Proposed Collection; Comment Request, 16751-16753 [2019-08037]
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Federal Register / Vol. 84, No. 77 / Monday, April 22, 2019 / Notices
proposed rule change to be operative
upon filing with the Commission.15
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CboeBYX–2019–004 and
should be submitted on or before May
13, 2019.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Jill M. Peterson,
Assistant Secretary.
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeBYX–2019–004 on the subject line.
SECURITIES AND EXCHANGE
COMMISSION
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CboeBYX–2019–004. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
15 For purposes only of waiving the operative
delay for this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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17:22 Apr 19, 2019
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[FR Doc. 2019–07991 Filed 4–19–19; 8:45 am]
BILLING CODE 8011–01–P
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: U.S. Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736.
Extension:
Business Conduct Standards for SecurityBased Swap Dealers and Major SecurityBased Swap Participants, SEC File No.
270–792; OMB Control No. 3235–0739.
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
provided for in Business Conduct
Standards for Security-Based Swap
Dealers and Major Security-Based Swap
Participants.1 (17 CFR 240.3a67–10,
240.3a71–3,240.3a71–6, 240.15Fh–1
through 15Fh–6 and 240.15Fk–1), under
the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.). The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget (‘‘OMB’’) for
extension and approval.
16 17
CFR 200.30–3(a)(12).
Conduct Standards for Security-Based
Swap Dealers and Major Security-Based Swap
Participants, Exchange Act Release 77617 (Apr. 14,
2016), 81 FR 29959 (May 13, 2016). See also
Business Conduct Standards for Security-Based
Swap Dealers and Major Security-Based Swap
Participants; Correction, Exchange Act Release
77617A (May 19, 2016), 81 FR 32643 (May 24,
2016). (together, ‘the Business Conduct Rules for
SBSDs and MSBSPs’’ or ‘‘BCS Rules’’)
1 Business
PO 00000
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16751
In 2010, Congress passed the DoddFrank Act, establishing a comprehensive
framework for regulating the over-thecounter swaps markets. As required by
Title VII of the Dodd-Frank Act, new
section 15F(h) of the Exchange Act
established business conduct standards
for security-based swap (‘‘SBS’’) Dealers
and Major SBS Participants
(‘‘collectively ‘‘SBS Entities’’) in their
dealings with counterparties, including
special entities. In 2016, in order to
implement the Dodd-Frank Act, the
Commission adopted the BCS Rules for
SBS Dealers and Major SBS
Participants,2 a comprehensive set of
business conduct standards and chief
compliance officer requirements
applicable to SBS Entities, that are
designed to enhance transparency,
facilitate informed customer decisionmaking, and heighten standards of
professional conduct to better protect
investors.3
Rules 15Fh–1 through 15Fh–6 and
15Fk–1 require SBS Entities to:
• Verify whether a counterparty is an
eligible contract participant and
whether it is a special entity;
• Disclose to the counterparty
material information about the SBS,
including material risks, characteristics,
incentives and conflicts of interest;
• Provide the counterparty with
information concerning the daily mark
of the SBS;
• Provide the counterparty with
information regarding the ability to
require clearing of the SBS;
• Communicate with counterparties
in a fair and balanced manner based on
principles of fair dealing and good faith;
• Establish a supervisory and
compliance infrastructure; and
• Designate a chief compliance officer
that is required to fulfill the described
duties and provide an annual
compliance report.
The rules also require SBS Dealers to:
• Determine that recommendations
they make regarding SBS are suitable for
their counterparties.
• Establish, maintain and enforce
written policies and procedures
reasonably designed to obtain and retain
2 Id.
3 Commission staff has prepared separate
supporting statements pursuant to the Paperwork
Reduction Act (‘‘PRA’’) regarding final Rule 3a71–
3(c) and Rule 3a71–6, which address the crossborder application of the business conduct
standards and the availability of substituted
compliance. The Office of Management and Budget
(‘‘OMB’’) has assigned control number 3235–0717
to Final Rule 3a71–3(c) and 3235–0715 to Final
Rule 3a71–6. Final Rule 3a67–10(d) is a definitional
rule and does not have a PRA burden associated
with it. Rules 3a71–3(a), Rule 15Fh–1 and Rules
15Fh–2(b) and (c) address scope of the rules and
definitions and so do not have PRA burdens
associated with them.
