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78 FR 69178

  • Federal Register, Volume 78 Issue 222 (Monday, November 18, 2013)[Federal Register Volume 78, Number 222 (Monday, November 18, 2013)]

    [Rules and Regulations]

    [Pages 69177-69266]

    From the Federal Register Online via the Government Printing Office [www.gpo.gov]

    [FR Doc No: 2013-26789]

    [[Page 69177]]

    Vol. 78

    Monday,

    No. 222

    November 18, 2013

    Part II

    Commodity Futures Trading Commission

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    17 CFR Parts 15, 17, 18, et al.

    Ownership and Control Reports, Forms 102/102S, 40/40S, and 71; Final

    Rule

    Federal Register / Vol. 78 , No. 222 / Monday, November 18, 2013 /

    Rules and Regulations

    [[Page 69178]]

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    COMMODITY FUTURES TRADING COMMISSION

    17 CFR Parts 15, 17, 18, and 20

    RIN 3038-AD31

    Ownership and Control Reports, Forms 102/102S, 40/40S, and 71

    AGENCY: Commodity Futures Trading Commission.

    ACTION: Final rule.

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    SUMMARY: The Commodity Futures Trading Commission (``Commission'' or

    ``CFTC'') is adopting new rules and related forms to enhance its

    identification of futures and swap market participants. These final

    rules will leverage the Commission's current position and transaction

    reporting programs by requiring the electronic submission of trader

    identification and market participant data on amended Forms 102 and 40,

    and on new Form 71. The new and amended forms require the reporting of

    certain trading accounts active on reporting markets that are

    designated contract markets or swap execution facilities. Among other

    information, the forms collect ownership and control information with

    respect to both position-based special accounts and trading accounts

    that meet specified volume-based reporting levels.

    DATES: Effective date: February 18, 2014.

    Compliance date: The compliance date will be delayed by an

    additional 180 days, with the result that the compliance date of these

    final rules will be August 15, 2014.

    FOR FURTHER INFORMATION CONTACT: Sebastian Pujol Schott, Associate

    Director, Division of Market Oversight (``DMO''), at 202-418-5641 or

    sps@cftc.gov; Mark Schlegel, Special Counsel, DMO, at 202-418-5055 or

    mschlegel@cftc.gov; Brian Robinson, Attorney Advisor, DMO, at 202-418-

    5385 or brobinson@cftc.gov; or James Outen, Industry Economist, DMO, at

    202-418-5710 or jouten@cftc.gov; Commodity Futures Trading Commission,

    Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581.

    SUPPLEMENTARY INFORMATION:

    Table of Contents

    I. Background

    A. Overview of Final Rules

    B. Benefits Derived From Final Rule

    II. Statutory Framework for Position Reporting and Trader and

    Account Identification

    III. Current Trader and Account Identification Programs

    A. Futures Large Trader Reporting--Current Forms 102 and 40

    i. Identification of Special Accounts--Current Form 102

    ii. Statement of Reporting Trader--Current Form 40

    B. Large Trader Reporting for Physical Commodity Swaps--102S and

    40S Filings

    IV. Summary of 2010 and 2012 NPRMs

    V. Summary of New and Amended Forms Adopted in These Final Rules

    A. Position-Triggered Form 102A (Special Accounts)

    i. Special Accounts and Reportable Positions

    ii. 102A Form Requirements

    iii. Timing of 102A Reporting

    iv. Timing of 102A Change Updates and Refresh Updates

    B. Volume-Triggered Form 102B (Volume Threshold Accounts)

    i. Volume Threshold Accounts and Reportable Trading Volume Level

    ii. 102B Form Requirements

    iii. Timing of 102B Reporting

    iv. Timing of 102B Change Updates and Refresh Updates

    C. Position-Triggered Form 102S (Consolidated Accounts)

    i. 102S Form Requirements

    ii. Timing of 102S Reporting, Change Updates and Refresh Updates

    D. Form 71 (Omnibus Accounts and Sub-Accounts)

    E. New Form 40 (Reporting Traders)

    VI. Data Submission Standards and Procedures

    A. Overview

    B. Schedule of Effective Date and Compliance Date

    VII. Review of NPRM and Summary of Final Rules

    A. Part 15

    i. Sec. 15.00(q)--Reporting Market

    ii. Sec. 15.00(t)--Control

    iii. Sec. 15.00(u)--Reportable Trading Volume

    iv. Sec. 15.00(v)--Direct Market Access

    v. Sec. 15.00(v)--Omnibus Account

    vi. Sec. 15.00(w)--Omnibus Account Originator

    vii. Sec. 15.00(x)--Volume Threshold Account

    viii. Sec. 15.00(y)--Omnibus Volume Threshold Account

    ix. Sec. 15.00(z)--Omnibus Reportable Sub-Account

    x. Sec. 15.00(aa)--Reportable Sub-Account

    xi. Sec. 15.00(bb)--Trading Account Controller; Sec.

    15.00(cc)--Volume Threshold Account Controller; Sec. 15.00(dd)--

    Reportable Sub-Account Controller

    xii. Sec. 15.01(c)--Persons Required To Report

    xiii. Sec. 15.02--Reporting Forms

    xiv. Sec. 15.04--Reportable Trading Volume Level

    B. Part 17

    i. Sec. 17.01(a)--Identification of Special Accounts (via 102A)

    ii. Sec. 17.01(b)--Identification of Volume Threshold Accounts

    (via 102B)

    iii. Sec. 17.01(c)--Identification of Omnibus Accounts and Sub-

    Accounts (via 71)

    iv. Sec. 17.01(d)--Exclusively Self-Cleared Contracts

    v. Sec. 17.01(e)--Identification of Omnibus Accounts and Sub-

    Accounts

    vi. Sec. 17.02(b)--Section 17.01(a) Reports (via 102A)

    vii. Sec. 17.02(c)--Section 17.01(b) Reports (via 102B)

    viii. Sec. 17.03(a)-(g)--Delegation of Authority to the

    Director of the Office of Data and Technology or the Director of the

    Division of Market Oversight

    C. Part 18

    i. Sec. 18.04--Statement of Reporting Trader

    ii. Sec. 18.05--Maintenance of Books and Records

    D. Part 20

    i. Sec. 20.5--Series S Filings

    VIII. Related Matters

    A. Paperwork Reduction Act

    i. Overview

    ii. Information To Be Provided

    iii. Total Reporting and Recordkeeping Costs; Methodology Used

    To Estimate Costs

    iv. Reporting Burdens--New and Revised Forms

    v. Recordkeeping Burdens--Revised Sec. 18.05

    B. Consideration of Costs and Benefits

    i. Background

    ii. The Statutory Requirement for the Commission To Consider the

    Costs and Benefits of Its Actions

    iii. Commission Request for Comments Regarding Cost and Benefit

    Estimates

    iv. Methodology Used To Estimate Costs

    v. Costs and Benefits of Individual Reporting Forms and

    Reporting and Recordkeeping Requirements

    vi. Comments Regarding Costs and Benefits

    vii. Consideration of Alternatives

    viii. Reporting on Form 102S

    ix. Consolidation Form Proposed by FIA

    x. Section 15(a) Factors

    C. Regulatory Flexibility Act

    I. Background

    A. Overview of Final Rules

    The CFTC's large trader reporting rules (also referred to herein as

    the ``reporting rules'') are contained in parts 15 through 21 of the

    Commission's regulations.\1\ The reporting rules are currently

    structured to collect information with respect to positions in ``open

    contracts,'' \2\ including: (1) Information necessary to identify

    persons who hold or control ``reportable positions'' \3\ in open

    contracts (via current Form 40); and (2) information necessary to

    identify ``special accounts'' \4\ (via current Form 102). These final

    rules modify the current

    [[Page 69179]]

    reporting rules and forms as they pertain to positions in open

    contracts. Specifically, the Commission is expanding the reporting

    rules and forms so that they may also be used to identify ``volume

    threshold accounts,'' defined as individual trading accounts that

    trigger volume-based reporting thresholds on a reporting market \5\

    that is a registered entity under sections 1a(40)(A) or 1a(40)(D) of

    the Commodity Exchange Act (``CEA'' or ``Act'') (i.e., a designated

    contract market (``DCM'') or a swap execution facility (``SEF'')),

    regardless of whether such activity results in reportable positions.\6\

    Volume threshold accounts associated with DCMs and SEFs will be

    required to be reported by clearing members, as discussed in sections

    V(B) and VII below. The Commission notes that volume threshold accounts

    could reflect, without limitation, trading in futures, options on

    futures, swaps, and any other products traded on or subject to the

    rules of a DCM or SEF.

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    \1\ 17 CFR parts 15 through 21. These final rules generally

    relate to parts 15, 17, 18 and 20 of the Commission's regulations.

    \2\ ``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

    Sec. Sec. 1.3(t) and 15.00(n).

    \3\ A ``reportable position'' is defined in Sec. 15.00(p) as

    any open contract position that at the close of the market on any

    business day equals or exceeds the Commission's reporting levels

    specified in Sec. 15.03.

    \4\ A ``special account'' is defined in Sec. 15.00(r) as any

    commodity futures or option account in which there is a reportable

    position.

    \5\ ``Reporting market'' is defined in current Sec. 15.00(q) as

    a designated contract market, registered entity under section 1a(29)

    of the Act, and unless determined otherwise by the Commission, a

    derivatives transaction execution facility. By way of these final

    rules, the Commission is revising Sec. 15.00(q) to define reporting

    market as a designated contract market or a registered entity under

    section 1a(40) of the Act. This revision is technical in nature, and

    serves to conform Sec. 15.00(q) with recent amendments to the Act.

    See infra sections VII and IX.

    \6\ See infra section VII and IX for a discussion of the

    definition of volume threshold account.

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    The amendments to the reporting rules and forms will achieve three

    primary purposes. First, they will expand and subdivide current Form

    102 into a new Form 102 (``New Form 102''), partitioned into three

    sections: Section 102A for the identification of position-based special

    accounts (``102A,'' ``Form 102A,'' or ``New Form 102A''); section 102B

    for the collection of ownership and control information from clearing

    members on volume threshold accounts associated with DCMs or SEFs

    (``102B,'' ``Form 102B,'' or ``New Form 102B''); and section 102S for

    the submission of 102S filings for swap counterparty and customer

    consolidated accounts with reportable positions (``102S,'' ``Form

    102S,'' or ``102S filings''). Second, the amendments will enhance the

    Commission's surveillance and large trader reporting programs for

    futures, options on futures, and swaps through a variety of

    enhancements, including: Requiring the reporting on Form 102A of the

    trading accounts that comprise each special account; requiring the

    reporting of certain omnibus account information on Form 71 (``Form

    71'' or ``New Form 71'') upon special call by the Commission; \7\

    updating Form 40 (``New Form 40''); and integrating the submission of

    102S and 40S filings into the general Form 102 and Form 40 reporting

    program. Finally, these rules will provide for the electronic

    submission of Forms 102, 40, and 71 through either a web portal or

    secure FTP transmission.

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    \7\ As explained below, information regarding the owners and

    controllers of volume threshold accounts reported on Form 102B and

    that are identified as omnibus accounts (``omnibus volume threshold

    accounts'') will be collected by the Commission directly from

    originating firms, via Form 71.

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    B. Benefits Derived From Final Rules

    The benefits of reporting through a dedicated ownership and control

    report (``OCR'') were discussed in proposed rulemakings that preceded

    these final rules--specifically, the Advanced Notice of Proposed

    Rulemaking published in July 2009 \8\ (the ``2009 Advanced NPRM''), the

    Notice of Proposed Rulemaking published in July 2010 \9\ (the ``2010

    OCR NPRM'') and the subsequent Notice of Proposed Rulemaking published

    in July 2012 \10\ (the ``NPRM''). Section IV below discusses the

    history of certain previous OCR rulemakings in more detail. As

    discussed in the NPRM, the final rules will enhance the Commission's

    current trade practice and market surveillance programs for futures and

    options on futures, and facilitate surveillance programs for swaps, by

    expanding the information presently collected on current Forms 102 and

    40, and introducing a new information collection for omnibus volume

    threshold accounts in New Form 71.\11\ The rules will also help

    implement the 102S and 40S filing requirements adopted in connection

    with the Commission's part 20 rules addressing large trader reporting

    for physical commodity swaps (discussed below).\12\ Ultimately, the

    final rules will significantly enhance the Commission's ability to

    identify participants in the derivatives markets and to understand

    relationships between trading accounts, special accounts, reportable

    positions, and market activity. This will enable the Commission to

    better deter and prevent market manipulation; deter and detect abusive

    or disruptive practices (such as marking the close, ``wash trading,''

    or money passing); and better perform risk-based monitoring and

    surveillance between related accounts.

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    \8\ See Commission, Advanced Notice of Proposed Rulemaking:

    Ownership and Control Report, 74 FR 31642 (July 2, 2009).

    \9\ See Commission, Notice of Proposed Rulemaking: Ownership and

    Control Report, 75 FR 41775 (July 19, 2010).

    \10\ See Commission, Notice of Proposed Rulemaking: Ownership

    and Control Reports, Forms 102/102S, 40/40S, and 71, 77 FR 43968

    (July 26, 2012).

    \11\ See id. at 43970. See infra section V for a discussion of

    New Form 71 and omnibus volume threshold accounts.

    \12\ See infra section V for a discussion of the 102S and 40S

    filing requirements. See also 17 CFR 20.5(a) and (b). Final part 20

    was published in the Federal Register on July 22, 2011. See

    Commission, Large Trader Reporting for Physical Commodity Swaps, 76

    FR 43851 (July 22, 2011) (``Large Trader Reporting for Physical

    Commodity Swaps'').

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    As discussed in the NPRM, the final rules respond, in part, to the

    increased dispersion and complexity of trading in U.S. futures markets

    following their transition from localized, open-outcry venues to global

    electronic platforms.\13\ Although electronic trading has conferred

    important informational benefits upon regulators, the resulting

    increases in trading volumes, products offered, and trader dispersion

    have created equally important regulatory challenges. Effective

    surveillance now requires automated analysis and pattern and anomaly

    detection involving millions of daily trade records \14\ and hundreds

    of thousands of position records \15\ present in the surveillance data

    sets received daily by the Commission.\16\ Although the final rules are

    partly driven by these developments in the U.S. futures markets, as

    discussed above, the rules will also facilitate the creation of a

    robust surveillance program for swaps that adequately captures

    information with respect to swap market participants.

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    \13\ See NPRM supra note 10 at 43970.

    \14\ For example, in November 2011, the Commission received an

    average of 7.4 million trade records per day from electronic trading

    on DCMs.

    \15\ For example, in November 2011, the Commission received an

    average of 617,000 position records per day from reporting firms and

    exchanges.

    \16\ Daily trade and position records are provided to the

    Commission pursuant to Sec. Sec. 16.02 and 17.00, respectively. For

    further discussion of the Commission's large trader reporting

    program, see sections III(A) and (B), below.

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    In order to perform effective surveillance, the Commission must

    receive data sets that contain a sufficient number of reference points

    for the Commission to uncover relationships between related accounts,

    and analyze information based on surveillance criteria that are

    frequently evolving in response to market events. The collection of

    additional information regarding trading accounts and traders will

    enable the Commission to perform more efficient and effective

    surveillance. In particular, the OCR data collection will enable the

    Commission to link transaction-level data that it receives (which

    includes trading account numbers, but not traders'

    [[Page 69180]]

    names) to position-based data (which includes large traders' names, but

    not their trading account numbers), as explained below.

    As noted in the NPRM, ``Commission staff utilizes two distinct data

    platforms to conduct market surveillance: The Trade Surveillance System

    (`TSS') and the Integrated Surveillance System (`ISS'). Broadly

    speaking, TSS captures transaction-level details of trade data, while

    ISS facilitates the storage, analysis, and mining of large trader data

    from a position perspective. One important component of TSS is the

    Trade Capture Report (`TCR'). Trade Capture Reports contain trade and

    related order data for every matched trade facilitated by an exchange,

    whether executed via open-outcry, electronically, or non-competitively.

    Among the data included in the TCR are trade date, product, contract

    month, trade time, price, quantity, trade type (e.g., open outcry

    outright future, electronic outright option, give-up, spread, block,

    etc.), executing broker, clearing member, opposite broker and clearing

    member, customer type indicator, trading account numbers, and numerous

    other data points.'' \17\ The OCR data collection will address a gap in

    the current system by providing common reference points between TSS and

    ISS data. New Form 102A, for example, is structured to collect special

    account numbers,\18\ trading account numbers that comprise the special

    account, and the names of owners and controllers of both special

    accounts and such trading accounts, thereby linking TSS data to ISS

    data.\19\

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    \17\ See NPRM supra note 10 at 43970.

    \18\ As discussed in section III(A) below, a special account is

    a commodity futures or option account that has a reportable

    position, based on reporting levels set by the Commission. A special

    account number is a unique account identifier assigned by an FCM,

    clearing member, or foreign broker to a special account. See 17 CFR

    17.00(g)(2)(iii) and 17 CFR 17.01(a). Special account numbers are

    included in ISS data. The special account number does not correspond

    to the trading account number reported on the Trade Capture Report.

    Accordingly, the special account number is not sufficient to link

    TSS data to ISS data.

    \19\ The final rules do not amend the current reporting

    requirements with respect to ownership information, in connection

    with both position reporting pursuant to Sec. 17.00 and Form 102

    reporting pursuant to Sec. 17.01. For a complete discussion of the

    reporting requirements with respect to ownership information, see

    section V(A)(i) below.

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    The data collection will also help the Commission to better

    identify and categorize individual trading accounts and market

    participants that trigger position or newly-created volume-based

    reporting thresholds. For example, New Form 102A will require reporting

    firms to identify the constituent trading accounts of each reported

    special account. In this manner, New Form 102A will ensure a new level

    of interoperability between the Commission's TSS trade data and ISS

    large trader data, and will permit Commission staff to quickly

    reconstruct trading for any special account. In addition to linking the

    two databases, New Form 102A will identify both the owners and

    controllers of such constituent trading accounts, thereby providing the

    Commission with a new lens through which to identify and surveil market

    activity that might otherwise appear unrelated to the Commission's

    surveillance programs.

    New Form 102B will, for the first time, require identification of

    trading accounts based solely on their total trading volume during a

    single trading day. This new information collection will enhance the

    Commission's trade practice surveillance program by revealing

    connections of ownership or control between trading accounts that

    otherwise appear unrelated in the TCR. More generally, it will

    facilitate Commission efforts to detect and deter attempted market

    disruptions that may occur even in the absence of large open positions

    that are reportable on New Form 102A. Finally, the automated collection

    of OCR information via electronic forms, rather than through ad-hoc,

    manual processes, will permit both the Commission and market

    participants to administer the reporting programs more efficiently and

    effectively. Additional information on the forms addressed by these

    final rules is provided in section V below.

    II. Statutory Framework for Position Reporting and Trader and Account

    Identification

    The Commission's current reporting rules, and those adopted herein,

    are primarily implemented by the Commission pursuant to the authority

    of sections 4a, 4c(b), 4g, and 4i of the Act.\20\ Section 4a of the

    Act, as amended by the Dodd-Frank Act, requires the Commission to set

    and enforce speculative position limits with respect to both futures

    and swaps.\21\ Section 4c(b) gives the Commission plenary authority to

    regulate transactions that involve commodity options.\22\ Section 4g(a)

    of the Act requires, among other things, each futures commission

    merchant (``FCM''), introducing broker, floor broker, and floor trader

    to file such reports as the Commission may require on proprietary and

    customer transactions and positions in commodities for future delivery

    on any board of trade in the United States or elsewhere.\23\ In

    addition, section 4g(b) requires registered entities to maintain daily

    trading records as required by the Commission, and section 4g(c)

    requires floor brokers, introducing brokers, and FCMs to maintain their

    own daily trading records for each customer in such manner and form as

    to be identifiable with the daily trading records maintained by

    registered entities. Section 4g(d) permits the Commission to require

    that such daily trading records be made available to the

    Commission.\24\ Lastly, section 4i of the Act requires the filing of

    such reports as the Commission may require when positions taken or

    obtained on designated contract markets equal or exceed Commission-set

    levels.\25\ Collectively, these CEA provisions warrant the maintenance

    of an effective and rigorous system of market and financial

    surveillance.

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    \20\ 7 U.S.C. 1 et seq. In addition, CEA section 8a(5)

    authorizes the Commission to promulgate such regulations as, in its

    judgment, are reasonably necessary to effectuate any provision of

    the Act or to accomplish any of the purposes of the Act. 7 U.S.C.

    12a(5). These final rules are also consistent with the purposes

    enumerated in CEA section 3(b), which states that the Act seeks to

    ensure the financial integrity of regulated transactions and to

    prevent price manipulation and other disruptions to market

    integrity. 7 U.S.C. 5(b).

    \21\ 7 U.S.C. 6a. See NPRM supra note 10 at 43970. See infra

    note 26 for a discussion of the Dodd-Frank Act.

    \22\ 7 U.S.C. 6c(b).

    \23\ 7 U.S.C. 6g(a).

    \24\ See supra section I(B) for a discussion of the trade data

    transmitted daily to the Commission by registered entities.

    \25\ 7 U.S.C. 6i.

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    As further discussed in the NPRM, in addition to the CEA sections

    described above, on July 21, 2010, President Obama signed the Dodd-

    Frank Wall Street Reform and Consumer Protection Act (``Dodd-Frank

    Act'').\26\ Title VII of the Dodd-Frank Act \27\ amended the CEA to

    establish a comprehensive new regulatory framework for swaps and

    security-based swaps. The legislation was enacted to reduce risk,

    increase transparency, and promote market integrity within the

    financial system by, among other things: (1) Providing for the

    registration and comprehensive regulation of swap dealers and major

    swap participants; (2) imposing clearing and trade execution

    requirements on standardized derivative products; (3) creating robust

    recordkeeping and real-

    [[Page 69181]]

    time reporting regimes; and (4) enhancing the Commission's rulemaking

    and enforcement authority with respect to, among other parties, all

    registered entities and intermediaries subject to the Commission's

    oversight.

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    \26\ See Dodd-Frank Wall Street Reform and Consumer Protection

    Act, Public Law 111-203, 124 Stat. 1376 (2010). The text of the

    Dodd-Frank Act may be accessed at http://www.cftc.gov./

    LawRegulation/OTCDERIVATIVES/index.htm. See NPRM supra note 10 at

    43971.

    \27\ Pursuant to section 701 of the Dodd-Frank Act, Title VII

    may be cited as the ``Wall Street Transparency and Accountability

    Act of 2010.''

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    As part of the Commission's rulemaking program implementing the

    Dodd-Frank Act,\28\ the rule changes adopted herein also include swaps-

    related considerations in connection with the Commission's large trader

    reporting rules for swaps, enacted in 2011.\29\ New CEA section 4t

    acknowledges the Commission's authority to establish a large trader

    reporting system for swaps that the Commission has determined perform a

    significant price discovery function; accordingly, the swaps-related

    considerations in the rules adopted herein also rely in part on the

    Commission's authority in CEA section 4t. Similarly, new CEA section

    4s(f) requires swap dealers and major swap participants to make such

    reports as required by the Commission by rule or regulation regarding

    the transactions and positions of the registered swap dealer or major

    swap participant.\30\ In addition, new CEA section 5h(f)(10) requires

    SEFs to report to the Commission, in a form and manner acceptable to

    the Commission, information that the Commission determines to be

    necessary or appropriate for the Commission to perform its duties under

    the CEA.\31\

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    \28\ See generally, http://www.cftc.gov/LawRegulation/DoddFrankAct/index.htm.

    \29\ As noted supra in note 12, 17 CFR 20.5(a) and (b) contain

    the 102S and 40S filing requirements, discussed in greater detail

    below. Final part 20 was published in the Federal Register on July

    22, 2011.

    \30\ 7 U.S.C. 6s(f).

    \31\ 7 U.S.C. 7b-3(f)(10).

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    III. Current Trader and Account Identification Programs

    Section III below summarizes the current trader and account

    identification program under Forms 102 and 40, which is also discussed

    in detail in Section III of the NPRM.\32\

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    \32\ See NPRM supra note 10 at 43971.

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    A. Futures Large Trader Reporting--Current Forms 102 and 40

    Current Sec. 17.00, in part 17 of the Commission's regulations,

    forms the basis of the Commission's large trader reporting program.\33\

    It requires each FCM, clearing member, and foreign broker to submit a

    daily report to the Commission for each ``special account'' it

    carries--i.e., a commodity futures or option account that has a

    reportable position. Such ``Sec. 17.00 position reports'' show the

    futures and option positions of traders with positions at or above

    specific reporting levels set by the Commission. Current reporting

    position trigger levels are located in Sec. 15.03(b).\34\ The daily

    report is sent to the Commission as a single data file from each

    reporting party pursuant to technical specifications identified in

    Sec. 17.00(g).\35\ The Commission's surveillance staff uses this

    report to, among other things: Assess individual traders' activities

    and potential market power; enforce speculative position limits;

    monitor for disruptions to market integrity; and calculate statistics

    that the Commission publishes to enhance market transparency (e.g., in

    the Commitments of Traders reports).

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    \33\ 17 CFR 17.00.

    \34\ 17 CFR 15.03(b).

    \35\ 17 CFR 17.00(g).

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    i. Identification of Special Accounts--Current Form 102

    For each special account identified by an FCM, clearing member, or

    foreign broker and reported to the Commission in a Sec. 17.00 position

    report, current Sec. 17.01 \36\ requires the reporting party to

    separately identify the special account to the Commission on Form

    102.\37\ Pursuant to current Sec. 17.02(b)(2),\38\ Form 102 must be

    submitted by such parties within three days of an account becoming a

    special account. A Form 102 submission may also be required by the

    Commission or its designee via a special call. The text of current

    Sec. 17.01 \39\ states the requirement to submit Form 102, and

    enumerates the specific data fields that are required to be completed

    on Form 102. Currently, Form 102 requires the filing of a separate

    ``paper'' form for each special account, which is generally transmitted

    to the Commission via email, facsimile, or regular mail. As explained

    below, these final rules will replace current Form 102, and require

    respondents to electronically submit New Form 102; the Commission will

    no longer accept submissions by email, facsimile, or regular mail.

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    \36\ 17 CFR 17.01.

    \37\ Current Form 102 is titled ``Identification of Special

    Accounts.'' 17 CFR 15.02.

    \38\ 17 CFR 17.02(b)(2).

    \39\ 17 CFR 17.01.

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    As noted above, Form 102 identifies and provides information with

    respect to special accounts carried by FCMs, clearing members, and

    foreign brokers. The current form, which will be updated and replaced

    by these final rules, provides the Commission with contact information

    for the trader(s) who owns and/or controls trading in each special

    account included in the daily Sec. 17.00 position reports. The Form

    102 questions, as currently detailed in Sec. 17.01(a)-(f),\40\ require

    the reporting firm to provide the following: A special account number;

    the name, address, and other identification information for the

    controller, owner (if also the controller), or originator (if an

    omnibus account) of the account; an indication whether trades and

    positions in the special account are usually associated with commercial

    activity of the account owner in a related cash commodity or activity;

    information regarding an FCM's relationship to the account; and name

    and address information for the party submitting the Form 102.\41\

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

    \40\ 17 CFR 17.01(a)-(f).

    \41\ Form 102 requires the reporting party to provide the legal

    entity identifier (``LEI'') (if any) of the reporting party and of

    various other parties reportable on the form, such as account

    owners, controllers, and originators. As noted in the footnotes to

    the reporting forms in the Appendix, if a reporting party provides

    an LEI on New Form 102 that was issued by the CICI Utility (or by

    any other CFTC-accepted LEI provider), then the reporting party is

    not required to report any of the fields marked as ``Optional

    Fields'' in the relevant question (i.e., name and address), provided

    that such Optional Fields were reported to the CICI Utility (or

    other CFTC-accepted LEI provider) and are associated with the

    relevant LEI. The Commission is addressing such otherwise

    duplicative reporting in order to leverage information regarding

    reporting parties that is available from another source.

    Furthermore, in the event the CICI Utility (or any other CFTC-

    accepted LEI provider) is modified in the future to accept any of

    the fields marked on the forms as ``Supplemental Fields,'' then the

    reporting party will not be required to report any of the

    Supplemental Fields in the relevant question, provided that such

    Supplemental Fields were reported to the CICI Utility (or other

    CFTC-accepted LEI provider) and are associated with the relevant

    LEI. ``Optional Fields'' are currently captured by the CICI Utility,

    while ``Supplemental Fields'' are not currently captured by the CICI

    Utility. Reporting parties that take advantage of such relief from

    duplicative reporting on the forms should indicate in their

    submission that the omitted information has been reported to an LEI

    provider.

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

    Based on the Commission's experience in receiving and reviewing

    Form 102 submissions, and as discussed below in the context of the

    final rules, the Commission has determined to update Form 102 in order

    to accommodate more detailed ownership and control information

    regarding identified special accounts, and to identify underlying

    trading accounts. In addition, the Commission is implementing an

    automated transmission process for Form 102 reporting, through either a

    web portal or secure FTP transmission, so that both the Commission and

    market participants may benefit from the efficiencies of

    automation.\42\

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

    \42\ See infra section VIII(B)(iv) for a discussion of the

    Commission's contact reference database, which is intended to

    streamline the automated submission process and reduce the burden on

    reporting parties.

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

    [[Page 69182]]

    ii. Statement of Reporting Trader--Current Form 40

    Current Sec. 18.04, in part 18 of the Commission's regulations,

    requires that, after a special call of the Commission, each trader

    holding or controlling a reportable position file with the Commission a

    ``Statement of Reporting Trader'' on current Form 40, at such time and

    place as directed in the call.\43\ Current Form 40 is most commonly

    submitted to the Commission via email, facsimile, or regular mail, but

    this submission scheme will be changed by these final rules.

    Specifically, as discussed below, current Form 40 will be replaced by

    New Form 40, which must be electronically submitted in response to a

    special call through either a web-based portal or a secure FTP

    transmission. When submitted in a timely and accurate manner, Form 40

    submissions provide the Commission with basic identifying information

    regarding reportable traders active in its markets.

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

    \43\ 17 CFR 18.04.

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

    Similar to current Sec. 17.01, current Sec. 18.04 specifically

    enumerates the data fields required in a Form 40 filing. Section 18.04

    and Form 40 require a reporting trader receiving a special call to

    provide the following principal data points: Name and address;

    principal business and occupation; type of trader; registration status

    with the Commission; name and address of other persons whose trading

    the trader controls; name, address, and phone number for each

    controller of the reporting trader's trading; name and location of

    other reporting firms through which the reporting trader has accounts;

    name and locations of persons guaranteeing the trading accounts of the

    reporting trader or persons having a 10 percent or greater financial

    interest in the reporting trader or its accounts; other identification

    information regarding accounts which the reporting trader guarantees or

    in which the reporting trader has a financial interest of 10 percent or

    more; and whether the reporting trader has certain relationships with

    owners that are foreign governments.

    Natural persons completing current Form 40 must also provide the

    following information, as applicable: A business telephone number;

    employer and job title; description of trading activity related to

    physical activity in or commercial use of a commodity; name and address

    of any organization of which the reporting trader participates in the

    management, if such organization holds a trading account; the name and

    address of a partner and/or joint tenant on the account; and the name

    and address of the partner and/or joint tenant that places orders.

    Corporations and other non-natural persons completing current Form

    40 must also provide the following information, as applicable: The

    jurisdiction where the reporting party is organized; names and

    locations of parent firms and their respective U.S. entity indication;

    names and locations of all subsidiary firms that trade in commodity

    futures and options on futures and their respective U.S. entity

    indication; name and address of person(s) controlling trading, by

    commodity and transaction type; contact information for a contact

    person regarding trading; and description of trading activity related

    to physical activity in, or the commercial use of, a commodity.

    As with Form 102, and based on the Commission's experience in

    calling for and reviewing Form 40 submissions, the Commission has

    determined to update Form 40 in order to request more detailed

    information regarding the ownership, control and business activities of

    reporting traders. In addition, the Commission is implementing an

    automated transmission process for Form 40 reporting, through either a

    web portal or secure FTP transmission, so that both the Commission and

    market participants may benefit from the efficiencies of automation.

    B. Large Trader Reporting for Physical Commodity Swaps--102S and 40S

    Filings

    As noted above, and discussed in detail in Section III of the

    NPRM,\44\ the Commission adopted rules in 2011 pertaining to swaps

    large trader reporting as new part 20 of the Commission's

    regulations.\45\ In addition to establishing a position-based reporting

    scheme for swaps,\46\ the rules also require the reporting of

    counterparty consolidated accounts with reportable positions (via Form

    102S) and the filing of a Form 40S in response to a special call by the

    Commission. In general, the 102S and 40S filings serve an analogous

    function for swap counterparties with reportable positions to that

    served by the current Form 102 and Form 40 filings for futures and

    options on futures traders with reportable positions. These final rules

    will update Forms 102S and 40S, in part by requiring more detailed

    ownership and control information, and integrate the forms into the

    automated submission process.

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

    \44\ See NPRM supra note 10 at 43972.

    \45\ See supra note 12.

    \46\ See generally: Large Trader Reporting for Physical

    Commodity Swaps: Division of Market Oversight Guidebook for part 20

    Reports, available at: http://www.cftc.gov/ucm/groups/public/@newsroom/documents/file/ltrguidebook053112.pdf (hereafter, ``Swaps

    Large Trader Guidebook'').

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

    Pursuant to Sec. 20.5(a), in part 20 of the Commission's

    regulations, current 102S filings must be filed by a part 20 reporting

    party (a swap dealer or clearing firm) for each reportable counterparty

    consolidated account and ``shall consist of the name, address, and

    contact information of the counterparty and a brief description of the

    nature of such person's paired swaps and swaptions market activity.''

    \47\ In addition, pursuant to Sec. 20.5(b), and in conjunction with

    Sec. 20.6, all clearing organizations, swap dealers, clearing members,

    and counterparties with reportable positions must, after a special call

    of the Commission, complete a Form 40 ``as if any references to futures

    or options contracts were references to paired swaps or swaptions as

    defined in Sec. 20.1'' and submit the same to the Commission as a 40S

    filing.\48\

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

    \47\ 17 CFR 20.5(a).

    \48\ 17 CFR 20.5(b) and 20.6.

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

    These final rules update and replace the reporting framework

    established by part 20. The information requested in new Form 102S also

    reflects considerations developed in the Swaps Large Trader Guidebook

    for compliance with part 20.\49\ For example, new Form 102S requires

    information on both swap counterparty and customer consolidated

    accounts with a reportable position.\50\ New Form 102S also requests

    ownership and control information regarding each non-omnibus

    consolidated account identified on the form. Building on the approach

    of modernizing Form 102 and Form 40 submissions, these final rules also

    provide for the electronic submission of both Form 102S and Form 40S.

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

    \49\ See supra note 46.

    \50\ As explained in the Swaps Large Trader Guidebook,

    acceptable part 20 data records include ``customer,'' ``principal,''

    ``counterparty'' and ``agent'' records. Customer consolidated

    accounts, principal consolidated accounts, and counterparty

    consolidated accounts must be reported on new Form 102S, but agent

    data records do not need to be reported on Form 102S. Customer

    consolidated accounts are treated as customer accounts for purposes

    of Form 102S reporting, while principal consolidated accounts and

    counterparty consolidated accounts are treated as counterparty

    accounts for purposes of Form 102S reporting.

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

    IV. Summary of 2010 and 2012 NPRMs

    On July 19, 2010, the Commission published for public comment a

    Notice of Proposed Rulemaking that proposed to collect certain account

    ownership and control information for all trading accounts active on

    U.S. futures

    [[Page 69183]]

    exchanges and other reporting parties (the ``2010 OCR NPRM'').\51\ The

    2010 OCR NPRM proposed to collect this information through a dedicated

    ownership and control report (``OCR''). In an effort to accommodate

    comments received in response to the 2010 OCR NPRM, the Commission

    withdrew the 2010 OCR NPRM, and instead pursued the collection of

    account ownership and control information through a separate Notice of

    Proposed Rulemaking, published on July 26, 2012 (the ``NPRM'').\52\

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

    \51\ See supra note 9.

    \52\ See supra note 10.

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

    The NPRM proposed new rules and related forms to enhance the

    Commission's identification of futures and swap market participants, by

    collecting ownership and control information for certain trading

    accounts active on reporting markets that are DCMs or SEFs. The rules

    proposed to leverage the Commission's current position and transaction

    reporting programs by requiring the electronic submission of trader

    identification and market participant data on revised Forms 102 and 40,

    and on New Form 71. The NPRM contained a detailed discussion of the

    current futures large trader program under Forms 102 and 40,\53\ and

    the anticipated benefits of the revised and newly introduced forms,\54\

    topics which are also summarized in these final rules.

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

    \53\ See NPRM supra note 10 at 43971.

    \54\ See NPRM supra note 10 at 43970.

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

    The Commission invited all interested parties to submit comments on

    the NPRM, including comments with respect to costs and benefits, within

    a designated comment window. The Commission received a total of eight

    comment letters from thirteen interested parties, which are listed

    below.\55\

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

    \55\ All NPRM comment letters (``CL'') are available through the

    Commission's Web site at: http://comments.cftc.gov/PublicComments/CommentList.aspx?id=1247.

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

    The following parties submitted written comments:

    1. CME Group Inc. (``CME'') \56\

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

    \56\ CME Group submitted a single comment letter on behalf of

    four DCMs, each of which is being counted for purposes of this

    summary as a separate interested party: The Chicago Mercantile

    Exchange, Inc.; the Board of Trade of the City of Chicago, Inc.; the

    New York Mercantile Exchange, Inc.; and the Commodity Exchange, Inc.

    Its comments are noted here as those of ``CME''.

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

    2. Futures Industry Association (``FIA'')

    3. ICE Futures U.S., Inc. (``ICE'')

    4. North American Derivatives Exchange, Inc. (``Nadex'')

    5. The National Rural Electric Cooperative Association, the Large

    Public Power Council, and the Electric Power Supply Association

    (collectively, ``Joint Electric Association'')

    6. John Hazelwood Estate (``Hazelwood'') \57\

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

    \57\ Hazelwood's comment letter responds to the 2010 OCR NPRM,

    rather than the NPRM; however, it remains part of the record for

    this rulemaking.

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

    7. Sheila Bailey-Waddell (``Waddell'')

    8. Ron Troncatty (``Troncatty'') \58\

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

    \58\ Mr. Troncatty's comment letter was unresponsive; however,

    it remains part of the record for this rulemaking.

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

    The written comments received are summarized in section VII below.

    In response to the comments received, the Commission has revised and/or

    eliminated several regulations that were proposed in the NPRM. The

    Commission also received a number of comments pertaining to the costs

    and/or benefits of certain proposed regulations. Pursuant to section

    15(a) of the CEA, the Commission has considered the costs and benefits

    of the regulations being adopted in this release, as discussed in more

    detail in section VIII(B) below. For purposes of these final rules, the

    Commission has updated the cost estimates that appeared in the NPRM

    based on the most recent data and statistics available to the

    Commission.

    V. Summary of New and Amended Forms Adopted in These Final Rules

    As noted above, this rulemaking addresses three forms--New Form

    102, New Form 71, and New Form 40. New Form 102 is designed as a multi-

    function form, since the requirement to submit New Form 102 can arise

    from one of three separate triggers: A special account, volume

    threshold account, or consolidated account becomes reportable. The data

    required to be submitted on a New Form 102 is determined by the

    underlying triggering mechanism. A discussion follows of the three New

    Form 102 triggering mechanisms, the related sections of the form, and

    the information required to be provided in each section. The Commission

    will send New Form 71 via a special call to collect additional

    information about certain volume threshold accounts identified as

    omnibus accounts on New Form 102B. New Form 40 will continue to serve

    its traditional purpose as a tool to be used, at the Commission's

    discretion, to collect additional information about traders and market

    participants identified on New Form 102, as well as on New Form 71. New

    Form 71 and New Form 40 are also described in detail below. In

    addition, section VII below discusses in detail the version of the

    forms proposed in the NPRM, the comments received on the forms, and the

    changes that are being made to the forms in these final rules in

    response to comments.

    As part of its implementation plan related to this rulemaking, and

    described in more detail below, the Commission has developed both a

    web-based portal and a secure FTP transmission through which market

    participates will submit and update their reporting forms. Market

    participants may provide required information through either submission

    method. This automated process is intended to cure much of the

    inefficiency and potential error associated with the current submission

    process via email, facsimile, or regular mail.

    A. Position-Triggered Form 102A (Special Accounts)

    i. Special Accounts and Reportable Positions

    New Form 102A is the section of New Form 102 that will serve a

    function most analogous to current Form 102. New Form 102A requires an

    FCM, clearing member, or foreign broker to identify and report its

    special accounts. As discussed above, a special account is defined in

    current Sec. 15.00(r), and means any commodity futures or option

    account in which there is a reportable position.\59\ For the purposes

    of part 17, reportable position is defined in current Sec.

    15.00(p)(1), and generally includes any open contract position that at

    the close of the market on any given business day equals or exceeds the

    levels in current Sec. 15.03.\60\ These final rules do not amend the

    definition of either special account or reportable position.

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

    \59\ 17 CFR 15.00(r).

    \60\ 17 CFR 15.00(p)(1) and 15.03.

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

    The Commission notes that under current regulations (Sec.

    17.00(b), citing Sec. 150.4),\61\ reporting firms are required to

    separately aggregate the positions of common owners and those of common

    controllers for purposes of reporting special accounts to the

    Commission, except as otherwise instructed by the Commission or its

    designee. Special accounts that are so aggregated and reported to the

    Commission pursuant to Sec. 17.00 must also be identified to the

    Commission on Form 102 pursuant to current Sec. 17.01. The requirement

    to separately aggregate the positions of common owners and those of

    common controllers for purposes of reporting special accounts to the

    Commission on Form 102 is reflected in the instructions to New Form

    102A. As noted in question 2 on New Form 102A, special accounts become

    reportable on the form based on (i) ownership of a reportable

    [[Page 69184]]

    position, (ii) control of a reportable position, (iii) both ownership

    and control of a reportable position, or (iv) because the relevant

    account is an omnibus account with a reportable position.

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

    \61\ 17 CFR 17.00(b) and 150.4.

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

    Following the implementation of these final rules, reporting

    parties should continue to report special accounts pursuant to Sec.

    17.00 on a disaggregated basis if the parties have been so instructed

    by the Commission or its designee. All reporting parties should

    continue to provide position reporting based on control of a special

    account. As an example, if a special account is controlled by one

    reporting party but owned by another, such account should be reported

    only by the reporting party that controls the special account.

    Consistent with this guidance, and notwithstanding the requirement

    on New Form 102A to also report based solely on ownership of a

    reportable position, the Commission will not require reporting based on

    this trigger via New Form 102A following the implementation of these

    final rules. The Commission is retaining the reporting trigger based on

    ownership of a reportable position in New Form 102A as a placeholder,

    in the event that the Commission requires 102A reporting based solely

    on this trigger on a future date.

    ii. 102A Form Requirements

    As compared to current Form 102, the data fields in 102A will

    include new ownership and control information fields (or, in the case

    of special accounts that are omnibus accounts, omnibus account

    originator information fields) for position-based special accounts.

    Form 102A will also require reporting firms that are clearing members

    to identify the trading accounts that comprise a position-based special

    account, and to provide TCR trading account numbers for those trading

    accounts.\62\ To clarify, trading accounts that comprise a position-

    based special account include all of those trading accounts that: (1)

    Are used to execute trades cleared by the clearing member submitting

    the 102A; (2) are owned or controlled by the entity identified as

    owning or controlling the special account reported on a 102A; and (3)

    execute transactions in the same commodity or commodities in which the

    special account has a reportable position. Notwithstanding the fact

    that the Commission will not require reporting of special accounts

    based solely on ownership (as discussed above), when completing New

    Form 102A, reporting parties must identify both the owners and

    controllers of trading accounts that comprise a position-based special

    account identified on the form. The Commission's objective, in

    requiring 102A reporting parties to identify the trading accounts that

    comprise a special account, is to facilitate trade-level monitoring of

    the means by which special account owners or controllers establish and

    unwind their reportable positions.

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

    \62\ See supra section I(B) for a discussion of the TCR.

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

    Based on comments received in response to the 2010 OCR NPRM, it is

    the Commission's understanding that non-clearing FCMs, foreign brokers,

    and omnibus account originators (collectively, ``non-clearing

    entities'') will generally not have the ability to match/identify a

    trading account number for their customers or sub-accounts (hereafter,

    ``sub-accounts'') on the TCR.\63\ As a result, the Commission notes

    that the requirement in 102A to identify a trading account number for

    trading accounts that comprise a special account will only be a

    relevant/applicable data field for clearing members identifying trading

    accounts that comprise a special account.

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

    \63\ See supra section I(B) for a discussion of the TCR.

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

    Notwithstanding these limitations regarding the reporting of

    trading accounts that comprise a special account, non-clearing entities

    must continue to report special accounts on Form 102 with respect to

    their customers/sub-accounts, in the event that such accounts, if

    carried directly with a clearing member, would be required to be

    reported as a position-based special account. Current Form 102 requires

    non-clearing entities to report such special accounts, and New Form

    102A does not change that requirement.

    New Form 102A will also require reporting firms to indicate whether

    a special account reported based on ownership or control of a

    reportable position is a house or customer account of the reporting

    firm. This indicator will allow the Commission to perform certain

    financial risk surveillance functions in a more automated and efficient

    manner, by quickly identifying house positions that potentially create

    risk for the reporting firm. Finally, 102A requires any reporting firm

    that indicates on 102A that it is a foreign broker to identify its U.S.

    FCM.

    New Form 102A also includes a question regarding the controllers of

    trading accounts.\64\ Respondents should report all individuals meeting

    the definition of ``trading account controller'' set forth in Sec.

    15.00(bb) when responding to this question.\65\ The Commission notes

    however that regardless of whether the trading is carried out in whole

    or in part through an automated trading system or direct human

    initiation, the underlying analysis remains the same. When completing

    Form 102A, reporting parties should identify each person that satisfies

    the definition of ``trading account controller,'' as defined in Sec.

    15.00(bb). Once respondents have identified all individuals meeting the

    definition of trading account controller in a Form 102A submission,

    they will not be required to submit change updates to the 102A if one

    previously identified controller takes the place of another previously

    identified controller. These instructions regarding the reporting of

    trading account controllers on New Form 102A are also applicable to the

    reporting of volume threshold account controllers on New Form 102B.\66\

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

    \64\ See question 10(iii) on Form 102A.

    \65\ Pursuant to Sec. 15.00(bb), trading account controllers

    are natural persons ``who by power of attorney or otherwise actually

    direc[t] the trading of a trading account''. In the event that a

    respondent's trading in a reportable trading account is conducted in

    whole or in part through an automated trading system (``ATS''), when

    submitting New Form 102A the respondent should consider whether any

    operator, supervisor, or other individual involved in the

    administration of such ATS meets the definition of trading account

    controller with respect to the trading account. The Commission

    recognizes that, for some respondents, the individuals involved in

    the administration of an ATS may not qualify as trading account

    controllers. The Commission further recognizes that the

    administration of ATSs may vary from one respondent to another, and

    that such variance may impact which natural persons a respondent

    identifies as trading account controllers for accounts whose trading

    is conducted in whole or in part through an ATS.

    \66\ See question 6 on Form 102B.

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

    iii. Timing of 102A Reporting \67\

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

    \67\ See infra the discussion of Sec. 17.02(b) in section VII,

    which provides additional information regarding changes to the

    timing of New Form 102A reporting made in response to comments on

    the NPRM.

