# Security-Based Swap Dealer > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Asec%3Aac81b2405f9a8ffd ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text Security-Based Swap Dealer Statistics Y.C. Loon 1 _____________________________________________________________________________________ MARCH 2025 Abstract The Securities and Exchange Commission (“Commission” or “SEC”) regulates security-based swaps (“SBS”), pursuant to Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). As part of this regulatory regime, beginning on November 1, 2021, entities that meet the definition of security-based swap dealer (“SBSD”) were required to file an application to register with the Commission. Drawing on these registration filings, this paper presents statistics on the population of conditionally registered SBSDs. SBSD registrations surged in October and November 2021, followed by a small number of registrations that occurred sporadically between December 2021 and December 2024. As of December 31, 2024, there were 53 conditionally registered SBSDs. SBSDs often are regulated by other U.S. as well as foreign financial regulators. Most non-broker-dealer SBSDs stated their intent to use mathematical models to compute capital or margin, or price customer or proprietary positions. SBSDs operate in multiple countries in addition to the U.S., underscoring the global nature of the SBS market. Of the SBSDs eligible to rely on a substituted compliance determination, all stated their intent to do so. Multiple SBSDs can be affiliated with the same ultimate parent, although this occurs infrequently. The vast majority of ultimate parents have one affiliated SBSD each. This white paper is provided in the author’s official capacity as an economist in the Commission’s Division of Economic and Risk Analysis but does not necessarily reflect the views of the Commission, the Commissioners, or other members of the staff. The author is grateful to Amy Butler, Pam Carmody, Donna Chambers, Michelle Danis, Juan Echeverri, John Guidroz, Diana Knyazeva, Carol McGee, Rajal Patel, Oliver Richard, Jovan Stojkovic, and Mike Willis for helpful comments and suggestions. The author is grateful to PJ Hamidi and Bob Luby for expert assistance with registration filing data. The author is grateful to Caroline Schulte for her invaluable assistance in the preparation of the paper. 1 Introduction The Commission required the first SBSDs to register with the Commission by November 2021, pursuant to Title VII of the Dodd-Frank Act. As part of this regulatory regime, market participants that meet the definition of SBSD must file a complete application to register with the Commission. 2 Drawing on these registration filings, this paper presents statistics on the population of conditionally registered SBSDs. 3 The statistics cover a range of topics including time trends in SBSD registrations; the types of SBSDs (based on the registration form they filed); SBSDs that are registered or registering as swap dealers with the Commodity Futures Trading Commission (“CFTC”); SBSDs subject to prudential regulation; use of mathematical models by non-broker-dealer SBSDs; SBSDs that are registered as over-the-counter (“OTC”) derivatives dealers; geographical distribution of SBSDs; SBSDs that are registered with foreign financial regulatory authorities; substituted compliance; and SBSD ownership structure. As discussed in greater detail below, the paper primarily relies on three sources of data: (1) the list of conditionally registered SBSDs and registration forms filed by SBSDs; (2) information about ultimate parents of SBSDs; and (3) reference data associated with entities that have a Legal Entity Identifier (“LEI”). 4 First, the list of all conditionally registered SBSDs is published on the Commission’s website 5 and is based on registration forms filed by SBSDs. An entity that registers with the Commission as an SBSD must file either a complete Form SBSE, Form SBSE-A, or Form SBSE-BD, as appropriate. 6 Form SBSEBD is the registration form for SBSDs that are registered or registering with the Commission as brokerdealers. 7 Form SBSE-A is the registration form for SBSDs that are registered or registering with the CFTC as swap dealers or major swap participants (and not also registered or registering with the Commission as broker-dealers). 