[Federal Register Volume 85, Number 228 (Wednesday, November 25, 2020)]
[Rules and Regulations]
[Pages 75503-75601]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-21569]


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

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: Final rule.

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

SUMMARY: The Commodity Futures Trading Commission (``Commission'' or 
``CFTC'') is amending certain regulations setting 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 amendments, 
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 neither SDs nor MSPs.

DATES: Effective Date: The effective date for this final rule is 
January 25, 2021.
    Compliance Date: SDRs, SEFs, DCMs, reporting counterparties, and 
non-reporting counterparties must comply with the amendments to the 
rules by May 25, 2022.

FOR FURTHER INFORMATION CONTACT: Richard Mo, Special Counsel, (202) 
418-7637, cftc.gov">rmo@cftc.gov; Benjamin DeMaria, Special Counsel, (202) 418-
5988, cftc.gov">bdemaria@cftc.gov; Thomas Guerin, Special Counsel, (202) 734-
4194, cftc.gov">tguerin@cftc.gov; Meghan Tente,

[[Page 75504]]

Acting Deputy Director, (202) 418-5785, cftc.gov">mtente@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; Kate Mitchel, Business 
Analyst, (202) 418-5871, cftc.gov">kmitchel@cftc.gov, Office of Data and 
Technology; Nancy Doyle, Senior Special Counsel, (202) 418-5136, 
cftc.gov">ndoyle@cftc.gov, Office of International Affairs; 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: 

I. Background
II. 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 Swap Data Repository
    I. Sec.  45.11--Data Reporting for Swaps in a Swap Asset Class 
Not Accepted by Any Swap Data Repository
    J. Sec.  45.12--Voluntary Supplemental Reporting
    K. Sec.  45.13--Required Data Standards
    L. Sec.  45.15--Delegation of Authority
III. 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. 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. Proposal
    B. Comments on the Proposal and Commission Determination
VI. Compliance Date
VII. Related Matters
    A. Regulatory Flexibility Act
    B. Paperwork Reduction Act
    C. Cost-Benefit Considerations
    D. Antitrust Considerations

I. Background

    Pursuant to section 2(a)(13)(G) of the Commodity Exchange Act 
(``CEA''), all swaps, whether cleared or uncleared, must be reported to 
SDRs.\1\ CEA section 21(b) directs the Commission to prescribe 
standards for swap data recordkeeping and reporting.\2\ Part 45 of the 
Commission's regulations implements the swap data reporting rules.\3\ 
The part 45 regulations require SEFs, DCMs, and reporting 
counterparties to report swap data to SDRs. SDRs collect and maintain 
data related to swap transactions, keeping such data electronically 
available for regulators or the public.\4\
---------------------------------------------------------------------------

    \1\ 7 U.S.C. 2(a)(13)(G) (2020).
    \2\ See 7 U.S.C. 24a(b)(1)-(3).
    \3\ Commission regulations referred to herein are found at 17 
CFR chapter I.
    \4\ 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. See generally 17 CFR part 
49.
---------------------------------------------------------------------------

    Since the Commission adopted the part 45 regulations, Commission 
staff has worked with SDRs, SEFs, DCMs, reporting counterparties, and 
non-reporting counterparties to interpret and implement of the 
requirements established in the regulations. Several years ago, the 
Division of Market Oversight (``DMO'') announced \5\ its Roadmap to 
Achieve High Quality Swaps Data (``Roadmap''),\6\ consisting of a 
comprehensive review to, among other things: (i) ensure the CFTC 
receives accurate, complete, and high-quality data on swap transactions 
for its regulatory oversight role; and (ii) streamline reporting, 
reduce messages that must be reported, and right-size the number of 
data elements reported to meet the agency's priority use-cases for swap 
data.\7\
---------------------------------------------------------------------------

    \5\ See Commission 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.
    \6\ The Roadmap is available at https://www.cftc.gov/sites/default/files/idc/groups/public/@newsroom/documents/file/dmo_swapdataplan071017.pdf. Comment letters related to the Roadmap 
are available at https://comments.cftc.gov/PublicComments/CommentList.aspx?id=1824.
    \7\ See Commission Letter 17-33, supra at n.5; Roadmap, supra at 
n.6.
---------------------------------------------------------------------------

    In February 2020, the Commission proposed certain changes to its 
parts 45, 46, and 49 regulations (``Proposal'') \8\ to simplify the 
requirements for reporting swaps, require SDRs to validate swap 
reports, permit the transfer of swap data between SDRs, alleviate 
reporting burdens for non-SD/MSP reporting counterparties, and 
harmonize the swap data elements counterparties report to SDRs with 
international technical guidance.
---------------------------------------------------------------------------

    \8\ See Swap Data Recordkeeping and Reporting Requirements, 85 
FR 21578 (Apr. 17, 2020).
---------------------------------------------------------------------------

    The Commission received 26 comment letters on the Proposal.\9\ 
After considering the comments, the Commission is adopting parts of the 
rules as proposed, although there are proposed changes the Commission 
has determined to either revise or decline to adopt. The Commission 
believes the rules it is adopting herein will provide clarity and lead 
to more effective swap data reporting by SEFs, DCMs, and reporting 
counterparties.
---------------------------------------------------------------------------

    \9\ The following entities submitted comment letters: American 
Public Gas Association (``APGA''); BP Energy Company (``BP''); 
Chatham Financial (``Chatham''); Chris Barnard; CME Group (``CME''); 
Coalition of Physical Energy Companies (``COPE''); Commercial Energy 
Working Group (``CEWG''); Credit Suisse (``CS''); The Data Coalition 
(``Data Coalition''); DTCC Data Repository (U.S.) LLC (``DTCC''); 
Edison Electric Institute (``EEI'') and Electric Power Supply 
Association (``EPSA'') (collectively, ``EEI-EPSA''); Eurex Clearing 
AG (``Eurex''); Foreign Exchange Professionals Association 
(``FXPA''); Futures Industry Association (``FIA''); Global Foreign 
Exchange Division of the Global Financial Markets Association 
(collectively, ``GFXD''); Global Legal Entity Identifier Foundation 
(``GLEIF''); ICE Clear Credit LLC and ICE Clear Europe Limited 
(``ICE DCOs''); ICE Trade Vault, LLC (``ICE SDR''); IHS Markit 
(``Markit''); International Energy Credit Association (``IECA''); 
International Swaps and Derivatives Association, Inc. (``ISDA'') and 
Securities Industry and Financial Markets Association (``SIFMA'') 
(collectively, ``ISDA-SIFMA''); Japanese Bankers Association 
(``JBA''); Japan Securities Clearing Corporation (``JSCC''); LCH Ltd 
and LCH SA (collectively, ``LCH''); National Rural Electric 
Cooperative Association and American Public Power Association 
(``NRECA-APPA''); and XBRL US, Inc. (``XBRL'').
---------------------------------------------------------------------------

    Before discussing the changes to the regulations, the Commission 
highlights the important role international data harmonization efforts 
have played in this rulemaking. As discussed in the Proposal, 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 over-the-counter (``OTC'') derivatives data 
elements (``Harmonisation Group'') to develop global guidance regarding 
the definition, format, and usage of key OTC derivatives data elements 
reported to trade repositories (``TRs''), including the Unique 
Transaction Identifier (``UTI''), the Unique Product Identifier 
(``UPI''), and critical data elements other than UTI and UPI 
(``CDE'').\10\
---------------------------------------------------------------------------

    \10\ In February 2017 and September 2017, respectively, the 
Harmonisation Group published Guidance on the Harmonisation of the 
Unique Transaction Identifier (``UTI Technical Guidance'') and 
Technical Guidance on the Harmonisation of the Unique Product 
Identifier (``UPI Technical Guidance''). 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'').

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

[[Page 75505]]

    The Commission has played an active role in the development and 
publication of each of the Harmonisation Group's technical guidance 
documents. For the CDE Technical Guidance in particular, as part of the 
Harmonisation Group, Commission staff worked alongside representatives 
from Canada, France, Germany, Hong Kong, Japan, Singapore, and the 
United Kingdom, among others, to provide feedback regarding the data 
elements, taking into account the Commission's experience with swap 
data reporting thus far. 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.\11\
---------------------------------------------------------------------------

    \11\ See CDE Technical Guidance at 9.
---------------------------------------------------------------------------

    The Commission's sustained, active role in the Harmonisation Group 
in developing global guidance on key OTC derivatives data elements 
reported to TRs is part of the Commission's broader, long-range goal of 
continued efforts to achieve international harmony in the area of swaps 
reporting. The Commission has co-led efforts to design ongoing 
international regulatory oversight of these standards in the Financial 
Stability Board (``FSB'') Working Group on UPI and UTI Governance 
(``GUUG'') and the Commission's efforts to achieve international 
harmonization in the entire clearing ecosystem, including swap data 
reporting, will continue.
    In particular, the Commission continues to be open to further ways 
to cooperate with our foreign regulatory counterparts in the 
supervision of TRs. An example is the consideration of when and how the 
Commission should grant swap data reporting substituted compliance 
determinations for SDs and DCOs domiciled in non-U.S. jurisdictions 
with similar swap data reporting requirements, permitting reporting of 
swap data to a foreign TR to satisfy Commission swap data requirements 
under appropriate circumstances. Efficiencies in cross-border reporting 
are critical to the smooth operation of transatlantic clearing and 
trading. To the degree the Commission can work with its international 
counterparts to thus increase interoperability between jurisdictions, 
this will enhance cross-border trading efficiency. Moreover, with 
appropriate tailoring and protections, and due access to foreign TR 
data, deference to foreign jurisdictions will reduce expensive 
redundancies in trade reporting.

II. Amendments to Part 45

A. Sec.  45.1--Definitions

    The paragraph of existing Sec.  45.1 is not lettered. The 
Commission is lettering the existing paragraph as ``(a)'' and adding 
(b) to Sec.  45.1. Paragraph (a) will contain all of the definitions in 
existing Sec.  45.1, as the Commission is modifying them. New paragraph 
(b) provides the terms not defined in part 45 have the meanings 
assigned to the terms in Commission regulation Sec.  1.3, which was 
implied in the existing regulation but will now be explicit.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 1.3.
---------------------------------------------------------------------------

    The Commission is adding new definitions, amending certain existing 
definitions, and removing certain existing definitions. Within each of 
these categories, the Commission discusses the changes in alphabetical 
order, except as otherwise noted.
1. New Definitions
    The Commission is adding a definition of ``allocation'' to Sec.  
45.1(a). ``Allocation'' means 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. Existing Sec.  45.3(f) 
contains regulations for reporting allocations without defining the 
term. The definition will help market participants comply with the 
regulations for reporting allocations in Sec.  45.3.
    The Commission is adding a definition of ``as soon as 
technologically practicable'' (``ASATP'') to Sec.  45.1(a). ``As soon 
as technologically practicable'' means 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 undefined but used throughout part 45. The 
Commission is adopting the same definition of ``as soon as 
technologically practicable'' as is defined in Sec.  43.2 for swap 
transaction and pricing data.\13\
---------------------------------------------------------------------------

    \13\ See 17 CFR 43.2 (definition of ``as soon as technologically 
practicable'').
---------------------------------------------------------------------------

    The Commission is adding a definition of ``collateral data'' to 
Sec.  45.1(a). ``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 part 45. The Commission 
explains this definition in a discussion of collateral data reporting 
in section II.D.4 below.
    The Commission is adding definitions of ``execution'' and 
``execution date'' to Sec.  45.1(a). ``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.\14\ In the 
Proposal, the Commission proposed ``execution date'' to 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 DCO accepts the original swap for clearing. The term 
``execution'' is currently undefined but used throughout part 45, and 
the Commission is adding regulations referencing ``execution date.'' 
\15\
---------------------------------------------------------------------------

    \14\ The definition of ``execution'' is functionally identical 
to the part 23 definition of execution. See 17 CFR 23.200(e) 
(definition of ``execution'').
    \15\ See Sec.  45.3(a) and (b), discussed in sections II.C.2.a 
and II.C.2.b, respectively, below.
---------------------------------------------------------------------------

    The Commission received three comments supporting the definition of 
``execution date.'' \16\ In particular, ISDA-SIFMA believe the 
definition is more practical than the referencing the ``day of 
execution,'' because the latter would require a more complex build for 
industry participants, including requiring reporting counterparties to 
compare against the non-reporting counterparty to determine the party 
with the calendar day that ends latest, on a swap-by-swap basis.\17\
---------------------------------------------------------------------------

    \16\ GXFD at 21; Eurex at 2; ISDA-SIFMA at 5.
    \17\ ISDA-SIFMA at 5.
---------------------------------------------------------------------------

    The Commission received three comments opposing the reference to 
Eastern Time in the proposed definition of ``execution date.'' CME and 
Chatham both believe the definition should use a coordinated universal 
time (``UTC'') standard.\18\ CME notes Eastern Time could make the 
reporting entity convert data between three time zones-- local time 
zone, Eastern Time, and UTC--and also account for daylight savings 
time.\19\ Chatham notes reporting counterparties build systems using 
UTC and it would be time-consuming and costly to convert to Eastern 
Time, as well as inconsistent with other regulatory reporting 
frameworks.\20\ JBA suggests the Commission use UTC to globally 
harmonize and follow the CDE Technical Guidance, and points out the 
January 2020 CPMI-IOSCO ``Clock

[[Page 75506]]

Synchronization'' report recommends business clocks synchronize to 
UTC.\21\
---------------------------------------------------------------------------

    \18\ CME at 12; Chatham at 1.
    \19\ CME at 12.
    \20\ Chatham at 1.
    \21\ JBA at 4.
---------------------------------------------------------------------------

    The Commission agrees the reference to Eastern Time in ``execution 
date'' would create unnecessary operational complexities and be 
inconsistent with the approach taken by other regulators. In addition, 
the Commission's updated swap data elements in appendix 1 reference 
UTC. In response, the Commission is removing the references to Eastern 
Time in the definition of ``execution date,'' and the swap data 
elements in appendix 1 will clarify that SEFs, DCMs, and reporting 
counterparties should report the specific data elements using UTC. As 
such, the new definition of ``execution date'' means the date of 
execution of a particular swap. The execution date for a clearing swap 
that replaces an original swap is the date on which the original swap 
has been accepted for clearing.
    The Commission is adding the following three definitions to Sec.  
45.1(a): ``Global Legal Entity Identifier System,'' ``legal entity 
identifier'' or ``LEI,'' and ``Legal Entity Identifier Regulatory 
Oversight Committee'' (``LEI ROC''). ``Global Legal Entity Identifier 
System'' means the system established and overseen by the LEI ROC 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 FSB, under the Charter of the 
Regulatory Oversight Committee for the Global Legal Entity Identifier 
System dated November 5, 2012, or any successor thereof.\22\ These 
definitions are all associated with, and further explained in the 
context of, the Sec.  45.6 regulations for LEI, in section II.F 
below.\23\
---------------------------------------------------------------------------

    \22\ See Charter of the Regulatory Oversight Committee For the 
Global Legal Entity Identifier System, available at https://www.leiroc.org/publications/gls/roc_20190130-1.pdf.
    \23\ GLEIF supports adding these definitions, but also suggests 
moving definitions to Sec.  45.1(a) from Sec.  45.6(a) for ``local 
operating unit'' and ``legal entity reference data.'' The Commission 
is declining to adopt this suggestion, as the definitions in Sec.  
45.6(a) are only used in Sec.  45.6.
---------------------------------------------------------------------------

    The Commission is adding a definition of ``non-SD/MSP/DCO reporting 
counterparty'' to Sec.  45.1(a). ``Non-SD/MSP/DCO reporting 
counterparty'' means a reporting counterparty that is not an SD, MSP, 
or DCO. The existing definition of ``non-SD/MSP reporting 
counterparty'' does not explicitly include DCOs. This creates problems 
when, for instance, the Commission did not intend DCOs 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 nor MSPs. Instead, DCOs 
follow Sec.  45.3(e) for clearing swaps. The definition of ``non-SD/
MSP/DCO reporting counterparty'' addresses this unintended gap.
    The Commission is adding a definition of ``novation'' to Sec.  
45.1(a). ``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. The term ``novation'' is 
currently undefined but used in the definition of ``life cycle event,'' 
as well as the existing Sec.  45.8(g) regulations for determining which 
counterparty must report.
    The Commission is adding a definition of ``swap'' to Sec.  45.1(a). 
``Swap'' means 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).\24\ The term ``swap'' 
is currently undefined but used throughout part 45 and the definition 
codifies the meaning of the term as it is currently used throughout 
part 45.\25\
---------------------------------------------------------------------------

    \24\ 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'').
    \25\ NRECA-APPA believe the Commission should incorporate the 
``swap'' definition in CEA section 1a into its interpretations, 
exemptions, and other guidance, as well as remove from the 
definition: guarantees of a swap, commodity options meeting the 
conditions in Sec.  32.3, and other types of agreements, contracts, 
and transactions the Commission has determined Congress did not 
intend to regulate as ``swaps.'' NRECA-APPA at 5. The Commission 
notes its interpretations, exemptions, and guidance are outside of 
the scope of this rulemaking, as is removing certain types of 
agreements, contracts, and transactions from the CEA definition of 
``swap.'' The Commission emphasizes the definition of ``swap'' in 
Sec.  45.1 is for swap data reporting purposes only, and does not 
impact any regulations outside of part 45.
---------------------------------------------------------------------------

    The Commission is adding definitions of ``swap data'' and ``swap 
transaction and pricing data'' to Sec.  45.1(a). In the Proposal, the 
Commission proposed ``swap data'' to 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. The Commission received a comment from DTCC 
suggesting deleting the phrase ``and information'' from the definition 
of ``swap data,'' because it is unclear to what ``and information'' 
refers.\26\ The Commission agrees and is modifying the definition to 
remove ``and information.'' \27\ The Commission is adopting the rest of 
the definition of ``swap data'' as proposed.
---------------------------------------------------------------------------

    \26\ DTCC at 4.
    \27\ The Commission notes certain swap-related information may 
be required to be reported to a SDR pursuant to other CFTC 
regulations which are not included in the definition of ``swap 
data.'' Market participants should be aware of other applicable 
reporting requirements. For example, counterparties electing an 
exception to or exemption from the swap clearing requirement under 
Sec.  50.4 are required to report specific information to a SDR, or 
if no SDR is available to receive the information, to the 
Commission, under Sec.  50.50(b).
---------------------------------------------------------------------------

    Separately, the Commission is adopting the definition of ``swap 
transaction and pricing data,'' with minor changes from the proposed 
definition. ``Swap transaction and pricing data'' will mean all data 
elements for a swap in appendix A \28\ to part 43 that are required to 
be reported or publicly disseminated pursuant to part 43. Having ``swap 
data'' apply to part 45 data, and ``swap transaction and pricing data'' 
apply to part 43 data, will provide clarity across the reporting 
regulations.
---------------------------------------------------------------------------

    \28\ The Commission is changing the reference to appendix C in 
the proposed definition of ``swap transaction and pricing data'' to 
appendix A due to changes to the part 43 appendices the Commission 
is adopting in a separate release.
---------------------------------------------------------------------------

    The Commission is adding a definition of ``swap data validation 
procedures'' to Sec.  45.1(a). ``Swap data validation procedures'' 
means procedures established by an SDR pursuant to Sec.  49.10 to 
accept, validate, and process swap data reported to an SDR pursuant to 
part 45. The Commission discusses this definition in section IV.C.3 
below.
    The Commission is adding a definition of ``unique transaction 
identifier'' to Sec.  45.1(a). ``Unique transaction identifier'' means 
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. The Commission received a comment from DTCC 
supporting the definition because it is consistent with UTI Technical 
Guidance.\29\ The Commission explains this definition in a discussion 
of the regulations to transition from using

[[Page 75507]]

unique swap identifiers (``USIs'') to UTIs in section II.E below.
---------------------------------------------------------------------------

    \29\ DTCC at 4, 5.
---------------------------------------------------------------------------

2. Changes to Existing Definitions \30\
---------------------------------------------------------------------------

    \30\ CEWG comments the ``financial entity'' definition, which 
the Commission did not propose changing, is overinclusive for 
financial energy firms because if a central treasury unit (``CTU'') 
enters into a swap for purposes other than hedging, the CTU cannot 
qualify for the relief in CEA section 2(h)(7)(D). CEWG at 9. The 
existing ``financial entity'' definition in Sec.  45.1 simply 
references the CEA section 2(h)(7)(C) definition of financial 
entity. The Commission does not see a connection between the 
clearing rules in CEA section 2(h)(7)(D) to the reporting rules, and 
thus declines to adopt CEWG's change to the existing definition.
---------------------------------------------------------------------------

    The Commission is making non-substantive technical changes to the 
existing definitions of ``asset class,'' ``derivatives clearing 
organization,'' and ``swap execution facility.''
    The Commission is changing the definition of ``business day'' in 
Sec.  45.1. Existing 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.\31\ In the Proposal, the Commission 
proposed replacing ``the twenty-four hour day'' with ``each twenty-
four-hour day,'' and ``legal holidays, in the location of the reporting 
counterparty'' with ``Federal holidays'' to simplify the definition by 
no longer requiring the determination of different legal holidays 
depending on the reporting counterparty's location.
---------------------------------------------------------------------------

    \31\ 17 CFR 45.1 (definition of ``business day'').
---------------------------------------------------------------------------

    The Commission received four comments raising concerns with the 
changes to ``business day.'' CME believes the proposed changes could 
result in firms keeping some staff in the office on local holidays or 
reporting before the deadline.\32\ JSCC believes the proposed changes 
would force non-U.S. reporting counterparties to report valuation, 
margin, and collateral data on local holidays even though the data 
would be unchanged because their markets would be closed.\33\ ISDA-
SIFMA request clarification that ``federal holidays'' include legal 
holidays in the reporting counterparty's principal place of business so 
a reporting counterparty located outside the U.S. can take into account 
legal holidays that are not U.S. federal holidays.\34\ DTCC suggests 
using the same definitions for parts 43 and 45.\35\
---------------------------------------------------------------------------

    \32\ CME at 12-13.
    \33\ JSCC at 1, 2.
    \34\ ISDA-SIFMA at 5.
    \35\ DTCC at 4.
---------------------------------------------------------------------------

    The Commission seeks to avoid firms keeping staff in the office on 
local holidays, as commenters pointed out the changes suggest. As such, 
the Commission is keeping the current definition of ``business day'' 
with one modification: ``registered entity'' refers to SEFs and DCMs. 
Therefore, the ``business day'' will mean the twenty-four-hour day, on 
all days except Saturdays, Sundays, and legal holidays, in the location 
of SEF, DCM, or reporting counterparty reporting data for the swap.
    The Commission is changing the definition of ``life cycle event'' 
in Sec.  45.1. Existing Sec.  45.1 defines ``life cycle event'' to mean 
any event that would result in either a change to a primary economic 
term (``PET'') of a swap or to any PET data (``PET data'') previously 
reported to an SDR in connection with a swap.\36\ The Commission is 
replacing the reference to PET data with required swap creation data to 
reflect the Commission's removal of the concept of PET data reporting 
from Sec.  45.3.\37\ The Commission is also replacing a reference to a 
counterparty being identified in swap data by ``name'' with ``other 
identifiers'' to be more precise in when counterparties are identified 
by other means.
---------------------------------------------------------------------------

    \36\ The Commission is not changing the examples the existing 
definition provides: 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 securities 
on which the swap is based (e.g., a merger, dividend, stock split, 
or bankruptcy).
    \37\ The Commission discusses this change to Sec.  45.3 in 
section II.C below.
---------------------------------------------------------------------------

    The Commission is changing the definition of ``non-SD/MSP 
counterparty'' in Sec.  45.1. Existing Sec.  45.1 defines ``non-SD/MSP 
counterparty'' to mean a swap counterparty that is neither an SD nor an 
MSP. The Commission is changing the defined term to ``non-SD/MSP/DCO 
counterparty.'' \38\ ``Non-SD/MSP/DCO counterparty'' means a swap 
counterparty that is not an SD, MSP, or DCO. This change conforms to 
the changes to the term ``non-SD/MSP/DCO reporting counterparty'' 
explained in section II.A.1 above.
---------------------------------------------------------------------------

    \38\ The Commission is updating 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 update 
of the phrase throughout this release.
---------------------------------------------------------------------------

    The Commission is changing the definition of ``required swap 
continuation data'' in Sec.  45.1. Existing 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 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 removing the reference to ``[PET] of the 
swap.'' \39\ Second, the Commission is removing the reference to 
snapshot reporting to reflect the removal of the concept of snapshot 
reporting from Sec.  45.4.\40\ Third, the Commission is adding a 
reference to margin and collateral data.\41\ As amended, ``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 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.
---------------------------------------------------------------------------

    \39\ As explained above, the Commission is removing the concept 
of PET data reporting from Sec.  45.3.
    \40\ The Commission discusses the changes to Sec.  45.4 in 
section II.D below.
    \41\ The Commission discussed new margin and collateral data 
reporting in section II.D below.
---------------------------------------------------------------------------

    The Commission is changing the definition of ``required swap 
creation data'' in Sec.  45.1. Existing 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 replacing the reference to PET data and confirmation data 
with a reference to the swap data elements in appendix 1 to part 45, to 
reflect the Commission's update of the swap data elements in existing 
appendix 1.\42\
---------------------------------------------------------------------------

    \42\ The Commission discusses the changes to appendix 1 in 
section V below.
---------------------------------------------------------------------------

    The Commission is changing the definition of ``valuation data'' in 
Sec.  45.1(a). Existing 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),\43\ and 
Sec.  23.431 of the Commission's regulations, if applicable. The 
Commission is adding a reference to the swap data elements in appendix 
1 to part 45 to link the definition and the data elements.
---------------------------------------------------------------------------

    \43\ 7 U.S.C. 6s(h)(3)(B)(iii).

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

[[Page 75508]]

3. Removed Definitions
    The Commission is removing 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 wants market participants to use the terms as 
they are already defined in Commission regulation Sec.  1.3 or in CEA 
section 1a.\44\
---------------------------------------------------------------------------

    \44\ 7 U.S.C. 1a.
---------------------------------------------------------------------------

    The Commission is removing the following definitions from Sec.  
45.1: ``confirmation;'' ``confirmation data;'' ``electronic 
confirmation;'' ``non-electronic confirmation;'' ``primary economic 
terms;'' and ``primary economic terms data.'' The definitions are 
unnecessary due to the Commission combining PET data and confirmation 
data into a single data report in Sec.  45.3.\45\
---------------------------------------------------------------------------

    \45\ The Commission discusses the changes to Sec.  45.3 in 
section II.C below.
---------------------------------------------------------------------------

    The Commission is removing the definition of ``quarterly 
reporting'' from Sec.  45.1 because the Commission is removing the 
quarterly reporting requirement for non-SD/MSP reporting counterparties 
from Sec.  45.4(d)(2)(ii).\46\
---------------------------------------------------------------------------

    \46\ The Commission discusses the changes to Sec.  45.4 in 
section II.D below.
---------------------------------------------------------------------------

    The Commission is removing the definitions of ``electronic 
verification,'' ``non-electronic verification,'' and ``verification'' 
from Sec.  45.1 because the Commission is changing the deadlines for 
reporting counterparties to report required swap creation data in Sec.  
45.3 to no longer depend on verification.\47\
---------------------------------------------------------------------------

    \47\ The Commission discusses the changes to Sec.  45.3 in 
section II.C below.
---------------------------------------------------------------------------

    The Commission is removing the definition of ``international swap'' 
from Sec.  45.1. Existing 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 Commission is removing the definition because 
the Commission is removing the international swap regulations in Sec.  
45.3(i).\48\
---------------------------------------------------------------------------

    \48\ The Commission discusses the changes to Sec.  45.3(i) in 
section II.C.6 below.
---------------------------------------------------------------------------

B. Sec.  45.2--Swap Recordkeeping

    The Commission is adopting technical changes to the Sec.  45.2 swap 
recordkeeping regulations.\49\ For instance, the Commission is removing 
the phrase ``subject to the jurisdiction of the Commission'' from Sec.  
45.2. The Commission is also removing this phrase from all of part 
45.\50\ 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.
---------------------------------------------------------------------------

    \49\ In a separate release, the Commission is relocating the 
recordkeeping requirements for SDRs from Sec.  45.2(f) and (g) to 
Sec.  49.12. 84 FR at 21103 (May 13, 2019).
    \50\ To limit repetition, the Commission will not discuss each 
removal in this release.
---------------------------------------------------------------------------

    The Commission received three comments on Sec.  45.2 unrelated to 
the technical changes. COPE requests the Commission confirm 
recordkeeping requirements for physical energy companies that use swaps 
for hedging purposes are limited to recordkeeping in the normal course 
of business, as is customary for the hedger's particular industry.\51\ 
As the requirement does not specify records outside of the normal 
course of business, the Commission is unsure of what else the 
regulation could require.
---------------------------------------------------------------------------

    \51\ COPE at 2.
---------------------------------------------------------------------------

    EEI-EPSA request the Commission clarify no additional recordkeeping 
is mandated to avoid injecting regulatory uncertainty into 
recordkeeping requirements.\52\ The Commission confirms its changes to 
Sec.  45.2 in this release are technical and do not create new 
requirements. Chris Barnard opposes retaining the current substantive 
requirement of keeping records for ``at least five years,'' following 
the final termination of the swap.\53\ The Commission declines to 
substantively amend the five-year requirement as requested by Chris 
Barnard. The Commission believes five years is reasonable for the 
Commission to access records if it has concerns about particular swaps.
---------------------------------------------------------------------------

    \52\ EEI-EPSA at 3.
    \53\ Chris Barnard at 2.
---------------------------------------------------------------------------

    The Commission did not receive any comments on the non-substantive 
changes to Sec.  45.2. For the reasons discussed above, the Commission 
is adopting the changes as proposed.

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

    Existing Sec.  45.3 requires SEFs, DCMs, and reporting 
counterparties to report swap data to SDRs upon swap execution. As 
discussed in the sections below, the Commission is adopting four 
significant changes to the regulations for reporting new swaps: (i) 
Requiring a single data report at execution instead of two separate 
reports; (ii) extending the time SEFs, DCMs, and reporting 
counterparties have to report new swaps to SDRs; (iii) removing the 
requirement for SDRs to map allocations; and (iv) removing the 
regulations for international swaps. The remaining changes to Sec.  
45.3 discussed below are non-substantive clarifying, cleanup, or 
technical changes.
1. Introductory Text
    The Commission is removing the introductory text to Sec.  45.3. The 
existing introductory text to Sec.  45.3 provides a broad overview of 
the swap data reporting regulations for registered entities and swap 
counterparties. The Commission believes the introductory text is 
superfluous because the scope of Sec.  45.3 is clear from the operative 
provisions of Sec.  45.3.\54\ Removing the introductory text does not 
impact any regulatory requirements, including those referenced in the 
existing introductory text.
---------------------------------------------------------------------------

    \54\ The Commission is moving the reference in the introductory 
text to required data standards for SDRs in Sec.  45.13(b) to the 
regulatory text of Sec.  45.3(a) and (b) and renumbering Sec.  
45.13(b) as Sec.  45.13(a).
---------------------------------------------------------------------------

    The Commission did not receive any comments on the proposal to 
remove the introductory text to Sec.  45.3.
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 adopting 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. Existing Sec.  45.3(a) 
requires that SEFs and DCMs report all PET data \55\ for swaps ASATP 
after execution. If the swap is not intended to be cleared at a DCO, 
existing Sec.  45.3(a) requires the SEF or DCM also report confirmation 
data \56\ for the swap ASATP after execution.
---------------------------------------------------------------------------

    \55\ PET data reporting includes the reporting of approximately 
sixty swap data elements, varying by asset class, enumerated in 
appendix 1 to part 45. See 17 CFR 45.1 (definition of ``primary 
economic terms''). The Commission discusses the removal of the 
definition of ``primary economic terms'' from Sec.  45.1 in section 
II.A.3 above.
    \56\ Confirmation data reporting includes reporting all of the 
terms of a swap matched and agreed upon by the counterparties in 
confirming a swap. See 17 CFR 45.1 (definition of ``confirmation 
data''). The Commission discusses removing the definition of 
``confirmation data'' from Sec.  45.1 in section II.A.3 above.
---------------------------------------------------------------------------

    First, the Commission is changing 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. While the Commission 
intended the initial PET report would ensure SDRs have sufficient data 
on each swap for the Commission to perform its regulatory functions 
while the more complete confirmation data is not yet available,\57\

[[Page 75509]]

the Commission is concerned the separate reports may be encouraging the 
reporting of duplicative information to SDRs. The Commission believes 
this will streamline reporting, remove uncertainty, and reduce 
instances of duplicative required swap creation data reports.
---------------------------------------------------------------------------

    \57\ See 77 FR at 2142, 2148 (Jan. 13, 2012).
---------------------------------------------------------------------------

    One of the PET data elements in existing appendix 1 to part 45 is 
any other term(s) matched or affirmed by the counterparties in 
verifying the swap.\58\ The Commission believes this catchall has 
obscured the difference between PET data and confirmation data. The 
Commission is concerned reporting counterparties, SEFs, and DCMs are 
submitting duplicative reports to meet the distinct, yet seemingly 
indistinguishable, regulatory requirements at the expense of data 
quality.\59\
---------------------------------------------------------------------------

    \58\ The comment associated with this ``catch-all'' data element 
in existing appendix 1 to part 45 instructs reporting 
counterparties, SEFs, DCMs, and DCOs to use as many data elements as 
required to report each such term. 17 CFR part 45 appendix 1.
    \59\ Other regulators have taken different approaches to 
required swap creation data reporting. The Securities and Exchange 
Commission (``SEC'') does not have rules for reporting separate 
confirmation data reports. See 17 CFR 242.901. The European Market 
Infrastructure Regulation (``EMIR'') requires reporting of the 
details of any derivative contract counterparties have concluded and 
of any modification or termination of the contract. European 
Securities and Markets Authority (``ESMA'') then develops the 
specific technical standards and requirements for the implementation 
of reporting. See 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).
---------------------------------------------------------------------------

    Second, the Commission is changing Sec.  45.3(a) to extend the 
deadline for SEFs and DCMs to report required swap creation data until 
the end of the next business day following the execution date 
(sometimes referred to as ``T+1''). Initially, the Commission believed 
reporting swap data immediately after execution ensured the ability of 
the Commission and other regulators to fulfill their systemic risk 
mitigation, market transparency, position limit monitoring, and market 
surveillance objectives,\60\ but the Commission is concerned the ASATP 
deadline may be causing reporting counterparties to hastily report 
required swap creation data that has contributed to data quality 
issues. The Commission believes an extended reporting timeline will 
help improve data quality while encouraging alignment with reporting 
deadlines set by other regulators.\61\
---------------------------------------------------------------------------

    \60\ See 77 FR 2142 at 2149 (Jan. 13, 2012).
    \61\ 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 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).
---------------------------------------------------------------------------

    The Commission received four comments supporting a single report 
for PET data and confirmation data in Sec.  45.3(a).\62\ In particular, 
DTCC believes this will streamline reporting, reduce instances of 
duplicative reports, remove uncertainty regarding which data elements 
are required to be reported to the SDR, and reduce operational burdens 
for SDRs and market participants by reducing the number of message 
types and duplicative data.\63\ CEWG believes the existing requirement 
is duplicative and costly.\64\ The Commission agrees with commenters, 
and for the reasons discussed above, is adopting the changes proposed.
---------------------------------------------------------------------------

    \62\ LCH at 2; FIA at 14; CEWG at 2; DTCC at 5.
    \63\ DTCC at 5.
    \64\ CEWG at 2.
---------------------------------------------------------------------------

    The Commission received seven comments generally supporting 
extending the deadline for reporting required swap creation data in 
existing Sec.  45.3(a).\65\ In particular, DTCC believes the change 
will reduce the number of corrections being sent to SDRs because of 
better quality data, be consistent with the SEC and ESMA, and promote 
reporting structure consistency concerning timing that would, in turn, 
create processing efficiencies for SDRs and data submitters.\66\ The 
Commission agrees with commenters, and for the reasons discussed above, 
is adopting the changes proposed, with one exception explained below.
---------------------------------------------------------------------------

    \65\ GFXD at 21, 22; DTCC at 5; Eurex at 2; ISDA-SIFMA at 5; 
Chatham at 2; ICE DCOs at 3; LCH at 2.
    \66\ DTCC at 5.
---------------------------------------------------------------------------

    Markit opposes extending the deadline for reporting because it 
believes ASATP reporting is already possible and using experienced 
third-party service providers like Markit helps minimize errors.\67\ 
The Commission understands ASATP reporting is possible and market 
participants have developed ways to minimize errors, and expects SEFs 
and DCMs have sophisticated reporting systems that will encourage them 
to continue reporting ASATP after execution. However, the Commission 
believes less-sophisticated reporting counterparties, especially for 
off-facility swaps, will benefit from having more time to report swap 
data to SDRs, and a single deadline for all reporting entities will be 
clearest for market participants.\68\
---------------------------------------------------------------------------

    \67\ Markit at 3-4.
    \68\ The Commission discusses the extended deadline for off-
facility swaps in section II.C.2.b below.
---------------------------------------------------------------------------

    The Commission received three comments concerning the reference to 
Eastern Time in the proposed extended deadline. Eurex and Chatham 
believe the Commission should consider aligning with regulators that 
reference UTC for global harmonization.\69\ ISDA-SIFMA believe a T+1 
deadline for required swap creation data is similar to the deadline 
used by other jurisdictions, and that a specific cutoff time like 11:59 
p.m. eastern time is less complex to build than T+24 hours.\70\ The 
Commission agrees with Eurex and Chatham that referencing Eastern Time 
would be inconsistent with global regulators. The swap data elements in 
appendix 1 also reference UTC.\71\ As a result, the Commission deems it 
appropriate to adopt a modification from the proposal to remove the 
reference to 11:59 p.m. eastern time. Instead, Sec.  45.3(a) will 
extend the deadline for reporting to not later than the end of the next 
business day following the execution date. For the same reason, and to 
be consistent, the Commission is removing the reference to 11:59 p.m. 
eastern time from all of the proposed regulations in Sec. Sec.  45.3 
and 45.4.\72\ While ISDA-SIFMA believe a specific cutoff time is less 
complex to build, the Commission views the complications the deadline 
would create for reporting counterparties, especially in other 
countries, as offsetting build-simplicity considerations.
---------------------------------------------------------------------------

    \69\ Eurex at 2; Chatham at 2.
    \70\ ISDA-SIFMA at 5-7.
    \71\ The Commission discusses the changes to appendix 1 in 
section V below.
    \72\ To limit repetition, the Commission will not discuss each 
removal in this release.
---------------------------------------------------------------------------

    In summary, in light of the above changes, Sec.  45.3(a) will 
require that for each swap executed on or pursuant to the rules of a 
SEF or DCM, the SEF or DCM shall report required swap creation data 
electronically to an SDR in the manner provided in Sec.  45.13(a) not 
later than the end of the next business day following the execution 
date.