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

    This rulemaking imposes a bifurcated deadline for submitting

    certain information on New Form 102A. Reporting parties are required to

    submit a completed Form 102A to the Commission no later than 9 a.m.\68\

    on the business day following the date on which the special account

    becomes

    [[Page 69185]]

    reportable. This form must include all required information, including

    the names of the owner(s) and controller(s) of each trading account

    that is not an omnibus account, and that comprises a special account

    reported on the form. However, the reporting party may provide certain

    supplemental information regarding such owner(s) and controller(s) on a

    later date. No later than 9 a.m. on the third business day following

    the date on which the special account becomes reportable, the reporting

    party may update its Form 102 submission to provide information with

    respect to such owner(s) and controller(s) other than their names

    (e.g., their address and other contact information).\69\ The final

    rules also include an ``on-call'' provision, which requires a 102A to

    be submitted on such other date as directed by special call of the

    Commission.

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

    \68\ Unless otherwise specified by the Commission or its

    designee, the stated time in the final rules is eastern time for

    information concerning markets located in that time zone, and

    central time for information concerning all other markets, in

    accordance with Sec. 17.02(a).

    \69\ Specifically, the information marked as `Follow-On

    Information' in questions 10(ii) and (iii) on New Form 102A may be

    provided within three business days. All other required fields on

    New Form 102A must be completed by 9:00 a.m. the following business

    day. See New Form 102A in the Appendix to these final rules for more

    information.

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

    iv. Timing of 102A Change Updates and Refresh Updates

    The final rules also require reporting parties to submit an updated

    Form 102A in the event that a change occurs that causes the information

    submitted on the form to no longer be accurate (``change updates'').

    Change updates must be submitted according to the bifurcated schedule

    described in the preceding paragraph. The final rules also include an

    ``on-call'' provision, which requires 102A change updates to be

    submitted on such other date as directed by special call of the

    Commission.

    In addition to change updates, Sec. 17.02(b) requires that,

    starting on a date specified by the Commission or its designee and at

    the end of each annual increment thereafter (or such other date

    specified by the Commission or its designee that is equal to or greater

    than six months), each FCM, clearing member, or foreign broker resubmit

    every 102A that it has submitted to the Commission or its designee for

    each of its special accounts (``refresh updates''). The goal of the

    refresh update provision for 102A is to establish discrete points in

    time where all 102A data is considered accurate and reliable, thereby

    avoiding the data drift that is often associated with long-term data

    collection efforts.

    Both the change update and refresh update provisions of Sec.

    17.02(b) include a sunset provision. An FCM, clearing member, or

    foreign broker may stop providing change updates or refresh updates for

    a Form 102A that it has submitted to the Commission for any special

    account upon notifying the Commission or its designee that the account

    in question is no longer reportable as a special account and has not

    been reportable as a special account for the past six months. If a

    reporting party so notifies the Commission, and the special account

    becomes reportable again at a subsequent date, then the reporting party

    would be required to file a new Form 102A.

    B. Volume-Triggered Form 102B (Volume Threshold Accounts)

    i. Volume Threshold Accounts and Reportable Trading Volume Level

    New Form 102B of New Form 102 introduces a new volume-based

    reporting structure not found in current Form 102. While current Form

    102 reporting requirements arise when an account (or collection of

    related accounts) has a reportable position, 102B reporting is

    triggered when an individual trading account meets a specified trading

    volume level in an individual product and, as a result, becomes a

    ``volume threshold account.'' Volume threshold account, as defined

    below in final Sec. 15.00(x), means any trading account that carries

    reportable trading volume on or subject to the rules of a reporting

    market that is a DCM or SEF.\70\ The reportable trading volume level

    (``RTVL'') is defined in final Sec. 15.04 as trading volume of 50 or

    more contracts, during a single trading day, on a single reporting

    market that is a DCM or SEF, in all instruments that such reporting

    market designates with the same product identifier (including purchases

    and sales, and inclusive of all expiration months).\71\ As noted above,

    volume threshold accounts could reflect, without limitation, trading in

    futures, options on futures, swaps, and any other product traded on or

    subject to the rules of a DCM or SEF.

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

    \70\ See supra section I(A) for an explanation of the reporting

    markets relevant to 102B filings, and infra sections VII and IX for

    amendments to the definition of ``reporting market.'' See also infra

    the discussion of Sec. 15.00(x) in section VII, which provides

    additional information regarding changes to the definition of volume

    threshold account made in response to comments on the NPRM.

    \71\ The RTVL is based on the Commission's analysis of DCM trade

    data received through the TCR from a sample of DCMs during a recent

    six month period. It is calibrated to yield information with respect

    to those trading accounts that are responsible for a substantial

    percentage of trading volume, while minimizing the adopted

    regulations' impact on low-volume accounts whose trading activity

    does not warrant inclusion in the adopted reporting and

    identification regime. Based on the sample data set used in the

    Commission's analysis, the RTVL would result in the reporting and

    identification of approximately one-third of the trading accounts

    reported in the sample data set. However, due to the concentration

    of trading activity among a minority of accounts and some accounts'

    tendency to be active in more than one product, the RTVL, as

    adopted, would nonetheless result in the identification of at least

    85% of the trading volume in approximately 90% of the products in

    the sample data set, as measured at the conclusion of the six-month

    period sampled by the Commission. See the discussion of Sec. 15.04

    in section VII below for additional information regarding the

    application of the RTVL to products traded on or subject to the

    rules of a SEF.

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

    ii. 102B Form Requirements

    As a threshold question, 102B requires that clearing members

    provide, in response to question 2, the trading account number of any

    trading account that meets the criteria for a volume threshold account;

    any related short code(s) for such account; and the name of the

    reporting market (i.e. the DCM or SEF) at which the volume threshold

    account had reportable trading volume. These data points are necessary

    to report and identify volume threshold accounts in TCRs received from

    DCMs, or similar transaction-based reports that may be received from

    SEFs, and to link the volume threshold account to other Commission's

    surveillance databases.\72\ The data points will also assist the

    Commission in identifying traders whose end-of-day open interest does

    not reach reportable levels on Form 102A, but whose intra-day trading

    reaches the volume threshold, thus enabling the Commission to monitor

    trading that could potentially impact markets during concentrated

    periods of intra-day trading.

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

    \72\ See supra section I(B) for a discussion of the TCR.

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

    Second, 102B requires that clearing members provide, in response to

    question 3, the volume threshold account's associated special account

    number, if applicable. This information will permit the Commission to

    more effectively and efficiently connect position data received via the

    large trader reporting system and trade data received via the TCR.

    Third, 102B requires that clearing members indicate, in response to

    question 4, whether the volume threshold account is an omnibus account,

    or used to execute trades for an omnibus account. If the account is an

    omnibus account or used to execute trades for an omnibus account,

    question 4 requires clearing members to indicate whether the account is

    a house or customer omnibus account, and to provide information

    sufficient to uniquely identify and contact the originator of the

    account (e.g., the originator's name, address and phone

    [[Page 69186]]

    number, among other information).\73\ More detailed information

    regarding ownership and control with respect to a volume threshold

    account that is a customer omnibus account will be collected separately

    at the Commission's request, from the omnibus account's originating

    firm (via a New Form 71), also adopted herein and described below.

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

    \73\ See supra note 41. Form 102B also requires the reporting

    party to provide the LEI (if any) of any omnibus account originator

    and volume threshold account owner(s) reported on the form. As noted

    in the footnotes to the reporting forms in the Appendix, if a

    reporting party provides an LEI on Form 102B that was issued by the

    CICI Utility (or by any other CFTC-accepted LEI provider), then the

    reporting party is not required to report any of the fields marked

    as ``Optional Fields'' in the relevant question (i.e., name and

    address), provided that such optional fields were reported to the

    CICI Utility (or other CFTC-accepted LEI provider) and are

    associated with the relevant LEI. Footnotes to the reporting forms

    in the Appendix contain instructions regarding other fields that are

    not required to be reported in certain circumstances.

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

    Fourth, 102B requires clearing members to provide information, in

    response to question 5, sufficient to uniquely identify and contact

    each owner of a volume threshold account that is not an omnibus account

    (e.g., the owner's name, address and phone number, among other

    information). For each account owner that is not a natural person,

    question 5 also requests, among other identifying information, a

    contact name, contact job title, and the relationship of the contact to

    the account owner. Finally, the Commission requests that clearing

    members provide information, in response to question 6, sufficient to

    uniquely identify and contact each volume threshold account controller

    of an account that is not an omnibus account. Pursuant to final Sec.

    15.00(cc), a volume threshold account controller must be a natural

    person. The requested information includes the name of the account

    controller(s), address, phone number and job title, together with the

    name of the controller's employer and other identifying

    information.\74\

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    \74\ As with Form 102A, respondents should report all

    individuals meeting the definition of volume threshold account

    controller on Form 102B. In the event that a respondent's trading in

    a reportable volume threshold account is conducted in whole or in

    part through an ATS, when submitting New Form 102B the respondent

    should consider whether any operator, supervisor, or other

    individual involved in the administration of such ATS meets the

    definition of volume threshold account controller with respect to

    the volume threshold account. The Commission recognizes that, for

    some respondents, the individuals involved in the administration of

    an ATS may not qualify as volume threshold account controllers. See

    supra section V(A)(ii).

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    iii. Timing of 102B Reporting \75\

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

    \75\ See infra the discussion of Sec. 17.02(c) in section VII,

    which provides additional information regarding changes to the

    timing of New Form 102B reporting made in response to comments on

    the NPRM.

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

    This rulemaking imposes a bifurcated deadline for submitting

    certain information on New Form 102B. Reporting parties are required to

    submit a completed Form 102B to the Commission no later than 9 a.m. on

    the business day following the date on which the volume threshold

    account becomes reportable. This form must include all required

    information, including the names of the owner(s) and controller(s) of

    each volume threshold account reported on the form that is not an

    omnibus account. However, the reporting party may provide certain

    supplemental information regarding such owner(s) and controller(s) on a

    later date. No later than 9 a.m. on the third business day following

    the date on which the volume threshold account becomes reportable, the

    reporting party may update its Form 102 submission to provide

    information with respect to such owner(s) and controller(s) other than

    their names (e.g., their address and other contact information).\76\

    The final rules also include an ``on-call'' provision, which requires a

    102B to be submitted on such other date as directed by special call of

    the Commission.

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

    \76\ Specifically, the information marked as `Follow-On

    Information' in questions 5 and 6 on New Form 102B may be provided

    within three business days. All other required fields on New Form

    102B must be completed by 9:00 a.m. the following business day

    (including question 4, with respect to omnibus account information).

    See New Form 102B in the Appendix to these final rules for more

    information.

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

    iv. Timing of 102B Change Updates and Refresh Updates

    The final rules also require reporting parties to submit an updated

    Form 102B in the event that a change occurs that causes the information

    submitted on the form to no longer be accurate (``change updates'').

    Change updates must be submitted according to the bifurcated schedule

    described in the preceding paragraph. The final rules also include an

    ``on-call'' provision, which requires 102B change updates to be

    submitted on such other date as directed by special call of the

    Commission.

    In addition to change updates, Sec. 17.02(c) requires that,

    starting on a date specified by the Commission or its designee and at

    the end of each annual increment thereafter (or such other date

    specified by the Commission or its designee that is equal to or greater

    than six months), each clearing member resubmit every 102B that it has

    submitted to the Commission for each of its volume threshold accounts

    (``refresh updates''). The goal of the refresh update provision for

    102B is to establish discrete points in time where all 102B data is

    considered accurate and reliable, thereby avoiding the data drift that

    is often associated with long-term data collection efforts.

    Both the change update and refresh update provisions of Sec.

    17.02(c) include a sunset provision. A clearing member may stop

    providing change updates or refresh updates for a Form 102B that it has

    submitted to the Commission for any volume threshold account upon

    notifying the Commission or its designee that the account in question

    executed no trades in any product in the past six months on the

    reporting market at which the volume threshold account reached the

    reportable trading volume level. If a reporting party so notifies the

    Commission, and the volume threshold account becomes reportable again

    at a subsequent date, then the reporting party would be required to

    file a new Form 102B.

    C. Position-Triggered Form 102S (Consolidated Accounts)

    i. 102S Form Requirements

    Section 102S of New Form 102 is designed to facilitate the

    electronic submission of 102S filings. Such filings are currently being

    submitted to the Commission (pursuant to Sec. 17 CFR 20.5(a)) through

    a non-automated process. As noted above, pursuant to Sec. 20.5(a),

    102S filings must be filed by a part 20 reporting party (a swap dealer

    or clearing firm) for each reportable counterparty consolidated account

    when such account first becomes reportable, and ``shall consist of the

    name, address, and contact information of the counterparty and a brief

    description of the nature of such person's paired swaps and swaptions

    market activity.'' \77\ By incorporating 102S in New Form 102, these

    rules will request more detailed ownership and control information

    regarding identified consolidated accounts, and require the submission

    of consolidated account reporting via an automated submission.\78\ As

    explained above, 102S

    [[Page 69187]]

    will also incorporate considerations developed in the Swaps Large

    Trader Guidebook for compliance with part 20. These rules will replace

    the 102S submission procedure and guidance in the Swaps Large Trader

    Guidebook.\79\

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

    \77\ 17 CFR 20.5(a).

    \78\ See supra note 41. Form 102S also requires the reporting

    party to provide the LEI (if any) of any omnibus account originator

    and consolidated account owner(s) and controller(s) reported on the

    form. As noted in the footnotes to the reporting forms in the

    Appendix, if a reporting party provides an LEI on Form 102S that was

    issued by the CICI Utility (or by any other CFTC-accepted LEI

    provider), then the reporting party is not required to report any of

    the fields marked as ``Optional Fields'' in the relevant question

    (i.e., name and address), provided that such optional fields were

    reported to the CICI Utility (or other CFTC-accepted LEI provider)

    and are associated with the relevant LEI. Footnotes to the reporting

    forms in the Appendix contain instructions regarding other fields

    that are not required to be reported in certain circumstances.

    \79\ See Swaps Large Trader Guidebook at p. 26 and p. 91,

    Appendix D. See also supra note 12.

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

    ii. Timing of 102S Reporting, Change Updates and Refresh Updates

    The timing for submitting new 102S filings will continue to be

    subject to current Sec. 20.5(a)(3).\80\

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

    \80\ 17 CFR 20.5(a)(3) provides: ``Reporting entities shall

    submit a 102S filing within three days following the first day a

    consolidated account first becomes reportable or at such time as

    instructed by the Commission upon special call.''

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

    Section 20.5(a)(4) of the final rules requires that if any change

    causes the information filed on a 102S for a consolidated account to no

    longer be accurate, an updated 102S must be filed with the Commission

    no later than 9:00 a.m. on the business day after such change occurs,

    or on such other date as directed by special call of the Commission

    (``change updates'').

    In addition to change updates, final Sec. 20.5(a)(5) requires

    that, starting on a date specified by the Commission or its designee

    and at the end of each annual increment thereafter (or such other date

    specified by the Commission or its designee that is equal to or greater

    than six months), each clearing member or swap dealer must resubmit

    every 102S that it has submitted to the Commission for each of its

    consolidated accounts (``refresh updates''). As with the 102A and 102B,

    discussed above, the goal of the refresh update provision is to

    establish discrete points in time where all 102S data is considered

    accurate and reliable. The Commission is proposing the refresh update

    provision in an effort to maintain accurate 102S data, and to avoid the

    data drift which is often associated with long-term data collection

    efforts.

    Both the change update and refresh update provisions of Sec.

    20.5(a) include a sunset provision. A clearing member or swap dealer

    may stop providing change updates or refresh updates for a Form 102S

    that it has submitted to the Commission for any consolidated account

    upon notifying the Commission or its designee that the account in

    question is no longer reportable as a consolidated account and has not

    been reportable as a consolidated account for the past six months. If a

    reporting party so notifies the Commission, and the consolidated

    account becomes reportable again at a subsequent date, then the

    reporting party would be required to file a new Form 102S.

    D. Form 71 (Omnibus Accounts and Sub-Accounts)

    New Form 71 (``Identification of Omnibus Accounts and Sub-

    Accounts'') will be sent, in the Commission's discretion, in the event

    that a volume threshold account is identified as a customer omnibus

    account on Form 102B. The Commission will send New Form 71 via a

    special call to the originating firm of such an account. The Commission

    will provide the relevant account number and reporting market reported

    on the 102B when sending the Form 71. Recipients of a Form 71 will be

    required to provide information regarding any account to which the

    customer omnibus account allocated trades that resulted in reportable

    trading volume for the account receiving such allocations (a

    ``reportable sub-account'') on a specified trading date.\81\ Form 71 is

    designed to permit originating firms to report the required information

    directly to the Commission without requiring such firms to disclose

    information regarding customers to potential competitors. If a

    reportable sub-account is itself an omnibus account (an ``omnibus

    reportable sub-account''), then the originating firm will be required

    to (a) indicate whether the omnibus reportable sub-account is a house

    or customer omnibus account and (b) identify the originator of the

    omnibus reportable sub-account. Another Form 71 will be sent, at the

    discretion of Commission staff, to the originator of a customer omnibus

    reportable sub-account identified on Form 71. At its discretion, the

    Commission will continue to reach through layered customer omnibus

    reportable sub-accounts via successive Form 71s until reaching all

    reportable sub-accounts, if any, that are not omnibus sub-accounts.

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

    \81\ The relevant trading date will be specified by Commission

    staff on Form 71 at the time the special call is made.

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

    If a reportable sub-account identified on Form 71 is not an omnibus

    sub-account, then the originating firm will be required to identify the

    owner(s) and controller(s) of the non-omnibus reportable sub-account. A

    New Form 40 will be sent, via a special call at the discretion of the

    Commission, to such owner(s) and controller(s). Form 71 will therefore

    enable the Commission to collect the same level of information

    regarding owners and controllers (via a subsequent New Form 40) that

    the Commission will collect with respect to a non-omnibus volume

    threshold account identified on 102B. The key data points to be

    collected in Form 71 are summarized below.

    As a threshold question, section A of Form 71 requires the

    originator of an omnibus volume threshold account or a reportable sub-

    account to confirm certain identifying information regarding the

    originator. Such information would have been reported to the Commission

    by an omnibus account carrying firm on Form 102B or on a preceding Form

    71 (e.g., the originator's name, address and phone number), and used to

    auto-populate the present Form 71. The originator is prompted to update

    any incorrect information provided in Section A.

    Second, section B of Form 71 requires the originator to provide

    certain information regarding the allocation of trades from a specified

    account number, and on a specified date and reporting market, to

    another account (called a ``recipient account''). Specifically, the

    originator is required to indicate whether: (1) It allocated trades

    from the specified account number on the specified date and reporting

    market that resulted in reportable trading volume for a recipient

    account; (2) it allocated trades from the specified account number on

    the specified date and reporting market, but the allocations did not

    sum to reportable trading volume for a recipient account on such date;

    or (3) it did not allocate any trades from the specified account number

    on the specified date and reporting market.

    If condition (1) is met, the originator is required to indicate in

    section B whether the reportable sub-account is an omnibus reportable

    sub-account. If so, the originator is required to indicate whether the

    omnibus reportable sub-account is a house or customer omnibus account,

    and to provide information sufficient to identify and contact the

    originator of the sub-account (e.g., the originator's name, address and

    phone number, and a contact name, contact job title, and the

    relationship of the contact to the originator). As noted above, another

    Form 71 will be sent at the discretion of Commission staff to the

    originator of a customer omnibus reportable sub-account identified in

    response to section B of Form 71. Therefore, Form 71 may be sent to a

    chain of such originators if each originator allocated trades to

    another customer omnibus reportable sub-account.

    If the reportable sub-account is not an omnibus sub-account, the

    originator is

    [[Page 69188]]

    required to provide information sufficient to identify and contact the

    owner(s) and controller(s) of such non-omnibus reportable sub-account

    (e.g., the name, address and phone number of the owner(s) and

    controller(s)). This information will enable the Commission, in its

    discretion, to send a New Form 40 to such owner(s) and controller(s).

    E. New Form 40 (Reporting Traders)

    In these final rules, the Commission adopts a revised Form 40 that

    will be sent, on special call of the Commission, to individuals and

    other entities identified on any of 102A, 102B, and Form 71. As adopted

    herein, New Form 40, still referred to as the ``Statement of Reporting

    Trader,'' will continue to serve the function traditionally met by

    current Form 40. New Form 40 will provide the Commission with detailed

    information regarding both the business activities and the ownership

    and control structure of a reporting trader identified in the

    Commission's Form 102 program (as updated by these final rules). New

    Form 40 will also be the vehicle through which market participants

    subject to 17 CFR 20.5(b) submit their 40S filings, and will be used to

    collect additional information regarding the owners and controllers of

    non-omnibus volume threshold accounts identified by Form 71. Those

    entities required to complete a New Form 40 will be under a continuing

    obligation, per direction in the special call, to update and maintain

    the accuracy of the information submitted on New Form 40 by

    periodically updating the information on the New Form 40 web portal or

    by periodically resubmitting New Form 40 by secure FTP transmission.

    Among other data, New Form 40 will request the following regarding

    the reporting trader: Contact information for the individual(s)

    responsible for the reporting trader's trading activities, risk

    management operations, and the information on the New Form 40; if

    applicable, omnibus account information, foreign government affiliation

    information, and an indication regarding the reporting trader's status

    as a domestic or non-domestic entity; information regarding the

    reporting party's ownership structure in connection with its parents

    and subsidiaries; information regarding the reporting trader's control

    relationships with other entities; information regarding other

    relationships with persons that influence or exercise authority over

    the trading of the reporting trader; an indication regarding swap

    dealer status and major swap participant status; an indication of all

    commodity groups and individual commodities that the reporting trader

    presently trades, or expects to trade in the near future, in

    derivatives markets; and other indications regarding the nature of the

    reporting trader's derivatives trading activity. The form includes

    definitions of certain terms, including parent, subsidiary, and

    control, to be used for the purpose of completing New Form 40.

    New Form 40 will also require reporting traders who engage in

    commodity index trading (``CIT''), as defined in the new form, to

    identify themselves to the Commission.\82\ New Form 40 defines CIT as:

    (a) An investment strategy that consists of investing in an instrument

    (e.g., a commodity index fund, exchange-traded fund for commodities, or

    exchange-traded note for commodities) that enters into one or more

    derivative contracts to track the performance of a published index that

    is based on the price of one or more commodities, or commodities in

    combination with other securities; or (b) an investment strategy that

    consists of entering into one or more derivative contracts to track the

    performance of a published index that is based on the price of one or

    more commodities, or commodities in combination with other securities.

    Reporting traders engaged in CIT as defined in (b) are required to

    indicate whether they are, in the aggregate, pursuing long exposure or

    short exposure with respect to the relevant commodities or commodity

    groups listed on the Form.\83\

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

    \82\ See question 14 in New Form 40.

    \83\ See question 14ii(a) in New Form 40.

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

    VI. Data Submission Standards and Procedures

    A. Overview

    During the comment period of the NPRM, the Commission's data and

    technology staff worked with potential reporting parties and other

    market participants to address the information technology standards

    associated with the rules proposed by the NPRM.\84\ Following these

    discussions, the Commission established two submission methods for the

    reporting forms required by these final rules: (a) A web-based portal

    and (b) an XML-based, secure FTP data feed. While the NPRM contemplated

    that certain forms (Forms 40/S and 71) could be submitted only via the

    web portal, these final rules provide that reporting parties may submit

    each of the new or revised forms through either the web-based portal or

    the FTP data feed, in order to provide additional flexibility to

    reporting parties. The Commission is offering two filing methods for

    each form because it anticipates a wide range of technological

    capabilities among reporting parties (varying based on the relative

    size and experience of a given reporting party). Reporting parties will

    be able to select the submission method that works best with their

    existing data and technology infrastructure and the number of filings

    they expect to make. Those reporting parties electing to submit

    information through the FTP data feed should contact the Commission,

    which will provide the necessary technical information to establish the

    data feed. Following the publication of these final rules, the

    Commission intends to publish a data compliance guidebook with detailed

    instructions for the two submission methods.\85\

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

    \84\ Summaries of these discussions are available through the

    Commission's Web site at: http://comments.cftc.gov/PublicComments/CommentList.aspx?id=1247.

    \85\ For a recent example of a similar undertaking, see the

    Swaps Large Trader Guidebook, linked supra at note 46.

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

    When a reporting party identifies a new account on New Form 102A,

    102B or 102S, the Commission will evaluate the account to determine

    whether to request a New Form 40/40S or New Form 71 via a special call.

    If the Commission determines to send a New Form 40/40S or New Form 71

    to the applicable reporting trader or account originator, the

    Commission will contact the reporting party (generally via email, using

    the email address provided on the New Form 102). The Commission will

    provide instructions for submitting the applicable form through either

    the web-based portal or secure FTP data feed. Depending on the

    information provided in New Form 71, the Commission may require a New

    Form 40 or New Form 71 from additional persons or entities identified

    in the New Form 71, using the same process described above.

    B. Schedule of Effective Date and Compliance Date

    As noted above, these final rules include separate ``effective''

    and ``compliance'' dates:

    The effective date of these final rules will be February

    18, 2014.

    The compliance date, however, will be delayed by an

    additional 180 days, with the result that the compliance date of these

    final rules will be August 15, 2014.

    Between the publication of these final rules and the effective

    date, reporting parties should work with the Commission's data and

    technology staff

    [[Page 69189]]

    to test and implement any information technology standards or systems

    associated with the final rules. During this testing period, reporting

    parties should provide all test data or form filings requested by the

    Commission's data and technology staff, in the form and manner

    requested by staff.\86\ In addition, the Commission will conduct beta

    testing of each submission method prior to the compliance date. All

    reporting parties subject to the final rules must be in full compliance

    by the compliance date, including having submitted complete and

    accurate filings using one of the two submission methods described

    above.

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

    \86\ The Commission will protect proprietary information

    consistent with the Freedom of Information Act and 17 CFR part 145,

    ``Commission Records and Information.'' In addition, section 8(a)(1)

    of the Act strictly prohibits the Commission, unless specifically

    authorized by the Act, 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.''

    The Commission is also required to protect certain information

    contained in a government system of records according to the Privacy

    Act of 1974, 5 U.S.C. 552a.

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

    VII. Review of NPRM and Summary of Final Rules

    A. Part 15

    i. Sec. 15.00(q)--Reporting Market

    NPRM Proposal

    Proposed Sec. 15.00(q) revised the definition of ``reporting

    market'' in current Sec. 15.00(q) to replace the provision's cross-

    reference to section 1a(29) of the Act with a cross-reference to Sec.

    1a(40). The proposed rule also revised current Sec. 15.00(q) to remove

    the provision's reference to derivatives transaction execution

    facilities (``DTEFs'').\87\

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

    \87\ 17 CFR 15.00(q) and 15.02. The Dodd-Frank Act modified

    section 1a of the CEA. As a result, the definition of ``registered

    entity'' previously found in section 1a(29) of the CEA is now in

    section 1a(40). In the NPRM, the Commission proposed to revise

    current Sec. 15.00(q) so that it cites to section 1a(40) for the

    definition of registered entity. The Commission also proposed to

    revise current Sec. 15.00(q) by removing the provision's reference

    to DTEFs, a category of regulated markets that was eliminated by

    section 734 of the Dodd-Frank Act.

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

    Discussion of Final Rule

    No comments were received pertaining to the proposed rule, and the

    Commission is adopting proposed Sec. 15.00(q) without modification.

    ii. Sec. 15.00(t)--Control

    NPRM Proposal

    Proposed Sec. 15.00(t) added ``control'' to the list of defined

    terms in Sec. 15.00.\88\ The Commission's proposed definition, which

    applied only to special accounts (New Form 102A) and consolidated

    accounts (Form 102S), defined control as ``to actually direct, by power

    of attorney or otherwise, the trading of a special account or a

    consolidated account.'' The proposed definition specified that special

    accounts and consolidated accounts may have more than one controller.

    The Commission notes that the proposed definition of ``control''

    applied solely for the purpose of satisfying the reporting obligations

    under parts 15 through 19 and 21 of the Commission's regulations. The

    proposed definition did not limit or alter existing law with respect to

    the meaning of the term control for the purpose of enforcing other

    requirements under the Act and the Commission's regulations, including

    those relating to position limits or manipulation. Similarly, existing

    requirements regarding the aggregation of positions in separate

    accounts for reporting or other purposes under the Act and Commission

    regulations (e.g., Sec. Sec. 17.00(b) and 150.4) were not altered by

    the definition of ``control'' proposed in Sec. 15.00(t).

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

    \88\ The definition of ``control'' in Sec. 15.00 is based upon

    the definition of ``controlled account'' in section 1.3(j) of the

    Commission's regulations.

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

    Summary of Comments on NPRM Proposal

    FIA commented that it would be difficult and/or meaningless to

    provide the requested control information, because the individuals

    responsible for trading an account within a special account or a volume

    threshold account can change often, even within the same trading

    day.\89\ Furthermore, ``in the case of algorithmic trading programs,

    there likely will not be an identifiable individual who `actually

    directs the trading' of the program. For this reason, FCMs do not

    currently collect this information.'' \90\ FIA recommended removing the

    requirement to identify account controllers on Forms 102A and 102B.\91\

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

    \89\ CL-2012-FIA supra note 55 at 5.

    \90\ CL-2012-FIA supra note 55 at 6.

    \91\ CL-2012-FIA supra note 55 at 5. The 2010 OCR NPRM proposed

    a broader definition of an account controller: ``A natural person,

    or a group of natural persons, with the legal authority to exercise

    discretion over trading decisions by a trading account, with the

    authority to determine the trading strategy of an automated trading

    system, or responsible for the supervision of any automated system

    or strategy.'' In a comment letter dated December 23, 2010, FIA

    commented that ``this definition cuts too broad a swath and would

    require information on individuals that never actually exercise

    trading authority over an account but, because of their position

    with the customer, as an owner or officer, would be deemed to have

    this authority . . . FIA believes the definition of an account

    controller should be consistent with the Commission's definition of

    control as set out in Commission Rule 1.3(j) and generally applied

    at exchanges.'' The definition of an account controller reflected in

    Sec. 15.00(t) and (bb)-(dd) of these final rules is based on

    Commission Rule 1.3(j).

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

    Discussion of Final Rule

    The Commission is adopting proposed Sec. 15.00(t) without

    modification. At the same time, the Commission is modifying the

    instructions on Form 102 in response to comments that discussed the

    difficulty of identifying individuals that exercise control on a

    transient basis, such as individuals operating an automated trading

    system (``ATS'') during a daily shift. The instructions for Form 102A

    and Form 102B have been revised to state that respondents should report

    all individuals who qualify as ``trading account controllers'' or

    ``volume threshold account controllers,'' as defined in Sec. 15.00(bb)

    and (cc), respectively.\92\ The Commission notes that regardless of

    whether the trading is carried out in whole or in part through an

    automated trading system or direct human initiation, the underlying

    analysis remains the same. When completing Form 102A and Form 102B,

    reporting parties should identify each person that satisfies the

    definition of ``trading account controller'' or ``volume threshold

    account controller,'' as defined in Sec. 15.00(bb) and (cc),

    respectively. Once respondents have identified all individuals meeting

    the applicable controller definition in a Form 102A or Form 102B

    submission, they will not be required to submit change updates to the

    submission if one previously identified controller takes the place of

    another previously identified controller.

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

    \92\ The Commission recognizes that, for some respondents that

    conduct trading in a reportable trading account or volume threshold

    account in whole or in part through an ATS, the individuals involved

    in the administration of such ATS may not qualify as trading account

    controllers or volume threshold account controllers. See supra

    section V(A)(ii).

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

    iii. Sec. 15.00(u)--Reportable Trading Volume

    NPRM Proposal

    Volume threshold accounts, omnibus volume threshold accounts,

    omnibus reportable sub-accounts, and reportable sub-accounts all

    reflect accounts that execute (or receive via allocation or give-up)

    ``reportable trading volume.'' Proposed Sec. 15.00(u) defined

    reportable trading volume as contract trading volume that meets or

    exceeds the level specified in proposed Sec. 15.04. Section 15.04, in

    turn, provided that reportable trading volume for a trading account is

    trading volume of 50 or more contracts, during a single trading day, on

    a single

    [[Page 69190]]

    reporting market that is a board of trade designated as a contract

    market under section 5 of the Act or a swap execution facility

    registered under section 5h of the Act, in all instruments that such

    reporting market designates with the same product identifier (including

    purchases and sales, and inclusive of all expiration months).

    Discussion of Final Rule

    See below the discussion of comments received regarding the

    reportable trading volume level proposed by Sec. 15.04. No comments

    were received pertaining specifically to proposed Sec. 15.00(u), and

    the Commission is adopting Sec. 15.00(u) without modification.

    iv. Sec. 15.00(v)--Direct Market Access

    NPRM Proposal

    Proposed Sec. 15.00(v) defined direct market access (``DMA'') as

    ``a connection method that enables a market participant to transmit

    orders to a DCM's electronic trade matching system without re-entry by

    another person or entity, or similar access to the trade execution

    platform of a SEF.'' Pursuant to the proposed definition, such access

    could be provided directly by a DCM or SEF, or by a 3rd-party platform.

    Proposed Forms 102A and 102B required an FCM to indicate whether a

    trading account or volume threshold account has been granted DMA to the

    trade matching system or the respective reporting system of the

    applicable reporting market.

    Summary of Comments on NPRM Proposal

    FIA, CME and ICE commented that the definition of DMA was

    overbroad, and FIA predicted that ``virtually all customers for which a

    Form 102 would be required to be filed will have been granted DMA.''

    \93\ CME commented that DMA data is not related to account ownership

    and control, the focus of these final rules, but rather to

    connectivity.\94\

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

    \93\ CL-2012-FIA supra note 55 at 6. CL-2012-CME supra note 55

    at 2-3. CL-2012-ICE supra note 55 at 2.

    \94\ CL-2012-CME supra note 55 at 2-3.

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

    Discussion of Final Rule

    In response to CME's comment regarding the relevance of DMA

    information, the Commission has concluded that the OCR reporting forms

    are not the appropriate vehicle for reporting information regarding

    connectivity. The Commission is therefore not adopting proposed Sec.

    15.00(v), and will not include a question regarding DMA in Form 102.

    v. Sec. 15.00(v)--Omnibus Account \95\

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

    \95\ Note that the following definitions in section Sec. 15.00

    have been reordered due to the elimination of the definition of

    direct market access (proposed in the NPRM as Sec. 15.00(v)).

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

    NPRM Proposal

    Proposed Sec. 15.00(w) (re-ordered in the final rules as Sec.

    15.00(v)) defined omnibus account as any trading account that one FCM,

    clearing member or foreign broker carries for another and in which the

    transactions of multiple individual accounts are combined. The

    identities of the holders of the individual accounts are not generally

    known or disclosed to the carrying firm.

    Discussion of Final Rule

    No comments were received pertaining to the proposed rule, and the

    Commission is adopting proposed Sec. 15.00(w) (re-ordered in the final

    rules as Sec. 15.00(v)) without modification.

    vi. Sec. 15.00(w)--Omnibus Account Originator

    NPRM Proposal

    Proposed Sec. 15.00(x) (re-ordered in the final rules as Sec.

    15.00(w)) defined omnibus account originator as any FCM, clearing

    member or foreign broker that executes trades for one or more customers

    via one or more accounts that are part of an omnibus account carried by

    another FCM, clearing member or foreign broker.

    Discussion of Final Rule

    No comments were received pertaining to the proposed rule, and the

    Commission is adopting proposed Sec. 15.00(x) (re-ordered in the final

    rules as Sec. 15.00(w)) without modification.

    vii. Sec. 15.00(x)--Volume Threshold Account

    NPRM Proposal

    Proposed Sec. 15.00(y) (re-ordered in the final rules as Sec.

    15.00(x)) defined volume threshold account as any trading account that

    executes, or receives via allocation or give-up, reportable trading

    volume on or subject to the rules of a reporting market that is a board

    of trade designated as a contract market under section 5 of the Act or

    a swap execution facility registered under section 5h of the Act.

    In the case of a give-up trade, this NPRM definition was intended

    to require reporting by: (i) The carrying firm of the original

    executing account; (ii) the carrying firm of any intervening

    account(s); and (iii) the carrying firm of the account to which the

    give-up trade was ultimately allocated. Question 10 in Section VII of

    the NPRM emphasized the broad scope of the definition: ``The Commission

    intends that the definition of `volume threshold account' captures all

    possible categories of accounts with reportable trading volume. . . .

    The Commission requests public comment regarding whether the proposed

    definition of `volume threshold account' achieves this purpose.''

    Summary of Comments on NPRM Proposal

    In response to this question, CME commented that volume-based

    accounts should be reported at the carrying broker level, and noted

    that, ``this is where the account ownership and control information

    resides, not at executing brokers.'' \96\

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

    \96\ CL-2012-CME supra note 55 at 4.

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

    Discussion of Final Rule

    The Commission is adopting proposed Sec. 15.00(y) (re-ordered in

    the final rules as Sec. 15.00(x)) with one modification. The

    definition of volume threshold account is being scaled back in the

    final rules, to capture a smaller number of volume threshold accounts

    than under the NPRM proposal. The definition is being modified to:

    ``any trading account that carries reportable trading volume on or

    subject to the rules of a reporting market that is a [DCM or SEF].''

    \97\ This change will reduce the number of reportable volume threshold

    accounts in the case of a give-up trade:

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

    \97\ Based on comment letters received in response to various

    proposed OCR rulemakings, the Commission understands that, in the

    case of a give-up trade, the industry regards the account to which a

    give-up trade is ultimately allocated as the only ``carrying''

    account in the give-up process. On this basis, the Commission does

    not view the original executing account of a give-up trade, or any

    intervening account(s) prior to the account to which the give-up

    trade is ultimately allocated, as ``carrying'' accounts in the give-

    up process.

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

    In a give-up scenario, this definition will require

    reporting by the carrying firm of the account to which the trade is

    ultimately allocated. Reporting will not be required, however, by the

    carrying firm of the original executing account, or by the carrying

    firm of any intervening account(s) prior to the account to which the

    trade is ultimately allocated.

    In a non-give-up scenario, there will be no change to the

    number of reportable volume threshold accounts. Under both the original

    and revised definition, reporting will be required by the carrying firm

    of the account in which the trade is both executed and cleared.

    The Commission believes that this approach will be more efficient

    and less

    [[Page 69191]]

    burdensome for reporting parties, while nonetheless capturing a

    sufficient number of volume threshold accounts to advance the

    Commission's surveillance objectives.

    viii. Sec. 15.00(y)--Omnibus Volume Threshold Account

    NPRM Proposal

    Proposed Sec. 15.00(z) (re-ordered in the final rules as Sec.

    15.00(y)) defined omnibus volume threshold account as any trading

    account that, on an omnibus basis, executes, or receives via allocation

    or give-up, reportable trading volume on or subject to the rules of a

    reporting market that is a board of trade designated as a contract

    market under section 5 of the Act or a swap execution facility

    registered under section 5h of the Act.

    Summary of Comments on NPRM Proposal

    See the discussion above regarding CME's comment on the definition

    of ``volume threshold account.''

    Discussion of Final Rule

    The Commission is adopting proposed Sec. 15.00(z) (re-ordered in

    the final rules as Sec. 15.00(y)) with one modification, consistent

    with the change to the definition of volume threshold account described

    above. Under the final rules, omnibus volume threshold account means

    ``any trading account that, on an omnibus basis, carries reportable

    trading volume on or subject to the rules of a reporting market that is

    a [DCM or SEF].''

    ix. Sec. 15.00(z)--Omnibus Reportable Sub-Account

    NPRM Proposal

    Proposed Sec. 15.00(aa) (re-ordered in the final rules as Sec.

    15.00(z)) defined omnibus reportable sub-account as any trading sub-

    account of an omnibus volume threshold account, which sub-account

    executes reportable trading volume on an omnibus basis. Omnibus

    reportable sub-account also means any trading account that is itself an

    omnibus account, executes reportable trading volume, and is a sub-

    account of another omnibus reportable sub-account.

    Discussion of Final Rule

    No comments were received pertaining to the proposed rule, and the

    Commission is adopting proposed Sec. 15.00(aa) (re-ordered in the

    final rules as Sec. 15.00(z)) without modification.

    x. Sec. 15.00(aa)--Reportable Sub-Account

    NPRM Proposal

    Proposed Sec. 15.00(bb) (re-ordered in the final rules as Sec.

    15.00(aa)) defined reportable sub-account as any trading sub-account of

    an omnibus volume threshold account or omnibus reportable sub-account,

    which sub-account executes reportable trading volume.

    Discussion of Final Rule

    No comments were received pertaining to the proposed rule, and the

    Commission is adopting proposed Sec. 15.00(bb) (re-ordered in the

    final rules as Sec. 15.00(aa)) without modification.

    xi. Sec. 15.00(bb)--Trading Account Controller; Sec. 15.00(cc)--

    Volume Threshold Account Controller; Sec. 15.00(dd)--Reportable Sub-

    Account Controller

    NPRM Proposal

    The Commission proposed to separately define the concept of control

    in the context of trading accounts, volume threshold accounts, and

    reportable sub-accounts. For these accounts, ``control'' may only be

    exercised by natural persons. Accordingly, proposed Sec. 15.00(cc),

    (dd), and (ee) (re-ordered in the final rules as Sec. 15.00(bb), (cc),

    and (dd)) defined trading account controllers, volume threshold account

    controllers, and reportable sub-account controllers, respectively, as

    ``a natural person who by power of attorney or otherwise actually

    directs the trading of a [trading account, volume threshold account, or

    reportable sub-account].'' Each account type may have more than one

    controller. The proposed definitions in Sec. 15.00(cc), (dd), and (ee)

    are relevant to the submission of New Forms 102A (trading accounts),

    102B (volume threshold accounts), and 71 (reportable sub-accounts),

    respectively.

    Summary of Comments on NPRM Proposal

    See above the discussion of comments received regarding the

    definition of control proposed by Sec. 15.00(t).

    Discussion of Final Rule

    The Commission is adopting proposed Sec. 15.00(cc), (dd), and (ee)

    (re-ordered in the final rules as Sec. 15.00(bb), (cc), and (dd))

    without modification. See the discussion of Sec. 15.00(t) above

    regarding the modifications to the Form 102 instructions that will be

    made in response to comments received regarding the definition of

    control.

    xii. Sec. 15.01(c)--Persons Required To Report

    NPRM Proposal

    The introduction of new account and controller types in New Forms

    102A, 102B, and 71 will result in a corresponding expansion in the

    categories of persons required to provide New Form 40 reports.

    Accordingly, the Commission proposed to amend Sec. 15.01(c), which

    currently requires Form 40 reports only from persons who hold or

    control reportable positions.\98\ Proposed Sec. 15.01(c) required New

    Form 40 reports from: Traders who own, hold, or control reportable

    positions (identified via New Form 102A); volume threshold account

    controllers (identified via New Form 102B); persons who own volume

    threshold accounts (identified via New Form 102B); reportable sub-

    account controllers (identified via New Form 71); and persons who own

    reportable sub-accounts (identified via New Form 71).

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

    \98\ 17 CFR 15.01(c).

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

    Discussion of Final Rule

    No comments were received pertaining to the proposed rule, and the

    Commission is adopting proposed Sec. 15.01(c) without modification.

    xiii. Sec. 15.02--Reporting Forms

    NPRM Proposal

    Current Sec. 15.02 contains a list of the forms contained in parts

    15 through 19, and 21.\99\ Proposed Sec. 15.02 was revised to reflect

    the proposed introduction of new Form 71, the renaming of Form 102, and

    the new OMB control number created by this rulemaking.

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

    \99\ 17 CFR 15.00(q) and 15.02. The Dodd-Frank Act modified

    section 1a of the CEA. As a result, the definition of ``registered

    entity'' previously found in section 1a(29) of the CEA is now in

    section 1a(40). In the NPRM, the Commission proposed to revise

    current Sec. 15.00(q) so that it cites to section 1a(40) for the

    definition of registered entity. The Commission also proposed to

    revise current Sec. 15.00(q) by removing the provision's reference

    to DTEFs, a category of regulated markets that was eliminated by

    section 734 of the Dodd-Frank Act. These proposals are adopted in

    the final rules.

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

    Discussion of Final Rule

    No comments were received pertaining to the proposed rule, and the

    Commission is adopting proposed Sec. 15.02 without modification.

    xiv. Sec. 15.04--Reportable Trading Volume Level

    NPRM Proposal

    Proposed Sec. 15.04 provided that reportable trading volume for a

    trading account is trading volume of 50 or more contracts, during a

    single trading day,

    [[Page 69192]]

    on a single reporting market that is a board of trade designated as a

    contract market under section 5 of the Act or a swap execution facility

    registered under section 5h of the Act, in all instruments that such

    reporting market designates with the same product identifier (including

    purchases and sales, and inclusive of all expiration months).

    Notably, proposed Sec. 15.04 addressed trading volume, not open

    positions, and required that purchases and sales by a trading account

    be summed to determine whether such account has reached the reportable

    trading volume. Section 15.04 also stipulates that reportable trading

    volume should encompass all instruments that the reporting market

    designates with the same product identifier.

    Summary of Comments on NPRM Proposal

    FIA, CME and ICE commented that the reportable trading volume level

    (``RTVL''), as proposed, would generate an excessive amount of data

    that may not be meaningful to the Commission's trade practice and

    market surveillance programs.\100\ More specifically, Nadex commented

    that the proposed 50-contract reportable trading volume level would

    capture too many retail customers that are trading contracts with very

    small notional values.\101\

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

    \100\ CL-2012-FIA supra note 55 at 8. CL-2012-CME supra note 55

    at 3. CL-2012-ICE supra note 55 at 6.

    \101\ CL-2012-Nadex supra note 55 at 2-3.

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

    FIA and ICE both recommended that the Commission phase in a

    descending RTVL until the optimum level is reached.\102\ FIA, for

    example, recommended that ``the Commission could require that only

    accounts meeting a volume threshold of 1,000 contracts per day be

    reported in the first three months; contracts meeting a volume

    threshold of 750 contracts per day be reported in the second three

    months after the compliance date; and so on until the optimum volume

    threshold is reached.'' \103\ CME also expressed concern that the RTVL

    will capture too many accounts, but recommended that the RTVL should be

    changed to 250 contracts bought or sold during a calendar week.\104\

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

    \102\ CL-2012-FIA supra note 55 at 8. CL-2012-ICE supra note 55

    at 6.

    \103\ CL-2012-FIA supra note 55 at 8.

    \104\ CL-2012-CME supra note 55 at 3.

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

    Nadex recommended that a different RTVL should be applied to

    contracts with small notional values, as compared to contracts with

    larger, traditional notional values. ``For any contract with a notional

    value of $1,000 or less, the RTVL could be increased to 5,000 (i.e.,

    1,000 times the standard RTVL of 50). This would still result in the

    Commission capturing information with respect to a relatively

    insignificant amount of trading activity in terms of notional value,

    but would be significantly less burdensome for the DCMs that offer

    these contracts.'' \105\ If the Commission determined not to adopt a

    different RTVL for contracts with small notional values, then Nadex

    recommended that ``DCMs should have the opportunity to obtain a waiver

    from the standard RTVL level with an appropriate alternative to be

    determined after consultation between the relevant market and CFTC

    staff.'' \106\

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

    \105\ CL-2012-Nadex supra note 55 at 3.

    \106\ Id.

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

    Discussion of Final Rule

    Although the Commission acknowledges comments received regarding

    the appropriate RTVL, the Commission is adopting proposed Sec. 15.04

    without modification.

