Agency Information Collection Activities: Revision of an Approved Information Collection; Comment Request; Margin and Capital Requirements for Covered Swap Entities, 20941-20943 [2023-07374]

Download as PDF Federal Register / Vol. 88, No. 67 / Friday, April 7, 2023 / Notices the system of records notice (DOT/ALL– 14 FDMS), which can be reviewed at https://www.transportation.gov/privacy. See also https://www.regulations.gov/ privacy-notice for the privacy notice of regulations.gov. Issued in Washington, DC. John Karl Alexy, Associate Administrator for Railroad Safety, Chief Safety Officer. [FR Doc. 2023–07322 Filed 4–6–23; 8:45 am] BILLING CODE 4910–06–P DEPARTMENT OF TRANSPORTATION Federal Railroad Administration [Docket Number FRA–2003–15638] ddrumheller on DSK120RN23PROD with NOTICES1 Petition for Expansion of Waiver of Compliance Under part 211 of title 49 Code of Federal Regulations (CFR), this document provides the public notice that by letter dated March 8, 2023, Long Island Rail Road (LIRR) petitioned the Federal Railroad Administration (FRA) for an expansion of a waiver of compliance from certain provisions of the Federal railroad safety regulations contained at 49 CFR part 238 (Passenger Equipment Safety Standards). The relevant Docket Number is FRA–2003– 15638. Specifically, LIRR requests to expand its relief from § 238.303(e)(15)(i)(C), which states that multiple unit (MU)type locomotives equipped with dynamic brakes that become defective, ‘‘shall be repaired or removed from service by or at the locomotive’s next exterior calendar day mechanical inspection.’’ LIRR’s existing relief applies to its fleet of M7 locomotives, which has multiple propulsion inverters. LIRR seeks to expand the relief to include its fleet of M9 locomotives, as LIRR states that the ‘‘IGBT inverter-controlled propulsion system of the M9 is similar to that of the M7 with an additional layer of redundancy.’’ LIRR explains that the arrangement of the pneumatic braking on the M9 locomotives ‘‘limits thermal stresses on the wheels and provides the same braking performance even when dynamic braking is not available.’’ LIRR requests that as the current waiver provides relief on a per-axle basis and considers two dead brake trucks on an M7 train to be the equivalent of a dead locomotive, the requirement be four dead axles on an M9 train to be considered the same. In support of its request, LIRR states that in the 19 years of relief, ‘‘LIRR has had no reports of a VerDate Sep<11>2014 19:11 Apr 06, 2023 Jkt 259001 slow or poorly braking train related to inactive inverters.’’ A copy of the petition, as well as any written communications concerning the petition, is available for review online at www.regulations.gov. Interested parties are invited to participate in these proceedings by submitting written views, data, or comments. FRA does not anticipate scheduling a public hearing in connection with these proceedings since the facts do not appear to warrant a hearing. If any interested party desires an opportunity for oral comment and a public hearing, they should notify FRA, in writing, before the end of the comment period and specify the basis for their request. All communications concerning these proceedings should identify the appropriate docket number and may be submitted at https:// www.regulations.gov. Follow the online instructions for submitting comments. Communications received by June 6, 2023 will be considered by FRA before final action is taken. Comments received after that date will be considered if practicable. Anyone can search the electronic form of any written communications and comments received into any of our dockets by the name of the individual submitting the comment (or signing the document, if submitted on behalf of an association, business, labor union, etc.). Under 5 U.S.C. 553(c), the U.S. Department of Transportation (DOT) solicits comments from the public to better inform its processes. DOT posts these comments, without edit, including any personal information the commenter provides, to www.regulations.gov, as described in the system of records notice (DOT/ALL– 14 FDMS), which can be reviewed at https://www.transportation.gov/privacy. See also https://www.regulations.gov/ privacy-notice for the privacy notice of regulations.gov. Issued in Washington, DC. John Karl Alexy, Associate Administrator for Railroad Safety, Chief Safety Officer. [FR Doc. 2023–07323 Filed 4–6–23; 8:45 am] BILLING CODE 4910–06–P PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 20941 DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency Agency Information Collection Activities: Revision of an Approved Information Collection; Comment Request; Margin and Capital Requirements for Covered Swap Entities Office of the Comptroller of the Currency (OCC), Treasury. ACTION: Notice and request for comment. AGENCY: The OCC, as part of its continuing effort to reduce paperwork and respondent burden, invites comment on a continuing information collection as required by the Paperwork Reduction Act of 1995 (PRA). In accordance with the requirements of the PRA, the OCC may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The OCC is soliciting comment concerning a revision to its information collection titled, ‘‘Margin and Capital Requirements for Covered Swap Entities.’’ SUMMARY: You should submit written comments by June 6, 2023. ADDRESSES: Commenters are encouraged to submit comments by email, if possible. You may submit comments by any of the following methods: • Email: prainfo@occ.treas.gov. • Mail: Chief Counsel’s Office, Attention: Comment Processing, Office of the Comptroller of the Currency, Attention: 1557–0251, 400 7th Street SW, Suite 3E–218, Washington, DC 20219. • Hand Delivery/Courier: 400 7th Street SW, Suite 3E–218, Washington, DC 20219. • Fax: (571) 465–4326. Instructions: You must include ‘‘OCC’’ as the agency name and ‘‘1557– 0251’’ in your comment. In general, the OCC will publish comments on www.reginfo.gov without change, including any business or personal information provided, such as name and address information, email addresses, or phone numbers. Comments received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. Do not include any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure. DATES: E:\FR\FM\07APN1.SGM 07APN1 20942 Federal Register / Vol. 88, No. 67 / Friday, April 7, 2023 / Notices Following the close of this notice’s 60-day comment period, the OCC will publish a second notice with a 30-day comment period. You may review comments and other related materials that pertain to this information collection beginning on the date of publication of the second notice for this collection by the method set forth below. • Viewing Comments Electronically: Go to www.reginfo.gov. Hover over the ‘‘Information Collection Review’’ drop down menu. Click on ‘‘Information Collection Review.’’ From the ‘‘Currently under Review’’ drop-down menu, select ‘‘Department of Treasury’’ and then click ‘‘submit.’’ This information collection can be located by searching by OMB control number ‘‘1557–0251’’ or ‘‘Margin and Capital Requirements for Covered Swap Entities.’’ Upon finding the appropriate information collection, click on the related ‘‘ICR Reference Number.’’ On the next screen, select ‘‘View Supporting Statement and Other Documents’’ and then click on the link to any comment listed at the bottom of the screen. • For assistance in navigating www.reginfo.gov, please contact the Regulatory Information Service Center at (202) 482–7340. FOR FURTHER INFORMATION CONTACT: Shaquita Merritt, OCC Clearance Officer, (202) 649–5490, Chief Counsel’s Office, Office of the Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219. If you are deaf, hard of hearing, or have a speech disability, please dial 7–1–1 to access telecommunications relay services. Under the PRA (44 U.S.C. 3501 et seq.), Federal agencies must obtain approval from the OMB for each collection of information that they conduct or sponsor. ‘‘Collection of information’’ is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) to include agency requests or requirements that members of the public submit reports, keep records, and/or provide information to a third party. Section 3506(c)(2)(A) of title 44 generally requires Federal agencies to provide a 60-day notice in the Federal Register concerning each proposed collection of information, including each proposed extension of an existing collection of information, before submitting the collection to OMB for approval. To comply with this requirement, the OCC is publishing notice of the revision to the collection of information set forth in this document. The OCC asks OMB to approve this revised collection. ddrumheller on DSK120RN23PROD with NOTICES1 SUPPLEMENTARY INFORMATION: VerDate Sep<11>2014 19:11 Apr 06, 2023 Jkt 259001 Title: Margin and Capital Requirements for Covered Swap Entities. OMB Control No.: 1557–0251. Affected Public: Business or other forprofit. Type of Review: Regular review. Abstract: Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) established a comprehensive regulatory framework for derivatives, which are generally characterized as swaps and security-based swaps. Sections 731 and 764 of the DoddFrank Act require the registration and regulation of swap dealers and major swap participants and security-based swap dealers and major security-based swap participants, respectively (collectively, ‘‘swap entities’’). For certain types of swap entities that are prudentially regulated by one of the Agencies,1 sections 731 and 764 of the Dodd-Frank Act require the Agencies to jointly adopt rules for swap entities under their respective jurisdictions imposing capital requirements and initial and variation margin requirements on all non-cleared swaps. Swap entities that are prudentially regulated by the Agencies are referred to herein as ‘‘covered swap entities.’’ OCC’s rules for swap entities can be found in 12 CFR part 45. The OCC, in conjunction with the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation, has determined that § 45.1(h), previously cleared as part of this information collection, no longer includes a disclosure collection of information because the conditions triggering the disclosure have expired. In addition, the OCC has omitted from this information collection the following provisions that were formerly referenced in the clearance because it has determined that they do not constitute collections of information under the Paperwork Reduction Act: §§ 45.1(d); 45.5(c)(2)(i); 45.8(c)(2); 45.8(d)(5), (12), and (13); 45.8(e); and 45.8(f)(2), (3), and (4). Twelve CFR 45.2 defines terms referenced in part 45. Under the definition of ‘‘eligible master netting agreement,’’ a covered swap entity that relies on such agreement for purpose of calculating required margin must (1) conduct sufficient legal review of the agreement to conclude with a wellfounded basis that the agreement meets 1 The Agencies are the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, and the Farm Credit Administration. PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 specified criteria and maintain sufficient written documentation of that legal review and (2) establish and maintain written procedures for monitoring relevant changes in law and to ensure that the agreement continues to satisfy the requirements of the definition. To demonstrate compliance, these records must be retained for as long as the covered swap entity relies on such agreement. The term ‘‘eligible master netting agreement’’ is used elsewhere in the rule to specify instances in which a covered swap entity may (1) calculate variation margin on an aggregate basis across multiple non-cleared swaps and security-based swaps and (2) calculate initial margin requirements under an initial margin model for one or more swaps and security-based swaps. Section 45.7 generally requires a covered swap entity to ensure that any initial margin collateral that it collect or posts is held at a third-party custodian. Section 45.7(c) requires the custodian to act pursuant to a custody agreement that: (1) prohibits the custodian from rehypothecating, repledging, reusing, or otherwise transferring (through securities lending, securities borrowing, repurchase agreement, reverse repurchase agreement or other means) the collateral held by the custodian except that cash collateral may be held in a general deposit account with the custodian if the funds in the account are used to purchase certain assets, such assets are held in compliance with § 45.7, and such purchase takes place within a time period reasonably necessary to consummate such purchase after the cash collateral is posted as initial margin; and (2) is a legal, valid, binding, and enforceable agreement under the laws of all relevant jurisdictions, including in the event of bankruptcy, insolvency, or a similar proceeding. A custody agreement may permit the posting party to substitute or direct any reinvestment of posted collateral held by the custodian, provided that, with respect to collateral collected by a covered swap entity pursuant to § 45.3(a) or posted by a covered swap entity pursuant to § 45.3(b), the agreement requires the posting party to substitute only funds or other property that would qualify as eligible collateral under § 45.6, and for which the amount net of applicable discounts described in Appendix B would be sufficient to meet the requirements of § 45.3 and direct reinvestment of funds only in assets that would qualify as eligible collateral under § 45.6, and for which the amount net of applicable discounts described in E:\FR\FM\07APN1.SGM 07APN1 ddrumheller on DSK120RN23PROD with NOTICES1 Federal Register / Vol. 88, No. 67 / Friday, April 7, 2023 / Notices Appendix B would be sufficient to meet the requirements of § 45.3. Section 45.8 sets forth standards for the use of initial margin models. These standards include: (1) a requirement that the covered swap entity receive prior approval from the OCC based on demonstration that the initial margin model meets specific requirements (§ 45.8(c)(1)); (2) a requirement that a covered swap entity notify the OCC in writing 60 days before extending use of the model to additional product types, making certain changes to the initial margin model, or making material changes to modeling assumptions (§ 45.8(c)(3)); and (3) a requirement that the covered swap entity demonstrate to the satisfaction of the OCC that the omission of any risk factor from the calculation of its initial margin is appropriate, prior to omitting such risk factor (§ 45.8(d)(10)), and demonstrate to the satisfaction of the OCC that the incorporation of any proxy or approximation used to capture the risks of the covered swap entity’s non-cleared swaps or non-cleared security-based swaps is appropriate, prior to incorporating such proxy or approximation (§ 45.8(d)(11)). Also, if the validation process reveals any material problems with the initial margin model, the covered swap entity must promptly notify the OCC of the problems, describe to the OCC any remedial actions being taken, and adjust the initial margin model to ensure an appropriately conservative amount of required initial margin is being calculated (§ 45.8(f)(3)). Section 45.8 also sets forth requirements for the ongoing review and documentation of initial margin models. These standards include a requirement that the covered swap entity