[Federal Register Volume 84, Number 218 (Tuesday, November 12, 2019)]
[Proposed Rules]
[Pages 60963-60966]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24581]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 160

RIN 3038-AE91


Privacy of Consumer Financial Information

AGENCY: Commodity Futures Trading Commission.

ACTION: Proposed rule.

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SUMMARY: The Commodity Futures Trading Commission (``CFTC'' or 
``Commission'') is proposing to make a correction to one of the 
Commission's regulations to restore text that was inadvertently deleted 
in a 2011 amendment to that regulation.

DATES: Comments must be received on or before December 12, 2019.

ADDRESSES: You may submit comments, identified by RIN 3038-AE91, by any 
of the following methods:
     CFTC Comments Portal: https://comments.cftc.gov. Select 
the ``Submit Comments'' link for this rulemaking and follow the 
instructions on the Public Comment Form.
     Mail: Send to Christopher Kirkpatrick, Secretary of the 
Commission, Commodity Futures Trading Commission, Three Lafayette 
Center, 1155 21st Street NW, Washington, DC 20581.
     Hand Delivery/Courier: Follow the same instructions as for 
Mail, above.
    Please submit your comments using only one of these methods. 
Submissions through the CFTC Comments Portal are encouraged.
    All comments must be submitted in English, or if not, accompanied 
by an English translation. Comments will be

[[Page 60964]]

posted as received to https://comments.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 (``FOIA''), 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\
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    \1\ 17 CFR 145.9. Commission regulations referred to herein are 
found at 17 CFR chapter I.
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    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 https://comments.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 rulemaking 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 FOIA.

FOR FURTHER INFORMATION CONTACT: Joshua Sterling, Director, (202) 418-
6056, [email protected]; Frank Fisanich, Chief Counsel, (202) 418-
5949, [email protected]; or Jacob Chachkin, Special Counsel, (202) 
418-5496, [email protected], Division of Swap Dealer and Intermediary 
Oversight, Commodity Futures Trading Commission, Three Lafayette 
Centre, 1155 21st Street NW, Washington, DC 20581.

SUPPLEMENTARY INFORMATION: 

