Ownership and Control Reports, Forms 102/102S, 40/40S, and 71, 69177-69266 [2013-26789]

Agencies

• Commodity Futures Trading Commission

[Federal Register Volume 78, Number 222 (Monday, November 18, 2013)]
[Rules and Regulations]
[Pages 69177-69266]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-26789]



[[Page 69177]]

Vol. 78

Monday,

No. 222

November 18, 2013

Part II





 Commodity Futures Trading Commission





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17 CFR Parts 15, 17, 18, et al.





 Ownership and Control Reports, Forms 102/102S, 40/40S, and 71; Final 
Rule

Federal Register / Vol. 78 , No. 222 / Monday, November 18, 2013 / 
Rules and Regulations

[[Page 69178]]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Parts 15, 17, 18, and 20

RIN 3038-AD31


Ownership and Control Reports, Forms 102/102S, 40/40S, and 71

AGENCY: Commodity Futures Trading Commission.

ACTION: Final rule.

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SUMMARY: The Commodity Futures Trading Commission (``Commission'' or 
``CFTC'') is adopting new rules and related forms to enhance its 
identification of futures and swap market participants. These final 
rules will leverage the Commission's current position and transaction 
reporting programs by requiring the electronic submission of trader 
identification and market participant data on amended Forms 102 and 40, 
and on new Form 71. The new and amended forms require the reporting of 
certain trading accounts active on reporting markets that are 
designated contract markets or swap execution facilities. Among other 
information, the forms collect ownership and control information with 
respect to both position-based special accounts and trading accounts 
that meet specified volume-based reporting levels.

DATES: Effective date: February 18, 2014.
    Compliance date: The compliance date will be delayed by an 
additional 180 days, with the result that the compliance date of these 
final rules will be August 15, 2014.

FOR FURTHER INFORMATION CONTACT: Sebastian Pujol Schott, Associate 
Director, Division of Market Oversight (``DMO''), at 202-418-5641 or 
sps@cftc.gov; Mark Schlegel, Special Counsel, DMO, at 202-418-5055 or 
mschlegel@cftc.gov; Brian Robinson, Attorney Advisor, DMO, at 202-418-
5385 or brobinson@cftc.gov; or James Outen, Industry Economist, DMO, at 
202-418-5710 or jouten@cftc.gov; Commodity Futures Trading Commission, 
Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
    A. Overview of Final Rules
    B. Benefits Derived From Final Rule
II. Statutory Framework for Position Reporting and Trader and 
Account Identification
III. Current Trader and Account Identification Programs
    A. Futures Large Trader Reporting--Current Forms 102 and 40
    i. Identification of Special Accounts--Current Form 102
    ii. Statement of Reporting Trader--Current Form 40
    B. Large Trader Reporting for Physical Commodity Swaps--102S and 
40S Filings
IV. Summary of 2010 and 2012 NPRMs
V. Summary of New and Amended Forms Adopted in These Final Rules
    A. Position-Triggered Form 102A (Special Accounts)
    i. Special Accounts and Reportable Positions
    ii. 102A Form Requirements
    iii. Timing of 102A Reporting
    iv. Timing of 102A Change Updates and Refresh Updates
    B. Volume-Triggered Form 102B (Volume Threshold Accounts)
    i. Volume Threshold Accounts and Reportable Trading Volume Level
    ii. 102B Form Requirements
    iii. Timing of 102B Reporting
    iv. Timing of 102B Change Updates and Refresh Updates
    C. Position-Triggered Form 102S (Consolidated Accounts)
    i. 102S Form Requirements
    ii. Timing of 102S Reporting, Change Updates and Refresh Updates
    D. Form 71 (Omnibus Accounts and Sub-Accounts)
    E. New Form 40 (Reporting Traders)
VI. Data Submission Standards and Procedures
    A. Overview
    B. Schedule of Effective Date and Compliance Date
VII. Review of NPRM and Summary of Final Rules
    A. Part 15
    i. Sec.  15.00(q)--Reporting Market
    ii. Sec.  15.00(t)--Control
    iii. Sec.  15.00(u)--Reportable Trading Volume
    iv. Sec.  15.00(v)--Direct Market Access
    v. Sec.  15.00(v)--Omnibus Account
    vi. Sec.  15.00(w)--Omnibus Account Originator
    vii. Sec.  15.00(x)--Volume Threshold Account
    viii. Sec.  15.00(y)--Omnibus Volume Threshold Account
    ix. Sec.  15.00(z)--Omnibus Reportable Sub-Account
    x. Sec.  15.00(aa)--Reportable Sub-Account
    xi. Sec.  15.00(bb)--Trading Account Controller; Sec.  
15.00(cc)--Volume Threshold Account Controller; Sec.  15.00(dd)--
Reportable Sub-Account Controller
    xii. Sec.  15.01(c)--Persons Required To Report
    xiii. Sec.  15.02--Reporting Forms
    xiv. Sec.  15.04--Reportable Trading Volume Level
    B. Part 17
    i. Sec.  17.01(a)--Identification of Special Accounts (via 102A)
    ii. Sec.  17.01(b)--Identification of Volume Threshold Accounts 
(via 102B)
    iii. Sec.  17.01(c)--Identification of Omnibus Accounts and Sub-
Accounts (via 71)
    iv. Sec.  17.01(d)--Exclusively Self-Cleared Contracts
    v. Sec.  17.01(e)--Identification of Omnibus Accounts and Sub-
Accounts
    vi. Sec.  17.02(b)--Section 17.01(a) Reports (via 102A)
    vii. Sec.  17.02(c)--Section 17.01(b) Reports (via 102B)
    viii. Sec.  17.03(a)-(g)--Delegation of Authority to the 
Director of the Office of Data and Technology or the Director of the 
Division of Market Oversight
    C. Part 18
    i. Sec.  18.04--Statement of Reporting Trader
    ii. Sec.  18.05--Maintenance of Books and Records
    D. Part 20
    i. Sec.  20.5--Series S Filings
VIII. Related Matters
    A. Paperwork Reduction Act
    i. Overview
    ii. Information To Be Provided
    iii. Total Reporting and Recordkeeping Costs; Methodology Used 
To Estimate Costs
    iv. Reporting Burdens--New and Revised Forms
    v. Recordkeeping Burdens--Revised Sec.  18.05
    B. Consideration of Costs and Benefits
    i. Background
    ii. The Statutory Requirement for the Commission To Consider the 
Costs and Benefits of Its Actions
    iii. Commission Request for Comments Regarding Cost and Benefit 
Estimates
    iv. Methodology Used To Estimate Costs
    v. Costs and Benefits of Individual Reporting Forms and 
Reporting and Recordkeeping Requirements
    vi. Comments Regarding Costs and Benefits
    vii. Consideration of Alternatives
    viii. Reporting on Form 102S
    ix. Consolidation Form Proposed by FIA
    x. Section 15(a) Factors
    C. Regulatory Flexibility Act

I. Background

A. Overview of Final Rules

    The CFTC's large trader reporting rules (also referred to herein as 
the ``reporting rules'') are contained in parts 15 through 21 of the 
Commission's regulations.\1\ The reporting rules are currently 
structured to collect information with respect to positions in ``open 
contracts,'' \2\ including: (1) Information necessary to identify 
persons who hold or control ``reportable positions'' \3\ in open 
contracts (via current Form 40); and (2) information necessary to 
identify ``special accounts'' \4\ (via current Form 102). These final 
rules modify the current

[[Page 69179]]

reporting rules and forms as they pertain to positions in open 
contracts. Specifically, the Commission is expanding the reporting 
rules and forms so that they may also be used to identify ``volume 
threshold accounts,'' defined as individual trading accounts that 
trigger volume-based reporting thresholds on a reporting market \5\ 
that is a registered entity under sections 1a(40)(A) or 1a(40)(D) of 
the Commodity Exchange Act (``CEA'' or ``Act'') (i.e., a designated 
contract market (``DCM'') or a swap execution facility (``SEF'')), 
regardless of whether such activity results in reportable positions.\6\ 
Volume threshold accounts associated with DCMs and SEFs will be 
required to be reported by clearing members, as discussed in sections 
V(B) and VII below. The Commission notes that volume threshold accounts 
could reflect, without limitation, trading in futures, options on 
futures, swaps, and any other products traded on or subject to the 
rules of a DCM or SEF.
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    \1\ 17 CFR parts 15 through 21. These final rules generally 
relate to parts 15, 17, 18 and 20 of the Commission's regulations.
    \2\ ``Open contract'' means any commodity or commodity option 
position held by any person on or subject to the rules of a board of 
trade which have not expired, been exercised, or offset. See 
Sec. Sec.  1.3(t) and 15.00(n).
    \3\ A ``reportable position'' is defined in Sec.  15.00(p) as 
any open contract position that at the close of the market on any 
business day equals or exceeds the Commission's reporting levels 
specified in Sec.  15.03.
    \4\ A ``special account'' is defined in Sec.  15.00(r) as any 
commodity futures or option account in which there is a reportable 
position.
    \5\ ``Reporting market'' is defined in current Sec.  15.00(q) as 
a designated contract market, registered entity under section 1a(29) 
of the Act, and unless determined otherwise by the Commission, a 
derivatives transaction execution facility. By way of these final 
rules, the Commission is revising Sec.  15.00(q) to define reporting 
market as a designated contract market or a registered entity under 
section 1a(40) of the Act. This revision is technical in nature, and 
serves to conform Sec.  15.00(q) with recent amendments to the Act. 
See infra sections VII and IX.
    \6\ See infra section VII and IX for a discussion of the 
definition of volume threshold account.
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    The amendments to the reporting rules and forms will achieve three 
primary purposes. First, they will expand and subdivide current Form 
102 into a new Form 102 (``New Form 102''), partitioned into three 
sections: Section 102A for the identification of position-based special 
accounts (``102A,'' ``Form 102A,'' or ``New Form 102A''); section 102B 
for the collection of ownership and control information from clearing 
members on volume threshold accounts associated with DCMs or SEFs 
(``102B,'' ``Form 102B,'' or ``New Form 102B''); and section 102S for 
the submission of 102S filings for swap counterparty and customer 
consolidated accounts with reportable positions (``102S,'' ``Form 
102S,'' or ``102S filings''). Second, the amendments will enhance the 
Commission's surveillance and large trader reporting programs for 
futures, options on futures, and swaps through a variety of 
enhancements, including: Requiring the reporting on Form 102A of the 
trading accounts that comprise each special account; requiring the 
reporting of certain omnibus account information on Form 71 (``Form 
71'' or ``New Form 71'') upon special call by the Commission; \7\ 
updating Form 40 (``New Form 40''); and integrating the submission of 
102S and 40S filings into the general Form 102 and Form 40 reporting 
program. Finally, these rules will provide for the electronic 
submission of Forms 102, 40, and 71 through either a web portal or 
secure FTP transmission.
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    \7\ As explained below, information regarding the owners and 
controllers of volume threshold accounts reported on Form 102B and 
that are identified as omnibus accounts (``omnibus volume threshold 
accounts'') will be collected by the Commission directly from 
originating firms, via Form 71.
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B. Benefits Derived From Final Rules

    The benefits of reporting through a dedicated ownership and control 
report (``OCR'') were discussed in proposed rulemakings that preceded 
these final rules--specifically, the Advanced Notice of Proposed 
Rulemaking published in July 2009 \8\ (the ``2009 Advanced NPRM''), the 
Notice of Proposed Rulemaking published in July 2010 \9\ (the ``2010 
OCR NPRM'') and the subsequent Notice of Proposed Rulemaking published 
in July 2012 \10\ (the ``NPRM''). Section IV below discusses the 
history of certain previous OCR rulemakings in more detail. As 
discussed in the NPRM, the final rules will enhance the Commission's 
current trade practice and market surveillance programs for futures and 
options on futures, and facilitate surveillance programs for swaps, by 
expanding the information presently collected on current Forms 102 and 
40, and introducing a new information collection for omnibus volume 
threshold accounts in New Form 71.\11\ The rules will also help 
implement the 102S and 40S filing requirements adopted in connection 
with the Commission's part 20 rules addressing large trader reporting 
for physical commodity swaps (discussed below).\12\ Ultimately, the 
final rules will significantly enhance the Commission's ability to 
identify participants in the derivatives markets and to understand 
relationships between trading accounts, special accounts, reportable 
positions, and market activity. This will enable the Commission to 
better deter and prevent market manipulation; deter and detect abusive 
or disruptive practices (such as marking the close, ``wash trading,'' 
or money passing); and better perform risk-based monitoring and 
surveillance between related accounts.
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    \8\ See Commission, Advanced Notice of Proposed Rulemaking: 
Ownership and Control Report, 74 FR 31642 (July 2, 2009).
    \9\ See Commission, Notice of Proposed Rulemaking: Ownership and 
Control Report, 75 FR 41775 (July 19, 2010).
    \10\ See Commission, Notice of Proposed Rulemaking: Ownership 
and Control Reports, Forms 102/102S, 40/40S, and 71, 77 FR 43968 
(July 26, 2012).
    \11\ See id. at 43970. See infra section V for a discussion of 
New Form 71 and omnibus volume threshold accounts.
    \12\ See infra section V for a discussion of the 102S and 40S 
filing requirements. See also 17 CFR 20.5(a) and (b). Final part 20 
was published in the Federal Register on July 22, 2011. See 
Commission, Large Trader Reporting for Physical Commodity Swaps, 76 
FR 43851 (July 22, 2011) (``Large Trader Reporting for Physical 
Commodity Swaps'').
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    As discussed in the NPRM, the final rules respond, in part, to the 
increased dispersion and complexity of trading in U.S. futures markets 
following their transition from localized, open-outcry venues to global 
electronic platforms.\13\ Although electronic trading has conferred 
important informational benefits upon regulators, the resulting 
increases in trading volumes, products offered, and trader dispersion 
have created equally important regulatory challenges. Effective 
surveillance now requires automated analysis and pattern and anomaly 
detection involving millions of daily trade records \14\ and hundreds 
of thousands of position records \15\ present in the surveillance data 
sets received daily by the Commission.\16\ Although the final rules are 
partly driven by these developments in the U.S. futures markets, as 
discussed above, the rules will also facilitate the creation of a 
robust surveillance program for swaps that adequately captures 
information with respect to swap market participants.
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    \13\ See NPRM supra note 10 at 43970.
    \14\ For example, in November 2011, the Commission received an 
average of 7.4 million trade records per day from electronic trading 
on DCMs.
    \15\ For example, in November 2011, the Commission received an 
average of 617,000 position records per day from reporting firms and 
exchanges.
    \16\ Daily trade and position records are provided to the 
Commission pursuant to Sec. Sec.  16.02 and 17.00, respectively. For 
further discussion of the Commission's large trader reporting 
program, see sections III(A) and (B), below.
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    In order to perform effective surveillance, the Commission must 
receive data sets that contain a sufficient number of reference points 
for the Commission to uncover relationships between related accounts, 
and analyze information based on surveillance criteria that are 
frequently evolving in response to market events. The collection of 
additional information regarding trading accounts and traders will 
enable the Commission to perform more efficient and effective 
surveillance. In particular, the OCR data collection will enable the 
Commission to link transaction-level data that it receives (which 
includes trading account numbers, but not traders'

[[Page 69180]]

names) to position-based data (which includes large traders' names, but 
not their trading account numbers), as explained below.
    As noted in the NPRM, ``Commission staff utilizes two distinct data 
platforms to conduct market surveillance: The Trade Surveillance System 
(`TSS') and the Integrated Surveillance System (`ISS'). Broadly 
speaking, TSS captures transaction-level details of trade data, while 
ISS facilitates the storage, analysis, and mining of large trader data 
from a position perspective. One important component of TSS is the 
Trade Capture Report (`TCR'). Trade Capture Reports contain trade and 
related order data for every matched trade facilitated by an exchange, 
whether executed via open-outcry, electronically, or non-competitively. 
Among the data included in the TCR are trade date, product, contract 
month, trade time, price, quantity, trade type (e.g., open outcry 
outright future, electronic outright option, give-up, spread, block, 
etc.), executing broker, clearing member, opposite broker and clearing 
member, customer type indicator, trading account numbers, and numerous 
other data points.'' \17\ The OCR data collection will address a gap in 
the current system by providing common reference points between TSS and 
ISS data. New Form 102A, for example, is structured to collect special 
account numbers,\18\ trading account numbers that comprise the special 
account, and the names of owners and controllers of both special 
accounts and such trading accounts, thereby linking TSS data to ISS 
data.\19\
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    \17\ See NPRM supra note 10 at 43970.
    \18\ As discussed in section III(A) below, a special account is 
a commodity futures or option account that has a reportable 
position, based on reporting levels set by the Commission. A special 
account number is a unique account identifier assigned by an FCM, 
clearing member, or foreign broker to a special account. See 17 CFR 
17.00(g)(2)(iii) and 17 CFR 17.01(a). Special account numbers are 
included in ISS data. The special account number does not correspond 
to the trading account number reported on the Trade Capture Report. 
Accordingly, the special account number is not sufficient to link 
TSS data to ISS data.
    \19\ The final rules do not amend the current reporting 
requirements with respect to ownership information, in connection 
with both position reporting pursuant to Sec.  17.00 and Form 102 
reporting pursuant to Sec.  17.01. For a complete discussion of the 
reporting requirements with respect to ownership information, see 
section V(A)(i) below.
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    The data collection will also help the Commission to better 
identify and categorize individual trading accounts and market 
participants that trigger position or newly-created volume-based 
reporting thresholds. For example, New Form 102A will require reporting 
firms to identify the constituent trading accounts of each reported 
special account. In this manner, New Form 102A will ensure a new level 
of interoperability between the Commission's TSS trade data and ISS 
large trader data, and will permit Commission staff to quickly 
reconstruct trading for any special account. In addition to linking the 
two databases, New Form 102A will identify both the owners and 
controllers of such constituent trading accounts, thereby providing the 
Commission with a new lens through which to identify and surveil market 
activity that might otherwise appear unrelated to the Commission's 
surveillance programs.
    New Form 102B will, for the first time, require identification of 
trading accounts based solely on their total trading volume during a 
single trading day. This new information collection will enhance the 
Commission's trade practice surveillance program by revealing 
connections of ownership or control between trading accounts that 
otherwise appear unrelated in the TCR. More generally, it will 
facilitate Commission efforts to detect and deter attempted market 
disruptions that may occur even in the absence of large open positions 
that are reportable on New Form 102A. Finally, the automated collection 
of OCR information via electronic forms, rather than through ad-hoc, 
manual processes, will permit both the Commission and market 
participants to administer the reporting programs more efficiently and 
effectively. Additional information on the forms addressed by these 
final rules is provided in section V below.

II. Statutory Framework for Position Reporting and Trader and Account 
Identification

    The Commission's current reporting rules, and those adopted herein, 
are primarily implemented by the Commission pursuant to the authority 
of sections 4a, 4c(b), 4g, and 4i of the Act.\20\ Section 4a of the 
Act, as amended by the Dodd-Frank Act, requires the Commission to set 
and enforce speculative position limits with respect to both futures 
and swaps.\21\ Section 4c(b) gives the Commission plenary authority to 
regulate transactions that involve commodity options.\22\ Section 4g(a) 
of the Act requires, among other things, each futures commission 
merchant (``FCM''), introducing broker, floor broker, and floor trader 
to file such reports as the Commission may require on proprietary and 
customer transactions and positions in commodities for future delivery 
on any board of trade in the United States or elsewhere.\23\ In 
addition, section 4g(b) requires registered entities to maintain daily 
trading records as required by the Commission, and section 4g(c) 
requires floor brokers, introducing brokers, and FCMs to maintain their 
own daily trading records for each customer in such manner and form as 
to be identifiable with the daily trading records maintained by 
registered entities. Section 4g(d) permits the Commission to require 
that such daily trading records be made available to the 
Commission.\24\ Lastly, section 4i of the Act requires the filing of 
such reports as the Commission may require when positions taken or 
obtained on designated contract markets equal or exceed Commission-set 
levels.\25\ Collectively, these CEA provisions warrant the maintenance 
of an effective and rigorous system of market and financial 
surveillance.
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    \20\ 7 U.S.C. 1 et seq. In addition, CEA section 8a(5) 
authorizes the Commission to promulgate such regulations as, in its 
judgment, are reasonably necessary to effectuate any provision of 
the Act or to accomplish any of the purposes of the Act. 7 U.S.C. 
12a(5). These final rules are also consistent with the purposes 
enumerated in CEA section 3(b), which states that the Act seeks to 
ensure the financial integrity of regulated transactions and to 
prevent price manipulation and other disruptions to market 
integrity. 7 U.S.C. 5(b).
    \21\ 7 U.S.C. 6a. See NPRM supra note 10 at 43970. See infra 
note 26 for a discussion of the Dodd-Frank Act.
    \22\ 7 U.S.C. 6c(b).
    \23\ 7 U.S.C. 6g(a).
    \24\ See supra section I(B) for a discussion of the trade data 
transmitted daily to the Commission by registered entities.
    \25\ 7 U.S.C. 6i.
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    As further discussed in the NPRM, in addition to the CEA sections 
described above, on July 21, 2010, President Obama signed the Dodd-
Frank Wall Street Reform and Consumer Protection Act (``Dodd-Frank 
Act'').\26\ Title VII of the Dodd-Frank Act \27\ amended the CEA 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: (1) Providing for the 
registration and comprehensive regulation of swap dealers and major 
swap participants; (2) imposing clearing and trade execution 
requirements on standardized derivative products; (3) creating robust 
recordkeeping and real-

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time reporting regimes; and (4) enhancing the Commission's rulemaking 
and enforcement authority with respect to, among other parties, all 
registered entities and intermediaries subject to the Commission's 
oversight.
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    \26\ See Dodd-Frank Wall Street Reform and Consumer Protection 
Act, Public Law 111-203, 124 Stat. 1376 (2010). The text of the 
Dodd-Frank Act may be accessed at https://www.cftc.gov./
LawRegulation/OTCDERIVATIVES/index.htm. See NPRM supra note 10 at 
43971.
    \27\ Pursuant to section 701 of the Dodd-Frank Act, Title VII 
may be cited as the ``Wall Street Transparency and Accountability 
Act of 2010.''
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    As part of the Commission's rulemaking program implementing the 
Dodd-Frank Act,\28\ the rule changes adopted herein also include swaps-
related considerations in connection with the Commission's large trader 
reporting rules for swaps, enacted in 2011.\29\ New CEA section 4t 
acknowledges the Commission's authority to establish a large trader 
reporting system for swaps that the Commission has determined perform a 
significant price discovery function; accordingly, the swaps-related 
considerations in the rules adopted herein also rely in part on the 
Commission's authority in CEA section 4t. Similarly, new CEA section 
4s(f) requires swap dealers and major swap participants to make such 
reports as required by the Commission by rule or regulation regarding 
the transactions and positions of the registered swap dealer or major 
swap participant.\30\ In addition, new CEA section 5h(f)(10) requires 
SEFs to report to the Commission, in a form and manner acceptable to 
the Commission, information that the Commission determines to be 
necessary or appropriate for the Commission to perform its duties under 
the CEA.\31\
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    \28\ See generally, https://www.cftc.gov/LawRegulation/DoddFrankAct/index.htm.
    \29\ As noted supra in note 12, 17 CFR 20.5(a) and (b) contain 
the 102S and 40S filing requirements, discussed in greater detail 
below. Final part 20 was published in the Federal Register on July 
22, 2011.
    \30\ 7 U.S.C. 6s(f).
    \31\ 7 U.S.C. 7b-3(f)(10).
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III. Current Trader and Account Identification Programs

    Section III below summarizes the current trader and account 
identification program under Forms 102 and 40, which is also discussed 
in detail in Section III of the NPRM.\32\
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    \32\ See NPRM supra note 10 at 43971.
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A. Futures Large Trader Reporting--Current Forms 102 and 40

    Current Sec.  17.00, in part 17 of the Commission's regulations, 
forms the basis of the Commission's large trader reporting program.\33\ 
It requires each FCM, clearing member, and foreign broker to submit a 
daily report to the Commission for each ``special account'' it 
carries--i.e., a commodity futures or option account that has a 
reportable position. Such ``Sec.  17.00 position reports'' show the 
futures and option positions of traders with positions at or above 
specific reporting levels set by the Commission. Current reporting 
position trigger levels are located in Sec.  15.03(b).\34\ The daily 
report is sent to the Commission as a single data file from each 
reporting party pursuant to technical specifications identified in 
Sec.  17.00(g).\35\ The Commission's surveillance staff uses this 
report to, among other things: Assess individual traders' activities 
and potential market power; enforce speculative position limits; 
monitor for disruptions to market integrity; and calculate statistics 
that the Commission publishes to enhance market transparency (e.g., in 
the Commitments of Traders reports).
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    \33\ 17 CFR 17.00.
    \34\ 17 CFR 15.03(b).
    \35\ 17 CFR 17.00(g).
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i. Identification of Special Accounts--Current Form 102
    For each special account identified by an FCM, clearing member, or 
foreign broker and reported to the Commission in a Sec.  17.00 position 
report, current Sec.  17.01 \36\ requires the reporting party to 
separately identify the special account to the Commission on Form 
102.\37\ Pursuant to current Sec.  17.02(b)(2),\38\ Form 102 must be 
submitted by such parties within three days of an account becoming a 
special account. A Form 102 submission may also be required by the 
Commission or its designee via a special call. The text of current 
Sec.  17.01 \39\ states the requirement to submit Form 102, and 
enumerates the specific data fields that are required to be completed 
on Form 102. Currently, Form 102 requires the filing of a separate 
``paper'' form for each special account, which is generally transmitted 
to the Commission via email, facsimile, or regular mail. As explained 
below, these final rules will replace current Form 102, and require 
respondents to electronically submit New Form 102; the Commission will 
no longer accept submissions by email, facsimile, or regular mail.
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    \36\ 17 CFR 17.01.
    \37\ Current Form 102 is titled ``Identification of Special 
Accounts.'' 17 CFR 15.02.
    \38\ 17 CFR 17.02(b)(2).
    \39\ 17 CFR 17.01.
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    As noted above, Form 102 identifies and provides information with 
respect to special accounts carried by FCMs, clearing members, and 
foreign brokers. The current form, which will be updated and replaced 
by these final rules, provides the Commission with contact information 
for the trader(s) who owns and/or controls trading in each special 
account included in the daily Sec.  17.00 position reports. The Form 
102 questions, as currently detailed in Sec.  17.01(a)-(f),\40\ require 
the reporting firm to provide the following: A special account number; 
the name, address, and other identification information for the 
controller, owner (if also the controller), or originator (if an 
omnibus account) of the account; an indication whether trades and 
positions in the special account are usually associated with commercial 
activity of the account owner in a related cash commodity or activity; 
information regarding an FCM's relationship to the account; and name 
and address information for the party submitting the Form 102.\41\
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    \40\ 17 CFR 17.01(a)-(f).
    \41\ Form 102 requires the reporting party to provide the legal 
entity identifier (``LEI'') (if any) of the reporting party and of 
various other parties reportable on the form, such as account 
owners, controllers, and originators. As noted in the footnotes to 
the reporting forms in the Appendix, if a reporting party provides 
an LEI on New Form 102 that was issued by the CICI Utility (or by 
any other CFTC-accepted LEI provider), then the reporting party is 
not required to report any of the fields marked as ``Optional 
Fields'' in the relevant question (i.e., name and address), provided 
that such Optional Fields were reported to the CICI Utility (or 
other CFTC-accepted LEI provider) and are associated with the 
relevant LEI. The Commission is addressing such otherwise 
duplicative reporting in order to leverage information regarding 
reporting parties that is available from another source. 
Furthermore, in the event the CICI Utility (or any other CFTC-
accepted LEI provider) is modified in the future to accept any of 
the fields marked on the forms as ``Supplemental Fields,'' then the 
reporting party will not be required to report any of the 
Supplemental Fields in the relevant question, provided that such 
Supplemental Fields were reported to the CICI Utility (or other 
CFTC-accepted LEI provider) and are associated with the relevant 
LEI. ``Optional Fields'' are currently captured by the CICI Utility, 
while ``Supplemental Fields'' are not currently captured by the CICI 
Utility. Reporting parties that take advantage of such relief from 
duplicative reporting on the forms should indicate in their 
submission that the omitted information has been reported to an LEI 
provider.
---------------------------------------------------------------------------

    Based on the Commission's experience in receiving and reviewing 
Form 102 submissions, and as discussed below in the context of the 
final rules, the Commission has determined to update Form 102 in order 
to accommodate more detailed ownership and control information 
regarding identified special accounts, and to identify underlying 
trading accounts. In addition, the Commission is implementing an 
automated transmission process for Form 102 reporting, through either a 
web portal or secure FTP transmission, so that both the Commission and 
market participants may benefit from the efficiencies of 
automation.\42\
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    \42\ See infra section VIII(B)(iv) for a discussion of the 
Commission's contact reference database, which is intended to 
streamline the automated submission process and reduce the burden on 
reporting parties.

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[[Page 69182]]

ii. Statement of Reporting Trader--Current Form 40
    Current Sec.  18.04, in part 18 of the Commission's regulations, 
requires that, after a special call of the Commission, each trader 
holding or controlling a reportable position file with the Commission a 
``Statement of Reporting Trader'' on current Form 40, at such time and 
place as directed in the call.\43\ Current Form 40 is most commonly 
submitted to the Commission via email, facsimile, or regular mail, but 
this submission scheme will be changed by these final rules. 
Specifically, as discussed below, current Form 40 will be replaced by 
New Form 40, which must be electronically submitted in response to a 
special call through either a web-based portal or a secure FTP 
transmission. When submitted in a timely and accurate manner, Form 40 
submissions provide the Commission with basic identifying information 
regarding reportable traders active in its markets.
---------------------------------------------------------------------------

    \43\ 17 CFR 18.04.
---------------------------------------------------------------------------

    Similar to current Sec.  17.01, current Sec.  18.04 specifically 
enumerates the data fields required in a Form 40 filing. Section 18.04 
and Form 40 require a reporting trader receiving a special call to 
provide the following principal data points: Name and address; 
principal business and occupation; type of trader; registration status 
with the Commission; name and address of other persons whose trading 
the trader controls; name, address, and phone number for each 
controller of the reporting trader's trading; name and location of 
other reporting firms through which the reporting trader has accounts; 
name and locations of persons guaranteeing the trading accounts of the 
reporting trader or persons having a 10 percent or greater financial 
interest in the reporting trader or its accounts; other identification 
information regarding accounts which the reporting trader guarantees or 
in which the reporting trader has a financial interest of 10 percent or 
more; and whether the reporting trader has certain relationships with 
owners that are foreign governments.
    Natural persons completing current Form 40 must also provide the 
following information, as applicable: A business telephone number; 
employer and job title; description of trading activity related to 
physical activity in or commercial use of a commodity; name and address 
of any organization of which the reporting trader participates in the 
management, if such organization holds a trading account; the name and 
address of a partner and/or joint tenant on the account; and the name 
and address of the partner and/or joint tenant that places orders.
    Corporations and other non-natural persons completing current Form 
40 must also provide the following information, as applicable: The 
jurisdiction where the reporting party is organized; names and 
locations of parent firms and their respective U.S. entity indication; 
names and locations of all subsidiary firms that trade in commodity 
futures and options on futures and their respective U.S. entity 
indication; name and address of person(s) controlling trading, by 
commodity and transaction type; contact information for a contact 
person regarding trading; and description of trading activity related 
to physical activity in, or the commercial use of, a commodity.
    As with Form 102, and based on the Commission's experience in 
calling for and reviewing Form 40 submissions, the Commission has 
determined to update Form 40 in order to request more detailed 
information regarding the ownership, control and business activities of 
reporting traders. In addition, the Commission is implementing an 
automated transmission process for Form 40 reporting, through either a 
web portal or secure FTP transmission, so that both the Commission and 
market participants may benefit from the efficiencies of automation.

B. Large Trader Reporting for Physical Commodity Swaps--102S and 40S 
Filings

    As noted above, and discussed in detail in Section III of the 
NPRM,\44\ the Commission adopted rules in 2011 pertaining to swaps 
large trader reporting as new part 20 of the Commission's 
regulations.\45\ In addition to establishing a position-based reporting 
scheme for swaps,\46\ the rules also require the reporting of 
counterparty consolidated accounts with reportable positions (via Form 
102S) and the filing of a Form 40S in response to a special call by the 
Commission. In general, the 102S and 40S filings serve an analogous 
function for swap counterparties with reportable positions to that 
served by the current Form 102 and Form 40 filings for futures and 
options on futures traders with reportable positions. These final rules 
will update Forms 102S and 40S, in part by requiring more detailed 
ownership and control information, and integrate the forms into the 
automated submission process.
---------------------------------------------------------------------------

    \44\ See NPRM supra note 10 at 43972.
    \45\ See supra note 12.
    \46\ See generally: Large Trader Reporting for Physical 
Commodity Swaps: Division of Market Oversight Guidebook for part 20 
Reports, available at: https://www.cftc.gov/ucm/groups/public/@newsroom/documents/file/ltrguidebook053112.pdf (hereafter, ``Swaps 
Large Trader Guidebook'').
---------------------------------------------------------------------------

    Pursuant to Sec.  20.5(a), in part 20 of the Commission's 
regulations, current 102S filings must be filed by a part 20 reporting 
party (a swap dealer or clearing firm) for each reportable counterparty 
consolidated account and ``shall consist of the name, address, and 
contact information of the counterparty and a brief description of the 
nature of such person's paired swaps and swaptions market activity.'' 
\47\ In addition, pursuant to Sec.  20.5(b), and in conjunction with 
Sec.  20.6, all clearing organizations, swap dealers, clearing members, 
and counterparties with reportable positions must, after a special call 
of the Commission, complete a Form 40 ``as if any references to futures 
or options contracts were references to paired swaps or swaptions as 
defined in Sec.  20.1'' and submit the same to the Commission as a 40S 
filing.\48\
---------------------------------------------------------------------------

    \47\ 17 CFR 20.5(a).
    \48\ 17 CFR 20.5(b) and 20.6.
---------------------------------------------------------------------------

    These final rules update and replace the reporting framework 
established by part 20. The information requested in new Form 102S also 
reflects considerations developed in the Swaps Large Trader Guidebook 
for compliance with part 20.\49\ For example, new Form 102S requires 
information on both swap counterparty and customer consolidated 
accounts with a reportable position.\50\ New Form 102S also requests 
ownership and control information regarding each non-omnibus 
consolidated account identified on the form. Building on the approach 
of modernizing Form 102 and Form 40 submissions, these final rules also 
provide for the electronic submission of both Form 102S and Form 40S.
---------------------------------------------------------------------------

    \49\ See supra note 46.
    \50\ As explained in the Swaps Large Trader Guidebook, 
acceptable part 20 data records include ``customer,'' ``principal,'' 
``counterparty'' and ``agent'' records. Customer consolidated 
accounts, principal consolidated accounts, and counterparty 
consolidated accounts must be reported on new Form 102S, but agent 
data records do not need to be reported on Form 102S. Customer 
consolidated accounts are treated as customer accounts for purposes 
of Form 102S reporting, while principal consolidated accounts and 
counterparty consolidated accounts are treated as counterparty 
accounts for purposes of Form 102S reporting.
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IV. Summary of 2010 and 2012 NPRMs

    On July 19, 2010, the Commission published for public comment a 
Notice of Proposed Rulemaking that proposed to collect certain account 
ownership and control information for all trading accounts active on 
U.S. futures

[[Page 69183]]

exchanges and other reporting parties (the ``2010 OCR NPRM'').\51\ The 
2010 OCR NPRM proposed to collect this information through a dedicated 
ownership and control report (``OCR''). In an effort to accommodate 
comments received in response to the 2010 OCR NPRM, the Commission 
withdrew the 2010 OCR NPRM, and instead pursued the collection of 
account ownership and control information through a separate Notice of 
Proposed Rulemaking, published on July 26, 2012 (the ``NPRM'').\52\
---------------------------------------------------------------------------

    \51\ See supra note 9.
    \52\ See supra note 10.
---------------------------------------------------------------------------

    The NPRM proposed new rules and related forms to enhance the 
Commission's identification of futures and swap market participants, by 
collecting ownership and control information for certain trading 
accounts active on reporting markets that are DCMs or SEFs. The rules 
proposed to leverage the Commission's current position and transaction 
reporting programs by requiring the electronic submission of trader 
identification and market participant data on revised Forms 102 and 40, 
and on New Form 71. The NPRM contained a detailed discussion of the 
current futures large trader program under Forms 102 and 40,\53\ and 
the anticipated benefits of the revised and newly introduced forms,\54\ 
topics which are also summarized in these final rules.
---------------------------------------------------------------------------

    \53\ See NPRM supra note 10 at 43971.
    \54\ See NPRM supra note 10 at 43970.
---------------------------------------------------------------------------

    The Commission invited all interested parties to submit comments on 
the NPRM, including comments with respect to costs and benefits, within 
a designated comment window. The Commission received a total of eight 
comment letters from thirteen interested parties, which are listed 
below.\55\
---------------------------------------------------------------------------

    \55\ All NPRM comment letters (``CL'') are available through the 
Commission's Web site at: https://comments.cftc.gov/PublicComments/CommentList.aspx?id=1247.
---------------------------------------------------------------------------

    The following parties submitted written comments:
    1. CME Group Inc. (``CME'') \56\
---------------------------------------------------------------------------

    \56\ CME Group submitted a single comment letter on behalf of 
four DCMs, each of which is being counted for purposes of this 
summary as a separate interested party: The Chicago Mercantile 
Exchange, Inc.; the Board of Trade of the City of Chicago, Inc.; the 
New York Mercantile Exchange, Inc.; and the Commodity Exchange, Inc. 
Its comments are noted here as those of ``CME''.
---------------------------------------------------------------------------

    2. Futures Industry Association (``FIA'')
    3. ICE Futures U.S., Inc. (``ICE'')
    4. North American Derivatives Exchange, Inc. (``Nadex'')
    5. The National Rural Electric Cooperative Association, the Large 
Public Power Council, and the Electric Power Supply Association 
(collectively, ``Joint Electric Association'')
    6. John Hazelwood Estate (``Hazelwood'') \57\
---------------------------------------------------------------------------

    \57\ Hazelwood's comment letter responds to the 2010 OCR NPRM, 
rather than the NPRM; however, it remains part of the record for 
this rulemaking.
---------------------------------------------------------------------------

    7. Sheila Bailey-Waddell (``Waddell'')
    8. Ron Troncatty (``Troncatty'') \58\
---------------------------------------------------------------------------

    \58\ Mr. Troncatty's comment letter was unresponsive; however, 
it remains part of the record for this rulemaking.
---------------------------------------------------------------------------

    The written comments received are summarized in section VII below. 
In response to the comments received, the Commission has revised and/or 
eliminated several regulations that were proposed in the NPRM. The 
Commission also received a number of comments pertaining to the costs 
and/or benefits of certain proposed regulations. Pursuant to section 
15(a) of the CEA, the Commission has considered the costs and benefits 
of the regulations being adopted in this release, as discussed in more 
detail in section VIII(B) below. For purposes of these final rules, the 
Commission has updated the cost estimates that appeared in the NPRM 
based on the most recent data and statistics available to the 
Commission.

V. Summary of New and Amended Forms Adopted in These Final Rules

    As noted above, this rulemaking addresses three forms--New Form 
102, New Form 71, and New Form 40. New Form 102 is designed as a multi-
function form, since the requirement to submit New Form 102 can arise 
from one of three separate triggers: A special account, volume 
threshold account, or consolidated account becomes reportable. The data 
required to be submitted on a New Form 102 is determined by the 
underlying triggering mechanism. A discussion follows of the three New 
Form 102 triggering mechanisms, the related sections of the form, and 
the information required to be provided in each section. The Commission 
will send New Form 71 via a special call to collect additional 
information about certain volume threshold accounts identified as 
omnibus accounts on New Form 102B. New Form 40 will continue to serve 
its traditional purpose as a tool to be used, at the Commission's 
discretion, to collect additional information about traders and market 
participants identified on New Form 102, as well as on New Form 71. New 
Form 71 and New Form 40 are also described in detail below. In 
addition, section VII below discusses in detail the version of the 
forms proposed in the NPRM, the comments received on the forms, and the 
changes that are being made to the forms in these final rules in 
response to comments.
    As part of its implementation plan related to this rulemaking, and 
described in more detail below, the Commission has developed both a 
web-based portal and a secure FTP transmission through which market 
participates will submit and update their reporting forms. Market 
participants may provide required information through either submission 
method. This automated process is intended to cure much of the 
inefficiency and potential error associated with the current submission 
process via email, facsimile, or regular mail.

A. Position-Triggered Form 102A (Special Accounts)

i. Special Accounts and Reportable Positions
    New Form 102A is the section of New Form 102 that will serve a 
function most analogous to current Form 102. New Form 102A requires an 
FCM, clearing member, or foreign broker to identify and report its 
special accounts. As discussed above, a special account is defined in 
current Sec.  15.00(r), and means any commodity futures or option 
account in which there is a reportable position.\59\ For the purposes 
of part 17, reportable position is defined in current Sec.  
15.00(p)(1), and generally includes any open contract position that at 
the close of the market on any given business day equals or exceeds the 
levels in current Sec.  15.03.\60\ These final rules do not amend the 
definition of either special account or reportable position.
---------------------------------------------------------------------------

    \59\ 17 CFR 15.00(r).
    \60\ 17 CFR 15.00(p)(1) and 15.03.
---------------------------------------------------------------------------

    The Commission notes that under current regulations (Sec.  
17.00(b), citing Sec.  150.4),\61\ reporting firms are required to 
separately aggregate the positions of common owners and those of common 
controllers for purposes of reporting special accounts to the 
Commission, except as otherwise instructed by the Commission or its 
designee. Special accounts that are so aggregated and reported to the 
Commission pursuant to Sec.  17.00 must also be identified to the 
Commission on Form 102 pursuant to current Sec.  17.01. The requirement 
to separately aggregate the positions of common owners and those of 
common controllers for purposes of reporting special accounts to the 
Commission on Form 102 is reflected in the instructions to New Form 
102A. As noted in question 2 on New Form 102A, special accounts become 
reportable on the form based on (i) ownership of a reportable

[[Page 69184]]

position, (ii) control of a reportable position, (iii) both ownership 
and control of a reportable position, or (iv) because the relevant 
account is an omnibus account with a reportable position.
---------------------------------------------------------------------------

    \61\ 17 CFR 17.00(b) and 150.4.
---------------------------------------------------------------------------

    Following the implementation of these final rules, reporting 
parties should continue to report special accounts pursuant to Sec.  
17.00 on a disaggregated basis if the parties have been so instructed 
by the Commission or its designee. All reporting parties should 
continue to provide position reporting based on control of a special 
account. As an example, if a special account is controlled by one 
reporting party but owned by another, such account should be reported 
only by the reporting party that controls the special account.
    Consistent with this guidance, and notwithstanding the requirement 
on New Form 102A to also report based solely on ownership of a 
reportable position, the Commission will not require reporting based on 
this trigger via New Form 102A following the implementation of these 
final rules. The Commission is retaining the reporting trigger based on 
ownership of a reportable position in New Form 102A as a placeholder, 
in the event that the Commission requires 102A reporting based solely 
on this trigger on a future date.
ii. 102A Form Requirements
    As compared to current Form 102, the data fields in 102A will 
include new ownership and control information fields (or, in the case 
of special accounts that are omnibus accounts, omnibus account 
originator information fields) for position-based special accounts. 
Form 102A will also require reporting firms that are clearing members 
to identify the trading accounts that comprise a position-based special 
account, and to provide TCR trading account numbers for those trading 
accounts.\62\ To clarify, trading accounts that comprise a position-
based special account include all of those trading accounts that: (1) 
Are used to execute trades cleared by the clearing member submitting 
the 102A; (2) are owned or controlled by the entity identified as 
owning or controlling the special account reported on a 102A; and (3) 
execute transactions in the same commodity or commodities in which the 
special account has a reportable position. Notwithstanding the fact 
that the Commission will not require reporting of special accounts 
based solely on ownership (as discussed above), when completing New 
Form 102A, reporting parties must identify both the owners and 
controllers of trading accounts that comprise a position-based special 
account identified on the form. The Commission's objective, in 
requiring 102A reporting parties to identify the trading accounts that 
comprise a special account, is to facilitate trade-level monitoring of 
the means by which special account owners or controllers establish and 
unwind their reportable positions.
---------------------------------------------------------------------------

    \62\ See supra section I(B) for a discussion of the TCR.
---------------------------------------------------------------------------

    Based on comments received in response to the 2010 OCR NPRM, it is 
the Commission's understanding that non-clearing FCMs, foreign brokers, 
and omnibus account originators (collectively, ``non-clearing 
entities'') will generally not have the ability to match/identify a 
trading account number for their customers or sub-accounts (hereafter, 
``sub-accounts'') on the TCR.\63\ As a result, the Commission notes 
that the requirement in 102A to identify a trading account number for 
trading accounts that comprise a special account will only be a 
relevant/applicable data field for clearing members identifying trading 
accounts that comprise a special account.
---------------------------------------------------------------------------

    \63\ See supra section I(B) for a discussion of the TCR.
---------------------------------------------------------------------------

    Notwithstanding these limitations regarding the reporting of 
trading accounts that comprise a special account, non-clearing entities 
must continue to report special accounts on Form 102 with respect to 
their customers/sub-accounts, in the event that such accounts, if 
carried directly with a clearing member, would be required to be 
reported as a position-based special account. Current Form 102 requires 
non-clearing entities to report such special accounts, and New Form 
102A does not change that requirement.
    New Form 102A will also require reporting firms to indicate whether 
a special account reported based on ownership or control of a 
reportable position is a house or customer account of the reporting 
firm. This indicator will allow the Commission to perform certain 
financial risk surveillance functions in a more automated and efficient 
manner, by quickly identifying house positions that potentially create 
risk for the reporting firm. Finally, 102A requires any reporting firm 
that indicates on 102A that it is a foreign broker to identify its U.S. 
FCM.
    New Form 102A also includes a question regarding the controllers of 
trading accounts.\64\ Respondents should report all individuals meeting 
the definition of ``trading account controller'' set forth in Sec.  
15.00(bb) when responding to this question.\65\ The Commission notes 
however that regardless of whether the trading is carried out in whole 
or in part through an automated trading system or direct human 
initiation, the underlying analysis remains the same. When completing 
Form 102A, reporting parties should identify each person that satisfies 
the definition of ``trading account controller,'' as defined in Sec.  
15.00(bb). Once respondents have identified all individuals meeting the 
definition of trading account controller in a Form 102A submission, 
they will not be required to submit change updates to the 102A if one 
previously identified controller takes the place of another previously 
identified controller. These instructions regarding the reporting of 
trading account controllers on New Form 102A are also applicable to the 
reporting of volume threshold account controllers on New Form 102B.\66\
---------------------------------------------------------------------------

    \64\ See question 10(iii) on Form 102A.
    \65\ Pursuant to Sec.  15.00(bb), trading account controllers 
are natural persons ``who by power of attorney or otherwise actually 
direc[t] the trading of a trading account''. In the event that a 
respondent's trading in a reportable trading account is conducted in 
whole or in part through an automated trading system (``ATS''), when 
submitting New Form 102A the respondent should consider whether any 
operator, supervisor, or other individual involved in the 
administration of such ATS meets the definition of trading account 
controller with respect to the trading account. The Commission 
recognizes that, for some respondents, the individuals involved in 
the administration of an ATS may not qualify as trading account 
controllers. The Commission further recognizes that the 
administration of ATSs may vary from one respondent to another, and 
that such variance may impact which natural persons a respondent 
identifies as trading account controllers for accounts whose trading 
is conducted in whole or in part through an ATS.
    \66\ See question 6 on Form 102B.
---------------------------------------------------------------------------

iii. Timing of 102A Reporting \67\
---------------------------------------------------------------------------

    \67\ See infra the discussion of Sec.  17.02(b) in section VII, 
which provides additional information regarding changes to the 
timing of New Form 102A reporting made in response to comments on 
the NPRM.
---------------------------------------------------------------------------

    This rulemaking imposes a bifurcated deadline for submitting 
certain information on New Form 102A. Reporting parties are required to 
submit a completed Form 102A to the Commission no later than 9 a.m.\68\ 
on the business day following the date on which the special account 
becomes

[[Page 69185]]

reportable. This form must include all required information, including 
the names of the owner(s) and controller(s) of each trading account 
that is not an omnibus account, and that comprises a special account 
reported on the form. However, the reporting party may provide certain 
supplemental information regarding such owner(s) and controller(s) on a 
later date. No later than 9 a.m. on the third business day following 
the date on which the special account becomes reportable, the reporting 
party may update its Form 102 submission to provide information with 
respect to such owner(s) and controller(s) other than their names 
(e.g., their address and other contact information).\69\ The final 
rules also include an ``on-call'' provision, which requires a 102A to 
be submitted on such other date as directed by special call of the 
Commission.
---------------------------------------------------------------------------

    \68\ Unless otherwise specified by the Commission or its 
designee, the stated time in the final rules is eastern time for 
information concerning markets located in that time zone, and 
central time for information concerning all other markets, in 
accordance with Sec.  17.02(a).
    \69\ Specifically, the information marked as `Follow-On 
Information' in questions 10(ii) and (iii) on New Form 102A may be 
provided within three business days. All other required fields on 
New Form 102A must be completed by 9:00 a.m. the following business 
day. See New Form 102A in the Appendix to these final rules for more 
information.
---------------------------------------------------------------------------

iv. Timing of 102A Change Updates and Refresh Updates
    The final rules also require reporting parties to submit an updated 
Form 102A in the event that a change occurs that causes the information 
submitted on the form to no longer be accurate (``change updates''). 
Change updates must be submitted according to the bifurcated schedule 
described in the preceding paragraph. The final rules also include an 
``on-call'' provision, which requires 102A change updates to be 
submitted on such other date as directed by special call of the 
Commission.
    In addition to change updates, Sec.  17.02(b) requires that, 
starting on a date specified by the Commission or its designee and at 
the end of each annual increment thereafter (or such other date 
specified by the Commission or its designee that is equal to or greater 
than six months), each FCM, clearing member, or foreign broker resubmit 
every 102A that it has submitted to the Commission or its designee for 
each of its special accounts (``refresh updates''). The goal of the 
refresh update provision for 102A is to establish discrete points in 
time where all 102A data is considered accurate and reliable, thereby 
avoiding the data drift that is often associated with long-term data 
collection efforts.
    Both the change update and refresh update provisions of Sec.  
17.02(b) include a sunset provision. An FCM, clearing member, or 
foreign broker may stop providing change updates or refresh updates for 
a Form 102A that it has submitted to the Commission for any special 
account upon notifying the Commission or its designee that the account 
in question is no longer reportable as a special account and has not 
been reportable as a special account for the past six months. If a 
reporting party so notifies the Commission, and the special account 
becomes reportable again at a subsequent date, then the reporting party 
would be required to file a new Form 102A.

