On July 13, 2016, the SEC adopted final rules amending Regulation SBSR (Reg SBSR), which details reporting and public dissemination obligations for security-based swap (SBS) transaction data (see Practice Note, US Derivatives Regulation: SEC Regulation SBSR Data Reporting for Security-Based Swaps). The amendment also contained guidance for reporting SBS executed by an asset manager on behalf of multiple clients (known as a “bunched order”).

The amendments to Reg SBSR include:

Amendments to Rule 908(a) extending Reg SBSR’s data reporting and public dissemination requirements to cross-border SBS, see Practice Note, The Dodd-Frank Act: Cross-Border Application of Swaps Rules: SEC Cross-Border Security-Based Swaps Rule.

Bunched orders. Guidance included in the amendment addresses how Reg SBSR applies to bunched order executions. In the guidance, the SEC explains that the reporting hierarchy of Rule 901(a)(2)(ii) will apply to the reporting of the original bunched order executions submitted for clearing. The reporting of the resulting SBS from the allocation of the original bunched order, however, will be different if a registered clearing agency is involved. Namely, the timing of providing allocation instructions in relation to the clearing of the bunched order alpha will be important in the creation of beta and gamma.

Dual reporting. Clearinghouses registered with both the CFTC as a derivatives clearing organization (DCO) and the SEC as a clearing agency will have to submit more reports – and likely duplicative ones – because reporting obligations under Reg SBSR are in addition to the obligations under the relevant CFTC reporting rules (see Practice Note, US Derivatives Regulation: SEC Regulations SBSR Data Reporting for Security-Backed-Swaps: Duplicative Reporting Obligations for SBS Under CFTC Rules).

Cross-border reporting. The final rules clarify that data for any SBS transaction "arranged, negotiated, or executed" on behalf of a non-US person by that non-US person's agent or other personnel located in a US branch or office must be reported and publicly disseminated.

If the SBS is arranged, negotiated, or executed in the US:

If the SBS is arranged between two non-US persons who are not engaged in SBS dealing activity in the US, then Reg SBSR does not apply. If, however, the SBS is conducted by or through a security-based SEF registered with the SEC (or other registered broker-dealer), then the security-based SEF is the reporting party.

Compliance dates. The final rule technically becomes effective October 11, 2016. However, registered SBSDRs and entities with a duty to report SBS data will be subject to the following compliance schedule for reporting:

Note that for Compliance Date 1, the SEC has, for the second time, pushed back the registration and compliance date for SB SDRs to April 1, 2017. For details, see Legal Update, SEC Pushes Back Registration and Compliance Date for Security-Based SDRs.