Swap Data Recordkeeping and Reporting Requirements: Pre-Enactment and Transition Swaps, 35200-35239 [2012-12531]

Agencies

• Commodity Futures Trading Commission

[Federal Register Volume 77, Number 113 (Tuesday, June 12, 2012)]
[Rules and Regulations]
[Pages 35200-35239]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-12531]



[[Page 35199]]

Vol. 77

Tuesday,

No. 113

June 12, 2012

Part IV





Commodity Futures Trading Commission





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17 CFR Part 46





Swap Data Recordkeeping and Reporting Requirements: Pre-Enactment and 
Transition Swaps; Final Rule

Federal Register / Vol. 77, No. 113 / Tuesday, June 12, 2012 / Rules 
and Regulations

[[Page 35200]]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 46

[3038-AD48]


Swap Data Recordkeeping and Reporting Requirements: Pre-Enactment 
and Transition Swaps

AGENCY: Commodity Futures Trading Commission.

ACTION: Final rulemaking.

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SUMMARY: The Commodity Futures Trading Commission (``Commission'' or 
``CFTC'') is adopting rules to further implement the Commodity Exchange 
Act (``CEA'' or ``Act'') with respect to the new statutory framework 
regarding swap data recordkeeping and reporting established by the 
Dodd-Frank Wall Street Reform and Consumer Protection Act (``Dodd-Frank 
Act''). The Dodd-Frank Act, which amended the CEA, directs that rules 
adopted by the Commission shall provide for the reporting of data 
relating to swaps entered into before the date of enactment of the 
Dodd-Frank Act, the terms of which have not expired as of the date of 
enactment of the Dodd-Frank Act (``pre-enactment swaps'') and data 
relating to swaps entered into on or after the date of enactment of the 
Dodd-Frank Act and prior to the compliance date specified in the 
Commission's final swap data reporting rules (``transition swaps''). 
These final rules establish swap data recordkeeping and reporting 
requirements for pre-enactment swaps and transition swaps.

DATES: The effective date of this part is August 13, 2012. Compliance 
dates: (1) Swap dealers and major swap participants shall commence full 
compliance with this part with respect to credit swaps and interest 
rate swaps on the later of: July 16, 2012; or 60 calendar days after 
publication in the Federal Register of the later of the Commission's 
final rule defining the term ``swap'' or the Commission's final rule 
defining the terms ``swap dealer'' and ``major swap participant;'' (2) 
Swap dealers and major swap participants shall commence full compliance 
with this part with respect to equity swaps, foreign exchange swaps, 
and other commodity swaps on or before 90 days after the compliance 
date for credit swaps and interest rate swaps; (3) Non-SD/MSP 
counterparties shall commence full compliance with this part with 
respect to all swaps on or before 90 days after the compliance date 
applicable to swap dealers and major swap participants with respect to 
equity swaps, foreign exchange swaps, and other commodity swaps.

FOR FURTHER INFORMATION CONTACT: David Taylor, Associate Director, 
Division of Market Oversight, 202-418-5488, dtaylor@cftc.gov; Commodity 
Futures Trading Commission, Three Lafayette Centre, 1155 21st Street 
NW., Washington, DC 20851.

SUPPLEMENTARY INFORMATION: The Commission is adopting new part 46 of 
its regulations relating to recordkeeping and reporting requirements 
applicable to both pre-enactment and transition swaps. These rules, 
when adopted, will supersede interim final rules previously adopted by 
the Commission in part 44 of its regulations.

Table of Contents


 
 
 
I. Background..............................................  ...........
    A. Introduction........................................  ...........
    B. Swap Data Provisions of the Dodd-Frank Act..........  ...........
    C. The Commission's Part 45 Rules on Swap Data           ...........
     Recordkeeping and Reporting Requirements..............
    D. The Interim Final Rules for Pre-Enactment and         ...........
     Transition Swaps......................................
    E. Summary of the Proposed Part 46 Rule................  ...........
        1. Fundamental Goals...............................  ...........
        2. Historical Swap Recordkeeping...................  ...........
        3. Historical Swap Data Reporting..................  ...........
        4. Unique Identifiers..............................  ...........
        5. Determination of Which Counterparty Must Report.  ...........
        6. Third-Party Facilitation of Reporting...........  ...........
        7. Reporting a Swap to a Single SDR................  ...........
        8. Reporting Swaps in an Asset Class Not Accepted    ...........
         By Any SDR........................................
        9. Data Standards..................................  ...........
        10. Reporting Errors in Previously Reported Data...  ...........
    F. Overview of Comments Received.......................  ...........
II. Part 46 of the Commission's Regulations................  ...........
    A. Recordkeeping Requirements..........................  ...........
        1. Proposed Rule...................................  ...........
        2. Comments Received...............................  ...........
        3. Final Rule......................................  ...........
    B. Swap Data Reporting.................................  ...........
        1. Proposed Rule...................................  ...........
        2. Comments Received...............................  ...........
        3. Final Rule......................................  ...........
    C. Unique Identifiers..................................  ...........
        1. Proposed Rule...................................  ...........
        2. Comments Received...............................  ...........
        3. Final Rule......................................  ...........
    D. Determination of the Reporting Counterparty.........  ...........
        1. Proposed Rule...................................  ...........
        2. Comments Received...............................  ...........
        3. Final Rule......................................  ...........
    E. Third-Party Facilitation of Data Reporting..........  ...........
        1. Proposed Rule...................................  ...........
        2. Comments Received...............................  ...........
        3. Final Rule......................................  ...........
    F. Reporting to a Single Swap Data Repository..........  ...........
        1. Proposed Rule...................................  ...........
        2. Comments Received...............................  ...........

[[Page 35201]]

 
        3. Final Rule......................................  ...........
    G. Data Reporting for Swaps in a Swap Asset Class Not    ...........
     Accepted by any Swap Data Repository..................
        1. Proposed Rule...................................  ...........
        2. Comments Received...............................  ...........
        3. Final Rule......................................  ...........
    H. Required Data Standards.............................  ...........
        1. Proposed Rule...................................  ...........
        2. Comments Received...............................  ...........
        3. Final Rule......................................  ...........
    I. Reporting of Errors and Omissions in Previously       ...........
     Reported Data.........................................
        1. Proposed Rule...................................  ...........
        2. Comments Received...............................  ...........
        3. Final Rule......................................  ...........
    J. Compliance Dates....................................  ...........
        1. Proposed Rule...................................  ...........
        2. Comments Received...............................  ...........
        3. Final Rule......................................  ...........
III. Related Matters.......................................  ...........
    A. Regulatory Flexibility Act..........................  ...........
    B. Paperwork Reduction Act.............................  ...........
        1. Introduction....................................  ...........
        2. Need for Information Collection.................  ...........
        3. Comment on proposed information collection......  ...........
        4. Recordkeeping burdens...........................  ...........
        5. Reporting Burdens...............................  ...........
    C. Consideration of Costs and Benefits.................  ...........
        1. Introduction....................................  ...........
        2. Recordkeeping...................................  ...........
        3. Reporting.......................................  ...........
IV. Compliance Dates.......................................  ...........
    A. Introduction........................................  ...........
    B. Compliance dates for swap dealers and major swap      ...........
     participants..........................................
    C. Compliance date for non-SD/MSP counterparties.......  ...........
Final Rules................................................  ...........
 


I. Background

A. Introduction

    On July 21, 2010, President Obama signed into law the Dodd-Frank 
Act.\1\ Title VII of the Dodd-Frank Act \2\ amended the CEA \3\ to 
establish a comprehensive new regulatory framework for swaps and 
security-based swaps. The legislation was enacted to reduce risk, 
increase transparency, and promote market integrity within the 
financial system by, among other things: providing for the registration 
and comprehensive regulation of swap dealers (``SDs'') and major swap 
participants (``MSPs''); imposing clearing and trade execution 
requirements on standardized derivatives products; creating robust 
recordkeeping and reporting regimes with respect to swaps, including 
real time reporting; and enhancing the Commission's rulemaking and 
enforcement authorities with respect to, among others, all registered 
entities, intermediaries and swap counterparties subject to the 
Commission's jurisdiction.
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    \1\ 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/LawRegulation/OTCDERIVATIVES/index.htm.
    \2\ Pursuant to Section 701 of the Dodd-Frank Act, Title VII may 
be cited as the ``Wall Street Transparency and Accountability Act of 
2010.''
    \3\ 7 U.S.C. 1 et seq.
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B. Swap Data Provisions of the Dodd-Frank Act

    To enhance transparency, promote standardization, and reduce 
systemic risk, Section 727 of the Dodd-Frank Act added to the CEA new 
section 2(a)(13)(G), which requires all swaps, whether cleared or 
uncleared, to be reported to swap data repositories (``SDRs''),\4\ 
which are new registered entities created by section 728 of the Dodd-
Frank Act to collect and maintain data related to swap transactions as 
prescribed by the Commission, and to make such data electronically 
available to regulators.\5\ New section 21(b) of the CEA, added by 
section 728 of the Dodd-Frank Act, directs the Commission to prescribe 
standards for swap data recordkeeping and reporting. Specifically, CEA 
section 21(b)(1)(A) provides that:
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    \4\ See also CEA Sec.  1a(40)(E).
    \5\ Regulations governing core principles and registration 
requirements for, and the duties of, SDRs are the subject of part 49 
of this chapter.

    The Commission shall prescribe standards that specify the data 
elements for each swap that shall be collected and maintained by 
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each registered swap data repository.

These standards are to apply to both registered entities and 
counterparties involved with swaps. CEA section 21(b)(1)(B) provides 
that:

    In carrying out [the duty to prescribe data element standards], 
the Commission shall prescribe consistent data element standards 
applicable to registered entities and reporting counterparties.

CEA section 21 also directs the Commission to prescribe data standards 
for SDRs. Specifically, CEA section 21(b)(2) provides that:

    The Commission shall prescribe data collection and data 
maintenance standards for swap data repositories.

These standards are to be comparable to those for clearing 
organizations. CEA section 21(b)(3) provides that:

    The [data] standards prescribed by the Commission under this 
subsection shall be comparable to the data standards imposed by the 
Commission on derivatives clearing organizations in connection with 
their clearing of swaps.

In addition, CEA section 21(c)(3) provides that, once the data elements 
prescribed by the Commission are reported to an SDR, the SDR shall:

maintain the data [prescribed by the Commission for each swap] in 
such form, in such manner, and for such period as may be required by 
the Commission.


[[Page 35202]]


    Section 727 of the Dodd-Frank Act, which added to the CEA new 
section 2(a)(13)(G), provides that ``Each swap (whether cleared or 
uncleared) shall be reported to a registered swap data repository.'' 
Section 729 of the Dodd-Frank Act added to the CEA new section 4r, 
which addresses reporting and recordkeeping requirements for uncleared 
swaps. Pursuant to this section, each swap not accepted for clearing by 
any derivatives clearing organization (``DCO'') must be reported to an 
SDR (or to the Commission if no repository will accept the swap). In a 
July 15, 2010 floor statement concerning swap data reporting as well as 
other aspects of the Dodd-Frank Act, Senator Blanche Lincoln emphasized 
that these provisions should be interpreted as complementary to one 
another to assure consistency between them, stating that: ``All swap 
trades, even those which are not cleared, would still be reported to 
regulators, a swap data repository, and subject to the public reporting 
requirements under the legislation.'' \6\
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    \6\ Senator Blanche Lincoln, ``Wall Street Transparency and 
Accountability Act,'' Congressional Record, July 15, 2010, at S5905.
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    CEA Section 4r(a)(3) ensures that at least one counterparty to a 
swap has an obligation to report data concerning that swap. The 
determination of this reporting counterparty depends on the status of 
the counterparties involved. If only one counterparty is an SD, the SD 
is required to report the swap. If one counterparty is an MSP, and the 
other counterparty is neither an SD nor an MSP (``non-SD/MSP 
counterparty''), the MSP must report. For any other swap, CEA section 
4r(a)(3)(C) provides that the counterparties to the swap shall select a 
counterparty to report the swap as specified in section 4r.7
    In addition, CEA section 4r provides for reporting to the 
Commission of swaps neither cleared nor accepted by any SDR. Under this 
provision, counterparties to such swaps must maintain books and records 
pertaining to their swaps in the manner and for the time required by 
the Commission, and must make these books and records available for 
inspection by the Commission or other specified regulators if requested 
to do so.\8\ It also requires counterparties to such swaps to provide 
reports concerning such swaps to the Commission upon its request, in 
the form and manner specified by the Commission.\9\ Such reports must 
be as comprehensive as the data required to be collected by SDRs.\10\
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    \8\ CEA Sec.  4r(c)(2) requires individuals or entities that 
enter into a swap transaction that is neither cleared nor accepted 
by an SDR to make required books and records open to inspection by 
any representative of the Commission; an appropriate prudential 
regulator; the Securities and Exchange Commission; the Financial 
Stability Oversight Council; and the Department of Justice.
    \9\ CEA Sec.  4r(a)(1)(B) and Sec.  4r(c).
    \10\ CEA Sec.  4r(d).
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    Section 729 of the Dodd-Frank Act establishes in new CEA section 
4r(a)(2)(A) a transitional rule applicable to pre-enactment swaps. 
Section 4r(a)(2)(A) provides for the reporting of pre-enactment swaps 
the terms of which have not expired as of the enactment of the Dodd-
Frank Act to an SDR or the Commission, by a date that the Commission 
determines to be appropriate.\11\ Section 4r(a)(2)(B) directed the 
Commission to promulgate an interim final rule within 90 days of the 
date of enactment of the Dodd-Frank Act providing for the reporting of 
such pre-enactment swaps.\12\
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    \11\ Subsection (A) of CEA Section 4r(a)(2) provides: ``Each 
swap entered into before the date of enactment of the Wall Street 
Transparency and Accountability Act of 2010, the terms of which have 
not expired as of the date of enactment of that Act, shall be 
reported to a registered swap data repository or the Commission by a 
date that is not later than--(i) 30 days after issuance of the 
interim final rule; or (ii) such other period as the Commission 
determines to be appropriate.''
    \12\ Pursuant to Section 4r(a)(2)(B), the Commission on October 
14, 2010 published in part 44 of its regulations an interim final 
rule instructing specified counterparties to pre-enactment swaps to 
report data to a registered SDR or to the Commission by a compliance 
date to be established in reporting rules to be promulgated under 
Section 2(h)(5)(A) of the CEA and advising counterparties of the 
necessity, inherent in the reporting requirement, to retain 
information pertaining to the terms of such swaps until reporting 
can be effectuated under permanent rules. See CFTC Interim Final 
Rule for Reporting Pre-Enactment Swap Transactions (``Pre-Enactment 
Swaps IFR''), 75 FR 63080 (Oct. 14, 2010).
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    Section 723 of the Dodd-Frank Act, which added to the CEA new 
Section 2(h)(5), addressed the reporting of swap data for both swaps 
executed before the enactment of the Dodd-Frank Act \13\ and swaps 
executed on or after the date of that enactment but before the 
compliance date specified in the Commission's final swap data 
recordkeeping and reporting rules.\14\ As discussed above, in a July 
15, 2010 floor statement concerning swap data reporting as well as 
other aspects of the Dodd-Frank Act, Senator Lincoln emphasized that 
these provisions should be interpreted as complementary in order to 
assure consistency between them, and emphasized that ``[T]his is 
particularly true with respect to issues such as the effective dates of 
these reporting requirements, the applicability of these provisions to 
cleared and/or uncleared swaps, and their applicability--or non-
applicability--to swaps whose terms have expired at the date of 
enactment.'' \15\
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    \13\ See Pre-Enactment Swaps IFR.
    \14\ See CFTC Interim Final Rule for Reporting Post-Enactment 
Swap Transactions (``Post-Enactment Swaps IFR'' or ``Transition 
Swaps IFR''), 75 FR 78892 (Dec. 17, 2010).
    \15\ Senator Blanche Lincoln, ``Wall Street Transparency and 
Accountability Act,'' Congressional Record, July 15, 2010, at S5923.
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    This part refers to the two types of swaps addressed in CEA Section 
2(h)(5) as follows. ``Pre-enactment swap'' means a swap executed before 
date of enactment of the Dodd-Frank Act (i.e., before July 21, 2010) 
the terms of which have not expired as of the date of enactment of 
Dodd-Frank Act.\16\ ``Transition swap'' means a swap executed on or 
after the date of enactment of the Dodd-Frank Act (i.e., July 21, 2010) 
and before the applicable compliance date set forth in this part and 
also specified in the final swap data reporting and recordkeeping 
requirements regulations in part 45 of this chapter.\17\ Collectively, 
this part refers to pre-enactment swaps and transition swaps as 
``historical swaps.''
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    \16\ Subsection (A) of CEA Section 2(h)(5) Reporting Transition 
Rules provides: ``Swaps entered into before the date of the 
enactment of this subsection shall be reported to a registered swap 
data repository or the Commission no later than 180 days after the 
effective date of this subsection.''
    \17\ Subsection (B) of CEA Section 2(h)(5) Reporting Transition 
Rules provides: ``Swaps entered into on or after such date of 
enactment shall be reported to a registered swap data repository or 
the Commission no later than the later of (i) 90 days after [the] 
effective date [of Section 2(h)(5)] or (ii) such other time after 
entering into the swap as the Commission may prescribe by rule or 
regulation.''
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C. The Commission's Part 45 Rules on Swap Data Recordkeeping and 
Reporting Requirements

    On January 13, 2012, the Commission published in new part 45 of its 
regulations final rules establishing swap data recordkeeping and 
reporting requirements applicable to SDs, MSPs, and non-SD/MSP 
counterparties,\18\ as well as to registered SDRs, DCOs, designated 
contract markets (``DCMs''), and swap execution facilities 
(``SEFs'').\19\
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    \18\ The category of non-SD/MSP counterparties includes but is 
not limited to counterparties who are entitled, with respect to any 
swap, to elect the clearing requirement exception pursuant to CEA 
section 2(h)(7) with respect to particular swaps.
    \19\ 77 FR 2136 (February 13, 2012).
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    With respect to recordkeeping, part 45 requires SDs and MSPs to 
keep records of all activities relating to their business with respect 
to swaps, and requires non-SD/MSP counterparties to keep records with 
respect to each swap in which they are a counterparty. Required records 
must be kept by all swap counterparties throughout the existence of a 
swap and for five years following termination of the swap. In the case 
of an SD or MSP, the records must be readily accessible

[[Page 35203]]

throughout the life of the swap and for two years following its 
termination, and retrievable by the SD or MSP within three business 
days during the remainder of the retention period. In the case of a 
non-SD/MSP counterparty, the records must be retrievable by the 
counterparty within five business days throughout the retention period.
    In order to ensure that complete data concerning swaps is available 
to regulators, part 45 calls for electronic reporting to an SDR of swap 
data from each of two important stages of the existence of a swap: the 
creation of the swap, and the continuation of the swap over its 
existence until its final termination or expiration. Creation data 
required to be reported pursuant to part 45 includes both primary 
economic terms (``PET'') data and confirmation data for a swap. 
Continuation data required to be reported includes all changes to 
primary economic terms and all required valuation data. For swaps 
executed on or after the applicable compliance date, part 45 
establishes a streamlined reporting regime calling for reporting by the 
entity or reporting counterparty the Commission believes has the 
easiest, fastest, and cheapest access to the data. For all swaps 
executed on a SEF or DCM, all required creation data is reported by the 
SEF or DCM. For off-facility swaps accepted for clearing within the 
applicable deadline for reporting PET data, all required swap creation 
data is reported by the DCO. For off-facility swaps not cleared or not 
accepted for clearing within the applicable deadline, required swap 
creation data is reported by the reporting counterparty. Continuation 
data for cleared swaps is reported by the DCO, though SD and MSP 
reporting counterparties must also report valuation data. For uncleared 
swaps, all continuation data is reported by the reporting counterparty.
    Part 45 notes that the obligations of swap counterparties with 
respect to historical swaps, i.e., swaps executed prior to the 
applicable compliance date and in existence on or after the date of 
enactment of the Dodd-Frank Act, will be as provided in part 46.

D. The Interim Final Rules for Pre-Enactment and Transition Swaps

    Interim Final Rule for Pre-Enactment Swaps. New section 4r(a)(2) to 
the CEA, added by the Dodd-Frank Act, provided for the reporting of 
pre-enactment swaps and directed that the Commission promulgate, within 
90 days of enactment of the Dodd-Frank Act, an interim final rule 
(``IFR'') providing for the reporting of such swaps. On October 14, 
2010, pursuant to the mandate of section 4r(a)(2)(B), the Commission 
published in new part 44 of its regulations an IFR advising specified 
counterparties to pre-enactment of the Commission's intent to 
promulgate rules pursuant to CEA sections 2(h)(5) and 4r requiring that 
such data be reported to a registered SDR or to the Commission by a 
compliance date to be established in those rules, and advising such 
counterparties of the necessity, inherent in the reporting requirement, 
to preserve information pertaining to the terms of such swaps until 
reporting was effectuated under permanent rules.\20\ This Pre-Enactment 
Swaps IFR stated that the reporting and recordkeeping provisions 
established by Section 4r and sections 44.00-44.02 of the Commission's 
regulations would remain in effect until the effective date of the 
permanent reporting rules to be adopted by the Commission pursuant to 
Section 2(h)(5) of the CEA.\21\ A principal purpose of this IFR was to 
advise counterparties of the need to retain data related to swap 
transactions so that reporting could be effectuated under permanent 
rules subsequently to be adopted.
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    \20\ See Pre-Enactment Swaps IFR, supra note 17, at 63083.
    \21\ See Pre-Enactment Swaps IFR, supra note 17.
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    With respect to the scope and coverage of the Pre-Enactment Swaps 
IFR, the Commission acknowledged that while new CEA Section 4r(a)(2) 
limits reportable pre-enactment swaps to those whose terms have not 
expired on the date of enactment of the Dodd-Frank Act, Section 2(h)(5) 
does not contain the same qualifying language. As discussed in the Pre-
Enactment Swaps IFR, the Commission believes that failure to limit the 
term ``pre-enactment swap'' to unexpired swaps would require reporting 
of every swap that has ever been entered into; accordingly, the 
Commission concluded that reportable pre-enactment swaps should be 
limited to those whose terms had not expired at the time of 
enactment.\22\
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    \22\ Id. at 63082.
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    Interim Final Rule for Transition Swaps. Section 2(h)(5) also 
prescribes reporting requirements applicable to swaps entered into on 
or after the date of enactment (``Transition Swaps''). To provide 
clarity and guidance with respect to such swaps, the Commission 
promulgated an IFR for transition swaps to establish that these swaps 
will be subject to Commission regulations to be promulgated under 
Section 2(h)(5)(B). The Commission also believed it was prudent to 
advise potential counterparties to such swaps that implicit in this 
prospective reporting requirement is the need to retain relevant data 
until such time as reporting can be effected. Accordingly, on December 
17, 2010 the Commission published under Part 44 of its regulations 
interim final rules establishing that counterparties to transition 
swaps will be subject to permanent recordkeeping and reporting 
requirements to be adopted by the Commission pursuant to Section 
2(h)(5)(B) of the CEA.\23\
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    \23\ See Transition Swaps IFR, supra note 18.
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    The Commission intended both the Pre-Enactment Swaps IFR and the 
Transition Swaps IFR to put counterparties on notice that swap data 
should be retained pending the adoption of permanent rules prescribing 
recordkeeping and reporting requirements for pre-enactment and 
transition swaps under part 46 of the Commission's regulations. With 
respect to both pre-enactment and transition swaps, the Commission 
stated that counterparties to these transactions should retain material 
information about such transactions. The Commission emphasized, 
however, that in the context of the interim rules, no counterparty was 
being required to create new records with respect to transactions that 
occurred in the past; instead, records relating to the terms of such 
transactions could be retained in their existing format to the extent 
and in such form as they presently exist.\24\
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    \24\ See Pre-Enactment Swaps IFR, supra note 17, at 63086, and 
Transition Swaps IFR, supra note 18, at 78894.
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    Comments Received. The Commission received a number of comments in 
response to each of the IFRs and considered them all. Comments 
generally fell into one or more of several broad categories and in a 
number of instances were common to both IFRs. Some commenters observed 
that issuance of IFRs in advance of regulations further defining the 
term ``swap'' (or defining other key terms in the Dodd-Frank Act) 
creates legal and regulatory uncertainty and increases compliance risk; 
most of these commenters urged the Commission to further detail the 
record retention aspects of the interim final rules.\25\ In this 
connection, commenters requested that the Commission issue guidance

