Exemption From Registration for Certain Foreign Persons, 51824-51828 [2016-18210]

Download as PDF 51824 Federal Register / Vol. 81, No. 151 / Friday, August 5, 2016 / Proposed Rules South Service Road, West Oakville, ON, Canada L6L 5Y7; telephone +1–877–808– 7575; fax: +1–860–660–0372; Internet: https://techpubs.goodrich.com/ContactUs. You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425–227–1221. Issued in Renton, Washington, on July 25, 2016. Victor Wicklund, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. 2016–18482 Filed 8–4–16; 8:45 am] BILLING CODE 4910–13–P CONSUMER PRODUCT SAFETY COMMISSION 16 CFR Chapter II Children’s Sleepwear Seminar Consumer Product Safety Commission. ACTION: Announcement of meeting. AGENCY: The Consumer Product Safety Commission (CPSC, Commission, or we) staff is holding a 1-day Flammable Fabrics Act (FFA) Children’s Sleepwear Seminar (the Seminar). The Seminar will focus on testing, certification, and other compliance guidance relating to mandatory FFA standards and requirements for children’s sleepwear. The Seminar will be held on October 20, 2016, at the CPSC offices in Bethesda Towers, Bethesda, MD. We invite interested parties to participate in or attend the Seminar. DATES: The Seminar will be held on October 20, 2016 at 8:30 a.m. Individuals interested in serving on panels or presenting information at the Seminar should register by August 26, 2016; all other individuals who wish to attend in person should register as soon as possible because available spots may fill up. ADDRESSES: The Seminar will be held in the 4th floor Hearing Room at the CPSC offices in Bethesda Towers, 4330 East West Highway, Bethesda, MD 20814. Persons interested in serving on a panel, presenting information, or attending the Seminar should register online at: http://www.cpsc.gov/ meetingsignup.html (click on the link titled, ‘‘Children’s Sleepwear Seminar’’). Some sessions of the Seminar may be available through a webcast, but viewers will not be able to interact with the panels and presenters. FOR FURTHER INFORMATION CONTACT: Carolyn Carlin, Textile Flammability Compliance Officer, Office of mstockstill on DSK3G9T082PROD with PROPOSALS SUMMARY: VerDate Sep<11>2014 16:15 Aug 04, 2016 Jkt 238001 Compliance, 4330 East West Highway, Room 610–33, Bethesda, MD 20814. Telephone: 301–504–7889, Email: ccarlin@cpsc.gov; or, Paige Witzen, Textile Technologist, Division of Engineering; Directorate for Laboratory Sciences, 5 Research Place, Rockville, MD 20850, Room 117–03. Telephone: 301–987–2029, Email: pwitzen@ cpsc.gov. SUPPLEMENTARY INFORMATION: The FFA, 15 U.S.C. 1191–1204, regulates the manufacture of highly flammable clothing, including children’s sleepwear. The FFA standards governing the flammability of children’s sleepwear are found at 16 CFR parts 1615 and 1616. These regulations protect children from burns by requiring that children’s sleepwear must be flame resistant, as demonstrated through prescribed flammability tests, and selfextinguish if the item catches fire. The goal of the Seminar is to bring together CPSC staff and stakeholders (manufacturers, importers, retailers, suppliers, legal counsel, testing laboratories and other interested parties) to discuss testing, certification, and other compliance guidance relating to mandatory FFA standards and requirements for children’s sleepwear products. The Seminar will include presentations by CPSC staff and industry representatives, as well as a panel discussion among manufacturers, importers, retailers, suppliers, legal counsel, testing laboratories, and other parties involved in the children’s sleepwear industry. Topics covered during the Seminar may include: D Issues and questions about testing and compliance for children’s sleepwear products regulated under the FFA. D challenges faced in implementing testing, certification, and quality control programs to ensure that regulated products are accurately identified, tested according to applicable children’s sleepwear testing methods, and certified as conforming to the applicable children’s sleepwear standard. This Seminar will focus exclusively on issues related to current CPSC requirements for children’s sleepwear. Staff intends to organize and develop panels to address these topics, informed by responses to this announcement. In addition, participants may present individually. If you would like to be a presenter or panel member, you should register by August 26, 2016 (see the ADDRESSES portion of this document for the Web site link and instruction on how to register). Please submit a brief summary of the topic on which you would like to make a presentation or speak as a panel participant, and your PO 00000 Frm 00013 Fmt 4702 Sfmt 4702 area of expertise. Although every effort will be made to accommodate all persons who wish to be a presenter or panelist, CPSC staff will determine the final agenda. To assist in making the final panelist selections, CPSC staff may request that potential panelists submit presentations in addition to the initial summary. We will notify those who are selected as presenters and panelists by September 2, 2016. If you wish to attend and participate in the Seminar, but do not wish to be a presenter or panelist, you should also register as soon as possible because the CPSC Hearing Room has a limited occupancy. Please identify your affiliation with your registration. Dated: August 2, 2016. Todd A. Stevenson, Secretary, Consumer Product Safety Commission. [FR Doc. 2016–18597 Filed 8–4–16; 8:45 am] BILLING CODE 6355–01–P COMMODITY FUTURES TRADING COMMISSION 17 CFR Part 3 RIN 3038–AE46 Exemption From Registration for Certain Foreign Persons Commodity Futures Trading Commission. ACTION: Proposed rule. AGENCY: The Commodity Futures Trading Commission (‘‘Commission’’) is proposing to amend one of its regulations. The proposed amendment would amend the conditions under which persons located outside the United States (‘‘U.S.’’) acting in the capacity of a futures commission merchant (‘‘FCM’’), an introducing broker (‘‘IB’’), commodity trading advisor (‘‘CTA’’), or commodity pool operator (‘‘CPO’’) in connection with commodity interest transactions solely on behalf of persons located outside the U.S., or on behalf of certain international financial institutions, would qualify for an exemption from registration with the Commission. DATES: Comments must be received on or before September 6, 2016. ADDRESSES: You may submit comments, identified by RIN number 3038–AE46, by any of the following methods: • CFTC Web site: http:// comments.cftc.gov. Follow the instructions for submitting comments through the Comments Online process on the Web site. SUMMARY: E:\FR\FM\05AUP1.SGM 05AUP1 Federal Register / Vol. 81, No. 151 / Friday, August 5, 2016 / Proposed Rules • Mail: Send to Christopher Kirkpatrick, Secretary of the Commission, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581. • Hand Delivery/Courier: Same as Mail, above. • Federal eRulemaking Portal: http:// www.regulations.gov. Follow the instructions for submitting comments. Please submit your comments using only one of these methods. All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to