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Federal Register / Vol. 86, No. 149 / Friday, August 6, 2021 / Notices
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annual compliance report to include a certification by the chief compliance officer or senior officer that, to the best of his or her knowledge and reasonable belief and under penalty of law, the information contained in the compliance report is accurate and complete in all material respects. 357
The Commission concurs that the Orders required certification should align with that of Exchange Act rule 15Fk1. It would seem incongruous and not within the intent of substituted compliance to apply a higher standard of certification to Covered Entities relying on substituted compliance than required under that rule. Therefore, the Commission is amending the Order to require that all required UK compliance reports include a certification signed by the chief compliance officer or senior officer of the Covered Entity that, to the best of the certifiers knowledge and reasonable belief and under penalty of law, the report is accurate and complete in all material respects.358 In addition, the Order has been updated to clarify that each UK compliance report, and therefore also the chief compliance officer or senior officer certification, must address the Covered Entitys compliance with applicable Exchange Act requirements, consistent with the Orders conditions with respect to internal supervision.359 The Commission believes that this clarification is necessary to promote comparable regulatory outcomes, particularly in light of the granular approach to substituted compliance, to ensure that the compliance report covers applicable Exchange Act requirements if the Covered Entity uses substituted compliance for chief compliance officer requirements, whether or not the Covered Entity relies on substituted compliance for internal supervision.
Second, because Covered Entities may prepare multiple UK compliance reports per year, the commenter requested that the Commission permit a Covered Entity to either a make an annual submission of these multiple reports that a Covered Entitys certification would include statements that the certification is to the best of the certifiers knowledge and reasonable belief and that the report is accurate and complete in all material respects.
357 Exchange Act rule 15Fk1c2iiD; see also Exchange Act rule 15Fk1e2 defining senior officer as the chief executive officer or other equivalent officer.
358 See para. d2iiB of the Order.
359 See para. d4 of the Order. In practice, a Covered Entity may satisfy this condition by identifying relevant Order conditions and reporting on the implementation and effectiveness of its controls with regard to compliance with applicable Exchange Act requirements and relevant provisions of the Order.

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with a supplement of information regarding compliance with conditions to substituted compliance or b create and submit a single, annual report regarding its SBS Entity business, including information regarding compliance with conditions to substituted compliance. 360 The Commission is persuaded that additional clarification regarding the timing of these UK
compliance reports is warranted, but believes that submission of multiple outdated and/or subsequently superseded UK compliance reports at the end of each year likely would not promote regulatory outcomes comparable to Exchange Act compliance report requirements. Rather, in the case of a Covered Entity that prepares multiple UK compliance reports each year, the Commission believes that it is appropriate for the Commission to receive compliance reports shortly after their submission to the management body. Providing these reports to the Commission near the times that the Covered Entity submits them to the management body also will better align with the UK regulatory framework, which permits a Covered Entity to prepare and submit to the management body multiple compliance reports throughout the year, but does not contemplate a Covered Entity preparing multiple internal compliance reports throughout the year and submitting those reports to the management body only at the end of the year. The Commission thus is changing the Order to clarify that a Covered Entity must provide the Commission each UK
compliance report prepared pursuant to UK MiFID Org Reg article 222c no later than 15 days following the earlier of its submission to the Covered Entitys management body or the time the report is required to be submitted to the management body.361 In line with UK
MiFID Org Reg article 222c, a Covered Entity must provide at least one report annually to the Commission but if a Covered Entity makes more than one report pursuant to UK MiFID Org Reg article 222c, the Covered Entity must provide and certify each such report within the required 15-day deadline.
The Commission views 15 days as providing a reasonable time to translate reports, if needed, and convey them to 360 See SIFMA 5/3/2021 Letter at 21 and Appendix A part d2. With regard to the French Substituted Compliance Notice and Proposed Order, SIFMA supported an additional timing standard that would provide for an annual submission 15 days after the submission to the French regulatory authority. The Commission addresses SIFMAs comment in connection with its consideration of French authorities application for substituted compliance.
361 See para. d2iiD of the Order.

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the Commission, and this change is consistent with the same commenters suggested clarification of the French Substituted Compliance Notice and Proposed Order.362 This deadline is intended to promote timely notice of compliance matters in a manner comparable to Exchange Act requirements, while also accounting for the annual deadline required under UK
MiFID Org Reg article 222c as well as the possibility that the Covered Entity may submit reports ahead of this annual deadline. In addition, reports required to be provided under UK MiFID Org Reg article 222c must together cover the entire period that an Exchange Act rule 15Fk1 annual report would have covered.363 This requirement prevents a Covered Entity from notifying the Commission just prior to the due date of its annual Exchange Act compliance report that it will use substituted compliance for chief compliance officer requirements and then providing the Commission a UK compliance report that covers only a part of the year that would have been covered in the Exchange Act report.
The Commission recognizes that a Covered Entity preparing multiple UK
compliance reports each year may find it difficult to submit to the Commission multiple UK compliance reports throughout the year, each with a chief compliance officer or senior officer certification and a section addressing the Covered Entitys compliance with U.S. requirements. However, on balance the Commission believes that these elements are necessary to achieve a regulatory outcome comparable to the Exchange Act, and is retaining the requirement for all reports to include them. The commenters suggested alternativeto allow a Covered Entity to create a single annual report regarding its SBS businessamounts to a request to allow a Covered Entity to prepare a bespoke compliance report outside of the requirements of both the Exchange Act and the UK regulatory framework.
The Commission believes this bespoke 362 In its comment on the same provision in the French Substituted Compliance Notice and Proposed Order, the commenter asked the Commission to permit a Covered Entity to make an annual submission of the foreign compliance report within 15 days after submission of that report to the foreign regulatory authority. The commenter explained that, absent clarification, the Order would appear to require a Covered Entity to provide the Commission its foreign compliance report within 30 days following the deadline for the Covered Entity to file its annual financial report with the Commission, without regard to when the Covered Entity prepares its foreign compliance report. See SIFMA 5/3/2021 Letter at 1920 and Appendix A part d2, available at: https
www.sec.gov/comments/s7-22-20/s72220.htm.
363 See para. d2iiE of the Order.

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