[Federal Register Volume 84, Number 211 (Thursday, October 31, 2019)]
[Notices]
[Pages 58375-58377]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-23796]


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

COMMODITY FUTURES TRADING COMMISSION


Agency Information Collection Activities Under OMB Review

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice.

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

SUMMARY: In compliance with the Paperwork Reduction Act of 1995 (PRA), 
this notice announces that the Information Collection Request (ICR) 
abstracted below has been forwarded to the Office of Management and 
Budget (OMB) for review and comment. The ICR describes the nature of 
the information collection and its expected costs and burden.

DATES: Comments must be submitted on or before December 2, 2019.

ADDRESSES: Comments regarding the burden estimate or any other aspect 
of the information collection, including suggestions for reducing the 
burden, may be submitted directly to the Office of Information and 
Regulatory Affairs (OIRA) in OMB within 30 days of this notice's 
publication by either of the following methods. Please identify the 
comments by ``Margin Requirements for Uncleared Swaps for Swap Dealers 
and Major Swap Participants, Comparability Determinations With Margin 
Requirements, OMB Control No. 3038-0111.''
     By email addressed to: [email protected] or
     By mail addressed to: the Office of Information and 
Regulatory Affairs, Office of Management and Budget, Attention Desk 
Officer for the Commodity Futures Trading Commission, 725 17th Street 
NW, Washington DC 20503.
    A copy of all comments submitted to OIRA should be sent to the 
Commodity Futures Trading Commission (the ``Commission'') by either of 
the following methods. The copies should refer to ``OMB Control No. 
3038-0111.''
     By mail addressed to: Christopher Kirkpatrick, Secretary 
of the Commission, Commodity Futures Trading Commission, Three 
Lafayette Centre, 1155 21st Street NW, Washington, DC 20581;
     By Hand Delivery/Courier to the same address; or
     Through the Commission's website at http://comments.cftc.gov. Please follow the instructions for submitting 
comments through the website.
    A copy of the supporting statement for the collection of 
information discussed herein may be obtained by visiting http://RegInfo.gov.
    All comments must be submitted in English, or if not, accompanied 
by an English translation. Comments will be posted as received to 
http://www.cftc.gov. You should submit only information that you wish 
to make available publicly. If you wish the Commission to consider 
information that you believe is exempt from disclosure under the 
Freedom of Information Act, a petition for confidential treatment of 
the exempt information may be submitted according to the procedures 
established in Sec.  145.9 of the Commission's regulations.\1\ The 
Commission reserves the right, but shall have no obligation, to review, 
pre-screen, filter, redact, refuse or remove any or all of your 
submission from http://www.cftc.gov that it may deem to be 
inappropriate for publication, such as obscene language. All 
submissions that have been redacted or removed that contain comments on 
the merits of the ICR will be retained in the public comment file and 
will be considered as required under the Administrative Procedure Act 
and other applicable laws, and may be accessible under the Freedom of 
Information Act.
---------------------------------------------------------------------------

    \1\ 17 CFR 145.9.

FOR FURTHER INFORMATION CONTACT: Lauren Bennett, Special Counsel, 
Division of Swap Dealer and Intermediary Oversight, Commodity Futures 
---------------------------------------------------------------------------
Trading Commission, (202) 418-5290 or [email protected].

SUPPLEMENTARY INFORMATION:
    Title: Margin Requirements for Uncleared Swaps for Swap Dealers and 
Major Swap Participants; Comparability Determinations With Margin 
Requirements (OMB Control No. 3038-0111). This is a request for an 
extension and revision of a currently approved information collection.
    Abstract: Section 731 of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (``Dodd-Frank Act''),\2\ amended the Commodity 
Exchange Act (``CEA''), 7 U.S.C. 1 et seq., to add, as section 4s(e) 
thereof, provisions concerning the setting of initial and variation 
margin requirements for swap dealers (``SDs'') and major swap 
participants (``MSPs'').\3\ Each SD and MSP for which there is a 
Prudential Regulator, as defined in section 1a(39) of the CEA,\4\ must 
meet margin requirements established by the applicable Prudential 
Regulator, and each SD and MSP for which there is no Prudential 
Regulator (``Covered Swap Entities'' or ``CSEs'') must comply with the 
Commission's regulations governing margin on all swaps that are not 
centrally cleared.
---------------------------------------------------------------------------

    \2\ Public Law 111-023, 124 Stat. 1376 (2010).
    \3\ 7 U.S.C. 6s(e).
    \4\ 7 U.S.C. 1a(39).
---------------------------------------------------------------------------

