2019-08253
Federal Register, Volume 84 Issue 80 (Thursday, April 25, 2019)
[Federal Register Volume 84, Number 80 (Thursday, April 25, 2019)]
[Rules and Regulations]
[Pages 17341-17345]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-08253]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 84, No. 80 / Thursday, April 25, 2019 / Rules
and Regulations
[[Page 17341]]
COMMODITY FUTURES TRADING COMMISSION
17 CFR Part 160
RIN 3038-AE80
Privacy of Consumer Financial Information--Amendment To Conform
Regulations to the Fixing America's Surface Transportation Act
AGENCY: Commodity Futures Trading Commission.
ACTION: Final rule.
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SUMMARY: The Commodity Futures Trading Commission (``CFTC'' or
``Commission'') is adopting amendments to revise its regulations
requiring covered persons to provide annual privacy notices to
customers. The revisions implement the Fixing America's Surface
Transportation Act's (``FAST Act'') December 2015 statutory amendment
to the Gramm-Leach-Bliley Act (``GLB Act'') by providing an exception
to the annual notice requirement under certain conditions.
DATES: This final rule is effective May 28, 2019.
FOR FURTHER INFORMATION CONTACT: Matthew Kulkin, Director, (202) 418-
5213, [email protected]; Frank Fisanich, Chief Counsel, (202) 418-5949,
[email protected]; or Jacob Chachkin, Special Counsel, (202) 418-5496,
[email protected], Division of Swap Dealer and Intermediary Oversight,
Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st
Street NW, Washington, DC 20581.
SUPPLEMENTARY INFORMATION:
I. Background
Title V, Subtitle A of the GLB Act \1\ (``Title V'') mandates that
financial institutions provide their consumers with whom they have
customer relationships (``customers'') with annual notices regarding
those institutions' privacy policies and practices.\2\ Further, subject
to certain exceptions, if financial institutions share nonpublic
personal information with particular types of third parties, the
financial institutions must also provide their consumers with an
opportunity to opt out of the sharing.\3\ The Commission and entities
subject to its jurisdiction were originally excluded from Title V's
coverage.\4\ However, section 124 of the Commodity Futures
Modernization Act of 2000 \5\ amended the Commodity Exchange Act
(``CEA'') to add section 5g,\6\ providing that futures commission
merchants (``FCMs''), commodity trading advisors (``CTAs''), commodity
pool operators (``CPOs''), and introducing brokers (``IBs'') \7\ fall
under the requirements of Title V and requiring the Commission to
prescribe regulations in furtherance of Title V. Thus, in 2001, the
Commission promulgated part 160 of its regulations to establish
standards relating to Title V.\8\
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\1\ Title V, Subtitle A, Public Law 106-102, 113 Stat. 1338
(1999), as codified at 15 U.S.C. 6801-6809.
\2\ See 15 U.S.C. 6803.
\3\ See 15 U.S.C. 6802(b). See also 15 U.S.C. 6809(4)(A)
(defining ``nonpublic personal information'').
\4\ 15 U.S.C. 6809(3)(B).
\5\ Section 124, Appendix E of Public Law 106-554, 114 Stat.
2763 (2000).
\6\ 7 U.S.C. 7b-2.
\7\ For the definitions of these intermediary categories, see
section 1a of the CEA and Sec. 1.3 of the Commission's regulations.
7 U.S.C. 1a and 17 CFR 1.3.
\8\ Privacy of Customer Information, 66 FR 21235 (April 27,
2001). The Commission later modified its part 160 regulations to
apply them to retail foreign exchange dealers (``RFEDs''), swap
dealers (``SDs''), and major swap participants (``MSPs'').
Regulation of Off-Exchange Retail Foreign Exchange Transactions and
Intermediaries, 75 FR 55409 (Sept. 10, 2010) for RFEDs, and Privacy
of Consumer Financial Information; Conforming Amendments Under Dodd-
Frank Act, 76 FR 43874 (July 22, 2011) for SDs and MSPs. For the
definition of RFED, see Sec. 5.1(h). 17 CFR 5.1(h). For the
definitions of SD and MSP, see section 1a of the CEA and Sec. 1.3
of the Commission's regulations. 7 U.S.C. 1a and 17 CFR 1.3.
