial Group,
Inc., to Elizabeth M. Murphy, Secretary,
Commission, dated August 8, 2013
(‘‘Mitsubishi Letter’’).

• Letter from Edward J. Rosen, Cleary
Gottlieb Steen & Hamilton LLP on behalf
of Bank of America Merrill Lynch, Barclays
Capital, BNP Paribas, Citi, Credit Agricole
Corporate and Investment Bank, Credit
Suisse Securities (USA), Deutsche Bank
AG, HSBC, Morgan Stanley, Nomura
Securities International, Inc., PNC Bank,
National Association, UBS Securities LLC,
and Wells Fargo & Company, to David A
Stawick, Secretary, CFTC, and Elizabeth M.
Murphy, Secretary, SEC, dated October 25,
2010 (‘‘Cleary I’’).
• Letter from James W. Toffey, Chief
Executive Officer, Benchmark Solutions, to
David A Stawick, Secretary, CFTC, and
Elizabeth M. Murphy, Secretary, SEC,
dated October 1, 2010 (‘‘Benchmark
Letter’’).

Comments on Acceptance of Public
Submissions for a Study on International
Swap Regulation Mandated by Section
719(c) of the Dodd-Frank Wall Street Reform
and Consumer Protection Act

Comments on Reporting of Security-Based
Swap Transaction Data

[Release No. 34–64926; File No. 4–635]
http://www.sec.gov/comments/4-635/4635.shtml
• Letter from Jirˇı´ Kro´l, Director of
Government and Regulatory Affairs,
Alternative Investment Management
Association Limited to David A. Stawick,
Secretary, CFTC, and Elizabeth M.
Murphy, Secretary, Commission, dated
September 26, 2011 (‘‘AIMA Letter’’).
Comments on Product Definitions Contained
in Title VII of the Dodd-Frank Wall Street
Reform and Consumer Protection Act
[Release No. 33–9204; File No. S7–16–11]
http://www.sec.gov/comments/s7-16-11/
s71611.shtml
• Letter from Jacques Mirante-Pe´re´, Chief
Financial Officer, and Jan De Bel, General
Counsel, Council of Europe Development
Bank, dated July 22, 2011 (‘‘CEB Letter’’).
• Letter from A. Querejeta, Secretary General
and General Counsel, and B. de Mazie`res,
Director General, European Investment
Bank, to David A Stawick, Secretary,
CFTC, and Elizabeth M. Murphy,
Secretary, SEC, dated July 22, 2011 (‘‘EIB
Letter’’).
• Letter from Gu¨nter Pleines, Head of
Banking Department, and Diego Devos,
General Counsel, Bank for International
Settlements, to David A Stawick, Secretary,
CFTC, and Elizabeth M. Murphy,
Secretary, SEC, dated July 20, 2011 (‘‘BIS
Letter’’).

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Real-Time Reporting: Title VII Provisions of
the Dodd-Frank Wall Street Reform and
Consumer Protection Act
http://www.sec.gov/comments/df-title-vii/
real-time-reporting/real-time-reporting.shtml
• Letter from FIA, the Financial Services
Forum (‘‘FSF’’), ISDA, and SIFMA to David
A Stawick, Secretary, CFTC, and Elizabeth
M. Murphy, Secretary, SEC, dated May 4,
2011 (‘‘FIA/FSF/ISDA/SIFMA Letter’’).