[[Page 75510]]

b. Sec.  45.3(b) through (e)--Off-Facility Swaps
    The Commission is making several changes to the Sec.  45.3(b) 
through (e) required swap creation data reporting regulations for off-
facility swaps. Most of these changes conform to the changes in Sec.  
45.3(a) because the regulations in Sec.  45.3(b) through (e) for off-
facility swaps are analogous to the regulations in Sec.  45.3(a) for 
swaps executed on SEFs and DCMs.
    In general, for off-facility swaps subject to the Commission's 
clearing requirement, existing 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.\73\ 
For off-facility swaps not subject to the clearing requirement but have 
an SD/MSP reporting counterparty, existing Sec.  45.3(c)(1) 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 deadline if not electronic, for credit, equity, foreign exchange, 
and interest rate swaps.\74\
---------------------------------------------------------------------------

    \73\ 17 CFR 45.3(b)(1)(i), (ii).
    \74\ 17 CFR 45.3(c)(1)(i), (ii).
---------------------------------------------------------------------------

    Existing Sec.  45.3(c)(2) 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.\75\ For off-
facility swaps that are not subject to the clearing requirement but 
have a non-SD/MSP reporting counterparty, existing 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.\76\
---------------------------------------------------------------------------

    \75\ 17 CFR 45.3(c)(2)(i), (ii).
    \76\ 17 CFR 45.3(d).
---------------------------------------------------------------------------

    Finally, existing Sec.  45.3(e) requires that ASATP after a DCO 
accepts an original swap for clearing, or ASATP after execution of a 
clearing swap that does not replace an original swap, the DCO report 
all required swap creation data for the clearing swap, which includes 
all confirmation data and all PET data.
    First, the Commission is replacing existing Sec.  45.3(b) through 
(e) with Sec.  45.3(b), titled ``Off-facility swaps,'' to restructure 
the regulations.\77\ Second, the Commission is changing the existing 
Sec.  45.3(b) through (e) requirements for reporting counterparties to 
submit separate PET data and confirmation data reports for all off-
facility swaps that are not intended to be cleared at a DCO to report a 
single required swap creation data report. The Commission discusses its 
reasoning for this change 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 and improve 
data quality.
---------------------------------------------------------------------------

    \77\ The Commission is replacing Sec.  45.3(c) through (d) with 
provisions for allocations and multi-asset swaps, respectively, as 
discussed in the following sections. As part of this change, the 
Commission is moving the requirements for reporting required swap 
creation data for clearing swaps from Sec.  45.3(e) to Sec.  
45.3(b).
---------------------------------------------------------------------------

    The Commission did not receive any comments beyond those discussed 
in section II.C.2.a above.\78\ The Commission is adopting the new 
requirement for reporting counterparties to report a single required 
swap creation data report as proposed.
---------------------------------------------------------------------------

    \78\ See comments from DTCC, LCH, FIA, and CEWG.
---------------------------------------------------------------------------

    Third, the Commission is changing the existing Sec.  45.3(b) 
through (e) requirements for reporting counterparties to report 
required swap creation data ASATP after execution with different 
deadlines for off-facility swaps in Sec.  45.3(b)(1) and (2). New Sec.  
45.3(b)(1) requires SD/MSP/DCO reporting counterparties report swap 
creation data to an SDR by T+1 following the execution date. New Sec.  
45.3(b)(2) requires non-SD/MSP/DCO reporting counterparties report swap 
creation data to an SDR not later than T+2 following the execution 
date.
    The Commission discusses the background to these changes in section 
II.C.2.a above. The Commission discusses several comments beyond those 
discussed in section II.C.2.a in this section. CEWG believes a T+2 
deadline for non-SD/MSP/DCO reporting counterparties strikes an 
appropriate balance between giving end-users enough time to report, 
incurring a limited compliance burden, and providing the Commission 
with swap data in a timely manner.\79\ The Commission agrees with CEWG 
and believes the extended deadline reflects the Commission's interest 
in avoiding placing unnecessary burdens on non-SD/MSP/DCO reporting 
counterparties.
---------------------------------------------------------------------------

    \79\ CEWG at 2.
---------------------------------------------------------------------------

    The Commission received two comments raising issues with the new 
deadlines for reporting required swap creation data in Sec.  45.3(b). 
ICE SDR believes including a set time of no later than 11:59 p.m. on 
T+1 or T+2 could impede the SDR's ability to update its reporting 
system during its maintenance window.\80\ As the Commission discusses 
in section II.C.2.a above, the Commission is removing 11:59 p.m. 
eastern time from Sec.  45.3(b)(1) and (2). The Commission believes 
this addresses ICE SDR's timing concern.
---------------------------------------------------------------------------

    \80\ ICE SDR at 7.
---------------------------------------------------------------------------

    CME believes the reporting deadline should be T+1 or T+2 for all 
entities to avoid a sequencing issue with non-SD/MSP/DCO reporting 
counterparties that have a T+2 deadline, and the Sec.  45.4(b) deadline 
for DCOs to report original swap terminations, which would result in 
DCO terminations being rejected until original swaps are reported.\81\ 
The Commission does not share CME's concern, as it expects SEFs, DCMs, 
and DCOs will continue to report original swaps and clearing swaps 
ASATP, which will avoid sequencing issues for original swap 
terminations. The Commission expects to monitor the data for 
implementation issues, however, and to work with SDRs in case the 
deadlines need to be modified.
---------------------------------------------------------------------------

    \81\ CME at 14-15.
---------------------------------------------------------------------------

    In summary, Sec.  45.3(b) will require that for each off-facility 
swap, the reporting counterparty shall report required swap creation 
data electronically to an SDR as provided by Sec.  45.3(b)(1) or (2), 
as applicable. If the reporting counterparty is an SD, MSP, or DCO, 
Sec.  45.3(b)(1) will require the reporting counterparty report 
required swap creation data electronically to an SDR in the manner 
provided in Sec.  45.13(a) not later than the end of the next business 
day following the execution date. 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 the end of the second 
business day following the execution date.
3. Sec.  45.3(f)--Allocations \82\
---------------------------------------------------------------------------

    \82\ The Commission is re-designating existing Sec.  45.3(f) as 
Sec.  45.3(c) to reflect the consolidation of Sec.  45.3(b) through 
(e) into Sec.  45.3(b).
---------------------------------------------------------------------------

    The Commission is making several changes to the existing Sec.  
45.3(f) regulations for reporting allocations, re-designated as Sec.  
45.3(c). The Commission is making most of the changes to Sec.  45.3(f) 
to conform to the changes in Sec.  45.3(a) through (e). Existing Sec.  
45.3(f)(1) provides that the reporting counterparty to an initial swap 
with an allocation agent reports required swap creation

[[Page 75511]]

data for the initial swap, including a USI. For the post-allocation 
swaps, existing Sec.  45.3(f)(2)(i) provides that the agent tells the 
reporting counterparty the identities of the actual counterparties 
ASATP after execution, with a deadline of eight business hours. 
Existing Sec.  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. Existing Sec.  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.
    First, the Commission is making non-substantive changes, including 
specifying required swap creation data for allocations must be reported 
``electronically'' to SDRs in Sec.  45.3(c), (c)(1), and (c)(2)(ii), 
and replacing the reference in existing Sec.  45.3(f)(1) (re-designated 
as Sec.  45.3(c)(1)) to ``Sec.  45.3(a) through (d)'' with a reference 
to paragraph (a) or (b) of Sec.  45.3, to reflect the structural 
revisions to Sec.  45.3(a) through (e). However, because the Commission 
is extending the time to report required swap creation data in Sec.  
45.3(a) and (b), reporting counterparties will have additional time to 
report required swap creation data for the initial swaps for 
allocations as well.
    Second, the Commission is changing existing Sec.  45.3(f)(2)(ii) 
(re-designated as Sec.  45.3(c)(2)(ii)) \83\ 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 gives reporting counterparties 
until T+1 or T+2, depending on their status, to report required swap 
creation data for the allocated swaps. Failing to extend the deadline 
for allocations would result in reporting counterparties unnecessarily 
reporting allocations faster than creation and continuation data swap 
reports.
---------------------------------------------------------------------------

    \83\ The Commission is not changing 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 would 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).
---------------------------------------------------------------------------

    Finally,\84\ the Commission is removing Sec.  45.3(f)(2)(iii) 
without re-designation. The Commission is requiring an event data 
element in appendix 1.\85\ One of the events in this data element is 
``allocation,'' which requires reporting counterparties indicate 
whether a swap is associated with an allocation. The Commission 
believes this will simplify the current process involving SDRs mapping 
data elements by having reporting counterparties report the information 
about allocations themselves.
---------------------------------------------------------------------------

    \84\ The Commission is adopting several non-substantive and 
technical language edits, but is limiting discussion in this section 
to substantive amendments.
    \85\ The swap data elements required to be reported to SDRs are 
discussed in section V below.
---------------------------------------------------------------------------

    The Commission received one question from two commenters on the 
proposed changes to Sec.  45.3(f).\86\ GFXD and ISDA-SIFMA request the 
Commission clarify for allocations, T+1 begins on receipt of the 
allocations, rather than on execution, given that allocations may not 
be provided for up to eight hours.\87\ In response, the Commission 
clarifies T+1 begins on receipt of the allocation notification, rather 
than execution. However, the Commission notes it is retaining the 
requirement for the agent to inform the reporting counterparties of the 
allocation ASATP after execution, with an eight-business-hour deadline. 
As such, in the majority of cases, the Commission expects the deadline 
to effectively remain T+1 following execution.
---------------------------------------------------------------------------

    \86\ GFXD separately responded to a request for comment on 
whether the changes create issues for SDRs stating it believes the 
changes do not create issues for SDRs. GXFD at 21.
    \87\ GFXD at 21; ISDA-SIFMA at 6-7.
---------------------------------------------------------------------------

    The Commission did not receive additional comments on the proposed 
changes to Sec.  45.3(f), re-designated as Sec.  45.3(c). For the 
reasons discussed above, the Commission is adopting the changes to 
Sec.  45.3(f).
4. Sec.  45.3(g)--Multi-Asset Swaps \88\
---------------------------------------------------------------------------

    \88\ The Commission is re-designating Sec.  45.3(g) as Sec.  
45.3(d) to reflect: The consolidation of Sec.  45.3(b) through (e) 
into Sec.  45.3(b); and re-designating Sec.  45.3(f) as Sec.  
45.3(c).
---------------------------------------------------------------------------

    The Commission is making non-substantive changes to the Sec.  
45.3(g) regulations for reporting multi-asset swaps to conform to the 
changes in Sec.  45.3(a) through (f). Existing Sec.  45.3(g) 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. 
Existing 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.
    First, the Commission is replacing ``making the first report'' of 
required swap creation data with ``reporting'' required swap creation 
data to reflect the single report for required swap creation data, 
instead of separate PET data and confirmation data reports. Second, the 
Commission is removing the last sentence of the regulation concerning 
all PET data for each asset class involved in the swap. The Commission 
believes this sentence is unnecessary and no longer relevant with the 
Commission's removal of PET data from the regulations.
    The Commission did not receive any comments on the amendments to 
Sec.  45.3(g). The Commission is adopting the amendments to Sec.  
45.3(g), re-designated as Sec.  45.3(d), as proposed.
5. Sec.  45.3(h)--Mixed Swaps \89\
---------------------------------------------------------------------------

    \89\ The Commission is re-designating Sec.  45.3(h) as Sec.  
45.3(e) to reflect: The consolidation of Sec.  45.3(b) through (e) 
into Sec.  45.3(b); re-designating Sec.  45.3(f) as Sec.  45.3(c); 
and re-designating Sec.  45.3(g) as Sec.  45.3(d).
---------------------------------------------------------------------------

    The Commission is making several non-substantive changes to the 
Sec.  45.3(h) regulations for mixed swaps to conform to the changes in 
Sec.  45.3(a) through (g). Existing 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. Existing Sec.  
45.3(h)(2) requires that the registered entity or reporting 
counterparty making the first report of required swap creation data 
under Sec.  45.3(h) ensure that the same USI is recorded for the swap 
in both the SDR and the SBSDR.
    The Commission is replacing ``making the first report'' of required 
swap creation data with ``reporting'' required swap creation data, 
among other non-substantive changes. The Commission did not receive any 
comments on the changes to Sec.  45.3(h), re-designated as Sec.  
45.3(e). The Commission is adopting the changes as proposed.
6. Sec.  45.3(i)--International Swaps
    The Commission is removing the Sec.  45.3(i) regulations for 
international swaps. Existing Sec.  45.3(i) requires that for each 
international swap, the reporting counterparty 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.\90\
---------------------------------------------------------------------------

    \90\ Existing Sec.  45.1 defines ``international swaps'' to mean 
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. The Commission discusses 
removing the definition of ``international swap'' from Sec.  45.1 in 
section II.A above.

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

[[Page 75512]]

    When Sec.  45.3(i) was adopted, the Commission believed 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 Wall Street Reform and Consumer Protection 
Act (the ``Dodd-Frank Act'').\91\ However, if the same swap is reported 
to different jurisdictions, the USI or UTI \92\ should be the same. If 
the transaction identifier is the same for the swap, there is no need 
for the counterparties to send the identifier to other jurisdictions. 
In addition, in the future, regulators should have access to each 
other's TRs, if necessary, further obviating the need for reporting 
counterparties sending identifiers to multiple jurisdictions. As a 
result, the Commission believes Sec.  45.3(i) is unnecessary and is 
removing Sec.  45.3(i) from its regulations. The Commission did not 
receive any comments on the removal of Sec.  45.3(i).
---------------------------------------------------------------------------

    \91\ Swap Data Recordkeeping and Reporting Requirements, 77 FR 
2136, 2151 (Jan. 13, 2012).
    \92\ The Commission discusses USIs and UTIs in section II.E 
below.
---------------------------------------------------------------------------

7. Sec.  45.3(j)--Choice of SDR \93\
---------------------------------------------------------------------------

    \93\ The Commission is re-designating Sec.  45.3(j) as Sec.  
45.3(f) to reflect: The consolidation of Sec.  45.3(b) through (e) 
into Sec.  45.3(b); re-designating Sec.  45.3(f) as Sec.  45.3(c); 
re-designating Sec.  45.3(g) as Sec.  45.3(d); re-designating Sec.  
45.3(h) as Sec.  45.3(d); and removing Sec.  45.3(i).
---------------------------------------------------------------------------

    The Commission is making non-substantive changes to the Sec.  
45.3(j) regulations for reporting counterparties in choosing their SDR. 
Existing Sec.  45.3(j) requires that the entity with the obligation to 
choose the SDR to which all required swap creation data for a swap is 
reported be the entity 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 choose the SDR; (ii) for all 
other swaps, the reporting counterparty, as determined in Sec.  45.8, 
choose the SDR.
    The Commission is changing the heading of 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, among other 
technical changes. The Commission did not receive any comments on the 
proposed changes to Sec.  45.3(j), re-designated as Sec.  45.3(f). The 
Commission is adopting the changes to Sec.  45.3(j) as proposed.

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

    Existing Sec.  45.4 requires reporting counterparties to report 
updates to existing swap data and swap valuations to SDRs. As discussed 
in the sections below, the Commission is adopting four significant 
changes to these regulations: (i) Removing the option for state data 
reporting; (ii) extending the deadline for reporting required swap 
continuation data to T+1 or T+2; (iii) removing the requirement for 
non-SD/MSP/DCO reporting counterparties to report valuation data 
quarterly; and (iv) requiring SD/MSP reporting counterparties to report 
margin and collateral data daily. The remaining changes to Sec.  45.4 
discussed below are non-substantive clarifying, cleanup, or technical 
changes.
1. Introductory Text
    The Commission is removing the introductory text to existing Sec.  
45.4.\94\ The existing introductory text to Sec.  45.4 provides a broad 
overview of the swap continuation data reporting regulations for 
registered entities and swap counterparties. The Commission believes 
the introductory text is superfluous because the scope of Sec.  45.4 is 
clear from the operative provisions of Sec.  45.4. Removing the 
introductory text would not impact any regulatory requirements, 
including those referenced in the introductory text.
---------------------------------------------------------------------------

    \94\ The introductory text to Sec.  45.4 references: The 
existing Sec.  45.13(b) regulations for required data standards for 
reporting swap data to SDRs; the existing Sec.  49.10 regulations 
for SDRs to accept swap data; the existing part 46 regulations for 
reporting pre-enactment swaps and transition swaps; the existing 
Sec.  45.3 regulations for reporting required swap creation data; 
the existing Sec.  45.6 regulations for the use of LEIs; the real-
time public reporting requirements in existing part 43; and the 
parts 17 and 18 regulations for large trader reporting.
---------------------------------------------------------------------------

    The Commission did not receive any comments on the proposal to 
remove the introductory text to Sec.  45.4.
2. Sec.  45.4(a)--Continuation Data Reporting Method Generally
    The Commission is making several changes to the Sec.  45.4(a) 
regulations for required swap continuation data reporting. Existing 
Sec.  45.4(a) requires reporting counterparties and DCOs \95\ report 
required swap continuation data 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. Existing Sec.  45.4(a) further specifies 
reporting entities and counterparties fulfill their obligations by 
reporting, within the applicable deadlines outlined 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.
---------------------------------------------------------------------------

    \95\ 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.
---------------------------------------------------------------------------

    First, the Commission is changing the first two sentences to state 
that 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.
    Second, the Commission is removing state data reporting as an 
option for reporting changes to swaps from Sec.  45.4. 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.\96\ 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.\97\
---------------------------------------------------------------------------

    \96\ 17 CFR 45.1 (definition of ``state data''). The Commission 
discusses removing the definition of ``state data'' from Sec.  45.1 
in section II.A.3 above.
    \97\ 17 CFR 45.1 (definition of ``life cycle event''). The 
Commission discusses amending the definition of ``life-cycle-event 
data'' in Sec.  45.1 in section II.A.2 above.
---------------------------------------------------------------------------

    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.\98\ 
However, the Commission believes state data reporting may be 
contributing to data quality issues by filling SDRs with unnecessary 
swap messages. As noted in the Proposal, the Commission estimates that 
state data reporting messages represent the vast majority of swap 
reports maintained by SDRs and the Commission.\99\ The Commission 
believes eliminating state

[[Page 75513]]

data reporting will improve data quality without impeding the 
Commission's ability to fulfill systemic risk mitigation, market 
transparency, position limit monitoring, and market surveillance 
objectives.
---------------------------------------------------------------------------

    \98\ See 77 FR at 2153.
    \99\ 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 SDRs have received and 
made available to the Commission over a billion state data reporting 
messages.
---------------------------------------------------------------------------

    CME opposes removing state data reporting from Sec.  45.4(a). CME 
believes the Commission should instead require the reporting of final-
state life cycle event changes per swap on the day in question to 
reduce further submission of unnecessary data, noting that this 
requirement would be consistent with the requirements of other 
international regulators.\100\ The Commission agrees with CME updates 
should be limited to final-state life cycle event changes per swap on a 
day in question, but believes the Commission can clarify this without 
continuing to permit state data reporting. As a result, the Commission 
declines to keep state data reporting, but does clarify life cycle 
updates should be limited to end of day updates where multiple take 
place on a day.
---------------------------------------------------------------------------

    \100\ CME at 15.
---------------------------------------------------------------------------

    For the reasons discussed above, the Commission is adopting the 
changes to Sec.  45.4(a) as proposed. Therefore, Sec.  45.4(a) will 
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 outlined in Sec.  45.4.
3. Sec.  45.4(b)--Continuation Data Reporting for Clearing Swaps
    The Commission is making several changes to the existing Sec.  
45.4(b) regulations for required swap continuation data reporting for 
clearing swaps. The Commission is moving the Sec.  45.4(b) required 
swap continuation data reporting regulations for clearing swaps to 
Sec.  45.4(c) as part of structural changes to the regulations.\101\ 
The Commission is re-designating existing Sec.  45.4(c) as Sec.  
45.4(b). Existing Sec.  45.4(c) contains the continuation data 
reporting regulations for original swaps. Re-designated Sec.  45.4(b) 
will be titled ``Continuation data reporting for original swaps.''
---------------------------------------------------------------------------

    \101\ The Commission discusses the revisions to the continuation 
data requirements for clearing swaps and uncleared swaps in section 
II.D.4 below.
---------------------------------------------------------------------------

    The Commission is also making several changes to the continuation 
data reporting regulations for original swaps in re-designated Sec.  
45.4(b). Existing Sec.  45.4(c) requires 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).\102\ For continuation data, existing 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, existing 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 under 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.
---------------------------------------------------------------------------

    \102\ 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).
---------------------------------------------------------------------------

    First, the Commission is extending the deadline for reporting swap 
continuation data for original swaps in Sec.  45.4(c)(1) to either T+1 
or T+2, depending on the reporting counterparty, to be consistent with 
the new deadlines for reporting required swap creation data in Sec.  
45.3.\103\ As the Commission discusses in section II.C.2.a above, 
though, the Commission is removing the references to 11:59 p.m. eastern 
time that were in the Proposal. The Commission is thus changing the 
reference from 11:59 p.m. eastern time to the end of the next business 
day or the second business day that any life cycle event occurs for the 
swap. Second, the Commission is removing the references to state data 
reporting \104\ in Sec.  45.4(b) and clarifying that required swap 
continuation data must be reported ``electronically,'' among other non-
substantive changes.
---------------------------------------------------------------------------

    \103\ The Commission discusses these changes in sections II.C.2 
above. The Commission also considered the deadlines set by other 
regulators. 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. 17 CFR 242.900(g); 17 CFR 
242.901(e). EMIR requires that contract modifications be reported no 
later than the working day following the modification. Reg. 648/2012 
Art. 9(1).
    \104\ The Commission discusses removing state data reporting in 
section II.D.2 above.
---------------------------------------------------------------------------

    The Commission received three comments supporting extending the 
deadline for reporting required swap continuation data in Sec.  
45.4(b).\105\ In particular, GFXD believes T+1 will create a more 
harmonized global regulatory framework.\106\ The Commission agrees with 
commenters that the proposal extending the deadline for reporting 
required swap continuation data will streamline reporting and be 
consistent with the deadlines set by other regulators.
---------------------------------------------------------------------------

    \105\ GFXD at 22; Chatham at 2; ISDA-SIFMA at 5.
    \106\ GFXD at 22.
---------------------------------------------------------------------------

    DTCC requests clarification on when ``each business day'' begins 
for Sec.  45.4(b) reporting.\107\ The Commission believes the 
definitions of ``required swap creation data'' and ``required swap 
continuation data'' explain that Sec.  45.4 required swap continuation 
data reporting begins when reporting counterparties need to update 
information for a swap reported to an SDR under Sec.  45.3. As such, 
reporting data required by Sec.  45.4 would begin on the ``business 
day'' on which a reporting counterparty needs to begin reporting 
according to Sec.  45.4.
---------------------------------------------------------------------------

    \107\ DTCC at 5.
---------------------------------------------------------------------------

    Eurex proposes removing the DCO obligation to report terminations 
of original swaps for ``off facility swaps.'' \108\ Eurex states that 
in Europe clearing members have no automated reporting line to Eurex 
and not all multilateral trading facilities (``MTFs'') or Approved 
Trade Sources (``ATSs'') transmit USI namespaces and LEIs of the SDR 
for ``off-facility swaps'' to the DCO.\109\ Eurex states this would be 
burdensome as SDRs' USI namespaces and LEIs would have to be manually 
obtained from the MTFs and ATSs.\110\ The Commission is not changing 
DCOs' obligations for reporting original swap terminations, as the 
Commission does not want to disrupt the reporting workflows for 
original and clearing swaps the Commission established in a 2016 
rulemaking extensively analyzing the process.\111\ The Commission 
declines to adopt Eurex's suggestion at this time.
---------------------------------------------------------------------------

    \108\ Eurex 2-3.
    \109\ Id.
    \110\ Id.
    \111\ See Amendments to Swap Data Recordkeeping and Reporting 
Requirements for Cleared Swaps, 81 FR 41736 (June 27, 2016).
---------------------------------------------------------------------------

    In summary, Sec.  45.4(b) will 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 such required swap continuation data 
shall be accepted and recorded by such SDR as provided in Sec.  49.10. 
New Sec.  45.4(b)(1) will provide 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 the end 
of the next business day following the day that any life cycle event 
occurs with respect to the swap. New Sec.  45.4(b)(2) will require 
that, in addition to all other required swap continuation data, life-

[[Page 75514]]

cycle-event data shall include 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); the UTI of the original swap that was 
replaced by the clearing swaps; and 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 making several changes to the Sec.  45.4(c) 
regulations for reporting required swap continuation data for original 
swaps. The Commission is moving the required swap continuation data 
reporting requirements for original swaps from existing Sec.  45.4(c) 
to Sec.  45.4(b) as part of structural changes.\112\ The Commission is 
also moving the continuation data reporting requirements for clearing 
swaps from existing Sec.  45.4(b) to Sec.  45.4(c), and combining them 
with the continuation data reporting requirements for uncleared swaps 
in existing Sec.  45.4(d). The Commission is retitling Sec.  45.4(c) 
``Continuation data reporting for swaps other than original swaps'' to 
reflect the combination.
---------------------------------------------------------------------------

    \112\ The Commission discusses changes to continuation data 
requirements for original swaps in section II.D.3 above.
---------------------------------------------------------------------------

    The Commission is making several changes to the continuation data 
reporting regulations for clearing swaps and uncleared swaps in Sec.  
45.4(b) and (d), respectively, proposed to be re-designated as Sec.  
45.4(c). Existing Sec.  45.4(b) requires that for all clearing swaps, 
DCOs 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. 
Existing Sec.  45.4(d) requires that for all uncleared swaps, including 
swaps executed on a SEF or DCM, the reporting counterparty 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 
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.\113\
---------------------------------------------------------------------------

    \113\ 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).
---------------------------------------------------------------------------

    First, the Commission is changing the life cycle event reporting 
deadlines for these swaps to match other T+1 and T+2 deadlines.\114\ 
The Commission is changing the life cycle event reporting deadline for 
SD/MSP/DCO reporting counterparties from the same day to T+1 following 
any life cycle event.\115\ The Commission is changing the exception for 
corporate events of the non-reporting counterparty to T+2. For non-SD/
MSP/DCO reporting counterparties, the Commission is changing the life 
cycle event reporting deadline to T+2 following the life cycle event. 
As explained in section II.C.2.a above, though, the Commission is 
removing the references to 11:59 p.m. eastern time from the proposal. 
As a result, the deadlines will be either the end of the next business 
day or the second business day following the events.
---------------------------------------------------------------------------

    \114\ The Commission discusses the T+1 and T+2 deadlines in 
Sec.  45.3(b) and Sec.  45.4(b) in sections II.C.2.b and II.D.3, 
respectively, above.
    \115\ The Commission is not extending the valuation data 
reporting deadline for SD/MSP/DCO reporting counterparties. The 
Commission believes SDs, MSPs, and DCOs are already creating daily 
valuations and tracking margin and collateral for reasons 
independent of their swap reporting obligations.
---------------------------------------------------------------------------

    Second, the Commission is removing the references to state data 
reporting in new Sec.  45.4(c).\116\ Third, the Commission is 
clarifying that required swap continuation data must be reported 
``electronically,'' among other non-substantive edits to improve 
readability and update cross-references.
---------------------------------------------------------------------------

    \116\ The Commission discusses the removal of state data 
reporting in section II.D.2 above.
---------------------------------------------------------------------------

    Fourth, the Commission is changing the swap valuation data 
reporting requirements for all reporting counterparties. DCOs, SDs, and 
MSPs report valuation data daily, while non-SD/MSP reporting 
counterparties report the daily mark of transactions quarterly.\117\ 
For DCO, SD, and MSP reporting counterparties, the Commission is 
keeping the daily reporting requirement. However, the Commission is 
expanding the requirement to include margin and collateral data.\118\ 
Conversely, the Commission is eliminating the requirement for non-SD/
MSP/DCO reporting counterparties to report valuation data and is not 
requiring them to report margin and collateral data.
---------------------------------------------------------------------------

    \117\ 17 CFR 45.4(b)(2) and (d)(2).
    \118\ The Commission is adding a definition of ``collateral 
data'' to Sec.  45.1(a), as discussed in section II.A.1 above. 
``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 part 45.
---------------------------------------------------------------------------

    The Commission decided against requiring collateral data reporting 
when it adopted part 45 in 2012. At the time, both the Commission and 
industry understood collateral data 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.\119\ In light 
of this limitation, the Commission required the daily mark be reported 
for swaps as valuation data, but not collateral.\120\ However, the 
Commission noted 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.\121\
---------------------------------------------------------------------------

    \119\ See 77 FR 2136, 2153.
    \120\ 17 CFR 45.1 (definition of ``valuation data''). The 
Commission proposed amending 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.
    \121\ See 77 FR 2136, 2154 (Jan. 13, 2012).
---------------------------------------------------------------------------

    The Commission is concerned not having margin and collateral data 
at SDRs impedes its ability to fulfill systemic risk mitigation 
objectives. As a result, the Commission revisited this issue in the 
Proposal to determine whether it is now feasible.\122\ The Commission 
believes margin and collateral data is necessary to monitor risk in the 
swaps market. Given that ESMA is already requiring margin and 
collateral reporting, and that the Commission is requiring many of the 
data elements that ESMA requires, the Commission believes certain 
market participants are ready to report this data to SDRs.
---------------------------------------------------------------------------

    \122\ Other regulators have taken different approaches to margin 
and collateral data reporting. ESMA, for instance, requires the 
reporting of many of the same collateral and margin swap data 
elements the Commission proposed requiring, either on a portfolio 
basis or by transaction. Reg. 148/2013 Art. 3(5). With respect to 
valuation data, ESMA requires central counterparties to report 
valuations for cleared swaps as the Commission does. Reg. 148/2013 
Art. 3(4); Reg. 648/2012 Art. 10. EMIR provides 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.
---------------------------------------------------------------------------

    However, the Commission is concerned valuation, margin, and 
collateral data reporting could create a significant burden for non-SD/
MSP/DCO reporting counterparties. These entities include those market

[[Page 75515]]

participants that, by virtue of size and extent of activity in the swap 
market, may have fewer resources to devote to reporting this complex 
data. The Commission also recognizes 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 received 11 comments on expanding daily valuation 
data reporting to include margin and collateral data reporting in Sec.  
45.4(c) for SD/MSP/DCO reporting counterparties. Three commenters 
support the proposal.\123\ In particular, Markit believes it is more 
efficient for reporting counterparties to submit both cleared and 
uncleared margin and collateral data together to SDRs, and states that 
when it comes to valuation or collateral reporting valuation, some 
systems may have limited information (e.g., trade reference 
identification but not clearing status), and therefore it is more 
complex to split valuation or collateral reporting into cleared versus 
uncleared categories.
---------------------------------------------------------------------------

    \123\ Chris Barnard at 1; Markit at 6; LCH at 2.
---------------------------------------------------------------------------

    Eight commenters oppose the proposal.\124\ CME, Eurex, ISDA-SIFMA, 
and FIA note collateral and margin reporting for DCOs pursuant to part 
45 would be redundant for DCOs that have to report similar data to the 
Commission pursuant to part 39 of the Commission's regulations, which 
could result in burdens on DCOs with questionable benefits to the 
Commission.\125\ In particular, CME believes the Commission should 
consider consolidating its collateral reporting obligations for DCOs 
under part 39.\126\
---------------------------------------------------------------------------

    \124\ CME at 15-16; CEWG at 8; Eurex at 3; ICE DCOs at 3-4; 
ISDA-SIFMA at 8; BP at 3; FXPA at 4-5; FIA at 12.
    \125\ CME at 15-16; Eurex at 3; ICE DCOs at 3-4; ISDA-SIFMA at 
8; FIA at 12.
    \126\ CME at 15-16.
---------------------------------------------------------------------------

    The Commission received nine comments supporting excluding non-SD/
MSP/DCO reporting counterparties from reporting valuation, margin, and 
collateral data in Sec.  45.4(c).\127\ In particular, IECA notes 
reporting counterparties contract for third-party services to perform 
quarterly valuations of transactions, and the valuation analysis does 
not mitigate systemic risk, and offers only tangential value, at best, 
to the two parties.\128\ Similarly, ISDA-SIFMA strongly support the 
proposal because ISDA-SIFMA do not believe the 2% of swaps reported by 
non-SD/MSP/DCO reporting counterparties represent systemic risk.\129\
---------------------------------------------------------------------------

    \127\ IECA at 3; Chatham at 2-3; Eurex at 3; JBA at 4; NRECA-
APPA at 5; ISDA-SIFMA at 8; FIA at 14; CEWG at 2; COPE at 2.
    \128\ IECA at 3.
    \129\ ISDA-SIFMA at 8.
---------------------------------------------------------------------------

    The Commission acknowledges the concerns raised by CME, Eurex, ICE 
DCOs, ISDA-SIFMA, and FIA about duplicative reporting for DCOs 
regarding cleared swaps. While collateral and margin data is reported 
pursuant to part 39 using a different set of data elements than those 
contained in appendix 1, and collateral and margin data is reported for 
end-of-day positions pursuant to part 39 as opposed to a more granular 
transaction-by-transaction basis pursuant to part 45, the Commission 
believes the collateral and margin data reported by DCOs pursuant to 
part 39 is sufficiently similar to data reported pursuant to part 45 to 
meet the Commission's current needs.
    However, the Commission is also open to requiring DCO reporting 
counterparties to report collateral and margin data on a transaction-
by-transaction basis pursuant to part 45 at a future date if a 
Commission need for more granular data emerges in its monitoring of 
systemic risk or if granular data is needed as a condition for global 
jurisdictions to grant substituted compliance and TR access to one 
another. The Commission notes any added costs to DCO reporting 
counterparties to comply with any such future Commission requirement 
would be substantially mitigated by DCOs' existing and future systems 
for transaction-by-transaction reporting of collateral and margin data 
developed to comply with the requirements of other jurisdictions, 
including Europe.
    The Commission received one comment on reporting corporate events. 
FIA suggests that for the reporting of corporate events of non-
reporting counterparties, the Commission measure the reporting deadline 
from the day the non-reporting counterparty informs the reporting 
counterparty of the corporate event.\130\ The Commission believes 
corporate events need to be reported in a timely manner, and is 
concerned FIA's suggestion of leaving the decision of when to inform 
the reporting counterparty could delay the notification for extended 
periods of time, resulting in inaccurate or stale data. As such, the 
Commission declines to adopt FIA's suggestion.
---------------------------------------------------------------------------

    \130\ FIA at 11.
---------------------------------------------------------------------------

    For the reasons discussed above, the Commission is adopting the 
changes to Sec.  45.4(c) as proposed, except the Commission is 
excluding DCO reporting counterparties from the requirement to report 
collateral data. In summary, Sec.  45.4(c) will require that for each 
swap that is not an original swap, including clearing swaps and swaps 
not cleared by DCOs, the reporting counterparty shall 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). New Sec.  
45.4(c)(1) will require that: (i) If the reporting counterparty is a 
SD, MSP, or DCO, the reporting counterparty shall report life-cycle-
event data electronically to an SDR in the manner provided in Sec.  
45.13(a) not later than the end of the next business day following the 
day 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 the end of the second business day 
following the day 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 an 
SDR in the manner provided in Sec.  45.13(a) not later than the end of 
the second business day following the day that any life cycle event 
occurred. New Sec.  45.4(c)(2)(i) will require that if the reporting 
counterparty is a SD, MSP, or DCO, swap valuation data shall be 
reported electronically to an SDR in the manner provided in Sec.  
45.13(b) each business day. New Sec.  45.4(c)(2)(ii) will require that 
if the reporting counterparty is a SD or MSP, collateral data shall be 
reported electronically to an SDR in the manner provided in Sec.  
45.13(b) each business day.

E. Sec.  45.5--Unique Transaction Identifiers

    The Commission is amending Sec.  45.5 to adopt requirements for 
UTIs, the globally accepted transaction identifier, replacing USIs in 
existing Sec.  45.5. In general, the Commission is amending existing 
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 
the UTI be comprised of the LEI of the generating entity and a unique 
alphanumeric code. Before discussing the specific changes to Sec.  
45.5(a) through (f) in sections II.E.1 to II.E.7 below, the Commission 
explains the policy behind adopting UTIs.
    In general, existing Sec.  45.5 requires: (i) Each swap be 
identified with a USI in all recordkeeping and all swap data reporting, 
and (ii) the USI be comprised of a unique alphanumeric code and an 
identifier the Commission assigns to the generating entity. Each swap 
retains its USI from execution until, for instance,

[[Page 75516]]

the swap reaches maturity or the counterparties terminate the contract. 
USIs allow the Commission to identify new swaps in SDR data and track 
changes to swaps by reviewing all reports associated with a USI.
    The Commission implemented the existing USI regulations before 
global consensus was reached on the structure and format for a common 
swap identifier. For entities reporting swap data to multiple 
jurisdictions, this has resulting in conflicting or ambiguous 
generation and transmission requirements across jurisdictions. 
Practically, the Commission is concerned this has resulted in: (i) 
Conflicting responsibilities for generating identifiers and (ii) 
entities reporting different identifiers identifying the same swap to 
different SDRs and TRs.
    The Commission believes amending Sec.  45.5 to require each swap 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, which will reduce cross-border reporting complexity and 
encourage global swap data aggregation.
1. Title and Introductory Text
    The Commission proposed several conforming amendments to the Sec.  
45.5 title and the introductory text. Existing Sec.  45.5 is titled 
``Unique swap identifiers.'' The existing 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 proposed replacing ``swap'' in the title with 
``transaction'' to reflect the Commission's proposed adoption of the 
UTI. Accordingly, the Commission proposed updating the reference to USI 
with UTI in the introductory text.
    The Commission also proposed updating the reference to paragraphs 
(a) through (f) of existing Sec.  45.5 to (a) through (h) of proposed 
Sec.  45.5. This would reflect the Commission's addition of proposed 
Sec.  45.5(g) and (h), discussed in sections II.E.8 and II.E.9 below.
    The Commission received eight general comments on adopting UTIs in 
Sec.  45.5. Four commenters generally support adopting UTIs in Sec.  
45.5.\131\ In particular, BP also supports using the same UTI across 
jurisdictions and recommends SDRs manage UTI generation and identify 
and coordinate the use of the earliest regulatory reporting deadline 
among jurisdictions.\132\
---------------------------------------------------------------------------

    \131\ Chatham at 3; LCH at 3; GLEIF at 3; BP at 5.
    \132\ BP at 5.
---------------------------------------------------------------------------

    GFXD supports implementing global UTI standards but is concerned 
the Commission will conflict with the global harmonized generation 
hierarchy or run on a timeframe that is not coordinated with other 
jurisdictions, negating the purpose and benefits of a universal UTI 
standard and creating significant extra cost and complexity, as well as 
the need to separate UTI systems and logic for each jurisdiction.\133\
---------------------------------------------------------------------------

    \133\ GFXD at 22-23.
---------------------------------------------------------------------------

    Eurex supports harmonizing the UTI and believes it would 
significantly relieve reporting counterparties. Eurex recommends the 
Commission align UTI requirements with ESMA and other global regulators 
on the effective date of UTI and phase in UTI to handle existing open 
swap positions.\134\ LCH recommends the Commission apply the factors 
provided in Table 1 of the UTI Technical Guidance, which contains 
specific factors authorities should consider for allocating 
responsibility for UTI generation.\135\
---------------------------------------------------------------------------

    \134\ Eurex suggests, for example, continuing use of the old 
identifier for open swaps until positions are modified. Eurex at 3-
4.
    \135\ LCH at 3.
---------------------------------------------------------------------------

    JBA believes not adopting the UTI Technical Guidance precisely 
could lead to confusion for the UTI generation responsibility for 
cross-border transactions. JBA asks the Commission consider designing 
easy-to-implement and flexible rules, such as allowing a change to the 
UTI generation responsibility in accordance with a bilateral agreement 
or adopting tiebreaker logic similar to the existing ISDA Tie-Breaker 
Logic that easily determines the UTI generation responsibility.\136\
---------------------------------------------------------------------------

    \136\ JBA at 2-3.
---------------------------------------------------------------------------

    The Commission did not receive any comments on the proposals to 
retitle Sec.  45.5 ``Unique Transaction Identifiers,'' to update the 
reference to paragraphs (a) through (f) of Sec.  45.5 to (a) through 
(h) of Sec.  45.5, or to update the reference to USI with UTI in the 
introductory text and for reasons articulated in the Proposal and 
reiterated above, is adopting the changes to those portions of the 
introductory text as proposed. For the reasons articulated in the 
Proposal and the additional reasons discussed below, the Commission is 
adopting the changes to the remainder of the introductory text to Sec.  
45.5 as proposed.
    The Commission acknowledges the comments supportive of the 
Commission's proposal to adopt UTIs. The Commission agrees with Eurex 
and GFXD that the promise of UTIs can only be realized if jurisdictions 
worldwide adopt the UTI, but the Commission shares the FSB's belief 
that it is not feasible for jurisdictions to have one coordinated 
global implementation date due to differences in the legislative and 
regulatory process across jurisdictions.\137\ However, as discussed in 
section VI below, the Commission is adopting an 18-month compliance 
date for UTIs in an effort to be closer aligned with the estimated 
implementation dates of other jurisdictions and recommends that other 
jurisdictions adopt UTIs as expeditiously as possible.
---------------------------------------------------------------------------

    \137\ FSB, Governance arrangements for the unique transaction 
identifier (UTI) (Dec. 29, 2017) at 16 (``The FSB recognises the 
challenges in coordinating a synchronised regulatory and 
technological implementation across jurisdictions and registered 
entities. As a result, the FSB believes that the most realistic and 
feasible implementation plan is that jurisdictions globally 
implement the requirements to report UTIs as expeditiously as 
possible'').
---------------------------------------------------------------------------

    As to the comments from LCH, GFXD, and JBA on the importance of 
following the UTI Technical Guidance for assigning UTI generation 
responsibilities, the Commission agrees and has cited the specific 
steps from the UTI Technical Guidance generation flowchart in sections 
II.E.2 to II.E.5 below to demonstrate the conformity of Sec.  45.5(a) 
to (d) with the UTI Technical Guidance.
    The Commission declines JBA's request for a rule affording 
flexibility in UTI generation responsibilities, such as allowing 
bilateral agreement between counterparties to override the UTI 
generation responsibilities in Sec.  45.5, because it believes clear 
rules delineating UTI generation responsibilities provide the best 
assurance that only one unique UTI is generated for a trade, a 
necessity for swap data reporting integrity. Allowing UTIs to be 
generated according to bilateral agreement results in the need to reach 
agreement on a trade-by-trade or counterparty-by-counterparty basis, a 
scenario the Commission believes will increase the likelihood, due to 
miscommunication, that no UTI is generated for a swap if each entity 
believes the other agreed to generate or multiple UTIs are generated 
for a swap if each entity believes it agreed to generate.

[[Page 75517]]

2. Sec.  45.5(a)--Swaps Executed on or Pursuant to the Rules of a SEF 
or DCM
    The Commission proposed several conforming amendments to Sec.  
45.5(a) for the creation and transmission of UTIs for swaps executed on 
or pursuant to the rules of SEFs and DCMs. Existing Sec.  45.5(a)(1) 
requires that for swaps executed on or pursuant to the rules of SEFs 
and DCMs, the 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.\138\
---------------------------------------------------------------------------

    \138\ The single data field must contain: (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 is 
unique with respect to all such codes generated and assigned by that 
SEF or DCM. 17 CFR 45.5(a)(1)(i) and (ii).
---------------------------------------------------------------------------

    Existing 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.\139\
---------------------------------------------------------------------------

    \139\ 17 CFR 45.5(a)(2)(i) through (iii).
---------------------------------------------------------------------------

    First, the Commission proposed amendments to conform to the 
Commission's proposed adoption of the UTI. The Commission proposed 
replacing all references to ``USIs'' with ``UTIs'' in proposed Sec.  
45.5(a)(1) and (2). In addition, the Commission proposed updating the 
phrase in existing Sec.  45.5(a)(1) that requires the USI to 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.\140\
---------------------------------------------------------------------------

    \140\ UTI Technical Guidance, Section 3.6.
---------------------------------------------------------------------------

    The Commission also proposed amending the Sec.  45.5(a)(1)(i) 
description of 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.\141\ The Commission proposed to delete the phrase 
in the second half of the sentence statin that 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.
---------------------------------------------------------------------------

    \141\ UTI Technical Guidance, Section 3.5.
---------------------------------------------------------------------------

    The Commission did not receive any comments on the proposed 
amendments to the requirements for the creation and transmission of 
UTIs for swaps executed on or pursuant to the rules of SEFs and DCMs in 
proposed Sec.  45.5(a) and for reasons articulated in the Proposal and 
reiterated above, is adopting the changes as proposed. The Commission 
notes assigning UTI generation responsibilities for swaps executed on 
or pursuant to the rules of SEFs and DCMs to the SEF or DCM adheres to 
the generation flowchart in the UTI Technical Guidance.\142\
---------------------------------------------------------------------------

    \142\ UTI Technical Guidance at 12 (Step 3: ``Was the 
transaction executed on a trading platform?'' ``If so, the trading 
platform'').
---------------------------------------------------------------------------

3. Sec.  45.5(b)--Off-Facility Swaps With an SD or MSP Reporting 
Counterparty
    The Commission proposed several amendments to existing Sec.  
45.5(b) for the creation and transmission of UTIs for off-facility 
swaps by SD/MSP reporting counterparties. Existing Sec.  45.5(b)(1) 
requires that, for off-facility swaps with SD/MSP reporting 
counterparties, the reporting counterparty generate and assign a USI 
consisting of a single data field.\143\ The required USI must 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.
---------------------------------------------------------------------------

    \143\ The single data field must 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 the SD or 
MSP 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. 17 CFR 45.5(b)(1).
---------------------------------------------------------------------------

    Existing 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 proposed expanding the UTI creation and 
transmission requirements for SD/MSP reporting counterparties to 
include reporting counterparties that are financial entities.\144\ The 
Commission explained that it believed extending the responsibility for 
generating off-facility swap UTIs to reporting counterparties that are 
financial entities would reduce the UTI generation burden on non-
financial entities. The Commission also proposed conforming changes. 
These changes replaced ``swap dealer or major swap participant 
reporting counterparty'' in the title to proposed Sec.  45.5(b) with 
``financial entity reporting counterparty'' and replaced ``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 proposed Sec.  45.5(b) would 
begin with ``For each off-facility swap where the reporting 
counterparty is a financial entity. . . .'' \145\ The Commission 
similarly proposed to replace references to ``swap dealer or major swap 
participant'' in Sec.  45.5(b)(1)(i) and (ii) with ``reporting 
counterparty.'' \146\
---------------------------------------------------------------------------

    \144\ 17 CFR 45.1 (definition of ``financial entity'').
    \145\ See row ``45.5(b)'' of the table in section VIII.3 below.
    \146\ See row ``45.5(b)(1)(ii)'' of the table in section VIII.3 
below.
---------------------------------------------------------------------------

    Second, the Commission proposed amendments to conform to the 
Commission's proposed adoption of the UTI. The Commission proposed 
replacing all references to ``USIs'' with ``UTIs'' in proposed Sec.  
45.5(b)(1) and (2). In addition, the Commission proposed updating the 
phrase in proposed Sec.  45.5(b)(1) that requires the USI to 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.\147\
---------------------------------------------------------------------------

    \147\ UTI Technical Guidance, Section 3.6.
---------------------------------------------------------------------------

    The Commission proposed amending Sec.  45.5(b)(1)(i) to describe 
the first component of the UTI's single data element by replacing 
``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.\148\ The Commission also proposed 
deleting 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 should be used 
to identify the UTI generating

[[Page 75518]]

entity instead of an identifier assigned by individual regulators.
---------------------------------------------------------------------------

    \148\ UTI Technical Guidance, Section 3.5.
---------------------------------------------------------------------------

    The Commission also believed 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.\149\ For example, 
in an off-facility swap where neither counterparty is an SD nor an MSP 
and only one counterparty is a financial entity, the counterparty that 
is a financial entity would be the reporting counterparty,\150\ yet the 
SDR would generate the USI under existing Sec.  45.5(c).\151\ The 
Commission explained that 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 and that the 
proposal would also reduce the number of swaps for which SDRs would be 
required to generate the UTI.
---------------------------------------------------------------------------

    \149\ 17 CFR 45.8.
    \150\ 17 CFR 45.8(c).
    \151\ 17 CFR 45.5(c).
---------------------------------------------------------------------------

    The Commission received two comments on the proposed amendments to 
Sec.  45.5(b). ISDA-SIFMA believe the Commission should delay the 
requirement to disseminate UTIs to non-reporting counterparties from 
ASATP to T+1, because the UTI transmission mechanisms generally align 
with the method of confirmation, such as electronic or paper. ISDA-
SIFMA suggest the Commission replace the ASATP requirement for UTI 
transmission with a deadline of no later than T+1, to correspond with 
the proposed timeline for reporting creation data to the SDR.\152\ DTCC 
agrees that the reporting counterparty should be responsible for 
generating off-facility swap UTIs.\153\
---------------------------------------------------------------------------

    \152\ ISDA-SIFMA at 10.
    \153\ DTCC at 5.
---------------------------------------------------------------------------

    The Commission did not receive any comments opposing the proposed 
amendments to Sec.  45.5(b) expanding the UTI creation and transmission 
requirements for SD/MSP reporting counterparties to include reporting 
counterparties that are financial entities, and for reasons articulated 
in the Proposal and reiterated above, is adopting the proposal with one 
modification relating to transmission. The Commission agrees with ISDA-
SIFMA and believes in light of the proposed changes in Sec.  45.3(b) to 
the deadline for reporting required swap creation data, that 
transmission of the UTI to the non-reporting counterparty should be 
similarly delayed in order to not potentially provide two separate 
confirmations to the non-reporting counterparty. The Commission 
therefore is adopting the changes as proposed, except it replaces ``To 
the non-reporting counterparty to the swap, as soon as technologically 
practicable after execution of the swap; and'' with ``To the non-
reporting counterparty to the swap, no later than the applicable 
deadline in Sec.  45.3(b) for reporting required swap creation data; 
and'' in final Sec.  45.5(b)(2)(ii).
    The Commission notes assigning UTI generation responsibilities for 
off-facility swaps with a financial entity reporting counterparty to 
the reporting counterparty adheres to the generation flowchart in the 
UTI Technical Guidance.\154\
---------------------------------------------------------------------------

    \154\ UTI Technical Guidance at 12 (Step 7: ``Does the 
jurisdiction employ a counterparty-status-based approach (e.g., rule 
definition or registration status) for determining which entity 
should have responsibility for generating the UTI?'' ``If so, see 
step 8.'' Step 8: ``Do the counterparties have the same regulatory 
status for UTI generation purposes under the relevant 
jurisdiction?'' ``Otherwise, see step 9.'' Step 9: ``Do the 
applicable rules determine which entity should have responsibility 
for generating the UTI?'' ``If so, the assigned entity'').
---------------------------------------------------------------------------

4. Sec.  45.5(c)--Off-Facility Swaps With a Non-SD/MSP Reporting 
Counterparty
    The Commission proposed several amendments to existing Sec.  
45.5(c) for the creation and transmission of USIs for off-facility 
swaps by non-SD/MSP reporting counterparties. Existing Sec.  45.5(c)(1) 
requires that, for off-facility swaps with non-SD/MSP reporting 
counterparties, the SDR generates and assigns the USI ASATP after 
receiving the first report of PET data, consisting of a single data 
field.\155\
---------------------------------------------------------------------------

