Large Trader Reporting Requirements, 41522-41540 [2023-13459]

Download as PDF 41522 Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Proposed Rules paragraph under 5 U.S.C. 552(a) and 1 CFR part 51. (2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise. (i) European Union Aviation Safety Agency (EASA) AD 2023–0009, dated January 16, 2023. (ii) [Reserved] (3) For EASA AD 2023–0009, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email ADs@easa.europa.eu; website easa.europa.eu. You may find this EASA AD on the EASA website at ad.easa.europa.eu. (4) You may view this service information at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206–231–3195. (5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, email fr.inspection@nara.gov, or go to: www.archives.gov/federal-register/cfr/ibrlocations.html. Issued on June 21, 2023. Michael Linegang, Acting Director, Compliance & Airworthiness Division, Aircraft Certification Service. [FR Doc. 2023–13566 Filed 6–26–23; 8:45 am] BILLING CODE 4910–13–P COMMODITY FUTURES TRADING COMMISSION 17 CFR Part 17 RIN 3038–AF27 Large Trader Reporting Requirements Commodity Futures Trading Commission. ACTION: Notice of proposed rulemaking. AGENCY: The Commodity Futures Trading Commission (‘‘Commission’’ or ‘‘CFTC’’) is proposing revisions to the Commission’s regulations that set forth large trader position reporting requirements for futures and options. First, the Commission is proposing to remove an outdated 80-character submission standard and delegate certain authority to the Office of Data and Technology to designate a modern submission standard for certain reports required to be submitted. Second, the Commission is proposing to replace certain enumerated data fields with an appendix specifying applicable data elements and a separate Guidebook specifying the form and manner for reporting. These revisions would modernize large trader position reporting and align it with other reporting structures set out in the Commission’s regulations. ddrumheller on DSK120RN23PROD with PROPOSALS1 SUMMARY: VerDate Sep<11>2014 17:46 Jun 26, 2023 Jkt 259001 Comments must be submitted on or before August 28, 2023. ADDRESSES: You may submit comments, identified by ‘‘Large Trader Reporting Requirements, RIN 3038–AF27,’’ by any of the following methods: • CFTC Comments Portal: https:// comments.cftc.gov/. Select the ‘‘Submit Comments’’ link for this rulemaking and follow the instructions on the Public Comment Form. • Mail: Send to Christopher Kirkpatrick, Secretary of the Commission, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581. • Hand Delivery/Courier: Same as Mail above. Please submit your comments using only one of these methods. To avoid possible delays with mail or in-person deliveries, submissions through the CFTC Comments Portal are encouraged. All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to https:// comments.cftc.gov. You should submit only information that you wish to make available publicly. If you wish the Commission to consider information that you believe is exempt from disclosure under the Freedom of Information Act (‘‘FOIA’’), a petition for confidential treatment of the exempt information may be submitted according to the procedures established in § 145.9 of the Commission’s regulations.1 The Commission reserves the right, but shall have no obligation, to review, pre-screen, filter, redact, refuse, or remove any or all submissions from https://www.comments.cftc.gov that it may deem to be inappropriate for publication, such as obscene language. All submissions that have been redacted or removed that contain comments on the merits of the rulemaking will be retained in the public comment file and will be considered as required under the Administrative Procedure Act and other applicable laws, and may be accessible under FOIA. FOR FURTHER INFORMATION CONTACT: Owen Kopon, Associate Chief Counsel, at (202) 418–5360 or okopon@cftc.gov, Paul Chaffin, Assistant Chief Counsel, at (202) 418–5185 or pchaffin@cftc.gov, Division of Market Oversight, James Fay, IT Specialist, at (202) 418–5293 or jfay@cftc.gov, Division of Data, or Daniel Prager, Research Economist, (202) 418– 5801 or dprager@cftc.gov, Office of the Chief Economist, in each case at the Commodity Futures Trading DATES: 1 17 PO 00000 CFR 145.9. Frm 00013 Fmt 4702 Sfmt 4702 Commission, 1155 21st Street NW, Washington, DC 20581. SUPPLEMENTARY INFORMATION: I. Background A. Introduction Part 17 of the Commission’s regulations governs large trader reporting for futures and options.2 Among other things, those rules require futures commission merchants (‘‘FCMs’’), foreign brokers, clearing members, and certain reporting markets 3 (FCMs, foreign brokers, clearing members, and such reporting markets are collectively referred to herein as ‘‘reporting firms’’) to report daily position information of the largest futures and options traders to the Commission.4 The Commission uses these § 17.00(a) large trader reports to carry out its market surveillance programs, which include detection and prevention of price manipulation, as well as enforcement of speculative limits.5 Among other things, data reported under Part 17 enable the Commission to identify large positions in single markets or across markets, including by aggregating the positions of a particular beneficial owner across multiple accounts held with multiple clearing members. In addition to supporting the Commission’s surveillance programs, aggregated position data collected under Part 17 serves as the basis of the Commission’s weekly Commitments of Traders (‘‘COT’’) report.6 Historically, a wide range of both commercial and speculative traders have used the COT report for a variety of purposes related to their trading activities.7 Finally, Part 2 17 CFR part 17. exclusively self-cleared contracts, designated contract markets (‘‘DCMs’’) must report data required to be reported under regulation 17.00(a) on behalf of clearing members. See 17 CFR 17.00(i). 4 17 CFR 17.00(a). 5 See, e.g., Final Rule, Reports; General Provisions; Adoption of Final Rules, 49 FR 46116, 46116 (Nov. 23, 1984). 6 See, e.g., Comprehensive Review of the Commitments of Traders Reporting Program, 71 FR 35627, 35630 (June 21, 2006) (stating that the Commission generates the COT report using Part 17 data); Final rule and corrections, Reporting Requirements for Contract Markets, Futures Commission Merchants, Members of Exchanges and Large Traders, 46 FR 59960, 59961 n.6 (Dec. 8, 1981) (‘‘[I]n addition to market surveillance and enforcement of speculative limits, large trader data provides the basis for the Commission’s monthly report on commitments of large traders.’’). 7 See, e.g., CFTC, ‘‘Commission Actions in Response to the Comprehensive Review of the Commitments of Traders Reporting Program,’’ at 6 (Dec. 5, 2006), available at https://www.cftc.gov/ idc/groups/public/@commitmentsoftraders/ documents/file/noticeonsupplementalcotrept.pdf; see also CFTC, Staff Report on Commodity Swap 3 For E:\FR\FM\27JNP1.SGM 27JNP1 Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Proposed Rules 17 data is an important source of data for fulfillment of the Commission’s market analysis program and to support Commission research projects. Since the 1980s, § 17.00(g) has set forth both the submission standard and data fields to be used in § 17.00(a) large trader reports.8 Section 17.00(g) requires reporting firms to submit data in a highly-specified 80-character record format that is unique to § 17.00(a) large trader reports. As technology and markets have evolved, this record format has become outdated. It does not accommodate information needed to represent certain contracts, and necessitates manual work by staff to validate and ingest data.9 The Commission is issuing a proposal to update data reporting under § 17.00(a) by removing § 17.00(g)’s 80-character record format and delegating authority to the Director of the Office of Data and Technology to designate a modern data submission standard. Additionally, the Commission proposes to replace the data fields enumerated in that § 17.00(g) record format with a proposed Appendix C to Part 17 specifying the data elements required to be reported, and to delegate to the Director of the Office of Data and Technology the authority to specify the form, manner, coding structure, and electronic data transmission procedures for reporting these data elements under Part 17. These changes would both address shortcomings of the current format for Part 17 data and align Part 17 reporting with the reporting structure set out in Parts 16, 20, 39, 43, and 45.10 ddrumheller on DSK120RN23PROD with PROPOSALS1 B. Statutory and Regulatory Framework for § 17.00(a) Large Trader Reporting for Futures and Options The reporting rules contained in Parts 15, 16, 17, 18, 19, and 21 of the Commission’s regulations are structured to ensure that the Commission receives adequate information to facilitate oversight of futures and options markets via its market surveillance programs.11 Part 16 requires contract markets to submit certain data; Parts 17 and 21 Dealers & Index Traders with Commission Recommendations, at 46 (Sept. 2008), available at https://www.cftc.gov/idc/groups/public/@ newsroom/documents/file/cftcstaffreport onswapdealers09.pdf (describing various market participants’ and researchers’ uses for the COT report). 8 The final rule promulgating regulation 17.00(g) was published in 1986. Final Rule, Reports Filed by Contract Markets, Futures Commission Merchants, Clearing Members, Foreign Brokers, and Large Traders, 51 FR 4712 (Feb. 7, 1986). 9 17 CFR 17.00(g). 10 See 17 CFR part 16; 17 CFR part 20; 17 CFR part 39; 17 CFR part 43; 17 CFR part 45. 11 See, e.g., Final Rule, Reporting Levels and Recordkeeping, 69 FR 76392, 76392 (Dec. 21, 2004). VerDate Sep<11>2014 17:46 Jun 26, 2023 Jkt 259001 require FCMs, clearing members, foreign brokers, and certain reporting markets to submit certain data; and Parts 18 and 19 require individual traders to submit certain data.12 The reporting rules are implemented by the Commission based on the authority of sections 4a, 4c(b), 4g, and 4i of the Commodity Exchange Act (‘‘CEA’’). Section 4a of the CEA permits the Commission to set and approve exchange-set limits and enforce speculative position limits.13 Section 4c(b) of the CEA gives the Commission plenary authority to regulate transactions that involve commodity options.14 Section 4g of the CEA imposes reporting and recordkeeping obligations on registered entities, and requires each registered entity to file such reports as the Commission may require on proprietary and customer transactions and positions in commodities for future delivery executed on any board of trade.15 Additionally, Section 4g of the CEA requires registered entities to maintain daily trading records as required by the Commission and permits the Commission to require that such daily trading records be made available to the Commission.16 Section 4i of the CEA requires the filing of such reports as the Commission may require when positions made or obtained on DCMs equal or exceed Commission-set levels.17 The Commission’s large trader reporting regime for futures and options requires reporting firms to submit, pursuant to § 17.00(a), daily reports to the Commission providing positions in open contracts 18 and identifying information for the futures and options trader accounts that exceed Commission-set reporting levels—called special accounts 19—and requires large traders themselves to provide certain identifying information.20 More 17 CFR parts 16–19, 21. U.S.C. 6a. Section 4a of the CEA also permits the Commission to set, approve, and enforce speculative position limits with respect to swaps. 14 7 U.S.C. 6c(b). 15 7 U.S.C. 6g. 16 See id. 17 7 U.S.C. 6i. 18 ‘‘Open contract’’ means any commodity or commodity option position held by any person on or subject to the rules of a board of trade which have not expired, been exercised, or offset. See 17 CFR 1.3 and 17 CFR 15.00(n). 19 A ‘‘special account’’ means any commodity futures or options account in which there is a ‘‘reportable position.’’ 17 CFR 15.00(r). A ‘‘reportable position’’ is any open contract position held or controlled by a trader at the close of business in any one futures contract of a commodity traded on any one contract market that equals or exceeds the reportable levels fixed by the Commission in regulation 15.03. 17 CFR 15.03. 20 17 CFR part 18. 41523 specifically, § 17.00(a) requires reporting firms to submit a § 17.00(a) large trader position report—historically referred to as a ‘‘series ’01 report’’ 21— that itemizes by special account certain positions, deliveries of futures, and exchanges of futures for related positions associated with each account that carries a reportable position.22 Section 17.01 requires, separately, that reporting firms submit information, via Form 102A,23 identifying the traders behind special accounts by name, address, and occupation, once an account accrues a reportable position.24 Reporting firms, as appropriate, submit Forms 102 to the Commission for each account when that account becomes reportable as a special account.25 By aggregating information from § 17.00(a) large trader position reports and Forms 102, the Commission can determine the size of each reportable trader’s overall positions across special accounts held with multiple FCMs, clearing members, or foreign brokers. These data reported under Part 17 are used for the Commission’s market surveillance program, for generating the weekly COT report, for market analysis, and for research projects.26 Section 17.00(g) provides the data submission standard and data elements for the reportable positions by special accounts—§ 17.00(a) large trader report data, or series ’01 report data—in the form of an 80-character record format.27 The Commission receives § 17.00(a) large trader reports by 9 a.m. on the business day following the day to which the information pertains.28 Information obtained from such reports is ingested into the Commission’s Integrated Surveillance System (‘‘ISS’’), where it may be linked to ownership and control information for special accounts reported pursuant to § 17.01.29 12 See 13 7 PO 00000 Frm 00014 Fmt 4702 Sfmt 4702 21 See, e.g., 17 CFR 15.02 (enumerating reports by ‘‘Form No.’’). 22 17 CFR 17.00(a). 23 See 17 CFR part 17, App’x A. 24 17 CFR 17.01. 25 17 CFR 17.02(b). 26 See, e.g., Final Rule, Reports Filed by Contract Markets, Futures Commission Merchants, Clearing Members, Foreign Brokers, and Large Traders, 51 FR 4712, at 4712 (Feb. 7, 1986). 27 17 CFR 17.00(g). 28 17 CFR 17.02(a). 29 ISS receives and stores end-of-day position reports submitted to the CFTC and allows the Commission’s divisions and offices to monitor daily activities of large traders. See, e.g., Final Rule, Ownership and Control Reports, Form 102/102S, 40/40S, and 71, 78 FR 69178, 69180 (Nov. 18, 2013). Among other things, ISS is used to generate the COT report. E:\FR\FM\27JNP1.SGM 27JNP1 41524 Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Proposed Rules C. Shortcomings of the § 17.00(g) Record Format Section 17.00(g)’s 80-character record format has been in place since 1986,30 and has become outdated and difficult for staff to use. Historically, Part 17 has evolved alongside technological advances in data transmission. At the time of the Commission’s establishment, daily reports with respect to special accounts could be submitted to the Commission on paper series ’01 forms.31 In 1984, the Commission amended Part 17 to permit, but not require, reporting firms to submit Part 17 reports on certain Commission-compatible data processing media—at that time, computer printouts or magnetic tape.32 The Commission found these methods improved data quality and saved time, money, and effort for both the Commission and market participants.33 In 1986, the Commission revised Part 17 to specifically require that a reporting firm submit reports in a machinereadable form compatible with the Commission’s data processing system, unless otherwise authorized by the Commission.34 At that time, newlyestablished § 17.00(g) set out the data fields to be reported and introduced an 80-character submission standard based on Cobol Programming Language descriptions.35 Market participants were required to submit § 17.00(a) large trader position reports using compatible data processing media, defined to include magnetic tape, magnetic diskette, or dial-up data transmission at speeds up to 1200 baud asynchronous transmission and 4800 baud synchronous transmission.36 The Commission made minor amendments ddrumheller on DSK120RN23PROD with PROPOSALS1 30 See 51 FR 4712. 31 See, e.g., Final Rule, Rules Under the Commodity Exchange Act, 41 FR 3192, 3208 (Jan. 21, 1976) (regulation 17.03 permitted reporting of series 01 information on ‘‘compatible dataprocessing punched cards’’ in addition to magnetic tape or discs). The Commission’s predecessor agency received regulation 17.00(a) large trader reporting in a similar format. See, e.g., Supersedure of Certain Regulations, 26 FR 2968, 2969 (Apr. 7, 1961). 32 Final Rule, Reports Filed by Contract Markets, Futures Commission Merchants, Clearing Members, Foreign Brokers and Large Traders, 51 FR 4712–01, 4713–14 (Feb. 7, 1986). 33 Id. at 4714; see also Proposed Rule, Reporting Requirements for Contract Markets, Futures Commission Merchants, Clearing Members and Traders, 50 FR 30450–01, 30452 (Jul. 26, 1985). 34 51 FR at 4714. 35 17 CFR 17.00(g) (1986). ‘‘Cobol’’ refers to Common Business Oriented Language. 36 17 CFR 15.00(1) (1986); see also 51 FR at 4714. By 1995, the Commission received 95 percent of its futures large trader data through dial-up transmission or on machine-readable media. See Proposed Rule, Futures Commission Merchants, Clearing Members and Foreign Brokers; Option Large Trader Reports Daily Filing Requirements, 61 FR 37409–01, 37411 (Jul. 18, 1996). VerDate Sep<11>2014 17:46 Jun 26, 2023 Jkt 259001 to the particulars of the 80-character record format in 1997 and, in recognition of evolving data transmission methods, revised the definition of ‘‘compatible dataprocessing media’’ to delete its list of specific compatible media and delegate to staff the authority to define acceptable media.37 The 80-character record format has remained largely unchanged since 1997. In 2004, the Commission revised requirements that specified that reports be transmitted by ‘‘dial-up’’ to allow for more general transmission via internet connection,38 and expanded the requirement that reporting firms include information concerning volume attributable to exchanges of futures for physicals to include information concerning exchanges of futures for derivatives positions.39 Technology for financial reporting has further advanced since the 1990s. As a result, the record format for § 17.00(a) large trader reports has become outdated. First, the Cobol Language submission standard embedded in current § 17.00(g) is outdated. No other CFTC reporting regime relies in the same manner on a Cobol Language submission standard today.40 Outside of the Part 17 context, the Commission has transitioned to more modern data submission standards, such as Financial Products Markup Language (‘‘FpML’’),41 the Financial Information eXchange (‘‘FIX’’) Protocol or Financial Information eXchange Markup Language (‘‘FIXML’’),42 and other submission standards using extensible markup language (‘‘XML’’).43 XML standards 37 See Final Rule, Recordkeeping: Reports by Futures Commission Merchants, Clearing Members, Foreign Brokers, and Large Traders, 85 FR 24026, 24028 (May 2, 1997). 38 See Final Rule, Reporting Levels and Recordkeeping, 69 FR 76392–01, 76394 (Dec. 21, 2004). 39 See id. at 76394. 40 In 2004, the Commission removed a Cobol Language record format used for special calls under regulation 21.02 as part of the process of modernizing the rules covering data and hard copy submissions to the Commission under Parts 15 through 21. See id. at 76400 (removing regulation 21.02). 41 FpML is a freely-licensed business information exchange standard for derivatives. See FpML, ‘‘What is FpML®?,’’ available at https:// www.fpml.org/about/what-is-fpml/ (last visited April 26, 2023). 42 See FIX Trading, ‘‘What is FIX?,’’ available at https://www.fixtrading.org/what-is-fix/ (last visited April 26, 2023). 43 See, e.g., Large Trader Reporting for Physical Commodity Swaps: Division of Market Oversight Guidebook for Part 20 Reports (June 22, 2015), available at https://www.cftc.gov/idc/groups/ public/@newsroom/documents/file/ ltrguidebook062215.pdf (incorporating FpML and FIXML data standards for Part 20 reporting); CFTC PO 00000 Frm 00015 Fmt 4702 Sfmt 4702 have the ability to capture complex or customizable information about products 44 beyond the capabilities of the simpler Cobol Language used in the current § 17.00(g) standard. The Commission converted reporting for transaction data reporting by DCMs to an FIXML standard in the 2009 to 2010 period.45 XML-based standards like FpML and FIXML both have been widely used by market participants and regulators to represent financial data for purposes of electronically messaging and confirming derivatives trades since at least 2011.46 Second, the current § 17.00(g) record format has grown error-prone. Correcting errors in § 17.00(a) data is burdensome for both Commission staff and industry. Uncorrected errors in such data impair the Commission’s ability to utilize data for surveillance and market analysis. In addition to relying on data reported under § 17.00(a) for market surveillance, the Commission generates the weekly COT report based on such data.47 Because the current § 17.00(g) record format does not support automated data quality checks from the Commission back to reporting firms, Commission staff must manually contact reporting firms to address errors, which has proven time-consuming and inefficient. Reporting firms must, in turn, submit error corrections. This error correction process puts the timeliness of the COT report in jeopardy. The error correction process also imposes costs on the Commission and on industry that could be reduced or avoided if the Commission were able to implement automated data quality checks. Third, data received in the § 17.00(g) record format is difficult to query outside of ISS, limiting staff’s flexibility in working with this data and impeding staff’s ability to integrate this data with other data housed outside of ISS. Fourth, new contract features have been introduced to the market since the last revisions to § 17.00(g), including certain features which are in some cases not readily susceptible to representation Technical Specification, Parts 43 and 45 swap data reporting and public dissemination requirements, Version 3.0 (Sept. 30, 2021), available at https:// www.cftc.gov/media/6576/Part43_45Technical Specification093021CLEAN/download (incorporating FIXML data standard for Parts 43 and 45 reporting). 44 See id. 45 See Advanced Notice of Proposed Rulemaking, Account Ownership and Control Information, 74 FR 31642, 31644 (July 2, 2009). 46 See CFTC and SEC, ‘‘Joint Study on the Feasibility of Mandating Algorithmic Descriptions for Derivatives,’’ at 11 (Apr. 7, 2011), available at https://www.cftc.gov/sites/default/files/idc/groups/ public/@swaps/documents/file/dfstudy_algo_ 040711.pdf. 47 See, e.g., 46 FR at 59961 n.6. E:\FR\FM\27JNP1.SGM 27JNP1 Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Proposed Rules in § 17.00(g)’s current 80-character record format. For example, the current § 17.00(g) submission standard contains a single data field that allows the reporting firm to indicate the strike for an option position, but cannot accommodate reporting strikes for a bounded option position—a position in a contract that has both an upper and lower strike—in that single data field. To accommodate data reporting for such contracts, the Commission must undertake additional manual work, including ingesting supplemental data reports. This is time-consuming, inefficient, and introduces unnecessary risks of error. In light of the above, the Commission is proposing to amend Part 17 to (1) remove the outdated 80-character record format and replace it with provisions that delegate to staff the authority to designate a modern data submission standard, and (2) replace the data fields represented in the 80-character record format with an appendix of applicable data elements and a Part 17 Guidebook to provide the form and manner for submitting data reports. In introducing an appendix of applicable data elements, the Commission also proposes to add data elements necessary to represent positions in certain innovative contracts in § 17.00(a) reports and to indicate the types of transactions that resulted in day-to-day changes in positions as described below. ddrumheller on DSK120RN23PROD with PROPOSALS1 II. Proposed Rules A. Sections 17.00(g), 17.00(h), and 17.03(d)—Submission Standard As discussed above, the current § 17.00(g) record format has become outdated, error-prone, and difficult to use. The Commission is proposing amendments to remove § 17.00(g)’s current, outdated 80-character record format and to replace it with provisions that allow the Commission to implement modern data submission standards.48 Specifically, the Commission proposes to remove current § 17.00(g)’s 80-character record format and amend § 17.03(d) to delegate authority to the Director of the Office of Data and Technology to designate a submission standard for reports required under § 17.00(a). That submission standard would be published in a Part 17 Guidebook. The Commission proposes replacing current § 17.00(g) with a provision requiring that a report under § 17.00(a) include all applicable data elements specified in a proposed Appendix C to Part 17, and be submitted in the form and manner 48 17 CFR 17.00(g). VerDate Sep<11>2014 17:46 Jun 26, 2023 Jkt 259001 provided in the Part 17 Guidebook. Delegated authority would facilitate implementing a submission standard that accommodates technological advances and provides efficiencies to market participants required to submit reports required by § 17.00(a). 1. Removal of the § 17.00(g) Record Format and Delegation of Authority to the Office of Data and Technology To Require Modern Submission Standards As discussed above, the current § 17.00(g) record format has become outdated. The Cobol Language submission standard is used nowhere else in CFTC reporting, as the Commission has otherwise transitioned to more modern data submission standards for data reporting across its reporting regulations.49 That record format is also error-prone and difficult to query outside of ISS, rendering large trader position data difficult to integrate with other Commission data. And, that submission standard lacks the flexibility to accommodate certain features of innovative contracts. To replace the current § 17.00(g) record format, the Commission proposes to revise §§ 17.00(g) and 17.03(d) to explicitly delegate authority to the Director of the Office of Data and Technology to determine the form and manner for reporting data required to be reported under § 17.00(a), including to establish the data submission standard for such reports. Concurrently with the issuance of this notice, the Office of Data and Technology has published a proposed Part 17 Guidebook on the Commission’s website, https:// www.cftc.gov. The proposed Part 17 Guidebook will specify the data submission standard for reports required under § 17.00(a), among other things. Such an approach is consistent with the Commission’s practice in other data reporting regimes.50 To facilitate 49 See, e.g., See Advanced Notice of Proposed Rulemaking, Account Ownership and Control Information, 74 FR 31642, 31644 (July 2, 2009) (regulation 16.02 data to be reported in FIXML); Large Trader Reporting for Physical Commodity Swaps: Division of Market Oversight Guidebook for Part 20 Reports (June 22, 2015), available at https:// www.cftc.gov/idc/groups/public/@newsroom/ documents/file/ltrguidebook062215.pdf (incorporating FpML and FIXML data standards for Part 20 reporting); CFTC Technical Specification, Parts 43 and 45 swap data reporting and public dissemination requirements, Version 3.0 (Sept. 30, 2021), available at https://www.cftc.gov/media/ 6576/Part43_45TechnicalSpecification 093021CLEAN/download (incorporating FIXML data standard for Parts 43 and 45 reporting). 50 See, e.g., 17 CFR 45.15(a)(2) (delegating authority to staff to determine whether to require reporting swap data using one or more particular data standards (such as FIX, FpML, ISO 20022, or some other standard), to accommodate the needs of different communities of users); 17 CFR 20.8(d) PO 00000 Frm 00016 Fmt 4702 Sfmt 4702 41525 adaptation to modern data standards, the Commission has delegated authority to the Divisions to determine which data standards to permit or require in order to accommodate the needs of different communities of users.51 The Divisions exercise delegated authority through the publication of guidebooks or technical specifications that set out the form, manner, and timing for reporting data. The proposed Part 17 Guidebook specifies that reporting firms submit § 17.00(a) data in FIXML format. In its other reporting regimes, the Commission typically requires modern XML submission standards, such as FpML 52 or FIXML.53 Receiving Part 17 data in a modern submission format comparable to that used in the submission of other datasets the Commission relies on would enable staff to more easily analyze Part 17 data outside of ISS and to more easily integrate Part 17 data with other Commission datasets. Notably, the Commission receives Trade Capture Reports and Ownership and Control Reports in a FIXML format.54 Section 17.00(a) position data can be linked to § 16.02 transaction data through ownership and control data required to (delegating authority to staff to provide instructions or determine the format, coding structure, and electronic data transmission procedures for submitting data records and any other information required for large trader swaps reporting under Part 20). 51 See, e.g., 17 CFR 20.8; 17 CFR 45.11; 17 CFR 45.15(a)(2). 52 See, e.g., Large Trader Reporting for Physical Commodity Swaps: Division of Market Oversight Guidebook for Part 20 Reports (June 22, 2015), available at https://www.cftc.gov/idc/groups/ public/@newsroom/documents/file/ ltrguidebook062215.pdf (permitting submission using FpML). 53 See, e.g., id. (permitting submission of Part 20 reports using FIXML); see also See Advanced Notice of Proposed Rulemaking, Account Ownership and Control Information, 74 FR 31642, 31644 (July 2, 2009) (FIXML is used for reporting transaction data for futures and options reporting under regulation 16.02). FIXML is an XML standard using the Financial Information eXchange Protocol (‘‘FIX’’); see also Notice of Proposed Rulemaking, Account Ownership and Control Report, 75 FR, 41775, 41784 (July 19, 2010) (‘‘Reporting entities should submit the [ownership and control reports required under regulation 17.01] weekly, in FIXML . . .’’); see also Notice of Proposed Rulemaking, Reporting and Information Requirements for Derivatives Clearing Organizations, 87 FR 76698, 76704 (Dec. 15, 2022) (addressing use of FIXML standard for daily reporting required of derivatives clearing organizations). 54 See Advanced Notice of Proposed Rulemaking, Account Ownership and Control Information, 74 FR 31642, 31644 (July 2, 2009) (FIXML scheduled to be implemented for Trade Capture Reports in 2009); Notice of Proposed Rulemaking, Account Ownership and Control Report, 75 FR, 41775, 41784 (July 19, 2010) (‘‘Reporting entities should submit the [ownership and control reports required under regulation 17.01] weekly, in FIXML . . .’’). E:\FR\FM\27JNP1.SGM 27JNP1 41526 Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Proposed Rules be reported under § 17.01.55 Receiving § 17.00(a) position data via FIXML and storing the same in ISS would facilitate linking ISS data to Trade Capture Report data stored in the Commission’s Trade Surveillance System (‘‘TSS’’). Adopting an XML-based standard for large trader position reports required under § 17.00(a) should also improve data quality by reducing the rate of errors. The Commission has previously recognized the importance of flexibility with respect to promulgating reporting submission standards to accommodate technological advances. For example, for Part 17 reporting, the Commission previously revised the definition of ‘‘compatible data-processing media’’ to remove enumeration of specific media in part because it was impractical to define the term by regulation since electronic media were evolving at such a rapid pace.56 Elsewhere, for swaps large trader reporting under Part 20, the Commission delegated to staff the authority to provide instructions for and determine the format, coding structure, and electronic data transmission procedures for submitting data records in order to allow the Commission to respond to changing market and technological conditions for the purpose of ensuring timely and accurate data reporting.57 Such an approach allows the Commission to consult with market participants and update reporting submission standards to remain consistent with industry best practices.58 Amending §§ 17.00(g) and 17.03(d) to facilitate implementation of a modern data submission standard should also simplify reporting for reporting firms. Although updating submission standards will require technological changes for reporting firms, the Commission believes that eliminating the use of the unique § 17.00(g) record ddrumheller on DSK120RN23PROD with PROPOSALS1 55 17 CFR 17.01. Trade Capture Reports contain trade and related order book data at the transaction level organized by trading account numbers, but do not generally contain biographical information for the owners of those trading accounts. See Advanced Notice of Proposed Rulemaking, Account Ownership and Control Information, 74 FR 31642, 31644 (July 2, 2009). Such biographical information is provided separately through Ownership and Control Reports, which are submitted for special accounts identified under Part 17. See id. 56 62 FR at 24028; 17 CFR 15.00(d) (defining ‘‘compatible data processing media’’ as data processing media approved by the Commission or its designee). 57 Final Rule, Large Trader Reporting for Physical Commodity Swaps, 76 FR 43851, 43857 (Jul. 22, 2011). 58 See, e.g., 76 FR at 43857 n.20 (explaining that ‘‘the Commission anticipates consulting with clearing organizations and reporting entities before determining the format, coding structure, and electronic data transmission procedures’’ for Part 20 reports). VerDate Sep<11>2014 17:46 Jun 26, 2023 Jkt 259001 format and replacing it with a more commonly-used submission standard may result in more efficient reporting. Additionally, using a modern submission standard should facilitate automated data quality checks from the Commission back to reporting firms, which should reduce burdens associated with correcting data errors and the time necessary to complete the correction process. A more efficient error correction process will also, in turn, assist staff in timely generating the weekly COT report. The Commission invites comments on all aspects of the proposed Part 17 Guidebook in addition to comments on this notice of proposed rulemaking. 2. Secure FTP Feed Versus Portal Submission The Commission recognizes that reporting firms’ technological capabilities may vary based on relative size and experience of a given reporting firm. For example, the Commission understands that today, although some firms have automated the process for creating reports required by § 17.00(a), other firms manually create those reports. Accordingly, the proposed Part 17 Guidebook offers two submission methods for § 17.00(a) data: (a) an XMLbased, secure file transfer protocol (‘‘FTP’’) data feed, and (b) a web-based portal to ingest manual submissions. The Commission anticipates that such an approach will provide greater flexibility to reporting firms. Reporting firms may consider their existing data reporting infrastructure and the volume of reports they expect to submit, among other factors, when selecting their preferred submission method. The proposed Part 17 Guidebook provides detailed instructions for submitting under each method. 3. Delegation of Authority To Determine the Form and Manner for Error Corrections Current § 17.00(h) provides that, unless otherwise approved by the Commission or its designee, corrections of errors and omissions in data required to be reported under § 17.00(a) shall be filed on series ’01 forms or in the format, coding structure and data transmission procedures approved in writing by the Commission or its designee.59 Consistent with the Commission’s proposal to revise Part 17 to modernize the reporting of data under § 17.00(a), the Commission proposes updating the submission standard for error corrections to mirror the 59 17 PO 00000 CFR 17.00(h). Frm 00017 Fmt 4702 Sfmt 4702 submission standard for the data to be corrected. Today, reporting firms submit error corrections using the current § 17.00(g) record format.60 Upon receipt of a correction, staff replaces the original, erroneous record with the corrected record. Staff will employ a similar process to ingest error corrections following the proposed removal of the current § 17.00(g) record format, such that corrected and omitted data will be submitted using the new data submission standard published by the Office of Data and Technology in the proposed Part 17 Guidebook pursuant to delegated authority.61 Currently, staff manually notifies reporting firms when it identifies errors in § 17.00(a) reports submitted by those firms. Following implementation of this proposal, the Commission expects to automate this process to notify reporting firms of errors on the same day erroneous reports are submitted. The Commission expects automating this process will facilitate more rapid corrections to reported data, which will improve the quality of the data used by Commission staff. Request for Comment The Commission requests comments on all aspects of the proposed changes to regulations in Part 17, including proposed changes to §§ 17.00(a), 17.00(g) and 17.03(d). The Commission requests specific comment on the following: (1) The advantages and disadvantages of the proposed Part 17 Guidebook requiring a FIXML submission standard for reports required under § 17.00(a), including with respect to data quality, implementation costs, and ongoing costs post-implementation. (2) The proposal to permit reporting firms to submit § 17.00(a) large trader position reports through the Commission’s web-based portal as an alternative to submission by secure FTP. (3) The advantages and disadvantages of correcting errors in data required to be reported under § 17.00(a) in the manner provided in the proposed Part 17 Guidebook, including with respect to data quality, implementation costs, and ongoing costs post-implementation. 60 Reports that correct errors or omissions populate the ‘‘Record Type’’ data field with a character that identifies that the submitted record corrects an error or omission and provides further information about that correction. See 17 CFR 17.00(g)(2)(xiv). 61 As discussed below, the Commission proposes to retain the current ‘‘Record type’’ data field as a data element that will serve to identify reports that correct errors or omissions. E:\FR\FM\27JNP1.SGM 27JNP1 Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Proposed Rules ddrumheller on DSK120RN23PROD with PROPOSALS1 B. Appendix C to Part 17 and § 17.03(d)—Data Elements 1. Appendix C As discussed above, in order to facilitate implementation of a modern submission standard, the Commission proposes removing the record format set out in § 17.00(g). Removing that record format will remove the data fields as well. To replace the data fields proposed to be deleted from § 17.00(g), the Commission proposes to add an Appendix C to Part 17 specifying required data elements and defining those elements. Enumerating required data elements in an appendix is consistent with the approach taken for certain other Commission data reporting regulations.62 In addition to retaining the data currently required to be reported under § 17.00(a), proposed Appendix C would provide revised definitions and add certain data elements not currently required by the § 17.00(g) record format. The Commission is proposing to remove the definitions set out in current § 17.00(g)(2). The Commission is proposing to include related definitions in Appendix C, revised to remove language providing the form and manner for reporting data. Given that the current § 17.00(g) record format will be removed from the rule and updated guidance on the form and manner for reporting will be required, certain of the § 17.00(g)(2) definitions contain language that would become superfluous. For example, for the ‘‘Report Type’’ data element, the Commission is proposing not to include in Appendix C the portion of the definition that specifies that ‘‘[v]alid values’’ to submit include ‘‘RP’’ for reporting positions, ‘‘DN’’ for reporting notices, and ‘‘EP’’ for reporting exchanges of futures for a commodity or for a derivatives position.63 Rather than specifying the form and manner for reporting the § 17.00(a) data elements in the rule, the Commission is proposing to delegate authority to determine the form and manner for reporting each data element to the Director of the Office of Data and Technology. To implement this delegation of authority, the Commission is proposing to amend § 17.03(d) to provide that the Director of the Office of Data and Technology would specify the form, manner, coding structure, and electronic data transmission procedures for reports and submissions under § 17.00(a). The proposed Part 17 62 See, e.g., 17 CFR part 20 App’x B; 17 CFR part 43 App’x A; 17 CFR part 45 App’x 1. 63 17 CFR 17.00(g)(2)(i). VerDate Sep<11>2014 17:46 Jun 26, 2023 Jkt 259001 Guidebook would set forth the form, manner, coding structure, and electronic data transmission procedures for reporting the data elements in proposed Appendix C to Part 17, and to determine whether to permit or require one or more particular data standards. Providing form and manner requirements through a Part 17 Guidebook would bring the Part 17 framework in line with reporting under Parts 16, 20, 43, and 45, for which, rather than embedding technical reporting details into regulation text, the Commission has delegated authority to staff to set the form and manner for reporting outside of the regulation text through a published technical specification or guidebook.64 Implementing form and manner requirements through a Part 17 Guidebook will facilitate the Commission’s ability to respond to changing market conventions and technological conditions, to harmonize submission standards with those of other authorities,65 and to accommodate the introduction of innovative products. As discussed above, concurrently with the issuance of this notice, the Commission has published a proposed Part 17 Guidebook on its website, https://www.cftc.gov. Commenters are invited to comment on both the data submission standard in the proposed Part 17 Guidebook and on the data elements in proposed Appendix C. 64 See, e.g., 17 CFR 16.07(c), (d) (delegating authority to staff to approve the format, coding structure and electronic data transmission procedures used by reporting markets and to determine the specific content of any daily trade and supporting data report); 17 CFR 20.2(d) (delegating authority to staff for providing instructions or determining the format, coding structure, and electronic data transmission procedures for submitting data records and any other information required under this part); 17 CFR 43.7(a) (delegating authority to staff to publish the technical specification providing the form and manner for reporting and publicly disseminating the swap transaction and pricing data elements in appendix A of Part 43); 17 CFR 45.15(b)(1) (delegating authority to staff to publish the technical specifications providing the form and manner for reporting the swap data elements in appendix 1 to Part 45 to swap data repositories). 65 Final Rule, Swap Data Recordkeeping and Reporting Requirements, 85 FR 75503, 75535 (Nov. 25, 2020) (‘‘The Commission . . . believes delegation to DMO will benefit data element harmonization.’’); see also Final Rule, Large Trader Reporting for Physical Commodity Swaps, 76 FR 43851, 43857 (Jul. 22, 2011) (the purpose of delegating authority to staff to provide ‘‘instructions for determining the format, coding structure, and electronic data transmission procedures for submitting data records and any other information required under [Part 20] . . . is to facilitate the ability of the Commission to respond to changing market and technological conditions for the purpose of ensuring timely and accurate data reporting’’). PO 00000 Frm 00018 Fmt 4702 Sfmt 4702 41527 Request for Comment The Commission requests comments on all aspects of the proposed Part 17 Guidebook published at the time of publication of this notice of proposed rulemaking. 2. Data Elements in Appendix C Proposed Appendix C will maintain certain data elements included in the current § 17.00(g) record format, revise certain data elements included in the current § 17.00(g) record format, and add certain data elements not previously included in the § 17.00(g) record format. The proposed additional data elements capture information not captured by the current § 17.00(g) record format that is necessary to fulfill the Commission’s surveillance and market analysis missions. The form and manner for reporting each of these data elements would be set forth in the proposed Part 17 Guidebook. The Commission invites comment on any of the data elements proposed in Appendix C. This section discusses these data elements below by category. First, proposed Appendix C includes data elements currently captured by the fields in the current § 17.00(g) record format. In some instances, those data elements are revised to account for the introduction of a modern data submission standard. Second, proposed Appendix C includes data elements necessary to facilitate a modern, XMLbased data submission standard, including data elements used to manage ingestion of data, such as ‘‘Total Message Count’’ and ‘‘Message Type.’’ Third, proposed Appendix C would add data elements necessary to capture product-identifying information not captured by the current record format, such as ‘‘Ticker Symbol’’ as well as certain data elements necessary to capture information to represent innovative contracts such as ‘‘bounded contracts,’’ options expiring to baskets of futures, and other novel contracts. The current record format does not allow reporting firms to represent all economically material terms of such contracts, and as a result the Commission is in some instances unable to determine whether certain special accounts carry positions in the same or different products. Fourth, proposed Appendix C would add data elements necessary to capture accurate information concerning changes in positions of special accounts that is not available in current § 17.00(a) large trader reporting but would benefit the Commission’s surveillance programs and market analysis. E:\FR\FM\27JNP1.SGM 27JNP1 41528 Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Proposed Rules a. Category 1: Currently Reported Data Elements Proposed Appendix C retains data elements capturing certain of the information currently captured by § 17.00(g)’s 80-character record format.66 The 80-character record format captures certain information necessary to process data,67 information concerning the reporting firm and special account,68 product-identifying information,69 and information concerning the direction or nature of the trades underlying the position.70 Proposed Appendix C calls for certain of this information in a different format than currently provided. For example, whereas the current § 17.00(g) record format captures information concerning whether a position is long or short in a single field, proposed Appendix C would capture long and short positions using separate data elements (‘‘Long Position’’ and ‘‘Short Position’’). Similarly, whereas the current § 17.00(g) record format identifies exchanges of futures for related positions using a single ‘‘Report type’’ field, proposed Appendix C would capture information concerning such exchanges in greater granularity through several data elements. As discussed further below, this greater granularity will facilitate Commission market surveillance and analysis programs. b. Category 2: XML Implementation and Data Processing Proposed Appendix C calls for certain data elements to facilitate processing of data.71 Such data elements generally do not correspond to analogous data ddrumheller on DSK120RN23PROD with PROPOSALS1 66 These fields would include (1) Data Element #7 Record Type (Action), (2) Data Element #8 Report Date, (3) Data Element #9 (Reporting Firm ID), (4) Data Element #11 Account ID, (5) Data Element #12 Exchange Indicator, (6) Data Element #13 Commodity Clearing Code, (7) Data Element #16 Maturity Month Year, (8) Data Element #20 Strike Level, (9) Data Element #26 Put or Call Indicator, (10) Data Element #27 Exercise Style, (11) Data Element #30 Underlying Contract ID, (12) Data Element #31 Underlying Maturity Month Year, (13) Data Element #32 Long Position, (14) Data Element #33 Short Position, (15) Data Element #38 Delivery Notices Stopped, and (16) Data Element #39 Delivery Notices Issued. 67 For example, ‘‘Report Date,’’ and ‘‘Record Type.’’ 17 CFR 17.00(g)(1). 68 For example, ‘‘Reporting Firm’’ and ‘‘Account Number.’’ 17 CFR 17.00(g)(1). 