[[Page 35204]]

clarifying and limiting the information that must be retained,\26\ or 
create a safe harbor for good faith compliance efforts.\27\ Several 
commenters recommended that the Commission should ensure that end users 
need only report basic data in a simplified reporting scheme, or should 
outline categories of information that need not be retained by persons 
who anticipate becoming eligible for the end user exemption under the 
Dodd-Frank Act.\28\ One commenter urged greater specificity with 
respect to the Pre-Enactment IFR's requirements, as well as consistency 
with the standards adopted by the Securities and Exchange Commission 
(``SEC'') and international regulators, and proposed alternatives to 
the requirements adopted in the IFR for pre-enactment swaps, 
particularly with respect to reporting protocols, record retention, and 
confidentiality issues (notably, those confidentiality issues arising 
in the context of cross-border transactions).\29\ Another commenter 
urged that U.S. swap data reporting requirements should not apply with 
respect to foreign swaps transactions, where counterparties are non-
U.S. entities.\30\
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    \25\ See, e.g., letters dated November 15, 2010 and January 18, 
2011 from the Working Group of Commercial Energy Firms (``Working 
Group letters''); letter dated November 15, 2010 from Hess 
Corporation (``Hess Corporation letter''); letter dated November 15, 
2010 from the Edison Electric Institute (``EEI letter''); letters 
dated November 15, 2010 and January 18, 2011 from the Not-for-Profit 
Electric End User Coalition (``Coalition letters''); letter dated 
January 18, 2011 from the American Gas Association (``AGA letter'').
    \26\ EEI letter.
    \27\ Working Group letters; EEI letter; Hess Corporation letter.
    \28\ AGA letter; Coalition letters.
    \29\ Letter dated November 12, 2010, from the International 
Swaps and Derivatives Association, Inc. and the Futures Industry 
Association.
    \30\ Letter dated January 11, 2011, from Barclays Bank PLC, BNP 
Paribas S.A., Deutsche Bank AG, Royal Bank of Canada, The Royal Bank 
of Scotland Group PLC, Soci[eacute]t[eacute] G[eacute]n[eacute]rale 
and UBS AG.
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    The Commission considered these comments in preparing its part 46 
Notice of Proposed Rulemaking (``NOPR'') with respect to historical 
swaps.\31\
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    \31\ See CFTC Swap Data Recordkeeping and Reporting 
Requirements: Pre-Enactment and Transition Swaps, 76 FR 22833 (April 
25, 2011).
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E. Summary of the Proposed Part 46 Rule

1. Fundamental Goals
    The fundamental goals of the part 46 NOPR were to provide for 
recordkeeping and reporting with respect to pre-enactment swaps and 
transition swaps as required by the Dodd-Frank Act; to provide 
specificity and clarity, to the extent possible, concerning what 
records must be kept and what data must be reported with respect to 
such historical swaps; and to ensure that data needed by regulators 
concerning historical swaps is available to regulators through SDRs 
when swap data reporting begins.
2. Historical Swap Recordkeeping
    The NOPR proposed limited recordkeeping requirements for 
counterparties to historical swaps. For swaps in existence on or after 
April 25, 2011, the date of publication of the NOPR, counterparties 
would be required to keep records of specified, minimum primary 
economic terms for a swap of the asset class in question, listed in 
Tables in the Appendix to the NOPR. In addition, if a historical swap 
counterparty had a confirmation of the historical swap as of that date, 
the NOPR called for the counterparty to keep it. For historical swaps 
that expired or were terminated prior to April 25, 2011, the NOPR 
provided that counterparties should keep the records they already have, 
in the form they are already kept. For all historical swaps, the 
required records would have to be kept throughout any remaining 
existence of a historical swap and for five years following its final 
termination or expiration.
3. Historical Swap Data Reporting
    a. Historical swaps in existence on or after April 25, 2011. For 
each historical swap in existence on or after April 25, 2011, the NOPR 
called for an initial data report by the reporting counterparty on the 
applicable compliance date, and for ongoing reporting of data from the 
continuation of the historical swap during its remaining existence. As 
proposed, the initial data report would include the minimum primary 
economic terms for a historical swap of the asset class in question, as 
specified in the appropriate Table in the Appendix to the rule. If the 
reporting counterparty possessed a confirmation of the historical swap 
on or after April 25, 2011, the confirmation terms recorded in the 
automated system of the reporting counterparty would also be included 
in the initial data report. For historical swaps already reported to an 
existing repository prior to the effective date of the final reporting 
rules, the NOPR would not require duplicate reporting. With respect to 
ongoing reporting of continuation data during the remaining existence 
of a historical swap, the NOPR aligned with the proposed part 45 rule 
in following the life cycle approach for credit swaps and equity swaps, 
and the state or snapshot approach for interest rate swaps, currency 
swaps, and other commodity swaps.
    b. Historical swaps expired or terminated prior to April 25, 2011. 
For each historical swap which expired or was terminated prior to April 
25, 2011, the NOPR called for the reporting counterparty to report such 
information relating to the terms of the transaction as was in the 
reporting counterparty's possession as of issuance of the interim final 
rule, in either electronic or non-electronic form at the option of the 
reporting counterparty.
4. Unique Identifiers
    The NOPR called for the initial data report for each historical 
swap in existence on or after April 25, 2011, to include the legal 
entity identifier (``LEI''),\32\ as provided in part 45 of this 
chapter, of the reporting counterparty. The NOPR proposed giving the 
non-reporting counterparty for each such historical swap an additional 
180 days after the applicable compliance date to obtain an LEI. Once 
this LEI was obtained, the NOPR called for it to be provided to the 
reporting counterparty and reported by the reporting counterparty to 
the SDR. After LEIs were obtained for either counterparty, the NOPR 
proposed requiring the counterparty identified by an LEI and the SDR to 
comply with the LEI requirements of part 45 of this chapter with 
respect to LEIs. The NOPR provided that the LEI requirements of parts 
45 and 46 of this chapter would not apply to historical swaps expired 
or terminated prior to April 25, 2011.
---------------------------------------------------------------------------

    \32\ The NOPRs for both parts 45 and 46 of this chapter used the 
term ``unique counterparty identifier'' in this context. As 
explained in the final part 45 rule, in response to comments the 
Commission has decided to use the term ``legal entity identifier,'' 
which refers to the same identifier and is in common international 
use, in order to prevent confusion.
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    The NOPR proposed that the unique swap identifier and unique 
product identifier requirements of part 45 of this chapter would not 
apply to historical swaps.
5. Determination of Which Counterparty Must Report
    The NOPR provided that determination of which counterparty is the 
reporting counterparty for a historical swap would be made in the same 
way provided in part 45 of this chapter. Counterparty reporting would 
follow the hierarchy outlined in the statute, giving SDs or MSPs the 
duty to report when possible, and limiting reporting by non-SD/MSP 
counterparties to situations where there is no SD or MSP counterparty. 
Where both counterparties have the same hierarchical status, the NOPR 
required them to agree as one term of their swap which of them is to 
report. Where only one counterparty to a historical swap is a U.S. 
person, the NOPR called for that counterparty to be the reporting

[[Page 35205]]

counterparty. For historical swaps in existence as of the applicable 
compliance date, the NOPR called for determination of the reporting 
counterparty to be made by applying the above provisions to the current 
counterparties to the swap as of the compliance date. For historical 
swaps for which reporting is required, but which have terminated prior 
to the compliance date, the NOPR called for determination of the 
reporting counterparty to be made as of the date of the swap's 
expiration or termination.
6. Third-Party Facilitation of Reporting
    The NOPR proposed explicit permission for third-party facilitation 
of data reporting with respect to historical swaps, without removing 
the reporting responsibility from the appropriate reporting 
counterparty.
7. Reporting a Swap To a Single SDR
    To avoid fragmentation of data for a given historical swap across 
multiple SDRs, the NOPR provided that all data for a particular 
historical swap must be reported to the same SDR to which the initial 
data report concerning the swap is made.
8. Reporting Swaps in an Asset Class Not Accepted by any SDR
    As required by section 729 of the Dodd-Frank Act, the NOPR provided 
that if there were an asset class for which no SDR currently accepted 
data, registered entities or counterparties required to report 
concerning historical swaps in such an asset class would be required to 
report the same data to the Commission at a time and in a form and 
manner determined by the Commission.
9. Data Standards
    The NOPR required reporting counterparties for historical swaps to 
use the facilities, methods, or data standards provided or required by 
the SDR to which the counterparty reports swap data.
10. Reporting Errors in Previously Reported Data
    Finally, the NOPR required reporting counterparties to report any 
errors or omissions in reported data, in the same format as the 
original data report, as soon as technologically practicable after 
their discovery. Non-reporting counterparties discovering an error or 
omission would be required to notify the reporting counterparty, who in 
turn would be required to report them to the SDR.

F. Overview of Comments Received

    The Commission received 12 comment letters in response to its 
proposal. Commission staff also held three public roundtables relating 
to swap data reporting, on September 14, 2010, January 28, 2011, and 
June 6, 2011, which provided input from a broad cross-section of 
industry and private sector experts concerning issues relating to the 
NOPR. Comments are addressed in the discussion below. Some comments 
received by the Commission requested further clarification relating to 
definitions provided in the NOPR, or regarding the application of NOPR 
provisions in various contexts. Additional or modified definitions 
included in the final rule are provided for clarification and do not 
impose new substantive requirements.

II. Part 46 of the Commission's Regulations

    New part 46 contains provisions governing swap data recordkeeping 
and reporting for pre-enactment swaps and transition swaps. Definitions 
are set forth in Sec.  46.1. Section 46.2 establishes swap 
recordkeeping requirements for swap counterparties subject to the 
Commission's jurisdiction. Section 46.3 establishes swap data reporting 
requirements. Required use of unique identifiers in swap data 
recordkeeping and reporting for historical swaps is addressed in Sec.  
46.4. Determination of which counterparty must report swap data for 
each swap is established by Sec.  46.5. Third-party facilitation of 
swap data reporting is addressed by Sec.  46.6. Section 46.7 
establishes requirements for reporting all data concerning a swap to a 
single SDR. Section 46.8 addresses data reporting for swaps in a swap 
asset class not accepted by any SDR. Section 46.9 addresses voluntary 
supplemental reporting. Section 46.10 establishes required data 
standards for swap data reporting. Finally, Sec.  46.11 sets forth 
requirements for reporting concerning errors and omissions in 
previously reported swap data.

A. Recordkeeping Requirements

1. Proposed Rule
    For historical swaps in existence on or after April 25, 2011, the 
NOPR imposed limited, specific recordkeeping obligations. 
Counterparties to such swaps would be required to keep records of an 
asset class-specific set of specified, minimum primary economic terms. 
They would also be required to keep records of a confirmation of their 
swaps if they had that information in their possession on or after 
April 25, 2011, the date from which public notice of specific 
recordkeeping requirements for historical swaps was available. In 
parallel with the proposed rules in part 45 of this chapter, the NOPR 
also called for counterparties to such swaps to keep copies of any 
master agreement or credit support agreement pertaining to the swap, if 
such copies were in the counterparty's possession on or after April 25, 
2011. For a historical swap in existence on or after April 25, 2011, 
that remains in existence after the applicable compliance date, 
counterparties would also be required to keep for that swap any records 
required by Sec.  45.2 of this chapter, to the extent that such records 
are created by or become available to the counterparty on or after the 
compliance date.
    For a pre-enactment swap expired or terminated prior to April 25, 
2011, the NOPR called for counterparties to keep the information and 
documents relating to the terms of the swap that were possessed by the 
counterparty on or after October 15, 2010, the publication date for the 
Interim Final Rule For Pre-Enactment Swaps. For a transition swap 
expired or terminated prior to April 25, 2011, the NOPR called for 
counterparties to keep the information and documents relating to the 
terms of the swap that were possessed by the counterparty on or after 
December 17, 2010, the date of publication of the Interim Final Rule 
For Transition Swaps. For all such historical swaps, the NOPR provided 
that counterparties could retain this information in the format in 
which it existed on or after the relevant Interim Final Rule 
publication date, or in such other format as the counterparty chooses 
to retain it.
    For all historical swaps, the NOPR called for retention of required 
records through the life of the swap and for five years following its 
termination. Records kept by SDs and MSPs would be required to be 
readily accessible through the life of the swap and for two years 
following its termination, and retrievable within three business days 
during the remainder of the retention period. Records kept by non-SD/
MSP counterparties would be required to be retrievable within three 
business days throughout the retention period.
2. Comments Received
    a. Recordkeeping for historical swaps in existence on or after 
April 25, 2011. The Coalition of Physical Energy Companies (``COPE'') 
and the Electric Trade Association (``ETA'') supported limiting the 
records required for historical swaps in existence on or after April 
25, 2011, to minimum PET data and related documentation as proposed.

[[Page 35206]]

Both these commenters stated that such data includes commercially 
relevant terms typically retained by most swap counterparties, although 
both noted that small entities involved in few swaps might not retain 
all such data. COPE also stated that requiring a counterparty to keep 
records of ``all terms'' of any confirmation in its possession is too 
vague, and that a counterparty could not be sure of meeting a 
requirement to keep records of any modification of a master or credit 
support agreement. The International Swaps and Derivatives Association 
(``ISDA'') stated that the scope and nature of the required minimum PET 
data, particularly time of trade data for credit swaps, could require 
some retroactive data creation. The Financial Services Roundtable 
(``FSR'') noted that its members might not necessarily have all the 
specified minimum PET data, particularly in the context of mergers or 
identification of settlement agents for historical currency swaps.
    b. Recordkeeping for historical swaps expired prior to April 25, 
2011. ISDA noted that, for historical swaps expired prior to April 25, 
2011, the proposed rule did not require parties to alter the format in 
which they already retain records, and requested clarification 
concerning whether this conflicted with the NOPR's general requirement 
for records to be kept in a form and manner acceptable to the 
Commission. ISDA argued that reporting counterparties whose current 
recordkeeping format would not enable making records electronically 
accessible in real time should not have to meet this accessibility 
requirement for historical swaps already reported to a repository that 
registers as an SDR. ISDA further recommended that SDs and MSPs not be 
required to keep records readily accessible during the first two years 
of the five years following termination of the swap, but instead that 
they should be required to make such records accessible within a 
reasonable time during the five years following termination of the 
swap. The Working Group of Commercial Energy Firms (``WGCEF'') 
requested clarification that keeping records in the form in which they 
are already retained would be acceptable to the Commission for all 
historical swaps, and requested that its members be required to make 
records available within three business days throughout the retention 
period. COPE stated that the requirement for counterparties to keep 
whatever information and documents they have relating to the terms of a 
historical swap expired before April 25, 2011, is too vague and 
overbroad, and asked that the requirement be limited to only the PET 
data listed in the NOPR Appendix.
    c. Records relating to credit support agreements. With respect to 
the NOPR requiring for counterparties to keep records of credit support 
agreements or ``equivalent documentation relating to the swap,'' WGCEF 
commented that the term ``equivalent documentation'' was overbroad, and 
asked for clarification of what constitutes such documentation.
3. Final Rule
    a. Recordkeeping for historical swaps in existence on or after 
April 25, 2011. The Commission has considered all of the comments, 
including the comments stating that most counterparties to historical 
swaps will have records of the commercially relevant, limited set of 
minimum PET data called for in the NOPR. It has also considered the 
comments stating that all counterparties to historical swaps in 
existence on or after April 25, 2011, and particularly smaller 
counterparties not involved in large numbers of swaps, might not have 
records of all such terms for each such swap in which they were a 
counterparty, and the comments noting the undesirability of retroactive 
creation or recreation of records concerning historical swaps, 
particularly records of execution times, which some counterparties may 
not have. In light of these considerations, and in order to limit 
burdens on counterparties to the extent consistent with the minimum 
information the Commission will need concerning historical swaps, the 
Commission has determined that the final rule will require 
counterparties to historical swaps in existence on or after April 25, 
2011 (the date on which publication of the NOPR provided notice of what 
records would be required) to keep records of all information specified 
in the minimum PET data tables included in Appendix 1 which was in 
their possession on or after April 25, 2011. The NOPR provided that a 
counterparty to such a swap must keep records of confirmation terms, 
and of master or credit support agreements and modifications thereto, 
only if such records are in the possession of the counterparty on or 
after April 25, 2011. The Commission does not believe this requirement 
is unclear or unduly burdensome, and has determined that it should be 
retained in the final rule.
    b. Recordkeeping for historical swaps expired prior to April 25, 
2011. The Commission has considered these comments, and has determined 
that the final rule should retain the NOPR provisions concerning 
limited recordkeeping for historical swaps expired prior to April 25, 
2011, which required counterparties to keep only the information and 
documents concerning such swaps that were in their possession on or 
after the date of the applicable Interim Final Rule. The final rule 
provides that counterparties may keep these records in any format they 
choose. The final rule calls for all counterparties to historical swaps 
expired prior to April 25, 2011 to be able to retrieve such records 
within five business days throughout the retention period, rather than 
requiring counterparties to keep the records readily accessible for 
part of the retention period or to be able to retrieve records within 
three business days, as provided in the NOPR. This reduced 
retrievability requirement is designed to mitigate costs for 
counterparties to historical swaps expired prior to April 25, 2011, 
while achieving the same regulatory objective.
    c. Records relating to credit support agreements. The Commission 
has considered the comment requesting clarification of the meaning of 
``equivalent documentation'' in the context of records of credit 
support agreements for historical swaps. The Commission recognizes 
that, while some swap counterparties may enter into credit support 
agreements, others may enter into other agreements that fulfill the 
same function. The Commission believes that records of such agreements 
can be important for market supervision and enforcement purposes as 
well as for prudential supervision. To clarify the intent of the rule 
in this regard, the final rule eliminates the phrase ``equivalent 
documentation,'' and addresses records of credit support agreements or 
other agreements between counterparties having the same function as a 
credit support agreement.

B. Swap Data Reporting

1. Proposed Rule
    a. Reporting for historical swaps in existence on or after April 
25, 2011. For each pre-enactment or transition swap in existence on or 
after April 25, 2011, the NOPR called for an initial data report on the 
applicable compliance date; and, if the swap has not expired or been 
terminated as of the compliance date, for ongoing reporting of required 
swap continuation data, as defined in part 45 of this chapter, during 
the remaining existence of the swap.
    The NOPR called for the initial data report for such swaps to 
include either all of the minimum primary economic terms specified in 
the NOPR Appendix,

[[Page 35207]]

or all of the terms of the confirmation of the swap if those terms 
include all of the minimum primary economic terms specified in the NOPR 
Appendix. It also called for the initial data report to include: the 
LEI of the reporting counterparty and the internal identifier used by 
the automated systems of the reporting counterparty to identify the 
non-reporting counterparty; \33\ the internal transaction identifier 
used by the automated systems of the reporting counterparty to identify 
the swap; and the internal master agreement identifier (if any) used by 
the automated systems of the reporting counterparty to identify the 
master agreement governing the swap.
---------------------------------------------------------------------------

    \33\ The NOPR also called for later reporting of the LEI of the 
non-reporting counterparty, after that LEI was obtained as provided 
in the NOPR.
---------------------------------------------------------------------------

    Where the reporting counterparty has reported any of the 
information required as part of the initial data report to a trade 
repository prior to the applicable compliance date, if that repository 
has registered as an SDR by the compliance date the NOPR provided that 
the reporting counterparty would not be required to report such 
previously reported information again, and would be required to report 
only such initial data report information as had not been previously 
reported.
    With respect to continuation data reporting, the NOPR followed the 
proposed rules for part 45 of this chapter in calling for continuation 
data reporting to follow the life cycle approach for credit swaps and 
equity swaps, and the snapshot approach for interest rate swaps, 
currency swaps, and other commodity swaps. Where the snapshot approach 
was required, the NOPR called for SD and MSP reporting counterparties 
to report all continuation data required under part 45, but limited 
such reporting by non-SD/MSP reporting counterparties to the data 
elements in the PET data tables in the Appendix to part 46 in cases 
where they did not possess all continuation data specified in part 45 
on the compliance date.
    b. Reporting for historical swaps expired or terminated prior to 
April 25, 2011. For historical swaps expired or terminated prior to 
April 25, 2011, the NOPR proposed only a single data report, made on 
the applicable compliance date. In the case of a pre-enactment swap, 
this report would include such information relating to the terms of the 
swap as was in the reporting counterparty's possession on or after 
October 14, 2010, the date of publication of the Interim Final Rule for 
Pre-Enactment Swaps. In the case of a transition swap, this report 
would include such information relating to the terms of the swap as was 
in the reporting counterparty's possession on or after December 17, 
2010, the date of publication of the Interim Final Rule for Transition 
Swaps. In both cases, the information would be permitted to be reported 
via any method or in any format selected by the reporting counterparty.
2. Comments Received
    a. PET data for historical swaps. Commenters made a number of 
suggestions with respect to the PET data required to be reported for 
historical swaps in existence on or after April 25, 2011. Commenters 
generally viewed the NOPR requirement for reporting a specified, 
limited set of minimum PET data for historical swaps as reasonable, 
since they believed the specified PET data elements reflect the 
commercially relevant terms typically retained by swap counterparties. 
However, ETA, WGCEF, ISDA, and the Global Foreign Exchange Division 
(``Global Forex'') recommended that the requirement to report PET data 
should be limited to the data elements in the minimum PET data tables 
that are in the possession of the reporting counterparty. They argued 
that some counterparties, particularly smaller counterparties that may 
not trade swaps frequently, may not have captured or retained all of 
the specified data elements.
    Three commenters, ISDA, ETA, and WGCEF, requested that the 
Commission drop the catch-all category of ``any other primary economic 
term'' verified or matched by the counterparties from the required PET 
data for historical swaps, arguing that it would be better to define 
PET data precisely for historical swaps. ETA stated that requiring such 
information could require extensive text submissions of non-
standardized transaction terms, complicating the compilation task of 
the SDRs.
    Both ISDA and Global Forex requested that the Commission not 
require reporting the time of trade for a historical swap, arguing that 
in many cases counterparties may not have recorded this information 
when a historical swap was executed.
    ISDA recommended that the PET data tables should not include 
indications of whether either or both counterparties are SDs or MSPs, 
arguing that if the SDR already has this information from registration, 
it would be simpler and more reliable for this indication to be 
centrally supplied by the SDR. ISDA requested that reporting 
counterparties be permitted to report the legally binding record 
already present in an existing trade repository (called a ``gold 
record'' by some existing trade repositories), in lieu of reporting the 
required minimum PET data.
    b. Master agreement identifiers. ISDA, ETA, Global Forex, and WGCEF 
recommended eliminating the requirement to report master agreement 
identifiers. Global Forex noted that providing this data would impose a 
significant burden because such information is not routinely stored on 
the same systems as the other PET data specified in the tables. WGCEF 
argued that counterparties are in the best position to make exposure 
calculations and that the Commission already has the ability to request 
such information from them. The Coalition of Derivative End-Users 
(``End-User Coalition'') requested that the Commission explain the use 
and value of reporting master agreement identifiers.
    c. Continuation data reporting. ETA requested that non-SD/MSP 
reporting counterparties not be required to report continuation data, 
arguing that transactions not involving SDs and MSPs represent only a 
small portion of the swaps market, and that such a requirement would be 
unduly burdensome. Alternatively, ETA asked that non-SD/MSP reporting 
counterparties be permitted to report continuation data for historical 
energy swaps on a quarterly basis.
    d. Electronic images of swap documentation. WGCEF disagreed with 
the Commission's proposed prohibition on the electronic transmission of 
an image of a document to satisfy the electronic reporting requirements 
of the proposed rule, arguing that by prohibiting the use of images for 
reporting, the Commission is effectively requiring market participants 
to rely on more burdensome, costly, and less efficient means of 
gathering and submitting required data to SDRs. WGCEF asked the 
Commission to allow reporting counterparties to submit images of 
confirmations and other paper swap documentation in lieu of submission 
of normalized data in data fields.
    e. Reporting of data beyond specified PET data. WGCEF requested 
that reporting counterparties be permitted to report data beyond the 
data required in the proposed rules, including all data pertaining to 
the swap if that is less burdensome for the reporting counterparty, as 
long as the data required by the proposed rules is included in the data 
reported.
    f. Reporting by both counterparties to a swap. WGCEF asked the 
Commission to allow both counterparties to a historical swap report the 
data to an

[[Page 35208]]