    \155\ The single data field must contain: (i) The unique 
alphanumeric code assigned to the SDR by the Commission at the time 
of its registration for the purpose of identifying the SDR with 
respect to USI creation; and (ii) an alphanumeric code generated and 
assigned to that swap by the automated systems of the SDR, which 
must be unique with respect to all such codes generated and assigned 
by that SDR. 17 CFR 45.5(c)(1).
---------------------------------------------------------------------------

    Existing 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 proposed replacing ``non-SD/MSP reporting 
counterparty'' in the title of proposed Sec.  45.5(c) with ``non-SD/
MSP/DCO reporting counterparty that is not a financial entity'' and 
replacing ``reporting counterparty is a non-SD/MSP counterparty'' in 
the first sentence of proposed Sec.  45.5(c) with ``reporting 
counterparty is a non-SD/MSP/DCO counterparty that is not a financial 
entity.'' 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. . . .'' The 
Commission is expanding UTI generation responsibilities to financial 
entities,\156\ and believes this amendment will clarify that Sec.  
45.5(c) will apply only where a reporting counterparty is a non-SD/MSP/
DCO counterparty that is not a financial entity.
---------------------------------------------------------------------------

    \156\ 17 CFR 45.1 (definition of ``financial entity''). The 
Commission discusses this change in section II.E.3 above.
---------------------------------------------------------------------------

    Second, the Commission proposed amending existing 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 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 final 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 generates the UTI, the SDR would follow the creation 
and transmission requirements for SDRs in proposed Sec.  45.5(c)(1) and 
(2). The Commission proposed amendments to the requirements for SDRs in 
proposed Sec.  45.5(c)(1), as discussed below.
    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.\157\ The UTI Technical Guidance also notes 
``[n]ot all factors'' in the flowchart for allocating responsibility 
for UTI generation ``will be relevant for all jurisdictions.'' \158\
---------------------------------------------------------------------------

    \157\ UTI Technical Guidance at 12-14.
    \158\ 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, the Commission explained 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 \159\ or

[[Page 75519]]

electronic confirmation platforms),\160\ and that therefore the 
Commission was unable to adopt the UTI Technical Guidance without 
modification. However, the Commission explained in the Proposal that 
none of the provisions of proposed Sec.  45.5 would 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 proposed Sec.  45.5(c), 
the Commission also believed the proposed alignment of the UTI 
generation and reporting counterparty determination for financial 
entities in final Sec.  45.5(b) and the proposed reporting option for 
reporting counterparties that are neither DCOs nor financial entities 
in proposed Sec.  45.5(c) would result in reduced overall UTI 
generation and transmission burdens for SDRs.
---------------------------------------------------------------------------

    \159\ 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?'').
    \160\ 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 explained in the Proposal 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 the SDR to 
which required swap creation data will be reported generate the UTI 
would 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. Simultaneously, the Commission believed the proposal 
would reduce the number of swaps where an SDR is assigned 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 proposed amendments to conform to the 
Commission's proposed adoption of the UTI.\161\ The Commission also 
proposed deleting 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 should be used 
to identify the UTI generating entity instead of an identifier assigned 
by individual regulators.
---------------------------------------------------------------------------

    \161\ The Commission proposed replacing all references to 
``USIs'' with ``UTIs'' in proposed Sec.  45.5(c)(1) and (2). In 
addition, the Commission proposed updating the phrase in proposed 
Sec.  45.5(c)(1) that required the USI to 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. UTI Technical 
Guidance, Section 3.6. The Commission proposed amending the Sec.  
45.5(c)(1)(i) description of 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. UTI Technical Guidance, Section 
3.5.
---------------------------------------------------------------------------

    The Commission received four comments supporting expansion of the 
ability to generate UTIs. CME supports expanding the ability to 
generate UTIs to non-SD/MSP/DCO reporting counterparties that are not 
financial entities, because the internal reference identifier used in 
bookkeeping systems is different than the transaction identifier used 
in swap data reporting.\162\ DTCC agrees that the reporting 
counterparty should be responsible for generating off-facility swap 
UTIs, because reporting counterparties are in the best position to 
collect information from a non-reporting counterparty necessary to 
generate a UTI, such as LEI.\163\ Chatham believes all non-SD/MSP/DCO 
reporting counterparties should have the option to have the SDR 
continue to generate the UTI for them, because it is efficient and 
requires the fewest changes to the current practice.\164\ BP supports 
SDRs continuing to manage UTI generation.\165\
---------------------------------------------------------------------------

    \162\ CME at 15.
    \163\ DTCC at 5.
    \164\ Chatham at 3.
    \165\ BP at 5.
---------------------------------------------------------------------------

    The Commission received four comments opposing the requirement for 
SDRs to generate UTIs. CME believes the rule changes appear to require 
SDRs to offer separate parts 43 and 45 messages because of the 
different reporting deadlines, and that SDRs would not be able to link 
the parts 43 and 45 messages, necessitating the reporting counterparty 
to include the UTI from the first message in the second message. CME 
believes SDRs should not generate UTIs to avoid this situation. CME 
also notes some reporting counterparties who currently rely on SDRs to 
generate USIs have swaps with multiple USIs because of an issue when 
reporting counterparties submit swaps to the SDR in batches but the 
swaps fail some validations.\166\
---------------------------------------------------------------------------

    \166\ CME at 16-17.
---------------------------------------------------------------------------

    DTCC opposes SDRs generating and transmitting UTIs because it would 
not enable early and automated generation in the transaction's life-
cycle, which may be necessary for counterparties.\167\ ICE SDR suggests 
the Commission instead let non-SD/MSP/DCO reporting counterparties 
choose which counterparty generates the UTI, and highlights that non-
SD/MSP/DCOs may have more flexibility with extended reporting timelines 
by electing to have a third-party service provider or confirmation 
platform generate and assign the UTI. ICE SDR believes allowing a 
confirmation platform to assign UTIs aligns with the UTI Technical 
Guidance.\168\ ICE SDR recommends that the Commission revise proposed 
Sec.  45.5(c) to remove the requirement that the SDR transmit the UTI 
to both counterparties to a swap. ICE SDR contends that, if the 
reporting counterparty chooses to have the SDR generate the UTI, the 
SDR should be responsible only for transmitting the UTI to the 
reporting counterparty requesting UTI generation, because SDRs often 
has no relationship with the non-reporting counterparties who are not 
participants of the SDR.\169\
---------------------------------------------------------------------------

    \167\ DTCC at 5.
    \168\ ICE SDR at 5.
    \169\ ICE SDR at 5.
---------------------------------------------------------------------------

    ISDA-SIFMA believe each jurisdiction must align to a global UTI 
waterfall to the maximum extent possible. ISDA-SIFMA also believe the 
Commission deviates from the UTI Technical Guidance by assigning SDRs 
the obligation to generate UTIs for non-SD/MSP/DCOs superior in the 
hierarchy than the UTI Technical Guidance. As non-SD reporting 
counterparties can conduct trade reporting and must transmit the UTI to 
their counterparties, ISDA-SIFMA question whether there is sufficient 
demand for UTI generation by the SDR to substantiate this deviation 
from the UTI Technical Guidance.\170\
---------------------------------------------------------------------------

    \170\ ISDA-SIFMA at 9.
---------------------------------------------------------------------------

    For reasons articulated in the Proposal and informed by comments 
and analysis as further discussed below, the Commission is adopting the 
proposed changes to the Sec.  45.5(c) regulations for the creation and 
transmission of UTIs for off-facility swaps with a non-SD/MSP/DCO 
reporting counterparty that is not a financial entity as proposed. The 
Commission notes SDRs have been required to generate USIs pursuant to 
existing Sec.  45.5(c) since the adoption of part 45 in 2012 and 
further notes assigning UTI generation responsibility for off-facility 
swaps with a non-SD/MSP/DCO reporting counterparty that is not a 
financial entity to the SDR adheres

[[Page 75520]]

to the generation flowchart in the UTI Technical Guidance.\171\
---------------------------------------------------------------------------

    \171\ UTI Technical Guidance at 12-13 (Step 7: ``Does the 
jurisdiction employ a counterparty-status-based approach . . . for 
determining which entity should have responsibility for generating 
the UTI?'' ``If so, see step 8.'' Step 8: ``Do the counterparties 
have the same regulatory status for UTI generation purposes[ ]?'' 
``If so, see step 11.'' Step 11: ``Do the counterparties have an 
agreement governing which entity should have responsibility for 
generating the UTI for this transaction?'' ``Otherwise, see step 
12.'' Step 12 ``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?'' ``Otherwise, see step 13.'' Step 13: ``Is 
there a single TR to which reports relating to the transaction have 
to be made, and is that TR able, willing and permitted to generate 
UTIs under the applicable rules?'' ``If so, the TR'').
---------------------------------------------------------------------------

    In addition to adhering to the UTI Technical Guidance, the 
Commission also believes the adopted rule appropriately balances the 
burdens between reporting counterparties and SDRs by providing 
optionality to a non-SD/MSP/DCO reporting counterparty that is not a 
financial entity to elect to generate a UTI if it so chooses, and 
lowers costs for both SDRs and non-SD/MSP/DCO reporting counterparties. 
SDR costs would be lowered due to fewer transaction identifiers that 
SDRs would be required to generate under final Sec.  45.5(c) compared 
to existing Sec.  45.5(c). Costs on non-SD/MSP/DCO reporting 
counterparties who choose not to generate UTIs would be lowered due to 
their ability to leverage the existing transaction identifier 
generation infrastructure of SDRs rather than expenditures to develop 
their own UTI generation systems.
    In response to the several comments indicating that the proposed 
amendments to Sec.  45.5(c) do not follow the UTI Technical Guidance, 
the Commission notes Commission staff was heavily involved in the 
preparation of the UTI Technical Guidance generation flowchart, and 
disagrees that assigning UTI generation to SDRs contravenes the UTI 
Technical Guidance for the following reasons. Section 45.5(c) would 
apply only for off-facility trades where both counterparties are of 
equal status (i.e., non-financial entities), and in this scenario, UTI 
Technical Guidance flowchart step 8 directs to step 11, which instructs 
inquiring about whether the counterparties have an agreement as to UTI 
generation. Since no agreement exists, the flowchart leads to step 12, 
which instructs inquiring about whether electronic confirmation 
platforms are able, willing, and permitted to generate UTIs, the step 
ICE SDR suggests the Commission set as the last step in assigning UTI 
generation responsibilities. However, the Commission is unable to 
assign electronic confirmation platforms with UTI generation 
responsibilities, as it has no jurisdiction over such platforms, nor 
does the Commission deem it desirable to require counterparties who do 
not use such platforms to specifically contract with platforms or other 
third parties solely for the purpose of UTI generation. As a result, 
step 12 is not applicable, leading to step 13 where the SDR is the 
entity responsible for generating UTIs. As demonstrated above, the 
Commission believes each step of the UTI Technical Guidance generation 
flowchart leading up to step 13 matches the conditions under which an 
SDR is required to generate UTIs pursuant to Sec.  45.5(c).
    While the optionality to generate UTIs for non-SD/MSP/DCO reporting 
counterparties that are not financial entities is not a step in the UTI 
Technical Guidance generation flowchart, the Commission does not 
believe the optionality conflicts with an SDR's responsibility for 
serving as UTI generator of last resort. Under the optionality, an SDR 
continues to be the entity that has legal responsibility for UTI 
generation for this type of off-facility trade should the non-SD/MSP/
DCO reporting counterparty that is not a financial entity elect not to, 
and at no point would a non-SD/MSP/DCO reporting counterparty that is 
not a financial entity that is unwilling or unable to generate the UTI 
be forced to generate the UTI. Additionally, no commenters oppose 
providing non-SD/MSP/DCO reporting counterparties that are not 
financial entities with the ability to generate UTIs.
    The Commission acknowledges ICE SDR's request to remove the 
requirement to transmit the UTI to the non-reporting counterparty due 
to a potential lack of relationship between an SDR and the non-
reporting counterparty, but declines to adopt the suggestion for two 
reasons. First, the Commission notes the requirement for an SDR 
generator to transmit USIs to both counterparties has been in existing 
Sec.  45.5(c)(2)(i) that SDRs have complied with since part 45 was 
adopted in 2012, and based on experience with compliance by SDRs since 
2012, the Commission has seen no evidence that lack of relationship 
presents a problem in need of being addressed. In addition, the 
Commission is adopting three amendments to Sec.  45.5 that will result 
in SDRs generating fewer UTIs than USIs and mitigate any burden placed 
on SDRs to transmit the UTIs they generate to non-reporting 
counterparties, including: (i) All financial entities, not just SD/
MSPs, being required to generate UTIs pursuant to final Sec.  45.5(b); 
(ii) the optionality provided to non-SD/MSP/DCO reporting 
counterparties that are not financial entities to generate UTIs in 
final Sec.  45.5(c); and (iii) as described in section II.E.8 below, 
the requirement in final Sec.  45.5(g) for entities using third-party 
service providers to ensure that the third-party service providers 
generate UTIs.
    Finally, the Commission declines to adopt the SDRs' suggestion to 
end the UTI generation responsibilities with the reporting counterparty 
as the last step of the hierarchy, since this would result in 
incomplete UTI generation logic. A natural person reporting 
counterparty, who by definition is a non-SD/MSP/DCO reporting 
counterparty that is not a financial entity, will highly likely be 
unable to generate UTIs due to the inability of most natural persons to 
obtain an LEI \172\ that is necessary to generate UTIs. As a result, 
the SDRs' suggestion would not ensure that an entity capable of 
generating UTIs is assigned with the responsibility to generate the UTI 
for every swap.
---------------------------------------------------------------------------

    \172\ CME itself notes the inability of natural person reporting 
counterparties to obtain LEIs in a separate portion of its comment 
letter. See CME at 25 (``For individuals that qualify as an Eligible 
Contract Participant, they will not be able to obtain an LEI and 
hence will be unable to report if [counterparty 1] allowable value 
is an LEI'').
---------------------------------------------------------------------------

    The Commission also acknowledges--but does not find persuasive--
DTCC's comment that reporting counterparties should be the entity 
responsible for generating UTIs because they are in the best position 
to collect information such as LEI from a non-reporting counterparty 
necessary to generate a UTI. The Commission notes no information about 
the non-reporting counterparty is necessary for an entity to generate 
UTIs, as the UTI is composed using the LEI of the UTI generating 
entity, not the LEI of the non-reporting counterparty. Accordingly, 
because proposed Sec.  45.5(c)(1)(i) requires the UTI to be composed of 
the ``legal entity identifier of the swap data repository'' and SDRs do 
not need the LEI of any other entity to generate the UTI, the 
Commission does not believe DTCC's reasoning supports its request for 
the Commission not to assign UTI generation responsibilities to SDRs.
5. Sec.  45.5(d)--Clearing Swaps
    The Commission proposed several amendments to the existing Sec.  
45.5(d) regulations for the creation and transmission of USIs for 
clearing swaps. Existing Sec.  45.5(d) requires that for each clearing 
swap, the DCO that is a

[[Page 75521]]

reporting 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. Existing Sec.  45.5(d)(1) requires that the USI consist 
of a single data field.\173\
---------------------------------------------------------------------------

    \173\ The single data field must contain: (i) The unique 
alphanumeric code assigned to the DCO by the Commission for the 
purpose of identifying the DCO 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. 17 CFR 
45.5(d)(1).
---------------------------------------------------------------------------

    Existing 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 the swap does not replace an original swap.
    First, the Commission proposed to retitle proposed Sec.  45.5(d) as 
``Off-facility swaps with a [DCO] reporting counterparty.'' The 
Commission also proposed rephrasing the introductory text in Sec.  
45.5(d) to reflect this shift in terminology.
    Second, the Commission proposed amendments to conform to the 
Commission's proposed adoption of the UTI.\174\ The Commission also 
proposed deleting 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 should be used 
to identify the UTI generating entity instead of an identifier assigned 
by individual regulators.
---------------------------------------------------------------------------

    \174\ The Commission proposed replacing all references to 
``USIs'' with ``UTIs'' in proposed Sec.  45.5(d)(1) and (2). In 
addition, the Commission proposed updating the phrase in proposed 
Sec.  45.5(d)(1) that requires 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. UTI 
Technical Guidance, Section 3.6. The Commission proposed amending 
Sec.  45.5(d)(1)(i) to describe 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 reporting counterparty so that the identifier used to 
identify the UTI generating entity is consistent with the UTI 
Technical Guidance. UTI Technical Guidance, Sec.  3.5.
---------------------------------------------------------------------------

    The Commission received two comments regarding DCOs in Sec.  
45.5(d). LCH supports the proposal that DCOs generate the UTIs for 
cleared swaps, as it is in line with the UTI Technical Guidance.\175\ 
ISDA-SIFMA suggest that the Commission cover exempt DCOs, SEFs, and 
DCMs in Sec.  45.5, because it is unclear which entities have part 45 
reporting obligations. ISDA-SIFMA recommend that parts 43 and 45 rules 
specify that the entities with individual exemptive orders assigning 
reporting obligations have the same reporting and UTI generation 
responsibilities as their non-exempt equivalents.\176\
---------------------------------------------------------------------------

    \175\ LCH at 3.
    \176\ ISDA-SIFMA at 9.
---------------------------------------------------------------------------

    The Commission received one supportive comment on the proposed 
amendments to the Sec.  45.5(d) regulations for the creation and 
transmission of UTIs for clearing swaps and for reasons articulated in 
the Proposal and reiterated above, is adopting the changes as proposed. 
The Commission notes assigning UTI generation responsibilities for 
clearing swaps to the DCO adheres to the generation flowchart in the 
UTI Technical Guidance.\177\
---------------------------------------------------------------------------

    \177\ UTI Technical Guidance at 12 (Step 1: ``Is a CCP a 
counterparty to this transaction?'' ``If so, the CCP'').
---------------------------------------------------------------------------

    The Commission appreciates the comment from ISDA-SIFMA recommending 
that the Commission issue a clarification that exempt DCOs, SEFs, and 
DCMs have the same reporting and UTI generation responsibilities as 
their non-exempt equivalents. The Commission did not propose including 
exempt DCOs, SEFs, and DCMs in Sec.  45.5 and has not had enough time 
to study the range of effects that any inclusion of these exempt 
entities in Sec.  45.5 would have on other provisions of the Act and 
the Commission's regulations, and as a result, the Commission declines 
to adopt alternative amendments relating to UTI generation for exempt 
entities such as exempt DCOs, SEFs, and DCMs at this time. However, the 
Commission notes despite exempt DCOs, SEFs, and DCMs not being assigned 
with formal UTI generation responsibilities in Sec.  45.5, exempt 
entities wishing to generate UTIs on behalf of their clients could do 
so voluntarily by entering into agreements with their clients to act as 
their third-party service provider pursuant to Sec.  45.5(g).
6. Sec.  45.5(e)--Allocations
    The Commission proposed several amendments to the existing Sec.  
45.5(e) regulations for the creation and transmission of USIs for 
allocations. The Commission proposed replacing references to USIs with 
UTI throughout proposed Sec.  45.5(e) to conform to the Commission's 
proposed adoption of the UTI. The Commission also proposed non-
substantive technical and language edits to update cross-references and 
improve readability.
    The Commission did not receive any comments on the proposed changes 
to existing Sec.  45.5(e) is adopting the changes to Sec.  45.5(e) as 
proposed.
7. Sec.  45.5(f)--Use
    The Commission proposed several amendments to the existing Sec.  
45.5(f) regulations for the use of UTIs by registered entities and swap 
counterparties. Existing 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 their records and all 
of their swap data reporting concerning that swap, from the time they 
create or receive the USI, throughout the existence of the swap, and 
for as long as any records concerning the swap are required to be kept 
by the CEA or Commission regulations, 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.
    Existing Sec.  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 SDR, the Commission, or another 
regulator of such internally generated identifiers in addition to the 
reporting of the USI.
    First, the Commission proposed amendments to conform proposed Sec.  
45.5(f) to the Commission's proposed adoption of the UTI. The 
Commission proposed replacing all references to ``USIs'' with ``UTIs'' 
in proposed Sec.  45.5(f). The Commission also proposed removing the 
reference to state data in part 45, and to make minor technical 
language edits, including removing reference to ownership of the swap, 
which is not needed given the reference to counterparties.
    Second, the Commission proposed removing the existing Sec.  45.5(f) 
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 explained this amendment would 
improve consistency in the swap data reported to SDRs, and further the 
goal of harmonization of SDR data across FSB member jurisdictions.

[[Page 75522]]

    Proposed Sec.  45.5(f) would therefore 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 to 
be kept concerning the swap by the CEA or Commission regulations, 
regardless of any life cycle events concerning the swap, including, 
without limitation, any changes to the counterparties to the swap.
    The Commission received one request for clarification on the 
proposal. ISDA-SIFMA believe, due to the requirement for a UTI to 
persist through ``changes with respect to the counterparty,'' the 
Commission should be clearer that these counterparty changes, when 
related to corporate events such as name change, are not considered 
novations or assignments, as current market practice is to create a new 
USI for a swap created through the novation process.\178\ The 
Commission declines to adopt the suggestion, as the Commission notes, 
in light of the Commission's adoption of the new definition of 
``novation'' in Sec.  45.1(a) described in section II.A above, market 
participants should refer to the newly adopted definition as to what 
constitutes a novation.
---------------------------------------------------------------------------

    \178\ ISDA-SIFMA at 7.
---------------------------------------------------------------------------

    The Commission received no additional comments on proposed Sec.  
45.5(f) and for reasons articulated in the Proposal and reiterated 
above in this section, is adopting Sec.  45.5(f) as proposed.
8. Sec.  45.5(g)--Third-Party Service Provider
    The Commission proposed adding 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--when contracting with third-party service providers to 
facilitate reporting under Sec.  45.9--to ensure that the third-party 
service providers create and transmit UTIs.\179\
---------------------------------------------------------------------------

    \179\ See generally 17 CFR 45.9.
---------------------------------------------------------------------------

    The Commission explained in the Proposal that it had encountered 
inconsistencies in the format and standard of USIs for swaps reported 
using third-party service providers, which is detrimental to the 
Commission's ability to use swap data for its regulatory purposes. The 
Commission believed proposed Sec.  45.5(g) would 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 explained that proposed Sec.  45.5(g) would also 
reinforce that a registered entity or reporting counterparty is 
responsible for the data reported on its behalf by a third-party 
service provider.
    The Commission received one comment supporting the proposal. Markit 
supports Sec.  45.5(g) UTI generation by third-party service providers 
and believes this is an important clarification, but advises the 
Commission to monitor SDRs' implementation of this requirement as some 
SDRs have struggled to capture third-party service provider LEIs as 
part of the transaction record, especially when reporting on behalf of 
SEFs.\180\
---------------------------------------------------------------------------

    \180\ Markit at 3.
---------------------------------------------------------------------------

    The Commission received no additional comments on proposed Sec.  
45.5(g) and for reasons articulated in the Proposal and reiterated 
above in this section, is adopting Sec.  45.5(g) as proposed.
9. Sec.  45.5(h)--Cross-Jurisdictional Swaps
    The Commission proposed adding new Sec.  45.5(h) to its 
regulations, titled ``Cross-jurisdictional swaps.'' Proposed Sec.  
45.5(h) would clarify that, notwithstanding Sec. 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 is to 
be transmitted pursuant to Sec. Sec.  45.5(a) through (g) and used in 
all recordkeeping and all swap data reporting pursuant to part 45.
    The Commission explained in the Proposal 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 to avoid double- or triple-counting of the 
swap. While the existing requirement in part 45 (for swap creation data 
to be reported ASATP after execution) results in the Commission having 
the earliest reporting deadline, changes to the reporting deadline in 
proposed amendments to Sec.  45.3 may result in the reporting of a 
cross-jurisdictional swap to another jurisdiction earlier than to the 
Commission. Further, given the critical importance of a unique UTI used 
to identify each swap, the Commission proposed 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 explained in the Proposal that the new proposed 
provision would: (i) Ensure consistency with the UTI Technical 
Guidance; \181\ (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.
---------------------------------------------------------------------------

    \181\ UTI Technical Guidance at 13 (Step 10: ``UTI generation 
rules of the jurisdiction with the sooner reporting deadline should 
be followed'').
---------------------------------------------------------------------------

    The Commission received three comments on cross-jurisdictional 
swaps. Specifically, ISDA-SIFMA highlight several implementation 
issues.\182\ ISDA-SIFMA believe counterparties may not come to the same 
conclusions regarding each other's jurisdictions, which could cause 
differing conclusions about who generates the UTI. In this regard, 
ISDA-SIFMA believe each counterparty's jurisdictional hierarchy would 
need to readjust each time new reporting jurisdictions go live. 
Separately, ISDA-SIFMA state that the UTI generating party should be 
determined separately from any nexus obligations, because nexus 
reporting (i.e., reporting requirements depending on the location of 
personnel) is treated differently according to jurisdiction, and it 
would be challenging for counterparties to communicate nexus 
obligations on a swap-by-swap basis.\183\ Lastly, ISDA-SIFMA note it is 
important for each reporting jurisdiction to follow a global UTI 
waterfall.\184\
---------------------------------------------------------------------------

    \182\ ISDA-SIFMA at 10-11.
    \183\ Id.
    \184\ Id.
---------------------------------------------------------------------------

    JBA believes it would be difficult for a counterparty in a 
jurisdiction to generate a UTI if other jurisdictions with a regulatory 
reporting deadline earlier than the Commission's do not mandate the UTI 
or use an identifier different from the UTI required under Commission 
or global rules.\185\ In addition, BP supports imparting responsibility 
on SDRs to coordinate identification of the jurisdiction with the 
earliest regulatory reporting deadline and conform to that 
jurisdiction's UTI requirements.\186\
---------------------------------------------------------------------------

    \185\ JBA at 2-3.
    \186\ BP at 5.
---------------------------------------------------------------------------

    The Commission is adopting the proposed provisions relating to 
cross-jurisdictional swaps in Sec.  45.5(h) as proposed, with one 
clarification relating

[[Page 75523]]

to the CFTC reporting deadlines to be considered for cross-
jurisdictional swaps, as discussed below. In the technical 
specification, UTIs are required to be reported (but are not publicly 
disseminated) pursuant to parts 43 and 45 to allow the Commission to 
link and reconcile the two reports for each swap, requiring the 
deadline to be measured in terms of both parts 43 and 45. Therefore, 
the Commission is adopting, in Sec.  45.5(h), the requirement that, 
notwithstanding Sec. 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 or 
in part 43, the same UTI generated according to the rules of the 
jurisdiction with the earliest regulatory reporting deadline is to be 
transmitted pursuant to Sec. Sec.  45.5(a) through (g) and used in all 
recordkeeping and all swap data reporting pursuant to part 45, a 
modification from the proposal's consideration of only the deadline 
outlined in Sec.  45.3.
    The Commission declines to adopt ISDA-SIFMA's suggestion regarding 
nexus obligations, as the Commission has no requirements for nexus 
reporting and how the jurisdictions requiring nexus reporting mandate 
UTI generation is outside of the Commission's jurisdiction. As 
discussed above, the Commission expects the vast majority of cross-
jurisdictional swaps reportable to both the CFTC and one or more 
additional jurisdictions will result in the CFTC having the earliest 
regulatory reporting deadline due to the CFTC being one of the few 
jurisdictions with real-time reporting requirement and UTIs being 
required to be generated ASATP for part 43 reporting. However, the 
Commission recognizes the potential concern that market participants 
may have in complying with similar rules that other jurisdictions may 
adopt to ensure consistency with the UTI Technical Guidance, and 
recommends that market participants and the LEI ROC work 
collaboratively on additional guidance relating to cross-jurisdictional 
swaps. The Commission also recognizes that the UTI Technical Guidance 
did not address which jurisdiction's UTI generation rules to follow if 
two jurisdictions hypothetically have the same reporting deadline, and 
similarly recommends that market participants and the LEI ROC work 
collaboratively on guidance to address this scenario.
    The Commission appreciates JBA's comment regarding the potential 
difficulties if other jurisdictions with a regulatory reporting 
deadline earlier than the Commission's do not mandate the UTI, but the 
Commission does not believe this hypothetical is likely to occur. As 
discussed above, the Commission's ASATP reporting deadline under part 
43 will result in the UTIs for most, if not all, swaps reportable to 
the Commission and another jurisdiction being generated according to 
Sec.  45.5. Furthermore, the Commission also acknowledges JBA's concern 
that other jurisdictions may require an identifier different from the 
UTI, but the Commission notes authorities in the major swap markets 
have all indicated through the FSB and CPMI-IOSCO harmonization 
initiatives of their intention to adopt the UTI and the other 
harmonized identifiers, and the Commission does not believe inaction by 
a holdout authority should hinder the Commission's fulfillment of its 
commitments on UTI.
    The Commission also acknowledges BP's desire for SDRs to coordinate 
identification of the jurisdiction with the earliest regulatory 
reporting deadline and conform to that jurisdiction's UTI requirements, 
but the Commission declines to adopt the suggestion. SDRs lack 
information to determine on their own the jurisdiction(s) that a SEF, 
DCM, DCO, or counterparty for each swap is subject to, and therefore 
the Commission believes requiring entities without such information 
such as SDRs to serve as the entity responsible for determining the 
earliest regulatory reporting deadline would not serve the Commission's 
interest in seeing that each swap is identified in all regulatory 
reporting worldwide with a single UTI.

F. Sec.  45.6--Legal Entity Identifiers \187\
---------------------------------------------------------------------------

    \187\ The Commission is re-numbering the requirements of 
existing Sec.  45.6 to correct extensive numbering errors.
---------------------------------------------------------------------------

    Existing Sec.  45.6 requires counterparties to be identified in all 
recordkeeping and swap data reporting under part 45 by an LEI. As 
discussed in the sections below, the Commission is revising the Sec.  
45.6 LEI regulations in two ways: (i) Cleanup changes removing 
unnecessary outdated regulatory text concerning LEIs and (ii) changes 
to the LEI regulations for SEFs, DCMs, DCOs, SDRs, and reporting and 
non-reporting counterparties.
1. Introductory Text
    The Commission proposed amending the introductory text of the Sec.  
45.6 regulations for LEIs. The existing 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 under part 45 through a single LEI as specified in Sec.  
45.6.
    First, to improve the section's precision, the Commission proposed 
replacing ``each counterparty'' with each SEF, DCM, DCO, SDR, entity 
reporting pursuant to Sec.  45.9, and counterparty to any swap. Second, 
the Commission proposed revising the introductory text to require each 
relevant entity (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 received two comments on proposed Sec.  45.6. ISDA-
SIFMA, while recognizing that SEF trades are not specifically addressed 
in Sec.  45.6, suggest clarifying that SEFs must require any entity 
allowed to execute a trade on a SEF under part 45 to obtain an LEI 
prior to reporting by the SEF.\188\ The Commission appreciates ISDA-
SIFMA's comment; however, the Commission did not propose substantive 
amendments to regulations relating to SEF trading and has not had 
enough time to study the range of effects that ISDA-SIFMA's proposal 
would have on SEF trading or market liquidity. Accordingly, it would be 
inappropriate to finalize such an amendment at this time.
---------------------------------------------------------------------------

    \188\ ISDA-SIFMA at 13.
---------------------------------------------------------------------------

    XBRL agrees with the proposed requirement that counterparties must 
be identified, not only with their own LEI, but that they must obtain 
an LEI if they do not have one.\189\ The Commission agrees with XBRL. 
The Commission is aware of uncertainty as to whether the requirement to 
identify each counterparty with an LEI in existing Sec.  45.6 also 
included a requirement for the counterparty to obtain an LEI, and the 
Commission believes clarifying in Sec.  45.6 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 would clarify that identification using LEI necessarily requires 
the identified person or entity, if eligible to receive an LEI, to 
obtain an LEI.
---------------------------------------------------------------------------

    \189\ XBRL at 2.
---------------------------------------------------------------------------

    The Commission believes 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 under 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,

[[Page 75524]]

and encourage global swap data aggregation.
    For reasons discussed above, the Commission is adopting the 
proposed changes to the introductory text of the Sec.  45.6 regulations 
for LEIs as proposed, with one clarification relating to the 
maintenance of LEI reference data. As discussed in section II.F.8 
below, the Commission is adding ``maintain'' to the introductory text 
of final Sec.  45.6 to clarify that each SEF, DCM, DCO, SDR, entity 
reporting under Sec.  45.9, and counterparty to any swap that is 
eligible to receive an LEI is required to ``maintain,'' as well as 
obtain and be identified in, all recordkeeping and swap data reporting 
by a single LEI.
2. Sec.  45.6(a)--Definitions
a. Proposal
    The Commission proposed several changes to the definitions for the 
LEI regulations in Sec.  45.6(a). As background, existing 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 proposed moving certain definitions pertaining to 
LEIs to Sec.  45.1(a). The Commission explained in the Proposal these 
definitions should be in Sec.  45.1(a) because they are used in 
regulations outside of Sec.  45.6. These definitions were: ``Global 
Legal Entity Identifier System,'' \190\ ``legal entity identifier'' or 
``LEI,'' and ``Legal Entity Identifier Regulatory Oversight 
Committee.'' These definitions are discussed in section II.A.1 above.
---------------------------------------------------------------------------

    \190\ ``Global Legal Entity Identifier System'' and ``local 
operating unit'' would be updated versions of the existing 
definition of ``legal identifier system.''
---------------------------------------------------------------------------

    The Commission proposed removing certain definitions pertaining to 
LEIs from Sec.  45.6(a). The Commission explained that 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 were: ``control,'' ``level one 
reference data,'' ``level two reference data,'' ``parent,'' and 
``ultimate parent.''
    The Commission proposed amending certain definitions pertaining to 
LEIs in Sec.  45.6(a). Specifically, the Commission proposed amending 
the definition of ``self-registration'' in several respects. First, the 
Commission proposed removing the specific reference to ``level one or 
level two'' reference data, and the accompanying specifier ``as 
applicable.'' The amendment reflected the Commission's proposal to 
remove the definitions of ``level one reference data'' and ``level two 
reference data.'' \191\
---------------------------------------------------------------------------

    \191\ Instead, as discussed below, the Commission proposed 
adding a definition of ``reference data.'' The proposed amendment to 
``self-registration'' would be consistent with the new definition.
---------------------------------------------------------------------------

    Second, the Commission proposed adding 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.
    Separately, the Commission proposed amending the definition of 
``third-party registration.'' In this regard, the Commission proposed 
removing the specific references to ``level one or level two'' 
reference data, and the accompanying specifier ``as applicable.'' This 
amendment reflected the Commission's proposal to remove the definitions 
of ``level one reference data'' and ``level two reference data.'' \192\
---------------------------------------------------------------------------

    \192\ Instead, as discussed below, the Commission proposed 
adding a definition of ``reference data.'' The proposed amendment to 
``self-registration'' would be consistent with the new definition.
---------------------------------------------------------------------------

    Further, the Commission proposed adding 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 proposed adding two definitions pertaining 
to LEIs to Sec.  45.6(a). First, the Commission proposed adding 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 proposed adding a definition of 
``reference data.'' As proposed, ``reference data'' would mean all 
identification and relationship information, as outlined 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.
b. Comments on the Proposal
    As also noted in section II.A.1 above, GLIEF suggests moving 
proposed definitions to Sec.  45.1(a) from Sec.  45.6(a) for ``local 
operating unit'' and ``legal entity reference data.'' \193\
---------------------------------------------------------------------------

    \193\ Id. The Commission notes the term proposed is ``reference 
data,'' not ``legal entity reference data.'' See 85 FR at 21632.
---------------------------------------------------------------------------

i. Definition: ``Reference data''
    The Commission received one comment on the proposed definition of 
``reference data.'' GLEIF suggests an alternative definition: ``data as 
defined by the currently valid common data file formats in the Global 
[Legal Entity Identifier] System describing business card and 
relationship information related to corresponding [Legal Entity 
Identifier] Regulatory Oversight Committee policies.'' GLEIF, however, 
does not explain why it believes its suggested alternative is 
preferable to the Commission's proposal.\194\
---------------------------------------------------------------------------

    \194\ GLEIF at 2.
---------------------------------------------------------------------------

ii. Definition: ``Self-registration''
    The Commission received one comment on the definition of ``self-
registration.'' GLEIF supports the proposed definition revisions in 
Sec.  45.6(a), including removal of references to ``level one'' and 
``level two.'' \195\
---------------------------------------------------------------------------

    \195\ Id.
---------------------------------------------------------------------------

c. Final Rule
    The Commission did not receive any comments on the proposed 
definitions for ``local operating unit'' and ``third-party 
registration'' and for reasons articulated in the Proposal and 
reiterated in section II.F.2.a above, is adopting those two definitions 
as proposed. The only comment submitted on the proposed definition of 
``self-registration'' supports the proposal and for reasons articulated 
in the Proposal and reiterated in section II.F.2.a above, the 
Commission is adopting the definition as proposed.
    GLEIF does not explain why its suggested alternative for 
``reference data'' is preferred to the Commission's proposal. Based on 
the analysis of the proposed text, the Commission believes the GLEIF 
definition's references to ``data as defined by the currently valid 
common data file formats'' and ``related to corresponding [LEI ROC] 
policies'' are unnecessarily detailed, and may not account for 
potential future changes to the Global Legal Entity Identifier System. 
The Commission believes

[[Page 75525]]

references in its proposed definition to ``all identification and 
relationship information'' and ``the standards of the Global Legal 
Entity Identifier System'' are more general and better-suited to 
account for potential future changes in the Global Legal Entity 
Identifier System (e.g., a hypothetical future shift away from common 
data files in setting reference data standards) and is adopting the 
definition as proposed, rather than the more-specific GLEIF suggestion.
    As the four definitions proposed in Sec.  45.6(a) are only used in 
Sec.  45.6, the Commission declines to adopt GLEIF's suggestion to move 
the proposed definitions to Sec.  45.1(a).
3. Sec.  45.6(b)--International Standard for the Legal Entity 
Identifier
    The Commission proposed several changes to Sec.  45.6(b) 
regulations for the international standards for LEIs. The amendments 
would reflect changes that have taken place since the Commission 
adopted the existing LEI regulations in Sec.  45.6 in 2012. Existing 
Sec.  45.6(b) 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 proposed removing the phrase ``following designation 
of the [LEI] system as provided in [Sec.  45.6(c)(2)].'' The Commission 
explained in the Proposal that governance of the Global Legal Entity 
Identifier System was designed by the FSB with the contribution of 
private sector participants and was fully in place.\196\ The Commission 
further explained that LEI ROC establishes policy standards, such as 
the definition of the eligibility to obtain an LEI and conditions for 
obtaining an LEI; the 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 of 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.\197\
---------------------------------------------------------------------------

    \196\ 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. 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.
    \197\ Id.
---------------------------------------------------------------------------

    The Commission did not receive any comments on the proposed changes 
to Sec.  45.6(b) and for reasons articulated in the Proposal and 
reiterated above, is adopting the changes to Sec.  45.6(b) as proposed.
4. Sec.  45.6(b)--Technical Principles for the Legal Entity Identifier
    The Commission proposed removing this redundantly-numbered Sec.  
45.6(b) for the technical principles for the LEI.\198\ Regulations for 
LEI reference data are currently located in Sec.  45.6(e), which the 
Commission proposed moving to Sec.  45.6(c). The Commission discusses 
revisions to the existing Sec.  45.6(e) reference data regulations in 
section II.F.7 below.
---------------------------------------------------------------------------

    \198\ 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.
---------------------------------------------------------------------------

    Existing Sec.  45.6(b) enumerates the six technical principles for 
the legal entity identifier to be used in all recordkeeping and all 
swap data reporting: (i) Uniqueness; (ii) neutrality; (iii) 
reliability; (iv) open source; (v) extensibility; and (vi) persistence.
    The Commission proposed removing the technical principles from 
Sec.  45.6(b). The Commission explained in the Proposal that it adopted 
Sec.  45.6(b) before global technical principles for the LEI were 
developed. The Commission further explained that it 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 
believed removing the technical principles from Sec.  45.6(b) for the 
LEI to be used in all recordkeeping and all swap data reporting was 
warranted because the global technical principles that have been 
developed and adopted by the Global Legal Entity Identifier System 
already conform to the technical principles in Sec.  45.6(b).
    The Commission did not receive any comments on the changes to Sec.  
45.6(b) and for reasons articulated in the Proposal and reiterated 
above, is adopting the changes to Sec.  45.6(b) as proposed.
5. Sec.  45.6(c)--Governance Principles for the Legal Entity Identifier
    The Commission proposed removing the existing Sec.  45.6(c) 
regulations for the governance principles for the LEI.\199\ Regulations 
for the use of the LEI are currently located in Sec.  45.6(f), which 
the Commission proposed moving to Sec.  45.6(d), which would be 
correctly renumbered as Sec.  45.6(d). The Commission discusses the 
revisions to existing Sec.  45.6(f) section II.F.8 below.
---------------------------------------------------------------------------

    \199\ Existing Sec.  45.6(c) was also numbered in error because 
of the duplicate Sec.  45.6(b) sections.
---------------------------------------------------------------------------

    Existing Sec.  45.6(c) enumerates the five governance principles 
for the LEI to be used in all recordkeeping and all swap data 
reporting: International governance; reference data access; non-profit 
operation and funding; unbundling and non-restricted use; and 
commercial advantage prohibition.
    The Commission proposed removing the governance principles from 
Sec.  45.6(c). The Commission explained in the Proposal that it adopted 
Sec.  45.6(c) before global governance principles for the LEI were 
developed. The Commission further explained that it 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 
believed deleting existing 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 was warranted because the 
global governance principles that have been developed and adopted by 
the Global Legal Entity Identifier System already conform to the 
governance principles in Sec.  45.6(c).
    The Commission did not receive any comments on the proposed changes 
to Sec.  45.6(c) and for reasons articulated in the Proposal and 
reiterated above, is adopting the changes to Sec.  45.6(c) as proposed.
6. Sec.  45.6(e)--Designation of the Legal Entity Identifier System
    The Commission proposed removing the Sec.  45.6(e) regulations for 
the designation of the legal entity identifier system. Existing 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 LEIs to be used in all recordkeeping and all swap data 
reporting.
    The Commission explained in the Proposal that it adopted Sec.  
45.6(e) before a global legal entity identifier system was developed. 
The Commission further explained that it 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 believed deleting existing

[[Page 75526]]

Sec.  45.6(e) to remove the procedures for designating a legal entity 
identifier system was warranted because such determination and 
designation procedures were no longer needed due to the establishment 
of the Global Legal Entity Identifier System and the standards adopted 
by the Global Legal Entity Identifier System under which a local 
operating unit is authorized to issue LEIs.
    The Commission did not receive any comments on the proposed changes 
to Sec.  45.6(e) and for reasons articulated in the Proposal and 
reiterated above, is adopting the changes to Sec.  45.6(e) as proposed.
7. Sec.  45.6(e)--Reference Data Reporting (Re-Designated as Sec.  
45.6(c))
    The Commission proposed changes to the Sec.  45.6(e) regulations 
for LEI reference data reporting.\200\ First, the Commission proposed 
moving the requirements for reporting LEI reference data in Sec.  
45.6(e) to correctly renumbered Sec.  45.5(c).
---------------------------------------------------------------------------

    \200\ This Sec.  45.6(e) was numbered in error, as there is 
already a Sec.  45.6(e) directly preceding it.
---------------------------------------------------------------------------

    Second, the Commission proposed changing the requirements for 
reporting LEI reference data in existing Sec.  45.6(e) to be moved to 
Sec.  45.6(c). Existing 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. Existing 
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 proposed removing 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 under 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 existing 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 explained in the Proposal that it adopted Sec.  
45.6(e) before a global legal entity identifier system was developed. 
The Commission further explained that it 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 to obtain an LEI. The Commission believed amending existing 
Sec.  45.6(e) to remove the distinction between level one and level two 
reference data, and proposed 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 was 
warranted because the establishment of Global Legal Entity Identifier 
System removes the role of individual authorities in determining the 
standards governing LEI reference data.
    The Commission explained in the Proposal that while existing 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.
    The Commission did not receive any comments on the proposed changes 
to Sec.  45.6(e) and for reasons articulated in the Proposal and 
reiterated above in this section, is adopting the changes to Sec.  
45.6(e) as proposed.
8. Sec.  45.6(f)--Use of the Legal Entity Identifier System by 
Registered Entities and Swap Counterparties (Re-designated as Sec.  
45.6(d))
    The Commission proposed changing the Sec.  45.6(f) regulations for 
the use of LEIs by registered entities and swap counterparties. 
Existing 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. Existing 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.\201\
---------------------------------------------------------------------------

    \201\ 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, and the Commission will limit the detail of their 
discussion in this release.
---------------------------------------------------------------------------

    Existing 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. Existing 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).\202\
---------------------------------------------------------------------------

    \202\ The regulation specified that this paragraph would have no 
effect on or after October 15, 2012. 17 CFR 45.6(f)(4).
---------------------------------------------------------------------------

    The Commission proposed retitling 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 proposed moving the requirements for the use of LEIs from 
existing Sec.  45.6(f) to correctly renumbered Sec.  45.6(d),\203\ as a 
result, the Commission's proposed amendments to the requirements for 
the use of LEIs in existing Sec.  45.6(f) discussed below will be 
captured in new Sec.  45.6(d).
---------------------------------------------------------------------------