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[Release No. 34–63094; File No. s7–28–10]
http://www.sec.gov/comments/s7-28-10/
s72810.shtml
• Letter from Larry E. Thompson, General
Counsel, DTCC, to Elizabeth M. Murphy,
Secretary, Commission, dated December
20, 2010 (‘‘DTCC I’’).
• Letter from Robert Pickel, Executive Vice
Chairman, ISDA, to Elizabeth Murphy,
Secretary, Commission, dated December
10, 2010 (‘‘ISDA I’’).
• Letter from Ernest C. Goodrich, Jr.,
Managing Director—Legal Department,
Deutsche Bank AG, and Marcel Riffaud,
Managing Director, Legal Department,
Deutsche Bank AG, to David A. Stawick,
Secretary, CFTC, and to Elizabeth M.
Murphy, Secretary, Commission, dated
November 5, 2010 (‘‘Deutsche Bank
Letter’’).
Comments on Proposed Rule: Registration
and Regulation of Security-Based Swap
Execution Facilities
[Release No. 34–63825; File No. S7–06–11]
http://www.sec.gov/comments/s70611/
s70611.shtml
• Letter from the American Benefits Council
to Elizabeth M. Murphy, Secretary,
Commission, dated April 8, 2011 (‘‘ABC
Letter’’).
• Letter from Joanne Medero, Richard Prager,
and Supurna VedBrat, BlackRock, Inc., to
Elizabeth M. Murphy, Secretary,
Commission, dated April 4, 2011
(‘‘BlackRock Letter’’).
• Letter from Kevin Gould, President, Markit
North America, Inc., to Elizabeth Murphy,
Secretary, Commission, dated April 4, 2011
(‘‘Markit II’’).
• Letter from Robert Pickel, Executive Vice
Chairman, ISDA, and Kenneth E. Bentsen,
Jr. Executive Vice President, Public Policy
and Advocacy, SIFMA, to Elizabeth M.
Murphy, Secretary, Commission, dated
April 4, 2011 (‘‘ISDA/SIFMA II’’).
• Letter from Jeff Gooch, Chief Executive
Officer, MarkitSERV, to Elizabeth Murphy,
Secretary, Commission, dated April 4, 2011
(‘‘MarkitSERV II’’).

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• Letter from Nancy C. Gardner, Executive
Vice President and General Counsel,
Markets Division, Thomson Reuters, to
Elizabeth M. Murphy, Secretary,
Commission, dated April 4, 2011
(‘‘Thomson Reuters Letter’’).
• Letter from Stuart J. Kaswell, Executive
Vice President and Managing Director,
General Counsel, MFA, to Elizabeth M.
Murphy, Secretary, Commission, dated
April 4, 2011 (‘‘MFA III’’).
• Letter from Nicholas J. Stephan, Chief
Executive Officer, Phoenix Partners Group
LP to Elizabeth M. Murphy, Secretary,
Commission, dated April 4, 2011
(‘‘Phoenix Letter’’).
Comments on Proposed Rule: Security-Based
Swap Data Repository Registration, Duties,
and Core Principles
[Release No. 34–63347; File No. S7–35–10]
http://www.sec.gov/comments/s73510/
s73510.shtml
• Letter from Larry E. Thompson, General
Counsel, DTCC, to Elizabeth M. Murphy,
Secretary, Commission, dated January 24,
2011 (‘‘DTCC III’’).
Comments on Joint Public Roundtable on
International Issues Relating to the
Implementation of Title VII of the DoddFrank Wall Street Reform and Consumer
Protection Act
[Release No. 34–64939; File No. 4–636]
http://www.sec.gov/comments/4-636/4636.shtml
• Letter from Edward J. Rosen, Cleary
Gottlieb Steen & Hamilton LLP, on behalf
of Bank of America Merrill Lynch, Barclays
Capital, BNP Paribas, Citi, Cree´dit Agricole
Corporate and Investment Bank, Credit
Suisse Securities (USA), Deutsche Bank
AG, HSBC, Morgan Stanley, Nomura
Securities International, Inc., Socie´te´
Ge´ne´rale, UBS Securities LLC, to David A.
Stawick, Secretary, CFTC; Elizabeth M.
Murphy, Secretary, SEC; Jennifer J.
Johnson, Secretary, Board of Governors of
the Federal Reserve Board (‘‘Federal
Reserve Board’’); Office of the Comptroller
of the Currency; Robert E. Feldman,
Executive Secretary, Federal Deposit
Insurance Corporation (‘‘FDIC’’); Alfred M.
Pollard, General Counsel, Federal Housing
Finance Agency; and Gary K. Van Meter,
Director, Office of Regulatory Policy, Farm
Credit Administration, dated September
20, 2011 (‘‘Cleary III’’).
• Letter from Kevin Gould, President, Markit
North America, Inc., to David A. Stawick,
Secretary, CFTC, and Elizabeth M.
Murphy, Secretary, Commission, dated
September 19, 2011 (‘‘Markit III’’).
• Letter from Jeff Gooch, Chief Executive
Officer, MarkitSERV, to David A. Stawick,
Secretary, CFTC, and Elizabeth M.
Murphy, Secretary, Commission, dated
September 19, 2011 (‘‘MarkitSERV III’’).
[FR Doc. 2015–03124 Filed 3–18–15; 8:45 am]
BILLING CODE 8011–01–P

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