Agency Information Collection Activities Under OMB Review, 50690-50692 [2016-18213]
Download as PDF
<![CDATA[
50690
Federal Register / Vol. 81, No. 148 / Tuesday, August 2, 2016 / Notices
ways to enhance the quality, utility, and
clarity of the information to be
collected; and (d) ways to minimize the
burden of the collection of information
on respondents, including through the
use of automated collection techniques
or other forms of information
technology.
Comments submitted in response to
this notice will be summarized and/or
included in the request for OMB
approval of this information collection;
they also will become a matter of public
record.
Dated: July 27, 2016.
Sarah Brabson,
NOAA PRA Clearance Officer.
[FR Doc. 2016–18195 Filed 8–1–16; 8:45 am]
BILLING CODE 3510–NK–P
COMMODITY FUTURES TRADING
COMMISSION
Agency Information Collection
Activities Under OMB Review
Commodity Futures Trading
Commission.
ACTION: Notice.
AGENCY:
In compliance with the
Paperwork Reduction Act of 1995,
(PRA), this notice announces that the
Information Collection Request (ICR)
abstracted below has been forwarded to
the Office of Management and Budget
(OMB) for review and comment. The
ICR describes the nature of the
information collection and its expected
costs and burden.
DATES: Comments must be submitted on
or before September 1, 2016.
ADDRESSES: Comments regarding the
burden estimated or any other aspect of
the information collection, including
suggestions on reducing the burden,
may be submitted directly to the Office
of Information and Regulatory Affairs
(OIRA) in OMB, within 30 days of the
notice’s publication, by email at
OIRAsubmissions@omb.eop.gov. Please
identify the comments by OMB Control
No. 3038–0111. Please provide the
Commission with a copy of all
submitted comments at the address
listed below. Please refer to OMB
Reference No. 3038–0111, found on
https://reginfo.gov. Comments may also
be mailed to the Office of Information
and Regulatory Affairs, Office of
Management and Budget, Attention:
Desk Officer for the Commodity Futures
Trading Commission, 725 17th Street
NW., Washington, DC 20503; or through
the Agency’s Web site at https://
comments.cftc.gov. Follow the
mstockstill on DSK3G9T082PROD with NOTICES
SUMMARY:
VerDate Sep<11>2014
18:35 Aug 01, 2016
Jkt 238001
instructions for submitting comments
through the Web site.
Comments may also be mailed to:
Christopher Kirkpatrick, Secretary of the
Commission, Commodity Futures
Trading Commission, Three Lafayette
Centre, 1155 21st Street NW.,
Washington, DC 20581 or by Hand
Delivery/Courier at the same address.
A copy of the supporting statements
for the collection of information
discussed above may be obtained by
visiting https://RegInfo.gov. All
comments must be submitted in
English, or if not, accompanied by an
English translation. Comments will be
posted as received to https://
www.cftc.gov.
For Further Information or a Copy
Contact: Laura B. Badian, Assistant
General Counsel, 202–418–5969,
lbadian@cftc.gov; Paul Schlichting,
Assistant General Counsel, 202–418–
5884, pschlichting@cftc.gov; or
Herminio Castro, Counsel, (202) 418–
6705, hcastro@cftc.gov; Office of the
General Counsel, Commodity Futures
Trading Commission, Three Lafayette
Centre, 1155 21st Street NW.,
Washington, DC 20581. Please refer to
OMB Control No. 3038–0111 in any
correspondence.
SUPPLEMENTARY INFORMATION:
Title: Margin Requirements for
Uncleared Swaps for Swap Dealers and
Major Swap Participants; Comparability
Determinations with Margin
Requirements, (OMB Control No. 3038–
0111). This is a request for a revision of
an information collection.
Abstract: Section 731 of the DoddFrank Wall Street Reform and Consumer
Protection Act (‘‘Dodd-Frank Act’’),1
amended the Commodity Exchange Act
(‘‘CEA’’), to add, as section 4s(e) thereof,
provisions concerning the establishment
of initial and variation margin
requirements for swap dealers and
major swap participants.2 Each swap
dealer and major swap participant for
which there is a Prudential Regulator, as
defined in section 1a(39) of the CEA,3
must meet margin requirements
established by the applicable Prudential
Regulator, and each swap dealer and
major swap participant for which there
is no Prudential Regulator (collectively,
‘‘Covered Swap Entities’’ or ‘‘CSEs’’)
must comply with the Commission’s
margin requirements. With regard to the
cross-border application of the swap
provisions enacted by Title VII of the
Dodd-Frank Act, section 2(i) of the CEA
provides the Commission with express
authority over activities outside the
1 Pub.
L. 111–203, 124 Stat. 1376 (2010).
U.S.C. 6s(e).