    \203\ As previously noted, existing Sec.  45.6(c) was numbered 
in error because of the duplicate Sec.  45.6(b) sections.
---------------------------------------------------------------------------

    The Commission proposed removing the sections of existing 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 proposed removing existing 
Sec.  45.6(f)(2) and (4). As a result, the substantive requirements of 
existing Sec.  45.6(f)(2) and (4) were not proposed to be moved to 
Sec.  45.6(d).
    The Commission explained in the Proposal that while the provisions 
of existing 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

[[Page 75527]]

previously reported pursuant to part 45 using substitute counterparty 
identifiers assigned by an SDR before Commission designation of a legal 
entity identifier system, would be moved to final Sec.  45.6(d)(4). The 
Commission considered this change to be non-substantive.
    The Commission proposed the following substantive changes to the 
regulations requiring the use of LEIs. First, the Commission proposed 
revisions to the existing Sec.  45.6(f)(1) regulations for the use of 
LEIs. The revised regulations would be moved to final Sec.  45.6(d)(1), 
as discussed below.
    The Commission proposed deleting the introductory clause ``[w]hen a 
legal entity identifier system has been designated by the Commission 
pursuant to paragraph (e) of this section'' in existing Sec.  
45.6(f)(1) because it was no longer relevant due to the establishment 
of the Global Legal Entity Identifier System and the LEI ROC in 2013. 
In addition, while existing Sec.  45.6(f)(1) requires ``each registered 
entity and swap counterparty'' to use LEIs in all recordkeeping and 
swap data reporting pursuant to part 45, the Commission proposed 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'' 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 proposed 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 proposed 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 
all recordkeeping and all swap data reporting pursuant to part 45 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 believed this sentence would provide 
clarity as to how LEI-ineligible counterparties should be identified.
    Second, the Commission proposed 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 (as opposed to the requirement for other entities to only 
maintain its LEI). Existing 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 final Sec.  
45.6(c).
    The Commission explained in the Proposal that 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. Existing Sec.  45.6 does not 
require annual LEI renewal because part 45 was drafted and implemented 
before the establishment of the Global Legal Entity Identifier System. 
The Commission further explained that since the implementation of 
existing 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 explained in the Proposal that it was aware that 
some LEI holders have not updated reference data as required by 
existing Sec.  45.6(e), and imposing an annual renewal requirement may 
increase the accuracy of their reference data. The Commission also 
recognized that other LEI holders comply 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 further 
explained that it 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 explained in the Proposal that it 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. Accordingly, in light of the introduction of LEI 
level two reference data, the Commission believed 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 
Sec.  45.6(d)(2) struck the appropriate balance between the 
Commission's interest in accurate LEI reference data and cost to LEI 
holders.
    Third, the Commission proposed 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, before 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 explained in the Proposal that it was aware that 
some counterparties have not obtained an LEI. While proposed amendments 
to Sec.  45.6 clarify the requirement 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 explained that 
it anticipates a small percentage of counterparties nonetheless will 
not have obtained an LEI before executing a swap. The Commission 
further explained that 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 believed 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 would further the objective of identifying each 
counterparty to a swap with an LEI.
    Proposed Sec.  45.6(d)(3) did 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, proposed Sec.  45.6(d)(3) required the DCO or 
financial entity reporting counterparty to obtain an LEI for the non-
reporting counterparty. The Commission explained in the Proposal 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 was appropriate because: (i) 
Each DCO and financial entity reporting counterparty already had 
obtained, via its ``know your customer'' and anti-money laundering 
compliance processes, all identification and relationship reference 
data of the non-reporting counterparty

[[Page 75528]]

required by a local operating unit to issue an LEI for the non-
reporting counterparty; (ii) multiple local operating units offered 
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 anticipated that third-party registration in these instances 
would be infrequent, as the Commission expected most non-reporting 
counterparties to be mindful of their direct obligation to obtain their 
own LEIs pursuant to Sec.  45.6.\204\
---------------------------------------------------------------------------

    \204\ 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.
---------------------------------------------------------------------------

    The Commission received two comments on the proposed provision 
relating to use of the LEI in proposed Sec.  45.6(f)(1) and moved to 
Sec.  45.6(d)(1). CME suggests that the Commission revise the proposal 
to require a DCO to record the LEIs of all of its swap counterparties 
in its books and records, instead of ``in all recordkeeping'' and swap 
data reporting, to avoid DCOs identifying a swap counterparty by its 
LEI every time the name of that counterparty is in its records.\205\
---------------------------------------------------------------------------

    \205\ CME at 17-18.
---------------------------------------------------------------------------

    GLEIF suggests that, in the interest of clarity, the Commission 
reformulate Sec.  45.6(d)(1) to state that alternative identifiers 
pursuant to Sec.  45.13(a) can only be used for natural persons who are 
not eligible for an LEI, though no explanation was provided as to why 
it believes the alternative formulation is clearer than the 
Commission's proposal.\206\
---------------------------------------------------------------------------

    \206\ GLEIF at 3.
---------------------------------------------------------------------------

    The Commission received six comments, all supporting the LEI 
maintenance and renewal requirements for SDs, MSPs, SEFs, DCMs, DCOs, 
and SDRs under proposed Sec.  45.6(d)(2),\207\ with two of those 
commenters supporting additional expansion of the LEI renewal 
requirement and one commenter opposing additional expansion of the LEI 
renewal requirement. In particular, GFXD believes reporting 
counterparties should be required only to renew their LEI and that 
reporting counterparties should not be responsible for ensuring 
counterparties renew their LEI.\208\ LCH is concerned about the 
treatment of swap data that contains lapsed LEIs, specifically if that 
data is rejected by an SDR and recommends language be included to 
clarify that SDRs would not reject data in an LEI lapse.\209\ GLEIF 
believes the Commission should expand the requirement to include all 
swap counterparties.\210\
---------------------------------------------------------------------------

    \207\ DTCC at 6; Eurex at 4; LCH at 3; GFXD at 23-24; GLEIF at 
1-2; Chatham at 3.
    \208\ GFXD at 23-24.
    \209\ LCH at 3.
    \210\ GLEIF at 1-2. GLEIF mentions that costs related to LEIs 
continue to decline and today average $60 versus $150 five years 
ago, and its ``validation agent'' framework pilot program provides a 
new operating model where financial institutions, and not 
registrants, have the responsibility of obtaining and maintaining an 
LEI, but that the program could take 1-2 years to complete.
---------------------------------------------------------------------------

    Chatham opposes expanding the requirement to renew LEIs annually 
beyond SDs, MSPs, SEFs, DCMs, DCOs, and SDRs.\211\ Chatham notes many 
LEI applicants may not have problems with the insignificant cost of 
application, but often experience significant difficulty with the 
documentation requirements for some renewals.\212\ Chatham also 
requests clarification on whether Sec.  45.6(d) requires counterparties 
to obtain an LEI to report for trades that have already been reported 
using a substitute identifier.\213\
---------------------------------------------------------------------------

    \211\ Chatham at 3.
    \212\ Id.
    \213\ Id.
---------------------------------------------------------------------------

    The Commission received four comments supporting obtaining an LEI 
for a counterparty that does not have one under proposed Sec.  
45.6(d)(3).\214\ GLEIF notes performing an LEI registration on behalf 
of a third-party is considered to satisfy the requirements of self-
registration only if the registrant has provided explicit permission 
for such a registration to be performed.\215\ In particular, Chatham 
believes requiring each DCO and financial entity reporting counterparty 
to obtain an LEI on behalf of the counterparty through third-party 
registration is the most logical method to implement requiring an LEI 
instead of a temporary identifier.\216\
---------------------------------------------------------------------------

    \214\ GLEIF at 2; Data Coalition at 2; Chatham at 3; Eurex at 4.
    \215\ GLEIF at 2.
    \216\ Chatham at 3.
---------------------------------------------------------------------------

    The Commission received four comments opposing obtaining an LEI for 
a counterparty that does not have one, under proposed Sec.  45.6(d)(3). 
GFXD believes the proposal disincentivizes smaller counterparties from 
obtaining their own LEI and places an administrative and financial 
burden on reporting counterparties.\217\ GFXD believes the requirement 
would ``likely'' cause unintended operational issues, such as reporting 
counterparties simultaneously creating an LEI for a counterparty.\218\ 
GFXD recommends following the EU approach, where all counterparties 
must obtain and maintain their own LEI (``no LEI, no trade''), with a 
sufficient implementation period and significant education effort for 
smaller counterparties.\219\
---------------------------------------------------------------------------

    \217\ GFXD at 23-24.
    \218\ Id.
    \219\ Id.
---------------------------------------------------------------------------

    JBA believes obtaining an LEI on behalf of the counterparty is 
impractical and costly.\220\ JBA requests changing this requirement and 
suggests that DCO and financial entities ``recommend'' the counterparty 
to obtain an LEI, or take other similar actions.\221\
---------------------------------------------------------------------------

    \220\ JBA at 5-6.
    \221\ Id.
---------------------------------------------------------------------------

    ISDA-SIFMA have concerns about a reporting counterparty's ability 
to comply with such a requirement because a DCO or financial entity 
reporting counterparty cannot obtain an LEI on behalf of a non-
reporting counterparty without the non-reporting counterparty's 
permission, and ISDA-SIFMA anticipate that some counterparties would be 
resistant to obtaining an LEI.\222\ ISDA-SIFMA request clarification 
that a DCO or financial entity reporting counterparty may act as an 
agent for third-party registration to obtain LEIs on a counterparty's 
behalf only if it chooses to do so, instead of being mandated to do 
so.\223\ ISDA-SIFMA suggest adding a clarification that the LEI 
registrant (i.e., the non-reporting counterparty), has the regulatory 
obligation to obtain and maintain its own LEI, and that the maintenance 
obligation be placed on the entity to whom the LEI is issued, instead 
of a third-party.\224\ ISDA-SIFMA consider a non-reporting counterparty 
to include an investment manager executing a transaction for, and on 
behalf of, a swap counterparty (e.g., funds), and wants the Commission 
to clarify that an investment manager executing a transaction on behalf 
of a counterparty is required to obtain and maintain its own LEI and 
that an investment manager is required to obtain its own LEI 
sufficiently in advance of executing pre-allocation swaps, so that the 
reporting counterparty can report the investment manager LEI within the 
reporting counterparty's part 45 timing obligations.\225\
---------------------------------------------------------------------------

    \222\ ISDA-SIFMA at 14-15.
    \223\ Id.
    \224\ Id.
    \225\ Id.
---------------------------------------------------------------------------

    ICE DCOs believe it is inappropriate for DCOs to backstop the 
compliance functions of other participants, especially since this may 
include clients of clearing members with which a DCO has no 
relationship, requests the

[[Page 75529]]

Commission to either remove the LEI backstop entirely or exempt DCOs 
from the backstop.\226\
---------------------------------------------------------------------------

    \226\ ICE DCOs at 4-5.
---------------------------------------------------------------------------

    For reasons articulated in the Proposal and informed by comments 
and analysis as further discussed below, the Commission is adopting the 
changes to Sec.  45.6(f), re-designated as Sec.  45.6(d), largely as 
proposed, with certain modifications in response to commenters and 
other considerations.
    The Commission did not receive any comments on the proposals to 
retitle Sec.  45.6(f) ``Use of the legal entity identifier'' or to 
remove Sec.  45.6(f)(2) and (4) and for reasons articulated in the 
Proposal and reiterated above, is adopting the changes as proposed. The 
Commission also did not receive any comments on the proposals to move 
the requirements for the use of LEIs from Sec.  45.6(f) to renumbered 
Sec.  45.6(d) or to move the substantive requirements in Sec.  
45.6(f)(3) relating to substitute counterparty identifiers to Sec.  
45.6(d)(4) and for reasons articulated in the Proposal and reiterated 
above, is adopting the changes as proposed.
    The Commission is adopting the changes to the Sec.  45.6(f)(1) 
regulations for the use of LEIs as proposed and the move to Sec.  
45.6(d)(1) as proposed. The Commission believes a change to the ``all 
recordkeeping and all swap data reporting'' language in Sec.  
45.6(f)(1) would only lead to confusion due to the term being used 
extensively elsewhere in Sec.  45.6 and other sections of part 45, and 
therefore declines to adopt CME's suggestion. The Commission notes the 
requirement to identify entities using an LEI in ``all recordkeeping 
and swap data reporting'' has existed in Sec.  45.6(f)(1) that all 
entities have complied with since part 45 was adopted in 2012, and the 
Commission has seen no evidence that any entity has encountered 
difficulty complying with this provision. The Commission notes nothing 
prevents an entity from supplementing the LEI with a human-readable 
alternative in its records.
    The Commission also declines to adopt GLEIF's suggestion to 
rephrase the second sentence of Sec.  45.6(f)(1) to state that 
alternative identifiers may only be used for natural persons who are 
not eligible for an LEI, as the Commission lacks sufficient knowledge 
of all entity structures and legal systems worldwide to know for 
certain that every non-natural person is eligible for an LEI.\227\ Even 
though the legal entities that have faced questions regarding their 
eligibility for LEIs are admittedly very small in number, GLEIF's 
suggested rephrasing of Sec.  45.6(f)(1) would result in those few 
legal entities currently ineligible for LEIs to also not be allowed to 
be identified using alternative identifiers, and the resulting lack of 
acceptable identifier would hinder the Commission's ability to 
aggregate the total exposure of those entities.
---------------------------------------------------------------------------

    \227\ For example, the Commission is aware that certain European 
banking groups with unconventional legal structures have encountered 
difficulties obtaining LEIs. The Commission also notes a recent LEI 
ROC consultation covered, among other topics, ``[p]otential 
difficulties for identification of general government entities in 
the [Global Legal Entity Identifier System] current framework''; see 
LEI ROC, LEI Eligibility for General Government Entities (Oct. 25, 
2019), available at https://www.leiroc.org/publications/gls/roc_20191025-1.pdf.
---------------------------------------------------------------------------

    The Commission did not receive any comments opposing the proposed 
requirements in Sec.  45.6(d)(2) for 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 and for reasons 
articulated in the Proposal and reiterated above, is adopting Sec.  
45.6(d)(2) as proposed.
    The Commission acknowledges LCH's request to clarify in Sec.  45.6 
that SDRs should not reject LEIs that have not been renewed, but 
declines to adopt this suggestion in the text of Sec.  45.6, as the 
Commission has delegated to the DMO Director in Sec.  45.15 to issue 
guidance on the form and manner of the technical specification 
governing reporting to SDRs. Nevertheless, the Commission notes DMO has 
not asked SDRs to validate the renewal status of LEIs in the technical 
specification being published concurrent with adoption of the revisions 
to part 45.
    The Commission acknowledges GFXD's comment regarding the duty to 
renew should apply to a reporting counterparty's own LEIs and not that 
of the non-reporting counterparty, but believes GFXD conflates two 
separate requirements: The LEI renewal requirement for SDs, MSPs, SEFs, 
DCMs, DCOs, and SDRs in Sec.  45.6(d)(2) and the requirements described 
in Sec.  45.6(d)(3) below regarding efforts to obtain LEIs for 
counterparties without LEIs. The Commission believes Sec.  45.6(d)(2) 
is clear that the renewal requirement applies only to an entity's own 
LEI. By definition, an LEI has to be issued before it can be renewed, 
so Sec.  45.6(d)(3) would not apply to LEI renewals.
    The Commission also acknowledges the alternative suggestions of 
expanding the LEI renewal requirement to either all reporting 
counterparties or all counterparties, but declines to adopt an 
expansion of the LEI renewal requirement, as the Commission continues 
to believe requiring each SD, MSP, SEF, DCM, DCO, and SDR to maintain 
and renew its LEI strikes the appropriate balance between the 
Commission's interest in accurate LEI reference data and the current 
cost to LEI holders. The Commission acknowledges and appreciates the 
reduction in the cost to LEI holders to obtain and renew LEIs since the 
start of the Global Legal Entity Identifier System, but does not 
believe further expansion of the renewal requirement and the resulting 
increased costs on LEI holders now premised solely on GLEIF's promises 
of future cost reductions and/or shifts of the LEI renewal fee to 
financial institutions resulting from Global Legal Entity Identifier 
System operating model changes is appropriate. Before the Commission 
mandates such a requirement, it will seek additional information to 
gain a better understanding what the benefits or costs of such a 
requirement will be. While the Commission declines to expand the 
renewal mandate in this release, it is open to considering expansions 
of the LEI renewal requirement in future releases upon further 
enhancements in LEI reference data or realized reductions in cost to 
LEI holders.
    In response to Chatham's request for clarification, the Commission 
notes the requirements of Sec.  45.6 would not apply retroactively to 
swap data reports previously reported before the adoption of the 
amendments to part 45, but do apply to creation data and continuation 
data submitted after the adoption of the amendments to part 45.
    For reasons articulated in the Proposal and informed by comments 
and analysis as further discussed below, the Commission is adopting 
Sec.  45.6(d)(3) largely as proposed, with certain modifications in 
response to commenters and other considerations.
    Section 45.6(d)(3) of the final rule removes DCOs from the 
obligation, as DCOs may not have information regarding customers 
clearing trades through futures commission merchants. Section 
45.6(d)(3) of the final rule also reflects the addition of ``use best 
efforts to'' before ``cause a legal entity identifier to be assigned to 
the counterparty'' to clarify that the obligation relates to actions 
within a financial entity reporting counterparty's control, instead of 
the obligation to ensure an outcome that may be outside of a financial 
entity reporting counterparty's control. Section 45.6(d)(3) of the 
final rule also removes the phrase ``including if necessary, through 
third-party registration.'' Finally, as the Commission still has a need 
to know the identity of the non-

[[Page 75530]]

reporting counterparty despite the non-reporting counterparty's failure 
to obtain its own LEI pursuant to Sec.  45.6, the Commission is 
adopting in Sec.  45.6(d)(3) of the final rule a requirement for the 
financial entity reporting counterparty to promptly provide to the 
Commission the identity and contact information of the counterparty for 
whom the financial entity reporting counterparty's efforts to cause an 
LEI to be issued were unsuccessful.\228\
---------------------------------------------------------------------------

    \228\ The Commission recognizes that if the non-reporting 
counterparty refuses to obtain an LEI or refuses to provide 
permission for the reporting counterparty to obtain an LEI on its 
behalf, the lack of LEI may cause the swap data report to fail an 
SDR's validations for the ``Counterparty 2'' data element. To the 
extent a swap data report would otherwise pass an SDR's validations 
but for the refusal by an LEI-eligible non-reporting counterparty to 
obtain an LEI, the Commission will take appropriate steps to address 
such refusal by the LEI-eligible non-reporting counterparty. The 
Commission expects this to be an infrequent situation.
---------------------------------------------------------------------------

    As discussed in the Proposal, swap data that does not identify 
eligible counterparties with an LEI hinders the Commission's 
fulfillment of its regulatory mandates. However, the Commissioner 
declines to adopt a ``no LEI, no trade'' requirement that GFXD suggests 
due to concerns of the potential impact of such a requirement may have 
on market liquidity, as a ``no LEI, no trade'' rule would result in 
market participants without an LEI not being permitted to transact in 
the market. The Commission also notes part 45 relates to the reporting 
of swaps that already have been executed, whereas ``no LEI, no trade'' 
relates to who is eligible to engage in swap transactions, a completely 
different topic than the reporting of executed swaps and outside of the 
scope of the part 45 swap data reporting rule. With regards to GFXD's 
operational concerns, the Commission does not believe operational 
issues such as multiple LEI being issued to a counterparty are likely 
to arise, as checks in the Global Legal Entity Identifier System 
prohibit multiple LEIs being issued to an entity. The Commission also 
does not believe GFXD's concerns that the provision will result in a 
material shifting of costs for obtaining an LEI onto reporting 
counterparties are particularly realistic due to: (i) Most 
counterparties having already obtained an LEI due to significant LEI 
adoption by other authorities whose jurisdictions the counterparties 
may be subject to, (ii) the relatively sophisticated nature of 
counterparties in the swaps market, (iii) the financial due diligence 
that reporting counterparties such as GFXD's members perform on their 
counterparties, and (iv) the unlikelihood that those relatively 
sophisticated counterparties with adequate financial resources would 
willingly and knowingly disregard their own separate obligation to 
obtain their own LEIs pursuant to Sec.  45.6 just so they may realize a 
one-time savings of $65.
    The Commission also recognizes the concerns noted by commenters 
that obtaining an LEI for a counterparty via third-party registration 
requires the consent of the counterparty, consent that may potentially 
not be obtained despite a financial entity reporting counterparty's 
best efforts. The Commission believes Sec.  45.6(d)(3) of the final 
rule addresses those concerns, as financial entities will only be 
required to ``use best efforts to cause [an LEI] to be assigned to the 
counterparty,'' so financial entities would not be required to obtain 
an LEI for a non-consenting counterparty. It was never the Commission's 
intent for anyone other than the entity to which an LEI is issued to be 
responsible for maintaining the reference data for that LEI, and the 
Commission has, in response to ISDA-SIFMA's suggestion, added a 
clarification in the introductory text of Sec.  45.6 that each entity 
is responsible for maintaining its LEI, in addition to obtaining and 
being identified with an LEI.
---------------------------------------------------------------------------

    \229\ The Commission proposed minor, non-substantive amendments 
to Sec.  45.7.
---------------------------------------------------------------------------

G. Sec.  45.8 229 --Determination of Which Counterparty 
Shall Report

    The Commission is changing the introductory text to the Sec.  45.8 
reporting counterparty determination regulations. The existing 
introductory text states the 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 is changing the introductory text to state that the 
determination of which counterparty is the reporting counterparty for 
each swap shall be made as provided in Sec.  45.8. The Commission 
believes this language is clearer, as 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 making 
non-substantive amendments to the rest of existing Sec.  45.8.
    The Commission received two comments beyond the non-substantive 
changes the Commission proposed. ICE SDR recommends the Commission 
allow swap counterparties to determine which entity is best suited to 
report swap data where both counterparties are non-SDs/MSPs and only 
one counterparty is a financial entity and where both counterparties 
are non-SDs/MSPs and only one counterparty is a U.S. person.\230\ The 
Commission declines to adopt ICE SDR's recommendation, as financial 
entities, being more active in the swaps market, are better suited to 
report swap data to SDRs than non-SD/MSP counterparties. In addition, 
between two non-SD/MSP/DCO reporting counterparties, the U.S. person 
counterparty should report swap data to SDRs given their stronger 
connection to the U.S.
---------------------------------------------------------------------------

    \230\ ICE SDR at 6.
---------------------------------------------------------------------------

    ISDA-SIFMA propose deleting language that seems to address cross-
border matters that do not fully align with Commission guidance or no-
action letters and request the Commission confirm that, so long as both 
counterparties incorporate a widely accepted industry practice into 
their internal policies and procedures, they will have met the 
requirements of Sec.  45.8.\231\ The Commission did not propose any 
amendments to reflect cross-border guidance or no-action letters, and 
believes the substantive amendments advocated by ISDA-SIFMA, are beyond 
the scope of this rulemaking and thus not amenable for adoption absent 
an notice and an opportunity for comment. The Commission believes the 
requirements of Sec.  45.8 are clear from their operative provisions, 
and declines to comment on widely-accepted industry practices in this 
rulemaking.
---------------------------------------------------------------------------

    \231\ ISDA-SIFMA at 15-16.
---------------------------------------------------------------------------

    For the reasons discussed above, the Commission is adopting the 
changes to Sec.  45.8 as proposed.

H. Sec.  45.10 232 - Reporting to a Single Swap Data 
Repository
---------------------------------------------------------------------------

    \232\ The Commission is making minor, non-substantive amendments 
to Sec.  45.9.
---------------------------------------------------------------------------

    The Commission is changing the Sec.  45.10 regulations for 
reporting swap data to a single SDR. The Commission is amending and 
removing existing regulations, and adding new regulations to Sec.  
45.10. In particular, new Sec.  45.10(d) will 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 amending the introductory text to Sec.  45.10. 
The existing

[[Page 75531]]

introductory text states that all swap data for a given swap, which 
includes all swap data required to be reported pursuant to parts 43 and 
45, must be reported to a single SDR, which must be the SDR to which 
the first report of required swap creation data is made pursuant to 
part 45.
    First, the Commission is clarifying all ``swap transaction and 
pricing data and swap data'' (both terms that the Commission proposed 
to newly define and add to Sec.  45.1(a)) \233\ 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 parts 43 and 45, making the existing Sec.  45.10 introductory text's 
reference to the two parts redundant. Second, the Commission is adding 
a qualifier to the end of the introductory text specifying 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).\234\ Third, the Commission is 
making non-substantive changes in the introductory text to improve 
readability.
---------------------------------------------------------------------------

    \233\ The Commission's addition of terms for ``swap data'' and 
``swap transaction and pricing data'' to Sec.  45.1(a) is discussed 
in section II.A.1 above.
    \234\ The Commission discusses Sec.  45.10(d) in section II.H.5 
below.
---------------------------------------------------------------------------

    The Commission did not receive any comments on the changes to the 
introductory text in Sec.  45.10. The Commission is adopting the 
changes as proposed.
2. Sec.  45.10(a)--Swaps Executed On or Pursuant to the Rules of a SEF 
or DCM
    The Commission is amending 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. Existing Sec.  45.10(a) requires that to ensure 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 must be reported 
to that same SDR (or to its successor in the event that it ceases to 
operate, as provided in existing part 49).
    First, the Commission is removing the phrase ``(or to its successor 
in the event that it ceases to operate, as provided in part 49)'' from 
Sec.  45.10(a)(2).\235\ Second, the Commission is updating all 
references to swap data throughout proposed Sec.  45.10(a) with ``swap 
transaction and pricing data and swap data.'' The Commission believes 
using the new defined terms for ``swap data'' and ``swap transaction 
and pricing data'' will provide clarity for market participants.
---------------------------------------------------------------------------

    \235\ This change is due to the new regulations the Commission 
is adding for changing SDRs in Sec.  45.10(d). The Commission 
discusses Sec.  45.10(d) in section II.H.5 below.
---------------------------------------------------------------------------

    Third, the Commission is removing Sec.  45.10(a)(1)(ii) and 
combining the text of Sec.  45.10(a) and (a)(i) into a single provision 
Sec.  45.10(a) to provide clarity as the requirement in Sec.  
45.10(a)(1)(ii) is already located in Sec.  45.5(a)(2). Fourth, the 
Commission is adding 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 in proposed Sec.  45.10(d).\236\
---------------------------------------------------------------------------

    \236\ Id.
---------------------------------------------------------------------------

    The Commission did not receive any comments on the changes to Sec.  
45.10(a). For the reasons discussed above, the Commission is adopting 
the changes as proposed.
3. Sec.  45.10(b)--Off-Facility Swaps with an SD or MSP Reporting 
Counterparty
    The Commission is amending the Sec.  45.10(b) regulations for 
reporting swaps executed off-facility with an SD/MSP reporting 
counterparty to a single SDR. Existing Sec.  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 under 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 combining 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. The Commission believes combining the 
requirements for SD/MSP reporting counterparties and non-SD/MSP 
reporting counterparties in Sec.  49.10(b) and (c) will simplify the 
regulations in Sec.  45.10. The Commission is re-titling Sec.  45.10(b) 
``Off-facility swaps that are not clearing swaps.'' \237\
---------------------------------------------------------------------------

    \237\ The Commission discusses the requirements of existing 
Sec.  45.10(c) in section II.H.4 below.
---------------------------------------------------------------------------

    Second, the Commission is removing 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).\238\ Third, the Commission is updating 
all references to swap data throughout Sec.  45.10(b) by replacing all 
references to ``swap data'' with ``swap transaction and pricing data 
and swap data.''
---------------------------------------------------------------------------

    \238\ This change is due to the new regulations the Commission 
is adopting for changing SDRs in Sec.  45.10(d). The Commission 
discusses Sec.  45.10(d) in section II.H.5 below.
---------------------------------------------------------------------------

    Fourth, the Commission is removing existing Sec.  45.10(b)(1) and 
combining the regulations in existing Sec.  45.10(b)(1)(i) through 
(iii) into Sec.  45.10(b)(1). The Commission believes existing Sec.  
45.10(b)(1) is unnecessary, as all reporting counterparties must report 
required swap creation data to an SDR pursuant to Sec.  45.3 for off-
facility swaps. Fifth, the Commission is removing the requirement in 
existing Sec.  45.10(b)(1)(ii) for the reporting counterparty to 
transmit the USI to the non-reporting counterparty to the swap. The 
requirement in Sec.  45.10(b)(1) is unnecessary, as it is already 
located in Sec.  45.5(b)(2) and (c)(2), depending on the type of 
counterparty.
    Finally, the Commission is adding 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

[[Page 75532]]

which such data is reported'' pursuant to proposed Sec.  45.10(d).\239\
---------------------------------------------------------------------------

    \239\ The Commission discusses new Sec.  45.10(d) in section 
II.H.5 below.
---------------------------------------------------------------------------

    The Commission did not receive any comments on the proposed changes 
to Sec.  45.10(b). For the reasons discussed above, the Commission is 
adopting the changes as proposed.
4. Sec.  45.10(c)--Off-Facility Swaps With a Non-SD/MSP Reporting 
Counterparty
    The Commission is moving the requirements in Sec.  45.10(d) to 
Sec.  45.10(c). The Commission discusses the requirements of existing 
Sec.  45.10(d) in the following section, II.H.5. The Commission 
discusses the requirements of existing Sec.  45.10(c) that it proposed 
moving to Sec.  45.10(b) in section II.H.3 above.
5. Sec.  45.10(d)--Clearing Swaps
a. Amendments to Existing Sec.  45.10(d) \240\
---------------------------------------------------------------------------

    \240\ The Commission is moving the requirements for reporting 
clearing swaps to a single SDR from Sec.  45.10(d) to Sec.  
45.10(c). The Commission is replacing Sec.  45.10(d) with new 
requirements for reporting counterparties to change SDRs. This 
section discusses the changes to the requirements for reporting 
clearing swaps to a single SDR in newly re-designated Sec.  45.10(c) 
(existing Sec.  45.10(d)), followed by a discussion of the new 
regulations permitting reporting counterparties to change SDRs.
---------------------------------------------------------------------------

    Existing 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 the clearing swap 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 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, existing Sec.  45.10(d)(2) requires the DCO report all 
required swap creation data and all required swap continuation data 
reported for that clearing swap 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). Existing 
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 report all required swap creation 
data and all required swap continuation data for such clearing swaps to 
a single SDR.
    Newly re-designated Sec.  45.10(c) would include several changes to 
the requirements in existing Sec.  45.10(d). First, the Commission is 
removing the phrase ``(or to its successor in the event that it ceases 
to operate, as provided in part 49)'' in existing Sec.  45.10(d)(2) 
from re-designated Sec.  49.10(c)(2).\241\
---------------------------------------------------------------------------

    \241\ This change is due to the new regulations the Commission 
is adopting for changing SDRs in Sec.  45.10(d). The Commission 
discusses Sec.  45.10(d) in section II.H.5.b below.
---------------------------------------------------------------------------

    Second, the Commission is updating all references to swap data now 
found throughout existing Sec.  45.10(d) with references to ``swap 
transaction and pricing data and swap data.'' Third, the Commission is 
adding the following qualifier: ``unless the reporting counterparty 
changes the [SDR] to which such data is reported'' pursuant to the new 
regulations in Sec.  45.10(d). Finally, the Commission is making 
numerous language edits to improve readability and to update certain 
cross-references.
    The Commission did not receive any comments on the proposed changes 
to Sec.  45.10(d), as moved to Sec.  45.10(c). For the reasons 
discussed above, the Commission is adopting the changes as proposed.
b. New Regulations for Changing SDRs
    The Commission is adding new Sec.  45.10(d) to permit reporting 
counterparties to change the SDR to which they report swap data and 
swap transaction and pricing data. Existing Sec.  45.10 provides all 
swaps must be reported to a ``single [SDR].'' \242\
---------------------------------------------------------------------------

    \242\ 17 CFR 45.10(a) through (d).
---------------------------------------------------------------------------

    The Commission is titling new Sec.  45.10(d) ``Change of [SDR] for 
swap transaction and pricing data and swap data reporting.'' The 
introductory text to Sec.  45.10(d) states a reporting counterparty may 
change the SDR to which swap transaction and pricing data and swap data 
is reported as outlined in Sec.  45.10(d).
    New Sec.  45.10(d)(1) will 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 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 will include the UTI 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 SDR.
    New Sec.  45.10(d)(2) will require that after providing 
notification, the reporting counterparty: (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 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 
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 be reported to the new 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).
    When the Commission adopted Sec.  45.10 in 2012, it believed 
regulators' ability to see necessary information concerning swaps could 
be impeded if data concerning a swap was spread over multiple 
SDRs.\243\ However, since then, the Commission has come to recognize it 
can aggregate swap data from different SDRs, and the Commission has 
received requests to permit reporting counterparties to change 
SDRs.\244\
---------------------------------------------------------------------------

    \243\ See 77 FR 2136, 2168 (Jan. 13, 2012).
    \244\ See, e.g., Joint letter from Bloomberg SDR LLC, Chicago 
Mercantile Exchange Inc., and ICE Trade Vault, LLC (Aug. 21, 2017) 
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. For this reason, the Commission is permitting 
reporting counterparties to change SDRs in Sec.  49.10(d), subject to 
certain notification procedures described below to ensure swaps are 
properly transferred between SDRs.
    The Commission received five comments supporting new Sec.  
45.10(d).\245\ In particular, GFXD does not believe counterparties 
changing SDRs raises any operational issues and does not believe any 
additional requirements should be adopted.\246\
---------------------------------------------------------------------------

    \245\ GFXD at 24; Eurex at 4; JBA at 5; DTCC at 7; Markit at 6.
    \246\ GFXD at 24.

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

[[Page 75533]]

    The Commission did not receive any comments opposing Sec.  
45.10(d), but did receive comments seeking clarification or commenting 
on some aspects of the new regulation. Markit supports Sec.  45.10(d), 
but does not believe the notice period and other formal procedures are 
necessary, and notes a swap transaction that has been moved will be 
evident from the ``Events'' data elements in appendix 1.\247\ The 
Commission agrees with Markit that data elements showing a swap has 
been moved to a different SDR will be beneficial, but as explained 
above, the Commission needs to ensure swaps are properly transferred. 
The Commission believes it has kept the notification requirements 
simple enough to provide the Commission the notification it needs 
without placing an unreasonable burden on the parties involved in the 
transfer.
---------------------------------------------------------------------------

    \247\ Markit at 6.
---------------------------------------------------------------------------

    ISDA-SIFMA suggest the Sec.  45.10(d)(1) notification obligation 
could be satisfied via an email notification, reporting counterparty 
portal, or the reporting counterparty's public-facing website.\248\ The 
Commission agrees with ISDA-SIFMA and clarifies the aforementioned 
methods could satisfy the notification requirements in Sec.  49.10(d).
---------------------------------------------------------------------------

    \248\ ISDA-SIFMA at 16.
---------------------------------------------------------------------------

    ISDA-SIFMA and DTCC have questions relating to transferring 
historical swap data. ISDA-SIFMA believe, where a reporting 
counterparty elects to transfer from an SDR due to the deregistration 
of the SDR, the deregistering SDR should be required to bear the 
reporting counterparty's costs of porting.\249\ DTCC requests 
confirmation that the transferability requirement will only apply to 
trades that are live at the time of the transfer, not historical 
trades.\250\ Transferring historical data in the context of SDR 
withdrawals from registration is covered by Sec.  49.4 regulations 
(Withdrawal from registration). New Sec.  45.10(d) does not apply to 
that process, with respect to costs or the process itself, among other 
things. The Commission believes ISDA-SIFMA and DTCC's comments are 
addressed by Sec.  49.4.
---------------------------------------------------------------------------

    \249\ Id.
    \250\ DTCC at 7.
---------------------------------------------------------------------------

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

    The Commission is making non-substantive changes to the Sec.  45.11 
regulations for reporting swaps in an asset class not accepted by any 
SDR. Existing 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 report 
that same data to the Commission.
    For instance, the Commission is removing the phrase ``registered 
with the Commission'' following the term SDR. The Commission believes 
this phrase is confusing, as the three SDRs are provisionally 
registered with the Commission pursuant to Sec.  49.4(b) of the 
Commission's regulations. 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 replacing ``each registered entity 
or counterparty'' with a reference to SEFs, DCMs, and DCOs, and the 
term ``reporting counterparty.'' The list of entities is more precise 
and does not modify the types of entities to which the requirements of 
Sec.  49.11 would apply.
    Existing 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 moving this 
delegation to a new section, Sec.  45.15, for delegations of authority. 
The Commission discusses Sec.  45.15 in section II.L below.
    The Commission did not receive any comments on the proposed changes 
to existing Sec.  45.11. For the reasons discussed above, the 
Commission is adopting the changes as proposed.

J. Sec.  45.12--Voluntary Supplemental Reporting

    The Commission is removing the Sec.  45.12 regulations for 
voluntary supplemental reporting from part 45. Existing Sec.  45.12 
permits the submission of voluntary supplemental swap data reports by 
swap counterparties.\251\ 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.\252\
---------------------------------------------------------------------------

    \251\ 17 CFR 45.12(b) through (e). Existing Sec.  45.12(d) 
requires 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.
    \252\ 17 CFR 45.12(a).
---------------------------------------------------------------------------

    When it adopted Sec.  45.12 in 2012, the Commission believed 
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.\253\ The Commission 
recognized Sec.  45.12 would lead to the submission of duplicative 
reports for the same swap,\254\ but believed an indication voluntary 
supplemental reports were voluntary would prevent double-counting of 
the same swaps within SDRs.\255\
---------------------------------------------------------------------------

    \253\ 77 FR at 2169 (Jan. 13, 2012).
    \254\ Id.
    \255\ Id.
---------------------------------------------------------------------------

    In practice, the Commission is concerned voluntary supplemental 
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 counterparties mark the reports as 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 
Commission's technical and staffing resources with no clear regulatory 
benefit. The Commission adopted existing Sec.  45.12 in 2012 without 
the benefit of having swap data available to consider the practical 
implications of existing Sec.  45.12. However, after years of use by 
Commission staff, the Commission now believes existing Sec.  45.12 has 
led to swap data reporting that inhibits the Commission's use of the 
swap data. The Commission believes eliminating Sec.  45.12 will help 
improve data quality.
    The Commission received three comments on the removal of Sec.  
45.12. NRECA-APPA and ISDA-SIFMA support removing Sec.  45.12.\256\ 
Eurex believes this removal would lead non-U.S. DCOs to only report 
part 45 data for swap transactions involving SDs, MSPs, and other U.S. 
counterparties.\257\ Furthermore, Eurex agrees that this removal would 
significantly lessen the operational cost currently incurred from 
reporting data for all cleared swaps.\258\ However, Eurex requests a 
list of SDs, MSPs, and other U.S. counterparties so, as a non-U.S. DCO, 
Eurex can appropriately filter out swap transactions that do not fall 
under the jurisdiction of the Commission.\259\ The Commission believes 
Eurex is confusing

[[Page 75534]]

voluntary supplemental reporting with cross-border reporting, possibly 
due to the Commission's example of some voluntary reports being non-
jurisdictional. The Commission clarifies that removing the regulations 
for voluntary supplemental reporting does not impact cross-border 
reporting requirements, and non-U.S. DCOs should continue reporting 
swap data to SDRs, to the extent the Commission's cross-border rules 
and guidance require it.
---------------------------------------------------------------------------

    \256\ NRECA-APPA at 5; ISDA-SIFMA at 16.
    \257\ Eurex at 5.
    \258\ Id.
    \259\ Id.
---------------------------------------------------------------------------

K. Sec.  45.13--Required Data Standards

1. Sec.  45.13(a)--Data Maintained and Furnished to the Commission by 
SDRs
    The Commission is changing the Sec.  45.13(a) regulations for data 
maintained and furnished to the Commission by SDRs. Existing Sec.  
45.13(a) requires each SDR maintain all swap data 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 Commission is removing existing Sec.  45.13(a), and moving 
existing Sec.  45.13(b) to Sec.  45.13(a)(3). The May 2019 notice of 
proposed rulemaking relating to the Commission's SDR regulations in 
parts 23, 43, 45, and 49 (the ``2019 Part 49 NPRM'') \260\ proposed 
moving the requirements of Sec.  45.13(a) to Sec.  49.17(c).\261\ The 
Commission did not propose corresponding modifications to Sec.  45.13 
in that release.\262\ Therefore, the Commission is changing Sec.  
45.13(a) in this release by removing language that the 2019 Part 49 
NPRM proposed incorporating in Sec.  49.17(c). The Commission discusses 
the changes to Sec.  45.13(b), including moving the requirement to 
Sec.  45.13(a)(3), in this section.
---------------------------------------------------------------------------

    \260\ See Certain Swap Data Repository and Data Reporting 
Requirements, 84 FR 21044 (May 13, 2019).
    \261\ 84 FR at 21060 (May 13, 2019).
    \262\ Id. at n.132 (noting the Commission's expectation to 
modify Sec.  45.13 in a subsequent Roadmap rulemaking).
---------------------------------------------------------------------------

    Existing 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. Existing 
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.
    In new Sec.  43.13(a)(1), the Commission is requiring 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 
pursuant to Sec.  45.15. This requirement is implied in the current 
regulations through the requirements in the introductory text to Sec.  
45.3 and Sec.  45.4, the definitions of ``required swap creation data'' 
and ``required swap continuation data,'' and Sec.  45.13(b) and (c), 
but new Sec.  45.13(a)(1) would make the existing requirement explicit.
    In new Sec.  45.13(a)(2), the Commission is requiring 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 adopting companion 
requirements for SDRs to validate swap data in Sec.  49.10.\263\ New 
Sec.  45.13(a)(2) will 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 specifying the requirements for the validation messages 
in Sec.  45.13(b). The Commission discusses these requirements, and 
comments received, in section IV.C.3 below.
---------------------------------------------------------------------------

    \263\ The Commission discusses Sec.  49.10 in section IV.C 
below.
---------------------------------------------------------------------------

    Finally, the Commission is moving existing Sec.  45.13(b) to Sec.  
45.13(a)(3) and changing the regulatory requirements. Existing Sec.  
45.13(b) requires that in reporting swap data to an SDR as required by 
part 45, each reporting entity or counterparty use the facilities, 
methods, or data standards provided or required by the SDR to which the 
entity or counterparty reports the data. An SDR may permit reporting 
entities and counterparties to use various facilities, methods, or data 
standards, provided 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.
    First, the Commission is replacing ``each reporting entity or 
counterparty'' with ``each reporting counterparty [SEF, DCM, and DCO]'' 
to be more precise. Second, the Commission is removing the second 
sentence in existing Sec.  45.13(b) because it pertains to the 
requirements of Sec.  45.13(a), which the Commission is moving to part 
49.
    The Commission did not receive any comments on the changes to Sec.  
45.13(a) and (b). For the reasons discussed above, the Commission is 
adopting the changes as proposed.
2. New Regulations for Data Validation Messages
    The Commission is specifying the requirements for data validation 
acceptance messages for SDRs, SEFs, DCMs, DCOs, and reporting 
counterparties. New Sec.  45.13(b)(1) will 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 will have to provide such notification ASATP after accepting 
the required swap creation data or required swap continuation data 
report. An SDR satisfies these requirements by transmitting data 
validation acceptance messages as required by proposed Sec.  49.10.
    New Sec.  45.13(b)(2) will 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 
outlined in Sec. Sec.  45.3 and 45.4.
    The Commission did not receive any comments on the new validations 
requirements in Sec.  45.13(b). As the new regulations for data 
validations in Sec.  45.13(b) are analogous to new regulations for SDRs 
to validate data in Sec.  49.10, the Commission discusses its reasoning 
behind requiring validations in one section in section IV.C.3, below.
3. Sec.  45.13(c)--Delegation of Authority to the Chief Information 
Officer
    Existing Sec.  45.13(c) and (d) contain a delegation of authority 
to the Chief Information Officer of the Commission concerning the 
requirements in existing Sec.  45.13(a) and (b). The Commission is 
deleting Sec.  45.13(c) and (d) and moving

[[Page 75535]]

the delegation to new Sec.  45.15 and delegating authority to the DMO 
Director. The Commission believes the updated delegation will enhance 
efficiency by including DMO. The Commission discusses new Sec.  45.15 
in the next section.

