15 U.S.C. § 78c: Security-based swap execution facilities

No person may operate a facility for the trading or processing of security-based swaps, unless the facility is registered as a security-based swap execution facility or as a national securities exchange under this section. Any person that is registered as a security-based swap execution facility under this section shall register with the Commission regardless of whether the person also is registered with the Commodity Futures Trading Commission as a swap execution facility. make available for trading any security-based swap; and facilitate trade processing of any security-based swap. A national securities exchange shall, to the extent that the exchange also operates a security-based swap execution facility and uses the same electronic trade execution system for listing and executing trades of security-based swaps on or through the exchange and the facility, identify whether electronic trading of such security-based swaps is taking place on or through the national securities exchange or the security-based swap execution facility. the core principles described in this subsection; and any requirement that the Commission may impose by rule or regulation. Unless otherwise determined by the Commission, by rule or regulation, a security-based swap execution facility described in subparagraph (A) shall have reasonable discretion in establishing the manner in which it complies with the core principles described in this subsection. the terms and conditions of the security-based swaps traded or processed on or through the facility; and any limitation on access to the facility; to provide market participants with impartial access to the market; and to capture information that may be used in establishing whether rule violations have occurred; and establish rules governing the operation of the facility, including rules specifying trading procedures to be used in entering and executing orders traded or posted on the facility, including block trades. The security-based swap execution facility shall permit trading only in security-based swaps that are not readily susceptible to manipulation. trading procedures to be used in entering and executing orders traded on or through the facilities of the security-based swap execution facility; and procedures for trade processing of security-based swaps on or through the facilities of the security-based swap execution facility; and monitor trading in security-based swaps to prevent manipulation, price distortion, and disruptions of the delivery or cash settlement process through surveillance, compliance, and disciplinary practices and procedures, including methods for conducting real-time monitoring of trading and comprehensive and accurate trade reconstructions. establish and enforce rules that will allow the facility to obtain any necessary information to perform any of the functions described in this subsection; provide the information to the Commission on request; and have the capacity to carry out such international information-sharing agreements as the Commission may require. The security-based swap execution facility shall establish and enforce rules and procedures for ensuring the financial integrity of security-based swaps entered on or through the facilities of the security-based swap execution facility, including the clearance and settlement of security-based swaps pursuant to section 78c–3(a)(1) of this title . The security-based swap execution facility shall adopt rules to provide for the exercise of emergency authority, in consultation or cooperation with the Commission, as is necessary and appropriate, including the authority to liquidate or transfer open positions in any security-based swap or to suspend or curtail trading in a security-based swap. The security-based swap execution facility shall make public timely information on price, trading volume, and other trading data on security-based swaps to the extent prescribed by the Commission. The security-based swap execution facility shall be required to have the capacity to electronically capture and transmit and disseminate trade information with respect to transactions executed on or through the facility. maintain records of all activities relating to the business of the facility, including a complete audit trail, in a form and manner acceptable to the Commission for a period of 5 years; and report to the Commission, in a form and manner acceptable to the Commission, such information as the Commission determines to be necessary or appropriate for the Commission to perform the duties of the Commission under this chapter. The Commission shall adopt data collection and reporting requirements for security-based swap execution facilities that are comparable to corresponding requirements for clearing agencies and security-based swap data repositories. adopt any rules or taking 1 any actions that result in any unreasonable restraint of trade; or 1 So in original. Probably should be “take”. impose any material anticompetitive burden on trading or clearing. establish and enforce rules to minimize conflicts of interest in its decision-making process; and establish a process for resolving the conflicts of interest. The security-based swap execution facility shall have adequate financial, operational, and managerial resources to discharge each responsibility of the security-based swap execution facility, as determined by the Commission. enables the organization to meet its financial obligations to its members and participants notwithstanding a default by the member or participant creating the largest financial exposure for that organization in extreme but plausible market conditions; and exceeds the total amount that would enable the security-based swap execution facility to cover the operating costs of the security-based swap execution facility for a 1-year period, as calculated on a rolling basis. are reliable and secure; and have adequate scalable capacity; the timely recovery and resumption of operations; and the fulfillment of the responsibilities and obligations of the security-based swap execution facility; and order processing and trade matching; price reporting; market surveillance; and maintenance of a comprehensive and accurate audit trail. Each security-based swap execution facility shall designate an individual to serve as a chief compliance officer. report directly to the board or to the senior officer of the facility; review compliance with the core principles in this subsection; in consultation with the board of the facility, a body performing a function similar to that of a board, or the senior officer of the facility, resolve any conflicts of interest that may arise; be responsible for establishing and administering the policies and procedures required to be established pursuant to this section; ensure compliance with this chapter and the rules and regulations issued under this chapter, including rules prescribed by the Commission pursuant to this section; compliance office reviews; look backs; internal or external audit findings; self-reported errors; or through validated complaints; and establish and follow appropriate procedures for the handling, management response, remediation, retesting, and closing of noncompliance issues. the compliance of the security-based swap execution facility with this chapter; and the policies and procedures, including the code of ethics and conflict of interest policies, of the security-based security-based 2 swap execution facility. 2 So in original. submit each report described in clause (i) with the appropriate financial report of the security-based swap execution facility that is required to be submitted to the Commission pursuant to this section; and include in the report a certification that, under penalty of law, the report is accurate and complete. The Commission may exempt, conditionally or unconditionally, a security-based swap execution facility from registration under this section if the Commission finds that the facility is subject to comparable, comprehensive supervision and regulation on a consolidated basis by the Commodity Futures Trading Commission. The Commission shall prescribe rules governing the regulation of security-based swap execution facilities under this section.