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16752
Federal Register / Vol. 84, No. 77 / Monday, April 22, 2019 / Notices
a record of the essential facts concerning
each known counterparty that are
necessary to conduct business with such
counterparty; and
• Comply with rules designed to
prevent ‘‘pay-to-play.’’
The rules also define what it means to
‘‘act as an advisor’’ to a special entity,
and require an SBS Dealer who acts as
an advisor to a special entity to:
• Make a reasonable determination
that any security-based swap or trading
strategy involving a security-based swap
recommended by the SBS Dealer is in
the best interests of the special entity
whose identity is known at a reasonably
sufficient time prior to the execution of
the transaction to permit the SBS Dealer
to comply with this obligation; and
• Make reasonable efforts to obtain
such information that the SBS Dealer
considers necessary to make a
reasonable determination that a
security-based swap or trading strategy
involving a security-based swap is in
the best interests of the known special
entity.
In addition, the rules require SBS
Entities acting as counterparties to
special entities to reasonably believe
that the counterparty has an
independent representative who meets
the following requirements:
• Has sufficient knowledge to
evaluate the transaction and risks;
Ongoing
annual
burden
(hours)
Industry-wide
annual burden
(hours)
Industry-wide
annual burden
(cost)
$0
226,600
$0
1
0
233,595
0
50
137
0
6,853
0
Reporting .............
55
2
3,600
110
198,000
Reporting .............
Reporting .............
55
55
540
390
4,800
0
29,700
21,450
264,000
0
Third-Party Disclosure.
Reporting .............
Reporting .............
55
390
0
21,450
0
50
55
1
273
25,600
7,200
50
15,015
1,280,000
396,000.00
554,823
$2,138,000
Type of burden
15Fh–3(b), (c), (d)—Disclosures—
SBS Entities.
15Fh–3(b), (c), (d)—Disclosures—
SBS Transactions Between SBS
Dealer
and
Non-SBSD
Counterparty.
15Fh–3(e),
(f)—Know
Your
Counterparty and Recommendations (SBS Dealers).
15Fh–3(g)—Fair and Balanced Communications.
15Fh–3(h)—Supervision ....................
15Fh–5—SBS Entities Acting as
Counterparties to Special Entities.
15Fh–5—SBS Entities Acting as
Counterparties to Special Entities.
15Fh–6—Political Contributions ........
15Fk–1—Chief Compliance Officer ...
Reporting .............
55
4,120
Reporting .............
233,595
Reporting .............
4 Unless otherwise noted, estimates were derived
from the DTCC–TIW data set (February 2019).
17:22 Apr 19, 2019
Jkt 247001
Respondents
.........................
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
VerDate Sep<11>2014
50 SBS Dealers, 5 Major SBS
Participants, for a total of 55 ‘‘SBS
Entities’’.4 Further, we estimate that
approximately 46 of these 55 SBS
Entities will be dually registered with
the CFTC as Swap Entities. We also
estimate that there are currently 13,137
security-based swap market participants
of which 8,802 are also swap market
participants. In 2018, there were
approximately 593,364 security-based
swap transactions between an SBS
Dealer and counterparty that is not an
SBS Dealer of which 233,595 were new
or amended trades. The Commission
estimates there are 370 independent,
third-party representatives and 20 inhouse independent representatives.5 We
estimate that there are approximately
13,706 unique SBS Dealer and non-SBSDealer pairs. We have used these
estimates in calculating the hour and
cost burdens for the rule provisions that
we anticipate have a ‘‘collection of
information’’ burden within the
meaning of the PRA.
The Commission estimates that the
aggregate burden of the ongoing
reporting and disclosures required by
the BCS Rules, as described above, is
approximately 554,823 hours and
$2,138,000 calculated as follows:
Ongoing
annual
burden
(cost)
Section
Total ............................................
amozie on DSK9F9SC42PROD with NOTICES
• Is not subject to a statutory
disqualification;
• Undertakes a duty to act in the best
interests of the special entity;
• Makes appropriate and timely
disclosures to the special entity of
material information concerning the
security-based swap;
• Evaluates, consistent with any
guidelines provided by the special
entity, the fair pricing and the
appropriateness of the security-based
swap;
• Is independent of the security-based
swap dealer or major security-based
swap participant that is the
counterparty to a proposed securitybased swap.
