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 [www.gpo.gov]
[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 http://comments.cftc.gov/. 
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: http://www.regulations.gov.
    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 
www.cftc.gov. 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, [email protected]; Lee Ann Duffy, Assistant 
General Counsel, at 202-418-6763, [email protected]; or David E. Aron, 
Counsel, at 202-418-6621, [email protected], 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]