B. Volume-Triggered Form 102B (Volume Threshold Accounts)

i. Volume Threshold Accounts and Reportable Trading Volume Level
    New Form 102B of New Form 102 introduces a new volume-based 
reporting structure not found in current Form 102. While current Form 
102 reporting requirements arise when an account (or collection of 
related accounts) has a reportable position, 102B reporting is 
triggered when an individual trading account meets a specified trading 
volume level in an individual product and, as a result, becomes a 
``volume threshold account.'' Volume threshold account, as defined 
below in final Sec.  15.00(x), means any trading account that carries 
reportable trading volume on or subject to the rules of a reporting 
market that is a DCM or SEF.\70\ The reportable trading volume level 
(``RTVL'') is defined in final Sec.  15.04 as trading volume of 50 or 
more contracts, during a single trading day, on a single reporting 
market that is a DCM or SEF, in all instruments that such reporting 
market designates with the same product identifier (including purchases 
and sales, and inclusive of all expiration months).\71\ As noted above, 
volume threshold accounts could reflect, without limitation, trading in 
futures, options on futures, swaps, and any other product traded on or 
subject to the rules of a DCM or SEF.
---------------------------------------------------------------------------

    \70\ See supra section I(A) for an explanation of the reporting 
markets relevant to 102B filings, and infra sections VII and IX for 
amendments to the definition of ``reporting market.'' See also infra 
the discussion of Sec.  15.00(x) in section VII, which provides 
additional information regarding changes to the definition of volume 
threshold account made in response to comments on the NPRM.
    \71\ The RTVL is based on the Commission's analysis of DCM trade 
data received through the TCR from a sample of DCMs during a recent 
six month period. It is calibrated to yield information with respect 
to those trading accounts that are responsible for a substantial 
percentage of trading volume, while minimizing the adopted 
regulations' impact on low-volume accounts whose trading activity 
does not warrant inclusion in the adopted reporting and 
identification regime. Based on the sample data set used in the 
Commission's analysis, the RTVL would result in the reporting and 
identification of approximately one-third of the trading accounts 
reported in the sample data set. However, due to the concentration 
of trading activity among a minority of accounts and some accounts' 
tendency to be active in more than one product, the RTVL, as 
adopted, would nonetheless result in the identification of at least 
85% of the trading volume in approximately 90% of the products in 
the sample data set, as measured at the conclusion of the six-month 
period sampled by the Commission. See the discussion of Sec.  15.04 
in section VII below for additional information regarding the 
application of the RTVL to products traded on or subject to the 
rules of a SEF.
---------------------------------------------------------------------------

ii. 102B Form Requirements
    As a threshold question, 102B requires that clearing members 
provide, in response to question 2, the trading account number of any 
trading account that meets the criteria for a volume threshold account; 
any related short code(s) for such account; and the name of the 
reporting market (i.e. the DCM or SEF) at which the volume threshold 
account had reportable trading volume. These data points are necessary 
to report and identify volume threshold accounts in TCRs received from 
DCMs, or similar transaction-based reports that may be received from 
SEFs, and to link the volume threshold account to other Commission's 
surveillance databases.\72\ The data points will also assist the 
Commission in identifying traders whose end-of-day open interest does 
not reach reportable levels on Form 102A, but whose intra-day trading 
reaches the volume threshold, thus enabling the Commission to monitor 
trading that could potentially impact markets during concentrated 
periods of intra-day trading.
---------------------------------------------------------------------------

    \72\ See supra section I(B) for a discussion of the TCR.
---------------------------------------------------------------------------

    Second, 102B requires that clearing members provide, in response to 
question 3, the volume threshold account's associated special account 
number, if applicable. This information will permit the Commission to 
more effectively and efficiently connect position data received via the 
large trader reporting system and trade data received via the TCR.
    Third, 102B requires that clearing members indicate, in response to 
question 4, whether the volume threshold account is an omnibus account, 
or used to execute trades for an omnibus account. If the account is an 
omnibus account or used to execute trades for an omnibus account, 
question 4 requires clearing members to indicate whether the account is 
a house or customer omnibus account, and to provide information 
sufficient to uniquely identify and contact the originator of the 
account (e.g., the originator's name, address and phone

[[Page 69186]]

number, among other information).\73\ More detailed information 
regarding ownership and control with respect to a volume threshold 
account that is a customer omnibus account will be collected separately 
at the Commission's request, from the omnibus account's originating 
firm (via a New Form 71), also adopted herein and described below.
---------------------------------------------------------------------------

    \73\ See supra note 41. Form 102B also requires the reporting 
party to provide the LEI (if any) of any omnibus account originator 
and volume threshold account owner(s) reported on the form. As noted 
in the footnotes to the reporting forms in the Appendix, if a 
reporting party provides an LEI on Form 102B that was issued by the 
CICI Utility (or by any other CFTC-accepted LEI provider), then the 
reporting party is not required to report any of the fields marked 
as ``Optional Fields'' in the relevant question (i.e., name and 
address), provided that such optional fields were reported to the 
CICI Utility (or other CFTC-accepted LEI provider) and are 
associated with the relevant LEI. Footnotes to the reporting forms 
in the Appendix contain instructions regarding other fields that are 
not required to be reported in certain circumstances.
---------------------------------------------------------------------------

    Fourth, 102B requires clearing members to provide information, in 
response to question 5, sufficient to uniquely identify and contact 
each owner of a volume threshold account that is not an omnibus account 
(e.g., the owner's name, address and phone number, among other 
information). For each account owner that is not a natural person, 
question 5 also requests, among other identifying information, a 
contact name, contact job title, and the relationship of the contact to 
the account owner. Finally, the Commission requests that clearing 
members provide information, in response to question 6, sufficient to 
uniquely identify and contact each volume threshold account controller 
of an account that is not an omnibus account. Pursuant to final Sec.  
15.00(cc), a volume threshold account controller must be a natural 
person. The requested information includes the name of the account 
controller(s), address, phone number and job title, together with the 
name of the controller's employer and other identifying 
information.\74\
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    \74\ As with Form 102A, respondents should report all 
individuals meeting the definition of volume threshold account 
controller on Form 102B. In the event that a respondent's trading in 
a reportable volume threshold account is conducted in whole or in 
part through an ATS, when submitting New Form 102B the respondent 
should consider whether any operator, supervisor, or other 
individual involved in the administration of such ATS meets the 
definition of volume threshold account controller with respect to 
the volume threshold account. The Commission recognizes that, for 
some respondents, the individuals involved in the administration of 
an ATS may not qualify as volume threshold account controllers. See 
supra section V(A)(ii).
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iii. Timing of 102B Reporting \75\
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    \75\ See infra the discussion of Sec.  17.02(c) in section VII, 
which provides additional information regarding changes to the 
timing of New Form 102B reporting made in response to comments on 
the NPRM.
---------------------------------------------------------------------------

    This rulemaking imposes a bifurcated deadline for submitting 
certain information on New Form 102B. Reporting parties are required to 
submit a completed Form 102B to the Commission no later than 9 a.m. on 
the business day following the date on which the volume threshold 
account becomes reportable. This form must include all required 
information, including the names of the owner(s) and controller(s) of 
each volume threshold account reported on the form that is not an 
omnibus account. However, the reporting party may provide certain 
supplemental information regarding such owner(s) and controller(s) on a 
later date. No later than 9 a.m. on the third business day following 
the date on which the volume threshold account becomes reportable, the 
reporting party may update its Form 102 submission to provide 
information with respect to such owner(s) and controller(s) other than 
their names (e.g., their address and other contact information).\76\ 
The final rules also include an ``on-call'' provision, which requires a 
102B to be submitted on such other date as directed by special call of 
the Commission.
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    \76\ Specifically, the information marked as `Follow-On 
Information' in questions 5 and 6 on New Form 102B may be provided 
within three business days. All other required fields on New Form 
102B must be completed by 9:00 a.m. the following business day 
(including question 4, with respect to omnibus account information). 
See New Form 102B in the Appendix to these final rules for more 
information.
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iv. Timing of 102B Change Updates and Refresh Updates
    The final rules also require reporting parties to submit an updated 
Form 102B in the event that a change occurs that causes the information 
submitted on the form to no longer be accurate (``change updates''). 
Change updates must be submitted according to the bifurcated schedule 
described in the preceding paragraph. The final rules also include an 
``on-call'' provision, which requires 102B change updates to be 
submitted on such other date as directed by special call of the 
Commission.
    In addition to change updates, Sec.  17.02(c) requires that, 
starting on a date specified by the Commission or its designee and at 
the end of each annual increment thereafter (or such other date 
specified by the Commission or its designee that is equal to or greater 
than six months), each clearing member resubmit every 102B that it has 
submitted to the Commission for each of its volume threshold accounts 
(``refresh updates''). The goal of the refresh update provision for 
102B is to establish discrete points in time where all 102B data is 
considered accurate and reliable, thereby avoiding the data drift that 
is often associated with long-term data collection efforts.
    Both the change update and refresh update provisions of Sec.  
17.02(c) include a sunset provision. A clearing member may stop 
providing change updates or refresh updates for a Form 102B that it has 
submitted to the Commission for any volume threshold account upon 
notifying the Commission or its designee that the account in question 
executed no trades in any product in the past six months on the 
reporting market at which the volume threshold account reached the 
reportable trading volume level. If a reporting party so notifies the 
Commission, and the volume threshold account becomes reportable again 
at a subsequent date, then the reporting party would be required to 
file a new Form 102B.

C. Position-Triggered Form 102S (Consolidated Accounts)

i. 102S Form Requirements
    Section 102S of New Form 102 is designed to facilitate the 
electronic submission of 102S filings. Such filings are currently being 
submitted to the Commission (pursuant to Sec.  17 CFR 20.5(a)) through 
a non-automated process. As noted above, pursuant to Sec.  20.5(a), 
102S filings must be filed by a part 20 reporting party (a swap dealer 
or clearing firm) for each reportable counterparty consolidated account 
when such account first becomes reportable, and ``shall consist of the 
name, address, and contact information of the counterparty and a brief 
description of the nature of such person's paired swaps and swaptions 
market activity.'' \77\ By incorporating 102S in New Form 102, these 
rules will request more detailed ownership and control information 
regarding identified consolidated accounts, and require the submission 
of consolidated account reporting via an automated submission.\78\ As 
explained above, 102S

[[Page 69187]]

will also incorporate considerations developed in the Swaps Large 
Trader Guidebook for compliance with part 20. These rules will replace 
the 102S submission procedure and guidance in the Swaps Large Trader 
Guidebook.\79\
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    \77\ 17 CFR 20.5(a).
    \78\ See supra note 41. Form 102S also requires the reporting 
party to provide the LEI (if any) of any omnibus account originator 
and consolidated account owner(s) and controller(s) reported on the 
form. As noted in the footnotes to the reporting forms in the 
Appendix, if a reporting party provides an LEI on Form 102S that was 
issued by the CICI Utility (or by any other CFTC-accepted LEI 
provider), then the reporting party is not required to report any of 
the fields marked as ``Optional Fields'' in the relevant question 
(i.e., name and address), provided that such optional fields were 
reported to the CICI Utility (or other CFTC-accepted LEI provider) 
and are associated with the relevant LEI. Footnotes to the reporting 
forms in the Appendix contain instructions regarding other fields 
that are not required to be reported in certain circumstances.
    \79\ See Swaps Large Trader Guidebook at p. 26 and p. 91, 
Appendix D. See also supra note 12.
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ii. Timing of 102S Reporting, Change Updates and Refresh Updates
    The timing for submitting new 102S filings will continue to be 
subject to current Sec.  20.5(a)(3).\80\
---------------------------------------------------------------------------

    \80\ 17 CFR 20.5(a)(3) provides: ``Reporting entities shall 
submit a 102S filing within three days following the first day a 
consolidated account first becomes reportable or at such time as 
instructed by the Commission upon special call.''
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    Section 20.5(a)(4) of the final rules requires that if any change 
causes the information filed on a 102S for a consolidated account to no 
longer be accurate, an updated 102S must be filed with the Commission 
no later than 9:00 a.m. on the business day after such change occurs, 
or on such other date as directed by special call of the Commission 
(``change updates'').
    In addition to change updates, final Sec.  20.5(a)(5) requires 
that, starting on a date specified by the Commission or its designee 
and at the end of each annual increment thereafter (or such other date 
specified by the Commission or its designee that is equal to or greater 
than six months), each clearing member or swap dealer must resubmit 
every 102S that it has submitted to the Commission for each of its 
consolidated accounts (``refresh updates''). As with the 102A and 102B, 
discussed above, the goal of the refresh update provision is to 
establish discrete points in time where all 102S data is considered 
accurate and reliable. The Commission is proposing the refresh update 
provision in an effort to maintain accurate 102S data, and to avoid the 
data drift which is often associated with long-term data collection 
efforts.
    Both the change update and refresh update provisions of Sec.  
20.5(a) include a sunset provision. A clearing member or swap dealer 
may stop providing change updates or refresh updates for a Form 102S 
that it has submitted to the Commission for any consolidated account 
upon notifying the Commission or its designee that the account in 
question is no longer reportable as a consolidated account and has not 
been reportable as a consolidated account for the past six months. If a 
reporting party so notifies the Commission, and the consolidated 
account becomes reportable again at a subsequent date, then the 
reporting party would be required to file a new Form 102S.

D. Form 71 (Omnibus Accounts and Sub-Accounts)

    New Form 71 (``Identification of Omnibus Accounts and Sub-
Accounts'') will be sent, in the Commission's discretion, in the event 
that a volume threshold account is identified as a customer omnibus 
account on Form 102B. The Commission will send New Form 71 via a 
special call to the originating firm of such an account. The Commission 
will provide the relevant account number and reporting market reported 
on the 102B when sending the Form 71. Recipients of a Form 71 will be 
required to provide information regarding any account to which the 
customer omnibus account allocated trades that resulted in reportable 
trading volume for the account receiving such allocations (a 
``reportable sub-account'') on a specified trading date.\81\ Form 71 is 
designed to permit originating firms to report the required information 
directly to the Commission without requiring such firms to disclose 
information regarding customers to potential competitors. If a 
reportable sub-account is itself an omnibus account (an ``omnibus 
reportable sub-account''), then the originating firm will be required 
to (a) indicate whether the omnibus reportable sub-account is a house 
or customer omnibus account and (b) identify the originator of the 
omnibus reportable sub-account. Another Form 71 will be sent, at the 
discretion of Commission staff, to the originator of a customer omnibus 
reportable sub-account identified on Form 71. At its discretion, the 
Commission will continue to reach through layered customer omnibus 
reportable sub-accounts via successive Form 71s until reaching all 
reportable sub-accounts, if any, that are not omnibus sub-accounts.
---------------------------------------------------------------------------

    \81\ The relevant trading date will be specified by Commission 
staff on Form 71 at the time the special call is made.
---------------------------------------------------------------------------

    If a reportable sub-account identified on Form 71 is not an omnibus 
sub-account, then the originating firm will be required to identify the 
owner(s) and controller(s) of the non-omnibus reportable sub-account. A 
New Form 40 will be sent, via a special call at the discretion of the 
Commission, to such owner(s) and controller(s). Form 71 will therefore 
enable the Commission to collect the same level of information 
regarding owners and controllers (via a subsequent New Form 40) that 
the Commission will collect with respect to a non-omnibus volume 
threshold account identified on 102B. The key data points to be 
collected in Form 71 are summarized below.
    As a threshold question, section A of Form 71 requires the 
originator of an omnibus volume threshold account or a reportable sub-
account to confirm certain identifying information regarding the 
originator. Such information would have been reported to the Commission 
by an omnibus account carrying firm on Form 102B or on a preceding Form 
71 (e.g., the originator's name, address and phone number), and used to 
auto-populate the present Form 71. The originator is prompted to update 
any incorrect information provided in Section A.
    Second, section B of Form 71 requires the originator to provide 
certain information regarding the allocation of trades from a specified 
account number, and on a specified date and reporting market, to 
another account (called a ``recipient account''). Specifically, the 
originator is required to indicate whether: (1) It allocated trades 
from the specified account number on the specified date and reporting 
market that resulted in reportable trading volume for a recipient 
account; (2) it allocated trades from the specified account number on 
the specified date and reporting market, but the allocations did not 
sum to reportable trading volume for a recipient account on such date; 
or (3) it did not allocate any trades from the specified account number 
on the specified date and reporting market.
    If condition (1) is met, the originator is required to indicate in 
section B whether the reportable sub-account is an omnibus reportable 
sub-account. If so, the originator is required to indicate whether the 
omnibus reportable sub-account is a house or customer omnibus account, 
and to provide information sufficient to identify and contact the 
originator of the sub-account (e.g., the originator's name, address and 
phone number, and a contact name, contact job title, and the 
relationship of the contact to the originator). As noted above, another 
Form 71 will be sent at the discretion of Commission staff to the 
originator of a customer omnibus reportable sub-account identified in 
response to section B of Form 71. Therefore, Form 71 may be sent to a 
chain of such originators if each originator allocated trades to 
another customer omnibus reportable sub-account.
    If the reportable sub-account is not an omnibus sub-account, the 
originator is

[[Page 69188]]

required to provide information sufficient to identify and contact the 
owner(s) and controller(s) of such non-omnibus reportable sub-account 
(e.g., the name, address and phone number of the owner(s) and 
controller(s)). This information will enable the Commission, in its 
discretion, to send a New Form 40 to such owner(s) and controller(s).

E. New Form 40 (Reporting Traders)

    In these final rules, the Commission adopts a revised Form 40 that 
will be sent, on special call of the Commission, to individuals and 
other entities identified on any of 102A, 102B, and Form 71. As adopted 
herein, New Form 40, still referred to as the ``Statement of Reporting 
Trader,'' will continue to serve the function traditionally met by 
current Form 40. New Form 40 will provide the Commission with detailed 
information regarding both the business activities and the ownership 
and control structure of a reporting trader identified in the 
Commission's Form 102 program (as updated by these final rules). New 
Form 40 will also be the vehicle through which market participants 
subject to 17 CFR 20.5(b) submit their 40S filings, and will be used to 
collect additional information regarding the owners and controllers of 
non-omnibus volume threshold accounts identified by Form 71. Those 
entities required to complete a New Form 40 will be under a continuing 
obligation, per direction in the special call, to update and maintain 
the accuracy of the information submitted on New Form 40 by 
periodically updating the information on the New Form 40 web portal or 
by periodically resubmitting New Form 40 by secure FTP transmission.
    Among other data, New Form 40 will request the following regarding 
the reporting trader: Contact information for the individual(s) 
responsible for the reporting trader's trading activities, risk 
management operations, and the information on the New Form 40; if 
applicable, omnibus account information, foreign government affiliation 
information, and an indication regarding the reporting trader's status 
as a domestic or non-domestic entity; information regarding the 
reporting party's ownership structure in connection with its parents 
and subsidiaries; information regarding the reporting trader's control 
relationships with other entities; information regarding other 
relationships with persons that influence or exercise authority over 
the trading of the reporting trader; an indication regarding swap 
dealer status and major swap participant status; an indication of all 
commodity groups and individual commodities that the reporting trader 
presently trades, or expects to trade in the near future, in 
derivatives markets; and other indications regarding the nature of the 
reporting trader's derivatives trading activity. The form includes 
definitions of certain terms, including parent, subsidiary, and 
control, to be used for the purpose of completing New Form 40.
    New Form 40 will also require reporting traders who engage in 
commodity index trading (``CIT''), as defined in the new form, to 
identify themselves to the Commission.\82\ New Form 40 defines CIT as: 
(a) An investment strategy that consists of investing in an instrument 
(e.g., a commodity index fund, exchange-traded fund for commodities, or 
exchange-traded note for commodities) that enters into one or more 
derivative contracts to track the performance of a published index that 
is based on the price of one or more commodities, or commodities in 
combination with other securities; or (b) an investment strategy that 
consists of entering into one or more derivative contracts to track the 
performance of a published index that is based on the price of one or 
more commodities, or commodities in combination with other securities. 
Reporting traders engaged in CIT as defined in (b) are required to 
indicate whether they are, in the aggregate, pursuing long exposure or 
short exposure with respect to the relevant commodities or commodity 
groups listed on the Form.\83\
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    \82\ See question 14 in New Form 40.
    \83\ See question 14ii(a) in New Form 40.
---------------------------------------------------------------------------

VI. Data Submission Standards and Procedures

A. Overview

    During the comment period of the NPRM, the Commission's data and 
technology staff worked with potential reporting parties and other 
market participants to address the information technology standards 
associated with the rules proposed by the NPRM.\84\ Following these 
discussions, the Commission established two submission methods for the 
reporting forms required by these final rules: (a) A web-based portal 
and (b) an XML-based, secure FTP data feed. While the NPRM contemplated 
that certain forms (Forms 40/S and 71) could be submitted only via the 
web portal, these final rules provide that reporting parties may submit 
each of the new or revised forms through either the web-based portal or 
the FTP data feed, in order to provide additional flexibility to 
reporting parties. The Commission is offering two filing methods for 
each form because it anticipates a wide range of technological 
capabilities among reporting parties (varying based on the relative 
size and experience of a given reporting party). Reporting parties will 
be able to select the submission method that works best with their 
existing data and technology infrastructure and the number of filings 
they expect to make. Those reporting parties electing to submit 
information through the FTP data feed should contact the Commission, 
which will provide the necessary technical information to establish the 
data feed. Following the publication of these final rules, the 
Commission intends to publish a data compliance guidebook with detailed 
instructions for the two submission methods.\85\
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    \84\ Summaries of these discussions are available through the 
Commission's Web site at: https://comments.cftc.gov/PublicComments/CommentList.aspx?id=1247.
    \85\ For a recent example of a similar undertaking, see the 
Swaps Large Trader Guidebook, linked supra at note 46.
---------------------------------------------------------------------------

    When a reporting party identifies a new account on New Form 102A, 
102B or 102S, the Commission will evaluate the account to determine 
whether to request a New Form 40/40S or New Form 71 via a special call. 
If the Commission determines to send a New Form 40/40S or New Form 71 
to the applicable reporting trader or account originator, the 
Commission will contact the reporting party (generally via email, using 
the email address provided on the New Form 102). The Commission will 
provide instructions for submitting the applicable form through either 
the web-based portal or secure FTP data feed. Depending on the 
information provided in New Form 71, the Commission may require a New 
Form 40 or New Form 71 from additional persons or entities identified 
in the New Form 71, using the same process described above.

B. Schedule of Effective Date and Compliance Date

    As noted above, these final rules include separate ``effective'' 
and ``compliance'' dates:
     The effective date of these final rules will be February 
18, 2014.
     The compliance date, however, will be delayed by an 
additional 180 days, with the result that the compliance date of these 
final rules will be August 15, 2014.
    Between the publication of these final rules and the effective 
date, reporting parties should work with the Commission's data and 
technology staff

[[Page 69189]]

to test and implement any information technology standards or systems 
associated with the final rules. During this testing period, reporting 
parties should provide all test data or form filings requested by the 
Commission's data and technology staff, in the form and manner 
requested by staff.\86\ In addition, the Commission will conduct beta 
testing of each submission method prior to the compliance date. All 
reporting parties subject to the final rules must be in full compliance 
by the compliance date, including having submitted complete and 
accurate filings using one of the two submission methods described 
above.
---------------------------------------------------------------------------

    \86\ The Commission will protect proprietary information 
consistent with 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 is also required to protect certain information 
contained in a government system of records according to the Privacy 
Act of 1974, 5 U.S.C. 552a.
---------------------------------------------------------------------------

VII. Review of NPRM and Summary of Final Rules

A. Part 15

i. Sec.  15.00(q)--Reporting Market
NPRM Proposal
    Proposed Sec.  15.00(q) revised the definition of ``reporting 
market'' in current Sec.  15.00(q) to replace the provision's cross-
reference to section 1a(29) of the Act with a cross-reference to Sec.  
1a(40). The proposed rule also revised current Sec.  15.00(q) to remove 
the provision's reference to derivatives transaction execution 
facilities (``DTEFs'').\87\
---------------------------------------------------------------------------

    \87\ 17 CFR 15.00(q) and 15.02. The Dodd-Frank Act modified 
section 1a of the CEA. As a result, the definition of ``registered 
entity'' previously found in section 1a(29) of the CEA is now in 
section 1a(40). In the NPRM, the Commission proposed to revise 
current Sec.  15.00(q) so that it cites to section 1a(40) for the 
definition of registered entity. The Commission also proposed to 
revise current Sec.  15.00(q) by removing the provision's reference 
to DTEFs, a category of regulated markets that was eliminated by 
section 734 of the Dodd-Frank Act.
---------------------------------------------------------------------------

Discussion of Final Rule
    No comments were received pertaining to the proposed rule, and the 
Commission is adopting proposed Sec.  15.00(q) without modification.
ii. Sec.  15.00(t)--Control
NPRM Proposal
    Proposed Sec.  15.00(t) added ``control'' to the list of defined 
terms in Sec.  15.00.\88\ The Commission's proposed definition, which 
applied only to special accounts (New Form 102A) and consolidated 
accounts (Form 102S), defined control as ``to actually direct, by power 
of attorney or otherwise, the trading of a special account or a 
consolidated account.'' The proposed definition specified that special 
accounts and consolidated accounts may have more than one controller. 
The Commission notes that the proposed definition of ``control'' 
applied solely for the purpose of satisfying the reporting obligations 
under parts 15 through 19 and 21 of the Commission's regulations. The 
proposed definition did not limit or alter existing law with respect to 
the meaning of the term control for the purpose of enforcing other 
requirements under the Act and the Commission's regulations, including 
those relating to position limits or manipulation. Similarly, existing 
requirements regarding the aggregation of positions in separate 
accounts for reporting or other purposes under the Act and Commission 
regulations (e.g., Sec. Sec.  17.00(b) and 150.4) were not altered by 
the definition of ``control'' proposed in Sec.  15.00(t).
---------------------------------------------------------------------------

    \88\ The definition of ``control'' in Sec.  15.00 is based upon 
the definition of ``controlled account'' in section 1.3(j) of the 
Commission's regulations.
---------------------------------------------------------------------------

Summary of Comments on NPRM Proposal
    FIA commented that it would be difficult and/or meaningless to 
provide the requested control information, because the individuals 
responsible for trading an account within a special account or a volume 
threshold account can change often, even within the same trading 
day.\89\ Furthermore, ``in the case of algorithmic trading programs, 
there likely will not be an identifiable individual who `actually 
directs the trading' of the program. For this reason, FCMs do not 
currently collect this information.'' \90\ FIA recommended removing the 
requirement to identify account controllers on Forms 102A and 102B.\91\
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    \89\ CL-2012-FIA supra note 55 at 5.
    \90\ CL-2012-FIA supra note 55 at 6.
    \91\ CL-2012-FIA supra note 55 at 5. The 2010 OCR NPRM proposed 
a broader definition of an account controller: ``A natural person, 
or a group of natural persons, with the legal authority to exercise 
discretion over trading decisions by a trading account, with the 
authority to determine the trading strategy of an automated trading 
system, or responsible for the supervision of any automated system 
or strategy.'' In a comment letter dated December 23, 2010, FIA 
commented that ``this definition cuts too broad a swath and would 
require information on individuals that never actually exercise 
trading authority over an account but, because of their position 
with the customer, as an owner or officer, would be deemed to have 
this authority . . . FIA believes the definition of an account 
controller should be consistent with the Commission's definition of 
control as set out in Commission Rule 1.3(j) and generally applied 
at exchanges.'' The definition of an account controller reflected in 
Sec.  15.00(t) and (bb)-(dd) of these final rules is based on 
Commission Rule 1.3(j).
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Discussion of Final Rule
    The Commission is adopting proposed Sec.  15.00(t) without 
modification. At the same time, the Commission is modifying the 
instructions on Form 102 in response to comments that discussed the 
difficulty of identifying individuals that exercise control on a 
transient basis, such as individuals operating an automated trading 
system (``ATS'') during a daily shift. The instructions for Form 102A 
and Form 102B have been revised to state that respondents should report 
all individuals who qualify as ``trading account controllers'' or 
``volume threshold account controllers,'' as defined in Sec.  15.00(bb) 
and (cc), respectively.\92\ The Commission notes that regardless of 
whether the trading is carried out in whole or in part through an 
automated trading system or direct human initiation, the underlying 
analysis remains the same. When completing Form 102A and Form 102B, 
reporting parties should identify each person that satisfies the 
definition of ``trading account controller'' or ``volume threshold 
account controller,'' as defined in Sec.  15.00(bb) and (cc), 
respectively. Once respondents have identified all individuals meeting 
the applicable controller definition in a Form 102A or Form 102B 
submission, they will not be required to submit change updates to the 
submission if one previously identified controller takes the place of 
another previously identified controller.
---------------------------------------------------------------------------

    \92\ The Commission recognizes that, for some respondents that 
conduct trading in a reportable trading account or volume threshold 
account in whole or in part through an ATS, the individuals involved 
in the administration of such ATS may not qualify as trading account 
controllers or volume threshold account controllers. See supra 
section V(A)(ii).
---------------------------------------------------------------------------

iii. Sec.  15.00(u)--Reportable Trading Volume
NPRM Proposal
    Volume threshold accounts, omnibus volume threshold accounts, 
omnibus reportable sub-accounts, and reportable sub-accounts all 
reflect accounts that execute (or receive via allocation or give-up) 
``reportable trading volume.'' Proposed Sec.  15.00(u) defined 
reportable trading volume as contract trading volume that meets or 
exceeds the level specified in proposed Sec.  15.04. Section 15.04, in 
turn, provided that reportable trading volume for a trading account is 
trading volume of 50 or more contracts, during a single trading day, on 
a single

[[Page 69190]]

reporting market that is a board of trade designated as a contract 
market under section 5 of the Act or a swap execution facility 
registered under section 5h of the Act, in all instruments that such 
reporting market designates with the same product identifier (including 
purchases and sales, and inclusive of all expiration months).
Discussion of Final Rule
    See below the discussion of comments received regarding the 
reportable trading volume level proposed by Sec.  15.04. No comments 
were received pertaining specifically to proposed Sec.  15.00(u), and 
the Commission is adopting Sec.  15.00(u) without modification.
iv. Sec.  15.00(v)--Direct Market Access
NPRM Proposal
    Proposed Sec.  15.00(v) defined direct market access (``DMA'') as 
``a connection method that enables a market participant to transmit 
orders to a DCM's electronic trade matching system without re-entry by 
another person or entity, or similar access to the trade execution 
platform of a SEF.'' Pursuant to the proposed definition, such access 
could be provided directly by a DCM or SEF, or by a 3rd-party platform. 
Proposed Forms 102A and 102B required an FCM to indicate whether a 
trading account or volume threshold account has been granted DMA to the 
trade matching system or the respective reporting system of the 
applicable reporting market.
Summary of Comments on NPRM Proposal
    FIA, CME and ICE commented that the definition of DMA was 
overbroad, and FIA predicted that ``virtually all customers for which a 
Form 102 would be required to be filed will have been granted DMA.'' 
\93\ CME commented that DMA data is not related to account ownership 
and control, the focus of these final rules, but rather to 
connectivity.\94\
---------------------------------------------------------------------------

    \93\ CL-2012-FIA supra note 55 at 6. CL-2012-CME supra note 55 
at 2-3. CL-2012-ICE supra note 55 at 2.
    \94\ CL-2012-CME supra note 55 at 2-3.
---------------------------------------------------------------------------

Discussion of Final Rule
    In response to CME's comment regarding the relevance of DMA 
information, the Commission has concluded that the OCR reporting forms 
are not the appropriate vehicle for reporting information regarding 
connectivity. The Commission is therefore not adopting proposed Sec.  
15.00(v), and will not include a question regarding DMA in Form 102.
v. Sec.  15.00(v)--Omnibus Account \95\
---------------------------------------------------------------------------

    \95\ Note that the following definitions in section Sec.  15.00 
have been reordered due to the elimination of the definition of 
direct market access (proposed in the NPRM as Sec.  15.00(v)).
---------------------------------------------------------------------------

NPRM Proposal
    Proposed Sec.  15.00(w) (re-ordered in the final rules as Sec.  
15.00(v)) defined omnibus account as any trading account that one FCM, 
clearing member or foreign broker carries for another and in which the 
transactions of multiple individual accounts are combined. The 
identities of the holders of the individual accounts are not generally 
known or disclosed to the carrying firm.
Discussion of Final Rule
    No comments were received pertaining to the proposed rule, and the 
Commission is adopting proposed Sec.  15.00(w) (re-ordered in the final 
rules as Sec.  15.00(v)) without modification.
vi. Sec.  15.00(w)--Omnibus Account Originator
NPRM Proposal
    Proposed Sec.  15.00(x) (re-ordered in the final rules as Sec.  
15.00(w)) defined omnibus account originator as any FCM, clearing 
member or foreign broker that executes trades for one or more customers 
via one or more accounts that are part of an omnibus account carried by 
another FCM, clearing member or foreign broker.
Discussion of Final Rule
    No comments were received pertaining to the proposed rule, and the 
Commission is adopting proposed Sec.  15.00(x) (re-ordered in the final 
rules as Sec.  15.00(w)) without modification.
vii. Sec.  15.00(x)--Volume Threshold Account
NPRM Proposal
    Proposed Sec.  15.00(y) (re-ordered in the final rules as Sec.  
15.00(x)) defined volume threshold account as any trading account that 
executes, or receives via allocation or give-up, reportable trading 
volume on or subject to the rules of a reporting market that is a board 
of trade designated as a contract market under section 5 of the Act or 
a swap execution facility registered under section 5h of the Act.
    In the case of a give-up trade, this NPRM definition was intended 
to require reporting by: (i) The carrying firm of the original 
executing account; (ii) the carrying firm of any intervening 
account(s); and (iii) the carrying firm of the account to which the 
give-up trade was ultimately allocated. Question 10 in Section VII of 
the NPRM emphasized the broad scope of the definition: ``The Commission 
intends that the definition of `volume threshold account' captures all 
possible categories of accounts with reportable trading volume. . . . 
The Commission requests public comment regarding whether the proposed 
definition of `volume threshold account' achieves this purpose.''
Summary of Comments on NPRM Proposal
    In response to this question, CME commented that volume-based 
accounts should be reported at the carrying broker level, and noted 
that, ``this is where the account ownership and control information 
resides, not at executing brokers.'' \96\
---------------------------------------------------------------------------

    \96\ CL-2012-CME supra note 55 at 4.
---------------------------------------------------------------------------

Discussion of Final Rule
    The Commission is adopting proposed Sec.  15.00(y) (re-ordered in 
the final rules as Sec.  15.00(x)) with one modification. The 
definition of volume threshold account is being scaled back in the 
final rules, to capture a smaller number of volume threshold accounts 
than under the NPRM proposal. The definition is being modified to: 
``any trading account that carries reportable trading volume on or 
subject to the rules of a reporting market that is a [DCM or SEF].'' 
\97\ This change will reduce the number of reportable volume threshold 
accounts in the case of a give-up trade:
---------------------------------------------------------------------------

    \97\ Based on comment letters received in response to various 
proposed OCR rulemakings, the Commission understands that, in the 
case of a give-up trade, the industry regards the account to which a 
give-up trade is ultimately allocated as the only ``carrying'' 
account in the give-up process. On this basis, the Commission does 
not view the original executing account of a give-up trade, or any 
intervening account(s) prior to the account to which the give-up 
trade is ultimately allocated, as ``carrying'' accounts in the give-
up process.
---------------------------------------------------------------------------

     In a give-up scenario, this definition will require 
reporting by the carrying firm of the account to which the trade is 
ultimately allocated. Reporting will not be required, however, by the 
carrying firm of the original executing account, or by the carrying 
firm of any intervening account(s) prior to the account to which the 
trade is ultimately allocated.
     In a non-give-up scenario, there will be no change to the 
number of reportable volume threshold accounts. Under both the original 
and revised definition, reporting will be required by the carrying firm 
of the account in which the trade is both executed and cleared.
    The Commission believes that this approach will be more efficient 
and less

[[Page 69191]]

burdensome for reporting parties, while nonetheless capturing a 
sufficient number of volume threshold accounts to advance the 
Commission's surveillance objectives.
viii. Sec.  15.00(y)--Omnibus Volume Threshold Account
NPRM Proposal
    Proposed Sec.  15.00(z) (re-ordered in the final rules as Sec.  
15.00(y)) defined omnibus volume threshold account as any trading 
account that, on an omnibus basis, executes, or receives via allocation 
or give-up, reportable trading volume on or subject to the rules of a 
reporting market that is a board of trade designated as a contract 
market under section 5 of the Act or a swap execution facility 
registered under section 5h of the Act.
Summary of Comments on NPRM Proposal
    See the discussion above regarding CME's comment on the definition 
of ``volume threshold account.''
Discussion of Final Rule
    The Commission is adopting proposed Sec.  15.00(z) (re-ordered in 
the final rules as Sec.  15.00(y)) with one modification, consistent 
with the change to the definition of volume threshold account described 
above. Under the final rules, omnibus volume threshold account means 
``any trading account that, on an omnibus basis, carries reportable 
trading volume on or subject to the rules of a reporting market that is 
a [DCM or SEF].''
ix. Sec.  15.00(z)--Omnibus Reportable Sub-Account
NPRM Proposal
    Proposed Sec.  15.00(aa) (re-ordered in the final rules as Sec.  
15.00(z)) defined omnibus reportable sub-account as any trading sub-
account of an omnibus volume threshold account, which sub-account 
executes reportable trading volume on an omnibus basis. Omnibus 
reportable sub-account also means any trading account that is itself an 
omnibus account, executes reportable trading volume, and is a sub-
account of another omnibus reportable sub-account.
Discussion of Final Rule
    No comments were received pertaining to the proposed rule, and the 
Commission is adopting proposed Sec.  15.00(aa) (re-ordered in the 
final rules as Sec.  15.00(z)) without modification.
x. Sec.  15.00(aa)--Reportable Sub-Account
NPRM Proposal
    Proposed Sec.  15.00(bb) (re-ordered in the final rules as Sec.  
15.00(aa)) defined reportable sub-account as any trading sub-account of 
an omnibus volume threshold account or omnibus reportable sub-account, 
which sub-account executes reportable trading volume.
Discussion of Final Rule
    No comments were received pertaining to the proposed rule, and the 
Commission is adopting proposed Sec.  15.00(bb) (re-ordered in the 
final rules as Sec.  15.00(aa)) without modification.
xi. Sec.  15.00(bb)--Trading Account Controller; Sec.  15.00(cc)--
Volume Threshold Account Controller; Sec.  15.00(dd)--Reportable Sub-
Account Controller
NPRM Proposal
    The Commission proposed to separately define the concept of control 
in the context of trading accounts, volume threshold accounts, and 
reportable sub-accounts. For these accounts, ``control'' may only be 
exercised by natural persons. Accordingly, proposed Sec.  15.00(cc), 
(dd), and (ee) (re-ordered in the final rules as Sec.  15.00(bb), (cc), 
and (dd)) defined trading account controllers, volume threshold account 
controllers, and reportable sub-account controllers, respectively, as 
``a natural person who by power of attorney or otherwise actually 
directs the trading of a [trading account, volume threshold account, or 
reportable sub-account].'' Each account type may have more than one 
controller. The proposed definitions in Sec.  15.00(cc), (dd), and (ee) 
are relevant to the submission of New Forms 102A (trading accounts), 
102B (volume threshold accounts), and 71 (reportable sub-accounts), 
respectively.
Summary of Comments on NPRM Proposal
    See above the discussion of comments received regarding the 
definition of control proposed by Sec.  15.00(t).
Discussion of Final Rule
    The Commission is adopting proposed Sec.  15.00(cc), (dd), and (ee) 
(re-ordered in the final rules as Sec.  15.00(bb), (cc), and (dd)) 
without modification. See the discussion of Sec.  15.00(t) above 
regarding the modifications to the Form 102 instructions that will be 
made in response to comments received regarding the definition of 
control.
xii. Sec.  15.01(c)--Persons Required To Report
NPRM Proposal
    The introduction of new account and controller types in New Forms 
102A, 102B, and 71 will result in a corresponding expansion in the 
categories of persons required to provide New Form 40 reports. 
Accordingly, the Commission proposed to amend Sec.  15.01(c), which 
currently requires Form 40 reports only from persons who hold or 
control reportable positions.\98\ Proposed Sec.  15.01(c) required New 
Form 40 reports from: Traders who own, hold, or control reportable 
positions (identified via New Form 102A); volume threshold account 
controllers (identified via New Form 102B); persons who own volume 
threshold accounts (identified via New Form 102B); reportable sub-
account controllers (identified via New Form 71); and persons who own 
reportable sub-accounts (identified via New Form 71).
---------------------------------------------------------------------------

    \98\ 17 CFR 15.01(c).
---------------------------------------------------------------------------

Discussion of Final Rule
    No comments were received pertaining to the proposed rule, and the 
Commission is adopting proposed Sec.  15.01(c) without modification.
xiii. Sec.  15.02--Reporting Forms
NPRM Proposal
    Current Sec.  15.02 contains a list of the forms contained in parts 
15 through 19, and 21.\99\ Proposed Sec.  15.02 was revised to reflect 
the proposed introduction of new Form 71, the renaming of Form 102, and 
the new OMB control number created by this rulemaking.
---------------------------------------------------------------------------

    \99\ 17 CFR 15.00(q) and 15.02. The Dodd-Frank Act modified 
section 1a of the CEA. As a result, the definition of ``registered 
entity'' previously found in section 1a(29) of the CEA is now in 
section 1a(40). In the NPRM, the Commission proposed to revise 
current Sec.  15.00(q) so that it cites to section 1a(40) for the 
definition of registered entity. The Commission also proposed to 
revise current Sec.  15.00(q) by removing the provision's reference 
to DTEFs, a category of regulated markets that was eliminated by 
section 734 of the Dodd-Frank Act. These proposals are adopted in 
the final rules.
---------------------------------------------------------------------------

Discussion of Final Rule
    No comments were received pertaining to the proposed rule, and the 
Commission is adopting proposed Sec.  15.02 without modification.
xiv. Sec.  15.04--Reportable Trading Volume Level
NPRM Proposal
    Proposed Sec.  15.04 provided that reportable trading volume for a 
trading account is trading volume of 50 or more contracts, during a 
single trading day,

[[Page 69192]]

on a single reporting market that is a board of trade designated as a 
contract market under section 5 of the Act or a swap execution facility 
registered under section 5h of the Act, in all instruments that such 
reporting market designates with the same product identifier (including 
purchases and sales, and inclusive of all expiration months).
    Notably, proposed Sec.  15.04 addressed trading volume, not open 
positions, and required that purchases and sales by a trading account 
be summed to determine whether such account has reached the reportable 
trading volume. Section 15.04 also stipulates that reportable trading 
volume should encompass all instruments that the reporting market 
designates with the same product identifier.
Summary of Comments on NPRM Proposal
    FIA, CME and ICE commented that the reportable trading volume level 
(``RTVL''), as proposed, would generate an excessive amount of data 
that may not be meaningful to the Commission's trade practice and 
market surveillance programs.\100\ More specifically, Nadex commented 
that the proposed 50-contract reportable trading volume level would 
capture too many retail customers that are trading contracts with very 
small notional values.\101\
---------------------------------------------------------------------------

    \100\ CL-2012-FIA supra note 55 at 8. CL-2012-CME supra note 55 
at 3. CL-2012-ICE supra note 55 at 6.
    \101\ CL-2012-Nadex supra note 55 at 2-3.
---------------------------------------------------------------------------

    FIA and ICE both recommended that the Commission phase in a 
descending RTVL until the optimum level is reached.\102\ FIA, for 
example, recommended that ``the Commission could require that only 
accounts meeting a volume threshold of 1,000 contracts per day be 
reported in the first three months; contracts meeting a volume 
threshold of 750 contracts per day be reported in the second three 
months after the compliance date; and so on until the optimum volume 
threshold is reached.'' \103\ CME also expressed concern that the RTVL 
will capture too many accounts, but recommended that the RTVL should be 
changed to 250 contracts bought or sold during a calendar week.\104\
---------------------------------------------------------------------------

    \102\ CL-2012-FIA supra note 55 at 8. CL-2012-ICE supra note 55 
at 6.
    \103\ CL-2012-FIA supra note 55 at 8.
    \104\ CL-2012-CME supra note 55 at 3.
---------------------------------------------------------------------------

    Nadex recommended that a different RTVL should be applied to 
contracts with small notional values, as compared to contracts with 
larger, traditional notional values. ``For any contract with a notional 
value of $1,000 or less, the RTVL could be increased to 5,000 (i.e., 
1,000 times the standard RTVL of 50). This would still result in the 
Commission capturing information with respect to a relatively 
insignificant amount of trading activity in terms of notional value, 
but would be significantly less burdensome for the DCMs that offer 
these contracts.'' \105\ If the Commission determined not to adopt a 
different RTVL for contracts with small notional values, then Nadex 
recommended that ``DCMs should have the opportunity to obtain a waiver 
from the standard RTVL level with an appropriate alternative to be 
determined after consultation between the relevant market and CFTC 
staff.'' \106\
---------------------------------------------------------------------------

    \105\ CL-2012-Nadex supra note 55 at 3.
    \106\ Id.
---------------------------------------------------------------------------

Discussion of Final Rule
    Although the Commission acknowledges comments received regarding 
the appropriate RTVL, the Commission is adopting proposed Sec.  15.04 
without modification.
    As indicated in the NPRM, the RTVL is based on Commission staff's 
analysis of DCM trade data received through the trade capture report 
from a sample of DCMs during a recent six-month period. The 50-contract 
RTVL is calibrated to identify a critical mass of the trading accounts 
active in Commission- regulated markets, measured not only by the 
percentage of trading volume for which those accounts are responsible, 
but also by the absolute number of accounts identified. The 50-contract 
RTVL identifies approximately 85 percent of trading volume in 
approximately 90 percent of the products sampled by the Commission over 
the six-month sample period. The 50-contract RTVL also identifies 
approximately one-third of the trading accounts in the sample set. As a 
result, the 50-contract RTVL will capture both: (1) Those accounts 
responsible for the large majority of trading volume; and (2) a 
meaningful absolute number of the trading accounts active in 
Commission-regulated markets. The Commission believes that (1) and (2) 
are both equally important in improving the Commission's ability to 
perform robust and comprehensive market and trade practice 
surveillance. While the 50-contract RTVL achieves the Commission's 
regulatory objectives, it is nonetheless also calibrated to minimize 
the regulations' impact on low-volume accounts whose trading activity 
does not warrant inclusion in the reporting regime.
    Furthermore, the Commission also reiterates that volume threshold 
account reporting, through Form 102B, is a transaction-based reporting 
regime rather than a position-based regime. A fundamental purpose of 
volume-based reporting on Form 102B is to identify trading accounts 
based solely on their trading volume, independently of such accounts' 
contribution to open interest. The Commission's intent in this 
rulemaking is to achieve a comprehensive identification of the 
participants in regulated derivatives markets regardless of the trading 
strategies they may pursue.
    For these reasons, the Commission declines to accept proposals that 
could reduce the trading volume or absolute number of accounts 
identified, including FIA's proposal that the final rules switch to an 
RTVL that descends from 1,000 contracts to 750 contracts, or proposals 
that would change the basis of measurement, including CME's proposal to 
use an RTVL of 250 contracts bought or sold per week. In addition, the 
Commission also declines to accept recommendations that would result in 
an impracticable administrative burden, including Nadex's 
recommendation that a different RTVL should be applied to contracts 
with small notional values. The Commission believes it would be 
inefficient for both the Commission and various reporting parties to 
create a reporting regime for its regulated markets that is differently 
scaled across multiple products, in response to the fact that trading 
volume varies from one product to the next.\107\ Accordingly, the final 
rules will use the same RTVL proposed in the NPRM.
---------------------------------------------------------------------------

    \107\ See infra section VIII(B)(vii) for a discussion of the 
administrative difficulties of implementing such a proposal.
---------------------------------------------------------------------------

    The NPRM proposed to apply the same RTVL (50 contracts) to volume 
threshold accounts associated with both DCMs and SEFs. Because the RTVL 
is based on the Commission's experience with DCMs, the NPRM asked for 
comment whether the 50-contract RTVL was also appropriate for the 
reporting of accounts associated with SEFs--and if not, what changes 
would be appropriate for reporting with regard to SEFs. The Commission 
did not receive any comments in response to this question. As a result, 
the Commission will apply the same RTVL (50 contracts) to volume 
threshold accounts associated with both DCMs and SEFs in the final 
rules, as contemplated by the NPRM.
    In the event that trading activity in the SEF marketplace is lower 
than in the futures marketplace, the Commission expects that the 50 
contract RTVL will likely identify a smaller percentage of volume 
threshold accounts associated with SEFs. The 50 contract RTVL for

[[Page 69193]]

SEFs would, correspondingly, impose a lesser burden on parties 
reporting volume threshold accounts on SEFs as compared to parties 
reporting such accounts on DCMs. Once the final rules have been 
implemented, if the Commission determines that the 50 contract RTVL is 
identifying an insufficient number of volume threshold accounts, the 
Commission may adjust the RTVL for SEF reporting via a subsequent 
rulemaking, to ensure that an equivalent segment of both the DCM and 
SEF marketplace is identified.