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Consistent with Title V, part 160 requires that, generally, all
FCMs, RFEDs, CTAs, CPOs, IBs, MSPs, and SDs that are subject to the
jurisdiction of the Commission, regardless of whether they are required
to register with the Commission (``Covered Persons''), provide a clear
and conspicuous notice to customers that accurately reflects their
privacy policies and practices not less than annually during the life
of the customer relationship.\9\
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\9\ 17 CFR 160.1 and 160.5. Part 160 does not apply to foreign
(non-resident) FCMs, RFEDs, CTAs, CPOs, IBs, MSPs, and SDs that are
not registered with the Commission. 17 CFR 160.1. Therefore, they
are not ``Covered Persons'' as defined in this release.
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On December 4, 2015, Congress amended Title V as part of the FAST
Act.\10\ This amendment, titled ``Eliminate Privacy Notice Confusion,''
added section 503(f) to the GLB Act to limit the circumstances under
which a financial institution must provide a privacy notice to its
customers on an annual basis.\11\ In particular, under section 503(f),
a financial institution is excepted from the requirement to send
privacy notices on an annual basis if that financial institution (1)
does not share nonpublic personal information except as described in
certain specified exceptions; and (2) has not changed its policies and
practices with regard to disclosing nonpublic personal information from
those policies and practices that the institution disclosed in the most
recent disclosure it sent to consumers in accordance with section
503.\12\ This amendment to the GLB Act became effective upon enactment
of the FAST Act in December 2015.
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\10\ Section 75001, Public Law 114-94, 129 Stat. 1312 (2015),
available at http://transportation.house.gov/uploadedfiles/fastact_xml.pdf (last visited Nov. 30, 2018).
\11\ Id.
\12\ See 15 U.S.C. 6803(f).
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II. Proposal
On December 10, 2018, the Commission published a Notice of Proposed
Rulemaking (the ``NPRM'') \13\ to amend Sec. 160.5 of the Commission's
regulations (the ``Proposal'') to implement the FAST Act amendments to
the GLB Act with respect to Covered Persons.\14\ Specifically, the
Commission proposed to modify Sec. 160.5(a) to add a reference to an
exception, contained in
[[Page 17342]]
a new paragraph (d), to the requirement that a Covered Person annually
provide a clear and conspicuous notice to customers that reflects the
Covered Person's privacy policies and practices (``annual privacy
notice'') during the life of the customer relationship. The Commission
proposed to describe that exception in Section 160.5(d)(1) by stating
that a Covered Person is not required to deliver an annual privacy
notice to customers pursuant to Sec. 160.5(a) if it: (1) Provides
nonpublic personal information to nonaffiliated third parties only in
accordance with the provisions of Sec. Sec. 160.13, 160.14, 160.15 and
any other exceptions adopted by the Commission pursuant to section
504(b) of the GLB Act; \15\ and (2) has not changed its policies and
practices with regard to disclosing nonpublic personal information from
the policies and practices that were disclosed to the customer under
Sec. 160.6(a)(2) through (5) and Sec. 160.6(a)(9) \16\ in the most
recent privacy notice provided to such customer pursuant to part 160 of
the Commission's regulations.
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\13\ 83 FR 63450 (Dec. 10, 2018).
\14\ In developing the Proposal, pursuant to Section 6804(a)(2)
of the GLB Act, the Commission consulted and coordinated with the
Bureau of Consumer Financial Protection (``CFPB''), the Securities
and Exchange Commission, the Federal Trade Commission, and the
National Association of Insurance Commissioners regarding
consistency and comparability with the regulations prescribed by
such agencies. See 15 U.S.C. 6804(a)(2). In addition, the Proposal
was consistent with rules recently finalized by the CFPB (``CFPB
Final Rule''). See Amendment to the Annual Privacy Notice
Requirement Under the Gramm-Leach-Bliley Act (Regulation P), 83 FR
40945 (Aug. 17, 2018).
