[Federal Register Volume 80, Number 246 (Wednesday, December 23, 2015)]
[Proposed Rules]
[Pages 79757-79776]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31703]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 240

[Release No. 34-76624; File No. S7-26-15]
RIN 3235-AL72


Establishing the Form and Manner with which Security-Based Swap 
Data Repositories Must Make Security-Based Swap Data Available to the 
Commission

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Securities and Exchange Commission (``SEC'' or 
``Commission'') is publishing for comment a proposed amendment to 
specify the form and manner with which security-based swap data 
repositories (``SDRs'') will be required to make security-based swap 
(``SBS'') data available to the Commission under Exchange Act Rule 13n-
4(b)(5). The Commission is proposing to require SDRs to make these data 
available according to schemas that will be published on the 
Commission's Web site and that will reference the international 
industry standards Financial products Markup Language (``FpML'') and 
Financial Information eXchange Markup Language (``FIXML'').

DATES: Comments should be received on or before February 22, 2016.

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/proposed.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number S7-26-25 on the subject line; or
     Use the Federal eRulemaking Portal (http://www.regulations.gov). Follow the instructions for submitting comments.

Paper Comments

     Send paper comments to Secretary, Securities and Exchange 
Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number S7-26-15. This file number 
should be included on the subject line if email is used. To help us 
process and review your comments more efficiently, please use only one 
method. The Commission will post all comments on the Commission's 
Internet Web site (http://www.sec.gov/rules/proposed.shtml). Comments 
are also available for Web site viewing and

[[Page 79758]]

printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. All comments received will be posted without 
change; the Commission does not edit personal identifying information 
from submissions. You should submit only information that you wish to 
make available publicly.
    Studies, memoranda, or other substantive items may be added by the 
Commission or staff to the comment file during this rulemaking. A 
notification of the inclusion in the comment file of any such materials 
will be made available on the SEC's Web site. To ensure direct 
electronic receipt of such notifications, sign up through the ``Stay 
Connected'' option at www.sec.gov to receive notifications by email.

FOR FURTHER INFORMATION CONTACT: Narahari Phatak, Branch Chief, at 
(202) 551-6693; Walter Hamscher, IT Project Manager, at (202) 551-5397; 
Yee Cheng Loon, Financial Economist, at (202) 551-3077; Hermine Wong, 
Attorney-Adviser, at (202) 551-4038; Christian Sabella, Associate 
Director, at (202) 551-5997; Michael Gaw, Assistant Director, at (202) 
551-5602.

SUPPLEMENTARY INFORMATION: The Commission is proposing to amend Rule 
13n-4(a)(5) under the Exchange Act (defining ``Direct electronic 
access'' to data stored by an SDR).

I. Introduction

    On February 11, 2015, the Commission adopted Rules 13n-1 to 13n-11 
under the Exchange Act (collectively, the ``SDR Rules''),\1\ which 
govern SDR registration, duties, and core principles.\2\ On the same 
day, the Commission adopted Rules 900 to 909 under the Exchange Act 
(collectively, ``Regulation SBSR''),\3\ which govern the reporting to 
registered SDRs of SBS data and public dissemination by registered SDRs 
of a subset of that data.\4\ In combination, these rules represent a 
significant step forward in providing a regulatory framework to promote 
transparency and efficiency in the OTC derivatives markets and assist 
relevant authorities in performing their market oversight functions.
---------------------------------------------------------------------------

    \1\ 17 CFR 240.13n-1 to 240.13n-11.
    \2\ See Securities Exchange Act Release No. 74246 (February 11, 
2015), 80 FR 14437 (March 19, 2015) (``SDR Adopting Release'').
    \3\ 17 CFR 242.900 to 242.909.
    \4\ See Securities Exchange Act Release No. 74244 (February 11, 
2015), 80 FR 14563 (March 19, 2015) (``Regulation SBSR Adopting 
Release'').
---------------------------------------------------------------------------

    Today, the Commission is proposing to amend the SDR Rules to 
specify the form and manner with which SDRs would be required to make 
SBS data available to the Commission. This rulemaking constitutes an 
important next step in the development of the SBS transaction reporting 
regime mandated by the Dodd-Frank Act.\5\ The proposed rule would 
require that SBS data made available by SDRs be formatted and 
structured consistently to allow the Commission to accurately analyze 
the data made available by a single SDR, and to aggregate and analyze 
data made available by multiple SDRs.
---------------------------------------------------------------------------

    \5\ Public Law 111-203, 124 Stat. 1376 (2010). The Dodd-Frank 
Act was enacted, among other reasons, to promote the financial 
stability of the United States by improving accountability and 
transparency in the financial system. See Public Law 111-203, 
Preamble. The 2008 financial crisis highlighted significant issues 
in the over-the-counter (``OTC'') derivatives markets, which 
experienced dramatic growth in the years leading up to the financial 
crisis and are capable of affecting significant sectors of the U.S. 
economy. Title VII of the Dodd-Frank Act provides for a 
comprehensive new regulatory framework for swaps and security-based 
swaps, by, among other things: (1) Providing for the registration 
and comprehensive regulation of swap dealers, security-based swap 
dealers, major swap participants, and major security-based swap 
participants; (2) imposing clearing and trade execution requirements 
on swaps and security-based swaps, subject to certain exceptions; 
(3) creating recordkeeping, regulatory reporting, and public 
dissemination requirements for swaps and security-based swaps; and 
(4) enhancing the rulemaking and enforcement authorities of the 
Commission and the Commodity Futures Trading Commission (``CFTC'').
---------------------------------------------------------------------------

A. Background

    Rule 13n-4(b)(5) under the Exchange Act \6\ requires an SDR to 
provide direct electronic access to the Commission (or any designee of 
the Commission, including another registered entity). Under Rule 13n-
4(a)(5),\7\ ``direct electronic access'' means ``access, which shall be 
in a form and manner acceptable to the Commission, to data stored by a 
security-based swap data repository in an electronic format and updated 
at the same time as the security-based swap data repository's data is 
updated so as to provide the Commission or any of its designees with 
the ability to query or analyze the data in the same manner that the 
security-based swap data repository can query or analyze the data'' 
(emphasis added). As discussed in detail below, the Commission is 
proposing to set out the form and manner for direct electronic access 
to SDRs that is acceptable to the Commission.
---------------------------------------------------------------------------

    \6\ 17 CFR 240.13n-4(b)(5).
    \7\ 17 CFR 240.13n-4(a)(5).
---------------------------------------------------------------------------

    As the Commission noted in the SDR Adopting Release, a significant 
portion of the benefits of an SDR will not be realized if the 
Commission obtains direct electronic access to the data stored at an 
SDR in a form or manner that cannot be easily utilized by the 
Commission.\8\ Furthermore, the form and manner with which an SDR 
provides the data to the Commission should not only permit the 
Commission to accurately analyze the data maintained by a single SDR, 
but also allow the Commission to aggregate and analyze data received 
from multiple SDRs.\9\ The form and manner that will be acceptable to 
the Commission for an SDR to provide direct electronic access may vary 
on a case-by-case basis and may change over time, depending on a number 
of factors.\10\ These factors could include the development of new 
types of security-based swaps or variations of existing security-based 
swaps that require additional data to accurately describe them.\11\ 
Additionally, the extent to which the Commission encounters difficulty 
in standardizing and aggregating SBS data across multiple SDRs would be 
a factor in considering the nature of the direct access provided by an 
SDR to the Commission.\12\
---------------------------------------------------------------------------

    \8\ See 80 FR at 14474.
    \9\ See id.
    \10\ See id.
    \11\ See id.
    \12\ See id.
---------------------------------------------------------------------------

    In the SDR Adopting Release, the Commission also stated that, until 
such time as the Commission adopts specific formats and taxonomies, 
SDRs ``may provide direct electronic access to the Commission to data 
in the form in which the SDRs maintain such data.'' \13\ Under this 
guidance, an SDR could provide direct electronic access to data in a 
form and manner that is not conducive to the Commission's ability to 
analyze the data or surveil the SBS market. For example, a particular 
SDR might provide direct electronic access to data in the same format 
in which the data were received from its participants. If participants 
report data to the SDR using different conventions, inconsistencies in 
data formats within the SDR might limit or impair the Commission's 
ability to accurately aggregate positions within the SDR or to compare 
the features of one market participant's transactions or positions to 
those of another market participant.
---------------------------------------------------------------------------

    \13\ See id. at 14475.
---------------------------------------------------------------------------

B. Overview of Proposed Amendment

    The Commission proposes to amend Rule 13n-4(a) to specify the form 
and manner with which SDRs must provide direct electronic access to the 
Commission by requiring SDRs to comply with an appropriate schema as 
will be published on the Commission's Web site.

[[Page 79759]]

    In the SDR Adopting Release, the Commission stated that it believed 
it was in the best position to aggregate data across multiple SDRs.\14\ 
The Commission also stated that if it were to propose a particular 
format for the direct electronic access, it would propose detailed 
specifications of acceptable formats and taxonomies that would 
facilitate an accurate interpretation, aggregation, and analysis of SBS 
data by the Commission.\15\ Any proposed format also would maximize the 
use of any applicable current industry standards for the description of 
SBS data.\16\
---------------------------------------------------------------------------

    \14\ Id.
    \15\ Id. at 14474-75.
    \16\ Id. at 14475.
---------------------------------------------------------------------------

    The Commission is currently aware of only two industry standards 
for representing SBS data: FpML \17\ and FIXML.\18\ The Commission is 
proposing to accommodate both industry standards by specifying that 
either of two distinct schemas \19\ would satisfy the requirements of 
Rule 13n-4. One schema would rely on the FpML standard and the other 
schema would rely on the FIXML standard. Both schemas would articulate 
the same common data model, which is the logical representation of the 
data elements required to be reported under Regulation SBSR. The 
Commission preliminary believes that each schema would facilitate the 
consistent reporting of SBS transaction characteristics, such as the 
counterparties, associated other parties (e.g., brokers), and 
corresponding terms of payments. In addition, validations associated 
with the schemas would help SDRs ensure that the data they make 
available to the Commission adhere to the common data model.
---------------------------------------------------------------------------

    \17\ FpML is a registered trademark of the International Swaps 
and Derivatives Association, Inc.
    \18\ FIXML is a registered trademark of Fix Protocol Limited.
    \19\ The term ``schema'' is generally applied to formal 
representations of data models.
---------------------------------------------------------------------------

    As discussed below in more detail, the Commission preliminarily 
believes that both industry standards already cover many of the data 
elements that must be reported to registered SDRs under Regulation 
SBSR. In the appendix, the Commission has highlighted clear cases where 
the schemas require additional elements that do not yet exist in FpML 
or FIXML to represent all data elements that must be reported under 
Regulation SBSR and that registered SDRs must accept and store.
    This release solicits comment on the Commission's proposal 
concerning the form and manner with which SDRs provide the Commission 
with direct electronic access, including whether the Commission should 
accept both the FpML and FIXML standards, whether the Commission should 
accept only one or the other, whether the Commission should accept 
other protocols or standards, and whether the Commission's 
incorporation of validations into the schemas supports completeness of 
the SBS data.

II. Discussion of the Proposed Amendment

A. Discussion of Existing Industry Standards

    Industry standards have evolved to enable participants in the SBS 
market to capture and communicate certain trade information. As 
discussed in more detail below, these standards have evolved for use in 
different contexts but inherently share features that are relevant for 
SBS data standardization and aggregation.
1. Background of Existing Industry Standards
    The Commission is aware of two existing industry standards which 
are used by market participants to capture trade-related information: 
FpML and FIXML. FpML and FIXML are both international open industry 
standards, meaning that they are technological standards that are 
widely available to the public, royalty-free, and at no cost. In 
addition, they are both independent of the software and hardware used 
by participants, thus facilitating interoperability. Both FpML and 
FIXML have evolved for use in different contexts and they share 
features that are relevant for rendering SBS data compatible for the 
purposes of normalization, aggregation, and comparison.
    FpML was developed under the auspices of the International Swaps 
and Derivatives Association (ISDA),\20\ using the ISDA derivatives 
documentation as its basis. FpML maintenance and continued development 
is undertaken by the FpML Standards Committee, which operates under the 
auspices of ISDA and is made up of representatives from a range of 
financial market participants, including banks, brokers, central 
counterparties (CCPs), and other financial infrastructure providers. 
FpML was designed for the OTC derivatives industry to capture data 
elements that provide a complete and accurate representation of the 
contractual provisions of a trade in derivatives or structured 
products. FpML is used by market participants to communicate OTC 
transaction details to counterparties and post-trade processors, and is 
designed to facilitate validation of message contents. FpML is also 
designed to be useful within firms for the purposes of sharing OTC 
transaction information across systems.\21\ The FpML Standards 
committee maintains FpML and updates it from time to time.\22\
---------------------------------------------------------------------------

    \20\ ISDA is a global organization of derivatives market 
participants. ISDA has developed standardized Master Agreements 
underlying derivatives transactions and manages the development of 
FpML. See http://www2.isda.org/ (last visited Dec. 8, 2015).
    \21\ See FpML[supreg] Information, https://dedicated.fpml.org/about/factsheet.html (last visited Dec. 8, 2015).
    \22\ See infra note 82.
---------------------------------------------------------------------------

    In contrast to FpML's focus on post-trade communication of 
standardized derivatives contracts, Financial Information eXchange 
(FIX) is a messaging protocol developed for pre-trade communication and 
trade execution of standardized and bespoke contracts for multiple 
asset classes and markets. The FIX protocol enables electronic 
communication between broker-dealers and their institutional clients to 
deliver quotes, submit orders, and execute trades. Since its inception 
in 1992 as a standard used to trade equities, the use of FIX was 
further developed to include fixed income, derivatives, and foreign 
exchange, and the scope of FIX has been extended to include pre-trade, 
trade, and post-trade business processes \23\ using FIXML, an 
eXtensible Markup Language (XML) based implementation of the FIX 
messaging standard. FIXML embeds FIX messages in an XML document that 
includes structures that are specific to the FIX protocol. The FIX 
messaging standard is owned, maintained, and developed through the 
collaborative efforts of the FIX Trading Community.\24\
---------------------------------------------------------------------------

    \23\ Oxera Consulting Ltd., What are the benefits of the FIX 
Protocol? Standardising messaging protocols in the capital markets, 
at 5 (2009), available at http://www.oxera.com/Oxera/media/Oxera/Benefits-of-the-FIX-Protocol.pdf?ext=.pdf.
    \24\ FIX Trading Community is a non-profit, industry-driven 
standards body comprised of over 270 member firms from the global 
financial services industry. See Letter from FIX Trading Community 
to Commodity Futures Trading Commission (May 27, 2014), available at 
http://comments.cftc.gov/PublicComments/ViewComment.aspx?id=59866& 
SearchText=.
---------------------------------------------------------------------------

    Both FpML and FIXML were derived from the XML standard. Each 
standard uses an XML-based schema to impose structure on the order and 
content of, and relationships among, data elements, including the 
particular data types that correspond to each data element. FpML and 
FIXML mark up or ``structure'' data using standard but distinct 
definitions.