    With regard to the cross-border application of the Commission's 
margin rules, section 2(i) \5\ of the CEA provides the Commission with 
express authority over activities outside the United States relating to 
swaps when certain conditions are met. Section 2(i) of the CEA provides 
that the provisions of the CEA relating to swaps that were enacted by 
the Wall Street Transparency and Accountability Act of 2010 (including 
any rule prescribed or regulation promulgated under that Act), shall 
not apply to activities outside the United States unless those 
activities (1) have a direct and significant connection with activities 
in, or effect on, commerce of the United States or (2) contravene such 
rules or regulations as the Commission may prescribe or promulgate as 
are necessary or appropriate to prevent the evasion of any provision of 
the CEA that was enacted by the Wall Street Transparency and 
Accountability Act of 2010.
---------------------------------------------------------------------------

    \5\ 7 U.S.C. 2(i).
---------------------------------------------------------------------------

    On May 31, 2016, the Commission published a final rule addressing 
the cross-border application of its margin requirements for uncleared 
swaps applicable to CSEs.\6\ As described below, the adopting release 
for the Final Rule contained a collection of information regarding 
requests for comparability determinations, which was previously 
included in the proposing release, and for which the Office of 
Management and Budget (``OMB'') assigned OMB control number 3038-0111, 
titled ``Margin Requirements for Uncleared Swaps for Swap Dealers and 
Major Swap Participants; Comparability Determinations With Margin 
Requirements.'' In addition, the adopting release included two 
additional information collections regarding non-netting jurisdictions 
\7\ and

[[Page 58376]]

non-segregation jurisdictions \8\ that were not previously proposed. 
Subsequently, on August 2, 2016, the Commission requested a revision of 
the collection for Margin Requirements for Uncleared Swaps for Swap 
Dealers and Major Swap Participants; Comparability Determinations With 
Margin Requirements (OMB control number 3038-0111) to include the 
burden estimates for the provisions regarding non-netting jurisdictions 
and non-segregation jurisdictions.\9\
---------------------------------------------------------------------------

    \6\ 81 FR 34818 (May 31, 2016).
    \7\ As used in the adopting release, a ``non-netting 
jurisdiction'' is a jurisdiction in which a CSE cannot conclude, 
with a well-founded basis, that the netting agreement with a 
counterparty in that foreign jurisdiction meets the definition of an 
``eligible master netting agreement'' set forth in the Final Rule, 
as described in section II.B.5.b of the adopting release.
    \8\ As used in the adopting release, a ``non-segregation 
jurisdiction'' is a jurisdiction where inherent limitations in the 
legal or operational infrastructure of the foreign jurisdiction make 
it impracticable for the CSE and its counterparty to post initial 
margin pursuant to custodial arrangements that comply with the 
Commission's margin rules, as further described in section II.B.4.b 
of the adopting release.
    \9\ 81 FR 50690 (Aug. 2, 2016).
---------------------------------------------------------------------------

