Large Trader Reporting for Physical Commodity Swaps, 43851-43874 [2011-18054]

Agencies

• Commodity Futures Trading Commission

[Federal Register Volume 76, Number 141 (Friday, July 22, 2011)]
[Rules and Regulations]
[Pages 43851-43874]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-18054]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Parts 15 and 20

RIN 3038-AD17


Large Trader Reporting for Physical Commodity Swaps

AGENCY: Commodity Futures Trading Commission.

ACTION: Final rules.

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SUMMARY: The Commission is adopting reporting regulations (``Reporting 
Rules'') that require physical commodity swap and swaption (for ease of 
reference, collectively ``swaps'') reports. The new regulations require 
routine position reports from clearing organizations, clearing members 
and swap dealers and also apply to reportable swap trader positions.

DATES: Effective Dates: This rulemaking shall become effective 
September 20, 2011.

FOR FURTHER INFORMATION CONTACT: Bruce Fekrat, Senior Special Counsel, 
Office of the Director, (202) 418-5578, bfekrat@cftc.gov, or Ali 
Hosseini, Attorney-Advisor, Office of the Director, (202) 418-6144, 
ahosseini@cftc.gov, Division of Market Oversight, Commodity Futures 
Trading Commission, Three Lafayette Centre, 1155 21st Street, NW., 
Washington, DC 20581.

SUPPLEMENTARY INFORMATION: 

I. Background and Summary of Comments

A. Background

    On November 2, 2010, the Commission proposed Reporting Rules that, 
in addition to establishing recordkeeping requirements, require routine 
swaps position reports from clearing organizations, clearing members 
and swap dealers and apply non-routine reporting requirements to large 
swaps traders.\1\ The Reporting Rules, as finalized and adopted herein, 
will allow the Commission to administer its regulatory responsibilities 
under the Commodity Exchange Act (``CEA or Act'') by implementing and 
conducting effective surveillance of economically equivalent physical 
commodity futures, options and swaps. The Reporting Rules will directly 
support the Commission's transparency initiatives such as its 
dissemination of Commitments of Traders and Index Investment Data 
Reports and will allow the Commission to monitor compliance with the 
trading requirements of the Act.\2\
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    \1\ 75 FR 67258, November 2, 2010. Comments and ex parte 
communications list available at https://comments.cftc.gov/PublicComments/CommentList.aspx?id=889.
    \2\ See 76 FR 4752, January 26, 2011.
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    The Commission currently receives and uses for market surveillance 
and enforcement purposes, data on large positions in all physical 
commodity futures and option contracts traded on designated contract 
markets (``DCMs''). Without the Reporting Rules, there would be no 
analogous reporting system in place for economically equivalent swaps, 
which until recently were largely unregulated financial contracts. The 
Reporting Rules, as discussed below, are reasonably necessary for the 
effective surveillance of economically equivalent futures and swaps.

B. Proposed Reporting Rules Summary of Comments

    The Commission received approximately 130 comment letters, and 
engaged in several ex parte communications, for the proposed Reporting 
Rules. The Commission has carefully reviewed and considered the 
submitted comments. Substantive comments pertinent to specific 
provisions in the rulemaking are summarized and discussed below and in 
other sections of this notice.
    The National Futures Association (``NFA'') submitted a comment \3\ 
suggesting that its issuance of trader identifications should be a part 
of the position reporting process. Although beyond the scope of this 
rulemaking as proposed, the Commission may review the feasibility of 
adopting such an approach as a part of its ongoing updating and 
revision of other transaction and position reporting requirements.
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    \3\ Letter from Thomas W. Sexton, Senior Vice President and 
General Counsel, NFA, to David A. Stawick, Secretary, CFTC (December 
2, 2010).
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    The Air Transport Association (``ATA''), Better Markets Inc. 
(``Better Markets''), the Petroleum Marketers Association of America 
(``PMAA'') and New England Fuel Institute (``NEFI''), and Robert Pollin 
and James Heintz of the Political Economy Research Institute

[[Page 43852]]