SDR if they so choose. WGCEF argued that permitting such dual reporting 
would avoid the need for counterparties of equal reporting hierarchy 
status to negotiate which will be the reporting counterparty.\34\
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    \34\ WGCEF also stated that dual reporting may be necessary if 
the Commission has not issued a final rule on entity definitions 
before data reporting begins, since in that event counterparties 
would be unable to determine which of them has the obligation to 
report. The compliance dates established in parts 45 and 46 for swap 
data reporting eliminate this issue, since the initial compliance 
date will be the later of July 16, 2012 or 60 days after issuance of 
entity and product definitions.
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    g. Safe harbor for good faith reporting. Global Forex asked that 
counterparties be allowed to meet their reporting and recordkeeping 
obligations on a best efforts basis without the need to recreate or 
report data that might have been lost. Global Forex expressed concerned 
that parties to FX swaps who use the SWIFT Accord system or use paper 
confirmations to keep records would need to transfer this information 
to new systems to meet the proposed reporting and retrieval 
requirements of the rules. It noted that in the time between the 
enactment of the Dodd-Frank Act and the compliance date for reporting, 
internal systems may have gone through a number of upgrades or 
migrations, potentially resulting in loss of information and thus in 
incomplete data. The Financial Services Roundtable (``FSR'') also 
requested a safe harbor for institutions that have complied with the 
previously issued interim-final rules by preserving all information on 
file, yet do not have full records for pre-enactment swaps. ETA also 
asked the Commission to create a safe harbor for non-financial entities 
that keep records for historical swaps consisting of data elements 
routinely captured prior to enactment of the Dodd-Frank Act, in the 
format in which they are already kept, and report only such data, 
whether or not it includes all of the data required by the final rules, 
without having to gather any required data from paper records.
3. Final Rule
    a. PET data for historical swaps. The Commission has considered the 
comments stating that the minimum PET data proposed to be reported for 
historical swaps reflects the commercially relevant terms typically 
retained by swap counterparties. It has also considered the comments 
noting that some counterparties, particularly smaller counterparties 
that may not trade swaps frequently, may not have captured or retained 
all of the specified data elements. In order to mitigate costs and 
burdens for swap counterparties while achieving the same regulatory 
objective, the Commission has determined that the final rule will 
require reporting of all of the minimum primary economic terms 
specified in Appendix 1 that were in the possession of the reporting 
counterparty on or after April 25, 2011. The final rule will not 
require reporting of unspecified, additional primary economic terms 
matched or verified by the counterparties to such swaps. With respect 
to execution times, the final rule will require reporting the date of 
execution, and call for reporting the time of execution only if that 
time was recorded when the trade was executed and is known to the 
reporting counterparty on or after April 25, 2011.
    The Commission believes that the minimum PET data for historical 
swaps should include indications of whether either or both 
counterparties are SDs or MSPs, and that this information should be 
provided to SDRs. SDs and MSPs will register with the Commission, and 
their status will be determined by Commission rules. SDs and MSP will 
need to possess this information in order to comply with the final 
rule, and the Commission believes they will have automated systems 
capable of recording and reporting it. The Commission has also 
determined that the final rule will not provide for reporting a legally 
binding record already present in an existing trade repository in lieu 
of reporting the required minimum PET data. Both the NOPR and the final 
rule provide that reporting counterparties need not re-report required 
PET data already reported to an existing trade repository that 
registers with the Commission as an SDR prior to the applicable 
compliance date for reporting.
    b. Master agreement identifiers. The Commission has considered the 
comments recommending elimination of the requirement to report master 
agreement identifiers for historical swaps. In the final swap data 
reporting rules in part 45 of this chapter, the Commission has already 
determined that it should not require master agreement reporting in its 
first swap data reporting final rules. As noted in the Joint Study on 
the Feasibility of Mandating Algorithmic Descriptions for Derivatives 
released by the CFTC and SEC in April 2011, at present the terms of 
such agreements are not readily reportable in an electronic format, as 
market participants have not developed electronic fields representing 
terms of a master agreement.\35\ For these reasons, the Commission has 
determined that the final rule will not require reporting of master 
agreement identifiers. The Commission may choose to revisit this issue 
at some point in the future, if and when market participants and SDRs 
develop ways to represent the terms of such agreements electronically.
---------------------------------------------------------------------------

    \35\ Commodity Futures Trading Commission and Securities and 
Exchange Commission, Joint Study on the Feasibility of Mandating 
Algorithmic Descriptions for Derivatives, April 7, 2011, available 
at https://www.sec.gov/news/studies/2011/719b-study.pdf.
---------------------------------------------------------------------------

    c. Continuation data reporting. The Commission believes that 
continuation data reporting for uncleared historical swaps must be 
retained to enable regulators to monitor exposures and systemic risk, 
and to fulfill their market supervision and enforcement 
responsibilities.\36\ Quarterly reports concerning changes to the 
primary economic terms of such a swap would impede regulators' ability 
to see a current and accurate picture of the swap market. To take just 
one example, delaying reporting of a partial novation for a quarter 
would give regulators an inaccurate picture of what counterparties are 
exposed to the swap for a substantial period of time. The Commission 
has therefore determined that the final rule will retain the NOPR 
requirements with respect to continuation data reporting for uncleared 
historical swaps.\37\
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    \36\ The final part 45 rules, which apply to continuation data 
reporting for uncleared historical swaps, extend and phase in 
continuation data reporting for non-SD/MSP counterparties in order 
to reduce burdens to the extent consistent with the purposes of such 
reporting.
    \37\ Section 46.3(a)(2) of this final rule provides that ``For 
each uncleared pre-enactment or transition swap in existence on or 
after April 25, 2011, throughout the existence of the swap following 
the compliance date, the reporting counterparty must report all 
required swap continuation data * * * .'' This means that reporting 
counterparties for such swaps must report changes to primary 
economic terms occurring after the applicable compliance date. It 
does not require reporting of changes occurring after execution of 
the historical swap but prior to the compliance date.
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    Continuation data reporting for cleared historical swaps in 
existence on or after April 25, 2011, is affected by the fact that such 
swaps will have been cleared prior to the start of reporting on the 
applicable compliance date. Part 45 requires DCOs to report 
continuation data, including valuation data, for cleared swaps, and 
limits continuation data reporting by reporting counterparties to 
reporting of valuation data by SD or MSP reporting counterparties. For 
swaps executed after the applicable compliance date, continuation data 
reporting will be linked to the original swap through use of unique 
swap identifiers. However, the Interim Final Rules for pre-enactment 
and transition swaps and the

[[Page 35209]]

NOPR took the fundamental approach that the data reported for 
historical swaps should be the data possessed by those involved in 
originating such swaps. Neither the Interim Final Rules nor the NOPR 
placed an obligation on DCOs to report to an SDR or to be able to trace 
the link between a historical swap submitted for clearing on or after 
April 25, 2011, and the transactions or positions resulting from 
novation of such a historical swap to the clearing house.\38\ The 
Commission understands that it therefore could be problematic for a DCO 
to be able to report valuation data for historical swaps cleared prior 
to the applicable compliance date. In addition, neither the Interim 
Final Rules nor the NOPR directly addressed the effect of clearing on 
the reporting requirements for the swap. In light of these factors, and 
in order to reduce burdens to the extent consistent with the purposes 
of the Dodd-Frank Act, the Commission has determined that this final 
rule regarding swap data reporting for historical swaps will not 
require reporting of continuation data for cleared historical swaps. 
This determination is limited to the reporting of cleared historical 
swaps pursuant to part 46 and has no effect on reporting required under 
part 45. As noted above, all historical swaps in existence on or after 
April 25, 2011 that have been accepted for clearing will be reported by 
the reporting counterparty, and these reports will include an 
indication that the swap has been accepted for clearing and the 
identity of the DCO clearing the swap.\39\ Under part 46, a DCO will 
have no duty to make an initial data report for the resulting novated 
swaps. The Commission plans to further clarify how novated and cleared 
historical swaps should be reported under the Commission's data 
reporting rules
---------------------------------------------------------------------------

    \38\ Unique swap identifiers will not be available for such 
swaps.
    \39\ If further information concerning a cleared historical swap 
is needed, the Commission will have ability to obtain it through its 
special call authority.
---------------------------------------------------------------------------

    d. Electronic images of swap documentation. The Commission believes 
that permitting reporting to be limited to submission of images would 
prevent regulators from searching, retrieving, aggregating, and 
manipulating historical swap data in SDRs for essential purposes, 
including monitoring systemic risk, conducting market oversight and 
enforcement, and calculating block trade sizes relevant to real time 
reporting, among others. The NOPR proposed to reduce the reporting 
burden to the extent possible in this respect, by allowing submission 
of images to fulfill reporting requirements for historical swaps that 
expired prior to April 25, 2011. The Commission is adopting the rule as 
proposed and, in so doing, notes that a reporting counterparty that 
maintained information concerning a historical swap in paper form could 
fulfill the final rule electronic reporting requirements by entering 
the minimum PET data from a paper confirmation into a web interface 
provided by the SDR.
    e. Reporting of data beyond specified PET data. With respect to the 
comment requesting that reporting counterparties be permitted to report 
data beyond the data required by the final rule, as long as the 
required data is included in the data reported, the Commission notes 
that neither the NOPR nor the final rule bars reporting of additional 
data beyond the minimum required, provided that such additional data is 
accepted by the SDR to which required swap data is reported. The 
Commission also notes that it is a business decision of the SDR whether 
to accept such additional data.
    f. Reporting by both counterparties to a swap. The Commission has 
considered the comment asking that the final rule permit voluntary 
reporting for a historical swap by the non-reporting counterparty. The 
Commission received a number of comments to the same effect in 
connection with the swap data reporting rules in part 45 of this 
chapter.
    The Commission determined in part 45 that voluntary supplement 
reporting is technologically feasible and may have benefits for both 
data accuracy and counterparty business processes.\40\ As noted in part 
45, while the Dodd-Frank Act requires swap data reporting by only one 
counterparty and establishes a hierarchy for choosing the reporting 
counterparty, it does not prohibit voluntary swap data reporting to an 
SDR that supplements required reporting. The Commission's final part 49 
rules permit counterparties to access to information in SDRs concerning 
their own swaps, and notes that nothing forbids swap counterparties to 
use an SDR as a provider of third-party services going beyond 
acceptance of required swap data reports for regulatory purposes. For 
these reasons, the final rules in part 45 provide for voluntary 
supplemental reporting to any SDR by either counterparty of swap data 
that part 45 does not require that counterparty to report.
---------------------------------------------------------------------------

    \40\ 77 FR 2136 (January 13, 2012), at 2171.
---------------------------------------------------------------------------

    The Commission also determined in part 45 that, to avoid double-
counting of the same swap due to voluntary supplemental reports, and to 
ensure that data reported via a voluntary supplemental report (``VSR'') 
to the same SDR to which required data is reported is integrated into 
that SDR's record for the swap, each VSR must include minimum VSR 
information that ensures achievement of these purposes. As provided in 
part 45, this required VSR information includes: an indication that the 
report is a VSR; the USI for the swap that has been created as required 
by this part; the identity of the SDR to which all required creation 
data and continuation data is reported for the swap, if the VSR is made 
to a different SDR; the LEI of the counterparty making the VSR; and if 
applicable, an indication that the VSR is made pursuant to the law of a 
jurisdiction outside the U.S. To avoid confusion and double-counting, 
and to ensure that each VSR includes the USI for the swap, part 45 also 
provides that a VSR may not be made until after the USI for the swap 
has been created as provided in Sec.  45.5 and transmitted to the 
counterparty making the VSR.
    In light of these comments and considerations, the Commission has 
determined that the final rules in this part should align with part 45 
and permit voluntary supplemental reporting for historical swaps in 
existence on or after April 25, 2011. The Commission believes, for the 
reasons noted above, and as provided in part 45, that appropriate 
safeguards are needed with respect to such VSRs, to avoid confusion and 
double counting with respect to these swaps. The final rule therefore 
provides that a VSR concerning a historical swap may not be made until 
after the initial data report required by part 46 concerning the swap 
is made. The final rule also provides that a VSR concerning a 
historical swap must include: an indication that the report is a VSR; 
the identity of the SDR to which the required initial data report 
concerning the swap has been made; the LEI of the counterparty making 
the VSR; and, if applicable, an indication that the VSR is made 
pursuant to the law of a jurisdiction outside the U.S.
    One of the safeguards provided in part 45 is the inclusion in each 
VSR of the USI for the swap in question. SDRs are required by part 45 
to create USIs for swaps with a non-SD/MSP reporting counterparty 
through what is known as the ``name space'' method, under which the 
first characters of each USI created by an SDR will consist of a unique 
code that identifies that SDR, given to the SDR by the Commission 
during the SDR registration process. The automated systems of SDRs will 
create an identifier for each historical swap reported in the normal 
course of SDR operation. Due to the above-mentioned requirements of 
part 45, SDRs will have the capacity to

[[Page 35210]]

create SDR identifiers for historical swaps using the name space 
technique. This would make the SDR identifiers for historical swaps 
functionally equivalent to USIs. The part 46 NOPR provided that the USI 
requirements of part 45 would not apply to historical swaps, and the 
final rule retains this provision. To provide for historical swaps an 
essential safeguard against confusion and double-counting in the 
context of VSRs similar to the safeguard provided for swaps reported 
pursuant to part 45 by USIs, the final part 46 rule requires that each 
VSR for a historical swap in existence on or after April 25, 2011, must 
include the SDR identifier assigned to the swap by the automated 
systems of the SDR to which the required initial data report concerning 
the swap is made. The Commission strongly encourages all SDRs to use 
the name space capability they are required to have pursuant to part 45 
to create such SDR identifiers using the name space technique, making 
them functionally equivalent to USIs.\41\ This would enhance the 
safeguard provided by such SDR identifiers.
---------------------------------------------------------------------------

    \41\ The Commission is mindful in this connection of a comment 
made by TriOptima in the context of part 45 of this chapter 
concerning USIs. TriOptima noted that the swap market has a 
relatively large outstanding stock of transactions, some quite long-
dated, and a relatively thin flow of new transactions, and stated 
that having USIs for new transactions only would result in a long 
transition period where there are live contracts both with and 
without USIs, something TriOptima stated would be problematic from a 
technology perspective. TriOptima recommended the creation of USIs 
via the name-space technique as the best way to resolve the issue.
---------------------------------------------------------------------------

    g. Safe harbor for good faith reporting. The Commission has 
considered the comments which addressed possible safe harbor 
provisions. As discussed above, the Commission has determined in 
response to comments that the final rule will only require 
counterparties to historical swaps in existence on or after April 25, 
2011, the publication date of the NOPR, to report specified information 
in their possession as of that date. The final rule will only require 
counterparties to historical swaps expired or terminated prior to April 
25, 2011, to report whatever information was in their possession as of 
publication of the relevant Interim Final Rule. The Commission believes 
this is the appropriate way to address the fundamental concerns raised 
in these comments, which centered on problems that could be caused by 
requiring reporting of information not possessed by some counterparties 
and on the technological burdens involved.

C. Unique Identifiers

1. Proposed Rule
    The NOPR called for the initial data report for each historical 
swap in existence on or after April 25, 2011, to include the legal 
entity identifier (``LEI''),\42\ as provided in part 45 of this 
chapter, of the reporting counterparty, as well as the reporting 
counterparty's internal system identifiers for the non-reporting 
counterparty and the particular swap transaction in question. The NOPR 
proposed giving the non-reporting counterparty for each such historical 
swap an additional 180 days after the applicable compliance date to 
obtain an LEI. Once this LEI was obtained, the NOPR called for it to be 
provided to the reporting counterparty and reported by the reporting 
counterparty to the SDR. After LEIs were obtained for either 
counterparty, the NOPR proposed requiring the counterparty identified 
by an LEI and the SDR to to comply with the LEI requirements of part 45 
of this chapter with respect to LEIs. The NOPR provided that the LEI 
requirements of parts 45 and 46 would not apply to historical swaps 
expired or terminated prior to April 25, 2011. The NOPR proposed that 
the unique swap identifier and unique product identifier requirements 
of part 45 of this chapter would not apply to historical swaps.
---------------------------------------------------------------------------

    \42\ The NOPRs for both parts 45 and 46 of this chapter used the 
term ``unique counterparty identifier'' in this context. As 
explained in the final part 45 rule, in response to comments the 
Commission has decided to use the term ``legal entity identifier,'' 
which refers to the same identifier and is in common international 
use, in order to prevent confusion.
---------------------------------------------------------------------------

2. Comments Received
    a. Obtaining LEIs by the compliance date. The End-User Coalition, 
ETA, and ISDA raised concerns regarding whether counterparties will be 
able to obtain LEIs by the compliance date. ISDA commented that the 
requirement for reporting an LEI for each counterparty would require 
finalization of parts 45 and 46 in advance of the compliance date to 
allow the LEI system to be built. In the event that LEIs are not 
available by the applicable compliance date, WGCEF asked that the final 
rule LEI provisions not require re-reporting a historical swap in order 
to include LEIs in the data for such a swap, but instead permit 
submission of a cross-referenced table of counterparties' internal 
counterparty identifiers matched with the new LEIs.
    b. Non-SD/MSPs and LEIs. ETA asked that non-SD/MSP counterparties 
be placed on a compliance schedule separate from SDs and MSPs to allow 
time for entities to develop and implement the requisite systems and 
procedures to input and report identifiers. The End-User Coalition 
asked that non-SD/MSP counterparties be given at least 18 months after 
the final rule is issued to obtain LEIs, stating that a potential 
``logistical traffic jam'' of entities seeking LEIs, as well as the 
currently undefined process for obtaining the identifiers, could make 
obtaining LEIs difficult for non-SD/MSP counterparties.
3. Final Rule
    a. Obtaining LEIs by the compliance date. The Commission has 
determined that the final rule should maintain the NOPR provisions 
requiring use of LEIs in data reporting for historical swaps in 
existence on or after April 25, 2011. LEIs will be a crucial tool for 
enabling the Commission and other regulators to search, aggregate, and 
use the swap data reported to SDRs to fulfill the purposes of the Dodd-
Frank Act. Both the NOPR and the final rule address concerns regarding 
whether a Commission-approved LEI will be available by the compliance 
date by applying the provisions of part 45 of this chapter, including 
the provision for use of a substitute counterparty identifier in the 
event that an LEI is not available on the compliance date, until a 
Commission-approved LEI is available.
    b. Non-SD/MSPs and LEIs. The Commission has determined that the 
final rule should maintain the NOPR provisions concerning LEIs for non-
SD/MSP counterparties. The applicable compliance date set in the final 
rule for non-SD/MSP counterparties is 180 days after the compliance 
date for SDs and MSPs, and the final rule provides an additional 180 
days after the applicable compliance date for non-reporting 
counterparties to obtain an LEI. The Commission believe this 
appropriately addresses commenters' concerns relating to obtaining LEIs 
for non-SD/MSP counterparties.
    c. USIs and UPIs. The final rule retains the NOPR provision stating 
that the USI and UPI requirements of part 45 do not apply to historical 
swaps.

D. Determination of the Reporting Counterparty

1. Proposed Rule
    The NOPR provided that determination of which counterparty is the 
reporting counterparty for a historical swap would be made in the same 
way provided in part 45 of this chapter. Counterparty reporting would 
follow the hierarchy outlined in the

[[Page 35211]]

statute, giving SDs or MSPs the duty to report when possible, and 
limiting reporting by non-SD/MSP counterparties to situations where 
there is no SD or MSP counterparty. Where both counterparties have the 
same hierarchical status, the NOPR required them to agree as one term 
of their swap which of them is to report. Where only one counterparty 
to a historical swap is a U.S. person, the NOPR called for that 
counterparty to be the reporting counterparty. For historical swaps in 
existence as of the applicable compliance date, the NOPR called for 
determination of the reporting counterparty to be made by applying the 
above provisions to the current counterparties to the swap as of the 
compliance date. For historical swaps for which reporting is required, 
but which have terminated prior to the compliance date, the NOPR called 
for determination of the reporting counterparty to be made as of the 
date of the swap's expiration or termination.
2. Comments Received
    a. Non-agreement by counterparties at the same hierarchical level. 
WGCEF, Global Forex, ISDA, ETA, and Encana Marketing (``Encana'') each 
raised the issue of how to assign the reporting obligation in cases 
where counterparties cannot come to an agreement. ETA recommended that 
the Commission clarify that the parties are under no obligation to 
renegotiate the transaction to provide for additional consideration, 
and should structure its rules to assume that the transaction data will 
be reported by one or both counterparties, or neither. WGCEF 
recommended allowing both counterparties to report if they cannot 
agree. ISDA stated that in cases where the hierarchy does not resolve 
the issue, the final rules should designate the calculation agent as 
the reporting counterparty. Global Forex recommended not requiring 
reporting of historical swaps that expire prior to the compliance date, 
to reduce the number of instances where counterparties would need to 
agree on which of them should report.
    b. Date for determining counterparty reporting obligations. For 
historical swaps which must be reported but which have expired prior to 
the compliance date, the proposed regulations called for determining 
the reporting counterparty by applying the statutory reporting 
hierarchy to the parties who were counterparties to the swap when it 
expired. ISDA noted that it may be difficult or impossible to determine 
whether a counterparty was an SD or MSP as of an expiration that 
occurred before final SD or MSP definitions and a registration system 
are put in place, and recommended that the reporting counterparty for 
such swaps be determined as of the compliance date.
    c. Non-U.S. counterparties. The End-User Coalition, ETA, WGCEF and 
ISDA recommended that a foreign SD or MSP should be the reporting 
counterparty for a historical swap in which the other counterparty is a 
U.S. non-SD/MSP. ISDA argued that requiring a non-SD/MSP to report in 
circumstances where the counterparty is a foreign SD could dissuade 
U.S. parties from engaging in transactions with foreign SDs. In 
contrast, Encana supported the proposed rule provision requiring the 
U.S. person to be the reporting counterparty in circumstances where 
only one of the parties is a U.S. person.
    d. Historical swaps platform-executed or cleared prior to the 
compliance date. ETA recommended that the final regulations should 
provide that, if a reportable historical swap between non-SD/MSP 
counterparties was executed prior to the compliance date on a platform 
later registered as a SEF or DCM, or was cleared prior to the 
compliance date by a DCO, the SEF, DCM, or DCO should be required to 
make the initial data report for the swap, in lieu of a report by 
either non-SD/MSP counterparty.
3. Final Rule
    a. Non-agreement by counterparties at the same hierarchical level. 
The Commission has determined that the final rule should substantially 
maintain the NOPR provisions concerning determination of the reporting 
counterparty. The Commission believes that requiring swap 
counterparties to agree on which of them is the reporting counterparty 
``as one term of their swap transaction'' could require potentially 
problematic renegotiation of a pre-existing swap agreement. 
Accordingly, the final regulations remove the phrase ``as one term of 
their swap transaction'' from Sec.  46.5. The final rule requires 
counterparties to a historical swap at the same hierarchical level to 
agree prior to the applicable compliance date on which of them is the 
reporting counterparty, but does not require them to do so as a term of 
the swap.\43\ The final rule follows part 45 of this chapter in 
providing an additional decision factor for determining the reporting 
counterparty for a swap between two non-SD/MSP counterparties: in such 
situations, if only one of the two non-SD/MSP counterparties is a 
financial entity as defined in the Dodd-Frank Act, the financial entity 
will be the reporting counterparty. The final rule addresses the 
concern raised in one comment about the difficulty of determining the 
reporting counterparty in the absence of definitions of swap dealer and 
major swap participant, by providing that the compliance dates on which 
historical swaps must be reported will come no less than 60 days after 
publication of such definitions.
---------------------------------------------------------------------------

    \43\ The Commission expects to provide interpretative guidance 
concerning determination of the reporting counterparty in situations 
where a historical swap was executed and submitted for clearing via 
a platform on which the counterparties to the swap do not know each 
other's identity.
---------------------------------------------------------------------------

    b. Date for determining counterparty reporting obligations. The 
Commission believes that it is prudent to determine the reporting 
counterparty for a historical swap as of the applicable compliance date 
where possible. The final rule provides that for historical swaps in 
existence as of the applicable compliance date, the reporting 
counterparty shall be determined by applying Sec.  46.5 to the current 
counterparties as of that date. For historical swaps expired or 
terminated prior to the compliance date, the final rule requires 
determination of the reporting counterparty by applying Sec.  46.5 to 
the counterparties to the swap as of the date of its expiration or 
termination (except for determination of a counterparty's status as an 
SD or MSP, which shall be determined as of the compliance date).
    c. Non-U.S. counterparties. The Commission has considered the 
comments recommending that a non-U.S. SD or MSP in a historical swap 
with a U.S. counterparty at a lower hierarchical level should be the 
reporting counterparty despite its status as a non-U.S. person. The 
Commission received a large number of similar comments in connection 
with its part 45 rules. It determined in part 45 in response to those 
comments that, because non-U.S. SDs and MSPs will be required to 
register with the Commission in this connection, the Commission will 
have sufficient oversight and enforcement authority with respect to 
such counterparties.\44\ The Commission therefore determined in part 45 
that, with a single exception, the determination of the reporting 
counterparty in situations where only one counterparty is a U.S. person 
should be made by applying the normal counterparty determination 
procedure. In cases where both counterparties are non-SD/MSP 
counterparties and only one counterparty is a U.S. person, part 45 
requires the U.S. person to be the reporting counterparty, which is

[[Page 35212]]

necessary in such situations because the non-U.S. non-SD/MSP 
counterparty will not be required to register with the Commission. 
Where neither counterparty to a swap executed on a SEF or DCM, 
otherwise executed in the U.S., or cleared on a DCO is a U.S. person, 
part 45 applies the same hierarchical selection criteria as for other 
swaps. In response to the comments on this subject made in connection 
with both parts 45 and 46, and for the same reasons, the Commission has 
determined that this final rule will follow part 45, as set forth 
above, with respect to determination of the reporting counterparty in 
this context.
---------------------------------------------------------------------------

    \44\ 77 FR 22136 (January 13, 2012), at 2167.
---------------------------------------------------------------------------

    d. Historical swaps platform-executed or cleared prior to the 
compliance date. The NOPR did not call for platform reporting of PET 
data or DCO reporting of confirmation data with respect to historical 
swaps, but mandated reporting by the reporting counterparty. The 
Commission has determined that the final rule should maintain these 
NOPR provisions. Counterparties to historical swaps in existence on or 
after April 25, 2011, were put on notice by the NOPR to retain records 
of the minimum PET data that will be required to be reported for such 
swaps, and as discussed above, the final rule limits required reporting 
for such swaps to the specified minimum PET data in the possession of 
the reporting counterparty as of April 25, 2011. Such reporting by the 
reporting counterparty should therefore be practicable. The Commission 
believes it may be impracticable to require execution facilities or 
DCOs to report data for swaps executed or cleared by them at a time 
when they were neither required by a rule nor on notice pursuant to a 
notice of proposed rulemaking to retain data for the purpose of making 
such a report.\45\
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    \45\ As discussed above at pages 31-33, the Commission plans to 
further clarify how novated and cleared historical swaps should be 
reported under the Commission's data reporting rules.
---------------------------------------------------------------------------

E. Third-Party Facilitation of Data Reporting

1. Proposed Rule
    The NOPR proposed explicit permission for third-party facilitation 
of data reporting with respect to historical swaps, without removing 
the reporting responsibility from the appropriate reporting 
counterparty.
2. Comments Received
    The Commission received no comments concerning this NOPR provision.
3. Final Rule
    The Commission has determined that the final rule should maintain 
this NOPR provision as proposed.