8 Form SBSE is the registration form for SBSDs that do not fit either of Entities that meet the definition of major security-based swap participant (“MSBSP”) also must file an application to register with the Commission. See Exchange Act Section 3(a)(71) (15 U.S.C. 78c(a)(71)) for the definition of “security-based swap dealer.” See also Rules 3a71-1 to -5 (17 CFR 240.3a71-1 through 240.3a71-5) for further definition of “security-based swap dealer,” including relevant thresholds. See Exchange Act Section 3(a)(67) (5 U.S.C. 78c(a)(67)) for the definition of “major security-based swap participant.” See also Rules 3a67-1 to -10 (17 CFR 240.3a67-1 through 240.3a67-10) for further definition of “major security-based swap participant,” including relevant thresholds. 2 An SBSD applicant that has submitted the required complete registration forms with the Commission is conditionally registered. See Rule 15Fb2-1(d) (17 CFR 240.15Fb2-1(d)). Subsequently, the Commission may grant or deny ongoing registration based on the conditionally registered SBSD’s application. See Rule 15Fb2-1(e) (17 CFR 240.15Fb2-1(e)). As of the date of this paper, all registered SBSDs are conditionally registered. 3 4 Unless otherwise noted, the statistics, figures, and tables presented below are based on data as of December 31, 2024. See List of Registered Security-Based Swap Dealers and Major Security-Based Swap Participants, U.S. SEC. & EXCH. COMM’N, available at https://www.sec.gov/about/divisions-offices/division-trading-markets/list-registered-security-based-swap-dealers-majorsecurity-based-swap-participants (last visited Jan. 28, 2025). 5 6 The entity also must file Form SBSE-C as part of its application per Rule 15Fb2-1. See 17 CFR 240.15Fb2-1. 7 These entities also file Form BD to register as broker-dealers. These entities also file a Form 7-R with the CFTC’s designee, the National Futures Association (“NFA”). In addition, the Form 7-R is filed as an exhibit to the Form SBSE-A. 8 DIVISION OF ECONOMIC AND RISK ANALYSIS 1 the above categories. 9 Entities that file these forms are required to correct any inaccurate information by filing an amendment through the Commission’s Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) system (in the case of Form SBSE, Form SBSE-A, and Form SBSE-BD) or the Central Registration Depository (in the case of Form BD). 10 Second, Standard & Poor’s Global Market Intelligence (“SPGMI”) Business Entity Cross Reference Service Ultimate Parent Point-in-Time package is used to identify the ultimate parent of each SBSD on the basis of majority ownership stake. 11 SPGMI updates the Ultimate Parent Point-in-Time package when there is a change in the relationship between a company and its ultimate parent. Third, provided an ultimate parent has an LEI, the reference data associated with that LEI is used to determine the ultimate parent’s location.12 The LEI Regulatory Oversight Committee (“LEI ROC”) has set forth principles to help ensure the accuracy of these reference data. Entities seeking an LEI have to confirm or certify the data and are requested to periodically verify the continued accuracy of their reference data (e.g., at least through yearly certification). Entities have an obligation to update their information when there are relevant changes. The LEI issuing organization (also known as the “Local Operating Unit” or “LOU”) is required to check each entry against reliable sources (public official sources such as a business registry and private legal documents) prior to publishing the LEI and See Registration Process for Security-Based Swap Dealers and Major Security-Based Swap Participants, Exchange Act Release No. 75611 (Aug. 5, 2015), 80 FR 48964, 48967 (Aug. 14, 2015) (“Entity Registration Adopting Release”). An entity that seeks to register as an MSBSP also would use Form SBSE-BD, Form SBSE-A, or Form SBSE, as appropriate. SBSD and MSBSP applications on Forms SBSE, SBSE-A, SBSE-BD (including the Schedules and Disclosure Reporting Pages) filed with the Commission as required by Rule 15Fb2-1, will be made public. All amendments to such applications, required by Rule 15Fb2-3, will be made public. See Entity Registration Adopting Release, 80 FR at 48995, 17 CFR 240.15Fb2-1, and 17 CFR 240.15Fb2-3. 