B. Part 17

i. Sec.  17.01(a)--Identification of Special Accounts (via 102A)
NPRM Proposal
    Proposed Sec.  17.01(a) required reporting parties to identify 
special accounts on New Form 102A, and referred reporting parties 
directly to the new form for the required data points.
Summary of Comments on NPRM Proposal
    Efficiency of Forms. FIA and CME both commented that the use of 
multiple reporting forms (i.e., the 102A, 102B and 102S) to capture 
similar information is inefficient and unnecessary.\108\ FIA stated 
that ``the proposed amendments appear to be designed to populate three 
separate data bases to accommodate the Commission's existing systems 
for conducting trade practice and market surveillance, thereby 
perpetuating an inefficient system.'' \109\ As an example of this 
inefficiency, FIA noted that ``the proposed amendments would require 
reporting firms to provide contact information for each of Form 102A, 
Form 102B and Form 102S.'' \110\ FIA stated that ``managing three 
separate forms for the same customer will create unnecessary work and 
be more challenging to keep current.'' \111\ CME regarded the 102 
reporting as duplicative and inefficient because it ``requires a 
different Form 102 depending on the type of trigger.'' \112\
---------------------------------------------------------------------------

    \108\ CL-2012-FIA supra note 55 at 3-4. CL-2012-CME supra note 
55 at 2.
    \109\ CL-2012-FIA supra note 55 at 4.
    \110\ Id.
    \111\ Id.
    \112\ CL-2012-CME supra note 55 at 2.
---------------------------------------------------------------------------

    In order to eliminate redundant requests on the forms for contact 
information, FIA suggested creating a ``Reporting Contact Reference 
Database,'' where contact information would be stored once for each 
special account number.\113\ ``This would ensure that contact 
information is stored and maintained as a single record, eliminate 
redundancy and improve the quality of information in the ownership and 
control reporting process.'' \114\ More generally, CME recommended that 
``the Commission's systems can and should use a common set of reference 
data so that a previously identified account does not need to be re-
reported based upon a different trigger.'' \115\
---------------------------------------------------------------------------

    \113\ CL-2012-FIA supra note 55 at 4.
    \114\ Id.
    \115\ CL-2012-CME supra note 55 at 2.
---------------------------------------------------------------------------

Discussion of Final Rule
    Efficiency of Forms. In response to comments regarding the 
efficiency of the electronic submission process, the Commission is 
creating a contact reference database so that respondents will not need 
to enter contact information each time they manually complete a 102A, 
102B or 102S through the web portal. For example, the respondent would 
enter the account number for the applicable form, and the Web portal 
page would automatically populate the contact information for that 
account number which the respondent had most recently provided. The 
Commission expects that this solution may be particularly helpful to 
small entities, which are likely to manually complete forms through the 
web portal. Larger firms, by contrast, are more likely to completely 
automate the process.\116\
---------------------------------------------------------------------------

    \116\ See also supra note 41. New Form 102 requires the 
reporting party to provide the LEI (if any) of the reporting party 
and of various other parties reportable on the form, such as account 
owners, controllers, and originators. As noted in the footnotes to 
the reporting forms in the Appendix, if a reporting party provides 
an LEI on New Form 102 that was issued by the CICI Utility (or by 
any other CFTC-accepted LEI provider), then the reporting party is 
not required to report any of the fields marked as ``Optional 
Fields'' in the relevant question (i.e., name and address), provided 
that such optional fields were reported to the CICI Utility (or 
other CFTC-accepted LEI provider) and are associated with the 
relevant LEI. The Commission is addressing such otherwise 
duplicative reporting in order to leverage information previously 
submitted by reporting parties. Footnotes to the reporting forms in 
the Appendix contain instructions regarding other fields that are 
not required to be reported in certain circumstances.
---------------------------------------------------------------------------

Summary of Comments on NPRM Proposal
    Burden of Collecting Information for Certain Fields. CME 
recommended that the data fields collected on any automated form should 
be limited to those records that an FCM obtains in its regular 
onboarding processes.\117\ CME commented that if the Commission 
requires the inclusion of certain data points that are not currently 
collected, ``FCMs will need to revise their onboarding procedures to 
obtain that data for every account so that it can be recorded in a 
system and eventually be extracted for the automated reports, which 
would be, among other things, incredibly costly.'' \118\ FIA 
recommended that data points that are not currently collected by FCMs 
be removed from the forms. Specifically, FIA recommended removing the 
requirement to provide a customer or account controller's NFA 
identification number, because FCMs generally do not request or record 
this information.\119\ FIA also recommended that certain ownership and 
control fields be removed, because FCMs do not collect this 
information. On a related topic, FIA recommended that the requirement 
to list the customer or account controller's Web site be removed, 
because Web site addresses are subject to change and FCMs would have no 
ability to monitor for such changes and update their records.\120\
---------------------------------------------------------------------------

    \117\ Id.
    \118\ Id.
    \119\ CL-2012-FIA supra note 55 at 6.
    \120\ CL-2012-FIA supra note 55 at 7.
---------------------------------------------------------------------------

    FIA proposed that the three sections of the proposed 102 be 
consolidated into a single Form 102, a draft of which is attached to 
the FIA comment letter (the ``FIA consolidated form'').\121\ CME 
expressed support for the FIA consolidated form.\122\ The FIA 
consolidated form does not include fields that FIA indicated are 
currently unavailable and would be burdensome to collect and/or 
maintain, such as the customer or account controller's NFA ID and Web 
site address.
---------------------------------------------------------------------------

    \121\ CL-2012-FIA supra note 55 at 4 and Exhibit A.
    \122\ CL-2012-CME supra note 55 at 2.
---------------------------------------------------------------------------

Discussion of Final Rule
    Burden of Collecting Information for Certain Fields. The Commission 
declines to accept the proposal to create a single, consolidated Form 
102 based on the FIA consolidated form. The FIA consolidated form is 
missing a number of key data fields, the absence of which would 
undermine the goals of the Commission's data collection effort.\123\ 
For example, the FIA consolidated form does not require respondents to 
state the reporting trigger. Instead, the directions to the FIA 
consolidated form state that, ``This form must be completed if an 
account exceeds the reportable levels on special accounts, volume 
threshold accounts or consolidated accounts.'' The form does not 
clarify whether respondents are reporting a special account, volume 
threshold account, or consolidated account that has reached a

[[Page 69194]]

reportable level. Without knowing the reporting trigger for the form 
(e.g., whether the reporting party had reached a reportable position or 
reportable volume level), the Commission would be unable to efficiently 
and accurately categorize the trading accounts reported on the form, 
and utilize this account information for surveillance or other related 
purposes.
---------------------------------------------------------------------------

    \123\ See infra section VIII(B)(vi) for a more detailed 
discussion of the FIA consolidated form.
---------------------------------------------------------------------------

    However, the Commission is accommodating FIA's comments in a more 
limited fashion, by clarifying in the instructions to the new forms 
that the NFA ID and Web site (the two examples of problematic fields 
cited by FIA) are only required to be reported to the extent the 
respondent has this information available in its records. There is no 
affirmative obligation for respondents to poll customers or other 
parties for the NFA ID and Web site if this information has not been 
previously collected.
Summary of Comments on NPRM Proposal
    Identification of Special Account Owners. FIA noted that the 
current Form 102 requires that a special account be identified only by 
account controller (who may also be the account owner).\124\ The new 
Form 102A requires that both the owner and controller of a special 
account be identified, if the account is reportable due to both 
ownership and control of a reportable position. FIA commented that ``if 
an account is identified by owner or controller, the FCM may be 
required to file two Form 102s for the same account.'' \125\ FIA also 
commented that ownership information may be difficult for FCMs to 
provide, because FCMs ``currently collect only limited information on 
certain indirect owners of an account, e.g., fund participants that 
have a 10 percent or greater ownership interest, when the account is 
opened. This information is not updated.'' \126\ Finally, FIA commented 
that ``owner'' is not defined for purposes of Form 102.\127\ FIA 
recommended ``removing the proposed requirement that special accounts 
be identified only by account owner.'' \128\
---------------------------------------------------------------------------

    \124\ CL-2012-FIA supra note 55 at 5.
    \125\ Id.
    \126\ Id.
    \127\ Id.
    \128\ Id.
---------------------------------------------------------------------------

Discussion of Final Rule
    Identification of Special Account Owners. The Commission declines 
to modify the reporting forms in response to comments regarding the 
identification of account owners. The Commission notes that FIA's 
comment that FCMs may be required to file two Form 102s for the same 
account appears to be based upon a misunderstanding of the New Form 102 
filing procedure. Regardless of whether a Form 102A is filed as a 
result of ownership of a reportable position, control of a reportable 
position, or both ownership and control of a reportable position,\129\ 
the form would be filed only once in response to each reporting 
trigger, by means of an electronic submission through a secure FTP data 
feed or through the Commission's secure Web site portal.
---------------------------------------------------------------------------

    \129\ See supra section V(A)(i) regarding the requirement on New 
Form 102A to report special accounts solely on the basis of 
ownership.
---------------------------------------------------------------------------

    As discussed above, FIA commented on the difficulty of collecting 
information regarding the direct owners of an account. However, the 
Commission notes that New Form 102 is identical to current Form 102 in 
that it requires respondents to determine which party directly owns a 
special account. The New Form 102 is not more burdensome in this 
regard. As a result, the Commission is not, pursuant to these final 
rules, requiring respondents to change their current practices with 
respect to the manner in which they identify owners for purposes of 102 
reporting.
    Finally, FIA discussed the difficulty of maintaining accurate 
information regarding the indirect owners of an account. The Commission 
notes that the New Form 102 requests information regarding only the 
direct owners of trading accounts, not the indirect owners.
Summary of Comments on NPRM Proposal
    Sharing of Information With Regulatory and Self-Regulatory 
Authorities. FIA and CME recommended that the information collected via 
the revised forms should be made available to ``appropriate regulatory 
and self-regulatory authorities'' (FIA) and ``relevant SROs'' 
(CME).\130\ Furthermore, ICE recommended that the Commission should 
``either provide a feed or separate file differentiated by exchange 
code(s) to each DCM containing information only for those accounts 
actively trading on the DCM, or permit DCMs to access and download the 
LTR [large trader reporting] and OCR data specific to the DCM.'' \131\
---------------------------------------------------------------------------

    \130\ CL-2012-FIA supra note 55 at 8. CL-2012-CME supra note 55 
at 3.
    \131\ CL-2012-ICE supra note 55 at 6.
---------------------------------------------------------------------------

Discussion of Final Rule
    Sharing of Information With Regulatory and Self-Regulatory 
Authorities. The Commission is not modifying the final rules to provide 
for the sharing of information collected via the forms with the parties 
proposed by commenters, such as regulatory and self-regulatory 
authorities. The Commission believes that it would be costly and overly 
burdensome for the Commission to distribute the collected information 
to external parties; furthermore, distribution to external parties 
would not be consistent with the scope of the Commission's 
responsibilities. The Commission notes that DCMs and SEFs may also 
implement rules requiring market participants to submit ownership and 
control information directly to them, if DCMs and SEFs determine that 
such reporting would be beneficial.
ii. Sec.  17.01(b)--Identification of Volume Threshold Accounts (via 
102B)
NPRM Proposal
    Proposed Sec.  17.01(b) subjects volume threshold accounts to an 
account identification regime comparable to the position-based regime 
already existing for special accounts. Proposed Sec.  17.01(b) 
specifically requires clearing firms to identify volume threshold 
accounts on New Form 102B.
Summary of Comments on NPRM Proposal
    See the discussion of Sec.  17.01(a) above, which describes 
comments received regarding the identification of special accounts and 
volume threshold accounts on Forms 102A and 102B, respectively.
Discussion of Final Rule
    The Commission is adopting proposed Sec.  17.01(b) without 
modification.
iii. Sec.  17.01(c)--Identification of Omnibus Accounts and Sub-
Accounts (via 71)
NPRM Proposal
    Proposed Sec.  17.01(c) subjected omnibus accounts to their own 
volume-based account identification regime.\132\ The proposed rule 
required the originator of an omnibus volume threshold account (or the 
originator of an omnibus reportable sub-account within such account) to 
file New Form 71 (``Identification of Omnibus Accounts and Sub-
Accounts'') upon

[[Page 69195]]

special call by the Commission or its designee.
---------------------------------------------------------------------------

    \132\ See supra section V(D) and infra section IX.
---------------------------------------------------------------------------

Discussion of Final Rule
    No comments were received pertaining to the proposed rule, and the 
Commission is adopting proposed Sec.  17.01(c) without modification.
iv. Sec.  17.01(d)--Exclusively Self-Cleared Contracts
NPRM Proposal
    Proposed Sec.  17.01(d) required reporting markets that list 
exclusively self-cleared contracts to file Sec.  17.01(a) and Sec.  
17.01(b) reports as if they were clearing members. Proposed Sec.  
17.01(d) reflects the requirements of current Sec.  17.01(h) with 
respect to special accounts, but also incorporates the new volume 
threshold accounts added by these final rules.
Discussion of Final Rule
    No comments were received pertaining to the proposed rule, and the 
Commission is adopting proposed Sec.  17.01(d) without modification.
v. Sec.  17.01(e)--Identification of Omnibus Accounts and Sub-Accounts
NPRM Proposal
    The Commission proposed to introduce a new Sec.  17.01(e) that 
would extend the Commission's special call authority--currently 
applicable to special accounts--to also include volume threshold 
accounts, omnibus volume threshold accounts and reportable sub-
accounts.\133\ Responses to special calls would be due within 24 hours.
---------------------------------------------------------------------------

    \133\ The Commission's special call authority with respect to 
special accounts is currently found in Sec.  17.02(b)(1), which the 
Commission will now strike, as explained below.
---------------------------------------------------------------------------

Discussion of Final Rule
    No comments were received pertaining to the proposed rule, and the 
Commission is adopting proposed Sec.  17.01(e) without modification.
vi. Sec.  17.02(b)--Section 17.01(a) Reports (via 102A)
NPRM Proposal
    Section 17.02(b) \134\ currently addresses the form, manner, and 
completion date requirements of current 102 filings. Specifically, 
Sec.  17.02(b)(1) requires reporting parties to submit current Form 102 
upon special call by the Commission; in the absence of a special call, 
Sec.  17.02(b)(2) requires reporting parties to submit current Form 102 
within three business days of the first day that a special account is 
reported to the Commission. The Commission proposed to replace both 
provisions as described below.
---------------------------------------------------------------------------

    \134\ 17 CFR 17.02(b).
---------------------------------------------------------------------------

    First, as explained above, the Commission proposed to strike 
current Sec.  17.02(b)(1) and to shift its special call requirements to 
proposed Sec.  17.01(e). Second, the Commission proposed to strike 
current Sec.  17.02(b)(2) and to replace its Form 102 submission 
requirements with a new Sec.  17.02(b)(1)-(4) to address the form and 
manner of New Form 102A filings for special accounts. Proposed Sec.  
17.02(b)(1) directed reporting parties to the Commission's Web site 
(www.cftc.gov) for detailed instructions on the Form 102A filing 
process. Proposed Sec.  17.02(b)(2)-(4) addressed the completion date 
requirements of initial Form 102A submissions, 102A change updates, and 
102A refresh updates, respectively.
Summary of Comments on NPRM Proposal
    Sec.  17.02(b)(2)-(3) (new 102A filings and change 102A filings). 
Proposed Sec.  17.02(b)(2)-(3) required firms to file a new Form 102A 
by 9:00 a.m. ET the following business day after a special account 
becomes reportable; similarly, changes to a previously submitted Form 
102A were required to be reported by 9:00 a.m. ET the following 
business day. FIA stated that obtaining all the information required by 
Form 102A (including, for example, the trading accounts that comprise a 
special account) can take several days.\135\ As a result, FIA 
recommended that the deadline for filing a complete Form 102A or any 
change update be modified to five business days from the date the 
account or change becomes reportable.\136\
---------------------------------------------------------------------------

    \135\ CL-2012-FIA supra note 55 at 7.
    \136\ Id.
---------------------------------------------------------------------------

    Sec.  17.02(b)(4) (refresh 102A filings). Proposed Sec.  
17.02(b)(4) required firms to resubmit the Form 102A every six months 
for each special account, in order to ensure that the information 
reported is frequently updated. Refresh updates were also required 
under this proposed rule on such later date (i.e., later than six 
months) specified by the Commission or its designee. FIA commented that 
this timeframe ``will impose significant operational and financial 
burden on reporting firms,'' and recommended that refresh updates 
instead be required every two years.\137\ CME also recommended that 
refresh updates be required every two years.\138\
---------------------------------------------------------------------------

    \137\ Id.
    \138\ CL-2012-CME supra note 55 at 3.
---------------------------------------------------------------------------

    Sec.  17.02(b)(3)-(4) (when 102A accounts are no longer 
reportable). Proposed Sec.  17.02(b)(3)-(4) provided that an FCM may 
stop reporting a change update or refresh update with respect to a 
special account upon notifying the Commission or its designee that the 
account in question is no longer reportable. FIA stated that ``the 
Commission provides no guidance on when an FCM may reasonably conclude 
that an account is no longer reportable. A customer may fall below and 
rise above the reportable position level frequently during the course 
of its relationship with an FCM.'' \139\ FIA therefore recommended that 
the Commission revise the proposed rule to provide that an FCM may 
determine that an account is no longer reportable with respect to a 
particular product if the account remains below the reporting level for 
a fixed period of time, such as 180 days/six months.\140\ FIA's six-
month proposal tracks the sunset provision in the NPRM for the 
reporting of change and refresh updates on Form 102B.\141\
---------------------------------------------------------------------------

    \139\ CL-2012-FIA supra note 55 at 7.
    \140\ CL-2012-FIA supra note 55 at 7-8.
    \141\ Under the NPRM and these final rules, clearing members may 
stop providing change and refresh updates on Form 102B for any 
volume threshold account upon notifying the Commission or its 
designee that the volume threshold account executed no trades in any 
product in the past six months on the reporting market at which the 
volume threshold account reached the reportable trading volume 
level. See Sec.  17.01(c)(3) and (4) in section IX, infra.
---------------------------------------------------------------------------

Discussion of Final Rule
    No comments were received pertaining to proposed Sec.  17.02(b)(1), 
and the Commission is adopting this proposed rule without modification. 
In light of the comments received, the Commission is making the 
following modifications to Sec.  17.02(b)(2)-(4) and to new Form 102A:
    Sec.  17.02(b)(2)-(3) (new 102A filings and change 102A filings). 
New Form 102A requests information regarding both special accounts and 
the trading accounts that comprise a special account. The Commission is 
modifying the reporting deadline for new and changed Form 102A filings, 
specifically with respect to the reporting of non-omnibus trading 
accounts that comprise a special account. Respondents are required to 
provide the names of such trading account owners and controllers by 
9:00 a.m. the following business day. However, respondents are required 
to provide the other contact details with respect to such trading 
account owners and controllers (address, telephone

[[Page 69196]]

number, etc.) within three business days.\142\
---------------------------------------------------------------------------

    \142\ Specifically, the information marked as `Follow-On 
Information' in questions 10(ii) and (iii) on New Form 102A may be 
provided within three business days. All other required fields on 
New Form 102A must be completed by 9:00 a.m. the following business 
day. See New Form 102A in the Appendix to these final rules for more 
information. The Commission is adopting a reporting requirement of 
three business days as an acceptable intermediate point between one 
business day (as proposed in the NPRM) and five business days (as 
requested by FIA, per the preceding summary of comments). The three 
business day requirement is therefore less burdensome than the one 
business day requirement proposed in the NPRM. Based on the 
experience of the Commission's surveillance group, the Commission 
believes that the three business day requirement, while longer than 
the one day proposal in the NPRM, will nonetheless enable the 
Commission to maintain current databases, including up-to-date 
contact information that will allow the Commission to contact market 
participants quickly in the event of significant market events that 
occur close to the time of reporting. By contrast, based on the 
experience of the Commission's surveillance group, the Commission 
believes that a five business day reporting deadline is too long to 
perform timely market surveillance, and maintain databases that are 
sufficiently accurate and current to be useful.
---------------------------------------------------------------------------

    In addition, the final rules will reduce the burden on reporting 
parties by clarifying that all Form 102 reporting deadlines in the 
final rules are eastern time for information concerning markets located 
in that time zone, and central time for information concerning all 
other markets.
    Sec.  17.02(b)(4) (refresh 102A filings). Refresh filings for 
special accounts will be required once per year, as opposed to once 
each six months (as proposed in the NPRM).\143\ In light of this 
change, the final rules provide that refresh updates are required on 
such other date specified by the Commission or its designee that is 
equal to or greater than six months, which is consistent with the 
alternative deadline language in proposed Sec. Sec.  17.02 and 20.5.
---------------------------------------------------------------------------

    \143\ The Commission is adopting a refresh reporting requirement 
of once per year as an acceptable intermediate point between once 
each six months (as proposed in the NPRM) and once every two years 
(as requested by FIA and CME, per the preceding summary of 
comments). The annual refresh requirement is therefore less 
burdensome than the six month requirement proposed in the NPRM. 
Based on the experience of the Commission's surveillance group, the 
Commission believes that the annual refresh requirement, while 
longer than the six month requirement proposed in the NPRM, will 
nonetheless enable the Commission to maintain current databases, 
including up-to-date contact information that will allow the 
Commission to contact market participants quickly in the event of 
significant market events. By contrast, based on the experience of 
the Commission's surveillance group, the Commission believes that a 
two year refresh deadline is too long to perform timely market 
surveillance and maintain databases that are sufficiently accurate 
and current to be useful.
---------------------------------------------------------------------------

    Sec.  17.02(b)(3)-(4) (when 102A special accounts are no longer 
reportable). In response to FIA's comment, pursuant to these final 
rules, reporting parties may stop providing Form 102A change updates 
and refresh updates for a special account if the account is no longer 
reportable as a special account and has not been reportable as a 
special account for the past six months. This change is intended to 
substantively replicate Sec.  17.02(c)(3)-(4), which provide that 
clearing members may stop providing Form 102B change updates and 
refresh updates, respectively, upon notifying the Commission or its 
designee that the relevant volume threshold account executed no trades 
in any product in the past six months on the reporting market at which 
the volume threshold account reached the reportable trading volume 
level.
    Sections 17.02(b)(3) and (4) have also been modified to enable 
reporting parties to notify the Commission ``or its designee'' that an 
account is no longer reportable as a special account, based on the 
criteria described in these sections.
vii. Sec.  17.02(c)--Section 17.01(b) Reports (via 102B)
NPRM Proposal
    To address New Form 102B filings for volume threshold accounts, the 
Commission proposed to codify a new Sec.  17.02(c). Proposed Sec.  
17.02(c) followed a structure similar to that of proposed Sec.  
17.02(b), with Sec.  17.02(c)(1) directing reporting parties to 
www.cftc.gov for detailed instructions on the Form 102B filing process, 
and proposed Sec.  17.02(c)(2)-(4) addressing the timing of initial 
Form 102B filings, 102B change updates, and 102B refresh updates, 
respectively.
Summary of Comments on NPRM Proposal
    Sec.  17.02(c)(2)-(3) (new 102B filings and change 102B filings). 
Proposed Sec.  17.02(c)(2)-(3) required firms to file a new Form 102B 
by 9:00 a.m. ET the following business day after the account becomes a 
volume threshold account; similarly, changes to a previously submitted 
Form 102B were required to be reported by 9:00 a.m. ET the following 
business day. See the discussion above of the comments received 
regarding Form 102A filings required by Sec.  17.02(b)(2)-(3), which 
are also relevant to the new 102B and change 102B reporting 
obligations.
    Sec.  17.02(c)(4) (refresh 102B filings). Proposed Sec.  
17.02(c)(4) required firms to resubmit the Form 102B every six months 
for each volume threshold account, in order to ensure that the 
information reported is frequently updated. Refresh updates were also 
required under this proposed rule on such later date (i.e., later than 
six months) specified by the Commission or its designee. As noted 
above, FIA commented that this timeframe ``will impose significant 
operational and financial burden on reporting firms,'' and recommended 
that refresh updates instead be required every two years.\144\ CME also 
recommended that refresh updates be required every two years.\145\
---------------------------------------------------------------------------

    \144\ CL-2012-FIA supra note 55 at 7.
    \145\ CL-2012-CME supra note 55 at 3.
---------------------------------------------------------------------------

Discussion of Final Rule
    No comments were received pertaining to proposed Sec.  17.02(c)(1), 
and the Commission is adopting this proposed rule without modification. 
In light of the comments received, the Commission is making the 
following modifications to Sec.  17.02(c)(2)-(4) and to new Form 102B:
    Sec.  17.02(c)(2)-(3) (new 102B filings and change 102B filings). 
The Commission is modifying the reporting deadline for new and changed 
Form 102B filings, specifically with respect to the reporting of non-
omnibus volume threshold accounts. Respondents are required to provide 
the names of non-omnibus volume threshold account owners and 
controllers reported on 102B by 9:00 a.m. the following business day. 
Respondents are required to provide the other contact details reported 
on 102B with respect to such parties (i.e., the address, telephone 
number, etc. of non-omnibus volume threshold account owners and 
controllers) within three business days.\146\ Notwithstanding this 
change to the reporting deadline with respect to non-omnibus volume 
threshold accounts, these final rules do not modify the reporting 
deadline for omnibus account information (question 4 on New Form 102B). 
Such omnibus account information must be reported by 9:00 a.m. the 
following business day.
---------------------------------------------------------------------------

    \146\ Specifically, the information marked as `Follow-On 
Information' in questions 5 and 6 on New Form 102B may be provided 
within three business days. All other required fields on New Form 
102B must be completed by 9:00 a.m. the following business day. See 
New Form 102B in the Appendix to these final rules for more 
information.
---------------------------------------------------------------------------

    Sec.  17.02(c)(4) (refresh 102B filings). Refresh filings for 
volume threshold accounts will be required once per year, as opposed to 
once each six months (as proposed in the NPRM). In light of this 
change, the final rules provide that refresh updates are required on 
such other date specified by the Commission or its designee that is 
equal to or greater than six months, which is consistent with the 
alternative deadline language in proposed Sec. Sec.  17.02 and 20.5.
    Sections 17.02(c)(3) and (4) have also been modified to enable 
reporting

[[Page 69197]]

parties to notify the Commission ``or its designee'' that an account is 
no longer reportable as a volume threshold account, based on the 
criteria described in these sections.
viii. Sec.  17.03(a)-(g)--Delegation of Authority to the Director of 
the Office of Data and Technology or the Director of the Division of 
Market Oversight
NPRM Proposal
    In the NPRM, the Commission proposed a number of new and revised 
provisions relating to the delegation of authority to solicit 
information on the OCR reporting forms. First, the Commission proposed 
to codify a new Sec.  17.03(e) that provided the Director of ODT with 
delegated authority to make special calls to solicit information from 
omnibus volume threshold account originators and omnibus reportable 
sub-account originators on New Form 71. The Commission also proposed to 
codify (a) a new Sec.  17.03(f) that provided the Director of DMO with 
delegated authority to determine the date on which each FCM, clearing 
member, or foreign broker shall update or otherwise resubmit every Form 
102 that it has submitted to the Commission for each of its special 
accounts and (b) a new Sec.  17.03(g) that provided the Director of DMO 
with delegated authority to determine the date on which each clearing 
member shall update or otherwise resubmit every Form 102 that it has 
submitted to the Commission for each of its volume threshold accounts.
    Second, the Commission proposed to revise current Sec.  17.03(a), 
which grants the Director of DMO the authority to determine whether 
FCMs, clearing members and foreign brokers can report certain 
information on series `01 forms, or can use some other format upon a 
determination that such person is unable to report the information 
using the standard transmission format.\147\ More specifically, the 
NPRM revised Sec.  17.03(a) to grant such authority to the Director of 
ODT, rather than the Director of DMO.
---------------------------------------------------------------------------

    \147\ 17 CFR 17.03(a).
---------------------------------------------------------------------------

    Third, the Commission proposed to revise current Sec.  17.03(b), 
which grants the Director of DMO the authority to approve the late 
submission of position reports and Form 102.\148\ The NPRM revised 
Sec.  17.03(b) to grant such authority to the Director of ODT, rather 
than the Director of DMO. The NPRM further revised Sec.  17.03(b) to: 
(i) Replace the provision's cross-reference to Sec.  17.01,\149\ which 
the Commission proposed to strike, with cross-references to proposed 
Sec. Sec.  17.01(a) and 17.01(b); and (ii) eliminate the provision's 
cross-reference to current Sec.  17.01(g),\150\ which the Commission 
also proposed to strike.
---------------------------------------------------------------------------

    \148\ 17 CFR 17.03(b).
    \149\ 17 CFR 17.01.
    \150\ 17 CFR 17.01(g).
---------------------------------------------------------------------------

    Fourth, the Commission proposed to revise current Sec.  17.03(c), 
which grants the Director of DMO the authority to permit reporting 
parties filing Form 102 to authenticate it through a means other than 
signing the form.\151\ The NPRM revised Sec.  17.03(c) to grant such 
authority to the Director of ODT, rather than the Director of DMO. The 
NPRM further revised Sec.  17.03(c) to replace the provision's current 
cross-reference to Sec.  17.01(f),\152\ which the Commission proposed 
to strike, with a cross-reference to proposed Sec.  17.01, and to 
address New Form 71.
---------------------------------------------------------------------------

    \151\ 17 CFR 17.03(c).
    \152\ 17 CFR 17.01(f).
---------------------------------------------------------------------------

    Finally, the Commission proposed to revise current Sec.  17.03(d), 
which grants the Director of DMO the authority to approve a format and 
coding structure other than that set forth in Sec.  17.00(g).\153\ The 
NPRM revised Sec.  17.03(d) to grant such authority to the Director of 
ODT, rather than the Director of DMO.
---------------------------------------------------------------------------

    \153\ 17 CFR 17.03(d) and 17.00(g).
---------------------------------------------------------------------------

Discussion of Final Rule
    No comments were received pertaining to the proposed rules, and the 
Commission is adopting proposed Sec.  17.03(a)-(g) without 
modification.

C. Part 18

i. Sec.  18.04--Statement of Reporting Trader
NPRM Proposal
    Current Sec.  18.04 (the ``Statement of Reporting Trader'') 
requires every trader who holds or controls a reportable position to 
file a Form 40 upon special call by the Commission or its designee and 
to provide on Form 40 information required by current Sec.  18.04(a)-
(c).\154\ In the NPRM, the Commission proposed to amend Sec.  18.04 by 
striking all of its current provisions and replacing them as described 
below.
---------------------------------------------------------------------------

    \154\ 17 CFR 18.04(a)-(c).
---------------------------------------------------------------------------

    First, and consistent with its approach to New Form 102, the 
Commission proposed to transition current Sec.  18.04(a)-(c)'s detailed 
form content requirements from the regulatory text to New Form 40. 
Second, the Commission proposed to codify a new Sec.  18.04(a) that, as 
with current Sec.  18.04, would require every trader who holds or 
controls a reportable position to file a New Form 40 upon special call 
by the Commission or its designee. Finally, to accommodate volume 
threshold accounts and reportable sub-accounts identified on New Forms 
102 and 71, the Commission proposed to codify a new Sec.  18.04(b) that 
would require volume threshold account controllers, persons who own a 
volume threshold account, reportable sub-account controllers, and 
persons who own a reportable sub-account to file New Form 40 upon 
special call by the Commission or its designee.
Summary of Comments on NPRM Proposal
    FIA and Joint Electric Association stated that the Form 40 (and the 
corresponding Form 40S) is overly complicated and extensive without a 
justified regulatory need.\155\ The forms request information regarding 
the ownership structure of the reporting trader, including all direct 
and indirect parents and subsidiaries and information regarding their 
trading activities. FIA commented that ``for some reporting traders, 
the number of parents and subsidiaries could number in the hundreds. 
Moreover, the reporting trader may not know, and may not be permitted 
to know, if the person in which the reporting trader has a 10 percent 
or greater interest engages in derivatives trading.'' \156\ FIA also 
noted that the Form 40 requires the reporting of persons that have a 10 
percent or greater ownership interest in the reporting trader.\157\ FIA 
viewed the 10 percent threshold as inconsistent with the precedent 
established by Commission Rule 45.6(a), which establishes a control 
definition based in part upon ``the right to vote 25 percent or more of 
a class of voting interest.'' \158\
---------------------------------------------------------------------------

    \155\ CL-2012-FIA supra note 55 at 8. CL-2012-Joint Electric 
Association supra note 55 at 3-4.
    \156\ CL-2012-FIA supra note 55 at 8.
    \157\ CL-2012-FIA supra note 55 at 5.
    \158\ Id.
---------------------------------------------------------------------------

    Joint Electric Association expressed concern that its members, 
which often enter into energy commodity swaps to hedge commercial 
risks, will not understand the terminology and purpose of the Form 
40S.\159\ They noted that Association members would, for the most part, 
be unlikely to have received an old Form 40. Joint Electric Association 
commented that ``most of the words in the form were not revised to 
reflect the different market structure whereby swap counterparties 
transact directly with registered `swap dealers' . . . rather than 
through financial intermediaries or market professionals as is the case 
in the futures industry. As a result, commercial market participants 
receiving the New Form 40, if they have never seen old Form 40, have no 
context

[[Page 69198]]

within which to understand the new Form or their responsibilities to 
the Commission.'' \160\
---------------------------------------------------------------------------

    \159\ CL-2012-Joint Electric Association supra note 55 at 3.
    \160\ Id.
---------------------------------------------------------------------------

    FIA recommended that, instead of requiring identification of 
indirect owners that have an ownership interest of 10 percent or more, 
``Form 40 be revised to require identification of indirect owners that 
have an ownership interest of 25 percent or more. Setting different 
indirect ownership levels for related purposes imposes an unnecessary 
operational burden on firms that must develop systems and procedures to 
assure compliance with these reporting requirements.'' \161\
---------------------------------------------------------------------------

    \161\ CL-2012-FIA supra note 55 at 5.
---------------------------------------------------------------------------

    Joint Electric Association recommended that various terms in the 
Form 40S (such as ``reportable position,'' ``swap dealer'' and ``major 
swap participant'') should be clarified and made more understandable to 
a commercial end user of energy commodity swaps.\162\ Joint Electric 
Association made several other recommendations to simplify the form and 
reduce the reporting burden on small entities, including the following: 
Provide a ``regulatory reporting lite'' version of the form, which 
would excuse commercial end users from completing the majority of the 
form; \163\ permit small entities to deliver the form by paper, 
facsimile or email, rather than make electronic filing through a web 
portal; \164\ excuse small entities from any requirement to 
periodically update the form in response to a subsequent special call 
by the Commission; \165\ and establish procedures to limit the 
application of the special call authority to small entities.\166\
---------------------------------------------------------------------------

    \162\ CL-2012-Joint Electric Association supra note 55 at 4-5.
    \163\ CL-2012-Joint Electric Association supra note 55 at 5.
    \164\ CL-2012-Joint Electric Association supra note 55 at 6.
    \165\ CL-2012-Joint Electric Association supra note 55 at 7.
    \166\ Id.
---------------------------------------------------------------------------

Discussion of Final Rule
    The Commission is adopting proposed Sec.  18.04 without 
modifications.
    The current Form 40 asks whether any person has a financial 
interest of 10 percent or more in the reporting trader. The Commission 
believes that it is appropriate to maintain the 10 percent threshold 
for reporting based on ownership that appears in current Form 40. The 
10 percent threshold in current Form 40 allows the Commission to 
receive reporting on a greater number of ownership relationships than a 
25 percent threshold would require, thereby benefiting the Commission's 
surveillance capabilities. The 10 percent threshold is also consistent 
with other Commission regulations, such as the aggregation requirements 
(based on 10 percent or greater ownership or equity interest) in Sec.  
150.4(b)-(c). The Commission notes that the 25 percent reporting 
threshold recommended by FIA reflects the definition of control for 
purposes of assigning legal entity identifiers (``LEIs'') to swap 
counterparties, a regulatory objective unrelated to the Form 40's 
objective of obtaining ownership and control information with regard to 
reporting traders.
    The questions added to New Form 40 will provide the Commission with 
crucial information regarding reporting traders' ownership and control 
relationships and business activities. The Commission will utilize this 
information to perform more comprehensive oversight and surveillance of 
regulated derivatives markets, including by better understanding 
relationships that may exist among market participants, and to 
facilitate analysis of potentially disruptive or manipulative trading 
activity. The definitions of ``swap dealer'' and ``major swap 
participant,'' which are the subject of a comment by Joint Electric 
Association, have now been finalized.\167\ In response to Joint 
Electric Association's other comments, the Commission expects New Form 
40 to affect only a small subset of respondents that may be ``small 
entities'' for purposes of the Regulatory Flexibility Act.\168\ This is 
due, in part, to the fact that the Commission will send New Form 40 on 
a discretionary basis in response to the reporting of an account that 
reaches a minimum position or volume threshold. The Commission does not 
expect that small entities will typically reach such reporting 
thresholds.\169\
---------------------------------------------------------------------------

    \167\ See Commission, Further Definition of ``Swap Dealer,'' 
``Security-Based Swap Dealer,'' ``Major Swap Participant,'' ``Major 
Security-Based Swap Participant'' and ``Eligible Swap Participant'', 
77 FR 30596 (May 23, 2012).
    \168\ The Regulatory Flexibility Act requires that agencies 
consider whether the rules they propose will have a significant 
economic impact on a substantial number of small entities and, if 
so, provide a regulatory flexibility analysis regarding the impact. 
See NPRM supra note 10 at 43990 and section VIII(C) infra.
    \169\ See supra the discussion of the RTVL for volume-based 
reporting in section VII(xiv). As noted above, the RTVL has been 
calibrated to yield information with respect to those trading 
accounts that are responsible for a substantial percentage of 
trading volume, while minimizing the proposed regulations' impact on 
low-volume accounts whose trading activity does not warrant 
inclusion in the reporting regime.
---------------------------------------------------------------------------

    Finally, the Commission declines to accept the proposal by Joint 
Electric Association that respondents retain the option to file by 
paper, facsimile or email. The Commission believes that the automation 
of Form 40, and the use of auto-population on the web-based Form, will 
result in increased efficiencies for the Commission and the majority of 
reporting parties. As noted in section VIII(A) below, the Commission 
expects that the majority of reporting parties will submit Form 40 via 
the web-based portal, as opposed to via an FTP data feed. The auto-
population of certain data fields on the portal will reduce the burden 
and complexity of the submission process. As a result, the Commission 
estimates that the time required to update information contained in New 
Form 40 using the web-based portal will be de minimis for most 
reporting parties.
ii. Sec.  18.05--Maintenance of Books and Records
NPRM Proposal
    Current Sec.  18.05 requires traders who hold or control reportable 
positions to maintain books and records regarding all positions and 
transactions in the commodity in which they have reportable 
positions.\170\ In addition, current Sec.  18.05 requires that the 
trader furnish the Commission with information concerning such 
positions upon request. The Commission proposed to expand Sec.  18.05 
to also impose books and records requirements upon (a) volume threshold 
account controllers and owners of volume threshold accounts reported on 
New Form 102B and (b) reportable sub-account controllers and persons 
who own a reportable sub-account reported on New Form 71.
---------------------------------------------------------------------------

    \170\ 17 CFR 18.05.
---------------------------------------------------------------------------

Discussion of Final Rule
    No comments were received pertaining to the proposed rule. As noted 
above, the Commission proposed to expand Sec.  18.05 to impose books 
and records requirements on volume threshold account controllers and 
owners of volume threshold accounts reported on New Form 102B and 
reportable sub-account controllers and persons who own a reportable 
sub-account reported on New Form 71. The Commission also notes that the 
definition of reportable trading volume encompasses trading on both 
DCMs and SEFs. Accordingly, the Commission is adopting Sec.  18.05 as 
proposed, with the clarification that the books and records required to 
be kept by volume threshold

[[Page 69199]]

account controllers, owners of volume threshold accounts, reportable 
sub-account controllers, and persons who own reportable sub-accounts 
include books and records with respect to both their futures and swap 
market activities.

D. Part 20

i. Sec.  20.5--Series S Filings
NPRM Proposal
    As with Forms 102 and 40, the Commission proposed to transfer the 
list of data points required in Form 102S from the relevant regulatory 
text (i.e., Sec.  20.5) \171\ to the form itself. More specifically, 
the Commission proposed to eliminate the data points specified in Sec.  
20.5(a)(1), and to revise Sec.  20.5(a)(1) to provide that when a 
counterparty consolidated account first becomes reportable, the 
reporting party shall submit a 102S filing (``initial 102S filing''). 
The timing for submitting initial 102S filings would continue to be 
subject to current Sec.  20.5(a)(3).\172\ Finally, the Commission 
proposed to codify new Sec.  20.5(a)(4) and (5) to require change and 
refresh updates for Form 102S in the same manner as they are required 
for Form 102A. The Commission also proposed a conforming amendment to 
Sec.  20.5(a)(2) to eliminate the current instructions with respect to 
updating 102S filings.
---------------------------------------------------------------------------

    \171\ 17 CFR 20.5.
    \172\ 17 CFR 20.5(a)(3).
---------------------------------------------------------------------------

Summary of Comments on NPRM Proposal
    FIA commented on the utility of Form 102S, which requires swap 
dealers and clearing members to identify and report a swap counterparty 
or customer consolidated account with a reportable position. FIA stated 
that the information that will be reported to swap data repositories 
under part 45 would provide the Commission with access to essentially 
the same information that proposed Form 102S will require.\173\ FIA 
commented that ``requiring FCMs, and the industry generally, to divert 
critical operational and financial resources from building the systems 
necessary to implement the part 45 recordkeeping and reporting 
requirements to implement this interim solution, would impose an 
unnecessary operational burden and cost without a significant 
offsetting benefit.'' \174\ CME commented that ``requiring swap 
reporting as part of OCR, to accomplish reporting that is already being 
done under part 20- and soon to be duplicated under SDR reporting with 
new unique legal entity identifiers- is unnecessary and imposes 
additional unjustified costs on the industry.'' \175\
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    \173\ CL-2012-FIA supra note 55 at 2-3.
    \174\ CL-2012-FIA supra note 55 at 3.
    \175\ CL-2012-CME supra note 55 at 3.
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    See the discussion of Sec.  17.02(b) above for a summary of the 
comments received on change and refresh obligations related to the Form 
102, which are relevant to Form 102S.
Discussion of Final Rule
    The Commission acknowledges the comments of FIA and CME regarding 
the Form 102S. Contrary to commenters' claims, however, SDRs will not, 
in all cases, be able to provide the ownership and control information 
requested on 102S. For example, the Commission anticipates that swap 
dealers and clearing members (the 102S reporting parties) will be able 
to consistently provide the contact information for owners and 
controllers of consolidated accounts on the 102S, based on the records 
these entities maintain. Part 45 reporting, by contrast, is based on 
counterparty data. This counterparty data may, in some cases, overlap 
with the owners and controllers of consolidated accounts reported on 
102S. However, counterparty data will not, in all cases, overlap with 
102S reporting and provide the ownership and control information 
required by 102S. As a result, the Commission cannot rely on SDR 
reporting under part 45 as a substitute for 102S. In addition, SDRs 
would not have a proactive obligation to send swap account information 
to the Commission; in contrast, 102S places an affirmative obligation 
on respondents to provide swap counterparty consolidated account 
information to the Commission.
    Such differences notwithstanding, in developing New Form 102, the 
Commission has endeavored to identify and eliminate any duplicative 
reporting obligations that may arise from these final rules. For 
example, New Form 102 requires respondents to provide the legal entity 
identifiers (LEI) and related information (i.e., names and addresses) 
of parties reportable on the form. However, if such related information 
has previously been reported to a CFTC-accepted provider of LEIs (e.g., 
the CICI Utility), then reporting parties are not required to report it 
again on New Form 102. This eliminates all duplication between New Form 
102 and data currently reported to an LEI provider. Furthermore, in the 
event the CICI Utility or another CFTC-accepted LEI provider is 
modified in the future to accept certain supplemental fields required 
on the forms,\176\ then reporting parties will not be required to 
report these supplemental fields on New Form 102, if the information 
has previously been reported to such an LEI provider.\177\
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    \176\ The Regulatory Oversight Committee (ROC) of the Global LEI 
System (GLEIS) is seeking to modify ISO 17442 LEI, the core standard 
underlying the GLEIS, in order to collect certain additional 
information from persons registering to receive an LEI.
    \177\ The supplemental fields required on New Form 102 include 
the name, phone number and email address of certain contact persons 
required by the reporting forms, among other fields. See the 
footnotes to the reporting forms in the Appendix for a detailed list 
of the information that may be omitted from the forms for the 
reasons described in this paragraph.
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    More generally, staff is considering recommending that the 
Commission issue an Advanced Notice of Proposed Rulemaking seeking 
public input on possible revisions to part 45 that could increase 
efficiencies in reporting swap data and mitigate the burden on market 
participants. As markets, market participants, and trading conventions 
adapt to the swap data recordkeeping and reporting requirements under 
part 45, staff will review these requirements to ensure that they 
continue to fulfill their regulatory objectives in light of the 
evolving swaps marketplace. For the reasons discussed above, the 
Commission is implementing 102S reporting pursuant to the final rules.
    The Commission is adopting proposed Sec.  20.5(a)(1)-(2) without 
modification. In response to comments received with respect to Sec.  
17.02(b), the Commission is making the following modifications to 
proposed Sec.  20.5(a)(4)-(5) and to Form 102S:
    Sec.  20.5(a)(5) (refresh 102S filings). The discussion of Sec.  
17.02(b) above contains a summary of the comments received on change 
and refresh obligations related to the Form 102, which are relevant to 
Form 102S. In response to FIA's comments, refresh filings for 
consolidated accounts will be required once per year, as opposed to 
once each six months (as proposed in the NPRM). In light of this 
change, the final rules provide that refresh updates are required on 
such other date specified by the Commission or its designee that is 
equal to or greater than six months, which is consistent with the 
alternative deadline language in proposed Sec. Sec.  17.02 and 20.5.
    Sec.  20.5(a)(4)-(5) (when 102S consolidated accounts are no longer 
reportable). Reporting parties may stop providing Form 102S change 
updates and refresh updates for a consolidated account if the account 
is no longer reportable as a consolidated account and has not been 
reportable as a consolidated account for the past six months. This 
change is intended to

[[Page 69200]]

substantively replicate Sec.  17.02(c)(3)-(4), which provide that 
clearing members may stop providing Form 102B change updates and 
refresh updates, respectively, upon notifying the Commission or its 
designee that the relevant volume threshold account executed no trades 
in any product in the past six months on the reporting market at which 
the volume threshold account reached the reportable trading volume 
level.
    Sections 20.5(a)(4) and (5) have also been modified to enable 
reporting parties to notify the Commission ``or its designee'' that an 
account is no longer reportable as a consolidated account, based on the 
criteria described in these sections.

