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U.S. Securities and Exchange Commission

Speech by SEC Chairman:
Opening Statement at the SEC Open Meeting
Item 3 — Security-Based Swap Data Repository Registration, Duties, and Core Principles


Chairman Mary L. Schapiro

U.S. Securities and Exchange Commission

Washington, D.C.
November 19, 2010

We now turn to rules related to the over-the-counter derivative market.

And, we begin with a proposal outlining the duties and core principles of security-based swap data repositories.

This proposal originates from Title VII of the Dodd-Frank Act which authorizes the Commission to regulate security-based swaps.

To encourage accountability and transparency in the security-based swap market, Congress created centralized recordkeeping facilities, known as security-based swap data repositories. The purpose of these repositories is to retain and maintain complete records of security-based swap transactions, and to ensure that those records can be accessed by regulators and others, where appropriate.

The need for these repositories stems from the opaque nature of the swaps market – a market where transaction-level data has not been widely available or required to be recorded. As such, regulators have not had ready access to information that could reveal market abuses or that could otherwise expose systemic risk.

These repositories are not only in a position to centralize data about swap transactions but also to reduce uncertainty that often undermines market integrity, particularly at times of stress. For example, when AIG collapsed, market participants lacked information regarding their own swap transactions and regulators were unable to fully assess the effect that the failure of any one participant would have on the derivatives and securities markets.

Within the past three years, the industry, with the encouragement of regulators, has begun establishing repositories covering significant portions of the swaps market.

The rules proposed today are intended to build on these efforts and implement the requirements of the Dodd-Frank Act

Today’s proposed rules describe the way in which security-based swap repositories would register with the Commission as required by the financial reform legislation.

Among other things, the proposed rules also would require the repositories to:

  • Provide swap data to the Commission and other relevant authorities.
  • Designate a chief compliance officer responsible for preparing and filing annual compliance reports.
  • Adopt policies and procedures outlining which market participants can access the data, and how.
  • Develop policies and procedures to minimize any conflicts of interest.

We fully appreciate that as we set out to regulate these repositories, we must strike the appropriate balance so that we neither discourage competition among these entities, nor compromise the integrity of the swaps data that is collected.

These repositories have a crucial role to play in the development of a healthy and robust security-based swap market.

Before I turn to Robert Cook, I would like to thank Robert, Nathaniel Stankard, John Ramsay, Jo Anne Swindler, Richard Vorosmarti, Angie Le, Bradley Gude, and Miles Treakle from the Division of Trading and Markets for the long hours and hard work they have devoted to preparing the recommendations before us.

Thank you as well to David Blass, Uzma Wahhab, and Hope Jarkowski, from the Office of the General Counsel; and Adam Glass, Scott Bauguess, and Eric Carr from the Division of Risk, Strategy, and Financial Innovation.

Now I will ask Robert to provide us with additional details about the Division’s recommendations.



Modified: 11/19/2010