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2011-17710

  • Federal Register, Volume 76 Issue 141 (Friday, July 22, 2011)[Federal Register Volume 76, Number 141 (Friday, July 22, 2011)]

    [Rules and Regulations]

    [Pages 43874-43879]

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

    [FR Doc No: 2011-17710]

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    COMMODITY FUTURES TRADING COMMISSION

    17 CFR Part 160

    RIN 3038-AD13

    Privacy of Consumer Financial Information; Conforming Amendments

    Under Dodd-Frank Act

    AGENCY: Commodity Futures Trading Commission.

    ACTION: Final rule.

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

    ``CFTC'') is amending its rules implementing new statutory provisions

    enacted by titles VII and X of the Dodd-Frank Wall Street Reform and

    Consumer Protection Act (the ``Dodd-Frank Act''). Section 1093 of the

    Dodd-Frank Act provides for certain amendments to title V of the Gramm-

    Leach-Bliley Act (the ``GLB Act''). The GLB Act sets forth certain

    protections for the privacy of consumer financial information and was

    amended by the Dodd-Frank Act to affirm the Commission's jurisdiction

    in this area. The Commission's amendments to its regulations, inter

    alia, broaden the scope of part 160 to cover two new entities created

    by title VII of the Dodd-Frank Act: swap dealers and major swap

    participants.

    DATES: Effective date: September 20, 2011.

    Compliance dates: Futures commission merchants, commodity pool

    operators, commodity trading advisors, introducing brokers, and retail

    foreign exchange dealers shall be in compliance with these rules not

    later than November 21, 2011. Swap dealers and major swap participants

    shall be in compliance with these rules not later than 60 days after

    the effective date of the final entities definition rulemaking, which

    the Commission will publish in the Federal Register at a future date.

    FOR FURTHER INFORMATION CONTACT: Carl E. Kennedy, Counsel, Office of

    General Counsel, (202) 418-6625, e-mail: c_kennedy@cftc.gov, Commodity

    Futures Trading Commission, Three Lafayette Centre, 1155 21st Street,

    NW., Washington, DC 20581.

    SUPPLEMENTARY INFORMATION:

    I. Background

    Section 5g(b) of the CEA provides the Commission with the authority

    to

    [[Page 43875]]

    prescribe regulations that establish appropriate standards for

    financial institutions subject to its jurisdiction to safeguard

    customer records and information in accordance with title V of the GLB

    Act.\1\ Pursuant to this authority, the Commission promulgated part 160

    of its regulations to require certain CFTC-regulated entities \2\ to

    adopt appropriate policies and procedures that address safeguards to

    customer records and information, including initial and annual privacy

    notice requirements, opt-out provisions to the extent that these

    registrants wish to share such records and information with non-

    affiliates, and other measures to protect nonpublic consumer

    information.\3\

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    \1\ See Gramm-Leach-Bliley Act, Public Law 106-102, 113 Stat.

    1338 (1999) (codified in scattered sections of 12 U.S.C. and 15

    U.S.C.). As enacted, title V of the GLB Act limits the instances in

    which a financial institution may disclose nonpublic personal

    information about a consumer to nonaffiliated third parties, and

    requires a financial institution to disclose to all of its customers

    the institution's privacy policies and practices with respect to

    information sharing with both affiliates and nonaffiliated third

    parties. Section 5g(b) of the CEA treats the Commission as a Federal

    functional regulator within the meaning of title V of the GLB Act.

    \2\ The Commission did not become subject to title V of the GLB

    Act until 2000. Section 5g of the CEA was added by the Commodity

    Futures Modernization Act of 2000 (7 U.S.C. 7b-2) to make the

    Commission a ``Federal functional regulator'' subject to the GLB Act

    Title V. Section 5g provides that the following entities are subject

    to the Commission's jurisdiction for the purposes of title V of the

    GLB Act: futures commission merchants (``FCMs''), commodity trading

    advisors (``CTAs''), commodity pool operators (``CPOs''), and

    introducing brokers (``IBs''). The scope of the part 160 rules

    mirrors this list of entities.

