Ongoing Data Collection of Centrally Cleared Transactions in the U.S. Repurchase Agreement Market, 4975-4987 [2019-02639]

Download as PDF Federal Register / Vol. 84, No. 34 / Wednesday, February 20, 2019 / Rules and Regulations issued by a surplus lines insurer recognized, or not disapproved, by the insurance regulator of the State or jurisdiction where the property to be insured is located; (iii) Covers both the mortgagor(s) and the mortgagee(s) as loss payees, except in the case of a policy that is provided by a condominium association, cooperative, homeowners association, or other applicable group and for which the premium is paid by the condominium association, cooperative, homeowners association, or other applicable group as a common expense; and (iv) Provides sufficient protection of the designated loan, consistent with general safety and soundness principles, and the credit union documents its conclusion regarding sufficiency of the protection of the loan in writing. (4) Mutual aid societies. Notwithstanding the requirements of paragraph (c)(3) of this section, a credit union may accept a plan issued by a mutual aid society, as defined in § 760.2, in satisfaction of the flood insurance purchase requirement in paragraph (a) of this section if: (i) The NCUA has determined that such plans qualify as flood insurance for purposes of the Act; (ii) The plan provides coverage in the amount required by paragraph (a) of this section; (iii) The plan covers both the mortgagor(s) and the mortgagee(s) as loss payees; and (iv) The plan provides sufficient protection of the designated loan, consistent with general safety and soundness principles, and the credit union documents its conclusion regarding sufficiency of the protection of the loan in writing. Dated: January 24, 2019 Joseph M. Otting, Comptroller of the Currency. By order of the Board of Governors of the Federal Reserve System, February 7, 2019. Ann E. Misback, Secretary of the Board. By order of the Board of Directors of the Federal Deposit Insurance Corporation. Dated at Washington, DC, on 25th day of January, 2019. Valerie J. Best, Assistant Executive Secretary. By order of the Board of the Farm Credit Administration. Dated at McLean, VA, this 5th day of February 2019 Dale L. Aultman, Secretary. By order of the Board of the National Credit Union Administration. VerDate Sep<11>2014 17:42 Feb 19, 2019 Jkt 247001 Dated at Alexandria, VA, this 31st day of January, 2019. Gerard S. Poliquin, Secretary of the Board. [FR Doc. 2019–02650 Filed 2–19–19; 8:45 am] BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P; 7535–01–P DEPARTMENT OF THE TREASURY Office of Financial Research 12 CFR Part 1610 RIN 1505–AC58 Ongoing Data Collection of Centrally Cleared Transactions in the U.S. Repurchase Agreement Market Office of Financial Research, Treasury. ACTION: Final rule. AGENCY: The U.S. Department of the Treasury’s Office of Financial Research (the ‘‘Office’’ or the ‘‘OFR’’) is adopting final rules (the ‘‘Final Rules’’) establishing a data collection covering centrally cleared transactions in the U.S. repurchase agreement (‘‘repo’’) market. This collection requires daily reporting to the Office by covered central counterparties (‘‘CCPs’’). The collected data will be used to support the work of the Financial Stability Oversight Council (the ‘‘Council’’), its member agencies, and the Office to identify and monitor risks to financial stability, and to support the calculation of certain reference rates. DATES: Effective date: This rule is effective April 22, 2019. Compliance dates: See the amendment to 12 CFR 1610.10(e). FOR FURTHER INFORMATION CONTACT: Matthew Reed, Chief Counsel, OFR, (202) 927–8164; John Zitko, Senior Counsel, OFR, (202) 927–8372; or Matthew McCormick, Research Economist, OFR, (202) 927–8215. SUPPLEMENTARY INFORMATION: SUMMARY: I. Introduction The OFR is adopting the Final Rules to establish a data collection for centrally cleared transactions in the U.S. repo market. The Final Rules will require reporting by certain U.S. CCPs for repo transactions and will serve two primary purposes: (1) To enhance the ability of the Council, its member agencies, and the Office to identify and monitor risks to financial stability; and (2) to support the calculation of certain reference rates. Under the Dodd-Frank Wall Street Reform and Consumer PO 00000 Frm 00025 Fmt 4700 Sfmt 4700 4975 Protection Act (the ‘‘Dodd-Frank Act’’), the Office is authorized to issue rules and regulations in order to collect and standardize data to support the Council in fulfilling its purposes and duties, such as identifying risks to U.S. financial stability. The Council recommended a permanent collection of repo data in its 2016 annual report to Congress and, as required by law, the Office consulted with the Council on the schedule of collection in September 2016.1 The Council maintained this recommendation in its 2017 annual report, and the Office provided a public update to the Council on November 16, 2017.2 The Final Rules will require reporting on centrally cleared repo transactions comprising approximately one-quarter of all U.S. repo market transactions. Together with data collected regarding approximately another one-quarter of the market by the Federal Reserve Bank of New York (the ‘‘FRBNY’’) pursuant to the supervisory authority of the Board of Governors of the Federal Reserve System (the ‘‘Federal Reserve Board’’), the Final Rules mark an important step toward fully addressing the Council’s recommendation. The expanded monitoring of the repo market made possible by the Final Rules will help fulfill the Council’s purposes and duties because of the repo market’s crucial role in providing short-term funding and performing other functions for U.S. markets, making it important for financial stability monitoring. The data will also support the calculation of the Secured Overnight Funding Rate (‘‘SOFR’’), which was selected by the Alternative Reference Rates Committee as its preferred alternative rate to the U.S. dollar London Interbank Offered Rate (‘‘LIBOR’’), as well as the Broad General Collateral Rate (‘‘BGCR’’), helping fulfill another Council recommendation on the creation of alternative reference rates.3 1 See Minutes of the Financial Stability Oversight Council (September 22, 2016), https:// www.treasury.gov/initiatives/fsoc/council-meetings/ Documents/September222016_minutes.pdf and 12 U.S.C. 5344(b)(1)(B)(iii). 2 See Financial Stability Oversight Council, meeting minutes (November 16, 2017), https:// www.treasury.gov/initiatives/fsoc/council-meetings/ Documents/November162017_minutes.pdf, and Office, OFR Update on Bilateral Repo Collection (November 22, 2017), https:// www.financialresearch.gov/from-themanagementteam/2017/11/22/ofr-update-onbilateral-repocollection/. 3 See Financial Stability Oversight Council, 2014 Annual Report, p. 10; 2015 Annual Report, p. 17; 2016 Annual Report, pp. 14–15; and 2017 Annual Report, pp. 12–13, https://www.treasury.gov/ initiatives/fsoc/studies-reports/Pages/2017-AnnualReport.aspx. E:\FR\FM\20FER1.SGM 20FER1 4976 Federal Register / Vol. 84, No. 34 / Wednesday, February 20, 2019 / Rules and Regulations The Office published a notice of proposed rulemaking on July 10, 2018 (the ‘‘NPRM’’ or the ‘‘Proposed Rules’’), and requested that any comments be submitted by September 10, 2018.4 The Office received relevant comments on the NPRM from a clearing organization, a trade association, an asset manager, a standards advisory group, and a nonprofit foundation.5 In general, all commenters supported the proposed data collection, noting such potential benefits as monitoring risks to financial stability and supporting the calculation of an alternative reference rate to LIBOR. In addition, commenters identified certain issues that the Office has addressed in the discussion below and, in some cases, through regulatory text changes reflected in the Final Rules. In making these changes, the Office intends to minimize the burden of the Final Rules while still assuring that the aims of the collection, as expressed in the NPRM and below, are met. II. Description of Final Rules The following discussion summarizes the NPRM, the comments received, and the Office’s response to those comments, including modifications reflected in the Final Rules. a. Purpose of Rules As noted in the NPRM, the collection of data pursuant to the Final Rules has two primary purposes, both of which support the Council, its member agencies, and the Office in carrying out their responsibilities. First, the data will be used to identify and monitor financial stability risks in a significant portion of the U.S. repo market. Second, the data will be used to support the calculation of reference rates, including the SOFR. Both of these aims received strong support in the comment letters. Public commenters endorsed the enhancement of information on the U.S. repo market that is to be accomplished through the collection, and they also noted such data would strengthen the calculation method and resiliency of the collection mechanism for the SOFR.6 4 83 FR 31896 (July 10, 2018). total, the OFR received five substantive comments on the Proposed Rules, including letters from the Depository Trust & Clearing Corporation (‘‘DTCC’’), the Securities Industry and Financial Markets Association (‘‘SIFMA’’), Citadel L.L.C., The Standards Advisory Group of the International Organization for Standardization’s (‘‘ISO’’) Technical Committee 68 for Financial Services (‘‘ISO/TC 68’’), and the Global Legal Entity Identifier (‘‘LEI’’) Foundation. 6 See, e.g., SIFMA letter, pp. 1–2. 5 In VerDate Sep<11>2014 17:42 Feb 19, 2019 Jkt 247001 i. Importance of Centrally Cleared Repurchase Agreement Data for Monitoring Financial Stability Risks The collection of data on the centrally cleared segments of the repo market marks an important step in fulfilling the Council’s recommendation to expand and make permanent the collection of data on the U.S. repo market. The Council recommended a permanent collection of repo data in its 2016 annual report to improve transparency and risk monitoring, which was reiterated in its 2017 annual report.7 The Office believes that the adopted approach of collecting certain cleared repo data from CCPs, which already obtain most or all of the requested data during trade processing, will result in lower aggregate costs to market participants than a collection from individual participants. As explained below, the Office believes that there is only one reporter currently covered by the Final Rules’ scope: Fixed Income Clearing Corporation (‘‘FICC’’), a subsidiary of DTCC. FICC has indicated that on average, it matches, nets, settles, and risk-manages centrally cleared repo transactions valued at more than $1.7 trillion per day.8 The collection is expected to result initially in reporting only from two FICC services: The General Collateral Finance Repo Service (‘‘GCF Repo Service’’) (a service that clears general collateral trades, in which the trade reported to the CCP is for a category of securities as opposed to a specific security), including FICC’s Centrally Cleared Institutional Triparty Service; and the Delivery-VersusPayment Service (‘‘DVP Service’’) (a specific-security repo service). This collection, together with existing data collections covering the tri-party repo market, will allow about half of the estimated activity in the U.S. repo market by volume to be analyzed and monitored.9 The collection of transactional data on centrally cleared repos is key to the 7 See Financial Stability Oversight Council, 2017 Annual Report, p. 14, https://www.treasury.gov/ initiatives/fsoc/studies-reports/Documents/FSOC_ 2017_Annual_Report.pdf and 2016 Annual Report, p. 14, https://www.treasury.gov/initiatives/fsoc/ studies-reports/Documents/ FSOC%202016%20Annual%20Report.pdf. 8 See Depository Trust & Clearing Corporation, DVP Repo Transactions, undated online content, https://www.dtcclearning.com/products-andservices/fixed-income-clearing/governmentsecurities-division-gsd/dvp-service/dvp-repotransactions.html. 9 See Baklanova, Caglio, Cipriani, and Copeland (January 13, 2016), using a method first outlined in Copeland, et al., ‘‘Lifting the Veil on the U.S. Bilateral Repo Market,’’ Liberty Street Economics: https://libertystreeteconomics.newyorkfed.org/2014/ 07/lifting-the-veil-on-the-us-bilateral-repomarket.html. PO 00000 Frm 00026 Fmt 4700 Sfmt 4700 Council’s effective identification and monitoring of emerging threats to the stability of the U.S. financial system. The repo market has a number of critical functions with associated vulnerabilities that could give rise to conditions that could impair its ability to perform such functions.10 These functions also create linkages between different financial markets and institutions, and therefore potential channels for the propagation of shocks through the wider financial system. These vulnerabilities have developed in the past into threats to U.S. financial stability, most notably during the 2007–09 financial crisis.11 Despite the vulnerabilities, only triparty repo transactions are currently subject to a mandatory regulatory data collection. Data gaps and the absence of mandatory collections are a significant impediment to the ongoing ability of the market, the Council, Council member agencies, and the Office to monitor developments in the repo market and potential emerging threats to financial stability. The lack of comprehensive data on repos creates material blind spots with regard to the most active short-term funding market in the U.S. financial system. This mandatory collection is an important step in eliminating these blind spots. From a financial stability perspective, it is important to monitor transactions in centrally cleared repo for three reasons. First, repos that are transacted through a CCP on a blind-brokered basis can act as a critical funding source for repo borrowers that are under stress. Uncleared repos backed by high-quality collateral can become sensitive to counterparty risk, potentially resulting in a run on an institution’s funding.12 Shifts in activity from specificcounterparty repos to blind-brokered transactions can therefore indicate market perceptions that a firm may be under stress. Second, while counterparty risk is mitigated by the use of CCPs, adverse changes in the value of collateral can 10 There are four functions that repo transactions can serve for individual participants: Low-risk cash investment, monetization of assets, transformation of collateral, and facilitation of hedging. Repos also benefit financial markets broadly by supporting secondary market efficiency and liquidity. 11 During the financial crisis, the repo market first began to show stress in the summer of 2007, and runs on repos played a central role in the failures of Bear Stearns and Lehman Brothers. These threats can manifest quickly; the run on Bear Stearns took place over less than a week. See Financial Crisis Inquiry Commission, ‘‘Conclusions of the Financial Crisis Inquiry Commission’’ (January 2011), pp. 286–290. 12 See Adam Copeland, Antoine Martin, and Martin Walker, ‘‘Repo Runs: Evidence from the TriParty Repo Market’’ (2011), Federal Reserve Bank of New York Staff Reports. E:\FR\FM\20FER1.SGM 20FER1 Federal Register / Vol. 84, No. 34 / Wednesday, February 20, 2019 / Rules and Regulations propagate shocks arising elsewhere in the financial system to CCP members by impacting their ability to borrow using centrally cleared repo.13 Further, collateral held at tri-party custodian banks that is used in centrally cleared repos within the tri-party system is not available for delivery outside of the triparty system, making information on the collateral used in this venue important for understanding broader market dynamics. Third, while CCPs offer benefits in terms of settlement and risk management, they may also propagate shocks to their members in other ways. If a repo CCP were to fail during a period of market stress, the repo intermediation capacity of the financial system would be impaired. Even if this risk were judged to be remote, in a circumstance where, as here, there is significant market centralization, disruption of such a critical service could have severe implications. For these reasons, and as noted by the Council in its 2017 annual report, further monitoring and analysis of risks related to CCPs is appropriate.14 ii. Importance of Centrally Cleared Repurchase Agreement Data to Alternative Reference Rates This collection is expected to support the calculation of reference rates including the SOFR, the Alternative Reference Rates Committee’s preferred alternative reference rate to U.S. dollar LIBOR. The SOFR relies on data on repos backed by Treasury securities in three segments of the U.S. repo market. The Federal Reserve Board collects data for the tri-party portion through its supervisory authority over the clearing banks. While some data on GCF Repo Service and DVP Service transactions are available to the FRBNY through a voluntary agreement with an affiliate of FICC, DTCC Solutions LLC (‘‘DTCC Solutions’’), an expanded and ongoing mandatory collection of these data will 13 The linkages between asset and funding markets create a risk of spillovers from one market to another because asset values help determine both the value of an asset as collateral and also the availability of funding for leveraged market participants that hold the asset. Price impacts on collateral arising forced asset sales due to a lack of confidence in such assets or in a particular counterparty can have widespread effects beyond the original transactions, leading to contagion that can culminate in broader fire sales and potential threats to financial stability. Further, the use of common underlying assets between different segments of the repo market therefore creates a channel through which centrally cleared repo transactions can be affected by activity in other portions of the repo market. 14 See Financial Stability Oversight Council, 2017 Annual Report, pp. 123–4, https:// www.treasury.gov/initiatives/fsoc/studies-reports/ Documents/FSOC_2017_Annual_Report.pdf. VerDate Sep<11>2014 17:42 Feb 19, 2019 Jkt 247001 increase confidence that the alternative reference rate’s inputs will continue to be available. This is especially true if new CCPs enter the market. This viability is important because the longterm success of any alternative reference rate relies on the confidence of market participants. Another benefit of this collection is the ability to require specific data fields from centrally cleared general collateral repo and centrally cleared specificsecurity repo services for use in reference rate calculation. The Office has reviewed these data fields with the FRBNY and believes the information will help to improve and ensure the ongoing quality of the SOFR and BGCR. From an early stage, the Office has contributed to the development of alternative reference rates and has designed this collection to maximize its compatibility with reference rate production. Some of the data fields in this collection are not currently received under the voluntary agreement between the FRBNY and DTCC Solutions, but will help ensure the continued quality of the rates. Most notably, the identity of transaction counterparties is important for rate calculation, as it allows the calculation agent to identify and, as appropriate, exclude transactions that may not be representative of market activity (e.g., certain affiliate transactions). Further, by making available data on repos that are outside the current scope of the voluntary data collection, this collection will allow the Federal Reserve and the Office to better monitor the evolution of markets and ensure that the rates continue to target their intended underlying interests. Finally, the collection will help ensure the long-term viability of the SOFR and BGCR by including within its scope reporting from any additional CCPs that meet the $50 billion activitybased materiality threshold in the future, regardless of their supervisor or regulator. This ensures rate production will include new comparable transactions in the calculation of the rate as U.S. repo markets evolve. This is of particular importance given that trading in products tied to the new rate might eventually subsume most volume that is currently tied to U.S. dollar LIBOR. b. Uses of the Data Collection The collection will be used by the Office to improve the ability of the Council, Council member agencies, and the Office to monitor the U.S. repo market and identify and assess potential financial stability risks. The additional daily transaction data this collection PO 00000 Frm 00027 Fmt 4700 Sfmt 4700 4977 will facilitate identification of potential repo market vulnerabilities and will also help identify shifting repo market trends that could be destabilizing or indicate stresses elsewhere in the financial system. Such trends might be reflected in indicators of the volume or price of funding in the repo market at different tenors, differentiated by the type or credit quality of participants or the quality of underlying collateral. Further, analyzing the collateral data from this collection together with other data available to the Office, the Council, and Council member agencies will enable a clearer understanding of collateral flows in securities markets and potential financial stability risks. As noted in the NPRM and consistent with the Dodd-Frank Act, the Office expects to share collected data and information with the Council and its member agencies, and such data and information must be maintained with at least the same level of security as used by the Office and may not be shared with any individual or entity without the permission of the Council.15 On October 16, 2018, the Council voted unanimously to authorize the OFR to share with the FRBNY the data the OFR will collect under the Final Rules.16 Accordingly, the Office will make available the data from this collection to the FRBNY for purposes of meeting the above monitoring and alternative reference rate objectives as well as other market analysis and research. The Office will also make data collected and maintained under this collection available to the Council and Council member agencies, as necessary to support their regulatory responsibilities.17 The sharing of any data from this collection will be subject to the confidentiality and security requirements of applicable laws, including the Dodd-Frank Act.18 Pursuant to the Dodd-Frank Act, the submission of any non-publicly available data to the Office under this collection will not constitute a waiver of, or otherwise affect, any privilege arising under federal or state law to which the data or information is otherwise subject.19 Aggregate or summary data from the collection might be provided to the public to increase market transparency and facilitate research on the financial 15 12 U.S.C. 5343(b). FSOC, Minutes of the Financial Stability Council dated October 16, 2018, https:// www.treasury.gov/initiatives/fsoc/council-meetings/ Documents/October162018_minutes.pdf. 17 12 U.S.C. 5344(b)(5). 18 E.g., 12 U.S.C. 5343(b), 5344(b)(3). 19 12 U.S.C. 5322(d)(5). 