731 Lexington Avenue

`

February 27, 2026

Derek Kleinbauer

President

Bloomberg SEF LLC

731 Lexington Avenue

New York, NY 10022

Re:

Order Book and Annual Compliance Report Data Structuring for Security-Based

Swap Execution Facilities

Dear Mr. Kleinbauer:

Based on the facts and circumstances set forth in your letter dated February 25,

2026 (“Letter”),1 the staff of the Division of Trading and Markets (“Division”) will not

recommend enforcement action to the Securities and Exchange Commission

(“Commission”) under Section 3D of the Securities Exchange Act of 1934 (“Exchange

Act”)2 against a security-based swap execution facility (“SBSEF”) that: (1) does not

maintain an order book,3 as set forth in Rule 803(a)(2),4 for security-based swaps

executed on an SBSEF that are not subject to the trade execution requirement set forth in

Section 3C(h) of the Exchange Act,5 which are defined in Rule 815(c)(1) as “permitted

transactions”6; and (2) does not submit its annual compliance report (“ACR”)

electronically to the Commission using the EDGAR system as an Interactive Data File, as

set forth in Rule 831(j)(2),7 and instead opts to submit its ACR in PDF format

electronically via email, a Commission portal, the Commission’s Electronic Form Filing

System, or any other means designated by the Commission.

1

A copy of the Letter is attached.

2

15 U.S.C. 78c-4.

3

See 17 CFR 242.802 (defining the term “order book”).

4

17 CFR 242.803(a)(2).

5

15 U.S.C. 78c-3(h).

6

17 CFR 242.815(c)(1).

7

17 CFR 242.831(j)(2).

Mr. Derek Kleinbauer

Page 2 of 2

February 27, 2026

This Division staff position is based strictly on the facts and circumstances stated

in the Letter. Any different facts or circumstances from those set forth in the Letter may

require a different response. This response, furthermore, expresses the Division staff’s

position regarding enforcement action only and does not purport to express any legal

conclusions on the question presented. The Division staff expresses no view with respect

to any other questions that the proposed activities discussed above may raise, including

the applicability of any other federal or state laws, or rules of an SBSEF. This position is

subject to modification or revocation at any time.

Sincerely,

Eric Juzenas

Associate Director

Division of Trading and Markets

.

February 25, 2026

Mr. Eric Juzenas

Associate Director

Division of Trading and Markets

Securities and Exchange Commission

100 F Street, NE

Washington, DC 20549

Re: Order Book and Annual Compliance Report Data Structuring for Security-Based

Swap Execution Facilities

Dear Mr. Juzenas:

Bloomberg SEF LLC (“BSEF”) 1 respectfully requests that the staff of the Division of

Trading and Markets (“Staff”) of the Securities and Exchange Commission (“SEC” or

“Commission”) not recommend that the Commission commence an enforcement action

against a security-based swap execution facility (“SBSEF”) that does not maintain an

“Order Book,” 2 as set forth in Commission Rule 803(a)(2), 3 for security-based swaps

(“SBS”) executed on an SBSEF that are not subject to the trade execution requirement in

section 3C(h) of the Securities Exchange Act of 1934 (“Permitted Transactions”).

BSEF also respectfully requests that Staff not recommend that the Commission commence

an enforcement action against an SBSEF that does not submit its annual compliance report

(“ACR”) electronically to the Commission using the EDGAR system as an Interactive Data

File in accordance with Commission Rule 831(j)(2), and which instead opts to submit its

ACR in PDF format electronically via email, a Commission portal, the Commission’s

Electronic Form Filing System (“EFFS”), or any other means designated by the

Commission.

1

Bloomberg SEF LLC is a wholly owned subsidiary of Bloomberg L.P. operating a swap execution facility

that is registered with, and regulated by, the CFTC. BSEF provides its participants with access to liquidity

across credit, interest rate, and foreign exchange swaps. In January 2025, BSEF became registered with the

SEC as the operator of an SBSEF. In the security-based swaps market, BSEF provides its market participants

with access to trade single-name credit default swaps.

2

Order Book is defined in Commission Rule 802 to mean “an electronic trading facility, a trading facility,

or a trading system or platform in which all market participants in the trading system or platform have the

ability to enter multiple bids and offers, observe or receive bids and offers entered by other market

participants, and transact on such bids and offers.”