I. Background

    Section 501 of Title V of the Gramm-Leach-Bliley Act (``Title V'') 
mandates that certain agencies covered by Title V establish appropriate 
safeguards for the financial institutions subject to their jurisdiction 
relating to administrative, technical and physical safeguards--(1) to 
insure the security and confidentiality of customer records and 
information; (2) to protect against any anticipated threats or hazards 
to the security or integrity of such records; and (3) to protect 
against unauthorized access to or use of such records or information 
which could result in substantial harm or inconvenience to any 
customer.\2\ The Commission and entities subject to its jurisdiction 
were originally excluded from Title V's coverage.\3\ However, section 
124 of the Commodity Futures Modernization Act of 2000 \4\ amended the 
Commodity Exchange Act (``CEA'') to add section 5g,\5\ providing that 
futures commission merchants (``FCMs''), commodity trading advisors 
(``CTAs''), commodity pool operators (``CPOs''), and introducing 
brokers (``IBs'') \6\ fall under the requirements of Title V and 
requiring the Commission to prescribe regulations in furtherance of 
Title V. Thus, in 2001, the Commission promulgated part 160 of its 
regulations to establish standards relating to Title V, and, 
specifically, Sec.  160.30 in relation to section 501's mandate.\7\
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    \2\ Section 501, Subtitle A, Title V, Public Law 106-102, 113 
Stat. 1338 (1999), as codified at 15 U.S.C. 6801.
    \3\ 15 U.S.C. 6809(3)(B).
    \4\ Section 124, Appendix E of Public Law 106-554, 114 Stat. 
2763 (2000).
    \5\ 7 U.S.C. 7b-2.
    \6\ For the definitions of these intermediary categories, see 
section 1a of the CEA and Sec.  1.3 of the Commission's regulations. 
7 U.S.C. 1a and 17 CFR 1.3.
    \7\ Privacy of Customer Information, 66 FR 21235 (April 27, 
2001) (``2001 Rulemaking''). The Commission later modified its part 
160 regulations to apply them to retail foreign exchange dealers 
(``RFEDs''), swap dealers (``SDs''), and major swap participants 
(``MSPs''). Regulation of Off-Exchange Retail Foreign Exchange 
Transactions and Intermediaries, 75 FR 55409 (Sept. 10, 2010) for 
RFEDs, and Privacy of Consumer Financial Information; Conforming 
Amendments Under Dodd-Frank Act, 76 FR 43874 (July 22, 2011) for SDs 
and MSPs (``2011 Amendment''). For the definition of RFED, see Sec.  
5.1(h). 17 CFR 5.1(h). For the definitions of SD and MSP, see 
section 1a of the CEA and Sec.  1.3 of the Commission's regulations. 
7 U.S.C. 1a and 17 CFR 1.3.
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    Commission regulation 160.30 implements this mandate by requiring 
every FCM, RFED, CTA, CPO, IB, MSP, or SD that is subject to the 
jurisdiction of the Commission (``Covered Persons'') \8\ to adopt 
policies and procedures to address administrative, technical and 
physical safeguards for the protection of customer records and 
information (the ``General Requirement'').\9\ In addition, mirroring 
section 501 of the GLB Act, the 2001 Rulemaking further required (the 
``Detailed Requirements'') that the policies and procedures be 
reasonably designed to: (i) Insure the security and confidentiality of 
customer records and information; (ii) protect against any anticipated 
threats or hazards to the security or integrity of customer records and 
information; and (iii) protect against unauthorized access to or use of 
customer records or information that could result in substantial harm 
or inconvenience to any customer.\10\ However, when the 2011 Amendment 
revised Sec.  160.30 to add SDs and MSPs to the list of entities in 
Sec.  160.30's introductory sentence (and, thus, subject to it), the 
Detailed Requirements were inadvertently deleted.\11\
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    \8\ 17 CFR 160.30. Part 160 does not apply to foreign (non-
resident) FCMs, RFEDs, CTAs, CPOs, IBs, MSPs, and SDs that are not 
registered with the Commission. 17 CFR 160.1. Therefore, they are 
not ``Covered Persons'' as defined in this release.
    \9\ 17 CFR 160.30.
    \10\ See 2001 Rulemaking at 21250.
    \11\ See 2011 Amendment at 43879. With respect to Sec.  160.30, 
the preamble to the 2011 Amendment only discusses amending the 
introductory sentence of Sec.  160.30 to add SDs and MSPs to the 
list of CFTC registrants that must comply with that regulation. See 
id. at 43876. Further, the Commission notes that the Detailed 
Requirements continued to be included in Commission staff guidance 
on compliance with Sec.  160.30 after the 2011 Amendment. See CFTC 
Staff Advisory No. 14-21 (Feb. 26, 2014) (``Sec.  160.30 
Guidance''). In addition, the Commission notes that restoring the 
Detailed Requirements will make Sec.  160.30 more consistent with 
similar rules adopted by the Securities and Exchange Commission 
(``SEC'') and the Federal Trade Commission (``FTC'') under the GLB 
Act. See 17 CFR 248.30 and 16 CFR 314.3, respectively.
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II. Proposal

    The Commission is now proposing (the ``Proposal'') to restore the 
inadvertently deleted Detailed Requirements in Sec.  160.30 as shown in 
the proposed amended rule text in this release. As discussed above, the 
Detailed Requirements mirror the requirements of section 501 of the GLB 
Act, pursuant to which part 160 of the Commission's regulations was 
adopted.

