for the industry to provide the manpower and the capital to form an
SDR''); see also DTCC 3, supra note 19 (``SDRs should serve an
impartial, utility function.'').
---------------------------------------------------------------------------

    Consistent with commenters' views, the Commission understands that
an SDR operating on a for-profit, non-utility model, or commercial
basis, may be presented with more conflicts of interest, including
economic self-interest in pricing or bundling its services, than an SDR
operating on an at-cost utility model, or non-profit basis.\145\ The
Commission believes, however, that if an SDR operating on an at-cost
utility model has an affiliate that provides ancillary services for
SBSs for profit, then that SDR may be presented with conflicts of
interest similar to conflicts at an SDR operating on a for-profit, non-
utility model.\146\ For example, an SDR that has an affiliate that
provides asset servicing for profit would most likely face similar
conflicts as a for-profit SDR that provides asset servicing itself.
---------------------------------------------------------------------------

    \145\ See Section VIII of this release discussing the costs and
benefits of different business models.
    \146\ See Section VIII of this release for further discussion.
---------------------------------------------------------------------------

    The Commission believes that the final SDR Rules, including rules
pertaining to conflicts of interest, are sufficiently broad to address
the range of conflicts of interest inherent in different SDR business
models. For instance, under Rule 13n-4(c)(3), each SDR is required to
identify conflicts of interest applicable to it and establish,
maintain, and enforce written policies and procedures to mitigate these
conflicts.\147\ In addition, the Commission believes that allowing SDRs
to pursue different business models will increase competition,
efficiency, and innovation among SDRs. For example, by not prescribing
one particular business model, new entrants may have an incentive to
develop business models for SDRs that efficiently provide core services
to the industry and effectively mitigate conflicts.\148\ Therefore,
after considering the comments, the Commission continues to believe
that it is not necessary to mandate any particular business model for
SDRs.
---------------------------------------------------------------------------

    \147\ See Section VI.D.3.c.iii of this release discussing Rule
13n-4(c)(3).
    \148\ See Section VIII of this release discussing the costs and
benefits of different business models.
---------------------------------------------------------------------------

IV. Number of SDRs and Consolidation of SBS Data

    The Commission received several comments relating to the issue of
data fragmentation among SDRs. The Commission believes that if there
are multiple SDRs in any given asset class, then it may be more
difficult for regulators to monitor the SBS market because of the
challenges in aggregating SBS data from multiple SDRs.\149\ Some
commenters suggested limiting the number of SDRs to one per asset class
in order to address these concerns.\150\ While such a limitation would
resolve many of the challenges involved in aggregating SBS data, the
Commission believes that imposing such a limitation would stymie
competition among SDRs, and, consequently, may lead to increased costs
to market participants.\151\ The Commission believes that the better
avenue at this point is to refrain from regulating the number of SDRs
in an asset class to permit market forces to determine an efficient
outcome. Therefore, the Commission is not adopting the commenters'
suggestions to limit the number of SDRs in each asset class.
---------------------------------------------------------------------------

    \149\ See FINRA SBSR, supra note 27 (recognizing ``the
Commission's acknowledgement of `the possibility that there could
emerge multiple registered SDRs in an asset class,' and, in the
event this should occur that `the Commission and the markets would
be confronted with the possibility that different registered SDRs
could adopt different dissemination protocols, potentially creating
fragmentation in SBS market data' '') (citations omitted); DTCC 3,
supra note 19 (``When there are multiple SDRs in any particular
asset class, the [Commission] should take such action as is
necessary to eliminate any overstatements of open interest or other
inaccuracies that may result from having broader market data
published from separate SDRs.'').
    \150\ See ISDA Temp Rule, supra note 28 (``[T]he designation of
a single [SDR] per class of security-based swap would provide the
Commission and market participants with valuable efficiencies. In
particular, there would be no redundancy of platforms, no need for
additional levels of data aggregation for each asset class and
reduced risk of errors and greater transparency (because a single
[SDR] per asset class would avoid the risk of errors associated with
transmitting, aggregating and analyzing multiple sources of
potentially incompatible and duplicative trade data).''); see also
Saul, supra note 19 (suggesting that the Commission should seek to
have only one or two SDRs to service the SBS market).
    \151\ See Section VIII.C.3.b of this release discussing the SDR
Rules' potential effects on competition (``The Commission believes
that by allowing multiple SDRs to provide data collection,
maintenance, and recordkeeping services, the SDR Rules should
promote competition among SDRs. . . . Increased competition may
lower costs for users of SDR services.''). Accord PFMI Report, supra
note 50 (``Competition can be an important mechanism for promoting
efficiency. Where there is effective competition and participants
have meaningful choices among FMIs[, including SDRs], such
competition may help to ensure that FMIs are efficient.'').
---------------------------------------------------------------------------

    In the Proposing Release, the Commission requested comment on
whether the Commission should designate one SDR as the recipient of the
information from all other SDRs in order to provide the Commission and
relevant authorities with a consolidated location from which to access
SBS data for regulatory monitoring and oversight purposes.\152\ Some
commenters suggested that an SDR's duties should include reporting SBS
data to a single SDR that would consolidate the data for relevant
authorities or otherwise mandating the consolidation of SBS data.\153\
Specifically, one commenter recommended that the Commission ``designate
one SDR as the recipient of the information of other SDRs to ensure the
efficient consolidation of data.'' \154\ The commenter further stated
that the designated SDR would need to have ``the organization and
governance structure that is consistent with being a

financial market utility serving a vital function to the entire
marketplace.'' \155\
---------------------------------------------------------------------------

    \152\ Proposing Release, 75 FR at 77309, supra note 2.
    \153\ See DTCC 1*, supra note 20; Better Markets 1, supra note
19; see also FINRA SBSR, supra note 27 (urging the Commission to
mandate the consolidation of disseminated SBS data to the public).
    \154\ DTCC 1*, supra note 20; see also Better Markets 1, supra
note 19 (making similar comments); see also DTCC 2, supra note 19
(``The role of an aggregating SDR is significant in that it ensures
regulators efficient, streamlined access to consolidated data,
reducing the strain on limited agency resources.'').
    \155\ DTCC 1*, supra note 20.
---------------------------------------------------------------------------

    The Commission does not dispute the commenter's assertion that
fragmentation of data among SDRs would ``leave to regulators the time
consuming, complicated and expensive task of rebuilding complex data
aggregation and reporting mechanisms.'' \156\ However, if the
Commission were to designate one SDR as the data consolidator, such an
action could be deemed as the Commission's endorsement of one regulated
person over another, discourage new market entrants, and interfere with
competition, resulting in a perceived government-sponsored
monopoly.\157\ In addition, such a requirement would likely impose an
additional cost on market participants to cover the SDR's cost for
acting as the data consolidator.
---------------------------------------------------------------------------

    \156\ DTCC 3, supra note 19.
    \157\ See Section VIII of this release for further discussion.
---------------------------------------------------------------------------

    In addition, any consolidation required by the Commission would be
limited to SBS data and may not necessarily include data not required
to be reported under Title VII and Regulation SBSR, such as swap data.
For example, consolidated SBS data may show that a person entered into
several SBSs based on individual equity securities. If the person also
entered into swaps based on a broad-based security index made up of the
individual equity securities, then the consolidated data would not
necessarily include that information. Therefore, commenters' suggestion
to designate one SDR as the data consolidator may not fully address
their data fragmentation concerns unless the same SDR also consolidates
swap data, which the CFTC regulates.
    Therefore, after considering the comments, the Commission is not
designating, at this time, one SDR as the recipient of information from
other SDRs in order to provide relevant authorities with consolidated
data. The Commission may revisit this issue if there is data
fragmentation among SDRs that is creating substantial difficulties for
relevant authorities to get a complete and accurate view of the
market.\158\
---------------------------------------------------------------------------

    \158\ See Section VI.D.2.c.ii of this release discussing
aggregation of data across multiple registered SDRs by the
Commission.
---------------------------------------------------------------------------

V. Implementation of the SDR Rules

A. Prior Commission Action

    The Commission solicited comment in the Proposing Release on
whether it should adopt an incremental, phase-in approach with respect
to Exchange Act Section 13(n) and the rules thereunder.\159\ The
Commission further sought and received comments on similar
implementation issues relating to Title VII in other rulemakings and
through solicitations for comments.\160\
---------------------------------------------------------------------------

    \159\ Proposing Release, 75 FR at 77314, supra note 2.
    \160\ See Sections I.C and I.D of this release discussing other
comments and regulatory initiatives considered in this rulemaking.
---------------------------------------------------------------------------

1. Effective Date Order
    In addition, as discussed above, on June 15, 2011, the Commission
issued the Effective Date Order, which provided guidance on the
provisions of the Exchange Act added by Title VII with which compliance
would have been required as of July 16, 2011 (i.e., the effective date
of the provisions of Title VII). The Effective Date Order provided
exemptions to SDRs from Exchange Act Sections 13(n)(5)(D)(i),
13(n)(5)(F), 13(n)(5)(G), 13(n)(5)(H), 13(n)(7)(A), 13(n)(7)(B), and
13(n)(7)(C), each of which will expire on the earlier of (1) the date
the Commission grants registration to the SDR and (2) the earliest
compliance date set forth in any of the final rules regarding the
registration of SDRs.\161\ Absent further Commission action, these
exemptions will expire as of the Compliance Date (as defined below),
unless the Commission has granted an SDR's registration before the
Compliance Date, in which case these exemptions will expire, with
respect to that SDR, as of the date the Commission grants the SDR's
registration.
---------------------------------------------------------------------------

    \161\ Effective Date Order, 76 FR at 36306, supra note 9.
---------------------------------------------------------------------------

    In addition, the Effective Date Order also provided exemptive
relief from the rescission provisions of Exchange Act Section 29(b) in
connection with Exchange Act Sections 13(n)(5)(D)(i), 13(n)(5)(F),
13(n)(5)(G), 13(n)(5)(H), 13(n)(7)(A), 13(n)(7)(B), and
13(n)(7)(C).\162\ That relief does not expire automatically, but rather
when the Commission specifies.\163\ The Commission is now specifying
that this exemption from Section 29(b) will expire on the Compliance
Date, or for those SDRs that are registered prior to the Compliance
Date, the date that the Commission grants each SDR's registration.
---------------------------------------------------------------------------

    \162\ Effective Date Order, 76 FR at 36307, supra note 9.
    \163\ Effective Date Order, 76 FR at 36307, supra note 9.
---------------------------------------------------------------------------

2. Implementation Policy Statement
    As discussed above, on June 11, 2012, the Commission issued a
statement of general policy on the anticipated sequencing of compliance
dates of final rules to be adopted under Title VII. The Implementation
Policy Statement stated that compliance with the SDR Rules ``earlier in
the implementation process should facilitate the development and
utilization of SDRs in a regulated manner.'' \164\ Among other things,
the Implementation Policy Statement requested comment on whether the
Commission should adopt a phase-in of the SDR Rules and whether SDRs
should be able to secure a grace period to defer compliance with some
or all of the requirements of Exchange Act Section 13(n) and the SDR
Rules.\165\
---------------------------------------------------------------------------

    \164\ Implementation Policy Statement, 77 FR at 35631, supra
note 10.
    \165\ Implementation Policy Statement, 77 FR at 35634, supra
note 10.
---------------------------------------------------------------------------

B. Summary of Comments

    While only two commenters on implementation referred specifically
to the SDR Rules, the Commission believes that other comments,
particularly those related to timing with respect to implementing rules
on SBS reporting, are relevant to the implementation of the SDR Rules
as well. Eight commenters suggested that a phase-in approach to the SDR
Rules or SBS reporting generally may be appropriate.\166\ The
commenters generally indicated that a phase-in would be necessary to
enable existing SDRs and other market participants to make the
necessary changes to their operations to comply with the new

regulatory requirements.\167\ One of the commenters who advocated a
phase-in approach also recognized the importance of reporting SBS data
to SDRs as an early part of the Dodd-Frank Act implementation
process.\168\
---------------------------------------------------------------------------

