2022-23195
[Federal Register Volume 87, Number 205 (Tuesday, October 25, 2022)]
[Notices]
[Pages 64455-64457]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-23195]
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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
Information and Regulatory Affairs (``OIRA'') of 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 November 25, 2022.
ADDRESSES: Written comments and recommendations for the proposed
information collection should be submitted within 30 days of this
notice's publication to OIRA, at https://www.reginfo.gov/public/do/PRAMain. Please find this particular information collection by
selecting ``Currently under 30-day Review--Open for Public Comments''
or by using the website's search function. Comments can be entered
electronically by clicking on the ``comment'' button next to the
information collection on the ``OIRA Information Collections Under
Review'' page, or the ``View ICR--Agency Submission'' page. A copy of
the supporting statement for the collection of information discussed
herein may be obtained by visiting https://www.reginfo.gov/public/do/PRAMain.
In addition to the submission of comments to https://Reginfo.gov as
indicated above, a copy of all comments submitted to OIRA may also be
submitted to the Commodity Futures Trading Commission (the
``Commission'' or ``CFTC'') by clicking on the ``Submit Comment'' box
next to the descriptive entry for OMB Control No. 3038-0111, at https://comments.cftc.gov/FederalRegister/PublicInfo.aspx.
Or by either of the following methods:
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.
All comments must be submitted in English, or if not, accompanied
by an English translation. Comments submitted to the Commission should
include 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 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 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: Dina Moussa, Attorney Advisor, Market
Participants Division, Commodity Futures Trading Commission, (202) 418-
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5696 or [email protected], and refer to OMB Control No. 3038-0111.
SUPPLEMENTARY INFORMATION:
Title: Margin Requirements for Uncleared Swaps for Swap Dealers and
Major Swap Participants--Cross-Border Application of the Margin
Requirements (OMB Control No. 3038-0111). This is a request for an
extension of a currently approved information collection.
Abstract: Section 731 of the Dodd-Frank Wall Street Reform and
Consumer Protection 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 the Commission's Margin
Requirements for Uncleared Swaps for Swap Dealers and Major Swap
Participants--Cross-Border Application of the Margin Requirements
(``Final Rule'') addressing the cross-border application of its margin
requirements for uncleared swaps applicable to CSEs.\6\ The Final Rule
contains a collection of information under Commission Regulation
23.160(c) regarding requests for comparability determinations, and
information collections regarding non-netting jurisdictions,\7\ and
non-segregation jurisdictions.\8\
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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 Commission
Regulation 23.151, and 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.
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[[Page 64456]]
Under Commission Regulation 23.160(c)(1), 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 (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.
Commission Regulation 23.160(c)(2) 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 margin policy framework for non-
cleared, bilateral derivatives set forth by the Basel Committee on
Banking Supervision and the International Organization of Securities
Commissions, 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.
Commission Regulation 23.160(d) 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 Commission Regulation 23.151 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
Commission Regulations 23.152(c) and 23.153(d). A CSE that enters into
uncleared swaps in ``non-netting'' jurisdictions in reliance on this
provision must have policies and procedures ensuring that it complies
with the special provision's requirements, and maintain books and
records properly documenting that all of the requirements of this
exception are satisfied.
Commission Regulation 23.160(e) includes a special provision for
non-segregation jurisdictions that allows non-U.S. CSEs that are
Foreign Consolidated Subsidiaries (``FCS'') (as defined in Commission
Regulation 23.160(a)(1)) 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 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
Commission Regulation 23.157 in the United States or a jurisdiction for
which the Commission has issued a comparability determination under
Commission Regulation 23.160(c) with respect to Commission Regulation
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, and posts and collects variation margin in cash,
for the uncleared swap in accordance with specific requirements; (5)
for each broad risk category, as set out in Commission Regulation
23.154(b)(2)(v), the total outstanding notional value of all uncleared
swaps in that broad risk category, as to which the CSE is relying on
Commission Regulation 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 5, 2022, the Commission
published in the Federal Register notice of the proposed extension of
this information collection and provided 60 days for public comment on
the proposed renewal, 87 FR 48001 (``60-Day Notice''). The Commission
received no relevant comments on the 60-Day Notice.\9\
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\9\ The Commission received one comment from William J.
Harrington on October 4, 2022. See Comment of William J. Harrington
(Oct. 4, 2022). The comment is not relevant to the Commission's
Paperwork Reduction Act analysis, including its cost and hour burden
estimates, but instead advocates for an unrelated change to the
Commission Regulations referenced above.
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Burden Statement--Information Collection for Comparability
Determinations:
The Commission estimates that approximately 53 CSEs may request a
comparability determination pursuant to Commission Regulation
23.160(c).\10\ 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.
However, 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
[[Page 64457]]
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,\12\ in addition to
Switzerland. The number of burden hours associated with such requests
is estimated to be 40 hours. Accordingly, the respondent burden for
this collection is estimated to be as follows:
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\10\ Currently, there are approximately 108 swap entities
provisionally registered with the Commission. The Commission
estimates that of the approximately 108 swap entities that are
provisionally registered, approximately 53 are CSEs for which there
is no Prudential Regulator, and are therefore subject to the
Commission's margin rules.
\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. 18, 2017); 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).
\12\ The Group of 20 (``G20'') is comprised of foreign leaders
and central bank managers from the top 19 countries with the largest
economies along with the European Union.
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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 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. Specifically, the
Commission estimates that approximately 53 CSEs may rely on Commission
Regulation 23.160(d).\13\ 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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\13\ See n.9, supra. Because all of these CSEs are eligible to
use the special provision for non-netting jurisdictions, the
Commission estimates that 53 CSEs may rely on Commission Regulation
23.160(d).
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Estimated Number of Respondents: 53.
Estimated Average Burden Hours per Respondent: 10.
Estimated Total Annual Burden Hours: 530.
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 or foreign
branches of U.S. CSEs may rely on Commission Regulation 23.160(e) 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 20, 2022.
Robert Sidman,
Deputy Secretary of the Commission.
[FR Doc. 2022-23195 Filed 10-24-22; 8:45 am]
BILLING CODE 6351-01-P