F. Reporting to a Single Swap Data Repository

1. Proposed Rule
    To avoid fragmentation of data for a given historical swap across 
multiple SDRs, the NOPR provided that all data for a particular 
historical swap must be reported to the same SDR to which the initial 
data report concerning the swap is made.
2. Comments Received
    The Commission received no comments concerning this NOPR provision.
3. Final Rule
    The Commission has determined that the final rule should maintain 
this NOPR provision as proposed.

G. Data Reporting for Swaps in a Swap Asset Class Not Accepted by Any 
Swap Data Repository

1. Proposed Rule
    As required by section 729 of the Dodd-Frank Act, the NOPR provided 
that if there were an asset class for which no SDR currently accepted 
data, registered entities or counterparties required to report 
concerning historical swaps in such an asset class would be required to 
report the same data to the Commission at a time and in a form and 
manner determined by the Commission.
2. Comments Received
    The Commission received no comments concerning this NOPR provision.
3. Final Rule
    The Commission determined in part 45 that, in this circumstance, 
data should be reported at times announced by the Commission and in an 
electronic format acceptable to the Commission. Part 45 delegates to 
the Commission's Chief Information Officer the authority to determine 
such times and formats. Since the part 46 NOPR called for reporting in 
this context at a time and in a form and manner determined by the 
Commission, the final rule must specify the Commission's requirements 
in these respects. The Commission has determined that, for historical 
swaps in existence on or after April 25, 2011, the final rule should 
provide, in parallel with part 45, that in this circumstance, data must 
be reported at times announced by the Commission and in an electronic 
format acceptable to the Commission. The final rule delegates to the 
Commission's Chief Information Officer, also in parallel with part 45, 
the authority to determine such times, and to determine with respect to 
historical swaps in existence on or after April 25, 2011, the 
electronic format for making the report. For historical swaps expired 
or terminated as of that date, the final rule permits reporting in any 
format chosen by the reporting counterparty.

H. Required Data Standards

1. Proposed Rule
    The NOPR required reporting counterparties for historical swaps to 
use the facilities, methods, or data standards provided or required by 
the SDR to which the counterparty reports swap data.
2. Comments Received
    The Commission received no comments concerning this NOPR provision.
3. Final Rule
    The Commission has determined that the final rule should maintain 
these NOPR provisions as proposed.

I. Reporting of Errors and Omissions in Previously Reported Data

1. Proposed Rule
    The NOPR required reporting counterparties to report any errors or 
omissions in reported data, in the same format as the original data 
report, as soon as technologically practicable after their discovery. 
Non-reporting counterparties discovering an error or omission would be 
required to notify the reporting counterparty, who in turn would be 
required to report them to the SDR.
2. Comments Received
    The Commission received no comments concerning this NOPR provision.
3. Final Rule
    The Commission has determined that the final rule should maintain 
these NOPR provisions as proposed.

J. Compliance Dates

1. Proposed Rule
    The proposed rules require swap data reporting for historical swaps 
to commence on the compliance date specified in the Commission's final 
swap data recordkeeping and reporting regulations in part 45.
2. Comments Received
    a. Compliance date on which reporting begins. Due to the dependence

[[Page 35213]]

of part 46 on other rulemakings, especially final rules defining 
``swap,'' ``swap dealer,'' and ``major swap participant,'' several 
commenters requested that Part 46 compliance and implementation take 
place on a staggered basis that takes the need for such definitions 
into account. Commenters stated that differences between asset classes 
with respect to both existing automation and existing data 
normalization are significant and should also be taken into account. 
Commenters made several specific recommendations concerning compliance 
dates and phasing also made by them in connection with part 45, which 
the Commission has already considered and addressed in part 45, and 
will not address again here.
    b. Using the same compliance dates for parts 45 and 46. WGCEF 
stated that the compliance date on which the initial data report for 
historical swaps must be made should not be the same compliance date 
provided for the beginning of swap data reporting pursuant to part 45, 
in order to avoid subjecting SDRs to a logjam of data on that date, and 
advocated setting the part 46 compliance date for historical swap data 
reporting somewhat earlier than the part 45 compliance date.
3. Final Rule
    a. Compliance date on which reporting begins. The Commission 
believes that the compliance dates for swap data reporting under part 
46 should take into account the need for Commission definitions of 
``swap,'' ``swap dealer,'' and ``major swap participant.'' The 
Commission also believes that the compliance dates for swap data 
reporting should take both asset class differences and the needs of 
non-SD/MSP reporting counterparties into account. As set forth in part 
45, the compliance dates established in part 45 phase in compliance 
dates in both these respects. Accordingly, the Commission has 
determined that this final rule will maintain the NOPR provision 
setting the same compliance dates for both parts 45 and 46. The 
Commission believes that these compliance dates strike the appropriate 
balance between the need for swaps data by the Commission charged with 
achieving the purposes of the Dodd-Frank Act and potential costs and 
burdens that may be imposed on market participants.
    b. Using the same compliance dates for parts 45 and 46. Since 
automated systems for swap data reporting must be developed, tested, 
and used for reporting with respect to both historical and new swaps, 
the Commission believes that setting the same compliance dates for data 
reporting in both part 45 and part 46, as provided in the proposed 
rules, remains appropriate. However, the Commission recognizes that 
having some initial data reporting for historical swaps pursuant to 
part 46 precede the start of data reporting for new swaps pursuant to 
part 45 could have the practical benefit of reducing the volume of data 
SDRs would have to receive on a single day if data reporting for all 
historical swaps as well as new swaps began on the same date. In light 
of comments and these considerations, the final rule will permit 
voluntary initial data reporting for historical swaps prior to the 
applicable compliance date, if a registered SDR is prepared to accept 
the initial data report required by this part prior to the applicable 
compliance date. Where such a voluntary early initial data report is 
made, continuation data reporting for the swap in question will still 
be required to commence as of the applicable compliance date.

III. Related Matters

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601 et seq., 
requires that agencies consider the impact of their rules on ``small 
entities.'' As provided in the NOPR, this part will have a direct 
effect on SDs, MSPs, and non-SD/MSP counterparties who are 
counterparties to one or more pre-enactment or transition swaps and 
subject to the Commission's jurisdiction.
    As stated in the NOPR,\46\ the Commission proposed that certain 
entities for which the Commission had not previously made a 
determination for RFA purposes--namely SDs, and MSPs--should not be 
considered to be small entities, for reasons set forth in the NOPR.
---------------------------------------------------------------------------

    \46\ 76 FR 22833.
---------------------------------------------------------------------------

    As noted in the NOPR, this part requires limited swap data 
reporting by a non-SD/MSP counterparty regarding pre-enactment and 
transition swaps only with respect to the swaps in which neither 
counterparty is an SD or MSP. With respect to such swaps, which 
represent a minority of swap transactions, only one of the swap non-SD/
MSP counterparties will be required to report--the counterparty 
designated as the reporting counterparty. In addition, the Commission 
has determined that the final rule provides that for swaps between non-
SD/MSP counterparties where only one counterparty is a ``financial 
entity'' as defined in CEA section 2(h)(7)(C), the financial entity 
shall be the reporting counterparty. As the NOPR noted, most end users 
and other non-SD/MSP counterparties who are regulated by the Employee 
Retirement Income Security Act of 1974 (``ERISA''), such as pension 
funds, which are among the most active participants in the swap market, 
are prohibited from transacting directly with other ERISA-regulated 
participants.\47\
---------------------------------------------------------------------------

    \47\ 29 U.S.C. 1106.
---------------------------------------------------------------------------

    With respect to SDs, the Commission previously has determined that 
Futures Commission Merchants (``FCMs'') should not be considered to be 
small entities for purposes of the RFA.\48\ Like FCMs, SDs will be 
subject to minimum capital and margin requirements and are expected to 
comprise the largest global financial firms.\49\ Similarly, with 
respect to MSPs, the Commission has previously determined that large 
traders are not ``small entities'' for RFA purposes.\50\ Like large 
traders, MSPs will maintain substantial positions, creating substantial 
counterparty exposure that could have serious adverse effects on the 
financial stability of the U.S. banking system or financial markets.
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    \48\ 47 FR 18618 (Apr. 30, 1982).
    \49\ Additionally, the Commission is required to exempt from 
designation entities that engage in a de minimis level of swaps. Id. 
at 18619.
    \50\ 47 FR at 18620.
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    For these reasons, the Commission does not believe that the 
regulations would have a significant economic impact on a substantial 
number of small entities. The Commission believes these provisions of 
the final rule reduce the economic impact on any non-SD/MSP 
counterparties that may be considered to be small entities under the 
RFA.
    Due to the operation of certain provisions of the CEA and the final 
rule, non-SD/MSP counterparties who may be considered small entities 
for RFA purposes are never required to report any swap creation data. 
Under the CEA, a non-SD/MSP counterparty is required to transact on a 
SEF or DCM unless that non-SD/MSP is an Eligible Contract Participant 
(``ECP'').\51\ The Commission

[[Page 35214]]

has previously determined that ECPs are not ``small entities'' for RFA 
purposes.\52\ For all swaps executed on a SEF or DCM, the final rule 
requires the SEF or DCM to report all required swap creation data. 
Therefore, no ``small entities'' for RFA purposes are required to 
report any swap creation data under the final rule.
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    \51\ CEA section 2(e) provides that ``It shall be 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.'' Congress created the ECP category in the Commodity 
Futures Modernization Act in 2000, to include individuals and 
entities that Congress determined to be sufficiently sophisticated 
in financial matters that they should be permitted to trade over-
the-counter swaps without the protection of federal regulation. See, 
e.g., ``Report of the President's Working Group on Financial 
Markets'' (Nov. 1999) at 16 (recommending that ``sophisticated 
counterparties that use OTC derivatives simply do not require the 
same protections under the CEA as those required by retail 
investors''). In the Dodd-Frank Act, Congress made two changes to 
the statutory ECP definition, both of which increased the thresholds 
to qualify as an ECP, making it harder for some entities and 
individuals to qualify. Compare CEA section 1a(12), 7 U.S.C. 1a(12) 
(2009), with Sec. Sec.  721(a)(1) and (9) of the Dodd-Frank Act, 
respectively redesignating section 1a(12) as section 1a(18) and 
increasing thresholds for certain categories of ECP.
    \52\ 66 FR 20740, 20743, Apr. 25, 2001.
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    In the NOPR, the Chairman, on behalf of the Commission, certified 
that the rulemaking would not have a significant economic effect on a 
substantial number of small entities. Nonetheless, the Commission 
specifically requested comment on the impact these proposed rules may 
have on small entities. The Commission received one comment on its RFA 
statement, from the Electric Coalition, stating that the vast majority 
of members of the National Rural Electric Cooperative Association and 
the American Public Power Association are considered small entities for 
purposes of the RFA. The Electric Coalition recommended that the 
Commission should consider the overall impact of its Dodd-Frank Act 
rules on nonfinancial entities, including small entities, and conduct a 
comprehensive analysis under the RFA.
    In response to this comment, and to other comments by non-SD/MSP 
counterparties, the Commission has adjusted the final reporting regime 
to reduce burdens and costs for non-SD/MSP counterparties in a variety 
of ways, as set forth in detail in the discussion above concerning 
Sec. Sec.  45.3 and 45.4 of the final rule. The Commission notes that 
the commenter did not dispute the reasons for the Commission's 
conclusion that this part does not have a significant impact on a 
substantial number of small entities. For these reasons, and for the 
reasons stated above and in the NOPR, the Commission continues to 
believe that this part will not have a significant impact on a 
substantial number of small entities. Therefore, the Chairman, on 
behalf of the Commission, hereby certifies, pursuant to 5 U.S.C. 
605(b), that this part as finally adopted will not have a significant 
economic impact on a substantial number of small entities.

B. Paperwork Reduction Act

1. Introduction
    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 issued by the Office of Management and 
Budget (``OMB''). Provisions of Commission Regulations 46.2, 46.3, 
46.4, 45.8, 45.10 and 45.11 result in information collection 
requirements within the meaning of the Paperwork Reduction Act 
(``PRA'').\53\ The Commission submitted the NOPR and supporting 
documentation to OMB for review in accordance with 44 U.S.C. 3507(d) 
and 5 CFR 1320.11. The Commission requested that OMB approve, and 
assign a new control number for, the collections of information covered 
by the NOPR.
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    \53\ 44 U.S.C. 3301 et. seq.
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    The title for the proposed collection of information under part 46 
is ``Swap Data Recordkeeping and Reporting: Pre-Enactment and 
Transition Swaps.'' The OMB has assigned this collection control number 
3038-0089. The responses to this new collection of information are 
mandatory. 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.
2. Need for Information Collection
    To the extent that the recordkeeping and reporting requirements in 
this rulemaking overlap with the requirements of other rulemakings for 
which the Commission prepared and submitted an information collection 
request to OMB, the burdens associated with those requirements are not 
being accounted for in the information collection request for this 
rulemaking, to avoid unnecessary duplication of information collection 
burdens.
    The collection of information under these regulations is necessary 
to implement certain provisions of the CEA, as amended by the Dodd-
Frank Act. Specifically, it is essential to reducing risk, achieve 
market transparency, and for market supervision purposes for which the 
Dodd-Frank Act was enacted. Such data will be needed to give the 
Commission a complete picture of the swap market. Data concerning 
historical swaps also is necessary for the Commission to prepare the 
semi-annual reports it is required to provide to Congress regarding the 
swap market.
3. Comment on Proposed Information Collection
    The Commission invited the public and other federal agencies to 
comment on any aspect of the reporting and recordkeeping burdens 
estimates. There was one comment from Encana relating to the collection 
of information estimates. Encana commented that the 10 hour one-time 
burden estimate in the proposal for non-reporting entities was too low. 
The Commission addresses this and other related comments as follows.
    Under the final rules, the Commission has revised its estimates 
provided for in the proposal for reporting entities and persons who 
will provide information under sections 46.2, 46.3, 46.4, 45.8, 45.10 
and 45.11 of this part. The information provided under each regulation 
is set forth below, together with burden estimates that were 
calculated, through research and through consultation with the 
Commission's technology staff, using wage rate estimates based on 
salary information for the securities industry compiled by the 
Securities Industry and Financial Markets Association (``SIFMA'').\54\
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    \54\ These wage estimates are derived from an industry-wide 
survey of participants and thus reflect an average across entities; 
the Commission notes that the actual costs for any individual 
company or sector may vary from the average. The Commission 
estimated the dollar costs of hourly burdens for each type of 
professional using the following calculations:
    (1) [(2009 salary + bonus) * (salary growth per professional 
type, 2009-2010)] = Estimated 2010 total annual compensation. The 
most recent data provided by the SIFMA report describe the 2009 
total compensation (salary + bonus) by professional type, the growth 
in base salary from 2009 to 2010 for each professional type, and the 
2010 base salary for each professional type; thus, the Commission 
estimated the 2010 total compensation for each professional type, 
but, in the absence of similarly granular data on salary growth or 
compensation from 2010 to 2011 and beyond, did not estimate dollar 
costs beyond 2010.
    (2) [(Estimated 2010 total annual compensation)/(1,800 annual 
work hours)] = Hourly wage per professional type.]
    (3) [Hourly wage) * (Adjustment factor for overhead and other 
benefits, which the Commission has estimated to be 1.3)] = Adjusted 
hourly wage per professional type.]
    (4) [(Adjusted hourly wage) * (Estimated hour burden for 
compliance)] = Dollar cost of compliance for each hour burden 
estimate per professional type.]
    The sum of each of these calculations for all professional types 
involved in compliance with a given element of the final rule 
represents the total cost for each counterparty, reporting 
counterparty, SD, MSP, SEF, DCM, or SDR, as applicable to that 
element of the final rule.

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[[Page 35215]]

4. Recordkeeping Burdens
    Section 46.2. Under Sec.  46.2, counterparties to a swap unexpired 
on or after April 25, 2011 are required to keep records containing 
minimum primary economic terms data, and (if they have them) 
confirmation documentation, master agreements, credit support or 
similar agreements, and any records required by Sec.  45.2 if the swap 
remains unexpired after the compliance date. The final rules allow 
counterparties to keep either paper or electronic records as long as 
they are reportable but require swap dealers and major swap 
participants to keep electronic records unless their paper records were 
``originally created and exclusively maintained'' in paper form.
    For historical swaps that expired prior to April 25, 2011, the 
final rules require that each counterparty ``retain the information and 
documents relating to the terms of the transaction that were possessed 
by the counterparty on or after the publication date of the relevant 
Interim Final Rule (October 14, 2010 for pre-enactment swaps and 
December 17, 2010 for transition swaps). They do not require 
counterparties to create or confirm any data that they possessed prior 
to October 14, 2010 for pre-enactment swaps or December 17, 2010 for 
transition swaps. The Commission has not calculated the burden for this 
requirement to the extent the Commission has previously calculated such 
burden in the PRA analyses for the Interim Final Rules covering ``pre-
enactment swaps'' and ``transition swaps.''
    For historical swaps still in existence on or after April 25, 2011, 
the final rules require that records kept by swap dealers or major swap 
participants be readily accessible via real time electronic access 
throughout the life of the swap and for two years following 
termination. Following this two year-post expiration period, the final 
rules require that records be retrievable within three business days 
``through the remainder of the period following final termination of 
the swap during which it is required to be kept.'' For records 
maintained by non-SD/MSP counterparties the final rules require that 
they be retrievable within five business days ``through the remainder 
of the period following final termination of the swap during which it 
is required to be kept.'' The Commission has calculated the 
recordkeeping burden for the time period beginning on or after April 
25, 2011, and ending on the compliance date; the burden occurring after 
the compliance date having been already considered in the Commission's 
final swap data rules.\55\
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    \55\ These are one-time recordkeeping costs, which necessarily 
take place in the period prior to the compliance date; therefore, 
the applicable recordkeeping burden applies during the period 
between the publication date and compliance date of Part 46, rather 
than the one year noted in the proposal.
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    The Commission believes that some percentage of the estimated 
30,000 non-SD/MSP counterparties who would be subject to the 
recordkeeping requirements of section 46.2 would contract with third-
party service providers to fulfill these requirements, and would 
therefore pay some fee to such providers in lieu of incurring the 
Commission's estimated costs of reporting. The identity of such third 
parties, the composition of the marketplace for third party services, 
and the costs to third parties to provide recordkeeping services given 
the economies of scale and scope they may realize in providing those 
services are all presently unknowable. Therefore, the Commission does 
not believe it is feasible to quantify the fees charged by third 
parties to non-SD/MSPs at the present time, but believes that they will 
likely vary with the volume of records to be retained. The remaining 
non-SD/MSP counterparties would elect to perform these functions 
themselves and incur the costs enumerated below.\56\ The Commission 
notes that this final rule allows non-SD/MSP counterparties to retain 
records in either an electronic or paper form, which will facilitate 
recordkeeping for less technologically resourced counterparties, who 
will likely choose to retain the records in the form in which they 
currently exist. For historical swaps still in existence on or after 
April 25, 2011, non-SD/MSP counterparties will already be required to 
normalize the data for those swaps to the minimum PET data tables, and 
the burdens associated with this task are addressed in the discussion 
of reporting burdens below; however, the recordkeeping requirements of 
section 46.2 do not require non-SD/MSP counterparties to retroactively 
revise or recreate data for those swaps. Non-SD/MSP counterparties will 
therefore not be required to manipulate, move, or update swap records 
in any way to comply with the recordkeeping requirements of the final 
rule; accordingly, the Commission believes that the recordkeeping 
requirements of this final rule will not impose costs on non-SD/MSP 
counterparties.\57\
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    \56\ The proposed rule estimated an average one-time per-entity 
burden of 40 hours (for SD/MSP reporting counterparties) and 10 
hours (for non-SD/MSP counterparties). These estimates have been 
revised following additional research by OCE staff and consultation 
with staff in the Commission's Office of Data and Technology.
    \57\ The Commission estimates that the percentage of non-SD/MSP 
counterparties that will contract with a third-party service 
provider to perform this function will likely be very low, given 
that the Commission has estimated that the recordkeeping 
requirements of section 46.2 would not impose costs on non-SD/MSP 
counterparties, which would not be required to manipulate, move, or 
update records, and would therefore not present a burden that could 
be more efficiently satisfied by contracting with a third-party 
service provider. Nevertheless, the Commission recognizes that some 
non-SD/MSP counterparties may contract with third-party service 
providers for a variety of regulatory compliance services, and may 
elect to engage a third-party service provider to manage its 
historical swap records, either as an individual service to satisfy 
the recordkeeping requirements of section 46.2, as part of a broader 
set of data management services for regulatory compliance, or to 
otherwise facilitate its own internal recordkeeping.
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    With respect to SDs and MSPs (an estimated 125 entities or 
persons),\58\ which will have higher levels of swap recording activity 
\59\ than non-SD/MSP counterparties, the Commission estimates that this 
requirement would impose an initial non-recurring burden of 335 hours 
per SD/MSP reporting counterparty at a cost of $22,172, equating to an 
aggregate estimated one-time burden of 41,875 hours at a cost of 
$2,771,500 for all SD/MSP reporting counterparties. The Commission also 
estimates that Sec.  46.2 will result in retrieval costs for swap 
counterparties that do not currently have the ability to retrieve 
records within the required timeframe. The Commission expects that this 
requirement will present costs to registered entities and swap 
counterparties in the form of non-recurring investments in 
technological systems and personnel associated with establishing data 
retrieval processes, and recurring expenses associated with the actual 
retrieval of swap data records. These same costs (including non-
recurring investments in technological

