SEC Proposes Rule on Risk Mitigation Techniques for Uncleared SBS
SEC proposed a rule that would require the application of specific risk-mitigation techniques to portfolios of security-based swaps (SBS) that are not submitted for clearing. Comments should be received on or before April 16, 2019.
The proposal would establish requirements for each registered SBS dealer and each registered major SBS participant with respect to the following:
- Reconciling outstanding SBS with applicable counterparties on a periodic basis
- Engaging in certain forms of portfolio compression exercises, as appropriate
- Executing written SBS trading relationship documentation with each of its counterparties prior to, or contemporaneously with, executing a SBS transaction
In addition, SEC proposed an interpretation to address the application of the portfolio reconciliation, portfolio compression, and trading relationship documentation requirements to cross-border SBS activities. SEC also proposed to amend Rule 3a71-6 to address the potential availability of substituted compliance in connection with those requirements. Moreover, the proposed rules would make corresponding changes to the recordkeeping, reporting, and notification requirements applicable to SBS entities. Finally, SEC requested comments on the way certain aspects of the proposed rules address how an SBS data repository could potentially satisfy its obligation to verify the terms of each SBS with both counterparties to the transaction.
SEC had previously adopted rules requiring SBS entities to provide trade acknowledgments and to verify those trade acknowledgments with their counterparties to security-based swap transactions; however, it had not proposed rules concerning portfolio reconciliation, portfolio compression, or trading relationship documentation. By contrast, CFTC has implemented rules setting forth standards for the timely and accurate confirmation of swaps, addressing the reconciliation and compression of swap portfolios, and setting forth requirements for documenting the swap trading relationship between swap dealers or major swap participants and their counterparties. Accordingly, SEC has now proposed the requirements applicable to SBS entities.
Related Link: Federal Register Notice
Comment Due Date: April 16, 2019
Keywords: Americas, US, Banking, Securities, Security-based Swaps, Swap Participants, Dodd Frank Act, Risk Mitigation, Reporting, CFTC, SEC
Previous Article
BIS Paper on Effect of Securities Lending on OTC Market LiquidityRelated Articles
|
News
BCBS Publishes Results of Survey on Proportionality in Bank RegulationBCBS published a report presenting the results of a survey conducted on proportionality practices in bank regulation and supervision.
March 19, 2019
WebPage
Regulatory News
|
|
News
US Agencies Adopt Interim Rule to Facilitate Transfers of Legacy SwapsUS Agencies (FCA, FDIC, FED, FHFA, and OCC) are adopting and inviting comments on an interim final rule.
March 19, 2019
WebPage
Regulatory News
|
|
News
EBA Single Rulebook Q&A: Third Update for March 2019EBA published answers to seven questions under the Single Rulebook question and answer (Q&A) updates for this week.
March 15, 2019
WebPage
Regulatory News
|
|
News
OCC Updates Recovery Planning Booklet of the Comptroller's HandbookOCC updated the Recovery Planning booklet of the Comptroller’s Handbook.
March 15, 2019
WebPage
Regulatory News
|
|
News
EBA Publishes Report on Convergence of Supervisory Practices Across EUEBA published annual report on the convergence of supervisory practices in EU.
March 14, 2019
WebPage
Regulatory News
|
|
News
CPMI-IOSCO Publish Update to Level 1 Assessment of PFMI ImplementationCPMI and IOSCO jointly updated the Level 1 Assessment Online Tracker on monitoring of the implementation of the Principles for financial market infrastructures (PFMI).
March 14, 2019
WebPage
Regulatory News
|
|
News
Agustín Carstens of BIS Speaks About New Role of Central BanksWhile speaking at the 20th anniversary conference of the Financial Stability Institute (FSI), Agustín Carstens, the General Manager of BIS, highlighted the need for regulatory actions in light of the continued evolution of financial technology.
March 14, 2019
WebPage
Regulatory News
|
|
News
ESMA Analyzes Impact of Regtech and Suptech for Markets and RegulatorsESMA published the results of its analysis of the regulatory and supervisory technologies—also known as regtech and suptech—being developed in response to various demand and supply drivers in the financial sector.
March 14, 2019
WebPage
Regulatory News
|
|
News
PRA Publishes Policy Statement on Group Supervision Under Solvency IIPRA published a policy statement (PS9/19) that provides feedback on responses to the consultation paper CP15/18 and the final supervisory statement SS9/15 (Appendix) on group supervision under Solvency II.
March 14, 2019
WebPage
Regulatory News
|
|
News
ECB Announces Start Date for Euro Short-Term RateECB announced that it will start publishing the euro short-term rate (€STR) as of October 02, 2019, reflecting the trading activity of October 01, 2019.
March 14, 2019
WebPage
Regulatory News
|
