Proposed Rule2023-13447
Reopening of Comment Period for Position Reporting of Large Security-Based Swap Positions
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
June 26, 2023
Effective
February 4, 2022
Issuing agencies
Securities and Exchange Commission
Abstract
The Securities and Exchange Commission ("SEC" or "Commission") is reopening the comment period for its proposal, Position Reporting of Large Security-Based Swap Positions, Release No. 34-93784, (Dec. 15, 2021) ("Proposing Release"). In the Proposing Release, the Commission proposed for comment a new rule, which would require any person with a security-based swap position that exceeds a certain threshold to promptly file with the Commission a schedule disclosing certain information related to its security-based swap position ("Proposed Rule"). The Commission is reopening the comment period to allow interested persons an opportunity to comment on the additional analysis and data contained in a staff memorandum that was added to the public comment file on June 20, 2023, including providing comment on questions identified below.
Full Text
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<title>Federal Register, Volume 88 Issue 121 (Monday, June 26, 2023)</title>
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[Federal Register Volume 88, Number 121 (Monday, June 26, 2023)]
[Proposed Rules]
[Pages 41338-41340]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-13447]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 240
[Release No. 34-97762; File No. S7-32-10]
RIN 3235-AN27
Reopening of Comment Period for Position Reporting of Large
Security-Based Swap Positions
AGENCY: Securities and Exchange Commission.
ACTION: Proposed rule; reopening of comment period.
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SUMMARY: The Securities and Exchange Commission (``SEC'' or
``Commission'') is reopening the comment period for its proposal,
Position Reporting of Large Security-Based Swap Positions, Release No.
34-93784, (Dec. 15, 2021) (``Proposing Release''). In the Proposing
Release, the Commission proposed for comment a new rule, which would
require any person with a security-based swap position that exceeds a
certain threshold to promptly file with the Commission a schedule
disclosing certain information related to its security-based swap
position
[[Page 41339]]
(``Proposed Rule''). The Commission is reopening the comment period to
allow interested persons an opportunity to comment on the additional
analysis and data contained in a staff memorandum that was added to the
public comment file on June 20, 2023, including providing comment on
questions identified below.
DATES: The comment period for the Proposing Release published February
4, 2022, at 87 FR 6652, is reopened. Comments should be received on or
before August 21, 2023.
ADDRESSES: Comments may be submitted by any of the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/submitcomments.htm">https://www.sec.gov/rules/submitcomments.htm</a>); or
Paper Comments
<bullet> Send paper comments to Vanessa A. Countryman, Secretary,
Securities and Exchange Commission, 100 F Street NE, Washington, DC
20549-1090.
All submissions should refer to File Number S7-32-10. This file number
should be included on the subject line if email is used. To help the
Commission process and review your comments more efficiently, please
use only one method of submission. The Commission will post all
submitted comments on the Commission's website (<a href="https://www.sec.gov/rules/proposed.shtml">https://www.sec.gov/rules/proposed.shtml</a>). Comments also are available for website viewing
and printing in the Commission's Public Reference Room, 100 F Street
NE, Washington, DC 20549, on official business days between the hours
of 10 a.m. and 3 p.m. Operating conditions may limit access to the
Commission's Public Reference Room. Do not include personal
identifiable information in submissions; you should submit only
information that you wish to make available publicly. We may redact in
part or withhold entirely from publication submitted material that is
obscene or subject to copyright protection.
Studies, memoranda, or other substantive items may be added by the
Commission or staff to the comment file during this rulemaking. A
notification of the inclusion in the comment file of any such materials
will be made available on the SEC's website. To ensure direct
electronic receipt of such notifications, sign up through the ``Stay
Connected'' option at <a href="http://www.sec.gov">www.sec.gov</a> to receive notifications by email.
FOR FURTHER INFORMATION CONTACT: Rajal B. Patel, Senior Special
Counsel, Richard Mo, Senior Special Counsel, Pamela Carmody, Special
Counsel, or Carol M. McGee, Associate Director, Office of Derivatives
Policy, Division of Trading and Markets, at (202) 551-5870, U.S.