    The Commission jointly promulgated final rules with the Office

    of the Comptroller of the Currency, the Board of Governors of the

    Federal Reserve System, the Federal Depository Insurance

    Corporation, the Office of Thrift Supervision, the National Credit

    Union Administration, and the Securities and Exchange Commission

    (collectively, the ``Agencies'') on April 27, 2001. See 66 FR 21236,

    Apr. 27, 2001. On September 10, 2010, the Commission expanded the

    scope of entities subject to the part 160 rules to include retail

    foreign exchange dealers (``RFEDs'').

    \3\ Section 160.3(h)(1) of the Commission's regulations defines

    the term consumer to mean ``an individual who obtains or has

    obtained a financial product or service from [a financial

    institution] that is to be used primarily for personal, family or

    household purposes, or that individual's legal representative.''

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    On October 27, 2010, the Commission published for comment in the

    Federal Register proposed amendments to part 160 of its regulations

    (the ``Proposal'') \4\ to implement certain provisions in titles VII

    and X of the Dodd-Frank Wall Street Financial Reform and Consumer

    Protection Act (the ``Dodd-Frank Act'').\5\

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    \4\ See 75 FR 66014, Oct. 27, 2010.

    \5\ See Public Law 111-203, 124 Stat. 1376 (2010). The text of

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

    of the Dodd-Frank Act creates a new consumer financial services

    regulator, the Bureau of Consumer Financial Protection (the

    ``Bureau''), that will assume most of the consumer financial

    services regulatory responsibilities currently spread among numerous

    agencies. However, these rules will continue to apply to financial

    institutions that are subject to the Commission's jurisdiction. In

    addition, the Commission will continue to have plenary oversight

    authority over such institutions.

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    In the Proposal, the Commission sought comments on proposed

    amendments to part 160 in accordance with section 1093 \6\ and title

    VII of the Dodd-Frank Act to, inter alia, broaden the types of entities

    that are subject to the Commission's jurisdiction \7\ to provide

    certain privacy protections for consumer financial information to

    include swap dealers (SDs) and major swap participants (MSPs). In

    addition, the Commission proposed: (1) in accordance with the transfer

    of authority in title X, changing all references in part 160 from the

    FTC to the Bureau; and (2) renaming part 160 to ``Privacy of Consumer

    Financial Information under the Gramm-Leach-Bliley Act'' to harmonize

    the title of part 160 with a new part of the Commission's

    regulations.\8\

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    \6\ Specifically, section 1093 of the Dodd-Frank Act amends

    section 504 of the GLB Act by providing that ``the [CFTC] shall have

    the authority to prescribe such regulations as may be necessary to

    carry out the purposes of [title V of the GLB Act] with respect to

    any financial institutions and other persons subject to the

    jurisdiction of the [CFTC] under section 5g of the [CEA].'' As

    discussed in the proposing release, the Commission has determined

    that section 1093 simply reaffirms its authority to prescribe

    regulations under title V of the GLB Act.

    \7\ Title VII of the Dodd-Frank Act creates two new entities

    over which the Commission has jurisdiction: swap dealers (``SDs'')

    and major swap participants (``MSPs''). The terms ``SD'' and ``MSP''

    as used in this final rule refer to the statutory definitions of

    such terms as defined in title VII of the Dodd-Frank Act, and as may

    be further defined by the Commission in a future final rulemaking.

    See section 721(b) of the Dodd-Frank Act, which provides that the

    Commission has the authority to adopt rules further defining any

    term in the CEA in a manner that is consistent with the Dodd-Frank

    Act. See also section 721(c) which provides that the Commission is

    required to adopt a rule to further define, inter alia, the terms

    ``swap dealer'' and ``major swap participant'' to include

    transactions and entities that have been structured to evade

    provisions in the Dodd-Frank Act.

    \8\ In a forthcoming release, the Commission plans to promulgate

    a new part 162, which provides privacy protections under the Fair

    Credit Reporting Act, 15 U.S.C. 1681 et seq. (``FCRA'').

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    The 60-day public comment period on the Proposal expired on

    December 27, 2010. In response to the Proposal, the Commission received

    a total of six comments: Two substantive comments and four other

    comments that did not address the merits or substance of the Proposal.

