2020-08552
Federal Register, Volume 85 Issue 96 (Monday, May 18, 2020)
[Federal Register Volume 85, Number 96 (Monday, May 18, 2020)]
[Rules and Regulations]
[Pages 29611-29614]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-08552]
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COMMODITY FUTURES TRADING COMMISSION
17 CFR Part 160
RIN 3038-AE91
Privacy of Consumer Financial Information
AGENCY: Commodity Futures Trading Commission.
[[Page 29612]]
ACTION: Final rule.
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SUMMARY: The Commodity Futures Trading Commission (``CFTC'' or
``Commission'') is making a correction to one of the Commission's
regulations to restore text that was inadvertently deleted in a 2011
amendment to that regulation.
DATES: Effective June 17, 2020.
FOR FURTHER INFORMATION CONTACT: Joshua Sterling, Director, (202) 418-
6056, [email protected]; Frank Fisanich, Chief Counsel, (202) 418-
5949, [email protected]; or Jacob Chachkin, Special Counsel, (202)
418-5496, [email protected], Division of Swap Dealer and Intermediary
Oversight, Commodity Futures Trading Commission, Three Lafayette
Centre, 1155 21st Street NW, Washington, DC 20581.
SUPPLEMENTARY INFORMATION:
I. Background
Section 501 of Title V of the Gramm-Leach-Bliley Act (``Title V'')
mandates that certain agencies covered by Title V establish appropriate
standards for the financial institutions subject to their jurisdiction
relating to administrative, technical and physical safeguards--(1) to
insure the security and confidentiality of customer records and
information; (2) to protect against any anticipated threats or hazards
to the security or integrity of such records; and (3) to protect
against unauthorized access to or use of such records or information
which could result in substantial harm or inconvenience to any
customer.\1\ The Commission and entities subject to its jurisdiction
were originally excluded from Title V's coverage.\2\ However, section
124 of the Commodity Futures Modernization Act of 2000 \3\ amended the
Commodity Exchange Act (``CEA'') to add section 5g,\4\ providing that
futures commission merchants (``FCMs''), commodity trading advisors
(``CTAs''), commodity pool operators (``CPOs''), and introducing
brokers (``IBs'') \5\ fall under the requirements of Title V and
requiring the Commission to prescribe regulations in furtherance of
Title V. Thus, in 2001, the Commission promulgated part 160 of its
regulations to establish standards relating to Title V, and,
specifically, Sec. 160.30 in relation to section 501's mandate.\6\
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\1\ Section 501, Subtitle A, Title V, Public Law 106-102, 113
Stat. 1338 (1999), as codified at 15 U.S.C. 6801.
\2\ 15 U.S.C. 6809(3)(B).
\3\ Section 124, Appendix E of Public Law 106-554, 114 Stat.
2763 (2000).
\4\ 7 U.S.C. 7b-2.
\5\ For the definitions of these intermediary categories, see
section 1a of the CEA and Sec. 1.3 of the Commission's regulations.
7 U.S.C. 1a and 17 CFR 1.3. Commission regulations referred to
herein are found at 17 CFR chapter I.
\6\ Privacy of Customer Information, 66 FR 21235 (April 27,
2001) (``2001 Rulemaking''). The Commission later modified its part
160 regulations to apply them to retail foreign exchange dealers
(``RFEDs''), swap dealers (``SDs''), and major swap participants
(``MSPs''). Regulation of Off-Exchange Retail Foreign Exchange
Transactions and Intermediaries, 75 FR 55409 (Sept. 10, 2010) for
RFEDs, and Privacy of Consumer Financial Information; Conforming
Amendments Under Dodd-Frank Act, 76 FR 43874 (July 22, 2011) for SDs
and MSPs (``2011 Amendment''). For the definition of RFED, see Sec.
5.1(h). 17 CFR 5.1(h). For the definitions of SD and MSP, see
section 1a of the CEA and Sec. 1.3 of the Commission's regulations.
