2019-23796
Federal Register, Volume 84 Issue 211 (Thursday, October 31, 2019)
[Federal Register Volume 84, Number 211 (Thursday, October 31, 2019)]
[Notices]
[Pages 58375-58377]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-23796]
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COMMODITY FUTURES TRADING COMMISSION
Agency Information Collection Activities Under OMB Review
AGENCY: Commodity Futures Trading Commission.
ACTION: Notice.
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SUMMARY: In compliance with the Paperwork Reduction Act of 1995 (PRA),
this notice announces that the Information Collection Request (ICR)
abstracted below has been forwarded to the Office of Management and
Budget (OMB) for review and comment. The ICR describes the nature of
the information collection and its expected costs and burden.
DATES: Comments must be submitted on or before December 2, 2019.
ADDRESSES: Comments regarding the burden estimate or any other aspect
of the information collection, including suggestions for reducing the
burden, may be submitted directly to the Office of Information and
Regulatory Affairs (OIRA) in OMB within 30 days of this notice's
publication by either of the following methods. Please identify the
comments by ``Margin Requirements for Uncleared Swaps for Swap Dealers
and Major Swap Participants, Comparability Determinations With Margin
Requirements, OMB Control No. 3038-0111.''
By email addressed to: [email protected] or
By mail addressed to: the Office of Information and
Regulatory Affairs, Office of Management and Budget, Attention Desk
Officer for the Commodity Futures Trading Commission, 725 17th Street
NW, Washington DC 20503.
A copy of all comments submitted to OIRA should be sent to the
Commodity Futures Trading Commission (the ``Commission'') by either of
the following methods. The copies should refer to ``OMB Control No.
3038-0111.''
By mail addressed to: Christopher Kirkpatrick, Secretary
of the Commission, Commodity Futures Trading Commission, Three
Lafayette Centre, 1155 21st Street NW, Washington, DC 20581;
By Hand Delivery/Courier to the same address; or
Through the Commission's website at http://comments.cftc.gov. Please follow the instructions for submitting
comments through the website.
A copy of the supporting statement for the collection of
information discussed herein may be obtained by visiting http://RegInfo.gov.
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 you believe 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
established in Sec. 145.9 of the Commission's regulations.\1\ 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 ICR 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.
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\1\ 17 CFR 145.9.
FOR FURTHER INFORMATION CONTACT: Lauren Bennett, Special Counsel,
Division of Swap Dealer and Intermediary Oversight, Commodity Futures
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Trading Commission, (202) 418-5290 or [email protected].
SUPPLEMENTARY INFORMATION:
Title: Margin Requirements for Uncleared Swaps for Swap Dealers and
Major Swap Participants; Comparability Determinations With Margin
Requirements (OMB Control No. 3038-0111). This is a request for an
extension and revision of a currently approved information collection.
Abstract: Section 731 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (``Dodd-Frank Act''),\2\ amended the Commodity
Exchange Act (``CEA''), 7 U.S.C. 1 et seq., to add, as section 4s(e)
thereof, provisions concerning the setting of initial and variation
margin requirements for swap dealers (``SDs'') and major swap
participants (``MSPs'').\3\ Each SD and MSP for which there is a
Prudential Regulator, as defined in section 1a(39) of the CEA,\4\ must
meet margin requirements established by the applicable Prudential
Regulator, and each SD and MSP for which there is no Prudential
Regulator (``Covered Swap Entities'' or ``CSEs'') must comply with the
Commission's regulations governing margin on all swaps that are not
centrally cleared.
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\2\ Public Law 111-023, 124 Stat. 1376 (2010).
\3\ 7 U.S.C. 6s(e).
\4\ 7 U.S.C. 1a(39).
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With regard to the cross-border application of the Commission's
margin rules, section 2(i) \5\ of the CEA provides the Commission with
express authority over activities outside the United States relating to
swaps when certain conditions are met. Section 2(i) of the CEA provides
that the provisions of the CEA relating to swaps that were enacted by
the Wall Street Transparency and Accountability Act of 2010 (including
any rule prescribed or regulation promulgated under that Act), shall
not apply to activities outside the United States unless those
activities (1) have a direct and significant connection with activities
in, or effect on, commerce of the United States or (2) contravene such
rules or regulations as the Commission may prescribe or promulgate as
are necessary or appropriate to prevent the evasion of any provision of
the CEA that was enacted by the Wall Street Transparency and
Accountability Act of 2010.