http:// www.cftc.gov. You should submit only information that you wish to make publicly available. If you wish the Commission to consider information that may be exempt from disclosure under the Freedom of Information Act, a petition for confidential treatment of the exempt information may be submitted according to the procedures established in § 145.9 of the Commission’s regulations.1 The Commission reserves the right, but shall have no obligation, to review, pre-screen, filter, redact, refuse or remove any or all of your submission from www.cftc.gov that it may deem to be inappropriate for publication, such as obscene language. All submissions that have been redacted or removed that contain comments on the merits of the rulemaking will be retained in the public comment file and will be considered as required under the Administrative Procedure Act and other applicable laws, and may be accessible under the Freedom of Information Act. FOR FURTHER INFORMATION CONTACT: Frank Fisanich, Chief Counsel, or Andrew Chapin, Associate Chief Counsel, at (202) 418–5430, Division of Swap Dealer and Intermediary Oversight, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581. Electronic mail: ffisanich@ cftc.gov or achapin@cftc.gov. SUPPLEMENTARY INFORMATION: U.S. trading facilities, including both designated contract markets (‘‘DCMs’’) and swap execution facilities (‘‘SEFs’’). Commission Regulation 3.10 sets forth the manner in which intermediaries, including FCMs, IBs, CPOs, and CTAs, must apply for registration with the Commission. Currently, § 3.10(c) provides an exemption from registration, subject to certain conditions, for certain persons located outside the U.S. (such intermediaries are referred to herein as ‘‘Foreign Intermediaries’’) acting as intermediaries with respect to persons also located outside the U.S., even though such transactions may be executed bilaterally, or on or subject to the rules of a DCM or SEF. As a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010,2 swaps 3 became subject to regulation under the Commodity Exchange Act (‘‘CEA’’). Accordingly, the Commission promulgated conforming amendments to its regulations to include swaps in the definition of ‘‘commodity interest’’ in Regulation 1.3(yy). Thus, acting as an intermediary for persons located within the U.S. in connection with swaps, whether executed bilaterally, or on or subject to the rules of a DCM or SEF, may require Foreign Intermediaries to register with the Commission. On the other hand, certain Foreign Intermediaries acting only for persons located outside the U.S. in connection with swaps may be exempt from registration with the Commission under § 3.10(c).4 With respect to activities involving commodity interest transactions (which, as explained above, includes swaps) executed bilaterally, or made on or subject to the rules of any DCM or SEF, existing Regulation 3.10(c)(3)(i) provides an exemption from registration as a CPO, CTA, or IB if a person 5 and the transaction meet the following conditions: 1. The person is located outside the U.S.; 2. The person acts only on behalf of persons located outside the U.S.; and I. Background 2 Pub. mstockstill on DSK3G9T082PROD with PROPOSALS Registration and Exemption From Registration of Intermediaries Part 3 of the Commission’s regulations governs the registration of intermediaries engaged in the offer and sale of, and providing advice concerning, all commodity interest transactions, including those futures, options on futures, and swaps traded on 1 17 CFR 145.9. Commission regulations referred to herein are found at 17 CFR Chapter I. VerDate Sep<11>2014 16:15 Aug 04, 2016 Jkt 238001 L. 111–203, 124 Stat. 137 (2010). are defined in Section 1a(47) of the CEA and Commission Regulation § 1.3(xxx). 4 See Adaptation of Regulations To Incorporate Swaps, 77 FR 66288, 66295 (Nov. 2, 2012) (discussing the modification of the term, ‘‘commodity interest,’’ to include swaps); Registration of Intermediaries, 77 FR 51898, 51899 (Aug. 28, 2012) (discussing the conforming amendments to Regulation 3.10(c)). 5 Under Section 1a(38) of the CEA and Regulation 1.3(u), the term ‘‘person’’ imports the plural and singular, and includes individuals, associations, partnerships, corporations and trusts. 7 U.S.C. 1a(38); 17 CFR 1.3(u). 3 Swaps PO 00000 Frm 00014 Fmt 4702 Sfmt 4702 51825 3. The commodity interest transaction is submitted for clearing through a registered FCM. Regulation 3.10(c)(2)(i) provides a similar exemption from registration for any Foreign Intermediary acting as an FCM. In 2015 and 2016, the Commission’s Division of Swap Dealer and Intermediary Oversight (‘‘Division’’) issued staff no-action relief that permitted Foreign Intermediaries to rely on the exemption from registration in § 3.10(c)(3)(i) if their activities involve swaps that are not subject to a Commission clearing requirement.6 The Division noted that the CEA and Commission regulations do not require that all swaps be cleared and some swaps are not yet accepted for clearing by any Commission-registered derivatives clearing organization (‘‘DCO’’). Thus, the Division stated that it did not believe the Commission intended that Foreign Intermediaries acting only for persons located outside the U.S. be required to register if the intermediaries merely acted for such persons in connection with transactions not required to be cleared by the CEA or Commission regulations. Similarly, pursuant to additional noaction relief provided in 2015, the Division also provided relief from registration as an IB or CTA for intermediaries acting for International Financial Institutions (‘‘IFIs’’).7 While such institutions may have headquarters or another significant presence in the U.S.,8 the Division recognized that the unique attributes and multinational status of these institutions did not warrant treating them as domestic persons. 6 See CFTC Letters 15–37 (June 4, 2015) and 16– 08 (Feb. 12, 2016). 7 IFIs are those institutions defined in the Commission’s previous rulemakings and staff noaction letters, i.e., Int’l Monetary Fund, Int’l Bank for Reconstruction and Development, European Bank for Reconstruction and Development, Int’l Development Association, Int’l Finance Corp., Multilateral Investment Guarantee Agency, African Development Bank, African Development Fund, Asian Development Bank, Inter-American Development Bank, Bank for Economic Cooperation and Development in the Middle East and North Africa, Inter-American Investment Corp., Council of Europe Development Bank, Nordic Investment Bank, Caribbean Development Bank, European Investment Bank and European Investment Fund (Int’l Bank for Reconstruction and Development, Int’l Finance Corp. and Multilateral Investment Guarantee Agency are parts of the World Bank Group). See, e.g., Further Definition of ‘‘Swap Dealer,’’ ‘‘Security-Based Swap Dealer,’’ ‘‘Major Swap Participant,’’ ‘‘Major Security-Based Swap Participant,’’ and ‘‘Eligible Contract Participant,’’ 77 FR 30596, 30692 n.1180 (May 23, 2012). 