L. Sec.  45.15 264 - Delegation of Authority
---------------------------------------------------------------------------

    \264\ The Commission proposed amendments to Sec.  45.14 in the 
2019 Part 49 NPRM. Therefore, Sec.  45.14 will not be discussed in 
this release. See 84 FR at 21067 (May 13, 2019).
---------------------------------------------------------------------------

1. New Regulation for Delegations of Authority
    The Commission is adding a new regulation to part 45 for 
delegations of authority. New Sec.  45.15 is titled ``Delegation of 
authority'' and contains the delegation of authority in existing Sec.  
45.11(c) and (d) and Sec.  45.13(c) and (d) with a new delegation to 
the DMO Director regarding reporting under Sec.  45.13.
    Existing Sec.  45.11(c) delegates to the Chief Information Officer 
of the Commission, or another 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 must be 
reported to the Commission.
    Existing 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, existing Sec.  45.13(c) 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 them, 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 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), to accommodate the needs of different 
communities of users, or to enable SDRs to comply with Sec.  45.13(a).
    Existing 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 moving the delegations in existing Sec. Sec.  
45.11(c) and (d) and 45.13(c) and (d) to new Sec.  45.15(a) and (b). 
The Commission is also updating the delegations to reflect the changes 
to the cross-references resulting from the Commission's other proposed 
amendments to part 45, and changing the delegation in Sec.  45.13 from 
the Chief Information Officer to the Director of the Division of Market 
Oversight due to different responsibilities over swap data within the 
Commission.
    The Commission received one comment on new Sec.  45.15. NRECA-APPA 
support the delegation to DMO.\265\ The Commission agrees with NRECA-
APPA and believes delegation to DMO will benefit data element 
harmonization. The Commission did not receive any other comments on new 
Sec.  45.15. The Commission is adopting the regulation as proposed.
---------------------------------------------------------------------------

    \265\ NRECA-APPA at 6.
---------------------------------------------------------------------------

2. Request for Comment on Data Standards
    The Proposal solicited comment on whether the Commission should 
mandate a specific data standard for reporting swap data to SDRs, and 
whether that standard should be ISO 20022. Existing Sec.  45.13(c) 
delegates to the Commission's Chief Information Officer 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, including ISO 20022, in order to accommodate 
the needs of different communities of users. The Commission is 
retaining this delegation but moving the authority to Sec.  45.15(b)(2) 
and transferring it to the DMO Director.
    While the Commission would mandate any standards via the delegated 
authority in Sec.  45.15(b)(2), the Commission took the opportunity 
presented by the Proposal to solicit public comment on the topic.\266\ 
As explained in the Proposal, the Commission is currently part of an 
effort to develop a standardized ISO message for the data elements in 
the CDE Technical Guidance. The Commission sought comment on whether 
market participants believe mandating ISO 20022 would be beneficial.
---------------------------------------------------------------------------

    \266\ The Commission last solicited comment on the topic in 2012 
when it adopted Sec.  45.13. 77 FR 2136 at 2169-70.
---------------------------------------------------------------------------

    The Commission received five comments supporting mandating data 
standards for swap data reporting.\267\ In particular, GFXD encourages 
the Commission to harmonize with the CPMI-IOSCO reporting standards to 
the extent the Commission chooses to implement those data 
elements.\268\ Similarly, XBRL ``strongly'' recommends the Commission 
``require all SDRs to adopt a single data standard.'' XBRL believes 
allowing SDRs to choose any data standard will lead to inconsistencies 
in the data, and unnecessary spending by counterparties, SDRs, data 
users, and the Commission, to accommodate multiple data sets that are 
standardized in different ways.'' \269\
---------------------------------------------------------------------------

    \267\ GFXD at 25; Chatham at 3-4; Eurex at 5; Data Coalition at 
2; XBRL at 2.
    \268\ GFXD at 25.
    \269\ XBRL at 2.
---------------------------------------------------------------------------

    The Commission received two comments opposing mandating standards 
for SDR reporting. ISDA-SIFMA state that, even if the Commission 
mandates that certain messaging formats (e.g., XML, FpML, CSV) for 
reporting from the SDR to the Commission, ISDA-SIFMA do not believe 
this should result in a mandate that the same message format type be 
required from the reporting counterparty to the SDRs, as not all 
reporting counterparties are built uniformly with respect to messaging 
formats and technology.\270\
---------------------------------------------------------------------------

    \270\ ISDA-SIFMA at 16-18.
---------------------------------------------------------------------------

    ICE SDR believes SDRs need flexibility to determine how to 
implement the requirement. For example, an SDR may choose to provide 
notifications through a graphical user interface so that less-
sophisticated reporting entities are not forced to write an application 
programming interface.\271\
---------------------------------------------------------------------------

    \271\ ICE SDR at 6, 10.
---------------------------------------------------------------------------

    The Commission received four comments supporting mandating the ISO 
20022 standard specifically.\272\ In particular, GFXD believes 
including the CDE data elements in the ISO 20022 data dictionary would 
reduce the

[[Page 75536]]

mapping required by market participants and third parties, but believes 
the Commission should coordinate with fellow international regulators 
to coordinate the adoption of CDE data elements.\273\ GFXD also 
believes it is ``extremely advisable'' for the Commission and ESMA to 
come to the same determination on the adoption of the ISO 20022 
messaging scheme and coordinate on implementation to reduce operational 
complexity and risk to data quality from mapping different message 
schemes in the interim.\274\ DTCC also encourages the Commission to 
``adopt a messaging methodology that is broadly consistent and aligned 
with the methodology adopted and used in other jurisdictions'' and 
notes ESMA has proposed ISO 20022 in its EMIR REFIT consultation 
published in March 2020.\275\
---------------------------------------------------------------------------

    \272\ GFXD at 25; Eurex at 5-6; JBA at 5; DTCC at 7.
    \273\ GFXD at 25.
    \274\ Id.
    \275\ DTCC at 7. See Regulation (EU) 2019/834 of the European 
Parliament and of the Council of 20 May 2019 amending Regulation 
(EU) No 648/2012 as regards the clearing obligation, the suspension 
of the clearing obligation, the reporting requirements, the risk-
mitigation techniques for OTC derivative contracts not cleared by a 
central counterparty, the registration and supervision of trade 
repositories and the requirements for trade repositories (``EMIR 
REFIT'').
---------------------------------------------------------------------------

    The Commission received three comments opposing mandating ISO 
20022. CME questions the value of using ISO 20022 values for reporting 
certain data elements given the significant implementation cost.\276\ 
ISDA-SIFMA oppose mandating ISO 20022 due to costs imposed on market 
participants without benefits to regulatory oversight.\277\ ICE SDR 
does not support prescribed facilities and methods for SDRs to 
communicate with and take in data from participants.\278\ According to 
ICE SDR, the Commission should not consider mandating the ISO 20022 
message scheme for reporting to SDRs as non-SD/MSP reporting entities 
often are not as sophisticated as SDs/MSPs and cannot follow such a 
standard.\279\
---------------------------------------------------------------------------

    \276\ CME at 21.
    \277\ ISDA-SIFMA at 18-20.
    \278\ ICE SDR at 10.
    \279\ Id.
---------------------------------------------------------------------------

    The Commission agrees with some commenters that mandating one 
standard for reporting swap data to SDRs is necessary to ensure data 
quality. The Commission believes if the data is reported using 
different standards or protocols, the data is then subject to 
interpretation by the SDRs, as it is transformed or translated into the 
SDRs' systems and further transformed when it is reported to the 
Commission. These successive layers of transformation inject ambiguity 
and data quality issues into the life cycle of the data. Such layers of 
transformation are unnecessary if the reporting solution is straight 
through processing. Consistency of data from the source, in a common 
format, regardless of SDR, will lead to better quality data.
    Several commenters note aligning with other jurisdictions will help 
reduce burden on market participants. Staff supports the idea that 
having a consistent standard for reporting, such as ISO 20022, across 
the globe would reduce reporting burden, streamline processing and 
allow industry to leverage scaled solutions bringing down the cost of 
changes and updates. As previously noted by a commenter, ESMA has 
proposed ISO 20022 in its EMIR REFIT consultation published in March 
2020 and has implemented ISO 20022 for other reporting regimes, 
including SFTR.
    As discussed in the Proposal, CPMI-IOSCO assigned ISO to execute 
the maintenance functions for the CDE Technical Guidance because ISO 
has significant experience maintaining financial data standards and 
almost half of the CDE data elements in the CDE Technical Guidance are 
already tied to an ISO standard. CPMI-IOSCO also decided that the CDE 
data elements should be included in the ISO 20022 data dictionary and 
the development of an ISO 20022-compliant message for CDE data elements 
is in progress. Further, a majority of the data elements in the 
technical specification are from the CDE Technical Guidance. For these 
reasons, and because comprehensive and unambiguous rules regarding 
reporting format will ensure the quality and usefulness of the data, 
the Commission will mandate ISO 20022 for reporting to SDRs according 
to Sec.  45.15(b)(2) when the standard is developed.

III. Amendments to Part 46

    CEA sections 4r(a)(2)(A) and 2(h)(5) provide for the reporting of 
pre-enactment and transition swaps.\280\ Part 46 of the Commission's 
regulations establishes the requirements for reporting pre-enactment 
and transition swaps to SDRs. In some instances, the revisions to part 
45 necessitate corresponding amendments to the regulations in part 46. 
The Commission describes any substantive amendments in this section. 
However, the Commission does not repeat the reasoning for changes if 
the Commission has discussed the reasoning for analogous part 45 
provisions above.
---------------------------------------------------------------------------

    \280\ 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).
---------------------------------------------------------------------------

A. Sec.  46.1--Definitions

    Existing Sec.  46.1 contains the definitions for terms used 
throughout the regulations in part 46. The Commission is separating 
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, to be consistent with the 
same change in Sec.  45.1.
    The Commission is adding a definition of ``historical swaps'' to 
Sec.  46.1(a). ``Historical swaps'' means pre-enactment swaps or 
transition swaps. This term will provide clarity as it is already used 
in part 46.
    The Commission is adding a definition of ``substitute counterparty 
identifier'' to Sec.  46.1(a). ``Substitute counterparty identifier'' 
means 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 making non-substantive minor technical changes to 
``asset class'' and ``required swap continuation data.''
    The Commission is amending 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).\281\ The Commission is 
updating the term throughout part 46.
---------------------------------------------------------------------------

    \281\ The Commission discusses the changes to the term in Sec.  
45.1(a) in section II.A.2 above.
---------------------------------------------------------------------------

    The Commission is amending the definition of ``reporting 
counterparty'' to update the reference to ``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 defining ``swap 
data'' to mean swap data reported pursuant to part 45. As a result, the 
Commission is changing the reference to ``data for a pre-enactment swap 
or transition swap'' to reflect the reference is to part 46 data.
    The Commission is removing the following definitions from Sec.  
46.1. The Commission has determined that the

[[Page 75537]]

following definitions are redundant because the terms are already 
defined in either Commission regulation 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 removing the definition of ``international 
swap,'' as there are no regulations for international swaps in part 46.
    The Commission did not receive any comments on the changes to Sec.  
46.1.

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

    Existing Sec.  46.3(a)(2)(i) \282\ 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.
---------------------------------------------------------------------------

    \282\ The Commission is not making substantive amendments 
outside of Sec.  46.3(a)(2)(i).
---------------------------------------------------------------------------

    The Commission is amending 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.
    The Commission received one comment supporting the proposal. ISDA-
SIFMA believe SDs should benefit from more limited part 46 reporting 
obligations. The Commission is adopting the changes as proposed.

C. Sec.  46.10--Required Data Standards

    Existing 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 adding a provision that in reporting required 
swap continuation data as required by this part, each reporting 
counterparty shall comply with the required data standards outlined 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. The Commission did not receive any comments 
on the changes to Sec.  46.10. The Commission is adopting the changes 
as proposed.

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

    Consistent with the Commission's removal of the option to report 
required swap continuation data by the state data reporting method, 
discussed in section II.D.2 above, the Commission is removing the 
option in Sec.  46.11(b) for pre-enactment/transition swaps reporting. 
Specifically, existing Sec.  46.11(b) 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 removal of existing 
Sec.  46.11(b), the Commission is re-designating existing Sec.  
46.11(c) and (d) as new Sec.  46.11(b) and (c), respectively.
    The Commission received two comments supporting the proposal. 
Consistent with its position supporting removing state data reporting 
in Sec.  45.4, Chatham believes this will significantly reduce the 
number of reports as life cycle data reporting provides the same 
critical information as state data reporting.\283\ CEWG believes the 
proposal will improve the effectiveness and efficiency of 
reporting.\284\ The Commission agrees removing state data reporting 
from part 46 will be beneficial for the reasons described above 
relating to Sec.  45.4. The Commission did not receive any other 
comments on the proposed changes to Sec.  46.11. The Commission is 
adopting the changes as proposed.
---------------------------------------------------------------------------

    \283\ Chatham at 2.
    \284\ CEWG at 3.
---------------------------------------------------------------------------

IV. Amendments to Part 49

A. Sec.  49.2--Definitions

    The Commission is adding four definitions to Sec.  49.2(a): ``data 
validation acceptance message,'' ``data validation error,'' ``Data 
validation error message,'' and ``data validation procedures.'' \285\ 
The Commission discusses the impact of the four definitions in section 
IV.C below. The four definitions encompass the messages and validations 
reports SDRs would be required to send reporting counterparties under 
new regulations in Sec.  49.10(c).
---------------------------------------------------------------------------

    \285\ The Commission also proposed defining ``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 84 FR at 21047. The term ``SDR data'' 
is also used in the amendments to Sec.  49.10 in this release.
---------------------------------------------------------------------------

    ``Data validation acceptance message'' means a notification that 
SDR data satisfied the data validation procedures applied by a SDR. 
``Data validation error'' means that a specific data element of SDR 
data did not satisfy the data validation procedures applied by a SDR. 
``Data validation error message'' means a notification SDR data 
contained one or more data validation error(s). ``Data validation 
procedures'' means procedures established by a SDR pursuant to Sec.  
49.10 to validate SDR data reported to the SDR.

B. Sec.  49.4--Withdrawal From Registration

    The Commission is amending the Sec.  49.4 regulations for SDR 
withdrawals from registration. Existing 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.\286\
---------------------------------------------------------------------------

    \286\ The Commission is not making 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).
---------------------------------------------------------------------------

    Existing Sec.  49.4(a)(2) requires that before 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 removing 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. Existing Sec.  1.44 requires ``depositories'' to 
maintain all books, records, papers, and memoranda relating to the 
storage and warehousing of commodities in such warehouse,

[[Page 75538]]

depository or other similar entity for a period of 5 years from the 
date thereof.\287\ The recordkeeping requirements for SDRs are located 
in Sec.  49.12.\288\ The Commission is removing erroneous Sec.  
49.4(a)(1)(iv) to avoid confusion.
---------------------------------------------------------------------------

    \287\ 17 CFR 1.44(d).
    \288\ The Commission 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 84 FR at 21055 
(May 13, 2019). 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.
---------------------------------------------------------------------------

    Second, the Commission is removing 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.\289\ The 
Commission is adding 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. New Sec.  49.4(a)(2) will 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.
---------------------------------------------------------------------------

    \289\ Existing 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 removing this part of Sec.  49.4(a)(2) 
as well.
---------------------------------------------------------------------------

    The Commission did not receive any comments on the changes to Sec.  
49.4. The Commission believes the existing Sec.  49.4(a)(2) 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. The 
Commission believes Sec.  49.4(a)(2) will better address the 
Commission's primary concerns in an SDR withdrawal from registration.
    The Commission is adopting the changes to Sec.  49.4 as proposed.

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

    The Commission is changing the Sec.  49.10(a) through (d) \290\ and 
(f) requirements for the acceptance of data. As part of these changes, 
the Commission is re-titling the section to reflect new requirements 
for SDRs to validate data proposed in Sec.  49.10(c) as ``Acceptance 
and validation of data.''
---------------------------------------------------------------------------

    \290\ The Commission 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 84 FR at 21050.
---------------------------------------------------------------------------

1. Sec.  49.10(a)--General Requirements
    The Commission is making non-substantive amendments to the general 
requirements in existing Sec.  49.10(a) for SDRs to have policies and 
procedures to accept swap data and swap transaction and pricing data. 
Existing Sec.  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.
    The non-substantive amendments include titling Sec.  49.10(a) 
``General requirements'' to distinguish it from the rest of Sec.  49.10 
and renumbering the sections. The Commission is revising 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. The Commission is removing 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 correcting 
references to defined terms.
    Together, the amendments to Sec.  49.10(a)(1) through (2) will 
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.\291\
---------------------------------------------------------------------------

    \291\ The background for the validations is discussed in section 
IV.C.3 below.
---------------------------------------------------------------------------

    The Commission did not receive any comments on the proposed changes 
to Sec.  49.10(a). For reasons discussed above, the Commission is 
adopting the changes as proposed.
2. Sec.  49.10(b)--Duty To Accept SDR Data
    The Commission is adopting non-substantive amendments to the Sec.  
49.10(b) requirements for SDRs to accept SDR data. Existing Sec.  
49.10(b) requires a registered SDR 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.
    The non-substantive changes include titling Sec.  49.10(b) ``Duty 
to accept SDR data'' and updating references to data in Sec.  49.10(b) 
to ``SDR data'' to use the correct defined term. The Commission did not 
receive any comments on the changes. For the reasons discussed above, 
the Commission is adopting the changes as proposed.
3. Sec.  49.10(c)--Duty To Validate SDR Data
    The Commission is adding new regulations for the SDR validation of 
SDR data in Sec.  49.10(c). The Commission is moving the requirements 
in existing Sec.  49.10(c) to Sec.  49.10(d).\292\ In Sec.  49.10(c), 
the Commission is requiring SDRs to apply validations and inform the 
entity submitting the swap report of any associated rejections. SDRs 
will be required to apply the validations approved in writing by the 
Commission. The Commission is also adopting regulations for SDRs to 
send validation messages to SEFs, DCMs, and reporting counterparties in 
Sec.  45.13(b).\293\ The Commission discusses Sec.  49.10(c) and Sec.  
45.13(b) together in this section.
---------------------------------------------------------------------------

    \292\ The amendments to the existing requirements of Sec.  
49.10(c), to be moved to Sec.  49.10(d), are discussed in section 
IV.C.4 below.
    \293\ The Commission is adopting 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).
---------------------------------------------------------------------------

    The Commission believes the consistent application of validation 
rules across SDRs will lead to an improvement in the quality of swap 
data maintained at SDRs. SDRs currently check each swap report for 
compliance with a list of rules specific to each SDR. However, the 
Commission is concerned 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

[[Page 75539]]

market participants. While one SDR may reject a report based on an 
incorrect value in a particular data element, another SDR may accept 
reports containing the same erroneous value in the same data element. 
Further, the Commission is concerned responses to SDR validation 
messages vary across reporting counterparties, given the lack of 
current standards.
    ESMA has published specific validations for TRs to perform to 
ensure that derivatives data meets the requirements set out in their 
technical standards pursuant to EMIR.\294\ 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.\295\ The Commission believes similarly 
consistent SDR validations will help improve data quality.
---------------------------------------------------------------------------

    \294\ See ``EMIR Reporting'' at https://www.esma.europa.eu/policy-rules/post-trading/trade-reporting.
    \295\ See id.
---------------------------------------------------------------------------

    The Commission received two comments supporting data validations 
regulations in Sec.  45.13. FIA believes the validations should 
strengthen data accuracy and appreciates using the SDRs' current 
processes.\296\ Markit believes validation requirements will enable 
third-party service providers to develop data validation mechanisms 
that will substantially reduce the cost of complying with new SDR data 
validation procedures.\297\
---------------------------------------------------------------------------

    \296\ FIA at 7.
    \297\ Markit at 3.
---------------------------------------------------------------------------

    The Commission received two comments on the new validations 
requirements in Sec.  49.10(c) and Sec.  45.13(b). NRECA-APPA request 
the Commission provide evidence that the validation process will 
achieve a specific regulatory benefit to offset the significant 
additional burden on non-SD/MSP/DCO counterparties to off-facility 
swaps.\298\ As discussed above, the Commission believes consistent SDR 
validations will improve data quality without placing unnecessary 
burdens on any swap counterparties as SDRs validate data today.
---------------------------------------------------------------------------

    \298\ NRECA-APPA at 5.
---------------------------------------------------------------------------

    GFXD believes limited exceptions to the validation requirements 
should be in place but believes such exceptions may have limited 
use.\299\ The Commission agrees, and believes the regulations, along 
with the existing delegations of authority that the Commission is 
moving to Sec.  45.15, give the Commission the discretion to specify 
validations exceptions in the case of new products or changes that 
require flexibility.
---------------------------------------------------------------------------

    \299\ GFXD at 25.
---------------------------------------------------------------------------

    The Commission did not receive any additional comments on Sec.  
49.10(c) or Sec.  45.13(b). The Commission is adopting the regulations 
as proposed.
4. Sec.  49.10(d)--Policies and Procedures To Prevent Invalidation or 
Modification
    As described above, the Commission is moving the requirement in 
Sec.  49.10(c) for SDRs to have policies and procedures to prevent 
invalidations or modifications of swaps to Sec.  49.10(d). As a result, 
the Commission is re-designating Sec.  49.10(d) as new Sec.  
49.10(f).\300\ Existing Sec.  49.10(c) 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.\301\
---------------------------------------------------------------------------

    \300\ The amendments to the existing requirements of Sec.  
49.10(d), re-designated as Sec.  49.10(f), are discussed in section 
IV.C.5 below.
    \301\ Existing 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).
---------------------------------------------------------------------------

    The Commission is making non-substantive amendments to existing 
Sec.  49.10(c), moved to Sec.  49.10(d). For instance, the Commission 
is titling Sec.  49.10(c) ``Policies and procedures to prevent 
invalidation or modification'' to distinguish it from the other 
requirements in Sec.  49.10.
    The Commission did not receive any comments on the non-substantive 
changes to Sec.  49.10(d). For the reasons discussed above, the 
Commission is adopting the changes as proposed.
5. Sec.  49.10(f)--Policies and Procedures for Resolving Disputes 
Regarding Data Accuracy
    As described above, the Commission is re-designating Sec.  49.10(d) 
as Sec.  49.10(f).\302\ The Commission is making non-substantive 
amendments to the requirements in existing Sec.  49.10(d), re-
designated as Sec.  49.10(f). Existing 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.
---------------------------------------------------------------------------

    \302\ The Commission's proposed revisions to Sec.  49.10(e) are 
discussed in the 2019 Part 49 NPRM. See 84 FR at 21050 (May 13, 
2019).
---------------------------------------------------------------------------

    The Commission is re-titling Sec.  49.10(f) ``Policies and 
procedures for resolving disputes regarding data accuracy'' and 
updating terminology in the regulation. The Commission did not receive 
any comments on the amendments to Sec.  49.10(f). For the reasons 
discussed above, the Commission is adopting the changes as proposed.

V. Swap Data Elements Reported to Swap Data Repositories

A. Proposal

    The Commission is updating and standardizing the data elements in 
appendix 1 to part 45. The Commission's minimum PET for swaps in each 
swap asset class are found in existing appendix 1 to part 45. The 
existing PET for swaps contain a set of ``data categories and fields'' 
followed by ``comments'' instead of specifications such as allowable 
values, formats, and conditions.\303\ In some cases, these comments 
include directions, such as to use ``yes/no'' indicators for certain 
data elements.\304\ 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'').\305\
---------------------------------------------------------------------------

    \303\ See generally 17 CFR part 45 appendix 1.
    \304\ Id.
    \305\ Id.
---------------------------------------------------------------------------

    In adopting part 45, the Commission intended the PET 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.\306\ However, in practice, this approach permitted a 
degree of discretion in reporting swap data that led to a lack of 
standardization which makes it more difficult for the Commission to 
analyze and aggregate swap data. Each SDR has worked to standardize the 
data within each SDR over recent years, and Commission staff has noted 
the improvement in data quality. However, the Commission believes a 
significant effort must be made to standardize swap data across SDRs. 
As a result, the Commission is revisiting the data currently required 
to be reported to SDRs in appendix 1.
---------------------------------------------------------------------------

    \306\ See 77 FR at 2149 (Jan. 13, 2012).
---------------------------------------------------------------------------

    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 the implementation of 
the CDE Technical Guidance will further

[[Page 75540]]

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.\307\ Having 
completed this assessment, the Commission proposed listing the swap 
data elements required to be reported to SDRs pursuant to part 45 in 
appendix 1 to part 45. In a separate proposal, the Commission proposed 
listing the swap transaction and pricing data elements required to be 
reported to, and then publicly disseminated by, SDRs pursuant to part 
43 in appendix A to part 43. The swap transaction and pricing data 
elements will be a harmonized subset of the swap data elements in 
appendix 1 to part 45.
---------------------------------------------------------------------------

    \307\ The Commission intended 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 (Jan. 9, 2012) (noting that it is important that the 
data fields for both the real-time and regulatory reporting 
requirements work together). However, there is no existing 
regulatory requirement linking the two sets of data elements.
---------------------------------------------------------------------------

    At the same time as the Commission proposed updating the swap data 
elements in appendix 1, DMO published draft technical specifications 
for reporting the swap data elements in appendix 1 to part 45 to SDRs, 
and for reporting and publicly disseminating the swap transaction and 
pricing data elements in appendix A to part 43 described in a separate 
proposal. Once finalized, DMO would then publish the technical 
specification in the Federal Register pursuant to the delegation of 
authority proposed in Sec.  45.15(b). Overall, DMO is establishing a 
technical specification for certain swap data elements according to the 
CDE Technical Guidance, where possible.
    The swap data elements to be reported to SDRs will therefore 
consist of: (i) The data elements implemented in the CDE Technical 
Guidance; and (ii) additional CFTC-specific data elements that support 
the Commission's regulatory responsibilities.\308\ While much of this 
swap data is already being reported to SDRs according to each SDR's 
technical specifications, as explained below, the technical 
specification and validation conditions will be new. A discussion of 
the swap data elements and comments on the technical specification 
follows below. Data elements specific to part 43 are discussed in a 
separate part 43 final rule.
---------------------------------------------------------------------------

    \308\ The update of appendix 1 and the technical specification 
are expected to represent a significant reduction in the number of 
swap data elements that could be reported to an SDR by market 
participants.
---------------------------------------------------------------------------

    DMO's technical specification contains an extensive introduction to 
help reviewers. As a preliminary matter, the Commission notes 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.\309\ The Commission 
expects UPIs will be available within the next two years.\310\ Until 
the Commission designates a UPI pursuant to Sec.  45.7, SDRs will 
continue to accept, and reporting counterparties will continue to 
report, the product-related data elements unique to each SDR. The 
Commission believes this temporary solution will have SDRs change their 
systems only once when UPI becomes available, instead of twice if the 
Commission adopted standardized product data elements in this release 
before UPIs are available and then later designates UPIs pursuant to 
Sec.  45.7.
---------------------------------------------------------------------------

    \309\ 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/.
    \310\ 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 is adopting the CDE Technical Guidance 
data elements as closely as possible. Where the Commission adopts a CDE 
Technical Guidance data element, the Commission adopts 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 includes footnotes in the technical 
specification to explain these differences as well as provide examples 
and jurisdiction-specific requirements. However, the Commission is not 
including 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 not be included in appendix 1, but are in the 
technical specification.
    Finally, the CDE Technical Guidance did not harmonize many data 
elements 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 anticipates addressing implementation issues through 
the international working groups 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.

B. Comments on the Proposal and Commission Determination

1. Category: Clearing
    The Commission proposed requiring reporting counterparties report 
12 clearing data elements.\311\ The Commission received two comments on 
whether it should require a data element for indicating whether a swap 
is subject to the Commission's clearing requirement in Sec.  50.4 and 
the trade execution requirement in CEA section 2(h)(8). ISDA-SIFMA do 
not believe the Commission should add these data elements because it is 
static data and the Commission already gets all the data elements 
necessary to determine whether a swap is subject to the clearing 
requirement or trade execution

[[Page 75541]]

requirement.\312\ They believe the data elements would be burdensome 
due to their granularity and the prescriptiveness of the clearing 
mandates under Sec.  50.4, and that the Commission will ultimately be 
able to use the global UPI to analyze data related to swaps subject to 
clearing.\313\ Chatham believes the Commission can determine whether a 
product is subject to the clearing requirement or the trade execution 
requirement by other related data elements in the report.\314\ The 
Commission agrees with Chatham and ISDA-SIFMA and is declining to add 
the mandatory clearing and trade execution indicators in appendix 1 at 
this time.\315\
---------------------------------------------------------------------------

    \311\ 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 exceptions and 
exemptions--Counterparty 1 (11); and Clearing exceptions and 
exemptions--Counterparty 2 (12).
    \312\ ISDA-SIFMA at 21.
    \313\ Id.
    \314\ Chatham at 4.
    \315\ The Commission acknowledges that it can determine which 
swaps are subject to the clearing requirement or the trade execution 
requirement, but notes there have been certain difficulties with 
obtaining all of the necessary information in the past due to data 
quality concerns. The Commission expects significant data quality 
improvements in response to this final rule to make that process 
easier.
---------------------------------------------------------------------------

    The Commission is adopting the clearing data elements for clearing 
in appendix 1 as proposed. 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.
2. Category: Counterparty
    The Commission proposed requiring reporting counterparties to 
report ten counterparty data elements.\316\ The Commission received 
eight comments on whether it should require an ultimate parent data 
element. GLEIF support the proposed addition of ultimate parent data 
elements, but acknowledges that the Commission could instead retrieve 
this information through its LEI data search engine.\317\ GFXD, ISDA-
SIFMA, BP, CEWG, DTCC, Chatham, and FIA all oppose requiring this 
information at a transaction level, with most commenters pointing out 
that the Commission could obtain this information from the Global Legal 
Entity Identifier System.\318\ The Commission agrees with GFXD, ISDA-
SIFMA, BP, CEWG, DTCC, Chatham, and FIA that the Commission can obtain 
this information outside of SDR data. As a result, the Commission is 
declining to adopt any parent/ultimate parent swap data elements.
---------------------------------------------------------------------------

    \316\ 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).
    \317\ GLEIF at 3.
    \318\ GFXD at 27; ISDA-SIFMA at 23; BP at 5-6; CEWG at 8; DTCC 
at 6; Chatham at 4; FIA at 4-6.
---------------------------------------------------------------------------

    Reflecting input received from the Department of Treasury, the 
Commission is adopting two counterparty swap data elements that were 
not in the Proposal: Counterparty 1 federal entity indicator and 
Counterparty 2 federal entity indicator.\319\ The Commission believes 
these swap data elements will help identify swaps use by federal 
entities. The Commission is adopting the rest of the counterparty data 
elements in appendix 1 as proposed. Nearly all of this information is 
currently being reported to SDRs. Six of these data elements are 
consistent with the CDE Technical Guidance.
---------------------------------------------------------------------------

    \319\ https://www.cftc.gov/LawRegulation/DoddFrankAct/ExternalMeetings/dfmeeting_060320_1568.
---------------------------------------------------------------------------

3. Category: Events
    The Commission proposed requiring reporting counterparties to 
report four event data elements.\320\ The Commission received four 
comments on the event model generally. GFXD encourages the Commission 
harmonize the event model with ESMA.\321\ CME and DTCC point out the 
differences between the Commission's event model and ESMA's.\322\ The 
Commission has worked to harmonize its event model with ESMA's as much 
as possible. Any remaining differences between its and ESMA's event 
models reflect differences in regulations referenced by the event model 
in the two jurisdictions.
---------------------------------------------------------------------------

    \320\ In appendix 1, these data elements are: Action type (26); 
Event type (27); Event identifier (29); Event timestamp (30);
    \321\ GFXD at 28.
    \322\ CME at 18; DTCC at 3.
---------------------------------------------------------------------------

    The Commission is adopting the event data elements as proposed, 
with one modification. The Commission is adding an Amendment indicator 
data element to flag changes to a previously submitted transaction due 
to a newly negotiated modification. The Amendment indicator will notify 
the public a swap is being amended on the public tape pursuant to part 
43, to indicate that the change to the previously disseminated swap 
transaction is price-forming.
    The Commission is adopting the rest of the events swap data 
elements as proposed. 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.
4. Category: Notional Amounts and Quantities
    The Commission proposed requiring reporting counterparties report 
12 notional data elements.\323\ The Commission requested comment on 
whether it should adopt the CDE Technical Guidance data elements for 
notional schedules. ISDA-SIFMA support the inclusion of ``Notional 
Amount Schedule'' data elements.\324\ They explain that the Notional 
amount data element does not provide a way to report changes (if 
applicable) in notional amounts, such as for amortizing swaps.\325\ The 
Commission agrees with ISDA-SIFMA that the Notional amount schedule 
data elements would remedy an issue with reporting changing notionals. 
As such, the Commission is adding the notional amount schedule data 
elements to appendix 1.
---------------------------------------------------------------------------

    \323\ In appendix 1, these data elements are: Notional amount 
(31); Notional currency (32); Delta (109); Call amount (36); Call 
currency (37); Put amount (38); Put currency (39); Notional quantity 
(40); Quantity frequency (41); Quantity frequency multiplier (42); 
Quantity unit of measure (43); and Total notional quantity (44).
    \324\ Notional amount schedule is three data elements in the CDE 
Technical Guidance.
    \325\ ISDA-SIFMA at 25.
---------------------------------------------------------------------------

    The Commission also requested comment on whether it should require 
the reporting of a USD equivalent notional amount data element. Four 
commenters oppose the data element on the grounds it would impose an 
unnecessary burden on reporting counterparties.\326\ The Commission 
agrees with commenters that the USD equivalent notional amount data 
element would be burdensome to compute and is declining to add the swap 
data element to appendix 1.
---------------------------------------------------------------------------

    \326\ CME at 19-20; GFXD at 29; ISDA-SIFMA at 25-26; FIA at 4-6.
---------------------------------------------------------------------------

    The Commission is adopting the notional data elements as proposed, 
with the modification described above for Notional amount schedule data 
elements and the data element Delta (109) which will be moved and 
included with valuation data elements. Nearly all of this information 
is currently being reported to SDRs. Eleven of the data elements are 
consistent with the CDE Technical Guidance. Exposure information, in 
conjunction with valuation information, is critical for, and currently 
used

[[Page 75542]]

extensively by, the Commission to monitor activity and risk in the 
swaps market.
5. Category: Packages
    The Commission proposed requiring reporting counterparties report 
four package transaction data elements.\327\ The Commission received 
three comments related to package data elements. GFXD supports the 
decision to implement package transaction elements, but GFXD requests 
the Commission coordinate with ESMA to ensure that implementation is 
consistent across jurisdictions.\328\ ISDA-SIFMA do not support 
additional package data elements because they are exceptionally complex 
and there is no consistent approach to decomposing a package 
transaction or their associated definitions.\329\ Markit opposes 
package transaction data elements because it believes they are too 
complex to provide a benefit to the Commission.\330\
---------------------------------------------------------------------------

    \327\ In appendix 1, these data elements are: Package identifier 
(46); Package transaction price (47); Package transaction price 
currency (48); and Package transaction price notation (49).
    \328\ GFXD at 29.
    \329\ ISDA-SIFMA at 26.
    \330\ Markit at 5.
---------------------------------------------------------------------------

    The Commission believes package transaction data is necessary for 
the Commission to monitor the exposure of its registrants to these 
complex transactions. As a result, despite the objections of ISDA-SIFMA 
and Markit, the Commission is adding three package transaction swap 
data elements to appendix 1 from the CDE Technical Guidance: Package 
transaction spread; Package transaction spread currency; and Package 
transaction spread notation. The Commission is also adding Package 
indicator data element to appendix 1. The Commission agrees with GFXD 
that it should harmonize with ESMA to ensure consistent implementation 
across jurisdictions, and that is why the Commission adopted the 
package data elements according to the CDE Technical Guidance where 
possible. The Package indicator will alert the public on the part 43 
tape that the swap is part of a package, so the public will know the 
price is impacted by factors beyond the swap.
    The Commission is adopting the rest of the package data elements as 
proposed. Some of this information is currently being reported to SDRs. 
Seven 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.
6. Category: Payments
    The Commission proposed requiring reporting counterparties to 
report 12 data elements related to payments.\331\ The Commission did 
not receive any comments on adding or removing the payments data 
elements in appendix 1 and is adopting the data elements as proposed. 
Nine of these data elements are consistent with the CDE Technical 
Guidance. Nearly all of this information is currently being reported to 
SDRs.
---------------------------------------------------------------------------

    \331\ In appendix 1, these data elements are: Day count 
convention (53); Fixing date (54); Floating rate reset frequency 
period (55); Floating rate reset frequency period multiplier (56); 
Other payment type (57); Other payment amount (58); Other payment 
currency (59); Other payment date (60); Other payment payer (61); 
Other payment receiver (62); Payment frequency period (63); and 
Payment frequency period multiplier (64).
---------------------------------------------------------------------------

7. Category: Prices
    The Commission proposed requiring reporting counterparties to 
report 18 data elements related to swap prices.\332\ The Commission 
received two comments on whether the Commission should continue to 
require the reporting of the Non-standardized pricing indicator. ISDA-
SIFMA and GFXD oppose the indicator \333\ and raise a concern that it 
could lead to reporting counterparties reporting additional terms to 
address the vague direction the data element provides. The Commission 
disagrees with ISDA-SIFMA and GFXD and is declining to remove this data 
element from appendix 1. While broad, the Non-standardized term 
indicator alerts the public a price may be due to unique terms when 
SDRs disseminate it to the public. The Commission does not share ISDA-
SIFMA's concerns about additional terms, as the data element is just an 
indicator to flag terms of the swap that may not be reported to an SDR.
---------------------------------------------------------------------------

    \332\ In appendix 1, these data elements are: Exchange rate 
(65); Exchange rate basis (66); Fixed rate (67); Post-priced swap 
indicator (68); Price (69); Price currency (70); Price notation 
(71); Price unit of measure (72); Spread (73); Spread currency (74); 
Spread notation (75); Strike price (76); Strike price currency/
currency pair (77); Strike price notation (78); Option premium 
amount (79); Option premium currency (80); Option premium payment 
date (81); and First exercise date (82).
    \333\ GFXD at 31; ISDA-SIFMA at 29.
---------------------------------------------------------------------------

    The Commission is adopting the price data elements in appendix 1 as 
proposed. 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 used by, the 
Commission in understanding pricing in the swaps market.
8. Category: Product
    The Commission proposed requiring reporting counterparties to 
report five product-related data elements.\334\ The Commission received 
two comments on its approach to product data elements until the UPI is 
available. GFXD and ISDA-SIFMA support the Commission's approach.\335\
---------------------------------------------------------------------------

    \334\ In appendix 1, these data elements are: CDS index 
attachment point (83); CDS index detachment point (84); Index factor 
(85); Embedded option type (86); and Unique product identifier (87).
    \335\ ISDA-SIFMA at 26-27; GFXD at 30.
---------------------------------------------------------------------------

    The Commission is adopting the product data elements in appendix 1 
as proposed. Product data elements are currently being reported to 
SDRs. The Commission has 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.
9. Category: Settlement
    The Commission proposed requiring reporting counterparties to 
report two settlement data elements.\336\ The Commission received two 
comments on additional settlement data elements. GFXD and ISDA-SIFMA 
recommend the Commission consider including the Settlement location 
data element in the CDE Technical Guidance, as it would be an efficient 
option to collect additional information on trades involving offshore 
currencies.\337\ The Commission agrees with GFXD and ISDA-SIFMA that 
the Settlement location data element would help the Commission collect 
information on trades involving offshore currencies. As a result, the 
Commission is adding the CDE Technical Guidance data element for 
Settlement location to appendix 1. For reasons articulated in the 
Proposal and reiterated above, the Commission is adopting the rest of 
the settlement data elements in appendix 1 as proposed.
---------------------------------------------------------------------------

    \336\ In appendix 1, these data elements are: Final contractual 
settlement date (88) and Settlement currency (89).
    \337\ GFXD at 30; ISDA-SIFMA at 27.
---------------------------------------------------------------------------

10. Category: Transaction-Related
    The Commission proposed requiring reporting counterparties to 
report 15 data elements that provide information about each swap 
transaction.\338\ The

[[Page 75543]]

Commission received one comment on whether the Commission should 
include the data element for Jurisdiction indicator. ISDA-SIFMA oppose 
the indicator as the reporting counterparty would need to reach out to 
each of its counterparties for each transaction at or shortly after 
execution.\339\ They also question whether and how the list of 
jurisdictions could change and whether they would be subject to the 
public rulemaking process, and note this is not a CDE data 
element.\340\ The Commission is adopting the data element with one 
change to address ISDA-SIFMA's concerns about complicated 
implementation: the data element will be named Jurisdiction and will 
include limited allowable values.
---------------------------------------------------------------------------

    \338\ In appendix 1, these data elements are: Allocation 
indicator (91); Non-standardized term indicator (92); Block trade 
election indicator (93); Effective date (94); Expiration date (95); 
Execution timestamp (96); Reporting timestamp (97); Platform 
identifier (98); Prime brokerage transaction identifier (89 in the 
Proposal); Prime brokerage transaction indicator (99); Prior USI 
(for one-to-one and one-to-many relations between transactions) 
(100); Prior UTI (for one-to-one and one-to-many relations between 
transactions) (101); Unique swap identifier (USI) (102); Unique 
transaction identifier (UTI) (103); and Jurisdiction (104).
    \339\ ISDA-SIFMA at 28.
    \340\ Id.
---------------------------------------------------------------------------

    The Commission received one comment on whether the Commission 
should add a Prime brokerage transaction identifier data element in 
appendix 1. ISDA-SIFMA have significant concerns with the Prime 
brokerage transaction identifier data element and opposes its 
adoption.\341\ ISDA-SIFMA point out that the Commission can require any 
SD to provide any information relating to a swap, including asking any 
prime broker to map swaps that result from a trigger swap and to which 
such SD is a party.\342\ In addition, the Prime brokerage transaction 
indicator data element should help identify prime broker intermediated 
transactions in SDR data.\343\ The Commission agrees with ISDA-SIFMA 
that the identifier would be too complex to implement at this time. As 
such, the Commission is declining to add Prime brokerage transaction 
identifier to appendix 1.
---------------------------------------------------------------------------

    \341\ ISDA-SIFMA at 27-28.
    \342\ Id.
    \343\ Id.
---------------------------------------------------------------------------

    The Commission is adopting the rest of the transaction data 
elements in appendix 1 as proposed. Most of this information is 
currently being reported to SDRs and the Commission requires data 
elements like transaction identifiers to properly track new and amended 
swaps.
11. Category: Transfer
    The Commission proposed requiring reporting counterparties to 
report one data element related to changing SDRs.\344\ The Commission 
did not receive any comments on the New SDR identifier data element and 
is adopting the data element as proposed. This data element is 
necessary as the Commission is adopting 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.
---------------------------------------------------------------------------

    \344\ In appendix 1, this data element is: New SDR identifier 
(105).
---------------------------------------------------------------------------

12. Category: Valuation
    The Commission proposed requiring reporting counterparties to 
report six valuation data elements.\345\ The Commission received 
several comments on the valuation data elements. ISDA-SIFMA, GFXD, and 
Markit generally oppose the valuation data elements. GFXD and ISDA-
SIFMA do not support any valuation data elements outside of those 
required by the CDE Technical Guidance.\346\ Markit opposes the 
valuation data elements as it would be difficult for firms to report 
them each day because (i) valuation data comes from systems separate 
from risk management systems that hold the transaction information; and 
(ii) daily valuation reporting that is prepared for other jurisdictions 
only involves minimum transaction information (trade reference, USI or 
UTI) that are used to link the valuation to the right trade.\347\
---------------------------------------------------------------------------

    \345\ In appendix 1, these data elements are: Last floating 
reference value (107); Last floating reference reset date (108); 
Valuation amount (110); Valuation currency (111); Valuation method 
(112); and Valuation timestamp (113).
    \346\ ISDA-SIFMA at 30-31; GFXD at 31-32.
    \347\ Markit at 7.
---------------------------------------------------------------------------

    The Commission is adopting Next floating reference reset date, 
along with the other valuation data elements in appendix 1. Nearly all 
of this information is currently being reported to SDRs. Five 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.
13. Category: Collateral and Margins
    The Commission proposed requiring reporting counterparties to 
report 14 collateral and margins data elements.\348\ In light of the 
importance of this information, the Commission is adopting the margin 
and collateral data elements as proposed, with one change. The proposed 
Collateral portfolio code is now two separate data elements, Initial 
margin collateral portfolio code and Variation margin collateral 
portfolio code. This information is not currently being reported to 
SDRs. Eleven of these data elements are consistent with the CDE 
Technical Guidance. One data element, Affiliated counterparty for 
margin and capital indicator (114), will help the Commission monitor 
compliance with the uncleared margin requirements. The three 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.
---------------------------------------------------------------------------

    \348\ In appendix 1, these data elements are: Affiliated 
counterparty for margin and capital indicator (114); 
Collateralisation category (115); collateral portfolio code (105 in 
the Proposal); Portfolio containing non-reportable component 
indicator (117); Initial margin posted by the reporting counterparty 
(post-haircut) (118); Initial margin posted by the reporting 
counterparty (pre-haircut) (119); Currency of initial margin posted 
(120); Initial margin collected by the reporting counterparty (post-
haircut) (121); Initial margin collected by the reporting 
counterparty (pre-haircut) (122); Currency of initial margin 
collected (123); Variation margin posted by the reporting 
counterparty (pre-haircut) (125); Currency of variation margin 
posted (126); Variation margin collected by the reporting 
counterparty (pre-haircut) (127); and Currency of variation margin 
collected (128).
---------------------------------------------------------------------------