7 U.S.C. 1a and 17 CFR 1.3.
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Commission regulation 160.30 implements this mandate by requiring
every FCM, RFED, CTA, CPO, IB, MSP, or SD that is subject to the
jurisdiction of the Commission (``Covered Persons'') \7\ to adopt
policies and procedures to address administrative, technical and
physical safeguards for the protection of customer records and
information (the ``General Requirement'').\8\ In addition, mirroring
section 501 of the GLB Act, the 2001 Rulemaking further required (the
``Detailed Requirements'') that the policies and procedures be
reasonably designed to: (i) Insure the security and confidentiality of
customer records and information; (ii) protect against any anticipated
threats or hazards to the security or integrity of customer records and
information; and (iii) protect against unauthorized access to or use of
customer records or information that could result in substantial harm
or inconvenience to any customer.\9\ However, when the 2011 Amendment
revised Sec. 160.30 to add SDs and MSPs to the list of entities in
Sec. 160.30's introductory sentence (and, thus, subject to it), the
Detailed Requirements were inadvertently deleted.\10\
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\7\ 17 CFR 160.30. Part 160 does not apply to foreign (non-
resident) FCMs, RFEDs, CTAs, CPOs, IBs, MSPs, and SDs that are not
registered with the Commission. 17 CFR 160.1. Therefore, they are
not ``Covered Persons'' as defined in this release.
\8\ 17 CFR 160.30.
\9\ See 2001 Rulemaking at 21250.
\10\ See 2011 Amendment at 43879. With respect to Sec. 160.30,
the preamble to the 2011 Amendment only discusses amending the
introductory sentence of Sec. 160.30 to add SDs and MSPs to the
list of CFTC registrants that must comply with that regulation. See
id. at 43876. Further, the Commission notes that the Detailed
Requirements continued to be included in Commission staff guidance
on compliance with Sec. 160.30 after the 2011 Amendment. See CFTC
Staff Advisory No. 14-21 (Feb. 26, 2014) (``Sec. 160.30
Guidance''). In addition, the Commission notes that restoring the
Detailed Requirements will make Sec. 160.30 more consistent with
similar rules adopted by the Securities and Exchange Commission
(``SEC'') and the Federal Trade Commission (``FTC'') under the GLB
Act. See 17 CFR 248.30 and 16 CFR 314.3, respectively.
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II. Proposal
On November 12, 2019, the Commission published a Notice of Proposed
Rulemaking \11\ to amend Sec. 160.30 of the Commission's regulations
(the ``Proposal''). Specifically, the Commission proposed to restore
the inadvertently deleted Detailed Requirements in Sec. 160.30. As
discussed above and in the Proposal, the Detailed Requirements mirror
the requirements of section 501 of the GLB Act, pursuant to which part
160 of the Commission's regulations was adopted.
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\11\ Privacy of Consumer Financial Information, 84 FR 60963
(Nov. 12, 2019).
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The Commission requested comments on the Proposal. The comment
period for the Proposal ended on December 12, 2019.
III. Summary of Comments and Final Rule
The Commission received two relevant comments on the Proposal,\12\
both of which were from individuals and supportive of the Proposal. The
Commission did not receive any comments on the Proposal from Covered
Persons.
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\12\ The Commission also received one comment that was not
relevant to the Proposal. All of the comments are available at
https://comments.cftc.gov/PublicComments/CommentList.aspx?id=3047.
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The Commission is adopting this Final Rule (``Final Rule'') as
proposed. Accordingly, the Commission is adopting the amendments to
Commission regulation 160.30 as shown in the rule text in this document
and for the reasons discussed in the Proposal and reiterated above.
IV. Related Matters
A. Regulatory Flexibility Act
The Regulatory Flexibility Act \13\ (``RFA'') requires federal
agencies to consider whether the rules they propose will have a
significant economic impact on a substantial number of small entities
and, if so, to provide a regulatory flexibility analysis regarding the
economic impact on those entities. In the Proposal, the Commission
certified that the Proposal would not have a significant economic
impact on a substantial number of small entities. The Commission
requested comments with respect to the RFA and received no such
comments.
