SEC asks if Dodd-Frank era swap rules still make sense

The US Securities and Exchange Commission (SEC) requested feedback from market participants on whether the reporting requirements of the Commission for security-based swaps transactions are still applicable to products and trading structures that exist today.

SEC X announcement on June 18 is in keeping with the collaboration between the SEC and the CFTC to eliminate conflicting requirements that force dealers to maintain parallel compliance systems for economically identical trades.

According to the SEC’s blog post, the SEC–CFTC Harmonization Initiative will address regulatory definitions, jurisdictional demarcations, and interpretive principles that have governed derivatives reporting since the division of oversight of the products and structures created by the Dodd-Frank Wall Street Reform and Consumer Protection Act over a decade ago.

The division led to the creation of two distinct classes of centralized record-keeping facilities: the swap data repositories (SDRs) under the CFTC, and the security-based swap data repositories (SBSDRs) under the SEC. The SEC SBSDR overview shows two types of entities that collect similar derivative transaction information, which makes it difficult for regulators or market participants to get a unified picture of derivatives risk across the market.

Two rule books for one market

The Dodd-Frank Act’s Title VII granted the SEC jurisdiction on security-based swaps (those that involve a single security, loan, or narrow-based security index) and granted everything else to the CFTC. Both agencies were charged by Congress to introduce transparency in the over-the-counter derivatives market, which was partly responsible for causing the 2008 financial crisis. However, both agencies established their reporting systems independently of one another.

SEC introduced the Regulation SBSR final rule back in February 2015. It contains rules on how security-based swap transactions are reported to registered SBSDRs and disseminated to the public. CFTC swap reporting rules (Part 45) created a similar system for its swap data repositories several years before that. The end result is that dealers of both swaps and security-based swaps will need to create and maintain two distinct compliance programs, two sets of infrastructure, and two reporting workflows.

ICE Trade Vault, one of the registered SBSDRs, asked the SEC in an April 2026 submission to permanently align Regulation SBSR with the CFTC‘s reporting framework. According to ICE Trade Vault, the approach that aligns with the CFTC is sufficient to meet the goals of transparency and supervision that were set by Congress through Title VII. The organization believes that letting existing no-action relief expire would impose “significant, unnecessary systems and compliance costs” on data repositories and market participants without providing additional regulatory benefit.

Industry supports the alignment

On May 19, the International Swaps and Derivatives Association (ISDA) and the Securities Industry and Financial Markets Association (SIFMA) filed an ISDA–SIFMA harmonization letter stating that alignment of transaction reporting is one of the three key priority areas for harmonization. According to ISDA and SIFMA, swaps and security-based swaps “behave functionally in the same manner, have similar risk profiles, are often used by market participants for the same economic purpose, are largely priced alike, and are typically offered by the same trader at the same dealer institutions.” The differences in treatment of similar types of instruments make firms develop duplicated compliance procedures, increasing cost and complexity without a corresponding regulatory benefit.

In addition, the organizations urged the agencies to use an outcome-based substituted-compliance approach and abolish the SEC’s “arranged, negotiated, or executed” clause applicable to certain non-US security-based swap transactions.

SEC and CFTC align priorities

In an SEC–CFTC MOU announcement signed on March 11, both the SEC and CFTC agreed to embark on a Joint Harmonization Initiative to be led by Robert Teply for the SEC and Meghan Tente for the CFTC.

SEC Chairman Paul Atkins explained that the “regulatory turf wars, duplicative agency registrations, and different sets of regulations between the SEC and CFTC have stifled innovation and pushed market participants to other jurisdictions.” CFTC Chairman Michael Selig urged that the regulators “eliminate duplicative, burdensome rules and close gaps in regulation.”

The initiative covers six workstreams, including clarifying product definitions, modernizing clearing and margin frameworks, and streamlining reporting for trade data.

On June 8, the SEC finalized the FDTA rulemaking document as required by the Financial Data Transparency Act of 2022, a rule made together with the CFTC and seven other agencies which will take effect on October 1. The new rule establishes baseline interoperability standards for financial regulatory data, although it does not itself alter reporting requirements for market participants.

There is no deadline specified for the current comment solicitation process. Written submissions may be made via the SEC harmonization initiative portal on the SEC website.

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