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Coast Guard, DHS.
Temporary interim rule with request for comments.
The Coast Guard is establishing both a safety zone and a Regulated Navigation Area (RNA) on the Chicago Sanitary and Ship Canal (CSSC) near Romeoville, IL. This temporary interim rule places navigational, environmental and operational restrictions on all vessels transiting the navigable waters located adjacent to and over the U.S. Army Corps of Engineers' (USACE) electrical dispersal fish barrier system.
You may submit comments identified by docket number USCG-2010-1054 using any one of the following methods:
(1)
(2)
(3)
(4)
If you have questions on this temporary rule, call CDR Tim Cummins, Deputy Prevention Division, Ninth Coast Guard District, telephone 216-902-6045. If you have questions on viewing the docket, call Renee V. Wright, Program Manager, Docket Operations, telephone 202-366-9826.
We encourage you to participate in this rulemaking by submitting comments and related materials. All comments received will be posted, without change, to
If you submit a comment, please include the docket number for this rulemaking (USCG-2010-1054), indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online, or by fax, mail or hand delivery, but please use only one of these means. We recommend that you include your name and a mailing address, an e-mail address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
To submit your comment online, go to
To view comments, as well as documents mentioned in this preamble as being available in the docket, go to
Anyone can search the electronic form of comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union,
We do not now plan to hold a public meeting. But you may submit a request for one on or before February 1, 2011 using one of the four methods specified under
This temporary interim rule essentially creates an extension of a prior temporary interim rule with
For the reasons discussed below, under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the
As such, the USCG must take immediate steps in order to prevent possible introduction of Asian carp before the ongoing effort can be completed. Therefore, it would be against the public interest to delay the issuing of this rule. Therefore, the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the
In 2002, the USACE energized a demonstration electrical dispersal barrier located in the CSSC. The demonstration barrier, commonly referred to as “Barrier I,” generates a low-voltage electric field (one-volt per inch) across the canal, which connects the Illinois River to Lake Michigan. Barrier I was built to block the passage of aquatic nuisance species, such as Asian carp, and prevent them from moving between the Mississippi River basin and Great Lakes via the canal. In 2006, the USACE completed construction of a new barrier, “Barrier IIA.” Because of its design, Barrier IIA can generate a more powerful electric field (up to four-volts per inch), over a larger area within the CSSC, than Barrier I. The USACE is currently in the process of constructing and testing “Barrier IIB” which will operate alongside Barrier IIA. Barrier IIB will also be capable of generating the four-volts per inch field strength.
A comprehensive, independent analysis of Barrier IIA, conducted in 2008 by the USACE at the one-volt per inch level, found a serious risk of injury or death to persons immersed in the water located adjacent to and over the barrier. Additionally, sparking between barges transiting the barrier (a risk to flammable cargoes) occurred at the one-volt per inch level.
In the past, the Coast Guard advised the USACE that it has no objection to the activation of Barrier IIA and Barrier I at a maximum strength of one-volt per inch. Testing on commercial vessels transiting the canal over the fish barrier was conducted at one volt per inch indicating that although the barriers create risks to people and vessels, those risks could be mitigated by following certain procedures. These mitigation procedures for the barrier operating at one volt per inch were implemented in a temporary interim rule establishing an RNA and a safety zone that was published in the
However, both of these rulemakings reflected the prior operating parameters of the dispersal barriers and contemplated further testing of the effects of higher voltages on commercial and recreational vessels as well as people. After Barrier IIA was energized, the USACE completed safety testing in consultation with the U.S. Coast Guard in August of 2009, to test various configurations of commercial tugs and barges as well as recreational vessels with non-conductive hulls passing through the barriers at increased voltage and operating parameters. Although testing and analysis of the risks to persons and vessels have begun, such efforts are ongoing.
Once Barrier IIB is energized, additional testing must be completed. In addition, the USACE is still in the process of determining what the optimal operational configurations of the barriers will be. Until all the barriers are operational, the strength and configuration of the barrier are finalized by the USACE and all necessary safety and operational testing is completed, the Coast Guard is unable to predict what waterway safety restrictions will be necessary in the vicinity of the electric dispersal barrier. As such, the Coast Guard is unable to give the public advanced notice of the final restrictions that will be necessary on the CSSC, but must take this immediate, interim action in order to prevent injury to people as well as damage to vessels and the waterway. Given the risks involved as well as the uncertainty of the situation, it is contrary to the public interest to delay the effective date of the RNA included in this rule.