3

17 C.F.R. § 242.803.

Background on BSEF

BSEF has over 10 years of experience operating a CFTC-registered swap execution facility

(“SEF”). BSEF has also operated an SEC-registered SBSEF since January 2025 which

initially began operating in August 2024 pursuant to certain exemptions. BSEF provides

multiple execution protocols for SBS, including request for quote functionality, a disclosed

Order Book, and an anonymous Order Book. Prior to BSEF becoming SEC-registered,

BSEF’s affiliates in the Bloomberg group operated security-based swap trading venues for

over a decade under temporary exemptions from registration. This request is grounded in

extensive market experience in operating trading venues for both swaps and security-based

swaps and is closely analogous to relief recently afforded to SEFs by the Commodity

Futures Trading Commission’s (“CFTC”) staff.4

Although BSEF’s SBSEF maintains an Order Book to address the Commission’s minimum

trading functionality requirement, it has seen little use to date. BSEF anticipates, based on

BSEF’s similar experience in operating a SEF with an order book for credit default swaps

on broad-based security indices (“CDS”), that participants on its SBSEF will rarely, if ever,

utilize the SBSEF’s Order Book in the future for Permitted Transactions.

Requests for Relief

The Commission finalized Regulation SE in 2023 to stand up the regime for the registration

and regulation of SBSEFs. 5 Within Regulation SE, Commission Rule 803 governs the

requirement and procedures for SBSEF registration. Commission Rule 803(a)(2)

specifically requires an SBSEF to, at a minimum, offer an Order Book in connection with

each SBS listed on the platform (the “Order Book Requirement”). 6

In January 2025, the Commission approved the first SBSEF registration applications,

thereby standing up an important part of the regulatory framework that enables market

participants to trade SBS on SEC-regulated platforms.7 Therefore, under Commission Rule

803(a)(2), SBSEFs are currently required to maintain an Order Book for all Permitted

Transactions.8

4

CFTC Letter No. 25-24 (July 30, 2025) (“No-Action Letter 25-24”). The CFTC Staff will not recommend

that the Commission commence an enforcement action against a SEF for failure to satisfy the Minimum

Trading Functionality Requirement in connection with Permitted Transactions. The no-action position

granted under No-Action Letter 25-24 will continue until the adoption of a Commission action addressing

the Minimum Trading Functionality Requirement in connection with Permitted Transactions.

5

See Securities Exchange Act Release No. 98845 (Nov. 2, 2023), 88 FR 87156 (Dec. 15, 2023) (“Final

Rule”).

6

17 C.F.R. § 242.803(a)(2).

7

See Securities Exchange Act Release No. 102305 (January 29, 2025), 90 FR 8946 (Feb. 4, 2025).

8

“Permitted Transaction” is defined under Commission Rule 815(c) to mean “any transaction not involving

a security-based swap that is subject to the trade execution requirement in section 3C(h) of the Act.” 17

C.F.R. § 242.815(c)(1). There are currently no SBS that are subject to the trade execution requirement.

2

As discussed in greater detail below, based on BSEF’s experience in the SBS market and

its extensive experience operating a SEF for CDS, we do not believe the Order Book

Requirement for Permitted Transactions will increase trading on SBSEFs nor will it lead

to greater pre-trade price transparency in the SBS market. Instead, maintaining an Order

Book for all listed instruments has led, and will continue to lead, to significant ongoing

resource costs to maintain unused functionality. In light of similar circumstances with

respect to swaps, the CFTC staff recently issued no-action relief from the CFTC’s Order

Book Requirement for swaps executed on a SEF that are not subject to the trade execution

requirement in section 2(h)(8) of the Commodity Exchange Act (“CFTC Permitted

Transactions”).9

To permit the same treatment of the Order Book Requirement for SEFs and SBSEFs, BSEF

believes the Staff should take the same position as the CFTC staff and issue no-action relief

from Commission Rule 803(a)(2)’s Order Book Requirement in connection with Permitted

Transactions. BSEF further believes that any no-action relief should continue until such

time that the Commission reaches a determination whether to remove the Order Book

Requirement altogether for Permitted Transactions.

BSEF also believes Staff should issue no-action relief from Commission Rule

242.831(j)(2) and allow an SBSEF to submit its ACR in compliance with Commission

Rule 242.831(j)(2) by submitting its ACR in PDF format (as permitted by the CFTC)

electronically via email, a Commission portal, the Commission’s EFFS, or any other means

designated by the Commission.

Discussion

A. The Trade Execution Requirement

Section 3C(h) of the Securities Exchange Act of 1934, added by the Dodd-Frank Act of

2010, sets out requirements around SBS trading, specifically dealing with the trade

execution mandate’s made available to trade (“MAT”) requirement.

If a swap is required to be cleared10 (i.e., must go through a clearing agency under the

clearing mandate) and has been MAT, 11 then it must be executed on either a national

securities exchange or an SBSEF (a “Required Transaction”), subject to certain exceptions.