9 Per Rule 15Fb2-3, if an SBSD or MSBSP finds that the information contained in its Form SBSE, Form SBSE-A, or Form SBSEBD, as appropriate, or in any amendment thereto, is or has become inaccurate for any reason, the SBSD or MSBSP shall promptly file an amendment electronically with the Commission through the Commission’s EDGAR system on the appropriate Form to correct such information. In addition, Rule 15Fb3-2(a) requires, among other things, that an SBSD or MSBSP shall amend its Form SBSE, Form SBSE-A, or Form SBSE-BD, as appropriate, in accordance with Rule 15Fb2-3 to update any inaccurate information prior to filing a notice of withdrawal from registration on Form SBSE-W. See 17 CFR 240.15Fb2-3, 17 CFR 240.15Fb3-2, and General Instructions to Form SBSE, Form SBSE-A, and Form SBSE-BD. Per Rule 15b3-1(a), if a broker or dealer finds that the information contained in its Form BD, or in any amendment thereto, is or becomes inaccurate for any reason, the broker or dealer shall promptly file with the Central Registration Depository (operated by the Financial Industry Regulatory Authority, Inc.) an amendment on Form BD correcting such information. See 17 CFR 240.15b3-1 and General Instructions to Form BD. Similarly, if the information provided by an SBSD in its Form 7-R changes or disclosure otherwise needs to be updated, the SBSD must file an updated Form 7-R with the NFA. The SBSD must also amend its Form SBSE-A to file the updated Form 7-R with the Commission. See 17 CFR 240.15Fb23 and Instructions to Form 7-R. 10 According to SPGMI, an ultimate parent is the company at the top of a corporate structure or the legal organization that is ultimately responsible for all associated entities below it. An entity rolls up to an ultimate parent when the ultimate parent has at least a 51% ownership stake in the entity. As an example, entity A acquires 75% ownership of entity B. Entity B’s ultimate parent is entity A. If two organizations jointly own 50% of another entity, an ultimate parent does not exist. As an example, entity A and entity B jointly own entity C (at 50% each). Entity C’s ultimate parent would be C itself. An ultimate parent could be organized in various ways, such as a public company, investment firm, index, or government institution. See S&P Global Market Intelligence, Business Entity Cross Reference Service User Guide. 11 Such reference data are available from the Global Legal Entity Identifier Foundation (“GLEIF”) database. When an entity registers for an LEI, it is required to provide accurate reference data (e.g., official name and registered address) about itself to the LEI issuing organization. See Get an LEI: Find LEI Issuing Organizations, GLOB. LEGAL ENTITY IDENTIFIER FOUND., available at https://www.gleif.org/en/about-lei/get-an-lei-find-lei-issuing-organizations (last visited Jan. 28, 2025). 12 DIVISION OF ECONOMIC AND RISK ANALYSIS 2 associated reference data. LEIs and their associated reference data are open to data challenges from any user, and those challenges must be resolved. 13 Time Trends in SBSD Registrations Final registration rules for SBSDs and MSBSPs 14 have been adopted and the first SBSDs were required to register as of November 1, 2021. 15 Between October 2021 and December 2024, 54 entities conditionally registered as SBSDs with the Commission. One of these entities withdrew its SBSD registration in October 2024. As of December 31, 2024, there were 53 conditionally registered SBSDs. 16 No entity had conditionally registered as an MSBSP with the Commission as of December 31, 2024. 17 SBSD registrations came in an initial wave in October and November 2021, followed by a small number of registrations that occurred sporadically between December 2021 and December 2024 (see Figure 1). In October and November 2021, respectively, 17 and 24 entities were conditionally registered as SBSDs. Another two entities were conditionally registered in December 2021. In 2022, there were six conditional registrations, which occurred in January, March, July, and October. In 2023, there were two conditional registrations, which occurred in January and September. There were three conditional registrations in 2024, two of which occurred in June and one of which occurred in December. While not depicted in Figure 1, one entity withdrew its SBSD registration in October 2024 as stated earlier. The number of conditionally registered SBSDs increased significantly in October and November 2021 and thereafter grew at a lower rate, with a small dip and recovery between October and December 2024 (see Figure 2). The subsequent sections report statistics and visualizations associated with the 53 conditionally registered SBSDs as of December 31, 2024. See Regulatory Oversight Committee Global LEI System, LEI ROC, available at https://www.leiroc.org/lei.htm (last visited Jan. 28, 2025); LEGAL ENTITY IDENTIFIER REGUL. OVERSIGHT COMM., COLLECTING DATA ON DIRECT AND ULTIMATE PARENTS OF LEGAL ENTITIES IN THE GLOBAL LEI SYSTEM – PHASE 1 at 11 (Mar. 10, 2016), available at https://www.leiroc.org/publications/gls/lou 20161003-1.pdf; and LEI Questions and Answers, What if There is an Error in an LEI Data Record?, GLOB. LEGAL ENTITY IDENTIFIER FOUND., available at https://www.gleif.org/en/about-lei/questions-and-answers (last visited Jan. 28, 2025). 