16 See E:\FR\FM\20FER1.SGM 20FER1 4978 Federal Register / Vol. 84, No. 34 / Wednesday, February 20, 2019 / Rules and Regulations system, to the extent that intellectual property rights are not violated, confidential business information is properly protected, and the sharing of such information poses no significant threats to the U.S. financial system.20 The potential sharing of aggregate or summary data collected under the Final Rules would help fulfill a recommendation of the Council to make appropriately aggregated securities financing data available to the public.21 The Office may also use the data to sponsor and conduct additional research.22 This research may include the use of these data to help fulfill the duties and purposes under the DoddFrank Act relating to the responsibility of the Office’s Research and Analysis Center to develop and maintain independent analytical capabilities to support the Council and relating to the programmatic functions of the Office’s Data Center.23 For example, access to data on centrally cleared repos will allow the Office to conduct research related to the Council’s analysis of potential risks arising from securities financing activities. Two commenters requested that the Office provide more clarity regarding information security. One focused on the standard of care and the particular measures the Office will take to secure and protect the data collected in order to provide greater transparency and enable a constructive dialogue regarding the adequacy of such measures in the face of future technological developments.24 The other stated its concern in light of the number of agencies and individuals within such agencies that may have access to the data.25 As noted above, the Office will, consistent with the Dodd-Frank Act, share data and information with the Council and its member agencies. As required by the Dodd-Frank Act, such data and information must be maintained with at least the same level of security as used by the Office and may not be shared with any individual or entity other than those specified in 12 U.S.C. 5343(b) without the permission of the Council.26 For purposes of 20 12 U.S.C. 5344(b)(6). Financial Stability Oversight Council, Council’s 2017 Annual Report, p. 16, https:// www.treasury.gov/initiatives/fsoc/studies-reports/ Documents/FSOC%202016%20Annual%20 Report.pdf. 22 12 U.S.C. 5343(b)(2). 23 12 U.S.C. 5344(b) discusses the Office’s Data Center, and 12 U.S.C. 5344(c) discusses the various uses of data by the Office’s Research and Analysis Center to support the Council. 24 DTCC letter, pp. 2–3. 25 SIFMA letter, p. 4. 26 12 U.S.C. 5343(b). 21 See VerDate Sep<11>2014 17:42 Feb 19, 2019 Jkt 247001 preventing unauthorized access to data, or loss of data, the Office is also subject to the Federal Information Security Modernization Act of 2014,27 which requires that federal agencies, including the OFR and independent regulatory agencies, provide information security protections commensurate with the risk and magnitude of harm resulting from unauthorized access, use, or disclosure of information collected by or on behalf of an agency. Additionally, U.S. federal employees are subject to government-wide regulations that prohibit the use of public office for private gain and impose other restrictions related to the use of nonpublic information.28 Unauthorized disclosure of trade secrets and insider trading can result in criminal prosecution.29 The information collected pursuant to the Final Rules will be handled in accordance with the OFR’s data access, security, and control policies and procedures, and the Office will further comply with all applicable privacy and data protection laws and regulations that are now or that may in the future become applicable to it. One commenter requested that specific data-handling procedures be delineated, depending on whether the data was to be used for risk monitoring and supervision, or academic research. This commenter suggested that certain enhanced protections could include anonymization or embargo of the data when it is to be used for academic research. It also recommended that the Office amend the Proposed Rules to set forth a standard with respect to the publication of any information that includes or is derived from the data to be collected, including in aggregate or summary form, that would prevent the disclosure of proprietary or confidential financial, operational, or trading data. In connection with such a standard, the commenter also suggested that the Office clarify a process by which a covered reporter (as defined in the regulation) would be permitted to review research prior to publication in order to confirm that the research does not reveal confidential information.30 Upon consideration, the Office declines to delineate between different data handling procedures in this manner. In light of the fact that the same personnel who take part in risk monitoring and supervision often 27 Public Law 113–283. 5 CFR 2635.702 (use of public office for private gain), 5 CFR 2635.703 (use of nonpublic information), and 18 U.S.C. 1905 (disclosure of confidential information generally). 29 See 18 U.S.C. 1832 (theft of trade secrets) and 15 U.S.C. 78j (manipulative and deceptive devices). 30 DTCC letter, pp. 3–4. 28 See PO 00000 Frm 00028 Fmt 4700 Sfmt 4700 additionally engage in academic research, with cross-functional benefits to each, the Office considers a demarcation between the two to be unworkable. Moreover, as noted above, 12 U.S.C. 5344(b)(6) provides that the Office shall, after consultation with Council member agencies, provide certain data to financial industry participants and the general public to increase market transparency and facilitate research on the financial system, to the extent that intellectual property rights are not violated, confidential business information is properly protected, and the sharing of such information poses no significant threats to the financial system of the United States. Furthermore, the Office employs a number of targeted mechanisms to protect confidential business information. With respect to the data to be collected pursuant to the Final Rules, such mechanisms may include, at the discretion of the Office, providing data in an anonymized format; providing data on an embargoed basis; performing statistical analysis to verify that confidential business information cannot be reverse-engineered; and allowing covered reporters to review research prior to publication for purposes of confirming that such research does not reveal the confidential information of their members. The same commenter recommended that the Office consider clarifying in the regulatory text how a Freedom of Information Act (‘‘FOIA’’) 31 request for confidential business information collected pursuant to a final rule would be treated, including the process for requesting confidential treatment of data submitted on a continuous basis via an automated process and by expressly identifying the exemptions that would be applicable to such data.32 In general, the FOIA provides for access to records maintained by a Federal agency. The provisions of the FOIA are intended to assure the right of the public to information, subject to the exemptions and exclusions set forth in the FOIA. The disclosure requirements of 5 U.S.C. 552(a) do not apply to records that are exempt under 5 U.S.C. 552(b), or to records that are excluded under 5 U.S.C. 552(c). As an office within the Department of the Treasury, the Office considers the data to be collected pursuant to the Final Rules as records maintained by the Department of the Treasury pursuant to its FOIA regulations.33 31 5 U.S.C. 552. letter, p. 3. 33 See 31 CFR part 1, subpart A. 32 DTCC E:\FR\FM\20FER1.SGM 20FER1 Federal Register / Vol. 84, No. 34 / Wednesday, February 20, 2019 / Rules and Regulations Upon receipt of a request for Treasury records, those records must be disclosed unless they are exempt or excluded under the FOIA. The Office expects that data collected under the Final Rules will likely contain or consist of ‘‘trade secrets and commercial or financial information obtained from a person and privileged or confidential.’’ This type of information is subject to withholding under exemption 4 of the FOIA.34 To the extent that data collected under the Final Rules contains or consists of data or information not subject to an applicable FOIA exemption, that data or information would be releasable under the FOIA. c. Collection Design i. Scope of Application The Final Rules establish the scope of entities subject to the Final Rules. The Final Rules require reporting by any CCP whose average daily total open commitments in repos across all services over all business days during the prior calendar quarter is at least $50 billion. ‘‘Open commitments’’ is defined as the CCP’s gross cash positions, prior to netting. Further, ‘‘CCP’’ is defined as a clearing agency that interposes itself between the counterparties to transactions, acting functionally as the buyer to every seller and the seller to every buyer. Finally, consistent with the NPRM, ‘‘clearing agency’’ is defined by reference to the Securities Exchange Act of 1934, as amended, which defines this term as ‘‘any person who acts as an intermediary in making payments or deliveries or both in connection with transactions in securities or who provides facilities for comparison of data respecting the terms of settlement of securities transactions, to reduce the number of settlements of securities transactions, or for the allocation of securities settlement responsibilities.’’ 35 The NPRM proposed that a CCP that becomes a covered reporter after the effective date of the Final Rules would be required to begin reporting on the first business day of the third calendar quarter after the calendar quarter in which the CCP meets the $50 billion activity-based materiality threshold. For example, if a CCP were to surpass the threshold beginning with the quarter ending on March 31 of a given year, that CCP would become subject to the reporting requirements of the Final Rules on the first business day of the calendar quarter that begins after two intervening calendar quarters—in this case, October 1. Conversely, the NPRM 34 5 U.S.C. 552(b)(4). U.S.C. 78c(a)(23). 36 SIFMA 35 15 VerDate Sep<11>2014 17:42 Feb 19, 2019 provided that a covered reporter whose volume falls below the $50 billion threshold for at least four consecutive calendar quarters would have its reporting obligations cease. For example, if a covered reporter ceases to meet the $50 billion threshold beginning with the quarter ending June 30 of a given year, and remains below the $50 billion threshold in each of the following three quarters (in this example, through the quarter ending March 31 of the following year), its reporting obligations would cease as of April 1. As stated in the NPRM, the Office established a $50 billion volume threshold for determining whether a CCP is a covered reporter, and therefore required to report, with the objective of collecting data only from CCPs with sufficient transaction volume to be considered material CCPs in the repo market. Specifically noting that the proposed definition of covered reporter sought to include only current or future material repo CCPs within the scope of the Final Rules, the Office requested comment on whether the proposed definition met the objective and whether the $50 billion activity-based volume threshold for identifying covered reporters was clear and appropriate for ensuring the inclusion only of current or future material repo CCPs. One commenter stated that the NPRM’s focus on CCPs meeting the $50 billion threshold was appropriate (while noting that FICC was the only currently expected covered reporter), as such collection would ‘‘gather information from the largest and most systemically important participants in the repo market.’’ 36 Another commenter, however, though not directly addressing the questions posed relating to materiality, suggested that the benefits to be gained from a collection of centrally cleared repo transactions were dependent not on the potential size of a covered reporter but, rather, on the collection of comprehensive data on repos. In support of increased transparency, the commenter suggested that the proposed materiality threshold would create a blind spot, and it encouraged the Office to remove it ‘‘so that all central counterparties that clear repos must submit the required repo data to the Office.’’ 37 The Office has considered the comments received and declines to change the activity-based volume threshold for identifying covered reporters. The $50 billion threshold 37 DTCC Jkt 247001 PO 00000 letter, p. 2. letter, p. 8. Frm 00029 Fmt 4700 Sfmt 4700 4979 serves to ensure that the collection does not apply to CCPs that are not material participants in relevant markets. The minimal additional market transparency that would be provided by collecting centrally cleared repo data from CCPs that do not meet the $50 billion threshold would not justify the burdens such a collection would impose on smaller market participants. As stated in the NPRM, the Office understands that the full scope of transaction information on the centrally cleared repo market, which is required to fulfill the stated purposes of the collection, has not been available to the Council or Council member agencies, including the primary financial regulatory agency for clearing agencies. The Office believes that the lack of comprehensive data on repos has already created material blind spots with regard to the most active shortterm funding market in the U.S. financial system, and that this collection will contribute significantly to eliminating these blind spots. The Final Rules require reporting on a market that comprises approximately one-quarter of all U.S. repo market transactions and, when combined with information collected about other types of repos by regulators, will enable access to transaction data on approximately half of U.S. repo market activity. The collection of data on the centrally cleared segments of the repo market also marks an important step in carrying out the Council’s recommendation to expand and make permanent the collection of data on the U.S. repo market. In executing both of these aims, however, the Office believes it reasonable to focus on those entities considered to be material in the relevant market, and it is mindful that establishing a lower threshold, or none at all, could place an inordinate burden on smaller entities. If the OFR finds in the future that a significant blind spot is created by a firm that remains just below the $50 billion threshold, it can consider expanding the collection of centrally cleared repo data at that time. The same commenter that requested removing the $50 billion activitiesbased materiality threshold also suggested that tri-party custodian banks should be subject to the reporting requirements covered by the NPRM. As noted in the NPRM, certain custodian banks are already required to report certain tri-party repo data to the Federal Reserve Board, through the FRBNY, pursuant to its supervisory authority. The commenter stated that, even though ‘‘it appears clear that the tri-party custodian banks provide the data the E:\FR\FM\20FER1.SGM 20FER1 4980 Federal Register / Vol. 84, No. 34 / Wednesday, February 20, 2019 / Rules and Regulations FRBNY needs to calculate the SOFR on a mandatory basis,’’ 38 incomplete or asymmetrical data sets could arise and affect the Council’s and the Office’s ability to identify and monitor risks to financial stability because it is not clear to what degree the scope and format of the tri-party custodian collection is identical to the collection proposed by the NPRM. Upon consideration of this comment and after consultation with the Federal Reserve, the Office does not seek to include tri-party custodian banks within the definition of covered reporter in the Final Rules. Setting aside any potential impact that inclusion of custodian banks within the Final Rules could present on the already-existing collection pursuant to the Federal Reserve Board’s supervisory authority, which is different than the Office’s authority to collect data, the Office seeks to mitigate the reporting burden placed on financial companies. The Office is familiar with the data made available by the custodian banks, having used it for financial stability research, and believes that the relevant data elements are sufficiently aligned between the supervisory data and the data to be collected under the Final Rules to meet the monitoring and analysis needs of the Office. The same commenter suggested that clarifying the definition of ‘‘financial company’’ and the scope of the Proposed Rules was necessary in order for a covered reporter to report data in a manner that complies with the Office’s authority. Certain provisions of the Dodd-Frank Act authorize the Office to collect data from financial companies.39 The commenter stated that, because the Office did not specifically limit the Proposed Rules’ scope to the collection of data on repo activity of financial companies, it recommended amending the Proposed Rules to describe the process by which the Office would determine and identify to a covered reporter which of its members are deemed to be financial companies, so that a covered reporter could report the data for such entities.40 While repo activity is not necessarily limited to financial companies as defined in the Dodd-Frank Act, the Final Rules require reporting only by CCPs that are clearing agencies and that perform the central clearing function for repo transactions at or above the activities-based volume threshold. Moreover, the preamble of the NPRM noted that the definition of ‘‘financial 38 DTCC letter, p. 8. e.g., 12 U.S.C. 5344(b)(1)(B). 40 DTCC letter, p. 9. 39 See, VerDate Sep<11>2014 17:42 Feb 19, 2019 Jkt 247001 company’’ 41 has the same meaning as in Title II of the Dodd-Frank Act and discussed why the Office believes the one expected covered reporter appears to meet such definition.42 The Office also noted that we would expect future covered reporters to meet the financial company definition because they would be expected to be incorporated or organized under federal or state law and to be companies that are ‘‘predominantly engaged’’ in activities that the Federal Reserve Board has determined are financial in nature or incidental thereto for purposes of section 4(k) of the Bank Holding Company Act of 1956 43 (or a subsidiary thereof).44 The NPRM described the importance of centrally cleared repo data from CCPs for monitoring financial stability risks and the calculating reference rates.45 Accordingly, because the Proposed Rules’ reporting requirements were directed at CCPs within the Office’s data-collection authority and provided reasons for the importance of gathering transaction information from such entities, the Office declines to amend the Proposed Rules in the manner requested. ii. Information Required A. Legal Entity Identifier Unchanged from the Proposed Rules, the Final Rules require a covered reporter to submit the Legal Entity Identifier (the ‘‘LEI’’) of each covered reporter, direct clearing member, counterparty, and broker involved in a repo transaction. The NPRM noted the submission of LEIs would enhance the ability of the Council, Council member agencies, and the Office to identify potential risks to U.S. financial stability by facilitating an understanding of repo market participants’ exposures, concentrations, and network structures. Precise identification of transaction counterparties is also important for rate calculation, as it allows the calculation agent to identify and, as appropriate, exclude transactions that may not be representative of market activity (e.g., certain affiliate transactions). Under the Final Rules, the LEI reported must satisfy the standards implemented by the Global LEI Foundation. The proposed inclusion of the LEI as a mandatory data field for such purposes 41 12 U.S.C. 5341(2). 83 FR 31896 at 31903–04. 43 12 U.S.C. 1843(k). 44 A ‘‘financial company’’ also includes a bank holding company or a nonbank financial company supervised by the Federal Reserve Board. 12 U.S.C. 5381(a)(11). 45 See 83 FR 31896, 31901–02. 42 See PO 00000 Frm 00030 Fmt 4700 Sfmt 4700 and according to the defined standards was widely supported and received no negative public comments. However, one commenter (the only currently expected covered reporter) recommended a phased implementation process in order to allow a covered reporter sufficient time to take necessary measures to avoid compromising the integrity of the data covered by the proposed collection. This commenter recommended that the data elements requiring an LEI should be reported within 420 days after the effective date of the Final Rules. It suggested in part that a phase-in process was necessary to allow a covered reporter sufficient time to provide for any required rule filings with the Securities and Exchange Commission (the ‘‘SEC’’) that might be necessary to require market participants to obtain LEIs and then provide them to the covered reporter. The same commenter stated, however, that, while it did not anticipate being able to provide LEI information on the same schedule as the other data elements, it would ‘‘work with the Office to provide sufficiently detailed identifying information (such as the alpha descriptor of the relevant market participants together with additional identifying information) . . . until LEI information is added to the relevant reports.’’ 46 The Office has considered this comment. The Office expects that covered reporters will take all feasible and appropriate steps to require that their platform participants obtain LEIs so that the covered reporters are in compliance with the LEI requirements of the Final Rules. As discussed in section II.c.iii.b below, the Final Rules adopt the commenter’s requested phasein period for data elements requiring an LEI; if a covered reporter is able to effect a rulemaking requiring each direct clearing member, counterparty, and broker associated with a repo transaction to obtain an LEI and provide it to that covered reporter, the covered reporter is required to begin reporting those LEIs within 420 days after the effective date of the Final Rules. In addition, in order to retain the benefits that entity identification provides for enhancing risk monitoring and reference rate creation, the Office has added basic entity identifier information for those fields applicable to each direct clearing member, counterparty, and broker involved in a repo transaction. The fields added will require reporting of each such entity’s legal name and the internal identifier assigned to it by the covered reporter, which the Office 46 DTCC E:\FR\FM\20FER1.SGM letter, pp. 6–7. 20FER1 Federal Register / Vol. 84, No. 34 / Wednesday, February 20, 2019 / Rules and Regulations understands to be readily available to the only currently expected covered reporter. To support an orderly transition for monitoring and rate calculation, these additional fields will be required to be reported either: (1) Until 365 days after the deadline for the covered reporter to begin reporting LEIs, if the covered reporter is able to effect a rulemaking requiring market participants to obtain LEIs and provide them to the covered reporter; or, (2) indefinitely, if a covered reporter is unable to effect such a rulemaking. The NPRM requested comment on the manner by which the LEI should be included in the specific data fields for which it was required. Stating that it had no preference between the two options presented, the Office asked whether it would be preferable to include LEIs in messages regarding transactions, or to add LEIs of reporting entities and counterparties after the transactions take place but prior to submission of data to the Office.47 Two comments were received on this issue, and both supported the position that LEIs should be added after the transactions take place, prior to submission of data to the Office. One commenter stated its belief that this option was preferable because it would require fewer parties to update their systems and that the centralization of the LEI reporting function would be not only more efficient but less complicated to implement by requiring fewer technology build-outs across the industry.48 The other commenter recommended that the Office leave the methodology and timing of the collection and addition of LEIs to the discretion of the covered reporter because it believed such an approach would provide the necessary flexibility to the industry in both meeting the short-term challenges of implementing the changes to existing reporting and messaging systems, as well as allowing for evolution of services between covered reporters and their clients.49 Because both comments favored allowing covered reporters to add LEIs of reporting entities and counterparties after the transactions take place but prior to submission of data to the Office, the Final Rules give covered reporters discretion and do not specify the manner by which the covered reporter will receive these LEIs. One commenter recommended that the Final Rules include an explicit requirement that relevant market participants obtain and maintain LEIs in 83 FR 31896, 31906. letter, p. 4. 