May. 26, 2022
May 26, 2022 I thank you for this opportunity to offer comments and suggestions regarding the proposed rule under file no. S7-14-22: Rules Relating to Security-Based Swap Execution and Registration and Regulation of Security-Based Swap Execution Facilities. 21. For CFTC-registered SEFs, relaxing or eliminating any registration requirements would be highly inappropriate. The Commission must be rigorous in reviewing and approving SBSEFs applicants while upholding complete impartiality. Non-dormant entities registered with the CFTC as SEFs and entities seeking to register with the Commission as SBSEFs that are not registered with the CFTC as SEFs must be held under the same standard to avoid any conflict of interests. As stated by the Commission, in its preliminary beliefs: \"an entity is registered as a SEF and in good standing with the CFTC is relevant when considering its application to register as an SBSEF, and that an abbreviated registration for CFTC-registered SEFs is appropriate\". This statement suggests dependence and reliance on the CFTC's biased judgment and relations with existing SEFs, and won't allow the Commission to have an unprejudiced determination. Therefore, I believe the Commission should not utilize its authority und er Section 36(a)(1) of the SEA to establish an abbreviated procedure for entities wishing to register as SBSEFs that are currently registered as SEFs with the CFTC. 25. The Commission's preliminary belief in the ten-business-day pre-listing review period for self-certified products of proposed Rule 804(a)(2) is adequate and reasonable for the aforementioned reasons such as the allocation of sufficient time for the review of novel or complex products, and potential issuance of a stay on a product by the Commission. 35. Self-certification of a rule, rule amendment, or dormant rules that the Commission had previously approved under Rule 806 via voluntary submissions, or that the SBSEF had previously self-certified under the conditions specified in Rule 807, is acceptable provided that, for any pending rules submission, rule amendments, or dormant rules that an SBSEF seeks to implement, they should always be subjected to review and approval by the Commission beforehand, regardless of the self-certification process defined under Rule 807(a). 36. The Commission should adopt procedures for self-certification of rules that are closely harmonized with CFTC's rules given that they are well understood by SEFs, and adapt any provisions that would benefit the Commission's intended goal. 40. In general, the submission cover sheet and instructions for SBSEF filings should harmonize with the CFTC's. Current entities registered as SEF with the CFTC that would be seeking SBSEF registration to become dual registrants will be able to seamlessly enact the necessary steps in regard to the adoption of proposed Regulation SE due to their familiarity with the CFTC's rules and filings procedures. 42. Any identifiers regarded as necessary should be included on the cover sheet. For an SBSEF, that would include its platform ID under Rule 903(a) of Regulation SBSR, 17 CFR 242.903(a), and standard identifiers that would provide beneficial information to the Commission to conduct and facilitate any potential investigations, or compliance of an SBSEF, and its members with respect of the SEA and the Commission's rules. 44. Regulation SE should include, in general, a rule akin to 40.8 to disclose information from an Applicant applying for its registration as an SBSEF. Being made publicly available brings forth the necessary disclosures and transparency of the SBSEF application system. 47. The Commission's proposed approach of listing specific exhibits, for proposed Rule 808, represents a net positive. Specifying elements of information required for Applicants within exhibits will provide clarity, ease of reference, and display an extensive portrayal of an Applicant. It decouples unrelated information, enables the categorization of correlated information into exhibits, and distinguishes clearly, exhibits that can or cannot be disclosed to the public. By extending the CFTC's general approach, I believe the Commission's approach to proposed Rule 808 is more desirable. 48, 49, 50. In general, Regulation SE should include a rule defining the procedure for staying a product certification or tolling a product review period if such request was made pursuant to SEA Rule 3a68-2 by the SBSEF, SEC, or the CFTC regarding the classification of the product. Enacting a rule loosely modelled on 40.12 regarding an unclear interpretation of a product that could be a swap, SBS, or a mixed swap will alleviate any existing concern and unveil uncertainty. The specific language provided by the Commission under Rule 809 is appropriate. Furthermore, given that an SBSEF submits for review and approval pertaining to swaps or SBS, not to security futures and security futures products, applying proposed Rule 809 onto a security or a future is irrelevant to jurisdictional questions arising from an SBSEF product. Sincerely, J.T.