Font Size: AAA // Print // Bookmark


  • Federal Register, Volume 77 Issue 159 (Thursday, August 16, 2012)[Federal Register Volume 77, Number 159 (Thursday, August 16, 2012)]


    [Pages 49428-49430]

    From the Federal Register Online via the Government Printing Office []

    [FR Doc No: 2012-20123]




    Agency Information Collection Activities; Proposed Collection,

    Comment Request: Further Definition of ``Swap,'' ``Security-Based

    Swap,'' and ``Security-Based Swap Agreement''; Mixed Swaps; Security-

    Based Swap Agreement Recordkeeping: Book-out Agreement Confirmation

    AGENCY: Commodity Futures Trading Commission.

    ACTION: Notice.


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

    ``CFTC'') is announcing an opportunity for public comment on the

    proposed collection of certain information by the agency. Under the

    Paperwork Reduction Act (``PRA''), 44 U.S.C. 3501 et seq., Federal

    agencies are required to publish notice in the Federal Register

    concerning each proposed collection of information and to allow 60 days

    for public comment. The Commission recently adopted a final rule and

    interpretations, as required by the Dodd-Frank Wall Street Reform and

    Consumer Protection Act (``Dodd-Frank Act''), requiring that oral book-

    out agreements must be followed in a commercially reasonable timeframe

    by a confirmation in some type of written or electronic form. This

    notice solicits comments on the recordkeeping requirement that is

    embedded in the final interpretation's reporting requirement.

    DATES: Comments must be submitted on or before October 15, 2012.

    ADDRESSES: You may submit comments, regarding the burden estimated or

    any other aspect of the information collection, including suggestions

    for reducing the burden, by any of the following methods:

    Office of Information and Regulatory Affairs, Office of

    Management and Budget, Attention: Desk Officer for CFTC, 725 17th

    Street, Washington, DC 20503.

    Comments may also be submitted by any of the following methods:

    The Agency's Web site, at

    Follow the instructions for submitting comments through the Web site.

    Mail: David A. Stawick, Secretary of the Commission,

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

    Street NW., Washington, DC 20581.

    Hand Delivery/Courier: Same as mail above.

    Federal eRulemaking Portal:

    Please submit your comments using only one method.

    All comments must be submitted in English, or if not, accompanied

    by an English translation. Comments will be posted as received to If you wish the Commission to consider information that

    you believe is exempt from disclosure under the Freedom of Information

    Act, a petition for confidential treatment of the exempt information

    may be submitted according to the procedures established in Sec. 145.9

    of the Commission's regulations.\1\


    \1\ See 17 CFR 145.9.

    FOR FURTHER INFORMATION CONTACT: Julian E. Hammar, Assistant General

    Counsel, at 202-418-5118,; Lee Ann Duffy, Assistant

    General Counsel, at 202-418-6763,; or David E. Aron,

    Counsel, at 202-418-6621,, Office of General Counsel,

    Commodity Futures Trading

    [[Page 49429]]

    Commission, Three Lafayette Centre, 1155 21st Street NW., Washington,


    DC 20581.

    SUPPLEMENTARY INFORMATION: Under the PRA, Federal agencies must obtain

    approval from the Office of Management and Budget (``OMB'') for each

    collection of information they conduct or sponsor. ``Collection of

    Information'' is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3 and

    includes agency requests or requirements that members of the public

    submit reports, keep records, or provide information to a third party.

    Section 3506(c)(2)(A) of the PRA, 44 U.S.C. 3506(c)(2)(A), requires

    Federal agencies to provide a 60-day notice in the Federal Register

    concerning each proposed collection of information before submitting

    the collection to OMB for approval. 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. To

    comply with this requirement, the CFTC is publishing the notice of the

    proposed collection of information listed below.

    Abstract: In accordance with section 712(a)(8), section 712(d)(1),

    sections 712(d)(2)(B) and (C), sections 721(b) and (c), and section

    761(b) of the Dodd-Frank Act, on July 10, 2012, the Commodity Futures

    Trading Commission (``CFTC'') and the Securities and Exchange

    Commission (``SEC'') (collectively, ``Commissions''), in consultation

    with the Board of Governors of the Federal Reserve System (``Board''),

    jointly adopted new rules and interpretations under the Commodity

    Exchange Act (``CEA'') and the Securities Exchange Act of 1934

    (``Exchange Act'') to further define the terms ``swap,'' ``security-

    based swap,'' and ``security-based swap agreement'' (collectively,

    ``Product Definitions''); regarding ``mixed swaps;'' and governing

    books and records with respect to ``security-based swap agreements''

    (collectively, ``Adopting Release'').\2\


    \2\ 77 FR 48207, August 13, 2012 (``Product Definitions'').


