Document ID: SEC-2022-0678-0001
Agency: sec
Document Type: Notice
Title: Data Collection Initiation Date and Contingent Phase-In Termination Date: De Minimis Notional Thresholds of Security-Based Swap Dealing
Posted Date: 2022-05-17T04:00Z

[Federal Register Volume 87, Number 95 (Tuesday, May 17, 2022)]
[Notices]
[Pages 29986-29987]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-10511]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94896/May 11, 2022]

Data Collection Initiation Date and Contingent Phase-In 
Termination Date for the De Minimis Notional Thresholds of Security-
Based Swap Dealing

AGENCY: Securities and Exchange Commission.

ACTION: Commission announcement.

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SUMMARY: The definition of ``security-based swap dealer'' is subject to 
a de minimis exception whereby a person is deemed not to be a security-
based swap dealer as a result of security-based swap dealing activity 
that falls below certain de minimis thresholds. These de minimis 
thresholds are subject to temporarily higher, phase-in levels of 
security-based swap dealing activity that will be in effect until the 
``phase-in termination date.'' The phase-in termination date will be 
determined in part by reference to a ``data collection initiation 
date.'' The Commission is making this announcement to confirm that the 
data collection initiation date was November 8, 2021, and, absent 
additional Commission action, the phase-in termination date shall be 
November 8, 2026.

DATES: The data collection initiation date referenced in 17 CFR 
240.3a71-2 and 240.3a71-2A, was November 8, 2021. Absent additional 
action by the Commission pursuant to 17 CFR 240.3a71-2(a)(2)(ii)(A), 
the phase-in termination date will be November 8, 2026.

FOR FURTHER INFORMATION CONTACT: Carol McGee, Assistant Director, Laura 
Compton, Senior Special Counsel, Office of Derivatives Policy, Division 
of Trading and Markets, at (202) 551-5870.

SUPPLEMENTARY INFORMATION: For purposes of this announcement, the 
Commission uses the following terms:

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          Commission reference                CFR citation (17 CFR)
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Securities Exchange Act of 1934 \1\
 (``Exchange Act''):
    Rule 3a71-2........................  Sec.   240.3a71-2.
    Rule 3a71-2(a).....................  Sec.   240.3a71-2(a).
    Rule 3a71-2(a)(1)(i)...............  Sec.   240.3a71-2(a)(1)(i).
    Rule 3a71-2(a)(1)(ii)..............  Sec.   240.3a71-2(a)(1)(ii).
    Rule 3a71-2(a)(2)(i)...............  Sec.   240.3a71-2(a)(2)(i).
    Rule 3a71-2(a)(2)(ii)(A)...........  Sec.   240.3a71-2(a)(2)(ii)(A).
    Rule 3a71-2(a)(2)(ii)(B)...........  Sec.   240.3a71-2(a)(2)(ii)(B).
    Rule 3a71-2(a)(2)(iii).............  Sec.   240.3a71-2(a)(2)(iii).
    Rule 3a71-2A.......................  Sec.   240.3a71-2A.
    Rule 3a71-2A(a)(1).................  Sec.   240.3a71-2A(a)(1).
    Rule 3a71-2A(b) through (c)........  Sec.  Sec.   240.3a71-2A(b)
                                          through (c).
    Rule 3a71-2A note..................  Sec.   240.3a71-2A note.
    Regulation SBSR....................  Sec.  Sec.   242.900 through
                                          242.909.
------------------------------------------------------------------------

Background
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    \1\ 15 U.S.C. 78a et seq.
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    Section 3(a)(71) of the Exchange Act \2\ defines the term 
``security-based swap dealer'' (``SBSD'') and provides in relevant part 
that a person shall be deemed not to be an SBSD as a result of 
security-based swap dealing activity that falls below certain de 
minimis thresholds.\3\ In 2012, the Commission adopted Exchange Act 
Rule 3a71-2(a), which provides that to qualify for this de minimis 
exception, all security-based swap positions connected with the 
person's and its affiliates' dealing activity over the immediately 
preceding twelve months must fall below three separate thresholds.\4\ 
Two of the thresholds are subject to temporarily higher, phase-in 
levels of aggregate gross notional amounts of de minimis security-based 
swap dealing activity.\5\ For credit default swaps that are security-
based swaps, the de minimis threshold is an aggregate gross notional

