Securities and Exchange Commission Proposes Expansion of Regulation Systems Compliance and Integrity

The Securities and Exchange Commission has proposed amendments to Reg SCI (Regulation Systems Compliance and Integrity) in order to keep up with the ever-evolving technology used in U.S. securities markets and improve oversight of the core technology used by key entities. The proposed amendments would expand the scope of SCI entities to include registered security-based swap data repositories, all clearing agencies exempt from registration, and large broker-dealers that exceed certain asset or transaction metrics. Additionally, these amended rules would require SCI entities to have policies and procedures to maintain an inventory classification system of their systems, as well as programs to prevent unauthorized access to said systems and information and manage and oversee third party providers (including cloud based service providers). Notification requirements and recordkeeping provisions for SCI events will also be updated per the proposal, and a 60 day public comment period is open.