SEC adopts rules establishing regime for swap data warehouses

Wed Jan 14, 2015 1:45pm EST
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By Sarah N. Lynch

(Reuters) - U.S. securities regulators took another step toward shedding more light on the over-the-counter derivatives market Wednesday, adopting a raft of measures to give them a direct window into the opaque market.

The Securities and Exchange Commission's rules lay out a regulatory framework for "swap data repositories" like those operated by the Depository Trust & Clearing Corp, a specialized warehouse that collects trillions of dollars worth of swaps trades, shares it with regulators, and disseminates aggregated data to the public.

The SEC's rules come more than four years after they were first required by the 2010 Dodd-Frank Wall Street reform law. That law requires direct oversight of the $692 trillion swaps market and calls for a variety of new rules to improve price transparency, reduce risks of defaults and hold banks accountable for misconduct.

"Regulators will rely on (swap data warehouses) for timely, accurate information to monitor concentrations of risk exposures and address potential market abuses," SEC Chair Mary Jo White said.

The Dodd-Frank law split up the responsibility for policing the swaps market between the SEC and the Commodity Futures Trading Commission, with the CFTC winning the lion's share.

The CFTC long ago adopted its own rules for swap data warehouses under its turf.

SEC officials said the new rules are similar to the CFTC's.

They will require data warehouses to register, establish governance standards and designate a chief compliance officer.   Continued...

A general exterior view of the U.S. Securities and Exchange Commission (SEC) headquarters in Washington, June 24, 2011.   REUTERS/Jonathan Ernst