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\5\ 7 U.S.C. 2(i).
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On May 31, 2016, the Commission published a final rule addressing
the cross-border application of its margin requirements for uncleared
swaps applicable to CSEs.\6\ As described below, the adopting release
for the Final Rule contained a collection of information regarding
requests for comparability determinations, which was previously
included in the proposing release, and for which the Office of
Management and Budget (``OMB'') assigned OMB control number 3038-0111,
titled ``Margin Requirements for Uncleared Swaps for Swap Dealers and
Major Swap Participants; Comparability Determinations With Margin
Requirements.'' In addition, the adopting release included two
additional information collections regarding non-netting jurisdictions
\7\ and
[[Page 58376]]
non-segregation jurisdictions \8\ that were not previously proposed.
Subsequently, on August 2, 2016, the Commission requested a revision of
the collection for Margin Requirements for Uncleared Swaps for Swap
Dealers and Major Swap Participants; Comparability Determinations With
Margin Requirements (OMB control number 3038-0111) to include the
burden estimates for the provisions regarding non-netting jurisdictions
and non-segregation jurisdictions.\9\
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\6\ 81 FR 34818 (May 31, 2016).
\7\ As used in the adopting release, a ``non-netting
jurisdiction'' is a jurisdiction in which a CSE cannot conclude,
with a well-founded basis, that the netting agreement with a
counterparty in that foreign jurisdiction meets the definition of an
``eligible master netting agreement'' set forth in the Final Rule,
as described in section II.B.5.b of the adopting release.
\8\ As used in the adopting release, a ``non-segregation
jurisdiction'' is a jurisdiction where inherent limitations in the
legal or operational infrastructure of the foreign jurisdiction make
it impracticable for the CSE and its counterparty to post initial
margin pursuant to custodial arrangements that comply with the
Commission's margin rules, as further described in section II.B.4.b
of the adopting release.
\9\ 81 FR 50690 (Aug. 2, 2016).
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Under section 23.160(c)(1) of the Final Rule, a CSE that is
eligible for substituted compliance or a foreign regulatory agency that
has direct supervisory authority over one or more CSEs and that is
responsible for administering the relevant foreign jurisdiction's
margin requirements may request, individually or collectively, that the
Commission make a determination that a CSE that complies with margin
requirements in the relevant foreign jurisdiction would be deemed to be
in compliance with the Commission's corresponding margin rule
promulgated by the Commission (a ``comparability determination''). Once
a comparability determination is made for a jurisdiction, it applies
for all entities or transactions in that jurisdiction to the extent
provided in the comparability determination, as approved by the
Commission and subject to any conditions specified by the Commission.
All CSEs, regardless of whether they rely on a comparability
determination, remain subject to the Commission's examination and
enforcement authority.
Section 23.160(c)(2) of the Final Rule requires that applicants for
a comparability determination provide copies of the relevant foreign
jurisdiction's margin requirements and descriptions of their
objectives, how they differ from the BCBS/IOSCO international
framework, and how they address the elements of the Commission's margin
requirements. The applicant must identify the specific legal and
regulatory provisions of the foreign jurisdiction's margin requirements
that correspond to each element and, if necessary, whether the relevant
foreign jurisdiction's margin requirements do not address a particular
element.
Section 23.160(d) of the Final Rule includes a special provision
for non-netting jurisdictions. This provision allows CSEs that cannot
conclude after sufficient legal review with a well-founded basis that
the netting agreement with a counterparty in a foreign jurisdiction
meets the definition of an ``eligible master netting agreement'' set
forth in the Final Rule to nevertheless net uncleared swaps in
determining the amount of margin that they post, provided that certain
conditions are met. In order to avail itself of this special provision,
a CSE must treat the uncleared swaps covered by the agreement on a
gross basis in determining the amount of initial and variation margin
that it must collect, but may net those uncleared swaps in determining
the amount of initial and variation margin it must post to the
counterparty, in accordance with the netting provisions of the Final
Rule. A CSE that enters into uncleared swaps in ``non-netting''
jurisdictions in reliance on this provision must have policies and
procedures ensuring that it is in compliance with the special
provision's requirements, and maintain books and records properly
documenting that all of the requirements of this exception are
satisfied.