(``PERI'') indicated support for the proposed regulations.\4\ ATA 
supported the proposal as a practical solution to the Commission's 
current lack of swaps position data. Better Markets stated its support 
for the use of futures equivalence and the assembly of data based on 
price relationships. PMAA and NEFI argued the regulations will provide 
for a solid foundation for position limits.
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    \4\ Letter from David A. Berg, Vice President and General 
Counsel, ATA, to David A. Stawick, Secretary, CFTC (December 2, 
2010); letter from Dennis M. Kelleher, President & CEO, and Wallace 
C. Turbeville, Derivatives Specialist, Better Markets Inc., to David 
A. Stawick, Secretary, CFTC (December 2, 2010); letter from Dan 
Gilligan, President, PMAA, and Shane Sweet, President & CEO, NEFI, 
to David A. Stawick, Secretary, CFTC (December 2, 2010); and letter 
from Robert Pollin, Professor of Economics and Co-Director, and 
James Heintz, Associate Research Professor and Associate Director, 
PERI, to David A. Stawick, Secretary, CFTC (December 2, 2010).
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    Bindicap Comster, the Futures Industry Association (``FIA'') and a 
working group of commercial energy firms (``Working Group''), 
meanwhile, opposed the proposed regulations,\5\ arguing that an 
expanded special call reporting mechanism, similar to the special call 
that the Commission has issued to support its Index Investment Data and 
Commitments of Traders Reports, would be a better alternative to the 
proposed regulations while remaining consistent with the requirements 
of the Act.\6\ The Commission notes that its current special call for 
Index Investment Data Reports is a targeted collection of data. It 
gathers information related to specific products from a limited set of 
market participants. The special call was not intended to function as a 
tool for general market surveillance, including compliance with section 
4a of the Act. In order to be able to gather data of the quality needed 
to conduct market surveillance the special call would have to undergo 
substantial modifications, such as requiring much more granular data by 
counterparty in a data stream on or close to a next-day basis, which in 
effect would convert it into the Reporting Rules.
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    \5\ Letter from Bindicap Comster to David A. Stawick, Secretary, 
CFTC (December 2, 2010); letter from John M. Damgard, President, 
FIA, to David A. Stawick, Secretary, CFTC (December 2, 2010); and 
letter from R. Michael Sweeney Jr., David T. McIndoe, and Mark W. 
Menezes, Counsel for the Working Group, to David A. Stawick, 
Secretary, CFTC (December 2, 2010).
    \6\ The Commission conducts its current special call pursuant to 
Commission regulation 18.05. Swap dealers and index traders that 
receive a special call file monthly reports with the Commission 
within five business days after the end of the month.
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    FIA and the Working Group also questioned whether the Commission 
has sufficient authority to adopt such regulations. FIA argued that the 
Commission's authority is not clear because of the CEA section 2(h) 
reporting exemption for swaps on exempt commodities. The Working Group 
argued that the proposal is not required by the Dodd-Frank Act and that 
it is not necessary to comply with CEA section 4a(a)(1). The Commission 
has requisite statutory authority for the Reporting Rules based on CEA 
sections 4a, 4t and 8a(5). Specifically, section 4a of the CEA, as 
amended by the Dodd-Frank Act, directs the Commission to establish 
position limits, as appropriate, for physical commodity swaps.\7\ 
Section 737 of the Dodd-Frank Act, which amended section 4a to direct 
the Commission to impose these limits, became effective on the date of 
enactment of the Dodd-Frank Act--i.e., July 21, 2010. Section 8a(5) of 
the CEA authorizes the Commission to promulgate such regulations as, in 
the judgment of the Commission, are reasonably necessary to effectuate 
any of the provisions or to accomplish any of the purposes of the CEA. 
In the Commission's judgment, the Reporting Rules are reasonably 
necessary to implement the statutory mandate in section 4a for the 
Commission to establish position limits, as appropriate, on an 
expedited basis.
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    \7\ Section 754 of the Dodd-Frank Act provides that, unless 
otherwise provided, the provisions of subtitle A of Title VII 
``shall take effect on the later of 360 days after the date of the 
enactment of this subtitle or, to the extent a provision of this 
subtitle requires a rulemaking, not less than 60 days after 
publication of the final rule or regulation implementing such 
provisions of this subtitle.'' CEA section 4a, as amended by Dodd-
Frank section 737, requires the Commission to establish position 
limits for exempt commodities within 180 days after the date of 
enactment, and position limits for agricultural commodities within 
270 days after the date of enactment. The Commission is proceeding 
deliberatively to meet this Congressional mandate. As previously 
noted, on November 2, 2010, the Commission proposed these Reporting 
Rules, and on January 26, 2011, the Commission proposed position 
limits, including aggregate limits, for 28 major physical commodity 
DCM contracts and economically equivalent swaps.
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    In addition, section 4t of the Act authorizes the Commission to 
establish a large trader reporting system for significant price 
discovery function swaps, of which economically equivalent swaps are a 
subset. Swaps position reports are a necessary component of an 
effective surveillance program. Accordingly, the Commission is adopting 
the subject swap reporting requirements pursuant to its authority in 
sections 4a and 4t of the CEA, as described above.
    With regard to the future establishment of swap data repositories 
(``SDRs'') and whether the Commission should wait for SDRs to provide 
swaps position data instead of adopting the regulations, ATA argued 
that the Commission should proceed with the regulations and not wait 
for SDRs to become operational. FIA and the Working Group, on the other 
hand, argued that the future role of SDRs makes adoption of the 
regulations unnecessary. The Commission has determined that the 
Reporting Rules are reasonably necessary for several reasons. It is 
likely that physical commodity SDRs will require the most time to 
become operational since, unlike for swaps in the interest rate, equity 
and credit default asset categories, there currently is no functional 
and accepted data repository for swaps in the energy, metal or 
agricultural commodity asset categories. In addition, even after SDRs 
have been established, because they are fundamentally transaction 
repositories, it may be a considerable time before SDRs are able to 
reliably convert transaction data into positional data. Thus, in view 
of the considerable time before physical commodity swap SDRs are likely 
to be operational and have the ability to convert transactions to 
positions, the Commission has determined to adopt the Reporting Rules. 
In order to address concerns raised about the possibility of redundant 
regulatory obligations, however, the Reporting Rules do include, in 
final regulation 20.9, a sunset provision.
    Better Markets, FIA and the Working Group, as well as a not-for-
profit electric end-user coalition (``Electric End User 
Coalition''),\8\ argued that the proposed regulations should not be 
adopted by the Commission until regulations defining the terms ``swap 
dealer'' and ``swap'' are adopted first. As further explained below, 
the Commission has determined to tie the compliance date of the 
regulations for swap dealers that are not clearing members to the 
effective date of the ``swap dealer'' definition final rulemaking.\9\ 
With regard to the ``swap'' definition, the Commission has determined 
to utilize, on a transitional basis and until final definitional 
regulations become effective, a definition of ``swap'' that is based on 
the

[[Page 43853]]