    In the Adopting Release, the CFTC clarified that its ``Brent

    Interpretation'' regarding book-outs developed in connection with the

    forward exclusion from futures applies to the forward exclusion from

    the swap definition as well. As noted in the Adopting Release, the

    issue of book-outs first arose in 1990 in the CFTC's Brent

    Interpretation. Citing to the Brent Interpretation's description of

    book-outs, the Adopting Release stated:

    It is noteworthy that while such [book-out] agreements may

    extinguish a party's delivery obligation, they are separate,

    individually negotiated, new agreements, there is no obligation or

    arrangement to enter into such agreements, they are not provided for

    by the terms of the contracts as initially entered into, and any

    party that is in a position in a distribution chain that provides

    for the opportunity to book-out with another party or parties in the

    chain is nevertheless entitled to require delivery of the commodity

    to be made through it, as required under the contracts.\3\


    \3\ Statutory Interpretation Concerning Forward Transactions, 55

    FR 39188, 39192 Sept. 25, 1990, (``Brent Interpretation'').

    In response to a comment to the proposed rule, the interpretation

    included in the Adopting Release clarified that an oral book-out

    agreement must be followed in a commercially reasonable timeframe by a

    confirmation in some type of written or electronic form. If a party to

    a contract elects to enter into such a book-out agreement, the

    collection of information would be mandatory to qualify for the Brent

    Interpretation Safe Harbor. If the Commission obtains information

    required to be kept through this collection, it would protect

    proprietary information in accordance with the Freedom of Information

    Act and 17 CFR part 145, ``Commission Records and Information.'' In

    addition, Section 8(a)(1) of the CEA strictly prohibits the Commission,

    unless specifically authorized by the CEA, from making public ``data

    and information that would separately disclose the business

    transactions or market positions of any person and trade secrets or

    names of customers.'' \4\ 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.


    \4\ 7 U.S.C. 12(a)(1).


    Burden Statement: The respondent burden for this collection is

    estimated to be 10 minutes per response. This estimate includes the

    time to prepare the written or electronic confirmation to an oral book-

    out agreement. The Commission estimates the average burden of this

    collection of information as follows:


    \5\ Cost per response: .166 x $100, Average: 1.5 x .166 x $100.

    The Commission estimates that entities will spend $100 per hour. The

    $100 per hour estimate was used as the average hourly wage rate in

    the PRA section of the Internal Business Conduct Standards for Swap

    Dealers and Major Swap Participants final rule (See 77 FR 20128,

    20194) and the wage rate for Chief Compliance Officers under the

    Derivatives Clearing Organization final rules (See 76 FR 69344,

    69428). As the Commission explained in the Internal Business Conduct

    Standards final rule, the estimate of $100 per hour was based on

    recent Bureau of Labor Statistics findings, including the mean

    hourly wage of an employee under occupation code 23-1011,

    ``Lawyers,'' that is employed by the ``Securities and Commodity

    Contracts Intermediation and Brokerage Industry,'' which is $82.22.

    The mean hourly wage of an employee under occupation code 11-3031,

    ``Financial Manager,'' in the same industry is $74.41. Additionally,

    SIFMA's ``Report on Management & Professional Earnings in the

    Securities Industry--2010'' estimates the average wage of a

    compliance attorney and a compliance staffer in the U.S. at only

    $46.31 per hour. As in those rules, the Commission is using a $100

    per hour wage rate in calculating the cost burdens imposed by this

    collection of information and requests comment on the accuracy of

    its estimate.

    \6\ Total number of hours arrived by multiplying the average

    number of responses, [(30,000 + 60,000)/2] x .166 minutes = 7,470


    \7\ 7,470 hours x $100 per hour = $747,000.

    Estimated Annual Reporting Burden Hours


    Frequency of Hours per

    17 CFR Annual number response per response and Total annual Total hours

    of respondents respondent cost responses cost


    17 CFR Part 1............... 30,000 On occasion, 1- 10 minutes per 45,000, 7,470 (average

    2 annually. response (.166 (average of 1- of 5,000-

    hour), at 2 annually for 10,000 total

    $16.60 per a total of hours

    response.\5\ 30,000-60,000 annually; \6\

    annually). $747,000,

    based on $100/



    Respondents/Affected Entities: 30,000.

    Estimated average number of responses: 45,000 [1-2 annually for a

    total of 30,000-60,000 annually]

    Estimated total average annual burden on respondents: 7,470 [5,000-

    10,000] hours.

    [[Page 49430]]

    Frequency of collection: Occasionally, 1-2 annually.

    Average total cost: $747,000.

    There are no capital costs or operating and maintenance costs

    associated with this collection. The Commission believes that, as part

    of customary and usual business practices, most respondents already

    create and store book-out agreements in either a written or electronic


    The Commission invites comments on:

    Whether the proposed collection of information is

    necessary for the proper performance of the functions of the

    Commission, including whether the information will have a practical


    The accuracy of the Commission's estimate of the burden of

    the proposed collection of information, including the validity of the

    methodology and assumptions used;

    Ways to enhance the quality, usefulness, and clarity of

    the information to be collected; and

    Ways to minimize the burden of collection of information

    on those who are to respond, including through the use of appropriate

    automated electronic, mechanical, or other technological collection

    techniques or other forms of information technology; e.g., permitting

    electronic submission of responses.

    Dated: August 13, 2012.

    Sauntia Warfield,

    Assistant Secretary of the Commission.

    [FR Doc. 2012-20123 Filed 8-15-12; 8:45 am]


    Last Updated: August 16, 2012

See Also:

OpenGov Logo

CFTC's Commitment to Open Government

Gavel and Book

Follow the Status of Enforcement Actions