On June 8, the Securities and Exchange Commission announced the adoption of the Securities Exchange Act of 1934 (Exchange Act) Rules 15Fi-1 and 15Fi-2, which establish new trade acknowledgement and verification requirements for security-based swap (SBS) entities entering into SBS transactions.
Under the new rules, SBS entities must provide trade counterparties with an electronic trade acknowledgement containing all of a given transaction’s terms no later than the first business day following the trade execution date. In addition, SBS entities also will be required to promptly verify or dispute any terms contained in the trade acknowledgement with the counterparty. To supplement the verification requirement, SBS entities will be required to maintain written policies and procedures reasonably designed to verify the terms outlined in such trade acknowledgements.
Due to the role of certain market infrastructures in the SBS market, the final rule exempts certain transactions processed through a registered clearing agency, SBS execution facility or national securities exchange from the new requirements. SBS entities that are broker-dealers also will be exempt from Exchange Act Rule 10b-10 by satisfying these requirements.
The final rules will be effective 60 days after publication in the Federal Register. Once the final rules become effective, non-US SBS entities may be able to satisfy the rules by complying with comparable foreign requirements.
A copy of the final rule is available here.