49 DTCC letter, p. 6. order to ensure that the requested data could be properly reported, pointing out that a covered reporter could not report LEI data for a market participant if such market participant has not obtained an LEI and supplied it to the covered reporter. Alternatively, the commenter maintained, the Final Rules should clarify that an LEI would only need be reported if and when available.50 In another section of its letter, however, the same commenter recognized that a covered reporter could require its own members or market participants to provide LEIs through a rule filing with the SEC and noted the need to allow for evolution in services between covered reporters and their clients.51 The Office believes that imposing the LEI requirement on covered reporters, rather than directly on a broader group of market participants, is a targeted approach that will better avoid undue burdens on market participants and ensure compliance with the scope of OFR’s statutory data-collection authority. As noted above, the Final Rules require reporting only from CCPs that meet the definition of ‘‘financial company.’’ They are not directed at nonfinancial companies or CCPs executing transactions below the $50 billion activity-based materiality threshold. The NPRM discussed the importance of identifying the entities involved in repo transactions subject to the Final Rules to monitoring financial stability risks and calculating reference rates. For example, with respect to analysis of potential risks to U.S. financial stability, mandatory LEI reporting will benefit firms and regulators by improving the ability to combine repo information with other information, such as derivatives and other qualified financial contracts, to monitor financial firms and markets. For creation of reference rates, the LEIs of the various entities required under the Final Rules will facilitate evaluation of repo transactions and whether a repo transaction was conducted on an arm’s-length basis or between affiliates. The NPRM also stated the Office’s belief that, while requiring the LEI may result in some additional compliance costs, doing so is reasonable and appropriate due to the added clarity and substantial benefit it provides for risk monitoring and rate production. Another commenter noted its belief that the relative sophistication of repo market participants, along with the requirements imposed by U.S. and foreign regulators (such as the recent 47 See 48 SIFMA VerDate Sep<11>2014 17:42 Feb 19, 2019 50 DTCC 51 DTCC Jkt 247001 PO 00000 letter, pp. 5–6. letter, p. 7. Frm 00031 Fmt 4700 Sfmt 4700 4981 Markets in Financial Instruments Directive 2 transaction reporting requirements), make it unlikely that obtaining and maintaining an LEI would be a burden for such participants. It agreed with the views expressed by the Office in the NPRM that the marginal burden of the obligation for some repo market participants to obtain and maintain an LEI is outweighed by the benefit associated with the collection under the Final Rules.52 Moreover, as noted above, the Office is adopting the only currently expected covered reporter’s requested LEI implementation timeline of 420 days 53 after the effective date of the Final Rules and believes that this timeframe will be sufficient to adopt any member rule changes necessary to effectuate the Final Rules. The Office has considered the commenter’s recommendation to directly require the relevant market participants to obtain and maintain LEIs and, for the reasons stated above, believes the better approach is to place requirements on covered reporters that meet the definition of ‘‘financial companies.’’ B. Price of Collateral/Security One commenter recommended providing greater clarity with respect to the meanings of, and differences between, the terms ‘‘Substitution Collateral Identifier’’ and ‘‘Substitution Collateral Identifier Type.’’ 54 Upon consideration of this comment, the OFR has modified the Final Rules to make clear that ‘‘Substitution Collateral Identifier’’ refers to the actual value of the identifier, which refers to a specific financial instrument. The field ‘‘Substitution Collateral Identifier Type’’ refers to the numbering system to which the identifier belongs, such as CUSIP. iii. Submission Process and Implementation A. Submission Process Consistent with its intent noted in the NPRM, the Office will require submission through a collection agent, as it believes this approach will decrease the costs of compliance for covered reporters and allow data reporting to commence sooner than would otherwise be possible. As also specifically contemplated in the NPRM, the Federal Reserve Board will act as the Office’s collection agent, with required data to be submitted directly by covered 52 SIFMA letter, p. 3. letter, p. 7. We note that this commenter also suggested that delays may occur. We believe such delays to be speculative, rather than concrete time constraints. 54 DTCC letter, p. 9. 53 DTCC E:\FR\FM\20FER1.SGM 20FER1 4982 Federal Register / Vol. 84, No. 34 / Wednesday, February 20, 2019 / Rules and Regulations reporters to the FRBNY. The FRBNY will transmit collected data to the Office. As noted in Section II.b. above, the Council has authorized the OFR to share with the FRBNY the data the OFR will collect under the Final Rules. As a result, the FRBNY will have access to the reported data, in part, to produce the SOFR and BGCR. To produce these reference rate calculations, data on repo transactions must be submitted by covered reporters to the FRBNY no later than 6:00 a.m. Eastern time on the business day following the transaction. The submission process will allow for the secure, automated transmission of files. As contemplated in the NPRM, the Office is publishing concurrently with the Final Rules specific reporting instructions and technical guidance on the Office’s website at https:// www.financialresearch.gov/data/ cleared-repo-data regarding matters such as data submission mechanics and formatting. As necessary, we will update these documents and publish any updates in the same location. One commenter, a standards advisory group, recommended that its own standard, ISO 20022, could be of use in collecting data pursuant to the Final Rules.55 Suggesting that ISO 20022 has comprehensive coverage of information related to repo processing, including definitions and messaging for both financings and the movement of collateral and cash, it also invited a dialogue with respect to ISO standards within its field of competence. The Office has considered the comment received and studied the use of ISO 20022. The ISO 20022 standard is for transaction messaging, while the reporting required under the Final Rules is based not on transaction flow, but rather on a single readout of all transactions within a particular period. As a result, the Office has determined not to directly reference the ISO 20022 standard for use in collecting data pursuant to the Final Rules. B. Implementation The NPRM proposed that the Final Rules would go into effect 60 days after their publication in the Federal Register and that covered reporters would begin to comply with the Final Rules 60 days after their effective date. The Office believed that this implementation period would provide adequate time for covered reporters to comply with the proposed requirements. However, the Office requested comment on whether the proposed 60-day compliance period for a CCP that is a covered reporter on 55 ISO/TC 68 letter, p. 2. VerDate Sep<11>2014 17:42 Feb 19, 2019 the effective date of the rule provided sufficient time to comply with the datareporting requirements and whether increasing the period between the effective date of a final rule and the subsequent compliance date would substantially reduce burdens for covered reporters or repo market participants, or improve the quality of the data reported. It also specifically asked whether there were any aspects of the proposed collection for which a phased-in reporting requirement would be particularly useful.56 In response to these requests, the one currently expected covered reporter recommended that the proposed implementation timeframe be reconsidered. Specifically, it suggested, operational complexities related to the scale of the data-field builds required, along with necessary testing, militated in favor of a longer implementation timeframe. The commenter also stated that while it did not believe all of the information requested in the NPRM could be collected in the timeframe proposed, certain elements could be provided sooner than others. As a result, the commenter recommended a phased implementation process, with all specified data elements, other than those requiring an LEI, to be reported within 240 days of the Final Rules’ effective date. Data elements requiring LEI data would then be reported within 180 days after the compliance date for the other data elements. Such a phase-in process was necessary, it suggested, to allow a covered reporter sufficient time to take necessary measures to avoid compromising the integrity of the data to be collected. The implementation schedule suggested by the commenter was as follows: Phase 1: FICC would transmit all of the data needed to calculate the SOFR and the BGCR in the same format that it currently supplies to the FRBNY 60 days after the effective date of a final rule. Phase 2: FICC would begin reporting DVP Service repo transaction data (excluding the LEI) within 120 days after the Phase 1 compliance date (180 days after the effective date of a final rule). Phase 3: FICC would begin reporting transaction data from the GCF Repo Service (excluding the LEI) within 60 days after the Phase 2 compliance date (240 days after the effective date of a final rule). Phase 4: FICC would begin reporting LEI data associated with the DVP Service and GCF Repo Service transactions within 180 days after the phase 3 compliance date (420 days after the effective date of a final rule). The Office has considered the comments received on this issue and 56 83 Jkt 247001 PO 00000 FR 31896, 31907. Frm 00032 Fmt 4700 Sfmt 4700 has decided to adopt in the Final Rules a phased implementation schedule similar to that recommended by the only currently expected covered reporter. Specifically, the Office is adopting a three-phase implementation schedule for a CCP that is a covered reporter on the effective date of the Final Rules that corresponds to the latter three stages proposed by the commenter. Because the data elements currently needed to calculate the SOFR are a subset of those included in the proposed delivery-versus-payment and general collateral collections, and the FRBNY currently obtains that data through its voluntary agreement with DTCC, the Office does not believe that adopting a three-phase implementation schedule will create a gap in access to the data needed to calculate the SOFR. As a result, the office is adopting a three-phase implementation schedule as follows: Phase 1. With respect to all data elements listed in 12 CFR 1610.10(c)(5), other than those data elements requiring an LEI of an entity other than the covered reporter, a covered reporter shall begin reporting within 180 days after the Final Rules’ effective date. Phase 2. With respect to all data elements listed in 12 CFR 1610.10(c)(3) and (4), other than those data elements requiring an LEI of an entity other than the covered reporter, a covered reporter shall begin reporting within 240 days after the Final Rules’ effective date. Phase 3. With respect to all data elements listed in 12 CFR 1610.10(c)(3), (4), and (5) that require reporting an LEI of an entity other than the covered reporter, a covered reporter is required to begin reporting these elements within 420 days after the Final Rules’ effective date, if the covered reporter is able to effect any rulemaking through the SEC that is necessary to require market participants to obtain LEIs and provide them to the covered reporter. If a covered reporter is unable to effect such a rulemaking through the SEC, the covered reporter would not be required to report an LEI for any market participant that does not have an LEI, but would be required to continue to report market participants’ legal names or internal identifiers. In order to provide a similar phased implementation schedule for any CCPs that become covered reporters after the effective date of the Final Rules, the Final Rules require such entities to comply with the reporting requirements beginning on the later of (i) the schedule applicable to CCPs that are covered reporters on the Final Rules’ effective date or (ii) the first business day of the third calendar quarter following the calendar quarter in which such CCP meets the $50 billion activity-based materiality threshold. The reporting obligations under the Final Rules would cease for any covered reporter that ceases to meet the $50 E:\FR\FM\20FER1.SGM 20FER1 Federal Register / Vol. 84, No. 34 / Wednesday, February 20, 2019 / Rules and Regulations billion activity-based materiality threshold for at least four consecutive calendar quarters. III. Administrative Law Matters a. Paperwork Reduction Act The information collections contained in the Final Rules have been reviewed and approved by the Office of Management and Budget (‘‘OMB’’) under OMB Control No. 1505–0259. In accordance with the requirements of the Paperwork Reduction Act (the ‘‘PRA’’), the Office may not conduct or sponsor, and a covered reporter is not required to respond to, an information collection unless it displays a currently valid OMB control number. Commenters on the Proposed Rules generally acknowledged the need for the Office to collect certain information on repo transactions in support of the work of the Council, its member agencies, and the Office for identifying and monitoring risks to financial stability, and to support the calculation of certain reference rates. Commenters also requested various modifications to or relief from aspects of the Proposed Rules that they stated would entail burdens that outweighed the benefits to the Office. This included a recommendation from the only currently expected covered reporter for a phased implementation process, over a longer period of time than the Office had proposed. However, none of the commenters provided comments, empirical data, estimates of costs or benefits, or other analyses directly addressing matters pertaining to the PRA discussion. The Office’s ability to collect centrally cleared repo data in this collection derives in part from the authority to promulgate regulations regarding the type and scope of financial transaction and position data from financial companies on a schedule determined by the Director of the Office in consultation with the Council.57 The Office consulted with the Council on the proposed permanent collection of repo data at the Council’s September 22, 2016, meeting.58 The Office also provided a public update to the Council on November 16, 2017.59 The Office 57 12 U.S.C. 5344(b)(1)(B)(iii). Financial Stability Oversight Council, meeting minutes (September 22, 2016), https:// www.treasury.gov/initiatives/fsoc/council-meetings/ Documents/September222016_minutes.pdf. 59 See Financial Stability Oversight Council, meeting minutes (November 16, 2017), https:// www.treasury.gov/initiatives/fsoc/council-meetings/ Documents/November162017_minutes.pdf, and Office, OFR Update on Bilateral Repo Collection (November 22, 2017), https:// www.financialresearch.gov/from-the-management58 See VerDate Sep<11>2014 17:42 Feb 19, 2019 Jkt 247001 provided a further update to the Council on October 16, 2018, and the Council voted to authorize the Office to share with the FRBNY the data the Office will collect under the Final Rules.60 The Office also has authority to promulgate regulations pursuant to the Office’s general rulemaking authority under Dodd-Frank Act section 153, which authorizes the Office to issue rules, regulations, and orders to the extent necessary to carry out certain purposes and duties of the Office.61 In particular, the purposes and duties of the Office include supporting the Council in fulfilling its purposes and duties, and supporting Council member agencies, by collecting data on behalf of the Council and providing such data to the Council and Council member agencies, and standardizing the types and formats of data reported and collected.62 The Office must consult with the Chairperson of the Council prior to the promulgation of any rules under section 153 63—these consultations occurred both before and after the publication of the NPRM. As noted above, commenters generally did not provide comments, empirical data, or other analyses directly addressing the Office’s estimates in the PRA discussion. As discussed in detail in section II above, the Final Rules incorporate changes from the Proposed Rules to provide for a phased implementation process, over a longer period of time than the Office had proposed. However, this change does not impact the scope of financial companies subject to the requirements of the Final Rules, nor the estimated annual burden on a covered reporter once the Final Rules are fully implemented. As a result, the Office’s estimate of an annual burden of 1,512 hours per covered reporter remains unchanged. This figure is arrived at by estimating the daily reporting time to be approximately 3 hours for each general team/2017/11/22/ofr-update-on-bilateral-repocollection/. 60 See FSOC, Minutes of the Financial Stability Council dated October 16, 2018, https:// www.treasury.gov/initiatives/fsoc/council-meetings/ Documents/October162018_minutes.pdf. 61 12 U.S.C. 5343(a), (c)(1). 62 12 U.S.C. 5343(a). The Council’s purposes and duties include identifying risks to U.S. financial stability; responding to emerging threats to the stability of the U.S. financial system; monitoring the financial services marketplace in order to identify potential threats to U.S. financial stability; making recommendations in such areas that will enhance the integrity, efficiency, competitiveness, and stability of the U.S. financial markets; and identifying gaps in regulation that could pose risks to the financial stability of the United States. 12 U.S.C. 5322(a). 63 12 U.S.C. 5343(c)(1). PO 00000 Frm 00033 Fmt 4700 Sfmt 4700 4983 collateral and specific-security submission, multiplied by 2 to reflect both types of submissions by the covered reporter, and multiplying that figure by an average of 252 business days in a year, the typical number of days per year that do not fall either on weekends or on holidays widely observed by the market. To estimate hourly wages, the Office used data from the May 2016 Bureau of Labor Statistics Occupational Employment Statistics for credit intermediation and related activities (NAICS 522000). For hourly compensation, a figure of $75 per hour was used, which is an average of the 90th percentile wages in seven different categories of employment (compliance officers, accountants and auditors, lawyers, management occupations, financial analysts, software developers, and statisticians), plus an additional 32 percent to cover subsequent wage gains and non-wage benefits, which yields an estimate of $99 per hour.64 Using these assumptions, the Office estimates the recurring operational costs for general collateral and specific-security submissions to be $74,844 annually, for a total estimated annual cost to the covered reporter of $149,688. b. Regulatory Flexibility Act Congress enacted the Regulatory Flexibility Act (the ‘‘RFA’’) to address concerns related to the effects of agency rules on small entities.65 The Office is sensitive to the impact its rules may impose on small entities. The RFA requires agencies either to provide an initial regulatory flexibility analysis with a proposed rule for which general notice of proposed rulemaking is required, or to certify that the proposed rule will not have a significant economic impact on a substantial number of small entities.66 In accordance with section 3(a) of the RFA, the Office is certifying that the Final Rules will not have a significant economic impact on a substantial number of small entities. As discussed above, this rule will only apply to CCPs for repos whose average daily total open commitments in repos across all services over the prior calendar quarter is at least $50 billion. Currently, under this scope, this rule will apply only to one entity, 64 The estimate includes an assumed additional 2 percent for subsequent wage gains from 2016 to 2017, and 30 percent for non-wage employee benefits, according to the Bureau of Labor Statistics’ June 2017 Employer Costs for Employee Compensation, https://www.bls.gov/news.release/ archives/ecec_09082017.htm. 65 5 U.S.C. 601 et seq. 66 5 U.S.C. 603(a). E:\FR\FM\20FER1.SGM 20FER1 4984 Federal Register / Vol. 84, No. 34 / Wednesday, February 20, 2019 / Rules and Regulations whose corporate parent’s total consolidated assets were $39 billion as of March 31, 2018.67 Reporting will be required of additional CCPs beginning on the later of (i) the schedule outlined in 12 CFR 1610.10(e)(1)(A), (B), and (C) or (ii) the first business day of the third calendar quarter after the calendar quarter in which such CCPs meet the $50 billion activity-based materiality threshold. If a covered reporter ceases to meet this threshold for at least four consecutive calendar quarters, its reporting obligations under this rule would cease. Under regulations issued by the Small Business Administration, a ‘‘small entity’’ includes those firms within the ‘‘Finance and Insurance’’ sector with asset sizes that vary from $7.5 million in assets to $550 million or less in assets.68 For purposes of the RFA, entities that are banks are considered small entities if their assets are less than or equal to $550 million. The level of the activity-based threshold under the Final Rules ensures that any respondent will be well beyond these small entity definitions. Pursuant to the Regulatory Flexibility Act, 5 U.S.C. 605(b), it is hereby certified that this final rule will not have a significant economic impact on a substantial number of small entities. c. Congressional Review Act (CRA) This rule is not a major rule pursuant to the CRA, 5 U.S.C. 801 et seq. List of Subjects in 12 CFR Part 1610 Confidential business information, Economic statistics, Reference rates, Repurchase agreements, Clearing, Central counterparty, Data collection. ■ For the reasons stated in the preamble, the Office of Financial Research adds part 1610 to 12 CFR chapter 16 to read as follows: Subpart B—Specific Collections 1610.10 Centrally cleared repurchase agreement data. 67 See DTCC, ‘‘DTCC Condensed Consolidated Financial Statements as of March 31, 2018 and December 31, 2017 and for the three months ended March 31, 2018 and 2017,’’ https://www.dtcc.com/∼/ media/Files/Downloads/legal/financials/2018/ DTCC-Condensed-Consolidated-FinancialStatements-Q1-2018.pdf. 68 13 CFR 121.201. Jkt 247001 § 1610.1 General authority. The collections under this part are made pursuant to the authority contained in 12 U.S.C. 5343(a) and (c)(1) and 5344(b). § 1610.2 General definitions. Council means the Financial Stability Oversight Council. Legal Entity Identifier or LEI for an entity means the global legal entity identifier maintained for such entity by a utility accredited by the Global LEI Foundation or by a utility endorsed by the Regulatory Oversight Committee that satisfies the standards implemented by the Global LEI Foundation. As used in this definition: (1) Regulatory Oversight Committee means the Regulatory Oversight Committee (of the Global LEI System), whose charter was set forth by the Finance Ministers and Central Bank Governors of the Group of Twenty and the Financial Stability Board, or any successor thereof; and (2) Global LEI Foundation means the not-for-profit organization organized under Swiss law by the Financial Stability Board in 2014, or any successor thereof. Office means the U.S. Department of the Treasury’s Office of Financial Research. § 1610.3 Treatment of collected information. The Office will treat any financial transaction data or position data submitted to the Data Center under this part in accordance with the relevant provisions of law, including 12 U.S.C. 5343(b) and 5344(b). §§ 1610.4–1610.9 [Reserved] § 1610.10 Centrally cleared repurchase agreement data. Subpart A—Collections Generally Sec. 1610.1 General authority. 