SEC Proposes Swap Reporting Rules
The SEC has proposed new rules pursuant to the Dodd-Frank Act for the reporting of information relating to security based swap transactions to newly registered security-based swap data repositories (SDRs). The proposed rules require one of the parties to a swap transaction to provide a broad range of data to the SDR. Generally, the swap dealer is required to provide the information. If no dealer is involved, the parties must decide which party will be responsible. The SDR will make certain reported information publicly available: asset class, underlying security, price, notional amount, and time of execution. Other information will be held solely for “regulatory purposes”: counterparty, payment terms, data to determine market value.
OUR TAKE: The extensive reporting requirements will slow the operations of the swaps market and make security-based swaps less available. The new rules may also discourage the use of swaps by parties concerned about disclosing proprietary trading strategies. It is unclear whether the reporting will serve the “regulatory purpose” that Congress intended.