3 7 U.S.C. 1a(39).
27
PO 00000
Frm 00009
Fmt 4703
Sfmt 4703
United States relating to swaps when
certain conditions are met. Specifically,
section 2(i) of the CEA provides that the
provisions of the CEA relating to swaps
enacted by Title VII of the Dodd-Frank
Act (including Commission rules and
regulations promulgated thereunder)
shall not apply to activities outside the
United States unless those activities (1)
have a direct and significant connection
with activities in, or effect on,
commerce of the United States or (2)
contravene such rules or regulations as
the Commission may prescribe or
promulgate as are necessary or
appropriate to prevent the evasion of
any provision of Title VII.4 Because
margin requirements are critical to
ensuring the safety and soundness of a
CSE and the stability of the U.S.
financial markets, the Commission
believes that its margin rules should
apply on a cross-border basis in a
manner that effectively addresses risks
to a CSE and the U.S. financial system.
On May 31, 2016, the Commission
published a Final Rule addressing the
cross-border application of its margin
requirements for uncleared swaps of
CSEs (with substituted compliance
available in certain circumstances),
except as to a narrow class of uncleared
swaps between a non-U.S. CSE and a
non-U.S. counterparty that fall within a
limited exclusion (the ‘‘Exclusion’’).5 As
described below, the adopting release
for the Final Rule contained a collection
of information regarding requests for
comparability determinations, which
was previously included in the
proposing release, and for which the
Office of Management and Budget
(‘‘OMB’’) assigned OMB control number
3038–0111, titled ‘‘Margin
Requirements for Uncleared Swaps for
Swap Dealers and Major Swap
Participants; Comparability
Determinations with Margin
Requirements.’’ In addition, the
adopting release included two
additional information collections
regarding non-segregation jurisdictions 6
and non-netting jurisdictions 7 that were
47
U.S.C. 2(i).
FR 34818 (May 31, 2016).
6 As used in the adopting release, a ‘‘nonsegregation jurisdiction’’ is a jurisdiction where
inherent limitations in the legal or operational
infrastructure of the foreign jurisdiction make it
impracticable for the CSE and its counterparty to
post initial margin pursuant to custodial
arrangements that comply with the Commission’s
margin rules, as further described in section II.B.4.b
of the adopting release.
7 As used in the adopting release, a ‘‘non-netting
jurisdiction’’ is a jurisdiction in which a CSE
cannot conclude, with a well-founded basis, that
the netting agreement with a counterparty in that
foreign jurisdiction meets the definition of an
‘‘eligible master netting agreement’’ set forth in the
5 81
E:\FR\FM\02AUN1.SGM
02AUN1
Federal Register / Vol. 81, No. 148 / Tuesday, August 2, 2016 / Notices
mstockstill on DSK3G9T082PROD with NOTICES
not previously proposed. Accordingly,
the Commission is requesting approval
by OMB of the revised information
collection under OMB Control Number
3038–0111.
Section 23.160(d) of the Final Rule
includes a special provision for nonnetting jurisdictions. This provision
allows CSEs that cannot conclude after
sufficient legal review with a wellfounded basis that the netting agreement
with a counterparty in a foreign
jurisdiction meets the definition of an
‘‘eligible master netting agreement’’ set
forth in the Commission’s final margin
rule (‘‘Final Margin Rule’’) 8 to
nevertheless net uncleared swaps in
determining the amount of margin that
they post, provided that certain
conditions are met.9 In order to avail
itself of this special provision, the CSE
must treat the uncleared swaps covered
by the agreement on a gross basis in
determining the amount of initial and
variation margin that it must collect, but
may net those uncleared swaps in
determining the amount of initial and
variation margin it must post to the
counterparty, in accordance with the
netting provisions of the Final Margin
Rule.10 A CSE that enters into uncleared
swaps in ‘‘non-netting’’ jurisdictions in
reliance on this provision must have
policies and procedures ensuring that it
is in compliance with the special
provision’s requirements, and maintain
books and records properly
documenting that all of the
requirements of this exception are
satisfied.11
Section 23.160(e) of the Final Rule
includes a special provision for nonsegregation jurisdictions that allows
Final Margin Rule, as described in section II.B.5.b
of the adopting release.
8 See Margin Requirements for Uncleared Swaps
for Swap Dealers and Major Swap Participants, 81
FR 636 (Jan. 6, 2016). The Final Margin Rule, which
became effective April 1, 2016, is codified in part
23 of the Commission’s regulations. See 17 CFR
23.150–159, 161.