\15\ Section 503(f)(1) of the GLB Act permits a financial
institution to share nonpublic personal information in accordance
with the provisions of sections 502(b)(2) or (e) of the GLB Act or
regulations prescribed under section 504(b) of the GLB Act. See 15
U.S.C. 6802 and 6803. Sharing by a financial institution, as
described in sections 502(b)(2) or (e), does not trigger the
consumer's statutory right to opt out of such sharing. These
exceptions are incorporated into existing Commission regulations at
17 CFR 160.13 (Exception to opt out requirements for service
providers and joint marketing), 160.14 (Exceptions to notice and opt
out requirements for processing and servicing transactions), and
160.15 (Other exceptions to notice and opt out requirements).
Section 504(b) of the GLB Act gives the Commission and other
relevant agencies authority to include additional exceptions to
certain regulations promulgated under Title V as are deemed
consistent with Title V's purposes. See 15 U.S.C. 6804(b).
\16\ Paragraphs (1) through (9) of Sec. 160.6(a) set forth the
specific types of information that a Covered Person must include in
its privacy notices. 17 CFR 160.6 (a)(1)-(9). As discussed in the
Proposal, the information required by Sec. 160.6(a)(2) through (5)
and Sec. 160.6(a)(9), which Sec. 160.5(d)(1)(ii) references,
specifically relate to the policies and practices connected to
disclosing nonpublic personal information. As new GLB Act section
503(f)(2) states that a condition for the annual privacy notice
exception is that a financial institution must not have changed its
policies and practices with regard to disclosing nonpublic personal
information from the policies and practices that were disclosed in
the most recent notice sent to consumers, the Commission is framed
the scope of the proposed exception to reference only the types of
information listed in Sec. 160.6(a)(2) through (5) and Sec.
160.6(a)(9).
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In addition, because, as discussed in the Proposal, the GLB Act is
silent as to when a financial institution that has relied on and no
longer meets the requirements of the exception must next provide an
annual privacy notice, the Commission proposed a framework for these
circumstances. Specifically, proposed Sec. 160.5(d)(2) stated that a
Covered Person who has been excepted from delivering an annual privacy
notice pursuant to Sec. 160.5(d)(1) and who changes its policies or
practices in such a way that it no longer meets the requirements for
that exception, would, if such a change required a revised privacy
notice pursuant to Sec. 160.8,\17\ be required to provide an annual
privacy notice in accordance with the timing requirements in Sec.
160.5(a), treating the revised privacy notice as an initial privacy
notice. Further, if the change in policies or practices did not require
a revised privacy notice pursuant to Sec. 160.8 to be sent, a Covered
Person who has been previously excepted from delivering an annual
privacy notice would be required to provide an annual privacy notice to
customers within 100 days of the change in their policies or
practices.\18\
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\17\ 17 CFR 160.8 (Revised privacy notices).
\18\ In developing this framework, the Commission looked to
Sec. 160.8 because that provision already addresses circumstances
in which a Covered Person might change its privacy policies or
practices in a way that affects the content of the notices.
Specifically, Sec. 160.8 requires that a Covered Person provide a
revised notice to consumers before implementing certain types of
changes. In other cases, part 160 currently contemplates that a
change in policy or practice that affects the content of the notices
would simply be reflected on the next regular annual notice provided
to customers pursuant to Sec. 160.5. The Commission therefore
proposed different timing requirements for resumption of delivery of
annual notices, depending on whether the change at issue would
trigger the requirement for a revised notice under Sec. 160.8 prior
to the change taking effect.
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As discussed in the Proposal, the Commission proposed this 100-day
period because the Commission believes the annual privacy notice should
be delivered within a relatively short time so that customers are
informed of the change in a timely manner. Further, the Commission
stated its belief that 100 days would allow a Covered Person to meet
the notice requirement without imposing additional costs on Covered
Persons; particularly, a 100-day delivery period would accommodate the
inclusion of the notice with their quarterly statements.\19\ In
addition, this 100-day delivery period is required under the CFPB Final
Rule, and the Commission stated that proposing the same delivery
requirement as the CFPB furthers the Commission's goal of having its
regulations be consistent with those of other regulators, where
appropriate.
