The SEC on Friday, voted unanimously to propose new Regulation SBSR, which would govern how security-based swap ("SBS") transactions should be reported and publicly disseminated.  Regulation SBSR targets transparency in the security-based swap market, while fulfilling mandates under the Dodd-Frank Act.  There's a 45-day window for submitting comments.

"This proposal lays out who must do security-based swap reporting, what information must be reported, and where and when it must be reported.  These rules would provide for post-trade transparency in the security-based swap markets, and are designed to provide all market participants access to transaction information at the same time."  -- SEC Chairman Mary L. Schapiro.

    Regulation SBSR, As Proposed.   Under proposed Rules 900 through 911 of Reg SBSR:

• Parties to an SBS transaction must report information about each transaction to a registered SBS data repository.
• The registered SBS repository must publicly disseminate certain of that information in a timely fashion.

More specifically, the proposed rules would:

• Specify categories of information to be reported to repository in real time and publicly disseminated - including information about the asset class of the SBS, information about the underlying security, the price, the notional amount, the time of execution, the effective date and the scheduled termination date.
• Specify certain other categories of information to be reported to repository for regulatory purposes, but not publicly disseminated - including the counterparty; the broker, trader and desk ID;  the amounts of any up-front payments and description of the terms of the payment streams; the title of any master agreement governing the transaction; and, the data elements needed to determine the market value of the transaction.
• Require the reporting of certain events that result in changes to previously reported information about an SBS transaction.
• Identify which counterparty to an SBS transaction would be required to report information to repository.

To facilitate the reporting and dissemination of the information, the rules would require that registered SBS repositories:

• Establish and maintain pols and procedures re: SBS transaction data that would be reported and disseminated.
• Register with the SEC as securities information processors.

Parties who report to the registered repositories, and who are registered as SBS dealers or major SBS participants, would be required to establish and maintain pols and procedures designed to ensure that they comply with applicable reporting obligations.

Re: block trades, the SEC will propose and solicit comment on general criteria that would be used to determine block trade thresholds, without proposing actual thresholds at this time. At a later date, the Commission expects to consider a recommendation that would propose and solicit comment on specific block trade thresholds. 

Finally, as required by the Dodd-Frank Act, the rules would exempt security-based swaps from the calculation of fees under Section 31 of the Exchange Act.

For further details, click onto:   [SEC PR 10-230, 'SBS Reporting', 11/19]   and    [SEC Proposed Rules Release 34-63446, 11/19 - 305pp]