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\13\ 5 U.S.C. 601 et seq.
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As discussed in the Proposal, this Final Rule will restore the
inadvertently deleted Detailed Requirements in Sec. 160.30. To the
extent that the Final Rule will impact Covered Persons that may be
small entities for purposes of the
[[Page 29613]]
RFA,\14\ the Commission considered whether the Final Rule will have a
significant economic impact on such Covered Persons.
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\14\ The Commission has previously determined that certain
entities are not ``small entities'' for purposes of the RFA. See,
e.g., 47 FR 18618, 18619 (Apr. 30, 1982) (registered FCMs); 75 FR
55410, 55416 (Sept. 10, 2010) (RFEDs); 77 FR 2613, 2620 (Jan. 19,
2012) (SDs and MSPs). However, the Commission has determined that
CPOs exempt pursuant to 17 CFR 4.13(a) are small entities. See 46 FR
26004 (May 8, 1981); 47 FR at 18619. The definitions of IB and CTA
are also broad enough to potentially encompass ``small entities.''
See 48 FR 35248, 35276 (Aug. 3, 1983) (recognizing that the IB
definition ``undoubtedly encompasses many business enterprises of
variable size''); 47 FR at 18620 (the category of CTAs is ``too
broad'' for a general determination regarding their small entity
status).
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In restoring the inadvertently deleted Detailed Requirements the
Final Rule will simply set forth, consistent with the Sec. 160.30
Guidance and the GLB Act, what is necessary to satisfy the General
Requirement that already applies to Covered Persons. Therefore, the
Commission believes that the Final Rule will not have a significant
economic impact on a substantial number of small entities, as defined
in the RFA.
Accordingly, the Chairman, on behalf of the Commission, hereby
certifies pursuant to 5 U.S.C. 605(b) that the Final Rule will not have
a significant economic impact on a substantial number of small
entities.
B. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (``PRA'') \15\ imposes certain
requirements on Federal agencies, including the Commission, in
connection with their conducting or sponsoring any collection of
information, as defined by the PRA. The Commission may not conduct or
sponsor, and a person is not required to respond to, a collection of
information unless it displays a currently valid Office of Management
and Budget (``OMB'') control number.
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\15\ 44 U.S.C. 3501 et seq.
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The Commission has previously received a control number from OMB
that includes the collection of information associated with the General
Requirement. The title for this collection of information is ``Privacy
of Consumer Financial Information, OMB control number 3038-0055''.\16\
Collection 3038-0055 is currently in force with its control number
having been provided by OMB. Because in restoring the inadvertently
deleted Detailed Requirements, the Final Rule simply sets forth,
consistent with the Sec. 160.30 Guidance and the GLB Act, what is
necessary to satisfy the General Requirement that already applies to
Covered Persons, the Commission believes that the Final Rule does not
impose any new recordkeeping or information collection requirements, or
other collections of information that require approval of OMB under the
PRA.
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\16\ See OMB Control No. 3038-0055, http://www.reginfo.gov/public/do/PRAOMBHistory?ombControlNumber=3038-0055# (last visited
Jan. 6, 2020).
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In the Proposal, the Commission invited the public and other
Federal agencies to comment on any aspect of the information collection
requirements discussed therein. The Commission did not receive any such
comments.
C. Cost-Benefit Considerations
Section 15(a) of the CEA requires the Commission to consider the
costs and benefits of its actions before promulgating a regulation
under the CEA. Section 15(a) further specifies that the costs and
benefits shall be evaluated in light of the following five broad areas
of market and public concern: (1) Protection of market participants and
the public; (2) efficiency, competitiveness, and financial integrity of
futures markets; (3) price discovery; (4) sound risk management
practices; and (5) other public interest considerations. The Commission
considers the costs and benefits resulting from its discretionary
determinations with respect to the section 15(a) considerations.
