SEC approves first US securities swap repository 11 May 2021US Reporter: Alex Pugh
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The US Securities and Exchange Commission has approved the registration of DTCC Data Repository (DDR), its first security-based swap data repository (SDR).
The approval will allow for the first time security-based swap transactions in the equity, credit, and interest rate derivatives asset classes.
Yesterday’s SEC announcement sets 8 November as the first compliance date for reporting and dissemination of security-based swap information (Regulation SBSR) — the regulation stipulates that the first SDR can accept transaction reports in a particular asset class six months after the registration date.
Regulation SBSR, which governs regulatory reporting to registered SDRs and public dissemination of security-based swap transactions, is a major component of the security-based swap regulatory regime established by Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act 2011.
DDR’s go-ahead to operate as a registered security-based swap data repository (SBSDR) is a key step in completing the implementation of derivatives oversight in the US. Dodd-Frank’s Title VII divided the regulatory oversight of derivatives between the SEC for security-based swaps and the Commodity Futures Trading Commission for all other swaps.
SEC chair Gary Gensler says implementing Regulation SBSR fulfils an “important mandate” under the Dodd-Frank Act. “A centralised database of security-based swap transactions is an essential reform to better understanding these markets, for surveillance and for enforcement. The data repository also will facilitate public reporting of security-based swap transactions, bringing much-needed transparency to these markets,” Gensler adds.
DTCC executive director, DDR, Kate Delp notes yesterday’s announcement was an “important step forward” in the provision of greater transparency in the over-the-counter derivatives market.
“We are pleased to receive SEC approval of DDR’s application as an SBSDR, and look forward to offering security-based swap transaction reporting capabilities within our global platform. We are proud to extend our trade reporting capabilities in the US and are committed to working with our clients to help them prepare for the reporting date.
“Now is the time to begin to implement and test trade reporting solutions as the reporting compliance date draws near.”
DTCC’s subsidiaries processed securities transactions valued at more than $2.15 quadrillion. Its depository provides custody and asset servicing for securities issues from 170 countries and territories valued at $63.0 trillion.
The move to finally implement under-utilised aspects of Dodd-Frank comes after newly minted SEC chair Gensler hinted that elements of the post-Great Financial Crash legislation could be used to enhance short selling disclosures, in the wake of the GameStop saga.
Dormant sections of 2011’s Dodd-Frank would oblige firms to record and publicly disclose short selling data at a minimum of once a month. The SEC was meant to revisit the requirement after Dodd-Frank but the reporting rules were instead left to gather dust.
In the third GameStop hearing in the House of Representatives last Thursday, Gensler said: “I’ve directed SEC staff to prepare recommendations for the Commission’s consideration on these issues.”
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