Under the rules, the special entity’s
independent representative must also be
subject to pay-to-play regulations, and if
the special entity is an ERISA plan, the
independent representative must be an
ERISA fiduciary.
The information that must be
collected pursuant to the BCS Rules is
intended to increase accountability and
transparency in the market. The
information will therefore help establish
a framework that protects investors and
promotes efficiency, competition and
capital formation.
Based on a review of recent data, as
of 2018, the Commission estimates the
number of respondents to be as follows:
information shall have practical utility;
(b) the accuracy of the Commission’s
estimate of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
5 See,
PO 00000
of the information to be collected; and
(d) ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
Exchange Act Rule 15Fh–5.
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Federal Register / Vol. 84, No. 77 / Monday, April 22, 2019 / Notices
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
Please direct your written comments
to: Charles Riddle, Acting Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Candace
Kenner, 100 F Street NE, Washington,
DC 20549, or send an email to: PRA_
Mailbox@sec.gov.
Dated: April 17, 2019.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–08037 Filed 4–19–19; 8:45 am]
BILLING CODE 8011–01–P
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing of
a Proposed Rule Change Amend
Exchange Rule 14.11(c), Index Fund
Shares, To Adopt Generic Listing
Standards for Index Fund Shares
Based on an Index of Municipal Bond
Securities
April 16, 2019.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 3,
2019, Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
amozie on DSK9F9SC42PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Exchange Rule 14.11(c) (‘‘Index Fund
Shares’’) to adopt generic listing
standards for Index Fund Shares based
on an index of municipal bond
securities.
The text of the proposed rule change
is also available on the Exchange’s
U.S.C. 78s(b)(1).
CFR 240.19b–4.
VerDate Sep<11>2014
17:22 Apr 19, 2019
Jkt 247001
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
1. Purpose
[Release No. 34–85656; File No. SR–
CboeBZX–2019–023]
2 17
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
SECURITIES AND EXCHANGE
COMMISSION
1 15
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/bzx/), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
Rule 14.11(c) permits the Exchange to
list a series of Index Fund Shares based
on an index or portfolio of underlying
securities. Currently, Rule 14.11(c)
includes generic listing standards for
Index Fund Shares based on an index or
portfolio of equity or fixed income
securities or a combination thereof. The
Exchange proposes to amend Rule
14.11(c) to add a new Rule
14.11(c)(4)(B)(ii) to provide quantitative
generic listing standards for Index Fund
Shares based on an index or portfolio of
Municipal Securities 3 that do not meet
the generic listing standards under Rule
14.11(c)(4)(B)(i).4 All other standards
not included in Rule 14.11(c)(4)(B)(i)
applicable to series of Index Fund
Shares based on an index composed of
fixed income securities will continue to
apply to a series of Index Fund Shares
based on an index or portfolio of
Municipal Securities listed pursuant to
Rule 14.11(c)(4)(B)(ii).
An index of Municipal Securities
typically does not meet the generic
listing requirements for Index Fund
Shares based on an index of fixed
income securities.5 Nonetheless, the
3 The term ‘‘Municipal Securities’’ has the
definition given to it in Section 3(a)(29) of the Act.
4 The Exchange notes that this proposal is
substantively identical to a proposal recently
submitted by NYSE Arca, Inc. See Securities
Exchange Act Release No. 85170 (February 21,
2019), 84 FR 6451 (February 27, 2019) (SR–
NYSEArca–2019–04).
5 See Exchange Rule 14.11(c)(4)(A)(ii). Municipal
Securities are typically issued in with individual
maturities of relatively small size, although they
generally are constituents of a much larger
PO 00000
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16753
Commission has previously approved
proposed rule changes relating to listing
and trading on the Exchange of Index
Fund Shares based on an index of
Municipal Securities.6 Given the large
number of prior approvals by the
Commission, the Exchange now
municipal bond offering. Therefore, an index of
Municipal Securities will typically be unable to
satisfy the requirement that component fixed
income securities that, in the aggregate, account for
at least 75% of the weight of the index each shall
have a minimum principal amount outstanding of
$100 million or more.