    \166\ See Barclays*, supra note 21; DTCC 2, supra note 19
(``[T]he Commission [should] ensure that the registration process
does not interrupt current operation of existing trade repositories
who intend to register as SDRs. This can be achieved as a phase-in
for existing SDRs where services will need to be amended to conform
with the final rules given the compressed time period between the
publication of the final rules and the effective date of the Dodd-
Frank Act.''); FIA*, supra note 21 (``[P]hase-in is critical for a
smooth implementation of the changes required under the Dodd-Frank
Act.''); FSF*, supra note 21; FSR Implementation, supra note 23; MFA
2, supra note 19; Morgan Stanley*, supra note 20 (``[G]iven the
market disruption that could result from the simultaneous
application of these requirements across products and markets, and
the potentially severe consequences to the markets and the larger
economy, we believe that a phase in approach is both permitted and
contemplated by Dodd-Frank, and desirable in order to maintain
orderly, efficient, liquid and inclusive markets.''); SIFMA
Implementation, supra note 22 (``Once SDRs are registered and [SBS
dealers] and [major SBS participants] have connected to them, data
reporting can begin. [SBS dealers] and [major SBS participants] will
not be able to provide, and [SDRs] will not be able to accept, all
data on Dodd-Frank Act-compliant timelines on the first day of
operation. Instead, there should be a phased process to develop the
procedures and connections needed to ultimately report all Dodd-
Frank Act-required data in the appropriate time frame.''); see also
DTCC 3, supra note 19; DTCC 5, supra note 19 (``[T]he final rules
should include implementation and compliance dates that are
unambiguous. . . . Appropriate time must be afforded to ensure that
implementation can take place smoothly for all market
participants.'').
    \167\ See, e.g., Barclays*, supra note 21 (``Changes envisioned
by Title VII require very significant investment into operational,
IT and other infrastructure--infrastructure that will take time and
resources to build, test and optimize. The ability to fund and
execute the necessary infrastructure build, as well as put in place
the risk management and operational processes needed to conduct
business under the new regulatory regime, will vary significantly by
asset class and type of market participant.''); DTCC 2, supra note
19 (stating that ``the final rules [should] be subject to a phase-in
period to allow an adequate period for existing service providers .
. . to make necessary changes to their service offerings,''
requesting that the Commission alternatively ``provide specific
transitional arrangements for existing infrastructures,'' and noting
that the continuation of counterparty reporting and the ability of
SDRs to receive and maintain current trade information on an ongoing
basis is ``imperative for effective oversight of systemic risk and
the continuance of the operational services to market
participants''); FSF*, supra note 21 (``New market infrastructure
and technologies, including central clearing services, data
reporting services and trading platforms, will be required to give
effect to the new Swap regulatory regime. Unless sufficient time is
allotted for these components of market infrastructure and
technologies to adequately develop, all market participants (and
particularly end users) will face interruptions in their ability to
enter into Swaps to hedge their business risks or manage investments
to meet client objectives.'').
    \168\ See MFA 2, supra note 19 (``[W]e believe the first two
priorities should be: (i) Expanding the use of central clearing for
liquid (`clearable') contracts; and (ii) having trade repositories
receive data on both cleared and bilateral swaps. These changes
would provide substantial benefits to the markets by enhancing price
transparency and competition for the most liquid swap transactions.
. . . Comprehensive reporting to SDRs and regulators . . . will
allow regulators to monitor systemic risk and individual risk
concentrations much more effectively, and intervene specifically as
necessary.''); see also FSF*, supra note 21 (The Commission ``should
prioritize implementation of data reporting, including registration
of [SDRs], to regulators ahead of real-time reporting and other
requirements, including public reporting. The [Commission] will
learn much about the full range of Swap markets from the data
collected by SDRs. This knowledge will be essential in developing
rules that meet Dodd-Frank's requirements while still allowing for
active and liquid Swap markets.'').
---------------------------------------------------------------------------

    Six commenters supported a phase-in approach based on asset
class.\169\ Some commenters supported a phase-in based on other
criteria.\170\ Some commenters indicated that a phase-in period, which
could be based on asset class or other SBS or market participant
attributes, is important in order to avoid market disruption.\171\
While one commenter indicated that connectivity concerns should not
delay implementation because it is easy for an SDR and other market
infrastructures to establish connectivity,\172\ another commenter
cautioned that market connectivity will take time to establish and
test.\173\ None of the commenters provided specific timeframes for a
phase-in approach.\174\
---------------------------------------------------------------------------

    \169\ See Barclays*, supra note 21 (``[W]e recommend that the
[Commission] phase in the clearing, execution and reporting
requirements gradually over time, staggered by asset class.''); DTCC
3, supra note 19 (``[P]hasing should focus first on the products
with the greatest automation and then on products with less
automation. The more widespread the automated processing, the higher
quality the data reported to SDRs. As automated processing is most
widely prevalent in credit derivatives . . . it should be the first
asset class implemented. Interest rate derivatives, being the next
most widely automated asset class, would be next, followed by FX
derivatives, then commodity and equity derivatives last.''); FSF*,
supra note 21 (``The [Commission] should phase in requirements based
on the state of readiness of each particular asset class (including,
where applicable, by specific products within an asset class) and
market participant type.''); FSR Implementation, supra note 23
(``[I]mplementing regulations on a product-by-product basis would
reduce the risk of significant market dislocation during a
transition period. For example, certain credit default swaps that
are already reported to a trade information warehouse, are highly
standardized, and are being regularly submitted for central clearing
. . . may be a natural choice with which to confirm that systems are
operating appropriately before expanding regulatory requirements to
other [asset] classes.''); AII Implementation, supra note 23
(``[C]learing and other requirements should come first for highly
liquid, standardized instruments, such as credit default swaps'' and
``[l]ess liquid products, such as certain physical commodity
instruments, should come afterward.''); SIFMA Implementation, supra
note 22 (``Reporting should also be phased in by asset class, based
on whether reporting infrastructure and data exist.'').
    \170\ See Morgan Stanley*, supra note 20 (``In addition to phase
in based on asset class and reporting times, reporting could also be
phased in based on how a product trades [e.g., whether the SBS is
cleared].''); FSR Implementation, supra note 23 (stating that ``it
may be prudent to have different portions of a single rulemaking
proposal take effect at different times and with due consideration
of steps that are preconditions to other steps''; suggesting, as an
example, that a requirement to designate a CCO should be implemented
quickly, but that the CCO be given time to design, implement, and
test the compliance system before any requirement to certify as to
the compliance system becomes effective; and supporting a phase-in
approach ``that recognizes the varying levels of sophistication,
resources and scale of operations within a particular category of
market participant''). But see Barclays*, supra note 21 (``Phasing
by type of market participant would not be useful for reporting
obligations, in [the commenter's] view, as the reported information
needs to reflect the entirety of the market to be useful for the
market participants and regulators.'').
    \171\ See, e.g., DTCC 2, supra note 19 (``[A]ppropriate
transitional arrangements [should] be made to avoid market
disruption by the implementation of the Proposed Rule. . . .
Restrictions to [the commenter's SDR] operation could introduce
significant operational risks to market participants.''); Barclays*,
supra note 21 (Phase-in by asset class would help ``ensure that both
the industry and SDRs have sufficient time to build and test the
needed infrastructure in order to prevent any potential market
disruptions that could result from the implementation of new
rules.''); see also FSR Implementation, supra note 23 (recommending
that the Commission consider resource constraints in evaluating
transition deadlines and stating that ``if there are a dozen rules
that would each take about a month to implement in isolation under
normal circumstances, it is unrealistic to expect all twelve rules
to be implemented one month from passage of final rules'').
    \172\ DTCC 3, supra note 19 (``Connectivity between
clearinghouses and [SB SEFs], as well as SDRs, is easy to establish
(and, in many instances, already exists) and should not be the
reason for delaying the implementation of real-time reporting
rules.'').
    \173\ FSR Implementation, supra note 23 (``Although we recognize
that central clearing, exchange trading and transparent reporting
are core aspects of the new regulatory system, they require a web of
interconnections that will take time to establish and test, and
their use should not become obligatory until such establishment and
testing is complete.'').
    \174\ But see Bank of Tokyo SBSR, supra note 27 (requesting
``that the [Commission] . . . defer compliance requirements under
Title VII until December 31, 2012'' to ``facilitate coordination
among national authorities in the United States, Japan and other
relevant jurisdictions in order to avoid overlapping and
inconsistent regulatory regimes''). Because the timeframe suggested
by this commenter has passed, this aspect of the comment is now
moot.
---------------------------------------------------------------------------

    In addition to the comments received above, participants in the
Implementation Joint Roundtable provided input regarding the
appropriateness of a phase-in period for Title VII rulemakings. Many of
the participants in the Implementation Joint Roundtable advocated for a
phase-in period for the SDR Rules or SBS reporting generally; however,
the participants' specific approaches varied. While some participants
at the Implementation Joint Roundtable advocated a phase-in by asset
class,\175\ other participants suggested that a phase-in should be
based on other product attributes, such as the liquidity of the
product,\176\ or based on the development of other market
infrastructures.\177\ Another participant suggested that SDRs'
obligations to provide reports of SBS transactions to regulators--which
the Commission believes are relevant to the direct

electronic access requirement in Rule 13n-4(b)(5) \178\--should be
implemented in a prioritized manner, with daily batch snapshots
provided until more real-time solutions are developed.\179\ None of the
Implementation Joint Roundtable participants provided specific
timeframes for a phase-in approach.
---------------------------------------------------------------------------

    \175\ See, e.g., statement of Ronald Levi, GFI Group, Inc., at
Implementation Joint Roundtable (``[D]epending on which asset
classes go first or which asset classes are amongst the first phase
will determine how long it takes us.''); statement of Larry
Thompson, The Depository Trust & Clearing Corporation, at
Implementation Joint Roundtable (``And right now, at least for a
couple of classes, they're in a much better position to be able to
see transparent into the marketplace, especially the credit default
swap [marketplace] . . . .''); statement of Jamie Cawley, Javelin
Capital Markets, LLC, at Implementation Joint Roundtable
(``Certainly from where we sit . . . interest rate swaps, vanilla
swaps clearly qualify for a day one [implementation and] index
[swaps] right behind that or on the same day. And the constituents
of the indices certainly as well. And then it trails off from there
over time. . . .'').
    \176\ See, e.g., statement of Chris Edmonds, ICE Trust, at
Implementation Joint Roundtable (``[I]nstead of looking at it
necessarily by asset class, the commissions may want to look at it
by the instruments that have the greatest amount of liquidity.'').
    \177\ See, e.g., statement of Sunil Cutinho, CME Group, at
Implementation Joint Roundtable (``[W]e don't believe that . . .
data should be in an SDR before clearing has to be done.'').
    \178\ See Section VI.D.2.c.ii of this release discussing direct
electronic access.
    \179\ Statement of Raf Pritchard, TriOptima--triResolve, at
Implementation Joint Roundtable (``[W]e would observe obviously that
building real-time solutions is a lot more critical and sensitive
than building daily batch solutions. And so in terms of getting that
first cut, it might make sense to prioritize a daily batch snapshot
of the market. . . . [T]hen you could sequence the real-time--the
more real-time sensitive parts of the reporting requirements
subsequent to that.'').
---------------------------------------------------------------------------

C. Sequenced Effective Date and Compliance Date for the SDR Rules

    After considering the issues raised by the commenters and
Implementation Joint Roundtable participants, the Commission has
determined to adopt, in lieu of a phase-in approach, a sequenced
effective date and compliance date for the SDR Rules \180\ that
recognizes the practical constraints arising from the time necessary
for persons to analyze and understand the final rules adopted by the
Commission, to develop and test new systems required as a result of the
Dodd-Frank Act's regulation of SDRs and the SDR Rules, to prepare and
file a completed Form SDR, to be in a position to demonstrate their
ability to meet the criteria for registration set forth in Rule 13n-
1(c)(3),\181\ and to register with the Commission. The Commission
agrees with commenters who have suggested that the Commission require
the reporting of SBS transaction information to registered SDRs early
in the implementation process because the Commission will then be able
to utilize the information reported to registered SDRs to inform other
aspects of its Title VII rulemaking.\182\ Adopting and implementing a
regulatory framework for SDRs will facilitate access by the Commission
and market participants to SBS information collected by SDRs.\183\
---------------------------------------------------------------------------

