SEC Adopts Rules Improving Transparency in the Security-Based Swap Market

The Securities and Exchange Commission has adopted rules mandating that security-based swap data repositories register with the regulator. They also prescribe public dissemination and reporting requirements for security-based swap transaction information.

The rules were mandated under the Dodd-Frank Wall Street Reform and Consumer Protection Act’s Title VII and they are supposed to increase transparency in the security-based swap market, while establishing a regulatory framework for “swap data repositories.”

The new rules require that data warehouses not only register with the Commission but also that they set up governance standards, appoint a chief compliance officer, and require the reporting of certain information to the public. For now, all swaps will have to be reported within 24 hours. This requirement could change as regulators examine the way this impacts the cost and ability of financial firms to execute large trades. The big banks that currently dominate the swaps market in the United States are Goldman Sachs Group Inc. (GS), JP Morgan Chase & Co. (JPM), Citigroup (C), Bank of America Corp. (BAC), and Morgan Stanley (MS).

There are also new record-keeping and notification requirements, including record-keeping requirements for brokerage firms related to their security-based swap activities. By establishing a record of swaps trades, regulators intend to monitor for systemic risk while providing investors with enhanced transparency so they can see whether prices are fair.

The Commodity Futures Trading Commission, which also has oversight of the security-based swap market, has already adopted similar rules. The SEC’s rules will go into effect 60 days after they are published in the Federal Register. Compliance requirements will go into effect within a year after the rule’s publication.

Our securities fraud lawyers are here to help investors recoup their losses. The SSEK Partners Group continues to investigate claims involving swaps and other investments.
Dodd-Frank Act, CFTC

More Blog Posts:

Commodities/Futures Round Up: CFTC Cracks Down on Perpetrators of Securities Violations and Considers New Swap Market Definitions and Rules, Stockbroker Fraud Blog, April 20, 2012

CFTC in Action: Agency Adopts Rules on SIDCOs, Reissues Relief for Contemporaneous Swaps Documentation Requirements, & Its Chair Gensler Praises Swaps Markets, Institutional Investor Securities Blog, November 30, 2013