    The Securities Industry and Financial Markets Association

    (``SIFMA'') commented on the following aspects of the proposal: (1) The

    proposed compliance date; (2) the annual burden estimate for the

    purpose of the Paperwork Reduction Act analysis and cost-benefit

    analysis; and (3) the appropriate standard applicable with regard to

    state laws.

    The International Swaps and Derivatives Association, Inc.

    (``ISDA'') and the Financial Services Roundtable (``FSR'') jointly

    submitted a comment letter generally in support of the Proposal. That

    is, ISDA and the FSR did not provide specific comments in response to

    the Proposal. ISDA and the FSR, however, encouraged the Commission to

    work collaboratively with other agencies to decrease duplication in

    regulation and increase efficiency industry-wide.

    The Commission's final rules, the specific comments noted above and

    the Commission's responses to those specific comments are discussed in

    greater detail below.\9\

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    \9\ This final rule incorporates technical revisions to its

    proposed amendments to add clarity. These revisions are not

    substantive and are not of the nature for which notice and comment

    must be provided under the Administrative Procedure Act. For

    example, in Sec. 160.3(x)(7), the Commission deleted the language

    ``subject to the jurisdiction of the Commission'' after the term

    ``Any swap dealer,'' since the Commission believes that the

    inclusion of such language was redundant and unnecessary.

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    II. Rule Amendments

    A. Renaming the Title of Part 160

    The Commission is renaming the title of part 160 to reflect the

    scope of the part 160 regulations. The Commission's part 160

    regulations implement certain protections for the privacy of consumer

    financial information under the GLB Act. To harmonize the title of part

    160 with the new part 162 being adopted under a separate

    rulemaking,\10\ Part 160 is renamed ``Privacy of Consumer Financial

    Information under the Gramm-Leach-Bliley Act.''

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    \10\ In a forthcoming release titled ``Business Affiliate

    Marketing and Disposal of Consumer Information Rules,'' the

    Commission will adopt a new part 162 of its regulations.

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    B. Scope of 17 CFR 160.1(b)

    Regulation 160.1(b) sets out the scope of the Commission's rules

    and identifies the financial institutions covered by the rules that

    include CFTC registrants regardless of whether they are required to

    register with the Commission. As referenced above, the Commission is

    amending the scope of part 160 to add SDs and MSPs.

    C. Section 160.3--Definitions

    Since the scope of the regulations extends to SDs and MSPs, the

    Commission amends Sec. 160.3 to add the definitions of SDs and MSPs to

    the list

    [[Page 43876]]

    of defined terms under Sec. 160.3. Specifically, the Commission

    defines ``major swap participant'' to have the same meaning as in

    section 1a(33) of the CEA, as further defined by the Commission's

    regulations, and includes any person registered as such thereunder. The

    Commission defines ``swap dealer'' to have the same meaning as in

    section 1a(49) of the CEA, as further defined by the Commission's

    regulations, and includes any person registered as such thereunder.

    There are existing definitions and related provisions under part

    160 that are amended to include these new registrants. Specifically,

    the definitions of ``financial institution'', ``affiliate'', and

    ``you'' are amended to include swap dealers and major swap

    participants.

    D. Section 160.15--Other Exceptions to Notice and Opt-out Requirements

    As noted above, title X of the Dodd-Frank Act transferred certain

    authority from the FTC to the Bureau. Accordingly, the Commission is

    changing the reference from the FTC to the Bureau in Sec. 160.15 to

    reflect that the Bureau is now a Federal functional regulator.

    E. Section 160.17(b)--Relation to State Laws

    Existing Sec. 160.17(b) of the Commission's regulations clarifies

    the relationship of title V to state consumer protection laws. As a

    result of the creation of the Bureau and the transfer of certain

    authority from the FTC to the Bureau, the Commission proposed to amend

    Sec. 160.17(b) by replacing it with the standard set out in section

    1041(a)(2) of the Dodd-Frank Act. In the Commission's view, while the

    language of the standard in section 1041(a)(2) is structured slightly

    different from the existing standard in Sec. 160.17(b), the Commission

    believed that the proposed language was nearly identical in substance

    to the current standard in Sec. 160.17(b).

