Staff Statement on Submissions

Staff Statement on Submitting Notices, Statements, Applications, and Reports for Security-Based Swap Dealers and Major Security-Based Swap Participants Pursuant to the Financial Responsibility Rules (Exchange Act Rules 18a-1 through 18a-10)

The staff of the Division of Trading and Markets has prepared the following statement regarding the submission of notices, statements, applications, and reports for security-based swap dealers and major security-based swap participants pursuant to Exchange Act Rules 18a-1 through 18a-10 (17 CFR 240.18a-1 through 18a-10). This statement represents the views of the staff of the Division of Trading and Markets. It is not a rule, regulation, or statement of the Commission. The Commission has neither approved nor disapproved this content. These statements, like all staff statements, have no legal force or effect: they do not alter or amend applicable law, and they create no new or additional obligations for any person.

Exchange Act Rules 18a-1 through 18a-10 impose requirements on security-based swap dealers and major security-based swap participants to submit notifications, statements, applications and reports to the Commission. Commission orders granting substituted compliance with respect to Rules 18a-1 through 18a-9 include conditions that security-based swap dealers and major security-based swap participants operating pursuant to the orders must meet by, among other things, submitting notices and reports to the Commission.

For general inquiries to the Division of Trading and Markets on these matters, you may call 202-551-5777 (Office of Interpretation and Guidance). Inquiries may also be made by email to tradingandmarkets@sec.gov. Please include a telephone number or email address that the Division staff can use to contact you. Paper submissions submitted to the Commission at its principal office in Washington, D.C. should be mailed or delivered to the following address: Securities and Exchange Commission, Division of Trading and Markets, Mail Stop 7010, 100 F Street NE, Washington, DC 20549.

Application to use models to compute deductions for market risk and credit risk under paragraphs (d)(1) and notice under paragraph (d)(4) of Rule 18a-1

Submit applications, as well as notices if any of the information in an application is found to be or becomes inaccurate, to the Commission at its principal office in Washington, D.C. The applications and notices may be submitted by email to SBS-OTCDDrequests@sec.gov.

Amendment to application to compute deductions for market risk and credit risk under paragraph (d)(6) of Rule 18a-1

Amendments to an application to compute deductions for market risk and credit risk may be submitted by email to SBS-OTCDDrequests@sec.gov.

Notice of intent to cease computing deductions for market risk and credit risk using models under paragraph (d)(7)(i) of Rule 18a-1

Notify the Commission at its principal office in Washington, DC 45 days before the entity ceases to compute deductions for market and credit risk using models. These notices may be submitted by email to SBS-OTCDDnotices@sec.gov.

Notice of withdrawal of equity capital under paragraph (h)(1) of Rule 18a-1

File notices under this provision with: (1) the Commission at the Commission’s principal office in Washington, D.C.; (2) the Commission’s regional office for the region in which the entity’s principal place of business is located (contact information for the Commission’s regional offices is available at http://www.sec.gov/contact-information/sec-directory); and (3) the Commodity Futures Trading Commission (“CFTC”) if the entity is also registered with the CFTC. The notice to the Commission’s principal office may be submitted by email to SBS-OTCDDnotices@sec.gov.

Filing of proposed subordinated loan agreements under paragraph (c)(5) of Rule 18a-1d

The proposed agreement and certain information specified in paragraph (c)(5) must be filed with the Commission at least 30 days prior to the proposed execution date of the agreement. For paper submissions, file two copies with the Commission at the Commission’s principal office in Washington, D.C. The submissions may be filed by email to SBS-OTCDDrequests@sec.gov in lieu of paper filing.

Permissive pre-payments of subordinated loans under paragraph (b)(6) of Rule 18a-1d

The security-based swap dealer must receive prior written approval of the Commission in order to make these pre-payments. Requests may be sent to the Commission by email to SBS-OTCDDrequests@sec.gov.

Notice of accelerated maturity of subordinated loans under paragraphs (b)(8) and (b)(9) of Rule 18a-1d

Notices may be sent to the Commission by email to SBS-OTCDDrequests@sec.gov.

