Federal Register, Volume 82 Issue 50 (Thursday, March 16, 2017)
[Federal Register Volume 82, Number 50 (Thursday, March 16, 2017)]
[Proposed Rules]
[Pages 13971-13972]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-05277]
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Proposed Rules
Federal Register
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This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 82, No. 50 / Thursday, March 16, 2017 /
Proposed Rules
[[Page 13971]]
COMMODITY FUTURES TRADING COMMISSION
17 CFR Parts 1, 23, and 40
RIN 3038-AD54
Capital Requirements of Swap Dealers and Major Swap Participants
AGENCY: Commodity Futures Trading Commission.
ACTION: Notice of proposed rulemaking; extension of comment period.
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SUMMARY: On December 16, 2016, the Commodity Futures Trading Commission
(Commission or CFTC) published in the Federal Register a notice of
proposed rulemaking (Proposal) to adopt new regulations and to amend
existing regulations to implement sections 4s(e) and (f) of the
Commodity Exchange Act (CEA), as added by section 731 of the Wall
Street Reform and Consumer Protection Act (Dodd-Frank Act). Section
4s(e) requires the Commission to adopt capital requirements for swap
dealers (SDs) and major swap participants (MSPs) that are not subject
to capital rules of a prudential regulator. Section 4s(f) requires the
Commission to adopt financial reporting and recordkeeping requirements
for SDs and MSPs. The Commission also proposed to amend existing
capital rules for futures commission merchants (FCMs), providing
specific capital deductions for market risk and credit risk for swaps
and security-based swaps entered into by an FCM. The Commission further
proposed several technical amendments to the regulations. As is
explained below, the Commission is extending for 60 days the comment
period for the Proposal.
DATES: The comment period for the Proposal published on December 16,
2016, at 81 FR 91252, is extended until May 15, 2017.
ADDRESSES: You may submit comments, identified by RIN 3038-AD54 and
``Capital Requirements for Swap Dealers and Major Swap Participants'',
by any of the following methods:
CFTC Web site, via its Comments Online process: http://comments.cftc.gov. Follow the instructions for submitting comments
through the Web site.
Mail: Send to Chris Kirkpatrick, Secretary, Commodity
Futures Trading Commission, 1155 21st Street NW., Washington, DC 20581.
Hand delivery/Courier: Same as Mail above.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Please submit your comments using only one of these methods.
All comments must be submitted in English, or if not, accompanied
by an English translation. Comments will be posted as received to
http://www.cftc.gov. You should submit only information that you wish
to make available publicly. If you wish the Commission to consider
information that is exempt from disclosure under the Freedom of
Information Act, a petition for confidential treatment of the exempt
information may be submitted according to the procedures set forth in
Regulation 145.9 of the Commission's regulations.\1\
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\1\ Commission regulations referred to herein are found at 17
CFR chapter 1. Commission regulations are accessible on the
Commission's Web site, http://www.cftc.gov.
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The Commission reserves the right, but shall have no obligation, to
review, pre-screen, filter, redact, refuse or remove any or all of your
submission from http://www.cftc.gov that it may deem to be
inappropriate for publication, such as obscene language. All
submissions that have been redacted or removed that contain comments on
the merits of the rulemaking will be retained in the public comment
file and will be considered as required under the Administrative
Procedure Act and other applicable laws, and may be accessible under
the Freedom of Information Act.
FOR FURTHER INFORMATION CONTACT: Eileen T. Flaherty, Director, Division
of Swap Dealer and Intermediary Oversight, 202-418-5326,
[email protected]; Thomas Smith, Deputy Director, Division of Swap
Dealer and Intermediary Oversight, 202-418-5495, [email protected];
Jennifer C.P. Bauer, Special Counsel, Division of Swap Dealer and
Intermediary Oversight, 202-418-5472, [email protected]; Joshua Beale,
Special Counsel, Division of Swap Dealer and Intermediary Oversight,
202-418-5446, [email protected]; Rafael Martinez, Senior Financial Risk
Analyst, Division of Swap Dealer and Intermediary Oversight, 202-418-
5462, [email protected]; Paul Schlichting, Assistant General Counsel,
Office of the General Counsel, 202-418-5884, [email protected]; or
Lihong McPhail, Research Economist, 202-418-5722, [email protected],
Office of the Chief Economist; Commodity Futures Trading Commission,
Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581.