VIII. Related Matters

A. Paperwork Reduction Act

i. Overview
    The Paperwork Reduction Act (``PRA'') \178\ imposes certain 
requirements on Federal agencies in connection with their conducting or 
sponsoring any collection of information as defined by the PRA. An 
agency may not conduct or sponsor, and a person is not required to 
respond to, a collection of information unless it displays a currently 
valid control number. This rulemaking will result in new collection of 
information requirements within the meaning of the PRA. The Commission 
has therefore submitted this proposal to the Office of Management and 
Budget (``OMB'') for review in accordance with 44 U.S.C. 3507(d) and 5 
CFR 1320.11. The title for this collection of information is ``Trader 
and Account Identification Reports'' (OMB control number 3038-0103). 
Responses to this collection of information will be mandatory. The 
Commission will protect proprietary information consistent with 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.'' \179\ The Commission is also 
required to protect certain information contained in a government 
system of records according to the Privacy Act of 1974, 5 U.S.C. 552a.
---------------------------------------------------------------------------

    \178\ 44 U.S.C. 3501 et seq.
    \179\ 7 U.S.C. 12(a)(1).
---------------------------------------------------------------------------

    The rulemaking will create new information collection requirements 
via Sec. Sec.  17.01, 18.04, 18.05, and 20.5. Currently, OMB control 
number 3038-0009 covers, among other things, the collection 
requirements arising from current Sec. Sec.  17.01, 18.04, and 
18.05.\180\ Also, OMB control number 3038-0095 covers, among other 
things, the collection requirements arising from current Sec.  
20.5.\181\ Accordingly, the Commission is requesting a new OMB control 
number for the purpose of consolidating the collections into a common 
control number. Collection requirements arising from Sec. Sec.  17.01, 
18.04, 18.05, and 20.5 will be covered by 3038-0103. Once the 
collections covered by control number 3038-0103 become operational, OMB 
control number 3038-0009 will no longer cover collection requirements 
arising from Sec. Sec.  17.01, 18.04, and 18.05. In addition, OMB 
control number 3038-0095 will no longer cover collection requirements 
arising from Sec.  20.5. The remaining collection requirements covered 
by 3038-0009 and 3038-0095 will not be affected.
---------------------------------------------------------------------------

    \180\ 17 CFR 17.01, 18.04 and 18.05.
    \181\ 17 CFR 20.5.
---------------------------------------------------------------------------

ii. Information To Be Provided
    Section 17.01, as revised by this rulemaking, will result in the 
collection of information regarding the following types of accounts: 
(a) Special accounts (as defined in current Sec.  15.00(r)); \182\ and 
(b) volume threshold accounts, omnibus volume threshold accounts, and 
omnibus reportable sub-accounts (each as defined in Sec.  15.00). 
Specifically, Sec.  17.01 will provide for the filing of New Form 102A, 
New Form 102B and New Form 71, as follows:
---------------------------------------------------------------------------

    \182\ 17 CFR 15.00(r).
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    1. pursuant to Sec.  17.01(a), FCMs, clearing members, and foreign 
brokers will identify new special accounts to the Commission on New 
Form 102A; \183\
---------------------------------------------------------------------------

    \183\ See supra sections III(A) and V(A) for a description of 
current Form 102 and a comparison to New Form 102A.
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    2. pursuant to Sec.  17.01(b), clearing members will identify 
volume threshold accounts to the Commission on New Form 102B; \184\ and
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    \184\ See supra section V(B) for a description of New Form 102B.
---------------------------------------------------------------------------

    3. pursuant to Sec.  17.01(c), omnibus volume threshold account 
originators and omnibus reportable sub-account originators will 
identify reportable sub-accounts to the Commission on New Form 71 when 
requested via a special call by the Commission or its designee.\185\
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    \185\ See supra section V(D) for a description of New Form 71.
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    Additional reporting requirements will arise from Sec.  18.04, 
which will result in the collection of information from and regarding 
traders who own, hold, or control reportable positions; volume 
threshold account controllers; persons who own volume threshold 
accounts; reportable sub-account controllers; and persons who own 
reportable sub-accounts. Specifically, Sec.  18.04 will provide for the 
filing of New Form 40, as follows:
    1. pursuant to Sec.  18.04(a), a trader who owns, holds, or 
controls a reportable position will file New Form 40, when requested 
via a special call by the Commission or its designee; and
    2. pursuant to Sec.  18.04(b), a volume threshold account 
controller, person who owns a volume threshold account, reportable sub-
account controller, and person who owns a reportable sub-account will 
file New Form 40 when requested via a special call by the Commission or 
its designee.\186\
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    \186\ See supra sections III(A) and V(E) for a description of 
current Form 40 and a comparison to New Form 40.
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    Reporting requirements will also arise from Sec.  20.5(a), which 
will require all reporting entities to submit New Form 102S for swap 
counterparty or customer consolidated accounts with reportable 
positions.\187\ In addition, current Sec.  20.5(b) requires every 
person subject to books or records under current Sec.  20.6 to complete 
a 40S filing after a special call upon such person by the 
Commission.\188\ However, current Sec.  20.5(b) also provides that a 
40S filing shall consist of the submission of Form 40. As discussed 
above, the final rules provide for the creation of New Form 40, which 
will expand and replace current Form 40. Accordingly, the final rules 
will require additional information from 40S filers.
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    \187\ ``Reporting entity,'' ``counterparty,'' and ``consolidated 
account'' are each defined in Sec.  20.1 of the Commission's 
regulations. See supra sections III(B) and V(C) for a description of 
current Form 102S and a comparison to New Form 102S.
    \188\ 17 CFR 20.5(b) and 20.6. See supra sections III(B) and 
V(E) for a description of current Form 40S and a comparison to New 
Form 40S.

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[[Page 69201]]

    In addition to the reporting requirements summarized above, Sec.  
18.05 will impose recordkeeping requirements upon: (1) Traders who own, 
hold, or control a reportable futures or options on futures position 
(who are subject to current Sec.  18.05); (2) volume threshold account 
controllers; (3) persons who own volume threshold accounts; (4) 
reportable sub-account controllers; and (5) persons who own reportable 
sub-accounts. These provisions extend the recordkeeping requirements of 
current Sec.  18.05, which are applicable to traders who hold or 
control a reportable futures or options on futures position, to owners 
and controllers of accounts with reportable trading volume.\189\
---------------------------------------------------------------------------

    \189\ 17 CFR 18.05.

iii. Total Reporting and Recordkeeping Costs; Methodology Used To 
---------------------------------------------------------------------------
Estimate Costs

(a) Total Costs
    Set forth below is the estimated total annual industry cost for 
affected participants to (i) Complete Forms 102A and 102S and any 
resulting Form 40s, (ii) complete Forms 102B and 71 for volume 
threshold accounts associated with DCMs and SEFs and any resulting Form 
40s, and (iii) comply with the books and records obligations arising 
from revised Sec.  18.05:

----------------------------------------------------------------------------------------------------------------
                                                               Estimated  total annual  Anticipated transmission
             Regulation                  Associated report       industry cost \190\             method
----------------------------------------------------------------------------------------------------------------
17.01(a)............................  New Form 102A..........               $1,931,129  FTP.
17.01(b)............................  New Form 102B..........                1,299,799  FTP.
17.01(c)............................  New Form 71............                  427,147  Web.
18.04(a)............................  New Form 40............                1,103,603  Web.
18.04(b)............................  New Form 40............                3,977,173  Web.
18.05...............................  Books and Records......                   18,569  N/A.
20.5(a).............................  102S Filing............                  289,669  FTP.
20.5(b).............................  40S Filing.............                  527,207  Web.
                                                              -------------------------
    Total...........................  .......................                9,574,296
----------------------------------------------------------------------------------------------------------------

    Total reporting and recordkeeping costs for the final rules reflect 
the sum of estimated burdens, multiplied by the wage rate provided 
below, for: (1) New Form 102A; (2) New Form 102B; (3) New Form 71; (4) 
New Form 40 (pursuant to 18.04(a)); \191\ (5) New Form 40 (pursuant to 
Sec.  18.04(b)); \192\ (6) the reporting and recordkeeping requirements 
of revised Sec.  18.05; (7) New Form 102S; and (8) New Form 40S. The 
Commission has updated the cost estimates in the NPRM based on the most 
recent data and statistics available to the Commission.
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    \190\ The estimated total annual industry cost includes annual 
reporting and recordkeeping costs, as well as annualized start-up 
costs and ongoing operating and maintenance costs. The estimated 
total costs for each form included in this chart are subject to the 
limitations described in section VIII(B), below.
    \191\ 17 CFR 18.04(a).
    \192\ 17 CFR 18.04(b).
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Methodology Used To Estimate Costs
    The Commission estimated the reporting burden associated with each 
filing obligation below by considering the two distinct filing methods 
that it will accommodate pursuant to these final rules (via FTP or via 
the web portal). With two methods of submission, reporting parties will 
have the flexibility to select the submission method that works best 
with their existing data and technology infrastructure and the number 
of filings they expect to make. While the NPRM contemplated that 
certain forms (Forms 40/S and 71) could be submitted only via the web 
portal, these final rules provide that all forms may be submitted 
either via the web portal or via FTP, in order to provide additional 
flexibility to reporting parties. In general, the Commission believes 
that FTP submission will be more cost effective for reporting parties 
with a large number of filings, while submission through the web-based 
portal will be more cost effective for reporting parties with a small 
number of filings.
    As noted above, the Commission has calculated the total estimated 
industry cost for submitting each form via FTP or via the web portal. 
These calculations represent the total industry cost if all reporting 
parties submit information via one method--as compared to the total 
industry cost if all parties submit via the other method. For example, 
the 102A calculations below represent the total estimated industry cost 
if all reporting parties submit 102A via FTP ($1,931,129), or if all 
parties submit 102A via the web portal ($5,954,969). The Commission 
recognizes that, even if it is less expensive for the industry as a 
whole to submit 102A via FTP, it may be less expensive for certain 
individual reporting parties to submit 102A via the web portal. This 
may be due to the limited number of forms these parties expect to 
submit, their technology infrastructure, or other factors.
    To expand on this example, if a new reporting party anticipates 
that it will submit only two 102A filings per year, it might logically 
conclude that it would be less expensive to submit its two filings via 
the web portal than to incur the development costs associated with 
establishing an FTP link to the Commission. In this instance, the 
Commission has estimated that the reporting party would incur 20 hours 
of initial development burden for each of the two records submitted via 
the web portal, or a total initial development burden of 40 hours. 
Accordingly, the reporting party may conclude that submitting its 102A 
filings via the web portal is more cost-effective than submitting the 
same information via FTP, which the Commission has estimated would 
require an initial development burden of 264 hours per entity 
(regardless of the number of forms submitted).\193\
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    \193\ In this example, the Commission expects that reporting 
parties making a small number of filings would choose to submit via 
the web-based portal, because web submission would be the most cost-
effective submission method for such parties. In doing so, they will 
incur fewer costs than they would if they submitted via FTP, thereby 
lowering the total costs to the industry. As a result, the 
simplifying assumption that all reporting parties will submit New 
Form 102A (along with certain other forms discussed below) via FTP 
is a conservative assumption, which will tend to overestimate the 
total industry cost.

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[[Page 69202]]

    All burden estimates assume that information required by each form 
is generally available within the reporting party; however, in 
preparing its estimates, the Commission did make an effort to account 
for the added burden associated with assembling data distributed among 
multiple systems and/or databases within a reporting party. Finally, 
the cost estimates in section VIII(A) and (B) assume that all market 
participants will start from the same point in developing the systems 
required to implement OCR reporting. Accordingly, to the extent that 
current reporting parties leverage their existing reporting systems 
\194\ to implement OCR reporting, the cost estimates are likely to 
overestimate actual costs to some degree for such parties.
---------------------------------------------------------------------------

    \194\ Certain parties that will be required to report under 
these final rules now provide certain forms under the current 
reporting system (e.g., the current Forms 102 and 40).
---------------------------------------------------------------------------

    For the following additional reasons, the Commission anticipates 
that total reporting and recordkeeping costs to the industry are likely 
to be lower than the sum of the costs associated with each form 
individually, as the Commission has calculated herein.
    First, the Commission notes that reporting and recordkeeping 
burdens arising from each regulation and associated form were estimated 
independently of the requirements of the other regulations and 
associated forms, and that substantial synergies are likely to exist 
across the systems and data necessary to meet the reporting 
requirements. As a result, the total reporting and recordkeeping costs 
to the industry for the final rules are likely to be substantially 
lower than estimated. For example, many reporting firms submitting New 
Form 102A will also submit New Form 102B, and will be able to leverage 
systems and information necessary for submitting one form to meet the 
requirements of the other.
    Second, the Commission responded to several proposals by commenters 
to modify the reporting requirements in order to reduce the 
requirements' burdens and associated costs. Commenters did not quantify 
the magnitude of the potential cost savings from their alternative 
proposals. The final rules adopt a number of these proposals in 
modified fashion in order to reduce the rules' burden and costs, while 
also maintaining their regulatory benefits. The Commission has taken a 
conservative approach and made no downward adjustment for cost savings 
attributable to modifications that the Commission has made to the final 
rules to accommodate commenters' proposals.
iv. Reporting Burdens--New and Revised Forms
New Form 102A--Sec.  17.01(a):
    Method 1 (102A FTP submission--lower estimate): Method 1 assumes 
that each New Form 102A reporting party will use an automated program 
to submit its forms via secure FTP. Each Method 1 submission will 
likely contain numerous 102A records. The Commission estimates that the 
total initial development burden will average 264 hours per reporting 
party. The Commission also estimates that the highly automated nature 
of this option will virtually eliminate the marginal costs associated 
with each additional submission or each additional record contained in 
a submission. Accordingly, the Commission estimates that 102A change 
and refresh updates will not increase a reporting party's burden when 
using Method 1. The Commission further estimates that the ongoing 
operation and maintenance burden will average 53 hours per year no 
matter how many records are contained in a submission. The total Method 
1 annualized initial development burden and the ongoing operation and 
maintenance burden (total yearly burden) will equal approximately 106 
hours per reporting party.\195\
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    \195\ All annualized development burden estimates are based on 5 
year, straight line depreciation. The 106 hour figure is arrived at 
by dividing 264 hours (initial development burden per reporting 
party) by 5 years, which results in an estimated annualized initial 
development burden of 53 hours per reporting party. 53 hours plus 53 
hours (annual, ongoing operation and maintenance burdens per 
reporting party) equals 106 hours per reporting party. The 
submission of Form 71 through the web-based portal does not require 
initial development expenditures; as a result, the burdens and costs 
for this form are calculated on an annual basis rather than an 
annualized basis.
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    An assessment of Commission data collection efforts demonstrated 
that the Commission received Form 102 submissions from 260 reporting 
parties in 2012. The Commission anticipates that it will receive New 
Form 102A submissions from a similar number of reporting parties each 
year. Assuming all New Form 102A reporting parties utilize Method 1, 
the Commission estimates that the total annual industry burden for New 
Form 102A will equal 27,560 hours. Using an estimated wage rate of 
$70.07 per hour,\196\ annual industry costs for 102A filings made 
pursuant to Method 1 are estimated at $1,931,129. As indicated 
throughout this section VIII(A), the Commission has applied the same 
wage rate of $70.07 to submission via both the web portal and FTP, 
although each submission method will require a different annual or 
annualized burden, in terms of hours. This $70.07 wage rate encompasses 
the work of a senior programmer, programmer, intermediate compliance 
advisor, systems analyst, and assistant/associate general counsel, in 
the proportions described in the preceding footnote.
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    \196\ The Commission staff's estimates concerning the wage rates 
are based on salary information for the securities industry compiled 
by the Securities Industry and Financial Markets Association 
(``SIFMA''). The $70.07 per hour is derived from figures from a 
weighted average of salaries and bonuses across different 
professions from the SIFMA Report on Management & Professional 
Earnings in the Securities Industry 2011, modified to account for an 
1800-hour work-year and multiplied by 1.3 to account for overhead 
and other benefits. The wage rate is a weighted national average of 
salary and bonuses for professionals with the following titles (and 
their relative weight): ``programmer (senior)'' (30% weight); 
``programmer'' (29% weight); ``compliance advisor (intermediate)'' 
(15%), ``systems analyst'' (16%), and ``assistant/associate general 
counsel'' (10%). The $70.07 wage rate is a blended rate, such that 
the Commission has applied the same $70.07 wage rate when 
calculating the cost of submission via both FTP and the web-based 
portal. As noted above, the NPRM contemplated that Forms 40/S and 71 
could be submitted only via the web portal. However, pursuant to 
these final rules, the Commission is allowing reporting parties to 
submit Forms 40/S and 71 via FTP as well, with the result that 
reporting parties may submit all forms either via the web portal or 
via FTP. In light of this change, the wage rage percentages in these 
final rules have been updated and slightly modified from the wage 
rate percentages in the NPRM, to more accurately reflect anticipated 
labor allocations. The NPRM employed the following wage rage 
percentages: ``programmer (senior)'' (30% weight); ``programmer'' 
(30% weight); ``compliance advisor (intermediate)'' (20%), ``systems 
analyst'' (10%), and ``assistant/associate general counsel'' (10%). 
While the NPRM calculated an estimated wage rate of $78.61 per hour, 
these final rules calculate an estimated wage rate of $70.07 per 
hour, using the 2011 SIFMA statistics and updated wage rate 
percentages. (Note that the national average of salary and bonuses 
for the professionals listed above declined between 2010 to 2011, 
according to the SIFMA report addressing each of those years. The 
2010 SIMA report (which is the basis for the wage rate in the NPRM) 
indicates an aggregate national average of salary and bonuses of 
$530,321 for these professionals, while the 2011 SIFMA report 
indicates an aggregate national average of salary and bonuses of 
$510,943.) The Commission has also updated the cost estimates that 
appeared in the NPRM based on the most recent data and statistics 
available to the Commission (including, for example, the number of 
reporting forms and/or records received by the Commission in 2012). 
The NPRM calculated an estimated total annual cost to the industry 
of $9,147,061, as compared to an estimated total cost to the 
industry of $9,574,296 in these final rules, supra. See also infra 
note 265.

[[Page 69203]]



                                      Form 102A--Lower Estimate Is Method 1
                                                [FTP submission]
----------------------------------------------------------------------------------------------------------------
                                                 Annualized
                                                 burden per      Total annual    Estimated wage       Annual
    Number of reporting parties per year      reporting party      industry           rate       industry  costs
                                                (hours) \197\  burden  (hours)
----------------------------------------------------------------------------------------------------------------
260.........................................             106           27,560           $70.07       $1,931,129
----------------------------------------------------------------------------------------------------------------

    Method 2 (102A web submission--higher estimate): Method 2 assumes 
that each New Form 102A reporting party will complete and submit its 
forms online via a secure portal provided by the Commission. The 
Commission estimates that the total initial development burden will 
average 20 hours per New Form 102A record. The Commission also 
estimates that the annual ongoing burden, which includes change and 
refresh filings, will average 7 hours per year for each New Form 102A 
record. The estimated Method 2 total annualized initial development 
burden and the ongoing operation and maintenance burden (total yearly 
burden) equals approximately 11 hours per New Form 102A record.\198\
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    \197\ See supra note 195 for a discussion of the calculation of 
this annualized burden. As discussed above, the initial development 
burden per reporting party (264 hours) has been divided by 5 years, 
which results in an estimated annualized initial development burden 
of 53 hours per reporting party. On a non-annualized basis, the 
initial development cost per reporting party is estimated at $18,498 
(264 hours x a wage rate of $70.07). The Commission expects that 
reporting parties will budget initial development costs in the 
manner that is most cost-effective for each party, which may result 
in some reporting parties incurring the majority of these initial 
development costs in the beginning of the rule compliance period.
    \198\ All annualized development burden estimates are based on 5 
year, straight line depreciation.
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    In connection with the introduction of New Form 102A pursuant to 
this rulemaking, the Commission notes that (except as otherwise 
instructed by the Commission or its designee) its regulations require 
reporting firms to separately aggregate positions by common ownership 
and by common control for the purpose of identifying and reporting 
special accounts.\199\ On the basis of such regulations, the Commission 
anticipates that it will receive 7,726 New Form 102A records per 
year.\200\ Assuming each of the 7,726 New Form 102A records are 
provided via Method 2, the Commission estimates that the total annual 
industry burden for New Form 102A will equal 84,986 hours. Using an 
estimated wage rate of $70.07 per hour, annual industry costs for 102A 
filings made pursuant to Method 2 are estimated at $5,954,969.\201\
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    \199\ See Sec. Sec.  17.00 and 150.4 of the Commission's 
regulations.
    \200\ This estimate is based on the requirements of Sec. Sec.  
17.00 and 150.4 of the Commission's regulations. The 7,726 figure 
represents an increase from the 4,415 Form 102 records the 
Commission received in 2012. The Commission calculated that in 
approximately 75 percent of New Form 102A filings, the owner and 
controller of a special account reported on the form will be 
different. As a result, the Commission multiplied the 4,415 figure 
from 2012 by 1.75, and estimated that it will receive approximately 
7,726 New Form 102A records per year.
    Notwithstanding this estimate, which is based on the 
requirements of Sec. Sec.  17.00 and 150.4, reporting parties should 
continue to report special accounts pursuant to Sec.  17.00 on a 
disaggregated basis following the implementation of these final 
rules, if the parties have been so instructed by the Commission or 
its designee. All reporting parties should continue to provide 
position reporting based on control of a special account. As an 
example, if a special account is controlled by one reporting party 
but owned by another, such account should be reported only by the 
reporting party that controls the special account. Consistent with 
this guidance, and notwithstanding the requirement on New Form 102A 
to also report based solely on ownership of a reportable position, 
the Commission will not require reporting based on this trigger via 
New Form 102A following the implementation of these final rules. 
Because the Commission will not require reporting on New Form 102A 
based solely on ownership of a reportable position, the Commission 
anticipates that the number of New Form 102A records it receives per 
year is likely to be lower than the estimated 7,726 records. See 
also supra section V(A)(i).
    \201\ The $5,954,969 figure is arrived at by multiplying 7,726 
records by 11 hours (equals 84,986 hours) by $70.07 (equals 
$5,954,969).

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[[Page 69204]]

    Conclusion: The Commission believes that providing filing options 
to the industry should lower their ultimate costs. Because of this, 
estimated total costs to the industry for 102A filings should be lower 
than any cost associated with mandating either Method 1 or Method 2. 
Given the cost estimates for the two individual methods discussed 
above, the Commission anticipates that the annual cost to the industry 
of filing 102A will be approximately $1,931,129 (Method 1--FTP 
submission), the lower of the two estimated filing methods. In 
developing this estimate, the Commission does not make any assumptions 
about the behavior of an individual reporting party. Reporting parties, 
given their own individualized needs, are assumed to make the most 
cost-effective choice for them, which may be either of the two methods.
New Form 102B--Sec.  17.01(b)
    Method 1 (102B FTP submission--lower estimate): Method 1 assumes 
that each New Form 102B reporting party will use an automated program 
to submit its forms via secure FTP. Each Method 1 submission will 
likely contain numerous 102B records. The Commission estimates that the 
total initial development burden should average 264 hours per reporting 
party. The Commission also estimates that the highly automated nature 
of this option will virtually eliminate the marginal costs associated 
with each additional submission or each additional record contained in 
a submission. Accordingly, the Commission estimates that 102B change 
and refresh updates will not increase a reporting party's burden when 
using Method 1. The Commission further estimates that the ongoing 
operation and maintenance burden will average 53 hours per year no 
matter how many records are contained in a submission. The total Method 
1 annualized initial development burden and the ongoing operation and 
maintenance burden (total yearly burden) equals approximately 106 hours 
per reporting party.\202\
---------------------------------------------------------------------------

    \202\ All annualized development burden estimates are based on 5 
year, straight line depreciation.
---------------------------------------------------------------------------

    Because New Form 102B provides a new volume-based reporting 
structure not found in current Form 102, the Commission is unable to 
refer to historical reporting statistics to directly estimate the 
number of New Form 102B reporting parties. Instead, based on a review 
of transaction volume across a sample of several DCMs from the second 
half of 2011, the Commission estimated the number of trading accounts 
that the Commission anticipates will qualify as volume threshold 
accounts. The Commission estimated the number of DCM-related New Form 
102B reporting parties by calculating the number of clearing members 
associated with these projected volume threshold accounts.
     For volume threshold accounts associated with DCMs, the 
Commission anticipates that it will receive New Form 102B submissions 
from approximately 100 reporting parties annually. Assuming that all 
such reporting parties utilize Method 1, the Commission estimates that 
the total annual industry burden for the reporting of such accounts on 
New Form 102B would equal 10,600 hours.\203\ Using an estimated wage 
rate of $70.07 per hour, annual industry costs for such filings made 
pursuant to Method 1 are estimated at $742,742.\204\
---------------------------------------------------------------------------

    \203\ The 10,600 hour figure is arrived at by multiplying 106 
hours (annualized development burden and ongoing operation and 
maintenance burden per reporting party) by 100 reporting parties.
    \204\ The $742,742 figure is arrived at by multiplying 100 
reporting parties by 106 hours (equals 10,600 hours) by $70.07 
(equals $742,742).
---------------------------------------------------------------------------

     In estimating the number of reporting parties that will 
submit New Form 102B for volume threshold accounts associated with 
SEFs, the Commission has made an assumption that trading activity in 
the SEF marketplace will be lower than in the futures marketplace. For 
volume threshold accounts associated with SEFs, the Commission 
anticipates that it will receive New Form 102B submissions from 
approximately 75 reporting parties annually. Assuming that all such 
reporting parties utilize Method 1, the Commission estimates that the 
total annual industry burden for the reporting of such accounts on New 
Form 102B would equal 7,950 hours.\205\ Using an estimated wage rate of 
$70.07 per hour, annual industry costs for such filings made pursuant 
to Method 1 are estimated at $557,057.\206\
---------------------------------------------------------------------------

    \205\ The 7,950 hour figure is arrived at by multiplying 106 
hours (annualized development burden and ongoing operation and 
maintenance burden per reporting party) by 75 reporting parties.
    \206\ The $557,057 figure is arrived at by multiplying 75 
reporting parties by 106 hours (equals 7,950 hours) by $70.07 
(equals $557,057).
---------------------------------------------------------------------------

    Collectively, annual industry costs for 102B filings made pursuant 
to Method 1 are estimated at $1,299,799.\207\
---------------------------------------------------------------------------

    \207\ The $1,299,799 figure is arrived at by multiplying 175 
reporting parties by 106 hours (equals 18,550 hours) by $70.07 
(equals $1,299,799).

                                      Form 102B--Lower Estimate Is Method 1
                                                [FTP submission]
----------------------------------------------------------------------------------------------------------------
                                                 Annualized
                                                 burden per      Total annual    Estimated wage       Annual
    Number of reporting parties per year      reporting party      industry           rate       industry  costs
                                                (hours) \208\  burden  (hours)
----------------------------------------------------------------------------------------------------------------
175.........................................             106           18,550           $70.07       $1,299,799
----------------------------------------------------------------------------------------------------------------

    Method 2 (102B web submission--higher estimate): Method 2 assumes 
that each New Form 102B reporting party will complete and submit its 
forms online via a secure portal provided by the Commission. The 
Commission estimates that the total initial development burden will 
average 20 hours per New Form 102B record. The Commission also 
estimates that annual ongoing burdens, which include both change and 
refresh updates, will average 7 hours per year for each New Form 102B 
record. The estimated Method 2 total annualized initial development 
burden and the ongoing operation and maintenance burden (total yearly 
burden) equals approximately 11 hours per New Form 102B record.\209\
---------------------------------------------------------------------------

    \208\ See supra note 195 for a discussion of the calculation of 
this annualized burden. As discussed above, the initial development 
burden per reporting party (264 hours) has been divided by 5 years, 
which results in an estimated annualized initial development burden 
of 53 hours per reporting party. On a non-annualized basis, the 
initial development cost per reporting party is estimated at $18,498 
(264 hours x a wage rate of $70.07). The Commission expects that 
reporting parties will budget initial development costs in the 
manner that is most cost-effective for each party, which may result 
in some reporting parties incurring the majority of these initial 
development costs in the beginning of the rule compliance period.
    \209\ All annualized development burden estimates are based on 5 
year, straight line depreciation.
---------------------------------------------------------------------------

    Because New Form 102B provides a new volume-based reporting 
structure

[[Page 69205]]

not found in current Form 102, the Commission is unable to refer to 
historical reporting statistics to directly estimate the number of New 
Form 102B records it might receive. Instead, the Commission estimated 
the number of New Form 102B records that it will receive on an annual 
basis by reviewing transaction volume across a sample of several DCMs 
from the second half of 2011. Based on this data, the Commission 
calculated the relationship between (a) volume activity on the DCMs 
reviewed, (b) the number of reportable volume threshold accounts that 
would result from this volume activity, and (c) the number of DCM-
related New Form 102B records the Commission would receive in 
connection with these volume threshold accounts. The Commission created 
a mathematical function based on these three factors. The Commission 
then made a projection regarding anticipated SEF-related volume 
activity, and applied the mathematical function described above to 
estimate (i) the number of SEF-related, reportable volume threshold 
accounts that would result from this volume activity, and (ii) the 
number of SEF-related New Form 102B records the Commission would 
receive in connection with these volume threshold accounts. Based on 
the preceding methodology, the Commission estimated the following:
     For volume threshold accounts associated with DCMs, the 
Commission anticipates that it will receive approximately 126,000 New 
Form 102B records annually. Assuming each such record is provided via 
Method 2, the Commission estimates that the total annual industry 
burden for the reporting of such accounts on New Form 102B would equal 
1,386,000 hours. Using an estimated wage rate of $70.07 per hour, 
annual industry costs for such filings made pursuant to Method 2 are 
estimated at $97,117,020.\210\
---------------------------------------------------------------------------

    \210\ The $97,117,020 figure is arrived at by multiplying 
126,000 records by 11 hours (equals 1,386,000 records) by $70.07 
(equals $97,117,020).
---------------------------------------------------------------------------

     For volume threshold accounts associated with SEFs, the 
Commission anticipates that it will receive approximately 62,015 New 
Form 102B records annually. Assuming each such record is provided via 
Method 2, the Commission estimates that the total annual industry 
burden for the reporting of such accounts on New Form 102B would equal 
682,165 hours. Using an estimated wage rate of $70.07 per hour, annual 
industry costs for such filings made pursuant to Method 2 are estimated 
at $47,799,302.\211\
---------------------------------------------------------------------------

    \211\ The $47,799,302 figure is arrived at by multiplying 62,015 
records by 11 hours (equals 682,165 records) by $70.07 (equals 
$47,799,302).
---------------------------------------------------------------------------

    Collectively, annual industry costs for 102B filings made pursuant 
to Method 2 are estimated at $144,916,322.\212\
---------------------------------------------------------------------------

    \212\ The $144,916,322 figure is arrived at by multiplying 
188,015 records by 11 hours (equals 2,068,165 hours) by $70.07 
(equals $144,916,322).
---------------------------------------------------------------------------

Conclusion
    As discussed above, while the Commission estimates that 
establishing an FTP link will require an initial development burden of 
264 hours, the Commission also believes that submission via FTP will 
virtually eliminate the ongoing marginal costs associated with each 
additional submission or each additional record contained in a 
submission. For this reason, the Commission believes that FTP 
submission will be more cost effective for reporting parties making a 
large number of filings. The Commission expects that a significant 
majority of New Form 102B reporting parties will be making a large 
number of filings. Therefore, when estimating the industry-wide costs, 
the Commission has made the simplifying assumption that all reporting 
parties will use the FTP submission method when submitting New Form 
102B.
    Given the cost estimates for the two individual methods discussed 
above, the Commission anticipates the annual cost to the industry of 
filing DCM and SEF-related 102B will be approximately $1,299,799 
(Method 1--FTP submission), the lower of the two estimated filing 
methods. Notwithstanding the preceding discussion regarding submission 
via FTP by New Form 102B reporting parties, the Commission recognizes 
that reporting parties, given their own individualized needs, will make 
the most cost-effective choice for them, which may be either of the two 
submission methods.
New Form 71--Sec.  17.01(c)
    Method 1 (71 FTP submission--higher estimate): New Form 71 must be 
provided in response to a special call by the Commission or its 
designee. Method 1 assumes that each New Form 71 reporting party will 
use an automated program to submit its form via secure FTP. The 
Commission estimates that the total initial development burden will 
average 264 hours per reporting party. The Commission further estimates 
that the ongoing operation and maintenance burden will average 53 hours 
per year no matter how many records are contained in a submission. The 
total Method 1 annualized initial development burden and the ongoing 
operation and maintenance burden (total yearly burden) will equal 
approximately 106 hours per reporting party.\213\
---------------------------------------------------------------------------

    \213\ All annualized development burden estimates are based on 5 
year, straight line depreciation.
---------------------------------------------------------------------------

    The number of New Form 71 filings per year will vary according to 
the number of special calls for the form made by the Commission. In 
order to estimate the annual number of New Form 71 filings (i.e., the 
number of special calls made), the Commission considered the number of 
current Form 102 omnibus special accounts and estimated that New Form 
102B will capture a similar number of DCM-related omnibus volume 
threshold accounts.\214\ Furthermore, the Commission estimated that it 
will require a New Form 71 for every such omnibus volume threshold 
account. Commission records indicate 564 omnibus special accounts in 
2012, and the Commission expects an equal number of DCM-related omnibus 
volume threshold accounts. The Commission therefore anticipates that it 
will receive approximately 564 DCM-related New Form 71 filings per 
year, from the same number of reporting parties (564).
---------------------------------------------------------------------------

    \214\ The Commission is estimating the number of New Form 71 
filings in this manner because New Form 71 provides for an omnibus 
account reporting structure that does not currently exist, making 
direct estimates impracticable.
---------------------------------------------------------------------------

    Because the Commission does not presently receive filings 
pertaining to SEF-related omnibus volume threshold accounts, the 
Commission is unable to refer to historical reporting statistics to 
calculate the number of applicable reporting parties. To estimate the 
number of Form 71 reporting parties for omnibus volume threshold 
accounts associated with SEFs, the Commission assumed that SEF 
transactions will likely be intermediated to a lesser extent than DCM 
transactions. The Commission estimates that there may be 35 percent as 
many SEF-related omnibus volume threshold accounts as DCM-related 
omnibus volume threshold accounts. Accordingly, the Commission 
estimates that there will be 198 SEF-related omnibus volume threshold 
accounts, and an equal number of reporting parties (198).
    The Commission notes that the final rules do not require change or 
refresh updates of New Form 71. Accordingly, the burdens and costs 
associated with such updates in the case of other forms described 
herein are not relevant to the calculation of burdens and costs for

[[Page 69206]]

New Form 71 filings. The Commission also notes that it is likely to 
request the resubmission of New Form 71 each year.
     Based on an estimated 564 DCM-related New Form 71 
reporting parties per year, the Commission estimates an aggregate 
reporting burden of 59,784 hours annually for DCM-related New Form 71 
filings via Method 1. Using an estimated wage rate of $70.07 per hour, 
annual industry costs for such filings made pursuant to Method 1 are 
estimated at $4,189,065.\215\
---------------------------------------------------------------------------

    \215\ The $4,189,065 figure is arrived at by multiplying 564 
reporting parties by 106 hours (equals 59,784 hours) by $70.07 
(equals $4,189,065).
---------------------------------------------------------------------------

     Based on an estimated 198 SEF-related New Form 71 
reporting parties per year, the Commission estimates an aggregate 
reporting burden of 20,988 hours annually for SEF-related New Form 71 
filings via Method 1. Using an estimated wage rate of $70.07 per hour, 
annual industry costs for such filings made pursuant to Method 1 are 
estimated at $1,470,629.\216\
---------------------------------------------------------------------------

    \216\ The $1,470,629 figure is arrived at by multiplying 198 
reporting parties by 106 hours (equals 20,988 hours) by $70.07 
(equals $1,470,629).
---------------------------------------------------------------------------

    Collectively, annual industry costs for New Form 71 filings made 
pursuant to Method 1 are estimated at $5,659,694.\217\
---------------------------------------------------------------------------

    \217\ The $5,659,694 figure is arrived at by multiplying 762 
reporting parties by 106 hours (equals 80,772 hours) by $70.07 
(equals $5,659,694).
---------------------------------------------------------------------------

    Method 2 (71 web submission--lower estimate): Method 2 assumes that 
each New Form 71 reporting party (i.e., originators of omnibus volume 
threshold accounts or omnibus reportable sub-accounts) will complete 
and submit New Form 71 online via a secure portal provided by the 
Commission.\218\ The Commission estimates that, on average, New Form 71 
will create an annual reporting burden of 8 hours per filing.\219\
---------------------------------------------------------------------------

    \218\ The Commission's special call will likely be in the form 
of an email request that will contain a URL for the portal, and a 
unique login and password for access to the portal.
    \219\ The submission of New Form 71 through the web-based portal 
does not require initial development expenditures; as a result, the 
burdens and costs for this form are calculated on an annual basis 
rather than an annualized basis.
---------------------------------------------------------------------------

    As discussed above, the Commission expects approximately 564 DCM-
related New Form 71 filings per year, and 198 SEF-related New Form 71 
filings per year.
     Based on an estimated 564 DCM-related New Form 71 filings 
per year, the Commission estimates an aggregate reporting burden of 
4,512 hours annually for such filings via Method 2. Using an estimated 
wage rate of $70.07 per hour, annual industry costs for such filings 
made pursuant to Method 2 are estimated at $316,156.\220\
---------------------------------------------------------------------------

    \220\ The $316,156 figure is arrived at by multiplying 564 
records by 8 hours (equals 4,512 hours) by $70.07 (equals $316,156).
---------------------------------------------------------------------------

     Based on an estimated 198 SEF-related New Form 71 filings 
per year, the Commission estimates an aggregate reporting burden of 
1,584 hours annually for such filings via Method 2. Using an estimated 
wage rate of $70.07 per hour, annual industry costs for such filings 
made pursuant to Method 2 are estimated at $110,991.\221\
---------------------------------------------------------------------------

    \221\ The $110,991 figure is arrived at by multiplying 198 
records by 8 hours (equals 1,584 hours) by $70.07 (equals $110,991).
---------------------------------------------------------------------------

    Collectively, annual industry costs for New Form 71 filings made 
pursuant to Method 2 are estimated at $427,147.\222\
---------------------------------------------------------------------------

    \222\ The $427,147 figure is arrived at by multiplying 762 
records by 8 hours (equals 6,096 hours) by $70.07 (equals $427,147).

                                       Form 71--Lower Estimate Is Method 2
                                                [Web submission]
----------------------------------------------------------------------------------------------------------------
                                               Annual burden     Total annual
        Number of responses  per year           per response       industry      Estimated wage       Annual
                                                  (hours)      burden  (hours)        rate       industry  costs
----------------------------------------------------------------------------------------------------------------
762.........................................               8            6,096           $70.07         $427,147
----------------------------------------------------------------------------------------------------------------

    Conclusion: The Commission believes that providing filing options 
to the industry should lower their ultimate costs. Because of this, 
estimated total costs to the industry for 71 filings should be lower 
than any cost associated with mandating either Method 1 or Method 2. 
Given the cost estimates for the two individual methods discussed 
above, the Commission anticipates the annual cost to the industry of 
filing 71 will be approximately $427,147 (Method 2--web submission), 
the lower of the two estimated filing methods. In developing this 
estimate, the Commission does not make any assumptions about the 
behavior of an individual reporting party. Reporting parties, given 
their own individualized needs, are assumed to make the most cost-
effective choice for them, which may be either of the two methods. New 
Form 40--Sec.  18.04(a) (arising from New Form 102A): \223\
---------------------------------------------------------------------------

    \223\ As discussed in section VIII(A)(iii) above, the Commission 
is evaluating the burden associated with each regulation and 
associated form separately. It should be noted that the burdens 
estimated for New Form 40 filings, arising from proposed Sec.  
18.04(a) and (b), are especially duplicative. For example, many of 
the traders that complete New Form 40 pursuant to Sec.  18.04(a) may 
also be volume threshold account controllers that could receive New 
Form 40 pursuant to Sec.  18.04(b). In practice, if the Commission 
possesses a recent Form 40 filing from a reporting party, it may 
elect not to request a second Form 40 filing from that same entity 
if the entity becomes reportable under an additional provision of 
the proposed regulations and there is no additional information to 
be gained.
---------------------------------------------------------------------------

    Method 1 (40 FTP submission (arising from New Form 102A)--higher 
estimate): New Form 40 must be provided in response to a special call 
by the Commission or its designee. Method 1 assumes that each New Form 
40 reporting party will use an automated program to submit its forms 
(arising from New Form 102A) via secure FTP. The Commission estimates 
that the total initial development burden will average 224 hours per 
reporting party. The Commission further estimates that the ongoing 
operation and maintenance burden will average 53 hours per year no 
matter how many records are contained in a submission. The total Method 
1 annualized initial development burden and the ongoing operation and 
maintenance burden (total yearly burden) will equal approximately 98 
hours per reporting party.\224\
---------------------------------------------------------------------------

    \224\ All annualized development burden estimates are based on 5 
year, straight line depreciation.
---------------------------------------------------------------------------

    As noted above, in connection with the introduction of New Form 
102A pursuant to this rulemaking, the Commission notes that (except as 
otherwise instructed by the Commission or its designee) its regulations 
require reporting firms to separately aggregate positions by common 
ownership and by common control for the purpose of identifying and 
reporting special accounts.\225\ On the basis of such regulations, the 
Commission anticipates that it will receive a greater number of

[[Page 69207]]

New Form 102A records per year (7,726) than the number of Form 102 
records it has received in recent years.\226\ While the number of New 
Form 40 filings arising from New Form 102A filings will vary according 
to the number of special calls made by the Commission, the Commission 
nonetheless anticipates that it may make a larger number of special 
calls than in recent years, due to the larger number of anticipated New 
Form 102A records.\227\ As a result, the Commission estimates that New 
Form 102A will result in approximately 5,250 New Form 40 records per 
year, submitted by an equal number of reporting parties (5,250).\228\
---------------------------------------------------------------------------

    \225\ See Sec. Sec.  17.00 and 150.4 of the Commission's 
regulations.
    \226\ The Commission received 4,415 Form 102 records in 2012. 
See also supra note 200.
    \227\ The Commission made approximately 3,000 special calls in 
2012. Such calls were made to special account owners and controllers 
identified via existing DCM-related Form 102.
    \228\ See also supra note 200. Because the Commission 
anticipates that the number of New Form 102A records it receives per 
year is likely to be lower than the estimated 7,726 records, the 
Commission may also make fewer special calls than the estimated 
5,250 calls.
---------------------------------------------------------------------------

    Entities required to complete a New Form 40 will be under a 
continuing obligation, per direction in the special call, to update and 
maintain the accuracy of the information they provide. Entities can 
update this information by either visiting the online New Form 40 
portal to review, verify, and/or update their information, or by 
submitting updated information via FTP. Regardless of whether entities 
update the information contained in New Form 40 via the web or FTP, the 
Commission believes that the time required to provide this information 
will be de minimis.\229\
---------------------------------------------------------------------------

    \229\ See infra section VIII(B)(iv) for a discussion of the 
Commission's contact reference database, which is intended to 
streamline the automated submission process and reduce the burden on 
reporting parties.
---------------------------------------------------------------------------

    Assuming all 5,250 New Form 40 reporting parties utilize Method 1, 
the Commission estimates that the total annual industry burden for New 
Form 40, as a result of New Form 102A, will equal 514,500 hours. Using 
an estimated wage rate of $70.07 per hour, annual industry costs for 
such New Form 40 filings made pursuant to Method 1 are estimated at 
$36,051,015.\230\
---------------------------------------------------------------------------

    \230\ The $36,051,015 figure is arrived at by multiplying 5,250 
reporting parties by 98 hours (equals 514,500 hours) by $70.07 
(equals $36,051,015).
---------------------------------------------------------------------------

    Method 2 (40 web submission (arising from New Form 102A)--lower 
estimate): Method 2 assumes that each reporting party filing New Form 
40 as a result of Form 102A (i.e., special account owners and 
controllers) will complete and submit New Form 40 online via a secure 
portal provided by the Commission.\231\
---------------------------------------------------------------------------

    \231\ The Commission's special call will likely be in the form 
of an email request that will contain a URL for the portal, and a 
unique login and password for access to the portal.
---------------------------------------------------------------------------

    The Commission estimates that each of the 5,250 New Form 40 records 
will require three hours to complete.\232\ Assuming each such New Form 
40 record is provided via Method 2, the Commission estimates that the 
total annual industry burden for reporting on New Form 40, as a result 
of New Form 102A, will equal 15,750 hours. Using an estimated wage rate 
of $70.07 per hour, annual industry costs for New Form 40 filings 
arising from special accounts are estimated at $1,103,603.\233\
---------------------------------------------------------------------------

    \232\ The Commission's estimate of three hours per response 
reflects an initial, one-time burden of 10 hours, annualized over a 
five-year period, plus an additional hour per year for change 
updates.
    \233\ The $1,103,603 figure is arrived at by multiplying 5,250 
records by 3 hours (equals 15,750 hours) by $70.07 (equals 
$1,103,603).

