Two men share securities regulation news

Breaking news and expert analysis on legal and compliance issues

[Back To Home][Back To Archives]

From Securities Regulation Daily, June 8, 2016

Final SEC rules require trade acknowledgement, verification for security-based swaps

By Anne Sherry, J.D.

The SEC continued progress on its security-based swap rulemaking by adopting final trade acknowledgement and verification requirements. New Exchange Act Rules 15Fi-1 and 15Fi-2 apply to SBS dealers and major SBS participants. The Commission also amended Exchange Act Rule 3a71-6 to allow substituted compliance for trade acknowledgement (Release No. 34-78011, June 8, 2016).

Trade acknowledgement and verification. Dodd-Frank required the SEC to develop a comprehensive regulatory framework for security-based swaps. The latest rules require SBS entities to provide an electronic trade acknowledgement to their counterparties promptly, and no later than the end of the next business day. The SBS entity must promptly verify or dispute the terms of any trade acknowledgement it receives. Finally, it must put into place written policies and procedures reasonably designed to obtain verification of the terms outlined in any trade acknowledgement that it provides.

Exemptions. The rules exempt certain transactions processed through a registered clearing agency or executed on an SBS execution facility or national securities exchange. Broker-dealers that are SBS entities and that satisfy the rules' requirements are exempt from the requirements of Exchange Act Rule 10b-10. Chair Mary Jo White said that the rules will improve SBS documentation, "a cornerstone of effective risk management."

Compliance date. Because the new rules only apply to registered SBS entities, the SEC aligned the compliance date with that of the registration rules. That date is the later of: 1) six months after the date of publication in the Federal Register of final rules establishing capital, margin, and segregation requirements for SBS entities; 2) the compliance date of final rules establishing recordkeeping and reporting requirements for SBS entities; 3) the compliance date of final rules establishing business conduct requirements under 1934 Act Sections 15F(h) and 15F(k), or 4) the compliance date for final rules establishing a process for a registered SBS entity to make an application to the SEC allow an associated person who is subject to a statutory disqualification to effect security-based swaps on the SBS entity’s behalf.

Substituted compliance. The SEC also revised its existing rule on substituted compliance by non-U.S. security-based swap entities. Rule 3a71-6 allows such entities to satisfy applicable business conduct requirements by complying with comparable foreign regulatory requirements. The amendment extends that relief to the trade acknowledgement and verification requirements.

The release is No. 34-78011.

MainStory: TopStory BrokerDealers ClearanceSettlement Derivatives DoddFrankAct ExchangesMarketRegulation FinancialIntermediaries RiskManagement SECNewsSpeeches Swaps

Back to Top

Securities Regulation Daily

Introducing Wolters Kluwer Securities Regulation Daily — a daily reporting service created by attorneys, for attorneys — providing same-day coverage of breaking news, court decisions, legislation, and regulatory activity.

A complete daily report of the news that affects your world

  • View full summaries of federal and state court decisions.
  • Access full text of legislative and regulatory developments.
  • Customize your daily email by topic and/or jurisdiction.
  • Search archives for stories of interest.

Not just news — the right news

  • Get expert analysis written by subject matter specialists—created by attorneys for attorneys.
  • Track law firms and organizations in the headlines with our new “Who’s in the News” feature.
  • Promote your firm with our new reprint policy.

24/7 access for a 24/7 world

  • Forward information with special copyright permissions, encouraging collaboration between counsel and colleagues.
  • Save time with mobile apps for your BlackBerry, iPhone, iPad, Android, or Kindle.
  • Access all links from any mobile device without being prompted for user name and password.