13 14 See supra note 2. See Key Dates for Registration of Security-Based Swap Dealers and Major Security-Based Swap Participants, U.S. SEC. & EXCH. COMM’N, available at https://www.sec.gov/page/key-dates-registration-security-based-swap-dealers-and-major-security-based-swapparticipants (last visited Jan. 28, 2025). 15 16 See supra note 5. The 53 conditionally registered SBSDs are legal entities. An MSBSP applicant that has submitted the required complete registration forms with the Commission is conditionally registered. See Rule 15Fb2-1(d). Subsequently, the Commission may grant or deny ongoing registration based on the conditionally registered SBSD’s application. See Rule 15Fb2-1(e) (17 CFR 240.15Fb2-1(e)). 17 DIVISION OF ECONOMIC AND RISK ANALYSIS 3 Figure 1. Figure 2. Distribution of SBSDs by the Type of Registration Form They File Of the 53 conditionally registered SBSDs, 40 filed Form SBSE-A, seven filed Form SBSE-BD, and six filed Form SBSE (see Figure 3). DIVISION OF ECONOMIC AND RISK ANALYSIS 4 Figure 3. SBSDs that Are Registered or Registering as Swap Dealers with CFTC Forty-six conditionally registered SBSDs indicated on their registration filing that they were registered or registering with the CFTC as swap dealers (see Figure 4). 18 Of these 46 conditionally registered SBSDs, 40 are Form SBSE-A filers, while six are Form SBSE-BD filers. Form SBSE-A and Form SBSE-BD elicit information on whether the applicant is registered with the CFTC as a swap dealer or major swap participant (see Form SBSE-A Question 5A and Form SBSE-BD Question 3A) or is registering with the CFTC as a swap dealer or major swap participant (see Form SBSE-A Question 5B and Form SBSE-BD Question 3B). Form SBSE does not elicit such information. As a result, the statistic and figure are based only on filers of Forms SBSE-A and SBSE-BD. Swap dealer registration, pursuant to Title VII of the Dodd-Frank Act reforms and related regulations, began on December 31, 2012. See CFTC Announces Real-Time Public Reporting of Swap Transactions and Swap Dealer Registration Began December 31, 2012, COMMODITY FUTURES TRADING COMM. (Jan. 2, 2013), available at https://www.cftc.gov/PressRoom/PressReleases/6489-13. 18 DIVISION OF ECONOMIC AND RISK ANALYSIS 5 Figure 4. SBSDs Subject to Prudential Regulation A majority of the SBSDs are subject to regulation by a prudential regulator. Specifically, 28 SBSDs are regulated by prudential regulators, while the remaining 25 are not (see Figure 5). 19 19 See Form SBSE Question 5, Form SBSE-A Question 8, and Form SBSE-BD Question 4 eliciting information on whether the applicant is subject to regulation by a prudential regulator, as defined in Section 1a(39) of the Commodity Exchange Act. If the applicant answers in the affirmative, then it is required to identify the prudential regulator in its registration form. DIVISION OF ECONOMIC AND RISK ANALYSIS 6 Figure 5. The likelihood of an SBSD being subject to regulation by a prudential regulator varies significantly across filer type. Table 1 shows that all 28 SBSDs that are subject to regulation by a prudential regulator are Form SBSE-A filers. None of the Form SBSE and Form SBSE-BD filers are subject to regulation by a prudential regulator. Table 1. Is SBSD subject to regulation by a prudential regulator? No Yes Form SBSE filer 6 0 Form SBSE-A filer Form SBSE-BD filer 12 28 7 0 The 28 SBSDs are subject to regulation by three prudential regulators: Federal Reserve Board (“FRB”), Office of the Comptroller of the Currency (“OCC”), and Federal Deposit Insurance Corporation (“FDIC”). The FRB, OCC, and FDIC regulate twenty-five, seven, and six SBSDs respectively (see Figure 6). The total number of prudential regulator-to-SBSD pairings is 38, 20 which is larger than the number of SBSDs that reported being regulated by prudential regulators on their registration form, i.e., 28. The reason is because an SBSD can be subject to regulation by multiple prudential regulators, which are 20 25 SBSDs (FRB) + 7 SBSDs (OCC) + 6 SBSDs (FDIC) = 38 prudential regulator-to-SBSD pairings. DIVISION OF ECONOMIC AND RISK ANALYSIS 7 identified in its registration form. 21 Figure 7 shows that 21 SBSDs are each subject to regulation by one prudential regulator; another four SBSDs are each subject to regulation by two prudential regulators; and three SBSDs are each subject to regulation by three prudential regulators. 