adequately document all material aspects of its initial margin model (§ 45.8(g)) and that the covered swap entity must adequately document internal authorization procedures, including escalation procedures, that require review and approval of any change to the initial margin calculation under the initial margin model, demonstrable analysis that any basis for any such change is consistent with the requirements of § 45.8, and independent review of such demonstrable analysis and approval (§ 45.8(h)). Section 45.9 addresses the treatment of cross-border transactions and, in certain limited situations, will permit a covered swap entity to comply with a foreign regulatory framework for noncleared swaps (as a substitute for compliance with the prudential regulators’ rule) if the prudential regulators jointly determine that the VerDate Sep<11>2014 19:11 Apr 06, 2023 Jkt 259001 foreign regulatory framework is comparable to the requirements in the prudential regulators’ rule. Section 45.9(e) allows a covered swap entity to request that the prudential regulators make a substituted compliance determination and provides that the covered swap entity must provide the reasons for the request and other required supporting documentation. A request for a substituted compliance determination must include a description of the scope and objectives of the foreign regulatory framework for non-cleared swaps and non-cleared security-based swaps; the specific provisions of the foreign regulatory framework for non-cleared swaps and security-based swaps (scope of transactions covered; determination of the amount of initial and variation margin required; timing of margin requirements; documentation requirements; forms of eligible collateral; segregation and rehypothecation requirements; and approval process and standards for models); the supervisory compliance program and enforcement authority exercised by a foreign financial regulatory authority or authorities in such system to support its oversight of the application of the non-cleared swap and security-based swap regulatory framework; and any other descriptions and documentation that the prudential regulators determine are appropriate. A covered swap entity may make a request under § 45.9 only if it is directly supervised by the authorities administering the foreign regulatory framework for non-cleared swaps and non-cleared security-based swaps. Section 45.10 requires a covered swap entity to execute trading documentation with each counterparty that is either a swap entity or financial end user regarding credit support arrangements that: (1) provides the contractual right to collect and post initial margin and variation margin in such amounts, in such form, and under such circumstances as are required; and (2) specifies the methods, procedures, rules, and inputs for determining the value of each non-cleared swap or noncleared security-based swap for purposes of calculating variation margin requirements, and the procedures for resolving any disputes concerning valuation. Estimated Number of Respondents: 11. Estimated Total Annual Burden: 4,895 hours. Comments submitted in response to this notice will be summarized and included in the request for OMB approval. All comments will become a PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 20943 matter of public record. Comments are invited on: (a) Whether the collection of information is necessary for the proper performance of the functions of the OCC, including whether the information has practical utility; (b) The accuracy of the OCC’s estimate of the information collection burden; (c) Ways to enhance the quality, utility, and clarity of the information to be collected; (d) Ways to minimize the burden of the collection on respondents, including through the use of automated collection techniques or other forms of information technology; and (e) Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. Patrick T. Tierney, Assistant Director, Bank Advisory, Office of the Comptroller of the Currency. [FR Doc. 2023–07374 Filed 4–6–23; 8:45 am] BILLING CODE 4810–33–P DEPARTMENT OF THE TREASURY Office of Foreign Assets Control Notice of OFAC Sanctions Actions Office of Foreign Assets Control, Treasury. AGENCY: ACTION: Notice. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is publishing the names of one or more persons that have been placed on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List) based on OFAC’s determination that one or more applicable legal criteria were satisfied. All property and interests in property subject to U.S. jurisdiction of these persons are blocked, and U.S. persons are generally prohibited from engaging in transactions with them. SUMMARY: See SUPPLEMENTARY INFORMATION section for applicable dates. DATES: FOR FURTHER INFORMATION CONTACT: OFAC: Andrea Gacki, Director, tel.: 202–622–2490; Associate Director for Global Targeting, tel.: 202–622–2420; Assistant Director for Licensing, tel.: 202–622–2480; Assistant Director for Regulatory Affairs, tel.: 202–622–4855; or the Assistant Director for Sanctions Compliance & Evaluation, tel.: 202–622– 2490. E:\FR\FM\07APN1.SGM 07APN1