9 The Final Margin Rule permits offsets in
relation to either initial margin or variation margin
calculation when (among other things), the offsets
related to swaps are subject to the same eligible
master netting agreement. This ensures that CSEs
can effectively foreclose on the margin in the event
of a counterparty default, and avoids the risk that
the administrator of an insolvent counterparty will
‘‘cherry-pick’’ from posted collateral to be returned.
10 In the event that the special provision for nonsegregation jurisdictions applies to a CSE, then the
special provision for non-netting jurisdictions
would not apply to the CSE even if the relevant
jurisdiction is also a ‘‘non-netting jurisdiction.’’ In
this circumstance, the CSE must collect the gross
amount of initial margin in cash (but would not be
required to post initial margin), and post and collect
variation margin in cash in accordance with the
requirements of the special provision for nonsegregation jurisdictions, as discussed in section
II.B.4.b.
11 See § 23.160(d) of the Final Rule.
VerDate Sep<11>2014
18:35 Aug 01, 2016
Jkt 238001
non-U.S. CSEs that are Foreign
Consolidated Subsidiaries (as defined in
the Final Rule) and foreign branches of
U.S. CSEs to engage in swaps in foreign
jurisdictions where inherent limitations
in the legal or operational infrastructure
make it impracticable for the CSE and
its counterparty to post collateral in
compliance with the custodial
arrangement requirements of the
Commission’s margin rules, subject to
certain conditions. In order to rely on
this special provision, a Foreign
Consolidated Subsidiary or foreign
branch of a U.S. CSE is required to
satisfy all of the conditions of the rule,
including that (1) inherent limitations in
the legal or operational infrastructure of
the foreign jurisdiction make it
impracticable for the CSE and its
counterparty to post any form of eligible
initial margin collateral for the
uncleared swap pursuant to custodial
arrangements that comply with the
Commission’s margin rules; (2) foreign
regulatory restrictions require the CSE
to transact in uncleared swaps with the
counterparty through an establishment
within the foreign jurisdiction and do
not permit the posting of collateral for
the swap in compliance with the
custodial arrangements of section
23.157 of the Final Margin Rule in the
United States or a jurisdiction for which
the Commission has issued a
comparability determination under the
Final Rule with respect to section
23.157; (3) the CSE’s counterparty is not
a U.S. person and is not a CSE, and the
counterparty’s obligations under the
uncleared swap are not guaranteed by a
U.S. person; 12 (4) the CSE collects
initial margin in cash on a gross basis,
and posts and collects variation margin
in cash, for the uncleared swap in
accordance with the Final Margin Rule;
(5) for each broad risk category, as set
out in section 23.154(b)(2)(v) of the
Final Margin Rule, the total outstanding
notional value of all uncleared swaps in
that broad risk category, as to which the
CSE is relying on section 23.160 (e),
may not exceed 5 percent of the CSE’s
total outstanding notional value for all
uncleared swaps in the same broad risk
category; (6) the CSE has policies and
procedures ensuring that it is in
compliance with the requirements of
this provision; and (7) the CSE
maintains books and records properly
12 The Commission would expect the CSE’s
counterparty to be a local financial end user that is
required to comply with the foreign jurisdiction’s
laws and that is prevented by regulatory restrictions
in the foreign jurisdiction from posting collateral for
the uncleared swap in the United States or a
jurisdiction for which the Commission has issued
a comparability determination under the Final Rule,
even using an affiliate.
PO 00000
Frm 00010
Fmt 4703
Sfmt 4703
50691
documenting that all of the
requirements of this provision are
satisfied.13
The new information collections
covered by this notice require CSEs to
have policies and procedures ensuring
that they are in compliance with all of
the requirements of the special
provisions for non-netting jurisdictions
and non-segregation provisions,
respectively, and to maintain books and
records properly documenting that all of
the requirements of the special
provisions for non-netting jurisdictions
and non-segregation jurisdictions,
respectively, are satisfied. Both
information collections are necessary as
a means for the Commission to be able
to determine that CSEs relying on these
special provisions are entitled to do so
and are complying with the special
provisions’ requirements. Both
information collections are also
necessary to implement sections 4s(e) of
the CEA, which mandates that the
Commission adopt rules establishing
minimum initial and variation margin
requirements for CSEs on all swaps that
are not cleared by a registered
derivatives clearing organization, and
section 2(i) of the CEA, which provides
that the provisions of the CEA relating
to swaps that were enacted by Title VII
of the Dodd-Frank Act (including any
rule prescribed or regulation
promulgated thereunder) apply to
activities outside the United States that
have a direct and significant connection
with activities in, or effect on,
commerce of the United States.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid OMB
control number. The Commission did
not receive any comments on the 60-day
Federal Register notice, 81 FR 34855,
dated May 31, 2016.