    As indicated in the NPRM, the RTVL is based on Commission staff's

    analysis of DCM trade data received through the trade capture report

    from a sample of DCMs during a recent six-month period. The 50-contract

    RTVL is calibrated to identify a critical mass of the trading accounts

    active in Commission- regulated markets, measured not only by the

    percentage of trading volume for which those accounts are responsible,

    but also by the absolute number of accounts identified. The 50-contract

    RTVL identifies approximately 85 percent of trading volume in

    approximately 90 percent of the products sampled by the Commission over

    the six-month sample period. The 50-contract RTVL also identifies

    approximately one-third of the trading accounts in the sample set. As a

    result, the 50-contract RTVL will capture both: (1) Those accounts

    responsible for the large majority of trading volume; and (2) a

    meaningful absolute number of the trading accounts active in

    Commission-regulated markets. The Commission believes that (1) and (2)

    are both equally important in improving the Commission's ability to

    perform robust and comprehensive market and trade practice

    surveillance. While the 50-contract RTVL achieves the Commission's

    regulatory objectives, it is nonetheless also calibrated to minimize

    the regulations' impact on low-volume accounts whose trading activity

    does not warrant inclusion in the reporting regime.

    Furthermore, the Commission also reiterates that volume threshold

    account reporting, through Form 102B, is a transaction-based reporting

    regime rather than a position-based regime. A fundamental purpose of

    volume-based reporting on Form 102B is to identify trading accounts

    based solely on their trading volume, independently of such accounts'

    contribution to open interest. The Commission's intent in this

    rulemaking is to achieve a comprehensive identification of the

    participants in regulated derivatives markets regardless of the trading

    strategies they may pursue.

    For these reasons, the Commission declines to accept proposals that

    could reduce the trading volume or absolute number of accounts

    identified, including FIA's proposal that the final rules switch to an

    RTVL that descends from 1,000 contracts to 750 contracts, or proposals

    that would change the basis of measurement, including CME's proposal to

    use an RTVL of 250 contracts bought or sold per week. In addition, the

    Commission also declines to accept recommendations that would result in

    an impracticable administrative burden, including Nadex's

    recommendation that a different RTVL should be applied to contracts

    with small notional values. The Commission believes it would be

    inefficient for both the Commission and various reporting parties to

    create a reporting regime for its regulated markets that is differently

    scaled across multiple products, in response to the fact that trading

    volume varies from one product to the next.\107\ Accordingly, the final

    rules will use the same RTVL proposed in the NPRM.

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

    \107\ See infra section VIII(B)(vii) for a discussion of the

    administrative difficulties of implementing such a proposal.

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

    The NPRM proposed to apply the same RTVL (50 contracts) to volume

    threshold accounts associated with both DCMs and SEFs. Because the RTVL

    is based on the Commission's experience with DCMs, the NPRM asked for

    comment whether the 50-contract RTVL was also appropriate for the

    reporting of accounts associated with SEFs--and if not, what changes

    would be appropriate for reporting with regard to SEFs. The Commission

    did not receive any comments in response to this question. As a result,

    the Commission will apply the same RTVL (50 contracts) to volume

    threshold accounts associated with both DCMs and SEFs in the final

    rules, as contemplated by the NPRM.

    In the event that trading activity in the SEF marketplace is lower

    than in the futures marketplace, the Commission expects that the 50

    contract RTVL will likely identify a smaller percentage of volume

    threshold accounts associated with SEFs. The 50 contract RTVL for

    [[Page 69193]]

    SEFs would, correspondingly, impose a lesser burden on parties

    reporting volume threshold accounts on SEFs as compared to parties

    reporting such accounts on DCMs. Once the final rules have been

    implemented, if the Commission determines that the 50 contract RTVL is

    identifying an insufficient number of volume threshold accounts, the

    Commission may adjust the RTVL for SEF reporting via a subsequent

    rulemaking, to ensure that an equivalent segment of both the DCM and

    SEF marketplace is identified.

    B. Part 17

    i. Sec. 17.01(a)--Identification of Special Accounts (via 102A)

    NPRM Proposal

    Proposed Sec. 17.01(a) required reporting parties to identify

    special accounts on New Form 102A, and referred reporting parties

    directly to the new form for the required data points.

    Summary of Comments on NPRM Proposal

    Efficiency of Forms. FIA and CME both commented that the use of

    multiple reporting forms (i.e., the 102A, 102B and 102S) to capture

    similar information is inefficient and unnecessary.\108\ FIA stated

    that ``the proposed amendments appear to be designed to populate three

    separate data bases to accommodate the Commission's existing systems

    for conducting trade practice and market surveillance, thereby

    perpetuating an inefficient system.'' \109\ As an example of this

    inefficiency, FIA noted that ``the proposed amendments would require

    reporting firms to provide contact information for each of Form 102A,

    Form 102B and Form 102S.'' \110\ FIA stated that ``managing three

    separate forms for the same customer will create unnecessary work and

    be more challenging to keep current.'' \111\ CME regarded the 102

    reporting as duplicative and inefficient because it ``requires a

    different Form 102 depending on the type of trigger.'' \112\

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

    \108\ CL-2012-FIA supra note 55 at 3-4. CL-2012-CME supra note

    55 at 2.

    \109\ CL-2012-FIA supra note 55 at 4.

    \110\ Id.

    \111\ Id.

    \112\ CL-2012-CME supra note 55 at 2.

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

    In order to eliminate redundant requests on the forms for contact

    information, FIA suggested creating a ``Reporting Contact Reference

    Database,'' where contact information would be stored once for each

    special account number.\113\ ``This would ensure that contact

    information is stored and maintained as a single record, eliminate

    redundancy and improve the quality of information in the ownership and

    control reporting process.'' \114\ More generally, CME recommended that

    ``the Commission's systems can and should use a common set of reference

    data so that a previously identified account does not need to be re-

    reported based upon a different trigger.'' \115\

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

    \113\ CL-2012-FIA supra note 55 at 4.

    \114\ Id.

    \115\ CL-2012-CME supra note 55 at 2.

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

    Discussion of Final Rule

    Efficiency of Forms. In response to comments regarding the

    efficiency of the electronic submission process, the Commission is

    creating a contact reference database so that respondents will not need

    to enter contact information each time they manually complete a 102A,

    102B or 102S through the web portal. For example, the respondent would

    enter the account number for the applicable form, and the Web portal

    page would automatically populate the contact information for that

    account number which the respondent had most recently provided. The

    Commission expects that this solution may be particularly helpful to

    small entities, which are likely to manually complete forms through the

    web portal. Larger firms, by contrast, are more likely to completely

    automate the process.\116\

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

    \116\ See also supra note 41. New Form 102 requires the

    reporting party to provide the LEI (if any) of the reporting party

    and of various other parties reportable on the form, such as account

    owners, controllers, and originators. As noted in the footnotes to

    the reporting forms in the Appendix, if a reporting party provides

    an LEI on New Form 102 that was issued by the CICI Utility (or by

    any other CFTC-accepted LEI provider), then the reporting party is

    not required to report any of the fields marked as ``Optional

    Fields'' in the relevant question (i.e., name and address), provided

    that such optional fields were reported to the CICI Utility (or

    other CFTC-accepted LEI provider) and are associated with the

    relevant LEI. The Commission is addressing such otherwise

    duplicative reporting in order to leverage information previously

    submitted by reporting parties. Footnotes to the reporting forms in

    the Appendix contain instructions regarding other fields that are

    not required to be reported in certain circumstances.

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

    Summary of Comments on NPRM Proposal

    Burden of Collecting Information for Certain Fields. CME

    recommended that the data fields collected on any automated form should

    be limited to those records that an FCM obtains in its regular

    onboarding processes.\117\ CME commented that if the Commission

    requires the inclusion of certain data points that are not currently

    collected, ``FCMs will need to revise their onboarding procedures to

    obtain that data for every account so that it can be recorded in a

    system and eventually be extracted for the automated reports, which

    would be, among other things, incredibly costly.'' \118\ FIA

    recommended that data points that are not currently collected by FCMs

    be removed from the forms. Specifically, FIA recommended removing the

    requirement to provide a customer or account controller's NFA

    identification number, because FCMs generally do not request or record

    this information.\119\ FIA also recommended that certain ownership and

    control fields be removed, because FCMs do not collect this

    information. On a related topic, FIA recommended that the requirement

    to list the customer or account controller's Web site be removed,

    because Web site addresses are subject to change and FCMs would have no

    ability to monitor for such changes and update their records.\120\

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

    \117\ Id.

    \118\ Id.

    \119\ CL-2012-FIA supra note 55 at 6.

    \120\ CL-2012-FIA supra note 55 at 7.

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

    FIA proposed that the three sections of the proposed 102 be

    consolidated into a single Form 102, a draft of which is attached to

    the FIA comment letter (the ``FIA consolidated form'').\121\ CME

    expressed support for the FIA consolidated form.\122\ The FIA

    consolidated form does not include fields that FIA indicated are

    currently unavailable and would be burdensome to collect and/or

    maintain, such as the customer or account controller's NFA ID and Web

    site address.

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

    \121\ CL-2012-FIA supra note 55 at 4 and Exhibit A.

    \122\ CL-2012-CME supra note 55 at 2.

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

    Discussion of Final Rule

    Burden of Collecting Information for Certain Fields. The Commission

    declines to accept the proposal to create a single, consolidated Form

    102 based on the FIA consolidated form. The FIA consolidated form is

    missing a number of key data fields, the absence of which would

    undermine the goals of the Commission's data collection effort.\123\

    For example, the FIA consolidated form does not require respondents to

    state the reporting trigger. Instead, the directions to the FIA

    consolidated form state that, ``This form must be completed if an

    account exceeds the reportable levels on special accounts, volume

    threshold accounts or consolidated accounts.'' The form does not

    clarify whether respondents are reporting a special account, volume

    threshold account, or consolidated account that has reached a

    [[Page 69194]]

    reportable level. Without knowing the reporting trigger for the form

    (e.g., whether the reporting party had reached a reportable position or

    reportable volume level), the Commission would be unable to efficiently

    and accurately categorize the trading accounts reported on the form,

    and utilize this account information for surveillance or other related

    purposes.

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

    \123\ See infra section VIII(B)(vi) for a more detailed

    discussion of the FIA consolidated form.

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

    However, the Commission is accommodating FIA's comments in a more

    limited fashion, by clarifying in the instructions to the new forms

    that the NFA ID and Web site (the two examples of problematic fields

    cited by FIA) are only required to be reported to the extent the

    respondent has this information available in its records. There is no

    affirmative obligation for respondents to poll customers or other

    parties for the NFA ID and Web site if this information has not been

    previously collected.

    Summary of Comments on NPRM Proposal

    Identification of Special Account Owners. FIA noted that the

    current Form 102 requires that a special account be identified only by

    account controller (who may also be the account owner).\124\ The new

    Form 102A requires that both the owner and controller of a special

    account be identified, if the account is reportable due to both

    ownership and control of a reportable position. FIA commented that ``if

    an account is identified by owner or controller, the FCM may be

    required to file two Form 102s for the same account.'' \125\ FIA also

    commented that ownership information may be difficult for FCMs to

    provide, because FCMs ``currently collect only limited information on

    certain indirect owners of an account, e.g., fund participants that

    have a 10 percent or greater ownership interest, when the account is

    opened. This information is not updated.'' \126\ Finally, FIA commented

    that ``owner'' is not defined for purposes of Form 102.\127\ FIA

    recommended ``removing the proposed requirement that special accounts

    be identified only by account owner.'' \128\

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

    \124\ CL-2012-FIA supra note 55 at 5.

    \125\ Id.

    \126\ Id.

    \127\ Id.

    \128\ Id.

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

    Discussion of Final Rule

    Identification of Special Account Owners. The Commission declines

    to modify the reporting forms in response to comments regarding the

    identification of account owners. The Commission notes that FIA's

    comment that FCMs may be required to file two Form 102s for the same

    account appears to be based upon a misunderstanding of the New Form 102

    filing procedure. Regardless of whether a Form 102A is filed as a

    result of ownership of a reportable position, control of a reportable

    position, or both ownership and control of a reportable position,\129\

    the form would be filed only once in response to each reporting

    trigger, by means of an electronic submission through a secure FTP data

    feed or through the Commission's secure Web site portal.

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

    \129\ See supra section V(A)(i) regarding the requirement on New

    Form 102A to report special accounts solely on the basis of

    ownership.

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

    As discussed above, FIA commented on the difficulty of collecting

    information regarding the direct owners of an account. However, the

    Commission notes that New Form 102 is identical to current Form 102 in

    that it requires respondents to determine which party directly owns a

    special account. The New Form 102 is not more burdensome in this

    regard. As a result, the Commission is not, pursuant to these final

    rules, requiring respondents to change their current practices with

    respect to the manner in which they identify owners for purposes of 102

    reporting.

    Finally, FIA discussed the difficulty of maintaining accurate

    information regarding the indirect owners of an account. The Commission

    notes that the New Form 102 requests information regarding only the

    direct owners of trading accounts, not the indirect owners.

    Summary of Comments on NPRM Proposal

    Sharing of Information With Regulatory and Self-Regulatory

    Authorities. FIA and CME recommended that the information collected via

    the revised forms should be made available to ``appropriate regulatory

    and self-regulatory authorities'' (FIA) and ``relevant SROs''

    (CME).\130\ Furthermore, ICE recommended that the Commission should

    ``either provide a feed or separate file differentiated by exchange

    code(s) to each DCM containing information only for those accounts

    actively trading on the DCM, or permit DCMs to access and download the

    LTR [large trader reporting] and OCR data specific to the DCM.'' \131\

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

    \130\ CL-2012-FIA supra note 55 at 8. CL-2012-CME supra note 55

    at 3.

    \131\ CL-2012-ICE supra note 55 at 6.

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

    Discussion of Final Rule

    Sharing of Information With Regulatory and Self-Regulatory

    Authorities. The Commission is not modifying the final rules to provide

    for the sharing of information collected via the forms with the parties

    proposed by commenters, such as regulatory and self-regulatory

    authorities. The Commission believes that it would be costly and overly

    burdensome for the Commission to distribute the collected information

    to external parties; furthermore, distribution to external parties

    would not be consistent with the scope of the Commission's

    responsibilities. The Commission notes that DCMs and SEFs may also

    implement rules requiring market participants to submit ownership and

    control information directly to them, if DCMs and SEFs determine that

    such reporting would be beneficial.

    ii. Sec. 17.01(b)--Identification of Volume Threshold Accounts (via

    102B)

    NPRM Proposal

    Proposed Sec. 17.01(b) subjects volume threshold accounts to an

    account identification regime comparable to the position-based regime

    already existing for special accounts. Proposed Sec. 17.01(b)

    specifically requires clearing firms to identify volume threshold

    accounts on New Form 102B.

    Summary of Comments on NPRM Proposal

    See the discussion of Sec. 17.01(a) above, which describes

    comments received regarding the identification of special accounts and

    volume threshold accounts on Forms 102A and 102B, respectively.

    Discussion of Final Rule

    The Commission is adopting proposed Sec. 17.01(b) without

    modification.

    iii. Sec. 17.01(c)--Identification of Omnibus Accounts and Sub-

    Accounts (via 71)

    NPRM Proposal

    Proposed Sec. 17.01(c) subjected omnibus accounts to their own

    volume-based account identification regime.\132\ The proposed rule

    required the originator of an omnibus volume threshold account (or the

    originator of an omnibus reportable sub-account within such account) to

    file New Form 71 (``Identification of Omnibus Accounts and Sub-

    Accounts'') upon

    [[Page 69195]]

    special call by the Commission or its designee.

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

    \132\ See supra section V(D) and infra section IX.

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

    Discussion of Final Rule

    No comments were received pertaining to the proposed rule, and the

    Commission is adopting proposed Sec. 17.01(c) without modification.

    iv. Sec. 17.01(d)--Exclusively Self-Cleared Contracts

    NPRM Proposal

    Proposed Sec. 17.01(d) required reporting markets that list

    exclusively self-cleared contracts to file Sec. 17.01(a) and Sec.

    17.01(b) reports as if they were clearing members. Proposed Sec.

    17.01(d) reflects the requirements of current Sec. 17.01(h) with

    respect to special accounts, but also incorporates the new volume

    threshold accounts added by these final rules.

    Discussion of Final Rule

    No comments were received pertaining to the proposed rule, and the

    Commission is adopting proposed Sec. 17.01(d) without modification.

    v. Sec. 17.01(e)--Identification of Omnibus Accounts and Sub-Accounts

    NPRM Proposal

    The Commission proposed to introduce a new Sec. 17.01(e) that

    would extend the Commission's special call authority--currently

    applicable to special accounts--to also include volume threshold

    accounts, omnibus volume threshold accounts and reportable sub-

    accounts.\133\ Responses to special calls would be due within 24 hours.

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

    \133\ The Commission's special call authority with respect to

    special accounts is currently found in Sec. 17.02(b)(1), which the

    Commission will now strike, as explained below.

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

    Discussion of Final Rule

    No comments were received pertaining to the proposed rule, and the

    Commission is adopting proposed Sec. 17.01(e) without modification.

    vi. Sec. 17.02(b)--Section 17.01(a) Reports (via 102A)

    NPRM Proposal

    Section 17.02(b) \134\ currently addresses the form, manner, and

    completion date requirements of current 102 filings. Specifically,

    Sec. 17.02(b)(1) requires reporting parties to submit current Form 102

    upon special call by the Commission; in the absence of a special call,

    Sec. 17.02(b)(2) requires reporting parties to submit current Form 102

    within three business days of the first day that a special account is

    reported to the Commission. The Commission proposed to replace both

    provisions as described below.

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

    \134\ 17 CFR 17.02(b).

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

    First, as explained above, the Commission proposed to strike

    current Sec. 17.02(b)(1) and to shift its special call requirements to

    proposed Sec. 17.01(e). Second, the Commission proposed to strike

    current Sec. 17.02(b)(2) and to replace its Form 102 submission

    requirements with a new Sec. 17.02(b)(1)-(4) to address the form and

    manner of New Form 102A filings for special accounts. Proposed Sec.

    17.02(b)(1) directed reporting parties to the Commission's Web site

    (www.cftc.gov) for detailed instructions on the Form 102A filing

    process. Proposed Sec. 17.02(b)(2)-(4) addressed the completion date

    requirements of initial Form 102A submissions, 102A change updates, and

    102A refresh updates, respectively.

    Summary of Comments on NPRM Proposal

    Sec. 17.02(b)(2)-(3) (new 102A filings and change 102A filings).

    Proposed Sec. 17.02(b)(2)-(3) required firms to file a new Form 102A

    by 9:00 a.m. ET the following business day after a special account

    becomes reportable; similarly, changes to a previously submitted Form

    102A were required to be reported by 9:00 a.m. ET the following

    business day. FIA stated that obtaining all the information required by

    Form 102A (including, for example, the trading accounts that comprise a

    special account) can take several days.\135\ As a result, FIA

    recommended that the deadline for filing a complete Form 102A or any

    change update be modified to five business days from the date the

    account or change becomes reportable.\136\

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

    \135\ CL-2012-FIA supra note 55 at 7.

    \136\ Id.

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

    Sec. 17.02(b)(4) (refresh 102A filings). Proposed Sec.

    17.02(b)(4) required firms to resubmit the Form 102A every six months

    for each special account, in order to ensure that the information

    reported is frequently updated. Refresh updates were also required

    under this proposed rule on such later date (i.e., later than six

    months) specified by the Commission or its designee. FIA commented that

    this timeframe ``will impose significant operational and financial

    burden on reporting firms,'' and recommended that refresh updates

    instead be required every two years.\137\ CME also recommended that

    refresh updates be required every two years.\138\

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

    \137\ Id.

    \138\ CL-2012-CME supra note 55 at 3.

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

    Sec. 17.02(b)(3)-(4) (when 102A accounts are no longer

    reportable). Proposed Sec. 17.02(b)(3)-(4) provided that an FCM may

    stop reporting a change update or refresh update with respect to a

    special account upon notifying the Commission or its designee that the

    account in question is no longer reportable. FIA stated that ``the

    Commission provides no guidance on when an FCM may reasonably conclude

    that an account is no longer reportable. A customer may fall below and

    rise above the reportable position level frequently during the course

    of its relationship with an FCM.'' \139\ FIA therefore recommended that

    the Commission revise the proposed rule to provide that an FCM may

    determine that an account is no longer reportable with respect to a

    particular product if the account remains below the reporting level for

    a fixed period of time, such as 180 days/six months.\140\ FIA's six-

    month proposal tracks the sunset provision in the NPRM for the

    reporting of change and refresh updates on Form 102B.\141\

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

    \139\ CL-2012-FIA supra note 55 at 7.

    \140\ CL-2012-FIA supra note 55 at 7-8.

    \141\ Under the NPRM and these final rules, clearing members may

    stop providing change and refresh updates on Form 102B for any

    volume threshold account upon notifying the Commission or its

    designee that the volume threshold account executed no trades in any

    product in the past six months on the reporting market at which the

    volume threshold account reached the reportable trading volume

    level. See Sec. 17.01(c)(3) and (4) in section IX, infra.

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

    Discussion of Final Rule

    No comments were received pertaining to proposed Sec. 17.02(b)(1),

    and the Commission is adopting this proposed rule without modification.

    In light of the comments received, the Commission is making the

    following modifications to Sec. 17.02(b)(2)-(4) and to new Form 102A:

    Sec. 17.02(b)(2)-(3) (new 102A filings and change 102A filings).

    New Form 102A requests information regarding both special accounts and

    the trading accounts that comprise a special account. The Commission is

    modifying the reporting deadline for new and changed Form 102A filings,

    specifically with respect to the reporting of non-omnibus trading

    accounts that comprise a special account. Respondents are required to

    provide the names of such trading account owners and controllers by

    9:00 a.m. the following business day. However, respondents are required

    to provide the other contact details with respect to such trading

    account owners and controllers (address, telephone

    [[Page 69196]]

    number, etc.) within three business days.\142\

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

    \142\ Specifically, the information marked as `Follow-On

    Information' in questions 10(ii) and (iii) on New Form 102A may be

    provided within three business days. All other required fields on

    New Form 102A must be completed by 9:00 a.m. the following business

    day. See New Form 102A in the Appendix to these final rules for more

    information. The Commission is adopting a reporting requirement of

    three business days as an acceptable intermediate point between one

    business day (as proposed in the NPRM) and five business days (as

    requested by FIA, per the preceding summary of comments). The three

    business day requirement is therefore less burdensome than the one

    business day requirement proposed in the NPRM. Based on the

    experience of the Commission's surveillance group, the Commission

    believes that the three business day requirement, while longer than

    the one day proposal in the NPRM, will nonetheless enable the

    Commission to maintain current databases, including up-to-date

    contact information that will allow the Commission to contact market

    participants quickly in the event of significant market events that

    occur close to the time of reporting. By contrast, based on the

    experience of the Commission's surveillance group, the Commission

    believes that a five business day reporting deadline is too long to

    perform timely market surveillance, and maintain databases that are

    sufficiently accurate and current to be useful.

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

    In addition, the final rules will reduce the burden on reporting

    parties by clarifying that all Form 102 reporting deadlines in the

    final rules are eastern time for information concerning markets located

    in that time zone, and central time for information concerning all

    other markets.

    Sec. 17.02(b)(4) (refresh 102A filings). Refresh filings for

    special accounts will be required once per year, as opposed to once

    each six months (as proposed in the NPRM).\143\ In light of this

    change, the final rules provide that refresh updates are required on

    such other date specified by the Commission or its designee that is

    equal to or greater than six months, which is consistent with the

    alternative deadline language in proposed Sec. Sec. 17.02 and 20.5.

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

    \143\ The Commission is adopting a refresh reporting requirement

    of once per year as an acceptable intermediate point between once

    each six months (as proposed in the NPRM) and once every two years

    (as requested by FIA and CME, per the preceding summary of

    comments). The annual refresh requirement is therefore less

    burdensome than the six month requirement proposed in the NPRM.

    Based on the experience of the Commission's surveillance group, the

    Commission believes that the annual refresh requirement, while

    longer than the six month requirement proposed in the NPRM, will

    nonetheless enable the Commission to maintain current databases,

    including up-to-date contact information that will allow the

    Commission to contact market participants quickly in the event of

    significant market events. By contrast, based on the experience of

    the Commission's surveillance group, the Commission believes that a

    two year refresh deadline is too long to perform timely market

    surveillance and maintain databases that are sufficiently accurate

    and current to be useful.

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

    Sec. 17.02(b)(3)-(4) (when 102A special accounts are no longer

    reportable). In response to FIA's comment, pursuant to these final

    rules, reporting parties may stop providing Form 102A change updates

    and refresh updates for a special account if the account is no longer

    reportable as a special account and has not been reportable as a

    special account for the past six months. This change is intended to

    substantively replicate Sec. 17.02(c)(3)-(4), which provide that

    clearing members may stop providing Form 102B change updates and

    refresh updates, respectively, upon notifying the Commission or its

    designee that the relevant volume threshold account executed no trades

    in any product in the past six months on the reporting market at which

    the volume threshold account reached the reportable trading volume

    level.

    Sections 17.02(b)(3) and (4) have also been modified to enable

    reporting parties to notify the Commission ``or its designee'' that an

    account is no longer reportable as a special account, based on the

    criteria described in these sections.

    vii. Sec. 17.02(c)--Section 17.01(b) Reports (via 102B)

    NPRM Proposal

    To address New Form 102B filings for volume threshold accounts, the

    Commission proposed to codify a new Sec. 17.02(c). Proposed Sec.

    17.02(c) followed a structure similar to that of proposed Sec.

    17.02(b), with Sec. 17.02(c)(1) directing reporting parties to

    www.cftc.gov for detailed instructions on the Form 102B filing process,

    and proposed Sec. 17.02(c)(2)-(4) addressing the timing of initial

    Form 102B filings, 102B change updates, and 102B refresh updates,

    respectively.

    Summary of Comments on NPRM Proposal

    Sec. 17.02(c)(2)-(3) (new 102B filings and change 102B filings).

    Proposed Sec. 17.02(c)(2)-(3) required firms to file a new Form 102B

    by 9:00 a.m. ET the following business day after the account becomes a

    volume threshold account; similarly, changes to a previously submitted

    Form 102B were required to be reported by 9:00 a.m. ET the following

    business day. See the discussion above of the comments received

    regarding Form 102A filings required by Sec. 17.02(b)(2)-(3), which

    are also relevant to the new 102B and change 102B reporting

    obligations.

    Sec. 17.02(c)(4) (refresh 102B filings). Proposed Sec.

    17.02(c)(4) required firms to resubmit the Form 102B every six months

    for each volume threshold account, in order to ensure that the

    information reported is frequently updated. Refresh updates were also

    required under this proposed rule on such later date (i.e., later than

    six months) specified by the Commission or its designee. As noted

    above, FIA commented that this timeframe ``will impose significant

    operational and financial burden on reporting firms,'' and recommended

    that refresh updates instead be required every two years.\144\ CME also

    recommended that refresh updates be required every two years.\145\

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

    \144\ CL-2012-FIA supra note 55 at 7.

    \145\ CL-2012-CME supra note 55 at 3.

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

    Discussion of Final Rule

    No comments were received pertaining to proposed Sec. 17.02(c)(1),

    and the Commission is adopting this proposed rule without modification.

    In light of the comments received, the Commission is making the

    following modifications to Sec. 17.02(c)(2)-(4) and to new Form 102B:

    Sec. 17.02(c)(2)-(3) (new 102B filings and change 102B filings).

    The Commission is modifying the reporting deadline for new and changed

    Form 102B filings, specifically with respect to the reporting of non-

    omnibus volume threshold accounts. Respondents are required to provide

    the names of non-omnibus volume threshold account owners and

    controllers reported on 102B by 9:00 a.m. the following business day.

    Respondents are required to provide the other contact details reported

    on 102B with respect to such parties (i.e., the address, telephone

    number, etc. of non-omnibus volume threshold account owners and

    controllers) within three business days.\146\ Notwithstanding this

    change to the reporting deadline with respect to non-omnibus volume

    threshold accounts, these final rules do not modify the reporting

    deadline for omnibus account information (question 4 on New Form 102B).

    Such omnibus account information must be reported by 9:00 a.m. the

    following business day.

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

    \146\ Specifically, the information marked as `Follow-On

    Information' in questions 5 and 6 on New Form 102B may be provided

    within three business days. All other required fields on New Form

    102B must be completed by 9:00 a.m. the following business day. See

    New Form 102B in the Appendix to these final rules for more

    information.

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

    Sec. 17.02(c)(4) (refresh 102B filings). Refresh filings for

    volume threshold accounts will be required once per year, as opposed to

    once each six months (as proposed in the NPRM). In light of this

    change, the final rules provide that refresh updates are required on

    such other date specified by the Commission or its designee that is

    equal to or greater than six months, which is consistent with the

    alternative deadline language in proposed Sec. Sec. 17.02 and 20.5.

    Sections 17.02(c)(3) and (4) have also been modified to enable

    reporting

    [[Page 69197]]

    parties to notify the Commission ``or its designee'' that an account is

    no longer reportable as a volume threshold account, based on the

    criteria described in these sections.

    viii. Sec. 17.03(a)-(g)--Delegation of Authority to the Director of

    the Office of Data and Technology or the Director of the Division of

    Market Oversight

    NPRM Proposal

    In the NPRM, the Commission proposed a number of new and revised

    provisions relating to the delegation of authority to solicit

    information on the OCR reporting forms. First, the Commission proposed

    to codify a new Sec. 17.03(e) that provided the Director of ODT with

    delegated authority to make special calls to solicit information from

    omnibus volume threshold account originators and omnibus reportable

    sub-account originators on New Form 71. The Commission also proposed to

    codify (a) a new Sec. 17.03(f) that provided the Director of DMO with

    delegated authority to determine the date on which each FCM, clearing

    member, or foreign broker shall update or otherwise resubmit every Form

    102 that it has submitted to the Commission for each of its special

    accounts and (b) a new Sec. 17.03(g) that provided the Director of DMO

    with delegated authority to determine the date on which each clearing

    member shall update or otherwise resubmit every Form 102 that it has

    submitted to the Commission for each of its volume threshold accounts.

    Second, the Commission proposed to revise current Sec. 17.03(a),

    which grants the Director of DMO the authority to determine whether

    FCMs, clearing members and foreign brokers can report certain

    information on series `01 forms, or can use some other format upon a

    determination that such person is unable to report the information

    using the standard transmission format.\147\ More specifically, the

    NPRM revised Sec. 17.03(a) to grant such authority to the Director of

    ODT, rather than the Director of DMO.

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

    \147\ 17 CFR 17.03(a).

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

    Third, the Commission proposed to revise current Sec. 17.03(b),

    which grants the Director of DMO the authority to approve the late

    submission of position reports and Form 102.\148\ The NPRM revised

    Sec. 17.03(b) to grant such authority to the Director of ODT, rather

    than the Director of DMO. The NPRM further revised Sec. 17.03(b) to:

    (i) Replace the provision's cross-reference to Sec. 17.01,\149\ which

    the Commission proposed to strike, with cross-references to proposed

    Sec. Sec. 17.01(a) and 17.01(b); and (ii) eliminate the provision's

    cross-reference to current Sec. 17.01(g),\150\ which the Commission

    also proposed to strike.

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

    \148\ 17 CFR 17.03(b).

    \149\ 17 CFR 17.01.

    \150\ 17 CFR 17.01(g).

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

    Fourth, the Commission proposed to revise current Sec. 17.03(c),

    which grants the Director of DMO the authority to permit reporting

    parties filing Form 102 to authenticate it through a means other than

    signing the form.\151\ The NPRM revised Sec. 17.03(c) to grant such

    authority to the Director of ODT, rather than the Director of DMO. The

    NPRM further revised Sec. 17.03(c) to replace the provision's current

    cross-reference to Sec. 17.01(f),\152\ which the Commission proposed

    to strike, with a cross-reference to proposed Sec. 17.01, and to

    address New Form 71.

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

    \151\ 17 CFR 17.03(c).

    \152\ 17 CFR 17.01(f).

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

    Finally, the Commission proposed to revise current Sec. 17.03(d),

    which grants the Director of DMO the authority to approve a format and

    coding structure other than that set forth in Sec. 17.00(g).\153\ The

    NPRM revised Sec. 17.03(d) to grant such authority to the Director of

    ODT, rather than the Director of DMO.

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

    \153\ 17 CFR 17.03(d) and 17.00(g).

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

    Discussion of Final Rule

    No comments were received pertaining to the proposed rules, and the

    Commission is adopting proposed Sec. 17.03(a)-(g) without

    modification.

    C. Part 18

    i. Sec. 18.04--Statement of Reporting Trader

    NPRM Proposal

    Current Sec. 18.04 (the ``Statement of Reporting Trader'')

    requires every trader who holds or controls a reportable position to

    file a Form 40 upon special call by the Commission or its designee and

    to provide on Form 40 information required by current Sec. 18.04(a)-

    (c).\154\ In the NPRM, the Commission proposed to amend Sec. 18.04 by

    striking all of its current provisions and replacing them as described

    below.

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

    \154\ 17 CFR 18.04(a)-(c).

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

    First, and consistent with its approach to New Form 102, the

    Commission proposed to transition current Sec. 18.04(a)-(c)'s detailed

    form content requirements from the regulatory text to New Form 40.

    Second, the Commission proposed to codify a new Sec. 18.04(a) that, as

    with current Sec. 18.04, would require every trader who holds or

    controls a reportable position to file a New Form 40 upon special call

    by the Commission or its designee. Finally, to accommodate volume

    threshold accounts and reportable sub-accounts identified on New Forms

    102 and 71, the Commission proposed to codify a new Sec. 18.04(b) that

    would require volume threshold account controllers, persons who own a

    volume threshold account, reportable sub-account controllers, and

    persons who own a reportable sub-account to file New Form 40 upon

    special call by the Commission or its designee.

    Summary of Comments on NPRM Proposal

    FIA and Joint Electric Association stated that the Form 40 (and the

    corresponding Form 40S) is overly complicated and extensive without a

    justified regulatory need.\155\ The forms request information regarding

    the ownership structure of the reporting trader, including all direct

    and indirect parents and subsidiaries and information regarding their

    trading activities. FIA commented that ``for some reporting traders,

    the number of parents and subsidiaries could number in the hundreds.

    Moreover, the reporting trader may not know, and may not be permitted

    to know, if the person in which the reporting trader has a 10 percent

    or greater interest engages in derivatives trading.'' \156\ FIA also

    noted that the Form 40 requires the reporting of persons that have a 10

    percent or greater ownership interest in the reporting trader.\157\ FIA

    viewed the 10 percent threshold as inconsistent with the precedent

    established by Commission Rule 45.6(a), which establishes a control

    definition based in part upon ``the right to vote 25 percent or more of

    a class of voting interest.'' \158\

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

    \155\ CL-2012-FIA supra note 55 at 8. CL-2012-Joint Electric

    Association supra note 55 at 3-4.

    \156\ CL-2012-FIA supra note 55 at 8.

    \157\ CL-2012-FIA supra note 55 at 5.

    \158\ Id.

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

    Joint Electric Association expressed concern that its members,

    which often enter into energy commodity swaps to hedge commercial

    risks, will not understand the terminology and purpose of the Form

    40S.\159\ They noted that Association members would, for the most part,

    be unlikely to have received an old Form 40. Joint Electric Association

    commented that ``most of the words in the form were not revised to

    reflect the different market structure whereby swap counterparties

    transact directly with registered `swap dealers' . . . rather than

    through financial intermediaries or market professionals as is the case

    in the futures industry. As a result, commercial market participants

    receiving the New Form 40, if they have never seen old Form 40, have no

    context

    [[Page 69198]]

    within which to understand the new Form or their responsibilities to

    the Commission.'' \160\

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

    \159\ CL-2012-Joint Electric Association supra note 55 at 3.

    \160\ Id.

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

    FIA recommended that, instead of requiring identification of

    indirect owners that have an ownership interest of 10 percent or more,

    ``Form 40 be revised to require identification of indirect owners that

    have an ownership interest of 25 percent or more. Setting different

    indirect ownership levels for related purposes imposes an unnecessary

    operational burden on firms that must develop systems and procedures to

    assure compliance with these reporting requirements.'' \161\

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

    \161\ CL-2012-FIA supra note 55 at 5.

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

    Joint Electric Association recommended that various terms in the

    Form 40S (such as ``reportable position,'' ``swap dealer'' and ``major

    swap participant'') should be clarified and made more understandable to

    a commercial end user of energy commodity swaps.\162\ Joint Electric

    Association made several other recommendations to simplify the form and

    reduce the reporting burden on small entities, including the following:

    Provide a ``regulatory reporting lite'' version of the form, which

    would excuse commercial end users from completing the majority of the

    form; \163\ permit small entities to deliver the form by paper,

    facsimile or email, rather than make electronic filing through a web

    portal; \164\ excuse small entities from any requirement to

    periodically update the form in response to a subsequent special call

    by the Commission; \165\ and establish procedures to limit the

    application of the special call authority to small entities.\166\

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

    \162\ CL-2012-Joint Electric Association supra note 55 at 4-5.

    \163\ CL-2012-Joint Electric Association supra note 55 at 5.

    \164\ CL-2012-Joint Electric Association supra note 55 at 6.

    \165\ CL-2012-Joint Electric Association supra note 55 at 7.

    \166\ Id.

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

    Discussion of Final Rule

    The Commission is adopting proposed Sec. 18.04 without

    modifications.

    The current Form 40 asks whether any person has a financial

    interest of 10 percent or more in the reporting trader. The Commission

    believes that it is appropriate to maintain the 10 percent threshold

    for reporting based on ownership that appears in current Form 40. The

    10 percent threshold in current Form 40 allows the Commission to

    receive reporting on a greater number of ownership relationships than a

    25 percent threshold would require, thereby benefiting the Commission's

    surveillance capabilities. The 10 percent threshold is also consistent

    with other Commission regulations, such as the aggregation requirements

    (based on 10 percent or greater ownership or equity interest) in Sec.

    150.4(b)-(c). The Commission notes that the 25 percent reporting

    threshold recommended by FIA reflects the definition of control for

    purposes of assigning legal entity identifiers (``LEIs'') to swap

    counterparties, a regulatory objective unrelated to the Form 40's

    objective of obtaining ownership and control information with regard to

    reporting traders.

    The questions added to New Form 40 will provide the Commission with

    crucial information regarding reporting traders' ownership and control

    relationships and business activities. The Commission will utilize this

    information to perform more comprehensive oversight and surveillance of

    regulated derivatives markets, including by better understanding

    relationships that may exist among market participants, and to

    facilitate analysis of potentially disruptive or manipulative trading

    activity. The definitions of ``swap dealer'' and ``major swap

    participant,'' which are the subject of a comment by Joint Electric

    Association, have now been finalized.\167\ In response to Joint

    Electric Association's other comments, the Commission expects New Form

    40 to affect only a small subset of respondents that may be ``small

    entities'' for purposes of the Regulatory Flexibility Act.\168\ This is

    due, in part, to the fact that the Commission will send New Form 40 on

    a discretionary basis in response to the reporting of an account that

    reaches a minimum position or volume threshold. The Commission does not

    expect that small entities will typically reach such reporting

    thresholds.\169\

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

    \167\ See Commission, Further Definition of ``Swap Dealer,''

    ``Security-Based Swap Dealer,'' ``Major Swap Participant,'' ``Major

    Security-Based Swap Participant'' and ``Eligible Swap Participant'',

    77 FR 30596 (May 23, 2012).

    \168\ The Regulatory Flexibility Act requires that agencies

    consider whether the rules they propose will have a significant

    economic impact on a substantial number of small entities and, if

    so, provide a regulatory flexibility analysis regarding the impact.

    See NPRM supra note 10 at 43990 and section VIII(C) infra.

    \169\ See supra the discussion of the RTVL for volume-based

    reporting in section VII(xiv). As noted above, the RTVL has been

    calibrated to yield information with respect to those trading

    accounts that are responsible for a substantial percentage of

    trading volume, while minimizing the proposed regulations' impact on

    low-volume accounts whose trading activity does not warrant

    inclusion in the reporting regime.

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

    Finally, the Commission declines to accept the proposal by Joint

    Electric Association that respondents retain the option to file by

    paper, facsimile or email. The Commission believes that the automation

    of Form 40, and the use of auto-population on the web-based Form, will

    result in increased efficiencies for the Commission and the majority of

    reporting parties. As noted in section VIII(A) below, the Commission

    expects that the majority of reporting parties will submit Form 40 via

    the web-based portal, as opposed to via an FTP data feed. The auto-

    population of certain data fields on the portal will reduce the burden

    and complexity of the submission process. As a result, the Commission

    estimates that the time required to update information contained in New

    Form 40 using the web-based portal will be de minimis for most

    reporting parties.

    ii. Sec. 18.05--Maintenance of Books and Records

    NPRM Proposal

    Current Sec. 18.05 requires traders who hold or control reportable

    positions to maintain books and records regarding all positions and

    transactions in the commodity in which they have reportable

    positions.\170\ In addition, current Sec. 18.05 requires that the

    trader furnish the Commission with information concerning such

    positions upon request. The Commission proposed to expand Sec. 18.05

    to also impose books and records requirements upon (a) volume threshold

    account controllers and owners of volume threshold accounts reported on

    New Form 102B and (b) reportable sub-account controllers and persons

    who own a reportable sub-account reported on New Form 71.

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

    \170\ 17 CFR 18.05.

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

    Discussion of Final Rule

    No comments were received pertaining to the proposed rule. As noted

    above, the Commission proposed to expand Sec. 18.05 to impose books

    and records requirements on volume threshold account controllers and

    owners of volume threshold accounts reported on New Form 102B and

    reportable sub-account controllers and persons who own a reportable

    sub-account reported on New Form 71. The Commission also notes that the

    definition of reportable trading volume encompasses trading on both

    DCMs and SEFs. Accordingly, the Commission is adopting Sec. 18.05 as

    proposed, with the clarification that the books and records required to

    be kept by volume threshold

    [[Page 69199]]

    account controllers, owners of volume threshold accounts, reportable

    sub-account controllers, and persons who own reportable sub-accounts

    include books and records with respect to both their futures and swap

    market activities.

    D. Part 20

    i. Sec. 20.5--Series S Filings

    NPRM Proposal

    As with Forms 102 and 40, the Commission proposed to transfer the

    list of data points required in Form 102S from the relevant regulatory

    text (i.e., Sec. 20.5) \171\ to the form itself. More specifically,

    the Commission proposed to eliminate the data points specified in Sec.

    20.5(a)(1), and to revise Sec. 20.5(a)(1) to provide that when a

    counterparty consolidated account first becomes reportable, the

    reporting party shall submit a 102S filing (``initial 102S filing'').

    The timing for submitting initial 102S filings would continue to be

    subject to current Sec. 20.5(a)(3).\172\ Finally, the Commission

    proposed to codify new Sec. 20.5(a)(4) and (5) to require change and

    refresh updates for Form 102S in the same manner as they are required

    for Form 102A. The Commission also proposed a conforming amendment to

    Sec. 20.5(a)(2) to eliminate the current instructions with respect to

    updating 102S filings.

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

    \171\ 17 CFR 20.5.

    \172\ 17 CFR 20.5(a)(3).

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

    Summary of Comments on NPRM Proposal

    FIA commented on the utility of Form 102S, which requires swap

    dealers and clearing members to identify and report a swap counterparty

    or customer consolidated account with a reportable position. FIA stated

    that the information that will be reported to swap data repositories

    under part 45 would provide the Commission with access to essentially

    the same information that proposed Form 102S will require.\173\ FIA

    commented that ``requiring FCMs, and the industry generally, to divert

    critical operational and financial resources from building the systems

    necessary to implement the part 45 recordkeeping and reporting

    requirements to implement this interim solution, would impose an

    unnecessary operational burden and cost without a significant

    offsetting benefit.'' \174\ CME commented that ``requiring swap

    reporting as part of OCR, to accomplish reporting that is already being

    done under part 20- and soon to be duplicated under SDR reporting with

    new unique legal entity identifiers- is unnecessary and imposes

    additional unjustified costs on the industry.'' \175\

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

    \173\ CL-2012-FIA supra note 55 at 2-3.

    \174\ CL-2012-FIA supra note 55 at 3.

    \175\ CL-2012-CME supra note 55 at 3.

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

    See the discussion of Sec. 17.02(b) above for a summary of the

    comments received on change and refresh obligations related to the Form

    102, which are relevant to Form 102S.

    Discussion of Final Rule

    The Commission acknowledges the comments of FIA and CME regarding

    the Form 102S. Contrary to commenters' claims, however, SDRs will not,

    in all cases, be able to provide the ownership and control information

    requested on 102S. For example, the Commission anticipates that swap

    dealers and clearing members (the 102S reporting parties) will be able

    to consistently provide the contact information for owners and

    controllers of consolidated accounts on the 102S, based on the records

    these entities maintain. Part 45 reporting, by contrast, is based on

    counterparty data. This counterparty data may, in some cases, overlap

    with the owners and controllers of consolidated accounts reported on

    102S. However, counterparty data will not, in all cases, overlap with

    102S reporting and provide the ownership and control information

    required by 102S. As a result, the Commission cannot rely on SDR

    reporting under part 45 as a substitute for 102S. In addition, SDRs

    would not have a proactive obligation to send swap account information

    to the Commission; in contrast, 102S places an affirmative obligation

    on respondents to provide swap counterparty consolidated account

    information to the Commission.

    Such differences notwithstanding, in developing New Form 102, the

    Commission has endeavored to identify and eliminate any duplicative

    reporting obligations that may arise from these final rules. For

    example, New Form 102 requires respondents to provide the legal entity

    identifiers (LEI) and related information (i.e., names and addresses)

    of parties reportable on the form. However, if such related information

    has previously been reported to a CFTC-accepted provider of LEIs (e.g.,

    the CICI Utility), then reporting parties are not required to report it

    again on New Form 102. This eliminates all duplication between New Form

    102 and data currently reported to an LEI provider. Furthermore, in the

    event the CICI Utility or another CFTC-accepted LEI provider is

    modified in the future to accept certain supplemental fields required

    on the forms,\176\ then reporting parties will not be required to

    report these supplemental fields on New Form 102, if the information

    has previously been reported to such an LEI provider.\177\

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

    \176\ The Regulatory Oversight Committee (ROC) of the Global LEI

    System (GLEIS) is seeking to modify ISO 17442 LEI, the core standard

    underlying the GLEIS, in order to collect certain additional

    information from persons registering to receive an LEI.

    \177\ The supplemental fields required on New Form 102 include

    the name, phone number and email address of certain contact persons

    required by the reporting forms, among other fields. See the

    footnotes to the reporting forms in the Appendix for a detailed list

    of the information that may be omitted from the forms for the

    reasons described in this paragraph.

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

    More generally, staff is considering recommending that the

    Commission issue an Advanced Notice of Proposed Rulemaking seeking

    public input on possible revisions to part 45 that could increase

    efficiencies in reporting swap data and mitigate the burden on market

    participants. As markets, market participants, and trading conventions

    adapt to the swap data recordkeeping and reporting requirements under

    part 45, staff will review these requirements to ensure that they

    continue to fulfill their regulatory objectives in light of the

    evolving swaps marketplace. For the reasons discussed above, the

    Commission is implementing 102S reporting pursuant to the final rules.

    The Commission is adopting proposed Sec. 20.5(a)(1)-(2) without

    modification. In response to comments received with respect to Sec.

    17.02(b), the Commission is making the following modifications to

    proposed Sec. 20.5(a)(4)-(5) and to Form 102S:

    Sec. 20.5(a)(5) (refresh 102S filings). The discussion of Sec.

    17.02(b) above contains a summary of the comments received on change

    and refresh obligations related to the Form 102, which are relevant to

    Form 102S. In response to FIA's comments, refresh filings for

    consolidated accounts will be required once per year, as opposed to

    once each six months (as proposed in the NPRM). In light of this

    change, the final rules provide that refresh updates are required on

    such other date specified by the Commission or its designee that is

    equal to or greater than six months, which is consistent with the

    alternative deadline language in proposed Sec. Sec. 17.02 and 20.5.