6 The Exchange notes that the Commission has
approved or published immediately effective filings
allowing the listing and trading of a large number
of series of Index Fund Shares based on Municipal
Securities. See Securities Exchange Act Release
Nos. 84107 (September 13, 2018), 83 FR 47210
(September 18, 2018) (SR–CboeBZX–2018–070)
(Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To List and Trade Shares of
the iShares iBonds Dec 2025 Term Muni Bond ETF
of iShares Trust Under BZX Rule 14.11(c)(4) (Index
Fund Shares)); 79381 (November 22, 2016), 81 FR
86044 (November 29, 2016) (SR–BatsBZX–2016–48)
(Order Granting Accelerated Approval of a
Proposed Rule Change, as Modified by
Amendments No. 1 and No. 2 Thereto, To List and
Trade Shares of the iShares iBonds Dec 2023 Term
Muni Bond ETF and iShares iBonds Dec 2024 Term
Muni Bond ETF of the iShares U.S. ETF Trust
Pursuant to BZX Rule 14.11(c)(4); 67985 (October
4, 2012), 77 FR 61804 (October 11, 2012) (SR–
NYSEArca–2012–92) (order approving proposed
rule change relating to the listing and trading of
iShares 2018 S&P AMT-Free Municipal Series and
iShares 2019 S&P AMT-Free Municipal Series
under NYSE Arca Equities Rule 5.2(j)(3),
Commentary .02); 67729 (August 24, 2012), 77 FR
52776 (August 30, 2012) (SR–NYSEArca–2012–92)
(notice of proposed rule change relating to the
listing and trading of iShares 2018 S&P AMT-Free
Municipal Series and iShares 2019 S&P AMT-Free
Municipal Series under NYSE Arca Equities Rule
5.2(j)(3), Commentary .02); 72523, (July 2, 2014), 79
FR 39016 (July 9, 2014) (SR–NYSEArca–2014–37)
(order approving proposed rule change relating to
the listing and trading of iShares 2020 S&P AMTFree Municipal Series under NYSE Arca Equities
Rule 5.2(j)(3), Commentary.02); 72172 (May 15,
2014), 79 FR 29241 (May 21, 2014) (SR–NYSEArca–
2014–37) (notice of proposed rule change relating
to the listing and trading of iShares 2020 S&P AMTFree Municipal Series under NYSE Arca Equities
Rule 5.2(j)(3), Commentary.02); 72464 (June 25,
2014), 79 FR 37373 (July 1, 2014) (File No. SR–
NYSEArca–2014–45) (order approving proposed
rule change governing the continued listing and
trading of shares of the PowerShares Insured
California Municipal Bond Portfolio, PowerShares
Insured National Municipal Bond Portfolio, and
PowerShares Insured New York Municipal Bond
Portfolio); 75468 (July 16, 2015), 80 FR 43500 (July
22, 2015) (SR–NYSEArca–2015–25) (order
approving proposed rule change relating to the
listing and trading of iShares iBonds Dec 2021
AMT-Free Muni Bond ETF and iShares iBonds
Dec2022 AMT-Free Muni Bond ETF under NYSE
Arca Equities Rule 5.2(j)(3)); 74730 (April 15, 2015),
76 [sic] FR 22234 (April 21, 2015) (notice of
proposed rule change relating to the listing and
trading of iShares iBonds Dec 2021 AMT-Free Muni
Bond ETF and iShares iBonds Dec 2022 AMT-Free
Muni Bond ETF under NYSE Arca Equities Rule
5.2(j)(3), Commentary .02); 74730 75376 (July 7,
2015), 80 FR 40113 (July 13, 2015) (SR–NYSEArca–
2015–18) (order approving proposed rule change
relating to the listing and trading of Vanguard TaxExempt Bond Index Fund under NYSE Arca
Equities Rule 5.2(j)(3)).
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]]>Agencies
[Federal Register Volume 84, Number 77 (Monday, April 22, 2019)]
[Notices]
[Pages 16751-16753]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-08037]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Proposed Collection; Comment Request
Upon Written Request, Copies Available From: U.S. Securities and
Exchange Commission, Office of FOIA Services, 100 F Street NE,
Washington, DC 20549-2736.
Extension:
Business Conduct Standards for Security-Based Swap Dealers and
Major Security-Based Swap Participants, SEC File No. 270-792; OMB
Control No. 3235-0739.