In November 2009, the USACE made an announcement that it had discovered environmental deoxyribonucleic acid (e-dna) from Asian carp north of the fish barrier, indicating the potential that an unknown amount of Asian carp may be living in the waterways north of the fish barrier in the Cal-Sag Channel but south of the O'Brien Locks. Under 50 CFR Part 16, Asian carp are listed as an injurious species of fish and as such are illegal for interstate transportation. A permit is required to transport all viable eggs, gametes, as well as live Silver or Asian carp. Historically, vessels have taken on water south of the barrier and transported it across the barrier as bilge, ballast, or other non-potable water. This practice is considered a possible bypass vector for transporting Asian carp eggs or juvenile fish from south of the barrier to north of the barrier. Although it not believed that Asian carp have been transported into the Great Lakes via this entry method, immediate action is needed to close down this possible bypass vector. In response to public comments on the previous interim rule, there is no indication that any particular type of vessel has transported Asian carp across the barrier or that any type of vessel is a higher risk than others for transporting Asian carp. For this reason, delaying the effective date for the safety zone included in this temporary interim rule would be contrary to the public interest.
The Nonindigenous Aquatic Nuisance Prevention and Control Act of 1990, as amended by the National Invasive Species Act of 1996, authorized the USACE to conduct a demonstration project to identify an environmentally sound method for preventing and reducing the dispersal of non-indigenous aquatic nuisance species through the CSSC. The USACE selected an electric barrier because it is a non-lethal deterrent with a proven history, which does not overtly interfere with navigation in the canal.
A demonstration dispersal barrier (Barrier I) was constructed and has been in operation since April 2002. It is
In the spring of 2004, a commercial towboat operator reported an electrical arc between a wire rope and timberhead while making up a tow in the vicinity of Barrier I. During subsequent USACE safety testing, sparking was observed at points where metal-to-metal contact occurred between two barges in the barrier field.
The electric current in the water also poses a safety risk to commercial and recreational boaters transiting the area. The Navy Experimental Diving Unit (NEDU) was tasked with researching how the electric current from the barriers would affect a human body if immersed in the water. The NEDU final report concluded that the possible effects to a human body if immersed in the water include paralysis of body muscles, inability to breathe, and ventricular fibrillation.
A Safety Work Group facilitated by the Coast Guard and in partnership with the USACE and industry initially met in February 2008 and focused on three goals: (1) Education and public outreach, (2) keeping people out of the water, and (3) egress/rescue efforts. The Safety Work Group has regularly been attended by eleven stakeholders, including industry representatives such as the American Waterways Operators and Illinois River Carriers Association, the Army Corps of Engineers Chicago District, Coast Guard Marine Safety Unit Chicago, Coast Guard Sector Lake Michigan/Captain of the Port Lake Michigan, and the Ninth Coast Guard District.
Based on the safety hazards associated with electric current flowing through navigable waterways and the uncertainty of the effects of higher voltage on people and vessels that pass over and adjacent to the barriers, the Coast Guard is implementing operational restrictions, via an RNA, on vessels until proper testing and analysis of such testing can be completed by the USACE. The Coast Guard appreciates the commercial significance of this waterway and will work closely with the USACE to reduce operational restrictions as soon as possible; however, it is imperative that the RNA be immediately enacted to avoid loss of life.
In addition to the USACE's electric dispersal barrier, rotenone, a fish toxicant, has been applied to approximately six miles of the CSSC while barrier maintenance was conducted to ensure no fish were able to transit the barrier. As a result, evidence indicating the presence of Asian carp, including one Silver carp south of the barrier, was found in the general vicinity of the barrier. Although research efforts are ongoing, researchers have not been able to determine a number or mass of the Asian carp present either north or immediately south of the barrier.
Affected parties are reminded that the USACE may, at any time, permanently raise the operating parameters of the fish barrier in response to ongoing tests regarding the effectiveness of the barrier on the Asian carp. In addition, when USACE activates barrier IIB, additional testing will be necessary to ensure the safety of vessels. If the USACE permanently raises the voltage strength of the Barrier or otherwise alters Barrier operations to create unacceptable risks to waterway users, it is possible that fewer vessels will be given permission to enter the RNA and safety zone until further safety testing and analysis can be completed. Interested parties are urged to provide comment on how a permanent closure of the CSSC at the affected location would impact them.