8 See CFTC No-Action Letter 15–37 (June 4, 2015). E:\FR\FM\05AUP1.SGM 05AUP1 51826 Federal Register / Vol. 81, No. 151 / Friday, August 5, 2016 / Proposed Rules II. The Proposal mstockstill on DSK3G9T082PROD with PROPOSALS A. Proposal Rationale Given the various execution venues and clearing requirements applicable to swaps,9 the Commission now proposes to amend § 3.10(c)(2)(i) and (3)(i) in tandem to simplify the registration exemption that is available to Foreign Intermediaries. Specifically, the proposed amendments would permit a Foreign Intermediary to be eligible for an exemption from registration with the Commission if the Foreign Intermediary, in connection with a commodity interest transaction, only acts on behalf of (1) persons located outside the U.S., or (2) IFIs (as defined in the proposed rule amendments), without regard to whether such persons or institutions clear such commodity interest transaction. The Commission notes at the outset that the exemptions from registration in § 3.10(c)(2) and (3) do not in themselves excuse any person (including any IFI) from compliance with any provision of the CEA or Commission regulations otherwise applicable to such persons, including, without limitation, any requirement that a resulting commodity interest transaction be cleared by a DCO registered or exempt from registration with the Commission. Commission Regulation 3.10 in its current form makes it a condition of the Foreign Intermediary’s exemption that its foreign located customer’s commodity interest transactions be cleared through a registered FCM. However, as explained above, not all commodity interest transactions are subject to a clearing requirement under the CEA or Commission regulations, and some are not available for clearing by any DCO registered with the Commission. Thus, the Commission is proposing to amend the language of the exemptions by removing the clearing requirement because persons located outside the U.S. that are subject to any applicable clearing requirement for futures or swaps, or any other applicable provision of the CEA or Commission regulations, must comply with those requirements regardless of any registration exemption for a Foreign Intermediary. 9 E.g., A swap may be executed bilaterally and then performed bilaterally between those counterparties or could be submitted for clearing where each counterparty would then face the clearing house for performance; a swap could be executed on a SEF and then performed bilaterally between the counterparties or could be cleared; a swap could be executed on a DCM and cleared. Under Part 50 of the Commission’s regulations, some swaps are required to cleared, but some swaps can be either performed bilaterally or voluntarily cleared if a clearing house accepts such swaps for clearing. VerDate Sep<11>2014 16:15 Aug 04, 2016 Jkt 238001 The Commission has come to the view that the focus of the exemption should be the activity of the Foreign Intermediary, not its customer. Accordingly, the Commission believes that the proposed amendments are consistent with its longstanding policy to focus its customer protection activities upon domestic firms and upon firms soliciting or accepting orders from domestic participants. Where a Foreign Intermediary’s customers are located outside the U.S., the Commission believes the jurisdiction where the customer is located has the preeminent interest in protecting such customers. B. Proposed Amended Rule Text Further to the foregoing, with respect to the amended rule text, the Commission is proposing to eliminate from § 3.10(c)(2)(i) and (3)(i) both the clearing requirement and references to DCMs and SEFs. The Commission is retaining the reference to the definition of ‘‘foreign broker’’ in paragraph (c)(2)(i) because ‘‘foreign broker’’ is not a Commission intermediary registration category (as are IB, CTA, and CPO) and the definition is necessary to make clear that a foreign broker is one who is ‘‘engaged in soliciting or in accepting orders only from persons located outside the United States, its territories or possessions.’’ This definitional reference also maintains symmetry with paragraph (c)(3)(i), which specifies that the exemption from registration applies to intermediary activity, as described in the IB, CTA, and CPO definitions, on behalf of IFIs or persons located outside the U.S., its territories, or possessions. Finally, because the Commission is proposing to codify the registration relief in No-Action Letter 15–37 with respect to intermediary activities on behalf of IFIs, the Commission proposes to add a new § 3.10(c)(6) to define IFIs for the purposes of § 3.10 in order to provide legal clarity on the scope of the registration exemption. The Commission requests comment on all aspects of this proposed rulemaking. III. Related Matters A. Regulatory Flexibility Act The Regulatory Flexibility Act (‘‘RFA’’) requires Federal agencies, in promulgating regulations, to consider whether the rules they propose will have a significant economic impact on a substantial number of small entities and, if so, to provide a regulatory flexibility analysis regarding the economic impact on those entities. Each Federal agency is required to conduct an initial and final regulatory flexibility PO 00000 Frm 00015 Fmt 4702 Sfmt 4702 analysis for each rule of general applicability for which the agency issues a general notice of proposed rulemaking.10 The rule proposed by the Commission would affect only FCMs, IBs, CTAs, and CPOs. The Commission has previously determined that FCMs and CPOs are not small entities for purposes of the RFA. Therefore, the requirements of the RFA do not apply to those entities.11 The Commission notes that the foreign persons affected by the proposed changes would be registered FCMs and CPOs if not for the exemption provided therein. Further, the Commission notes that the proposed rule would impose no new obligation, significant or otherwise, on any of the entities remaining entities. With respect to CTAs and IBs, the Commission has found it appropriate to consider whether such registrants should be deemed small entities for purposes of the RFA on a case-by-case basis, in the context of the particular Commission regulation at issue.12 As certain of these registrants may be small entities for purposes of the RFA, the Commission considered whether this rulemaking would have a significant economic impact on such registrants. This proposal would clarify in what circumstances certain foreign persons acting in the capacity of a FCM or an IB, CTA, or CPO would be exempt from registration, in connection with commodity interest transactions solely on behalf of persons located outside the U.S. This proposal is not expected to impose any new burdens on market participants. Rather, to the extent that this proposal provides an exemption to the intermediary registration requirement, the Commission believes it is reasonable to infer that the exemption would be less burdensome to such participant. The Commission does not, therefore, expect small entities to incur any additional costs as a result of this proposal. Therefore, the Commission has determined that the proposed rule will not create a significant economic impact on a substantial number of small entities. Accordingly, the Chairman, on behalf of the Commission, hereby certifies pursuant to 5 U.S.C. 605(b) that the proposed rule will not have a 10 5 U.S.C. 601 et seq. Policy Statement and Establishment of Definitions of ‘‘Small Entities’’ for Purposes of the Regulatory Flexibility Act, 47 FR 18618, 18620 (Apr. 30, 1982) (FCMs and CPOs). 