Today is the deadline for market participants who meet the definition of a security-based swap dealer to register with the Commission.[1] And next Monday transaction data will be required to be reported to a swap data depository, and in turn available to the SEC. These are important milestones, and we are pleased that the SEC will have more oversight and visibility into the market for security-based swaps, as envisioned in Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act.[2]

As we continue to implement the various components of this regime, we want to note the importance of carefully monitoring the effectiveness of the Title VII framework. We need to ensure that the data we collect allows us to detect the buildup and concentration of risk, and that the framework effectively guards the financial integrity of security-based swap dealers and major security-based swap participants, thereby reducing risks to investors and the financial system.

In 2019, several key safeguards were weakened or eliminated from the Title VII regime. For example, the final rules on the cross-border application of security-based swap requirements were revised to weaken bad actor protections [3] and remove limits on the amount of security-based swap dealing activity foreign entities may engage in using U.S. personnel,[4] and the final Capital, Margin, and Segregation rules relaxed or removed a number of proposed requirements intended to ensure that entities maintain sufficient capital and margin.[5] We are concerned that these changes have the potential to undermine the effectiveness of the Title VII regime. It is therefore all the more important that we carefully assess the operation of the regime as it goes into effect, and consider whether modifications are necessary.

We appreciate the continued hard work of the SEC staff in standing up this regime, and we look forward to working with them to monitor and evaluate its effectiveness.