On November 25, 2019, the SEC’s Division of Trading and Markets issued guidance for foreign security-based swap dealers (SBSDs) and major security-based swap participants (MSBSPs) who wish to substitute a foreign jurisdiction’s compliance requirements for the final security-based swap (SBS) recordkeeping rules under Section 15F of the Exchange Act.

The final SBS recordkeeping rules, which were adopted on September 19, 2019, established recordkeeping, reporting, and notification requirements for SBS (SBS recordkeeping rules), which are applicable to SBSDs, MSBSPs, and broker-dealers under Title VII of the Dodd-Frank Act (see Legal Update, SEC Adopts Final Recordkeeping, Reporting, and Notification Requirements for Security-Based Swaps).

The final SBS recordkeeping rules permit foreign SBSDs and MSBSPs to avail themselves of substituted compliance with comparable foreign requirements to satisfy the recordkeeping and reporting requirements under the final SBS recordkeeping rules in the same manner as it permits substituted compliance for SBS business conduct, trade acknowledgement and verification, and capital and margin requirements (see Practice Note, US Derivatives Regulation: Cross-Border Application of Swaps Rules: SEC Cross-Border Security-Based Swaps Rules).

The guidance is intended to aid those looking to apply for such substituted compliance by providing information on the relevant requirements. Comparability of a foreign jurisdiction’s compliance requirements is assessed both by looking at the individual requirements and by looking at whether the analogous requirements produce similar outcomes.

The requirements are broken down into the following categories:

The guidance has no legal force or effect and is not intended to be exhaustive.

For a detailed explanation of the final SBS recordkeeping rules, see Practice Note, US Derivatives Regulation: SEC Recordkeeping, Reporting, and Notification Requirements for Security-Based Swaps.