69 For example, ‘‘Commodity Code,’’ ‘‘Expiration Date,’’ and ‘‘Exchange Code.’’ 70 For example, ‘‘Report type,’’ ‘‘Put or Call,’’ ‘‘Strike Price,’’ ‘‘Exercise Style,’’ ‘‘Long—Buy— Stopped,’’ and ‘‘Short—Sell—Issued.’’ 71 These fields would include (1) Data Element #1 Total Message Count, (2) Data Element #2 Message Type, (3) Data Element #3 Sender ID, (4) Data Element #4 To ID, (5) Data Element #5 Message Transmit Datetime, (6) Data Element #6 Report ID, and (7) Data Element #10 Special Account Controller LEI. VerDate Sep<11>2014 17:46 Jun 26, 2023 Jkt 259001 elements in § 17.00(g)’s record format. These include data elements concerning the submission of messages to the Commission, data elements identifying the sender and special account controller, and data elements identifying the date and time of the report. This information is necessary to enable the Commission to track and manage reports received using an XML submission standard. The ‘‘Special Account Controller LEI’’ data element captures the legal entity identifier (‘‘LEI’’) of the account controller. An LEI is a unique code assigned to an entity in accordance with the standards set by the Global Legal Identifier System.72 The ‘‘Special Account Controller LEI’’ data element would allow the Commission to link data reports submitted under § 17.00(a) with other data reports concerning the same counterparty. The Commission notes that not all special account controllers possess a legal entity identifier, or ‘‘LEI.’’ Some special account controllers may be ineligible to receive an LEI. For example, it is highly likely that a natural person who controls a special account would be unable to obtain an LEI.73 For clarity, the Commission expects the ‘‘Special Account Controller LEI’’ data element will be conditional—an LEI must be reported for special accounts for which the special account controller is eligible to receive an LEI, but an LEI need not be reported for special accounts for which the special account controller is ineligible for an LEI. For such accounts, the Commission will receive identifying information via Form 102A. c. Category 3: Product Identification Proposed Appendix C calls for reporting of certain data elements that, where applicable, are necessary to identify and distinguish the futures or option contract pertaining to the reported position. Specifically, additional data elements are necessary to draw more granular distinctions between certain contracts for reportable positions,74 to accommodate reporting 72 The Global Legal Identifier System was established by the finance ministers and the central bank governors of the Group of Twenty nations and the Financial Stability Board. See Charter of the Regulatory Oversight Committee For the Global Legal Entity Identifier System, available at https:// www.leiroc.org/publications/gls/roc_201901301.pdf. 73 The Commission has elsewhere discussed this issue in regulations concerning reporting of swap data. See, e.g., Final Rule, Swap Data Reporting and Recordkeeping, 85 FR 75503, 75520 (Nov. 25, 2020). 74 These fields would include (1) Data Element #14 Product Type, (2) Data Element #15 Ticker Symbol, (3) Data Element #17 Maturity Time, (4) Data Element #18 Listing Date, and (5) Data Element #19 Earliest Exercise Date. PO 00000 Frm 00019 Fmt 4702 Sfmt 4702 of positions in bounded or barrier contracts,75 to accommodate reporting of positions in contracts with non-price or non-numeric strikes,76 and to accommodate reporting of positions in other innovative contracts.77 Distinguishing Products. Certain additional fields are necessary to precisely identify the product for a reported position. When § 17.00(g) was promulgated and revised in the 1980s and 1990s, exchanges listed a less diverse array of futures and options contracts than those available today. More granular data is required to distinguish among products in today’s futures and options markets. Section 17.00(g)’s current record format allows the Commission to identify the product for a given position based on a combination of data points that indicate whether the product is a futures or option contract and identify the underlying commodity. That record format, however, is limited. For example, that record format allows the Commission to identify the underlying commodity through a ‘‘Commodity Code’’ field, which is populated with an exchange-assigned code corresponding to a relevant underlier.78 However, the ‘‘Commodity Code’’ field does not currently enable the Commission to draw more granular distinctions between products that reference the same commodity but have material differences. A proposed ‘‘Product Type’’ field would allow the Commission to differentiate between futures and options contracts that use the same ‘‘Commodity Code’’ without separately relying on other reported fields, which may be insufficient to adequately distinguish between products in some instances.79 A proposed ‘‘Ticker Symbol’’ field would provide the Commission with the published ticker symbol associated with the product on 75 These fields would include (1) Data Element #22 Cap Level, (2) Data Element #23 Floor Level, (3) Data Element #24 Bound or Barrier Type, (4) Data Element #25 Bound or Barrier Level, (5) Data Element #28 Payout Amount, and (6) Data Element #29 Payout Type. 76 These fields would include Data Element #21 Alpha Strike, as well as transposing the ‘‘Strike Price’’ field in the current regulation 17.00(g) record format to Data Element #20, ‘‘Strike Level,’’ in proposed Appendix C. 77 For example, Data Element #50 ProductSpecific Terms. 78 17 CFR 17.00(g)(2)(vii) (the ‘‘Commodity’’ field reflects an exchange-assigned commodity code for the futures and options contract). 79 The Commission proposes to retain the ‘‘Commodity Code’’ field, but to rename it to ‘‘Commodity Clearing Code,’’ which more accurately reflects industry terminology and provides consistency in labeling between reports provided under Part 17 and Part 16. E:\FR\FM\27JNP1.SGM 27JNP1 Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Proposed Rules ddrumheller on DSK120RN23PROD with PROPOSALS1 the listing contract market.80 Proposed Appendix C would provide for ‘‘Maturity Month Year’’ and ‘‘Underlying Maturity Month Year’’ data elements, where applicable, to be populated with a specific day when necessary to characterize a product.81 Similarly, a ‘‘Maturity Time’’ data element, where applicable, would be populated with the expiration time of an option or last trading time of a future for contracts that have multiple expiration times within a single day. A ‘‘Listing Date’’ data element, where applicable, would be populated with the listing date for options that had early expirations and were relisted with identical strikes and expirations, allowing the Commission to distinguish between tranches of closely related contracts. Absent such a field, different tranches of certain options contracts might be indistinguishable in ISS.82 An ‘‘Earliest Exercise Date’’ data element would provide, where applicable, the date when American or Bermuda options 83 may be exercised, which would assist the Commission in identifying more complex positions. Bounded or Barrier Contracts. Certain of these data elements are necessary to accurately report ‘‘bounded’’ 84 or ‘‘barrier’’ 85 contracts, including ‘‘Cap Level,’’ ‘‘Floor Level,’’ and ‘‘Bound or Barrier Level,’’ as the current § 17.00(g) 80 Ticker symbols typically include a product code consisting of a multi-letter code assigned to the underlier, a month code consisting of a single alphabetical character assigned to a month or quarter, and a year code consisting of a numerical code representing a particular year. 81 This responds to the advent of certain futures and options contracts with more varied maturity or expiration dates. 82 If a DCM lists an option that settles based on the occurrence of a specified event—as opposed to expiring at a future time that is certain at the time the contract is executed—and that specified event may occur serially at multiple times, a ‘‘Listing Date’’ data element would permit the Commission to distinguish between iterations of that contract as it is re-listed following expirations. 83 An American Option is an option that can be exercised at any time prior to or on the expiration date. See CFTC, Futures Glossary, available at https://www.cftc.gov/LearnAndProtect/ AdvisoriesAndArticles/CFTCGlossary/index.htm (last visited April 26, 2023). A Bermuda Option is an option which can be exercised on a specified set of predetermined dates during the life of the option. See id. In contrast, a European Option is an option that may only be exercised on the expiration date. See id. 84 A bounded futures contract specifies upper and lower boundaries, which limit short and long interest exposure. See, e.g., Eris Exchange, LLC, ‘‘CFTC Regulation 40.2(a) Certification. Notification Regarding the Initial Listing of Eris Exchange Financially Settled Bounded Futures Contract on Bitcoin and Ether’’ (Aug. 21, 2020), available at https://www.cftc.gov/sites/default/files/filings/ptc/ 20/08/ptc082420erisdcmdcm001.pdf. 85 A barrier option contract specifies a ‘‘barrier,’’ either a price or an event, the occurrence of which triggers either a knock-in or knock-out provision. VerDate Sep<11>2014 17:46 Jun 26, 2023 Jkt 259001 record format does not accommodate this information. A ‘‘Bound or Barrier Type’’ data element would be necessary to identify the behavior of a product when it hits a bound or barrier, including to distinguish between ‘‘knock-in,’’ ‘‘knock-out,’’ and capped products.86 Receiving data sufficient to understand the economics of bounded and barrier contracts would, among other things, support the Commission’s surveillance program. Position data that more completely reflects the economics of positions in bounded or barrier options would provide the Commission with greater insight into, for example, potential cross-market manipulation. Where a bounded or barrier contract references the price or value of a contract or commodity listed in another market, a manipulative trader may trade in that other market for the purpose of influencing the price or value of that contract in order to hit or avoid a bound or barrier for an options position held in the first market. To obtain comprehensive data concerning positions in bounded and barrier contract and certain binary option contracts based on the occurrence or non-occurrence of a specified event, proposed Appendix C also includes ‘‘Payout Amount’’ and ‘‘Payout Type’’ data elements. The proposed ‘‘Payout Amount’’ data element is intended to capture a cash amount of the payout associated with a product where that amount may not otherwise be determined based on reported data. The proposed ‘‘Payout Type’’ data element would allow the Commission to distinguish between vanilla, capped, binary, and other options that use the same Commodity Clearing Code. Non-Price and Non-Numeric Strike Levels. Certain of the data elements in Proposed Appendix C are necessary to accurately capture information for options contracts that contain non-price and non-numeric strike levels. Specifically, § 17.00(g)’s record format’s ‘‘Strike Price’’ field would be converted to two separate data elements: ‘‘Strike Level’’ and ‘‘Alpha Strike.’’ These data elements, respectively, would accommodate reporting of certain listed options contracts with non-monetary 86 A knock-in is a provision in an option or other derivative contract whereby the contract is activated only if the price of the underlying instrument reaches a specified level before a specified expiration date. A knock-out is a provision in an option whereby the contract is immediately canceled if the price of the underlying instrument reaches a specified level during the life of the contract. See CFTC, Futures Glossary, available at https://www.cftc.gov/LearnAndProtect/ AdvisoriesAndArticles/CFTCGlossary/index.htm (last visited April 26, 2023). PO 00000 Frm 00020 Fmt 4702 Sfmt 4702 41529 threshold levels and non-numeric threshold levels. For example, a binary option with U.S. Gross Domestic Product (‘‘GDP’’) as an underlier would have a non-price strike—a GDP figure. Other contracts that incorporate the occurrence or non-occurrence of a specified event as an underlier might specify as strikes non-numeric units, which would more appropriately be reported as a strike ‘‘value,’’ or ‘‘Alpha Strike.’’ For example, a binary option with different categories of hurricane landfalls as strike values might include as ‘‘Alpha Strikes’’ different categories of hurricane—for example, ‘‘Category 1 or higher’’ or ‘‘Category 2 or higher.’’ Product-Specific Terms. To account for the likelihood that exchanges will introduce contracts that include novel features, proposed Appendix C includes a ‘‘Product-Specific Terms’’ data element. For innovative contracts, this data element would be populated with data reflecting economically material terms of contracts are not otherwise able to be represented in the proposed Appendix C data elements. The data element would not require reporting of any information that is not already separately recorded by a DCM for recordkeeping purposes. Future editions of the proposed Part 17 Guidebook would specify the form and manner of reporting positions in products subject to reporting that includes the ‘‘ProductSpecific Terms’’ data element. Reporting under this data element—as well as certain other data elements designed to represent particular products, such as the aforementioned fields designed to capture terms of bounded and barrier contracts—would only be required to be reported for contracts that cannot otherwise be represented in Part 17 reporting. Put differently, for reporting firms that facilitate trading or clearing of contracts that can be adequately represented in the other data elements in the proposed Part 17 Guidebook, reporting data pursuant to the ‘‘Product-Specific Terms’’ data element would not be required. Reporting firms that do become involved in trading futures and options contracts for which economically material terms are not otherwise reportable under § 17.00(a) may be required to report such data. Pursuant to the proposed rule, the Director of the Office of Data and Technology would have delegated authority to publish the form and manner of any product-specific terms required to be reported pursuant to this proposed data element. E:\FR\FM\27JNP1.SGM 27JNP1 41530 Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Proposed Rules d. Category 4: Information Concerning Changes in Positions ddrumheller on DSK120RN23PROD with PROPOSALS1 Proposed Appendix C would add data elements necessary to capture accurate information regarding changes in positions that is not fully-captured by the current § 17.00(g) record format.87 Understanding the nature and quantity of transactions that resulted in day-today changes in positions of special accounts will provide Commission staff with additional information for surveillance purposes, and will allow Commission staff to link position data reported at the special account level pursuant to § 17.00(a) with transaction data reported at the trading account level under § 16.02.88 Additionally, information identifying the nature and quantity of transactions that resulted in day-to-day changes in positions of special accounts should provide reporting firms with an additional tool to perform an internal consistency review on data reported under § 17.00(a), and therefore enhance data quality. Changes in positions are generally effected by buying and selling contracts; the expiration or settlement of contracts, which may result in assignments of contracts; or off-exchange transactions, such as block-trades, exchanges of derivatives for related positions (‘‘EDRPs’’), and transfers. Although the current § 17.00(g) record format requires reporting of the aggregate of certain EDRPs each day and the total delivery notices issued and stopped via the ‘‘Report Type’’ and ‘‘Long-Buy-Stopped (Short-Sell-Issued)’’ 89 fields, it otherwise does not capture data concerning changes in position. Proposed Appendix C would include 87 These fields would include (1) Data Element #34 Contracts Bought, (2) Data Element #35 Contracts Sold, (3) Data Element #36 EDRPs Bought, (4) Data Element #37 EDRPs Sold, (5) Data Element #38 Delivery Notices Stopped, (6) Data Element #39 Delivery Notices Issued, (7) Data Element #40 Long Options Expired, (8) Data Element #41 Short Options Expired, (9) Data Element #42 Long Options Exercised, (10) Data Element #43 Short Options Exercised, (11) Data Element #44 Long Futures Assigned, (12) Data Element #45 Short Futures Assigned, (13) Data Element # 46 Long Transfers Sent, (14) Data Element #47 Long Transfers Received, (15) Data Element #48 Short Transfers Sent, and (16) Data Element #49 Short Transfers Received. 88 DCMs identify traders by account numbers, but certain DCMs do not routinely collect detailed trader-identifying data. See, e.g., Final Rule, Significant Price Discovery Contracts on Exempt Commercial Markets, 74 FR 12178, 12185 (Mar. 23, 2009). The Commission instead generally obtains such trader-identifying data from FCMs, clearing members, and foreign brokers through regulation 17.01. 17 CFR 17.01. 89 17 CFR 17.00(g)(2)(i), (xi). VerDate Sep<11>2014 17:46 Jun 26, 2023 Jkt 259001 data elements necessary to capture this information, as follows. Contracts Bought and Sold. Proposed Appendix C includes data elements to capture ‘‘Contracts Bought’’ and ‘‘Contracts Sold.’’ The current § 17.00(g) record format captures aggregate positions, but does not reflect the amount of buying and selling associated with a particular special account. Obtaining reliable and accurate counts of gross buys and sells associated with a special account would enhance the Commission’s ability to differentiate between large position holders that appear passive and large position holders that also trade in significant quantities of contracts daily. In addition to contracts bought and sold on-exchange, contracts bought or sold via block trades are included in the sums reported as ‘‘Contracts Bought’’ and ‘‘Contracts Sold.’’ The Commission also expects that contracts acquired through give-ups 90 and allocations will be included in the totals of ‘‘Contracts Bought’’ and ‘‘Contracts Sold,’’ as such contracts would be treated as positions in the carrying accounts through which they are ultimately cleared rather than positions in the accounts that execute the transactions, if such accounts differ from the accounts through which such transactions are cleared. Exchanges of Derivatives for Related Positions (EDRPs). A DCM’s rules may authorize, for bona fide business purposes, privately-negotiated exchanges of derivatives for related positions, or ‘‘EDRPs.’’ 91 As discussed, the current § 17.00(g) record format requires reporting of aggregate EDRPs, but does not provide more granular data necessary to understand whether a position was exchanged for a physical commodity (exchanges for physical, or ‘‘EFPs’’), exchanged for a swap or other derivative (exchanges for swaps, or ‘‘EFSs,’’ sometimes referred to as exchanges for risk, or ‘‘EFRs’’), exchanged for an option, or exchanged for some other related position. Proposed Appendix C includes an ‘‘Exchanges of Derivatives for Related 90 The term ‘‘give-up’’ means an order executed by one broker on behalf of another broker which clears and settles the order. 91 See 17 CFR 38.500 (authorizing ‘‘exchange[s] of’’ ‘‘[f]utures in connection with a cash commodity transaction,’’ ‘‘[f]utures for cash commodities,’’ and ‘‘[f]utures for swaps’’). In practice, such transactions are often referred to as ‘‘exchanges of futures for related positions’’ or ‘‘EFRPs.’’ The Commission has used the terminology ‘‘exchanges of derivatives for related positions’’ or ‘‘EDRPs’’ because it believes this is a more accurate and descriptive term given it includes transactions not limited to futures, such as swaps. Noticed of Proposed Rulemaking, Core Principles and Other Requirements for Designated Contract Markets, 75 FR 80572, 80593 (Dec. 22, 2010). PO 00000 Frm 00021 Fmt 4702 Sfmt 4702 Positions’’ data element that is defined to require reporting firms to disaggregate EDRP transactions by type of EDRP in the form and manner for reporting set forth in the proposed Part 17 Guidebook. The proposed Part 17 Guidebook requires reporting firms to disaggregate reporting of EDRPs into EFPs bought and sold, EFSs bought and sold, and exchanges of options for option (‘‘EOOs’’) bought and sold.92 This would also effect an update to a record format devised largely during the 1970s and 1980s, before EDRPs other than EFPs were commonly used.93 EFSs, for example, were not explicitly authorized under the CEA until 2000, years after the initial § 17.00(g) record format had been promulgated.94 In 2004, when the Commission amended the § 17.00(g) record format to require reporting of EDRPs generally, including EFSs, rather than just EFPs, it did not require reporting firms to distinguish among these different types of transactions, but rather required that such reporting group together all EFPs, EFSs, EFRs, EFOs 95 or other exchanges of futures for a commodity or for a derivatives position permitted by exchange rules, and report the sum under the same category.96 At the time, 92 The Commission believes these three categories of EDRPs capture current market practices, but recognizes the possibility that a DCM or DCMs may, in the future, introduce additional EDRPs. For example, DCMs could conceivably permit exchanges of futures for futures. See, e.g., 75 FR at 80588 (recognizing that the term ‘‘exchanges of derivatives for related position’’ describes a panoply of off-exchange transactions currently offered by DCMs including, in addition to EFPs and EFSs, exchanges of futures for futures). The Commission expects that if any DCM revises its rulebook to permit an additional type of EDRP transaction, reporting firms would also submit disaggregated data reflecting changes of position effected through that type of EDRP transaction. For example, if a DCM revised its rulebook to permit exchanges of futures for futures, the proposed Part 17 Guidebook would be updated to facilitate reporting firms submitting information reflecting changes in positions resulting from exchanges of futures for futures. 93 Cf. CFTC, Division of Trade and Markets: Report on Exchange of Futures for Physicals (1987) (analysis of EFPs published in 1987, relying in part on data reported pursuant to regulation 17.00(a)). 94 See, e.g., Concept Release, Regulation of Noncompetitive Transactions Executed on or Subject to the Rules of a Contract Market, 63 FR 3708 (Jan. 26, 1998) (requesting comment on whether Commission regulations should be modified in order to permit EFSs and exchanges of futures for options); Proposed Rules, Execution of Transactions: Regulation 1.38 and Guidance on Core Principle 9, 69 FR 39880, 39881 (July 1, 2004) (proposing amendments to regulation 1.38 to permit DCMs to allow exchanges of futures for another derivatives position following the Commodity Futures Modernization Act of 2000 amending the CEA to ‘‘specifically allow[] the exchange of futures for swaps’’); see also 7 U.S.C. 7(b)(3). 95 ‘‘EFOs’’ refers to ‘‘exchanges of futures for options.’’ Final Rule, Reporting Levels and Recordkeeping, 69 FR 76392, 76394 (Dec. 21, 2004). 96 69 FR at 76395. E:\FR\FM\27JNP1.SGM 27JNP1 ddrumheller on DSK120RN23PROD with PROPOSALS1 Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Proposed Rules the Commission found this to be ‘‘an appropriate approach because all of these trades are similar in that they permit the exchange of a futures position for an off-exchange position.’’ 97 The Commission now, based on experience surveilling EDRP practices in futures and options markets, proposes to require more granular differentiation in reporting of different types of EDRPs. More granular differentiation between the types of offexchange transactions that effect changes in positions will provide a better understanding of the methods by which traders exit and enter positions. In particular, disaggregated EDRP data allows staff to confirm market integrity when there are concerns about a potential squeeze or other matters near the expiration of the physical delivery contract. Expirations and Settlement of Contracts. In addition to EDRP counts and counts of contracts bought and sold, proposed Appendix C would add data elements necessary to capture expirations and settlements, including whether options were exercised and contracts assigned. Proposed Appendix C would capture such information in ‘‘Delivery Notices Stopped,’’ ‘‘Delivery Notices Issued,’’ ‘‘Long Options Expired,’’ ‘‘Short Options Expired,’’ ‘‘Long Options Exercised,’’ ‘‘Short Options Exercised,’’ ‘‘Long Futures Assigned,’’ and ‘‘Short Futures Assigned’’ data elements. The current § 17.00(g) record format captures information concerning delivery notices stopped and issued, but does not capture information concerning changes in positions due to option expirations and exercises. Transfers. The Commission also proposes to include ‘‘Long Transfers Sent,’’ ‘‘Long Transfers Received,’’ ‘‘Short Transfers Sent,’’ and ‘‘Short Transfers Received’’ data elements to capture transfers of contracts that effect a change in position in a special account. This information is not directly captured by the current § 17.00(g) record format. Internal Consistency Check for Data Concerning Changes in Position. The inclusion in reports required under § 17.00(a) of data elements reflecting counts of transactions that resulted in day-to-day changes in positions would enable reporting firms to perform internal consistency checks on position reports before submitting those reports. Specifically, the day-to-day change in the size of a position for a particular special account should equal the net value of contracts bought and sold, 97 Id. VerDate Sep<11>2014 17:46 Jun 26, 2023 Jkt 259001 EDRPs bought and sold, expirations and assignments of contracts, and transfers. Request for Comment The Commission requests comment on all aspects of proposed Appendix C, including the proposed data elements enumerated therein. The Commission requests specific comment on the following: (4) Are there any data elements not included in proposed Appendix C that commenters believe are necessary to obtain a complete and accurate picture of positions held by large traders? If so, please identify such data elements. (5) Are there any transactions that would effect changes in positions that are not accounted for by the Data Elements discussed in Section II.B.2.d above? If so, please identify such transactions. (6) Are there any data elements proposed to be added in Appendix C that commenters believe are not necessary to obtain a complete and accurate picture of positions held by large traders? If so, please identify such data elements and explain why. III. Compliance Date The Commission understands that market participants would require sufficient time to revise or build infrastructure to submit data required under § 17.00 using the proposed new submission standard. In addition, given that proposed Appendix C would require the submission of additional data elements beyond the information required by the current § 17.00(g) record format, the Commission understands that reporting firms may need to make additional adjustments to reporting systems. The Commission expects that the compliance date for the rules proposed herein would be 365 days following publication of a final rule in the Federal Register. The Commission also expects to permit reporting firms to begin reporting under the proposed new regime for § 17.00(a) reports in advance of the compliance date, while continuing to permit reporting firms to report under the current § 17.00(g) record format. The Commission believes that this approach will allow early adopters to realize the advantages of reporting using a modern data submission standard while allowing slower adopters sufficient time to modify and test reporting systems. Request for Comment The Commission requests comment on all aspects of the proposed compliance date. The Commission PO 00000 Frm 00022 Fmt 4702 Sfmt 4702 41531 requests specific comment on the following: (7) Is the proposed compliance date of 365 days after publication of a final rule in the Federal Register an appropriate amount of time for compliance? If not, please propose an alternative timeline and provide reasons supporting that alternative timeline. IV. Related Matters A. Cost-Benefit Considerations 1. Introduction Section 15(a) 98 of the CEA requires the Commission to consider the costs and benefits of its actions before issuing a new regulation or order under the CEA. By its terms, section 15(a) does not require the Commission to quantify the costs and benefits of a new rule or to determine whether the benefits of the adopted rule outweigh its costs. Rather, section 15(a) requires the Commission to ‘‘consider the costs and benefits’’ of a subject rule. Section 15(a) further specifies that the costs and benefits of proposed rules shall be evaluated in light of five broad areas of market and public concern: (1) Protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations. In conducting its analysis, the Commission may, in its discretion, give greater weight to any one of the five enumerated areas of concern and may determine that, notwithstanding its costs, a particular rule is necessary or appropriate to protect the public interest or to effectuate any of the provisions or to accomplish any of the purposes of the Act. Although the Commission believes the proposed amendments would create meaningful benefits for market participants and the public, the Commission also recognizes that the proposed amendments would impose costs. The Commission has endeavored to enumerate these costs and, when possible, assign a quantitative value to the costs reporting entities might face given the proposed changes. Where it is not possible to reasonably quantify costs and benefits of the proposed amendments, those costs and benefits are discussed qualitatively. 2. Background The data required to be reported under § 17.00(a) comprise core data used by many divisions within the Commission, including the Division of 98 7 E:\FR\FM\27JNP1.SGM U.S.C. 19(a). 27JNP1 41532 Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Proposed Rules ddrumheller on DSK120RN23PROD with PROPOSALS1 Market Oversight (‘‘DMO’’), the Office of the Chief Economist (‘‘OCE’’), and the Division of Enforcement (‘‘DOE’’). In addition, § 17.00(a) submissions are collated to produce the database from which public COT reports are created. COT reports are used by news media, researchers, academics, and industry professionals to describe current trends in futures trading, conduct analysis of past trading patterns, and inform current market strategies. The current § 17.00(g) record format, which instructs reporting firms to submit data in an 80character, Cobol-based format, has been in effect since 1986 and was last revised in 2004.99 This current format limits the amount of descriptive data that can be included in any given field. This limits the Commission’s ability to capture the economic characteristics of certain products in § 17.00(a) position reports and, in some instances, prevents the Commission from distinguishing a position in one contract from a position in another contract. In addition, the current reporting fields do not allow for the granular reporting of EDRPs, of certain futures and options contracts, and for complete information reflecting day-to-day changes in position. 3. Baselines The costs and benefits considered herein use as a baseline the reporting provided by reporting firms under current Part 17 regulations. In particular, entities are currently required to report positions for special accounts 100 by 9 a.m. on the business day following the trading day 101 and to correct errors as they are found by either the Commission or the reporting entity.102 These elements of the rule would not change under the new reporting requirements. The Commission notes that this costbenefit consideration is based on its understanding that the derivatives market regulated by the Commission functions internationally with: (1) transactions that involve U.S. entities occurring across different international jurisdictions; (2) some entities organized outside of the United States that are registered with the Commission; and (3) some entities that typically operate both within and outside the United States and that follow substantially similar business practices wherever located. Where the Commission does not specifically refer to matters of location, the discussion of costs and benefits 99 See Final Rule, Reporting Levels and Recordkeeping, 69 FR 76392–01, 76394 (Dec. 21, 2004). 100 See 17 CFR 17.00(a). 101 See 17 CFR 17.02(a). 102 17 CFR 17.00(h). VerDate Sep<11>2014 17:46 Jun 26, 2023 Jkt 259001 below refers to the effects of the proposed regulations on all relevant derivatives activity, whether based on their actual occurrence in the United States or on their connection with, or effect on U.S. commerce.103 4. Proposed Amendments to Part 17 The Commission proposes two categories of amendments to Part 17. First, the Commission proposes to remove current § 17.00(g)’s 80-character record format and amend § 17.03(d) to delegate authority to the Director of the Office of Data and Technology to designate a submission standard for reports required under § 17.00(a). That submission standard would be published in a Part 17 Guidebook, to be published on the Commission’s website. The proposed Part 17 Guidebook designates a modern XML submission standard for submitting reports required under § 17.00(a). Second, the Commission proposes adding an Appendix C to Part 17 enumerating data elements to be included in § 17.00(a) reports. The proposed data elements consist of (1) certain data elements currently required to be reported under § 17.00(g), (2) certain data elements necessary for processing files submitted in XML, (3) certain data elements necessary to represent innovative contracts that cannot currently be represented using the § 17.00(g) format, and (4) data elements necessary to understand the transactions that resulted in day-to-day changes in positions of large traders. The form and manner for reporting these data elements in proposed Appendix C would be provided in the Part 17 Guidebook. a. Change in Submission Standard From Current § 17.00(g) Record Format to a Modern Data Standard Designated in a Part 17 Guidebook Currently, reporting firms submit § 17.00(a) position reports using § 17.00(g)’s 80-character record format. The proposed amendments would require such reports to be submitted using a submission standard, which would be designated in a Part 17 Guidebook published by the Office of Data and Technology on the Commission’s website. The proposed Part 17 Guidebook would require such submissions to be made using an XML format similar to that used in other reporting required by the Commission, including Trade Capture Reports submitted pursuant to § 16.02 and swap data reports submitted to swap data repositories pursuant to Part 43 and Part 103 See, PO 00000 e.g., 7 U.S.C. 2(i). Frm 00023 Fmt 4702 Sfmt 4702 45.104 In order to collect and transmit these reports to the Commission, reporting firms would have to modify the systems they currently use to report Part 17 data. The Commission estimates there are currently over 300 reporting firms submitting 17.00(a) reports. Reporting firms are divided between DCMs, FCMs, clearing members, and foreign brokers, including some firms that are registered under multiple categories. Over a 30day period in early 2023 there were 310 reporting firms submitting § 17.00(a) reports. The Commission estimates that approximately 74 of these reporting firms automate the creation of § 17.00(a) reports and 236 of these firms create and submit § 17.00(a) reports manually. The Commission believes that reporting firms that currently automate the creation of § 17.00(a) reports will continue to do so and will submit such reports by secure FTP, and that reporting firms that currently manually create § 17.00(a) reports will continue these practices rather than modifying their systems to facilitate reporting by secure FTP. Firms that currently manually create § 17.00(a) reports may need to update systems used to manually generate those reports. 1. Benefits The proposed revisions concerning the data submission standard will facilitate more rapid data ingestion for the Commission and increased automation in ingesting data required to be reported under § 17.00(a), which will reduce staff time devoted to data ingestion. The proposed revisions concerning the data submission standard should also enhance data quality. First, a modern data submission standard should be less error-prone than the current § 17.00(g) record format. Second, a modern data submission standard should facilitate automated, real-time error correction notifications, which will reduce the amount of manual staff intervention in the error correction process and should provide reporting firms with more efficient timelines for correcting errors. By improving data quality and enabling more rapid corrections of errors, the proposed revisions concerning the data submission standard should ensure the timeliness of COT reports. The proposed revisions concerning the data submission standard should simplify the error correction process for 104 See, e.g., Advanced Notice of Proposed Rulemaking, Account Ownership and Control Information, 74 FR 31642, 31644 (July 2, 2009); 17 CFR 43.7(a)(1); 17 CFR 45.15(a)(2). E:\FR\FM\27JNP1.SGM 27JNP1 Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Proposed Rules reporting firms by automating and accelerating feedback concerning errors. The proposed revisions concerning the data submission standard should enhance DMO’s ability to monitor the markets, support DOE’s surveillance program, and facilitate OCE research projects. ddrumheller on DSK120RN23PROD with PROPOSALS1 2. Costs The Commission believes that the changes proposed to Part 17 would cause reporting firms to modify their systems to collect and submit data using a new data submission standard. The cost of such modifications is likely to vary from entity to entity. Under the proposed Part 17 Guidebook, reporting firms would submit reports required under § 17.00(a) using an XML submission standard. The Commission expects more sophisticated reporting firms that submit a substantial number of daily reports, such as FCMs, will build systems to report using the XML submission standard designated in the proposed Part 17 Guidebook, and will arrange to automate daily submissions using a secure FTP data feed. The Commission estimates that 74 entities will submit reports in in this manner. The Commission estimates those entities would incur a one-time initial cost of approximately $29,800 for each entity (200 hours × $149/hour) to modify and test their systems, or an estimated aggregate dollar cost of $2,205,200 (74 entities × $29,800).105 The Commission understands that some reporting firms today submit reports required under § 17.00(a) manually through the CFTC Portal, and believes that many of those firms would continue to do so under the new submission standard. The Commission estimates that 236 entities would continue to manually report through the CFTC Portal and would incur a one-time initial cost of approximately $1,310 to update their systems (10 hours × $131/ hour) for each entity, or an estimated aggregate dollar cost of $309,160 (236 entities × $1,310).106 105 For costs associated with upgrading reporting systems for secure FTP filers, the Commission estimates that modifications and testing will be undertaken by computer and information research scientists, database architects, software developers, programmers, and testers. The associated costs are taken from the U.S. Bureau of Labor Statistics’ Occupational Employment and Wage Statistics, available at https://www.bls.gov/oes/2021/may/oes_ nat, and adjusted with a multiple of 2.5 to account for benefits and overhead costs. 106 For costs associated with upgrading reporting systems for CFTC Portal filers, the Commission estimates that the necessary modifications will be undertaken by data scientists. The associated costs are taken from the U.S. Bureau of Labor Statistics’ Occupational Employment and Wage Statistics, VerDate Sep<11>2014 17:46 Jun 26, 2023 Jkt 259001 On an ongoing basis, the Commission believes that the 310 estimated reporting firms would incur minimal additional costs above the baseline once setup is complete. However, the Commission estimates that approximately 74 entities filing using secure FTP may incur an ongoing operation and maintenance cost of $3,576 per year (2 hours per month × $149 per hour) per entity to maintain their systems, or an estimated aggregate annual cost of $264,624 (74 entities × $3,756). In addition, the Commission estimates that 236 entities filing manually would incur ongoing additional costs of $3,144 per year (2 hours per month × $131 per hour) per entity to maintain their systems, or an estimated aggregate annual cost of $741,984 (236 entities × $3,144). However, the Commission believes that costs associated with correcting errors would be reduced due to improved data validation at the time of ingest. These cost estimates are based on a number of assumptions and cover a number of tasks required by reporting firms to design, test, and implement an updated data system based on an XML submission standard. These tasks include defining requirements, developing an extraction query, developing an interim extraction format (such as a CSV, or ‘‘comma-separated values,’’ file), developing validations, developing formatting conversions, developing a framework to execute tasks on a repeatable basis, and finally, integration and testing. (C) Request for Comment The Commission requests comment on the range of costs reporting markets, FCMs, clearing members, and foreign brokers would incur to implement an XML submission standard to comply with the proposed amendments. Are there additional costs or benefits that the Commission should consider? Commenters are encouraged to include both qualitative and quantitative assessments of these benefits. b. Changes in Data Elements Reported As detailed above, the current 80character § 17.00(g) format does not allow for flexibility in the reporting of certain types of futures, such as bounded futures, and options, such as capped or barrier options. The proposed amendments would enable these products to be identified in § 17.00(a) reports, and would capture additional information reflecting changes in position, including reporting concerning available at https://www.bls.gov/oes/2021/may/oes_ nat, and adjusted with a multiple of 2.5 to account for benefits and overhead costs. PO 00000 Frm 00024 Fmt 4702 Sfmt 4702 41533 numbers of transfers, reporting of numbers of expirations of contracts, and more granular reporting of EDRPs, including specifying the type of related product (physical, swap, or option). Additionally, the expanded reporting regime instills flexibility such that the proposed Part 17 Guidebook can facilitate reporting of positions in products with innovative features. (A) Benefits The proposed additional fields necessary to identify certain contracts will facilitate collection of more robust market information for the Commission, including allowing the Commission to distinguish between positions in different contracts that may not currently be distinguishable. The proposed additional fields necessary to identify changes in positions, including more granular information concerning types of EDRPs, would also allow the Commission to collect better market information. Additionally, obtaining accurate, granular information concerning daily changes in position should improve data quality. These data elements will enable reporting firms to perform an internal consistency check to confirm the accuracy of data, which should reduce reporting errors. Obtaining accurate, granular information concerning daily changes in position would also support the Commission’s surveillance and monitoring programs. This data would provide the Commission with a more comprehensive understanding concerning the nature of changes in positions—as opposed to merely understanding the scope of positions— and should further facilitate linking position data reported under § 17.00(a) 107 with transaction data reporting under § 16.02.108 (B) Costs The proposed amendments will require reporting firms to report certain additional data elements to the Commission beyond those elements required by the current § 17.00(g) record format. CFTC staff experienced in designing data reporting, ingestion, and validation systems, estimate that for the 74 reporting firms that automate reporting through a secure file transfer protocol, the process of upgrading and testing systems to collect and report new fields will require them to incur on average 400 hours to update, test, and implement the proposed additional data elements required by proposed 107 17 108 17 E:\FR\FM\27JNP1.SGM CFR 17.00(a). CFR 16.02. 27JNP1 ddrumheller on DSK120RN23PROD with PROPOSALS1 41534 Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Proposed Rules Appendix C, for a total of 29,600 hours across all FTP filers at an hourly wage rate of $149. This would amount to total capital and start-up costs of $4,410,400 across all FTP filers (400 hours × 74 FTP filers × $149 = $4,410,400). In addition, the Commission estimates that these firms may each incur one-time costs of up to $1,000 for equipment modifications associated with these changes. The Commission estimates that the 236 reporting firms that manually input data required to be reported under § 17.00(a) into the CFTC Portal will incur on average 20 hours to implement additional data elements required by proposed Appendix C, or 4,720 total hours across all manual filers, at an hourly wage rate of $131 per hour. The Commission estimates that in the aggregate manual filers will incur total capital and start-up costs associated with updating, testing and implementing new data elements of $618,320 (4,720 hours × $131/hour). On an ongoing basis, there would be minimal additional costs related to the addition of new data elements, since reporting entities would not be required to submit substantially more information than the baseline. For example, the Commission does not believe that the proposed amendments are likely to affect the overall number of reports submitted annually under § 17.00(a). However, given the additional data elements required by the proposed amendments, the Commission estimates that 74 entities who automate their reporting systems may each incur an ongoing operation and maintenance cost of $3,576 per year (2 hours per month × $149 per hour) per entity, or an estimated aggregate annual cost of $264,624 (74 entities × $3,576) related to implementation of the new data elements. In addition, the Commission estimates that 236 firms that manually file reports may incur ongoing operation and maintenance costs of $3,144 per year (2 hours per month × $131 per hour) per entity as a result of implementing the proposed amendments implementing new data elements, or an estimated aggregate annual cost of $741,984 (236 entities × $3,144). These cost estimates are based on a number of assumptions and cover a number of tasks required by the reporting firms to design, test, and implement an updated data system based on an XML format. These tasks include defining requirements, developing an extraction query, developing an interim extraction format (such as a CSV, or ‘‘comma-separated values,’’ file), developing validations, VerDate Sep<11>2014 17:46 Jun 26, 2023 Jkt 259001 developing formatting conversions, developing a framework to execute tasks on a repeatable basis, and finally, integration and testing. Additionally, these costs may be mitigated because certain of the proposed data elements are conditional and will only be applicable to a small subset of the reporting firms. For example, if a particular FCM is not a participant on an exchange that lists ‘‘bounded’’ or ‘‘barrier’’ contracts, that FCM will not be required to report proposed data elements that are conditional and only applicable to positions in ‘‘bounded’’ or ‘‘barrier’’ contracts. (C) Request for Comment The Commission requests comment on the range of costs reporting markets, FCMs, clearing members, and foreign brokers would incur to report the data elements described in the proposed amendments. Are there additional costs or benefits that the Commission should consider? Are there any data elements proposed to be added in Appendix C that commenters believe would be unduly onerous or burdensome to report pursuant to part 17? If so, please identify such data elements and explain why. Commenters are encouraged to include both qualitative and quantitative assessments of these benefits. Specific areas of interest include the following: the necessity of collecting additional fields in order to obtain a complete view of futures and options positions across all markets; (ii) evaluations of the accuracy of the Commission’s estimate of the burden of the proposed information reporting; (iii) determining whether there are ways to enhance the utility of reported information; and (iv) minimizing the burden of additional data collection to reporting entities. 5. Section 15(a) Considerations CEA Section 15(a) 109 requires the Commission to consider the costs and benefits of the proposed amendments to Part 17 with respect to the following factors: (1) Protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations. A discussion of these proposed amendments in light of the CEA Section 15(a) factors is set out immediately below. 