• Burden Statement—Information
Collection for Non-Netting Jurisdictions:
The Commission estimates that
approximately 54 CSEs may rely on
section 23.160(d) of the Final Rule.14
Furthermore, the Commission estimates
that these CSEs would incur an average
of 10 annual burden hours to maintain
books and records properly
documenting that all of the
13 See
17 CFR 23.160(e).
there are approximately 106 swap
entities provisionally registered with the
Commission. The Commission estimates that of the
approximately 106 swap entities that are
provisionally registered, approximately 54 are CSEs
that are subject to the Commission’s margin rules
as they are not subject to a Prudential Regulator.
Because all of these CSEs are eligible to use the
special provision for non-netting jurisdictions, the
Commission estimates that 54 CSEs may rely on
section 23.160(d) of the Final Rule.
14 Currently,
E:\FR\FM\02AUN1.SGM
02AUN1
mstockstill on DSK3G9T082PROD with NOTICES
50692
Federal Register / Vol. 81, No. 148 / Tuesday, August 2, 2016 / Notices
requirements of this exception are
satisfied (including policies and
procedures ensuring that they are in
compliance). Based upon the above, the
estimated hour burden for collection is
calculated as follows:
Estimated Number of Respondents
per Year: 54.
Estimated Burden Hours per
Registrant: 10.
Estimated Total Annual Burden
Hours: 540.
Frequency of Collection: Once; As
needed.
• Burden Statement—Information
Collection for Non-Segregation
Jurisdictions: The Commission currently
estimates that there are between five
and ten jurisdictions for which the first
two conditions specified above for nonsegregation jurisdictions are satisfied
and where Foreign Consolidated
Subsidiaries and foreign branches of
U.S. CSEs that are subject to the
Commission’s margin rules may engage
in swaps, or for purposes of the PRA
estimate, an average of 7.5 nonsegregation jurisdictions. The
Commission estimates that
approximately 12 Foreign Consolidated
Subsidiaries and foreign branches of
U.S. CSEs may rely on section 23.160(e)
of the Final Rule in some or all of these
jurisdiction(s). The Commission
estimates that each Foreign
Consolidated Subsidiary or foreign
branch of a U.S. CSE relying on this
provision would incur an average of 20
annual burden hours to maintain books
and records properly documenting that
all of the requirements of this provision
are satisfied (including policies and
procedures ensuring that they are in
compliance) with respect to each
jurisdiction as to which they rely on the
special provision. Thus, based on the
average of 7.5 non-segregation
jurisdictions, the Commission estimates
that each of the approximately 12
Foreign Consolidated Subsidiaries and
foreign branches of U.S. CSEs that may
rely on this provision will incur an
estimated 150 average burden hours per
year (i.e., 20 average burden hours per
jurisdiction multiplied by 7.5). Based
upon the above, the estimated hour
burden for collection is calculated as
follows:
Estimated Number of Respondents
per Year: 12.
Estimated Burden Hours per
Registrant: 150.
Estimated Total Annual Burden
Hours: 1,800 hours.
Frequency of Collection: Once; As
needed.
There are no capital costs or operating
and maintenance costs associated with
this collection.
VerDate Sep<11>2014
18:35 Aug 01, 2016
Jkt 238001
Authority: 44 U.S.C. 3501 et seq.
Dated: July 27, 2016.
Christopher J. Kirkpatrick,
Secretary of the Commission.
[FR Doc. 2016–18213 Filed 8–1–16; 8:45 am]
BILLING CODE 6351–01–P
COMMODITY FUTURES TRADING
COMMISSION
Agency Information Collection
Activities Under OMB Review
Commodity Futures Trading
Commission.
ACTION: Notice.
AGENCY:
In compliance with the
Paperwork Reduction Act of 1995
(PRA), this notice announces that the
Information Collection Request (ICR)
abstracted below has been forwarded to
the Office of Management and Budget
(OMB) for review and comment. The
ICR describes the nature of the
information collection and its expected
costs and burden.
DATES: Comments must be submitted on
or before September 1, 2016.
ADDRESSES: Comments regarding the
burden estimated or any other aspect of
the information collection, including
suggestions for reducing the burden,
may be submitted directly to the Office
of Information and Regulatory Affairs
(OIRA) in OMB, within 30 days of the
notice’s publication, by email at
OIRAsubmissions@omb.eop.gov. Please
identify the comments by OMB Control
No. 3038–0067. Please provide the
Commission with a copy of all
submitted comments at the address
listed below. Please refer to OMB
Reference No. 3038–0067, found on
https://reginfo.gov. Comments may also
be mailed to the Office of Information
and Regulatory Affairs, Office of
Management and Budget, Attention:
Desk Officer for the Commodity Futures
Trading Commission, 725 17th Street
NW., Washington, DC 20503 or through
the Agency’s Web site at https://
comments.cftc.gov. Follow the
instructions for submitting comments
through the Web site.