1610.2 General definitions. 1610.3 Treatment of collected information. 1610.4–1610.9 [Reserved] 17:42 Feb 19, 2019 Subpart A—Collections Generally Subpart B—Specific Collections PART 1610—REGULATORY DATA COLLECTIONS VerDate Sep<11>2014 Authority: 12 U.S.C. 5343 and 5344. (a) Definitions. Central counterparty means a clearing agency that interposes itself between the counterparties to transactions, acting functionally as the buyer to every seller and the seller to every buyer. Clearing agency has the same meaning as set forth in 15 U.S.C. 78c(a)(23). Covered reporter means any central counterparty for repurchase agreement transactions that meets the criteria set forth in paragraph (b)(2) of this section; provided, however, that any covered reporter shall cease to be a covered reporter only if it does not meet the dollar threshold specified in paragraph PO 00000 Frm 00034 Fmt 4700 Sfmt 4700 (b)(2) for at least four consecutive calendar quarters. General collateral trade means a repurchase agreement transaction in which the trade reported to the central counterparty is for a category of securities as opposed to a specific security. Repurchase agreement transaction or transaction means an agreement of a counterparty to transfer securities to another counterparty in exchange for the receipt of cash, and the simultaneous agreement of the former counterparty to later reacquire the same securities (or any subsequently substituted securities) from that same counterparty in exchange for the payment of cash; or an agreement of a counterparty to acquire securities from another counterparty in exchange for the payment of cash, and the simultaneous agreement of the former party to later transfer back the same securities (or any subsequently substituted securities) to the latter counterparty in exchange for the receipt of cash. Specific-security trade means a repurchase agreement transaction where the trade as reported to the central counterparty is for a mutually agreed upon specific security. (b) Purpose and scope—(1) Purpose. The purpose of this data collection is to require the reporting of certain information to the Office about repurchase agreement transactions cleared through a central counterparty. The information will be used by the Office to support the Council and Council member agencies by facilitating financial stability monitoring including research consistent with support of the Council and its member agencies, and to support the calculation of certain reference rates. (2) Scope of application. Reporting under this Section is required by any central counterparty for repurchase agreement transactions that meets the definition of financial company set forth in 12 U.S.C. 5341(2) and whose average daily total open commitments in repurchase agreement contracts (gross cash positions prior to netting) across all services over all business days during the prior calendar quarter is at least $50 billion. (c) Data required. (1) Covered reporters shall report trade and collateral information on all repurchase agreement transactions cleared through any of its services, subject to paragraph (c)(2) of this section, in accordance with the prescribed reporting format in this section. (2) Covered reporters shall only report trade and collateral information with E:\FR\FM\20FER1.SGM 20FER1 Federal Register / Vol. 84, No. 34 / Wednesday, February 20, 2019 / Rules and Regulations respect to any repurchase agreement transaction for which there is a current or future delivery obligation as of the file observation date, including forwardstarting transactions. 4985 (3) Covered reporters shall submit the following data elements for all general collateral trades: TABLE 1 TO § 1610.10(c)—GENERAL COLLATERAL TRADES Data element Explanation File Observation Date ......................................... The observation date of the file (typically one business day before the day the file is submitted). The Legal Entity Identifier of the covered reporter. Respondent-generated unique transaction identifier. Time that trade is first submitted to clearing service. Time that trade is matched by clearing service. Asset class identifier. Type of securities identifier used (the numbering system to which the identifier belongs). The Legal Entity Identifier of the cash provider. The legal name of the cash provider. The internal identifier assigned by the covered reporter to the cash provider. The Legal Entity Identifier of the direct clearing member through which the cash provider accessed the clearing service. The legal name of the of the direct clearing member through which the cash provider accessed the clearing service. The internal identifier assigned by the covered reporter to the direct clearing member through which the cash provider accessed the clearing service. The Legal Entity Identifier of the securities provider. The legal name of the securities provider. The internal identifier assigned by the covered reporter to the securities provider. The Legal Entity Identifier of the direct clearing member through which the securities provider accessed the clearing service. The legal name of the direct clearing member through which the securities provider accessed the clearing service. The internal identifier assigned by the covered reporter to the direct clearing member through which the securities provider accessed the clearing service. The Legal Entity Identifier of the broker. The legal name of the broker. The internal identifier assigned by the covered reporter to the broker. The start date of the repurchase agreement. The date the repurchase agreement matures. The repurchase agreement rate, expressed as an annual percentage rate on an actual/360day basis. The amount of cash borrowed or lent. The type of optionality, if any, in the repurchase agreement. The earliest possible date on which the transaction could end in accordance with its contractual terms (taking into account optionality). Covered Reporter LEI ......................................... Transaction ID .................................................... Submission Timestamp ...................................... Match Timestamp ............................................... Securities Asset Class Identifier Value .............. Securities Asset Class Identifier Type ................ Cash Provider LEI .............................................. Cash Provider Name .......................................... Cash Provider Internal Identifier ......................... Cash Provider Direct Clearing Member LEI ....... Cash Provider Direct Clearing Member Name ... Cash Provider Direct Clearing Member Internal Identifier. Securities Provider LEI ....................................... Securities Provider Name ................................... Securities Provider Internal Identifier ................. Securities Provider Direct Clearing Member LEI Securities Provider Direct Clearing Member Name. Securities Provider Direct Clearing Member Internal Identifier. Broker LEI ........................................................... Broker Name ....................................................... Broker Internal Identifier ..................................... Start Date ............................................................ End Date ............................................................. Rate .................................................................... Principal .............................................................. Optionality ........................................................... Minimum Maturity ............................................... (4) Covered reporters shall submit the following data elements on the collateral delivered against net general collateral exposures for all general collateral trades: TABLE 2 TO § 1610.10(c)—GENERAL COLLATERAL NET EXPOSURE Data element Explanation File Observation Date .................................................... Covered Reporter LEI .................................................... Direct Clearing Member LEI ........................................... Direct Clearing Member Name ....................................... Direct Clearing Member Internal Identifier ..................... Transaction Side ............................................................ Securities Identifier Value .............................................. Securities Identifier Type ................................................ Securities Quantity ......................................................... Securities Value ............................................................. The observation date of the file (typically one business day before the day the file is submitted). The Legal Entity Identifier of the covered reporter. The Legal Entity Identifier of the direct clearing member of the clearing service. The legal name of the direct clearing member. The internal identifier assigned by the covered reporter to the direct clearing member. Indicates the side of the transaction: Collateral was received by or delivered from the covered reporter. Identifier of securities transferred. Type of securities identifier used (the numbering system to which the identifier belongs). Par value or quantity (as applicable) of securities transferred. The market value as of most recent valuation of securities transferred, including accrued interest. (5) Covered reporters shall submit the following data elements for all specificsecurity trades: VerDate Sep<11>2014 17:42 Feb 19, 2019 Jkt 247001 PO 00000 Frm 00035 Fmt 4700 Sfmt 4700 E:\FR\FM\20FER1.SGM 20FER1 4986 Federal Register / Vol. 84, No. 34 / Wednesday, February 20, 2019 / Rules and Regulations TABLE 3 TO § 1610.10(c)—SPECIFIC-SECURITY TRADES Data element Explanation File Observation Date ......................................... The observation date of the file (typically one business day before the day the file is submitted). The Legal Entity Identifier of the covered reporter. Respondent-generated unique transaction identifier. The Legal Entity Identifier of the cash provider. The legal name of the cash provider. The internal identifier assigned by the covered reporter to the cash provider. The Legal Entity Identifier of the direct clearing member through which the cash provider accessed the clearing service. The legal name of the of the direct clearing member through which the cash provider accessed the clearing service. The internal identifier assigned by the covered reporter to the direct clearing member through which the cash provider accessed the clearing service. The Legal Entity Identifier of the securities provider. The legal name of the securities provider. The internal identifier assigned by the covered reporter to the securities provider. The Legal Entity Identifier of the direct clearing member through which the securities provider accessed the clearing service. The legal name of the direct clearing member through which the securities provider accessed the clearing service. The internal identifier assigned by the covered reporter to the direct clearing member through which the securities provider accessed the clearing service. The Legal Entity Identifier of the broker. The legal name of the broker. The internal identifier assigned by the covered reporter to the broker. Time that trade is first submitted to clearing service. Time that trade is matched by clearing service. The start date of the repurchase agreement. The date when the repurchase agreement matures; the close leg settlement date. The type of optionality, if any. The earliest possible date on which the transaction could end in accordance with its contractual terms (taking into account optionality). Identifier of pledged security. Type of securities identifier used (the numbering system to which the identifier belongs). Par value or quantity (as applicable) of securities transferred. Asset class identifier or no substitution. Type of securities identifier used (the numbering system to which the identifier belongs). The amount of cash transferred by the cash provider on the open leg of the transaction. The amount of cash received by the securities provider on the open leg of the transaction. The rate of interest received by the cash provider, expressed as an annual percentage rate on an actual/360-day basis. The rate of interest paid by the securities provider, expressed as an annual percentage rate on an actual/360-day basis. The amount of cash received by the cash provider on the close leg of the transaction. The amount of cash paid by the securities provider on the close leg of the transaction. Covered Reporter LEI ......................................... Transaction ID .................................................... Cash Provider LEI .............................................. Cash Provider Name .......................................... Cash Provider Internal Identifier ......................... Cash Provider Direct Clearing Member LEI ....... Cash Provider Direct Clearing Member Name ... Cash Provider Direct Clearing Member Internal Identifier. Securities Provider LEI ....................................... Securities Provider Name ................................... Securities Provider Internal Identifier ................. Securities Provider Direct Clearing Member LEI Securities Provider Direct Clearing Member Name. Securities Provider Direct Clearing Member Internal Identifier. Broker LEI ........................................................... Broker Name ....................................................... Broker Internal Identifier ..................................... Submission Timestamp ...................................... Match Timestamp ............................................... Start Date ............................................................ End Date ............................................................. Optionality ........................................................... Minimum Maturity ............................................... Security Identifier Value ...................................... Securities Identifier Type .................................... Securities Quantity .............................................. Substitution Collateral Identifier Value ............... Substitution Collateral Identifier Type ................. Cash Provider Start Leg Amount ....................... Securities Provider Start Leg Amount ................ Cash Provider Rate ............................................ Securities Provider Rate ..................................... Cash Provider Close Leg Settlement Amount ... Securities Provider Close Leg Settlement Amount. (d) Reporting process and collection agent. The Office may designate a collection agent for the data reporting. Covered reporters shall submit the required data for each business day by 6:00 a.m. Eastern time on the following business day. (e) Compliance. (1) Any central counterparty that is a covered reporter as of the effective date of this Section shall comply with the reporting requirements pursuant to this Section in the following manner: (i) Subject to paragraph (e)(1)(iii) of this section, a covered reporter shall begin reporting all data elements required to be submitted pursuant to paragraph (c)(5) of this section within 180 days after April 22, 2019. (ii) Subject to paragraph (e)(1)(iii) of this section, a covered reporter shall VerDate Sep<11>2014 17:42 Feb 19, 2019 Jkt 247001 begin reporting all data elements required to be submitted pursuant to paragraphs (c)(3) and (4) of this section within 240 days after April 22, 2019. (iii) If a covered reporter is able to effect a rulemaking through the Securities and Exchange Commission requiring each direct clearing member, counterparty, and broker associated with a repurchase agreement transaction to obtain an LEI and provide it to the covered reporter, the covered reporter shall begin reporting all data elements requiring an LEI other than its own pursuant to paragraphs (c)(3) through (5) of this section by the later of the effective date of its rulemaking, or 420 days April 22, 2019, and continue to report all data elements requiring a legal name or internal identifier until 365 PO 00000 Frm 00036 Fmt 4700 Sfmt 4700 days after the date the covered reporter begins reporting all data elements requiring an LEI pursuant to this section. If a covered reporter is unable to effect such a rulemaking, the covered reporter is not required to report any data elements requiring an LEI other than its own pursuant to paragraphs (c)(3) through (5) of this section, except, if available, the LEI for any direct clearing member, counterparty, or broker associated with a repurchase agreement transaction that has an LEI, and shall report all data elements requiring a legal name or internal identifier in any report submitted under this section regardless of whether the relevant entity has an LEI. A covered reporter shall report its own LEI in accordance with the schedules set forth E:\FR\FM\20FER1.SGM 20FER1 Federal Register / Vol. 84, No. 34 / Wednesday, February 20, 2019 / Rules and Regulations in paragraphs (e)(1)(i) and (ii) of this section. (2) The first submission by any central counterparty that is a covered reporter as of the effective date of this Section shall be submitted on the first business day after the applicable compliance date under paragraph (e)(1) of this section. DEPARTMENT OF TRANSPORTATION Note 1 to paragraph (e)(2): For example, if this section became effective on March 20, 2019, a central counterparty that meets the dollar threshold specified in paragraph (b)(2) of this section for the calendar quarter ending December 31, 2018, would be required to submit its first report under paragraph (e)(1)(i) of this section on the first business day after September 16, 2019, its first report under paragraph (e)(1)(ii) of this section on November 15, 2019, and its first report with data elements requiring an LEI (other than that of the covered reporter) on May 13, 2020 (if the covered reporter effected the rulemaking described in paragraph (e)(1)(iii) of this section). RIN 2120–AA64 (3) Any central counterparty that becomes a covered reporter after the effective date of this Section shall comply with the reporting requirements pursuant to this Section beginning on the later of the schedule set forth in paragraphs (e)(1)(i) through (iii) of this section or the first business day of the third calendar quarter following the calendar quarter in which such central counterparty meets the dollar threshold specified in paragraph (b)(2) of this section. Note 2 to paragraph (e)(3): For example, if this section became effective on March 20, 2019, a central counterparty that first meets the dollar threshold specified in paragraph (b)(2) of this section for the calendar quarter ending June 30, 2019, would be required to submit its first report under paragraphs (e)(1)(i) and (ii) of this section on January 2, 2020, and its first report with data elements requiring an LEI (other than that of the covered reporter) on May 13, 2020 (if the covered reporter effected the rulemaking described in paragraph (e)(1)(iii) of this section by May 13, 2020). Note 3 to paragraph (e)(3): For example, if this section became effective on March 20, 2019, a central counterparty that first met the dollar threshold specified in paragraph (b)(2) for the calendar quarter ending June 30, 2020, would be required to comply with all of the reporting requirements under this section on January 2, 2021 (and would continue to be required to report all data elements requiring a legal name or internal identifier for at least 365 days after the effective date of the covered reporter’s rulemaking described in paragraph (e)(1)(iii) if such effective date occurred after January 2, 2021). Ryan D. Brady, Executive Secretary, Department of the Treasury. [FR Doc. 2019–02639 Filed 2–19–19; 8:45 am] BILLING CODE 4810–25–P VerDate Sep<11>2014 17:42 Feb 19, 2019 Jkt 247001 Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA–2017–0505; Product Identifier 2017–NE–15–AD; Amendment 39– 19472; AD 2018–21–14] Airworthiness Directives; Zodiac Aerotechnics Oxygen Mask Regulators Federal Aviation Administration (FAA), DOT. ACTION: Final rule. AGENCY: Examining the AD Docket You may examine the AD docket on the internet at https:// www.regulations.gov by searching for and locating Docket No. FAA–2017– 0505; or in person at Docket Operations between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this final rule, the mandatory continuing airworthiness information (MCAI), the regulatory evaluation, any comments received, and Fmt 4700 Sfmt 4700 Erin King, Aerospace Engineer, Boston ACO Branch, FAA, 1200 District Avenue, Burlington, MA 01803; phone 781–238– 7655; fax: 781–238–7199; email: erin.king@faa.gov. FOR FURTHER INFORMATION CONTACT: Discussion We are adopting a new airworthiness directive (AD) for certain Zodiac Aerotechnics (Zodiac) oxygen mask regulators. This AD was prompted by reports that certain silicon harness inflation hoses installed on certain flight crew quick donning mask harnesses have shown an unusually high premature rupture rate. This AD requires inspection and replacement of certain oxygen mask regulator harness inflation hoses. We are issuing this AD to address the unsafe condition on these products. DATES: This AD is effective March 27, 2019. The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of March 27, 2019. ADDRESSES: For service information identified in this final rule, contact Zodiac Aerotechnics, 61 rue Pierre Curie BP 1, 78373 Plaisir, CEDEX, France; phone: +33 1 6486 6964; email: Christophe.besset@ zodiacaerospace.com or Yann.laine@ zodiacaerospace.com. You may view this service information at the FAA, Engine & Propeller Standards Branch, 1200 District Avenue, Burlington, MA 01803. For information on the availability of this material at the FAA, call 781–238–7759. It is also available on the internet at https:// www.regulations.gov by searching for and locating Docket No. FAA–2017– 0505. Frm 00037 other information. The address for Docket Operations (phone: 800–647– 5527) is U.S. Department of Transportation, Docket Operations, M– 30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE, Washington, DC 20590. SUPPLEMENTARY INFORMATION: SUMMARY: PO 00000 4987 We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Zodiac oxygen mask regulators. The NPRM published in the Federal Register on September 25, 2017 (82 FR 44539). The NPRM was prompted by reports that certain silicon harness inflation hoses installed on certain flight crew quick donning mask harnesses have shown an unusually high premature rupture rate. The NPRM proposed to require an inspection and replacement of oxygen mask regulator harness inflation hoses. We are issuing this AD to address the unsafe condition on these products. The European Union Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA AD 2014–0142, Revision 01, dated June 11, 2014 (referred to after this as ‘‘the MCAI’’), to address the unsafe condition on these products. The MCAI states: Recent reported occurrences have shown that for harness hoses P/N 445952, installed on certain flight crew quick donning mask harnesses (also known as ‘comfort’ harness) having P/N MXH21–1, suspected silicon batches may have been used during manufacture, which have shown an unusually high premature rupture rate. The affected P/N MXH21–1 inflatable harness assembly consists of two main parts that can be disassembled; the harness itself and the harness inflation hose, P/N 445952. This condition, if not detected and corrected, could lead, in case of a sudden depressurization event, to a harness rupture, thereby providing inadequate protection against hypoxia of the affected flight crew member, possibly resulting in unconsciousness and consequent reduced control of the aeroplane. You may obtain further information by examining the MCAI in the AD docket on the internet at https:// www.regulations.gov by searching for and locating Docket No. FAA–2017– 0505. E:\FR\FM\20FER1.SGM 20FER1