109 7 PO 00000 U.S.C. 19(a). Frm 00025 Fmt 4702 Sfmt 4702 a. Protection of Market Participants and the Public The Commission expects that the changes to Part 17 reporting will lead to improvements in the Commission’s ability to collect data on large traders. The Commission expects better validation of data at ingest, leading to more efficient error corrections compared to the old reporting format. The Commission expects these enhancements would occur without sacrificing the Commission’s ability to perform comprehensive oversight of the market. Additionally, reducing the risk of errors and delays in the publication of the COT report would benefit the public by providing more accurate data on positions held by large traders. Furthermore, higher-quality and more granular position data from large traders would improve the Commission’s oversight and enforcement capabilities and, in turn, would aid the Commission in protecting markets, participants, and the public in general. b. Efficiency, Competitiveness, and Financial Integrity of Futures Markets The Commission believes the proposed amendments would improve the accuracy and completeness of futures and options position data available to the Commission by improving data quality and providing Commission staff with a more complete understanding of the products comprising certain positions. In particular, the proposed rule would allow for more complete reporting of EDRPs and complex futures and options positions. Access to more accurate and complete data would in turn assist the Commission with, among other things, evaluating if certain traders are in violation of position limits, monitoring concentrations of risk exposures, and preventing fraud and market manipulation. In addition, as described above, the proposed amendments are expected to improve the efficiency of data reporting and analysis by reducing the number of reporting errors and automating data validity and error corrections processes. c. Price Discovery The Commission does not believe the proposed rules would have a significant impact on price discovery. d. Sound Risk Management Practices The Commission believes the proposed rule changes would improve the data quality associated with futures and options position reporting required under § 17.00(a). The proposed additional data elements would capture E:\FR\FM\27JNP1.SGM 27JNP1 Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Proposed Rules more complete product information for certain positions and more complete information concerning changes in position would provide the Commission with an expanded view of the marketplace that would enable the Commission to more effectively identify disruptive or manipulative trading activity. These improvements in the reporting would allow the Commission to evaluate risk throughout the futures and related markets. The Commission does not believe that the costs arising from the proposed rules would threaten the ability of market participants to manage risks. e. Other Public Interest Considerations The Commission believes that the increased reliability and detail resulting from improvements to data reporting would further other public interest considerations, including transparency in the futures market to the public and detection of fraud or manipulation. Additionally, the reporting structure would provide additional flexibility to collect information on new products developed by exchanges, thereby allowing for those exchanges to innovate and respond to the demands of the marketplace while still providing traders’ positions to the Commission. ddrumheller on DSK120RN23PROD with PROPOSALS1 f. General Request for Comment The Commission generally requests comment on all aspects of its costbenefit considerations, including the identification and assessment of any costs and benefits not discussed herein; data and any other information to assist or otherwise inform the Commission’s ability to quantify or qualitatively describe the costs and benefits of the proposed amendments; and substantiating data, statistics, and any other information to support positions posited by commenters with respect to the Commission’s discussion. The Commission welcomes comment on such costs, particularly from existing reporting firms that can provide quantitative cost data based on their respective experiences. Commenters may also suggest other alternatives to the proposed approach. B. Regulatory Flexibility Act The Regulatory Flexibility Act 110 (‘‘RFA’’) requires that agencies, in proposing rules, consider the impact of those rules on small business or, in the statute’s parlance, ‘‘small entities.’’ 111 110 5 U.S.C. 601 et seq. 5 U.S.C. 603. The RFA applies to rules subject to notice and comment rulemakings issued pursuant to section 553(b) of the Administrative Procedure Act, 5 U.S.C. 553(b), or any other law. Id. 111 See VerDate Sep<11>2014 17:46 Jun 26, 2023 Jkt 259001 These amendments affect large traders, FCMs, and other similar entities. The Commission has defined ‘‘small entities’’ as used by the Commission in evaluating the impact of its rules in accordance with the RFA.112 In that statement, the Commission concluded that large traders and FCMs are not considered small entities for purposes of the RFA. Thus, under section 3(a) of the RFA,113 the Chairman, on behalf of the Commission, certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities. The Commission nonetheless invites comment from any firm which believes that these rules would have a significant economic impact on its operations. C. Paperwork Reduction Act The Paperwork Reduction Act (‘‘PRA’’) 114 imposes certain requirements on federal agencies, including the Commission, in connection with agencies’ conducting or sponsoring any collection of information, as defined by the PRA. This proposed rulemaking would result in the collection of information within the meaning of the PRA, as discussed below. The proposed rulemaking contains collections of information for which the Commission has previously received control number 3038–0009 from the Office of Management and Budget (‘‘OMB’’).115 The Commission is proposing to amend the above information collection to accommodate newly proposed and revised information collection requirements for participants in the futures and options markets that require approval from OMB under the PRA. The amendments are expected to modify the existing annual burden for complying with certain requirements of Part 17. Specifically, the Commission is proposing to amend §§ 17.00(a), 17.00(g), 17.00(h), and 17.03(d), which set out (1) the data submission standard and (2) the data elements for large trader reports required to be filed under § 17.00(a), among other things.116 The 112 See Policy Statement and Final Establishment of Definitions, 47 FR 18618 (Apr. 30, 1982). 113 5 U.S.C. 605(b). 114 44 U.S.C. 3501 et seq. 115 For the previously approved estimates, see ICR Reference No: 202303–3038–002, available at https://www.reginfo.gov/public/do/ PRAViewICR?ref_nbr=202303-3038-002. 116 The Commission proposes two categories of amendments to Part 17. First, the Commission proposes to remove current regulation 17.00(g)’s 80character record format and amend regulation 17.03(d) to delegate authority to the Director of the Office of Data and Technology to determine the form, manner, coding structure, and electronic data transmission procedures for reporting the data PO 00000 Frm 00026 Fmt 4702 Sfmt 4702 41535 Commission has previously estimated that the reporting requirements associated with § 17.00 of the Commission’s regulations entail an estimated 17,160 burden hours for all reporting firms.117 The Commission is revising its total burden estimates for this clearance to reflect updated estimates of the number of respondents to the collection. The Commission is also estimating the total capital and start-up costs and ongoing operation and maintenance costs associated with the proposed amendments to the Part 17 regulations described herein. The Commission is therefore submitting this proposal to the OMB for its review in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. Responses to this collection of information by reporting firms pursuant to the Part 17 regulations would be mandatory. The Commission will protect proprietary information according to the Freedom of Information Act 118 and 17 CFR 145, ‘‘Commission Records and Information.’’ In addition, CEA section 8(a)(1) strictly prohibits the Commission, unless specifically authorized by the CEA, from making public data and information that would separately disclose the business transactions or market positions of any person and trade secrets or names of customers.119 The Commission is also required to protect certain information contained in a government system of elements in Appendix C to Part 17 and to determine whether to permit or require one or more particular data standards for reports required under regulation 17.00(a). That submission standard would be published in a Part 17 Guidebook, to be published on the Commission’s website. The proposed Part 17 Guidebook designates a modern XML submission standard for submitting reports required under regulation 17.00(a). Second, the Commission proposes adding an Appendix C to Part 17 enumerating data elements to be included in regulation 17.00(a) reports. The proposed data elements consist of (1) certain data elements currently required to be reported under regulation 17.00(g), (2) certain data elements necessary for processing files submitted in XML, (3) certain data elements necessary to represent innovative contracts that cannot currently be represented using the regulation 17.00(g) format, and (4) data elements necessary to understand the transactions that resulted in day-to-day changes in positions of large traders. The form and manner for reporting these data elements in proposed Appendix C would be provided in the Part 17 Guidebook. The burden estimates provided in this section take into account the burden associated with reporting using a modern XML submission standard and reporting the data elements as set out in proposed Appendix C, in compliance with the proposed Part 17 Guidebook. 117 See ICR Reference No: 202303–3038–002, available at https://www.reginfo.gov/public/do/ PRAViewICR?ref_nbr=202303-3038-002. 118 5 U.S.C. 552. 119 7 U.S.C. 12(a)(1). E:\FR\FM\27JNP1.SGM 27JNP1 ddrumheller on DSK120RN23PROD with PROPOSALS1 41536 Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Proposed Rules records according to the Privacy Act of 1974.120 The Commission expects that requiring reporting pursuant to a modern data standard will not require reporting firms to submit substantially more information than is currently required. Accordingly, the Commission is retaining its previous estimated numbers of reports, burden hours per report, and average burden hour cost. However, based on review of recent data from 2023, the Commission is reducing its estimate of the number of respondents from 330 to 310. Accordingly, the Commission is reducing its estimate from the previous 17,160 burden hours for all reporting firms 121 to 16,120 burden hours. In addition, the Commission anticipates that implementation of a modern submission standard as proposed in the rules should reduce or eliminate manual corrections and resubmissions that occur under the currently operative regulations. The aggregate annual estimate for the reporting burden associated with Part 17, as amended by the proposal,122 would be as follows: Estimated number of respondents: 310. Estimated Average Burden Hours per Respondent: 52 hours. Estimated total annual burden on Respondents: 16,120 hours. Frequency of collection: Periodically. In addition, the Commission anticipates that the proposed rules will result in annual capital and start-up costs as well as operating and maintenance costs, consisting of (1) start-up costs to implement the proposed rule changes, (2) operating and maintenance costs to implement the proposed rule changes, and (3) costs to modify equipment as necessary to comply with the proposed rule changes. The Commission estimates that some respondents may report by secure FTP (‘‘FTP filers’’) and some firms may report manually (‘‘manual filers’’), and that the total capital and start-up costs will vary based on whether a respondent is an FTP Filer or a Manual Filer. The Commission estimates that FTP filers would comprise 74 respondents. The Commission estimates that these respondents would incur one-time initial costs associated with (1) 120 5 U.S.C. 552a. ICR Reference No: 202303–3038–002, available at https://www.reginfo.gov/public/do/ PRAViewICR?ref_nbr=202303-3038-002. 122 The previous burden estimates for 17 CFR 17.00 are available at Notice, Agency Information Collection Activities Under OMB Review, 88 FR 18127 (Mar. 27, 2023). 121 See VerDate Sep<11>2014 17:46 Jun 26, 2023 Jkt 259001 modifying systems to adopt a new data standard, (2) updating and testing systems to implement new data elements, and (3) modifying equipment to implement new data elements. First, the Commission estimates that such firms would incur a one-time initial burden of 200 hours per entity to modify their systems to adopt changes to the data submission standard described in this proposed rulemaking, for a total estimated 14,800 total hours. Second, the Commission estimates that FTP filers will incur total capital and start-up costs associated with updating, testing, and implementing new data elements of 400 hours, for a total estimated 29,600 hours. Third, the Commission also estimates that FTP filers would incur one-time costs of $1,000 to modify equipment to implement new data elements. This would amount to $6,689,600 (((200 + 400 hours) × 74 FTP filers × $149 123)) + (74 FTP filers × $1,000) = $6,689,600). In addition, the Commission estimates that as a result of implementing that new data submission standard, these 74 FTP filers may incur additional operating and maintenance costs of 24 hours per year, for 1,776 total hours, resulting in costs of $264,624 (24 hours × 74 FTP filers × $149 124 = $264,624), and, as a result of implementing new data elements, these 74 FTP filers may incur additional operating and maintenance costs of 24 hours per year, for 1,776 total hours, resulting in costs of $264,624 (24 hours × 74 FTP filers × $149 125 = $264,624). This yields additional annual operating and maintenance costs of $529,248 for FTP filers. The Commission estimates that manual filers would comprise 236 reporting firms. The Commission estimates that these respondents would incur one-time initial costs associated with (1) modifying systems to adopt a new data standard and (2) updating and 123 For the cost calculations for FTP submitters, Commission staff used a composite (blended) wage rate by averaging the hour wages for (1) Computer Research Scientists, (2) Database Architects, (3) Software Developers, and (4) Developers, Programmers, and Testers. Per the U.S. Bureau of Labor Statistics, national industry-specific occupational employment and wage estimates from May 2021, the mean hourly wage for a computer research scientist is $68.58, database architect is $58.58, software developer is $58.17, and developers, programmers, and testers is $54.68. See U.S. Bureau of Labor Statistics’ Occupational Employment and Wage Statistics, available at https://www.bls.gov/oes/2021/may/oes_nat. The average of those wages is $59.42. Commission staff has applied a multiplier of 2.5 times to account for benefits and overhead. The Commission is therefore using an hourly wage rate of $149 for FTP submitters. 124 See id. 125 See id. PO 00000 Frm 00027 Fmt 4702 Sfmt 4702 testing systems to implement new data elements. First, the Commission estimates such respondents would incur a one-time initial burden of 10 hours to modify their systems to implement a new data standard, for a total estimated 2,360 total hours. Second, the Commission estimates that manual filers will incur an average one-time cost of 20 hours to implement additional data elements required by proposed Appendix C, for a total estimated 4,720 total hours. This would amount to aggregate one-time initial costs of $927,480 ((10 hours + 20 hours) × 236 manual filers × $131 126 = $927,480). In addition, the Commission estimates that as a result of implementing that new data submission standard, these 236 manual filers may incur additional operating and maintenance costs of 24 hours per year, for 5,664 total hours, for an associated cost of $741,984 (24 hours × 236 manual filers × $131 127 = $741,984), and, as a result of implementing new data elements, these 236 manual filers may incur additional operating and maintenance costs of 24 hours per year, for 5,664 total hours, for an associated cost of $741,984 (24 hours × 236 manual filers × $131 128 = $741,984). This yields additional annual operating and maintenance costs of $1,483,968 for manual filers. Accordingly, the total estimated capital and start-up costs across all 310 reporting entities is $7,617,080 ($6,689,600 + $927,480 = $7,617,080). Based on five-year, straight line depreciation, this amounts to annualized total capital and start-up costs for all covered entities of $1,523,416. The total estimated annual operating and maintenance costs across all entities is $2,013,216 ($529,248 for FTP filers + $1,483,968 for manual filers = $2,013,216). The Commission estimates that total annual capital and start-up costs and operation and maintenance costs for all covered entities would be $3,536,632 ($1,523,416 + $2,013,216 = $3,536,632). Request for Comment The Commission invites the public and other Federal agencies to comment 126 For the cost calculations for manual submitters, Commission staff used the wage rate for Data Scientists. Per the U.S. Bureau of Labor Statistics, national industry-specific occupational employment and wage estimates from May 2021, the mean hourly wage for a data scientist is $52.24. See U.S. Bureau of Labor Statistics’ Occupational Employment and Wage Statistics, available at https://www.bls.gov/oes/2021/may/oes_nat. Commission staff has applied a multiplier of 2.5 times to account for benefits and overhead. The Commission is therefore using an hourly wage rate of $131 for manual submitters. 127 See id. 128 See id. E:\FR\FM\27JNP1.SGM 27JNP1 ddrumheller on DSK120RN23PROD with PROPOSALS1 Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Proposed Rules on any aspect of the proposed information collection requirements discussed above. The Commission will consider public comments on this proposed collection of information in: (1) Evaluating whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information will have a practical use; (2) Evaluating the accuracy of the estimated burden of the proposed collection of information, including the degree to which the methodology and the assumptions that the Commission employed were valid; (3) Enhancing the quality, utility, and clarity of the information proposed to be collected; and (4) Minimizing the burden of the proposed information collection requirements on reporting firms, including through the use of appropriate automated, electronic, mechanical, or other technological information collection techniques, e.g., permitting electronic submission of responses. Copies of the submission from the Commission to OMB are available from the CFTC Clearance Officer, 1155 21st Street NW, Washington, DC 20581, (202) 418–5160 or from https://RegInfo.gov. Organizations and individuals desiring to submit comments on the proposed information collection requirements should send those comments to: • The Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10235, New Executive Office Building, Washington, DC 20503, Attn: Desk Officer of the Commodity Futures Trading Commission; • (202) 395–6566 (fax); or • OIRAsubmissions@omb.eop.gov (email). Please provide the Commission with a copy of submitted comments so that comments can be summarized and addressed in the final rulemaking, and please refer to the ADDRESSES section of this rulemaking for instructions on submitting comments to the Commission. OMB is required to make a decision concerning the proposed information collection requirements between 30 and 60 days after publication of this release in the Federal Register. Therefore, a comment to OMB is best assured of receiving full consideration if OMB receives it within 30 calendar days of publication of this release. Nothing in the foregoing affects the deadline enumerated above for public comment to the Commission on the proposed rules. VerDate Sep<11>2014 17:46 Jun 26, 2023 Jkt 259001 D. Antitrust Considerations CEA section 15(b) requires the Commission to take into consideration the public interest to be protected by the antitrust laws and endeavor to take the least anticompetitive means of achieving the objectives of the CEA in issuing any order or adopting any Commission rule or regulation. The Commission does not anticipate that the proposed amendments to Part 17 would result in anti-competitive behavior. The Commission encourages comments from the public on any aspect of the proposal that may have the potential to be inconsistent with the antitrust laws or anticompetitive in nature. List of Subjects in 17 CFR Part 17 Brokers, Commodity futures, Reporting and recordkeeping requirements, Swaps. For the reasons stated in the preamble, the Commodity Futures Trading Commission proposes to amend part 17 of title 17 of the Code of Federal Regulations as follows: PART 17—REPORTS BY REPORTING MARKETS, FUTURES COMMISSION MERCHANTS, CLEARING MEMBERS, AND FOREIGN BROKERS 1. The authority citation for part 17 continues to read as follows: ■ Authority: 7 U.S.C. 2, 6a, 6c, 6d, 6f, 6g, 6i, 6t, 7, 7a, and 12a. 2. In § 17.00, revise paragraphs (a)(1), (g), and (h) to read as follows: ■ § 17.00 Information to be furnished by futures commission merchants, clearing members, and foreign brokers. * * * * * (a) * * * (1) Each futures commission merchant, clearing member and foreign broker shall submit a report to the Commission for each business day with respect to all special accounts carried by the futures commission merchant, clearing member or foreign broker, except for accounts carried on the books of another futures commission merchant or clearing member on a fully-disclosed basis. Except as otherwise authorized by the Commission or its designee, such report shall be made pursuant to paragraph (g) of this section. The report shall show each futures position, separately for each reporting market and for each future, and each put and call options position separately for each reporting market, expiration and strike price en each special account as of the close of market on the day covered by the report and, in addition, the number PO 00000 Frm 00028 Fmt 4702 Sfmt 4702 41537 of futures and options contracts bought and sold, the quantity of exchanges of futures or options for commodities or for derivatives positions, the number of delivery notices issued for each such account by the clearing organization of a reporting market and the number stopped by the account, the number of long and short options expired and exercised, the number of long and short futures assigned, and the number of long and short transfers sent and received. The report shall also show all positions in all contract months and option expirations of that same commodity on the same reporting market for which the special account is reportable. * * * * * (g) Media and file characteristics. Except as otherwise approved by the Commission or its designee, all of the applicable data elements set forth in appendix C to this Part shall be included in a report required by § 17.00(a), and shall be submitted together in a single file. The report shall be submitted in the form and manner published by the Commission or its designee pursuant to § 17.03. (h) Correction of errors and omissions. Except as otherwise approved by the Commission or its designee, corrections to errors and omissions in data provided pursuant to § 17.00(a) shall be submitted in the form and manner published by the Commission or its designee pursuant to § 17.03. * * * * * ■ 3. In § 17.03, revise paragraphs (a) and (d) to read as follows: § 17.03 Delegation of authority to the Director of the Office of Data and Technology or the Director of the Division of Market Oversight. * * * * * (a) Pursuant to § 17.00(a) and (h), the authority shall be designated to the Director of the Office of Data and Technology to determine whether futures commission merchants, clearing members, and foreign brokers may report the information required under § 17.00(a) and (h) using some format other than that required under § 17.00(g) upon a determination that such person is unable to report the information using the format, coding structure, or electronic data transmission procedures otherwise required. * * * * * (d) Pursuant to § 17.00(a), (g), and (h), the authority shall be designated to the Director of the Office of Data and Technology to determine the form, manner, coding structure, and electronic data transmission procedures for reporting the data elements in appendix E:\FR\FM\27JNP1.SGM 27JNP1 41538 Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Proposed Rules ddrumheller on DSK120RN23PROD with PROPOSALS1 C to this part and to determine whether to permit or require one or more particular data standards. * * * * * 4. Add appendix C to part 17 to read as follows: ■ Data element name Definition for data element 1. .............. 2. .............. 3. .............. 4. .............. 5. .............. 6. .............. 7. .............. 8. .............. 9. .............. 10. ............ 11. ............ Total Message Count ................................. Message Type ............................................ Sender ID .................................................... To ID ........................................................... Message Transmit Datetime ....................... Report ID .................................................... Record Type (Action) .................................. Report Date ................................................ Reporting Firm ID ....................................... Special Account Controller LEI ................... Account ID .................................................. 12. 13. 14. 15. 16. ............ ............ ............ ............ ............ Exchange Indicator ..................................... Commodity Clearing Code ......................... Product Type .............................................. Ticker Symbol ............................................. Maturity Month Year ................................... 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ Maturity Time .............................................. Listing Date ................................................. First Exercise Date ..................................... Strike Level ................................................. Alpha Strike ................................................ Cap Level .................................................... Floor Level .................................................. Bound or Barrier Type ................................ Bound or Barrier Level ............................... Put or Call Indicator .................................... Exercise Style ............................................. Payout Amount ........................................... Payout Type ................................................ Underlying Contract ID ............................... Underlying Maturity Month Year ................. Long Position .............................................. Short Position ............................................. Contracts Bought ........................................ 35. ............ Contracts Sold ............................................ 36. ............ EDRPs Bought ............................................ 37. ............ EDRPs Sold ................................................ 38. ............ Delivery Notices Stopped ........................... 39. ............ Delivery Notices Issued .............................. 40. 41. 42. 43. 44. 45. 46. 47. ............ ............ ............ ............ ............ ............ ............ ............ Long Options Expired ................................. Short Options Expired ................................ Long Options Exercised ............................. Short Options Exercised ............................. Long Futures Assigned ............................... Short Futures Assigned .............................. Long Transfers Sent ................................... Long Transfers Received ........................... 48. ............ Short Transfers Sent .................................. The total number of reports included in the file. Message report type. The CFTC-issued reporting firm identifier. Indicates the report was submitted to the CFTC. The date and time the file was created. A unique identifier assigned to each position report. Indicates the action that triggered the Position Report. The date of the information being reported. CFTC assigned identifier for the reporting firm. The Legal Entity Identifier issued to the special account controller. A unique account identifier, assigned by the reporting firm to each special account. Assignment of the account number is subject to the provisions of § 17.00(b) and Appendix A of this part (Form 102). The exchange where the contract is traded. The clearinghouse-assigned commodity code for the futures or options contract. Type of Product. Ticker symbol of the product traded. Month and year of the delivery or maturity of the product, as applicable. Day must be provided when necessary to characterize a product. The expiration time of an option or last trading time of a future. Product listing date. The earliest time at which notice of exercise can be given. Numeric option moneyness criterion. Non-Numeric option moneyness criterion. Ceiling value of a capped option or bounded future. Floor value of a capped option or bounded future. Behavior of the product when it hits the bound or barrier. Bound or barrier level of a contingent option. Nature of the option exercise. Type of exercise of an option. Cash amount indicating the payout associated with the product. The type of valuation method or payout trigger. The instrument that forms the basis of an option. Underlying delivery year and month (and day where applicable). The total of long open contracts carried at the end of the day. The total of short open contracts carried at the end of the day. The total quantity of contracts bought (gross) during the day associated with a special account, including all block trades and trade allocations such as give-ups, even if the give-ups are processed beyond T+1. Do not include exchanges of derivatives for related positions EDRPs (EFP, EFS or EFR, EOO) or transfers. The total quantity of contracts sold (gross) during the day associated with a special account, including all block trades and trade allocations such as give-ups, even if the give-ups are processed beyond T+1. Do not include exchanges of derivatives for related positions EDRPs (EFP, EFS or EFR, EOO) or transfers. The quantity of purchases of futures or options in connection with exchanges of futures or options for related positions (‘‘EDRPs’’) done pursuant to a DCM’s rules, disaggregated into quantity of purchases of futures or options in connection with EDRPs by type of EDRP, including exchanges of futures for physical, exchanges of futures for risk, exchanges of options for options, and any other EDRP offered pursuant to a DCM’s rules. The quantity of sales of futures or options in connection with EDRPs done pursuant to a DCM’s rules, disaggregated into quantity of sales of futures or options in connection with EDRPs by type of EDRP, including exchanges of futures for physical, exchanges of futures for risk, exchanges of options for options, and any other EDRP offered pursuant to a DCM’s rules. The number of futures contracts for which delivery notices have been stopped during a day. The number of futures contracts for which delivery notices have been issued during a day. Long options positions expired without being exercised. Short options positions expired without being exercised. Long options positions exercised during the day. Short options positions exercised during the day. Long futures assigned as the result of an option exercise. Short futures assigned as the result of an option exercise. Long positions sent through other transfers during the day. (Do not include give-ups.) Long positions received through other transfers during the day. (Do not include give-ups.) Short positions sent through other transfers during the day. (Do not include give-ups.) VerDate Sep<11>2014 17:46 Jun 26, 2023 Jkt 259001 PO 00000 Frm 00029 Fmt 4702 Sfmt 4702 E:\FR\FM\27JNP1.SGM 27JNP1 Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Proposed Rules Data element name Definition for data element 49. ............ Short Transfers Received ........................... 50. ............ Product-Specific Terms .............................. Short positions received through other transfers during the day. (Do not include give-ups.) Terms of the contract that are economically material to the contract, maintained in the ordinary course of business by the reporting market listing the contract, and not otherwise required to be reported under the data elements in this Appendix. Issued in Washington, DC, on June 20, 2023, by the Commission. Robert Sidman, Deputy Secretary of the Commission. Note: The following appendices will not appear in the Code of Federal Regulations. Appendices to Large Trader Reporting Requirements—Voting Summary and Commissioners’ Statements Appendix 1—Voting Summary On this matter, Chairman Behnam and Commissioners Johnson, Goldsmith Romero, Mersinger, and Pham voted in the affirmative. No Commissioner voted in the negative. Appendix 2—Statement of Chairman Rostin Behnam in Support of the Notice of Proposed Rulemaking on Amendments to Part 17 Large Trader Reporting Requirements ddrumheller on DSK120RN23PROD with PROPOSALS1 41539 I support today’s proposed rule which would modernize and create a path for efficient future modernization of large trader data reporting under Part 17 of the Commission’s regulations. The proposal also seeks to align Part 17 data and reporting with the reporting structure in Parts 16, 20, 39, 43, and 45. Part 17 governs large trader reporting for futures and options, and requires certain registrants to report daily position information for the largest futures and options traders. The Commission uses the large trader reports for surveillance (detection and prevention of price manipulation) and enforcement of speculative limits. These reports also provide the basis for the Commission’s weekly Commitments of Traders (‘‘COT’’) report, which is used by a wide range of commercial and speculative traders, and was itself recently modernized to include an updated interface that simplifies the downloading of COT data and an Application Program Interface (API), which enables an easier automated download process.1 Large trader data and the COT report alike are tools of the trade, and ensuring that they are usable internally and externally promotes transparency and efficiency as we carry out our regulatory and enforcement functions. Submission standards and data fields for the report (§ 17.00(g)) were promulgated in 1986 and last updated in 1997, and have become outdated and difficult for staff to use. The 1 See Press Release Number 8612–22, CFTC, CFTC Launches New Commitments of Traders Reports (Oct. 20, 2022), CFTC Launches New Commitments of Traders Reports, available at https://www.cftc.gov/PressRoom/PressReleases/ 8612-22. VerDate Sep<11>2014 17:46 Jun 26, 2023 Jkt 259001 proposal seeks to modernize the format standards and data fields by: removing the 80-character format and delegating authority to the Director of the Division of Data (DOD) to designate a modern data submission standard; replacing the data fields enumerated in the regulation with a new Appendix C specifying data elements to be reported; and delegating to the DOD Director the authority to specify the form, manner, coding structure, and electronic data transmission procedures for reporting. The Part 17 proposal is accompanied by the contemporaneous publication of a proposed Part 17 Guidebook on the Commission’s website. The proposed Guidebook designates a modern FIXML submission standard for submitting reports required under § 17.00(a). The proposal includes a general description of the Guidebook and requests comments from the public. At their core, rules like this support foundational compliance and unequivocally support our efforts in ensuring that end-users and individual and institutional investors alike can measure and understand risks. Further, this rule will allow a better understanding that those trading in our markets are being monitored, and their impacts and influence within such markets, constantly measured and evaluated. Appendix 3—Statement of Commissioner Kristin N. Johnson In Support of Notice of Proposed Rulemaking on Large Trader Reporting Requirements I strongly support issuing the proposal on Large Trader Reporting Requirements. Large trader reports ‘‘effectuate the Commission’s market and financial surveillance programs by providing information concerning the size and composition’’ of Commission regulated markets and the accounts that hold the largest positional exposures.1 The Commission’s large trader reporting system serves as a foundational tool for protecting market integrity as well as price discovery and hedging utility of futures contracts for commercial end-users. Despite technologybased formatting limitations, the large trader reporting system has admirably supported the Commission’s market surveillance and position limits enforcement programs for decades. Among other uses, data reported under Part 17 enables the Commission to identify large positions in single markets or across markets, including by aggregating positions of a particular beneficial owner across multiple accounts held with multiple 1 Notice of Proposed Rulemaking, Position Limits for Derivatives, 78 FR 75,680, 75,741 (Dec. 12, 2013). PO 00000 Frm 00030 Fmt 4702 Sfmt 4702 clearing members. This data also supports the Commission’s surveillance programs and serves as the basis of the Commission’s weekly Commitment of Traders (‘‘COT’’) reports. In addition, the data required to be reported under § 17.00(a) comprise core data used by many divisions within the Commission, including the Division of Market Oversight (‘‘DMO’’), the Office of the Chief Economist (‘‘OCE’’), and the Division of Enforcement. Requiring reporting in an extensible markup language (‘‘XML’’) protocol as proposed is consistent with current regulatory practices and reconciles the format for transmitting large trader reports with the Commission’s transactional reporting structures for designated contract markets, derivatives clearing organizations, physical commodity swaps, and swap data repositories.2 This harmonization, if properly implemented, should unlock surveillance synergies and allow the Commission’s Integrated Surveillance System, where large trader reports are housed, to interact with other reporting frameworks including Ownership and Control Reports, which are triggered when accounts exceed volume thresholds,3 and Trade Capture Reports, which contain transaction level and related order book data.4 Although the proposal preserves the core data that large trader reports collect today, it also measuredly proposes to integrate complementary data that is not fully reflected in current reports. Access to more fulsome and reliable data will improve the Commission’s understanding of how traders employ certain transactions and serve as a deterrent to potential abusive trading practices. The proposal would also require reporting data elements that capture ‘‘Contracts Bought’’ and ‘‘Contracts Sold’’ instead of reporting aggregated positions that do not presently consider the amount of buying and selling associated with a particular special account from one trading day to the next.5 I am heartened by the proposal’s one-year compliance period,6 and I encourage stakeholders to meaningfully engage with this proposal to enhance the Commission’s regulatory mandate without placing undue burdens on the firms that potentially would have to comply with new requirements. I commend staff—Owen Kopon and Paul Chaffin from DMO, James Fay from the 2 Notice of Proposed Rulemaking, Large Trader Reporting Requirements at 14 (Jun. 7, 2023), https:// www.cftc.gov/media/8716/votingdraft060723_ 17CFRPart17/download (hereinafter ‘‘Large Trader Proposal’’). 3 17 CFR 17.01. 4 17 CFR 16.02. 5 Large Trader Proposal at 29 to 30. 6 Large Trader Proposal at 34. E:\FR\FM\27JNP1.SGM 27JNP1 41540 Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Proposed Rules Division of Data, and Daniel Prager from OCE—for bringing to the Commission a thoughtful proposal for modernizing large trader reports. Appendix 4—Statement of Commissioner Christy Goldsmith Romero on Strengthening and Modernizing Large Trader Reporting Requirements for Transparency and Market Integrity ddrumheller on DSK120RN23PROD with PROPOSALS1 At my confirmation hearing for this role, I testified, ‘‘If confirmed, my highest priority would be to work to ensure that the markets are working well—that they are open, fair, and competitive. . . . Whether focused on hard commodities like agriculture, energy, or metals, or on the financial sector, the Commission plays a critical role in ensuring that these markets work well. That starts with the Agricultural sector—the farmers, ranchers, and producers our nation depends on—to put food on our tables and contribute to our nation’s economic activity. For our farmers and ranchers to help drive our economy and feed the world, they need U.S. derivatives markets for risk management and price discovery.’’ 1 Transparency is critical to fair and orderly markets. It provides the market confidence that pricing is appropriate, reflects market fundaments, and is free of manipulation and excessive speculation. This confidence is reflected in the fact that the Commission’s Commitments of Traders report that reports position information for the largest traders in our markets is consistently the most downloaded item from our website. Market participants, news media, researchers, academics, and industry professionals, use these reports to determine current trends, conduct analysis of trading patterns, and inform market strategies. The importance of these reports was highlighted when the Commission had to postpone the reports temporarily after the cyber attack on Ion Markets.2 Fair and orderly markets also require confidence that the Commission is monitoring markets and taking strong action to promote market integrity. The Commitments of Traders report is a tool in the Commission’s market surveillance program and enforcement program to deter and catch market manipulation and excessive speculation. As I have visited with our nation’s farmers and producers, I have heard about their need for the Commission to protect the integrity of our markets, to ensure that prices are not artificially increased, thereby unfairly raising input costs. The Commission has a critical mission to deter and combat excess speculation in our markets—which I discussed Monday in a 1 Statement of Christy Goldsmith Romero, Confirmation Hearing, U.S. Senate Committee on Agriculture, Nutrition, and Forestry (Mar. 2, 2022) available at https://www.agriculture.senate.gov/ imo/media/doc/Testimony_ Goldsmith%20Romero.pdf. 2 See CFTC, CFTC Announces Postponement of Commitment of Traders Report, (Feb. 16, 2023) available at https://www.cftc.gov/PressRoom/ PressReleases/8662-23. VerDate Sep<11>2014 17:46 Jun 26, 2023 Jkt 259001 recent enforcement action.3 In September, I proposed that the CFTC use its expertise and data to study whether prices in key commodities markets are being determined by market fundamentals, and to root out any manipulation and excessive speculation so that families and businesses aren’t forced to pay artificially increased prices.4 These deep dive studies would need data on the activity of the largest traders in our markets—which is the sole focus of these reporting requirements. The Commission will benefit from strengthening and modernizing this important surveillance tool, as will the public. I particularly appreciate the recognition of the need to determine positions across markets for more comprehensive data, and for data quality improvements. The proposed changes would enhance the Commission’s ability to identify disruptive or manipulative trading activity. For these reasons, I support the proposed rule. I thank the staff and look forward to public comment. Appendix 5—Statement of Commissioner Caroline D. Pham in Support of Notice of Proposed Rulemaking for Large Trader Reporting Requirements Under Part 17 Today, the Commodity Futures Trading Commission (Commission or CFTC) is considering whether to propose revisions that would update the outdated large trader reporting submission standards in Part 17 of the Commission’s regulations. I am pleased to support this proposed rulemaking because the CFTC relies on its large trader reporting data to generate its weekly Commitment of Traders (COT) Report and to carry out our important market surveillance functions. Part 17 is the CFTC’s regulatory framework that outlines the reporting obligations for clearing members, including futures commission merchants (FCMs) and foreign brokers, collectively known as reporting firms. Part 17 requires these reporting firms to submit daily trade data to the CFTC, which includes data on open interest, positions held, and other relevant position information on futures and options on futures. This framework allows the CFTC to maintain an up-to-date and accurate picture of the markets, ensuring that market participants and end-users have the necessary information for price discovery 3 See CFTC Commissioner Christy Goldsmith Romero, The Importance of Protecting Commodity Markets Against Excess Speculation in the Ghost Cattle Fraud Case, (June 5, 2023) Statement of Commissioner Goldsmith Romero on the Importance of Protecting Commodity Markets Against Excessive Speculation in the Ghost Cattle Fraud Case CFTC v. Cody Easterday available at https://www.cftc.gov/PressRoom/ SpeechesTestimony/romerostatement060523. 4 See Opening Statement of Commissioner Christy Goldsmith Romero Before the Energy and Environmental Markets Advisory Committee, Opening Statement of Commissioner Christy Goldsmith Romero Before the Energy and Environmental Markets Advisory Committee (September 20, 2022) available at https:// www.cftc.gov/PressRoom/SpeechesTestimony/ romerostatement092022. PO 00000 Frm 00031 Fmt 4702 Sfmt 9990 and risk management. By regularly collecting and publishing this market data through the CFTC’s COT Report, Part 17 helps maintain market integrity and fosters transparency, providing valuable insights into market trends and dynamics. The COT Report has been vital to our derivatives market since its inception in 1962. The report provides a weekly summary of the open interest positions held by various categories of market participants, including commercial traders, non-commercial traders, and nonreportable positions. By understanding the positions held by commercial and noncommercial traders, market participants and end-users can better manage their risk exposure, assess the supply and demand fundamentals that drive price movements, and gauge the overall sentiment in markets, enabling market participants to make informed decisions about their own positions and strategies. Part 17 data is also used by the CFTC to monitor market activities and to detect potential fraud, market manipulation, and position limit violations. Collecting position data that accurately reflects the full picture of a market participant’s position also enables the CFTC to assess the financial risks presented by large customer positions to registrants such as FCMs, and derivatives clearing organizations (DCOs). As we deliberate today on the proposed rule to amend Part 17, it is crucial to remember that we should periodically update our reporting rules as needed to reflect developments in the derivatives markets, while ensuring such updates do not cause disruption to the CFTC’s weekly COT Report or our market oversight. And in the rulemaking process, the Commission must give fair consideration to every alternative to ensure that our efforts to enhance market transparency do not unnecessarily increase the regulatory burden and costs for market participants, particularly end-users who are already dealing with inflation, rising interest rates, and increased costs for inputs. I often say that we are not regulating in a vacuum, and the Commission must take into account real-world considerations and the realities of implementing significant changes to systems, operations, and processes. To that end, I’m pleased that the proposed implementation period is one year from publication of the final rule, and encourage commenters to note if this is not enough time. The COT Report is an invaluable tool in the derivatives market, providing transparency and aiding in price discovery and risk management for market participants and end-users, and enabling the CFTC’s market surveillance and oversight mission. I’d like to recognize and thank the following CFTC staff members: Owen Kopon and Paul Chaffin in the Division of Market Oversight, James Fay in the Division of Data, and Daniel Prager in the Office of Chief Economist, for their critical work on these important requirements. [FR Doc. 2023–13459 Filed 6–26–23; 8:45 am] BILLING CODE 6351–01–P E:\FR\FM\27JNP1.SGM 27JNP1