12 See 47 FR at 18620 (CTAs); and Introducing Brokers and Associated Persons of Introducing Brokers, Commodity Trading Advisors and Commodity Pool Operators; Registration and Other Regulatory Requirements, 48 FR 35248, 35276 (Aug. 3, 1983) (IBs). 11 See E:\FR\FM\05AUP1.SGM 05AUP1 Federal Register / Vol. 81, No. 151 / Friday, August 5, 2016 / Proposed Rules mstockstill on DSK3G9T082PROD with PROPOSALS significant impact on a substantial number of small entities. B. Paperwork Reduction Act The Paperwork Reduction Act of 1995 (‘‘PRA’’) imposes certain requirements on Federal agencies, including the Commission, in connection with their conducting or sponsoring any collection of information, as defined the PRA.13 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. The proposed rules will not impose any new recordkeeping or information collection requirements, or other collections of information that require approval of the Office of Management and Budget (‘‘OMB’’) under the PRA. The Commission invites the public and other interested parties to comment on any aspect of the reporting burdens. Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission generally solicits comments in order to: (1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information will have practical utility; (2) evaluate the accuracy of the Commission’s estimate of the burden of the proposed collection of information; (3) determine whether there are ways to enhance the quality, utility, and clarity of the information to be collected; and (4) mitigate the burden of the collection of information on those who are to respond, including through the use of automated collection techniques or other forms of information technology. The Commission specifically invites public comment on the accuracy of its estimate that no additional information collection requirements or changes to existing collection requirements would result from the rules proposed herein. Comments may be submitted directly to the Office of Information and Regulatory Affairs, by fax at (202) 395– 6566 or by email at OIRAsubmissions@ omb.eop.gov. Please provide the Commission with a copy of submitted comments so that all comments can be summarized and addressed in the final rule preamble. Refer to the ADDRESSES section of this proposed rule for comment submission instructions to the Commission. A copy of the supporting statement for the collection of information discussed above may be obtained by visiting http://reginfo.gov/. OMB is required to make a decision concerning the collection of information between 30 and 60 days after 13 44 U.S.C. 3501 et seq. VerDate Sep<11>2014 16:15 Aug 04, 2016 publication of this document in the Federal Register. Therefore, a comment is best assured of having its full effect if OMB receives it within 30 days of publication. Authority: 5 U.S.C. 552, 552b; 7 U.S.C. 1a, 2, 6a, 6b, 6b–1, 6c, 6d, 6e, 6f, 6g, 6h, 6i, 6k, 6m, 6n, 6o, 6p, 6s, 8, 9, 9a, 12, 12a, 13b, 13c, 16a, 18, 19, 21, 23. C. Cost-Benefit Analysis ■ Section 15(a) of the CEA requires the Commission to consider the costs and benefits of its actions before issuing new regulations under the Act.14 By its terms, it does not require the Commission to quantify the costs and benefits of new rules or to determine whether the benefits of the proposed rules outweigh their costs; it requires the Commission to ‘‘consider’’ the cost and benefits of its actions. Section 15(A) of the CEA further specifies that the costs and benefits of the proposed rules shall be evaluated in light of five broad areas of market public concern: (1) Protection of market participants and the public; (2) efficiency, competitiveness and financial integrity of the futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations. The Commission may, in its discretion, give greater weight to any of the five enumerated areas of concern and may, in its discretion, determine that, notwithstanding its costs, a particular rule is necessary or appropriate to protect the public interest or to effectuate any of the provisions or to accomplish any of the purposes of the CEA. The proposed regulation should foster: (1) The protection of market participants and the public by providing greater legal certainty to the commodity interest activities of persons located outside the U.S.; and (2) greater efficiency, competitiveness and financial integrity of financial markets; price discovery; and sound risk management practices by ensuring greater depth in swaps markets accessed by U.S. persons. The Commission invites public comment on its costbenefit considerations. List of Subjects in 17 CFR Part 3 Definitions, Consumer protection, Foreign futures, Foreign options, Registration requirements. For the reasons set forth in the preamble, the Commodity Futures Trading Commission proposes to amend 17 CFR part 3 as follows: PART 3—REGISTRATION 1. The authority citation for part 3 continues to read as follows: ■ 14 7 Jkt 238001 51827 PO 00000 U.S.C. 19(a). Frm 00016 Fmt 4702 Sfmt 4702 2. Amend § 3.10 as follows: a. Revise paragraphs (c)(2)(i) and (c)(3)(i); and ■ b. Add paragraph (c)(6). The revisions and addition to read as follows: ■ § 3.10 Registration of futures commission merchants, retail foreign exchange dealers, introducing brokers, commodity trading advisors, commodity pool operators, swap dealers, major swap participants and leverage transaction merchants. * * * * * (c) * * * (2)(i) A person located outside the United States, its territories, or possessions (a ‘‘foreign located person’’) engaged in activity that meets the definition of a futures commission merchant in the Act and § 1.3(p) of this chapter is not required to register as a futures commission merchant if such activity is either solely that of a foreign broker as defined in § 1.3(xx) of this chapter or solely on behalf of international financial institutions. * * * * * (3)(i) A foreign located person engaged in activity that meets the definition of an introducing broker, commodity trading advisor, or commodity pool operator, as defined in the Act and in § 1.3(mm), (bb), and (nn) of this chapter, respectively, is not required to register as an introducing broker, commodity trading advisor, or commodity pool operator if such activity is either solely on behalf of foreign located persons or international financial institutions. * * * * * (6) For the purposes of this section, ‘‘international financial institution’’ means each of the following and any other international financial institution that the Commission may designate: Int’l Monetary Fund, Int’l Bank for Reconstruction and Development, European Bank for Reconstruction and Development, Int’l Development Association, Int’l Finance Corp., Multilateral Investment Guarantee Agency, African Development Bank, African Development Fund, Asian Development Bank, Inter-American Development Bank, Bank for Economic Cooperation and Development in the Middle East and North Africa, InterAmerican Investment