[Federal Register Volume 85, Number 75 (Friday, April 17, 2020)]
[Proposed Rules]
[Pages 21578-21658]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-04407]



[[Page 21577]]

Vol. 85

Friday,

No. 75

April 17, 2020

Part III





 Commodity Futures Trading Commission





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17 CFR Parts 45, 46, and 49





Swap Data Recordkeeping and Reporting Requirements; Proposed Rule

  Federal Register / Vol. 85, No. 75 / Friday, April 17, 2020 / 
Proposed Rules  

[[Page 21578]]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Parts 45, 46, and 49

RIN 3038-AE31


Swap Data Recordkeeping and Reporting Requirements

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commodity Futures Trading Commission (``Commission'' or 
``CFTC'') is proposing revisions to the Commission regulations that set 
forth the swap data recordkeeping and reporting requirements for swap 
data repositories (``SDRs''), derivatives clearing organizations 
(``DCOs''), swap execution facilities (``SEFs''), designated contract 
markets (``DCMs''), swap dealers (``SDs''), major swap participants 
(``MSPs''), and swap counterparties that are neither SDs nor MSPs. The 
Commission is proposing revisions that, among other things, streamline 
the requirements for reporting new swaps, define and adopt swap data 
elements that harmonize with international technical guidance, and 
reduce reporting burdens for reporting counterparties that are not SDs 
or MSPs.

DATES: Comments must be received on or before May 20, 2020.

ADDRESSES: You may submit comments, identified by RIN 3038-AE31, 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 
Centre, 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 posted as received to 
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 (``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 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 
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: Meghan Tente, Acting Associate 
Director, (202) 418-5785, cftc.gov">mtente@cftc.gov; Richard Mo, Special Counsel, 
(202) 418-7637, cftc.gov">rmo@cftc.gov; Thomas Guerin, Special Counsel, (202) 
734-4194, cftc.gov">tguerin@cftc.gov, Division of Market Oversight, Commodity 
Futures Trading Commission, Three Lafayette Centre, 1155 21st Street 
NW, Washington, DC 20581; Kristin Liegel, Surveillance Analyst, (312) 
596-0671, cftc.gov">kliegel@cftc.gov, Division of Market Oversight, Commodity 
Futures Trading Commission, 525 West Monroe Street, Suite 1100, 
Chicago, Illinois 60661; Nancy Doyle, Senior Special Counsel, (202) 
418-5136, cftc.gov">ndoyle@cftc.gov, Office of International Affairs; Gloria 
Clement, Senior Special Counsel, (202) 418-5122, cftc.gov">gclement@cftc.gov; 
John Coughlan, Research Economist, (202) 418-5944, cftc.gov">jcoughlan@cftc.gov, 
Office of the Chief Economist, in each case at the Commodity Futures 
Trading Commission, Three Lafayette Centre, 1155 21st Street NW, 
Washington, DC 20581.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background and Introduction
    A. Reporting Rules Review
    B. Statutory and Regulatory Framework for Swap Data 
Recordkeeping and Reporting
    C. International Swap Data Reporting Developments
II. Proposed Amendments to Part 45
    A. Sec.  45.1--Definitions
    B. Sec.  45.2--Swap Recordkeeping
    C. Sec.  45.3--Swap Data Reporting: Creation Data
    D. Sec.  45.4--Swap Data Reporting: Continuation Data
    E. Sec.  45.5--Unique Transaction Identifiers
    F. Sec.  45.6--Legal Entity Identifiers
    G. Sec.  45.8--Determination of Which Counterparty Shall Report
    H. Sec.  45.10--Reporting to a Single SDR
    I. Sec.  45.11--Data Reporting for Swaps in a Swap Asset Class 
Not Accepted by Any SDR
    J. Sec.  45.12--Voluntary Supplemental Reporting
    K. Sec.  45.13--Required Data Standards
    L. Sec.  45.15--Delegation of Authority
III. Proposed Amendments to Part 46
    A. Sec.  46.1--Definitions
    B. Sec.  46.3--Data Reporting for Pre-Enactment Swaps and 
Transition Swaps
    C. Sec.  46.10--Required Data Standards
    D. Sec.  46.11--Reporting of Errors and Omissions in Previously 
Reported Data
IV. Proposed Amendments to Part 49
    A. Sec.  49.2--Definitions
    B. Sec.  49.4--Withdrawal From Registration
    C. Sec.  49.10--Acceptance and Validation of Data
V. Swap Data Elements Reported to Swap Data Repositories
    A. General
    B. Swap Data Elements To Be Reported to Swap Data Repositories
VI. Compliance Date
VII. Related Matters
    A. Regulatory Flexibility Act
    B. Paperwork Reduction Act
    C. Cost-Benefit Considerations
    D. Antitrust Considerations

I. Background and Introduction

A. Reporting Rules Review

    The Commission's swap data reporting regulations were first adopted 
in 2012 and are located in part 45 of the Commission's regulations.\2\ 
The regulations require swap counterparties, SEFs, and DCMs to report 
swap data to SDRs. In 2016, the Commission amended part 45 to clarify 
the reporting obligations for DCOs and swap counterparties with respect 
to cleared swaps.\3\ In addition, throughout this time, the Commission 
has undertaken several efforts to identify, and made recommendations to 
resolve, swap reporting challenges faced by market participants.\4\
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    \2\ Swap Data Recordkeeping and Reporting Requirements, 77 FR 
2136 (Jan. 13, 2012).
    \3\ Amendments to Swap Data Recordkeeping and Reporting 
Requirements for Cleared Swaps, 81 FR 41736 (June 27, 2016).
    \4\ See, e.g., Review of Swap Data Recordkeeping and Reporting 
Requirements, Request for Comment, 79 FR 16689 (Mar. 26, 2014); 
Press Release, CFTC Staff Issues Request for Comment on Draft 
Technical Specifications for Certain Swap Data Elements (Dec. 22, 
2015), available at https://www.cftc.gov/PressRoom/PressReleases/pr7298-15; Press Release, CFTC Requests Public Input on Simplifying 
Rules (May 3, 2017), available at https://www.cftc.gov/PressRoom/PressReleases/pr7555-17.
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    The Division of Market Oversight (``Division'' or ``DMO'') is 
currently completing an update of the swap reporting rules. On July 10, 
2017, the Division announced its Roadmap to Achieve High Quality Swaps 
Data (``Roadmap''), consisting of a comprehensive review to: (i) Ensure 
that

[[Page 21579]]

the CFTC receives accurate, complete, and high quality data on swaps 
transactions for its regulatory oversight role; and (ii) streamline 
reporting, reduce messages that must be reported, and right-size the 
number of data elements that are reported to meet the agency's priority 
use-cases for swap data.\5\
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    \5\ See CFTC Letter 17-33, Division of Market Oversight 
Announces Review of Swap Reporting Rules in Parts 43, 45, and 49 of 
Commission Regulations (July 10, 2017), available at https://www.cftc.gov/idc/groups/public/@lrlettergeneral/documents/letter/17-33.pdf; Roadmap to Achieve High Quality Swap Data, available at 
https://www.cftc.gov/idc/groups/public/@newsroom/documents/file/dmo_swapdataplan071017.pdf.
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    The Commission received extensive feedback that addressed many swap 
reporting topics in response to DMO's Roadmap.\6\ Informed by that 
feedback, the Commission is taking a stepwise approach to amend its 
rules through separate notices of proposed rulemaking (``NPRMs'') as 
part of the Roadmap review. First, in May 2019, the Commission 
published an NPRM to streamline and clarify the Commission's SDR 
regulations in parts 23, 43, 45, and 49 (the ``2019 Part 49 NPRM'').\7\ 
Among other things, the 2019 Part 49 NPRM proposed modifications to the 
existing requirements for SDRs to confirm the accuracy of swap data 
with swap counterparties, and proposed requiring reporting 
counterparties to verify the accuracy of swap data with SDRs.
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    \6\ Comment letters are available at https://comments.cftc.gov/PublicComments/CommentList.aspx?id=1824. The Commission will discuss 
comment letters in the relevant sections throughout this release.
    \7\ See Certain Swap Data Repository and Data Reporting 
Requirements, 84 FR 21044 (May 13, 2019).
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    Now, in this release, the Commission is proposing revisions to the 
part 45 reporting regulations related to the following topics: 
Simplifying the requirements for reporting swaps; requiring SDRs to 
validate swap reports; permitting the transfer of swap data between 
SDRs; alleviating reporting burdens for non-SD/MSP reporting 
counterparties; and harmonizing the swap data elements counterparties 
report to SDRs with international technical guidance. The Commission 
will discuss each of these proposed changes in this release.
    In addition, the Commission is proposing amendments to certain part 
46 regulations for reporting pre-enactment swaps and transition swaps, 
primarily to conform to changes the Commission is proposing to part 
45.\8\ The Commission is also proposing amendments to certain 
regulations in part 49 that were not addressed in the 2019 Part 49 
NPRM.\9\ Most of the amendments the Commission is proposing to part 49 
concern new requirements for SDRs, including proposed requirements to 
validate SDR data.\10\
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    \8\ See generally 17 CFR part 46.
    \9\ See generally 17 CFR part 49.
    \10\ The new requirements proposed for SDRs to validate swap 
data in Sec.  49.10 are discussed in section IV.C.3 below. The 
Commission has proposed to define the term ``SDR data'' in the 2019 
Part 49 NPRM. As proposed, ``SDR data'' would mean the specific data 
elements and information required to be reported to an SDR or 
disseminated by an SDR, pursuant to two or more of parts 43, 45, 46, 
and/or 49, as applicable. See 2019 Part 49 NPRM at 21047, 21101.
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    The Commission appreciates the time commenters have taken to 
explain aspects of the reporting requirements that they believe the 
Commission could make more efficient. As discussed throughout this 
release, the Commission believes that the revisions proposed herein 
address many of these recommendations, as well as several major 
domestic and international swap reporting developments that have 
occurred since the Commission originally adopted part 45.

B. Statutory and Regulatory Framework for Swap Data Recordkeeping and 
Reporting

    Pursuant to section 2(a)(13)(G) of the Commodity Exchange Act 
(``CEA''), all swaps, whether cleared or uncleared, must be reported to 
SDRs.\11\ SDRs collect and maintain data related to swap transactions, 
keeping such data electronically available for regulators or the 
public.\12\ CEA section 21(b) directs the Commission to prescribe 
standards for swap data recordkeeping and reporting, which are to apply 
to both registered entities and counterparties involved with swaps, and 
be comparable to standards for clearing organizations in connection 
with clearing of swaps.\13\ CEA sections 4r(a)(2)(A) and 2(h)(5) 
provide for the reporting of pre-enactment and transition swaps.\14\
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    \11\ 7 U.S.C. 2(a)(13)(g).
    \12\ The term ``swap data repository'' means any person that 
collects and maintains information or records with respect to 
transactions or positions in, or the terms and conditions of, swaps 
entered into by third parties for the purpose of providing a 
centralized recordkeeping facility for swaps. See 7 U.S.C. 1a(48). 
Regulations governing core principles and registration requirements 
for, and duties of, SDRs are in part 49 of the Commission's 
regulations. See generally 17 CFR part 49.
    \13\ See 7 U.S.C. 24a(b).
    \14\ See 7 U.S.C. 6r(a)(2)(A) and 7 U.S.C. 2(h)(5); see also 17 
CFR 46.1 (defining ``pre-enactment swap'' as any swap entered into 
prior to enactment of the Dodd-Frank Act of 2010 (July 21, 2010), 
the terms of which have not expired as of the date of enactment of 
that Act, and ``transition swap'' as any swap entered into on or 
after the enactment of the Dodd-Frank Act of 2010 (July 21, 2010) 
and prior to the applicable compliance date on which a registered 
entity or swap counterparty subject to the jurisdiction of the 
Commission is required to commence full compliance with all 
provisions of part 46.
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    In 2011, the Commission adopted the part 49 regulations setting 
forth the specific duties that SDRs are required to comply with to 
register as an SDR.\15\ In 2012, the Commission adopted the part 45 
regulations to implement standards for swap data reporting and 
recordkeeping \16\ and the part 46 regulations to implement standards 
for pre-enactment and transition swap recordkeeping and reporting.\17\ 
In 2016, the Commission amended part 45 to clarify the reporting 
obligations for cleared swaps.\18\
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    \15\ See generally Swap Data Repositories: Registration 
Standards, Duties and Core Principles, 76 FR 54538 (Sept. 1, 2011).
    \16\ See generally Swap Data Recordkeeping and Reporting 
Requirements, 77 FR 2136 (Jan. 13, 2012).
    \17\ See generally Swap Data Recordkeeping and Reporting 
Requirements: Pre-Enactment and Transition Swaps, 77 FR 35200 (June 
12, 2012).
    \18\ See generally Amendments to Swap Data Recordkeeping and 
Reporting Requirements for Cleared Swaps, 81 FR 41736 (June 27, 
2016).
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    The Commission will discuss relevant sections of the current parts 
45, 46, and 49 regulations throughout this release.

C. International Swap Data Reporting Developments

    In response to the financial crisis in 2009, the G20 leaders agreed 
that all over-the-counter (``OTC'') derivatives should be reported to 
trade repositories (``TRs'') \19\ to further the goals of improving 
transparency, mitigating systemic risk, and preventing market abuse. 
Since November 2014, regulators across major derivatives jurisdictions, 
including the CFTC, have come together through the Committee on 
Payments and Market Infrastructures (``CPMI'') and the International 
Organization of Securities Commissions (``IOSCO'') working group for 
the harmonization of key OTC derivatives data elements (``Harmonisation 
Group'') to develop global guidance regarding the definition, format, 
and usage of key OTC derivatives data elements reported to TRs, 
including the Unique Transaction Identifier (``UTI''), the Unique 
Product Identifier (``UPI''), and critical data elements other than UTI 
and UPI (``CDE'').
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    \19\ See https://www.treasury.gov/resource-center/international/g7-g20/Documents/pittsburgh_summit_leaders_statement_250909.pdf. In 
the U.S., trade repositories are called SDRs.
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    The Harmonisation Group published Guidance on the Harmonisation of 
the Unique Transaction Identifier (``UTI Technical Guidance'') \20\ in 
February

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2017 and Technical Guidance on the Harmonisation of the Unique Product 
Identifier \21\ (``UPI Technical Guidance'') in September 2017.
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    \20\ CPMI-IOSCO, Technical Guidance, Harmonisation of the Unique 
Transaction Identifier (Feb. 2017), available at https://www.iosco.org/library/pubdocs/pdf/IOSCOPD557.pdf. The CFTC's rules 
currently refer to UTIs as USIs. As discussed in section II.E below, 
the Commission is proposing to harmonize its unique swap identifier 
(``USI'') rules with the UTI Technical Guidance, and change USI 
references to UTI.
    \21\ CPMI-IOSCO, Technical Guidance, Harmonisation of the Unique 
Product Identifier (Sept. 2017), available at https://www.iosco.org/library/pubdocs/pdf/IOSCOPD580.pdf.
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    The Commission currently requires that each swap subject to its 
jurisdiction be identified by a USI.\22\ The UTI Technical Guidance, 
intended by CPMI-IOSCO to help authorities set rules for a uniform 
global UTI, provided guidance to authorities on the definition, format, 
generation, and usage of UTIs. Similarly, CPMI-IOSCO intends that the 
UPI Technical Guidance will result in a unique UPI code that will be 
assigned to each distinct OTC derivative product. The Commission's 
rules do not specify a standardized set of swap product data elements. 
The new CPMI-IOSCO UPI code will map to a set of data comprised of 
reference data elements with specific values that together describe the 
swap product.
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    \22\ See 17 CFR 45.5.
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    In April 2018, the Harmonisation Group published Technical Guidance 
on the Harmonisation of Critical OTC Derivatives Data Elements (other 
than UTI and UPI) (``CDE Technical Guidance'').\23\ The CDE Technical 
Guidance provides technical guidance on the definition, format, and 
allowable values of over 100 critical data elements, other than UTI and 
UPI, reported to TRs and important for data aggregation by authorities. 
The harmonized data elements in the CDE Technical Guidance cover data 
elements ranging from counterparty information, payments, and valuation 
and collateral to prices and quantities, package trades, and custom 
baskets.\24\
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    \23\ The CDE Technical Guidance was finalized following 
consultative reports in September 2015, October 2016, and June 2017. 
See CPMI-IOSCO, Technical Guidance, Harmonisation of Critical OTC 
Derivatives Data Elements (other than UTI and UPI) (Apr. 2018), 
available at https://www.iosco.org/library/pubdocs/pdf/IOSCOPD598.pdf.
    \24\ Id.
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    The Commission has played an active role in the development and 
publication of the CDE Technical Guidance as part of the CPMI-IOSCO 
working group, alongside representatives from Canada, France, Germany, 
Hong Kong, Japan, Singapore, and the United Kingdom, among others. 
Commission staff provided feedback about the data elements, taking into 
account the Commission's experience with swap data reporting and its 
use of such data in fulfilling its regulatory responsibilities. 
Commission staff also participated in the solicitation of responses to 
three public consultations on the CDE Technical Guidance, along with 
related industry workshops and conference calls.\25\
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    \25\ See CPMI-IOSCO, Technical Guidance, Harmonisation of 
Critical OTC Derivatives Data Elements (other than UTI and UPI) at 
9.
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    Since each authority is responsible for issuing requirements for 
market participants on OTC derivatives data reporting, the CDE 
Technical Guidance does not determine which critical data elements are 
required to be reported in a given jurisdiction. Instead, if CDE 
Technical Guidance data elements are required to be reported in a given 
jurisdiction, the CDE Technical Guidance provides the relevant 
authorities in that jurisdiction guidance on the definition, format, 
and allowable values for these data elements that would facilitate 
consistent aggregation at a global level.

II. Proposed Amendments to Part 45

A. Sec.  45.1--Definitions

    Section 45.1 contains the definitions for terms used throughout the 
regulations in part 45. Section 45.1 does not contain any lower 
paragraph levels. The Commission is proposing to separate Sec.  45.1 
into two paragraphs: Sec.  45.1(a) for definitions, and Sec.  45.1(b), 
which would state that terms not defined in part 45 have the meanings 
assigned to the terms in Commission regulation Sec.  1.3.\26\
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    \26\ 17 CFR 1.3.
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    The Commission is also proposing to revise the definitions in 
proposed Sec.  45.1(a). As part of these revisions, the Commission is 
proposing to add new definitions, and amend or remove certain 
definitions. As Sec.  45.1 is arranged alphabetically, the Commission 
has grouped the discussion of its proposed changes to Sec.  45.1 into 
corresponding categories (i.e., new definitions, amendments, and 
removal), except as otherwise noted.
1. Proposed New Definitions
    The Commission is proposing to add a definition of ``allocation'' 
to Sec.  45.1(a). As proposed, ``allocation'' would mean the process by 
which an agent, having facilitated a single swap transaction on behalf 
of clients, allocates a portion of the executed swap to the clients. 
Section 45.3(f) currently contains regulations for reporting 
allocations without defining the term. Defining ``allocation'' should 
help market participants comply with the regulations for reporting 
allocations in Sec.  45.3.
    The Commission is also proposing to add a definition of ``as soon 
as technologically practicable'' (``ASATP'') to Sec.  45.1(a). As 
proposed, ``as soon as technologically practicable'' would mean as soon 
as possible, taking into consideration the prevalence, implementation, 
and use of technology by comparable market participants. The phrase 
``as soon as technologically practicable'' is currently used throughout 
part 45, but is not defined. The Commission is proposing to adopt the 
same definition of ``as soon as technologically practicable'' as is 
defined in Sec.  43.2 of the Commission's regulations for the swap 
transaction and pricing data.\27\
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    \27\ See 17 CFR 43.2 (definition of ``as soon as technologically 
practicable'').
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    The Commission is also proposing to add a definition of 
``collateral data'' to Sec.  45.1(a). As proposed, ``collateral data'' 
would mean the data elements necessary to report information about the 
money, securities, or other property posted or received by a swap 
counterparty to margin, guarantee, or secure a swap, as specified in 
appendix 1 to part 45. This proposed new definition is explained in a 
discussion of proposed requirements for reporting counterparties to 
report collateral data in section II.D.4 below.
    The Commission is proposing to add definitions for ``execution'' 
and ``execution date'' to Sec.  45.1(a). As proposed, ``execution'' 
would mean an agreement by the parties, by any method, to the terms of 
a swap that legally binds the parties to such swap terms under 
applicable law.\28\ The term ``execution date'' would mean the date, 
determined by reference to eastern time, on which swap execution has 
occurred. The execution date for a clearing swap that replaces an 
original swap would be the date, determined by reference to eastern 
time, on which the original swap has been accepted for clearing. The 
term ``execution'' is currently used throughout part 45 but not 
defined, and the Commission is proposing new regulations that reference 
``execution date.'' \29\
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    \28\ The Commission notes that the proposed definition of 
``execution'' is functionally identical to the existing definition 
of execution in part 23 of the Commission's regulations. See 17 CFR 
23.200(e) (definition of ``execution'').
    \29\ See proposed Sec.  45.3(a) and (b), discussed in sections 
II.C.2.a and II.C.2.b, respectively, below.
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    The Commission is proposing to add the following three definitions 
to Sec.  45.1(a): ``Global Legal Entity Identifier

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System,'' ``legal entity identifier'' or ``LEI,'' and ``Legal Entity 
Identifier Regulatory Oversight Committee'' (``LEI ROC''). As proposed, 
``Global Legal Entity Identifier System'' would mean the system 
established and overseen by the LEI ROC for the unique identification 
of legal entities and individuals. As proposed, ``legal entity 
identifier'' or ``LEI'' would mean a unique code assigned to swap 
counterparties and entities in accordance with the standards set by the 
Global Legal Entity Identifier System. As proposed, ``Legal Entity 
Identifier Regulatory Oversight Committee'' would mean the group 
charged with the oversight of the Global Legal Entity Identifier System 
that was established by the finance ministers and the central bank 
governors of the Group of Twenty nations and the Financial Stability 
Board, under the Charter of the Regulatory Oversight Committee for the 
Global Legal Entity Identifier System dated November 5, 2012, or any 
successor thereof.\30\ These proposed definitions are all associated 
with, and further explained in the context of, the Sec.  45.6 
regulations for LEI, discussed in section II.F below.
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    \30\ https://www.leiroc.org/publications/gls/roc_20190130-1.pdf.
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    The Commission is proposing to add a definition of ``non-SD/MSP/DCO 
reporting counterparty'' to Sec.  45.1(a). As proposed, ``non-SD/MSP/
DCO reporting counterparty'' would mean a reporting counterparty that 
is not an SD, MSP, or DCO. Currently, DCOs are not included in the term 
``non-SD/MSP reporting counterparty.'' This creates problems when, for 
instance, the Commission did not intend for DCOs to follow the required 
swap creation data reporting regulations in Sec.  45.3(d) for off-
facility swaps not subject to the clearing requirement with a non-SD/
MSP reporting counterparty, even though DCOs are technically reporting 
counterparties that are neither SDs or MSPs. Instead, DCOs follow the 
required swap creation data reporting regulations in Sec.  45.3(e) for 
clearing swaps. The definition of ``non-SD/MSP/DCO reporting 
counterparty'' should address this unintended regulatory overlap.
    The Commission is proposing to add a definition of ``novation'' to 
Sec.  45.1(a). As proposed, ``novation'' would mean the process by 
which a party to a swap legally transfers all or part of its rights, 
liabilities, duties, and obligations under the swap to a new legal 
party other than the counterparty to the swap under applicable law. 
This proposed term is currently referenced in the definition of ``life 
cycle event,'' as well as the Sec.  45.8(g) regulations for determining 
which counterparty must report, but is not currently defined.
    The Commission is proposing to add a definition of ``swap'' to 
Sec.  45.1(a). As proposed, ``swap'' would mean any swap, as defined by 
Sec.  1.3, as well as any foreign exchange forward, as defined by CEA 
section 1a(24), or foreign exchange swap, as defined by CEA section 
1a(25).\31\ The term ``swap'' is used throughout part 45. The proposed 
definition would codify the meaning of the term as it is currently used 
throughout part 45.
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    \31\ The Commission notes that while foreign exchange forwards 
and foreign exchange swaps are excluded from the definition of 
``swap,'' such transactions are nevertheless required to be reported 
to an SDR. See 7 U.S.C. 1a(47)(E)(iii) (definition of ``swap'').
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    The Commission is proposing to add definitions of ``swap data'' and 
``swap transaction and pricing data'' to Sec.  45.1(a). As proposed, 
``swap data'' would mean the specific data elements and information in 
appendix 1 to part 45 required to be reported to an SDR pursuant to 
part 45 or made available to the Commission pursuant to part 49, as 
applicable; ``swap transaction and pricing data'' would mean all data 
for a swap in appendix C to part 43 required to be reported or publicly 
disseminated pursuant to part 43. The term ``swap data'' is currently 
used throughout part 45. The Commission believes that having the term 
``swap data'' apply to part 45 data, and ``swap transaction and pricing 
data'' apply to part 43 data would provide clarity across the reporting 
regulations.\32\
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    \32\ The Commission has also proposed to add functionally 
identical definitions for ``swap data'' and ``swap transaction and 
pricing data'' to part 49 of the Commission's regulations as part of 
the 2019 Part 49 NPRM. See 2019 Part 49 NPRM at 21102 (definitions 
of ``swap data'' and ``swap transaction and pricing data'').
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    The Commission is proposing to add a definition of ``swap data 
validation procedures'' to Sec.  45.1(a). As proposed, ``swap data 
validation procedures'' would mean procedures established by an SDR 
pursuant to proposed Sec.  49.10 to accept, validate, and process swap 
data reported to an SDR pursuant to part 45. This proposed new 
definition is explained in a discussion of the proposed regulations for 
the validation of swap data reported to SDRs in section IV.C.3 below.
    The Commission is proposing to add a definition of ``unique 
transaction identifier'' to Sec.  45.1(a). As proposed, ``unique 
transaction identifier'' would mean a unique alphanumeric identifier 
with a maximum of 52 characters constructed solely from the upper-case 
alphabetic characters A to Z or the digits 0 to 9, inclusive in both 
cases, generated for each swap pursuant to Sec.  45.5. This proposed 
new definition is used in the discussion of the regulations to 
transition from using USIs to UTIs. Those proposed changes are 
explained in section II.E below.
2. Proposed Amendments to Existing Definitions
    The Commission is proposing non-substantive minor technical changes 
to the existing definitions of ``asset class,'' ``derivatives clearing 
organization,'' and ``swap execution facility.'' The remaining 
discussion in this section addresses substantive amendments.
    The Commission is proposing to amend the definition of ``business 
day'' in proposed Sec.  45.1(a). Currently, Sec.  45.1 defines 
``business day'' to mean ``the twenty-four hour day, on all days except 
Saturdays, Sundays, and legal holidays, in the location of the 
reporting counterparty or registered entity reporting data for the 
swap.'' \33\ The Commission is proposing to replace ``the twenty-four 
hour day'' with ``each twenty-four hour day,'' and ``legal holidays, in 
the location of the reporting counterparty'' with ``Federal holidays.'' 
The Commission believes these changes would simplify the current 
business day definition by removing the responsibility of determining 
different legal holidays depending on the reporting counterparty's 
location. The proposed amended definition is used in a discussion of 
proposed changes to the timing requirements for reporting swap creation 
data and required swap continuation data in current and proposed 
Sec. Sec.  45.3 and 45.4. Those proposed changes are explained in 
sections II.C and II.D, respectively, below.
---------------------------------------------------------------------------

    \33\ 17 CFR 45.1 (definition of ``business day'').
---------------------------------------------------------------------------

    The Commission is proposing to amend the definition of ``life cycle 
event'' in proposed Sec.  45.1(a). Currently, Sec.  45.1 defines ``life 
cycle event'' to mean any event that would result in either a change to 
a primary economic term of a swap or to any primary economic terms data 
(``PET data'') previously reported to an SDR in connection with a swap. 
Examples of such events include, without limitation, a counterparty 
change resulting from an assignment or novation; a partial or full 
termination of the swap; a change to the end date for the swap; a 
change in the cash flows or rates originally reported; availability of 
an LEI for a swap counterparty previously identified by name or by some 
other identifier; or a corporate action affecting a security or

[[Page 21582]]

securities on which the swap is based (e.g., a merger, dividend, stock 
split, or bankruptcy). The Commission is proposing to replace the 
reference to PET data with required swap creation data.\34\ The 
Commission is also proposing to replace a reference to a counterparty 
being identified in swap data by ``name'' with other identifiers to 
account for situations where counterparties are identified by other 
means.
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    \34\ The removal of the term PET data is reflected in the 
discussion of the proposed changes to the required swap creation 
data and required swap continuation data regulations in Sec. Sec.  
45.3 and 45.4. Those proposed changes are explained in sections II.C 
and II.D, respectively, below.
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    The Commission is proposing to amend the definition of ``non-SD/MSP 
counterparty'' in proposed Sec.  45.1(a). Currently, Sec.  45.1 defines 
``non-SD/MSP counterparty'' to mean a swap counterparty that is neither 
an SD nor an MSP. The Commission is proposing to change the defined 
term to ``non-SD/MSP/DCO counterparty.'' \35\ As amended, ``non-SD/MSP/
DCO counterparty'' would mean a swap counterparty that is not an SD, 
MSP, or DCO. This amendment would conform to the amendments proposed to 
the term ``non-SD/MSP/DCO reporting counterparty'' explained in section 
II.A.1 above.
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    \35\ The Commission is proposing to update all references to 
``non-SD/MSP counterparty'' to ``non-SD/MSP/DCO counterparty'' 
throughout part 45. To limit repetition, the Commission will not 
discuss each removal of the phrase throughout this release.
---------------------------------------------------------------------------

    The Commission is proposing to amend the definition of ``required 
swap continuation data'' in proposed Sec.  45.1(a). Currently, Sec.  
45.1 defines ``required swap continuation data'' to mean all of the 
data elements that must be reported during the existence of a swap to 
ensure that all data concerning the swap in the SDR remains current and 
accurate, and includes all changes to the PET terms of the swap 
occurring during the existence of the swap. The definition further 
specifies that for this purpose, required swap continuation data 
includes: (i) All life cycle event data for the swap if the swap is 
reported using the life cycle reporting method, or all state data for 
the swap if the swap is reported using the snapshot reporting method; 
and (ii) all valuation data for the swap.
    First, the Commission is proposing to remove the reference to 
``primary economic terms of the swap.'' \36\ Second, the Commission is 
proposing to remove the reference to snapshot reporting.\37\ Third, the 
Commission is proposing to add a reference to the margin and collateral 
data that would be required to be reported pursuant to proposed Sec.  
45.4(c)(2). As amended, the definition would mean all of the data 
elements that shall be reported during the existence of a swap to 
ensure that all swap data concerning the swap in the SDR remains 
current and accurate, and includes all changes to the required swap 
creation data occurring during the existence of the swap. For this 
purpose, required swap continuation data includes: (i) All life cycle 
event data for the swap; and (ii) all swap valuation, margin, and 
collateral data for the swap.
---------------------------------------------------------------------------

    \36\ The removal of the term PET data is reflected in the 
discussion of the proposed changes to the required swap creation 
data and required swap continuation data regulations in Sec. Sec.  
45.3 and 45.4. Those proposed changed are explained in sections II.C 
and II.D, respectively, below.
    \37\ The removal of state data reporting is reflected in the 
discussion of the proposed changes to the required swap continuation 
data regulations in Sec.  45.4. Those proposed changes are explained 
in section II.D below.
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    The Commission is proposing to amend the definition of ``required 
swap creation data'' in Sec.  45.1(a). Currently, Sec.  45.1 defines 
``required swap creation data'' to mean all PET data for a swap in the 
swap asset class in question, and all confirmation data for the swap. 
The Commission is proposing to replace the reference to PET data and 
confirmation data with a reference to the swap data elements in 
appendix 1 to part 45. This proposed amended definition is explained in 
a discussion of the proposal to eliminate the requirement to report 
confirmation data in section II.C below.
    The Commission is proposing to amend the definition of ``valuation 
data'' in Sec.  45.1(a). Currently, Sec.  45.1 defines ``valuation 
data'' to mean all of the data elements necessary to fully describe the 
daily mark of the transaction, pursuant to CEA section 
4s(h)(3)(B)(iii),\38\ and Sec.  23.431 of the Commission's regulations, 
if applicable. The Commission is proposing to include a reference to 
the swap data elements in appendix 1 to part 45. This proposed amended 
definition is explained in a discussion of the proposal to amend the 
valuation reporting requirements in Sec.  45.4 in section II.D below.
---------------------------------------------------------------------------

    \38\ 7 U.S.C. 6s(h)(3)(B)(iii).
---------------------------------------------------------------------------

3. Proposed Removal of Definitions
    The Commission is proposing to remove the following definitions 
from Sec.  45.1: ``credit swap;'' ``designated contract market;'' 
``foreign exchange forward;'' ``foreign exchange instrument;'' 
``foreign exchange swap;'' ``interest rate swap;'' ``major swap 
participant;'' ``other commodity swap;'' ``state data;'' ``swap data 
repository;'' and ``swap dealer.'' The Commission is proposing to 
remove these definitions to eliminate redundancy because the terms are 
already generally defined in Sec.  1.3 of the Commission's regulations 
or in CEA section 1a.\39\
---------------------------------------------------------------------------

    \39\ 7 U.S.C. 1a.
---------------------------------------------------------------------------

    The Commission is also proposing to remove the following 
definitions from Sec.  45.1: ``confirmation;'' ``confirmation data;'' 
``electronic confirmation;'' ``non-electronic confirmation;'' ``primary 
economic terms;'' and ``primary economic terms data.'' These 
definitions are being removed as part of the proposed amendments to 
combine PET data and confirmation data into a single required swap 
creation data report. These proposed amendments are explained in 
section II.C below.
    The Commission is proposing to remove the definition of ``quarterly 
reporting'' from Sec.  45.1. Currently, Sec.  45.4(d)(2)(ii) requires 
non-SD/MSP reporting counterparties to provide quarterly reports of 
valuation data. The Commission is proposing to remove this requirement 
for non-SD/MSP reporting counterparties, as explained in section II.D.4 
below. As a result, the definition of ``quarterly reporting'' in Sec.  
45.1 is no longer necessary.
    The Commission is also proposing to remove the definitions of 
``electronic verification,'' ``non-electronic verification,'' and 
``verification'' from Sec.  45.1. Currently, certain deadlines for 
reporting required swap creation data for off-facility swaps in Sec.  
45.3 depend on whether verification occurs electronically.\40\ The 
Commission is proposing to amend the deadlines for reporting 
counterparties to report required swap creation data in Sec.  45.3. As 
part of these proposed amendments, the deadlines would no longer depend 
on verification.\41\ Therefore, the definitions related to verification 
in this context would no longer be necessary.
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    \40\ For instance, current Sec.  45.3(c)(1)(i)(A) requires 
reporting counterparties to report all PET data for a swap ASATP or 
within 30 minutes of execution if verification occurs 
electronically. See 17 CFR 45.3(c)(1)(i)(A).
    \41\ These proposed amendments are discussed in section II.C 
below.
---------------------------------------------------------------------------

    The Commission is proposing to remove the definition of 
``international swap'' from Sec.  45.1. Currently, Sec.  45.1 defines 
``international swap'' to mean a swap required by U.S. law and the law 
of another jurisdiction to be reported both to an SDR and to a 
different TR registered with the other jurisdiction. The proposal to 
remove this definition is explained in a discussion of the Commission's 
proposal to remove the requirements for international swaps in Sec.  
45.3(i). Those proposed changes are explained in section II.C.6 below.

[[Page 21583]]

Request for Comment
    The Commission requests comments on all aspects of the proposed 
changes to Sec.  45.1. The Commission also invites specific comment on 
the following:
    (1) Does the Commission's proposed definition of ``execution date'' 
present problems for SEFs, DCMs, SDRs, or reporting counterparties? 
Should the Commission instead adopt a definition that aligns with other 
regulations, including, for instance, the definition of ``day of 
execution'' in Sec.  23.501(a)(5)(i)? \42\
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    \42\ For the purposes of Sec.  23.501, ``day of execution'' 
means the calendar day of the party to the swap transaction that 
ends latest, provided that if a swap transaction is--(a) entered 
into after 4:00 p.m. in the place of a party; or (b) entered into on 
a day that is not a business day in the place of a party, then such 
swap transaction shall be deemed to have been entered into by that 
party on the immediately succeeding business day of that party, and 
the day of execution shall be determined with reference to such 
business day. 17 CFR 23.501(a)(5)(i). For the purposes of Sec.  
23.501, ``business day'' means any day other than a Saturday, 
Sunday, or legal holiday. 17 CFR 23.501(a)(5)(ii).
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B. Sec.  45.2--Swap Recordkeeping

    The Commission is proposing amendments to the Sec.  45.2 swap 
recordkeeping regulations. The proposed amendments are technical and do 
not impact the existing requirements or applicability of Sec.  
45.2.\43\ The proposed technical amendments to Sec.  45.2 are limited 
to updating terminology and phrasing to improve consistency in the 
reporting regulations, and to conform to changes proposed elsewhere in 
part 45.
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    \43\ In the 2019 Part 49 NPRM, the Commission proposed 
relocating the recordkeeping requirements for SDRs from Sec.  
45.2(f) and (g) to Sec.  49.12. See 2019 Part 49 NPRM at 21103. The 
request for comment for Sec.  45.2(f) and (g), as well as any 
associated cost-benefit analysis, is in the 2019 Part 49 NPRM. See 
id. at 21084-85.
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    For instance, in this release, the Commission is proposing a 
technical amendment to remove the phrase ``subject to the jurisdiction 
of the Commission'' from Sec.  45.2. The Commission is proposing to 
remove this phrase from all of part 45.\44\ The phrase is unnecessary, 
as the Commission's regulations apply to all swaps or entities within 
the Commission's jurisdiction, regardless of whether the regulation 
states the fact.
---------------------------------------------------------------------------

    \44\ To limit repetition, the Commission will not discuss each 
removal throughout this release.
---------------------------------------------------------------------------

C. Sec.  45.3--Swap Data Reporting: Creation Data

1. Introductory Text
    The Commission is proposing to remove the introductory text to 
Sec.  45.3. As background, the introductory text to Sec.  45.3 provides 
a broad overview of the swap data reporting regulations for registered 
entities and swap counterparties. In providing this overview, the 
introductory text to Sec.  45.3 cross-references reporting regulations 
in parts 17, 18, 43, 45, 46, and 50.\45\ The introductory text also 
specifies that Sec.  45.3(a) through (d) applies to all swaps except 
clearing swaps, and Sec.  45.3(e) applies to clearing swaps.
---------------------------------------------------------------------------

    \45\ The introductory text to current Sec.  45.3 references: The 
Sec.  45.13(b) regulations related to required data standards for 
reporting swap data to SDRs; the Sec.  49.10 regulations requiring 
SDRs to accept swap data; the part 46 regulations for reporting pre-
enactment swaps and transition swaps; the Sec.  45.4 regulations for 
reporting required swap continuation data; the Sec.  45.6 
regulations for the use of LEIs; the real-time public reporting 
requirements in part 43; the part 50 regulations for counterparties 
to report electing the end-user exception from clearing; and the 
parts 17 and 18 regulations for large trader reporting.
---------------------------------------------------------------------------

    The Commission believes that the introductory text is superfluous 
because the scope of Sec.  45.3 is clear from the operative provisions 
of Sec.  45.3.\46\ Removing the introductory text would not impact any 
regulatory requirements, including those referenced in the introductory 
text.
---------------------------------------------------------------------------

    \46\ The Commission is proposing to move the reference in the 
introductory text to required data standards for SDRs in Sec.  
45.13(b) to the regulatory text of proposed Sec.  45.3(a) and (b) 
and renumber it from Sec.  45.13(b) to Sec.  45.13(a).
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2. Sec.  45.3(a) Through (e)--Swap Data Reporting: Creation Data
a. Sec.  45.3(a)--Swaps Executed on or Pursuant to the Rules of a SEF 
or DCM
    The Commission is proposing several changes to the Sec.  45.3(a) 
required swap creation data reporting regulations for swaps executed on 
or pursuant to the rules of a SEF or DCM. Current Sec.  45.3(a) 
requires that SEFs and DCMs report all PET data for swaps ASATP after 
execution. If the swap is not intended to be cleared at a DCO, Sec.  
45.3(a) requires that the SEF or DCM also report confirmation data for 
the swap ASATP after execution.
    The Commission is first proposing to revise the Sec.  45.3(a) 
requirement for SEFs and DCMs to submit both PET data and confirmation 
data for swaps that are not intended to be cleared at a DCO. As 
background, PET data reporting includes the reporting of approximately 
sixty swap data elements, varying by asset class, enumerated in 
appendix 1 to part 45.\47\ Confirmation data reporting includes 
reporting all of the terms of a swap matched and agreed upon by the 
counterparties in confirming a swap.\48\
---------------------------------------------------------------------------

    \47\ See 17 CFR 45.1 (definition of ``primary economic terms''). 
The Commission is proposing to remove the definition of ``primary 
economic terms'' from Sec.  45.1, as discussed in section II.A.3 
above.
    \48\ See 17 CFR 45.1 (definition of ``confirmation data''). The 
Commission is proposing to remove the definition of ``confirmation 
data'' from Sec.  45.1, as discussed in section II.A.3 above. 
``Confirmation'' is defined as the consummation of legally binding 
documentation that memorializes the agreement of the parties to all 
terms of a swap. 17 CFR 45.1 (definition of ``confirmation'').
---------------------------------------------------------------------------

    By the terms of the two definitions, PET data, which is a set 
number of data elements for each asset class, appears to be a subset of 
confirmation data, which is defined as, ``all terms of a swap . . . .'' 
In defining two separate data sets, the Commission intended that that 
the initial PET data report would ensure that an SDR would have 
sufficient data on each swap for the Commission to perform its 
regulatory functions while the more complete confirmation data may not 
yet be available.\49\
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    \49\ See 77 FR at 2142, 2148.
---------------------------------------------------------------------------

    However, the current Sec.  45.3 PET data and confirmation data 
requirements may be encouraging the reporting of duplicative 
information to SDRs. One of the PET data elements in current appendix 1 
to part 45 is ``[a]ny other term(s) . . . matched or affirmed by the 
counterparties in verifying the swap.'' The comments to this ``catch-
all'' data element in appendix 1 to part 45 instruct reporting 
counterparties, SEFs, DCMs, and DCOs to use ``as many data elements as 
required to report each such term.'' \50\ The Commission believes that 
this catch-all has obscured the difference between PET data and 
confirmation data. The Commission is concerned that reporting 
counterparties, SEFs, and DCMs are submitting duplicative reports to 
meet the distinct, yet seemingly indistinguishable, regulatory 
requirements at the expense of data quality.\51\
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    \50\ 17 CFR 45 appendix 1.
    \51\ For instance, in reviewing 49,766 part 45 credit default 
swap reports from June 1, 2019 to June 7, 2019, Commission staff 
found that out of the 12,336 swap reports submitted by SEFs and 
DCMs, 5,883 reports were duplicative in that they related to swaps 
that had already been reported, while SDs submitted 645 reports that 
were similarly duplicative out of 22,264 total.
---------------------------------------------------------------------------

    DMO requested comment on whether to combine PET data and 
confirmation data into a single, clearly defined, and electronically 
reportable set of data elements as part of the Roadmap review.\52\ 
Several commenters supported combining PET and confirmation data as a 
way to streamline reporting.\53\ One commenter supported

[[Page 21584]]

viewing PET data and confirmation data as a single set of data 
elements, which would remove confusion in the industry as to what must 
be reported as part of confirmation data.\54\ Other commenters 
requested that, if the Commission maintains a separate confirmation 
data reporting requirement, it specify what data elements should be in 
confirmation data.\55\
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    \52\ See Roadmap to Achieve High Quality Swap Data at 7.
    \53\ Letter from Global Foreign Exchange Division (``GFXD'') of 
the Global Financial Markets Association (``GFMA'') (Aug. 21, 2017) 
at 6-7; Letter from LedgerX (Aug. 18, 2017) at 1; Letter from The 
International Swaps and Derivatives Association (``ISDA'') and The 
Securities Industry and Financial Markets Association (``SIFMA'') 
(``Joint ISDA-SIFMA Letter'') (Aug. 21, 2017) at 7; Letter from 
Chatham Financial (``Chatham'') (Aug. 21, 2017) at 5.
    \54\ Letter from The Depository Trust & Clearing Corporation 
(``DTCC''), which owns DTCC Data Repository (U.S.), LLC (``DDR'') 
(Aug. 21, 2017) at 2, n.4.
    \55\ Joint letter from Bloomberg SDR LLC (``BSDR''), Chicago 
Mercantile Exchange Inc. (``CME''), and ICE Trade Vault, LLC 
(``Joint SDR Letter'') (Aug. 21, 2017) at 6. BSDR voluntarily 
withdrew its provisional SDR registration on March 21, 2019.
---------------------------------------------------------------------------

    Other regulators have taken different approaches to required swap 
creation data reporting. The Securities and Exchange Commission 
(``SEC''), for instance, does not have rules for reporting separate 
confirmation data reports.\56\ In the European Union (``EU''), the 
European Market Infrastructure Regulation (``EMIR'') \57\ requires 
reporting of the details of any derivative contract counterparties have 
concluded and of any modification or termination of the contract. The 
European Securities and Markets Authority (``ESMA'') then develops the 
specific technical standards and requirements for the implementation of 
reporting.
---------------------------------------------------------------------------

    \56\ See generally 17 CFR 242.901.
    \57\ Regulation (EU) No 648/2012 of the European Parliament and 
of the Council on OTC derivatives, central counterparties and trade 
repositories, Article 9(1) (July 4, 2012) (requiring reporting after 
execution without reference to separate reports); Commission 
Implementing Regulation (EU) No 1247/2012 laying down implementing 
technical standards with regard to the format and frequency of trade 
reports to trade repositories according to Regulation (EU) No 648/
2012 of the European Parliament and of the Council on OTC 
derivatives, central counterparties and trade repositories, Article 
1 (Dec. 19, 2012) (referencing ``single'' reports under Article 9 of 
Regulation (EU) No 648/2012).
---------------------------------------------------------------------------

    The Commission believes eliminating the confirmation data reporting 
requirement would help streamline swap data reporting under part 45. 
Therefore, the Commission is proposing to revise Sec.  45.3(a) to 
require SEFs and DCMs to report a single required swap creation data 
report, regardless of whether the swap is intended to be cleared.
    Second, the Commission is proposing to revise the Sec.  45.3(a) 
requirement for SEFs and DCMs to report required swap creation data 
ASATP following execution. As background, the CEA requires that all 
swaps be reported to SDRs, but does not specify the timeframes for 
reporting swap data to SDRs for regulatory purposes under sections 
2(a)(13)(G) and 4r(a).\58\
---------------------------------------------------------------------------

    \58\ See 7 U.S.C. 2(a)(13)(G) (``Each swap (whether cleared or 
uncleared) shall be reported to a registered [SDR]''); see also 7 
U.S.C. 6r (establishing the SDR reporting requirements for uncleared 
swaps without reference to a timing requirement); see also Swap Data 
Recordkeeping and Reporting Requirements, 77 FR 2136, 2150.
---------------------------------------------------------------------------

    When part 45 was adopted in 2012, the Commission believed that 
reporting swap data immediately following execution was important to 
further the objectives of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (the ``Dodd-Frank Act'').\59\ Reporting swap 
data ASATP would ensure that swap data is reported to SDRs in a manner 
that ensures the ability of the Commission and other regulators to 
fulfill the systemic risk mitigation, market transparency, position 
limit monitoring, and market surveillance objectives of the Dodd-Frank 
Act.\60\
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    \59\ Swap Data Recordkeeping and Reporting Requirements, 77 FR 
2136, 2150.
    \60\ See id. at 2149.
---------------------------------------------------------------------------

    The Commission is concerned that the ASATP deadline for regulatory 
reporting may be causing reporting counterparties to hastily report 
required swap creation data that has contributed to data quality 
issues. As a result, the Commission is considering extending the 
deadline for required swap creation data in a way that will continue to 
permit it to fulfill the systemic risk mitigation, market transparency, 
position limit monitoring, and market surveillance objectives of the 
Dodd-Frank Act.
    DMO requested comment on whether to move to a new ``T+1'' reporting 
timeline for part 45 in the Roadmap to understand whether additional 
reporting time would be beneficial.\61\ DMO suggested a ``T+1'' 
timeline would involve reporting required swap creation data on the 
next business day following execution.\62\ DMO further noted that a 
``T+1'' standard would encourage alignment with the reporting deadlines 
established by the SEC and ESMA.\63\ In response, several commenters 
expressed support for moving part 45 reporting to ``T+1'' or a similar 
delayed time.\64\
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    \61\ See Roadmap to Achieve High Quality Swap Data at 10.
    \62\ See id.
    \63\ The SEC requires primary and secondary trade information be 
reported within 24 hours of execution on the next business day. 17 
CFR 242.901(j). The SEC noted that commenters raised concerns that 
unreasonably short reporting timeframes would result in the 
submission of inaccurate transaction information, and that the SEC's 
interim 24-hour reporting timeframe Sec.  901(j) strikes an 
appropriate balance between the need for prompt reporting of 
security-based swap transaction information and allowing reporting 
entities sufficient time to develop fast and robust reporting 
capability. See Regulation SBSR--Reporting and Dissemination of 
Security-Based Swap Information, 80 FR 14564, 14623-64 (Mar. 19, 
2015). ESMA requires reporting no later than the working day 
following execution. Regulation (EU) No 648/2012 Article 9(1).
    \64\ Letter from Chatham at 5; Letter from CME (Aug. 21, 2017) 
at 2; Letter from the London Clearing House, Ltd. (``LCH'') (Aug. 
21, 2017) at 3; Letter from GFMA at 7-8; Joint SDR Letter at 10.
---------------------------------------------------------------------------

    The Commission believes this extended reporting timeline could help 
improve data quality while encouraging alignment with reporting 
deadlines set by other regulators. The Commission is therefore 
proposing to revise Sec.  45.3(a) to extend the deadline for SEFs and 
DCMs to report required swap creation data to T+1 following the 
execution date. Revised Sec.  45.3(a) would therefore require that for 
each swap executed on or pursuant to the rules of a SEF or DCM, the SEF 
or DCM shall report swap creation data electronically to an SDR in the 
manner provided in Sec.  45.13(a) not later than 11:59 p.m. eastern 
time on the next business day following the execution date.
b. Sec.  45.3(b) Through (d)--Off-Facility Swaps
    The Commission is proposing several changes to the current Sec.  
45.3(b) through (d) required swap creation data reporting regulations 
for off-facility swaps. Many of the proposed changes to requirements in 
Sec.  45.3(b) through (d) would conform to the revisions proposed in 
the previous sections to the requirements for swaps executed on SEFs 
and DCMs.
    The current required swap creation data reporting obligations for 
off-facility swaps are based on the type of swap and type of reporting 
counterparty. In general, for off-facility swaps subject to the 
Commission's clearing requirement, Sec.  45.3(b) requires that SD/MSP 
reporting counterparties report PET data ASATP after execution, with a 
15-minute deadline, while non-SD/MSP reporting counterparties report 
PET data ASATP after execution with a one business hour deadline.\65\
---------------------------------------------------------------------------

    \65\ 17 CFR 45.3(b)(1)(i) and (ii).
---------------------------------------------------------------------------

    For off-facility swaps that are not subject to the clearing 
requirement but have an SD/MSP reporting counterparty, Sec.  45.3(c)(1) 
now generally requires that SD/MSP reporting counterparties report PET 
data ASATP after execution with a 30-minute deadline, and confirmation 
data for swaps that are not intended to be cleared ASATP with a 30 
minute deadline if confirmation is electronic, or ASATP with a 24 
business hour

[[Page 21585]]

deadline if not electronic, for credit, equity, foreign exchange, and 
interest rate swaps.\66\
---------------------------------------------------------------------------

    \66\ 17 CFR 45.3(c)(1)(i) through (ii).
---------------------------------------------------------------------------

    Section 45.3(c)(2) currently requires that for swaps in the other 
commodity asset class, SD/MSP reporting counterparties report PET data 
ASATP after execution, with a two-hour deadline, and confirmation data 
for swaps that are not intended to be cleared ASATP after confirmation 
with a 30-minute deadline if confirmation is electronic, or a 24 
business hour deadline if confirmation is not electronic.\67\
---------------------------------------------------------------------------

    \67\ 17 CFR 45.3(c)(2)(i) through (ii).
---------------------------------------------------------------------------

    For off-facility swaps that are not subject to the clearing 
requirement but have a non-SD/MSP reporting counterparty, Sec.  45.3(d) 
requires reporting counterparties report PET data ASATP after execution 
with a 24 business hour deadline, and confirmation data ASATP with a 24 
business hour deadline if the swap is not intended to be cleared.\68\
---------------------------------------------------------------------------

    \68\ 17 CFR 45.3(d).
---------------------------------------------------------------------------