Notice regarding subordinated loans under paragraph (c)(2) of Rule 18a-1d

Notices may be sent to the Commission by email to SBS-OTCDDnotices@sec.gov.

Permissive pre-payments of revolving subordinated loans under paragraph (c)(4) of Rule 18a-1d

The security-based swap dealer must receive prior written approval of the Commission in order to make these pre-payments. Requests may be sent to the Commission by email to SBS-OTCDDrequests@sec.gov.

Application to use models to compute initial margin under paragraph (d)(2)(ii) of Rule 18a-3

Submit applications in accordance with paragraph (d)(2)(ii) of Rule 18a-3 with the Commission at the Commission’s principal office in Washington, D.C. Applications may be submitted by email to SBS-OTCDDrequests@sec.gov.

Application for control location for excess securities collateral under paragraph (b)(2)(v) of Rule 18a-4

The application may be sent to the Commission by email to SBS-OTCDDrequests@sec.gov.

Notice of intent to rely on CFTC recordkeeping rules under paragraph (c)(6) of Rule 18a-5

Submit written notices under this provision with: (1) the Commission at its principal office in Washington, DC; and (2) the Commission’s regional office for the region in which the entity’s principal place of business is located (contact information for the Commission’s regional offices is available at http://www.sec.gov/contact-information/sec-directory). The notice to the Commission’s principal office may be submitted by email to SBS-OTCDDnotices@sec.gov.

Rule 18a-6(e)(3)(v) Designated third-party or designated executive officer undertaking

Undertakings under this rule may submitted to the Commission by email to SBS-OTCDDnotices@sec.gov.

Rule 18a-6(f)(1) third-party recordkeeper undertaking regarding access to records

A third party undertaking under this rule may submitted to the Commission by email to SBS-OTCDDnotices@sec.gov.

Monthly or quarterly FOCUS Reports under paragraphs (a)(1) and (a)(2) of Rule 18a-7

Firms filing FOCUS Reports pursuant to Rule 18a-7 must file the reports through the SEC eFOCUS system operated by FINRA. A training video for the SEC eFOCUS system is available at https://youtu.be/B9z0YCNj_co. Any questions about accessing the SEC eFOCUS system should be directed to SBS-OTCDDrequests@sec.gov.

Additional reports under paragraph (a)(3) of Rule 18a-7 required of entities approved to use models to compute net capital

File the reports with the Commission at the Commission’s principal office in Washington, D.C. The reports may be submitted by email to SBS-OTCDDnotices@sec.gov.

Statement regarding independent public accountant and notice of replacement of accountant under paragraphs (e)(2) and (e)(3) of Rule 18a-7

File notices under this provision with: (1) the Commission at its principal office in Washington, DC; and (2) the Commission’s regional office for the region in which the entity’s principal place of business is located (contact information for the Commission’s regional offices is available at https://www.sec.gov/contact-information/sec-directory). The notice to the Commission’s principal office may be submitted by email to SBS-OTCDDnotices@sec.gov.

Notice of non-compliance or material weakness under paragraph (g) of Rule 18a-7

The notices may be filed with the Commission by email to SBS-OTCDDnotices@sec.gov.

Notice of fiscal year change under paragraph (i) of Rule 18a-7

File notices under this provision with: (1) the Commission at its principal office in Washington, DC; and (2) the Commission’s regional office for the region in which the entity’s principal place of business is located (contact information for the Commission’s regional offices is available at https://www.sec.gov/contact-information/sec-directory). The notice to the Commission’s principal office may be submitted by email to SBS-OTCDDnotices@sec.gov.

Notifications under Rule 18a-8

Submit notices under this rule with: (1) the Commission at the Commission’s principal office in Washington, D.C.; (2) the Commission’s regional office for the region in which the entity’s principal place of business is located (contact information for the Commission’s regional offices is available at https://www.sec.gov/contact-information/sec-directory); and (3) the CFTC if the entity also is registered with the CFTC as a futures commission merchant. The notice to the Commission’s principal office may be submitted by email to SBS-OTCDDnotices@sec.gov.