    Under section 23.160(c)(1) of the Final Rule, a CSE that is 
eligible for substituted compliance or a foreign regulatory agency that 
has direct supervisory authority over one or more CSEs and that is 
responsible for administering the relevant foreign jurisdiction's 
margin requirements may request, individually or collectively, that the 
Commission make a determination that a CSE that complies with margin 
requirements in the relevant foreign jurisdiction would be deemed to be 
in compliance with the Commission's corresponding margin rule 
promulgated by the Commission (a ``comparability determination''). Once 
a comparability determination is made for a jurisdiction, it applies 
for all entities or transactions in that jurisdiction to the extent 
provided in the comparability determination, as approved by the 
Commission and subject to any conditions specified by the Commission. 
All CSEs, regardless of whether they rely on a comparability 
determination, remain subject to the Commission's examination and 
enforcement authority.
    Section 23.160(c)(2) of the Final Rule requires that applicants for 
a comparability determination provide copies of the relevant foreign 
jurisdiction's margin requirements and descriptions of their 
objectives, how they differ from the BCBS/IOSCO international 
framework, and how they address the elements of the Commission's margin 
requirements. The applicant must identify the specific legal and 
regulatory provisions of the foreign jurisdiction's margin requirements 
that correspond to each element and, if necessary, whether the relevant 
foreign jurisdiction's margin requirements do not address a particular 
element.
    Section 23.160(d) of the Final Rule includes a special provision 
for non-netting jurisdictions. This provision allows CSEs that cannot 
conclude after sufficient legal review with a well-founded basis that 
the netting agreement with a counterparty in a foreign jurisdiction 
meets the definition of an ``eligible master netting agreement'' set 
forth in the Final Rule to nevertheless net uncleared swaps in 
determining the amount of margin that they post, provided that certain 
conditions are met. In order to avail itself of this special provision, 
a CSE must treat the uncleared swaps covered by the agreement on a 
gross basis in determining the amount of initial and variation margin 
that it must collect, but may net those uncleared swaps in determining 
the amount of initial and variation margin it must post to the 
counterparty, in accordance with the netting provisions of the Final 
Rule. A CSE that enters into uncleared swaps in ``non-netting'' 
jurisdictions in reliance on this provision must have policies and 
procedures ensuring that it is in compliance with the special 
provision's requirements, and maintain books and records properly 
documenting that all of the requirements of this exception are 
satisfied.
    Section 23.160(e) of the Final Rule includes a special provision 
for non-segregation jurisdictions that allows non-U.S. CSEs that are 
Foreign Consolidated Subsidiaries (as defined in the Final Rule) and 
foreign branches of U.S. CSEs to engage in swaps in foreign 
jurisdictions where inherent limitations in the legal or operational 
infrastructure make it impracticable for the CSE and its counterparty 
to post collateral in compliance with the custodial arrangement 
requirements of the Commission's margin rules, subject to certain 
conditions. In order to rely on this special provision, a Foreign 
Consolidated Subsidiary (``FCS'') or foreign branch of a U.S. CSE is 
required to satisfy all of the conditions of the rule, including that 
(1) inherent limitations in the legal or operational infrastructure of 
the foreign jurisdiction make it impracticable for the CSE and its 
counterparty to post any form of eligible initial margin collateral for 
the uncleared swap pursuant to custodial arrangements that comply with 
the Commission's margin rules; (2) foreign regulatory restrictions 
require the CSE to transact in uncleared swaps with the counterparty 
through an establishment within the foreign jurisdiction and do not 
permit the posting of collateral for the swap in compliance with the 
custodial arrangements of section 23.157 of the Final Rule in the 
United States or a jurisdiction for which the Commission has issued a 
comparability determination under the Final Rule with respect to 
section 23.157; (3) the CSE's counterparty is not a U.S. person and is 
not a CSE, and the counterparty's obligations under the uncleared swap 
are not guaranteed by a U.S. person; (4) the CSE collects initial 
margin in cash on a gross basis, in cash, and posts and collects 
variation margin in cash, for the uncleared swap in accordance with the 
Final Rule; (5) for each broad risk category, as set out in Sec.  
23.154(b)(2)(v) of the Final Rule, the total outstanding notional value 
of all uncleared swaps in that broad risk category, as to which the CSE 
is relying on Sec.  23.160 (e), may not exceed 5 percent of the CSE's 
total outstanding notional value for all uncleared swaps in the same 
broad risk category; (6) the CSE has policies and procedures ensuring 
that it is in compliance with the requirements of this provision; and 
(7) the CSE maintains books and records properly documenting that all 
of the requirements of this provision are satisfied.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number. On August 21, 2019, the Commission 
published in the Federal Register notice of the proposed extension and 
revision of this information collection and provided 60 days for public 
comment on the proposed extension and revision, 84 FR 43589 (``60-Day 
Notice''). The Commission did not receive any relevant substantive 
comments on the 60-Day Notice.
    Burden Statement--Information Collection for Comparability 
Determinations: The Commission is revising its estimate of the burden 
for this collection to reflect the current number of registrants 
subject to the Commission's margin requirements for uncleared swaps and 
the Commission's implementation experience. Specifically, the 
Commission estimates that approximately 54 CSEs may request a 
comparability determination pursuant to section 23.160(c) of the Final 
Rule.\10\

[[Page 58377]]

The Commission notes that any foreign regulatory agency that has direct 
supervisory authority over one or more CSEs and that is responsible for 
administering the relevant foreign jurisdiction's margin requirements 
may also apply for a comparability determination. Further, once a 
comparability determination is made for a jurisdiction, it will apply 
for all entities or transactions in that jurisdiction to the extent 
provided in the determination, as approved by the Commission. To date, 
the Commission has issued a comparability determination for 3 
jurisdictions.\11\ Accordingly, the Commission estimates that it will 
receive requests from the 13 remaining jurisdictions within the G20, in 
addition to Switzerland. In light of its experience in evaluating 
requests for comparability determinations, the Commission is revising 
its estimate for the number of burden hours associated with such 
requests from 10 hours to 40 hours. Accordingly, the respondent burden 
for this collection is estimated to be as follows:
---------------------------------------------------------------------------