    The Commission's proposed changes to Sec.  45.3(b) through (d) fall 
into three categories, discussed below.
    First, as part of a restructuring of regulations in Sec.  45.3(a) 
through (d), the Commission is proposing to replace Sec.  45.3(b) 
through (d) with new Sec.  45.3(b), titled ``Off-facility swaps.'' This 
proposed new Sec.  45.3(b) would contain the swap creation data 
reporting requirements for off-facility swaps. The new timing 
requirements for reporting off-facility swaps would depend on whether 
the reporting counterparty is an SD/MSP/DCO or a non-SD/MSP/DCO 
reporting counterparty. This means the timing requirements in Sec.  
45.3(b) would include the required swap creation data reporting 
requirements for clearing swaps, as they are created at DCOs.\69\ 
Sections 45.3(c) through (d) would be replaced by provisions for 
allocations and multi-asset swaps, as discussed in the following 
sections.
---------------------------------------------------------------------------

    \69\ As part of this change, the Commission is proposing to move 
the requirements for reporting required swap creation data for 
clearing swaps from Sec.  45.3(e) to new Sec.  45.3(b).
---------------------------------------------------------------------------

    Second, the Commission is proposing to revise the requirement in 
Sec.  45.3(b) through (d) for reporting counterparties to submit 
separate PET data and confirmation data for all off-facility swaps that 
are not intended to be cleared at a DCO. The background to this change 
is discussed in section II.C.2.a above. As with swaps executed on SEFs 
and DCMs, the Commission believes a single report would align with the 
approach taken by other regulators, improve data quality, and be 
responsive to Roadmap comments.
    Third, the Commission is proposing to revise the Sec.  45.3(b) 
through (d) requirements for reporting counterparties to report 
required swap creation data ASATP after execution with different 
deadlines for off-facility swaps.\70\
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    \70\ The background to this amendment is discussed in section 
II.C.2.a above, in the context of SEF/DCM/DCO reporting.
---------------------------------------------------------------------------

    With respect to off-facility swaps, one Roadmap commenter explained 
that the current requirement for SD/MSP reporting counterparties to 
report uncleared swaps in Sec.  45.3(c)(1) within 30 minutes means that 
reporting counterparties are inputting data before the trade is 
confirmed, resulting in modifications as terms are finalized.\71\ 
Another commenter requested that end-users be given at least 36, if not 
48, hours to report.\72\ One commenter requested that, if the 
Commission maintains confirmation data reporting, the deadline for 
reporting that data coincide with the deadline for issuing 
confirmations under Sec.  23.501.\73\
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    \71\ Letter from GFMA at 7.
    \72\ Letter from the Commercial Energy Working Group (``CEWG'') 
(Aug. 21, 2017) at 4.
    \73\ Joint SDR Letter at 6. The regulation provides SDs and MSPs 
entering into swaps with SD/MSP counterparties must execute 
confirmations ASATP but in any event by the end of the first 
business day following the day of execution. 17 CFR 23.501(a)(1).
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    The Commission is proposing to revise the required swap creation 
data reporting deadlines in Sec.  45.3(a) through (d) for off-facility 
swaps in two new regulations: Sec.  45.3(b)(1) and Sec.  45.3(b)(2). 
New Sec.  45.3(b)(1) would require that SD/MSP/DCO reporting 
counterparties report swap creation data to an SDR by T+1 following the 
execution date. This standard would be consistent with the standard 
proposed for SEFs and DCMs in Sec.  45.3(a). The Commission believes 
this standard would also address commenters' concerns about needing 
more time to report to avoid modifications to the data, and would allow 
for errors identified during the confirmation process to be corrected 
prior to reporting.
    New Sec.  45.3(b)(2) would require that non-SD/MSP/DCO reporting 
counterparties report swap creation data to an SDR not later than T+2 
following the execution date. The Commission anticipates that proposed 
Sec.  45.3(b)(2) would provide non-SD/MSP/DCO reporting counterparties 
relief in reporting swap creation data for the minority of off-facility 
swaps in which both counterparties are non-SD/MSP/DCO counterparties. 
This extended deadline reflects the Commission's interest in relieving 
some of the swap data reporting burdens previously imposed on end users 
in a way that should also help improve data quality.
    Therefore the Commission is proposing revised Sec.  45.3(b) to 
require that for each off-facility swap, the reporting counterparty 
shall report electronically to an SDR as provided by Sec.  45.3(b)(1) 
or (b)(2), as applicable.
    Proposed Sec.  45.3(b)(1) would require that if the reporting 
counterparty is an SD, MSP, or DCO, the reporting counterparty shall 
report swap creation data electronically to an SDR in the manner 
provided in Sec.  45.13(a) not later than 11:59 p.m. eastern time on 
the next business day following the execution date.
    Proposed Sec.  45.3(b)(2) would require that if the reporting 
counterparty is a non-SD/MSP/DCO counterparty, the reporting 
counterparty shall report required swap creation data electronically to 
an SDR in the manner provided in Sec.  45.13(a) not later than 11:59 
p.m. eastern time on the second business day following the execution 
date.
c. Sec.  45.3(e)--Clearing Swaps
    As noted above, the Commission is proposing to move the required 
swap creation data reporting requirements for clearing swaps from Sec.  
45.3(e) to revised Sec.  45.3(b)(1). The required swap creation data 
reporting requirements would be covered under the ``off-facility 
swaps'' regulations, as clearing swaps are created at DCOs. As 
background, Sec.  45.3(e) currently requires that DCOs report required 
swap creation data for clearing swaps ASATP after clearing or 
execution, depending on whether the swap is replacing an original swap. 
Current Sec.  45.3(e) specifies that required swap creation data for 
clearing swaps includes all confirmation data and PET data.
    Consolidating the requirements for DCOs to report swap creation 
data in Sec.  45.3(b) with those of SD/MSP reporting counterparties 
would simplify the reporting requirements. Revised Sec.  45.3(b)(1) 
would require that SD/MSP/DCO reporting counterparties report required 
swap creation data to an SDR not later than T+1 following the execution 
date.\74\ This would extend the time DCOs have to report required swap 
creation data for clearing swaps pursuant to Sec.  45.3(e) from ASATP 
after

[[Page 21586]]

clearing or execution to T+1 following the execution date.
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    \74\ The background to this proposed amendment is discussed in 
connection with the proposed amendment to the required swap creation 
data reporting deadlines for off-facility swaps, discussed in 
section II.C.2.b above.
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    While the Commission is proposing to extend the time DCOs have to 
report required swap creation data, the Commission recognizes that DCOs 
are required to clear swaps ASATP after execution as if fully automated 
systems were used.\75\ The Commission therefore expects that DCO 
reporting counterparties may continue to report ASATP, especially if 
their reporting and clearing processes are connected. However, proposed 
Sec.  45.3(b)(1) would provide DCOs with the opportunity to change 
their reporting practices to take advantage of the additional time.
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    \75\ 17 CFR 39.12(b)(7)(ii) and (iii).
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3. Sec.  45.3(f)--Allocations
    The Commission is proposing several amendments to the Sec.  45.3(f) 
regulations for reporting allocations, including re-designating it as 
Sec.  45.3(c).\76\ As background, Sec.  45.3(f)(1) provides that the 
reporting counterparty to an initial swap with an allocation agent 
reports required swap creation data for the initial swap, including a 
USI. For the post-allocation swaps, Sec.  45.3(f)(2)(i) provides that 
the agent must tell the reporting counterparty the identities of the 
actual counterparties ASATP after execution, with a deadline of eight 
business hours. Section 45.3(f)(2)(ii) provides that the reporting 
counterparty must create USIs for the swaps and report all required 
swap creation data for each post-allocation swap ASATP after learning 
the identities of the counterparties. Section 45.3(f)(2)(iii) provides 
that the SDR to which the initial and post-allocation swaps were 
reported must map together the USIs of the initial swap and each post-
allocation swap.
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    \76\ The Commission is proposing to redesignate current Sec.  
45.3(f) as Sec.  45.3(c) to reflect the consolidation of Sec.  
45.3(b) through (d) into Sec.  45.3(b) discussed above.
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    The Commission is proposing to specify that required swap creation 
data for allocations must be reported ``electronically'' to SDRs in 
Sec.  45.3(c), (c)(1), and (c)(2)(ii). This should be current practice 
for reporting allocations to SDRs.
    The Commission is also proposing to replace the reference in Sec.  
45.3(f)(1) (re-designated as Sec.  45.3(c)(1)) to ``Sec.  45.3(a) 
through (d)'' with a reference to paragraphs (a) or (b) of Sec.  45.3, 
to reflect the structural revisions to Sec.  45.3(a) through (d) 
discussed above. Because the Commission is proposing to extend the time 
to report required swap creation data in Sec.  45.3(a) and (b), 
reporting counterparties would have additional time to report required 
swap creation data for the initial swaps as well.
    The Commission is proposing to amend current Sec.  45.3(f)(2)(ii) 
(re-designated as Sec.  45.3(c)(2)(ii)) \77\ to replace the requirement 
to report required swap creation data for post-allocation swaps ASATP 
after learning the identities of the actual counterparties with a 
cross-reference to Sec.  45.3(b). This would give reporting 
counterparties until T+1 or T+2, depending on their status, to report 
required swap creation data for the allocated swaps, for reasons 
previously explained.
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    \77\ The Commission is not proposing to revise the Sec.  
45.3(f)(2)(i) requirement (re-designated as Sec.  45.3(c)(2)(i)) for 
the agent to inform the reporting counterparty of the identities of 
the reporting counterparty's actual counterparties ASATP after 
execution, with an eight business hour deadline. Reporting 
counterparties will still need to know their actual counterparties, 
and the eight hour deadline is consistent with other regulations for 
allocations. See 17 CFR 1.35(b)(5)(iv).
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    Finally,\78\ the Commission is proposing to remove Sec.  
45.3(f)(2)(iii) without re-designation. One of the swap data elements 
the Commission is to require is an event data element.\79\ One of the 
events in this data element will be ``allocation,'' which would require 
reporting counterparties to indicate whether a swap is associated with 
an allocation.
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    \78\ The Commission is also proposing several non-substantive 
minor and technical language edits, but is limiting discussion in 
this section to substantive amendments.
    \79\ The swap data elements required to be reported to SDRs are 
discussed in section V below.
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    The Commission preliminarily believes this would simplify the 
current process involving SDRs mapping data elements. The Commission 
believes these data elements would also provide clarity to reporting 
counterparties, who are the parties with the information needed to map 
the data elements even though the rule placed the obligation on SDRs. 
As a result, the Commission believes removing Sec.  45.3(f)(2)(iii) 
without re-designation will result in a better process for reporting 
counterparties and SDRs that should also help improve data quality.
    Therefore, in light of the above proposed amendments, revised Sec.  
45.3(c)(1) would require that the initial swap transaction between the 
reporting counterparty and the agent shall be reported as required by 
Sec.  45.3(a) or (b), as applicable. Section 45.3(c)(1) would also 
require that a UTI for the initial swap transaction be created as 
provided in Sec.  45.5.
    Section 45.3(c)(2)(i) would continue to provide that the agent 
shall inform the reporting counterparty of the identities of the 
reporting counterparty's actual counterparties resulting from 
allocation, ASATP after execution, but not later than eight business 
hours after execution. Section 45.3(c)(2)(ii) would require that the 
reporting counterparty report required swap creation data, as required 
by Sec.  45.3(b), for each swap resulting from allocation to the same 
SDR to which the initial swap transaction is reported. Section 
45.3(c)(2)(ii) would also provide that the reporting counterparty shall 
create a UTI for each such swap as required in Sec.  45.5.
4. Sec.  45.3(g)--Multi-Asset Swaps
    The Commission is proposing several amendments to the current Sec.  
45.3(g) regulations for reporting multi-asset swaps, proposed to be re-
designated as Sec.  45.3(d). Section 45.3(g) now provides that for each 
multi-asset swap, required swap creation data and required swap 
continuation data must be reported to a single SDR that accepts swaps 
in the asset class treated as the primary asset class involved in the 
swap by the SEF, DCM, or reporting counterparty making the first report 
of required swap creation data pursuant to Sec.  45.3. Current Sec.  
45.3(g) also provides that the registered entity or reporting 
counterparty making the first report of required swap creation data 
report all PET data for each asset class involved in the swap.
    The Commission is proposing to amend Sec.  45.3(g) (re-designated 
as Sec.  45.3(d)) to replace the reference to ``making the first 
report'' of required swap creation data with ``reporting'' required 
swap creation data. This would reflect the Commission's proposal to 
require a single report for required swap creation data, instead of 
separate PET data and confirmation data reports.\80\
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    \80\ See sections II.C.2.a and II.C.2.b above.
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    The Commission is also proposing to remove the last sentence of the 
regulation concerning all PET data for each asset class involved in the 
swap. This sentence is unnecessary, and would no longer be relevant 
with the Commission's proposal to remove PET data from its regulations.
    Therefore, new Sec.  45.3(d) would require that required swap 
creation data and required swap continuation data be reported to a 
single SDR that accepts swaps in the asset class treated as the primary 
asset class involved in the swap by the SEF, DCM, or reporting 
counterparty reporting required swap creation data pursuant to Sec.  
45.3.
5. Sec.  45.3(h)--Mixed Swaps
    The Commission is proposing several conforming or otherwise non-
substantive amendments to Sec.  45.3(h) for

[[Page 21587]]

mixed swaps, including re-designating it as Sec.  45.3(e). Current 
Sec.  45.3(h)(1) requires that for each mixed swap, required swap 
creation data and required swap continuation data shall be reported to 
an SDR registered with the Commission and to a security-based SDR 
(``SBSDR'') registered with the SEC. This requirement may be satisfied 
by reporting the mixed swap to an SDR or SBSDR registered with both 
Commissions. Current Sec.  45.3(h)(2) requires that the registered 
entity or reporting counterparty making the first report of required 
swap creation data pursuant to Sec.  45.3(h) shall ensure that the same 
USI is recorded for the swap in both the SDR and the SBSDR.
    For instance, as with proposed Sec.  45.3(d) for multi-asset swaps 
and for the same reason, the Commission is proposing to replace 
``making the first report'' of required swap creation data with 
``reporting'' required swap creation data in re-designated Sec.  
45.3(e)(2) to improve readability.
    Therefore, Sec.  45.3(e)(1) would require that for each mixed swap, 
required swap creation data and required swap continuation data shall 
be reported to an SDR and to a SBSDR registered with the SEC.\81\ 
Amended Sec.  45.3(e)(2) would require that the registered entity or 
reporting counterparty reporting required swap creation data pursuant 
to Sec.  45.3(h) ensure that the same UTI is recorded for the swap in 
both the SDR and the SBSDR.
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    \81\ Section 45.3(e)(1) would continue to provide that the 
requirement may be satisfied by reporting the mixed swap to an SDR 
or SBSDR registered with both Commissions.
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6. Sec.  45.3(i)--International Swaps
    The Commission is proposing to remove the Sec.  45.3(i) regulations 
for international swaps. Section 45.3(i) requires that for each 
international swap, the reporting counterparty must report to an SDR 
the identity of the non-U.S. TR to which the swap is also reported and 
the swap identifier used by the non-U.S. TR. ``International swaps'' 
are defined in Sec.  45.1 as swaps required to be reported by U.S. law 
and the law of another jurisdiction to be reported to both an SDR and 
to a different TR registered with the other jurisdiction.\82\
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    \82\ The Commission is proposing to remove the definition of 
``international swap'' from Sec.  45.1, as discussed in section 
II.A.3 above.
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    When Sec.  45.3(i) was adopted, the Commission believed that the 
regulations for international swaps were necessary to provide an 
accurate picture of the swaps market to regulators to further the 
purposes of the Dodd-Frank Act.\83\ However, if the same swap is 
reported to different jurisdictions, the USI, or UTI, as discussed in 
section II.E below, should be the same. If the transaction identifier 
is the same for the swap, there would be no need for the counterparties 
to send the identifier to other jurisdictions. In addition, in the 
future, regulators should have global TR access, further obviating the 
need for reporting counterparties sending identifiers to multiple 
jurisdictions.
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    \83\ Swap Data Recordkeeping and Reporting Requirements, 77 FR 
2136, 2151.
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    As a result, the Commission believes that Sec.  45.3(i) is no 
longer necessary and is proposing to remove Sec.  45.3(i) from its 
regulations.
7. Sec.  45.3(j)--Choice of SDR
    The Commission is proposing non-substantive amendments to Sec.  
45.3(j) for reporting counterparties in choosing their SDR, including 
re-designating it as Sec.  45.3(f). As background, Sec.  45.3(j) now 
requires that the entity with the obligation to choose the SDR to which 
all required swap creation data for the swap is reported shall be the 
entity that is required to make the first report of all data pursuant 
to Sec.  45.3, as follows: (i) For swaps executed on or pursuant to the 
rules of a SEF or DCM, the SEF or DCM shall choose the SDR; (ii) for 
all other swaps, the reporting counterparty, as determined in Sec.  
45.8, shall choose the SDR.
    For instance, the Commission is proposing to change the heading of 
newly re-designated Sec.  45.3(f) from ``Choice of SDR'' to ``Choice of 
swap data repository'' to be consistent with other headings throughout 
part 45.
    Therefore, with the proposed amendments, Sec.  45.3(f) would 
require that for swaps executed on or pursuant to the rules of a SEF or 
DCM, the SEF or DCM shall choose the SDR, and for all other swaps, the 
reporting counterparty, as determined in Sec.  45.8, shall choose the 
SDR.
Request for Comment
    The Commission requests comment on all aspects of the proposed 
changes to Sec.  45.3. The Commission also invites specific comment on 
the following:
    (2) Is the Commission's proposed T+1 deadline for reporting 
required swap creation data appropriately harmonized with the deadlines 
set by other regulators and jurisdictions?
    (3) Does the Commission's proposed T+1 deadline create any problems 
for SEFs, DCMs, SDRs, or reporting counterparties by referencing 
eastern time? Should the Commission instead adopt a definition that 
aligns with other regulations, including, for instance, the definition 
of ``day of execution'' in Sec.  23.501(a)(5)(i)? \84\
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    \84\ For the purposes of Sec.  23.501, ``day of execution'' 
means the calendar day of the party to the swap transaction that 
ends latest, provided that if a swap transaction is--(a) entered 
into after 4:00 p.m. in the place of a party; or (b) entered into on 
a day that is not a business day in the place of a party, then such 
swap transaction shall be deemed to have been entered into by that 
party on the immediately succeeding business day of that party, and 
the day of execution shall be determined with reference to such 
business day. 17 CFR 23.501(a)(5)(i). For the purposes of Sec.  
23.501, ``business day'' means any day other than a Saturday, 
Sunday, or legal holiday. 17 CFR 23.501(a)(5)(ii).
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    (4) Do any of the Commission's proposed changes to the timing 
deadlines for reporting required swap creation data in Sec.  45.3 raise 
issues with the sequencing of messages for SDRs that could compromise 
data quality? For instance, could a T+1 deadline for reporting original 
swaps and clearing swaps create problems for SDRs in processing swap 
terminations? Could the 8-hour delay for the allocation agent notifying 
the reporting counterparty of the actual counterparty's identity create 
timing message sequencing issues for allocation reporting?

D. Sec.  45.4--Swap Data Reporting: Continuation Data

1. Introductory Text
    The Commission is proposing to remove the introductory text to 
Sec.  45.4 for the same reasons it is proposing to remove the 
introductory text to Sec.  45.3.\85\ Removing the introductory text 
would not impact any regulatory requirements, including those 
referenced in the introductory text.
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    \85\ See discussion in II.C.1 above. The introductory text to 
Sec.  45.4 references: The Sec.  45.13(b) regulations for required 
data standards for reporting swap data to SDRs; the Sec.  49.10 
regulations for SDRs to accept swap data; the part 46 regulations 
for reporting pre-enactment swaps and transition swaps; the Sec.  
45.3 regulations for reporting required swap creation data; the 
Sec.  45.6 regulations for the use of LEIs; the real-time public 
reporting requirements in part 43; and the parts 17 and 18 
regulations for large trader reporting.
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2. Sec.  45.4(a)--Continuation Data Reporting Method Generally
    The Commission is proposing several changes to Sec.  45.4(a), which 
concerns required swap continuation data reporting. Section 45.4(a) 
requires that reporting counterparties and DCOs \86\

[[Page 21588]]

required to report swap continuation data must do so in a manner 
sufficient to ensure that all data in the SDR for a swap remains 
current and accurate, and includes all changes to the PET data of the 
swap occurring during the existence of the swap. Current Sec.  45.4(a) 
further specifies that reporting entities and counterparties fulfill 
their obligations by reporting, within the applicable deadlines set 
forth in Sec.  45.4, the following: (i) Life cycle event data to an SDR 
that accepts only life cycle event data reporting; (ii) state data to 
an SDR that accepts only state data reporting; or (iii) either life 
cycle event data or state data to an SDR that accepts both life cycle 
event data and state data reporting.
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    \86\ SEFs and DCMs do not have reporting obligations with 
respect to required swap continuation data. DCOs are reporting 
counterparties for clearing swaps, and are thus responsible for 
reporting required swap continuation data for these swaps. However, 
DCOs also have required swap continuation data obligations for 
original swaps, to which DCOs are not counterparties. As a result, 
Sec.  45.4(a) must address reporting counterparties and DCOs 
separately.
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    First, the Commission is proposing to revise the first two 
sentences. The first two sentences state that ``for each swap, 
regardless of asset class, reporting counterparties and [DCOs] required 
to report swap continuation data must do so in a manner sufficient to 
ensure that all data in the [SDR] concerning the swap remains current 
and accurate, and includes all changes to the [PET data] of the swap 
occurring during the existence of the swap. Reporting entities and 
counterparties fulfill this obligation by reporting either . . . .'' 
The Commission is proposing to replace the text with ``for each swap, 
regardless of asset class, reporting counterparties and [DCOs] required 
to report required swap continuation data shall report . . . .'' to 
improve readability without changing the regulatory requirement 
substantively.
    Second, the Commission is proposing to remove state data reporting 
as an option for reporting changes to swaps from Sec.  45.4. As 
background, state data reporting involves reporting counterparties re-
reporting the PET terms of a swap every day, regardless of whether any 
changes have occurred to the terms of the swap since the last state 
data report.\87\ In contrast, life cycle event data reporting involves 
reporting counterparties re-submitting the PET terms of a swap when an 
event has taken place that results in a change to the previously 
reported terms of the swap.\88\
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    \87\ 17 CFR 45.1 (definition of ``state data''). The Commission 
is proposing to remove the definition of ``state data'' from Sec.  
45.1, as discussed in section II.A.3 above.
    \88\ 17 CFR 45.1 (definition of ``life cycle event''). The 
Commission is proposing to amend the definition of ``life cycle 
event data'' in Sec.  45.1, as discussed in section II.A.2 above.
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    The Commission is proposing to eliminate state data reporting 
because it would improve data quality without impeding the Commission's 
ability to fulfill the systemic risk mitigation, market transparency, 
position limit monitoring, and market surveillance objectives of the 
Dodd-Frank Act. In adopting part 45, the Commission gave reporting 
counterparties the option of reporting changes to swaps by either the 
state data reporting method or life cycle event method to provide 
flexibility.\89\ The Commission is concerned that the option for state 
data reporting may be contributing to data quality issues by filling 
SDRs with unnecessary swap messages.
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    \89\ Swap Data Recordkeeping and Reporting Requirements, 77 FR 
2136, 2153.
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    The Commission estimates that state data reporting messages 
represent the vast majority of swap reports maintained by SDRs and the 
Commission.\90\ The large number of state data reporting messages has 
complicated the Commission's use of swap data. For instance, 
determining the changes that occurred over time to a five-year swap 
reported via state data reporting would require Commission staff to 
analyze all swap data elements on over 1,800 (360 x 5 = 1,800) state 
data swap reports associated with the swap.
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    \90\ For instance, an analysis of part 45 data showed that 
during January 2018, SDRs received approximately 30 million state 
data reporting messages, which included over 77% of all interest 
rate swap reports submitted to SDRs during that time period. Since 
reporting began, the Commission estimates that SDRs have received 
and made available to the Commission over a billion state data 
reporting messages.
---------------------------------------------------------------------------

    Other regulators have taken approaches that are less receptive to 
state data reporting. The SEC, for instance, stated that ``Regulation 
SBSR would not prevent a registered SDR from developing for its members 
a mechanism or other service that automates or facilitates the 
production of life cycle events from state data.'' \91\ However, with 
respect to state data reporting generally, the SEC noted that it ``is 
not sufficient merely to re-report all of the terms of the security-
based swap each day without identifying which data elements have 
changed.'' \92\ Similarly, ESMA requires maintaining a reporting log 
containing the reporting of ``modifications'' to the data registered in 
TRs.\93\ With these modifications, ESMA requires the identity of the 
person or persons requesting the modification, including the TR itself 
if applicable, the reason or reasons for such modification, a date and 
timestamp, and a clear description of the changes, including the old 
and new contents of the relevant data.\94\
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    \91\ See Regulation SBSR--Reporting and Dissemination of 
Security-Based Swap Information, 80 FR 14564, 14640 n.692. The SEC 
explained that its Sec.  901(e)(1) ``requires the reporting of a 
life cycle event . . . that results in a change to information 
previously reported pursuant to [Sec.  ] 901(c), 901(d), or 901(i). 
Thus, Rule 901(e)(1) contemplates the reporting of the specific 
changes to previously reported information. Reports of life cycle 
events, therefore, must clearly identify the nature of the life 
cycle event for each security-based swap.''
    \92\ Id.
    \93\ Commission Delegated Regulation (EU) No 148/2013 
supplementing Regulation (EU) No 648/2012 of the European Parliament 
and of the Council on OTC derivatives, central counterparties and 
trade repositories with regard to regulatory technical standards on 
the minimum details of the data to be reported to trade 
repositories, Article 4 (Dec. 19, 2012).
    \94\ Id.
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    In light of the foregoing, the Commission is proposing to remove 
the option for state data reporting in Sec.  45.4. The Commission 
preliminarily believes that this would simplify swap reporting by 
significantly reducing swap message traffic to only those messages 
corresponding with a change in the terms of a swap. All terms would 
continue to be reported with each change, but the event and action type 
swap data elements would indicate the changes that have been made to 
the swap transaction.\95\ This approach would facilitate the 
Commission's analysis of swap data by drastically reducing the number 
of messages that would need to be analyzed for each swap. Moreover, 
this approach would be consistent with the approach taken by other 
regulators.
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    \95\ The swap data elements required to be reported to SDRs are 
discussed in section V below.
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    Therefore, proposed Sec.  45.4(a) would require that for each swap, 
regardless of asset class, reporting counterparties and DCOs required 
to report required swap continuation data shall report life cycle event 
data for the swap electronically to an SDR in the manner provided in 
Sec.  45.13(a) within the applicable deadlines set forth in Sec.  
45.4.\96\
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    \96\ The deadlines for reporting required swap continuation data 
are discussed in the following two sections.
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3. Sec.  45.4(b)--Continuation Data Reporting for Clearing Swaps
    The Commission is proposing several revisions to the Sec.  45.4(b) 
required swap continuation data reporting requirements for clearing 
swaps. First, the Commission is proposing to move the Sec.  45.4(b) 
required swap continuation data reporting regulations for clearing 
swaps to revised Sec.  45.4(c). The Commission is then proposing to 
redesignate current Sec.  45.4(c) as Sec.  45.4(b). Current Sec.  
45.4(c) contains the continuation data reporting regulations for 
original swaps. As revised, newly re-designated Sec.  45.4(b) would be 
titled

[[Page 21589]]

``Continuation data reporting for original swaps.''
    Revised Sec.  45.4(c) would contain the continuation data reporting 
requirements for all swaps other than original swaps, which would 
include clearing swaps. The revisions to the continuation data 
requirements for clearing swaps and uncleared swaps are discussed in 
section II.D.4 below. The revisions to the continuation data 
requirements for original swaps in revised Sec.  45.4(b) will be 
discussed in this section.
    Second, the Commission is proposing several amendments to the 
continuation data reporting regulations for original swaps in Sec.  
45.4(c), proposed to be redesignated as Sec.  45.4(b). Current Sec.  
45.4(c) requires that required swap continuation data, including 
terminations, must be reported to the SDR to which the original swap 
that was accepted for clearing was reported pursuant to Sec.  45.3(a) 
through (d).\97\ For continuation data, Sec.  45.4(c)(1) requires: (i) 
Life cycle event data or state data reporting either on the same day 
that any life cycle event occurs with respect to the swap, or daily for 
state data reporting; and (ii) daily valuation data. In addition, Sec.  
45.4(c)(2) requires the reporting of: (i) The LEI of the SDR to which 
all required swap creation data for each clearing swap was reported by 
the DCO pursuant to Sec.  45.3(e); (ii) the USI of the original swap 
that was replaced by the clearing swaps; and (iii) the USI of each 
clearing swap that replaces a particular original swap.
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    \97\ The regulation also specifies the information must be 
reported in the manner provided in Sec.  45.13(b) and in Sec.  45.4, 
and must be accepted and recorded by such SDR as provided in Sec.  
49.10. 17 CFR 45.4(c).
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    The Commission is proposing to extend the deadline for reporting 
swap continuation data for original swaps in Sec.  45.4(c)(1). As 
explained in sections II.C.2.a and II.C.2.b above, the Commission is 
proposing to extend the deadlines for reporting required swap creation 
data in Sec.  45.3 for swaps executed on SEFs and DCMs and those 
executed off-facility to either T+1 or T+2, depending on the reporting 
counterparty.\98\ As a result, the Commission reviewed the reporting 
deadlines for required swap continuation data to ensure the amendments 
to the required swap creation data reporting deadlines do not conflict.
---------------------------------------------------------------------------

    \98\ The background to these proposed amendments is discussed in 
connection with the proposed revisions to the required swap creation 
data reporting deadlines in Sec.  45.3(a) and (b), discussed in 
sections II.C.2.a and II.C.2.b, respectively, above.
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    In reviewing the continuation data reporting deadlines, the 
Commission also considered those set by other regulators. For instance, 
the SEC requires that any events that would result in a change in the 
information reported to a SBSDR be reported within 24 hours of the 
event taking place.\99\ EMIR similarly requires that contract 
modifications be reported no later than the working day following the 
modification.\100\ Both the SEC and ESMA generally have the same 
deadlines for reporting new swaps as well as amendments, though the 
deadline may be more than 24 hours in Europe depending on when the 
trade was concluded and if the following day is a working day.
---------------------------------------------------------------------------

    \99\ 17 CFR 242.900(g); 17 CFR 242.901(e).
    \100\ Reg. 648/2012 Art. 9(1).
---------------------------------------------------------------------------

    Original swaps are swaps that are accepted for clearing by a DCO. 
Because they are cleared, the original swap reporting counterparties do 
not report continuation data for original swaps to SDRs. However, the 
Commission believes aligning the required swap creation data deadlines 
with the required swap continuation data deadlines would be consistent 
with the approach taken by other regulators. In light of the foregoing, 
the Commission is proposing to extend the deadline for reporting 
continuation data for original swaps to T+1 following any life cycle 
event.
    The Commission is also proposing to remove the references to state 
data reporting \101\ in Sec.  45.4(b) and to clarify that required swap 
continuation data must be reported ``electronically.'' As explained 
earlier in this proposal, this should be current practice. In addition, 
the Commission is proposing to update various cross references and make 
non-substantive language edits to improve readability.
---------------------------------------------------------------------------

    \101\ The background to this proposed amendment is discussed in 
connection with the proposed removal of the state data reporting 
regulations from Sec.  45.4(a), discussed in section II.D.2 above.
---------------------------------------------------------------------------

    Therefore, proposed Sec.  45.4(b) would require that for each 
original swap, the DCO shall report required swap continuation data, 
including terminations, electronically to the SDR to which the swap 
that was accepted for clearing was reported pursuant to Sec.  45.3 in 
the manner provided in Sec.  45.13(a) and in Sec.  45.4, and such 
required swap continuation data shall be accepted and recorded by such 
SDR as provided in Sec.  49.10. Revised Sec.  45.4(b)(1) would require 
that the DCO that accepted the swap for clearing shall report all life 
cycle event data electronically to an SDR in the manner provided in 
Sec.  45.13(a) not later than 11:59 p.m. eastern time on the next 
business day following the day, as determined according to eastern 
time, that any life cycle event occurs with respect to the swap.
    Revised Sec.  45.4(b)(2) would continue to require that in addition 
to all other required swap continuation data, life cycle event data 
shall include: (i) The LEI of the SDR to which all required swap 
creation data for each clearing swap was reported by the DCO pursuant 
to Sec.  45.3(b); (ii) the UTI of the original swap that was replaced 
by the clearing swaps; and (iii) the UTI of each clearing swap that 
replaces a particular original swap.
4. Sec.  45.4(c)--Continuation Data for Original Swaps
    The Commission is proposing several amendments to the Sec.  45.4(c) 
regulations for reporting required swap continuation data for original 
swaps. First, the Commission is proposing to move the required swap 
continuation data reporting requirements for original swaps from Sec.  
45.4(c) to Sec.  45.4(b). The Commission is proposing to move the 
continuation data reporting requirements for clearing swaps from Sec.  
45.4(b) to Sec.  45.4(c), and combine them with the continuation data 
reporting requirements for uncleared swaps currently located in Sec.  
45.4(d). The Commission is proposing to retitle Sec.  45.4(c) 
``Continuation data reporting for swaps other than original swaps'' to 
reflect the combination.
    The Commission is proposing several revisions to the continuation 
data reporting regulations for clearing swaps and uncleared swaps in 
Sec.  45.4(b) and (d), respectively, which are proposed to be 
redesignated as Sec.  45.4(c). The revisions to the continuation data 
requirements for original swaps are discussed in section II.D.3 above. 
The revisions to the continuation data requirements for clearing swaps 
and uncleared swaps to be combined in revised Sec.  45.4(c) will be 
discussed below in this section.
    Current Sec.  45.4(b) requires that for all clearing swaps, DCOs 
must report: (i) Life cycle event data or state data reporting either 
on the same day that any life cycle event occurs with respect to the 
swap, or daily for state data reporting; and (ii) daily valuation data. 
Current Sec.  45.4(d) requires that for all uncleared swaps, including 
swaps executed on a SEF or DCM, the reporting counterparty must report: 
(i) All life cycle event data on the same day for SD/MSP reporting 
counterparties, or the second business day if it relates to a corporate 
event of the non-reporting counterparty, or state data daily; (ii) all

[[Page 21590]]

life cycle event data on the next business day for non-SD/MSP reporting 
counterparties, or the end of the second business day if it relates to 
a corporate event of the non-reporting counterparty, or state data 
daily; (iii) daily valuation data for SD/MSP reporting counterparties; 
and (iv) the current daily mark of the transaction as of the last day 
of each fiscal quarter, within 30 calendar days of the end of each 
fiscal quarter for non-SD/MSP reporting counterparties.\102\
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    \102\ If a daily mark of the transaction is not available for 
the swap, the reporting counterparty satisfies the requirement by 
reporting the current valuation of the swap recorded on its books in 
accordance with applicable accounting standards. 17 CFR 
45.4(d)(2)(ii).
---------------------------------------------------------------------------

    The Commission is proposing to revise the life cycle event 
reporting deadlines for these swaps to reflect the revisions proposed 
to the Sec.  45.3(b) required swap creation data reporting deadlines 
and the Sec.  45.4(b) original swap continuation data reporting 
deadlines.\103\ The Commission is proposing to change the life cycle 
event reporting deadline for SD/MSP/DCO reporting counterparties from 
the same day to T+1 following any life cycle event.\104\ The Commission 
is proposing to update the exception for corporate events of the non-
reporting counterparty to T+2.
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    \103\ The background to these proposed revisions is discussed in 
connection with the proposed revisions to the required swap creation 
data reporting deadlines for off-facility swaps in revised Sec.  
45.3(b) and the required swap continuation data deadlines for 
original swaps in Sec.  45.4(b), discussed in sections II.C.2.b and 
II.D.3, respectively, above.
    \104\ The Commission is not similarly proposing to extend the 
valuation data reporting deadline for SD/MSP/DCO reporting 
counterparties. The Commission preliminarily believes that valuation 
data should not be similarly delayed because SDs, MSPs, and DCOs are 
already creating daily valuations and tracking margin and collateral 
for reasons independent of their swap reporting obligations.
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    For non-SD/MSP/DCO reporting counterparties, the Commission is 
proposing to change the life cycle event reporting deadline to T+2 
following the life cycle event.
    The Commission is also proposing to remove the references to state 
data reporting in revised Sec.  45.4(c).\105\ The Commission is also 
proposing to clarify that required swap continuation data must be 
reported ``electronically.'' The Commission is also proposing to update 
various cross references and make non-substantive language edits to 
improve readability.
---------------------------------------------------------------------------

    \105\ The background to this proposed amendment is discussed in 
connection with the proposed removal of the state data reporting 
regulations from Sec.  45.4(a), discussed in section II.D.2 above.
---------------------------------------------------------------------------

    The Commission is also proposing revisions to the requirements for 
reporting swap valuation data for all reporting counterparties. As 
background, DCOs, SDs, and MSPs report valuation data daily, while non-
SD/MSP reporting counterparties report the daily mark of transactions 
quarterly.\106\ For DCO, SD, and MSP reporting counterparties, the 
Commission is proposing to maintain the daily reporting requirement. 
However, the Commission is proposing to expand the requirement to 
include margin and collateral data.\107\
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    \106\ 17 CFR 45.4(b)(2) and (d)(2).
    \107\ The Commission is proposing to add a definition of 
``collateral data'' to Sec.  45.1(a), as discussed in section II.A.1 
above. As proposed ``collateral data'' would mean the data elements 
necessary to report information about the money, securities, or 
other property posted or received by a swap counterparty to margin, 
guarantee, or secure a swap, as specified in appendix 1 to part 45.
---------------------------------------------------------------------------

    As background, the Commission decided not to require collateral 
data reporting when it adopted part 45 in 2012. At the time, both the 
Commission and industry understood that collateral information was 
important for systemic risk management, but was not yet possible to 
include in transaction-based reporting since it was calculated at the 
portfolio level.\108\ In light of this limitation, the Commission 
required that the daily mark be reported for swaps as valuation data, 
but not collateral.\109\ However, the Commission noted that while the 
industry had not yet developed data elements suitable for representing 
the terms required to report collateral, the Commission could revisit 
the issue in the future if and when industry and SDRs develop ways to 
represent electronically the terms required for reporting 
collateral.\110\
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    \108\ Swap Data Recordkeeping and Reporting Requirements, 77 FR 
2136, 2153.
    \109\ 17 CFR 45.1 (definition of ``valuation data''). The 
Commission is proposing to amend the definition of ``valuation 
data'' in Sec.  45.1(a), as discussed in section II.A.2 above. As 
amended, ``valuation data'' would mean the data elements necessary 
to report information about the daily mark of the transaction, 
pursuant to CEA section 4s(h)(3)(B)(iii), and to Sec.  23.431 if 
applicable, as specified in appendix 1 to part 45.
    \110\ Swap Data Recordkeeping and Reporting Requirements, 77 FR 
2136, 2154.
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    The Commission is concerned that not having margin and collateral 
data impedes its ability to fulfill the systemic risk mitigation 
objectives of the Dodd-Frank Act. As a result, the Commission is 
revisiting this issue as the Commission noted in 2012 to determine 
whether it is now feasible.
    DMO raised the issue of and received comments on new margin and 
collateral reporting as part of the Roadmap review. Some commenters 
opposed such reporting,\111\ with one recommending that the Commission 
look for alternative means to collect the data.\112\ One commenter 
indicated that increased harmonization with ESMA on issues such as 
margin data collection could be helpful.\113\
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    \111\ Letter from American Counsel of Life Insurers (``ACLI'') 
(Aug. 21, 2017) at, 2-3 (asserting that margin data would not ``be 
constructive'' and the burden would outweigh any benefit); Letter 
from CEWG at 3; Joint ISDA-SIFMA Letter at 8.
    \112\ Joint ISDA-SIFMA Letter at 8.
    \113\ Letter from Chatham at 5.
---------------------------------------------------------------------------

    Other regulators have taken different approaches to margin and 
collateral data reporting. The SEC does not require reporting of any 
valuation data or margin and collateral data, for security-based 
swaps.\114\ ESMA, in contrast, requires the reporting of many of the 
same collateral and margin swap data elements the Commission is 
proposing to require, either on a portfolio basis or by 
transaction.\115\ With respect to valuation data, ESMA requires central 
counterparties to report valuations for cleared swaps as the Commission 
does.\116\ EMIR does provide an exemption from valuation reporting, as 
well as reporting margin and collateral data, for non-financial 
counterparties, unless they exceed a threshold of derivatives 
activity.\117\
---------------------------------------------------------------------------

    \114\ Regulation SBSR--Reporting and Dissemination of Security-
Based Swap Information, 80 FR 14564, 14590 (noting that SEC will 
continue to assess the reporting and public dissemination regime 
under Regulation SBSR and could determine to propose additional 
requirements, such as the reporting of valuations, as necessary or 
appropriate.).
    \115\ The collateral and margin data elements themselves are 
included below in section V.
    \116\ Reg. 148/2013 Art. 3(5).
    \117\ Reg. 148/2013 Art. 3(4); Reg. 648/2012 Art. 10.
---------------------------------------------------------------------------

    The Commission believes margin and collateral data is necessary to 
monitor risk in the swaps market. Given that ESMA is already requiring 
collateral reporting, and that the Commission is proposing to require 
many of the swap data elements that ESMA requires, the Commission 
believes industry is ready to report this data to SDRs.
    However, the Commission is concerned that valuation, margin, and 
collateral data reporting could create a significant burden for non-SD/
MSP/DCO reporting counterparties. The Commission is aware that these 
entities may be smaller and less active in the swaps market, with fewer 
resources to devote to reporting this complex data. The Commission also 
recognizes that the quarterly valuation data these counterparties 
report is not integral to the Commission's ability to monitor systemic 
risk in the swaps market and may not justify the cost to these entities 
to report it. The Commission is therefore proposing to remove the 
current requirement for non-SD/MSP/DCO

[[Page 21591]]

reporting counterparties to report valuation data in Sec.  
45.4(d)(2)(ii). The Commission is also proposing not to require non-SD/
MSP/DCO reporting counterparties to report margin and collateral data. 
The Commission preliminarily believes this would relieve these 
counterparties from unnecessary burdens without impacting the 
Commission's ability to monitor systemic risk. The Commission also 
notes this change would be consistent with the approach taken by ESMA 
(and the SEC, insofar as the SEC does not require reporting of margin 
and collateral data from any type of market participant).
    In light of the foregoing, the Commission is proposing to require 
margin and collateral reporting for reporting counterparties that are 
SDs, MSPs, and DCOs in Sec.  45.4(c)(2). Proposed Sec.  45.4(c) would 
require that for each swap that is not an original swap, including 
clearing swaps and swaps not cleared by a DCO, the reporting 
counterparty report all required swap continuation data electronically 
to an SDR in the manner provided in Sec.  45.13(a) as provided in Sec.  
45.4(c). Proposed Sec.  45.4(c)(1)(i) would require that SD/MSP/DCO 
reporting counterparties report life cycle event data electronically to 
an SDR in the manner provided in Sec.  45.13(a) not later than 11:59 
p.m. eastern time on the next business day following the day, as 
determined according to eastern time, that any life cycle event 
occurred, with the sole exception that life cycle event data relating 
to a corporate event of the non-reporting counterparty shall be 
reported in the manner provided in Sec.  45.13(a) not later than 11:59 
p.m. eastern time on the second business day following the day, as 
determined according to eastern time, that such corporate event 
occurred.
    Proposed Sec.  45.4(c)(1)(ii) would require that non-SD/MSP/DCO 
reporting counterparties report life cycle event data electronically to 
an SDR in the manner provided in Sec.  45.13(a) not later than 11:59 
p.m. eastern time on the second business day following the day, as 
determined according to eastern time, that any life cycle event 
occurred.
    Proposed Sec.  45.4(c)(2) would require that SD/MSP/DCO reporting 
counterparties report swap valuation data and collateral data 
electronically to an SDR in the manner provided in Sec.  45.13(b) each 
business day.
Request for Comment
    The Commission requests comment on all aspects of the proposed 
changes to Sec.  45.4. The Commission also invites specific comment on 
the following:
    (5) Are the Commission's proposed T+1 and T+2 deadlines for 
reporting required swap continuation data appropriately harmonized with 
the deadlines set by other regulators and jurisdictions to benefit 
market participants? Do the Commission's proposed T+1 and T+2 deadlines 
for reporting required swap continuation data create any operational 
issues for reporting counterparties that the Commission has not 
considered?
    (6) Is the requirement to report margin and collateral data without 
distinction for whether a swap is cleared or uncleared redundant with 
existing part 39 reporting requirements for cleared swaps? Are there 
efficiencies for reporting counterparties to submit both cleared and 
uncleared margin and collateral data together to SDRs?
    (7) Does the Commission's proposal to no longer require non-SD/MSP/
DCO reporting counterparties to report valuation data raise any 
concerns about the Commission's ability to monitor systemic risk in the 
U.S. swaps market?

E. Sec.  45.5--Unique Transaction Identifiers

    The Commission is proposing amendments to Sec.  45.5 for USIs. In 
general, the Commission is proposing to amend Sec.  45.5(a) through (f) 
to require each swap to be identified with a UTI in all recordkeeping 
and all swap data reporting, and to require that the UTI be comprised 
of the LEI of the generating entity and a unique alphanumeric code. The 
proposed amendments to Sec.  45.5(a) through (f) are discussed in 
sections II.E.1 to II.E.7 below.
    In general, Sec.  45.5 requires each swap to be identified with a 
USI in all recordkeeping and all swap data reporting, and requires that 
the USI be comprised of the identifier assigned by the Commission to 
the generating entity and a unique alphanumeric code. In response to 
the Roadmap, the Commission received comment letters supporting 
adoption of the UTI and UPI standards as part of the review.\118\
---------------------------------------------------------------------------

    \118\ Joint ISDA-SIFMA Letter at 4; Joint SDR Letter at 7.
---------------------------------------------------------------------------

    Because the current USI requirement was implemented prior to global 
consensus on the structure and format for a common swap identifier, the 
Commission preliminarily believes that amending Sec.  45.5 to require 
each swap to be identified with a UTI in all recordkeeping and all swap 
data reporting and to require that the UTI be comprised of the LEI of 
the generating entity and a unique alphanumeric code will result in the 
structure and format for the swap identifier being consistent with the 
UTI Technical Guidance, reduce cross-border reporting complexity and 
encourage global swap data aggregation.
1. Title and Introductory Text
    The Commission is proposing several conforming amendments to the 
Sec.  45.5 title and the introductory text. Current Sec.  45.5 is 
titled ``Unique swap identifiers.'' The current introductory text 
states that each swap subject to the jurisdiction of the Commission 
shall be identified in all recordkeeping and all swap data reporting 
pursuant to part 45 by the use of a USI, which shall be created, 
transmitted, and used for each swap as provided in Sec.  45.5(a) 
through (f).
    The Commission is proposing to replace ``swap'' in the title with 
``transaction'' to reflect the Commission's proposed adoption of the 
UTI. Accordingly, the Commission is also proposing to update the 
reference to USI with UTI in the introductory text.
    The Commission is also proposing to update the reference to 
paragraphs (a) through (f) of Sec.  45.5 to (a) through (h) of Sec.  
45.5. This amendment would reflect the Commission's proposed addition 
of Sec.  45.5(g) and (h), discussed in sections II.E.8 and II.E.9 
below.
    Therefore, in light of the above proposed amendments, the 
introductory text would state that each swap shall be identified in all 
recordkeeping and all swap data reporting pursuant to part 45 by the 
use of a UTI, which shall be created, transmitted, and used for each 
swap as provided in paragraphs (a) through (h) of Sec.  45.5.
2. Sec.  45.5(a)--Swaps Executed on or Pursuant to the Rules of a SEF 
or DCM
    The Commission is proposing several conforming amendments to Sec.  
45.5(a) for the creation and transmission of USIs for swaps executed on 
or pursuant to the rules of SEFs and DCMs. Current Sec.  45.5(a)(1) 
requires that for swaps executed on or pursuant to the rules of SEFs 
and DCMs, SEFs and DCMs generate and assign USIs at or ASATP following 
execution, but prior to the reporting of required swap creation data, 
that consist of a single data field containing: (i) The unique 
alphanumeric code assigned to the SEF or DCM by the Commission for the 
purpose of identifying the SEF or DCM with respect to the USI creation; 
and (ii) an alphanumeric code generated and assigned to that swap by 
the automated systems of the SEF or DCM, which shall be unique with 
respect to all such codes

[[Page 21592]]

generated and assigned by that SEF or DCM.\119\
---------------------------------------------------------------------------

    \119\ 17 CFR 45.5(a)(1)(i) through (ii).
---------------------------------------------------------------------------

    Current Sec.  45.5(a)(2) requires that the SEF or DCM transmit the 
USI electronically: (i) To the SDR to which the SEF or DCM reports 
required swap creation data for the swap, as part of that report; (ii) 
to each counterparty to the swap ASATP after execution of the swap; and 
(iii) to the DCO, if any, to which the swap is submitted for clearing, 
as part of the required swap creation data transmitted to the DCO for 
clearing purposes.\120\
---------------------------------------------------------------------------

    \120\ 17 CFR 45.5(a)(2)(i) through (iii).
---------------------------------------------------------------------------

    First, the Commission is proposing amendments to conform to the 
Commission's proposed adoption of the UTI. The Commission is proposing 
to replace all references to USIs with UTIs in Sec.  45.5(a)(1) through 
(2). In addition, the Commission is proposing to update the phrase in 
Sec.  45.5(a)(1) that the USI shall consist of a single data ``field'' 
that contains two components to a single data ``element with a maximum 
length of 52 characters'' so that the length of the UTI is consistent 
with the UTI Technical Guidance.\121\
---------------------------------------------------------------------------

    \121\ UTI Technical Guidance, Section 3.6.
---------------------------------------------------------------------------

    The Commission is also proposing to amend Sec.  45.5(a)(1)(i) 
describing the first component of the UTI's single data element to 
replace ``unique alphanumeric code assigned to'' the SEF or DCM with 
``legal entity identifier of'' the SEF or DCM so that the identifier 
used to identify the UTI generating entity is consistent with the UTI 
Technical Guidance.\122\ The Commission is also proposing to delete the 
phrase in the second half of the sentence stating ``by the Commission 
for the purpose of identifying the [SEF] or [DCM] with respect to the 
[USI] creation,'' because, according to the UTI Technical Guidance, an 
LEI is used to identify the UTI generating entity instead of an 
identifier assigned by individual regulators.
---------------------------------------------------------------------------

    \122\ UTI Technical Guidance, Section 3.5.
---------------------------------------------------------------------------

    Therefore, in light of the above proposed changes, Sec.  45.5(a)(1) 
\123\ would require that for swaps executed on or pursuant to the rules 
of SEFs or DCMs, SEFs and DCMs generate and assign UTIs at or ASATP 
following execution, but prior to the reporting of required swap 
creation data, that consist of a single data element with a maximum 
length of 52 characters containing: (i) The LEI of the SEF or DCM; and 
(ii) an alphanumeric code generated and assigned to that swap by the 
automated systems of the SEF or DCM, which shall be unique with respect 
to all such codes generated and assigned by that SEF or DCM.
---------------------------------------------------------------------------

    \123\ Current Sec.  45.5(a)(2) would remain unchanged, except 
for the single updated reference to UTI in Sec.  45.5(a)(2).
---------------------------------------------------------------------------

3. Sec.  45.5(b)--Off-Facility Swaps With an SD or MSP Reporting 
Counterparty
    The Commission is proposing several amendments to Sec.  45.5(b) for 
the creation and transmission of USIs for off-facility swaps by SD/MSP 
reporting counterparties. Current Sec.  45.5(b)(1) requires that for 
off-facility swaps with SD/MSP reporting counterparties, the reporting 
counterparty generate and assign a USI ASATP consisting of a single 
data field. The single data field is to contain: (i) The unique 
alphanumeric code assigned to the SD or MSP by the Commission at the 
time of its registration for the purpose of identifying them with 
respect to USI creation; and (ii) an alphanumeric code generated and 
assigned to that swap by the automated systems of the SD or MSP, which 
shall be unique with respect to all such codes generated and assigned 
by that SD or MSP. The required USI is to be generated and assigned 
after execution of the swap and prior to the reporting of required swap 
creation data and the transmission of data to a DCO if the swap is to 
be cleared.
    Current Sec.  45.5(b)(2) requires that the reporting counterparty 
transmit the USI electronically: (i) To the SDR to which the reporting 
counterparty reports required swap creation data for the swap, as part 
of that report; and (ii) to the non-reporting counterparty to the swap, 
ASATP after execution of the swap; and (iii) to the DCO, if any, to 
which the swap is submitted for clearing, as part of the required swap 
creation data transmitted to the DCO for clearing purposes.
    First, the Commission is proposing to expand the UTI creation and 
transmission requirements for SD/MSP reporting counterparties to 
include reporting counterparties that are financial entities.\124\ The 
Commission preliminarily believes that amending Sec.  45.5(b) to extend 
the responsibility for generating off-facility swap UTIs to reporting 
counterparties that are financial entities will reduce the UTI-
generation burden on non-financial entities.
---------------------------------------------------------------------------