SUPPLEMENTARY INFORMATION:
I. Background
Section 731 of the Dodd-Frank Act amended the CEA by adding
sections 4s(e) and 4s(f). Section 4s(e) requires that the Commission
adopt rules establishing capital requirements for SDs and MSPs to help
ensure the safety and soundness of the SDs and MSPs. Section 4s(f),
among other things, requires that the Commission adopt regulations
related to financial reporting and recordkeeping by SDs and MSPs. The
Proposal would adopt new regulations and amend existing regulations to
implement the requirements of these CEA sections.\2\
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\2\ The Commission previously proposed capital and financial
reporting rules for SDs and MSPs in 2011. See Capital Requirements
of Swap Dealers and Major Swap Participants, 76 FR 27802 (May 12,
2011).
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The Proposal generally permits the application of three alternative
approaches to the treatment of capital based upon existing U.S. bank
regulators' capital requirements or the CFTC's future commission
merchant and the Securities and Exchange Commission's broker-dealer net
liquid asset capital requirements. The Proposal further provides that
SDs predominantly engaged in non-financial activities and MSPs may
elect minimum capital requirements based upon the tangible net worth of
the entities. SDs may use internal models for purposes of computing
their regulatory capital, subject to prior approval by either the
Commission or the National Futures Association. The Proposal would also
require certain SDs and MSPs to satisfy defined liquidity and funding
requirements and would place certain
[[Page 13972]]
limitations on the withdrawal of capital from SDs as part of the SD
capital requirements.
In implementing the provisions of Section 4s(f) of the CEA, the
Proposal includes recordkeeping, reporting and notification
requirements for SDs and MSPs relative to their respective capital
requirements. The Proposal would also allow foreign SDs to comply with
comparable capital requirements in the home jurisdiction under a
program of substituted compliance.
In addition to proposing minimum capital and financial reporting
requirements for SDs and MSPs, the Proposal would also amend existing
capital requirements for FCMs to establish specific capital
requirements for FCMs that engage in swaps or security-based swaps that
are not cleared by a clearing organization. The Proposal also includes
certain technical amendments to several regulations as part of the
proposed capital and financial recordkeeping and reporting
requirements.
II. Extension of Comment Period
The comment period for the Proposal is due to expire on March 16,
2017. By letters dated February 24, 2017 and March 2, 2017,
respectively, the Securities Industry and Financial Markets Association
(SIFMA) and The Futures Industry Association (FIA), membership
organizations representing many firms that would be affected by the
Proposal, requested a 60-day extension of the comment period. In
support of their requests, SIFMA and FIA explained that firms have
extensive work to do in order to calculate the effect on their
activities of the different types of proposed capital requirements.
SIFMA further explained that the initial comment period overlaps with
firms' year-end accounting and reporting cycles as well as with the
deadline for firms' compliance with the Commission's uncleared swaps
margin rules, resulting in a significant drain on their resources.
SIFMA and FIA noted that given the complexity of the Proposal it will
require significant time beyond the Commission's initial March 16
comment deadline to fully assess the potential impact of the Proposal
on firms' operations.
In light of the foregoing, and in response to the SIFMA and FIA
requests, by this Federal Register release the Commission is extending
the comment period for the Proposal for 60 days, until May 15, 2017.
Issued in Washington, DC, on March 13, 2017, by the Commission.
Robert N. Sidman,
Deputy Secretary of the Commission.
Note: The following appendix will not appear in the Code of
Federal Regulations.
Appendix to Capital Requirements of Swap Dealers and Major Swap
Participants--Commission Voting Summary
On this matter, Acting Chairman Giancarlo and Commissioner Bowen
voted in the affirmative. No Commissioner voted in the negative.
[FR Doc. 2017-05277 Filed 3-15-17; 8:45 am]
BILLING CODE 6351-01-P
Last Updated: March 16, 2017