Agencies

DEPARTMENT OF THE TREASURY
Office of Financial Research

[Federal Register Volume 84, Number 34 (Wednesday, February 20, 2019)]
[Rules and Regulations]
[Pages 4975-4987]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-02639]

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DEPARTMENT OF THE TREASURY

Office of Financial Research

12 CFR Part 1610

RIN 1505-AC58

Ongoing Data Collection of Centrally Cleared Transactions in the
U.S. Repurchase Agreement Market

AGENCY: Office of Financial Research, Treasury.

ACTION: Final rule.

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SUMMARY: The U.S. Department of the Treasury's Office of Financial
Research (the ``Office'' or the ``OFR'') is adopting final rules (the
``Final Rules'') establishing a data collection covering centrally
cleared transactions in the U.S. repurchase agreement (``repo'')
market. This collection requires daily reporting to the Office by
covered central counterparties (``CCPs''). The collected data will be
used to support the work of the Financial Stability Oversight Council
(the ``Council''), its member agencies, and the Office to identify and
monitor risks to financial stability, and to support the calculation of
certain reference rates.

DATES:
Effective date: This rule is effective April 22, 2019.
Compliance dates: See the amendment to 12 CFR 1610.10(e).

FOR FURTHER INFORMATION CONTACT: Matthew Reed, Chief Counsel, OFR,
(202) 927-8164; John Zitko, Senior Counsel, OFR, (202) 927-8372; or
Matthew McCormick, Research Economist, OFR, (202) 927-8215.

SUPPLEMENTARY INFORMATION:

I. Introduction

The OFR is adopting the Final Rules to establish a data collection
for centrally cleared transactions in the U.S. repo market. The Final
Rules will require reporting by certain U.S. CCPs for repo transactions
and will serve two primary purposes: (1) To enhance the ability of the
Council, its member agencies, and the Office to identify and monitor
risks to financial stability; and (2) to support the calculation of
certain reference rates. Under the Dodd-Frank Wall Street Reform and
Consumer Protection Act (the ``Dodd-Frank Act''), the Office is
authorized to issue rules and regulations in order to collect and
standardize data to support the Council in fulfilling its purposes and
duties, such as identifying risks to U.S. financial stability. The
Council recommended a permanent collection of repo data in its 2016
annual report to Congress and, as required by law, the Office consulted
with the Council on the schedule of collection in September 2016.\1\
The Council maintained this recommendation in its 2017 annual report,
and the Office provided a public update to the Council on November 16,
2017.\2\ The Final Rules will require reporting on centrally cleared
repo transactions comprising approximately one-quarter of all U.S. repo
market transactions. Together with data collected regarding
approximately another one-quarter of the market by the Federal Reserve
Bank of New York (the ``FRBNY'') pursuant to the supervisory authority
of the Board of Governors of the Federal Reserve System (the ``Federal
Reserve Board''), the Final Rules mark an important step toward fully
addressing the Council's recommendation. The expanded monitoring of the
repo market made possible by the Final Rules will help fulfill the
Council's purposes and duties because of the repo market's crucial role
in providing short-term funding and performing other functions for U.S.
markets, making it important for financial stability monitoring. The
data will also support the calculation of the Secured Overnight Funding
Rate (``SOFR''), which was selected by the Alternative Reference Rates
Committee as its preferred alternative rate to the U.S. dollar London
Interbank Offered Rate (``LIBOR''), as well as the Broad General
Collateral Rate (``BGCR''), helping fulfill another Council
recommendation on the creation of alternative reference rates.\3\
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\1\ See Minutes of the Financial Stability Oversight Council
(September 22, 2016), https://www.treasury.gov/initiatives/fsoc/council-meetings/Documents/September222016_minutes.pdf and 12 U.S.C.
5344(b)(1)(B)(iii).
\2\ See Financial Stability Oversight Council, meeting minutes
(November 16, 2017), https://www.treasury.gov/initiatives/fsoc/council-meetings/Documents/November162017_minutes.pdf, and Office,
OFR Update on Bilateral Repo Collection (November 22, 2017), https://www.financialresearch.gov/from-the-managementteam/2017/11/22/ofr-update-on-bilateral-repocollection/.
\3\ See Financial Stability Oversight Council, 2014 Annual
Report, p. 10; 2015 Annual Report, p. 17; 2016 Annual Report, pp.
14-15; and 2017 Annual Report, pp. 12-13, https://www.treasury.gov/initiatives/fsoc/studies-reports/Pages/2017-Annual-Report.aspx.

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[[Page 4976]]

The Office published a notice of proposed rulemaking on July 10,
2018 (the ``NPRM'' or the ``Proposed Rules''), and requested that any
comments be submitted by September 10, 2018.\4\ The Office received
relevant comments on the NPRM from a clearing organization, a trade
association, an asset manager, a standards advisory group, and a
nonprofit foundation.\5\ In general, all commenters supported the
proposed data collection, noting such potential benefits as monitoring
risks to financial stability and supporting the calculation of an
alternative reference rate to LIBOR. In addition, commenters identified
certain issues that the Office has addressed in the discussion below
and, in some cases, through regulatory text changes reflected in the
Final Rules. In making these changes, the Office intends to minimize
the burden of the Final Rules while still assuring that the aims of the
collection, as expressed in the NPRM and below, are met.
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\4\ 83 FR 31896 (July 10, 2018).
\5\ In total, the OFR received five substantive comments on the
Proposed Rules, including letters from the Depository Trust &
Clearing Corporation (``DTCC''), the Securities Industry and
Financial Markets Association (``SIFMA''), Citadel L.L.C., The
Standards Advisory Group of the International Organization for
Standardization's (``ISO'') Technical Committee 68 for Financial
Services (``ISO/TC 68''), and the Global Legal Entity Identifier
(``LEI'') Foundation.
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II. Description of Final Rules

The following discussion summarizes the NPRM, the comments
received, and the Office's response to those comments, including
modifications reflected in the Final Rules.

a. Purpose of Rules

As noted in the NPRM, the collection of data pursuant to the Final
Rules has two primary purposes, both of which support the Council, its
member agencies, and the Office in carrying out their responsibilities.
First, the data will be used to identify and monitor financial
stability risks in a significant portion of the U.S. repo market.
Second, the data will be used to support the calculation of reference
rates, including the SOFR. Both of these aims received strong support
in the comment letters. Public commenters endorsed the enhancement of
information on the U.S. repo market that is to be accomplished through
the collection, and they also noted such data would strengthen the
calculation method and resiliency of the collection mechanism for the
SOFR.\6\
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\6\ See, e.g., SIFMA letter, pp. 1-2.
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i. Importance of Centrally Cleared Repurchase Agreement Data for
Monitoring Financial Stability Risks
The collection of data on the centrally cleared segments of the
repo market marks an important step in fulfilling the Council's
recommendation to expand and make permanent the collection of data on
the U.S. repo market. The Council recommended a permanent collection of
repo data in its 2016 annual report to improve transparency and risk
monitoring, which was reiterated in its 2017 annual report.\7\ The
Office believes that the adopted approach of collecting certain cleared
repo data from CCPs, which already obtain most or all of the requested
data during trade processing, will result in lower aggregate costs to
market participants than a collection from individual participants. As
explained below, the Office believes that there is only one reporter
currently covered by the Final Rules' scope: Fixed Income Clearing
Corporation (``FICC''), a subsidiary of DTCC. FICC has indicated that
on average, it matches, nets, settles, and risk-manages centrally
cleared repo transactions valued at more than $1.7 trillion per day.\8\
The collection is expected to result initially in reporting only from
two FICC services: The General Collateral Finance Repo Service (``GCF
Repo Service'') (a service that clears general collateral trades, in
which the trade reported to the CCP is for a category of securities as
opposed to a specific security), including FICC's Centrally Cleared
Institutional Triparty Service; and the Delivery-Versus-Payment Service
(``DVP Service'') (a specific-security repo service). This collection,
together with existing data collections covering the tri-party repo
market, will allow about half of the estimated activity in the U.S.
repo market by volume to be analyzed and monitored.\9\
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\7\ See Financial Stability Oversight Council, 2017 Annual
Report, p. 14, https://www.treasury.gov/initiatives/fsoc/studies-reports/Documents/FSOC_2017_Annual_Report.pdf and 2016 Annual
Report, p. 14, https://www.treasury.gov/initiatives/fsoc/studies-reports/Documents/FSOC%202016%20Annual%20Report.pdf.
\8\ See Depository Trust & Clearing Corporation, DVP Repo
Transactions, undated online content, https://www.dtcclearning.com/products-and-services/fixed-income-clearing/government-securities-division-gsd/dvp-service/dvp-repo-transactions.html.
\9\ See Baklanova, Caglio, Cipriani, and Copeland (January 13,
2016), using a method first outlined in Copeland, et al., ``Lifting
the Veil on the U.S. Bilateral Repo Market,'' Liberty Street
Economics: https://libertystreeteconomics.newyorkfed.org/2014/07/lifting-the-veil-on-the-us-bilateral-repo-market.html.
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The collection of transactional data on centrally cleared repos is
key to the Council's effective identification and monitoring of
emerging threats to the stability of the U.S. financial system. The
repo market has a number of critical functions with associated
vulnerabilities that could give rise to conditions that could impair
its ability to perform such functions.\10\ These functions also create
linkages between different financial markets and institutions, and
therefore potential channels for the propagation of shocks through the
wider financial system. These vulnerabilities have developed in the
past into threats to U.S. financial stability, most notably during the
2007-09 financial crisis.\11\
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\10\ There are four functions that repo transactions can serve
for individual participants: Low-risk cash investment, monetization
of assets, transformation of collateral, and facilitation of
hedging. Repos also benefit financial markets broadly by supporting
secondary market efficiency and liquidity.
\11\ During the financial crisis, the repo market first began to
show stress in the summer of 2007, and runs on repos played a
central role in the failures of Bear Stearns and Lehman Brothers.
These threats can manifest quickly; the run on Bear Stearns took
place over less than a week. See Financial Crisis Inquiry
Commission, ``Conclusions of the Financial Crisis Inquiry
Commission'' (January 2011), pp. 286-290.
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Despite the vulnerabilities, only tri-party repo transactions are
currently subject to a mandatory regulatory data collection. Data gaps
and the absence of mandatory collections are a significant impediment
to the ongoing ability of the market, the Council, Council member
agencies, and the Office to monitor developments in the repo market and
potential emerging threats to financial stability. The lack of
comprehensive data on repos creates material blind spots with regard to
the most active short-term funding market in the U.S. financial system.
This mandatory collection is an important step in eliminating these
blind spots.
From a financial stability perspective, it is important to monitor
transactions in centrally cleared repo for three reasons. First, repos
that are transacted through a CCP on a blind-brokered basis can act as
a critical funding source for repo borrowers that are under stress.
Uncleared repos backed by high-quality collateral can become sensitive
to counterparty risk, potentially resulting in a run on an
institution's funding.\12\ Shifts in activity from specific-
counterparty repos to blind-brokered transactions can therefore
indicate market perceptions that a firm may be under stress.
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\12\ See Adam Copeland, Antoine Martin, and Martin Walker,
``Repo Runs: Evidence from the Tri-Party Repo Market'' (2011),
Federal Reserve Bank of New York Staff Reports.
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Second, while counterparty risk is mitigated by the use of CCPs,
adverse changes in the value of collateral can

[[Page 4977]]

propagate shocks arising elsewhere in the financial system to CCP
members by impacting their ability to borrow using centrally cleared
repo.\13\ Further, collateral held at tri-party custodian banks that is
used in centrally cleared repos within the tri-party system is not
available for delivery outside of the tri-party system, making
information on the collateral used in this venue important for
understanding broader market dynamics.
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\13\ The linkages between asset and funding markets create a
risk of spillovers from one market to another because asset values
help determine both the value of an asset as collateral and also the
availability of funding for leveraged market participants that hold
the asset. Price impacts on collateral arising forced asset sales
due to a lack of confidence in such assets or in a particular
counterparty can have widespread effects beyond the original
transactions, leading to contagion that can culminate in broader
fire sales and potential threats to financial stability. Further,
the use of common underlying assets between different segments of
the repo market therefore creates a channel through which centrally
cleared repo transactions can be affected by activity in other
portions of the repo market.
---------------------------------------------------------------------------

Third, while CCPs offer benefits in terms of settlement and risk
management, they may also propagate shocks to their members in other
ways. If a repo CCP were to fail during a period of market stress, the
repo intermediation capacity of the financial system would be impaired.
Even if this risk were judged to be remote, in a circumstance where, as
here, there is significant market centralization, disruption of such a
critical service could have severe implications. For these reasons, and
as noted by the Council in its 2017 annual report, further monitoring
and analysis of risks related to CCPs is appropriate.\14\
---------------------------------------------------------------------------

\14\ See Financial Stability Oversight Council, 2017 Annual
Report, pp. 123-4, https://www.treasury.gov/initiatives/fsoc/studies-reports/Documents/FSOC_2017_Annual_Report.pdf.
---------------------------------------------------------------------------

ii. Importance of Centrally Cleared Repurchase Agreement Data to
Alternative Reference Rates
This collection is expected to support the calculation of reference
rates including the SOFR, the Alternative Reference Rates Committee's
preferred alternative reference rate to U.S. dollar LIBOR. The SOFR
relies on data on repos backed by Treasury securities in three segments
of the U.S. repo market. The Federal Reserve Board collects data for
the tri-party portion through its supervisory authority over the
clearing banks. While some data on GCF Repo Service and DVP Service
transactions are available to the FRBNY through a voluntary agreement
with an affiliate of FICC, DTCC Solutions LLC (``DTCC Solutions''), an
expanded and ongoing mandatory collection of these data will increase
confidence that the alternative reference rate's inputs will continue
to be available. This is especially true if new CCPs enter the market.
This viability is important because the long-term success of any
alternative reference rate relies on the confidence of market
participants.
Another benefit of this collection is the ability to require
specific data fields from centrally cleared general collateral repo and
centrally cleared specific-security repo services for use in reference
rate calculation. The Office has reviewed these data fields with the
FRBNY and believes the information will help to improve and ensure the
ongoing quality of the SOFR and BGCR. From an early stage, the Office
has contributed to the development of alternative reference rates and
has designed this collection to maximize its compatibility with
reference rate production. Some of the data fields in this collection
are not currently received under the voluntary agreement between the
FRBNY and DTCC Solutions, but will help ensure the continued quality of
the rates. Most notably, the identity of transaction counterparties is
important for rate calculation, as it allows the calculation agent to
identify and, as appropriate, exclude transactions that may not be
representative of market activity (e.g., certain affiliate
transactions). Further, by making available data on repos that are
outside the current scope of the voluntary data collection, this
collection will allow the Federal Reserve and the Office to better
monitor the evolution of markets and ensure that the rates continue to
target their intended underlying interests.
Finally, the collection will help ensure the long-term viability of
the SOFR and BGCR by including within its scope reporting from any
additional CCPs that meet the $50 billion activity-based materiality
threshold in the future, regardless of their supervisor or regulator.
This ensures rate production will include new comparable transactions
in the calculation of the rate as U.S. repo markets evolve. This is of
particular importance given that trading in products tied to the new
rate might eventually subsume most volume that is currently tied to
U.S. dollar LIBOR.

b. Uses of the Data Collection

The collection will be used by the Office to improve the ability of
the Council, Council member agencies, and the Office to monitor the
U.S. repo market and identify and assess potential financial stability
risks. The additional daily transaction data this collection will
facilitate identification of potential repo market vulnerabilities and
will also help identify shifting repo market trends that could be
destabilizing or indicate stresses elsewhere in the financial system.
Such trends might be reflected in indicators of the volume or price of
funding in the repo market at different tenors, differentiated by the
type or credit quality of participants or the quality of underlying
collateral. Further, analyzing the collateral data from this collection
together with other data available to the Office, the Council, and
Council member agencies will enable a clearer understanding of
collateral flows in securities markets and potential financial
stability risks.
As noted in the NPRM and consistent with the Dodd-Frank Act, the
Office expects to share collected data and information with the Council
and its member agencies, and such data and information must be
maintained with at least the same level of security as used by the
Office and may not be shared with any individual or entity without the
permission of the Council.\15\ On October 16, 2018, the Council voted
unanimously to authorize the OFR to share with the FRBNY the data the
OFR will collect under the Final Rules.\16\ Accordingly, the Office
will make available the data from this collection to the FRBNY for
purposes of meeting the above monitoring and alternative reference rate
objectives as well as other market analysis and research. The Office
will also make data collected and maintained under this collection
available to the Council and Council member agencies, as necessary to
support their regulatory responsibilities.\17\
---------------------------------------------------------------------------