    SIFMA commented that the standard for relation to state laws should

    be the same as the standard under section 507(b) of the GLB Act. SIFMA

    asserted that the appropriate standard should more closely follow

    section 507(b)--not section 1041 of the Dodd-Frank Act--because the

    former standard would achieve maximum consistency with the rules of the

    Office of the Comptroller of the Currency, the Board of Governors of

    the Federal Reserve System, the Federal Depository Insurance

    Corporation, the Office of Thrift Supervision, the National Credit

    Union Administration, and the Securities and Exchange Commission

    (collectively, the ``Agencies'') and would maintain the settled

    expectations of the market participants, which have complied with the

    standards of GLB Act for several years.

    The Commission has carefully considered SIFMA's comment and has

    amended Sec. 160.17(b) to use the language of section 507(b) of the

    GLB Act, as amended by section 1093(6) of the Dodd-Frank Act. The

    Commission recognizes that market participants are familiar with the

    standard in section 507(b) of the GLB Act, and therefore, changing the

    language of the standard ever so slightly from what is in section

    507(b) may create unnecessary and unintended confusion.

    F. Section 160.30--Procedures to Safeguard Customer Records and

    Information

    Section 160.30 requires CFTC registrants to adopt policies and

    procedures that, among other things, address administrative, technical

    and physical safeguards for the protection of customer records and

    information. The Commission amends the introductory sentence of Sec.

    160.30 to add SDs and MSPs to the list of CFTC registrants that must

    comply with this requirement.

    III. Effective Date

    In the Proposal, the Commission proposed to adopt the amendments to

    part 160 on July 21, 2011, which coincides with the designated transfer

    date when various Federal agencies transfer their consumer protection

    authority to the Consumer Financial Protection Bureau pursuant to

    section 1100H of the Dodd-Frank Act.\11\ In response to the proposed

    effective date, SIFMA expressed concern that this timeframe would not

    provide covered entities with a reasonable amount of time to address

    and implement the new rules. To address this concern, SIFMA requested

    that the Commission extend the effective date of the final rules to

    commence nine months from the date of the rules' publication in the

    Federal Register to ensure a reasonable time for compliance.

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    \11\ See 75 FR 57252-02, Sept. 20, 2010.

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    The Commission partly agrees with SIFMA's comment in that SDs and

    MSPs may need a reasonable amount of time to comply with the amendments

    to part 160 since these are two new types of Commission-regulated

    entities. The Commission, however, believes that nine months is more

    time than is necessary for these new regulated entities to comply with

    part 160. The Commission has decided to establish staggered compliance

    dates for its regulated entities that fall within the scope of part

    160.\12\ Specifically, with respect to those Commission-regulated

    entities that were previously complying with part 160--FCMs, IBs, CPOs,

    CTA, and RFEDs--the amendments to part 160 will not require that these

    entities materially alter their compliance programs. Accordingly, in

    the Commission's view, the appropriate compliance date for these

    entities is 120 days from the date of publication in the Federal

    Register. With respect to SDs and MSPs, the compliance date for these

    entities is 60 days from the date of publication of the Commission's

    final entities definitional rulemaking, which shall be published in the

    Federal Register at a date in the future.\13\

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    \12\ The effective date of the amendments to part 160 shall be

    60 days from the date of publication in the Federal Register.

    \13\ See the Commission's proposed entities definitional

    rulemaking at 75 FR 80174, Dec. 21, 2010.

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    IV. Related Matters

    A. Cost-Benefit Considerations.

    Section 15(a) of the CEA explicitly requires the Commission to

    consider the costs and benefits of its actions before issuing a rule or

    order under the CEA. By its terms, section 15(a) neither requires the

    Commission to quantify the costs and benefits of amendments to

    regulations, nor does it require the Commission to determine whether

    the benefits of the amendments outweigh its costs. Section 15(a)

    specifies that the costs and benefits shall be evaluated in light of

    five broad areas of market and public concern: (1) Protection of market

    participants and the public; (2) efficiency, competitiveness and

    financial integrity of futures markets; (3) price discovery; (4) sound

    risk management practices; and (5) other public interest

    considerations. The Commission may in its discretion give greater

    weight to any one of the five enumerated areas and could in its

    discretion determine that, notwithstanding its costs, a particular

    amendment is necessary or appropriate to protect the public interest or

    to effectuate any of the provisions or accomplish any of the purposes

    of the CEA.