III. Related Matters

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act \12\ (``RFA'') requires federal 
agencies to consider whether the rules they propose will have a 
significant economic impact on a substantial number of small entities 
and, if so, to provide a regulatory flexibility analysis regarding the 
economic impact on those entities. The Proposal would restore the 
inadvertently deleted Detailed Requirements in Sec.  160.30. To the 
extent that the Proposal would impact Covered Persons that may be small 
entities for purposes of the RFA,\13\ the Commission considered whether 
the Proposal would have a significant economic impact on such Covered 
Persons.
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    \12\ 5 U.S.C. 601 et seq.
    \13\ The Commission has previously determined that certain 
entities are not ``small entities'' for purposes of the RFA. See, 
e.g., 47 FR 18618, 18619 (Apr. 30, 1982) (registered FCMs); 75 FR 
55410, 55416 (Sept. 10, 2010) (RFEDs); 77 FR 2613, 2620 (Jan. 19, 
2012) (SDs and MSPs). However, the Commission has determined that 
CPOs exempt pursuant to 17 CFR 4.13(a) are small entities. See 46 FR 
26004 (May 8, 1981); 47 FR at 18619. The definitions of IB and CTA 
are also broad enough to potentially encompass ``small entities.'' 
See 48 FR 35248, 35276 (Aug. 3, 1983) (recognizing that the IB 
definition ``undoubtedly encompasses many business enterprises of 
variable size''); 47 FR at 18620 (the category of CTAs is ``too 
broad'' for a general determination regarding their small entity 
status).
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    In restoring the inadvertently deleted Detailed Requirements the 
Proposal would simply set forth, consistent with

[[Page 60965]]

the Sec.  160.30 Guidance and the GLB Act, what is necessary to satisfy 
the General Requirement that already applies to Covered Persons. 
Therefore, the Commission believes that the Proposal will not have a 
significant economic impact on a substantial number of small entities, 
as defined in the RFA.
    Accordingly, the Chairman, on behalf of the Commission, hereby 
certifies pursuant to 5 U.S.C. 605(b) that the Proposal will not have a 
significant economic impact on a substantial number of small entities. 
The Commission invites comment on the impact of the Proposal on small 
entities.

B. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (``PRA'') \14\ imposes certain 
requirements on Federal agencies, including the Commission, in 
connection with their conducting or sponsoring any collection of 
information, as defined by the PRA. The Commission may not conduct or 
sponsor, and a person is not required to respond to, a collection of 
information unless it displays a currently valid Office of Management 
and Budget (``OMB'') control number.
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    \14\ 44 U.S.C. 3501 et seq.
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    The Commission has previously received a control number from OMB 
that includes the collection of information associated with the General 
Requirement. The title for this collection of information is ``Privacy 
of Consumer Financial Information, OMB control number 3038-0055''.\15\ 
Collection 3038-0055 is currently in force with its control number 
having been provided by OMB. Because in restoring the inadvertently 
deleted Detailed Requirements, the Proposal would simply set forth what 
is necessary to satisfy the General Requirement that already applies to 
Covered Persons, the Commission believes that the Proposal would not 
impose any new recordkeeping or information collection requirements, or 
other collections of information that require approval of OMB under the 
PRA.
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    \15\ See OMB Control No. 3038-0055, http://www.reginfo.gov/public/do/PRAOMBHistory?ombControlNumber=3038-0055# (last visited 
Nov. 5, 2019).
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    The Commission invites the public and other Federal agencies to 
comment on any aspect of the proposed information collection 
requirements discussed above. Refer to the ADDRESSES section of this 
notice for comment submission instructions to the Commission. A copy of 
the supporting statements for the collection of information discussed 
above may be obtained by visiting www.RegInfo.gov.

