FR 2021-02755

The document is a notification from the Securities and Exchange Commission (SEC) regarding an application by DTCC Data Repository (U.S.) LLC, referred to as DDR, to register as a Security-Based Swap Data Repository (SDR) and a Securities Information Processor (SIP). Essentially, DDR seeks approval from the SEC to handle data for transactions involving equity, credit, and interest rate derivatives. The SEC is inviting public comments on the application to assist in its decision-making process.

Summary of the Document

The notice outlines DDR's intention to operate in the domain of security-based swaps (SBS), which involves complex financial transactions. DDR's aim is to manage data for specific asset classes and ensure compliance with the relevant U.S. financial regulations. The application details DDR's organizational structure, operational procedures, and the measures it plans to take for security, compliance, and data reporting.

Issues and Concerns

One of the core issues in the document is its complexity and density—filled with technical jargon and references to laws and regulations that may not be easily comprehensible to an average reader. This complexity, evidenced by numerous references to sections of the Code of Federal Regulations (CFR) and past releases, could pose a barrier to understanding the full scope and implications of the document. There is also no discussion of the potential financial implications, such as costs associated with DDR's registration or operation. Additionally, the document does not provide insights into whether DDR underwent a competitive selection process or the transparency of its application, leading to questions about the fairness of the registration procedure.

Impact on the Public

Broadly, the registration of DDR as an SDR and SIP could enhance the regulation and reporting of security-based swap transactions, which can contribute to greater transparency in financial markets. This transparency potentially benefits the public by fostering more stable financial environments. However, the complexity of the document might hinder public engagement in the comment process, as potential stakeholders may find it challenging to comprehend or contribute informed opinions on the matter.

Impact on Stakeholders

For financial professionals and entities engaging in SBS transactions, DDR's registration could provide a reliable and structured system for reporting and managing swap data. This could streamline operations in these transactions, ensuring compliance with regulatory requirements and minimizing legal risks. However, for market participants unfamiliar with the technicalities of financial regulation, the implementation of DDR's systems could impose additional compliance burdens, potentially involving financial and operational adjustments.

In conclusion, while the document presents a significant development in securities regulation, its technical nature might limit its accessibility to the general public. Engaging broader audiences necessitates simplifying such communications to facilitate informed public discourse.

The document under review provides details on the application of DTCC Data Repository (U.S.), LLC (DDR) for registration as a security-based swap data repository (SDR) and securities information processor (SIP), including references to financial aspects associated with their services. These references are essential to understand the financial commitments and implications for users of DDR's services.

Financial References and Fees

The document specifies two primary types of fees that DDR intends to charge: Position Maintenance Fees and Account Management Fees. The Account Management Fee is currently set at $1,200.00 annually. This fee is applied to all accounts and is prorated in the year when an account is established. Users have the option to structure accounts individually or as Grouped Accounts, which may affect the fee application.

Additionally, for a commitment ending on December 31, 2024, known as the "Long Term Commitment," users can benefit from a 10% reduction in both Position Maintenance and Account Management Fees. However, if this commitment is terminated early, an early termination fee applies. This fee is calculated as the difference between the incentivized fee total and the full fee total without incentives, plus the greater of 5% of this total incentive provided or $500.00.

Relationship to Issues Identified

These financial details indicate a structured approach to how DDR plans to monetize its services, showcasing transparency in the costs users may incur. However, the document does not explore potential financial implications or cost estimates regarding the registration process or operations as an SDR and SIP, which could be seen as a gap in understanding potential economic impacts or wasteful spending.

Moreover, the technical language and complex regulatory references make it challenging for those without specialized knowledge to fully grasp the financial commitments required by potential users. This complexity can obscure understanding and create barriers to appreciating how these financial references align with broader regulatory and operational contexts.

Furthermore, there is no clear description of a competitive selection process or justification for DDR's application despite outlining financial commitments. This omission might raise concerns about the transparency and fairness of the registration process, which could have indirect financial ramifications on stakeholders or market dynamics due to perceived favoritism.

Overall, the financial references provide clarity on user fees but also highlight areas where more detailed financial implication analysis could enhance understanding and transparency.