SEC fires warning shot to firms on reporting data quality

The SEC has fired a warning shot across the bows of security-based swap reporting firms, warning them that it is observing failures related to the timeliness, accuracy and completeness of reporting.

Risk Alert: Observations Related to Security-Based Swap Dealers cites issues the SEC has detected through examinations of, and outreach to, security-based swap dealers. As well as reporting issues it cites the US regulator’s concerns around failures involving:

  • Business conduct standards
  • Security-based swap trading relationship documentation and portfolio reconciliation
  • Recordkeeping

The SEC’s section on Reporting and Correction of SBS Reporting Errors states:

“In examinations and other outreach to security-based swap dealers, the Division observed that certain security-based swap dealers failed to:

  • Report certain security-based swap trade data to a registered security-based swap data repository within the required timeframes;
  • Accurately report primary trade information, including by reporting:
    • inaccurate notional amounts, including miscalculated notional amounts and notional amounts that are not economically possible
    • incorrect underlying asset information, such as an incorrect International Securities Identification Number (“ISIN”) or an underlying asset of “Basket,” without identifying specific underlying reference asset(s), reference issuer(s), or reference index as required under Rule 901(c)(1)(i)
  • Accurately and completely report all secondary trade information, such as:
    • counterparty identifications, including reporting an internal identifier for security-based swap transactions that did not involve privacy laws or natural persons; and
    • buyer, seller, receiver, or payer fields.

In many instances, the failures identified above were the result of weak internal controls and processes for ensuring that information reported was accurate. In addition, examinations of security-based swap dealers revealed that certain security-based swap dealers did not employ procedures that were reasonably designed to identify and correct the trade reporting errors noted above.”

  • See the SEC’s press release here
  • Contact us to find out more about how we can help get your SEC reporting accurate, complete and timely.