Security-Based Swap CCO/Supervision Standards
Summary
SIFMA provides comments to the Securities and Exchange Commission (SEC) on the internal business conduct standards for security-based swap dealers and major security-based swap participants. SIFMA’s recommended modifications are generally intended to harmonize the Proposed Rules with the FINRA Supervision Rule, the FINRA CCO Rule and the CFTC CCO Rule. Harmonization of the rules will allow SBS Entities to leverage existing processes and speed implementation. It will also enhance the ability of SBS Entities to identify and remediate non-compliance issues by permitting personnel to focus on the substance of issues rather than allocating resources to comply with the formalities of multiple overlapping but slightly differing rules.
Excerpt
Brent Fields
Secretary, Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549-1090
Re: Business Conduct Standards for Security-Based Swap Dealers and Major SecurityBased Swap Participants; File No. S7-25-11 (the “Proposed Rules”)1
Dear Mr. Fields:
The Securities Industry and Financial Markets Association (“SIFMA”)2 appreciates the opportunity to provide the Securities and Exchange Commission (the “SEC”) with additional comments on the internal business conduct standards for security-based swap (“SBS”) dealers and major SBS participants (together “SBS Entities”) contained in the Proposed Rules. In
particular, our additional comments pertain to Proposed Rules 15Fh-3(h) (Supervision) and 15Fk-1 (Designation of Chief Compliance Officer for SBS entities). Please refer to our letter
submitted August 7, 2015 for our additional comments on the other aspects of the Proposed Rules.
Our comments are informed by SIFMA members’ experiences complying with the parallel supervision rule for broker-dealers adopted by the Financial Industry Regulatory Authority (“FINRA”) in 2014 (the “FINRA Supervision Rule”), appreciates the opportunity to provide the Securities and Exchange Commission (the “SEC”) 3 FINRA’s chief compliance officer (“CCO”) rule for broker-dealers (the “FINRA CCO Rule”)4 and the CCO rule for swap dealers and major swap participants adopted by the Commodity Futures Trading Commission (“CFTC”) in 2012 (the “CFTC CCO Rule”).5 1 Release No. 34-69491, 76 Fed. Reg. 42396 (July 18, 2011). We have provided our comments in the attached matrix, which includes (i) the text of the Proposed Rules with our recommended modifications underlined and bolded and (ii) explanations for why we recommend that the SEC adopt those
modifications.