[[Page 79760]]

These data element definitions establish a consistent structure of 
identity and context so that the reported data can be recognized and 
processed by standard computer code or software (i.e., made machine 
readable). For example, under Regulation SBSR, the title and date of 
agreements incorporated by reference in a SBS contract must be reported 
to a registered SDR for certain transactions.\25\ To convey this 
information electronically, the data must be structured with the role 
of the agreement (such as master, collateral, or margin), the title of 
the agreement, and the date of the agreement.
---------------------------------------------------------------------------

    \25\ 17 CFR 242.901(d)(4).
---------------------------------------------------------------------------

    The Commission notes that the bodies responsible for the 
maintenance of both FpML and FIXML have experience engaging with the 
regulatory community and have made enhancements specifically to support 
regulatory requirements. FpML currently supports several regulatory 
reporting requirements other than those imposed by the Commission as 
part of Regulation SBSR,\26\ and has a working group currently 
considering SBS data reporting requirements.\27\ The FIX Trading 
Community has enhanced FIXML to support the trade capture requirements 
of the CFTC.\28\ FIXML is used for asset- and mortgage-backed 
securities trade reporting to FINRA.\29\ The Australian Securities and 
Investments Commission published FIXML requirements for the disclosure 
and reporting of short sales.\30\ The Investment Industry Regulatory 
Organization of Canada adopted FIXML for market surveillance and 
transactional reporting.\31\
---------------------------------------------------------------------------

    \26\ See FpML Global Regulatory Reporting Mapping 2014 v9 (Feb 
27) (Working Draft), available at http://www.fpml.org/asset/40388bcb/6a20cde6.xlsx.
    \27\ See Reporting/Regulatory Reporting Working Group Charter, 
http://www.fpml.org/wgroup/rptwg/rptwgcharter.doc.
    \28\ See Letter from FIX Protocol Limited to SEC (August 5, 
2010), available at http://www.sec.gov/comments/s7-11-10/s71110-32.pdf.
    \29\ Id.
    \30\ Id.
    \31\ Id.
---------------------------------------------------------------------------

    The Commission preliminarily believes that both standards have been 
implemented by market participants and are widespread in use, and that 
the taxonomies for both standards for SBS reporting have developed 
sufficient coverage such that the Commission does not need to develop 
its own standard for the required data elements.\32\ If the Commission 
were to adopt a rule that required SDRs to make SBS data available to 
the Commission using the FpML or FIXML standards, the Commission 
anticipates that its staff would keep apprised of relevant advances and 
developments with those standards and engage with each standard's 
working group regarding such developments, as appropriate.
---------------------------------------------------------------------------

    \32\ See Appendix.
---------------------------------------------------------------------------

2. Interoperability and Acceptance of Existing Standards
    Interoperability is the ability of two or more systems to exchange 
data and for the data to be automatically interpreted. While FpML and 
FIXML both rely on XML to exchange data, they are not interoperable 
unless a common data model is built that allows a translation between 
the two standards. As a result, the Commission has developed a common 
data model that uses as a basis the existing overlap of the standards' 
current coverages of SBS data. The Commission's common data model is a 
representation of the SBS data elements required to be made available 
to the Commission. The Commission preliminarily believes that requiring 
SDRs to use either the FpML or FIXML schema will help achieve one of 
the key objectives of Regulation SBSR, which is to have a complete and 
intelligible record of all SBS transactions for oversight purposes. The 
common data model is represented by two separate schemas, one each for 
the FIXML and FPML standards. Accordingly, under the proposed 
amendment, SDRs can make SBS data available to the Commission using 
either the FIXML or FpML schema. The Commission describes both the 
common data model and the two schemas in greater detail below.
    The Commission notes that ISDA and the FIX Community formed the 
FpML Collaboration Working Group in 2004 to support certain aspects of 
interoperability between FpML and FIXML.\33\ For example, the group 
addressed the question of how swap execution facilities would handle 
the transformation of a FIX message into an FpML message for use in 
post-trade confirmation, clearing, and trade reporting with a solution 
that supports detailed FpML messages contained within a compact FIX 
message. The group also facilitated a common approach to data items for 
capture of interest rate and credit default swaps during the pre-trade 
and trade lifecycles. To date, the Commission's understanding is that 
this group has not generated a common data model as proposed in this 
release.
---------------------------------------------------------------------------

    \33\ See 2012 FIX-FpML Collaboration WG Charter, http://www.fixtradingcommunity.org/mod/file/download.php?file_guid=46484.
---------------------------------------------------------------------------

3. Proposed Amendment to Rule 13n-4(a)(5) To Specify the Format for 
Direct Electronic Access
    The Commission is proposing to amend Rule 13n-4(a)(5) to specify 
the form and manner with which SDRs must provide direct electronic 
access to the Commission. In particular, under the proposal, SDRs must 
provide direct electronic access using either the FpML schema or the 
FIXML schema as published on the Commission's Web site. The Commission 
is also proposing to require that the SDRs use the most recent schema 
as published on the Web site as the Commission anticipates that the 
schemas will be updated periodically to reflect changes in the FpML and 
FIXML standards, or to reflect changes in industry practice or 
financial products covered by Regulation SBSR. As with the Commission's 
updates to other taxonomies and schemas,\34\ Commission staff will post 
draft schemas on the Commission's Web site for the public to review and 
provide comment before posting any final schemas.
---------------------------------------------------------------------------

    \34\ See, e.g., Rating History Files Publication Guide, http://xbrl.sec.gov/doc/rocr-publication-guide-draft-2014-12-15.pdf, and 
Release Notes for SEC Taxonomies 2015-Draft, http://xbrl.sec.gov/doc/releasenotes-2015-draft.pdf.
---------------------------------------------------------------------------

B. Commission Schemas

    As mentioned above, the Commission has developed a common data 
model, which is the logical arrangement of the data elements that 
comprise a transaction report as described under Regulation SBSR and 
how those data elements relate to each other. The purpose of the common 
data model is to improve the consistency and reliability of the data 
made available to the Commission for analysis and aggregation along 
various dimensions, such as across SDRs, within an SDR, by 
counterparty, or by product. The Commission's common data model 
reflects the reporting requirements under Regulation SBSR. The 
Commission's schemas for SBS data are formal representations of the 
Commission's common data model.
    For example, a schema representing the common data model would 
require that a transaction record made available to the Commission 
include the terms of any standardized fixed or floating rate payments 
that correspond exactly to Rule 901(c)(1)(iv). However, consistent with 
Regulation SBSR, such a schema would allow flexibility in how 
information may be reported to a registered SDR. For example, 
consistent with Rule 901(c)(1), a schema that represents the common 
data model

[[Page 79761]]

would not require data elements to satisfy Rules 901(c)(1)(iv) if a 
product ID reported under Rule 901(c)(1) already includes the 
information that would be captured by data elements associated with 
Rules 901(c)(1)(iv) data elements.
    To implement the common data model into an electronic format 
according to which SDRs could provide direct electronic access to the 
Commission, the Commission has developed two distinct schemas (computer 
code representations of the common data model), one based on the FpML 
standard, and the other based on the FIXML standard. Under the proposed 
amendment, an SDR could provide the Commission with direct electronic 
access by using either schema or both schemas. SBS transaction records 
structured according to one of the schemas could be immediately 
aggregated, compared, and analyzed by the Commission.
    At this time, the Commission is aware of only the FpML and FIXML 
standards for representing SBS data. In its evaluation of the potential 
applicability of these two standards for the purpose of regulatory 
reporting of SBS transactions, Commission staff undertook a mapping 
exercise, the results of which are reported in the appendix, to 
determine how much of the Commission's common data model could be 
represented using the existing reporting elements within the two 
standards. Commission staff found that there exists significant overlap 
between the FpML and FIXML standards in their descriptions of SBS data, 
and that almost all concepts of the common data model can be 
represented with existing FpML and FIXML reporting elements.\35\ In 
light of this and the SBS industry's current familiarity with and 
acceptance of these widely-used standards, the Commission believes that 
using FpML and FIXML schemas is an efficient and effective approach for 
satisfying the necessary form and manner of direct electronic access. 
Moreover, in light of prior engagement with the regulatory community 
and prior efforts to support regulatory requirements by the bodies that 
maintain both FpML and FIXML,\36\ the Commission anticipates that the 
bodies responsible for maintaining each industry standard are likely to 
update these standards to incorporate any remaining data elements 
needed for the purpose of reporting under SBSR. In particular, 
Commission staff has identified concepts within the proposed common 
data model that do not currently have equivalent data elements in FpML 
or FIXML. As discussed further below, in cases where concepts within 
the common data model do not yet have equivalents in FpML or FIXML, the 
Commission's schemas use extensions of existing FpML and FIXML 
reporting elements that accommodate the kind of data required by the 
common data model's concept.
---------------------------------------------------------------------------

    \35\ See Appendix.
    \36\ See 0.
---------------------------------------------------------------------------

    Both FpML and FIXML employ data models to logically arrange and 
organize their respective data elements in specific ways. These data 
models reflect each's' decisions regarding how to represent their data 
elements for reporting and communication purposes. The Commission's 
schemas would not require alteration of the standards' data models, but 
rather would incorporate each standard's data models as they are used 
to represent one of their data elements. As a result, the mapping of 
FpML and FIXML to the common data model does not necessarily reflect a 
one-to-one mapping between named data elements. In some instances, a 
single concept in the Commission's common data model maps to a group of 
data elements within FpML or FIXML. For example, FIXML models the terms 
of any standardized fixed rate payments by arranging multiple FIXML 
data elements that each represent a different attribute of a payment 
stream, including settlement currency, day count convention, and fixed 
rate. This FIXML data model composed of multiple data elements maps to 
a single concept in the common data model that corresponds to Rule 
901(c)(1)(iv).\37\
---------------------------------------------------------------------------

    \37\ See Appendix.
---------------------------------------------------------------------------

1. Common Data Model Treatment of Broad Categories of Transaction 
Information
    Below, we describe how Regulation SBSR provides the basis for the 
requirements of the common data model by examining how the schemas 
representing the common data model would treat broad categories of 
transaction information and how they would define relationships between 
specific data elements within those broad categories by placing 
restrictions on SBS data. The Commission notes that the concepts within 
the common data model are limited to those required to be reported to 
registered SDRs under Rules 901, 905, and 906 and required to be 
assigned by registered SDRs under Rule 907. The common data model also 
relies on definitions provided by Rule 900.
a. Primary Trade Information
    Rule 901(c) sets forth the data elements of a security-based swap 
that must be reported to a registered SDR and will then be publicly 
disseminated by the registered SDR pursuant to Rule 902(a) (unless an 
exception applies). These data elements generally encompass the means 
of identifying the contract and the basic economic terms of the 
contract and include any standardized payment streams associated with a 
contract, the notional value of the contract, the transaction price, 
and other information necessary for interpreting transaction prices 
such as a variable that would indicate the intent to clear a 
transaction.
    In order for the Commission to aggregate and analyze SBS data, 
Regulation SBSR requires reporting participants to report certain 
information about each security-based swap transaction. To provide a 
standardized means for identifying security-based swaps that share 
certain material economic terms, the Commission requires reporting 
participants to utilize a product ID of a security-based swap when one 
is available.\38\ If the security-based swap has no product ID, or if 
the product ID does not include the information enumerated in Rules 
901(c)(1)(i)-(v) of Regulation SBSR, then the information specified in 
subparagraphs (i)-(v) of Rule 901(c)(1) must be reported 
separately.\39\ The FpML and FIXML schemas would allow these data 
elements described in Rules 901(c)(1)(i)-(v) to supplement product IDs, 
and validations in each schema would indicate an error if the product 
ID is not provided and none of these supplementary data elements are 
included. In addition, as contemplated by Rule 901(c)(1)(v), the common 
data model would include a ``custom swap flag'' that would indicate 
when the information provided pursuant to Rules 901(c)(1)(i)-(iv) does 
not provide all of the material information necessary to calculate the 
price of a security-based swap.
---------------------------------------------------------------------------

    \38\ See Regulation SBSR Adopting Release, 80 FR at 14570.
    \39\ Subparagraph (i) requires information that identifies the 
security-based swap, including the asset class of the security-based 
swap and the specific underlying reference asset(s), reference 
issuer(s), or reference index. Subparagraph (ii) requires the 
effective date. Subparagraph (iii) requires the scheduled 
termination date. Subparagraph (iv) requires the terms of any 
standardized fixed or floating rate payments, and the frequency of 
any such payments. Subparagraph (v) requires a bespoke condition 
flag if the security-based swap is customized to the extent that the 
information provided in subparagraphs (i)-(iv) of Rule 901(c)(1) 
does not provide all of the material information necessary to 
identify the customized security-based swap or does not contain the 
data elements necessary to calculate the price.