[[Page 35216]]

systems and personnel associated with establishing data storage and 
retrieval systems, and recurring expenses associated with data storage 
and retrieval, and maintenance of data storage systems), however, are 
required to comply with the requirements of part 45. Accordingly, they 
are not incremental to, and inappropriate for, consideration in this 
rulemaking.\60\
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    \58\ The Commission previously estimated that as many as 250 SDs 
and 50 MSPs would register. After recently receiving additional 
information, particularly a letter from Thomas Sexton, NFA Senior 
Vice President and General Counsel to Gary Barnett, Director of the 
Division of Swap Dealer and Intermediary Oversight, the Commission 
is revising its estimate downward. Accordingly, the Commission now 
believes that approximately 125 Swaps Entities, including only a 
handful of MSPs, will register with the Commission as SDs or MSPs.
    \59\ For purposes of this Paperwork Reduction Act analysis, the 
Commission estimates that ``high activity'' entities or persons are 
those who process or enter into hundreds or thousands of swaps per 
week that are subject to the jurisdiction of the Commission. Low 
activity users would be those who process or enter into 
substantially fewer than the high activity users.
    \60\ These are one-time recordkeeping costs, which necessarily 
take place in the period prior to the compliance date. For the 
purposes of this rulemaking, the Commission has considered only the 
one-time costs associated with recordkeeping; as noted in the Part 
46 Consideration of Costs and Benefits section, the forward-looking 
(recurring) costs associated with recordkeeping are already covered 
by the recurring costs of recordkeeping enumerated in the Part 45 
Consideration of Costs and Benefits section. See Final Data Rules, 
77 FR 2136, 2171.
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5. Reporting Burdens
    Sections 46.3, 46.4, 46.8, 46.10 and 46.11. Pursuant to Sec. Sec.  
46.3 and 46.4, each historical swap in existence on or after April 25, 
2011 will be reported to an SDR electronically [on or before the 
applicable compliance date], or to the Commission if no SDR accepts 
such a swap under Sec.  46.8. The initial data report must contain all 
of the minimum primary economic terms data listed in Appendix 1 that 
were in the possession of the reporting counterparty on or after April 
25, 2011, the legal entity identifier of the reporting counterparty, 
the internal counterparty identifier used by the reporting counterparty 
to identify the non-reporting counterparty, and the internal 
transaction identifier used by the reporting counterparty to identify 
the swap. For each such swap that remains in existence after the 
compliance date, the reporting counterparty must report swap 
continuation data as provided in part 45 of this chapter, with the 
exception that such reports need only include changes to the minimum 
primary economic terms listed in Appendix 1 to this part, rather than 
changes to the larger list of primary economic terms provided in part 
45. Continuation data must be reported to the same SDR which received 
the initial data report. In parallel with part 45 of this chapter, the 
final rule provides that multi-asset historical swaps must be reported 
to a single SDR that accepts swaps in the asset class that is treated 
as the primary asset class involved in the swap by the reporting 
counterparty; and provides that mixed historical swaps must be reported 
to an SDR or security-based SDR registered with both the Commission and 
the SEC.
    For historical swaps that expired prior to April 25, 2011, the 
final rules require that counterparties report to a SDR on the 
compliance date such information relating to the terms of the 
transaction as was in the counterparty's possession on or after the 
publication date of the relevant Interim Final Rule (October 14, 2010 
for pre-enactment swaps and December 17, 2010 in the case of transition 
swaps.) This information may be reported via any method selected by the 
reporting counterparty. The Commission has not calculated the burden 
for this requirement to the extent the Commission has previously 
calculated such burden in the PRA analyses for the Interim Final Rule 
covering ``pre-enactment swaps'' and ``transition swaps.''
    For historical swaps still in existence on or after April 25, 2011, 
the Commission anticipates that the reporting required by Sec. Sec.  
46.3 and 46.4 will to a significant extent be automatically completed 
by electronic computer systems; the following burden hours are 
calculated based on the annual burden hours necessary to oversee, 
maintain, and utilize the reporting functionality. SDs and MSPs (an 
estimated 125 entities or persons) are anticipated to have high levels 
of reporting activity; the Commission estimates that their average one-
time burden may be approximately 285 hours per MSP or SD reporting 
counterparty at a cost of $20,169,\61\ equating to an estimated one-
time aggregate burden of 35,625 hours at a cost of $2,521,125 for all 
SD/MSP reporting counterparties. The Commission believes that this is a 
reasonable assumption due to the volume of swap transactions that will 
be processed or entered into by these entities, the varied nature of 
the information required to be reported, and the frequency with which 
information may be required to be reported.\62\
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    \61\ The Commission obtained this estimate in consultation with 
the Commission's information technology staff.
    \62\ The estimated burden hours have been adjusted from the 
proposal. The estimated burden hours were obtained in consultation 
with the Commission's information technology staff.
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    Non-SD/MSP counterparties who would be required to report--which 
presently would include an estimated 1,000 entities \63\--are 
anticipated to have lower levels of activity with respect to reporting. 
Of those 1,000 non-SD/MSPs, the Commission believes that a majority, 
estimated now at 75%, or 750 entities, will contract with third parties 
to satisfy their reporting obligations. The identity of such third 
parties, the composition of the marketplace for third party services, 
and the costs to third parties to provide reporting services given the 
economies of scale and scope they may realize in providing those 
services are all presently unknowable. Therefore, the Commission does 
not believe it is feasibly to quantify the fees charged by third 
parties to non-SD/MSPs at the present time, but believes that they will 
likely vary with the volume of reports to be made. For those estimated 
250 non-SDs/non-MSPs who are required to report swap transaction and 
pricing data to an SDR and do not contract with a third party, the 
Commission estimates a one-time burden of 55 hours per non-SD/MSP 
reporting counterparty at a cost of $4,191, equating to an aggregate 
estimated one-time burden of 13,750 hours at a cost of $1,047,750 for 
all non-SD/MSP reporting counterparties that do not contract with a 
third party.\64\ For swaps unexpired on or after April 25, 2011, the 
reporting counterparty shall obtain for itself an LEI as provided in 
Sec.  45.6 (or substitute LEI if applicable) and include such 
identifier in the relevant initial report. Within 180 days of the 
compliance date non-reporting counterparties must provide their LEI (or 
substitute if applicable) to the reporting counterparty, which then 
must report it to the relevant SDR, as set forth in part 45. Final 
Sec.  46.5 sets forth the criteria for determining which counterparty 
must report. For unexpired swaps the provisions apply to the current 
counterparties as of the compliance date, notwithstanding whether they 
were the original counterparties.
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    \63\ The estimated burden hours have been adjusted from the 
proposal. This is the estimated number of non-SD/MSP counterparties 
who will be required to report in a given year. Only one 
counterparty to a swap is required to report, typically an SD or a 
MSP as determined by Sec.  45.8. Therefore, a non-SD/MSP 
counterparty that is in a swap with an SD or MSP counterparty will 
not be subject to the reporting obligations of Sec. Sec.  45.3 and 
45.4.
    \64\ In the event that all estimated 1,000 non-SD/MSP reporting 
counterparties elect to perform their reporting functions 
themselves, rather than contract with a third-party service 
provider, the aggregate burden would be 55,000 hours at a cost of 
$4,191,000.
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    Final Sec.  46.9 permits voluntary early submission of the initial 
data report (and of subsequent continuation data reports) prior to the 
applicable compliance date if a registered SDR is prepared to accept 
the reports and Sec.  46.10 require that each counterparty use the 
``facilities, methods, or data standards provided for or required by'' 
the SDR to which the counterparty reports the data. Final Sec.  46.11 
also requires that corrections be reported ``as soon as technologically 
practicable'' to the applicable SDR in the same format that data was 
reported erroneously or omitted. It provides that reporting 
counterparties who report state data can report error corrections by 
updating

[[Page 35217]]

their next daily report. Recordkeeping and reporting requirements that 
exist after compliance dates and those of Sec. Sec.  46.9, 46.10 and 
46.11 are covered by other rulemakings for which the Commission 
prepared and submitted an information collection request to OMB, the 
burdens associated with those requirements are not being accounted for 
in the information collection request for this rulemaking.\65\
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    \65\ Costs associated with reporting are already covered by the 
Part 45 rules. See Data Final Rules, 77 FR 2136, 2171.
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C. Consideration of Costs and Benefits

1. Introduction
    The Dodd-Frank Act's swap reporting requirements apply to all swaps 
in existence on or after the date of the legislation's enactment. 
Previously, in its separate Part 45 rulemaking, the Commission adopted 
final rules to implement the data reporting and recordkeeping 
requirements for swaps entered into on or after the applicable 
compliance date specified in Part 45. This final Part 46 rulemaking 
implements the mandate of sections 723 and 729 of the Dodd-Frank Act 
\66\ requiring that data be reported to SDRs for historical swaps. In 
so doing, the final rule specifies the Commission's recordkeeping 
requirements with respect to historical swaps; and specifies the manner 
and form for reporting historical swap transaction data to an SDR, 
including the identification of entities and transactions through 
unique identifiers.
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    \66\ These sections established new sections 2(h)(5) and 
4r(a)(2)(A) of the CEA, respectively. This rulemaking is undertaken 
to implement those two CEA sections. They are discussed in greater 
detail in section [ ], supra, including their interrelationship and 
the import of the Commission's October 14, 2010 and December 17, 
2010 Part 44 interim final rules.
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    As discussed in more detail below, the requirements of Part 46, 
working in tandem with Part 45, will enhance swaps market transparency 
beyond the level afforded by Part 45 alone; this enriches its value to 
regulators for the ultimate benefit of swap market participants and the 
general public. More specifically, the benefits of the improved 
transparency engendered by this rule include improved regulatory 
oversight of markets (with respect to surveillance, enforcement, and 
analysis); improved regulatory understanding of the behavior of swap 
market participants; improved regulatory understanding of the 
concentrations of risk in swap markets; and greater market integrity. 
In addition, the requirements of the regulation, in tandem with the 
requirements of Part 45, promote the development of firm-level 
infrastructure and practices well-suited to improve market 
participants' risk management capabilities. Further, market 
participants will be able to use data associated with their own 
historical swaps for which continuation data reporting extends past the 
Part 45 compliance date to better understand and manage the risk 
associated with their swap exposure.
    The Commission also recognizes that compliance with these rules 
will impose costs. However, because certain non-SD/MSP counterparties 
are subject to the Commission's part 45 regulations, which impose swap 
data recordkeeping and reporting requirements similar in certain key 
respects to those of part 46, the Commission does not consider 
expenditures to be costs of this regulation if they are also required 
to comply with part 45. These expenditures would only constitute costs 
of this final rule, independent of the costs of part 45, in the case of 
a market participant that exits the swap market entirely immediately 
following the part 45 compliance date.\67\ Such an entity would not be 
required to comply with part 45, having no active swap data to report, 
but would still be required to report its historical swap data pursuant 
to part 46, because it was active during the pre-compliance date time 
period affected by this rule. The Commission cannot presently estimate 
the number of entities that may exit the swap market immediately after 
the compliance date.
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    \67\ For discussion of costs of compliance with part 45, see 77 
FR 2136 (January 13, 2012) at 2176 et seq.
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    The two chief cost-driver categories in this final rulemaking are 
recordkeeping and reporting (including unique identifier requirements). 
For both categories, the Commission identifies the costs and benefits 
of the final rule, discusses comments regarding them, and considers 
them in relation to the five broad areas of market and public concern 
as required by section 15(a) of the CEA.
a. Section 15(a) of the CEA
    Section 15(a) of the CEA \68\ requires the Commission to consider 
the costs and benefits of its actions before promulgating a regulation 
under the CEA or issuing an order. Section 15(a) further specifies that 
the costs and benefits shall be evaluated in light of the following 
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. Accordingly, the Commission considers is the costs and 
benefits resulting from its discretionary determinations with respect 
to the Section 15(a) factors.
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    \68\ 7 U.S.C. 19(a).
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b. Cost Estimation Methodology
    In the NOPR, the Commission asked for public comment on the costs 
and benefits of the proposed regulations, and specifically invited 
commenters ``to submit any data or other information that they may have 
quantifying or qualifying the costs and benefits'' of the proposed 
requirements.\69\ The Commission also asked for comments on the overall 
costs and benefits of the proposed rules implementing the Dodd-Frank 
Act.\70\ The Commission received numerous comments addressing various 
cost and benefit considerations of the proposed rule, including several 
that recommended alternatives, but none provided data from which the 
costs and benefits of the rule could be quantified. Nevertheless, the 
Commission has endeavored to estimate quantifiable costs and benefits 
of the final rule where possible.\71\ Where estimation or 
quantification is not feasible, the Commission provides a qualitative 
assessment of the costs and benefits.
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    \69\ 75 FR 76574 (December 8, 2010), at 76597.
    \70\ Id.
    \71\ The Commission made these estimates in consultation with 
experts on its information technology staff through a collaborative 
process that involved determining the types of personnel needed to 
complete each aspect of the tasks necessary for compliance, 
determining the number of hours required of each of those personnel 
types, and comparing the burden estimates for separate tasks to 
identify and eliminate any redundancies.
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    The Part 46 final rules will affect three types of market 
participants, including SD/MSP counterparties, non-SD/MSP 
counterparties, and SDRs. To serve as the reference point for 
estimating the costs of these rules to non-SD/MSP counterparties, the 
Commission selected a non-SD/MSP counterparty that is not a financial 
entity as defined in CEA section (2)(h)(7)(C).\72\
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    \72\ To aid in cost estimates, the Commission at times has used 
wage rate estimates compiled by the Securities Industry and 
Financial Markets Association (``SIFMA''). These wage estimates are 
derived from a securities industry-wide survey of participants and 
thus reflect an average across entities; the Commission notes that 
the actual costs for any individual company or sector may differ.
    The Commission estimated the dollar costs of hourly burdens for 
each type of professional using the following calculations:
    (5) [(2009 salary + bonus) * (salary growth per professional 
type, 2009-2010)] = Estimated 2010 total annual compensation. The 
most recent data provided by the SIFMA report describe the 2009 
total compensation (salary + bonus) by professional type, the growth 
in base salary from 2009 to 2010 for each professional type, and the 
2010 base salary for each professional type; using this, the 
Commission estimated the 2010 total compensation for each 
professional type. In the absence of similar data for 2011 and 
beyond, the Commission did not estimate dollar costs beyond 2010.
    (6) [(Estimated 2010 total annual compensation)/(1,800 annual 
work hours)] = Hourly wage per professional type.
    (7) [(Hourly wage) * (Adjustment factor for overhead and other 
benefits, which the Commission has estimated to be 1.3)] = Adjusted 
hourly wage per professional type.
    (8) [(Adjusted hourly wage) * (Estimated hour burden for 
compliance)] = Dollar cost of compliance for each hour burden 
estimate per professional type.
    The sum of each of these calculations for all professional types 
involved in compliance with a given element of the final rule 
represents the total cost for each counterparty, reporting party, 
SD, MSP, SEF, DCM, or SDR, as applicable to that element of the 
final rule.

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[[Page 35218]]

    The Commission expects that the actual costs to established market 
participants will often be lower than this reference point--perhaps 
significantly so, depending on the extent to which swap counterparties 
currently format, organize, and store swap transaction data that would 
be reported as historical swap data pursuant to this final rule.
    To address costs specific to SDRs, the Commission has estimated the 
incremental costs SDRs would incur to comply with the reporting and 
recordkeeping requirements of this rulemaking above the base operating 
costs for SDRs to comply with part 45 regulations.\73\
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    \73\ Again, because these costs have been considered in the 
context of the part 45 rulemaking, to reconsider them in this 
rulemaking would double-count them.
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2. Recordkeeping
a. Summary of Final Rule
    The final rule requires counterparties to a historical swap in 
existence on or after April 25, 2011 to keep records of the minimum 
primary economic terms data specified in the Appendix to the rule, as 
well as copies (if they have them) of confirmation documentation, 
master agreements, credit support or similar agreements. If the swap 
remains unexpired after the applicable compliance date, counterparties 
must also keep any records required by section 45.2 of this chapter. 
Non-SD counterparties may keep records in either paper or electronic 
form so long as they are retrievable and reportable as required, while 
SD or MSP counterparties must keep electronic records unless their 
paper records were originally created and are exclusively maintained in 
paper form. Records kept by SDs and MSPs must be readily accessible 
during the existence of the swap and for two years thereafter, and be 
retrievable within three business days during the remainder of the 
retention period, while records kept by non-SD/MSP counterparties must 
be retrievable within five business days throughout the retention 
period.
    For historical swaps that expired prior to April 25, 2011, each 
counterparty must retain the information and documents relating to the 
terms of the transaction that were in its possession on or after the 
date of the relevant Interim Final Rule (October 14, 2010 for pre-
enactment swaps and December 17, 2010 for transition swaps). The final 
rule does not require counterparties to create or retain records of 
information regarding such swaps that was not in their possession as of 
those dates, or to alter how the records are organized or stored.
    For all historical swaps, the final rule requires retention of 
records throughout the existence of the swap and for five years 
following expiration of the swap.
b. Benefits
    By providing for the collection and retention of historical swap 
data (as well as its reporting), part 46 ensures the availability of 
data that will enhance the transparency of the swap markets. The 
Commission believes that improved swap market transparency (including 
transparency with respect to the historical swap transaction activity 
subject to Part 46's recordkeeping requirements) is important to the 
Commission's efforts to better identify, assess, and respond to risks, 
including systemic risks that swaps market may pose for market 
participants and the public in the future. The recordkeeping 
requirements of part 46 will increase the Commission's and other 
regulatory agencies' visibility into the activities and exposures of 
swap market participants and the dynamics of the swap market at large. 
This serves the public interest in effective regulatory enforcement. 
These recordkeeping requirements will enable Commission oversight and 
enforcement staff to reconstruct a comprehensive, sequenced record of 
swap transactions active between the enactment of the Dodd-Frank Act 
and this final rule's compliance date. This data is necessary to 
effectively monitor and investigate activities that could compromise 
the integrity of swap markets. Additionally, the presence of an 
effective monitoring and investigation regime may deter parties from 
engaging in behavior that undermines the integrity of swap markets.
    In addition, the requirement to retain historical swap records for 
five years provides substantial benefit to market participants and the 
public because it affords the Commission the capability to analyze 
market trends through time-series analysis for a reasonable period of 
time in the future. This in turn enhances the Commission's ability to 
efficiently regulate the markets subject to its jurisdiction. A swap 
can continue to exist for a substantial period of time prior to its 
final termination or expiration, and key economic terms of the swap can 
change during this time. Thus, recordkeeping requirements with respect 
to a swap must necessarily cover the entire period of time during which 
the swap exists, as well as an appropriate period following final 
termination or expiration of the swap. A five-year retention period 
following termination of the swap also will ensure document retention 
consistent with the information that the Commission needs to carry out 
its oversight and enforcement responsibilities. It parallels the 
Commission's existing five-year record retention requirement in the 
context of futures and is consistent with the Commission's final part 
49 rules regarding SDR registration. The identical retention periods 
provided in parts 45 and 46 will ensure that a single, comprehensive 
record is produced in the event that regulators require a data set 
spanning both Part 45 and Part 46 data. Additionally, data collected on 
swap market activity both before and after the compliance date of part 
45 and part 46 will be available to inform any pre/post-Dodd-Frank Act 
comparative analysis that might be performed in the future. Part 46 
data would provide the starting point for such an assessment.
c. Costs
    The Commission believes that the incremental\74\ costs to comply 
with the recordkeeping requirements of this part are limited to those 
related to historical swap data storage. The rules do not require 
counterparties to recreate data that does not presently exist, and thus 
imposes no costs in this respect.\75\
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    \74\ Swap counterparties that currently do not retain historical 
swap records for the period of time and in the form required by this 
final rule will incur costs to comply with these requirements. These 
same costs (including non-recurring investments in technological 
systems and personnel associated with establishing data storage and 
retrieval systems, and recurring expenses associated with data 
storage and retrieval, and maintenance of data storage systems), 
however, are required to comply with the requirements of part 45. 
Accordingly, they are not incremental to, and inappropriate for, 
consideration in this rulemaking.
    \75\ For pre-enactment swaps, the rule allows swap 
counterparties to retain swap data in whatever form it currently 
exists. For transition swaps, the rule only requires the retention 
of data to populate the minimum PET data tables for swaps that were 
in existence after the issuance of the proposed rule.

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[[Page 35219]]

    The Commission believes that any incremental costs will be incurred 
primarily by SD/MSP swap counterparties, which are required to retain 
historical swap data according to the format and retrieval requirements 
of Sec.  46.2. The costs to SDRs of retaining historical swap data 
reported by swap counterparties pursuant to this final rule will be 
addressed in the discussion of the costs and benefits of reporting 
historical swap data in this Consideration of Costs and Benefits.
    Historical swap data storage. The Commission believes that storing 
historical swap data for the period of time required by this final rule 
will impose a one-time burden on swap counterparties associated with 
gathering and transferring the historical swap data onto a server for 
secure storage.\76\
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    \76\ While swap counterparties also may have costs to maintain 
data storage infrastructure and/or costs to require the necessary 
data retrieval ability, these costs duplicate those that would be 
incurred to comply with part 45. Accordingly, they are not 
incremental to, and appropriate for, consideration in this 
rulemaking.
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    Non-SD/MSP counterparties are permitted by the rule to keep records 
in either electronic or paper form at their discretion, so as to 
eliminate the burden of gathering and transferring historical swap data 
for recordkeeping. To satisfy the recordkeeping provision of this final 
rule, non-SD/MSP counterparties can simply retain their records as and 
wherever they currently exist.
    For SD/MSPs, the Commission estimates a one-time burden of 335 
hours per SD/MSP counterparty\77\ at an estimated cost of $22,172.\78\ 
The Commission anticipates that SD/MSPs will likely be required to 
process a larger volume of historical swap data than non-SD/MSPs, 
though many may be able to leverage existing technology and personnel 
expertise to reduce the burden to perform this function.
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    \77\ The costs of historical swap data storage were estimated 
based on the costs to SD/MSPs that decide not to contract with a 
third party to comply with the recordkeeping requirements of Part 
46. See ``Overview of Cost Calculations.'' This estimate is 
calculated as follows: [(Computer Operations Supervisor at 80 hours) 
+ (Computer Operations Group/Section Manager at 80 hours) + 
(Computer Operations Department Manager at 40 hours) + (Sr. Database 
Administrator at 40 hours) + (Programmer at 40 hours) + (Systems 
Analyst at 20 hours) + (Compliance Manager at 10 hours) + (Director 
of Compliance at 5 hours) + (Compliance Attorney at 20 hours)] = 335 
hours per SD/MSP counterparty; [(335 hours per SD/MSP) x (125 SD/
MSPs) = 41,875 aggregate hours. The Commission believes that 
information on swap transactions is currently being retained by many 
market participants in the ordinary course of business, which may 
result in lesser burden for those parties.
    \78\ See Table 2.
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d. Comments, Alternatives, and Cost Mitigation
    Recordkeeping for historical swaps in existence on or after April 
25, 2011. The Commission received several comments related to the costs 
of recordkeeping for swaps in existence on or after April 25, 2011. 
COPE supported the NOPR provision that limited the records required to 
be kept for such swaps to the minimum PET data specified in the NOPR 
Appendix (plus any confirmation, master agreement, or credit support 
agreement that the counterparty has), stating this is a reasonable 
requirement. COPE added that the specified PET data elements reflect 
the commercially relevant terms typically retained by swap 
counterparties, although a counterparty involved in few swaps might not 
retain all of this data in the ordinary course of its business. ETA 
also supported the requirement to keep records of the specified minimum 
PET data, stating that it believes all or most counterparties will have 
this data, although it could not be certain that all smaller non-
financial entities in the energy sector will have all of it.
    As noted above, ISDA and Global Forex requested that the Commission 
eliminate the time of trade from the NOPR's required PET data, arguing 
that including the time of trade would require some participants to 
retroactively create data they do not possess. FSR stated that its 
members have made best efforts to comply with the interim final rules 
for historical swaps by retaining the records in their possession, but 
that they do not necessarily have all of the required minimum PET data. 
The specific concerns FSR raised include identifying the settlement 
agent for pre-enactment currency swaps, and having data for pre-
enactment swaps that were acquired through merger or acquisition.
    The Commission made two important modifications in the final rule 
in an effort to address these comments and mitigate the costs of the 
final rule while achieve the same regulatory benefits.
    First, as discussed above, the final rule requires counterparties 
to keep records of only the minimum PET data specified in Appendix 1 
that was in their possession as of publication of the NOPR, which gave 
notice of what records would be required. The Commission believes that 
this will reduce costs and burdens associated with recordkeeping by 
counterparties to historical swaps to the extent consistent with 
ensuring the availability of swap data needed to fulfill the purposes 
of the Dodd-Frank Act.
    Second, as discussed above, the final rule will require reporting 
the date of execution for a historical swap, and require reporting the 
time of execution only if that time was recorded when the trade was 
executed and is known to the reporting counterparty on or after April 
25, 2011, the NOPR publication date. As noted above, the Commission 
believes that it would be undesirable for counterparties who did not 
record the execution time when a historical swap was executed to 
attempt to assign an execution time retroactively.
    Recordkeeping for historical swaps expired prior to April 25, 2011. 
ISDA noted that, for historical swaps expired prior to the publication 
date of the NOPR, the NOPR does not require parties to alter the format 
in which they already retain records concerning such swaps. ISDA asked 
the Commission to clarify whether this requirement allowed 
counterparties to keep records in the form already used. Similarly, 
WGCEF requested clarification that keeping records in the form in which 
they are already retained will be acceptable to the Commission for all 
historical swaps.
    As discussed above, and in order to achieve the benefits of the 
rule, the Commission has determined that the final rule should retain 
the NOPR provisions concerning limited recordkeeping for such swaps, 
which required counterparties to keep only the information and 
documents concerning such swaps that were in their possession on or 
after the publication date of the applicable Interim Final Rule. The 
final rule provides that counterparties may keep such records in any 
format they choose. The retrievability requirement for all 
counterparties to such swaps will require counterparties to be able to 
retrieve such records within five business days throughout the 
retention period, rather than to keep records readily accessible for 
part of the retention period or to be able to retrieve records within 
three business days, as provided in the NOPR. This reduced 
retrievability requirement is designed to further reduce costs and 
burdens for counterparties to historical swaps that have expired prior 
to April 25, 2011.
e. Recordkeeping in Light of CEA Section 15(a)
    The Commission has evaluated the benefits of the recordkeeping 
provisions of this part in light of the specific considerations 
identified in section 15(a) of the CEA as follows:
    Protection of market participants and the public. The Commission 
believes that the recordkeeping requirements in