Comments may also be mailed to:
Christopher Kirkpatrick, Secretary of the
Commission, Commodity Futures
Trading Commission, Three Lafayette
Centre, 1155 21st Street NW.,
Washington, DC 20581 or by Hand
Delivery/Courier at the same address.
A copy of the supporting statements
for the collection of information
discussed above may be obtained by
visiting https://RegInfo.gov. All
comments must be submitted in
English, or if not, accompanied by an
SUMMARY:
PO 00000
Frm 00011
Fmt 4703
Sfmt 4703
English translation. Comments will be
posted as received to https://
www.cftc.gov.
For Further Information or a Copy
Contact: Sue McDonough, Counsel,
Office of General Counsel, Commodity
Futures Trading Commission, (202)
418–5132; email: smcdonough@cftc.gov,
and refer to OMB Control No. 3038–
0067.
SUPPLEMENTARY INFORMATION:
Title: Part 162 Subpart C—Identity
Theft Rule (OMB Control No. 3038–
0067). This is a request for extension of
a currently approved information
collection.
Abstract: This collection of
information is needed because under
part 162 subpart C—Identify Theft,
CFTC-regulated entities are required to
develop and implement reasonable
policies and procedures to identify,
detect, and respond to relevant red flags
(the Identity Theft Red Flags Rules) and,
in the case of entities that issue credit
or debit cards, to assess the validity of,
and communicate with cardholders
regarding, address changes. Section
162.30 includes the following
information collection requirements for
each CFTC-regulated entity that
qualifies as a ‘‘financial institution’’ or
‘‘creditor’’ under part 162 subpart C and
that offers or maintains covered
accounts: (i) Creation and periodic
updating of an identity theft prevention
program (‘‘Program’’) that is approved
by the board of directors, an appropriate
committee thereof, or a designated
senior management employee; (ii)
periodic staff reporting to the board of
directors on compliance with the
Identity Theft Red Flags Rules and
related guidelines; and (iii) training of
staff to implement the Program. Section
162.32 includes the following
information collection requirements for
each CFTC-regulated entity that is a
credit or debit card issuer: (i)
Establishment of policies and
procedures that assess the validity of a
change of address notification if a
request for an additional or replacement
card on the account follows soon after
the address change; and (ii) notification
of a cardholder, before issuance of an
additional or replacement card, at the
previous address or through some other
previously agreed-upon form of
communication, or alternatively,
assessment of the validity of the address
change request through the entity’s
established policies and procedures.
The Commission uses the collection of
information to discharge its regulatory
responsibilities to protect investors from
the risks of identity theft.
E:\FR\FM\02AUN1.SGM
02AUN1
]]>Agencies
[Federal Register Volume 81, Number 148 (Tuesday, August 2, 2016)]
[Notices]
[Pages 50690-50692]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-18213]
=======================================================================
-----------------------------------------------------------------------
COMMODITY FUTURES TRADING COMMISSION
Agency Information Collection Activities Under OMB Review
AGENCY: Commodity Futures Trading Commission.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: In compliance with the Paperwork Reduction Act of 1995, (PRA),
this notice announces that the Information Collection Request (ICR)
abstracted below has been forwarded to the Office of Management and
Budget (OMB) for review and comment. The ICR describes the nature of
the information collection and its expected costs and burden.
DATES: Comments must be submitted on or before September 1, 2016.
ADDRESSES: Comments regarding the burden estimated or any other aspect
of the information collection, including suggestions on reducing the
burden, may be submitted directly to the Office of Information and
Regulatory Affairs (OIRA) in OMB, within 30 days of the notice's
publication, by email at OIRAsubmissions@omb.eop.gov. Please identify
the comments by OMB Control No. 3038-0111. Please provide the
Commission with a copy of all submitted comments at the address listed
below. Please refer to OMB Reference No. 3038-0111, found on https://reginfo.gov. Comments may also be mailed to the Office of Information
and Regulatory Affairs, Office of Management and Budget, Attention:
Desk Officer for the Commodity Futures Trading Commission, 725 17th
Street NW., Washington, DC 20503; or through the Agency's Web site at
https://comments.cftc.gov. Follow the instructions for submitting
comments through the Web site.
Comments may also be mailed to: Christopher Kirkpatrick, Secretary
of the Commission, Commodity Futures Trading Commission, Three
Lafayette Centre, 1155 21st Street NW., Washington, DC 20581 or by Hand
Delivery/Courier at the same address.
