ISDA Issues "Suggested Operating Practices" For SEC SBS Reporting Party Determinations

ISDA issued a set of "suggested operational practices" ("SOPs") for determining the counterparty with the reporting obligation for SEC security-based swap ("SBS") transactions. ISDA stated that the best practices reflect existing reporting standards put out by ISDA for CFTC and Canada derivatives reporting requirements.

The SOPs outline scenarios under SEC Regulation SBSR in which two persons of the same type for purposes of the rules must agree on which person is responsible for reporting. The SOPs provide standardized tiebreaker logic to be used by market participants:

• Two SBS dealers ("SBSDs"), both direct counterparties to the SBS. Apply asset-class tiebreaker logic, which is broken down by (i) credit, (ii) equities, (iii) rates and (iv) the legal-entity identifiers tiebreaker process.