    \124\ 17 CFR 45.1 (definition of ``financial entity'').
---------------------------------------------------------------------------

    The Commission also believes this would more closely align the UTI 
generation hierarchy with the reporting counterparty determination 
hierarchy in Sec.  45.8, which incorporates financial entities for 
purposes of determining the reporting counterparty.\125\ For example, 
in an off-facility swap where neither counterparty is an SD nor MSP and 
only one counterparty is a financial entity, the counterparty that is a 
financial entity will be the reporting counterparty,\126\ yet the SDR 
would generate the USI under current Sec.  45.5(c).\127\ The proposed 
changes to Sec.  45.5(b) would ensure that for such swap, the financial 
entity would be assigned to both the reporting counterparty and to 
generate the UTI. This amendment to Sec.  45.5(b) would also reduce the 
number of swaps for which SDRs would be required to generate the UTI.
---------------------------------------------------------------------------

    \125\ 17 CFR 45.8.
    \126\ 17 CFR 45.8(c).
    \127\ 17 CFR 45.5(c).
---------------------------------------------------------------------------

    The Commission is also proposing conforming changes. These are to 
replace ``swap dealer or major swap participant reporting 
counterparty'' in the title to Sec.  45.5(b) with ``financial entity 
reporting counterparty'' and to replace ``swap dealer or major swap 
participant'' in the first sentence of Sec.  45.5(b) with ``financial 
entity.'' As proposed, the new title of Sec.  45.5(b) would be ``Off-
facility swaps with a financial entity reporting counterparty'' and the 
first sentence of Sec.  45.5(b) would begin with ``For each off-
facility swap where the reporting counterparty is a financial entity . 
. . .'' \128\ The Commission is similarly proposing to replace 
references to ``swap dealer or major swap participant'' in Sec.  
45.5(b)(1)(i) and (ii) with ``reporting counterparty.'' \129\
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    \128\ See row ``45.5(b)'' of the table in section VIII.3 below.
    \129\ See row ``45.5(b)(1)(ii)'' of the table in section VIII.3 
below.
---------------------------------------------------------------------------

    Second, the Commission is proposing amendments to conform to the 
Commission's proposed adoption of the UTI. The Commission is proposing 
to replace all references to USIs with UTIs in Sec.  45.5(b)(1) through 
(2). In addition, the Commission is proposing to update the phrase in 
Sec.  45.5(b)(1) that the USI shall consist of a single data ``field'' 
that contains two components to a single data ``element with a maximum 
length of 52 characters'' so that the length of the UTI is consistent 
with the UTI Technical Guidance.\130\
---------------------------------------------------------------------------

    \130\ UTI Technical Guidance, Section 3.6.
---------------------------------------------------------------------------

    The Commission is also proposing to amend Sec.  45.5(b)(1)(i) 
describing the first component of the UTI's single data element to 
replace ``unique alphanumeric code assigned to'' the SD or MSP with 
``legal entity identifier of'' the reporting counterparty so that the 
identifier used to identify the UTI generating entity is consistent 
with the UTI Technical Guidance.\131\ The

[[Page 21593]]

Commission is also proposing to delete the phrase in the second half of 
the sentence stating ``by the Commission at the time of its 
registration as such, for the purpose of identifying the [SD] or [MSP] 
with respect to the [USI] creation,'' because, according to the UTI 
Technical Guidance, an LEI is used to identify the UTI generating 
entity instead of an identifier assigned by individual regulators.
---------------------------------------------------------------------------

    \131\ UTI Technical Guidance, Section 3.5.
---------------------------------------------------------------------------

    Therefore, in light of the above proposed changes, Sec.  45.5(b)(1) 
\132\ would require that for off-facility swaps with a financial entity 
reporting counterparty, the reporting counterparties generate and 
assign UTIs at or ASATP following execution, but prior to the reporting 
of required swap creation data, that consist of a single data element 
with a maximum length of 52 characters containing: (i) The LEI of the 
reporting counterparty; and (ii) an alphanumeric code generated and 
assigned to that swap by the automated systems of the reporting 
counterparty, which shall be unique with respect to all such codes 
generated and assigned by that reporting counterparty.
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    \132\ Current Sec.  45.5(b)(2) would remain unchanged, except 
for the single updated reference to UTI in Sec.  45.5(b)(2).
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4. Sec.  45.5(c)--Off-Facility Swaps With a Non-SD/MSP Reporting 
Counterparty
    The Commission is proposing several amendments to Sec.  45.5(c) for 
the creation and transmission of USIs for off-facility swaps by non-SD/
MSP reporting counterparties. Current Sec.  45.5(c)(1) requires that 
for off-facility swaps with non-SD/MSP reporting counterparties, the 
SDR generates and assigns a USI ASATP after receiving the first report 
of PET data consisting of a single data field containing: (i) The 
unique alphanumeric code assigned to the SDR by the Commission at the 
time of its registration for the purpose of identifying them with 
respect to USI creation; and (ii) an alphanumeric code generated and 
assigned to that swap by the automated systems of the SDR, which shall 
be unique with respect to all such codes generated and assigned by that 
SDR.
    Current Sec.  45.5(c)(2) requires that the SDR transmit the USI 
electronically: (i) To the counterparties to the swap ASATP after 
creation of the USI, and (ii) to the DCO, if any, to which the swap is 
submitted for clearing ASATP after creation of the USI.
    First, the Commission is proposing to replace ``non-SD/MSP 
reporting counterparty'' in the title to Sec.  45.5(c) with ``non-SD/
MSP/DCO reporting counterparty that is not a financial entity'' and to 
replace ``reporting counterparty is a non-SD/MSP counterparty'' in the 
first sentence of Sec.  45.5(c) with ``reporting counterparty is a non-
SD/MSP/DCO counterparty that is not a financial entity.'' As proposed, 
the new title of Sec.  45.5(c) would be ``Off-facility swaps with a 
non-SD/MSP/DCO reporting counterparty that is not a financial entity'' 
and the first sentence of Sec.  45.5(c) would begin with ``For each 
off-facility swap for which the reporting counterparty is a non-SD/MSP/
DCO counterparty that is not a financial entity . . . .'' As explained 
in section II.E.3 above, the Commission is proposing to expand UTI 
generation responsibilities to financial entities,\133\ and 
preliminarily believes that this amendment is needed to clarify that 
proposed Sec.  45.5(c) would apply only where a reporting counterparty 
is a non-SD/MSP/DCO counterparty that is not a financial entity.
---------------------------------------------------------------------------

    \133\ 17 CFR 45.1 (definition of ``financial entity'').
---------------------------------------------------------------------------

    Second, the Commission is proposing to amend Sec.  45.5(c) to 
provide non-SD/MSP/DCO reporting counterparties that are not financial 
entities with the option to generate the UTI for an off-facility swap 
or to request that the SDR to which required swap creation data will be 
reported to generate the UTI. If the non-SD/MSP/DCO reporting 
counterparty that is not a financial entity chooses to generate the UTI 
for an off-facility swap, the reporting counterparty would follow the 
creation and transmission requirements for financial entity reporting 
counterparties in Sec.  45.5(b)(1) and (2). If the non-SD/MSP/DCO 
reporting counterparty that is not a financial entity chooses to 
request the SDR to generate the UTI, the SDR would follow the creation 
and transmission requirements for SDRs in Sec.  45.5(c)(1) and (2). The 
Commission is proposing amendments to the requirements for SDRs in 
Sec.  45.5(c)(1), as discussed below.
    In the Joint SDR Letter, three SDRs expressed the view that the 
Commission should adopt the UTI Technical Guidance without 
modification, after which anyone with an LEI would be able to create a 
USI, and SDRs would no longer need to generate and transmit UTIs.\134\ 
The Commission participated in the preparation of the UTI Technical 
Guidance, which includes guidance to authorities for allocating 
responsibility for UTI generation, including a generation flowchart 
that places SDRs at the end.\135\ The UTI Technical Guidance also notes 
that ``[n]ot all factors'' in the flowchart for allocating 
responsibility for UTI generation ``will be relevant for all 
jurisdictions.'' \136\
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    \134\ Joint SDR Letter at 7-8.
    \135\ UTI Technical Guidance at 12-14.
    \136\ UTI Technical Guidance at 12.
---------------------------------------------------------------------------

    Because the UTI Technical Guidance was produced with the need to 
accommodate the different trading patterns and reporting rules in 
jurisdictions around the world, certain factors included in the UTI 
Technical Guidance generation flowchart are not applicable for the 
Commission (e.g., factors relating to the principal clearing model 
\137\ or electronic confirmation platforms),\138\ and therefore the 
Commission is unable to adopt the UTI Technical Guidance without 
modification. However, the Commission preliminarily believes that none 
of the provisions of amended Sec.  45.5 conflict with the UTI Technical 
Guidance, including maintaining the existing obligations for SDRs to 
generate and transmit UTIs. While UTI generation and transmission 
responsibilities by SDRs remain in amended Sec.  45.5(c), the 
Commission also preliminarily believes that the proposed alignment of 
the UTI generation and reporting counterparty determination for 
financial entities in amended Sec.  45.5(b) and the proposed reporting 
option for counterparties that are neither DCOs nor financial entities 
in amended Sec.  45.5(c) will result in reduced overall UTI generation 
and transmission burdens for SDRs.
---------------------------------------------------------------------------

    \137\ UTI Technical Guidance at 12 (Step 2: ``Is a counterparty 
to this transaction a clearing member of a CCP, and if so is that 
clearing member acting in its clearing member capacity for this 
transaction?'').
    \138\ UTI Technical Guidance at 12 (Step 6: ``Has the 
transaction been electronically confirmed or will it be and, if so, 
is the confirmation platform able, willing and permitted to generate 
a UTI within the required time frame under the applicable rules?'').
---------------------------------------------------------------------------

    The Commission preliminarily believes that amending Sec.  45.5(c) 
to provide the reporting counterparty with the option to generate the 
UTI for an off-facility swap where the reporting counterparty is 
neither a DCO nor financial entity or, if the reporting counterparty 
elects not to generate the UTI, to request that the SDR to which 
required swap creation data will be reported to generate the UTI will 
simultaneously: (i) Provide a reporting counterparty that is neither a 
DCO nor financial entity with the flexibility to generate the UTI 
should it choose to do so; and (ii) reduce the number of swaps where an 
SDR is assigned with UTI generation responsibilities, while also 
maintaining the existing SDR role as a guarantee that every off-
facility swap will be identified with a UTI.
    Third, the Commission is proposing amendments to conform to the 
Commission's proposed adoption of the

[[Page 21594]]

UTI. The Commission is proposing to replace all references to USIs with 
UTIs in Sec.  45.5(c)(1) through (2). In addition, the Commission is 
proposing to update the phrase in Sec.  45.5(c)(1) that the USI shall 
consist of a single data ``field'' that contains two components to a 
single data ``element with a maximum length of 52 characters'' so that 
the length of the UTI is consistent with the UTI Technical 
Guidance.\139\
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    \139\ UTI Technical Guidance, Section 3.6.
---------------------------------------------------------------------------

    The Commission is also proposing to amend Sec.  45.5(c)(1)(i) 
describing the first component of the UTI's single data element to 
replace ``unique alphanumeric code assigned to'' the SDR with ``legal 
entity identifier of'' the SDR so that the identifier used to identify 
the UTI generating entity is consistent with the UTI Technical 
Guidance.\140\ The Commission is also proposing to delete the phrase in 
the second half of the sentence stating ``by the Commission at the time 
of its registration as such, for the purpose of identifying the [SDR] 
with respect to the [USI] creation,'' because, according to the UTI 
Technical Guidance, an LEI is used to identify the UTI generating 
entity instead of an identifier assigned by individual regulators.
---------------------------------------------------------------------------

    \140\ UTI Technical Guidance, Section 3.5.
---------------------------------------------------------------------------

    Therefore, in light of the above proposed amendments, Sec.  
45.5(c)(1) \141\ would require that for swaps with a non-SD/MSP/DCO 
reporting counterparty that is not a financial entity, the reporting 
counterparty shall either create and transmit a UTI as provided in 
Sec.  45.5(b)(1) and Sec.  45.5(b)(2), or request that the SDR to which 
it reports required swap creation data create and transmit one pursuant 
to Sec.  45.5(c)(1) or (c)(2).
---------------------------------------------------------------------------

    \141\ Current Sec.  45.5(c)(2) would remain unchanged, except 
for the updated references to UTI in Sec.  45.5(b)(2)(i)(A) through 
(B).
---------------------------------------------------------------------------

    Proposed Sec.  45.5(c)(1) would provide that the SDR generate and 
assign UTIs at or ASATP following receipt of a request from the 
reporting counterparty, that consist of a single data element with a 
maximum length of 52 characters containing: (i) The LEI of the SDR; and 
(ii) an alphanumeric code generated and assigned to that swap by the 
automated systems of the SDR, which shall be unique with respect to all 
such codes generated and assigned by that SDR.
5. Sec.  45.5(d)--Clearing Swaps
    The Commission is proposing several amendments to the Sec.  45.5(d) 
regulations for the creation and transmission of USIs for clearing 
swaps. Current Sec.  45.5(d) requires that for each clearing swap, the 
DCO that is a counterparty to such swap shall create and transmit a USI 
upon, or ASATP after, acceptance of an original swap for clearing, or 
execution of a clearing swap that does not replace an original swap, 
and prior to the reporting of required swap creation data for the 
clearing swap. Current Sec.  45.5(d)(1) requires that the USI shall 
consist of a single data field that contains: (i) The unique 
alphanumeric code assigned to the DCO by the Commission for the purpose 
of identifying it with respect to USI creation; and (ii) an 
alphanumeric code generated and assigned to that clearing swap by the 
automated systems of the DCO, which shall be unique with respect to all 
such codes generated and assigned by that DCO.
    Current Sec.  45.5(d)(2) requires that the DCO transmit the USI 
electronically to: (i) The SDR to which the DCO reports required swap 
creation data for the clearing swap; and (ii) to the counterparty to 
the clearing swap, ASATP after accepting the swap for clearing or 
executing the swap, if it does not replace an original swap.
    First, the Commission is proposing to retitle the section ``Off-
facility swaps with a [DCO] reporting counterparty.'' The Commission is 
proposing to rephrase the introductory text in Sec.  45.5(d) to reflect 
this shift in terminology.
    Second, the Commission is proposing amendments to conform to the 
Commission's proposed adoption of the UTI. The Commission is proposing 
to replace all references to USIs with UTIs in Sec.  45.5(d)(1) through 
(2). In addition, the Commission is proposing to update the phrase in 
Sec.  45.5(d)(1) that the USI shall consist of a single data ``field'' 
that contains two components to a single data ``element with a maximum 
length of 52 characters'' so that the length of the UTI is consistent 
with the UTI Technical Guidance.\142\
---------------------------------------------------------------------------

    \142\ UTI Technical Guidance, Section 3.6.
---------------------------------------------------------------------------

    The Commission is also proposing to amend Sec.  45.5(d)(1)(i) 
describing the first component of the UTI's single data element to 
replace ``unique alphanumeric code assigned to the ``DCO reporting 
counterparty with ``legal entity identifier of'' the DCO so that the 
identifier used to identify the UTI generating entity is consistent 
with the UTI Technical Guidance.\143\ The Commission is also proposing 
to delete the phrase in the second half of the sentence stating ``by 
the Commission at the time of its registration as such, for the purpose 
of identifying the [DCO] with respect to the [USI] creation,'' because, 
according to the UTI Technical Guidance, an LEI is used to identify the 
UTI generating entity instead of an identifier assigned by individual 
regulators.
---------------------------------------------------------------------------

    \143\ UTI Technical Guidance, Section 3.5.
---------------------------------------------------------------------------

    Therefore, in light of the above proposed amendments, Sec.  
45.5(d)(1) \144\ would require that for off-facility swaps with a DCO 
reporting counterparty, the reporting counterparty generate and assign 
UTIs at or ASATP following clearing or execution, but prior to the 
reporting of required swap creation data for the clearing swap, that 
consist of a single data element with a maximum length of 52 characters 
containing: (i) The LEI of the DCO; and (ii) an alphanumeric code 
generated and assigned to that swap by the automated systems of the 
DCO, which shall be unique with respect to all such codes generated and 
assigned by that DCO.
---------------------------------------------------------------------------

    \144\ Current Sec.  45.5(d)(2) would remain unchanged, except 
for the single updated reference to UTI in Sec.  45.5(d)(2).
---------------------------------------------------------------------------

6. Sec.  45.5(e)--Allocations
    The Commission is proposing several amendments to the Sec.  45.5(e) 
regulations for the creation and transmission of USIs for allocations. 
The Commission is proposing to replace references to USIs with UTI 
throughout Sec.  45.5(e) to conform to the Commission's proposed 
adoption of the UTI. The Commission is also proposing non-substantive 
technical and language edits to update cross-references and improve 
readability.
7. Sec.  45.5(f)--Use
    The Commission is proposing several amendments to the Sec.  45.5(f) 
regulations for the use of UTIs by registered entities and swap 
counterparties. Current Sec.  45.5(f) requires that registered entities 
and swap counterparties subject to the jurisdiction of the Commission 
include the USI for a swap in all of its records and all of its swap 
data reporting concerning that swap, from the time it creates or 
receives the USI, throughout the existence of the swap and for as long 
as any records are required by the CEA or Commission regulations to be 
kept concerning the swap, regardless of any life cycle events or any 
changes to state data concerning the swap, including, without 
limitation, any changes with respect to the counterparties to or the 
ownership of the swap.
    Section 45.5(f) also specifies that this requirement shall not 
prohibit the use by a registered entity or swap counterparty in its own 
records of any additional identifier or identifiers internally 
generated by the automated systems of the registered entity or swap 
counterparty, or the reporting to an

[[Page 21595]]

SDR, the Commission, or another regulator of such internally generated 
identifiers in addition to the reporting of the USI.
    First, the Commission is proposing amendments to conform to the 
Commission's proposed adoption of the UTI. The Commission is proposing 
to replace all references to USIs with UTIs in Sec.  45.5(f). The 
Commission is also proposing to remove the reference to state data in 
the regulation,\145\ and make minor technical language edits, including 
removing reference to ownership of the swap, which is not needed given 
the reference to counterparties.
---------------------------------------------------------------------------

    \145\ See discussion in section II.D.2 above.
---------------------------------------------------------------------------

    Second, the Commission is proposing to remove the provision 
permitting the reporting of any additional identifier or identifiers 
internally generated by the automated systems of the registered entity 
or swap counterparty to an SDR, the Commission, or another regulator. 
The Commission believes this amendment would improve consistency in the 
swap data reported to SDRs, and further the goal of harmonization of 
SDR data across Financial Stability Board (``FSB'') member 
jurisdictions.
    Therefore, in light of the above proposed amendments, Sec.  45.5(f) 
would require that registered entities and swap counterparties include 
the UTI for a swap in all of their records and all of their swap data 
reporting concerning that swap, from the time they create or receive 
the UTI, throughout the existence of the swap and for as long as any 
records are required by the CEA or Commission regulations to be kept 
concerning the swap, regardless of any life cycle events concerning the 
swap, including, without limitation, any changes with respect to the 
counterparties to the swap.
8. Sec.  45.5(g)--Third-Party Service Provider
    The Commission is proposing to add new Sec.  45.5(g) to its 
regulations, titled ``Third-party service provider.'' Proposed Sec.  
45.5(g) would create requirements for registered entities and reporting 
counterparties to, when contracting with third-party service providers 
to facilitate reporting pursuant to Sec.  45.9, ensure that the third-
party service providers create and transmit UTIs.\146\
---------------------------------------------------------------------------

    \146\ 17 CFR 45.9.
---------------------------------------------------------------------------

    As background, the Commission has encountered inconsistencies in 
the format and standard of USIs for swaps reported using third-party 
service providers. The Commission preliminarily believes that proposed 
Sec.  45.5(g) will help ensure consistency with the UTI Technical 
Guidance in the format and standard of UTIs for swaps reported by 
third-party service providers. The Commission further believes that 
proposed Sec.  45.5(g) will reinforce the existing responsibility of a 
registered entity or reporting counterparty under Sec.  45.9 for the 
data reported on its behalf by a third-party service provider.
    Therefore, proposed Sec.  45.5(g) would provide that if a 
registered entity or reporting counterparty required by part 45 to 
report required swap creation data or required swap continuation data 
contracts with a third-party service provider to facilitate reporting 
pursuant to Sec.  45.9, the registered entity or reporting counterparty 
ensures that such third-party service provider creates and transmits 
the UTI as otherwise required for such category of swap by Sec.  
45.5(a) through (e). It would further provide that the UTI shall 
consist of a single data element with a maximum length of 52 characters 
that contains: (i) The LEI of the third-party service provider; and 
(ii) an alphanumeric code generated and assigned to that swap by the 
automated systems of the third-party service provider, which shall be 
unique with respect to all such codes generated and assigned by that 
third-party service provider.
9. Sec.  45.5(h)--Cross-Jurisdictional Swaps
    The Commission is proposing to add new Sec.  45.5(h) to its 
regulations, titled ``Cross-jurisdictional swaps.'' Proposed Sec.  
45.5(h) would clarify that if a swap is also reportable to one or more 
other jurisdictions with a regulatory reporting deadline earlier than 
the deadline set forth in Sec.  45.3, the swap is to be identified in 
all reporting pursuant to part 45 with the same UTI that has been 
generated according to the rules of the jurisdiction with the earliest 
regulatory reporting deadline.
    The Commission believes that the benefits resulting from global 
swap data aggregation and harmonization are realizable only if each 
swap is identified in all regulatory reporting worldwide with a single 
UTI so as to avoid double- or triple-counting of the swap. While the 
current requirement in part 45 for swap creation data to be reported 
ASATP after execution results in the Commission having the earliest 
regulatory reporting deadline, changes to the reporting deadline in 
proposed amendments to Sec.  45.3 may result in a cross-jurisdictional 
swap being required to be reported to another jurisdiction earlier than 
to the Commission. Because the Commission considers it critical that 
only one unique UTI is used to identify each swap, whether reportable 
only to the Commission or to multiple jurisdictions, the Commission 
proposes that, if a cross-jurisdictional swap is reportable to another 
jurisdiction earlier than required under part 45, the UTI for such swap 
reported pursuant to part 45 be generated according to the rules of the 
jurisdiction with the earliest regulatory reporting deadline.
    The Commission preliminarily believes that the new proposed 
provision would: (i) Ensure consistency with the UTI Technical 
Guidance; \147\ (ii) assist the Commission, SDRs, and swap 
counterparties to avoid potentially identifying a single cross-
jurisdictional trade with multiple UTIs; and (iii) eliminate the 
potential for market participants to be faced with a situation of 
attempting to comply with conflicting UTI generation rules.
---------------------------------------------------------------------------

    \147\ UTI Technical Guidance at 13 (Step 10: ``UTI generation 
rules of the jurisdiction with the sooner reporting deadline should 
be followed'').
---------------------------------------------------------------------------

    Therefore, proposed Sec.  45.5(h) would require that 
notwithstanding the provisions of Sec.  45.5(a) through (g), if a swap 
is also reportable to one or more other jurisdictions with a regulatory 
reporting deadline earlier than the deadline set forth in Sec.  45.3, 
the same UTI generated according to the rules of the jurisdiction with 
the earliest regulatory reporting deadline shall be transmitted 
pursuant to Sec.  45.5(a)-(g) and used in all recordkeeping and all 
swap data reporting pursuant to part 45.
Request for Comment
    The Commission requests comment on all aspects of the proposed 
changes to Sec.  45.5.

F. Sec.  45.6--Legal Entity Identifiers \148\
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    \148\ The Commission is proposing to re-number the requirements 
of Sec.  45.6 to correct current extensive numbering errors.
---------------------------------------------------------------------------

1. Introductory Text
    The Commission is proposing amendments to the introductory text of 
the Sec.  45.6 regulations for LEIs. The current introductory text 
states that each counterparty to any swap subject to the jurisdiction 
of the Commission shall be identified in all recordkeeping and all swap 
data reporting pursuant to part 45 by means of a single LEI as 
specified in Sec.  45.6.
    First, the Commission is proposing to replace ``each counterparty'' 
with each SEF, DCM, DCO, SDR, entity reporting pursuant to Sec.  45.9, 
and counterparty to any swap. The Commission believes a list of 
entities would be more precise and help market participants referring 
to the introductory text.
    Second, the Commission is proposing to revise the introductory text 
to require

[[Page 21596]]

each SEF, DCM, DCO, SDR, entity reporting pursuant to Sec.  45.9, and 
counterparty to any swap that is eligible to receive an LEI to 
``obtain'' as well as be identified in all recordkeeping and swap data 
reporting by a single LEI. The Commission is aware of uncertainty as to 
whether the requirement to identify each counterparty with an LEI in 
current Sec.  45.6 also includes a requirement for the counterparty to 
obtain an LEI, and the Commission preliminarily believes that amending 
Sec.  45.6 to clarify that a person or entity required to be identified 
with an LEI in recordkeeping and swap data reporting also has an 
associated affirmative requirement to obtain an LEI will clarify that 
identification using LEI necessarily requires the identified person or 
entity, if eligible to receive an LEI, to obtain an LEI.
    The Commission also preliminarily believes that extending the 
requirement for each counterparty to any swap to be identified in all 
recordkeeping and swap data reporting by a single LEI to all SEFs, 
DCMs, DCOs, entities reporting pursuant to Sec.  45.9, and SDRs will 
ensure consistency with the CDE Technical Guidance, allow for 
standardization in the identification in recordkeeping and swap data 
reporting, and encourage global swap data aggregation.
    Therefore, in light of the above proposed amendments, the 
introductory text to Sec.  45.6 would state that each SEF, DCM, DCO, 
SDR, entity reporting pursuant to Sec.  45.9, and counterparty to any 
swap eligible to receive an LEI shall obtain and be identified in all 
recordkeeping and all swap data reporting pursuant to part 45 by a 
single LEI as specified in Sec.  45.6.
2. Sec.  45.6(a)--Definitions
    The Commission is proposing several changes to the definitions for 
the LEI regulations in Sec.  45.6(a). As background, current Sec.  
45.6(a) provides definitions for ``control,'' ``legal identifier 
system,'' ``level one reference data,'' ``level two reference data,'' 
``parent,'' ``self-registration,'' ``third-party registration,'' and 
``ultimate parent.''
    The Commission is proposing to move certain definitions pertaining 
to LEIs to Sec.  45.1(a). The Commission believes these definitions 
should be in Sec.  45.1(a) because they are used in regulations outside 
of Sec.  45.6. These definitions are: ``Global Legal Entity Identifier 
System,'' \149\ ``legal entity identifier'' or ``LEI,'' and ``Legal 
Entity Identifier Regulatory Oversight Committee.'' These definitions 
are discussed in section II.A.1 above.
---------------------------------------------------------------------------

    \149\ ``Global Legal Entity Identifier System'' and ``local 
operating unit'' would be updated versions of the current definition 
of ``legal identifier system.''
---------------------------------------------------------------------------

    The Commission is also proposing to remove certain definitions 
pertaining to LEIs from Sec.  45.6(a). These definitions would no 
longer be necessary in light of the proposed amendments to the LEI 
regulations, discussed in sections II.F.3 to II.F.8 below. These 
definitions are: ``control,'' ``level one reference data,'' ``level two 
reference data,'' ``parent,'' and ``ultimate parent.''
    The Commission is proposing to amend certain definitions pertaining 
to LEIs in Sec.  45.6(a). The Commission is proposing to amend the 
definition of ``self-registration'' in several respects. First, the 
Commission is proposing to remove the specific reference to ``level one 
or level two'' reference data, and the accompanying specifier ``as 
applicable.'' This amendment would reflect the Commission's proposal to 
remove the definitions of ``level one reference data'' and ``level two 
reference data.'' \150\
---------------------------------------------------------------------------

    \150\ Instead, as discussed below, the Commission is proposing 
to add a definition of ``reference data.'' The proposed amendment to 
``self-registration'' would be consistent with the new definition.
---------------------------------------------------------------------------

    Second, the Commission is proposing to add a reference to 
``individuals,'' to reflect the fact that swap counterparties may be 
individuals who need to obtain LEIs. As amended, ``self-registration'' 
would mean submission by a legal entity or individual of its own 
reference data.
    The Commission is also proposing to amend the definition of 
``third-party registration.'' First, the Commission is proposing to 
remove the specific references to ``level one or level two'' reference 
data, and the accompanying specifier ``as applicable.'' This amendment 
would reflect the Commission's proposal to remove the definitions of 
``level one reference data'' and ``level two reference data.'' \151\
---------------------------------------------------------------------------

    \151\ Instead, as discussed below, the Commission is proposing 
to add a definition of ``reference data.'' The proposed amendment to 
``self-registration'' would be consistent with the new definition.
---------------------------------------------------------------------------

    Second, the Commission is proposing to add references to 
``individuals,'' to reflect that swap counterparties may be individuals 
who need to obtain LEIs. As amended, ``third-party registration'' would 
mean submission of reference data for a legal entity or individual that 
is or may become a swap counterparty, made by an entity or organization 
other than the legal entity or individual identified by the submitted 
reference data. Examples of third-party registration include, without 
limitation, submission by an SD or MSP of reference data for its swap 
counterparties, and submission by a national numbering agency, national 
registration agency, or data service provider of reference data 
concerning legal entities or individuals with respect to which the 
agency or service provider maintains information.
    Finally, the Commission is proposing to add two definitions 
pertaining to LEIs to Sec.  45.6(a). First, the Commission is proposing 
to add a definition of ``local operating unit.'' As proposed, ``local 
operating unit'' would mean an entity authorized under the standards of 
the Global Legal Entity Identifier System to issue legal entity 
identifiers. Second, the Commission is proposing to add a definition of 
``reference data.'' As proposed, ``reference data'' would mean all 
identification and relationship information, as set forth in the 
standards of the Global Legal Entity Identifier System, of the legal 
entity or individual to which an LEI is assigned. The terms ``local 
operating unit'' and ``reference data'' are explained in a discussion 
of the proposed amendments to Sec.  45.6(e) in section II.F.7 below.
3. Sec.  45.6(b)--International Standard for the Legal Entity 
Identifier
    The Commission is proposing several changes to Sec.  45.6(b) 
regulations for the international standards for LEIs. The proposed 
amendments to Sec.  45.6(b) would reflect changes that have taken place 
since the current LEI regulations in Sec.  45.6 were adopted in 2012. 
As background, Sec.  45.6(b) now states that the LEI used in all 
recordkeeping and all swap data reporting required by part 45, 
following designation of the legal entity identifier system as provided 
in Sec.  45.6(c)(2), shall be issued under, and shall conform to, 
International Organization for Standardization (``ISO'') Standard 
17442, Legal Entity Identifier (LEI), issued by the ISO.
    The Commission is proposing to remove the phrase ``following 
designation of the [LEI] system as provided in [Sec.  45.6(c)(2)].'' 
The governance of the Global Legal Entity Identifier System designed by 
the FSB with the contribution of private sector participants is now 
fully in place: While at the beginning of the Global Legal Entity 
Identifier System, LEI issuers were operating under a temporary 
endorsement of the LEI ROC, all active LEI issuers have now been 
accredited.\152\ The LEI ROC establishes policy standards, such as the 
definition of the eligibility to obtain an LEI and conditions for 
obtaining an LEI; the

[[Page 21597]]

definition of reference data and any extension thereof, such as the 
addition of information on relationships between entities; the 
frequency of update for some or all the reference data; the nature of 
due diligence and other standards necessary for sufficient data 
quality; or high level principles governing data and information 
access.\153\
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    \152\ Progress report by the LEI ROC, The Global LEI System and 
regulatory uses of the LEI, 2 (Apr. 30, 2018), available at https://www.leiroc.org/publications/gls/roc_20180502-1.pdf.
    \153\ Id.
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    Therefore, in light of the above proposed amendments, Sec.  45.6(b) 
would state that the LEI used in all recordkeeping and all swap data 
reporting required by part 45 shall be issued under, and shall conform 
to, ISO Standard 17442, Legal Entity Identifier (LEI), issued by the 
ISO.
4. Sec.  45.6(b)--Technical Principles for the Legal Entity Identifier
    The Commission is proposing to remove this redundantly-numbered 
Sec.  45.6(b) for the technical principles for the LEI.\154\ 
Regulations for LEI reference data are currently located in Sec.  
45.6(e), which the Commission is proposing to move to Sec.  45.6(c). 
The revisions to the current Sec.  45.6(e) reference data regulations 
are discussed in section II.F.7 below.
---------------------------------------------------------------------------

    \154\ This Sec.  45.6(b) was numbered in error, as there is 
already a Sec.  45.6(b), discussed in section II.F.3 above.
---------------------------------------------------------------------------

    Currently, this Sec.  45.6(b) regulation enumerates the six 
technical principles for the legal entity identifier to be used in all 
recordkeeping and all swap data reporting. The principles in Sec.  
45.6(b) are: (i) Uniqueness; (ii) neutrality; (iii) reliability; (iv) 
open source; (v) extensibility; and (vi) persistence.
    The Commission is proposing to remove the above technical 
principles from Sec.  45.6(b). The Commission adopted Sec.  45.6(b) 
before global technical principles for the LEI were developed. The 
Commission has participated in the Global Legal Entity Identifier 
System and the LEI ROC since their establishment in 2013, through which 
global technical principles have been developed and a functioning LEI 
system introduced. The Commission preliminarily believes that deleting 
this current Sec.  45.6(b) to remove the technical principles for the 
legal entity identifier to be used in all recordkeeping and all swap 
data reporting is now warranted because the global technical principles 
that have been developed conform to the technical principles in Sec.  
45.6(b).
5. Sec.  45.6(c)--Governance Principles for the Legal Entity Identifier
    The Commission is proposing to remove the current Sec.  45.6(c) 
regulations for the governance principles for the LEI.\155\ Regulations 
for the use of the LEI are currently located in Sec.  45.6(f), which 
the Commission is proposing to move to Sec.  45.6(d), which would be 
correctly renumbered as Sec.  45.6(d). The revisions to the current 
Sec.  45.6(f) use of LEI regulations are discussed in section II.F.8 
below.
---------------------------------------------------------------------------

    \155\ Current Sec.  45.6(c) was also numbered in error because 
of the duplicate Sec.  45.6(b) sections.
---------------------------------------------------------------------------

    Current Sec.  45.6(c) enumerates the five governance principles for 
the legal entity identifier to be used in all recordkeeping and all 
swap data reporting. The governance principles are: International 
governance; reference data access; non-profit operation and funding; 
unbundling and non-restricted use; and commercial advantage 
prohibition.
    The Commission is proposing to remove the above governance 
principles from Sec.  45.6(c). The Commission adopted Sec.  45.6(c) 
before global governance principles for the LEI were developed. The 
Commission has participated in the Global Legal Entity Identifier 
System and the LEI ROC since their establishment in 2013, through which 
global governance principles have been developed and a functioning LEI 
system introduced. The Commission preliminarily believes that deleting 
current Sec.  45.6(c) to remove the governance principles for the legal 
entity identifier to be used in all recordkeeping and all swap data 
reporting is now warranted because the global governance principles 
that have been developed conform to the governance principles in Sec.  
45.6(c).
6. Sec.  45.6(e)--Designation of the Legal Entity Identifier System
    The Commission is proposing to remove the Sec.  45.6(e) regulations 
for the designation of the legal entity identifier system. Current 
Sec.  45.6(e) enumerates the procedures for determining whether a legal 
entity identifier system meets the Commission's requirements and the 
procedures for designating the legal entity identifier system as the 
provider of legal entity identifiers to be used in all recordkeeping 
and all swap data reporting.
    The Commission adopted Sec.  45.6(e) before a global legal entity 
identifier system was developed. The Commission has participated in the 
Global Legal Entity Identifier System and the LEI ROC since their 
establishment in 2013, through which a functioning LEI system has been 
introduced, overseeing the issuance of LEIs by local operating units. 
The Commission preliminarily believes that deleting this current Sec.  
45.6(e) to remove the procedures for determining whether a legal entity 
identifier system meets the Commission's requirements and the 
procedures for designating the legal entity identifier system as the 
provider of legal entity identifiers to be used in all recordkeeping 
and all swap data reporting is now warranted because such determination 
and designation procedures are no longer needed due to the 
establishment of Global Legal Entity Identifier System.
7. Sec.  45.6(e)--Reference Data Reporting
    The Commission is proposing changes to the Sec.  45.6(e) 
regulations for LEI reference data reporting.\156\ First, the 
Commission is proposing to move the requirements for reporting LEI 
reference data in Sec.  45.6(e) to correctly-renumbered Sec.  45.5(c).
---------------------------------------------------------------------------

    \156\ This Sec.  45.6(e) was numbered in error, as there is 
already a Sec.  45.6(e) directly preceding it.
---------------------------------------------------------------------------

    Second, the Commission is proposing amendments to the requirements 
for reporting LEI reference data in current Sec.  45.6(e), proposed to 
be moved to Sec.  45.6(c). Current Sec.  45.6(e)(1) requires level one 
reference data for each counterparty to be reported via self-
registration, third-party registration, or both, and details the 
procedures for doing so, including the requirement to update level one 
reference data in the event of a change or discovery of the need for a 
correction. Current Sec.  45.6(e)(2) contains the requirement, once the 
Commission has determined the location of the level two reference 
database, for level two reference data for each counterparty to be 
reported via self-registration, third-party registration, or both, and 
the procedures for doing so, including the requirement to update level 
two reference data in the event of a change or discovery of the need 
for a correction.
    The Commission is proposing to remove the distinction between level 
one and level two reference data now found in Sec.  45.6(e). Instead, 
proposed new Sec.  45.6(c) would require that all reference data for 
each SEF, DCM, DCO, SDR, entity reporting pursuant to Sec.  45.9, and 
counterparty to any swap be reported via self-registration, third-party 
registration, or both, to a local operating unit in accordance with the 
standards set by the Global Legal Entity Identifier System. Proposed 
new Sec.  45.6(c) would retain the requirement in current Sec.  45.6(e) 
to update the reference data in the event of a change or discovery of 
the need for a correction.
    The Commission adopted Sec.  45.6(e) before a global legal entity 
identifier system was developed. The Commission

[[Page 21598]]

has participated in the Global Legal Entity Identifier System and the 
LEI ROC since their establishment in 2013, through which a functioning 
LEI system has been introduced that sets, and updates as needed, the 
standards governing the identification and relationship reference data 
required to be provided in order to obtain an LEI. The Commission 
preliminarily believes that removing Sec.  45.6(e) to remove the 
distinction between level one and level two reference data, and 
proposing a new Sec.  45.6(c) to require that all reference data is 
reported to a local operating unit in accordance with the standards set 
by the Global Legal Entity Identifier System is warranted because the 
establishment of Global Legal Entity Identifier System removes the role 
of individual authorities in determining the standards governing LEI 
reference data.
    While current Sec.  45.6(e) requires that reference data for only 
the counterparties to a swap be reported, the extension of the 
requirement to be identified in all recordkeeping and swap data 
reporting by a single LEI to all SEFs, DCMs, DCOs, entities reporting 
pursuant to Sec.  45.9, and SDRs described in section II.F.1 above also 
necessarily requires that all SEFs, DCMs, DCOs, entities reporting 
pursuant to Sec.  45.9, and SDRs report their LEI reference data.
    Therefore, in light of the above proposed amendments, Sec.  45.6(c) 
would require that LEI reference data regarding each SEF, DCM, DCO, 
SDR, entity reporting pursuant to Sec.  45.9, and counterparty to any 
swap shall be reported, by means of self-registration, third-party 
registration, or both, to a local operating unit in accordance with the 
standards set by the Global Legal Entity Identifier System. All 
subsequent changes and corrections to reference data previously 
reported would be reported, by means of self-registration, third-party 
registration, or both, to a local operating unit ASATP following 
occurrence of any such change or discovery of the need for a 
correction.
8. Sec.  45.6(f)--Use of the Legal Entity Identifier System by 
Registered Entities and Swap Counterparties
    The Commission is proposing changes to the Sec.  45.6(f) 
regulations for the use of LEIs by registered entities and swap 
counterparties. Current Sec.  45.6(f)(1) requires that when a legal 
entity identifier system has been designated by the Commission pursuant 
to Sec.  45.6(e), each registered entity and swap counterparty shall 
use the LEI provided by that system in all recordkeeping and swap data 
reporting pursuant to part 45. Current Sec.  45.6(f)(2) requires that 
before a legal entity identifier system has been designated by the 
Commission, each registered entity and swap counterparty shall use a 
substitute counterparty identifier created and assigned by an SDR in 
all recordkeeping and swap data reporting pursuant to part 45.\157\
---------------------------------------------------------------------------

    \157\ The requirements for the substitute identifier were set 
forth in Sec.  45.6(f)(2)(i) through (iv). As the Global Legal 
Entity Identifier System has been introduced that oversees the 
issuance of LEIs by local operating units, these requirements are no 
longer applicable, the Commission will limit the detail of their 
discussion in this release.
---------------------------------------------------------------------------

    Current Sec.  45.6(f)(3) requires that for swaps reported pursuant 
to part 45 prior to Commission designation of a legal entity identifier 
system, after such designation each SDR shall map the LEIs for the 
counterparties to the substitute counterparty identifiers in the record 
for each such swap. Current Sec.  45.6(f)(4) requires that prior to 
October 15, 2012, if an LEI has been designated by the Commission as 
provided in Sec.  45.6, but a reporting counterparty's automated 
systems are not yet prepared to include LEIs in recordkeeping and swap 
data reporting pursuant to part 45, the counterparty shall be excused 
from complying with Sec.  45.6(f)(1), and shall instead comply with 
Sec.  45.6(f)(2), until its automated systems are prepared with respect 
to LEIs, at which time it must commence compliance with Sec.  
45.6(f)(1).\158\
---------------------------------------------------------------------------

    \158\ The regulation specified that this paragraph would have no 
effect on or after October 15, 2012. 17 CFR 45.6(f)(4).
---------------------------------------------------------------------------

    The Commission is proposing to retitle the section ``Use of the 
legal entity identifier,'' because, as discussed below, the LEI will no 
longer be used only by registered entities and swap counterparties. The 
Commission is also proposing to move the requirements for the use of 
LEIs from current Sec.  45.6(f) to correctly renumbered Sec.  
45.6(d),\159\ as a result, the Commission's proposed amendments to the 
requirements for the use of LEIs in current Sec.  45.6(f) discussed 
below will be captured in new Sec.  45.6(d).
---------------------------------------------------------------------------

    \159\ As previously noted, current Sec.  45.6(c) was numbered in 
error because of the duplicate Sec.  45.6(b) sections.
---------------------------------------------------------------------------

    The Commission is proposing to remove the sections of Sec.  45.6(f) 
that are no longer operative, either because the Commission has 
designated a legal entity identifier system, or the provisions have 
expired. For these reasons, the Commission is proposing to remove Sec.  
45.6(f)(2) and (4). As a result, the substantive requirements of Sec.  
45.6(f)(2) and (4) will not be moved to Sec.  45.6(d).
    While the provisions of Sec.  45.6(f)(3) relating to substitute 
counterparty identifiers are no longer applicable for new swaps, the 
substantive requirements in Sec.  45.6(f)(3), which are still 
applicable for swaps previously reported pursuant to part 45 using 
substitute counterparty identifiers assigned by an SDR prior to 
Commission designation of a legal entity identifier system, will be 
moved to new Sec.  45.6(d)(4). Since this provision is applicable only 
to old swaps and does not alter existing SDRs obligations, the 
Commission considers this change to be non-substantive.
    The Commission is also proposing the following substantive changes 
to the regulations requiring the use of LEIs. First, the Commission is 
proposing revisions to the Sec.  45.6(f)(1) regulations for the use of 
LEIs. The revised regulations will be moved to Sec.  45.6(d)(1), but 
discussed below.
    The Commission proposes to delete the introductory clause ``[w]hen 
a legal entity identifier system has been designated by the Commission 
pursuant to paragraph (e) of this section'' in Sec.  45.6(f)(1) because 
it is no longer relevant due to the establishment of the Global Legal 
Entity Identifier System and the LEI ROC in 2013. In addition, while 
Sec.  45.6(f)(1) currently requires ``each registered entity and swap 
counterparty'' to use LEIs in all recordkeeping and swap data reporting 
pursuant to part 45, the Commission proposes to replace ``each 
registered entity and swap counterparty'' with ``[e]ach [SEF], [DCM], 
[DCO], [SDR], entity reporting pursuant to Sec.  45.9, and swap 
counterparty'' in order to, as described in section II.F.1 above, 
ensure consistency with the CDE Technical Guidance, allow for 
standardization in the identification in recordkeeping and swap data 
reporting, and encourage global swap data aggregation. The Commission 
also proposes to add ``to identify itself and swap counterparties'' 
immediately after ``use [LEIs]'' in this section to clarify the 
intended use of LEIs. Finally, the Commission proposes to add a new 
sentence in this section to clarify that if a swap counterparty is not 
eligible to receive an LEI, such counterparty should be identified in 
with an alternate identifier pursuant to Sec.  45.13(a). Because some 
counterparties, including many individuals, are currently ineligible to 
receive an LEI based on the standards of the Global Legal Entity 
Identifier System, the Commission believes that this sentence will 
provide clarity as to how LEI-ineligible counterparties should be 
identified.
    Second, the Commission is proposing new Sec.  45.6(d)(2) to require 
each SD, MSP, SEF, DCM, DCO, and SDR to maintain and renew its LEI in 
accordance with the standards set by the Global Legal Entity Identifier 
System.

[[Page 21599]]

Current Sec.  45.6(e) requires that reference data be updated in the 
event of a change or discovery of the need for a correction, which will 
continue to be required under new Sec.  45.6(c).
    Pursuant to the Global Legal Entity Identifier System, established 
in 2013, a person or entity is issued an LEI after: (1) Providing its 
identification and relationship reference data to a local operating 
unit and (2) paying a fee, currently as low as approximately $65, to 
the local operating unit to validate the provided reference data. After 
initial issuance, an LEI holder is asked to certify the continuing 
accuracy of, or provide updates to, its reference data annually, and 
pay a fee, currently as low as approximately $50, to the local 
operating unit. LEIs that are not renewed annually are marked as 
lapsed. Section 45.6 does not currently require annual LEI renewal 
because part 45 was drafted and implemented prior to the establishment 
of the Global Legal Entity Identifier System. Since the implementation 
of Sec.  45.6, the Commission has received consistent feedback from 
certain market participants and industry groups that the Commission 
should require at least some LEI holders to annually renew their LEIs.
    The Commission is aware that some LEI holders have not complied 
with the continuing requirement to update reference data as currently 
required by Sec.  45.6(e), and imposing an annual renewal requirement 
may increase the accuracy of their reference data. The Commission also 
recognizes that other LEI holders are in compliance with the continuing 
requirement to update reference data, and imposing an annual renewal 
requirement may impose costs on those LEI holders without necessarily 
increasing the accuracy of their reference data. The Commission has 
participated in the Global Legal Entity Identifier System since its 
inception, and values the functionality of the LEI reference data 
collected, including the introduction of level two reference data.
    The Commission considers the activities of SDs, MSPs, SEFs, DCMs, 
DCOs, and SDRs to have the most systemic impact affecting the 
Commission's ability to fulfill its regulatory mandates and, in light 
of the introduction of LEI level two reference data, the Commission 
preliminarily believes that requiring each SD, MSP, SEF, DCM, DCO, and 
SDR to maintain and renew its LEI in accordance with the standards set 
by the Global Legal Entity Identifier System in new Sec.  45.6(d)(2) 
strikes the appropriate balance between the Commission's interest in 
accurate LEI reference data and cost to LEI holders.
    Third, the Commission proposes a new Sec.  45.6(d)(3) that would 
obligate each DCO and each financial entity reporting counterparty 
executing a swap with a counterparty that does not have an LEI but is 
eligible for one to cause, prior to reporting any required swap 
creation data for such swap, an LEI to be assigned to the counterparty, 
including if necessary, through third-party registration.
    The Commission is aware that some counterparties currently have not 
obtained an LEI. While proposed amendments to Sec.  45.6 discussed 
above clarify that a counterparty required to be identified with an LEI 
in swap data reporting also has an associated affirmative requirement 
to obtain an LEI, the Commission anticipates that a small percentage of 
counterparties nonetheless will not have obtained an LEI before 
executing a swap. Swap data that does not identify eligible 
counterparties with an LEI hinders the Commission's fulfillment of its 
regulatory mandates, including monitoring systemic risk, market 
monitoring, and market abuse prevention. The Commission preliminarily 
believes that proposing new Sec.  45.6(d)(3) to require each DCO and 
each financial entity reporting counterparty executing a swap with a 
counterparty that does not have an LEI to cause an LEI to be assigned 
to the non-reporting counterparty will further the objective of 
identifying each counterparty to a swap with an LEI.
    New Sec.  45.6(d)(3) would not prescribe the initial manner in 
which a DCO or financial entity reporting counterparty causes an LEI to 
be assigned to the non-reporting counterparty, though if initial 
efforts are unsuccessful, new Sec.  45.6(d)(3) requires the DCO or 
financial entity reporting counterparty to obtain an LEI for the non-
reporting counterparty. The Commission preliminarily believes that 
having a DCO or financial entity reporting counterparty serving as a 
backstop under new Sec.  45.6(d)(3) to ensure the identification of the 
non-reporting counterparty with an LEI is appropriate because: (i) Each 
DCO and financial entity reporting counterparty already has obtained, 
via its ``know your customer'' and anti-money laundering compliance 
processes, all identification and relationship reference data of the 
non-reporting counterparty required by a local operating unit to issue 
an LEI for the non-reporting counterparty; (ii) multiple local 
operating units offer expedited issuance of LEI in sufficient time to 
allow reporting counterparties to meet their new extended deadline in 
Sec.  45.3(a) through (b) for reporting required swap creation data; 
and (iii) the Commission anticipates that third-party registration in 
these instances will be infrequent, as the Commission expects most non-
reporting counterparties to be mindful of their direct obligation to 
obtain their own LEIs pursuant to Sec.  45.6.\160\
---------------------------------------------------------------------------

    \160\ ESMA also issued temporary relief to investment firms 
transacting with a client without an LEI on the condition that they 
``[obtain] the necessary documentation from this client to apply for 
an LEI code on his behalf,'' available at https://www.esma.europa.eu/press-news/esma-news/esma-issues-statement-lei-implementation-under-mifid-ii.
---------------------------------------------------------------------------

    Therefore, in light of the above proposed amendments, Sec.  
45.6(d)(1) would require that each SEF, DCM, DCO, SDR, entity reporting 
pursuant to Sec.  45.9, and swap counterparty use an LEI to identify 
itself and swap counterparties in all recordkeeping and all swap data 
reporting pursuant to part 45. If a swap counterparty is not eligible 
to receive an LEI as determined by the Global Legal Entity Identifier 
System, such counterparty would be identified in all recordkeeping and 
all swap data reporting pursuant to part 45 with an alternate 
identifier as prescribed by the Commission pursuant to Sec.  45.13(a).
    Proposed Sec.  45.6(d)(2) would provide that each SD, MSP, SEF, 
DCM, DCO, and SDR shall maintain and renew its LEI in accordance with 
the standards set by the Global Legal Entity Identifier System. 
Proposed Sec.  45.6(d)(3) would require that each DCO and each 
financial entity reporting counterparty executing a swap with a 
counterparty that is eligible to receive an LEI, but has not been 
assigned an LEI, prior to reporting any required swap creation data for 
such swap, cause an LEI to be assigned to the counterparty, including 
if necessary, through third-party registration.
    Proposed Sec.  45.6(d)(4) would require that for swaps previously 
reported pursuant to part 45 using substitute counterparty identifiers 
assigned by an SDR prior to Commission designation of an LEI system, 
each SDR map the LEIs for the counterparties to the substitute 
counterparty identifiers in the record for each such swap.
Request for Comment
    The Commission requests comment on all aspects of the proposed 
changes to Sec.  45.6. The Commission also invites specific comment on 
the following:
    (8) Should the Commission expand requiring LEIs to be renewed 
annually beyond SDs, MSPs, SEFs, DCMs, DCOs, and SDRs? Please explain 
why or why

[[Page 21600]]

not, including specification of any material costs or benefits.
    (9) Are there other ways to ensure that an LEI is obtained and 
reported for a counterparty without an LEI, but is eligible for an LEI, 
other than each DCO and each financial entity reporting counterparty 
potentially being required to obtain an LEI on behalf of the 
counterparty through third-party registration?

G. Sec.  45.8 \161\--Determination of Which Counterparty Shall Report
---------------------------------------------------------------------------

    \161\ The Commission is proposing minor, non-substantive 
amendments to Sec.  45.7.
---------------------------------------------------------------------------

    The Commission is proposing to amend the introductory text to the 
Sec.  45.8 reporting counterparty determination regulations. The 
current introductory text states that determination of which 
counterparty is the reporting counterparty for all swaps, except 
clearing swaps, shall be made as provided in Sec.  45.8(a) through (h), 
and that the determination of which counterparty is the reporting 
counterparty for all clearing swaps shall be made as provided in Sec.  
45.8(i).
    The Commission believes that much of the introductory text is 
superfluous, given that the scope of what Sec.  45.8 covers is clear 
from the operative provisions of Sec.  45.8. The Commission is 
proposing to amend the introductory text to Sec.  45.8 to state that 
the determination of which counterparty is the reporting counterparty 
for each swap shall be made as provided in Sec.  45.8.

