On September 29, 2016 the Securities and Exchange Commission (SEC) issued an extension, from October 5, 2016 to April 1, 2017, for its final rule on security based swap data repository (SBSDR) registration, duties and core principles. The extension gives SEC staff more time to review the applications of SBSDRs that would accept the security-based swap data required to be reported under the SEC’s swap reporting regime (Regulation SBSR). Thus far only two entities have submitted applications to be SBSDRs, ICE Trade Vault and DTCC Data Repository.
The SEC’s extension followed amendments, and related guidance, that the SEC published on July 13, 2016, which established a revised compliance schedule providing that the regulatory reporting requirements will not begin until the first Monday that is the later of: (1) one month after security-based swap dealers register with the SEC or (2) six months after the date on which the first SBSDR that can accept transaction reports for the particular asset class in question registers with the SEC (Compliance Date 1). This mitigates the concerns of many buy-side commenters, which, under the SEC’s originally proposed compliance schedule, would have been required to potentially report security-based swaps prior to security-based swap dealer registration. Triggering reporting requirements off security-based swap dealer registration will alleviate a potential reporting burden for buy-side firms. Public dissemination of transactions for a particular asset class would follow three months after Compliance Date 1.
As a consequence of these modifications, a ballpark of the earliest initial compliance dates would be some time during Q4 2017. Be aware that, as with the rollout of many Dodd-Frank compliance dates, this is a moving target. However, in order to prepare for the eventual implementation of security-based swap reporting, an initial action step for financial entities that trade CDS, TRS or other swaps over single names or narrow-based indices is to comprehensively review their pool of counterparties in order to determine whether they face entities that intend to register as security-based swap dealers (or major security-based swap participants).