Notice2025-02162
Order Granting Registration of Security-Based Swap Execution Facilities
Primary source
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Published
February 4, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 22 (Tuesday, February 4, 2025)</title>
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[Federal Register Volume 90, Number 22 (Tuesday, February 4, 2025)]
[Notices]
[Pages 8946-8948]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-02162]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102305]
Order Granting Registration of Security-Based Swap Execution
Facilities
January 29, 2025.
I. Introduction
On or prior to August 12, 2024, eight entities filed with the
Securities and Exchange Commission (``Commission'') applications on
Form SBSEF to register as security-based swap execution facilities
(``SBSEF(s)'') pursuant to section 3D(a)(1) of the Securites Exchange
Act of 1934 (``Exchange Act'' or ``Act'') and 17 CFR 242.803 (``Rule
803'').\1\ As discussed below, after reviewing each SBSEF Applicant's
Form SBSEF registration application (including the representations
included therein), this order grants each SBSEF Applicant registration
as a SBSEF.
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\1\ 15 U.S.C. 78c-4; 17 CFR 242.803. See Form SBSEF applications
filed by Bloomberg SEF LLC (August 2, 2024); GFI Swaps Exchange LLC
(initially filed as GFI Securities LLC) (Aug. 12, 2024); GLMX
Technologies, LLC (Aug. 12, 2024); ICE Swap Trade, LLC (Aug. 12,
2024); tpSEF Inc. (Aug. 7, 2024); Tradition SEF, LLC (Aug. 12,
2024); TW SEF LLC (Aug. 12, 2024); WEMATCH.LIVE LLC (July 26, 2024)
(collectively, ``SBSEF Applicant(s)''). The portions of the SBSEF
Applicants' applications on Form SBSEF that are not subject to
confidential treatment requests are available for public viewing on
the Commission's website at <a href="https://www.sec.gov/edgar/search/#/q=SBSEF&filter_forms=SBSEF">https://www.sec.gov/edgar/search/#/q=SBSEF&filter_forms=SBSEF</a>.
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II. Background
A. Statutory and Rule Requirements
Section 3D of the Exchange Act was enacted as part of Title VII of
the Dodd-Frank Wall Street Reform and Consumer Protection Act.\2\
Section 3D(a)(1) of the Exchange Act provides that no person may
operate a facility for the trading or processing of security-based
swaps (``SBS'') unless the facility is registered as a SBSEF or as a
national securities exchange.\3\ Section 3D(d) enumerates 14 Core
Principles with which SBSEFs must comply.\4\ And section 3D(f) requires
the Commission to prescribe rules governing the regulation of SBSEFs.
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\2\ Public Law 111-203, H.R. 4173, sec. 763(c).
\3\ 15 U.S.C. 78c-4(a)(1).
\4\ 15 U.S.C. 78c-4(d).
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On November 2, 2023, the Commission adopted Regulation SE to govern
the registration and regulation of SBSEFs as required by section 3D of
the Exchange Act.\5\ Regulation SE sets forth
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rules governing the registration and post-registration regulation of
SBSEFs, rules that implement the 14 statutory Core Principles with
which SBSEFs must comply, and rules that address issues relating to SBS
execution generally. Specifically, the 14 core principles, and
corresponding Regulation SE rule provisions, are:
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\5\ Securities Exchange Act Release No. 98845 (Nov. 2, 2023), 88
FR 87156, 87237 (Dec. 15, 2023) (``Adopting Release''); 15 U.S.C.
78c-4. The Commission proposed Regulation SE on Apr. 6, 2022. See
Rules Relating to Security-Based Swap Execution and Registration and
Regulation of Security-Based Swap Execution Facilities, Securities
Exchange Act Release No. 94615 (Apr. 6, 2022), 87 FR 28872 (May 11,
2022) (``Proposing Release'').
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Regulation SE
Core principle title rule No.
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Compliance with Core Principles........................ 818
Compliance with Rules.................................. 819
Security-Based Swaps Not Readily Susceptible to 820
Manipulation..........................................