Agencies

[Federal Register Volume 88, Number 67 (Friday, April 7, 2023)]
[Notices]
[Pages 20941-20943]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-07374]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency


Agency Information Collection Activities: Revision of an Approved 
Information Collection; Comment Request; Margin and Capital 
Requirements for Covered Swap Entities

AGENCY: Office of the Comptroller of the Currency (OCC), Treasury.

ACTION: Notice and request for comment.

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

SUMMARY: The OCC, as part of its continuing effort to reduce paperwork 
and respondent burden, invites comment on a continuing information 
collection as required by the Paperwork Reduction Act of 1995 (PRA). In 
accordance with the requirements of the PRA, the OCC may not conduct or 
sponsor, and the respondent is not required to respond to, an 
information collection unless it displays a currently valid Office of 
Management and Budget (OMB) control number. The OCC is soliciting 
comment concerning a revision to its information collection titled, 
``Margin and Capital Requirements for Covered Swap Entities.''

DATES: You should submit written comments by June 6, 2023.

ADDRESSES: Commenters are encouraged to submit comments by email, if 
possible. You may submit comments by any of the following methods:
     Email: [email protected].
     Mail: Chief Counsel's Office, Attention: Comment 
Processing, Office of the Comptroller of the Currency, Attention: 1557-
0251, 400 7th Street SW, Suite 3E-218, Washington, DC 20219.
     Hand Delivery/Courier: 400 7th Street SW, Suite 3E-218, 
Washington, DC 20219.
     Fax: (571) 465-4326.
    Instructions: You must include ``OCC'' as the agency name and 
``1557-0251'' in your comment. In general, the OCC will publish 
comments on www.reginfo.gov without change, including any business or 
personal information provided, such as name and address information, 
email addresses, or phone numbers. Comments received, including 
attachments and other supporting materials, are part of the public 
record and subject to public disclosure. Do not include any information 
in your comment or supporting materials that you consider confidential 
or inappropriate for public disclosure.

[[Page 20942]]

    Following the close of this notice's 60-day comment period, the OCC 
will publish a second notice with a 30-day comment period. You may 
review comments and other related materials that pertain to this 
information collection beginning on the date of publication of the 
second notice for this collection by the method set forth below.
     Viewing Comments Electronically: Go to www.reginfo.gov. 
Hover over the ``Information Collection Review'' drop down menu. Click 
on ``Information Collection Review.'' From the ``Currently under 
Review'' drop-down menu, select ``Department of Treasury'' and then 
click ``submit.'' This information collection can be located by 
searching by OMB control number ``1557-0251'' or ``Margin and Capital 
Requirements for Covered Swap Entities.'' Upon finding the appropriate 
information collection, click on the related ``ICR Reference Number.'' 
On the next screen, select ``View Supporting Statement and Other 
Documents'' and then click on the link to any comment listed at the 
bottom of the screen.
     For assistance in navigating www.reginfo.gov, please 
contact the Regulatory Information Service Center at (202) 482-7340.

FOR FURTHER INFORMATION CONTACT: Shaquita Merritt, OCC Clearance 
Officer, (202) 649-5490, Chief Counsel's Office, Office of the 
Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219. 
If you are deaf, hard of hearing, or have a speech disability, please 
dial 7-1-1 to access telecommunications relay services.

SUPPLEMENTARY INFORMATION: Under the PRA (44 U.S.C. 3501 et seq.), 
Federal agencies must obtain approval from the OMB for each collection 
of information that they conduct or sponsor. ``Collection of 
information'' is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) to 
include agency requests or requirements that members of the public 
submit reports, keep records, and/or provide information to a third 
party. Section 3506(c)(2)(A) of title 44 generally requires Federal 
agencies to provide a 60-day notice in the Federal Register concerning 
each proposed collection of information, including each proposed 
extension of an existing collection of information, before submitting 
the collection to OMB for approval. To comply with this requirement, 
the OCC is publishing notice of the revision to the collection of 
information set forth in this document. The OCC asks OMB to approve 
this revised collection.
    Title: Margin and Capital Requirements for Covered Swap Entities.
    OMB Control No.: 1557-0251.
    Affected Public: Business or other for-profit.
    Type of Review: Regular review.
    Abstract: Title VII of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (Dodd-Frank Act) established a comprehensive 
regulatory framework for derivatives, which are generally characterized 
as swaps and security-based swaps.
    Sections 731 and 764 of the Dodd-Frank Act require the registration 
and regulation of swap dealers and major swap participants and 
security-based swap dealers and major security-based swap participants, 
respectively (collectively, ``swap entities''). For certain types of 
swap entities that are prudentially regulated by one of the 
Agencies,\1\ sections 731 and 764 of the Dodd-Frank Act require the 
Agencies to jointly adopt rules for swap entities under their 
respective jurisdictions imposing capital requirements and initial and 
variation margin requirements on all non-cleared swaps. Swap entities 
that are prudentially regulated by the Agencies are referred to herein 
as ``covered swap entities.'' OCC's rules for swap entities can be 
found in 12 CFR part 45.
---------------------------------------------------------------------------