As discussed above, in the Final Rule, the Commission is restoring
the inadvertently deleted Detailed Requirements in Sec. 160.30. Below,
the Commission discusses the costs and benefits of the Final Rule.\17\
The baseline against which the costs and benefits are considered is the
current status quo for Covered Persons with respect to their obligation
to satisfy the General Requirement under Sec. 160.30.\18\ The
Commission recognizes that there are inherent costs and benefits to
Covered Persons in providing requirements for specific customer privacy
policies and procedures, which Congress took into account in codifying
the GLB Act.
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\17\ The Commission endeavors to assess the expected costs and
benefits of its proposed rules in quantitative terms where possible.
Where estimation or quantification is not feasible, the Commission
provides its discussion in qualitative terms. Given a general lack
of relevant data, the Commission's assessment is generally provided
in qualitative terms.
\18\ The Commission notes that the consideration of costs and
benefits below is based on the understanding that the markets
function internationally, with many transactions involving United
States firms taking place across international boundaries; with some
Commission registrants being organized outside of the United States;
with some leading industry members typically conducting operations
both within and outside the United States; and with industry members
commonly following substantially similar business practices wherever
located. Where the Commission does not specifically refer to matters
of location, the discussion of costs and benefits below refers to
the effects of this Final Rule on all activity subject to the
amended regulations, whether by virtue of the activity's physical
location in the United States or by virtue of the activity's
connection with activities in, or effect on, United States commerce
under CEA section 2(i), 7 U.S.C. 2(i). In particular, the Commission
notes that some Covered Persons are located outside of the United
States.
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The inadvertent deletion of the Detailed Requirements in Sec.
160.30 affected entities that were required to comply with the Detailed
Requirements prior to the 2011 Amendment as well as the two types of
entities (SDs and MSPs) the rule was being revised to include. Due to
the inadvertent nature of the deletion of the Detailed Requirements,
and that they applied prior to the 2011 Amendment, the Commission
expects the number of entities affected by the Final Rule to be
negligible, if any. Consequently, the Commission believes that the
restoration of the Detailed Requirements in Sec. 160.30, consistent
with the Sec. 160.30 Guidance and the GLB Act, does not alter existing
benefits and costs. The Commission, however, recognizes that this Final
Rule may benefit certain Covered Persons by, consistent with the GLB
Act, specifying what types of policies and procedures are necessary to
satisfy the General Requirement. In doing so, this Final Rule may
reduce any potential confusion and allow Covered Persons to design and
maintain their policies and procedures to focus on the specified areas
mandated by the GLB Act. In this regard, this Final Rule may allow
Covered Persons to more efficiently utilize their resources in
developing policies and procedures in compliance with Sec. 160.30.
This Final Rule also will, consistent with the GLB Act,\19\ result in
Sec. 160.30 being more similar to regulations adopted by the SEC and
FTC pursuant to the GLB Act and to which certain Covered Persons may be
subject.\20\
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\19\ See 15 U.S.C. 6804(a)(2).
\20\ See n.10, supra.
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The Commission recognizes that, as a result of this Final Rule,
certain Covered Persons may become subject to more specific
requirements under Sec. 160.30 than they are currently. However, given
that the General Requirement currently applies to Covered Persons, and
the Sec. 160.30 Guidance that remains in effect takes into account the
substance of the Detailed Requirements, the Commission believes that
the burden of this Final Rule on Covered Persons will not be
significant.
[[Page 29614]]
1. Section 15(a) Considerations
In light of the foregoing, the CFTC has evaluated the costs and
benefits of this Final Rule pursuant to the five considerations
identified in section 15(a) of the CEA as follows:
(1) Protection of Market Participants and the Public
This Final Rule's restoration of the Detailed Requirements may
protect market participants and the public by ensuring that the
policies and procedures required under Sec. 160.30 are reasonably
designed to address the specific areas mandated by Congress in the GLB
Act.