Notice is hereby given that pursuant to the Paperwork Reduction Act
of 1995 (``PRA'') (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission (``Commission'') is soliciting comments on the collection of
information provided for in Business Conduct Standards for Security-
Based Swap Dealers and Major Security-Based Swap Participants.\1\ (17
CFR 240.3a67-10, 240.3a71-3,240.3a71-6, 240.15Fh-1 through 15Fh-6 and
240.15Fk-1), under the Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.). The Commission plans to submit this existing collection of
information to the Office of Management and Budget (``OMB'') for
extension and approval.
---------------------------------------------------------------------------
\1\ Business Conduct Standards for Security-Based Swap Dealers
and Major Security-Based Swap Participants, Exchange Act Release
77617 (Apr. 14, 2016), 81 FR 29959 (May 13, 2016). See also Business
Conduct Standards for Security-Based Swap Dealers and Major
Security-Based Swap Participants; Correction, Exchange Act Release
77617A (May 19, 2016), 81 FR 32643 (May 24, 2016). (together, `the
Business Conduct Rules for SBSDs and MSBSPs'' or ``BCS Rules'')
---------------------------------------------------------------------------
In 2010, Congress passed the Dodd-Frank Act, establishing a
comprehensive framework for regulating the over-the-counter swaps
markets. As required by Title VII of the Dodd-Frank Act, new section
15F(h) of the Exchange Act established business conduct standards for
security-based swap (``SBS'') Dealers and Major SBS Participants
(``collectively ``SBS Entities'') in their dealings with
counterparties, including special entities. In 2016, in order to
implement the Dodd-Frank Act, the Commission adopted the BCS Rules for
SBS Dealers and Major SBS Participants,\2\ a comprehensive set of
business conduct standards and chief compliance officer requirements
applicable to SBS Entities, that are designed to enhance transparency,
facilitate informed customer decision-making, and heighten standards of
professional conduct to better protect investors.\3\
---------------------------------------------------------------------------
\2\ Id.
\3\ Commission staff has prepared separate supporting statements
pursuant to the Paperwork Reduction Act (``PRA'') regarding final
Rule 3a71-3(c) and Rule 3a71-6, which address the cross-border
application of the business conduct standards and the availability
of substituted compliance. The Office of Management and Budget
(``OMB'') has assigned control number 3235-0717 to Final Rule 3a71-
3(c) and 3235-0715 to Final Rule 3a71-6. Final Rule 3a67-10(d) is a
definitional rule and does not have a PRA burden associated with it.
Rules 3a71-3(a), Rule 15Fh-1 and Rules 15Fh-2(b) and (c) address
scope of the rules and definitions and so do not have PRA burdens
associated with them.
---------------------------------------------------------------------------
Rules 15Fh-1 through 15Fh-6 and 15Fk-1 require SBS Entities to:
Verify whether a counterparty is an eligible contract
participant and whether it is a special entity;
Disclose to the counterparty material information about
the SBS, including material risks, characteristics, incentives and
conflicts of interest;
Provide the counterparty with information concerning the
daily mark of the SBS;
Provide the counterparty with information regarding the
ability to require clearing of the SBS;
Communicate with counterparties in a fair and balanced
manner based on principles of fair dealing and good faith;
Establish a supervisory and compliance infrastructure; and
Designate a chief compliance officer that is required to
fulfill the described duties and provide an annual compliance report.
The rules also require SBS Dealers to:
Determine that recommendations they make regarding SBS are
suitable for their counterparties.
Establish, maintain and enforce written policies and
procedures reasonably designed to obtain and retain
[[Page 16752]]
a record of the essential facts concerning each known counterparty that
are necessary to conduct business with such counterparty; and
Comply with rules designed to prevent ``pay-to-play.''
The rules also define what it means to ``act as an advisor'' to a
special entity, and require an SBS Dealer who acts as an advisor to a
special entity to:
Make a reasonable determination that any security-based
swap or trading strategy involving a security-based swap recommended by
the SBS Dealer is in the best interests of the special entity whose
identity is known at a reasonably sufficient time prior to the
execution of the transaction to permit the SBS Dealer to comply with
this obligation; and
Make reasonable efforts to obtain such information that
the SBS Dealer considers necessary to make a reasonable determination
that a security-based swap or trading strategy involving a security-
based swap is in the best interests of the known special entity.