---------------------------------------------------------------------------

[[Page 79762]]

    Rule 901(c) also requires reporting of certain details about an SBS 
transaction, including the execution time, price, and notional amount. 
The precise formats in which these elements can be provided have been 
determined by each industry standard. For example, the various FIXML 
data elements that express execution time are all expressed in 
coordinated universal time (UTC). Similarly, currencies that denominate 
price and notional amount are expressed using ISO 4217 currency 
codes.\40\
---------------------------------------------------------------------------

    \40\ See ISO 4217--Currency Codes, http://www.iso.org/iso/home/standards/currency_codes.htm (last visited Dec. 8, 2015).
---------------------------------------------------------------------------

    Finally, the common data model would include concepts that 
correspond to requirements in Rules 901(c)(5) and 901(c)(6) for flags 
that indicate inter-dealer transactions and transactions that 
counterparties intend to clear. In addition to these required flags, 
Rule 901(c)(7) requires that the person with a duty to report include 
any additional transaction flags as specified in the policies and 
procedures of the registered SDR to which they report.
b. Reportable Events and Transaction Identifiers
    Rule 901(a) assigns reporting duties for the security-based swaps 
described in Rule 908(a), including new security-based swaps and those 
that result from the allocation, termination, novation, or assignment 
of other security-based swaps. Rule 901(e) requires reporting of life 
cycle events. Rule 901(i) requires reporting, to the extent the 
information is available, of security-based swaps entered into before 
the date of enactment of the Dodd-Frank Act and security-based swaps 
entered into after the date of enactment but before Rule 901 becomes 
fully operative. Finally, Rule 905 sets out procedures for correcting 
errors to previously submitted transaction information. The schemas 
would include requirements for all of these event types. Both FIXML and 
FpML currently support the reporting of both new transactions as well 
as most of the other types of events required to be reported under 
Regulation SBSR, and so the schemas would include explicit mappings 
between existing FIXML and FpML events and those included in the common 
data model as a result of reporting requirements under Regulation SBSR.
    Under Rule 901(g), a registered SDR must assign a transaction ID to 
each new security-based swap that is reported to it or establish a 
methodology for doing so. Further, Rule 901(d)(10) requires reports of 
allocations, termination, novation, or assignment of one or more 
existing security-based swaps to include the transaction ID of the 
security-based swap that is allocated, terminated, novated, or 
assigned, while Rule 901(e)(2) requires reports of life cycle events to 
include the transaction ID of the original transaction. As the 
Commission discussed in the Regulation SBSR Adopting Release, requiring 
the use of a transaction ID in these instances would enable the 
Commission to update a transaction record to incorporate the life cycle 
event and map a new security-based swap to a corresponding prior 
transaction, even if the prior transaction was reported to a different 
registered SDR.\41\ To ensure consistency in the use of transaction IDs 
and enable the Commission to link together related transactions even if 
stored at different SDRs, the schemas that represent the common data 
model would stipulate how transaction reporting would link new trade 
activity and life cycle events to existing transactions through the use 
of the transaction ID. Further, the schemas would stipulate how an SDR 
would include the original transaction ID on records that involve 
allocations, terminations, novations, or assignments.
---------------------------------------------------------------------------

    \41\ See Regulation SBSR Adopting Release, 80 FR at 14589.
---------------------------------------------------------------------------

c. Market Participant Identifiers
    Rules 901(d)(1), 901(d)(2), 901(d)(9), 906(a), and 906(b) require 
reporting of the identity of each counterparty to a security-based swap 
as well as certain other persons who are affiliated with the 
counterparties or are otherwise involved in the transaction but who are 
not counterparties of that specific transaction. Because the Commission 
has recognized the Global Legal Entity Identifier System (GLEIS) as an 
Internationally Recognized Standard Setting System (IRSS) that assigns 
unique identification codes (``UICs'') to persons, these types of 
persons are required to obtain an LEI and registered SDRs are required 
to use these LEIs to identify these persons. Because the requirement to 
obtain an LEI does not apply to all persons enumerated in Rules 
901(d)(1), 901(d)(2), 901(d)(9), 906(a), and 906(b), the schemas would 
accommodate identifiers that are not LEIs.\42\
---------------------------------------------------------------------------

    \42\ See id. at 14632.
---------------------------------------------------------------------------

    Similarly, the schemas would accommodate LEI and non-LEI 
identifiers for execution agent IDs and broker IDs, since such persons 
might not have an LEI. Further, because no IRSS meeting the 
requirements of 903(a) has assigned or developed a methodology for 
assigning branch IDs, trader IDs, and trading desk IDs, the schemas 
would accommodate the identifiers or methodologies developed by the 
registered SDRs.
d. Cash Flows for Customized Contracts
    Rule 901(d)(3) requires reporting of details regarding the payment 
terms, frequencies, and contingencies for non-standard, or bespoke, 
contracts. The schemas would accommodate these as separate data 
elements by including restrictions so that these data elements would be 
permitted only if the custom swap flag discussed in Section II.B.1.a is 
set by the registered SDR based on the transaction data that it 
receives from the reporting participant.
e. Agreements
    Rule 901(d)(4) requires, for transactions that are not clearing 
transactions, the title and date of any master agreement, collateral 
agreement, margin agreement, or any other agreement incorporated by 
reference into the SBS contract. For example, to reflect these 
reporting requirements the schemas would include a flag to identify 
clearing transactions. For purposes of validation, if the clearing 
transaction flag is not set by the registered SDR, the registered SDR 
would be required to provide the agreement information provided by a 
reporting side under Rule 901(d)(4), if applicable, as separate data 
elements as well as provide the settlement details provided by 
reporting participants under Rule 901(d)(8). If instead the clearing 
transaction flag identifies a security-based swap as a clearing 
transaction, the associated transaction record would be valid even in 
the absence of the title and date of any master agreement, collateral 
agreement, margin agreement, or any other agreement incorporated by 
reference into the SBS contract because the Commission believes it 
could obtain this information from the registered clearing agency as 
necessary.\43\ Additionally, if the clearing transaction flag is not 
set because of the exception in Section 3C(g) of the Exchange Act (15 
U.S.C. 78c-3(g)) has been invoked, then an indication would be provided 
by the SDR.
---------------------------------------------------------------------------

    \43\ See Regulation SBSR Adopting Release, 80 FR at 14586.
---------------------------------------------------------------------------

f. Clearing
    Under Rule 901(c)(6), the person with the duty to report must 
indicate with a flag whether there is an intent to clear a transaction. 
The schemas would include such a flag. Rule 901(d)(6) also requires 
reporting of the name of the

[[Page 79763]]

clearing agency to which the swap will be submitted for clearing. 
Therefore, if the reporting participant \44\ has included an ``intent 
to clear'' flag, then expression of the intent to clear within the 
common data model would require the registered SDR to also include the 
name of the clearing agency to which the security-based swap will be 
submitted for clearing.
---------------------------------------------------------------------------

    \44\ See Sec.  242.901(a).
---------------------------------------------------------------------------

2. Required Reporting Elements That Do Not Exist in FpML or FIXML
    As mentioned earlier, some concepts within the common data model do 
not currently have existing equivalents within FpML or FIXML. These 
include:
     Custom swap flag; \45\
---------------------------------------------------------------------------

    \45\ See Sec.  242.901(c)(1)(v).
---------------------------------------------------------------------------

     the currencies of any upfront payment,\46\ if applicable;
---------------------------------------------------------------------------

    \46\ See Sec.  242.901(c)(3).
---------------------------------------------------------------------------

     a description of the settlement terms; \47\
---------------------------------------------------------------------------

    \47\ See Sec.  242.901(d)(8).
---------------------------------------------------------------------------

     inter-dealer swap flag; \48\
---------------------------------------------------------------------------

    \48\ See Sec.  242.901(c)(5).
---------------------------------------------------------------------------

     the title of any margin agreement; \49\ and
---------------------------------------------------------------------------

    \49\ See Sec.  242.901(d)(4).
---------------------------------------------------------------------------

     the date of any margin agreement.\50\
---------------------------------------------------------------------------

    \50\ See id.
---------------------------------------------------------------------------

    In these cases, the schemas would require specific extensions of 
existing FpML and FIXML reporting elements. For flags required by Rule 
901(c)(7), the Commission's schemas would require registered SDRs to 
populate the section with the flags identified within their own 
policies and then to select from those. As we discuss in Section 
III.C.2, both FpML and FIXML undergo regular updates. To the extent 
that the FpML and FIXML standards address the common data model as part 
of their periodic updates, the Commission expects that the standards 
will create defined elements to replace the initial use of extensions. 
When the Commission periodically updates its schemas, each schema will 
reflect the most recent version of each standard.
3. Validations
    As mentioned above, the schemas would incorporate validations. 
These validations are restrictions placed on the form and manner of the 
reported SBS data that help ensure that the data SDRs make available to 
the Commission adhere to the appropriate schema. In particular, the 
validations test for completeness of the data and for appropriate 
format. As a result, the validations will enhance the Commission's 
ability to normalize and aggregate the data. These validations are 
effective at testing for whether the SBS data conforms to the technical 
specifications of the schema. However, these validations will not test 
for whether the SBS data accurately reflects the transaction that took 
place. By using the incorporated validations, SDRs will help ensure 
that their stored data adheres to the appropriate schema, thereby 
providing the Commission with direct electronic access pursuant to Rule 
13n-4(b)(5).
4. Regulatory and Technical Coordination
    In developing these proposed rules, we have consulted and 
coordinated with the CFTC and the prudential regulators \51\ in 
accordance with the consultation mandate of the Dodd-Frank Act.\52\ We 
have also incorporated the past experiences of the CFTC regarding their 
swap data collection efforts, and consulted with both the CFTC and U.S. 
Department of the Treasury's Office of Financial Research regarding 
draft technical documentation, including the FIXML and FpML schemas. 
More generally, as part of the Commission's coordination efforts, 
Commission staff continue to participate in bilateral and multilateral 
discussions, task forces, and working groups on data harmonization and 
the regulation of OTC derivatives.
---------------------------------------------------------------------------

    \51\ The term ``prudential regulator'' is defined in section 
1a(39) of the Commodity Exchange Act, 7 U.S.C. 1a(39), and that 
definition is incorporated by reference in section 3(a)(74) of the 
Exchange Act, 15 U.S.C. 78c(a)(74). Pursuant to the definition, the 
Board of Governors of the Federal Reserve System (``Federal Reserve 
Board''), the Office of the Comptroller of the Currency, the Federal 
Deposit Insurance Corporation, the Farm Credit Administration, or 
the Federal Housing Finance Agency (collectively, the ``prudential 
regulators'') is the ``prudential regulator'' of a security-based 
swap dealer or major security-based swap participant if the entity 
is directly supervised by that regulator.
    \52\ Section 712(a)(2) of the Dodd-Frank Act provides in part 
that the Commission shall ``consult and coordinate to the extent 
possible with the Commodity Futures Trading Commission and the 
prudential regulators for the purposes of assuring regulatory 
consistency and comparability, to the extent possible.''
---------------------------------------------------------------------------

C. Request for Comment

     The Commission has developed two interoperable schemas so 
that SDRs can make SBS transaction data available to the Commission 
using already existing standards in a form and manner that can be 
easily utilized by the Commission for analysis and aggregation. Are 
there other ways to provide for the representation of SBS transactions 
that could be easily utilized by the Commission? If so, what are they? 
What are their strengths and weaknesses?
     Should the Commission require direct electronic access be 
provided by SDRs using only an FpML schema? Should the Commission 
require direct electronic access be provided by SDRs using only an 
FIXML schema? Is there another standard that the Commission should 
consider as acceptable? If so, which characteristics about that 
standard should make it acceptable to the Commission and how does that 
standard affect the Commission's ability to normalize, aggregate, and 
analyze the SBS data?
     Does the Commission's approach to providing for direct 
electronic access using either the FpML or FIXML schemas allow for the 
accurate representation of SBS transactions as described in Regulation 
SBSR? If not, why not?
     Are the FpML and FIXML standards sufficiently developed to 
require either one of them to be used by SDRs to provide access to the 
required SBS data? What factors or indicators should the Commission use 
to determine when an SBS-related standard has become sufficiently 
developed to require its use for providing the Commission with direct 
electronic access to SBS data?
     Should the Commission allow SDRs to develop their own 
standards or leverage other standards to provide access to the 
Commission? How would the Commission's ability to normalize, aggregate, 
and analyze the data be affected if SDRs used different standards and 
developed different schemas for representing the SBS data?
     Instead of leveraging industry standards, such as FIXML 
and FpML, should the Commission create a new standard or contract with 
a third-party to create a new standard? Why or why not?
     Are there other approaches to developing or using a 
standard that the Commission should consider? Please explain in detail.
     What would be the costs to an SDR to provide data in 
either FpML or FIXML standard? Are there other ways that SBS data 
should be provided to the Commission? Are there other standards that 
would cost less but still allow the Commission to similarly normalize, 
aggregate, and analyze the data?
     Should the Commission institute a test phase for providing 
this information in either an FpML or FIXML standard? If so, how long 
should this test phase last?
     Other than using schemas, is there another effective 
mechanism for SDRs to provide direct electronic access to the 
Commission that still achieves similar or better aggregation and 
consistency results?
     The Commission intends to incorporate validations into its 
schemas to help ensure the quality and completeness of the SBS data 
that SDRs

[[Page 79764]]

make available to the Commission. Is there another effective mechanism 
that would help ensure completeness and still achieve similar or better 
aggregation and consistency results?
     How should the common data model support reporting 
requirements that do not yet have equivalents in FpML or FIXML, while 
preserving the ability to normalize, aggregate, and analyze the data? 
As discussed in Section II.B.2, the Commission's schemas would require 
specific extensions of existing FpML and FIXML reporting elements. Is 
there a better alternative? Specifically, how would the alternative 
affect SDRs, the Commission, and market participants?

III. Economic Analysis

    On February 11, 2015, the Commission adopted the SDR Rules,\53\ 
which govern SDR registration, duties, and core principles,\54\ and 
Regulation SBSR, which governs the reporting to registered SDRs of SBS 
data and public dissemination by registered SDRs of a subset of that 
data.\55\ In combination, these rules represent a significant step 
forward in providing a regulatory framework to promote transparency and 
efficiency in the OTC derivatives markets and assist relevant 
authorities in performing their market oversight functions. As noted 
earlier in Section I.A, the Commission is concerned that SDRs might 
provide direct electronic access to data in a form and manner that is 
not conducive to the Commission's ability to analyze the data or 
surveil the SBS market. Under the proposed amendment, the Commission 
would specify the form and manner with which SDRs must provide direct 
electronic access to the Commission by requiring SDRs to comply with 
the appropriate schema as will be published on the Commission's Web 
site.
---------------------------------------------------------------------------

    \53\ See supra note 1.
    \54\ See supra note 2.
    \55\ See supra notes 3-4.
---------------------------------------------------------------------------

    The Commission is sensitive to the economic effects of the rules 
that it proposes, including implications for efficiency, competition, 
and capital formation. The Commission preliminarily believes that the 
proposed rule would provide a number of benefits and result in certain 
costs. Section 23(a)(2) of the Exchange Act \56\ requires the 
Commission, when making rules under the Exchange Act, to consider the 
impact that any new rule would have on competition. In addition, 
Section 23(a)(2) prohibits the Commission from adopting any rule that 
would impose a burden on competition not necessary or appropriate in 
furtherance of the purposes of the Exchange Act. Furthermore, Section 
3(f) of the Exchange Act \57\ requires the Commission, when engaging in 
rulemaking pursuant to the Exchange Act where it is required to 
consider or determine whether an action is necessary or appropriate in 
the public interest, to consider, in addition to the protection of 
investors, whether the action will promote efficiency, competition, and 
capital formation.
---------------------------------------------------------------------------

    \56\ 15 U.S.C. 78w(a)(2).
    \57\ 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    In many instances the potential benefits and costs of the proposed 
amendment are difficult to quantify. In particular, the Commission does 
not have precise estimates of the monetary benefits arising from the 
anticipated improvement in the Commission's ability to accurately 
analyze data made available by a single SDR, and the anticipated 
improvement in the Commission's ability to aggregate and analyze data 
made available by multiple SDRs. Benefits may arise from these 
improvements indirectly to the extent that facilitating the 
Commission's oversight of SBS market activity reduces the likelihood of 
abuse in the SBS market and risks to financial stability emanating from 
the SBS market, however the Commission does not have data that would 
enable it to estimate the magnitude of either of these effects.
    Similarly, the Commission also does not have the data to estimate 
the potential costs that might be associated with reduced competition 
in the SDR industry that could result from the proposed approach. As we 
discuss in more detail below, a potential result of reduced competition 
among SDRs is that SDRs increase prices for their services or decrease 
the quantity or quality of their services. While the Commission 
acknowledges these potential costs, it does not have information about 
SDR services that would be necessary to estimate changes in prices, 
quality of service, or quantity of service that might result from 
reduced competition. One reason for this lack of information is that, 
to date, no SDRs have registered with the Commission. Where possible, 
we provide quantitative estimates of the potential costs of the 
proposed amendments. We provide discussions of a qualitative nature 
when quantification is not possible.