Corp., Council of Europe Development Bank, Nordic Investment Bank, Caribbean Development Bank, European E:\FR\FM\05AUP1.SGM 05AUP1 51828 Federal Register / Vol. 81, No. 151 / Friday, August 5, 2016 / Proposed Rules Investment Bank and European Investment Fund. * * * * * Issued in Washington, DC, on July 27, 2016, by the Commission. Christopher J. Kirkpatrick, Secretary of the Commission. Note: The following appendix will not appear in the Code of Federal Regulations. Appendix to Amendment to Commission Regulation 3.10(c): Exemption From Registration for Certain Foreign Persons—Commission Voting Summary On this matter, Chairman Massad and Commissioners Bowen and Giancarlo voted in the affirmative. No Commissioner voted in the negative. [FR Doc. 2016–18210 Filed 8–4–16; 8:45 am] BILLING CODE 6351–01–P COMMODITY FUTURES TRADING COMMISSION 17 CFR Part 4 RIN 3038–AE47 Commodity Pool Operator Annual Report Commodity Futures Trading Commission. ACTION: Notice of proposed rulemaking. AGENCY: The Commodity Futures Trading Commission (Commission or CFTC) is proposing to amend certain of its regulations applicable to the Annual Report that each person registered or required to be registered as a commodity pool operator (CPO) must distribute for each commodity pool that it operates (Proposal). Specifically, the Proposal addresses the use of additional alternative generally accepted accounting principles, standards or practices, and the Annual Report audit requirement where the first fiscal year of a pool consists of a period of three months or less from the date of formation of the pool. DATES: Comments must be received on or before September 6, 2016. ADDRESSES: You may submit comments, identified by RIN 3038–AE47 and ‘‘Commodity Pool Operator Annual Report,’’ by any of the following methods: • CFTC Web site: http:// comments.cftc.gov. Follow the instructions for submitting comments through the Comments Online process on the Web site. • Mail: Send to Christopher Kirkpatrick, Secretary of the mstockstill on DSK3G9T082PROD with PROPOSALS SUMMARY: VerDate Sep<11>2014 16:15 Aug 04, 2016 Jkt 238001 Commission, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581. • Hand Delivery/Courier: Same as Mail, above. • Federal eRulemaking Portal: http:// www.regulations.gov. Follow the instructions for submitting comments. Please submit your comments using only one of these methods. All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to http:// www.cftc.gov. You should submit only information that you wish to make available publicly. If you wish the Commission to consider information that may be exempt from disclosure under the Freedom of Information Act (FOIA), a petition for confidential treatment of the exempt information may be submitted according to the procedures established in Commission Regulation 145.9.1 The Commission reserves the right, but shall have no obligation, to review, pre-screen, filter, redact, refuse or remove any or all of your submission from www.cftc.gov that it may deem to be inappropriate for publication, such as obscene language. All submissions that have been redacted or removed that contain comments on the merits of the rulemaking will be retained in the public comment file and will be considered as required under the Administrative Procedure Act and other applicable laws, and may be accessible under the FOIA. FOR FURTHER INFORMATION CONTACT: Christopher W. Cummings, Special Counsel, 202–418–5445, ccummings@ cftc.gov or Barbara S. Gold, Associate Director, 202–418–5441, bgold@cftc.gov, Division of Swap Dealer and Intermediary Oversight, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st NW., Washington, DC 20581. SUPPLEMENTARY INFORMATION: I. Background A. Part 4 of the Commission’s Regulations Part 4 of the Commission’s regulations governs the operations and activities of CPOs.2 It requires each CPO registered 1 17 CFR 145.9 (2016). The Commission’s regulations are found at 17 CFR Ch. I (2016). They are accessible through the Commission’s Web site. 2 Section 1a(11) of the Commodity Exchange Act (Act or CEA), 7 U.S.C. 1a(11) (2012), defines the term ‘‘commodity pool operator’’ and CEA Section 4m(1) generally requires each person who comes within the CPO definition to register as a CPO with the Commission. The Act is found at 7 U.S.C. et seq. PO 00000 Frm 00017 Fmt 4702 Sfmt 4702 or required to be registered with the Commission: To deliver to each participant in its commodity pool a Disclosure Document for the pool containing specified information (Regulations 4.21, 4.24, 4.25 and 4.26); to distribute to each participant periodic unaudited Account Statements for the pool (Regulation 4.22(a)) and an audited Annual Report for the pool (Regulation 4.22(c)); and to make and keep specified books and records (Regulation 4.23). Additionally, Part 4 prohibits certain activities on the part of all CPOs (Regulations 4.20 and 4.41) and provides for various CPO definitional exclusions (Regulation 4.5), CPO registration exemptions (Regulation 4.13), and compliance exemptions from otherwise applicable CPO requirements (Regulations 4.7, 4.12(b), and 4.12(c)).3 Over the past years, and pursuant to authority delegated to it by Regulation 140.93, Commission staff has provided exemptive relief from specific Part 4 requirements on a case-by-case basis.4 By this Federal Register release, the Commission is proposing to codify certain of these exemptions as applicable to the Annual Report. B. Regulation 4.22: The Annual Report Requirement Regulation 4.22 requires, in general, that each CPO registered or required to be registered with the Commission to distribute to each participant in each commodity pool it operates, and to submit to the National Futures Association (NFA),5 an Annual Report for the pool within 90 calendar days after the end of the pool’s fiscal year.6 (2012). It similarly is accessible through the Commission’s Web site. 3 Part 4 contains many similar provisions applicable to commodity trading advisors (CTAs). The Proposal does not pertain to CTAs, however, because CTAs do not operate commodity pools (CPOs do) and therefore there is no Annual Report requirement applicable to them. 4 These were issued by the Commission’s Division of Swap Dealer and Intermediary Oversight (‘‘DSIO’’) and its predecessors, the Division of Clearing and Intermediary Oversight and the Division of Trading and Markets. Regulation 140.93 currently delegates to the Director of DSIO ‘‘all functions reserved to the Commission’’ in Regulation 4.12(a)—which provides that the Commission ‘‘may exempt any person or any class or classes of persons from any provision of this Part 4 if it finds that the exemption is not contrary to the public interest and the purposes of the provisions from which the exemption is sought’’ and, further, that the Commission ‘‘may grant the exemption subject to such terms and conditions as it may find appropriate.’’ 5 NFA is registered as a futures association in accordance with CEA Section 17. It is the only futures association registered as such. 6 Regulation 4.22(c) further requires the CPO to submit to NFA certain key financial balances from the Annual Report. E:\FR\FM\05AUP1.SGM 05AUP1

