SEC Props Up Transparency in New Security-based Swap Reporting Proposal

Jack Humphrey, Regulatory journalist
November 22, 2010 /

The new regulation on security-based swap reporting proposed by the Securities and Exchange Commission (SEC) on November 19 paves the way for a more transparent transaction in the swap market, the SEC said.

SEC Chairman Mary L. Schapiro said the proposal “lays out who must do security-based swap reporting, what information must be reported, and where and when it must be reported.”

The proposed ruling would enable all the participants in the swap market to gain access to the information related to their transactions as it “represents an important step” in the Commission’s endeavor to escalate transparency in the way by which reporting in the market is conducted.

Specifically, Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act primarily mandates the SEC to propose regulations on security-based swaps. It also heightens the level of transparency and accountability in the swap market.

The Congress sought to back up such transparency by establishing centralized security-based swap data repositories whose function and principles have been outlined in a separate proposed regulation.

Along with SEC, the Commodity Futures Trading Commission (CFTC) also has the mandate of the Dodd-Frank Act to regulate all other swaps, thus, a sharing of authority between the two commissions over “mixed swaps” with commodity components. The CFTC has also been proposing its own version of regulating the security-based swap reporting and dissemination of the information to the public with respect to its own jurisdiction.

The SEC and CFTC sought to get more insights into the other issues that arise from the ruling in a joint public roundtable discussion. On the other hand, the SEC will gather comments from the public regarding the proposed swap market regulation for 45 days after the ruling’s publication in the Federal Register.

 

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