On March 21, 2022, the Committee submitted a comment letter to the Securities and Exchange Commission (the “SEC”) regarding its proposed rule on the reporting of large security-based swap positions.

The Committee’s letter proceeds in three parts. First, we describe the Proposed Rule’s reporting requirements, including a description of the credit default swaps and total return swaps covered by the proposal. Second, we review the policy rationale for the Proposed Rule. Third, we assess the Proposed Rule’s cost-benefit analysis and find that it has several key shortcomings, including a failure to sufficiently analyze or quantify several of the principal benefits and costs of the proposal.

While we generally support transparency and properly calibrated reforms to make markets more efficient and competitive, we find that the Proposed Rule’s cost-benefit analysis (“CBA”) fails to provide a sufficient basis for the proposed disclosure requirements, and we therefore cannot support the proposed security-based swap disclosures. If the SEC nonetheless chooses to impose such a requirement, then we recommend that the SEC revise the Proposed Rule such that reporting thresholds only apply on a net basis, because the goal of the proposal is to identify directional positions. We also recommend increasing the threshold for reporting security-based swaps positions for all market participants to focus more narrowly on large positions.

The full letter is available here.