22 Figure 6. 21 See supra note 19. 22 (21 x 1) + (4 x 2) + (3 x 3) = 38 prudential regulator-to-SBSD pairings. DIVISION OF ECONOMIC AND RISK ANALYSIS 8 Figure 7. Use of Mathematical Models by Non-Broker-Dealer SBSDs Of the 46 filers of Form SBSE-A and Form SBSE (“non-broker-dealer SBSDs”), 41 stated their intent to use mathematical models to compute capital or margin, or to price customer or proprietary positions (see Figure 8). 23 23 Form SBSE and Form SBSE-A elicit information on whether the applicant intends to use mathematical models to compute capital or margin, or price customer or proprietary positions. See Form SBSE-A Question 4 and Form SBSE Question 4. Form SBSE-BD does not elicit such information. As a result, the statistic and figure are based only on filers of Forms SBSE and SBSE-A. DIVISION OF ECONOMIC AND RISK ANALYSIS 9 Figure 8. SBSDs that Are OTC Derivatives Dealers A broker-dealer may apply to the Commission for authorization to register as an OTC derivatives dealer and to compute capital charges for market and credit risk contained in Appendix F to 17 CFR 240.15c3-1. Under Appendix F, firms with strong internal risk management practices may utilize the mathematical modeling methods they use to manage their own business risk, including value-at-risk (VaR) models, to compute deductions from net capital for market risks and for credit risks arising from OTC derivatives transactions. 24 Of the seven filers of Form SBSE-BD, four are registered as OTC derivatives dealers with the SEC, while three are not (see Figure 9). 25 See OTC Derivatives Dealers, U.S. SEC. & EXCH. COMM’N, available at https://www.sec.gov/tm/otc-derivatives-dealers (last visited Jan. 29, 2025). 24 Form SBSE-BD elicits information on whether the applicant is registered with the SEC as an OTC derivatives dealer. See Form SBSE-BD Question 5. An applicant’s registration as an OTC derivatives dealer can also be found on Form X-17A-5 Part III or in the applicant’s Statement of Financial Condition (17 CFR 240.18a-7(b)(1)(i)). In addition, a firm that elects to register as an OTC derivatives dealer must file an application for registration on Form BD, in accordance with the instructions on the form, among other things. See OTC Derivatives Dealers, Exchange Act Release No. 40594 (Oct. 23, 1998), 63 FR 59362, 59376 (Nov. 3, 1998) (“OTCDD Adopting Release”) and Rule 15b1-1 (17 CFR 240.15b1-1). 25 DIVISION OF ECONOMIC AND RISK ANALYSIS 10 Figure 9. Geographical Distribution of SBSDs SBSDs provide information on their main address, among other things, in their registration filings. 26 Using this information, I report the geographical distribution of SBSDs based on their main address (see Figure 10). Of the 53 SBSDs, 23 are located in the U.S., while the remaining 30 are located outside the U.S. Of the SBSDs that are outside the U.S., ten are in the U.K. and six are in Canada. France and Germany each have four SBSDs residing in them. Two SBSDs reside in Spain. Australia, Ireland, Sweden, and Switzerland each have one SBSD residing in them. The fact that SBSDs operate in multiple countries in addition to the U.S. underscores the global nature of the SBS market. Form SBSE Question 1E and Form SBSE-A Question 1D elicit information on an applicant’s main address. Form SBSE-BD does not elicit information on an applicant’s main address. A Form SBSE-BD filer’s main address can be found using Form X-17A-5 Part III. The analysis in this section is based on the main address information provided in the SBSD’s regulatory filing and is not necessarily reflective of the SBSD’s status as a U.S. person. 26 DIVISION OF ECONOMIC AND RISK ANALYSIS 11 Figure 10. SBSDs Registered with Foreign Financial Regulatory Authorities Of the 53 SBSDs, 31 are registered with a foreign financial regulatory authority, while 22 are not (see Figure 11). 27 Registration with a foreign financial regulatory authority largely falls along geographical lines. According to Table 2, among the 30 non-U.S. SBSDs, 29 are registered with a foreign financial regulatory authority (about 97% of all non-U.S. SBSDs) and only one is not (about 3% of all non-U.S. SBSDs). Among the 23 U.S. SBSDs, two are registered with a foreign financial regulatory authority (about 9% of all U.S. SBSDs), while 21 are not (about 91% of all U.S. SBSDs). In short, almost all nonU.S. SBSDs are registered with a foreign financial regulatory authority, while almost all U.S. SBSDs are not registered with a foreign financial regulatory authority. If an SBSD is registered with a foreign financial regulatory authority, it has to list its registration with all such authorities in its registration filing. See Form SBSE (Question 17 and Schedule F), Form SBSE-A (Question 17 and Schedule F), and Form SBSEBD (Question 7 and Schedule F). 