Agencies

Commodity Futures Trading Commission

[Federal Register Volume 88, Number 122 (Tuesday, June 27, 2023)]
[Proposed Rules]
[Pages 41522-41540]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-13459]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 17

RIN 3038-AF27


Large Trader Reporting Requirements

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commodity Futures Trading Commission (``Commission'' or 
``CFTC'') is proposing revisions to the Commission's regulations that 
set forth large trader position reporting requirements for futures and 
options. First, the Commission is proposing to remove an outdated 80-
character submission standard and delegate certain authority to the 
Office of Data and Technology to designate a modern submission standard 
for certain reports required to be submitted. Second, the Commission is 
proposing to replace certain enumerated data fields with an appendix 
specifying applicable data elements and a separate Guidebook specifying 
the form and manner for reporting. These revisions would modernize 
large trader position reporting and align it with other reporting 
structures set out in the Commission's regulations.

DATES: Comments must be submitted on or before August 28, 2023.

ADDRESSES: You may submit comments, identified by ``Large Trader 
Reporting Requirements, RIN 3038-AF27,'' by any of the following 
methods:
     CFTC Comments Portal: https://comments.cftc.gov/. Select 
the ``Submit Comments'' link for this rulemaking and follow the 
instructions on the Public Comment Form.
     Mail: Send to Christopher Kirkpatrick, Secretary of the 
Commission, Commodity Futures Trading Commission, Three Lafayette 
Centre, 1155 21st Street NW, Washington, DC 20581.
     Hand Delivery/Courier: Same as Mail above.
    Please submit your comments using only one of these methods. To 
avoid possible delays with mail or in-person deliveries, submissions 
through the CFTC Comments Portal are encouraged.
    All comments must be submitted in English, or if not, accompanied 
by an English translation. Comments will be posted as received to 
https://comments.cftc.gov. You should submit only information that you 
wish to make available publicly. If you wish the Commission to consider 
information that you believe is exempt from disclosure under the 
Freedom of Information Act (``FOIA''), a petition for confidential 
treatment of the exempt information may be submitted according to the 
procedures established in Sec.  145.9 of the Commission's 
regulations.\1\
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    \1\ 17 CFR 145.9.
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    The Commission reserves the right, but shall have no obligation, to 
review, pre-screen, filter, redact, refuse, or remove any or all 
submissions from https://www.comments.cftc.gov that it may deem to be 
inappropriate for publication, such as obscene language. All 
submissions that have been redacted or removed that contain comments on 
the merits of the rulemaking will be retained in the public comment 
file and will be considered as required under the Administrative 
Procedure Act and other applicable laws, and may be accessible under 
FOIA.

FOR FURTHER INFORMATION CONTACT: Owen Kopon, Associate Chief Counsel, 
at (202) 418-5360 or [email protected], Paul Chaffin, Assistant Chief 
Counsel, at (202) 418-5185 or [email protected], Division of Market 
Oversight, James Fay, IT Specialist, at (202) 418-5293 or 
[email protected], Division of Data, or Daniel Prager, Research Economist, 
(202) 418-5801 or [email protected], Office of the Chief Economist, in 
each case at the Commodity Futures Trading Commission, 1155 21st Street 
NW, Washington, DC 20581.