[[Page 35220]]

the final rule protect market participants and the public by improving 
the ability of the Commission and other regulatory agencies to fulfill 
their oversight and enforcement responsibilities, and contributing to 
improved transparency necessary to identify and assess risks that swaps 
markets may pose.
    The record retention periods in the final rule are consistent with 
both the Commission's existing retention requirement in the context of 
futures, pursuant to Commission Regulation 1.31, and with applicable 
statutes of limitation. A general five-year record retention 
requirement helps assure the Commission ready access to records and 
data essential to its mission to protect market participants and the 
public from violations of the CEA and Commission regulations. For 
example, records retained pursuant to Part 46 will enable Commission 
staff to reconstruct a comprehensive, sequenced record of swap 
transactions active during the window between statutory enactment and 
the final rule's compliance date for purposes of analysis; 
investigation; and, if appropriate, prosecution of an enforcement 
action.
    Moreover, by providing for the collection and retention of 
historical swap data (as well as its reporting), Part 46 assures that 
data valuable to enrich the depth and perspective of regulators' 
understanding of swap markets over time is available for reporting and 
regulatory analysis. In this way, historical recordkeeping requirements 
serve an important role in counteracting the swap market opacity and 
potential for under-appreciation of systemic risk that contributed to 
the financial crisis of 2008. The Commission believes that improved 
swap market transparency (including transparency with respect to the 
historical swap transaction activity subject to Part 46's recordkeeping 
requirements) is critical to the Commission's efforts to better 
identify, assess, and respond to risks that swap markets may pose for 
market participants and the public in the future.
    Efficiency, competitiveness, and financial integrity. This rule 
promotes efficiency and competitiveness. The historical swaps 
transaction data subject to these recordkeeping requirements will 
provide a basis for comparative assessments of the swap markets that 
might be conducted in the future (including potential comparative 
assessments of market efficiency and competitiveness \79\). In 
addition, electronic recordkeeping, which will aid required electronic 
reporting, may improve efficiency and reduce initiation and maintenance 
costs in the future.
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    \79\ For example, such assessments may compare measures such as 
the concentration of swap activity by type of market participant, 
the volumes of cleared and uncleared swap transactions, or the 
effective cost to the user of engaging in similar swap transactions 
in the pre- and post-compliance marketplace.
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    Further, the Commission believes that the final Part 46 
recordkeeping requirements promote swap market financial integrity. As 
previously discussed, the Commission believes that historical swap 
transaction data as collected and retained under these final rules will 
aid it in effective swap market oversight and legal enforcement, 
including by helping to assure the availability of records needed to 
monitor and investigate market abuses. Also, by ensuring a data pool 
that provides historical swap transaction transparency to better inform 
regulators' swap market analysis, the recordkeeping requirements serve 
an important role in counteracting swap market opacity that, as 
evidenced in the 2008 financial crisis, may contribute to a loss of 
confidence in market integrity.
    The Commission does not believe that costs of these recordkeeping 
requirements will impede swaps market efficiency, competitiveness, or 
integrity.
    Price discovery. The Commission does not believe that this 
requirement has a significant effect on the price discovery process.
    Sound risk management practices. The Commission believes that the 
final rule's recordkeeping requirements, in tandem with the 
recordkeeping requirements of Part 45, will serve to improve the 
soundness of the risk management practices of market participants. The 
Commission is essentially requiring the maintenance of accurate records 
in a manner that makes them appropriately available for reproduction to 
regulators. Market participants may leverage the highly organized and 
streamlined internal records system they will possess in order to 
comply with Parts 45 and 46 for an ancillary risk management benefit; 
the system will be useful for analysis and for development of enhanced 
risk management practices.\80\ The cost of implementation of the 
recordkeeping rule may be partially compensated by error avoidance and 
the mitigation of internal risk.
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    \80\ The Commission notes that non-SD/MSP counterparties will be 
able to retain either electronic or paper records at their 
discretion; if paper rather than electronic records are retained, 
this system will not be necessary for compliance, and thus this 
ancillary risk management benefit will not apply.
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3. Reporting
a. Summary of Final Rule
    The final rule requires that each historical swap in existence on 
or after April 25, 2011 be reported to a SDR electronically on or 
before the applicable compliance date. The initial data report must 
contain all of the minimum primary economic terms data listed in 
Appendix 1 that were in the possession of the reporting counterparty on 
or after April 25, 2011, the legal entity identifier of the reporting 
counterparty, the internal counterparty identifier used by the 
reporting counterparty to identify the non-reporting counterparty, and 
the internal transaction identifier used by the reporting counterparty 
to identify the swap. For each such swap that remains in existence 
after the compliance date, the reporting counterparty must report swap 
continuation data as provided in part 45 of this chapter, with the 
exception that such reports need only include changes to the minimum 
primary economic terms listed in Appendix 1 to this part, rather than 
change to the larger list of primary economic terms provided in part 
45. Continuation data must be reported to the same SDR that received 
the initial data report. In parallel with part 45 of this chapter, the 
final rule provides that multi-asset historical swaps must be reported 
to a single SDR that accepts swaps in the asset class that is treated 
as the primary asset class involved in the swap by the reporting 
counterparty, and that mixed historical swaps must be reported to an 
SDR or security-based SDR registered with both the Commission and the 
SEC.
    For historical swaps that expired prior to April 25, 2011, the 
final rule requires that counterparties report to an SDR on the 
applicable compliance date such information relating to the terms of 
the transaction as was in the counterparty's possession on or after the 
publication date of the relevant Interim Final Rule (October 14, 2010 
for pre-enactment swaps and December 17, 2010 in the case of transition 
swaps). This information may be reported via any method selected by the 
reporting counterparty.
    The rule permits voluntary early submission of the initial data 
report (and of subsequent continuation data reports) prior to the 
applicable compliance date if a registered SDR is prepared to accept 
the reports.
    For historical swaps in existence on or after April 25, 2011, by 
the applicable compliance date the reporting counterparty must obtain, 
report, and provide to its counterparty an LEI as

[[Page 35221]]

provided in part 45. Within 180 days of the applicable compliance date, 
the non-reporting counterparty must obtain an LEI and provide it to the 
reporting counterparty, which then must report it to the relevant SDR.
    The final rule sets forth the criteria for determining which 
counterparty must report. For historical swaps in existence on the 
applicable compliance date, these provisions apply to the current 
counterparties as of the compliance date, notwithstanding whether they 
were the original counterparties. If only one counterparty is an SD, 
the SD reports. If neither counterparty is an SD and only one is an 
MSP, the MSP reports. If both counterparties are non-SD/MSP 
counterparties, and only one is a financial entity as defined in CEA 
section 2(h)(7)(C), the financial entity reports. If the counterparties 
share the same status, the rule requires them to agree which of them is 
the reporting counterparty for that swap. If both counterparties are 
non-SD/MSP counterparties but only one is a U.S. person, the U.S person 
must report. After the initial data report is made, if the reporting 
counterparty exits the original transaction (e.g., through an 
assignment), the new reporting counterparty will be: The SD (or the MSP 
if there is no SD) if only one is present; the U.S. person if both 
counterparties are non-SD/MSP counterparties and only one is a U.S. 
person; or, in all other cases, the counterparty that replaced the 
previous reporting counterparty, unless otherwise agreed by the 
counterparties.
    The final rule provides for third-party facilitation of reporting. 
It also requires that all data for a historical swap must be reported 
to the same SDR to which the initial data report is made. It permits 
either counterparty to make voluntary supplemental reports (``VSRs''), 
to either the same or a different SDR. To provide minimum safeguards 
against confusion or double-counting resulting from VSRs, the rule 
requires that each VSR must include an indication that it is a VSR, as 
well as the SDR identifier created for the swap by the automated 
systems of the SDR to which the required, initial data report is made.
    The final rule requires the reporting counterparty to use the 
facilities, methods, or data standards provided or required by the SDR 
to which it reports the data. Corrections must be reported, as soon as 
technologically practicable after discovery of an error or omission, to 
the same SDR that received the initial data report.
b. Benefits
    The Commission believes that the part 46 reporting requirements 
will improve regulatory oversight, enforcement, and understanding of 
systemic risks.
    The Commission's harmonization of the reporting requirements of 
this part with those of part 45 will benefit market participants by 
enabling reporting counterparties to satisfy the reporting requirements 
of both parts in the same way, and avoiding redundant costs that could 
be caused by differing reporting requirements.
    Historical swap reporting under part 46 also benefits the general 
public by supporting the Commission's supervision of the swaps market. 
As considered above in the discussion of the benefits of historical 
swap recordkeeping in this final rule, the reporting requirements 
provide a means for the Commission to gain a better understanding of 
the swaps market.
    The incorporation of unique identifier requirements within the part 
46 reporting regime also provides important benefits to market 
participants and the public by enhancing the quality and usability of 
the historical swap data that will be provided to the Commission.\81\
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    \81\ Unique identifier use also reflects a harmonized approach 
between the part 45 and part 46 regulations. Accordingly, historic 
swaps will be reported in a consistent fashion with part 45 swaps, 
ensuring comparable data for analysis. The use of unique identifiers 
also enabled the Commission to allow for historical swap reporting 
through a VSR; without unique identifiers, the value and usability 
of the data reported in a VSR would be greatly diminished because of 
potential double-counting (recording the same transaction from the 
reporting counterparty and from the VSR reported by the non-
reporting counterparty), and would not be readily comparable to the 
data reported pursuant to Part 45 after the compliance date (which 
are required to incorporate unique identifiers).
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    The beneficial contributions attributable to the specific unique 
identifiers addressed in the final rule, including both SDR identifiers 
for VSRs and LEIs, are as follows:

     SDR identifiers will facilitate the collating of 
various data reports concerning a swap into a single, accurate data 
record. Through them it is possible to identify the origins of each 
swap as well as events that affect the swap during its existence; 
aggregate transaction information without double-counting swaps 
reported to different SDRs or to foreign trade repositories, or 
reported in VSRs; and create a clear and unified data stream that 
spans the pre- and post-part 46 compliance date periods. 
Accordingly, the Commission believes they provide a vital tool for 
regulatory agencies' analysis of historical swap market data to 
better protect market participants and the public from systemic 
risk.
     LEIs will enhance the ability of the Commission and 
other regulatory agencies to oversee swap markets by providing 
necessary clarity and cohesion to the swap data used for regulatory 
analyses, particularly with regard to clearly understanding the 
activities of participants in the pre- and post- part 46 compliance 
date periods. Among the benefits of an LEI regime, GFMA identified 
more efficient data aggregation; more powerful modeling and risk 
analysis; facilitation of information sharing and reconciliation 
between regulators; better supervision of cross-border firms and 
firms whose business lines are overseen by multiple regulators; and 
facilitating identification of affiliates and parent companies. GFMA 
also called the LEI regime ``a powerful tool for regulators in 
monitoring and managing systemic risks.'' \82\ As recognized in the 
CPSS-IOSCO Report on OTC Derivatives Data Reporting and Aggregation 
Requirement, which recommends expeditious development of a global 
LEI:
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    \82\ GFMA, Creating a Global Legal Entity Identifier (LEI) 
Standard, September 21, 2001, p. 10. Publicly available at https://www.sifma.org/uploadedfiles/issues/technology_and_operations/legal_entity_identifier/lei-project-summary-slides.pdf.
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    [A] standard system of LEIs is an essential tool for aggregation 
of OTC derivatives data. An LEI would contribute to the ability of 
authorities to fulfill the systemic risk mitigation, transparency, 
and market abuse protection goals established by the G20 commitments 
related to OTC derivatives, and would benefit efficiency and 
transparency in many other areas. As a universally available system 
for uniquely identifying legal entities in multiple financial data 
applications, LEIs would constitute a global public good.\83\

    \83\ CPSS-IOSCO Report on OTC Derivatives Data Reporting and 
Aggregation Requirement, August 2011, p.36. Publicly available at 
https://www.bis.org/publ/cpss96.pdf.
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c. Costs
    Incremental \84\ costs to comply with the reporting requirements of 
this part

[[Page 35222]]

will be incurred only by reporting counterparties for historical swaps, 
most of whom will be SDs or MSPs. The reporting requirements of the 
final rule apply only to reporting counterparties. They will incur 
costs associated with normalizing required PET data for historical 
swaps in existence on or after April 25, 2011 in data fields for 
electronic reporting, and obtaining LEIs and including them in reported 
data as required by the rule. SDRs will incur costs for data receipt 
and storage. The SDR identifiers used to provide a safeguard against 
confusion and double-counting of historical swaps in the context of 
VSRs will be created automatically by the automated systems of SDRs 
when they receive the initial data report for a historical swap and 
transmit that identifier to the counterparties to the swap in the 
normal course of their business. SDRs are already required by part 45 
to have the systems and personnel necessary to create unique swap 
identifiers, and the creation of SDR identifiers by SDR automated 
systems will not impose any additional costs in these respects due to 
the requirements of part 46.
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    \84\ Swap counterparties that have not previously established a 
reporting infrastructure, including connectivity to an SDR (or the 
Commission in the absence of an SDR that collects data for a given 
asset class), will incur costs to comply with these requirements. 
The Commission anticipates, however, that swap counterparties will 
satisfy the reporting requirements of part 46 with a single, non-
recurring transmission of data to an SDR occurring at the same time 
and through the same mechanism as its initial transmission of swap 
creation and continuation data pursuant to part 45. Thus, the costs 
(including non-recurring investments to train personnel, implement 
data reporting technology, and establish the required data 
connectivity; and recurring expenses associated with personnel hours 
and maintenance of the data reporting technology infrastructure), to 
comply with part 46 are already necessitated by part 45 and were 
considered in that rulemaking. Accordingly, they are not incremental 
to, and inappropriate for, consideration in this rulemaking.
    Similarly, swap counterparties will experience a one-time cost 
to format swap records subject to part 46 and part 45 to the same 
minimum PET data tables required in both regulations. Because these 
costs were considered previously in the part 45 rulemaking, they are 
not incremental to, and inappropriate for, consideration in this 
rulemaking.
    SDRs will also incur recurring costs to maintain their data 
storage infrastructure. Since the same SDR infrastructure expectedly 
will support storage activities under part 45, however, the 
Commission believes that the same maintenance activities undertaken 
to support part 45 will support part 46. Because these costs were 
considered previously in the part 45 rulemaking, they are not 
incremental to, and inappropriate for, consideration in this 
rulemaking.
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    Normalizing data for electronic reporting. The Commission 
anticipates that formatting transition swaps to populate the minimum 
PET data tables would impose a one-time burden on swap counterparties 
associated with the manipulation of the electronic files from their 
existing form to the form required by the final rule. For SDs and MSPs, 
the Commission estimates a one-time burden of 285 hours per SD or MSP 
counterparty \85\ at an estimated cost of $20,169.\86\ For non-SD/MSPs, 
the Commission estimates a one-time burden of 55 hours per non-SD/MSP 
counterparty \87\ at an estimated cost of $4,191.\88\ The Commission 
estimates that this requirement will present a larger burden for SD and 
MSP counterparties than for non-SD/MSP counterparties, because SDs and 
MSPs are likely to be required to process a larger volume of historical 
swap data. The Commission notes that this burden may be reduced for 
swap counterparties, especially SDs or MSPs that are able to leverage 
existing technology and personnel expertise to perform this function.
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    \85\ The costs of normalizing data for historical swaps in 
existence on or after April 25, 2011 in data fields for electronic 
reporting were estimated based on the costs to SD/MSPs that decide 
not to contract with a third party to comply with the recordkeeping 
requirements of Part 46. See ``Overview of Cost Calculations.'' This 
estimate is calculated as follows: [(Sr. Database Administrator at 
80 hours) + (Programmer at 80 hours) + (Systems Analyst at 80 hours) 
+ (Compliance Manager at 20 hours) + (Director of Compliance at 5 
hours) + (Compliance Attorney at 20 hours)] = 285 hours per SD/MSP 
counterparty; [(285 hours per SD/MSP) x (125 SD/MSPs) = 35,625 
aggregate hours. The Commission believes that information on swap 
transactions is currently being retained by many market participants 
in the ordinary course of business, which may result in lesser 
burden for those parties.
    \86\ See Table 1.
    \87\ The costs of formatting transition swaps for storage were 
estimated based on the costs to non-SD/MSPs that decide not to 
contract with a third party to comply with the recordkeeping 
requirements of Part 46. See ``Overview of Cost Calculations.'' This 
estimate is calculated as follows: [(Compliance Manager at 10 hours) 
+ (Director of Compliance at 5 hours) + (Compliance Attorney at 20 
hours) + (Compliance Clerk at 20 hours)] = 55 hours per non-SD/MSP 
counterparty; [(55 hours per non-SD/MSP) x (1,000 non-SD/MSPs) = 
55,000 aggregate hours. The Commission believes that information on 
swap transactions is currently being retained by many market 
participants in the ordinary course of business, which may result in 
lesser burden for those parties.
    \88\ See Table 1.
---------------------------------------------------------------------------

    Applying unique identifiers. The Commission anticipates that 
including LEIs in historical swap data, as required by this final rule, 
would impose a one-time burden on swap counterparties associated with 
reviewing the subset of historical swap data and appending the LEIs. 
The Commission believes that it may be possible to achieve a high 
degree of automation or computer-assisted processing for the task of 
reporting the LEI and adding it to the historical swap data files in 
storage.
    For SD and MSP reporting counterparties, the Commission estimates a 
one-time burden of 440 hours per SD or MSP reporting counterparty \89\ 
at an estimated cost of $29,681.\90\ For non-SD/MSP reporting 
counterparties, the Commission estimates a one-time burden of 220 hours 
per non-SD/MSP reporting counterparty \91\ at an estimated cost of 
$18,481.\92\ The Commission estimates that this requirement will 
present a larger burden for SDs and MSPs than for non-SD/MSP reporting 
counterparties because SDs and MSPs are likely to be required to 
process a larger volume of historical swap data. The Commission notes 
that this burden may be reduced for swap counterparties, especially SDs 
or MSPs that are able to leverage existing technology and personnel 
expertise to perform this function.
---------------------------------------------------------------------------

    \89\ The costs of applying unique identifiers to historical swap 
data were estimated based on the costs to SD/MSPs that decide not to 
contract with a third party to comply with the recordkeeping/
reporting requirements of Part 46. See ``Overview of Cost 
Calculations.'' This estimate is calculated as follows: [(Sr. 
Database Administrator at 80 hours) + (Programmer at 160 hours) + 
(Systems Analyst at 160 hours) + (Compliance Manager at 20 hours) + 
(Director of Compliance at 10 hours) + (Compliance Attorney at 10 
hours)] = 440 hours per SD/MSP counterparty; [(440 hours per SD/MSP) 
x (125 SD/MSPs) = 55,000 aggregate hours. The Commission believes 
that information on swap transactions is currently being retained by 
many market participants in the ordinary course of business, which 
may result in lesser burden for those parties.
    \90\ See Table 3. The Commission notes that while tasks required 
for compliance with the unique identifier requirements of this rule 
may ultimately overlap to some extent with the tasks required for 
compliance with the unique identifier requirements of part 45, the 
Commission believes that the process of appending a unique 
identifier to historical data submissions will be substantially 
different than the process of incorporating a unique identifier into 
the submissions of active swaps from a technological implementation 
perspective, and has therefore estimated the burden of the two 
processes separately. The Commission notes that, in the event that 
SD/MSP counterparties find it practical to combine duplicative 
elements of the two task (for example, writing a single program to 
process both historical and active swaps), the burden of compliance 
with the unique identifier requirements of this rule may be reduced 
for those entities.
    \91\ The costs of applying unique identifiers to historical swap 
data were estimated based on the costs to non-SD/MSPs that decide 
not to contract with a third party to comply with the recordkeeping 
requirements of Part 46. See ``Overview of Cost Calculations.'' This 
estimate is calculated as follows: [(Sr. Database Administrator at 
40 hours) + (Programmer at 80 hours) + (Systems Analyst at 80 hours) 
+ (Compliance Manager at 10 hours) + (Director of Compliance at 5 
hours) + (Compliance Attorney at 5 hours)] = 220 hours per non-SD/
MSP counterparty; [(220 hours per non-SD/MSP) x (1,000 non-SD/MSPs) 
= 220,000 aggregate hours. The Commission believes that information 
on swap transactions is currently being retained by many market 
participants in the ordinary course of business, which may result in 
lesser burden for those parties.
    \92\ See Table 3.
---------------------------------------------------------------------------

    Receiving and storing data. The Commission believes that receiving 
and storing historical swap data, as required by this final rule, would 
impose a one-time burden on SDRs associated with importing, examining/
approving, and organizing/storing the historical swap data. The 
Commission anticipates that this incremental burden will involve the 
additional usage of the processes and personnel time and expertise 
necessary for receiving the stream of swap data reported by market 
participants for Part 45 compliance.
    The Commission anticipates that some aspects of this task, such as 
programming a code to process historical swap data, will require manual 
intervention; for other aspects of this task, such as submitting the 
code and updating the historical swap data files in storage, it may be 
possible to achieve a high degree of automation or computer-assisted 
processing. Furthermore, the Commission notes that this burden may be 
further reduced to an extent dependent on the ability of an

[[Page 35223]]

SDR to leverage existing technology and personnel expertise to perform 
this function. Finally, the Commission notes that SDRs will be required 
by Part 45 to have the automated technological systems in place to 
assign SDR identifiers to swap data; therefore, assigning SDR 
identifiers to VSRs should not impose costs on SDRS. The Commission 
estimates a one-time burden of 460 hours per SDR \93\ at a cost of 
$29,882 \94\ for receiving and storing historical swap data.
---------------------------------------------------------------------------