    \180\ Title VII provides the Commission with the flexibility to
establish effective dates beyond the minimum 60 days specified
therein for Title VII provisions that require a rulemaking. See
Dodd-Frank Act Section 774 (specifying that the effective date for a
provision requiring a rulemaking is ``not less than 60 days after
publication of the final rule or regulation implementing such
provision''). Furthermore, as with other rulemakings under the
Exchange Act, the Commission may set compliance dates (which may be
later than the effective dates) for rulemakings under the Title VII
amendments to the Exchange Act. Together, this provides the
Commission with the ability to sequence the implementation of the
various Title VII requirements in a way that effectuates the policy
goals of Title VII while minimizing unnecessary disruption or costs.
See Effective Date Order, 76 FR at 36289, supra note 9.
    \181\ See Section VI.A.2.c of this release discussing Rule 13n-
1(c), which requires that the Commission make a finding that a
``security-based swap data repository is so organized, and has the
capacity, to be able to assure the prompt, accurate, and reliable
performance of its functions as a security-based swap data
repository, comply with any applicable provision of the federal
securities laws and the rules and regulations thereunder, and carry
out its functions in a manner consistent with the purposes of
section 13(n) of the [Exchange] Act . . . and the rules and
regulations thereunder.''
    \182\ See, e.g., FSF*, supra note 21 (noting that the Commission
``will be in a better position to adopt rules that achieve Dodd-
Frank's goals while maintaining active and viable [SBS] markets'' if
SDRs are required to register and data reporting is enabled).
    \183\ See, e.g., FSF*, supra note 21 (``The [Commission] should
prioritize implementation of data reporting, including registration
of Swap data repositories (`SDRs'), to regulators ahead of real-time
reporting and other requirements, including public reporting. The
[Commission] will learn much about the full range of Swap markets
from the data collected by SDRs. This knowledge will be essential in
developing rules that meet Dodd-Frank's requirements while still
allowing for active and liquid Swap markets.'').
---------------------------------------------------------------------------

    All of the SDR Rules will become effective 60 days following
publication of the rules in the Federal Register (``Effective Date'').
However, the exemptions to provisions in Exchange Act Section 13(n)
that the Commission provided in the Effective Date Order will continue
to be in effect following the adoption of the SDR Rules. Consistent
with the Effective Date Order, the exemptive relief remains in place
and will expire: (1) Upon the compliance date for the SDR Rules, or (2)
for those SDRs that are registered prior to such compliance date, the
date that the Commission grants each SDR's registration.\184\
---------------------------------------------------------------------------

    \184\ See Effective Date Order, 76 FR at 36306, supra note 9.
---------------------------------------------------------------------------

    SDRs must be in compliance with the SDR Rules by 365 days after
publication of the rules in the Federal Register (``Compliance
Date'').\185\ Absent an exemption, SDRs must be registered with the
Commission and in compliance with the federal securities laws and the
rules and regulations thereunder (including the applicable Dodd-Frank
Act provisions and all of the SDR Rules) by the Compliance Date, and
all exemptions that the Commission provided in the Effective Date Order
will expire on the Compliance Date.\186\ After the Compliance Date,
pursuant to Exchange Act Section 13(n)(1), it will be unlawful, absent
exemptive relief,\187\ (1) for a person, unless registered with the
Commission as an SDR, directly or indirectly, to make use of the mails
or any means or instrumentality of interstate commerce to perform the
functions of an SDR or (2) for an SDR to fail to comply with all
applicable statutory provisions and the SDR Rules.
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    \185\ In a separate release, the Commission is proposing a
compliance schedule for portions of Regulation SBSR in which the
timeframes for compliance with the reporting and public
dissemination requirements would key off of the registration of
SDRs. See Regulation SBSR Proposed Amendments Release, supra note
13.
    \186\ Any SDR that is registered with the Commission before the
Compliance Date will be required, absent an exemption, to comply
with Exchange Act Section 13(n); the SDR Rules; and Regulation SBSR,
as applicable to registered SDRs, as of the date the Commission
grants registration to the SDR. See Effective Date Order, 76 FR at
36306, supra note 9 (granting exemptions to certain provisions in
Exchange Act Section 13(n) and indicated that the exemptions will
expire on the earlier of (1) the date the Commission grants
registration to an SDR and (2) the earliest compliance date set
forth in any of the final rules regarding the registration of SDRs).
    \187\ See Section VI.K of this release discussing Rule 13n-12,
which provides an exemption for certain non-U.S. persons from the
SDR requirements.
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    The Commission believes that setting the Compliance Date for the
SDR Rules at 365 days after publication of the rules in the Federal
Register adequately addresses commenters' concerns \188\ by providing
SDRs with sufficient time to become compliant with the Dodd-Frank Act
and the SDR Rules and for the Commission to act on SDRs' applications
for registration, while also allowing SDRs to continue performing the
functions of an SDR without interruption.
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    \188\ See, e.g., DTCC 2, supra note 19.
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    The Commission notes that if an SDR files its Form SDR close to the
Compliance Date, it is possible that the Commission will not have
sufficient time to consider the Form SDR and the SDR may not be
registered with the Commission by the Compliance Date. In this case,
the SDR must cease any operations that cause it to meet the statutory
definition of an SDR as of the Compliance Date and not begin or resume
such operations until (and unless) the Commission grants the SDR's
registration or provides the SDR with an exemption. As discussed below,
Rule 13n-1(c), as adopted, provides that the Commission will grant
registration to an SDR or institute proceedings to determine whether
registration should be granted or denied within 90 days of the date of
the publication of notice of the filing of an application for
registration. Accordingly, SDRs should consider that the Commission may
take several months following the publication of notice of the filing
of an application for registration \189\ to review

an SDR's application for registration and assess whether the SDR meets
the criteria for registration set forth in Rule 13n-1(c)(3).\190\
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    \189\ The Commission's review of the application for
registration could extend beyond 90 days. Rule 13n-1(c) provides
that the Commission will grant registration or institute proceedings
to determine whether registration should be granted or denied within
90 days of the publication of notice of the filing of an application
for registration ``or within such longer period as to which the
applicant consents.''
    \190\ As provided in Rule 13n-1(c)(3), in order to grant the
registration of an SDR, the Commission must make a finding that
``such security-based swap data repository is so organized, and has
the capacity, to be able to assure the prompt, accurate, and
reliable performance of its functions as a security-based swap data
repository, comply with any applicable provision of the federal
securities laws and the rules and regulations thereunder, and carry
out its functions in a manner consistent with the purposes of
section 13(n) of the [Exchange] Act . . . and the rules and
regulations thereunder.'' In addition to the application for
registration on Form SDR, Rule 13n-1(b) provides that, ``[a]s part
of the application process, each [SDR] shall provide additional
information to any representative of the Commission upon request.''
In determining whether an applicant meets the criteria set forth in
Rule 13n-1(c), the Commission will consider the application and any
additional information obtained from the SDR, which may include
information obtained in connection with an inspection or examination
of the SDR. If the Commission is unable to determine that the
applicant meets the criteria for registration set forth in Rule 13n-
1(c)(3), then the Commission may not grant registration to the
applicant. See also Section VI.A.1 of this release discussing Form
SDR and information required for registration as an SDR.
---------------------------------------------------------------------------

    After weighing the practical considerations with respect to SDRs'
preparations for compliance with the Dodd-Frank Act and the SDR Rules,
as well as the benefits to investors and regulators of adopting the SDR
Rules in order to facilitate the establishment and utilization of
registered SDRs, the Commission has determined not to adopt a phase-in
approach, as suggested by some commenters and Implementation Joint
Roundtable participants.\191\ Specifically, the Commission does not
believe that it is necessary or appropriate to tailor a phase-in period
for the SDR Rules based on specific asset classes, type of market
participant, or other SBS attributes. While a phase-in approach based
on asset class, type of market participant, or other attributes may
have been appropriate had the Commission adopted rules prior to the
July 16, 2011 effective date of the Dodd-Frank Act,\192\ the Commission
believes that the passage of time has afforded ample time for the
development of SDR infrastructure. This belief is based, in part, on
the existence of four swap data repositories already provisionally
registered with the CFTC.\193\ These swap data repositories, most of
which will likely register as SDRs with the Commission, have had
approximately three years to implement the final swap data repository
rules adopted by the CFTC on August 4, 2011 (Part 49 swap data
repository rules)\194\ and December 20, 2011 (Part 45 swap data
recordkeeping and reporting rules).\195\ The Commission believes that
the CFTC's Part 49 rules \196\ and Part 45 rules \197\ applicable to
swap data repositories are substantially similar to the final SDR
Rules. Because of the substantial similarity between the Commissions'
rules, to the extent that the SDRs are in compliance with the CFTC's
rules, they are likely already in substantial compliance with the
Commission's SDR Rules.
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    \191\ See Section V.B of this release discussing commenters' and
Implementation Joint Roundtable participants' views with respect to
phase-in approaches.
    \192\ See Section V.A.1 of this release discussing the Effective
Date Order.
    \193\ CFTC Rule 49.3(b) provides for provisional registration of
a swap data repository. 17 CFR 49.3(b).
    \194\ See CFTC Part 49 Adopting Release, supra note 36.
    \195\ See CFTC Part 45 Adopting Release, supra note 37.
    \196\ See CFTC Part 49 Adopting Release, supra note 36.
    \197\ See CFTC Part 45 Adopting Release, supra note 37.
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VI. Discussion of Rules Governing SDRs

    Exchange Act Section 13(n), enacted in Dodd-Frank Act Section
763(i), makes it ``unlawful for any person, unless registered with the
Commission, directly or indirectly, to make use of the mails or any
means or instrumentality of interstate commerce to perform the
functions of a security-based swap data repository.'' \198\ To be
registered and maintain such registration, each SDR is required (absent
an exemption) to comply with the requirements and core principles
described in Exchange Act Section 13(n), as well as with any
requirements that the Commission adopts by rule or regulation.\199\ The
Exchange Act also requires each SDR to designate an individual to serve
as a CCO and specifies the CCO's duties.\200\ In addition, the Exchange
Act grants the Commission authority to inspect and examine any
registered SDR and to prescribe data standards for SDRs.\201\
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    \198\ 15 U.S.C. 78m(n)(1); see also Section III.A of this
release discussing definition of ``security-based swap data
repository.'' Any person that is required to be registered as an SDR
under Exchange Act Section 13(n) must register with the Commission
(absent an exemption), regardless of whether that person is also
registered under the Commodity Exchange Act (``CEA'') as a swap data
repository. Exchange Act Section 13(n)(8), 15 U.S.C. 78m(n)(8); see
also CEA Section 21, 7 U.S.C. 24a (regarding swap data
repositories). Under the Exchange Act, a clearing agency may
register as an SDR. Exchange Act Section 13(m)(1)(H), 15 U.S.C.
78m(m)(1)(H). In addition, any person that is required to register
as an SDR pursuant to this section must register with the Commission
(absent an exemption) regardless of whether that person is also
registered as an SB SEF. See SB SEF Proposing Release, supra note
29.
    \199\ See Exchange Act Section 13(n)(3), 15 U.S.C. 78m(n)(3).
    \200\ See Exchange Act Section 13(n)(6), 15 U.S.C. 78m(n)(6).
    \201\ See Exchange Act Sections 13(n)(2) and 13(n)(4), 15 U.S.C.
78m(n)(2) and 78m(n)(4). In a separate release, the Commission
proposed rules prescribing the data elements that an SDR would be
required to accept for each SBS in association with requirements
under Dodd-Frank Act Section 763(i), adding Exchange Act Section
13(n)(4)(A) relating to standard setting and data identification.
See Regulation SBSR Proposing Release, 75 FR at 75284-5, supra note
8 (proposed Rule 901); see also Cross-Border Proposing Release, 78
FR at 31212-3, supra note 3 (re-proposing Rule 901). The Commission
is concurrently adopting Regulation SBSR, including rules
prescribing the data elements that an SDR is required to accept. See
Regulation SBSR Adopting Release, supra note 13 (Rule 901).
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A. Registration of SDRs (Rule 13n-1 and Form SDR)