[[Page 29987]]

amount of no more than $3 billion, subject to a phase-in level of an 
aggregate gross notional amount of no more than $8 billion.\6\ For 
security-based swaps that are not credit default swaps, the de minimis 
threshold is an aggregate gross notional amount of no more than $150 
million, subject to a phase-in level of an aggregate gross notional 
amount of no more than $400 million.\7\
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    \2\ 15 U.S.C. 78c(a)(71).
    \3\ See Exchange Act Section 3(a)(71)(D).
    \4\ See Exchange Act Rule 3a71-2(a); Further Definition of 
``Swap Dealer,'' ``Security-Based Swap Dealer,'' ``Major Swap 
Participant,'' ``Major Security-Based Swap Participant'' and 
``Eligible Contract Participant,'' Release No. 34-66868 (Apr. 27, 
2012) [77 FR 30596, 30727 (May 23, 2012)].
    \5\ The higher phase-in levels of de minimis security-based swap 
dealing activity are not available to the extent that a person 
engages in security-based swap dealing activity with counterparties 
that are natural persons, other than natural persons who qualify as 
eligible contract participants by virtue of section 
1a(18)(A)(xi)(II) of the Commodity Exchange Act, 7 U.S.C. 
1a(18)(A)(xi)(II). See Exchange Act Rule 3a71-2(a)(2)(i).
    \6\ Exchange Act Rule 3a71-2(a)(1)(i).
    \7\ Exchange Act Rule 3a71-2(a)(1)(ii).
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    The phase-in period for these de minimis security-based swap 
dealing activity thresholds is available until the ``phase-in 
termination date.'' \8\ The phase-in termination date, in turn, depends 
in part on the ``data collection initiation date'' established pursuant 
to Exchange Act Rule 3a71-2(a)(2)(iii). That rule provides that the 
data collection initiation date was the later of (1) the last 
compliance date for the registration and regulatory requirements for 
SBSDs and major security-based swap participants under Exchange Act 
Section 15F,\9\ and (2) the first date on which compliance with the 
trade-by-trade reporting rules for credit-related and equity-related 
security-based swaps to a registered security-based swap data 
repository is required. With respect to the first prong of Exchange Act 
Rule 3a71-2(a)(2)(iii), the compliance date for registration and 
regulatory requirements for SBSDs and major security-based swap 
participants under Exchange Act Section 15F was October 6, 2021.\10\ 
With respect to the second prong of Exchange Act Rule 3a71-
2(a)(2)(iii), on May 7, 2021, DTCC Data Repository registered with the 
Commission, which definitively set November 8, 2021, as the first 
compliance date for Regulation SBSR's requirements regarding reporting 
of credit-related and equity-related security-based swaps.\11\ Pursuant 
to Exchange Act Rule 3a71-2(a)(2)(iii), the data collection initiation 
date thus was November 8, 2021.
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    \8\ Exchange Act Rule 3a71-2(a)(2)(i).
    \9\ 15 U.S.C. 78o-10.
    \10\ See Cross-Border Application of Certain Security-Based Swap 
Requirements, Release No. 34-87780 (Dec. 18, 2019) [85 FR 6270, 6345 
(Feb. 4, 2020)] (``Cross-Border Amendments Release''). In the Cross-
Border Amendments Release, the Commission set the compliance date 
for registration and regulatory requirements for SBSDs and major 
security-based swap participants as 18 months after the effective 
date described therein; that effective date was 60 days after 
publication of the Cross-Border Amendments Release in the Federal 
Register. The Cross-Border Amendments Release was published in the 
Federal Register on Feb. 4, 2020; 60 days after that date was Apr. 
6, 2020. Eighteen months after Apr. 6, 2020, was Oct. 6, 2021.
    \11\ The first compliance date for Regulation SBSR with respect 
to a security-based swap asset class was the first Monday that was 
the later of: (1) Six months after the date on which the first 
security-based swap data repository that can accept transaction 
reports in that asset class registers with the Commission; or (2) 
one month after the compliance date for registration and regulatory 
requirements for SBSDs and major security-based swap participants. 