27 DIVISION OF ECONOMIC AND RISK ANALYSIS 12 Figure 11. Table 2. Is SBSD registered with a foreign financial regulatory authority? Non-U.S. SBSD U.S. SBSD Yes 29 2 No 1 21 Registration with a foreign financial regulatory authority exhibits distinct patterns across different types of SBSDs. According to Table 3, all 31 SBSDs that are registered with a foreign financial regulatory authority are Form SBSE-A filers (about 78% of all Form SBSE-A filers). In contrast, none of the Form SBSE and Form SBSE-BD filers are registered with a foreign financial regulatory authority. Table 3. Is SBSD registered with a foreign financial regulatory authority? Form SBSE filer Form SBSE-A filer Form SBSE-BD filer Yes 0 31 0 No 6 9 7 DIVISION OF ECONOMIC AND RISK ANALYSIS 13 Substituted Compliance Determination As of December 31, 2024, the Commission had issued orders granting conditional substituted compliance in connection with certain requirements applicable to non-U.S. SBSDs and MSBSPs subject to regulation in France, Germany, the U.K., Switzerland, and Spain. 28 This section reports statistics on substituted compliance for those SBSDs whose main addresses, as provided in their registration filings, are in France, Germany, the U.K., Switzerland, or Spain. There are 21 SBSDs located in these five jurisdictions. All of them are Form SBSE-A filers who stated their intent to avail themselves of a substituted compliance determination. 29 As required, all 21 SBSDs that stated their intent to avail themselves of a substituted compliance determination are registered with a foreign financial regulatory authority. 30 Figure 12 shows the geographical distribution of these SBSDs based on their main address. Of the 21 SBSDs, 10 are located in the U.K. The remaining SBSDs have main addresses in France (4 SBSDs), Germany (4 SBSDs), Spain (2 SBSDs) and Switzerland (1 SBSD). See Order Granting Conditional Substituted Compliance in Connection With Certain Requirements Applicable to Non-U.S. Security-Based Swap Dealers and Major Security-Based Swap Participants Subject to Regulation in the Federal Republic of Germany, Exchange Act No. 90765 (Dec. 22, 2020), 85 FR 85686 (Dec. 29, 2020); Order Granting Conditional Substituted Compliance in Connection With Certain Requirements Applicable to Non-U.S. Security-Based Swap Dealers and Major SecurityBased Swap Participants Subject to Regulation in the French Republic, Exchange Act No. 92484 (Jul. 23, 2021), 86 FR 41612 (Aug. 2, 2021); Order Granting Conditional Substituted Compliance in Connection With Certain Requirements Applicable to Non-U.S. Security-Based Swap Dealers and Major Security-Based Swap Participants Subject to Regulation in the United Kingdom, Exchange Act No. 92529 (Jul. 30, 2021), 86 FR 43318 (Aug. 6, 2021); Order Granting Conditional Substituted Compliance in Connection With Certain Requirements Applicable to Non-U.S. Security-Based Swap Dealers Subject to Regulation in the Swiss Confederation, Exchange Act No. 93284 (Oct. 8, 2021), 86 FR 57455 (Oct. 15, 2021); Amended and Restated Order Granting Conditional Substituted Compliance in Connection With Certain Requirements Applicable to Non-U.S. Security-Based Swap Dealers and Major Security-Based Swap Participants Subject to Regulation in the Federal Republic of Germany; Amended Orders Addressing NonU.S. Security-Based Swap Entities Subject to Regulation in the French Republic or the United Kingdom; and Order Extending the Time To Meet Certain Conditions Relating to Capital and Margin, Exchange Act No. 93411 (Oct. 22, 2021), 86 FR 59797 (Oct. 28, 2021); and Order Granting Conditional Substituted Compliance in Connection With Certain Requirements Applicable to Non-U.S. Security-Based Swap Dealers and Major Security-Based Swap Participants Subject to Regulation in the Kingdom of Spain, Exchange Act No. 93412 (Oct. 22, 2021), 86 FR 59776 (Oct. 28, 2021). 28 Entities filing Form SBSE and Form SBSE-A are required to provide this and related information. See Forms SBSE and SBSE-A Questions 3A, 3B, and 3C. Entities filing Form SBSE-BD are not required to provide such information. See Entity Registration Adopting Release, 80 FR at 48986. 