Notice2022-10511
Data Collection Initiation Date and Contingent Phase-In Termination Date for the De Minimis Notional Thresholds of Security-Based Swap Dealing
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
May 17, 2022
Issuing agencies
Securities and Exchange Commission
Abstract
The definition of "security-based swap dealer" is subject to a de minimis exception whereby a person is deemed not to be a security- based swap dealer as a result of security-based swap dealing activity that falls below certain de minimis thresholds. These de minimis thresholds are subject to temporarily higher, phase-in levels of security-based swap dealing activity that will be in effect until the "phase-in termination date." The phase-in termination date will be determined in part by reference to a "data collection initiation date." The Commission is making this announcement to confirm that the data collection initiation date was November 8, 2021, and, absent additional Commission action, the phase-in termination date shall be November 8, 2026.
Full Text
<html>
<head>
<title>Federal Register, Volume 87 Issue 95 (Tuesday, May 17, 2022)</title>
</head>
<body><pre>
[Federal Register Volume 87, Number 95 (Tuesday, May 17, 2022)]
[Notices]
[Pages 29986-29987]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-10511]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94896/May 11, 2022]
Data Collection Initiation Date and Contingent Phase-In
Termination Date for the De Minimis Notional Thresholds of Security-
Based Swap Dealing
AGENCY: Securities and Exchange Commission.
ACTION: Commission announcement.
-----------------------------------------------------------------------
SUMMARY: The definition of ``security-based swap dealer'' is subject to
a de minimis exception whereby a person is deemed not to be a security-
based swap dealer as a result of security-based swap dealing activity
that falls below certain de minimis thresholds. These de minimis
thresholds are subject to temporarily higher, phase-in levels of
security-based swap dealing activity that will be in effect until the
``phase-in termination date.'' The phase-in termination date will be
determined in part by reference to a ``data collection initiation
date.'' The Commission is making this announcement to confirm that the
data collection initiation date was November 8, 2021, and, absent
additional Commission action, the phase-in termination date shall be
November 8, 2026.
DATES: The data collection initiation date referenced in 17 CFR
240.3a71-2 and 240.3a71-2A, was November 8, 2021. Absent additional
action by the Commission pursuant to 17 CFR 240.3a71-2(a)(2)(ii)(A),
the phase-in termination date will be November 8, 2026.
FOR FURTHER INFORMATION CONTACT: Carol McGee, Assistant Director, Laura
Compton, Senior Special Counsel, Office of Derivatives Policy, Division
of Trading and Markets, at (202) 551-5870.
SUPPLEMENTARY INFORMATION: For purposes of this announcement, the
Commission uses the following terms:
------------------------------------------------------------------------
Commission reference CFR citation (17 CFR)
------------------------------------------------------------------------
Securities Exchange Act of 1934 \1\
(``Exchange Act''):
Rule 3a71-2........................ Sec. 240.3a71-2.
Rule 3a71-2(a)..................... Sec. 240.3a71-2(a).
Rule 3a71-2(a)(1)(i)............... Sec. 240.3a71-2(a)(1)(i).
Rule 3a71-2(a)(1)(ii).............. Sec. 240.3a71-2(a)(1)(ii).
Rule 3a71-2(a)(2)(i)............... Sec. 240.3a71-2(a)(2)(i).
Rule 3a71-2(a)(2)(ii)(A)........... Sec. 240.3a71-2(a)(2)(ii)(A).
Rule 3a71-2(a)(2)(ii)(B)........... Sec. 240.3a71-2(a)(2)(ii)(B).
Rule 3a71-2(a)(2)(iii)............. Sec. 240.3a71-2(a)(2)(iii).
Rule 3a71-2A....................... Sec. 240.3a71-2A.
Rule 3a71-2A(a)(1)................. Sec. 240.3a71-2A(a)(1).
Rule 3a71-2A(b) through (c)........ Sec. Sec. 240.3a71-2A(b)
through (c).
Rule 3a71-2A note.................. Sec. 240.3a71-2A note.
Regulation SBSR.................... Sec. Sec. 242.900 through
242.909.
------------------------------------------------------------------------
Background
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78a et seq.