H. Sec.  45.10 \162\--Reporting to a Single SDR
---------------------------------------------------------------------------

    \162\ The Commission is proposing minor, non-substantive 
amendments to Sec.  45.9.
---------------------------------------------------------------------------

    The Commission is proposing to revise the Sec.  45.10 regulations 
for reporting swap data to a single SDR. As part of these revisions, 
the Commission is proposing to amend and remove current regulations, 
and add new regulations to Sec.  45.10. In particular, new Sec.  
45.10(d) would permit reporting counterparties to change the SDR to 
which they report swap data and swap transaction and pricing data.
1. Introductory Text
    The Commission is proposing to amend the introductory text to the 
Sec.  45.10 regulations for reporting to a single SDR. The current 
introductory text states that all swap data for a given swap, which 
shall include all swap data required to be reported pursuant to parts 
43 and 45, must be reported to a single SDR, which shall be the SDR to 
which the first report of required swap creation data is made pursuant 
to part 45.
    First, the Commission is proposing to remove the reference to parts 
43 and 45. In its place, the Commission is proposing to clarify in the 
beginning of the introductory text that all ``swap transaction and 
pricing data and swap data'' (both terms that the Commission proposes 
to newly define and add to Sec.  45.1(a)) \163\ for a given swap must 
be reported. As newly defined, ``swap transaction and pricing data'' 
and ``swap data'' would expressly refer, respectively, to data subject 
to part 43 and part 45, making the current Sec.  45.10 introductory 
text's express reference to the two parts redundant.
---------------------------------------------------------------------------

    \163\ The Commission's proposed addition of defined terms for 
``swap data'' and ``swap transaction and pricing data'' to Sec.  
45.1(a) is discussed in section II.A.1 above.
---------------------------------------------------------------------------

    Second, the Commission is proposing to add a qualifier to the end 
of the introductory text. The qualifier would specify that all swap 
data and swap transaction and pricing data for a swap must be reported 
to a single SDR ``unless the reporting counterparty changes the [SDR] 
to which such data is reported'' pursuant to the new regulations 
proposed in Sec.  45.10(d). New Sec.  45.10(d) would permit reporting 
counterparties to change the SDR to which they report swap data and 
swap transaction and pricing data.\164\
---------------------------------------------------------------------------

    \164\ New Sec.  45.10(d) is discussed in section II.H.5 below.
---------------------------------------------------------------------------

    Finally, the Commission is proposing ministerial language 
amendments in the introductory text to improve readability.
    Therefore, the introductory text to Sec.  45.10 would state that 
all swap transaction and pricing data and swap data for a given swap 
shall be reported to a single SDR, which shall be the SDR to which the 
first report of such data is made, unless the reporting counterparty 
changes the SDR to which such data is reported pursuant to Sec.  
45.10(d).

2. Sec.  45.10(a)--Swaps Executed on or Pursuant to the Rules of a SEF 
or DCM

    The Commission is proposing to amend the Sec.  45.10(a) regulations 
for reporting swaps executed on or pursuant to the rules of a SEF or 
DCM to a single SDR. Current Sec.  45.10(a) requires that to ensure 
that all swap data, including all swap data required to be reported 
pursuant to parts 43 and 45, for a swap executed on or pursuant to the 
rules of a SEF or DCM is reported to a single SDR: (i) The SEF or DCM 
that reports required swap creation data as required by Sec.  45.3 
shall report all such data to a single SDR, and ASATP after execution 
shall transmit to both counterparties to the swap, and to any DCO, the 
identity of the SDR and the USI for the swap; and (ii) thereafter, all 
required swap creation data and all required swap continuation data 
reported for the swap reported by any registered entity or counterparty 
shall be reported to that same SDR (or to its successor in the event 
that it ceases to operate, as provided in part 49).
    First, the Commission is proposing to remove the phrase ``(or to 
its successor in the event that it ceases to operate, as provided in 
part 49)'' in Sec.  45.10(a)(2). This phrase would no longer be 
necessary with the proposed regulations in Sec.  49.10(d) that would 
permit reporting counterparties to change SDRs.\165\
---------------------------------------------------------------------------

    \165\ Id.
---------------------------------------------------------------------------

    Second, the Commission is proposing to update all references to 
swap data throughout Sec.  45.10(a). The Commission is proposing to 
replace all references to ``swap data'' with all ``swap transaction and 
pricing data and swap data.''
    Third, the Commission is proposing to remove Sec.  45.10(a)(1)(ii). 
As discussed above, Sec.  45.10(a)(1)(ii) requires SEFs and DCMs to 
transmit the USI to both counterparties to the swap, and to any DCO. 
This requirement is already located in Sec.  45.5(a)(2). Since the 
Commission is proposing to remove Sec.  45.10(a)(1)(ii), the Commission 
is also proposing to combine the text of Sec.  45.10(a) and (a)(i) into 
a single provision in Sec.  45.10(a).
    Finally, the Commission is proposing to add the qualifier to the 
end of Sec.  45.10(a)(2) that all swap data and swap transaction and 
pricing data for a swap must be reported to a single SDR ``unless the 
reporting counterparty changes the [SDR] to which such data is 
reported'' pursuant to the new regulations proposed in Sec.  45.10(d). 
New Sec.  45.10(d) would permit reporting counterparties to change the 
SDR to which they report swap data and swap transaction and pricing 
data.\166\
---------------------------------------------------------------------------

    \166\ Id.
---------------------------------------------------------------------------

    Therefore, Sec.  45.10(a) would require that to ensure that all 
swap transaction and pricing data and swap data for a swap executed on 
or pursuant to the rules of a SEF or DCM is reported to a single SDR: 
(i) The SEF or DCM shall report all swap transaction and pricing data 
and required swap creation data for a swap to a single SDR, and ASATP 
after execution of the swap shall transmit to both counterparties to 
the swap, and to any DCO, the identity of the SDR to which such data is 
reported; and (ii) thereafter, all swap transaction and pricing data, 
required swap creation data, and required swap continuation data for 
the swap shall be reported to that same SDR, unless the reporting 
counterparty changes the SDR to which

[[Page 21601]]

such data is reported pursuant to Sec.  45.10(d).
3. Sec.  45.10(b)--Off-Facility Swaps With an SD or MSP Reporting 
Counterparty
    The Commission is proposing to amend the Sec.  45.10(b) regulations 
for reporting swaps executed off-facility with an SD/MSP reporting 
counterparty to a single SDR. Section 45.10(b)(1) requires that to 
ensure that all swap data, including all swap data required to be 
reported pursuant to parts 43 and 45, for off-facility swaps with an SD 
or MSP reporting counterparty is reported to a single SDR: (i) If the 
reporting counterparty reports PET data to an SDR as required by Sec.  
45.3, the reporting counterparty shall report PET data to a single SDR 
and ASATP after execution, but no later than as required pursuant to 
Sec.  45.3, shall transmit to the other counterparty to the swap both 
the identity of the SDR to which PET data is reported by the reporting 
counterparty, and the USI for the swap created pursuant to Sec.  45.5; 
and (ii) if the swap will be cleared, the reporting counterparty shall 
transmit to the DCO at the time the swap is submitted for clearing both 
the identity of the SDR to which PET data is reported by the reporting 
counterparty, and the USI for the swap created pursuant to Sec.  45.5.
    Thereafter, Sec.  45.10(b)(2) requires that all required swap 
creation data and all required swap continuation data reported for the 
swap, by any registered entity or counterparty, shall be reported to 
the SDR to which swap data has been reported pursuant to Sec.  
45.10(b)(1) or (2) (or to its successor in the event that it ceases to 
operate, as provided in part 49).
    First, the Commission is proposing to combine the requirements for 
SD/MSP reporting counterparties in Sec.  45.10(b) for off-facility 
swaps with the requirements for non-SD/MSP reporting counterparties in 
Sec.  45.10(c) for off-facility swaps. Revised Sec.  45.10(b) would be 
retitled ``Off-facility swaps that are not clearing swaps.'' The 
Commission believes that the requirements for SD/MSP reporting 
counterparties and non-SD/MSP reporting counterparties could be 
combined to simplify the regulations in Sec.  45.10. The requirements 
of current Sec.  45.10(c) are discussed in section II.H.4 below.
    Second, the Commission is proposing to remove the phrase ``(or to 
its successor in the event that it ceases to operate, as provided in 
part 49)'' from Sec.  45.10(b)(2). This phrase would no longer be 
necessary with the proposed regulations in Sec.  49.10(d) that would 
permit reporting counterparties to change SDRs.
    Third, the Commission is proposing to update all references to swap 
data throughout Sec.  45.10(b). The Commission is proposing to replace 
all references to ``swap data'' with all ``swap transaction and pricing 
data and swap data.''
    Fourth, the Commission is proposing to remove Sec.  45.10(b)(1). 
Current Sec.  45.10(b) contains the condition that Sec.  45.10(b)(1)(i) 
through (iii) apply ``[i]f the reporting counterparty reports [PET 
data] to a [SDR] as required by Sec.  45.3.'' This condition is 
unnecessary, as all reporting counterparties must report required swap 
creation data to an SDR pursuant to Sec.  45.3 for off-facility swaps. 
As a result, the Commission is proposing to remove Sec.  45.10(b)(1) 
and combine and move the regulations in Sec.  45.10(b)(1)(i) through 
(iii) into Sec.  45.10(b)(1).
    Fifth, the Commission is proposing to remove the requirement in 
current Sec.  45.10(b)(1)(ii) for the reporting counterparty to 
transmit the USI to the non-reporting counterparty to the swap. This 
requirement is already located in Sec.  45.5(b)(2) and (c)(2), 
depending on the type of counterparty.
    Finally, the Commission is proposing to add the qualifier to the 
end of Sec.  45.10(b)(2) that all swap data and swap transaction and 
pricing data for a swap must be reported to a single SDR ``unless the 
reporting counterparty changes the [SDR] to which such data is 
reported'' pursuant to the new regulations proposed in Sec.  45.10(d). 
New Sec.  45.10(d) would permit reporting counterparties to change the 
SDR to which they report swap data and swap transaction and pricing 
data.\167\
---------------------------------------------------------------------------

    \167\ New Sec.  45.10(d) is discussed in section II.H.5 below.
---------------------------------------------------------------------------

    Therefore, proposed Sec.  45.10(b)(1) would require that to ensure 
that all swap transaction and pricing data and swap data for an off-
facility swap that is not a clearing swap is reported to a single SDR: 
(i) The reporting counterparty shall report all swap transaction and 
pricing data and required swap creation data to an SDR, and ASATP after 
execution, shall transmit to the other counterparty to the swap, and to 
any DCO that will clear the swap, the identity of the SDR to which such 
data is reported. Thereafter, proposed Sec.  45.10(b)(2) would require 
that all swap transaction and pricing data, required swap creation 
data, and required swap continuation data for the swap shall be 
reported to the same SDR, unless the reporting counterparty changes the 
SDR to which such data is reported pursuant to Sec.  45.10(d).
4. Sec.  45.10(c)--Off-Facility Swaps With a Non-SD/MSP Reporting 
Counterparty
    As discussed in section II.H.3 above, the Commission is proposing 
to move the Sec.  45.10(c) requirements for non-SD/MSP reporting 
counterparties to report off-facility swaps to a single SDR to revised 
Sec.  45.10(b). The requirements in current Sec.  45.10(b) and (c) 
would be combined to create revised Sec.  45.10(b), which would contain 
the requirements for reporting counterparties to report off-facility 
swaps that are not clearing swaps. As a result, the Commission is 
proposing to move the requirements in current Sec.  45.10(d) to Sec.  
45.10(c). The requirements of current Sec.  45.10(d) are discussed in 
the following section II.H.5.
    Current Sec.  45.10(c)(1) requires that to ensure that all swap 
data, including all swap data required to be reported pursuant to parts 
43 and 45, for such swaps is reported to a single SDR: (i) If the 
reporting counterparty reports PET data to an SDR as required by Sec.  
45.3, the reporting counterparty reports PET data to a single SDR, and 
ASATP after execution, but no later than as required pursuant to Sec.  
45.3, the reporting counterparty shall transmit to the other 
counterparty to the swap the identity of the SDR to which PET data was 
reported by the reporting counterparty; and (ii) if the swap will be 
cleared, the reporting counterparty shall transmit to the DCO at the 
time the swap is submitted for clearing the identity of the SDR to 
which PET data was reported by the reporting counterparty.
    Current Sec.  45.10(c)(2) requires that the SDR to which the swap 
is reported as provided in Sec.  45.10(c) shall transmit the USI 
created pursuant to Sec.  45.5 to both counterparties and to any DCO, 
ASATP after creation of the USI. Thereafter, Sec.  45.10(c)(3) requires 
that all required swap creation data and all required swap continuation 
data reported for the swap, by any registered entity or counterparty, 
shall be reported to the SDR to which swap data has been reported 
pursuant to Sec.  45.10(c)(1) (or to its successor in the event that it 
ceases to operate, as provided in part 49 of the Commission's 
regulations).
    As discussed above, the Commission preliminarily believes that the 
requirements for SD/MSP reporting counterparties and non-SD/MSP 
reporting counterparties are nearly identical. Therefore, the 
Commission is proposing to move the requirements for non-SD/MSP 
reporting counterparties to revised Sec.  45.10(b). The discussion of 
Sec.  45.10(b), including the Commission's proposed revisions to the 
new combined

[[Page 21602]]

section, are discussed in section II.H.3 above.
5. Sec.  45.10(d)--Clearing Swaps
    As discussed above, the Commission is proposing to move the 
requirements for reporting clearing swaps to a single SDR from Sec.  
45.10(d) to Sec.  45.10(c). As proposed, newly re-designated Sec.  
45.10(c) also would amend the current requirements for reporting 
clearing swaps to a single SDR now located in Sec.  45.10(d). The 
Commission is proposing to replace current Sec.  45.10(d) with new 
requirements for reporting counterparties to change SDRs. Below is a 
discussion of the proposed amendments to the regulatory requirements 
for reporting clearing swaps to a single SDR in newly re-designated 
Sec.  45.10(c) (currently Sec.  45.10(d)), followed by a discussion of 
the new regulations permitting reporting counterparties to change SDRs.
a. Amendments to Current Sec.  45.10(d) (Re-Designated as Sec.  
45.10(c))
    Current Sec.  45.10(d)(1) requires that to ensure that all swap 
data for a given clearing swap, and for clearing swaps that replace a 
particular original swap or that are created upon execution of the same 
transaction and that do not replace an original swap, is reported to a 
single SDR: The DCO that is a counterparty to such clearing swap shall 
report all required swap creation data for that clearing swap to a 
single SDR, and ASATP after acceptance of an original swap by a DCO for 
clearing or execution of a clearing swap that does not replace an 
original swap, the DCO shall transmit to the counterparty to each 
clearing swap the LEI of the SDR to which the DCO reported the required 
swap creation data for that clearing swap.
    Thereafter, Sec.  45.10(d)(2) requires that all required swap 
creation data and all required swap continuation data reported for that 
clearing swap shall be reported by the DCO to the SDR to which swap 
data has been reported pursuant to Sec.  45.10(d)(1) (or to its 
successor in the event that it ceases to operate, as provided in part 
49). Current Sec.  45.10(d)(3) requires that for clearing swaps that 
replace a particular original swap, and for equal and opposite clearing 
swaps that are created upon execution of the same transaction and that 
do not replace an original swap, the DCO shall report all required swap 
creation data and all required swap continuation data for such clearing 
swaps to a single SDR.
    As proposed, newly re-designated Sec.  45.10(c) would include 
several amendments to the requirements now found in Sec.  45.10(d). 
First, the Commission is proposing to remove the phrase ``(or to its 
successor in the event that it ceases to operate, as provided in part 
49)'' as now used in Sec.  45.10(d)(2) from re-designated Sec.  
49.10(c)(2). This phrase would no longer be necessary with the proposed 
regulations in new Sec.  49.10(d) that would permit reporting 
counterparties to change SDRs.
    Second, the Commission is proposing in re-designated Sec.  45.10(c) 
to update all references to swap data now found throughout Sec.  
45.10(d). The Commission is proposing to replace all references to 
``swap data'' with all ``swap transaction and pricing data and swap 
data.''
    Third, the Commission is proposing in re-designated Sec.  
45.10(c)(2) to add the following qualifier to the requirement now found 
in Sec.  45.10(d)(2) for reporting all swap data and swap transaction 
and pricing data for a swap to a single SDR: ``unless the reporting 
counterparty changes the [SDR] to which such data is reported'' 
pursuant to the new regulations proposed in Sec.  45.10(d). Finally, 
the Commission is also proposing numerous language edits to improve 
readability, and to update certain cross-references.
    Therefore, Sec.  45.10(c)(1) would require that to ensure that all 
swap transaction and pricing data and swap data for a given clearing 
swap, including clearing swaps that replace a particular original swap 
or that are created upon execution of the same transaction and that do 
not replace an original swap, is reported to a single SDR: (i) The DCO 
that is a counterparty to such clearing swap report all swap 
transaction and pricing data and required swap creation data for that 
clearing swap to a single SDR; and (ii) ASATP after acceptance of an 
original swap for clearing, or execution of a clearing swap that does 
not replace an original swap, the DCO transmit to the counterparty to 
each clearing swap the identity of the SDR to which such data is 
reported.
    Thereafter, Sec.  45.10(c)(2) would require that all swap 
transaction and pricing data, required swap creation data and required 
swap continuation data for that clearing swap shall be reported by the 
DCO to the same SDR to which swap data has been reported pursuant to 
Sec.  45.10(c)(1), unless the reporting counterparty changes the SDR to 
which such data is reported pursuant to Sec.  45.10(d).
    Proposed Sec.  45.10(c)(3) would require that for clearing swaps 
that replace a particular original swap, and for equal and opposite 
clearing swaps that are created upon execution of the same transaction 
and that do not replace an original swap, the DCO report all swap 
transaction and pricing data, required swap creation data, and required 
swap continuation data for such clearing swaps to a single SDR.
b. New Regulations for Changing SDRs
    The Commission is proposing new regulations in Sec.  45.10(d) to 
permit reporting counterparties to change the SDR to which they report 
swap data and swap transaction and pricing data. Current Sec.  45.10 
provides that all swaps must be reported to a ``single [SDR].'' \168\
---------------------------------------------------------------------------

    \168\ 17 CFR 45.10(a) through (d).
---------------------------------------------------------------------------

    As background, when the Commission adopted Sec.  45.10 in 2012, it 
believed that regulators' ability to see necessary information 
concerning swaps could be impeded if data concerning a swap was spread 
over multiple SDRs.\169\ However, since then: (i) The Commission has 
come to recognize that swap data from different SDRs can be aggregated 
and made available for Commission analysis and (ii) the Commission has 
received requests to permit reporting counterparties to change 
SDRs.\170\
---------------------------------------------------------------------------

    \169\ Swap Data Recordkeeping and Reporting Requirements, 77 FR 
2136, 2168.
    \170\ See, e.g., Joint SDR Letter at 15.
---------------------------------------------------------------------------

    However, the ability to change SDRs cannot frustrate the 
Commission's ability to use swap data due to duplicative swap reports 
housed at multiple SDRs. Therefore, the Commission is proposing to 
permit reporting to change SDRs, subject to certain procedures 
described below to ensure swaps are properly transferred between SDRs.
    The Commission is proposing new regulations in Sec.  45.10(d), 
titled ``Change of [SDR] for swap transaction and pricing data and swap 
data reporting.'' The introductory text to Sec.  45.10(d) would state 
that a reporting counterparty may change the SDR to which swap 
transaction and pricing data and swap data is reported as set forth in 
this Sec.  45.10(d).
    Proposed Sec.  45.10(d)(1) would require that at least five 
business days prior to changing the SDR to which the reporting 
counterparty reports swap transaction and pricing data and swap data 
for a swap, the reporting counterparty shall provide notice of such 
change to the other counterparty to the swap, the SDR to which swap 
transaction and pricing data and swap data is currently reported, and 
the SDR to which swap transaction and pricing data and swap data will 
be reported going forward. Such notification would include the UTI of 
the swap and the date on which the reporting counterparty will begin 
reporting such

[[Page 21603]]

swap transaction and pricing data and swap data to a different SDR.
    Proposed Sec.  45.10(d)(2) would require that after providing 
notification, the reporting counterparty shall: (i) Report the change 
of SDR to the SDR to which the reporting counterparty is currently 
reporting swap transaction and pricing data and swap data as a life 
cycle event for such swap pursuant to Sec.  45.4; (ii) on the same day 
that the reporting counterparty reports required swap continuation data 
as required by Sec.  45.10(d)(2)(i), the reporting counterparty shall 
also report the change of SDR to the SDR to which swap transaction and 
pricing data and swap data will be reported going forward, as a life 
cycle event for such swap pursuant to Sec.  45.4, and the report shall 
identify the swap using the same UTI used to identify the swap at the 
previous SDR; (iii) thereafter, all swap transaction and pricing data, 
required swap creation data, and required swap continuation data for 
the swap shall be reported to the same SDR, unless the reporting 
counterparty for the swap makes another change to the SDR to which such 
data is reported pursuant to Sec.  45.10(d).
Request for Comment
    The Commission requests comment on all aspects of the proposed 
changes to Sec.  45.10. The Commission also invites specific comment on 
the following:
    (10) Would the Commission's proposal to permit reporting 
counterparties to change SDRs raise any operational issues for 
reporting counterparties, SDRs, or non-reporting counterparties?
    (11) Should the Commission adopt additional requirements to ensure 
that a reporting counterparty's choice to change SDRs does not result 
in the loss of any data or information?

I. Sec.  45.11--Data Reporting for Swaps in a Swap Asset Class Not 
Accepted by Any SDR

    The Commission is proposing non-substantive amendments to the Sec.  
45.11 regulations for reporting swaps in an asset class not accepted by 
any SDR. Current Sec.  45.11(a) requires that should there be a swap 
asset class for which no SDR registered with the Commission currently 
accepts swap data, each registered entity or counterparty required by 
part 45 to report any required swap creation data or required swap 
continuation data with respect to a swap in that asset class must 
report that same data to the Commission.
    For instance, the Commission is proposing to remove the phrase 
``registered with the Commission'' following the term SDR. The 
Commission believes this phrase could create confusion, as the three 
SDRs are provisionally registered with the Commission pursuant to Sec.  
49.4(b). The Commission also believes this phrase is unnecessary, as 
provisionally registered SDRs and fully registered SDRs are subject to 
the same requirements in the CEA and the Commission's regulations. The 
Commission is also proposing to replace ``each registered entity or 
counterparty'' with SEFs, DCMs, and DCOs, and the term ``reporting 
counterparty.'' The list of entities would be more precise.
    Therefore, proposed Sec.  45.11(a) would require that should there 
be a swap asset class for which no SDR registered currently accepts 
swap data, each SEF, DCM, DCO, or reporting counterparty required by 
part 45 to report any required swap creation data or required swap 
continuation data with respect to a swap in that asset class shall 
report that same data to the Commission.
    Current Sec.  45.11(c) and (d) contain a delegation of authority to 
the Chief Information Officer of the Commission concerning the 
requirements in Sec.  45.11(a) and (b). The Commission is proposing to 
move this delegation to a new section, Sec.  45.15, specifically for 
delegations of authority. This delegation of authority, including the 
Commission's proposed amendments to it, is discussed in section II.L 
below.
Request for Comment
    The Commission requests comment on all aspects of the proposed 
changes to Sec.  45.11.

J. Sec.  45.12--Voluntary Supplemental Reporting

    The Commission is proposing to remove the Sec.  45.12 regulations 
for voluntary supplemental reporting from part 45. Current Sec.  45.12 
permits the submission of voluntary supplemental swap data reports by 
swap counterparties.\171\ Voluntary supplemental swap data reports are 
defined as ``any report of swap data to a [SDR] that is not required to 
be made pursuant to [part 45] or any other part in this chapter.'' 
\172\
---------------------------------------------------------------------------

    \171\ 17 CFR 45.12(b) through (e). Current Sec.  45.12(d) 
requires that voluntary supplemental reports contain an indication 
the report is voluntary, a USI, the identity of the SDR to which 
required swap creation data and required swap continuation data were 
reported, if different from the SDR to which the voluntary 
supplemental report was reported, the LEI of the counterparty making 
the voluntary supplemental report, and an indication the report is 
made pursuant to laws of another jurisdiction, if applicable.
    \172\ 17 CFR 45.12(a).
---------------------------------------------------------------------------

    As background, when the Commission adopted Sec.  45.12 in 2012, it 
believed that voluntary supplemental reporting could have benefits for 
data accuracy and counterparty business processes, especially for 
counterparties that were not the reporting counterparty to a swap.\173\ 
The Commission recognized that Sec.  45.12 would lead to the submission 
of duplicative reports for the same swap.\174\ In response, the 
Commission believed that requiring an indication that voluntary 
supplemental reports were voluntary would help prevent double-counting 
of the same swaps within SDRs.\175\
---------------------------------------------------------------------------

    \173\ Swap Data Recordkeeping and Reporting Requirements, 77 FR 
2136, 2169.
    \174\ Id.
    \175\ Id.
---------------------------------------------------------------------------

    In practice, the Commission is concerned that these reports 
compromise data quality and provide no clear regulatory benefit. In 
analyzing reports that have been marked as ``voluntary reports,'' it is 
not immediately apparent to the Commission why reporting parties mark 
them as being voluntary. In some cases, it appears these reports can be 
related to products outside the Commission's jurisdiction. The 
Commission believes it should not accept duplicative or non-
jurisdictional reports at the expense of the CFTC's technical and 
staffing resources with no clear regulatory benefit.
    The Commission adopted Sec.  45.12 in 2012 without the benefit of 
having swap data available to consider the practical implications of 
Sec.  45.12. However, after years of use by Commission staff, the 
Commission now believes that Sec.  45.12 has led to swap data reporting 
that inhibits the Commission's use of the swap data. Therefore, the 
Commission is proposing to eliminate the Sec.  45.12 regulations for 
voluntary supplemental reporting.
Request for Comment
    The Commission requests comment on all aspects of the proposed 
changes to Sec.  45.12.

K. Sec.  45.13--Required Data Standards

1. Sec.  45.13(a)--Data Maintained and Furnished to the Commission by 
SDRs
    The Commission is proposing to revise the Sec.  45.13(a) 
regulations for data maintained and furnished to the Commission by 
SDRs. As part of these revisions, the Commission is proposing to remove 
and replace Sec.  45.13(a)'s current language, including by moving 
current Sec.  45.13(b) to amended Sec.  45.13(a)(3). Current Sec.  
45.13(a) requires that each SDR maintain all swap data

[[Page 21604]]

reported to it in a format acceptable to the Commission, and transmit 
all swap data requested by the Commission to the Commission in an 
electronic file in a format acceptable to the Commission.
    The 2019 Part 49 NPRM proposed moving the requirements of Sec.  
45.13(a) to Sec.  49.17(c).\176\ Proposed amended Sec.  49.17(c) would 
contain the requirements for SDRs to provide Commission access to swap 
data.\177\ The Commission did not propose corresponding modifications 
to current Sec.  45.13 in that release.\178\ Therefore, the Commission 
is now proposing to amend Sec.  45.13(a) by removing language that the 
2019 Part 49 NPRM proposed for incorporation in Sec.  49.17(c). The 
revisions to Sec.  45.13(b), proposed to be moved to Sec.  45.13(a)(3), 
are discussed in the following section.
---------------------------------------------------------------------------

    \176\ 2019 Part 49 NPRM at 21060.
    \177\ Id.
    \178\ Id. at 21060 n.132 (noting the Commission's expectation to 
modify Sec.  45.13 in a subsequent Roadmap rulemaking).
---------------------------------------------------------------------------

    Proposed Sec.  45.13(a)(1) would require that in reporting required 
swap creation data and required swap continuation data to an SDR, each 
reporting counterparty, SEF, DCM, and DCO, shall report the swap data 
elements in appendix 1 in the form and manner provided in the technical 
specifications published by the Commission.
    Proposed Sec.  45.13(a)(2) would require that in reporting required 
swap creation data and required swap continuation data to an SDR, each 
reporting counterparty, SEF, DCM, and DCO making such report satisfy 
the swap data validation procedures of the SDR receiving the swap data. 
The Commission is proposing companion requirements for SDRs to validate 
swap data in Sec.  49.10. The proposed validation requirements for SDRs 
in Sec.  49.10 are discussed in section IV.C below. Proposed Sec.  
45.13(a)(2) would establish the regulatory requirement for reporting 
counterparties, SEFs, DCMs, and DCOs to satisfy the data validation 
procedures established by SDRs pursuant to Sec.  49.10. The Commission 
is also proposing to specify the requirements for the validation 
messages in Sec.  45.13(b). These requirements are discussed in the 
following discussion.
2. Sec.  45.13(b)--Data Reported to SDRs
a. Amendments to Current Sec.  45.13(b) (Re-Designated as Sec.  
45.13(a)(3))
    The Commission is proposing to re-designate the regulations for 
data reported to SDRs currently located in Sec.  45.13(b). Current 
Sec.  45.13(b) requires that in reporting swap data to an SDR as 
required by part 45, each reporting entity or counterparty shall use 
the facilities, methods, or data standards provided or required by the 
SDR to which the entity or counterparty reports the data. Current Sec.  
45.13(b) further provides that an SDR may permit reporting entities and 
counterparties to use various facilities, methods, or data standards, 
provided that its requirements in this regard enable it to meet the 
requirements of Sec.  45.13(a) with respect to maintenance and 
transmission of swap data.
    The Commission is also proposing to amend the requirements of 
current Sec.  45.13(b), as re-designated in new Sec.  45.13(a)(3). 
First, the Commission is proposing to replace ``each reporting entity 
or counterparty'' with ``each reporting counterparty [SEF, DCM, and 
DCO].'' The Commission believes a list of entities would be more 
precise.
    Second, the Commission is proposing to remove the second sentence 
in current Sec.  45.13(b). The second sentence in Sec.  45.13(b) 
pertains to the requirements of Sec.  45.13(a), which the Commission 
has proposed to move to part 49. Therefore, the Commission is proposing 
to remove the outdated reference.
    As a result, new Sec.  45.13(a)(3) would require that in reporting 
swap data to an SDR as required by part 45, each reporting 
counterparty, SEF, DCM, and DCO use the facilities, methods, or data 
standards provided or required by the SDR to which the entity or 
counterparty reports the swap data.
b. New Regulations for Data Validation Acceptance Messages
    The Commission is proposing to specify the requirements for data 
validation acceptance messages for SDRs, SEFs, DCMs, DCOs, and 
reporting counterparties. As proposed Sec.  45.13(b)(1) would require 
that for each required swap creation data or required swap continuation 
data report submitted to an SDR, an SDR notify the reporting 
counterparty, SEF, DCM, DCO or third-party service provider submitting 
the report whether the report satisfied the swap data validation 
procedures of the SDR. The SDR would be required to provide such 
notification ASATP after accepting the required swap creation data or 
required swap continuation data report. An SDR would satisfy these 
requirements by transmitting data validation acceptance messages as 
required by proposed Sec.  49.10.
    Proposed Sec.  45.13(b)(2) would require that if a required swap 
creation data or required swap continuation data report to an SDR does 
not satisfy the data validation procedures of the SDR, the reporting 
counterparty, SEF, DCM, or DCO required to submit the report has not 
yet satisfied its obligation to report required swap creation or 
continuation data in the manner provided by paragraph (a) within the 
timelines set forth in Sec. Sec.  45.3 and 45.4. The reporting 
counterparty, SEF, DCM, or DCO has not satisfied its obligation until 
it submits the required swap data report in the manner provided by 
paragraph (a), which includes the requirement to satisfy the data 
validation procedures of the SDR, within the applicable time deadline 
set forth in Sec. Sec.  45.3 and 45.4.
3. Sec.  45.13(c)--Delegation of Authority to the Chief Information 
Officer
    Current Sec.  45.13(c) and (d) contain a delegation of authority to 
the Chief Information Officer of the Commission concerning the 
requirements in Sec.  45.13(a). The Commission is proposing to remove 
the delegation, delegate authority to the Director of the Division of 
Market Oversight, and move the delegation to new Sec.  45.15. New Sec.  
45.15 is discussed in the next section.
Request for Comment
    The Commission requests comment on all aspects of the proposed 
changes to Sec.  45.13. The Commission also invites specific comment on 
the following:
    (12) Should the Commission provide a limited exception to the 
validation requirements for swaps that, for instance, may be a new type 
of swaps that may fall within one of the five asset classes, but for 
which swap data reporting standards have not yet been adopted?
    (13) Even with technical standards published by the Commission, 
there is a risk of inconsistent data across SDRs if the Commission 
allows the SDRs to specify the facilities, methods or data standards 
for reporting. In order to ensure data quality, should the Commission 
mandate a certain standard for reporting to the SDRs? If so, what 
standard would you propose and what would be the benefits? If not, why 
not?
    (14) The CPMI-IOSCO Governance Arrangements for critical OTC 
derivatives data elements (other than UTI and UPI) (``CDE Governance 
Arrangements''),\179\ assigned ISO to execute the maintenance functions 
for the CDE data elements included in the CDE Technical Guidance. Some 
of the reasons include that almost half of the CDE data elements are 
already tied to an ISO standard and because ISO has significant 
experience maintaining data standards, specifically in financial

[[Page 21605]]

services. CPMI and IOSCO, in the CDE Governance Arrangements, also 
decided that the CDE data elements should be included in the ISO 20022 
data dictionary and supported the development of an ISO 20022-compliant 
message for CDE data elements. Given these factors, should the 
Commission consider mandating ISO 20022 message scheme for reporting to 
SDRs? Please comment on the advantages and disadvantages of mandating 
ISO 20022 for swap transaction reporting.
---------------------------------------------------------------------------

    \179\ https://www.iosco.org/library/pubdocs/pdf/IOSCOPD642.pdf.
---------------------------------------------------------------------------

L. Sec.  45.15 \180\--Delegation of Authority
---------------------------------------------------------------------------

    \180\ The Commission has proposed amendments to Sec.  45.14 in 
the 2019 Part 49 NPRM. Therefore, Sec.  45.14 will not be discussed 
in this release. See 2019 Part 49 NPRM at 21067.
---------------------------------------------------------------------------

    The Commission is proposing to add a new section to its regulations 
for delegations of authority. As proposed, Sec.  45.15 would be titled 
``Delegation of authority,'' and would contain the delegation of 
authority currently in Sec.  45.11 and add a new delegation of 
authority to the Director of the Division of Market Oversight regarding 
the reporting under Sec.  45.13.
    Current Sec.  45.11(c) delegates to the Chief Information Officer 
of the Commission, or other such employee he or she designates, with 
respect to swaps in an asset class not accepted by any SDR, the 
authority to determine: The manner, format, coding structure, and 
electronic data transmission standards and procedures acceptable to the 
Commission; whether the Commission may permit or require use by 
reporting entities or counterparties in reporting pursuant to Sec.  
45.11 of one or more particular data standards (such as FIX, FpML, ISO 
20022, or some other standard), in order to accommodate the needs of 
different communities of users; and the dates and times at which 
required swap creation data or required swap continuation data shall be 
reported to the Commission.
    Current Sec.  45.11(d) requires the Chief Information Officer to 
publish from time to time in the Federal Register and on the website of 
the Commission the format, data schema, electronic data transmission 
methods and procedures, and dates and times for reporting acceptable to 
the Commission with respect to swap data reporting pursuant to Sec.  
45.11.
    Separately, current Sec.  45.13 delegates to the Chief Information 
Officer, until the Commission orders otherwise, the authority to 
establish the format by which SDRs maintain swap data reported to it, 
and the format by which SDRs transmit the data to the Commission. The 
authority includes the authority to determine the manner, format, 
coding structure, and electronic data transmission standards and 
procedures acceptable to the Commission for the purposes of Sec.  
45.13(a); and the authority to determine whether the Commission may 
permit or require use by reporting entities or counterparties, or by 
SDRs, of one or more particular data standards (such as FIX, FpML, ISO 
20022, or some other standard), in order to accommodate the needs of 
different communities of users, or to enable SDRs to comply with Sec.  
45.13(a).
    Current Sec.  45.13(d) requires the Chief Information Officer to 
publish from time to time in the Federal Register and on the website of 
the Commission the format, data schema, and electronic data 
transmission methods and procedures acceptable to the Commission.
    The Commission is proposing to move the delegations in Sec. Sec.  
45.11(c) through (d) and 45.13(c) through (d) to Sec.  45.15(a) and 
(b). The Commission is also proposing to update the delegations to 
reflect the changes to the cross-references resulting from the 
Commission's amendments to part 45. Proposed Sec.  45.15(b) would 
therefore delegate to the Director of DMO, until the Commission orders 
otherwise, the authority set forth in Sec.  45.13(a)(1), to be 
exercised by the Director of DMO or by such other employee or employees 
of the Commission as may be designated from time to time by the 
Director of DMO. The DMO Director would be able to submit to the 
Commission for its consideration any matter which has been delegated 
pursuant to Sec.  45.13(b). Nothing in Sec.  45.15(b) would prohibit 
the Commission, at its election, from exercising the authority 
delegated in Sec.  45.15(b).
    The authority delegated to the Director of DMO would continue to 
include, subject to the above-mentioned updates: (1) The authority to 
publish the technical specifications providing the form and manner for 
reporting the swap data elements in appendix 1 to SDRs as provided in 
Sec.  45.13(a)(1); (2) the authority to determine whether the 
Commission may permit or require use by SEFs, DCMs, DCOs, or reporting 
counterparties in reporting pursuant to Sec.  45.13(a)(1) of one or 
more particular data standards (such as FIX, FpML, ISO 20022, or some 
other standard), in order to accommodate the needs of different 
communities of users; and (3) the dates and times at which required 
swap creation data or required swap continuation data shall be reported 
pursuant to Sec.  45.13(a)(1). Section 45.15(b)(4) would continue to 
provide, with updates, that (4) the DMO director publish from time to 
time in the Federal Register and on the website of the Commission the 
technical specifications for swap data reporting pursuant to Sec.  
45.13(a)(1).
Request for Comment
    The Commission requests comment on all aspects of the proposed 
changes to Sec.  45.15.

III. Proposed Amendments to Part 46

    Part 46 of the Commission's regulations establishes the 
requirements for reporting pre-enactment and transition swaps to SDRs. 
In some instances, the proposed revisions to part 45 described in 
section II above would necessitate corresponding revisions and 
amendments to the regulations in part 46. The Commission describes any 
substantive revisions and amendments in this section.

A. Sec.  46.1--Definitions

    Current Sec.  46.1 contains the definitions for terms used 
throughout the regulations in part 46. Current Sec.  46.1 does not 
contain any subordinate paragraphs. The Commission is proposing to 
separate Sec.  46.1 into two paragraphs: Sec.  46.1(a) for definitions 
and Sec.  46.1(b), which would state that terms not defined in part 46 
have the meanings assigned to the terms in Sec.  1.3.
    The Commission is proposing to add a definition of ``historical 
swaps'' to Sec.  46.1(a). As proposed, ``historical swaps'' would mean 
pre-enactment swaps or transition swaps. This term is already used in 
part 46.
    The Commission is proposing to add a definition of ``substitute 
counterparty identifier'' to Sec.  46.1(a). As proposed, ``substitute 
counterparty identifier'' would mean a unique alphanumeric code 
assigned by an SDR to a swap counterparty prior to the Commission 
designation of an LEI identifier system on July 23, 2012. The term 
``substitute counterparty identifier'' is already used throughout Sec.  
46.4.
    The Commission is proposing non-substantive minor technical changes 
to ``asset class'' and ``required swap continuation data.''
    The Commission is proposing to amend the definition of ``non-SD/MSP 
counterparty'' in Sec.  46.1(a) to conform to the amendments proposed 
to the corresponding term in Sec.  45.1(a).\181\ The Commission is 
proposing to update the term throughout part 46.
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    \181\ The proposed amendments to the term in Sec.  45.1(a) are 
discussed in section II.A.2 above.
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    The Commission is proposing to amend the definition of ``reporting 
counterparty'' to update the reference to

[[Page 21606]]

``swap data.'' Currently, ``reporting counterparty'' means the 
counterparty required to report swap data pursuant to part 46, selected 
as provided in Sec.  46.5. As discussed in section II.A.1 above, the 
Commission is proposing to define ``swap data'' to mean swap data 
reported pursuant to part 45. As a result, the Commission is proposing 
to change the reference to ``data for a pre-enactment swap or 
transition swap'' to reflect that the reference is to part 46 data.
    The Commission is proposing to remove the following definitions 
from Sec.  46.1. The Commission has determined that the following 
definitions are redundant because the terms are already defined in 
either Sec.  1.3 or CEA section 1a: ``Credit swap;'' ``foreign exchange 
forward;'' ``foreign exchange instrument;'' ``foreign exchange swap;'' 
``interest rate swap;'' ``major swap participant;'' ``other commodity 
swap;'' ``swap data repository;'' and ``swap dealer.''
    The Commission is proposing to remove the definition of 
``international swap,'' as there are no regulations for international 
swaps in part 46.
Request for Comment
    The Commission requests comment on all aspects of the proposed 
changes to Sec.  46.1.

B. Sec.  46.3--Data Reporting for Pre-Enactment Swaps and Transition 
Swaps

    Current Sec.  46.3(a)(2)(i) \182\ requires that for each uncleared 
pre-enactment or transition swap in existence on or after April 25, 
2011, throughout the existence of the swap following the compliance 
date, the reporting counterparty must report all required swap 
continuation data required to be reported pursuant to part 45, with the 
exception that when a reporting counterparty reports changes to minimum 
PET data for a pre-enactment or transition swap, the reporting 
counterparty is required to report only changes to the minimum PET data 
listed in appendix 1 to part 46 and reported in the initial data report 
made pursuant to Sec.  46(a)(1), rather than changes to all minimum PET 
data listed in appendix 1 to part 45.
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    \182\ The Commission is not proposing substantive amendments 
outside of Sec.  46.3(a)(2)(i).
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    The Commission is proposing to amend Sec.  46.3(a)(2)(i) to remove 
the exception from PET data reporting for pre-enactment and transition 
swaps to specify that reporting counterparties would report updates to 
pre-enactment and transition swaps according to part 45. The Commission 
believes this is current practice and would not result in any 
significant change for the entities reporting updates to historical 
swaps.
    Therefore, proposed Sec.  46.3(a)(2)(i) would require that for each 
uncleared pre-enactment swap or transition swap in existence on or 
after April 25, 2011, throughout the existence of the swap following 
the compliance date, the reporting counterparty shall report all 
required swap continuation data as required by part 45.
Request for Comment
    The Commission requests comment on all aspects of the proposed 
changes to Sec.  46.3.

C. Sec.  46.10--Required Data Standards

    Current Sec.  46.10 requires that in reporting swap data to an SDR 
as required by part 46, each reporting counterparty use the facilities, 
methods, or data standards provided or required by the SDR to which 
counterparty reports the data.
    The Commission is proposing to add a provision that ``[i]n 
reporting required swap continuation data as required by this part, 
each reporting counterparty shall comply with the required data 
standards set forth in part 45 of this chapter, including those set 
forth in Sec.  45.13(a) of this chapter.'' As discussed above in the 
previous section, the Commission believes this is current practice for 
reporting counterparties and should not result in any significant 
change for reporting counterparties.
Request for Comment
    The Commission requests comment on all aspects of the proposed 
changes to Sec.  46.10.

D. Sec.  46.11--Reporting of Errors and Omissions in Previously 
Reported Data

    Consistent with the Commission's proposal to remove the option to 
report required swap continuation data by the state data reporting 
method, discussed in section II.D.2 above, the Commission proposes to 
remove the option in Sec.  46.11(b) for pre-enactment/transition swaps 
reporting. Specifically, Sec.  46.11(b) currently provides that for 
pre-enactment or transition swaps for which part 46 requires reporting 
of continuation data, reporting counterparties reporting state data as 
provided in part 45 may fulfill the requirement to report errors or 
omissions by making appropriate corrections in their next daily report 
of state data pursuant to part 45. Further to the proposed removal of 
current Sec.  46.11(b), the Commission is also proposing to re-
designate current Sec.  46.11(c) and (d) as new Sec.  46.11(b) and (c), 
respectively.
Request for Comment
    The Commission requests comment on all aspects of the proposed 
changes to Sec.  46.11.

IV. Proposed Amendments to Part 49

A. Sec.  49.2--Definitions

    The Commission is proposing to add four definitions to Sec.  
49.2(a): ``Data validation acceptance message,'' ``Data validation 
error,'' ``Data validation error message,'' and ``Data validation 
procedures.'' \183\ The four definitions are explained in a discussion 
of the proposed Sec.  49.10 regulations for the acceptance and 
validation of data in section IV.C below.
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    \183\ The Commission has also proposed to define the term ``SDR 
data'' in the 2019 Part 49 NPRM. As proposed, ``SDR data'' would 
mean the specific data elements and information required to be 
reported to an SDR or disseminated by an SDR, pursuant to two or 
more of parts 43, 45, 46, and/or 49, as applicable. See 2019 Part 49 
NPRM at 21047. The term ``SDR data'' is also used in the proposed 
amendments to Sec.  49.10 in this release.
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B. Sec.  49.4--Withdrawal From Registration

    The Commission is proposing to amend the Sec.  49.4 regulations for 
SDR withdrawals from registration. Current Sec.  49.4(a)(1)(iv) 
requires that a request to withdraw filed pursuant to Sec.  49.4(a)(1) 
shall specify, among other items, a statement that the custodial SDR is 
authorized to make such data and records available in accordance with 
Sec.  1.44.\184\
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    \184\ The Commission is not proposing substantive amendments to 
Sec.  49.4(a)(1)(i) through (iii). The Commission is limiting the 
discussion in this release to Sec.  49.4(a)(1)(iv).
---------------------------------------------------------------------------

    Current Sec.  49.4(a)(2) requires that prior to filing a request to 
withdraw, a registered SDR shall file an amended Form SDR to update any 
inaccurate information. A withdrawal of registration shall not affect 
any action taken or to be taken by the Commission based upon actions, 
activities or events occurring during the time that the facility was 
designated by the Commission.
    First, the Commission is proposing to remove the Sec.  
49.4(a)(1)(iv) requirement for SDRs to submit a statement to the 
Commission that the custodial SDR is authorized to make the withdrawing 
SDR's data and records available in accordance with Sec.  1.44. The 
reference to Sec.  1.44 is erroneous. Section 1.44 requires 
``depositories'' to maintain all books, records, papers, and memoranda 
relating to the storage and warehousing of commodities in such 
warehouse, depository or other similar entity for a period of 5 years 
from the date thereof.\185\ The recordkeeping

[[Page 21607]]

requirements for SDRs are located in Sec.  49.12.\186\ The Commission 
is proposing to remove erroneous Sec.  49.4(a)(1)(iv) to avoid 
confusion.
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    \185\ 17 CFR 1.44(d).
    \186\ The Commission has proposed amendments to Sec.  49.12 in 
the 2019 Part 49 NPRM. However, these amendments do not impact the 
substance of the SDR recordkeeping requirements. See 2019 Part 49 
NPRM at 21055. Pursuant to Sec.  49.12(b), SDRs must maintain swap 
data, including historical positions, throughout the existence of 
the swap and for five years following final termination of the swap, 
during which time the records must be readily accessible to the 
Commission via real-time electronic access; and in archival storage 
for which the swap data is retrievable by the SDR within three 
business days.
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    Second, the Commission is proposing to remove the Sec.  49.4(a)(2) 
requirement that prior to filing a request to withdraw, a registered 
SDR file an amended Form SDR to update any inaccurate information.\187\ 
The Commission believes that this requirement is unnecessary and does 
not help the Commission confirm the successful transfer of data and 
records to a custodial SDR. The Commission has a significant interest 
in ensuring that the data and records of an SDR withdrawing from 
registration are successfully transferred to a custodial SDR. In 
addition, the Commission needs confirmation that the custodial SDR will 
retain the data and records for at least the remainder of the time that 
records are required to be retained according to the Commission's 
recordkeeping rules. When an SDR is withdrawing from registration, the 
Commission would no longer have a regulatory need for the information 
in Form SDR to be updated.
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    \187\ Current Sec.  49.4(a)(2) further provides that a 
withdrawal of registration shall not affect any action taken or to 
be taken by the Commission based upon actions, activities or events 
occurring during the time that the facility was designated by the 
Commission. The Commission is proposing to remove this part of Sec.  
49.4(a)(2) as well.
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    The Commission is proposing to instead create a new requirement in 
Sec.  49.4(a)(2) for SDRs to execute an agreement with the custodial 
SDR governing the custody of the withdrawing SDR's data and records 
prior to filing a request to withdraw with the Commission. Proposed 
Sec.  49.4(a)(2) would also specify that the custodial SDR retain such 
records for at least as long as the remaining period of time the SDR 
withdrawing from registration would have been required to retain such 
records pursuant to part 49. The Commission believes that proposed 
Sec.  49.4(a)(2) would better address the Commission's primary concerns 
in an SDR withdrawal from registration.
    Therefore, Sec.  49.4(a)(2) would require that prior to filing a 
request to withdraw, an SDR shall execute an agreement with the 
custodial SDR governing the custody of the withdrawing SDR's data and 
records. The custodial SDR shall retain such records for at least as 
long as the remaining period of time the SDR withdrawing from 
registration would have been required to retain such records pursuant 
to part 49.
Request for Comment
    The Commission requests comment on all aspects of the proposed 
changes to Sec.  49.4.