    Sec. 20.5(a)(4)-(5) (when 102S consolidated accounts are no longer

    reportable). Reporting parties may stop providing Form 102S change

    updates and refresh updates for a consolidated account if the account

    is no longer reportable as a consolidated account and has not been

    reportable as a consolidated account for the past six months. This

    change is intended to

    [[Page 69200]]

    substantively replicate Sec. 17.02(c)(3)-(4), which provide that

    clearing members may stop providing Form 102B change updates and

    refresh updates, respectively, upon notifying the Commission or its

    designee that the relevant volume threshold account executed no trades

    in any product in the past six months on the reporting market at which

    the volume threshold account reached the reportable trading volume

    level.

    Sections 20.5(a)(4) and (5) have also been modified to enable

    reporting parties to notify the Commission ``or its designee'' that an

    account is no longer reportable as a consolidated account, based on the

    criteria described in these sections.

    VIII. Related Matters

    A. Paperwork Reduction Act

    i. Overview

    The Paperwork Reduction Act (``PRA'') \178\ imposes certain

    requirements on Federal agencies in connection with their conducting or

    sponsoring any collection of information as defined by the PRA. An

    agency may not conduct or sponsor, and a person is not required to

    respond to, a collection of information unless it displays a currently

    valid control number. This rulemaking will result in new collection of

    information requirements within the meaning of the PRA. The Commission

    has therefore submitted this proposal to the Office of Management and

    Budget (``OMB'') for review in accordance with 44 U.S.C. 3507(d) and 5

    CFR 1320.11. The title for this collection of information is ``Trader

    and Account Identification Reports'' (OMB control number 3038-0103).

    Responses to this collection of information will be mandatory. The

    Commission will protect proprietary information consistent with the

    Freedom of Information Act and 17 CFR part 145, ``Commission Records

    and Information.'' In addition, section 8(a)(1) of the Act strictly

    prohibits the Commission, unless specifically authorized by the Act,

    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.'' \179\ The Commission is also

    required to protect certain information contained in a government

    system of records according to the Privacy Act of 1974, 5 U.S.C. 552a.

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

    \178\ 44 U.S.C. 3501 et seq.

    \179\ 7 U.S.C. 12(a)(1).

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

    The rulemaking will create new information collection requirements

    via Sec. Sec. 17.01, 18.04, 18.05, and 20.5. Currently, OMB control

    number 3038-0009 covers, among other things, the collection

    requirements arising from current Sec. Sec. 17.01, 18.04, and

    18.05.\180\ Also, OMB control number 3038-0095 covers, among other

    things, the collection requirements arising from current Sec.

    20.5.\181\ Accordingly, the Commission is requesting a new OMB control

    number for the purpose of consolidating the collections into a common

    control number. Collection requirements arising from Sec. Sec. 17.01,

    18.04, 18.05, and 20.5 will be covered by 3038-0103. Once the

    collections covered by control number 3038-0103 become operational, OMB

    control number 3038-0009 will no longer cover collection requirements

    arising from Sec. Sec. 17.01, 18.04, and 18.05. In addition, OMB

    control number 3038-0095 will no longer cover collection requirements

    arising from Sec. 20.5. The remaining collection requirements covered

    by 3038-0009 and 3038-0095 will not be affected.

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

    \180\ 17 CFR 17.01, 18.04 and 18.05.

    \181\ 17 CFR 20.5.

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

    ii. Information To Be Provided

    Section 17.01, as revised by this rulemaking, will result in the

    collection of information regarding the following types of accounts:

    (a) Special accounts (as defined in current Sec. 15.00(r)); \182\ and

    (b) volume threshold accounts, omnibus volume threshold accounts, and

    omnibus reportable sub-accounts (each as defined in Sec. 15.00).

    Specifically, Sec. 17.01 will provide for the filing of New Form 102A,

    New Form 102B and New Form 71, as follows:

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

    \182\ 17 CFR 15.00(r).

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

    1. pursuant to Sec. 17.01(a), FCMs, clearing members, and foreign

    brokers will identify new special accounts to the Commission on New

    Form 102A; \183\

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

    \183\ See supra sections III(A) and V(A) for a description of

    current Form 102 and a comparison to New Form 102A.

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

    2. pursuant to Sec. 17.01(b), clearing members will identify

    volume threshold accounts to the Commission on New Form 102B; \184\ and

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

    \184\ See supra section V(B) for a description of New Form 102B.

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

    3. pursuant to Sec. 17.01(c), omnibus volume threshold account

    originators and omnibus reportable sub-account originators will

    identify reportable sub-accounts to the Commission on New Form 71 when

    requested via a special call by the Commission or its designee.\185\

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

    \185\ See supra section V(D) for a description of New Form 71.

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

    Additional reporting requirements will arise from Sec. 18.04,

    which will result in the collection of information from and regarding

    traders who own, hold, or control reportable positions; volume

    threshold account controllers; persons who own volume threshold

    accounts; reportable sub-account controllers; and persons who own

    reportable sub-accounts. Specifically, Sec. 18.04 will provide for the

    filing of New Form 40, as follows:

    1. pursuant to Sec. 18.04(a), a trader who owns, holds, or

    controls a reportable position will file New Form 40, when requested

    via a special call by the Commission or its designee; and

    2. pursuant to Sec. 18.04(b), a volume threshold account

    controller, person who owns a volume threshold account, reportable sub-

    account controller, and person who owns a reportable sub-account will

    file New Form 40 when requested via a special call by the Commission or

    its designee.\186\

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

    \186\ See supra sections III(A) and V(E) for a description of

    current Form 40 and a comparison to New Form 40.

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

    Reporting requirements will also arise from Sec. 20.5(a), which

    will require all reporting entities to submit New Form 102S for swap

    counterparty or customer consolidated accounts with reportable

    positions.\187\ In addition, current Sec. 20.5(b) requires every

    person subject to books or records under current Sec. 20.6 to complete

    a 40S filing after a special call upon such person by the

    Commission.\188\ However, current Sec. 20.5(b) also provides that a

    40S filing shall consist of the submission of Form 40. As discussed

    above, the final rules provide for the creation of New Form 40, which

    will expand and replace current Form 40. Accordingly, the final rules

    will require additional information from 40S filers.

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

    \187\ ``Reporting entity,'' ``counterparty,'' and ``consolidated

    account'' are each defined in Sec. 20.1 of the Commission's

    regulations. See supra sections III(B) and V(C) for a description of

    current Form 102S and a comparison to New Form 102S.

    \188\ 17 CFR 20.5(b) and 20.6. See supra sections III(B) and

    V(E) for a description of current Form 40S and a comparison to New

    Form 40S.

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

    [[Page 69201]]

    In addition to the reporting requirements summarized above, Sec.

    18.05 will impose recordkeeping requirements upon: (1) Traders who own,

    hold, or control a reportable futures or options on futures position

    (who are subject to current Sec. 18.05); (2) volume threshold account

    controllers; (3) persons who own volume threshold accounts; (4)

    reportable sub-account controllers; and (5) persons who own reportable

    sub-accounts. These provisions extend the recordkeeping requirements of

    current Sec. 18.05, which are applicable to traders who hold or

    control a reportable futures or options on futures position, to owners

    and controllers of accounts with reportable trading volume.\189\

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

    \189\ 17 CFR 18.05.

    iii. Total Reporting and Recordkeeping Costs; Methodology Used To

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

    Estimate Costs

    (a) Total Costs

    Set forth below is the estimated total annual industry cost for

    affected participants to (i) Complete Forms 102A and 102S and any

    resulting Form 40s, (ii) complete Forms 102B and 71 for volume

    threshold accounts associated with DCMs and SEFs and any resulting Form

    40s, and (iii) comply with the books and records obligations arising

    from revised Sec. 18.05:

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

    Estimated total annual Anticipated transmission

    Regulation Associated report industry cost \190\ method

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

    17.01(a)............................ New Form 102A.......... $1,931,129 FTP.

    17.01(b)............................ New Form 102B.......... 1,299,799 FTP.

    17.01(c)............................ New Form 71............ 427,147 Web.

    18.04(a)............................ New Form 40............ 1,103,603 Web.

    18.04(b)............................ New Form 40............ 3,977,173 Web.

    18.05............................... Books and Records...... 18,569 N/A.

    20.5(a)............................. 102S Filing............ 289,669 FTP.

    20.5(b)............................. 40S Filing............. 527,207 Web.

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

    Total........................... ....................... 9,574,296

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

    Total reporting and recordkeeping costs for the final rules reflect

    the sum of estimated burdens, multiplied by the wage rate provided

    below, for: (1) New Form 102A; (2) New Form 102B; (3) New Form 71; (4)

    New Form 40 (pursuant to 18.04(a)); \191\ (5) New Form 40 (pursuant to

    Sec. 18.04(b)); \192\ (6) the reporting and recordkeeping requirements

    of revised Sec. 18.05; (7) New Form 102S; and (8) New Form 40S. The

    Commission has updated the cost estimates in the NPRM based on the most

    recent data and statistics available to the Commission.

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

    \190\ The estimated total annual industry cost includes annual

    reporting and recordkeeping costs, as well as annualized start-up

    costs and ongoing operating and maintenance costs. The estimated

    total costs for each form included in this chart are subject to the

    limitations described in section VIII(B), below.

    \191\ 17 CFR 18.04(a).

    \192\ 17 CFR 18.04(b).

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

    Methodology Used To Estimate Costs

    The Commission estimated the reporting burden associated with each

    filing obligation below by considering the two distinct filing methods

    that it will accommodate pursuant to these final rules (via FTP or via

    the web portal). With two methods of submission, reporting parties will

    have the flexibility to select the submission method that works best

    with their existing data and technology infrastructure and the number

    of filings they expect to make. While the NPRM contemplated that

    certain forms (Forms 40/S and 71) could be submitted only via the web

    portal, these final rules provide that all forms may be submitted

    either via the web portal or via FTP, in order to provide additional

    flexibility to reporting parties. In general, the Commission believes

    that FTP submission will be more cost effective for reporting parties

    with a large number of filings, while submission through the web-based

    portal will be more cost effective for reporting parties with a small

    number of filings.

    As noted above, the Commission has calculated the total estimated

    industry cost for submitting each form via FTP or via the web portal.

    These calculations represent the total industry cost if all reporting

    parties submit information via one method--as compared to the total

    industry cost if all parties submit via the other method. For example,

    the 102A calculations below represent the total estimated industry cost

    if all reporting parties submit 102A via FTP ($1,931,129), or if all

    parties submit 102A via the web portal ($5,954,969). The Commission

    recognizes that, even if it is less expensive for the industry as a

    whole to submit 102A via FTP, it may be less expensive for certain

    individual reporting parties to submit 102A via the web portal. This

    may be due to the limited number of forms these parties expect to

    submit, their technology infrastructure, or other factors.

    To expand on this example, if a new reporting party anticipates

    that it will submit only two 102A filings per year, it might logically

    conclude that it would be less expensive to submit its two filings via

    the web portal than to incur the development costs associated with

    establishing an FTP link to the Commission. In this instance, the

    Commission has estimated that the reporting party would incur 20 hours

    of initial development burden for each of the two records submitted via

    the web portal, or a total initial development burden of 40 hours.

    Accordingly, the reporting party may conclude that submitting its 102A

    filings via the web portal is more cost-effective than submitting the

    same information via FTP, which the Commission has estimated would

    require an initial development burden of 264 hours per entity

    (regardless of the number of forms submitted).\193\

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

    \193\ In this example, the Commission expects that reporting

    parties making a small number of filings would choose to submit via

    the web-based portal, because web submission would be the most cost-

    effective submission method for such parties. In doing so, they will

    incur fewer costs than they would if they submitted via FTP, thereby

    lowering the total costs to the industry. As a result, the

    simplifying assumption that all reporting parties will submit New

    Form 102A (along with certain other forms discussed below) via FTP

    is a conservative assumption, which will tend to overestimate the

    total industry cost.

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

    [[Page 69202]]

    All burden estimates assume that information required by each form

    is generally available within the reporting party; however, in

    preparing its estimates, the Commission did make an effort to account

    for the added burden associated with assembling data distributed among

    multiple systems and/or databases within a reporting party. Finally,

    the cost estimates in section VIII(A) and (B) assume that all market

    participants will start from the same point in developing the systems

    required to implement OCR reporting. Accordingly, to the extent that

    current reporting parties leverage their existing reporting systems

    \194\ to implement OCR reporting, the cost estimates are likely to

    overestimate actual costs to some degree for such parties.

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

    \194\ Certain parties that will be required to report under

    these final rules now provide certain forms under the current

    reporting system (e.g., the current Forms 102 and 40).

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

    For the following additional reasons, the Commission anticipates

    that total reporting and recordkeeping costs to the industry are likely

    to be lower than the sum of the costs associated with each form

    individually, as the Commission has calculated herein.

    First, the Commission notes that reporting and recordkeeping

    burdens arising from each regulation and associated form were estimated

    independently of the requirements of the other regulations and

    associated forms, and that substantial synergies are likely to exist

    across the systems and data necessary to meet the reporting

    requirements. As a result, the total reporting and recordkeeping costs

    to the industry for the final rules are likely to be substantially

    lower than estimated. For example, many reporting firms submitting New

    Form 102A will also submit New Form 102B, and will be able to leverage

    systems and information necessary for submitting one form to meet the

    requirements of the other.

    Second, the Commission responded to several proposals by commenters

    to modify the reporting requirements in order to reduce the

    requirements' burdens and associated costs. Commenters did not quantify

    the magnitude of the potential cost savings from their alternative

    proposals. The final rules adopt a number of these proposals in

    modified fashion in order to reduce the rules' burden and costs, while

    also maintaining their regulatory benefits. The Commission has taken a

    conservative approach and made no downward adjustment for cost savings

    attributable to modifications that the Commission has made to the final

    rules to accommodate commenters' proposals.

    iv. Reporting Burdens--New and Revised Forms

    New Form 102A--Sec. 17.01(a):

    Method 1 (102A FTP submission--lower estimate): Method 1 assumes

    that each New Form 102A reporting party will use an automated program

    to submit its forms via secure FTP. Each Method 1 submission will

    likely contain numerous 102A records. The Commission estimates that the

    total initial development burden will average 264 hours per reporting

    party. The Commission also estimates that the highly automated nature

    of this option will virtually eliminate the marginal costs associated

    with each additional submission or each additional record contained in

    a submission. Accordingly, the Commission estimates that 102A change

    and refresh updates will not increase a reporting party's burden when

    using Method 1. The Commission further estimates that the ongoing

    operation and maintenance burden will average 53 hours per year no

    matter how many records are contained in a submission. The total Method

    1 annualized initial development burden and the ongoing operation and

    maintenance burden (total yearly burden) will equal approximately 106

    hours per reporting party.\195\

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

    \195\ All annualized development burden estimates are based on 5

    year, straight line depreciation. The 106 hour figure is arrived at

    by dividing 264 hours (initial development burden per reporting

    party) by 5 years, which results in an estimated annualized initial

    development burden of 53 hours per reporting party. 53 hours plus 53

    hours (annual, ongoing operation and maintenance burdens per

    reporting party) equals 106 hours per reporting party. The

    submission of Form 71 through the web-based portal does not require

    initial development expenditures; as a result, the burdens and costs

    for this form are calculated on an annual basis rather than an

    annualized basis.

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

    An assessment of Commission data collection efforts demonstrated

    that the Commission received Form 102 submissions from 260 reporting

    parties in 2012. The Commission anticipates that it will receive New

    Form 102A submissions from a similar number of reporting parties each

    year. Assuming all New Form 102A reporting parties utilize Method 1,

    the Commission estimates that the total annual industry burden for New

    Form 102A will equal 27,560 hours. Using an estimated wage rate of

    $70.07 per hour,\196\ annual industry costs for 102A filings made

    pursuant to Method 1 are estimated at $1,931,129. As indicated

    throughout this section VIII(A), the Commission has applied the same

    wage rate of $70.07 to submission via both the web portal and FTP,

    although each submission method will require a different annual or

    annualized burden, in terms of hours. This $70.07 wage rate encompasses

    the work of a senior programmer, programmer, intermediate compliance

    advisor, systems analyst, and assistant/associate general counsel, in

    the proportions described in the preceding footnote.

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

    \196\ The Commission staff's estimates concerning the wage rates

    are based on salary information for the securities industry compiled

    by the Securities Industry and Financial Markets Association

    (``SIFMA''). The $70.07 per hour is derived from figures from a

    weighted average of salaries and bonuses across different

    professions from the SIFMA Report on Management & Professional

    Earnings in the Securities Industry 2011, modified to account for an

    1800-hour work-year and multiplied by 1.3 to account for overhead

    and other benefits. The wage rate is a weighted national average of

    salary and bonuses for professionals with the following titles (and

    their relative weight): ``programmer (senior)'' (30% weight);

    ``programmer'' (29% weight); ``compliance advisor (intermediate)''

    (15%), ``systems analyst'' (16%), and ``assistant/associate general

    counsel'' (10%). The $70.07 wage rate is a blended rate, such that

    the Commission has applied the same $70.07 wage rate when

    calculating the cost of submission via both FTP and the web-based

    portal. As noted above, the NPRM contemplated that Forms 40/S and 71

    could be submitted only via the web portal. However, pursuant to

    these final rules, the Commission is allowing reporting parties to

    submit Forms 40/S and 71 via FTP as well, with the result that

    reporting parties may submit all forms either via the web portal or

    via FTP. In light of this change, the wage rage percentages in these

    final rules have been updated and slightly modified from the wage

    rate percentages in the NPRM, to more accurately reflect anticipated

    labor allocations. The NPRM employed the following wage rage

    percentages: ``programmer (senior)'' (30% weight); ``programmer''

    (30% weight); ``compliance advisor (intermediate)'' (20%), ``systems

    analyst'' (10%), and ``assistant/associate general counsel'' (10%).

    While the NPRM calculated an estimated wage rate of $78.61 per hour,

    these final rules calculate an estimated wage rate of $70.07 per

    hour, using the 2011 SIFMA statistics and updated wage rate

    percentages. (Note that the national average of salary and bonuses

    for the professionals listed above declined between 2010 to 2011,

    according to the SIFMA report addressing each of those years. The

    2010 SIMA report (which is the basis for the wage rate in the NPRM)

    indicates an aggregate national average of salary and bonuses of

    $530,321 for these professionals, while the 2011 SIFMA report

    indicates an aggregate national average of salary and bonuses of

    $510,943.) The Commission has also updated the cost estimates that

    appeared in the NPRM based on the most recent data and statistics

    available to the Commission (including, for example, the number of

    reporting forms and/or records received by the Commission in 2012).

    The NPRM calculated an estimated total annual cost to the industry

    of $9,147,061, as compared to an estimated total cost to the

    industry of $9,574,296 in these final rules, supra. See also infra

    note 265.

    [[Page 69203]]

    Form 102A--Lower Estimate Is Method 1

    [FTP submission]

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

    Annualized

    burden per Total annual Estimated wage Annual

    Number of reporting parties per year reporting party industry rate industry costs

    (hours) \197\ burden (hours)

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

    260......................................... 106 27,560 $70.07 $1,931,129

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

    Method 2 (102A web submission--higher estimate): Method 2 assumes

    that each New Form 102A reporting party will complete and submit its

    forms online via a secure portal provided by the Commission. The

    Commission estimates that the total initial development burden will

    average 20 hours per New Form 102A record. The Commission also

    estimates that the annual ongoing burden, which includes change and

    refresh filings, will average 7 hours per year for each New Form 102A

    record. The estimated Method 2 total annualized initial development

    burden and the ongoing operation and maintenance burden (total yearly

    burden) equals approximately 11 hours per New Form 102A record.\198\

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

    \197\ See supra note 195 for a discussion of the calculation of

    this annualized burden. As discussed above, the initial development

    burden per reporting party (264 hours) has been divided by 5 years,

    which results in an estimated annualized initial development burden

    of 53 hours per reporting party. On a non-annualized basis, the

    initial development cost per reporting party is estimated at $18,498

    (264 hours x a wage rate of $70.07). The Commission expects that

    reporting parties will budget initial development costs in the

    manner that is most cost-effective for each party, which may result

    in some reporting parties incurring the majority of these initial

    development costs in the beginning of the rule compliance period.

    \198\ All annualized development burden estimates are based on 5

    year, straight line depreciation.

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

    In connection with the introduction of New Form 102A pursuant to

    this rulemaking, the Commission notes that (except as otherwise

    instructed by the Commission or its designee) its regulations require

    reporting firms to separately aggregate positions by common ownership

    and by common control for the purpose of identifying and reporting

    special accounts.\199\ On the basis of such regulations, the Commission

    anticipates that it will receive 7,726 New Form 102A records per

    year.\200\ Assuming each of the 7,726 New Form 102A records are

    provided via Method 2, the Commission estimates that the total annual

    industry burden for New Form 102A will equal 84,986 hours. Using an

    estimated wage rate of $70.07 per hour, annual industry costs for 102A

    filings made pursuant to Method 2 are estimated at $5,954,969.\201\

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

    \199\ See Sec. Sec. 17.00 and 150.4 of the Commission's

    regulations.

    \200\ This estimate is based on the requirements of Sec. Sec.

    17.00 and 150.4 of the Commission's regulations. The 7,726 figure

    represents an increase from the 4,415 Form 102 records the

    Commission received in 2012. The Commission calculated that in

    approximately 75 percent of New Form 102A filings, the owner and

    controller of a special account reported on the form will be

    different. As a result, the Commission multiplied the 4,415 figure

    from 2012 by 1.75, and estimated that it will receive approximately

    7,726 New Form 102A records per year.

    Notwithstanding this estimate, which is based on the

    requirements of Sec. Sec. 17.00 and 150.4, reporting parties should

    continue to report special accounts pursuant to Sec. 17.00 on a

    disaggregated basis following the implementation of these final

    rules, if the parties have been so instructed by the Commission or

    its designee. All reporting parties should continue to provide

    position reporting based on control of a special account. As an

    example, if a special account is controlled by one reporting party

    but owned by another, such account should be reported only by the

    reporting party that controls the special account. Consistent with

    this guidance, and notwithstanding the requirement on New Form 102A

    to also report based solely on ownership of a reportable position,

    the Commission will not require reporting based on this trigger via

    New Form 102A following the implementation of these final rules.

    Because the Commission will not require reporting on New Form 102A

    based solely on ownership of a reportable position, the Commission

    anticipates that the number of New Form 102A records it receives per

    year is likely to be lower than the estimated 7,726 records. See

    also supra section V(A)(i).

    \201\ The $5,954,969 figure is arrived at by multiplying 7,726

    records by 11 hours (equals 84,986 hours) by $70.07 (equals

    $5,954,969).

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

    [[Page 69204]]

    Conclusion: The Commission believes that providing filing options

    to the industry should lower their ultimate costs. Because of this,

    estimated total costs to the industry for 102A filings should be lower

    than any cost associated with mandating either Method 1 or Method 2.

    Given the cost estimates for the two individual methods discussed

    above, the Commission anticipates that the annual cost to the industry

    of filing 102A will be approximately $1,931,129 (Method 1--FTP

    submission), the lower of the two estimated filing methods. In

    developing this estimate, the Commission does not make any assumptions

    about the behavior of an individual reporting party. Reporting parties,

    given their own individualized needs, are assumed to make the most

    cost-effective choice for them, which may be either of the two methods.

    New Form 102B--Sec. 17.01(b)

    Method 1 (102B FTP submission--lower estimate): Method 1 assumes

    that each New Form 102B reporting party will use an automated program

    to submit its forms via secure FTP. Each Method 1 submission will

    likely contain numerous 102B records. The Commission estimates that the

    total initial development burden should average 264 hours per reporting

    party. The Commission also estimates that the highly automated nature

    of this option will virtually eliminate the marginal costs associated

    with each additional submission or each additional record contained in

    a submission. Accordingly, the Commission estimates that 102B change

    and refresh updates will not increase a reporting party's burden when

    using Method 1. The Commission further estimates that the ongoing

    operation and maintenance burden will average 53 hours per year no

    matter how many records are contained in a submission. The total Method

    1 annualized initial development burden and the ongoing operation and

    maintenance burden (total yearly burden) equals approximately 106 hours

    per reporting party.\202\

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

    \202\ All annualized development burden estimates are based on 5

    year, straight line depreciation.

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

    Because New Form 102B provides a new volume-based reporting

    structure not found in current Form 102, the Commission is unable to

    refer to historical reporting statistics to directly estimate the

    number of New Form 102B reporting parties. Instead, based on a review

    of transaction volume across a sample of several DCMs from the second

    half of 2011, the Commission estimated the number of trading accounts

    that the Commission anticipates will qualify as volume threshold

    accounts. The Commission estimated the number of DCM-related New Form

    102B reporting parties by calculating the number of clearing members

    associated with these projected volume threshold accounts.

    For volume threshold accounts associated with DCMs, the

    Commission anticipates that it will receive New Form 102B submissions

    from approximately 100 reporting parties annually. Assuming that all

    such reporting parties utilize Method 1, the Commission estimates that

    the total annual industry burden for the reporting of such accounts on

    New Form 102B would equal 10,600 hours.\203\ Using an estimated wage

    rate of $70.07 per hour, annual industry costs for such filings made

    pursuant to Method 1 are estimated at $742,742.\204\

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

    \203\ The 10,600 hour figure is arrived at by multiplying 106

    hours (annualized development burden and ongoing operation and

    maintenance burden per reporting party) by 100 reporting parties.

    \204\ The $742,742 figure is arrived at by multiplying 100

    reporting parties by 106 hours (equals 10,600 hours) by $70.07

    (equals $742,742).

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

    In estimating the number of reporting parties that will

    submit New Form 102B for volume threshold accounts associated with

    SEFs, the Commission has made an assumption that trading activity in

    the SEF marketplace will be lower than in the futures marketplace. For

    volume threshold accounts associated with SEFs, the Commission

    anticipates that it will receive New Form 102B submissions from

    approximately 75 reporting parties annually. Assuming that all such

    reporting parties utilize Method 1, the Commission estimates that the

    total annual industry burden for the reporting of such accounts on New

    Form 102B would equal 7,950 hours.\205\ Using an estimated wage rate of

    $70.07 per hour, annual industry costs for such filings made pursuant

    to Method 1 are estimated at $557,057.\206\

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

    \205\ The 7,950 hour figure is arrived at by multiplying 106

    hours (annualized development burden and ongoing operation and

    maintenance burden per reporting party) by 75 reporting parties.

    \206\ The $557,057 figure is arrived at by multiplying 75

    reporting parties by 106 hours (equals 7,950 hours) by $70.07

    (equals $557,057).

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

    Collectively, annual industry costs for 102B filings made pursuant

    to Method 1 are estimated at $1,299,799.\207\

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

    \207\ The $1,299,799 figure is arrived at by multiplying 175

    reporting parties by 106 hours (equals 18,550 hours) by $70.07

    (equals $1,299,799).

    Form 102B--Lower Estimate Is Method 1

    [FTP submission]

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

    Annualized

    burden per Total annual Estimated wage Annual

    Number of reporting parties per year reporting party industry rate industry costs

    (hours) \208\ burden (hours)

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

    175......................................... 106 18,550 $70.07 $1,299,799

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

    Method 2 (102B web submission--higher estimate): Method 2 assumes

    that each New Form 102B reporting party will complete and submit its

    forms online via a secure portal provided by the Commission. The

    Commission estimates that the total initial development burden will

    average 20 hours per New Form 102B record. The Commission also

    estimates that annual ongoing burdens, which include both change and

    refresh updates, will average 7 hours per year for each New Form 102B

    record. The estimated Method 2 total annualized initial development

    burden and the ongoing operation and maintenance burden (total yearly

    burden) equals approximately 11 hours per New Form 102B record.\209\

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

    \208\ See supra note 195 for a discussion of the calculation of

    this annualized burden. As discussed above, the initial development

    burden per reporting party (264 hours) has been divided by 5 years,

    which results in an estimated annualized initial development burden

    of 53 hours per reporting party. On a non-annualized basis, the

    initial development cost per reporting party is estimated at $18,498

    (264 hours x a wage rate of $70.07). The Commission expects that

    reporting parties will budget initial development costs in the

    manner that is most cost-effective for each party, which may result

    in some reporting parties incurring the majority of these initial

    development costs in the beginning of the rule compliance period.

    \209\ All annualized development burden estimates are based on 5

    year, straight line depreciation.

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

    Because New Form 102B provides a new volume-based reporting

    structure

    [[Page 69205]]

    not found in current Form 102, the Commission is unable to refer to

    historical reporting statistics to directly estimate the number of New

    Form 102B records it might receive. Instead, the Commission estimated

    the number of New Form 102B records that it will receive on an annual

    basis by reviewing transaction volume across a sample of several DCMs

    from the second half of 2011. Based on this data, the Commission

    calculated the relationship between (a) volume activity on the DCMs

    reviewed, (b) the number of reportable volume threshold accounts that

    would result from this volume activity, and (c) the number of DCM-

    related New Form 102B records the Commission would receive in

    connection with these volume threshold accounts. The Commission created

    a mathematical function based on these three factors. The Commission

    then made a projection regarding anticipated SEF-related volume

    activity, and applied the mathematical function described above to

    estimate (i) the number of SEF-related, reportable volume threshold

    accounts that would result from this volume activity, and (ii) the

    number of SEF-related New Form 102B records the Commission would

    receive in connection with these volume threshold accounts. Based on

    the preceding methodology, the Commission estimated the following:

    For volume threshold accounts associated with DCMs, the

    Commission anticipates that it will receive approximately 126,000 New

    Form 102B records annually. Assuming each such record is provided via

    Method 2, the Commission estimates that the total annual industry

    burden for the reporting of such accounts on New Form 102B would equal

    1,386,000 hours. Using an estimated wage rate of $70.07 per hour,

    annual industry costs for such filings made pursuant to Method 2 are

    estimated at $97,117,020.\210\

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

    \210\ The $97,117,020 figure is arrived at by multiplying

    126,000 records by 11 hours (equals 1,386,000 records) by $70.07

    (equals $97,117,020).

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

    For volume threshold accounts associated with SEFs, the

    Commission anticipates that it will receive approximately 62,015 New

    Form 102B records annually. Assuming each such record is provided via

    Method 2, the Commission estimates that the total annual industry

    burden for the reporting of such accounts on New Form 102B would equal

    682,165 hours. Using an estimated wage rate of $70.07 per hour, annual

    industry costs for such filings made pursuant to Method 2 are estimated

    at $47,799,302.\211\

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

    \211\ The $47,799,302 figure is arrived at by multiplying 62,015

    records by 11 hours (equals 682,165 records) by $70.07 (equals

    $47,799,302).

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

    Collectively, annual industry costs for 102B filings made pursuant

    to Method 2 are estimated at $144,916,322.\212\

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

    \212\ The $144,916,322 figure is arrived at by multiplying

    188,015 records by 11 hours (equals 2,068,165 hours) by $70.07

    (equals $144,916,322).

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

    Conclusion

    As discussed above, while the Commission estimates that

    establishing an FTP link will require an initial development burden of

    264 hours, the Commission also believes that submission via FTP will

    virtually eliminate the ongoing marginal costs associated with each

    additional submission or each additional record contained in a

    submission. For this reason, the Commission believes that FTP

    submission will be more cost effective for reporting parties making a

    large number of filings. The Commission expects that a significant

    majority of New Form 102B reporting parties will be making a large

    number of filings. Therefore, when estimating the industry-wide costs,

    the Commission has made the simplifying assumption that all reporting

    parties will use the FTP submission method when submitting New Form

    102B.

    Given the cost estimates for the two individual methods discussed

    above, the Commission anticipates the annual cost to the industry of

    filing DCM and SEF-related 102B will be approximately $1,299,799

    (Method 1--FTP submission), the lower of the two estimated filing

    methods. Notwithstanding the preceding discussion regarding submission

    via FTP by New Form 102B reporting parties, the Commission recognizes

    that reporting parties, given their own individualized needs, will make

    the most cost-effective choice for them, which may be either of the two

    submission methods.

    New Form 71--Sec. 17.01(c)

    Method 1 (71 FTP submission--higher estimate): New Form 71 must be

    provided in response to a special call by the Commission or its

    designee. Method 1 assumes that each New Form 71 reporting party will

    use an automated program to submit its form via secure FTP. The

    Commission estimates that the total initial development burden will

    average 264 hours per reporting party. The Commission further estimates

    that the ongoing operation and maintenance burden will average 53 hours

    per year no matter how many records are contained in a submission. The

    total Method 1 annualized initial development burden and the ongoing

    operation and maintenance burden (total yearly burden) will equal

    approximately 106 hours per reporting party.\213\

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

    \213\ All annualized development burden estimates are based on 5

    year, straight line depreciation.

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

    The number of New Form 71 filings per year will vary according to

    the number of special calls for the form made by the Commission. In

    order to estimate the annual number of New Form 71 filings (i.e., the

    number of special calls made), the Commission considered the number of

    current Form 102 omnibus special accounts and estimated that New Form

    102B will capture a similar number of DCM-related omnibus volume

    threshold accounts.\214\ Furthermore, the Commission estimated that it

    will require a New Form 71 for every such omnibus volume threshold

    account. Commission records indicate 564 omnibus special accounts in

    2012, and the Commission expects an equal number of DCM-related omnibus

    volume threshold accounts. The Commission therefore anticipates that it

    will receive approximately 564 DCM-related New Form 71 filings per

    year, from the same number of reporting parties (564).

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

    \214\ The Commission is estimating the number of New Form 71

    filings in this manner because New Form 71 provides for an omnibus

    account reporting structure that does not currently exist, making

    direct estimates impracticable.

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

    Because the Commission does not presently receive filings

    pertaining to SEF-related omnibus volume threshold accounts, the

    Commission is unable to refer to historical reporting statistics to

    calculate the number of applicable reporting parties. To estimate the

    number of Form 71 reporting parties for omnibus volume threshold

    accounts associated with SEFs, the Commission assumed that SEF

    transactions will likely be intermediated to a lesser extent than DCM

    transactions. The Commission estimates that there may be 35 percent as

    many SEF-related omnibus volume threshold accounts as DCM-related

    omnibus volume threshold accounts. Accordingly, the Commission

    estimates that there will be 198 SEF-related omnibus volume threshold

    accounts, and an equal number of reporting parties (198).

    The Commission notes that the final rules do not require change or

    refresh updates of New Form 71. Accordingly, the burdens and costs

    associated with such updates in the case of other forms described

    herein are not relevant to the calculation of burdens and costs for

    [[Page 69206]]

    New Form 71 filings. The Commission also notes that it is likely to

    request the resubmission of New Form 71 each year.

    Based on an estimated 564 DCM-related New Form 71

    reporting parties per year, the Commission estimates an aggregate

    reporting burden of 59,784 hours annually for DCM-related New Form 71

    filings via Method 1. Using an estimated wage rate of $70.07 per hour,

    annual industry costs for such filings made pursuant to Method 1 are

    estimated at $4,189,065.\215\

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

    \215\ The $4,189,065 figure is arrived at by multiplying 564

    reporting parties by 106 hours (equals 59,784 hours) by $70.07

    (equals $4,189,065).

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

    Based on an estimated 198 SEF-related New Form 71

    reporting parties per year, the Commission estimates an aggregate

    reporting burden of 20,988 hours annually for SEF-related New Form 71

    filings via Method 1. Using an estimated wage rate of $70.07 per hour,

    annual industry costs for such filings made pursuant to Method 1 are

    estimated at $1,470,629.\216\

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

    \216\ The $1,470,629 figure is arrived at by multiplying 198

    reporting parties by 106 hours (equals 20,988 hours) by $70.07

    (equals $1,470,629).

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

    Collectively, annual industry costs for New Form 71 filings made

    pursuant to Method 1 are estimated at $5,659,694.\217\

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

    \217\ The $5,659,694 figure is arrived at by multiplying 762

    reporting parties by 106 hours (equals 80,772 hours) by $70.07

    (equals $5,659,694).

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

    Method 2 (71 web submission--lower estimate): Method 2 assumes that

    each New Form 71 reporting party (i.e., originators of omnibus volume

    threshold accounts or omnibus reportable sub-accounts) will complete

    and submit New Form 71 online via a secure portal provided by the

    Commission.\218\ The Commission estimates that, on average, New Form 71

    will create an annual reporting burden of 8 hours per filing.\219\

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

    \218\ The Commission's special call will likely be in the form

    of an email request that will contain a URL for the portal, and a

    unique login and password for access to the portal.

    \219\ The submission of New Form 71 through the web-based portal

    does not require initial development expenditures; as a result, the

    burdens and costs for this form are calculated on an annual basis

    rather than an annualized basis.

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

    As discussed above, the Commission expects approximately 564 DCM-

    related New Form 71 filings per year, and 198 SEF-related New Form 71

    filings per year.

    Based on an estimated 564 DCM-related New Form 71 filings

    per year, the Commission estimates an aggregate reporting burden of

    4,512 hours annually for such filings via Method 2. Using an estimated

    wage rate of $70.07 per hour, annual industry costs for such filings

    made pursuant to Method 2 are estimated at $316,156.\220\

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

    \220\ The $316,156 figure is arrived at by multiplying 564

    records by 8 hours (equals 4,512 hours) by $70.07 (equals $316,156).

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

    Based on an estimated 198 SEF-related New Form 71 filings

    per year, the Commission estimates an aggregate reporting burden of

    1,584 hours annually for such filings via Method 2. Using an estimated

    wage rate of $70.07 per hour, annual industry costs for such filings

    made pursuant to Method 2 are estimated at $110,991.\221\

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

    \221\ The $110,991 figure is arrived at by multiplying 198

    records by 8 hours (equals 1,584 hours) by $70.07 (equals $110,991).

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

    Collectively, annual industry costs for New Form 71 filings made

    pursuant to Method 2 are estimated at $427,147.\222\

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

    \222\ The $427,147 figure is arrived at by multiplying 762

    records by 8 hours (equals 6,096 hours) by $70.07 (equals $427,147).

    Form 71--Lower Estimate Is Method 2

    [Web submission]

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

    Annual burden Total annual

    Number of responses per year per response industry Estimated wage Annual

    (hours) burden (hours) rate industry costs

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

    762......................................... 8 6,096 $70.07 $427,147

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

    Conclusion: The Commission believes that providing filing options

    to the industry should lower their ultimate costs. Because of this,

    estimated total costs to the industry for 71 filings should be lower

    than any cost associated with mandating either Method 1 or Method 2.

    Given the cost estimates for the two individual methods discussed

    above, the Commission anticipates the annual cost to the industry of

    filing 71 will be approximately $427,147 (Method 2--web submission),

    the lower of the two estimated filing methods. In developing this

    estimate, the Commission does not make any assumptions about the

    behavior of an individual reporting party. Reporting parties, given

    their own individualized needs, are assumed to make the most cost-

    effective choice for them, which may be either of the two methods. New

    Form 40--Sec. 18.04(a) (arising from New Form 102A): \223\

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

    \223\ As discussed in section VIII(A)(iii) above, the Commission

    is evaluating the burden associated with each regulation and

    associated form separately. It should be noted that the burdens

    estimated for New Form 40 filings, arising from proposed Sec.

    18.04(a) and (b), are especially duplicative. For example, many of

    the traders that complete New Form 40 pursuant to Sec. 18.04(a) may

    also be volume threshold account controllers that could receive New

    Form 40 pursuant to Sec. 18.04(b). In practice, if the Commission

    possesses a recent Form 40 filing from a reporting party, it may

    elect not to request a second Form 40 filing from that same entity

    if the entity becomes reportable under an additional provision of

    the proposed regulations and there is no additional information to

    be gained.

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

    Method 1 (40 FTP submission (arising from New Form 102A)--higher

    estimate): New Form 40 must be provided in response to a special call

    by the Commission or its designee. Method 1 assumes that each New Form

    40 reporting party will use an automated program to submit its forms

    (arising from New Form 102A) via secure FTP. The Commission estimates

    that the total initial development burden will average 224 hours per

    reporting party. The Commission further estimates that the ongoing

    operation and maintenance burden will average 53 hours per year no

    matter how many records are contained in a submission. The total Method

    1 annualized initial development burden and the ongoing operation and

    maintenance burden (total yearly burden) will equal approximately 98

    hours per reporting party.\224\

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

    \224\ All annualized development burden estimates are based on 5

    year, straight line depreciation.

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

    As noted above, in connection with the introduction of New Form

    102A pursuant to this rulemaking, the Commission notes that (except as

    otherwise instructed by the Commission or its designee) its regulations

    require reporting firms to separately aggregate positions by common

    ownership and by common control for the purpose of identifying and

    reporting special accounts.\225\ On the basis of such regulations, the

    Commission anticipates that it will receive a greater number of

    [[Page 69207]]

    New Form 102A records per year (7,726) than the number of Form 102

    records it has received in recent years.\226\ While the number of New

    Form 40 filings arising from New Form 102A filings will vary according

    to the number of special calls made by the Commission, the Commission

    nonetheless anticipates that it may make a larger number of special

    calls than in recent years, due to the larger number of anticipated New

    Form 102A records.\227\ As a result, the Commission estimates that New

    Form 102A will result in approximately 5,250 New Form 40 records per

    year, submitted by an equal number of reporting parties (5,250).\228\

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

    \225\ See Sec. Sec. 17.00 and 150.4 of the Commission's

    regulations.

    \226\ The Commission received 4,415 Form 102 records in 2012.

    See also supra note 200.

    \227\ The Commission made approximately 3,000 special calls in

    2012. Such calls were made to special account owners and controllers

    identified via existing DCM-related Form 102.

    \228\ See also supra note 200. Because the Commission

    anticipates that the number of New Form 102A records it receives per

    year is likely to be lower than the estimated 7,726 records, the

    Commission may also make fewer special calls than the estimated

    5,250 calls.

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

    Entities required to complete a New Form 40 will be under a

    continuing obligation, per direction in the special call, to update and

    maintain the accuracy of the information they provide. Entities can

    update this information by either visiting the online New Form 40

    portal to review, verify, and/or update their information, or by

    submitting updated information via FTP. Regardless of whether entities

    update the information contained in New Form 40 via the web or FTP, the

    Commission believes that the time required to provide this information

    will be de minimis.\229\

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

    \229\ See infra section VIII(B)(iv) for a discussion of the

    Commission's contact reference database, which is intended to

    streamline the automated submission process and reduce the burden on

    reporting parties.

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

    Assuming all 5,250 New Form 40 reporting parties utilize Method 1,

    the Commission estimates that the total annual industry burden for New

    Form 40, as a result of New Form 102A, will equal 514,500 hours. Using

    an estimated wage rate of $70.07 per hour, annual industry costs for

    such New Form 40 filings made pursuant to Method 1 are estimated at

    $36,051,015.\230\

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

    \230\ The $36,051,015 figure is arrived at by multiplying 5,250

    reporting parties by 98 hours (equals 514,500 hours) by $70.07

    (equals $36,051,015).

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

    Method 2 (40 web submission (arising from New Form 102A)--lower

    estimate): Method 2 assumes that each reporting party filing New Form

    40 as a result of Form 102A (i.e., special account owners and

    controllers) will complete and submit New Form 40 online via a secure

    portal provided by the Commission.\231\

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

    \231\ The Commission's special call will likely be in the form

    of an email request that will contain a URL for the portal, and a

    unique login and password for access to the portal.

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

    The Commission estimates that each of the 5,250 New Form 40 records

    will require three hours to complete.\232\ Assuming each such New Form

    40 record is provided via Method 2, the Commission estimates that the

    total annual industry burden for reporting on New Form 40, as a result

    of New Form 102A, will equal 15,750 hours. Using an estimated wage rate

    of $70.07 per hour, annual industry costs for New Form 40 filings

    arising from special accounts are estimated at $1,103,603.\233\

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

    \232\ The Commission's estimate of three hours per response

    reflects an initial, one-time burden of 10 hours, annualized over a

    five-year period, plus an additional hour per year for change

    updates.

    \233\ The $1,103,603 figure is arrived at by multiplying 5,250

    records by 3 hours (equals 15,750 hours) by $70.07 (equals

    $1,103,603).

    Form 40--lower estimate is Method 2

    [Web submission]

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

    Annualized

    burden per Total annual Estimated wage Annual

    Number of responses per year response industry rate industry costs

    (hours) \234\ burden (hours)

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

    5,250....................................... 3 15,750 $70.07 $1,103,603

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

    Conclusion: The Commission believes that providing filing options

    to the industry should lower their ultimate costs. Because of this,

    estimated total costs to the industry for 40 filings, as a result of

    New Form 102A, should be lower than any cost associated with mandating

    either Method 1 or Method 2. Given the cost estimates for the two

    individual methods discussed above, the Commission anticipates the

    annual cost to the industry of filing 40, as a result of New Form 102A,

    will be approximately $1,103,603 (Method 2--web submission), the lower

    of the two estimated filing methods. In developing this estimate, the

    Commission does not make any assumptions about the behavior of an

    individual reporting party. Reporting parties, given their own

    individualized needs, are assumed to make the most cost-effective

    choice for them, which may be either of the two methods.

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

    \234\ As discussed above, the initial development burden per

    reporting party (10 hours) has been divided by 5 years, which

    results in an estimated annualized initial development burden of two

    hours per reporting party. On a non-annualized basis, the initial

    development cost per reporting party is estimated at $701 (10 hours

    x a wage rate of $70.07). The Commission expects that reporting

    parties will budget initial development costs in the manner that is

    most cost-effective for each party, which may result in some

    reporting parties incurring the majority of these initial

    development costs in the beginning of the rule compliance period.

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

    New Form 40--Sec. 18.04(b) (arising from New Form 102B and New

    Form 71):

    Method 1 (40 FTP submission (arising from New Form 102B and New

    Form 71)--higher estimate):

    New Form 40 must be provided in response to a special call by the

    Commission or its designee. Method 1 assumes that each New Form 40

    reporting party will use an automated program to submit its forms

    (arising from New Form 102B and New Form 71) via secure FTP. The

    Commission estimates that the total initial development burden will

    average 224 hours per reporting party. The Commission further estimates

    that the ongoing operation and maintenance burden will average 53 hours

    per year no matter how many records are contained in a submission. The

    total Method 1 annualized initial development burden and the ongoing

    operation and maintenance burden (total yearly burden) will equal

    approximately 98 hours per reporting party.\235\

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

    \235\ All annualized development burden estimates are based on 5

    year, straight line depreciation.

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

    In estimating the number of anticipated New Form 40 special calls

    arising from both DCM-related and SEF-related New Form 102B and New

    Form 71, the Commission first considered the number of Form 40 special

    calls made in 2012 (approximately 3,000). The Commission sent some of

    these special calls to a subset of the 260 special account owners and

    controllers identified via existing DCM-related

    [[Page 69208]]

    Form 102 in 2012. The Commission sent other of these special calls to

    individuals that were not identified via Form 102, but instead were

    identified through other surveillance means. The 260 reporting parties

    that submitted a Form 102 in 2012 represent approximately 8.7 percent

    of the 3,000 special calls sent in 2012 (``the special call ratio'').

    The Commission used this special call ratio as a baseline in

    calculating the number of anticipated New Form 40 filings arising from

    New Form 102B and New Form 71. The Commission acknowledges that this

    percentage represents a high-end baseline, since as noted above, the

    Commission made a special call in 2012 to a subset of the 260 reporting

    parties, rather than to each one.