A. Economic Baseline

    To examine the potential economic effects of the proposed 
amendments, our analysis considers as a baseline the rules adopted by 
the Commission that affect regulatory reporting and public 
dissemination, particularly those rules adopted as part of Regulation 
SBSR and the SDR Rules. The baseline includes our current understanding 
of international industry standards and market practices, including how 
those standards and practices have been influenced by the actions of 
other regulators. This section begins by summarizing the economic 
implications of regulatory reporting and public dissemination under the 
Commission's current regulatory framework for the SBS market and 
describing the data currently made available to the Commission on a 
voluntary basis. Following this discussion, the section describes the 
number of SDRs likely to be affected by the proposed amendments before 
examining the current state of the FIXML and FpML standards.
1. The SDR Rules and Regulation SBSR
    As mentioned above, the Commission recently adopted the SDR Rules 
and Regulation SBSR. Together, the rules seek to provide improved 
transparency to regulators and the markets through comprehensive 
regulations for SBS transaction data and SDRs.\58\ As the Commission 
envisioned in the SDR Adopting Release, SDRs will become an essential 
part of the infrastructure of the SBS market.\59\ Persons that meet the 
definition of an SDR will be required by the SDR Rules to maintain 
policies and procedures relating to data accuracy and maintenance, and 
will be further required by Regulation SBSR to publicly disseminate 
transaction-level data, thereby promoting post-trade transparency in 
the SBS market.
---------------------------------------------------------------------------

    \58\ See SDR Adopting Release, 80 FR at 14440.
    \59\ See id. at 14528.
---------------------------------------------------------------------------

    Additionally, as a result of the SDR Rules and Regulation SBSR, 
increased quality and quantity of pricing and volume information and 
other information available to the Commission about the SBS market may 
enhance the Commission's ability to respond to market developments. To 
help inform its understanding of the SBS market, the Commission 
currently relies upon data on individual CDS transactions voluntarily 
provided by the Depository Trust and Clearing Corporation (``DTCC'') 
Trade Information Warehouse (``TIW''). This information is made 
available to the Commission in accordance with an agreement between the 
DTCC-TIW and the OTC Derivatives Regulators' Forum (``ODRF''), of which 
the Commission is a member.

[[Page 79765]]

    The DTCC-TIW data provides sufficient information to identify the 
types of market participants active in the SBS market and the general 
pattern of dealing within that market. However, as the Commission noted 
in the SDR Adopting Release, the DTCC-TIW data does not encompass CDS 
transactions that both: (i) do not involve any U.S. counterparty, and 
(ii) are not based on a U.S. reference entity.\60\ Furthermore, because 
counterparties to CDS transactions voluntarily submit data to DTCC-TIW 
to support commercial activities, the data are not necessarily suited 
to support the Commission's needs, the legal requirements underlying 
the rules (e.g., the Dodd-Frank Act) or regulatory needs. For example, 
the transaction records captured by DTCC-TIW allow the Commission to 
identify trade execution dates but do not provide data to determine 
trade execution times.\61\ Both Regulation SBSR and the SDR Rules will 
assist the Commission in fulfilling its regulatory mandates such as 
detecting market manipulation, fraud, and other market abuses by 
providing it with access to more detailed SBS information than that 
provided under the voluntary reporting regime.
---------------------------------------------------------------------------

    \60\ See SDR Adopting Release, 80 FR at 14445.
    \61\ See Memorandum by the Staffs of the Division of Trading and 
Markets and the Division of Economic and Risk Analysis of the U.S. 
Securities and Exchange Commission, Inventory risk management by 
dealers in the single-name credit default swap market (Oct. 17, 
2014), available at http://www.sec.gov/comments/s7-34-10/s73410-184.pdf.
---------------------------------------------------------------------------

2. Swap Data Repositories
    In the SDR Adopting Release, the Commission estimated that 10 
persons may register with the Commission as SDRs.\62\ The Commission 
notes that in the swap market, only four persons have been 
provisionally registered with the CFTC for regulatory reporting in the 
swap market as SDRs thus far: BSDR LLC, Chicago Mercantile Exchange, 
Inc., DTCC Data Repository, and ICE Trade Vault.\63\ BSDR LLC and DTCC 
Data Repository currently allow reporting participants to submit 
transaction data using FpML.\64\ Intercontinental Exchange, the parent 
of ICE Trade Vault, uses FpML,\65\ while Chicago Mercantile Exchange, 
Inc. allows reporting participants to submit transaction data using 
FIXML.\66\ Accordingly, the Commission continues to preliminarily 
believe that approximately 10 persons would register with the 
Commission as SDRs.
---------------------------------------------------------------------------

    \62\ See SDR Adopting Release, 80 FR at 14521.
    \63\ See U.S. Commodity Futures Trading Commission, Swap Data 
Repository Organizations, http://sirt.cftc.gov/sirt/sirt.aspx?Topic=DataRepositories (last visited Dec. 8, 2015).
    \64\ See Bloomberg Swap Data Repository, BDSR APIs, http://www.bloombergsdr.com/api (describing trade submission methods 
available to participants reporting to BDSR) (last visited Dec. 8, 
2015). See also DTCC, US DDR SDR, http://www.dtcc.com/data-and-repository-services/global-trade-repository/gtr-us.aspx (describing 
submission formats supported by DTCC Data Repository) (last visited 
Dec. 8 2015).
    \65\ See ISDA FpML Survey Annex 1 (January 2011), http://www.isda.org/media/press/2011/pdf/isda-fpml-user-survey.pdf (listing 
ICE as an FpML user).
    \66\ See CME Group, Submitting Trades to the CME Swap Data 
Repository, http://www.cmegroup.com/trading/global-repository-services/submitting-trades-to-cme-repository-service.html (detailing 
data submission requirements for the CME Swap Data Repository) (last 
visited Dec. 8, 2015).
---------------------------------------------------------------------------

3. FIXML and FpML
    As previously discussed in Section II.A, there are two 
international industry standards for representing SBS data: FpML and 
FIXML.\67\ Both are open standards, meaning that they are technological 
standards that are widely available to the public at no cost. In 
addition, both standards are independent of the software and hardware 
used by market participants, thus facilitating interoperability. 
Representatives from the financial industry, including those in the SBS 
market, and market participants are involved in maintaining, 
developing, and updating both standards to support, among other things, 
market practices and regulatory reporting requirements. FpML 
maintenance is undertaken by the FpML Standards Committee, which is 
made up of representatives from a range of financial market 
participants including banks, brokers, CCPs, and other financial 
infrastructure providers. FIX is owned, maintained, and developed 
through the collaborative efforts of the FIX Trading Community, which 
is a non-profit, industry-driven standards body comprised of over 270 
member firms from the global financial services industry.\68\
---------------------------------------------------------------------------

    \67\ The Commission is aware that market participants may also 
use proprietary XML representations of transactions data.
    \68\ Updates to FpML are regularly announced at www.fpml.org, 
while updates to the FIX protocol, including updates to FIXML are 
regularly announced at http://www.fixtradingcommunity.org/pg/structure/tech-specs/fix-protocol (last visited Dec. 8, 2015).
---------------------------------------------------------------------------

    Based on the fact that there is substantial industry involvement in 
the development of both standards, the Commission preliminarily 
believes that the majority of transactions reportable under Regulation 
SBSR would include at least one counterparty that is familiar with 
communicating transaction details using FpML or FIXML or currently 
supports such communication. Further, most market participants will 
have familiarity with using FpML and/or FIXML for transaction 
reporting, including reporting to meet reporting obligations under the 
rules of other jurisdictions. For example, the FpML Regulatory 
Reporting Working Group has developed a draft mapping document that 
relates data elements required by seven regulators other than the 
Commission, in various jurisdictions, to corresponding FpML fields.\69\ 
The FIX Community has similarly provided documentation to show how data 
represented in FIX corresponds to certain regulatory reporting 
requirements.\70\ These efforts provide evidence that the groups 
responsible for developing FIX and FpML are already responding to 
regulatory reporting requirements by updating their reporting elements, 
and that market participants that use these standards would likely be 
able to use these standards to discharge reporting obligations.
---------------------------------------------------------------------------

    \69\ See supra note 26.
    \70\ See, e.g., FIX Protocol, Limited, Global Technical 
Committee and Futures Industry Association, CFTC Part 43 & 45 Gap 
Analysis III Foreign Exchange, (Jan. 3, 2013), available at http://www.fixtradingcommunity.org/mod/file/view.php?file_guid=46985.
---------------------------------------------------------------------------

    As noted in Section II.B.1, the schemas would include data elements 
that correspond to concepts defined in Rule 900 and required to be 
reported to registered SDRs by Rule 901. It would also include certain 
data elements derived from obligations of registered SDRs under Rule 
907. Based on a mapping exercise conducted by Commission staff, the 
Commission preliminarily believes that both the FpML and FIMXL 
reporting standards already include defined data elements that can be 
used to cover many of the concepts in the common data model. However, 
the Commission staff has identified several instances of concepts 
within the proposed common data model that do not yet have equivalently 
defined data elements in FpML or FIXML. In those cases, the schemas 
published on the Commission's Web site would provide extensions of 
existing FpML and FIXML reporting elements. To the extent that the FpML 
and FIXML standards address the common data model as part of their 
periodic updates, the Commission expects that the standards will create 
defined elements to replace the initial use of extensions. If the 
Commission were to adopt a rule that required SDRs to make SBS data 
available to the Commission using the FpML or FIXML standards, the 
Commission anticipates that its staff would keep apprised of

[[Page 79766]]

relevant advances and developments with those standards and engage with 
each standard's working group regarding such developments, as 
appropriate.

B. Benefits

    The Commission preliminarily believes that the proposed amendment, 
by specifying the form and manner with which SDRs would be required to 
make SBS data available to the Commission, provide for the accurate 
analysis of data made available by a single SDR, and the aggregation 
and analysis of data made available by multiple SDRs. In particular, 
the proposed amendment would enable the aggregation of SBS data by the 
Commission.
    In the SDR Adopting Release, the Commission recognized that the 
benefits associated with SDR duties, data collection and maintenance, 
and direct electronic access may be reduced to the extent that SBS 
market data are fragmented across multiple SDRs.\71\ Fragmentation of 
SBS market data may impose costs on any user of this data associated 
with consolidating, reconciling, and aggregating this data. Without a 
common data model expressed in specific formats, SDRs might, for 
example, make available to the Commission SBS data that are formatted 
using a variety of standards including FpML, FIXML, or other distinct 
proprietary standards or methods. Such an outcome could significantly 
increase the complexity of data aggregation, or perhaps even render 
data aggregation impractical because the Commission would have to map 
each standard to the common data model and might need to transform data 
from each SDR to meaningfully aggregate data across SDRs. Adding to the 
complexity of data aggregation, the Commission would have to repeat the 
mapping exercise and update data transformations each time an SDR 
chooses to update its standard, which could be disruptive to the 
Commission's monitoring and surveillance efforts.
---------------------------------------------------------------------------

    \71\ See SDR Adopting Release, 80 FR at 14538.
---------------------------------------------------------------------------

    By limiting SDRs' flexibility to a choice between FpML and FIXML, 
the Commission seeks to facilitate data aggregation and analysis by 
specifying the form and manner with which SDRs would be required to 
make SBS data available to the Commission. Adherence by SDRs to the 
schemas when providing direct electronic access should enhance the 
Commission's ability to analyze the data maintained by a single SDR, 
and allow the Commission to more effectively aggregate and analyze data 
received from multiple SDRs. Furthermore, the proposed amendment also 
simplifies the aggregation task because the Commission would determine 
the permitted formatting standards and schemas, not the SDRs. As a 
result, the process of data aggregation will not be complicated or 
disrupted by SDRs' decisions to update their formatting standards for 
reasons unrelated to regulatory requirements. The proposed amendment 
affords a simpler data aggregation process compared to an alternative 
in which SDRs exercise full discretion over the choice of formatting 
standard for providing direct electronic access and the timing for 
using the chosen standard.
    As discussed above, the schemas would incorporate validations.\72\ 
These validations are restrictions placed on the form and manner of the 
SBS data made available by SDRs to the Commission that help ensure that 
the data SDRs make available to the Commission adhere to the 
appropriate schema. In particular, the validations test whether the 
data are complete and appropriately formatted and will likely enhance 
the Commission's ability to normalize and aggregate the data. While 
validations incorporated into the schemas will be effective for 
checking data completeness and appropriate formatting, schema 
validations will not test for whether the SBS data accurately reflects 
the transaction that took place.
---------------------------------------------------------------------------

    \72\ See Section II.C.3 of this release.
---------------------------------------------------------------------------

    The proposed amendment may also indirectly improve the quality of 
regulatory reporting in a number of ways. First, by specifying the form 
and manner with which SDRs must make SBS data available to the 
Commission, the proposed amendment might provide SDRs an incentive to 
limit the range of ways that their participants can report SBS 
transaction data to them. If the proposed amendment results in clearer 
policies and procedures of registered SDRs, then the result could be 
more efficient reporting. Second, by leveraging existing industry 
standards, the proposed amendment may indirectly improve SBS data 
quality by eliminating the need for SDRs to reformat data already 
structured in FpML or FIXML in some different Commission specific 
format, thus reducing the likelihood that SDRs introduce errors in the 
process of reformatting data.