\15\ 12 U.S.C. 5343(b).
\16\ See FSOC, Minutes of the Financial Stability Council dated
October 16, 2018, https://www.treasury.gov/initiatives/fsoc/council-meetings/Documents/October162018_minutes.pdf.
\17\ 12 U.S.C. 5344(b)(5).
---------------------------------------------------------------------------

The sharing of any data from this collection will be subject to the
confidentiality and security requirements of applicable laws, including
the Dodd-Frank Act.\18\ Pursuant to the Dodd-Frank Act, the submission
of any non-publicly available data to the Office under this collection
will not constitute a waiver of, or otherwise affect, any privilege
arising under federal or state law to which the data or information is
otherwise subject.\19\
---------------------------------------------------------------------------

\18\ E.g., 12 U.S.C. 5343(b), 5344(b)(3).
\19\ 12 U.S.C. 5322(d)(5).
---------------------------------------------------------------------------

Aggregate or summary data from the collection might be provided to
the public to increase market transparency and facilitate research on
the financial

[[Page 4978]]

system, to the extent that intellectual property rights are not
violated, confidential business information is properly protected, and
the sharing of such information poses no significant threats to the
U.S. financial system.\20\ The potential sharing of aggregate or
summary data collected under the Final Rules would help fulfill a
recommendation of the Council to make appropriately aggregated
securities financing data available to the public.\21\
---------------------------------------------------------------------------

\20\ 12 U.S.C. 5344(b)(6).
\21\ See Financial Stability Oversight Council, Council's 2017
Annual Report, p. 16, https://www.treasury.gov/initiatives/fsoc/studies-reports/Documents/FSOC%202016%20Annual%20Report.pdf.
---------------------------------------------------------------------------

The Office may also use the data to sponsor and conduct additional
research.\22\ This research may include the use of these data to help
fulfill the duties and purposes under the Dodd-Frank Act relating to
the responsibility of the Office's Research and Analysis Center to
develop and maintain independent analytical capabilities to support the
Council and relating to the programmatic functions of the Office's Data
Center.\23\ For example, access to data on centrally cleared repos will
allow the Office to conduct research related to the Council's analysis
of potential risks arising from securities financing activities.
---------------------------------------------------------------------------

\22\ 12 U.S.C. 5343(b)(2).
\23\ 12 U.S.C. 5344(b) discusses the Office's Data Center, and
12 U.S.C. 5344(c) discusses the various uses of data by the Office's
Research and Analysis Center to support the Council.
---------------------------------------------------------------------------

Two commenters requested that the Office provide more clarity
regarding information security. One focused on the standard of care and
the particular measures the Office will take to secure and protect the
data collected in order to provide greater transparency and enable a
constructive dialogue regarding the adequacy of such measures in the
face of future technological developments.\24\ The other stated its
concern in light of the number of agencies and individuals within such
agencies that may have access to the data.\25\
---------------------------------------------------------------------------

\24\ DTCC letter, pp. 2-3.
\25\ SIFMA letter, p. 4.
---------------------------------------------------------------------------

As noted above, the Office will, consistent with the Dodd-Frank
Act, share data and information with the Council and its member
agencies. As required by the Dodd-Frank Act, such data and information
must be maintained with at least the same level of security as used by
the Office and may not be shared with any individual or entity other
than those specified in 12 U.S.C. 5343(b) without the permission of the
Council.\26\ For purposes of preventing unauthorized access to data, or
loss of data, the Office is also subject to the Federal Information
Security Modernization Act of 2014,\27\ which requires that federal
agencies, including the OFR and independent regulatory agencies,
provide information security protections commensurate with the risk and
magnitude of harm resulting from unauthorized access, use, or
disclosure of information collected by or on behalf of an agency.
---------------------------------------------------------------------------

\26\ 12 U.S.C. 5343(b).
\27\ Public Law 113-283.
---------------------------------------------------------------------------

Additionally, U.S. federal employees are subject to government-wide
regulations that prohibit the use of public office for private gain and
impose other restrictions related to the use of nonpublic
information.\28\ Unauthorized disclosure of trade secrets and insider
trading can result in criminal prosecution.\29\ The information
collected pursuant to the Final Rules will be handled in accordance
with the OFR's data access, security, and control policies and
procedures, and the Office will further comply with all applicable
privacy and data protection laws and regulations that are now or that
may in the future become applicable to it.
---------------------------------------------------------------------------

\28\ See 5 CFR 2635.702 (use of public office for private gain),
5 CFR 2635.703 (use of nonpublic information), and 18 U.S.C. 1905
(disclosure of confidential information generally).
\29\ See 18 U.S.C. 1832 (theft of trade secrets) and 15 U.S.C.
78j (manipulative and deceptive devices).
---------------------------------------------------------------------------

One commenter requested that specific data-handling procedures be
delineated, depending on whether the data was to be used for risk
monitoring and supervision, or academic research. This commenter
suggested that certain enhanced protections could include anonymization
or embargo of the data when it is to be used for academic research. It
also recommended that the Office amend the Proposed Rules to set forth
a standard with respect to the publication of any information that
includes or is derived from the data to be collected, including in
aggregate or summary form, that would prevent the disclosure of
proprietary or confidential financial, operational, or trading data. In
connection with such a standard, the commenter also suggested that the
Office clarify a process by which a covered reporter (as defined in the
regulation) would be permitted to review research prior to publication
in order to confirm that the research does not reveal confidential
information.\30\
---------------------------------------------------------------------------

\30\ DTCC letter, pp. 3-4.
---------------------------------------------------------------------------

Upon consideration, the Office declines to delineate between
different data handling procedures in this manner. In light of the fact
that the same personnel who take part in risk monitoring and
supervision often additionally engage in academic research, with cross-
functional benefits to each, the Office considers a demarcation between
the two to be unworkable. Moreover, as noted above, 12 U.S.C.
5344(b)(6) provides that the Office shall, after consultation with
Council member agencies, provide certain data to financial industry
participants and the general public to increase market transparency and
facilitate research on the financial system, to the extent that
intellectual property rights are not violated, confidential business
information is properly protected, and the sharing of such information
poses no significant threats to the financial system of the United
States.
Furthermore, the Office employs a number of targeted mechanisms to
protect confidential business information. With respect to the data to
be collected pursuant to the Final Rules, such mechanisms may include,
at the discretion of the Office, providing data in an anonymized
format; providing data on an embargoed basis; performing statistical
analysis to verify that confidential business information cannot be
reverse-engineered; and allowing covered reporters to review research
prior to publication for purposes of confirming that such research does
not reveal the confidential information of their members.
The same commenter recommended that the Office consider clarifying
in the regulatory text how a Freedom of Information Act (``FOIA'') \31\
request for confidential business information collected pursuant to a
final rule would be treated, including the process for requesting
confidential treatment of data submitted on a continuous basis via an
automated process and by expressly identifying the exemptions that
would be applicable to such data.\32\
---------------------------------------------------------------------------

\31\ 5 U.S.C. 552.
\32\ DTCC letter, p. 3.
---------------------------------------------------------------------------

In general, the FOIA provides for access to records maintained by a
Federal agency. The provisions of the FOIA are intended to assure the
right of the public to information, subject to the exemptions and
exclusions set forth in the FOIA. The disclosure requirements of 5
U.S.C. 552(a) do not apply to records that are exempt under 5 U.S.C.
552(b), or to records that are excluded under 5 U.S.C. 552(c).
As an office within the Department of the Treasury, the Office
considers the data to be collected pursuant to the Final Rules as
records maintained by the Department of the Treasury pursuant to its
FOIA regulations.\33\

[[Page 4979]]

Upon receipt of a request for Treasury records, those records must be
disclosed unless they are exempt or excluded under the FOIA. The Office
expects that data collected under the Final Rules will likely contain
or consist of ``trade secrets and commercial or financial information
obtained from a person and privileged or confidential.'' This type of
information is subject to withholding under exemption 4 of the
FOIA.\34\ To the extent that data collected under the Final Rules
contains or consists of data or information not subject to an
applicable FOIA exemption, that data or information would be releasable
under the FOIA.
---------------------------------------------------------------------------

\33\ See 31 CFR part 1, subpart A.
\34\ 5 U.S.C. 552(b)(4).
---------------------------------------------------------------------------

c. Collection Design

i. Scope of Application
The Final Rules establish the scope of entities subject to the
Final Rules. The Final Rules require reporting by any CCP whose average
daily total open commitments in repos across all services over all
business days during the prior calendar quarter is at least $50
billion. ``Open commitments'' is defined as the CCP's gross cash
positions, prior to netting. Further, ``CCP'' is defined as a clearing
agency that interposes itself between the counterparties to
transactions, acting functionally as the buyer to every seller and the
seller to every buyer. Finally, consistent with the NPRM, ``clearing
agency'' is defined by reference to the Securities Exchange Act of
1934, as amended, which defines this term as ``any person who acts as
an intermediary in making payments or deliveries or both in connection
with transactions in securities or who provides facilities for
comparison of data respecting the terms of settlement of securities
transactions, to reduce the number of settlements of securities
transactions, or for the allocation of securities settlement
responsibilities.'' \35\
---------------------------------------------------------------------------

\35\ 15 U.S.C. 78c(a)(23).
---------------------------------------------------------------------------

The NPRM proposed that a CCP that becomes a covered reporter after
the effective date of the Final Rules would be required to begin
reporting on the first business day of the third calendar quarter after
the calendar quarter in which the CCP meets the $50 billion activity-
based materiality threshold. For example, if a CCP were to surpass the
threshold beginning with the quarter ending on March 31 of a given
year, that CCP would become subject to the reporting requirements of
the Final Rules on the first business day of the calendar quarter that
begins after two intervening calendar quarters--in this case, October
1. Conversely, the NPRM provided that a covered reporter whose volume
falls below the $50 billion threshold for at least four consecutive
calendar quarters would have its reporting obligations cease. For
example, if a covered reporter ceases to meet the $50 billion threshold
beginning with the quarter ending June 30 of a given year, and remains
below the $50 billion threshold in each of the following three quarters
(in this example, through the quarter ending March 31 of the following
year), its reporting obligations would cease as of April 1.
As stated in the NPRM, the Office established a $50 billion volume
threshold for determining whether a CCP is a covered reporter, and
therefore required to report, with the objective of collecting data
only from CCPs with sufficient transaction volume to be considered
material CCPs in the repo market. Specifically noting that the proposed
definition of covered reporter sought to include only current or future
material repo CCPs within the scope of the Final Rules, the Office
requested comment on whether the proposed definition met the objective
and whether the $50 billion activity-based volume threshold for
identifying covered reporters was clear and appropriate for ensuring
the inclusion only of current or future material repo CCPs.
One commenter stated that the NPRM's focus on CCPs meeting the $50
billion threshold was appropriate (while noting that FICC was the only
currently expected covered reporter), as such collection would ``gather
information from the largest and most systemically important
participants in the repo market.'' \36\ Another commenter, however,
though not directly addressing the questions posed relating to
materiality, suggested that the benefits to be gained from a collection
of centrally cleared repo transactions were dependent not on the
potential size of a covered reporter but, rather, on the collection of
comprehensive data on repos. In support of increased transparency, the
commenter suggested that the proposed materiality threshold would
create a blind spot, and it encouraged the Office to remove it ``so
that all central counterparties that clear repos must submit the
required repo data to the Office.'' \37\
---------------------------------------------------------------------------

\36\ SIFMA letter, p. 2.
\37\ DTCC letter, p. 8.
---------------------------------------------------------------------------

The Office has considered the comments received and declines to
change the activity-based volume threshold for identifying covered
reporters. The $50 billion threshold serves to ensure that the
collection does not apply to CCPs that are not material participants in
relevant markets. The minimal additional market transparency that would
be provided by collecting centrally cleared repo data from CCPs that do
not meet the $50 billion threshold would not justify the burdens such a
collection would impose on smaller market participants.
As stated in the NPRM, the Office understands that the full scope
of transaction information on the centrally cleared repo market, which
is required to fulfill the stated purposes of the collection, has not
been available to the Council or Council member agencies, including the
primary financial regulatory agency for clearing agencies. The Office
believes that the lack of comprehensive data on repos has already
created material blind spots with regard to the most active short-term
funding market in the U.S. financial system, and that this collection
will contribute significantly to eliminating these blind spots. The
Final Rules require reporting on a market that comprises approximately
one-quarter of all U.S. repo market transactions and, when combined
with information collected about other types of repos by regulators,
will enable access to transaction data on approximately half of U.S.
repo market activity. The collection of data on the centrally cleared
segments of the repo market also marks an important step in carrying
out the Council's recommendation to expand and make permanent the
collection of data on the U.S. repo market.
In executing both of these aims, however, the Office believes it
reasonable to focus on those entities considered to be material in the
relevant market, and it is mindful that establishing a lower threshold,
or none at all, could place an inordinate burden on smaller entities.
If the OFR finds in the future that a significant blind spot is created
by a firm that remains just below the $50 billion threshold, it can
consider expanding the collection of centrally cleared repo data at
that time.
The same commenter that requested removing the $50 billion
activities-based materiality threshold also suggested that tri-party
custodian banks should be subject to the reporting requirements covered
by the NPRM. As noted in the NPRM, certain custodian banks are already
required to report certain tri-party repo data to the Federal Reserve
Board, through the FRBNY, pursuant to its supervisory authority. The
commenter stated that, even though ``it appears clear that the tri-
party custodian banks provide the data the

[[Page 4980]]

FRBNY needs to calculate the SOFR on a mandatory basis,'' \38\
incomplete or asymmetrical data sets could arise and affect the
Council's and the Office's ability to identify and monitor risks to
financial stability because it is not clear to what degree the scope
and format of the tri-party custodian collection is identical to the
collection proposed by the NPRM.
---------------------------------------------------------------------------

\38\ DTCC letter, p. 8.
---------------------------------------------------------------------------

Upon consideration of this comment and after consultation with the
Federal Reserve, the Office does not seek to include tri-party
custodian banks within the definition of covered reporter in the Final
Rules. Setting aside any potential impact that inclusion of custodian
banks within the Final Rules could present on the already-existing
collection pursuant to the Federal Reserve Board's supervisory
authority, which is different than the Office's authority to collect
data, the Office seeks to mitigate the reporting burden placed on
financial companies. The Office is familiar with the data made
available by the custodian banks, having used it for financial
stability research, and believes that the relevant data elements are
sufficiently aligned between the supervisory data and the data to be
collected under the Final Rules to meet the monitoring and analysis
needs of the Office.
The same commenter suggested that clarifying the definition of
``financial company'' and the scope of the Proposed Rules was necessary
in order for a covered reporter to report data in a manner that
complies with the Office's authority. Certain provisions of the Dodd-
Frank Act authorize the Office to collect data from financial
companies.\39\ The commenter stated that, because the Office did not
specifically limit the Proposed Rules' scope to the collection of data
on repo activity of financial companies, it recommended amending the
Proposed Rules to describe the process by which the Office would
determine and identify to a covered reporter which of its members are
deemed to be financial companies, so that a covered reporter could
report the data for such entities.\40\
---------------------------------------------------------------------------

\39\ See, e.g., 12 U.S.C. 5344(b)(1)(B).
\40\ DTCC letter, p. 9.
---------------------------------------------------------------------------

While repo activity is not necessarily limited to financial
companies as defined in the Dodd-Frank Act, the Final Rules require
reporting only by CCPs that are clearing agencies and that perform the
central clearing function for repo transactions at or above the
activities-based volume threshold. Moreover, the preamble of the NPRM
noted that the definition of ``financial company'' \41\ has the same
meaning as in Title II of the Dodd-Frank Act and discussed why the
Office believes the one expected covered reporter appears to meet such
definition.\42\ The Office also noted that we would expect future
covered reporters to meet the financial company definition because they
would be expected to be incorporated or organized under federal or
state law and to be companies that are ``predominantly engaged'' in
activities that the Federal Reserve Board has determined are financial
in nature or incidental thereto for purposes of section 4(k) of the
Bank Holding Company Act of 1956 \43\ (or a subsidiary thereof).\44\
---------------------------------------------------------------------------

\41\ 12 U.S.C. 5341(2).
\42\ See 83 FR 31896 at 31903-04.
\43\ 12 U.S.C. 1843(k).
\44\ A ``financial company'' also includes a bank holding
company or a nonbank financial company supervised by the Federal
Reserve Board. 12 U.S.C. 5381(a)(11).
---------------------------------------------------------------------------

The NPRM described the importance of centrally cleared repo data
from CCPs for monitoring financial stability risks and the calculating
reference rates.\45\ Accordingly, because the Proposed Rules' reporting
requirements were directed at CCPs within the Office's data-collection
authority and provided reasons for the importance of gathering
transaction information from such entities, the Office declines to
amend the Proposed Rules in the manner requested.
---------------------------------------------------------------------------

\45\ See 83 FR 31896, 31901-02.
---------------------------------------------------------------------------

ii. Information Required
A. Legal Entity Identifier
Unchanged from the Proposed Rules, the Final Rules require a
covered reporter to submit the Legal Entity Identifier (the ``LEI'') of
each covered reporter, direct clearing member, counterparty, and broker
involved in a repo transaction. The NPRM noted the submission of LEIs
would enhance the ability of the Council, Council member agencies, and
the Office to identify potential risks to U.S. financial stability by
facilitating an understanding of repo market participants' exposures,
concentrations, and network structures. Precise identification of
transaction counterparties is also important for rate calculation, as
it allows the calculation agent to identify and, as appropriate,
exclude transactions that may not be representative of market activity
(e.g., certain affiliate transactions). Under the Final Rules, the LEI
reported must satisfy the standards implemented by the Global LEI
Foundation. The proposed inclusion of the LEI as a mandatory data field
for such purposes and according to the defined standards was widely
supported and received no negative public comments.
However, one commenter (the only currently expected covered
reporter) recommended a phased implementation process in order to allow
a covered reporter sufficient time to take necessary measures to avoid
compromising the integrity of the data covered by the proposed
collection. This commenter recommended that the data elements requiring
an LEI should be reported within 420 days after the effective date of
the Final Rules. It suggested in part that a phase-in process was
necessary to allow a covered reporter sufficient time to provide for
any required rule filings with the Securities and Exchange Commission
(the ``SEC'') that might be necessary to require market participants to
obtain LEIs and then provide them to the covered reporter. The same
commenter stated, however, that, while it did not anticipate being able
to provide LEI information on the same schedule as the other data
elements, it would ``work with the Office to provide sufficiently
detailed identifying information (such as the alpha descriptor of the
relevant market participants together with additional identifying
information) . . . until LEI information is added to the relevant
reports.'' \46\
---------------------------------------------------------------------------

\46\ DTCC letter, pp. 6-7.
---------------------------------------------------------------------------

