Privacy of Consumer Financial Information; Conforming Amendments Under Dodd-Frank Act, 66014-66018 [2010-26912]
Download as PDF
<![CDATA[
66014
Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules
List of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference,
Navigation (Air).
The Proposed Amendment
In consideration of the foregoing, the
Federal Aviation Administration
proposes to amend 14 CFR part 71 as
follows:
PART 71—DESIGNATION OF CLASS A,
B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND
REPORTING POINTS
1. The authority citation for part 71
continues to read as follows:
Authority: 49 U.S.C. 106(g); 40103, 40113,
40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–
1963 Comp., p. 389.
§ 71.1
[Amended]
2. The incorporation by reference in
14 CFR 71.1 of FAA Order 7400.9U,
Airspace Designations and Reporting
Points, dated August 18, 2010, and
effective September 15, 2010, is
amended as follows:
Paragraph 6005 Class E airspace areas
extending upward from 700 feet or more
above the surface of the earth.
*
*
*
*
*
ASW TX E5 Austin, Horseshoe Bay Resort
Airport, TX [Amended]
Horseshoe Bay Resort Airport, TX
(Lat. 30°31′37″ N., long. 98°21′32″ W.)
That airspace extending upward from 700
feet above the surface within a 6.5-mile
radius of Horseshoe Bay Resort Airport.
Issued in Fort Worth, TX, on October 19,
2010.
Anthony D. Roetzel,
Manager, Operations Support Group, ATO
Central Service Center.
[FR Doc. 2010–27258 Filed 10–26–10; 8:45 am]
BILLING CODE 4901–13–P
COMMODITY FUTURES TRADING
COMMISSION
17 CFR Part 160
RIN 3038–AD13
Privacy of Consumer Financial
Information; Conforming Amendments
Under Dodd-Frank Act
Commodity Futures Trading
Commission.
ACTION: Notice of proposed rulemaking.
jlentini on DSKJ8SOYB1PROD with PROPOSALS
AGENCY:
The Commodity Futures
Trading Commission (‘‘Commission’’ or
‘‘CFTC’’) is proposing to amend its rules
under part 160 of its Regulations to
implement new statutory provisions
enacted by Titles VII and X of the Dodd-
SUMMARY:
VerDate Mar<15>2010
16:59 Oct 26, 2010
Jkt 223001
Frank Wall Street Reform and Consumer
Protection Act (‘‘Dodd-Frank Act’’).
Section 1093 of the Dodd-Frank Act
provides for certain amendments to
Title V of the Gramm-Leach-Bliley Act
(‘‘GLB Act’’)—which sets forth certain
protections for the privacy of consumer
financial information—affirming the
Commission’s jurisdiction in this area.
This proposal broadens the scope of Part
160 to cover two new entities created by
Title VII of the Dodd-Frank Act: Swap
dealers and major swap participants. In
addition, the Commission proposes to
rename Part 160 as ‘‘Privacy of
Consumer Financial Information under
the Gramm-Leach-Bliley Act’’ to
harmonize the title of this part with
other parts of the Commission’s
Regulations.
Comments must be received on
or before December 27, 2010.
ADDRESSES: You may submit comments,
identified by RIN number 3038–AD13,
by any of the following methods:
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• E-mail: infoprivacy@cftc.gov.
• Mail: David A. Stawick, 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 will be
posted as received to https://
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, 5 U.S.C.
552, a petition for confidential treatment
of the exempt information may be
submitted according to the established
rules in section 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 rulemaking will be
retained in the public comment file and
will be considered as required under the
Administrative Procedure Act, 5 U.S.C.
551 et seq., and other applicable laws,
DATES:
1 17
PO 00000
CFR 145.9.
Frm 00020
Fmt 4702
Sfmt 4702
and may be accessible under the
Freedom of Information Act.
Carl
E. Kennedy, Counsel, Office of General
Counsel, (202) 418–6625, e-mail:
c_kennedy@cftc.gov, Commodity
Futures Trading Commission, Three
Lafayette Centre, 1155 21st Street, NW.,
Washington, DC 20581.
SUPPLEMENTARY INFORMATION:
FOR FURTHER INFORMATION CONTACT:
I. Background
On July 21, 2010, President Obama
signed the ‘‘Dodd-Frank Wall Street
Reform and Consumer Protection Act’’
(‘‘Dodd-Frank Act’’).2 Title VII of the
Dodd-Frank Act,3 which substantially
amended the Commodity Exchange Act
(‘‘CEA’’),4 established a comprehensive
new regulatory framework for swaps
and security-based swaps. It lowers risk
in the financial system, increases
transparency, and promotes market
integrity by, among other things: (1)
Providing for the comprehensive
regulation of swap dealers and major
swap participants; (2) imposing clearing
and trade execution requirements on
standardized products; (3) creating a
robust real-time reporting regime; and
(4) enhancing the Commission’s
enforcement authorities.
Title X of the Dodd-Frank Act creates
a new consumer financial services
regulator, the Bureau of Consumer
Financial Protection (the ‘‘Bureau’’), that
will assume most of the consumer
financial services regulatory
responsibilities currently spread among
numerous agencies. More specifically,
the Dodd-Frank Act removes from the
jurisdiction of the Federal Trade
Commission (‘‘FTC’’) its rulemaking and
other authorities granted pursuant to
Federal consumer law, and cedes that
authority to the Bureau. In addition,
section 1093 of the Dodd-Frank Act
amends Title V of the GLB Act (15
U.S.C. 6801 et seq.), to, inter alia,
reaffirm the Commission’s authority to
promulgate regulations to require
entities that are subject to the
Commission’s jurisdiction to provide
certain privacy protections for consumer
financial information. Specifically,
section 1093 of the Dodd-Frank Act
amends section 504 of the GLB Act by
providing that ‘‘the [CFTC] shall have
the authority to prescribe such
regulations as may be necessary to carry
out the purposes of [Title V of the GLB
2 See Dodd-Frank Wall Street Reform and
Consumer Protection Act, Public Law 111–203, 124
Stat. 1376 (2010). The text of the Dodd-Frank Act
may be accessed at https://www.cftc.gov.
3 Under Section 701 of the Dodd-Frank Act, Title
VII may be cited as the ‘‘Wall Street Transparency
and Accountability Act of 2010.’’
4 7 U.S.C. 1 et seq.
E:\FR\FM\27OCP1.SGM
27OCP1
Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules
jlentini on DSKJ8SOYB1PROD with PROPOSALS
Act] with respect to any financial
institutions and other persons subject to
the jurisdiction of the [CFTC] under
section 5g of the [CEA].’’ (Emphasis
added.)
As enacted, Title V of the GLB Act 5
(‘‘Title V’’), inter alia, limits the
instances in which a financial
institution may disclose nonpublic
personal information about a consumer
to nonaffiliated third parties, and
requires a financial institution to
disclose to all of its customers the
institution’s privacy policies and
practices with respect to information
sharing with both affiliates and
nonaffiliated third parties.6
In 2000, the Commodity Futures
Modernization Act of 2000 (‘‘CFMA’’)
created section 5g of the CEA, providing
that the Commission be treated as a
Federal functional regulator within the
meaning of Title V.7 Section 5g also
granted the Commission the authority to
adopt rules that establish appropriate
standards for financial institutions
subject to its jurisdiction to safeguard
customer records and information.
Section 5g provides that the following
entities are subject to the Commission’s
jurisdiction for the purposes of Title V:
Futures commission merchants
(‘‘FCMs’’), commodity trading advisors
(‘‘CTAs’’), commodity pool operators
(‘‘CPOs’’), and introducing brokers
(‘‘IBs’’) (collectively, ‘‘CFTC registrants’’).