    Promulgated in 2001, part 160 of the Commission's regulations

    currently applies to several types of Commission-regulated entities,

    including FCMs, IBs, CTAs, CPOs and RFEDs. The Commission proposed and

    later promulgated the rules in part 160 in concert with the Agencies in

    order to broadly protect individual customers from all types of

    regulated businesses

    [[Page 43877]]

    (including businesses that are regulated with the Commission) that have

    access to nonpublic personal information. Part 160 imposes disclosure

    and procedural requirements that are either mandated by or fully

    consistent with the privacy provisions of the GLB Act and section 5g of

    the CEA.

    The Dodd-Frank Act created two new entities over which the

    Commission has jurisdiction (i.e., SDs and MSPs), and specifically

    mandated that the Commission has the authority to prescribe regulations

    as necessary to carry out the purposes of title V of the GLB Act for

    entities under its jurisdiction. In its Proposal, the Commission

    primarily sought to expand the scope of part 160 to cover these new

    entities because the Commission believes that, like FCMs, IBs, CTAs,

    CPOs and RFEDs, these new entities are more likely to have access to

    nonpublic personal information. The cost-benefit discussion in the

    Proposal analyzed the costs and benefits of extending the existing

    regulatory regime in part 160 to these new entities.

    The Commission has considered the costs and benefits of the final

    rule in light of comments received and the specific areas of concern

    identified in section 15(a). An analysis of the section 15(a) factors

    is set out immediately below, followed by a discussion of the comments

    received in response to the Commission's cost-benefit discussion in the

    Proposal.

    1. Protection of market participants and the public. The

    requirements to provide opt out notices and to protect customer

    information will benefit market participants and the public by

    protecting the privacy of their nonpublic personal information. The

    Commission believes that extending these requirements to SDs and MSPs

    will further ensure the protection of nonpublic personal information.

    The Commission further believes that the costs, which will be placed on

    these new entities will not exceed those costs currently placed on

    FCMs, IBs, CTAs, CPOs and RFEDs. In the Commission's view, SDs and MSPs

    will likely have similar resources and administrative infrastructure to

    comply with the part 160 requirements. Moreover, while these new

    entities will likely incur some incremental costs in complying with

    part 160, the privacy protection benefits that will accrue to the

    general public far outweigh those costs.

    2. Efficiency and competition. The requirements to provide initial

    and annual privacy notices will benefit efficiency and competition by

    allowing customers to compare the privacy policies of financial

    institutions. The Commission's final rules also will benefit efficiency

    and competition by allowing SDs and MSPs flexibility to distribute

    notices and to adopt policies and procedures to protect customer

    information that are best suited to the institution's business and

    needs. As noted above, the Commission believes that the costs, which

    will be placed on these new entities will not exceed those costs

    currently placed on FCMs, IBs, CTAs, CPOs and RFEDs. Indeed, SDs and

    MSPs will likely have similar resources and administrative

    infrastructure to comply with the part 160 requirements.

    3. Price discovery and financial integrity of futures and swaps

    markets, price discovery and sound risk management practices. The final

    rules should have no effect, from the standpoint of imposing costs or

    creating benefits, on the price discovery function or financial

    integrity of the futures and swaps markets or on the risk management

    practices of SDs or MSPs.

    4. Other public interest considerations. In the same manner that

    part 160 was designed to minimize the costs of compliance on FCMs, IBs,

    CTAs, CPOs and RFEDs, part 160 will similarly provide SDs and MSPs with

    maximum flexibility, consistent with legal requirements, to design

    their own compliance systems. Ultimately, the Commission believes that

    extending the scope of part 160 to SDs and MSPs will harmonize privacy

    protections for individual customers across the futures and swaps

    markets.