Agencies

[Federal Register Volume 81, Number 151 (Friday, August 5, 2016)]
[Proposed Rules]
[Pages 51824-51828]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-18210]


=======================================================================
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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 3

RIN 3038-AE46


Exemption From Registration for Certain Foreign Persons

AGENCY: Commodity Futures Trading Commission.

ACTION: Proposed rule.

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SUMMARY: The Commodity Futures Trading Commission (``Commission'') is 
proposing to amend one of its regulations. The proposed amendment would 
amend the conditions under which persons located outside the United 
States (``U.S.'') acting in the capacity of a futures commission 
merchant (``FCM''), an introducing broker (``IB''), commodity trading 
advisor (``CTA''), or commodity pool operator (``CPO'') in connection 
with commodity interest transactions solely on behalf of persons 
located outside the U.S., or on behalf of certain international 
financial institutions, would qualify for an exemption from 
registration with the Commission.

DATES: Comments must be received on or before September 6, 2016.

ADDRESSES: You may submit comments, identified by RIN number 3038-AE46, 
by any of the following methods:
     CFTC Web site: http://comments.cftc.gov. Follow the 
instructions for submitting comments through the Comments Online 
process on the Web site.

[[Page 51825]]

     Mail: Send to Christopher Kirkpatrick, Secretary of the 
Commission, Commodity Futures Trading Commission, Three Lafayette 
Centre, 1155 21st Street NW., Washington, DC 20581.
     Hand Delivery/Courier: Same as Mail, above.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    Please submit your comments using only one of these methods.
    All comments must be submitted in English, or if not, accompanied 
by an English translation. Comments will be posted as received to 
http://www.cftc.gov. You should submit only information that you wish 
to make publicly available. If you wish the Commission to consider 
information that may be exempt from disclosure under the Freedom of 
Information Act, a petition for confidential treatment of the exempt 
information may be submitted according to the procedures established in 
Sec.  145.9 of the Commission's regulations.\1\
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    \1\ 17 CFR 145.9. Commission regulations referred to herein are 
found at 17 CFR Chapter I.
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    The Commission reserves the right, but shall have no obligation, to 
review, pre-screen, filter, redact, refuse or remove any or all of your 
submission from www.cftc.gov that it may deem to be inappropriate for 
publication, such as obscene language. All submissions that have been 
redacted or removed that contain comments on the merits of the 
rulemaking will be retained in the public comment file and will be 
considered as required under the Administrative Procedure Act and other 
applicable laws, and may be accessible under the Freedom of Information 
Act.

FOR FURTHER INFORMATION CONTACT: Frank Fisanich, Chief Counsel, or 
Andrew Chapin, Associate Chief Counsel, at (202) 418-5430, Division of 
Swap Dealer and Intermediary Oversight, Commodity Futures Trading 
Commission, Three Lafayette Centre, 1155 21st Street NW., Washington, 
DC 20581. Electronic mail: ffisanich@cftc.gov or achapin@cftc.gov.

SUPPLEMENTARY INFORMATION:

I. Background

Registration and Exemption From Registration of Intermediaries

    Part 3 of the Commission's regulations governs the registration of 
intermediaries engaged in the offer and sale of, and providing advice 
concerning, all commodity interest transactions, including those 
futures, options on futures, and swaps traded on U.S. trading 
facilities, including both designated contract markets (``DCMs'') and 
swap execution facilities (``SEFs''). Commission Regulation 3.10 sets 
forth the manner in which intermediaries, including FCMs, IBs, CPOs, 
and CTAs, must apply for registration with the Commission. Currently, 
Sec.  3.10(c) provides an exemption from registration, subject to 
certain conditions, for certain persons located outside the U.S. (such 
intermediaries are referred to herein as ``Foreign Intermediaries'') 
acting as intermediaries with respect to persons also located outside 
the U.S., even though such transactions may be executed bilaterally, or 
on or subject to the rules of a DCM or SEF.
    As a result of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act of 2010,\2\ swaps \3\ became subject to regulation under 
the Commodity Exchange Act (``CEA''). Accordingly, the Commission 
promulgated conforming amendments to its regulations to include swaps 
in the definition of ``commodity interest'' in Regulation 1.3(yy). 
Thus, acting as an intermediary for persons located within the U.S. in 
connection with swaps, whether executed bilaterally, or on or subject 
to the rules of a DCM or SEF, may require Foreign Intermediaries to 
register with the Commission. On the other hand, certain Foreign 
Intermediaries acting only for persons located outside the U.S. in 
connection with swaps may be exempt from registration with the 
Commission under Sec.  3.10(c).\4\
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    \2\ Pub. L. 111-203, 124 Stat. 137 (2010).
    \3\ Swaps are defined in Section 1a(47) of the CEA and 
Commission Regulation Sec.  1.3(xxx).
    \4\ See Adaptation of Regulations To Incorporate Swaps, 77 FR 
66288, 66295 (Nov. 2, 2012) (discussing the modification of the 
term, ``commodity interest,'' to include swaps); Registration of 
Intermediaries, 77 FR 51898, 51899 (Aug. 28, 2012) (discussing the 
conforming amendments to Regulation 3.10(c)).
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    With respect to activities involving commodity interest 
transactions (which, as explained above, includes swaps) executed 
bilaterally, or made on or subject to the rules of any DCM or SEF, 
existing Regulation 3.10(c)(3)(i) provides an exemption from 
registration as a CPO, CTA, or IB if a person \5\ and the transaction 
meet the following conditions:
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    \5\ Under Section 1a(38) of the CEA and Regulation 1.3(u), the 
term ``person'' imports the plural and singular, and includes 
individuals, associations, partnerships, corporations and trusts. 7 
U.S.C. 1a(38); 17 CFR 1.3(u).
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    1. The person is located outside the U.S.;
    2. The person acts only on behalf of persons located outside the 
U.S.; and
    3. The commodity interest transaction is submitted for clearing 
through a registered FCM.
    Regulation 3.10(c)(2)(i) provides a similar exemption from 
registration for any Foreign Intermediary acting as an FCM.
    In 2015 and 2016, the Commission's Division of Swap Dealer and 
Intermediary Oversight (``Division'') issued staff no-action relief 
that permitted Foreign Intermediaries to rely on the exemption from 
registration in Sec.  3.10(c)(3)(i) if their activities involve swaps 
that are not subject to a Commission clearing requirement.\6\ The 
Division noted that the CEA and Commission regulations do not require 
that all swaps be cleared and some swaps are not yet accepted for 
clearing by any Commission-registered derivatives clearing organization 
(``DCO''). Thus, the Division stated that it did not believe the 
Commission intended that Foreign Intermediaries acting only for persons 
located outside the U.S. be required to register if the intermediaries 
merely acted for such persons in connection with transactions not 
required to be cleared by the CEA or Commission regulations.
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    \6\ See CFTC Letters 15-37 (June 4, 2015) and 16-08 (Feb. 12, 
2016).
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    Similarly, pursuant to additional no-action relief provided in 
2015, the Division also provided relief from registration as an IB or 
CTA for intermediaries acting for International Financial Institutions 
(``IFIs'').\7\ While such institutions may have headquarters or another 
significant presence in the U.S.,\8\ the Division recognized that the 
unique attributes and multinational status of these institutions did 
not warrant treating them as domestic persons.
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    \7\ IFIs are those institutions defined in the Commission's 
previous rulemakings and staff no-action letters, i.e., Int'l 
Monetary Fund, Int'l Bank for Reconstruction and Development, 
European Bank for Reconstruction and Development, Int'l Development 
Association, Int'l Finance Corp., Multilateral Investment Guarantee 
Agency, African Development Bank, African Development Fund, Asian 
Development Bank, Inter-American Development Bank, Bank for Economic 
Cooperation and Development in the Middle East and North Africa, 
Inter-American Investment Corp., Council of Europe Development Bank, 
Nordic Investment Bank, Caribbean Development Bank, European 
Investment Bank and European Investment Fund (Int'l Bank for 
Reconstruction and Development, Int'l Finance Corp. and Multilateral 
Investment Guarantee Agency are parts of the World Bank Group). See, 
e.g., Further Definition of ``Swap Dealer,'' ``Security-Based Swap 
Dealer,'' ``Major Swap Participant,'' ``Major Security-Based Swap 
Participant,'' and ``Eligible Contract Participant,'' 77 FR 30596, 
30692 n.1180 (May 23, 2012).
    \8\ See CFTC No-Action Letter 15-37 (June 4, 2015).