The Commission’s consumer
information privacy rules are set out in
Part 160 of the Commission’s
regulations, which require CFTC
registrants to adopt appropriate policies
and procedures that address safeguards
to customer records and information,
including initial and annual privacy
notice requirements, opt-out provisions
to the extent that these registrants wish
to share such records and information
with non-affiliates and other measures
to protect nonpublic consumer
information. The protections provided
in Part 160 inure to the benefit of
individual consumers.8 The
Commission recently amended the
scope of Part 160 and the definition of
‘‘financial institution’’ to include retail
foreign exchange dealers (‘‘RFEDs’’).9
Title VII of the Dodd-Frank Act
creates two new entities over which the
Commission has jurisdiction: Swap
dealers (‘‘SDs’’) and major swap
participants (‘‘MSPs’’).10 The
Commission proposes in this
rulemaking to: (1) Expand the scope of
Part 160 of its Regulations to apply to
SDs and MSPs; (2) in accordance with
the transfer of authority in Title X,
changing all references in Part 160 from
the FTC to the Bureau; and (3) rename
Part 160 to ‘‘Privacy of Consumer
Financial Information under the
Gramm-Leach-Bliley Act’’ to harmonize
the title of part 160 with the new part
of the Commission’s Regulations, which
provide protections to certain customer
information under the FCRA.
The Commission requests comment
on all aspects of these conforming
amendments, as well as comment on
specific provisions and issues
highlighted in the section-by-section
analysis below.
5 Public Law 106–102, 113 Stat. 1338 (1999)
(codified in scattered sections of 12 U.S.C. and 15
U.S.C.).
6 GLB Act sections 501–510, 15 U.S.C. 6801–
6809.
7 The other agencies subject to GLB Act
jurisdiction include the Office of the Comptroller of
the Currency (‘‘OCC’’); Board of Governors of the
Federal Reserve System (‘‘Board’’); Federal Deposit
Insurance Corporation (‘‘FDIC’’); Office of Thrift
Supervision (‘‘OTS’’); National Credit Union
Administration (‘‘NCUA’’); FTC; and Securities and
Exchange Commission (‘‘SEC’’).
8 Section 160.3(h)(1) of the Commission’s
Regulations defines the term consumer to mean ‘‘an
individual who obtains or has obtained a financial
product or service from [a financial institution] that
is to be used primarily for personal, family or
household purposes, or that individual’s legal
representative.’’
9 See 75 FR 55410, 55450 (Sept. 10, 2010).
10 The terms ‘‘SD’’ and ‘‘MSP’’ as used in this
proposed regulation refer to the statutory
definitions of such terms as defined in Title VII of
the Dodd-Frank Act, and as may be further defined
by the Commission in a future rulemaking. See
section 721(b) of the Dodd-Frank Act, which
provides that the Commission has the authority to
adopt rules further defining any term in an
amendment to the CEA in the Dodd-Frank Act. See
also section 721(c) which provides that the
Commission is required to adopt a rule to further
define, inter alia, the terms ‘‘swap dealer’’ and
‘‘major swap participant’’ to include transactions
and entities that have been structured to evade
provisions in the Dodd-Frank Act.
VerDate Mar<15>2010
16:25 Oct 26, 2010
Jkt 223001
II. Section-by-Section Analysis
A. Specific Section Amendments
Renaming Part 160
Another provision in Title X of the
Dodd-Frank Act, section 1088, provides
that the Commission promulgate
regulations under various sections of the
Fair Credit Reporting Act, 15 U.S.C.
1608 et seq. Similar to Title V of the
GLB Act, the FCRA sets forth safeguards
for the protection of a broader range of
consumer information. Under a separate
rulemaking, the Commission proposes
to create a new part in its Regulations
to provide protections under the FCRA.
To harmonize the title of Part 160 with
the new part being adopted by the
Commission promulgated under Title X
of the Dodd-Frank Act, the Commission
proposes to rename Part 160 as ‘‘Privacy
PO 00000
Frm 00021
Fmt 4702
Sfmt 4702
66015
of Consumer Financial Information
under the Gramm-Leach-Bliley Act.’’ 11
Regulation 160.1(b) Scope
Regulation 160.1(b) sets out the scope
of the Commission’s rules and identifies
the financial institutions covered by the
rules that include CFTC registrants
regardless whether they are required to
register with the Commission. The
Commission proposes to add SDs and
MSPs to the scope of Part 160 (and to
the definition of ‘‘financial institution’’
therein) because, for example, these new
entities may enter into swap
transactions with individuals who
qualify as ‘‘eligible contract
participants’’.12 Section 1a(18)(A)(xi)
defines ‘‘eligible contact participant’’ to
include any individual who has
amounts invested on a discretionary
basis, the aggregate of which is in excess
of either $10,000,000 or, if certain other
qualifications are met, $5,000,000. As a
result of this addition, SDs and MSPs
that transact swaps with individuals
would have to comply with the various
provisions under Part 160, including
requirements to protect the nonpublic
personal information of these
individuals. Of course, if any SD or MSP
has no business interactions with
natural persons, no obligations would
arise under this proposal. This proposal
would ensure that all CFTC registrants
that enter into swap transactions with
natural persons would provide privacy
protections to any nonpublic, consumer
information.
Section 160.3—Definitions
Since the scope of the proposed
regulations would extend to SDs and
MSPs, the Commission proposes to
amend section 160.3 to add the
definitions of SDs and MSPs to the list
of defined terms under section 160.3.
Specifically, the Commission proposes
to define ‘‘major swap participant’’ to
have the same meaning as in section
1a(33) of the CEA, as further defined by
the Commission’s Regulations, and
includes any person registered as such
thereunder. The Commission proposes
to define ‘‘swap dealer’’ to have the same
meaning as in section 1a(49) of the CEA,
as further defined by the Commission’s
Regulations, and includes any person
registered as such thereunder. There are
existing definitions and related
11 Section 1088 of the Dodd-Frank Act provides
the CFTC with authority to implement regulations
under sections 624 and 628 of the FCRA.
12 New section 2(e) of the CEA—as enacted under
723(a)(2) of the Dodd-Frank Act—provides that it is
‘‘unlawful for any person, other than an eligible
contract participant, to enter into a swap unless the
swap is entered into on, or subject to the rules of,
a board of trade designated as a contract market
under section 5 [of the CEA].’’
E:\FR\FM\27OCP1.SGM
27OCP1
66016
Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules
provisions under Part 160 that must be
amended to include these new
registrants. Specifically, the definitions
of ‘‘financial institution’’, ‘‘affiliate’’, and
‘‘you’’ must be amended to include swap
dealers and major swap participants.
Section 160.15—Other Exceptions to
Notice and Opt Out Requirements
As noted above, Title X of the DoddFrank Act transferred certain authority
from the FTC to the Bureau.
Accordingly, we changed the reference
from the FTC to the Bureau in section
160.15 to reflect that the Bureau is now
a Federal functional regulator.
Section 160.17(b)—Relation to State
Laws
As a result of the creation of the
Bureau and the transfer of certain
authority from the FTC to the Bureau,
the Commission proposes to amend
paragraph (b) by replacing it with the
language similar to section 1041(a)(2) of
the Dodd-Frank Act. This section
clarifies the relationship of Title V to
state consumer protection laws.