29 30 See 17 CFR 240.3a71-6 (addressing the substituted compliance requirements for SBSDs and MSBSPs). DIVISION OF ECONOMIC AND RISK ANALYSIS 14 Figure 12. Among other things, an SBSD that states its intent to avail itself of a substituted compliance determination has to identify the foreign financial regulatory authority that serves as its primary regulator and for which the Commission has made, or may make, a substituted compliance determination. 31 An analysis of the registration filings made by the 21 SBSDs that stated their intent to avail themselves of a substituted compliance determination shows that nine foreign financial regulatory authorities serve as primary regulators for these SBSDs. Figure 13 shows that the U.K. Financial Conduct Authority (“FCA”) and Prudential Regulation Authority (“PRA”) are primary regulators for nine and six SBSDs respectively. France’s Autorité des Marchés Financiers (“AMF”) and Germany’s Federal Financial Supervisory Authority (“BaFin”) each serve as a primary regulator for four SBSDs. France’s Autorité de contrôle prudentiel et de résolution (“ACPR”) and the European Central Bank (“ECB”) each serve as a primary regulator for three SBSDs. Spain’s National Securities Market Commission (“CNMV”) serves as a primary regulator for two SBSDs. Germany’s Bundesbank and Switzerland’s Financial Market Supervisory Authority (“FINMA”) each serve as a primary regulator for one SBSD. These foreign financial regulatory authorities collectively have jurisdiction over the U.K., France, Germany, Spain, and Switzerland, among other areas. This collection of jurisdictions aligns with the geographical distribution of the SBSDs that stated their intent to avail themselves of a substituted compliance determination (see Figure 12). According to Figure 13, the total number of primary regulator-to-SBSD pairings is 33, 32 which is larger than the number of SBSDs that stated their intent to avail themselves of a substituted compliance determination, i.e., 21. The reason is because some SBSDs identified multiple foreign financial regulatory 31 See Form SBSE Question 3B and Form SBSE-A Question 3B. 9 SBSDs (FCA) + 6 SBSDs (PRA) + 4 SBSDs (AMF) + 4 SBSDs (BaFin) + 3 SBSDs (ACPR) + 3 SBSDs (ECB) + 2 SBSDs (CNMV) + 1 SBSD (Bundesbank) + 1 SBSD (FINMA) = 33 primary regulator-to-SBSD pairings. 32 DIVISION OF ECONOMIC AND RISK ANALYSIS 15 authorities that serve as their primary regulators in their registration filings. 33 Figure 14 shows that 11 SBSDs have one primary regulator each. Eight SBSDs have two primary regulators each, and two SBSDs have three primary regulators each.34 Figure 13. 33 See Form SBSE Question 3B and Form SBSE-A Question 3B. 34 (11 x 1) + (8 x 2) + (2 x 3) = 33 primary regulator-to-SBSD pairings. DIVISION OF ECONOMIC AND RISK ANALYSIS 16 Figure 14. SBSD Ownership Structure This section discusses statistics related to the ownership structure of SBSDs, focusing on the relationship between an SBSD and its ultimate parent. I identified 37 ultimate parents across all SBSDs on the basis of majority ownership stake. Each ultimate parent can be affiliated with one or more SBSDs. In other words, multiple SBSDs could have the same ultimate parent in some instances, while in other instances, one SBSD’s ultimate parent is not common to that of any other SBSD. Specifically, 28 out of 37 ultimate parents (76%) have one affiliated SBSD each. Of those ultimate parents with multiple affiliated SBSDs, five are affiliated with two SBSDs each, two are affiliated with three SBSDs each, another is affiliated with four SBSDs, and a final one is affiliated with five SBSDs. These results reveal variations in the organization of security-based swap dealing activity at the ultimate parent level (see Figure 15). DIVISION OF ECONOMIC AND RISK ANALYSIS 17 Figure 15. The ultimate parents are distributed across 11 countries. 35 Out of the 37 ultimate parents, 15 are headquartered in the U.S. (approximately 41%). Six ultimate parents are headquartered in Canada, while three ultimate parents are headquartered respectively in France, Japan, and the U.K. Two ultimate parents have headquarters in Spain. Australia, Germany, the Netherlands, Sweden, and Switzerland each provide headquarters location for one ultimate parent (see Figure 16). These findings indicate that the U.S. has the largest presence by the number of ultimate parents headquartered in it. The next analysis provides a closer look at the relative importance of different ultimate parent countries by considering the number of SBSDs affiliated with ultimate parents headquartered in each of these countries. For ultimate parents issued with an LEI (35 out of 37 ultimate parents), I identified the country in which an ultimate parent is located using the ultimate parent’s headquarters address recorded in the GLEIF database (Golden Copy file) for December 31, 2024. For the two ultimate parents not issued with an LEI, I identified the country in which they are located by examining (where applicable) corporate websites, EDGAR filings, and Departments of Corporation databases. 