    \1\ The Agencies are the Office of the Comptroller of the 
Currency, the Board of Governors of the Federal Reserve System, the 
Federal Deposit Insurance Corporation, the Federal Housing Finance 
Agency, and the Farm Credit Administration.
---------------------------------------------------------------------------

    The OCC, in conjunction with the Board of Governors of the Federal 
Reserve System and the Federal Deposit Insurance Corporation, has 
determined that Sec.  45.1(h), previously cleared as part of this 
information collection, no longer includes a disclosure collection of 
information because the conditions triggering the disclosure have 
expired. In addition, the OCC has omitted from this information 
collection the following provisions that were formerly referenced in 
the clearance because it has determined that they do not constitute 
collections of information under the Paperwork Reduction Act: 
Sec. Sec.  45.1(d); 45.5(c)(2)(i); 45.8(c)(2); 45.8(d)(5), (12), and 
(13); 45.8(e); and 45.8(f)(2), (3), and (4).
    Twelve CFR 45.2 defines terms referenced in part 45. Under the 
definition of ``eligible master netting agreement,'' a covered swap 
entity that relies on such agreement for purpose of calculating 
required margin must (1) conduct sufficient legal review of the 
agreement to conclude with a well-founded basis that the agreement 
meets specified criteria and maintain sufficient written documentation 
of that legal review and (2) establish and maintain written procedures 
for monitoring relevant changes in law and to ensure that the agreement 
continues to satisfy the requirements of the definition. To demonstrate 
compliance, these records must be retained for as long as the covered 
swap entity relies on such agreement. The term ``eligible master 
netting agreement'' is used elsewhere in the rule to specify instances 
in which a covered swap entity may (1) calculate variation margin on an 
aggregate basis across multiple non-cleared swaps and security-based 
swaps and (2) calculate initial margin requirements under an initial 
margin model for one or more swaps and security-based swaps.
    Section 45.7 generally requires a covered swap entity to ensure 
that any initial margin collateral that it collect or posts is held at 
a third-party custodian. Section 45.7(c) requires the custodian to act 
pursuant to a custody agreement that: (1) prohibits the custodian from 
rehypothecating, repledging, reusing, or otherwise transferring 
(through securities lending, securities borrowing, repurchase 
agreement, reverse repurchase agreement or other means) the collateral 
held by the custodian except that cash collateral may be held in a 
general deposit account with the custodian if the funds in the account 
are used to purchase certain assets, such assets are held in compliance 
with Sec.  45.7, and such purchase takes place within a time period 
reasonably necessary to consummate such purchase after the cash 
collateral is posted as initial margin; and (2) is a legal, valid, 
binding, and enforceable agreement under the laws of all relevant 
jurisdictions, including in the event of bankruptcy, insolvency, or a 
similar proceeding. A custody agreement may permit the posting party to 
substitute or direct any reinvestment of posted collateral held by the 
custodian, provided that, with respect to collateral collected by a 
covered swap entity pursuant to Sec.  45.3(a) or posted by a covered 
swap entity pursuant to Sec.  45.3(b), the agreement requires the 
posting party to substitute only funds or other property that would 
qualify as eligible collateral under Sec.  45.6, and for which the 
amount net of applicable discounts described in Appendix B would be 
sufficient to meet the requirements of Sec.  45.3 and direct 
reinvestment of funds only in assets that would qualify as eligible 
collateral under Sec.  45.6, and for which the amount net of applicable 
discounts described in

[[Page 20943]]