Specifically, section 1041(a)(2)
provides, ‘‘For the purposes of this
section, a [State] statute, regulation,
order, or interpretation * * * is not
inconsistent with the provisions of
[Title V] if the protection that such
statute, regulation, order, or
interpretation affords to consumers is
greater than the protection provided
under [Title V]. A determination
regarding whether a [State] statute,
regulation, order, or interpretation
* * * is inconsistent with the
provisions of [Title V] may be made by
the Bureau on its own motion or in
response to a nonfrivolous petition
initiated by any interested person.’’
jlentini on DSKJ8SOYB1PROD with PROPOSALS
Section 160.30—Procedures To
Safeguard Customer Records and
Information
Section 160.30 requires CFTC
registrants to adopt policies and
procedures that, among other things,
address administrative, technical and
physical safeguards for the protection of
customer records and information. The
Commission proposes to amend the
introductory sentence of section 160.30
to add SDs and MSPs to the list of CFTC
registrants that must comply with this
requirement.
B. Effective Date
Pursuant to section 1100H of the
Dodd-Frank Act, the Commission
proposes to make the proposed
regulations—the affiliate marketing
rules and the disposal rules—become
effective on the ‘‘designated transfer
date’’ of authority from various Federal
VerDate Mar<15>2010
16:25 Oct 26, 2010
Jkt 223001
agencies to the Bureau. Section 1062 of
the Dodd-Frank Act provides that the
‘‘designated transfer date’’ is a date
designated in the Federal Register no
later than 60 days after the enactment of
the Dodd-Frank Act by the Secretary of
the Treasury, the Chairman of the Board
of Governors, the Chairman of the
Federal Trade Commission, and several
other Federal agencies.13 On September
20, 2010, these Federal agencies issued
a notice designating July 21, 2011 as the
designated transfer date.14 As a result,
the Commission proposes to adopt the
affiliate marketing rules and the
disposal rules on that date.
III. Related Matters
A. Cost-Benefit Analysis
Section 15(a) of the CEA 15 requires
the Commission to consider the costs
and benefits of its actions before issuing
an order under the CEA. By its terms,
section 15(a) does not require the
Commission to quantify the costs and
benefits of amendments to regulations to
determine whether the benefits of the
amendments outweigh its costs; rather,
it requires that the Commission
‘‘consider’’ the costs and benefits of its
actions. Section 15(a) further specifies
that the costs and benefits shall be
evaluated in light of 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 may in
its discretion give greater weight to any
one of the five enumerated areas and
could in its discretion determine that,
notwithstanding its costs, a particular
amendment is necessary or appropriate
to protect the public interest or to
effectuate any of the provisions or
accomplish any of the purposes of the
Act. The proposed conforming rule
amendments would broaden the scope
of Part 160 to cover SDs and MSPs.
With respect to costs, the Commission
has determined that the proposed
conforming amendments are necessary
to implement various consumer
financial information privacy provisions
as they relate to SDs and MSPs, by
adding these new registrants to the list
13 The heads of the other Federal agencies are:
The Comptroller of the Currency; the Director of the
Office of Thrift Supervision; the Secretary of the
Department of Housing and Urban Development;
the Director of the Office of Management and
Budget; the Chairman of the National Credit Union
Administration Board; and the Chairperson of the
Corporation.
14 See 75 FR 57252–02 (Sept. 20, 2010).
15 7 U.S.C. 19(a).
PO 00000
Frm 00022
Fmt 4702
Sfmt 4702
of financial institutions responsible for
complying with its provisions under
part 160 of its Regulations.
The Commission has determined that
market participants and the public may
be harmed if these new registrants are
not added to part 160. The notice
requirements under part 160 were
established to protect individual
customers who do business with CFTC
registrants. There is no reason why SDs
and MSPs should be excluded from
these requirements to the extent that
they conduct business with a natural
person. With respect to benefits, the
Commission has determined that
requiring financial institutions to
protect the privacy of nonpublic
personal information about consumers
is a benefit that must be maintained
given the risks to the public if it is not,
given the minor costs to the financial
institutions affected by the conforming
amendments.
The Commission invites public
comment on its cost-benefit
considerations. Commenters are also
invited to submit any data or other
information that they may have
quantifying or qualifying the costs and
benefits of the proposal.
B. Paperwork Reduction Act
Under the Paperwork Reduction Act
(‘‘PRA’’) 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
control number.16 The proposed
amendments to Part 160 of the
Commission’s Regulations include a
collection of information within the
meaning of the PRA. The Commission
therefore is submitting this proposal to
the Office of Management and Budget
(‘‘OMB’’) for review in accordance with
44 U.S.C. 3507(d) and 5 CFR 1320.11,
together with a request for approval of
a revision to the Commission’s currently
approved collection associated with part
160. The title of the collection of
information to be revised is ‘‘Privacy of
Consumer Financial Information,’’ OMB
Control Number 3038–0055. If
approved, the provision of notice to this
revised collection of information would
be mandatory for SDs and MSPs.
1. Information Provided by Reporting
Entities
The proposed rule would require SDs
and MSPs to provide initial and annual
privacy and opt-out notices to all
customers that are natural persons. It is
not currently known how many SDs and
MSPs will be required to register as
such with the Commission, and this will
16 44
E:\FR\FM\27OCP1.SGM
U.S.C. 3501 et seq.
27OCP1
Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules
not be known to the Commission until
registration requirements for these
entities become effective after July 15,
2011, the date on which the Dodd-Frank
Act becomes effective.
Nonetheless, for purposes of
calculating PRA burden, the
Commission estimates that there will be
approximately 300 SDs and MSPs who
would be required to provide notices
under part 160 on an initial and then on
an annual basis.17 It is anticipated that
most SDs and MSPs will not transact
business with a significant number of
natural persons, causing the
Commission to estimate that each SD
and MSP will issue an average of 20
notices per year. As previously
estimated, the average time per notice
will be .24 hours. This will result in an
annual aggregate of 1,440 burden hours.
jlentini on DSKJ8SOYB1PROD with PROPOSALS
2. Information Collection Comments
The Commission invites the public
and other Federal agencies to comment
on any aspect of the reporting and
recordkeeping burdens discussed above.
Pursuant to 44 U.S.C. 3506(c)(2)(B), the
Commission solicits comments in order
to: (i) Evaluate whether the proposed
collection of information is necessary
for the proper performance of the
functions of the Commission, including
whether the information will have
practical utility; (ii) evaluate the
accuracy of the Commission’s estimate
of the burden of the proposed collection
of information; (iii) determine whether
there are ways to enhance the quality,
utility, and clarity of the information to
be collected; and (iv) minimize the
burden of the collection of information
on those who are to respond, including
through the use of automated collection
techniques or other forms of information
technology. Comments may be
submitted directly to the Office of
Information and Regulatory Affairs, by
fax at (202) 395–6566 or by e-mail at
OIRAsubmissions@omb.eop.gov. Please
provide the Commission with a copy of
submitted comments so that they can be
summarized and addressed in the final
rule. Refer to the ADDRESSES section of
this notice of proposed rulemaking for
comment submission instructions to the
Commission. A copy of the supporting
statements for the collections of
information discussed above may be
obtained by visiting RegInfo.gov. OMB
is required to make a decision
concerning the collection of information
between 30 and 60 days after
publication of this release.
Consequently, a comment to OMB is
most assured of being fully effective if
received by OMB (and the Commission)
within 30 days after publication of this
notice of proposed rulemaking.
