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

Re: Notice of Substituted Compliance Application Submitted by the Bundesanstalt für Finanzdienstleistungsaufsicht in Connection With Certain Requirements Applicable to Security-Based Swap Entities Subject to Regulation in the Federal Republic of Germany; Proposed Order (File No.S7-16-20)

Dear Ms. Countryman:

The Securities Industry and Financial Markets Association (“SIFMA”)1appreciates the opportunity to comment on the above-captioned notice by the Securities and Exchange Commission (“SEC” or “Commission”) regarding the substituted compliance application submitted by the Bundesanstalt für Finanzdienstleistungsaufsicht (“BaFin”) in connection with certain requirements applicable to security-based swap (“SBS”) dealers (“SBSDs”) and major SBS participants (together with SBSDs, “SBS Entities”) subject to regulation in the Federal Republic of Germany and proposed Order providing for the conditional substituted compliance in connection with the application (together, the “Proposal”).2

In many respects, the Proposal reflects a thoughtful, holistic approach to substituted compliance. However, the Proposal still includes certain conditions and limitations that raise significant issues. Our comments below mainly focus on those issues raised by the Proposal that we believe are relevant not only for SBS Entities based in Germany but also for SBS Entities based in other non-U.S. jurisdictions. We also have attached an Annex providing comments relevant to certain technical matters specific to Germany and the European Union (“EU”).

I. Trading Relationship Documentation – Disclosure Regarding Legal and Bankruptcy Status

SEC Rule 15Fi-5 requires that an SBS Entity establish, maintain, and follow written policies and procedures reasonably designed to ensure that it executes written SBS trading relationship documentation with its counterparties. This requirement applies to a non-U.S. SBS Entity on an “entity-wide” basis, including in connection with SBS with non-U.S. counterparties.3 The Proposal would permit a German firm to substitute compliance with comparable EU and German requirements for compliance with Rule 15Fi-5, except that substituted compliance would not extend to disclosures required by Rule 15Fi-5(b)(5) regarding (a) the status of the SBS Entity or its counterparty as an insured depository institution (as defined in 12 U.S.C. § 1813) or financial company (as defined in 12 U.S.C. § 5381(a)(11)) and (b) the possibility that in certain circumstances the SBS Entity or its counterparty may be subject to the insolvency regime set forth under Title II of the Dodd-Frank Act (the “Orderly Liquidation Authority” or “OLA”) or the Federal Deposit Insurance Act (“FDIA”), which may affect rights to terminate, liquidate or net SBS.4