Monitoring of Trading and Trade Processing............. 821
Ability to Obtain Information.......................... 822
Financial Integrity of Transactions.................... 823
Emergency Authority.................................... 824
Timely Publication of Trading Information.............. 825
Recordkeeping and Reporting............................ 826
Antitrust Considerations............................... 827
Conflicts of Interest.................................. 828
Financial Resources.................................... 829
System Safeguards...................................... 830
Designation of Chief Compliance Officer................ 831
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The Regulation SE rules other than those that implement the
statutory Core Principles are:
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Regulation SE
Regulation SE rule title rule No.
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Scope.................................................. 800
Applicable provisions.................................. 801
Definitions............................................ 802
Requirements and procedures for registration........... 803
Listing products for trading by certification.......... 804
Voluntary submission of new products for Commission 805
review and approval...................................
Voluntary submission of rules for Commission review and 806
approval..............................................
Self-certification of rules............................ 807
Availability of public information..................... 808
Staying of certification and tolling of review period 809
pending jurisdictional determination..................
Product filings by security-based swap execution 810
facilities that are not yet registered and by dormant
security-based swap execution facilities..............
Information related to security-based swap execution 811
facility compliance...................................
Enforceability......................................... 812
Prohibited use of data collected for regulatory 813
purposes..............................................
Entity operating both a national securities exchange 814
and security-based swap execution facility............
Methods of execution for required and permitted 815
transactions..........................................
Trade execution requirement and exemptions therefrom... 816
Trade execution compliance schedule.................... 817
Application of the trade execution requirement to cross- 832
border security-based swap transactions...............
Cross-border exemptions................................ 833
Mitigation of conflicts of interest of security-based 834
swap execution facilities and certain exchanges.......
Notice to Commission by security-based swap execution 835
facility of final disciplinary action or denial or
limitation of access..................................
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Rule 802 of Regulation SE defines a SBSEF as having the same
meaning as in section 3(a)(77) of the Act, which states that a SBSEF is
a trading system or platform in which multiple participants have the
ability to execute or trade SBSs by accepting bids and offers made by
multiple participants in the facility or system, through any means of
interstate commerce, including any trading facility, that facilitates
the execution of SBSs between persons; and is not a national securities
exchange.\6\ For any trading system or platform that falls within the
SBSEF definition, Rule 803 of Regulation SE requires that system or
platform to register with the Commission as a SBSEF or a national
securities exchange.\7\
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\6\ See 17 CFR 242.802; 15 U.S.C. 78c(77). Rule 802 does not
include in the SBSEF definition any entity that is registered with
the Commission as a clearing agency pursuant to section 17A of the
Act and limits its SBSEF functions to operation of a trading session
that is designed to further the accuracy of end-of-day valuations.
See 17 CFR 242.802; see also 15 U.S.C. 78q-1.
\7\ See 17 CFR 242.803.
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Specifically, Rule 803 of Regulation SE sets forth the requirements
and procedures for registration as a SBSEF, including what must inform
the Commission's determination whether to grant or deny registration.
With respect to granting registration, Rule 803(b)(6)(i) states:
The Commission shall issue an order granting registration upon a
Commission determination, in its own discretion, that the applicant
has demonstrated compliance with the Act and the Commission's rules
applicable to security-based swap execution
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facilities. If deemed appropriate, the Commission may issue an order
granting registration subject to conditions.
And with respect to denying registration, Rule 803(b)(6)(ii)
states:
The Commission may issue an order denying registration upon a
Commission determination, in its own discretion, that the applicant
has not demonstrated compliance with the Act and the Commission's
rules applicable to security-based swap execution facilities. If the
Commission denies an application, it shall specify the grounds for
the denial.
B. Compliance Schedule
In 2011, the Commission published for comment proposed Regulation
SBSEF relating to, among other things, the registration and regulation
of SBSEFs.\8\ After issuing the 2011 SBSEF Proposal, the Commission
granted temporary exemptive relief regarding registration of any SBS
trading venue as a SBSEF, national securities exchange, and/or
broker.\9\ The Temporary SBSEF Exemptions, among other things,
permitted SBS trading venues that were not registered as exchanges or
brokers, and that could not register as SBSEFs (because final rules for
such registration had not been adopted), to continue to trade SBS
products.\10\ According to their terms, the Temporary SBSEF Exemptions
expire upon the earliest compliance date for the Commission's final
rules regarding SBSEF registration.\11\ In 2022, the Commission re-
proposed Regulation SE,\12\ and the Temporary SBSEF Exemptions remained
in force.\13\
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\8\ See Securities Exchange Act Release No. 63825 (Feb. 2,
2011), 76 FR 10948 (Feb. 28, 2011) (``2011 SBSEF Proposal'').