C. Sec.  49.10--Acceptance and Validation of Data

    The Commission is proposing to revise the Sec.  49.10(a) through 
(d) \188\ and (f) requirements for the acceptance of data. As part of 
these revisions, the Commission is proposing to retitle the section to 
reflect new requirements for SDRs to validate data proposed in Sec.  
49.10(c) as ``Acceptance and validation of data.''
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    \188\ The Commission has proposed amendments to the Sec.  
49.10(e) requirements for correction of errors and omissions in SDR 
data in the 2019 Part 49 NPRM. See 2019 Part 49 NPRM at 21050.
---------------------------------------------------------------------------

1. Sec.  49.10(a)--General Requirements
    The Commission is proposing to amend the general requirements in 
Sec.  49.10(a) for SDRs to have policies and procedures to accept swap 
data and swap transaction and pricing data. Section 49.10(a) requires 
that registered SDRs establish, maintain, and enforce policies and 
procedures for the reporting of swap data to the registered SDR and 
shall accept and promptly record all swap data in its selected asset 
class and other regulatory information that is required to be reported 
pursuant to parts 43 and 45 by DCMs, DCOs, SEFs, SDs, MSPs, or non-SD/
MSP counterparties.
    First, the Commission is proposing to title Sec.  49.10(a) 
``General requirements'' to distinguish it from the rest of the 
requirements in Sec.  49.10. Second, the Commission is proposing to 
number the requirement in Sec.  49.10(a) as Sec.  49.10(a)(1), and 
renumber Sec.  49.10(a)(1) as Sec.  49.10(a)(2).
    Third, the Commission is proposing to revise the first sentence to 
specify that SDRs shall maintain and enforce policies and procedures 
reasonably designed to facilitate the complete and accurate reporting 
of SDR data.
    Fourth, the Commission is proposing to remove the last phrase of 
Sec.  49.10(a) beginning with ``all swap data in its selected asset 
class'' and create a second sentence requiring SDRs to promptly accept, 
validate, and record SDR data.
    Finally, the Commission is proposing non-substantive edits to Sec.  
49.10(a)(1), renumbered as Sec.  49.10(a)(2), to correct references to 
defined terms and improve consistency in use of terminology. Together, 
the amendments to Sec.  49.10(a)(1) through (2) would improve the 
readability of Sec.  49.10(a) while updating the terminology to use the 
proposed ``SDR data'' term for the data SDRs are required to accept, 
validate, and record pursuant to Sec.  49.10.\189\
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    \189\ The background for the proposed validations regulations is 
discussed in section IV.C.3 below.
---------------------------------------------------------------------------

    Therefore, Sec.  49.10(a)(1) would require that an SDR shall 
establish, maintain, and enforce policies and procedures reasonably 
designed to facilitate the complete and accurate reporting of SDR data. 
Proposed Sec.  49.10(a)(1) would further provide that an SDR shall 
promptly accept, validate, and record SDR data.
    Proposed Sec.  49.10(a)(2) would require that for the purpose of 
accepting SDR data, the SDR shall adopt policies and procedures, 
including technological protocols, which provide for electronic 
connectivity between the SDR and DCMs, DCOs, SEFs, SDs, MSPs, and non-
SD/MSP/DCO reporting counterparties who report such data. Proposed 
Sec.  49.10(a)(2) would further provide that the technological 
protocols established by an SDR shall provide for the receipt of SDR 
data. The SDR shall ensure that its mechanisms for SDR data acceptance 
are reliable and secure.
2. Sec.  49.10(b)--Duty To Accept SDR Data
    The Commission is proposing to amend the Sec.  49.10(b) 
requirements for SDRs to accept SDR data. Current Sec.  49.10(b) 
requires that a registered SDR shall set forth in its application for 
registration as described in Sec.  49.3 the specific asset class or 
classes for which it will accept swaps data. If an SDR accepts swap 
data of a particular asset class, then it shall accept data from all 
swaps of that asset class, unless otherwise prescribed by the 
Commission.
    First, the Commission is proposing to title Sec.  49.10(b) ``Duty 
to accept SDR data'' to distinguish it from the other requirements of 
Sec.  49.10. Second, the Commission is proposing to update references 
to data in Sec.  49.10(b) to ``SDR data'' to use the correct defined 
term. These amendments would not change the substantive requirements of 
Sec.  49.10(b).
    Therefore, Sec.  49.10(b) would require that an SDR shall set forth 
in its application for registration as described in Sec.  49.3 the 
specific asset class or classes for which it will accept SDR data. If 
an SDR accepts SDR data of a particular asset class, then it shall

[[Page 21608]]

accept SDR data from all swaps of that asset class, unless otherwise 
prescribed by the Commission.
3. Sec.  49.10(c)--Duty To Validate SDR Data
    As part of the revisions to Sec.  49.10, the Commission is 
proposing to add new regulations for the SDR validation of SDR data in 
Sec.  49.10(c). The Commission is proposing to move the requirements in 
current Sec.  49.10(c) to Sec.  49.10(d).\190\
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    \190\ The amendments to the current requirements of Sec.  
49.10(c), proposed to be moved to Sec.  49.10(d), are discussed in 
section IV.C.4 below.
---------------------------------------------------------------------------

    SDRs currently check each swap report for compliance with a list of 
rules specific to each SDR. However, the Commission is concerned that 
SDRs apply different validation rules that could be making it difficult 
for SDR data to either be reported to the SDR or the SDRs' real-time 
public data feeds. The SDRs applying different validations to swap 
reports creates numerous challenges for the Commission and market 
participants. While one SDR may reject a report based on an incorrect 
value in a particular swap data element, another SDR may accept reports 
containing the same erroneous value in the same data element. Further, 
the Commission is concerned that responses to SDR validation messages 
vary across reporting counterparties, given the lack of current 
standards.
    The Commission received several comments on data validations in 
response to the Roadmap. Commenters were broadly supportive \191\ of 
including swap data validations in revisions to the Commission's data 
reporting regulations.\192\ Commenters recommended that the 
requirements for data validation be implemented at the same time or 
after the Commission harmonized and updated the data elements to be 
reported \193\ and that the validations be implemented all at 
once.\194\ Many commenters also requested that the Commission provide 
specific guidance and requirements for the validations, including, for 
example, a defined list of minimum validations, form and manner 
specifications, mapping, and allowable values.\195\
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    \191\ No comment letters directly opposed data validations, 
though not all letters addressed the topic.
    \192\ Joint SDR Letter at 1-4, 6, 9; Letter from Chatham at 3; 
Letter from CME at 2; Letter from DTCC at 2-3; Letter from Eurex 
Clearing AG (``Eurex'') (Aug. 21, 2017) at 3; Letter from GFMA at 5-
6; Joint ISDA-SIFMA Letter at 3, 6; Letter from LCH at 3.
    \193\ Joint SDR Letter at 1-3, 9; Letter from CME at 2; Letter 
from GFMA at 5-6; Joint ISDA-SIFMA Letter at 3, 6.
    \194\ Joint SDR Letter at 9.
    \195\ Joint SDR Letter at 4, 6; Letter from DTCC at 2-3; Joint 
ISDA-SIFMA Letter at 3, 6; Letter from LCH at 3.
---------------------------------------------------------------------------

    Commenters diverged in some instances in regards to continuing the 
SDRs' current validation practices. The SDRs advocated for leveraging 
existing SDR validation processes in order to minimize the costs 
associated with system changes.\196\ The SDRs also argued that the SDRs 
should not be required to implement the exact same validations and that 
the SDRs should have the flexibility to design their own validations, 
as long as the data is provided to the Commission in the mandated 
format.\197\ In contrast, one commenter advocated for the Commission to 
ensure that data element collection and validations are consistent 
across all SDRs.\198\ The commenter also advocated for limiting the 
data SDRs may request to the data required under the Commission's 
regulations.\199\
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    \196\ Joint SDR Letter at 2; Letter from CME at 2; Letter from 
DTCC at 2.
    \197\ Joint SDR Letter at 3; Letter from DTCC at 2-3.
    \198\ Joint ISDA-SIFMA Letter at 6.
    \199\ Id. at 5.
---------------------------------------------------------------------------

    Commenters also raised other specific validation-related issues. 
The SDRs suggested that data should be required to be validated against 
public sources, to the extent possible, such as the GLEIF database for 
LEIs.\200\ One commenter stated that the Commission should resolve any 
uncertainty regarding what a reporting counterparty must report when a 
data element may not apply to the reported swap and/or data may not be 
available at the time of reporting.\201\
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    \200\ Joint SDR Letter at 4.
    \201\ Joint ISDA-SIFMA Letter at 6. The Commission has requested 
specific comment on this issue above in connection with Sec.  45.13.
---------------------------------------------------------------------------

    ESMA has published specific validations for TRs to perform to 
ensure that derivatives data meets the requirements set out in the 
technical standards pursuant to EMIR.\202\ ESMA's validations, for 
instance, set forth when data elements are mandatory, conditional, 
optional, or must be left blank, and specify conditions for data 
elements along with the format and content of allowable values for 
almost 130 data elements.\203\
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    \202\ See https://www.esma.europa.eu/policy-rules/post-trading/trade-reporting.
    \203\ See id.
---------------------------------------------------------------------------

    The Commission believes that similarly consistent SDR validations 
would help improve data quality. Therefore, the Commission is proposing 
to require SDRs to apply validations and inform the entity submitting 
the swap report of any associated rejections. SDRs would be required to 
apply the validations approved in writing by the Commission. The 
Commission is also proposing regulations for SDRs to send validation 
messages to SEFs, DCMs, and reporting counterparties.\204\ The 
Commission believes that the consistent application of validation rules 
across SDRs would lead to an improvement in the quality of swap data 
maintained at SDRs.
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    \204\ The Commission is also proposing regulations for reporting 
counterparties, SEFs, and DCMs to address the validations messages 
sent by SDRs and to resubmit any rejected swap reports in time to 
meet their obligations to report creation and continuation data. The 
requirements for reporting counterparties, SEFs, and DCMs to comply 
with SDR validations are proposed in Sec.  45.13(b).
---------------------------------------------------------------------------

    Proposed Sec.  49.10(c)(1) would provide that SDRs shall validate 
each SDR data report submitted and notify the reporting counterparty, 
SEF, DCM, or third party service provider submitting the report whether 
the report satisfied \205\ the data validation procedures \206\ of the 
SDR ASATP after accepting the SDR data report.
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    \205\ The Commission is proposing to define ``data validation 
acceptance message'' to mean a notification that SDR data satisfied 
the data validation procedures applied by an SDR.
    \206\ The Commission is proposing to define ``data validation 
procedures'' to mean procedures established by an SDR pursuant to 
Sec.  49.10 to validate SDR data reported to the SDR.
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    Proposed Sec.  49.10(c)(2) would provide that if SDR data contains 
one or more data validation errors,\207\ the SDR shall distribute a 
data validation error message \208\ to the DCM, SEF, reporting 
counterparty, or third-party service provider that submitted such SDR 
data ASATP after acceptance of such data. Each data validation error 
message shall indicate which specific data validation error(s) was 
identified in the SDR data.
---------------------------------------------------------------------------

    \207\ The Commission is proposing to define ``data validation 
error'' to mean that a specific data element of SDR data did not 
satisfy the data validation procedures applied by an SDR.
    \208\ The Commission is proposing to define ``data validation 
error message'' to mean a notification that SDR data contained one 
or more data validation error(s).
---------------------------------------------------------------------------

    Proposed Sec.  49.10(c)(3) would require that if an SDR allows for 
the joint submission of swap transaction and pricing data and swap 
data, the SDR validate the swap transaction and pricing data and swap 
data separately. Swap transaction and pricing data that satisfies the 
data validation procedures applied by an SDR shall not be deemed to 
contain a data validation error because it was submitted to the SDR 
jointly with swap data that contained a data validation error.

[[Page 21609]]

4. Sec.  49.10(d)--Policies and Procedures To Prevent Invalidation or 
Modification
    As described above, the Commission is proposing to move the 
requirement currently in Sec.  49.10(c) for SDRs to have policies and 
procedures to prevent invalidations or modifications of swaps to an 
amended Sec.  49.10(d). As a result, the Commission is also proposing 
to redesignate Sec.  49.10(d) as new Sec.  49.10(f).\209\ Section 
49.10(c) currently requires registered SDRs to establish policies and 
procedures reasonably designed to prevent any provision in a valid swap 
from being invalidated or modified through the confirmation or 
recording process of the SDR.\210\
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    \209\ The amendments to the current requirements of Sec.  
49.10(d), proposed to be redesignated as Sec.  49.10(f), are 
discussed in section IV.C.5 below.
    \210\ Current Sec.  49.10(c) further provides that the policies 
and procedures must ensure that the SDR's user agreements must be 
designed to prevent any such invalidation or modification. 17 CFR 
49.10(c).
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    The Commission is also proposing non-substantive amendments to the 
current language of Sec.  49.10(c), proposed to be moved to Sec.  
49.10(d). For instance, the Commission is proposing to title Sec.  
49.10(c) ``Policies and procedures to prevent invalidation or 
modification'' to distinguish it from the other requirements in Sec.  
49.10.
    In light of the above proposed amendments, Sec.  49.10(d) would 
require SDRs to establish policies and procedures reasonably designed 
to prevent provision in a valid swap from being invalidated or modified 
through the verification or recording process of the SDR. The policies 
and procedures shall ensure that the SDR's user agreements are designed 
to prevent any such invalidation or modification.
5. Sec.  49.10(f)--Policies and Procedures for Resolving Disputes 
Regarding Data Accuracy
    As described above, the Commission is proposing to redesignate 
Sec.  49.10(d) as Sec.  49.10(f).\211\ The Commission is also proposing 
non-substantive amendments to the requirements currently set out in 
Sec.  49.10(d), proposed to be redesignated as new Sec.  49.10(f). 
Current Sec.  49.10(d) requires that registered SDRs establish 
procedures and provide facilities for effectively resolving disputes 
over the accuracy of the swap data and positions that are recorded in 
the SDR.
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    \211\ The Commission's proposed revisions to Sec.  49.10(e) are 
discussed in the 2019 part 49 NPRM. See 2019 part 49 NPRM at 21050.
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    First, the Commission is proposing to title Sec.  49.10(f) 
``Policies and procedures for resolving disputes regarding data 
accuracy'' to distinguish it from the other requirements of Sec.  
49.10. Second, the Commission is proposing to update terminology in the 
regulation. These updates include replacing ``swap'' with the correct 
term ``SDR data, and removing the term ``registered'' before references 
to SDRs.
    Therefore, in light of the above proposed amendments, Sec.  
49.10(f) would require SDRs to establish procedures and provide 
facilities for effectively resolving disputes over the accuracy of the 
SDR data and positions that are recorded in the SDR.
Request for Comment
    The Commission requests comment on all aspects of the proposed 
changes to Sec.  49.10.

V. Swap Data Elements Reported to Swap Data Repositories

A. General

    The Commission is proposing to revise appendix 1 to part 45 to 
update and further standardize the swap data being reported to SDRs and 
the swap data SDRs make available to the Commission. The Commission's 
current minimum primary economic terms for swaps in each swap asset 
class are found in appendix 1 to part 45. The current primary economic 
terms for swaps contain a set of ``data categories and fields'' 
followed by ``comments'' instead of specifications such as allowable 
values, formats, and conditions.\212\ In some cases, these comments 
include directions, such as to use ``yes/no'' indicators for certain 
data elements (e.g., an indication whether the reporting counterparty 
is an SD).\213\ In others, the comments reference Commission 
regulations (e.g., to report the LEI of the non-reporting counterparty 
``[a]s provided in Sec.  45.6'').\214\
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    \212\ See generally 17 CFR 45 appendix 1.
    \213\ Id.
    \214\ Id.
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    In adopting part 45, the Commission intended that the primary 
economic terms would ensure uniformity in ``essential data'' concerning 
swaps across all of the asset classes and across SDRs to ensure the 
Commission had the necessary information to characterize and understand 
the nature of reported swaps.\215\ However, in practice, this approach 
permitted a degree of discretion in reporting swap data that led to a 
lack of standardization, and therefore a reduction in data quality, 
which makes it more difficult for the Commission to analyze and 
aggregate swap data. The Commission recognizes that each SDR has worked 
to standardize the data within each SDR over recent years, and 
Commission staff has noted the improvement in data quality. The 
Commission however believes a significant effort must be made to 
standardize swap data across SDRs. As a result, the Commission decided 
to revisit the data elements currently required to be reported to SDRs 
in appendix 1 to part 45.
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    \215\ See 77 FR at 2149.
---------------------------------------------------------------------------

    In the Roadmap, DMO announced an intention to propose detailed 
technical specifications once the CPMI-IOSCO harmonization efforts had 
sufficiently progressed.\216\ In the Roadmap, DMO also signaled its 
intention to match foreign regulators as closely as possible in the 
technical specifications, but noted that some data elements may be 
different depending on Commission's needs.\217\
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    \216\ See Roadmap at 9.
    \217\ Id.
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    In response to the Roadmap, DMO received many comments on swap data 
elements. Commenters broadly supported efforts to reduce the number of 
reportable data elements and to remove the requirement to report ``any 
other term(s) of the swap matched or affirmed'' by the counterparties 
(commonly known as the ``catchall'' provision).\218\ Commenters were 
also broadly supportive of the CPMI-IOSCO harmonization efforts to 
standardize critical data elements,\219\ as both reducing burdens on 
reporters \220\ and as increasing the utility of the data for 
regulators and the users of public data.\221\
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    \218\ Joint SDR Letter at 8; Letter from Chatham at 5; Letter 
from CME at 3; Letter from NRECA-APPA at 3; Letter from LCH at 2; 
Joint ISDA-SIFMA Letter at 7; Letter from the Natural Gas Supply 
Association (``NGSA'') at 1.
    \219\ Letter from ACLI at 2; Joint SDR Letter at 7; Letter from 
Chatham at 5; Letter from CEWG at 3; Letter from the Coalition for 
Derivatives End Users (``CDEU'') (Aug. 21, 2017) at 5; Letter from 
DTCC at 2; Letter from Eurex at 3-4; Letter from GFMA at 3; Joint 
ISDA-SIFMA Letter at 5; Letter from Japanese Bankers Association 
(``JBA'') (Aug. 21, 2017) at 2; Letter from SIFMA Asset Management 
Group (``AMG'') (Aug. 18, 2017) at 2.
    \220\ Letter from GFMA at 3; Letter from JBA at 2; Joint SDR 
Letter at 8.
    \221\ Letter from Better Markets (Aug. 21, 2017) at 7; Letter 
from DTCC at 2; Letter from GFMA at 3; Joint ISDA-SIFMA Letter at 5.
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    Several commenters asked for precise definitions for required data 
elements.\222\ Several commenters acknowledged that the Commission may 
require some data elements beyond the final CDE Technical Guidance data 
elements,\223\ but cautioned the Commission to be careful when making 
that determination.\224\ One commenter, while supporting harmonization 
generally, opposed expanding reporting

[[Page 21610]]

to cover any additional data elements.\225\ Two commenters noted that 
differences between the CFTC and other regulators, including the SEC, 
were not only in the data elements that must be reported, but also in 
what transactions must be reported.\226\
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    \222\ Letter from GFMA at 4; Letter from CEWG at 3; Letter from 
CME at 3; Letter from Eurex at 3-4.
    \223\ Joint SDR Letter at 9.
    \224\ Letter from GFMA at 4.
    \225\ Letter from CEWG 3.
    \226\ Letter from CDEU at 6; Letter from GFMA at 3.
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    Several commenters indicated potential opposition to individual CDE 
Technical Guidance data elements.\227\ Another commenter recommended 
using the final CDE Technical Guidance as a ``tool'' rather than a 
``mandate,'' and to only implement those data elements that the 
Commission needs for its oversight obligations.\228\ One commenter 
suggested not pursuing the data elements proposed in DMO's December 
2015 Request for Comment on Draft Technical Specifications for Certain 
Swap Data Elements, as they would unnecessarily increase costs without 
benefits.\229\
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    \227\ Letter from GFMA at 4; Joint ISDA-SIFMA Letter at 4, 9; 
Letter from SIFMA AMG at 2.
    \228\ Joint ISDA-SIFMA Letter at 4.
    \229\ Id. at 8.
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    In the course of revisiting which swap data elements should be 
reported to SDRs, the Commission reviewed the swap data elements 
currently in appendix 1 to part 45 to determine if any currently 
required data elements should be eliminated and if any additional data 
elements should be added. The Commission then reviewed the CDE 
Technical Guidance to determine which data elements the Commission 
could adopt according to the CDE Technical Guidance.
    As a general matter, the Commission believes that the 
implementation of the CDE Technical Guidance will further improve the 
harmonization of SDR data across FSB member jurisdictions. This 
international harmonization, when widely implemented, would allow 
market participants to report swap data to several jurisdictions in the 
same format, allowing for potential cost-savings. This harmonization, 
when widely implemented, would also allow the Commission to potentially 
receive more standardized information regarding swaps reported to TRs 
regulated by other authorities. For instance, such standardization 
across SDRs and TRs could support data aggregation for the analysis of 
global systemic risk in swaps markets.
    As part of this process, the Commission also reviewed the part 43 
swap transaction and pricing data and part 45 swap data elements to 
determine whether any differences could be reconciled.\230\ Having 
completing this assessment, the Commission is proposing to list the 
swap data elements required to be reported to SDRs pursuant to part 45 
in appendix 1 to part 45. In a separate NPRM, the Commission is 
proposing to list the swap transaction and pricing data elements 
required to be reported to, and then publicly disseminated by, SDRs 
pursuant to part 43 in appendix C to part 43. The swap transaction and 
pricing data elements would be a harmonized subset of the swap data 
elements in appendix 1 to part 45.
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    \230\ The Commission intended that the data elements in appendix 
A to part 43 would be harmonized with the data elements required to 
be reported to an SDR for regulatory purposes pursuant to part 45. 
See 77 FR at 1226 (noting that ``it is important that the data 
fields for both the real-time and regulatory reporting requirements 
work together''). However, there is no current regulatory 
requirement linking the two sets of data elements.
---------------------------------------------------------------------------

    At the same time as the Commission is proposing to update the swap 
data elements in appendix 1, DMO is publishing draft technical 
specifications for reporting the swap data elements in appendix 1 to 
part 45 to SDRs, as specified in proposed Sec.  45.13(a)(1), and for 
reporting and publicly disseminating the swap transaction and pricing 
data elements in appendix C to part 43 described in a separate NPRM. 
DMO would then publish the technical specifications in the Federal 
Register pursuant to the delegation of authority proposed in Sec.  
45.15(b).
    DMO is proposing to establish technical standards for certain swap 
data elements according to the CDE Technical Guidance, where possible. 
Commenters are invited to comment on both the technical standards and 
the swap data elements proposed in appendix 1.
    The swap data elements proposed to be reported to SDRs would 
therefore consist of: (i) The data elements implementing the CDE 
Technical Guidance; and (ii) additional CFTC-specific data elements 
that support the Commission's regulatory responsibilities.\231\ While, 
as explained below, much of this swap data is already being reported to 
SDRs according to each SDR's technical standards, the technical 
standards and validation conditions that the Commission is proposing 
for the SDRs to implement would be new. A discussion of the swap data 
elements and requests for comment on the technical standards follows 
below. Data elements specific to part 43 are discussed in the separate 
part 43 NPRM.
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    \231\ The proposed update of appendix 1 and technical standards 
are expected to represent a significant reduction in the number of 
swap data elements that could be reported to an SDR by market 
participants.
---------------------------------------------------------------------------

B. Swap Data Elements To Be Reported to Swap Data Repositories

    DMO's proposed technical standards contains an extensive 
introduction to help reviewers. As a preliminary matter, the Commission 
notes that the swap data elements in appendix 1 do not include swap 
data elements specific to swap product terms. The Commission is 
currently heavily involved in separate international efforts to 
introduce UPIs.\232\ The Commission preliminarily expects UPIs will be 
available within the next two years.\233\ Until the Commission 
designates a UPI pursuant to Sec.  45.7, the Commission is proposing 
SDRs continue to accept, and reporting counterparties continue to 
report, the product-related data elements unique to each SDR. The 
Commission believes this temporary solution would have SDRs change 
their systems only once when UPI becomes available, instead of twice if 
the Commission proposes standardized product data elements in this 
release before UPIs are available and then later designates UPIs 
pursuant to Sec.  45.7.
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    \232\ See FSB, Governance arrangements for the UPI: Conclusions, 
implementation plan and next steps to establish the International 
Governance Body (Oct. 9, 2019), available at https://www.fsb.org/2019/10/governance-arrangements-for-the-upi/.
    \233\ See id. The FSB recommends that jurisdictions undertake 
necessary actions to implement the UPI Technical Guidance and that 
these take effect no later than the third quarter of 2022.
---------------------------------------------------------------------------

    In addition, the Commission notes that it has endeavored to propose 
adopting the CDE Technical Guidance data elements as closely as 
possible. Where the Commission proposes adopting a CDE Technical 
Guidance data element, the Commission has proposed adopting the terms 
used in the CDE Technical Guidance. This means that some terms may be 
different for certain concepts. For instance, ``derivatives clearing 
organization'' is the Commission's term for registered entities that 
clear swap transactions, but the CDE Technical Guidance uses the term 
``central counterparty.''
    To help clarify, DMO has proposed footnotes in the technical 
standards to explain these differences as well as provide examples and 
jurisdiction-specific requirements. However, the Commission has not 
included these footnotes in appendix 1. In addition, the definitions 
from CDE Technical Guidance data elements included in appendix 1 
sometimes include references to allowable values in the CDE Technical 
Guidance, which may

[[Page 21611]]

not be included in appendix 1, but can be found in the technical 
standards.
    Finally, the CDE Technical Guidance did not harmonize many fields 
that would be particularly relevant for commodity and equity swap asset 
classes (e.g., unit of measurement for commodity swaps). CPMI and 
IOSCO, in the CDE Governance Arrangements, address both implementation 
and maintenance of CDE, together with their oversight. One area of the 
CDE Governance Arrangements includes updating the CDE Technical 
Guidance, including the harmonization of certain data elements and 
allowable values that were not included in the CDE Technical Guidance 
(e.g., data elements related to events and allowable values for the 
following data elements: Price unit of measure, Quantity unit of 
measure, and Custom basket constituents' unit of measure).
    The Commission invites comment on any of the swap data elements 
proposed in appendix 1. The Commission briefly discusses the swap data 
elements below by category to simplify the topics for market 
participants to comment on. To the extent any comment involves data 
elements adopted according to the CDE Technical Guidance, however, the 
Commission anticipates raising issues according to the CDE Governance 
Arrangements procedures to help ensure that authorities follow the 
established processes for doing so. In addition, the Commission 
anticipates updating its rules to adopt any new or updated CDE 
Technical Guidance, as necessary.
1. Category: Clearing
    The Commission is proposing to require reporting counterparties 
report twelve clearing data elements.\234\ Nearly all of this 
information is currently being reported to SDRs. Three of these data 
elements are consistent with the CDE Technical Guidance. Four of these 
data elements would transition clearing swap and original swap USIs to 
UTIs. All of these data elements help the Commission monitor the 
cleared swaps market.
---------------------------------------------------------------------------

    \234\ In appendix 1, these data elements are: Cleared (1); 
Central counterparty (2); Clearing account origin (3); Clearing 
member (4); Clearing swap USIs (5); Clearing swap UTIs (6); Original 
swap USI (7); Original swap UTI (8); Original swap SDR identifier 
(9); Clearing receipt timestamp (10); Clearing exemptions--
Counterparty 1 (11); and Clearing exemptions--Counterparty 2 (12).
---------------------------------------------------------------------------

    The Commission requests specific comment on the following related 
to the clearing data elements:
    (15) The Commission is considering including a data element called 
``Mandatory clearing indicator'' to indicate whether a swap is subject 
to the clearing requirement in part 50 of the Commission's regulations. 
The Commission requests specific comment on whether commenters believe 
this data element could be reported to SDRs.
2. Category: Counterparty
    The Commission is proposing to require reporting counterparties 
report ten counterparty data elements.\235\ Nearly all of this 
information is currently being reported to SDRs. Six of these data 
elements are consistent with the CDE Technical Guidance.
---------------------------------------------------------------------------

    \235\ In appendix 1, these data elements are: Counterparty 1 
(reporting counterparty) (13); Counterparty 2 (14); Counterparty 2 
identifier source (15); Counterparty 1 financial entity indicator 
(16); Counterparty 2 financial entity indicator (17); Buyer 
identifier (18); Seller identifier (19); Payer identifier (20); 
Receiver identifier (21); and Submitter identifier (22).
---------------------------------------------------------------------------

    The Commission requests specific comment on the following related 
to the counterparty data elements:
    (16) The CFTC needs the ability to link swap counterparties to 
their parent entities to aggregate swap data to be able to monitor 
risk. Given the complicated nature of how some entities are structured 
within a larger legal entity, the CFTC also needs information related 
to the ultimate parent entity. The Commission believes this information 
is necessary to collect for both swap counterparties. The Commission 
requests specific comment on whether commenters believe this data could 
be reported as part of swap data reporting.\236\ Given the static 
nature of these relationships, the Commission requests comment on 
whether reporting counterparties should report parent and ultimate 
parent information for each swap trade or in a regularly updated (e.g., 
monthly or quarterly) reference file maintained by SDRs.
---------------------------------------------------------------------------

    \236\ The SEC has rules providing for SBSDR participants to 
provide SBSDRs with information sufficient to identify their 
ultimate parent(s) and any affiliate(s) that are also participants 
of the SBSDR using ultimate parent identifiers and counterparty 
identifiers. See 17 CFR 242.906(b).
---------------------------------------------------------------------------

3. Category: Events
    The Commission is proposing to require reporting counterparties 
report four event data elements.\237\ Nearly all of this information is 
currently being reported to SDRs. Event data elements were not included 
in the CDE Technical Guidance. This information is, however, critical 
for the Commission to be able to properly utilize swap data. Without 
it, the Commission would be unable to discern why each swap event is 
reported following the initial required swap creation data report.
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    \237\ In appendix 1, these data elements are: Action type (24); 
Event type (25); Event identifier (26); and Event timestamp (27).
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    The Commission requests specific comment on the following related 
to the event data elements:
    (17) Are there ways in which the Commission could harmonize the 
event model with ESMA's? Would harmonization in this area reduce 
burdens for SDRs and reporting counterparties? The Commission proposes 
to require reporting transactions for simultaneous clearing and 
allocation at a DCO using a new event type of ``Clearing and 
Allocation'' in the events model. Is there a more efficient method to 
report related transactions when a DCO simultaneously clears and 
allocates transactions?
4. Category: Notional Amounts and Quantities
    The Commission is proposing to require reporting counterparties 
report twelve notional data elements.\238\ Nearly all of this 
information is currently being reported to SDRs. Nine of these data 
elements are consistent with the CDE Technical Guidance. Exposure 
information, in conjunction with valuation information, is critical 
for, and currently used extensively by, the Commission to monitor 
activity and risk in the swaps market.
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    \238\ In appendix 1, these data elements are: Notional amount 
(28); Notional currency (29); Delta (30); Call amount (31); Call 
currency (32); Put amount (33); Put currency (34); Notional quantity 
(35); Quantity frequency (36); Quantity frequency multiplier (37); 
Quantity unit of measure (38); and Total notional quantity (39).
---------------------------------------------------------------------------

    The Commission requests specific comment on the following related 
to the notional data elements:
    (18) The Commission is considering including the notional schedule 
data elements from the CDE Technical Guidance.\239\ The Commission has 
learned through experience with swap data that notional data elements 
are applicable to a substantial number of swaps within certain product 
areas such as energy swaps and amortizing interest rate swaps. Does 
such concentration exist and, if so, what gaps would exist in the 
Commission's ability to evaluate and monitor market activity in these 
areas if notional schedule data elements are inadequately or improperly 
represented? The Commission requests comment on whether SDRs and 
reporting counterparties would be able

[[Page 21612]]

to both accept and report this information.
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    \239\ The notional schedule data elements in the CDE Technical 
Guidance are: 2.78.1 (Effective date of the notional amount); 2.78.2 
(End date of the notional amount); 2.78.3 (Notional amount in effect 
on the associated effective date); 2.80.1 (Effective date of the 
notional quantity); 2.80.2 (End date of the notional quantity); and 
2.80.3 (Notional quantity in effect on the associated effective 
date).
---------------------------------------------------------------------------

    (19) The Commission requests specific comment on how SDRs would 
implement these CDE data elements for reporting counterparties to 
report notional schedule-related data. Should the Commission mandate a 
specific reporting structure for reporting notional schedule-related 
data elements to the SDRs? If so, what standard would you propose and 
what would be the benefits? If not, why not?
    (20) The Commission is considering requiring reporting 
counterparties to provide a USD equivalent notional amount that 
represents the entire overall transaction for tracking notional volume 
(in addition to leg-by-leg notional data reported pursuant to other 
proposed data elements). The Commission believes that this additional 
data element could allow staff to more effectively assess compliance 
with CFTC regulations, including but not limited to SD registration and 
uncleared margin requirements, and help staff more efficiently monitor 
swap market risk. The Commission specifically requests comment on the 
frequency with which reporting counterparties should report USD 
equivalent notional.
5. Category: Packages
    The Commission is proposing to require reporting counterparties to 
report four package transaction data elements.\240\ The Commission 
believes some of this information is currently being reported to SDRs. 
Each of these data elements are consistent with the CDE Technical 
Guidance. The Commission anticipates using this information to better 
understand risk in the swaps market, as the Commission understands that 
many swaps are executed as part of packages.
---------------------------------------------------------------------------

    \240\ In appendix 1, these data elements are: Package identifier 
(40); Package transaction price (41); Package transaction price 
currency (42); and Package transaction price notation (43).
---------------------------------------------------------------------------

    The Commission requests specific comment on the following related 
to the package data elements in appendix 1:
    (21) The Commission is considering including the additional package 
transaction data elements from the CDE Technical Guidance.\241\ The 
Commission requests comment on whether SDRs and reporting 
counterparties would be able to both accept and report this 
information. The Commission requests specific comment on how SDRs would 
implement these CDE data elements for reporting counterparties to 
report the data.
---------------------------------------------------------------------------

    \241\ In the CDE Technical Guidance, the additional package data 
elements are: Package transaction spread (2.93); Package transaction 
spread currency (2.94); and Package transaction spread notation 
(2.95).
---------------------------------------------------------------------------

6. Category: Payments
    The Commission is proposing to require reporting counterparties 
report twelve data elements related to payments.\242\ Nine of these 
data elements are consistent with the CDE Technical Guidance. Nearly 
all of this information is currently being reported to SDRs.
---------------------------------------------------------------------------

    \242\ In appendix 1, these data elements are: Day count 
convention (44); Fixing date (45); Floating rate reset frequency 
period (46); Floating rate reset frequency period multiplier (47); 
Other payment type (48); Other payment amount (49); Other payment 
currency (50); Other payment date (51); Other payment payer (52); 
Other payment receiver (53); Payment frequency period (54); and 
Payment frequency period multiplier (55).
---------------------------------------------------------------------------

7. Category: Prices
    The Commission is proposing to require reporting counterparties 
report eighteen data elements related to swap prices.\243\ Nearly all 
of this information is currently being reported to SDRs. Seventeen of 
these data elements are consistent with the CDE Technical Guidance. 
This information is critical for, and currently used by, the Commission 
in understanding pricing in the swaps market.
---------------------------------------------------------------------------

    \243\ In appendix 1, these data elements are: Exchange rate 
(56); Exchange rate basis (57); Fixed rate (58); Post-priced swap 
indicator (59); Price (60); Price currency (61); Price notation 
(62); Price unit of measure (63); Spread (64); Spread currency (65); 
Spread notation (66); Strike price (67); Strike price currency/
currency pair (68); Strike price notation (69); Option premium 
amount (70); Option premium currency (71); Option premium payment 
date (72); and First exercise date (73).
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    The Commission requests specific comment on the following related 
to the price data elements:
    (22) The Commission is considering including the price schedule 
data elements from the CDE Technical Guidance.\244\ The Commission has 
learned through experience with swap data that price data elements are 
applicable to a substantial number of swaps within certain product 
areas such as energy swaps and amortizing interest rate swaps. Does 
such concentration exist and, if so, what gaps would exist in the 
Commission's ability to evaluate and monitor market activity in these 
areas if schedule data elements are inadequately or improperly 
represented? The Commission requests comment on whether SDRs and 
reporting counterparties would be able to both accept and report this 
information. The Commission requests specific comment on how SDRs would 
implement these CDE data elements for reporting counterparties to 
report the data. Should the Commission mandate a specific reporting 
structure for reporting schedule-related data elements to the SDRs? If 
so, what standard would you propose and what would be the benefits? If 
not, why not?
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    \244\ The price schedule data elements in the CDE Technical 
Guidance are: 2.54.1 (Unadjusted effective date of the price); 
2.54.2 (Unadjusted end date of the price); 2.54.3 (Price in effect 
between the unadjusted effective date and unadjusted end date 
inclusive); 2.63.1 (Unadjusted effective date of the strike price); 
2.63.2 (Unadjusted end date of the strike price); and 2.63.3 (Strike 
price in effect between the unadjusted effective date and unadjusted 
end date inclusive).
---------------------------------------------------------------------------

8. Category: Product
    The Commission is proposing to require reporting counterparties 
report five product-related data elements.\245\ The Commission believes 
some of this information is currently being reported to SDRs. Two of 
these data elements are in the CDE Technical Guidance. The Commission 
has preliminarily determined these data elements are critical for 
monitoring risk in the swaps market, even though the Commission expects 
any additional product data elements to remain unstandardized until the 
UPI is introduced.
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    \245\ In appendix 1, these data elements are: CDS index 
attachment point (74); CDS index detachment point (75); Index factor 
(76); Embedded option type (77); and Unique product identifier (78).
---------------------------------------------------------------------------

    The Commission requests specific comment on the following related 
to the other product data elements:
    (23) The CFTC intends to collect sufficient granular detail on the 
economic terms of swaps to conduct independent valuation and stress 
testing analysis. The CFTC will rely on UPI for many product related 
data elements, but forthcoming UPI standards may not describe some 
swaps with enough detail to allow the CFTC to independently value the 
transaction. Are there additional product data elements the CFTC should 
collect outside of UPI to ensure the CFTC may independently value swaps 
with sufficient accuracy?
9. Category: Settlement
    The Commission is proposing to require reporting counterparties 
report two settlement data elements.\246\ The Commission believes this 
information is currently being reported to SDRs. These data elements 
are consistent with the CDE Technical Guidance.
---------------------------------------------------------------------------

    \246\ In appendix 1, these data elements are: Final contractual 
settlement date (79) and Settlement currency (80).
---------------------------------------------------------------------------

    The Commission requests specific comment on the following related 
to the settlement data elements:
    (24) Should the Commission include the additional swap data element 
related to settlement included in the

[[Page 21613]]

CDE Technical Guidance? \247\ Please comment on alternative methods to 
report offshore currencies that are not included in ISO 4217 currency 
code list.
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    \247\ The settlement data element in the CDE Technical Guidance 
is 2.21 (Settlement location).
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10. Category: Transaction-Related
    The Commission is proposing to require reporting counterparties 
report fifteen data elements that provide information about each swap 
transaction.\248\ The Commission believes this information is currently 
being reported to SDRs. Six of these data elements are consistent with 
the CDE Technical Guidance.
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    \248\ In appendix 1, these data elements are: Allocation 
indicator (81); Non-standardized term indicator (82); Block trade 
election indicator (83); Effective date (84); Expiration date (85); 
Execution timestamp (86); Reporting timestamp (87); Platform 
identifier (88); Prime brokerage transaction identifier (89); Prime 
brokerage transaction indicator (90); Prior USI (for one-to-one and 
one-to-many relations between transactions) (91); Prior UTI (for 
one-to-one and one-to-many relations between transactions) (92); 
Unique swap identifier (USI) (93); Unique transaction identifier 
(UTI) (94); and Jurisdiction indicator (95).
---------------------------------------------------------------------------

    The Commission requests specific comment on the following 
transaction-related data elements:
    (25) Should the Commission include the additional swap data 
elements related to transaction included in the CDE Technical Guidance? 
Are there additional transaction-related data elements the Commission 
should include beyond the CDE Technical Guidance?
    (26) Should the Commission expand the Non-standardized term 
indicator (82) data element to apply to any non-standard term, 
regardless of impact on price? Should the Commission instead create a 
part 45-specific data element for non-standard terms that would not be 
publicly disseminated, and still have Non-standardized term indicator 
(82) for real-time public reporting?
    (27) The Commission is considering including a data element called 
``Trade execution requirement indicator'' to indicate whether a swap is 
subject to the Commission's trade execution mandate. The Commission 
requests specific comment on whether commenters believe this data 
element could be reported.
11. Category: Transfer
    The Commission is proposing to require reporting counterparties to 
report one data element related to changing SDRs.\249\ This data 
element would be necessary if the Commission adopts proposed Sec.  
45.10(d) permitting reporting counterparties to change the SDR to which 
they report data for a given swap. Without this data element, the 
Commission is concerned there would be swaps in the SDR that would 
appear open but not updated because the reporting counterparty reports 
to a different SDR.
---------------------------------------------------------------------------

    \249\ In appendix 1, this data element is: New SDR identifier 
(96).
---------------------------------------------------------------------------

12. Category: Valuation
    The Commission is proposing to require reporting counterparties 
report six valuation data elements.\250\ Nearly all of this information 
is currently being reported to SDRs. Four data elements are consistent 
with the CDE Technical Guidance. Valuation information is critical for, 
and currently used by, the Commission to monitor risk in the swaps 
market.
---------------------------------------------------------------------------

    \250\ In appendix 1, these data elements are: Last floating 
reference value (97); Last floating reference reset date (98); 
Valuation amount (99); Valuation currency (100); Valuation method 
(101); and Valuation timestamp (102).
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    The Commission requests specific comment on the following related 
to the valuation data elements:
    (28) The Commission is considering including the following 
valuation data elements that were not included in the CDE Technical 
Guidance: Discount index; discount index tenor period; discount index 
tenor period multiplier; next floating reference reset date; underlying 
spot or reference rate. Would reporting counterparties be able to 
report this information to SDRs each day? Could the Commission obtain 
this information from different source? Could the Commission require 
this information less frequently? Is reporting reset dates more 
efficient than reporting the full calendar generation logic (including 
business day calendars and reset lookback terms) of swaps?
    (29) The CFTC intends to collect information to independently 
validate individual swap values (also known as ``mark-to-market'' or 
``fair value''), portfolio aggregated values, and the value of 
collateral posted to meet initial and variation margin requirements. 
One method is to require parties to report the aggregate valuations of 
all financial instruments (including swaps and other cross margined 
products) associated with a Collateral Portfolio Code. What other 
validation and cross referencing information should the Commission 
collect in addition to the proposed data elements? Is there a more 
efficient way to collect data on the value of individual swaps, 
portfolios, and the margin posted and collected against these 
positions?
13. Category: Collateral and Margins
    The Commission is proposing to require reporting counterparties 
report fourteen collateral and margins data elements.\251\ This 
information is not currently being reported to SDRs. Twelve of these 
data elements are consistent with the CDE Technical Guidance. One data 
element, Affiliated counterparty for margin and capital indicator 
(103), will help the Commission monitor compliance with the uncleared 
margin requirements. The two remaining CFTC-specific data elements are 
indicators and codes that will help the Commission understand how the 
margin and collateral data is being reported by reporting 
counterparties. Margin and collateral information is critical for the 
Commission to monitor risk in the swaps market. When other 
jurisdictions implement the CDE Technical Guidance, sharing this 
information with other regulators will permit regulators to create a 
global picture of swaps risk.
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    \251\ In appendix 1, these data elements are: Affiliated 
counterparty for margin and capital indicator (103); 
Collateralisation category (104); Collateral portfolio code (105); 
Portfolio containing non-reportable component indicator (106); 
Initial margin posted by the reporting counterparty (post-haircut) 
(107); Initial margin posted by the reporting counterparty (pre-
haircut) (108); Currency of initial margin posted (109); Initial 
margin collected by the reporting counterparty (post-haircut) (110); 
Initial margin collected by the reporting counterparty (pre-haircut) 
(111); Currency of initial margin collected (112); Variation margin 
posted by the reporting counterparty (pre-haircut) (113); Currency 
of variation margin posted (114); Variation margin collected by the 
reporting counterparty (pre-haircut) (115); and Currency of 
variation margin collected (116).
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    The Commission requests specific comment on the following related 
to the collateral and margin data elements:
    (30) The Commission is interested in determining the quality of 
collateral posted. Comparing pre- and post-haircut values is one way to 
gain this information. Should the Commission consider other ways, such 
as collecting specific information on the contents of the collateral 
portfolio?
    (31) The proposed swap data elements allow for single collateral 
portfolio ID for both initial margin and variation margin. Should the 
Commission consider other approaches to collecting this information to 
account for when variation margin cash flows are separated between 
swaps that may not all be subject to initial margin?
    (32) The Commission is proposing to collect new margin and 
collateral information from reporting counterparties that are SDs, 
MSPs, and DCOs. Some of this information could be reported at the 
portfolio level, rather than the transaction level. Do reporting 
counterparties or SDRs have feedback for the Commission on how 
portfolio level, as opposed to transaction level, reporting would work 
in practice? Are

[[Page 21614]]

there challenges the Commission should consider? What are alternatives 
or solutions for collecting this information?
Request for Comment
    The Commission additionally requests comment on all aspects of the 
proposed swap data elements in appendix 1. The Commission requests 
specific comment on the following:
    (33) Are there any data elements not included in appendix 1 that 
commenters feel should be prioritized for standardization? Please 
explain why and provide relevant information that would assist with 
standardizing any suggested data elements.
    (34) The Commission is not proposing data elements by leg for 
multi-leg products where some data elements are reported more than once 
per leg. The Commission thinks that it is best to leave the 
implementation details to market conventions and SDR requirements. 
Should the Commission consider another approach for leg-level 
reporting? If so, please provide details on the suggested approach.
    (35) The Commission has not proposed any specific implementation 
requirement to report multiple values for the same data element when 
applicable. The Commission thinks that it is best to leave the 
implementation details to market conventions and SDR requirements. 
Should the Commission consider a set approach to report multiple 
values? If so, please provide details on the suggested approach.
    (36) The Commission is considering requiring reporting 
counterparties to indicate whether a specific swap: (1) Was entered 
into for dealing purposes (as opposed to hedging, investing, or 
proprietary trading); and/or (2) need not be considered in determining 
whether a person is a swap dealer or need not be counted towards a 
person's de minimis threshold, as described in paragraph (4) of the 
``swap dealer'' definition in Sec.  1.3 of the Commission's 
regulations, pursuant to one of the exclusions or exceptions in the 
swap dealer definition (e.g., the insured depository institution 
provision in paragraph (4)(C) or exclusion in paragraph (5) of the 
``swap dealer'' definition in Sec.  1.3, the inter-affiliate exclusion 
in paragraph (6)(i) of the ``swap dealer'' definition, etc.). In the 
past, the Commission staff has identified the lack of these data 
elements as limiting constraints on the usefulness of SDR data to 
identify which swaps should be counted towards a person's de minimis 
threshold, and the ability to precisely assess the current de minimis 
threshold or the impact of potential changes to current 
exclusions.\252\ Given the Commission's ongoing surveillance for 
compliance with the swap dealer registration requirements, the 
Commission requests comment on this potential field.
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    \252\ See De Minimis Exception to the Swap Dealer Definition, 83 
FR 27444, 27449 (proposed June 12, 2018); Swap Dealer De Minimis 
Exception Final Staff Report at 19 (Aug. 15, 2016) available at 
https://www.cftc.gov/sites/default/files/idc/groups/public/@swaps/documents/file/dfreport_sddeminis081516.pdf; Swap Dealer De Minimis 
Exception Preliminary Report at 15 (Nov. 18, 2015), available at 
https://www.cftc.gov/sites/default/files/idc/groups/public/@swaps/documents/file/dfreport_sddeminis_1115.pdf.
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VI. Compliance Date

    Market participants raised questions in the Roadmap comment letters 
about the compliance schedules for the Commission's proposed reporting 
rules amendments. Commenters raised various concerns about the 
compliance schedule. For instance, the SDRs requested that system 
updates that would result from any rule changes happen all at 
once.\253\ Others suggested phasing in any SDR obligations before 
requiring reporting counterparty changes.\254\ Multiple market 
participants requested that the rulemakings take place simultaneously 
to inform one another.\255\ Commenters also cautioned against 
artificial deadlines,\256\ requested avoiding compliance dates at the 
end of the calendar year during holidays and code freezes,\257\ and 
requested that the Commission consider deadlines for changes in foreign 
jurisdictions when setting compliance dates.\258\
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    \253\ Joint SDR Letter at 12.
    \254\ Letter from Chatham at 5-6; Joint NRECA-APPA Letter at 3.
    \255\ Joint SDR Letter at 1; Letter from GFXD of the GFMA at 5; 
Joint ISDA-SIFMA Letter at 2-3; Letter from LCH at 2.
    \256\ Letter from Chatham at 5.
    \257\ Joint SDR Letter at 12.
    \258\ Id.
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    The Commission understands that market participants will need a 
sufficient implementation period to accommodate any of the changes 
proposed in the three NPRMs that are adopted by the Commission. The 
Commission expects to finalize all rules at the same time, even though 
the proposals were approved separately. The Commission also expects 
that the compliance date for the Roadmap rules that the Commission 
adopts other than the rules on UTIs in Sec.  45.5 would be one year 
from the date the final rulemakings are published in the Federal 
Register.
    The Commission expects that the compliance date for the rules on 
UTIs in Sec.  45.5 would be December 31, 2020, in accordance with the 
UTI implementation deadline recommended by the FSB.\259\ As a 
participant in the international swaps data harmonization initiatives 
described in section 1.C above, the Commission fully supports the 
adoption of UTIs and its role in facilitating the aggregation of swaps 
data reported to SDRs. While the Commission recognizes that the 
expected compliance date of December 31, 2020 for Sec.  45.5 will be 
sooner than the other changes proposed in the three NPRMs, the 
Commission believes that this earlier compliance date will not pose any 
substantial difficulties due to the limited nature of the proposed 
changes in Sec.  45.5.\260\
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    \259\ See Financial Stability Board, Governance Arrangements for 
the Unique Transaction Identifier (UTI), Conclusions and 
Implementation Plan (Dec. 2017), Section 5.2.
    \260\ The Commission recognizes commenters' concerns about end-
of-year code freezes. The Commission encourages market participants 
to make the necessary code changes to comply with Sec.  45.5 earlier 
than the end-of-year deadline.
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    The Commission requests comment on all aspects of the proposed 
compliance data. The Commission requests specific comment on the 
following:
    (37) Part 20 of the Commission's regulations (``Large Trader 
Reporting for Physical Commodity Swaps'') contains a ``sunset 
provision'' in Sec.  20.9 that would take effect upon ``a Commission 
finding that, through the issuance of an order, operating [SDRs] are 
processing positional data and that such processing will enable the 
Commission to effectively surveil trading in paired swaps and swaptions 
and paired swap and swaption markets.'' \261\ The Commission can now 
analyze swap data from the SDRs for various purposes, such as re-
evaluating the current swap categories and determine appropriate 
minimum block and cap sizes in part 43. In addition, the same physical 
commodity swaps reported to the Commission directly through part 20 
reporting are being reported to SDRs under part 45. In conjunction with 
the Commission's proposals to update its swap reporting regulations, 
should the Commission review part 20 to determine whether it would be 
appropriate to sunset part 20 reporting according to the Sec.  20.9?
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    \261\ 17 CFR 20.9.
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VII. Related Matters

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA'') requires federal agencies, 
in promulgating rules, to consider the impact of those rules on small 
entities.\262\ The Commission has

[[Page 21615]]

previously established certain definitions of ``small entities'' to be 
used by the Commission in evaluating the impact of its rules on small 
entities in accordance with the RFA.\263\ The amendments to parts 45, 
46, and 49 proposed herein would have a direct effect on the operations 
of DCMs, DCOs, MSPs, reporting counterparties, SDs, SDRs, and SEFs. The 
Commission has previously certified that DCMs,\264\ DCOs,\265\ 
MSPs,\266\ SDs,\267\ SDRs,\268\ and SEFs \269\ are not small entities 
for purpose of the RFA.
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    \262\ See 5 U.S.C. 601 et seq.
    \263\ See Policy Statement and Establishment of ``Small 
Entities'' for purposes of the Regulatory Flexibility Act, 47 FR 
18618 (Apr. 30, 1982).
    \264\ See id.
    \265\ See Derivatives Clearing Organization General Provisions 
and Core Principles, 76 FR 69334, 69428 (Nov. 8, 2011).
    \266\ See Swap Dealer and Major Swap Participant Recordkeeping, 
Reporting, and Duties Rules, 77 FR 20128, 20194 (Apr. 3, 2012) 
(basing determination in part on minimum capital requirements).
    \267\ See Swap Trading Relationship Documentation Requirements 
for Swap Dealers and Major Swap Participants 76 FR 6715 (Feb. 8, 
2011).
    \268\ See Swap Data Repositories; Proposed Rule, 75 FR 80898, 
80926 (Dec. 23, 2010) (basing determination in part on the central 
role of SDRs in swaps reporting regime, and on the financial 
resource obligations imposed on SDRs).
    \269\ Core Principles and Other Requirements for Swap Execution 
Facilities, 78 FR 33476, 33548 (June 4, 2013).
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    Various proposed amendments to parts 45, 46, and 49 would have a 
direct impact on all reporting counterparties. These reporting 
counterparties may include SDs, MSPs, DCOs, and non-SD/MSP/DCO 
counterparties. Regarding whether non-SD/MSP/DCO reporting 
counterparties are small entities for RFA purposes, the Commission 
notes that CEA section 2(e) prohibits a person from entering into a 
swap unless the person is an eligible contract participant (``ECP''), 
except for swaps executed on or pursuant to the rules of a DCM.\270\ 
The Commission has previously certified that ECPs are not small 
entities for purposes of the RFA.\271\
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    \270\ See 7 U.S.C. 2(e).
    \271\ See Opting Out of Segregation, 66 FR 20740, 20743 (Apr. 
25, 2001). The Commission also notes that this determination was 
based on the definition of ECP as provided in the Commodity Futures 
Modernization Act of 2000. The Dodd-Frank Act amended the definition 
of ECP as to the threshold for individuals to qualify as ECPs, 
changing ``an individual who has total assets in an amount in excess 
of'' to ``an individual who has amounts invested on a discretionary 
basis, the aggregate of which is in excess of . . . .'' Therefore, 
the threshold for ECP status is currently higher than was in place 
when the Commission certified that ECPs are not small entities for 
RFA purposes, meaning that there are likely fewer entities that 
could qualify as ECPs than when the Commission first made the 
determination.
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    The Commission has analyzed swap data reported to each SDR \272\ 
across all five asset classes to determine the number and identities of 
non-SD/MSP/DCOs that are reporting counterparties to swaps under the 
Commission's jurisdiction. A recent Commission staff review of swap 
data, including swaps executed on or pursuant to the rules of a DCM, 
identified nearly 1,600 non-SD/MSP/DCO reporting counterparties. Based 
on its review of publicly available data, the Commission believes that 
the overwhelming majority of these non-SD/MSP/DCO reporting 
counterparties are either ECPs or do not meet the definition of ``small 
entity'' established in the RFA. Accordingly, the Commission does not 
believe the proposed rule would affect a substantial number of small 
entities.
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    \272\ The sample data sets varied across SDRs and asset classes 
based on relative trade volumes. The sample represents data 
available to the Commission for swaps executed over a period of one 
month. These sample data sets captured 2,551,907 FX swaps, 98,145 
credit swaps, 357,851 commodities swaps, 603,864 equities swaps, and 
276,052 interest rate swaps.
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    Based on the above analysis, the Commission does not believe that 
this proposal will have a significant economic impact on a substantial 
number of small entities. Therefore, the Chairman, on behalf of the 
Commission, pursuant to 5 U.S.C. 605(b), hereby certifies that the 
proposed rules will not have a significant economic impact on a 
substantial number of small entities.