    Proposed Rule 13n-1 and proposed Form SDR would establish the
procedures by which a person may apply to the Commission for
registration as an SDR. After considering the comments, the Commission
is adopting Rule 13n-1 and Form SDR substantially as proposed, with
certain modifications.\202\
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    \202\ The Commission did not receive any comments on the
definitions in proposed Rule 13n-1(a) and is adopting each of them
as proposed, other than revising the definition of ``tag'' to have
the same meaning as set forth in Rule 11 of Regulation S-T and
deleting the definition of ``EDGAR Filer Manual,'' which is no
longer referenced in the revised definition of ``tag.'' See Rule
13n-1(a)(2). The Commission is also revising the heading of
paragraph (a) of the rule by changing ``Definition'' to
``Definitions'' to reflect that there is more than one definition in
the paragraph.
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1. New Form SDR; Electronic Filing
a. Proposed Form SDR
    As proposed, Form SDR would require an applicant seeking to
register as an SDR and a registered SDR filing an amendment (including
an annual amendment) to indicate the purpose for which it is filing the
form and then to provide several categories of information. As part of
the application process, each SDR would be required to provide
additional information to the Commission upon request. Applicants would
be required to file Form SDR electronically in a tagged data format. As
proposed, Form SDR would require all SDRs to provide the same
information, with two related limited exceptions applicable to non-
resident SDRs. First, if the applicant is a non-resident SDR, then Form
SDR would require the applicant to attach as an exhibit to the form an
opinion of counsel stating that the SDR can, as a matter of law,
provide the Commission with prompt access to the SDR's books and
records and that the SDR can, as a matter of law, submit to onsite
inspection and examination by the Commission. Second, Form SDR would

require an applicant that is a non-resident SDR to certify to this
(i.e., the SDR can, as a matter of law, provide the Commission with
prompt access to the SDR's books and records and the SDR can, as a
matter of law, submit to onsite inspection and examination by the
Commission).\203\
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    \203\ See Items 12 and 46 of proposed Form SDR; see also
Sections VI.A.1 and VI.A.5 of this release discussing legal opinion
of counsel and certification by non-resident SDRs on Form SDR.
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b. Comments on Proposed Form SDR
    Two commenters submitted comments relating to this proposal.\204\
One commenter urged the Commission to ensure that the registration
process does not interfere with the ongoing operation of existing
SDRs.\205\ This commenter also addressed the items to be provided on
Form SDR and stressed the importance of gathering information regarding
an applicant's information technology systems, including its ability to
provide direct electronic access to the Commission.\206\ In addition,
the commenter supported combining new Form SDR with Form SIP and
further suggested that the Commission and the CFTC publish a joint form
for registration with the Commission as an SDR and SIP and with the
CFTC as a swap data repository.\207\ The commenter also suggested that
the Commission require applicants to submit their rulebooks as part of
the registration process on Form SDR.\208\
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    \204\ See DTCC 2, supra note 19; ESMA, supra note 19; see also
DTCC 3, supra note 19. Five commenters submitted comments to the
Commission regarding registration of non-resident SDRs. See ESMA,
supra note 19; DTCC 2, supra note 19; Foreign Banks SBSR, supra note
27; BofA SBSR, supra note 27; US & Foreign Banks, supra note 24.
With the exception of the certification and legal opinion
requirements discussed later in this section, the Commission
discussed cross-border issues applicable to SDRs that were raised by
Title VII in the Cross-Border Proposing Release, and is adopting an
exemption from the SDR requirements for certain non-U.S. persons, as
discussed in Section VI.K of this release.
    \205\ DTCC 2, supra note 19.
    \206\ DTCC 2, supra note 19 (``[I]t is essential that proposed
Form SDR request information related to the SDR's operating
schedule, real-time processing, existence of multiple redundant
infrastructures for continuity, strong information security
controls, and robust reporting operations (including direct
electronic access by the Commission). Because an SDR provides
important utility services to regulators and market participants,
such resiliency and redundancy should be evaluated in light of the
significant policies and procedures for establishing such
redundancy, including several backup locations in different
geographic regions.'').
    \207\ DTCC 2, supra note 19; DTCC 3, supra note 19
(``Harmonization in the registration process for SDRs is necessary.
Requiring one SDR to complete three sets of registration forms--an
SDR application to the CFTC, an SDR application to the SEC and Form
SIP to the SEC--demonstrates a specific instance where the
regulatory agencies should come together, determine the information
necessary for registration and jointly publish a common registration
application.'').
    \208\ DTCC 3, supra note 19 (``The [Commission] should require
rulebooks for SDRs prior to operation and as part of the
registration process. SDRs will need to complete legal agreements
with clearing-houses and among the users of an SDR. These agreements
generally constitute the agreement of the user to abide by published
rules and/or procedures of the SDR and generally have a notice of
change to permit amendments without having to re-execute with all
users. These agreements should be in place before SDRs operate under
the new regulatory regime.'').
---------------------------------------------------------------------------

    One commenter expressed concern that non-resident SDRs would be
subject to a stricter regulatory regime than that applicable to
resident SDRs due to the proposed opinion of counsel requirement, which
is applicable only to non-resident SDRs.\209\
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    \209\ ESMA, supra note 19 (``[N]on-resident SDRs are actually
subject to a stricter regime than the resident ones, as they need to
provide a legal opinion certifying that they can provide the SEC
with prompt access to their books and records and that they can be
subject to onsite inspections and examinations by the SEC.'').
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c. Final Form SDR
    After considering the comments, the Commission is adopting Form SDR
substantially as proposed with certain modifications. Form SDR includes
a set of instructions for its completion and submission. These
instructions are included in this release, together with Form SDR. The
instructions require an SDR to indicate the purpose for which it is
filing the form (i.e., application for registration, interim or annual
amendment to an application or to an effective registration,\210\ or
withdrawal from registration \211\) and to provide information in seven
categories: (1) General information, (2) business organization, (3)
financial information, (4) operational capability, (5) access to
services and data, (6) other policies and procedures, and (7) legal
opinion. As part of the application process, each SDR will be required
to provide additional information to any representative of the
Commission upon request.\212\
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    \210\ See Section VI.A.4 of this release discussing amendments
on Form SDR.
    \211\ See Section VI.B of this release discussing withdrawal
from registration as an SDR.
    \212\ See Rule 13n-1(b). The Commission is revising the last
sentence of proposed Rule 13n-1(b) to use the statutorily defined
term ``security-based swap data repository'' rather than ``SDR'' to
be consistent with the rest of the SDR Rules. The Commission is also
revising the last sentence of proposed Rule 13n-1(b) to require SDRs
to provide additional information upon request to ``any
representative of the Commission,'' rather than ``the Commission.''
This revision is intended to clarify that such requests will be made
by Commission staff.
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    As noted in the Proposing Release, the Commission believes that
permitting an SDR to provide information in narrative form in Form SDR
will allow the SDR greater flexibility and opportunity for meaningful
disclosure of relevant information.\213\ The Commission believes that
it is necessary to obtain the information requested in Form SDR to
enable the Commission to determine whether to grant or deny an
application for registration. Specifically, the information will assist
the Commission in understanding the basis for registration as well as
an SDR's overall business structure, financial condition, track record
in providing access to its services and data, technological
reliability, and policies and procedures to comply with its statutory
and regulatory obligations. The information will also be useful to the
Commission in tailoring any requests for additional information that it
may ask an SDR to provide. Furthermore, the required information will
assist Commission representatives in the preparation of their
inspection and examination of an SDR.\214\
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    \213\ Proposing Release, 75 FR at 77310, supra note 2.
    \214\ The Commission is revising Form SDR from proposed Form SDR
to include disclosure relating to the Paperwork Reduction Act. See
Section VII of this release regarding the Paperwork Reduction Act.
---------------------------------------------------------------------------

    Form SIP.\215\ In the Proposing Release, the Commission noted that
proposed Regulation SBSR would require each registered SDR to register
with the Commission as a SIP on Form SIP, and requested comment on
whether the Commission should combine Form SDR and Form SIP, such that
an SDR would register as an SDR and SIP using only one form.\216\ One
commenter supported combining Form SDR with Form SIP.\217\ Taking into
consideration this commenter's view and in an effort to minimize the
burden of filing multiple registration forms, the Commission has
decided to amend proposed Form SDR to accommodate SIP registration;
thus, an SDR will register and amend such registration as an SDR and as
a SIP using one combined form.\218\ An

amendment or withdrawal on Form SDR will also constitute an amendment
or withdrawal of SIP registration pursuant to Exchange Act Section 11A
and the rules and regulations thereunder.\219\ The Commission has made
certain changes to proposed Form SDR to incorporate the additional
information requested on Form SIP of applicants for registration as a
SIP.\220\ However, there are some disclosures required in Form SIP that
have not been incorporated into Form SDR because they do not appear to
be relevant to SDRs.\221\ The Commission notes that by requiring a
registered SDR to register as a SIP, the requirements of SIP
registration provided in Exchange Act Section 11A, including
publication of notice of the filing of an application for registration,
will apply to applications filed on Form SDR \222\ and, accordingly,
the Commission will publish notice of the filing of applications for
registration on Form SDR in the Federal Register.\223\ In addition, the
Commission expects that it will make the filed applications available
on its Web site, except for information where confidential treatment is
requested by the applicant \224\ and granted by the Commission.\225\
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    \215\ Today, the Commission is adopting Regulation SBSR, which
includes a requirement for each registered SDR to register as a SIP,
as defined in Exchange Act Section 3(a)(22), 15 U.S.C. 78c(a)(22).
See Regulation SBSR Adopting Release, supra note 13 (Rule 909).
    \216\ Proposing Release, 75 FR at 77313, supra note 2. See also
Regulation SBSR Proposing Release, 75 FR at 75287, supra note 8
(proposed Rule 909); Cross-Border Proposing Release, 78 FR at 31215-
6, supra note 3 (re-proposing Rule 909).
    \217\ DTCC 2, supra note 19; see also DTCC 3, supra note 19.
    \218\ Form SDR will be used only by SIPs that also register as
SDRs; Form SIP will continue to be used by applicants for
registration as SIPs not seeking to become dually-registered as an
SDR and SIP, and for interim amendments or annual amendments by
registered SIPs that are not dually-registered as an SDR and SIP. In
discussing Form SDR as adopted in this release, references to SDRs
may, where applicable, refer to SDRs and SIPs, collectively.
    \219\ See General Instruction 2 to Form SDR.
    \220\ See Item 32(a)(1) (adding ``(or disseminate for display or
other use)'' and ``(e.g., number of inquiries from remote
terminals)''), Item 32(a)(2) (adding ``(or disseminate for display
or other use)''), new Item 33(c) (With respect to each of an
applicant's ``services that involves the supply of information to a
quotation board, ticker device, electronic information terminal, or
other such device, [the applicant must] state the total number of
devices to which information is, or will be supplied (`serviced')
and any minimum and or maximum number of devices required or
permitted by agreement or otherwise to be serviced by the applicant.
In addition, [an applicant must] define the data elements for each
service.''); and Item 36 of Form SDR (adding ``processing, preparing
for distribution, and publication''); see also new General
Instructions 2 and 3 and conforming revisions to General
Instructions 7 and 9 to Form SDR and Items 16, 19, 20, 23, 25-35,
and 39 of Form SDR.
    \221\ See, e.g., Item 31 of Form SIP, 17 CFR 249.1001 (requiring
applicant to state whether certain specifications or qualifications
are imposed at the direction of a national securities exchange or a
registered securities association).
    \222\ 15 U.S.C. 78k-1(b).
    \223\ As discussed below, the Commission is revising Rule 13n-
1(c) from the proposal to reflect this publication requirement with
respect to the registration process for Form SDR. See Section
VI.A.2.c of this release discussing revision to Rule 13n-1(c) to
provide that: (1) Within 90 days of the date of the publication of
notice of the filing of an application for registration (or within
such longer period as to which the SDR consents), the Commission
shall either grant the registration by order or institute
proceedings to determine whether registration should be granted or
denied and (2) proceedings instituted pursuant to Rule 13n-1(c)
shall be concluded not later than 180 days after the date of the
publication of notice of the filing of the application for
registration, absent an extension.
    \224\ As discussed below, the Commission is adopting technical
amendments to Exchange Act Rule 24b-2 to clarify that the
confidential portion of electronic filings by SDRs must be filed
electronically and to require SDRs to request confidential treatment
electronically. The Commission is also adopting technical amendments
to Rule 101 of Regulation S-T to provide that, except as otherwise
provided, all filings by SDRs, including any information with
respect to which confidential treatment is requested, must be filed
electronically.
    \225\ The instructions to Form SDR have been modified from the
proposal to clarify that information supplied on the form may be
made available on the Commission's Web site. See General Instruction
7 to Form SDR (stating that ``[e]xcept in cases where confidential
treatment is requested by the applicant and granted by the
Commission pursuant to the Freedom of Information Act and the rules
of the Commission thereunder, information supplied on this form may
be made available on the Commission's Web site, will be included
routinely in the public files of the Commission, and will be
available for inspection by any interested person''). The Commission
expects that non-confidential information supplied on an SDR's
completed application for registration will be made available on the
Commission's Web site; other filings on Form SDR may be made
available on the Commission's Web site.
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    The Commission has determined not to adopt a joint form for
registration with the Commission as an SDR and SIP and with the CFTC as
a swap data repository, as suggested by one commenter.\226\ First, the
CFTC has already adopted the final registration rules and form for swap
data repositories to use.\227\ Adopting a joint form for registration
would require the CFTC to amend its adopted Form SDR while the industry
is still in the implementation phase and swap data repositories are
already provisionally registered with the CFTC.\228\ Second, the CFTC's
registration form for swap data repositories is substantially similar
to the Commission's Form SDR. Thus, the Commission does not anticipate
that filing with each Commission separately will entail a significant
cost for dual registrants even though the Commission and the CFTC have
tailored their respective forms in order to meet the specific needs of
each agency and their respective statutory mandates. For example, the
Commission is revising proposed Form SDR to require an SDR to provide
certain information to address Exchange Act requirements applicable to
SIPs. The CFTC's Form SDR does not require information to address some
of these requirements.
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    \226\ See DTCC 3, supra note 19.
    \227\ See CFTC Part 49 Adopting Release, supra note 36.
    \228\ As noted above, CFTC Rule 49.3(b) provides for provisional
registration of a swap data repository. 17 CFR 49.3(b).
---------------------------------------------------------------------------