    5. Response to comments. In its Proposal, the Commission solicited

    comment on its consideration of these costs and benefits. The

    Commission received one comment with respect to costs and benefits of

    the Proposal. Specifically, SIFMA argued that the Commission also

    should consider anticipated additional costs associated with monitoring

    the privacy and opt-out notice process, addressing consumer issues, and

    adjusting records to comport with consumer requests. SIFMA did not

    provide specific cost information to support its comments.

    Despite SIFMA's argument that the Commission did not consider the

    additional costs identified above, there are several Commission-

    regulated entities that already comply with part 160, and the final

    rule simply extends this protection to new registrants, SDs and MSPs.

    As noted above, the Commission believes that the costs, which will be

    placed on these new entities will be no greater than those costs

    currently placed on FCMs, IBs, CTAs, CPOs and RFEDs. In the

    Commission's view, there is no reason why SDs and MSPs should be

    excluded from these requirements to the extent that they conduct

    business with a natural person. SDs and MSPs will likely have similar

    resources and administrative infrastructure to comply with the part 160

    requirements. The additional costs that SIFMA raised (but did not

    articulate with specificity) were subsumed within the considerations

    discussed in the Proposal.\14\

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    \14\ See the Commission's cost-benefit discussion and Paperwork

    Reduction Act analysis at 75 FR at 66016-17.

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    In line with Section 15(a) of the CEA, the Commission believes that

    extending these provisions to SDs and MSPs is in the public interest

    and will further protect market the general public, promote efficiency

    and competition, and address other public interest considerations such

    as the harmonization of regulation across the futures and swaps

    markets. In the Commission's view, these benefits far outweigh the

    additional costs that SIFMA cited.

    B. Paperwork Reduction Act.

    This rule contains information collection requirements. As required

    by the Paperwork Reduction Act of 1995, 44 U.S.C. 3501 et seq., the

    Commission submitted a copy of the Proposal to the Office of Management

    and Budget (``OMB'') for review. The Commission may not sponsor, and a

    person is not required to respond to an information collection unless

    it displays a currently valid OMB control number.

    The final rule, affecting part 160, titled ``Privacy of Consumer

    Financial Information,'' OMB Control Number 3038-0055, expands the

    scope of this part to cover SDs and MSPs, two new classes of

    registrants, now subject to Commission jurisdiction. The final rule

    imposes mandatory requirements for these entities. SDs and MSPs must

    provide initial and annual privacy and opt-out notices to all customers

    that are natural persons.

    In response to the Commission's request in the notice of proposed

    rulemaking for comments on any potential paperwork burden associated

    with this regulation, only one commenter provided a substantive comment

    addressing the merits of the Commission's proposed PRA calculations. In

    particular, SIFMA proposed that the burden estimate should be refined

    to reflect anticipated additional burden hours associated with

    monitoring the privacy and opt-out notice process, addressing consumer

    issues, and adjusting records to comport with consumer requests.

    [[Page 43878]]

    Based on this comment, the Commission estimates that the

    approximately 300 SDs and MSPs may incur additional burden hours.

    Consequently, it is anticipated the 300 SDs and MSPs may incur an

    additional aggregate of 1440 burden hours than what was stated in the

    Proposal, monitoring an average of 20 notices per year, with an average

    monitoring time of .24 hours per notice. Accordingly, the Commission

    has submitted to the OMB an amended calculation of the annual burden

    hours for SDs and MSPs. OMB has approved a revision to Control Number

    3038-0055 to cover the revision in the Commission's annual burden

    calculation.

    C. Regulatory Flexibility Act.

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., requires that

    Federal agencies consider whether their proposed regulations will have

    a significant economic impact on a substantial number of small

    entities. The rule amendments adopted herein now will affect SDs and

    MSPs, in addition to the certain Commission regulated entities that are

    currently subject to Commission's regulations under part 160. These

    regulations require periodic notice to be provided to individuals who

    obtain financial products or services primarily for personal, family,

    or household purposes from the institutions, and may be satisfied by

    the use of a model notice developed by the Commission and other

    regulatory agencies to minimize the burden of compliance. The

    Commission certified in the Proposal that these rules will not have a

    significant economic impact on a substantial number of small entities.