The Office has considered this comment. The Office expects that
covered reporters will take all feasible and appropriate steps to
require that their platform participants obtain LEIs so that the
covered reporters are in compliance with the LEI requirements of the
Final Rules. As discussed in section II.c.iii.b below, the Final Rules
adopt the commenter's requested phase-in period for data elements
requiring an LEI; if a covered reporter is able to effect a rulemaking
requiring each direct clearing member, counterparty, and broker
associated with a repo transaction to obtain an LEI and provide it to
that covered reporter, the covered reporter is required to begin
reporting those LEIs within 420 days after the effective date of the
Final Rules. In addition, in order to retain the benefits that entity
identification provides for enhancing risk monitoring and reference
rate creation, the Office has added basic entity identifier information
for those fields applicable to each direct clearing member,
counterparty, and broker involved in a repo transaction. The fields
added will require reporting of each such entity's legal name and the
internal identifier assigned to it by the covered reporter, which the
Office

[[Page 4981]]

understands to be readily available to the only currently expected
covered reporter. To support an orderly transition for monitoring and
rate calculation, these additional fields will be required to be
reported either: (1) Until 365 days after the deadline for the covered
reporter to begin reporting LEIs, if the covered reporter is able to
effect a rulemaking requiring market participants to obtain LEIs and
provide them to the covered reporter; or, (2) indefinitely, if a
covered reporter is unable to effect such a rulemaking.
The NPRM requested comment on the manner by which the LEI should be
included in the specific data fields for which it was required. Stating
that it had no preference between the two options presented, the Office
asked whether it would be preferable to include LEIs in messages
regarding transactions, or to add LEIs of reporting entities and
counterparties after the transactions take place but prior to
submission of data to the Office.\47\ Two comments were received on
this issue, and both supported the position that LEIs should be added
after the transactions take place, prior to submission of data to the
Office. One commenter stated its belief that this option was preferable
because it would require fewer parties to update their systems and that
the centralization of the LEI reporting function would be not only more
efficient but less complicated to implement by requiring fewer
technology build-outs across the industry.\48\ The other commenter
recommended that the Office leave the methodology and timing of the
collection and addition of LEIs to the discretion of the covered
reporter because it believed such an approach would provide the
necessary flexibility to the industry in both meeting the short-term
challenges of implementing the changes to existing reporting and
messaging systems, as well as allowing for evolution of services
between covered reporters and their clients.\49\ Because both comments
favored allowing covered reporters to add LEIs of reporting entities
and counterparties after the transactions take place but prior to
submission of data to the Office, the Final Rules give covered
reporters discretion and do not specify the manner by which the covered
reporter will receive these LEIs.
---------------------------------------------------------------------------

\47\ See 83 FR 31896, 31906.
\48\ SIFMA letter, p. 4.
\49\ DTCC letter, p. 6.
---------------------------------------------------------------------------

One commenter recommended that the Final Rules include an explicit
requirement that relevant market participants obtain and maintain LEIs
in order to ensure that the requested data could be properly reported,
pointing out that a covered reporter could not report LEI data for a
market participant if such market participant has not obtained an LEI
and supplied it to the covered reporter. Alternatively, the commenter
maintained, the Final Rules should clarify that an LEI would only need
be reported if and when available.\50\ In another section of its
letter, however, the same commenter recognized that a covered reporter
could require its own members or market participants to provide LEIs
through a rule filing with the SEC and noted the need to allow for
evolution in services between covered reporters and their clients.\51\
The Office believes that imposing the LEI requirement on covered
reporters, rather than directly on a broader group of market
participants, is a targeted approach that will better avoid undue
burdens on market participants and ensure compliance with the scope of
OFR's statutory data-collection authority.
---------------------------------------------------------------------------

\50\ DTCC letter, pp. 5-6.
\51\ DTCC letter, p. 7.
---------------------------------------------------------------------------

As noted above, the Final Rules require reporting only from CCPs
that meet the definition of ``financial company.'' They are not
directed at non-financial companies or CCPs executing transactions
below the $50 billion activity-based materiality threshold.
The NPRM discussed the importance of identifying the entities
involved in repo transactions subject to the Final Rules to monitoring
financial stability risks and calculating reference rates. For example,
with respect to analysis of potential risks to U.S. financial
stability, mandatory LEI reporting will benefit firms and regulators by
improving the ability to combine repo information with other
information, such as derivatives and other qualified financial
contracts, to monitor financial firms and markets. For creation of
reference rates, the LEIs of the various entities required under the
Final Rules will facilitate evaluation of repo transactions and whether
a repo transaction was conducted on an arm's-length basis or between
affiliates.
The NPRM also stated the Office's belief that, while requiring the
LEI may result in some additional compliance costs, doing so is
reasonable and appropriate due to the added clarity and substantial
benefit it provides for risk monitoring and rate production. Another
commenter noted its belief that the relative sophistication of repo
market participants, along with the requirements imposed by U.S. and
foreign regulators (such as the recent Markets in Financial Instruments
Directive 2 transaction reporting requirements), make it unlikely that
obtaining and maintaining an LEI would be a burden for such
participants. It agreed with the views expressed by the Office in the
NPRM that the marginal burden of the obligation for some repo market
participants to obtain and maintain an LEI is outweighed by the benefit
associated with the collection under the Final Rules.\52\ Moreover, as
noted above, the Office is adopting the only currently expected covered
reporter's requested LEI implementation timeline of 420 days \53\ after
the effective date of the Final Rules and believes that this timeframe
will be sufficient to adopt any member rule changes necessary to
effectuate the Final Rules.
---------------------------------------------------------------------------

\52\ SIFMA letter, p. 3.
\53\ DTCC letter, p. 7. We note that this commenter also
suggested that delays may occur. We believe such delays to be
speculative, rather than concrete time constraints.
---------------------------------------------------------------------------

The Office has considered the commenter's recommendation to
directly require the relevant market participants to obtain and
maintain LEIs and, for the reasons stated above, believes the better
approach is to place requirements on covered reporters that meet the
definition of ``financial companies.''
B. Price of Collateral/Security
One commenter recommended providing greater clarity with respect to
the meanings of, and differences between, the terms ``Substitution
Collateral Identifier'' and ``Substitution Collateral Identifier
Type.'' \54\ Upon consideration of this comment, the OFR has modified
the Final Rules to make clear that ``Substitution Collateral
Identifier'' refers to the actual value of the identifier, which refers
to a specific financial instrument. The field ``Substitution Collateral
Identifier Type'' refers to the numbering system to which the
identifier belongs, such as CUSIP.
---------------------------------------------------------------------------

\54\ DTCC letter, p. 9.
---------------------------------------------------------------------------

iii. Submission Process and Implementation
A. Submission Process
Consistent with its intent noted in the NPRM, the Office will
require submission through a collection agent, as it believes this
approach will decrease the costs of compliance for covered reporters
and allow data reporting to commence sooner than would otherwise be
possible. As also specifically contemplated in the NPRM, the Federal
Reserve Board will act as the Office's collection agent, with required
data to be submitted directly by covered

[[Page 4982]]

reporters to the FRBNY. The FRBNY will transmit collected data to the
Office.
As noted in Section II.b. above, the Council has authorized the OFR
to share with the FRBNY the data the OFR will collect under the Final
Rules. As a result, the FRBNY will have access to the reported data, in
part, to produce the SOFR and BGCR. To produce these reference rate
calculations, data on repo transactions must be submitted by covered
reporters to the FRBNY no later than 6:00 a.m. Eastern time on the
business day following the transaction. The submission process will
allow for the secure, automated transmission of files. As contemplated
in the NPRM, the Office is publishing concurrently with the Final Rules
specific reporting instructions and technical guidance on the Office's
website at https://www.financialresearch.gov/data/cleared-repo-data
regarding matters such as data submission mechanics and formatting. As
necessary, we will update these documents and publish any updates in
the same location.
One commenter, a standards advisory group, recommended that its own
standard, ISO 20022, could be of use in collecting data pursuant to the
Final Rules.\55\ Suggesting that ISO 20022 has comprehensive coverage
of information related to repo processing, including definitions and
messaging for both financings and the movement of collateral and cash,
it also invited a dialogue with respect to ISO standards within its
field of competence.
---------------------------------------------------------------------------

\55\ ISO/TC 68 letter, p. 2.
---------------------------------------------------------------------------

The Office has considered the comment received and studied the use
of ISO 20022. The ISO 20022 standard is for transaction messaging,
while the reporting required under the Final Rules is based not on
transaction flow, but rather on a single readout of all transactions
within a particular period. As a result, the Office has determined not
to directly reference the ISO 20022 standard for use in collecting data
pursuant to the Final Rules.
B. Implementation
The NPRM proposed that the Final Rules would go into effect 60 days
after their publication in the Federal Register and that covered
reporters would begin to comply with the Final Rules 60 days after
their effective date. The Office believed that this implementation
period would provide adequate time for covered reporters to comply with
the proposed requirements. However, the Office requested comment on
whether the proposed 60-day compliance period for a CCP that is a
covered reporter on the effective date of the rule provided sufficient
time to comply with the data-reporting requirements and whether
increasing the period between the effective date of a final rule and
the subsequent compliance date would substantially reduce burdens for
covered reporters or repo market participants, or improve the quality
of the data reported. It also specifically asked whether there were any
aspects of the proposed collection for which a phased-in reporting
requirement would be particularly useful.\56\
---------------------------------------------------------------------------

\56\ 83 FR 31896, 31907.
---------------------------------------------------------------------------

In response to these requests, the one currently expected covered
reporter recommended that the proposed implementation timeframe be
reconsidered. Specifically, it suggested, operational complexities
related to the scale of the data-field builds required, along with
necessary testing, militated in favor of a longer implementation
timeframe. The commenter also stated that while it did not believe all
of the information requested in the NPRM could be collected in the
timeframe proposed, certain elements could be provided sooner than
others.
As a result, the commenter recommended a phased implementation
process, with all specified data elements, other than those requiring
an LEI, to be reported within 240 days of the Final Rules' effective
date. Data elements requiring LEI data would then be reported within
180 days after the compliance date for the other data elements. Such a
phase-in process was necessary, it suggested, to allow a covered
reporter sufficient time to take necessary measures to avoid
compromising the integrity of the data to be collected. The
implementation schedule suggested by the commenter was as follows:

Phase 1: FICC would transmit all of the data needed to calculate
the SOFR and the BGCR in the same format that it currently supplies
to the FRBNY 60 days after the effective date of a final rule.
Phase 2: FICC would begin reporting DVP Service repo transaction
data (excluding the LEI) within 120 days after the Phase 1
compliance date (180 days after the effective date of a final rule).
Phase 3: FICC would begin reporting transaction data from the
GCF Repo Service (excluding the LEI) within 60 days after the Phase
2 compliance date (240 days after the effective date of a final
rule).
Phase 4: FICC would begin reporting LEI data associated with the
DVP Service and GCF Repo Service transactions within 180 days after
the phase 3 compliance date (420 days after the effective date of a
final rule).

The Office has considered the comments received on this issue and
has decided to adopt in the Final Rules a phased implementation
schedule similar to that recommended by the only currently expected
covered reporter. Specifically, the Office is adopting a three-phase
implementation schedule for a CCP that is a covered reporter on the
effective date of the Final Rules that corresponds to the latter three
stages proposed by the commenter. Because the data elements currently
needed to calculate the SOFR are a subset of those included in the
proposed delivery-versus-payment and general collateral collections,
and the FRBNY currently obtains that data through its voluntary
agreement with DTCC, the Office does not believe that adopting a three-
phase implementation schedule will create a gap in access to the data
needed to calculate the SOFR.
As a result, the office is adopting a three-phase implementation
schedule as follows:

Phase 1. With respect to all data elements listed in 12 CFR
1610.10(c)(5), other than those data elements requiring an LEI of an
entity other than the covered reporter, a covered reporter shall
begin reporting within 180 days after the Final Rules' effective
date.
Phase 2. With respect to all data elements listed in 12 CFR
1610.10(c)(3) and (4), other than those data elements requiring an
LEI of an entity other than the covered reporter, a covered reporter
shall begin reporting within 240 days after the Final Rules'
effective date.
Phase 3. With respect to all data elements listed in 12 CFR
1610.10(c)(3), (4), and (5) that require reporting an LEI of an
entity other than the covered reporter, a covered reporter is
required to begin reporting these elements within 420 days after the
Final Rules' effective date, if the covered reporter is able to
effect any rulemaking through the SEC that is necessary to require
market participants to obtain LEIs and provide them to the covered
reporter. If a covered reporter is unable to effect such a
rulemaking through the SEC, the covered reporter would not be
required to report an LEI for any market participant that does not
have an LEI, but would be required to continue to report market
participants' legal names or internal identifiers.

In order to provide a similar phased implementation schedule for
any CCPs that become covered reporters after the effective date of the
Final Rules, the Final Rules require such entities to comply with the
reporting requirements beginning on the later of (i) the schedule
applicable to CCPs that are covered reporters on the Final Rules'
effective date or (ii) the first business day of the third calendar
quarter following the calendar quarter in which such CCP meets the $50
billion activity-based materiality threshold.
The reporting obligations under the Final Rules would cease for any
covered reporter that ceases to meet the $50

[[Page 4983]]

billion activity-based materiality threshold for at least four
consecutive calendar quarters.

III. Administrative Law Matters

a. Paperwork Reduction Act

The information collections contained in the Final Rules have been
reviewed and approved by the Office of Management and Budget (``OMB'')
under OMB Control No. 1505-0259. In accordance with the requirements of
the Paperwork Reduction Act (the ``PRA''), the Office may not conduct
or sponsor, and a covered reporter is not required to respond to, an
information collection unless it displays a currently valid OMB control
number.
Commenters on the Proposed Rules generally acknowledged the need
for the Office to collect certain information on repo transactions in
support of the work of the Council, its member agencies, and the Office
for identifying and monitoring risks to financial stability, and to
support the calculation of certain reference rates.
Commenters also requested various modifications to or relief from
aspects of the Proposed Rules that they stated would entail burdens
that outweighed the benefits to the Office. This included a
recommendation from the only currently expected covered reporter for a
phased implementation process, over a longer period of time than the
Office had proposed. However, none of the commenters provided comments,
empirical data, estimates of costs or benefits, or other analyses
directly addressing matters pertaining to the PRA discussion.
The Office's ability to collect centrally cleared repo data in this
collection derives in part from the authority to promulgate regulations
regarding the type and scope of financial transaction and position data
from financial companies on a schedule determined by the Director of
the Office in consultation with the Council.\57\ The Office consulted
with the Council on the proposed permanent collection of repo data at
the Council's September 22, 2016, meeting.\58\ The Office also provided
a public update to the Council on November 16, 2017.\59\ The Office
provided a further update to the Council on October 16, 2018, and the
Council voted to authorize the Office to share with the FRBNY the data
the Office will collect under the Final Rules.\60\
---------------------------------------------------------------------------

\57\ 12 U.S.C. 5344(b)(1)(B)(iii).
\58\ See Financial Stability Oversight Council, meeting minutes
(September 22, 2016), https://www.treasury.gov/initiatives/fsoc/council-meetings/Documents/September222016_minutes.pdf.
\59\ See Financial Stability Oversight Council, meeting minutes
(November 16, 2017), https://www.treasury.gov/initiatives/fsoc/council-meetings/Documents/November162017_minutes.pdf, and Office,
OFR Update on Bilateral Repo Collection (November 22, 2017), https://www.financialresearch.gov/from-the-management-team/2017/11/22/ofr-update-on-bilateral-repo-collection/.
\60\ See FSOC, Minutes of the Financial Stability Council dated
October 16, 2018, https://www.treasury.gov/initiatives/fsoc/council-meetings/Documents/October162018_minutes.pdf.
---------------------------------------------------------------------------

The Office also has authority to promulgate regulations pursuant to
the Office's general rulemaking authority under Dodd-Frank Act section
153, which authorizes the Office to issue rules, regulations, and
orders to the extent necessary to carry out certain purposes and duties
of the Office.\61\ In particular, the purposes and duties of the Office
include supporting the Council in fulfilling its purposes and duties,
and supporting Council member agencies, by collecting data on behalf of
the Council and providing such data to the Council and Council member
agencies, and standardizing the types and formats of data reported and
collected.\62\ The Office must consult with the Chairperson of the
Council prior to the promulgation of any rules under section 153 \63\--
these consultations occurred both before and after the publication of
the NPRM.
---------------------------------------------------------------------------

\61\ 12 U.S.C. 5343(a), (c)(1).
\62\ 12 U.S.C. 5343(a). The Council's purposes and duties
include identifying risks to U.S. financial stability; responding to
emerging threats to the stability of the U.S. financial system;
monitoring the financial services marketplace in order to identify
potential threats to U.S. financial stability; making
recommendations in such areas that will enhance the integrity,
efficiency, competitiveness, and stability of the U.S. financial
markets; and identifying gaps in regulation that could pose risks to
the financial stability of the United States. 12 U.S.C. 5322(a).
\63\ 12 U.S.C. 5343(c)(1).
---------------------------------------------------------------------------

As noted above, commenters generally did not provide comments,
empirical data, or other analyses directly addressing the Office's
estimates in the PRA discussion. As discussed in detail in section II
above, the Final Rules incorporate changes from the Proposed Rules to
provide for a phased implementation process, over a longer period of
time than the Office had proposed. However, this change does not impact
the scope of financial companies subject to the requirements of the
Final Rules, nor the estimated annual burden on a covered reporter once
the Final Rules are fully implemented.
As a result, the Office's estimate of an annual burden of 1,512
hours per covered reporter remains unchanged. This figure is arrived at
by estimating the daily reporting time to be approximately 3 hours for
each general collateral and specific-security submission, multiplied by
2 to reflect both types of submissions by the covered reporter, and
multiplying that figure by an average of 252 business days in a year,
the typical number of days per year that do not fall either on weekends
or on holidays widely observed by the market.
To estimate hourly wages, the Office used data from the May 2016
Bureau of Labor Statistics Occupational Employment Statistics for
credit intermediation and related activities (NAICS 522000). For hourly
compensation, a figure of $75 per hour was used, which is an average of
the 90th percentile wages in seven different categories of employment
(compliance officers, accountants and auditors, lawyers, management
occupations, financial analysts, software developers, and
statisticians), plus an additional 32 percent to cover subsequent wage
gains and non-wage benefits, which yields an estimate of $99 per
hour.\64\ Using these assumptions, the Office estimates the recurring
operational costs for general collateral and specific-security
submissions to be $74,844 annually, for a total estimated annual cost
to the covered reporter of $149,688.
---------------------------------------------------------------------------

\64\ The estimate includes an assumed additional 2 percent for
subsequent wage gains from 2016 to 2017, and 30 percent for non-wage
employee benefits, according to the Bureau of Labor Statistics' June
2017 Employer Costs for Employee Compensation, https://www.bls.gov/news.release/archives/ecec_09082017.htm.
---------------------------------------------------------------------------

b. Regulatory Flexibility Act

Congress enacted the Regulatory Flexibility Act (the ``RFA'') to
address concerns related to the effects of agency rules on small
entities.\65\ The Office is sensitive to the impact its rules may
impose on small entities. The RFA requires agencies either to provide
an initial regulatory flexibility analysis with a proposed rule for
which general notice of proposed rulemaking is required, or to certify
that the proposed rule will not have a significant economic impact on a
substantial number of small entities.\66\ In accordance with section
3(a) of the RFA, the Office is certifying that the Final Rules will not
have a significant economic impact on a substantial number of small
entities.
---------------------------------------------------------------------------

\65\ 5 U.S.C. 601 et seq.
\66\ 5 U.S.C. 603(a).
---------------------------------------------------------------------------

As discussed above, this rule will only apply to CCPs for repos
whose average daily total open commitments in repos across all services
over the prior calendar quarter is at least $50 billion. Currently,
under this scope, this rule will apply only to one entity,

[[Page 4984]]

whose corporate parent's total consolidated assets were $39 billion as
of March 31, 2018.\67\ Reporting will be required of additional CCPs
beginning on the later of (i) the schedule outlined in 12 CFR
1610.10(e)(1)(A), (B), and (C) or (ii) the first business day of the
third calendar quarter after the calendar quarter in which such CCPs
meet the $50 billion activity-based materiality threshold. If a covered
reporter ceases to meet this threshold for at least four consecutive
calendar quarters, its reporting obligations under this rule would
cease.
---------------------------------------------------------------------------

\67\ See DTCC, ``DTCC Condensed Consolidated Financial
Statements as of March 31, 2018 and December 31, 2017 and for the
three months ended March 31, 2018 and 2017,'' https://www.dtcc.com/~/
media/Files/Downloads/legal/financials/2018/DTCC-Condensed-
Consolidated-Financial-Statements-Q1-2018.pdf.
---------------------------------------------------------------------------

Under regulations issued by the Small Business Administration, a
``small entity'' includes those firms within the ``Finance and
Insurance'' sector with asset sizes that vary from $7.5 million in
assets to $550 million or less in assets.\68\ For purposes of the RFA,
entities that are banks are considered small entities if their assets
are less than or equal to $550 million. The level of the activity-based
threshold under the Final Rules ensures that any respondent will be
well beyond these small entity definitions.
---------------------------------------------------------------------------

\68\ 13 CFR 121.201.
---------------------------------------------------------------------------

Pursuant to the Regulatory Flexibility Act, 5 U.S.C. 605(b), it is
hereby certified that this final rule will not have a significant
economic impact on a substantial number of small entities.

c. Congressional Review Act (CRA)

This rule is not a major rule pursuant to the CRA, 5 U.S.C. 801 et
seq.