    General Information.\229\ Form SDR requires an applicant to provide
contact information, information concerning any predecessor SDR (if
applicable), a list of asset classes of SBSs for which the applicant is
collecting and maintaining data or for which it proposes to collect and
maintain data,\230\ a description of the functions that it performs or
proposes to perform, and general information regarding its business
organization.\231\ This information will assist the Commission and its
staff in evaluating applications for registration and overseeing
registered SDRs for purposes of determining whether the SDRs are able
to comply with the federal securities laws and the rules and
regulations thereunder.
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    \229\ In the General Information section of Form SDR, the
Commission is adding a new item (Item 12) to implement the
requirement in Rule 13n-2(b) for a registered SDR seeking to
withdraw from registration to identify a custodian of its books and
records, and the address(es) where the books and records will be
located. See Section VI.B of this release discussing Rule 13n-2(b).
    \230\ As proposed, Item 6 of Form SDR implicitly pertained to
the data that an applicant is collecting and maintaining or proposes
to collect and maintain. The Commission is revising Item 6 of Form
SDR from the proposal to make this explicit by adding references to
``data.''
    \231\ See Items 1-10 of Form SDR. The Commission is revising
Form SDR from the proposal to remove the heading ``Business
Organization'' in the ``General Information'' section because the
heading is superfluous and may lead to confusion with another
section entitled ``Exhibits--Business Organization.'' General
information regarding business organization is requested in the
``General Information'' section, whereas detailed information
regarding business organization is requested in the ``Exhibits--
Business Organization'' section. As proposed, Item 10 of Form SDR
requested information regarding the filing date of ``partnership
articles'' and ``place where partnership agreement was filed.'' For
consistency, the Commission is revising Item 10 of Form SDR from the
proposal to request the filing date of the ``partnership agreement''
rather than ``partnership articles.''
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    An applicant is required to acknowledge and consent that any notice
or service of process, pleadings, or other documents in connection with
any action or proceeding against the applicant may be effectuated by
certified mail to an officer or person specified by the SDR at a given
U.S. address.\232\ The Commission believes that such consent is
important to minimize any logistical obstacles (e.g., locating
defendants or respondents abroad) that the Commission may encounter
when attempting to provide notice to an applicant or to effect service,
including service overseas.
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    \232\ See Item 11 of Form SDR.
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    Form SDR must be signed by a person who is duly authorized to act
on behalf of the applicant.\233\ The signer is

required to certify that all information contained in the application,
including the required items and exhibits, is true, current, and
complete.\234\ The Commission believes that this certification
requirement will serve as an effective means to assure that the
information filed on Form SDR with the Commission is reliable.\235\ The
Commission notes that this certification is consistent with the
certification provisions in the registration forms for SIPs, broker-
dealers, and investment advisers (i.e., Forms SIP, BD, and ADV).\236\
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    \233\ See Item 13 of Form SDR.
    \234\ See Item 13 of Form SDR. The Commission is revising the
signature block from the proposal to be consistent with an SDR's
filing requirements for interim amendments on Form SDR. See note
infra 356 (discussing amendment of signature block). The Commission
is also revising the signature block to state that ``[i]ntentional
misstatements or omissions of fact constitute federal criminal
violations (see 18 U.S.C. 1001 and 15 U.S.C. 78ff(a)).'' This
statement was included in Instruction 5 of proposed Form SDR, and is
included in Instruction 7 of Form SDR, as adopted. This statement
has been added to the signature block to remind the signer of the
consequences of intentional misstatements or omissions of fact. See
18 U.S.C. 1001 (applying to ``whoever, in any matter within the
jurisdiction of the executive, legislative, or judicial branch of
the Government of the United States, knowingly and willfully -- (1)
falsifies, conceals, or covers up by any trick, scheme, or device a
material fact; (2) makes any materially false, fictitious, or
fraudulent statement or representation; or (3) makes or uses any
false writing or document knowing the same to contain any materially
false, fictitious, or fraudulent statement or entry''); 15 U.S.C.
78ff(a) (applying to, among other persons, ``any person who
willfully and knowingly makes, or causes to be made, any statement
in any application, report, or document required to be filed under
[the Exchange Act] or any rule or regulation thereunder or any
undertaking contained in a registration statement as provided in
subsection (d) of section 78o of [Title 15 of the U.S. Code], or by
any self-regulatory organization in connection with an application
for membership or participation therein or to become associated with
a member thereof, which statement was false or misleading with
respect to any material fact'').
    \235\ Accord Registration of Municipal Advisors, Exchange Act
Release No. 70462 (Sept. 20, 2013), 78 FR 67468, 67568 (Nov. 12,
2013) (stating that the certification requirement in Form MA-W
pertaining to the accuracy and completeness of information
previously submitted in Form MA should serve as an effective means
to assure that the information supplied is correct).
    \236\ See Form SIP, 17 CFR 249.1001, available at http://www.sec.gov/about/forms/formsip.pdf; Form BD, 17 CFR 249.501,
available at http://www.sec.gov/about/forms/formbd.pdf; Form ADV, 17
CFR 279.1, available at http://www.sec.gov/about/forms/formadv.pdf.
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    If an applicant is a non-resident SDR, then the signer of Form SDR
is also required to certify that the applicant can, as a matter of law,
and will provide the Commission with prompt access to the applicant's
books and records and that the applicant can, as a matter of law, and
will submit to onsite inspection and examination by the
Commission.\237\ For purposes of the certification, Form SDR defines
``non-resident security-based swap data repository'' as (i) in the case
of an individual, one who resides in or has his principal place of
business in any place not in the United States; (ii) in the case of a
corporation, one incorporated in or having its principal place of
business in any place not in the United States; or (iii) in the case of
a partnership or other unincorporated organization or association, one
having its principal place of business in any place not in the United
States.\238\ Certain foreign jurisdictions may have laws that
complicate the ability of regulated persons such as SDRs located in
their jurisdictions from sharing certain information, including
personal information of individuals that the regulated persons come to
possess from third persons (e.g., personal data relating to the
identity of market participants or their customers), with the
Commission.\239\ In order for the Commission to fulfill its oversight
responsibilities with respect to registered SDRs, it is important that
Commission representatives have prompt access to the SDRs' books and
records and have the ability to conduct onsite inspections and
examinations.\240\ As noted above, one commenter was concerned that
non-resident SDRs are subject to a stricter regime than resident
SDRs.\241\ To the extent that the commenter's concerns pertain to the
certification requirement, the Commission notes that it continues to
believe that if a non-resident SDR is registered with the Commission,
the SDR's certification is important to confirm that it has taken the
necessary steps to be in the position to provide the Commission with
prompt access to the SDR's books and records and to be subject to
onsite inspection and examination by the Commission. Failure to make
this certification may be a basis for the Commission to institute
proceedings to consider denying an application for registration. If a
registered non-resident SDR becomes unable to provide this
certification, then this may be a basis for the Commission to institute
proceedings to consider revoking the SDR's registration.
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    \237\ See Item 13 of Form SDR. Under Exchange Act Section
13(n)(2), an SDR is subject to inspection and examination by any
representative of the Commission. See 15 U.S.C. 78m(n)(2); see also
Section VI.D.2 of this release discussing Rule 13n-4(b)(1). The
Commission is revising ``can, as a matter of law'' (referring to the
certification regarding access to the SDR's books and records) and
``can'' (referring to the certification regarding inspection and
examination) in the signature block of proposed Form SDR to ``can,
as a matter of law, and will'' to track the language of Rule 13n-
1(f), as discussed in Section VI.A.5 of this release.
    \238\ See Item 13 of Form SDR; see also Rule 13n-1(a)(1)
(defining ``non-resident security-based swap data repository'').
This definition is substantially similar to the definition of ``non-
resident broker or dealer'' in Exchange Act Rule 17a-7(d)(3). See 17
CFR 240.17a-7(d)(3). Although there may be instances in which a non-
resident SDR can fall within the definition of a ``U.S. person,''
the Commission believes that, as a practical matter, all non-
resident SDRs would likely be non-U.S. persons given the similar
distinguishing factors in the definitions of ``non-resident
security-based swap data repository'' and ``non-U.S. person.'' See
supra note 99 (discussing definition of ``U.S. person'') and Section
VI.A.5 of this release discussing non-resident SDRs.
    \239\ See, e.g., Dagong Global Credit Rating Agency, Exchange
Act Release No. 62968 (Sept. 22, 2010) (denying application as an
NRSRO due to applicant's inability to comply with U.S. securities
laws, in part because records requests would have to be approved by
a Chinese regulator); Dominick & Dominick, Inc., Exchange Act
Release No. 29243 (May 29, 1991) (settled administrative proceeding
involving a broker-dealer's failure to furnish promptly to the
Commission copies of certain records required to be kept pursuant to
Exchange Act Section 17(a)(1) and Rule 17a-3 thereunder where the
broker-dealer initially asserted that Swiss law prevented it from
producing the required records).
    \240\ See Section VI.D.2 of this release discussing inspection
and examination by Commission representatives.
    \241\ ESMA, supra note 19.
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    Business Organization. Form SDR requires each applicant to provide
as exhibits detailed information regarding its business organization,
including information about (1) any person that owns 10 percent or more
of the applicant's stock or that, either directly or indirectly,
through agreement or otherwise, in any other manner, may control or
direct the applicant's management or policies;\242\ (2) the business
experience, qualifications, and disciplinary history of its designated
CCO, officers, directors, governors, and persons performing functions
similar to any of the foregoing, and the members of all standing
committees;\243\ (3) its