    \10\ Currently, there are approximately 107 swap entities 
provisionally registered with the Commission. The Commission 
estimates that of the approximately 107 swap entities that are 
provisionally registered, approximately 54 are CSEs for which there 
is no Prudential Regulator, and are therefore subject to the 
Commission's margin rules. Since the publication of the 60-Day 
Notice, the number of CSEs subject to the Commission's margin rules 
decreased from 55 to 54.
    \11\ See Comparability Determination for Japan: Margin 
Requirements for Uncleared Swaps for Swap Dealers and Major Swap 
Participants, 81 FR 63376 (Sep. 15, 2016); Comparability 
Determination for the European Union: Margin Requirements for 
Uncleared Swaps for Swap Dealers and Major Swap Participants, 82 FR 
48394 (Oct. 13, 2017) (``Margin Comparability Determination for the 
European Union''); and Comparability Determination for Australia: 
Margin Requirements for Uncleared Swaps for Swap Dealers and Major 
Swap Participants, 84 FR 12908 (Apr. 3, 2019). The Commission 
subsequently amended its comparability determination for Japan. See 
Amendment to Comparability Determination for Japan: Margin 
Requirements for Uncleared Swaps for Swap Dealers and Major Swap 
Participants, 84 FR 12074 (Apr. 1, 2019).
---------------------------------------------------------------------------

    Estimated Number of Respondents: 14.
    Estimated Average Burden Hours per Respondent: 40.
    Estimated Total Annual Burden Hours: 560.
    Frequency of Collection: Once.
    There are no capital costs or operating and maintenance costs 
associated with this collection.
    Burden Statement--Information Collection for Non-Netting 
Jurisdictions: The Commission estimates that approximately 54 CSEs may 
rely on section 23.160(d) of the Final Rule.\12\ Furthermore, the 
Commission estimates that these CSEs would incur an average of 10 
annual burden hours to maintain books and records properly documenting 
that all of the requirements of this exception are satisfied (including 
policies and procedures ensuring compliance). Accordingly, the 
respondent burden for this collection is estimated to be as follows:
---------------------------------------------------------------------------

    \12\ Currently, there are approximately 107 swap entities 
provisionally registered with the Commission. The Commission 
estimates that of the approximately 107 swap entities that are 
provisionally registered, approximately 54 are CSEs for which there 
is no Prudential Regulator, and are therefore subject to the 
Commission's margin rules. Because all of these CSEs are eligible to 
use the special provision for non-netting jurisdictions, the 
Commission estimates that 54 CSEs may rely on section 23.160(d) of 
the Final Rule. Since the publication of the 60-Day Notice, the 
number of CSEs subject to the Commission's margin rules decreased 
from 55 to 54.
---------------------------------------------------------------------------

    Estimated Number of Respondents: 54.
    Estimated Average Burden Hours per Respondent: 10.
    Estimated Total Annual Burden Hours: 540.
    Frequency of Collection: Once; As needed.
    There are no capital costs or operating and maintenance costs 
associated with this collection.
    Burden Statement--Information Collection for Non-Segregation 
Jurisdictions: The Commission estimates that there are eight 
jurisdictions for which the first two conditions specified above for 
non-segregation jurisdictions are satisfied and where FCSs and foreign 
branches of U.S. CSEs that are subject to the Commission's margin rules 
may engage in swaps. The Commission estimates that approximately 12 
FCSs and foreign branches of U.S. CSEs may rely on section 23.160(e) of 
the Final Rule in some or all of these jurisdictions. The Commission 
estimates that each FCS or foreign branch of a U.S. CSE relying on this 
provision would incur an average of 20 annual burden hours to maintain 
books and records properly documenting that all of the requirements of 
this provision are satisfied (including policies and procedures for 
ensuring compliance) with respect to each jurisdiction as to which they 
rely on the special provision. Thus, based on the estimate of eight 
non-segregation jurisdictions, the Commission estimates that each of 
the approximately 12 FCSs and foreign branches of U.S. CSEs that may 
rely on this provision will incur an estimated 160 average burden hours 
per year (i.e., 20 average burden hours per jurisdiction multiplied by 
8). Accordingly, the respondent burden for this collection is estimated 
to be as follows:
    Estimated Number of Respondents: 12.
    Estimated Average Burden Hours per Respondent: 160.
    Estimated Total Annual Burden Hours: 1,920.
    Frequency of Collection: Once; As needed.
    There are no capital costs or operating and maintenance costs 
associated with this collection.

    Authority: 44 U.S.C. 3501 et seq.

    Dated: October 28, 2019.
Robert Sidman,
Deputy Secretary of the Commission.
[FR Doc. 2019-23796 Filed 10-30-19; 8:45 am]
BILLING CODE 6351-01-P