B. Paperwork Reduction Act

    The Paperwork Reduction Act (``PRA'') \273\ 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. This proposed rulemaking would 
result in the collection of information within the meaning of the PRA, 
as discussed below. The proposed rulemaking contains collections of 
information for which the Commission has previously received control 
numbers from the Office of Management and Budget (``OMB''): OMB Control 
Numbers 3038-0096 (relating to swap data recordkeeping and reporting); 
3038-0089 (relating to pre-enactment swaps and transition swaps); and 
3038-0086 (relating to SDRs).
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    \273\ See 44 U.S.C. 3501.
---------------------------------------------------------------------------

    The Commission is proposing to amend the above information 
collections to accommodate newly proposed and revised information 
collection requirements for swap market participants and SDRs that 
require approval from OMB under the PRA. The amendments described 
herein are expected to modify the existing annual burden for complying 
with certain requirements of parts 45 and 46. The Commission proposed 
amendments to the annual burden for complying with certain requirements 
of part 49 in the 2019 Part 49 NPRM. As discussed below, the Commission 
believes the estimates for the regulations in part 49 proposed to be 
amended in this NPRM accurately estimate the burdens and do not require 
updates based on what is proposed in this NPRM.
    The Commission therefore is submitting this proposal to the OMB for 
its review in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. 
Responses to this collection of information would be mandatory. The 
Commission will protect proprietary information according to the FOIA 
and 17 CFR 145, ``Commission Records and Information.'' In addition, 
CEA section 8(a)(1) strictly prohibits the Commission, unless 
specifically authorized by the CEA, from making public ``data and 
information that would separately disclose the business transactions or 
market positions of any person and trade secrets or names of 
customers.'' \274\ The Commission is also required to protect certain 
information contained in a government system of records according to 
the Privacy Act of 1974.\275\
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    \274\ 7 U.S.C. 12(a)(1).
    \275\ 5 U.S.C. 552a.
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1. Revisions to Collection 3038-0096 (Swap Data Recordkeeping and 
Reporting Requirements)
    The Commission proposes to revise collection 3038-0096 to account 
for changes proposed to the requirements in part 45 for reporting swap 
data to SDRs. Most of the estimated hours burdens and costs provided 
below would be in addition to or subtracted from the existing hours 
burdens and costs in collection 3038-0096, with the exception that the 
proposed Sec.  45.10(d) notification requirements for changing SDRs 
would be a new burden within collection 3038-0096. As discussed in this 
section as well, the Commission is also proposing to update and correct 
some estimates in collection 3038-0096.
a. Swap Creation Data Reporting Amendments
    The Commission is proposing to amend Sec.  45.3, which requires 
SEFs, DCMs, and reporting counterparties to report swap data to SDRs 
when entering into new swaps. Some of these amendments will result in 
changes to the burden calculations. As an initial matter, the 
Commission is proposing to correct the ``total annual burden hour cost 
of all responses'' in the supporting

[[Page 21616]]

statement from $7,248 (which was the total average hour burden cost per 
respondent) to $12,553,536.
    The Commission estimates that SDRs, SEFs, DCMs, and reporting 
counterparties would incur a one-time initial burden of 10 hours per 
entity to modify their systems to adopt the changes described below, 
for a total estimated hours burden of 17,320 hours. This burden should 
be mitigated by the fact that these entities currently have systems in 
place to provide this information to the Commission. The Commission 
additionally estimates 5 hours per entity annually to perform any 
needed maintenance or adjustments to reporting systems.
    Currently, Sec.  45.3 requires SEFs, DCMs, and reporting 
counterparties to report confirmation data reports and PET data reports 
when entering into new swaps. The Commission is proposing to remove the 
requirement for SEFs, DCMs, and reporting counterparties to report 
confirmation data reports. These entities would report a single swap 
creation data report instead of separate PET data reports and 
confirmation data reports. As described above in section II.C.a, the 
Commission anticipates removing this requirement will reduce the number 
of swap creation data reports being sent to SDRs. Commission staff 
estimates that across the range of entities, the change could result in 
a 30% reduction in the number of swap creation data reports being sent 
to SDRs.
    This change would not decrease the hourly burden, but would 
decrease the number of reports from 10,000 reports per 1,732 
respondents to 7,000 reports per respondent, or a reduction of 
5,196,000 reports in the aggregate.
    The Commission is also proposing to remove the requirement for 
SEFs, DCMs, and reporting counterparties to report TR identifiers and 
swap identifiers for international swaps. This proposed amendment would 
remove the requirement to report two pieces of information within a 
required swap creation data report, without impacting the number of 
reports themselves. The requirement to report swap identifiers is 
duplicative, and would not change the burden estimate, as SEFs, DCMs, 
and reporting counterparties are required to report swap identifiers 
for all swap pursuant to Sec.  45.5. However, the removal of the 
requirement to report TR identifiers would slightly reduce the amount 
of time required to make each report, as SEFs, DCMs, and reporting 
counterparties would not need to report this information anymore. 
Therefore, the Commission estimates the removal of this requirement 
would lower the burden hours by .01 hour per report.
    However, at the same time, the Commission is proposing to require 
the reporting of UTIs instead of USIs, which are currently being 
reported in every required swap creation data report. As described 
below in the section discussing amendments to Sec.  45.5, as this 
information is reported in required swap creation data reports, the 
Commission estimates the new rules requiring SEFs, DCMs, SDRs, and 
reporting counterparties to change from reporting USIs to UTIs would 
impact the burden calculations for Sec.  45.3 by increasing the burden 
hours by .01 hour per report. As a result, the Commission estimates 
there will be no change to the burden hours for Sec.  45.3 required 
swap creation data reporting.
    The new aggregate proposed estimate for Sec.  45.3, as amended by 
the proposal is as follows:
    Estimated number of respondents: 1,732.
    Estimated number of reports per respondent: 7,000.
    Average number of hours per report: .01.
    Estimated gross annual reporting burden: 121,240.
b. Swap Continuation Data Reporting Amendments
    The Commission is proposing to amend Sec.  45.4, which requires 
reporting counterparties to report data to SDRs when swap terms change 
and daily swap valuation data. As an initial matter, the Commission is 
proposing to correct the estimated number of respondents in the 
supporting statement from 1,732 to 1,705, to reflect the fact that SEFs 
and DCMs do not report required swap continuation data under Sec.  
45.4.
    The Commission estimates that SDRs and reporting counterparties 
would incur a one-time initial burden of 10 hours per entity to modify 
their systems to adopt the changes described below, for a total 
estimated hours burden of 17,050 hours. This burden should be mitigated 
by the fact that these entities currently have systems in place to 
provide this information to the Commission. The Commission additionally 
estimates 5 hours per entity annually to perform any needed maintenance 
or adjustments to reporting systems.
    Currently, Sec.  45.4 permits reporting counterparties to report 
changes to swap terms when they occur (life cycle reporting), or to 
provide a daily report of all of the swap terms (state data reporting). 
The Commission is proposing to remove the option for state data 
reporting. Reporting counterparties would report data to SDRs only when 
swap terms change. As discussed above in section II.D, the Commission 
believes this would significantly reduce the number of required swap 
continuation data reports being sent to SDRs. Commission staff 
estimates that across asset class for each respondent, the number of 
reports would decrease by approximately 50%, reducing the number of 
reports from 207,543 reports per respondent to 103,772 reports per 
respondent, and a decrease of 176,930,408 reports in the aggregate.
    Currently, Sec.  45.4 requires SD/MSP/DCO reporting counterparties 
to report valuation data for swaps daily, and non-SD/MSP/DCO reporting 
counterparties to report valuation data quarterly. The Commission is 
proposing to remove the requirement for non-SD/MSP/DCO reporting 
counterparties to report quarterly valuation data. For the 1,585 non-
SD/MSP/DCO reporting counterparties, the Commission believes this 
change would further reduce the number of required swap continuation 
data reports being sent by 4 quarterly reports per 1,585 non-SD/MSP/DCO 
reporting counterparties, from 107,772 reports per respondent to 97,431 
reports per respondent, and a decrease of 6,340 reports in the 
aggregate.
    Separately, the Commission is proposing to expand the daily 
valuation data reporting requirement for SD/MSP/DCO reporting 
counterparties to report margin and collateral data in addition to 
valuation data. The frequency of the report would not change, but the 
Commission expects SD/MSP/DCO reporting counterparties would require 
more time to prepare each report. However, since all of this 
information is reported electronically, the Commission expects the 
increase per report to be small. The burden associated with these 
changes is anticipated to result in an increase from .003 to .004 hours 
per report, or 166,119 hours in the aggregate.
    The estimated aggregate burden for swap continuation data, as 
amended by the proposal is as follows:
    Estimated number of respondents: 1,705.
    Estimated number of reports per respondent: 97,431.
    Average number of hours per report: .004.
    Estimated gross annual reporting burden: 664,479.
c. Unique Swap Identifiers
    The Commission is proposing to amend Sec.  45.5, which requires 
SEFs, DCMs, reporting counterparties, and SDRs to generate and transmit 
USIs. As

[[Page 21617]]

an initial matter, the Commission is proposing to correct the estimated 
number of respondents and the estimated number of reports per each 
respondent. Currently, SDRs, SDs, MSPs, SEFs, and DCMs are required to 
generate USIs, but the Commission inadvertently had included the 1,585 
non-SD/MSP/DCO reporting counterparties. The Commission is proposing to 
therefore update the number or respondents to 147 SDs, MSPs, SEFs, 
DCMs, DCOs, and SDRs. However, these entities generate USIs on behalf 
of non-SD/MSP/DCO reporting counterparties for all swaps, so the 
estimated number of reports per each respondents would increase to 
115,646 reports per 147 respondents to account for the 17,000,000 new 
swaps reported each year with USIs.
    The Commission estimates that SDRs and reporting counterparties 
required to generate UTIs would incur a one-time initial burden of 1 
hour per entity to modify their systems to adopt the changes described 
below, for a total estimated hours burden of 940 hours. This burden 
should be mitigated by the fact that these entities currently have 
systems in place to provide this information to the Commission, and 
UTIs are, in most cases, less burdensome to generate than USIs. The 
Commission additionally estimates 1 hour per entity annually to perform 
any needed maintenance or adjustments to reporting systems.
    Currently, Sec.  45.5 requires SDRs to generate and transmit USIs 
for off-facility swaps with a non-SD/MSP reporting counterparty. The 
Commission is proposing to amend Sec.  45.5 to require non-SD/MSP/DCO 
reporting counterparties that are financial entities to generate and 
transmit UTIs for off-facility swaps. The Commission estimates that 
approximately half of non-SD/MSP/DCO reporting counterparties are 
financial entities. Therefore, the Commission estimates that the number 
of respondents would increase from 147 SDs, MSPs, SEFs, DCMs, DCOs, and 
SDRs to 940 with the addition of financial entities.
    At the same time, however, this would lower the number of UTIs 
generated per respondent to account for the increase in the number of 
respondents generating UTIs. The Commission estimates the estimated 
number of reports per respondent would decrease from 115,646 reports 
from 147 respondents to 18,085 reports from 940 respondents.
    The estimated aggregate burden for unique transaction identifiers, 
as amended by the proposal is as follows:
    Estimated number of respondents: 940.
    Estimated number of reports per respondent: 18,085.
    Average number of hours per report: .01.
    Estimated gross annual reporting burden: 169,999.
d. Legal Entity Identifier Amendments
    The Commission is proposing to amend Sec.  45.6, which requires 
reporting entities to have LEIs. As an initial matter, the Commission 
is proposing to revise the burden estimate for Sec.  45.6. LEIs are 
reported in required swap creation data and required swap continuation 
data reports, which are separately accounted for in the estimates for 
Sec. Sec.  45.3 and 45.4. The current estimate for Sec.  45.6 double-
counts the estimates for Sec. Sec.  45.3 and 45.4 by calculating the 
burden per data report. Instead, the burden for Sec.  45.6 should be 
based on the requirement for each counterparty to obtain an LEI. The 
Commission is proposing to revise the estimate to state that there are 
1,732 entities required to have one LEI per respondent, and revise the 
burden hours based on this change.\276\
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    \276\ The Commission is similarly revising the estimate for 
Sec.  45.7, which requires reporting counterparties to use UPIs. 
Until the Commission designates a UPI, reporting counterparties use 
the product fields unique to each SDR. As a result, until the 
Commission designates a UPI, the burden estimates for the product 
fields are accounted for in Sec. Sec.  45.3 and 45.4. To avoid 
double-counting until there is a UPI, the Commission is proposing to 
remove the burden estimate for Sec.  45.7 until the Commission 
designates a UPI.
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    Currently, Sec.  45.6 requires all entities to have LEIs. The 
Commission is proposing to amend Sec.  45.6 to require SDs, MSPs, SEFs, 
DCMs, DCOs, and SDRs to renew their LEIs annually. The proposed change 
would increase the hour burden for these entities, but would not affect 
the burden for the majority of entities required to have LEIs. 
Nonetheless, the Commission expects the burden associated with these 
changes is anticipated to result in an increase from .01 to .02 hours 
per report, and 17 hours in the aggregate.
    The estimated aggregate burden for LEIs, as amended by the proposal 
is as follows:
    Estimated number of respondents: 1,732.
    Estimated number of reports per respondent: 1.
    Average number of hours per report: .02.
    Estimated gross annual reporting burden: 35.
e. New Notifications for Changing SDRs
    The Commission is proposing amendments to Sec.  49.10(d) to require 
reporting counterparties to notify SDRs and non-reporting 
counterparties if they change the SDR to which they report swap data 
and swap transaction and pricing data. This is a new burden that is not 
covered in the collection. Reporting counterparties would be required 
to send notifications to non-reporting counterparties and SDRs if they 
elect to change the SDR to which they report data pursuant to parts 43 
and 45.
    The Commission believes this would not require reporting 
counterparties or SDRs to build any new systems or update technology. 
Reporting counterparties would continue to report, and SDRs would 
continue to accept, swap data according to current processes and 
infrastructures. The Commission estimates that no more than 15 
reporting counterparties would choose to change the SDR to which they 
report data.
    The burden applicable to reporting counterparties is estimated as 
follows:
    Estimated number of respondents: 15.
    Estimated number of reports per respondent: 1.
    Average number of hours per report: .01.
    Estimated gross annual reporting burden: .15.
2. Revisions to Collection 3038-0086 (Swap Data Access Provisions of 
Part 49 and Certain Other Matters)
a. SDR Withdrawal From Registration Amendments
    The Commission is proposing to amend Sec.  49.4, which requires 
SDRs to follow certain requirements when withdrawing from registration 
with the Commission. These requirements involve filing paperwork with 
the Commission. The Commission does not believe these changes would 
require any one-time or ongoing system updates for SDRs.
    Currently, Sec.  49.4 requires that a request to withdraw specify, 
among other items, a statement that the custodial SDR is authorized to 
make such data and records available in accordance with Sec.  1.44 of 
the Commission's regulations. The Commission is proposing to remove 
this requirement from Sec.  49.4 because Sec.  1.44 does not apply to 
SDRs or swap data. Currently, Sec.  49.4(a)(2) requires that prior to 
filing a request to withdraw, a registered SDR shall file an amended 
Form SDR to update any inaccurate information. The proposal would 
eliminate the requirement for SDRs to file an amended Form SDR prior to 
filing a request to withdraw. The burden associated with these changes 
to the

[[Page 21618]]

paperwork requirements for an SDR withdrawing from registration would 
result in a decrease of 5 hours per report.
    However, separately, the Commission is proposing amendments to 
Sec.  49.4(a)(2) to require SDRs to execute an agreement with the 
custodial SDR governing the custody of the withdrawing SDR's data and 
records prior to filing a request to withdraw with the Commission. The 
Commission believes this is current practice for SDRs, yet it would 
nonetheless be a new requirement. As a result, the Commission believes 
this would result in an increase of 5 hours per report for a 
withdrawing SDR.
    Overall, the proposed amendments to Sec.  49.4 result in no change 
to the estimated burdens for Sec.  49.4.
    The estimated aggregate burden for requirements for withdrawing 
from SDR registration, remains as follows:
    Estimated number of respondents: 1.
    Estimated number of reports per respondent: 1.
    Average number of hours per report: 40.
    Estimated gross annual reporting burden: 40.
b. SDR Data Validation Requirement Amendments
    The Commission is proposing to amend Sec.  49.10, which provides 
the requirements for SDRs in accepting SDR Data. As an initial matter, 
the Commission notes that the burden estimate for Sec.  49.10 already 
accounts for the messages SDRs send and receive in accepting swap data.
    The Commission estimates that SDRs would incur a one-time initial 
burden of 100 hours per entity to modify their systems to adopt the 
changes described below, for a total estimated hours burden of 300 
hours. This burden should be mitigated by the fact that these entities 
currently have systems in place to validate data that each SDR takes 
in. The Commission additionally estimates 100 hours per entity annually 
to perform any needed maintenance or adjustments to reporting systems.
    Currently, Sec.  49.10(a) requires SDRs to accept and promptly 
record all swap data. In the 2019 Part 49 NPRM, the Commission proposed 
amending the requirements in Sec.  49.10 by detailing separate Sec.  
49.10(e) requirements for correcting swap errors. In this release, the 
Commission is proposing separate Sec.  49.10(c) requirements for 
validating swap messages. This proposal would further specify that SDRs 
must send validation acceptance and rejection messages after validating 
SDR data. The Commission believes this would increase the number of 
reports SDRs would need to send reporting entities. The current burden 
estimate for Sec.  49.10, which right now includes Sec.  49.10(a), 
estimates each SDR sends 5,652,000 messages, for a total of almost 
17,000,000. This estimate includes the 2,626,000 messages the 
Commission estimates SDRs would be required to send to process swap 
corrections. The Commission believes this burden was estimated 
correctly in the 2019 Part 49 NPRM and already accurately accounts for 
the validation messages proposed in Sec.  49.10(c).
    The estimated aggregate burden for requirements for validating SDR 
Data, remains as follows:
    Estimated number of respondents: 3.
    Estimated number of reports per respondent: 5,652,000.
    Average number of hours per report: .00055.
    Estimated gross annual reporting burden: 9,750.
3. Revisions to Collection 3038-0089 (Pre-Enactment Swaps and 
Transition Swaps)
    Current Sec.  46.11 provides that for pre-enactment or transition 
swaps for which part 46 requires reporting of continuation data, 
reporting counterparties reporting state data as provided in part 45 
may fulfill the requirement to report errors or omissions by making 
appropriate corrections in their next daily report of state data 
pursuant to part 45. Since the Commission is proposing to remove this 
requirement from Sec.  45.4, the Commission is also proposing to remove 
the option for state data reporting from Sec.  46.11.
    The Commission does not believe this proposed amendment would 
require any system updates by SDRs or reporting counterparties. To the 
extent they did, these updates would be covered under the estimates 
above for entities making updates to comply with the change proposed in 
Sec.  45.4.
    The Commission believes the proposed change would reduce the number 
of continuation data reports reporting counterparties send SDRs for 
historical swaps by 50%. The Commission has not previously calculated 
the burden estimates for part 46 by regulatory requirement. As such, 
the Commission now estimates that to comply with proposed amended Sec.  
46.11, the 500 SD, MSP, and non-SD/MSP reporting counterparties that 
the Commission estimates are reporting historical swaps would each 
report 200 reports with an average burden of .01 hours per report, for 
a burden of 2 hours per respondent or 1,000 burden hours in the 
aggregate.
    The estimated aggregate burden for requirements for reporting 
continuation data for historical swaps would be as follows:
    Estimated number of respondents: 500.
    Estimated number of reports per respondent: 200.
    Average number of hours per report: .01.
    Estimated gross annual reporting burden: 1,000.
Request for Comment
    The Commission invites the public and other Federal agencies to 
comment on any aspect of the proposed information collection 
requirements discussed above. The Commission will consider public 
comments on this proposed collection of information in:
    1. Evaluating whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information will have a practical 
use;
    2. Evaluating the accuracy of the estimated burden of the proposed 
collection of information, including the degree to which the 
methodology and the assumptions that the Commission employed were 
valid;
    3. Enhancing the quality, utility, and clarity of the information 
proposed to be collected; and
    4. Minimizing the burden of the proposed information collection 
requirements on registered entities, including through the use of 
appropriate automated, electronic, mechanical, or other technological 
information collection techniques, e.g., permitting electronic 
submission of responses.
    Copies of the submission from the Commission to OMB are available 
from the CFTC Clearance Officer, 1155 21st Street NW, Washington, DC 
20581, (202) 418-5160 or from http://RegInfo.gov. Organizations and 
individuals desiring to submit comments on the proposed information 
collection requirements should send those comments to:
     The Office of Information and Regulatory Affairs, Office 
of Management and Budget, Room 10235, New Executive Office Building, 
Washington, DC 20503, Attn: Desk Officer of the Commodity Futures 
Trading Commission;
     (202) 395-6566 (fax); or
     [email protected] (email).
    Please provide the Commission with a copy of submitted comments so 
that all comments can be summarized and addressed in the final 
rulemaking, and please refer to the ADDRESSES section of this 
rulemaking for instructions on

[[Page 21619]]

submitting comments to the Commission. OMB is required to make a 
decision concerning the proposed information collection requirements 
between 30 and 60 days after publication of this Release in the Federal 
Register. Therefore, a comment to OMB is best assured of receiving full 
consideration if OMB receives it within 30 calendar days of publication 
of this Release. Nothing in the foregoing affects the deadline 
enumerated above for public comment to the Commission on the proposed 
rules.

C. Cost-Benefit Considerations

1. Introduction
    Since issuing the first swap reporting rules in 2012, the 
Commission has gained a significant amount of experience with swaps 
markets and products based on studying and monitoring data reported to 
SDRs.\277\ As a result of this work, the Commission has also identified 
areas for improvement in the current swap data reporting rules. Current 
limitations with the regulations have, in some cases, encouraged the 
reporting of swap data in a way that has made it difficult for the 
Commission to aggregate and analyze. As a result, the Commission is 
proposing a number of rule amendments intended to improve data quality 
and standardization to achieve the G20 goal for trade reporting to 
improve transparency, mitigate systemic risk, and prevent market 
abuse.\278\
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    \277\ The Commission has used swap data in various rulemakings, 
research, and reports. See, e.g., ``Introducing ENNS: A Measure of 
the Size of Interest Rate Swap Markets,'' Haynes R., Roberts J. 
Sharma R., and Tuckman B., January 2018; CFTC Weekly Swaps Report, 
available at www.cftc.gov/MarketReports/SwapsReports/index.htm.
    \278\ See https://www.treasury.gov/resource-center/international/g7-g20/Documents/pittsburgh_summit_leaders_statement_250909.pdf.
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    While the Commission believes the proposed amendments would create 
meaningful benefits for market participants, SDRs, and the public, 
these changes could also result in costs. 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 or issuing 
certain orders.\279\ Section 15(a) further specifies that the costs and 
benefits shall be evaluated in light of five broad areas of market and 
public concern: (1) Protection of market participants and the public; 
(2) the efficiency, competitiveness and financial integrity of markets; 
(3) price discovery; (4) sound risk management practices; and (5) other 
public interest considerations.\280\ The Commission considers the costs 
and benefits resulting from its discretionary determinations with 
respect to the section 15(a) factors.
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    \279\ 7 U.S.C. 19(a)(1).
    \280\ 7 U.S.C. 19(a)(2).
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    In this release, the Commission is proposing revisions to existing 
regulations in parts 45, 46, and 49. The Commission also is proposing 
new requirements in parts 45, 46, and 49. Together, these proposed 
revisions and additions are intended to further specify and streamline 
swap data reporting workflows and to improve the quality of data 
reporting generally. It is important to note that most of these 
regulatory changes are being made to existing systems and processes, 
therefore nearly all costs considered are incremental additions or 
updates to systems already in place. Some of the proposed amendments 
are substantive. A number of amendments, however, are non-substantive 
or technical, and therefore are not expected to have material cost-
benefits implications.\281\
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    \281\ The Commission believes there are no cost-benefit 
implications for amendments proposed to Sec. Sec.  45.1, 45.2, 45.7, 
45.8, 45.9, 45.11, 45.15, 46.1, 46.2, 46.4, 46.5, 46.8, 46.9, and 
49.2.
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    The changes proposed in this release that would result in costs to 
implement are in many cases intended to harmonize the Commission's 
reporting regulations with those of other regulators where doing so 
will not impact the Commission's ability to fulfill its regulatory 
mandates. As the FSB and CPMI-IOSCO harmonization efforts have 
incorporated many rounds of industry feedback and the Commission has 
been vocal about its support and participation,\282\ the Commission 
expects that many market participants have, to the extent possible, 
been planning and preparing for system updates to accommodate these 
important changes in the most efficient, cost-effective manner.
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    \282\ See, e.g., https://www.cftc.gov/PressRoom/SpeechesTestimony/opagiancarlo50 (``I believe the CFTC needs to be a 
leading participant in IOSCO and other international bodies. The 
CFTC currently chairs the following international committees and 
groups and serves as a member of many other ones: . . . Co-Chair, 
CPMI-IOSCO Data Harmonization Group[, and] Co-Chair, FSB Working 
Group on UTI and UPI Governance'').
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    The Commission notes that many jurisdictions have committed to 
these harmonization efforts for which the Commission is proposing 
adopting standards in this NPRM. If the Commission did not adopt these 
standards, but other jurisdictions do according to the implementation 
deadlines recommended by the FSB, unnecessary costs could be created by 
SDRs and reporting entities having to maintain unharmonized reporting 
infrastructures for CFTC reporting while other jurisdictions harmonize 
and recognize efficiencies from harmonization.
    To the extent costs and benefits are reasonably quantifiable, they 
are discussed below in this section; where they are not, they are 
discussed qualitatively. Throughout this release, the Commission has 
used the swap data currently available to estimate the expected 
quantifiable cost-benefit impact of proposed changes on certain types 
of registrants, such as the extent of state data reporting and 
duplicative creation data reports. Most of the changes proposed in this 
release alter reporting requirements for reporting counterparties, 
SDRs, SEFs, and DCMs. As a result, there will likely be some 
quantifiable costs related to either: (a) Creating new data reporting 
systems; (b) re-programming data reporting systems to meet the new 
reporting requirements; or (c) cancelling data streams, which might 
lead to archiving data and maintaining legacy systems.
    These costs are quantifiable to the extent reporting entities 
covered by the proposed regulations are able to price-out the changes 
to the IT architecture to meet the reporting requirement changes. These 
quantifiable costs, however, will likely vary because reporting 
entities vary in terms of the sophistication of their data reporting 
systems. For example, some reporting entities operate their own data 
reporting systems where they employ in-house developers and analysts to 
plan, design, code, test, establish, and monitor systems. Other 
reporting entities pay fees to third-party vendors who handle reporting 
obligations. Because reporting systems differ, the Commission 
recognizes that the quantitative costs associated with these proposed 
reporting rules in this release will vary depending on the reporting 
entities' operations and number of swaps that they execute.
    Given this understanding, the Commission has tried to provide a 
monetary range for quantifiable costs as they relate to each proposed 
reporting change discussed below. The Commission also specifically 
requests comments to help quantify the costs of changes to reporting 
systems and infrastructures that would be required to comply with the 
regulatory changes proposed in this rulemaking.
    This consideration of costs and benefits is based on the 
understanding that the swaps market functions internationally. Many 
swaps transactions involving U.S. firms occur across international 
borders, and some Commission registrants are organized

[[Page 21620]]

outside of the U.S., including many SDs. Many of the largest market 
entities often conduct operations both within and outside the U.S. 
Where the Commission does not specifically refer to matters of 
location, the discussion of costs and benefits refers to the proposed 
rules' effects on all swaps activity, whether by virtue of the 
activity's physical location in the U.S. or by virtue of the activity's 
connection with or effect on U.S. commerce under CEA section 2(i).\283\
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    \283\ See 7 U.S.C. 2(i). CEA section 2(i) limits the 
applicability of the CEA provisions enacted by the Dodd-Frank Act, 
and Commission regulations promulgated under those provisions, to 
activities within the U.S., unless the activities have a direct and 
significant connection with activities in, or effect on, commerce of 
the U.S.; or 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 enacted by the Dodd-
Frank Act. Application of section 2(i)(1) to the existing 
regulations under part 45 with respect to SDs/MSPs and non-SD/MSP 
counterparties is discussed in the Commission's Interpretive 
Guidance and Policy Statement Regarding Compliance With Certain Swap 
Regulations, 78 FR 45292 (July 26, 2013).
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2. Background
    The Commission has issued several rulemakings related to swaps 
reporting and, in those, considered the benefits and costs.\284\ Among 
others, the Commission has generally identified benefits such as 
increased transparency to both the marketplace and to regulators; 
improved regulatory understanding of risk distributions and 
concentrations in derivatives markets; more effective monitoring of 
risk profiles by regulators and regulated entities through the use of 
unique identifiers; improved regulatory oversight, and more robust data 
management systems.\285\ The Commission also identified two main areas 
where costs may be incurred: Recordkeeping and reporting.\286\
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    \284\ In 2021, the Commission provided a detailed cost-benefit 
discussion on its final swap reporting rules to ensure that market 
participants reported cleared and uncleared swaps to SDRs. See 77 FR 
at 2176-2193. In 2012, the Commission also issued final rules for 
reporting pre-enactment and transition swaps. See generally Swap 
Data Recordkeeping and Reporting Requirements: Pre-Enactment and 
Transition Swaps, 77 FR 35200 (June 12, 2012). In 2016, the 
Commission amended its regulations to clarify the reporting 
obligations for DCOs and swap counterparties with respect to cleared 
swaps. See generally Amendments to Swap Data Recordkeeping and 
Reporting Requirements for Cleared Swaps, 81 FR 41736 (June 27, 
2016).
    \285\ See, e.g., 77 FR at 2176-2193; 77 FR at 35217-35225; 81 FR 
at 41758-41770.
    \286\ See, e.g., id.
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    Since establishing swap data reporting requirements, the Commission 
gained experience with swap data reported to, and held by, SDRs. Based 
on this experience, along with extensive feedback received from market 
participants, the Commission believes that improving data quality would 
significantly enhance the data's usefulness, allow the Commission to 
realize the objectives of the original rule (e.g., market risk 
monitoring in furtherance of the G20 commitments discussed above), but 
also reduce the burden on reporting entities and SDRs through 
harmonizing, streamlining and clarifying data requirements. In this 
release, the Commission has focused on the swap data reporting 
workflows, the swap data elements reporting counterparties report to 
SDRs, and the validations SDRs apply to help ensure the swap data they 
receive is accurate. The Commission is also proposing to modify a 
number of other regulations for clarity and consistency.
    Prior to discussing the proposed rule changes, the Commission 
describes below the current environment that would be impacted by these 
changes. Three SDRs are currently provisionally registered with the 
Commission: CME, DDR, and ICE. The changes proposed should apply 
equally to all three SDRs.
    The current reporting environment also involves third-party service 
providers. These entities assist market participants with fulfilling 
the applicable data reporting requirements, though the reporting 
requirements do not apply to third-party service providers directly. 
From looking at current data, the Commission estimates that third-party 
service providers do not account for a large portion of the overall 
record submissions to SDRs, but provide an important service for firms 
that choose to outsource their reporting needs.
    Finally, the current reporting environment depends on reporting 
counterparties that report swap data to SDRs. The Commission currently 
estimates reporting counterparties include 107 provisionally-registered 
SDs, 24 SEFs, 3 DCMs, 14 DCOs, and 1,585 non-SD/MSP/DCO reporting 
counterparties. There is considerable variation within each of these 
reporting counterparty types as to size and swaps market activity. The 
Commission understands that most SDs and nearly all SEFs, DCMs, DCOs, 
and SDRs have sophisticated technology dedicated to data reporting 
because of the frequency with which they either enter into or 
facilitate the execution of swaps, or accept swap data from reporting 
entities. The Commission also believes that these entities have greater 
access to resources to update these systems as regulatory requirements 
change. Further, the Commission's data analysis implies that much of 
the cost and benefit of the proposed changes will be incurred by SDs--
the most sophisticated participants in the market with the most 
experience reporting under the E.U. and U.S. reporting regimes--that 
accounted for over 70% of records submitted to SDRs in December 
2019.\287\
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    \287\ Analyzing SDR data from December 2019, CFTC staff found 
over 70% of all records submitted to the SDRs came from SDs. Between 
15% and 20% came from DCOs, 4% came from SEFs, and the remaining 
came from non-SD reporting counterparties.
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    As to non-SD/MSP/DCO reporting counterparties--a category 
accounting for a small fraction of SDR reports--the Commission believes 
there is wide variation in the reporting systems maintained by and 
resources available to them. Many of these reporting counterparties are 
large, sophisticated financial entities, including banks, hedge funds, 
and asset management firms that the Commission believes have devoted 
resources and systems similar to those available to SDs, SEFs, DCMs, 
DCOs, and SDRs. However, the Commission recognizes that a significant 
number of these reporting counterparties are smaller, less-
sophisticated swap end-users entering into swaps less frequently to 
hedge commercial risk.
    For these entities, for which the Commission has a significant 
interest in ensuring access to the U.S. swaps market without 
unnecessary costs or burdens, the Commission has difficulty accurately 
estimating the cost impact of the changes to its regulations proposed 
in this NPRM. The challenge stems from the wide range of complexity 
firms in this group face in their reporting burdens--a large asset 
manager with billions of dollars in assets under management and a large 
swaps portfolio could have a reporting system as complex and 
sophisticated as an SD while a small hedge fund with a limited swaps 
portfolio might rely on third-party providers to handle its reporting 
obligations.
    As discussed in the Roadmap, the Commission is in the process of 
improving data reporting requirements, including modifying the 
requirements to be more specific and more consistent with other 
regulators' requirements. The amendments proposed in this rulemaking 
are one part of this larger effort to ensure that better-quality data 
is available to market participants and the Commission.
    Current regulations have led to swap data reports that do not fully 
meet the Commission's needs for data quality. For example, the current 
appendix to part 45 provides no standards, formats, or allowable values 
for the swap data

[[Page 21621]]

that reporting counterparties report to SDRs and there is no technical 
specification or other guidance associated with the current rule. Since 
the industry has not identified a standard for all market participants 
to use, market participants have reported information in many different 
ways, often creating difficulties in data harmonization, or even 
identification, within and across SDRs.
    It is not uncommon for Commission staff to find discrepancies 
between open swaps information available to the Commission and swap 
transaction data reported for the same swaps. In the processing of swap 
data to generate the CFTC's Weekly Swaps Report,\288\ for example, 
there are instances when the notional amount differs between the 
Commission's open swaps information and the swap transaction data 
reported for the same swap. While infrequent errors can be expected, 
the wide variation in standards among SDRs has increased the challenge 
of swap data analysis and often has required significant data cleaning 
and data validation prior to any data analysis effort. This has meant 
that the Commission has, in some but not all cases, determined that 
certain data analyses were not feasible, harming its ability to oversee 
market activity.
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    \288\ See CFTC's Weekly Swaps Report, available at https://www.cftc.gov/MarketReports/SwapsReports/index.htm.
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    In addition to the lack of standardization across SDRs, the 
Commission is concerned that the current timeframes for reporting swap 
data may have contributed to the prevalence of errors. Common examples 
of errors include incorrect references to underlying currencies, such 
as a notional value incorrectly linked to U.S. dollars instead of 
Japanese Yen. Among others, these examples strongly suggest a need for 
standardized, validated swap data as well as additional time to review 
the accuracy of the data report.
    Based on its experience with data reporting, the Commission 
believes that certain regulations, particularly in parts 45, 46, and 
49, should be amended to improve swap data accuracy and completeness. 
This release also includes one amendment to part 49 to improve the 
process for an SDR's withdrawal from registration. Many of the proposed 
regulations have costs and benefits that must be considered. These will 
be discussed individually below.
    For each proposed amendment discussed below, the Commission 
summarizes the changes,\289\ and identifies and discusses the costs and 
benefits attributable to the proposed changes. Since many of the 
changes require technical updates to reporting systems, where 
significant, CFTC staff estimated the hourly wages market participants 
will likely pay software developers to implement each change to be 
between $47 and $100 per hour.\290\ Relevant amendments below will list 
a low-to-high range of potential cost as determined by the number of 
developer hours estimated by technical subject matter experts 
(``SMEs'') in the Commission's Office of Data and Technology; 
amendments where this type of cost estimate is not relevant will not. 
Finally, the Commission considers the costs and benefits of all of the 
proposed rules jointly in light of the five public interest 
considerations in CEA section 15(a).
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    \289\ As described throughout this release, the Commission is 
also proposing a number of non-substantive, conforming rule 
amendments in this release, such as renumbering certain provisions 
and modifying the wording of existing provisions. Non-substantive 
amendments of this nature may be described in the cost-benefit 
portion of this release, but the Commission will note that there are 
no costs or benefits to consider.
    \290\ Hourly wage rates came from the Software Developers and 
Programmers category of the May 2018 National Occupational 
Employment and Wage Estimates Report produced by the U.S. Bureau of 
Labor Statistics, available at https://www.bls.gov/oes/current/oes_nat.htm. The 25th percentile was used for the low range and the 
90th percentile was used for the upper range ($36.07 and $76.78, 
respectively). Each number was multiplied by an adjustment factor of 
1.3 for overhead and benefits (rounded to the nearest whole dollar) 
which is in line with adjustment factors the CFTC has used for 
similar purposes in other final rules adopted under the Dodd-Frank 
Act. See, e.g., 77 FR at 2173 (using an adjustment factor of 1.3 for 
overhead and other benefits). These estimates are intended to 
capture and reflect U.S. developer hourly rates market participants 
are likely to pay when complying with the proposed changes. We 
recognize that individual entities may, based on their 
circumstances, incur costs substantially greater or less than the 
estimated averages and encourage commenters to share relevant cost 
information if it differs from the numbers reported here.
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3. Baselines
    There are multiple baselines for the costs and benefits that might 
arise from the proposed regulations in this release. The Commission 
believes that the baseline for the proposed amendments to Sec. Sec.  
45.3, 45.4, 45.5, 45.6, 45.10, 45.12, 45.13, 46.3, 46.10, 46.11, and 
49.4 are the current regulations, as discussed above in sections II, 
III, and IV. The baseline for proposed Sec.  49.10 is current practice, 
which is that SDRs may be performing validations according to their own 
specifications, as discussed above in section IV.C.
4. Costs and Benefits of Proposed Amendments to Part 45
a. Sec.  45.3--Swap Data Reporting: Creation Data
    The Commission is proposing to amend Sec.  45.3 to: (i) Remove the 
requirement for SEFs, DCMs, and reporting counterparties to report 
separate PET and confirmation data reports; (ii) extend the deadline 
for reporting required swap creation data and allocations to T+1 or 
T+2, depending on the reporting counterparty; (iii) remove the 
requirement for SDRs to map allocations; and (iv) remove the 
international swap reporting requirements.
    The Commission believes: (i) Reporting a single required creation 
data report would reduce complexity for reporting counterparties, as 
well as for the Commission; (ii) extending the deadline to report 
required swap creation data and allocations would improve data quality 
without impacting the Commission's ability to perform its regulatory 
responsibilities; (iii) the requirements for SDRs to map allocations 
and the international swap requirements are unnecessary.
(A) Costs and Benefits
    Requiring a single confirmation data report for SEFs, DCMs, and 
reporting counterparties would benefit SDRs, SEFs, DCMs, and reporting 
counterparties by reducing the number of swap data reports being sent 
to and stored by SDRs. Extending the deadline to report required swap 
creation data would benefit SDRs, SEFs, DCMs, and reporting 
counterparties by giving SEFs, DCMs, and reporting counterparties more 
time to report swap data to SDRs, likely reducing the number of errors 
SDRs would need to follow-up on with reporting entities. Since 
reporting data ASATP requires reporting systems to monitor activity and 
report in real-time, the proposed time will also benefit SDRs, SEFs, 
DCMs, and reporting counterparties by allowing them to implement a 
simpler data reporting workflow that assembles and submits data once 
per day.
    Removing the requirements to map allocations and international 
swaps would benefit SDRs by removing the need to manage separate 
processes to maintain this information. In addition, SEFs, DCMs, and 
reporting counterparties would benefit from reporting allocations 
directly via swap data reporting, and would no longer have to report 
information about international swaps that would be

[[Page 21622]]

rendered unnecessary given the UTI standards.
    The initial cost of updating systems to adopt the changes proposed 
in Sec.  45.3, as well as reporting-related changes that will be 
discussed below, are expected to be small. The Commission expects that 
many SEFs, DCMs, and reporting counterparties have systems designed to 
report swap data to SDRs ASATP after execution, as well as systems that 
report separate PET and confirmation swap reports as well as 
information about international swaps. SDRs likewise have systems to 
accept both PET and confirmation swap data reports, possibly separate 
or combined, as well as systems to map allocations and intake 
information about international swaps.
    In both cases, this is a reduction in complexity and software 
functionality. Reporting counterparties no longer have to generate and 
submit multiple messages, which will require limited cost and effort to 
implement. SDRs will also require few, if any, updates to ingest fewer 
messages.
    The Commission expects costs associated with the changes proposed 
in this release would be further mitigated by the fact that they 
involve updates to current systems, rather than having to create new 
reporting systems as most firms had to do when ESMA and the CFTC first 
required swaps reporting. CFTC SMEs estimate the cost of these changes 
to be small, but not zero for large reporting entities and SDRs due to 
the reduction in complexity and system features. However, over time, 
after these one-time system updates are implemented, the Commission 
expects SDRs, SEFs, DCMs, and reporting counterparties would recognize 
significant benefits through reduced costs and complexity associated 
with reporting streamlined data to SDRs over an extended time frame.
    The Commission preliminarily believes that on balance the expected 
benefits justify the proposed rule amendments notwithstanding their 
expected mitigated costs.
(B) Request for Comment
    The Commission requests comment on its considerations of the costs 
and benefits of the proposed amendments to Sec.  45.3. Are there 
additional costs or benefits that the Commission should consider that 
have not yet been highlighted? Commenters are encouraged to include 
both qualitative and quantitative assessments of these benefits.
    Are there any other alternatives that may provide preferable costs 
or benefits than the costs and benefits related to the proposed 
amendments? Specific areas of interest include the following:
    (38) The Commission has noted benefits of providing extended 
timeframes for regulatory reporting, including improved data quality 
and reduced number of reports for SDRs to maintain. Are there 
additional benefits the Commission has not identified given the revised 
structure? Are these benefits likely to be especially notable for 
certain types of reporting entities?
    (39) The Commission has noted that the revised reporting framework 
should, over time and after initial outlays, reduce costs for all 
reporting entities, given the ability of an entity to retain but update 
their current reporting systems. Are there costs the Commission has not 
anticipated in these revisions? Are there specific types of reporters 
that are more likely to adjust their current reporting systems? What 
would be the reason for these adjustments, and the costs/benefits 
associated with these adjustments?
    (40) The Commission has outlined two revised reporting frameworks, 
depending on the type of the reporting entity (e.g., T+1 for SDs, MSPs 
and DCOs). Does this division into two reporting categories make sense 
given the current or anticipated reporting systems of the entities? 
Would reporting be improved if any entity types were moved from one to 
the other category?
    (41) The Commission requests comment on the range of costs SDRs, 
SEFs, DCMs, DCOs, SDs, MSPs, and non-SD/MSP/DCO reporting 
counterparties would have to spend to comply with the amendments 
proposed in Sec.  45.3.
b. Sec.  45.4--Swap Data Reporting: Continuation Data
    The Commission is proposing to amend Sec.  45.4 to: (i) Remove the 
option for reporting counterparties to report state data as required 
swap continuation data; (ii) extend the deadline for reporting required 
swap continuation data to T+1 or T+2, depending on the reporting 
counterparty; (iii) remove the requirement for non-SD/MSP/DCO reporting 
counterparties to report valuation data quarterly; and (iv) require SD/
MSP/DCO reporting counterparties to report margin and collateral data 
daily.
    The Commission believes: (i) Removing the option for state data 
reporting would reduce the number of messages being sent to and stored 
by SDRs; (ii) extending the deadline to report required swap 
continuation data would improve data quality without impacting the 
Commission's ability to perform its regulatory responsibilities; (iii) 
removing the valuation requirement for non-SD/MSP/DCO reporting 
counterparties would reduce burdens for these counterparties, which 
tend to be smaller and less-active in the swaps market, without 
sacrificing any important information; and (iv) requiring SD/MSP/DCO 
reporting counterparties to report margin and collateral daily is 
essential for the Commission to monitor risk in the swaps market.
(A) Costs and Benefits
    Removing state data reporting would benefit reporting 
counterparties by significantly reducing the number of messages they 
report to SDRs. Relatedly, this would benefit SDRs by significantly 
reducing the number of messages they need to ingest, validate, process, 
and store In 2019, CFTC staff estimates that the Commission received 
over 557,000,000 swap messages from CME, DDR, and ICE. Staff analysis 
from December 2019 showed over 50% of all records submitted were state 
data messages.
    Extending the deadline to report required swap continuation data 
would benefit SDRs and reporting counterparties by likely reducing the 
number of errors SDRs would need to notify reporting counterparties 
about. Removing the requirement for non-SD/MSP/DCO reporting 
counterparties to report quarterly valuation data would reduce 
reporting costs for these estimated 1,585 counterparties, which tend to 
be smaller and less-active in the swaps market. Because these entities 
are small relative to the swaps market as a whole, the lack of 
quarterly valuation data is not anticipated to greatly inhibit the 
market oversight responsibilities of the Commission. Requiring SD/MSP/
DCO reporting counterparties to report margin and collateral daily 
would benefit the swaps market by improving the Commission's ability to 
monitor risk in the swaps market, particularly for uncleared swaps. 
Because current part 45 reports do not include collateral information, 
the Commission is often able to identify the level of risk inherent to 
a swap (or set of swaps), but not fully understand the amount of 
collateral protection a counterparty holds to mitigate this risk.
    The initial costs of updating systems to adopt the changes proposed 
in Sec.  45.4 are expected to range from low for many impacted parties 
to moderate for others, and would be offset by the lessened reporting 
burden. For instance, the Commission understands that many reporting 
counterparties already have systems designed to report swap data, 
including snapshot data, to SDRs

[[Page 21623]]

according the current timelines--extending the timeline for reporting 
reduces the complexity of the reporting system and removing a message 
type that accounts for over 50% of the existing message traffic is a 
significant reduction in reporting burden. SDRs likewise have systems 
to accept snapshot data which would require minimal updates (based on 
the experience of CFTC SMEs with similar systems) and reduced data 
storage costs.
    Non-SD/MSP/DCO reporting counterparties would need to update their 
systems to stop sending valuation data to SDRs. In contrast, SD/MSP/DCO 
reporting counterparties would need to program systems to begin 
reporting margin and collateral data in addition to current valuation 
data. The T+1 reporting timeline greatly mitigates this cost by 
allowing end-of-day data integration and validation processes, which 
according to CFTC SMEs and staff conversations with industry 
participants provides flexibility in exactly how and when system 
resources are used to produce the reports and better aligns trade and 
collateral and margin data reporting streams.
    Additionally, over time, after these one-time system updates, the 
Commission expects SDRs, SEFs, DCMs, and reporting counterparties would 
recognize the full benefits of the reduced costs associated with 
reporting streamlined data to SDRs in a more reasonable time frame. 
While the Commission understands reporting margin and collateral data 
to SDRs could involve considerable expense for the estimated 121 SD/
MSP/DCO reporting counterparties, the Commission notes that ESMA 
currently requires the reporting of much of the same information to 
E.U.-registered TRs. The Commission expects this to mitigate the costs 
for SDRs that serve multiple jurisdictions.
    The Commission expects this could also mitigate the costs for most 
of the 121 SD/MSP/DCO reporting counterparties given that they are 
likely active in the European swap markets and thus already fall under 
similar requirements. The Commission also expects that, for the other 
relevant reporting entities, collateral and margin information is 
already known by the entity. The primary cost would be in integrating 
existing collateral data streams into SDR reporting workflows. CFTC 
SMEs estimate the cost of these changes to be small to moderate for 
large reporting entities and SDRs due to the reduction in complexity 
and system features, as well as the extended timeline to integrate 
potentially disparate data streams.
    The Commission preliminarily believes that on balance the expected 
benefits justify the proposed rule amendments notwithstanding their 
expected mitigated costs.
(B) Request for Comment
    The Commission requests comment on its considerations of the costs 
and benefits of the proposed amendments to Sec.  45.4, given that there 
might be different transaction reporting and risk reporting systems. 
Are there additional costs or benefits that the Commission should 
consider? Commenters are encouraged to include both qualitative and 
quantitative assessments of these benefits.
    Are there any other alternatives that may provide preferable costs 
or benefits than the costs and benefits related to the proposed 
amendments? Specific areas of interest include the following:
    (42) The Commission requests comment on the range of costs SDRs, 
SEFs, DCMs, DCOs, SDs, MSPs, and non-SD/MSP/DCO reporting 
counterparties would have to spend to comply with the amendments 
proposed in Sec.  45.4.
c. Sec.  45.5--Unique Swap Identifiers
    The Commission is proposing to amend Sec.  45.5 to: (i) Require 
reporting counterparties use UTIs instead of USIs for new swaps; (ii) 
require SD/MSP entities that are financial entities to generate UTIs 
for off-facility swaps; and (iii) permit non-SD/MSP/DCO reporting 
counterparties that are not financial entities to ask their SDR to 
generate UTIs for swaps.
    In general, as described in section II.E, the Commission believes 
transitioning to the globally-standardized UTI system will benefit 
SDRs, SEFs, DCMs, and reporting counterparties by reducing the 
complexity associated with reporting swaps to or in multiple 
jurisdictions.
(A) Costs and Benefits
    The Commission believes that proposed Sec.  45.5 would benefit SDRs 
by providing one standard that multiple regulators should adopt to 
reduce the burdens associated with multiple jurisdictions with 
different, and possibly conflicting, standards. The Commission believes 
that requiring SD/MSP and financial entity reporting counterparties to 
generate UTIs for off-facility swaps would benefit non-financial 
entities by reducing the frequency with which they would be responsible 
for UTI generation, as compared to the current frequency with which 
they generate USIs.
    The Commission believes permitting non-SD/MSP/DCO reporting 
counterparties that are not financial entities to ask their SDR to 
generate UTIs for swaps would benefit smaller, less-active swaps market 
participants by relieving them of the burden to create UTIs. While non-
financial entities account for a small portion of total swaps traded as 
noted above, this group is mostly comprised of end-users that often 
don't maintain systems that automatically generate UTIs. Therefore, 
this group will benefit proportionally more from this change.
    Permitting these reporting counterparties to ask the SDRs to 
generate UTIs would maintain, but lower, an ancillary cost for the 
three SDRs that are currently required to generate USIs for non-SD/MSP/
DCO reporting counterparties. The Commission believes that giving these 
reporting counterparties, which should be a minority of the 1,585 non-
SD/MSP reporting counterparties, the option, rather than a mandate, 
strikes the appropriate balance between avoiding undue costs for SDRs 
and significant burdens for the least-sophisticated market 
participants.
    In general, the Commission expects the initial costs of updating 
systems to adopt UTIs could be significant. For instance, the 
Commission expects that reporting counterparties and SDRs have systems 
that create, report, accept, validate, process, and store USIs. CFTC 
SMEs estimate the cost of these changes to be small for large reporting 
entities and small to moderate for SDRs. However, over time, after 
these one-time system updates, the Commission expects market 
participants would recognize the full benefits of the reduced costs 
associated with reporting a globally-standardized UTI.
    In addition, the Commission understands that ESMA already mandates 
UTIs. The Commission expects that this should mitigate burdens for SDRs 
serving multiple jurisdictions as well as reporting counterparties 
active in the European markets since they have likely already updated 
their systems to meet the European standards.
    The Commission preliminarily believes that on balance the expected 
benefits justify the proposed rule amendments notwithstanding their 
expected mitigated costs.
(B) Request for Comment
    The Commission requests comment on its considerations of the costs 
and benefits of the proposed amendments to Sec.  45.5. Are there 
additional costs or benefits that the Commission should consider? 
Commenters are encouraged to include both qualitative and

[[Page 21624]]

quantitative assessments of these benefits.
    Are there any other alternatives that may provide preferable costs 
or benefits than the costs and benefits related to the proposed 
amendments?
d. Sec.  45.6--Legal Entity Identifiers
    The Commission is proposing to amend Sec.  45.6 to: (i) Require 
SDs, MSPs, DCOs, SEFs, DCMs, and SDRs to maintain and renew LEIs; (ii) 
required registered entities and financial entities to obtain LEIs for 
swap counterparties that do not have one; and (iii) update unnecessary 
and outdated regulatory text. The Commission believes accurate LEIs are 
essential for the Commission to use swap data to fulfill its regulatory 
responsibilities.
(A) Costs and Benefits
    Mandating LEI renewal will benefit the swaps market by improving 
the Commission's ability to analyze activity in the swaps market. 
Reference data provides valuable identification and relationship 
information about swap counterparties. Accurate reference data allows 
for robust analysis of swaps risk concentration within and across 
entities, as well as a way to identify the distribution or transfer of 
risk across different legal entities under the same parent. The 
Commission also believes accurate reference data is essential for it to 
satisfy its regulatory responsibilities because it clearly identifies 
entities involved in the swaps market, as well as how these entities 
relate to one another--both key requirements for monitoring systemic 
risk and promoting fair and efficient markets. In addition, LEIs have 
already been broadly adopted in swaps markets and their widespread use 
has shown promise by reducing ambiguity engendered by market 
participants previously using a variety of non-standard reporting 
identifiers.
    However, the Commission recognizes LEI renewals impose some costs. 
Currently, the Commission understands that LEI renewals cost each 
holder $50 per year. To limit burdens for counterparties that are 
smaller or less-active in the swaps market, the Commission has proposed 
limiting the renewal requirement to the estimated 151 SDs, MSPs, SEFs, 
DCMs, DCOs, and SDRs, resulting in an aggregate cost of approximately 
$7,550 for this requirement. The Commission believes the activities of 
these entities have the most systemic impact on the Commission's 
ability to fulfill its regulatory mandates and thus warrant this small 
additional cost.
    Requiring each DCO and financial entity reporting counterparty to 
obtain an LEI for their counterparties that do not have LEIs would both 
further the Commission's objective of monitoring risk in the swaps 
market and incentivize LEI registration for counterparties that have 
not yet obtained LEIs. However, the Commission recognizes this 
requirement imposes some costs either on the entity obtaining an LEI 
for its counterparty, or the entity incentivized to register on its 
own.
    The number of current swap counterparties without LEIs is difficult 
to estimate because of the lack of standardization of non-LEI 
identifiers. The Commission cannot therefore determine whether non-LEI 
identifiers represent an entity that has already been assigned an LEI 
or whether two non-LEI identifiers are two different representations of 
the same entity. However, the Commission expects the number of 
counterparties currently without LEIs to be small, given the results of 
an analysis of swap data from December 2019 that showed 90% of all 
records reported had LEIs for both counterparties. More generally, any 
swap data that does not identify eligible counterparties with an LEI 
hinders the Commission's fulfillment of its regulatory mandates, 
including systemic risk monitoring.
    The Commission preliminarily believes that on balance the expected 
benefits justify the proposed rule amendments notwithstanding their 
expected mitigated costs.
(B) Request for Comment
    The Commission requests comment on its considerations of the costs 
and benefits of the proposed amendments to Sec.  45.6. Are there 
additional costs or benefits that the Commission should consider? 
Commenters are encouraged to include both qualitative and quantitative 
assessments of these benefits.
    Are there any other alternatives that may provide preferable costs 
or benefits than the costs and benefits related to the proposed 
amendments? Specific areas of interest include the following:
    (43) The Commission requests comment on the range of costs for DCO 
and financial entity reporting counterparties to obtain LEIs via third-
party registration for counterparties that have not obtained LEIs to 
comply with proposed Sec.  45.6(d)(3).
e. Sec.  45.10--Reporting to a Single SDR
    The Commission is proposing to amend Sec.  45.10 to permit 
reporting counterparties to transfer swap data and swap transaction and 
pricing data between SDRs in revised Sec.  45.10(d). To do so, 
reporting counterparties would need to notify the current SDR, new SDR, 
and non-reporting counterparty of the UTIs for the swaps being 
transferred and the date of transfer at least five business days before 
the transfer. Reporting counterparties would then need to report the 
change of SDR to the current SDR and the new SDR, and then begin 
reporting to the new SDR.
    The Commission believes the ability to change SDRs will benefit 
reporting counterparties by permitting them to choose the SDR that best 
fits their business needs.
(A) Costs and Benefits
    Proposed Sec.  45.10(d) would benefit reporting counterparties by 
giving them the freedom to select the SDR that provides the best 
services, pricing, and functionality to serve their business needs 
instead of having to use the same SDR for the entire life of the swap. 
The Commission believes reporting counterparties could benefit through 
reduced costs if they had the ability to change to an SDR that provided 
services better calibrated to their business needs.
    The Commission recognizes the proposal would impose costs on the 
three SDRs. SDRs would need to update their systems to permit reporting 
counterparties to transfer swap data and swap transaction pricing data 
in the middle of a swap's lifecycle, rather than at the point of swap 
initiation. However, the Commission believes that after the initial 
system updates, SDRs should be able to accommodate these changes since 
they are only slightly more burdensome than most of the current on-
boarding practices for new clients in place at each SDR. In addition, 
SDRs would benefit from attracting new clients that choose to move 
their reporting to their SDR.
    The Commission preliminarily believes that on balance the expected 
benefits justify the proposed rule amendments notwithstanding their 
expected mitigated costs.
(B) Request for Comment
    The Commission requests comment on its considerations of the costs 
and benefits of the proposed amendments to Sec.  49.10. Are there 
additional costs and benefits that the Commission should consider? 
Commenters are encouraged to include both qualitative and quantitative 
assessments of these costs and benefits.
    Are there any other alternatives that may provide preferable costs 
or benefits than the costs and benefits related to the proposed 
amendments?