reference to ``commodity swap'' within the definition of ``swap 
agreement'' in part 35 of the Commission's regulations. Swap market 
participants have relied on the definition of ``swap agreement'' for 
exempting transactions from the CEA since 1993. As a result, market 
participants have an understanding of the general nature of the 
definition of commodity swap. The swaps that would be subject to the 
Reporting Rules would be the same under both definitions.
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    \8\ Letter from Russell Wasson, Director, Tax, Finance and 
Accounting Policy, National Rural Electric Cooperative Association, 
Susan N. Kelly, Senior Vice President of Policy Analysis and General 
Counsel, American Public Power Association, and Noreen Roche-Carter, 
Chair, Tax & Finance Task Force, Large Public Power Council, to 
David A. Stawick, Secretary, CFTC (December 2, 2010).
    \9\ Further Definition of ``Swap Dealer,'' ``Security-Based Swap 
Dealer,'' ``Major Swap Participant,'' ``Major Security-Based Swap 
Participant'' and ``Eligible Contract Participant,'' 75 FR 80174, 
December 21, 2010.
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    With regard to the definition of ``reporting entity,'' FIA and the 
Working Group argued that it is overly broad. Bindicap Comster argued 
that the definition is appropriate. In the Commission's judgment, the 
Reporting Rules have been narrowly tailored to obtain the information 
reasonably necessary from clearing organizations, clearing members and 
swap dealers in order to implement and conduct an effective initial 
surveillance program for swaps.
    With regard to the proposed definition of ``paired swaps,'' the 
Working Group argued that it would not always appropriately capture the 
concept of economic equivalence because, for example, different 
delivery locations may have periods of high correlation followed by 
periods where such correlations break down. Better Markets argued that 
it was too narrow because it did not consider criteria such as market 
hedging practices, margin netting offered by clearing organizations or 
historical price correlation. The proposed regulations identified three 
categories of swaps that would be economically equivalent to DCM 
contracts and thereby subject to reporting under the proposed rules: 
(1) Swaps directly or indirectly linked to the price of a referenced 
DCM contract; (2) swaps directly or indirectly linked to the price of 
the same commodity for delivery at the same location as that of a 
referenced DCM contract; and (3) swaps based on the same commodity as 
that of a referenced DCM contract which are deliverable at different 
locations that nonetheless have the same supply and demand fundamentals 
as the referenced DCM contract's delivery point. The first two 
categories of the definition of economically equivalent swaps are 
appropriately tailored and objectively defined, do not require case by 
case Commission analysis, and would provide sufficient data for the 
Commission to meet its responsibility under sections 4a and 4t of the 
Act. To further the objectives of clear applicability of the 
regulations and the submission of accurate reports, as well as to lower 
the burden on reporting entities by limiting the set of reportable 
swaps, the Commission has amended the definition to remove the third 
category.
    With regard to the reporting mechanics and data fields of the 
proposed regulations, Better Markets suggested additional reporting 
fields, arguing that reporting entities should be required to specify 
their role with respect to the execution of reported trades and that 
clearing organizations should be required to report net position 
information as well as gross positions and delta values. The Commission 
has determined that the data fields specified in the regulations will 
provide the Commission with sufficient data to begin its initial 
surveillance of the swaps markets for physical commodities, while 
minimizing the burden on reporting entities. Such identification data, 
including trader categorization, will be collected in 102S and 40S 
filings which include other trader identifying information and are 
submitted to the Commission much less frequently than positional data. 
The Commission can later broaden the scope of the reporting 
requirements or frequency of reporting identifying data if necessary 
based on its administrative experience.
    The final Reporting Rules do, however, harmonize the data fields 
required to be reported by swap dealers for cleared and non-cleared 
swaptions. As proposed, certain fields were required for cleared 
swaptions that were not required for non-cleared swaptions and vice-
versa. Although certain data fields may be more relevant for cleared or 
non-cleared swaptions, the harmonization of required data fields will 
simplify the reporting of swaptions and thereby will likely decrease 
(and not increase) any burden associated with reporting swaptions under 
the Reporting Rules as finalized.
    FIA argued that reporting entities' trade capture systems are not 
readily adaptable to the data fields specified in the proposed 
regulations. It also argued that data for cleared swaps should only be 
submitted by clearing members in order to prevent double counting. The 
reporting of cleared positions by swap dealers and clearing members was 
intentionally incorporated into the regulations. As with the collection 
of any data, there is a need to verify submitted information.
    FIA also argued that reporting entities, because certain 
counterparty data may not be available to them or organized as 
described by the Reporting Rules, should only be required to report 
their positions and the names of counterparties, not all the specified 
data related to consolidated accounts in the proposed regulations.
    The Commission has amended the proposed regulations, which 
initially required a reporting entity to identify information about the 
controller of a reportable account, to partially address this concern 
by requiring that data be provided by a clearing member's or swap 
dealer's direct legal counterparty. Data is no longer required to be 
provided by account controller. In addition, the final Reporting Rules 
do not require reporting by actual swap and swaption accounts. All of 
these amendments will serve to streamline the reporting process while 
preserving the Commission's regulatory interests.
    With regard to the reporting threshold of futures equivalent 
contracts for economically equivalent swaps, Better Markets suggested 
that the threshold reporting level should be 25 contracts instead of 
the 50-contract threshold specified in the proposed regulations. 
Bindicap Comster stated that the threshold reporting level of 50 
contracts is generally suitable while the FIA stated that the threshold 
reporting level for a particular swap should depend upon its liquidity.
    The Commission determined the 50-contract threshold for reporting 
based on industry inquiries regarding a reporting level that would make 
95% of the economically equivalent swaps markets visible to the 
Commission. In order to streamline reporting and give reporting 
entities the option of avoiding a complex reporting level calculation, 
however, the final Reporting Rules allow reporting entities to deem a 
reporting level of one or more swaps to be a reportable position. Thus 
the final Reporting Rules allow reporting entities the option of not 
conducting any potentially complex or costly reporting threshold 
analysis prior to transmitting reports to the Commission.
    The Commission is aware that a reporting level of one contract 
could potentially expand the Reporting Rules' books and records 
obligations to additional swap market participants. Therefore, final 
regulation 20.6 applies a books and records requirement to swap 
counterparties only if such persons' swaps positions meet or exceed a 
simplified 50 futures contract equivalent reporting level. Also, final 
regulation 20.6 provides that persons with swaps positions meeting or 
exceeding the aforementioned threshold may keep and reproduce books and 
records for transactions resulting in such swaps positions in the 
record retention format that such person has developed in the normal 
course of business. Regulation 20.6 also provides

[[Page 43854]]