Section 23.160(e) of the Final Rule includes a special provision
for non-segregation jurisdictions that allows non-U.S. CSEs that are
Foreign Consolidated Subsidiaries (as defined in the Final Rule) and
foreign branches of U.S. CSEs to engage in swaps in foreign
jurisdictions where inherent limitations in the legal or operational
infrastructure make it impracticable for the CSE and its counterparty
to post collateral in compliance with the custodial arrangement
requirements of the Commission's margin rules, subject to certain
conditions. In order to rely on this special provision, a Foreign
Consolidated Subsidiary (``FCS'') or foreign branch of a U.S. CSE is
required to satisfy all of the conditions of the rule, including that
(1) inherent limitations in the legal or operational infrastructure of
the foreign jurisdiction make it impracticable for the CSE and its
counterparty to post any form of eligible initial margin collateral for
the uncleared swap pursuant to custodial arrangements that comply with
the Commission's margin rules; (2) foreign regulatory restrictions
require the CSE to transact in uncleared swaps with the counterparty
through an establishment within the foreign jurisdiction and do not
permit the posting of collateral for the swap in compliance with the
custodial arrangements of section 23.157 of the Final Rule in the
United States or a jurisdiction for which the Commission has issued a
comparability determination under the Final Rule with respect to
section 23.157; (3) the CSE's counterparty is not a U.S. person and is
not a CSE, and the counterparty's obligations under the uncleared swap
are not guaranteed by a U.S. person; (4) the CSE collects initial
margin in cash on a gross basis, in cash, and posts and collects
variation margin in cash, for the uncleared swap in accordance with the
Final Rule; (5) for each broad risk category, as set out in Sec.
23.154(b)(2)(v) of the Final Rule, the total outstanding notional value
of all uncleared swaps in that broad risk category, as to which the CSE
is relying on Sec. 23.160 (e), may not exceed 5 percent of the CSE's
total outstanding notional value for all uncleared swaps in the same
broad risk category; (6) the CSE has policies and procedures ensuring
that it is in compliance with the requirements of this provision; and
(7) the CSE maintains books and records properly documenting that all
of the requirements of this provision are satisfied.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid OMB control number. On August 21, 2019, the Commission
published in the Federal Register notice of the proposed extension and
revision of this information collection and provided 60 days for public
comment on the proposed extension and revision, 84 FR 43589 (``60-Day
Notice''). The Commission did not receive any relevant substantive
comments on the 60-Day Notice.
Burden Statement--Information Collection for Comparability
Determinations: The Commission is revising its estimate of the burden
for this collection to reflect the current number of registrants
subject to the Commission's margin requirements for uncleared swaps and
the Commission's implementation experience. Specifically, the
Commission estimates that approximately 54 CSEs may request a
comparability determination pursuant to section 23.160(c) of the Final
Rule.\10\
[[Page 58377]]
The Commission notes that any foreign regulatory agency that has direct
supervisory authority over one or more CSEs and that is responsible for
administering the relevant foreign jurisdiction's margin requirements
may also apply for a comparability determination. Further, once a
comparability determination is made for a jurisdiction, it will apply
for all entities or transactions in that jurisdiction to the extent
provided in the determination, as approved by the Commission. To date,
the Commission has issued a comparability determination for 3
jurisdictions.\11\ Accordingly, the Commission estimates that it will
receive requests from the 13 remaining jurisdictions within the G20, in
addition to Switzerland. In light of its experience in evaluating
requests for comparability determinations, the Commission is revising
its estimate for the number of burden hours associated with such
requests from 10 hours to 40 hours. Accordingly, the respondent burden
for this collection is estimated to be as follows:
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\10\ Currently, there are approximately 107 swap entities
provisionally registered with the Commission. The Commission
estimates that of the approximately 107 swap entities that are
provisionally registered, approximately 54 are CSEs for which there
is no Prudential Regulator, and are therefore subject to the
Commission's margin rules. Since the publication of the 60-Day
Notice, the number of CSEs subject to the Commission's margin rules
decreased from 55 to 54.
