In its June 18 announcement, the U.S. Securities and Exchange Commission requested comments from market participants on whether reporting obligations for security-based swap transactions are still appropriate for today’s products and transaction structures. It was stated that the step was taken within the scope of harmonization studies between the SEC and the Commodity Futures Trading Commission.
Two institutions want to converge rules for similar transactions
According to the SEC’s blog post, the SEC and CFTC compliance initiative will address regulatory definitions, jurisdictional distinctions, and interpretive principles that have long shaped derivatives reporting. This framework builds on the oversight structure established after the Dodd Frank reform. The goal is to reduce overlaps that require institutions to establish separate compliance systems for economically similar transactions.
Title 7 of the Dodd Frank Act authorized the SEC to enter into swap transactions based on a single security, loan, or narrow-based security index. Other swap types were left to CFTC supervision. Both institutions are tasked with increasing transparency in the over-the-counter derivatives market, but their reporting infrastructures were established independently of each other.
The SEC said the call for comment is intended to support assessing the extent to which existing regulatory definitions, interpretations and jurisdictions are compatible with changing market structures, financial products and transaction practices.
As a result of this distinction, two separate central registry structures emerged. There are swap data pools on the CFTC side and security-based swap data pools on the SEC side. Collecting similar derivative transaction data in different structures makes it difficult for both regulators and market participants to monitor the market-wide risk outlook in a single framework.
Mini dictionary: A security-based swap is a derivative contract whose return is tied to a single stock, credit instrument or narrow index. SDR and SBSDR refer to the official recording infrastructures where the data of these transactions are collected for regulators.
The industry supports convergence to a single framework
The SEC enacted the final rule, Regulation SBSR, in February 2015. This regulation determines how security-based swap transactions will be reported to registered data repositories and disclosed to the public. The CFTC’s Part 45 reporting rules had previously implemented a similar system. For this reason, institutions operating in both swap and security-based swap transactions have to carry out two separate compliance programs, two different technical infrastructures and two reporting flows.
In its opinion filed with the SEC in April 2026, ICE Trade Vault, one of the registered repositories, requested that Regulation SBSR be permanently aligned with the CFTC reporting framework. The Authority argued that ending the current temporary exemptions would create serious and unnecessary system compliance costs without creating additional regulatory benefits for data repositories and market participants. ICE Trade Vault stands out as a registered infrastructure provider operating in the field of derivative transaction data collection.
On May 19, the International Swaps and Derivatives Association and the Securities Industry and Financial Markets Association published a joint letter, citing the harmonization of transaction reporting as one of their three main priorities. The two organizations emphasized that swaps and security-based swaps behave functionally similar, their risk profiles are close and they are often used for the same economic purpose.
According to organizations, similar vehicles are subject to different rules, forcing companies to establish repeated compliance processes; This increases cost and complexity without providing additional regulatory benefit.
The joint venture will proceed under six headings
According to the SEC and CFTC memorandum signed on March 11, the joint compliance initiative will be led by Robert Teply on the SEC side and Meghan Tente on the CFTC side. Program; It covers six areas of work, including clarifying product definitions, updating clearing and collateral frameworks, and simplifying transaction data reporting.
SEC Chairman Paul Atkins said regulatory disputes between the SEC and CFTC, duplicate agency registrations and different rule sets have stifled innovation and driven some market participants to other countries. CFTC Chairman Michael Selig also stated that repetitive and burdensome rules should be removed and gaps in the regulation should be closed.
The SEC also finalized the rules package under the Financial Data Transparency Act of 2022 on June 8. This regulation, prepared together with the CFTC and seven agencies, will go into effect on October 1. The new rule introduces basic interoperability standards for financial regulatory data but does not directly alter existing reporting obligations of market participants. No deadline has been announced for the SEC’s current opinion gathering process.