SUPPLEMENTARY INFORMATION: 

I. Background

A. Introduction

    Part 17 of the Commission's regulations governs large trader 
reporting for futures and options.\2\ Among other things, those rules 
require futures commission merchants (``FCMs''), foreign brokers, 
clearing members, and certain reporting markets \3\ (FCMs, foreign 
brokers, clearing members, and such reporting markets are collectively 
referred to herein as ``reporting firms'') to report daily position 
information of the largest futures and options traders to the 
Commission.\4\
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    \2\ 17 CFR part 17.
    \3\ For exclusively self-cleared contracts, designated contract 
markets (``DCMs'') must report data required to be reported under 
regulation 17.00(a) on behalf of clearing members. See 17 CFR 
17.00(i).
    \4\ 17 CFR 17.00(a).
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    The Commission uses these Sec.  17.00(a) large trader reports to 
carry out its market surveillance programs, which include detection and 
prevention of price manipulation, as well as enforcement of speculative 
limits.\5\ Among other things, data reported under Part 17 enable the 
Commission to identify large positions in single markets or across 
markets, including by aggregating the positions of a particular 
beneficial owner across multiple accounts held with multiple clearing 
members. In addition to supporting the Commission's surveillance 
programs, aggregated position data collected under Part 17 serves as 
the basis of the Commission's weekly Commitments of Traders (``COT'') 
report.\6\ Historically, a wide range of both commercial and 
speculative traders have used the COT report for a variety of purposes 
related to their trading activities.\7\ Finally, Part

[[Page 41523]]

17 data is an important source of data for fulfillment of the 
Commission's market analysis program and to support Commission research 
projects.
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    \5\ See, e.g., Final Rule, Reports; General Provisions; Adoption 
of Final Rules, 49 FR 46116, 46116 (Nov. 23, 1984).
    \6\ See, e.g., Comprehensive Review of the Commitments of 
Traders Reporting Program, 71 FR 35627, 35630 (June 21, 2006) 
(stating that the Commission generates the COT report using Part 17 
data); Final rule and corrections, Reporting Requirements for 
Contract Markets, Futures Commission Merchants, Members of Exchanges 
and Large Traders, 46 FR 59960, 59961 n.6 (Dec. 8, 1981) (``[I]n 
addition to market surveillance and enforcement of speculative 
limits, large trader data provides the basis for the Commission's 
monthly report on commitments of large traders.'').
    \7\ See, e.g., CFTC, ``Commission Actions in Response to the 
Comprehensive Review of the Commitments of Traders Reporting 
Program,'' at 6 (Dec. 5, 2006), available at https://www.cftc.gov/idc/groups/public/@commitmentsoftraders/documents/file/noticeonsupplementalcotrept.pdf; see also CFTC, Staff Report on 
Commodity Swap Dealers & Index Traders with Commission 
Recommendations, at 46 (Sept. 2008), available at https://www.cftc.gov/idc/groups/public/@newsroom/documents/file/cftcstaffreportonswapdealers09.pdf (describing various market 
participants' and researchers' uses for the COT report).
---------------------------------------------------------------------------

    Since the 1980s, Sec.  17.00(g) has set forth both the submission 
standard and data fields to be used in Sec.  17.00(a) large trader 
reports.\8\ Section 17.00(g) requires reporting firms to submit data in 
a highly-specified 80-character record format that is unique to Sec.  
17.00(a) large trader reports. As technology and markets have evolved, 
this record format has become outdated. It does not accommodate 
information needed to represent certain contracts, and necessitates 
manual work by staff to validate and ingest data.\9\ The Commission is 
issuing a proposal to update data reporting under Sec.  17.00(a) by 
removing Sec.  17.00(g)'s 80-character record format and delegating 
authority to the Director of the Office of Data and Technology to 
designate a modern data submission standard. Additionally, the 
Commission proposes to replace the data fields enumerated in that Sec.  
17.00(g) record format with a proposed Appendix C to Part 17 specifying 
the data elements required to be reported, and to delegate to the 
Director of the Office of Data and Technology the authority to specify 
the form, manner, coding structure, and electronic data transmission 
procedures for reporting these data elements under Part 17. These 
changes would both address shortcomings of the current format for Part 
17 data and align Part 17 reporting with the reporting structure set 
out in Parts 16, 20, 39, 43, and 45.\10\
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    \8\ The final rule promulgating regulation 17.00(g) was 
published in 1986. Final Rule, Reports Filed by Contract Markets, 
Futures Commission Merchants, Clearing Members, Foreign Brokers, and 
Large Traders, 51 FR 4712 (Feb. 7, 1986).
    \9\ 17 CFR 17.00(g).
    \10\ See 17 CFR part 16; 17 CFR part 20; 17 CFR part 39; 17 CFR 
part 43; 17 CFR part 45.
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B. Statutory and Regulatory Framework for Sec.  17.00(a) Large Trader 
Reporting for Futures and Options

    The reporting rules contained in Parts 15, 16, 17, 18, 19, and 21 
of the Commission's regulations are structured to ensure that the 
Commission receives adequate information to facilitate oversight of 
futures and options markets via its market surveillance programs.\11\ 
Part 16 requires contract markets to submit certain data; Parts 17 and 
21 require FCMs, clearing members, foreign brokers, and certain 
reporting markets to submit certain data; and Parts 18 and 19 require 
individual traders to submit certain data.\12\
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    \11\ See, e.g., Final Rule, Reporting Levels and Recordkeeping, 
69 FR 76392, 76392 (Dec. 21, 2004).
    \12\ See 17 CFR parts 16-19, 21.
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    The reporting rules are implemented by the Commission based on the 
authority of sections 4a, 4c(b), 4g, and 4i of the Commodity Exchange 
Act (``CEA''). Section 4a of the CEA permits the Commission to set and 
approve exchange-set limits and enforce speculative position 
limits.\13\ Section 4c(b) of the CEA gives the Commission plenary 
authority to regulate transactions that involve commodity options.\14\ 
Section 4g of the CEA imposes reporting and recordkeeping obligations 
on registered entities, and requires each registered entity to file 
such reports as the Commission may require on proprietary and customer 
transactions and positions in commodities for future delivery executed 
on any board of trade.\15\ Additionally, Section 4g of the CEA requires 
registered entities to maintain daily trading records as required by 
the Commission and permits the Commission to require that such daily 
trading records be made available to the Commission.\16\ Section 4i of 
the CEA requires the filing of such reports as the Commission may 
require when positions made or obtained on DCMs equal or exceed 
Commission-set levels.\17\
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    \13\ 7 U.S.C. 6a. Section 4a of the CEA also permits the 
Commission to set, approve, and enforce speculative position limits 
with respect to swaps.
    \14\ 7 U.S.C. 6c(b).
    \15\ 7 U.S.C. 6g.
    \16\ See id.
    \17\ 7 U.S.C. 6i.
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    The Commission's large trader reporting regime for futures and 
options requires reporting firms to submit, pursuant to Sec.  17.00(a), 
daily reports to the Commission providing positions in open contracts 
\18\ and identifying information for the futures and options trader 
accounts that exceed Commission-set reporting levels--called special 
accounts \19\--and requires large traders themselves to provide certain 
identifying information.\20\ More specifically, Sec.  17.00(a) requires 
reporting firms to submit a Sec.  17.00(a) large trader position 
report--historically referred to as a ``series '01 report'' \21\--that 
itemizes by special account certain positions, deliveries of futures, 
and exchanges of futures for related positions associated with each 
account that carries a reportable position.\22\ Section 17.01 requires, 
separately, that reporting firms submit information, via Form 102A,\23\ 
identifying the traders behind special accounts by name, address, and 
occupation, once an account accrues a reportable position.\24\ 
Reporting firms, as appropriate, submit Forms 102 to the Commission for 
each account when that account becomes reportable as a special 
account.\25\ By aggregating information from Sec.  17.00(a) large 
trader position reports and Forms 102, the Commission can determine the 
size of each reportable trader's overall positions across special 
accounts held with multiple FCMs, clearing members, or foreign brokers.
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    \18\ ``Open contract'' means any commodity or commodity option 
position held by any person on or subject to the rules of a board of 
trade which have not expired, been exercised, or offset. See 17 CFR 
1.3 and 17 CFR 15.00(n).
    \19\ A ``special account'' means any commodity futures or 
options account in which there is a ``reportable position.'' 17 CFR 
15.00(r). A ``reportable position'' is any open contract position 
held or controlled by a trader at the close of business in any one 
futures contract of a commodity traded on any one contract market 
that equals or exceeds the reportable levels fixed by the Commission 
in regulation 15.03. 17 CFR 15.03.
    \20\ 17 CFR part 18.
    \21\ See, e.g., 17 CFR 15.02 (enumerating reports by ``Form 
No.'').
    \22\ 17 CFR 17.00(a).
    \23\ See 17 CFR part 17, App'x A.
    \24\ 17 CFR 17.01.
    \25\ 17 CFR 17.02(b).
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    These data reported under Part 17 are used for the Commission's 
market surveillance program, for generating the weekly COT report, for 
market analysis, and for research projects.\26\ Section 17.00(g) 
provides the data submission standard and data elements for the 
reportable positions by special accounts--Sec.  17.00(a) large trader 
report data, or series '01 report data--in the form of an 80-character 
record format.\27\
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    \26\ See, e.g., Final Rule, Reports Filed by Contract Markets, 
Futures Commission Merchants, Clearing Members, Foreign Brokers, and 
Large Traders, 51 FR 4712, at 4712 (Feb. 7, 1986).
    \27\ 17 CFR 17.00(g).
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    The Commission receives Sec.  17.00(a) large trader reports by 9 
a.m. on the business day following the day to which the information 
pertains.\28\ Information obtained from such reports is ingested into 
the Commission's Integrated Surveillance System (``ISS''), where it may 
be linked to ownership and control information for special accounts 
reported pursuant to Sec.  17.01.\29\
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    \28\ 17 CFR 17.02(a).
    \29\ ISS receives and stores end-of-day position reports 
submitted to the CFTC and allows the Commission's divisions and 
offices to monitor daily activities of large traders. See, e.g., 
Final Rule, Ownership and Control Reports, Form 102/102S, 40/40S, 
and 71, 78 FR 69178, 69180 (Nov. 18, 2013). Among other things, ISS 
is used to generate the COT report.

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[[Page 41524]]

C. Shortcomings of the Sec.  17.00(g) Record Format

    Section 17.00(g)'s 80-character record format has been in place 
since 1986,\30\ and has become outdated and difficult for staff to use. 
Historically, Part 17 has evolved alongside technological advances in 
data transmission. At the time of the Commission's establishment, daily 
reports with respect to special accounts could be submitted to the 
Commission on paper series '01 forms.\31\ In 1984, the Commission 
amended Part 17 to permit, but not require, reporting firms to submit 
Part 17 reports on certain Commission-compatible data processing 
media--at that time, computer printouts or magnetic tape.\32\ The 
Commission found these methods improved data quality and saved time, 
money, and effort for both the Commission and market participants.\33\ 
In 1986, the Commission revised Part 17 to specifically require that a 
reporting firm submit reports in a machine-readable form compatible 
with the Commission's data processing system, unless otherwise 
authorized by the Commission.\34\ At that time, newly-established Sec.  
17.00(g) set out the data fields to be reported and introduced an 80-
character submission standard based on Cobol Programming Language 
descriptions.\35\ Market participants were required to submit Sec.  
17.00(a) large trader position reports using compatible data processing 
media, defined to include magnetic tape, magnetic diskette, or dial-up 
data transmission at speeds up to 1200 baud asynchronous transmission 
and 4800 baud synchronous transmission.\36\ The Commission made minor 
amendments to the particulars of the 80-character record format in 1997 
and, in recognition of evolving data transmission methods, revised the 
definition of ``compatible data-processing media'' to delete its list 
of specific compatible media and delegate to staff the authority to 
define acceptable media.\37\ The 80-character record format has 
remained largely unchanged since 1997. In 2004, the Commission revised 
requirements that specified that reports be transmitted by ``dial-up'' 
to allow for more general transmission via internet connection,\38\ and 
expanded the requirement that reporting firms include information 
concerning volume attributable to exchanges of futures for physicals to 
include information concerning exchanges of futures for derivatives 
positions.\39\
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    \30\ See 51 FR 4712.
    \31\ See, e.g., Final Rule, Rules Under the Commodity Exchange 
Act, 41 FR 3192, 3208 (Jan. 21, 1976) (regulation 17.03 permitted 
reporting of series 01 information on ``compatible data-processing 
punched cards'' in addition to magnetic tape or discs). The 
Commission's predecessor agency received regulation 17.00(a) large 
trader reporting in a similar format. See, e.g., Supersedure of 
Certain Regulations, 26 FR 2968, 2969 (Apr. 7, 1961).
    \32\ Final Rule, Reports Filed by Contract Markets, Futures 
Commission Merchants, Clearing Members, Foreign Brokers and Large 
Traders, 51 FR 4712-01, 4713-14 (Feb. 7, 1986).
    \33\ Id. at 4714; see also Proposed Rule, Reporting Requirements 
for Contract Markets, Futures Commission Merchants, Clearing Members 
and Traders, 50 FR 30450-01, 30452 (Jul. 26, 1985).
    \34\ 51 FR at 4714.
    \35\ 17 CFR 17.00(g) (1986). ``Cobol'' refers to Common Business 
Oriented Language.
    \36\ 17 CFR 15.00(1) (1986); see also 51 FR at 4714. By 1995, 
the Commission received 95 percent of its futures large trader data 
through dial-up transmission or on machine-readable media. See 
Proposed Rule, Futures Commission Merchants, Clearing Members and 
Foreign Brokers; Option Large Trader Reports Daily Filing 
Requirements, 61 FR 37409-01, 37411 (Jul. 18, 1996).
    \37\ See Final Rule, Recordkeeping: Reports by Futures 
Commission Merchants, Clearing Members, Foreign Brokers, and Large 
Traders, 85 FR 24026, 24028 (May 2, 1997).
    \38\ See Final Rule, Reporting Levels and Recordkeeping, 69 FR 
76392-01, 76394 (Dec. 21, 2004).
    \39\ See id. at 76394.
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    Technology for financial reporting has further advanced since the 
1990s. As a result, the record format for Sec.  17.00(a) large trader 
reports has become outdated.
    First, the Cobol Language submission standard embedded in current 
Sec.  17.00(g) is outdated. No other CFTC reporting regime relies in 
the same manner on a Cobol Language submission standard today.\40\ 
Outside of the Part 17 context, the Commission has transitioned to more 
modern data submission standards, such as Financial Products Markup 
Language (``FpML''),\41\ the Financial Information eXchange (``FIX'') 
Protocol or Financial Information eXchange Markup Language 
(``FIXML''),\42\ and other submission standards using extensible markup 
language (``XML'').\43\ XML standards have the ability to capture 
complex or customizable information about products \44\ beyond the 
capabilities of the simpler Cobol Language used in the current Sec.  
17.00(g) standard. The Commission converted reporting for transaction 
data reporting by DCMs to an FIXML standard in the 2009 to 2010 
period.\45\ XML-based standards like FpML and FIXML both have been 
widely used by market participants and regulators to represent 
financial data for purposes of electronically messaging and confirming 
derivatives trades since at least 2011.\46\
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    \40\ In 2004, the Commission removed a Cobol Language record 
format used for special calls under regulation 21.02 as part of the 
process of modernizing the rules covering data and hard copy 
submissions to the Commission under Parts 15 through 21. See id. at 
76400 (removing regulation 21.02).
    \41\ FpML is a freely-licensed business information exchange 
standard for derivatives. See FpML, ``What is FpML[supreg]?,'' 
available at https://www.fpml.org/about/what-is-fpml/ (last visited 
April 26, 2023).
    \42\ See FIX Trading, ``What is FIX?,'' available at https://www.fixtrading.org/what-is-fix/ (last visited April 26, 2023).
    \43\ See, e.g., Large Trader Reporting for Physical Commodity 
Swaps: Division of Market Oversight Guidebook for Part 20 Reports 
(June 22, 2015), available at https://www.cftc.gov/idc/groups/public/@newsroom/documents/file/ltrguidebook062215.pdf 
(incorporating FpML and FIXML data standards for Part 20 reporting); 
CFTC Technical Specification, Parts 43 and 45 swap data reporting 
and public dissemination requirements, Version 3.0 (Sept. 30, 2021), 
available at https://www.cftc.gov/media/6576/Part43_45TechnicalSpecification093021CLEAN/download (incorporating 
FIXML data standard for Parts 43 and 45 reporting).
    \44\ See id.
    \45\ See Advanced Notice of Proposed Rulemaking, Account 
Ownership and Control Information, 74 FR 31642, 31644 (July 2, 
2009).
    \46\ See CFTC and SEC, ``Joint Study on the Feasibility of 
Mandating Algorithmic Descriptions for Derivatives,'' at 11 (Apr. 7, 
2011), available at https://www.cftc.gov/sites/default/files/idc/groups/public/@swaps/documents/file/dfstudy_algo_040711.pdf.
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    Second, the current Sec.  17.00(g) record format has grown error-
prone. Correcting errors in Sec.  17.00(a) data is burdensome for both 
Commission staff and industry. Uncorrected errors in such data impair 
the Commission's ability to utilize data for surveillance and market 
analysis. In addition to relying on data reported under Sec.  17.00(a) 
for market surveillance, the Commission generates the weekly COT report 
based on such data.\47\ Because the current Sec.  17.00(g) record 
format does not support automated data quality checks from the 
Commission back to reporting firms, Commission staff must manually 
contact reporting firms to address errors, which has proven time-
consuming and inefficient. Reporting firms must, in turn, submit error 
corrections. This error correction process puts the timeliness of the 
COT report in jeopardy. The error correction process also imposes costs 
on the Commission and on industry that could be reduced or avoided if 
the Commission were able to implement automated data quality checks.
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    \47\ See, e.g., 46 FR at 59961 n.6.
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    Third, data received in the Sec.  17.00(g) record format is 
difficult to query outside of ISS, limiting staff's flexibility in 
working with this data and impeding staff's ability to integrate this 
data with other data housed outside of ISS.
    Fourth, new contract features have been introduced to the market 
since the last revisions to Sec.  17.00(g), including certain features 
which are in some cases not readily susceptible to representation

[[Page 41525]]

in Sec.  17.00(g)'s current 80-character record format. For example, 
the current Sec.  17.00(g) submission standard contains a single data 
field that allows the reporting firm to indicate the strike for an 
option position, but cannot accommodate reporting strikes for a bounded 
option position--a position in a contract that has both an upper and 
lower strike--in that single data field. To accommodate data reporting 
for such contracts, the Commission must undertake additional manual 
work, including ingesting supplemental data reports. This is time-
consuming, inefficient, and introduces unnecessary risks of error.
    In light of the above, the Commission is proposing to amend Part 17 
to (1) remove the outdated 80-character record format and replace it 
with provisions that delegate to staff the authority to designate a 
modern data submission standard, and (2) replace the data fields 
represented in the 80-character record format with an appendix of 
applicable data elements and a Part 17 Guidebook to provide the form 
and manner for submitting data reports. In introducing an appendix of 
applicable data elements, the Commission also proposes to add data 
elements necessary to represent positions in certain innovative 
contracts in Sec.  17.00(a) reports and to indicate the types of 
transactions that resulted in day-to-day changes in positions as 
described below.

II. Proposed Rules

A. Sections 17.00(g), 17.00(h), and 17.03(d)--Submission Standard

    As discussed above, the current Sec.  17.00(g) record format has 
become outdated, error-prone, and difficult to use. The Commission is 
proposing amendments to remove Sec.  17.00(g)'s current, outdated 80-
character record format and to replace it with provisions that allow 
the Commission to implement modern data submission standards.\48\ 
Specifically, the Commission proposes to remove current Sec.  
17.00(g)'s 80-character record format and amend Sec.  17.03(d) to 
delegate authority to the Director of the Office of Data and Technology 
to designate a submission standard for reports required under Sec.  
17.00(a). That submission standard would be published in a Part 17 
Guidebook. The Commission proposes replacing current Sec.  17.00(g) 
with a provision requiring that a report under Sec.  17.00(a) include 
all applicable data elements specified in a proposed Appendix C to Part 
17, and be submitted in the form and manner provided in the Part 17 
Guidebook. Delegated authority would facilitate implementing a 
submission standard that accommodates technological advances and 
provides efficiencies to market participants required to submit reports 
required by Sec.  17.00(a).
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    \48\ 17 CFR 17.00(g).
---------------------------------------------------------------------------

1. Removal of the Sec.  17.00(g) Record Format and Delegation of 
Authority to the Office of Data and Technology To Require Modern 
Submission Standards
    As discussed above, the current Sec.  17.00(g) record format has 
become outdated. The Cobol Language submission standard is used nowhere 
else in CFTC reporting, as the Commission has otherwise transitioned to 
more modern data submission standards for data reporting across its 
reporting regulations.\49\ That record format is also error-prone and 
difficult to query outside of ISS, rendering large trader position data 
difficult to integrate with other Commission data. And, that submission 
standard lacks the flexibility to accommodate certain features of 
innovative contracts.
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    \49\ See, e.g., See Advanced Notice of Proposed Rulemaking, 
Account Ownership and Control Information, 74 FR 31642, 31644 (July 
2, 2009) (regulation 16.02 data to be reported in FIXML); Large 
Trader Reporting for Physical Commodity Swaps: Division of Market 
Oversight Guidebook for Part 20 Reports (June 22, 2015), available 
at https://www.cftc.gov/idc/groups/public/@newsroom/documents/file/ltrguidebook062215.pdf (incorporating FpML and FIXML data standards 
for Part 20 reporting); CFTC Technical Specification, Parts 43 and 
45 swap data reporting and public dissemination requirements, 
Version 3.0 (Sept. 30, 2021), available at https://www.cftc.gov/media/6576/Part43_45TechnicalSpecification093021CLEAN/download 
(incorporating FIXML data standard for Parts 43 and 45 reporting).
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    To replace the current Sec.  17.00(g) record format, the Commission 
proposes to revise Sec. Sec.  17.00(g) and 17.03(d) to explicitly 
delegate authority to the Director of the Office of Data and Technology 
to determine the form and manner for reporting data required to be 
reported under Sec.  17.00(a), including to establish the data 
submission standard for such reports. Concurrently with the issuance of 
this notice, the Office of Data and Technology has published a proposed 
Part 17 Guidebook on the Commission's website, https://www.cftc.gov. 
The proposed Part 17 Guidebook will specify the data submission 
standard for reports required under Sec.  17.00(a), among other things. 
Such an approach is consistent with the Commission's practice in other 
data reporting regimes.\50\ To facilitate adaptation to modern data 
standards, the Commission has delegated authority to the Divisions to 
determine which data standards to permit or require in order to 
accommodate the needs of different communities of users.\51\ The 
Divisions exercise delegated authority through the publication of 
guidebooks or technical specifications that set out the form, manner, 
and timing for reporting data.
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    \50\ See, e.g., 17 CFR 45.15(a)(2) (delegating authority to 
staff to determine whether to require reporting swap data using one 
or more particular data standards (such as FIX, FpML, ISO 20022, or 
some other standard), to accommodate the needs of different 
communities of users); 17 CFR 20.8(d) (delegating authority to staff 
to provide instructions or determine the format, coding structure, 
and electronic data transmission procedures for submitting data 
records and any other information required for large trader swaps 
reporting under Part 20).
    \51\ See, e.g., 17 CFR 20.8; 17 CFR 45.11; 17 CFR 45.15(a)(2).
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    The proposed Part 17 Guidebook specifies that reporting firms 
submit Sec.  17.00(a) data in FIXML format. In its other reporting 
regimes, the Commission typically requires modern XML submission 
standards, such as FpML \52\ or FIXML.\53\ Receiving Part 17 data in a 
modern submission format comparable to that used in the submission of 
other datasets the Commission relies on would enable staff to more 
easily analyze Part 17 data outside of ISS and to more easily integrate 
Part 17 data with other Commission datasets. Notably, the Commission 
receives Trade Capture Reports and Ownership and Control Reports in a 
FIXML format.\54\ Section 17.00(a) position data can be linked to Sec.  
16.02 transaction data through ownership and control data required to

[[Page 41526]]

be reported under Sec.  17.01.\55\ Receiving Sec.  17.00(a) position 
data via FIXML and storing the same in ISS would facilitate linking ISS 
data to Trade Capture Report data stored in the Commission's Trade 
Surveillance System (``TSS''). Adopting an XML-based standard for large 
trader position reports required under Sec.  17.00(a) should also 
improve data quality by reducing the rate of errors.
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    \52\ See, e.g., Large Trader Reporting for Physical Commodity 
Swaps: Division of Market Oversight Guidebook for Part 20 Reports 
(June 22, 2015), available at https://www.cftc.gov/idc/groups/public/@newsroom/documents/file/ltrguidebook062215.pdf (permitting 
submission using FpML).
    \53\ See, e.g., id. (permitting submission of Part 20 reports 
using FIXML); see also See Advanced Notice of Proposed Rulemaking, 
Account Ownership and Control Information, 74 FR 31642, 31644 (July 
2, 2009) (FIXML is used for reporting transaction data for futures 
and options reporting under regulation 16.02). FIXML is an XML 
standard using the Financial Information eXchange Protocol 
(``FIX''); see also Notice of Proposed Rulemaking, Account Ownership 
and Control Report, 75 FR, 41775, 41784 (July 19, 2010) (``Reporting 
entities should submit the [ownership and control reports required 
under regulation 17.01] weekly, in FIXML . . .''); see also Notice 
of Proposed Rulemaking, Reporting and Information Requirements for 
Derivatives Clearing Organizations, 87 FR 76698, 76704 (Dec. 15, 
2022) (addressing use of FIXML standard for daily reporting required 
of derivatives clearing organizations).
    \54\ See Advanced Notice of Proposed Rulemaking, Account 
Ownership and Control Information, 74 FR 31642, 31644 (July 2, 2009) 
(FIXML scheduled to be implemented for Trade Capture Reports in 
2009); Notice of Proposed Rulemaking, Account Ownership and Control 
Report, 75 FR, 41775, 41784 (July 19, 2010) (``Reporting entities 
should submit the [ownership and control reports required under 
regulation 17.01] weekly, in FIXML . . .'').
    \55\ 17 CFR 17.01. Trade Capture Reports contain trade and 
related order book data at the transaction level organized by 
trading account numbers, but do not generally contain biographical 
information for the owners of those trading accounts. See Advanced 
Notice of Proposed Rulemaking, Account Ownership and Control 
Information, 74 FR 31642, 31644 (July 2, 2009). Such biographical 
information is provided separately through Ownership and Control 
Reports, which are submitted for special accounts identified under 
Part 17. See id.
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    The Commission has previously recognized the importance of 
flexibility with respect to promulgating reporting submission standards 
to accommodate technological advances. For example, for Part 17 
reporting, the Commission previously revised the definition of 
``compatible data-processing media'' to remove enumeration of specific 
media in part because it was impractical to define the term by 
regulation since electronic media were evolving at such a rapid 
pace.\56\ Elsewhere, for swaps large trader reporting under Part 20, 
the Commission delegated to staff the authority to provide instructions 
for and determine the format, coding structure, and electronic data 
transmission procedures for submitting data records in order to allow 
the Commission to respond to changing market and technological 
conditions for the purpose of ensuring timely and accurate data 
reporting.\57\ Such an approach allows the Commission to consult with 
market participants and update reporting submission standards to remain 
consistent with industry best practices.\58\
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    \56\ 62 FR at 24028; 17 CFR 15.00(d) (defining ``compatible data 
processing media'' as data processing media approved by the 
Commission or its designee).
    \57\ Final Rule, Large Trader Reporting for Physical Commodity 
Swaps, 76 FR 43851, 43857 (Jul. 22, 2011).
    \58\ See, e.g., 76 FR at 43857 n.20 (explaining that ``the 
Commission anticipates consulting with clearing organizations and 
reporting entities before determining the format, coding structure, 
and electronic data transmission procedures'' for Part 20 reports).
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    Amending Sec. Sec.  17.00(g) and 17.03(d) to facilitate 
implementation of a modern data submission standard should also 
simplify reporting for reporting firms. Although updating submission 
standards will require technological changes for reporting firms, the 
Commission believes that eliminating the use of the unique Sec.  
17.00(g) record format and replacing it with a more commonly-used 
submission standard may result in more efficient reporting. 
Additionally, using a modern submission standard should facilitate 
automated data quality checks from the Commission back to reporting 
firms, which should reduce burdens associated with correcting data 
errors and the time necessary to complete the correction process. A 
more efficient error correction process will also, in turn, assist 
staff in timely generating the weekly COT report. The Commission 
invites comments on all aspects of the proposed Part 17 Guidebook in 
addition to comments on this notice of proposed rulemaking.
2. Secure FTP Feed Versus Portal Submission
    The Commission recognizes that reporting firms' technological 
capabilities may vary based on relative size and experience of a given 
reporting firm. For example, the Commission understands that today, 
although some firms have automated the process for creating reports 
required by Sec.  17.00(a), other firms manually create those reports. 
Accordingly, the proposed Part 17 Guidebook offers two submission 
methods for Sec.  17.00(a) data: (a) an XML-based, secure file transfer 
protocol (``FTP'') data feed, and (b) a web-based portal to ingest 
manual submissions. The Commission anticipates that such an approach 
will provide greater flexibility to reporting firms. Reporting firms 
may consider their existing data reporting infrastructure and the 
volume of reports they expect to submit, among other factors, when 
selecting their preferred submission method. The proposed Part 17 
Guidebook provides detailed instructions for submitting under each 
method.
3. Delegation of Authority To Determine the Form and Manner for Error 
Corrections
    Current Sec.  17.00(h) provides that, unless otherwise approved by 
the Commission or its designee, corrections of errors and omissions in 
data required to be reported under Sec.  17.00(a) shall be filed on 
series '01 forms or in the format, coding structure and data 
transmission procedures approved in writing by the Commission or its 
designee.\59\ Consistent with the Commission's proposal to revise Part 
17 to modernize the reporting of data under Sec.  17.00(a), the 
Commission proposes updating the submission standard for error 
corrections to mirror the submission standard for the data to be 
corrected.
---------------------------------------------------------------------------

    \59\ 17 CFR 17.00(h).
---------------------------------------------------------------------------

    Today, reporting firms submit error corrections using the current 
Sec.  17.00(g) record format.\60\ Upon receipt of a correction, staff 
replaces the original, erroneous record with the corrected record. 
Staff will employ a similar process to ingest error corrections 
following the proposed removal of the current Sec.  17.00(g) record 
format, such that corrected and omitted data will be submitted using 
the new data submission standard published by the Office of Data and 
Technology in the proposed Part 17 Guidebook pursuant to delegated 
authority.\61\
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    \60\ Reports that correct errors or omissions populate the 
``Record Type'' data field with a character that identifies that the 
submitted record corrects an error or omission and provides further 
information about that correction. See 17 CFR 17.00(g)(2)(xiv).
    \61\ As discussed below, the Commission proposes to retain the 
current ``Record type'' data field as a data element that will serve 
to identify reports that correct errors or omissions.
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    Currently, staff manually notifies reporting firms when it 
identifies errors in Sec.  17.00(a) reports submitted by those firms. 
Following implementation of this proposal, the Commission expects to 
automate this process to notify reporting firms of errors on the same 
day erroneous reports are submitted. The Commission expects automating 
this process will facilitate more rapid corrections to reported data, 
which will improve the quality of the data used by Commission staff.
Request for Comment
    The Commission requests comments on all aspects of the proposed 
changes to regulations in Part 17, including proposed changes to 
Sec. Sec.  17.00(a), 17.00(g) and 17.03(d). The Commission requests 
specific comment on the following:
    (1) The advantages and disadvantages of the proposed Part 17 
Guidebook requiring a FIXML submission standard for reports required 
under Sec.  17.00(a), including with respect to data quality, 
implementation costs, and ongoing costs post-implementation.
    (2) The proposal to permit reporting firms to submit Sec.  17.00(a) 
large trader position reports through the Commission's web-based portal 
as an alternative to submission by secure FTP.
    (3) The advantages and disadvantages of correcting errors in data 
required to be reported under Sec.  17.00(a) in the manner provided in 
the proposed Part 17 Guidebook, including with respect to data quality, 
implementation costs, and ongoing costs post-implementation.

