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Request for Relief from Application of Rules to SBS as Securities

Issue

OTC Derivatives→

Summary

SIFMA sent comments to the SEC regarding the implications of Sections 761 and 768 of the Dodd-Frank Wall Street Reform and Consumer Protection Act which contained provisions that included security-based swaps in the definition of “security” for purposes of the Securities Exchange Act of 1934 and the Securities Act of 1933. We support the Commission’s recent Order2 extending certain temporary exemptive relief under the Exchange Act where such an exemption does not directly relate to a specific SBS rulemaking (an “unlinked temporary exemption” as it is described in the release) until February 5, 2018, and further support the Financial Industry Regulatory Authority notice of filing to extend the expiration date of FINRA Rule 0180, which provides time-limited relief from the application of FINRA rules with respect to SBS to February 12, 2018.

PDF

Submitted To

SEC

Submitted By

SIFMA

Related Committee(s)

  • Swap Dealer Committee

Date

2

February

2017

Excerpt

Brent J. Fields
Secretary
Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549

Re: Order Extending Certain Temporary Exemptions under the Securities Exchange Act of 1934 in Connection with the Revision of the Definition of “Security” to Encompass Security-Based Swaps and Request for Comment (Release No. 34-79833; File No. S7-27-11); Self Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Expiration Date of FINRA Rule 0180 (Application of Rules to Security-Based Swaps) (Release No. 34–79752; File No. SR–FINRA–2017–001)

Dear Mr. Fields,

The Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates the ongoing consideration by the Securities and Exchange Commission (the “SEC” or “Commission”) regarding the implications of Sections 761 and 768 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) which contained provisions that included security-based swaps (or “SBS”) in the definition of “security” for purposes of the Securities Exchange Act of 1934 (the “Exchange Act”) and the Securities Act of 1933 (the “Securities Act”). We support the Commission’s recent Order2 extending certain temporary exemptive relief under the Exchange Act where such an exemption does not directly relate to a specific SBS rulemaking (an “unlinked temporary exemption” as it is described in the release) until February 5, 2018, and further support the Financial Industry Regulatory Authority (“FINRA”) notice of filing to extend the expiration date of FINRA Rule 0180, which provides time-limited relief from the application of FINRA rules with respect to SBS to February 12, 2018.

While such relief is appreciated, we reiterate4 our view that it is necessary and appropriate for the Commission to provide permanent exemptive and other relief to SBS market participants from the federal securities laws (including both the Exchange Act and Securities Act) that apply to SBS due to their inclusion in the definition of “security” in order to avoid disrupting the SBS market and limiting the availability of SBS for eligible investors. It is also necessary for FINRA to take similar action regarding the application of their rules to SBS. We stand ready to provide whatever technical assistance the Commission would find useful as it continues its significant efforts to implement this aspect of Dodd-Frank and would welcome the opportunity to further discuss areas where significant interpretive guidance or specific exemptive relief may be needed.

Please do not hesitate to contact the undersigned for any further information the Commission or its staff may require.

Best regards,

Kyle Brandon
Managing Director

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