The goals of Section 3C(h) were to: (i) increase transparency in swaps markets;

9

CFTC Letter No. 25-24 (July 30, 2025).

Before making an SBS subject to the clearing mandate, the Commission is required to take into account a

number of factors, including the existence of significant outstanding notional exposures, trading liquidity,

and the adequacy of pricing data.

10

11

In order to make an SBS “available to trade,” an SBSEF would, under Commission Rule 816(a)(1), have

to make a filing with the Commission addressing a number of relevant factors about the SBS, which will then

be considered by the Commission, including: (i) whether there are ready and willing buyers and sellers;

(ii) the frequency or size of transactions; (iii) the trading volume; (iv) the number and types of market

participants; (v) the bid/ask spread; and (vi) the usual number of resting firm or indicative bids and offers. 17

C.F.R. § 242.816(b).

3

(ii) promote competition among trading venues; (iii) reduce systemic risk by pushing

standardized swaps onto clearinghouses and electronic platforms; and (iv) move swaps

trading away from opaque bilateral negotiations toward more open, regulated markets.

As noted above, an Order Book is one of the trading protocols that an SBSEF must offer

to its participants, but participants do not have an obligation to use it. With respect to

BSEF’s CFTC-regulated SEF, the Order Book is almost never used for Permitted

Transactions. We anticipate similar extremely intermittent usage for SBS trading on

SBSEFs. In the relatively limited amount of time under the current SBSEF registration

regime, there has been virtually no demand for an Order Book.

Yet SBSEFs are currently required, under Commission Rule 803(a)(2), to maintain an

Order Book for all SBS, including Permitted Transactions. This requirement has proved

costly, as the ongoing operational expenses to maintain an SBSEF Order Book for every

listed SBS is significant. In addition to the initial costs to build the Order Book

functionality, each SBSEF continues to incur ongoing costs to maintain the Order Book

functionality, including compliance and testing.

B. Recent CFTC No-Action Letter

On July 30, 2025, the CFTC’s Division of Market Oversight (“DMO”) issued No-Action

Letter 25-24 granting relief to SEFs from the obligation under CFTC Regulation 37.3(a)(2)

to maintain an Order Book for CFTC Permitted Transactions. In granting the relief, DMO

noted the rule was originally intended to promote transparency and shift liquidity onto

SEFs, but that it had not achieved those goals. In over a decade of operation, broader market

evidence showed extremely low Order Book usage for swaps. Maintaining this

infrastructure imposed significant costs and diverted resources from developing execution

methods that market participants actually use.

Accordingly, DMO stated that it would not recommend enforcement against SEFs that do

not maintain an Order Book for CFTC Permitted Transactions until the Commission takes

further action on the rule. The no-action position applies only to CFTC Permitted

Transactions, and does not affect swaps subject to MAT determinations.

BSEF’s request for no-action relief from the Staff mirrors that logic for SBS under SEC

oversight where no execution mandate currently exists.

C. Commission Justification for the Order Book Requirement

The Commission’s decision to impose the Order Book Requirement appears to be based

on three distinct goals: (i) promoting SBS trading on SBSEFs; (ii) facilitating pre-trade

price transparency; and (iii) harmonizing with the CFTC’s rules. For the reasons set forth

below, we believe the Order Book Requirement currently achieves none of these goals.

(i)

Promoting SBS Trading on SBSEFs.

4

In proposing Regulation SE, the Commission noted that a key goal of the Dodd-Frank Act

was to bring trading of swaps and SBS onto regulated markets. 12 The CFTC has

acknowledged in the past how infrequently Order Books in general are used for trading of

swaps. This is consistent with the reasoning received by the CFTC and incorporated into

its decision to issue No-Action Letter 25-24. In the CFTC’s 2018 proposed rule to amend

certain aspects of the SEF regulations, for example, the CFTC wrote that “[d]epending on

the product involved . . . order book trading typically ranges between ‘less than [one

percent] to less than [three percent] of total CDS transactions’ on SEFs, while order book

trading constitutes between ‘less than [one percent] to approximately [twenty percent] of

total IRS transactions.”13 While this statistic pertains to the CFTC-regulated market, it

illustrates the broader reality that over-the-counter derivatives liquidity generally coalesces

around request-for-quote and voice-intermediated workflows and not Order Books. In

BSEF’s experience, since 2015, over 96% of Order Book trading has been in MAT swaps,

and less than 4% of Order Book trades have been in non-MAT swaps.

We also note there is considerably more liquidity in index CDS than single name CDS (i.e.