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\19\ The Commission also noted in the Proposal that a delivery
requirement resulting from a change in policies and practices
described under proposed Commission regulation 160.5(d)(1)(ii) is
effectively a one-time burden for a Covered Person absent additional
changes to its policies and practices. Specifically, under the
Proposal, after providing the one annual privacy notice, the Covered
Person would once again meet both of the conditions for the
exception--it would not be sharing other than as described under
Commission regulation 160.5(d)(1)(i) and its policies and practices
would not have changed since it provided the annual privacy notice.
Because the Covered Person would once again meet the conditions for
the exception, it would not be required to provide future annual
privacy notices.
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In order to ensure that the Proposal, if adopted, achieved its
stated purpose, the Commission requested comments generally on all
aspects of the Proposal and the NPRM,\20\ as well as comments on
certain specific matters discussed below. The comment period for the
Proposal ended on February 8, 2019.
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\20\ Proposal, 83 FR at 63453.
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III. Summary of Comments and Final Rule
The Commission received one relevant comment,\21\ which was
supportive of the Proposal.
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\21\ The Commission also received one comment that was not
relevant to the Proposal. These comments are available at https://comments.cftc.gov/PublicComments/CommentList.aspx?id=2938.
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The Commission is adopting the final rule (``Final Rule'') as
proposed. Accordingly, the Commission is adopting the amendments to
Commission regulation 160.5 as shown in the rule text in this document
and for the reasons discussed in the Proposal and reiterated above.
IV. Related Matters
A. Regulatory Flexibility Act
The Regulatory Flexibility Act \22\ (``RFA'') requires federal
agencies to consider whether the rules they propose will have a
significant economic impact on a substantial number of small entities
and, if so, to provide a regulatory flexibility analysis regarding the
economic impact on those entities. In the Proposal, the Commission
certified that the Proposal would not have a significant economic
impact on a substantial number of small entities. The Commission
requested comments with respect to the RFA and received no such
comments.
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\22\ 5 U.S.C. 601 et seq.
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As discussed in the Proposal, the Final Rule adds an exception to
Sec. 160.5's requirement that Covered Persons deliver annual privacy
notices, as discussed above. The Final Rule affects Covered Persons
(i.e., certain FCMs, RFEDs, CTAs, CPOs, IBs, MSPs, and SDs). To the
extent that the Final Rule will impact Covered Persons that may be
small entities for purposes of the RFA,\23\ the Commission considered
[[Page 17343]]
whether the Final Rule will have a significant economic impact on such
Covered Persons.
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\23\ The Commission has previously determined that certain
entities are not ``small entities'' for purposes of the RFA. See,
e.g., 47 FR 18618, 18619 (Apr. 30, 1982) (registered FCMs); 75 FR
55410, 55416 (Sept. 10, 2010) (RFEDs); 77 FR 2613, 2620 (Jan. 19,
2012) (SDs and MSPs). However, the Commission has determined that
CPOs exempt pursuant to 17 CFR 4.13(a) are small entities. See 46 FR
26004 (May 8, 1981); 47 FR at 18619. The definitions of IB and CTA
are also broad enough to potentially encompass ``small entities.''
See 48 FR 35248, 35276 (Aug. 3, 1983) (recognizing that the IB
definition ``undoubtedly encompasses many business enterprises of
variable size''); 47 FR at 18620 (the category of CTAs is ``too
broad'' for a general determination regarding their small entity
status).