[[Page 21625]]

f. Sec.  45.12--Data Reporting for Swaps in a Swap Asset Class Not 
Accepted by Any SDR
    The Commission is proposing to remove the Sec.  45.12 regulations 
that permit voluntary supplemental reporting. Current Sec.  45.12 
permits voluntary supplemental reporting to SDRs and specifies 
counterparties must report USIs, LEIs, and an indication of 
jurisdiction as part of the supplementary report. Section 45.12 also 
requires counterparties correct errors in voluntary supplemental 
reports.
    The Commission believes removing voluntary supplemental swap 
reports will reduce unnecessary messages in the SDR that do not provide 
a clear regulatory benefit to the Commission.
(A) Costs and Benefits
    Removing the option for voluntary supplemental reporting would 
benefit SDRs to the extent that they would no longer need to take in, 
process, validate, and store the reports. This should reduce costs and 
any unnecessary complexities for SDRs with respect to these reports 
that provide little benefit to the Commission.
    The Commission recognizes the proposal would impose initial costs 
on SDRs. The three SDRs would need to update their systems to stop 
accepting these reports. However, the Commission expects these costs 
would be minimal and after the initial system updates, SDRs should see 
reduced costs by not having to accommodate these reports. CFTC SMEs 
estimate the cost of these changes to be small for large reporting 
entities and SDRs.
    The Commission preliminarily believes that on balance the expected 
benefits justify the proposed rule amendments notwithstanding their 
expected mitigated costs.
(B) Request for Comment
    The Commission requests comment on its considerations of the costs 
and benefits of the proposed amendments to Sec.  45.12. Are there 
additional costs and benefits that the Commission should consider? 
Commenters are encouraged to include both qualitative and quantitative 
assessments of these costs and benefits.
    Are there any other alternatives that may provide preferable costs 
or benefits than the costs and benefits related to the proposed 
amendments?
g. Sec.  45.13--Required Data Standards
    The Commission is proposing to amend Sec.  45.13 to (i) require 
reporting counterparties, SEFs, DCMs, and DCOs to report required swap 
creation and continuation data to SDRs using the technical standards, 
as instructed by the Commission, for each swap data element required to 
be reported; (ii) require reporting counterparties, SEFs, DCMs, and 
DCOs to satisfy SDR validation rules; and (iii) require SDRs to send 
reporting counterparties, SEFs, DCMs, DCOs, and third party service 
providers validation messages.
(A) Costs and Benefits
    Through updating and further specifying the swap data elements 
required to be reported to SDRs, the Commission would benefit from 
having swap data that is more standardized, accurate, and complete 
across SDRs. As discussed in section V above, the Commission's use of 
the data to fulfill its regulatory responsibilities has been 
complicated by varying compliance with swap data standards both within 
and across SDRs.
    The Commission recognizes that the changes proposed in Sec.  45.13 
would require SDRs, SEFs, DCMs, and reporting counterparties to update 
their reporting systems. The three SDRs would need to update their 
systems to accept swap data according to new technical standards and 
validation conditions. SEFs, DCMs, and reporting counterparties would 
need to update their systems as well to report swap data to SDRs 
according to the technical standards. These entities would also need to 
update systems to validate swap data. The costs of these updates are 
likely to differ from entity to entity but, depending on current 
systems, could be high.
    However, if the Commission believes some factors would mitigate the 
costs to these entities. First, most of the swap data the Commission is 
proposing to further standardize with the updates in appendix 1 is 
currently being reported to SDRs. Commission staff recognize that data 
quality has improved over the past years as SDRs adopted more technical 
standards on their own. However, for certain assets classes, the 
Commission expects the changes could be more pronounced. Costs to 
standardize data elements that had not been standardized, in certain 
asset classes like commodities, or adding new data elements would be 
more costly but could be mitigated if the reporting entity already 
saves this information but does not currently then send it to the SDR.
    Second, to the extent SDRs operate in multiple jurisdictions, ESMA 
already requires many of the swap data elements and many of the 
technical standards and validation conditions the Commission is 
proposing. An SDR may have to spend fewer resources updating its 
systems for the proposed changes in Sec.  45.13 if it has already made 
these changes for European market participants. Similarly, SEFs, DCMs, 
and reporting counterparties reporting to European TRs may have to 
spend fewer resources.
    Additionally, after the updates would be made, the Commission 
expects SDRs, SEFs, DCMs, and reporting counterparties would see a 
reduction in costs through reporting a more streamlined data set than 
what is currently being reported to SDRs. In addition, entities 
reporting in multiple jurisdictions would be able to report more 
efficiently as jurisdictions adopt the CDE Technical Guidance data 
elements.
    Finally, this NPRM is proposed to have the part 43 swap transaction 
and pricing data be a subset of the part 45 swap data. This means 
proposed changes to parts 43 and 45 would largely require technological 
changes that could merge two different data streams into one. For 
example, SDRs will have to make adjustments to their extraction, 
transformation, and loading (ETL) process in order to accept feeds that 
comply with new technical standards and validation conditions.
    Because many of the changes SDRs would make to comply with part 45 
will likely also allow it to comply with part 43, the Commission 
anticipates significantly lower aggregate costs relative to the costs 
for parts 43 and 45 separately. For this reason, the costs described 
below may most accurately represent the full technological cost of 
satisfying the requirements for both proposed rules.
    Based on conversations with CFTC staff experienced in designing 
data reporting, ingestion, and validation systems, Commission staff 
estimates the cost per SDR to be in a range of $141,000 to 
$500,000.\291\ This staff cost estimate is based on a number of 
assumptions and covers the set of tasks required for the SDR to design, 
test, and implement a data system based on the proposed list of swap 
data elements in appendix 1 and the technical standards.\292\ These 
numbers assume

[[Page 21626]]

that each SDR will spend approximately 3,000-5,000 hours to establish 
ETL into a relational database on such a data stream.\293\
---------------------------------------------------------------------------

    \291\ To generate the included estimates, a bottom-up estimation 
method was used based on internal CFTC expertise. In brief, and as 
seen in the estimates, the Commission anticipates that the task for 
the SDR's will be significantly more complex than it is for 
reporters. On several occasions, the CFTC has developed an ETL data 
stream similar to the anticipated parts 43 and 45 data streams. 
These data sets consist of 100-200 fields, similar to the number of 
fields in proposed appendix 1. This past Commission experience has 
been used to derive the included estimates.
    \292\ These assumptions include: (1) At a minimum, the SDRs will 
be required to establish a data extraction transformation and 
loading (ETL) process. This implies that either the SDR is using a 
sophisticated ETL tool, or will be implementing a data staging 
process from which the transformation can be implemented. (2) It is 
assumed that the SDR would require the implementation of a new 
database or other data storage vehicle from which their business 
processes can be executed. (3) While the proposed record structure 
is straight forward, the implementation of a database representing 
the different asset classes may be complex. (4) It is assumed that 
the SDR would need to implement a data validation regime typical of 
data sets of this size and magnitude. (5) It is reasonable to expect 
that the cost to operate the stream would be lower due to the 
standardization of incoming data, and the opportunity to 
automatically validate the data may make it less labor intensive.
    \293\ The lower estimate of $141,000 represents 3,000 working 
hours at the $47 rate. The higher estimate of $500,000 represents 
5,000 working hours at the $100 rate.
---------------------------------------------------------------------------

    For reporting entities, the Commission estimates the cost per 
reporting entity to be in a range of $23,500 to $72,500.\294\ This cost 
estimate is based on a number of assumptions and covers a number of 
tasks required by the reporting entities to design, test, and implement 
an updated data system based on the proposed swap data elements, 
technical standards, and validation conditions.\295\ These tasks 
include defining requirements, developing an extraction query, 
developing of an interim extraction format (e.g., CSV), developing 
validations, developing formatting conversions, developing a framework 
to execute tasks on a repeatable basis, and finally, integration and 
testing. Staff estimates that it would take a reporting entity 200 to 
325 hours to implement the extraction. Including validations and 
conversions would add another 300 to 400 hours, resulting in an 
estimated total of 500 to 725 hours per reporting entity.\296\ The 
Commission preliminarily believes that on balance the expected benefits 
justify the proposed rule amendments notwithstanding their expected 
mitigated costs.
---------------------------------------------------------------------------

    \294\ To generate the included estimates, a bottom-up estimation 
method was used based on internal CFTC expertise. On several 
occasions, the CFTC has created data sets that are transmitted to 
outside organizations. These data sets consist of 100-200 fields, 
similar to the number of fields in the proposed appendix 1. This 
past experience has been used to derive the included estimates.
    \295\ These assumptions include: (1) The data that will be 
provided to the SDRs from this group of reporters largely exists in 
their environment. The back end data is currently available; (2) the 
data transmission connection from the firms that provide the data to 
the SDR currently exists. The assumption for the purposes of this 
estimate is that reporting firms do not need to set up 
infrastructure components such as FTP servers, routers, switches, or 
other hardware; it is already in place; (3) implementing the 
requirement does not cause reporting firms to create back end 
systems to collect their data in preparation for submission. It is 
assumed that firms that submit this information have the data 
available on a query-able environment today, (4) reporting firms are 
provided with clear direction and guidance regarding form and manner 
of submission. A lack of clear guidance will significantly increase 
costs for each reporter; and (5) there is no cost to disable 
reporting streams that will be made for obsolete by the proposed 
change in part 43.
    \296\ The lower estimate of $23,500 represents 500 working hours 
at the $47 rate. The higher estimate of $72,500 represent 725 
working hours at the $100 rate.
---------------------------------------------------------------------------

(B) Request for Comment
    The Commission requests comment on its considerations of the costs 
and benefits of the proposed amendments to Sec.  45.13. Are there 
additional costs and benefits that the Commission should consider? 
Commenters are encouraged to include both qualitative and quantitative 
assessments of these costs and benefits.
    Are there any other alternatives that may provide preferable costs 
or benefits than the costs and benefits related to the proposed 
amendments?
5. Costs and Benefits of Proposed Amendments to Part 46
a. Sec.  46.3--Swap Data Reporting for Pre-Enactment Swaps and 
Transition Swaps
    The Commission is proposing to amend Sec.  46.3 to remove an 
exception for required swap continuation data reporting for pre-
enactment and transition swaps. Currently, Sec.  46.3(a)(2) provides 
that reporting counterparties need to report only a subset of part 45 
swap data fields when reporting updates to pre-enactment and transition 
swaps. The Commission is removing that exception to specify that 
reporting counterparties would report updates to pre-enactment and 
transition swaps according to part 45.
(A) Costs and Benefits
    The Commission believes that this should be current practice for 
SDRs and reporting counterparties, and should therefore not impact 
costs or benefits to SDRs and reporting counterparties.
(B) Request for Comment
    Is the Commission's understanding correct that the proposed change 
to Sec.  46.3(a)(2) would have no practical impact on reporting 
counterparties and SDRs for pre-enactment and transition swap 
continuation data reporting? Are there additional costs and benefits 
that the Commission should consider? Commenters are encouraged to 
include both qualitative and quantitative assessments of these costs 
and benefits.
    Are there any other alternatives that may provide preferable costs 
or benefits than the costs and benefits related to the proposed 
amendments?
b. Sec.  46.10--Required Data Standards
    The Commission is proposing to update Sec.  46.10 to require 
reporting counterparties to use the required data standards set forth 
in Sec.  45.13(a) for reporting historical swaps to SDRs. The 
Commission believes reporting counterparties currently use the same 
data standards for both parts 45 and 46 reporting. This change would 
ensure that reporting counterparties continue to do so under the 
proposed updated list of swap data elements in appendix 1 and the new 
technical standards.
(A) Costs and Benefits
    SDRs and reporting counterparties would both incur costs in 
updating their part 46 reporting systems to report according to any of 
the proposed changes to part 45 reporting. However, given the 
diminishing number of historical swaps that have not yet matured or 
been terminated, the Commission expects that these costs would be 
negligible compared to the costs associated with complying with new 
Sec.  45.13.
(B) Request for Comment
    The Commission requests comment on its considerations of the costs 
and benefits of the proposed amendments to Sec.  46.10. Are there 
additional costs and benefits that the Commission should consider? Are 
there factors that would raise costs for reporting historical swaps 
according to the standards in Sec.  45.13? Commenters are encouraged to 
include both qualitative and quantitative assessments of these costs 
and benefits.
    Are there any other alternatives that may provide preferable costs 
or benefits than the costs and benefits related to the proposed 
amendments?
c. Sec.  46.11--Reporting of Errors and Omissions in Previously Omitted 
Data
    The Commission is proposing to remove Sec.  46.11(b) to remove the 
option for state data reporting. This would be consistent with the 
Commission's proposal to eliminate state data reporting in Sec.  45.4.
(A) Costs and Benefits
    SDRs and reporting counterparties would both incur costs in 
updating their part 46 reporting systems to eliminate state data 
reporting. However, given the dwindling number of historical swaps that 
have not yet matured or been terminated, the Commission expects that 
these costs would be negligible.\297\
---------------------------------------------------------------------------

    \297\ For instance, in reviewing credit default swap data, the 
Commission found that there were 153,563 open pre-enactment swaps 
and transition swaps in 2013. In 2019, that number had decreased to 
2,048.

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

[[Page 21627]]

(B) Request for Comment
    The Commission requests comment on its considerations of the costs 
and benefits of the proposed amendments to Sec.  46.11. Are there 
additional costs and benefits that the Commission should consider? 
Commenters are encouraged to include both qualitative and quantitative 
assessments of these costs and benefits.
    Are there any other alternatives that may provide preferable costs 
or benefits than the costs and benefits related to the proposed 
amendments?
6. Costs and Benefits of Proposed Amendments to Part 49
a. Sec.  49.4--Withdrawal From Registration
    The Commission is proposing to amend Sec.  49.4 to: (i) Remove the 
erroneous requirement for SDRs to submit a statement to the Commission 
that the custodial SDR is authorized to make the withdrawing SDR's data 
and records available in accordance with Sec.  1.44; and (ii) remove 
the Sec.  49.4(a)(2) requirement that prior to filing a request to 
withdraw, a registered SDR file an amended Form SDR to update any 
inaccurate information and replace it with a new requirement for SDRs 
to execute an agreement with the custodial SDR governing the custody of 
the withdrawing SDR's data and records prior to filing a request to 
withdraw with the Commission.
    The Commission believes the amendments would simplify the 
regulations and help ensure that swap data is properly transferred to a 
different SDR when one SDR withdraws from registration.
(A) Costs and Benefits
    The Commission believes SDRs would benefit from the removal of the 
unnecessary requirement to update Form SDR prior to withdrawing from 
registration. The Commission would benefit from having a clear 
regulatory requirement for an SDR withdrawing from registration to have 
an agreement with the custodial SDR regarding the withdrawing SDR's 
data and records.
    The Commission believes SDRs would not incur any material costs 
associated with the proposed changes. SDRs would execute a custodial 
agreement to transfer the data as a matter of due course. The changes 
concerning timing and removing the erroneous reference would not result 
in costs for the SDRs.
(B) Request for Comment
    The Commission requests comment on its considerations of the costs 
and benefits of the proposed amendments to Sec.  46.11. Are there 
additional costs and benefits that the Commission should consider? 
Commenters are encouraged to include both qualitative and quantitative 
assessments of these costs and benefits.
    Are there any other alternatives that may provide preferable costs 
or benefits than the costs and benefits related to the proposed 
amendments?
b. Sec.  49.10--Acceptance of Data
    Most of the amendments the Commission is proposing to Sec.  49.10 
are non-substantive minor technical amendments. However, the Commission 
is proposing to add a new requirement in Sec.  49.10(c) to require SDRs 
to validate SDR data. Proposed Sec.  49.10(c) would require that SDRs 
establish data validations. SDRs would also be required to send SEFs, 
DCMs, and reporting counterparties data validation acceptance and error 
messages that identify the validation errors. The Commission is also 
proposing to require that SDRs cannot reject a swap transaction and 
pricing data message if it was submitted jointly with a swap data 
message that contained a validation error.
(A) Costs and Benefits
    SDRs, SEFs, DCMs, and reporting counterparties would benefit by 
having a single set of validation rules in the technical standards 
instead of each SDR applying different validations.
    SDRs, SEFs, DCMs, and reporting counterparties would incur costs in 
updating their reporting systems apply these validation rules. To the 
extent SDRs operate in multiple jurisdictions, ESMA is already 
requiring many of the data validations that DMO is proposing in the 
technical standards to be published on cftc.gov. An SDR may have to 
spend fewer resources updating its systems for the proposed changes in 
Sec.  49.10(c) if it has already made these changes for European market 
participants. Similarly, SEFs, DCMs, and reporting counterparties 
reporting to European TRs may have to spend fewer resources making 
these updates.
(B) Request for Comment
    The Commission requests comment on its considerations of the costs 
and benefits of the proposed amendments to Sec.  49.10(c). Are there 
additional costs and benefits that the Commission should consider? 
Commenters are encouraged to include both qualitative and quantitative 
assessments of these costs and benefits.
    Are there any other alternatives that may provide preferable costs 
or benefits than the costs and benefits related to the proposed 
amendments?
7. Reporting in Light of CEA Section 15(a)
    The Dodd-Frank Act sought to promote the financial stability of the 
U.S., in part, by improving financial system accountability and 
transparency. More specifically, Title VII of the Dodd-Frank Act 
directs the Commission to promulgate regulations to increase swaps 
markets' transparency and thereby reduce the potential for counterparty 
and systemic risk.\298\ Transaction-based reporting is a fundamental 
component of the legislation's objectives to increase transparency, 
reduce risk, and promote market integrity within the financial system 
generally, and the swaps market in particular. The SDRs and the SEFs, 
DCMs, and other reporting entities that submit data to SDRs are central 
to achieving the legislation's objectives related to swap reporting.
---------------------------------------------------------------------------

    \298\ See Congressional Research Service Report for Congress, 
The Dodd-Frank Wall Street Reform and Consumer Protection Act: Title 
VII, Derivatives, by Mark Jickling and Kathleen Ann Ruane (August 
30, 2010); Department of the Treasury, Financial Regulatory Reform: 
A New Foundation: Rebuilding Financial Supervision and Regulation 
(June 17, 2009) at 47-48.
---------------------------------------------------------------------------

    CEA section 15(a) requires the Commission to consider the costs and 
benefits of the proposed amendments to parts 23, 43, 45, and 49 with 
respect to the following factors:
     Protection of market participants and the public;
     Efficiency, competitiveness, and financial integrity of 
markets;
     Price discovery;
     Sound risk management practices; and
     Other public interest considerations.
    A discussion of these proposed amendments in light of CEA section 
15(a) factors is set out immediately below.
a. Protection of Market Participants and the Public
    The Commission believes that the reporting changes under parts 45, 
46, and 49 would enhance protections already in place for market 
participants and the public. By lengthening reporting timeframes and 
standardizing data formats, the Commission believes that it would be 
provided a more cohesive, more standardized, and, ultimately, more 
accurate data without sacrificing

[[Page 21628]]

the ability to oversee the markets in a robust fashion. Higher-quality 
swap data would improve the Commission's oversight and enforcement 
capabilities, and, in turn, would aid it in protecting markets, 
participants, and the public in general.
b. Efficiency, Competitiveness, and Financial Integrity
    The Commission believes the proposed rules would streamline 
reporting and improve efficiencies given the improved data 
standardization. By identifying reporting entities and by making DCO 
reporting duties clearer, the proposed rules strive to improve 
reliability and consistency of swap data. This reliability might 
further lead to bolstering the financial integrity of swaps markets. 
Finally, the validation of swap data would improve the accuracy and 
completeness of swap data available to the Commission and would assist 
the Commission with, among other things, improved monitoring of risk 
exposures of individual counterparties, monitoring concentrations of 
risk exposure, and evaluating systemic risk.
c. Price Discovery
    The Commission does not believe the proposed rules would have a 
significant impact on price discovery.
d. Risk Management Practices
    The Commission believes that the proposed rules would improve the 
quality of swap data reported to SDRs and, hence, improve the 
Commission's ability to monitor the swaps market, react to changes in 
market conditions, and fulfill its regulatory responsibilities 
generally. The Commission believes that regulator access to high-
quality swap data is essential for regulators' to monitor the swaps 
market for systemic risk, or unusually large concentrations of risk in 
individual swaps markets or asset classes.
e. Other Public Interest Considerations
    The Commission believes that the increased accuracy resulting from 
improvements to data entry by market participants and validation 
efforts by SDRs via the proposed rules has other public interest 
considerations including:
     Increased understanding for the public, market 
participants, and the Commission of the interaction between the swaps 
market, other financial markets, and the overall economy;
     Improved regulatory oversight and enforcement 
capabilities; and
     Enhanced information for the Commission and other 
regulators so that they may establish more effective public policies to 
monitor and, where necessary, reduce overall systemic risk.
8. General Request for Comment
    The Commission requests comment on all aspects of the proposed 
rules. Beyond specific questions interspersed throughout this 
discussion, the Commission generally requests comment on all aspects of 
its consideration of costs and benefits, including: Identification and 
assessment of any costs and benefits not discussed therein; the 
potential costs and benefits of alternatives; data and any other 
information (including proposed methodology) to assist or otherwise 
inform the Commission's ability to quantify or qualitatively describe 
the benefits and costs of the proposed rules; and substantiating data, 
statistics, and any other information to support statements by 
commenters with respect to the Commission's consideration of costs and 
benefits. Commenters also may suggest other alternatives to the 
proposed approach where the commenters believe that the alternatives 
would be appropriate under the CEA and provide a superior cost-benefit 
profile. Commenters are encouraged to include both qualitative and 
quantitative assessments of these benefits and costs.

D. Antitrust Considerations

    CEA section 15(b) 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, in issuing any order or adopting any Commission 
rule or regulation.
    The Commission does not anticipate that the proposed amendments to 
part 45 would result in anti-competitive behavior. The Commission 
expects the proposed amendments to Sec.  45.10(d) that would permit 
reporting counterparties to change SDRs would promote competition by 
encouraging SDRs to offer competitive pricing and services to encourage 
reporting counterparties to either stay customers or come to their SDR. 
The Commission encourages comments from the public on any aspect of the 
proposal that may have the potential to be inconsistent with the 
antitrust laws or anti-competitive in nature.

List of Subjects

17 CFR Part 45

    Data recordkeeping requirements, Data reporting requirements, 
Swaps.

17 CFR Part 46

    Data recordkeeping requirements, Data reporting requirements, 
Swaps.

17 CFR Part 49

    Registration and regulatory requirements, Swap data repositories.

    For the reasons stated in the preamble, the Commodity Futures 
Trading Commission proposes to amend 17 CFR chapter I as follows:

PART 45--SWAP DATA RECORDKEEPING AND REPORTING REQUIREMENTS

0
1. The authority citation for part 45 continues to read as follows:

    Authority:  7 U.S.C. 6r, 7, 7a-1, 7b-3, 12a, and 24a, as amended 
by Title VII of the Wall Street Reform and Consumer Protection Act 
of 2010, Pub. L. 111-203, 124 Stat. 1376 (Jul. 21, 2010), unless 
otherwise noted.

0
2. In part 45, revise all references to ``unique swap identifier'' to 
read ``unique transaction identifier'' and revise all references to 
``non-SD/MSP'' to read ``non-SD/MSP/DCO''.


Sec.  Sec.  45.2, 45.5, 45.7, 45.8, and 45.9  [Amended]

0
3. In the table below, for each section and paragraph indicated in the 
left column, remove the term indicated in the middle column from 
wherever it appears in the section or paragraph, and add in its place 
the term indicated in the right column:

----------------------------------------------------------------------------------------------------------------
      Section/paragraph                             Remove                                      Add
----------------------------------------------------------------------------------------------------------------
45.2(a).....................  major swap participant subject to the jurisdiction  major swap participant
                               of the Commission
45.2(b).....................  counterparties subject to the jurisdiction of the   counterparties
                               Commission
45.2(b).....................  the clearing requirement exception                  any clearing requirement
                                                                                   exception or exemption
45.2(b).....................  in CEA section 2(h)(7)                              pursuant to section 2(h)(7) of
                                                                                   the Act or part 50 of this
                                                                                   chapter
45.2(h).....................  counterparty subject to the jurisdiction of the     counterparty
                               Commission

[[Page 21629]]

 
45.5 (introductory text)....  swap subject to the jurisdiction of the Commission  swap
45.5 (introductory text)....  (f)                                                 (h)
45.5(a)(1)..................  single data field                                   single data element with a
                                                                                   maximum length of 52
                                                                                   characters
45.5(b).....................  swap dealer or major swap participant               financial entity
45.5(b)(1)..................  transmission of data                                transmission of swap data
45.5(b)(1)..................  single data field                                   single data element with a
                                                                                   maximum length of 52
                                                                                   characters
45.5(b)(1)(ii)..............  swap dealer or major swap participant               reporting counterparty
45.5(d)(1)..................  single data field                                   single data element with a
                                                                                   maximum length of 52
                                                                                   characters
45.5(e)(1)..................  (c)                                                 (d)
45.5(e)(1)..................  of this section                                     of this section, as applicable
45.5(e)(2)(i)...............  question.                                           question;
45.5(e)(2)(ii)..............  agent.                                              agent; and
45.7 (introductory text)....  swap subject to the jurisdiction of the Commission  swap
45.8(h).....................  swap creation data                                  required swap creation data
45.8(h)(1)..................  achieve this                                        comply with paragraph (h) of
                                                                                   this section
45.8(h)(2)..................  achieve this                                        comply with paragraph (h) of
                                                                                   this section
45.9........................  swap counterparties                                 reporting counterparties
----------------------------------------------------------------------------------------------------------------

0
4. Revise Sec.  45.1 to read as follows:


Sec.  45.1  Definitions.

    (a) As used in this part:
    Allocation means the process by which an agent, having facilitated 
a single swap transaction on behalf of several clients, allocates a 
portion of the executed swap to the clients.
    As soon as technologically practicable means as soon as possible, 
taking into consideration the prevalence, implementation, and use of 
technology by comparable market participants.
    Asset class means a broad category of commodities, including, 
without limitation, any ``excluded commodity'' as defined in section 
1a(19) of the Act, with common characteristics underlying a swap. The 
asset classes include interest rate, foreign exchange, credit, equity, 
other commodity, and such other asset classes as may be determined by 
the Commission.
    Business day means each twenty-four hour day, on all days except 
Saturdays, Sundays, and Federal holidays.
    Business hours means consecutive hours during one or more 
consecutive business days.
    Clearing swap means a swap created pursuant to the rules of a 
derivatives clearing organization that has a derivatives clearing 
organization as a counterparty, including any swap that replaces an 
original swap that was extinguished upon acceptance of such original 
swap by the derivatives clearing organization for clearing.
    Collateral data means the data elements necessary to report 
information about the money, securities, or other property posted or 
received by a swap counterparty to margin, guarantee, or secure a swap, 
as specified in appendix 1 to this part.
    Derivatives clearing organization means a derivatives clearing 
organization, as defined by Sec.  1.3 of this chapter, that is 
registered with the Commission.
    Electronic reporting (``report electronically'') means the 
reporting of data normalized in data elements as required by the data 
standard or standards used by the swap data repository to which the 
data is reported. Except where specifically otherwise provided in this 
chapter, electronic reporting does not include submission of an image 
of a document or text file.
    Execution means an agreement by the parties, by any method, to the 
terms of a swap that legally binds the parties to such swap terms under 
applicable law.
    Execution date means the date, determined by reference to eastern 
time, on which swap execution occurred. The execution date for a 
clearing swap that replaces an original swap is the date, determined by 
reference to eastern time, on which the original swap has been accepted 
for clearing.
    Financial entity has the meaning set forth in CEA section 
2(h)(7)(C).
    Global Legal Entity Identifier System means the system established 
and overseen by the Legal Entity Identifier Regulatory Oversight 
Committee for the unique identification of legal entities and 
individuals.
    Legal entity identifier or LEI means a unique code assigned to swap 
counterparties and entities in accordance with the standards set by the 
Global Legal Entity Identifier System.
    Legal Entity Identifier Regulatory Oversight Committee means the 
group charged with the oversight of the Global Legal Entity Identifier 
System that was established by the Finance Ministers and the Central 
Bank Governors of the Group of Twenty nations and the Financial 
Stability Board, under the Charter of the Regulatory Oversight 
Committee for the Global Legal Entity Identifier System dated November 
5, 2012, or any successor thereof.
    Life cycle event means any event that would result in a change to 
required swap creation data previously reported to a swap data 
repository in connection with a swap. Examples of such events include, 
without limitation, a counterparty change resulting from an assignment 
or novation; a partial or full termination of the swap; a change to the 
end date for the swap; a change in the cash flows or rates originally 
reported; availability of a legal entity identifier for a swap 
counterparty previously identified by some other identifier; or a 
corporate action affecting a security or securities on which the swap 
is based (e.g., a merger, dividend, stock split, or bankruptcy).
    Life cycle event data means all of the data elements necessary to 
fully report any life cycle event.
    Mixed swap has the meaning set forth in CEA section 1a(47)(D), and 
refers to an instrument that is in part a swap subject to the 
jurisdiction of the Commission, and in part a security-based swap 
subject to the jurisdiction of the SEC.
    Multi-asset swap means a swap that does not have one easily 
identifiable primary underlying notional item, but instead involves 
multiple underlying notional items within the Commission's jurisdiction 
that belong to different asset classes.
    Non-SD/MSP/DCO counterparty means a swap counterparty that is not a 
swap dealer, major swap participant, or derivatives clearing 
organization.

[[Page 21630]]

    Non-SD/MSP/DCO reporting counterparty means a reporting 
counterparty that is not a swap dealer, major swap participant, or 
derivatives clearing organization.
    Novation means the process by which a party to a swap legally 
transfers all or part of its rights, liabilities, duties, and 
obligations under the swap to a new legal party other than the 
counterparty to the swap under applicable law.
    Off-facility swap means any swap transaction that is not executed 
on or pursuant to the rules of a swap execution facility or designated 
contract market.
    Original swap means a swap that has been accepted for clearing by a 
derivatives clearing organization.
    Reporting counterparty means the counterparty required to report 
swap data pursuant to this part, selected as provided in Sec.  45.8.
    Required swap continuation data means all of the data elements that 
must be reported during the existence of a swap to ensure that all swap 
data concerning the swap in the swap data repository remains current 
and accurate, and includes all changes to the required swap creation 
data occurring during the existence of the swap. For this purpose, 
required swap continuation data includes:
    (i) All life cycle event data for the swap; and
    (ii) All swap valuation, margin, and collateral data for the swap.
    Required swap creation data means all data for a swap required to 
be reported pursuant to Sec.  45.3 for the swap data elements in 
appendix 1 to this part.
    Swap means any swap, as defined by Sec.  1.3 of this chapter, as 
well as any foreign exchange forward, as defined by section 1a(24) of 
the Act, or foreign exchange swap, as defined by section 1a(25) of the 
Act.
    Swap data means the specific data elements and information in 
appendix 1 to this part required to be reported to a swap data 
repository pursuant to this part or made available to the Commission 
pursuant to part 49 of this chapter, as applicable.
    Swap data validation procedures means procedures established by a 
swap data repository pursuant to Sec.  49.10 of this chapter to accept, 
validate, and process swap data reported to the swap data repository 
pursuant to part 45 of this chapter.
    Swap execution facility means a trading system or platform that is 
a swap execution facility as defined in CEA section 1a(50) and in Sec.  
1.3 of this chapter and that is registered with the Commission pursuant 
to CEA section 5h and part 37 of this chapter.
    Swap transaction and pricing data means all data for a swap in 
appendix C to part 43 of this chapter required to be reported or 
publicly disseminated pursuant to part 43 of this chapter.
    Unique transaction identifier means a unique alphanumeric 
identifier with a maximum length of 52 characters constructed solely 
from the upper-case alphabetic characters A to Z or the digits 0 to 9, 
inclusive in both cases, generated for each swap pursuant to Sec.  
45.5.
    Valuation data means the data elements necessary to report 
information about the daily mark of the transaction, pursuant to 
section 4s(h)(3)(B)(iii) of the Act, and to Sec.  23.431 of this 
chapter, if applicable, as specified in appendix 1 to this part.
    (b) Other defined terms. Terms not defined in this part have the 
meanings assigned to the terms in Sec.  1.3 of this chapter.
0
5. Revise Sec.  45.3 to read as follows:


Sec.  45.3  Swap data reporting: Creation data.

    (a) Swaps executed on or pursuant to the rules of a swap execution 
facility or designated contract market. For each swap executed on or 
pursuant to the rules of a swap execution facility or designated 
contract market, the swap execution facility or designated contract 
market shall report required swap creation data electronically to a 
swap data repository in the manner provided in Sec.  45.13(a) not later 
than 11:59 p.m. eastern time on the next business day following the 
execution date.
    (b) Off-facility swaps. For each off-facility swap, the reporting 
counterparty shall report required swap creation data electronically to 
a swap data repository as provided by paragraph (b)(1) or (2) of this 
section, as applicable.
    (1) If the reporting counterparty is a swap dealer, major swap 
participant, or derivatives clearing organization, the reporting 
counterparty shall report required swap creation data electronically to 
a swap data repository in the manner provided in Sec.  45.13(a) not 
later than 11:59 p.m. eastern time on the next business day following 
the execution date.
    (2) If the reporting counterparty is a non-SD/MSP/DCO counterparty, 
the reporting counterparty shall report required swap creation data 
electronically to a swap data repository in the manner provided in 
Sec.  45.13(a) not later than 11:59 p.m. eastern time on the second 
business day following the execution date.
    (c) Allocations. For swaps involving allocation, required swap 
creation data shall be reported electronically to a single swap data 
repository as follows.
    (1) Initial swap between reporting counterparty and agent. The 
initial swap transaction between the reporting counterparty and the 
agent shall be reported as required by paragraphs (a) or (b) of this 
section, as applicable. A unique transaction identifier for the initial 
swap transaction shall be created as provided in Sec.  45.5.
    (2) Post-allocation swaps--(i) Duties of the agent. In accordance 
with this section, the agent shall inform the reporting counterparty of 
the identities of the reporting counterparty's actual counterparties 
resulting from allocation, as soon as technologically practicable after 
execution, but not later than eight business hours after execution.
    (ii) Duties of the reporting counterparty. The reporting 
counterparty shall report required swap creation data, as required by 
paragraph (b) of this section, for each swap resulting from allocation 
to the same swap data repository to which the initial swap transaction 
is reported. The reporting counterparty shall create a unique 
transaction identifier for each such swap as required in Sec.  45.5.
    (d) Multi-asset swaps. For each multi-asset swap, required swap 
creation data and required swap continuation data shall be reported to 
a single swap data repository that accepts swaps in the asset class 
treated as the primary asset class involved in the swap by the swap 
execution facility, designated contract market, or reporting 
counterparty reporting required swap creation data pursuant to this 
section.
    (e) Mixed swaps. (1) For each mixed swap, required swap creation 
data and required swap continuation data shall be reported to a swap 
data repository and to a security-based swap data repository registered 
with the Securities and Exchange Commission. This requirement may be 
satisfied by reporting the mixed swap to a swap data repository or 
security-based swap data repository registered with both Commissions.
    (2) The registered entity or reporting counterparty reporting 
required swap creation data pursuant to this section shall ensure that 
the same unique transaction identifier is recorded for the swap in both 
the swap data repository and the security-based swap data repository.
    (f) Choice of swap data repository. The entity with the obligation 
to choose the swap data repository to which all required swap creation 
data for the swap is reported shall be the entity that is required to 
make the first report of all data pursuant to this section, as follows:
    (1) For swaps executed on or pursuant to the rules of a swap 
execution facility

[[Page 21631]]

or designated contract market, the swap execution facility or 
designated contract market shall choose the swap data repository;
    (2) For all other swaps, the reporting counterparty, as determined 
in Sec.  45.8, shall choose the swap data repository.
0
6. Revise Sec.  45.4 to read as follows:


Sec.  45.4  Swap data reporting: Continuation data.

    (a) Continuation data reporting method generally. For each swap, 
regardless of asset class, reporting counterparties and derivatives 
clearing organizations required to report required swap continuation 
data shall report life cycle event data for the swap electronically to 
a swap data repository in the manner provided in Sec.  45.13(a) within 
the applicable deadlines set forth in this section.
    (b) Continuation data reporting for original swaps. For each 
original swap, the derivatives clearing organization shall report 
required swap continuation data, including terminations, electronically 
to the swap data repository to which the swap that was accepted for 
clearing was reported pursuant to Sec.  45.3 in the manner provided in 
Sec.  45.13(a) and in this section, and such required swap continuation 
data shall be accepted and recorded by such swap data repository as 
provided in Sec.  49.10 of this chapter.
    (1) The derivatives clearing organization that accepted the swap 
for clearing shall report all life cycle event data electronically to a 
swap data repository in the manner provided in Sec.  45.13(a) not later 
than 11:59 p.m. eastern time on the next business day following the 
day, as determined according to eastern time, that any life cycle event 
occurs with respect to the swap.
    (2) In addition to all other required swap continuation data, life 
cycle event data shall include all of the following:
    (i) The legal entity identifier of the swap data repository to 
which all required swap creation data for each clearing swap was 
reported by the derivatives clearing organization pursuant to Sec.  
45.3(b);
    (ii) The unique transaction identifier of the original swap that 
was replaced by the clearing swaps; and
    (iii) The unique transaction identifier of each clearing swap that 
replaces a particular original swap.
    (c) Continuation data reporting for swaps other than original 
swaps. For each swap that is not an original swap, including clearing 
swaps and swaps not cleared by a derivatives clearing organization, the 
reporting counterparty shall report all required swap continuation data 
electronically to a swap data repository in the manner provided in 
Sec.  45.13(a) as provided in this paragraph (c).
    (1) Life cycle event data reporting. (i) If the reporting 
counterparty is a swap dealer, major swap participant, or derivatives 
clearing organization, the reporting counterparty shall report life 
cycle event data electronically to a swap data repository in the manner 
provided in Sec.  45.13(a) not later than 11:59 p.m. eastern time on 
the next business day following the day, as determined according to 
eastern time, that any life cycle event occurred, with the sole 
exception that life cycle event data relating to a corporate event of 
the non-reporting counterparty shall be reported in the manner provided 
in Sec.  45.13(a) not later than 11:59 p.m. eastern time on the second 
business day following the day, as determined according to eastern 
time, that such corporate event occurred.
    (ii) If the reporting counterparty is a non-SD/MSP/DCO 
counterparty, the reporting counterparty shall report life cycle event 
data electronically to a swap data repository in the manner provided in 
Sec.  45.13(a) not later than 11:59 p.m. eastern time on the second 
business day following the day, as determined according to eastern 
time, that any life cycle event occurred.
    (2) Valuation, margin, and collateral data reporting. If the 
reporting counterparty is a swap dealer, major swap participant, or 
derivatives clearing organization, swap valuation data and collateral 
data shall be reported electronically to a swap data repository in the 
manner provided in Sec.  45.13(b) each business day.
0
7. Amend Sec.  45.5 by revising paragraphs (a)(1)(i); (b)(1)(i); (c) 
introductory text; (c)(1) introductory text; (c)(1)(i); (d) 
introductory text; (d)(1)(i) and (f); and adding paragraphs (g) and (h) 
to read as follows:


Sec.  45.5  Unique transaction identifiers.

* * * * *
    (a) * * *
    (1) * * *
    (i) The legal entity identifier of the swap execution facility or 
designated contract market; and
* * * * *
    (b) * * *
    (1) * * *
    (i) The legal entity identifier of the reporting counterparty; and
* * * * *
    (c) Off-facility swaps with a non-SD/MSP/DCO reporting counterparty 
that is not a financial entity. For each off-facility swap for which 
the reporting counterparty is a non-SD/MSP/DCO counterparty that is not 
a financial entity, the reporting counterparty shall either: create and 
transmit a unique transaction identifier as provided in paragraphs 
(b)(1) and (2) of this section; or request that the swap data 
repository to which required swap creation data will be reported create 
and transmit a unique transaction identifier as provided in paragraphs 
(c)(1) and (2) of this section.
    (1) Creation. The swap data repository shall generate and assign a 
unique transaction identifier as soon as technologically practicable 
following receipt of the request from the reporting counterparty. The 
unique transaction identifier shall consist of a single data element 
with a maximum length of 52 characters that contains two components:
    (i) The legal entity identifier of the swap data repository; and
* * * * *
    (d) Off-facility swaps with a derivatives clearing organization 
reporting counterparty. For each off-facility swap where the reporting 
counterparty is a derivatives clearing organization, the reporting 
counterparty shall create and transmit a unique transaction identifier 
as provided in paragraphs (d)(1) and (2) of this section.
    (1) * * *
    (i) The legal entity identifier of the derivatives clearing 
organization; and
* * * * *
    (f) Use. Each registered entity and swap counterparty shall include 
the unique transaction identifier for a swap in all of its records and 
all of its swap data reporting concerning that swap, from the time it 
creates or receives the unique transaction identifier as provided in 
this section, throughout the existence of the swap and for as long as 
any records are required by the Act or Commission regulations to be 
kept concerning the swap, regardless of any life cycle events 
concerning the swap, including, without limitation, any changes with 
respect to the counterparties to the swap.
    (g) Third-party service provider. If a registered entity or 
reporting counterparty required by this part to report required swap 
creation data or required swap continuation data contracts with a 
third-party service provider to facilitate reporting pursuant to Sec.  
45.9, the registered entity or reporting counterparty shall ensure that 
such third-party service provider creates and transmits the unique 
transaction identifier as otherwise required for such category of swap 
by paragraphs (a) through (e) of this section. The unique transaction 
identifier shall consist of a

[[Page 21632]]

single data element with a maximum length of 52 characters that 
contains two components:
    (1) The legal entity identifier of the third-party service 
provider; and
    (2) An alphanumeric code generated and assigned to that swap by the 
automated systems of the third-party service provider, which shall be 
unique with respect to all such codes generated and assigned by that 
third-party service provider.
    (h) Cross-jurisdictional swaps. Notwithstanding the provisions of 
paragraphs (a) through (g) of this section, if a swap is also 
reportable to one or more other jurisdictions with a regulatory 
reporting deadline earlier than the deadline set forth in Sec.  45.3, 
the same unique transaction identifier generated according to the rules 
of the jurisdiction with the earliest regulatory reporting deadline 
shall be transmitted pursuant to paragraphs (a) through (g) of this 
section and used in all recordkeeping and all swap data reporting 
pursuant to this part.

0
8. Revise Sec.  45.6 to read as follows:


Sec.  45.6  Legal entity identifiers.

    Each swap execution facility, designated contract market, 
derivatives clearing organization, swap data repository, entity 
reporting pursuant to Sec.  45.9, and counterparty to any swap that is 
eligible to receive a legal entity identifier shall obtain and be 
identified in all recordkeeping and all swap data reporting pursuant to 
this part by a single legal entity identifier as specified in this 
section.
    (a) Definitions. As used in this section:
    Local operating unit means an entity authorized under the standards 
of the Global Legal Entity Identifier System to issue legal entity 
identifiers.
    Reference data means all identification and relationship 
information, as set forth in the standards of the Global Legal Entity 
Identifier System, of the legal entity or individual to which a legal 
entity identifier is assigned.
    Self-registration means submission by a legal entity or individual 
of its own reference data.
    Third-party registration means submission of reference data for a 
legal entity or individual that is or may become a swap counterparty, 
made by an entity or organization other than the legal entity or 
individual identified by the submitted reference data. Examples of 
third-party registration include, without limitation, submission by a 
swap dealer or major swap participant of reference data for its swap 
counterparties, and submission by a national numbering agency, national 
registration agency, or data service provider of reference data 
concerning legal entities or individuals with respect to which the 
agency or service provider maintains information.
    (b) International standard for the legal entity identifier. The 
legal entity identifier used in all recordkeeping and all swap data 
reporting required by this part shall be issued under, and shall 
conform to, ISO Standard 17442, Legal Entity Identifier (LEI), issued 
by the International Organization for Standardization.
    (c) Reference data reporting. Reference data for each swap 
execution facility, designated contract market, derivatives clearing 
organization, swap data repository, entity reporting pursuant to Sec.  
45.9, and counterparty to any swap shall be reported, by means of self-
registration, third-party registration, or both, to a local operating 
unit in accordance with the standards set by the Global Legal Entity 
Identifier System. All subsequent changes and corrections to reference 
data previously reported shall be reported, by means of self-
registration, third-party registration, or both, to a local operating 
unit as soon as technologically practicable following occurrence of any 
such change or discovery of the need for a correction.
    (d) Use of the legal entity identifier. (1) Each swap execution 
facility, designated contract market, derivatives clearing 
organization, swap data repository, entity reporting pursuant to Sec.  
45.9, and swap counterparty shall use legal entity identifiers to 
identify itself and swap counterparties in all recordkeeping and all 
swap data reporting pursuant to this part. If a swap counterparty is 
not eligible to receive a legal entity identifier as determined by the 
Global Legal Entity Identifier System, such counterparty shall be 
identified in all recordkeeping and all swap data reporting pursuant to 
this part with an alternate identifier as prescribed by the Commission 
pursuant to Sec.  45.13(a) of this chapter.
    (2) Each swap dealer, major swap participant, swap execution 
facility, designated contract market, derivatives clearing 
organization, and swap data repository shall maintain and renew its 
legal identity identifier in accordance with the standards set by the 
Global Legal Entity Identifier System.
    (3) Each derivatives clearing organization and each financial 
entity reporting counterparty executing a swap with a counterparty that 
is eligible to receive a legal entity identifier, but has not been 
assigned a legal entity identifier, shall, prior to reporting any 
required swap creation data for such swap, cause a legal entity 
identifier to be assigned to the counterparty, including if necessary, 
through third-party registration.
    (4) For swaps previously reported pursuant to this part using 
substitute counterparty identifiers assigned by a swap data repository 
prior to Commission designation of a legal entity identifier system, 
each swap data repository shall map the legal entity identifiers for 
the counterparties to the substitute counterparty identifiers in the 
record for each such swap.
0
9. In Sec.  45.8, revise the introductory text to read as follows:


Sec.  45.8  Determination of which counterparty shall report.

    The determination of which counterparty is the reporting 
counterparty for each swap shall be made as provided in this section.
* * * * *
0
10. Revise Sec.  45.10 to read as follows:


Sec.  45.10  Reporting to a single swap data repository.

    All swap transaction and pricing data and swap data for a given 
swap shall be reported to a single swap data repository, which shall be 
the swap data repository to which the first report of such data is 
made, unless the reporting counterparty changes the swap data 
repository to which such data is reported pursuant to paragraph (d) of 
this section.
    (a) Swaps executed on or pursuant to the rules of a swap execution 
facility or designated contract market. To ensure that all swap 
transaction and pricing data and swap data for a swap executed on or 
pursuant to the rules of a swap execution facility or designated 
contract market is reported to a single swap data repository:
    (1) The swap execution facility or designated contract market shall 
report all swap transaction and pricing data and required swap creation 
data for a swap to a single swap data repository. As soon as 
technologically practicable after execution of the swap, the swap 
execution facility or designated contract market shall transmit to both 
counterparties to the swap, and to the derivatives clearing 
organization, if any, that will clear the swap, the identity of the 
swap data repository to which such data is reported.
    (2) Thereafter, all swap transaction and pricing data, required 
swap creation data, and required swap continuation data for the swap 
shall be reported to that same swap data repository, unless the 
reporting counterparty changes the swap data repository to which such 
data

[[Page 21633]]

is reported pursuant to paragraph (d) of this section.
    (b) Off-facility swaps that are not clearing swaps. To ensure that 
all swap transaction and pricing data and swap data for an off-facility 
swap that is not a clearing swap is reported to a single swap data 
repository:
    (1) The reporting counterparty shall report all swap transaction 
and pricing data and required swap creation data to a single swap data 
repository. As soon as technologically practicable after execution, the 
reporting counterparty shall transmit to the other counterparty to the 
swap, and to the derivatives clearing organization, if any, that will 
clear the swap, the identity of the swap data repository to which such 
data is reported.
    (2) Thereafter, all swap transaction and pricing data, required 
swap creation data, and required swap continuation data for the swap 
shall be reported to the same swap data repository, unless the 
reporting counterparty changes the swap data repository to which such 
data is reported pursuant to paragraph (d) of this section.
    (c) Clearing swaps. To ensure that all swap transaction and pricing 
data and swap data for a given clearing swap, including clearing swaps 
that replace a particular original swap or that are created upon 
execution of the same transaction and that do not replace an original 
swap, is reported to a single swap data repository:
    (1) The derivatives clearing organization that is a counterparty to 
such clearing swap shall report all swap transaction and pricing data 
and required swap creation data for that clearing swap to a single swap 
data repository. As soon as technologically practicable after 
acceptance of an original swap for clearing, or execution of a clearing 
swap that does not replace an original swap, the derivatives clearing 
organization shall transmit to the counterparty to each clearing swap 
the identity of the swap data repository to which such data is 
reported.
    (2) Thereafter, all swap transaction and pricing data, required 
swap creation data and required swap continuation data for that 
clearing swap shall be reported by the derivatives clearing 
organization to the same swap data repository to which swap data has 
been reported pursuant to paragraph (c)(1) of this section, unless the 
reporting counterparty changes the swap data repository to which such 
data is reported pursuant to paragraph (d) of this section.
    (3) For clearing swaps that replace a particular original swap, and 
for equal and opposite clearing swaps that are created upon execution 
of the same transaction and that do not replace an original swap, the 
derivatives clearing organization shall report all swap transaction and 
pricing data, required swap creation data, and required swap 
continuation data for such clearing swaps to a single swap data 
repository.
    (d) Change of swap data repository for swap transaction and pricing 
data and swap data reporting. A reporting counterparty may change the 
swap data repository to which swap transaction and pricing data and 
swap data is reported as set forth in this paragraph.
    (1) Notifications. At least five business days prior to changing 
the swap data repository to which the reporting counterparty reports 
swap transaction and pricing data and swap data for a swap, the 
reporting counterparty shall provide notice of such change to the other 
counterparty to the swap, the swap data repository to which swap 
transaction and pricing data and swap data is currently reported, and 
the swap data repository to which swap transaction and pricing data and 
swap data will be reported going forward. Such notification shall 
include the unique transaction identifier of the swap and the date on 
which the reporting counterparty will begin reporting such swap 
transaction and pricing data and swap data to a different swap data 
repository.
    (2) Procedure. After providing the notifications required in 
paragraph (d)(1) of this section, the reporting counterparty shall 
follow paragraphs (d)(2)(i) through (iii) of this section to complete 
the change of swap data repository.
    (i) The reporting counterparty shall report the change of swap data 
repository to the swap data repository to which the reporting 
counterparty is currently reporting swap transaction and pricing data 
and swap data as a life cycle event for such swap pursuant to Sec.  
45.4.
    (ii) On the same day that the reporting counterparty reports 
required swap continuation data as required by paragraph (d)(2)(i) of 
this section, the reporting counterparty shall also report the change 
of swap data repository to the swap data repository to which swap 
transaction and pricing data and swap data will be reported going 
forward, as a life cycle event for such swap pursuant to Sec.  45.4. 
The required swap continuation data report shall identify the swap 
using the same unique transaction identifier used to identify the swap 
at the previous swap data repository.
    (iii) Thereafter, all swap transaction and pricing data, required 
swap creation data, and required swap continuation data for the swap 
shall be reported to the same swap data repository, unless the 
reporting counterparty for the swap makes another change to the swap 
data repository to which such data is reported pursuant to paragraph 
(d) of this section.
0
11. Revise Sec.  45.11 to read as follows:


Sec.  45.11  Data reporting for swaps in a swap asset class not 
accepted by any swap data repository.