that such persons may keep and reproduce books and records for, among 
other things, the cash commodity underlying such swaps positions in 
accordance with the record retention format developed in the normal 
course of business.
    In connection with the submission of swaps position data, FIA 
expressed concern about the confidential treatment of data submitted 
should the Commission determine to require the submission of data to 
third parties. This concern is not relevant as the regulations only 
involve the submission of position and identifying data to the 
Commission. The Commission will protect proprietary information 
according to the Freedom of Information Act and 17 CFR part 145, 
``Commission Records and Information.'' In addition, section 8(a)(1) of 
the Act strictly prohibits the Commission, unless specifically 
authorized by the Act, from making public ``data and information that 
would separately disclose the business transactions or market positions 
of any person and trade secrets or names of customers.'' The Commission 
also is required to protect certain information contained in a 
government system of records according to the Privacy Act of 1974, 5 
U.S.C. 552a.
    FIA and the Working Group argued that the costs placed by the 
proposed regulations would be significant and that the Commission 
significantly underestimated the costs to clearing members and swap 
dealers. FIA stated that some of its members believe the costs to be 
very substantial and in some cases exceeding millions of dollars, while 
acknowledging that it is difficult to estimate costs with any 
precision. The Working Group stated that some of its members estimate 
the total compliance costs to range up to $80,000 to $750,000 per year, 
inclusive of capital costs, and that the upfront costs could be as high 
as $1.5 million. The Commission has carefully considered the costs on 
market participants. In response, the Commission notes that the 
Reporting Rules are tailored to collect routine reports only from 
clearing organizations, clearing members, and swap dealers. Based on 
discussions with potential reporting entities, the Commission has 
determined that the costs that would be imposed by the regulations on 
reporting entities is reasonable given the trade capture and 
information technology resources of such entities and their familiarity 
with limiting and managing complex price risks. Clearing organizations 
and clearing members should have appropriate systems in place and 
currently likely provide or collect market and large trader reports.
    The compliance date for swap dealers that are not clearing members 
will be delayed until the Commission further defines the term swap 
dealer. In order to address concerns relating to the ability of 
reporting entities to comply with the requirements of part 20 by the 
compliance date set forth in final regulation 20.10(a), final 
regulation 20.10(c) authorizes the Commission (or staff members 
delegated with such authority) to permit, for a period not to exceed 
six calendar months following the effective date of the Reporting 
Rules, the submission of reports that differ in content, form, or 
manner from that mandated in part 20, provided that there is a good 
faith attempt at compliance with part 20.
    In addition, in order to address the possibility of certain firms 
that may not be able to comply expediently with the requirements of 
part 20 should they fall within the definition of swap dealer, 
regulation 20.10(e) allows the Commission to defer compliance for such 
firms for a period not to exceed six calendar months following the 
effective date of final regulations further defining the term swap 
dealer. The Commission's consideration of costs and burdens is 
discussed in more detail below.
    The Electric End User Coalition also argued that the recordkeeping 
burden imposed by the proposed regulations on commercial entities would 
be significant. In particular it argued that the recordkeeping 
requirements should not apply to end-users and that the Commission 
should defer to other regulators, specifically the Federal Energy 
Regulatory Commission (``FERC''), with regard to recordkeeping 
obligations. In the Commission's judgment, the recordkeeping 
requirements for end-users with swaps positions that meet or exceed the 
relevant thresholds are consistent with requirements under current 
Commission regulation 18.05. As described above, final regulation 20.6 
generally permits such end-users to keep and reproduce records of swaps 
positions, as well as the underlying cash commodities, in the record 
retention format that such entities have developed in the normal course 
of business.

II. The Final Reporting Rules

A. Covered Contracts

    With regard to the ``swap'' definition, the final part 20 
regulations utilize a definition of ``swap '' that is based on the 
reference to ``commodity swaps'' within the definition of ``swap 
agreement'' in part 35 of the Commission's regulations.\10\ Swap market 
participants have relied on the definition of ``swap agreement'' for 
exempting transactions from the CEA since 1993. As a result, market 
participants have an understanding of the general nature of the 
definition of commodity swaps. The part 35 definition will become 
effective on the effective date of this final rulemaking and will 
operate until the effective date of any swap definitional rulemaking by 
the Commission under section 1a of the CEA. Under both definitions, the 
category of the swaps that would be subject to the Reporting Rules 
remains the same.\11\ For further clarity, forwards as currently 
excluded from the CEA (i.e., prior to the effective date of the Dodd-
Frank Act) are also outside the scope of the definition of ``swap'' as 
used in this reporting scheme.
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    \10\ 17 CFR 35.1(b)(1).
    \11\ This definition of ``swap'' is also intended to be 
generally consistent with how swaps are defined in the Commission's 
Policy Statement Concerning Swap Transactions, 54 FR 30694, July 21, 
1989. That is, a ``swap'' as used in this rulemaking refers to an 
agreement between two parties to exchange one or more cash flows 
measured by different rates or prices with payments calculated by 
reference to a principle base (notional amount).
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    Regulation 20.2 lists the 46 DCM-listed futures contracts covered 
by the Reporting Rules (``Covered Futures Contracts''), as well as an 
additional line item for diversified commodity indices.\12\ The 
Commission, through the definition of paired swap or paired swaption 
(for ease of reference, collectively ``paired swaps'') in regulation 
20.1, defines a subset of swaps as economically equivalent to the 
Covered Futures Contracts. The definition of paired swaps (i.e., 
economically equivalent swaps) identifies two distinct categories of 
instruments.
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    \12\ For the purpose of reporting in futures equivalents, paired 
swaps and swaptions using commodity reference prices that are 
commonly known diversified indices with publicly available 
weightings may be reported as if such indices underlie a single 
futures contract with monthly expirations for each calendar month 
and year.
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    First, the definition includes those paired swaps that are directly 
or indirectly linked to the price of a Covered Futures Contract. This 
category includes swaps that are partially or fully settled or priced 
at a differential to a Covered Futures Contract. The following are 
examples of these types of paired swaps:

    1. Directly linked to a listed contract--A swap settled to the 
price of the New York Mercantile Exchange (``NYMEX'') Heating Oil 
Calendar Swap Futures Contract is directly linked to a Covered 
Futures Contract because the floating price of the futures contract 
is equal to the monthly average settlement price

[[Page 43855]]

of the first nearby contract month for the NYMEX New York Harbor No. 
2 Heating Oil Futures Contract.
    2. Indirectly linked to a listed contract--The ICE WTI Average 
Price Option is indirectly linked to a Covered Futures Contract 
because the floating price of the swap references the ICE WTI 1st 
Line Swap Contract which in turn is equal to the monthly average 
settlement price of the NYMEX Front Month WTI Crude Futures 
Contract.
    3. Partially settled to a listed contract--A swap settled to the 
Argus Sour Crude Index (``ASCI'') (which also underlies the Chicago 
Mercantile Exchange (``CME'') Argus WTI Formula Basis Calendar Month 
Swap Futures Contract) is partially settled to a Covered Futures 
Contract.\13\ Because the ASCI index uses both a physical cash 
market component and the NYMEX WTI Futures Contract to establish the 
level of the index, it would partially settle to a Covered Futures 
Contract and would be a paired swap under the first paragraph of the 
definition.\14\
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    \13\ The floating price of the CME futures contract is equal to 
the arithmetic average of the ASCI (1st month) outright price from 
Argus Media for each business day that the ASCI is determined during 
the contract month.
    \14\ For a description of the ASCI methodology, see, e.g., 
https://web04.us.argusmedia.com/ArgusStaticContent//Meth/ASCI.pdf.
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    4. Priced at a differential to a listed contract--The ICE Henry 
Physical Basis LD1 Contract is priced at a differential to a Covered 
Futures Contract because the settlement price is the final 
settlement price for natural gas futures (a Covered Futures 
Contract) as reported by NYMEX for the specified month plus the 
contract price.