Appendix B would be sufficient to meet the requirements of Sec.  45.3.
    Section 45.8 sets forth standards for the use of initial margin 
models. These standards include: (1) a requirement that the covered 
swap entity receive prior approval from the OCC based on demonstration 
that the initial margin model meets specific requirements (Sec.  
45.8(c)(1)); (2) a requirement that a covered swap entity notify the 
OCC in writing 60 days before extending use of the model to additional 
product types, making certain changes to the initial margin model, or 
making material changes to modeling assumptions (Sec.  45.8(c)(3)); and 
(3) a requirement that the covered swap entity demonstrate to the 
satisfaction of the OCC that the omission of any risk factor from the 
calculation of its initial margin is appropriate, prior to omitting 
such risk factor (Sec.  45.8(d)(10)), and demonstrate to the 
satisfaction of the OCC that the incorporation of any proxy or 
approximation used to capture the risks of the covered swap entity's 
non-cleared swaps or non-cleared security-based swaps is appropriate, 
prior to incorporating such proxy or approximation (Sec.  45.8(d)(11)). 
Also, if the validation process reveals any material problems with the 
initial margin model, the covered swap entity must promptly notify the 
OCC of the problems, describe to the OCC any remedial actions being 
taken, and adjust the initial margin model to ensure an appropriately 
conservative amount of required initial margin is being calculated 
(Sec.  45.8(f)(3)).
    Section 45.8 also sets forth requirements for the ongoing review 
and documentation of initial margin models. These standards include a 
requirement that the covered swap entity adequately document all 
material aspects of its initial margin model (Sec.  45.8(g)) and that 
the covered swap entity must adequately document internal authorization 
procedures, including escalation procedures, that require review and 
approval of any change to the initial margin calculation under the 
initial margin model, demonstrable analysis that any basis for any such 
change is consistent with the requirements of Sec.  45.8, and 
independent review of such demonstrable analysis and approval (Sec.  
45.8(h)).
    Section 45.9 addresses the treatment of cross-border transactions 
and, in certain limited situations, will permit a covered swap entity 
to comply with a foreign regulatory framework for non-cleared swaps (as 
a substitute for compliance with the prudential regulators' rule) if 
the prudential regulators jointly determine that the foreign regulatory 
framework is comparable to the requirements in the prudential 
regulators' rule. Section 45.9(e) allows a covered swap entity to 
request that the prudential regulators make a substituted compliance 
determination and provides that the covered swap entity must provide 
the reasons for the request and other required supporting 
documentation. A request for a substituted compliance determination 
must include a description of the scope and objectives of the foreign 
regulatory framework for non-cleared swaps and non-cleared security-
based swaps; the specific provisions of the foreign regulatory 
framework for non-cleared swaps and security-based swaps (scope of 
transactions covered; determination of the amount of initial and 
variation margin required; timing of margin requirements; documentation 
requirements; forms of eligible collateral; segregation and re-
hypothecation requirements; and approval process and standards for 
models); the supervisory compliance program and enforcement authority 
exercised by a foreign financial regulatory authority or authorities in 
such system to support its oversight of the application of the non-
cleared swap and security-based swap regulatory framework; and any 
other descriptions and documentation that the prudential regulators 
determine are appropriate. A covered swap entity may make a request 
under Sec.  45.9 only if it is directly supervised by the authorities 
administering the foreign regulatory framework for non-cleared swaps 
and non-cleared security-based swaps.
    Section 45.10 requires a covered swap entity to execute trading 
documentation with each counterparty that is either a swap entity or 
financial end user regarding credit support arrangements that: (1) 
provides the contractual right to collect and post initial margin and 
variation margin in such amounts, in such form, and under such 
circumstances as are required; and (2) specifies the methods, 
procedures, rules, and inputs for determining the value of each non-
cleared swap or non-cleared security-based swap for purposes of 
calculating variation margin requirements, and the procedures for 
resolving any disputes concerning valuation.
    Estimated Number of Respondents: 11.
    Estimated Total Annual Burden: 4,895 hours.
    Comments submitted in response to this notice will be summarized 
and included in the request for OMB approval. All comments will become 
a matter of public record. Comments are invited on:
    (a) Whether the collection of information is necessary for the 
proper performance of the functions of the OCC, including whether the 
information has practical utility;
    (b) The accuracy of the OCC's estimate of the information 
collection burden;
    (c) Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    (d) Ways to minimize the burden of the collection on respondents, 
including through the use of automated collection techniques or other 
forms of information technology; and
    (e) Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of services to provide information.

Patrick T. Tierney,
Assistant Director, Bank Advisory, Office of the Comptroller of the 
Currency.
[FR Doc. 2023-07374 Filed 4-6-23; 8:45 am]
BILLING CODE 4810-33-P

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