SBS that are credit default swaps on single names or narrow-based security indices)

(“SNCDS”). Therefore, Order Book trading for SBSEFs in SBS is likely lower or

significantly lower, with a lower likelihood of future voluntary trading of SBS Permitted

Transactions through an Order Book on SBSEFs.

Therefore, it is clear from the available data for SBS and for SEFs that facilitate trading of

CDS (which are similar to SNCDS), that the Order Book Requirement is unlikely to

promote trading on SBSEFs while nonetheless imposing unnecessarily burdensome and

overly restrictive trading protocol requirements that will potentially discourage market

participants from executing Permitted Transactions on SBSEFs.14

Given the costs associated with the operation and maintenance of an Order Book, and the

lack of any meaningful benefit to the SBS market, we believe the Order Book requirement

for Permitted Transactions should be removed. SBSEF resources could be better deployed

elsewhere to provide services that are more useful, innovative, and responsive to customer

needs.

(ii)

Facilitating Pre-Trade Price Transparency.

12

Proposed Rules Relating to Security-Based Swap Execution and Registration and Regulation of SecurityBased Swap Execution Facilities, Securities Exchange Act Release No. 94615 (April 6, 2022), 87 Fed. Reg.

28872, 28894 (May 11, 2022).

13

Swap Execution Facilities and Trade Execution Requirement, 83 Fed. Reg. 61946, 61964 (proposed Nov.

30, 2018).

14

Final Rule, at 87178-79 (Dec. 15, 2023) (One commenter suggested applying the order interaction

requirement to all transactions on the SBSEF, not only Required Transactions, or to require that firm interest

outside an SBSEF’s Order Book be communicated in response to RFQs. The Commission responded that

“applying such requirements to Permitted Transactions . . . would be likely to have the undesirable effect of

discouraging market participants from voluntarily executing Permitted Transactions on SBSEFs . . .).”

5

Among other provisions, the Commission anticipated that Commission Rule 803(a)(2)’s

Order Book Requirement would increase pre-trade transparency in the SBS market. The

Commission reasoned that the pre-trade transparency requirements would allow an

increased number of market participants to better see the trading interest of other market

participants prior to trading, which in turn would lead to increased price competition among

market participants, more efficient pricing, and reduced transaction costs. 15 The

Commission correctly noted that the benefits of pre-trade transparency would not come

without costs. Specifically, the Commission noted that the pre-trade transparency

requirements could cause market participants to reveal valuable information about their

trading interests, which could potentially discourage participation in the SBS market and

if too burdensome, would cause SBS dealers to be less willing to supply liquidity for SBS

trades on SBSEFs.16

BSEF’s experience indicates that Order Book trading, or the complete lack thereof, has not

materially advanced pre-trade transparency or execution quality for swaps, which we

anticipate will also be the experience for SBS. Request-based and negotiation-supported

protocols better fit episodically liquid SBS markets. We have no reason to anticipate that

these circumstances will change in the foreseeable future for SBS that are not subject to

MAT determinations.

Building and maintaining an Order Book imposes significant initial and ongoing costs—

engineering, infrastructure, market-surveillance integration, and periodic upgrades—and

similar to SEF Order Books, SBSEF Order Books are anticipated to rarely be used for

Permitted Transactions, and are not anticipated to meaningfully contribute to pre-trade

price transparency. These resources could otherwise be directed to protocols SBSEF

participants actually use and to innovations that promote transparency and enhanced

execution quality.

(iii)

Harmonizing with the CFTC.

In establishing rules for the registration and regulation of SBSEFs, the Commission sought

to closely harmonize the Commission’s SBSEF rules with analogous CFTC SEF rules,

except where differences in either the underlying statutory authority or differences in the

SBS market relative to the swaps market necessitated differences between the rules of the

Commission and the CFTC.

The Commission observed a number of key benefits in favor of harmonization, including

facilitating the ability of entities to dually register and minimize costs by allowing SEFs to

use their existing systems, policies, and procedures to comply with SBSEF requirements.

The Commission also observed that, since the CFTC adopted the SEF rules in 2013, the

swaps market had grown and matured within the framework established by the CFTC, and

therefore market participants were familiar with the CFTC’s requirements, comfortable

15

Final Rule, at 87249.

16

Final Rule, at 87255.

6

with the overall framework, and have additional experience with aspects of the rules that

either work well or require improvement.17

At the time the Commission adopted Commission Rule 803(a)(2) (and prior to the CFTC’s

issuance of No-Action Letter 25-24), the Order Book requirement was fully aligned with

and harmonized to the CFTC’s corresponding minimum trading functionality requirement.

In light of the CFTC’s recent no-action relief granted under No-Action Letter 25-24, SEFs

do not have to offer any minimum trading functionality for CFTC Permitted Transactions.