    The second category of swaps captured by the paired swap definition 
includes swaps that directly or indirectly link to, including being 
partially or fully settled or priced at a differential to, the price of 
the same commodity for delivery at the same location or locations as 
that of a Covered Futures Contract. As opposed to the first category of 
paired swaps, the second category looks to a swap's connection to the 
commodity underlying a Covered Futures Contract, and to the delivery 
locations specified in a Covered Futures Contract, as opposed to the 
price of the contract itself. Therefore, the linkage for contracts in 
this second category is to the price of the underlying commodity and 
its physical marketing channels.
    As proposed, a paired swap would have also included swaps that are 
based on the same commodity \15\ as that of a Covered Futures Contract 
but deliverable at locations that are different than a Covered Futures 
Contract's delivery locations, so long as such locations have 
substantially the same supply and demand fundamentals as that of a 
Covered Futures Contract reference delivery location. In response to 
comments, the Commission has determined not to include this proposed 
category in the final definition of paired swaps. The final definition 
thereby narrows the scope of the swaps that are subject to position 
reporting.
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    \15\ A commodity is considered to be the same (for the purposes 
of reporting under these regulations) if such commodity has the same 
economic characteristics with respect to grade and quality 
specifications as those referenced by a Covered Futures Contract.
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B. Reporting Under the Final Regulations

1. Clearing Organizations
    Regulation 20.3 requires paired swap reports from clearing 
organizations. Clearing organizations are defined in regulation 20.1 as 
persons or organizations that act as a medium between clearing members 
for the purpose of clearing swaps or effecting settlements of swaps or 
swaptions. The definition is adopted as proposed and is modeled after 
the definition used in current Commission regulation 15.00 (the 
definitional section for the Commission's large trader reporting rules) 
solely for the purposes of reporting under part 20. The definition is 
intended to cover entities that qualify as clearing organizations, 
regardless of their registration status with the Commission, should for 
example there exist a mutual recognition regime. It is not meant to 
apply to financial institutions or parties to swaps that provide 
counterparties with financing, credit support, or hold collateral to 
facilitate or to ensure that payments are made under the terms of a 
paired swap.
    Pursuant to regulation 20.3, clearing organizations, for paired 
swap positions, are required to report the aggregate proprietary and 
aggregate customer accounts of each clearing member of that clearing 
organization. Regulation 20.1 defines clearing member as any person who 
is a member of, or enjoys the privilege of clearing trades in its own 
name through, a clearing organization. The paired swap positions must 
be reported to the Commission as futures equivalent positions in terms 
of a swap's related Covered Futures Contract. Appendix A to this part 
provides several examples of the methods used for converting swap 
positions into futures equivalent positions. The regulations call for 
reporting in futures equivalents because such conversions are made by 
entities that deal in swaps to effectively manage residual price risks 
by entering into Covered Futures Contracts. Reporting in futures 
equivalents provides a measure of equivalency between positions in 
paired swaps and their related Covered Futures Contracts, which allows 
for more effective market surveillance and the monitoring of trading 
across futures and swaps.
    As required under paragraphs (a) and (b) of regulation 20.3, each 
clearing organization is required to submit to the Commission a data 
record that identifies either gross long and gross short futures 
equivalent positions if the data record corresponds to a paired swap 
position, or gross long and gross short futures equivalent positions on 
a non-delta-adjusted basis if the data record corresponds to a paired 
swaption position. A data record (for the purposes of this rulemaking) 
can be thought of as a grouped subset of data elements that 
communicates a unique (non-repetitive) positional message to the 
Commission.
    Clearing organizations are required to report a data record for 
each clearing member for each reporting day, which is defined in 
regulation 20.1 as the daily period of time between a clearing 
organization or reporting entity's usual and customary last internal 
valuation of paired swaps and the next such period. In order to provide 
clearing organizations with some flexibility in determining daily 
operational cycles that would coincide with their obligation to provide 
clearing member reports on a daily basis, the proposed definition would 
permit such cycles of time to vary for different clearing 
organizations, so long as the daily period of time is consistently 
observed and the Commission is notified, upon its request, of the 
manner by which a cycle is calculated. Data records would be reported 
electronically in a manner consistent with current Commission practice.
    The positional data elements in paragraphs (a) and (b) of 
regulation 20.3 require daily reports for each aggregated proprietary 
account and each aggregated customer account, by each cleared product, 
and by each futures equivalent month. Each data record would indicate 
the commodity reference price with which each cleared product is 
associated. As defined in regulation 20.1, a commodity reference price 
is the price series used by the parties to a swap or swaption to 
determine payments made, exchanged, or accrued under the terms of that 
swap or swaption. In addition, data records for swaptions are required 
to be broken down further by expiration date, put or call indicator, 
and strike price. Appendix B to part 20 includes examples of data 
records that would be required of clearing organizations.
    In addition to reports for clearing members, clearing organizations 
are, pursuant to regulation 20.3(c), required to provide to the 
Commission, for each

[[Page 43856]]