Securities and Exchange Commission, 100 F Street NE, Washington, DC
20549.
SUPPLEMENTARY INFORMATION: This release relates to the Commission's
Proposed Rule under the Exchange Act of 1934 (``Exchange Act''), new
rule 17 CFR 240.10B-1 (``Rule 10B-1''), which would require any person
with a security-based swap position that exceeds a certain threshold to
promptly file with the Commission a schedule disclosing among other
things: (1) the applicable security-based swap position; (2) positions
in any security or loan underlying the security-based swap position;
and (3) any other instrument relating to the underlying security or
loan, or group or index of securities or loans. The Proposed Rule
includes different reporting thresholds for security-based swaps tied
to debt securities and security-based swaps tied to equity securities.
Under the proposal, the Commission would make all filings received
pursuant to the Proposed Rule available to the public, with the goal of
increasing transparency and oversight in the security-based swap
market.
I. Background
As described more fully in the Proposing Release, the Commission
proposed Rule 10B-1, which would be a large trader position reporting
rule for security-based swaps.\1\ The Proposed Rule would require
public reporting of, among other things: (1) certain large positions in
security-based swaps; (2) positions in any security or loan underlying
the security-based swap position; and (3) positions in any other
instrument relating to the underlying security or loan or group or
index of securities or loans. The Proposed Rule would include a
specific quantitative threshold for when public reporting is required.
Specifically, the Proposed Rule would, among other things:
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\1\ See Prohibition Against Fraud, Manipulation, or Deception in
Connection With Security-Based Swaps; Prohibition Against Undue
Influence Over Chief Compliance Officers; Position Reporting of
Large Security-Based Swap Positions, Release No. 34-93784 (Dec. 15,
2021) [87 FR 6652 (Feb. 4, 2022)]. On June 7, 2023, the Commission
adopted rules regarding a prohibition against fraud, manipulation,
or deception in connection with security-based swaps, and a
prohibition against undue influence over chief compliance officers,
which the Commission proposed along with Rule 10B-1 in the Proposing
Release.
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1. Require any person (and any entity controlling, controlled by or
under common control with such person), or group of persons, who
through any contract, arrangement, understanding or relationship, after
acquiring or selling directly or indirectly, any security-based swap,
is directly or indirectly the owner or seller of a Security-Based Swap
Position \2\ that exceeds the Reporting Threshold Amount, to promptly
file with the Commission a statement containing the information
required by Schedule 10B on the Commission's EDGAR system. These
reports would be made publicly available immediately upon filing; \3\
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\2\ Capitalized terms not defined in this release have the
meaning set forth in the Proposing Release.
\3\ See proposed Rule 10B-1(a)(1).
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2. Require that any Schedule 10B be filed promptly, but in no event
later than the end of the first business day following the day of
execution of the security-based swap transaction that results in the
Security-Based Swap Position first exceeding the Reporting Threshold
Amount; \4\
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\4\ See proposed Rule 10B-1(a)(2).
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3. Provide that a group's filing obligation may be satisfied either
by a single joint filing or by each of the group members making an
individual filing; \5\
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\5\ See proposed Rule 10B-1(a)(3).
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4. Contain a provision intended to prevent evasion of the reporting
requirement; \6\
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\6\ See proposed Rule 10B-1(a)(4).
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5. Require a person who has previously filed a Schedule 10B with
the Commission to file an amendment if any material change occurs in
the facts set forth in a previously filed Schedule 10B including, but
not limited to, any material increase in the Security-Based Swap
Positions or if a Security-Based Swap Position falls back below the
applicable Reporting Threshold Amount; \7\
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\7\ See proposed Rule 10B-1(c).
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6. Contain key definitions for determining the scope of the
position to be disclosed, including for the terms ``Reporting Threshold
Amount'' and ``Security-Based Swap Position''; \8\
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\8\ See proposed Rule 10B-1(b).