[[Page 41527]]

B. Appendix C to Part 17 and Sec.  17.03(d)--Data Elements

1. Appendix C
    As discussed above, in order to facilitate implementation of a 
modern submission standard, the Commission proposes removing the record 
format set out in Sec.  17.00(g). Removing that record format will 
remove the data fields as well. To replace the data fields proposed to 
be deleted from Sec.  17.00(g), the Commission proposes to add an 
Appendix C to Part 17 specifying required data elements and defining 
those elements. Enumerating required data elements in an appendix is 
consistent with the approach taken for certain other Commission data 
reporting regulations.\62\ In addition to retaining the data currently 
required to be reported under Sec.  17.00(a), proposed Appendix C would 
provide revised definitions and add certain data elements not currently 
required by the Sec.  17.00(g) record format.
---------------------------------------------------------------------------

    \62\ See, e.g., 17 CFR part 20 App'x B; 17 CFR part 43 App'x A; 
17 CFR part 45 App'x 1.
---------------------------------------------------------------------------

    The Commission is proposing to remove the definitions set out in 
current Sec.  17.00(g)(2). The Commission is proposing to include 
related definitions in Appendix C, revised to remove language providing 
the form and manner for reporting data. Given that the current Sec.  
17.00(g) record format will be removed from the rule and updated 
guidance on the form and manner for reporting will be required, certain 
of the Sec.  17.00(g)(2) definitions contain language that would become 
superfluous. For example, for the ``Report Type'' data element, the 
Commission is proposing not to include in Appendix C the portion of the 
definition that specifies that ``[v]alid values'' to submit include 
``RP'' for reporting positions, ``DN'' for reporting notices, and 
``EP'' for reporting exchanges of futures for a commodity or for a 
derivatives position.\63\
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    \63\ 17 CFR 17.00(g)(2)(i).
---------------------------------------------------------------------------

    Rather than specifying the form and manner for reporting the Sec.  
17.00(a) data elements in the rule, the Commission is proposing to 
delegate authority to determine the form and manner for reporting each 
data element to the Director of the Office of Data and Technology. To 
implement this delegation of authority, the Commission is proposing to 
amend Sec.  17.03(d) to provide that the Director of the Office of Data 
and Technology would specify the form, manner, coding structure, and 
electronic data transmission procedures for reports and submissions 
under Sec.  17.00(a). The proposed Part 17 Guidebook would set forth 
the form, manner, coding structure, and electronic data transmission 
procedures for reporting the data elements in proposed Appendix C to 
Part 17, and to determine whether to permit or require one or more 
particular data standards.
    Providing form and manner requirements through a Part 17 Guidebook 
would bring the Part 17 framework in line with reporting under Parts 
16, 20, 43, and 45, for which, rather than embedding technical 
reporting details into regulation text, the Commission has delegated 
authority to staff to set the form and manner for reporting outside of 
the regulation text through a published technical specification or 
guidebook.\64\ Implementing form and manner requirements through a Part 
17 Guidebook will facilitate the Commission's ability to respond to 
changing market conventions and technological conditions, to harmonize 
submission standards with those of other authorities,\65\ and to 
accommodate the introduction of innovative products.
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    \64\ See, e.g., 17 CFR 16.07(c), (d) (delegating authority to 
staff to approve the format, coding structure and electronic data 
transmission procedures used by reporting markets and to determine 
the specific content of any daily trade and supporting data report); 
17 CFR 20.2(d) (delegating authority to staff for providing 
instructions or determining the format, coding structure, and 
electronic data transmission procedures for submitting data records 
and any other information required under this part); 17 CFR 43.7(a) 
(delegating authority to staff to publish the technical 
specification providing the form and manner for reporting and 
publicly disseminating the swap transaction and pricing data 
elements in appendix A of Part 43); 17 CFR 45.15(b)(1) (delegating 
authority to staff to publish the technical specifications providing 
the form and manner for reporting the swap data elements in appendix 
1 to Part 45 to swap data repositories).
    \65\ Final Rule, Swap Data Recordkeeping and Reporting 
Requirements, 85 FR 75503, 75535 (Nov. 25, 2020) (``The Commission . 
. . believes delegation to DMO will benefit data element 
harmonization.''); see also Final Rule, Large Trader Reporting for 
Physical Commodity Swaps, 76 FR 43851, 43857 (Jul. 22, 2011) (the 
purpose of delegating authority to staff to provide ``instructions 
for determining the format, coding structure, and electronic data 
transmission procedures for submitting data records and any other 
information required under [Part 20] . . . is to facilitate the 
ability of the Commission to respond to changing market and 
technological conditions for the purpose of ensuring timely and 
accurate data reporting'').
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    As discussed above, concurrently with the issuance of this notice, 
the Commission has published a proposed Part 17 Guidebook on its 
website, https://www.cftc.gov. Commenters are invited to comment on 
both the data submission standard in the proposed Part 17 Guidebook and 
on the data elements in proposed Appendix C.
Request for Comment
    The Commission requests comments on all aspects of the proposed 
Part 17 Guidebook published at the time of publication of this notice 
of proposed rulemaking.
2. Data Elements in Appendix C
    Proposed Appendix C will maintain certain data elements included in 
the current Sec.  17.00(g) record format, revise certain data elements 
included in the current Sec.  17.00(g) record format, and add certain 
data elements not previously included in the Sec.  17.00(g) record 
format. The proposed additional data elements capture information not 
captured by the current Sec.  17.00(g) record format that is necessary 
to fulfill the Commission's surveillance and market analysis missions. 
The form and manner for reporting each of these data elements would be 
set forth in the proposed Part 17 Guidebook. The Commission invites 
comment on any of the data elements proposed in Appendix C. This 
section discusses these data elements below by category.
    First, proposed Appendix C includes data elements currently 
captured by the fields in the current Sec.  17.00(g) record format. In 
some instances, those data elements are revised to account for the 
introduction of a modern data submission standard. Second, proposed 
Appendix C includes data elements necessary to facilitate a modern, 
XML-based data submission standard, including data elements used to 
manage ingestion of data, such as ``Total Message Count'' and ``Message 
Type.'' Third, proposed Appendix C would add data elements necessary to 
capture product-identifying information not captured by the current 
record format, such as ``Ticker Symbol'' as well as certain data 
elements necessary to capture information to represent innovative 
contracts such as ``bounded contracts,'' options expiring to baskets of 
futures, and other novel contracts. The current record format does not 
allow reporting firms to represent all economically material terms of 
such contracts, and as a result the Commission is in some instances 
unable to determine whether certain special accounts carry positions in 
the same or different products. Fourth, proposed Appendix C would add 
data elements necessary to capture accurate information concerning 
changes in positions of special accounts that is not available in 
current Sec.  17.00(a) large trader reporting but would benefit the 
Commission's surveillance programs and market analysis.

[[Page 41528]]

a. Category 1: Currently Reported Data Elements
    Proposed Appendix C retains data elements capturing certain of the 
information currently captured by Sec.  17.00(g)'s 80-character record 
format.\66\ The 80-character record format captures certain information 
necessary to process data,\67\ information concerning the reporting 
firm and special account,\68\ product-identifying information,\69\ and 
information concerning the direction or nature of the trades underlying 
the position.\70\
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    \66\ These fields would include (1) Data Element #7 Record Type 
(Action), (2) Data Element #8 Report Date, (3) Data Element #9 
(Reporting Firm ID), (4) Data Element #11 Account ID, (5) Data 
Element #12 Exchange Indicator, (6) Data Element #13 Commodity 
Clearing Code, (7) Data Element #16 Maturity Month Year, (8) Data 
Element #20 Strike Level, (9) Data Element #26 Put or Call 
Indicator, (10) Data Element #27 Exercise Style, (11) Data Element 
#30 Underlying Contract ID, (12) Data Element #31 Underlying 
Maturity Month Year, (13) Data Element #32 Long Position, (14) Data 
Element #33 Short Position, (15) Data Element #38 Delivery Notices 
Stopped, and (16) Data Element #39 Delivery Notices Issued.
    \67\ For example, ``Report Date,'' and ``Record Type.'' 17 CFR 
17.00(g)(1).
    \68\ For example, ``Reporting Firm'' and ``Account Number.'' 17 
CFR 17.00(g)(1).
    \69\ For example, ``Commodity Code,'' ``Expiration Date,'' and 
``Exchange Code.''
    \70\ For example, ``Report type,'' ``Put or Call,'' ``Strike 
Price,'' ``Exercise Style,'' ``Long--Buy--Stopped,'' and ``Short--
Sell--Issued.''
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    Proposed Appendix C calls for certain of this information in a 
different format than currently provided. For example, whereas the 
current Sec.  17.00(g) record format captures information concerning 
whether a position is long or short in a single field, proposed 
Appendix C would capture long and short positions using separate data 
elements (``Long Position'' and ``Short Position''). Similarly, whereas 
the current Sec.  17.00(g) record format identifies exchanges of 
futures for related positions using a single ``Report type'' field, 
proposed Appendix C would capture information concerning such exchanges 
in greater granularity through several data elements. As discussed 
further below, this greater granularity will facilitate Commission 
market surveillance and analysis programs.
b. Category 2: XML Implementation and Data Processing
    Proposed Appendix C calls for certain data elements to facilitate 
processing of data.\71\ Such data elements generally do not correspond 
to analogous data elements in Sec.  17.00(g)'s record format. These 
include data elements concerning the submission of messages to the 
Commission, data elements identifying the sender and special account 
controller, and data elements identifying the date and time of the 
report. This information is necessary to enable the Commission to track 
and manage reports received using an XML submission standard.
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    \71\ These fields would include (1) Data Element #1 Total 
Message Count, (2) Data Element #2 Message Type, (3) Data Element #3 
Sender ID, (4) Data Element #4 To ID, (5) Data Element #5 Message 
Transmit Datetime, (6) Data Element #6 Report ID, and (7) Data 
Element #10 Special Account Controller LEI.
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    The ``Special Account Controller LEI'' data element captures the 
legal entity identifier (``LEI'') of the account controller. An LEI is 
a unique code assigned to an entity in accordance with the standards 
set by the Global Legal Identifier System.\72\ The ``Special Account 
Controller LEI'' data element would allow the Commission to link data 
reports submitted under Sec.  17.00(a) with other data reports 
concerning the same counterparty. The Commission notes that not all 
special account controllers possess a legal entity identifier, or 
``LEI.'' Some special account controllers may be ineligible to receive 
an LEI. For example, it is highly likely that a natural person who 
controls a special account would be unable to obtain an LEI.\73\ For 
clarity, the Commission expects the ``Special Account Controller LEI'' 
data element will be conditional--an LEI must be reported for special 
accounts for which the special account controller is eligible to 
receive an LEI, but an LEI need not be reported for special accounts 
for which the special account controller is ineligible for an LEI. For 
such accounts, the Commission will receive identifying information via 
Form 102A.
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    \72\ The Global Legal Identifier System was established by the 
finance ministers and the central bank governors of the Group of 
Twenty nations and the Financial Stability Board. See Charter of the 
Regulatory Oversight Committee For the Global Legal Entity 
Identifier System, available at https://www.leiroc.org/publications/gls/roc_20190130-1.pdf.
    \73\ The Commission has elsewhere discussed this issue in 
regulations concerning reporting of swap data. See, e.g., Final 
Rule, Swap Data Reporting and Recordkeeping, 85 FR 75503, 75520 
(Nov. 25, 2020).
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c. Category 3: Product Identification
    Proposed Appendix C calls for reporting of certain data elements 
that, where applicable, are necessary to identify and distinguish the 
futures or option contract pertaining to the reported position. 
Specifically, additional data elements are necessary to draw more 
granular distinctions between certain contracts for reportable 
positions,\74\ to accommodate reporting of positions in bounded or 
barrier contracts,\75\ to accommodate reporting of positions in 
contracts with non-price or non-numeric strikes,\76\ and to accommodate 
reporting of positions in other innovative contracts.\77\
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    \74\ These fields would include (1) Data Element #14 Product 
Type, (2) Data Element #15 Ticker Symbol, (3) Data Element #17 
Maturity Time, (4) Data Element #18 Listing Date, and (5) Data 
Element #19 Earliest Exercise Date.
    \75\ These fields would include (1) Data Element #22 Cap Level, 
(2) Data Element #23 Floor Level, (3) Data Element #24 Bound or 
Barrier Type, (4) Data Element #25 Bound or Barrier Level, (5) Data 
Element #28 Payout Amount, and (6) Data Element #29 Payout Type.
    \76\ These fields would include Data Element #21 Alpha Strike, 
as well as transposing the ``Strike Price'' field in the current 
regulation 17.00(g) record format to Data Element #20, ``Strike 
Level,'' in proposed Appendix C.
    \77\ For example, Data Element #50 Product-Specific Terms.
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    Distinguishing Products. Certain additional fields are necessary to 
precisely identify the product for a reported position. When Sec.  
17.00(g) was promulgated and revised in the 1980s and 1990s, exchanges 
listed a less diverse array of futures and options contracts than those 
available today. More granular data is required to distinguish among 
products in today's futures and options markets. Section 17.00(g)'s 
current record format allows the Commission to identify the product for 
a given position based on a combination of data points that indicate 
whether the product is a futures or option contract and identify the 
underlying commodity. That record format, however, is limited. For 
example, that record format allows the Commission to identify the 
underlying commodity through a ``Commodity Code'' field, which is 
populated with an exchange-assigned code corresponding to a relevant 
underlier.\78\ However, the ``Commodity Code'' field does not currently 
enable the Commission to draw more granular distinctions between 
products that reference the same commodity but have material 
differences. A proposed ``Product Type'' field would allow the 
Commission to differentiate between futures and options contracts that 
use the same ``Commodity Code'' without separately relying on other 
reported fields, which may be insufficient to adequately distinguish 
between products in some instances.\79\ A proposed ``Ticker Symbol'' 
field would provide the Commission with the published ticker symbol 
associated with the product on

[[Page 41529]]

the listing contract market.\80\ Proposed Appendix C would provide for 
``Maturity Month Year'' and ``Underlying Maturity Month Year'' data 
elements, where applicable, to be populated with a specific day when 
necessary to characterize a product.\81\ Similarly, a ``Maturity Time'' 
data element, where applicable, would be populated with the expiration 
time of an option or last trading time of a future for contracts that 
have multiple expiration times within a single day. A ``Listing Date'' 
data element, where applicable, would be populated with the listing 
date for options that had early expirations and were relisted with 
identical strikes and expirations, allowing the Commission to 
distinguish between tranches of closely related contracts. Absent such 
a field, different tranches of certain options contracts might be 
indistinguishable in ISS.\82\ An ``Earliest Exercise Date'' data 
element would provide, where applicable, the date when American or 
Bermuda options \83\ may be exercised, which would assist the 
Commission in identifying more complex positions.
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    \78\ 17 CFR 17.00(g)(2)(vii) (the ``Commodity'' field reflects 
an exchange-assigned commodity code for the futures and options 
contract).
    \79\ The Commission proposes to retain the ``Commodity Code'' 
field, but to rename it to ``Commodity Clearing Code,'' which more 
accurately reflects industry terminology and provides consistency in 
labeling between reports provided under Part 17 and Part 16.
    \80\ Ticker symbols typically include a product code consisting 
of a multi-letter code assigned to the underlier, a month code 
consisting of a single alphabetical character assigned to a month or 
quarter, and a year code consisting of a numerical code representing 
a particular year.
    \81\ This responds to the advent of certain futures and options 
contracts with more varied maturity or expiration dates.
    \82\ If a DCM lists an option that settles based on the 
occurrence of a specified event--as opposed to expiring at a future 
time that is certain at the time the contract is executed--and that 
specified event may occur serially at multiple times, a ``Listing 
Date'' data element would permit the Commission to distinguish 
between iterations of that contract as it is re-listed following 
expirations.
    \83\ An American Option is an option that can be exercised at 
any time prior to or on the expiration date. See CFTC, Futures 
Glossary, available at https://www.cftc.gov/LearnAndProtect/AdvisoriesAndArticles/CFTCGlossary/index.htm (last visited April 26, 
2023). A Bermuda Option is an option which can be exercised on a 
specified set of predetermined dates during the life of the option. 
See id. In contrast, a European Option is an option that may only be 
exercised on the expiration date. See id.
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    Bounded or Barrier Contracts. Certain of these data elements are 
necessary to accurately report ``bounded'' \84\ or ``barrier'' \85\ 
contracts, including ``Cap Level,'' ``Floor Level,'' and ``Bound or 
Barrier Level,'' as the current Sec.  17.00(g) record format does not 
accommodate this information. A ``Bound or Barrier Type'' data element 
would be necessary to identify the behavior of a product when it hits a 
bound or barrier, including to distinguish between ``knock-in,'' 
``knock-out,'' and capped products.\86\ Receiving data sufficient to 
understand the economics of bounded and barrier contracts would, among 
other things, support the Commission's surveillance program. Position 
data that more completely reflects the economics of positions in 
bounded or barrier options would provide the Commission with greater 
insight into, for example, potential cross-market manipulation. Where a 
bounded or barrier contract references the price or value of a contract 
or commodity listed in another market, a manipulative trader may trade 
in that other market for the purpose of influencing the price or value 
of that contract in order to hit or avoid a bound or barrier for an 
options position held in the first market.
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    \84\ A bounded futures contract specifies upper and lower 
boundaries, which limit short and long interest exposure. See, e.g., 
Eris Exchange, LLC, ``CFTC Regulation 40.2(a) Certification. 
Notification Regarding the Initial Listing of Eris Exchange 
Financially Settled Bounded Futures Contract on Bitcoin and Ether'' 
(Aug. 21, 2020), available at https://www.cftc.gov/sites/default/files/filings/ptc/20/08/ptc082420erisdcmdcm001.pdf.
    \85\ A barrier option contract specifies a ``barrier,'' either a 
price or an event, the occurrence of which triggers either a knock-
in or knock-out provision.
    \86\ A knock-in is a provision in an option or other derivative 
contract whereby the contract is activated only if the price of the 
underlying instrument reaches a specified level before a specified 
expiration date. A knock-out is a provision in an option whereby the 
contract is immediately canceled if the price of the underlying 
instrument reaches a specified level during the life of the 
contract. See CFTC, Futures Glossary, available at https://www.cftc.gov/LearnAndProtect/AdvisoriesAndArticles/CFTCGlossary/index.htm (last visited April 26, 2023).
---------------------------------------------------------------------------

    To obtain comprehensive data concerning positions in bounded and 
barrier contract and certain binary option contracts based on the 
occurrence or non-occurrence of a specified event, proposed Appendix C 
also includes ``Payout Amount'' and ``Payout Type'' data elements. The 
proposed ``Payout Amount'' data element is intended to capture a cash 
amount of the payout associated with a product where that amount may 
not otherwise be determined based on reported data. The proposed 
``Payout Type'' data element would allow the Commission to distinguish 
between vanilla, capped, binary, and other options that use the same 
Commodity Clearing Code.
    Non-Price and Non-Numeric Strike Levels. Certain of the data 
elements in Proposed Appendix C are necessary to accurately capture 
information for options contracts that contain non-price and non-
numeric strike levels. Specifically, Sec.  17.00(g)'s record format's 
``Strike Price'' field would be converted to two separate data 
elements: ``Strike Level'' and ``Alpha Strike.'' These data elements, 
respectively, would accommodate reporting of certain listed options 
contracts with non-monetary threshold levels and non-numeric threshold 
levels. For example, a binary option with U.S. Gross Domestic Product 
(``GDP'') as an underlier would have a non-price strike--a GDP figure. 
Other contracts that incorporate the occurrence or non-occurrence of a 
specified event as an underlier might specify as strikes non-numeric 
units, which would more appropriately be reported as a strike 
``value,'' or ``Alpha Strike.'' For example, a binary option with 
different categories of hurricane landfalls as strike values might 
include as ``Alpha Strikes'' different categories of hurricane--for 
example, ``Category 1 or higher'' or ``Category 2 or higher.''
    Product-Specific Terms. To account for the likelihood that 
exchanges will introduce contracts that include novel features, 
proposed Appendix C includes a ``Product-Specific Terms'' data element. 
For innovative contracts, this data element would be populated with 
data reflecting economically material terms of contracts are not 
otherwise able to be represented in the proposed Appendix C data 
elements. The data element would not require reporting of any 
information that is not already separately recorded by a DCM for 
recordkeeping purposes. Future editions of the proposed Part 17 
Guidebook would specify the form and manner of reporting positions in 
products subject to reporting that includes the ``Product-Specific 
Terms'' data element.
    Reporting under this data element--as well as certain other data 
elements designed to represent particular products, such as the 
aforementioned fields designed to capture terms of bounded and barrier 
contracts--would only be required to be reported for contracts that 
cannot otherwise be represented in Part 17 reporting. Put differently, 
for reporting firms that facilitate trading or clearing of contracts 
that can be adequately represented in the other data elements in the 
proposed Part 17 Guidebook, reporting data pursuant to the ``Product-
Specific Terms'' data element would not be required. Reporting firms 
that do become involved in trading futures and options contracts for 
which economically material terms are not otherwise reportable under 
Sec.  17.00(a) may be required to report such data. Pursuant to the 
proposed rule, the Director of the Office of Data and Technology would 
have delegated authority to publish the form and manner of any product-
specific terms required to be reported pursuant to this proposed data 
element.

[[Page 41530]]

d. Category 4: Information Concerning Changes in Positions
    Proposed Appendix C would add data elements necessary to capture 
accurate information regarding changes in positions that is not fully-
captured by the current Sec.  17.00(g) record format.\87\ Understanding 
the nature and quantity of transactions that resulted in day-to-day 
changes in positions of special accounts will provide Commission staff 
with additional information for surveillance purposes, and will allow 
Commission staff to link position data reported at the special account 
level pursuant to Sec.  17.00(a) with transaction data reported at the 
trading account level under Sec.  16.02.\88\ Additionally, information 
identifying the nature and quantity of transactions that resulted in 
day-to-day changes in positions of special accounts should provide 
reporting firms with an additional tool to perform an internal 
consistency review on data reported under Sec.  17.00(a), and therefore 
enhance data quality.
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    \87\ These fields would include (1) Data Element #34 Contracts 
Bought, (2) Data Element #35 Contracts Sold, (3) Data Element #36 
EDRPs Bought, (4) Data Element #37 EDRPs Sold, (5) Data Element #38 
Delivery Notices Stopped, (6) Data Element #39 Delivery Notices 
Issued, (7) Data Element #40 Long Options Expired, (8) Data Element 
#41 Short Options Expired, (9) Data Element #42 Long Options 
Exercised, (10) Data Element #43 Short Options Exercised, (11) Data 
Element #44 Long Futures Assigned, (12) Data Element #45 Short 
Futures Assigned, (13) Data Element # 46 Long Transfers Sent, (14) 
Data Element #47 Long Transfers Received, (15) Data Element #48 
Short Transfers Sent, and (16) Data Element #49 Short Transfers 
Received.
    \88\ DCMs identify traders by account numbers, but certain DCMs 
do not routinely collect detailed trader-identifying data. See, 
e.g., Final Rule, Significant Price Discovery Contracts on Exempt 
Commercial Markets, 74 FR 12178, 12185 (Mar. 23, 2009). The 
Commission instead generally obtains such trader-identifying data 
from FCMs, clearing members, and foreign brokers through regulation 
17.01. 17 CFR 17.01.
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    Changes in positions are generally effected by buying and selling 
contracts; the expiration or settlement of contracts, which may result 
in assignments of contracts; or off-exchange transactions, such as 
block-trades, exchanges of derivatives for related positions 
(``EDRPs''), and transfers. Although the current Sec.  17.00(g) record 
format requires reporting of the aggregate of certain EDRPs each day 
and the total delivery notices issued and stopped via the ``Report 
Type'' and ``Long-Buy-Stopped (Short-Sell-Issued)'' \89\ fields, it 
otherwise does not capture data concerning changes in position. 
Proposed Appendix C would include data elements necessary to capture 
this information, as follows.
---------------------------------------------------------------------------

    \89\ 17 CFR 17.00(g)(2)(i), (xi).
---------------------------------------------------------------------------

    Contracts Bought and Sold. Proposed Appendix C includes data 
elements to capture ``Contracts Bought'' and ``Contracts Sold.'' The 
current Sec.  17.00(g) record format captures aggregate positions, but 
does not reflect the amount of buying and selling associated with a 
particular special account. Obtaining reliable and accurate counts of 
gross buys and sells associated with a special account would enhance 
the Commission's ability to differentiate between large position 
holders that appear passive and large position holders that also trade 
in significant quantities of contracts daily.
    In addition to contracts bought and sold on-exchange, contracts 
bought or sold via block trades are included in the sums reported as 
``Contracts Bought'' and ``Contracts Sold.'' The Commission also 
expects that contracts acquired through give-ups \90\ and allocations 
will be included in the totals of ``Contracts Bought'' and ``Contracts 
Sold,'' as such contracts would be treated as positions in the carrying 
accounts through which they are ultimately cleared rather than 
positions in the accounts that execute the transactions, if such 
accounts differ from the accounts through which such transactions are 
cleared.
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    \90\ The term ``give-up'' means an order executed by one broker 
on behalf of another broker which clears and settles the order.
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    Exchanges of Derivatives for Related Positions (EDRPs). A DCM's 
rules may authorize, for bona fide business purposes, privately-
negotiated exchanges of derivatives for related positions, or 
``EDRPs.'' \91\ As discussed, the current Sec.  17.00(g) record format 
requires reporting of aggregate EDRPs, but does not provide more 
granular data necessary to understand whether a position was exchanged 
for a physical commodity (exchanges for physical, or ``EFPs''), 
exchanged for a swap or other derivative (exchanges for swaps, or 
``EFSs,'' sometimes referred to as exchanges for risk, or ``EFRs''), 
exchanged for an option, or exchanged for some other related position. 
Proposed Appendix C includes an ``Exchanges of Derivatives for Related 
Positions'' data element that is defined to require reporting firms to 
disaggregate EDRP transactions by type of EDRP in the form and manner 
for reporting set forth in the proposed Part 17 Guidebook. The proposed 
Part 17 Guidebook requires reporting firms to disaggregate reporting of 
EDRPs into EFPs bought and sold, EFSs bought and sold, and exchanges of 
options for option (``EOOs'') bought and sold.\92\
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    \91\ See 17 CFR 38.500 (authorizing ``exchange[s] of'' 
``[f]utures in connection with a cash commodity transaction,'' 
``[f]utures for cash commodities,'' and ``[f]utures for swaps''). In 
practice, such transactions are often referred to as ``exchanges of 
futures for related positions'' or ``EFRPs.'' The Commission has 
used the terminology ``exchanges of derivatives for related 
positions'' or ``EDRPs'' because it believes this is a more accurate 
and descriptive term given it includes transactions not limited to 
futures, such as swaps. Noticed of Proposed Rulemaking, Core 
Principles and Other Requirements for Designated Contract Markets, 
75 FR 80572, 80593 (Dec. 22, 2010).
    \92\ The Commission believes these three categories of EDRPs 
capture current market practices, but recognizes the possibility 
that a DCM or DCMs may, in the future, introduce additional EDRPs. 
For example, DCMs could conceivably permit exchanges of futures for 
futures. See, e.g., 75 FR at 80588 (recognizing that the term 
``exchanges of derivatives for related position'' describes a 
panoply of off-exchange transactions currently offered by DCMs 
including, in addition to EFPs and EFSs, exchanges of futures for 
futures). The Commission expects that if any DCM revises its 
rulebook to permit an additional type of EDRP transaction, reporting 
firms would also submit disaggregated data reflecting changes of 
position effected through that type of EDRP transaction. For 
example, if a DCM revised its rulebook to permit exchanges of 
futures for futures, the proposed Part 17 Guidebook would be updated 
to facilitate reporting firms submitting information reflecting 
changes in positions resulting from exchanges of futures for 
futures.
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    This would also effect an update to a record format devised largely 
during the 1970s and 1980s, before EDRPs other than EFPs were commonly 
used.\93\ EFSs, for example, were not explicitly authorized under the 
CEA until 2000, years after the initial Sec.  17.00(g) record format 
had been promulgated.\94\ In 2004, when the Commission amended the 
Sec.  17.00(g) record format to require reporting of EDRPs generally, 
including EFSs, rather than just EFPs, it did not require reporting 
firms to distinguish among these different types of transactions, but 
rather required that such reporting group together all EFPs, EFSs, 
EFRs, EFOs \95\ or other exchanges of futures for a commodity or for a 
derivatives position permitted by exchange rules, and report the sum 
under the same category.\96\ At the time,

[[Page 41531]]

the Commission found this to be ``an appropriate approach because all 
of these trades are similar in that they permit the exchange of a 
futures position for an off-exchange position.'' \97\ The Commission 
now, based on experience surveilling EDRP practices in futures and 
options markets, proposes to require more granular differentiation in 
reporting of different types of EDRPs. More granular differentiation 
between the types of off-exchange transactions that effect changes in 
positions will provide a better understanding of the methods by which 
traders exit and enter positions. In particular, disaggregated EDRP 
data allows staff to confirm market integrity when there are concerns 
about a potential squeeze or other matters near the expiration of the 
physical delivery contract.
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    \93\ Cf. CFTC, Division of Trade and Markets: Report on Exchange 
of Futures for Physicals (1987) (analysis of EFPs published in 1987, 
relying in part on data reported pursuant to regulation 17.00(a)).
    \94\ See, e.g., Concept Release, Regulation of Noncompetitive 
Transactions Executed on or Subject to the Rules of a Contract 
Market, 63 FR 3708 (Jan. 26, 1998) (requesting comment on whether 
Commission regulations should be modified in order to permit EFSs 
and exchanges of futures for options); Proposed Rules, Execution of 
Transactions: Regulation 1.38 and Guidance on Core Principle 9, 69 
FR 39880, 39881 (July 1, 2004) (proposing amendments to regulation 
1.38 to permit DCMs to allow exchanges of futures for another 
derivatives position following the Commodity Futures Modernization 
Act of 2000 amending the CEA to ``specifically allow[] the exchange 
of futures for swaps''); see also 7 U.S.C. 7(b)(3).
    \95\ ``EFOs'' refers to ``exchanges of futures for options.'' 
Final Rule, Reporting Levels and Recordkeeping, 69 FR 76392, 76394 
(Dec. 21, 2004).
    \96\ 69 FR at 76395.
    \97\ Id.
---------------------------------------------------------------------------

    Expirations and Settlement of Contracts. In addition to EDRP counts 
and counts of contracts bought and sold, proposed Appendix C would add 
data elements necessary to capture expirations and settlements, 
including whether options were exercised and contracts assigned. 
Proposed Appendix C would capture such information in ``Delivery 
Notices Stopped,'' ``Delivery Notices Issued,'' ``Long Options 
Expired,'' ``Short Options Expired,'' ``Long Options Exercised,'' 
``Short Options Exercised,'' ``Long Futures Assigned,'' and ``Short 
Futures Assigned'' data elements. The current Sec.  17.00(g) record 
format captures information concerning delivery notices stopped and 
issued, but does not capture information concerning changes in 
positions due to option expirations and exercises.
    Transfers. The Commission also proposes to include ``Long Transfers 
Sent,'' ``Long Transfers Received,'' ``Short Transfers Sent,'' and 
``Short Transfers Received'' data elements to capture transfers of 
contracts that effect a change in position in a special account. This 
information is not directly captured by the current Sec.  17.00(g) 
record format.
    Internal Consistency Check for Data Concerning Changes in Position. 
The inclusion in reports required under Sec.  17.00(a) of data elements 
reflecting counts of transactions that resulted in day-to-day changes 
in positions would enable reporting firms to perform internal 
consistency checks on position reports before submitting those reports. 
Specifically, the day-to-day change in the size of a position for a 
particular special account should equal the net value of contracts 
bought and sold, EDRPs bought and sold, expirations and assignments of 
contracts, and transfers.
Request for Comment
    The Commission requests comment on all aspects of proposed Appendix 
C, including the proposed data elements enumerated therein. The 
Commission requests specific comment on the following:
    (4) Are there any data elements not included in proposed Appendix C 
that commenters believe are necessary to obtain a complete and accurate 
picture of positions held by large traders? If so, please identify such 
data elements.
    (5) Are there any transactions that would effect changes in 
positions that are not accounted for by the Data Elements discussed in 
Section II.B.2.d above? If so, please identify such transactions.
    (6) Are there any data elements proposed to be added in Appendix C 
that commenters believe are not necessary to obtain a complete and 
accurate picture of positions held by large traders? If so, please 
identify such data elements and explain why.

