Federal Register, Volume 85 Issue 159 (Monday, August 17, 2020)
[Federal Register Volume 85, Number 159 (Monday, August 17, 2020)]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-17896]
COMMODITY FUTURES TRADING COMMISSION
Agency Information Collection Activities: Notice of Intent To
Renew Collection 3038-0092, Customer Clearing Documentation and Timing
of Acceptance for Clearing
AGENCY: Commodity Futures Trading Commission.
SUMMARY: The Commodity Futures Trading Commission (``Commission'' or
``CFTC'') is announcing an opportunity for public comment on the
extension of the 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, including each proposed extension of an
existing collection of information, and to allow 60 days for public
comment. 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 October 16, 2020.
ADDRESSES: You may submit comments, identified by OMB Control No. 3038-
0092 by any of the following methods:
The Agency's website, at http://comments.cftc.gov/. Follow
the instructions for submitting comments through the website.
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.
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 http://www.cftc.gov.
FOR FURTHER INFORMATION CONTACT: Megan Wallace, Senior Special Counsel,
Division of Clearing and Risk, Commodity Futures Trading Commission,
(202) 418-5150; email: [email protected].
SUPPLEMENTARY INFORMATION: Under the PRA, 44 U.S.C. 3501 et seq.,
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, including each proposed extension of an existing
collection of information, before submitting the collection to OMB for
approval. To comply with this requirement, the Commission is publishing
notice of the proposed extension of the collection of information
listed below. 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.
Title: Customer Clearing Documentation and Timing of Acceptance for
Clearing (OMB Control No. 3038-0092). This is a request for extension
and revision of a currently approved information collection.
Abstract: Section 4d(c) of the Commodity Exchange Act (``CEA''), as
amended by the Dodd-Frank Wall Street Reform and Consumer Protection
Act (``Dodd-Frank Act''), directs the Commission to require futures
commission merchants (``FCMs'') to implement conflict of interest
procedures that address such issues the Commission determines to be
appropriate. Similarly, section 4s(j)(5) of the CEA, as added by the
Dodd-Frank Act, requires swap dealers (``SDs) and major swap
participants (``MSPs'') to
implement conflict of interest procedures that address such issues the
Commission determines to be appropriate. Section 4s(j)(5) also requires
SDs and MSPs to ensure that any persons providing clearing activities
or making determinations as to accepting clearing customers are
separated by appropriate informational partitions from persons whose
involvement in pricing, trading, or clearing activities might bias
their judgment or contravene the core principle of open access. Section
4s(j)(6) of the CEA prohibits a SD or MSP from adopting any process or
taking any action that results in any unreasonable restraint on trade
or imposes any material anticompetitive burden on trading or clearing,
unless necessary or appropriate to achieve the purposes of the Act.
Section 2(h)(1)(B)(ii) of the CEA requires that derivatives clearing
organization (``DCOs) rules provide for the nondiscriminatory clearing
of swaps executed bilaterally or through an unaffiliated designated
contract market or swap execution facility.
To address these provisions, the Commission promulgated regulations
that prohibit arrangements involving FCMs, SDs, MSPs, and DCOs that
would (a) disclose to an FCM, SD, or MSP the identity of a customer's
original executing counterparty (Sec. Sec. 1.72(a), 23.608(a), and
39.12(a)(1)(vi)); (b) limit the number of counterparties with whom a
customer may enter into a trade (Sec. Sec. 1.72(b), 23.608(b), and
39.12(a)(1)(vi)); (c) restrict the size of the position a customer may
take with any individual counterparty, apart from an overall credit
limit for all positions held by the customer at the FCM (Sec. Sec.
1.72(c), 23.608(c), and 39.12(a)(1)(vi)); (d) impair a customer's
access to execution of a trade on terms that have a reasonable
relationship to the best terms available (Sec. Sec. 1.72(d),
23.608(d), and 39.12(a)(1)(vi)); or (e) prevent compliance with
specified time frames for acceptance of trades into clearing set forth
in 1.74(b), 23.610(b), or 39.12(b)(7) (Sec. Sec. 1.72(e), 23.608(e),
and 39.12(a)(1)(vi)). Additionally, the Commission requires, through
regulation 39.12(b)(7)(i)(B), DCOs to coordinate with clearing members
to establish prompt processing of trades. Regulations 1.74(a) and
23.610(a) require reciprocal coordination by FCMs, SDs, and MSPs that
are clearing members.
Under the above regulations, SDs, MSPs, FCMs, and DCOs are required
to develop and maintain written customer clearing documentation and
trade processing procedures. Maintenance of contracts, policies, and
procedures is prudent business practice. All SDs, MSPs, FCMs, and DCOs
maintain documentation consistent with these regulations. The
regulations are crucial both for effective risk management and for the
efficient operation of trading venues among SDs, MSPs, FCMs, and DCOs.
Each of these entities has a general recordkeeping obligation for these
requirements under the Commission's regulations (Sec. 39.20 for DCOs;
Sec. 23.606 for SDs and MSPs; and Sec. 1.73 for FCMs).
As discussed further below, the information collection burden
arising from the regulations primarily is restricted to the costs
associated with the affected registrants' obligation to maintain
records related to clearing documentation between the customer and the
customer's clearing member, and trade processing procedures between
DCOs and FCMs, SDs, and MSPs. The information collection obligations
are necessary to implement certain provisions of the CEA, including
ensuring that registrants exercise effective risk management and for
the efficient operation of trading venues among swap dealers, major
swap participants, futures commission merchants, and derivatives
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
automated electronic, mechanical, or other technological collection
techniques or other forms of information technology; e.g., permitting
electronic submission of responses.
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 section 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 Commission is revising its estimate of the
burden for this collection, which include 107 Swap Dealers, Major Swap
Participants, 61 Futures Commission Merchants, and 15 Derivatives
Clearing Organizations. The respondent burden for this collection is
estimated to be as follows:
Respondents/Affected Entities: 183.
Estimated Average Burden Hours per Respondent: 40.
Estimated Total Annual Burden Hours: 7,320.
Frequency of collection: Daily, annual, and 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: August 11, 2020.
Deputy Secretary of the Commission.
[FR Doc. 2020-17896 Filed 8-14-20; 8:45 am]
BILLING CODE 6351-01-P