    Form 40s Arising From DCM-related New Form 102B and New Form 71. To

    estimate the number of Form 40 special calls arising from DCM-related

    New Form 102B and New Form 71, the Commission first calculated the

    number of anticipated reporting parties for each form: 100 reporting

    parties for DCM-related New Form 102B, and 564 reporting parties for

    DCM-related New Form 71, or 664 in total. Based on the special call

    ratio calculations performed above with respect to the Commission's

    2012 special call practices, the Commission estimated that it will send

    special calls to approximately 7,662 recipients per year in connection

    with DCM-related New Form 102B and New Form 71.\236\ Finally, the

    Commission calculated that in approximately 75 percent of New Form 102B

    and New Form 71 filings, the owner and controller of a volume threshold

    account reported on the form will be different.\237\ In this scenario,

    the Commission may make a separate special call to both the owner and

    controller. As a result, the Commission multiplied the 7,662 recipient

    estimate by 1.75, and concluded that it will receive approximately

    13,409 New Form 40 filings annually arising from DCM-related New Form

    102B and New Form 71, from the same number of reporting parties

    (13,409).

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

    \236\ The Commission applied the ratio of reporting parties to

    special calls that it developed with respect to its 2012 Form 40

    special call practices. 260 reporting parties represents

    approximately 8.7 percent of the 3,000 special calls sent in 2012.

    Similarly, 664 reporting parties represents approximately 8.7

    percent of 7,662 special calls. The Commission believes that 664

    reporting parties is a high-end estimate, because the Commission

    will likely send New Form 40 to a subset of New Form 71 reporting

    parties, rather than to each reporting party, as this calculation

    assumes.

    \237\ As with 102A records, the Commission estimates that in

    approximately 25 percent of filings, the owner and the controller of

    a volume threshold account reported on New Form 102B or New Form 71

    will be the same, and that accordingly, only one New Form 40 would

    be required. Similarly, a number of potential New Form 40 reporting

    parties are likely to own or control both DCM-related and SEF-

    related volume threshold accounts, but only one New Form 40 would be

    required.

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

    Form 40s Arising From SEF-related New Form 102B and New Form 71.

    The Commission applied the same rationale to calculate the number of

    anticipated New Form 40 filings arising from SEF-related New Form 102B

    and New Form 71. The Commission first calculated the number of

    anticipated reporting parties for each form: 75 reporting parties for

    SEF-related New Form 102B, and 198 reporting parties for SEF-related

    New Form 71, or 273 in total. Based on the special call ratio

    calculations performed above with respect to the Commission's 2012

    special call practices, the Commission estimated that it will send

    special calls to approximately 3,149 recipients per year in connection

    with SEF-related New Form 102B and New Form 71.\238\ Finally, the

    Commission calculated that in approximately 75 percent of New Form 102B

    and New Form 71 filings, the owner and controller of a volume threshold

    account reported on the form will be different.\239\ In this scenario,

    the Commission may make a separate special call to both the owner and

    controller. As a result, the Commission multiplied the 3,149 recipient

    estimate by 1.75, and concluded that it will receive approximately

    5,511 New Form 40 filings annually arising from SEF-related New Form

    102B and New Form 71, from the same number of reporting parties

    (5,511).

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

    \238\ The Commission applied the ratio of reporting parties to

    special calls that it developed with respect to its 2012 Form 40

    special call practices. 260 reporting parties represents

    approximately 8.7 percent of the 3,000 special calls sent in 2012.

    Similarly, 273 reporting parties represents approximately 8.7

    percent of 3,149 special calls. The Commission believes that 273

    reporting parties is a high-end estimate, because the Commission

    will likely send New Form 40 to a subset of New Form 71 reporting

    parties, rather than to each reporting party, as this calculation

    assumes.

    \239\ See supra note 237.

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

    As discussed above, the Commission estimates that the time required

    to update information contained in New Form 40, whether submitted via

    the web or FTP, will be de minimis.\240\

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

    \240\ See infra section VIII(B)(iv) for a discussion of the

    Commission's contact reference database, which is intended to

    streamline the automated submission process and reduce the burden on

    reporting parties.

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

    Based on an estimated 13,409 DCM-related New Form 40

    reporting parties per year, the Commission estimates an aggregate

    reporting burden of 1,314,082 hours annually for DCM-related New Form

    40 filings, arising from New Form 102B and New Form 71, via Method 1.

    Using an estimated wage rate of $70.07 per hour, annual industry costs

    for such filings made pursuant to Method 1 are estimated at

    $92,077,726.\241\

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

    \241\ The $92,077,726 figure is arrived at by multiplying 13,409

    reporting parties by 98 hours (equals 1,314,082 hours) by $70.07

    (equals $92,077,726).

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

    Based on an estimated 5,511 SEF-related New Form 40

    reporting parties per year, the Commission estimates an aggregate

    reporting burden of 540,078 hours annually for SEF-related New Form 40

    filings, arising from New Form 102B and New Form 71, via Method 1.

    Using an estimated wage rate of $70.07 per hour, annual industry costs

    for such filings made pursuant to Method 1 are estimated at

    $37,843,265.\242\

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

    \242\ The $37,843,265 figure is arrived at by multiplying 5,511

    reporting parties by 98 hours (equals 540,078 hours) by $70.07

    (equals $37,843,265).

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

    Collectively, annual industry costs for New Form 40 filings

    (arising from New Form 102B and New Form 71) made pursuant to Method 1

    are estimated at $129,920,991.\243\

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

    \243\ The $129,920,991 figure is arrived at by multiplying

    18,920 reporting parties by 98 hours (equals 1,854,160 hours) by

    $70.07 (equals $129,920,991).

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

    Method 2 (40 web submission (arising from New Form 102B and New

    Form 71)--lower estimate):

    Method 2 assumes that each reporting party filing New Form 40 as a

    result of New Form 102B and New Form 71 (i.e., volume threshold account

    controllers, persons who own volume threshold accounts, reportable sub-

    account controllers, and persons who own reportable sub-accounts) will

    complete and submit New Form 40 online via a secure portal provided by

    the Commission.\244\

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

    \244\ The Commission's special call will likely be in the form

    of an email request that will contain a URL for the portal, and a

    unique login and password for access to the portal.

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

    As discussed above, the Commission anticipates that it will receive

    approximately 13,409 DCM-related New Form 40 filings annually and

    approximately 5,511 SEF-related New Form 40 filings annually, in each

    case arising from New Form 102B and New Form 71.\245\ Each such New

    Form 40 filing is estimated to require three hours.\246\ Assuming each

    such New

    [[Page 69209]]

    Form 40 record is provided via Method 2:

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

    \245\ As with 102A records, the Commission estimates that in

    approximately 25 percent of filings, the owner and the controller of

    a volume threshold account reported on New Form 102B will be the

    same, and that accordingly, only one New Form 40 would be required.

    Similarly, a number of potential New Form 40 reporting parties are

    likely to own or control both DCM-related and SEF-related volume

    threshold accounts, but only one New Form 40 would be required.

    \246\ The Commission's estimate of three hours per response

    reflects an initial, one-time burden of 10 hours, annualized over a

    five-year period, plus an additional hour per year for change

    updates.

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

    The Commission estimates that the total annual industry

    burden for reporting on New Form 40, as a result of New Form 102B and

    New Form 71, will equal 40,227 hours for DCM-related New Form 40

    filings. Using an estimated wage rate of $70.07 per hour, annual

    industry costs for such filings arising from volume threshold accounts

    and reportable sub-accounts are estimated at $2,818,706.\247\

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

    \247\ The $2,818,706 figure is arrived at by multiplying 13,409

    filings by 3 hours (equals 40,227 hours) by $70.07 (equals

    $2,818,706).

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

    The Commission estimates that the total annual industry

    burden for reporting on New Form 40, as a result of New Form 102B and

    New Form 71, will equal 16,533 hours for SEF-related New Form 40

    filings. Using an estimated wage rate of $70.07 per hour, annual

    industry costs for such filings arising from volume threshold accounts

    and reportable sub-accounts are estimated at $1,158,467.\248\

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

    \248\ The $1,158,467 figure is arrived at by multiplying 5,511

    filings by 3 hours (equals 16,533 hours) by $70.07 (equals

    $1,158,467).

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

    Collectively, annual industry costs for New Form 40 filings, as a

    result of New Form 102B and New Form 71, are estimated at

    $3,977,173.\249\

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

    \249\ The $3,977,173 figure is arrived at by multiplying 18,920

    filings by 3 hours (equals 56,760 hours) by $70.07 (equals

    $3,977,173).

    Form 40--Lower Estimate is Method 2

    [Web submission]

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

    Annualized

    burden per Total annual Estimated wage Annual

    Number of responses per year response industry burden rate industry costs

    (hours) \250\ (hours)

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

    18,920...................................... 3 56,760 $70.07 $3,977,173

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

    Conclusion: The Commission believes that providing filing options

    to the industry should lower their ultimate costs. Because of this,

    estimated total costs to the industry for 40 filings, as a result of

    New Form 102B and New Form 71, should be lower than any cost associated

    with mandating either Method 1 or Method 2. Given the cost estimates

    for the two individual methods discussed above, the Commission

    anticipates the annual cost to the industry of filing 40, as a result

    of New Form 102B and New Form 71, will be approximately $3,977,173

    (Method 2--web submission), the lower of the two estimated filing

    methods. In developing this estimate, the Commission does not make any

    assumptions about the behavior of an individual reporting party.

    Reporting parties, given their own individualized needs, are assumed to

    make the most cost-effective choice for them, which may be either of

    the two methods. New Form 102S -- Sec. 20.5(a):

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

    \250\ As discussed above, the initial development burden per

    reporting party (10 hours) has been divided by 5 years, which

    results in an estimated annualized initial development burden of two

    hours per reporting party. On a non-annualized basis, the initial

    development cost per reporting party is estimated at $701 (10 hours

    x a wage rate of $70.07). The Commission expects that reporting

    parties will budget initial development costs in the manner that is

    most cost-effective for each party, which may result in some

    reporting parties incurring the majority of these initial

    development costs in the beginning of the rule compliance period.

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

    Method 1 (102S FTP submission--lower estimate): Method 1 assumes

    that each New Form 102S reporting party will use an automated program

    to submit its forms via secure FTP. Each Method 1 submission will

    likely contain numerous 102S records. The Commission estimates that the

    total initial development burden will average 264 hours per reporting

    party. The Commission also estimates that the highly automated nature

    of this option will virtually eliminate the marginal costs associated

    with each additional submission or each additional record contained in

    a submission. The Commission believes that the timing requirements for

    102S filings in current Sec. 20.5(a)(3),\251\ or any new submission

    procedures arising from the Swaps Large Trader Guidebook (i.e.,

    frequency of 102S filing submission), will not increase a reporting

    party's burden when using Method 1. The Commission further estimates

    that the ongoing operation and maintenance burden will average 53 hours

    per year no matter how many records are contained in a submission. The

    total Method 1 annualized initial development burden and the ongoing

    operation and maintenance burden (total yearly burden) will equal

    approximately 106 hours per reporting party.\252\

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

    \251\ 17 CFR 20.5(a)(3).

    \252\ All annualized development burden estimates are based on 5

    year, straight line depreciation.

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

    The 102S filing requirements in current Sec. 20.5 \253\ are nearly

    identical to the filing requirements for revised 102S; accordingly, the

    Commission used its recent experience with 102S filings to estimate the

    number of 102S reporting parties. An assessment of Commission data

    collection efforts demonstrated that the Commission received Form 102S

    submissions from 39 reporting parties in 2012. The Commission

    anticipates that it will receive New Form 102S submissions from a

    similar number of reporting parties each year. Assuming 102S reporting

    parties utilize Method 1, the Commission estimates that the total

    annual industry burden for 102S filing will equal 4,134 hours. Using an

    estimated wage rate of $70.07 per hour, annual industry costs for New

    Form 102S are estimated at $289,669.\254\

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

    \253\ 17 CFR 20.5.

    \254\ The $289,669 figure is arrived at by multiplying 39

    reporting parties by 106 hours (equals 4,134 hours) by $70.07

    (equals $289,669).

    [[Page 69210]]

    Form 102S--Lower Estimate is Method 1

    [FTP submission]

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

    Annualized

    burden per Total annual Estimated wage Annual

    Number of reporting parties per year reporting party industry burden rate industry costs

    (hours) \255\ (hours)

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

    39.......................................... 106 4,134 $70.07 $289,669

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

    Method 2 (102S web submission--higher estimate): Method 2 assumes

    that each New Form 102S reporting party will complete and submit its

    forms online via a secure portal provided by the Commission. The

    Commission estimates that the total initial development burden will

    average 17 hours per 102S record. The Commission also estimates that

    the annual ongoing burden, including change and refresh updates, will

    average 7 hours per year for each 102S record. The sum of the Method 2

    annualized initial development burden and the ongoing operation and

    maintenance burden (total yearly burden) equals approximately 10 hours

    per 102S record.\256\

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

    \255\ See supra note 195 for a discussion of the calculation of

    this annualized burden. As discussed above, the initial development

    burden per reporting party (264 hours) has been divided by 5 years,

    which results in an estimated annualized initial development burden

    of 53 hours per reporting party. On a non-annualized basis, the

    initial development cost per reporting party is estimated at $18,498

    (264 hours x a wage rate of $70.07). The Commission expects that

    reporting parties will budget initial development costs in the

    manner that is most cost-effective for each party, which may result

    in some reporting parties incurring the majority of these initial

    development costs in the beginning of the rule compliance period.

    \256\ All annualized development burden estimates are based on 5

    year, straight line depreciation.

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

    An assessment of Commission data collection efforts demonstrated

    that the Commission received approximately 2,508 102S records in 2012.

    The Commission anticipates that it will receive a similar number of

    102S records each year. Assuming each of the estimated 2,508 102S

    records are provided via Method 2, the Commission estimates that the

    total annual industry burden for New Form 102S will equal 25,080 hours.

    Using an estimated wage rate of $70.07 per hour, annual industry costs

    for New Form 102S filings made pursuant to Method 2 are estimated at

    $1,757,356.\257\

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

    \257\ The $1,757,356 figure is arrived at by multiplying 2,508

    records by 10 hours (equals 25,080 hours) by $70.07 (equals

    $1,757,356).

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

    Conclusion: The Commission understands that providing options to

    the industry should lower costs relative to failing to provide these

    options. Because of this, estimated total costs to the industry for

    102S filing should be lower than any cost associated with mandating

    either Method 1 or Method 2. Given the cost estimates for the two

    individual methods discussed above, the Commission anticipates the

    annual cost to the industry of filing 102S will be approximately

    $289,669 (Method 1--FTP submission), the lower of the two estimated

    submission costs. In developing this estimate, the Commission does not

    make any assumptions about the behavior of an individual reporting

    party. Reporting parties, given their own individualized needs, are

    assumed to make the most cost-effective choice for them, which may be

    either of the two methods.

    New Form 40S--Sec. 20.5(b): \258\

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

    \258\ The final rules do not revise Sec. 20.5(b); however,

    current Sec. 20.5(b) requires a person, after special call by the

    Commission, to submit a 40S filing, which shall consist of the

    submission of Form 40. The final rules do include changes to Form

    40. Accordingly, the reporting burden associated with Sec. 20.5(b)

    and the 40S filing is being recalculated to account for variations

    between current and New Form 40.

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

    Method 1 (40S FTP submission--higher estimate): New Form 40S must

    be provided in response to a special call by the Commission or its

    designee. Method 1 assumes that each New Form 40S reporting party will

    use an automated program to submit its forms via secure FTP. The

    Commission estimates that the total initial development burden will

    average 224 hours per reporting party. The Commission further estimates

    that the ongoing operation and maintenance burden will average 53 hours

    per year no matter how many records are contained in a submission. The

    total Method 1 annualized initial development burden and the ongoing

    operation and maintenance burden (total yearly burden) will equal

    approximately 98 hours per reporting party.\259\

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

    \259\ All annualized development burden estimates are based on 5

    year, straight line depreciation.

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

    Current Sec. 20.5(b),\260\ which requires the 40S filing, will not

    be altered by this rulemaking. As noted above, the Commission

    anticipates that it will receive approximately 2,508 102S records per

    year, and the Commission estimates that it will make approximately the

    same number of 40S special calls each year (2,508). Assuming all Form

    40S reporting parties utilize Method 1, the Commission estimates that

    the total annual industry burden for Form 40S will equal 245,784 hours.

    Time required to update information contained in 40S filings, whether

    submitted via the web or FTP, will be de minimis. Using an estimated

    wage rate of $70.07 per hour, annual industry costs for Form 40S

    filings made pursuant to Method 1 are estimated at $17,222,085.\261\

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

    \260\ 17 CFR 20.5(b).

    \261\ The $17,222,085 figure is arrived at by multiplying 2,508

    reporting parties by 98 hours (equals 245,784 hours) by $70.07

    (equals $17,222,085).

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

    Method 2 (40S web submission--lower estimate): Method 2 assumes

    that each New Form 40S reporting party will complete and submit its

    forms online via a secure portal provided by the Commission.\262\ As

    noted above, the Commission anticipates that it will receive

    approximately 2,508 102S records per year, and the Commission estimates

    that it will make approximately the same number of 40S special calls

    each year (2,508). Each response is estimated to require three

    hours,\263\ resulting in an estimated total annual reporting burden of

    7,524 hours. Using an estimated wage rate of $70.07 per hour, annual

    industry costs for New Form 40S filings made pursuant to Method 2 are

    estimated at $527,207.\264\

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

    \262\ The Commission's special call will likely be in the form

    of an email request that will contain a URL for the portal, and a

    unique login and password for access to the portal.

    \263\ The Commission's estimate of three hours per response

    reflects an initial, one-time burden of 10 hours, annualized over a

    five-year period, plus an additional hour per year for change

    updates.

    \264\ The $527,207 figure is arrived at by multiplying 2,508

    filings by 3 hours (equals 7,524 hours) by $70.07 (equals $527,207).

    [[Page 69211]]

    Form 40S--Lower Estimate is Method 2

    [Web submission]

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

    Annualized

    burden per Total annual Estimated wage Annual

    Number of responses per year response industry burden rate industry costs

    (hours) \265\ (hours)

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

    2,508....................................... 3 7,524 $70.07 $527,207

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

    Conclusion: The Commission understands that providing options to

    the industry should lower costs relative to failing to provide these

    options. Because of this, estimated total costs to the industry for 40S

    filing should be lower than any cost associated with mandating either

    Method 1 or Method 2. Given the cost estimates for the two individual

    methods discussed above, the Commission anticipates the annual industry

    cost to the industry of filing 40S will be approximately $527,207

    (Method 2--web submission), the lower of the two estimated submission

    costs. In developing this estimate, the Commission does not make any

    assumptions about the behavior of an individual reporting party.

    Reporting parties, given their own individualized needs, are assumed to

    make the most cost-effective choice for them, which may be either of

    the two methods.

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

    \265\ As discussed above, the initial development burden per

    reporting party (10 hours) has been divided by 5 years, which

    results in an estimated annualized initial development burden of two

    hours per reporting party. On a non-annualized basis, the initial

    development cost per reporting party is estimated at $701 (10 hours

    x a wage rate of $70.07). The Commission expects that reporting

    parties will budget initial development costs in the manner that is

    most cost-effective for each party, which may result in some

    reporting parties incurring the majority of these initial

    development costs in the beginning of the rule compliance period.

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

    v. Recordkeeping Burdens--Revised Sec. 18.05

    Current Sec. 18.05 requires traders who hold or control reportable

    positions to maintain books and records regarding all positions and

    transactions in the commodity in which they have reportable

    positions.\266\ In addition, current Sec. 18.05 requires that the

    trader furnish the Commission with information concerning such

    positions upon request. The Commission is expanding Sec. 18.05 to also

    impose books and records requirements upon (1) Volume threshold account

    controllers and (2) owners of volume threshold accounts, and upon (3)

    reportable sub-account controllers and (4) persons who own reportable

    sub-accounts. As a result, revised Sec. 18.05 will likely impose a

    recordkeeping burden on a larger number of persons than current Sec.

    18.05. However, any additional persons subject to Sec. 18.05 may be

    able to rely on books and records already kept in the ordinary course

    of business to meet the requirements of the final regulation.

    Accordingly, the Commission believes that revised Sec. 18.05 will not

    meaningfully increase recordkeeping burdens on persons brought under

    its scope.

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

    \266\ 17 CFR 18.05.

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

    The Commission sent 59 special calls pursuant to Sec. 18.05 in

    2012, 42 of which were based on trade data reflected in the TCR data

    feed.\267\ As noted above, revised Sec. 18.05 will make four new

    categories of persons, identified through the volume-based reporting

    regime, subject to Sec. 18.05. Because the volume-based reporting

    regime is designed to identify designated types of trading activity,

    the Commission estimates that it will send special calls pursuant to

    revised Sec. 18.05 to, at a minimum, 42 recipients (i.e., the same

    number of persons to which the Commission sent special calls in 2012

    based on trade data reflected in the TCR). At the same time, the

    Commission expects that the introduction of volume-based reporting will

    lead to the Commission sending more special calls than it would

    otherwise, because this regime will identify new ownership and control

    relationships and patterns of trading activity. As a result, for

    purposes of estimating the costs of revised Sec. 18.05, the Commission

    assumes it will send 25% more special calls in response to trade data

    than it did in 2012, for a total of 53 special calls per year. These

    special calls will require a response from approximately 53 individual

    traders per year.

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

    \267\ See supra section I(B) for a discussion of the TCR.

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

    This estimate reflects only special calls sent pursuant to Sec.

    18.05 as a result of information collected via the volume-based

    reporting regime (i.e., New Form 102B and New Form 71).\268\ The

    estimated 53 recipients of such special calls may include some traders

    that are already subject to the costs and obligations of current Sec.

    18.05. The Commission estimates that each special call response

    submitted by the new categories of persons subject to revised Sec.

    18.05 will take approximately 5 hours, for a total annual reporting

    burden of 265 hours. Using an estimated wage rate of $70.07 per hour,

    annual reporting costs for the new categories of persons that are

    subject to revised Sec. 18.05 are estimated at $18,569.\269\

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

    \268\ The NPRM estimated the total annual cost to the industry

    of Sec. 18.05 following implementation of the final rules as

    $214,605. This figure included the cost to parties already subject

    to Sec. 18.05 who will not be impacted by the amendments to Sec.

    18.05 described herein. Consistent with the description of costs to

    reporting parties presented elsewhere herein, the estimate of

    $18,569 represents only the new or incremental costs imposed by the

    changes to Sec. 18.05 described in these final rules. The $18,569

    estimate is therefore less than the $214,605 estimate for revised

    Sec. 18.05 in the NPRM.

    \269\ The $18,569 figure is arrived at by multiplying 53

    responses by 5 hours (equals 265 hours) by $70.07 (equals $18,569).

    Sec. 18.05--Recordkeeping Burden

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

    Annual burden Total annual

    Number of responses per year per response industry burden Estimated wage Annual

    (hours) (hours) rate industry costs

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

    53.......................................... 5 265 $70.07 $18,569

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

    [[Page 69212]]

    B. Consideration of Costs and Benefits

    i. Background

    The current rules and forms, which these final rules update,

    require FCMs, clearing members, and foreign brokers to identify special

    account traders to the Commission via Form 102.\270\ The Commission

    sends a Form 40 in its discretion via a special call to a trader

    identified on Form 102, requiring the trader to provide the Commission

    with detailed information regarding the nature of the trader's market

    activity. The current Form 102 and Form 40 are generally submitted to

    the Commission via a manual submission process (via email, facsimile,

    or regular mail). The Commission then individually uploads the forms

    into the Commission's Integrated Surveillance System (ISS), discussed

    in section I(B) above. The questions and data points on both forms

    relate only to the Commission's current position-based reporting rules.

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

    \270\ See supra section III for a discussion of the current

    trader and account identification programs.

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

    The final rules establish the information architecture necessary

    for the Commission to efficiently identify and categorize individual

    trading accounts and market participants that trigger position or

    newly-created volume-based reporting thresholds. By requiring the

    collection of ownership and control information via the new and amended

    forms, the Commission will be able to efficiently and effectively

    monitor risk exposure by institution, market class, and asset class

    over an extended period of time. To accomplish this, the final rules

    modify current Forms 102 and 40 to require additional information,

    require additional reporting via New Form 71, and modify the timing and

    method by which market participants are required to submit these forms

    to the Commission. New Form 102 will now be divided into three

    sections: 102A, 102B, and 102S. Section 102A captures information that

    must be reported when a trading account exceeds open position

    thresholds (a ``special account''); section 102B, which is new in its

    entirety, will capture information that must be reported when a trading

    account exceeds a specified volume threshold during a single trading

    day (a ``volume threshold account''); and section 102S will capture

    information that must be reported for consolidated accounts and swap

    counterparties that have a reportable position in swaps. The following

    summarizes each of the new and amended forms that will take the place

    of current Form 102 and 40 pursuant to these final rules.\271\

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

    \271\ See supra section IV for a detailed summary of the new and

    amended forms adopted in these final rules.

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

    New Form 102A. As noted above, Form 102A is a position-based

    reporting form, which requires the reporting of both special accounts

    and the trading accounts that comprise special accounts. This reporting

    will allow the Commission to link special accounts holding reportable

    positions to the transactions (and associated trading accounts)

    identified on daily trade capture reports received by the Commission.

    By illustrating the connections between end-of-day position reporting

    via Form 102 and daily trade capture reports, the final rules will

    enable the Commission to perform a more accurate and timely accounting

    of market position at the level of individual trading accounts, thereby

    improving the Commission's surveillance capabilities.\272\

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

    \272\ See the discussion of the daily trade capture reports in

    section I(B) above.

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

    New Form 102B. While Form 102A requires the reporting of large

    trader positions that remain open at the end of the day, Form 102B

    requires the reporting of trading accounts that exceed a stated volume

    threshold during a single trading day, regardless of whether these

    positions remain open at the end of the day. This will identify traders

    whose end-of-day open interest does not reach reportable levels on Form

    102A, but whose intra-day trading reaches the volume threshold, thus

    enabling the Commission to monitor trading that could potentially

    impact markets during concentrated periods of intra-day trading. The

    Commission expects that the addition of volume-based reporting will

    provide much needed information about high-frequency traders and other

    market participants using algorithmic systems, whose activities are not

    typically captured by the current position-based reporting regime. When

    combined with the position data reported on Form 102A, New Form 102B

    will improve the Commission's ability to: (i) Aggregate accounts under

    common ownership and/or control; (ii) better understand how certain

    market segments may affect the process of price formation; (iii)

    efficiently analyze trading behavior surrounding price spikes and other

    pricing anomalies throughout the day; and (iv) detect and investigate

    disruptive trading activities, including intraday speculative position

    limit violations and wash trades.

    New Form 71. The Commission will send Form 71, in its discretion

    via a special call, to collect additional information on omnibus volume

    threshold accounts identified on Form 102B (or on another Form 71).

    Form 71 is designed to permit originating firms to report the required

    information directly to the Commission without requiring such firms to

    disclose information regarding customers to potential competitors. Form

    71 illustrates the `nested' structure of omnibus accounts and

    underlying omnibus sub-accounts that are volume threshold accounts, and

    identifies the ultimate owner and controller of these accounts. Form 71

    will provide crucial ownership and control information to the

    Commission that is not collected under the current reporting regime.

    The Commission will use this ownership information to aggregate and

    analyze all trading by a market participant for surveillance purposes,

    irrespective of whether this trading is conducted through a single

    account, or through a number of accounts maintained by one or more

    intermediaries.

    New Form 102S. Form 102S is designed to facilitate the electronic

    submission of 102S filings. Such filings are currently being submitted

    to the Commission (pursuant to 17 CFR 20.5(a)) through a non-automated

    process. Form 102S will provide position-based reporting of

    consolidated accounts in the swaps market. The form expands the current

    102S reporting regime to require the reporting of ownership and control

    information with respect to such accounts. Swap reporting on Form 102S

    significantly improves the Commission's surveillance capabilities, by

    enabling it to track the market activity of a specific trader,

    including traders that may be dividing risk exposure between both on-

    exchange and off-exchange instruments. Swap reporting will also enable

    the Commission to more efficiently aggregate position exposure in a

    particular product or commodity group. Such reporting also aligns with

    the Commission's recently finalized rules on real-time public and

    regulatory reporting of swap trades, and improves transparency into

    markets that, historically, have often been opaque and/or over-the-

    counter.

    New Form 40/40S. Each of the 102 forms and Form 71 requires

    respondents to identify the parties that the Commission should contact

    (such as the account owner, controller, and related contact persons) if

    the Commission requires additional information regarding traders or

    trading accounts identified on the forms. The

    [[Page 69213]]

    Commission will send New Form 40 in its discretion via a special call

    to collect additional information from traders reported on each of the

    102 forms and Form 71. These final rules expand Form 40 by requiring

    the reporting trader to: (1) Indicate whether it is engaged in

    commodity index trading (as that term is defined in the form) (a

    question that does not appear on current Form 40); (2) report its

    control relationships with other entities, and other relationships with

    persons that influence or exercise authority over the trading of a

    reporting trader (a question that has been expanded on New Form 40);

    (3) identify all the business sectors that pertain to its business

    activities or occupation (a question that has been expanded on New Form

    40); and (4) identify all commodity groups and individual commodities

    that it presently trades, or expects to trade in the near future, in

    derivatives markets (a question that has been expanded on New Form 40),

    among other information.

    Responses to these questions will improve the Commission's ability

    to perform effective surveillance, by enabling it to better understand

    the ownership and control structure of reporting traders, and the

    extent of their business activities across multiple markets and product

    groups. The Commission will, furthermore, be able to use information

    reported on New Form 40 to cross-check several of the ownership and

    control data fields reported on New Form 102. The additional

    information requested on New Form 40 will improve the quality of data

    published in the Commission's reports, including the classifications in

    the Commitments of Traders Report. Finally, the Commission will be able

    to compare the trading goals that a respondent reports on New Form 40

    to its subsequent market activity. If the two do not correspond, the

    Commission will request additional information from the respondent in

    order to maintain accuracy in Commission databases and reports, or take

    other appropriate action.

    In sum, the final rules will build upon the Commission's existing

    market and trade practice surveillance programs for futures, options on

    futures, and swaps, by improving the Commission's understanding of the

    impact of special accounts, consolidated accounts, and newly designated

    volume threshold accounts on market activity. In turn, this will allow

    the Commission to better perform risk-based monitoring and surveillance

    among related accounts; efficiently monitor risk exposure by

    institution, market class, and asset class; facilitate investigations

    into disruptive trading activity by Commission enforcement staff; and

    expand the Commission's ability to research and analyze how a wide-

    ranging variety of market participants impact market behavior.

    ii. The Statutory Requirement for the Commission To Consider the Costs

    and Benefits of Its Actions

    Section 15(a) of the CEA \273\ requires the Commission to

    ``consider the costs and benefits'' of its actions before promulgating

    a regulation under the CEA or issuing certain orders. Section 15(a)

    further specifies that the costs and benefits must be evaluated in

    light of the following 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. The Commission considers the costs and

    benefits resulting from its discretionary determinations with respect

    to the section 15(a) factors below.

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

    \273\ 7 U.S.C. 19(a).

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

    As a general matter, the Commission considers the incremental costs

    and benefits of these rules, that is the costs and benefits that are

    above the standard established by the Commission's existing

    regulations.\274\ Where reasonably feasible, the Commission has

    endeavored to estimate quantifiable costs and benefits. Where

    quantification is not feasible, the Commission identifies and describes

    costs and benefits qualitatively.\275\

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

    \274\ As discussed below with respect to costs more

    specifically, the Commission's estimated cost ranges assume that all

    market participants will start from the same point in developing the

    systems required to implement OCR reporting, irrespective of whether

    they provide certain forms under the current reporting system (e.g.,

    the current Forms 102 and 40).

    \275\ For example, to quantify benefits such as improved

    transparency and enhanced protections for market participants and

    the public would require information, data and/or metrics that

    either do not exist, or to which the Commission generally does not

    have access.

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

    iii. Commission Request for Comments Regarding Cost and Benefit

    Estimates

    The Commission requested comment on a variety of cost and benefit

    metrics in the NPRM. As a general matter, the Commission requested that

    commenters provide data and any other information or statistics that

    they relied on to reach conclusions on the Commission's cost and

    benefit estimates. The Commission also requested comment, including

    specific quantitative estimates, on the expected costs related to

    upgrading or obtaining systems to implement and comply with the

    reporting requirement under the proposed new and revised forms, as well

    as the impact of the proposed rules (or the relative impact of any

    alternative rules) on the section 15(a) factors. Although some

    commenters stated that the NPRM understated the total cost to the

    industry, no commenter provided specific quantitative cost or benefit

    estimates, or other information to more precisely estimate costs beyond

    those presented in the NPRM.\276\

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

    \276\ See section VIII(B)(vi) below for additional discussion of

    comments received by the Commission regarding the costs and benefits

    of reporting.

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

    In the absence of specific quantitative estimates or alternative

    cost proposals by commenters, the Commission performed its own analysis

    in updating the NPRM cost benefit considerations for these final rules.

    As explained below, for purposes of these final rules, the Commission

    has updated the cost estimates that appeared in the NPRM based on the

    most recent data and statistics available to the Commission. In this

    section VIII(B), the Commission has also calculated an estimated range

    of 25 percent below and 25 percent above the estimated total annual

    industry cost for each form. The Commission has applied these ranges

    because reporting costs will differ among market participants based on

    a variety of factors, including the state of their current technology

    systems, and their differing levels of market and reporting experience.

    The upper end of the ranges also responds to comments stating that the

    cost estimates in the NPRM understated the total cost to the industry

    (without expressing by how much, or to what degree).\277\

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

    \277\ See id.

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

    iv. Methodology Used To Estimate Costs

    As discussed above, the Commission has calculated the total

    estimated industry cost for submitting each form via FTP or via the web

    portal. For each form, these calculations represent the total industry

    cost if all reporting parties submit information via one method--as

    compared to the total industry cost if all parties submit via the other

    method. For example, the 102A estimates described in sections VIII(A)

    and (B) represent the total estimated industry cost if all reporting

    parties submit 102A via FTP ($1,931,129), or if all parties submit 102A

    via the web portal ($5,954,969). The Commission recognizes that, even

    if it is less expensive for the industry as a whole to submit 102A via

    FTP, it may be less expensive for certain individual reporting parties

    to submit 102A via the web portal. This may be due to the limited

    number of forms these parties

    [[Page 69214]]

    expect to submit, their technology infrastructure, or other factors.

    To expand on this example, if a new reporting party anticipates

    that it will submit only two 102A filings per year, it might logically

    conclude that it would be less expensive to submit its two filings via

    the web portal than to incur the development costs associated with

    establishing an FTP link to the Commission. In this instance, the

    Commission has estimated that the reporting party would incur 20 hours

    of initial development burden for each of the two records submitted via

    the web portal, or a total initial development burden of 40 hours.

    Accordingly, the reporting party may conclude that submitting its 102A

    filings via the web portal is more cost-effective than submitting the

    same information via FTP, which the Commission has estimated would

    require an initial development burden of 264 hours per entity

    (regardless of the number of forms submitted).\278\

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

    \278\ In this example, the Commission expects that reporting

    parties making a small number of filings would choose to submit via

    the web-based portal, because web submission would be the most cost-

    effective submission method for such parties. In doing so, they will

    incur fewer costs than they would if they submitted via FTP, thereby

    lowering the total costs to the industry. As a result, the

    simplifying assumption that all reporting parties will submit New

    Form 102A (along with certain other forms discussed below) via FTP

    is a conservative assumption, which will tend to overestimate the

    total industry cost.

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

    The cost estimates in section VIII(A) and (B) assume that all

    market participants will start from the same point in developing the

    systems required to implement OCR reporting. Accordingly, to the extent

    that current reporting parties leverage their existing reporting

    systems \279\ to implement OCR reporting, the cost estimates are likely

    to overestimate actual costs to some degree for such parties.

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

    \279\ Certain parties that will be required to report under

    these final rules now provide certain forms under the current

    reporting system (e.g., the current Forms 102 and 40).

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

    For the following additional reasons, the Commission anticipates

    that total reporting and recordkeeping costs to the industry are likely

    to be lower than the sum of the costs associated with each form

    individually, as the Commission has calculated herein.

    First, the reporting and recordkeeping burdens arising from each

    regulation and associated form were estimated independently of the

    requirements of the other regulations and associated forms. The

    Commission anticipates that substantial synergies are likely to exist

    across the systems and data necessary to meet the reporting

    requirements. For example, many reporting firms submitting New Form

    102A via FTP (which the Commission believes is the more cost-effective

    submission method for the industry as a whole) will also submit New

    Form 102B via FTP, and will be able to leverage systems and information

    necessary for submitting one form to meet the requirement to submit the

    other.

    Second, the Commission has incorporated a number of proposals made

    by commenters that are intended to reduce the reporting burden and

    associated costs to market participants. These proposals are described

    in section VII above and section VIII(B)(vii) below. While the

    Commission has updated the cost estimates that appeared in the NPRM

    based on the most recent data and statistics available to the

    Commission, in order to generate more conservative cost estimates, the

    Commission has not reduced the cost estimates in these final rules to

    account for the incorporation of these cost-saving proposals.

    v. Costs and Benefits of Individual Reporting Forms and Reporting and

    Recordkeeping Requirements

    The discussion below considers the anticipated costs and benefits

    to the industry of New Form 102A, New Form 102B, New Form 71, New Form

    40, New Form 102S, New Form 40S, and the reporting and recordkeeping

    requirements of revised Sec. 18.05.

    New Form 102A

    (1) Overview of New Form 102A

    New Form 102A, which identifies owners and controllers of special

    accounts and other related information, is based on the Form 102

    currently in use. These final rules do not modify the definition of

    what constitutes a ``special account'' for reporting purposes.\280\ The

    rules do, however, increase the amount of information required to be

    reported with respect to each special account. For example, New Form

    102A requests that the respondent provide the Web site, NFA ID, and

    Legal Entity Identifier of the owners and controllers reported on the

    form, to the extent this information is available in the respondent's

    records. More significantly, New Form 102A requires respondents to

    identify the owners and controllers of each trading account that

    comprises the reported special account. The preceding information is

    not collected on current Form 102. These newly collected data points

    will allow the Commission to link special accounts holding reportable

    positions to the transactions (and associated trading accounts)

    identified on daily trade capture reports received by the Commission.

    The Commission understands that (as noted by comment letters on the

    2010 OCR NPRM) \281\ the majority of these data points already reside

    with reporting parties.\282\ As a result, reporting parties will not

    need to coordinate with external parties in order to compile most data

    points required by New Form 102A.

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

    \280\ See Sec. 15.005(r) of the Commission's regulations.

    \281\ All 2010 OCR NPRM comment letters are available through

    the Commission's Web site at: http://comments.cftc.gov/PublicComments/CommentList.aspx?id=755&ctl00_ctl00_cphContentMain_MainContent_gvCommentListChangePage=1

    \282\ The Commission received a number of comment letters in

    response to the 2010 OCR NPRM, and incorporated several of their

    suggestions in the NPRM (published in the Federal Register in 2012),

    which forms the basis for these final rules. Among these changes,

    the Commission removed certain questions from the reporting forms

    asking for data that, in the view of commenters, is not maintained

    by reporting parties. See NPRM supra note 10 at 43973-43974 for a

    discussion of comments received in response to the 2010 OCR NPRM

    that were incorporated in the NPRM. See also the December 23, 2010

    comment letter from FIA at 9 and Exhibit A; October 7, 2010 comment

    letter from CME at 4; and October 7, 2010 comment letter from ICE at

    3, which establish that the majority of the remaining data points,

    which appear on the forms adopted in these final rules, already

    reside with reporting parties.

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

    (2) Benefits of New Form 102A

    The reporting of trading accounts that comprise a special account

    will provide common reference points between TSS and ISS data, thereby

    enabling the Commission to efficiently compare end-of-day reportable

    positions with intra-day account activity.\283\ By connecting end-of-

    day position level data with intra-day account activity, the Commission

    will be able to efficiently determine the ownership or control of

    specific positions held by individual trading accounts at any time

    throughout the trading day, thereby improving market transparency. More

    specifically, Commission staff will use the additional ownership and

    control information to determine whether a reported account is a new

    account of a previously reported trader, or whether it correlates to a

    previously unreported trader. If the account is owned or controlled by

    a previously reported trader, it will be aggregated with other related

    accounts currently being reported. By identifying and aggregating

    accounts in this manner, Commission staff can more thoroughly monitor

    and assess a trader's potential market impact during significant

    periods such as price spikes or settlement periods, monitor the

    trader's compliance with speculative position limits, and determine

    whether

    [[Page 69215]]

    the trader is engaging in abusive or disruptive practices (such as

    marking the close, ``wash trading,'' or money passing). By aggregating

    the accounts of individual traders, the Commission will also be able to

    more efficiently calculate aggregate position exposure in a particular

    product or commodity group. In sum, the additional information provided

    by New Form 102A will contribute to the overall integrity of the

    financial markets, by improving the Commission's ability to detect and

    investigate disruptive or manipulative behavior.

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

    \283\ See supra section I(B) for a discussion of the TSS and

    ISS.

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

    (3) Costs of New Form 102A

    The Commission assumes that each New Form 102A reporting party will

    submit New Form 102A via secure FTP, which the Commission believes is

    the more cost-effective of the two filing methods for the industry as a

    whole. Each FTP submission will likely contain numerous 102A records.

    The Commission estimates that the total initial development burden will

    average 264 hours per reporting party. The Commission also estimates

    that the highly automated nature of this option will virtually

    eliminate the marginal costs associated with each additional submission

    or each additional record contained in a submission. Accordingly, the

    Commission estimates that 102A change and refresh updates will not

    increase a reporting party's burden when using the FTP submission

    method. The Commission further estimates that the ongoing operation and

    maintenance burden will average 53 hours per year no matter how many

    records are contained in a submission. The total annualized initial

    development burden and the ongoing operation and maintenance burden

    (total yearly burden) will equal approximately 106 hours per reporting

    party.\284\

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

    \284\ All annualized development burden estimates are based on 5

    year, straight line depreciation. The 106 hour figure is arrived at

    by dividing 264 hours (initial development burden per reporting

    party) by 5 years, which results in an estimated annualized initial

    development burden of 53 hours per reporting party. 53 hours plus 53

    hours (annual, ongoing operation and maintenance burdens per

    reporting party) equals 106 hours per reporting party.

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

    An assessment of Commission data collection efforts demonstrated

    that the Commission received Form 102 submissions from 260 reporting

    parties in 2012. The Commission anticipates that it will receive New

    Form 102A submissions from a similar number of reporting parties each

    year. Assuming all New Form 102A reporting parties utilize the FTP

    submission method, the Commission estimates that the total annual

    industry burden for New Form 102A will equal 27,560 hours. Using an

    estimated wage rate of $70.07 per hour,\285\ annual industry costs for

    102A filings made pursuant to the FTP submission method are estimated

    at $1,931,129.

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

    \285\ The Commission staff's estimates concerning the wage rates

    are based on salary information for the securities industry compiled

    by the Securities Industry and Financial Markets Association

    (``SIFMA''). The $70.07 per hour is derived from figures from a

    weighted average of salaries and bonuses across different

    professions from the SIFMA Report on Management & Professional

    Earnings in the Securities Industry 2011, modified to account for an

    1800-hour work-year and multiplied by 1.3 to account for overhead

    and other benefits. The wage rate is a weighted national average of

    salary and bonuses for professionals with the following titles (and

    their relative weight): ``programmer (senior)'' (30% weight);

    ``programmer'' (29% weight); ``compliance advisor (intermediate)''

    (15%), ``systems analyst'' (16%), and ``assistant/associate general

    counsel'' (10%). The $70.07 wage rate is a blended rate, such that

    the Commission has applied the same $70.07 wage rate when

    calculating the cost of submission via both FTP and the web-based

    portal. As noted above, the NPRM contemplated that Forms 40/S and 71

    could be submitted only via the web portal. However, pursuant to

    these final rules, the Commission is allowing reporting parties to

    submit Forms 40/S and 71 via FTP as well, with the result that

    reporting parties may submit all forms either via the web portal or

    via FTP. In light of this change, the wage rage percentages in these

    final rules have been updated and slightly modified from the wage

    rate percentages in the NPRM, to more accurately reflect anticipated

    labor allocations. The NPRM employed the following wage rage

    percentages: ``programmer (senior)'' (30% weight); ``programmer''

    (30% weight); ``compliance advisor (intermediate)'' (20%), ``systems

    analyst'' (10%), and ``assistant/associate general counsel'' (10%).

    While the NPRM calculated an estimated wage rate of $78.61 per hour,

    these final rules calculate an estimated wage rate of $70.07 per

    hour using the 2011 SIFMA statistics and updated wage rate

    percentages. (Note that the national average of salary and bonuses

    for the professionals listed above declined between 2010 to 2011,

    according to the SIFMA report addressing each of those years. The

    2010 SIMA report (which is the basis for the wage rate in the NPRM)

    indicates an aggregate national average of salary and bonuses of

    $530,321 for these professionals, while the 2011 SIFMA report

    indicates an aggregate national average of salary and bonuses of

    $510,943.) The Commission has also updated the cost estimates that

    appeared in the NPRM based on the most recent data and statistics

    available to the Commission (including, for example, the number of

    reporting forms received by the Commission in 2012). The NPRM

    calculated an estimated total annual cost to the industry of

    $9,147,061, as compared to an estimated total cost to the industry

    of $9,574,296 in these final rules, per section VIII(A) above. See

    also supra note 265.

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

    As indicated throughout this section VIII(B), the Commission has

    used the same wage rate of $70.07 when calculating the cost of

    submission via both the web portal and FTP. Each submission method

    will, nonetheless, require a different annual or annualized burden, in

    terms of hours. This $70.07 wage rate represents the work of a senior

    programmer, programmer, intermediate compliance advisor, systems

    analyst, and assistant/associate general counsel, in the proportions

    described in the preceding footnote.

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

    \286\ As noted in section VIII(A), the initial development cost

    per reporting party is estimated at $18,498 (264 hours of initial

    development burden x a wage rate of $70.07). The Commission expects

    that reporting parties will budget initial development costs in the

    manner that is most cost-effective for each party, which may result

    in some reporting parties incurring the majority of these initial

    development costs in the beginning of the rule compliance period.

    \287\ The Commission has calculated an estimated range of 25%

    below and 25% above the estimated total annual industry cost, due to

    the fact that reporting costs will differ among market participants

    based on a variety of factors, including the state of their current

    technology systems, and their differing levels of market and

    reporting experience. The upper end of the ranges also responds to

    comments stating that the cost estimates in the NPRM understated the

    total cost to the industry (without expressing by how much, or to

    what degree).

    \288\ The Commission estimated the total annual industry cost

    associated with each filing obligation by considering the two

    distinct filing methods that it will accommodate pursuant to these

    final rules (web-based submission and FTP submission). The estimated

    cost of each filing obligation assumes that all reporting parties

    will file via the less expensive of the two filing methods. However,

    reporting parties, given their own individualized needs, are assumed

    to make the most cost-effective choice for them, which may be either

    of the two methods. As noted in section VIII(A) above, the estimated

    total annual industry cost of the more expensive submission method,

    via the web-based portal, is $5,954,969. The $5,954,969 figure is

    arrived at by multiplying the anticipated 7,726 records by 11 hours

    anticipated burden per record (equals 84,986 hours) by a wage rate

    of $70.07 (equals $5,954,969). An estimated low and high range (25%

    below and above this figure) equals $4,466,227 and $7,443,711,

    respectively.