A copy of the supporting statements for the collection of
information discussed above may be obtained by visiting https://
RegInfo.gov. All comments must be submitted in English, or if not,
accompanied by an English translation. Comments will be posted as
received to https://www.cftc.gov.
For Further Information or a Copy Contact: Laura B. Badian,
Assistant General Counsel, 202-418-5969, lbadian@cftc.gov; Paul
Schlichting, Assistant General Counsel, 202-418-5884,
pschlichting@cftc.gov; or Herminio Castro, Counsel, (202) 418-6705,
hcastro@cftc.gov; Office of the General Counsel, Commodity Futures
Trading Commission, Three Lafayette Centre, 1155 21st Street NW.,
Washington, DC 20581. Please refer to OMB Control No. 3038-0111 in any
correspondence.
SUPPLEMENTARY INFORMATION:
Title: Margin Requirements for Uncleared Swaps for Swap Dealers and
Major Swap Participants; Comparability Determinations with Margin
Requirements, (OMB Control No. 3038-0111). This is a request for a
revision of an information collection.
Abstract: Section 731 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (``Dodd-Frank Act''),\1\ amended the Commodity
Exchange Act (``CEA''), to add, as section 4s(e) thereof, provisions
concerning the establishment of initial and variation margin
requirements for swap dealers and major swap participants.\2\ Each swap
dealer and major swap participant for which there is a Prudential
Regulator, as defined in section 1a(39) of the CEA,\3\ must meet margin
requirements established by the applicable Prudential Regulator, and
each swap dealer and major swap participant for which there is no
Prudential Regulator (collectively, ``Covered Swap Entities'' or
``CSEs'') must comply with the Commission's margin requirements. With
regard to the cross-border application of the swap provisions enacted
by Title VII of the Dodd-Frank Act, section 2(i) of the CEA provides
the Commission with express authority over activities outside the
United States relating to swaps when certain conditions are met.
Specifically, section 2(i) of the CEA provides that the provisions of
the CEA relating to swaps enacted by Title VII of the Dodd-Frank Act
(including Commission rules and regulations promulgated thereunder)
shall not apply to activities outside the United States unless those
activities (1) have a direct and significant connection with activities
in, or effect on, commerce of the United States or (2) contravene such
rules or regulations as the Commission may prescribe or promulgate as
are necessary or appropriate to prevent the evasion of any provision of
Title VII.\4\ Because margin requirements are critical to ensuring the
safety and soundness of a CSE and the stability of the U.S. financial
markets, the Commission believes that its margin rules should apply on
a cross-border basis in a manner that effectively addresses risks to a
CSE and the U.S. financial system.
---------------------------------------------------------------------------
\1\ Pub. L. 111-203, 124 Stat. 1376 (2010).
\2\ 7 U.S.C. 6s(e).
\3\ 7 U.S.C. 1a(39).
\4\ 7 U.S.C. 2(i).
---------------------------------------------------------------------------
On May 31, 2016, the Commission published a Final Rule addressing
the cross-border application of its margin requirements for uncleared
swaps of CSEs (with substituted compliance available in certain
circumstances), except as to a narrow class of uncleared swaps between
a non-U.S. CSE and a non-U.S. counterparty that fall within a limited
exclusion (the ``Exclusion'').\5\ As described below, the adopting
release for the Final Rule contained a collection of information
regarding requests for comparability determinations, which was
previously included in the proposing release, and for which the Office
of Management and Budget (``OMB'') assigned OMB control number 3038-
0111, titled ``Margin Requirements for Uncleared Swaps for Swap Dealers
and Major Swap Participants; Comparability Determinations with Margin
Requirements.'' In addition, the adopting release included two
additional information collections regarding non-segregation
jurisdictions \6\ and non-netting jurisdictions \7\ that were
[[Page 50691]]
not previously proposed. Accordingly, the Commission is requesting
approval by OMB of the revised information collection under OMB Control
Number 3038-0111.
---------------------------------------------------------------------------
\5\ 81 FR 34818 (May 31, 2016).
\6\ As used in the adopting release, a ``non-segregation
jurisdiction'' is a jurisdiction where inherent limitations in the
legal or operational infrastructure of the foreign jurisdiction make
it impracticable for the CSE and its counterparty to post initial
margin pursuant to custodial arrangements that comply with the
Commission's margin rules, as further described in section II.B.4.b
of the adopting release.
\7\ As used in the adopting release, a ``non-netting
jurisdiction'' is a jurisdiction in which a CSE cannot conclude,
with a well-founded basis, that the netting agreement with a
counterparty in that foreign jurisdiction meets the definition of an
``eligible master netting agreement'' set forth in the Final Margin
Rule, as described in section II.B.5.b of the adopting release.