C. Regulatory Flexibility Act
The Regulatory Flexibility Act
(‘‘RFA’’) requires that agencies consider
whether their proposed regulations will
have a significant economic impact on
a substantial number of small entities
and, if so, provide a regulatory
flexibility analysis respecting the
impact.18 The Commission’s proposed
regulations now will affect SDs and
MSPs, in addition to the CFTC
registrants that are currently subject to
Commission’s Regulations under Part
160. These regulations require periodic
notice to be provided to individuals
who obtain financial products or
services primarily for personal, family,
or household purposes from the
institutions, and may be satisfied by the
use of a model notice developed by the
Commission and other regulatory
agencies to minimize the burden of
compliance. Accordingly, the
Commission has determined that the
obligations created by these rule
amendments will not create a significant
economic impact on a substantial
number of small entities. Accordingly,
the Chairman, on behalf of the
Commission, hereby certifies pursuant
to 5 U.S.C. 605(b) that the proposed
rules will not have a significant impact
on a substantial number of small
entities.
List of Subjects in 17 CFR Part 160
Brokers, Dealers, Consumer
protection, Privacy, Reporting and
recordkeeping requirements.
For the reasons articulated in the
preamble, the Commission proposes to
amend Part 160 of Title 17 of the Code
of Federal Regulations as follows:
1. The heading of part 160 is revised
to read as follows:
(b) Scope. This part applies only to
nonpublic personal information about
individuals who obtain financial
products or services primarily for
personal, family, or household purposes
from the institutions listed below. This
part does not apply to information about
companies or about individuals who
obtain financial products or services
primarily for business, commercial, or
agricultural purposes. This part applies
to all futures commission merchants,
retail foreign exchange dealers,
commodity trading advisors, commodity
pool operators, introducing brokers,
major swap participants and swap
dealers that are subject to the
jurisdiction of the Commission,
regardless whether they are required to
register with the Commission. These
entities are hereinafter referred to in this
part as ‘‘you.’’ This part does not apply
to foreign (non-resident) futures
commission merchants, retail foreign
exchange dealers, commodity trading
advisors, commodity pool operators,
introducing brokers, major swap
participants and swap dealers that are
not registered with the Commission.
*
*
*
*
*
4. Amend § 160.3 as follows:
a. Revise paragraphs (a), (n)(1)(i),
(n)(2)(i), and (o)(1)(i);
b. Redesignating paragraphs (w) and
(x) as paragraphs (y) and (z);
c. Redesignating paragraphs (s)
through (v) as paragraphs (t) through
(w);
d. Adding new paragraphs (s) and (x);
and
e. Revising newly designated
paragraphs (y)(4) and (5) and adding
new paragraphs (y)(6) and (7) to read as
follows:
§ 160.3
PART 160—PRIVACY OF CONSUMER
FINANCIAL INFORMATION UNDER
TITLE V OF THE GRAMM-LEACHBLILEY ACT
2. The authority citation for part 160
is revised to read as follows:
Authority: 7 U.S.C. 7b–2 and 12a(5); 15
U.S.C 6801, et seq., and title X, sec. 1093,
Pub. L. 111–203, 124 Stat. 1376.
3. Amend § 160.1 by revising
paragraph (b) to read as follows:
§ 160.1
17 While
staff believes that there may likely be
approximately 200 swap dealers, we have taken a
conservative approach in estimating that there will
be 250 swap dealers for PRA purposes.
VerDate Mar<15>2010
16:25 Oct 26, 2010
Jkt 223001
66017
*
*
18 5
PO 00000
Purpose and scope.
*
*
*
U.S.C. 601 et seq.
Frm 00023
Fmt 4702
Sfmt 4702
Definitions.
*
*
*
*
*
(a) Affiliate of a futures commission
merchant, retail foreign exchange
dealer, commodity trading advisor,
commodity pool operator, introducing
broker, major swap participant, or swap
dealer means any company that
controls, is controlled by, or is under
common control with a futures
commission merchant, retail foreign
exchange dealer, commodity trading
advisor, commodity pool operator,
introducing broker, major swap
participant, or swap dealer that is
subject to the jurisdiction of the
Commission. In addition, a futures
commission merchant, retail foreign
exchange dealer, commodity trading
advisor, commodity pool operator,
introducing broker, major swap
participant, or swap dealer subject to
the jurisdiction of the Commission will
E:\FR\FM\27OCP1.SGM
27OCP1
jlentini on DSKJ8SOYB1PROD with PROPOSALS
66018
Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules
be deemed an affiliate of a company for
purposes of this part if:
(1) That company is regulated under
Title V of the GLB Act by the Bureau of
Consumer Financial Protection or by a
Federal functional regulator other than
the Commission; and
(2) Rules adopted by the Bureau of
Consumer Financial Protection or
another Federal functional regulator
under Title V of the GLB Act treat the
futures commission merchant, retail
foreign exchange dealer, commodity
trading advisor, commodity pool
operator, introducing broker, major
swap participant, or swap dealer as an
affiliate of that company.
*
*
*
*
*
(n)(1) * * *
(i) Any futures commission merchant,
retail foreign exchange dealer,
commodity trading advisor, commodity
pool operator, introducing broker, major
swap participant, or swap dealer that is
registered with the Commission as such
or is otherwise subject to the
Commission’s jurisdiction; and
(ii) * * *
(2) * * *:
(i) Any person or entity, other than a
futures commission merchant, retail
foreign exchange dealer, commodity
trading advisor, commodity pool
operator, introducing broker, major
swap participant, or swap dealer that,
with respect to any financial activity, is
subject to the jurisdiction of the
Commission under the Act.
*
*
*
*
*
(o)(1) * * *:
(i) Any product or service that a
futures commission merchant, retail
foreign exchange dealer, commodity
trading advisor, commodity pool
operator, introducing broker, major
swap participant, or swap dealer could
offer that is subject to the Commission’s
jurisdiction; and
*
*
*
*
*
(s) Major swap participant. The term
‘‘major swap participant’’ has the same
meaning as in section 1a(33) of the
Commodity Exchange Act, 7 U.S.C. 1 et
seq., as may be further defined by this
title, and includes any person registered
as such thereunder.
*
*
*
*
*
(x) Swap dealer. The term ‘‘swap
dealer’’ has the same meaning as in
section 1a(49) of the Commodity
Exchange Act, 7 U.S.C. 1 et seq., as may
be further defined by this title, and
includes any person registered as such
thereunder.
(y) * * *
(4) Any commodity pool operator;
(5) Any introducing broker;
(6) Any major swap participant; and
VerDate Mar<15>2010
16:25 Oct 26, 2010
Jkt 223001
(7) Any swap dealer subject to the
jurisdiction of the Commission.
*
*
*
*
*
5. Amend § 160.15 by revising
paragraph (a)(4) to read as follows:
§ 160.15 Other exceptions to notice and
opt out requirements.
(a) * * *
(4) To the extent specifically
permitted or required under other
provisions of law and in accordance
with the Right to Financial Privacy Act
of 1978, 12 U.S.C. 3401 et seq., to law
enforcement agencies (including a
Federal functional regulator, the
Secretary of the Treasury, with respect
to 31 U.S.C. Chapter 53, Subchapter II
(Records and Reports on Monetary
Instruments and Transactions) and 12
U.S.C. Chapter 21 (Financial
Recordkeeping), a State insurance
authority, with respect to any person
domiciled in that insurance authority’s
state that is engaged in providing
insurance, and the Bureau of Consumer
Financial Protection), self-regulatory
organizations, or for an investigation on
a matter related to public safety;
*
*
*
*
*
6. Amend § 160.17 by revising
paragraph (b) to read as follows:
§ 160.17
Relation to state laws.
*
*
*
*
*
(b) Greater protection under state law.
For purposes of this section, a state
statute, regulation, order or
interpretation is not inconsistent with
the provisions of this part if the
protection such statute, regulation,
order or interpretation affords to any
consumer is greater than the protection
provided under this part. A
determination regarding whether a state
statute, regulation, order, or
interpretation is inconsistent with the
provisions of this part may be made by
the Bureau of Consumer Financial
Protection, after consultation with the
Commission, on its own motion or in
response to a nonfrivolous petition
initiated by any interested person.
