SEC and ECB sign MOU to enhance cross-border inspections

Rick Steves

The MOU also supports the operation of substituted compliance orders that the Commission has issued for security-based swap entities in France and Germany, as well as any future substituted compliance orders in other EU Member States that participate in the SSM.

The Securities and Exchange Commission has announced the signing of a Memorandum of Understanding (MOU) with the European Central Bank, the first of its kind.

Both parties agreed to consult, cooperate, and exchange information in connection with the supervision, enforcement, and oversight of certain security-based swap dealers and major security-based swap participants that are registered with the SEC and supervised by the ECB.

The SEC has recently gone forward with the implementation of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) in order to boost derivatives oversight in the U.S..

As part of that move, the agency approved the DTCC Data Repository (U.S.) application to operate as a registered security-based swap data repository (SBSDR).

In late July, the US financial watchdog saw France approve a substituted compliance determination order with respect to security-based swap dealers and major security-based swap participants (SBS Entities) subject to regulation in the French Republic.

By signing the MOU with the ECB, the US regulatory agency will be able to extend oversight of all SEC-registered security-based swap entities in the EU Member States participating in the Single Supervisory Mechanism (SSM).

The SSM refers to the system of banking supervision in the European Union, which is composed of the ECB and the relevant national competent authorities of participating EU Member States.

The MOU also supports the operation of substituted compliance orders that the Commission has issued for security-based swap entities in France and Germany, as well as any future substituted compliance orders in other EU Member States that participate in the SSM.

Substituted compliance allows a security-based swap entity to comply with particular U.S. requirements under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 through compliance with comparable EU and EU Member State laws, the agency states.

The MOU enhances cross-border inspections between the SEC and the ECB.

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