III. Compliance Date

    The Commission understands that market participants would require 
sufficient time to revise or build infrastructure to submit data 
required under Sec.  17.00 using the proposed new submission standard. 
In addition, given that proposed Appendix C would require the 
submission of additional data elements beyond the information required 
by the current Sec.  17.00(g) record format, the Commission understands 
that reporting firms may need to make additional adjustments to 
reporting systems.
    The Commission expects that the compliance date for the rules 
proposed herein would be 365 days following publication of a final rule 
in the Federal Register.
    The Commission also expects to permit reporting firms to begin 
reporting under the proposed new regime for Sec.  17.00(a) reports in 
advance of the compliance date, while continuing to permit reporting 
firms to report under the current Sec.  17.00(g) record format. The 
Commission believes that this approach will allow early adopters to 
realize the advantages of reporting using a modern data submission 
standard while allowing slower adopters sufficient time to modify and 
test reporting systems.
Request for Comment
    The Commission requests comment on all aspects of the proposed 
compliance date. The Commission requests specific comment on the 
following:
    (7) Is the proposed compliance date of 365 days after publication 
of a final rule in the Federal Register an appropriate amount of time 
for compliance? If not, please propose an alternative timeline and 
provide reasons supporting that alternative timeline.

IV. Related Matters

A. Cost-Benefit Considerations

1. Introduction
    Section 15(a) \98\ of the CEA requires the Commission to consider 
the costs and benefits of its actions before issuing a new regulation 
or order under the CEA. By its terms, section 15(a) does not require 
the Commission to quantify the costs and benefits of a new rule or to 
determine whether the benefits of the adopted rule outweigh its costs. 
Rather, section 15(a) requires the Commission to ``consider the costs 
and benefits'' of a subject rule. Section 15(a) further specifies that 
the costs and benefits of proposed rules shall be evaluated in light of 
five broad areas of market and public concern: (1) Protection of market 
participants and the public; (2) efficiency, competitiveness, and 
financial integrity of futures markets; (3) price discovery; (4) sound 
risk management practices; and (5) other public interest 
considerations. In conducting its analysis, the Commission may, in its 
discretion, give greater weight to any one of the five enumerated areas 
of concern and may determine that, notwithstanding its costs, a 
particular rule is necessary or appropriate to protect the public 
interest or to effectuate any of the provisions or to accomplish any of 
the purposes of the Act.
---------------------------------------------------------------------------

    \98\ 7 U.S.C. 19(a).
---------------------------------------------------------------------------

    Although the Commission believes the proposed amendments would 
create meaningful benefits for market participants and the public, the 
Commission also recognizes that the proposed amendments would impose 
costs. The Commission has endeavored to enumerate these costs and, when 
possible, assign a quantitative value to the costs reporting entities 
might face given the proposed changes. Where it is not possible to 
reasonably quantify costs and benefits of the proposed amendments, 
those costs and benefits are discussed qualitatively.
2. Background
    The data required to be reported under Sec.  17.00(a) comprise core 
data used by many divisions within the Commission, including the 
Division of

[[Page 41532]]

Market Oversight (``DMO''), the Office of the Chief Economist 
(``OCE''), and the Division of Enforcement (``DOE''). In addition, 
Sec.  17.00(a) submissions are collated to produce the database from 
which public COT reports are created. COT reports are used by news 
media, researchers, academics, and industry professionals to describe 
current trends in futures trading, conduct analysis of past trading 
patterns, and inform current market strategies. The current Sec.  
17.00(g) record format, which instructs reporting firms to submit data 
in an 80-character, Cobol-based format, has been in effect since 1986 
and was last revised in 2004.\99\ This current format limits the amount 
of descriptive data that can be included in any given field. This 
limits the Commission's ability to capture the economic characteristics 
of certain products in Sec.  17.00(a) position reports and, in some 
instances, prevents the Commission from distinguishing a position in 
one contract from a position in another contract. In addition, the 
current reporting fields do not allow for the granular reporting of 
EDRPs, of certain futures and options contracts, and for complete 
information reflecting day-to-day changes in position.
---------------------------------------------------------------------------

    \99\ See Final Rule, Reporting Levels and Recordkeeping, 69 FR 
76392-01, 76394 (Dec. 21, 2004).
---------------------------------------------------------------------------

3. Baselines
    The costs and benefits considered herein use as a baseline the 
reporting provided by reporting firms under current Part 17 
regulations. In particular, entities are currently required to report 
positions for special accounts \100\ by 9 a.m. on the business day 
following the trading day \101\ and to correct errors as they are found 
by either the Commission or the reporting entity.\102\ These elements 
of the rule would not change under the new reporting requirements.
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    \100\ See 17 CFR 17.00(a).
    \101\ See 17 CFR 17.02(a).
    \102\ 17 CFR 17.00(h).
---------------------------------------------------------------------------

    The Commission notes that this cost-benefit consideration is based 
on its understanding that the derivatives market regulated by the 
Commission functions internationally with: (1) transactions that 
involve U.S. entities occurring across different international 
jurisdictions; (2) some entities organized outside of the United States 
that are registered with the Commission; and (3) some entities that 
typically operate both within and outside the United States and that 
follow substantially similar business practices wherever located. Where 
the Commission does not specifically refer to matters of location, the 
discussion of costs and benefits below refers to the effects of the 
proposed regulations on all relevant derivatives activity, whether 
based on their actual occurrence in the United States or on their 
connection with, or effect on U.S. commerce.\103\
---------------------------------------------------------------------------

    \103\ See, e.g., 7 U.S.C. 2(i).
---------------------------------------------------------------------------

4. Proposed Amendments to Part 17
    The Commission proposes two categories of amendments to Part 17. 
First, the Commission proposes to remove current Sec.  17.00(g)'s 80-
character record format and amend Sec.  17.03(d) to delegate authority 
to the Director of the Office of Data and Technology to designate a 
submission standard for reports required under Sec.  17.00(a). That 
submission standard would be published in a Part 17 Guidebook, to be 
published on the Commission's website. The proposed Part 17 Guidebook 
designates a modern XML submission standard for submitting reports 
required under Sec.  17.00(a). Second, the Commission proposes adding 
an Appendix C to Part 17 enumerating data elements to be included in 
Sec.  17.00(a) reports. The proposed data elements consist of (1) 
certain data elements currently required to be reported under Sec.  
17.00(g), (2) certain data elements necessary for processing files 
submitted in XML, (3) certain data elements necessary to represent 
innovative contracts that cannot currently be represented using the 
Sec.  17.00(g) format, and (4) data elements necessary to understand 
the transactions that resulted in day-to-day changes in positions of 
large traders. The form and manner for reporting these data elements in 
proposed Appendix C would be provided in the Part 17 Guidebook.
a. Change in Submission Standard From Current Sec.  17.00(g) Record 
Format to a Modern Data Standard Designated in a Part 17 Guidebook
    Currently, reporting firms submit Sec.  17.00(a) position reports 
using Sec.  17.00(g)'s 80-character record format. The proposed 
amendments would require such reports to be submitted using a 
submission standard, which would be designated in a Part 17 Guidebook 
published by the Office of Data and Technology on the Commission's 
website. The proposed Part 17 Guidebook would require such submissions 
to be made using an XML format similar to that used in other reporting 
required by the Commission, including Trade Capture Reports submitted 
pursuant to Sec.  16.02 and swap data reports submitted to swap data 
repositories pursuant to Part 43 and Part 45.\104\ In order to collect 
and transmit these reports to the Commission, reporting firms would 
have to modify the systems they currently use to report Part 17 data.
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    \104\ See, e.g., Advanced Notice of Proposed Rulemaking, Account 
Ownership and Control Information, 74 FR 31642, 31644 (July 2, 
2009); 17 CFR 43.7(a)(1); 17 CFR 45.15(a)(2).
---------------------------------------------------------------------------

    The Commission estimates there are currently over 300 reporting 
firms submitting 17.00(a) reports. Reporting firms are divided between 
DCMs, FCMs, clearing members, and foreign brokers, including some firms 
that are registered under multiple categories. Over a 30-day period in 
early 2023 there were 310 reporting firms submitting Sec.  17.00(a) 
reports. The Commission estimates that approximately 74 of these 
reporting firms automate the creation of Sec.  17.00(a) reports and 236 
of these firms create and submit Sec.  17.00(a) reports manually. The 
Commission believes that reporting firms that currently automate the 
creation of Sec.  17.00(a) reports will continue to do so and will 
submit such reports by secure FTP, and that reporting firms that 
currently manually create Sec.  17.00(a) reports will continue these 
practices rather than modifying their systems to facilitate reporting 
by secure FTP. Firms that currently manually create Sec.  17.00(a) 
reports may need to update systems used to manually generate those 
reports.
1. Benefits
    The proposed revisions concerning the data submission standard will 
facilitate more rapid data ingestion for the Commission and increased 
automation in ingesting data required to be reported under Sec.  
17.00(a), which will reduce staff time devoted to data ingestion.
    The proposed revisions concerning the data submission standard 
should also enhance data quality. First, a modern data submission 
standard should be less error-prone than the current Sec.  17.00(g) 
record format. Second, a modern data submission standard should 
facilitate automated, real-time error correction notifications, which 
will reduce the amount of manual staff intervention in the error 
correction process and should provide reporting firms with more 
efficient timelines for correcting errors. By improving data quality 
and enabling more rapid corrections of errors, the proposed revisions 
concerning the data submission standard should ensure the timeliness of 
COT reports.
    The proposed revisions concerning the data submission standard 
should simplify the error correction process for

[[Page 41533]]

reporting firms by automating and accelerating feedback concerning 
errors.
    The proposed revisions concerning the data submission standard 
should enhance DMO's ability to monitor the markets, support DOE's 
surveillance program, and facilitate OCE research projects.
2. Costs
    The Commission believes that the changes proposed to Part 17 would 
cause reporting firms to modify their systems to collect and submit 
data using a new data submission standard. The cost of such 
modifications is likely to vary from entity to entity. Under the 
proposed Part 17 Guidebook, reporting firms would submit reports 
required under Sec.  17.00(a) using an XML submission standard.
    The Commission expects more sophisticated reporting firms that 
submit a substantial number of daily reports, such as FCMs, will build 
systems to report using the XML submission standard designated in the 
proposed Part 17 Guidebook, and will arrange to automate daily 
submissions using a secure FTP data feed. The Commission estimates that 
74 entities will submit reports in in this manner. The Commission 
estimates those entities would incur a one-time initial cost of 
approximately $29,800 for each entity (200 hours x $149/hour) to modify 
and test their systems, or an estimated aggregate dollar cost of 
$2,205,200 (74 entities x $29,800).\105\ The Commission understands 
that some reporting firms today submit reports required under Sec.  
17.00(a) manually through the CFTC Portal, and believes that many of 
those firms would continue to do so under the new submission standard. 
The Commission estimates that 236 entities would continue to manually 
report through the CFTC Portal and would incur a one-time initial cost 
of approximately $1,310 to update their systems (10 hours x $131/hour) 
for each entity, or an estimated aggregate dollar cost of $309,160 (236 
entities x $1,310).\106\
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    \105\ For costs associated with upgrading reporting systems for 
secure FTP filers, the Commission estimates that modifications and 
testing will be undertaken by computer and information research 
scientists, database architects, software developers, programmers, 
and testers. The associated costs are taken from the U.S. Bureau of 
Labor Statistics' Occupational Employment and Wage Statistics, 
available at https://www.bls.gov/oes/2021/may/oes_nat, and adjusted 
with a multiple of 2.5 to account for benefits and overhead costs.
    \106\ For costs associated with upgrading reporting systems for 
CFTC Portal filers, the Commission estimates that the necessary 
modifications will be undertaken by data scientists. The associated 
costs are taken from the U.S. Bureau of Labor Statistics' 
Occupational Employment and Wage Statistics, available at https://www.bls.gov/oes/2021/may/oes_nat, and adjusted with a multiple of 
2.5 to account for benefits and overhead costs.
---------------------------------------------------------------------------

    On an ongoing basis, the Commission believes that the 310 estimated 
reporting firms would incur minimal additional costs above the baseline 
once setup is complete. However, the Commission estimates that 
approximately 74 entities filing using secure FTP may incur an ongoing 
operation and maintenance cost of $3,576 per year (2 hours per month x 
$149 per hour) per entity to maintain their systems, or an estimated 
aggregate annual cost of $264,624 (74 entities x $3,756). In addition, 
the Commission estimates that 236 entities filing manually would incur 
ongoing additional costs of $3,144 per year (2 hours per month x $131 
per hour) per entity to maintain their systems, or an estimated 
aggregate annual cost of $741,984 (236 entities x $3,144). However, the 
Commission believes that costs associated with correcting errors would 
be reduced due to improved data validation at the time of ingest.
    These cost estimates are based on a number of assumptions and cover 
a number of tasks required by reporting firms to design, test, and 
implement an updated data system based on an XML submission standard. 
These tasks include defining requirements, developing an extraction 
query, developing an interim extraction format (such as a CSV, or 
``comma-separated values,'' file), developing validations, developing 
formatting conversions, developing a framework to execute tasks on a 
repeatable basis, and finally, integration and testing.
(C) Request for Comment
    The Commission requests comment on the range of costs reporting 
markets, FCMs, clearing members, and foreign brokers would incur to 
implement an XML submission standard to comply with the proposed 
amendments. Are there additional costs or benefits that the Commission 
should consider? Commenters are encouraged to include both qualitative 
and quantitative assessments of these benefits.
b. Changes in Data Elements Reported
    As detailed above, the current 80-character Sec.  17.00(g) format 
does not allow for flexibility in the reporting of certain types of 
futures, such as bounded futures, and options, such as capped or 
barrier options. The proposed amendments would enable these products to 
be identified in Sec.  17.00(a) reports, and would capture additional 
information reflecting changes in position, including reporting 
concerning numbers of transfers, reporting of numbers of expirations of 
contracts, and more granular reporting of EDRPs, including specifying 
the type of related product (physical, swap, or option). Additionally, 
the expanded reporting regime instills flexibility such that the 
proposed Part 17 Guidebook can facilitate reporting of positions in 
products with innovative features.
(A) Benefits
    The proposed additional fields necessary to identify certain 
contracts will facilitate collection of more robust market information 
for the Commission, including allowing the Commission to distinguish 
between positions in different contracts that may not currently be 
distinguishable. The proposed additional fields necessary to identify 
changes in positions, including more granular information concerning 
types of EDRPs, would also allow the Commission to collect better 
market information. Additionally, obtaining accurate, granular 
information concerning daily changes in position should improve data 
quality. These data elements will enable reporting firms to perform an 
internal consistency check to confirm the accuracy of data, which 
should reduce reporting errors.
    Obtaining accurate, granular information concerning daily changes 
in position would also support the Commission's surveillance and 
monitoring programs. This data would provide the Commission with a more 
comprehensive understanding concerning the nature of changes in 
positions--as opposed to merely understanding the scope of positions--
and should further facilitate linking position data reported under 
Sec.  17.00(a) \107\ with transaction data reporting under Sec.  
16.02.\108\
---------------------------------------------------------------------------

    \107\ 17 CFR 17.00(a).
    \108\ 17 CFR 16.02.
---------------------------------------------------------------------------

(B) Costs
    The proposed amendments will require reporting firms to report 
certain additional data elements to the Commission beyond those 
elements required by the current Sec.  17.00(g) record format.
    CFTC staff experienced in designing data reporting, ingestion, and 
validation systems, estimate that for the 74 reporting firms that 
automate reporting through a secure file transfer protocol, the process 
of upgrading and testing systems to collect and report new fields will 
require them to incur on average 400 hours to update, test, and 
implement the proposed additional data elements required by proposed

[[Page 41534]]

Appendix C, for a total of 29,600 hours across all FTP filers at an 
hourly wage rate of $149. This would amount to total capital and start-
up costs of $4,410,400 across all FTP filers (400 hours x 74 FTP filers 
x $149 = $4,410,400). In addition, the Commission estimates that these 
firms may each incur one-time costs of up to $1,000 for equipment 
modifications associated with these changes.
    The Commission estimates that the 236 reporting firms that manually 
input data required to be reported under Sec.  17.00(a) into the CFTC 
Portal will incur on average 20 hours to implement additional data 
elements required by proposed Appendix C, or 4,720 total hours across 
all manual filers, at an hourly wage rate of $131 per hour. The 
Commission estimates that in the aggregate manual filers will incur 
total capital and start-up costs associated with updating, testing and 
implementing new data elements of $618,320 (4,720 hours x $131/hour).
    On an ongoing basis, there would be minimal additional costs 
related to the addition of new data elements, since reporting entities 
would not be required to submit substantially more information than the 
baseline. For example, the Commission does not believe that the 
proposed amendments are likely to affect the overall number of reports 
submitted annually under Sec.  17.00(a). However, given the additional 
data elements required by the proposed amendments, the Commission 
estimates that 74 entities who automate their reporting systems may 
each incur an ongoing operation and maintenance cost of $3,576 per year 
(2 hours per month x $149 per hour) per entity, or an estimated 
aggregate annual cost of $264,624 (74 entities x $3,576) related to 
implementation of the new data elements. In addition, the Commission 
estimates that 236 firms that manually file reports may incur ongoing 
operation and maintenance costs of $3,144 per year (2 hours per month x 
$131 per hour) per entity as a result of implementing the proposed 
amendments implementing new data elements, or an estimated aggregate 
annual cost of $741,984 (236 entities x $3,144).
    These cost estimates are based on a number of assumptions and cover 
a number of tasks required by the reporting firms to design, test, and 
implement an updated data system based on an XML format. These tasks 
include defining requirements, developing an extraction query, 
developing an interim extraction format (such as a CSV, or ``comma-
separated values,'' file), developing validations, developing 
formatting conversions, developing a framework to execute tasks on a 
repeatable basis, and finally, integration and testing.
    Additionally, these costs may be mitigated because certain of the 
proposed data elements are conditional and will only be applicable to a 
small subset of the reporting firms. For example, if a particular FCM 
is not a participant on an exchange that lists ``bounded'' or 
``barrier'' contracts, that FCM will not be required to report proposed 
data elements that are conditional and only applicable to positions in 
``bounded'' or ``barrier'' contracts.
(C) Request for Comment
    The Commission requests comment on the range of costs reporting 
markets, FCMs, clearing members, and foreign brokers would incur to 
report the data elements described in the proposed amendments. Are 
there additional costs or benefits that the Commission should consider? 
Are there any data elements proposed to be added in Appendix C that 
commenters believe would be unduly onerous or burdensome to report 
pursuant to part 17? If so, please identify such data elements and 
explain why. Commenters are encouraged to include both qualitative and 
quantitative assessments of these benefits. Specific areas of interest 
include the following: the necessity of collecting additional fields in 
order to obtain a complete view of futures and options positions across 
all markets; (ii) evaluations of the accuracy of the Commission's 
estimate of the burden of the proposed information reporting; (iii) 
determining whether there are ways to enhance the utility of reported 
information; and (iv) minimizing the burden of additional data 
collection to reporting entities.
5. Section 15(a) Considerations
    CEA Section 15(a) \109\ requires the Commission to consider the 
costs and benefits of the proposed amendments to Part 17 with respect 
to the following factors: (1) Protection of market participants and the 
public; (2) efficiency, competitiveness, and financial integrity of 
futures markets; (3) price discovery; (4) sound risk management 
practices; and (5) other public interest considerations. A discussion 
of these proposed amendments in light of the CEA Section 15(a) factors 
is set out immediately below.
---------------------------------------------------------------------------

    \109\ 7 U.S.C. 19(a).
---------------------------------------------------------------------------

a. Protection of Market Participants and the Public
    The Commission expects that the changes to Part 17 reporting will 
lead to improvements in the Commission's ability to collect data on 
large traders. The Commission expects better validation of data at 
ingest, leading to more efficient error corrections compared to the old 
reporting format. The Commission expects these enhancements would occur 
without sacrificing the Commission's ability to perform comprehensive 
oversight of the market.
    Additionally, reducing the risk of errors and delays in the 
publication of the COT report would benefit the public by providing 
more accurate data on positions held by large traders.
    Furthermore, higher-quality and more granular position data from 
large traders would improve the Commission's oversight and enforcement 
capabilities and, in turn, would aid the Commission in protecting 
markets, participants, and the public in general.
b. Efficiency, Competitiveness, and Financial Integrity of Futures 
Markets
    The Commission believes the proposed amendments would improve the 
accuracy and completeness of futures and options position data 
available to the Commission by improving data quality and providing 
Commission staff with a more complete understanding of the products 
comprising certain positions. In particular, the proposed rule would 
allow for more complete reporting of EDRPs and complex futures and 
options positions. Access to more accurate and complete data would in 
turn assist the Commission with, among other things, evaluating if 
certain traders are in violation of position limits, monitoring 
concentrations of risk exposures, and preventing fraud and market 
manipulation. In addition, as described above, the proposed amendments 
are expected to improve the efficiency of data reporting and analysis 
by reducing the number of reporting errors and automating data validity 
and error corrections processes.
c. Price Discovery
    The Commission does not believe the proposed rules would have a 
significant impact on price discovery.
d. Sound Risk Management Practices
    The Commission believes the proposed rule changes would improve the 
data quality associated with futures and options position reporting 
required under Sec.  17.00(a). The proposed additional data elements 
would capture

[[Page 41535]]

more complete product information for certain positions and more 
complete information concerning changes in position would provide the 
Commission with an expanded view of the marketplace that would enable 
the Commission to more effectively identify disruptive or manipulative 
trading activity. These improvements in the reporting would allow the 
Commission to evaluate risk throughout the futures and related markets.
    The Commission does not believe that the costs arising from the 
proposed rules would threaten the ability of market participants to 
manage risks.
e. Other Public Interest Considerations
    The Commission believes that the increased reliability and detail 
resulting from improvements to data reporting would further other 
public interest considerations, including transparency in the futures 
market to the public and detection of fraud or manipulation. 
Additionally, the reporting structure would provide additional 
flexibility to collect information on new products developed by 
exchanges, thereby allowing for those exchanges to innovate and respond 
to the demands of the marketplace while still providing traders' 
positions to the Commission.
f. General Request for Comment
    The Commission generally requests comment on all aspects of its 
cost-benefit considerations, including the identification and 
assessment of any costs and benefits not discussed herein; data and any 
other information to assist or otherwise inform the Commission's 
ability to quantify or qualitatively describe the costs and benefits of 
the proposed amendments; and substantiating data, statistics, and any 
other information to support positions posited by commenters with 
respect to the Commission's discussion. The Commission welcomes comment 
on such costs, particularly from existing reporting firms that can 
provide quantitative cost data based on their respective experiences. 
Commenters may also suggest other alternatives to the proposed 
approach.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act \110\ (``RFA'') requires that 
agencies, in proposing rules, consider the impact of those rules on 
small business or, in the statute's parlance, ``small entities.'' \111\ 
These amendments affect large traders, FCMs, and other similar 
entities. The Commission has defined ``small entities'' as used by the 
Commission in evaluating the impact of its rules in accordance with the 
RFA.\112\ In that statement, the Commission concluded that large 
traders and FCMs are not considered small entities for purposes of the 
RFA. Thus, under section 3(a) of the RFA,\113\ the Chairman, on behalf 
of the Commission, certifies that this proposed rule will not have a 
significant economic impact on a substantial number of small entities. 
The Commission nonetheless invites comment from any firm which believes 
that these rules would have a significant economic impact on its 
operations.
---------------------------------------------------------------------------

    \110\ 5 U.S.C. 601 et seq.
    \111\ See 5 U.S.C. 603. The RFA applies to rules subject to 
notice and comment rulemakings issued pursuant to section 553(b) of 
the Administrative Procedure Act, 5 U.S.C. 553(b), or any other law. 
Id.
    \112\ See Policy Statement and Final Establishment of 
Definitions, 47 FR 18618 (Apr. 30, 1982).
    \113\ 5 U.S.C. 605(b).
---------------------------------------------------------------------------

C. Paperwork Reduction Act

    The Paperwork Reduction Act (``PRA'') \114\ imposes certain 
requirements on federal agencies, including the Commission, in 
connection with agencies' conducting or sponsoring any collection of 
information, as defined by the PRA. This proposed rulemaking would 
result in the collection of information within the meaning of the PRA, 
as discussed below. The proposed rulemaking contains collections of 
information for which the Commission has previously received control 
number 3038-0009 from the Office of Management and Budget 
(``OMB'').\115\
---------------------------------------------------------------------------

    \114\ 44 U.S.C. 3501 et seq.
    \115\ For the previously approved estimates, see ICR Reference 
No: 202303-3038-002, available at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202303-3038-002.
---------------------------------------------------------------------------

    The Commission is proposing to amend the above information 
collection to accommodate newly proposed and revised information 
collection requirements for participants in the futures and options 
markets that require approval from OMB under the PRA. The amendments 
are expected to modify the existing annual burden for complying with 
certain requirements of Part 17. Specifically, the Commission is 
proposing to amend Sec. Sec.  17.00(a), 17.00(g), 17.00(h), and 
17.03(d), which set out (1) the data submission standard and (2) the 
data elements for large trader reports required to be filed under Sec.  
17.00(a), among other things.\116\ The Commission has previously 
estimated that the reporting requirements associated with Sec.  17.00 
of the Commission's regulations entail an estimated 17,160 burden hours 
for all reporting firms.\117\ The Commission is revising its total 
burden estimates for this clearance to reflect updated estimates of the 
number of respondents to the collection. The Commission is also 
estimating the total capital and start-up costs and ongoing operation 
and maintenance costs associated with the proposed amendments to the 
Part 17 regulations described herein.
---------------------------------------------------------------------------

    \116\ The Commission proposes two categories of amendments to 
Part 17. First, the Commission proposes to remove current regulation 
17.00(g)'s 80-character record format and amend regulation 17.03(d) 
to delegate authority to the Director of the Office of Data and 
Technology to determine the form, manner, coding structure, and 
electronic data transmission procedures for reporting the data 
elements in Appendix C to Part 17 and to determine whether to permit 
or require one or more particular data standards for reports 
required under regulation 17.00(a). That submission standard would 
be published in a Part 17 Guidebook, to be published on the 
Commission's website. The proposed Part 17 Guidebook designates a 
modern XML submission standard for submitting reports required under 
regulation 17.00(a). Second, the Commission proposes adding an 
Appendix C to Part 17 enumerating data elements to be included in 
regulation 17.00(a) reports. The proposed data elements consist of 
(1) certain data elements currently required to be reported under 
regulation 17.00(g), (2) certain data elements necessary for 
processing files submitted in XML, (3) certain data elements 
necessary to represent innovative contracts that cannot currently be 
represented using the regulation 17.00(g) format, and (4) data 
elements necessary to understand the transactions that resulted in 
day-to-day changes in positions of large traders. The form and 
manner for reporting these data elements in proposed Appendix C 
would be provided in the Part 17 Guidebook. The burden estimates 
provided in this section take into account the burden associated 
with reporting using a modern XML submission standard and reporting 
the data elements as set out in proposed Appendix C, in compliance 
with the proposed Part 17 Guidebook.
    \117\ See ICR Reference No: 202303-3038-002, available at 
https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202303-3038-002.
---------------------------------------------------------------------------

    The Commission is therefore submitting this proposal to the OMB for 
its review in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. 
Responses to this collection of information by reporting firms pursuant 
to the Part 17 regulations would be mandatory. The Commission will 
protect proprietary information according to the Freedom of Information 
Act \118\ and 17 CFR 145, ``Commission Records and Information.'' In 
addition, CEA section 8(a)(1) strictly prohibits the Commission, unless 
specifically authorized by the CEA, from making public data and 
information that would separately disclose the business transactions or 
market positions of any person and trade secrets or names of 
customers.\119\ The Commission is also required to protect certain 
information contained in a government system of

[[Page 41536]]

records according to the Privacy Act of 1974.\120\
---------------------------------------------------------------------------

    \118\ 5 U.S.C. 552.
    \119\ 7 U.S.C. 12(a)(1).
    \120\ 5 U.S.C. 552a.
---------------------------------------------------------------------------

    The Commission expects that requiring reporting pursuant to a 
modern data standard will not require reporting firms to submit 
substantially more information than is currently required. Accordingly, 
the Commission is retaining its previous estimated numbers of reports, 
burden hours per report, and average burden hour cost. However, based 
on review of recent data from 2023, the Commission is reducing its 
estimate of the number of respondents from 330 to 310. Accordingly, the 
Commission is reducing its estimate from the previous 17,160 burden 
hours for all reporting firms \121\ to 16,120 burden hours. In 
addition, the Commission anticipates that implementation of a modern 
submission standard as proposed in the rules should reduce or eliminate 
manual corrections and resubmissions that occur under the currently 
operative regulations.
---------------------------------------------------------------------------

    \121\ See ICR Reference No: 202303-3038-002, available at 
https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202303-3038-002.
---------------------------------------------------------------------------

    The aggregate annual estimate for the reporting burden associated 
with Part 17, as amended by the proposal,\122\ would be as follows:
---------------------------------------------------------------------------

    \122\ The previous burden estimates for 17 CFR 17.00 are 
available at Notice, Agency Information Collection Activities Under 
OMB Review, 88 FR 18127 (Mar. 27, 2023).
---------------------------------------------------------------------------

    Estimated number of respondents: 310.
    Estimated Average Burden Hours per Respondent: 52 hours.
    Estimated total annual burden on Respondents: 16,120 hours.
    Frequency of collection: Periodically.
    In addition, the Commission anticipates that the proposed rules 
will result in annual capital and start-up costs as well as operating 
and maintenance costs, consisting of (1) start-up costs to implement 
the proposed rule changes, (2) operating and maintenance costs to 
implement the proposed rule changes, and (3) costs to modify equipment 
as necessary to comply with the proposed rule changes. The Commission 
estimates that some respondents may report by secure FTP (``FTP 
filers'') and some firms may report manually (``manual filers''), and 
that the total capital and start-up costs will vary based on whether a 
respondent is an FTP Filer or a Manual Filer.
    The Commission estimates that FTP filers would comprise 74 
respondents. The Commission estimates that these respondents would 
incur one-time initial costs associated with (1) modifying systems to 
adopt a new data standard, (2) updating and testing systems to 
implement new data elements, and (3) modifying equipment to implement 
new data elements. First, the Commission estimates that such firms 
would incur a one-time initial burden of 200 hours per entity to modify 
their systems to adopt changes to the data submission standard 
described in this proposed rulemaking, for a total estimated 14,800 
total hours. Second, the Commission estimates that FTP filers will 
incur total capital and start-up costs associated with updating, 
testing, and implementing new data elements of 400 hours, for a total 
estimated 29,600 hours. Third, the Commission also estimates that FTP 
filers would incur one-time costs of $1,000 to modify equipment to 
implement new data elements. This would amount to $6,689,600 (((200 + 
400 hours) x 74 FTP filers x $149 \123\)) + (74 FTP filers x $1,000) = 
$6,689,600).
---------------------------------------------------------------------------