7. Revise § 160.30 to read as follows:
§ 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.
By the Commission.
PO 00000
Frm 00024
Fmt 4702
Sfmt 4702
Dated: October 19, 2010.
David A. Stawick,
Secretary.
Statement of Chairman Gary Gensler
Privacy of Consumer Financial
Information; Conforming Amendments
Under Dodd-Frank Act
October 19, 2010
I support today’s Commission vote on
the notice of public rulemaking, which
expands the scope of the Commission’s
existing protections afforded to
consumers’ information to two new
entities created by the Dodd-Frank Act.
The proposed rulemaking expands the
Commission’s Part 160 rules to
customers of swap dealers and major
swap participants. Part 160 includes the
Commission’s existing privacy rules for
consumers.
[FR Doc. 2010–26912 Filed 10–26–10; 8:45 am]
BILLING CODE 6351–01–P
COMMODITY FUTURES TRADING
COMMISSION
17 CFR Part 162
RIN Number 3038–AD12
Business Affiliate Marketing and
Disposal of Consumer Information
Rules
Commodity Futures Trading
Commission.
ACTION: Notice of proposed rulemaking.
AGENCY:
The Commodity Futures
Trading Commission (‘‘Commission’’ or
‘‘CFTC’’) is proposing regulations to
implement new statutory provisions
enacted by Title X of the ‘‘Dodd-Frank
Wall Street Reform and Consumer
Protection Act’’ (‘‘Dodd-Frank Act’’).
These proposed regulations apply to
futures commission merchants, retail
foreign exchange dealers, commodity
trading advisors, commodity pool
operators, introducing brokers, swap
dealers and major swap participants
(collectively, ‘‘CFTC registrants’’). The
Dodd-Frank Act provides the CFTC with
authority to implement regulations
under sections 624 and 628 of the Fair
Credit Reporting Act (‘‘FCRA’’). The
proposed regulations implementing
section 624 of the FCRA require CFTC
registrants to provide consumers with
the opportunity to prohibit affiliates
from using certain information to make
marketing solicitations to consumers.
The proposed regulations implementing
section 628 of the FCRA require CFTC
registrants that possess or maintain
consumer report information in
connection with their business activities
SUMMARY:
E:\FR\FM\27OCP1.SGM
27OCP1
]]>Agencies
[Federal Register Volume 75, Number 207 (Wednesday, October 27, 2010)]
[Proposed Rules]
[Pages 66014-66018]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-26912]
=======================================================================
-----------------------------------------------------------------------
COMMODITY FUTURES TRADING COMMISSION
17 CFR Part 160
RIN 3038-AD13
Privacy of Consumer Financial Information; Conforming Amendments
Under Dodd-Frank Act
AGENCY: Commodity Futures Trading Commission.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Commodity Futures Trading Commission (``Commission'' or
``CFTC'') is proposing to amend its rules under part 160 of its
Regulations to implement new statutory provisions enacted by Titles VII
and X of the Dodd-Frank Wall Street Reform and Consumer Protection Act
(``Dodd-Frank Act''). Section 1093 of the Dodd-Frank Act provides for
certain amendments to Title V of the Gramm-Leach-Bliley Act (``GLB
Act'')--which sets forth certain protections for the privacy of
consumer financial information--affirming the Commission's jurisdiction
in this area. This proposal broadens the scope of Part 160 to cover two
new entities created by Title VII of the Dodd-Frank Act: Swap dealers
and major swap participants. In addition, the Commission proposes to
rename Part 160 as ``Privacy of Consumer Financial Information under
the Gramm-Leach-Bliley Act'' to harmonize the title of this part with
other parts of the Commission's Regulations.
DATES: Comments must be received on or before December 27, 2010.
ADDRESSES: You may submit comments, identified by RIN number 3038-AD13,
by any of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: infoprivacy@cftc.gov.
Mail: David A. Stawick, 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 will be posted as received to
https://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, 5 U.S.C. 552, a petition for confidential treatment of
the exempt information may be submitted according to the established
rules in section 145.9 of the Commission's Regulations.\1\
---------------------------------------------------------------------------
\1\ 17 CFR 145.9.
---------------------------------------------------------------------------
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 rulemaking will be retained in the public comment
file and will be considered as required under the Administrative
Procedure Act, 5 U.S.C. 551 et seq., and other applicable laws, and may
be accessible under the Freedom of Information Act.
FOR FURTHER INFORMATION CONTACT: Carl E. Kennedy, Counsel, Office of
General Counsel, (202) 418-6625, e-mail: c_kennedy@cftc.gov, Commodity
Futures Trading Commission, Three Lafayette Centre, 1155 21st Street,
NW., Washington, DC 20581.
SUPPLEMENTARY INFORMATION:
I. Background
On July 21, 2010, President Obama signed the ``Dodd-Frank Wall
Street Reform and Consumer Protection Act'' (``Dodd-Frank Act'').\2\
Title VII of the Dodd-Frank Act,\3\ which substantially amended the
Commodity Exchange Act (``CEA''),\4\ established a comprehensive new
regulatory framework for swaps and security-based swaps. It lowers risk
in the financial system, increases transparency, and promotes market
integrity by, among other things: (1) Providing for the comprehensive
regulation of swap dealers and major swap participants; (2) imposing
clearing and trade execution requirements on standardized products; (3)
creating a robust real-time reporting regime; and (4) enhancing the
Commission's enforcement authorities.
---------------------------------------------------------------------------
\2\ See Dodd-Frank Wall Street Reform and Consumer Protection
Act, Public Law 111-203, 124 Stat. 1376 (2010). The text of the
Dodd-Frank Act may be accessed at https://www.cftc.gov.
\3\ Under Section 701 of the Dodd-Frank Act, Title VII may be
cited as the ``Wall Street Transparency and Accountability Act of
2010.''
\4\ 7 U.S.C. 1 et seq.
---------------------------------------------------------------------------
Title X of the Dodd-Frank Act creates a new consumer financial
services regulator, the Bureau of Consumer Financial Protection (the
``Bureau''), that will assume most of the consumer financial services
regulatory responsibilities currently spread among numerous agencies.
More specifically, the Dodd-Frank Act removes from the jurisdiction of
the Federal Trade Commission (``FTC'') its rulemaking and other
authorities granted pursuant to Federal consumer law, and cedes that
authority to the Bureau. In addition, section 1093 of the Dodd-Frank
Act amends Title V of the GLB Act (15 U.S.C. 6801 et seq.), to, inter
alia, reaffirm the Commission's authority to promulgate regulations to
require entities that are subject to the Commission's jurisdiction to
provide certain privacy protections for consumer financial information.
Specifically, section 1093 of the Dodd-Frank Act amends section 504 of
the GLB Act by providing that ``the [CFTC] shall have the authority to
prescribe such regulations as may be necessary to carry out the
purposes of [Title V of the GLB
[[Page 66015]]
Act] with respect to any financial institutions and other persons
subject to the jurisdiction of the [CFTC] under section 5g of the
[CEA].'' (Emphasis added.)
As enacted, Title V of the GLB Act \5\ (``Title V''), inter alia,
limits the instances in which a financial institution may disclose
nonpublic personal information about a consumer to nonaffiliated third
parties, and requires a financial institution to disclose to all of its
customers the institution's privacy policies and practices with respect
to information sharing with both affiliates and nonaffiliated third
parties.\6\
---------------------------------------------------------------------------
\5\ Public Law 106-102, 113 Stat. 1338 (1999) (codified in
scattered sections of 12 U.S.C. and 15 U.S.C.).
