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Views and Information on Activity Related to Security-Based Swaps

FINRA invites member firms that participate, or plan to participate, in the security-based swap (SBS) market to provide views and information with regard to broker-dealer SBS activities, including the application of FINRA rules to those activities. Any other interested party is also invited to submit views and information. FINRA welcomes views and information on all aspects of SBS activity, including, without limitation, the following topics:

  • Does your firm, or an affiliate of your firm, plan to register with the SEC as an SBS dealer or a major SBS participant? Does your firm, or an affiliate of your firm, plan to engage in SBS activity below the SEC registration threshold? If so, how will your firm monitor for compliance with the de minimis thresholds for SBS as established under SEC rules?
  • In what capacity does your firm participate or plan to participate in SBS transactions? For example, as principal, agent or both? Does your firm engage in, or plan to engage in, non-dealing SBS activity, such as entering into SBS for hedging or risk management purposes?
  • Do personnel of your firm arrange, negotiate or execute SBS transactions on behalf of affiliates or clients, or plan to arrange, negotiate or execute such transactions in the future? Are there other SBS-related activities that personnel of your firm engage in, or plan to engage in, such as providing market color, processing trades, engaging in other back-office activities, or Rule 15a-6 activities for foreign affiliates?
  • What type of SBS products does your firm handle or expect to handle? For example, does your firm handle or expect to handle credit default swaps, equity swaps, or other types of products?
  • Is your firm’s SBS activity conducted within your firm’s broker-dealer unit or in affiliate entities, or both? If in affiliate entities, what types of affiliates? Are these US affiliates or foreign affiliates, or both?
  • How should FINRA think about the application of its rules to SBS activities? For example, should the application of FINRA rules depend on the capacity in which a member participates in SBS activity or the type of counterparty involved? Should the application of FINRA rules depend on whether the firm also registers as an SBS dealer or major SBS participant?

Member firms and other interested parties that wish to submit views and information may do so using a dedicated SBS email inbox that FINRA has established for this purpose.

Important Note: All submissions made in response to this request may be made public as part of any later rulemaking.

Questions regarding this request should be directed to:

  • William Wollman, Office of General Counsel, at 646-315-8496;
  • Ornella Bergeron, Member Supervision, at 646-315-8410; or
  • Adam Arkel, Office of General Counsel, at 202-728-6961.

FINRA would appreciate receiving responses by July 31, 2020.