Sec seeks market input on swap reporting rules in June 2024

The U.S. Securities and Exchange Commission (SEC) announced on June 18 that it is seeking feedback from market participants on whether current reporting requirements for security-based swap transactions remain appropriate in light of today’s products and trading structures. This move is part of a broader effort to align oversight between the SEC and the Commodity Futures Trading Commission (CFTC).

Regulators target fragmentation in derivatives oversight

According to the SEC’s official blog, the joint SEC–CFTC initiative is set to address longstanding regulatory definitions, jurisdictional divisions, and the principles guiding interpretation in the reporting of derivatives. This framework is built on the supervisory architecture established after the Dodd-Frank Act. The main aim is to reduce overlap that forces institutions to maintain separate compliance systems for economically similar transactions.

Title VII of the Dodd-Frank Act granted the SEC authority over swaps based on a single security, a credit instrument, or a narrow-based securities index, while other swap types fell under CFTC jurisdiction. Both regulators were tasked with increasing transparency in the over-the-counter derivatives market. However, each developed reporting infrastructures independently, leading to divergent systems.

As a result of this split, two separate centralized data structures emerged: swap data repositories (SDRs) under the CFTC and security-based swap data repositories (SBSDRs) on the SEC side. The collection of similar derivatives data in different formats has made it challenging for both regulators and industry players to monitor systemic risks comprehensively.

Mini glossary: A security-based swap is a derivative contract whose value is tied to a single equity, credit product, or a narrow equity index. SDRs and SBSDRs are official data repositories designed to collect transaction details for regulatory oversight purposes.

Industry calls for harmonized reporting framework

In February 2015, the SEC implemented Regulation SBSR, laying out how security-based swap trades must be reported to data repositories and disclosed to the public. The CFTC had already adopted its Part 45 reporting rules for swaps. As a result, entities active in both security-based and standard swaps have had to operate under dual compliance programs, supporting two technical reporting infrastructures and maintaining separate data flows.

ICE Trade Vault, one of the registered data repositories, petitioned the SEC in April 2026 to permanently align Regulation SBSR with the CFTC reporting framework. ICE argued that ending temporary exemptions would create significant and unnecessary compliance costs for data repositories and market participants, without delivering meaningful regulatory benefits. ICE Trade Vault is a prominent infrastructure provider for derivatives data collection.

On May 19, the International Swaps and Derivatives Association (ISDA) and the Securities Industry and Financial Markets Association (SIFMA) issued a joint letter identifying harmonized transaction reporting as a top-three industry priority. Both organizations highlighted that swaps and security-based swaps are functionally similar, share comparable risk profiles, and are often used for the same economic objectives.

Six focus areas in joint SEC–CFTC initiative

A memorandum of understanding signed on March 11 designates Robert Teply from the SEC and Meghan Tente from the CFTC to lead their respective agencies in the coordination effort. The program will address six workstreams, including clarifying product definitions, updating clearing and margin frameworks, and simplifying transaction data reporting requirements.

SEC Chair Paul Atkins remarked that regulatory turf battles, redundant registration requirements, and diverging rulebooks between the SEC and CFTC have stifled innovation and pushed some market participants to move operations abroad. CFTC Chair Michael Selig echoed that removing duplicative or burdensome rules and closing regulatory gaps are critical steps forward.

Additionally, on June 8, the SEC finalized a package of rules mandated by the 2022 Financial Data Transparency Act, a measure developed in coordination with the CFTC and seven other agencies. Set to take effect October 1, the new rules introduce core interoperability standards for regulatory data, but do not directly impact participants’ current reporting obligations. The SEC has not announced a deadline for comments on its current request for input.

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