---------------------------------------------------------------------------
Section 23.160(d) of the Final Rule includes a special provision
for non-netting jurisdictions. This provision allows CSEs that cannot
conclude after sufficient legal review with a well-founded basis that
the netting agreement with a counterparty in a foreign jurisdiction
meets the definition of an ``eligible master netting agreement'' set
forth in the Commission's final margin rule (``Final Margin Rule'') \8\
to nevertheless net uncleared swaps in determining the amount of margin
that they post, provided that certain conditions are met.\9\ In order
to avail itself of this special provision, the CSE must treat the
uncleared swaps covered by the agreement on a gross basis in
determining the amount of initial and variation margin that it must
collect, but may net those uncleared swaps in determining the amount of
initial and variation margin it must post to the counterparty, in
accordance with the netting provisions of the Final Margin Rule.\10\ A
CSE that enters into uncleared swaps in ``non-netting'' jurisdictions
in reliance on this provision must have policies and procedures
ensuring that it is in compliance with the special provision's
requirements, and maintain books and records properly documenting that
all of the requirements of this exception are satisfied.\11\
---------------------------------------------------------------------------
\8\ See Margin Requirements for Uncleared Swaps for Swap Dealers
and Major Swap Participants, 81 FR 636 (Jan. 6, 2016). The Final
Margin Rule, which became effective April 1, 2016, is codified in
part 23 of the Commission's regulations. See 17 CFR 23.150-159, 161.
\9\ The Final Margin Rule permits offsets in relation to either
initial margin or variation margin calculation when (among other
things), the offsets related to swaps are subject to the same
eligible master netting agreement. This ensures that CSEs can
effectively foreclose on the margin in the event of a counterparty
default, and avoids the risk that the administrator of an insolvent
counterparty will ``cherry-pick'' from posted collateral to be
returned.
\10\ In the event that the special provision for non-segregation
jurisdictions applies to a CSE, then the special provision for non-
netting jurisdictions would not apply to the CSE even if the
relevant jurisdiction is also a ``non-netting jurisdiction.'' In
this circumstance, the CSE must collect the gross amount of initial
margin in cash (but would not be required to post initial margin),
and post and collect variation margin in cash in accordance with the
requirements of the special provision for non-segregation
jurisdictions, as discussed in section II.B.4.b.
\11\ See Sec. 23.160(d) of the Final Rule.
---------------------------------------------------------------------------
Section 23.160(e) of the Final Rule includes a special provision
for non-segregation jurisdictions that allows non-U.S. CSEs that are
Foreign Consolidated Subsidiaries (as defined in the Final Rule) and
foreign branches of U.S. CSEs to engage in swaps in foreign
jurisdictions where inherent limitations in the legal or operational
infrastructure make it impracticable for the CSE and its counterparty
to post collateral in compliance with the custodial arrangement
requirements of the Commission's margin rules, subject to certain
conditions. In order to rely on this special provision, a Foreign
Consolidated Subsidiary or foreign branch of a U.S. CSE is required to
satisfy all of the conditions of the rule, including that (1) inherent
limitations in the legal or operational infrastructure of the foreign
jurisdiction make it impracticable for the CSE and its counterparty to
post any form of eligible initial margin collateral for the uncleared
swap pursuant to custodial arrangements that comply with the
Commission's margin rules; (2) foreign regulatory restrictions require
the CSE to transact in uncleared swaps with the counterparty through an
establishment within the foreign jurisdiction and do not permit the
posting of collateral for the swap in compliance with the custodial
arrangements of section 23.157 of the Final Margin Rule in the United
States or a jurisdiction for which the Commission has issued a
comparability determination under the Final Rule with respect to
section 23.157; (3) the CSE's counterparty is not a U.S. person and is
not a CSE, and the counterparty's obligations under the uncleared swap
are not guaranteed by a U.S. person; \12\ (4) the CSE collects initial
margin in cash on a gross basis, and posts and collects variation
margin in cash, for the uncleared swap in accordance with the Final
Margin Rule; (5) for each broad risk category, as set out in section
23.154(b)(2)(v) of the Final Margin Rule, the total outstanding
notional value of all uncleared swaps in that broad risk category, as
to which the CSE is relying on section 23.160 (e), may not exceed 5
percent of the CSE's total outstanding notional value for all uncleared
swaps in the same broad risk category; (6) the CSE has policies and
procedures ensuring that it is in compliance with the requirements of
this provision; and (7) the CSE maintains books and records properly
documenting that all of the requirements of this provision are
satisfied.\13\
---------------------------------------------------------------------------
\12\ The Commission would expect the CSE's counterparty to be a
local financial end user that is required to comply with the foreign
jurisdiction's laws and that is prevented by regulatory restrictions
in the foreign jurisdiction from posting collateral for the
uncleared swap in the United States or a jurisdiction for which the
Commission has issued a comparability determination under the Final
Rule, even using an affiliate.