futures equivalent month, end of reporting day settlement prices for 
each cleared product and deltas for every unique swaption put and call, 
expiration date, and strike price. This second daily report will allow 
the Commission to assign an appropriate weight to unadjusted positions.
2. Reporting Entities
    Regulation 20.4 requires reporting entities to report principal 
\16\ and direct legal counterparty paired swap positions to the 
Commission when such positions become reportable. Reporting entities 
are required to follow the same procedure for determining if their 
principal or counterparty positions are reportable to the Commission. 
Regulation 20.1 identifies a reporting entity as a clearing member or a 
swap dealer as defined in section 1a of the CEA and as subject to 
definitional changes that will be made through Commission regulations 
further defining the term swap dealer. The compliance date of any 
provisions relating to swap dealers will be the effective date of a 
final swap dealer definition.\17\
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    \16\ The Reporting Rules, as proposed, used the term proprietary 
to refer to principal positions in the context of reporting by 
clearing members and swap dealers.
    \17\ The Reporting Rules render a swap dealer in any paired swap 
to be a reporting entity with the responsibility to provide data on 
all reportable positions, regardless of the specific types of paired 
swaps that render the entity a statutory swap dealer under the CEA.
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    Regulation 20.4 requires reporting entities to provide positional 
reports when reporting entities have principal and counterparty 
reportable paired swap positions. The final Reporting Rules amend 
regulation 20.1 to define a reportable position in two distinct ways. 
First, regulation 20.1, as proposed and finalized, defines a reportable 
position as a position, in any one futures equivalent month, comprised 
of 50 or more futures equivalent paired swaps or swaptions based on the 
same commodity. This proposed level is calibrated to capture data on a 
sufficiently large percentage of paired swap positions and was arrived 
at after consultation with multiple market participants.\18\ Once a 
paired swap position attributable to the reporting entity as principal 
or to its counterparty meets or exceeds the 50 futures equivalent 
contract threshold, all other paired swaps in the same commodity 
attributable to such trader becomes part of that trader's reportable 
position.\19\
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    \18\ See https://comments.cftc.gov/PublicComments/CommentList.aspx?id=889.
    \19\ In order to verify that a reporting entity's paired swap 
positions are no longer above the threshold, the proposed definition 
of reportable position would also encompass positions in paired 
swaps held by the reporting entity on the first day after which the 
reporting entity's paired swap positions are no longer reportable.
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    Alternatively the Reporting Rules, as amended and finalized, allow 
reporting entities to identify a reportable position as all positions 
on a gross basis in a consolidated account (as described in regulation 
20.4(a)) that are based on the same commodity, so long as this approach 
is consistently applied to all consolidated accounts for reporting 
purposes. This amended definition of a reportable position allows 
reporting entities to forgo the 50-contract threshold calculation, 
which may be complex or costly, prior to submitting reports to the 
Commission.
    As with reports that are required to be provided by clearing 
organizations to the Commission under regulation 20.3, regulation 20.4 
requires paired swap positions to be represented and reported in 
futures equivalents. A common method of accounting for positions in 
swaps and futures allows for more effective market surveillance. The 
data collected by the Reporting Rules could be used to determine 
aggregate open interest levels for economically equivalent derivatives. 
For example, such ``size-of-the-market'' calculations could in turn 
serve as a basis for computing non-spot-month position limits, should 
the Commission determine to adopt such limits.
    Under final regulation 20.11, for the purpose of reporting in 
futures equivalents, paired swaps and swaptions that are based on 
commonly known diversified indices with publicly available weightings 
must be reported as if such indices underlie a single futures contract 
with monthly expirations for each calendar month and year. Bespoke 
indices, however, must be decomposed into their futures equivalent 
components and reported along with a commodity reference price which 
allows the Commission to match such components to the bespoke index. 
The term commodity reference price is defined in regulation 20.1 as the 
price series (including derivatives contract and cash market prices or 
price indices) used by the parties to a swap or swaption to determine 
payments made, exchanged, or accrued under the terms of such contracts.
    To determine what to report under regulation 20.4, reporting 
entities are required to separately consider principal and counterparty 
positions on a gross basis. Reporting entities are required to provide 
for each reporting day a data record that either identifies long and 
short paired swap positions (if the record pertains to swap positions) 
or long and short non-delta-adjusted paired swaption positions and long 
and short delta-adjusted swaption positions (if the record pertains to 
swaptions positions). For uncleared paired swaps, the regulations 
require a reporting entity to use economically reasonable and 
analytically supported deltas.
    More specifically, regulation 20.4, as proposed and finalized, 
requires that this information be grouped separately by principal or 
counterparty positions, by futures equivalent month, by cleared or 
uncleared contracts, by commodity reference price, and by clearing 
organization if the data record pertains to cleared swaps. Data records 
pertaining to swaption positions under the final regulations are to be 
further grouped by put or call, expiration date, and strike price. The 
reports provided under regulation 20.4 are required to also include 
identifiers for the commodity underlying the reportable position, the 
counterparties of the account and the 102S filing identifier, as 
described in more detail below, assigned by the reporting entity to its 
counterparty.
3. Series S Filings
    Regulation 20.5(a) requires a 102S filing for the identification of 
a reporting entity's counterparty when such counterparty holds a 
reportable position. The 102S filing consists of the ``name, address, 
and contact information of the counterparty with the reportable 
account'' and a ``brief description of the nature of such person's 
paired swaps and swaptions' market activity.'' The reporting entity is 
required to submit a 102S filing only once for each person associated 
with a reportable account unless prior filed information is no longer 
accurate.
    Once an account counterparty is reportable, the Commission may 
contact the trader directly and require that the trader file a more 
detailed identification report, a 40S filing. The Commission would 
require a 40S filing if a trader has become reportable for the first 
time and is not known to the Commission. A 40S filing consists of the 
submission of a CFTC Form 40 ``Statement of Reporting Trader.'' As the 
current version of Form 40 covers information on positions in futures 
and options, traders would be required to complete the form as if the 
form covered information related to positions in paired swaps and 
swaptions.
    The 102S filing and the 40S filing together would allow the 
Commission to identify the person(s) owning or controlling the trading 
of a reportable account, the person to contact regarding

[[Page 43857]]

