The Securities and Exchange Commission and the European Central Bank signed a Memorandum of Understanding (MOU) – the first of its kind – to consult, cooperate, and exchange information in connection with the supervision, enforcement, and oversight of certain security-based swap dealers and major participants that are registered with the SEC and supervised by the ECB.
The MOU aims to enhances cross-border inspections between the SEC and the ECB.
It is intended to facilitate the SEC’s oversight of all SEC-registered security-based swap entities in EU member states participating in the Single Supervisory Mechanism (SSM).
The SSM refers to the system of banking supervision in the EU which comprises the ECB and the relevant national competent authorities of participating EU member states.
The SEC has recently implemented Title VII of the Dodd-Frank in order to boost derivatives oversight in the US.
As part of that move, the agency approved the DTCC Data Repository application to operate as a registered security-based swap data repository (SBSDR).
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 orders in other EU Member States that participate in the SSM.
Substituted compliance allows a security-based swap entity to meet particular US requirements under Title VII 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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