2022-03700
[Federal Register Volume 87, Number 35 (Tuesday, February 22, 2022)]
[Notices]
[Pages 9582-9583]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-03700]
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COMMODITY FUTURES TRADING COMMISSION
Agency Information Collection Activities: Notice of Intent To
Extend Collection 3038-0094: Clearing Member Risk Management
AGENCY: Commodity Futures Trading Commission.
ACTION: Notice.
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SUMMARY: The Commodity Futures Trading Commission (``Commission'' or
``CFTC'') is announcing an opportunity for public comment on the
proposed renewal of a collection of certain information by the agency.
Under the Paperwork Reduction Act (``PRA''), Federal agencies are
required to publish notice in the Federal Register concerning each
proposed collection of information, including each proposed extension
of an existing collection of information, and to allow 60 days for
public comment. This notice solicits comments on the obligation to
maintain records related to clearing documentation between a customer
and the customer's clearing member, as required under Commission
regulations.
DATES: Comments must be submitted on or before April 25, 2022.
ADDRESSES: You may submit comments, identified by ``OMB Control No.
3038-0094'' by any of the following methods:
The Agency's website, at https://comments.cftc.gov/.
Follow the instructions for submitting comments through the website.
Mail: Christopher Kirkpatrick, Secretary of the
Commission, Commodity Futures Trading Commission, Three Lafayette
Centre, 1155 21st Street NW, Washington, DC 20581.
Hand Delivery/Courier: Same as Mail above. Please submit
your comments using only one method. All comments must be submitted in
English, or if not, accompanied by an English translation. Comments
will be posted as received to https://www.cftc.gov.
FOR FURTHER INFORMATION CONTACT: Melissa A. D'Arcy, Special Counsel,
Division of Clearing and Risk, Commodity Futures Trading Commission,
Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581;
(202) 418-5086; email: [email protected].
SUPPLEMENTARY INFORMATION: Under the PRA, 44 U.S.C. 3501 et seq.,
Federal agencies must obtain approval from the Office of Management and
Budget (``OMB'') for each collection of information they conduct or
sponsor. ``Collection of Information'' is defined in 44 U.S.C. 3502(3)
and 5 CFR 1320.3 and includes agency requests or requirements that
members of the public submit reports, keep records, or provide
information to a third party. Section 3506(c)(2)(A) of the PRA, 44
U.S.C. 3506(c)(2)(A), requires Federal agencies to provide a 60-day
notice in the Federal Register concerning each proposed collection of
information, including each proposed extension of an existing
collection of information, before submitting the collection to OMB for
approval. To comply with this requirement, the Commission is publishing
notice of the proposed extension of the existing collection of
information listed below. 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.\1\
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\1\ The OMB control numbers for the CFTC regulations were
published on December 30, 1981. See 46 FR 63035 (Dec. 30, 1981).
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Title: Clearing Member Risk Management (OMB Control No. 3038-0094).
This is a request for an extension of a currently approved information
collection.
Abstract: Section 3(b) of the Commodity Exchange Act (``Act'' or
``CEA'') provides that one of the purposes of the Act is to ensure the
financial integrity of all transactions subject to the Act and to avoid
systemic risk. Section 8a(5) of the CEA authorizes the Commission to
promulgate such
[[Page 9583]]
regulations that it believes are reasonably necessary to effectuate any
of the provisions or to accomplish any of the purposes of the CEA. Risk
management systems are critical to the avoidance of systemic risk.
Section 4s(j)(2) of the CEA requires each Swap Dealer (``SD'') and
Major Swap Participant (``MSP'') to have risk management systems
adequate for managing its business. Section 4s(j)(4) requires each SD
and MSP to have internal systems and procedures to perform any of the
functions set forth in Section 4s.
Section 4d requires Futures Commission Merchants (``FCMs'') to
register with the Commission. It further requires FCMs to segregate
customer funds. Section 4f requires FCMs to maintain certain levels of
capital. Section 4g establishes reporting and recordkeeping
requirements for FCMs.
Pursuant to these provisions, the Commission adopted Commission
regulation 1.73 which applies to clearing members that are FCMs and
Commission regulation 23.609 which applies to clearing members that are
SDs or MSPs. These provisions require these clearing members to have
procedures to limit the financial risks they incur as a result of
clearing trades and liquid resources to meet the obligations that
arise. The regulations require each clearing members to: (1) Establish
credit and market risk-based limits based on position size, order size,
margin requirements, or similar factors; (2) use automated means to
screen orders for compliance with the risk-based limits; (3) monitor
for adherence to the risk-based limits intra-day and overnight; (4)
conduct stress tests of all positions in the proprietary account and
all positions in any customer account that could pose material risk to
the futures commission merchant at least once per week; (5) evaluate
its ability to meet initial margin requirements at least once per week;
(6) evaluate its ability to meet variation margin requirements in cash
at least once per week; (7) evaluate its ability to liquidate the
positions it clears in an orderly manner, and estimate the cost of the
liquidation at least once per month; and (8) test all lines of credit
at least once per quarter.
Each of these items has been observed by Commission staff as an
element of an existing sound risk management program at an SD, MSP, or
FCM. The Commission regulations require each clearing member to
establish written procedures to comply with this regulation and to keep
records documenting its compliance. The information collection
obligations imposed by the regulations are necessary to implement
certain provisions of the CEA, including ensuring that registrants
exercise effective risk management and for the efficient operation of
trading venues among SDs, MSPs, and FCMs.
With respect to the collection of information, the CFTC invites
comments on:
Whether the proposed collection of information is
necessary for the proper performance of the functions of the
Commission, including whether the information will have a practical
use;
The accuracy of the Commission's estimate of the burden of
the proposed collection of information, including the validity of the
methodology and assumptions used;
Ways to enhance the quality, usefulness, and clarity of
the information to be collected; and
Ways to minimize the burden of collection of information
on those who are to respond, including through the use of appropriate
automated electronic, mechanical, or other technological collection
techniques or other forms of information technology; e.g., permitting
electronic submission of responses.
You should submit only information that you wish to make available
publicly. If you wish for 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 Regulations.\2\
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\2\ 17 CFR 145.9.
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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 https://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 Information Collection Request 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.
Burden Statement: The Commission is revising its estimate of the
burden for this collection of information from clearing members of
derivatives clearing organizations who are swap dealers, major swap
participants, and/or futures commission merchants. The respondent
burden for this collection is estimated to be as follows:
Estimated Number of Respondents: 167 (108 Clearing Member Swap
Dealers and 59 Clearing Member Futures Commission Merchants).
Estimated Average Burden Hours per Respondent: 504 hours.
Estimated Total Annual Burden Hours: 84,168 hours.
Frequency of Collection: 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: February 16, 2022.
Robert Sidman,
Deputy Secretary of the Commission.
[FR Doc. 2022-03700 Filed 2-18-22; 8:45 am]
BILLING CODE 6351-01-P