trading, the nature of the trading, whether the reportable account is 
related--by financial interest or control--to another account, and the 
principal occupation or business of the account owner. The filings also 
would provide the Commission information on whether the account is 
being used for hedging cash market exposure.
    Commission staff would use the information in these two filings to 
determine if the reported account corresponds to a new trader or is an 
additional account of an existing trader. If the account is an 
additional one of an existing trader, it would then be aggregated with 
that of other related accounts currently being reported.
    The Commission plans to update, streamline and make electronic its 
current Form 102 and Form 40 in the near term. The Commission intends 
for such revised forms to include sections specifically for swap and 
swaptions. When updated, regulation 20.5 will be amended to reflect 
these revisions and to require reports electronically through updated 
Forms 102 and 40.
4. Maintenance of Books and Records
    Regulation 20.6 imposes recordkeeping requirements on clearing 
organizations, reporting entities, and persons with positions in paired 
swaps above a certain futures equivalent threshold. Regulations 20.6(a) 
and 20.6(b) require clearing organizations and reporting entities, 
respectively, to keep records of transactions in paired swaps or 
swaptions as well as methods used to convert paired swaps or swaptions 
into futures equivalents. In addition, regulation 20.6(c) requires 
every person with greater than 50 all-months-combined futures 
equivalent positions on a gross basis in paired swaps or swaptions on 
the same commodity to keep books and records for transactions resulting 
in such swaps positions and, among other things, the cash commodity 
underlying such positions. In general, such person may keep and 
reproduce such books and records in the record retention format that 
such person has developed in the normal course of business. 
Furthermore, in order to clarify the Commission's authority to issue 
special calls for books and records, the Commission is including an 
explicit special call provision with respect to reportable positions in 
regulation 20.6(d).
    The recordkeeping duties imposed by regulations 20.6(a) and 20.6(b) 
are in accordance with the requirements of regulation 1.31. Regulation 
1.31(a)(1) requires that these transaction records be kept for five 
years, the first two of which they ``shall be readily accessible.'' 
Such books and records ``shall be open to inspection by any 
representative of the Commission.''
    These recordkeeping requirements allow the Commission to have ready 
access to records that would enable Commission staff to reconstruct the 
transaction history of reported positions. These requirements would 
ensure that data records submitted to the Commission could be audited. 
In addition, these records enable Commission staff to better 
reconstruct trading activity that may have had a material impact on the 
price discovery process.
    The recordkeeping burden imposed by regulation 20.6 is not 
anticipated to be unduly significant. These requirements are not unlike 
the recordkeeping requirements imposed by Congress in new CEA section 
4r(c)(2) on all swap market participants, and by the Commission on 
those entities with reportable futures accounts under the existing 
recordkeeping provision of regulation 18.05.
5. Form and Manner of Reporting
    Regulation 20.7(a) provides that the Commission would specify, in 
writing to persons required to report, the format, coding structure, 
and electronic data transmission procedures for these reports and 
submissions. The purpose of this provision is to provide notice on how 
the Commission would determine the means by which the part 20 reports 
are to be formatted and submitted. The Commission notes that subsequent 
to the commencement of reporting, and from time to time thereafter, it 
will provide standardized codes for data elements such as commodity 
reference prices and require that submitted position reports use such 
standard codes instead of proprietary codes. Such information will be 
disseminated on the Commission's Web site.\20\
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    \20\ As section II.(B).(8) herein describes, the Commission 
anticipates consulting with clearing organizations and reporting 
entities before determining the format, coding structure, and 
electronic data transmission procedures referenced in final 
regulation 20.7.
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6. Delegation of Authority
    Regulation 20.8, as proposed and finalized, delegates certain of 
the Commission's part 20 authorities to the Director of the Division of 
Market Oversight and through the Director to other employee or 
employees as designated by the Director. The delegated authority 
extends to: (1) Issuing a special call for a 40S or 102S filing and 
books and records; (2) providing instructions or determining the 
format, coding structure, and electronic data transmission procedures 
for submitting data records and any other information required under 
this part; and (3) determining the compliance schedules described in 
regulation 20.10. The purpose of these delegations is to facilitate the 
ability of the Commission to respond to changing market and 
technological conditions for the purpose of ensuring timely and 
accurate data reporting.
7. Sunset Provision
    Regulation 20.9, as proposed and finalized, includes a sunset 
provision that would render the Reporting Rules ineffective and 
unenforceable upon the Commission's finding (through the issuance of an 
order) that operating SDRs are capable of processing positional data in 
a manner that would enable the Commission to effectively oversee and 
surveil paired swaps trading and paired swap markets. Regulation 20.9 
also states that the Commission may retain the effectiveness and 
enforceability of any or all requirements in part 20, such as the 
reporting of deltas for uncleared paired swaps or the reporting of 
paired swap positions in futures equivalents, should the Commission 
determine through an order that such reporting is of material value to 
conducting market surveillance.
8. Compliance Schedule
    Under regulation 20.10, the compliance date for reporting 
requirements for clearing organizations under regulation 20.3 and 
clearing members under regulation 20.4 is sixty days after the 
publication of this notice in the Federal Register. The compliance date 
with regulation 20.4 for swap dealers that are not clearing members is 
the effective date of final regulations defining the term swap 
dealer.\21\ All special call provisions must be complied with sixty 
days following the date of publication of this notice in the Federal 
Register.
---------------------------------------------------------------------------

    \21\ See 75 FR 80174, December 21, 2010.
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    Regulation 20.10 also allows the Commission to permit for a period, 
not to exceed six calendar months following the effective date of this 
part, during which a clearing organization or reporting entity or 
trader may provide reports that differ in content or are submitted in a 
form and manner which is other than prescribed by the provisions of 
part 20, provided that the submitter coordinates with the Commission 
and is making a good faith attempt to comply with all of the provisions 
of part 20. Furthermore, upon the passage of the full compliance

[[Page 43858]]

schedule outlined above, all paired swaps and swaptions position and 
market reports that are currently reported under a Commission order or 
parts 15 through 19 and 21 of the Commission's regulations must instead 
be reported exclusively under part 20.
    In order to address the possibility of certain firms that may not 
be able to comply expediently with the requirements of part 20 should 
they fall within the definition of swap dealer, regulation 20.10(e) 
allows the Commission to defer compliance for such firms for a period 
not to exceed six calendar months following the effective date of final 
regulations further defining the term swap dealer.
    A deferred compliance period of six months is appropriate to reduce 
potential compliance costs for such reporting entities because they may 
not have procedures in place for routine reporting of swaps data as 
they currently are not regulated as financial firms. The deferred 
compliance period would provide these affected entities with additional 
time to determine whether they need to make any arrangements to 
implement the reporting regime, and to make any such arrangements. Once 
the swap dealer definition is final, a party that is uncertain as to 
whether or not they are a swap dealer would not be foreclosed from 
asking CFTC staff or the Commission for additional relief under the CEA 
or Commission regulations.
    The Commission also notes that it expects to consult with clearing 
organizations and reporting entities with respect to the manner of 
reporting before determining the format, coding structure, and 
electronic data transmission procedures that must be used to transmit 
information to the Commission pursuant to regulation 20.7.