C. Costs

    The Commission has preliminarily identified three potential sources 
of costs associated with the proposed amendment. The first potential 
source is SDRs' implementation of the proposed amendment, the second 
potential source is the extension of existing standards to meet the 
Commission's reporting requirements and the updating of those standards 
if necessary, and the third potential source arises from limiting the 
flexibility of SDRs in making SBS data available to the Commission.
1. Implementation Cost to SDRs
    As the Commission noted in the SDR Adopting Release, the cost 
imposed on SDRs to provide direct electronic access to the Commission 
should be minimal as SDRs likely have or will establish comparable 
electronic access mechanisms to enable market participants to provide 
data to SDRs and review transactions to which such participants are 
parties.\73\ Further, as the Commission noted in Section III.A, many of 
the entities likely to register with the Commission as SDRs already 
accept transactions data from reporting persons who submit trade 
information using the FpML and FIXML standards.
---------------------------------------------------------------------------

    \73\ See SDR Adopting Release, 80 FR at 14539.
---------------------------------------------------------------------------

    Nevertheless, the Commission acknowledges that, as a result of the 
proposed amendment, SDRs may decide to implement policies, procedures, 
and information systems to ensure that SBS data made available to the 
Commission is in a form and manner that satisfies the requirements laid 
out in the schemas. The Commission preliminarily believes that the 
costs of implementing such policies, procedures, and information 
systems are likely to be related to conforming their data models to one 
of the Commission's schemas and are likely to be smaller for those SDRs 
that already employ FIXML or FpML. The Commission preliminarily 
believes that these costs, which are in addition to the internal costs 
related to information technology systems, policies, and procedures the 
Commission estimated in the SDR Adopting Release,\74\ would be 
approximately $127,000 in one-time costs per SDR, on average,\75\ for 
an

[[Page 79767]]

expected aggregate one-time cost of approximately $1,270,000.\76\ To 
arrive at these estimates, we assume that each SDR will first compare 
the data model it currently employs to the common data model 
represented by the schemas and subsequently make necessary 
modifications to information technology systems and policies and 
procedures.
---------------------------------------------------------------------------

    \74\ See id.
    \75\ The Commission preliminarily estimates that an SDR will 
assign responsibilities for modifications of information technology 
systems to an Attorney, a Compliance Manager, a Programmer Analyst 
and a Senior Business Analyst and responsibilities for policies and 
procedures to an Attorney, a Compliance Manager, a Senior Systems 
Analyst and an Operations Specialist. Data from SIFMA's Management & 
Professional Earnings in the Securities Industry 2013, modified by 
Commission staff to account for an 1800-hour work-year and 
multiplied by 5.35 to account for bonuses, firm size, employee 
benefits, and overhead, suggest that the cost of a Compliance 
Manager is $283 per hour, a Programmer Analyst is $220 per hour, a 
Senior Systems Specialist is $260 per hour, a Senior Business 
Analyst is $251 per hour, and an Operations Specialist is $125 per 
hour. Thus, the total initial estimated dollar cost will be 
$126,736.50 per SDR. This reflects the sum of the costs of modifying 
information technology systems ($110,810) and the cost of modifying 
policies and procedures ($15,926.50). Costs of modifying information 
technology systems are calculated as follows: (Attorney at $380 per 
hour for 70 hours) + (Compliance Manager at $283 per hour for 80 
hours) + (Programmer Analyst at $220 per hour for 200 hours) + 
(Senior Business Analyst at $251 per hour for 70 hours) = $110,810. 
Costs of modifying policies and procedures are calculated as 
follows: (Attorney at $380 per hour for 21.75 hours) + (Compliance 
Manager at $283 per hour for 19.25 hours) + (Senior Systems Analyst 
at $260 per hour for 5.75 hours) + (Operations Specialist at $125 
per hour for 5.75 hours) = $15,926.50.
    \76\ Aggregate costs are calculated as $126,736.50 x 10 SDRs = 
$1,267,365.
---------------------------------------------------------------------------

    To the extent that SDRs decide to modify their policies, 
procedures, and information technology systems, the Commission 
preliminarily believes that modifications that would be needed to 
support compliance with the proposed amendment are unlikely to change 
the marginal burden of providing direct electronic access to 
transaction records to the Commission. This is because the only 
additional costs would be costs incurred by SDRs to use policies, 
procedures, and information systems they would have already established 
to ensure that each additional transaction record that is made 
available to the Commission is in a form and manner that meets the 
requirements of the schemas.
    The Commission also preliminarily believes that certain of these 
costs may be mitigated to the extent that the proposed amendment 
promotes enhancements to FpML and FIXML in support of regulatory 
reporting to registered SDRs. If the schemas, by identifying and 
closing gaps between reporting requirements and existing standards, 
encourage the use of FpML and FIXML by reporting persons instead of 
other formatting standards, then SDRs could incur a lower burden of 
conforming SBS data to one of the Commission's schemas because SDRs 
will be limited to FpML or FIXML when making the data available to the 
Commission.
    The Commission recognizes that while SDRs may directly bear the 
implementation costs discussed above, these costs may be shared among 
market participants other than SDRs in several ways and will likely be 
passed through to SBS market participants, potentially in the form of 
higher costs for participants of registered SDRs, which in turn could 
result in higher transactions costs for counterparties, potentially 
impairing, albeit indirectly, efficiency in the SBS market and capital 
formation by SBS market participants. For example, the implementation 
costs incurred by registered SDRs could be passed on to reporting 
participants in the form of higher fees for reporting transactions. 
Consider the situation in which a registered SDR takes on reporting 
participants as clients before it implements the policies, procedures, 
and information systems needed to ensure that SBS data made available 
to the Commission is in a form and manner that satisfies the 
requirements laid out in the schemas. This registered SDR could offset 
this implementation cost by levying higher service charges on its 
participant base.
    The ability of SDRs to pass through costs to their participants 
depends in part on the market power of SDRs. As discussed in the 
economic baseline, the Commission preliminarily believes that a limited 
number of persons would register with the Commission as SDRs. If there 
is only one registered SDR serving all reporting participants, then 
this SDR would have a greater ability to shift implementation costs 
that could arise as a consequence of the proposed amendment to its 
users. By contrast, a competitive SDR industry would likely mean that 
registered SDRs had less market power, rendering them less able to pass 
through such costs to reporting participants.
    As an alternative to imposing higher fees on participants, 
registered SDRs could pass through a portion of the implementation 
costs to their participants by requiring reporting parties to report 
SBS data using FpML or FIXML in the same manner that the Commission is 
proposing to require that SDRs utilize for making data accessible to 
the Commission under the Commission's schemas. Under Rule 907(a)(2), a 
registered SDR is required to establish and maintain written policies 
and procedures that specify one or more acceptable data formats (each 
of which must be an open-source structured data format that is widely 
used by participants), connectivity requirements, and other protocols 
for submitting information. In response to the proposed amendment, 
registered SDRs might elect to establish policies and procedures that 
would facilitate conforming transaction data submitted by reporting 
participants to the schemas, pursuant to which the registered SDRs 
would be required to make the data accessible to the Commission. In 
particular, a registered SDR might elect to establish policies and 
procedures that mandate reporting of data elements under Rules 901(c) 
and 901(d) in the same form and manner that the Commission is proposing 
to require of registered SDRs, or levy fees for reformatting SBS 
transaction data reported in other formats to conform to one of the 
schemas. In this scenario, the registered SDR's participants could 
incur costs associated with: (i) modifying their reporting systems to 
transmit data to the registered SDR in a FIXML or FpML format that 
conforms to one of the schemas; or (ii) the registered SDR's 
reformatting of data to conform to one of the schemas. The registered 
SDR could subsequently make the data available to the Commission with 
minimal resources in ensuring that the data conforms to one of the 
schemas.
    Efficiency in the SBS market and capital formation by SBS market 
participants may be impaired, albeit indirectly, by registered SDRs' 
decisions to require reporting parties to report SBS data using FpML or 
FIXML under the Commission's schemas. If the technologies required to 
implement the proposed amendment have scale economies, then an outcome 
in which reporting participants independently modify their reporting 
systems potentially represents an inefficient use of resources for the 
SBS market as a whole, even if it results in lower costs to SDRs, and 
particularly if reporting participants that do not otherwise have a 
frequent duty to report also modify their reporting systems. While 
acknowledging the potential for these inefficiencies, the Commission 
preliminarily believes they are unlikely to manifest for a number of 
reasons. First, because FpML and FIXML are currently international 
industry standards,\77\ it is likely that a significant proportion of 
reporting participants already use either FpML or FIXML. Participants 
with reporting obligations include SBS dealers; the Commission has also 
proposed reporting obligations for clearing agencies.\78\ Commission 
staff has determined that all four clearing agencies currently clearing 
index and single name CDS use either FpML or FIXML,\79\ and at least 
fourteen

[[Page 79768]]

of the fifteen major dealers recognized by ISDA use either FpML or 
FIXML \80\. Reporting participants that already use FpML or FIXML could 
potentially adapt policies, procedures, and information systems to 
report transactions using one of the schemas at a lower cost than 
reporting participants that use a standard other than FpML or FIXML. 
Second, the potential inefficiencies may be muted if there are multiple 
SDRs that accept SBS data in each asset class. To the extent that 
multiple SDRs compete within an asset class, one potential competitive 
outcome is that one or more SDRs may strive to attract business from 
reporting participants by exploiting the scale economies associated 
with implementation and offering to accept data in whatever formats 
they currently accept from reporting participants and reformatting this 
data to conform to the common data model. In the case of a registered 
SDR that chooses to levy a fee for reformatting SBS data to conform to 
one of the schemas, competition between SDRs may limit the fees an SDR 
has the ability to charge.
---------------------------------------------------------------------------

    \77\ See Sections II.A.1 and III.A of this release.
    \78\ See Regulation SBSR Adopting Release, 80 FR at 14730. See 
also Securities Exchange Act Release No. 74245 (February 11, 2015), 
80 FR 14740, 14802 (March 19, 2015) (``SBSR Amendments Proposing 
Release'').
    \79\ ICE Clear Credit, ICE Clear Europe, CME, and LCH.Clearnet 
currently clear index and single name CDS. See SBSR Amendments 
Proposing Release 80 FR at 14775. Section III.A.2 of this release 
discusses the formatting standards used by ICE and CME. LCH.Clearnet 
allows reporting participants to submit transactions data using 
FpML. See LCH.Clearnet Ltd, ClearLink Messaging Specification 4 
(June 2013), available at http://www.lchclearnet.com/documents/515114/515787/Clearlink+Technical+Requirements/004bb402-1b77-4561-88d7-c0e7e90b7363.
    \80\ The fifteen major derivatives dealers identified in the 
2013 ISDA Operations Benchmarking Survey are Barclays Capital, BNP 
Paribas, Bank of America-Merrill Lynch, Citigroup, Credit Suisse, 
Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley, 
Nomura, Royal Bank of Scotland, Societe Generale, UBS, Wells Fargo. 
See International Swaps and Derivatives Association, Inc., 2013 ISDA 
Operations Benchmarking Survey 29 (Apr. 2013), available at https://www2.isda.org/attachment/NTUzOQ==/OBS%202013%20FINAL%200425.pdf.
    We use the FIX Trading Community Membership listing to identify 
dealers that use FIXML. See Premier Global Members, http://www.fixtradingcommunity.org/pg/group-types/sellside-broker-dealers-public (last visited Dec. 8, 2015). We rely on a dealer's membership 
in the FpML Standards Committee as an indication of the dealer's use 
of FpML. See Standards Committee, http://www.fpml.org/committees/standards/ (last visited Dec. 8, 2015). Because both the FIX 
Membership listing and FpML Standards Committee participation are 
voluntary, our estimates present a lower bound of the number of 
major dealers that use either FpML or FIXML.
---------------------------------------------------------------------------

    Taken together, scale economies for implementation and competition 
among SDRs might compel all SDRs to permit reporting participants to 
submit SBS data to SDRs using a variety of formats, thereby eliminating 
the inefficiencies associated with modification of systems by reporting 
parties.
    Finally, participants that report infrequently or do not use FpML 
or FIXML could reduce their burden by engaging with third-party 
entities to carry out reporting duties incurred under Regulation SBSR 
as well as satisfy data formatting requirements specified by registered 
SDRs.\81\ Third-party entities may offer reporting services if they are 
able to make SBS data available in a form and manner consistent with 
the schemas at a lower cost than SDRs and SDR participants. Such a cost 
advantage might arise if a third-party entity uses FpML or FIXML to 
process SBS data as part of its existing business activities and has 
acquired technical expertise in using FpML or FIXML. Further, the 
availability of third-party entities that can convert SBS data to meet 
formatting requirements specified by registered SDRs may place an upper 
limit on the fees levied by SDRs to reformat data to conform to a 
Commission schema.
---------------------------------------------------------------------------

    \81\ The Commission acknowledged in Regulation SBSR that 
reporting requirements could present a barrier to entry for smaller 
firms but noted that firms that are reluctant to acquire and build 
reporting infrastructure could engage with third-party service 
providers to carry out reporting duties under Regulation SBSR. See 
Regulation SBSR Adopting Release, 80 FR at 14702.
---------------------------------------------------------------------------

2. Costs of Extending and Updating Standards
    At present, FpML and FIXML do not have a complete set of defined 
reporting elements that address all Regulation SBSR reporting 
requirements. Market participants may choose to extend these standards 
to fully reflect Regulation SBSR reporting requirements through the 
industry bodies that maintain FpML and FIXML (working groups).\82\ As 
discussed earlier, both standards undergo regular updates.
---------------------------------------------------------------------------

    \82\ The FIX Protocol is updated by actions of its Global 
Technical Committee via a formal process in which working groups 
formulate a gap analysis and technical proposal. The gap analysis 
and proposal documents are posted on the FIX Web site and accessible 
to the public prior to Global Technical Committee review. Approved 
proposals are published to the technical specification page as an 
``extension'' or ``errata/service'' release, depending on their 
scope. Extensions to the FIX protocol apply to both FIX's native 
format and FIXML. See FIX Protocol, Limited, FPL Technical Gap 
Analysis Approval Process (Jan. 20, 2006), available at http://www.fixtradingcommunity.org/pg/file/fplpo/read/1437402/gap-analysis-specification-proposal-process.
    FpML is updated by actions of its Standards Committee via a 
formal process in which working groups produce documents that define 
extensions or other technical matters which must proceed through 
stages as working drafts, last call working drafts, trial 
recommendations and recommendations. Extensions to FpML that reach 
trial recommendation status are assigned an incremented version 
number, so that the latest recommendation may be FpML 5.7 while the 
trial recommendation is FpML 5.8. All public specifications are 
published on the FpML Web site. See FpML Standards Committee, 
Standards Approval Process--Version 2.1--June 2009, available at 
http://www.fpml.org/asset/49a6b038/7545553a.pdf.
---------------------------------------------------------------------------