\11\ See Comparability Determination for Japan: Margin
Requirements for Uncleared Swaps for Swap Dealers and Major Swap
Participants, 81 FR 63376 (Sep. 15, 2016); Comparability
Determination for the European Union: Margin Requirements for
Uncleared Swaps for Swap Dealers and Major Swap Participants, 82 FR
48394 (Oct. 13, 2017) (``Margin Comparability Determination for the
European Union''); and Comparability Determination for Australia:
Margin Requirements for Uncleared Swaps for Swap Dealers and Major
Swap Participants, 84 FR 12908 (Apr. 3, 2019). The Commission
subsequently amended its comparability determination for Japan. See
Amendment to Comparability Determination for Japan: Margin
Requirements for Uncleared Swaps for Swap Dealers and Major Swap
Participants, 84 FR 12074 (Apr. 1, 2019).
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Estimated Number of Respondents: 14.
Estimated Average Burden Hours per Respondent: 40.
Estimated Total Annual Burden Hours: 560.
Frequency of Collection: Once.
There are no capital costs or operating and maintenance costs
associated with this collection.
Burden Statement--Information Collection for Non-Netting
Jurisdictions: The Commission estimates that approximately 54 CSEs may
rely on section 23.160(d) of the Final Rule.\12\ Furthermore, the
Commission estimates that these CSEs would incur an average of 10
annual burden hours to maintain books and records properly documenting
that all of the requirements of this exception are satisfied (including
policies and procedures ensuring compliance). Accordingly, the
respondent burden for this collection is estimated to be as follows:
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\12\ Currently, there are approximately 107 swap entities
provisionally registered with the Commission. The Commission
estimates that of the approximately 107 swap entities that are
provisionally registered, approximately 54 are CSEs for which there
is no Prudential Regulator, and are therefore subject to the
Commission's margin rules. Because all of these CSEs are eligible to
use the special provision for non-netting jurisdictions, the
Commission estimates that 54 CSEs may rely on section 23.160(d) of
the Final Rule. Since the publication of the 60-Day Notice, the
number of CSEs subject to the Commission's margin rules decreased
from 55 to 54.
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Estimated Number of Respondents: 54.
Estimated Average Burden Hours per Respondent: 10.
Estimated Total Annual Burden Hours: 540.
Frequency of Collection: Once; As needed.
There are no capital costs or operating and maintenance costs
associated with this collection.
Burden Statement--Information Collection for Non-Segregation
Jurisdictions: The Commission estimates that there are eight
jurisdictions for which the first two conditions specified above for
non-segregation jurisdictions are satisfied and where FCSs and foreign
branches of U.S. CSEs that are subject to the Commission's margin rules
may engage in swaps. The Commission estimates that approximately 12
FCSs and foreign branches of U.S. CSEs may rely on section 23.160(e) of
the Final Rule in some or all of these jurisdictions. The Commission
estimates that each FCS or foreign branch of a U.S. CSE relying on this
provision would incur an average of 20 annual burden hours to maintain
books and records properly documenting that all of the requirements of
this provision are satisfied (including policies and procedures for
ensuring compliance) with respect to each jurisdiction as to which they
rely on the special provision. Thus, based on the estimate of eight
non-segregation jurisdictions, the Commission estimates that each of
the approximately 12 FCSs and foreign branches of U.S. CSEs that may
rely on this provision will incur an estimated 160 average burden hours
per year (i.e., 20 average burden hours per jurisdiction multiplied by
8). Accordingly, the respondent burden for this collection is estimated
to be as follows:
Estimated Number of Respondents: 12.
Estimated Average Burden Hours per Respondent: 160.
Estimated Total Annual Burden Hours: 1,920.
Frequency of Collection: Once; As needed.
There are no capital costs or operating and maintenance costs
associated with this collection.
Authority: 44 U.S.C. 3501 et seq.
Dated: October 28, 2019.
Robert Sidman,
Deputy Secretary of the Commission.
[FR Doc. 2019-23796 Filed 10-30-19; 8:45 am]
BILLING CODE 6351-01-P