---------------------------------------------------------------------------
Section 3(a)(71) of the Exchange Act \2\ defines the term
``security-based swap dealer'' (``SBSD'') and provides in relevant part
that a person shall be deemed not to be an SBSD as a result of
security-based swap dealing activity that falls below certain de
minimis thresholds.\3\ In 2012, the Commission adopted Exchange Act
Rule 3a71-2(a), which provides that to qualify for this de minimis
exception, all security-based swap positions connected with the
person's and its affiliates' dealing activity over the immediately
preceding twelve months must fall below three separate thresholds.\4\
Two of the thresholds are subject to temporarily higher, phase-in
levels of aggregate gross notional amounts of de minimis security-based
swap dealing activity.\5\ For credit default swaps that are security-
based swaps, the de minimis threshold is an aggregate gross notional
[[Page 29987]]
amount of no more than $3 billion, subject to a phase-in level of an
aggregate gross notional amount of no more than $8 billion.\6\ For
security-based swaps that are not credit default swaps, the de minimis
threshold is an aggregate gross notional amount of no more than $150
million, subject to a phase-in level of an aggregate gross notional
amount of no more than $400 million.\7\
---------------------------------------------------------------------------
\2\ 15 U.S.C. 78c(a)(71).
\3\ See Exchange Act Section 3(a)(71)(D).
\4\ See Exchange Act Rule 3a71-2(a); Further Definition of
``Swap Dealer,'' ``Security-Based Swap Dealer,'' ``Major Swap
Participant,'' ``Major Security-Based Swap Participant'' and
``Eligible Contract Participant,'' Release No. 34-66868 (Apr. 27,
2012) [77 FR 30596, 30727 (May 23, 2012)].
\5\ The higher phase-in levels of de minimis security-based swap
dealing activity are not available to the extent that a person
engages in security-based swap dealing activity with counterparties
that are natural persons, other than natural persons who qualify as
eligible contract participants by virtue of section
1a(18)(A)(xi)(II) of the Commodity Exchange Act, 7 U.S.C.
1a(18)(A)(xi)(II). See Exchange Act Rule 3a71-2(a)(2)(i).
\6\ Exchange Act Rule 3a71-2(a)(1)(i).
\7\ Exchange Act Rule 3a71-2(a)(1)(ii).
---------------------------------------------------------------------------
The phase-in period for these de minimis security-based swap
dealing activity thresholds is available until the ``phase-in
termination date.'' \8\ The phase-in termination date, in turn, depends
in part on the ``data collection initiation date'' established pursuant
to Exchange Act Rule 3a71-2(a)(2)(iii). That rule provides that the
data collection initiation date was the later of (1) the last
compliance date for the registration and regulatory requirements for
SBSDs and major security-based swap participants under Exchange Act
Section 15F,\9\ and (2) the first date on which compliance with the
trade-by-trade reporting rules for credit-related and equity-related
security-based swaps to a registered security-based swap data
repository is required. With respect to the first prong of Exchange Act
Rule 3a71-2(a)(2)(iii), the compliance date for registration and
regulatory requirements for SBSDs and major security-based swap
participants under Exchange Act Section 15F was October 6, 2021.\10\
With respect to the second prong of Exchange Act Rule 3a71-
2(a)(2)(iii), on May 7, 2021, DTCC Data Repository registered with the
Commission, which definitively set November 8, 2021, as the first
compliance date for Regulation SBSR's requirements regarding reporting
of credit-related and equity-related security-based swaps.\11\ Pursuant
to Exchange Act Rule 3a71-2(a)(2)(iii), the data collection initiation
date thus was November 8, 2021.
---------------------------------------------------------------------------
\8\ Exchange Act Rule 3a71-2(a)(2)(i).
\9\ 15 U.S.C. 78o-10.
\10\ See Cross-Border Application of Certain Security-Based Swap
Requirements, Release No. 34-87780 (Dec. 18, 2019) [85 FR 6270, 6345
(Feb. 4, 2020)] (``Cross-Border Amendments Release''). In the Cross-
Border Amendments Release, the Commission set the compliance date
for registration and regulatory requirements for SBSDs and major
security-based swap participants as 18 months after the effective
date described therein; that effective date was 60 days after
publication of the Cross-Border Amendments Release in the Federal
Register. The Cross-Border Amendments Release was published in the
Federal Register on Feb. 4, 2020; 60 days after that date was Apr.