    While the Commission acknowledges the costs of extending and 
updating these standards, these are indirect costs, in that they are 
not costs required to be incurred by the proposed amendment, but costs 
that may be incurred voluntarily by industry bodies. Further, the 
Commission preliminarily believes that extension costs would be modest. 
An analysis undertaken by Commission staff suggests that each standard 
currently has the defined reporting elements required to capture almost 
all of the data elements contemplated by Regulation SBSR.\83\ The 
Commission also preliminarily believes that the update costs would be 
limited because any update needed to support possible future changes in 
Regulation SBSR reporting requirements would likely be implemented as 
part of the routine updates undertaken by the working groups. The 
Commission reviewed the time taken to revise both FpML and FIXML and 
estimated that a revision requires on average 304 days.\84\ A working 
group is estimated to be 29-member strong based on the size of the 
working group charged with revising FpML to define data elements to be 
used for reporting OTC derivative positions between market participants 
and to regulators.\85\ The Commission assumes that the one-time 
extension and a periodic update of each standard will require only a 
fraction of the time required for a revision of a standard, with an 
extension requiring more time than a periodic update. Thus, the one-
time cost of extending each standard is estimated to be $1,410,560 for 
a total cost of $2,821,120 for both standards, while the cost of a 
periodic update to one standard is estimated to be $282,112 for a total 
cost of $564,224 for both standards.\86\ The Commission

[[Page 79769]]

preliminarily believes that, while these costs would be directly 
incurred by working group members, they would likely be passed through 
to market participants, potentially in the form of higher transactions 
costs.
---------------------------------------------------------------------------

    \83\ See Section II.C and Appendix.
    \84\ Using the release dates for versions 4.1 through 5.7 of 
FpML, we estimate the average time taken to update each version to 
be 154 days. Using the release dates for versions 4.0 through 5.0 of 
FIXML, we estimate the average update time to be 454 days. We take 
the average of these two estimates to arrive at the final estimate 
of 304 days. The Commission preliminarily believes that these 
estimates are upper bounds on the time required to make extensions 
as a result of the proposed amendment because they represent an 
average of major and minor changes and because these changes likely 
represent a mix of changes in response to market practice and 
changes in response to regulatory requirements.
    \85\ See Section III.A.3 of this release. See also FpML, 
Regulatory Reporting Working Group, http://www.fpml.org/wgroup/rptwg/ (last visited Dec. 8, 2015).
    \86\ Because members of a working group are professionals from 
various organizations, we treat each member as an outside 
professional for this analysis and use a $400 per hour cost. We 
assume an eight hour work day for each member of the working group. 
For the one-time extension of a standard, we assume a workload of 5% 
of each working group member's work day. Given these assumptions, 
the cost of extending one standard = 304 x 29 x 8 x 400 x 0.05 = 
$1,410,560. The cost of extending both standards is = 1,410,560 x 2 
= $2,821,120. For the periodic update of a standard, we assume a 
workload of 1% of each working group member's work day due to the 
incremental and limited nature of a periodic update. Thus, the cost 
of a periodic update to one standard = 304 x 29 x 8 x 400 x 0.01 = 
$282,112, and the cost for both standards is = 282,112 x 2 = 
$564,224.
---------------------------------------------------------------------------

3. Limiting Formatting Flexibility of SDRs
    In the SDR Adopting Release, the Commission required SDRs to 
provide direct electronic access, but did not specify the form and 
manner of the direct electronic access. As the Commission noted in the 
SDR Adopting Release, until such time as the Commission adopts specific 
formats and taxonomies, ``SDRs may provide direct electronic access to 
the Commission to data in the form in which the SDRs maintain such 
data.'' \87\ The proposed amendment, by specifying the form and manner 
of direct electronic access, potentially curtails the flexibility in 
formatting choices that SDRs enjoy in the absence of the proposed 
amendment. The Commission is aware that such curtailment potentially 
represents a cost of the proposed amendment, but does not believe it 
can quantify this cost with any degree of precision as it depends on 
the different means by which each SDR could potentially make data 
available to the Commission electronically in the absence of the 
proposed amendment.
---------------------------------------------------------------------------

    \87\ See SDR Adopting Release, 80 FR at 14475.
---------------------------------------------------------------------------

    Additionally, the proposed amendment could entail costs if FpML and 
FIXML no longer reflect SBS market conventions. As the SBS market 
evolves, FpML and FIXML may cease to reflect SBS market practices or 
products. If more efficient standards other than FpML or FIXML emerge, 
the proposed amendment would not permit SDRs to take advantage of those 
standards in providing direct electronic access to the Commission, 
though the proposed amendment would not preclude SDRs from using those 
standards for other purposes. The magnitude of this economic effect is 
difficult to estimate as we would require information about future SBS 
market practices and products, as well as efficiency improvements in 
currently existing and new formatting standards. Moreover, the 
Commission preliminarily believes that potential reductions in future 
flexibility will be limited for a number of reasons. First, as 
previously discussed in Section II.A, representatives from the 
financial industry, including those in the SBS market, are involved in 
maintaining, developing, and updating FpML and FIXML to support, among 
other things, market practices and regulatory reporting requirements. 
Periodic updating reduces the likelihood that FpML and FIXML will fail 
to reflect changes to SBS market practices or products. Further, the 
Commission preliminarily believes that industry involvement and 
periodic updating make it less likely that a more efficient alternative 
to FpML or FIXML will emerge. Second, by specifying schemas based on 
both FpML and FIXML, the proposed amendment provides redundancy in case 
one standard falls into disuse and no longer reflects SBS market 
practices or products.

D. Competition Among SDRs

    The Commission is also sensitive to the effects on competition 
among SDRs that might arise as a result of the proposed amendment. The 
Commission preliminarily believes that the impact of the proposed 
amendment is likely to be limited. The Commission views the effect of 
the proposed amendment as further specifying the form and manner of 
data already required to be made available to the Commission under Rule 
13n-4(b)(5). The Commission understands that the implementation costs 
associated with meeting minimum requirements for form and manner under 
the proposed amendment could represent a barrier to entry for entrants 
into the SDR industry that, in the absence of the proposed amendment, 
would choose to make data available to the Commission in a lower cost 
form and manner.
    To the extent that the proposed amendment deters new firms from 
entering the SDR industry, competition between SDRs could be reduced. A 
less competitive SDR industry could see incumbent registered SDRs 
increasing fees charged to reporting participants, reducing the 
quantity and quality of services provided to reporting participants, or 
both. Further, a less competitive SDR industry could make it easier for 
incumbent registered SDRs to shift a bigger portion of their 
implementation cost to reporting participants. As noted above, such a 
shift could represent an inefficient allocation of implementation costs 
if it results in duplicative investment in software and systems by a 
large number of reporting parties to conform data to the schemas.\88\
---------------------------------------------------------------------------

    \88\ See Section III.C.1 of this release.
---------------------------------------------------------------------------

    The Commission preliminarily believes that any deleterious effect 
on competition that results from the proposed amendment might be 
limited for a number of reasons. First, because the Commission is 
selecting the FpML and FIXML standards which are widely available to 
the public at no cost, new entrants would not incur any cost associated 
with the creation of new standards. Second, should extension and 
updating costs be necessary, such costs are expected to be modest and 
would likely be shared among various market participants, including 
SDRs. Thus, the actual portion of these costs incurred by a new entrant 
would be limited.

E. Alternative Approaches

    The Commission has considered two alternatives to the approach 
contemplated in the proposed amendment. In this section, we discuss 
each alternative in turn and the reasons why each alternative approach 
was not proposed.
1. Developing a New Standard
    The first alternative would involve development of a new 
information formatting standard specifically designed to support 
regulatory reporting of SBS data. The Commission could implement this 
alternative in one of two ways. First, the Commission could develop a 
new standard on its own and require SDRs to use this standard. The key 
advantage of such an approach is that it would give the Commission the 
ability to tailor definitions of data elements to precisely match those 
in Regulation SBSR. However, this approach suffers from a number of 
drawbacks. The Commission would likely expend significant resources to 
(i) develop an information formatting standard for SBS data, (ii) stay 
informed of the various practices of the SDRs, (iii) provide guidance 
on the standard's use, and (iv) update the standard on a regular basis 
to incorporate innovations in the SBS market and additional reporting 
requirements as determined by future Commission action. Further, under 
this approach market participants could incur costs associated with 
supporting an additional information formatting standard that is not 
useful except for purposes of satisfying Title VII requirements.
    In the absence of an existing standard for SBS data, it would be 
appropriate for the Commission to develop a new

[[Page 79770]]

standard specifically designed to support regulatory reporting of SBS 
data. However, because FpML and FIXML are existing standards that are 
widely used by market participants, the Commission preliminarily 
believes it would be more efficient to leverage these standards that 
have been designed with input from market participants, that 
communicate information about financial contracts, and that can be 
updated and maintained with the assistance of dedicated industry 
working groups. Further, the Commission preliminarily believes that the 
proposed approach reduces the likelihood that SDRs introduce errors to 
SBS data in the process of reformatting data structured in FpML or 
FIXML to conform to a new standard developed specifically for 
regulatory reporting. Thus, the Commission has not chosen to develop 
its own standard in the proposed amendment.
2. FpML or FIXML as the Sole Schema Standard
    A second alternative would be to use either FpML or FIXML as the 
sole schema standard. The Commission preliminarily believes that using 
only a single standard would impose an additional burden on an SDR that 
currently uses a standard other than the selected standard. Because 
FpML and FIXML are both widely used and accepted in the financial 
industry, it is possible that some SDRs use FpML while others use 
FIXML. As noted in the economic baseline, among the persons that could 
potentially register as SDRs for security-based swaps, BSDR LLC, DTCC 
Data Repository, and ICE are FpML users, while Chicago Mercantile 
Exchange, Inc. is a FIXML user. By selecting either FpML or FIXML as 
the sole standard, the Commission would be requiring an SDR that did 
not use the proposed standard to incur costs to change its policies, 
procedures, and information systems to accommodate the proposed 
standard. In addition, selecting a sole standard could increase the 
likelihood of introducing errors to SBS data caused by an SDR that uses 
the non-permissible standard when reformatting its data to conform to 
the selected standard. A greater likelihood of errors could potentially 
reduce the quality of SBS data made available to the Commission. 
Further, allowing both FpML and FIXML instead of allowing just one of 
these standards would afford some measure of redundancy in case one 
standard falls into disuse (due, for example, to the cessation of 
industry support) and no longer reflects current market practices.

F. Request for Comment

    The Commission seeks commenters' views and suggestions on all 
aspects of its economic analysis of the proposed amendment. In 
particular, the Commission asks commenters to consider the following 
questions:
     What additional information sources can the Commission use 
to calibrate the cost of setting up and implementing policies, 
procedures, and information systems to format and submit SBS 
transaction data in accordance with the Commission's schemas?
     What fraction of reporting participants already use FpML 
or FIXML to format SBS data?
     What fraction of reporting participants use proprietary 
XML representations of SBS?
     What additional information sources can the Commission use 
to calibrate (a) the cost of extending FpML and FIXML and (b) the cost 
of periodically updating these standards?
     Are there costs associated with the proposed amendment 
that the Commission has not identified? If so, please identify them and 
if possible, offer ways of estimating these costs.

IV. Paperwork Reduction Act

    The Commission is required to take into account those provisions of 
any proposed amendments that contain ``collection of information 
requirements'' within the meaning of the Paperwork Reduction Act of 
1995 (``PRA'').\89\ In this release, the Commission is proposing to 
specify the form and manner with which SDRs will be required to make 
SBS data available to the Commission under Exchange Act Rule 13n-
4(b)(5). Specifically, the Commission is proposing to amend Rule 13n-
4(a)(5) to require SDRs to provide direct electronic access using 
either the FpML schema or the FIXML schema as published on the 
Commission's Web site. The Commission is also requiring that the SDRs 
use the most recent schema published on the Web site, as the Commission 
may make periodic updates to reflect changes in the FpML and FIXML 
standards or changes in industry practice.
---------------------------------------------------------------------------

    \89\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

    As is discussed in greater detail below, the Commission 
preliminarily believes that the proposed amendments to Rule 13n-4(a)(5) 
would result in a collection of information burden. To the extent that 
this collection of information burden has not already been accounted 
for in the adoption of the SDR Adopting Release and Regulation 
SBSR,\90\ such burden is discussed below. The purpose of the proposed 
amendments to Rule 13n-4(a)(5) is to specify the form and manner with 
which SDRs would be required to make SBS data available to the 
Commission. By doing so, the Commission seeks to ensure that the SBS 
data made available by SDRs are formatted and structured consistently 
so that the Commission can accurately analyze the data maintained by a 
single SDR, and so that the Commission can also aggregate and analyze 
data maintained by multiple SDRs. Collection of the underlying data, 
however, is already covered by existing collections.
---------------------------------------------------------------------------

    \90\ See SDR Adopting Release, 80 FR 14437; Regulation SBSR 
Adopting Release, 80 FR 14673.
---------------------------------------------------------------------------

    The Commission's SDR Rules (OMB Control Number 3235-0719) consist 
of Rules 13n-1 to 13n-12 under the Exchange Act governing SDRs, and a 
new form, Form SDR, for registration as a security-based swap data 
repository. Among other things, Rule 13n-4(b) sets forth requirements 
for collecting and maintaining transaction data that each SDR will be 
required to follow. The SDR Adopting Release described the relevant 
burdens and costs that complying with Rule 13n-4(b), as well as the 
other companion rules, will entail. The Commission estimated that the 
one-time start-up burden relating to establishing the systems necessary 
to comply to the SDR Rules (including Rule 13n-4(b)) would be 42,000 
hours and $10 million in information technology costs for each SDR, for 
a total one-time start-up burden of 420,000 hours and $100 million.\91\ 
The Commission further estimated that the average ongoing annual burden 
of these systems would be 25,200 hours and $6 million per SDR, for a 
total annual ongoing annual burden of 252,000 hours and $60 
million.\92\ The Commission preliminarily believes that there would be 
additional burdens on top of those already discussed in connection with 
the SDR Rules as a result of the proposed amendments. The Commission is 
submitting the collection of information to the Office of Management 
and Budget for review in accordance with 44 U.S.C. 3507 and 5 CFR 
1320.11. The title of the collection of information the Commission is 
proposing to amend is ``Form SDR and Security-Based Swap Data 
Repository Registration, Duties, and Core Principles.'' An agency may 
not conduct or sponsor, and a person is not required to respond to, a 
collection of

[[Page 79771]]

information unless it displays a currently valid OMB control number.
---------------------------------------------------------------------------

    \91\ See 80 FR at 14523.
    \92\ Id.
---------------------------------------------------------------------------

    Regulation SBSR (OMB Control No. 3235-0718), among other things, 
sets forth the primary and secondary SBS trade information that must be 
reported to a registered SDR and, with some exceptions, disseminated by 
a registered SDR to the public. The burdens associated with the 
reporting and dissemination of SBS trade information are discussed in 
Regulation SBSR. These burdens include those related to a registered 
SDR to time-stamping information that it receives, assigning a unique 
transaction ID to each security-based swap it receives (or establishing 
or endorsing a methodology for transaction IDs to be assigned by third 
parties), disseminating transaction reports related to SBSs, issuing 
notifications regarding closing hours and system availability, 
establishing protocols for correcting errors in SBS information, 
obtaining UICs as necessary, establishing and maintaining compliance 
with certain policies and procedures, and registering as a securities 
information processor. In this release, the Commission has not proposed 
changes to the information that must be reported to a registered SDR or 
the information that must be disseminated by a registered SDR to the 
public. The Commission therefore preliminarily believes that there 
would be no additional burden beyond those already discussed in 
connection with Regulation SBSR.
    The Commission believes, as is discussed in greater detail above in 
Section II.A., that the participants in the SBS market generally 
already employ two industry standard formats: FpML and FIXML. The 
Commission expects, but Regulation SBSR does not require, that 
registered SDRs will accept SBS trade information in one or both of 
these industry standard formats. In preparation for compliance with 
Regulation SBSR and the SDR Adopting Release, the Commission expects 
that registered SDRs will have established systems capable of 
collecting--and indeed likely have already collected SBS trade 
information--in one of these two industry standards formats. However, 
the Commission does acknowledge that, as a result of the proposed 
amendment, SDRs may incur burdens associated with implementing 
policies, procedures, and information systems to ensure that SBS data 
made available to the Commission is in the form and manner that 
satisfies the requirements laid out in the schema.