14. Category: Miscellaneous
    CME requests clarification on whether SDRs can add proprietary data 
elements to its technical specification or whether an SDR can reject 
submissions due to validation failures of these data elements, and gave 
two examples of certain data elements for internal processing purposes 
(e.g., billing) and data elements to satisfy its regulatory obligations 
(e.g., implementation of certain data elements at the leg level).\349\ 
The Commission understands SDRs may have data elements for internal 
processing, and the Commission does not want to interrupt an SDR's 
ability to efficiently function. Beyond that, the Commission opposes 
SDRs adding data elements outside of those mandated by the Commission 
to satisfy the Commission's rules to avoid creating the issue SDRs and 
the Commission currently face of each SDR creating their own data 
elements according to different standards and thus inhibiting data 
quality.
---------------------------------------------------------------------------

    \349\ CME at 20.
---------------------------------------------------------------------------

    ISDA-SIFMA request the Commission follows EMIR's process on the 
data elements in the future: ESMA publishes the data validation table 
on an ``EMIR Reporting'' web landing page, while

[[Page 75544]]

only the data elements required to be reported, format and applicable 
types of derivatives contracts appear in the rule text.\350\ The 
approach would allow for public comment on any future changes to the 
data required to be reported to the SDRs, but would provide greater 
flexibility to make adjustments (e.g., due to industry feedback or 
completion of developing the ISO message for example) that do not 
change the data elements required to be reported.\351\ The Commission 
has endeavored to follow ESMA's approach as reflected by the steps 
taken to solicit public comment on the data elements and have DMO 
publish its technical specification.
---------------------------------------------------------------------------

    \350\ ISDA-SIFMA at 34-35.
    \351\ Id.
---------------------------------------------------------------------------

VI. Compliance Date

    In the Proposal, the Commission acknowledged that market 
participants will need a sufficient implementation period to 
accommodate the changes proposed in the three Roadmap proposals that 
would be adopted by the Commission. The Commission expected to finalize 
all rules at the same time, even though the three Roadmap proposals 
were approved separately. The Commission also expected 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 expected that the compliance date for the rules on 
UTIs in Sec.  45.5 would be December 31, 2020, according to the UTI 
implementation deadline recommended by the FSB.\352\
---------------------------------------------------------------------------

    \352\ See Financial Stability Board, Governance Arrangements for 
the Unique Transaction Identifier (UTI), Conclusions and 
Implementation Plan (Dec. 2017), section 5.2.
---------------------------------------------------------------------------

    The Commission received three comments supporting the proposed one-
year compliance period. ISDMA-SIFMA support a single compliance date 
for parts 43, 45, and 49 at a minimum of 12 months from the date the 
final rules are published in the Federal Register. If the Commission 
does not implement all rules at the same time, ISDA-SIFMA support a 
compliance date a minimum of 12 months from the date the last rule of 
the final set of rules is published in the Federal Register.\353\
---------------------------------------------------------------------------

    \353\ ISDSA-SIFMA at 36.
---------------------------------------------------------------------------

    Similarly, LCH recommends the Commission set the compliance date 
for all requirements under the proposal to 12 months from publication 
to comply with all aspects of the rules, as LCH believes the current 
date of December 31, 2020, related to UTI implementation does not allow 
enough time for market participants to comply.\354\
---------------------------------------------------------------------------

    \354\ LCH at 2 and 4.
---------------------------------------------------------------------------

    ICE SDR suggests the Commission allow voluntary early 
implementation before the compliance effective date, and points out 
that having SDRs and market participants implement immediately after 
publication would be advantageous to the market and would eliminate the 
need for reporting counterparties to report valuation data.\355\
---------------------------------------------------------------------------

    \355\ ICE SDR at 2 and 5.
---------------------------------------------------------------------------

    The Commission received five comments opposing the proposed 
implementation period. GFXD suggests 12 months from publication of 
final rules should be the minimum implementation period and that GFXD 
believes the changes to the technical specification in parts 43 and 45 
should be implemented and allowed to imbed before the validation 
changes under part 49 are implemented.\356\
---------------------------------------------------------------------------

    \356\ GFXD at 35.
---------------------------------------------------------------------------

    CME believes SDRs will need an extra six months beyond the 
Commission's proposal because the Commission expects SDRs to implement 
all changes simultaneously. CME notes this timing assumes the technical 
specification would be finalized at the same time and would not be 
modified in any material respect prior. CME's DCO also believes the 
Commission underestimated the number of man-hours that it will take 
reporting entities, including CME's DCO, to implement the Commission's 
proposed changes to the reporting requirements.\357\
---------------------------------------------------------------------------

    \357\ CME at 22-23.
---------------------------------------------------------------------------

    DTCC requests clarification regarding the implementation period for 
any proposed changes to the reporting requirements in Sec.  45.15(a)(1) 
through (3) and in Sec.  45.15(b)(1) through (3), because certain 
changes, including the potential use and ingestion of prescribed 
message standards, may take significant time to implement.\358\
---------------------------------------------------------------------------

    \358\ DTCC at 8.
---------------------------------------------------------------------------

    ICE DCOs believe the Commission should adopt a realistic compliance 
period that allows for industry coordination.\359\ FIA suggests 
extending the compliance date for all aspects of the proposals to the 
later of two years following the effective date of the final rules or 
one year following finalization of the required data elements and 
validation processes of the reporting counterparty's SDR. FIA is 
concerned the proposed dates do not provide enough time for market 
participants to undertake the extensive system developments necessary 
for compliance.\360\
---------------------------------------------------------------------------

    \359\ ICE DCOs at 1-2.
    \360\ FIA at 10-11.
---------------------------------------------------------------------------

    The Commission received six comments opposing the UTI compliance 
date proposal. GFXD believes the December 31, 2020 compliance date for 
UTIs is ``extremely ambitious,'' and that there should be a later 
implementation period for UTI that is coordinated with the EU.\361\ CME 
requests the Commission align the UTI transition with the main 
compliance date to reduce the potential for unnecessary duplication of 
effort and to allow for potential project implementation 
synergies.\362\
---------------------------------------------------------------------------

    \361\ GFXD at 34-35.
    \362\ CME at 22.
---------------------------------------------------------------------------

    JBA believes aligning the UTI implementation timeline across 
jurisdictions will be more beneficial, and that deadlines should 
coincide with those of the UPI and CDE, in light of proposals offered 
in the ESMA consultation.\363\ ISDA-SIFMA note the proposed date would 
give only two months for entities to complete builds and test systems, 
accounting for year-end code freezes and the exacerbation of budgeting 
and resource constraints caused by the COVID-19 pandemic. ISDMA-SIFMA 
want Sec.  45.5 to be implemented at least at the same time as the rest 
of part 45 but would prefer the Commission wait until closer to the 
Australian Securities and Investments Commission's or ESMA's compliance 
dates in 2022.
---------------------------------------------------------------------------

    \363\ JBA at 1-2.
---------------------------------------------------------------------------

    CS recommends the Commission not separate the Proposal's compliance 
dates. If the Commission does keep them separate, CS suggests working 
closely with fellow IOSCO members in considering an extended 
implementation timeline for the UTI. In light of other initiatives for 
global SDs, the operationalizing requirements and operational hurdles 
present challenges for SDs. CS requests the Commission continue to 
weigh concerns related to data fragmentation in evaluating a bifurcated 
implementation of the proposals. CS also suggests the Commission 
continue to engage in dialogue with the Harmonisation Group and could 
suggest a timeframe that takes into account the Commission's proposals 
and other data reform efforts in other IOSCO jurisdictions.\364\
---------------------------------------------------------------------------

    \364\ CS at 2.
---------------------------------------------------------------------------

    FIA believes the USI and UTI compliance changes will have to be 
addressed and should occur in tandem with the rest of the reporting 
rule requirements. It recommends eliminating the December 30, 2020

[[Page 75545]]

compliance date for UTIs and instead imposing one date for compliance 
for all final rules.\365\
---------------------------------------------------------------------------

    \365\ FIA at 10-11.
---------------------------------------------------------------------------

    The Commission received two questions on going-forward amendments 
for UTIs. ISDA-SIFMA request the amendments to the Commission's swap 
reporting rules clarify that requirements should be applied on a 
``going forward'' basis and only apply to swaps and events occurring on 
or after the compliance date of the amended rules, including the 
clarification that UTI requirements only apply to new swap transactions 
and not to swaps prior to the compliance date that have a USI.\366\ 
DTCC requests clarification on implementing UTI versus USI. It 
questions whether swaps that were reported using a USI prior to the end 
of the compliance period can continue being reported using the USI and 
only events requiring the creation of new UTIs will be reported using 
the UTI.\367\
---------------------------------------------------------------------------

    \366\ ISDA-SIFMA at 36.
    \367\ DTCC at 5.
---------------------------------------------------------------------------

    Based on the many comments that requested one compliance date for 
all aspects of the Proposal and all of the Roadmap proposals, including 
final Sec.  45.5, and the many comments that requested a compliance 
date that is more than one year from the date the proposals are 
finalized, the Commission has determined to adopt a unified compliance 
date that is 18 months from the date of publication of the final rule 
amendments in the Federal Register. The Commission agrees with the 
suggestion from ICE SDR that market participants should be able to 
adopt the rule changes ahead of the compliance date.
    Regarding the UTI implementation, the Commission clarifies that UTI 
implementation should be on a going-forward basis. This means that all 
new swaps entered into after the compliance date should have UTIs 
according to final Sec.  45.5. As a result, SDRs will need to 
accommodate both USIs and UTIs for a certain amount of time after the 
compliance date, but the Commission anticipates SDRs would be able to 
phase it out at a certain point after swaps using USIs are terminated 
or reach maturity.
    Part 20 of the Commission's regulations governing 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.\368\ In the Proposal, the Commission asked 
whether 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? \369\
---------------------------------------------------------------------------

    \368\ 17 CFR 20.9.
    \369\ Swap Data Recordkeeping and Reporting Requirements, 85 FR 
21578, 21614 (Apr. 17, 2020).
---------------------------------------------------------------------------

    The Commission received three comments on the appropriateness of 
sunsetting part 20. BP supports sunsetting part 20 since SDRs have been 
collecting and processing data for several years, Commission and 
industry resources should no longer be expended on part 20.\370\ CEWG 
believes once the improvements in the proposed rules are implemented, 
CFTC should look towards ending part 20.\371\ FIA believes the 
provisions in Sec.  20.9 have been met and recommends CFTC sunset the 
part 20 reporting requirements.\372\
---------------------------------------------------------------------------

    \370\ BP at 6.
    \371\ CEWG at 9.
    \372\ FIA at 14.
---------------------------------------------------------------------------

    Since part 20 data is reported directly to the Commission and not 
to SDRs, the Commission did not propose any changes to part 20 in the 
Roadmap or in the Proposal, and therefore, the Commission is taking no 
action on part 20 in this release. The Commission nonetheless 
acknowledges the commenters' responses to the question. The Commission 
may address part 20 reporting at a future date after implementation of 
the Roadmap rules.

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.\373\ The Commission has previously established certain 
definitions of ``small entities'' to be used by the Commission in 
evaluating the impact of its rules on small entities under the 
RFA.\374\ The changes to parts 45, 46, and 49 adopted 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,\375\ DCOs,\376\ MSPs,\377\ SDs,\378\ SDRs, \379\ 
and SEFs \380\ are not small entities for purpose of the RFA.
---------------------------------------------------------------------------

    \373\ See 5 U.S.C. 601-604.
    \374\ See Policy Statement and Establishment of ``Small 
Entities'' for purposes of the Regulatory Flexibility Act, 47 FR 
18618 (Apr. 30, 1982).
    \375\ See id.
    \376\ See Derivatives Clearing Organization General Provisions 
and Core Principles, 76 FR 69334, 69428 (Nov. 8, 2011).
    \377\ See 77 FR at 20194 (basing determination in part on 
minimum capital requirements).
    \378\ See Swap Trading Relationship Documentation Requirements 
for Swap Dealers and Major Swap Participants, 76 FR 6715 (Feb. 8, 
2011).
    \379\ 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).
    \380\ Core Principles and Other Requirements for Swap Execution 
Facilities, 78 FR 33476, 33548 (June 4, 2013).
---------------------------------------------------------------------------

    Various changes 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 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 under the rules 
of a DCM.\381\ The Commission has previously certified that ECPs are 
not small entities for purposes of the RFA.\382\
---------------------------------------------------------------------------

    \381\ See 7 U.S.C. 2(e).
    \382\ See Opting Out of Segregation, 66 FR 20740, 20743 (Apr. 
25, 2001). The Commission also notes 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.
---------------------------------------------------------------------------

    The Commission has analyzed swap data reported to each SDR \383\ 
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 under the rules of a DCM, 
identified nearly 1,600 non-SD/MSP/DCO reporting counterparties.

[[Page 75546]]

Based on its review of publicly available data, the Commission believes 
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 rules would affect a substantial number of small entities.
---------------------------------------------------------------------------

    \383\ 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.
---------------------------------------------------------------------------

    Based on the above analysis, the Commission does not believe this 
Final Rule 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 
Final Rule will not have a significant economic impact on a substantial 
number of small entities.

B. Paperwork Reduction Act

    The Paperwork Reduction Act (``PRA'') \384\ imposes certain 
requirements on federal agencies, including the Commission, in 
connection with their conducting or sponsoring any collection of 
information, as defined by the PRA. The rule amendments adopted herein 
will result in the revision of three information collections, as 
discussed below. The Commission has previously received control numbers 
from the Office of Management and Budget (``OMB'') for each of the 
collections impacted by this rulemaking: OMB Control Numbers 3038-0096 
(relating to part 45 swap data recordkeeping and reporting); 3038-0089 
(relating to part 46 pre-enactment swaps and transition swaps); and 
3038-0086 (relating to part 49 SDR regulations).
---------------------------------------------------------------------------

    \384\ See 44 U.S.C. 3501.
---------------------------------------------------------------------------

    The Commission did not receive any comments regarding its PRA 
burden analysis in the preamble to the Proposal. The Commission is 
revising the three information collections to reflect the adoption of 
amendments to parts 45, 46, and 49, as discussed below, including 
changes to reflect adjustments that were made to the final rules in 
response to comments on the Proposal (not relating to the PRA). In 
addition, the Commission is revising the information collections for 
part 45 to include estimates of the burden hours that SDRs, SEFs, DCMs, 
and reporting counterparties could incur to report updated swap data 
elements in appendix 1 to part 45 in the form and manner provided in 
the technical specification published by the Commission, as discussed 
below, which were not included in the Proposal. The Commission has re-
evaluated its analysis of the one-time costs that SDRs, SEFs, DCMs, and 
reporting counterparties could incur to modify their systems for part 
45. These estimates have been updated to include software developer 
labor costs for amended Sec.  45.3 related to the technical 
specification, as developed by staff in its Offices of the Chief 
Economist and Data and Technology. The Commission does not expect any 
ongoing costs after the initial builds. Further, the Commission 
previously included estimates for proposed Sec.  45.4 of costs for SDRs 
and reporting counterparties to update systems for reporting required 
swap continuation data. However, after further analysis, the Commission 
is removing the estimates for Sec.  45.4 to avoid double-counting, 
since the costs relate to reporting certain swap data elements that are 
included in the estimated one-time start-up costs for Sec.  45.3. The 
Commission does not believe the rule amendments as adopted impose any 
other new collections of information that require the approval of OMB 
under the PRA.
    Under the PRA, Federal agencies must obtain approval from OMB for 
each collection of information they collect or sponsor. ``Collection of 
information'' is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3 and 
includes agency requests or requirements that members of the public 
submit reports, keep records, or provide information to a third party. 
Section 3506(c)(2)(A) of the PRA, 44 U.S.C. 3506(c)(2)(A), requires 
Federal agencies to provide a 60-day notice in the Federal Register for 
each proposed collection of information before submitting the 
collection to OMB for approval. The Commission is publishing a 60-day 
notice (``60-day Notice'') in the Federal Register concurrently with 
the publication of this final rule in order to solicit comment on 
burden estimates for part 45 that were not included in the Proposal.
1. Part 45: Revisions to Collection 3038-0096 (Swap Data Recordkeeping 
and Reporting Requirements)
a. Sec.  45.3--Swap Creation Data Reports
    Existing 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 adopting changes that 
will remove the requirement for SEFs, DCMs, and reporting 
counterparties \385\ to report confirmation data reports, and instead 
report a single swap creation data report. Commission staff estimates 
that for these entities, the change will reduce the number of swap 
creation data reports sent to SDRs from 10,000 reports per 1,732 
respondents to 7,000 reports per 1,732 respondents, or 12,124,000 
reports in the aggregate. The annual hourly burden is estimated to 
remain .01 average hours per report for the remaining reports, and the 
gross annual reporting burden is estimated to be 121,240 hours.
---------------------------------------------------------------------------

    \385\ The current requirement for SEFs and DCMs is in Sec.  
45.3(a), and the current requirement for off-facility swaps is in 
Sec. Sec.  45.3(b) through (d).
---------------------------------------------------------------------------

    The Commission is also adopting changes that will remove the Sec.  
45.3(i) requirement for SEFs, DCMs, and reporting counterparties to 
report TR identifiers and swap identifiers for international swaps. The 
changes 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 will not change the burden estimate, as 
SEFs, DCMs, and reporting counterparties are required to report swap 
identifiers for all swaps pursuant to Sec.  45.5. However, the removal 
of the requirement to report TR identifiers will slightly reduce the 
amount of time required to make each report, as SEFs, DCMs, and 
reporting counterparties will not need to report this information 
anymore.
    The Commission estimates the removal of this requirement will lower 
the burden hours by .01 hour per report. However, at the same time, as 
discussed further below in section VII.B.1.c, the Commission is 
adopting changes to require the reporting of UTIs instead of USIs, 
which are currently reported in every required swap creation data 
report. The Commission estimates the new rules requiring SEFs, DCMs, 
and reporting counterparties to report UTIs will 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 net 
change to the .01 burden hours per report for Sec.  45.3 required swap 
creation data reporting resulting from the amendments to Sec.  45.3(i).
    The aggregate burden estimate for Sec.  45.3 required swap creation 
data reports 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.
    In addition, the Commission estimates SDRs, SEFs, DCMs, and 
reporting counterparties will incur capital/start-up costs related to 
adopting the changes proposed in Sec.  45.3. The Commission

[[Page 75547]]

estimates that SDRs will incur one-time initial costs in a range of 
$144,000 to $1,010,000 per SDR to update their systems, with each SDR 
spending approximately 3,000 to 5,000 hours on the updates. The 
Commission estimates SEFs, DCMs, and reporting counterparties will 
incur one-time initial costs in a range of $24,000 to $73,225 per 
reporting entity, with each reporting entity spending approximately 500 
to 725 hours per reporting entity on the updates.\386\ The cost per 
entity is estimated to be $28,923 for a total cost across entities of 
$50,094,636.
---------------------------------------------------------------------------

    \386\ The Commission is updating its estimates of the capital/
start-up costs that SDRs, SEFs, DCMs, and reporting counterparties 
will incur related to adopting the changes in Sec.  45.3 to provide 
a more-accurate range of expected costs. In doing so, the Commission 
includes the costs associated with updates to Sec.  45.4, discussed 
below, as they would be captured in the costs of updating systems to 
adopt the updated data elements in appendix 1 to part 45.
---------------------------------------------------------------------------

b. Sec.  45.4--Swap Continuation Data Reports
    Existing Sec.  45.4 requires reporting counterparties to report 
data to SDRs when swap terms change, as well as daily and quarterly 
swap valuation data, depending on the type of reporting counterparty. 
As a preliminary matter, the Commission is correcting the estimated 
number of respondents for Sec.  45.4 from 1,732 SDRs, SEFs, DCMs, and 
reporting counterparties to 1,705 SDRs and reporting counterparties to 
reflect that SEFs and DCMs do not report required swap continuation 
data.
    Existing Sec.  45.4(a) 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 adopting changes that will remove the option for 
state data reporting for reporting counterparties. The Commission 
estimates that this will reduce the number of Sec.  45.4 continuation 
data reports that reporting counterparties report from 207,543 reports 
per respondent to 103,772 reports per respondent.
    The Commission is also adopting changes 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 estimates this will further reduce the number of Sec.  
45.4 swap continuation data reports they send to SDRs by four quarterly 
reports per 1,585 non-SD/MSP/DCO reporting counterparties. This is 
estimated to reduce the number of Sec.  45.4 continuation data reports 
sent by reporting counterparties from 103,772 reports per respondent to 
97,431 reports per respondent.
    Separately, the Commission is adopting changes to expand the daily 
valuation data reporting requirement for SD/MSP reporting 
counterparties to report margin and collateral data in addition to 
valuation data. This is a change from the Proposal, in which the 
Commission proposed requiring DCO counterparties to report the 
information as well. The frequency of the report will not change for 
SD/MSP reporting counterparties, but the Commission estimated SD/MSP/
DCO reporting counterparties would require more time to prepare each 
report. However, since all of this information is reported 
electronically, the Commission expected the increase per report to be 
small, from .003 to .004 hours per report. Since the Commission is not 
requiring DCO reporting counterparties to report the information, the 
Commission is revising its estimate to .0035 hours per report. The 
reduction in this estimate from .004 hours in the Proposal reflects the 
Commission adopting a less burdensome rule than was proposed.
    The aggregate burden estimate for Sec.  45.4 required swap 
continuation data is as follows:
    Estimated number of respondents: 1,705.
    Estimated number of reports per respondent: 97,431.
    Average number of hours per report: .0035.
    Estimated gross annual reporting burden: 581,419.
    In addition, in the Proposal, the Commission estimated SDRs and 
reporting counterparties would incur capital/start-up costs and ongoing 
operational/maintenance costs related to adopting the changes proposed 
in Sec.  45.4. In reevaluating its analysis in the Proposal, the 
Commission recognizes the reporting costs created by the changes to 
Sec.  43.4 relate to reporting swap data elements, which the Commission 
has included in the estimated costs for Sec.  45.3. To avoid double-
counting costs, the Commission is not estimating separate initial and 
ongoing costs for Sec.  43.4 and removing the estimate that was 
included in the Proposal.
c. Sec.  45.5--Unique Swap Identifier Reporting
    Existing Sec.  45.5 requires SEFs, DCMs, reporting counterparties, 
and SDRs to generate and transmit USIs, and include USIs in all of 
their Sec.  45.3 creation data and Sec.  45.4 continuation data reports 
to SDRs. As a preliminary matter, the Commission is correcting 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 in the 
current estimated number of respondents. The Commission is updating the 
number of 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 respondent will increase proportionately to 115,646 
reports per 147 respondents to account for the 17,000,000 new swaps 
reported each year with USIs.
    Existing Sec.  45.5 requires SDRs to generate and transmit USIs for 
off-facility swaps with a non-SD/MSP reporting counterparty. The 
Commission is adopting changes that will 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 will increase from 147 SDs, MSPs, SEFs, DCMs, DCOs, and 
SDRs to 940 respondents with the addition of financial entities. At the 
same time, however, this will 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 will decrease from 115,646 reports per 147 
respondents to 18,085 reports per 940 respondents.
    The aggregate burden estimate for Sec.  45.5 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.
    In addition, the Commission estimates that Sec.  45.5 will create 
costs for entities required to generate USIs to update their systems to 
generate UTIs. The Commission estimates that SDRs and reporting 
counterparties required to generate UTIs will incur a one-time initial 
burden of one hour per entity to modify their systems to adopt the 
changes described below, for a total estimated hours burden of 940 
hours. The cost per entity is estimated to be

[[Page 75548]]

$72.23 for a total cost across entities of $67,896. The Commission 
additionally estimates one hour per entity annually to perform any 
needed maintenance or adjustments to reporting systems, at a cost of 
$72.23 per entity and $67,896 across entities.
d. Sec.  45.6--Legal Entity Identifier Reporting
    Existing Sec.  45.6 requires reporting entities to have LEIs and 
report them to SDRs as part of their Sec.  45.3 creation data and Sec.  
45.4 continuation data reports. As a preliminary matter, the Commission 
is revising 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 revising 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.\387\
---------------------------------------------------------------------------

    \387\ 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 removing the 
burden estimate for Sec.  45.7 until the Commission designates a 
UPI.
---------------------------------------------------------------------------

    The Commission is also adopting amendments to Sec.  45.6 to require 
SDs, MSPs, SEFs, DCMs, DCOs, and SDRs to renew their LEIs annually. The 
change will increase the burden estimates for these entities, but will 
not affect the burden for the majority of entities required to have 
LEIs. Nonetheless, the Commission expects the burden associated with 
these changes to increase from .01 to .02 hours per report, and 17 
hours in the aggregate.
    The aggregate burden estimate for Sec.  45.6 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. Sec.  45.10--Reporting Changing SDRs
    The Commission is adopting new regulations in Sec.  45.10(d) that 
require reporting counterparties to send SDRs and non-reporting 
counterparties notifications if they change the SDR to which they 
report swap data and swap transaction and pricing data. This is a new 
reporting burden that is not covered in the current collection.
    The Commission estimates that no more than 15 reporting 
counterparties will choose to change the SDR to which they report data. 
As a result, the Commission estimates these 15 reporting counterparties 
will each send one report annually, with an average response time of 
.01 hours per report and a gross annual burden of .15 hours.
    The aggregate burden estimate for Sec.  45.10 is 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 Repositories: 
Registration and Regulatory Requirements)
a. SDR Withdrawal from Registration Amendments
    Existing Sec.  49.4 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 any of the changes the Commission is 
adopting will require any one-time or ongoing system updates for SDRs. 
In addition, the Commission notes it had not previously provided a 
burden estimate for Sec.  49.4, so the Commission provided an estimate 
with the Proposal.
    Existing Sec.  49.4(a)(1)(iv) requires that an SDR's request to the 
Commission to withdraw from SDR registration 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. The 
Commission is adopting changes to remove this requirement from Sec.  
49.4(a)(1)(iv).
    Existing Sec.  49.4(a)(2) requires that before filing a request to 
withdraw, a registered SDR shall file an amended Form SDR to update any 
inaccurate information. The Commission is adopting changes that 
eliminate the requirement for SDRs to file an amended Form SDR prior to 
filing a request to withdraw.
    Separately, the Commission is adopting new 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 estimates that at most one SDR will request to 
withdraw from registration each year pursuant to amended Sec.  49.4. 
The Commission estimates that the SDR will provide one notification to 
the CFTC, which will take an estimated 40 hours for the SDR to 
complete.
    The aggregate burden estimate for Sec.  49.4 is 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
    Existing Sec.  49.10 provides the requirements for SDRs in 
accepting SDR data. As an initial matter, the Commission is correcting 
the estimates for Sec.  49.10 in the Proposal. In the Proposal, the 
Commission misstated the current burden estimate for Sec.  49.10 as 
5,652,000 messages per SDR respondent, for a total of almost 17,000,000 
messages across SDRs. The correct current estimate for Sec.  49.10 is 
2,652,000 messages per SDR, for a total of almost 8,000,000 messages. 
The Commission will discuss the changes to the estimate for Sec.  49.10 
resulting from this rulemaking below according to the corrected 
estimate for Sec.  49.10.
    Existing 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. The Commission is 
adopting those changes in a separate release. In this release, the 
Commission is adopting separate Sec.  49.10(c) requirements for 
validating swap messages. These changes further specify that SDRs must 
send validation acceptance and rejection messages after validating SDR 
data. The Commission estimates that this will increase the number of 
reports SDRs will need to send reporting entities.
    The Commission estimates that the new requirement to send 
validation messages in Sec.  49.10(c) will add 3,000,000 messages to 
each SDR's current burden estimate, at .00055 hours per message, or 
4,950 aggregate burden hours for all three SDRs.
    When added to the current estimate for Sec.  49.10, the aggregate 
burden estimate for Sec.  49.10 is as follows:
    Estimated number of respondents: 3.

[[Page 75549]]

    Estimated number of reports per respondent: 5,652,000.
    Average number of hours per report: .00055.
    Estimated gross annual reporting burden: 9,326. \388\
---------------------------------------------------------------------------

    \388\ The Commission is correcting an incorrect estimate from 
the Proposal of 9,750 hours, due to an error in another Supporting 
Statement accompanying a different rulemaking.
---------------------------------------------------------------------------

    In addition, the Commission estimates that SDRs will incur capital/
start-up costs and ongoing operational/maintenance costs related to 
adopting the changes proposed in Sec.  49.10(c). The Commission 
estimates that SDRs will incur a one-time initial burden of 100 hours 
per entity to modify their systems to adopt the changes described 
above, for a total estimated hours burden of 300 hours, and that SDRs 
will additionally spend 100 hours per entity annually to perform any 
needed maintenance or adjustments to reporting systems. Based on a 
labor cost of $72.23 per hour, the total cost of the one-time initial 
burden is estimated at $21,669 across all three SDRs, and the total 
cost to perform any additional needed maintenance or adjustments to 
reporting systems annually is estimated at $21,669 across all three 
SDRs.
3. Revisions to Collection 3038-0089 (Pre-Enactment Swaps and 
Transition Swaps)
    Existing 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 adopting changes to remove 
the option for state data reporting from Sec.  45.4, the Commission is 
also adopting changes to remove the option for state data reporting 
from Sec.  46.11.
    Because reporting counterparties will no longer be able to send 
daily state data reports for their part 46 historical swaps, the 
Commission estimates the changes adopted in Sec.  46.11 will reduce the 
number of continuation data reports reporting counterparties send SDRs 
for historical swaps by 50%. As a result, the Commission estimates that 
the 125 \389\ SD/MSP reporting counterparties that the Commission 
estimates are reporting historical swaps will each spend five hours on 
these reports annually instead of the previous estimate of 10 hours, 
and the 500 non-SD/MSP reporting counterparties will spend .64 hours on 
these reports annually, instead of the previous estimate of 1.275 
hours.
---------------------------------------------------------------------------

    \389\ The Commission had erroneously stated there were 500 SD, 
MSP, and non-SD/MSP reporting counterparties in the Proposal.
---------------------------------------------------------------------------

    The aggregate burden estimate for reporting historical swaps to 
SDRs under part 46 is as follows:
    Estimated number of respondents: 625.
    Estimated number of reports per respondent: 151.
    Average number of hours per report: .01.
    Estimated gross annual reporting burden: 945. \390\
---------------------------------------------------------------------------

    \390\ In the Proposal, the Commission estimated that to comply 
with proposed amended Sec.  46.11, 500 SD, MSP, and non-SD/MSP 
reporting counterparties that the Commission estimated are reporting 
historical swaps would each submit 200 reports under part 46 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 correct 
aggregate burden hours estimate, which was reflected in the 
supporting statement filed with OMB in connection with the Proposal, 
is 945 (consisting of 625 aggregate annual burden hours for the 125 
SD/MSP reporting counterparties and 320 aggregate burden hours for 
the 500 non-SD/MSP reporting counterparties). The Commission is also 
revising the estimated number of reports filed per respondent under 
part 46 from 200 reports to 151.
---------------------------------------------------------------------------

    The Commission does not believe the changes to Sec.  46.11 being 
adopted will require SDRs or reporting counterparties to make any one-
time or ongoing updates to their systems.

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 swap data.\391\ 
As a result of this work, the Commission has identified ways to improve 
the existing swap data reporting rules. 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 amending its rules to improve 
data quality and standardization to achieve the Group of Twenty 
(``G20'') goal for trade reporting to improve transparency, mitigate 
systemic risk, and prevent market abuse.\392\
---------------------------------------------------------------------------

    \391\ 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.
    \392\ See G20, Leader's Statement Pittsburgh Summit September 
24-25, 2009, (Sept. 2009), available at https://www.treasury.gov/resource-center/international/g7-g20/Documents/pittsburgh_summit_leaders_statement_250909.pdf.
---------------------------------------------------------------------------

    While the Commission believes the amendments will meaningfully 
benefit market participants and the public, some costs could result as 
well. Section 15(a) of the CEA requires the Commission to consider the 
costs and benefits of its actions before promulgating rules under the 
CEA.\393\ Section 15(a) specifies that the Commission evaluates costs 
and benefits 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.\394\ The Commission considers the costs 
and benefits resulting from its discretionary determinations concerning 
the section 15(a) factors.
---------------------------------------------------------------------------

    \393\ 7 U.S.C. 19(a)(1).
    \394\ 7 U.S.C. 19(a)(2).
---------------------------------------------------------------------------

    In this release, the Commission is adopting revisions to existing 
regulations in parts 45, 46, and 49. The Commission is also adopting 
new requirements in parts 45, 46, and 49. Together, these revisions and 
additions should further specify and streamline swap data reporting and 
improve the quality of swap data reporting. The Commission is making 
most of the changes to existing systems and processes, so nearly all 
costs considered are incremental additions or updates to systems 
already in place. The Commission believes many of the amendments, which 
are non-substantive or technical, will not have material cost-benefits 
implications.\395\
---------------------------------------------------------------------------

    \395\ The Commission believes there are no cost-benefit 
implications for amendments 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.
---------------------------------------------------------------------------

    The Commission is adopting multiple changes to harmonize the 
Commission's reporting regulations with those of other regulators as 
part of the FSB and CPMI-IOSCO harmonization efforts. As these efforts 
have incorporated industry feedback, and the Commission has been vocal 
about its support and participation,\396\ the Commission expects many 
market participants have been planning and preparing for updates to 
accommodate these

[[Page 75550]]

important changes in efficient, cost-effective manners.
---------------------------------------------------------------------------

    \396\ See, e.g., Testimony of Chairman J. Christopher Giancarlo 
before the House Committee on Agriculture, Washington, DC, July 25, 
2018, available at 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'').
---------------------------------------------------------------------------

    Many jurisdictions have committed to these harmonization efforts 
for which the Commission is adopting standards. If the Commission did 
not adopt these standards, but other jurisdictions--consistent with the 
technical guidance and implementation deadlines recommended by the 
FSB--did, SDRs and reporting entities could experience unnecessary 
costs due to unharmonized reporting infrastructures for CFTC reporting, 
while market participants in other jurisdictions enjoyed harmonization 
efficiencies.
    The Commission discusses reasonably quantifiable costs and benefits 
in this section; the Commission discusses them qualitatively if they 
are not reasonably quantifiable. Throughout this release, the 
Commission estimates the cost-benefit impact of its changes using swap 
data, such as the prevalence of state data reporting and duplicative 
required swap creation data reports. Most of the changes affect 
reporting requirements for reporting counterparties, SDRs, SEFs, and 
DCMs. As a result, there will likely be some reasonably quantifiable 
costs related to either: (a) Creating new data reporting systems; (b) 
reprogramming existing data reporting systems to meet the new reporting 
requirements; or (c) canceling data streams, which might lead to 
archiving data and maintaining legacy systems. These estimates focus on 
the costs and benefits of the amended rules market participants are 
likely to encounter with an emphasis on technical details, 
implementation, and market-level impacts. Where software changes are 
expected, these costs reflect software developer labor costs only, not 
a blend of different occupations. Costs and benefits quantified at the 
respondent level are estimated in the PRA section in section VII.B 
above. Those costs are not repeated in this section, but where 
appropriate, quantified costs reflected in the PRA are noted below to 
reflect PRA costs have been taken into account in the cost-benefit 
analysis.
    These costs are quantifiable if entities covered by the final 
regulations can price-out the changes to the information technology 
architecture to adopt the reporting requirement changes. These 
quantifiable costs, however, will likely vary because the 
sophistication of reporting entities varies. For example, some 
reporting entities operate their own data reporting systems and employ 
in-house developers and analysts to plan, design, code, test, 
establish, and monitor systems. Other reporting entities pay fees to 
third-party vendors. The quantitative costs associated with the 
reporting rules in this release will vary depending on the reporting 
entities' operations and number of swaps they execute. The Commission 
provides a monetary range for quantifiable costs as they relate to each 
change discussed below where possible.
    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 outside of the 
U.S., including many SDs. Many of the largest market participants often 
conduct operations both within and outside the U.S. Where the 
Commission does not always refer to location, the discussion of costs 
and benefits refers to the 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).\397\
---------------------------------------------------------------------------

    \397\ See 7 U.S.C. 2(i). CEA section 2(i) provides that the swap 
provisions enacted by the Dodd-Frank Act, and Commission regulations 
promulgated under those provisions, shall not apply to activities 
outside 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.
---------------------------------------------------------------------------

2. Background
    The Commission has issued several rulemakings related to swaps 
reporting where it has considered the benefits and costs.\398\ Among 
others, the Commission has identified benefits such as increased 
transparency to both market participants and 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; and improved regulatory oversight and more robust data 
management systems.\399\ The Commission also identified two main areas 
where costs may be incurred: recordkeeping and reporting.\400\
---------------------------------------------------------------------------

    \398\ In 2012, 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 (Jan. 13, 2012). 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).
    \399\ See, e.g., 77 FR at 2176-2193 (Jan. 13, 2012); 77 FR at 
35217-35225 (June 12, 2012); 81 FR at 41758-41770 (June 27, 2016).
    \400\ See, e.g., id.
---------------------------------------------------------------------------

    Based on its experience with swap data and extensive feedback from 
market participants, the Commission believes improving data quality 
will significantly enhance the utility of the swap data while also 
reducing burdens on reporting entities and SDRs through harmonizing, 
streamlining, and clarifying data requirements. In this release, the 
Commission focuses 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 modifying several other regulations for clarity and 
consistency.
    Three SDRs are currently provisionally registered with the 
Commission: CME, DTCC, and ICE. The changes the Commission is adopting 
should apply equally to all three SDRs. The current reporting 
environment also involves third-party service providers that help 
market participants fulfill their reporting requirements, though the 
reporting requirements do not apply directly to them. 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 entities that use them.
    Finally, the current reporting environment depends on reporting 
counterparties. The Commission estimates reporting counterparties 
include 107 provisionally registered SDs, 24 SEFs, 3 DCMs, 13 DCOs, and 
approximately 1,585 non-SD/MSP/DCO reporting counterparties. Each of 
these reporting counterparty types varies as to size and activity. The 
Commission believes most SDs and nearly all SEFs, DCMs, DCOs, and SDRs 
have sophisticated technology dedicated to data reporting because of 
the frequency with which they enter into or facilitate swaps execution 
or accept swap data from reporting entities. The Commission also 
believes these entities have greater access to resources to update 
these systems as regulatory requirements change. Further, the 
Commission estimates that SDs will incur much of the costs and benefits 
associated with the Commission's changes, given they are the most 
sophisticated participants with the most experience reporting under the 
EU and U.S. reporting regimes. For instance, SDs accounted for

[[Page 75551]]

over 70% of records submitted to SDRs in December 2019.\401\
---------------------------------------------------------------------------

    \401\ 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.
---------------------------------------------------------------------------

    Non-SD/MSP/DCO reporting counterparties account for a small 
fraction of SDR reports. The Commission believes there is a wide 
variation in the reporting systems maintained by these entities and the 
resources available to them. These reporting counterparties can be 
large, sophisticated financial entities, including banks, hedge funds, 
and asset management firms, but a significant number are smaller, less-
sophisticated swap end-users entering into swaps less frequently to 
hedge commercial risk.
    The Commission has a significant interest in ensuring these 
smaller, less-sophisticated entities can access the U.S. swaps market 
without unnecessary costs or burdens, but the Commission has difficulty 
accurately estimating the cost impact of the changes on them. The 
challenge stems from the wide range of complexity of firms in this 
group: 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 service providers to 
handle its reporting obligations. Commenters did not provide 
information to help the Commission quantify the costs to these smaller 
entities, notwithstanding the Proposal's request for data and other 
information to assist the Commission's quantification effort.\402\
---------------------------------------------------------------------------

    \402\ 85 FR at 21628 (Apr. 17, 2020).
---------------------------------------------------------------------------

    Swap data reports submitted under the existing regulations have 
posed data quality challenges. For example, the existing appendix 1 to 
part 45 provides no standards, formats, or allowable values for the 
swap data that reporting counterparties report to SDRs and there is no 
technical specification or other guidance associated with the existing 
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,\403\ 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.
---------------------------------------------------------------------------

    \403\ See CFTC's Weekly Swaps Report, available at https://www.cftc.gov/MarketReports/SwapsReports/index.htm.
---------------------------------------------------------------------------

    In addition to the lack of standardization across SDRs, the 
Commission is concerned 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 is 
amending certain regulations, particularly in parts 45, 46, and 49, to 
improve swap data accuracy and completeness. This release also adopts 
one amendment to part 49 to improve the process for an SDR's withdrawal 
from registration. Many of the final regulations have costs and 
benefits that must be considered. The Commission discusses these below.
    The Commission summarizes the amendments \404\ and identifies and 
discusses the costs and benefits attributable to the amendments below. 
Where significant software development costs are expected, CFTC staff 
estimated the hourly wages market participants will likely pay software 
developers to implement each change to be between $48 and $101 per 
hour.\405\ 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. The Commission did not receive any 
comments on its hourly wage estimates. Finally, the Commission 
considers the costs and benefits of all of the amendments jointly in 
light of the five public interest considerations in CEA section 15(a).
---------------------------------------------------------------------------

    \404\ As described throughout this release, the Commission is 
adopting a number of non-substantive changes, such as renumbering 
provisions and modifying the wording of existing provisions. The 
Commission may acknowledge these non-substantive amendments, but 
they present no costs or benefits to consider.
    \405\ Hourly wage rates came from the Software Developers and 
Programmers category of the May 2019 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 ($36.89 and $78.06, 
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 changes. Individual 
entities may, based on their circumstances, incur costs 
substantially greater or less than the estimated averages.
---------------------------------------------------------------------------

3. Baselines
    There are multiple baselines for the costs and benefits that might 
arise from the regulations in this release. The Commission believes the 
baseline for measurement of costs and benefits attributable to the 
amendments to Sec. Sec.  45.3, 45.4, 45.5, 45.6, 45.10, 45.12, 46.3, 
46.10, 46.11, and 49.4 are the costs and benefits realized under 
current regulations, as discussed above in sections II, III, and IV. 
The baseline for 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. General Cost-Benefit Comments
    The Commission received no comments on the general costs and 
benefits of the Proposal overall. The Commission received a few 
comments on the costs and benefits of the proposed amendments to 
individual sections, which are discussed in the relevant sections 
below. To the extent the Commission did not receive comments objecting 
to the Proposal's general cost-benefit consideration, or to its cost-
benefit consideration of specific sections, the Commission views the 
absence of comment as affirmation that the Proposal's consideration of 
costs and benefits was sound, unless otherwise stated below.
    The Commission also notes, with one exception discussed in section 
VII.C.5.a below, it did not receive specific data or information 
regarding costs and benefits from commenters in response to its 
requests for such information in the Proposal.\406\ The Commission 
therefore did not receive additional information

[[Page 75552]]

making it reasonably feasible for the Commission to quantify overall 
costs and benefits, or costs and benefits for specific proposed 
amendments, to a degree beyond that presented in the Proposal, except 
as otherwise noted below.
---------------------------------------------------------------------------

    \406\ See 85 FR at 21628 (Apr. 17, 2020).
---------------------------------------------------------------------------

5. Costs and Benefits of Amendments to Part 45
a. Sec.  45.3--Swap Data Reporting: Creation Data
    The Commission is changing 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) Single required creation data report 
will reduce complexity for reporting counterparties, as well as for the 
Commission; (ii) extending the deadline to report required swap 
creation data and allocations will 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.
    The Commission is also updating the swap data elements in appendix 
1, which existing and amended Sec.  45.3 require SEFs, DCMs, and 
reporting counterparties report to SDRs in the manner provided in Sec.  
45.13(b).\407\ The Commission believes this will improve data quality 
at SDRs and help market participants by removing ambiguity around what 
data they need to report to SDRs.
---------------------------------------------------------------------------

    \407\ The Commission is moving Sec.  45.13(b) to Sec.  
45.13(a)(3) and updating the reference in Sec.  45.3.
---------------------------------------------------------------------------

i. Benefits
    Requiring a single confirmation data report for SEFs, DCMs, and 
reporting counterparties will benefit SDRs, SEFs, DCMs, and reporting 
counterparties by reducing the number of swap data reports being sent 
to and stored by SDRs. An analysis of SDR data by Commission staff 
found this change is likely to significantly reduce reported messages, 
which benefits the reporting parties sending data, and the SDRs who 
ingest, validate and store the data. The analysis showed 26% of all 
swap messages received by the Commission from DTCC, ICE, and CME in 
December of 2019 (48 million records in total) were separate PET and 
confirm messages, which means this amendment could reduce overall 
messages reported to and stored by SDRs by approximately 13% overall.
    Extending the deadline to report required swap creation data will 
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 new 
deadline 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 will benefit SDRs by removing the need to manage separate 
processes to maintain this information. SEFs, DCMs, and reporting 
counterparties will benefit from reporting allocations directly via 
swap data reporting, and no longer reporting information about 
international swaps that will be rendered unnecessary given the UTI 
standards.
    Through updating and further specifying the swap data elements 
required to be reported to SDRs, the Commission will 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 degrees of compliance with swap data standards 
both within and across SDRs.
ii. Costs
    The Commission expects the initial cost of updating systems to 
adopt the changes in Sec.  45.3--outside of updating the data elements 
in appendix 1--to be small.\408\ Most SEFs, DCMs, and reporting 
counterparties should have systems to report swap data to SDRs ASATP 
after execution, as well as systems that report separate PET and 
confirmation swap reports and information about international swaps. 
SDRs likewise have systems to accept both PET data and confirmation 
data reports, possibly separately or combined, as well as systems to 
map allocations and ingest information about international swaps.
---------------------------------------------------------------------------