\9\ See Securities Exchange Act Release Nos. 64678 (June 15,
2011), 76 FR 36287 (June 22, 2011); and 64795 (July 1, 2011), 76 FR
39927 (July 7, 2011) (collectively, the ``Temporary SBSEF
Exemptions'').
\10\ See Temporary SBSEF Exemptions, supra note 9; see also
Adopting Release, supra note 5, 88 FR at 87228.
\11\ See Temporary SBSEF Exemptions, supra note 9.
\12\ See Proposing Release, supra note 5.
\13\ See id. at 28874.
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In the Adopting Release, the Commission set forth the following
compliance schedule: (1) the adopted rules became effective on February
13, 2024 (the ``Effective Date''); (2) the Temporary SBSEF Exemptions
expired on August 12, 2024, which was 180 days after the Effective
Date, for any entity that had not filed an application to register with
the Commission on Form SBSEF; (3) for any entity that filed a Form
SBSEF registration application on or before August 12, 2024, and whose
Form SBSEF registration application was complete (having responded to
requests by the Commission's staff for revisions or amendments) on or
before October 11, 2024, which was 240 days after the Effective Date,
the Temporary SBSEF Exemptions expire 30 days after Commission action
to approve or disapprove the Form SBSEF registration application.\14\
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\14\ See Adopting Release, supra note 5, 88 FR at 87237.
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III. Discussion
The SBSEF Applicants each filed a Form SBSEF registration
application on or before August 12, 2024. After initial review focused
on the completeness of each application, the Commission determined that
each application was complete prior to October 11, 2024. Having
determined each application to be complete, the Commission must
determine whether each application has met the requirements of Rule 803
for registration as a SBSEF.
As stated above, pursuant to Rule 803, the Commission must issue an
order granting SBSEF registration upon a Commission determination, in
its own discretion, that the applicant has demonstrated compliance with
the Exchange Act and the Commission's rules applicable to SBSEFs.
Additionally, Rule 818(b) provides that, ``[u]nless otherwise
determined by the Commission, by rule or regulation, a security-based
swap execution facility . . . shall have reasonable discretion in
establishing the manner in which it complies with the core principles
described in section 3D of the Act.'' \15\ The Exchange Act provisions
and Commission rules applicable to SBSEFs are those set forth in the
background section above, namely, the statutory provisions contained in
section 3D of the Exchange Act, and the Commission rules contained in
Regulation SE.
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\15\ 17 CFR 242.818(b).
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After review, the Commission has determined that each SBSEF
Applicant has demonstrated compliance with the Exchange Act and the
Commission rules applicable to SBSEFs. Each SBSEF Applicant's Form
SBSEF application sets forth materials that demonstrate the SBSEF
Applicant's compliance with the requirements of section 3D of the
Exchange Act and Regulation SE that must be met upon a grant of
registration.
IV. Conclusion
It is hereby ordered that the Form SBSEF application filed by each
SBSEF Applicant listed below, pursuant to section 3D(a)(1) of the
Exchange Act and Rule 803 thereunder, be, and hereby is, approved:
(1) Bloomberg SEF LLC (File No. 039-100022).
(2) Tradition SEF, LLC (File No. 039-100035).
(3) GFI Swaps Exchange LLC (File No. 039-100079).
(4) ICE Swap Trade, LLC (File No. 039-100038).
(5) TW SEF LLC (File No. 039-100034).
(6) WEMATCH.LIVE LLC (File No. 039-100017).
(7) tpSEF Inc. (File No. 039-100023).
(8) GLMX Technologies, LLC (File No. 039-100030).
By the Commission.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2025-02162 Filed 2-3-25; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on February 4, 2025.
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