    Accordingly, because the Commission received no substantive comments

    from the public addressing the merits of the proposed rule, nothing

    alters the Commission's determination that the obligations created by

    these rule amendments will not create a significant economic impact on

    a substantial number of small entities.

    D. Regulatory Text.

    List of Subjects in 17 CFR Part 160

    Brokers, Dealers, Consumer protection, Privacy, Reporting and

    recordkeeping requirements.

    For the reasons articulated in the preamble, the Commission amends

    part 160 of title 17 of the Code of Federal Regulations as follows:

    0

    1. The authority citation for part 160 is revised to read as follows:

    Authority: 7 U.S.C. 7b-2 and 12a(5); 15 U.S.C 6801, et seq.,

    and sec. 1093, Pub. L. 111-203, 124 Stat. 1376.

    0

    2. The heading for part 160 is revised to read as follows:

    PART 160--PRIVACY OF CONSUMER FINANCIAL INFORMATION UNDER TITLE V

    OF THE GRAMM-LEACH-BLILEY ACT

    0

    3. Amend section 160.1 by revising paragraph (b) to read as follows:

    Sec. 160.1 Purpose and scope.

    * * * * *

    (b) Scope. This part applies only to nonpublic personal information

    about individuals who obtain financial products or services primarily

    for personal, family, or household purposes from the institutions

    listed below. This part does not apply to information about companies

    or about individuals who obtain financial products or services

    primarily for business, commercial, or agricultural purposes. This part

    applies to all futures commission merchants, retail foreign exchange

    dealers, commodity trading advisors, commodity pool operators,

    introducing brokers, major swap participants and swap dealers that are

    subject to the jurisdiction of the Commission, regardless whether they

    are required to register with the Commission. These entities are

    hereinafter referred to in this part as ``you.'' This part does not

    apply to foreign (non-resident) futures commission merchants, retail

    foreign exchange dealers, commodity trading advisors, commodity pool

    operators, introducing brokers, major swap participants and swap

    dealers that are not registered with the Commission.

    0

    4. Amend Sec. 160.3 as follows:

    0

    a. Revise paragraphs (a), (n)(1)(i), (n)(1)(ii), and (o)(1)(i);

    0

    b. Redesignating paragraphs (w) and (x) as paragraphs (y) and (z);

    0

    c. Redesignating paragraphs (s) through (v) as paragraphs (t) through

    (w);

    0

    d. Adding new paragraphs (s) and (x);

    0

    e. Revising new designated paragraphs (y)(4) and (y)(5); and

    0

    f. Adding new paragraph (y)(6) and (7) to read as follows:

    Sec. 160.3 Definitions.

    * * * * *

    (a) Affiliate of a futures commission merchant, retail foreign

    exchange dealer, commodity trading advisor, commodity pool operator,

    introducing broker, major swap participant, or swap dealer means any

    company that controls, is controlled by, or is under common control

    with a futures commission merchant, retail foreign exchange dealer,

    commodity trading advisor, commodity pool operator, introducing broker,

    major swap participant, or swap dealer that is subject to the

    jurisdiction of the Commission. In addition, a futures commission

    merchant, retail foreign exchange dealer, commodity trading advisor,

    commodity pool operator, introducing broker, major swap participant, or

    swap dealer subject to the jurisdiction of the Commission will be

    deemed an affiliate of a company for purposes of this part if:

    (1) That company is regulated under title V of the GLB Act by the

    Bureau of Consumer Financial Protection or by a Federal functional

    regulator other than the Commission; and

    (2) Rules adopted by the Bureau of Consumer Financial Protection or

    another Federal functional regulator under title V of the GLB Act treat

    the futures commission merchant, retail foreign exchange dealer,

    commodity trading advisor, commodity pool operator, introducing broker,

    major swap participant, or swap dealer as an affiliate of that company.

    * * * * *

    (n)(1) * * *

    (i) Any futures commission merchant, retail foreign exchange

    dealer, commodity trading advisor, commodity pool operator, introducing

    broker, major swap participant, or swap dealer that is registered with

    the Commission as such or is otherwise subject to the Commission's

    jurisdiction; and

    * * * * *

    (2) * * *

    (i) Any person or entity, other than a futures commission merchant,

    retail foreign exchange dealer, commodity trading advisor, commodity

    pool operator, introducing broker, major swap participant, or swap

    dealer that, with respect to any financial activity, is subject to the

    jurisdiction of the Commission under the Act.