III. Related Matters

A. Cost-Benefit Analysis

1. Introduction
    Section 15(a) of the Act requires that the Commission, before 
promulgating a regulation under the Act or issuing an order, consider 
the costs and benefits of its action. By its terms, CEA section 15(a) 
does not require the Commission to quantify the costs and benefits of a 
new regulation or determine whether the benefits of the regulation 
outweigh its costs. Rather, CEA section 15(a) requires the Commission 
to ``consider the costs and benefits'' of its action.
    CEA section 15(a) specifies that costs and benefits shall be 
evaluated in light of the following considerations: (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. Accordingly, the Commission could, in its discretion, 
give greater weight to any of the five considerations and could, in its 
discretion, determine that, notwithstanding its costs, a particular 
regulation was necessary or appropriate to protect the public interest 
or to effectuate any of the provisions or to accomplish any of the 
purposes of the Act.
2. Costs
    As mentioned above, under CEA section 4a(a)(2), the Commission has 
been directed to establish position limits for exempt and agricultural 
commodities, as appropriate. Section 4t of the Act authorizes the 
Commission to establish a large trader reporting system for significant 
price discovery function swaps, of which economically equivalent swaps 
are a subset. As discussed in more detail above, swaps position reports 
are a necessary component of an effective surveillance program, 
including monitoring compliance with any limits that may be established 
by the Commission under section 4a of the Act.
    Through the public comment process, alternatives to the Reporting 
Rules were presented to and reviewed by the Commission. Some commenters 
indicated that their respective alternatives would provide the 
Commission with the data it needs and would be less burdensome than the 
Reporting Rules. Bindicap Comster, the FIA, and the Working Group 
opposed the proposed regulations, and suggested an expanded special 
call reporting mechanism would be a better alternative. The 
Commission's current Index Investment Data Reports special call is a 
targeted collection of data. It gathers information related to specific 
products from a limited set of market participants. The special call 
was not intended to function as a tool for general market surveillance. 
In order to be able to gather positional data of the quality needed to 
conduct market surveillance, the special call would have to undergo 
substantial modifications which in effect would convert it into the 
Reporting Rules. In light of the broad areas of cost and benefit 
evaluation specified by CEA section 15(a), in particular section 
15(a)(2)(B), the Commission has determined that the alternative 
presented by Bindicap Comster, FIA, and the Working Group is less 
viable than the Reporting Rules and would not reduce costs to persons 
subject to this part or provide additional benefits.
    With regard to the future establishment of SDRs and whether the 
Commission should wait for SDRs to provide swaps position data instead 
of adopting the regulations, ATA argued that the Commission should 
proceed with the regulations and not wait for SDRs to become 
operational. FIA and the Working Group, meanwhile, argued that the 
future role of SDRs makes adoption of the regulations unnecessary. The 
Commission has determined that the Reporting Rules are necessary for 
several reasons. It is likely that physical commodity SDRs will require 
the most time to become operational since, unlike for swaps in the 
interest rate, equity and credit default asset categories, there 
currently is no functional and accepted data repository for energy, 
metal and agricultural commodities. In addition, even after SDRs have 
been established, because they are fundamentally transaction 
repositories, it may be a considerable amount of time before SDRs are 
able to reliably convert transaction data into positional data. Thus, 
in view of the considerable time before physical commodity swap SDRs 
are likely to be operational and have the ability to convert 
transactions to positions, the Commission has determined to adopt the 
Reporting Rules instead of the proposed alternative, consistent with 
the objectives outlined in CEA section 15(a)(2). Without a 
comprehensive and operational market surveillance system in the near 
term, the Commission would not be able to administer the CEA as amended 
by the Dodd-Frank Act.
    The Electric End User Coalition also argued that the recordkeeping 
burden imposed by the proposed regulations would be significant. In 
particular it argued that the recordkeeping requirements should not 
apply to end-users and that the Commission should defer to other 
regulators, specifically FERC, with regard to recordkeeping 
obligations. In the Commission's judgment, the recordkeeping 
requirements of the regulations are not unduly burdensome and are 
consistent with the recordkeeping requirements of current Commission 
regulations 1.31 and 18.05. In addition, as the regulations have been 
narrowly tailored to collect routine data only from clearing 
organizations, clearing members and swap dealers, the Reporting Rules 
will not have a significant negative impact on a substantial number of 
end-users. The Commission has thus determined to proceed with the 
Reporting Rules.

[[Page 43859]]

    In developing the Reporting Rules, the Commission has aimed to 
minimize the cost and burden associated with reporting positional data 
to the Commission. As discussed above, the Commission has tailored the 
Reporting Rules to conform to the market structure for cleared and 
uncleared paired swaps. The cost of the part 20 regulations will be 
borne by firms that are clearing organizations reporting under 
regulation 20.3 and reporting entities reporting under regulation 20.4. 
For such firms, the additional cost to implement a reporting system is 
expected to be reasonable since the Commission understands these firms 
track their counterparties' positions for risk management purposes.
    Although the Reporting Rules establish a reporting system for 
cleared paired swaps that resembles the large trader reporting system, 
they establish a structurally different reporting system for uncleared 
paired swaps. The structure of the uncleared paired swaps market is not 
as centralized as the cleared paired swaps market: there is no central 
counterparty that corresponds to a clearing organization in the 
uncleared paired swaps market. The Commission believes that swap 
dealers may be counterparties to a significant portion of the market 
for uncleared paired swaps and swaptions.
    Accordingly, the Reporting Rules require position reporting from 
swap dealers. These firms are to report their reportable positions as 
well as those of their counterparties. As is the case for clearing 
member reporting entities, it is likely that creating or purchasing an 
information technology system that can present such a firm's net 
position exposures on a daily basis will not be an overly burdensome 
marginal expense, since the Commission understands swap dealers track 
their exposures for risk management purposes.
    For counterparties that will be subject to the recordkeeping 
requirements of regulation 20.6, it should be noted that these 
requirements will place new burdens (in terms of reporting and 
retaining information on cash market transactions) only on persons that 
are reportable solely in paired swaps. This is because Congress, in new 
CEA section 4r(c)(2), has extended recordkeeping requirements to all 
swaps irrespective of any reporting requirement. Likewise, 
counterparties that hold reportable futures positions (in addition to 
reportable paired swaps positions) are currently subject to existing 
recordkeeping requirements under regulation 18.05. Thus, the Commission 
believes that these additional burdens, in marginal terms, are not 
expected to be overly burdensome, given that firms collect information 
on their commercial activities in the normal course of business 
operations. The Commission also notes its adoption of regulation 20.10, 
which staggers implementation of the Reporting Rules. The flexible 
implementation process should reduce compliance costs in general.
    As described in detail below, the Commission held several meetings 
with potential reporting entities and conducted analysis to estimate 
the reporting and recordkeeping burdens imposed by the Reporting Rules 
annually for the next five years. For clearing organizations, the 
reporting burden is estimated to be approximately 950 hours and 
$100,000 spread across 5 entities, or 190 hours and $20,000 per entity. 
The recordkeeping burden for clearing organizations is estimated to be 
100 hours and $100,000 spread across 5 entities, or 20 hours and 
$20,000 per entity. Each clearing organization, then, is estimated t