[Federal Register Volume 84, Number 55 (Thursday, March 21, 2019)]
[Notices]
[Pages 10561-10562]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-05339]


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SECURITIES AND EXCHANGE COMMISSION


Proposed Collection; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 
20549-2736

Extension:
    Order Granting Conditional Exemptions under the Securities 
Exchange Act of 1934 in Connection with Portfolio Margining of Swaps 
and Security-Based Swaps, SEC File No. S7-13-12, OMB Control No. 
3235-0698

    Notice is hereby given that pursuant to the Paperwork Reduction Act 
of 1995 (``PRA'') (44 U.S.C. 3501 et seq.), the Securities and Exchange 
Commission (``Commission'') is soliciting comments on the existing 
collection of information provided for in the Order Granting 
Conditional Exemptions Under the Securities Exchange Act of 1934 
(``Exchange Act'') in Connection with Portfolio Margining of Swaps and 
Security-Based Swaps, Exchange Act Release No. 68433 (Dec. 14, 2012), 
77 FR 75211 (Dec. 19, 2012) (``Order''). The Commission plans to submit 
this existing collection of information to the Office of Management and 
Budget (``OMB'') for extension and approval.
    On December 14, 2012, the Commission found it necessary or 
appropriate in the public interest and consistent with the protection 
of investors to grant the conditional exemptions discussed in the 
Order. Among other things, the Order requires dually-registered broker-
dealer and futures commission merchants (``BD/FCMs'') that elect to 
offer a program to commingle and portfolio margin customer positions in 
credit default swaps (``CDS'') in customer accounts maintained in 
accordance with Section 4d(f) of the Commodity Exchange Act (``CEA'') 
and rules thereunder, to obtain certain agreements and opinions from 
its customers regarding the applicable regulatory regime, and to make 
certain disclosures to its customers before receiving any money, 
securities, or property of a customer to margin, guarantee, or secure 
positions consisting of cleared CDS, which include both swaps and 
security-based swaps, under a program to commingle and portfolio margin 
CDS. The Order also requires BD/FCMs that elect to offer a program to 
commingle and portfolio margin CDS positions in customer accounts 
maintained in accordance with Section 4d(f) of the CEA and rules 
thereunder, to maintain minimum margin levels using a margin 
methodology approved by the Commission or the Commission staff.
    The Commission estimates that 35 firms may seek to avail themselves 
of the conditional exemptive relief provided by the Order and therefore 
would be subject to the information collection. The Commission bases 
this estimate on the total number of entities that are dually 
registered as broker-dealers and futures commission merchants.
    The Commission estimates that the aggregate annual time burden for 
all of the 35 respondents is approximately 22,517 hours calculated as 
follows:
    (a) Based on information that the Commission receives on a monthly 
basis, the Commission estimates that each respondent will have, on 
average, 34 non-affiliate credit default swap customers. The Commission 
further estimates for each such customer, a respondent will spend 
approximately 20 hours developing a non-conforming subordination 
agreement under paragraph IV(b)(1)(ii) of the Order. The Commission 
therefore estimates that the burden associated with entering into non-
conforming subordination agreements with non-affiliate cleared credit 
default swap customers under paragraph IV(b)(1)(ii) of the Order will 
impose an initial, one-time average burden of 680 hours (34 non-
affiliate customers times 20 hours per customer) per respondent and an 
aggregate burden of 23,800 hours for all 35 respondents (680 x 35). 
This burden is a third-party disclosure burden.
    (b) The Commission estimates that each respondent will have, on 
average, 11 affiliate credit default swap customers and that for each 
such customer, a respondent will spend approximately 20 hours 
developing a non-conforming subordination agreement under paragraph 
IV(b)(2)(ii) of the Order. The Commission therefore estimates that the 
burden associated with entering into non-conforming subordination 
agreements with affiliate cleared credit default swap customers under 
paragraph IV(b)(2)(ii) of the Order will impose an initial, one-time 
burden of 220 hours per respondent (11 affiliate customers times 20 
hours per customer) and an aggregate burden of 7,700 hours for all 35 
respondents (220 x 35) . This burden is a third-party disclosure 
burden.
    (c) The Commission estimates that for each affiliate cleared credit 
default swap customer a respondent will spend approximately 2 hours 
developing and reviewing the required opinion of counsel under 
paragraph IV(b)(2)(iii) of the Order. The Commission therefore 
estimates that the burden associated with obtaining opinions of counsel 
from affiliate cleared credit default swap customers under paragraph 
IV(b)(2)(iii) of the Order will impose an initial, one-time burden of 
22 hours per respondent (11 affiliate customers times 2 hours per 
customer) and an aggregate burden for all 35 respondents of 770 hours 
(22 x 35). This burden is a third-party disclosure burden.
    (d) The Commission estimates that the burden associated with 
seeking the Commission's approval of margin methodologies under 
paragraph IV(b)(3) of the Order will impose an initial, one-time burden 
of 1,000 hours per respondent and an aggregate burden for all 35 
respondents of 35,000 hours (1,000 x 35) . This burden is a reporting 
burden.
    (e) The Commission estimates that the burden associated with 
disclosing information to customers under paragraph IV(b)(6) of the 
Order will impose an initial, one-time burden of 8 hours per respondent 
and an aggregate burden for all 35 respondents of 280 hours (8 x 35). 
This burden is a third-party disclosure burden.
    The total aggregate one-time burden for all 35 respondents is thus 
67,550 hours (32,550 third party disclosure + 35,000 reporting). 
Amortized over three years, the aggregate burden per year is 
approximately 22,517 hours.
    The Commission estimates that each respondent will incur a one-time 
cost of $8,000 in outside legal counsel expenses in connection with 
obtaining opinions of counsel from affiliate cleared credit default 
swap customers under paragraph IV(b)(2)(iii) of the Order, calculated 
as follows: (20 hours to obtain opinions of counsel from affiliate 
cleared credit default swap customers under paragraph IV(b)(2)(iii) of 
the Order) x ($400 per hour for outside legal counsel) = $8,000. The 
one-time aggregate burden for all 35 respondents is thus $280,000 
(8,000 x 35), or approximately $93,333 per year when amortized over 
three years.
    Written comments are invited on: (a) Whether the proposed 
collection of information is necessary for the proper

[[Page 10562]]

performance of the functions of the Commission, including whether the 
information shall have practical utility; (b) the accuracy of the 
Commission's estimates of the burden of the proposed collection of 
information; (c) ways to enhance the quality, utility, and clarity of 
the information collected; and (d) ways to minimize the burden of the 
collection of information on respondents, including through the use of 
automated collection techniques or other forms of information 
technology. Consideration will be given to comments and suggestions 
submitted in writing within 60 days of this publication.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information under the PRA unless it 
displays a currently valid OMB control number.
    Please direct your written comments to: Charles Riddle, Acting 
Director/Chief Information Officer, Securities and Exchange Commission, 
c/o Candace Kenner, 100 F Street NE, Washington, DC 20549, or send an 
email to: [email protected].

    Dated: March 15, 2019.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-05339 Filed 3-20-19; 8:45 am]
 BILLING CODE 8011-01-P