\6\ GLB Act sections 501-510, 15 U.S.C. 6801-6809.
---------------------------------------------------------------------------
In 2000, the Commodity Futures Modernization Act of 2000 (``CFMA'')
created section 5g of the CEA, providing that the Commission be treated
as a Federal functional regulator within the meaning of Title V.\7\
Section 5g also granted the Commission the authority to adopt rules
that establish appropriate standards for financial institutions subject
to its jurisdiction to safeguard customer records and information.
Section 5g provides that the following entities are subject to the
Commission's jurisdiction for the purposes of Title V: Futures
commission merchants (``FCMs''), commodity trading advisors (``CTAs''),
commodity pool operators (``CPOs''), and introducing brokers (``IBs'')
(collectively, ``CFTC registrants'').
---------------------------------------------------------------------------
\7\ The other agencies subject to GLB Act jurisdiction include
the Office of the Comptroller of the Currency (``OCC''); Board of
Governors of the Federal Reserve System (``Board''); Federal Deposit
Insurance Corporation (``FDIC''); Office of Thrift Supervision
(``OTS''); National Credit Union Administration (``NCUA''); FTC; and
Securities and Exchange Commission (``SEC'').
---------------------------------------------------------------------------
The Commission's consumer information privacy rules are set out in
Part 160 of the Commission's regulations, which require CFTC
registrants to adopt appropriate policies and procedures that address
safeguards to customer records and information, including initial and
annual privacy notice requirements, opt-out provisions to the extent
that these registrants wish to share such records and information with
non-affiliates and other measures to protect nonpublic consumer
information. The protections provided in Part 160 inure to the benefit
of individual consumers.\8\ The Commission recently amended the scope
of Part 160 and the definition of ``financial institution'' to include
retail foreign exchange dealers (``RFEDs'').\9\
---------------------------------------------------------------------------
\8\ Section 160.3(h)(1) of the Commission's Regulations defines
the term consumer to mean ``an individual who obtains or has
obtained a financial product or service from [a financial
institution] that is to be used primarily for personal, family or
household purposes, or that individual's legal representative.''
\9\ See 75 FR 55410, 55450 (Sept. 10, 2010).
---------------------------------------------------------------------------
Title VII of the Dodd-Frank Act creates two new entities over which
the Commission has jurisdiction: Swap dealers (``SDs'') and major swap
participants (``MSPs'').\10\ The Commission proposes in this rulemaking
to: (1) Expand the scope of Part 160 of its Regulations to apply to SDs
and MSPs; (2) in accordance with the transfer of authority in Title X,
changing all references in Part 160 from the FTC to the Bureau; and (3)
rename Part 160 to ``Privacy of Consumer Financial Information under
the Gramm-Leach-Bliley Act'' to harmonize the title of part 160 with
the new part of the Commission's Regulations, which provide protections
to certain customer information under the FCRA.
---------------------------------------------------------------------------
\10\ The terms ``SD'' and ``MSP'' as used in this proposed
regulation refer to the statutory definitions of such terms as
defined in Title VII of the Dodd-Frank Act, and as may be further
defined by the Commission in a future rulemaking. See section 721(b)
of the Dodd-Frank Act, which provides that the Commission has the
authority to adopt rules further defining any term in an amendment
to the CEA in the Dodd-Frank Act. See also section 721(c) which
provides that the Commission is required to adopt a rule to further
define, inter alia, the terms ``swap dealer'' and ``major swap
participant'' to include transactions and entities that have been
structured to evade provisions in the Dodd-Frank Act.
---------------------------------------------------------------------------
The Commission requests comment on all aspects of these conforming
amendments, as well as comment on specific provisions and issues
highlighted in the section-by-section analysis below.
II. Section-by-Section Analysis
A. Specific Section Amendments
Renaming Part 160
Another provision in Title X of the Dodd-Frank Act, section 1088,
provides that the Commission promulgate regulations under various
sections of the Fair Credit Reporting Act, 15 U.S.C. 1608 et seq.
Similar to Title V of the GLB Act, the FCRA sets forth safeguards for
the protection of a broader range of consumer information. Under a
separate rulemaking, the Commission proposes to create a new part in
its Regulations to provide protections under the FCRA. To harmonize the
title of Part 160 with the new part being adopted by the Commission
promulgated under Title X of the Dodd-Frank Act, the Commission
proposes to rename Part 160 as ``Privacy of Consumer Financial
Information under the Gramm-Leach-Bliley Act.'' \11\
---------------------------------------------------------------------------
\11\ Section 1088 of the Dodd-Frank Act provides the CFTC with
authority to implement regulations under sections 624 and 628 of the
FCRA.
---------------------------------------------------------------------------
Regulation 160.1(b) Scope
Regulation 160.1(b) sets out the scope of the Commission's rules
and identifies the financial institutions covered by the rules that
include CFTC registrants regardless whether they are required to
register with the Commission. The Commission proposes to add SDs and
MSPs to the scope of Part 160 (and to the definition of ``financial
institution'' therein) because, for example, these new entities may
enter into swap transactions with individuals who qualify as ``eligible
contract participants''.\12\ Section 1a(18)(A)(xi) defines ``eligible
contact participant'' to include any individual who has amounts
invested on a discretionary basis, the aggregate of which is in excess
of either $10,000,000 or, if certain other qualifications are met,
$5,000,000. As a result of this addition, SDs and MSPs that transact
swaps with individuals would have to comply with the various provisions
under Part 160, including requirements to protect the nonpublic
personal information of these individuals. Of course, if any SD or MSP
has no business interactions with natural persons, no obligations would
arise under this proposal. This proposal would ensure that all CFTC
registrants that enter into swap transactions with natural persons
would provide privacy protections to any nonpublic, consumer
information.
---------------------------------------------------------------------------
\12\ New section 2(e) of the CEA--as enacted under 723(a)(2) of
the Dodd-Frank Act--provides that it is ``unlawful for any person,
other than an eligible contract participant, to enter into a swap
unless the swap is entered into on, or subject to the rules of, a
board of trade designated as a contract market under section 5 [of
the CEA].''
---------------------------------------------------------------------------
Section 160.3--Definitions
Since the scope of the proposed regulations would extend to SDs and
MSPs, the Commission proposes to amend section 160.3 to add the
definitions of SDs and MSPs to the list of defined terms under section
160.3. Specifically, the Commission proposes to define ``major swap
participant'' to have the same meaning as in section 1a(33) of the CEA,
as further defined by the Commission's Regulations, and includes any
person registered as such thereunder. The Commission proposes to define
``swap dealer'' to have the same meaning as in section 1a(49) of the
CEA, as further defined by the Commission's Regulations, and includes
any person registered as such thereunder. There are existing
definitions and related
[[Page 66016]]
provisions under Part 160 that must be amended to include these new
registrants. Specifically, the definitions of ``financial
institution'', ``affiliate'', and ``you'' must be amended to include
swap dealers and major swap participants.
Section 160.15--Other Exceptions to Notice and Opt Out Requirements
As noted above, Title X of the Dodd-Frank Act transferred certain
authority from the FTC to the Bureau. Accordingly, we changed the
reference from the FTC to the Bureau in section 160.15 to reflect that
the Bureau is now a Federal functional regulator.
Section 160.17(b)--Relation to State Laws
As a result of the creation of the Bureau and the transfer of
certain authority from the FTC to the Bureau, the Commission proposes
to amend paragraph (b) by replacing it with the language similar to
section 1041(a)(2) of the Dodd-Frank Act. This section clarifies the
relationship of Title V to state consumer protection laws.