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As a Covered Person may continue to provide annual privacy notices
and not avail itself of the exception to the annual privacy notice
requirement in Sec. 160.5, the Final Rule will not impose any new
regulatory obligations on Covered Persons, including Covered Persons
that may be small entities for purposes of the RFA. Rather, to the
extent that a Covered person relies on the exception, it would simply
avoid providing a privacy notice annually until such time as it is no
longer eligible for the exception. The Final Rule's clarification that,
once it is no longer eligible for the exception, the Covered Person
needs to provide a privacy notice either in accordance with existing
Sec. 160.8 or within 100 days also does not result in any new burdens.
Sections 160.5 and 160.8 are existing requirements to deliver annual
privacy notices and revised privacy notices under certain
circumstances. Further, the Commission endeavors to reduce any burdens
for those Covered Persons utilizing the exception by allowing the 100-
day period following loss of the exception to resume delivery of an
annual privacy notice where a notice is not already required pursuant
to Sec. 160.8, as discussed above. The Commission does not, therefore,
expect that any small entities that may be impacted by the rule to
incur any additional costs as a result of the Final Rule.
Therefore, the Commission believes that the Final Rule will not
have a significant economic impact on a substantial number of small
entities, as defined in the RFA.
Accordingly, the Chairman, on behalf of the Commission, hereby
certifies pursuant to 5 U.S.C. 605(b) that the Final Rule will not have
a significant economic impact on a substantial number of small
entities.
B. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (``PRA'') \24\ imposes certain
requirements on Federal agencies, including the Commission, in
connection with their conducting or sponsoring any collection of
information, as defined by the PRA. The Commission may not conduct or
sponsor, and a person is not required to respond to, a collection of
information unless it displays a currently valid Office of Management
and Budget (``OMB'') control number.
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\24\ 44 U.S.C. 3501 et seq.
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As discussed in the Proposal, the Commission believes that the
Final Rule will not impose any new recordkeeping or information
collection requirements, or other collections of information that
require approval of OMB under the PRA. However, by providing the
exception to the requirement to provide annual privacy notices to
customers discussed above, the Final Rule modifies a collection of
information for which the Commission has previously received a control
number from OMB. The title for this collection of information is
``Privacy of Consumer Financial Information, OMB control number 3038-
0055''.\25\ Collection 3038-0055 is currently in force with its control
number having been provided by OMB. Accordingly, the Commission
submitted to OMB revisions to OMB control number 3038-0055 to reflect
the addition of this exception and the resulting reduction of burden.
In particular, the Commission estimated that the availability of the
exception in Commission regulation 160.5(d) will reduce the current
number of annual privacy notices by approximately 30%. Accordingly, in
accordance with its previous estimates, the Commission estimated that
the Final Rule will reduce the total number of responses by 113,620
responses annually and reduce the time burden by approximately 1,136
hours annually. The Commission believes that the one-time cost of
adopting the annual privacy notice exception for Covered Persons that
adopt it is de minimis.
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\25\ See OMB Control No. 3038-0055, http://www.reginfo.gov/public/do/PRAOMBHistory?ombControlNumber=3038-0055# (last visited
Nov. 30, 2018).
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Information Collection Comments. In the Proposal, the Commission
invited the public and other Federal agencies to comment on any aspect
of the information collection requirements discussed therein. The
Commission did not receive any such comments.
C. Cost-Benefit Considerations
Section 15(a) of the CEA requires the Commission to consider the
costs and benefits of its actions before promulgating a regulation
under the CEA. Section 15(a) further specifies that the costs and
benefits shall 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) considerations.
As discussed above, the Commission is implementing the FAST Act's
amendments to the GLB Act by amending Sec. 160.5 to incorporate an
exception to a Covered Person's obligation to provide an annual privacy
notice under certain specified circumstances, consistent with section
503(f) of the GLB Act, and address when a Covered Person that has
relied on and no longer meets the requirements of that exception must
next provide an annual privacy notice.