    \93\ The costs of receiving and storing historical swap data 
were estimated based on the costs to SDRs. See ``Overview of Cost 
Calculations.'' This estimate is calculated as follows: [(Computer 
Operations Supervisor at 80 hours) + (Computer Operations Group/
Section Manager at 80 hours) + (Computer Operations Department 
Manager at 20 hours) + (Sr. Database Administrator at 80 hours) + 
(Programmer at 80 hours) + (Systems Analyst at 80 hours) + 
(Compliance Manager at 20 hours) + (Director of Compliance at 10 
hours) + (Compliance Attorney at 10 hours)] = 460 hours per SDR; 
[(460 hours per SDR) x (15 SDRs) = 6,900 aggregate hours.
    \94\ See Table 4.
---------------------------------------------------------------------------

d. Comments, Alternatives, and Cost Mitigation
    Parties required to report certain historical swap data. Numerous 
commenters urged the Commission to phase in swap data reporting by both 
asset class and counterparty type. The Financial Services Roundtable 
recommended a phased implementation timeline based on a participant's 
level of sophistication, resources and swap trading volume. Global 
Forex advocated phased implementation of reporting that takes into 
account both the readiness of a particular asset class for reporting 
and the type of reporting counterparty involved. ETA urged that 
reporting be phased in by asset class and product type, and noted that 
one or more SDRs must be prepared to accept data for an asset class 
before effective reporting can begin. ETA also advocated beginning 
reporting by SDs and MSPs before non-SD/MSP counterparties are required 
to report. ISDA called for reporting to be phased in based on the state 
of readiness of different asset classes and market participant types.
    After considering these comments, the Commission made a number of 
modifications in the final rule. The final rule phases in the start of 
reporting by counterparty type, by setting the compliance date for non-
SD/MSP reporting counterparties six months after the compliance date 
for SDs and MSPs. The Commission believes that this approach reduces 
the costs of compliance for reporting counterparties that are likely to 
be smaller or less technologically sophisticated, while retaining the 
essential benefits of receiving historical swap transaction data from 
all swap market participants. This approach parallels that of the part 
45 rulemaking, which recognized the appropriateness of a phase-in 
period for non-SD/MSP counterparties.
    ETA urged that non-SD/MSP reporting counterparties not be required 
to report continuation data, arguing that transactions not involving 
SDs and MSPs represent only a small portion of the swaps market, and 
that such a requirement would be unduly burdensome. Alternatively, they 
asked that non-SD/MSP reporting counterparties be permitted to report 
continuation data for historical energy swaps on a quarterly basis.
    The Commission has determined that the final rule will require 
continuation data reporting as provided in part 45 of this chapter. 
Timely reporting of changes to primary economic terms of all swaps, 
including historical swaps, is necessary to give the Commission and 
other regulators the ability to see a current and accurate picture of 
the swap market as called for by the Dodd-Frank Act. In light of this 
comment, and after further considering the costs to non-SD/MSP 
counterparties, the Commission extended and phased in the continuation 
data reporting deadlines for non-SD/MSP reporting counterparties. For 
non-SD/MSP reporting counterparties, the NOPR applied the same 
continuation data reporting deadlines found in Part 45. The final 
rule's deadlines for continuation data reporting by non-SD/MSP 
counterparties require such reporting no later than the end of the 
first business day following a relevant change to a primary economic 
term during the first year of reporting, and require such reporting no 
later than the end of the second business day following a relevant 
change to the primary economic terms of the swap thereafter. This 
approach should reduce the costs of Part 46 compliance to non-SD/MSP 
counterparties, while retaining the benefits of receiving continuation 
data.
    Scope of reporting requirements. ISDA and Global Forex requested 
that the Commission not require reporting of the time of trade for a 
historical swap, arguing that in many cases counterparties may not have 
recorded this information when a historical swap was executed. ISDA 
argues that it would be undesirable, if not impossible, for a 
participant to attempt to recreate an execution time not previously 
recorded.
    The Commission believes that it would not be desirable for 
counterparties to assign an execution time retroactively when no record 
exists, and the Commission also recognizes that the costs of doing so 
could be significant to reporting counterparties. To mitigate costs and 
maintain the integrity of the historical swap data record, the final 
rule limits the execution timestamp reporting requirement to the 
transaction date, calling for reporting the time of the trade only if 
the time was recorded when the trade was executed and is known to the 
reporting counterparty when the report is made.
    Three commenters, ISDA, ETA, and WGCEF, requested that the 
Commission drop the catchall category of ``any other primary economic 
term(s)'' from the required PET data for historical swaps, arguing that 
it would be better to define PET data precisely. ETA stated reporting 
such information could require extensive text submissions of non-
standardized transaction terms, complicating the compilation task of 
the SDRs.
    In response, the Commission has removed ``any other primary 
economic term(s) of the swap matched by the counterparties in verifying 
the swap'' from the minimum PET data tables. The Commission believes 
the PET data in the NOPR tables provides the minimum information 
regulators will need concerning historical swaps, information 
counterparties almost surely will possess (e.g., trade date, price, 
expiration date). Other primary economic terms that might be captured 
by the catch-all category are not crucial to fulfill the purposes of 
reporting data on historical swaps under Dodd-Frank, and the PET data 
elements specified in the tables should be sufficient in this respect. 
In addition, the burden of reporting data on swaps executed prior to 
issuance of the Commission's final Dodd-Frank rules would be reduced by 
limiting required PET data for historical swaps to specified data 
elements.
    The End User Coalition requested that the Commission explain the 
use and value of reporting Master Agreement Identifiers. ISDA, ETA, and 
Global Forex stated that eliminating the requirement to report such 
identifiers, arguing that they would not necessarily allow regulators 
to calculate net exposures. Global Forex stated that providing this 
data would impose a significant burden because such information is not 
routinely stored on the same systems as the other PET data specified in 
the tables. WGCEF also asked that this requirement be eliminated, 
arguing that counterparties are in the best position to make exposure 
calculations and that the Commission already has the ability to request 
such information from them.

[[Page 35224]]

    In response, the Commission has eliminated the requirement to 
report master agreement identifiers. The terms of master agreements are 
not readily reportable in an electronic format, since no schema for 
reporting these terms in data fields has yet been developed. In 
addition, Dodd-Frank does not provide explicit authority for requiring 
such reporting; Dodd-Frank authorizes transaction-based reporting of 
the terms of a swap, and a master agreement is not a transactional 
agreement. Furthermore, the Commission notes that reporting of master 
agreements may eventually be initiated by the Office of Financial 
Research under its statutory authority. Eliminating this requirement 
therefore represents a reduction in the costs associated with Part 46 
compliance. In addition, because master agreement identifiers are not 
required to be reported pursuant to Part 45, eliminating this 
requirement also represents improved harmonization between Parts 45 and 
46.
Reporting of Valuation Information
    ISDA recommended that data elements necessary for a person to 
determine the market value of a transaction be dropped from the 
proposed data reporting requirements for historical credit swaps. ISDA 
stated that such a requirement would be overly burdensome in that it 
would require a trader to retain a variety of information irrelevant to 
the purposes of the rule, is not currently retained by traders, and may 
be proprietary to the trader.
    The Commission considered this comment, and does not require these 
data elements in the final rule. The Commission eliminated the 
requirement to report data elements necessary to value a swap from the 
final Part 45 data reporting rule; for the same reasons explained in 
that rulemaking, the Commission believes that such a requirement is not 
appropriate for inclusion in the historical swaps data reporting rule.
Alternative Submission Formats
    WGCEF requested that the Commission allow reporting counterparties 
to submit images of confirmations and other paper swap documentation in 
lieu of submission of normalized data in data fields, arguing that 
prohibiting the use of images for reporting would make the requirement 
more burdensome.
    The Commission considered this comment, but determined to maintain 
the NOPR's requirement for electronic reporting of normalized data for 
historical swaps in existence on or after the date the NOPR was issued. 
Permitting submission of images in lieu of submission of normalized 
data in data fields would hinder regulators' ability to efficiently 
search, retrieve, aggregate, and manipulate historical swap data in 
SDRs for essential purposes intended in the Dodd-Frank Act, including 
monitoring systemic risk and conducting market oversight and 
enforcement. In light of these considerations, the Commission believes 
that this final rule, by allowing submission of images to fulfill 
reporting requirements for swaps that expired prior to issuance of the 
NOPR on April 25, 2011 reduces the reporting burden to the extent 
appropriate.
e. Reporting in Light of CEA Section 15(a)
    The Commission has evaluated the costs and benefits of the 
reporting provisions of this part in light of the specific 
considerations identified in Section 15(a) of the CEA as follows.
    Protection of market participants and the public. The Commission 
believes that historical swap data reporting as provided in part 46 
enhances protections for market participants and the public in 
important ways. Information revealed through the requirements of Sec.  
46.3 and the use of unique identifiers as provided in Sec.  46.4 will 
provide the Commission with a significant body of previously 
unavailable data in a cohesive form that will enhance oversight and 
enforcement abilities to the benefit of both market participants and 
the public. For reasons identified above in the discussion of reporting 
requirement benefits, reporting of historical swap data in the manner 
prescribed in part 46 promotes the Commission's market participant and 
public protection goals by improving the ability to: (1) Detect and 
protect market participants against fraud, manipulation, and abusive 
trading practices; (2) conduct effective surveillance to oversee the 
integrity and efficiency of market operation; and, (3) understand, 
monitor, and appropriately react to systemic risk indicators.
    Furthermore, the Commission believes that the requirements of this 
final rule, and the associated compliance costs, represent a transfer 
of the costs associated with the systemic risks inherent in transacting 
in opaque swap markets from the public to private entities, 
particularly to those that are better positioned to realize economies 
of scale and scope in assuming those costs; the Commission believes 
that because historical swap data could be used as a benchmark to 
better understand systemic risks associated with swap market activity 
in the future, the costs of reporting historical swap data relate to 
the systemic risks of ongoing swap market activity, as well as 
historical swap market activity.
    Efficiency, competitiveness, and financial integrity. This rule 
promotes efficiency and competitiveness in several ways. First, the 
Commission has exercised its discretion to specify reporting 
requirements in a manner designed to mitigate costs to the extent 
consistent with statutory requirements and fulfillment of the purposes 
of the Dodd-Frank Act.
    Second, by allowing reporting parties to utilize third-party 
service providers to transmit required data, the Commission provides 
flexibility for reporting parties to utilize the most efficient means 
for compliance. The Commission believes that, relative to the 
capabilities of at least certain reporting parties, third-party 
providers likely will have a comparative advantage in data processing 
costs. The rule affords reporting parties the opportunity to avail 
themselves of potential efficiencies that use of such a third-party 
provider could provide.
    Third, the reporting hierarchy employed in the final rule assigns 
reporting responsibility based on factors including the relative size 
and sophistication of market participants (for example, SD/MSP 
counterparties, which are likely to have technological resources more 
readily available for reporting than non-SD/MSP counterparties, will 
serve as the reporting counterparty when facing a non-SD/MSP 
counterparty in a swap). The Commission believes that this is an 
efficient approach to swap reporting, as it provides the opportunity 
for larger, more sophisticated entities to realize economies of scale 
and scope in their reporting processes (for example, a swap dealer can 
collect data from swaps to which it is a counterparty from a variety of 
asset classes and send the data to an SDR in a single report; this 
allows for the creation of fewer reports and a reduced burden vis-
[agrave]-vis a system in which numerous small non-SD/MSP counterparties 
would need to collect and report data).
    Fourth, the Commission believes that the provisions of the final 
rule that relate to the format of the historical swap data to be 
reported will serve to reduce costs and burdens for registered entities 
and swap counterparties by (a) Allowing reporting counterparties to 
report data for pre-enactment swaps in the form in which it currently 
exists, thereby removing the need for (and costs associated with) 
reformatting or recreating the data; (b) allowing reporting entities 
and counterparties to

[[Page 35225]]

use whatever facilities, methods, or data standards are provided or 
required by the SDR to which data is reported; (c) allowing SDRs to use 
various facilities, methods, and data standards to receive data, so 
long as the SDR can provide data to the Commission in the format 
required by the Commission; and (d) allowing for the dual reporting, 
additional information reporting, and early submission of historical 
swap data in the form of a VSR. The Commission believes this approach 
is preferable to having the Commission mandate that reporting entities 
or counterparties adopt a particular format or data standard for 
reporting historical swap data and/or a particular form for pre-
enactment swap data, which in some cases could impose the additional 
burden of acquiring new technological capability different or more 
extensive that what the entity or counterparty already possesses. The 
Commission believes that, in light of this provision of the final rule, 
market competition is likely to lead SDRs to allow reporting entities 
and counterparties to report using data formats or standards that are 
easiest and least costly for them. Costs for market participants may 
also be lowered by the final rule provision authorizing the 
Commission's Chief Information Officer to require use of a particular 
data standard in order to accommodate the needs of different 
communities of users.\95\
---------------------------------------------------------------------------

    \95\ This authority could be used, for example, to require SDRs 
to accept swap data reports using a particular computer language 
already used by firms in a particular segment of the swap 
marketplace, so that they are not forced to incur additional cost by 
acquiring the capability needed to report using a different computer 
language.
---------------------------------------------------------------------------

    Furthermore, the Commission does not anticipate that the reporting 
requirements (including unique identifier requirements) of this final 
rule present costs that would impede the efficiency of swaps markets.
    The Commission anticipates that the reporting requirements of this 
final rule will work in concert with the recordkeeping requirements of 
this final rule to improve the integrity of swap markets. Accordingly, 
the manner in which these reporting requirements will aid market 
integrity mirrors those considered in the preceding discussion of the 
integrity benefits of recordkeeping-- namely, by aiding the prosecution 
and deterrence of market abuses and assisting regulatory supervision of 
markets through improved transparency.
    Price discovery. The Commission does not believe that the 
historical swap data reporting requirements (including unique 
identifier requirements) of this final rule will impact the price 
discovery process.
    Sound risk management practices. The Commission does not believe 
that the historical swap data reporting requirements (including unique 
identifier requirements) of this final rule have a significant effect 
on sound risk management practices.
    Other public interest considerations. The Commission believes that 
the data reporting requirements of this final rule will allow the 
Commission to readily acquire and analyze market data, thus 
streamlining the surveillance process. The Commission believes that by 
receiving historical swap data from the same market participants that 
will likely report a comparable stream of creation and continuation 
data pursuant to part 45, part 46 will allow the economists and other 
analysts employed by the Commission the opportunity to compare aspects 
of the swap market before and after the effective date of parts 45 and 
46. This will likely create the potential for an analysis of the 
effects of implementing these rules.
    With regard to unique identifiers, the Commission anticipates that 
the unique identifier requirements of this final rule will facilitate 
the Commission's efforts in the course of their investigations by 
providing a clear framework for data aggregation and comparison across 
financial instruments and between the pre- and post- part 46 compliance 
date periods.

           Table 1--Normalizing Data for Electronic Reporting
------------------------------------------------------------------------
                                                               Personnel
                                                     Hours       cost
------------------------------------------------------------------------
SD/MSPs.........................................         285     $20,169
Non-SD/MSPs.....................................          55       4,191
------------------------------------------------------------------------


                  Table 2--Historical Swap Data Storage
------------------------------------------------------------------------
                                                               Personnel
                                                     Hours       cost
------------------------------------------------------------------------
SD/MSPs.........................................         335     $22,172
------------------------------------------------------------------------


                   Table 3--Applying Unique Identifier
------------------------------------------------------------------------
                                                               Personnel
                                                     Hours       cost
------------------------------------------------------------------------
SD/MSPs.........................................         440     $29,681
Non-SD/MSPs.....................................         220      18,481
------------------------------------------------------------------------


                   Table 4--Receiving and Storing Data
------------------------------------------------------------------------
                                                               Personnel
                                                     Hours       cost
------------------------------------------------------------------------
SDRs............................................         460     $29,882
------------------------------------------------------------------------

IV. Compliance Dates

A. Introduction

    As discussed above, the final rule retains the NOPR provision 
requiring compliance with recordkeeping and reporting requirements for 
historical swaps to commence on the same compliance dates specified in 
the Commission's final swap data recordkeeping and reporting 
regulations in part 45 of this chapter. The provisions of both part 45 
and part 46 phase in compliance dates by both asset class and 
counterparty type. As noted above, this final rule permits voluntary 
initial data reporting for historical swaps prior to the applicable 
compliance date, if a registered SDR is prepared to accept the required 
initial data report prior to the applicable compliance date. Where such 
a voluntary early initial data report is made, continuation data 
reporting for the swap in question, if applicable, is still required to 
commence as of the applicable compliance date.
    Accordingly, the Commission has determined that each swap dealer, 
major swap participant, and non-SD/MSP counterparty subject to the 
jurisdiction of the Commission shall commence full compliance with all 
provisions of this part on the applicable compliance dates set forth 
below.

B. Compliance Dates for Swap Dealers and Major Swap Participants

    Swap dealers, and major swap participants shall commence full 
compliance with all provisions of this part as follows:
    Credit swaps and interest rate swaps. Compliance date 1, the 
compliance date with respect to credit swaps and interest rate swaps, 
shall be the later of: July 16, 2012; or 60 calendar days after the 
publication in the Federal Register of the later of the Commission's 
final rule defining the term ``swap'' or the Commission's final rule 
defining the terms ``swap dealer'' and ``major swap participant.''
    Equity swaps, foreign exchange swaps, and other commodity swaps. 
Compliance date 2, the compliance date with respect to equity swaps, 
foreign exchange swaps, and other commodity swaps, shall be 90 calendar 
days after compliance date 1.

[[Page 35226]]

C. Compliance Date for Non-SD/MSP Counterparties

    Non-SD/MSP counterparties shall commence full compliance with all 
provisions of this part for all pre-enactment and transition swaps on 
compliance date 3, which shall be 90 calendar days after compliance 
date 2.

Final Rules

List of Subjects in 17 CFR Part 46

    Swaps, data recordkeeping requirements and data reporting 
requirements.

    For the reasons set forth in the preamble, and pursuant to the 
authority in the Commodity Exchange Act, as amended, and in particular 
Sections 2(h)(5) and 4r(a), the Commission amends Chapter 1 of Title 17 
of the Code of Federal Regulations by adding Part 46 to read as 
follows:

PART 46--SWAP DATA RECORDKEEPING AND REPORTING REQUIREMENTS: PRE-
ENACTMENT AND TRANSITION SWAPS

Sec.
46.1 Definitions.
46.2 Recordkeeping for pre-enactment swaps and transition swaps.
46.3 Swap data reporting for pre-enactment swaps and transition 
swaps.
46.4 Unique identifiers.
46.5 Determination of which counterparty must report.
46.6 Third-party facilitation of data reporting.
46.7 Reporting to a single swap data repository.
46.8 Data reporting for swaps in a swap asset class not accepted by 
any swap data repository.
46.9 Voluntary supplemental reporting
46.10 Required data standards.
46.11 Reporting of errors and omissions in previously reported data.
Appendix to Part 46--Tables of Minimum Primary Economic Terms Data 
for Pre-Enactment and Transition Swaps.

    Authority:  Title VII, sections 723 and 729, Pub. L. 111-203, 
124 Stat. 1738.


Sec.  46.1  Definitions.

    Terms used in this part are defined as follows:
    Asset class means the broad category of goods, services or 
commodities, including any ``excluded commodity'' as defined in CEA 
section 1a(19), with common characteristics underlying a swap. The 
asset classes include credit, equity, foreign exchange (excluding 
cross-currency), interest rate (including cross-currency), other 
commodity, and such other asset classes as may be determined by the 
Commission.
    Compliance date means the applicable date, as specified in part 45 
of this chapter, on which a registered entity or swap counterparty 
subject to the jurisdiction of the Commission is required to commence 
full compliance with all provisions of this part and with all 
applicable provisions of part 45 of this chapter, as set forth in the 
preamble to this part.
    Confirmation (confirming) means the consummation (electronically or 
otherwise) of legally binding documentation (electronic or otherwise) 
that memorializes the agreement of the parties to all terms of a swap. 
A confirmation must be in writing (whether electronic or otherwise) and 
must legally supersede any previous agreement (electronically or 
otherwise).
    Confirmation data means all of the terms of a swap matched and 
agreed upon by the counterparties in confirming the swap.
    Credit swap means any swap that is primarily based on instruments 
of indebtedness, including, without limitation: any swap primarily 
based on one or more broad-based indices related to instruments of 
indebtedness; and any swap that is an index credit swap or total return 
swap on one or more indices of debt instruments.
    Electronic reporting (``report electronically'') means the 
reporting of data normalized in data fields as required by the data 
standard or standards used by the swap data repository to which the 
data is reported. Except where specifically otherwise provided in this 
chapter, electronic reporting does not include submission of an image 
of a document or text file.
    Equity swap means any swap that is primarily based on equity 
securities, including, without limitation: any swap primarily based on 
one or more broad-based indices of equity securities; and any total 
return swap on one or more equity indices.
    Financial entity has the meaning set forth in CEA section 
2(h)(7)(C).
    Foreign exchange forward has the meaning set forth in CEA section 
1a(24).
    Foreign exchange instrument means an instrument that is both 
defined as a swap in part 1 of this chapter and included in the foreign 
exchange asset class. Instruments in the foreign exchange asset class 
include: any currency option, foreign currency option, foreign exchange 
option, or foreign exchange rate option; any foreign exchange forward 
as defined in CEA section 1a(24); any foreign exchange swap as defined 
in CEA section 1a(25); and any non-deliverable forward involving 
foreign exchange.
    Foreign exchange swap has the meaning set forth in CEA section 
1a(25). It does not include swaps primarily based on rates of exchange 
between different currencies, changes in such rates, or other aspects 
of such rates (sometimes known as ``cross-currency swaps'').
    Interest rate swap means any swap which is primarily based on one 
or more interest rates, such as swaps of payments determined by fixed 
and floating interest rates; or any swap which is primarily based on 
rates of exchange between different currencies, changes in such rates, 
or other aspects of such rates (sometimes known as ``cross-currency 
swaps'').
    International swap means a swap required by U.S. law and the law of 
another jurisdiction to be reported both to a swap data repository and 
to a different trade repository registered with the other jurisdiction.
    Major swap participant has the meaning set forth in CEA section 
1a(33) and in part 1 of this chapter.
    Minimum primary economic terms means, with respect to a historical 
swap, the terms included in the list of minimum primary economic terms 
for swaps in each swap asset class found in Appendix 1 to this part.
    Minimum primary economic terms data means all of the data elements 
necessary to fully report all of the minimum primary economic terms 
required by this part to be reported for a swap in the swap asset class 
of the swap in question.
    Mixed swap has the meaning set forth in CEA section 1a(47)(D), and 
refers to an instrument that is in part a swap subject to the 
jurisdiction of the Commission, and in part a security-based swap 
subject to the jurisdiction of the SEC.
    Multi-asset swap means a swap that does not have one easily 
identifiable primary underlying notional item, but instead involves 
multiple underlying notional items within the Commission's jurisdiction 
that belong to different asset classes.
    Non-SD/MSP counterparty means a swap counterparty that is neither a 
swap dealer nor a major swap participant.
    Other commodity swap means any swap not included in the credit, 
equity, foreign exchange, or interest rate asset classes, including, 
without limitation, any swap for which the primary underlying item is a 
physical commodity or the price or any other aspect of a physical 
commodity.
    Pre-enactment swap means any swap entered into prior to enactment 
of the Dodd-Frank Act of 2010 (July 21, 2010), the terms of which have 
not expired as of the date of enactment of that Act.
    Reporting counterparty means the counterparty required to report 
swap

[[Page 35227]]

data pursuant to this part, selected as provided in Sec.  46.5.
    Required swap continuation data means all of the data elements that 
must be reported during the existence of a swap as required by part 45 
of this chapter.
    Swap data repository has the meaning set forth in CEA section 
1a(48), and in part 49 of this chapter.
    Swap dealer has the meaning set forth in CEA section 1a(49), and in 
part 1 of this chapter.
    Transition swap means any swap entered into on or after the 
enactment of the Dodd-Frank Act of 2010 (July 21, 2010) and prior to 
the applicable compliance date on which a registered entity or swap 
counterparty subject to the jurisdiction of the Commission is required 
to commence full compliance with all provisions of this part, as set 
forth in the preamble to this part.


Sec.  46.2  Recordkeeping for pre-enactment swaps and transition swaps.