In addition, the rules require SBS Entities acting as
counterparties to special entities to reasonably believe that the
counterparty has an independent representative who meets the following
requirements:
Has sufficient knowledge to evaluate the transaction and
risks;
Is not subject to a statutory disqualification;
Undertakes a duty to act in the best interests of the
special entity;
Makes appropriate and timely disclosures to the special
entity of material information concerning the security-based swap;
Evaluates, consistent with any guidelines provided by the
special entity, the fair pricing and the appropriateness of the
security-based swap;
Is independent of the security-based swap dealer or major
security-based swap participant that is the counterparty to a proposed
security-based swap.
Under the rules, the special entity's independent representative
must also be subject to pay-to-play regulations, and if the special
entity is an ERISA plan, the independent representative must be an
ERISA fiduciary.
The information that must be collected pursuant to the BCS Rules is
intended to increase accountability and transparency in the market. The
information will therefore help establish a framework that protects
investors and promotes efficiency, competition and capital formation.
Based on a review of recent data, as of 2018, the Commission
estimates the number of respondents to be as follows: 50 SBS Dealers, 5
Major SBS Participants, for a total of 55 ``SBS Entities''.\4\ Further,
we estimate that approximately 46 of these 55 SBS Entities will be
dually registered with the CFTC as Swap Entities. We also estimate that
there are currently 13,137 security-based swap market participants of
which 8,802 are also swap market participants. In 2018, there were
approximately 593,364 security-based swap transactions between an SBS
Dealer and counterparty that is not an SBS Dealer of which 233,595 were
new or amended trades. The Commission estimates there are 370
independent, third-party representatives and 20 in-house independent
representatives.\5\ We estimate that there are approximately 13,706
unique SBS Dealer and non-SBS-Dealer pairs. We have used these
estimates in calculating the hour and cost burdens for the rule
provisions that we anticipate have a ``collection of information''
burden within the meaning of the PRA.
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\4\ Unless otherwise noted, estimates were derived from the
DTCC-TIW data set (February 2019).
\5\ See, Exchange Act Rule 15Fh-5.
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The Commission estimates that the aggregate burden of the ongoing
reporting and disclosures required by the BCS Rules, as described
above, is approximately 554,823 hours and $2,138,000 calculated as
follows:
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Industry-wide Industry-wide
Section Type of burden Respondents Ongoing annual Ongoing annual annual burden annual burden
burden (hours) burden (cost) (hours) (cost)
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15Fh-3(b), (c), (d)--Disclosures--SBS Reporting................... 55 4,120 $0 226,600 $0
Entities.
15Fh-3(b), (c), (d)--Disclosures--SBS Reporting................... 233,595 1 0 233,595 0
Transactions Between SBS Dealer and Non-
SBSD Counterparty.
15Fh-3(e), (f)--Know Your Counterparty and Reporting................... 50 137 0 6,853 0
Recommendations (SBS Dealers).
15Fh-3(g)--Fair and Balanced Reporting................... 55 2 3,600 110 198,000
Communications.
15Fh-3(h)--Supervision.................... Reporting................... 55 540 4,800 29,700 264,000
15Fh-5--SBS Entities Acting as Reporting................... 55 390 0 21,450 0
Counterparties to Special Entities.
15Fh-5--SBS Entities Acting as Third-Party Disclosure...... 55 390 0 21,450 0
Counterparties to Special Entities.
15Fh-6--Political Contributions........... Reporting................... 50 1 25,600 50 1,280,000
15Fk-1--Chief Compliance Officer.......... Reporting................... 55 273 7,200 15,015 396,000.00
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Total................................. ............................ .............. .............. .............. 554,823 $2,138,000
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Written comments are invited on: (a) Whether the proposed
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information shall
have practical utility; (b) the accuracy of the Commission's estimate
of the burden of the proposed collection of information; (c) ways to
enhance the quality, utility, and clarity of the information to be
collected; and (d) ways to minimize the burden of the collection of
information on respondents, including through the use of automated
collection techniques or
[[Page 16753]]
other forms of information technology. Consideration will be given to
comments and suggestions submitted in writing within 60 days of this
publication.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information under the PRA unless it
displays a currently valid OMB control number.
Please direct your written comments to: Charles Riddle, Acting
Director/Chief Information Officer, Securities and Exchange Commission,
c/o Candace Kenner, 100 F Street NE, Washington, DC 20549, or send an
email to: [email protected].
Dated: April 17, 2019.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-08037 Filed 4-19-19; 8:45 am]
BILLING CODE 8011-01-P