    Form 102A

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

    Estimated low and high range

    Estimated total (25% below and 25% above Anticipated

    Regulation annual industry estimated total annual transmission

    cost \286\ industry cost) \287\ method \288\

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

    17.01(a)....................................... $1,931,129 $1,448,347-$2,413,911 FTP

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

    [[Page 69216]]

    New Form 102B

    (4) Overview of New Form 102B

    New Form 102B provides a new volume-based reporting structure not

    found in current Form 102. While current Form 102 reporting

    requirements arise when an account (or collection of related accounts)

    has a reportable position, 102B reporting is triggered when an

    individual trading account meets a specified trading volume level in an

    individual product and, as a result, becomes a ``volume threshold

    account.'' As noted above, volume threshold accounts could reflect,

    without limitation, trading in futures, options on futures, swaps, and

    any other product traded on or subject to the rules of a DCM or SEF.

    (5) Benefits of New Form 102B

    The current position-based reporting regime captures over 90

    percent of open interest in many markets regulated by the Commission.

    Nonetheless, the current system is not specifically designed to

    identify market participants using algorithmic systems, whose

    activities have been opaque under the position-based reporting regime.

    These traders typically enter and exit a given market position within

    very brief periods intraday, and are therefore rarely captured by end-

    of-day position reports. In highly liquid markets, participants of this

    type can make up a meaningful percentage of market activity. The

    addition of volume-based reporting, which identifies intra-day trading

    activity meeting a volume threshold regardless of whether positions

    continue to be held at the end of day, will enable the Commission to

    better understand the behavior and evolution of this rapidly growing

    market segment. Reporting on 102B will also enable the Commission to

    identify other types of high-volume traders that may hold positions for

    longer periods of time than is characteristic of high-frequency

    traders, but nonetheless enter and exit positions intraday.

    While the Commission is able to view intraday transactions via the

    Commission's trade capture report, this report does not provide

    ownership or control information regarding the relevant trading

    accounts. Because the Commission lacks the information necessary to

    efficiently link transaction and account data, the Commission is unable

    to aggregate the positions of individual trading accounts, or associate

    trading accounts with special accounts in a timely fashion. The

    addition of volume-based reporting via New Form 102B will remedy this,

    by providing the Commission with an efficient means to collect the

    information required to aggregate positions, detect intra-day position

    limit violations, and calculate market share. When analyzing periods of

    elevated volatility--especially at significant trading times such as

    market open and close--the ability to aggregate intra-day trading

    behavior by owner/controller is crucial to understanding whether a

    trader has adversely affected (or has the potential to affect) market

    quality or price discovery.

    In sum, the information collected on new Form 102B will

    significantly improve the efficiency and performance of the

    Commission's market and trade practice surveillance program. The

    Commission anticipates that New Form 102B will allow the Commission to

    perform more comprehensive surveillance, by identifying over 90 percent

    of market activity in many significant products that are traded intra-

    day but not held overnight, mirroring the level of account

    identification under the current end-of-day position-based reporting

    regime. In so doing, it will improve the integrity of financial

    markets, protecting market participants and the public from the costs

    of disruptive trading practices and other market abuses. Improving the

    Commission's surveillance program will also support the Commission's

    enforcement efforts to investigate such market abuses. Finally, the

    ability to more efficiently identify and aggregate trading activity

    will improve the Commission's research capabilities as well as its

    forensic analysis of disruptive market events, even when prohibited

    practices are not involved. For example, the Commission's efforts to

    identify and aggregate trading activity were shown to be particularly

    helpful in diagnosing events such as the Flash Crash of 2010.\289\

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

    \289\ See ``Findings Regarding the Market Events of May 6,

    2010,'' available at: http://www.sec.gov/news/studies/2010/marketevents-report.pdf.

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

    (6) Costs of New Form 102B

    The Commission assumes that each New Form 102B reporting party will

    submit New Form 102B via secure FTP, which the Commission believes is

    the more cost-effective of the two filing methods for the industry as a

    whole. Each FTP submission will likely contain numerous 102B records.

    The Commission estimates that the total initial development burden

    should average 264 hours per reporting party. The Commission also

    estimates that the highly automated nature of this option will

    virtually eliminate the marginal costs associated with each additional

    submission or each additional record contained in a submission.

    Accordingly, the Commission estimates that 102B change and refresh

    updates will not increase a reporting party's burden when using the FTP

    submission method. The Commission further estimates that the ongoing

    operation and maintenance burden will average 53 hours per year no

    matter how many records are contained in a submission. The total

    annualized initial development burden and the ongoing operation and

    maintenance burden (total yearly burden) equals approximately 106 hours

    per reporting party.\290\

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

    \290\ All annualized development burden estimates are based on 5

    year, straight line depreciation.

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

    Because New Form 102B provides a new volume-based reporting

    structure not found in current Form 102, the Commission is unable to

    refer to historical reporting statistics to directly estimate the

    number of New Form 102B reporting parties. Instead, the Commission

    estimated the number of New Form 102B reporting parties by estimating

    the number of clearing members associated with trading accounts that

    the Commission projects will qualify as volume threshold accounts.

    For volume threshold accounts associated with DCMs, the

    Commission anticipates that it will receive New Form 102B submissions

    from approximately 100 reporting parties annually. Assuming that all

    such reporting parties utilize the FTP submission method, the

    Commission estimates that the total annual industry burden for the

    reporting of such accounts on New Form 102B will equal 10,600

    hours.\291\ Using an estimated wage rate of $70.07 per hour, annual

    industry costs for such filings made pursuant to the FTP submission

    method are estimated at $742,742.\292\

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

    \291\ The 10,600 hour figure is arrived at by multiplying 106

    hours (annualized development burden and ongoing operation and

    maintenance burden per reporting party) by 100 reporting parties.

    \292\ The $742,742 figure is arrived at by multiplying 100

    reporting parties by 106 hours (equals 10,600 hours) by $70.07

    (equals $742,742).

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

    For volume threshold accounts associated with SEFs, the

    Commission anticipates that it will receive New Form 102B submissions

    from approximately 75 reporting parties annually. Assuming that all

    such reporting parties utilize the FTP submission method, the

    Commission estimates that the total annual industry burden for the

    reporting of such accounts on New Form 102B will equal 7,950

    hours.\293\ Using an estimated wage

    [[Page 69217]]

    rate of $70.07 per hour, annual industry costs for such filings made

    pursuant to the FTP submission method are estimated at $557,057.\294\

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

    \293\ The 7,950 hour figure is arrived at by multiplying 106

    hours (annualized development burden and ongoing operation and

    maintenance burden per reporting party) by 75 reporting parties.

    \294\ The $557,057 figure is arrived at by multiplying 75

    reporting parties by 106 hours (equals 7,950 hours) by $70.07

    (equals $557,057).

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

    Collectively, annual industry costs for 102B filings made pursuant

    to the FTP submission method are estimated at $1,299,799.\295\

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

    \295\ The $1,299,799 figure is arrived at by multiplying 175

    reporting parties by 106 hours (equals 18,550 hours) by $70.07

    (equals $1,299,799).

    \296\ As noted in section VIII(A), the initial development cost

    per reporting party is estimated at $18,498 (264 hours of initial

    development burden x a wage rate of $70.07). The Commission expects

    that reporting parties will budget initial development costs in the

    manner that is most cost-effective for each party, which may result

    in some reporting parties incurring the majority of these initial

    development costs in the beginning of the rule compliance period.

    \297\ The Commission has calculated an estimated range of 25%

    below and 25% above the estimated total annual industry cost, due to

    the fact that reporting costs will differ among market participants

    based on a variety of factors, including the state of their current

    technology systems, and their differing levels of market and

    reporting experience. The upper end of the ranges also responds to

    comments stating that the cost estimates in the NPRM understated the

    total cost to the industry (without expressing by how much, or to

    what degree).

    \298\ As noted in section VIII(A) above, the estimated total

    annual industry cost of the more expensive submission method, via

    the web-based portal, is $144,916,322. The $144,916,322 figure is

    arrived at by multiplying the anticipated 188,015 records by 11

    hours anticipated burden per record (equals 2,068,165 hours) by a

    wage rate of $70.07 (equals $144,916,322). An estimated low and high

    range (25% below and above this figure) equals $108,687,242 and

    $181,145,403, respectively.

    Form 102B

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

    Estimated total Estimated low and high range

    annual (25% below and 25% above Anticipated

    Regulation industry cost estimated total annual transmission

    \296\ industry cost) \297\ method \298\

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

    17.01(b)....................................... $1,299,799 $974,849-$1,624,749 FTP

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

    New Form 71

    (7) Overview of New Form 71

    New Form 71 (``Identification of Omnibus Accounts and Sub-

    Accounts'') will be sent, in the Commission's discretion, in the event

    that a volume threshold account is identified as a customer omnibus

    account on Form 102B. The Commission will send New Form 71 via a

    special call to the originating firm of such an account. If the

    originating firm indicates that this account is itself an omnibus

    account (an ``omnibus reportable sub-account''), then the originating

    firm will be required to indicate whether the omnibus reportable sub-

    account is a house or customer omnibus account and identify the

    originator of the omnibus reportable sub-account. Another Form 71 will

    be sent, at the discretion of Commission staff, to the originator of a

    customer omnibus reportable sub-account identified on Form 71. At its

    discretion, the Commission will continue to reach through layered

    customer omnibus reportable sub-accounts via successive Form 71s until

    reaching all reportable sub-accounts, if any, that are not omnibus sub-

    accounts. Form 71 therefore illustrates the `nested' structure of

    omnibus accounts and underlying omnibus sub-accounts that are volume

    threshold accounts, and identifies the ultimate owner and controller of

    these accounts.

    (8) Benefits of New Form 71

    Without the information provided on New Form 71, the Commission is

    unable to determine whether trading activity in omnibus accounts is

    attributable to accounts under common ownership or control, or whether

    it simply represents the combined trading activity of multiple traders

    acting independently of one another. Similar to the benefits of New

    Form 102B, the ability to aggregate trading activity will enable the

    Commission to better identify manipulative and disruptive trading

    activity, regardless of whether this activity is conducted through a

    single account, or spread across a number of omnibus accounts and sub-

    accounts.

    (9) Costs of New Form 71

    The Commission assumes that each New Form 71 reporting party (i.e.,

    originators of omnibus volume threshold accounts or omnibus reportable

    sub-accounts) will complete and submit New Form 71 online via a secure

    web-based portal provided by the Commission, which the Commission

    believes is the more cost-effective of the two filing methods for the

    industry as a whole. The Commission estimates that, on average, New

    Form 71 will create an annual reporting burden of 8 hours per

    filing.\299\

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

    \299\ The submission of New Form 71 through the web-based portal

    does not require initial development expenditures; as a result, the

    burdens and costs for this form are calculated on an annual basis

    rather than an annualized basis. In addition, Form 71 does not

    require change or refresh updates.

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

    As discussed in section VIII(A) above, the Commission expects

    approximately 564 DCM-related New Form 71 filings per year, and 198

    SEF-related New Form 71 filings per year.

    Based on an estimated 564 DCM-related New Form 71 filings

    per year, the Commission estimates an aggregate reporting burden of

    4,512 hours annually for such filings via the web-based portal. Using

    an estimated wage rate of $70.07 per hour, annual industry costs for

    such filings made via the web-based portal are estimated at

    $316,156.\300\

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

    \300\ The $316,156 figure is arrived at by multiplying 564

    records by 8 hours (equals 4,512 hours) by $70.07 (equals $316,156).

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

    Based on an estimated 198 SEF-related New Form 71 filings

    per year, the Commission estimates an aggregate reporting burden of

    1,584 hours annually for such filings via the web-based portal. Using

    an estimated wage rate of $70.07 per hour, annual industry costs for

    such filings made via the web-based portal are estimated at

    $110,991.\301\

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

    \301\ The $110,991 figure is arrived at by multiplying 198

    records by 8 hours (equals 1,584 hours) by $70.07 (equals $110,991).

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

    Collectively, annual industry costs for New Form 71 filings made

    via the web-based portal are estimated at $427,147.\302\

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

    \302\ The $427,147 figure is arrived at by multiplying 762

    records by 8 hours (equals 6,096 hours) by $70.07 (equals $427,147).

    \303\ The Commission has calculated an estimated range of 25%

    below and 25% above the estimated total annual industry cost, due to

    the fact that reporting costs will differ among market participants

    based on a variety of factors, including the state of their current

    technology systems, and their differing levels of market and

    reporting experience. The upper end of the ranges also responds to

    comments stating that the cost estimates in the NPRM understated the

    total cost to the industry (without expressing by how much, or to

    what degree).

    \304\ As noted in section VIII(A) above, the estimated total

    annual industry cost of the more expensive submission method, via

    FTP data feed, is $5,659,694. The $5,659,694 figure is arrived at by

    multiplying the anticipated 762 reporting parties by 106 hours of

    annualized development burden and ongoing operation and maintenance

    burden (equals 80,772 hours) by a wage rate of $70.07 (equals

    $5,659,694). An estimated low and high range (25% below and above

    this figure) equals $4,244,771 and $7,074,618, respectively.

    [[Page 69218]]

    Form 71

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

    Estimated low and high range

    Estimated total (25% below and 25% above Anticipated

    Regulation annual estimated total annual transmission

    industry cost industry cost) \303\ method \304\

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

    17.01(c)....................................... $427,147 $320,360-$533,934 web

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

    New Form 40

    (10) Overview of New Form 40

    New Form 40 will be sent, on special call of the Commission, to

    individuals and other entities identified on any of 102A, 102B, and

    Form 71. New Form 40, still referred to as the ``Statement of Reporting

    Trader,'' will continue to serve the function traditionally met by

    current Form 40. At the same time, New Form 40 will provide the

    Commission with more detailed information than current Form 40

    regarding both the business activities and the ownership and control

    structure of a reporting trader identified in the Commission's Form 102

    program (as updated by these final rules). New Form 40 will also be the

    vehicle through which market participants subject to 17 CFR 20.5(b)

    submit their 40S filings (discussed below), and will be used to collect

    additional information regarding the owners and controllers of non-

    omnibus volume threshold accounts identified by Form 71. Those entities

    required to complete a New Form 40 will be under a continuing

    obligation, per direction in the special call, to update and maintain

    the accuracy of the information submitted on New Form 40 by

    periodically updating the information on the New Form 40 web portal or

    by periodically resubmitting New Form 40 by secure FTP transmission.

    Among other requested data fields, New Form 40: asks if the

    respondent is engaged in commodity index trading (as that term is

    defined in the form) (a question that does not appear on current Form

    40); requires the respondent to identify all the business sectors that

    pertain to its business activities or occupation (a question that has

    been expanded on New Form 40); requires the respondent to identify all

    commodity groups and individual commodities that it presently trades,

    or expects to trade in the near future, in derivatives markets (a

    question that has been expanded on New Form 40); and requires the

    respondent to indicate the business purpose for which it uses

    derivatives markets (a question that has been expanded on New Form 40).

    (11) Benefits of New Form 40

    The expanded Form 40 will improve the Commission's ability to

    perform effective surveillance, by providing the Commission with more

    detailed data on reporting traders, including: information regarding

    reporting traders' control relationships with other entities; other

    relationships with persons that influence or exercise authority over

    the trading of a reporting trader; and more detailed information

    regarding the business activities of the reporting trader. Responses to

    the questions above will enable the Commission to better understand the

    ownership and control structure of reporting traders, and the extent of

    their business activities across multiple markets and product groups.

    This enhanced visibility will, in turn, improve the Commission's

    ability to respond to market disruptions, which can come at a high cost

    to the investing and general public. The Commission will also be able

    to use information reported on New Form 40 to cross-check several of

    the ownership and control data fields reported on New Form 102. The

    Commission will be able to compare the trading goals that a respondent

    reports on New Form 40 to its subsequent market activity. If the two do

    not correspond, the Commission will request additional information from

    the respondent in order to maintain accuracy in Commission databases

    and reports, or take other appropriate action.

    Currently, Form 40s (as well as Form 102s) are submitted to the

    Commission via facsimile, email, and physical mail. The Commission

    converts these submissions into an electronic format, and loads them

    into the Commission's Integrated Surveillance System. Automating Form

    40 submission will improve efficiency by eliminating this additional

    layer of transcription. As a result, these final rules will reduce the

    likelihood of input errors. The rules will also reduce the burden and

    costs that arise when Commission staff must contact reporting parties

    to request additional information or clarification due to errors

    arising from mistaken inputs. The more accurate data reported via the

    automated Form 40 will, in turn, improve the quality of the

    Commission's published reports, such as the classifications in the

    Commitments of Traders report.

    (12) Costs of New Form 40

    New Form 40 Submissions Resulting from New Form 102A. The

    Commission assumes that each reporting party filing New Form 40 as a

    result of New Form 102A (i.e., special account owners and controllers)

    will complete and submit New Form 40 online via a secure web-based

    portal provided by the Commission, which the Commission believes is the

    more cost-effective of the two filing methods for the industry as a

    whole.

    As discussed in section VIII(A) above, the Commission expects

    approximately 5,250 New Form 40 records filings per year arising from

    New Form 102A filings. The Commission estimates that each of the 5,250

    New Form 40 records will require three hours to complete.\305\ Assuming

    each such New Form 40 record is provided via the web-based portal, the

    Commission estimates that the total annual industry burden for

    reporting on New Form 40, as a result of New Form 102A, will equal

    15,750 hours. Using an estimated wage rate of $70.07 per hour, annual

    industry costs for New Form 40 filings arising from special accounts

    are estimated at $1,103,603.\306\

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

    \305\ The Commission's estimate of three hours per response

    reflects an initial, one-time burden of 10 hours, annualized over a

    five-year period, plus an additional hour per year for change

    updates.

    \306\ The $1,103,603 figure is arrived at by multiplying 5,250

    records by 3 hours (equals 15,750 hours) by $70.07 (equals

    $1,103,603).

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

    New Form 40 Submissions Resulting from New Form 102B and New Form

    71. The Commission also assumes that each reporting party filing New

    Form 40 as a result of New Form 102B and New Form 71 (i.e., volume

    threshold account controllers, persons who own volume threshold

    accounts, reportable sub-account controllers, and persons who own

    reportable sub-accounts) will complete and submit New Form 40 online

    via a secure web-based portal provided by the Commission.

    [[Page 69219]]

    As discussed in section VIII(A) above, the Commission anticipates

    that it will receive approximately 13,409 DCM-related New Form 40

    filings annually and approximately 5,511 SEF-related New Form 40

    filings annually, in each case arising from New Form 102B and New Form

    71.\307\ Each such New Form 40 filing is estimated to require three

    hours.\308\ Assuming each such New Form 40 record is provided via the

    web-based portal:

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

    \307\ As with 102A records, the Commission estimates that in

    approximately 25 percent of filings, the owner and the controller of

    a volume threshold account reported on New Form 102B will be the

    same, and that accordingly, only one New Form 40 would be required.

    Similarly, a number of potential New Form 40 reporting parties are

    likely to own or control both DCM-related and SEF-related volume

    threshold accounts, but only one New Form 40 would be required.

    \308\ The Commission's estimate of three hours per response

    reflects an initial, one-time burden of 10 hours, annualized over a

    five-year period, plus an additional hour per year for change

    updates.

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

    The Commission estimates that the total annual industry

    burden for reporting on New Form 40, as a result of New Form 102B and

    New Form 71, will equal 40,227 hours for DCM-related New Form 40

    filings. Using an estimated wage rate of $70.07 per hour, annual

    industry costs for such filings arising from volume threshold accounts

    and reportable sub-accounts are estimated at $2,818,706.\309\

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

    \309\ The $2,818,706 figure is arrived at by multiplying 13,409

    filings by 3 hours (equals 40,227 hours) by $70.07 (equals

    $2,818,706).

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

    The Commission estimates that the total annual industry

    burden for reporting on New Form 40, as a result of New Form 102B and

    New Form 71, will equal 16,533 hours for SEF-related New Form 40

    filings. Using an estimated wage rate of $70.07 per hour, annual

    industry costs for such filings arising from volume threshold accounts

    and reportable sub-accounts are estimated at $1,158,467.\310\

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

    \310\ The $1,158,467 figure is arrived at by multiplying 5,511

    filings by 3 hours (equals 16,533 hours) by $70.07 (equals

    $1,158,467).

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

    Collectively, annual industry costs for New Form 40 filings, as a

    result of New Form 102B and New Form 71, are estimated at

    $3,977,173.\311\

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

    \311\ The $3,977,173 figure is arrived at by multiplying 18,920

    filings by 3 hours (equals 56,760 hours) by $70.07 (equals

    $3,977,173).

    Form 40--Submissions Resulting From (a) New Form 102A and (b) New Form 102B and New Form 71

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

    Estimated total Estimated low and high range

    annual (25% below and 25% above Anticipated

    Regulation industry cost estimated total annual transmission

    \312\ industry cost) \313\ method

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

    18.04(a)....................................... $1,103,603 $827,702-$1,379,504 web \314\

    18.04(b)....................................... 3,977,173 $2,982,880-$4,971,466 web \315\

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

    New Form 102S

    (13) Overview of New Form 102S

    Section 102S of New Form 102 is designed to facilitate the

    electronic submission of 102S filings. Such filings are currently being

    submitted to the Commission (pursuant to 17 CFR 20.5(a)) through a non-

    automated process.\316\ Pursuant to Sec. 20.5(a), 102S filings must be

    submitted by a part 20 reporting party (a swap dealer or clearing firm)

    for each reportable counterparty consolidated account when such account

    first becomes reportable.\317\ By incorporating 102S in New Form 102,

    these final rules will require more detailed ownership and control

    information regarding identified consolidated accounts, and require the

    submission of consolidated account reporting via an automated

    submission.

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

    \312\ As noted in section VIII(A) above, the initial development

    cost per reporting party is estimated at $701 (10 hours of initial

    development burden x a wage rate of $70.07). The Commission expects

    that reporting parties will budget initial development costs in the

    manner that is most cost-effective for each party, which may result

    in some reporting parties incurring the majority of these initial

    development costs in the beginning of the rule compliance period.

    \313\ The Commission has calculated an estimated range of 25%

    below and 25% above the estimated total annual industry cost, due to

    the fact that reporting costs will differ among market participants

    based on a variety of factors, including the state of their current

    technology systems, and their differing levels of market and

    reporting experience. The upper end of the ranges also responds to

    comments stating that the cost estimates in the NPRM understated the

    total cost to the industry (without expressing by how much, or to

    what degree).

    \314\ As noted in section VIII(A) above, the estimated total

    annual industry cost of the more expensive submission method for New

    Form 40 submissions arising from New Form 102A, via FTP data feed,

    is $36,051,015. The $36,051,015 figure is arrived at by multiplying

    the anticipated 5,250 reporting parties by 98 hours of annualized

    development burden and ongoing operation and maintenance burden

    (equals 514,500 hours) by a wage rate of $70.07 (equals

    $36,051,015). An estimated low and high range (25% below and above

    this figure) equals $27,038,261 and $45,063,769, respectively.

    \315\ As noted in section VIII(A) above, the estimated total

    annual industry cost of the more expensive submission method for New

    Form 40 submissions arising from New Form 102B and New Form 71, via

    FTP data feed, is $129,920,991. The $129,920,991 figure is arrived

    at by multiplying the anticipated 18,920 reporting parties by 98

    hours of annualized development burden and ongoing operation and

    maintenance burden (equals 1,854,160 hours) by a wage rate of $70.07

    (equals $129,920,991). An estimated low and high range (25% below

    and above this figure) equals $97,440,743 and $162,401,239,

    respectively.

    \316\ References in these final rules to ``102S filings'' are

    based on the regulatory text of Sec. 20.5, which refers to ``102S

    filings'' and ``40S filings.''

    \317\ 17 CFR 20.5(a).

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

    (14) Benefits of New Form 102S

    Form 102S will require reporting parties to identify swap

    counterparty or customer consolidated accounts with reportable

    positions. Swap reporting on Form 102S significantly improves the

    Commission's surveillance capabilities, by enabling it to track the

    market activity of a specific trader, including traders that may be

    dividing risk exposure between both on-exchange and off-exchange

    instruments. Swap reporting will also enable the Commission to more

    efficiently aggregate position exposure in a particular product or

    commodity group. The reporting of swap activity on Form 102S aligns

    with the Commission's recently finalized rules on real-time public and

    regulatory reporting of swap trades, and provides further transparency

    into markets that, historically, have often been opaque and/or over-

    the-counter.

    As further changes arise in the commodity swap market, such as the

    introduction of SEFs, the identification of both special accounts (via

    102A) and consolidated accounts (via 102S) will enable the Commission

    to monitor a broad range of market activity across traditional futures

    exchanges and SEFs. This will enable the Commission to quantify the

    amount of activity in a given product across different execution

    platforms, and monitor changes in this amount over time. The

    Commission's expanded view of the marketplace will enable it to more

    quickly and efficiently identify disruptive market activity occurring

    across multiple trading facilities (similar to the transmission effects

    that occurred during the Flash

    [[Page 69220]]

    Crash).\318\ In particular, New Form 102S will improve the Commission's

    ability to perform risk-based monitoring of trading activity conducted

    through accounts owned or controlled by, for example, a single market

    participant, but spread across multiple platform types.\319\ In the

    event the Commission identifies trading activity requiring further

    investigation, the Commission will be able to contact market

    participants more quickly and efficiently using the ownership and

    control information collected through the OCR reporting process.

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

    \318\ See supra note 289 for further information regarding the

    Flash Crash.

    \319\ The Commission also notes that 102S reporting is a

    necessary complement to SDR reporting under Part 45, and will

    provide information that is not otherwise available under the SDR

    reporting regime. The Commission anticipates that swap dealers and

    clearing members (the 102S reporting parties) will be able to

    consistently provide the contact information for owners and

    controllers of consolidated accounts on the 102S, based on the

    records these entities maintain. Part 45 reporting, by contrast, is

    based on counterparty data. Although this counterparty data may, in

    some cases, include the owners and controllers of consolidated

    accounts, it will not include this information in all cases. As a

    result, the Commission cannot rely on SDR reporting under Part 45 as

    a substitute for 102S reporting.

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

    (15) Costs of New Form 102S

    The Commission assumes that each New Form 102S reporting party will

    submit New Form 102S via secure FTP, which the Commission believes is

    the more cost-effective of the two filing methods for the industry as a

    whole. Each FTP submission will likely contain numerous 102S records.

    The Commission estimates that the total initial development burden will

    average 264 hours per reporting party. The Commission also estimates

    that the highly automated nature of this option will virtually

    eliminate the marginal costs associated with each additional submission

    or each additional record contained in a submission. The Commission

    believes that the timing requirements for 102S filings in current Sec.

    20.5(a)(3),\320\ or any new submission procedures arising from the

    Swaps Large Trader Guidebook (i.e., frequency of 102S filing

    submission), will not increase a reporting party's burden when using

    the FTP submission method. The Commission further estimates that the

    ongoing operation and maintenance burden will average 53 hours per year

    no matter how many records are contained in a submission. The total

    annualized initial development burden and the ongoing operation and

    maintenance burden (total yearly burden) will equal approximately 106

    hours per reporting party.\321\

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

    \320\ 17 CFR 20.5(a)(3).

    \321\ All annualized development burden estimates are based on 5

    year, straight line depreciation.

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

    The 102S filing requirements in current Sec. 20.5 \322\ are nearly

    identical to the filing requirements for revised 102S; accordingly, the

    Commission used its experience to date with 102S filings to estimate

    the number of 102S reporting parties. An assessment of Commission data

    collection efforts demonstrated that the Commission received Form 102S

    submissions from 39 reporting parties in 2012. The Commission

    anticipates that it will receive New Form 102S submissions from a

    similar number of reporting parties each year. Assuming 102S reporting

    parties utilize the FTP submission method, the Commission estimates

    that the total annual industry burden for 102S filing will equal 4,134

    hours. Using an estimated wage rate of $70.07 per hour, annual industry

    costs for New Form 102S are estimated at $289,669.\323\

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

    \322\ 17 CFR 20.5.

    \323\ The $289,669 figure is arrived at by multiplying 39

    reporting parties by 106 hours (equals 4,134 hours) by $70.07

    (equals $289,669).

    \324\ As noted in section VIII(A), the initial development cost

    per reporting party is estimated at $18,498 (264 hours of initial

    development burden x a wage rate of $70.07). The Commission expects

    that reporting parties will budget initial development costs in the

    manner that is most cost-effective for each party, which may result

    in some reporting parties incurring the majority of these initial

    development costs in the beginning of the rule compliance period.

    \325\ The Commission has calculated an estimated range of 25%

    below and 25% above the estimated total annual industry cost, due to

    the fact that reporting costs will differ among market participants

    based on a variety of factors, including the state of their current

    technology systems, and their differing levels of market and

    reporting experience. The upper end of the ranges also responds to

    comments stating that the cost estimates in the NPRM understated the

    total cost to the industry (without expressing by how much, or to

    what degree).

    \326\ As noted in section VIII(A) above, the estimated total

    annual industry cost of the more expensive submission method, via

    the web-based portal, is $1,757,356. The $1,757,356 figure is

    arrived at by multiplying the anticipated 2,508 records by 10 hours

    anticipated burden per record (equals 25,080 hours) by a wage rate

    of $70.07 (equals $1,757,356). An estimated low and high range (25%

    below and above this figure) equals $568,017 and $946,695,

    respectively.

    Form 102S

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

    Estimated total Estimated low and high range

    annual (25% below and 25% above Anticipated

    Regulation industry cost estimated total annual transmission

    \324\ industry cost) \325\ method \326\

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

    20.5(a)........................................ $289,669 $217,252-$362,086 FTP

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

    New Form 40S

    (16) Overview of New Form 40S

    New Form 40 will be the vehicle through which market participants

    subject to 17 CFR 20.5(b) submit New Form 40S. As a result, New Form 40

    and New Form 40S are substantively identical. New Form 40S will be

    sent, on special call of the Commission, to individuals and other

    entities identified on Form 102S. New Form 40S will continue to serve

    the function traditionally met by current Form 40S. New Form 40S will

    provide the Commission with detailed information regarding both the

    business activities and the ownership and control structure of a

    reporting trader identified in the Commission's Form 102S program (as

    updated by these final rules). As noted above, a reporting party (a

    swap dealer or clearing firm) must submit a Form 102S for each

    reportable counterparty consolidated account when such account first

    becomes reportable. Those entities required to complete a New Form 40S

    will be under a continuing obligation, per direction in the special

    call, to update and maintain the accuracy of the information submitted

    on New Form 40S by periodically updating the information on the New

    Form 40S web portal or by periodically resubmitting New Form 40S by

    secure FTP transmission.

    The expanded Form 40S will provide the Commission with more

    detailed data on reporting traders, including information regarding

    reporting traders' control relationships with other entities, and other

    relationships with persons that influence or exercise authority over

    the trading of a reporting trader. The expanded form also collects more

    detailed information regarding the business activities of the reporting

    trader. For example, New Form 40S:

    [[Page 69221]]

    Asks if the respondent is engaged in commodity index trading (as that

    term is defined in the form) (a question that does not appear on

    current Form 40S); requires the respondent to identify all the business

    sectors that pertain to its business activities or occupation (a

    question that has been expanded on New Form 40S); requires the

    respondent to identify all commodity groups and individual commodities

    that it presently trades, or expects to trade in the near future, in

    derivatives markets (a question that has been expanded on New Form

    40S); and requires the respondent to indicate the business purpose for

    which it uses derivatives markets (a question that has been expanded on

    New Form 40S).

    (17) Benefits of New Form 40S

    Responses to the questions above will improve the Commission's

    ability to perform effective surveillance, by enabling it to better

    understand the ownership and control structure of reporting traders,

    and the extent of their business activities across multiple markets and

    product groups. The collection of the information described above will

    improve the Commission's ability to analyze and/or respond to market

    disruptions, which can exact a high cost to the investing and general

    public. The Commission will also be able to use information reported on

    New Form 40S to cross-check several of the ownership and control data

    fields reported on New Form 102S. The Commission will be able to

    compare the trading goals that a respondent reports on New Form 40S to

    its subsequent market activity. If the two do not correspond, the

    Commission will request additional information from the respondent in

    order to maintain accuracy in Commission databases and reports, or take

    other appropriate action.

    (18) Costs of New Form 40S

    The Commission assumes that each New Form 40S reporting party will

    complete and submit its forms online via a secure web-based portal

    provided by the Commission, which the Commission believes is the more

    cost-effective of the two filing methods for the industry as a whole.

    As discussed in section VIII(A) above, the Commission anticipates that

    it will receive approximately 2,508 102S records per year, and the

    Commission estimates that it will make approximately the same number of

    40S special calls each year (2,508). Each response is estimated to

    require three hours,\327\ resulting in an estimated total annual

    reporting burden of 7,524 hours. Using an estimated wage rate of $70.07

    per hour, annual industry costs for New Form 40S filings made via the

    web-based portal are estimated at $527,207.\328\

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

    \327\ The Commission's estimate of three hours per response

    reflects an initial, one-time burden of 10 hours, annualized over a

    five-year period, plus an additional hour per year for change

    updates.

    \328\ The $527,207 figure is arrived at by multiplying 2,508

    filings by 3 hours (equals 7,524 hours) by $70.07 (equals $527,207).

    \329\ As noted in section VIII(A) above, the initial development

    cost per reporting party is estimated at $701 (10 hours of initial

    development burden x a wage rate of $70.07). The Commission expects

    that reporting parties will budget initial development costs in the

    manner that is most cost-effective for each party, which may result

    in some reporting parties incurring the majority of these initial

    development costs in the beginning of the rule compliance period.

    \330\ The Commission has calculated an estimated range of 25%

    below and 25% above the estimated total annual industry cost, due to

    the fact that reporting costs will differ among market participants

    based on a variety of factors, including the state of their current

    technology systems, and their differing levels of market and

    reporting experience. The upper end of the ranges also responds to

    comments stating that the cost estimates in the NPRM understated the

    total cost to the industry (without expressing by how much, or to

    what degree).

    \331\ As noted in section VIII(A) above, the estimated total

    annual industry cost of the more expensive submission method, via

    FTP data feed, is $17,222,085. The $17,222,085 figure is arrived at

    by multiplying the anticipated 2,508 reporting parties by 98 hours

    of annualized development burden and ongoing operation and

    maintenance burden (equals 245,784 hours) by a wage rate of $70.07

    (equals $17,222,085). An estimated low and high range (25% below and

    above this figure) equals $12,916,564 and $21,527,606, respectively.

    Form 40S

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

    Estimated total Estimated low and high range

    annual (25% below and 25% above Anticipated

    Regulation industry cost estimated total annual transmission

    \329\ industry cost) \330\ method \331\

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

    20.5(b)........................................ $527,207 $395,405-$659,009 web

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

    Expanded Obligation To Maintain Books and Records and Furnish

    Information to the Commission Under Sec. 18.05

    (19) Overview of Sec. 18.05

    Current Sec. 18.05 requires traders who hold or control reportable

    positions to maintain books and records regarding all positions and

    transactions in the commodity in which they have reportable

    positions.\332\ In addition, current Sec. 18.05 requires that the

    trader furnish the Commission with information concerning such

    positions upon request. The Commission is expanding Sec. 18.05 to

    impose books and records requirements upon four new categories of

    market participants, who are not required to maintain books and records

    pursuant to current Sec. 18.05: (1) Owners of volume threshold

    accounts reported on New Form 102B; (2) controllers of volume threshold

    accounts reported on New Form 102B; (3) owners of reportable sub-

    accounts reported on New Form 71; and (4) controllers of reportable

    sub-accounts reported on New Form 71. Traders who hold or control

    reportable positions will remain subject to the books and records

    requirements, consistent with the current requirements.

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

    \332\ 17 CFR 18.05.

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

    (20) Benefits of Expanded Recordkeeping

    As a result of the final rules, the four new categories of persons

    identified above will have the same books and records requirements as

    traders who hold or control a reportable futures or options on futures

    position, and are therefore required to maintain books and records

    under current Sec. 18.05. When the Commission identifies potential

    instances of manipulative or abusive practices via the new and amended

    Forms 102, 40 and 71, or in the daily trade capture reports received by

    the Commission, it may request additional information via special call

    regarding traders' positions, transactions or activities. The Sec.

    18.05 special call enables the Commission to analyze a trader's

    activities in Commission-regulated markets and related cash markets, as

    well as the trader's other commercial activity. By requiring all

    persons subject to the revised reporting regime to provide detailed

    books and records to the Commission upon its request, the Commission

    will strengthen its ability to conduct surveillance and pursue

    enforcement actions in the event

    [[Page 69222]]

    of potentially manipulative or abusive activity.

    (21) Costs of Expanded Recordkeeping

    As noted above, revised Sec. 18.05 will likely impose a

    recordkeeping burden on a larger number of persons than current Sec.

    18.05. The Commission anticipates that additional persons subject to

    Sec. 18.05 will likely be able to rely on books and records already

    kept in the ordinary course of business to meet the requirements of the

    final regulation. This is due, in part, to the fact that Sec. 18.05

    requires traders to maintain fairly limited information regarding their

    trading activity. Section 18.05(a), for example, requires that, ``Every

    trader who holds or controls a reportable futures or option position

    shall keep books and records showing all details concerning all

    positions and transactions in the commodity'' on certain enumerated

    trading markets. Furthermore, the Commission assumes that some parties

    required to maintain books and records pursuant to revised Sec. 18.05

    are likely required to maintain books and records under current Sec.

    18.05, because they hold or control reportable positions (i.e., there

    will be a certain amount of overlap between these two groups).

    Accordingly, the Commission believes that revised Sec. 18.05 will not

    meaningfully increase recordkeeping burdens on persons brought under

    its scope. As noted in section VII above, the Commission did not

    receive any comments regarding the changes to Sec. 18.05 proposed in

    the NPRM.

    The Commission sent 59 special calls pursuant to Sec. 18.05 in

    2012, 42 of which were based on trade data reflected in the TCR data

    feed.\333\ As noted above, revised Sec. 18.05 will make four new

    categories of persons, identified through the volume-based reporting

    regime, subject to Sec. 18.05. Because the volume-based reporting

    regime is designed to identify designated types of trading activity,

    the Commission estimates that it will send special calls pursuant to

    revised Sec. 18.05 to, at a minimum, 42 recipients (i.e., the same

    number of persons to which the Commission sent special calls in 2012

    based on trade data reflected in the TCR). At the same time, the

    Commission expects that the introduction of volume-based reporting will

    lead to the Commission sending more special calls than it would

    otherwise, because this regime will identify new ownership and control

    relationships and patterns of trading activity. As a result, for

    purposes of estimating the costs of revised Sec. 18.05, the Commission

    assumes it will send 25% more special calls in response to trade data

    than it did in 2012, for a total of 53 special calls per year. These

    special calls will require a response from approximately 53 individual

    traders per year.

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

    \333\ See supra section I(B) for a discussion of the TCR.

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

    This estimate reflects only special calls sent pursuant to Sec.

    18.05 as a result of information collected via the volume-based

    reporting regime (i.e., New Form 102B and New Form 71). The estimated

    53 recipients of such special calls may include some traders that are

    already subject to the costs and obligations of current Sec. 18.05.

    The Commission estimates that each special call response submitted by

    the new categories of persons subject to revised Sec. 18.05 will take

    approximately 5 hours, for a total annual reporting burden of 265

    hours. Using an estimated wage rate of $70.07 per hour, annual

    reporting costs for the new categories of persons that are subject to

    revised Sec. 18.05 are estimated at $18,569.\334\

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

    \334\ The $18,569 figure is arrived at by multiplying 53

    responses by 5 hours (equals 265 hours) by $70.07 (equals $18,569).

    \335\ The Commission has calculated an estimated range of 25%

    below and 25% above the estimated total annual industry cost, due to

    the fact that recordkeeping costs will differ among market

    participants based on a variety of factors, including the state of

    their current technology and recordkeeping systems, and their

    differing levels of market and reporting experience. The upper end

    of the ranges also responds to comments stating that the cost

    estimates in the NPRM understated the total cost to the industry

    (without expressing by how much, or to what degree).

    Sec. 18.05 Recordkeeping Burden

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

    Estimated low and high range

    Estimated total (25% below and 25% above

    Regulation annual estimated total annual

    industry cost industry cost) \335\

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

    18.05........................................................... $18,569 $13,927-$23,211

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

    vi. Comments Regarding Costs and Benefits

    As previously noted, the NPRM requested comment on many aspects of

    the proposed rules, including the Commission's evaluation of the rules'

    costs and benefits.\336\ In response, ICE commented that it

    ``recognizes the value in collecting this OCR information for accounts

    that actively trade on DCMs, and integrating it with existing market

    surveillance and trade practice surveillance data to bridge gaps that

    may exist between individual transaction data contained in the trade

    register and position data contained in LTRs [large trader reporting].

    Having such data readily available in Commission . . . surveillance

    systems would improve the efficiency of the investigative process by

    saving the additional work and time required to manually request such

    information from clearing members.'' \337\

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

    \336\ See NPRM supra note 10 at 43984 and 43990.

    \337\ CL-2012-ICE supra note 55 at 5.

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

    ICE's comments are consistent with other supportive comments

    received in response to the 2009 NPRM.\338\ Petroleum Marketers

    Association of America (PMAA), for example, stated that, ``Efficient

    integration of large trader and trade register data from DCMs, ECMS,

    and [other markets] will improve market transparency and ensure that no

    one trader, investment fund or other entity controls a large percentage

    of the interest on commodity futures exchanges. Increased reporting

    requirements will help to identify those who possibly attempt to corner

    the market by taking huge positions in the futures markets which can

    move futures prices beyond what supply and demand fundamentals

    dictate.'' \339\

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

    \338\ See supra note 8. All 2009 Advanced NPRM comment letters

    (``CL-2009'') are available through the Commission's Web site at:

    http://www.cftc.gov/LawRegulation/FederalRegister/CommentFiles/09-008.

    \339\ CL-2009-PMAA supra note 338 at 2. Similarly, the Air

    Transport Association (ATA), commenting on the 2009 Advanced NPRM,

    included a list of market and regulatory benefits of the ownership

    and control report. These include allowing Commission staff to

    aggregate trading accounts under common ownership or control,

    allowing large trader reports and exchange trade registers to be

    linked, allowing expanded oversight of trading by widely dispersed

    individuals and accounts, linking traders' intra-day transactions

    with end-of-day positions, assisting investigations into intra-day

    manipulation and other trade practice abuses, and bridging gaps in

    current data reporting systems. CL-2009-ATA supra note 338 at 2-3.

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

    Other NPRM commenters, however, asserted that the Commission's cost

    [[Page 69223]]

    estimates were underestimated, that certain requirements imposed costs

    unwarranted by the magnitude of the anticipated benefits, and/or that

    certain requirements would not provide meaningful benefits.\340\ CME

    commented that ``Commission estimates do not appear to take into

    consideration the process changes that firms would need to engage in to

    obtain all OCR data, nor do they contain estimates for changes that

    SROs might have to institute to their systems to incorporate the three

    tiered reporting method.'' \341\ FIA commented that ``the proposed

    rules . . . would require significant changes to the procedures,

    processes and systems pursuant to which FCMs create and maintain

    records with respect to their customers and customer transactions. Such

    redesign would take longer and be substantially more expensive than the

    Commission has suggested in the Federal Register release accompanying

    the proposed rules.'' \342\ FIA also stated that ``we are still

    developing our costs analyses and will forward them to the Commission

    as soon as they are ready.''\343\ FIA did not provide the cost analyses

    mentioned in its comment letter to the Commission.

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

    \340\ See, e.g., the discussion of Sec. 15.00(v) (direct market

    access), Sec. 15.04 (reportable trading volume level) and Sec.

    17.01(a) in section VII, above.

    \341\ CL-2012-CME supra note 55 at 4.

    \342\ CL-2012-FIA NPRM supra note 55 at 9.

    \343\ Id.

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

    In the absence of specific quantitative estimates or alternative

    cost proposals by commenters, the Commission performed its own analysis

    in updating the NPRM cost benefit considerations for these final rules.

    As noted above, for purposes of these final rules, the Commission has

    updated the cost estimates that appeared in the NPRM based on the most

    recent data and statistics available to the Commission. The Commission

    has also calculated the total initial development burden on a non-

    annualized basis for each reporting form, as applicable, and presented

    cost ranges below and above each estimate in this section VIII(B). The

    high end of the cost ranges responds to comments stating that the cost

    estimates in the NPRM understated the total cost to the industry

    (without expressing by how much, or to what degree).

    Commenters asserting that certain requirements imposed costs

    unwarranted by the magnitude of anticipated benefits, and/or that

    certain requirements would not provide meaningful benefits, typically

    proposed an alternative approach, such as removing a question on the

    reporting forms, or modifying a reporting deadline. Such comments are

    addressed in the consideration of alternatives below. In addition,

    section VII above contains a detailed discussion of the comments

    received in response to the NPRM, the Commission's response to

    comments, and any changes made to the final rules in response to

    comments.

    vii. Consideration of Alternatives

    Commenters suggested a number of alternatives to the rules proposed

    in the NPRM for purposes of minimizing the cost to market participants.

    The final rules incorporate a number of these alternative proposals, or

    otherwise modify the proposed rules where doing so reduces costs

    without sacrificing benefits.\344\ The various alternatives considered

    for purposes of minimizing the cost to market participants (including

    those not ultimately adopted) are discussed below.

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

    \344\ As noted in section VIII(A) above, while the Commission

    has updated the cost estimates that appeared in the NPRM based on

    the most recent data and statistics available to the Commission, the

    Commission has not reduced the cost estimates in these final rules

    to account for the incorporation of the cost-saving proposals

    described below. As a result, total reporting costs to the industry

    are likely to be lower than the sum of the costs associated with

    each form individually, as the Commission has calculated above.

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

    (a) Creation of Contact Reference Database

    FIA commented that requiring firms to potentially submit three

    separate forms (102A, 102B and 102S) for the same customer ``will

    create unnecessary work and be more challenging to keep current.''

    \345\ To address this issue, FIA suggested that the Commission create a

    reporting contact reference database, which would ``ensure that contact

    information is stored and maintained as a single record, eliminate

    redundancy and improve the quality of information in the ownership and

    control reporting process.'' \346\ In response to FIA's comment, the

    Commission is creating a contact reference database that will store

    contact information previously provided through the web-based portal by

    a reporting party on each of the reporting forms with respect to

    owners, controllers, and other parties. When a reporting party submits

    a subsequent reporting form through the web-based portal, the

    Commission will, to the extent practicable, pre-populate contact

    information that the reporting party previously provided. This will

    reduce the amount of time that is required for reporting entities to

    update information submitted to the Commission through the web-based

    portal without reducing the amount of information that is required to

    be submitted through the portal.\347\

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

    \345\ CL-2012-FIA supra note 55 at 4.

    \346\ Id.

    \347\ See also supra note 41 for a discussion of certain fields

    in the reporting forms that have been made optional, subject to

    certain conditions discussed in the reporting forms, in order to

    leverage information that reporting parties have previously

    provided.

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

    Definition of ``Control''

    Section 15.00(t), as proposed in the NPRM, added ``control'' to the

    list of defined terms in Sec. 15.00.\348\ The Commission's proposed

    definition, which applied only to special accounts (New Form 102A) and

    consolidated accounts (Form 102S), defined control as ``to actually

    direct, by power of attorney or otherwise, the trading of a special

    account or a consolidated account.'' FIA commented that it would be

    difficult and/or meaningless to provide the requested control

    information, because the individuals responsible for trading an account

    within a special account or a volume threshold account can change

    often, even within the same trading day.\349\ Furthermore, ``in the

    case of algorithmic trading programs, there likely will not be an

    identifiable individual who `actually directs the trading' of the

    program. For this reason, FCMs do not currently collect this

    information.'' \350\ FIA recommended removing the requirement to

    identify account controllers on Forms 102A and 102B.\351\

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

    \348\ The definition of ``control'' in Sec. 15.00 is based upon

    the definition of ``controlled account'' in Sec. 1.3(j) of the

    Commission's regulations.

    \349\ CL-2012-FIA supra note 55 at 5.

    \350\ CL-2012-FIA supra note 55 at 6.