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7. Specify the information required to be included in a Schedule
10B; \9\
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\9\ See proposed Rule 10B-101.
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8. Specify the territorial scope of the reporting requirements;
\10\ and
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\10\ See proposed Rule 10B-1(d).
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9. Require filers to submit Schedule 10B using a structured,
machine-readable data language.\11\
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\11\ See Proposing Release, 87 FR at 6675.
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II. Reopening of Comment Period
Since the publication of the Proposing Release, the staff of the
Division of Economic and Risk Analysis has prepared a memorandum that
provides
[[Page 41340]]
supplemental data and analysis related to anticipated economic effects
of the Proposed Rule.\12\
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\12\ Memorandum of the Staff of the Division of Economic and
Risk Analysis, Supplemental data and analysis regarding the proposed
reporting thresholds in the equity security-based swap market (June
20, 2023), available at <a href="https://www.sec.gov/comments/s7-32-10/s73210.htm">https://www.sec.gov/comments/s7-32-10/s73210.htm</a>.
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We believe that the information presented in the memorandum has the
potential to be informative for purposes of further evaluating the
Proposed Rule. We are, therefore, reopening the comment period to
permit interested parties to comment on the staff memorandum, which has
been included in the comment file. Given the information presented in
the memorandum, we seek comment regarding whether the Reporting
Threshold Amounts in the Proposed Rule should be higher or lower.
Specifically, in addition to the requests for comment included in the
Proposing Release, the Commission seeks comments on the following:
Request for Comment
1. In general, the Commission requests comment on the proposed
Reporting Threshold Amount for each asset class (e.g., equity security-
based swaps, CDS, non-CDS debt security-based swaps, etc.).
2. With respect to each asset class, should the Reporting Threshold
Amount in any final rule be higher or lower than the proposed Reporting
Threshold Amount if:
a. Consistent with the Proposed Rule, such final rule requires, at
an interim threshold, the inclusion of the value of related securities
owned by the holder of the security-based swap position in the
calculation of the Reporting Threshold Amount?
b. Such final rule does not require the inclusion of related
securities owned by the holder of the security-based swap position in
those calculations?
c. Such final rule permits offsetting of security-based swap
positions with identical terms (e.g., offsetting long positions with
short positions, but only if the security-based swap positions
reference the same product identifier)?
d. Consistent with the Proposed Rule, such final rule requires
aggregation of security-based swap positions by any person (and any
entity controlling, controlled by or under common control with such
person) or group of persons, who through any contract, arrangement,
understanding or relationship, after acquiring or selling directly or
indirectly, any security-based swap, is directly or indirectly the
owner or seller of a security-based swap position that exceeds the
Reporting Threshold Amount?
e. Such final rule does not require aggregation of security-based
swap positions across entities that are both separately legally
established and capitalized (unless a guarantee exists)?
f. Such final rule does not require aggregation of security-based
swap positions across entities that are both separately legally
established and capitalized (unless a guarantee exists), unless acting
as a group with a common purpose?
g. Such final rule requires aggregation of security-based swap
positions established by transactions effected for such person's own
account and of security-based swap positions established by
transactions effected for the account of others, when that person
shares in the economic risk in the other accounts or otherwise controls
the account?
h. Such final rule does not require the Reporting Threshold Amount
to include security-based swap positions entered into by a person with
an entity or person controlling, controlled by, or under common control
with that person?
i. Such final rule requires or does not require aggregation or
inclusion of transactions pursuant to any combination of the options
listed in items (a) through (h) above?
We encourage any interested person to submit comments, including
comments on the data or methodology used in the analysis contained in
the memorandum and on how this analysis should inform our consideration
of the economic effects of the Proposed Rule. If any commenters who
have already submitted a comment letter wish to provide supplemental or
updated comments, we encourage them to do so. Comments are of
particular assistance if accompanied by supporting data and analysis of
the issues addressed in those comments.
By the Commission.
Dated: June 20, 2023.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2023-13447 Filed 6-23-23; 8:45 am]
BILLING CODE 8011-01-P
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