A. Summary of Collection of Information

    Rule 13n-4(b)(5) requires SDRs to provide direct electronic access 
to the Commission or its designees. Rule 13n-4(a)(5), as proposed to be 
amended, requires ``direct electronic access'' to be made using ``the 
most recent version of either the FpML schema or the FIXML schema for 
security-based swap data repositories as published on the Commission's 
Web site.'' The proposed amendments do not alter or amend the 
information that must be collected and maintained by a registered SDR, 
but do impact the manner in which such information is made available to 
the Commission.

B. Use of Information

    Rules 13n-4(b)(5) requires that an SDR provide the Commission, or 
any designee of the Commission, with direct electronic access. The 
information made available to the Commission, or its designee, will 
help ensure an orderly and transparent SBS market as well as provide 
the Commission with tools to help oversee this market.

C. Respondents

    The direct electronic access requirements of Rule 13n-4(b)(5) apply 
to all SDRs, absent an exemption. Thus, for these provisions, the 
Commission continues to estimate that there will be 10 respondents.

D. Total Initial and Annual Reporting and Recordkeeping Burden

    As discussed above, Rule 13n-5(b)(5) requires SDRs to provide 
direct electronic access to the Commission or its designees. Rule 13n-
4(a)(5), as proposed to be amended, would require ``direct electronic 
access'' to be made available to the Commission using ``the most recent 
version of either the FpML schema or the FIXML schema for security-
based swap data repositories as published on the Commission's Web 
site.''
    The Commission preliminarily believes that registered SDRs are 
likely to already accept transaction data from reporting persons who 
submit trade information using FpML and FIXML reporting standards. 
However, the Commission preliminarily believes that, as a result of the 
proposed amendment, registered SDRs may incur certain burdens 
associated with implementing policies, procedures, and information 
systems to ensure that SBS data made available to the Commission is in 
a form and manner that satisfies the requirements laid out in the 
schemas. The Commission preliminarily believes that these incremental 
burdens are likely to be related to ensuring that the data elements 
that constitute the common data model are represented using the 
appropriate FIXML or FpML reporting elements and are likely to be 
smaller for those SDRs that already employ FIXML or FpML. The 
Commission preliminarily estimates that each registered SDR will incur 
an initial, one-time burden of 472.5 hours,\93\ for an aggregate one-
time burden of 4,725 hour for all registered SDRs.\94\ The Commission 
expects that each SDR will comply with the proposed rule by first 
comparing the data model it currently employs to the common data model 
represented by the schemas and subsequently making necessary 
modifications to information technology systems and policies and 
procedures.
---------------------------------------------------------------------------

    \93\ The Commission preliminarily estimates that an SDR will 
assign responsibilities for modifications of information technology 
systems to an Attorney, a Compliance Manager, a Programmer Analyst 
and a Senior Business Analyst and responsibilities for policies and 
procedures to an Attorney, a Compliance Manager, a Senior Systems 
Analyst and an Operations Specialist. The Commission estimates the 
burden of modifying information technology systems to be as follows: 
70 hours (Attorney) + 80 hours (Compliance Manager + 200 hours 
(Programmer Analyst) + 70 hours (Senior Business Analyst) = 420 
burden hours. The Commission estimates the burden of modifying 
policies and procedures to be as follows: 21.75 hours (Attorney) + 
19.25 (Compliance Manager) + 5.75 hours (Senior Systems Analyst) + 
5.75 hours (Operations Specialist) = 52.5 burden hours.
    \94\ The aggregate burden is calculated as follows: (420 hours + 
52.5 hours) x 10 registered SDRs = 4,725 burden hours
---------------------------------------------------------------------------

    Once the policies, procedures, and information systems required to 
comply with the proposed amendment are in place, the Commission 
preliminarily does not believe that there will be any additional 
paperwork burden placed upon SDRs to make transaction records 
accessible in a form and manner that satisfies the requirements of the 
schemas. The Commission preliminarily believes that the burdens related 
to SDRs using their policies, procedures, and information systems they 
would have already established have been accounted for in the 
previously adopted SDR Rules. Furthermore, the Commission preliminarily 
believes that the annual burdens associated with maintaining the SDRs 
policies and procedures, as well as the annual burdens associated with 
modifications of information technology systems have already been 
accounted for in the previously approved SDR Rules.

E. Collection of Information Is Mandatory

    The collection of information relating to direct electronic access 
is mandatory for all SDRs, absent an exemption.

[[Page 79772]]

F. Confidentiality

    Because these proposed amendments do not impact the scope or nature 
of the information required to be made available to the Commission, the 
Commission does not expect to receive confidential information as a 
result of these proposed amendments. However, to the extent that the 
Commission does receive confidential information pursuant to this 
collection of information, such information will be kept confidential, 
subject to the provisions of applicable law.

G. Recordkeeping Requirements

    Rule 13n-7(b) under the Exchange Act requires an SDR to keep and 
preserve at least one copy of all documents, including all documents 
and policies and procedures required by the Exchange Act and the rules 
or regulations thereunder, correspondence, memoranda, papers, books, 
notices, accounts, and other such records as shall be made or received 
by it in the course of its business as such, for a period of not less 
than five years, the first two years in a place that is immediately 
available to representatives of the Commission for inspection and 
examination. This requirement encompasses any documents and policies 
and procedures established as a result of the proposed amendments.

H. Request for Comments

    Pursuant to 44 U.S.C. 3505(c)(2)(B), the Commission solicits 
comment to:
     Evaluate whether the proposed collection of information is 
necessary for the proper performance of our functions, including 
whether the information will have practical utility;
     Evaluate the accuracy of our estimate of the burden of the 
proposed collection of information;
     Determine whether there are ways to enhance the quality, 
utility, and clarity of the information to be collected; and
     Evaluate whether there are ways to minimize the burden of 
collection of information on those who are to respond, including 
through the use of automated collection techniques or other forms of 
information technology.

Persons submitting comments on the collection of information 
requirements should direct them to the Office of Management and Budget, 
Attention: Desk Officer for the Securities and Exchange Commission, 
Office of Information and Regulatory Affairs, Washington, DC 20503, and 
should also send a copy of their comments to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090, with reference to File Number S7-26-15. 
Requests for materials submitted to OMB by the Commission with regard 
to this collection of information should be in writing, with reference 
to File Number S7-26-15 and be submitted to the Securities and Exchange 
Commission, Office of FOIA/PA Operations, 100 F Street NE., Washington, 
DC 20549-2736. As OMB is required to make a decision concerning the 
collections of information between 30 and 60 days after publication, a 
comment to OMB is best assured of having its full effect if OMB 
receives it within 30 days of publication.

V. Regulatory Flexibility Act Certification

    Section 3(a) of the Regulatory Flexibility Act of 1980 (``RFA'') 
\95\ requires the Commission to undertake an initial regulatory 
flexibility analysis of the proposed amendment on ``small entities.'' 
Section 605(b) of the RFA \96\ provides that this requirement shall not 
apply to any proposed rule or proposed rule amendment which, if 
adopted, would not have a significant economic impact on a substantial 
number of small entities. Pursuant to 5 U.S.C. 605(b), the Commission 
hereby certifies that the proposed amendment to Rule 13n-4(a)(5) would 
not, if adopted, have a significant economic impact on a substantial 
number of small entities. In developing this proposed amendment the 
Commission has considered its potential impact on small entities. For 
purposes of Commission rulemaking in connection with the RFA, a small 
entity includes: (1) When used with reference to an ``issuer'' or a 
``person,'' other than an investment company, an ``issuer'' or 
``person'' that, on the last day of its most recent fiscal year, had 
total assets of $5 million or less; \97\ or (2) a broker-dealer with 
total capital (net worth plus subordinated liabilities) of less than 
$500,000 on the date in the prior fiscal year as of which its audited 
financial statements were prepared pursuant to Rule 17a-5(d) under the 
Exchange Act,\98\ or, if not required to file such statements, a 
broker-dealer with total capital (net worth plus subordinated 
liabilities) of less than $500,000 on the last day of the preceding 
fiscal year (or in the time that it has been in business, if shorter); 
and is not affiliated with any person (other than a natural person) 
that is not a small business or small organization.\99\
---------------------------------------------------------------------------

    \95\ 5 U.S.C. 603(a).
    \96\ 5 U.S.C. 605(b).
    \97\ 17 CFR 240.0-10(a).
    \98\ 17 CFR 240.17a-5(d).
    \99\ 17 CFR 240.0-10(c).
---------------------------------------------------------------------------

    The Commission believes, based on input from SBS market 
participants and its own information, that persons that are likely to 
register as SDRs would not be small entities. Based on input from SBS 
market participants and its own information, the Commission believes 
that most if not all registered SDRs would be part of large business 
entities, and that all registered SDRs would have assets exceeding $5 
million and total capital exceeding $500,000.
    The Commission encourages written comments regarding this 
certification. The Commission solicits comment as to whether the 
proposed amendment to Rule 13n-4(a)(5) could have an effect on small 
entities that has not been considered. The Commission requests that 
commenters describe the nature of any impact on small entities and 
provide empirical data to support the extent of such impact.

VI. Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness 
Act of 1996 (``SBREFA) \100\ the Commission must advise the OMB whether 
the proposed regulation constitutes a ``major'' rule. Under SBREFA, a 
rule is considered ``major'' where, if adopted, it results or is likely 
to result in: (1) An annual effect on the economy of $100 million or 
more; (2) a major increase in costs or prices for consumers or 
individual industries; or (3) significant adverse effect on 
competition, investment or innovation.
---------------------------------------------------------------------------

    \100\ Public Law 104-121, Title II, 110 Stat. 857 (1996) 
(codified in various sections of 5 U.S.C. and 15 U.S.C. and as a 
note to 5 U.S.C. 601).
---------------------------------------------------------------------------

    The Commission requests comment on the potential impact of the 
proposed amendment on the economy on an annual basis. Commenters are 
requested to provide empirical data and other factual support for their 
views to the extent possible.
    Pursuant to the Exchange Act, and particularly Sections 13(n) and 
23(a) thereof, 15 U.S.C. 78m(n) and 78w(a), the Commission is proposing 
to amend rule 13n-4(a)(5), under the Exchange Act.

List of Subjects in 17 CFR Part 240

    Reporting and recordkeeping requirements.

Text of Proposed Amendment

    For the reasons stated in the preamble, the SEC is proposing to 
amend Title 17, Chapter II of the Code of the Federal Regulations as 
follows:

[[Page 79773]]

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 
1934

0
1. The general authority citation for part 240 continues to read as 
follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 
78g, 78i, 78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o, 78o-4, 
78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78ll, 78mm, 80a-20, 
80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, 7201 et seq.; and 
8302; 7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C. 1350; and 
Pub. L. 111-203, 939A, 124 Stat. 1376 (2010), unless otherwise 
noted.
* * * * *
0
2. Amend Sec.  240.13n-4(a)(5) by adding a second sentence to read as 
follows:


Sec.  240.13n-4  Duties and core principles of security-based swap data 
repository.

    (a) * * *
    (5) * * * Direct electronic access must be made available to the 
Commission using the most recent version of either the FpML schema or 
the FIXML schema for security-based swap data repositories as published 
on the Commission's Web site.
* * * * *

    By the Commission.
Brent J. Fields,
Secretary.
    The following will not appear in the CFR.

Appendix

Mapping of Common Data Model Concepts to FIXML and FpML Data Elements

    The common data model is informed by the current versions of the 
FpML and FIXML standards. Commission staff has mapped concepts in 
the common data model to existing data elements in both FpML and 
FIXML. Table 1 depicts the result of this mapping exercise for FpML 
version 5.9, which is considered current for the purposes of this 
proposal. Table 2 repeats this exercise for FIX version 5.0, Service 
Pack 2, which shall be considered current for the purposes of this 
proposal.