                                       Form 40--lower estimate is Method 2
                                                [Web submission]
----------------------------------------------------------------------------------------------------------------
                                                 Annualized
                                                 burden per      Total annual    Estimated wage       Annual
        Number of responses per year              response         industry           rate       industry  costs
                                               (hours) \234\   burden  (hours)
----------------------------------------------------------------------------------------------------------------
5,250.......................................               3           15,750           $70.07       $1,103,603
----------------------------------------------------------------------------------------------------------------

    Conclusion: The Commission believes that providing filing options 
to the industry should lower their ultimate costs. Because of this, 
estimated total costs to the industry for 40 filings, as a result of 
New Form 102A, should be lower than any cost associated with mandating 
either Method 1 or Method 2. Given the cost estimates for the two 
individual methods discussed above, the Commission anticipates the 
annual cost to the industry of filing 40, as a result of New Form 102A, 
will be approximately $1,103,603 (Method 2--web submission), the lower 
of the two estimated filing methods. In developing this estimate, the 
Commission does not make any assumptions about the behavior of an 
individual reporting party. Reporting parties, given their own 
individualized needs, are assumed to make the most cost-effective 
choice for them, which may be either of the two methods.
---------------------------------------------------------------------------

    \234\ As discussed above, the initial development burden per 
reporting party (10 hours) has been divided by 5 years, which 
results in an estimated annualized initial development burden of two 
hours per reporting party. On a non-annualized basis, the initial 
development cost per reporting party is estimated at $701 (10 hours 
x a wage rate of $70.07). The Commission expects that reporting 
parties will budget initial development costs in the manner that is 
most cost-effective for each party, which may result in some 
reporting parties incurring the majority of these initial 
development costs in the beginning of the rule compliance period.
---------------------------------------------------------------------------

    New Form 40--Sec.  18.04(b) (arising from New Form 102B and New 
Form 71):
    Method 1 (40 FTP submission (arising from New Form 102B and New 
Form 71)--higher estimate):
    New Form 40 must be provided in response to a special call by the 
Commission or its designee. Method 1 assumes that each New Form 40 
reporting party will use an automated program to submit its forms 
(arising from New Form 102B and New Form 71) via secure FTP. The 
Commission estimates that the total initial development burden will 
average 224 hours per reporting party. The Commission further estimates 
that the ongoing operation and maintenance burden will average 53 hours 
per year no matter how many records are contained in a submission. The 
total Method 1 annualized initial development burden and the ongoing 
operation and maintenance burden (total yearly burden) will equal 
approximately 98 hours per reporting party.\235\
---------------------------------------------------------------------------

    \235\ All annualized development burden estimates are based on 5 
year, straight line depreciation.
---------------------------------------------------------------------------

    In estimating the number of anticipated New Form 40 special calls 
arising from both DCM-related and SEF-related New Form 102B and New 
Form 71, the Commission first considered the number of Form 40 special 
calls made in 2012 (approximately 3,000). The Commission sent some of 
these special calls to a subset of the 260 special account owners and 
controllers identified via existing DCM-related

[[Page 69208]]

Form 102 in 2012. The Commission sent other of these special calls to 
individuals that were not identified via Form 102, but instead were 
identified through other surveillance means. The 260 reporting parties 
that submitted a Form 102 in 2012 represent approximately 8.7 percent 
of the 3,000 special calls sent in 2012 (``the special call ratio''). 
The Commission used this special call ratio as a baseline in 
calculating the number of anticipated New Form 40 filings arising from 
New Form 102B and New Form 71. The Commission acknowledges that this 
percentage represents a high-end baseline, since as noted above, the 
Commission made a special call in 2012 to a subset of the 260 reporting 
parties, rather than to each one.
    Form 40s Arising From DCM-related New Form 102B and New Form 71. To 
estimate the number of Form 40 special calls arising from DCM-related 
New Form 102B and New Form 71, the Commission first calculated the 
number of anticipated reporting parties for each form: 100 reporting 
parties for DCM-related New Form 102B, and 564 reporting parties for 
DCM-related New Form 71, or 664 in total. Based on the special call 
ratio calculations performed above with respect to the Commission's 
2012 special call practices, the Commission estimated that it will send 
special calls to approximately 7,662 recipients per year in connection 
with DCM-related New Form 102B and New Form 71.\236\ Finally, the 
Commission calculated that in approximately 75 percent of New Form 102B 
and New Form 71 filings, the owner and controller of a volume threshold 
account reported on the form will be different.\237\ In this scenario, 
the Commission may make a separate special call to both the owner and 
controller. As a result, the Commission multiplied the 7,662 recipient 
estimate by 1.75, and concluded that it will receive approximately 
13,409 New Form 40 filings annually arising from DCM-related New Form 
102B and New Form 71, from the same number of reporting parties 
(13,409).
---------------------------------------------------------------------------

    \236\ The Commission applied the ratio of reporting parties to 
special calls that it developed with respect to its 2012 Form 40 
special call practices. 260 reporting parties represents 
approximately 8.7 percent of the 3,000 special calls sent in 2012. 
Similarly, 664 reporting parties represents approximately 8.7 
percent of 7,662 special calls. The Commission believes that 664 
reporting parties is a high-end estimate, because the Commission 
will likely send New Form 40 to a subset of New Form 71 reporting 
parties, rather than to each reporting party, as this calculation 
assumes.
    \237\ As with 102A records, the Commission estimates that in 
approximately 25 percent of filings, the owner and the controller of 
a volume threshold account reported on New Form 102B or New Form 71 
will be the same, and that accordingly, only one New Form 40 would 
be required. Similarly, a number of potential New Form 40 reporting 
parties are likely to own or control both DCM-related and SEF-
related volume threshold accounts, but only one New Form 40 would be 
required.
---------------------------------------------------------------------------

    Form 40s Arising From SEF-related New Form 102B and New Form 71. 
The Commission applied the same rationale to calculate the number of 
anticipated New Form 40 filings arising from SEF-related New Form 102B 
and New Form 71. The Commission first calculated the number of 
anticipated reporting parties for each form: 75 reporting parties for 
SEF-related New Form 102B, and 198 reporting parties for SEF-related 
New Form 71, or 273 in total. Based on the special call ratio 
calculations performed above with respect to the Commission's 2012 
special call practices, the Commission estimated that it will send 
special calls to approximately 3,149 recipients per year in connection 
with SEF-related New Form 102B and New Form 71.\238\ Finally, the 
Commission calculated that in approximately 75 percent of New Form 102B 
and New Form 71 filings, the owner and controller of a volume threshold 
account reported on the form will be different.\239\ In this scenario, 
the Commission may make a separate special call to both the owner and 
controller. As a result, the Commission multiplied the 3,149 recipient 
estimate by 1.75, and concluded that it will receive approximately 
5,511 New Form 40 filings annually arising from SEF-related New Form 
102B and New Form 71, from the same number of reporting parties 
(5,511).
---------------------------------------------------------------------------

    \238\ The Commission applied the ratio of reporting parties to 
special calls that it developed with respect to its 2012 Form 40 
special call practices. 260 reporting parties represents 
approximately 8.7 percent of the 3,000 special calls sent in 2012. 
Similarly, 273 reporting parties represents approximately 8.7 
percent of 3,149 special calls. The Commission believes that 273 
reporting parties is a high-end estimate, because the Commission 
will likely send New Form 40 to a subset of New Form 71 reporting 
parties, rather than to each reporting party, as this calculation 
assumes.
    \239\ See supra note 237.
---------------------------------------------------------------------------

    As discussed above, the Commission estimates that the time required 
to update information contained in New Form 40, whether submitted via 
the web or FTP, will be de minimis.\240\
---------------------------------------------------------------------------

    \240\ See infra section VIII(B)(iv) for a discussion of the 
Commission's contact reference database, which is intended to 
streamline the automated submission process and reduce the burden on 
reporting parties.
---------------------------------------------------------------------------

     Based on an estimated 13,409 DCM-related New Form 40 
reporting parties per year, the Commission estimates an aggregate 
reporting burden of 1,314,082 hours annually for DCM-related New Form 
40 filings, arising from New Form 102B and New Form 71, via Method 1. 
Using an estimated wage rate of $70.07 per hour, annual industry costs 
for such filings made pursuant to Method 1 are estimated at 
$92,077,726.\241\
---------------------------------------------------------------------------

    \241\ The $92,077,726 figure is arrived at by multiplying 13,409 
reporting parties by 98 hours (equals 1,314,082 hours) by $70.07 
(equals $92,077,726).
---------------------------------------------------------------------------

     Based on an estimated 5,511 SEF-related New Form 40 
reporting parties per year, the Commission estimates an aggregate 
reporting burden of 540,078 hours annually for SEF-related New Form 40 
filings, arising from New Form 102B and New Form 71, via Method 1. 
Using an estimated wage rate of $70.07 per hour, annual industry costs 
for such filings made pursuant to Method 1 are estimated at 
$37,843,265.\242\
---------------------------------------------------------------------------

    \242\ The $37,843,265 figure is arrived at by multiplying 5,511 
reporting parties by 98 hours (equals 540,078 hours) by $70.07 
(equals $37,843,265).
---------------------------------------------------------------------------

    Collectively, annual industry costs for New Form 40 filings 
(arising from New Form 102B and New Form 71) made pursuant to Method 1 
are estimated at $129,920,991.\243\
---------------------------------------------------------------------------

    \243\ The $129,920,991 figure is arrived at by multiplying 
18,920 reporting parties by 98 hours (equals 1,854,160 hours) by 
$70.07 (equals $129,920,991).
---------------------------------------------------------------------------

    Method 2 (40 web submission (arising from New Form 102B and New 
Form 71)--lower estimate):
    Method 2 assumes that each reporting party filing New Form 40 as a 
result of New Form 102B and New Form 71 (i.e., volume threshold account 
controllers, persons who own volume threshold accounts, reportable sub-
account controllers, and persons who own reportable sub-accounts) will 
complete and submit New Form 40 online via a secure portal provided by 
the Commission.\244\
---------------------------------------------------------------------------

    \244\ The Commission's special call will likely be in the form 
of an email request that will contain a URL for the portal, and a 
unique login and password for access to the portal.
---------------------------------------------------------------------------

    As discussed above, the Commission anticipates that it will receive 
approximately 13,409 DCM-related New Form 40 filings annually and 
approximately 5,511 SEF-related New Form 40 filings annually, in each 
case arising from New Form 102B and New Form 71.\245\ Each such New 
Form 40 filing is estimated to require three hours.\246\ Assuming each 
such New

[[Page 69209]]

Form 40 record is provided via Method 2:
---------------------------------------------------------------------------

    \245\ As with 102A records, the Commission estimates that in 
approximately 25 percent of filings, the owner and the controller of 
a volume threshold account reported on New Form 102B will be the 
same, and that accordingly, only one New Form 40 would be required. 
Similarly, a number of potential New Form 40 reporting parties are 
likely to own or control both DCM-related and SEF-related volume 
threshold accounts, but only one New Form 40 would be required.
    \246\ The Commission's estimate of three hours per response 
reflects an initial, one-time burden of 10 hours, annualized over a 
five-year period, plus an additional hour per year for change 
updates.
---------------------------------------------------------------------------

     The Commission estimates that the total annual industry 
burden for reporting on New Form 40, as a result of New Form 102B and 
New Form 71, will equal 40,227 hours for DCM-related New Form 40 
filings. Using an estimated wage rate of $70.07 per hour, annual 
industry costs for such filings arising from volume threshold accounts 
and reportable sub-accounts are estimated at $2,818,706.\247\
---------------------------------------------------------------------------

    \247\ The $2,818,706 figure is arrived at by multiplying 13,409 
filings by 3 hours (equals 40,227 hours) by $70.07 (equals 
$2,818,706).
---------------------------------------------------------------------------

     The Commission estimates that the total annual industry 
burden for reporting on New Form 40, as a result of New Form 102B and 
New Form 71, will equal 16,533 hours for SEF-related New Form 40 
filings. Using an estimated wage rate of $70.07 per hour, annual 
industry costs for such filings arising from volume threshold accounts 
and reportable sub-accounts are estimated at $1,158,467.\248\
---------------------------------------------------------------------------

    \248\ The $1,158,467 figure is arrived at by multiplying 5,511 
filings by 3 hours (equals 16,533 hours) by $70.07 (equals 
$1,158,467).
---------------------------------------------------------------------------

    Collectively, annual industry costs for New Form 40 filings, as a 
result of New Form 102B and New Form 71, are estimated at 
$3,977,173.\249\
---------------------------------------------------------------------------

    \249\ The $3,977,173 figure is arrived at by multiplying 18,920 
filings by 3 hours (equals 56,760 hours) by $70.07 (equals 
$3,977,173).

                                       Form 40--Lower Estimate is Method 2
                                                [Web submission]
----------------------------------------------------------------------------------------------------------------
                                                 Annualized
                                                 burden per      Total annual    Estimated wage       Annual
        Number of responses per year              response     industry burden        rate       industry  costs
                                               (hours) \250\        (hours)
----------------------------------------------------------------------------------------------------------------
18,920......................................               3           56,760           $70.07       $3,977,173
----------------------------------------------------------------------------------------------------------------

    Conclusion: The Commission believes that providing filing options 
to the industry should lower their ultimate costs. Because of this, 
estimated total costs to the industry for 40 filings, as a result of 
New Form 102B and New Form 71, should be lower than any cost associated 
with mandating either Method 1 or Method 2. Given the cost estimates 
for the two individual methods discussed above, the Commission 
anticipates the annual cost to the industry of filing 40, as a result 
of New Form 102B and New Form 71, will be approximately $3,977,173 
(Method 2--web submission), the lower of the two estimated filing 
methods. In developing this estimate, the Commission does not make any 
assumptions about the behavior of an individual reporting party. 
Reporting parties, given their own individualized needs, are assumed to 
make the most cost-effective choice for them, which may be either of 
the two methods. New Form 102S -- Sec.  20.5(a):
---------------------------------------------------------------------------

    \250\ As discussed above, the initial development burden per 
reporting party (10 hours) has been divided by 5 years, which 
results in an estimated annualized initial development burden of two 
hours per reporting party. On a non-annualized basis, the initial 
development cost per reporting party is estimated at $701 (10 hours 
x a wage rate of $70.07). The Commission expects that reporting 
parties will budget initial development costs in the manner that is 
most cost-effective for each party, which may result in some 
reporting parties incurring the majority of these initial 
development costs in the beginning of the rule compliance period.
---------------------------------------------------------------------------

    Method 1 (102S FTP submission--lower estimate): Method 1 assumes 
that each New Form 102S reporting party will use an automated program 
to submit its forms via secure FTP. Each Method 1 submission will 
likely contain numerous 102S records. The Commission estimates that the 
total initial development burden will average 264 hours per reporting 
party. The Commission also estimates that the highly automated nature 
of this option will virtually eliminate the marginal costs associated 
with each additional submission or each additional record contained in 
a submission. The Commission believes that the timing requirements for 
102S filings in current Sec.  20.5(a)(3),\251\ or any new submission 
procedures arising from the Swaps Large Trader Guidebook (i.e., 
frequency of 102S filing submission), will not increase a reporting 
party's burden when using Method 1. The Commission further estimates 
that the ongoing operation and maintenance burden will average 53 hours 
per year no matter how many records are contained in a submission. The 
total Method 1 annualized initial development burden and the ongoing 
operation and maintenance burden (total yearly burden) will equal 
approximately 106 hours per reporting party.\252\
---------------------------------------------------------------------------

    \251\ 17 CFR 20.5(a)(3).
    \252\ All annualized development burden estimates are based on 5 
year, straight line depreciation.
---------------------------------------------------------------------------

    The 102S filing requirements in current Sec.  20.5 \253\ are nearly 
identical to the filing requirements for revised 102S; accordingly, the 
Commission used its recent experience with 102S filings to estimate the 
number of 102S reporting parties. An assessment of Commission data 
collection efforts demonstrated that the Commission received Form 102S 
submissions from 39 reporting parties in 2012. The Commission 
anticipates that it will receive New Form 102S submissions from a 
similar number of reporting parties each year. Assuming 102S reporting 
parties utilize Method 1, the Commission estimates that the total 
annual industry burden for 102S filing will equal 4,134 hours. Using an 
estimated wage rate of $70.07 per hour, annual industry costs for New 
Form 102S are estimated at $289,669.\254\
---------------------------------------------------------------------------

    \253\ 17 CFR 20.5.
    \254\ The $289,669 figure is arrived at by multiplying 39 
reporting parties by 106 hours (equals 4,134 hours) by $70.07 
(equals $289,669).

[[Page 69210]]



                                      Form 102S--Lower Estimate is Method 1
                                                [FTP submission]
----------------------------------------------------------------------------------------------------------------
                                                 Annualized
                                                 burden per      Total annual    Estimated wage       Annual
    Number of reporting parties per year      reporting party  industry burden        rate       industry  costs
                                               (hours) \255\        (hours)
----------------------------------------------------------------------------------------------------------------
39..........................................             106            4,134           $70.07         $289,669
----------------------------------------------------------------------------------------------------------------

    Method 2 (102S web submission--higher estimate): Method 2 assumes 
that each New Form 102S reporting party will complete and submit its 
forms online via a secure portal provided by the Commission. The 
Commission estimates that the total initial development burden will 
average 17 hours per 102S record. The Commission also estimates that 
the annual ongoing burden, including change and refresh updates, will 
average 7 hours per year for each 102S record. The sum of the Method 2 
annualized initial development burden and the ongoing operation and 
maintenance burden (total yearly burden) equals approximately 10 hours 
per 102S record.\256\
---------------------------------------------------------------------------

    \255\ See supra note 195 for a discussion of the calculation of 
this annualized burden. As discussed above, the initial development 
burden per reporting party (264 hours) has been divided by 5 years, 
which results in an estimated annualized initial development burden 
of 53 hours per reporting party. On a non-annualized basis, the 
initial development cost per reporting party is estimated at $18,498 
(264 hours x a wage rate of $70.07). The Commission expects that 
reporting parties will budget initial development costs in the 
manner that is most cost-effective for each party, which may result 
in some reporting parties incurring the majority of these initial 
development costs in the beginning of the rule compliance period.
    \256\ All annualized development burden estimates are based on 5 
year, straight line depreciation.
---------------------------------------------------------------------------

    An assessment of Commission data collection efforts demonstrated 
that the Commission received approximately 2,508 102S records in 2012. 
The Commission anticipates that it will receive a similar number of 
102S records each year. Assuming each of the estimated 2,508 102S 
records are provided via Method 2, the Commission estimates that the 
total annual industry burden for New Form 102S will equal 25,080 hours. 
Using an estimated wage rate of $70.07 per hour, annual industry costs 
for New Form 102S filings made pursuant to Method 2 are estimated at 
$1,757,356.\257\
---------------------------------------------------------------------------

    \257\ The $1,757,356 figure is arrived at by multiplying 2,508 
records by 10 hours (equals 25,080 hours) by $70.07 (equals 
$1,757,356).
---------------------------------------------------------------------------

    Conclusion: The Commission understands that providing options to 
the industry should lower costs relative to failing to provide these 
options. Because of this, estimated total costs to the industry for 
102S filing should be lower than any cost associated with mandating 
either Method 1 or Method 2. Given the cost estimates for the two 
individual methods discussed above, the Commission anticipates the 
annual cost to the industry of filing 102S will be approximately 
$289,669 (Method 1--FTP submission), the lower of the two estimated 
submission costs. In developing this estimate, the Commission does not 
make any assumptions about the behavior of an individual reporting 
party. Reporting parties, given their own individualized needs, are 
assumed to make the most cost-effective choice for them, which may be 
either of the two methods.
    New Form 40S--Sec.  20.5(b): \258\
---------------------------------------------------------------------------

    \258\ The final rules do not revise Sec.  20.5(b); however, 
current Sec.  20.5(b) requires a person, after special call by the 
Commission, to submit a 40S filing, which shall consist of the 
submission of Form 40. The final rules do include changes to Form 
40. Accordingly, the reporting burden associated with Sec.  20.5(b) 
and the 40S filing is being recalculated to account for variations 
between current and New Form 40.
---------------------------------------------------------------------------

    Method 1 (40S FTP submission--higher estimate): New Form 40S must 
be provided in response to a special call by the Commission or its 
designee. Method 1 assumes that each New Form 40S reporting party will 
use an automated program to submit its forms via secure FTP. The 
Commission estimates that the total initial development burden will 
average 224 hours per reporting party. The Commission further estimates 
that the ongoing operation and maintenance burden will average 53 hours 
per year no matter how many records are contained in a submission. The 
total Method 1 annualized initial development burden and the ongoing 
operation and maintenance burden (total yearly burden) will equal 
approximately 98 hours per reporting party.\259\
---------------------------------------------------------------------------

    \259\ All annualized development burden estimates are based on 5 
year, straight line depreciation.
---------------------------------------------------------------------------

    Current Sec.  20.5(b),\260\ which requires the 40S filing, will not 
be altered by this rulemaking. As noted above, the Commission 
anticipates that it will receive approximately 2,508 102S records per 
year, and the Commission estimates that it will make approximately the 
same number of 40S special calls each year (2,508). Assuming all Form 
40S reporting parties utilize Method 1, the Commission estimates that 
the total annual industry burden for Form 40S will equal 245,784 hours. 
Time required to update information contained in 40S filings, whether 
submitted via the web or FTP, will be de minimis. Using an estimated 
wage rate of $70.07 per hour, annual industry costs for Form 40S 
filings made pursuant to Method 1 are estimated at $17,222,085.\261\
---------------------------------------------------------------------------

    \260\ 17 CFR 20.5(b).
    \261\ The $17,222,085 figure is arrived at by multiplying 2,508 
reporting parties by 98 hours (equals 245,784 hours) by $70.07 
(equals $17,222,085).
---------------------------------------------------------------------------

    Method 2 (40S web submission--lower estimate): Method 2 assumes 
that each New Form 40S reporting party will complete and submit its 
forms online via a secure portal provided by the Commission.\262\ As 
noted above, the Commission anticipates that it will receive 
approximately 2,508 102S records per year, and the Commission estimates 
that it will make approximately the same number of 40S special calls 
each year (2,508). Each response is estimated to require three 
hours,\263\ resulting in an estimated total annual reporting burden of 
7,524 hours. Using an estimated wage rate of $70.07 per hour, annual 
industry costs for New Form 40S filings made pursuant to Method 2 are 
estimated at $527,207.\264\
---------------------------------------------------------------------------

    \262\ The Commission's special call will likely be in the form 
of an email request that will contain a URL for the portal, and a 
unique login and password for access to the portal.
    \263\ The Commission's estimate of three hours per response 
reflects an initial, one-time burden of 10 hours, annualized over a 
five-year period, plus an additional hour per year for change 
updates.
    \264\ The $527,207 figure is arrived at by multiplying 2,508 
filings by 3 hours (equals 7,524 hours) by $70.07 (equals $527,207).

[[Page 69211]]



                                      Form 40S--Lower Estimate is Method 2
                                                [Web submission]
----------------------------------------------------------------------------------------------------------------
                                                 Annualized
                                                 burden per      Total annual    Estimated wage       Annual
        Number of responses per year              response     industry burden        rate       industry  costs
                                               (hours) \265\        (hours)
----------------------------------------------------------------------------------------------------------------
2,508.......................................               3            7,524           $70.07         $527,207
----------------------------------------------------------------------------------------------------------------

    Conclusion: The Commission understands that providing options to 
the industry should lower costs relative to failing to provide these 
options. Because of this, estimated total costs to the industry for 40S 
filing should be lower than any cost associated with mandating either 
Method 1 or Method 2. Given the cost estimates for the two individual 
methods discussed above, the Commission anticipates the annual industry 
cost to the industry of filing 40S will be approximately $527,207 
(Method 2--web submission), the lower of the two estimated submission 
costs. In developing this estimate, the Commission does not make any 
assumptions about the behavior of an individual reporting party. 
Reporting parties, given their own individualized needs, are assumed to 
make the most cost-effective choice for them, which may be either of 
the two methods.
---------------------------------------------------------------------------

    \265\ As discussed above, the initial development burden per 
reporting party (10 hours) has been divided by 5 years, which 
results in an estimated annualized initial development burden of two 
hours per reporting party. On a non-annualized basis, the initial 
development cost per reporting party is estimated at $701 (10 hours 
x a wage rate of $70.07). The Commission expects that reporting 
parties will budget initial development costs in the manner that is 
most cost-effective for each party, which may result in some 
reporting parties incurring the majority of these initial 
development costs in the beginning of the rule compliance period.
---------------------------------------------------------------------------

v. Recordkeeping Burdens--Revised Sec.  18.05
    Current Sec.  18.05 requires traders who hold or control reportable 
positions to maintain books and records regarding all positions and 
transactions in the commodity in which they have reportable 
positions.\266\ In addition, current Sec.  18.05 requires that the 
trader furnish the Commission with information concerning such 
positions upon request. The Commission is expanding Sec.  18.05 to also 
impose books and records requirements upon (1) Volume threshold account 
controllers and (2) owners of volume threshold accounts, and upon (3) 
reportable sub-account controllers and (4) persons who own reportable 
sub-accounts. As a result, revised Sec.  18.05 will likely impose a 
recordkeeping burden on a larger number of persons than current Sec.  
18.05. However, any additional persons subject to Sec.  18.05 may be 
able to rely on books and records already kept in the ordinary course 
of business to meet the requirements of the final regulation. 
Accordingly, the Commission believes that revised Sec.  18.05 will not 
meaningfully increase recordkeeping burdens on persons brought under 
its scope.
---------------------------------------------------------------------------

    \266\ 17 CFR 18.05.
---------------------------------------------------------------------------

    The Commission sent 59 special calls pursuant to Sec.  18.05 in 
2012, 42 of which were based on trade data reflected in the TCR data 
feed.\267\ As noted above, revised Sec.  18.05 will make four new 
categories of persons, identified through the volume-based reporting 
regime, subject to Sec.  18.05. Because the volume-based reporting 
regime is designed to identify designated types of trading activity, 
the Commission estimates that it will send special calls pursuant to 
revised Sec.  18.05 to, at a minimum, 42 recipients (i.e., the same 
number of persons to which the Commission sent special calls in 2012 
based on trade data reflected in the TCR). At the same time, the 
Commission expects that the introduction of volume-based reporting will 
lead to the Commission sending more special calls than it would 
otherwise, because this regime will identify new ownership and control 
relationships and patterns of trading activity. As a result, for 
purposes of estimating the costs of revised Sec.  18.05, the Commission 
assumes it will send 25% more special calls in response to trade data 
than it did in 2012, for a total of 53 special calls per year. These 
special calls will require a response from approximately 53 individual 
traders per year.
---------------------------------------------------------------------------

    \267\ See supra section I(B) for a discussion of the TCR.
---------------------------------------------------------------------------

    This estimate reflects only special calls sent pursuant to Sec.  
18.05 as a result of information collected via the volume-based 
reporting regime (i.e., New Form 102B and New Form 71).\268\ The 
estimated 53 recipients of such special calls may include some traders 
that are already subject to the costs and obligations of current Sec.  
18.05. The Commission estimates that each special call response 
submitted by the new categories of persons subject to revised Sec.  
18.05 will take approximately 5 hours, for a total annual reporting 
burden of 265 hours. Using an estimated wage rate of $70.07 per hour, 
annual reporting costs for the new categories of persons that are 
subject to revised Sec.  18.05 are estimated at $18,569.\269\
---------------------------------------------------------------------------

    \268\ The NPRM estimated the total annual cost to the industry 
of Sec.  18.05 following implementation of the final rules as 
$214,605. This figure included the cost to parties already subject 
to Sec.  18.05 who will not be impacted by the amendments to Sec.  
18.05 described herein. Consistent with the description of costs to 
reporting parties presented elsewhere herein, the estimate of 
$18,569 represents only the new or incremental costs imposed by the 
changes to Sec.  18.05 described in these final rules. The $18,569 
estimate is therefore less than the $214,605 estimate for revised 
Sec.  18.05 in the NPRM.
    \269\ The $18,569 figure is arrived at by multiplying 53 
responses by 5 hours (equals 265 hours) by $70.07 (equals $18,569).

                                       Sec.   18.05--Recordkeeping Burden
----------------------------------------------------------------------------------------------------------------
                                               Annual burden     Total annual
        Number of responses per year            per response   industry burden   Estimated wage       Annual
                                                  (hours)          (hours)            rate       industry  costs
----------------------------------------------------------------------------------------------------------------
53..........................................               5              265           $70.07          $18,569
----------------------------------------------------------------------------------------------------------------


[[Page 69212]]

B. Consideration of Costs and Benefits

i. Background
    The current rules and forms, which these final rules update, 
require FCMs, clearing members, and foreign brokers to identify special 
account traders to the Commission via Form 102.\270\ The Commission 
sends a Form 40 in its discretion via a special call to a trader 
identified on Form 102, requiring the trader to provide the Commission 
with detailed information regarding the nature of the trader's market 
activity. The current Form 102 and Form 40 are generally submitted to 
the Commission via a manual submission process (via email, facsimile, 
or regular mail). The Commission then individually uploads the forms 
into the Commission's Integrated Surveillance System (ISS), discussed 
in section I(B) above. The questions and data points on both forms 
relate only to the Commission's current position-based reporting rules.
---------------------------------------------------------------------------

    \270\ See supra section III for a discussion of the current 
trader and account identification programs.
---------------------------------------------------------------------------

    The final rules establish the information architecture necessary 
for the Commission to efficiently identify and categorize individual 
trading accounts and market participants that trigger position or 
newly-created volume-based reporting thresholds. By requiring the 
collection of ownership and control information via the new and amended 
forms, the Commission will be able to efficiently and effectively 
monitor risk exposure by institution, market class, and asset class 
over an extended period of time. To accomplish this, the final rules 
modify current Forms 102 and 40 to require additional information, 
require additional reporting via New Form 71, and modify the timing and 
method by which market participants are required to submit these forms 
to the Commission. New Form 102 will now be divided into three 
sections: 102A, 102B, and 102S. Section 102A captures information that 
must be reported when a trading account exceeds open position 
thresholds (a ``special account''); section 102B, which is new in its 
entirety, will capture information that must be reported when a trading 
account exceeds a specified volume threshold during a single trading 
day (a ``volume threshold account''); and section 102S will capture 
information that must be reported for consolidated accounts and swap 
counterparties that have a reportable position in swaps. The following 
summarizes each of the new and amended forms that will take the place 
of current Form 102 and 40 pursuant to these final rules.\271\
---------------------------------------------------------------------------

    \271\ See supra section IV for a detailed summary of the new and 
amended forms adopted in these final rules.
---------------------------------------------------------------------------

    New Form 102A. As noted above, Form 102A is a position-based 
reporting form, which requires the reporting of both special accounts 
and the trading accounts that comprise special accounts. This reporting 
will allow the Commission to link special accounts holding reportable 
positions to the transactions (and associated trading accounts) 
identified on daily trade capture reports received by the Commission. 
By illustrating the connections between end-of-day position reporting 
via Form 102 and daily trade capture reports, the final rules will 
enable the Commission to perform a more accurate and timely accounting 
of market position at the level of individual trading accounts, thereby 
improving the Commission's surveillance capabilities.\272\
---------------------------------------------------------------------------

    \272\ See the discussion of the daily trade capture reports in 
section I(B) above.
---------------------------------------------------------------------------

    New Form 102B. While Form 102A requires the reporting of large 
trader positions that remain open at the end of the day, Form 102B 
requires the reporting of trading accounts that exceed a stated volume 
threshold during a single trading day, regardless of whether these 
positions remain open at the end of the day. This will identify traders 
whose end-of-day open interest does not reach reportable levels on Form 
102A, but whose intra-day trading reaches the volume threshold, thus 
enabling the Commission to monitor trading that could potentially 
impact markets during concentrated periods of intra-day trading. The 
Commission expects that the addition of volume-based reporting will 
provide much needed information about high-frequency traders and other 
market participants using algorithmic systems, whose activities are not 
typically captured by the current position-based reporting regime. When 
combined with the position data reported on Form 102A, New Form 102B 
will improve the Commission's ability to: (i) Aggregate accounts under 
common ownership and/or control; (ii) better understand how certain 
market segments may affect the process of price formation; (iii) 
efficiently analyze trading behavior surrounding price spikes and other 
pricing anomalies throughout the day; and (iv) detect and investigate 
disruptive trading activities, including intraday speculative position 
limit violations and wash trades.
    New Form 71. The Commission will send Form 71, in its discretion 
via a special call, to collect additional information on omnibus volume 
threshold accounts identified on Form 102B (or on another Form 71). 
Form 71 is designed to permit originating firms to report the required 
information directly to the Commission without requiring such firms to 
disclose information regarding customers to potential competitors. Form 
71 illustrates the `nested' structure of omnibus accounts and 
underlying omnibus sub-accounts that are volume threshold accounts, and 
identifies the ultimate owner and controller of these accounts. Form 71 
will provide crucial ownership and control information to the 
Commission that is not collected under the current reporting regime. 
The Commission will use this ownership information to aggregate and 
analyze all trading by a market participant for surveillance purposes, 
irrespective of whether this trading is conducted through a single 
account, or through a number of accounts maintained by one or more 
intermediaries.
    New Form 102S. Form 102S is designed to facilitate the electronic 
submission of 102S filings. Such filings are currently being submitted 
to the Commission (pursuant to 17 CFR 20.5(a)) through a non-automated 
process. Form 102S will provide position-based reporting of 
consolidated accounts in the swaps market. The form expands the current 
102S reporting regime to require the reporting of ownership and control 
information with respect to such accounts. Swap reporting on Form 102S 
significantly improves the Commission's surveillance capabilities, by 
enabling it to track the market activity of a specific trader, 
including traders that may be dividing risk exposure between both on-
exchange and off-exchange instruments. Swap reporting will also enable 
the Commission to more efficiently aggregate position exposure in a 
particular product or commodity group. Such reporting also aligns with 
the Commission's recently finalized rules on real-time public and 
regulatory reporting of swap trades, and improves transparency into 
markets that, historically, have often been opaque and/or over-the-
counter.
    New Form 40/40S. Each of the 102 forms and Form 71 requires 
respondents to identify the parties that the Commission should contact 
(such as the account owner, controller, and related contact persons) if 
the Commission requires additional information regarding traders or 
trading accounts identified on the forms. The

[[Page 69213]]

Commission will send New Form 40 in its discretion via a special call 
to collect additional information from traders reported on each of the 
102 forms and Form 71. These final rules expand Form 40 by requiring 
the reporting trader to: (1) Indicate whether it is engaged in 
commodity index trading (as that term is defined in the form) (a 
question that does not appear on current Form 40); (2) report its 
control relationships with other entities, and other relationships with 
persons that influence or exercise authority over the trading of a 
reporting trader (a question that has been expanded on New Form 40); 
(3) identify all the business sectors that pertain to its business 
activities or occupation (a question that has been expanded on New Form 
40); and (4) identify all commodity groups and individual commodities 
that it presently trades, or expects to trade in the near future, in 
derivatives markets (a question that has been expanded on New Form 40), 
among other information.
    Responses to these questions will improve the Commission's ability 
to perform effective surveillance, by enabling it to better understand 
the ownership and control structure of reporting traders, and the 
extent of their business activities across multiple markets and product 
groups. The Commission will, furthermore, be able to use information 
reported on New Form 40 to cross-check several of the ownership and 
control data fields reported on New Form 102. The additional 
information requested on New Form 40 will improve the quality of data 
published in the Commission's reports, including the classifications in 
the Commitments of Traders Report. Finally, the Commission will be able 
to compare the trading goals that a respondent reports on New Form 40 
to its subsequent market activity. If the two do not correspond, the 
Commission will request additional information from the respondent in 
order to maintain accuracy in Commission databases and reports, or take 
other appropriate action.
    In sum, the final rules will build upon the Commission's existing 
market and trade practice surveillance programs for futures, options on 
futures, and swaps, by improving the Commission's understanding of the 
impact of special accounts, consolidated accounts, and newly designated 
volume threshold accounts on market activity. In turn, this will allow 
the Commission to better perform risk-based monitoring and surveillance 
among related accounts; efficiently monitor risk exposure by 
institution, market class, and asset class; facilitate investigations 
into disruptive trading activity by Commission enforcement staff; and 
expand the Commission's ability to research and analyze how a wide-
ranging variety of market participants impact market behavior.
ii. The Statutory Requirement for the Commission To Consider the Costs 
and Benefits of Its Actions
    Section 15(a) of the CEA \273\ requires the Commission to 
``consider the costs and benefits'' of its actions before promulgating 
a regulation under the CEA or issuing certain orders. Section 15(a) 
further specifies that the costs and benefits must 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. The Commission considers the costs and 
benefits resulting from its discretionary determinations with respect 
to the section 15(a) factors below.
---------------------------------------------------------------------------

    \273\ 7 U.S.C. 19(a).
---------------------------------------------------------------------------

    As a general matter, the Commission considers the incremental costs 
and benefits of these rules, that is the costs and benefits that are 
above the standard established by the Commission's existing 
regulations.\274\ Where reasonably feasible, the Commission has 
endeavored to estimate quantifiable costs and benefits. Where 
quantification is not feasible, the Commission identifies and describes 
costs and benefits qualitatively.\275\
---------------------------------------------------------------------------

    \274\ As discussed below with respect to costs more 
specifically, the Commission's estimated cost ranges assume that all 
market participants will start from the same point in developing the 
systems required to implement OCR reporting, irrespective of whether 
they provide certain forms under the current reporting system (e.g., 
the current Forms 102 and 40).
    \275\ For example, to quantify benefits such as improved 
transparency and enhanced protections for market participants and 
the public would require information, data and/or metrics that 
either do not exist, or to which the Commission generally does not 
have access.
---------------------------------------------------------------------------

iii. Commission Request for Comments Regarding Cost and Benefit 
Estimates
    The Commission requested comment on a variety of cost and benefit 
metrics in the NPRM. As a general matter, the Commission requested that 
commenters provide data and any other information or statistics that 
they relied on to reach conclusions on the Commission's cost and 
benefit estimates. The Commission also requested comment, including 
specific quantitative estimates, on the expected costs related to 
upgrading or obtaining systems to implement and comply with the 
reporting requirement under the proposed new and revised forms, as well 
as the impact of the proposed rules (or the relative impact of any 
alternative rules) on the section 15(a) factors. Although some 
commenters stated that the NPRM understated the total cost to the 
industry, no commenter provided specific quantitative cost or benefit 
estimates, or other information to more precisely estimate costs beyond 
those presented in the NPRM.\276\
---------------------------------------------------------------------------

    \276\ See section VIII(B)(vi) below for additional discussion of 
comments received by the Commission regarding the costs and benefits 
of reporting.
---------------------------------------------------------------------------

    In the absence of specific quantitative estimates or alternative 
cost proposals by commenters, the Commission performed its own analysis 
in updating the NPRM cost benefit considerations for these final rules. 
As explained below, for purposes of these final rules, the Commission 
has updated the cost estimates that appeared in the NPRM based on the 
most recent data and statistics available to the Commission. In this 
section VIII(B), the Commission has also calculated an estimated range 
of 25 percent below and 25 percent above the estimated total annual 
industry cost for each form. The Commission has applied these ranges 
because reporting costs will differ among market participants based on 
a variety of factors, including the state of their current technology 
systems, and their differing levels of market and reporting experience. 
The upper end of the ranges also responds to comments stating that the 
cost estimates in the NPRM understated the total cost to the industry 
(without expressing by how much, or to what degree).\277\
---------------------------------------------------------------------------

    \277\ See id.
---------------------------------------------------------------------------

iv. Methodology Used To Estimate Costs
    As discussed above, the Commission has calculated the total 
estimated industry cost for submitting each form via FTP or via the web 
portal. For each form, these calculations represent the total industry 
cost if all reporting parties submit information via one method--as 
compared to the total industry cost if all parties submit via the other 
method. For example, the 102A estimates described in sections VIII(A) 
and (B) represent the total estimated industry cost if all reporting 
parties submit 102A via FTP ($1,931,129), or if all parties submit 102A 
via the web portal ($5,954,969). The Commission recognizes that, even 
if it is less expensive for the industry as a whole to submit 102A via 
FTP, it may be less expensive for certain individual reporting parties 
to submit 102A via the web portal. This may be due to the limited 
number of forms these parties

[[Page 69214]]

expect to submit, their technology infrastructure, or other factors.
    To expand on this example, if a new reporting party anticipates 
that it will submit only two 102A filings per year, it might logically 
conclude that it would be less expensive to submit its two filings via 
the web portal than to incur the development costs associated with 
establishing an FTP link to the Commission. In this instance, the 
Commission has estimated that the reporting party would incur 20 hours 
of initial development burden for each of the two records submitted via 
the web portal, or a total initial development burden of 40 hours. 
Accordingly, the reporting party may conclude that submitting its 102A 
filings via the web portal is more cost-effective than submitting the 
same information via FTP, which the Commission has estimated would 
require an initial development burden of 264 hours per entity 
(regardless of the number of forms submitted).\278\
---------------------------------------------------------------------------

    \278\ In this example, the Commission expects that reporting 
parties making a small number of filings would choose to submit via 
the web-based portal, because web submission would be the most cost-
effective submission method for such parties. In doing so, they will 
incur fewer costs than they would if they submitted via FTP, thereby 
lowering the total costs to the industry. As a result, the 
simplifying assumption that all reporting parties will submit New 
Form 102A (along with certain other forms discussed below) via FTP 
is a conservative assumption, which will tend to overestimate the 
total industry cost.
---------------------------------------------------------------------------

    The cost estimates in section VIII(A) and (B) assume that all 
market participants will start from the same point in developing the 
systems required to implement OCR reporting. Accordingly, to the extent 
that current reporting parties leverage their existing reporting 
systems \279\ to implement OCR reporting, the cost estimates are likely 
to overestimate actual costs to some degree for such parties.
---------------------------------------------------------------------------

    \279\ Certain parties that will be required to report under 
these final rules now provide certain forms under the current 
reporting system (e.g., the current Forms 102 and 40).
---------------------------------------------------------------------------

    For the following additional reasons, the Commission anticipates 
that total reporting and recordkeeping costs to the industry are likely 
to be lower than the sum of the costs associated with each form 
individually, as the Commission has calculated herein.
    First, the reporting and recordkeeping burdens arising from each 
regulation and associated form were estimated independently of the 
requirements of the other regulations and associated forms. The 
Commission anticipates that substantial synergies are likely to exist 
across the systems and data necessary to meet the reporting 
requirements. For example, many reporting firms submitting New Form 
102A via FTP (which the Commission believes is the more cost-effective 
submission method for the industry as a whole) will also submit New 
Form 102B via FTP, and will be able to leverage systems and information 
necessary for submitting one form to meet the requirement to submit the 
other.
    Second, the Commission has incorporated a number of proposals made 
by commenters that are intended to reduce the reporting burden and 
associated costs to market participants. These proposals are described 
in section VII above and section VIII(B)(vii) below. While the 
Commission has updated the cost estimates that appeared in the NPRM 
based on the most recent data and statistics available to the 
Commission, in order to generate more conservative cost estimates, the 
Commission has not reduced the cost estimates in these final rules to 
account for the incorporation of these cost-saving proposals.
v. Costs and Benefits of Individual Reporting Forms and Reporting and 
Recordkeeping Requirements
    The discussion below considers the anticipated costs and benefits 
to the industry of New Form 102A, New Form 102B, New Form 71, New Form 
40, New Form 102S, New Form 40S, and the reporting and recordkeeping 
requirements of revised Sec.  18.05.
New Form 102A
(1) Overview of New Form 102A
    New Form 102A, which identifies owners and controllers of special 
accounts and other related information, is based on the Form 102 
currently in use. These final rules do not modify the definition of 
what constitutes a ``special account'' for reporting purposes.\280\ The 
rules do, however, increase the amount of information required to be 
reported with respect to each special account. For example, New Form 
102A requests that the respondent provide the Web site, NFA ID, and 
Legal Entity Identifier of the owners and controllers reported on the 
form, to the extent this information is available in the respondent's 
records. More significantly, New Form 102A requires respondents to 
identify the owners and controllers of each trading account that 
comprises the reported special account. The preceding information is 
not collected on current Form 102. These newly collected data points 
will allow the Commission to link special accounts holding reportable 
positions to the transactions (and associated trading accounts) 
identified on daily trade capture reports received by the Commission. 
The Commission understands that (as noted by comment letters on the 
2010 OCR NPRM) \281\ the majority of these data points already reside 
with reporting parties.\282\ As a result, reporting parties will not 
need to coordinate with external parties in order to compile most data 
points required by New Form 102A.
---------------------------------------------------------------------------

    \280\ See Sec.  15.005(r) of the Commission's regulations.
    \281\ All 2010 OCR NPRM comment letters are available through 
the Commission's Web site at: https://comments.cftc.gov/PublicComments/CommentList.aspx?id=755&ctl00_ctl00_cphContentMain_MainContent_gvCommentListChangePage=1
    \282\ The Commission received a number of comment letters in 
response to the 2010 OCR NPRM, and incorporated several of their 
suggestions in the NPRM (published in the Federal Register in 2012), 
which forms the basis for these final rules. Among these changes, 
the Commission removed certain questions from the reporting forms 
asking for data that, in the view of commenters, is not maintained 
by reporting parties. See NPRM supra note 10 at 43973-43974 for a 
discussion of comments received in response to the 2010 OCR NPRM 
that were incorporated in the NPRM. See also the December 23, 2010 
comment letter from FIA at 9 and Exhibit A; October 7, 2010 comment 
letter from CME at 4; and October 7, 2010 comment letter from ICE at 
3, which establish that the majority of the remaining data points, 
which appear on the forms adopted in these final rules, already 
reside with reporting parties.
---------------------------------------------------------------------------

(2) Benefits of New Form 102A
    The reporting of trading accounts that comprise a special account 
will provide common reference points between TSS and ISS data, thereby 
enabling the Commission to efficiently compare end-of-day reportable 
positions with intra-day account activity.\283\ By connecting end-of-
day position level data with intra-day account activity, the Commission 
will be able to efficiently determine the ownership or control of 
specific positions held by individual trading accounts at any time 
throughout the trading day, thereby improving market transparency. More 
specifically, Commission staff will use the additional ownership and 
control information to determine whether a reported account is a new 
account of a previously reported trader, or whether it correlates to a 
previously unreported trader. If the account is owned or controlled by 
a previously reported trader, it will be aggregated with other related 
accounts currently being reported. By identifying and aggregating 
accounts in this manner, Commission staff can more thoroughly monitor 
and assess a trader's potential market impact during significant 
periods such as price spikes or settlement periods, monitor the 
trader's compliance with speculative position limits, and determine 
whether

[[Page 69215]]

the trader is engaging in abusive or disruptive practices (such as 
marking the close, ``wash trading,'' or money passing). By aggregating 
the accounts of individual traders, the Commission will also be able to 
more efficiently calculate aggregate position exposure in a particular 
product or commodity group. In sum, the additional information provided 
by New Form 102A will contribute to the overall integrity of the 
financial markets, by improving the Commission's ability to detect and 
investigate disruptive or manipulative behavior.
---------------------------------------------------------------------------

    \283\ See supra section I(B) for a discussion of the TSS and 
ISS.
---------------------------------------------------------------------------

(3) Costs of New Form 102A
    The Commission assumes that each New Form 102A reporting party will 
submit New Form 102A via secure FTP, which the Commission believes is 
the more cost-effective of the two filing methods for the industry as a 
whole. Each FTP submission will likely contain numerous 102A records. 
The Commission estimates that the total initial development burden will 
average 264 hours per reporting party. The Commission also estimates 
that the highly automated nature of this option will virtually 
eliminate the marginal costs associated with each additional submission 
or each additional record contained in a submission. Accordingly, the 
Commission estimates that 102A change and refresh updates will not 
increase a reporting party's burden when using the FTP submission 
method. The Commission further estimates that the ongoing operation and 
maintenance burden will average 53 hours per year no matter how many 
records are contained in a submission. The total annualized initial 
development burden and the ongoing operation and maintenance burden 
(total yearly burden) will equal approximately 106 hours per reporting 
party.\284\
---------------------------------------------------------------------------

    \284\ All annualized development burden estimates are based on 5 
year, straight line depreciation. The 106 hour figure is arrived at 
by dividing 264 hours (initial development burden per reporting 
party) by 5 years, which results in an estimated annualized initial 
development burden of 53 hours per reporting party. 53 hours plus 53 
hours (annual, ongoing operation and maintenance burdens per 
reporting party) equals 106 hours per reporting party.
---------------------------------------------------------------------------

    An assessment of Commission data collection efforts demonstrated 
that the Commission received Form 102 submissions from 260 reporting 
parties in 2012. The Commission anticipates that it will receive New 
Form 102A submissions from a similar number of reporting parties each 
year. Assuming all New Form 102A reporting parties utilize the FTP 
submission method, the Commission estimates that the total annual 
industry burden for New Form 102A will equal 27,560 hours. Using an 
estimated wage rate of $70.07 per hour,\285\ annual industry costs for 
102A filings made pursuant to the FTP submission method are estimated 
at $1,931,129.
---------------------------------------------------------------------------

    \285\ The Commission staff's estimates concerning the wage rates 
are based on salary information for the securities industry compiled 
by the Securities Industry and Financial Markets Association 
(``SIFMA''). The $70.07 per hour is derived from figures from a 
weighted average of salaries and bonuses across different 
professions from the SIFMA Report on Management & Professional 
Earnings in the Securities Industry 2011, modified to account for an 
1800-hour work-year and multiplied by 1.3 to account for overhead 
and other benefits. The wage rate is a weighted national average of 
salary and bonuses for professionals with the following titles (and 
their relative weight): ``programmer (senior)'' (30% weight); 
``programmer'' (29% weight); ``compliance advisor (intermediate)'' 
(15%), ``systems analyst'' (16%), and ``assistant/associate general 
counsel'' (10%). The $70.07 wage rate is a blended rate, such that 
the Commission has applied the same $70.07 wage rate when 
calculating the cost of submission via both FTP and the web-based 
portal. As noted above, the NPRM contemplated that Forms 40/S and 71 
could be submitted only via the web portal. However, pursuant to 
these final rules, the Commission is allowing reporting parties to 
submit Forms 40/S and 71 via FTP as well, with the result that 
reporting parties may submit all forms either via the web portal or 
via FTP. In light of this change, the wage rage percentages in these 
final rules have been updated and slightly modified from the wage 
rate percentages in the NPRM, to more accurately reflect anticipated 
labor allocations. The NPRM employed the following wage rage 
percentages: ``programmer (senior)'' (30% weight); ``programmer'' 
(30% weight); ``compliance advisor (intermediate)'' (20%), ``systems 
analyst'' (10%), and ``assistant/associate general counsel'' (10%). 
While the NPRM calculated an estimated wage rate of $78.61 per hour, 
these final rules calculate an estimated wage rate of $70.07 per 
hour using the 2011 SIFMA statistics and updated wage rate 
percentages. (Note that the national average of salary and bonuses 
for the professionals listed above declined between 2010 to 2011, 
according to the SIFMA report addressing each of those years. The 
2010 SIMA report (which is the basis for the wage rate in the NPRM) 
indicates an aggregate national average of salary and bonuses of 
$530,321 for these professionals, while the 2011 SIFMA report 
indicates an aggregate national average of salary and bonuses of 
$510,943.) The Commission has also updated the cost estimates that 
appeared in the NPRM based on the most recent data and statistics 
available to the Commission (including, for example, the number of 
reporting forms received by the Commission in 2012). The NPRM 
calculated an estimated total annual cost to the industry of 
$9,147,061, as compared to an estimated total cost to the industry 
of $9,574,296 in these final rules, per section VIII(A) above. See 
also supra note 265.
---------------------------------------------------------------------------

    As indicated throughout this section VIII(B), the Commission has 
used the same wage rate of $70.07 when calculating the cost of 
submission via both the web portal and FTP. Each submission method 
will, nonetheless, require a different annual or annualized burden, in 
terms of hours. This $70.07 wage rate represents the work of a senior 
programmer, programmer, intermediate compliance advisor, systems 
analyst, and assistant/associate general counsel, in the proportions 
described in the preceding footnote.
---------------------------------------------------------------------------

    \286\ As noted in section VIII(A), the initial development cost 
per reporting party is estimated at $18,498 (264 hours of initial 
development burden x a wage rate of $70.07). The Commission expects 
that reporting parties will budget initial development costs in the 
manner that is most cost-effective for each party, which may result 
in some reporting parties incurring the majority of these initial 
development costs in the beginning of the rule compliance period.
    \287\ The Commission has calculated an estimated range of 25% 
below and 25% above the estimated total annual industry cost, due to 
the fact that reporting costs will differ among market participants 
based on a variety of factors, including the state of their current 
technology systems, and their differing levels of market and 
reporting experience. The upper end of the ranges also responds to 
comments stating that the cost estimates in the NPRM understated the 
total cost to the industry (without expressing by how much, or to 
what degree).
    \288\ The Commission estimated the total annual industry cost 
associated with each filing obligation by considering the two 
distinct filing methods that it will accommodate pursuant to these 
final rules (web-based submission and FTP submission). The estimated 
cost of each filing obligation assumes that all reporting parties 
will file via the less expensive of the two filing methods. However, 
reporting parties, given their own individualized needs, are assumed 
to make the most cost-effective choice for them, which may be either 
of the two methods. As noted in section VIII(A) above, the estimated 
total annual industry cost of the more expensive submission method, 
via the web-based portal, is $5,954,969. The $5,954,969 figure is 
arrived at by multiplying the anticipated 7,726 records by 11 hours 
anticipated burden per record (equals 84,986 hours) by a wage rate 
of $70.07 (equals $5,954,969). An estimated low and high range (25% 
below and above this figure) equals $4,466,227 and $7,443,711, 
respectively.