List of Subjects in 12 CFR Part 1610

Confidential business information, Economic statistics, Reference
rates, Repurchase agreements, Clearing, Central counterparty, Data
collection.

0
For the reasons stated in the preamble, the Office of Financial
Research adds part 1610 to 12 CFR chapter 16 to read as follows:

PART 1610--REGULATORY DATA COLLECTIONS

Subpart A--Collections Generally
Sec.
1610.1 General authority.
1610.2 General definitions.
1610.3 Treatment of collected information.
1610.4-1610.9 [Reserved]
Subpart B--Specific Collections
1610.10 Centrally cleared repurchase agreement data.

Authority: 12 U.S.C. 5343 and 5344.

Subpart A--Collections Generally

Sec. 1610.1 General authority.

The collections under this part are made pursuant to the authority
contained in 12 U.S.C. 5343(a) and (c)(1) and 5344(b).

Sec. 1610.2 General definitions.

Council means the Financial Stability Oversight Council.
Legal Entity Identifier or LEI for an entity means the global legal
entity identifier maintained for such entity by a utility accredited by
the Global LEI Foundation or by a utility endorsed by the Regulatory
Oversight Committee that satisfies the standards implemented by the
Global LEI Foundation. As used in this definition:
(1) Regulatory Oversight Committee means the Regulatory Oversight
Committee (of the Global LEI System), whose charter was set forth by
the Finance Ministers and Central Bank Governors of the Group of Twenty
and the Financial Stability Board, or any successor thereof; and
(2) Global LEI Foundation means the not-for-profit organization
organized under Swiss law by the Financial Stability Board in 2014, or
any successor thereof.
Office means the U.S. Department of the Treasury's Office of
Financial Research.

Sec. 1610.3 Treatment of collected information.

The Office will treat any financial transaction data or position
data submitted to the Data Center under this part in accordance with
the relevant provisions of law, including 12 U.S.C. 5343(b) and
5344(b).

Sec. Sec. 1610.4-1610.9 [Reserved]

Subpart B--Specific Collections

Sec. 1610.10 Centrally cleared repurchase agreement data.

(a) Definitions.
Central counterparty means a clearing agency that interposes itself
between the counterparties to transactions, acting functionally as the
buyer to every seller and the seller to every buyer.
Clearing agency has the same meaning as set forth in 15 U.S.C.
78c(a)(23).
Covered reporter means any central counterparty for repurchase
agreement transactions that meets the criteria set forth in paragraph
(b)(2) of this section; provided, however, that any covered reporter
shall cease to be a covered reporter only if it does not meet the
dollar threshold specified in paragraph (b)(2) for at least four
consecutive calendar quarters.
General collateral trade means a repurchase agreement transaction
in which the trade reported to the central counterparty is for a
category of securities as opposed to a specific security.
Repurchase agreement transaction or transaction means an agreement
of a counterparty to transfer securities to another counterparty in
exchange for the receipt of cash, and the simultaneous agreement of the
former counterparty to later reacquire the same securities (or any
subsequently substituted securities) from that same counterparty in
exchange for the payment of cash; or an agreement of a counterparty to
acquire securities from another counterparty in exchange for the
payment of cash, and the simultaneous agreement of the former party to
later transfer back the same securities (or any subsequently
substituted securities) to the latter counterparty in exchange for the
receipt of cash.
Specific-security trade means a repurchase agreement transaction
where the trade as reported to the central counterparty is for a
mutually agreed upon specific security.
(b) Purpose and scope--(1) Purpose. The purpose of this data
collection is to require the reporting of certain information to the
Office about repurchase agreement transactions cleared through a
central counterparty. The information will be used by the Office to
support the Council and Council member agencies by facilitating
financial stability monitoring including research consistent with
support of the Council and its member agencies, and to support the
calculation of certain reference rates.
(2) Scope of application. Reporting under this Section is required
by any central counterparty for repurchase agreement transactions that
meets the definition of financial company set forth in 12 U.S.C.
5341(2) and whose average daily total open commitments in repurchase
agreement contracts (gross cash positions prior to netting) across all
services over all business days during the prior calendar quarter is at
least $50 billion.
(c) Data required. (1) Covered reporters shall report trade and
collateral information on all repurchase agreement transactions cleared
through any of its services, subject to paragraph (c)(2) of this
section, in accordance with the prescribed reporting format in this
section.
(2) Covered reporters shall only report trade and collateral
information with

[[Page 4985]]

respect to any repurchase agreement transaction for which there is a
current or future delivery obligation as of the file observation date,
including forward-starting transactions.
(3) Covered reporters shall submit the following data elements for
all general collateral trades:

Table 1 to Sec. 1610.10(c)--General Collateral Trades
------------------------------------------------------------------------
Data element Explanation
------------------------------------------------------------------------
File Observation Date........ The observation date of the file
(typically one business day before the
day the file is submitted).
Covered Reporter LEI......... The Legal Entity Identifier of the
covered reporter.
Transaction ID............... Respondent-generated unique transaction
identifier.
Submission Timestamp......... Time that trade is first submitted to
clearing service.
Match Timestamp.............. Time that trade is matched by clearing
service.
Securities Asset Class Asset class identifier.
Identifier Value.
Securities Asset Class Type of securities identifier used (the
Identifier Type. numbering system to which the identifier
belongs).
Cash Provider LEI............ The Legal Entity Identifier of the cash
provider.
Cash Provider Name........... The legal name of the cash provider.
Cash Provider Internal The internal identifier assigned by the
Identifier. covered reporter to the cash provider.
Cash Provider Direct Clearing The Legal Entity Identifier of the direct
Member LEI. clearing member through which the cash
provider accessed the clearing service.
Cash Provider Direct Clearing The legal name of the of the direct
Member Name. clearing member through which the cash
provider accessed the clearing service.
Cash Provider Direct Clearing The internal identifier assigned by the
Member Internal Identifier. covered reporter to the direct clearing
member through which the cash provider
accessed the clearing service.
Securities Provider LEI...... The Legal Entity Identifier of the
securities provider.
Securities Provider Name..... The legal name of the securities
provider.
Securities Provider Internal The internal identifier assigned by the
Identifier. covered reporter to the securities
provider.
Securities Provider Direct The Legal Entity Identifier of the direct
Clearing Member LEI. clearing member through which the
securities provider accessed the
clearing service.
Securities Provider Direct The legal name of the direct clearing
Clearing Member Name. member through which the securities
provider accessed the clearing service.
Securities Provider Direct The internal identifier assigned by the
Clearing Member Internal covered reporter to the direct clearing
Identifier. member through which the securities
provider accessed the clearing service.
Broker LEI................... The Legal Entity Identifier of the
broker.
Broker Name.................. The legal name of the broker.
Broker Internal Identifier... The internal identifier assigned by the
covered reporter to the broker.
Start Date................... The start date of the repurchase
agreement.
End Date..................... The date the repurchase agreement
matures.
Rate......................... The repurchase agreement rate, expressed
as an annual percentage rate on an
actual/360-day basis.
Principal.................... The amount of cash borrowed or lent.
Optionality.................. The type of optionality, if any, in the
repurchase agreement.
Minimum Maturity............. The earliest possible date on which the
transaction could end in accordance with
its contractual terms (taking into
account optionality).
------------------------------------------------------------------------

(4) Covered reporters shall submit the following data elements on
the collateral delivered against net general collateral exposures for
all general collateral trades:

Table 2 to Sec. 1610.10(c)--General Collateral Net Exposure
------------------------------------------------------------------------
Data element Explanation
------------------------------------------------------------------------
File Observation Date........ The observation date of the file
(typically one business day before the
day the file is submitted).
Covered Reporter LEI......... The Legal Entity Identifier of the
covered reporter.
Direct Clearing Member LEI... The Legal Entity Identifier of the direct
clearing member of the clearing service.
Direct Clearing Member Name.. The legal name of the direct clearing
member.
Direct Clearing Member The internal identifier assigned by the
Internal Identifier. covered reporter to the direct clearing
member.
Transaction Side............. Indicates the side of the transaction:
Collateral was received by or delivered
from the covered reporter.
Securities Identifier Value.. Identifier of securities transferred.
Securities Identifier Type... Type of securities identifier used (the
numbering system to which the identifier
belongs).
Securities Quantity.......... Par value or quantity (as applicable) of
securities transferred.
Securities Value............. The market value as of most recent
valuation of securities transferred,
including accrued interest.
------------------------------------------------------------------------

(5) Covered reporters shall submit the following data elements for
all specific-security trades:

[[Page 4986]]

Table 3 to Sec. 1610.10(c)--Specific-Security Trades
------------------------------------------------------------------------
Data element Explanation
------------------------------------------------------------------------
File Observation Date........ The observation date of the file
(typically one business day before the
day the file is submitted).
Covered Reporter LEI......... The Legal Entity Identifier of the
covered reporter.
Transaction ID............... Respondent-generated unique transaction
identifier.
Cash Provider LEI............ The Legal Entity Identifier of the cash
provider.
Cash Provider Name........... The legal name of the cash provider.
Cash Provider Internal The internal identifier assigned by the
Identifier. covered reporter to the cash provider.
Cash Provider Direct Clearing The Legal Entity Identifier of the direct
Member LEI. clearing member through which the cash
provider accessed the clearing service.
Cash Provider Direct Clearing The legal name of the of the direct
Member Name. clearing member through which the cash
provider accessed the clearing service.
Cash Provider Direct Clearing The internal identifier assigned by the
Member Internal Identifier. covered reporter to the direct clearing
member through which the cash provider
accessed the clearing service.
Securities Provider LEI...... The Legal Entity Identifier of the
securities provider.
Securities Provider Name..... The legal name of the securities
provider.
Securities Provider Internal The internal identifier assigned by the
Identifier. covered reporter to the securities
provider.
Securities Provider Direct The Legal Entity Identifier of the direct
Clearing Member LEI. clearing member through which the
securities provider accessed the
clearing service.
Securities Provider Direct The legal name of the direct clearing
Clearing Member Name. member through which the securities
provider accessed the clearing service.
Securities Provider Direct The internal identifier assigned by the
Clearing Member Internal covered reporter to the direct clearing
Identifier. member through which the securities
provider accessed the clearing service.
Broker LEI................... The Legal Entity Identifier of the
broker.
Broker Name.................. The legal name of the broker.
Broker Internal Identifier... The internal identifier assigned by the
covered reporter to the broker.
Submission Timestamp......... Time that trade is first submitted to
clearing service.
Match Timestamp.............. Time that trade is matched by clearing
service.
Start Date................... The start date of the repurchase
agreement.
End Date..................... The date when the repurchase agreement
matures; the close leg settlement date.
Optionality.................. The type of optionality, if any.
Minimum Maturity............. The earliest possible date on which the
transaction could end in accordance with
its contractual terms (taking into
account optionality).
Security Identifier Value.... Identifier of pledged security.
Securities Identifier Type... Type of securities identifier used (the
numbering system to which the identifier
belongs).
Securities Quantity.......... Par value or quantity (as applicable) of
securities transferred.
Substitution Collateral Asset class identifier or no
Identifier Value. substitution.
Substitution Collateral Type of securities identifier used (the
Identifier Type. numbering system to which the identifier
belongs).
Cash Provider Start Leg The amount of cash transferred by the
Amount. cash provider on the open leg of the
transaction.
Securities Provider Start Leg The amount of cash received by the
Amount. securities provider on the open leg of
the transaction.
Cash Provider Rate........... The rate of interest received by the cash
provider, expressed as an annual
percentage rate on an actual/360-day
basis.
Securities Provider Rate..... The rate of interest paid by the
securities provider, expressed as an
annual percentage rate on an actual/360-
day basis.
Cash Provider Close Leg The amount of cash received by the cash
Settlement Amount. provider on the close leg of the
transaction.
Securities Provider Close Leg The amount of cash paid by the securities
Settlement Amount. provider on the close leg of the
transaction.
------------------------------------------------------------------------

(d) Reporting process and collection agent. The Office may
designate a collection agent for the data reporting. Covered reporters
shall submit the required data for each business day by 6:00 a.m.
Eastern time on the following business day.
(e) Compliance. (1) Any central counterparty that is a covered
reporter as of the effective date of this Section shall comply with the
reporting requirements pursuant to this Section in the following
manner:
(i) Subject to paragraph (e)(1)(iii) of this section, a covered
reporter shall begin reporting all data elements required to be
submitted pursuant to paragraph (c)(5) of this section within 180 days
after April 22, 2019.
(ii) Subject to paragraph (e)(1)(iii) of this section, a covered
reporter shall begin reporting all data elements required to be
submitted pursuant to paragraphs (c)(3) and (4) of this section within
240 days after April 22, 2019.
(iii) If a covered reporter is able to effect a rulemaking through
the Securities and Exchange Commission requiring each direct clearing
member, counterparty, and broker associated with a repurchase agreement
transaction to obtain an LEI and provide it to the covered reporter,
the covered reporter shall begin reporting all data elements requiring
an LEI other than its own pursuant to paragraphs (c)(3) through (5) of
this section by the later of the effective date of its rulemaking, or
420 days April 22, 2019, and continue to report all data elements
requiring a legal name or internal identifier until 365 days after the
date the covered reporter begins reporting all data elements requiring
an LEI pursuant to this section. If a covered reporter is unable to
effect such a rulemaking, the covered reporter is not required to
report any data elements requiring an LEI other than its own pursuant
to paragraphs (c)(3) through (5) of this section, except, if available,
the LEI for any direct clearing member, counterparty, or broker
associated with a repurchase agreement transaction that has an LEI, and
shall report all data elements requiring a legal name or internal
identifier in any report submitted under this section regardless of
whether the relevant entity has an LEI. A covered reporter shall report
its own LEI in accordance with the schedules set forth

[[Page 4987]]

in paragraphs (e)(1)(i) and (ii) of this section.
(2) The first submission by any central counterparty that is a
covered reporter as of the effective date of this Section shall be
submitted on the first business day after the applicable compliance
date under paragraph (e)(1) of this section.

Note 1 to paragraph (e)(2): For example, if this section became
effective on March 20, 2019, a central counterparty that meets the
dollar threshold specified in paragraph (b)(2) of this section for
the calendar quarter ending December 31, 2018, would be required to
submit its first report under paragraph (e)(1)(i) of this section on
the first business day after September 16, 2019, its first report
under paragraph (e)(1)(ii) of this section on November 15, 2019, and
its first report with data elements requiring an LEI (other than
that of the covered reporter) on May 13, 2020 (if the covered
reporter effected the rulemaking described in paragraph (e)(1)(iii)
of this section).

(3) Any central counterparty that becomes a covered reporter after
the effective date of this Section shall comply with the reporting
requirements pursuant to this Section beginning on the later of the
schedule set forth in paragraphs (e)(1)(i) through (iii) of this
section or the first business day of the third calendar quarter
following the calendar quarter in which such central counterparty meets
the dollar threshold specified in paragraph (b)(2) of this section.

Note 2 to paragraph (e)(3): For example, if this section became
effective on March 20, 2019, a central counterparty that first meets
the dollar threshold specified in paragraph (b)(2) of this section
for the calendar quarter ending June 30, 2019, would be required to
submit its first report under paragraphs (e)(1)(i) and (ii) of this
section on January 2, 2020, and its first report with data elements
requiring an LEI (other than that of the covered reporter) on May
13, 2020 (if the covered reporter effected the rulemaking described
in paragraph (e)(1)(iii) of this section by May 13, 2020).

Note 3 to paragraph (e)(3): For example, if this section became
effective on March 20, 2019, a central counterparty that first met
the dollar threshold specified in paragraph (b)(2) for the calendar
quarter ending June 30, 2020, would be required to comply with all
of the reporting requirements under this section on January 2, 2021
(and would continue to be required to report all data elements
requiring a legal name or internal identifier for at least 365 days
after the effective date of the covered reporter's rulemaking
described in paragraph (e)(1)(iii) if such effective date occurred
after January 2, 2021).

Ryan D. Brady,
Executive Secretary, Department of the Treasury.
[FR Doc. 2019-02639 Filed 2-19-19; 8:45 am]
BILLING CODE 4810-25-P

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