    \351\ CL-2012-FIA supra note 55 at 5.

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

    As noted in section VII, these final rules adopt proposed Sec.

    15.00(t) without modification. At the same time, the Commission is

    modifying the instructions on Form 102 in response to comments that

    discussed the difficulty of identifying individuals that exercise

    control on a transient basis, such as individuals operating an

    automated trading system (``ATS'') during a daily shift. The

    instructions for Form 102A and Form 102B have been revised to state

    that respondents should report all individuals who qualify as ``trading

    account controllers'' or ``volume threshold account controllers,'' as

    defined in Sec. 15.00(bb) and (cc), respectively.\352\ The Commission

    notes

    [[Page 69224]]

    that regardless of whether the trading is carried out in whole or in

    part through an automated trading system or direct human initiation,

    the underlying analysis remains the same. When completing Form 102A and

    Form 102B, reporting parties should identify each person that satisfies

    the definition of ``trading account controller'' or ``volume threshold

    account controller,'' as defined in Sec. 15.00(bb) and (cc),

    respectively. Once respondents have identified all individuals meeting

    the applicable controller definition in a Form 102A or Form 102B

    submission, they will not be required to submit change updates to the

    submission if one previously identified controller takes the place of

    another previously identified controller. These changes to the

    instructions on Form 102 are intended to reduce the reporting burden on

    market participants, who would otherwise be required to submit change

    updates to the 102 in the prior scenario. Respondents will be required

    to report the same number of controllers that they would be required to

    report under the NPRM proposal, but will do so in their original 102

    submission, thereby eliminating the cost of submitting change updates

    due to a shift change. The Commission believes that this is a more

    effective solution than removing the control question altogether, as

    FIA had suggested, which would deprive the Commission of the ability to

    aggregate trading accounts based on common control.

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

    \352\ The Commission recognizes that, for some respondents that

    conduct trading in a reportable trading account or volume threshold

    account in whole or in part through an ATS, the individuals involved

    in the administration of such ATS may not qualify as trading account

    controllers or volume threshold account controllers. See supra

    section V(A)(ii).

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

    Definition of ``Volume Threshold Account''

    The NPRM defined a volume threshold account as any trading account

    that executes, or receives via allocation or give-up, reportable

    trading volume on or subject to the rules of a reporting market that is

    a board of trade designated as a contract market under section 5 of the

    Act or a swap execution facility registered under section 5h of the

    Act.

    In the case of a give-up trade, this NPRM definition was intended

    to require reporting by: (i) The carrying firm of the original

    executing account; (ii) the carrying firm of any intervening

    account(s); and (iii) the carrying firm of the account to which the

    give-up trade was ultimately allocated. Question 10 in Section VII of

    the NPRM emphasized the broad scope of the definition: ``The Commission

    intends that the definition of `volume threshold account' captures all

    possible categories of accounts with reportable trading volume . . .

    The Commission requests public comment regarding whether the proposed

    definition of `volume threshold account' achieves this purpose.'' In

    response to this question, CME commented that volume-based accounts

    should be reported at the carrying broker level, and noted that, ``this

    is where the account ownership and control information resides, not at

    executing brokers.'' \353\

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

    \353\ CL-2012-CME supra note 55 at 4.

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

    As noted in section VII above, the Commission is adopting the

    definition of volume threshold account with one modification.\354\ The

    following change incorporates CME's comment. It is also intended to

    reduce the burden and cost to reporting parties. The definition of

    volume threshold account is being scaled back in the final rules, to

    capture a smaller number of volume threshold accounts than under the

    NPRM proposal. The definition is being modified to: ``any trading

    account that carries reportable trading volume on or subject to the

    rules of a reporting market that is a [DCM or SEF].'' This change will

    lessen the burden on reporting parties, by reducing the number of

    reportable volume threshold accounts in the case of a give-up trade:

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

    \354\ The definition of volume threshold account appears in the

    final rules as Sec. 15.00(x).

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

    In a give-up scenario, this definition will require

    reporting by the carrying firm of the account to which the trade is

    ultimately allocated. Reporting will not be required, however, by the

    carrying firm of the original executing account, or by the carrying

    firm of any intervening account(s).

    In a non-give-up scenario, there will be no change to the

    number of reportable volume threshold accounts. Under both the original

    and revised definition, reporting will be required by the carrying firm

    of the account in which the trade is both executed and cleared.

    The Commission believes that this approach, which incorporates

    CME's comment, will be more efficient (and less burdensome and costly)

    for reporting parties than the approach proposed in the NPRM. At the

    same time, it captures a sufficient number of volume threshold accounts

    to advance the Commission's surveillance objectives.

    Reportable Trading Volume Level

    Section 15.04, as proposed in the NPRM, provided that reportable

    trading volume for a trading account is trading volume of 50 or more

    contracts, during a single trading day, on a single reporting market

    that is a board of trade designated as a contract market under section

    5 of the Act or a swap execution facility registered under section 5h

    of the Act, in all instruments that such reporting market designates

    with the same product identifier (including purchases and sales, and

    inclusive of all expiration months). Relative to alternatives proposed

    by commenters, the Commission has determined--as shown through its

    analysis of sample DCM trade data received through the TCR during a

    recent six-month period-- that the 50-contract threshold represents the

    level that best optimizes visibility into both trading volume and the

    absolute number of trading accounts. Both components are fundamental to

    the volume-based reporting regime established by Form 102B. At the same

    time, the RTVL is calibrated to minimize the impact of the volume-based

    reporting requirements on low-volume accounts whose trading activity

    would not meaningfully advance the Commission's volume-based

    surveillance goals.

    Several commenters criticized the 50-contract RTVL, and proposed

    alternatives to it. FIA, CME and ICE commented that the RTVL, as

    proposed, would generate an excessive amount of data that may not be

    meaningful to the Commission's trade practice and market surveillance

    programs.\355\ More specifically, Nadex commented that the proposed 50-

    contract RTVL would capture too many retail customers that are trading

    contracts with very small notional values.\356\ FIA and ICE both

    recommended that the Commission phase in a descending RTVL until the

    optimum level is reached.\357\ FIA, for example, recommended that ``the

    Commission could require that only accounts meeting a volume threshold

    of 1,000 contracts per day be reported in the first three months;

    contracts meeting a volume threshold of 750 contracts per day be

    reported in the second three months after the compliance date; and so

    on until the optimum volume threshold is reached.'' \358\ CME also

    expressed concern that the RTVL will capture too many accounts, but

    recommended that the RTVL should be changed to 250 contracts bought or

    sold during a calendar week.\359\

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

    \355\ CL-2012-FIA supra note 55 at 8. CL-2012-CME supra note 55

    at 3. CL-2012-ICE supra note 55 at 6.

    \356\ CL-2012-Nadex supra note 55 at 2-3.

    \357\ CL-2012-FIA supra note 55 at 8. CL-2012-ICE supra note 55

    at 6.

    \358\ CL-2012-FIA supra note 55 at 8.

    \359\ CL-2012-CME supra note 55 at 3.

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

    Nadex recommended that a different RTVL should be applied to

    contracts with small notional values, as compared to contracts with

    larger, traditional notional values. ``For any contract with a notional

    value of $1,000 or less, the

    [[Page 69225]]

    RTVL could be increased to 5,000 (i.e., 1,000 times the standard RTVL

    of 50). This would still result in the Commission capturing information

    with respect to a relatively insignificant amount of trading activity

    in terms of notional value, but would be significantly less burdensome

    for the DCMs that offer these contracts.'' \360\

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

    \360\ CL-2012-Nadex supra note 55 at 3.

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

    Compared to these various alternatives, the 50-contract RTVL--which

    the Commission's analysis has shown to identify approximately 85

    percent of trading volume in approximately 90 percent of the products

    sampled, and approximately one-third of the trading accounts in the

    sample set--best achieves the regulatory objective and design-purpose

    of Form 102B. That objective is to identify a critical mass of the

    trading accounts active in its regulated markets through 102B

    reporting, measured not only by the percentage of trading volume for

    which those accounts are responsible, but also by the number of

    accounts identified. This objective is independent of whether the

    identified accounts hold reportable positions and what trading

    strategies market participants may pursue. The 50-contract RTVL

    achieves this objective by capturing both: (1) Those accounts

    responsible for the majority of trading volume; and (2) a meaningful

    number of the trading accounts active in the Commission's regulated

    markets. The Commission seeks to identify a meaningful number of such

    trading accounts in order to improve its ability to protect market

    participants from instances of fraudulent or deceptive trading

    practices, regardless of the amount of trading volume that such

    practices represent, or their impact on the overall market. In

    determining the optimal threshold level, the Commission gave equal

    weight to the twin objectives of the volume-based reporting regime--

    trading volume and trading account identification. In its analysis, the

    Commission found that although higher RTVLs, such as those proposed by

    commenters, may have a relatively minor impact on the identification of

    trading volume in a particular market, they would likely lead to a

    disproportionately large exclusion of the number of trading accounts,

    thus rendering the RTVL ineffective to achieve the Commission's

    objective.\361\ In particular, the alternative proposals to raise the

    RTVL threshold to 250 contracts and/or to incrementally introduce

    moderately lower thresholds down from 1,000 contracts over time would

    sacrifice visibility with respect to the number of trading accounts

    (and at the highest threshold levels perhaps in trading volume, as

    well) to a degree likely to frustrate the intent of volume account

    surveillance.

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

    \361\ This is because the correlation between trading volume and

    number of accounts when RTVL is adjusted up or down is not

    proportional. Rather, the curve for the number of accounts is much

    steeper than for trading account volume, meaning that, while a tick

    up or down in RTVL translates to a relatively modest proportional

    change in trading volume coverage, the impact on number-of-account

    coverage is more exaggerated. The Commission took this relationship

    into account when proposing the 50 RTVL threshold: while a lower

    RTVL threshold would yield a substantially higher number of

    accounts, the slight incremental gain in trading volume coverage

    would not significantly advance the Commission's volume account

    surveillance objectives. Furthermore, the relationship also explains

    why the alternatives proposed are suboptimal and unacceptable to

    capture the twin elements essential to achieve the regulatory

    objective of volume account surveillance.

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

    Furthermore, if the Commission were to substitute an alternative

    RTVL, in response to commenter proposals, that does not identify a

    sufficient percentage of trading volume or absolute number of trading

    accounts, the Commission would, in effect, partially transform 102B

    into another vehicle for identifying trading accounts associated with

    reportable positions. Form 102A will accomplish this objective

    separately.

    Finally, even if modifying the RTVL to make fewer accounts

    reportable were consistent with the Commission's regulatory objectives

    (which it is not), doing so is unlikely to result in significant cost

    savings to market participants. As explained above, FTP submission of

    New Form 102B will be most cost-effective for the industry as a whole.

    Furthermore, the ongoing operation and maintenance burden for FTP

    submission of New Form 102B will average the same number of hours per

    year (53 hours) irrespective of how many records are contained in a

    submission.\362\ Accordingly, the number of volume threshold accounts

    reported to the Commission by a reporting party via FTP should not have

    a material impact on the overall cost burden.

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

    \362\ See supra section VIII(A)(iv).

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

    The Commission also considered the alternative of adopting

    threshold levels that distinguish on the basis of notional value, such

    as proposed by Nadex, and/or other contract or market characteristics.

    The Commission recognizes that the uniform 50-contract threshold will

    capture a relatively small degree of market activity that is less

    significant for purposes of its Form 102B regulatory objectives.

    However, an alternative that would appropriately filter for such less-

    significant contracts would be administratively impracticable for the

    Commission and increase the administrative burden for some, if not

    many, reporting parties. For example, in the five year period from

    January 1, 2008 through December 31, 2012, the Commission received from

    DCMs self-certifications or requests for approval for approximately

    5,400 new products, or an average of almost 21 new products per week.

    It is simpler, and far superior in terms of administrative cost and

    burden to set a single RTVL level, above which all parties report, than

    to determine differing levels for different markets/products, monitor

    the appropriateness of such levels and adjust them as circumstances

    warrant over time, and effectively communicate such differing levels

    and their periodic adjustments to the trading community. Moreover, the

    cost of determining whether parties were compliant with the reporting

    requirements and enforcing those requirements would place further

    burden upon the Commission and reporting parties.

    In sum, the Commission believes that it is has achieved an

    appropriate balance by implementing a uniform 50-contract RTVL rather

    than a product-by-product RTVL. While the uniform RVTL may capture a

    small number of additional accounts, representing a relatively small

    degree of market activity that is less significant for purposes of its

    Form 102B regulatory objectives, it avoids the administrative

    complexity of a product-by-product RTVL, which carries the potential to

    hobble Form 102B's regulatory effectiveness.

    Direct Market Access

    CME commented on a question in proposed Forms 102A and 102B,

    discussed in more detail in section VII above, which asks whether

    certain trading accounts have been granted direct market access

    (DMA).\363\ CME stated that ``requiring this data may force substantial

    process change at the firms to obtain the data upfront and record it in

    the firm's reference database with other account information.'' \364\

    As discussed in section VII above, the Commission is not including the

    question regarding DMA in the final rules.

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

    \363\ See the discussion of the definition of direct market

    access in proposed Sec. 15.00(v).

    \364\ CL-2012-CME supra note 55 at 3.

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

    Reporting Deadline for Certain Information Required on Forms

    FIA commented that obtaining all the information required by the

    Form 102 could potentially take longer than the

    [[Page 69226]]

    deadlines proposed in the NPRM. ``Although it is possible to file

    limited information by 9:00 a.m., i.e., the name of the account holder

    and the special account number, it is not practical to complete the

    entire Form 102 by that deadline.'' \365\ As a result, FIA recommended

    that the deadline for filing a complete Form 102A or any change update

    be modified to five business days from the date the account or change

    becomes reportable.\366\ In response to this comment, the Commission is

    extending the reporting deadline for new and changed Form 102A filings,

    specifically with respect to the reporting of non-omnibus trading

    accounts that comprise a special account. Respondents are required to

    provide the names of such trading account owners and controllers by

    9:00 a.m. the following business day.\367\ However, respondents are

    required to provide the other contact details with respect to such

    trading account owners and controllers (address, telephone number,

    etc.) within three business days, in order to permit respondents

    additional time to compile the required information.\368\

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

    \365\ Id.

    \366\ Id.

    \367\ Unless otherwise specified by the Commission or its

    designee, the stated time in the final rules is eastern time for

    information concerning markets located in that time zone, and

    central time for information concerning all other markets, in

    accordance with Sec. 17.02(a).

    \368\ Specifically, the information marked as `Follow-On

    Information' in questions 10(ii) and (iii) on New Form 102A may be

    provided within three business days. All other required fields on

    New Form 102A must be completed by 9:00 a.m. the following business

    day. See New Form 102A in the Appendix to these final rules for more

    information. Notwithstanding the change to the reporting deadline

    with respect to non-omnibus trading accounts that comprise a special

    account, these final rules do not modify the reporting deadline for

    information with respect to omnibus trading accounts that comprise a

    special account (question 10(i) on New Form 102A). Such omnibus

    account information must be reported by 9:00 a.m. the following

    business day. The Commission is adopting a reporting requirement of

    three business days as an intermediate compromise between one

    business day (as proposed in the NPRM) and five business days (as

    requested by FIA). The three business day requirement is therefore

    less burdensome than the one business day requirement proposed in

    the NPRM. Based on the experience of the Commission's surveillance

    group, the Commission believes that the three business day

    requirement, while longer than the one day proposal in the NPRM,

    will nonetheless enable the Commission to maintain current

    databases, including up-to-date contact information that will allow

    the Commission to contact market participants quickly in the event

    of significant market events that occur close to the time of

    reporting. By contrast, based on the experience of the Commission's

    surveillance group, the Commission believes that a five business day

    reporting deadline is too long to perform timely market

    surveillance, and maintain databases that are sufficiently accurate

    and current to be useful.

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

    The Commission is also modifying the reporting deadline for new and

    changed Form 102B filings, specifically with respect to the reporting

    of non-omnibus volume threshold accounts. Respondents are required to

    provide the names of non-omnibus volume threshold account owners and

    controllers reported on 102B by 9:00 a.m. the following business day.

    Consistent with the change described above, respondents are required to

    provide the other contact details reported on 102B with respect to such

    parties (i.e., the address, telephone number, etc. of non-omnibus

    volume threshold account owners and controllers) within three business

    days, in order to permit respondents additional time to compile the

    required information.\369\

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

    \369\ Specifically, the information marked as `Follow-On

    Information' in questions 5 and 6 on New Form 102B may be provided

    within three business days. All other required fields on New Form

    102B must be completed by 9:00 a.m. the following business day. See

    New Form 102B in the Appendix to these final rules for more

    information. Notwithstanding the change to the reporting deadline

    with respect to non-omnibus volume threshold accounts, these final

    rules do not modify the reporting deadline for information with

    respect to omnibus volume threshold accounts (question 4 on New Form

    102B). Such omnibus account information must be reported by 9:00

    a.m. the following business day.

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

    FIA commented that the refresh filing deadline proposed by the

    NPRM, which required firms to resubmit the Form 102 for each special

    account, volume threshold account and consolidated account every six

    months, was too short. FIA stated that this six-month schedule ``will

    impose a significant operational and financial burden on reporting

    firms,'' and recommended that refresh updates instead be required every

    two years.\370\ CME also recommended that refresh updates be required

    every two years.\371\ In response to this comment, the Commission is

    modifying the reporting deadline for refresh filings. Refresh filings

    for special accounts, volume threshold accounts and consolidated

    accounts will be required once per year, as opposed to once every six

    months.\372\ The Commission believes that the annual refresh

    requirement is a reasonable accommodation that will limit costs to

    market participants while still achieving the Commission's surveillance

    objectives. For the majority of accounts, there should be little or no

    change to prior reported information. As a result, the reporting burden

    for refresh filings should be minimal.

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

    \370\ CL-2012-FIA supra note 55 at 7.

    \371\ CL-2012-CME supra note 55 at 3.

    \372\ The Commission is adopting a refresh reporting requirement

    of once per year as an acceptable intermediate point between once

    each six months (as proposed in the NPRM) and once every two years

    (as requested by FIA and CME). The annual refresh requirement is

    therefore less burdensome than the six month requirement proposed in

    the NPRM. Based on the experience of the Commission's surveillance

    group, the Commission believes that the annual refresh requirement,

    while longer than the six month requirement proposed in the NPRM,

    will nonetheless enable the Commission to maintain current

    databases, including up-to-date contact information that will allow

    the Commission to contact market participants quickly in the event

    of significant market events. By contrast, based on the experience

    of the Commission's surveillance group, the Commission believes that

    a two year refresh deadline is too long to perform timely market

    surveillance and maintain databases that are sufficiently accurate

    and current to be useful.

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

    viii. Reporting on Form 102S

    FIA commented on the utility of Form 102S, which requires swap

    dealers and clearing members to identify and report a swap counterparty

    or customer consolidated account with a reportable position. FIA stated

    that the information that will be reported to swap data repositories

    under part 45 would provide the Commission with access to essentially

    the same information that proposed Form 102S will require.\373\ FIA

    commented that ``requiring FCMs, and the industry generally, to divert

    critical operational and financial resources from building the systems

    necessary to implement the part 45 recordkeeping and reporting

    requirements to implement this interim solution, would impose an

    unnecessary operational burden and cost without a significant

    offsetting benefit.'' \374\ CME commented that ``requiring swap

    reporting as part of OCR, to accomplish reporting that is already being

    done under part 20--and soon to be duplicated under SDR reporting with

    new unique legal entity identifiers--is unnecessary and imposes

    additional unjustified costs on the industry.'' \375\

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

    \373\ CL-2012-FIA supra note 55 at 2-3.

    \374\ CL-2012-FIA supra note 55 at 3.

    \375\ CL-2012-CME supra note 55 at 3.

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

    In light of FIA and CME's comments regarding the Form 102S, the

    Commission considered, but rejected, the alternative of omitting Form

    102S from the final rules. Contrary to commenters' claims, SDRs will

    not, in all cases, be able to provide the ownership and control

    information requested on 102S. For example, the Commission anticipates

    that swap dealers and clearing members (the 102S reporting parties)

    will be able to consistently provide the contact information for owners

    and controllers of consolidated accounts on the 102S, based on the

    records these entities maintain. Part 45 reporting, by contrast, is

    based on counterparty data. This counterparty data may, in some cases,

    [[Page 69227]]

    overlap with the owners and controllers of consolidated accounts

    reported on 102S. However, counterparty data will not, in all cases,

    overlap with 102S reporting. Furthermore, even when counterparty data

    does overlap with 102S reporting, it does not provide the ownership and

    control information required by 102S. Counterparty data provides a

    Legal Entity Identifier, which is a numeric data field that must be

    cross-checked against an external source in order to generate the names

    of owners and controllers. As a result, the Commission cannot rely on

    SDR reporting under part 45 as a substitute for 102S. For these

    reasons, the Commission is implementing 102S reporting pursuant to

    these final rules.

    ix. Consolidated Form Proposed by FIA

    For purposes of reducing the costs to reporting parties, and

    alleviating perceived inefficiencies in the forms proposed in the NPRM,

    FIA recommended consolidating the proposed forms into a single Form

    102.\376\ FIA attached a proposed form to its NPRM comment letter that

    consolidates Forms 102A, 102B and 102S (the ``FIA consolidated form'').

    The FIA consolidated form is the principal alternative approach

    proposed by commenters on the NPRM.\377\

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

    \376\ CL-2012-FIA NPRM supra note 55 at 4.

    \377\ Note that the Commission published a prior Notice of

    Proposed Rulemaking on July 19, 2010 (the 2010 OCR NPRM) with

    respect to ownership and control reporting, which the Commission

    withdrew concurrent with the publication of the NPRM. See supra note

    9. The Commission received a number of comment letters in response

    to the 2010 OCR NPRM, and incorporated several of their suggestions

    in the NPRM (published in the Federal Register in 2012), which forms

    the basis for these final rules. See NPRM supra note 10 at 43973-

    43974 for a discussion of comments received in response to the 2010

    OCR NPRM that were incorporated in the NPRM.

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

    The Commission notes that FIA's description of New Form 102A, 102B

    and 102S as inefficient and overlapping appears to arise from a

    presumption that reporting parties will print and complete each form as

    a separate paper filing. The forms included in the Appendix to these

    final rules are visual representations of reporting forms that will be

    completed through the Commission's web-based portal. In such an

    electronic environment, it will not be more burdensome for reporting

    parties to enter information via separate screens on a web portal (for

    102A, 102B and 102S), as compared to via a single screen.

    The Commission does not consider the FIA consolidated form an

    acceptable alternative, because it is missing a number of key data

    fields that appear on Forms 102A, 102B, and 102S. As discussed in more

    detail below, while the list of data fields that the FIA consolidated

    form is missing is not extensive, the absence of these data fields

    would create gaps in the reporting of ownership and control

    information. These gaps would prevent the Commission from realizing the

    goals of the OCR data collection. If the missing data fields were added

    back to FIA consolidated form, then the FIA form would be substantively

    identical to the forms adopted in these final rules.

    The FIA consolidated form does not include the following data

    fields collected on New Forms 102A, 102B and 102S:

    The FIA consolidated form does not require respondents to

    state the reporting trigger. I.e., the form does not clarify whether

    respondents are reporting a special account, volume threshold account,

    or consolidated account that has reached a reportable level. Instead,

    the directions to the FIA consolidated form state that, ``This form

    must be completed if an account exceeds the reportable levels on

    special accounts, volume threshold accounts or consolidated accounts.''

    The Commission would receive ownership and control information

    regarding the reported trading accounts, but would not know what market

    activity the trader had engaged in that necessitated reporting pursuant

    to the Commission's regulations. Without knowing the reporting trigger

    for the form (e.g., whether the reporting party had reached a

    reportable position or reportable volume level), the Commission would

    be unable to efficiently and accurately categorize the trading accounts

    reported on the form, and utilize this account information for

    surveillance or other related purposes.

    The FIA consolidated form does not require respondents to

    identify the originator of a consolidated account that is also an

    omnibus account, and provide contact information for this

    originator.\378\ Without this contact information, the Commission would

    not know which party to contact to request additional information on

    the reported omnibus account (e.g., via a Form 40). As noted above, one

    of the key reasons that the Commission is requesting additional

    information regarding ownership and control on the reporting forms is

    to enable it to send a Form 40 to such parties in order to identify

    them for surveillance purposes. Alternative proposals that would leave

    significant and potentially exploitable gaps in the reporting and

    identification system--e.g., with respect to omnibus accounts--would

    defeat the Commission's intent for these final rules.

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

    \378\ This information will be collected on New Form 102S as a

    result of these final rules.

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

    Similarly, the FIA consolidated form does not require

    respondents to state whether a volume threshold account is an omnibus

    account--and if so, to identify the originator of the omnibus account

    and provide contact information for this originator.\379\ Without the

    name and contact information of the originator of an omnibus volume

    threshold account, the Commission would be unable to send a Form 71 to

    the originator and collect ownership and control information for

    underlying sub-accounts. If the Commission does not send a Form 71 in

    this scenario, the Commission would again be unable to send a Form 40

    to identify the ultimate owner and controller of the underlying sub-

    accounts. This would again create significant gaps in the reporting and

    identification system, which would defeat the Commission's intent for

    these final rules.

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

    \379\ This information will be collected on New Form 102B as a

    result of these final rules.

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

    As discussed above, FIA commented that requiring respondents to

    potentially submit three separate forms (102A, 102B and 102S) for the

    same customer is inefficient. FIA proposed its consolidated form in an

    attempt to address this overlap, reduce the costs to reporting parties,

    and alleviate other perceived inefficiencies in the forms proposed in

    the NPRM.\380\ As previously noted, the Commission is implementing a

    contact reference database to reduce the burden on parties reporting

    via the web-based portal.\381\ This database will pre-populate certain

    fields on the portal with information previously provided by the

    respondent, thereby reducing the inefficiency associated with

    responding to more than one section of New Form 102.\382\

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

    \380\ CL-2012-FIA supra note 55 at 4.

    \381\ As discussed in section VIII(B)(iv) above, the Commission

    has determined that it will be more cost-effective for the industry

    as a whole to submit Forms 102A, 102B and 102S via FTP. Nonetheless,

    it may be less expensive for certain individual reporting parties to

    submit these forms via the web portal. This may be due to the

    limited number of forms these parties expect to submit, their

    technology infrastructure, or other factors. The Commission has also

    determined that it will be more cost-effective for the industry as a

    whole to submit Forms 40/S and 71 via the web portal. The contact

    reference database will pre-populate information on Forms 40/S and

    71 to the extent practicable.

    \382\ See also supra note 41 for a discussion of certain fields

    in the reporting forms that have been made optional, subject to

    certain conditions discussed in the reporting forms, in order to

    leverage information that reporting parties have previously

    provided.

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

    [[Page 69228]]

    x. Section 15(a) Factors

    (a) Protection of Market Participants and the Public

    The data collection requirements under these final rules will

    support the Commission in its mission to protect market participants

    and the public, by significantly improving the Commission's visibility

    with respect to market participants and their activities across

    derivatives markets. Specifically, the final rules build upon the

    Commission's existing market and trade practice surveillance programs

    for futures, options on futures, and swaps, by providing for the timely

    and efficient analysis of market data related to special accounts,

    consolidated accounts, and newly designated volume threshold accounts.

    The rules implement these goals in a manner designed to reduce costs to

    reporting entities. Improving the capabilities of the Commission's

    market and trade practice surveillance programs will support the

    integrity of financial markets, and protect market participants and the

    public from the costs of disruptive trading practices and other market

    abuses.

    New Form 102A. As an example of these benefits, New Form 102A

    requires reporting of ownership and control information for the trading

    accounts that constitute special accounts. This will allow the

    Commission to more efficiently link special accounts holding reportable

    positions to the transactions (and associated trading accounts)

    identified on daily trade capture reports received by the

    Commission.\383\ By illustrating the connections between end-of-day

    position reporting via Form 102 and daily trade capture reports, the

    final rules will enable the Commission to perform a more accurate and

    timely accounting of market position at the level of individual trading

    accounts. With this information, the Commission will be able to conduct

    a thorough assessment of a trader's potential market impact, including

    with respect to disruptive practices.

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

    \383\ See the discussion of the daily trade capture reports in

    section I(B) above.

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

    New Form 102B. New Form 102B institutes a reporting requirement for

    trading accounts that exceed a specific volume threshold on any single

    trading day, regardless of whether the account maintains open positions

    at the end of the day. The addition of volume-based reporting will

    provide the Commission with an efficient means to collect the

    information required to aggregate positions, detect intra-day position

    limit violations, and calculate market share. When analyzing periods of

    elevated volatility--especially at significant trading times such as

    market open and close--the ability to aggregate intra-day trading

    behavior by owner/controller is crucial to understanding whether a

    trader has adversely affected (or has the potential to affect) market

    quality or price discovery.

    New Form 102S. New Form 102S will improve upon the current 102S

    reporting system by providing detailed ownership and control

    information regarding consolidated accounts. The information collected

    via Form 102S will allow the Commission's market and trade practice

    surveillance programs to track the market activity of traders that may

    be dividing risk exposure between both on-exchange and off-exchange

    instruments. In addition to the ability to track individual traders,

    swap reporting will also enable the Commission to aggregate exposure in

    a particular product or commodity group. The reporting of swap activity

    on Form 102S aligns with the Commission's recently finalized rules on

    real-time public and regulatory reporting of swap trades, and provides

    further transparency into markets that, historically, have often been

    opaque and/or over-the-counter.

    Collectively, the ownership and control information on New Forms

    102A/102B/102S, 40/40S and 71 will improve the Commission's ability to

    analyze and/or respond to market disruptions, which can come at a high

    cost to the investing and general public. The information will also

    enable the Commission to perform more robust research and analytics,

    encompassing a significantly greater segment of market activity on a

    more diverse set of platforms, as well as improve its classification of

    traders in Commission publications, such as the Commitments of Traders

    report. Finally, the Commission will be able to perform data integrity

    checks within and between its databases using the additional fields

    collected on the revised forms.

    Efficiency, Competitiveness, and Financial Integrity of the Markets

    The collection of ownership and control information via the new and

    amended forms will enable the Commission to better perform risk-based

    monitoring and surveillance among related accounts, and monitor risk

    exposure by institution, market class, and asset class. For example,

    the rules will enable the Commission to more efficiently link end-of-

    day position reporting and the trade capture reports received by the

    Commission. Accordingly, the rules will allow the Commission to

    aggregate respondents' positions across multiple products and markets,

    assess their potential market impact with respect to disruptive or

    manipulative activities during important periods, and analyze their

    compliance with speculative position limits at any time during the

    trading day. In the event the Commission identifies trading activity

    requiring further investigation, the Commission will be able to contact

    market participants more quickly and efficiently using the ownership

    and control information collected through the OCR reporting process.

    The final rules will also promote resource allocation efficiency by

    automating the submission process, eliminating an additional layer of

    transcription and reducing the likelihood of input errors and/or the

    need to revert back to reporting parties for further explanation. In

    addition, the final rules permit respondents to use either of two

    available submission methods (FTP or web portal), thereby allowing

    respondents to select the method that is most economical in light of

    the number of filings they expect to make, and that integrates most

    efficiently with their existing data and technology infrastructure.

    These improvements in resource efficiency and data quality will also

    improve the Commission's published reports, such as the classifications

    in the Commitments of Traders report. Finally, the Commission will be

    able to perform data integrity checks within and between its databases

    using the additional data fields collected on the revised forms.

    The Commission believes that market integrity is essential to fair

    and orderly markets that serve as effective centers for price discovery

    and risk management. By promoting these important goals, the final

    rules will help promote the utility of Commission-regulated markets.

    Price Discovery

    The Commission does not view the costs and benefits of the final

    rules as impacting price discovery in markets that it regulates.

    Sound Risk Management Practices

    The final rules establish the information architecture necessary to

    support Dodd-Frank's objectives of reducing risk, increasing

    transparency, and promoting market integrity within the financial

    system. The expanded reporting requirements will significantly improve

    the Commission's ability to perform risk-based monitoring of trading

    activity spread across multiple platform types but directed or

    controlled by individual entities. Such

    [[Page 69229]]

    an expanded view of the marketplace will enable the Commission to more

    effectively identify disruptive or manipulative trading activity. The

    Commission does not believe that the costs arising from the final

    rules, which the Commission has taken steps to reduce, threaten the

    ability of market participants to manage risk.

    Other Public Interest Considerations

    The Commission does not view the costs and benefits of the final

    rules as impacting other public interest considerations beyond those

    discussed above.

    C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA'') requires that agencies

    consider whether the rules they propose will have a significant

    economic impact on a substantial number of small entities and, if so,

    provide a regulatory flexibility analysis regarding the impact.\384\ A

    regulatory flexibility analysis or certification is typically required

    for ``any rule for which the agency publishes a general notice of

    proposed rulemaking'' pursuant to the notice-and-comment provisions of

    the Administrative Procedure Act, 5 U.S.C. 553(b).\385\

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

    \384\ 5 U.S.C. 601 et seq.

    \385\ 5 U.S.C. 601(2), 603, 604 and 605. While the definition of

    ``entity'' does not encompass natural persons, it does encompass

    sole proprietorships. 5 U.S.C. 601(6). The Commission recognizes

    that floor brokers and other natural persons doing business as sole

    proprietors could potentially be considered small entities. See

    generally 58 FR 40,335 at 40,347-48, n. 45 (July 28, 1993); 47 FR

    18618 at 18,620, (Apr. 30, 1982).

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

    The final rules require FCMs, clearing members, foreign brokers,

    swap dealers and other reporting traders (including natural persons) to

    complete New Forms 102 or 71, and to submit them to the Commission as

    specified in the final rules, or upon special call by the Commission.

    The Commission has previously determined that FCMs, clearing members,

    foreign brokers, and swap dealers are not small entities for purposes

    of the RFA.\386\ The Commission has also determined that natural

    persons are not `entities' for purposes of the RFA.\387\ Accordingly,

    the final rules with respect to Forms 102 and 71 will not have a

    significant economic impact on a substantial number of small entities.

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

    \386\ See respectively and as indicated: 47 FR 18618 (April 30,

    1982) (FCMs and large traders); 72 FR 34417 at 34418 (June 22, 2007)

    (foreign brokers); 76 FR 71626 at 71680 (November 18, 2011) (swap

    dealers); 76 FR 71626 at 71680 (November 18, 2011) and 76 FR 43851

    at 43860 (July 22, 2011) (clearing members).

    \387\ See 5 U.S.C. 601(6).

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

    The final rules also require certain reporting traders to complete

    and submit New Form 40 upon special call by the Commission. Some of

    these reporting traders may be ``small entities'' under the RFA. In

    2012, the Commission received approximately 3,123 completed Form 40s,

    from a total population of approximately 10,000 reporting traders. Of

    these 3,123 Form 40s, approximately 2,500 were completed by

    institutions, a portion of which could potentially be small entities

    under the RFA. For example, the Commission has received comments on its

    Dodd-Frank Act rulemakings indicating that certain entities that may be

    required to comply with the reporting and recordkeeping requirements in

    the final rules have been determined by the Small Business

    Administration to be small entities. In particular, the Commission

    understands that some not-for-profit electric generators, transmitters,

    and distributors that may be required to comply with the proposed rules

    have been determined to be small entities by the SBA, because they are

    ``primarily engaged in the generation, transmission, and/or

    distribution of electric energy for sale and [their] total electric

    output for the preceding fiscal year did not exceed 4 million megawatt

    hours.'' \388\

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

    \388\ Small Business Administration, Table of Small Business

    Size Standards (Nov. 5, 2010). See also the regulatory flexibility

    analysis regarding such entities in 77 FR 1182 at 1240 (January 9,

    2012), 77 FR 2136 at 2170 (January 13, 2012), and 77 FR 2613 at 2620

    (January 19, 2012).

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

    The Commission believes that, due to the limited number of

    institutions likely to receive a New Form 40 request in any given year,

    as well as the limited nature of the New Form 40 reporting burden, the

    final rules with respect to New Form 40 will not have a significant

    economic impact on a substantial number of small entities. New Form 40

    will not be required on a routine and ongoing basis, but rather will be

    sent by the Commission on a discretionary basis in response to the

    reporting of an account that reaches a minimum position or volume

    threshold. As summarized above, in 2012 the Commission made Form 40

    requests to only 25 percent of all reporting traders that could

    potentially be small entities; furthermore, some of these reporting

    traders were not in fact small entities. As a result, New Form 40

    should be expected to affect only a small subset of the entities that

    may be small entities under the RFA. In addition, New Form 40 is not

    lengthy or complex, and will require reporting traders to provide only

    limited information to the Commission. As discussed above, the

    Commission estimates that a reporting trader submitting New Form 40 via

    the web-based portal will require only three hours, on an annualized

    basis, to complete the form.\389\

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

    \389\ See supra section VIII(A).

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

    The final rules regarding revised Sec. 18.05 will also impose

    books and records obligations upon a new category of market

    participants--specifically, certain owners (but not controllers) of a

    volume threshold account or a reportable sub-account. Such owners may

    be small entities under the RFA. The Commission does not believe that

    the obligation to maintain books and records under revised Sec. 18.05

    will impose significant costs on the additional small entities subject

    to the recordkeeping requirements of such section. The Commission

    expects that such account owners may largely rely on the books and

    records that they maintain in the ordinary course of business to

    fulfill the requirements of revised Sec. 18.05. The Commission also

    expects that a portion of the account owners subject to revised Sec.

    18.05 are subject to the position-based recordkeeping requirements of

    current Sec. 18.05,\390\ and will not incur significant costs

    expanding their recordkeeping practices to comply with revised Sec.

    18.05. To the extent that certain small entities are required to modify

    their practices to comply with the volume-based recordkeeping

    requirements of revised Sec. 18.05, the Commission believes that the

    resulting economic burden will be appropriate, because this requirement

    will: (a) Ensure that (i) owners of volume threshold accounts and

    reportable sub-accounts and (ii) owners of reportable positions are

    subject to equivalent recordkeeping obligations under Sec. 18.05, and

    therefore maintain books and records in a consistent format; and (b)

    promote the Commission's surveillance and investigatory functions to

    better deter price manipulation and other disruptions of market

    integrity.

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

    \390\ 17 CFR 18.05.

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

    List of Subjects

    17 CFR Part 15

    Brokers, Commodity futures, Reporting and recordkeeping

    requirements.

    17 CFR Part 17

    Brokers, Commodity futures, Reporting and recordkeeping

    requirements.

    17 CFR Part 18

    Commodity futures, Reporting and recordkeeping requirements.

    [[Page 69230]]

    17 CFR Part 20

    Physical commodity swaps, Swap dealers, Reporting and recordkeeping

    requirements.

    For the reasons stated in the preamble, the Commodity Futures

    Trading Commission amends 17 CFR parts 15, 17, 18, and 20 as follows:

    PART 15--REPORTS--GENERAL PROVISIONS

    0

    1. The authority citation for part 15 continues to read as follows:

    Authority: 7 U.S.C. 2, 5, 6a, 6c, 6f, 6g, 6i, 6k, 6m, 6n, 7, 7a,

    9, 12a, 19, and 21, as amended by Title VII of the Dodd-Frank Wall

    Street Reform and Consumer Protection Act, Pub. L. 111-203, 124

    Stat. 1376 (2010).

    0

    2. Amend Sec. 15.00 by revising paragraph (q) and adding paragraphs

    (t) through (dd) to read as follows:

    Sec. 15.00 Definitions of terms used in parts 15 to 19, and 21 of

    this chapter.

    * * * * *

    (q) Reporting market means a designated contract market or a

    registered entity under section 1a(40) of the Act.

    * * * * *

    (t) Control means to actually direct, by power of attorney or

    otherwise, the trading of a special account or a consolidated account.

    A special account or a consolidated account may have more than one

    controller.

    (u) Reportable trading volume means contract trading volume that

    meets or exceeds the level specified in Sec. 15.04.

    (v) Omnibus account means any trading account that one futures

    commission merchant, clearing member or foreign broker carries for

    another and in which the transactions of multiple individual accounts

    are combined. The identities of the holders of the individual accounts

    are not generally known or disclosed to the carrying firm.

    (w) Omnibus account originator means any futures commission

    merchant, clearing member or foreign broker that executes trades for

    one or more customers via one or more accounts that are part of an

    omnibus account carried by another futures commission merchant,

    clearing member or foreign broker.

    (x) Volume threshold account means any trading account that carries

    reportable trading volume on or subject to the rules of a reporting

    market that is a board of trade designated as a contract market under

    section 5 of the Act or a swap execution facility registered under

    section 5h of the Act.

    (y) Omnibus volume threshold account means any trading account

    that, on an omnibus basis, carries reportable trading volume on or

    subject to the rules of a reporting market that is a board of trade

    designated as a contract market under section 5 of the Act or a swap

    execution facility registered under section 5h of the Act.

    (z) Omnibus reportable sub-account means any trading sub-account of

    an omnibus volume threshold account, which sub-account executes

    reportable trading volume on an omnibus basis. Omnibus reportable sub-

    account also means any trading account that is itself an omnibus

    account, executes reportable trading volume, and is a sub-account of

    another omnibus reportable sub-account.

    (aa) Reportable sub-account means any trading sub-account of an

    omnibus volume threshold account or omnibus reportable sub-account,

    which sub-account executes reportable trading volume.

    (bb) Trading account controller means, for reports specified in

    Sec. 17.01(a) of this chapter, a natural person who by power of

    attorney or otherwise actually directs the trading of a trading

    account. A trading account may have more than one controller.

    (cc) Volume threshold account controller means a natural person who

    by power of attorney or otherwise actually directs the trading of a

    volume threshold account. A volume threshold account may have more than

    one controller.

    (dd) Reportable sub-account controller means a natural person who

    by power of attorney or otherwise actually directs the trading of a

    reportable sub-account. A reportable sub-account may have more than one

    controller.

    0

    3. In Sec. 15.01, revise paragraph (c) to read as follows:

    Sec. 15.01 Persons required to report.

    * * * * *

    (c) As specified in part 18 of this chapter:

    (1) Traders who own, hold, or control reportable positions;

    (2) Volume threshold account controllers;

    (3) Persons who own volume threshold accounts;

    (4) Reportable sub-account controllers; and

    (5) Persons who own reportable sub-accounts.

    * * * * *

    0

    4. Revise Sec. 15.02 to read as follows:

    Sec. 15.02 Reporting forms.

    Forms on which to report may be obtained from any office of the

    Commission or via the Internet (http://www.cftc.gov). Forms to be used

    for the filing of reports follow, and persons required to file these

    forms may be determined by referring to the rule listed in the column

    opposite the form number.

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

    Form No. Title Rule

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

    40......................................... Statement of Reporting Trader......................... 18.04

    101........................................ Positions of Special Accounts......................... 17.00

    102........................................ Identification of Special Accounts, Volume Threshold 17.01

    Accounts, and Consolidated Accounts.

    204........................................ Cash Positions of Grain Traders (including Oilseeds 19.00

    and Products).

    304........................................ Cash Positions of Cotton Traders...................... 19.00

    71......................................... Identification of Omnibus Accounts and Sub-accounts... 17.01

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

    (Approved by the Office of Management and Budget under control

    numbers 3038-0007, 3038-0009, and 3038-0103.)

    0

    5. Add Sec. 15.04 to read as follows:

    Sec. 15.04 Reportable trading volume level.

    The volume quantity for the purpose of reports filed under parts 17

    and 18 of this chapter is trading volume of 50 or more contracts,

    during a single trading day, on a single reporting market that is a

    board of trade designated as a contract market under section 5 of the

    Act or a swap execution facility registered under section 5h of the

    Act, in all instruments that such reporting market designates with the

    same product identifier (including purchases and sales, and inclusive

    of all expiration months).

    PART 17--REPORTS BY REPORTING MARKETS, FUTURES COMMISSION

    MERCHANTS, CLEARING MEMBERS, AND FOREIGN BROKERS

    0

    6. The authority citation for part 17 is revised to read as follows:

    [[Page 69231]]

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

    12a, as amended by Title VII of the Dodd-Frank Wall Street Reform

    and Consumer Protection Act, Pub. L. 111-203, 124 Stat. 1376 (2010).

    0

    7. In Sec. 17.00, revise paragraph (g)(2)(iii) to read as follows:

    Sec. 17.00 Information to be furnished by futures commission

    merchants, clearing members and foreign brokers.

    * * * * *

    (g) * * *

    (2) * * *

    (iii) Account Number. A unique identifier assigned by the reporting

    firm to each special account. The field is zero filled with the account

    number right-justified. Assignment of the account number is subject to

    the provisions of paragraph (b) of this section and appendix A of this

    part (Form 102).

    * * * * *

    0

    8. Revise Sec. 17.01 to read as follows:

    Sec. 17.01 Identification of special accounts, volume threshold

    accounts, and omnibus accounts.

    (a) Identification of special accounts. When a special account is

    reported for the first time, the futures commission merchant, clearing

    member, or foreign broker shall identify the special account to the

    Commission on Form 102, in accordance with the form instructions and as

    specified in Sec. 17.02(b).

    (b) Identification of volume threshold accounts. Each clearing

    member shall identify and report its volume threshold accounts to the

    Commission on Form 102, in accordance with the form instructions and as

    specified in Sec. 17.02(c).

    (c) Identification of omnibus accounts and sub-accounts. Each

    originator of an omnibus volume threshold account identified in Form

    102 or an omnibus reportable sub-account identified in Form 71 shall,

    after a special call upon such originator by the Commission or its

    designee, file with the Commission an ``Identification of Omnibus

    Accounts and Sub-Accounts'' on Form 71, to be completed in accordance

    with the instructions thereto, at such time and place as directed in

    the call.

    (d) Exclusively self-cleared contracts. Unless determined otherwise

    by the Commission, reporting markets that list exclusively self-cleared

    contracts shall meet the requirements of paragraphs (a) and (b) of this

    section, as they apply to trading in such contracts by all clearing

    members, on behalf of all clearing members.

    (e) Special call provision. Upon a call by the Commission or its

    designee, the reports required to be filed by futures commission

    merchants, clearing members, foreign brokers, and reporting markets

    under paragraphs (a) through (d) of this section shall be submitted

    within 24 hours of the Commission or its designee's request in

    accordance with the instructions accompanying the request.

    0

    9. Amend Sec. 17.02 by revising the introductory text and paragraph

    (b) and adding paragraph (c) to read as follows:

    Sec. 17.02 Form, manner and time of filing reports.

    Unless otherwise instructed by the Commission or its designee, the

    reports required to be filed by reporting markets, futures commission

    merchants, clearing members, and foreign brokers under Sec. Sec. 17.00

    and 17.01 shall be filed as specified in paragraphs (a) through (c) of

    this section.

    * * * * *

    (b) Section 17.01(a) reports. For data submitted pursuant to Sec.

    17.01(a) on Form 102:

    (1) Form of submission. Form 102 must be submitted to the

    Commission in the form and manner provided on www.cftc.gov.

    (2) Time of submission. For each account that becomes reportable as

    a special account, the futures commission merchant, clearing member, or

    foreign broker, as appropriate, shall submit a Form 102 to the

    Commission, in accordance with the instructions thereto, and in the

    manner specified by the Commission or its designee. Such form shall be

    submitted in accordance with the instructions and schedule set forth in

    paragraphs (b)(2)(i) and (ii) of this section:

    (i) The applicable reporting party shall submit a completed Form

    102 to the Commission no later than 9 a.m. on the business day

    following the date on which the special account becomes reportable, or

    on such other date as directed by special call of the Commission or its

    designee, and as periodically required thereafter by paragraphs (b)(3)

    and (4) of this section. Such form shall include all required

    information, including the names of the owner(s) and controller(s) of

    each trading account that is not an omnibus account, and that comprises

    a special account reported on the form, provided that, with respect to

    such owners(s) and controller(s), information other than the names of

    such parties may be reported in accordance with the instructions and

    schedule set forth in paragraph (b)(2)(ii) of this section. Unless

    otherwise specified by the Commission or its designee, the stated time

    is eastern time for information concerning markets located in that time

    zone, and central time for information concerning all other markets.

