Federal Register, Volume 80 Issue 206 (Monday, October 26, 2015)
[Federal Register Volume 80, Number 206 (Monday, October 26, 2015)]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-27164]
COMMODITY FUTURES TRADING COMMISSION
Agency Information Collection Activities: Notice of Intent To
Renew Collection: Clearing Member Risk Management
AGENCY: Commodity Futures Trading Commission.
SUMMARY: The Commodity Futures Trading Commission (``Commission'' or
``CFTC'') is announcing an opportunity for public comment on the
proposed renewal of a collection of certain information by the agency.
Under the Paperwork Reduction Act (``PRA''), 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. In 2012, the Commission adopted final rules, which address
risk management for cleared trades by futures commission merchants
(``FCMs''), swap dealers (``SDs), and major swap participants
(``MSPs'') that are clearing members. This notice solicits comments on
the obligation to maintain records related to clearing documentation
between the customer and the customer's clearing member.
DATES: Comments must be submitted on or before December 28, 2015.
ADDRESSES: You may submit comments, identified by ``OMB Control No.
3038-0094,'' 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: Christopher Kirkpatrick, 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/.
Follow the instructions for submitting comments through the Portal.
Please submit your comments using only one method.
FOR FURTHER INFORMATION CONTACT: Christopher Hower, Special Counsel,
Division of Clearing and Risk, Commodity Futures Trading Commission,
(202) 418-6703; email: [email protected]
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. To comply with this requirement,
the CFTC is publishing notice of the proposed collection of information
Title: Clearing Member Risk Management (OMB Control No. 3038-0094).
This is a request for extension of a currently approved information
Abstract: Section 3(b) of the Commodity Exchange Act (``Act'')
provides that one of the purposes of the Act is to ensure the financial
integrity of all transactions subject to the Act and to avoid systemic
risk. Section 8a(5) authorizes the Commission to promulgate such
regulations that it believes are reasonably necessary to effectuate any
of the provisions or to accomplish any of the purposes of the Act. Risk
management systems are critical to the avoidance of systemic risks.
Section 4s(j)(2) requires each SD and MSP to have risk management
systems adequate for managing its business. Section 4s(j)(4) requires
each SD and MSP to have internal systems and procedures to perform any
of the functions set forth in Section 4s.
Section 4d requires FCMs to register with the Commission. It
further requires FCMs to segregate customer funds. Section 4f requires
FCMs to maintain certain levels of capital. Section 4g establishes
reporting and recordkeeping requirements for FCMs. Pursuant to these
provisions, the Commission adopted Sec. 1.73 which applies to clearing
members that are FCMs and Sec. 23.609 which applies to clearing
members that are SDs or MSPs. These provisions require these clearing
members to have procedures to limit the financial risks they incur as a
result of clearing trades and liquid resources to meet the obligations
that arise. The regulations require clearing members to:
(1) Establish credit and market risk-based limits based on position
size, order size, margin requirements, or similar factors;
(2) use automated means to screen orders for compliance with the
(3) monitor for adherence to the risk-based limits intra-day and
(4) conduct stress tests of all positions in the proprietary
account and all positions in any customer account that could pose
material risk to the futures commission merchant at least once per
(5) evaluate its ability to meet initial margin requirements at
least once per week;
(6) evaluate its ability to meet variation margin requirements in
cash at least once per week;
(7) evaluate its ability to liquidate the positions it clears in an
orderly manner, and estimate the cost of the liquidation at least once
per month; and
(8) test all lines of credit at least once per quarter.
Each of these items has been observed by Commission staff as an
element of an existing sound risk management program at an SD, MSP, or
FCM. The Commission regulations require each clearing member to
establish written procedures to comply with this regulation and to keep
records documenting its compliance. The information collection
obligations imposed by the regulations are necessary to implement
certain provisions of the Act, including ensuring that registrants
exercise effective risk management and for the efficient operation of
trading venues among SDs, MSPs, and FCMs. 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 OMB control number.
With respect to the collection of information, the CFTC invites
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
mechanical, or other technological collection techniques or other forms
of information technology; e.g., permitting electronic submission of
All comments must be submitted in English, or if not, accompanied
by an English translation. Comments will be posted as received to
http://www.cftc.gov. You should submit only information that you wish
to make available publicly. 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\ 17 CFR 145.9.
The Commission reserves the right, but shall have no obligation, to
review, pre-screen, filter, redact, refuse or remove any or all of your
submission from http://www.cftc.gov that it may deem to be
inappropriate for publication, such as obscene language. All
submissions that have been redacted or removed that contain comments on
the merits of the Information Collection Request will be retained in
the public comment file and will be considered as required under the
Administrative Procedure Act and other applicable laws, and may be
accessible under the Freedom of Information Act.
Burden Statement: The respondent burden for this collection is
estimated to average 2 hours per response for an estimated annual
burden of 504 hours per respondent. This estimate includes the total
time, effort, or financial resources expended by persons to generate,
maintain, retain, disclose, or provide information to or for a federal
Respondents/Affected Entities: Swap dealers, Major Swap
Participants, and Futures Commission Merchants.
Estimated number of respondents: 239 (105 Swap Dealers and Major
Swap Participants and 134 Futures Commission Merchants).
Estimated number of responses: 253.
Estimated total annual burden on respondents: 120,456 hours.
Frequency of collection: As needed.
There are no capital costs or operating and maintenance costs
associated with this collection.
(Authority: 44 U.S.C. 3501 et seq.)
Dated: October 21, 2015.
Robert N. Sidman,
Deputy Secretary of the Commission.
[FR Doc. 2015-27164 Filed 10-23-15; 8:45 am]
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