governance arrangements;\244\ (4) the applicant's constitution,
articles of incorporation or association with all amendments to them,
existing by-laws, rules, procedures, and instruments corresponding to
them;\245\ (5) the applicant's organizational structure;\246\ (6) its
affiliates;\247\ (7) any material pending legal proceedings to which
the applicant or its affiliate(s) is a party or to which any of its
property is the subject;\248\ (8) the applicant's material contracts
with any SB SEF, clearing agency, central counterparty, and third party
service provider; \249\ and (9) the applicant's policies and procedures
to minimize conflicts of interest in its decision-making process and to
resolve any such conflicts of interest.\250\ Obtaining this information
will assist the Commission in, among other things, understanding an
SDR's overall business structure, governance arrangements, and
operations, all of which will assist the Commission in its inspection
and examination of the SDR and the Commission's decision on whether to
grant the SDR's registration.
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    \242\ See Item 14 of Form SDR.
    \243\ See Items 15 and 16 of Form SDR. More specifically, Form
SDR requires an applicant to disclose the following information
regarding its designated CCO, officers, directors, governors, and
persons performing functions similar to any of the foregoing, and
the members of all standing committees: (a) name; (b) title; (c)
date of commencement and, if appropriate, termination of present
term of position; (d) length of time such person has held the same
position; (e) brief account of the business experience of such
person over the last five years; (f) any other business affiliations
in the securities industry or derivatives industry; and (g) details
of: (1) any order of the Commission with respect to such person
pursuant to Sections 15(b)(4), 15(b)(6), 19(h)(2), or 19(h)(3) of
the Exchange Act, (2) any conviction or injunction of a type
described in Sections l5(b)(4)(B) or (C) of the Exchange Act within
the past ten years, (3) any action of an SRO with respect to such
person imposing a final disciplinary sanction pursuant to Exchange
Act Sections 6(b)(6), l5A(b)(7), or 17A(b)(3)(G), (4) any final
action by an SRO with respect to such person constituting a denial,
bar, prohibition, or limitation of membership, participation, or
association with a member, or of access to services offered by such
organization or a member thereof, and (5) any final action by
another federal regulatory agency, including the CFTC, any state
regulatory agency, or any foreign financial regulatory authority
resulting in: (i) a finding that such person has made a false
statement or omission, or has been dishonest, unfair, or unethical;
(ii) a finding that such person has been involved in a violation of
any securities-related regulations or statutes; (iii) a finding that
such person has been a cause of a business having its authorization
to do business denied, suspended, revoked, or restricted; (iv) an
order entered, in the past ten years, against such person in
connection with a securities-related activity; or (v) any
disciplinary sanction, including a denial, suspension, or revocation
of such person's registration or license or otherwise, by order, a
prevention from associating with a securities-related or a
restriction of such person's activities. The Commission is
correcting a typographical error in proposed Items 14(g)(4) and
15(g)(4). As proposed, the items stated ``. . . such organization of
a member thereof.'' As adopted, Items 15(g)(4) and 16(g)(4) state
``. . . such organization or a member thereof.''
    \244\ See Item 17 of Form SDR. The Commission has made minor
revisions to Form SDR from the proposal with regard to the
disclosure of governance arrangements for the sake of clarity.
Compare Item 16 of Form SDR, as proposed (requiring disclosure of
the responsibilities ``of each of the board and such committee'' and
the composition ``of each board and such committee''), with Item 17
of Form SDR, as adopted (requiring disclosure of the
responsibilities and composition ``of the board and each such
committee'').
    \245\ See Item 18 of Form SDR.
    \246\ See Item 19 of Form SDR.
    \247\ See Item 20 of Form SDR. For purposes of Form SDR, an
``affiliate'' of an SDR is defined as a person that, directly or
indirectly, controls, is controlled by, or is under common control
with the SDR. See also Rule 13n-4(a)(1); Rule 13n-9(a)(1). This
definition of ``affiliate'' is designed to allow the Commission to
collect comprehensive identifying information relating to an SDR.
This definition is substantially similar to the definition of
``affiliate'' in Exchange Act Rule 12b-2. See 17 CFR 240.12b-2. See
also infra note 621 (defining ``control'' (including the terms
``controlled by'' and ``under common control with'')). The
Commission notes that it received a comment letter after the
Proposing Release through the Commission's general solicitation for
comments that addressed the definition of ``affiliate'' for all of
Title VII. See letter from ABA Securities Association, American
Council of Life Insurers, Financial Services Roundtable, Futures
Industry Association, Institute of International Bankers,
International Swaps and Derivatives Association and the Securities
Industry and Financial Markets Association, available on the
Commission's Web site at http://www.sec.gov/comments/df-title-vii/swap-data-repositories/swap-data-repositories.shtml (suggesting
defining ``affiliate'' for the purposes of Title VII rulemaking
generally as ``any group of entities that is under common control
and that reports information or prepares its financial statements on
a consolidated basis''). The commenter focused on the effect of the
definition in the context of inter-affiliate transactions, such as
whether inter-affiliate transactions should be counted when
determining if a person is required to register as an SBS dealer.
Among other things, the commenter addressed the reporting of inter-
affiliate transactions to SDRs. Because Form SDR and the SDR Rules
do not pertain to what transactions must be reported to an SDR, the
Commission believes that the letter is not relevant to Form SDR or
the SDR Rules. Additionally, the Commission believes that it is
important that an applicant for registration as an SDR provide
information regarding all of its affiliates, regardless of whether
the SDR's and affiliates' financial statements are prepared on a
consolidated basis. Among other reasons, the Commission needs to
know the identity of an SDR's affiliates before it can determine
whether the SDR has any material conflicts of interest based on the
services provided by those affiliates or is providing favorable
treatment to affiliates in accessing the SDR's services or whether
the SDR is complying with other rules and core principles, such as
the core principle related to access to services and data.
    \248\ See Item 21 of Form SDR.
    \249\ See Item 22 of Form SDR.
    \250\ See Item 23 of Form SDR.
---------------------------------------------------------------------------

    The Commission is revising Form SDR from the proposal requiring
disclosure of business affiliations in the ``derivatives industry''
rather than the ``OTC derivatives industry'' for an applicant's
designated CCO, officers, directors, governors, and persons performing
functions similar to any of the foregoing, and the members of all
standing committees \251\ The Commission is making this revision to
clarify that the disclosure covers derivatives traded on exchanges and
SB SEFs as well as those traded over-the-counter.
---------------------------------------------------------------------------

    \251\ Compare Items 14(f) and 15(f) of proposed Form SDR with
Items 15(f) and 16(f) of Form SDR, as adopted.
---------------------------------------------------------------------------

    Financial Information. Each applicant is required to disclose as
exhibits to Form SDR certain financial and related information,
including (1) its statement of financial position, results of
operations, statement of sources and application of revenues, and all
notes or schedules thereto, as of the most recent fiscal year of the
applicant, or, alternatively, a financial report, as discussed further
in Section VI.J.5 of this release; \252\ (2) a statement of financial
position and results of operations for each affiliate of the applicant
as of the end of the most recent fiscal year of each such affiliate,
or, alternatively, identification of the most recently filed annual
report on Form 10-K of the applicant's affiliate, if available; \253\
(3) a list of all dues, fees, and other charges imposed, or to be
imposed, for the applicant's services, as well as all discounts and
rebates offered, or to be offered; \254\ (4) a description of the basis
and methods used in determining the level and structure of the
applicant's services as well as its dues, fees, other charges,
discounts, or rebates; \255\ and (5) a description of any
differentiations in such dues, fees, other charges, discounts, and
rebates.\256\ This information will assist the Commission in, among
other things, its decision of whether to grant the SDR's registration
and in its evaluation of the financial resources available to the SDR
to support its operations.
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    \252\ See Item 24 of Form SDR. As proposed, this item referred
to a ``balance sheet'' and a ``statement of income and expenses''
rather than a ``statement of financial position'' and ``results of
operations.'' The Commission is making this change from the proposal
for consistency with Rule 13n-11(f)(4). See Section VI.J.5 of this
release discussing Rule 13n-11(f). This revision is not intended to
substantively change the requirements of this item.
    \253\ See Item 25 of Form SDR. As proposed, this item referred
to a ``balance sheet'' and a ``statement of income and expenses''
rather than a ``statement of financial position'' and ``results of
operations.'' The Commission is making this change from the proposal
for consistency with Rule 13n-11(f)(4). See Section VI.J.5 of this
release discussing Rule 13n-11(f). This revision is not intended to
substantively change the requirements of this item.
    \254\ See Item 26.a of Form SDR.
    \255\ See Item 26.b of Form SDR.
    \256\ See Item 26.c of Form SDR.
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    Operational Capability. Form SDR requires each applicant to provide
as exhibits information on its operational capability, including (1)
its SDR and SIP functions and services;\257\ (2) the computer hardware
that it uses to perform its SDR or SIP functions;\258\ (3) personnel
qualifications for each category of professional, non-professional, and
supervisory employees employed by the applicant or the division,
subdivision, or other segregable entity within the applicant;\259\ (4)
the applicant's measures or procedures to provide for the security of
any system employed to perform its SDR or SIP functions, including any
physical and operational safeguards designed to prevent unauthorized
access to the system;\260\ (5) any circumstances within the past year
in which such security measures or safeguards failed to prevent any
such unauthorized access to the system and

any measures taken to prevent a reoccurrence;\261\ (6) any measures
used by the applicant to satisfy itself that the information received
or disseminated by the system is accurate;\262\ (7) the applicant's
backup systems or subsystems that are designed to prevent interruptions
in the performance of any SDR or SIP functions;\263\ (8) limitations on
the applicant's capacity to receive (or collect), process, store, or
display (or disseminate for display or other use) its data and factors
that account for such limitations;\264\ and (9) the priorities of
assignment of capacity between functions of an SDR or SIP and any other
uses and methods used or able to be used to divert capacity between
such functions and other uses.\265\ As stated in the Cross-Border
Proposing Release, SDRs themselves are subject to certain operational
risks that may impede their ability to fulfill their roles.\266\
Obtaining information regarding an SDR's operational capability will
assist the Commission in determining, among other things, whether an
SDR's automated systems provide adequate levels of capacity, integrity,
resiliency, availability, and security.
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    \257\ See Item 27 of Form SDR.
    \258\ See Item 28 of Form SDR.
    \259\ See Item 29 of Form SDR.
    \260\ See Item 30 of Form SDR.
    \261\ See Item 30 of Form SDR.
    \262\ See Item 30 of Form SDR.
    \263\ See Item 31 of Form SDR.
    \264\ See Item 32.a of Form SDR.
    \265\ See Item 32.b of Form SDR.
    \266\ Cross-Border Proposing Release, 78 FR at 31042 n.719,
supra note 3 (citing the Proposing Release, 75 FR at 77307 (``The
inability of an SDR to protect the accuracy and integrity of the
data that it maintains or the inability of an SDR to make such data
available to regulators, market participants, and others in a timely
manner could have a significant negative impact on the [security-
based swap] market. Failure to maintain privacy of such data could
lead to market abuse and subsequent loss of liquidity.'')).
---------------------------------------------------------------------------

    As highlighted by one commenter, it is imperative that Form SDR
includes ``information related to the SDR's operating schedule, real-
time processing, existence of multiple redundant infrastructures for
continuity, strong information security controls, and robust reporting
operations.'' \267\ The Commission believes that the operational
capability information requested on Form SDR sufficiently addresses the
commenter's concern. In addition, Commission representatives may
conduct inspections or examinations to assess a registered SDR's
ongoing operational capability and compliance with the federal
securities laws and the rules and regulations thereunder.\268\
---------------------------------------------------------------------------

    \267\ DTCC 2, supra note 19.
    \268\ See Section VI.A.2 of this release discussing Rule 13n-
1(c) (reviews by Commission staff of the SDR's operational capacity
and ability are important to determine whether the Commission should
grant an SDR's application for registration or revoke the
registration of a registered SDR pursuant to Rule 13n-2(e)).
---------------------------------------------------------------------------

    Access to Services and Data. Form SDR requires an applicant to
provide as exhibits information regarding access to its services and
data, including (1) the number of persons who presently subscribe, or
who have notified the applicant of their intention to subscribe, to its
services; \269\ (2) instances in which the applicant has prohibited or
limited any person with respect to access to services offered or data
maintained by the applicant; \270\ (3) for each service that involves
the supply of information to a quotation board, ticker device,
electronic information terminal, or other such device, the total number
of devices to which information is, or will be supplied and any minimum
and or maximum number of devices required or permitted by agreement or
otherwise to be serviced by the applicant; \271\ (4) the storage media
of any service furnished in machine-readable form and the data elements
of such service; \272\ (5) copies of all contracts governing the terms
by which persons may subscribe to the SDR services, SIP services, and
any ancillary services provided by the applicant; \273\ (6) any
specifications, qualifications, or other criteria that limit, are
interpreted to limit, or have the effect of limiting access to or use
of any SDR or SIP services offered or data maintained by the applicant;
\274\ (7) any specifications, qualifications, or other criteria
required of persons who supply SBS information to the applicant for
collection, maintenance, processing, preparing for distribution, and
publication by the applicant or of persons who seek to connect to or
link with the applicant; \275\ (8) any specifications, qualifications,
or other criteria required of any person who requests access to data
maintained by the applicant; \276\ and (9) the applicant's policies and
procedures to review any prohibition or limitation of any person with
respect to access to services offered or data maintained by the
applicant and to grant such person access to such services or data if
such person has been discriminated against unfairly.\277\
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    \269\ See Item 33.a of Form SDR.
    \270\ See Item 33.b of Form SDR; see also infra note 278
(discussing denials of access to services offered by SDRs).
    \271\ See Item 33.c of Form SDR. The Commission is including
this item from Form SIP to Form SDR for purposes of combining the
two forms. See Section VI.A.1 of this release discussing Form SIP.
    \272\ See Item 33.d of Form SDR.
    \273\ See Item 34 of Form SDR.
    \274\ See Item 35 of Form SDR.
    \275\ See Item 36 of Form SDR.
    \276\ See Item 37 of Form SDR. The Commission is correcting a
typographical error in proposed Item 36 of Form SDR. As proposed,
the item stated ``any person, including, but not limited to . . .
third party service providers who request access. . . .'' As
adopted, Item 37 states ``any person, including, but not limited to
. . . third party service providers, who requests access. . . .''
    \277\ See Item 38 of Form SDR.
---------------------------------------------------------------------------

    The information regarding access to services and data will assist
the Commission in determining, among other things, whether an SDR can
comply with Rule 13n-4(c)(1), which relates to the core principle for
market access to services and data, as discussed further in Section
VI.D.3.a of this release. With respect to Item 33 of Form SDR
(requiring an SDR to provide information regarding access to services
and data, including any denials of such access), the Commission further
believes that, due to an SDR's role as a central recordkeeping facility
for SBSs, upon which the Commission and the public will rely for
market-wide SBS data, the Commission should be informed of persons who
have been granted access to an SDR's services and data, as well as
instances in which an SDR prohibits or limits access to its
services.\278\ As part of the process to amend Form SDR from the
proposal to accommodate SIP registration, discussed above, the
Commission is adding Item 33(c) to Form SDR so that the Commission can
obtain specific information regarding an SDR's supply of information
for public dissemination purposes.
---------------------------------------------------------------------------