    (ii) With respect to the owner(s) and controller(s) of each trading

    account that is not an omnibus account, and that comprises a special

    account reported on Form 102, information other than the names of such

    parties must be provided on Form 102 no later than 9 a.m. on the third

    business day following the date on which the special account becomes

    reportable, or on such other date as directed by special call of the

    Commission or its designee, and as periodically required thereafter by

    paragraphs (b)(3) and (4) of this section. Unless otherwise specified

    by the Commission or its designee, the stated time is eastern time for

    information concerning markets located in that time zone, and central

    time for information concerning all other markets.

    (3) Change updates. If any change causes the information filed by a

    futures commission merchant, clearing member, or foreign broker on a

    Form 102 for a special account to no longer be accurate, then such

    futures commission merchant, clearing member, or foreign broker shall

    file an updated Form 102 with the Commission in accordance with the

    instructions and schedule set forth in paragraphs (b)(2)(i) and (ii) of

    this section, or on such other date as directed by special call of the

    Commission, provided that, a futures commission merchant, clearing

    member, or foreign broker may stop providing change updates for a Form

    102 that it has submitted to the Commission for any special account

    upon notifying the Commission or its designee that the account in

    question is no longer reportable as a special account and has not been

    reportable as a special account for the past six months.

    (4) Refresh updates. For Special Accounts--Starting on a date

    specified by the Commission or its designee and at the end of each

    annual increment thereafter (or such other date specified by the

    Commission or its designee that is equal to or greater than six

    months), each futures commission merchant, clearing member, or foreign

    broker shall resubmit every Form 102 that it has submitted to the

    Commission for each of its special accounts, provided that, a futures

    commission merchant, clearing member, or foreign broker may stop

    providing refresh updates for a Form 102 that it has submitted to the

    Commission for any special account upon notifying the Commission or its

    designee that the account in question is no longer reportable as a

    special account and has not been reportable as a special account for

    the past six months.

    [[Page 69232]]

    (c) Section 17.01(b) reports. For data submitted pursuant to Sec.

    17.01(b) on Form 102:

    (1) Form of submission. Form 102 must be submitted to the

    Commission in the form and manner provided on www.cftc.gov.

    (2) Time of submission. For each account that becomes reportable as

    a volume threshold account, the clearing member shall submit a Form 102

    to the Commission, in accordance with the instructions thereto, and in

    the manner specified by the Commission or its designee. Such form shall

    be submitted in accordance with the instructions and schedule set forth

    in paragraphs (c)(2)(i) and (ii) of this section:

    (i) The clearing member shall submit a completed Form 102 to the

    Commission no later than 9 a.m. on the business day following the date

    on which the volume threshold account becomes reportable, or on such

    other date as directed by special call of the Commission or its

    designee, and as periodically required thereafter by paragraphs (c)(3)

    and (4) of this section. Such form shall include all required

    information, including the names of the owner(s) and controller(s) of

    each volume threshold account reported on the form that is not an

    omnibus account, provided that, with respect to such owners(s) and

    controller(s), information other than the names of such parties may be

    reported in accordance with the instructions and schedule set forth in

    paragraph (c)(2)(ii) of this section. Unless otherwise specified by the

    Commission or its designee, the stated time is eastern time for

    information concerning markets located in that time zone, and central

    time for information concerning all other markets.

    (ii) With respect to the owner(s) and controller(s) of each volume

    threshold account reported on Form 102 that is not an omnibus account,

    information other than the names of such parties must be provided on

    Form 102 no later than 9 a.m. on the third business day following the

    date on which the volume threshold account becomes reportable, or on

    such other date as directed by special call of the Commission or its

    designee, and as periodically required thereafter by paragraphs (c)(3)

    and (4) of this section. Unless otherwise specified by the Commission

    or its designee, the stated time is eastern time for information

    concerning markets located in that time zone, and central time for

    information concerning all other markets.

    (3) Change updates. If any change causes the information filed by a

    clearing member on a Form 102 for a volume threshold account to no

    longer be accurate, then such clearing member shall file an updated

    Form 102 with the Commission in accordance with the instructions and

    schedule set forth in paragraphs (c)(2)(i) and (ii) of this section, or

    on such other date as directed by special call of the Commission,

    provided that, a clearing member may stop providing Form 102 change

    updates for a volume threshold account upon notifying the Commission or

    its designee that the volume threshold account executed no trades in

    any product in the past six months on the reporting market at which the

    volume threshold account reached the reportable trading volume level.

    (4) Refresh updates. For Volume Threshold Accounts--Starting on a

    date specified by the Commission or its designee and at the end of each

    annual increment thereafter (or such other date specified by the

    Commission or its designee that is equal to or greater than six

    months), each clearing member shall resubmit every Form 102 that it has

    submitted to the Commission for each of its volume threshold accounts,

    provided that, a clearing member may stop providing refresh updates for

    a Form 102 that it has submitted to the Commission for any volume

    threshold account upon notifying the Commission or its designee that

    the volume threshold account executed no trades in any product in the

    past six months on the reporting market at which the volume threshold

    account reached the reportable trading volume level.

    0

    10. Revise Sec. 17.03 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.

    The Commission hereby delegates, until the Commission orders

    otherwise, the authority set forth in the paragraphs below to either

    the Director of the Office of Data and Technology or the Director of

    the Division of Market Oversight, as indicated below, to be exercised

    by such Director or by such other employee or employees of such

    Director as designated from time to time by such Director. The Director

    of the Office of Data and Technology or the Director of the Division of

    Market Oversight may submit to the Commission for its consideration any

    matter which has been delegated to such Director in this paragraph.

    Nothing in this paragraph prohibits the Commission, at its election,

    from exercising the authority delegated in this paragraph.

    (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 can report the information required under Sec.

    17.00(a) and (h) on series `01 forms or using some other format upon a

    determination that such person is unable to report the information

    using the format, coding structure or electronic data transmission

    procedures otherwise required.

    (b) Pursuant to Sec. 17.02, the authority shall be designated to

    the Director of the Office of Data and Technology to instruct or

    approve the time at which the information required under Sec. Sec.

    17.00 and 17.01(a) and (b) must be submitted by futures commission

    merchants, clearing members and foreign brokers provided that such

    persons are unable to meet the requirements set forth in Sec. 17.02.

    (c) Pursuant to Sec. 17.01, the authority shall be designated to

    the Director of the Office of Data and Technology to determine whether

    to permit an authorized representative of a firm filing the Form 102 or

    person filing the Form 71 to use a means of authenticating the report

    other than by signing the Form 102 or Form 71 and, if so, to determine

    the alternative means of authentication that shall be used.

    (d) Pursuant to Sec. 17.00(a), the authority shall be designated

    to the Director of the Office of Data and Technology to approve a

    format and coding structure other than that set forth in Sec.

    17.00(g).

    (e) Pursuant to Sec. 17.01(c), the authority shall be designated

    to the Director of the Office of Data and Technology to make special

    calls on omnibus volume threshold account originators and omnibus

    reportable sub-account originators for information as set forth in

    Sec. 17.01(c).

    (f) Pursuant to Sec. 17.02(b)(4), the authority shall be

    designated to the Director of the Division of Market Oversight to

    determine the date on which each futures commission merchant, clearing

    member, or foreign broker shall update or otherwise resubmit every Form

    102 that it has submitted to the Commission for each of its special

    accounts.

    (g) Pursuant to Sec. 17.02(c)(4), the authority shall be

    designated to the Director of the Division of Market Oversight to

    determine the date on which each clearing member shall update or

    otherwise resubmit every Form 102 that it has submitted to the

    Commission for each of its volume threshold accounts.

    0

    11. Add appendix A to part 17 to read as follows:

    [[Page 69233]]

    Appendix A to Part 17--Form 102

    Note: This Appendix is a representation of the final reporting

    form, which will be submitted in an electronic format pursuant to

    the rules in part 17, either via the Commission's web portal or via

    XML-based, secure FTP transmission.

    [GRAPHIC] [TIFF OMITTED] TR18NO13.003

    [[Page 69234]]

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    [[Page 69252]]

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    BILLING CODE 6351-01-C

    0

    12. Add appendix B to part 17 to read as follows:

    Appendix B to Part 17--Form 71

    Note: This Appendix is a representation of the final reporting

    form, which will be submitted in an electronic format pursuant to

    the rules in Part 17, either via the Commission's web portal or via

    XML-based, secure FTP transmission.

    BILLING CODE 6351-01-P

    [[Page 69253]]

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    [[Page 69254]]

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    [[Page 69255]]

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    [[Page 69259]]

    [GRAPHIC] [TIFF OMITTED] TR18NO13.029

    PART 18--REPORTS BY TRADERS

    0

    13. The authority citation for part 18 is revised to read as follows:

    Authority: 7 U.S.C. 2, 4, 5, 6a, 6c, 6f, 6g, 6i, 6k, 6m, 6n, 6t,

    12a, and 19, as amended by Title VII of the Dodd-Frank Wall Street

    Reform and Consumer Protection Act, Pub. L. 111-203, 124 Stat. 1376

    (2010).

    0

    14. Revise Sec. 18.04 to read as follows:

    Sec. 18.04 Statement of reporting trader.

    (a) Every trader who owns, holds, or controls a reportable futures

    and option position shall after a special call upon such trader by the

    Commission or its designee file with the Commission a ``Statement of

    Reporting Trader'' on the Form 40, to be completed in accordance with

    the instructions thereto, at such time and place as directed in the

    call.

    (b) Every volume threshold account controller, person who owns a

    volume threshold account, reportable sub-account controller, and person

    who owns a reportable sub-account shall after a special call upon such

    person by the Commission or its designee file with the Commission a

    ``Statement of Reporting Trader'' on the Form 40, to be completed in

    accordance with the instructions thereto, at such time and place as

    directed in the call.

    0

    15. Amend Sec. 18.05 to revise introductory paragraph (a), and

    paragraphs (b) and (c), to read as follows:

    Sec. 18.05 Maintenance of books and records.

    (a) Every volume threshold account controller; person who owns a

    volume threshold account; reportable sub-account controller; person who

    owns a reportable sub-account; and trader who owns, holds, or controls

    a reportable futures or option position shall keep books and records

    showing all details concerning all positions and transactions in the

    commodity or swap:

    * * * * *

    (b) Every such volume threshold account controller; person who owns

    a volume threshold account; reportable sub-account controller; person

    who owns a reportable sub-account; and trader who owns, holds, or

    controls a reportable futures or option position shall also keep books

    and records showing all details concerning all positions and

    transactions in the cash commodity or swap, its products and

    byproducts, and all commercial activities that it hedges in the

    futures, option, or swap contract in which it is reportable.

    (c) Every volume threshold account controller; person who owns a

    volume threshold account; reportable sub-account controller; person who

    owns a reportable sub-account; and trader who owns, holds, or controls

    a reportable futures or option position shall upon request furnish to

    the Commission any pertinent information concerning such positions,

    transactions, or activities in a form acceptable to the Commission.

    0

    16. Add appendix A to part 18 to read as follows:

    Appendix A to Part 18--Form 40

    Note: This Appendix is a representation of the final reporting

    form, which will be submitted in an electronic format pursuant to

    the rules in Part 18, either via the Commission's web portal or via

    XML-based, secure FTP transmission.

    BILLING CODE 6351-01-P

    [[Page 69260]]

    [GRAPHIC] [TIFF OMITTED] TR18NO13.030

    BILLING CODE 6351-01-P

    General Instructions

    Who Must File a Form 40--17 CFR 18.04(a) requires every person

    who owns or controls a reportable position to file a Form 40--

    Statement of Reporting Trader with the Commission. 17 CFR 18.04(b)

    requires every volume threshold account controller, person who owns

    a volume threshold account, reportable sub-account controller, and

    person who owns a reportable sub-account to file a Form 40--

    Statement of Reporting Trader with the Commission. 17 CFR 20.5

    requires every person subject to books or records under 17 CFR 20.6

    to file a 40S filing \3\ with the Commission.

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

    \3\ As used in this document, ``Form 40'' may refer to either a

    Form 40--Statement of Reporting Trader or a 40S Filing, as

    appropriate, and as the context may require.

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

    [[Page 69261]]

    When to file--A reporting trader must file a Form 40 on call by

    the Commission or its designee.

    Where to file--The Form 40 should be submitted (a) via the

    CFTC's web-based Form 40 submission process at www.cftc.gov, (b) via

    a secure FTP data feed to the Commission, or (c) as otherwise

    instructed by the Commission or its designee. If electronic

    submission attempts fail, the reporting trader shall contact the

    Commission at techsupport@cftc.gov for further technical support.

    When to update--A reporting trader required to complete a Form

    40 will be under a continuing obligation, per direction in the

    special call, to update and maintain the accuracy of the information

    it provides. Reporting traders can update this information by either

    visiting the CFTC's web-based Form 40 portal to review, verify, and/

    or update their information, or by submitting updated information

    via FTP.

    Signature--Each Form 40 submitted to the Commission must be

    signed or otherwise authenticated by either (1) the reporting trader

    submitting the form or (2) an individual that is duly authorized by

    the reporting trader to provide the information and representations

    contained in the form.

    What to File--All reporting traders that are filing a Form 40

    pursuant to either 17 CFR 18.04(a) (i.e. reportable position

    reporting traders) or 17 CFR 20.5 (i.e. swaps books and records

    reporting traders) must complete all questions. All reporting

    traders that are filing a Form 40 pursuant to 17 CFR 18.04(b) (i.e.

    volume threshold account controllers, persons who own a volume

    threshold account, reportable sub-account controllers, and persons

    who own a reportable sub-account reporting trader) must complete all

    questions unless they are natural persons. Reporting traders that

    are filing a Form 40 pursuant to 17 CFR 18.04(b) who are natural

    persons shall mark not applicable for questions 7 and 8.

    Please be advised that pursuant to 5 CFR 1320.5(b)(2)(i), you

    are not required to respond to this collection of information unless

    it displays a currently valid OMB control number.

    Table of Contents

    1. General information for Reporting Trader

    2. Contact Information for Individual Responsible for Trading

    Activities

    3. Contact Information for Individual Responsible for Risk

    Management Operations

    4. Contact information for Individual Responsible for Information on

    the Form 40

    5. Omnibus Account Identification

    6. Foreign Government Affiliation

    7. Non-Domestic Entity Indicator

    8. Ownership Structure (Parent/Parents)

    9. Ownership Structure (Subsidiary/Subsidiaries)

    10. Control of Reporting Trader's Trading Activities by Others

    11. Control of Other's Trading Activities by Reporting Trader

    12. Other Parties Influencing Trading of Reporting Trader

    13. Trading Subject to Express or Implied Agreement

    14. Commodity Index Trading Indicator

    15. Swap Dealer Identification

    16. Major Swap Participant Identification

    17. Business Sectors, Subsectors and Occupation

    18. Commodities Being Traded in Derivative Markets

    19. Business Purpose for Trading in Derivative Markets

    20. Signature/Authentication, Name, and Date

    Acknowledgement of Definitions

    Before proceeding with your submission, please check this box to

    indicate that you have read the definitions for the following

    terms--as they are used in the Form 40: [ballot]

    Commodity (or commodities)--generally, all goods and articles

    (except onions and motion picture box office receipts, or any index,

    measure, value, or data related to such receipts), and all services,

    rights, and interests (except motion picture box office receipts, or

    any index, measure, value, or data related to such receipts) in

    which contracts for future delivery are presently or in the future

    dealt in (see 7 U.S.C. 1a(9)).

    Commodity Index Trading (``CIT'')--means:

    a. An investment strategy that consists of investing in an

    instrument (e.g., a commodity index fund, exchange-traded fund for

    commodities, or exchange-traded note for commodities) that enters

    into one or more derivative contracts to track the performance of a

    published index that is based on the price of one or more

    commodities, or commodities in combination with other securities; or

    b. An investment strategy that consists of entering into one or

    more derivative contracts to track the performance of a published

    index that is based on the price of one or more commodities, or

    commodities in combination with other securities.

    Control--as used in this Form, ``control'' means to actually

    direct, by power of attorney or otherwise, the trading of a special

    account or a consolidated account. A special account or a

    consolidated account may have more than one controller.

    Derivatives--futures, options on futures, and swaps.

    Omnibus volume threshold account--means any trading account

    that, on an omnibus basis, carries reportable trading volume on or

    subject to the rules of a reporting market that is a board of trade

    designated as a contract market under section 5 of the Act or a swap

    execution facility registered under section 5h of the Act.

    Parent--for purposes of Form 40, a person is a parent of a

    reporting trader if it has a direct or indirect controlling interest

    in the reporting trader; and a person has a controlling interest if

    such person has the ability to control the reporting trader through

    the ownership of voting equity, by contract, or otherwise.

    Person--an individual, association, partnership, corporation,

    trust, or government agency and/or department.

    Reportable sub-account--means any trading sub-account of an

    omnibus volume threshold account or omnibus reportable sub-account,

    which sub-account executes reportable trading volume.

    Reportable sub-account controller--means a natural person who by

    power of attorney or otherwise actually directs the trading of a

    reportable sub-account. A reportable sub-account may have more than

    one controller.

    Reportable trading volume--means contract trading volume that

    meets or exceeds the level specified in 17 CFR 15.04.

    Reporting trader--a person who must file a Form 40, whether

    pursuant to 17 CFR 18.04(a), 17 CFR 18.04(b), or 17 CFR 20.05.

    Subsidiary--for purposes of Form 40, a person is a subsidiary of

    a reporting trader if the reporting trader has a direct or indirect

    controlling interest in the person; and a reporting trader has a

    controlling interest if such reporting trader has the ability to

    control the person through the ownership of voting equity, by

    contract, or otherwise.

    Volume threshold account--means any trading account that carries

    reportable trading volume on or subject to the rules of a reporting

    market that is a board of trade designated as a contract market

    under section 5 of the Act or a swap execution facility registered

    under section 5h of the Act.

    Volume threshold account controller--means a natural person who

    by power of attorney or otherwise actually directs the trading of a

    volume threshold account. A volume threshold account may have more

    than one controller.

    CFTC Form 40

    General Information for Reporting Trader:

    For question 1, please provide the name, contact information and

    other requested information regarding the reporting trader. If the

    reporting trader is an individual, provide their full legal name and

    the name of the reporting trader's employer.

    1. Indicate whether the reporting trader is a legal entity or a

    natural person:

    Legal entity: [ballot]

    Natural person: [ballot]

    Name of Reporting Trader

    Street Address

    City

    State

    Country

    Zip/Postal Code

    Phone Number \4\

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

    \4\ Please provide a direct number, without any telephone

    extension. Non-U.S. respondents should also provide the applicable

    international area code.

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

    Email Address

    Web site

    NFA ID (if any)

    Legal Entity Identifier (if any)

    Name of Employer

    Employer NFA ID (if any)

    Employer Legal Entity Identifier (if any)

    Contact Information

    For questions 2, 3, and 4, provide the name and contact

    information as requested.

    2. Individual to contact regarding the derivatives trading of

    the reporting trader (this individual should be able to answer

    specific questions about the reporting trader's trading activity

    when contacted by Commission staff):

    Check here if this individual has the same contact information

    as that of the reporting trader.

    [[Page 69262]]

    Name

    Street Address

    City

    State

    Country

    Zip/Postal Code

    Phone Number \5\

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

    \5\ Please provide a direct number, without any telephone

    extension. Non-U.S. respondents should also provide the applicable

    international area code.

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

    Email Address

    NFA ID (if any)

    3. Individual to contact regarding the risk management

    operations of the reporting trader (this individual should be able

    to answer specific questions about the reporting trader's risk

    management operations, including account margining, when contacted

    by Commission staff):

    Check here if this individual has the same contact information

    as that of the reporting trader.

    Name

    Street Address

    City

    State

    Country

    Zip/Postal Code

    Phone Number \6\

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

    \6\ Please provide a direct number, without any telephone

    extension. Non-U.S. respondents should also provide the applicable

    international area code.

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

    Email Address

    NFA ID (if any)

    4. Individual responsible for the information on the Form 40

    (this individual should be able to verify, clarify, and explain the

    answers submitted by a reporting trader on the Form 40):

    Check here if this individual has the same contact information

    as that of the reporting trader.

    Name

    Street Address

    City

    State

    Country

    Zip/Postal Code

    Phone Number \7\

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

    \7\ Please provide a direct number, without any telephone

    extension. Non-U.S. respondents should also provide the applicable

    international area code.

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

    Email Address

    NFA ID (if any)

    Omnibus Account Identification

    For question 5, indicate whether the reporting trader has a

    customer omnibus account with a futures commission merchant,

    clearing member, or foreign broker (NOTE: For the purpose of this

    question, an omnibus account is an account that one futures

    commission merchant, clearing member or foreign broker carries for

    another in which the transactions of multiple individual accounts

    are combined. The identities of the holders of the individual

    accounts are not generally known or disclosed to the carrying firm.

    In addition, the Commission has traditionally identified omnibus

    accounts as either house or customer omnibus accounts. House omnibus

    accounts exclusively contain the proprietary accounts of the omnibus

    account originator. Customer omnibus accounts contain the accounts

    of customers of the omnibus account originator. It is the obligation

    of the omnibus account originator to correctly identify the omnibus

    account type to the reporting entity):

    5. Does the reporting trader have a customer omnibus account

    with a futures commission merchant, clearing member, or foreign

    broker? YES/NO

    IF YES, Give the name(s) of the futures commission merchant,

    clearing member, or foreign broker carrying the account(s) of the

    reporting trader.

    Foreign Government Affiliation

    For question 6, please complete the following (NOTE: For the

    purpose of this question, affiliation can include, but is not

    limited to, a situation (1) where the foreign government directly or

    indirectly controls the reporting trader's assets, operations, and/

    or derivatives trading, or (2) where the reporting trader operates

    as a direct or indirect subsidiary of a foreign government, its

    agencies or departments, or any investment program of the foreign

    government):

    6. Is the reporting trader directly or indirectly affiliated

    with a government other than that of the United States? YES/NO

    IF YES, give the name of the government(s).

    IF YES, explain the nature of the affiliation between the

    reporting trader and the government(s) listed above.

    Non-Domestic Entity Indicator

    For question 7, if the Reporting Trader is a legal entity,

    please complete the following.

    7. Is the reporting trader organized under the laws of a country

    other than the United States? YES/NO

    IF YES, give the name of the country or countries under whose

    laws the reporting trader is organized.

    Ownership Structure of the Reporting Trader

    For questions 8 and 9, provide the requested ownership

    information only as applicable.

    If the Reporting Trader is a commodity pool, also provide the

    requested information in questions 8i, 8ii, and 8iii. If the

    Reporting Trader is reporting commodity pools in which it has an

    ownership interest, also provide the requested information in

    questions 9i, 9ii, and 9iii.

    8. List all the parents of the reporting trader (including the

    immediate parent and any parent(s) of its parent) and, separately,

    all persons that have a 10 percent or greater ownership interest in

    the reporting trader (commodity pool investors are deemed to have an

    ownership interest in the pool). For each such parent or 10 percent

    or greater owner include the following information:

    Indicate whether the party identified below is a legal entity or

    a natural person:

    Legal entity: [ballot]

    Natural person: [ballot]

    Name

    Street Address

    City

    State

    Country

    Zip/Postal Code

    Phone Number \8\

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

    \8\ Please provide a direct number, without any telephone

    extension. Non-U.S. respondents should also provide the applicable

    international area code.

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

    Web site \9\

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

    \9\ The Web site and NFA ID requested in this question are only

    required to be reported to the extent the respondent has this

    information available in its records. Respondents are not required

    to poll customers or other parties for the Web site and NFA ID if

    this information has not been previously collected.

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

    Email Address

    NFA ID (if any)

    Legal Entity Identifier (if any)

    Parent Company/10% Owner/or Both Indicator

    8i. For each person identified in question 8 that is a limited

    partner, shareholder, or other similar type of pool participant,

    indicate if they are a principal or affiliate of the operator of the

    commodity pool.

    Principal/Affiliate Indicator

    8ii. For each person identified in question 8 that is a limited

    partner, shareholder, or other similar type of pool participant,

    indicate if they are also a commodity pool operator of the pool.

    Commodity Pool Operator Indicator

    8iii. For each person identified in question 8 that is a limited

    partner, shareholder, or other similar type of pool participant and

    where the operator of the commodity pool is exempt from registration

    under Sec. 4.13 of the Commission's regulations, indicate if that

    person has an ownership or equity interest of 25 percent or greater

    in the commodity pool.

    25% Ownership Indicator

    9. List all the subsidiaries of the reporting trader (including

    the immediate subsidiary and any subsidiaries of those subsidiaries)

    and, separately, all persons in which the reporting trader has a 10

    percent or greater ownership interest (including a 10 percent or

    greater interest in a commodity pool(s)). Only list subsidiaries and

    persons that engage in derivatives trading. For each such subsidiary

    and/or person include the following information:

    Indicate whether the party identified below is a legal entity or

    a natural person:

    Legal entity: [ballot]

    Natural person: [square]

    Name

    Street Address

    City

    State

    Country

    Zip/Postal Code

    Phone Number \10\

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

    \10\ Please provide a direct number, without any telephone

    extension. Non-U.S. respondents should also provide the applicable

    international area code.

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

    Web site \11\

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

    \11\ The Web site and NFA ID requested in this question are only

    required to be reported to the extent the respondent has this

    information available in its records. Respondents are not required

    to poll customers or other parties for the Web site and NFA ID if

    this information has not been previously collected.

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

    Email Address

    NFA ID (if any)

    Legal Entity Identifier (if any)

    [[Page 69263]]

    Subsidiary/10% Ownership/or Both Indicator

    9i. For each person identified in question 9 that is a commodity

    pool and for which you are a limited partner, shareholder or other

    similar type of pool participant, indicate if you are a principal or

    affiliate of the operator of the commodity pool.

    Principal/Affiliate Indicator

    9ii. For each person identified in question 9 that is a

    commodity pool and for which you are a limited partner, shareholder

    or other similar type of pool participant, indicate if you are the

    commodity pool operator for the pool.

    Commodity Pool Operator Indicator

    9iii. For each person identified in question 9 that is a

    commodity pool and for which you are a limited partner, shareholder

    or other similar type of pool participant and for which the operator

    of the commodity pool is exempt from registration under Sec. 4.13

    of the Commission's regulations, indicate if you have an ownership

    or equity interest of 25 percent or greater in the commodity pool.

    25% Ownership Indicator

    Control of Trading

    For questions 10, 11, 12, and 13 provide the requested control

    information only as applicable.

    10. List all persons outside of the reporting trader that

    control some or all of the derivatives trading of the reporting

    trader (including persons that may have been previously identified

    as a parent, above):

    Indicate whether the party identified below is a legal entity or

    a natural person:

    Legal entity: [ballot]

    Natural person: [ballot]

    Name

    Street Address

    City

    State

    Country

    Zip/Postal Code

    Phone Number \12\

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

    \12\ Please provide a direct number, without any telephone

    extension. Non-U.S. respondents should also provide the applicable

    international area code.

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

    Web site \13\

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

    \13\ The Web site and NFA ID requested in this question are only

    required to be reported to the extent the respondent has this

    information available in its records. Respondents are not required

    to poll customers or other parties for the Web site and NFA ID if

    this information has not been previously collected.

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

    Email Address

    NFA ID (if any)

    Legal Entity Identifier (if any)

    Some/All Indicator

    11. List all persons for which the reporting trader controls

    some or all of the derivatives trading (including persons that may

    have been previously identified as a subsidiary, above):

    Indicate whether the party identified below is a legal entity or

    a natural person:

    Legal entity: [square]

    Natural person: [square]

    Name

    Street Address

    City

    State

    Country

    Zip/Postal Code

    Phone Number \14\

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

    \14\ Please provide a direct number, without any telephone

    extension. Non-U.S. respondents should also provide the applicable

    international area code.

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

    Web site \15\

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

    \15\ The Web site and NFA ID requested in this question are only

    required to be reported to the extent the respondent has this

    information available in its records. Respondents are not required

    to poll customers or other parties for the Web site and NFA ID if

    this information has not been previously collected.

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

    Email Address

    NFA ID (if any)

    Legal Entity Identifier (if any)

    Some/All Indicator

    12. List any other person(s) that directly or indirectly

    influence, or exercise authority over, some or all of the trading of

    the reporting trader, but who do not exercise ``control'' as defined

    in this Form: Indicate whether the party identified below is a legal

    entity or a natural person:

    Legal entity: [ballot]

    Natural person: [ballot]

    Name

    Street Address

    City

    State

    Country

    Zip/Postal Code

    Phone Number \16\

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

    \16\ Please provide a direct number, without any telephone

    extension. Non-U.S. respondents should also provide the applicable

    international area code.

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

    Web site \17\

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

    \17\ The Web site and NFA ID requested in this question are only

    required to be reported to the extent the respondent has this

    information available in its records. Respondents are not required

    to poll customers or other parties for the Web site and NFA ID if

    this information has not been previously collected.

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

    Email Address

    NFA ID (if any)

    Legal Entity Identifier (if any)

    Some/All Indicator

    13. Is some or all of the derivatives trading of the reporting

    trader subject to an express or implied agreement or understanding

    with any other person(s) not addressed in questions 10, 11, or 12,

    above? YES/NO

    If yes, provide the following information:

    Indicate whether the party identified below is a legal entity or

    a natural person:

    Legal entity: [ballot]

    Natural person: [ballot]

    Name

    Street Address

    City

    State

    Country

    Zip/Postal Code

    Phone Number \18\

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

    \18\ Please provide a direct number, without any telephone

    extension. Non-U.S. respondents should also provide the applicable

    international area code.

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

    Web site \19\

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

    \19\ The Web site and NFA ID requested in this question are only

    required to be reported to the extent the respondent has this

    information available in its records. Respondents are not required

    to poll customers or other parties for the Web site and NFA ID if

    this information has not been previously collected.

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

    Email Address

    NFA ID (if any)

    Legal Entity Identifier (if any)

    Some/All Indicator

    Commodity Index Trading Indicator

    For question 14, please answer the following:

    14i. Is the reporting trader engaged in commodity index trading

    as defined in paragraph (a) of the definition of CIT above? YES/NO

    14ii. Is the reporting trader engaged in commodity index trading

    as defined in paragraph (b) of the definition of CIT above? YES/NO

    a. If the reporting trader is engaged in CIT (as defined in

    paragraph (b)) with respect to one or more commodities or commodity

    groups appearing on Supplemental List II, indicate whether the

    reporting trader is, in the aggregate, pursuing long exposure or

    short exposure with respect to such commodities or commodity groups.

    It is not necessary to respond to this question with respect to CIT

    that tracks the performance of multiple unrelated commodities or

    commodity groups (e.g., an investment in an exchange-traded fund

    that tracks the performance of an index representing commodities

    spanning multiple commodity groups).

    14iii. If the reporting trader is currently engaged in commodity

    index trading as defined in paragraphs (a) or (b) of the CIT

    definition above, indicate the month and year on which the reporting

    trader first became engaged in commodity index trading.

    Swaps Participation Indicators

    For questions 15 and 16, please indicate if the reporting trader

    meets the specified definition:

    15. Is the reporting trader a Swap Dealer, as defined in Sec.

    1.3(ppp) of regulations under the Commodity Exchange Act? YES/NO

    16. Is the reporting trader a Major Swap Participant, as defined

    in Sec. 1.3(qqq) of regulations under the Commodity Exchange Act?

    YES/NO

    Nature of Business and of Derivatives Trading Activities

    For questions 17, 18, and 19 provide the requested information

    only as applicable.

    17. Select all business sectors and subsectors that pertain to

    the business activities or occupation of the reporting trader. If

    more than one business subsector is selected, indicate which

    business subsector primarily describes the nature of the reporting

    trader's business.

    Choose From Supplemental List I

    18. Select all commodity groups and individual commodities that

    the reporting trader presently trades or expects to trade in the

    near future in derivative markets.

    Choose From Supplemental List II

    19. For each selected individual commodity identified in

    question 18, indicate the business purpose(s) for which the

    reporting trader uses derivative markets.

    [[Page 69264]]

    If the reporting trader has more than one business purpose for

    trading in an individual commodity, also indicate the predominant

    business purpose.

    Choose From Supplemental List III

    Signature/Authentication, Name, and Date

    20. Please sign/authenticate the Form 40 prior to submitting.

    Signature/Electronic Authentication:

    [ballot] By checking this box and submitting this form (or by

    clicking ``submit,'' ``send,'' or any other analogous transmission

    command if transmitting electronically), I certify that I am duly

    authorized by the reporting trader identified below to provide the

    information and representations submitted on this Form 40, and that

    the information and representations are true and correct.

    Reporting Trader Authorized Representative (Name and Position):

    -------------------- (Name)

    -------------------- (Position)

    Submitted on behalf of:

    ---------- (Reporting Trader Name)

    Date of Submission:

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

    Supplemental List I: List of Business Sectors and Subsectors

    Business Sector

    Subsector

    Agriculture and Forestry

    Oilseed Farming

    Grain Farming

    Fruit and Tree Nut Farming

    Other Crop Farming (Specify)

    Cattle Ranching and Farming

    Hog and Pig Farming

    Poultry and Egg Production

    Sheep and Goat Farming

    Other Animal Production

    Forestry, Logging, or Timber Production

    Cooperative

    Other (Specify)

    Mining, Oil and Natural Gas Extraction

    Oil Exploration/Production

    Natural Gas Exploration/Production

    Coal Mining

    Precious Metal Mining

    Non-Precious Metal Mining

    Other (Specify)

    Utilities

    Utility/Cooperative

    Electric Power Generation

    Local Distribution Company

    Natural Gas Distribution

    Other (Specify)

    Construction

    Building Construction

    Heavy and Civil Engineering Construction

    Other (Specify)

    Manufacturing, Refining and Processing

    Animal Food Manufacturing

    Grain Milling

    Oilseed Milling

    Sugar and Confectionery Product Manufacturing

    Fruit and Vegetable Preserving and Specialty Food Manufacturing

    Dairy Product Manufacturing

    Animal Slaughtering and Processing

    Bakeries

    Other Food Manufacturing

    Beverage Manufacturing Textile Mills

    Textile Product Mills

    Apparel Manufacturing

    Wood Product Manufacturing

    Paper Manufacturing

    Pulp, Paper, and Paperboard Mills

    Petroleum and Coal Products Manufacturing

    Renewable Fuels Manufacturing

    Petrochemical/Chemical Manufacturing

    Plastics and Rubber Products Manufacturing

    Natural Gas Processing

    Precious Metal Processor/Smelter

    Non-Precious Metal Processor

    Metals Fabricator

    Other (Specify)

    Wholesale Trade

    Lumber and Other Construction Materials Merchant Wholesalers

    Metal and Mineral Merchant Dealer

    Grocery and Related Product Merchant Wholesaler

    Farm Product Raw Material Merchant Wholesalers

    Chemical and Allied Products Merchant Wholesalers

    Petroleum and Petroleum Products Merchant Wholesalers

    Natural Gas, Power Marketer

    Importer/Exporter (specify commodities)

    Other (Specify)

    Retail Trade

    Building Materials and Supplies Dealers

    Food and Beverage Stores

    Jeweler/Precious Metals Retailer

    Vehicle Fuel Retailer/Convenience Store Operator

    Fuel Dealers

    Other (Specify)

    Transportation and Warehousing

    Air Transport

    Trucking

    Pipeline Transportation of Crude Oil

    Pipeline Transportation of Natural Gas

    Farm Product Warehousing and Storage

    Energy Distributor (warehousing, storage)

    Other (Specify)

    End User (NOTE: May not be the only/primary subsector selected)

    Metals End User (Construction Co., Brass Mill, Steel Mill)

    Emissions End User (Factory, Industrial Cos.)

    Petroleum End User (Airline Cos. Municipalities, Industrial

    Cos., Trucking Cos.)

    Information

    Other (Specify)

    Financial Institutions and Investment Management

    Dealers and Financial Intermediaries

    Broker/Dealer

    Bank Holding Company

    Investment/Merchant Bank

    Non-US Commercial Bank

    US Commercial Bank

    Swaps/Derivatives Dealer

    Universal Bank

    Asset/Investment/Fund Management:

    Asset/Investment Manager

    Institutional Clients

    Retail Clients

    Managed Accounts and Pools (CTAs, CPOs, etc.)

    Institutional Clients

    Retail Clients

    College Endowment, Trust, Foundation

    Fund of Hedge Funds

    Hedge Fund

    Mutual Fund

    Pension Fund

    Private Wealth Management

    Private Bank

    Exchange Traded Fund Issuer

    Exchange Traded Note Issuer

    Government Financial Institution:

    Central Bank

    Sovereign Wealth Fund

    Government Sponsored Enterprise (GSE)

    Other Governmental Entity (Specify)

    Other Financial or Trading Entities:

    Arbitrageur

    Individual Trader/Investor

    Floor Broker

    Floor Trader

    Market Maker

    Proprietary Trader

    Corporate Treasury

    Mortgage Originator

    Savings Bank

    Credit Union

    Insurance Company

    Other (Specify)

    Real Estate

    Other (Specify)

    Arts, Entertainment, and Recreation

    Performing Arts Companies

    Promoters of Performing Arts

    Agents and Managers for Artists and Entertainers

    Independent Artists, Writers, Performers

    Other (Specify)

    Accommodation and Food Services

    Food Services

    Other (Specify)

    Public Administration

    Administration of Environmental Quality Programs

    Administration of Economic Programs

    Other (Specify)

    Supplemental List II: Commodity Groups and Individual Commodities

    Commodity Group

    Individual Commodity

    GRAINS

    OATS

    WHEAT

    CORN

    RICE

    LIVESTOCK/MEAT PRODUCTS

    LIVE CATTLE

    PORK BELLIES

    FEEDER CATTLE

    LEAN HOGS

    DAIRY PRODUCTS

    MILK

    BUTTER

    CHEESE

    OILSEED AND PRODUCTS

    SOYBEAN OIL

    SOYBEAN MEAL

    SOYBEANS

    FIBER

    COTTON

    FOODSTUFFS/SOFTS

    COFFEE

    FROZEN CONCENTRATED ORANGE JUICE

    SUGAR

    [[Page 69265]]

    COCOA

    OTHER AGRICULTURAL

    REAL ESTATE

    CURRENCY

    EQUITIES AND EQUITY INDICIES

    INTEREST RATES

    TREASURY COMPLEX

    OTHER INTEREST RATE PRODUCTS

    OTHER FINANCIAL INSTRUMENTS

    PETROLEUM AND PRODUCTS

    JET FUEL

    ETHANOL

    BIODIESEL

    FUEL OIL

    HEATING OIL

    GASOLINE

    NAPHTHA

    CRUDE OIL

    DIESEL

    NATURAL GAS AND PRODUCTS

    NATURAL GAS LIQUIDS

    NATURAL GAS

    ELECTRICITY AND SOURCES

    COAL

    ELECTRICITY

    URANIUM

    PRECIOUS METALS

    PALLADIUM

    PLATINUM

    SILVER

    GOLD

    BASE METALS

    STEEL

    COPPER

    WOOD PRODUCTS

    LUMBER

    PULP

    CHEMICALS

    PLASTICS

    EMISSIONS

    WEATHER

    OTHER (SPECIFY)

    Supplemental List III: Business Purposes of Commodity Derivatives

    Trading

    Business Purpose

    Definition

    Example

    Offsetting Cash or Spot Market Input Price Risk

    Using derivative markets for commodities that are direct inputs

    or purchases for your business so as to offset price risk associated

    with your purchase of these inputs.

    E.g. You are a grain processor, so you use wheat futures to

    offset the price risk incidental to your cash purchases of wheat.

    Offsetting Cash or Spot Market Output Price Risk

    Using derivative markets for commodities that are direct outputs

    or sales of your business so as to offset price risk associated with

    your sale of these outputs.

    E.g. You are a gasoline refiner, so you use gasoline futures to

    offset price risk associated with your production of gasoline.

    Offsetting Other Cash or Spot Market Price Risks (Cross Price Risk)

    Using derivative markets for a commodity that is not a direct

    input or output of your business, but which has significant price

    correlations with the direct inputs or outputs of your business.

    E.g. You manufacture ethanol which is used as an additive in and

    competitor for gasoline as a combustive fuel. While you neither

    directly consume nor produce gasoline, you may find that the price

    you receive for your ethanol product is highly correlated with the

    price of gasoline, and therefore you reduce ethanol price risk by

    using gasoline futures contracts.

    Other Physical Risk Management Strategies

    Managing other price risks incidental to the operation of your

    business or physical assets through the use of commodity derivative

    markets.

    E.g. You are a manufacturer with significant international

    sales, so you use foreign currency futures to offset risks

    associated with changes in the competitiveness of your exports and

    therefore the value of your physical assets such as production

    plants, land, machinery, etc.

    Client Futures/Options on Futures Trading

    Fulfilling customer/client desire for portfolio diversification

    or exposure to various asset classes through your activity as a

    Commodity Pool Operator, Commodity Trading Advisor, or other similar

    role.

    E.g. You collect funds and execute trading strategies through

    the use of futures/options on futures markets at the expressed

    intent and for the sole benefit of clients.

    Managing Client Swaps Exposure

    Reducing risk stemming from holding or executing swaps contracts

    on behalf of clients or customers through the use of futures/options

    on futures markets.

    E.g. You sell crude oil swaps to a client and agree to accept

    the risk inherent in the index price. You offset this risk through

    purchases of crude oil futures, in effect transferring price risk

    from the client to another market participant.

    Making Markets/Providing Liquidity

    Engaging in derivatives transactions to assume risk and help

    transfer ownership of derivative positions from one market

    participant to another, realizing the bid-ask spread as the return.

    E.g. You accept risk by buying and selling futures/options on

    futures contracts so that other traders can move into and out of

    positions when they wish. You then find other traders willing to

    take the other side of those transactions.

    Arbitrage

    Using derivative markets as part of a strategy designed to

    realize risk-free profit from pricing anomalies.

    E.g. You realize that the wheat futures contract is trading at a

    discount (even after considering storage, transport, etc.) relative

    to the wheat cash price, and therefore find it profitable to

    purchase the wheat futures contract, take delivery, and then resell

    the wheat in the cash market for a risk-free profit.

    Establishing Price Exposure

    Using derivative markets as a way to express your belief in the

    future movement of market prices. This strategy does not involve

    offsetting risks incidental to your business, but instead involves

    directional trading.

    E.g. You conduct research and believe that crude oil prices are

    due to rise, so you take long futures positions in crude oil to

    profit from your predictions.

    Financial Asset Management

    Using derivatives to diversify, rebalance, or otherwise allocate

    financial assets so that risks to the value of the investment

    portfolio are reduced. This strategy is used by entities such as

    pension funds and endowments to manage overall risk to their

    financial portfolios.

    E.g. You hold Treasury bonds as a component of your investment

    portfolio, and use futures contracts to reduce overall portfolio

    risk that would result from falling bond prices.

    Managing Proprietary Swaps Exposure

    Reducing risk stemming from your proprietary holding or

    execution of swaps contracts through the use of futures/options on

    futures markets.

    E.g. You trade interest rate swaps as part of your business or

    investment strategy, and offset some of the risk inherent in those

    swaps through your use of Eurodollar futures markets.

    Other: Specify

    List and explain your business purpose if the above categories

    do not adequately describe the reason you trade in a particular

    commodity derivative market.

    PART 20--LARGE TRADER REPORTING FOR PHYSICAL COMMODITY SWAPS

    0

    17. The authority citation for part 20 continues to read as follows:

    Authority: 7 U.S.C. 1a, 2, 5, 6, 6a, 6c, 6f, 6g, 6t, 12a, 19, as

    amended by Title VII of the Dodd-Frank Wall Street Reform and

    Consumer Protection Act, Pub. L. 111-203, 124 Stat. 1376 (2010).

    0

    18. Amend Sec. 20.5 to:

    0

    a. Revise paragraphs (a)(1) and (a)(2); and

    0

    b. Add paragraphs (a)(4) and (a)(5)

    The revisions and additions to read as follows:

    Sec. 20.5 Series S filings.

    (a) * * *

    (1) When a counterparty consolidated account first becomes

    reportable, the reporting entity shall submit a 102S filing, in

    accordance with the form instructions and as specified in this section.

    (2) A reporting entity may submit a 102S filing only once for each

    counterparty, even if such persons at various times have multiple

    reportable positions in the same or different paired swaps or

    swaptions.

    * * * * *

    (4) Change updates. If any change causes the information filed by a

    [[Page 69266]]

    clearing member or swap dealer on a Form 102 for a consolidated account

    to no longer be accurate, then such clearing member or swap dealer

    shall file an updated Form 102 with the Commission no later than 9 a.m.

    on the business day after such change occurs, or on such other date as

    directed by special call of the Commission, provided that, a clearing

    member or swap dealer may stop providing change updates for a Form 102

    that it has submitted to the Commission for any consolidated account

    upon notifying the Commission or its designee that the account in

    question is no longer reportable as a consolidated account and has not

    been reportable as a consolidated account for the past six months.

    Unless otherwise specified by the Commission or its designee, the

    stated time is eastern time for information concerning markets located

    in that time zone, and central time for information concerning all

    other markets.

    (5) Refresh updates. For Consolidated Accounts--Starting on a date

    specified by the Commission or its designee and at the end of each

    annual increment thereafter (or such other date specified by the

    Commission or its designee that is equal to or greater than six

    months), each clearing member or swap dealer shall resubmit every Form

    102 that it has submitted to the Commission for each of its

    consolidated accounts, provided that, a clearing member or swap dealer

    may stop providing refresh updates for a Form 102 that it has submitted

    to the Commission for any consolidated account upon notifying the

    Commission or its designee that the account in question is no longer

    reportable as a consolidated account and has not been reportable as a

    consolidated account for the past six months.

    * * * * *

    Issued in Washington, DC, on November 5, 2013, by the

    Commission.

    Melissa D. Jurgens,

    Secretary of the Commission.

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

    Federal Regulations.

    Appendices to Ownership and Control Reports, Forms 102/102S, 40/40S,

    and 71--Commission Voting Summary and Statement of Chairman

    Appendix 1--Commission Voting Summary

    On this matter, Chairman Gensler and Commissioners Chilton,

    O'Malia, and Wetjen voted in the affirmative; no Commissioner voted

    in the negative.

    Appendix 2--Statement of Chairman Gary Gensler

    I support the final rule on ownership and control reporting as

    it provides the Commission with greater detail on both who owns

    accounts and who controls accounts in the futures, options on

    futures, and swaps markets.

    The reforms require, for the first time, that accounts which

    trade more than a certain volume in a day have to disclose who owns

    or controls them. Previously, the Commission only had a window into

    the ownership of those accounts that had large positions at the end

    of the day. This new information is critical in today's world of

    high frequency trading, as many accounts trade often throughout the

    day but end the day without reportable positions. Thus, with these

    reforms, the Commission will get additional tools to oversee the

    markets' largest day traders and high frequency traders.

    There is also flexibility built into the rule such that if some

    of the required information on accounts has already been reported

    through a legal entity identifier, the market participant does not

    have to submit it twice.

    Further this rule modernizes the reporting by requiring

    electronic submission of information, rather than by mailing or

    faxing forms.

    These reforms enhance the Commission's ability to oversee the

    markets, as well as detect market manipulation and abusive or

    disruptive trading practices.

    [FR Doc. 2013-26789 Filed 11-15-13; 8:45 am]

    BILLING CODE 6351-01-P

    Last Updated: November 18, 2013



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