Below, the Commission discusses the costs and benefits of the Final
Rule.\26\ The baseline against which the costs and benefits are
considered is the current status quo for Covered Persons with respect
to their obligation to provide annual privacy notices. The Commission
recognizes that there are inherent costs and benefits to Covered
Persons and their customers associated with providing an exception to
the annual privacy notice requirement, which Congress took into account
in amending the GLB Act under the FAST Act. The Commission further
recognizes that there are costs and benefits due to discretionary
actions taken by the Commission in implementing the exception. In
formulating the Final Rule, the Commission was mindful of the policy
goals that drove Congress to create this exception and endeavored not
to impose unnecessary burdens on Covered Persons in determining when a
Covered Person next needs to provide an annual privacy notice after
loss of the exception.\27\
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\26\ The Commission endeavors to assess the expected costs and
benefits of the Final Rule in quantitative terms where possible.
Where estimation or quantification is not feasible, the Commission
provides its discussion in qualitative terms. Given a general lack
of relevant data, the Commission's assessment is generally provided
in qualitative terms.
\27\ The Commission notes that the consideration of costs and
benefits below is based on the understanding that the markets
function internationally, with many transactions involving United
States firms taking place across international boundaries; with some
commission registrants being organized outside of the United States;
with some leading industry members typically conducting operations
both within and outside the United States; and with industry members
commonly following substantially similar business practices wherever
located. Where the Commission does not specifically refer to matters
of location, the discussion of costs and benefits below refers to
the effects of this proposal on all activity subject to the proposed
and amended regulations, whether by virtue of the activity's
physical location in the United States or by virtue of the
activity's connection with or effect on United States commerce under
CEA section 2(i). In particular, the Commission notes that some
Covered Persons are located outside of the United States.
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[[Page 17344]]
The Commission anticipates that some Covered Persons may avail
themselves of the exception in the Final Rule and not provide annual
privacy notices. The Final Rule benefits these Covered Persons that are
opting out of providing annual privacy notices by reducing their costs
associated with sending such notices. Further, because no Covered
Person is required to avail themselves of the exception in the Final
Rule, as discussed above, the Commission believes that it is reasonable
to conclude that only those Covered Persons that expect a net benefit
from the Final Rule will stop providing annual privacy notices under
the proposed exception.
The Commission recognizes that, as a result of the Final Rule,
certain customers of Covered Persons may no longer receive privacy
notices annually and therefore will not be made aware of the Covered
Persons' policies and procedures as frequently. However, the scope of
the exception is tailored such that customers of Covered Persons could
only not receive an annual privacy notice to the extent that the
Covered Person: (1) Provides nonpublic personal information to
nonaffiliated third parties only in accordance with the provisions of
Sec. Sec. 160.13, 160.14, 160.15 and any other exceptions adopted by
the Commission pursuant to section 504(b) of the GLB Act; and (2) has
not changed its policies and practices with regard to disclosing
nonpublic personal information from the policies and practices that
were disclosed to the customer under Sec. 160.6(a)(2) through (5) and
Sec. 160.6(a)(9) in the most recent privacy notice provided to such
customer pursuant to part 160 of the Commission's regulations. Thus,
the Final Rule may reduce confusion among customers by providing them
with disclosures when they would be most relevant, i.e., when
disclosure policies change after the customer relationship begins and
to the extent an institution shares sensitive personal information with
third parties for marketing purposes.
In determining when to require the resumption of annual privacy
notices following the loss of the exception in the Final Rule, the
Commission endeavored to make its requirements consistent with existing
timing requirements for privacy notices under current regulations, as
discussed above, and to provide clarity to Covered Persons.\28\
Specifically, in requiring the resumption of annual privacy notices
within 100 days of the loss of the exception where a revised privacy
notice is not required under Sec. 160.8, the Commission has tried not
to impose unnecessary burdens on Covered Persons while taking into
account the potential impact on a Covered Person's customers of not
receiving such notices in a timely manner. The Commission considered
different requirements for the resumption of annual privacy notices in
these circumstances (e.g., requiring a notice before the change in the
policy or practice causing the loss of the availability of the
exception or immediately following such change, or within 60 or 90 days
of such change). The Commission is providing the 100 day period because
it believes the Final Rule to be consistent with the revisions of the
GLB Act in the FAST Act and current regulations while allowing Covered
Persons some flexibility in resuming annual privacy notices. This
flexibility allows, for example, these notices to be included with
quarterly statements to reduce any costs from resuming providing such
notices. In providing timing requirements for the resumption of annual
privacy notices where a revised notice is required under Sec. 160.8,
the Commission is clarifying the effect of such a revised notice on the
requirement that a Covered Person provide an annual privacy notice and
on the eligibility for the exception to this requirement. Specifically,
the Commission is clarifying that a Covered Person must provide the
notice currently required by Sec. 160.8 and treat such notice as an
initial privacy notice.