    \278\ See Regulation SBSR Adopting Release, supra note 13
(discussing Rule 909, which requires a registered SDR to also
register as a SIP); Proposing Release, 75 FR at 77311 n.33, supra
note 2 (noting that if the Commission adopts proposed Rule 909 of
Regulation SBSR, then Exchange Act Section 11A(b)(5) would govern
denials of access to all SDRs' services); see also 15 U.S.C. 78k-
1(b)(5) (A registered SIP must promptly file notice with the
Commission if it, directly or indirectly, prohibits or limits any
person in respect of access to its services, which may be subject to
review by the Commission. If the Commission finds that (a) such
limitation or prohibition is not consistent with Exchange Act
Section 11A and the rules and regulations thereunder and that such
person has been discriminated against unfairly or (b) the
prohibition or limitation imposes any burden on competition not
necessary or appropriate, it may set aside the prohibition or
limitation and require the SIP to permit such person access to its
services.). The Commission has made certain changes to Form SDR from
the proposal to accommodate SIP registration. See supra note 220.
---------------------------------------------------------------------------

    Other Policies and Procedures. Form SDR requires each applicant to
attach as exhibits: (1) The applicant's policies and procedures to
protect the privacy of any and all SBS transaction information that the
applicant receives from a market participant or any registered entity;
\279\ (2) a description of the applicant's safeguards, policies, and
procedures to prevent the misappropriation or misuse of (a) any
confidential information received by the applicant, including, but not
limited to,

trade data, position data, and any nonpublic personal information about
a market participant or any of its customers; (b) material, nonpublic
information; and/or (c) intellectual property by the applicant or any
person associated with the applicant for their personal benefit or for
the benefit of others; \280\ (3) the applicant's policies and
procedures regarding its use of the SBS transaction information that it
receives from a market participant, any registered entity, or any other
person for non-commercial and/or commercial purposes; \281\ (4) the
applicant's procedures and a description of its facilities for
resolving disputes over the accuracy of the transaction data and
positions that are recorded in the SDR; \282\ (5) the applicant's
policies and procedures relating to its calculation of positions; \283\
(6) the applicant's policies and procedures to prevent any provision in
a valid SBS from being invalidated or modified through the procedures
or operations of the applicant; \284\ and (7) a plan to ensure that the
transaction data and position data that are recorded in the SDR
continue to be maintained after the applicant withdraws from
registration, which shall include procedures for transferring
transaction data and position data to the Commission or its designee
(including another registered SDR).\285\ This information will assist
the Commission in determining, among other things, whether an SDR can
comply with the requirements to establish, maintain, and enforce these
seven policies and procedures, as discussed further in Sections VI.D,
VI.E, VI.G, and VI.I of this release. In addition, Form SDR requires an
applicant to attach as exhibits all of the policies and procedures set
forth in Regulation SBSR.\286\
---------------------------------------------------------------------------

    \279\ See Item 39 of Form SDR.
    \280\ See Item 40 of Form SDR.
    \281\ See Item 41 of Form SDR.
    \282\ See Item 42 of Form SDR.
    \283\ See Item 43 of Form SDR.
    \284\ See Item 44 of Form SDR.
    \285\ See Item 45 of Form SDR.
    \286\ See Item 46 of Form SDR; Regulation SBSR Adopting Release,
supra note 13 (Rule 907 requiring SDRs to establish and maintain
certain written policies and procedures).
---------------------------------------------------------------------------

    One commenter suggested that the Commission require an applicant to
submit its ``rulebook.'' \287\ The Commission does not believe that
such a requirement is necessary, but is revising Form SDR from the
proposal to provide that if an applicant has a rulebook, then it may
attach its rulebook as an exhibit to the form,\288\ as a supplement to
the policies and procedures required by Form SDR. The Commission
believes that if an applicant has a rulebook, much of the information
that would be contained in the rulebook likely would be filed as part
of an SDR's policies and procedures.\289\ To the extent that an
applicant's rulebook is broader, an applicant may submit its rulebook
to the Commission if, for example, the applicant believes that it would
be useful for the Commission to better understand the context of the
applicant's policies and procedures or how the policies and procedures
relate to one another.
---------------------------------------------------------------------------

    \287\ DTCC 3, supra note 19.
    \288\ See Item 47 of Form SDR.
    \289\ The Commission notes that an SDR that is also registered
with the CFTC as a swap data repository is required under CFTC Rule
49.8 to either submit its rules and amendments thereto for approval
by the CFTC or self-certify that the rulebook complies with the
CFTC's swap data repository rules and the CEA. See 17 CFR 49.8. The
Dodd-Frank Act did not establish SDRs as self-regulatory
organizations (``SROs'') (which, under the Exchange Act, are
required to file their rules with the Commission) or create an
express obligation for SDRs to file their rules with the Commission.
As noted above, SDRs must provide certain policies and procedures on
Form SDR. The Commission believes that this disclosure is sufficient
to enable the Commission to determine whether an SDR's policies and
procedures are in compliance with the Exchange Act, including
Section 13(n), and the rules and regulations thereunder. The
Commission recognizes, however, that reviewing a rulebook that is
voluntarily submitted to the Commission may assist the Commission in
understanding other items in an applicant's Form SDR.
---------------------------------------------------------------------------

    Legal Opinion. Form SDR requires each non-resident SDR to attach as
an exhibit an opinion of counsel that the SDR can, as a matter of law,
provide the Commission with prompt access to the SDR's books and
records and that the SDR can, as a matter of law, submit to onsite
inspection and examination by the Commission.\290\
---------------------------------------------------------------------------

    \290\ See Item 48 of Form SDR.
---------------------------------------------------------------------------

    As discussed above, one commenter suggested that the legal opinion
requirement would subject non-resident SDRs to a stricter regulatory
regime than resident SDRs.\291\ The Commission, however, continues to
believe that non-resident SDRs that are registered, or seek to
register, with the Commission should be required to provide the opinion
of counsel. Each jurisdiction may have a different legal framework
(e.g., privacy laws) that may limit or restrict the Commission's
ability to access information from an SDR. Rather than create unequal
regulatory obligations, the legal opinion requirement equalizes the
regulatory landscape for SDRs by addressing whether a non-resident SDR
is able to comply with the requirements for it to provide the
Commission with prompt access to the SDR's books and records,\292\ and
to submit to onsite inspection and examination by the Commission,\293\
similar to SDRs that reside in the United States. Failure to provide an
opinion of counsel may be a basis for the Commission to institute
proceedings to consider denying an application for registration.
---------------------------------------------------------------------------

    \291\ ESMA, supra note 19.
    \292\ See Rule 13n-7(b)(3) (requiring every SDR to, upon request
of any representative of the Commission, promptly furnish requested
documents to the representative).
    \293\ See Exchange Act Section 13(n)(2), 15 U.S.C. 78m(n)(2)
(subjecting registered SDRs to inspection and examination by any
representative of the Commission)).
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    Electronic Filing. The Commission is revising Rule 13n-1(b) from
the proposal to conform the rule with General Instruction 1 to Form
SDR. As revised, Rule 13n-1(b) provides that in addition to an
application for registration as an SDR, all amendments thereto must be
filed electronically in a tagged \294\ data format on Form SDR with the
Commission in accordance with the instructions contained in the
form.\295\ This modification to also require all amendments on Form SDR
be filed electronically in a tagged data format is intended to conform
with General Instruction 1 to Form SDR, which requires the form and
exhibits thereto to be filed electronically in a tagged data format by
an applicant for registration as an SDR and by an SDR amending its
application for registration.
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    \294\ The term ``tag'' (including the term ``tagged'') is being
revised from the proposal to have the same meaning as set forth in
Rule 11 of Regulation S-T (defining ``tag'' as ``an identifier that
highlights specific information to EDGAR that is in the format
required by the EDGAR Filer Manual''). See Rules 13n-1(a)(2), 13n-
2(a), and 13n-11(b)(9); see also 17 CFR 232.11. The Commission is
revising this term from the proposal to be consistent with all the
other terms in the SDR Rules that cross-reference to the definitions
set forth in Regulation S-T, where applicable. For example, the term
``EDGAR Filer Manual'' has the same meaning as set forth in Rule 11
of Regulation S-T (defining ``EDGAR Filer Manual'' as ``the current
version of the manual prepared by the Commission setting out the
technical format requirements for an electronic submission''). See
Rule 13n-11(b)(3); see also 17 CFR 232.11.
    \295\ See Rule 13n-1(b).
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    The Commission anticipates developing an electronic filing system
through which an SDR will be able to file and update Form SDR on or
about the effective date of Rule 13n-1.\296\ If

