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Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Notices
Exchange Act rule 15Fk1.61 These provisions in general require that SBSDs designate individuals with the responsibility and authority to establish, administer and review compliance policies and procedures, to resolve conflicts of interest, and to prepare and certify an annual compliance report to the Commission.62
Additional Exchange Act section 15Fj requirementsAdditional requirements related to informationgathering pursuant to Exchange Act section 15Fj4A, and certain antitrust prohibitions specified by Exchange Act section 15Fj6.63
Taken as a whole, these internal supervision, chief compliance officer and additional Exchange Act section 15Fj requirements help to promote SBSDs use of structures, processes and responsible personnel reasonably designed to promote compliance with applicable law, to identify and cure instances of non-compliance and to manage conflicts of interest. The comparability assessment accordingly may focus on whether the analogous foreign requirementstaken as a wholeproduce comparable outcomes with regard to providing that Covered Entities have structures and processes reasonably designed to promote compliance with applicable law, identify and cure instances of noncompliance and to manage conflicts of interest, in part through the designation of an individual with responsibility and authority over compliance matters.
B. Preliminary Views and Proposed Order 1. General considerations Based on the Swiss Application and the Commissions review of applicable provisions, in the Commissions preliminary view the relevant Swiss requirements would produce regulatory outcomes that are comparable to those associated with the above-described 61 17

CFR 240.15Fk1.
Swiss Application discusses Swiss requirements that address compliance officers and their responsibilities, compliance officer appointment, removal and compensation, related conflict of interest provisions and compliancerelated reports. See Swiss Application section II.3.c at 90109.
63 Section 15Fj4A particularly requires firms to have systems and procedures to obtain necessary information to perform functions required under section 15F. The Swiss Application in turn discusses Swiss provisions generally addressing information gathering and disclosure. See Swiss Application Section II.2 at 33. Section 15Fj6
prohibits firms from adopting any process or taking any action that results in any unreasonable restraint of trade, or to impose any material anticompetitive burden on trading or clearing. The Swiss Application addresses Swiss antitrust requirements.
See Swiss Application section II.3.b at 78.

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internal supervision, chief compliance officer, conflict of interest and information-related requirements by providing that Covered Entities have structures and processes that reasonably are designed to promote compliance with applicable law and to identify and cure instances of non-compliance and manage conflicts of interest.64 As elsewhere, this part of the proposed Order conditions substituted compliance on Covered Entities being subject to and complying with specified Swiss requirements that are necessary to establish comparability.65
The Commission recognizes that certain differences are present between those Swiss requirements and the applicable requirements under the Exchange Act. In the Commissions preliminary view, on balance, however, those differences would not preclude substituted compliance within the relevant outcomes-oriented context.
2. Additional Conditions Substituted compliance in connection with these requirements would be subject to certain additional conditions to help ensure the comparability of outcomes:
a. Application of Swiss Supervisory and Compliance Requirements to Residual U.S. Requirements and Order Conditions Under the proposed Order, substituted compliance for the relevant internal supervision requirements would be conditioned on Covered Entities complying with applicable Swiss supervisory and compliance provisions as if those provisions also require the Covered Entity to comply with applicable requirements under the Exchange Act and the other applicable conditions to the Order.66
64 This portion of the proposed Order accordingly would extend generally to the internal supervision provisions of Exchange Act rule 15Fh3h, the requirement in Exchange Act section 15Fj4A to have systems and procedures to obtain necessary information to perform functions required under Exchange Act section 15F and the conflict of interest provisions of Exchange Act section 15Fj5. See para. c1 of the proposed Order.
This portion of the proposed Order does not extend to the portions of rule 15Fh3h that mandate supervisory policies and procedures in connection with: The risk management system provisions of Exchange Act section 15Fj2 which are addressed by paragraph b1 of the proposed Order in connection with internal risk management; the information-related provisions of Exchange Act sections 15Fj3 and j4B for which substituted compliance is not available; or the antitrust provisions of Exchange Act section 15Fj6 for which the Commission is not proposing to provide substituted compliance. See para. c1ii of the proposed Order.
65 See para. c3 of the proposed Order.
66 See para. c4 of the proposed Order.

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Even with substituted compliance, Covered Entities still would be subject directly to a number of requirements under the Exchange Act and to the conditions to the Order. In some cases, particular requirements under the Exchange Act are outside the ambit of substituted compliance.67 In other cases, certain requirements under the Exchange Act may not have comparable Swiss requirements or may be outside the scope of the Swiss Application,68 or the Covered Entity may decide not to use substituted compliance for certain requirements under the Exchange Act.69
While the Swiss regulatory framework in general reasonably appears to promote Covered Entities compliance with applicable Swiss laws, those requirements do not appear to promote Covered Entities compliance with requirements under the Exchange Act that are not subject to substituted compliance,70 or promote Covered Entities compliance with the applicable conditions to substituted compliance.
This condition would address this issue, while still allowing Covered Entities to use their existing internal supervision and compliance frameworks to comply with the relevant Exchange Act requirements and Order conditions, rather than having to establish separate special-purpose supervision and compliance frameworks.
b. Compliance Reports Under the proposed Order, substituted compliance in connection with the compliance report requirements under Exchange Act section 15Fk3 and Exchange Act rule 15Fk1c also would be subject to the condition that the compliance reports required pursuant to FINMA Circular 2017/1 margins 7881 must: 1 Be provided to the Commission at least annually and in the English language;
2 include a certification signed by the chief compliance officer or senior 67 As noted, substituted compliance does not extend to antifraud prohibitions or to certain other requirements under the Exchange Act e.g., segregation requirements and requirements related to transactions with counterparties that are not ECPs. See note 5, supra.
68 The Swiss Firms are not requesting substituted compliance in connection with: 1 Capital requirements: Exchange Act Rules 18a1; 2 margin requirements: Exchange Act Rule 18a3; 3
recordkeeping requirements not applicable to nonbank SBSEs in Exchange Act Rules 18a5 and 18a 6; 4 reporting requirements applicable to non-bank SBSEs in Exchange Act Rule 18a7; 5 notification requirements applicable to non-bank SBSEs in Exchange Act rule 18a8; and 6 securities count requirements in Exchange Act rule 18a9.
69 See part III, supra.
70 See note 5, supra.

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