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\28\ In addition, as discussed above, the Commission notes that
a Covered Person's obligation to resume providing annual privacy
notices may be effectively a one-time burden absent additional
changes to their policies and practices.
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Section 15(a) Considerations. In light of the foregoing, the CFTC
has evaluated the costs and benefits of the Final Rule pursuant to the
five considerations identified in section 15(a) of the CEA as follows:
(1) Protection of Market Participants and the Public
The requirements of Sec. 160.5 protect market participants by
ensuring that customers of Covered Persons are informed about such
Covered Persons' practices and policies with respect to nonpublic
personal information and certain other information described in Sec.
160.6. As discussed above, the Commission recognizes that, as a result
of the Final Rule, some customers of Covered Persons may no longer
receive privacy notices annually and therefore will not be made aware
of the Covered Persons' policies and procedures as frequently. However,
the scope of the exception is tailored such that customers of Covered
Persons could only not receive an annual privacy notice to the extent
that the Covered Person: (1) Provides nonpublic personal information to
nonaffiliated third parties only in accordance with the provisions of
Sec. Sec. 160.13, 160.14, 160.15 and any other exceptions adopted by
the Commission pursuant to section 504(b) of the GLB Act; and (2) has
not changed its policies and practices with regard to disclosing
nonpublic personal information from the policies and practices that
were disclosed to the customer under Sec. 160.6(a)(2) through (5) and
Sec. 160.6(a)(9) in the most recent privacy notice provided to such
customer pursuant to part 160 of the Commission's regulations. Further,
as discussed above, the Final Rule may reduce confusion among customers
by providing them with disclosures when they would be most relevant. In
addition, the Commission believes that the requirements for the
resumption of annual privacy notices following the loss of the
exception in the Final Rule will allow customers of Covered Persons to
receive annual privacy notices in a timely manner while not causing
Covered Persons to incur any additional costs.
(2) Efficiency, Competitiveness, and Financial Integrity of Markets
The Commission believes that the Final Rule may improve competition
by reducing costs for Covered Persons that meet the requirements of the
exception in Sec. 160.5(d) to not deliver an annual privacy notice and
elect to not deliver such notices. Specifically, the Commission expects
that the Final Rule will likely result in fewer substantially similar
annual privacy notices being delivered, which will reduce costs
associated with producing and delivering such privacy notices. Further,
to the extent that a Covered Person is no longer able to take advantage
of the exception to providing annual privacy notices and is required to
resume providing them, the Commission believes that a Covered Person
will not incur any additional costs in doing so, as the Covered Person
would simply need to resume sending annual privacy notices as currently
required.
[[Page 17345]]
(3) Price Discovery
The Commission has not identified an impact on price discovery as a
result of the Final Rule.
(4) Sound Risk Management
The Commission has not identified an impact on sound risk
management as a result of the Final Rule.
(5) Other Public Interest Considerations
The Commission has not identified an impact on other public
interest considerations as a result of the Final Rule.
Comments on Cost-Benefit Considerations. The Commission invited
public comment on its cost-benefit considerations in the Proposal,
including the Section 15(a) factors described above. The Commission
received no such comments.