    \408\ The Commission estimates for PRA purposes that there would 
be a decrease in the burden incurred by reporting counterparties, as 
discussed in the PRA estimates.
---------------------------------------------------------------------------

    In both cases, the changes will reduce complexity and software 
functionality. Reporting entities will 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 and will see data storage costs decline over time.
    The Commission expects market participants to further mitigate 
costs by the fact they involve updates to current systems, rather than 
having to create new systems as most firms had to do when 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 entities implement these one-time system updates, the 
Commission expects SDRs, SEFs, DCMs, and reporting counterparties will 
recognize significant benefits through reduced costs and complexity 
associated with reporting streamlined data to SDRs.
    The Commission received comments supporting its expectation that 
the changes to Sec.  45.3 will improve data quality and reduce 
compliance and cost burdens. Specifically, DTCC believes these changes 
will improve data quality by reducing the number of corrections sent to 
the SDRs and streamline reporting for market participants.\409\ ISDA-
SIFMA believe the extended timeline for reporting swap data will 
improve data quality \410\ and CEWG comments that these changes will 
reduce the compliance burden on market participants.\411\ The 
Commission requested comments on the proposed cost-benefit analysis for 
Sec.  45.3, but did not receive any providing data, significant cost-
benefit alternatives, or opposing views on the costs and benefits.
---------------------------------------------------------------------------

    \409\ DTCC at 5.
    \410\ ISDA-SIFMA 5-7.
    \411\ CEWG at 2.
---------------------------------------------------------------------------

    Conversely, the Commission expects SEFs, DCMs, SDRs, and reporting 
counterparties will incur greater costs in response to the changes to 
the appendix 1 data elements in order to comply with Sec.  45.3. Beyond 
the changes to appendix 1, the Commission expects SEFs, DCMs, SDRs, and 
reporting counterparties will update systems according to DMO's 
technical specification on website at www.cftc.gov, resulting in 
additional costs, even though the technical specifications help these 
entities

[[Page 75553]]

implement reporting for the data elements in appendix 1.
    The three SDRs will need to update their systems to accept the 
updated swap data elements in appendix 1. SEFs, DCMs, and reporting 
counterparties will need to update systems to report the swap data 
elements in appendix 1 to SDRs. SDRs will also need to update systems 
to validate swap data pursuant to the validations requirements in Sec.  
49.10(c). The costs are likely to differ across entities but, depending 
on current systems, as indicated in the estimates detailed below, could 
be significant, before accounting for likely mitigating factors, also 
discussed below.
    The Commission believes some factors will mitigate the costs to 
these entities. First, most of the swap data the Commission is further 
standardizing with updated appendix 1 is currently being reported to 
SDRs. Commission staff recognizes 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 
from current practice could be more pronounced. Costs to standardize 
data elements that had not previously been standardized in certain 
asset classes like commodities, or adding new data elements would be 
costlier; although the reporting entity could mitigate costs if it 
already saves this information but either does not currently send it to 
an SDR or sends it in a non-standard format.
    To the extent SDRs operate in multiple jurisdictions, ESMA already 
requires many of the swap data elements the Commission is adopting. An 
SDR presumably will spend fewer resources updating its systems for the 
changes in appendix 1 if it has already made these changes for European 
markets. Similarly, SEFs, DCMs, and reporting counterparties reporting 
to European TRs may have to spend fewer resources.
    Additionally, after the updates are made, the Commission expects 
SDRs, SEFs, DCMs, and reporting counterparties will see an offsetting 
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 will be able to report more 
efficiently as jurisdictions adopt the CDE Technical Guidance data 
elements.
    Finally, the changes adopted to the swap data elements makes the 
part 43 swap transaction and pricing data elements a subset of the part 
45 swap data elements. This means the changes to parts 43 and 45 will 
require technological changes that could merge two different data 
streams into one. For example, SDRs will have to adjust their 
extraction, transformation, and loading (``ETL'') process to accept 
feeds that comply with the new technical specification and validation 
conditions, but these changes will apply to data elements in both parts 
43 and 45.
    Because many of the changes SDRs will make to comply with part 45 
will likely also help them comply with part 43, the Commission 
anticipates significantly lower aggregate costs for complying with both 
rules 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 final 
rules but for purposes of this section focus on the part 45 swap data 
elements.
    Based on conversations with ODT SMEs experienced in designing data 
reporting, ingestion, and validation systems, Commission staff 
estimates the cost per SDR to be in a range of $144,000 to 
$505,000.\412\ Staff based this estimate on several assumptions and 
covers the set of tasks required for an SDR to design, test, and 
implement a data system based on the list of swap data elements in 
appendix 1 and the technical specification.\413\ These numbers assume 
that each SDR will spend approximately 3,000-5,000 hours to establish 
ETL processes into a relational database on such a data stream.\414\
---------------------------------------------------------------------------

    \412\ 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, staff anticipates the task for the SDRs will 
be significantly more complex than it is for reporters. On several 
occasions, the CFTC has developed an ETL data stream similar to the 
parts 43 and 45 data streams. These data sets consist of 100-200 
data elements, similar to the number of data elements in appendix 1. 
This past Commission experience has been used to derive the included 
estimates.
    \413\ 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) The 
SDR would require implementation of a new database or other data 
storage vehicle from which their business processes can be executed. 
(3) While the record structure is straight forward, the 
implementation of a database representing the different asset 
classes may be complex. (4) The SDR would need to implement a data 
validation regime typical of data sets of this size and magnitude. 
(5) 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.
    \414\ The lower estimate of $144,000 represents 3,000 working 
hours at the $48 rate. The higher estimate of $505,000 represents 
5,000 working hours at the $101 rate.
---------------------------------------------------------------------------

    For reporting entities, the Commission estimates the cost per 
reporting entity to be in a range of $24,000 to $73,225.\415\ This cost 
estimate is based on several assumptions and covers a number of tasks 
required by the reporting entities to design, test, and implement an 
updated data system based on the swap data elements, technical 
specification, and validation conditions.\416\ These tasks include 
defining requirements, developing an extraction query, developing an 
interim extraction format (e.g., comma-separated values (``CSV'')), 
developing validations, developing formatting conversions, developing a 
framework to execute tasks on a repeatable basis, and finally, 
integration and testing. Staff estimates 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.\417\
---------------------------------------------------------------------------

    \415\ 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 transmitted to outside 
organizations. These data sets consist of 100-200 data elements, 
similar to the number of data elements in appendix 1. This past 
experience has been used to derive the included estimates.
    \416\ 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 change in 
part 43.
    \417\ The lower estimate of $24,000 represents 500 working hours 
at the $48 rate. The higher estimate of $73,225 represent 725 
working hours at the $101 rate.
---------------------------------------------------------------------------

    The Commission received one comment, from CME, addressing these 
estimates.\418\ CME notes it expects the costs for its organization to 
be 8,000 to 10,000 developer hours, which is approximately double the 
3,000 to 5,000 developer-hour estimate listed above. The costs CME 
references are specific to its organization. The costs may not directly 
apply to other SDRs and do not apply to the reporting counterparties, 
but provide useful information on the level of effort needed to comply 
with these amendments. Accordingly, the

[[Page 75554]]

Commission deems it appropriate to expand the range of potential costs 
per SDR before mitigation upwards to between $144,000 and $1,010,000 
for purposes of its cost-benefit assessment. Additionally, CME 
acknowledges they expect maintenance costs to decline over time due to 
the streamlined reporting requirements. The Commission did not receive 
any other comments related to the amendments to the data elements in 
appendix 1 that provided additional data, significant cost-benefit 
alternatives, or other opposing or critical views.
---------------------------------------------------------------------------

    \418\ CME at 22.
---------------------------------------------------------------------------

    In sum, for reasons discussed above and taking into account 
relevant comments, the Commission believes the expected benefits 
justify the final rule amendments notwithstanding their expected 
mitigated costs.\419\
---------------------------------------------------------------------------

    \419\ Note the costs associated with reporting daily collateral 
and margin information required by Sec.  45.4 for SD/MSP/DCO 
reporting counterparties as detailed in section VII.C.5.b.ii are 
fully reflected in the costs detailed in this section.
---------------------------------------------------------------------------

b. Sec.  45.4--Swap Data Reporting: Continuation Data
    The Commission is amending Sec.  45.4 to (i) remove the option for 
state data reporting; (ii) extend the deadline for reporting required 
swap continuation data to T+1 or T+2; (iii) remove the requirement for 
non-SD/MSP/DCO reporting counterparties to report valuation data 
quarterly; and (iv) require SD/MSP reporting counterparties to report 
margin and collateral data daily.
    The Commission believes: (i) Removing state data reporting will 
reduce the number of messages being sent to and stored by SDRs; (ii) 
extending the deadline to report required swap continuation data will 
improve data quality without impacting the Commission's ability to 
perform its regulatory responsibilities; (iii) removing the valuation 
data reporting for non-SD/MSP/DCO reporting counterparties will reduce 
burdens for these counterparties, which tend to be smaller and less 
active in the swaps market; and (iv) requiring SD/MSP reporting 
counterparties to report margin and collateral daily is reasonable 
given the sophistication of their trading and reporting systems, 
especially on a T+1 timeline, and essential for the Commission to 
monitor risk.
i. Benefits
    Removing state data reporting will benefit reporting counterparties 
by reducing the number of messages they report to SDRs. This will also 
benefit SDRs by reducing the number of messages they need to ingest, 
validate, process, and store. In 2019, CFTC staff estimates the 
Commission received over 557 million swap messages from CME, DTCC, and 
ICE. Staff analysis from December 2019 shows over 50% of all records 
submitted were state data messages.
    Extending the deadline to report required swap continuation data 
will benefit SDRs and reporting counterparties by reducing the number 
of validation errors SDRs must notify reporting counterparties about. 
Removing the requirement for non-SD/MSP/DCO reporting counterparties to 
report quarterly valuation data will reduce reporting costs for these 
estimated 1,585 counterparties, which tend to be smaller and less 
active in the swaps market. Because of their size, the Commission does 
not expect the lack of valuation data to inhibit the Commission's 
market oversight responsibilities.
    ISDA-SIFMA note approximately 98% of uncleared swaps involve at 
least one SD. As such, this change will affect 2% of reported swaps, 
which they agree do not present systemic risk issues.\420\ Requiring 
SD/MSP reporting counterparties to report margin and collateral daily 
will benefit the swaps market by improving the Commission's ability to 
monitor swap markets and systemic risk within and across markets, 
particularly for uncleared swaps. In contrast, because existing part 45 
reports do not include collateral information, while the Commission is 
often able to identify the level of risk inherent to a swap (or set of 
swaps), it may not fully understand the amount of collateral protection 
a counterparty holds to mitigate this risk.
---------------------------------------------------------------------------

    \420\ ISDA-SIFMA at 8.
---------------------------------------------------------------------------

ii. Costs
    The Commission expects the initial costs of updating systems to 
adopt the changes in Sec.  45.4 to range from low to moderate, offset 
by the decreased reporting burden for all reporting entities.\421\ For 
instance, the Commission understands many reporting counterparties have 
systems to report swap data, including snapshot data, to SDRs according 
to the current timelines. Extending the deadline reduces some of this 
complexity and removes a message type that accounts for over 50% of the 
existing message traffic, which will significantly reduce reporting 
burdens. Based on CFTC SME experience with similar systems, SDRs should 
require minimal updates to their systems that accept snapshot data and 
should ultimately experience reduced data storage costs.
---------------------------------------------------------------------------

    \421\ The Commission estimates for PRA purposes that there would 
be a moderate increase in the burden incurred by market 
participants, as discussed in the PRA section.
---------------------------------------------------------------------------

    Non-SD/MSP/DCO reporting counterparties will need to update their 
systems to stop sending valuation data to SDRs. In contrast, SD/MSP 
reporting counterparties will need to program systems to begin 
reporting margin and collateral data in addition to valuation data. The 
T+1 reporting timeline mitigates this by allowing end-of-day data 
integration and validation processes as opposed to near-real-time 
integration, which, according to CFTC SMEs and staff conversations with 
industry participants, provides flexibility in how and when system 
resources are used to produce the reports and better aligns trade and 
collateral and margin data reporting streams. The Commission 
understands SD/MSP reporting counterparties currently have access to 
the data they need to report collateral and margin data and the costs 
lie in integrating that information with the swap data reporting 
stream. The cost of implementing these changes is expected to be fully 
contained in and a subset of the costs associated with implementing the 
updated data elements in appendix 1 detailed in section VII.C.5.a 
above. As a result, the Commission expects the cost of reporting daily 
collateral and margin data for SD/MSP reporting counterparties on a T+1 
basis to be fully encapsulated by the effort to implement the updated 
data elements in appendix 1.
    Additionally, over time, after these one-time system updates, the 
Commission expects SDRs, SEFs, DCMs, and reporting counterparties will 
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 will likely involve costs for the estimated 107 SD/MSP 
reporting counterparties, it is unlikely to occasion significant, if 
any material, additional costs for the SDRs serving EU jurisdictions. 
This is because ESMA currently requires the reporting of much of the 
same information to EU-registered TRs.
    The Commission expects this could also mitigate the costs for most 
of the 107 SD/MSP reporting counterparties given that they are likely 
active in European swap markets and thus already comply with similar 
requirements. The Commission also expects, for the smaller remaining 
group of reporting entities not active in European swaps markets, each 
entity already has access to the collateral and margin information. 
Accordingly, for

[[Page 75555]]

them, the primary cost will be in integrating existing collateral data 
streams into SDR reporting workflows, which is less costly and 
burdensome than acquiring additional or outside data to integrate. 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 received comments supporting its expectation these 
amendments will benefit the market and mitigate costs incurred. FIA 
agrees the quarterly valuation data reported by non-SD/MSP/DCO 
reporting counterparties is not integral to the CFTC's systemic risk 
monitoring and the benefit of collecting this data do not justify the 
cost incurred by the impacted market participants.\422\ CEWG believes 
the burden of collecting the quarterly valuation data is not 
proportional to the limited value the data provides.\423\ Additionally, 
IECA notes many small counterparties contract with third-party 
reporting services to report the required quarterly valuations and the 
value derived from the data does not justify the cost.\424\
---------------------------------------------------------------------------

    \422\ FIA at 14.
    \423\ CEWG at 2.
    \424\ IECA at 3.
---------------------------------------------------------------------------

    The Commission received 12 comments related to the daily collection 
of collateral and margin data from SD/MSP/DCO counterparties, with four 
in favor and eight opposed. Of the supportive comments, Markit 
addresses the expected costs by noting the daily submission of both 
cleared and uncleared collateral and margin data is more streamlined 
and efficient (and therefore cost-effective) than making reporting for 
cleared trades optional.\425\ Other supportive commenters emphasize the 
need to harmonize collateral and margin data elements to the greatest 
extent possible across jurisdictions in order to not create unnecessary 
costs for market participants.\426\ Several of the opposing comments 
note the additional regulatory costs associated with reporting 
collateral and margin data,\427\ which as noted above is mitigated by 
the T+1 reporting deadline.
---------------------------------------------------------------------------

    \425\ Markit at 6.
    \426\ FXPA at 4-5.
    \427\ See, e.g., CEWG at 8 and Eurex at 3.
---------------------------------------------------------------------------

    CME, Eurex, ICE DCOs, ISDA-SIFMA, and FIA raise concerns about 
duplicative reporting for DCOs regarding cleared swaps. Further, as 
noted in section II.D.4 above, the Commission acknowledges these 
concerns but believes the costs are warranted for uncleared swaps 
reported by SD/MSP reporting counterparties, as this information is not 
available elsewhere and is critical for monitoring systemic risk. For 
cleared swaps reported by DCOs, however, the Commission acknowledges 
the potential duplication with collateral and margin data reported by 
DCOs pursuant to part 39. While collateral and margin data is reported 
pursuant to part 39 using a different set of data elements than those 
contained in appendix 1, and collateral and margin data is reported for 
end-of-day positions pursuant to part 39 as opposed to a more granular 
transaction-by-transaction basis pursuant to part 45, the Commission 
believes the collateral and margin data reported by DCOs pursuant to 
part 39 is sufficiently similar to data reported pursuant to part 45 to 
meet the Commission's current needs.
    In sum, for reasons discussed above and taking into account 
relevant comments, the Commission believes the expected benefits 
justify the final rule amendments notwithstanding their expected 
mitigated costs.
c. Sec.  45.5--Unique Swap Identifiers
    The Commission is amending Sec.  45.5 to (i) require reporting 
parties use UTIs instead of USIs for new swaps; (ii) require financial 
entities to generate UTIs for off-facility swaps; and (iii) permit non-
SD/MSP/DCO reporting counterparties that are not financial entities to 
generate UTIs themselves or ask their SDR to generate UTIs for off-
facility swaps. In general, 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 multiple jurisdictions.
i. Benefits
    The Commission believes amending Sec.  45.5 will benefit SDRs by 
providing one identifier for multiple regulators to adopt to reduce the 
burdens associated with multiple jurisdictions requiring different, and 
possibly conflicting, identifiers. The Commission believes requiring 
SD/MSP and other financial entity reporting counterparties to generate 
UTIs for off-facility swaps will benefit SDRs 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 either generate UTIs 
or ask their SDR to generate UTIs for off-facility swaps will benefit 
smaller, less-active swaps market participants by relieving them of the 
burden to generate UTIs unless they choose to do so. Non-financial 
entities may include end-users more likely to not maintain systems that 
automatically generate UTIs. Therefore, this group will benefit 
proportionally more from this change.
    Permitting these entities to ask the SDRs to generate UTIs will 
maintain, but lower, an ancillary cost for the three SDRs that are 
currently required to generate USIs for off-facility swaps with non-SD/
MSP reporting counterparties. The Commission believes giving these 
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.
ii. Costs
    In general, the Commission expects the initial costs of updating 
systems to adopt UTIs will be small to moderate for most reporting 
entities and SDRs.\428\ For instance, the Commission expects reporting 
counterparties and SDRs have systems that generate, 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, the Commission expects market 
participants will recognize the reduced costs associated with reporting 
a globally-standardized UTI.
---------------------------------------------------------------------------

    \428\ The Commission estimates for PRA purposes that there would 
be a moderate increase in the burden incurred by market 
participants, as discussed in the PRA section.
---------------------------------------------------------------------------

    In addition, the Commission understands ESMA mandates UTIs. The 
Commission views this as a significant mitigating factor when assessing 
what, if any, additional burden SDRs serving multiple jurisdictions as 
well as reporting counterparties active in the European markets, will 
experience, since they have likely already updated their systems to 
meet the European standards.
    Commenters support the Commission's expectation implementing the 
global standard would streamline reporting across jurisdictions, reduce 
costs overall, and benefit markets by facilitating more accurate global 
swap data aggregation.\429\ LCH notes implementing the UTI will reduce 
cross-border reporting complexity, further

[[Page 75556]]

encouraging global aggregation.\430\ Many commenters also support 
expanding the ability to generate UTIs to non-SD/MSP/DCO reporting 
counterparties that are not financial entities for off-facility swaps 
since they are in the best position to collect the required information 
(such as the LEI) from the non-reporting counterparty \431\ and it 
removes a disparity between trade identifiers used by internal record-
keeping systems and data reported to SDRs.\432\
---------------------------------------------------------------------------

    \429\ GLEIF at 3; see also GFXD at 22-23.
    \430\ LCH at 3.
    \431\ DTCC at 5.
    \432\ CME at 16.
---------------------------------------------------------------------------

    Some commenters disagree with keeping SDRs as the UTI ``generator 
of last resort.'' \433\ However, other commenters recognize the need 
for it in some cases.\434\ Further, keeping SDRs at the bottom of the 
UTI generation hierarchy is consistent with the UTI Technical Guidance 
and is currently required by the Commission's regulations.
---------------------------------------------------------------------------

    \433\ CME at 16-17, DTCC at 5, and ICE SDR at 5.
    \434\ Chatham at 3.
---------------------------------------------------------------------------

    In sum, for reasons discussed above and taking into account 
relevant comments, the Commission believes the expected benefits 
justify the final rule amendments notwithstanding their expected 
mitigated costs.
d. Sec.  45.6--Legal Entity Identifiers
    The Commission is amending Sec.  45.6 to (i) require SDs, MSPs, 
DCOs, SEFs, DCMs, and SDRs to maintain and renew LEIs; (ii) require 
financial entity reporting counterparties to use best efforts to cause 
LEIs to be issued for swap counterparties that do not have one and if 
those efforts fail, to promptly provide the identity and contact 
information of the counterparty to the Commission; 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.
i. Benefits
    Mandating LEI renewal will benefit the swaps market by improving 
the Commission's ability to analyze activity in the swaps market. 
Reference data provide valuable identification and relationship 
information about swap counterparties. Accurate reference data allow 
for robust analysis of 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 
believes accurate reference data is essential for it to satisfy its 
regulatory responsibilities because it clearly identify 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 have reduced ambiguity for 
market participants previously using various unstandardized 
identifiers.
ii. Costs
    LEI renewals will impose some costs.\435\ Currently, the Commission 
understands registering a new LEI costs $65 and renewals cost each 
holder $50 per year.\436\ One comment notes the mitigating fact these 
costs have fallen by more than 50% over the last 5 years due to 
increased efficiency as market adoption increased.\437\ To limit 
burdens, the Commission is limiting the renewal requirement to the 
estimated 150 SDs, MSPs, SEFs, DCMs, DCOs, and SDRs, resulting in an 
aggregate cost of approximately $7,500 for this requirement. The 
Commission believes these entities have the most systemic impact on the 
Commission's ability to fulfill its regulatory mandates and thus 
warrant this small additional cost. The Commission will consider 
expanding the renewal requirement in future releases upon further 
enhancements in LEI reference data or realized reductions in cost to 
LEI holders.
---------------------------------------------------------------------------

    \435\ The Commission estimates for PRA purposes that there would 
be a slight increase in the burden incurred by market participants, 
as discussed in the PRA section.
    \436\ LEI registration and renewal costs from Bloomberg LLP, 
retrieved on September 16, 2020. https://lei.bloomberg.com/docs/faq#what-fees-are-involved.
    \437\ GLEIF at 1-2.
---------------------------------------------------------------------------

    Requiring financial entities to endeavor to cause LEIs to be issued 
for swap counterparties that do not have one (and, if those efforts 
fail, to report the identity and contact information of the 
counterparty to the Commission) will 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 
on both the entity encouraged to obtain an LEI and the financial entity 
in verifying that its counterparties have valid LEIs and encouraging 
them to obtain one (or obtaining an LEI for them) if they do not and 
informing the Commission if the financial entity's efforts fail. As 
mentioned above, the cost to an entity to obtain an LEI is minor, and 
has trended down over time. Further, financial entities collect the 
same information during the onboarding process when entering into a 
swap contract with a new counterparty that is needed to obtain an LEI 
for the counterparty, a mitigating factor for the financial entities to 
the extent they must be required to encourage their counterparties to 
obtain LEIs (or obtain an LEI for them). The cost to notify the 
Commission if the financial entity's efforts fail is also expected to 
be low. The Commission expects both cases to impose a limited burden on 
swaps markets as the widespread adoption of the LEI standard continues.
    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 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 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. Given the low cost of registering for a new LEI listed 
above, the small number of remaining entities engaging in swap 
transactions without an LEI, and the limited amount of additional 
effort financial entities need to exert so that every LEI-eligible 
counterparty has an LEI, the Commission expects the overall cost of 
this amendment to be minimal.
    The Commission received comments supporting its expectation that 
requiring the most systemically important swaps market participants to 
maintain and renew their LEIs will facilitate better aggregation of 
entities and more accurate analysis of swaps market activity, market 
concentration, risk transfer, and systemic risk. Commenters, including 
DTCC, GLEIF, XBRL, LCH, Chatham, and Eurex, all support the requirement 
for SDs, MSPs, DCOs, SEFs, DCMs, and SDRs to maintain and renew their 
LEIs to ensure their accuracy noting this improves transparency and 
aligns with the global adoption of LEIs.\438\ While the existing 
requirement for all LEI holders to update their LEI reference data 
remains, the Commission believes the confirmation of the

[[Page 75557]]

accuracy of their reference data provided by LEI holders during LEI 
renewal serves as an additional assurance of data quality for the most 
systematically important entities, and therefore warrants the annual 
renewal requirement for SDs, MSPs, DCOs, SEFs, DCMs, and SDRs.
---------------------------------------------------------------------------

    \438\ DTCC at 6, GLEIF at 1-2, XBRL at 2, LCH at 3, Chatham at 
3, Eurex at 4.
---------------------------------------------------------------------------

    In sum, for reasons discussed above and taking into account 
relevant comments, the Commission believes the expected benefits 
justify the final rule amendments notwithstanding their expected 
mitigated costs.
e. Sec.  45.10--Reporting to a Single SDR
    The Commission is amending 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 will 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 will 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.
i. Benefits
    The amendments to Sec.  45.10(d) will 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.
ii. Costs
    The amendments will impose costs on the three SDRs. SDRs will 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 
life cycle, rather than at the point of swap initiation. However, the 
Commission believes SDRs will be able to accommodate these changes 
after initial system updates since they are only slightly more 
burdensome than current onboarding practices for new clients at 
SDRs.\439\
---------------------------------------------------------------------------

    \439\ The Commission estimates for PRA purposes that there would 
be a minimal increase in the burden incurred by reporting 
counterparties, as discussed in the PRA section.
---------------------------------------------------------------------------

    The Commission received comments supporting its expectation that 
market participants will benefit from the flexibility to change SDRs 
and the SDRs themselves will be able to accommodate the changes with 
minimal additional burden.\440\ The Commission requested comments on 
the costs and benefits of the amendments to Sec.  45.10, but did not 
receive any comments that provided additional data, significant cost-
benefit alternatives, or other opposing or critical views on the costs 
and benefits.
---------------------------------------------------------------------------

    \440\ GFXD at 24, DTCC at 7.
---------------------------------------------------------------------------

    In sum, for reasons discussed above and taking into account 
relevant comments, the Commission believes the expected benefits 
justify the rule amendments notwithstanding their expected mitigated 
costs.
f. Sec.  45.12--Data Reporting for Swaps in a Swap Asset Class Not 
Accepted by Any SDR
    The Commission is removing the Sec.  45.12 regulations permitting 
voluntary supplemental reporting. Existing 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. Existing Sec.  45.12 also requires 
counterparties correct errors in voluntary supplemental reports. The 
Commission believes removing voluntary supplemental reports will reduce 
unnecessary messages at SDRs that do not provide a clear regulatory 
benefit to the Commission.
i. Benefits
    Removing the option for voluntary supplemental reporting will 
benefit SDRs that will no longer need to take in, process, validate, 
and store the reports. This should reduce costs and any unnecessary 
complexities for SDRs concerning these reports that provide little 
benefit to the Commission.
ii. Costs
    The change could impose initial costs on SDRs. SDRs may need to 
update their systems to stop accepting these reports. However, the 
Commission expects these costs will 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 received comments from Eurex, ISDA-SIFMA, and NRECA-
APPA in support of this amendment.\441\ The Commission did not receive 
any comments providing additional data, significant cost-benefit 
alternatives, or other opposing or critical views on the costs and 
benefits. In sum, for reasons discussed above and taking into account 
relevant comments, the Commission believes the expected benefits 
justify the final rule amendments notwithstanding their expected 
mitigated costs.
---------------------------------------------------------------------------

    \441\ Eurex at 5, ISDA-SIFMA at 16, NRECA-APPA at 5.
---------------------------------------------------------------------------

6. Costs and Benefits of Amendments to Part 46
a. Sec.  46.3--Swap Data Reporting for Pre-Enactment Swaps and 
Transition Swaps
    The Commission is amending Sec.  46.3 to remove an exception for 
required swap continuation data reporting for pre-enactment and 
transition swaps. Existing Sec.  46.3(a)(2) provides that reporting 
counterparties need to report only a subset of part 45 swap data 
elements 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.
    The Commission believes this is current practice for SDRs and 
reporting counterparties, and therefore should not impact costs or 
benefits to SDRs and reporting counterparties. The Commission did not 
receive any comments on the cost-benefit considerations for the 
proposed changes to Sec.  46.3.
b. Sec.  46.10--Required Data Standards
    The Commission is updating Sec.  46.10 to require reporting 
counterparties to use the required data standards outlined in Sec.  
45.13(a) and data elements in appendix 1 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 
will ensure that reporting counterparties continue to do so under the 
updated list of swap data elements in appendix 1 and the new technical 
specification.
    SDRs and reporting counterparties will both incur costs in updating 
their part 46 reporting systems to report according to any of the 
changes to part 45 reporting. However, given the diminishing number of 
historical swaps that have not yet matured or been terminated, the 
Commission expects these costs will be negligible compared to the costs 
associated with complying with new data elements in appendix 1.

[[Page 75558]]

In addition, since the data elements are the same, any costs or 
benefits are captured in the Commission's analysis for Sec.  45.3. The 
Commission did not receive any comments on the cost-benefit 
considerations for the proposed changes to Sec.  46.10.
c. Sec.  46.11--Reporting of Errors and Omissions in Previously Omitted 
Data
    The Commission is removing Sec.  46.11(b) to remove the option for 
state data reporting. This is consistent with the Commission's 
elimination of state data reporting in Sec.  45.4. While the number of 
historical swaps that have not yet matured or been terminated is 
dwindling, SD/MSP and non-SD/MSP reporting counterparties would see a 
reduction in costs due to no longer having to submit daily reports for 
any open swaps.\442\ The Commission did not receive any comments on the 
cost-benefit considerations for the proposed removal of Sec.  46.11(b).
---------------------------------------------------------------------------

    \442\ 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.
---------------------------------------------------------------------------

7. Costs and Benefits of Amendments to Part 49
a. Sec.  49.4--Withdrawal From Registration
    The Commission is amending 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 
will simplify the regulations and help ensure that swap data is 
properly transferred to a different SDR when one SDR withdraws from 
registration.
i. Benefits
    The Commission believes SDRs will benefit from the removal of the 
unnecessary requirement to update Form SDR prior to withdrawing from 
registration. The swaps market will benefit from having an explicit 
regulatory requirement for an SDR withdrawing from registration to have 
an agreement with the custodial SDR regarding the withdrawing SDR's 
data and records. This will also benefit market participants by 
ensuring the preservation of historical swap data which will improve 
the Commission's oversight abilities and promote the health and 
integrity of swaps markets.
ii. Costs
    The Commission believes SDRs will not incur any material costs 
associated with the changes.\443\ SDRs will execute a custodial 
agreement to transfer the data as a matter of due course. The changes 
concerning timing and removing the erroneous reference will not result 
in costs for the SDRs. The Commission did not receive any comments on 
the cost-benefit considerations for the proposed changes to Sec.  49.4. 
In the absence of material costs, the Commission believes the expected 
benefits justify this amendment.
---------------------------------------------------------------------------

    \443\ The Commission estimates for PRA purposes that there would 
be a minimal change in the burden incurred by reporting 
counterparties, as discussed in the PRA section.
---------------------------------------------------------------------------

b. Sec.  49.10--Acceptance of Data
    Most of the amendments to Sec.  49.10 are non-substantive technical 
amendments. However, the Commission is adding new Sec.  49.10(c) to 
require SDRs to validate SDR data. New Sec.  49.10(c) will require that 
SDRs establish data validations. SDRs will also be required to send 
SEFs, DCMs, and reporting counterparties data validation acceptance and 
error messages that identify the validation errors. The Commission is 
prohibiting SDRs from rejecting a swap transaction and pricing data 
message if it was submitted jointly with a swap data message that 
contained a validation error.
i. Benefits
    SDRs, SEFs, DCMs, and reporting counterparties will benefit by 
having a single set of validation rules in the technical specification 
instead of the current environment where each SDR applies different 
validations they designed independently. A common set of validations 
specified in the technical data standards will also benefit market 
participants by streamlining the data reporting process for market 
participants and ensuring more accurate data which facilitates more 
effective market oversight by the Commission.
ii. Costs
    SDRs, SEFs, DCMs, and reporting counterparties will incur costs in 
updating their reporting systems to apply these validation rules.\444\ 
To the extent SDRs operate in multiple jurisdictions, ESMA already 
requires many data validations similar to those in the DMO technical 
specification to be published on cftc.gov. An SDR may have to spend 
fewer resources updating its systems for the 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. In 
both cases, the cost of implementing these changes is expected to be 
fully contained in the costs associated with implementing the data 
standards detailed in section VII.C.5.a above, since the validations 
are part of the data standards. As a result, the Commission expects the 
cost of implementing data validations to be fully encapsulated by the 
effort to implement the data standards.
---------------------------------------------------------------------------

    \444\ The Commission estimates for PRA purposes that there would 
be an increase in the burden incurred by reporting counterparties 
and SDRs, as discussed in the PRA section.
---------------------------------------------------------------------------

    The Commission received comments from FIA that they believe 
validations will improve data accuracy.\445\ Markit supports 
validations notes they will allow third-party service providers to 
develop data validation solutions for reporting parties that will 
substantially reduce the cost of complying with them.\446\ NRECA-APPA 
note these validations burden swap market participants and requests 
evidence of regulatory benefits that would offset their costs.\447\ In 
response, the Commission maintains the critical regulatory benefits of 
more accurate swap data noted multiple times throughout section VII.C 
of this final rule and consistent with Congressional goals reflected in 
the Dodd-Frank Act--including more effective market oversight by the 
Commission and streamlined reporting processes for market 
participants--provide the necessary degree of justifying benefits. The 
Commission did not receive any comments that provided additional data, 
significant cost-benefit alternatives, or other opposing or critical 
views on the costs and benefits.
---------------------------------------------------------------------------

    \445\ FIA at 7.
    \446\ Markit at 3.
    \447\ NRECA-APPA at 5.
---------------------------------------------------------------------------

    In sum, for reasons discussed above and taking into account 
relevant comments, the Commission believes the expected benefits 
justify the final rule amendments notwithstanding their expected 
mitigated costs.
8. Consideration of CEA Section 15(a) Factors
    The Dodd-Frank Act sought to promote the financial stability of the 
U.S., in part, by improving financial system accountability and 
transparency.

[[Page 75559]]

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.\448\ 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. SDRs and SEFs, DCMs, and 
other reporting entities that submit data to SDRs are central to 
achieving the legislation's objectives related to swap reporting.
---------------------------------------------------------------------------

    \448\ 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 45, 46, 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.
    The Commission discusses the CEA section 15(a) factors below.
a. Protection of Market Participants and the Public
    The Commission believes the reporting changes under parts 45, 46, 
and 49 will enhance protections already in place for market 
participants and the public. By lengthening reporting timeframes and 
standardizing data formats, the Commission believes it will receive 
more cohesive, more standardized, and, ultimately, more accurate data 
without sacrificing the ability to oversee the markets robustly. 
Higher-quality swap data will improve the Commission's oversight and 
enforcement capabilities, and, in turn, will aid it in protecting 
markets, participants, and the public in general.
b. Efficiency, Competitiveness, and Financial Integrity
    The Commission believes the final rules will streamline reporting 
and improve efficiencies given the improved data standardization. By 
identifying reporting entities and more sharply defining reporting 
responsibilities by making DCO reporting duties clearer, the final 
rules strive to improve the reliability and consistency of swap data. 
This enhanced reliability, in turn, is an added support that might 
further lead to bolstering the financial integrity of swaps markets. 
Finally, the validation of swap data will improve the accuracy and 
completeness of swap data available to the Commission and will 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 final rules will have a 
significant impact on price discovery.
d. Risk Management Practices
    The Commission believes the final rules will 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 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 the improved accuracy resulting from 
improvements to data entry by market participants and validation 
efforts by SDRs via the final rules has other public interest impacts 
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.

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 believe the changes to part 45 would result 
in anti-competitive behavior. The Commission believes the 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 did not receive any 
comments on the antitrust considerations in the Proposal.

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 amends 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 (2010), unless otherwise 
noted.


0
2. 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 the twenty-four-hour day, on all days except 
Saturdays, Sundays, and legal holidays, in the location of the swap 
execution facility, designated contract market, or reporting

[[Page 75560]]

counterparty reporting data for the swap.
    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 of execution of a particular swap. 
The execution date for a clearing swap that replaces an original swap 
is the date 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 Securities and Exchange Commission.
    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.
    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 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 elements for a 
swap in appendix A to part 43 of this chapter that are 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.


Sec.  45.2  [Amended]

0
3. In Sec.  45.2:

[[Page 75561]]

0
a. Remove all instances of ``non-SD/MSP'' and add in its place ``non-
SD/MSP/DCO''; and
0
b. For each paragraph indicated in the left column of the table below, 
remove the text indicated in the middle column from wherever it 
appears, and add in its place the text indicated in the right column:

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


0
4. 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 the end of 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 the end of 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 the end of 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 paragraph (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 no 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 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
5. 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 the end of the next business day following the day that

[[Page 75562]]

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 the end of the next business 
day following the day 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 the end of the second business day 
following the day 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 the end of the second business day 
following the day that any life cycle event occurred.
    (2) Valuation, margin, and collateral data reporting. (i) If the 
reporting counterparty is a swap dealer, major swap participant, or 
derivatives clearing organization, swap valuation data shall be 
reported electronically to a swap data repository in the manner 
provided in Sec.  45.13(b) each business day.
    (ii) If the reporting counterparty is a swap dealer or major swap 
participant, collateral data shall be reported electronically to a swap 
data repository in the manner provided in Sec.  45.13(b) each business 
day.

0
6. Amend Sec.  45.5 by:
0
a. Revising the section heading and paragraphs (a)(1)(i); (b)(1)(i); 
(b)(2)(ii); (c) introductory text; (c)(1) introductory text; (c)(1)(i); 
(d) introductory text; (d)(1)(i);
0
b. In the table below, for each paragraph indicated in the left column, 
remove the text indicated in the middle column from wherever it 
appears, and add in its place the text indicated in the right column:

------------------------------------------------------------------------
          Paragraph                  Remove                  Add
------------------------------------------------------------------------
introductory text...........  swap subject to the   swap.
                               jurisdiction of the
                               Commission.
introductory text...........  (a) through (f).....  (a) through (h).
(a)(1) introductory text....  single data field...  single data element
                                                     with a maximum
                                                     length of 52
                                                     characters.
(b) paragraph heading and     swap dealer or major  financial entity.
 introductory text.            swap participant.
(b)(1) introductory text....  transmission of data  transmission of swap
                                                     data.
(b)(1) introductory text....  single data field...  single data element
                                                     with a maximum
                                                     length of 52
                                                     characters.
(b)(1)(ii)..................  swap dealer or major  reporting
                               swap participant.     counterparty.
(d)(1) introductory text....  single data field...  single data element
                                                     with a maximum
                                                     length of 52
                                                     characters.
(e)(1) introductory text....  (a) through (c) of    (a) through (d) of
                               this section.         this section, as
                                                     applicable.
(e)(2)(i)...................  question............  question.
(e)(2)(ii)..................  agent...............  agent; and.
------------------------------------------------------------------------

0
c. Revising paragraph (f) and adding paragraphs (g) and (h); and
0
d. Removing all instances of ``unique swap identifier'' and ``unique 
swap identifiers'' and adding in their place ``unique transaction 
identifier'' and ``unique transaction identifiers'', respectively.
    The revisions and additions 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
* * * * *
    (2) * * *
    (ii) To the non-reporting counterparty to the swap, no later than 
the applicable deadline in Sec.  45.3(b) for reporting required swap 
creation data; 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

[[Page 75563]]

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 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 or 
in part 43 of this chapter, 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
7. 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, maintain, 
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 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 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 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, use 
best efforts to cause a legal entity identifier to be assigned to the 
counterparty. If these efforts do not result in a legal entity 
identifier being assigned to the counterparty prior to the reporting of 
required swap creation data, the financial entity reporting 
counterparty shall promptly provide the identity and contact 
information of the counterparty to the Commission.
    (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.


Sec.  45.7  [Amended]

0
8. Amend Sec.  45.7 introductory text by removing ``subject to the 
jurisdiction of the Commission''.

0
9. In Sec.  45.8:
0
a. Revise the section heading and the introductory text;

[[Page 75564]]

0
b. Remove ``non-SD/MSP'' wherever it appears and add in its place 
``non-SD/MSP/DCO''; and
0
c. In the table below, for each paragraph indicated in the left column, 
remove the text indicated in the middle column from wherever it 
appears, and add in its place the text indicated in the right column:

------------------------------------------------------------------------
          Paragraph                  Remove                  Add
------------------------------------------------------------------------
(h) introductory text.......  swap creation data..  required swap
                                                     creation data.
(h)(1) introductory text....  achieve this........  comply with
                                                     paragraph (h) of
                                                     this section.
(h)(1)(vii)(D)..............  unique swap           unique transaction
                               identifier.           identifier.
(h)(2)......................  achieve this........  comply with
                                                     paragraph (h) of
                                                     this section.
------------------------------------------------------------------------

    The revisions 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.
* * * * *


Sec.  45.9  [Amended]

0
10. Amend Sec.  45.9 by removing ``swap counterparties'' and adding in 
its place ``reporting counterparties''.

0
11. 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 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.

[[Page 75565]]

    (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
12. 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 subject 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
13. Remove and reserve Sec.  45.12.

0
14. 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 
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
15. 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), 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

[[Page 75566]]

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), 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
16. Revise appendix 1 to part 45 to read as follows:
    Appendix 1 to Part 45--Swap Data Elements
BILLING CODE 6351-01-P

[[Page 75567]]

[GRAPHIC] [TIFF OMITTED] TR25NO20.011


[[Page 75568]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.012


[[Page 75569]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.013


[[Page 75570]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.014


[[Page 75571]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.015


[[Page 75572]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.016


[[Page 75573]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.017


[[Page 75574]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.018


[[Page 75575]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.019


[[Page 75576]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.020


[[Page 75577]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.021


[[Page 75578]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.022


[[Page 75579]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.023


[[Page 75580]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.024


[[Page 75581]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.025


[[Page 75582]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.026


[[Page 75583]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.027


[[Page 75584]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.028


[[Page 75585]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.029


[[Page 75586]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.030


[[Page 75587]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.031


[[Page 75588]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.032


[[Page 75589]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.033


[[Page 75590]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.034


[[Page 75591]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.035


[[Page 75592]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.036


[[Page 75593]]


[GRAPHIC] [TIFF OMITTED] TR25NO20.037


[[Page 75594]]


BILLING CODE 6351-01-C

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

0
17. 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
18. Amend Sec.  46.1 by:
0
a. Revising the introductory text and designating it as paragraph (a) 
introductory text;
0
b. Revising the definition of ``Asset class'';
0
c. Removing the definitions of ``Credit swap'', ``Foreign exchange 
forward'', ``Foreign exchange instrument'', and ``Foreign exchange 
swap'';
0
d. Adding, in alphabetical order, a definition for ``Historical swap''
0
e. Removing the definitions of ``Interest rate swap'', ``International 
swap'', and ``Major swap participant'';
0
f. Removing the definition of ``Non-SD/MSP counterparty'' and adding a 
definition for ``Non-SD/MSP/DCO counterparty'';
0
g. Removing the definition of ``Other commodity swap'';
0
h. Revising the definitions of ``Reporting counterparty'' and 
``Required swap continuation data'';
0
i. Adding, in alphabetical order, a definition for ``Substitute 
counterparty identifier'';
0
j. Removing the definitions of ``Swap data repository'' and ``Swap 
dealer''; and
0
k. 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.


Sec.  46.2  [Amended]

0
19. Remove from Sec.  46.2 the text ``non-SD/MSP'' and add in its place 
``non-SD/MSP/DCO'' wherever it appears.

0
20. In Sec.  46.3:
0
a. Revise the section heading;
0
b. Remove from the end of paragraph (a)(1)(iii)(A) ``; and'' and add in 
its place a period;
0
c. Revise paragraph (a)(2)(i); and
0
d. Remove from paragraph (a)(3)(i) the text ``first report of required 
swap creation data'' and add in its place ``first report of such 
data''.
    The revisions 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.
* * * * *


Sec. Sec.  46.4, 46.5, 46.6, 46.8, 46.9  [Amended]

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

------------------------------------------------------------------------
      Section/paragraph              Remove                  Add
------------------------------------------------------------------------
46.4 introductory text......  swap data reporting.  data reporting.
46.4(a).....................  substitute            substitute
                               counterparty          counterparty
                               identifier as         identifier.
                               provided in Sec.
                               45.6(f) of this
                               chapter.
46.4(d).....................  unique swap           unique swap
                               identifier and        identifier, unique
                               unique product        transaction
                               identifier.           identifier, and
                                                     unique product
                                                     identifier.
46.5(a) introductory text...  swap data...........  data.
46.5(a)(3), (4), and (5)....  non-SD/MSP..........  non-SD/MSP/DCO.
46.5(d)(3)..................  non-SD/MSP..........  non-SD/MSP/DCO.
46.6........................  report swap data....  report data.
46.8(a).....................  accepts swap data...  accepts data for pre-
                                                     enactment and
                                                     transition swaps.
46.8(a).....................  required swap         such data.
                               creation data or
                               required swap
                               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    any report of data.
                               data.
46.9(f).....................  errors in the swap    errors in the data
                               data.                 for a pre-enactment
                                                     or a transition
                                                     swap.
------------------------------------------------------------------------


0
22. In Sec.  46.10:
0
a. Remove the text ``reporting swap data'' and add in its place 
``reporting data for a pre-enactment or a transition swap''; and
0
b. 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 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.