                                                    Form 102A
----------------------------------------------------------------------------------------------------------------
                                                                   Estimated low and high range
                                                 Estimated total     (25% below and 25% above      Anticipated
                   Regulation                    annual industry      estimated total annual       transmission
                                                    cost \286\         industry cost) \287\        method \288\
----------------------------------------------------------------------------------------------------------------
17.01(a).......................................      $1,931,129          $1,448,347-$2,413,911              FTP
----------------------------------------------------------------------------------------------------------------


[[Page 69216]]

New Form 102B
(4) Overview of New Form 102B
    New Form 102B provides a new volume-based reporting structure not 
found in current Form 102. While current Form 102 reporting 
requirements arise when an account (or collection of related accounts) 
has a reportable position, 102B reporting is triggered when an 
individual trading account meets a specified trading volume level in an 
individual product and, as a result, becomes a ``volume threshold 
account.'' As noted above, volume threshold accounts could reflect, 
without limitation, trading in futures, options on futures, swaps, and 
any other product traded on or subject to the rules of a DCM or SEF.
(5) Benefits of New Form 102B
    The current position-based reporting regime captures over 90 
percent of open interest in many markets regulated by the Commission. 
Nonetheless, the current system is not specifically designed to 
identify market participants using algorithmic systems, whose 
activities have been opaque under the position-based reporting regime. 
These traders typically enter and exit a given market position within 
very brief periods intraday, and are therefore rarely captured by end-
of-day position reports. In highly liquid markets, participants of this 
type can make up a meaningful percentage of market activity. The 
addition of volume-based reporting, which identifies intra-day trading 
activity meeting a volume threshold regardless of whether positions 
continue to be held at the end of day, will enable the Commission to 
better understand the behavior and evolution of this rapidly growing 
market segment. Reporting on 102B will also enable the Commission to 
identify other types of high-volume traders that may hold positions for 
longer periods of time than is characteristic of high-frequency 
traders, but nonetheless enter and exit positions intraday.
    While the Commission is able to view intraday transactions via the 
Commission's trade capture report, this report does not provide 
ownership or control information regarding the relevant trading 
accounts. Because the Commission lacks the information necessary to 
efficiently link transaction and account data, the Commission is unable 
to aggregate the positions of individual trading accounts, or associate 
trading accounts with special accounts in a timely fashion. The 
addition of volume-based reporting via New Form 102B will remedy this, 
by providing the Commission with an efficient means to collect the 
information required to aggregate positions, detect intra-day position 
limit violations, and calculate market share. When analyzing periods of 
elevated volatility--especially at significant trading times such as 
market open and close--the ability to aggregate intra-day trading 
behavior by owner/controller is crucial to understanding whether a 
trader has adversely affected (or has the potential to affect) market 
quality or price discovery.
    In sum, the information collected on new Form 102B will 
significantly improve the efficiency and performance of the 
Commission's market and trade practice surveillance program. The 
Commission anticipates that New Form 102B will allow the Commission to 
perform more comprehensive surveillance, by identifying over 90 percent 
of market activity in many significant products that are traded intra-
day but not held overnight, mirroring the level of account 
identification under the current end-of-day position-based reporting 
regime. In so doing, it will improve the integrity of financial 
markets, protecting market participants and the public from the costs 
of disruptive trading practices and other market abuses. Improving the 
Commission's surveillance program will also support the Commission's 
enforcement efforts to investigate such market abuses. Finally, the 
ability to more efficiently identify and aggregate trading activity 
will improve the Commission's research capabilities as well as its 
forensic analysis of disruptive market events, even when prohibited 
practices are not involved. For example, the Commission's efforts to 
identify and aggregate trading activity were shown to be particularly 
helpful in diagnosing events such as the Flash Crash of 2010.\289\
---------------------------------------------------------------------------

    \289\ See ``Findings Regarding the Market Events of May 6, 
2010,'' available at: https://www.sec.gov/news/studies/2010/marketevents-report.pdf.
---------------------------------------------------------------------------

(6) Costs of New Form 102B
    The Commission assumes that each New Form 102B reporting party will 
submit New Form 102B via secure FTP, which the Commission believes is 
the more cost-effective of the two filing methods for the industry as a 
whole. Each FTP submission will likely contain numerous 102B records. 
The Commission estimates that the total initial development burden 
should average 264 hours per reporting party. The Commission also 
estimates that the highly automated nature of this option will 
virtually eliminate the marginal costs associated with each additional 
submission or each additional record contained in a submission. 
Accordingly, the Commission estimates that 102B change and refresh 
updates will not increase a reporting party's burden when using the FTP 
submission method. The Commission further estimates that the ongoing 
operation and maintenance burden will average 53 hours per year no 
matter how many records are contained in a submission. The total 
annualized initial development burden and the ongoing operation and 
maintenance burden (total yearly burden) equals approximately 106 hours 
per reporting party.\290\
---------------------------------------------------------------------------

    \290\ All annualized development burden estimates are based on 5 
year, straight line depreciation.
---------------------------------------------------------------------------

    Because New Form 102B provides a new volume-based reporting 
structure not found in current Form 102, the Commission is unable to 
refer to historical reporting statistics to directly estimate the 
number of New Form 102B reporting parties. Instead, the Commission 
estimated the number of New Form 102B reporting parties by estimating 
the number of clearing members associated with trading accounts that 
the Commission projects will qualify as volume threshold accounts.
     For volume threshold accounts associated with DCMs, the 
Commission anticipates that it will receive New Form 102B submissions 
from approximately 100 reporting parties annually. Assuming that all 
such reporting parties utilize the FTP submission method, the 
Commission estimates that the total annual industry burden for the 
reporting of such accounts on New Form 102B will equal 10,600 
hours.\291\ Using an estimated wage rate of $70.07 per hour, annual 
industry costs for such filings made pursuant to the FTP submission 
method are estimated at $742,742.\292\
---------------------------------------------------------------------------

    \291\ The 10,600 hour figure is arrived at by multiplying 106 
hours (annualized development burden and ongoing operation and 
maintenance burden per reporting party) by 100 reporting parties.
    \292\ The $742,742 figure is arrived at by multiplying 100 
reporting parties by 106 hours (equals 10,600 hours) by $70.07 
(equals $742,742).
---------------------------------------------------------------------------

     For volume threshold accounts associated with SEFs, the 
Commission anticipates that it will receive New Form 102B submissions 
from approximately 75 reporting parties annually. Assuming that all 
such reporting parties utilize the FTP submission method, the 
Commission estimates that the total annual industry burden for the 
reporting of such accounts on New Form 102B will equal 7,950 
hours.\293\ Using an estimated wage

[[Page 69217]]

rate of $70.07 per hour, annual industry costs for such filings made 
pursuant to the FTP submission method are estimated at $557,057.\294\
---------------------------------------------------------------------------

    \293\ The 7,950 hour figure is arrived at by multiplying 106 
hours (annualized development burden and ongoing operation and 
maintenance burden per reporting party) by 75 reporting parties.
    \294\ The $557,057 figure is arrived at by multiplying 75 
reporting parties by 106 hours (equals 7,950 hours) by $70.07 
(equals $557,057).
---------------------------------------------------------------------------

    Collectively, annual industry costs for 102B filings made pursuant 
to the FTP submission method are estimated at $1,299,799.\295\
---------------------------------------------------------------------------

    \295\ The $1,299,799 figure is arrived at by multiplying 175 
reporting parties by 106 hours (equals 18,550 hours) by $70.07 
(equals $1,299,799).
    \296\ As noted in section VIII(A), the initial development cost 
per reporting party is estimated at $18,498 (264 hours of initial 
development burden x a wage rate of $70.07). The Commission expects 
that reporting parties will budget initial development costs in the 
manner that is most cost-effective for each party, which may result 
in some reporting parties incurring the majority of these initial 
development costs in the beginning of the rule compliance period.
    \297\ The Commission has calculated an estimated range of 25% 
below and 25% above the estimated total annual industry cost, due to 
the fact that reporting costs will differ among market participants 
based on a variety of factors, including the state of their current 
technology systems, and their differing levels of market and 
reporting experience. The upper end of the ranges also responds to 
comments stating that the cost estimates in the NPRM understated the 
total cost to the industry (without expressing by how much, or to 
what degree).
    \298\ As noted in section VIII(A) above, the estimated total 
annual industry cost of the more expensive submission method, via 
the web-based portal, is $144,916,322. The $144,916,322 figure is 
arrived at by multiplying the anticipated 188,015 records by 11 
hours anticipated burden per record (equals 2,068,165 hours) by a 
wage rate of $70.07 (equals $144,916,322). An estimated low and high 
range (25% below and above this figure) equals $108,687,242 and 
$181,145,403, respectively.

                                                    Form 102B
----------------------------------------------------------------------------------------------------------------
                                                 Estimated total   Estimated low and high range
                                                      annual         (25% below and 25% above      Anticipated
                   Regulation                     industry cost       estimated total annual       transmission
                                                      \296\            industry cost) \297\        method \298\
----------------------------------------------------------------------------------------------------------------
17.01(b).......................................      $1,299,799            $974,849-$1,624,749              FTP
----------------------------------------------------------------------------------------------------------------

New Form 71
(7) Overview of New Form 71
    New Form 71 (``Identification of Omnibus Accounts and Sub-
Accounts'') will be sent, in the Commission's discretion, in the event 
that a volume threshold account is identified as a customer omnibus 
account on Form 102B. The Commission will send New Form 71 via a 
special call to the originating firm of such an account. If the 
originating firm indicates that this account is itself an omnibus 
account (an ``omnibus reportable sub-account''), then the originating 
firm will be required to indicate whether the omnibus reportable sub-
account is a house or customer omnibus account and identify the 
originator of the omnibus reportable sub-account. Another Form 71 will 
be sent, at the discretion of Commission staff, to the originator of a 
customer omnibus reportable sub-account identified on Form 71. At its 
discretion, the Commission will continue to reach through layered 
customer omnibus reportable sub-accounts via successive Form 71s until 
reaching all reportable sub-accounts, if any, that are not omnibus sub-
accounts. Form 71 therefore illustrates the `nested' structure of 
omnibus accounts and underlying omnibus sub-accounts that are volume 
threshold accounts, and identifies the ultimate owner and controller of 
these accounts.
(8) Benefits of New Form 71
    Without the information provided on New Form 71, the Commission is 
unable to determine whether trading activity in omnibus accounts is 
attributable to accounts under common ownership or control, or whether 
it simply represents the combined trading activity of multiple traders 
acting independently of one another. Similar to the benefits of New 
Form 102B, the ability to aggregate trading activity will enable the 
Commission to better identify manipulative and disruptive trading 
activity, regardless of whether this activity is conducted through a 
single account, or spread across a number of omnibus accounts and sub-
accounts.
(9) Costs of New Form 71
    The Commission assumes that each New Form 71 reporting party (i.e., 
originators of omnibus volume threshold accounts or omnibus reportable 
sub-accounts) will complete and submit New Form 71 online via a secure 
web-based portal provided by the Commission, which the Commission 
believes is the more cost-effective of the two filing methods for the 
industry as a whole. The Commission estimates that, on average, New 
Form 71 will create an annual reporting burden of 8 hours per 
filing.\299\
---------------------------------------------------------------------------

    \299\ The submission of New Form 71 through the web-based portal 
does not require initial development expenditures; as a result, the 
burdens and costs for this form are calculated on an annual basis 
rather than an annualized basis. In addition, Form 71 does not 
require change or refresh updates.
---------------------------------------------------------------------------

    As discussed in section VIII(A) above, the Commission expects 
approximately 564 DCM-related New Form 71 filings per year, and 198 
SEF-related New Form 71 filings per year.
     Based on an estimated 564 DCM-related New Form 71 filings 
per year, the Commission estimates an aggregate reporting burden of 
4,512 hours annually for such filings via the web-based portal. Using 
an estimated wage rate of $70.07 per hour, annual industry costs for 
such filings made via the web-based portal are estimated at 
$316,156.\300\
---------------------------------------------------------------------------

    \300\ The $316,156 figure is arrived at by multiplying 564 
records by 8 hours (equals 4,512 hours) by $70.07 (equals $316,156).
---------------------------------------------------------------------------

     Based on an estimated 198 SEF-related New Form 71 filings 
per year, the Commission estimates an aggregate reporting burden of 
1,584 hours annually for such filings via the web-based portal. Using 
an estimated wage rate of $70.07 per hour, annual industry costs for 
such filings made via the web-based portal are estimated at 
$110,991.\301\
---------------------------------------------------------------------------

    \301\ The $110,991 figure is arrived at by multiplying 198 
records by 8 hours (equals 1,584 hours) by $70.07 (equals $110,991).
---------------------------------------------------------------------------

    Collectively, annual industry costs for New Form 71 filings made 
via the web-based portal are estimated at $427,147.\302\
---------------------------------------------------------------------------

    \302\ The $427,147 figure is arrived at by multiplying 762 
records by 8 hours (equals 6,096 hours) by $70.07 (equals $427,147).
    \303\ The Commission has calculated an estimated range of 25% 
below and 25% above the estimated total annual industry cost, due to 
the fact that reporting costs will differ among market participants 
based on a variety of factors, including the state of their current 
technology systems, and their differing levels of market and 
reporting experience. The upper end of the ranges also responds to 
comments stating that the cost estimates in the NPRM understated the 
total cost to the industry (without expressing by how much, or to 
what degree).
    \304\ As noted in section VIII(A) above, the estimated total 
annual industry cost of the more expensive submission method, via 
FTP data feed, is $5,659,694. The $5,659,694 figure is arrived at by 
multiplying the anticipated 762 reporting parties by 106 hours of 
annualized development burden and ongoing operation and maintenance 
burden (equals 80,772 hours) by a wage rate of $70.07 (equals 
$5,659,694). An estimated low and high range (25% below and above 
this figure) equals $4,244,771 and $7,074,618, respectively.

[[Page 69218]]



                                                     Form 71
----------------------------------------------------------------------------------------------------------------
                                                                   Estimated low and high range
                                                 Estimated total     (25% below and 25% above      Anticipated
                   Regulation                         annual          estimated total annual       transmission
                                                  industry cost        industry cost) \303\        method \304\
----------------------------------------------------------------------------------------------------------------
17.01(c).......................................        $427,147              $320,360-$533,934              web
----------------------------------------------------------------------------------------------------------------

New Form 40
(10) Overview of New Form 40
    New Form 40 will be sent, on special call of the Commission, to 
individuals and other entities identified on any of 102A, 102B, and 
Form 71. New Form 40, still referred to as the ``Statement of Reporting 
Trader,'' will continue to serve the function traditionally met by 
current Form 40. At the same time, New Form 40 will provide the 
Commission with more detailed information than current Form 40 
regarding both the business activities and the ownership and control 
structure of a reporting trader identified in the Commission's Form 102 
program (as updated by these final rules). New Form 40 will also be the 
vehicle through which market participants subject to 17 CFR 20.5(b) 
submit their 40S filings (discussed below), and will be used to collect 
additional information regarding the owners and controllers of non-
omnibus volume threshold accounts identified by Form 71. Those entities 
required to complete a New Form 40 will be under a continuing 
obligation, per direction in the special call, to update and maintain 
the accuracy of the information submitted on New Form 40 by 
periodically updating the information on the New Form 40 web portal or 
by periodically resubmitting New Form 40 by secure FTP transmission.
    Among other requested data fields, New Form 40: asks if the 
respondent is engaged in commodity index trading (as that term is 
defined in the form) (a question that does not appear on current Form 
40); requires the respondent to identify all the business sectors that 
pertain to its business activities or occupation (a question that has 
been expanded on New Form 40); requires the respondent to identify all 
commodity groups and individual commodities that it presently trades, 
or expects to trade in the near future, in derivatives markets (a 
question that has been expanded on New Form 40); and requires the 
respondent to indicate the business purpose for which it uses 
derivatives markets (a question that has been expanded on New Form 40).
(11) Benefits of New Form 40
    The expanded Form 40 will improve the Commission's ability to 
perform effective surveillance, by providing the Commission with more 
detailed data on reporting traders, including: information regarding 
reporting traders' control relationships with other entities; other 
relationships with persons that influence or exercise authority over 
the trading of a reporting trader; and more detailed information 
regarding the business activities of the reporting trader. Responses to 
the questions above will enable the Commission to better understand the 
ownership and control structure of reporting traders, and the extent of 
their business activities across multiple markets and product groups. 
This enhanced visibility will, in turn, improve the Commission's 
ability to respond to market disruptions, which can come at a high cost 
to the investing and general public. The Commission will also be able 
to use information reported on New Form 40 to cross-check several of 
the ownership and control data fields reported on New Form 102. The 
Commission will be able to compare the trading goals that a respondent 
reports on New Form 40 to its subsequent market activity. If the two do 
not correspond, the Commission will request additional information from 
the respondent in order to maintain accuracy in Commission databases 
and reports, or take other appropriate action.
    Currently, Form 40s (as well as Form 102s) are submitted to the 
Commission via facsimile, email, and physical mail. The Commission 
converts these submissions into an electronic format, and loads them 
into the Commission's Integrated Surveillance System. Automating Form 
40 submission will improve efficiency by eliminating this additional 
layer of transcription. As a result, these final rules will reduce the 
likelihood of input errors. The rules will also reduce the burden and 
costs that arise when Commission staff must contact reporting parties 
to request additional information or clarification due to errors 
arising from mistaken inputs. The more accurate data reported via the 
automated Form 40 will, in turn, improve the quality of the 
Commission's published reports, such as the classifications in the 
Commitments of Traders report.
(12) Costs of New Form 40
    New Form 40 Submissions Resulting from New Form 102A. The 
Commission assumes that each reporting party filing New Form 40 as a 
result of New Form 102A (i.e., special account owners and controllers) 
will complete and submit New Form 40 online via a secure web-based 
portal provided by the Commission, which the Commission believes is the 
more cost-effective of the two filing methods for the industry as a 
whole.
    As discussed in section VIII(A) above, the Commission expects 
approximately 5,250 New Form 40 records filings per year arising from 
New Form 102A filings. The Commission estimates that each of the 5,250 
New Form 40 records will require three hours to complete.\305\ Assuming 
each such New Form 40 record is provided via the web-based portal, the 
Commission estimates that the total annual industry burden for 
reporting on New Form 40, as a result of New Form 102A, will equal 
15,750 hours. Using an estimated wage rate of $70.07 per hour, annual 
industry costs for New Form 40 filings arising from special accounts 
are estimated at $1,103,603.\306\
---------------------------------------------------------------------------

    \305\ The Commission's estimate of three hours per response 
reflects an initial, one-time burden of 10 hours, annualized over a 
five-year period, plus an additional hour per year for change 
updates.
    \306\ The $1,103,603 figure is arrived at by multiplying 5,250 
records by 3 hours (equals 15,750 hours) by $70.07 (equals 
$1,103,603).
---------------------------------------------------------------------------

    New Form 40 Submissions Resulting from New Form 102B and New Form 
71. The Commission also assumes that each reporting party filing New 
Form 40 as a result of New Form 102B and New Form 71 (i.e., volume 
threshold account controllers, persons who own volume threshold 
accounts, reportable sub-account controllers, and persons who own 
reportable sub-accounts) will complete and submit New Form 40 online 
via a secure web-based portal provided by the Commission.

[[Page 69219]]

    As discussed in section VIII(A) above, the Commission anticipates 
that it will receive approximately 13,409 DCM-related New Form 40 
filings annually and approximately 5,511 SEF-related New Form 40 
filings annually, in each case arising from New Form 102B and New Form 
71.\307\ Each such New Form 40 filing is estimated to require three 
hours.\308\ Assuming each such New Form 40 record is provided via the 
web-based portal:
---------------------------------------------------------------------------

    \307\ As with 102A records, the Commission estimates that in 
approximately 25 percent of filings, the owner and the controller of 
a volume threshold account reported on New Form 102B will be the 
same, and that accordingly, only one New Form 40 would be required. 
Similarly, a number of potential New Form 40 reporting parties are 
likely to own or control both DCM-related and SEF-related volume 
threshold accounts, but only one New Form 40 would be required.
    \308\ The Commission's estimate of three hours per response 
reflects an initial, one-time burden of 10 hours, annualized over a 
five-year period, plus an additional hour per year for change 
updates.
---------------------------------------------------------------------------

     The Commission estimates that the total annual industry 
burden for reporting on New Form 40, as a result of New Form 102B and 
New Form 71, will equal 40,227 hours for DCM-related New Form 40 
filings. Using an estimated wage rate of $70.07 per hour, annual 
industry costs for such filings arising from volume threshold accounts 
and reportable sub-accounts are estimated at $2,818,706.\309\
---------------------------------------------------------------------------

    \309\ The $2,818,706 figure is arrived at by multiplying 13,409 
filings by 3 hours (equals 40,227 hours) by $70.07 (equals 
$2,818,706).
---------------------------------------------------------------------------

     The Commission estimates that the total annual industry 
burden for reporting on New Form 40, as a result of New Form 102B and 
New Form 71, will equal 16,533 hours for SEF-related New Form 40 
filings. Using an estimated wage rate of $70.07 per hour, annual 
industry costs for such filings arising from volume threshold accounts 
and reportable sub-accounts are estimated at $1,158,467.\310\
---------------------------------------------------------------------------

    \310\ The $1,158,467 figure is arrived at by multiplying 5,511 
filings by 3 hours (equals 16,533 hours) by $70.07 (equals 
$1,158,467).
---------------------------------------------------------------------------

    Collectively, annual industry costs for New Form 40 filings, as a 
result of New Form 102B and New Form 71, are estimated at 
$3,977,173.\311\
---------------------------------------------------------------------------

    \311\ The $3,977,173 figure is arrived at by multiplying 18,920 
filings by 3 hours (equals 56,760 hours) by $70.07 (equals 
$3,977,173).

           Form 40--Submissions Resulting From (a) New Form 102A and (b) New Form 102B and New Form 71
----------------------------------------------------------------------------------------------------------------
                                                 Estimated total   Estimated low and high range
                                                      annual         (25% below and 25% above      Anticipated
                   Regulation                     industry cost       estimated total annual       transmission
                                                      \312\            industry cost) \313\           method
----------------------------------------------------------------------------------------------------------------
18.04(a).......................................      $1,103,603            $827,702-$1,379,504        web \314\
18.04(b).......................................       3,977,173          $2,982,880-$4,971,466        web \315\
----------------------------------------------------------------------------------------------------------------

New Form 102S
(13) Overview of New Form 102S
    Section 102S of New Form 102 is designed to facilitate the 
electronic submission of 102S filings. Such filings are currently being 
submitted to the Commission (pursuant to 17 CFR 20.5(a)) through a non-
automated process.\316\ Pursuant to Sec.  20.5(a), 102S filings must be 
submitted by a part 20 reporting party (a swap dealer or clearing firm) 
for each reportable counterparty consolidated account when such account 
first becomes reportable.\317\ By incorporating 102S in New Form 102, 
these final rules will require more detailed ownership and control 
information regarding identified consolidated accounts, and require the 
submission of consolidated account reporting via an automated 
submission.
---------------------------------------------------------------------------

    \312\ As noted in section VIII(A) above, the initial development 
cost per reporting party is estimated at $701 (10 hours of initial 
development burden x a wage rate of $70.07). The Commission expects 
that reporting parties will budget initial development costs in the 
manner that is most cost-effective for each party, which may result 
in some reporting parties incurring the majority of these initial 
development costs in the beginning of the rule compliance period.
    \313\ The Commission has calculated an estimated range of 25% 
below and 25% above the estimated total annual industry cost, due to 
the fact that reporting costs will differ among market participants 
based on a variety of factors, including the state of their current 
technology systems, and their differing levels of market and 
reporting experience. The upper end of the ranges also responds to 
comments stating that the cost estimates in the NPRM understated the 
total cost to the industry (without expressing by how much, or to 
what degree).
    \314\ As noted in section VIII(A) above, the estimated total 
annual industry cost of the more expensive submission method for New 
Form 40 submissions arising from New Form 102A, via FTP data feed, 
is $36,051,015. The $36,051,015 figure is arrived at by multiplying 
the anticipated 5,250 reporting parties by 98 hours of annualized 
development burden and ongoing operation and maintenance burden 
(equals 514,500 hours) by a wage rate of $70.07 (equals 
$36,051,015). An estimated low and high range (25% below and above 
this figure) equals $27,038,261 and $45,063,769, respectively.
    \315\ As noted in section VIII(A) above, the estimated total 
annual industry cost of the more expensive submission method for New 
Form 40 submissions arising from New Form 102B and New Form 71, via 
FTP data feed, is $129,920,991. The $129,920,991 figure is arrived 
at by multiplying the anticipated 18,920 reporting parties by 98 
hours of annualized development burden and ongoing operation and 
maintenance burden (equals 1,854,160 hours) by a wage rate of $70.07 
(equals $129,920,991). An estimated low and high range (25% below 
and above this figure) equals $97,440,743 and $162,401,239, 
respectively.
    \316\ References in these final rules to ``102S filings'' are 
based on the regulatory text of Sec.  20.5, which refers to ``102S 
filings'' and ``40S filings.''
    \317\ 17 CFR 20.5(a).
---------------------------------------------------------------------------

(14) Benefits of New Form 102S
    Form 102S will require reporting parties to identify swap 
counterparty or customer consolidated accounts with reportable 
positions. Swap reporting on Form 102S significantly improves the 
Commission's surveillance capabilities, by enabling it to track the 
market activity of a specific trader, including traders that may be 
dividing risk exposure between both on-exchange and off-exchange 
instruments. Swap reporting will also enable the Commission to more 
efficiently aggregate position exposure in a particular product or 
commodity group. The reporting of swap activity on Form 102S aligns 
with the Commission's recently finalized rules on real-time public and 
regulatory reporting of swap trades, and provides further transparency 
into markets that, historically, have often been opaque and/or over-
the-counter.
    As further changes arise in the commodity swap market, such as the 
introduction of SEFs, the identification of both special accounts (via 
102A) and consolidated accounts (via 102S) will enable the Commission 
to monitor a broad range of market activity across traditional futures 
exchanges and SEFs. This will enable the Commission to quantify the 
amount of activity in a given product across different execution 
platforms, and monitor changes in this amount over time. The 
Commission's expanded view of the marketplace will enable it to more 
quickly and efficiently identify disruptive market activity occurring 
across multiple trading facilities (similar to the transmission effects 
that occurred during the Flash

[[Page 69220]]

Crash).\318\ In particular, New Form 102S will improve the Commission's 
ability to perform risk-based monitoring of trading activity conducted 
through accounts owned or controlled by, for example, a single market 
participant, but spread across multiple platform types.\319\ In the 
event the Commission identifies trading activity requiring further 
investigation, the Commission will be able to contact market 
participants more quickly and efficiently using the ownership and 
control information collected through the OCR reporting process.
---------------------------------------------------------------------------

    \318\ See supra note 289 for further information regarding the 
Flash Crash.
    \319\ The Commission also notes that 102S reporting is a 
necessary complement to SDR reporting under Part 45, and will 
provide information that is not otherwise available under the SDR 
reporting regime. The Commission anticipates that swap dealers and 
clearing members (the 102S reporting parties) will be able to 
consistently provide the contact information for owners and 
controllers of consolidated accounts on the 102S, based on the 
records these entities maintain. Part 45 reporting, by contrast, is 
based on counterparty data. Although this counterparty data may, in 
some cases, include the owners and controllers of consolidated 
accounts, it will not include this information in all cases. As a 
result, the Commission cannot rely on SDR reporting under Part 45 as 
a substitute for 102S reporting.
---------------------------------------------------------------------------

(15) Costs of New Form 102S
    The Commission assumes that each New Form 102S reporting party will 
submit New Form 102S via secure FTP, which the Commission believes is 
the more cost-effective of the two filing methods for the industry as a 
whole. Each FTP submission will likely contain numerous 102S records. 
The Commission estimates that the total initial development burden will 
average 264 hours per reporting party. The Commission also estimates 
that the highly automated nature of this option will virtually 
eliminate the marginal costs associated with each additional submission 
or each additional record contained in a submission. The Commission 
believes that the timing requirements for 102S filings in current Sec.  
20.5(a)(3),\320\ or any new submission procedures arising from the 
Swaps Large Trader Guidebook (i.e., frequency of 102S filing 
submission), will not increase a reporting party's burden when using 
the FTP submission method. The Commission further estimates that the 
ongoing operation and maintenance burden will average 53 hours per year 
no matter how many records are contained in a submission. The total 
annualized initial development burden and the ongoing operation and 
maintenance burden (total yearly burden) will equal approximately 106 
hours per reporting party.\321\
---------------------------------------------------------------------------

    \320\ 17 CFR 20.5(a)(3).
    \321\ All annualized development burden estimates are based on 5 
year, straight line depreciation.
---------------------------------------------------------------------------

    The 102S filing requirements in current Sec.  20.5 \322\ are nearly 
identical to the filing requirements for revised 102S; accordingly, the 
Commission used its experience to date with 102S filings to estimate 
the number of 102S reporting parties. An assessment of Commission data 
collection efforts demonstrated that the Commission received Form 102S 
submissions from 39 reporting parties in 2012. The Commission 
anticipates that it will receive New Form 102S submissions from a 
similar number of reporting parties each year. Assuming 102S reporting 
parties utilize the FTP submission method, the Commission estimates 
that the total annual industry burden for 102S filing will equal 4,134 
hours. Using an estimated wage rate of $70.07 per hour, annual industry 
costs for New Form 102S are estimated at $289,669.\323\
---------------------------------------------------------------------------

    \322\ 17 CFR 20.5.
    \323\ The $289,669 figure is arrived at by multiplying 39 
reporting parties by 106 hours (equals 4,134 hours) by $70.07 
(equals $289,669).
    \324\ As noted in section VIII(A), the initial development cost 
per reporting party is estimated at $18,498 (264 hours of initial 
development burden x a wage rate of $70.07). The Commission expects 
that reporting parties will budget initial development costs in the 
manner that is most cost-effective for each party, which may result 
in some reporting parties incurring the majority of these initial 
development costs in the beginning of the rule compliance period.
    \325\ The Commission has calculated an estimated range of 25% 
below and 25% above the estimated total annual industry cost, due to 
the fact that reporting costs will differ among market participants 
based on a variety of factors, including the state of their current 
technology systems, and their differing levels of market and 
reporting experience. The upper end of the ranges also responds to 
comments stating that the cost estimates in the NPRM understated the 
total cost to the industry (without expressing by how much, or to 
what degree).
    \326\ As noted in section VIII(A) above, the estimated total 
annual industry cost of the more expensive submission method, via 
the web-based portal, is $1,757,356. The $1,757,356 figure is 
arrived at by multiplying the anticipated 2,508 records by 10 hours 
anticipated burden per record (equals 25,080 hours) by a wage rate 
of $70.07 (equals $1,757,356). An estimated low and high range (25% 
below and above this figure) equals $568,017 and $946,695, 
respectively.

                                                    Form 102S
----------------------------------------------------------------------------------------------------------------
                                                 Estimated total   Estimated low and high range
                                                      annual         (25% below and 25% above      Anticipated
                   Regulation                     industry cost       estimated total annual       transmission
                                                      \324\            industry cost) \325\        method \326\
----------------------------------------------------------------------------------------------------------------
20.5(a)........................................        $289,669              $217,252-$362,086              FTP
----------------------------------------------------------------------------------------------------------------

New Form 40S
(16) Overview of New Form 40S
    New Form 40 will be the vehicle through which market participants 
subject to 17 CFR 20.5(b) submit New Form 40S. As a result, New Form 40 
and New Form 40S are substantively identical. New Form 40S will be 
sent, on special call of the Commission, to individuals and other 
entities identified on Form 102S. New Form 40S will continue to serve 
the function traditionally met by current Form 40S. New Form 40S will 
provide the Commission with detailed information regarding both the 
business activities and the ownership and control structure of a 
reporting trader identified in the Commission's Form 102S program (as 
updated by these final rules). As noted above, a reporting party (a 
swap dealer or clearing firm) must submit a Form 102S for each 
reportable counterparty consolidated account when such account first 
becomes reportable. Those entities required to complete a New Form 40S 
will be under a continuing obligation, per direction in the special 
call, to update and maintain the accuracy of the information submitted 
on New Form 40S by periodically updating the information on the New 
Form 40S web portal or by periodically resubmitting New Form 40S by 
secure FTP transmission.
    The expanded Form 40S will provide the Commission with more 
detailed data on reporting traders, including information regarding 
reporting traders' control relationships with other entities, and other 
relationships with persons that influence or exercise authority over 
the trading of a reporting trader. The expanded form also collects more 
detailed information regarding the business activities of the reporting 
trader. For example, New Form 40S:

[[Page 69221]]

Asks if the respondent is engaged in commodity index trading (as that 
term is defined in the form) (a question that does not appear on 
current Form 40S); requires the respondent to identify all the business 
sectors that pertain to its business activities or occupation (a 
question that has been expanded on New Form 40S); requires the 
respondent to identify all commodity groups and individual commodities 
that it presently trades, or expects to trade in the near future, in 
derivatives markets (a question that has been expanded on New Form 
40S); and requires the respondent to indicate the business purpose for 
which it uses derivatives markets (a question that has been expanded on 
New Form 40S).
(17) Benefits of New Form 40S
    Responses to the questions above will improve the Commission's 
ability to perform effective surveillance, by enabling it to better 
understand the ownership and control structure of reporting traders, 
and the extent of their business activities across multiple markets and 
product groups. The collection of the information described above will 
improve the Commission's ability to analyze and/or respond to market 
disruptions, which can exact a high cost to the investing and general 
public. The Commission will also be able to use information reported on 
New Form 40S to cross-check several of the ownership and control data 
fields reported on New Form 102S. The Commission will be able to 
compare the trading goals that a respondent reports on New Form 40S to 
its subsequent market activity. If the two do not correspond, the 
Commission will request additional information from the respondent in 
order to maintain accuracy in Commission databases and reports, or take 
other appropriate action.
(18) Costs of New Form 40S
    The Commission assumes that each New Form 40S reporting party will 
complete and submit its forms online via a secure web-based portal 
provided by the Commission, which the Commission believes is the more 
cost-effective of the two filing methods for the industry as a whole. 
As discussed in section VIII(A) above, the Commission anticipates that 
it will receive approximately 2,508 102S records per year, and the 
Commission estimates that it will make approximately the same number of 
40S special calls each year (2,508). Each response is estimated to 
require three hours,\327\ resulting in an estimated total annual 
reporting burden of 7,524 hours. Using an estimated wage rate of $70.07 
per hour, annual industry costs for New Form 40S filings made via the 
web-based portal are estimated at $527,207.\328\
---------------------------------------------------------------------------

    \327\ The Commission's estimate of three hours per response 
reflects an initial, one-time burden of 10 hours, annualized over a 
five-year period, plus an additional hour per year for change 
updates.
    \328\ The $527,207 figure is arrived at by multiplying 2,508 
filings by 3 hours (equals 7,524 hours) by $70.07 (equals $527,207).
    \329\ As noted in section VIII(A) above, the initial development 
cost per reporting party is estimated at $701 (10 hours of initial 
development burden x a wage rate of $70.07). The Commission expects 
that reporting parties will budget initial development costs in the 
manner that is most cost-effective for each party, which may result 
in some reporting parties incurring the majority of these initial 
development costs in the beginning of the rule compliance period.
    \330\ The Commission has calculated an estimated range of 25% 
below and 25% above the estimated total annual industry cost, due to 
the fact that reporting costs will differ among market participants 
based on a variety of factors, including the state of their current 
technology systems, and their differing levels of market and 
reporting experience. The upper end of the ranges also responds to 
comments stating that the cost estimates in the NPRM understated the 
total cost to the industry (without expressing by how much, or to 
what degree).
    \331\ As noted in section VIII(A) above, the estimated total 
annual industry cost of the more expensive submission method, via 
FTP data feed, is $17,222,085. The $17,222,085 figure is arrived at 
by multiplying the anticipated 2,508 reporting parties by 98 hours 
of annualized development burden and ongoing operation and 
maintenance burden (equals 245,784 hours) by a wage rate of $70.07 
(equals $17,222,085). An estimated low and high range (25% below and 
above this figure) equals $12,916,564 and $21,527,606, respectively.

                                                    Form 40S
----------------------------------------------------------------------------------------------------------------
                                                 Estimated total   Estimated low and high range
                                                      annual         (25% below and 25% above      Anticipated
                   Regulation                     industry cost       estimated total annual       transmission
                                                      \329\            industry cost) \330\        method \331\
----------------------------------------------------------------------------------------------------------------
20.5(b)........................................        $527,207              $395,405-$659,009              web
----------------------------------------------------------------------------------------------------------------

Expanded Obligation To Maintain Books and Records and Furnish 
Information to the Commission Under Sec.  18.05
(19) Overview of Sec.  18.05
    Current Sec.  18.05 requires traders who hold or control reportable 
positions to maintain books and records regarding all positions and 
transactions in the commodity in which they have reportable 
positions.\332\ In addition, current Sec.  18.05 requires that the 
trader furnish the Commission with information concerning such 
positions upon request. The Commission is expanding Sec.  18.05 to 
impose books and records requirements upon four new categories of 
market participants, who are not required to maintain books and records 
pursuant to current Sec.  18.05: (1) Owners of volume threshold 
accounts reported on New Form 102B; (2) controllers of volume threshold 
accounts reported on New Form 102B; (3) owners of reportable sub-
accounts reported on New Form 71; and (4) controllers of reportable 
sub-accounts reported on New Form 71. Traders who hold or control 
reportable positions will remain subject to the books and records 
requirements, consistent with the current requirements.
---------------------------------------------------------------------------

    \332\ 17 CFR 18.05.
---------------------------------------------------------------------------

(20) Benefits of Expanded Recordkeeping
    As a result of the final rules, the four new categories of persons 
identified above will have the same books and records requirements as 
traders who hold or control a reportable futures or options on futures 
position, and are therefore required to maintain books and records 
under current Sec.  18.05. When the Commission identifies potential 
instances of manipulative or abusive practices via the new and amended 
Forms 102, 40 and 71, or in the daily trade capture reports received by 
the Commission, it may request additional information via special call 
regarding traders' positions, transactions or activities. The Sec.  
18.05 special call enables the Commission to analyze a trader's 
activities in Commission-regulated markets and related cash markets, as 
well as the trader's other commercial activity. By requiring all 
persons subject to the revised reporting regime to provide detailed 
books and records to the Commission upon its request, the Commission 
will strengthen its ability to conduct surveillance and pursue 
enforcement actions in the event

[[Page 69222]]

of potentially manipulative or abusive activity.
(21) Costs of Expanded Recordkeeping
    As noted above, revised Sec.  18.05 will likely impose a 
recordkeeping burden on a larger number of persons than current Sec.  
18.05. The Commission anticipates that additional persons subject to 
Sec.  18.05 will likely be able to rely on books and records already 
kept in the ordinary course of business to meet the requirements of the 
final regulation. This is due, in part, to the fact that Sec.  18.05 
requires traders to maintain fairly limited information regarding their 
trading activity. Section 18.05(a), for example, requires that, ``Every 
trader who holds or controls a reportable futures or option position 
shall keep books and records showing all details concerning all 
positions and transactions in the commodity'' on certain enumerated 
trading markets. Furthermore, the Commission assumes that some parties 
required to maintain books and records pursuant to revised Sec.  18.05 
are likely required to maintain books and records under current Sec.  
18.05, because they hold or control reportable positions (i.e., there 
will be a certain amount of overlap between these two groups). 
Accordingly, the Commission believes that revised Sec.  18.05 will not 
meaningfully increase recordkeeping burdens on persons brought under 
its scope. As noted in section VII above, the Commission did not 
receive any comments regarding the changes to Sec.  18.05 proposed in 
the NPRM.
    The Commission sent 59 special calls pursuant to Sec.  18.05 in 
2012, 42 of which were based on trade data reflected in the TCR data 
feed.\333\ As noted above, revised Sec.  18.05 will make four new 
categories of persons, identified through the volume-based reporting 
regime, subject to Sec.  18.05. Because the volume-based reporting 
regime is designed to identify designated types of trading activity, 
the Commission estimates that it will send special calls pursuant to 
revised Sec.  18.05 to, at a minimum, 42 recipients (i.e., the same 
number of persons to which the Commission sent special calls in 2012 
based on trade data reflected in the TCR). At the same time, the 
Commission expects that the introduction of volume-based reporting will 
lead to the Commission sending more special calls than it would 
otherwise, because this regime will identify new ownership and control 
relationships and patterns of trading activity. As a result, for 
purposes of estimating the costs of revised Sec.  18.05, the Commission 
assumes it will send 25% more special calls in response to trade data 
than it did in 2012, for a total of 53 special calls per year. These 
special calls will require a response from approximately 53 individual 
traders per year.
---------------------------------------------------------------------------

    \333\ See supra section I(B) for a discussion of the TCR.
---------------------------------------------------------------------------

    This estimate reflects only special calls sent pursuant to Sec.  
18.05 as a result of information collected via the volume-based 
reporting regime (i.e., New Form 102B and New Form 71). The estimated 
53 recipients of such special calls may include some traders that are 
already subject to the costs and obligations of current Sec.  18.05. 
The Commission estimates that each special call response submitted by 
the new categories of persons subject to revised Sec.  18.05 will take 
approximately 5 hours, for a total annual reporting burden of 265 
hours. Using an estimated wage rate of $70.07 per hour, annual 
reporting costs for the new categories of persons that are subject to 
revised Sec.  18.05 are estimated at $18,569.\334\
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    \334\ The $18,569 figure is arrived at by multiplying 53 
responses by 5 hours (equals 265 hours) by $70.07 (equals $18,569).
    \335\ The Commission has calculated an estimated range of 25% 
below and 25% above the estimated total annual industry cost, due to 
the fact that recordkeeping costs will differ among market 
participants based on a variety of factors, including the state of 
their current technology and recordkeeping systems, and their 
differing levels of market and reporting experience. The upper end 
of the ranges also responds to comments stating that the cost 
estimates in the NPRM understated the total cost to the industry 
(without expressing by how much, or to what degree).

