SEC again postpones swap data repository effective date

The Securities and Exchange Commission (SEC) is postponing the compliance date on rules that would allow the agency to access swap data as part of its regular examinations.

The Oct. 4 decision applies to a compliance exemption provided to swap data repositories (SDRs) as it reviews comments surrounding the applications of two potential SDRs, DTCC Data Repository and ICE Trade Vault, LLC.

Finalized in January 2015, rules governing SDRs were included as part of Regulation SBSR, which aims to overhaul the security-based swap market. Under the new regime, transactions must be submitted to a swap data repository within 24 hours of execution and SDRs are required to allow the SEC to access their swap data. 

Delay the date.

The SEC has previously extended the compliance date twice. It was originally set to go into effect in March. 

Tuesday’s ruling postpones the effective date until April 1, 2017, as the commission continues to review comment letters surrounding the submission of SDR applications by DTCC and ICE Trade Vault.

“The Commission does not believe that the October 5, 2016 compliance date provides sufficient time for adequate consideration of the comments and any possible amendments to the respective applications,” SEC Deputy Secretary Robert Errett said in an official notice.

Industry concerns.

In a comment letter submitted May 31, Jennifer Choi, associate general counsel at Investment Company Institute, issued a four-part recommendation to the SEC ahead of its ruling on ICE Trade Vault.

Part I urged the commission to prevent SDRs from expanding the scope of legal requirements specified in the original rulemaking. 

“Part II urges the Commission not to approve SDR rules that would condition a fund’s ability to meet its reporting requirements under Regulation SBSR on the fund agreeing to become a participant of that SDR,” Choi wrote. “Part III urges the Commission not to approve any SDR rule that would expand the scope of obligations placed on funds and other end users of security-based swaps.

“Part IV recommends that the Commission ensure that SDR rulebooks contain unambiguous and complete information to allow potential users to understand SDR operations,” Choi said.

Timothy Cameron and Laura Martin, members of the Securities Industry and Financial Markets Association’s Asset Management Group, sent a letter on Aug. 5 regarding the commission’s ruling on DTCC. 

They said SIFMA’s Asset Management Group continues to support SBS reporting and believes that DTCC is well-equipped to serve their role of as a repository, but DTCC should revise its on-boarding requirements.

Such a change would provide a mechanism for asset managers on behalf of non-reporting clients “to fulfill the limited obligations imposed by Regulation SBSR without having to fully on-board,” Cameron and Martin wrote. “Further, AMG asks that the Commission impose a cap on the reporting of notional amounts for block trades.”