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US SEC to adopt rules establishing regime for swap data warehouses

[WASHINGTON] US securities regulators were poised on Wednesday to adopt rules to create a new regime for overseeing firms tasked with storing trillions of dollars worth of swap trading data, a crucial effort to help police the marketplace.

The Securities and Exchange Commission's rules for so-called swap data repositories come more than four years after they were first required by the 2010 Dodd-Frank Wall Street reform law.

They will apply to companies such as the Depository Trust & Clearing Corp, a major player in the business of warehousing swap trading data.

"These rulemakings signify another step forward in putting together a regulatory infrastructure to promote transparency in the opaque derivatives market," SEC Democratic Commissioner Luis Aguilar said in prepared remarks.

The 2010 Dodd-Frank Wall Street reform required the SEC and the Commodity Futures Trading Commission to jointly regulate the US$692 trillion over-the-counter derivatives market.

The law is an attempt to shine more light on the market by requiring real-time price reporting and reduce risks by routing many swaps through clearinghouses, which stand in between parties to guarantee trades.

The CFTC, which regulates the lion's share of the market, long ago adopted rules laying out the regime for swap data repositories.

But the SEC has taken a different approach, opting instead to work out the details on how swap rules would apply across borders before completing other new regulations.

The SEC on Wednesday planned to adopt a package of 21 rules requiring data warehouses to register, establish governance standards and designate a chief compliance officer.

The package of rules would also require the reporting of data, including the public dissemination of aggregated volume and pricing figures.

Besides adopting the slew of new rules, the SEC will separately propose regulations for reporting requirements for trading platforms and clearing agencies.

Despite the SEC's relatively small role in policing the derivatives markets, Wednesday's rules were not without controversy.

Democratic and Republican SEC commissioners clashed over a measure in the final rules that would hold employees of swap data repositories liable for lying to the chief compliance officer.

Republican SEC Commissioner Michael Piwowar lambasted the measure in prepared remarks, saying it "creates heightened liability and uncertainty."