[[Page 75595]]


0
23. Amend Sec.  46.11 by:
0
a. Removing from paragraph (a) the text ``report swap data'' and adding 
in its place ``report data for a pre-enactment or a transition swap'';
0
b. Removing paragraph (b);
0
c. Redesignating paragraph (c) as new paragraph (b) and revising it; 
and
0
d. Redesignating paragraph (d) as new 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
24. 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.


0
25. In Sec.  49.2(a),
0
a. Remove the paragraph designations of the definitions and arrange the 
definitions in alphabetical order;
0
b. Add, in alphabetical order, definitions for the terms ``Data 
validation acceptance message''; ``Data validation error''; ``Data 
validation error message''; and ``Data validation procedures''
0
c. Redesignate paragraphs (i) through (iii) under the definition for 
``Non-affiliated third party'' as paragraphs (1) through (3);
0
d. Redesignate paragraphs (i) through (iii) under the definition for 
``Person associated with a swap data repository'' as paragraphs (1) 
through (3); and
0
e. Redesignate paragraphs (i) through (vi) under the definition for 
``Position'' as paragraphs (1) through (6);
    The additions read as follows:


Sec.  49.2  Definitions.

    (a) * * *
    Data validation acceptance message means a notification that SDR 
data satisfied the data validation procedures applied by a swap data 
repository.
    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 means a notification that SDR data 
contained one or more data validation error(s).
    Data validation procedures 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:
0
a. For each paragraph indicated in the left column of the table below, 
remove the text indicated in the middle column from wherever it 
appears, and add in its place the text indicated in the right column:

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

0
b. 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. Revise Sec.  49.10 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 and data 
validation error messages, as provided in this paragraph (c).
    (1) Data validation acceptance message. A swap data repository 
shall validate each SDR data report submitted to the swap data 
repository and notify

[[Page 75596]]

the reporting counterparty, swap execution facility, designated 
contract market, or third-party service provider submitting the report 
whether the report 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 September 24, 2020, by the 
Commission.
Robert Sidman,
Deputy 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 Chairman Heath P. Tarbert

    I am pleased to support today's final swap data reporting rules 
under Parts 43, 45, and 49 of the CFTC's regulations, which are 
foundational to effective oversight of the derivatives markets. As I 
noted when these rules were proposed in February, ``[d]ata is the 
lifeblood of our markets.'' \1\ Little did I know just how timely 
that statement would prove to be.
---------------------------------------------------------------------------

    \1\ Statement of Chairman Heath P. Tarbert in Support of 
Proposed Rules on Swap Data Reporting (Feb. 20, 2020), https://www.cftc.gov/PressRoom/SpeechesTestimony/tabertstatement022020 
(hereinafter, Tarbert, Proposal Statement).
---------------------------------------------------------------------------

COVID-19 Crisis and Beyond

    In the month following our data rule proposals, historic 
volatility caused by the coronavirus pandemic rocketed through our 
derivatives markets, affecting nearly every asset class.\2\ I said 
at the time that while our margin rules acted as ``shock absorbers'' 
to cushion the impact of volatility, the Commission was also 
considering data rules that would expand our insight into potential 
systemic risk. In particular, the data rules ``would for the first 
time require the reporting of margin and collateral data for 
uncleared swaps . . . significantly strengthen[ing] the CFTC's 
ability to monitor for systemic risk'' in those markets.\3\ Today we 
complete those rules, shoring up the data-based reporting systems 
that can help us identify--and quickly respond to--emerging systemic 
threats.
---------------------------------------------------------------------------

    \2\ See Heath P. Tarbert, Volatility Ain't What it Used to Be, 
Wall Street Journal (Mar. 23, 2020), https://www.wsj.com/articles/volatility-aint-what-it-used-to-be-11585004897?mod=searchresults&page=1&pos=1 (hereinafter Tarbert, 
Volatility).
    \3\ Id.
---------------------------------------------------------------------------

    But data reporting is not just about mitigating systemic risk. 
Vibrant derivatives markets must be open and free, meaning 
transparency is a critical component of any reporting system. Price 
discovery requires robust public reporting that supplies market 
participants with the information they need to price trades, hedge 
risk, and supply liquidity. Today we double down on transparency, 
ensuring that public reporting of swap transactions is even more 
accurate and timely. In particular, our final rules adjust certain 
aspects of the Part 43 proposal's block-trade \4\ reporting rules to 
improve transparency in our markets. These changes have been 
carefully considered to enhance clarity, one of the CFTC's core 
values.\5\
---------------------------------------------------------------------------

    \4\ The final rule's definition of ``block trade'' is provided 
in regulation 43.2.
    \5\ See CFTC Core Values, https://www.cftc.gov/About/Mission/index.htm.
---------------------------------------------------------------------------

    Promoting clarity in our markets also demands that we, as an 
agency, have clear goals in mind. Today's final swap data reporting 
rules reflect a hard look at the data we need and the data we 
collect, building on insights gleaned from our own analysis as well 
as feedback from market participants. The key point is that more 
data does not necessarily mean better information. Instead, the core 
of an effective data reporting system is focus.
    As Aesop reminds us, ``Beware lest you lose the substance by 
grasping at the shadow.'' \6\ Today's final swap data reporting 
rules place substance first, carefully tailoring our requirements to 
reach the data that really matters, while removing unnecessary 
burdens on our market participants. As Bill Gates once remarked, 
``My success, part of it certainly, is that I have focused in on a 
few things.'' \7\ So too are the final swap data reporting rules 
limited in number. The Part 45 Technical Specification, for example, 
streamlines hundreds of different data fields currently required by 
swap data repositories into 128 that truly advance the CFTC's 
regulatory goals. This focus will simplify the data reporting 
process without undermining its effectiveness, thus fulfilling the 
CFTC's strategic goal of enhancing the regulatory experience for 
market participants at home and abroad.\8\
---------------------------------------------------------------------------

    \6\ Aesop, ``The Dog and the Shadow,'' The Harvard Classics, 
https://www.bartleby.com/17/1/3.html.
    \7\ ABC News, One-on-One with Bills Gates (Feb. 21, 2008), 
https://abcnews.go.com/WNT/CEOProfiles/story?id=506354&page=1.
    \8\ See CFTC Strategic Plan 2020-2024, at 4 (discussing 
Strategic Goal 3), https://www.cftc.gov/media/3871/CFTC2020_2024StrategicPlan/download.
---------------------------------------------------------------------------

    That last point is worth highlighting: Our final swap data 
reporting rules account for market participants both within and 
outside the United States. A diversity of market participants, some 
of whom reside beyond our borders and are accountable to foreign 
regulatory regimes, contribute to vibrant derivatives markets. But 
before today, inconsistent international rules meant some swap 
dealers were left to navigate what I have called ``a byzantine maze 
of disparate data fields and reporting timetables'' for the very 
same swap.\9\ While perfect alignment may not be possible or even 
desirable, the final rules significantly harmonize reportable data 
fields, compliance timetables, and implementation requirements to 
advance our global markets. Doing so brings us closer to realizing 
the CFTC's vision of being the global standard for sound derivatives 
regulation.\10\
---------------------------------------------------------------------------

    \9\ Tarbert, Proposal Statement, supra note 1.
    \10\ See CFTC Vision Statement, available at https://
www.cftc.gov/About/
AboutTheCommission#:~:text=CFTC%20Vision%20Statement,standard%20for%2
0sound%20derivatives%20regulation.
---------------------------------------------------------------------------

Overview of the Swap Data Reporting Rules

    It is important to understand the specific function of each of 
the three swap data

[[Page 75597]]

reporting rules, which together form the CFTC's reporting system. 
First, Part 43 relates to the real-time public reporting of swap 
pricing and transaction data, which appears on the ``public tape.'' 
Swap dealers and other reporting parties supply Part 43 data to swap 
data repositories (SDRs), which then make the data public. Part 43 
includes provisions relating to the treatment and public reporting 
of large notional trades (blocks), as well as the ``capping'' of 
swap trades that reach a certain notional amount.
    Second, Part 45 relates to the regulatory reporting of swap data 
to the CFTC by swap dealers and other covered entities. Part 45 data 
provides the CFTC with insight into the swaps markets to assist with 
regulatory oversight. A Technical Specification available on the 
CFTC's website \11\ includes data elements that are unique to CFTC 
reporting, as well as certain ``Critical Data Elements,'' which 
reflect longstanding efforts by the CFTC and other regulators to 
develop global guidance for swap data reporting.\12\
---------------------------------------------------------------------------

    \11\ See CFTC, Technical Specification Document, https://www.cftc.gov/media/3496/DMO_Part43_45TechnicalSpecification022020/download.
    \12\ Since November 2014, the CFTC and regulators in other 
jurisdictions have collaborated through the Committee on Payments 
and Market Infrastructures (``CPMI'') and the International 
Organization of Securities Commissions (``IOSCO'') working group for 
the harmonization of key over-the-counter (``OTC'') derivatives data 
elements (``Harmonisation Group''). The Harmonisation Group 
developed global guidance for key OTC derivatives data elements, 
including the Unique Transaction Identifier, the Unique Product 
Identifier, and critical data elements other than UTI and UPI.
---------------------------------------------------------------------------

    Finally, Part 49 requires data verification to help ensure that 
the data reported to SDRs and the CFTC in Parts 43 and 45 is 
accurate. The final Part 49 rule will provide enhanced and 
streamlined oversight of SDRs and data reporting generally. In 
particular, Part 49 will now require SDRs to have a mechanism by 
which reporting counterparties can access and verify the data for 
their open swaps held at the SDR. A reporting counterparty must 
compare the SDR data with the counterparty's own books and records, 
correcting any data errors with the SDR.

Systemic Risk Mitigation

    Today's final swap data reporting rules are designed to fulfill 
our agency's first Strategic Goal: to strengthen the resilience and 
integrity of our derivatives markets while fostering the 
vibrancy.\13\ The Part 45 rule requires swap dealers to report 
uncleared margin data for the first time, enhancing the CFTC's 
ability to ``to monitor systemic risk accurately and to act quickly 
if cracks begin to appear in the system.'' \14\ As Justice Brandeis 
famously wrote in advocating for transparency in organizations, 
``sunlight is the best disinfectant.'' \15\ So too it is for 
financial markets: the better visibility the CFTC has into the 
uncleared swaps markets, the more effectively it can address what 
until now has been ``a black box of potential systemic risk.'' \16\
---------------------------------------------------------------------------

    \13\ See CFTC Strategic Plan, supra note 7, at 5.
    \14\ Tarbert, Proposal Statement, supra note 1, note 2.
    \15\ Hon. Louis D. Brandeis, Other People's Money 62 (National 
Home Library Foundation ed. 1933).
    \16\ Tarbert, Proposal Statement, supra note 1.
---------------------------------------------------------------------------

Doubling Down on Transparency

    Justice Brandeis's words also resonate across other areas of the 
final swap data reporting rules. The final swap data reporting rules 
enhance transparency to the public of pricing and trade data.

1. Blocks and Caps

    A critical aspect of the final Part 43 rule is the issue of 
block trades and dissemination delays. When the Part 43 proposal was 
issued, I noted that ``[o]ne of the issues we are looking at closely 
is whether a 48-hour delay for block trade reporting is 
appropriate.'' \17\ I encouraged market participants to ``provide 
comment letters and feedback concerning the treatment of block 
delays.'' \18\ Market participants responded with extensive 
feedback, much of which advocated for shorter delays in making block 
trade data publicly available. I agree with this view, and support a 
key change in the final Part 43 rule. Rather than apply the 
proposal's uniform 48-hour dissemination delay on block trade 
reporting, the final rule returns to bespoke public reporting 
timeframes that consider liquidity, market depth, and other factors 
unique to specific categories of swaps. The result is shorter 
reporting delays for most block trades.
---------------------------------------------------------------------------

    \17\ Tarbert, Proposal Statement, supra note 1, note 14.
    \18\ Id.
---------------------------------------------------------------------------

    The final Part 43 rule also changes the threshold for block 
trade treatment, raising the amount needed from a 50% to 67% 
notional calculation. It also increases the threshold for capping 
large notional trades from 67% to 75%. These changes will enhance 
market transparency by applying a stricter standard for blocks and 
caps, thereby enhancing public access to swap trading data. At the 
same time, the rule reflects serious consideration of how these 
thresholds are calculated, particularly for block trades. In 
excluding certain option trades and CDS trades around the roll 
months from the 67% notional threshold for blocks, the final rule 
helps ensure that dissemination delays have their desired effect of 
preventing front-running and similar disruptive activity.

2. Post-Priced and Prime-Broker Swaps

    The swaps market is highly complex, reflecting a nearly endless 
array of transaction structures. Part 43 takes these differences 
into account in setting forth the public reporting requirements for 
price and transaction data. For example, post-priced swaps are 
valued after an event occurs, such as the ringing of the daily 
closing bell in an equity market. As it stands today, post-priced 
swaps often appear on the public tape with no corresponding pricing 
data--rendering the data largely unusable. The final Part 43 rule 
addresses this data quality issue and improves price discovery by 
requiring post-priced swaps to appear on the public tape after 
pricing occurs.
    The final Part 43 rule also resolves an issue involving the 
reporting of prime-brokerage swaps. The current rule requires that 
offsetting swaps executed with prime brokers--in addition to the 
initial swap reflecting the actual terms of trade--be reported on 
the public tape. This duplicative reporting obfuscates public 
pricing data by including prime-broker costs and fees that are 
unrelated to the terms of the swap. As I explained when the rule was 
proposed, cluttering the public tape with duplicative or confusing 
data can impair price discovery.\19\ The final Part 43 rule 
addresses this issue by requiring that only the initial ``trigger'' 
swap be reported, thereby improving public price information.
---------------------------------------------------------------------------

    \19\ Tarbert, Proposal Statement, supra note 1.
---------------------------------------------------------------------------

3. Verification and Error Correction

    Data is only as useful as it is accurate. The final Part 49 rule 
establishes an efficient framework for verifying SDR data accuracy 
and correcting errors, which serves both regulatory oversight and 
public price discovery purposes.

Improving the Regulatory Experience

    Today's final swap data reporting rules improve the regulatory 
experience for market participants at home and abroad in several key 
ways, advancing the CFTC's third Strategic Goal.\20\ Key examples 
are set forth below.
---------------------------------------------------------------------------

    \20\ CFTC Strategic Plan, supra note 7, at 7.
---------------------------------------------------------------------------

1. Streamlined Data Fields

    As I stated at the proposal stage, ``[s]implicity should be a 
central goal of our swap data reporting rules.'' \21\ This sentiment 
still holds true, and a key improvement to our final Part 45 
Technical Specification is the streamlining of reportable data 
fields. The current system has proven unworkable, leaving swap 
dealers and other market participants to wander alone in the digital 
wilderness, with little guidance about the data elements that the 
CFTC actually needs. This uncertainty has led to ``a proliferation 
of reportable data fields'' required by SDRs that ``exceed what 
market participants can readily provide and what the [CFTC] can 
realistically use.'' \22\
---------------------------------------------------------------------------

    \21\ Tarbert, Proposal Statement, supra note 1.
    \22\ Id.
---------------------------------------------------------------------------

    We resolve this situation today by replacing the sprawling mass 
of disparate SDR fields--sometimes running into the hundreds or 
thousands--with 128 that are important to the CFTC's oversight of 
the swaps markets. These fields reflect an honest look at the data 
we are collecting and the data we can use, ensuring that our market 
participants are not burdened with swap reporting obligations that 
do not advance our statutory mandates.

2. Regulatory Harmonization

    The swaps markets are integrated and global; our data rules must 
follow suit.\23\ To that end, the final Part 45 rule takes a 
sensible approach to aligning the CFTC's data reporting fields with 
the standards set by international efforts. Swap data reporting is 
an area where harmonization simply makes sense. The costs of failing 
to harmonize are high, as swap dealers and other reporting parties 
must provide entirely different data sets to multiple regulators for 
the very same

[[Page 75598]]

swap.\24\ A better approach is to conform swap data reporting 
requirements where possible.
---------------------------------------------------------------------------

    \23\ See Tarbert, Proposal Statement, supra note 1.
    \24\ See id.
---------------------------------------------------------------------------

    Data harmonization is not just good for market participants: it 
also advances the CFTC's vision of being the global standard for 
sound derivatives regulation.\25\ The CFTC has a long history of 
leading international harmonization efforts in data reporting, 
including by serving as a co-chair of 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.\26\ I am pleased to support a final Part 45 
rule that advances these efforts by incorporating CDE fields that 
serve our regulatory goals.
---------------------------------------------------------------------------

    \25\ See CFTC Vision Statement, https://www.cftc.gov/About/
AboutTheCommission#:~:text=CFTC%20Vision%20Statement,standard%20for%2
0sound%20derivatives%20regulation.
    \26\ The CFTC also co-chaired the Financial Stability Board's 
working group on UTI and UPI governance.
---------------------------------------------------------------------------

    In addition to certain CDE fields, the final Part 45 rule also 
adopts other important features of the CPMI-IOSCO Technical 
Guidance, such as the use of a Unique Transaction Identifier (UTI) 
system in place of today's Unique Swap Identifier (USI) system. This 
change will bring the CFTC's swap data reporting system in closer 
alignment with those of other regulators, leading to better data 
sharing and lower burdens on market participants.
    Last, the costs of altering data reporting systems makes 
implementation timeframes especially important. To that effect, the 
CFTC has worked with ESMA to bring our jurisdictions' swap data 
reporting compliance timetables into closer harmony, easing 
transitions to new reporting systems.

3. Verification and Error Correction

    The final Part 49 rule has changed since the proposal stage to 
facilitate easier verification of SDR data by swap dealers. Based on 
feedback we received, the final rule now requires SDRs to provide a 
mechanism for swap dealers and other reporting counterparties to 
access the SDR's data for their open swaps to verify accuracy and 
address errors. This approach replaces a message-based system for 
error identification and correction, which would have produced 
significant implementation costs without improving error 
remediation. The final rule achieves the goal--data accuracy--with 
fewer costs and burdens.\27\
---------------------------------------------------------------------------

    \27\ Limiting error correction to open swaps--versus all swaps 
that a reporting counterparty may have entered into at any point in 
time--is also a sensible approach to addressing risk in the markets. 
The final Part 49 rule limits error correction to errors discovered 
prior to the expiration of the five-year recordkeeping period in 
regulation 45.2, ensuring that market participants are not tasked 
with addressing old or closed transactions that pose no active risk.
---------------------------------------------------------------------------

4. Relief for End Users

    I have long said that if our derivatives markets are not working 
for agriculture, then they are not working at all.\28\ While swaps 
are often the purview of large financial institutions, they also 
provide critical risk-management functions for end users like 
farmers, ranchers, and manufacturers. Our final Part 45 rule removes 
the requirement that end users report swap valuation data, and it 
provides them with a longer ``T+2'' timeframe to report the data 
that is required. I am pleased to support these changes to end-user 
reporting, which will help ensure that our derivatives markets work 
for all Americans, advancing another CFTC strategic goal.\29\
---------------------------------------------------------------------------

    \28\ Opening Statement of Chairman Heath P. Tarbert Before the 
April 22 Agricultural Advisory Committee Meeting (April 22, 2020), 
https://www.cftc.gov/PressRoom/SpeechesTestimony/tarbertstatement042220.
    \29\ CFTC Strategic Plan, supra note 7, at 6.
---------------------------------------------------------------------------

Conclusion

    The derivatives markets run on data. They will be even more 
reliant on it in the future, as digitization continues to sweep 
through society and industry. I am pleased to support the final 
rules under Parts 43, 45, and 49, which will help ensure that the 
CFTC's swap data reporting systems are effective, efficient, and 
built to last.

Appendix 3--Supporting Statement of Commissioner Brian Quintenz

    I am pleased to support these amendments to part 45 regulatory 
reporting, which 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 
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--more than 10 years after Dodd 
Frank--the Commission has great difficulty aggregating and analyzing 
data for uncleared swaps across swap data repositories (SDRs).
    Since the CFTC first implemented its swap data reporting 
requirements, the CFTC has continued to lead global efforts to reach 
international consensus on those reporting requirements so that 
derivatives regulators can finally get a clear picture of the 
uncleared swaps landscape. I would like to recognize the diligent 
efforts of DMO staff to finally get us over the finish line.
    Today's amendments to part 45 regulatory reporting will provide 
the Commission with the homogeneous data it needs to readily analyze 
swap data for both cleared and uncleared swaps across jurisdictions. 
The final rule eliminates unnecessary reporting fields and 
implements internationally agreed to ``critical data elements'' (CDE 
fields) consistently with the detailed technical standards put forth 
by CPMI-IOSCO.\1\
---------------------------------------------------------------------------

    \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 final rule also provides 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), derivatives 
clearing organization (DCO), and swap execution facility (SEF) 
reporting parties, and a ``T+2'' reporting timeframe for non-SD/DCO/
SEF reporting counterparties. I have long supported providing 
additional time for market participants to meet their regulatory 
reporting obligations given it is a matter of being right, not 
first. A later regulatory reporting deadline will help 
counterparties report the trade correctly the first time, instead of 
reporting an erroneous trade that then needs to be corrected later. 
This change also more closely harmonizes the CFTC's and ESMA's 
reporting deadlines.
    For the first time, the final rule also requires SD reporting 
counterparties to report daily margin and collateral information for 
uncleared swaps to the Commission. However, the final rule would not 
require DCO reporting parties to report margin and collateral 
information with respect to cleared swaps. Instead, the Commission 
will continue to rely on the comprehensive margin and collateral 
data reported by DCOs pursuant to part 39. Importantly, in order to 
alleviate burdens on small reporting counterparties, non-SD/MSP 
reporting counterparties are not required to report valuation, 
margin, or collateral information to the Commission.
    Although this final rule implements the lion's share of 
regulatory reporting requirements, it is not quite the capstone of 
the Commission's reporting efforts. The CDE technical guidance did 
not harmonize many data elements that are relevant to the physical 
commodity and equity swap asset classes. More work remains to be 
done with respect to how certain data elements should be reported, 
including how the prices and quantities of physical commodity swaps 
should be reported and how swaps on customized equity baskets should 
be represented. 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 these asset classes.
    I support the CFTC's efforts to adopt the CDE fields--the most 
basic data elements that are critical to the analysis and 
supervision of swaps activities--in a manner identical to other 
jurisdictions' reporting fields. Over time and through cooperative 
arrangements with other jurisdictions, global aggregation and 
measurement of risk, including counterparty credit risk, can become 
a reality. However, as the Commission moves closer to achieving its 
goal of global data harmonization, in my opinion, it should keep in 
mind that the benefits of harmonization should always be balanced 
against the burdens and practical realities facing reporting 
counterparties. I think the final rule before us today strikes an 
appropriate balance on this point.

Appendix 4--Concurring Statement of Commissioner Rostin Behnam

    I respectfully concur in the Commission's amendments to its 
regulations regarding real-time public reporting, recordkeeping, and 
swap data repositories. The three rules being

[[Page 75599]]

finalized together today are the culmination of a multi-year effort 
to streamline, simplify, and internationally harmonize the 
requirements associated with reporting swaps. Today's actions 
represent the end of a long procedural road at the Commission, one 
that started with the Commission's 2017 Roadmap to Achieve High 
Quality Swap Data.\1\
---------------------------------------------------------------------------

    \1\ Roadmap to Achieve High Quality Swap Data, available at 
http://www.cftc.gov/idc/groups/public/@newsroom/documents/file/dmo_swapdataplan071017.pdf.
---------------------------------------------------------------------------

    But the road really goes back much further than that, to the 
time prior to the 2008 financial crisis, when swaps were largely 
exempt from regulation and traded exclusively over-the-counter.\2\ 
Lack of transparency in the over-the-counter swaps market 
contributed to the financial crisis because both regulators and 
market participants lacked the visibility necessary to identify and 
assess swaps market exposures, counterparty relationships, and 
counterparty credit risk.\3\
---------------------------------------------------------------------------

    \2\ See Commodity Futures Modernization Act of 2000, Public Law 
106-554, 114 Stat. 2763 (2000).
    \3\ See The Financial Crisis Inquiry Commission, The Financial 
Crisis Inquiry Report: Final Report of the National Commission on 
the Causes of the Financial and Economic Crisis in the United States 
(Official Government Edition), at 299, 352, 363-364, 386, 621 n. 56 
(2011), available at https://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf.
---------------------------------------------------------------------------

    In the aftermath of the financial crisis, Congress enacted the 
Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 
(Dodd-Frank Act).\4\ The Dodd-Frank Act largely incorporated the 
international financial reform initiatives for over-the-counter 
derivatives laid out at the 2009 G20 Pittsburgh Summit, which sought 
to improve transparency, mitigate systemic risk, and protect against 
market abuse.\5\ With respect to data reporting, the policy 
initiative developed by the G20 focused on establishing a consistent 
and standardized global data set across jurisdictions in order to 
support regulatory efforts to timely identify systemic risk. The 
critical need and importance of this policy goal given the 
consequences of the financial crisis cannot be overstated.
---------------------------------------------------------------------------

    \4\ See Dodd-Frank Wall Street Reform and Consumer Protection 
Act, Public Law 111-203, 124 Stat. 1376 (2010).
    \5\ G20, Leaders' Statement, The Pittsburgh Summit (Sept. 24-25, 
2009) at 9, available at https://www.treasury.gov/resource-center/international/g7-g20/Documents/pittsburgh_summit_leaders_statement_250909.pdf.
---------------------------------------------------------------------------

    Among many critically important statutory changes, which have 
shed light on the over-the-counter derivatives markets, Title VII of 
the Dodd-Frank Act amended the Commodity Exchange Act (``CEA'' or 
``Act'') and added a new term to the Act: ``real-time public 
reporting.'' \6\ The Act defines that term to mean reporting ``data 
relating to swap transaction, including price and volume, as soon as 
technologically practicable after the time at which the swap 
transaction has been executed.'' \7\
---------------------------------------------------------------------------

    \6\ 7 U.S.C. 2(a)(13)(A).
    \7\ Id.
---------------------------------------------------------------------------

    As we amend these rules, I think it is important that we keep in 
mind the Dodd-Frank Act's emphasis on transparency, and what 
transpired to necessitate that emphasis. However, the Act is also 
clear that its purpose, in regard to transparency and real time 
public reporting, is to authorize the Commission to make swap 
transaction and pricing data available to the public ``as the 
Commission determines appropriate to enhance price discovery.'' \8\ 
The Act expressly directs the Commission to specify the criteria for 
what constitutes a block trade, establish appropriate time delays 
for disseminating block trade information to the public, and ``take 
into account whether the public disclosure will materially reduce 
market liquidity.'' \9\ So, as we keep Congress's directive 
regarding public transparency (and the events that necessitated that 
directive) in mind as we promulgate rules, we also need to be 
cognizant of instances where public disclosure of the details of 
large transactions in real time will materially reduce market 
liquidity. This is a complex endeavor, and the answers vary across 
markets and products. I believe that these final rules strike an 
appropriate balance.
---------------------------------------------------------------------------

    \8\ 7 U.S.C. 2(a)(13)(B).
    \9\ 7 U.S.C. 2(a)(13)(C)(ii-iv).
---------------------------------------------------------------------------

    Today's final rules amending the swap data and recordkeeping and 
reporting requirements also culminate a multi-year undertaking by 
dedicated Commission staff and our international counterparts 
working through the Committee on Payments and Market Infrastructures 
and the International Organization of Securities Commissions working 
group for the harmonization of key over-the-counter derivatives data 
elements. The amendments benefit from substantial public 
consultation as well as internal data and regulatory analyses aimed 
at determining, among other things, how the Commission can meet its 
current data needs in support of its duties under the CEA. These 
include ensuring the financial integrity of swap transactions, 
monitoring of substantial and systemic risks, formulating bases for 
and granting substituted compliance and trade repository access, and 
entering information sharing agreements with fellow regulators.
    I wish to thank the responsible staff in the Division of Market 
Oversight, as well as in the Offices of International Affairs, Chief 
Economist, and General Counsel for their efforts and engagement over 
the last several years as well as their constructive dialogues with 
my office over the last several months. Their timely and fulsome 
responsiveness amid the flurry of activity at the Commission as we 
continue to work remotely is greatly appreciated.
    The final rules should improve data quality by eliminating 
duplication, removing alternative or adjunct reporting options, 
utilizing universal data elements and identifiers, and focusing on 
critical data elements. To the extent the Commission is moving 
forward with mandating a specific data standard for reporting swap 
data to swap data repositories (``SDRs''), and that the standard 
will be ISO 20022, I appreciate the Commission's thorough discussion 
of its rationale in support of that decision. I also commend 
Commission staff for its demonstrated expertise in incorporating the 
mandate into the regulatory text in a manner that provides certainty 
while acknowledging that the chosen standard remains in development.
    The rules provide clear, reasonable and universally acceptable 
reporting deadlines that not only account for the minutiae of local 
holidays, but address the practicalities of common market practices 
such as allocation and compression exercises.
    I am especially pleased that the final rules require consistent 
application of rules across SDRs for the validation of both Part 43 
and Part 45 data submitted by reporting counterparties. I believe 
the 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) \10\ without incurring 
unreasonable burdens.
---------------------------------------------------------------------------

    \10\ 7 U.S.C. 24a(c)(2).
---------------------------------------------------------------------------

    I appreciate that the Commission considered and received 
comments regarding whether to require 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 for purposes of determining swap dealer status 
under Commission regulations.\11\ While today's rules may not be the 
appropriate means to acquire such information, I continue to believe 
that that the Commission's ongoing surveillance for compliance with 
the swap dealer registration requirements could be enhanced through 
data collection and analysis.
---------------------------------------------------------------------------

    \11\ 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. 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.
---------------------------------------------------------------------------

    Thank you again to the staff who worked on these rules. I 
support the overall vision articulated in these several rules and am 
committed to supporting the acquisition and development of 
information technology and human resources needed for execution of 
that vision. As data forms the basis for much of what we do here at 
the Commission, especially in terms of identifying, assessing, and 
monitoring risk, I look forward to future discussions with staff 
regarding how the CFTC's Market Risk Advisory Committee which I 
sponsor may be of assistance.

Appendix 5--Statement of Commissioner Dan M. Berkovitz

Introduction

    I support today's final rules amending the swap data reporting 
requirements in parts 43,

[[Page 75600]]

45, 46, and 49 of the Commission's rules (the ``Reporting Rules''). 
The amended rules provide major improvements to the Commission's 
swap data reporting requirements. They will increase the 
transparency of the swap markets, enhance the usability of the data, 
streamline the data collection process, and better align the 
Commission's reporting requirements with international standards.
    The Commission must have accurate, timely, and standardized data 
to fulfill its customer protection, market integrity, and risk 
monitoring mandates in the Commodity Exchange Act (``CEA'').\1\ The 
2008 financial crisis highlighted the systemic importance of global 
swap markets, and drew attention to the opacity of a market valued 
notionally in the trillions of dollars. Regulators such as the CFTC 
were unable to quickly ascertain the exposures of even the largest 
financial institutions in the United States. The absence of real-
time public swap reporting contributed to uncertainty as to market 
liquidity and pricing. One of the primary goals of the Dodd-Frank 
Act is to improve swap market transparency through both real-time 
public reporting of swap transactions and ``regulatory reporting'' 
of complete swap data to registered swap data repositories 
(``SDRs'').\2\
---------------------------------------------------------------------------

    \1\ See CEA section 3b.
    \2\ Dodd-Frank Wall Street Reform and Consumer Protection Act, 
section 727, Public Law 111-203, 124 Stat. 1376 (2010) (the ``Dodd-
Frank Act''), available at https://www.gpo.gov/fdsys/pkg/PLAW-111publ203/pdf/PLAW-111publ203.pdf.
---------------------------------------------------------------------------

    As enacted by the Dodd-Frank Act, CEA section 2(a)(13)(G) 
directs the CFTC to establish real-time and comprehensive swap data 
reporting requirements, on a swap-by-swap basis. CEA section 21 
establishes SDRs as the statutory entities responsible for 
receiving, storing, and facilitating regulators' access to swap 
data. The Commission began implementing these statutory directives 
in 2011 and 2012 in several final rules that addressed regulatory 
and real-time public reporting of swaps; established SDRs to receive 
data and make it available to regulators and the public; and defined 
certain swap dealer (``SD'') and major swap participant (``MSP'') 
reporting obligations.\3\
---------------------------------------------------------------------------

    \3\ Swap Data Recordkeeping and Reporting Requirements, 77 FR 
2136 (Jan. 13, 2012); and Swap Data Repositories: Registration 
Standards, Duties and Core Principles, 76 FR 54538 (Sept. 1, 2011).
---------------------------------------------------------------------------

    The Commission was the first major regulator to adopt data 
repository and swap data reporting rules. Today's final rules are 
informed by the Commission's and the market's experience with these 
initial rules. Today's revisions also reflect recent international 
work to harmonize and standardize data elements.

Part 43 Amendments (Real-Time Public Reporting)

Benefits of Real Time Public Reporting

    Price transparency fosters price competition and reduces the 
cost of hedging. In directing the Commission to adopt real-time 
public reporting regulations, the Congress stated ``[t]he purpose of 
this section is to authorize the Commission to make swap transaction 
and pricing data available to the public in such form and at such 
times as the Commission determines appropriate to enhance price 
discovery.'' \4\ For real-time data to be useful for price 
discovery, SDRs must be able to report standardized, valid, and 
timely data. The reported data should also reflect the large 
majority of swaps executed within a particular swap category. The 
final Reporting Rules for part 43 address a number of infirmities in 
the current rules affecting the aggregation, validation, and 
timeliness of the data. They also provide pragmatic solutions to 
several specific reporting issues, such as the treatment of prime 
broker trades and post-priced swaps.
---------------------------------------------------------------------------

    \4\ CEA section 2(13)(B) (emphasis added).
---------------------------------------------------------------------------

Block Trade Reporting

    The Commission's proposed rule for block trades included two 
significant amendments to part 43: (1) Refined swap categories for 
calculating blocks; and (2) a single 48-hour time-delay for 
reporting all blocks. In addition, the proposed rule would give 
effect to increased block trade size thresholds from 50% to 67% of a 
trimmed (excluding outliers) trade data set as provided for in the 
original part 43. The increases in the block sizing thresholds and 
the refinement of swap categories were geared toward better meeting 
the statutory directives to the Commission to enhance price 
discovery through real-time reporting while also providing 
appropriate time delays for the reporting of swaps with very large 
notional amounts, i.e., block trades.
    Although I supported the issuance of the proposed rule, I 
outlined a number of concerns with the proposed blanket 48-hour 
delay. As described in the preamble to the part 43 final rule, a 
number of commenters supported the longer delay as necessary to 
facilitate the laying off of risk resulting from entering into swaps 
in illiquid markets or with large notional amounts. Other commenters 
raised concerns that such a broad, extended delay was unwarranted 
and could impede, rather than foster, price discovery. The delay 
also would provide counterparties to large swaps with an information 
advantage during the 48-hour delay.
    The CEA directs the Commission to provide for both real-time 
reporting and appropriate block sizes. In developing the final rule 
the Commission has sought to achieve these objectives.
    As described in the preamble, upon analysis of market data and 
consideration of the public comments, the Commission has concluded 
that the categorization of swap transactions and associated block 
sizes and time delay periods set forth in the final rule strikes an 
appropriate balance to achieve the statutory objectives of enhancing 
price discovery, not disclosing ``the business transactions and 
market positions of any person,'' preserving market liquidity, and 
providing appropriate time delays for block transactions. The final 
part 43 includes a mechanism for regularly reviewing swap 
transaction data to refine the block trade sizing and reporting 
delays as appropriate to maintain that balance.

Consideration of Additional Information Going Forward

    I have consistently supported the use of the best available data 
to inform Commission rulemakings, and the periodic evaluation and 
updating of those rules, as new data becomes available. The preamble 
to the final rules for part 43 describes how available data, 
analytical studies, and public comments informed the Commission's 
rulemaking. Following press reports about the contents of the final 
rule, the Commission recently has received comments from a number of 
market participants raising issues with the reported provisions in 
the final rule. These commenters have expressed concern that the 
reported reversion of the time delays for block trades to the 
provisions in the current regulations, together with the 67% 
threshold for block trades, will impair market liquidity, increase 
costs to market participants, and not achieve the Commission's 
objectives of increasing price transparency and competitive trading 
of swaps. Many of these commenters have asked the Commission to 
delay the issuance of the final rule or to re-propose the part 43 
amendments for additional public comments.
    I do not believe it would be appropriate for the Commission to 
withhold the issuance of the final rule based on these latest 
comments and at this late stage in the process. The Commission has 
expended significant time and resources in analyzing data and 
responding to the public comments received during the public comment 
period. As explained in the preamble, the Commission is already 
years behind its original schedule for revising the block 
thresholds. I therefore do not support further delay in moving 
forward on these rules.
    Nonetheless, I also support evaluation and refinement of the 
block reporting rules, if appropriate, based upon market data and 
analysis. The 30-month implementation schedule for the revised block 
sizes provides market participants with sufficient time to review 
the final rule and analyze any new data. Market participants can 
then provide their views to the Commission on whether further, 
specific adjustments to the block sizes and/or reporting delay 
periods may be appropriate for certain instrument classes. This 
implementation period is also sufficient for the Commission to 
consider those comments and make any adjustments as may be 
warranted. The Commission should consider any such new information 
in a transparent, inclusive, and deliberative manner. Amended part 
43 also provides a process for the Commission to regularly review 
new data as it becomes available and amend the block size thresholds 
and caps as appropriate.

Cross Border Regulatory Arbitrage Risk

    The International Swaps and Derivatives Association, Inc. 
(``ISDA'') and the Securities Industry and Financial Markets 
Association (``SIFMA'') commented that higher block size thresholds 
may put swap execution facilities (``SEFs'') organized in the United 
States at a competitive disadvantage as compared to European trading 
platforms that provide different trading protocols and allow longer 
delays in swap trade reporting. SIFMA and

[[Page 75601]]

ISDA commented that the higher block size thresholds might 
incentivize swap dealers to move at least a portion of their swap 
trading from United States SEFs to European trading platforms. They 
also noted that this regulatory arbitrage activity could apply to 
swaps that are subject to mandatory exchange trading. Importantly, 
European platforms allow a non-competitive single-quote trading 
mechanism for these swaps while U.S. SEFs are required to maintain 
more competitive request-for-quotes mechanisms from at least three 
parties. The three-quote requirement serves to fulfill important 
purposes delineated in the CEA to facilitate price discovery and 
promote fair competition.
    The migration of swap trading from SEFs to non-U.S. trading 
platforms to avoid U.S. trade execution and/or swap reporting 
requirements would diminish the liquidity in and transparency of 
U.S. markets, to the detriment of many U.S. swap market 
participants. Additionally, as the ISDA/SIFMA comment letter notes, 
it would provide an unfair competitive advantage to non-U.S. trading 
platforms over SEFs registered with the CFTC, who are required to 
abide by CFTC regulations. Such migration would fragment the global 
swaps market and undermine U.S. swap markets.\5\
---------------------------------------------------------------------------

    \5\ In my dissenting statement on the Commission's recent 
revisions to it cross-border regulations, I detailed a number of 
concerns with how those revisions could provide legal avenues for 
U.S. swap dealers to migrate swap trading activity currently subject 
to CFTC trade execution requirements to non-U.S. markets that would 
not be subject to those CFTC requirements.
---------------------------------------------------------------------------

    I have supported the Commission's substituted compliance 
determinations for foreign swap trading platforms in non-U.S. 
markets where the foreign laws and regulations provide for 
comparable and comprehensive regulation. Substituted compliance 
recognizes the interests of non-U.S. jurisdictions in regulating 
non-U.S. markets and allows U.S. firms to compete in those non-U.S. 
markets. However, substituted compliance is not intended to 
encourage--or permit--regulatory arbitrage or circumvention of U.S. 
swap market regulations. If swap dealers were to move trading 
activity away from U.S. SEFs to a foreign trading platform for 
regulatory arbitrage purposes, such as, for example, to avoid the 
CFTC's transparency and trade execution requirements, it would 
undermine the goals of U.S. swap market regulation, and constitute 
the type of fragmentation of the swaps markets that our cross-border 
regime was meant to mitigate. It also would undermine findings by 
the Commission that the non-U.S. platform is subject to regulation 
that is as comparable and comprehensive as U.S. regulation, or that 
the non-U.S. regime achieves a comparable outcome.
    The Commission should be vigilant to protect U.S. markets and 
market participants. The Commission should monitor swap data to 
identify whether any such migration from U.S. markets to overseas 
markets is occurring and respond, if necessary, to protect the U.S. 
swap markets.

Part 45 (Swap Data Reporting), Part 46 (Pre-enactment and Transition 
Swaps), and Part 49 (Swap Data Repositories) Amendments

    I also support today's final rules amending the swap data 
reporting, verification, and SDR registration requirements in parts 
45, 46, and 49 of the Commission's rules. These regulatory reporting 
rules will help ensure that reporting counterparties, including SDs, 
MSPs, designated contract markets (``DCMs''), SEFs, derivatives 
clearing organizations (``DCOs''), and others report accurate and 
timely swap data to SDRs. Swap data will also be subject to a 
periodic verification program requiring the cooperation of both SDRs 
and reporting counterparties. Collectively, the final rules create a 
comprehensive framework of swap data standards, reporting deadlines, 
and data validation and verification procedures for all reporting 
counterparties.
    The final rules simplify the swap data reports required in part 
45, and organize them into two report types: (1) ``Swap creation 
data'' for new swaps; and (2) ``swap continuation data'' for changes 
to existing swaps.\6\ The final rules also extend the deadline for 
SDs, MSPs, SEFs, DCMs, and DCOs to submit these data sets to an SDR, 
from ``as soon as technologically practicable'' to the end of the 
next business day following the execution date (T+1). Off-facility 
swaps where the reporting counterparty is not an SD, MSP, or DCO 
must be reported no later than T+2 following the execution date.
---------------------------------------------------------------------------

    \6\ Swap creation data reports replace primary economic terms 
(``PET'') and confirmation data previously required in part 45. The 
final rules also eliminate optional ``state data'' reporting, which 
resulted in extensive duplicative reports crowding SDR databases, 
and often included no new information.
---------------------------------------------------------------------------

    The amended reporting deadlines will result in a moderate time 
window where swap data may not be available to the Commission or 
other regulators with access to an SDR. However, it is likely that 
they will also improve the accuracy and reliability of data. 
Reporting parties will have more time to ensure that their data 
reports are complete and accurate before being transmitted to an 
SDR.\7\
---------------------------------------------------------------------------

    \7\ The amended reporting deadlines are also consistent with 
comparable swap data reporting obligations under the Securities and 
Exchange Commission's and European Securities and Markets 
Authority's rules.
---------------------------------------------------------------------------

    The final rules in part 49 will also promote data accuracy 
through validation procedures to help identify errors when data is 
first sent to an SDR, and periodic reconciliation exercises to 
identify any discrepancies between an SDR's records and those of the 
reporting party that submitted the swaps. The final rules provide 
for less frequent reconciliation than the proposed rules, and depart 
from the proposal's approach to reconciliation in other ways that 
may merit future scrutiny to ensure that reconciliation is working 
as intended. Nonetheless, the validation and periodic reconciliation 
required by the final rule is an important step in ensuring that the 
Commission has access to complete and accurate swap data to monitor 
risk and fulfill its regulatory mandate.
    The final rules also better harmonize with international 
technical standards, the development of which included significant 
Commission participation and leadership. These harmonization efforts 
will reduce complexity for reporting parties without significantly 
reducing the specific data elements needed by the Commission for its 
purposes. For example, the final rules adopt the Unique Transaction 
Identifier and related rules, consistent with CPMI-IOSCO technical 
standards, in lieu of the Commission's previous Unique Swap 
Identifier. They also adopt over 120 distinct data elements and 
definitions that specify information to be reported to SDRs. Clear 
and well-defined data standards are critical for the efficient 
analysis of swap data across many hundreds of reporting parties and 
multiple SDRs. Although data elements may not be the most riveting 
aspect of Commission policy making, I support the Commission's 
determination to focus on these important, technical elements as a 
necessary component of any effective swap data regime.

Conclusion

    Today's Reporting Rules are built upon nearly eight years of 
experience with the current reporting rules and benefitted from 
extensive international coordination. The amendments make important 
strides toward fulfilling Congress's mandate to bring transparency 
and effective oversight to the swap markets. I commend CFTC staff, 
particularly in Division of Market Oversight and the Office of Data 
and Technology, who have worked on the Reporting Rules over many 
years. Swaps are highly variable and can be difficult to represent 
in standardized data formats. Establishing accurate, timely, and 
complete swap reporting requirements is a difficult, but important 
function for the Commission and regulators around the globe. This 
proposal offers a number of pragmatic solutions to known issues with 
the current swap data rules. For these reasons, I am voting for the 
final Reporting Rules.

[FR Doc. 2020-21569 Filed 11-24-20; 8:45 am]
BILLING CODE 6351-01-P