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U.S. Securities and Exchange Commission

Speech by SEC Chairman:
Opening Statement at the SEC Open Meeting
Item 4 — Proposed Regulation SBSR


Chairman Mary L. Schapiro

U.S. Securities and Exchange Commission

Washington, D.C.
November 19, 2010

Next, we will consider a rule that would describe how information about security-based swap transactions should be reported and publicly disseminated.

Like the previous rule, this proposal also originates from Title VII of the Dodd-Frank Act authorizing the Commission to regulate security-based swaps.

This rule — known as Regulation SBSR — also represents an important step in the Commission’s continuing effort to increase the transparency of the security-based swap market and fulfill mandates under the Dodd-Frank Act.

Whereas the previous rule outlined the parameters and obligations of the data repositories, this rule speaks to those who would be responsible for reporting the security-based swap information to the repositories.

Among other things, this proposed rule lays out who must do the reporting, what information must be reported and where and when it must be reported.

The proposed rule also would set forth which information needs to be publicly disseminated, as opposed to simply reported to the repository.

Under the proposed rule, one party to a security-based swap transaction would have to report information about the transaction to a registered security-based swap data repository. Some of the information would be reported in real-time.

In turn, the registered repository — under this rule — would be required to publicly disseminate certain of that information in real-time.

The proposed rules also discuss when transaction information about block trades would be required to be disseminated, and a proposed framework for determining what would be a block trade.

To provide all market participants sufficient time to implement the rules, Regulation SBSR proposes a phased-in approach to reporting and public dissemination.

Together with the previous proposed rules, these actions are designed to bring greater transparency to the financial system, further reduce systemic risk, and provide the Commission important tools to better protect investors.

With ready access to more in-depth and timely information on all security-based swap transactions, the Commission would be able to gain a better overall appreciation of the size and scope of the market. We would gain a better understanding of the players involved and we would be better able to track an emerging risk cascading through the system.

Finally, the proposed rules would provide for post-trade transparency in the security-based swap markets, by requiring the real-time dissemination of certain transaction information to the public. In this manner, the proposed rules are designed to provide all market participants access to transaction information at the same time.

We recognize the concerns expressed by market participants about the impact on the security-based swap market of public transparency for large, block trades. So, the proposed rules include a separate discussion of the way we propose to handle such dissemination.

Before I ask Robert Cook, Director of the Division of Trading and Markets, to discuss the proposed rules, I would like to thank Robert, as well as Heather Seidel, Gregg Berman, Tom Eady, Michael Gaw, David Michehl, Sarah Albertson, Christopher Chow, Natasha Cowen, Yvonne Fraticelli, Geoff Pemble, Brian Trackman, Mia Zur, Yue Ding and Kathleen Gray from the Division of Trading and Markets for their hard work on this rulemaking.

Thanks as well to David Blass and Hope Jarkowski from the Office of the General Counsel; Amy Edwards, Scott Bauguess, Adam Glass, Cecilia Caglio, and Laura Serban from the Division of Risk, Strategy, and Financial Innovation; and

Amy Starr from the Division of Corporation Finance.

The staff has worked countless hours on the rulemakings thus far, with many more hours to come. I would like to thank you all for the tremendous efforts that you have put forth.

Finally, I would like to thank the other Commissioners and all of our counsels for their work and comments on the proposed rule.

Now I'll turn the meeting over to Robert Cook to hear more about the Division’s recommendations.



Modified: 11/19/2010