Instead, each SEF will be free to offer (or not offer) any method of execution for Permitted

Transactions. The CFTC’s decision to provide no-action relief from the minimum trading

functionality requirement for CFTC Permitted Transactions recognized the fact that SEF

Order Books have not been effective in attracting liquidity onto SEFs.

However, as a result of the CFTC’s no-action relief, SEFs and SBSEFs are now treated

differently with respect to the Order Book requirement. Consequently, SBSEFs will need

to maintain differing systems, policies, and procedures to comply with the Commission’s

SBSEF rules as compared with the SEF framework. This duplicative and burdensome

divergence in the regulatory framework is one of the very things the Commission sought

to avoid in standing up the SBSEF framework.

For Permitted Transactions in SBS, we believe that, similar to CDS under the CFTC’s

remit, request-for-quote protocols will prove more effective for attracting participation and

concentrating liquidity than maintaining a dormant Order Book. A targeted, interim

approach would allow SBSEFs to focus on execution methods that are more effective in

enhancing price discovery and transparency in the SBS markets.

D. Consistency with the purposes of Title VII.

It is worth noting that the underlying statute does not require SBSEFs to offer an Order

Book, and so the requirement in Regulation SE for an SBSEF to offer an Order Book

appears on its face to have been the product of an interpretation of the statute that was not

required by the Securities Exchange Act of 1934. In addition, the Commission recognized

in the Final Rule that “[t]he Dodd-Frank Act does not require . . . that all SBS be subject

to mandatory clearing or mandatory trade execution, and it does not impose any execution

requirements for transactions in an SBS unless the SBS is subject to mandatory clearing

and it has been made available to trade.” 18 Therefore, a Staff no-action position with

respect to the Order Book Requirement for Permitted Transactions would be in keeping

with the statute and the Commission’s intent to provide flexibility for Permitted

Transactions.

E. Filing SBSEF ACRs in PDF format electronically via email, a Commission portal,

the Commission’s EFFS, or any other means designated by the Commission

harmonizes with CFTC filing protocols for submitting SEF ACRs

17

Final Rule, at 87157.

18

Final Rule, at 87176.

7

To harmonize the Commission’s filing approach with the approach taken by the CFTC,

which permits SEFs to file ACRs in PDF format and not as an Interactive Data File and

via a dedicated CFTC portal or via email, the Commission should allow SBSEFs to submit

ACRs in PDF format electronically via email, a Commission portal, the Commission’s

EFFS, or any other means designated by the Commission.

Specifically, the CFTC permits a SEF’s filings (including initial registration filings,

quarterly financial filings and rulebook filings) to be made in PDF format via a dedicated

portal or via email. By contrast, an SBSEF’s filings submitted to EDGAR in the form and

manner specified by the Commission must be prepared, formatted, and submitted in

accordance with a very particular set of requirements to the Commission. Most filers, in

order to comply with these specifications, retain a third-party vendor, and incur substantial

costs. Requiring an SBSEF to submit its ACR as an Interactive Data File via the EDGAR

filing system is substantially more onerous and costly than the corresponding CFTC filing

process for a SEF’s ACR.

Conclusion

For the foregoing reasons, BSEF respectfully requests that the Division not recommend

enforcement action if an SBSEF does not offer or maintain an Order Book to satisfy any

minimum trading functionality requirement with respect to Permitted Transactions in SBS

executed on an SBSEF. The requested relief would be temporary and targeted, remaining

in effect until the earlier of: (i) Commission action addressing order-book or minimum

trading-functionality requirements for Permitted Transactions in SBS on SBSEFs, or

(ii) staff modification, withdrawal, or supersession of the relief.

Furthermore, BSEF respectfully requests that the Division not recommend enforcement

action if an SBSEF does not electronically submit its ACR using the EDGAR system as an

Interactive Data File in accordance with Commission Rule 831(j)(2) and opts instead to

file its ACR in PDF format electronically via email, a Commission portal, the

Commission’s EFFS, or any other means designated by the Commission.

Granting this limited relief would allow BSEF to focus resources on execution protocols

that market participants use and improving participation and transparency for Permitted

Transactions in SBS without sacrificing investor protection or market oversight. Granting

the limited relief with respect to submission methods for an SBSEF’s ACR will also

harmonize the Commission’s submission protocols with those of the CFTC.

8

Please contact Jennifer Borzooyeh, Counsel at (212) 617-2894 with any questions. We

would be pleased to provide additional data or meet with Staff to discuss.

Sincerely,

/s/ Derek Kleinbauer

Derek Kleinbauer

President

Bloomberg SEF LLC

9