Document ID: SEC-2023-0681-0001
Agency: sec
Document Type: Proposed Rule
Title: Position Reporting of Large Security-Based Swap Positions; Reopening of Comment Period
Posted Date: 2023-06-26T04:00Z

[Federal Register Volume 88, Number 121 (Monday, June 26, 2023)]
[Proposed Rules]
[Pages 41338-41340]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-13447]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 240

[Release No. 34-97762; File No. S7-32-10]
RIN 3235-AN27

Reopening of Comment Period for Position Reporting of Large 
Security-Based Swap Positions

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule; reopening of comment period.

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SUMMARY: The Securities and Exchange Commission (``SEC'' or 
``Commission'') is reopening the comment period for its proposal, 
Position Reporting of Large Security-Based Swap Positions, Release No. 
34-93784, (Dec. 15, 2021) (``Proposing Release''). In the Proposing 
Release, the Commission proposed for comment a new rule, which would 
require any person with a security-based swap position that exceeds a 
certain threshold to promptly file with the Commission a schedule 
disclosing certain information related to its security-based swap 
position

[[Page 41339]]

(``Proposed Rule''). The Commission is reopening the comment period to 
allow interested persons an opportunity to comment on the additional 
analysis and data contained in a staff memorandum that was added to the 
public comment file on June 20, 2023, including providing comment on 
questions identified below.

DATES: The comment period for the Proposing Release published February 
4, 2022, at 87 FR 6652, is reopened. Comments should be received on or 
before August 21, 2023.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/submitcomments.htm); or

Paper Comments

     Send paper comments to Vanessa A. Countryman, Secretary, 
Securities and Exchange Commission, 100 F Street NE, Washington, DC 
20549-1090.

All submissions should refer to File Number S7-32-10. This file number 
should be included on the subject line if email is used. To help the 
Commission process and review your comments more efficiently, please 
use only one method of submission. The Commission will post all 
submitted comments on the Commission's website (https://www.sec.gov/rules/proposed.shtml). Comments also are available for website viewing 
and printing in the Commission's Public Reference Room, 100 F Street 
NE, Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Operating conditions may limit access to the 
Commission's Public Reference Room. Do not include personal 
identifiable information in submissions; you should submit only 
information that you wish to make available publicly. We may redact in 
part or withhold entirely from publication submitted material that is 
obscene or subject to copyright protection.
    Studies, memoranda, or other substantive items may be added by the 
Commission or staff to the comment file during this rulemaking. A 
notification of the inclusion in the comment file of any such materials 
will be made available on the SEC's website. To ensure direct 
electronic receipt of such notifications, sign up through the ``Stay 
Connected'' option at www.sec.gov to receive notifications by email.

FOR FURTHER INFORMATION CONTACT: Rajal B. Patel, Senior Special 
Counsel, Richard Mo, Senior Special Counsel, Pamela Carmody, Special 
Counsel, or Carol M. McGee, Associate Director, Office of Derivatives 
Policy, Division of Trading and Markets, at (202) 551-5870, U.S. 
Securities and Exchange Commission, 100 F Street NE, Washington, DC 
20549.

SUPPLEMENTARY INFORMATION: This release relates to the Commission's 
Proposed Rule under the Exchange Act of 1934 (``Exchange Act''), new 
rule 17 CFR 240.10B-1 (``Rule 10B-1''), which would require any person 
with a security-based swap position that exceeds a certain threshold to 
promptly file with the Commission a schedule disclosing among other 
things: (1) the applicable security-based swap position; (2) positions 
in any security or loan underlying the security-based swap position; 
and (3) any other instrument relating to the underlying security or 
loan, or group or index of securities or loans. The Proposed Rule 
includes different reporting thresholds for security-based swaps tied 
to debt securities and security-based swaps tied to equity securities. 
Under the proposal, the Commission would make all filings received 
pursuant to the Proposed Rule available to the public, with the goal of 
increasing transparency and oversight in the security-based swap 
market.