C. Cost-Benefit Considerations

    Section 15(a) of the CEA requires the Commission to consider the 
costs and benefits of its actions before promulgating a regulation 
under the CEA. Section 15(a) further specifies that the costs and 
benefits shall be evaluated in light of the following five broad areas 
of market and public concern: (1) Protection of market participants and 
the public; (2) efficiency, competitiveness, and financial integrity of 
futures markets; (3) price discovery; (4) sound risk management 
practices; and (5) other public interest considerations. The Commission 
considers the costs and benefits resulting from its discretionary 
determinations with respect to the section 15(a) considerations.
    As discussed above, the Commission is proposing to restore the 
inadvertently deleted Detailed Requirements in Sec.  160.30. Below, the 
Commission discusses the costs and benefits of the Proposal.\16\ The 
baseline against which the costs and benefits are considered is the 
current status quo for Covered Persons with respect to their obligation 
to satisfy the General Requirement under Sec.  160.30.\17\ The 
Commission recognizes that there are inherent costs and benefits to 
Covered Persons in providing requirements for specific customer privacy 
policies and procedures, which Congress took into account in codifying 
the GLB Act.
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    \16\ The Commission endeavors to assess the expected costs and 
benefits of its proposed rules in quantitative terms where possible. 
Where estimation or quantification is not feasible, the Commission 
provides its discussion in qualitative terms. Given a general lack 
of relevant data, the Commission's assessment is generally provided 
in qualitative terms.
    \17\ The Commission notes that the consideration of costs and 
benefits below is based on the understanding that the markets 
function internationally, with many transactions involving United 
States firms taking place across international boundaries; with some 
Commission registrants being organized outside of the United States; 
with some leading industry members typically conducting operations 
both within and outside the United States; and with industry members 
commonly following substantially similar business practices wherever 
located. Where the Commission does not specifically refer to matters 
of location, the discussion of costs and benefits below refers to 
the effects of this proposal on all activity subject to the proposed 
and amended regulations, whether by virtue of the activity's 
physical location in the United States or by virtue of the 
activity's connection with or effect on United States commerce under 
CEA section 2(i). In particular, the Commission notes that some 
Covered Persons are located outside of the United States.
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    The inadvertent deletion of the Detailed Requirements in Sec.  
160.30 affected entities that were required to comply with the Detailed 
Requirements prior to the 2011 Amendment as well as the two types of 
entities (SDs and MSPs) the rule was being revised to include. Due to 
the inadvertent nature of the deletion of the Detailed Requirements, 
and that they applied prior to the 2011 Amendment, the Commission 
expects the number of entities affected by the Proposal to be 
negligible, if any. Consequently, to the extent the Proposal restores 
the Detailed Requirements in Sec.  160.30, consistent with the Sec.  
160.30 Guidance and the GLB Act, the Proposal would not alter existing 
benefits and costs. The Commission, however, recognizes that the 
Proposal may benefit certain Covered Persons by, consistent with the 
GLB Act, specifying what types of policies and procedures are necessary 
to satisfy the General Requirement. In doing so, the Proposal may 
reduce any potential confusion and allow Covered Persons to design and 
maintain their policies and procedures to focus on the specified areas 
mandated by the GLB Act. In this regard, the Proposal may allow Covered 
Persons to more efficiently utilize their resources in developing 
policies and procedures in compliance with Sec.  160.30. The Proposal 
also will, consistent with the GLB Act,\18\ result in Sec.  160.30 
being more similar to regulations adopted by the SEC and FTC pursuant 
to the GLB Act and to which certain Covered Persons may be subject.\19\
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    \18\ See Section 6804(a)(2) of the GLB Act. 15 U.S.C. 
6804(a)(2).
    \19\ See n.11, supra.
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    The Commission recognizes that, as a result of the Proposal, 
certain Covered Persons may become subject to more specific 
requirements under Sec.  160.30 than they are currently. However, given 
that the General Requirement currently applies to Covered Persons, and 
the Sec.  160.30 Guidance that remains in effect takes into account the 
substance of the Detailed Requirements, the Commission believes that 
the burden of the Proposal on Covered Persons will not be significant.
1. Section 15(a) Considerations
    In light of the foregoing, the CFTC has evaluated the costs and 
benefits of the Proposal pursuant to the five considerations identified 
in section 15(a) of the CEA as follows:
(1) Protection of Market Participants and the Public
    The Proposal's restoration of the Detailed Requirements may protect 
market participants and the public by ensuring that the policies and 
procedures required under Sec.  160.30 are reasonably designed to 
address the

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specific areas mandated by Congress in the GLB Act.