\13\ See 17 CFR 23.160(e).
---------------------------------------------------------------------------
The new information collections covered by this notice require CSEs
to have policies and procedures ensuring that they are in compliance
with all of the requirements of the special provisions for non-netting
jurisdictions and non-segregation provisions, respectively, and to
maintain books and records properly documenting that all of the
requirements of the special provisions for non-netting jurisdictions
and non-segregation jurisdictions, respectively, are satisfied. Both
information collections are necessary as a means for the Commission to
be able to determine that CSEs relying on these special provisions are
entitled to do so and are complying with the special provisions'
requirements. Both information collections are also necessary to
implement sections 4s(e) of the CEA, which mandates that the Commission
adopt rules establishing minimum initial and variation margin
requirements for CSEs on all swaps that are not cleared by a registered
derivatives clearing organization, and section 2(i) of the CEA, which
provides that the provisions of the CEA relating to swaps that were
enacted by Title VII of the Dodd-Frank Act (including any rule
prescribed or regulation promulgated thereunder) apply to activities
outside the United States that have a direct and significant connection
with activities in, or effect on, commerce of the United States.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid OMB control number. The Commission did not receive any
comments on the 60-day Federal Register notice, 81 FR 34855, dated May
31, 2016.
Burden Statement--Information Collection for Non-Netting
Jurisdictions: The Commission estimates that approximately 54 CSEs may
rely on section 23.160(d) of the Final Rule.\14\ Furthermore, the
Commission estimates that these CSEs would incur an average of 10
annual burden hours to maintain books and records properly documenting
that all of the
[[Page 50692]]
requirements of this exception are satisfied (including policies and
procedures ensuring that they are in compliance). Based upon the above,
the estimated hour burden for collection is calculated as follows:
---------------------------------------------------------------------------
\14\ Currently, there are approximately 106 swap entities
provisionally registered with the Commission. The Commission
estimates that of the approximately 106 swap entities that are
provisionally registered, approximately 54 are CSEs that are subject
to the Commission's margin rules as they are not subject to a
Prudential Regulator. Because all of these CSEs are eligible to use
the special provision for non-netting jurisdictions, the Commission
estimates that 54 CSEs may rely on section 23.160(d) of the Final
Rule.
---------------------------------------------------------------------------
Estimated Number of Respondents per Year: 54.
Estimated Burden Hours per Registrant: 10.
Estimated Total Annual Burden Hours: 540.
Frequency of Collection: Once; As needed.
Burden Statement--Information Collection for Non-
Segregation Jurisdictions: The Commission currently estimates that
there are between five and ten jurisdictions for which the first two
conditions specified above for non-segregation jurisdictions are
satisfied and where Foreign Consolidated Subsidiaries and foreign
branches of U.S. CSEs that are subject to the Commission's margin rules
may engage in swaps, or for purposes of the PRA estimate, an average of
7.5 non-segregation jurisdictions. The Commission estimates that
approximately 12 Foreign Consolidated Subsidiaries and foreign branches
of U.S. CSEs may rely on section 23.160(e) of the Final Rule in some or
all of these jurisdiction(s). The Commission estimates that each
Foreign Consolidated Subsidiary or foreign branch of a U.S. CSE relying
on this provision would incur an average of 20 annual burden hours to
maintain books and records properly documenting that all of the
requirements of this provision are satisfied (including policies and
procedures ensuring that they are in compliance) with respect to each
jurisdiction as to which they rely on the special provision. Thus,
based on the average of 7.5 non-segregation jurisdictions, the
Commission estimates that each of the approximately 12 Foreign
Consolidated Subsidiaries and foreign branches of U.S. CSEs that may
rely on this provision will incur an estimated 150 average burden hours
per year (i.e., 20 average burden hours per jurisdiction multiplied by
7.5). Based upon the above, the estimated hour burden for collection is
calculated as follows:
Estimated Number of Respondents per Year: 12.
Estimated Burden Hours per Registrant: 150.
Estimated Total Annual Burden Hours: 1,800 hours.
Frequency of Collection: Once; As needed.
There are no capital costs or operating and maintenance costs
associated with this collection.
Authority: 44 U.S.C. 3501 et seq.
Dated: July 27, 2016.
Christopher J. Kirkpatrick,
Secretary of the Commission.
[FR Doc. 2016-18213 Filed 8-1-16; 8:45 am]
BILLING CODE 6351-01-P