Specifically, section 1041(a)(2) provides, ``For the purposes of this
section, a [State] statute, regulation, order, or interpretation * * *
is not inconsistent with the provisions of [Title V] if the protection
that such statute, regulation, order, or interpretation affords to
consumers is greater than the protection provided under [Title V]. A
determination regarding whether a [State] statute, regulation, order,
or interpretation * * * is inconsistent with the provisions of [Title
V] may be made by the Bureau on its own motion or in response to a
nonfrivolous petition initiated by any interested person.''
Section 160.30--Procedures To Safeguard Customer Records and
Information
Section 160.30 requires CFTC registrants to adopt policies and
procedures that, among other things, address administrative, technical
and physical safeguards for the protection of customer records and
information. The Commission proposes to amend the introductory sentence
of section 160.30 to add SDs and MSPs to the list of CFTC registrants
that must comply with this requirement.
B. Effective Date
Pursuant to section 1100H of the Dodd-Frank Act, the Commission
proposes to make the proposed regulations--the affiliate marketing
rules and the disposal rules--become effective on the ``designated
transfer date'' of authority from various Federal agencies to the
Bureau. Section 1062 of the Dodd-Frank Act provides that the
``designated transfer date'' is a date designated in the Federal
Register no later than 60 days after the enactment of the Dodd-Frank
Act by the Secretary of the Treasury, the Chairman of the Board of
Governors, the Chairman of the Federal Trade Commission, and several
other Federal agencies.\13\ On September 20, 2010, these Federal
agencies issued a notice designating July 21, 2011 as the designated
transfer date.\14\ As a result, the Commission proposes to adopt the
affiliate marketing rules and the disposal rules on that date.
---------------------------------------------------------------------------
\13\ The heads of the other Federal agencies are: The
Comptroller of the Currency; the Director of the Office of Thrift
Supervision; the Secretary of the Department of Housing and Urban
Development; the Director of the Office of Management and Budget;
the Chairman of the National Credit Union Administration Board; and
the Chairperson of the Corporation.
\14\ See 75 FR 57252-02 (Sept. 20, 2010).
---------------------------------------------------------------------------
III. Related Matters
A. Cost-Benefit Analysis
Section 15(a) of the CEA \15\ requires the Commission to consider
the costs and benefits of its actions before issuing an order under the
CEA. By its terms, section 15(a) does not require the Commission to
quantify the costs and benefits of amendments to regulations to
determine whether the benefits of the amendments outweigh its costs;
rather, it requires that the Commission ``consider'' the costs and
benefits of its actions. Section 15(a) further specifies that the costs
and benefits shall be evaluated in light of 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
may in its discretion give greater weight to any one of the five
enumerated areas and could in its discretion determine that,
notwithstanding its costs, a particular amendment is necessary or
appropriate to protect the public interest or to effectuate any of the
provisions or accomplish any of the purposes of the Act. The proposed
conforming rule amendments would broaden the scope of Part 160 to cover
SDs and MSPs.
---------------------------------------------------------------------------
\15\ 7 U.S.C. 19(a).
---------------------------------------------------------------------------
With respect to costs, the Commission has determined that the
proposed conforming amendments are necessary to implement various
consumer financial information privacy provisions as they relate to SDs
and MSPs, by adding these new registrants to the list of financial
institutions responsible for complying with its provisions under part
160 of its Regulations.
The Commission has determined that market participants and the
public may be harmed if these new registrants are not added to part
160. The notice requirements under part 160 were established to protect
individual customers who do business with CFTC registrants. There is no
reason why SDs and MSPs should be excluded from these requirements to
the extent that they conduct business with a natural person. With
respect to benefits, the Commission has determined that requiring
financial institutions to protect the privacy of nonpublic personal
information about consumers is a benefit that must be maintained given
the risks to the public if it is not, given the minor costs to the
financial institutions affected by the conforming amendments.
The Commission invites public comment on its cost-benefit
considerations. Commenters are also invited to submit any data or other
information that they may have quantifying or qualifying the costs and
benefits of the proposal.
B. Paperwork Reduction Act
Under the Paperwork Reduction Act (``PRA'') 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 control
number.\16\ The proposed amendments to Part 160 of the Commission's
Regulations include a collection of information within the meaning of
the PRA. The Commission therefore is submitting this proposal to the
Office of Management and Budget (``OMB'') for review in accordance with
44 U.S.C. 3507(d) and 5 CFR 1320.11, together with a request for
approval of a revision to the Commission's currently approved
collection associated with part 160. The title of the collection of
information to be revised is ``Privacy of Consumer Financial
Information,'' OMB Control Number 3038-0055. If approved, the provision
of notice to this revised collection of information would be mandatory
for SDs and MSPs.
---------------------------------------------------------------------------
\16\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------
1. Information Provided by Reporting Entities
The proposed rule would require SDs and MSPs to provide initial and
annual privacy and opt-out notices to all customers that are natural
persons. It is not currently known how many SDs and MSPs will be
required to register as such with the Commission, and this will
[[Page 66017]]
not be known to the Commission until registration requirements for
these entities become effective after July 15, 2011, the date on which
the Dodd-Frank Act becomes effective.
Nonetheless, for purposes of calculating PRA burden, the Commission
estimates that there will be approximately 300 SDs and MSPs who would
be required to provide notices under part 160 on an initial and then on
an annual basis.\17\ It is anticipated that most SDs and MSPs will not
transact business with a significant number of natural persons, causing
the Commission to estimate that each SD and MSP will issue an average
of 20 notices per year. As previously estimated, the average time per
notice will be .24 hours. This will result in an annual aggregate of
1,440 burden hours.
---------------------------------------------------------------------------
\17\ While staff believes that there may likely be approximately
200 swap dealers, we have taken a conservative approach in
estimating that there will be 250 swap dealers for PRA purposes.
---------------------------------------------------------------------------
2. Information Collection Comments
The Commission invites the public and other Federal agencies to
comment on any aspect of the reporting and recordkeeping burdens
discussed above. Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission
solicits comments in order to: (i) Evaluate whether the proposed
collection of information is necessary for the proper performance of
the functions of the Commission, including whether the information will
have practical utility; (ii) evaluate the accuracy of the Commission's
estimate of the burden of the proposed collection of information; (iii)
determine whether there are ways to enhance the quality, utility, and
clarity of the information to be collected; and (iv) minimize the
burden of the collection of information on those who are to respond,
including through the use of automated collection techniques or other
forms of information technology. Comments may be submitted directly to
the Office of Information and Regulatory Affairs, by fax at (202) 395-
6566 or by e-mail at OIRAsubmissions@omb.eop.gov. Please provide the
Commission with a copy of submitted comments so that they can be
summarized and addressed in the final rule. Refer to the ADDRESSES
section of this notice of proposed rulemaking for comment submission
instructions to the Commission. A copy of the supporting statements for
the collections of information discussed above may be obtained by
visiting RegInfo.gov. OMB is required to make a decision concerning the
collection of information between 30 and 60 days after publication of
this release. Consequently, a comment to OMB is most assured of being
fully effective if received by OMB (and the Commission) within 30 days
after publication of this notice of proposed rulemaking.