                                        Sec.   18.05 Recordkeeping Burden
----------------------------------------------------------------------------------------------------------------
                                                                                    Estimated low and high range
                                                                  Estimated total     (25% below and 25% above
                           Regulation                                  annual          estimated total annual
                                                                   industry cost        industry cost) \335\
----------------------------------------------------------------------------------------------------------------
18.05...........................................................         $18,569                $13,927-$23,211
----------------------------------------------------------------------------------------------------------------

vi. Comments Regarding Costs and Benefits
    As previously noted, the NPRM requested comment on many aspects of 
the proposed rules, including the Commission's evaluation of the rules' 
costs and benefits.\336\ In response, ICE commented that it 
``recognizes the value in collecting this OCR information for accounts 
that actively trade on DCMs, and integrating it with existing market 
surveillance and trade practice surveillance data to bridge gaps that 
may exist between individual transaction data contained in the trade 
register and position data contained in LTRs [large trader reporting]. 
Having such data readily available in Commission . . . surveillance 
systems would improve the efficiency of the investigative process by 
saving the additional work and time required to manually request such 
information from clearing members.'' \337\
---------------------------------------------------------------------------

    \336\ See NPRM supra note 10 at 43984 and 43990.
    \337\ CL-2012-ICE supra note 55 at 5.
---------------------------------------------------------------------------

    ICE's comments are consistent with other supportive comments 
received in response to the 2009 NPRM.\338\ Petroleum Marketers 
Association of America (PMAA), for example, stated that, ``Efficient 
integration of large trader and trade register data from DCMs, ECMS, 
and [other markets] will improve market transparency and ensure that no 
one trader, investment fund or other entity controls a large percentage 
of the interest on commodity futures exchanges. Increased reporting 
requirements will help to identify those who possibly attempt to corner 
the market by taking huge positions in the futures markets which can 
move futures prices beyond what supply and demand fundamentals 
dictate.'' \339\
---------------------------------------------------------------------------

    \338\ See supra note 8. All 2009 Advanced NPRM comment letters 
(``CL-2009'') are available through the Commission's Web site at: 
https://www.cftc.gov/LawRegulation/FederalRegister/CommentFiles/09-008.
    \339\ CL-2009-PMAA supra note 338 at 2. Similarly, the Air 
Transport Association (ATA), commenting on the 2009 Advanced NPRM, 
included a list of market and regulatory benefits of the ownership 
and control report. These include allowing Commission staff to 
aggregate trading accounts under common ownership or control, 
allowing large trader reports and exchange trade registers to be 
linked, allowing expanded oversight of trading by widely dispersed 
individuals and accounts, linking traders' intra-day transactions 
with end-of-day positions, assisting investigations into intra-day 
manipulation and other trade practice abuses, and bridging gaps in 
current data reporting systems. CL-2009-ATA supra note 338 at 2-3.
---------------------------------------------------------------------------

    Other NPRM commenters, however, asserted that the Commission's cost

[[Page 69223]]

estimates were underestimated, that certain requirements imposed costs 
unwarranted by the magnitude of the anticipated benefits, and/or that 
certain requirements would not provide meaningful benefits.\340\ CME 
commented that ``Commission estimates do not appear to take into 
consideration the process changes that firms would need to engage in to 
obtain all OCR data, nor do they contain estimates for changes that 
SROs might have to institute to their systems to incorporate the three 
tiered reporting method.'' \341\ FIA commented that ``the proposed 
rules . . . would require significant changes to the procedures, 
processes and systems pursuant to which FCMs create and maintain 
records with respect to their customers and customer transactions. Such 
redesign would take longer and be substantially more expensive than the 
Commission has suggested in the Federal Register release accompanying 
the proposed rules.'' \342\ FIA also stated that ``we are still 
developing our costs analyses and will forward them to the Commission 
as soon as they are ready.''\343\ FIA did not provide the cost analyses 
mentioned in its comment letter to the Commission.
---------------------------------------------------------------------------

    \340\ See, e.g., the discussion of Sec.  15.00(v) (direct market 
access), Sec.  15.04 (reportable trading volume level) and Sec.  
17.01(a) in section VII, above.
    \341\ CL-2012-CME supra note 55 at 4.
    \342\ CL-2012-FIA NPRM supra note 55 at 9.
    \343\ Id.
---------------------------------------------------------------------------

    In the absence of specific quantitative estimates or alternative 
cost proposals by commenters, the Commission performed its own analysis 
in updating the NPRM cost benefit considerations for these final rules. 
As noted above, for purposes of these final rules, the Commission has 
updated the cost estimates that appeared in the NPRM based on the most 
recent data and statistics available to the Commission. The Commission 
has also calculated the total initial development burden on a non-
annualized basis for each reporting form, as applicable, and presented 
cost ranges below and above each estimate in this section VIII(B). The 
high end of the cost ranges responds to comments stating that the cost 
estimates in the NPRM understated the total cost to the industry 
(without expressing by how much, or to what degree).
    Commenters asserting that certain requirements imposed costs 
unwarranted by the magnitude of anticipated benefits, and/or that 
certain requirements would not provide meaningful benefits, typically 
proposed an alternative approach, such as removing a question on the 
reporting forms, or modifying a reporting deadline. Such comments are 
addressed in the consideration of alternatives below. In addition, 
section VII above contains a detailed discussion of the comments 
received in response to the NPRM, the Commission's response to 
comments, and any changes made to the final rules in response to 
comments.
vii. Consideration of Alternatives
    Commenters suggested a number of alternatives to the rules proposed 
in the NPRM for purposes of minimizing the cost to market participants. 
The final rules incorporate a number of these alternative proposals, or 
otherwise modify the proposed rules where doing so reduces costs 
without sacrificing benefits.\344\ The various alternatives considered 
for purposes of minimizing the cost to market participants (including 
those not ultimately adopted) are discussed below.
---------------------------------------------------------------------------

    \344\ As noted in section VIII(A) above, while the Commission 
has updated the cost estimates that appeared in the NPRM based on 
the most recent data and statistics available to the Commission, the 
Commission has not reduced the cost estimates in these final rules 
to account for the incorporation of the cost-saving proposals 
described below. As a result, total reporting costs to the industry 
are likely to be lower than the sum of the costs associated with 
each form individually, as the Commission has calculated above.
---------------------------------------------------------------------------

(a) Creation of Contact Reference Database
    FIA commented that requiring firms to potentially submit three 
separate forms (102A, 102B and 102S) for the same customer ``will 
create unnecessary work and be more challenging to keep current.'' 
\345\ To address this issue, FIA suggested that the Commission create a 
reporting contact reference database, which would ``ensure that contact 
information is stored and maintained as a single record, eliminate 
redundancy and improve the quality of information in the ownership and 
control reporting process.'' \346\ In response to FIA's comment, the 
Commission is creating a contact reference database that will store 
contact information previously provided through the web-based portal by 
a reporting party on each of the reporting forms with respect to 
owners, controllers, and other parties. When a reporting party submits 
a subsequent reporting form through the web-based portal, the 
Commission will, to the extent practicable, pre-populate contact 
information that the reporting party previously provided. This will 
reduce the amount of time that is required for reporting entities to 
update information submitted to the Commission through the web-based 
portal without reducing the amount of information that is required to 
be submitted through the portal.\347\
---------------------------------------------------------------------------

    \345\ CL-2012-FIA supra note 55 at 4.
    \346\ Id.
    \347\ See also supra note 41 for a discussion of certain fields 
in the reporting forms that have been made optional, subject to 
certain conditions discussed in the reporting forms, in order to 
leverage information that reporting parties have previously 
provided.
---------------------------------------------------------------------------

Definition of ``Control''
    Section 15.00(t), as proposed in the NPRM, added ``control'' to the 
list of defined terms in Sec.  15.00.\348\ The Commission's proposed 
definition, which applied only to special accounts (New Form 102A) and 
consolidated accounts (Form 102S), defined control as ``to actually 
direct, by power of attorney or otherwise, the trading of a special 
account or a consolidated account.'' FIA commented that it would be 
difficult and/or meaningless to provide the requested control 
information, because the individuals responsible for trading an account 
within a special account or a volume threshold account can change 
often, even within the same trading day.\349\ Furthermore, ``in the 
case of algorithmic trading programs, there likely will not be an 
identifiable individual who `actually directs the trading' of the 
program. For this reason, FCMs do not currently collect this 
information.'' \350\ FIA recommended removing the requirement to 
identify account controllers on Forms 102A and 102B.\351\
---------------------------------------------------------------------------

    \348\ The definition of ``control'' in Sec.  15.00 is based upon 
the definition of ``controlled account'' in Sec.  1.3(j) of the 
Commission's regulations.
    \349\ CL-2012-FIA supra note 55 at 5.
    \350\ CL-2012-FIA supra note 55 at 6.
    \351\ CL-2012-FIA supra note 55 at 5.
---------------------------------------------------------------------------

    As noted in section VII, these final rules adopt proposed Sec.  
15.00(t) without modification. At the same time, the Commission is 
modifying the instructions on Form 102 in response to comments that 
discussed the difficulty of identifying individuals that exercise 
control on a transient basis, such as individuals operating an 
automated trading system (``ATS'') during a daily shift. The 
instructions for Form 102A and Form 102B have been revised to state 
that respondents should report all individuals who qualify as ``trading 
account controllers'' or ``volume threshold account controllers,'' as 
defined in Sec.  15.00(bb) and (cc), respectively.\352\ The Commission 
notes

[[Page 69224]]

that regardless of whether the trading is carried out in whole or in 
part through an automated trading system or direct human initiation, 
the underlying analysis remains the same. When completing Form 102A and 
Form 102B, reporting parties should identify each person that satisfies 
the definition of ``trading account controller'' or ``volume threshold 
account controller,'' as defined in Sec.  15.00(bb) and (cc), 
respectively. Once respondents have identified all individuals meeting 
the applicable controller definition in a Form 102A or Form 102B 
submission, they will not be required to submit change updates to the 
submission if one previously identified controller takes the place of 
another previously identified controller. These changes to the 
instructions on Form 102 are intended to reduce the reporting burden on 
market participants, who would otherwise be required to submit change 
updates to the 102 in the prior scenario. Respondents will be required 
to report the same number of controllers that they would be required to 
report under the NPRM proposal, but will do so in their original 102 
submission, thereby eliminating the cost of submitting change updates 
due to a shift change. The Commission believes that this is a more 
effective solution than removing the control question altogether, as 
FIA had suggested, which would deprive the Commission of the ability to 
aggregate trading accounts based on common control.
---------------------------------------------------------------------------

    \352\ The Commission recognizes that, for some respondents that 
conduct trading in a reportable trading account or volume threshold 
account in whole or in part through an ATS, the individuals involved 
in the administration of such ATS may not qualify as trading account 
controllers or volume threshold account controllers. See supra 
section V(A)(ii).
---------------------------------------------------------------------------

Definition of ``Volume Threshold Account''
    The NPRM defined a volume threshold account as any trading account 
that executes, or receives via allocation or give-up, reportable 
trading volume on or subject to the rules of a reporting market that is 
a board of trade designated as a contract market under section 5 of the 
Act or a swap execution facility registered under section 5h of the 
Act.
    In the case of a give-up trade, this NPRM definition was intended 
to require reporting by: (i) The carrying firm of the original 
executing account; (ii) the carrying firm of any intervening 
account(s); and (iii) the carrying firm of the account to which the 
give-up trade was ultimately allocated. Question 10 in Section VII of 
the NPRM emphasized the broad scope of the definition: ``The Commission 
intends that the definition of `volume threshold account' captures all 
possible categories of accounts with reportable trading volume . . . 
The Commission requests public comment regarding whether the proposed 
definition of `volume threshold account' achieves this purpose.'' In 
response to this question, CME commented that volume-based accounts 
should be reported at the carrying broker level, and noted that, ``this 
is where the account ownership and control information resides, not at 
executing brokers.'' \353\
---------------------------------------------------------------------------

    \353\ CL-2012-CME supra note 55 at 4.
---------------------------------------------------------------------------

    As noted in section VII above, the Commission is adopting the 
definition of volume threshold account with one modification.\354\ The 
following change incorporates CME's comment. It is also intended to 
reduce the burden and cost to reporting parties. The definition of 
volume threshold account is being scaled back in the final rules, to 
capture a smaller number of volume threshold accounts than under the 
NPRM proposal. The definition is being modified to: ``any trading 
account that carries reportable trading volume on or subject to the 
rules of a reporting market that is a [DCM or SEF].'' This change will 
lessen the burden on reporting parties, by reducing the number of 
reportable volume threshold accounts in the case of a give-up trade:
---------------------------------------------------------------------------

    \354\ The definition of volume threshold account appears in the 
final rules as Sec.  15.00(x).
---------------------------------------------------------------------------

     In a give-up scenario, this definition will require 
reporting by the carrying firm of the account to which the trade is 
ultimately allocated. Reporting will not be required, however, by the 
carrying firm of the original executing account, or by the carrying 
firm of any intervening account(s).
     In a non-give-up scenario, there will be no change to the 
number of reportable volume threshold accounts. Under both the original 
and revised definition, reporting will be required by the carrying firm 
of the account in which the trade is both executed and cleared.
    The Commission believes that this approach, which incorporates 
CME's comment, will be more efficient (and less burdensome and costly) 
for reporting parties than the approach proposed in the NPRM. At the 
same time, it captures a sufficient number of volume threshold accounts 
to advance the Commission's surveillance objectives.
Reportable Trading Volume Level
    Section 15.04, as proposed in the NPRM, provided that reportable 
trading volume for a trading account is trading volume of 50 or more 
contracts, during a single trading day, on a single reporting market 
that is a board of trade designated as a contract market under section 
5 of the Act or a swap execution facility registered under section 5h 
of the Act, in all instruments that such reporting market designates 
with the same product identifier (including purchases and sales, and 
inclusive of all expiration months). Relative to alternatives proposed 
by commenters, the Commission has determined--as shown through its 
analysis of sample DCM trade data received through the TCR during a 
recent six-month period-- that the 50-contract threshold represents the 
level that best optimizes visibility into both trading volume and the 
absolute number of trading accounts. Both components are fundamental to 
the volume-based reporting regime established by Form 102B. At the same 
time, the RTVL is calibrated to minimize the impact of the volume-based 
reporting requirements on low-volume accounts whose trading activity 
would not meaningfully advance the Commission's volume-based 
surveillance goals.
    Several commenters criticized the 50-contract RTVL, and proposed 
alternatives to it. FIA, CME and ICE commented that the RTVL, as 
proposed, would generate an excessive amount of data that may not be 
meaningful to the Commission's trade practice and market surveillance 
programs.\355\ More specifically, Nadex commented that the proposed 50-
contract RTVL would capture too many retail customers that are trading 
contracts with very small notional values.\356\ FIA and ICE both 
recommended that the Commission phase in a descending RTVL until the 
optimum level is reached.\357\ FIA, for example, recommended that ``the 
Commission could require that only accounts meeting a volume threshold 
of 1,000 contracts per day be reported in the first three months; 
contracts meeting a volume threshold of 750 contracts per day be 
reported in the second three months after the compliance date; and so 
on until the optimum volume threshold is reached.'' \358\ CME also 
expressed concern that the RTVL will capture too many accounts, but 
recommended that the RTVL should be changed to 250 contracts bought or 
sold during a calendar week.\359\
---------------------------------------------------------------------------

    \355\ CL-2012-FIA supra note 55 at 8. CL-2012-CME supra note 55 
at 3. CL-2012-ICE supra note 55 at 6.
    \356\ CL-2012-Nadex supra note 55 at 2-3.
    \357\ CL-2012-FIA supra note 55 at 8. CL-2012-ICE supra note 55 
at 6.
    \358\ CL-2012-FIA supra note 55 at 8.
    \359\ CL-2012-CME supra note 55 at 3.
---------------------------------------------------------------------------

    Nadex recommended that a different RTVL should be applied to 
contracts with small notional values, as compared to contracts with 
larger, traditional notional values. ``For any contract with a notional 
value of $1,000 or less, the

[[Page 69225]]

RTVL could be increased to 5,000 (i.e., 1,000 times the standard RTVL 
of 50). This would still result in the Commission capturing information 
with respect to a relatively insignificant amount of trading activity 
in terms of notional value, but would be significantly less burdensome 
for the DCMs that offer these contracts.'' \360\
---------------------------------------------------------------------------

    \360\ CL-2012-Nadex supra note 55 at 3.
---------------------------------------------------------------------------

    Compared to these various alternatives, the 50-contract RTVL--which 
the Commission's analysis has shown to identify approximately 85 
percent of trading volume in approximately 90 percent of the products 
sampled, and approximately one-third of the trading accounts in the 
sample set--best achieves the regulatory objective and design-purpose 
of Form 102B. That objective is to identify a critical mass of the 
trading accounts active in its regulated markets through 102B 
reporting, measured not only by the percentage of trading volume for 
which those accounts are responsible, but also by the number of 
accounts identified. This objective is independent of whether the 
identified accounts hold reportable positions and what trading 
strategies market participants may pursue. The 50-contract RTVL 
achieves this objective by capturing both: (1) Those accounts 
responsible for the majority of trading volume; and (2) a meaningful 
number of the trading accounts active in the Commission's regulated 
markets. The Commission seeks to identify a meaningful number of such 
trading accounts in order to improve its ability to protect market 
participants from instances of fraudulent or deceptive trading 
practices, regardless of the amount of trading volume that such 
practices represent, or their impact on the overall market. In 
determining the optimal threshold level, the Commission gave equal 
weight to the twin objectives of the volume-based reporting regime--
trading volume and trading account identification. In its analysis, the 
Commission found that although higher RTVLs, such as those proposed by 
commenters, may have a relatively minor impact on the identification of 
trading volume in a particular market, they would likely lead to a 
disproportionately large exclusion of the number of trading accounts, 
thus rendering the RTVL ineffective to achieve the Commission's 
objective.\361\ In particular, the alternative proposals to raise the 
RTVL threshold to 250 contracts and/or to incrementally introduce 
moderately lower thresholds down from 1,000 contracts over time would 
sacrifice visibility with respect to the number of trading accounts 
(and at the highest threshold levels perhaps in trading volume, as 
well) to a degree likely to frustrate the intent of volume account 
surveillance.
---------------------------------------------------------------------------

    \361\ This is because the correlation between trading volume and 
number of accounts when RTVL is adjusted up or down is not 
proportional. Rather, the curve for the number of accounts is much 
steeper than for trading account volume, meaning that, while a tick 
up or down in RTVL translates to a relatively modest proportional 
change in trading volume coverage, the impact on number-of-account 
coverage is more exaggerated. The Commission took this relationship 
into account when proposing the 50 RTVL threshold: while a lower 
RTVL threshold would yield a substantially higher number of 
accounts, the slight incremental gain in trading volume coverage 
would not significantly advance the Commission's volume account 
surveillance objectives. Furthermore, the relationship also explains 
why the alternatives proposed are suboptimal and unacceptable to 
capture the twin elements essential to achieve the regulatory 
objective of volume account surveillance.
---------------------------------------------------------------------------

    Furthermore, if the Commission were to substitute an alternative 
RTVL, in response to commenter proposals, that does not identify a 
sufficient percentage of trading volume or absolute number of trading 
accounts, the Commission would, in effect, partially transform 102B 
into another vehicle for identifying trading accounts associated with 
reportable positions. Form 102A will accomplish this objective 
separately.
    Finally, even if modifying the RTVL to make fewer accounts 
reportable were consistent with the Commission's regulatory objectives 
(which it is not), doing so is unlikely to result in significant cost 
savings to market participants. As explained above, FTP submission of 
New Form 102B will be most cost-effective for the industry as a whole. 
Furthermore, the ongoing operation and maintenance burden for FTP 
submission of New Form 102B will average the same number of hours per 
year (53 hours) irrespective of how many records are contained in a 
submission.\362\ Accordingly, the number of volume threshold accounts 
reported to the Commission by a reporting party via FTP should not have 
a material impact on the overall cost burden.
---------------------------------------------------------------------------

    \362\ See supra section VIII(A)(iv).
---------------------------------------------------------------------------

    The Commission also considered the alternative of adopting 
threshold levels that distinguish on the basis of notional value, such 
as proposed by Nadex, and/or other contract or market characteristics. 
The Commission recognizes that the uniform 50-contract threshold will 
capture a relatively small degree of market activity that is less 
significant for purposes of its Form 102B regulatory objectives. 
However, an alternative that would appropriately filter for such less-
significant contracts would be administratively impracticable for the 
Commission and increase the administrative burden for some, if not 
many, reporting parties. For example, in the five year period from 
January 1, 2008 through December 31, 2012, the Commission received from 
DCMs self-certifications or requests for approval for approximately 
5,400 new products, or an average of almost 21 new products per week. 
It is simpler, and far superior in terms of administrative cost and 
burden to set a single RTVL level, above which all parties report, than 
to determine differing levels for different markets/products, monitor 
the appropriateness of such levels and adjust them as circumstances 
warrant over time, and effectively communicate such differing levels 
and their periodic adjustments to the trading community. Moreover, the 
cost of determining whether parties were compliant with the reporting 
requirements and enforcing those requirements would place further 
burden upon the Commission and reporting parties.
    In sum, the Commission believes that it is has achieved an 
appropriate balance by implementing a uniform 50-contract RTVL rather 
than a product-by-product RTVL. While the uniform RVTL may capture a 
small number of additional accounts, representing a relatively small 
degree of market activity that is less significant for purposes of its 
Form 102B regulatory objectives, it avoids the administrative 
complexity of a product-by-product RTVL, which carries the potential to 
hobble Form 102B's regulatory effectiveness.
Direct Market Access
    CME commented on a question in proposed Forms 102A and 102B, 
discussed in more detail in section VII above, which asks whether 
certain trading accounts have been granted direct market access 
(DMA).\363\ CME stated that ``requiring this data may force substantial 
process change at the firms to obtain the data upfront and record it in 
the firm's reference database with other account information.'' \364\ 
As discussed in section VII above, the Commission is not including the 
question regarding DMA in the final rules.
---------------------------------------------------------------------------

    \363\ See the discussion of the definition of direct market 
access in proposed Sec.  15.00(v).
    \364\ CL-2012-CME supra note 55 at 3.
---------------------------------------------------------------------------

Reporting Deadline for Certain Information Required on Forms
    FIA commented that obtaining all the information required by the 
Form 102 could potentially take longer than the

[[Page 69226]]

deadlines proposed in the NPRM. ``Although it is possible to file 
limited information by 9:00 a.m., i.e., the name of the account holder 
and the special account number, it is not practical to complete the 
entire Form 102 by that deadline.'' \365\ As a result, FIA recommended 
that the deadline for filing a complete Form 102A or any change update 
be modified to five business days from the date the account or change 
becomes reportable.\366\ In response to this comment, the Commission is 
extending the reporting deadline for new and changed Form 102A filings, 
specifically with respect to the reporting of non-omnibus trading 
accounts that comprise a special account. Respondents are required to 
provide the names of such trading account owners and controllers by 
9:00 a.m. the following business day.\367\ However, respondents are 
required to provide the other contact details with respect to such 
trading account owners and controllers (address, telephone number, 
etc.) within three business days, in order to permit respondents 
additional time to compile the required information.\368\
---------------------------------------------------------------------------

    \365\ Id.
    \366\ Id.
    \367\ Unless otherwise specified by the Commission or its 
designee, the stated time in the final rules is eastern time for 
information concerning markets located in that time zone, and 
central time for information concerning all other markets, in 
accordance with Sec.  17.02(a).
    \368\ Specifically, the information marked as `Follow-On 
Information' in questions 10(ii) and (iii) on New Form 102A may be 
provided within three business days. All other required fields on 
New Form 102A must be completed by 9:00 a.m. the following business 
day. See New Form 102A in the Appendix to these final rules for more 
information. Notwithstanding the change to the reporting deadline 
with respect to non-omnibus trading accounts that comprise a special 
account, these final rules do not modify the reporting deadline for 
information with respect to omnibus trading accounts that comprise a 
special account (question 10(i) on New Form 102A). Such omnibus 
account information must be reported by 9:00 a.m. the following 
business day. The Commission is adopting a reporting requirement of 
three business days as an intermediate compromise between one 
business day (as proposed in the NPRM) and five business days (as 
requested by FIA). The three business day requirement is therefore 
less burdensome than the one business day requirement proposed in 
the NPRM. Based on the experience of the Commission's surveillance 
group, the Commission believes that the three business day 
requirement, while longer than the one day proposal in the NPRM, 
will nonetheless enable the Commission to maintain current 
databases, including up-to-date contact information that will allow 
the Commission to contact market participants quickly in the event 
of significant market events that occur close to the time of 
reporting. By contrast, based on the experience of the Commission's 
surveillance group, the Commission believes that a five business day 
reporting deadline is too long to perform timely market 
surveillance, and maintain databases that are sufficiently accurate 
and current to be useful.
---------------------------------------------------------------------------

    The Commission is also modifying the reporting deadline for new and 
changed Form 102B filings, specifically with respect to the reporting 
of non-omnibus volume threshold accounts. Respondents are required to 
provide the names of non-omnibus volume threshold account owners and 
controllers reported on 102B by 9:00 a.m. the following business day. 
Consistent with the change described above, respondents are required to 
provide the other contact details reported on 102B with respect to such 
parties (i.e., the address, telephone number, etc. of non-omnibus 
volume threshold account owners and controllers) within three business 
days, in order to permit respondents additional time to compile the 
required information.\369\
---------------------------------------------------------------------------

    \369\ Specifically, the information marked as `Follow-On 
Information' in questions 5 and 6 on New Form 102B may be provided 
within three business days. All other required fields on New Form 
102B must be completed by 9:00 a.m. the following business day. See 
New Form 102B in the Appendix to these final rules for more 
information. Notwithstanding the change to the reporting deadline 
with respect to non-omnibus volume threshold accounts, these final 
rules do not modify the reporting deadline for information with 
respect to omnibus volume threshold accounts (question 4 on New Form 
102B). Such omnibus account information must be reported by 9:00 
a.m. the following business day.
---------------------------------------------------------------------------

    FIA commented that the refresh filing deadline proposed by the 
NPRM, which required firms to resubmit the Form 102 for each special 
account, volume threshold account and consolidated account every six 
months, was too short. FIA stated that this six-month schedule ``will 
impose a significant operational and financial burden on reporting 
firms,'' and recommended that refresh updates instead be required every 
two years.\370\ CME also recommended that refresh updates be required 
every two years.\371\ In response to this comment, the Commission is 
modifying the reporting deadline for refresh filings. Refresh filings 
for special accounts, volume threshold accounts and consolidated 
accounts will be required once per year, as opposed to once every six 
months.\372\ The Commission believes that the annual refresh 
requirement is a reasonable accommodation that will limit costs to 
market participants while still achieving the Commission's surveillance 
objectives. For the majority of accounts, there should be little or no 
change to prior reported information. As a result, the reporting burden 
for refresh filings should be minimal.
---------------------------------------------------------------------------

    \370\ CL-2012-FIA supra note 55 at 7.
    \371\ CL-2012-CME supra note 55 at 3.
    \372\ The Commission is adopting a refresh reporting requirement 
of once per year as an acceptable intermediate point between once 
each six months (as proposed in the NPRM) and once every two years 
(as requested by FIA and CME). The annual refresh requirement is 
therefore less burdensome than the six month requirement proposed in 
the NPRM. Based on the experience of the Commission's surveillance 
group, the Commission believes that the annual refresh requirement, 
while longer than the six month requirement proposed in the NPRM, 
will nonetheless enable the Commission to maintain current 
databases, including up-to-date contact information that will allow 
the Commission to contact market participants quickly in the event 
of significant market events. By contrast, based on the experience 
of the Commission's surveillance group, the Commission believes that 
a two year refresh deadline is too long to perform timely market 
surveillance and maintain databases that are sufficiently accurate 
and current to be useful.
---------------------------------------------------------------------------

viii. Reporting on Form 102S
    FIA commented on the utility of Form 102S, which requires swap 
dealers and clearing members to identify and report a swap counterparty 
or customer consolidated account with a reportable position. FIA stated 
that the information that will be reported to swap data repositories 
under part 45 would provide the Commission with access to essentially 
the same information that proposed Form 102S will require.\373\ FIA 
commented that ``requiring FCMs, and the industry generally, to divert 
critical operational and financial resources from building the systems 
necessary to implement the part 45 recordkeeping and reporting 
requirements to implement this interim solution, would impose an 
unnecessary operational burden and cost without a significant 
offsetting benefit.'' \374\ CME commented that ``requiring swap 
reporting as part of OCR, to accomplish reporting that is already being 
done under part 20--and soon to be duplicated under SDR reporting with 
new unique legal entity identifiers--is unnecessary and imposes 
additional unjustified costs on the industry.'' \375\
---------------------------------------------------------------------------

    \373\ CL-2012-FIA supra note 55 at 2-3.
    \374\ CL-2012-FIA supra note 55 at 3.
    \375\ CL-2012-CME supra note 55 at 3.
---------------------------------------------------------------------------

    In light of FIA and CME's comments regarding the Form 102S, the 
Commission considered, but rejected, the alternative of omitting Form 
102S from the final rules. Contrary to commenters' claims, SDRs will 
not, in all cases, be able to provide the ownership and control 
information requested on 102S. For example, the Commission anticipates 
that swap dealers and clearing members (the 102S reporting parties) 
will be able to consistently provide the contact information for owners 
and controllers of consolidated accounts on the 102S, based on the 
records these entities maintain. Part 45 reporting, by contrast, is 
based on counterparty data. This counterparty data may, in some cases,

[[Page 69227]]

overlap with the owners and controllers of consolidated accounts 
reported on 102S. However, counterparty data will not, in all cases, 
overlap with 102S reporting. Furthermore, even when counterparty data 
does overlap with 102S reporting, it does not provide the ownership and 
control information required by 102S. Counterparty data provides a 
Legal Entity Identifier, which is a numeric data field that must be 
cross-checked against an external source in order to generate the names 
of owners and controllers. As a result, the Commission cannot rely on 
SDR reporting under part 45 as a substitute for 102S. For these 
reasons, the Commission is implementing 102S reporting pursuant to 
these final rules.
ix. Consolidated Form Proposed by FIA
    For purposes of reducing the costs to reporting parties, and 
alleviating perceived inefficiencies in the forms proposed in the NPRM, 
FIA recommended consolidating the proposed forms into a single Form 
102.\376\ FIA attached a proposed form to its NPRM comment letter that 
consolidates Forms 102A, 102B and 102S (the ``FIA consolidated form''). 
The FIA consolidated form is the principal alternative approach 
proposed by commenters on the NPRM.\377\
---------------------------------------------------------------------------

    \376\ CL-2012-FIA NPRM supra note 55 at 4.
    \377\ Note that the Commission published a prior Notice of 
Proposed Rulemaking on July 19, 2010 (the 2010 OCR NPRM) with 
respect to ownership and control reporting, which the Commission 
withdrew concurrent with the publication of the NPRM. See supra note 
9. The Commission received a number of comment letters in response 
to the 2010 OCR NPRM, and incorporated several of their suggestions 
in the NPRM (published in the Federal Register in 2012), which forms 
the basis for these final rules. See NPRM supra note 10 at 43973-
43974 for a discussion of comments received in response to the 2010 
OCR NPRM that were incorporated in the NPRM.
---------------------------------------------------------------------------

    The Commission notes that FIA's description of New Form 102A, 102B 
and 102S as inefficient and overlapping appears to arise from a 
presumption that reporting parties will print and complete each form as 
a separate paper filing. The forms included in the Appendix to these 
final rules are visual representations of reporting forms that will be 
completed through the Commission's web-based portal. In such an 
electronic environment, it will not be more burdensome for reporting 
parties to enter information via separate screens on a web portal (for 
102A, 102B and 102S), as compared to via a single screen.
    The Commission does not consider the FIA consolidated form an 
acceptable alternative, because it is missing a number of key data 
fields that appear on Forms 102A, 102B, and 102S. As discussed in more 
detail below, while the list of data fields that the FIA consolidated 
form is missing is not extensive, the absence of these data fields 
would create gaps in the reporting of ownership and control 
information. These gaps would prevent the Commission from realizing the 
goals of the OCR data collection. If the missing data fields were added 
back to FIA consolidated form, then the FIA form would be substantively 
identical to the forms adopted in these final rules.
    The FIA consolidated form does not include the following data 
fields collected on New Forms 102A, 102B and 102S:
     The FIA consolidated form does not require respondents to 
state the reporting trigger. I.e., the form does not clarify whether 
respondents are reporting a special account, volume threshold account, 
or consolidated account that has reached a reportable level. Instead, 
the directions to the FIA consolidated form state that, ``This form 
must be completed if an account exceeds the reportable levels on 
special accounts, volume threshold accounts or consolidated accounts.'' 
The Commission would receive ownership and control information 
regarding the reported trading accounts, but would not know what market 
activity the trader had engaged in that necessitated reporting pursuant 
to the Commission's regulations. Without knowing the reporting trigger 
for the form (e.g., whether the reporting party had reached a 
reportable position or reportable volume level), the Commission would 
be unable to efficiently and accurately categorize the trading accounts 
reported on the form, and utilize this account information for 
surveillance or other related purposes.
     The FIA consolidated form does not require respondents to 
identify the originator of a consolidated account that is also an 
omnibus account, and provide contact information for this 
originator.\378\ Without this contact information, the Commission would 
not know which party to contact to request additional information on 
the reported omnibus account (e.g., via a Form 40). As noted above, one 
of the key reasons that the Commission is requesting additional 
information regarding ownership and control on the reporting forms is 
to enable it to send a Form 40 to such parties in order to identify 
them for surveillance purposes. Alternative proposals that would leave 
significant and potentially exploitable gaps in the reporting and 
identification system--e.g., with respect to omnibus accounts--would 
defeat the Commission's intent for these final rules.
---------------------------------------------------------------------------

    \378\ This information will be collected on New Form 102S as a 
result of these final rules.
---------------------------------------------------------------------------

     Similarly, the FIA consolidated form does not require 
respondents to state whether a volume threshold account is an omnibus 
account--and if so, to identify the originator of the omnibus account 
and provide contact information for this originator.\379\ Without the 
name and contact information of the originator of an omnibus volume 
threshold account, the Commission would be unable to send a Form 71 to 
the originator and collect ownership and control information for 
underlying sub-accounts. If the Commission does not send a Form 71 in 
this scenario, the Commission would again be unable to send a Form 40 
to identify the ultimate owner and controller of the underlying sub-
accounts. This would again create significant gaps in the reporting and 
identification system, which would defeat the Commission's intent for 
these final rules.
---------------------------------------------------------------------------

    \379\ This information will be collected on New Form 102B as a 
result of these final rules.
---------------------------------------------------------------------------

    As discussed above, FIA commented that requiring respondents to 
potentially submit three separate forms (102A, 102B and 102S) for the 
same customer is inefficient. FIA proposed its consolidated form in an 
attempt to address this overlap, reduce the costs to reporting parties, 
and alleviate other perceived inefficiencies in the forms proposed in 
the NPRM.\380\ As previously noted, the Commission is implementing a 
contact reference database to reduce the burden on parties reporting 
via the web-based portal.\381\ This database will pre-populate certain 
fields on the portal with information previously provided by the 
respondent, thereby reducing the inefficiency associated with 
responding to more than one section of New Form 102.\382\
---------------------------------------------------------------------------

    \380\ CL-2012-FIA supra note 55 at 4.
    \381\ As discussed in section VIII(B)(iv) above, the Commission 
has determined that it will be more cost-effective for the industry 
as a whole to submit Forms 102A, 102B and 102S via FTP. Nonetheless, 
it may be less expensive for certain individual reporting parties to 
submit these forms via the web portal. This may be due to the 
limited number of forms these parties expect to submit, their 
technology infrastructure, or other factors. The Commission has also 
determined that it will be more cost-effective for the industry as a 
whole to submit Forms 40/S and 71 via the web portal. The contact 
reference database will pre-populate information on Forms 40/S and 
71 to the extent practicable.
    \382\ See also supra note 41 for a discussion of certain fields 
in the reporting forms that have been made optional, subject to 
certain conditions discussed in the reporting forms, in order to 
leverage information that reporting parties have previously 
provided.

---------------------------------------------------------------------------

[[Page 69228]]

x. Section 15(a) Factors
(a) Protection of Market Participants and the Public
    The data collection requirements under these final rules will 
support the Commission in its mission to protect market participants 
and the public, by significantly improving the Commission's visibility 
with respect to market participants and their activities across 
derivatives markets. Specifically, the final rules build upon the 
Commission's existing market and trade practice surveillance programs 
for futures, options on futures, and swaps, by providing for the timely 
and efficient analysis of market data related to special accounts, 
consolidated accounts, and newly designated volume threshold accounts. 
The rules implement these goals in a manner designed to reduce costs to 
reporting entities. Improving the capabilities of the Commission's 
market and trade practice surveillance programs will support the 
integrity of financial markets, and protect market participants and the 
public from the costs of disruptive trading practices and other market 
abuses.
    New Form 102A. As an example of these benefits, New Form 102A 
requires reporting of ownership and control information for the trading 
accounts that constitute special accounts. This will allow the 
Commission to more efficiently link special accounts holding reportable 
positions to the transactions (and associated trading accounts) 
identified on daily trade capture reports received by the 
Commission.\383\ By illustrating the connections between end-of-day 
position reporting via Form 102 and daily trade capture reports, the 
final rules will enable the Commission to perform a more accurate and 
timely accounting of market position at the level of individual trading 
accounts. With this information, the Commission will be able to conduct 
a thorough assessment of a trader's potential market impact, including 
with respect to disruptive practices.
---------------------------------------------------------------------------

    \383\ See the discussion of the daily trade capture reports in 
section I(B) above.
---------------------------------------------------------------------------

    New Form 102B. New Form 102B institutes a reporting requirement for 
trading accounts that exceed a specific volume threshold on any single 
trading day, regardless of whether the account maintains open positions 
at the end of the day. The addition of volume-based reporting will 
provide the Commission with an efficient means to collect the 
information required to aggregate positions, detect intra-day position 
limit violations, and calculate market share. When analyzing periods of 
elevated volatility--especially at significant trading times such as 
market open and close--the ability to aggregate intra-day trading 
behavior by owner/controller is crucial to understanding whether a 
trader has adversely affected (or has the potential to affect) market 
quality or price discovery.
    New Form 102S. New Form 102S will improve upon the current 102S 
reporting system by providing detailed ownership and control 
information regarding consolidated accounts. The information collected 
via Form 102S will allow the Commission's market and trade practice 
surveillance programs to track the market activity of traders that may 
be dividing risk exposure between both on-exchange and off-exchange 
instruments. In addition to the ability to track individual traders, 
swap reporting will also enable the Commission to aggregate exposure in 
a particular product or commodity group. The reporting of swap activity 
on Form 102S aligns with the Commission's recently finalized rules on 
real-time public and regulatory reporting of swap trades, and provides 
further transparency into markets that, historically, have often been 
opaque and/or over-the-counter.
    Collectively, the ownership and control information on New Forms 
102A/102B/102S, 40/40S and 71 will improve the Commission's ability to 
analyze and/or respond to market disruptions, which can come at a high 
cost to the investing and general public. The information will also 
enable the Commission to perform more robust research and analytics, 
encompassing a significantly greater segment of market activity on a 
more diverse set of platforms, as well as improve its classification of 
traders in Commission publications, such as the Commitments of Traders 
report. Finally, the Commission will be able to perform data integrity 
checks within and between its databases using the additional fields 
collected on the revised forms.
Efficiency, Competitiveness, and Financial Integrity of the Markets
    The collection of ownership and control information via the new and 
amended forms will enable the Commission to better perform risk-based 
monitoring and surveillance among related accounts, and monitor risk 
exposure by institution, market class, and asset class. For example, 
the rules will enable the Commission to more efficiently link end-of-
day position reporting and the trade capture reports received by the 
Commission. Accordingly, the rules will allow the Commission to 
aggregate respondents' positions across multiple products and markets, 
assess their potential market impact with respect to disruptive or 
manipulative activities during important periods, and analyze their 
compliance with speculative position limits at any time during the 
trading day. In the event the Commission identifies trading activity 
requiring further investigation, the Commission will be able to contact 
market participants more quickly and efficiently using the ownership 
and control information collected through the OCR reporting process.
    The final rules will also promote resource allocation efficiency by 
automating the submission process, eliminating an additional layer of 
transcription and reducing the likelihood of input errors and/or the 
need to revert back to reporting parties for further explanation. In 
addition, the final rules permit respondents to use either of two 
available submission methods (FTP or web portal), thereby allowing 
respondents to select the method that is most economical in light of 
the number of filings they expect to make, and that integrates most 
efficiently with their existing data and technology infrastructure. 
These improvements in resource efficiency and data quality will also 
improve the Commission's published reports, such as the classifications 
in the Commitments of Traders report. Finally, the Commission will be 
able to perform data integrity checks within and between its databases 
using the additional data fields collected on the revised forms.
    The Commission believes that market integrity is essential to fair 
and orderly markets that serve as effective centers for price discovery 
and risk management. By promoting these important goals, the final 
rules will help promote the utility of Commission-regulated markets.
Price Discovery
    The Commission does not view the costs and benefits of the final 
rules as impacting price discovery in markets that it regulates.
Sound Risk Management Practices
    The final rules establish the information architecture necessary to 
support Dodd-Frank's objectives of reducing risk, increasing 
transparency, and promoting market integrity within the financial 
system. The expanded reporting requirements will significantly improve 
the Commission's ability to perform risk-based monitoring of trading 
activity spread across multiple platform types but directed or 
controlled by individual entities. Such

[[Page 69229]]

an expanded view of the marketplace will enable the Commission to more 
effectively identify disruptive or manipulative trading activity. The 
Commission does not believe that the costs arising from the final 
rules, which the Commission has taken steps to reduce, threaten the 
ability of market participants to manage risk.
Other Public Interest Considerations
    The Commission does not view the costs and benefits of the final 
rules as impacting other public interest considerations beyond those 
discussed above.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA'') requires that agencies 
consider whether the rules they propose will have a significant 
economic impact on a substantial number of small entities and, if so, 
provide a regulatory flexibility analysis regarding the impact.\384\ A 
regulatory flexibility analysis or certification is typically required 
for ``any rule for which the agency publishes a general notice of 
proposed rulemaking'' pursuant to the notice-and-comment provisions of 
the Administrative Procedure Act, 5 U.S.C. 553(b).\385\
---------------------------------------------------------------------------

    \384\ 5 U.S.C. 601 et seq.
    \385\ 5 U.S.C. 601(2), 603, 604 and 605. While the definition of 
``entity'' does not encompass natural persons, it does encompass 
sole proprietorships. 5 U.S.C. 601(6). The Commission recognizes 
that floor brokers and other natural persons doing business as sole 
proprietors could potentially be considered small entities. See 
generally 58 FR 40,335 at 40,347-48, n. 45 (July 28, 1993); 47 FR 
18618 at 18,620, (Apr. 30, 1982).
---------------------------------------------------------------------------

    The final rules require FCMs, clearing members, foreign brokers, 
swap dealers and other reporting traders (including natural persons) to 
complete New Forms 102 or 71, and to submit them to the Commission as 
specified in the final rules, or upon special call by the Commission. 
The Commission has previously determined that FCMs, clearing members, 
foreign brokers, and swap dealers are not small entities for purposes 
of the RFA.\386\ The Commission has also determined that natural 
persons are not `entities' for purposes of the RFA.\387\ Accordingly, 
the final rules with respect to Forms 102 and 71 will not have a 
significant economic impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \386\ See respectively and as indicated: 47 FR 18618 (April 30, 
1982) (FCMs and large traders); 72 FR 34417 at 34418 (June 22, 2007) 
(foreign brokers); 76 FR 71626 at 71680 (November 18, 2011) (swap 
dealers); 76 FR 71626 at 71680 (November 18, 2011) and 76 FR 43851 
at 43860 (July 22, 2011) (clearing members).
    \387\ See 5 U.S.C. 601(6).
---------------------------------------------------------------------------

    The final rules also require certain reporting traders to complete 
and submit New Form 40 upon special call by the Commission. Some of 
these reporting traders may be ``small entities'' under the RFA. In 
2012, the Commission received approximately 3,123 completed Form 40s, 
from a total population of approximately 10,000 reporting traders. Of 
these 3,123 Form 40s, approximately 2,500 were completed by 
institutions, a portion of which could potentially be small entities 
under the RFA. For example, the Commission has received comments on its 
Dodd-Frank Act rulemakings indicating that certain entities that may be 
required to comply with the reporting and recordkeeping requirements in 
the final rules have been determined by the Small Business 
Administration to be small entities. In particular, the Commission 
understands that some not-for-profit electric generators, transmitters, 
and distributors that may be required to comply with the proposed rules 
have been determined to be small entities by the SBA, because they are 
``primarily engaged in the generation, transmission, and/or 
distribution of electric energy for sale and [their] total electric 
output for the preceding fiscal year did not exceed 4 million megawatt 
hours.'' \388\
---------------------------------------------------------------------------

    \388\ Small Business Administration, Table of Small Business 
Size Standards (Nov. 5, 2010). See also the regulatory flexibility 
analysis regarding such entities in 77 FR 1182 at 1240 (January 9, 
2012), 77 FR 2136 at 2170 (January 13, 2012), and 77 FR 2613 at 2620 
(January 19, 2012).
---------------------------------------------------------------------------

    The Commission believes that, due to the limited number of 
institutions likely to receive a New Form 40 request in any given year, 
as well as the limited nature of the New Form 40 reporting burden, the 
final rules with respect to New Form 40 will not have a significant 
economic impact on a substantial number of small entities. New Form 40 
will not be required on a routine and ongoing basis, but rather will be 
sent by the Commission on a discretionary basis in response to the 
reporting of an account that reaches a minimum position or volume 
threshold. As summarized above, in 2012 the Commission made Form 40 
requests to only 25 percent of all reporting traders that could 
potentially be small entities; furthermore, some of these reporting 
traders were not in fact small entities. As a result, New Form 40 
should be expected to affect only a small subset of the entities that 
may be small entities under the RFA. In addition, New Form 40 is not 
lengthy or complex, and will require reporting traders to provide only 
limited information to the Commission. As discussed above, the 
Commission estimates that a reporting trader submitting New Form 40 via 
the web-based portal will require only three hours, on an annualized 
basis, to complete the form.\389\
---------------------------------------------------------------------------

    \389\ See supra section VIII(A).
---------------------------------------------------------------------------

    The final rules regarding revised Sec.  18.05 will also impose 
books and records obligations upon a new category of market 
participants--specifically, certain owners (but not controllers) of a 
volume threshold account or a reportable sub-account. Such owners may 
be small entities under the RFA. The Commission does not believe that 
the obligation to maintain books and records under revised Sec.  18.05 
will impose significant costs on the additional small entities subject 
to the recordkeeping requirements of such section. The Commission 
expects that such account owners may largely rely on the books and 
records that they maintain in the ordinary course of business to 
fulfill the requirements of revised Sec.  18.05. The Commission also 
expects that a portion of the account owners subject to revised Sec.  
18.05 are subject to the position-based recordkeeping requirements of 
current Sec.  18.05,\390\ and will not incur significant costs 
expanding their recordkeeping practices to comply with revised Sec.  
18.05. To the extent that certain small entities are required to modify 
their practices to comply with the volume-based recordkeeping 
requirements of revised Sec.  18.05, the Commission believes that the 
resulting economic burden will be appropriate, because this requirement 
will: (a) Ensure that (i) owners of volume threshold accounts and 
reportable sub-accounts and (ii) owners of reportable positions are 
subject to equivalent recordkeeping obligations under Sec.  18.05, and 
therefore maintain books and records in a consistent format; and (b) 
promote the Commission's surveillance and investigatory functions to 
better deter price manipulation and other disruptions of market 
integrity.
---------------------------------------------------------------------------

    \390\ 17 CFR 18.05.
---------------------------------------------------------------------------

List of Subjects

17 CFR Part 15

    Brokers, Commodity futures, Reporting and recordkeeping 
requirements.

17 CFR Part 17

    Brokers, Commodity futures, Reporting and recordkeeping 
requirements.

17 CFR Part 18

    Commodity futures, Reporting and recordkeeping requirements.

[[Page 69230]]

17 CFR Part 20

    Physical commodity swaps, Swap dealers, Reporting and recordkeeping 
requirements.

    For the reasons stated in the preamble, the Commodity Futures 
Trading Commission amends 17 CFR parts 15, 17, 18, and 20 as follows:

PART 15--REPORTS--GENERAL PROVISIONS

0
1. The authority citation for part 15 continues to read as follows:

    Authority: 7 U.S.C. 2, 5, 6a, 6c, 6f, 6g, 6i, 6k, 6m, 6n, 7, 7a, 
9, 12a, 19, and 21, as amended by Title VII of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act, Pub. L. 111-203, 124 
Stat. 1376 (2010).


0
2. Amend Sec.  15.00 by revising paragraph (q) and adding paragraphs 
(t) through (dd) to read as follows:


Sec.  15.00  Definitions of terms used in parts 15 to 19, and 21 of 
this chapter.

* * * * *
    (q) Reporting market means a designated contract market or a 
registered entity under section 1a(40) of the Act.
* * * * *
    (t) Control means to actually direct, by power of attorney or 
otherwise, the trading of a special account or a consolidated account. 
A special account or a consolidated account may have more than one 
controller.
    (u) Reportable trading volume means contract trading volume that 
meets or exceeds the level specified in Sec.  15.04.
    (v) Omnibus account means any trading account that one futures 
commission merchant, clearing member or foreign broker carries for 
another and in which the transactions of multiple individual accounts 
are combined. The identities of the holders of the individual accounts 
are not generally known or disclosed to the carrying firm.
    (w) Omnibus account originator means any futures commission 
merchant, clearing member or foreign broker that executes trades for 
one or more customers via one or more accounts that are part of an 
omnibus account carried by another futures commission merchant, 
clearing member or foreign broker.
    (x) Volume threshold account means any trading account that carries 
reportable trading volume on or subject to the rules of a reporting 
market that is a board of trade designated as a contract market under 
section 5 of the Act or a swap execution facility registered under 
section 5h of the Act.
    (y) Omnibus volume threshold account means any trading account 
that, on an omnibus basis, carries reportable trading volume on or 
subject to the rules of a reporting market that is a board of trade 
designated as a contract market under section 5 of the Act or a swap 
execution facility registered under section 5h of the Act.
    (z) Omnibus reportable sub-account means any trading sub-account of 
an omnibus volume threshold account, which sub-account executes 
reportable trading volume on an omnibus basis. Omnibus reportable sub-
account also means any trading account that is itself an omnibus 
account, executes reportable trading volume, and is a sub-account of 
another omnibus reportable sub-account.
    (aa) Reportable sub-account means any trading sub-account of an 
omnibus volume threshold account or omnibus reportable sub-account, 
which sub-account executes reportable trading volume.
    (bb) Trading account controller means, for reports specified in 
Sec.  17.01(a) of this chapter, a natural person who by power of 
attorney or otherwise actually directs the trading of a trading 
account. A trading account may have more than one controller.
    (cc) Volume threshold account controller means a natural person who 
by power of attorney or otherwise actually directs the trading of a 
volume threshold account. A volume threshold account may have more than 
one controller.
    (dd) Reportable sub-account controller means a natural person who 
by power of attorney or otherwise actually directs the trading of a 
reportable sub-account. A reportable sub-account may have more than one 
controller.

0
3. In Sec.  15.01, revise paragraph (c) to read as follows:


Sec.  15.01  Persons required to report.

* * * * *
    (c) As specified in part 18 of this chapter:
    (1) Traders who own, hold, or control reportable positions;
    (2) Volume threshold account controllers;
    (3) Persons who own volume threshold accounts;
    (4) Reportable sub-account controllers; and
    (5) Persons who own reportable sub-accounts.
* * * * *

0
4. Revise Sec.  15.02 to read as follows:


Sec.  15.02  Reporting forms.

    Forms on which to report may be obtained from any office of the 
Commission or via the Internet (https://www.cftc.gov). Forms to be used 
for the filing of reports follow, and persons required to file these 
forms may be determined by referring to the rule listed in the column 
opposite the form number.

----------------------------------------------------------------------------------------------------------------
                  Form No.                                            Title                              Rule
----------------------------------------------------------------------------------------------------------------
40.........................................  Statement of Reporting Trader.........................        18.04
101........................................  Positions of Special Accounts.........................        17.00
102........................................  Identification of Special Accounts, Volume Threshold          17.01
                                              Accounts, and Consolidated Accounts.
204........................................  Cash Positions of Grain Traders (including Oilseeds           19.00
                                              and Products).
304........................................  Cash Positions of Cotton Traders......................        19.00
71.........................................  Identification of Omnibus Accounts and Sub-accounts...        17.01
----------------------------------------------------------------------------------------------------------------


    (Approved by the Office of Management and Budget under control 
numbers 3038-0007, 3038-0009, and 3038-0103.)


0
5. Add Sec.  15.04 to read as follows:


Sec.  15.04  Reportable trading volume level.

    The volume quantity for the purpose of reports filed under parts 17 
and 18 of this chapter is trading volume of 50 or more contracts, 
during a single trading day, on a single reporting market that is a 
board of trade designated as a contract market under section 5 of the 
Act or a swap execution facility registered under section 5h of the 
Act, in all instruments that such reporting market designates with the 
same product identifier (including purchases and sales, and inclusive 
of all expiration months).

PART 17--REPORTS BY REPORTING MARKETS, FUTURES COMMISSION 
MERCHANTS, CLEARING MEMBERS, AND FOREIGN BROKERS

0
6. The authority citation for part 17 is revised to read as follows:


[[Page 69231]]


    Authority: 7 U.S.C. 2, 6a, 6c, 6d, 6f, 6g, 6i, 6t, 7, 7a, and 
12a, as amended by Title VII of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act, Pub. L. 111-203, 124 Stat. 1376 (2010).


0
7. In Sec.  17.00, revise paragraph (g)(2)(iii) to read as follows:


Sec.  17.00  Information to be furnished by futures commission 
merchants, clearing members and foreign brokers.

* * * * *
    (g) * * *
    (2) * * *
    (iii) Account Number. A unique identifier assigned by the reporting 
firm to each special account. The field is zero filled with the account 
number right-justified. Assignment of the account number is subject to 
the provisions of paragraph (b) of this section and appendix A of this 
part (Form 102).
* * * * *

0
8. Revise Sec.  17.01 to read as follows:


Sec.  17.01  Identification of special accounts, volume threshold 
accounts, and omnibus accounts.

    (a) Identification of special accounts. When a special account is 
reported for the first time, the futures commission merchant, clearing 
member, or foreign broker shall identify the special account to the 
Commission on Form 102, in accordance with the form instructions and as 
specified in Sec.  17.02(b).
    (b) Identification of volume threshold accounts. Each clearing 
member shall identify and report its volume threshold accounts to the 
Commission on Form 102, in accordance with the form instructions and as 
specified in Sec.  17.02(c).
    (c) Identification of omnibus accounts and sub-accounts. Each 
originator of an omnibus volume threshold account identified in Form 
102 or an omnibus reportable sub-account identified in Form 71 shall, 
after a special call upon such originator by the Commission or its 
designee, file with the Commission an ``Identification of Omnibus 
Accounts and Sub-Accounts'' on Form 71, to be completed in accordance 
with the instructions thereto, at such time and place as directed in 
the call.
    (d) Exclusively self-cleared contracts. Unless determined otherwise 
by the Commission, reporting markets that list exclusively self-cleared 
contracts shall meet the requirements of paragraphs (a) and (b) of this 
section, as they apply to trading in such contracts by all clearing 
members, on behalf of all clearing members.
    (e) Special call provision. Upon a call by the Commission or its 
designee, the reports required to be filed by futures commission 
merchants, clearing members, foreign brokers, and reporting markets 
under paragraphs (a) through (d) of this section shall be submitted 
within 24 hours of the Commission or its designee's request in 
accordance with the instructions accompanying the request.

0
9. Amend Sec.  17.02 by revising the introductory text and paragraph 
(b) and adding paragraph (c) to read as follows:


Sec.  17.02  Form, manner and time of filing reports.