    * * * * *

    (o)(1) * * *

    (i) Any product or service that a futures commission merchant,

    retail foreign exchange dealer, commodity trading advisor, commodity

    pool operator, introducing broker, major swap participant, or swap

    dealer could offer that is subject to the Commission's jurisdiction;

    and

    * * * * *

    (s) Major swap participant. The term ``major swap participant'' has

    the same meaning as in section 1a(33) of the Commodity Exchange Act, 7

    U.S.C. 1 et seq., as may be further defined by this title, and includes

    any person registered as such thereunder.

    * * * * *

    [[Page 43879]]

    (x) Swap dealer. The term ``swap dealer'' has the same meaning as

    in section 1a(49) of the Commodity Exchange Act, 7 U.S.C. 1 et seq., as

    may be further defined by this title, and includes any person

    registered as such thereunder.

    * * * * *

    (y) * * *

    (4) Any commodity pool operator;

    (5) Any introducing broker;

    (6) Any major swap participant; and

    (7) Any swap dealer.

    * * * * *

    0

    5. Revise Sec. 160.15(a)(4) to read as follows:

    Sec. 160.15 Other exceptions to notice and opt out requirements.

    * * * * *

    (4) To the extent specifically permitted or required under other

    provisions of law and in accordance with the Right to Financial Privacy

    Act of 1978, 12 U.S.C. 3401 et seq., to law enforcement agencies

    (including a Federal functional regulator, the Secretary of the

    Treasury, with respect to 31 U.S.C. Chapter 53, Subchapter II (Records

    and Reports on Monetary Instruments and Transactions) and 12 U.S.C.

    Chapter 21 (Financial Recordkeeping), a State insurance authority, with

    respect to any person domiciled in that insurance authority's state

    that is engaged in providing insurance, and the Bureau of Consumer

    Financial Protection), self-regulatory organizations, or for an

    investigation on a matter related to public safety;

    * * * * *

    0

    6. Amend Sec. 160.17 by revising paragraph (b) to read as follows:

    Sec. 160.17 Relation to state laws.

    * * * * *

    (b) Greater protection under state law. For purposes of this

    section, a state statute, regulation, order or interpretation is not

    inconsistent with the provisions of this part if the protection such

    statute, regulation, order or interpretation affords any person is

    greater than the protection provided under this part, as determined by

    the Bureau of Consumer Financial Protection, after consultation with

    the Commission, on its own motion or upon the petition of any

    interested party.

    0

    7. Revise Sec. 160.30 to read as follows:

    Sec. 160.30 Procedures to safeguard customer records and information.

    Every futures commission merchant, retail foreign exchange dealer,

    commodity trading advisor, commodity pool operator, introducing broker,

    major swap participant, and swap dealer subject to the jurisdiction of

    the Commission must adopt policies and procedures that address

    administrative, technical and physical safeguards for the protection of

    customer records and information.

    Issued in Washington, DC on July 7, 2011 by the Commission.

    David A. Stawick,

    Secretary of the Commission.

    Appendices to Privacy of Consumer Financial Information; Conforming

    Amendments Under Dodd-Frank Act--Commission Voting Summary and

    Statements of Commissioners

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

    Federal Regulations.

    Appendix 1--Commission Voting Summary

    On this matter, Chairman Gensler and Commissioners Dunn,

    Sommers, O'Malia and Chilton voted in the affirmative; no

    Commissioner voted in the negative.

    Appendix 2--Statement of Chairman Gary Gensler

    I support the final rulemaking to expand the scope of privacy

    protections for consumer financial information under the Gramm-

    Leach-Bliley Act. The rulemaking expands the scope of the

    Commission's existing privacy protections afforded to consumers'

    information--under the Commission's Part 160 rules--to swap dealers

    and major swap participants.

    [FR Doc. 2011-17710 Filed 7-21-11; 8:45 am]

    BILLING CODE 6351-01-P

    Last Updated: July 22, 2011