the Commission's electronic filing system is unavailable at the time an
applicant seeks to file its application for registration on Form SDR,
the applicant may file the form, including any amendments thereto, in
paper format with the Commission's Division of Trading and Markets at
the Commission's principal office in Washington, DC. However, doing so
does not relieve the SDR from compliance with the requirement in Rule
13n-1(b) to file Form SDR ``electronically in a tagged data format.''
Therefore, when the Commission's electronic filing system is available,
the applicant should file electronically any initial and amended Form
SDRs that had been filed previously in paper format.\297\ The
Commission expects that the information filed will be made available on
the Commission's Web site, except in cases where confidential treatment
is requested by an SDR and granted by the Commission.\298\ The
Commission acknowledges that SDRs will likely incur additional costs
and burdens, particularly in initial compliance, with the data tagging
requirement, when compared with filing Form SDR in paper format.
However, the Commission believes that such costs will be minimal and
that this requirement will facilitate review and analysis of
registration materials by Commission staff and, to the extent such
materials are made public, the public. The Commission believes that the
costs of completing Form SDR in tagged data format are justified by the
benefits derived from the ability of investors, analysts, and
Commission staff to be able to more effectively capture, review, and
analyze the SDR registration materials if they are in tagged data
format.\299\
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    \296\ This electronic filing system for Form SDR will be through
EDGAR, and thus, the electronic filing requirements of Regulation S-
T will apply. See generally 17 CFR 232 (governing the electronic
submission of documents filed with the Commission). The Commission
is amending General Instruction 1 to Form SDR to clarify the
applicability of Regulation S-T to Form SDR. To conform with how
filings are presently made through EDGAR, the Commission has made
several minor edits to Form SDR from the proposal. See, e.g.,
Instruction 10 of Form SDR (providing guidance on filing Form SDR as
an amendment, other than an annual amendment); Item 3 of Form SDR
(requesting mailing address, which includes state/country and
mailing zip/postal code); Item 9 of Form SDR (requesting information
regarding an entity's incorporation or organization); Item 13 of
Form SDR (requesting date of signature in different format).
    \297\ See Proposing Release, 75 FR at 77309 n.25, supra note 2
(noting that SDRs might be required to file Form SDR in paper until
such time as an electronic filing system is operational and capable
of receiving the form and the Commission may require each SDR to
promptly re-file electronically Form SDR and any amendments to the
form).
    \298\ As discussed below, the Commission is adopting technical
amendments to Exchange Act Rule 24b-2 to clarify that the
confidential portion of electronic filings by SDRs must be filed
electronically and to require SDRs to request confidential treatment
electronically. The Commission is also adopting technical amendments
to Rule 101 of Regulation S-T to provide that, except as otherwise
provided, all filings by SDRs, including any information with
respect to which confidential treatment is requested, must be filed
electronically.
    \299\ As part of the Commission's longstanding efforts to
increase transparency and the usefulness of information, the
Commission has been implementing data tagging of information
contained in electronic filings to improve the accuracy of financial
information and facilitate its analysis. See Regulation S-T, 17 CFR
232; see also Securities Act Release No. 8891 (Feb. 6, 2008), 73 FR
10592 (Feb. 27, 2008); Securities Act Release No. 9002 (Jan. 30,
2009), 74 FR 6776 (Feb. 10, 2009); Securities Act Release No. 9006
(Feb. 11, 2009), 74 FR 7748 (Feb. 19, 2009); Exchange Act Release
No. 61050 (Nov. 23, 2009), 74 FR 63832 (Dec. 4, 2009); Investment
Company Release No. 29132 (Feb. 23, 2010), 75 FR 10060 (Mar. 4,
2010); What is Interactive Data and Who's Using It?, http://www.sec.gov/spotlight/xbrl/what-is-idata.shtml (last updated March
15, 2010) (link to the Commission's Office of Interactive
Disclosure's discussion of the benefits of interactive data). Data
becomes machine-readable when it is labeled, or tagged, using a
computer markup language that can be processed by software programs
for analysis. Such computer markup languages use standard sets of
definitions, or ``taxonomies,'' that translate text-based
information in Commission filings into structured data that can be
retrieved, searched, and analyzed through automated means. Requiring
the information to be tagged in a machine-readable format using a
data standard that is freely available, consistent, and compatible
with the tagged data formats already in use for Commission filings
will enable the Commission to review and analyze more effectively
Form SDR submissions.
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    Technical Amendments to Electronic Filing Requirements. The
Commission is adopting technical amendments to Exchange Act Rule 24b-2
\300\ and Rule 101 of Regulation S-T \301\ to clarify that SDRs'
electronic filings pursuant to Exchange Act Section 13(n) and the rules
and regulations thereunder \302\ must include any information with
respect to which confidential treatment is requested (``confidential
portion''). Generally speaking, Exchange Act Rule 24b-2 and Rule 101 of
Regulation S-T require confidential treatment requests and the
confidential portion to be submitted in paper format only. The
Commission's technical amendments provide an exception from Rule 24b-
2's and Rule 101's paper-only filing requirements for all SDR filings.
Under this exception, the confidential portion of all SDR filings must
be filed in electronic format.
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    \300\ 17 CFR 240.24b-2.
    \301\ 17 CFR 232.101.
    \302\ See, e.g., Rule 13n-2(b) (relating to withdrawal on Form
SDR) and Rule 13n-11(d)(2) (relating to compliance reports); see
also Rule 13n-11(f)(5) (relating to financial reports); General
Instruction 1 to Form SDR (requiring Form SDR and exhibits to be
filed electronically in a tagged data format, including amendments
filed under Rule 13n-1(d)).
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    The Commission is revising Rule 24b-2 in two ways. First, the
Commission is revising Rule 24b-2(b) to provide an exception for
persons providing materials pursuant to Rule 24b-2(h) from the general
requirement to omit the confidential portion from ``the material
filed.'' \303\ Second, the Commission is adding Rule 24b-2(h) to
provide that an SDR must not omit the confidential portion from the
material filed in electronic format pursuant to Exchange Act Section
13(n) and the rules and regulations thereunder, and must request
confidential treatment electronically in lieu of the procedures
described in Rule 24b-2(b).
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    \303\ Rule 24b-2(a) refers to ``any registration statement,
report, application, statement, correspondence, notice or other
document'' as ``the material filed.''
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    The Commission is also revising Rule 101 to add paragraph
(a)(1)(xvii) to the list of mandated electronic submissions.
Specifically, paragraph (a)(1)(xvii) adds to this list documents filed
with the Commission pursuant to Exchange Act Section 13(n) and the
rules and regulations thereunder, including Form SDR and reports filed
pursuant to Exchange Act Rules 13n-11(d) and (f).\304\ The Commission
is also revising Rule 101(c) to provide that except as otherwise
specified in Rule 101(d), confidential treatment requests and the
information with respect to which confidential treatment is requested
must not be submitted in electronic format. The Commission is further
adding Rule 101(d) to provide as an exception to Rule 101(c)'s paper-
only filing requirement all documents, including any information with
respect to which confidential treatment is requested, filed pursuant to
Exchange Act Section 13(n) and the rules and regulations thereunder.
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    \304\ See Sections VI.J.4 and VI.J.5 of this release discussing
compliance reports and financial reports filed pursuant to Rules
13n-11(d) and (f).
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    Electronic filing of all materials filed by SDRs, including the
confidential portion, will reduce the burden on SDRs by not requiring a
separate paper submission and facilitate the Commission's review and
analysis of the filings.\305\
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    \305\ See Rules 13-1(b); 13n-2(b); 13n-11(d)(2); see also Rule
13n-11(f)(5); General Instruction 1 to Form SDR.
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2. Factors for Approval of Registration and Procedural Process for
Review (Rule 13n-1(c))
a. Proposed Rule
    Proposed Rule 13n-1(c) would establish the timeframe for Commission
action on applications for registration as an SDR, as well as the
Commission's procedures for reviewing applications for registration. In
particular, proposed Rule 13n-1(c) provided that, within 90 days of the
date of the filing of an application for registration on Form SDR (or
within such longer period as to which the SDR consents), the

Commission will either grant the registration by order or institute
proceedings to determine whether registration should be denied. The
proposed rule set forth the time period for such proceedings. The
proposed rule also set forth the standard applicable to an application
for registration as an SDR.
b. Comments on the Proposed Rule
    Although the Commission did not receive any comments directly
relating to this proposed rule, two commenters expressed their views on
the SDR registration process generally.\306\
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    \306\ See DTCC 2, supra note 19; ICE CB, supra note 26.
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    The first commenter recommended sufficient time for an appropriate
level of due diligence with respect to applications for
registration.\307\ While the commenter expressly referenced the
proposed temporary registration rule, the Commission believes that the
commenter's concern regarding the operational capability of SDRs is
applicable to any applicant for registration as an SDR.\308\
Additionally, the same commenter supported combining new Form SDR with
Form SIP,\309\ which would necessitate a revision to Rule 13n-1(c), as
described below.\310\
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    \307\ DTCC 2, supra note 19 (``DTCC is concerned that the SEC's
proposed implementation schedule for reporting to SDRs is heavily
compressed and, when coupled with the temporary registration regime,
may lead to compromised solutions, including operational and
security compromises. . . . [P]otential SDRs are unlikely to be able
to offer fully robust or efficient solutions for early registration,
given that the final rules will be available relatively shortly
before the effective date. DTCC recommends that appropriate due
diligence is conducted with respect to the temporary registration
process and that those diligence findings are either used to support
transition of existing infrastructure or used for new entrants who
can demonstrate that their infrastructure supports key operational
capabilities, including 24/6 operation, real-time processing,
multiple redundancy, and robust information security controls.'');
see also DTCC 3, supra note 19 (``SDRs must be able to demonstrate
an infrastructure which supports critical operational capabilities.
. . . Assessment of these core capabilities is a critical component
of any registration process, including a temporary registration.'').
    \308\ See Section VI.A.3.c of this release discussing the
Commission's decision not to adopt the proposed temporary
registration rule.
    \309\ DTCC 2, supra note 19 (requesting that the Commission
combine Form SDR and Form SIP such that an SDR would register as an
SDR and a SIP using only one form or permit either Form SDR or Form
SIP to be the application for registration as both an SDR and an
SIP); DTCC 3, supra note 19.
    \310\ See Section VI.A.1 of this release discussing combining
Form SDR and Form SIP.
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    The second commenter requested the Commission's expedited review of
SDR registration.\311\
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    \311\ ICE CB, supra note 26 (suggesting that the Commission take
into consideration the SDR's provisional registration with the
CFTC).
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c. Final Rule
    After considering the comments, the Commission is adopting Rule
13n-1(c) as proposed, with minor modifications. First, the Commission
is making minor revisions from the proposal relating to the event that
begins the 90-day period for Commission review and action on the
application for registration as an SDR. The final rule provides that
within 90 days of the date of the publication of notice of the filing
of an application for registration (or within such longer period as to
which the applicant consents), the Commission will either grant the
registration by order or institute proceedings to determine whether
registration should be granted or denied.\312\ The 90-day period will
not begin to run until an SDR files a complete Form SDR with the
Commission,\313\ and the Commission publishes notice of the filing of
Form SDR to afford interested persons an opportunity to submit written
comments concerning such application.\314\ As discussed above, in light
of the Commission's adoption of the requirement for a registered SDR to
also register as a SIP in Regulation SBSR,\315\ the Commission has
decided to consolidate Form SIP and Form SDR in order to make the
registration process for SDRs more efficient; this approach has been
endorsed by one commenter.\316\ The Commission's revision of Rule 13n-
1(c) relating to the publication of notice makes it procedurally
consistent with the registration process applicable to SIPs under
Exchange Act Section 11A(b) \317\ and stems from the Commission's
requirement that a registered SDR register as a SIP \318\ and the
Commission's revision of Form SDR to accommodate SIP registration.
Exchange Act Section 11A(b)(3) provides that the Commission will, upon
the filing of an application for registration as a SIP, publish notice
of the filing and afford interested persons an opportunity to submit
written data, views, and arguments concerning such application; within
90 days of the date of the publication of such notice (or within such
longer period as to which the applicant consents), the Commission will
by order grant such registration or institute proceedings to determine
whether registration should be denied.\319\ The Commission has
determined to adopt Rule 13n-1(c) with revised text from the proposal
that conforms the event preceding the period for Commission action,
with respect to applications for registration as an SDR, to the event
set forth in Section 11A(b)(3), with respect to applications for
registration as a SIP.\320\
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    \312\ Rule 13n-1(c).
    \313\ See Proposing Release, 75 FR at 77313, supra note 2. If a
Form SDR is incomplete, then it may be deemed as not acceptable for
filing. General Instruction 7 to Form SDR, as adopted, provides that
``[a] form that is not prepared and executed in compliance with
applicable requirements may be deemed as not acceptable for
filing.'' Further, the application must include information
sufficient to allow the Commission to assess the applicant's ability
to comply with the federal securities laws and the rules and
regulations thereunder. Form SDR consists of instructions, a list of
questions, a signature page, and a list of exhibits that the
Commission requires in order to be able to determine whether an
applicant is able to comply with the federal securities laws and the
rules and regulations thereunder. An application on Form SDR may not
be considered complete unless the applicant has filed, at a minimum,
responses to all the questions listed, the signature page, and
exhibits as required in Form SDR, and any other materials the
Commission may require, upon request, in order to assess whether an
applicant is able to comply with the federal securities laws and the
rules and regulations thereunder. If the application is not
complete, then the application will not be deemed to have been filed
for the Commission's review.
    \314\ If, however, an SDR files an amendment to its application
for registration after the Commission has already published notice
of the filing of Form SDR and the Commission finds that the
amendment renders the prior filing materially incomplete, then the
90-day period will reset from the time that the Commission deems the
amended application to be complete for the Commission's review.
    \315\ See Regulation SBSR Adopting Release, supra note 13 (Rule
909).
    \316\ See DTCC 2, supra note 19; DTCC 3, supra note 19.
    \317\ See 15 U.S.C. 78k-1(b).
    \318\ See Regulation SBSR Adopting Release, supra note 13 (Rule
909).
    \319\ See 15 U.S.C. 78k-1(b)(3).
    \320\ A publication of notice of the filing of an application
for registration is required in the SIP context.
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    Second, the Commission is revising Rule 13n-1(c) from the proposal
to clarify that the purpose of proceedings instituted pursuant to the
rule is to determine whether an applicant's registration as an SDR
should be granted or denied, rather than only denied (as
proposed).\321\ The Commission is further revising Rule 13n-1(c) from
the proposal to provide that proceedings instituted pursuant to the
rule will include notice of the issues under consideration (rather than
grounds for denial under consideration, as proposed) and opportunity
for hearing on the record and will be concluded within 180 days after
the date of the publication of notice of the filing of the application
for registration.\322\ These

revisions from the proposal are intended to make the rule internally
consistent.\323\
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    \321\ See Rule 13n-1(c)(2).
    \322\ See Rule 13n-1(c)(2). For the reasons provided above, in
conjunction with the revision from the proposal to the event that
precedes the 90-day period, and for consistency within the rule, the
Commission is also revising from the proposal the event that
precedes the 180-day period for conclusion of Commission action on
the application for registration as an SDR. In making this revision,
the Commission is changing ``not later than 180 days'' to ``within
180 days'' for consistency within the rule.
    \323\ Proposed Rule 13n-1(c)(2) stated that the Commission may
institute proceedings to determine whether registration should be
``denied,'' and that such proceedings include notice of the
``grounds for denial,'' but that at the conclusion of such
proceedings, the Commission shall ``grant or deny'' registration. As
adopted, the rule clarifies that the Commission may institute
proceedings to determine whether registration should be ``granted or
denied'' and that proceedings instituted pursuant to this rule must
include notice of the ``issues under consideration.''
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    The Commission is adopting Rule 13n-1(c) as proposed in all other
respects. Rule 13n-1(c) provides that at the conclusion of proceedings
instituted pursuant to the rule, the Commission, by order, will grant
or deny such registration.\324\ The Commission may extend the time for
conclusion of such proceedings for up to 90 days if it finds good cause
for such extension and publishes its reasons for so finding or for such
longer period as to which the SDR consents.\325\
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