6, 2020. Eighteen months after Apr. 6, 2020, was Oct. 6, 2021.
\11\ The first compliance date for Regulation SBSR with respect
to a security-based swap asset class was the first Monday that was
the later of: (1) Six months after the date on which the first
security-based swap data repository that can accept transaction
reports in that asset class registers with the Commission; or (2)
one month after the compliance date for registration and regulatory
requirements for SBSDs and major security-based swap participants.
See Cross-Border Amendments Release, 85 FR 6346. DTCC Data
Repository (U.S.), LLC registered as a security-based swap data
repository for credit and equity asset classes (i.e., the asset
classes referenced in Exchange Act Rule 3a71-2(a)(2)(iii)) on May 7,
2021. See Security-Based Swap Data Repositories; DTCC Data
Repository (U.S.), LLC; Order Approving Application for Registration
as a Security-Based Swap Data Repository, Release No. 34-91798 (May
7, 2021) [86 FR 26115 (May 12, 2021)]. Nov. 8, 2021, was both the
first Monday that was six months after May 7, 2021, and the first
Monday that was one month after the Oct. 6, 2021, compliance date
for registration and regulatory requirements for SBSDs and major
security-based swap participants. See also SEC Approves Registration
of First Security-Based Swap Data Repository; Sets the First
Compliance Date for Regulation SBSR, Press Release No. 2021-80 (May
7, 2021), available at <a href="https://www.sec.gov/news/press-release/2021-80">https://www.sec.gov/news/press-release/2021-80</a> (``Today's SEC action sets Nov. 8, 2021, as the first compliance
date for Regulation SBSR, which governs regulatory reporting and
public dissemination of security-based swap transactions.'').
---------------------------------------------------------------------------
The phase-in termination date is determined through a separate
mechanism that depends in part on the data collection initiation date
and also, as explained below, in part upon the timing of a Commission
staff report addressing the rules and interpretations further defining
the Exchange Act's definition of the term ``security-based swap
dealer,'' including the de minimis exception to that definition.\12\
The report must be published in the Federal Register for public comment
no later than three years following the data collection initiation
date, or November 8, 2024, and could be published earlier.\13\ Nine
months after the publication of the report, the Commission may by order
either terminate the phase-in period for the de minimis thresholds or
provide notice of its determination that it is necessary or appropriate
in the public interest to propose through rulemaking an alternative to
the $3 billion and $150 million de minimis thresholds. The Commission's
order in either case shall establish the phase-in termination date.\14\
Alternatively, if the phase-in termination date has not been previously
established in such an order, the phase-in termination date shall be
five years after the data collection initiation date,\15\ or November
8, 2026.
---------------------------------------------------------------------------
\12\ See Exchange Act Rule 3a71-2A note. As appropriate, based
on the availability of data and information, the report generally
should assess whether any of the de minimis thresholds should be
increased or decreased. See Exchange Act Rule 3a71-2A(a)(1). The
Commission intends to consider this report in reviewing the effect
and application of the de minimis thresholds based on the evolution
of the security-based swap market following the implementation of
the registration and regulatory requirements of Exchange Act Section
15F; the report may also be informative as to potential changes to
the rules further defining the term ``security-based swap dealer.''
See Exchange Act Rule 3a71-2A note. The Commission directed staff
also to report on the rules and interpretations further defining the
Exchange Act's definition of the term ``major security-based swap
participant,'' to which the de minimis thresholds in Exchange Act
Rule 3a71-2 do not apply.
\13\ See Exchange Act Rule 3a71-2A(b) through (c).
\14\ See Exchange Act Rule 3a71-2(a)(2)(ii)(A).
\15\ Exchange Act Rule 3a71-2(a)(2)(ii)(B).
---------------------------------------------------------------------------
Commission Announcement
The data collection initiation date referenced in Exchange Act
Rules 3a71-2 and 3a71-2A was November 8, 2021. Absent additional
Commission action establishing the phase-in termination date pursuant
to Exchange Act Rule 3a71-2(a)(2)(ii)(A), the phase-in termination date
shall be November 8, 2026.
By the Commission.
Dated: May 11, 2022.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2022-10511 Filed 5-16-22; 8:45 am]
BILLING CODE 8011-01-P
</pre></body>
</html>Indexed from Federal Register on May 17, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.