D. Antitrust Considerations
Section 15(b) of the CEA requires the Commission to take into
consideration the public interest to be protected by the antitrust laws
and endeavor to take the least anticompetitive means of achieving the
purposes of the CEA, in issuing any order or adopting any Commission
rule or regulation (including any exemption under section 4(c) or
4c(b)), or in requiring or approving any bylaw, rule, or regulation of
a contract market or registered futures association established
pursuant to section 17 of the CEA.\29\ The Commission believes that the
public interest to be protected by the antitrust laws is generally to
protect competition. The Commission requested and did not receive any
comments on whether the Proposal implicated any other specific public
interest to be protected by the antitrust laws.
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\29\ 7 U.S.C. 19(b).
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The Commission has considered this Final Rule to determine whether
it is anticompetitive and has preliminarily identified no
anticompetitive effects. The Commission requested and did not receive
any comments on whether the Proposal was anticompetitive and, if it is,
what the anticompetitive effects are.
Because the Commission has preliminarily determined that this Final
Rule is not anticompetitive and has no anticompetitive effects and
received no comments on its determination, the Commission has not
identified any less anticompetitive means of achieving the purposes of
the CEA.
List of Subjects in 17 CFR Part 160
Brokers, Consumer protection, Privacy, Reporting and recordkeeping
requirements.
For the reasons stated in the preamble, the Commodity Futures
Trading Commission amends 17 CFR chapter I as follows:
PART 160--PRIVACY OF CONSUMER FINANCIAL INFORMATION UNDER TITLE V
OF THE GRAMM-LEACH-BLILEY ACT
0
1. The authority citation for part 160 continues 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. In Sec. 160.5, revise the first sentence of paragraph (a)(1) and
add paragraph (d) to read as follows:
Sec. 160.5 Annual privacy notice to customers required.
(a)(1) * * * Except as provided by paragraph (d) of this section,
you must provide a clear and conspicuous notice to customers that
accurately reflects your privacy policies and practices not less than
annually during the life of the customer relationship. * * *
* * * * *
(d) Exception to annual privacy notice requirement. (1) You are not
required to deliver an annual privacy notice if you:
(i) Provide nonpublic personal information to nonaffiliated third
parties only in accordance with the provisions of Sec. Sec. 160.13,
160.14, and 160.15 and any other exceptions adopted by the Commission
pursuant to section 504(b) of the GLB Act; and
(ii) Have not changed your policies and practices with regard to
disclosing nonpublic personal information from the policies and
practices that were disclosed to the customer under Sec. 160.6(a)(2)
through (5) and Sec. 160.6(a)(9) in the most recent privacy notice
sent to the customer pursuant to this part.
(2) Delivery of annual privacy notice after you no longer meet
requirements for exception. If you have been excepted from delivering
an annual privacy notice pursuant to paragraph (d)(1) of this section
and change your policies or practices in such a way that you no longer
meet the requirements for that exception, you must comply with
paragraph (d)(2)(i) or (ii) of this section, as applicable.
(i) Changes preceded by a revised privacy notice. If you no longer
meet the requirements of paragraph (d)(1) of this section because you
change your policies or practices in such a way that Sec. 160.8 of
this part requires you to provide a revised privacy notice, you must
provide an annual privacy notice in accordance with the timing
requirements in paragraph (a) of this section, treating the revised
privacy notice as an initial privacy notice.
(ii) Changes not preceded by a revised privacy notice. If you no
longer meet the requirements of paragraph (d)(1) of this section
because you change your policies or practices in such a way that Sec.
160.8 of this part does not require you to provide a revised privacy
notice, you must provide an annual privacy notice within 100 days of
the change in your policies or practices that causes you to no longer
meet the requirements of paragraph (d)(1) of this section.
Issued in Washington, DC, on April 19, 2019, by the Commission.
Robert Sidman,
Deputy Secretary of the Commission.
Appendix to Privacy of Consumer Financial Information--Amendment To
Conform Regulations to the Fixing America's Surface Transportation
Act--Commission Voting Summary
On this matter, Chairman Giancarlo and Commissioners Quintenz,
Behnam, Stump, and Berkovitz voted in the affirmative. No
Commissioner voted in the negative.
[FR Doc. 2019-08253 Filed 4-24-19; 8:45 am]
BILLING CODE 6351-01-P