    \123\ For the cost calculations for FTP submitters, Commission 
staff used a composite (blended) wage rate by averaging the hour 
wages for (1) Computer Research Scientists, (2) Database Architects, 
(3) Software Developers, and (4) Developers, Programmers, and 
Testers. Per the U.S. Bureau of Labor Statistics, national industry-
specific occupational employment and wage estimates from May 2021, 
the mean hourly wage for a computer research scientist is $68.58, 
database architect is $58.58, software developer is $58.17, and 
developers, programmers, and testers is $54.68. See U.S. Bureau of 
Labor Statistics' Occupational Employment and Wage Statistics, 
available at https://www.bls.gov/oes/2021/may/oes_nat. The average 
of those wages is $59.42. Commission staff has applied a multiplier 
of 2.5 times to account for benefits and overhead. The Commission is 
therefore using an hourly wage rate of $149 for FTP submitters.
---------------------------------------------------------------------------

    In addition, the Commission estimates that as a result of 
implementing that new data submission standard, these 74 FTP filers may 
incur additional operating and maintenance costs of 24 hours per year, 
for 1,776 total hours, resulting in costs of $264,624 (24 hours x 74 
FTP filers x $149 \124\ = $264,624), and, as a result of implementing 
new data elements, these 74 FTP filers may incur additional operating 
and maintenance costs of 24 hours per year, for 1,776 total hours, 
resulting in costs of $264,624 (24 hours x 74 FTP filers x $149 \125\ = 
$264,624). This yields additional annual operating and maintenance 
costs of $529,248 for FTP filers.
---------------------------------------------------------------------------

    \124\ See id.
    \125\ See id.
---------------------------------------------------------------------------

    The Commission estimates that manual filers would comprise 236 
reporting firms. The Commission estimates that these respondents would 
incur one-time initial costs associated with (1) modifying systems to 
adopt a new data standard and (2) updating and testing systems to 
implement new data elements. First, the Commission estimates such 
respondents would incur a one-time initial burden of 10 hours to modify 
their systems to implement a new data standard, for a total estimated 
2,360 total hours. Second, the Commission estimates that manual filers 
will incur an average one-time cost of 20 hours to implement additional 
data elements required by proposed Appendix C, for a total estimated 
4,720 total hours. This would amount to aggregate one-time initial 
costs of $927,480 ((10 hours + 20 hours) x 236 manual filers x $131 
\126\ = $927,480).
---------------------------------------------------------------------------

    \126\ For the cost calculations for manual submitters, 
Commission staff used the wage rate for Data Scientists. Per the 
U.S. Bureau of Labor Statistics, national industry-specific 
occupational employment and wage estimates from May 2021, the mean 
hourly wage for a data scientist is $52.24. See U.S. Bureau of Labor 
Statistics' Occupational Employment and Wage Statistics, available 
at https://www.bls.gov/oes/2021/may/oes_nat. Commission staff has 
applied a multiplier of 2.5 times to account for benefits and 
overhead. The Commission is therefore using an hourly wage rate of 
$131 for manual submitters.
---------------------------------------------------------------------------

    In addition, the Commission estimates that as a result of 
implementing that new data submission standard, these 236 manual filers 
may incur additional operating and maintenance costs of 24 hours per 
year, for 5,664 total hours, for an associated cost of $741,984 (24 
hours x 236 manual filers x $131 \127\ = $741,984), and, as a result of 
implementing new data elements, these 236 manual filers may incur 
additional operating and maintenance costs of 24 hours per year, for 
5,664 total hours, for an associated cost of $741,984 (24 hours x 236 
manual filers x $131 \128\ = $741,984). This yields additional annual 
operating and maintenance costs of $1,483,968 for manual filers.
---------------------------------------------------------------------------

    \127\ See id.
    \128\ See id.
---------------------------------------------------------------------------

    Accordingly, the total estimated capital and start-up costs across 
all 310 reporting entities is $7,617,080 ($6,689,600 + $927,480 = 
$7,617,080). Based on five-year, straight line depreciation, this 
amounts to annualized total capital and start-up costs for all covered 
entities of $1,523,416. The total estimated annual operating and 
maintenance costs across all entities is $2,013,216 ($529,248 for FTP 
filers + $1,483,968 for manual filers = $2,013,216). The Commission 
estimates that total annual capital and start-up costs and operation 
and maintenance costs for all covered entities would be $3,536,632 
($1,523,416 + $2,013,216 = $3,536,632).
Request for Comment
    The Commission invites the public and other Federal agencies to 
comment

[[Page 41537]]

on any aspect of the proposed information collection requirements 
discussed above. The Commission will consider public comments on this 
proposed collection of information in:
    (1) Evaluating whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information will have a practical 
use;
    (2) Evaluating the accuracy of the estimated burden of the proposed 
collection of information, including the degree to which the 
methodology and the assumptions that the Commission employed were 
valid;
    (3) Enhancing the quality, utility, and clarity of the information 
proposed to be collected; and
    (4) Minimizing the burden of the proposed information collection 
requirements on reporting firms, including through the use of 
appropriate automated, electronic, mechanical, or other technological 
information collection techniques, e.g., permitting electronic 
submission of responses.
    Copies of the submission from the Commission to OMB are available 
from the CFTC Clearance Officer, 1155 21st Street NW, Washington, DC 
20581, (202) 418-5160 or from https://RegInfo.gov. Organizations and 
individuals desiring to submit comments on the proposed information 
collection requirements should send those comments to:
     The Office of Information and Regulatory Affairs, Office 
of Management and Budget, Room 10235, New Executive Office Building, 
Washington, DC 20503, Attn: Desk Officer of the Commodity Futures 
Trading Commission;
     (202) 395-6566 (fax); or
     [email protected] (email).
    Please provide the Commission with a copy of submitted comments so 
that comments can be summarized and addressed in the final rulemaking, 
and please refer to the ADDRESSES section of this rulemaking for 
instructions on submitting comments to the Commission. OMB is required 
to make a decision concerning the proposed information collection 
requirements between 30 and 60 days after publication of this release 
in the Federal Register. Therefore, a comment to OMB is best assured of 
receiving full consideration if OMB receives it within 30 calendar days 
of publication of this release. Nothing in the foregoing affects the 
deadline enumerated above for public comment to the Commission on the 
proposed rules.

D. Antitrust Considerations

    CEA section 15(b) requires the Commission to take into 
consideration the public interest to be protected by the antitrust laws 
and endeavor to take the least anticompetitive means of achieving the 
objectives of the CEA in issuing any order or adopting any Commission 
rule or regulation.
    The Commission does not anticipate that the proposed amendments to 
Part 17 would result in anti-competitive behavior. The Commission 
encourages comments from the public on any aspect of the proposal that 
may have the potential to be inconsistent with the antitrust laws or 
anticompetitive in nature.

List of Subjects in 17 CFR Part 17

    Brokers, Commodity futures, Reporting and recordkeeping 
requirements, Swaps.

    For the reasons stated in the preamble, the Commodity Futures 
Trading Commission proposes to amend part 17 of title 17 of the Code of 
Federal Regulations as follows:

PART 17--REPORTS BY REPORTING MARKETS, FUTURES COMMISSION 
MERCHANTS, CLEARING MEMBERS, AND FOREIGN BROKERS

0
1. The authority citation for part 17 continues to read as follows:

    Authority: 7 U.S.C. 2, 6a, 6c, 6d, 6f, 6g, 6i, 6t, 7, 7a, and 
12a.

0
2. In Sec.  17.00, revise paragraphs (a)(1), (g), and (h) to read as 
follows:


Sec.  17.00  Information to be furnished by futures commission 
merchants, clearing members, and foreign brokers.

* * * * *
    (a) * * *
    (1) Each futures commission merchant, clearing member and foreign 
broker shall submit a report to the Commission for each business day 
with respect to all special accounts carried by the futures commission 
merchant, clearing member or foreign broker, except for accounts 
carried on the books of another futures commission merchant or clearing 
member on a fully-disclosed basis. Except as otherwise authorized by 
the Commission or its designee, such report shall be made pursuant to 
paragraph (g) of this section. The report shall show each futures 
position, separately for each reporting market and for each future, and 
each put and call options position separately for each reporting 
market, expiration and strike price en each special account as of the 
close of market on the day covered by the report and, in addition, the 
number of futures and options contracts bought and sold, the quantity 
of exchanges of futures or options for commodities or for derivatives 
positions, the number of delivery notices issued for each such account 
by the clearing organization of a reporting market and the number 
stopped by the account, the number of long and short options expired 
and exercised, the number of long and short futures assigned, and the 
number of long and short transfers sent and received. The report shall 
also show all positions in all contract months and option expirations 
of that same commodity on the same reporting market for which the 
special account is reportable.
* * * * *
    (g) Media and file characteristics. Except as otherwise approved by 
the Commission or its designee, all of the applicable data elements set 
forth in appendix C to this Part shall be included in a report required 
by Sec.  17.00(a), and shall be submitted together in a single file. 
The report shall be submitted in the form and manner published by the 
Commission or its designee pursuant to Sec.  17.03.
    (h) Correction of errors and omissions. Except as otherwise 
approved by the Commission or its designee, corrections to errors and 
omissions in data provided pursuant to Sec.  17.00(a) shall be 
submitted in the form and manner published by the Commission or its 
designee pursuant to Sec.  17.03.
* * * * *
0
3. In Sec.  17.03, revise paragraphs (a) and (d) to read as follows:


Sec.  17.03  Delegation of authority to the Director of the Office of 
Data and Technology or the Director of the Division of Market 
Oversight.

* * * * *
    (a) Pursuant to Sec.  17.00(a) and (h), the authority shall be 
designated to the Director of the Office of Data and Technology to 
determine whether futures commission merchants, clearing members, and 
foreign brokers may report the information required under Sec.  
17.00(a) and (h) using some format other than that required under Sec.  
17.00(g) upon a determination that such person is unable to report the 
information using the format, coding structure, or electronic data 
transmission procedures otherwise required.
* * * * *
    (d) Pursuant to Sec.  17.00(a), (g), and (h), the authority shall 
be designated to the Director of the Office of Data and Technology to 
determine the form, manner, coding structure, and electronic data 
transmission procedures for reporting the data elements in appendix

[[Page 41538]]

C to this part and to determine whether to permit or require one or 
more particular data standards.
* * * * *
0
4. Add appendix C to part 17 to read as follows:

------------------------------------------------------------------------
                   Data element name      Definition for data element
------------------------------------------------------------------------
1...............  Total Message Count  The total number of reports
                                        included in the file.
2...............  Message Type.......  Message report type.
3...............  Sender ID..........  The CFTC-issued reporting firm
                                        identifier.
4...............  To ID..............  Indicates the report was
                                        submitted to the CFTC.
5...............  Message Transmit     The date and time the file was
                   Datetime.            created.
6...............  Report ID..........  A unique identifier assigned to
                                        each position report.
7...............  Record Type          Indicates the action that
                   (Action).            triggered the Position Report.
8...............  Report Date........  The date of the information being
                                        reported.
9...............  Reporting Firm ID..  CFTC assigned identifier for the
                                        reporting firm.
10..............  Special Account      The Legal Entity Identifier
                   Controller LEI.      issued to the special account
                                        controller.
11..............  Account ID.........  A unique account identifier,
                                        assigned by the reporting firm
                                        to each special account.
                                        Assignment of the account number
                                        is subject to the provisions of
                                        Sec.   17.00(b) and Appendix A
                                        of this part (Form 102).
12..............  Exchange Indicator.  The exchange where the contract
                                        is traded.
13..............  Commodity Clearing   The clearinghouse-assigned
                   Code.                commodity code for the futures
                                        or options contract.
14..............  Product Type.......  Type of Product.
15..............  Ticker Symbol......  Ticker symbol of the product
                                        traded.
16..............  Maturity Month Year  Month and year of the delivery or
                                        maturity of the product, as
                                        applicable. Day must be provided
                                        when necessary to characterize a
                                        product.
17..............  Maturity Time......  The expiration time of an option
                                        or last trading time of a
                                        future.
18..............  Listing Date.......  Product listing date.
19..............  First Exercise Date  The earliest time at which notice
                                        of exercise can be given.
20..............  Strike Level.......  Numeric option moneyness
                                        criterion.
21..............  Alpha Strike.......  Non-Numeric option moneyness
                                        criterion.
22..............  Cap Level..........  Ceiling value of a capped option
                                        or bounded future.
23..............  Floor Level........  Floor value of a capped option or
                                        bounded future.
24..............  Bound or Barrier     Behavior of the product when it
                   Type.                hits the bound or barrier.
25..............  Bound or Barrier     Bound or barrier level of a
                   Level.               contingent option.
26..............  Put or Call          Nature of the option exercise.
                   Indicator.
27..............  Exercise Style.....  Type of exercise of an option.
28..............  Payout Amount......  Cash amount indicating the payout
                                        associated with the product.
29..............  Payout Type........  The type of valuation method or
                                        payout trigger.
30..............  Underlying Contract  The instrument that forms the
                   ID.                  basis of an option.
31..............  Underlying Maturity  Underlying delivery year and
                   Month Year.          month (and day where
                                        applicable).
32..............  Long Position......  The total of long open contracts
                                        carried at the end of the day.
33..............  Short Position.....  The total of short open contracts
                                        carried at the end of the day.
34..............  Contracts Bought...  The total quantity of contracts
                                        bought (gross) during the day
                                        associated with a special
                                        account, including all block
                                        trades and trade allocations
                                        such as give-ups, even if the
                                        give-ups are processed beyond
                                        T+1. Do not include exchanges of
                                        derivatives for related
                                        positions EDRPs (EFP, EFS or
                                        EFR, EOO) or transfers.
35..............  Contracts Sold.....  The total quantity of contracts
                                        sold (gross) during the day
                                        associated with a special
                                        account, including all block
                                        trades and trade allocations
                                        such as give-ups, even if the
                                        give-ups are processed beyond
                                        T+1. Do not include exchanges of
                                        derivatives for related
                                        positions EDRPs (EFP, EFS or
                                        EFR, EOO) or transfers.
36..............  EDRPs Bought.......  The quantity of purchases of
                                        futures or options in connection
                                        with exchanges of futures or
                                        options for related positions
                                        (``EDRPs'') done pursuant to a
                                        DCM's rules, disaggregated into
                                        quantity of purchases of futures
                                        or options in connection with
                                        EDRPs by type of EDRP, including
                                        exchanges of futures for
                                        physical, exchanges of futures
                                        for risk, exchanges of options
                                        for options, and any other EDRP
                                        offered pursuant to a DCM's
                                        rules.
37..............  EDRPs Sold.........  The quantity of sales of futures
                                        or options in connection with
                                        EDRPs done pursuant to a DCM's
                                        rules, disaggregated into
                                        quantity of sales of futures or
                                        options in connection with EDRPs
                                        by type of EDRP, including
                                        exchanges of futures for
                                        physical, exchanges of futures
                                        for risk, exchanges of options
                                        for options, and any other EDRP
                                        offered pursuant to a DCM's
                                        rules.
38..............  Delivery Notices     The number of futures contracts
                   Stopped.             for which delivery notices have
                                        been stopped during a day.
39..............  Delivery Notices     The number of futures contracts
                   Issued.              for which delivery notices have
                                        been issued during a day.
40..............  Long Options         Long options positions expired
                   Expired.             without being exercised.
41..............  Short Options        Short options positions expired
                   Expired.             without being exercised.
42..............  Long Options         Long options positions exercised
                   Exercised.           during the day.
43..............  Short Options        Short options positions exercised
                   Exercised.           during the day.
44..............  Long Futures         Long futures assigned as the
                   Assigned.            result of an option exercise.
45..............  Short Futures        Short futures assigned as the
                   Assigned.            result of an option exercise.
46..............  Long Transfers Sent  Long positions sent through other
                                        transfers during the day. (Do
                                        not include give-ups.)
47..............  Long Transfers       Long positions received through
                   Received.            other transfers during the day.
                                        (Do not include
                                        give[hyphen]ups.)
48..............  Short Transfers      Short positions sent through
                   Sent.                other transfers during the day.
                                        (Do not include give-ups.)

[[Page 41539]]

 
49..............  Short Transfers      Short positions received through
                   Received.            other transfers during the day.
                                        (Do not include
                                        give[hyphen]ups.)
50..............  Product-Specific     Terms of the contract that are
                   Terms.               economically material to the
                                        contract, maintained in the
                                        ordinary course of business by
                                        the reporting market listing the
                                        contract, and not otherwise
                                        required to be reported under
                                        the data elements in this
                                        Appendix.
------------------------------------------------------------------------


    Issued in Washington, DC, on June 20, 2023, by the Commission.
Robert Sidman,
Deputy Secretary of the Commission.

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

Appendices to Large Trader Reporting Requirements--Voting Summary and 
Commissioners' Statements

Appendix 1--Voting Summary

    On this matter, Chairman Behnam and Commissioners Johnson, 
Goldsmith Romero, Mersinger, and Pham voted in the affirmative. No 
Commissioner voted in the negative.

Appendix 2--Statement of Chairman Rostin Behnam in Support of the 
Notice of Proposed Rulemaking on Amendments to Part 17 Large Trader 
Reporting Requirements

    I support today's proposed rule which would modernize and create 
a path for efficient future modernization of large trader data 
reporting under Part 17 of the Commission's regulations. The 
proposal also seeks to align Part 17 data and reporting with the 
reporting structure in Parts 16, 20, 39, 43, and 45.
    Part 17 governs large trader reporting for futures and options, 
and requires certain registrants to report daily position 
information for the largest futures and options traders. The 
Commission uses the large trader reports for surveillance (detection 
and prevention of price manipulation) and enforcement of speculative 
limits. These reports also provide the basis for the Commission's 
weekly Commitments of Traders (``COT'') report, which is used by a 
wide range of commercial and speculative traders, and was itself 
recently modernized to include an updated interface that simplifies 
the downloading of COT data and an Application Program Interface 
(API), which enables an easier automated download process.\1\
---------------------------------------------------------------------------

    \1\ See Press Release Number 8612-22, CFTC, CFTC Launches New 
Commitments of Traders Reports (Oct. 20, 2022), CFTC Launches New 
Commitments of Traders Reports, available at https://www.cftc.gov/PressRoom/PressReleases/8612-22.
---------------------------------------------------------------------------

    Large trader data and the COT report alike are tools of the 
trade, and ensuring that they are usable internally and externally 
promotes transparency and efficiency as we carry out our regulatory 
and enforcement functions. Submission standards and data fields for 
the report (Sec.  17.00(g)) were promulgated in 1986 and last 
updated in 1997, and have become outdated and difficult for staff to 
use. The proposal seeks to modernize the format standards and data 
fields by: removing the 80-character format and delegating authority 
to the Director of the Division of Data (DOD) to designate a modern 
data submission standard; replacing the data fields enumerated in 
the regulation with a new Appendix C specifying data elements to be 
reported; and delegating to the DOD Director the authority to 
specify the form, manner, coding structure, and electronic data 
transmission procedures for reporting.
    The Part 17 proposal is accompanied by the contemporaneous 
publication of a proposed Part 17 Guidebook on the Commission's 
website. The proposed Guidebook designates a modern FIXML submission 
standard for submitting reports required under Sec.  17.00(a). The 
proposal includes a general description of the Guidebook and 
requests comments from the public.
    At their core, rules like this support foundational compliance 
and unequivocally support our efforts in ensuring that end-users and 
individual and institutional investors alike can measure and 
understand risks. Further, this rule will allow a better 
understanding that those trading in our markets are being monitored, 
and their impacts and influence within such markets, constantly 
measured and evaluated.

Appendix 3--Statement of Commissioner Kristin N. Johnson In Support of 
Notice of Proposed Rulemaking on Large Trader Reporting Requirements

    I strongly support issuing the proposal on Large Trader 
Reporting Requirements. Large trader reports ``effectuate the 
Commission's market and financial surveillance programs by providing 
information concerning the size and composition'' of Commission 
regulated markets and the accounts that hold the largest positional 
exposures.\1\ The Commission's large trader reporting system serves 
as a foundational tool for protecting market integrity as well as 
price discovery and hedging utility of futures contracts for 
commercial end-users. Despite technology-based formatting 
limitations, the large trader reporting system has admirably 
supported the Commission's market surveillance and position limits 
enforcement programs for decades.
---------------------------------------------------------------------------

    \1\ Notice of Proposed Rulemaking, Position Limits for 
Derivatives, 78 FR 75,680, 75,741 (Dec. 12, 2013).
---------------------------------------------------------------------------

    Among other uses, data reported under Part 17 enables the 
Commission to identify large positions in single markets or across 
markets, including by aggregating positions of a particular 
beneficial owner across multiple accounts held with multiple 
clearing members. This data also supports the Commission's 
surveillance programs and serves as the basis of the Commission's 
weekly Commitment of Traders (``COT'') reports. In addition, the 
data required to be reported under Sec.  17.00(a) comprise core data 
used by many divisions within the Commission, including the Division 
of Market Oversight (``DMO''), the Office of the Chief Economist 
(``OCE''), and the Division of Enforcement.
    Requiring reporting in an extensible markup language (``XML'') 
protocol as proposed is consistent with current regulatory practices 
and reconciles the format for transmitting large trader reports with 
the Commission's transactional reporting structures for designated 
contract markets, derivatives clearing organizations, physical 
commodity swaps, and swap data repositories.\2\ This harmonization, 
if properly implemented, should unlock surveillance synergies and 
allow the Commission's Integrated Surveillance System, where large 
trader reports are housed, to interact with other reporting 
frameworks including Ownership and Control Reports, which are 
triggered when accounts exceed volume thresholds,\3\ and Trade 
Capture Reports, which contain transaction level and related order 
book data.\4\
---------------------------------------------------------------------------

    \2\ Notice of Proposed Rulemaking, Large Trader Reporting 
Requirements at 14 (Jun. 7, 2023), https://www.cftc.gov/media/8716/votingdraft060723_17CFRPart17/download (hereinafter ``Large Trader 
Proposal'').
    \3\ 17 CFR 17.01.
    \4\ 17 CFR 16.02.
---------------------------------------------------------------------------

    Although the proposal preserves the core data that large trader 
reports collect today, it also measuredly proposes to integrate 
complementary data that is not fully reflected in current reports. 
Access to more fulsome and reliable data will improve the 
Commission's understanding of how traders employ certain 
transactions and serve as a deterrent to potential abusive trading 
practices.
    The proposal would also require reporting data elements that 
capture ``Contracts Bought'' and ``Contracts Sold'' instead of 
reporting aggregated positions that do not presently consider the 
amount of buying and selling associated with a particular special 
account from one trading day to the next.\5\ I am heartened by the 
proposal's one-year compliance period,\6\ and I encourage 
stakeholders to meaningfully engage with this proposal to enhance 
the Commission's regulatory mandate without placing undue burdens on 
the firms that potentially would have to comply with new 
requirements.
---------------------------------------------------------------------------

    \5\ Large Trader Proposal at 29 to 30.
    \6\ Large Trader Proposal at 34.
---------------------------------------------------------------------------

    I commend staff--Owen Kopon and Paul Chaffin from DMO, James Fay 
from the

[[Page 41540]]

Division of Data, and Daniel Prager from OCE--for bringing to the 
Commission a thoughtful proposal for modernizing large trader 
reports.

Appendix 4--Statement of Commissioner Christy Goldsmith Romero on 
Strengthening and Modernizing Large Trader Reporting Requirements for 
Transparency and Market Integrity

    At my confirmation hearing for this role, I testified, ``If 
confirmed, my highest priority would be to work to ensure that the 
markets are working well--that they are open, fair, and competitive. 
. . . Whether focused on hard commodities like agriculture, energy, 
or metals, or on the financial sector, the Commission plays a 
critical role in ensuring that these markets work well. That starts 
with the Agricultural sector--the farmers, ranchers, and producers 
our nation depends on--to put food on our tables and contribute to 
our nation's economic activity. For our farmers and ranchers to help 
drive our economy and feed the world, they need U.S. derivatives 
markets for risk management and price discovery.'' \1\
---------------------------------------------------------------------------

    \1\ Statement of Christy Goldsmith Romero, Confirmation Hearing, 
U.S. Senate Committee on Agriculture, Nutrition, and Forestry (Mar. 
2, 2022) available at https://www.agriculture.senate.gov/imo/media/doc/Testimony_Goldsmith%20Romero.pdf.
---------------------------------------------------------------------------

    Transparency is critical to fair and orderly markets. It 
provides the market confidence that pricing is appropriate, reflects 
market fundaments, and is free of manipulation and excessive 
speculation. This confidence is reflected in the fact that the 
Commission's Commitments of Traders report that reports position 
information for the largest traders in our markets is consistently 
the most downloaded item from our website. Market participants, news 
media, researchers, academics, and industry professionals, use these 
reports to determine current trends, conduct analysis of trading 
patterns, and inform market strategies. The importance of these 
reports was highlighted when the Commission had to postpone the 
reports temporarily after the cyber attack on Ion Markets.\2\
---------------------------------------------------------------------------

    \2\ See CFTC, CFTC Announces Postponement of Commitment of 
Traders Report, (Feb. 16, 2023) available at https://www.cftc.gov/PressRoom/PressReleases/8662-23.
---------------------------------------------------------------------------

    Fair and orderly markets also require confidence that the 
Commission is monitoring markets and taking strong action to promote 
market integrity. The Commitments of Traders report is a tool in the 
Commission's market surveillance program and enforcement program to 
deter and catch market manipulation and excessive speculation. As I 
have visited with our nation's farmers and producers, I have heard 
about their need for the Commission to protect the integrity of our 
markets, to ensure that prices are not artificially increased, 
thereby unfairly raising input costs.
    The Commission has a critical mission to deter and combat excess 
speculation in our markets--which I discussed Monday in a recent 
enforcement action.\3\ In September, I proposed that the CFTC use 
its expertise and data to study whether prices in key commodities 
markets are being determined by market fundamentals, and to root out 
any manipulation and excessive speculation so that families and 
businesses aren't forced to pay artificially increased prices.\4\ 
These deep dive studies would need data on the activity of the 
largest traders in our markets--which is the sole focus of these 
reporting requirements.
---------------------------------------------------------------------------

    \3\ See CFTC Commissioner Christy Goldsmith Romero, The 
Importance of Protecting Commodity Markets Against Excess 
Speculation in the Ghost Cattle Fraud Case, (June 5, 2023) Statement 
of Commissioner Goldsmith Romero on the Importance of Protecting 
Commodity Markets Against Excessive Speculation in the Ghost Cattle 
Fraud Case CFTC v. Cody Easterday available at https://www.cftc.gov/PressRoom/SpeechesTestimony/romerostatement060523.
    \4\ See Opening Statement of Commissioner Christy Goldsmith 
Romero Before the Energy and Environmental Markets Advisory 
Committee, Opening Statement of Commissioner Christy Goldsmith 
Romero Before the Energy and Environmental Markets Advisory 
Committee (September 20, 2022) available at https://www.cftc.gov/PressRoom/SpeechesTestimony/romerostatement092022.
---------------------------------------------------------------------------

    The Commission will benefit from strengthening and modernizing 
this important surveillance tool, as will the public. I particularly 
appreciate the recognition of the need to determine positions across 
markets for more comprehensive data, and for data quality 
improvements. The proposed changes would enhance the Commission's 
ability to identify disruptive or manipulative trading activity. For 
these reasons, I support the proposed rule. I thank the staff and 
look forward to public comment.

Appendix 5--Statement of Commissioner Caroline D. Pham in Support of 
Notice of Proposed Rulemaking for Large Trader Reporting Requirements 
Under Part 17

    Today, the Commodity Futures Trading Commission (Commission or 
CFTC) is considering whether to propose revisions that would update 
the outdated large trader reporting submission standards in Part 17 
of the Commission's regulations. I am pleased to support this 
proposed rulemaking because the CFTC relies on its large trader 
reporting data to generate its weekly Commitment of Traders (COT) 
Report and to carry out our important market surveillance functions.
    Part 17 is the CFTC's regulatory framework that outlines the 
reporting obligations for clearing members, including futures 
commission merchants (FCMs) and foreign brokers, collectively known 
as reporting firms. Part 17 requires these reporting firms to submit 
daily trade data to the CFTC, which includes data on open interest, 
positions held, and other relevant position information on futures 
and options on futures.
    This framework allows the CFTC to maintain an up-to-date and 
accurate picture of the markets, ensuring that market participants 
and end-users have the necessary information for price discovery and 
risk management. By regularly collecting and publishing this market 
data through the CFTC's COT Report, Part 17 helps maintain market 
integrity and fosters transparency, providing valuable insights into 
market trends and dynamics.
    The COT Report has been vital to our derivatives market since 
its inception in 1962. The report provides a weekly summary of the 
open interest positions held by various categories of market 
participants, including commercial traders, non-commercial traders, 
and nonreportable positions. By understanding the positions held by 
commercial and noncommercial traders, market participants and end-
users can better manage their risk exposure, assess the supply and 
demand fundamentals that drive price movements, and gauge the 
overall sentiment in markets, enabling market participants to make 
informed decisions about their own positions and strategies.
    Part 17 data is also used by the CFTC to monitor market 
activities and to detect potential fraud, market manipulation, and 
position limit violations. Collecting position data that accurately 
reflects the full picture of a market participant's position also 
enables the CFTC to assess the financial risks presented by large 
customer positions to registrants such as FCMs, and derivatives 
clearing organizations (DCOs).
    As we deliberate today on the proposed rule to amend Part 17, it 
is crucial to remember that we should periodically update our 
reporting rules as needed to reflect developments in the derivatives 
markets, while ensuring such updates do not cause disruption to the 
CFTC's weekly COT Report or our market oversight. And in the 
rulemaking process, the Commission must give fair consideration to 
every alternative to ensure that our efforts to enhance market 
transparency do not unnecessarily increase the regulatory burden and 
costs for market participants, particularly end-users who are 
already dealing with inflation, rising interest rates, and increased 
costs for inputs. I often say that we are not regulating in a 
vacuum, and the Commission must take into account real-world 
considerations and the realities of implementing significant changes 
to systems, operations, and processes.
    To that end, I'm pleased that the proposed implementation period 
is one year from publication of the final rule, and encourage 
commenters to note if this is not enough time.
    The COT Report is an invaluable tool in the derivatives market, 
providing transparency and aiding in price discovery and risk 
management for market participants and end-users, and enabling the 
CFTC's market surveillance and oversight mission. I'd like to 
recognize and thank the following CFTC staff members: Owen Kopon and 
Paul Chaffin in the Division of Market Oversight, James Fay in the 
Division of Data, and Daniel Prager in the Office of Chief 
Economist, for their critical work on these important requirements.

[FR Doc. 2023-13459 Filed 6-26-23; 8:45 am]
BILLING CODE 6351-01-P

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