See Cross-Border Amendments Release, 85 FR 6346. DTCC Data 
Repository (U.S.), LLC registered as a security-based swap data 
repository for credit and equity asset classes (i.e., the asset 
classes referenced in Exchange Act Rule 3a71-2(a)(2)(iii)) on May 7, 
2021. See Security-Based Swap Data Repositories; DTCC Data 
Repository (U.S.), LLC; Order Approving Application for Registration 
as a Security-Based Swap Data Repository, Release No. 34-91798 (May 
7, 2021) [86 FR 26115 (May 12, 2021)]. Nov. 8, 2021, was both the 
first Monday that was six months after May 7, 2021, and the first 
Monday that was one month after the Oct. 6, 2021, compliance date 
for registration and regulatory requirements for SBSDs and major 
security-based swap participants. See also SEC Approves Registration 
of First Security-Based Swap Data Repository; Sets the First 
Compliance Date for Regulation SBSR, Press Release No. 2021-80 (May 
7, 2021), available at https://www.sec.gov/news/press-release/2021-80 (``Today's SEC action sets Nov. 8, 2021, as the first compliance 
date for Regulation SBSR, which governs regulatory reporting and 
public dissemination of security-based swap transactions.'').
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    The phase-in termination date is determined through a separate 
mechanism that depends in part on the data collection initiation date 
and also, as explained below, in part upon the timing of a Commission 
staff report addressing the rules and interpretations further defining 
the Exchange Act's definition of the term ``security-based swap 
dealer,'' including the de minimis exception to that definition.\12\ 
The report must be published in the Federal Register for public comment 
no later than three years following the data collection initiation 
date, or November 8, 2024, and could be published earlier.\13\ Nine 
months after the publication of the report, the Commission may by order 
either terminate the phase-in period for the de minimis thresholds or 
provide notice of its determination that it is necessary or appropriate 
in the public interest to propose through rulemaking an alternative to 
the $3 billion and $150 million de minimis thresholds. The Commission's 
order in either case shall establish the phase-in termination date.\14\ 
Alternatively, if the phase-in termination date has not been previously 
established in such an order, the phase-in termination date shall be 
five years after the data collection initiation date,\15\ or November 
8, 2026.
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    \12\ See Exchange Act Rule 3a71-2A note. As appropriate, based 
on the availability of data and information, the report generally 
should assess whether any of the de minimis thresholds should be 
increased or decreased. See Exchange Act Rule 3a71-2A(a)(1). The 
Commission intends to consider this report in reviewing the effect 
and application of the de minimis thresholds based on the evolution 
of the security-based swap market following the implementation of 
the registration and regulatory requirements of Exchange Act Section 
15F; the report may also be informative as to potential changes to 
the rules further defining the term ``security-based swap dealer.'' 
See Exchange Act Rule 3a71-2A note. The Commission directed staff 
also to report on the rules and interpretations further defining the 
Exchange Act's definition of the term ``major security-based swap 
participant,'' to which the de minimis thresholds in Exchange Act 
Rule 3a71-2 do not apply.
    \13\ See Exchange Act Rule 3a71-2A(b) through (c).
    \14\ See Exchange Act Rule 3a71-2(a)(2)(ii)(A).
    \15\ Exchange Act Rule 3a71-2(a)(2)(ii)(B).
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Commission Announcement

    The data collection initiation date referenced in Exchange Act 
Rules 3a71-2 and 3a71-2A was November 8, 2021. Absent additional 
Commission action establishing the phase-in termination date pursuant 
to Exchange Act Rule 3a71-2(a)(2)(ii)(A), the phase-in termination date 
shall be November 8, 2026.

    By the Commission.

    Dated: May 11, 2022.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2022-10511 Filed 5-16-22; 8:45 am]
BILLING CODE 8011-01-P