Carol McGee
Assistant Director
Office of Derivatives Policy, Division of Trading and Markets
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549

Re: Order Granting a Limited Exemption from the Exchange Act Definition of “Penny Stock” for Security-Based Swap Transactions between Eligible Contract Participants; Granting a limited Exemption from the Exchange Act Definition of “Municipal Securities” for Security-Based Swaps; and Extending Certain Temporary Exemptions under the Exchange Act in Connection with the Revision of the Definition of “Security” to Encompass Security-Based Swaps (Release No. 34-84991; File No. S7-21-11) (the “2019 Extension Order”)

Dear Ms. McGee:

This letter responds to the request by staff of the U.S. Securities and Exchange Commission (the “Commission”) that the Securities Industry and Financial Markets Association (“SIFMA”)1 supplement our submission dated December 20, 2018 (the “December 2018 Submission”)2 regarding the Commission’s Order Extending Until February 5, 2019, Certain Temporary Exemptions under the Securities Exchange Act of 1934 in Connection with the Revision of the Definition of “Security” to Encompass Security-Based Swaps and Request for Comment (the “2018 Extension Order”)3 by providing additional details regarding certain of the exemptions and guidance that we requested in the December 2018 Submission.

I. Background

In 2011, the Commission issued an order (the “Exchange Act Exemptive Order”)4 granting certain temporary exemptive relief (the “Temporary Exemptions”) in connection with the revision of the definition of “security” in the Securities Exchange Act of 1934 (“Exchange Act”) to encompass security-based swaps (“SBS”). In 2014, the Commission issued an order (the “2014 Extension Order”) 5 extended the expiration dates for the Temporary Exemptions. In the 2014 Extension Order, the Commission distinguished between: (i) the Temporary Exemptions related to pending SBS rulemakings (“Linked Temporary Exemptions”); and (ii) the Temporary Exemptions that generally were not directly related to a specific SBS rulemaking (“Unlinked Temporary Exemptions”). The expiration dates for the Linked Temporary Exemptions established by the 2014 Extension Order were the compliance dates for the specific rulemakings to which they were “linked,” and the expiration date for the Unlinked Temporary Exemptions was three years following the effective date of the 2014 Extension Order (i.e., February 5, 2017), or such time that the Commission issues an order or rule determining whether continuing exemptive relief is appropriate for SBS with respect to any such Unlinked Temporary Exemptions. In 2017, the Commission issued an order (the “2017 Extension Order”)6 extending the expiration date of the Unlinked Temporary Exemptions until February 5, 2018. The 2018 Extension Order then extended that expiration date until February 5, 2019. The 2019 Extension Order then granted a permanent exemption from the Exchange Act definition of “penny stock” for SBS transactions between eligible contract participants, granted a limited exemption from the Exchange Act definition of “municipal securities” for SBS, and extended other Unlinked Temporary Exemptions until February 5, 2020.