    (a) Should there be a swap asset class for which no swap data 
repository currently accepts swap data, each swap execution facility, 
designated contract market, derivatives clearing organization, or 
reporting counterparty required by this part to report any required 
swap creation data or required swap continuation data with respect to a 
swap in that asset class must report that same data to the Commission.
    (b) Data reported to the Commission pursuant to this section shall 
be reported at times announced by the Commission and in an electronic 
file in a format acceptable to the Commission.


Sec.  45.12  [Removed and Reserved]

0
12. Remove and reserve Sec.  45.12.
0
13. Revise Sec.  45.13 to read as follows:


Sec.  45.13  Required data standards.

    (a) Data reported to swap data repositories. (1) In reporting 
required swap creation data and required swap continuation data to a 
swap data repository, each reporting counterparty, swap execution 
facility, designated contract market, and derivatives clearing 
organization, shall report the swap data elements in appendix 1 to this 
part in the form and manner provided in the technical specifications 
published by the Commission pursuant to Sec.  45.15.
    (2) In reporting required swap creation data and required swap 
continuation data to a swap data repository, each reporting 
counterparty, swap execution facility, designated contract market, and 
derivatives clearing organization making such report shall satisfy the 
swap data validation procedures of the swap data repository.
    (3) In reporting swap data to a swap data repository as required by 
this part, each reporting counterparty, swap execution facility, 
designated contract market, and derivatives clearing organization shall 
use the facilities, methods, or data standards provided or required by 
the swap data repository to which the entity or counterparty reports 
the data.
    (b) Data Validation Acceptance Message. (1) For each required swap

[[Page 21634]]

creation data or required swap continuation data report submitted to a 
swap data repository, a swap data repository shall notify the reporting 
counterparty, swap execution facility, designated contract market, 
derivatives clearing organization, or third-party service provider 
submitting the report whether the report satisfied the swap data 
validation procedures of the swap data repository. The swap data 
repository shall provide such notification as soon as technologically 
practicable after accepting the required swap creation data or required 
swap continuation data report. A swap data repository may satisfy the 
requirements of this paragraph by transmitting data validation 
acceptance messages as required by Sec.  49.10 of this chapter.
    (2) If a required swap creation data or required swap continuation 
data report to a swap data repository does not satisfy the data 
validation procedures of the swap data repository, the reporting 
counterparty, swap execution facility, designated contract market, or 
derivatives clearing organization, required to submit the report has 
not yet satisfied its obligation to report required swap creation or 
continuation data in the manner provided by paragraph (a) of this 
section within the timelines set forth in Sec. Sec.  45.3 and 45.4. The 
reporting counterparty, swap execution facility, designated contract 
market, or derivatives clearing organization has not satisfied its 
obligation until it submits the required swap data report in the manner 
provided by paragraph (a) of this section, which includes the 
requirement to satisfy the data validation procedures of the swap data 
repository, within the applicable time deadline set forth in Sec. Sec.  
45.3 and 45.4.

0
14. Add Sec.  45.15 to read as follows:


Sec.  45.15  Delegation of authority.

    (a) Delegation of authority to the Chief Information Officer. The 
Commission hereby delegates to its chief information officer, until the 
Commission orders otherwise, the authority set forth in paragraph (a) 
of this section, to be exercised by the chief information officer or by 
such other employee or employees of the Commission as may be designated 
from time to time by the chief information officer. The chief 
information officer may submit to the Commission for its consideration 
any matter which has been delegated in this paragraph. Nothing in this 
paragraph prohibits the Commission, at its election, from exercising 
the authority delegated in this paragraph. The authority delegated to 
the chief information officer by this paragraph (a) shall include:
    (1) The authority to determine the manner, format, coding 
structure, and electronic data transmission standards and procedures 
acceptable to the Commission for the purposes of Sec.  45.11;
    (2) The authority to determine whether the Commission may permit or 
require use by swap execution facilities, designated contract markets, 
derivatives clearing organizations, or reporting counterparties in 
reporting pursuant to Sec.  45.11 of one or more particular data 
standards (such as FIX, FpML, ISO 20022, or some other standard), in 
order to accommodate the needs of different communities of users;
    (3) The dates and times at which required swap creation data or 
required swap continuation data shall be reported pursuant to Sec.  
45.11; and
    (4) The chief information officer shall publish from time to time 
in the Federal Register and on the website of the Commission the 
format, data schema, electronic data transmission methods and 
procedures, and dates and times for reporting acceptable to the 
Commission with respect to swap data reporting pursuant to Sec.  45.11.
    (b) Delegation of authority to the Director of the Division of 
Market Oversight. The Commission hereby delegates to the Director of 
the Division of Market Oversight, until the Commission orders 
otherwise, the authority set forth in Sec.  45.13(a)(1), to be 
exercised by the Director of the Division of Market Oversight or by 
such other employee or employees of the Commission as may be designated 
from time to time by the Director of the Division of Market Oversight. 
The Director of the Division of Market Oversight may submit to the 
Commission for its consideration any matter which has been delegated 
pursuant to this paragraph. Nothing in this paragraph prohibits the 
Commission, at its election, from exercising the authority delegated in 
this paragraph. The authority delegated to the Director of the Division 
of Market Oversight by this paragraph (b) shall include:
    (1) The authority to publish the technical specifications providing 
the form and manner for reporting the swap data elements in appendix 1 
to this part to swap data repositories as provided in Sec.  
45.13(a)(1);
    (2) The authority to determine whether the Commission may permit or 
require use by swap execution facilities, designated contract markets, 
derivatives clearing organizations, or reporting counterparties in 
reporting pursuant to Sec.  45.13(a)(1) of one or more particular data 
standards (such as FIX, FpML, ISO 20022, or some other standard), in 
order to accommodate the needs of different communities of users;
    (3) The dates and times at which required swap creation data or 
required swap continuation data shall be reported pursuant to Sec.  
45.13(a)(1); and
    (4) The Director of the Division of Market Oversight shall publish 
from time to time in the Federal Register and on the website of the 
Commission the technical specifications for swap data reporting 
pursuant to Sec.  45.13(a)(1).
0
15. Revise appendix 1 to part 45 to read as follows:
BILLING CODE 6351-01-P

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BILLING CODE 6351-01-C

PART 46--SWAP DATA RECORDKEEPING AND REPORTING REQUIREMENTS: PRE-
ENACTMENT AND TRANSITION SWAPS

0
16. The authority citation for part 46 continues to read as follows:

    Authority:  Title VII, sections 723 and 729, Pub. L. 111-203, 
124 Stat. 1738.

0
17. In part 46, revise all references to ``non-SD/MSP'' to read ``non-
SD/MSP/DCO''.


Sec.  Sec.  46.3, 46.4, 46.5, 46.6, 46.8, 46.9, 46.10, and 
46.11  [Amended]

0
18. In the table below, for each section and paragraph indicated in the 
left column, remove the term indicated in the middle column from 
wherever it appears in the section or paragraph, and add in its place 
the term indicated in the right column:

----------------------------------------------------------------------------------------------------------------
      Section/Paragraph                             Remove                                      Add
----------------------------------------------------------------------------------------------------------------
46.3(a)(1)(iii)(A)..........  counterparty; and                                   counterparty.
46.3(a)(3)..................  first report of required swap creation data         first report of such data.
46.4 (introductory text)....  swap data reporting                                 data reporting.
46.4(a).....................  substitute counterparty identifier as provided in   substitute counterparty
                               Sec.   45.6(f) of this chapter                      identifier.
46.4(d).....................  unique swap identifier and unique product           unique swap identifier, unique
                               identifier                                          transaction identifier, and
                                                                                   unique product identifier.
46.5(a).....................  swap data                                           data.
46.6 (introductory text)....  report swap data                                    report data.
46.8(a).....................  accepts swap data                                   accepts data for pre-enactment
                                                                                   and transition swaps.
46.8(a).....................  required swap creation data or required swap        such data.
                               continuation data
46.8(c)(2)(ii)..............  reporting entities                                  registered entities.
46.8(d).....................  swap data reporting                                 reporting data for pre-
                                                                                   enactment and transition
                                                                                   swaps.
46.9(a).....................  any report of swap data                             any report of data.
46.9(f).....................  errors in the swap data                             errors in the data for a pre-
                                                                                   enactment or a transition
                                                                                   swap.
46.10.......................  reporting swap data                                 reporting data for a pre-
                                                                                   enactment or a transition
                                                                                   swap.
46.11(a)....................  report swap data                                    report data for a pre-
                                                                                   enactment or a transition
                                                                                   swap.
----------------------------------------------------------------------------------------------------------------

0
19. Amend Sec.  46.1 by:
0
a. Revising the introductory text and redesignating it as paragraph 
(a);
0
b. Removing the definitions of ``credit swap''; ``foreign exchange 
forward''; ``foreign exchange instrument''; ``foreign exchange swap''; 
``interest rate swap''; ``international swap''; ``major swap 
participant''; ``other commodity swap''; ``swap data repository''; and 
``swap dealer'';
0
c. Revising the definitions of ``asset class''; ``non-SD/MSP 
counterparty''; ``reporting counterparty''; ``required swap 
continuation data'';
0
d. Adding, in alphabetical order, definitions for ``historical swaps'' 
and ``substitute counterparty identifier''; and
0
e. Adding paragraph (b).
    The revisions and additions read as follows:


Sec.  46.1  Definitions.

    (a) As used in this part:
    Asset class means a broad category of commodities, including, 
without limitation, any ``excluded commodity'' as defined in section 
1a(19) of the Act, with common characteristics underlying a swap. The 
asset classes include interest rate, foreign exchange, credit, equity, 
other commodity, and such other asset classes as may be determined by 
the Commission.
* * * * *
    Historical swap means pre-enactment swaps and transition swaps.
* * * * *
    Non-SD/MSP/DCO counterparty means a swap counterparty that is not a 
swap dealer, major swap participant, or derivatives clearing 
organization.
* * * * *
    Reporting counterparty means the counterparty required to report 
data for a pre-enactment swap or a transition swap pursuant to this 
part, selected as provided in Sec.  46.5.
    Required swap continuation data means all of the data elements that 
shall be reported during the existence of a swap as required by part 45 
of this chapter.
    Substitute counterparty identifier means a unique alphanumeric code 
assigned by a swap data repository to a swap counterparty prior to the 
Commission designation of a legal entity identifier system on July 23, 
2012.
* * * * *
    (b) Other defined terms. Terms not defined in this part have the 
meanings assigned to the terms in Sec.  1.3 of this chapter.
0
20. In Sec.  46.3, revise paragraph (a)(2)(i) to read as follows:


Sec.  46.3  Data reporting for pre-enactment swaps and transition 
swaps.

    (a) * * *
    (2) * * *
    (i) For each uncleared pre-enactment or transition swap in 
existence on or after April 25, 2011, throughout the existence of the 
swap following the compliance date, the reporting counterparty must 
report all required swap continuation data as required by part 45 of 
this chapter.
* * * * *
0
21. In Sec.  46.10, add a second sentence to read as follows:


Sec.  46.10  Required data standards.

    * * * In reporting required swap continuation data as required by 
this part, each reporting counterparty shall

[[Page 21653]]

comply with the required data standards set forth in part 45 of this 
chapter, including those set forth in Sec.  45.13(a) of this chapter.
0
22. Amend Sec.  46.11 by:
0
a. Removing paragraph (b);
0
b. Redesignating paragraph (c) as paragraph (b) and revising it; and
0
c. Redesignating paragraph (d) as paragraph (c).
    The revision reads as follows:


Sec.  46.11  Reporting of errors and omissions in previously reported 
data.

* * * * *
    (b) Each counterparty to a pre-enactment or transition swap that is 
not the reporting counterparty as determined pursuant to Sec.  46.5, 
and that discovers any error or omission with respect to any data for a 
pre-enactment or transition swap reported to a swap data repository for 
that swap, shall promptly notify the reporting counterparty of each 
such error or omission. As soon as technologically practicable after 
receiving such notice, the reporting counterparty shall report a 
correction of each such error or omission to the swap data repository.
* * * * *

PART 49--SWAP DATA REPOSITORIES

0
23. The authority citation for part 49 is revised to read as follows:

    Authority:  7 U.S.C. 1a, 2(a), 6r, 12a, and 24a, as amended by 
Title VII of the Wall Street Reform and Consumer Protection Act, 
Pub. L. 111-203, 124 Stat. 1376 (Jul. 21, 2010), unless otherwise 
noted.


Sec.  49.4  [Amended]

0
24. In the table below, for each section and paragraph indicated in the 
left column, remove the term indicated in the middle column from 
wherever it appears in the section or paragraph, and add in its place 
the term indicated in the right column:

----------------------------------------------------------------------------------------------------------------
         Section/paragraph                           Remove                                  Add
----------------------------------------------------------------------------------------------------------------
49.4(a)(1).........................  registered swap data repository......  swap data repository.
49.4(a)(1).........................  registrant...........................  swap data repository.
49.4(a)(1).........................  withdrawn, which notice..............  withdrawn. Such.
49.4(a)(1).........................  sixty................................  60.
49.4(a)(1)(i)......................  registrant...........................  swap data repository.
49.4(a)(1)(ii).....................  registrant;..........................  swap data repository; and.
49.4(a)(1)(iii)....................  located; and.........................  located.
49.4(c)............................  registered swap data repository......  swap data repository.
----------------------------------------------------------------------------------------------------------------

0
25. In Sec.  49.2(a), remove the paragraph designations and arrange the 
definitions, in alphabetical order, and add, in alphabetical order, 
definitions for the terms ``data validation acceptance message''; 
``data validation error''; ``data validation error message''; and 
``data validation procedures'' to read as follows:


Sec.  49.2  Definitions.

    (a) * * *
    Data validation acceptance message. The term ``data validation 
acceptance message'' means a notification that SDR data satisfied the 
data validation procedures applied by a swap data repository.
    Data validation error. The term ``data validation error'' means 
that a specific data element of SDR data did not satisfy the data 
validation procedures applied by a swap data repository.
    Data validation error message. The term ``data validation error 
message'' means a notification that SDR data contained one or more data 
validation error(s).
    Data validation procedures. The term ``data validation procedures'' 
means procedures established by a swap data repository pursuant to 
Sec.  49.10 to validate SDR data reported to the swap data repository.
* * * * *
0
26. In Sec.  49.4, remove paragraph (a)(1)(iv) and revise paragraph 
(a)(2).
    The revision reads as follows:


Sec.  49.4  Withdrawal from registration.

* * * * *
    (a) * * *
    (2) Prior to filing a request to withdraw, a swap data repository 
shall execute an agreement with the custodial swap data repository 
governing the custody of the withdrawing swap data repository's data 
and records. The custodial swap data repository shall retain such 
records for at least as long as the remaining period of time the swap 
data repository withdrawing from registration would have been required 
to retain such records pursuant to this part.
* * * * *
0
27. In Sec.  49.10, revise paragraphs (a) through (d) and add reserved 
paragraph (e) and paragraph (f) to read as follows:


Sec.  49.10  Acceptance and validation of data.

    (a) General requirements. (1) Generally. A swap data repository 
shall establish, maintain, and enforce policies and procedures 
reasonably designed to facilitate the complete and accurate reporting 
of SDR data. A swap data repository shall promptly accept, validate, 
and record SDR data.
    (2) Electronic connectivity. For the purpose of accepting SDR data, 
the swap data repository shall adopt policies and procedures, including 
technological protocols, which provide for electronic connectivity 
between the swap data repository and designated contract markets, 
derivatives clearing organizations, swap execution facilities, swap 
dealers, major swap participants and non-SD/MSP/DCO reporting 
counterparties who report such data. The technological protocols 
established by a swap data repository shall provide for the receipt of 
SDR data. The swap data repository shall ensure that its mechanisms for 
SDR data acceptance are reliable and secure.
    (b) Duty to accept SDR data. A swap data repository shall set forth 
in its application for registration as described in Sec.  49.3 the 
specific asset class or classes for which it will accept SDR data. If a 
swap data repository accepts SDR data of a particular asset class, then 
it shall accept SDR data from all swaps of that asset class, unless 
otherwise prescribed by the Commission.
    (c) Duty to validate SDR data. A swap data repository shall 
validate SDR data as soon as technologically practicable after such 
data is accepted according to the validation conditions approved in 
writing by the Commission. A swap data repository shall validate SDR 
data by providing data validation acceptance messages, data validation 
messages, as provided below.
    (1) Data validation acceptance message. A swap data repository 
shall validate each SDR data report submitted to the swap data 
repository and notify the reporting counterparty, swap execution 
facility, designated contract market, or third party service provider 
submitting the report whether the report

[[Page 21654]]

satisfied the data validation procedures of the swap data repository as 
soon as technologically practicable after accepting the SDR data 
report.
    (2) Data validation error message. If SDR data contains one or more 
data validation errors, the swap data repository shall distribute a 
data validation error message to the designated contract market, swap 
execution facility, reporting counterparty, or third-party service 
provider that submitted such SDR data as soon as technologically 
practicable after acceptance of such data. Each data validation error 
message shall indicate which specific data validation error(s) was 
identified in the SDR data.
    (3) Swap transaction and pricing data submitted with swap data. If 
a swap data repository allows for the joint submission of swap 
transaction and pricing data and swap data, the swap data repository 
shall validate the swap transaction and pricing data and swap data 
separately. Swap transaction and pricing data that satisfies the data 
validation procedures applied by a swap data repository shall not be 
deemed to contain a data validation error because it was submitted to 
the swap data repository jointly with swap data that contained a data 
validation error.
    (d) Policies and procedures to prevent invalidation or 
modification. A swap data repository shall establish policies and 
procedures reasonably designed to prevent any provision in a valid swap 
from being invalidated or modified through the verification or 
recording process of the swap data repository. The policies and 
procedures shall ensure that the swap data repository's user agreements 
are designed to prevent any such invalidation or modification.
    (e) [Reserved].
    (f) Policies and procedures for resolving disputes regarding data 
accuracy. A swap data repository shall establish procedures and provide 
facilities for effectively resolving disputes over the accuracy of the 
SDR data and positions that are recorded in the swap data repository.

    Issued in Washington, DC, on February 27, 2020, by the 
Commission.
Christopher Kirkpatrick,
Secretary of the Commission.

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

Appendices to Swap Data Recordkeeping and Reporting Requirements--
Commission Voting Summary, Chairman's Statement, and Commissioners' 
Statements

Appendix 1--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.

Appendix 2--Statement of Support of Chairman Heath P. Tarbert

    Data is the lifeblood of our markets. Yet for too long, market 
participants have been burdened with confusing and costly swap data 
reporting rules that do little to advance the Commission's 
regulatory functions. In the decade-long effort to refine our swap 
data rules, we have at times lost sight of Sir Isaac Newton's 
wisdom: ``Truth is ever to be found in simplicity, and not in the 
multiplicity and confusion of things.''

Overview

    Simplicity should be a central goal of our swap data reporting 
rules. After all, making rules simple and clear facilitates 
compliance, price discovery, and risk monitoring. While principles-
based regulation can offer numerous advantages, there are areas 
where a rules-based approach is preferable because of the level of 
clarity, standardization, and harmonization it provides. Swap data 
reporting is one such area.\1\
---------------------------------------------------------------------------

    \1\ See Heath P. Tarbert, Rules for Principles and Principles 
for Rules: Tools for Crafting Sound Financial Regulation, Harv. Bus. 
L. Rev. (forthcoming 2020) (``A principles-based regime is often a 
poor choice where standard forms and disclosures are heavily used, 
as principles do not offer the needed precision.'').
---------------------------------------------------------------------------

    As it stands, swap data repositories (SDRs) and market 
participants have been left to wade through Parts 43 and 45 of our 
rules on their own. We have essentially asked them to decide what to 
report to the CFTC, instead of being clear about what we want. The 
result is a proliferation of reportable data fields designed to 
ensure compliance with our rules--but which exceed what market 
participants can readily provide and what the agency can 
realistically use. These fields can run hundreds deep, imposing 
costly burdens on market participants. Yet for all its sprawling 
complexity, the current data reporting system omits, of all things, 
uncleared margin information--thereby creating a black box of 
potential systemic risk.\2\
---------------------------------------------------------------------------

    \2\ Requiring margin in the uncleared swaps markets ensures that 
counterparties have the necessary collateral to offset losses, 
preventing financial contagion. With respect to non-cleared, 
bilateral swaps, in which there is no central clearinghouse, parties 
bear the risk of counterparty default. In turn, the CFTC must have 
visibility into uncleared margin data to monitor systemic risk 
accurately and to act quickly if cracks begin appear in the system.
---------------------------------------------------------------------------

    And that just describes CFTC reporting. As it stands today, a 
market participant with a swap reportable to the CFTC might also 
have to report the same swap to the SEC, the European Securities and 
Markets Authority (ESMA), and perhaps other regulators as well. The 
global nature of our derivatives markets has led to the preparation 
and submission of multiple swap data reports, creating a byzantine 
maze of disparate data fields and reporting timetables. Market 
participants should not incur the costs and burdens of reporting a 
grab-bag of dissimilar data for the very same swap. That approach 
helps neither the market nor the CFTC: Conflicting data reporting 
requirements make regulatory coordination more difficult, preventing 
a panoramic view of risk.
    Today we take the first step toward changing this. I am pleased 
to support the proposed amendments to Parts 43 and 45 of the CFTC's 
rules governing swap data reporting.\3\ The proposals simplify the 
swap data reporting process to ensure that market participants are 
not burdened with unclear or duplicative reporting obligations that 
do little to reduce market risk or facilitate price discovery. If 
the amendments are adopted, we will no longer collect data that does 
not advance our oversight of the swaps markets.
---------------------------------------------------------------------------

    \3\ We are also re-opening the comment period for part 49, which 
relates to SDR registration and governance.
---------------------------------------------------------------------------

    In fact, the Part 45 proposal includes a technical specification 
that identifies 116 standardized data fields that will help replace 
the many hundreds of fields now in use by SDRs. We are also 
proposing to harmonize our swap data reporting requirements with 
those of the SEC and ESMA. Harmonization would remove the burdens of 
duplicative reporting while painting a more complete picture of 
market risk. At the same time, the proposed changes to Part 43 would 
enhance public transparency as well as provide relief for end users 
who rely on our markets to hedge their risks. Our swaps markets are 
integrated and global; it is time for our reporting regime to catch 
up.

Simplified Reporting

    Today's proposals advance my first strategic goal for our 
agency: Strengthening the resilience and integrity of our 
derivatives markets while fostering their vibrancy.\4\ Simplified 
reporting is critical to the CFTC's ability to monitor systemic 
risk. While SDRs now require hundreds of data fields in an effort to 
comply with Parts 43 and 45 of our rules, uncleared margin has been 
noticeably absent. If finalized, Part 45 will require the reporting 
of uncleared margin data for the first time. This will significantly 
expand our visibility into potential systemic risk in the swaps 
markets.
---------------------------------------------------------------------------

    \4\ See Remarks of CFTC Chairman Heath P. Tarbert to the 35th 
Annual FIA Expo 2019 (Oct. 30, 2019), available at https://www.cftc.gov/PressRoom/SpeechesTestimony/opatarbert2 (announcing the 
core value of ``clarity'' and defining it as ``providing 
transparency to market participants about our rules and 
processes'').
---------------------------------------------------------------------------

    A related problem we address today involves inconsistent data. 
SDRs currently validate swap transaction data in conflicting ways, 
causing market participants to report disparate data elements to 
different SDRs. Today's proposals include guidance to help SDRs 
standardize their validation of swap

[[Page 21655]]

data reports, shoring up the resilience and integrity of our 
markets.
    Simplifying the reporting process will also enhance the 
regulatory experience for market participants at home and abroad, 
which is another strategic goal for the agency.\5\ We have heard 
from those who use our markets that the complexity of our existing 
reporting rules creates confusion, leading to reporting errors.\6\ 
This situation neither serves the markets nor advances the agency's 
regulatory purpose. Indeed, data errors can frustrate transparency 
and price discovery.
---------------------------------------------------------------------------

    \5\ See id. (identifying the CFTC's strategic goals).
    \6\ The problem is compounded by the allowance for ``catch-all'' 
voluntary reporting, which creates incentives for market 
participants to flood the CFTC with any data that might possibly be 
required. Paradoxically, this kitchen-sink approach can so muddy the 
water as to undermine a fundamental purpose of data reporting: To 
create a transparent picture of market risk.
---------------------------------------------------------------------------

    Our proposals today reflect a hard look at the data we are 
requesting and the data we really need. The proposals provide the 
guidance needed to collapse hundreds of reportable data fields into 
a standardized set of 116 that truly advance our regulatory 
objectives. If adopted, this would reduce burdens on market 
participants and provide technical guidance to ensure they are no 
longer guessing at what we require. Clear rules are easier to 
follow, and market participants will no longer be subject to 
reporting obligations that raise the costs of compliance without 
improving the resilience and integrity of our derivatives markets. 
Just as we are reducing requirements where they are not needed, we 
are also enhancing them where they are. This is the balanced 
approach sound regulation demands.

Regulatory Harmonization

    Today's proposals also improve the regulatory experience by 
harmonizing swap data reporting where it is sensible to do so.\7\ 
There is no good reason for a swap dealer or other market 
participant to report hundreds of differing data fields to multiple 
jurisdictions for the very same swap transaction. This situation 
imposes high costs with very little benefit.
---------------------------------------------------------------------------

    \7\ Harmonizing regulation is an important consideration in 
addressing our increasingly global markets. See Opening Statement of 
Chairman Heath P. Tarbert Before the Open Commission Meeting on 
October 16, 2019, available at https://www.cftc.gov/PressRoom/SpeechesTestimony/heathstatement101619 (``The global nature of 
today's derivatives markets requires that regulators work 
cooperatively to ensure the success of the G20 reforms, foster 
economic growth, and promote financial stability.'').
---------------------------------------------------------------------------

    While we should not harmonize for the sake of harmonizing,\8\ we 
can reap real efficiencies by carefully building consistent data 
reporting frameworks. The proposals would harmonize our swap data 
reporting timelines with the SEC by moving to a ``T+1'' system for 
swap dealers, major swap participants, and derivatives clearing 
organizations. We would also remove duplicative confirmation data 
and lift the requirement that end users provide valuation data.
---------------------------------------------------------------------------

    \8\ Id. (``To be sure, as my colleagues have said on several 
occasions, we should not harmonize with the SEC merely for the sake 
of harmonization. I agree that we should harmonize only if it is 
sensible.'').
---------------------------------------------------------------------------

    Harmonization also helps the CFTC realize our vision of being 
the global standard for sound derivatives regulation.\9\ We have 
long been a leader in international swap data harmonization efforts, 
including by co-chairing the Committee on Payments and 
Infrastructures and the International Organization of Securities 
Commissioners (CPMI-IOSCO) working group on critical data elements 
(CDE) in swap reporting.\10\ The purpose of the working group is to 
standardize CDE fields to facilitate consistent data reporting 
across borders. Our proposals today would bring this and related 
harmonization efforts to fruition by incorporating many of the CDE 
fields and a limited number of CFTC-specific fields into new Part 45 
technical specifications. Incorporating the CDE fields would 
sensibly harmonize our reporting system with that of ESMA. As a 
result, the proposals would advance the CFTC's important role in 
bringing global regulators together to form a better data reporting 
system.
---------------------------------------------------------------------------

    \9\ See CFTC Vision Statement, available at https://www.cftc.gov/About/Mission/index.htm.
    \10\ The CFTC also co-chaired the Financial Stability Board's 
working group on UTI and UPI governance.
---------------------------------------------------------------------------

    The proposals also would harmonize swap data reporting in 
several other important respects. First, we propose adopting a 
Unique Transaction Identifier (UTI) requirement in place of the 
existing Unique Swap Identifier (USI) system, as provided for in the 
CPMI-IOSCO Technical Guidance.\11\ Adopting a UTI system would 
provide for consistent monitoring of swaps across borders, improving 
data sharing and risk surveillance. The proposals would also remove 
the requirement that market participants report duplicative creation 
and confirmation data, and would adopt reporting timetables that are 
consistent with those of ESMA and other regulators.\12\ These are 
reasonable efforts that will improve the reporting process, while 
shoring up the CFTC's position as a leader on harmonization.
---------------------------------------------------------------------------

    \11\ The CPMI-IOSCO harmonization group has requested that 
regulators implement UTI by December 31, 2020. I believe it is 
important for the CFTC to meet this deadline, which has long been 
public and reflects input from our staff. The remainder of our 
proposals today are subject to a 1-year implementation period.
    \12\ Today's proposals move to a ``T+1'' reporting deadline for 
swap dealers, major swap participants, and derivatives clearing 
organizations and to a ``T+2'' system for other market participants.
---------------------------------------------------------------------------

Enhanced Public Transparency

    I am also pleased to support our proposals today because they 
enhance clarity, one of the four core values of our agency.\13\ 
Streamlining the Part 45 technical specification is intended, in 
part, to reduce unclear and confusing data reporting fields that do 
not advance our regulatory objectives. But clarity demands more: We 
must also ensure we are providing transparent, high-quality data to 
the public.\14\
---------------------------------------------------------------------------

    \13\ See CFTC Core Values, available at https://www.cftc.gov/About/Mission/index.htm.
    \14\ One of the issues we are looking at closely is whether a 
48-hour delay for block trade reporting is appropriate. We are 
hopeful that market participants will provide comment letters and 
feedback concerning the treatment of block trade delays.
---------------------------------------------------------------------------

    Part 43 embodies our public reporting system for swap data, 
which provides high-quality information in real time. Providing 
transparent, timely swap data to the public is critically important 
to the price discovery process necessary for our markets to thrive 
and grow. Enhanced public transparency also ensures that market 
participants and end users can make informed trading and hedging 
decisions.
    The CFTC's current system for public reporting is considered the 
global standard. Even so, it can be improved. Although post-priced 
swaps are subject to unique pricing factors that affect the ``public 
tape,'' \15\ they are nonetheless reported after execution just like 
any other swap. It is of little value for the public to see swaps 
reported without an accurate price, or any price at all. To remedy 
this data quality issue and improve price discovery, we are 
proposing that post-priced swaps now be reported to the public tape 
after pricing occurs.
---------------------------------------------------------------------------

    \15\ Many post-priced swaps are priced based on the equity 
markets, and do not have a known price until the equity markets 
close.
---------------------------------------------------------------------------

    The current reporting system for prime broker swaps has led to 
data that distorts the picture of what is actually happening in the 
market. Currently, Part 43 requires that offsetting swaps executed 
with prime brokers--in addition to the initial swap reflecting the 
actual terms of the trade between counterparties--be reported on the 
public tape. Reporting these duplicative swaps can hinder price 
discovery by displaying pricing data that includes fees and other 
costs unrelated to the actual terms of the parties' swap. Cluttering 
the public tape with duplicative swaps is at best unhelpful, and at 
worst confusing. To the public, it could appear as though there are 
twice as many negotiated, arms-length swaps as there actually are. 
Today's proposals would solve this problem by requiring that only 
the initial ``trigger'' swaps be publicly reported.

Relief for End Users

    Finally, the proposals would help make our derivatives markets 
work for all Americans, another of the CFTC's strategic goals.\16\ 
While swaps are viewed by many Americans as esoteric products, they 
can nonetheless fulfill an important risk-management function for 
end users like farmers, ranchers, and manufacturers. End users often 
lack the reporting infrastructure of big banks, and may be unable to 
report data as quickly as swap dealers and financial institutions. 
Indeed, demanding that they do so can impair data quality, 
frustrating our regulatory objectives.
---------------------------------------------------------------------------

    \16\ See FIA Expo Remarks, supra note 5.
---------------------------------------------------------------------------

    If finalized, today's proposals will no longer require end users 
to report swap valuation data. It would also give them a ``T+2'' 
timeframe for reporting the data we do require. The proposals would 
therefore remove unnecessary reporting burdens from end users 
relying on our swaps markets to hedge their risks. In addition, by 
providing sufficient time for end users to ensure their

[[Page 21656]]

reporting is accurate, the proposals would also improve the quality 
of data we receive.

Conclusion

    It is time for the Commission to reform our swap data reporting 
rules. Sir Isaac Newton realized long ago that simplicity can often 
lead to truth. It does not take an apple striking us on the head to 
realize that simplifying our swap data reporting rules to achieve 
clarity, standardization, and harmonization will inevitably make for 
sounder regulation.

Appendix 3--Statement of Support of Commissioner Brian D. Quintenz

    I am pleased to support the data proposals before the Commission 
today. These proposed amendments to part 45 regulatory reporting and 
part 43 real-time reporting hopefully represent the beginning of the 
end of this agency's longstanding efforts to collect and utilize 
accurate, reliable swap data to further its regulatory mandates.
    There is frequently a trade-off between being first and being 
right. That is especially true when it comes to regulation and 
specifically true when it comes to the CFTC's historical approach to 
uncleared swap data reporting. Although the CFTC was the first 
regulator in the world to implement swap data reporting 
requirements, it did so only in a partial, non-descriptive, and non-
technical fashion, which has led to the fact that, even today, the 
Commission has great difficulty aggregating and analyzing data for 
uncleared swaps across swap data repositories (SDRs).
    However, I'm very pleased that over the past few years, the CFTC 
continued to lead global efforts to reach international consensus on 
reporting requirements so that derivatives regulators can finally 
get a clear picture of the uncleared landscape.
    I wish we could have arrived at this stage sooner. Nevertheless, 
I would like to recognize the diligent efforts of DMO staff to 
finally get us over the finish line. The proposals before us today 
seek to provide the Commission with the homogeneous data it needs to 
readily analyze swap data for both cleared and uncleared swaps, 
across jurisdictions. The proposals would eliminate unnecessary 
reporting fields, implement internationally agreed to ``critical 
data elements,'' or CDE fields, and revisit aspects of our current 
reporting regimes that can be further perfected.
    It is important to note the differentiation between the poor 
usability of current uncleared swaps data and the significant 
usability of swaps data produced by clearinghouses for cleared swaps 
trades. In fact, the swap data for cleared swap transactions is 
regularly used by the Commission to monitor risk in real time at the 
client portfolio level.

Part 45 Regulatory Reporting

    The proposal would provide reporting counterparties with a 
longer time to report trades accurately to an SDR by moving to a 
``T+1'' reporting timeframe for swap dealer (SD) and derivatives 
clearing organization (DCO) reporting parties, and a ``T+2'' 
reporting timeframe for non-SD/DCO reporting counterparties. I 
support providing additional time for market participants to meet 
their regulatory reporting obligations. A later regulatory reporting 
deadline should help counterparties report the trade correctly the 
first time, instead of reporting an erroneous trade that then needs 
to be corrected later. This proposed change would also more closely 
harmonize the CFTC's and ESMA's reporting deadlines.
    The proposal would also implement a number of CDE fields 
consistently with the detailed technical standards put forth by 
CPMI-IOSCO.\1\ Importantly, the proposal would remove the current 
``catch-all'' reporting requirement to report ``any other term(s) of 
the swap matched or affirmed'' by the counterparties. It would also 
require, for the first time, certain reporting counterparties to 
report valuation, margin, and collateral information daily to the 
Commission. Significantly, in order to alleviate burdens on small 
reporting counterparties, non-SD/MSP reporting counterparties would 
not be subject to these new requirements. With respect to swaps on 
physical commodities, the proposal seeks input from market 
participants about how certain data elements should be reported, 
including quantity unit of measure and price unit of measure. The 
CDE technical guidance did not harmonize many fields that are 
relevant to the physical commodity asset class. I know DMO will 
continue to play an active role through CPMI-IOSCO's CDE governance 
process to ensure that additional guidance and specificity are 
provided regarding the data elements for this asset class. I hope 
that commenters use this as an opportunity to help inform the 
additional steps that must be taken at the international level to 
ensure the effective reporting of commodity swaps.
---------------------------------------------------------------------------

    \1\ See CPMI-IOSCO, Technical Guidance, Harmonization of 
Critical OTC Derivatives Data Elements (other than UTI and UPI) 
(Apr. 2018), available at https://www.bis.org/cpmi/publ/d175.pdf.
---------------------------------------------------------------------------

    The technical specification describing each of these data 
elements is being put out for public comment and I urge market 
participants to comment on all of the proposed elements. To the 
extent the CFTC can adopt basic data elements that are identical to 
other jurisdictions' elements, global aggregation and measurement of 
risk, including counterparty credit risk, can become a reality. 
However, the goal of global data harmonization, in my opinion, 
should also be balanced against the burdens and practical realities 
facing reporting counterparties. This proposal tries to strike an 
appropriate balance and I look forward to hearing from commenters on 
this point.

Part 43 Real-Time Reporting

    The real-time reporting proposal generally maintains the ``as 
soon as technologically practicable'' reporting standard for most 
trades, but would adjust the delay for public dissemination of block 
transactions. The proposal also updates the block size thresholds 
and cap sizes and makes adjustments to the block swap categories.
    With respect to the timing requirement for reporting block 
trades, the proposal would establish a time delay of 48 hours after 
execution of the trade. The Commodity Exchange Act (CEA) 
specifically directs the Commission to ensure that real-time public 
reporting requirements for swap transactions (i) do not identify the 
participants; (ii) specify the criteria for what constitutes a block 
trade and the appropriate time delay for reporting such block 
trades, and (iii) take into account whether public disclosure will 
materially reduce market liquidity.\2\ Several commenters requested 
that the Commission reconsider the current delays for block trades 
under CFTC regulations, citing concerns about market liquidity, 
counterparty confidentiality, or the pricing of block trades.\3\ 
Taking into account the CEA's directives and commenters' concerns, 
the proposal seeks to recalibrate the balance among price 
transparency, price discovery, and market liquidity. I am very 
interested to hear from commenters about whether or not the 
Commission struck the right balance in this proposal, and, if 
another time delay is more appropriate for particular asset classes 
of trades, I hope commenters will include their suggestions.
---------------------------------------------------------------------------

    \2\ CEA section 2(a)(13)(E).
    \3\ See, e.g., Comment Letter from SIFMA Asset Management Group 
(Aug. 18, 2017) and Comment Letter from the ACLI (Aug. 21, 2017).
---------------------------------------------------------------------------

Conclusion

    In the past, the leadership of the CFTC has likened the 
construction of a swap data reporting system to the building of a 
transcontinental railroad--a monumental infrastructure project, 
requiring considerable time and resources. However, in my opinion 
the best way to build a functioning intercontinental railroad is not 
to let every state decide how wide they want to make the tracks--the 
approach the agency tried when it rushed out its uncleared swap 
reporting framework almost eight years ago. Subsequent progress on 
this issue has always been stymied by transitioning away from that 
view--away from the lack of specificity and consistency in how 
reporting counterparties should report basic data elements. Today, 
as a result of the decisive leadership and hard work of this agency, 
I am optimistic that we have finally turned the corner towards 
complete visibility into the global swaps market landscape. I look 
forward to hearing feedback from market participants and SDRs about 
how our proposals can be further improved.

Appendix 4--Statement of Concurrence of Commissioner Rostin Behnam

    I respectfully concur in the Commission's proposal to amend 
certain swap data and recordkeeping and reporting requirements. The 
proposed amendments reflect a multi-year effort to streamline, 
simplify, and internationally harmonize the requirements associated 
with reporting swaps. As a whole, the proposed amendments should 
improve data quality by eliminating duplication, removing 
alternative or adjunct reporting options, and utilizing universal 
data elements and identifiers. Along those lines, I am especially 
pleased that the Commission is proposing to require consistent 
application of rules across SDRs for the validation of both part 43 
and part 45 data submitted by

[[Page 21657]]

reporting counterparties. I believe the proposed amendments to part 
49 set forth a practical approach to ensuring SDRs can meet the 
statutory requirement to confirm the accuracy of swap data set forth 
in CEA section 21(c) \1\ without incurring unreasonable burdens.
---------------------------------------------------------------------------

    \1\ 7 U.S.C. 24a(c)(2).
---------------------------------------------------------------------------

    I am also pleased that the Commission is considering requiring 
reporting counterparties to indicate whether a specific swap: (1) 
Was entered into for dealing purposes (as opposed to hedging, 
investing, or proprietary trading); and/or (2) needs not be 
considered in determining whether a person is a swap dealer or need 
not be counted towards a person's de minimis threshold as described 
in paragraph (4) of the ``swap dealer'' definition in regulation 1.3 
pursuant to one of the exclusions or exceptions in the swap dealer 
definition. In the past, the Commission staff has identified the 
lack of these fields as limiting constraints on the usefulness of 
SDR data to identify which swaps should be counted towards a 
person's de minimis threshold, and the ability to precisely assess 
the current de minimis threshold or the impact of potential changes 
to current exclusions.\2\ As I have noted, where Congress has 
dictated that the Commission be the primary regulator for certain 
swap dealing activities, it should utilize resources efficiently to 
accomplish its duties.\3\ It seems that the Commission's ongoing 
surveillance for compliance with the swap dealer registration 
requirements would be greatly enhanced by data fields identifying 
the relationship of a particular swap to its participant's business 
or purpose--even where the data might only be reasonably available 
via the reporting counterparty. Moreover, it would afford the 
Commission greater insight into the use and usefulness of current 
exclusions and exceptions, as well as provide important data to 
support further consideration of relief. I look forward to hearing 
from commenters on this question.
---------------------------------------------------------------------------

    \2\ See De Minimis Exception to the Swap Dealer Definition, 83 
FR 27444, 27449 (proposed June 12, 2018); Swap Dealer De Minimis 
Exception Final Staff Report at 19 (Aug. 15, 2016); (Nov. 18, 2015), 
available at https://www.cftc.gov/sites/default/files/idc/groups/public/@swaps/documents/file/dfreport_sddeminis081516.pdf; Swap 
Dealer De Minimis Exception Preliminary Report at 15 (Nov. 18, 
2015), available at https://www.cftc.gov/sites/default/files/idc/groups/public/@swaps/documents/file/dfreport_sddeminis_1115.pdf.
    \3\ See De Minimis Exception to the Swap Dealer Definition--
Swaps Entered Into by Insured Depository Institutions in Connection 
with Loans to Customers, 84 FR 12450, 12470-71 (Apr. 1, 2019).
---------------------------------------------------------------------------

Appendix 5--Statement of Commissioner Dan M. Berkovitz

Introduction

    Collecting swap data is crucial to fulfilling the purposes of 
the Commodity Exchange Act (``CEA''), including ``insur[ing] the 
financial integrity of all transactions subject to this Act and the 
avoidance of systemic risk.'' \1\ The 2008 financial crisis showed 
how a lack of transparency in swap trading, and regulators' 
inability to monitor risk, can create fertile ground for the 
accumulation of excessive risks.
---------------------------------------------------------------------------

    \1\ CEA section 3(b).
---------------------------------------------------------------------------

    The Commission must collect appropriate swap data to fulfill its 
statutory mandate. The data must be accurate and sufficiently 
standardized so that the Commission can easily aggregate and analyze 
the data reported to different swap data repositories (``SDRs''). 
The Commission must be able to determine how different derivatives 
categories and products are being traded, as well as the positions 
and risks that different market participants are taking across the 
entire swaps market. I support today's Proposal to amend the Part 
45, 46, and 49 \2\ reporting requirements because it would improve 
the standardization and accuracy of swap data reported to SDRs, and 
would thereby strengthen the Commission's ability to oversee swap 
markets. I commend the many CFTC staff members who have spent years 
reviewing swap data and helped improve the data reporting framework.
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    \2\ The Proposal is one of three notices of proposed rulemaking 
developed from the Commission's 2017 ``Roadmap to Achieve High 
Quality Swaps Data.'' The Commission previously proposed revisions 
to its rules for SDRs (part 49) in 2019. The present proposal 
addresses regulatory reporting of swaps (part 45), reporting of 
transition and pre-enactment swaps (part 46), and certain additional 
amendments to part 49. Through separate actions today, the 
Commission is also proposing significant amendments to its real-time 
public reporting rules (part 43) and reopening the comment period on 
its 2019 proposal for SDRs.
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    In addition to obtaining accurate data, the Commission must also 
develop the tools and resources to analyze that data. The Proposal, 
which focuses on the quality and reporting of data, does not address 
in any detail the actual use cases for the data that would be 
collected or the analytical needs for swap risk management 
oversight. Regrettably, the Commission has yet to set forth with any 
specificity how it intends to use this swap data to evaluate or 
address systemic risk. More generally, the Commission has not 
devoted enough attention to the important task of building a risk 
monitoring system for swaps. In my view, this effort should be a 
high priority. I encourage market participants and members of the 
public to comment on the Proposal and on the particular questions 
noted below.

The Proposal

    In 2010, Congress enacted the Dodd-Frank Act and codified swap 
reporting reforms consistent with international goals of ensuring 
that swap reporting and review is ``sufficient to improve 
transparency in the derivatives markets, mitigate systemic risk, and 
protect against market abuse.'' \3\ In 2012, the Commission was the 
first major jurisdiction to adopt swap data reporting rules.\4\
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    \3\ See G20, Leaders' Statement: The Pittsburgh Summit (Sept. 
24-25, 2009), paragraph 13, available at https://www.treasury.gov/resource-center/international/g7-g20/Documents/pittsburgh_summit_leaders_statement_250909.pdf.
    \4\ The Commission initially published its part 45 rules in 
January 2012. See Swap Data Recordkeeping and Reporting 
Requirements, 77 FR 2136 (Jan. 13, 2012).
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    The Proposal would amend those existing rules to simplify 
reporting obligations, increase data quality, and partially 
harmonize specific data elements and taxonomies with new 
international standards. It would reduce the number of potentially 
duplicative reports sent to SDRs by condensing basic reporting 
obligations into ``creation'' and ``continuation'' reports for all 
swaps and eliminate repetitive daily ``state'' data reporting of the 
same data for most existing transactions. SDRs would also be 
required to validate the data they receive. I support these efforts 
to improve swap data reporting.
    The Proposal would also extend swap data reporting deadlines to 
T+1 (reporting required one day after the day the trade is executed) 
for swap dealers, major swap participants, swap execution 
facilities, designated contract markets, and derivatives clearing 
organizations (``DCOs''). Other reporting counterparties would be 
required to report no later than T+2. This change is expected to 
increase data accuracy, as it would allow time for reporting parties 
to verify their data before submission to an SDR. The tradeoff is 
that the Commission will not receive data nearly instantaneously, 
which could constrain the Commission's ability to undertake real 
time monitoring of risks in times of market stress. It is my 
understanding, however, that to date such monitoring has not been 
possible. I encourage public comments on these proposed reporting 
deadlines, including whether the full amount of T+1 or T+2 is 
necessary to achieve accurate reporting and is compatible with the 
Commission's market and systemic risk oversight responsibilities.
    The Proposal also would impose a new requirement for swap 
dealers, major swap participants, and DCOs to report margin and 
collateral data each business day.\5\ It would specify certain 
margin and collateral data elements, including the value of initial 
margin posted and received by the reporting counterparty, the value 
of variation margin posted and received, and the currency of posted 
margin.\6\ The uncleared swaps margin rules are one of the most 
important risk-mitigation requirements added after the 2008 
financial crisis and collecting margin data is important for the 
Commission to monitor risks and check compliance with the rules.
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    \5\ See proposed Sec.  45.4(c)(2).
    \6\ See proposed appendix 1 to part 45.
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    However, it is not clear whether the collateral data to be 
collected would be sufficient for the Commission's purposes. Without 
exposure data, the Commission may not be able to assess whether the 
amount of collateral collected offsets the risks posed by swaps or 
verify compliance with the uncleared swap margin rules. For these 
reasons, I ask that commenters address whether reporting of 
exposures or other data elements related to margin should be 
included in this rule or in other reporting requirements, or 
alternatively, whether the CFTC should be able to undertake the 
appropriate analysis with other data it already collects.

More Focus Needed on Data Analysis

    As a CFTC Commissioner, I am often asked how we use SDR data, 
and whether the

[[Page 21658]]

Commission has the institutional focus to leverage the unprecedented 
amounts of information at its disposal. The Commission requires that 
every swap subject to its jurisdiction be reported to an SDR, and 
that the data be updated throughout the entire swap lifecycle. Tens 
of millions of swap data records are received by SDRs monthly. 
Market participants are justified in asking what the Commission does 
with so much data.
    Systemic risk monitoring, market integrity, and the protection 
of market participants are fundamental purposes of the CEA. 
Comprehensive data sets and sophisticated data analysis are 
indispensable to the Commission and indeed to any modern financial 
regulatory agency. For decades the CFTC has been analyzing futures 
and options data on a daily basis to monitor risk and margin 
sufficiency in those markets.
    The Commission needs to identify and articulate how it will use 
swap data to meet its mandates. While general goals are often 
stated, the Commission needs to identify the specific risks it is 
measuring and monitoring and the information that should be made 
available to the public to improve market transparency. The 
Commission should be able to identify which data elements allow the 
Commission to specifically monitor for market risk, liquidity risk, 
and credit risk, for example, and how those elements are used for 
that purpose. We should describe how specific data elements will 
improve the accuracy of the weekly swaps report and bring greater 
transparency for market participants. The Commission should map the 
data elements in the Proposal to these uses and others to explain in 
a comprehensive manner \7\ how they will be used and why they are 
needed.
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    \7\ Staff has provided information about a particular use for 
each data element. However, we have not seen how the data elements 
together allow for a more comprehensive entity level or market level 
analysis of specific risks.
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    I urge the Commission to focus more resources on swap data 
analysis so that we can maximize our use of the reported data to 
help mitigate risks before they become a full blown crisis. While 
data is the necessary foundation of any good risk monitoring 
program, more must be done. The Commission must also develop a more 
comprehensive capacity to measure and monitor risk. It must identify 
how it will achieve specific swap analysis objectives, the data 
needed for such objectives, and the information technology and human 
resources needed to execute its vision.

Conclusion

    Part 45 and the proposal's swap data elements are generally 
focused on the reporting of individual swap transactions, as 
specified in CEA section 2a(13)(G). I support the Proposal because 
it will standardize and improve the reporting of quality swap data. 
This is both necessary and appropriate; high quality data is the 
foundation upon which needed data analysis for risk monitoring and 
greater transparency are built. I encourage public comment on 
whether the 116 data elements in the proposal are sufficient to 
understand the market, counterparty, and systemic risks associated 
with individual swaps and with each market participant's swap book 
and aggregate exposures.
    I thank the staff of the Commission, and particularly the 
Division of Market Oversight, for their work on the Proposal and for 
their constructive engagement with my office. I look forward to 
public comments, and to a more complete articulation by the 
Commission of how it will use the swap data that would be collected 
to fulfill its congressionally mandated mission.

[FR Doc. 2020-04407 Filed 4-16-20; 8:45 am]
BILLING CODE 6351-01-P