Voglio sapere a riguardo di…

41612

Federal Register / Vol. 86, No. 145 / Monday, August 2, 2021 / Notices
SECURITIES AND EXCHANGE
COMMISSION
Release No. 3492484; File No. S72220

Order Granting Conditional Substituted Compliance in Connection With Certain Requirements Applicable to Non-U.S. Security-Based Swap Dealers and Major Security-Based Swap Participants Subject to Regulation in the French Republic July 23, 2021.

khammond on DSKJM1Z7X2PROD with NOTICES3

I. Overview The French Autorite des Marches Financiers AMF and the Autorite de Controle Prudentiel et de Resolution ACPR, the French financial authorities, have submitted a substituted compliance application requesting that the Securities and Exchange Commission Commission determine, pursuant to the Securities Exchange Act of 1934 Exchange Act rule 3a716, that security-based swap dealers and major security-based swap participants SBS Entities subject to regulation in the French Republic France conditionally may satisfy requirements under the Exchange Act by complying with comparable French and European Union EU
requirements.1 The AMF and the ACPR
French Authorities sought substituted compliance in connection with certain Exchange Act requirements related to risk control, capital and margin, internal supervision and compliance, counterparty protection, and record keeping, reporting, notification, and securities counts.2 The 1 See Letter from Robert Ophe le, Chairman, AMF, and Denis Beau, Chairman, ACPR, to Vanessa Countryman, Secretary, Commission, dated Dec. 9, 2020 French Authorities Application. The application is available on the Commissions website at: https www.sec.gov/files/full-frenchapplication.pdf.
2 Risk control includes requirements related to internal risk management, trade acknowledgment and verification, portfolio reconciliation and dispute resolution, portfolio compression and trading relationship documentation; capital and margin includes requirements related to capital applicable to non-prudentially regulated securitybased swap dealers and to margin applicable to non-prudentially regulated SBS Entities; internal supervision and compliance includes requirements related to diligent supervision, conflicts of interest, information gathering under Exchange Act section 15Fj, 15 U.S.C. 78o10j, and chief compliance officers; counterparty protection includes requirements related to disclosure of material risks and characteristics and material incentives or conflicts of interest, know your counterparty, suitability of recommendations, fair and balanced communications, disclosure of daily marks and disclosure of clearing rights; and record keeping, reporting, notification, and securities counts includes requirements related to making and keeping current certain prescribed records, preservation of records, reporting, notification and securities counts.

VerDate Sep<11>2014

18:23 Jul 30, 2021

Jkt 253001

application incorporated comparability analyses between the relevant requirements in Exchange Act section 15F and the rules and regulations thereunder and applicable French and EU law, as well as information regarding French supervisory and enforcement frameworks.
On December 22, 2020, the Commission issued a notice of the French Authorities Application, accompanied by a proposed order to grant substituted compliance with conditions in connection with the French Authorities Application the proposed Order.3 The proposed Order incorporated a number of conditions to tailor the scope of substituted compliance consistent with the prerequisite that relevant French and EU requirements produce regulatory outcomes that are comparable to relevant requirements under the Exchange Act. The Commission reopened the comment period for the proposed Order on April 5, 2021.4
As discussed below, the Commission is adopting a final Order that has been modified from the proposal in certain respects to address commenter concerns and to make clarifying changes.
II. Substituted Compliance Framework, Prerequisites and Commenter Issues of General Applicability A. Substituted Compliance Framework and Purpose As the Commission has discussed previously,5 Exchange Act rule 3a716
provides a framework whereby non-U.S.
SBS Entities may satisfy certain requirements under Exchange Act section 15F by complying with comparable regulatory requirements of a foreign jurisdiction.6 Because substituted compliance does not constitute exemptive relief, but instead provides an alternative method by which non-U.S. SBS Entities may comply with applicable Exchange Act requirements, the non-U.S. SBS Entities would remain subject to the relevant requirements under section 15F. The Commission accordingly will retain the 3 See Exchange Act Release No. 90766 Dec. 22, 2020, 85 FR 85720, 85721 Dec. 29, 2020 French Substituted Compliance Notice and Proposed Order.
4 See Exchange Act Release No. 91477 Apr. 5, 2021, 86 FR 18341 Apr. 8, 2021 Reopening Release. The reopened comment period ended on May 3, 2021.
5 See French Substituted Compliance Notice and Proposed Order, 85 FR at 85721; Exchange Act Release No. 90765 Dec. 22, 2020, 85 FR 85686, 85687 Dec. 29, 2020 German Substituted Compliance Order.
6 See Exchange Act Release No. 77617 Apr. 14, 2016, 81 FR 29960, 30079 May 13, 2016
Business Conduct Adopting Release.

PO 00000

Frm 00002

Fmt 4701

Sfmt 4703

authority to inspect, examine and supervise those SBS Entities compliance and take enforcement action as appropriate. Under the substituted compliance framework, failure to comply with the applicable foreign requirements and other conditions to a substituted compliance order would lead to a violation of the applicable requirements under the Exchange Act and potential enforcement action by the Commission as opposed to automatic revocation of the substituted compliance order.
Under rule 3a716, substituted compliance potentially is available in connection with certain section 15F
requirements,7 but is not available in connection with antifraud prohibitions and certain other requirements under the Federal securities laws.8 SBS
Entities in France accordingly must comply directly with those requirements notwithstanding the availability of substituted compliance for other requirements.
The substituted compliance framework reflects the cross-border nature of the security-based swap market, and is intended to promote efficiency and competition by helping to address potential duplication and inconsistency between relevant U.S. and foreign requirements.9 In practice, substituted compliance may be expected to help SBS Entities leverage their existing systems and practices to comply with relevant Exchange Act requirements in conjunction with their compliance with relevant foreign requirements. Market participants will begin to count security-based swap transactions toward the thresholds for registration with the Commission as an SBS Entity on August 6, 2021, and will be required to begin registering with the Commission on November 1, 2021.10
7 17

CFR 240.3a716d.
Substituted Compliance Notice and Proposed Order, 85 FR at 85721 n.2 addressing unavailability of substituted compliance in connection with antifraud provisions, as well as provisions related to transactions with counterparties that are not eligible contract participants ECPs, segregation of customer assets, required clearing upon counterparty election, regulatory reporting and public dissemination, and registration of offerings.
9 See generally Business Conduct Adopting Release, 81 FR at 30073 noting that the crossborder nature of the security-based swap market poses special regulatory challenges, in that relevant U.S. requirements have the potential to lead to requirements that are duplicative of or in conflict with applicable foreign business conduct requirements, even when the two sets of requirements implement similar goals and lead to similar results.
10 See Key Dates for Registration of SecurityBased Swap Dealers and Major Security-Based Swap Participants, available at https
www.sec.gov/page/key-dates-registration-security8 French
E:FRFM02AUN3.SGM

02AUN3