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[[Page 51826]]

II. The Proposal

A. Proposal Rationale

    Given the various execution venues and clearing requirements 
applicable to swaps,\9\ the Commission now proposes to amend Sec.  
3.10(c)(2)(i) and (3)(i) in tandem to simplify the registration 
exemption that is available to Foreign Intermediaries. Specifically, 
the proposed amendments would permit a Foreign Intermediary to be 
eligible for an exemption from registration with the Commission if the 
Foreign Intermediary, in connection with a commodity interest 
transaction, only acts on behalf of (1) persons located outside the 
U.S., or (2) IFIs (as defined in the proposed rule amendments), without 
regard to whether such persons or institutions clear such commodity 
interest transaction.
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    \9\ E.g., A swap may be executed bilaterally and then performed 
bilaterally between those counterparties or could be submitted for 
clearing where each counterparty would then face the clearing house 
for performance; a swap could be executed on a SEF and then 
performed bilaterally between the counterparties or could be 
cleared; a swap could be executed on a DCM and cleared. Under Part 
50 of the Commission's regulations, some swaps are required to 
cleared, but some swaps can be either performed bilaterally or 
voluntarily cleared if a clearing house accepts such swaps for 
clearing.
---------------------------------------------------------------------------

    The Commission notes at the outset that the exemptions from 
registration in Sec.  3.10(c)(2) and (3) do not in themselves excuse 
any person (including any IFI) from compliance with any provision of 
the CEA or Commission regulations otherwise applicable to such persons, 
including, without limitation, any requirement that a resulting 
commodity interest transaction be cleared by a DCO registered or exempt 
from registration with the Commission. Commission Regulation 3.10 in 
its current form makes it a condition of the Foreign Intermediary's 
exemption that its foreign located customer's commodity interest 
transactions be cleared through a registered FCM. However, as explained 
above, not all commodity interest transactions are subject to a 
clearing requirement under the CEA or Commission regulations, and some 
are not available for clearing by any DCO registered with the 
Commission.
    Thus, the Commission is proposing to amend the language of the 
exemptions by removing the clearing requirement because persons located 
outside the U.S. that are subject to any applicable clearing 
requirement for futures or swaps, or any other applicable provision of 
the CEA or Commission regulations, must comply with those requirements 
regardless of any registration exemption for a Foreign Intermediary.
    The Commission has come to the view that the focus of the exemption 
should be the activity of the Foreign Intermediary, not its customer. 
Accordingly, the Commission believes that the proposed amendments are 
consistent with its longstanding policy to focus its customer 
protection activities upon domestic firms and upon firms soliciting or 
accepting orders from domestic participants. Where a Foreign 
Intermediary's customers are located outside the U.S., the Commission 
believes the jurisdiction where the customer is located has the 
preeminent interest in protecting such customers.

B. Proposed Amended Rule Text

    Further to the foregoing, with respect to the amended rule text, 
the Commission is proposing to eliminate from Sec.  3.10(c)(2)(i) and 
(3)(i) both the clearing requirement and references to DCMs and SEFs. 
The Commission is retaining the reference to the definition of 
``foreign broker'' in paragraph (c)(2)(i) because ``foreign broker'' is 
not a Commission intermediary registration category (as are IB, CTA, 
and CPO) and the definition is necessary to make clear that a foreign 
broker is one who is ``engaged in soliciting or in accepting orders 
only from persons located outside the United States, its territories or 
possessions.'' This definitional reference also maintains symmetry with 
paragraph (c)(3)(i), which specifies that the exemption from 
registration applies to intermediary activity, as described in the IB, 
CTA, and CPO definitions, on behalf of IFIs or persons located outside 
the U.S., its territories, or possessions.
    Finally, because the Commission is proposing to codify the 
registration relief in No-Action Letter 15-37 with respect to 
intermediary activities on behalf of IFIs, the Commission proposes to 
add a new Sec.  3.10(c)(6) to define IFIs for the purposes of Sec.  
3.10 in order to provide legal clarity on the scope of the registration 
exemption.
    The Commission requests comment on all aspects of this proposed 
rulemaking.

III. Related Matters

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA'') requires Federal agencies, 
in promulgating regulations, to consider whether the rules they propose 
will have a significant economic impact on a substantial number of 
small entities and, if so, to provide a regulatory flexibility analysis 
regarding the economic impact on those entities. Each Federal agency is 
required to conduct an initial and final regulatory flexibility 
analysis for each rule of general applicability for which the agency 
issues a general notice of proposed rulemaking.\10\
---------------------------------------------------------------------------

    \10\ 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------

    The rule proposed by the Commission would affect only FCMs, IBs, 
CTAs, and CPOs. The Commission has previously determined that FCMs and 
CPOs are not small entities for purposes of the RFA. Therefore, the 
requirements of the RFA do not apply to those entities.\11\ The 
Commission notes that the foreign persons affected by the proposed 
changes would be registered FCMs and CPOs if not for the exemption 
provided therein. Further, the Commission notes that the proposed rule 
would impose no new obligation, significant or otherwise, on any of the 
entities remaining entities.
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    \11\ See Policy Statement and Establishment of Definitions of 
``Small Entities'' for Purposes of the Regulatory Flexibility Act, 
47 FR 18618, 18620 (Apr. 30, 1982) (FCMs and CPOs).
---------------------------------------------------------------------------

    With respect to CTAs and IBs, the Commission has found it 
appropriate to consider whether such registrants should be deemed small 
entities for purposes of the RFA on a case-by-case basis, in the 
context of the particular Commission regulation at issue.\12\ As 
certain of these registrants may be small entities for purposes of the 
RFA, the Commission considered whether this rulemaking would have a 
significant economic impact on such registrants. This proposal would 
clarify in what circumstances certain foreign persons acting in the 
capacity of a FCM or an IB, CTA, or CPO would be exempt from 
registration, in connection with commodity interest transactions solely 
on behalf of persons located outside the U.S. This proposal is not 
expected to impose any new burdens on market participants. Rather, to 
the extent that this proposal provides an exemption to the intermediary 
registration requirement, the Commission believes it is reasonable to 
infer that the exemption would be less burdensome to such participant. 
The Commission does not, therefore, expect small entities to incur any 
additional costs as a result of this proposal. Therefore, the 
Commission has determined that the proposed rule will not create a 
significant economic impact on a substantial number of small entities. 
Accordingly, the Chairman, on behalf of the Commission, hereby 
certifies pursuant to 5 U.S.C. 605(b) that the proposed rule will not 
have a

[[Page 51827]]

significant impact on a substantial number of small entities.
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    \12\ See 47 FR at 18620 (CTAs); and Introducing Brokers and 
Associated Persons of Introducing Brokers, Commodity Trading 
Advisors and Commodity Pool Operators; Registration and Other 
Regulatory Requirements, 48 FR 35248, 35276 (Aug. 3, 1983) (IBs).
---------------------------------------------------------------------------

B. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (``PRA'') imposes certain 
requirements on Federal agencies, including the Commission, in 
connection with their conducting or sponsoring any collection of 
information, as defined the PRA.\13\ 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. The 
proposed rules will not impose any new recordkeeping or information 
collection requirements, or other collections of information that 
require approval of the Office of Management and Budget (``OMB'') under 
the PRA.
---------------------------------------------------------------------------

    \13\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

    The Commission invites the public and other interested parties to 
comment on any aspect of the reporting burdens. Pursuant to 44 U.S.C. 
3506(c)(2)(B), the Commission generally solicits comments in order to: 
(1) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information will have practical 
utility; (2) evaluate the accuracy of the Commission's estimate of the 
burden of the proposed collection of information; (3) determine whether 
there are ways to enhance the quality, utility, and clarity of the 
information to be collected; and (4) mitigate the burden of the 
collection of information on those who are to respond, including 
through the use of automated collection techniques or other forms of 
information technology. The Commission specifically invites public 
comment on the accuracy of its estimate that no additional information 
collection requirements or changes to existing collection requirements 
would result from the rules proposed herein.
    Comments may be submitted directly to the Office of Information and 
Regulatory Affairs, by fax at (202) 395-6566 or by email at 
OIRAsubmissions@omb.eop.gov. Please provide the Commission with a copy 
of submitted comments so that all comments can be summarized and 
addressed in the final rule preamble. Refer to the ADDRESSES section of 
this proposed rule for comment submission instructions to the 
Commission. A copy of the supporting statement for the collection of 
information discussed above may be obtained by visiting http://reginfo.gov/. OMB is required to make a decision concerning the 
collection of information between 30 and 60 days after publication of 
this document in the Federal Register. Therefore, a comment is best 
assured of having its full effect if OMB receives it within 30 days of 
publication.

C. Cost-Benefit Analysis

    Section 15(a) of the CEA requires the Commission to consider the 
costs and benefits of its actions before issuing new regulations under 
the Act.\14\ By its terms, it does not require the Commission to 
quantify the costs and benefits of new rules or to determine whether 
the benefits of the proposed rules outweigh their costs; it requires 
the Commission to ``consider'' the cost and benefits of its actions. 
Section 15(A) of the CEA further specifies that the costs and benefits 
of the proposed rules shall be evaluated in light of five broad areas 
of market public concern: (1) Protection of market participants and the 
public; (2) efficiency, competitiveness and financial integrity of the 
futures markets; (3) price discovery; (4) sound risk management 
practices; and (5) other public interest considerations. The Commission 
may, in its discretion, give greater weight to any of the five 
enumerated areas of concern and may, in its discretion, determine that, 
notwithstanding its costs, a particular rule is necessary or 
appropriate to protect the public interest or to effectuate any of the 
provisions or to accomplish any of the purposes of the CEA.
---------------------------------------------------------------------------

    \14\ 7 U.S.C. 19(a).
---------------------------------------------------------------------------

    The proposed regulation should foster: (1) The protection of market 
participants and the public by providing greater legal certainty to the 
commodity interest activities of persons located outside the U.S.; and 
(2) greater efficiency, competitiveness and financial integrity of 
financial markets; price discovery; and sound risk management practices 
by ensuring greater depth in swaps markets accessed by U.S. persons. 
The Commission invites public comment on its cost-benefit 
considerations.

List of Subjects in 17 CFR Part 3

    Definitions, Consumer protection, Foreign futures, Foreign options, 
Registration requirements.

    For the reasons set forth in the preamble, the Commodity Futures 
Trading Commission proposes to amend 17 CFR part 3 as follows:

PART 3--REGISTRATION

0
1. The authority citation for part 3 continues to read as follows:

    Authority: 5 U.S.C. 552, 552b; 7 U.S.C. 1a, 2, 6a, 6b, 6b-1, 6c, 
6d, 6e, 6f, 6g, 6h, 6i, 6k, 6m, 6n, 6o, 6p, 6s, 8, 9, 9a, 12, 12a, 
13b, 13c, 16a, 18, 19, 21, 23.

0
2. Amend Sec.  3.10 as follows:
0
a. Revise paragraphs (c)(2)(i) and (c)(3)(i); and
0
b. Add paragraph (c)(6).
    The revisions and addition to read as follows:


Sec.  3.10  Registration of futures commission merchants, retail 
foreign exchange dealers, introducing brokers, commodity trading 
advisors, commodity pool operators, swap dealers, major swap 
participants and leverage transaction merchants.

* * * * *
    (c) * * *
    (2)(i) A person located outside the United States, its territories, 
or possessions (a ``foreign located person'') engaged in activity that 
meets the definition of a futures commission merchant in the Act and 
Sec.  1.3(p) of this chapter is not required to register as a futures 
commission merchant if such activity is either solely that of a foreign 
broker as defined in Sec.  1.3(xx) of this chapter or solely on behalf 
of international financial institutions.
* * * * *
    (3)(i) A foreign located person engaged in activity that meets the 
definition of an introducing broker, commodity trading advisor, or 
commodity pool operator, as defined in the Act and in Sec.  1.3(mm), 
(bb), and (nn) of this chapter, respectively, is not required to 
register as an introducing broker, commodity trading advisor, or 
commodity pool operator if such activity is either solely on behalf of 
foreign located persons or international financial institutions.
* * * * *
    (6) For the purposes of this section, ``international financial 
institution'' means each of the following and any other international 
financial institution that the Commission may designate: Int'l Monetary 
Fund, Int'l Bank for Reconstruction and Development, European Bank for 
Reconstruction and Development, Int'l Development Association, Int'l 
Finance Corp., Multilateral Investment Guarantee Agency, African 
Development Bank, African Development Fund, Asian Development Bank, 
Inter-American Development Bank, Bank for Economic Cooperation and 
Development in the Middle East and North Africa, Inter-American 
Investment Corp., Council of Europe Development Bank, Nordic Investment 
Bank, Caribbean Development Bank, European

[[Page 51828]]

Investment Bank and European Investment Fund.
* * * * *

    Issued in Washington, DC, on July 27, 2016, by the Commission.
Christopher J. Kirkpatrick,
Secretary of the Commission.

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

Appendix to Amendment to Commission Regulation 3.10(c): Exemption From 
Registration for Certain Foreign Persons--Commission Voting Summary

    On this matter, Chairman Massad and Commissioners Bowen and 
Giancarlo voted in the affirmative. No Commissioner voted in the 
negative.

[FR Doc. 2016-18210 Filed 8-4-16; 8:45 am]
 BILLING CODE 6351-01-P