(2) Efficiency, Competitiveness, and Financial Integrity of Markets

    The Proposal may reduce confusion and allow Covered Persons to 
design and maintain their policies and procedures to focus on the 
specified areas mandated by the GLB Act. This may allow Covered Persons 
to more efficiently utilize their resources in developing policies and 
procedures in compliance with Sec.  160.30. In addition, consistent 
with the GLB Act, the Proposal will further align the consumer privacy 
regulations of the Commission, FTC, and SEC, which may lower costs for 
certain Covered Persons.
(3) Price Discovery
    The Commission has not identified an impact on price discovery as a 
result of the Proposal.
(4) Sound Risk Management
    The Commission has not identified an impact on sound risk 
management as a result of the Proposal.
(5) Other Public Interest Considerations
    Consistent with the GLB Act, the Proposal will further align the 
consumer privacy regulations of the Commission, FTC, and SEC.
2. Request for Comments on Cost-Benefit Considerations
    The Commission invites public comment on its cost-benefit 
considerations, including the section 15(a) factors described above. 
Commenters are also invited to submit any data or other information 
that they may have quantifying or qualifying the costs and benefits of 
the Proposal with their comment letters.

D. Antitrust Considerations

    Section 15(b) of the CEA \20\ requires the Commission to take into 
consideration the public interest to be protected by the antitrust laws 
and endeavor to take the least anticompetitive means of achieving the 
objectives of the CEA, as well as the policies and purposes of the CEA, 
in issuing any order or adopting any Commission rule or regulation 
(including any exemption under section 4(c) or 4c(b)), or in requiring 
or approving any bylaw, rule, or regulation of a contract market or 
registered futures association established pursuant to section 17 of 
the CEA.
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    \20\ 7 U.S.C. 19(b).
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    The Commission believes that the public interest to be protected by 
the antitrust laws is generally to protect competition. The Commission 
requests comment on whether the Proposal implicates any other specific 
public interest to be protected by the antitrust laws.
    The Commission has considered the Proposal to determine whether it 
is anticompetitive and has preliminarily identified no anticompetitive 
effects. The Commission requests comment on whether the Proposal is 
anticompetitive and, if it is, what the anticompetitive effects are.
    Because the Commission has preliminarily determined that the 
Proposal is not anticompetitive and has no anticompetitive effects, the 
Commission has not identified any less anticompetitive means of 
achieving the purposes of the CEA. The Commission requests comment on 
whether there are less anticompetitive means of achieving the relevant 
purposes of the CEA that would otherwise be served by adopting the 
Proposal.

List of Subjects in 17 CFR Part 160

    Brokers, Consumer protection, Privacy, Reporting and recordkeeping 
requirements.

    For the reasons stated in the preamble, the Commodity Futures 
Trading Commission proposes to amend 17 CFR part 160 as set forth 
below:

PART 160--PRIVACY OF CONSUMER FINANCIAL INFORMATION UNDER TITLE V 
OF THE GRAMM-LEACH-BLILEY ACT

0
1. The authority citation for part 160 continues to read as follows:

    Authority:  7 U.S.C. 7b-2 and 12a(5); 15 U.S.C 6801, et seq., 
and sec. 1093, Pub. L. 111-203, 124 Stat. 1376.

0
2. Revise Sec.  160.30 to read as follows:


Sec.  160.30  Procedures to safeguard customer records and information.

    Every futures commission merchant, retail foreign exchange dealer, 
commodity trading advisor, commodity pool operator, introducing broker, 
major swap participant, and swap dealer subject to the jurisdiction of 
the Commission must adopt policies and procedures that address 
administrative, technical and physical safeguards for the protection of 
customer records and information. These policies and procedures must be 
reasonably designed to:
    (a) Insure the security and confidentiality of customer records and 
information;
    (b) Protect against any anticipated threats or hazards to the 
security or integrity of customer records and information; and
    (c) Protect against unauthorized access to or use of customer 
records or information that could result in substantial harm or 
inconvenience to any customer.

    Issued in Washington, DC, on November 6, 2019, by the 
Commission.
Christopher Kirkpatrick,
Secretary of the Commission.

    Note:  The following appendix will not appear in the Code of 
Federal Regulations.

Appendix to Privacy of Consumer Financial Information--Commission 
Voting Summary

    On this matter, Chairman Tarbert and Commissioners Quintenz, 
Behnam, Stump, and Berkovitz voted in the affirmative. No 
Commissioner voted in the negative.

[FR Doc. 2019-24581 Filed 11-8-19; 8:45 am]
 BILLING CODE 6351-01-P