Alternative compliance mechanism notices under paragraphs (b)(3) and (b)(4) of Rule 18a-10

Submit notices under this rule with: (1) the Commission at the Commission’s principal office in Washington, D.C.; (2) the Commission’s regional office for the region in which the entity’s principal place of business is located (contact information for the Commission’s regional offices is available at https://www.sec.gov/contact-information/sec-directory); and (3) the CFTC. The notice to the Commission’s principal office may be submitted by email to SBS-OTCDDnotices@sec.gov.

Annual audited reports under paragraph (c) of Rule 18a-7

Electronic Filing

The annual reports may be filed electronically through the Commission’s EDGAR system. Instructions for filing through EDGAR are available at Electronic Filing of Form X-17A-5 Part III (Broker-dealer, SBSD, and MSBSP Annual Reports).

Filers can contact the Commission’s electronic filer support at (202) 551-8900, option 3 (technicians are available live from 9:00 am-5:30 pm EST Monday-Friday) or filertechunit@sec.gov for procedural and technical questions. Substantive questions regarding an entity’s filing requirements should be directed to the Division of Trading and Markets by calling (202) 551-5777 or by e-mailing tradingandmarkets@sec.gov. Please include a telephone number in your voice message or e-mail that the Division staff can use to contact you.

Paper Filing

File the reports with: (1) the Commission at its principal office in Washington, DC at the following address: Securities and Exchange Commission, Division of Trading and Markets, Mail Stop 7010, 100 F Street NE, Washington, DC 20549; and (2) the Commission’s regional office for the region in which the entity’s principal place of business is located (contact information for the Commission’s regional offices is available at http://www.sec.gov/contact-information/sec-directory).

Notification and Submission Requirements Relating to Applying Substituted Compliance with respect to the Financial Responsibility Rules

Applying substituted compliance with respect to Rule 18a-1 – Notify the Commission of failure to meet capital condition in a substituted compliance order

The notice should be sent to the Commission by email to SBS-OTCDDnotices@sec.gov.

Applying no-action position with respect to Rule 18a-7(a)(2) – Notify Division staff of failure to maintain minimum capital required under local law

The notice should be sent to the Commission by email to SBS-OTCDDnotices@sec.gov.

Applying substituted compliance or no-action position with respect to paragraph (a) of Rule 18a-7 – File periodic financial and operational information in a substituted compliance order or Division staff no-action position

Firms applying a substituted compliance order or Division staff no-action position with respect to paragraph (a) of Rule 18a-7 must file FOCUS Reports through the SEC eFOCUS system operated by FINRA. A training video for the SEC eFOCUS system is available at https://youtu.be/B9z0YCNj_co. Any questions about accessing the SEC eFOCUS system should be directed to SBS-OTCDDrequests@sec.gov.

Applying substituted compliance with respect to paragraph (c) of Rule 18a-7 – File annual audited reports required under local law

The annual reports should be filed electronically through the Commission’s EDGAR system. Instructions for filing through EDGAR are available at Electronic Filing of Form X-17A-5 Part III (Broker-dealer, SBSD, and MSBSP Annual Reports).

Filers can contact the Commission’s electronic filer support at (202) 551-8900, option 3 (technicians are available live from 9:00 am-5:30 pm EST Monday-Friday) or filertechunit@sec.gov for procedural and technical questions. Substantive questions regarding an entity’s filing requirements should be directed to the Division of Trading and Markets by calling (202) 551-5777 or by e-mailing tradingandmarkets@sec.gov. Please include a telephone number in your voice message or e-mail that the Division staff can use to contact you.

Applying substituted compliance with respect to paragraph (i) of Rule 18a-7 – Notify the Commission of fiscal year change in a substituted compliance order

The notices should be sent to the Commission by email to SBS-OTCDDnotices@sec.gov.

Applying substituted compliance with respect to Rule 18a-8 – Submit notifications to the Commission in a substituted compliance order

The notifications should be sent to the Commission by email to SBS-OTCDDnotices@sec.gov.