Statement of Commissioner Caroline D. Pham in Support of Swap Dealer Financial Reporting Rule
April 30, 2024
I support the Capital and Financial Reporting Requirements for Swap Dealers (SD) and Major Swap Participants (MSP) Final Rule (SD Financial Reporting Rule Amendments) because it aligns the timing of financial reporting for entities that have a bank regulator or are registered with the Securities and Exchange Commission (SEC). This simplifies the filing process for these reports to minimize unnecessary costs and administrative burdens. I would like to thank Jennifer Bauer, Andrew Pai, Maria Aguilar-Rocha, Christine McKeveny, Josh Beale, Tom Smith, and Amanda Olear in the Market Participants Division for their work on the SD Financial Reporting Rule Amendments. I truly appreciate the time staff took to discuss my questions and concerns.
However, I believe that the Commission should have taken an evergreen approach to SEC harmonization of the filing time period. The Commission proposed to amend Regulation 23.105(p)(7)[1] to include a 30-day deadline for dually-registered non-U.S. bank swap dealers and major swap participants to file comparable SEC-approved financial reports and schedules with the CFTC following the date on which the report is made.[2] One comment letter pointed out that the 30-day deadline is inconsistent with the Commission’s alignment of the deadline for U.S. bank swap dealers and major swap participants that are not dually registered to submit the report when required by the prudential regulators, and that the SEC had aligned its deadline for all bank security-based swap dealers to submit such reports to the same 35-day deadline.[3]
While the Commission agreed with the comment letter and extended the deadline to 35 days to allow dual registrants to submit the reports on the same day as they do with the SEC, the Commission should have made the deadline “on the date Form X–17A–5 FOCUS Report Part IIC is due to be filed with the [SEC].”[4] This would avoid the Commission having to do another rulemaking to harmonize if the SEC updates its FOCUS report filing deadlines in the future. This would have anticipated a future problem and adopted a forward-looking solution, rather than setting up an issue we may have to react to in the future.
[1] Existing Regulation 23.105(p)(7) allows swap dealers or major swap participants that are subject to rules of a prudential regulator and are also registered with the SEC as a security-based swap dealer or a major security-based swap participant, and files a quarterly Form X–17A–5 FOCUS Report Part IIC with the SEC pursuant to 17 CFR 240.18a–7, to file such Form X–17A–5 FOCUS Report Part IIC with the CFTC in lieu of the financial reports required under Regulation 23.105(p)(2). The swap dealer or major swap participant must file the form with the Commission when it files the Form X–17A–5 FOCUS Report Part IIC with the SEC, provided, however, that the swap dealer or major swap participant must file the Form X–17A–5 FOCUS Report Part IIC with the CFTC no later than 30 calendar days from the date the report is made. See 17 CFR 23.105(p)(7).
[2] See Proposed Rule, Capital and Financial Reporting Requirements for Swap Dealers and Major Swap Participants, 89 FR 2554, 2558 (Jan. 16, 2024), https://www.govinfo.gov/content/pkg/FR-2024-01-16/pdf/2023-28649.pdf.
[3] See Comment Letter, Institute of International Bankers (IIB), the International Swaps and Derivatives Association (ISDA), and the Securities Industry and Financial Markets Association (SIFMA), Capital Requirements for Swap Dealers and Major Swap Participants (RIN 3038-AD54), 5 (Feb. 13, 2024), https://comments.cftc.gov/Handlers/PdfHandler.ashx?id=35181.
[4] Id. at 7.
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