I. Background

    As described more fully in the Proposing Release, the Commission 
proposed Rule 10B-1, which would be a large trader position reporting 
rule for security-based swaps.\1\ The Proposed Rule would require 
public reporting of, among other things: (1) certain large positions in 
security-based swaps; (2) positions in any security or loan underlying 
the security-based swap position; and (3) positions in any other 
instrument relating to the underlying security or loan or group or 
index of securities or loans. The Proposed Rule would include a 
specific quantitative threshold for when public reporting is required. 
Specifically, the Proposed Rule would, among other things:
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    \1\ See Prohibition Against Fraud, Manipulation, or Deception in 
Connection With Security-Based Swaps; Prohibition Against Undue 
Influence Over Chief Compliance Officers; Position Reporting of 
Large Security-Based Swap Positions, Release No. 34-93784 (Dec. 15, 
2021) [87 FR 6652 (Feb. 4, 2022)]. On June 7, 2023, the Commission 
adopted rules regarding a prohibition against fraud, manipulation, 
or deception in connection with security-based swaps, and a 
prohibition against undue influence over chief compliance officers, 
which the Commission proposed along with Rule 10B-1 in the Proposing 
Release.
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    1. Require any person (and any entity controlling, controlled by or 
under common control with such person), or group of persons, who 
through any contract, arrangement, understanding or relationship, after 
acquiring or selling directly or indirectly, any security-based swap, 
is directly or indirectly the owner or seller of a Security-Based Swap 
Position \2\ that exceeds the Reporting Threshold Amount, to promptly 
file with the Commission a statement containing the information 
required by Schedule 10B on the Commission's EDGAR system. These 
reports would be made publicly available immediately upon filing; \3\
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    \2\ Capitalized terms not defined in this release have the 
meaning set forth in the Proposing Release.
    \3\ See proposed Rule 10B-1(a)(1).
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    2. Require that any Schedule 10B be filed promptly, but in no event 
later than the end of the first business day following the day of 
execution of the security-based swap transaction that results in the 
Security-Based Swap Position first exceeding the Reporting Threshold 
Amount; \4\
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    \4\ See proposed Rule 10B-1(a)(2).
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    3. Provide that a group's filing obligation may be satisfied either 
by a single joint filing or by each of the group members making an 
individual filing; \5\
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    \5\ See proposed Rule 10B-1(a)(3).
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    4. Contain a provision intended to prevent evasion of the reporting 
requirement; \6\
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    \6\ See proposed Rule 10B-1(a)(4).
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    5. Require a person who has previously filed a Schedule 10B with 
the Commission to file an amendment if any material change occurs in 
the facts set forth in a previously filed Schedule 10B including, but 
not limited to, any material increase in the Security-Based Swap 
Positions or if a Security-Based Swap Position falls back below the 
applicable Reporting Threshold Amount; \7\
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    \7\ See proposed Rule 10B-1(c).
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    6. Contain key definitions for determining the scope of the 
position to be disclosed, including for the terms ``Reporting Threshold 
Amount'' and ``Security-Based Swap Position''; \8\
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    \8\ See proposed Rule 10B-1(b).
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    7. Specify the information required to be included in a Schedule 
10B; \9\
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    \9\ See proposed Rule 10B-101.
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    8. Specify the territorial scope of the reporting requirements; 
\10\ and
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    \10\ See proposed Rule 10B-1(d).
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    9. Require filers to submit Schedule 10B using a structured, 
machine-readable data language.\11\
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    \11\ See Proposing Release, 87 FR at 6675.
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II. Reopening of Comment Period

    Since the publication of the Proposing Release, the staff of the 
Division of Economic and Risk Analysis has prepared a memorandum that 
provides

[[Page 41340]]

supplemental data and analysis related to anticipated economic effects 
of the Proposed Rule.\12\
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    \12\ Memorandum of the Staff of the Division of Economic and 
Risk Analysis, Supplemental data and analysis regarding the proposed 
reporting thresholds in the equity security-based swap market (June 
20, 2023), available at https://www.sec.gov/comments/s7-32-10/s73210.htm.
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    We believe that the information presented in the memorandum has the 
potential to be informative for purposes of further evaluating the 
Proposed Rule. We are, therefore, reopening the comment period to 
permit interested parties to comment on the staff memorandum, which has 
been included in the comment file. Given the information presented in 
the memorandum, we seek comment regarding whether the Reporting 
Threshold Amounts in the Proposed Rule should be higher or lower. 
Specifically, in addition to the requests for comment included in the 
Proposing Release, the Commission seeks comments on the following:

Request for Comment

    1. In general, the Commission requests comment on the proposed 
Reporting Threshold Amount for each asset class (e.g., equity security-
based swaps, CDS, non-CDS debt security-based swaps, etc.).
    2. With respect to each asset class, should the Reporting Threshold 
Amount in any final rule be higher or lower than the proposed Reporting 
Threshold Amount if:
    a. Consistent with the Proposed Rule, such final rule requires, at 
an interim threshold, the inclusion of the value of related securities 
owned by the holder of the security-based swap position in the 
calculation of the Reporting Threshold Amount?
    b. Such final rule does not require the inclusion of related 
securities owned by the holder of the security-based swap position in 
those calculations?
    c. Such final rule permits offsetting of security-based swap 
positions with identical terms (e.g., offsetting long positions with 
short positions, but only if the security-based swap positions 
reference the same product identifier)?
    d. Consistent with the Proposed Rule, such final rule requires 
aggregation of security-based swap positions by any person (and any 
entity controlling, controlled by or under common control with such 
person) or group of persons, who through any contract, arrangement, 
understanding or relationship, after acquiring or selling directly or 
indirectly, any security-based swap, is directly or indirectly the 
owner or seller of a security-based swap position that exceeds the 
Reporting Threshold Amount?
    e. Such final rule does not require aggregation of security-based 
swap positions across entities that are both separately legally 
established and capitalized (unless a guarantee exists)?
    f. Such final rule does not require aggregation of security-based 
swap positions across entities that are both separately legally 
established and capitalized (unless a guarantee exists), unless acting 
as a group with a common purpose?
    g. Such final rule requires aggregation of security-based swap 
positions established by transactions effected for such person's own 
account and of security-based swap positions established by 
transactions effected for the account of others, when that person 
shares in the economic risk in the other accounts or otherwise controls 
the account?
    h. Such final rule does not require the Reporting Threshold Amount 
to include security-based swap positions entered into by a person with 
an entity or person controlling, controlled by, or under common control 
with that person?
    i. Such final rule requires or does not require aggregation or 
inclusion of transactions pursuant to any combination of the options 
listed in items (a) through (h) above?
    We encourage any interested person to submit comments, including 
comments on the data or methodology used in the analysis contained in 
the memorandum and on how this analysis should inform our consideration 
of the economic effects of the Proposed Rule. If any commenters who 
have already submitted a comment letter wish to provide supplemental or 
updated comments, we encourage them to do so. Comments are of 
particular assistance if accompanied by supporting data and analysis of 
the issues addressed in those comments.

    By the Commission.

    Dated: June 20, 2023.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2023-13447 Filed 6-23-23; 8:45 am]
BILLING CODE 8011-01-P