Registration and Regulation of Security-Based Swap Execution Facilities

The Asset Management Group (AMG) of SIFMA provides comments to the Securities and Exchange Commission (SEC) on the registration and regulation of security-based swap execution facilities (SB SEFs), Release No. 34–63825; File No. S7–07–11.  SIFMA AMG shares its observations and recommendations, including:

• Block trades should be given a broad exemption from minimum pre-trade transparency and order interaction requirements.
• SB SEFs should not be permitted to impose heightened capital requirements for participants in excess of those imposed on such participants by the SEC.
• The SEC and the Commodity Futures Trading Commission (CFTC) must harmonize their final rulemakings with respect to SEFs and SB SEFs due to differing rule proposals for similar transactions.  Requiring market participants to execute similar transactions in dissimilar ways will create confusion and increased compliance costs.
• The number of participants actively trading an SB swap, frequency of trading and transaction size should be among the objective criteria that swap review committees of SB SEFs must consider in determining whether a swap is available to trade.

SIFMA filed a joint letter with the International Swaps and Derivatives Association, Inc. (ISDA) on this proposal on April 4, 2011.

Previously, SIFMA AMG provided the SEC and the Commodity Futures Trading Commission (CFTC)  with its views on SEFs and SB SEFs requirements in a pre-rulemaking comment letter dated November 24, 2010, and on block trading definitions and reporting issues in a comment letter dated February 7, 2011.