    Unless otherwise instructed by the Commission or its designee, the 
reports required to be filed by reporting markets, futures commission 
merchants, clearing members, and foreign brokers under Sec. Sec.  17.00 
and 17.01 shall be filed as specified in paragraphs (a) through (c) of 
this section.
* * * * *
    (b) Section 17.01(a) reports. For data submitted pursuant to Sec.  
17.01(a) on Form 102:
    (1) Form of submission. Form 102 must be submitted to the 
Commission in the form and manner provided on www.cftc.gov.
    (2) Time of submission. For each account that becomes reportable as 
a special account, the futures commission merchant, clearing member, or 
foreign broker, as appropriate, shall submit a Form 102 to the 
Commission, in accordance with the instructions thereto, and in the 
manner specified by the Commission or its designee. Such form shall be 
submitted in accordance with the instructions and schedule set forth in 
paragraphs (b)(2)(i) and (ii) of this section:
    (i) The applicable reporting party shall submit a completed Form 
102 to the Commission no later than 9 a.m. on the business day 
following the date on which the special account becomes reportable, or 
on such other date as directed by special call of the Commission or its 
designee, and as periodically required thereafter by paragraphs (b)(3) 
and (4) of this section. Such form shall include all required 
information, including the names of the owner(s) and controller(s) of 
each trading account that is not an omnibus account, and that comprises 
a special account reported on the form, provided that, with respect to 
such owners(s) and controller(s), information other than the names of 
such parties may be reported in accordance with the instructions and 
schedule set forth in paragraph (b)(2)(ii) of this section. Unless 
otherwise specified by the Commission or its designee, the stated time 
is eastern time for information concerning markets located in that time 
zone, and central time for information concerning all other markets.
    (ii) With respect to the owner(s) and controller(s) of each trading 
account that is not an omnibus account, and that comprises a special 
account reported on Form 102, information other than the names of such 
parties must be provided on Form 102 no later than 9 a.m. on the third 
business day following the date on which the special account becomes 
reportable, or on such other date as directed by special call of the 
Commission or its designee, and as periodically required thereafter by 
paragraphs (b)(3) and (4) of this section. Unless otherwise specified 
by the Commission or its designee, the stated time is eastern time for 
information concerning markets located in that time zone, and central 
time for information concerning all other markets.
    (3) Change updates. If any change causes the information filed by a 
futures commission merchant, clearing member, or foreign broker on a 
Form 102 for a special account to no longer be accurate, then such 
futures commission merchant, clearing member, or foreign broker shall 
file an updated Form 102 with the Commission in accordance with the 
instructions and schedule set forth in paragraphs (b)(2)(i) and (ii) of 
this section, or on such other date as directed by special call of the 
Commission, provided that, a futures commission merchant, clearing 
member, or foreign broker may stop providing change updates for a Form 
102 that it has submitted to the Commission for any special account 
upon notifying the Commission or its designee that the account in 
question is no longer reportable as a special account and has not been 
reportable as a special account for the past six months.
    (4) Refresh updates. For Special Accounts--Starting on a date 
specified by the Commission or its designee and at the end of each 
annual increment thereafter (or such other date specified by the 
Commission or its designee that is equal to or greater than six 
months), each futures commission merchant, clearing member, or foreign 
broker shall resubmit every Form 102 that it has submitted to the 
Commission for each of its special accounts, provided that, a futures 
commission merchant, clearing member, or foreign broker may stop 
providing refresh updates for a Form 102 that it has submitted to the 
Commission for any special account upon notifying the Commission or its 
designee that the account in question is no longer reportable as a 
special account and has not been reportable as a special account for 
the past six months.

[[Page 69232]]

    (c) Section 17.01(b) reports. For data submitted pursuant to Sec.  
17.01(b) on Form 102:
    (1) Form of submission. Form 102 must be submitted to the 
Commission in the form and manner provided on www.cftc.gov.
    (2) Time of submission. For each account that becomes reportable as 
a volume threshold account, the clearing member shall submit a Form 102 
to the Commission, in accordance with the instructions thereto, and in 
the manner specified by the Commission or its designee. Such form shall 
be submitted in accordance with the instructions and schedule set forth 
in paragraphs (c)(2)(i) and (ii) of this section:
    (i) The clearing member shall submit a completed Form 102 to the 
Commission no later than 9 a.m. on the business day following the date 
on which the volume threshold account becomes reportable, or on such 
other date as directed by special call of the Commission or its 
designee, and as periodically required thereafter by paragraphs (c)(3) 
and (4) of this section. Such form shall include all required 
information, including the names of the owner(s) and controller(s) of 
each volume threshold account reported on the form that is not an 
omnibus account, provided that, with respect to such owners(s) and 
controller(s), information other than the names of such parties may be 
reported in accordance with the instructions and schedule set forth in 
paragraph (c)(2)(ii) of this section. Unless otherwise specified by the 
Commission or its designee, the stated time is eastern time for 
information concerning markets located in that time zone, and central 
time for information concerning all other markets.
    (ii) With respect to the owner(s) and controller(s) of each volume 
threshold account reported on Form 102 that is not an omnibus account, 
information other than the names of such parties must be provided on 
Form 102 no later than 9 a.m. on the third business day following the 
date on which the volume threshold account becomes reportable, or on 
such other date as directed by special call of the Commission or its 
designee, and as periodically required thereafter by paragraphs (c)(3) 
and (4) of this section. Unless otherwise specified by the Commission 
or its designee, the stated time is eastern time for information 
concerning markets located in that time zone, and central time for 
information concerning all other markets.
    (3) Change updates. If any change causes the information filed by a 
clearing member on a Form 102 for a volume threshold account to no 
longer be accurate, then such clearing member shall file an updated 
Form 102 with the Commission in accordance with the instructions and 
schedule set forth in paragraphs (c)(2)(i) and (ii) of this section, or 
on such other date as directed by special call of the Commission, 
provided that, a clearing member may stop providing Form 102 change 
updates for a volume threshold account upon notifying the Commission or 
its designee that the volume threshold account executed no trades in 
any product in the past six months on the reporting market at which the 
volume threshold account reached the reportable trading volume level.
    (4) Refresh updates. For Volume Threshold Accounts--Starting on a 
date specified by the Commission or its designee and at the end of each 
annual increment thereafter (or such other date specified by the 
Commission or its designee that is equal to or greater than six 
months), each clearing member shall resubmit every Form 102 that it has 
submitted to the Commission for each of its volume threshold accounts, 
provided that, a clearing member may stop providing refresh updates for 
a Form 102 that it has submitted to the Commission for any volume 
threshold account upon notifying the Commission or its designee that 
the volume threshold account executed no trades in any product in the 
past six months on the reporting market at which the volume threshold 
account reached the reportable trading volume level.

0
10. Revise Sec.  17.03 to read as follows:


Sec.  17.03  Delegation of authority to the Director of the Office of 
Data and Technology or the Director of the Division of Market 
Oversight.

    The Commission hereby delegates, until the Commission orders 
otherwise, the authority set forth in the paragraphs below to either 
the Director of the Office of Data and Technology or the Director of 
the Division of Market Oversight, as indicated below, to be exercised 
by such Director or by such other employee or employees of such 
Director as designated from time to time by such Director. The Director 
of the Office of Data and Technology or the Director of the Division of 
Market Oversight may submit to the Commission for its consideration any 
matter which has been delegated to such Director in this paragraph. 
Nothing in this paragraph prohibits the Commission, at its election, 
from exercising the authority delegated in this paragraph.
    (a) Pursuant to Sec.  17.00(a) and (h), the authority shall be 
designated to the Director of the Office of Data and Technology to 
determine whether futures commission merchants, clearing members and 
foreign brokers can report the information required under Sec.  
17.00(a) and (h) on series `01 forms or using some other format upon a 
determination that such person is unable to report the information 
using the format, coding structure or electronic data transmission 
procedures otherwise required.
    (b) Pursuant to Sec.  17.02, the authority shall be designated to 
the Director of the Office of Data and Technology to instruct or 
approve the time at which the information required under Sec. Sec.  
17.00 and 17.01(a) and (b) must be submitted by futures commission 
merchants, clearing members and foreign brokers provided that such 
persons are unable to meet the requirements set forth in Sec.  17.02.
    (c) Pursuant to Sec.  17.01, the authority shall be designated to 
the Director of the Office of Data and Technology to determine whether 
to permit an authorized representative of a firm filing the Form 102 or 
person filing the Form 71 to use a means of authenticating the report 
other than by signing the Form 102 or Form 71 and, if so, to determine 
the alternative means of authentication that shall be used.
    (d) Pursuant to Sec.  17.00(a), the authority shall be designated 
to the Director of the Office of Data and Technology to approve a 
format and coding structure other than that set forth in Sec.  
17.00(g).
    (e) Pursuant to Sec.  17.01(c), the authority shall be designated 
to the Director of the Office of Data and Technology to make special 
calls on omnibus volume threshold account originators and omnibus 
reportable sub-account originators for information as set forth in 
Sec.  17.01(c).
    (f) Pursuant to Sec.  17.02(b)(4), the authority shall be 
designated to the Director of the Division of Market Oversight to 
determine the date on which each futures commission merchant, clearing 
member, or foreign broker shall update or otherwise resubmit every Form 
102 that it has submitted to the Commission for each of its special 
accounts.
    (g) Pursuant to Sec.  17.02(c)(4), the authority shall be 
designated to the Director of the Division of Market Oversight to 
determine the date on which each clearing member shall update or 
otherwise resubmit every Form 102 that it has submitted to the 
Commission for each of its volume threshold accounts.

0
11. Add appendix A to part 17 to read as follows:

[[Page 69233]]

Appendix A to Part 17--Form 102

    Note: This Appendix is a representation of the final reporting 
form, which will be submitted in an electronic format pursuant to 
the rules in part 17, either via the Commission's web portal or via 
XML-based, secure FTP transmission.

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BILLING CODE 6351-01-C

0
12. Add appendix B to part 17 to read as follows:

Appendix B to Part 17--Form 71

    Note: This Appendix is a representation of the final reporting 
form, which will be submitted in an electronic format pursuant to 
the rules in Part 17, either via the Commission's web portal or via 
XML-based, secure FTP transmission.

BILLING CODE 6351-01-P

[[Page 69253]]

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[[Page 69254]]


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[[Page 69259]]


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PART 18--REPORTS BY TRADERS

0
13. The authority citation for part 18 is revised to read as follows:

    Authority: 7 U.S.C. 2, 4, 5, 6a, 6c, 6f, 6g, 6i, 6k, 6m, 6n, 6t, 
12a, and 19, as amended by Title VII of the Dodd-Frank Wall Street 
Reform and Consumer Protection Act, Pub. L. 111-203, 124 Stat. 1376 
(2010).


0
14. Revise Sec.  18.04 to read as follows:


Sec.  18.04  Statement of reporting trader.

    (a) Every trader who owns, holds, or controls a reportable futures 
and option position shall after a special call upon such trader by the 
Commission or its designee file with the Commission a ``Statement of 
Reporting Trader'' on the Form 40, to be completed in accordance with 
the instructions thereto, at such time and place as directed in the 
call.
    (b) Every volume threshold account controller, person who owns a 
volume threshold account, reportable sub-account controller, and person 
who owns a reportable sub-account shall after a special call upon such 
person by the Commission or its designee file with the Commission a 
``Statement of Reporting Trader'' on the Form 40, to be completed in 
accordance with the instructions thereto, at such time and place as 
directed in the call.

0
15. Amend Sec.  18.05 to revise introductory paragraph (a), and 
paragraphs (b) and (c), to read as follows:


Sec.  18.05  Maintenance of books and records.

    (a) Every volume threshold account controller; person who owns a 
volume threshold account; reportable sub-account controller; person who 
owns a reportable sub-account; and trader who owns, holds, or controls 
a reportable futures or option position shall keep books and records 
showing all details concerning all positions and transactions in the 
commodity or swap:
* * * * *
    (b) Every such volume threshold account controller; person who owns 
a volume threshold account; reportable sub-account controller; person 
who owns a reportable sub-account; and trader who owns, holds, or 
controls a reportable futures or option position shall also keep books 
and records showing all details concerning all positions and 
transactions in the cash commodity or swap, its products and 
byproducts, and all commercial activities that it hedges in the 
futures, option, or swap contract in which it is reportable.
    (c) Every volume threshold account controller; person who owns a 
volume threshold account; reportable sub-account controller; person who 
owns a reportable sub-account; and trader who owns, holds, or controls 
a reportable futures or option position shall upon request furnish to 
the Commission any pertinent information concerning such positions, 
transactions, or activities in a form acceptable to the Commission.

0
16. Add appendix A to part 18 to read as follows:

Appendix A to Part 18--Form 40

    Note: This Appendix is a representation of the final reporting 
form, which will be submitted in an electronic format pursuant to 
the rules in Part 18, either via the Commission's web portal or via 
XML-based, secure FTP transmission.

BILLING CODE 6351-01-P

[[Page 69260]]

[GRAPHIC] [TIFF OMITTED] TR18NO13.030

BILLING CODE 6351-01-P

General Instructions

    Who Must File a Form 40--17 CFR 18.04(a) requires every person 
who owns or controls a reportable position to file a Form 40--
Statement of Reporting Trader with the Commission. 17 CFR 18.04(b) 
requires every volume threshold account controller, person who owns 
a volume threshold account, reportable sub-account controller, and 
person who owns a reportable sub-account to file a Form 40--
Statement of Reporting Trader with the Commission. 17 CFR 20.5 
requires every person subject to books or records under 17 CFR 20.6 
to file a 40S filing \3\ with the Commission.
---------------------------------------------------------------------------

    \3\ As used in this document, ``Form 40'' may refer to either a 
Form 40--Statement of Reporting Trader or a 40S Filing, as 
appropriate, and as the context may require.

---------------------------------------------------------------------------

[[Page 69261]]

    When to file--A reporting trader must file a Form 40 on call by 
the Commission or its designee.
    Where to file--The Form 40 should be submitted (a) via the 
CFTC's web-based Form 40 submission process at www.cftc.gov, (b) via 
a secure FTP data feed to the Commission, or (c) as otherwise 
instructed by the Commission or its designee. If electronic 
submission attempts fail, the reporting trader shall contact the 
Commission at techsupport@cftc.gov for further technical support.
    When to update--A reporting trader required to complete a Form 
40 will be under a continuing obligation, per direction in the 
special call, to update and maintain the accuracy of the information 
it provides. Reporting traders can update this information by either 
visiting the CFTC's web-based Form 40 portal to review, verify, and/
or update their information, or by submitting updated information 
via FTP.
    Signature--Each Form 40 submitted to the Commission must be 
signed or otherwise authenticated by either (1) the reporting trader 
submitting the form or (2) an individual that is duly authorized by 
the reporting trader to provide the information and representations 
contained in the form.
    What to File--All reporting traders that are filing a Form 40 
pursuant to either 17 CFR 18.04(a) (i.e. reportable position 
reporting traders) or 17 CFR 20.5 (i.e. swaps books and records 
reporting traders) must complete all questions. All reporting 
traders that are filing a Form 40 pursuant to 17 CFR 18.04(b) (i.e. 
volume threshold account controllers, persons who own a volume 
threshold account, reportable sub-account controllers, and persons 
who own a reportable sub-account reporting trader) must complete all 
questions unless they are natural persons. Reporting traders that 
are filing a Form 40 pursuant to 17 CFR 18.04(b) who are natural 
persons shall mark not applicable for questions 7 and 8.
    Please be advised that pursuant to 5 CFR 1320.5(b)(2)(i), you 
are not required to respond to this collection of information unless 
it displays a currently valid OMB control number.

Table of Contents

1. General information for Reporting Trader
2. Contact Information for Individual Responsible for Trading 
Activities
3. Contact Information for Individual Responsible for Risk 
Management Operations
4. Contact information for Individual Responsible for Information on 
the Form 40
5. Omnibus Account Identification
6. Foreign Government Affiliation
7. Non-Domestic Entity Indicator
8. Ownership Structure (Parent/Parents)
9. Ownership Structure (Subsidiary/Subsidiaries)
10. Control of Reporting Trader's Trading Activities by Others
11. Control of Other's Trading Activities by Reporting Trader
12. Other Parties Influencing Trading of Reporting Trader
13. Trading Subject to Express or Implied Agreement
14. Commodity Index Trading Indicator
15. Swap Dealer Identification
16. Major Swap Participant Identification
17. Business Sectors, Subsectors and Occupation
18. Commodities Being Traded in Derivative Markets
19. Business Purpose for Trading in Derivative Markets
20. Signature/Authentication, Name, and Date

Acknowledgement of Definitions

    Before proceeding with your submission, please check this box to 
indicate that you have read the definitions for the following 
terms--as they are used in the Form 40: [ballot]
    Commodity (or commodities)--generally, all goods and articles 
(except onions and motion picture box office receipts, or any index, 
measure, value, or data related to such receipts), and all services, 
rights, and interests (except motion picture box office receipts, or 
any index, measure, value, or data related to such receipts) in 
which contracts for future delivery are presently or in the future 
dealt in (see 7 U.S.C. 1a(9)).
    Commodity Index Trading (``CIT'')--means:
    a. An investment strategy that consists of investing in an 
instrument (e.g., a commodity index fund, exchange-traded fund for 
commodities, or exchange-traded note for commodities) that enters 
into one or more derivative contracts to track the performance of a 
published index that is based on the price of one or more 
commodities, or commodities in combination with other securities; or
    b. An investment strategy that consists of entering into one or 
more derivative contracts to track the performance of a published 
index that is based on the price of one or more commodities, or 
commodities in combination with other securities.
    Control--as used in this Form, ``control'' means to actually 
direct, by power of attorney or otherwise, the trading of a special 
account or a consolidated account. A special account or a 
consolidated account may have more than one controller.
    Derivatives--futures, options on futures, and swaps.
    Omnibus volume threshold account--means any trading account 
that, on an omnibus basis, carries reportable trading volume on or 
subject to the rules of a reporting market that is a board of trade 
designated as a contract market under section 5 of the Act or a swap 
execution facility registered under section 5h of the Act.
    Parent--for purposes of Form 40, a person is a parent of a 
reporting trader if it has a direct or indirect controlling interest 
in the reporting trader; and a person has a controlling interest if 
such person has the ability to control the reporting trader through 
the ownership of voting equity, by contract, or otherwise.
    Person--an individual, association, partnership, corporation, 
trust, or government agency and/or department.
    Reportable sub-account--means any trading sub-account of an 
omnibus volume threshold account or omnibus reportable sub-account, 
which sub-account executes reportable trading volume.
    Reportable sub-account controller--means a natural person who by 
power of attorney or otherwise actually directs the trading of a 
reportable sub-account. A reportable sub-account may have more than 
one controller.
    Reportable trading volume--means contract trading volume that 
meets or exceeds the level specified in 17 CFR 15.04.
    Reporting trader--a person who must file a Form 40, whether 
pursuant to 17 CFR 18.04(a), 17 CFR 18.04(b), or 17 CFR 20.05.
    Subsidiary--for purposes of Form 40, a person is a subsidiary of 
a reporting trader if the reporting trader has a direct or indirect 
controlling interest in the person; and a reporting trader has a 
controlling interest if such reporting trader has the ability to 
control the person through the ownership of voting equity, by 
contract, or otherwise.
    Volume threshold account--means any trading account that carries 
reportable trading volume on or subject to the rules of a reporting 
market that is a board of trade designated as a contract market 
under section 5 of the Act or a swap execution facility registered 
under section 5h of the Act.
    Volume threshold account controller--means a natural person who 
by power of attorney or otherwise actually directs the trading of a 
volume threshold account. A volume threshold account may have more 
than one controller.

CFTC Form 40

General Information for Reporting Trader:

    For question 1, please provide the name, contact information and 
other requested information regarding the reporting trader. If the 
reporting trader is an individual, provide their full legal name and 
the name of the reporting trader's employer.
    1. Indicate whether the reporting trader is a legal entity or a 
natural person:

Legal entity: [ballot]
Natural person: [ballot]

Name of Reporting Trader
Street Address
City
State
Country
Zip/Postal Code
Phone Number \4\
---------------------------------------------------------------------------

    \4\ Please provide a direct number, without any telephone 
extension. Non-U.S. respondents should also provide the applicable 
international area code.
---------------------------------------------------------------------------

Email Address
Web site
NFA ID (if any)
Legal Entity Identifier (if any)
Name of Employer
Employer NFA ID (if any)
Employer Legal Entity Identifier (if any)

Contact Information

    For questions 2, 3, and 4, provide the name and contact 
information as requested.
    2. Individual to contact regarding the derivatives trading of 
the reporting trader (this individual should be able to answer 
specific questions about the reporting trader's trading activity 
when contacted by Commission staff):
    Check here if this individual has the same contact information 
as that of the reporting trader.


[[Page 69262]]


Name
Street Address
City
State
Country
Zip/Postal Code
Phone Number \5\
---------------------------------------------------------------------------

    \5\ Please provide a direct number, without any telephone 
extension. Non-U.S. respondents should also provide the applicable 
international area code.
---------------------------------------------------------------------------

Email Address
NFA ID (if any)

    3. Individual to contact regarding the risk management 
operations of the reporting trader (this individual should be able 
to answer specific questions about the reporting trader's risk 
management operations, including account margining, when contacted 
by Commission staff):
    Check here if this individual has the same contact information 
as that of the reporting trader.

Name
Street Address
City
State
Country
Zip/Postal Code
Phone Number \6\
---------------------------------------------------------------------------

    \6\ Please provide a direct number, without any telephone 
extension. Non-U.S. respondents should also provide the applicable 
international area code.
---------------------------------------------------------------------------

Email Address
NFA ID (if any)

    4. Individual responsible for the information on the Form 40 
(this individual should be able to verify, clarify, and explain the 
answers submitted by a reporting trader on the Form 40):
    Check here if this individual has the same contact information 
as that of the reporting trader.

Name
Street Address
City
State
Country
Zip/Postal Code
Phone Number \7\
---------------------------------------------------------------------------

    \7\ Please provide a direct number, without any telephone 
extension. Non-U.S. respondents should also provide the applicable 
international area code.
---------------------------------------------------------------------------

Email Address
NFA ID (if any)

Omnibus Account Identification

    For question 5, indicate whether the reporting trader has a 
customer omnibus account with a futures commission merchant, 
clearing member, or foreign broker (NOTE: For the purpose of this 
question, an omnibus account is an account that one futures 
commission merchant, clearing member or foreign broker carries for 
another in which the transactions of multiple individual accounts 
are combined. The identities of the holders of the individual 
accounts are not generally known or disclosed to the carrying firm. 
In addition, the Commission has traditionally identified omnibus 
accounts as either house or customer omnibus accounts. House omnibus 
accounts exclusively contain the proprietary accounts of the omnibus 
account originator. Customer omnibus accounts contain the accounts 
of customers of the omnibus account originator. It is the obligation 
of the omnibus account originator to correctly identify the omnibus 
account type to the reporting entity):
    5. Does the reporting trader have a customer omnibus account 
with a futures commission merchant, clearing member, or foreign 
broker? YES/NO
    IF YES, Give the name(s) of the futures commission merchant, 
clearing member, or foreign broker carrying the account(s) of the 
reporting trader.

Foreign Government Affiliation

    For question 6, please complete the following (NOTE: For the 
purpose of this question, affiliation can include, but is not 
limited to, a situation (1) where the foreign government directly or 
indirectly controls the reporting trader's assets, operations, and/
or derivatives trading, or (2) where the reporting trader operates 
as a direct or indirect subsidiary of a foreign government, its 
agencies or departments, or any investment program of the foreign 
government):
    6. Is the reporting trader directly or indirectly affiliated 
with a government other than that of the United States? YES/NO
    IF YES, give the name of the government(s).
    IF YES, explain the nature of the affiliation between the 
reporting trader and the government(s) listed above.

Non-Domestic Entity Indicator

    For question 7, if the Reporting Trader is a legal entity, 
please complete the following.
    7. Is the reporting trader organized under the laws of a country 
other than the United States? YES/NO
    IF YES, give the name of the country or countries under whose 
laws the reporting trader is organized.

Ownership Structure of the Reporting Trader

    For questions 8 and 9, provide the requested ownership 
information only as applicable.
    If the Reporting Trader is a commodity pool, also provide the 
requested information in questions 8i, 8ii, and 8iii. If the 
Reporting Trader is reporting commodity pools in which it has an 
ownership interest, also provide the requested information in 
questions 9i, 9ii, and 9iii.
    8. List all the parents of the reporting trader (including the 
immediate parent and any parent(s) of its parent) and, separately, 
all persons that have a 10 percent or greater ownership interest in 
the reporting trader (commodity pool investors are deemed to have an 
ownership interest in the pool). For each such parent or 10 percent 
or greater owner include the following information:
    Indicate whether the party identified below is a legal entity or 
a natural person:

Legal entity: [ballot]
Natural person: [ballot]

Name
Street Address
City
State
Country
Zip/Postal Code
Phone Number \8\
---------------------------------------------------------------------------

    \8\ Please provide a direct number, without any telephone 
extension. Non-U.S. respondents should also provide the applicable 
international area code.
---------------------------------------------------------------------------

Web site \9\
---------------------------------------------------------------------------

    \9\ The Web site and NFA ID requested in this question are only 
required to be reported to the extent the respondent has this 
information available in its records. Respondents are not required 
to poll customers or other parties for the Web site and NFA ID if 
this information has not been previously collected.
---------------------------------------------------------------------------

Email Address
NFA ID (if any)
Legal Entity Identifier (if any)
Parent Company/10% Owner/or Both Indicator

    8i. For each person identified in question 8 that is a limited 
partner, shareholder, or other similar type of pool participant, 
indicate if they are a principal or affiliate of the operator of the 
commodity pool.

Principal/Affiliate Indicator

    8ii. For each person identified in question 8 that is a limited 
partner, shareholder, or other similar type of pool participant, 
indicate if they are also a commodity pool operator of the pool.

Commodity Pool Operator Indicator

    8iii. For each person identified in question 8 that is a limited 
partner, shareholder, or other similar type of pool participant and 
where the operator of the commodity pool is exempt from registration 
under Sec.  4.13 of the Commission's regulations, indicate if that 
person has an ownership or equity interest of 25 percent or greater 
in the commodity pool.

25% Ownership Indicator

    9. List all the subsidiaries of the reporting trader (including 
the immediate subsidiary and any subsidiaries of those subsidiaries) 
and, separately, all persons in which the reporting trader has a 10 
percent or greater ownership interest (including a 10 percent or 
greater interest in a commodity pool(s)). Only list subsidiaries and 
persons that engage in derivatives trading. For each such subsidiary 
and/or person include the following information:
    Indicate whether the party identified below is a legal entity or 
a natural person:

Legal entity: [ballot]
Natural person: [square]

Name
Street Address
City
State
Country
Zip/Postal Code
Phone Number \10\
---------------------------------------------------------------------------

    \10\ Please provide a direct number, without any telephone 
extension. Non-U.S. respondents should also provide the applicable 
international area code.
---------------------------------------------------------------------------

Web site \11\
---------------------------------------------------------------------------

    \11\ The Web site and NFA ID requested in this question are only 
required to be reported to the extent the respondent has this 
information available in its records. Respondents are not required 
to poll customers or other parties for the Web site and NFA ID if 
this information has not been previously collected.
---------------------------------------------------------------------------

Email Address
NFA ID (if any)
Legal Entity Identifier (if any)

[[Page 69263]]

Subsidiary/10% Ownership/or Both Indicator

    9i. For each person identified in question 9 that is a commodity 
pool and for which you are a limited partner, shareholder or other 
similar type of pool participant, indicate if you are a principal or 
affiliate of the operator of the commodity pool.

Principal/Affiliate Indicator

    9ii. For each person identified in question 9 that is a 
commodity pool and for which you are a limited partner, shareholder 
or other similar type of pool participant, indicate if you are the 
commodity pool operator for the pool.

Commodity Pool Operator Indicator

    9iii. For each person identified in question 9 that is a 
commodity pool and for which you are a limited partner, shareholder 
or other similar type of pool participant and for which the operator 
of the commodity pool is exempt from registration under Sec.  4.13 
of the Commission's regulations, indicate if you have an ownership 
or equity interest of 25 percent or greater in the commodity pool.

25% Ownership Indicator

Control of Trading

    For questions 10, 11, 12, and 13 provide the requested control 
information only as applicable.
    10. List all persons outside of the reporting trader that 
control some or all of the derivatives trading of the reporting 
trader (including persons that may have been previously identified 
as a parent, above):
    Indicate whether the party identified below is a legal entity or 
a natural person:

Legal entity: [ballot]
Natural person: [ballot]

Name
Street Address
City
State
Country
Zip/Postal Code
Phone Number \12\
---------------------------------------------------------------------------

    \12\ Please provide a direct number, without any telephone 
extension. Non-U.S. respondents should also provide the applicable 
international area code.
---------------------------------------------------------------------------

Web site \13\
---------------------------------------------------------------------------

    \13\ The Web site and NFA ID requested in this question are only 
required to be reported to the extent the respondent has this 
information available in its records. Respondents are not required 
to poll customers or other parties for the Web site and NFA ID if 
this information has not been previously collected.
---------------------------------------------------------------------------

Email Address
NFA ID (if any)
Legal Entity Identifier (if any)
Some/All Indicator

    11. List all persons for which the reporting trader controls 
some or all of the derivatives trading (including persons that may 
have been previously identified as a subsidiary, above):
    Indicate whether the party identified below is a legal entity or 
a natural person:

Legal entity: [square]
Natural person: [square]

Name
Street Address
City
State
Country
Zip/Postal Code
Phone Number \14\
---------------------------------------------------------------------------

    \14\ Please provide a direct number, without any telephone 
extension. Non-U.S. respondents should also provide the applicable 
international area code.
---------------------------------------------------------------------------

Web site \15\
---------------------------------------------------------------------------

    \15\ The Web site and NFA ID requested in this question are only 
required to be reported to the extent the respondent has this 
information available in its records. Respondents are not required 
to poll customers or other parties for the Web site and NFA ID if 
this information has not been previously collected.
---------------------------------------------------------------------------

Email Address
NFA ID (if any)
Legal Entity Identifier (if any)
Some/All Indicator

    12. List any other person(s) that directly or indirectly 
influence, or exercise authority over, some or all of the trading of 
the reporting trader, but who do not exercise ``control'' as defined 
in this Form: Indicate whether the party identified below is a legal 
entity or a natural person:

Legal entity: [ballot]
Natural person: [ballot]

Name
Street Address
City
State
Country
Zip/Postal Code
Phone Number \16\
---------------------------------------------------------------------------

    \16\ Please provide a direct number, without any telephone 
extension. Non-U.S. respondents should also provide the applicable 
international area code.
---------------------------------------------------------------------------

Web site \17\
---------------------------------------------------------------------------

    \17\ The Web site and NFA ID requested in this question are only 
required to be reported to the extent the respondent has this 
information available in its records. Respondents are not required 
to poll customers or other parties for the Web site and NFA ID if 
this information has not been previously collected.
---------------------------------------------------------------------------

Email Address
NFA ID (if any)
Legal Entity Identifier (if any)
Some/All Indicator

    13. Is some or all of the derivatives trading of the reporting 
trader subject to an express or implied agreement or understanding 
with any other person(s) not addressed in questions 10, 11, or 12, 
above? YES/NO
    If yes, provide the following information:
    Indicate whether the party identified below is a legal entity or 
a natural person:

Legal entity: [ballot]
Natural person: [ballot]

Name
Street Address
City
State
Country
Zip/Postal Code
Phone Number \18\
---------------------------------------------------------------------------

    \18\ Please provide a direct number, without any telephone 
extension. Non-U.S. respondents should also provide the applicable 
international area code.
---------------------------------------------------------------------------

Web site \19\
---------------------------------------------------------------------------

    \19\ The Web site and NFA ID requested in this question are only 
required to be reported to the extent the respondent has this 
information available in its records. Respondents are not required 
to poll customers or other parties for the Web site and NFA ID if 
this information has not been previously collected.
---------------------------------------------------------------------------

Email Address
NFA ID (if any)
Legal Entity Identifier (if any)
Some/All Indicator

Commodity Index Trading Indicator

    For question 14, please answer the following:
    14i. Is the reporting trader engaged in commodity index trading 
as defined in paragraph (a) of the definition of CIT above? YES/NO
    14ii. Is the reporting trader engaged in commodity index trading 
as defined in paragraph (b) of the definition of CIT above? YES/NO
    a. If the reporting trader is engaged in CIT (as defined in 
paragraph (b)) with respect to one or more commodities or commodity 
groups appearing on Supplemental List II, indicate whether the 
reporting trader is, in the aggregate, pursuing long exposure or 
short exposure with respect to such commodities or commodity groups. 
It is not necessary to respond to this question with respect to CIT 
that tracks the performance of multiple unrelated commodities or 
commodity groups (e.g., an investment in an exchange-traded fund 
that tracks the performance of an index representing commodities 
spanning multiple commodity groups).
    14iii. If the reporting trader is currently engaged in commodity 
index trading as defined in paragraphs (a) or (b) of the CIT 
definition above, indicate the month and year on which the reporting 
trader first became engaged in commodity index trading.

Swaps Participation Indicators

    For questions 15 and 16, please indicate if the reporting trader 
meets the specified definition:
    15. Is the reporting trader a Swap Dealer, as defined in Sec.  
1.3(ppp) of regulations under the Commodity Exchange Act? YES/NO
    16. Is the reporting trader a Major Swap Participant, as defined 
in Sec.  1.3(qqq) of regulations under the Commodity Exchange Act? 
YES/NO

Nature of Business and of Derivatives Trading Activities

    For questions 17, 18, and 19 provide the requested information 
only as applicable.
    17. Select all business sectors and subsectors that pertain to 
the business activities or occupation of the reporting trader. If 
more than one business subsector is selected, indicate which 
business subsector primarily describes the nature of the reporting 
trader's business.

Choose From Supplemental List I

    18. Select all commodity groups and individual commodities that 
the reporting trader presently trades or expects to trade in the 
near future in derivative markets.

Choose From Supplemental List II

    19. For each selected individual commodity identified in 
question 18, indicate the business purpose(s) for which the 
reporting trader uses derivative markets.

[[Page 69264]]

If the reporting trader has more than one business purpose for 
trading in an individual commodity, also indicate the predominant 
business purpose.

Choose From Supplemental List III

Signature/Authentication, Name, and Date

    20. Please sign/authenticate the Form 40 prior to submitting.
    Signature/Electronic Authentication:
[ballot] By checking this box and submitting this form (or by 
clicking ``submit,'' ``send,'' or any other analogous transmission 
command if transmitting electronically), I certify that I am duly 
authorized by the reporting trader identified below to provide the 
information and representations submitted on this Form 40, and that 
the information and representations are true and correct.
Reporting Trader Authorized Representative (Name and Position):

 -------------------- (Name)

 -------------------- (Position)

Submitted on behalf of:

 ---------- (Reporting Trader Name)

Date of Submission:

 --------------------

Supplemental List I: List of Business Sectors and Subsectors

Business Sector

Subsector

Agriculture and Forestry
    Oilseed Farming
    Grain Farming
    Fruit and Tree Nut Farming
    Other Crop Farming (Specify)
    Cattle Ranching and Farming
    Hog and Pig Farming
    Poultry and Egg Production
    Sheep and Goat Farming
    Other Animal Production
    Forestry, Logging, or Timber Production
    Cooperative
    Other (Specify)
Mining, Oil and Natural Gas Extraction
    Oil Exploration/Production
    Natural Gas Exploration/Production
    Coal Mining
    Precious Metal Mining
    Non-Precious Metal Mining
    Other (Specify)
Utilities
    Utility/Cooperative
    Electric Power Generation
    Local Distribution Company
    Natural Gas Distribution
    Other (Specify)
Construction
    Building Construction
    Heavy and Civil Engineering Construction
    Other (Specify)
Manufacturing, Refining and Processing
    Animal Food Manufacturing
    Grain Milling
    Oilseed Milling
    Sugar and Confectionery Product Manufacturing
    Fruit and Vegetable Preserving and Specialty Food Manufacturing
    Dairy Product Manufacturing
    Animal Slaughtering and Processing
    Bakeries
    Other Food Manufacturing
    Beverage Manufacturing Textile Mills
    Textile Product Mills
    Apparel Manufacturing
    Wood Product Manufacturing
    Paper Manufacturing
    Pulp, Paper, and Paperboard Mills
    Petroleum and Coal Products Manufacturing
    Renewable Fuels Manufacturing
    Petrochemical/Chemical Manufacturing
    Plastics and Rubber Products Manufacturing
    Natural Gas Processing
    Precious Metal Processor/Smelter
    Non-Precious Metal Processor
    Metals Fabricator
    Other (Specify)
Wholesale Trade
    Lumber and Other Construction Materials Merchant Wholesalers
    Metal and Mineral Merchant Dealer
    Grocery and Related Product Merchant Wholesaler
    Farm Product Raw Material Merchant Wholesalers
    Chemical and Allied Products Merchant Wholesalers
    Petroleum and Petroleum Products Merchant Wholesalers
    Natural Gas, Power Marketer
    Importer/Exporter (specify commodities)
    Other (Specify)
Retail Trade
    Building Materials and Supplies Dealers
    Food and Beverage Stores
    Jeweler/Precious Metals Retailer
    Vehicle Fuel Retailer/Convenience Store Operator
    Fuel Dealers
    Other (Specify)
Transportation and Warehousing
    Air Transport
    Trucking
    Pipeline Transportation of Crude Oil
    Pipeline Transportation of Natural Gas
    Farm Product Warehousing and Storage
    Energy Distributor (warehousing, storage)
    Other (Specify)
End User (NOTE: May not be the only/primary subsector selected)
    Metals End User (Construction Co., Brass Mill, Steel Mill)
    Emissions End User (Factory, Industrial Cos.)
    Petroleum End User (Airline Cos. Municipalities, Industrial 
Cos., Trucking Cos.)
Information
    Other (Specify)
Financial Institutions and Investment Management
Dealers and Financial Intermediaries
    Broker/Dealer
    Bank Holding Company
    Investment/Merchant Bank
    Non-US Commercial Bank
    US Commercial Bank
    Swaps/Derivatives Dealer
    Universal Bank
Asset/Investment/Fund Management:
    Asset/Investment Manager
 Institutional Clients
 Retail Clients
    Managed Accounts and Pools (CTAs, CPOs, etc.)
 Institutional Clients
 Retail Clients
    College Endowment, Trust, Foundation
    Fund of Hedge Funds
    Hedge Fund
    Mutual Fund
    Pension Fund
    Private Wealth Management
    Private Bank
    Exchange Traded Fund Issuer
    Exchange Traded Note Issuer
Government Financial Institution:
    Central Bank
    Sovereign Wealth Fund
    Government Sponsored Enterprise (GSE)
    Other Governmental Entity (Specify)
Other Financial or Trading Entities:
    Arbitrageur
    Individual Trader/Investor
    Floor Broker
    Floor Trader
    Market Maker
    Proprietary Trader
    Corporate Treasury
    Mortgage Originator
    Savings Bank
    Credit Union
    Insurance Company
    Other (Specify)
Real Estate
    Other (Specify)
Arts, Entertainment, and Recreation
    Performing Arts Companies
    Promoters of Performing Arts
    Agents and Managers for Artists and Entertainers
    Independent Artists, Writers, Performers
    Other (Specify)
Accommodation and Food Services
    Food Services
    Other (Specify)
Public Administration
    Administration of Environmental Quality Programs
    Administration of Economic Programs
    Other (Specify)

Supplemental List II: Commodity Groups and Individual Commodities

Commodity Group

Individual Commodity

GRAINS
    OATS
    WHEAT
    CORN
    RICE
LIVESTOCK/MEAT PRODUCTS
    LIVE CATTLE
    PORK BELLIES
    FEEDER CATTLE
    LEAN HOGS
DAIRY PRODUCTS
    MILK
    BUTTER
    CHEESE
OILSEED AND PRODUCTS
    SOYBEAN OIL
    SOYBEAN MEAL
    SOYBEANS
FIBER
    COTTON
FOODSTUFFS/SOFTS
    COFFEE
    FROZEN CONCENTRATED ORANGE JUICE
    SUGAR

[[Page 69265]]

    COCOA
OTHER AGRICULTURAL
REAL ESTATE
CURRENCY
EQUITIES AND EQUITY INDICIES
INTEREST RATES
    TREASURY COMPLEX
    OTHER INTEREST RATE PRODUCTS
OTHER FINANCIAL INSTRUMENTS
PETROLEUM AND PRODUCTS
    JET FUEL
    ETHANOL
    BIODIESEL
    FUEL OIL
    HEATING OIL
    GASOLINE
    NAPHTHA
    CRUDE OIL
    DIESEL
NATURAL GAS AND PRODUCTS
    NATURAL GAS LIQUIDS
    NATURAL GAS
ELECTRICITY AND SOURCES
    COAL
ELECTRICITY
    URANIUM
PRECIOUS METALS
    PALLADIUM
    PLATINUM
    SILVER
    GOLD
BASE METALS
    STEEL
    COPPER
WOOD PRODUCTS
    LUMBER
    PULP
CHEMICALS
PLASTICS
EMISSIONS
WEATHER
OTHER (SPECIFY)

Supplemental List III: Business Purposes of Commodity Derivatives 
Trading

Business Purpose

Definition

Example

Offsetting Cash or Spot Market Input Price Risk

    Using derivative markets for commodities that are direct inputs 
or purchases for your business so as to offset price risk associated 
with your purchase of these inputs.
    E.g. You are a grain processor, so you use wheat futures to 
offset the price risk incidental to your cash purchases of wheat.

Offsetting Cash or Spot Market Output Price Risk

    Using derivative markets for commodities that are direct outputs 
or sales of your business so as to offset price risk associated with 
your sale of these outputs.
    E.g. You are a gasoline refiner, so you use gasoline futures to 
offset price risk associated with your production of gasoline.

Offsetting Other Cash or Spot Market Price Risks (Cross Price Risk)

    Using derivative markets for a commodity that is not a direct 
input or output of your business, but which has significant price 
correlations with the direct inputs or outputs of your business.
    E.g. You manufacture ethanol which is used as an additive in and 
competitor for gasoline as a combustive fuel. While you neither 
directly consume nor produce gasoline, you may find that the price 
you receive for your ethanol product is highly correlated with the 
price of gasoline, and therefore you reduce ethanol price risk by 
using gasoline futures contracts.

Other Physical Risk Management Strategies

    Managing other price risks incidental to the operation of your 
business or physical assets through the use of commodity derivative 
markets.
    E.g. You are a manufacturer with significant international 
sales, so you use foreign currency futures to offset risks 
associated with changes in the competitiveness of your exports and 
therefore the value of your physical assets such as production 
plants, land, machinery, etc.

Client Futures/Options on Futures Trading

    Fulfilling customer/client desire for portfolio diversification 
or exposure to various asset classes through your activity as a 
Commodity Pool Operator, Commodity Trading Advisor, or other similar 
role.
    E.g. You collect funds and execute trading strategies through 
the use of futures/options on futures markets at the expressed 
intent and for the sole benefit of clients.

Managing Client Swaps Exposure

    Reducing risk stemming from holding or executing swaps contracts 
on behalf of clients or customers through the use of futures/options 
on futures markets.
    E.g. You sell crude oil swaps to a client and agree to accept 
the risk inherent in the index price. You offset this risk through 
purchases of crude oil futures, in effect transferring price risk 
from the client to another market participant.

Making Markets/Providing Liquidity

    Engaging in derivatives transactions to assume risk and help 
transfer ownership of derivative positions from one market 
participant to another, realizing the bid-ask spread as the return.
    E.g. You accept risk by buying and selling futures/options on 
futures contracts so that other traders can move into and out of 
positions when they wish. You then find other traders willing to 
take the other side of those transactions.

Arbitrage

    Using derivative markets as part of a strategy designed to 
realize risk-free profit from pricing anomalies.
    E.g. You realize that the wheat futures contract is trading at a 
discount (even after considering storage, transport, etc.) relative 
to the wheat cash price, and therefore find it profitable to 
purchase the wheat futures contract, take delivery, and then resell 
the wheat in the cash market for a risk-free profit.

Establishing Price Exposure

    Using derivative markets as a way to express your belief in the 
future movement of market prices. This strategy does not involve 
offsetting risks incidental to your business, but instead involves 
directional trading.
    E.g. You conduct research and believe that crude oil prices are 
due to rise, so you take long futures positions in crude oil to 
profit from your predictions.

Financial Asset Management

    Using derivatives to diversify, rebalance, or otherwise allocate 
financial assets so that risks to the value of the investment 
portfolio are reduced. This strategy is used by entities such as 
pension funds and endowments to manage overall risk to their 
financial portfolios.
    E.g. You hold Treasury bonds as a component of your investment 
portfolio, and use futures contracts to reduce overall portfolio 
risk that would result from falling bond prices.

Managing Proprietary Swaps Exposure

    Reducing risk stemming from your proprietary holding or 
execution of swaps contracts through the use of futures/options on 
futures markets.
    E.g. You trade interest rate swaps as part of your business or 
investment strategy, and offset some of the risk inherent in those 
swaps through your use of Eurodollar futures markets.

Other: Specify

    List and explain your business purpose if the above categories 
do not adequately describe the reason you trade in a particular 
commodity derivative market.

PART 20--LARGE TRADER REPORTING FOR PHYSICAL COMMODITY SWAPS

0
17. The authority citation for part 20 continues to read as follows:

    Authority: 7 U.S.C. 1a, 2, 5, 6, 6a, 6c, 6f, 6g, 6t, 12a, 19, as 
amended by Title VII of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act, Pub. L. 111-203, 124 Stat. 1376 (2010).


0
18. Amend Sec.  20.5 to:
0
a. Revise paragraphs (a)(1) and (a)(2); and
0
b. Add paragraphs (a)(4) and (a)(5)
    The revisions and additions to read as follows:


Sec.  20.5  Series S filings.

    (a) * * *
    (1) When a counterparty consolidated account first becomes 
reportable, the reporting entity shall submit a 102S filing, in 
accordance with the form instructions and as specified in this section.
    (2) A reporting entity may submit a 102S filing only once for each 
counterparty, even if such persons at various times have multiple 
reportable positions in the same or different paired swaps or 
swaptions.
* * * * *
    (4) Change updates. If any change causes the information filed by a

[[Page 69266]]

clearing member or swap dealer on a Form 102 for a consolidated account 
to no longer be accurate, then such clearing member or swap dealer 
shall file an updated Form 102 with the Commission no later than 9 a.m. 
on the business day after such change occurs, or on such other date as 
directed by special call of the Commission, provided that, a clearing 
member or swap dealer may stop providing change updates for a Form 102 
that it has submitted to the Commission for any consolidated account 
upon notifying the Commission or its designee that the account in 
question is no longer reportable as a consolidated account and has not 
been reportable as a consolidated account for the past six months. 
Unless otherwise specified by the Commission or its designee, the 
stated time is eastern time for information concerning markets located 
in that time zone, and central time for information concerning all 
other markets.
    (5) Refresh updates. For Consolidated Accounts--Starting on a date 
specified by the Commission or its designee and at the end of each 
annual increment thereafter (or such other date specified by the 
Commission or its designee that is equal to or greater than six 
months), each clearing member or swap dealer shall resubmit every Form 
102 that it has submitted to the Commission for each of its 
consolidated accounts, provided that, a clearing member or swap dealer 
may stop providing refresh updates for a Form 102 that it has submitted 
to the Commission for any consolidated account upon notifying the 
Commission or its designee that the account in question is no longer 
reportable as a consolidated account and has not been reportable as a 
consolidated account for the past six months.
* * * * *

    Issued in Washington, DC, on November 5, 2013, by the 
Commission.
Melissa D. Jurgens,
Secretary of the Commission.

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

Appendices to Ownership and Control Reports, Forms 102/102S, 40/40S, 
and 71--Commission Voting Summary and Statement of Chairman

Appendix 1--Commission Voting Summary

    On this matter, Chairman Gensler and Commissioners 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 on ownership and control reporting as 
it provides the Commission with greater detail on both who owns 
accounts and who controls accounts in the futures, options on 
futures, and swaps markets.
    The reforms require, for the first time, that accounts which 
trade more than a certain volume in a day have to disclose who owns 
or controls them. Previously, the Commission only had a window into 
the ownership of those accounts that had large positions at the end 
of the day. This new information is critical in today's world of 
high frequency trading, as many accounts trade often throughout the 
day but end the day without reportable positions. Thus, with these 
reforms, the Commission will get additional tools to oversee the 
markets' largest day traders and high frequency traders.
    There is also flexibility built into the rule such that if some 
of the required information on accounts has already been reported 
through a legal entity identifier, the market participant does not 
have to submit it twice.
    Further this rule modernizes the reporting by requiring 
electronic submission of information, rather than by mailing or 
faxing forms.
    These reforms enhance the Commission's ability to oversee the 
markets, as well as detect market manipulation and abusive or 
disruptive trading practices.

[FR Doc. 2013-26789 Filed 11-15-13; 8:45 am]
BILLING CODE 6351-01-P