                    Table 1--Mapping of Common Data Model Data Concepts to FpML Data Elements
 [When the FpML column includes a list of terms, this means that FpML expresses the concept as a combination of
data elements from that list. Blank entries mean that the concept does not presently have an exact equivalent in
                                                     FpML.]
----------------------------------------------------------------------------------------------------------------
       Sec.   901 ref.         Common data model concept                    FpML data elements
----------------------------------------------------------------------------------------------------------------
(c)(1).......................  Product ID...............  productId.
                                                          primaryAssetClass.
                                                          secondaryAssetClass.
                                                          productType.
                                                          embeddedOptionType.
(c)(1)(i)....................  Asset Class..............  primaryAssetClass.
                                                          secondaryAssetClass.
(c)(1)(i)....................  Underlying Reference       underlyingAsset.
                                Asset(s).
(c)(1)(i)....................  Underlying Reference       referenceEntity.
                                Issuer(s).
(c)(1)(i)....................  Underlying Reference       index.
                                Index.
(c)(1)(ii)...................  Effective Date...........  effectiveDate.
(c)(1)(iii)..................  Scheduled Termination      scheduledTerminationDate.
                                Date.
(c)(1)(iv)...................  Terms of any standardized  calculationPeriodAmount or
                                fixed rate payments.      fixedAmountCalculation.
                                                          paymentDates.
(c)(1)(iv)...................  Frequency of any fixed     calculationPeriodFrequency.
                                rate payments.
(c)(1)(iv)...................  Terms of any standardized  calculationPeriodAmount.
                                floating rate payments.
                                                          paymentDates.
                                                          resetDates.
(c)(1)(iv)...................  Frequency of any floating  calculationPeriodFrequency.
                                rate payments.
(c)(1)(v)....................  Custom Swap Flag.........  nonStandardTerms.
(c)(2).......................  The date and time, to the  executionDateTime.
                                second, of execution,
                                expressed using
                                Coordinated Universal
                                Time (UTC);
(c)(3).......................  The price................  quote.
                                                          value.
(c)(3).......................  The currency in which the  currency.
                                price is expressed.
(c)(3).......................  The amount(s) of any up-   additionalPayment.
                                front payments.
                                                          paymentType.
(c)(3).......................  The currenc(ies) of any    currency.
                                up-front payments.
(c)(4).......................  The notional amount(s)...  notional.
                                                          amount.
(c)(4).......................  The currenc(ies) in which  currency.
                                the notional amount(s)
                                is expressed.
(c)(5).......................  Inter-Dealer Swap Flag...  ......................................................
(c)(6).......................  Intention To Clear Flag..  intentToClear.
(c)(7).......................  If applicable, any flags   ......................................................
                                pertaining to the
                                transaction that are
                                specified in the
                                policies and procedures
                                of the registered SDR to
                                which the transaction
                                will be reported.
(d)(1).......................  The counterparty ID [on    onBehalfOf.
                                the reporting side].
                                                          partyId.
(d)(1).......................  The execution agent ID     partyId.
                                [on the reporting side],
                                as applicable.
                                                          partyRole.
(d)(1).......................  The counterparty ID [on    partyId.
                                the non-reporting side].
                                                          partyRole.
(d)(1).......................  The execution agent ID of  partyId.
                                each counterparty, as
                                applicable.
                                                          partyRole.
(d)(1).......................  [As applicable] the        relatedBusinessUnit.
                                branch ID of the direct
                                counterparty on the
                                reporting side.
                                                          role.
(d)(1).......................  [As applicable] the        relatedBusinessUnit.
                                broker ID of the direct
                                counterparty on the
                                reporting side.
                                                          role.

[[Page 79774]]

 
(d)(1).......................  [As applicable] the        relatedBusinessUnit.
                                execution agent ID of
                                the direct counterparty
                                on the reporting side.
                                                          role.
(d)(2).......................  [As applicable] the        relatedBusinessUnit.
                                trader ID of the direct
                                counterparty on the
                                reporting side.
                                                          role.
(d)(2).......................  [As applicable] the        relatedBusinessUnit.
                                trading desk ID of the
                                direct counterparty on
                                the reporting side.
                                                          role.
(d)(3).......................  the terms of any fixed or  genericProduct.
                                floating rate payments,
                                or otherwise customized
                                or non-standard payment
                                streams.
(d)(3).......................  the frequency of any       paymentFrequency.
                                fixed or floating rate
                                payments, or otherwise
                                customized or non-
                                standard payment streams.
                                                          resetFrequency.
(d)(3).......................  the contingencies of any   feature.
                                fixed or floating rate
                                payments, or otherwise
                                customized or non-
                                standard payment streams.
(d)(4).......................  title of any master        masterAgreement.
                                agreement.
                                                          masterAgreementId.
(d)(4).......................  the date of any master     masterAgreement.
                                agreement.
                                                          masterAgreementDate.
(d)(4).......................  the title of any           creditSupportAgreement.
                                collateral agreement.
                                                          identifier.
(d)(4).......................  the date of any            creditSupportAgreement.
                                collateral agreement.
                                                          date.
(d)(4).......................  the title of any margin    ......................................................
                                agreement.
(d)(4).......................  the date of any margin     ......................................................
                                agreement.
(d)(4).......................  the title of any other     contractualTermsSupplement, et al.
                                agreement.
                                                          identifier.
(d)(4).......................  the date of any other      contractualTermsSupplement, et al.
                                agreement.
                                                          date.
(d)(5).......................  any additional data        ......................................................
                                elements included in the
                                agreement between the
                                counterparties that are
                                necessary for a person
                                to determine the market
                                value of the
                                transaction;
(d)(6).......................  the name of the clearing   partyId.
                                agency to which the
                                security-based swap will
                                be submitted for
                                clearing.
                                                          partyRole.
(d)(7).......................  whether they have invoked  endUserException.
                                the exception in Section
                                3C(g) of the Exchange
                                Act (15 U.S.C. 78c-
                                3(g));
(d)(8).......................  a description of the       cashSettlementTerms.
                                settlement terms.
(d)(8).......................  whether the security-      physicalSettlementTerms.
                                based swap is cash-
                                settled or physically
                                settled.
(d)(8).......................  the method for             valuationMethod.
                                determining the
                                settlement value.
(d)(9).......................  The platform ID, if        partyId.
                                applicable.
                                                          partyRole.
(d)(10)......................  the transaction ID of an   originatingEvent.
                                allocated security-based
                                swap.
                                                          originatingTradeId.
                                                          allocationTradeId.
(d)(10)......................  the transaction ID of a    terminatingEvent.
                                terminated security-
                                based swap.
                                                          originatingTradeId.
(d)(10)......................  the transaction ID of a    novation.
                                novated security-based
                                swap.
                                                          originatingTradeId.
(d)(10)......................  the transaction ID of an   novation.
                                assigned security-based
                                swap.
                                                          originatingTradeId.
(e)(1)(i)....................  A life cycle event, and    originatingEvent.
                                any adjustment due to a
                                life cycle event, that
                                results in a change to
                                information previously
                                reported pursuant to
                                paragraph (c), (d), or
                                (i) of this section
                                shall be reported by the
                                reporting side [except
                                that the reporting side
                                shall not report whether
                                or not a security-based
                                swap has been accepted
                                for clearing].
                                                          trade.
(e)(1)(ii)...................  Acceptance for clearing..  ......................................................
(e)(2).......................  All reports of life cycle  originatingTradeId.
                                events and adjustments
                                due to life cycle events
                                shall, within the
                                timeframe specified in
                                paragraph (j) of this
                                section, be reported to
                                the entity to which the
                                original security-based
                                swap transaction will be
                                reported or has been
                                reported and shall
                                include the transaction
                                ID of the original
                                transaction.
(f)..........................  Time stamp, to the         timestamps.
                                second, its receipt of
                                any information
                                submitted to it pursuant
                                to paragraph (c), (d),
                                (e), or (i) of this
                                section.
                                                          nonpubliclyReported.
(g)..........................  A transaction ID to each   originatingTradeId.
                                security-based swap, or
                                establish or endorse a
                                methodology for
                                transaction IDs to be
                                assigned by third
                                parties.
----------------------------------------------------------------------------------------------------------------


[[Page 79775]]


                   Table 2--Mapping of Common Data Model Data Concepts to FIXML Data Elements
[When the FIXML column includes a list of terms, this means that FIXML expresses the concept as a combination of
data elements from that list. Blank entries mean that the concept does not presently have an exact equivalent in
                                                     FIXML.]
----------------------------------------------------------------------------------------------------------------
       Sec.   901 ref.         Common data model concept                    FIXML data elements
----------------------------------------------------------------------------------------------------------------
(c)(1).......................  Product ID...............  Prod.
                                                          SecTyp.
                                                          PxDtrmnMeth.
                                                          SettlMeth.
                                                          SwapClss.
                                                          SwapSubClss.
(c)(1)(i)....................  Asset Class..............  CFI.
(c)(1)(i)....................  Underlying Reference       Undly.
                                Asset(s).
(c)(1)(i)....................  Underlying Reference       Issr.
                                Issuer(s).
(c)(1)(i)....................  Underlying Reference       NdxSeries.
                                Index.
(c)(1)(ii)...................  Effective Date...........  EfctvDt.
(c)(1)(iii)..................  Scheduled Termination      TrmntDt.
                                Date.
(c)(1)(iv)...................  Terms of any standardized  PmtStrm.
                                fixed rate payments.
                                                          CalcDts.
                                                          Rt.
                                                          Amt.
                                                          Ccy.
(c)(1)(iv)...................  Frequency of any fixed     PmtDts.
                                rate payments.
(c)(1)(iv)...................  Terms of any standardized  ResetDts.
                                floating rate payments.
(c)(1)(iv)...................  Frequency of any floating  PmtDts.
                                rate payments.
(c)(1)(v)....................  Custom Swap Flag.........  ......................................................
(c)(2).......................  The date and time, to the  TrdRegTS.
                                second, of execution,
                                expressed using
                                Coordinated Universal
                                Time (UTC).
                                                          TS.
                                                          Typ.
                                                          Src.
(c)(3).......................  The price................  Px.
(c)(3).......................  The currency in which the  Ccy.
                                price is expressed.
(c)(3).......................  The amount(s) of any up-   UpfrontPx.
                                front payments.
(c)(3).......................  The currenc(ies) of any    ......................................................
                                up-front payments.
(c)(4).......................  The notional amount(s)...  Strm.
                                                          Notl.
(c)(4).......................  The currenc(ies) in which  Ccy.
                                the notional amount(s)
                                is expressed.
(c)(5).......................  Inter-Dealer Swap Flag...  Pty.
                                                          Typ.
(c)(6).......................  Intention To Clear Flag..  ClrIntn.
(c)(7).......................  If applicable, any flags   ......................................................
                                pertaining to the
                                transaction that are
                                specified in the
                                policies and procedures
                                of the registered
                                security-based swap data
                                repository to which the
                                transaction will be
                                reported.
(d)(1).......................  The counterparty ID [on    Pty.
                                the reporting side].
                                                          ID.
                                                          Src.
                                                          R.
                                                          R.
                                                          Sub.
                                                          ID.
                                                          Typ.
(d)(1).......................  The execution agent ID     R.
                                [on the reporting side],
                                as applicable.
(d)(1).......................  The counterparty ID [on    R.
                                the non-reporting side].
(d)(1).......................  The execution agent ID of  R.
                                each counterparty, as
                                applicable.
(d)(1).......................  [As applicable] the        R.
                                branch ID of the direct
                                counterparty on the
                                reporting side.
(d)(1).......................  [As applicable] the        R.
                                broker ID of the direct
                                counterparty on the
                                reporting side.
(d)(1).......................  [As applicable] the        R.
                                execution agent ID of
                                the direct counterparty
                                on the reporting side.
(d)(2).......................  [As applicable] the        R.
                                trader ID of the direct
                                counterparty on the
                                reporting side.
(d)(2).......................  [As applicable] the        R.
                                trading desk ID of the
                                direct counterparty on
                                the reporting side.
(d)(3).......................  the terms of any fixed or  ......................................................
                                floating rate payments,
                                or otherwise customized
                                or non-standard payment
                                streams.
(d)(3).......................  the frequency of any       PmtDts.
                                fixed or floating rate
                                payments, or otherwise
                                customized or non-
                                standard payment streams.
                                                          PmtDts.
(d)(3).......................  the contingencies of any   ContingencyType.
                                fixed or floating rate
                                payments, or otherwise
                                customized or non-
                                standard payment streams.
(d)(4).......................  title of any master        FinDetls.
                                agreement.
                                                          AgmtDesc.
(d)(4).......................  date of any master         AgmtDt.
                                agreement.
(d)(4).......................  title of any collateral    CrdSuprtDesc.
                                agreement.
(d)(4).......................  date of any collateral     CrdSuprtDt.
                                agreement.
(d)(4).......................  title of any margin        ......................................................
                                agreement.
(d)(4).......................  date of any margin         ......................................................
                                agreement.

[[Page 79776]]

 
(d)(4).......................  title of any any other     CnfmDesc.
                                agreement.
                                                          BrkrCnfmDesc.
(d)(4).......................  date of any any other      CnfmDt.
                                agreement.
(d)(5).......................  any additional data        ......................................................
                                elements included in the
                                agreement between the
                                counterparties that are
                                necessary for a person
                                to determine the market
                                value of the transaction.
(d)(6).......................  the name of the clearing   R.
                                agency to which the
                                security-based swap will
                                be submitted for
                                clearing.
                                                          ID.
(d)(7).......................  whether they have invoked  ClrReqmtExcptn.
                                the exception in Section
                                3C(g) of the Exchange
                                Act (15 U.S.C. 78c-3(g)).
(d)(8).......................  a description of the       ......................................................
                                settlement terms.
(d)(8).......................  whether the security-      SettlMeth.
                                based swap is cash-
                                settled or physically
                                settled.
                               the method for             SettlNdx.
                                determining the
                                settlement value.
                                                          SettlNdxLctn.
(d)(9).......................  The platform ID, if        R.
                                applicable.
                                                          ID.
                                                          Src.
(d)(10)......................  the transaction ID of an   AllExc.
                                allocated security-based
                                swap.
                                                          TransTyp.
                                                          TrdID.
(d)(10)......................  the transaction ID of a    RegTrdID.
                                terminated security-
                                based swap.
                                                          TrmTyp.
                                                          TrdID.
(d)(10)......................  Novation transaction ID..  TrdContntn.
                                                          TrdContntn.
                                                          OrigTrdID.
                                                          Side.
(d)(10)......................  the transaction ID of an   AsgnTyp.
                                assigned security-based
                                swap.
                                                          TrdID.
(e)(1)(i)....................  A life cycle event, and    TrdContntn.
                                any adjustment due to a
                                life cycle event, that
                                results in a change to
                                information previously
                                reported pursuant to
                                paragraph (c), (d), or
                                (i) of this section
                                shall be reported by the
                                reporting side [except
                                that the reporting side
                                shall not report whether
                                or not a security-based
                                swap has been accepted
                                for clearing].
                                                          TrdContntn.
(e)(1)(ii)...................  Acceptance for clearing..  RskLmitChkStat.
(e)(2).......................  All reports of life cycle  OrigTrdID.
                                events and adjustments
                                due to life cycle events
                                shall, within the
                                timeframe specified in
                                paragraph (j) of this
                                section, be reported to
                                the entity to which the
                                original security-based
                                swap transaction will be
                                reported or has been
                                reported and shall
                                include the transaction
                                ID of the original
                                transaction.
(f)..........................  Time stamp, to the         TrdRegTS.
                                second, its receipt of
                                any information
                                submitted to it pursuant
                                to paragraph (c), (d),
                                (e), or (i) of this
                                section.
                                                          TS.
                                                          Typ.
                                                          Src.
(g)..........................  A transaction ID to each   TrdID.
                                security-based swap, or
                                establish or endorse a
                                methodology for
                                transaction IDs to be
                                assigned by third
                                parties.
----------------------------------------------------------------------------------------------------------------

[FR Doc. 2015-31703 Filed 12-22-15; 8:45 am]
BILLING CODE 8011-01-P