    (a) Recordkeeping for pre-enactment and transition swaps in 
existence on or after April 25, 2011. Each counterparty subject to the 
jurisdiction of the Commission that is a counterparty to any pre-
enactment swap or transition swap that is in existence on or after 
April 25, 2011 shall keep the following records concerning each such 
swap:
    (1) Minimum records required. Each counterparty shall keep records 
of all of the minimum primary economic terms data specified in Appendix 
1 to this part.
    (2) Additional records required to be kept if possessed by a 
counterparty. In addition to the minimum records required pursuant to 
paragraph (a)(1) of this part, a counterparty that is in possession at 
any time on or after April 25, 2011 of any of the following 
documentation shall keep copies thereof:
    (i) Any confirmation of the swap executed by the counterparties.
    (ii) Any master agreement governing the swap, and any modification 
or amendment thereof.
    (iii) Any credit support agreement, or other agreement between the 
counterparties having the same function as a credit support agreement, 
relating to the swap, and any modification or amendment thereof.
    (3) Records created or available after the compliance date. In 
addition to the records required to be kept pursuant to paragraphs 
(a)(1) and (2) of this section, each counterparty to any pre-enactment 
swap or transition swap that remains in existence on the compliance 
date shall keep for each such swap, from the compliance date forward, 
all of the records required to be kept by section 45.2 of this chapter, 
to the extent that any such records are created by or become available 
to the counterparty on or after the compliance date.
    (4) Retention form. Records required to be kept pursuant to this 
section with respect to historical swaps in existence on or after April 
25, 2011, must be kept as required by paragraph (a)(4)(i) or (ii) of 
this section, as applicable.
    (i) Records required to be kept by swap dealers or major swap 
participants may be kept in electronic form, or kept in paper form if 
originally created and exclusively maintained in paper form, so long as 
they are retrievable, and information in them is reportable as required 
by this part.
    (ii) Records required to be kept by non-SD/MSP counterparties may 
be kept in either electronic or paper form, so long as they are 
retrievable, and information in them is reportable, as required by this 
part.
    (b) Recordkeeping for pre-enactment and transition swaps expired or 
terminated prior to April 25, 2011. Each counterparty subject to the 
jurisdiction of the Commission that is a counterparty to any pre-
enactment swap or transition swap that is expired or terminated prior 
to April 25, 2011 shall keep the following records concerning each such 
swap:
    (1) Pre-enactment swaps expired prior to April 25, 2011. Each 
counterparty to any pre-enactment swap that expired or was terminated 
prior to April 25, 2011 shall retain the information and documents 
relating to the terms of the transaction that were possessed by the 
counterparty on or after October 14, 2010 (17 CFR 44.00 through 44.02). 
Such information may be retained in the format in which it existed on 
or after October 14, 2010, or in such other format as the counterparty 
chooses to retain it. This paragraph (b)(1) does not require the 
counterparty to create or retain records of information not in its 
possession on or after October 14, 2010, or to alter the format, i.e., 
the method by which the information is organized and stored.
    (2) Transition swaps expired prior to April 25, 2011. Each 
counterparty to any transition swap that expired or was terminated 
prior to April 25, 2011 shall retain the information and documents 
relating to the terms of the transaction that were possessed by the 
counterparty on or after December 17, 2010 (17 CFR 44.03). Such 
information may be retained in the format in which it existed on or 
after December 17, 2010, or in such other format as the counterparty 
chooses to retain it. This paragraph (b)(2) does not require the 
counterparty to create or retain records of information not in its 
possession on or after December 17, 2010, or to alter the format, i.e., 
the method by which the information is organized and stored.
    (c) Retention period. All records required to be kept by this 
section shall be kept from the applicable dates specified in paragraphs 
(a) or (b) of this section through the life of the swap, and for a 
period of at least five years from the final termination of the swap.
    (d) Retrieval. Records required to be kept pursuant to this section 
shall be retrievable as follows.
    (1) Retrieval for pre-enactment and transition swaps in existence 
on or after April 25, 2011. Records concerning pre-enactment and 
transition swaps in existence on or after April 25, 2011, shall be 
retrievable as follows:
    (i) Each record required to be kept by a counterparty that is a 
swap dealer or major swap participant shall be readily accessible via 
real time electronic access by the counterparty throughout the life of 
the swap and for two years following the final termination of the swap, 
and shall be retrievable by the registrant or its affiliates within 
three business days through the remainder of the period following final 
termination of the swap during which it is required to be kept.
    (ii) Each record required to be kept by a non-SD/MSP counterparty 
shall be retrievable by the counterparty within five business days 
throughout the period during which it is required to be kept.
    (2) Retrieval for pre-enactment and transition swaps expired or 
terminated prior to April 25, 2011. Records concerning pre-enactment 
and transition swaps expired or terminated prior to April 25, 2011, 
shall be retrievable by the counterparty within five business days 
throughout the period during which they are required to be kept.
    (e) Inspection. All records required to be kept pursuant to this 
section by any registrant or its affiliates or by any counterparty 
subject to the jurisdiction of the Commission shall be open to 
inspection upon request by any representative of the Commission, the 
United States Department of Justice, or the Securities and Exchange 
Commission, or by any representative of a prudential regulator as 
authorized by the Commission. Copies of all such records shall be 
provided, at the expense of the entity or person required to keep the 
record, to any representative of the Commission upon request. With 
respect to historical swaps in existence on or after April 25, 2011, 
copies of records required to be kept by any swap dealer or major swap 
participant shall

[[Page 35228]]

be provided either by electronic means, in hard copy, or both, as 
requested by the Commission, with the sole exception that copies of 
records originally created and exclusively maintained in paper form may 
be provided in hard copy only; and copies of records required to be 
kept by any non-SD/MSP counterparty shall be provided in the form, 
whether electronic or paper, in which the records are kept. With 
respect to historical swaps expired or terminated prior to April 25, 
2011, records shall be provided in the form, whether electronic or 
paper, in which the records are kept.


Sec.  46.3  Swap data reporting for pre-enactment swaps and transition 
swaps.

    (a) Reporting for pre-enactment and transition swaps in existence 
on or after April 25, 2011. (1) Initial data report. For each pre-
enactment swap or transition swap in existence on or after April 25, 
2011, the reporting counterparty shall report electronically to a swap 
data repository (or to the Commission if no swap data repository for 
swaps in the asset class in question is available), on the compliance 
date, the following:
    (i) All of the minimum primary economic terms data specified in 
Appendix 1 to this part that were in the possession of the reporting 
counterparty on or after April 25, 2011;
    (ii) The legal entity identifier of the reporting counterparty 
required pursuant to Sec.  46.4; and
    (iii) The following additional identifiers:
    (A) The internal counterparty identifier or legal entity identifier 
used by the reporting counterparty to identify the non-reporting 
counterparty; and
    (B) The internal transaction identifier used by the reporting 
counterparty to identify the swap.
    (2) Reporting of required swap continuation data. (i) For each 
uncleared pre-enactment or transition swap in existence on or after 
April 25, 2011, throughout the existence of the swap following the 
compliance date, the reporting counterparty must report all required 
swap continuation data required to be reported pursuant to part 45 of 
this chapter, with the exception that when a reporting counterparty 
reports changes to minimum primary economic terms for a pre-enactment 
or transition swap, the reporting counterparty is required to report 
only changes to the minimum primary economic terms listed in Appendix 1 
to this part and reported in the initial data report made pursuant to 
paragraph (a)(1) of this section, rather than changes to all minimum 
primary economic terms listed in Appendix 1 to part 45.
    (ii) Swap continuation data reporting is not required for a pre-
enactment or transition swap in existence on or after April 25, 2011, 
that has been cleared by a designated clearing organization.
    (3) Data reporting for multi-asset swaps and mixed swaps. (i) For 
each pre-enactment or transition swap in existence on or after April 
25, 2011, that is a multi-asset swap, all data required to be reported 
by this part shall be reported to a single swap data repository that 
accepts swaps in the asset class treated as the primary asset class 
involved in the swap by the reporting counterparty making the first 
report of required swap creation data pursuant to this section.
    (ii) For each pre-enactment or transition swap in existence on or 
after April 25, 2011, that is a mixed swap, all data required to be 
reported pursuant to this part shall be reported to a swap data 
repository registered with the Commission and to a security-based swap 
data repository registered with the Securities and Exchange Commission. 
This requirement may be satisfied by reporting the mixed swap to a swap 
data repository or security-based swap data repository registered with 
both Commissions.
    (b) Reporting for pre-enactment and transition swaps expired or 
terminated prior to April 25, 2011. (1) Pre-enactment swaps expired or 
terminated prior to April 25, 2011. For each pre-enactment swap which 
expired or was terminated prior to April 25, 2011, the reporting 
counterparty shall report to a swap data repository (or to the 
Commission if no swap data repository for swaps in the asset class in 
question is available), on the compliance date, such information 
relating to the terms of the transaction as was in the reporting 
counterparty's possession on or after October 14, 2010 (17 CFR 44.00 
through 44.02). This information may be reported via any method 
selected by the reporting counterparty.
    (2) Transition swaps expired or terminated prior to April 25, 2011. 
For each transition swap which expired or was terminated prior to April 
25, 2011, the reporting counterparty shall report to a swap data 
repository (or to the Commission if no swap data repository for swaps 
in the asset class in question is available), on the compliance date, 
such information relating to the terms of the transaction as was in the 
reporting counterparty's possession on or after December 17, 2010 (17 
CFR 44.03). This information may be reported via any method selected by 
the reporting counterparty.
    (c) Voluntary early submission of initial data report. For all pre-
enactment and transition swaps required to be reported pursuant to this 
part, the reporting counterparty may make the initial data report 
required by paragraph (a)(1) of this section, or the data report 
required by paragraph (b) of this section, prior to the applicable 
compliance date, if a swap data repository accepting swaps in the asset 
class in question is prepared to accept the report. The obligation to 
report continuation data as required by paragraph (a)(2) of this 
section with respect to a swap for which a voluntary early submission 
is made commences on the applicable compliance date. However, the 
reporting counterparty may submit continuation data at any time after a 
voluntary early submission made pursuant to this paragraph, if the swap 
data repository is prepared to accept such continuation data, and if 
that repository has registered with the Commission as a swap data 
repository as of the applicable compliance date.
    (d) Non-duplication of previous reporting. If the reporting 
counterparty for a pre-enactment or transition swap has reported any of 
the information required as paragraphs (a) or (b) of this section to a 
trade repository prior to the compliance date, and if as of the 
compliance date that repository has registered with the Commission as a 
swap data repository, then:
    (1) The counterparty shall not be required to report such 
previously reported information to the swap data repository again;
    (2) The counterparty shall be required to report to the swap data 
repository on the compliance date any information required as part of 
the initial data report by paragraph (a) of this section that has not 
been reported prior to the compliance date: and
    (3) In the case of pre-enactment and transition swaps in existence 
on or after April 25, 2011, the initial data report required by 
paragraph (a) of this section and all subsequent data reporting 
concerning the swap shall be made to the same swap data repository to 
which data concerning the swap was first reported prior to the 
compliance date (or to its successor in the event that it ceases to 
operate, as provided in part 49 of this chapter).


Sec.  46.4  Unique identifiers.

    The unique identifier requirements for swap data reporting with 
respect to pre-enactment or transition swaps shall be as follows:
    (a) By the compliance date, the reporting counterparty (as defined 
by part 45 of this chapter) for each pre-

[[Page 35229]]

enactment or transition swap in existence on or after April 25, 2011, 
for which an initial data report is required by this part 46, shall 
obtain for itself a legal entity identifier as provided in Sec.  45.6 
of this chapter (or if the Commission has not yet designated a legal 
entity identifier system, a substitute counterparty identifier as 
provided in Sec.  45.6(f) of this chapter), and shall include its own 
legal entity identifier (or substitute counterparty identifier) in the 
initial data report concerning the swap. With respect to the legal 
entity identifier (or substitute counterparty identifier) of the 
reporting counterparty, the reporting counterparty and the swap data 
repository to which the swap is reported shall comply thereafter with 
all unique identifier requirements of Sec.  45.6 of this chapter.
    (b) Within 180 days after the compliance date, the non-reporting 
counterparty for each pre-enactment or transition swap in existence on 
or after April 25, 2011, for which an initial data report is required 
by this part 46, shall obtain a legal entity identifier as provided in 
Sec.  45.6 of this chapter (or if the Commission has not yet designated 
a legal entity identifier system, a substitute counterparty identifier 
as provided in Sec.  45.6(f) of this chapter), and shall provide its 
legal entity identifier (or substitute counterparty identifier) to the 
reporting counterparty. Upon receipt of the non-reporting 
counterparty's legal entity identifier (or substitute counterparty 
identifier), the reporting counterparty shall provide it to the swap 
data repository to which swap data for the swap was reported. 
Thereafter, with respect to the legal entity identifier (or substitute 
counterparty identifier) of the non-reporting counterparty, the 
counterparties to the swap and the swap data repository to which it is 
reported shall comply with all requirements of Sec.  45.6 of this 
chapter.
    (c) The legal entity identifier requirements of parts 46 and 45 of 
this chapter shall not apply to pre-enactment or transition swaps 
expired or terminated prior to April 25, 2011.
    (d) The unique swap identifier and unique product identifier 
requirements of part 45 of this chapter shall not apply to pre-
enactment or transition swaps.


Sec.  46.5  Determination of which counterparty must report.

    (a) Determination of which counterparty must report swap data 
concerning each pre-enactment or transition swap shall be made as 
follows:
    (1) If only one counterparty is a swap dealer, the swap dealer 
shall fulfill all counterparty reporting obligations.
    (2) If neither party is an swap dealer, and only one counterparty 
is an major swap participant, the major swap participant shall fulfill 
all counterparty reporting obligations.
    (3) If both counterparties are non-SD/MSP counterparties, and only 
one counterparty is a financial entity as defined in CEA section 
2(h)(7)(C), the counterparty that is a financial entity shall be the 
reporting counterparty.
    (4) For each pre-enactment swap or transition swap for which both 
counterparties are swap dealers, or both counterparties are major swap 
participants, or both counterparties are non-SD/MSP counterparties that 
are financial entities as defined in CEA section 2(h)(7)(C), or both 
counterparties are non-SD/MSP counterparties and neither counterparty 
is a financial entity as defined in CEA section 2(h)(7)(C), the 
counterparties shall agree which counterparty shall fulfill reporting 
obligations with respect to that swap; and the counterparty so selected 
shall fulfill all counterparty reporting obligations.
    (5) Notwithstanding the provisions of paragraphs (a)(1) through (3) 
of this section, for pre-enactment or transition swaps for which both 
counterparties are non-SD/MSP counterparties, if only one counterparty 
is a U.S. person, that counterparty shall be the reporting counterparty 
and shall fulfill all counterparty reporting obligations.
    (b) For pre-enactment and transition swaps in existence as of the 
compliance date, determination of the reporting counterparty shall be 
made by applying the provisions of paragraph (a) of this section with 
respect to the current counterparties to the swap as of the compliance 
date, regardless of whether either or both were original counterparties 
to the swap when it was first executed.
    (c) For pre-enactment and transition swaps for which reporting is 
required, but which have expired or been terminated prior to the 
compliance date, determination of the reporting counterparty shall be 
made by applying the provisions of paragraph (a) of this section to the 
counterparties to the swap as of the date of its expiration or 
termination (except for determination of a counterparty's status as an 
SD or MSP, which shall be made as of the compliance date), regardless 
of whether either or both were original counterparties to the swap when 
it was first executed.
    (d) After the initial report required by Sec.  46.3 is made, if a 
reporting counterparty selected pursuant to this section ceases to be a 
counterparty to a swap due to an assignment or novation, the reporting 
counterparty for reporting of required swap continuation data following 
the assignment or novation shall be selected from the two current 
counterparties as provided in paragraphs (d)(1) through (4) of this 
section.
    (1) If only one counterparty is a swap dealer, the swap dealer 
shall be the reporting counterparty and shall fulfill all counterparty 
reporting obligations.
    (2) If neither counterparty is a swap dealer, and only one 
counterparty is a major swap participant, the major swap participant 
shall be the reporting counterparty and shall fulfill all counterparty 
reporting obligations.
    (3) If both counterparties are non-SD/MSP counterparties, and only 
one counterparty is a U.S. person, that counterparty shall be the 
reporting counterparty and shall fulfill all counterparty reporting 
obligations.
    (4) In all other cases, the counterparty that replaced the previous 
reporting counterparty by reason of the assignment or novation shall be 
the reporting counterparty, unless otherwise agreed by the 
counterparties.


Sec.  46.6  Third-party facilitation of data reporting.

    Counterparties required by this part 46 to report swap data for any 
pre-enactment or transition swap, while remaining fully responsible for 
reporting as required by this part 46, may contract with third-party 
service providers to facilitate reporting.


Sec.  46.7  Reporting to a single swap data repository.

    All data reported for each pre-enactment or transition swap 
pursuant to this part 46, and all corrections of errors and omissions 
in previously reported data for the swap, shall be reported to the same 
swap data repository to which the initial data report concerning the 
swap is made (or to its successor in the event that it ceases to 
operate, as provided in part 49 of this chapter).


Sec.  46.8  Data reporting for swaps in a swap asset class not accepted 
by any swap data repository.

    (a) Should there be a swap asset class for which no swap data 
repository registered with the Commission currently accepts swap data, 
each registered entity or counterparty required by this part to report 
any required swap creation data or required swap continuation data with 
respect to a swap in that asset class must report that same data to the 
Commission.

[[Page 35230]]

    (b) Data reported to the Commission pursuant to this section shall 
be reported at times announced by the Commission. Data reported to the 
Commission pursuant to this section with respect to pre-enactment and 
transition swaps in existence on or after April 25, 2011 shall be 
reported in an electronic format acceptable to the Commission.
    (c) Delegation of authority to the Chief Information Officer: The 
Commission hereby delegates to its Chief Information Officer, until the 
Commission orders otherwise, the authority set forth in paragraph (c) 
of this section, to be exercised by the Chief Information Officer or by 
such other employee or employees of the Commission as may be designated 
from time to time by the Chief Information Officer. The Chief 
Information Officer may submit to the Commission for its consideration 
any matter which has been delegated in this paragraph. Nothing in this 
paragraph prohibits the Commission, at its election, from exercising 
the authority delegated in this paragraph. The authority delegated to 
the Chief Information Officer by paragraph (c) of this section shall 
include:
    (1) With respect to all pre-enactment and transition swaps required 
to be reported by this part, the authority to determine the dates and 
times at which data concerning such swaps shall be reported pursuant to 
this part.
    (2) With respect to all pre-enactment swaps or transition swaps in 
existence on or after April 25, 2011:
    (i) The authority to determine the manner, format, coding 
structure, and electronic data transmission standards and procedures 
acceptable to the Commission for the purposes of paragraphs (a) and (b) 
of this section; and
    (ii) The authority to determine whether the Commission may permit 
or require use by reporting entities or counterparties in reporting 
pre-enactment or transition swaps in existence on or after April 25, 
2011, of one or more particular data standards (such as FIX, FpML, ISO 
20022, or some other standard), in order to accommodate the needs of 
different communities of users.
    (d) The Chief Information Officer shall publish from time to time 
in the Federal Register and on the Web site of the Commission the dates 
and times, format, data schema, and electronic data transmission 
methods and procedures for reporting acceptable to the Commission with 
respect to swap data reporting pursuant to this section.


Sec.  46.9  Voluntary supplemental reporting

    (a) For purposes of this section, the term voluntary, supplemental 
report means any report of swap data for a pre-enactment or transition 
swap to a swap data repository that is not required to be made pursuant 
to this part or any other part in this chapter.
    (b) A voluntary, supplemental report for a pre-enactment or 
transition swap may be made only by a counterparty to the swap in 
connection with which the voluntary, supplemental report is made, or by 
a third-party service provider acting on behalf of a counterparty to 
the swap.
    (c) A voluntary, supplemental report for a pre-enactment or 
transition swap may be made only after the initial data report for the 
swap required by section 46.3(a) or the report required by section 
46.3(b), as applicable, has been made.
    (d) A voluntary, supplemental report for a pre-enactment or 
transition swap may be made either to the swap data repository to which 
the initial data report for the swap required by section 46.3(a) or the 
report required by section 46.3(b), as applicable, has been made, or to 
a different swap data repository.
    (e) A voluntary, supplemental report for a pre-enactment or 
transition swap must contain:
    (1) An indication that the report is a voluntary, supplemental 
report.
    (2) The swap data repository identifier created for the swap by the 
automated systems of the swap data repository to which the initial data 
report required by section 46.3(a) or the report required by section 
46.3(b), as applicable, has been made.
    (3) An indication of the identity of the swap data repository to 
which the initial data report required by section 46.3(a) or the report 
required by section 46.3(b), as applicable, has been made, if the 
voluntary supplemental report is made to a different swap data 
repository.
    (4) If the pre-enactment or transition swap was in existence on or 
after April 25, 2011, the legal entity identifier (or substitute 
identifier) of the counterparty making the voluntary, supplemental 
report.
    (5) If applicable, an indication that the voluntary, supplemental 
report is made pursuant to the laws or regulations of any jurisdiction 
outside the United States.
    (f) If a counterparty that has made a voluntary, supplemental 
report discovers any errors in the swap data included in the voluntary, 
supplemental report, the counterparty must report a correction of each 
such error to the swap data repository to which the voluntary, 
supplemental report was made, as soon as technologically practicable 
after discovery of any such error.


Sec.  46.10  Required data standards.

    In reporting swap data to a swap data repository as required by 
this part 46, each reporting counterparty shall use the facilities, 
methods, or data standards provided or required by the swap data 
repository to which counterparty reports the data.


Sec.  46.11  Reporting of errors and omissions in previously reported 
data.

    (a) Each swap counterparty required by this part 46 to report swap 
data shall report any errors and omissions in the data so reported. 
Corrections of errors or omissions shall be reported as soon as 
technologically practicable after discovery of any such error or 
omission.
    (b) For pre-enactment or transition swaps for which this part 
requires reporting of continuation data, reporting counterparties 
reporting state data as provided in part 45 of this chapter may fulfill 
the requirement to report errors or omissions by making appropriate 
corrections in their next daily report of state data pursuant to part 
45 of this chapter.
    (c) Each counterparty to a pre-enactment or transition swap that is 
not the reporting counterparty as determined pursuant to Sec.  46.5, 
and that discovers any error or omission with respect to any swap data 
reported to a swap data repository for that swap, shall promptly notify 
the reporting counterparty of each such error or omission. As soon as 
technologically practicable after receiving such notice, the reporting 
counterparty shall report a correction of each such error or omission 
to the swap data repository.
    (d) Each swap counterparty reporting corrections to errors or 
omissions in data previously reported as required by this part shall 
report such corrections in the same format as it reported the erroneous 
or omitted data.

Appendix 1 to Part 46--Tables of Minimum Primary Economic Terms Data 
For Pre-Enactment and Transition Swaps

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BILLING CODE C

    Issued in Washington, DC on May 17, 2012 by the Commission.
David A. Stawick,
Secretary of the Commission.
    Appendix to Swap Data Recordkeeping and Reporting Requirements: 
Pre-Enactment and Transition Swaps--Commission Voting Summary and 
Statement of Chairman Gensler

    Note:  The following appendix will not appear in the Code of 
Federal Regulations.

    On this matter, Chairman Gensler and Commissioner Sommers, Chilton, 
O'Malia and Wetjen voted in the affirmative; no Commissioner voted in 
the negative.

Appendix 2--Statement of Chairman Gary Gensler

    I support the final rule establishing swap data recordkeeping 
and reporting requirements for pre-enactment and transition swaps, 
collectively called ``historical swaps.'' One of the main goals of 
the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-
Frank Act) is to bring transparency to the unregulated swaps market. 
Starting this summer, light will shine for the first time on this 
market with the reporting both to the public and to regulators of 
nearly every swap transaction.
    The historical swaps rule builds on already completed swaps 
market transparency rules. It will help give regulators a complete 
picture of the swaps market, including data on swaps in existence at 
the time of the Dodd-Frank Act's passage.
    The rule provides market participants guidance on the reporting 
requirements for pre-enactment swaps (those entered into before the 
enactment of the Dodd-Frank Act) as well as transition swaps (those 
entered into between the enactment date of the law and the 
applicable compliance date for swap data reporting). The rule 
specifies clearly what records must be kept and what data must be 
reported to swap data repositories (SDRs) with respect to these 
historical swaps. It ensures that the historical swaps data needed 
by regulators is available through SDRs beginning on the compliance 
date for swap data reporting.
    The rule achieves the reporting benefits of Dodd-Frank while 
reducing the costs and burdens associated with recordkeeping for 
historical swaps. Recordkeeping requirements for these swaps are 
minimized for counterparties who are not swap dealers or major swap 
participants. These counterparties are permitted to maintain records 
in any format they choose, and are allowed five days to retrieve 
their records.

[FR Doc. 2012-12531 Filed 6-11-12; 8:45 am]
BILLING CODE P