(2) Efficiency, Competitiveness, and Financial Integrity of Markets
This Final Rule may reduce confusion and allow Covered Persons to
design and maintain their policies and procedures to focus on the
specified areas mandated by the GLB Act. This may allow Covered Persons
to more efficiently utilize their resources in developing policies and
procedures in compliance with Sec. 160.30. In addition, consistent
with the GLB Act, this Final Rule will further align the consumer
privacy regulations of the Commission, FTC, and SEC, which may lower
costs for certain Covered Persons.
(3) Price Discovery
The Commission has not identified an impact on price discovery as a
result of this Final Rule.
(4) Sound Risk Management
The Commission has not identified an impact on sound risk
management as a result of this Final Rule.
(5) Other Public Interest Considerations
Consistent with the GLB Act, this Final Rule will further align the
consumer privacy regulations of the Commission, FTC, and SEC.
2. Comments on Cost-Benefit Considerations
The Commission invited public comment on its cost-benefit
considerations in the Proposal, including the Section 15(a) factors
described above. The Commission received no such comments.
D. Antitrust Considerations
Section 15(b) of the CEA \21\ requires the Commission to take into
consideration the public interest to be protected by the antitrust laws
and endeavor to take the least anticompetitive means of achieving the
objectives of the CEA, as well as the policies and purposes of the CEA,
in issuing any order or adopting any Commission rule or regulation
(including any exemption under section 4(c) or 4c(b)), or in requiring
or approving any bylaw, rule, or regulation of a contract market or
registered futures association established pursuant to section 17 of
the CEA.
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\21\ 7 U.S.C. 19(b).
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The Commission believes that the public interest to be protected by
the antitrust laws is generally to protect competition. The Commission
requested and did not receive any comments on whether the Proposal
implicated any other specific public interest to be protected by the
antitrust laws.
The Commission has considered this Final Rule to determine whether
it is anticompetitive and has identified no anticompetitive effects.
The Commission requested and did not receive any comments on whether
the Proposal was anticompetitive and, if it is, what the
anticompetitive effects are.
Because the Commission has determined that this Final Rule is not
anticompetitive and has no anticompetitive effects and received no
comments on its determination, the Commission has not identified any
less anticompetitive means of achieving the purposes of the CEA.
List of Subjects in 17 CFR Part 160
Brokers, Consumer protection, Privacy, Reporting and recordkeeping
requirements.
For the reasons stated in the preamble, the Commodity Futures
Trading Commission amends 17 CFR part 160 as follows:
PART 160--PRIVACY OF CONSUMER FINANCIAL INFORMATION UNDER TITLE V
OF THE GRAMM-LEACH-BLILEY ACT
0
1. The authority citation for part 160 continues to read as follows:
Authority: 7 U.S.C. 7b-2 and 12a(5); 15 U.S.C 6801, et seq.,
and sec. 1093, Pub. L. 111-203, 124 Stat. 1376.
0
2. Revise Sec. 160.30 to read as follows:
Sec. 160.30 Procedures to safeguard customer records and information.
Every futures commission merchant, retail foreign exchange dealer,
commodity trading advisor, commodity pool operator, introducing broker,
major swap participant, and swap dealer subject to the jurisdiction of
the Commission must adopt policies and procedures that address
administrative, technical and physical safeguards for the protection of
customer records and information. These policies and procedures must be
reasonably designed to:
(a) Insure the security and confidentiality of customer records and
information;
(b) Protect against any anticipated threats or hazards to the
security or integrity of customer records and information; and
(c) Protect against unauthorized access to or use of customer
records or information that could result in substantial harm or
inconvenience to any customer.
Issued in Washington, DC, on April 17, 2020, by the Commission.
Robert Sidman,
Deputy Secretary of the Commission.
Note: The following appendix will not appear in the Code of
Federal Regulations.
Appendix to Privacy of Consumer Financial Information--Commission
Voting Summary
On this matter, Chairman Tarbert and Commissioners Quintenz,
Behnam, Stump, and Berkovitz voted in the affirmative. No
Commissioner voted in the negative.
[FR Doc. 2020-08552 Filed 5-15-20; 8:45 am]
BILLING CODE 6351-01-P