35 DIVISION OF ECONOMIC AND RISK ANALYSIS 18 Figure 16. Figure 17 shows that 27 out of 53 SBSDs (about 51%) have ultimate parents that are headquartered in the U.S. Seven SBSDs have ultimate parents that are headquartered in Canada. Japan, the U.K., and France form the middle group of countries for ultimate parents. Four SBSDs have ultimate parents that are headquartered in Japan and the U.K. respectively. Three SBSDs have ultimate parents that are headquartered in France. Two SBSDs have ultimate parents that are headquartered in Spain. Another two SBSDs have ultimate parents that are headquartered in Switzerland. Ultimate parents that are headquartered in Australia, Germany, the Netherlands, and Sweden each have one affiliated SBSD. The relative ranking of countries appears to be fairly stable even after accounting for the number of affiliated SBSDs. DIVISION OF ECONOMIC AND RISK ANALYSIS 19 Figure 17. SBSDs are geographically distributed across many of the same countries in which their ultimate parents are headquartered (see Figure 10). That said, the overlap is not complete. For example, there are ultimate parents headquartered in Japan, but none of the SBSDs have main addresses in Japan. For each ultimate parent country depicted in Figure 17, Table4 provides a breakdown of the countries in which affiliated SBSDs are located. Of the 27 SBSDs affiliated with ultimate parents headquartered in the U.S., 18 are in the U.S., four are in the U.K., three are in Germany, one is in France, and one is in Ireland. Of the seven SBSDs affiliated with ultimate parents headquartered in Canada, six are in Canada and one is in the U.S. Ultimate parents in Japan have two SBSDs in the U.S. and two SBSDs in the U.K. Ultimate parents in the U.K. have three SBSDs in the U.K. and one SBSD in the U.S. The ultimate parent in Switzerland has one SBSD in Switzerland and one SBSD in the U.K. The ultimate parent in the Netherlands has an SBSD in the U.S. Ultimate parents in Australia, France, Germany, Spain, and Sweden have SBSDs in their respective countries. DIVISION OF ECONOMIC AND RISK ANALYSIS 20 Table 4. Ultimate parent country SBSD country No. of SBSDs Australia Australia 1 Canada 6 United States 1 France France 3 Germany Germany 1 United Kingdom 2 United States 2 Netherlands United States 1 Spain Spain 2 Sweden Sweden 1 Switzerland 1 United Kingdom 1 United Kingdom 3 United States 1 France 1 Germany 3 Ireland 1 United Kingdom 4 United States 18 Canada Japan Switzerland United Kingdom United States The foregoing results suggest that an ultimate parent’s proximity to its affiliated SBSDs–in the sense of both parent and SBSDs being in the same country–varies across the ultimate parent population. For example, ultimate parents in Australia and France have affiliated SBSDs in their respective countries, ultimate parents in Japan have no affiliated SBSDs located in Japan, and ultimate parents in the U.S. have many but not all affiliated SBSDs in the U.S. To measure the extent to which an ultimate parent has affiliated SBSDs located in the ultimate parent’s country, the percentage of affiliated SBSDs whose main addresses are in the country in which the ultimate parent is headquartered is calculated for each ultimate parent. Figure 18 presents the distribution of ultimate parents based on this percentage. Out of the 37 ultimate parents, 25 have all their affiliated SBSDs located in the ultimate parent’s country (see column “High”). Five ultimate parents have between 50% and 60% of their affiliated SBSDs located in the ultimate parent’s country (see column “Medium”) and seven ultimate parents have between 0% and 33% of their affiliated SBSDs located in the ultimate parent’s country (see column “Low”). In short, the vast majority of ultimate parents (25 out of 37, or approximately 68%) are headquartered in the country in which all their affiliated SBSDs are located. The remaining ultimate parents have affiliated SBSDs that tend to be less proximate geographically. DIVISION OF ECONOMIC AND RISK ANALYSIS 21 Figure 18. DIVISION OF ECONOMIC AND RISK ANALYSIS 22 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Asec%3Aac81b2405f9a8ffd. Public record. Not legal advice.