C. Regulatory Flexibility Act
The Regulatory Flexibility Act (``RFA'') requires that agencies
consider whether their proposed regulations will have a significant
economic impact on a substantial number of small entities and, if so,
provide a regulatory flexibility analysis respecting the impact.\18\
The Commission's proposed regulations now will affect SDs and MSPs, in
addition to the CFTC registrants that are currently subject to
Commission's Regulations under Part 160. These regulations require
periodic notice to be provided to individuals who obtain financial
products or services primarily for personal, family, or household
purposes from the institutions, and may be satisfied by the use of a
model notice developed by the Commission and other regulatory agencies
to minimize the burden of compliance. Accordingly, the Commission has
determined that the obligations created by these rule amendments will
not create a significant economic impact on a substantial number of
small entities. Accordingly, the Chairman, on behalf of the Commission,
hereby certifies pursuant to 5 U.S.C. 605(b) that the proposed rules
will not have a significant impact on a substantial number of small
entities.
---------------------------------------------------------------------------
\18\ 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------
List of Subjects in 17 CFR Part 160
Brokers, Dealers, Consumer protection, Privacy, Reporting and
recordkeeping requirements.
For the reasons articulated in the preamble, the Commission
proposes to amend Part 160 of Title 17 of the Code of Federal
Regulations as follows:
1. The heading of part 160 is revised to read as follows:
PART 160--PRIVACY OF CONSUMER FINANCIAL INFORMATION UNDER TITLE V
OF THE GRAMM-LEACH-BLILEY ACT
2. The authority citation for part 160 is revised to read as
follows:
Authority: 7 U.S.C. 7b-2 and 12a(5); 15 U.S.C 6801, et seq.,
and title X, sec. 1093, Pub. L. 111-203, 124 Stat. 1376.
3. Amend Sec. 160.1 by revising paragraph (b) to read as follows:
Sec. 160.1 Purpose and scope.
* * * * *
(b) Scope. This part applies only to nonpublic personal information
about individuals who obtain financial products or services primarily
for personal, family, or household purposes from the institutions
listed below. This part does not apply to information about companies
or about individuals who obtain financial products or services
primarily for business, commercial, or agricultural purposes. This part
applies to all futures commission merchants, retail foreign exchange
dealers, commodity trading advisors, commodity pool operators,
introducing brokers, major swap participants and swap dealers that are
subject to the jurisdiction of the Commission, regardless whether they
are required to register with the Commission. These entities are
hereinafter referred to in this part as ``you.'' This part does not
apply to foreign (non-resident) futures commission merchants, retail
foreign exchange dealers, commodity trading advisors, commodity pool
operators, introducing brokers, major swap participants and swap
dealers that are not registered with the Commission.
* * * * *
4. Amend Sec. 160.3 as follows:
a. Revise paragraphs (a), (n)(1)(i), (n)(2)(i), and (o)(1)(i);
b. Redesignating paragraphs (w) and (x) as paragraphs (y) and (z);
c. Redesignating paragraphs (s) through (v) as paragraphs (t)
through (w);
d. Adding new paragraphs (s) and (x); and
e. Revising newly designated paragraphs (y)(4) and (5) and adding
new paragraphs (y)(6) and (7) to read as follows:
Sec. 160.3 Definitions.
* * * * *
(a) Affiliate of a futures commission merchant, retail foreign
exchange dealer, commodity trading advisor, commodity pool operator,
introducing broker, major swap participant, or swap dealer means any
company that controls, is controlled by, or is under common control
with a futures commission merchant, retail foreign exchange dealer,
commodity trading advisor, commodity pool operator, introducing broker,
major swap participant, or swap dealer that is subject to the
jurisdiction of the Commission. In addition, a futures commission
merchant, retail foreign exchange dealer, commodity trading advisor,
commodity pool operator, introducing broker, major swap participant, or
swap dealer subject to the jurisdiction of the Commission will
[[Page 66018]]
be deemed an affiliate of a company for purposes of this part if:
(1) That company is regulated under Title V of the GLB Act by the
Bureau of Consumer Financial Protection or by a Federal functional
regulator other than the Commission; and
(2) Rules adopted by the Bureau of Consumer Financial Protection or
another Federal functional regulator under Title V of the GLB Act treat
the futures commission merchant, retail foreign exchange dealer,
commodity trading advisor, commodity pool operator, introducing broker,
major swap participant, or swap dealer as an affiliate of that company.
* * * * *
(n)(1) * * *
(i) Any futures commission merchant, retail foreign exchange
dealer, commodity trading advisor, commodity pool operator, introducing
broker, major swap participant, or swap dealer that is registered with
the Commission as such or is otherwise subject to the Commission's
jurisdiction; and
(ii) * * *
(2) * * *:
(i) Any person or entity, other than a futures commission merchant,
retail foreign exchange dealer, commodity trading advisor, commodity
pool operator, introducing broker, major swap participant, or swap
dealer that, with respect to any financial activity, is subject to the
jurisdiction of the Commission under the Act.
* * * * *
(o)(1) * * *:
(i) Any product or service that a futures commission merchant,
retail foreign exchange dealer, commodity trading advisor, commodity
pool operator, introducing broker, major swap participant, or swap
dealer could offer that is subject to the Commission's jurisdiction;
and
* * * * *
(s) Major swap participant. The term ``major swap participant'' has
the same meaning as in section 1a(33) of the Commodity Exchange Act, 7
U.S.C. 1 et seq., as may be further defined by this title, and includes
any person registered as such thereunder.
* * * * *
(x) Swap dealer. The term ``swap dealer'' has the same meaning as
in section 1a(49) of the Commodity Exchange Act, 7 U.S.C. 1 et seq., as
may be further defined by this title, and includes any person
registered as such thereunder.
(y) * * *
(4) Any commodity pool operator;
(5) Any introducing broker;
(6) Any major swap participant; and
(7) Any swap dealer subject to the jurisdiction of the Commission.
* * * * *
5. Amend Sec. 160.15 by revising paragraph (a)(4) to read as
follows:
Sec. 160.15 Other exceptions to notice and opt out requirements.
(a) * * *
(4) To the extent specifically permitted or required under other
provisions of law and in accordance with the Right to Financial Privacy
Act of 1978, 12 U.S.C. 3401 et seq., to law enforcement agencies
(including a Federal functional regulator, the Secretary of the
Treasury, with respect to 31 U.S.C. Chapter 53, Subchapter II (Records
and Reports on Monetary Instruments and Transactions) and 12 U.S.C.
Chapter 21 (Financial Recordkeeping), a State insurance authority, with
respect to any person domiciled in that insurance authority's state
that is engaged in providing insurance, and the Bureau of Consumer
Financial Protection), self-regulatory organizations, or for an
investigation on a matter related to public safety;
* * * * *
6. Amend Sec. 160.17 by revising paragraph (b) to read as follows:
Sec. 160.17 Relation to state laws.
* * * * *
(b) Greater protection under state law. For purposes of this
section, a state statute, regulation, order or interpretation is not
inconsistent with the provisions of this part if the protection such
statute, regulation, order or interpretation affords to any consumer is
greater than the protection provided under this part. A determination
regarding whether a state statute, regulation, order, or interpretation
is inconsistent with the provisions of this part may be made by the
Bureau of Consumer Financial Protection, after consultation with the
Commission, on its own motion or in response to a nonfrivolous petition
initiated by any interested person.
7. 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.
By the Commission.
Dated: October 19, 2010.
David A. Stawick,
Secretary.
Statement of Chairman Gary Gensler
Privacy of Consumer Financial Information; Conforming Amendments Under
Dodd-Frank Act
October 19, 2010
I support today's Commission vote on the notice of public
rulemaking, which expands the scope of the Commission's existing
protections afforded to consumers' information to two new entities
created by the Dodd-Frank Act. The proposed rulemaking expands the
Commission's Part 160 rules to customers of swap dealers and major swap
participants. Part 160 includes the Commission's existing privacy rules
for consumers.
[FR Doc. 2010-26912 Filed 10-26-10; 8:45 am]
BILLING CODE 6351-01-P