This temporary interim rule replaces 33 CFR 165.T09-1004, the last temporary rule published to address risks associated with Barrier IIA and the application of rotenone to the CSSC. This rule also suspends 33 CFR 165.923 until 5 p.m. on December 1, 2011. This rule places an RNA on all waters located adjacent to, and over, the electrical dispersal barriers on the CSSC between mile marker 295.5 (approximately 3600 feet south of the Romeo Road Bridge) and mile marker 297.2 (approximately 2,640 feet north of the aerial pipeline arch). This RNA was reduced in size in response to public comments on a previous temporary interim rule. Public comments suggested that the RNA extend no further than 1,200 feet north and south of the aerial pipeline arch and the Romeo Road Bridge respectively. The Coast Guard finds that the current size of the RNA is necessary to account for situations where a vessel inside the barrier could come into contact with a vessel outside the barrier possibly causing sparking greater than 1,200 feet beyond the Romeo Road Bridge or the aerial pipeline arch.
The rule also places a safety zone over a smaller portion of these same waters located between mile marker 296.1 (approximately 958 feet south of the Romeo Road Bridge) and mile marker 296.7 (aerial pipeline arch located approximately 2,693 feet north east of Romeo Road Bridge). The RNA and safety zone will be enforced at all times until the USACE suspends operation of the electrified fish barrier and the Asian carp are no longer deemed an environmental threat to the Great Lakes. This temporary rule is to remain in effect until December 1, 2011 in order to give sufficient time for the USACE to complete construction and testing of Barrier IIB and determine the long-term operational configurations associated with the electric dispersal barrier.
The RNA places requirements on all vessels to include: (1) Vessels must be greater than twenty feet in length; (2) Vessel must not be a personal watercraft of any kind (
Public comments to the previous temporary interim rule suggested that both recreational and commercial vessel traffic (1) be prohibited from loitering, mooring, or laying up on the left or right descending banks; (2) provide radio notification before entering the RNA; and (3) move through the RNA with all due speed. The Coast Guard believes that suggestions (1) and (3) are already covered by the terms of this RNA in that no vessels may loiter or moor within the RNA. Secondly, all vessels must enter the RNA for the sole purpose of transiting to the other side and must maintain headway. Given the various vessel designs and engine configurations, requiring a certain speed is not prudent or necessary.
With regard to the requirement to have recreational vessels provide radio notification prior to entering the RNA, many of the recreational vessels that typically pass through the RNA are not required to carry marine band VHF radios. As such, requiring radio call outs is beyond the scope of this rule. Furthermore, the majority of recreational vessels that typically pass through the RNA are not comparable in size or maneuverability to the commercial vessels that typically pass through the RNA. As such, the Coast Guard finds that the proposed requirement is not necessary to prevent injury to persons, property, or the waterway. Furthermore, there has been no requirement for recreational vessels to make radio call outs since 2002 and there have been no reported casualties or incidents resulting from recreational vessels not calling out.
This temporary final rule places additional restrictions on all vessels transiting a safety zone that encompasses a smaller portion of the CSSC. The safety zone consists of all the waters of the CSSC located between 270 feet south of the Romeo Road Bridge (mile marker 296.1) to the south side of the aerial pipeline (mile marker 296.7). Vessels are prohibited from transiting the safety zone with non-potable water on board in any space except for water on board that will not be discharged on the other side of the safety zone. Vessels must notify and obtain permission from the Captain of the Port Sector Lake Michigan prior to transiting the safety zone if they intend to discharge any non-potable water attained on one-side of the safety zone on the other side of the zone. This includes water in void spaces being unintentionally introduced through cracks or other damage to the hull. The Captain of the Port Sector Lake Michigan maintains a telephone line that is manned 24-hours a day, seven days a week at 414-747-7182.
Public comments on this portion of the rule requested that this rule exempt “water on board from a commercial or municipal source (which ultimately could be discharged)” because it is inconsistent with Title 33 CFR Part 151. The Coast Guard declines to include such an exemption. First, the prohibitions in this rule are consistent with 33 CFR Part 151 because, under that Part, water from a commercial or municipal source held for the purpose to control or maintain trim, draught, stability, or stresses of the vessel, regardless of how it is carried, will still be considered “ballast water” as contemplated by Part 151. Therefore, Part 151 does not differentiate ballast water that is collected from commercial or municipal sources.
Secondly, if vessel operators intend on transiting the zone with the intent of discharging non-potable water that comes from a commercial or municipal source north of the barrier, those vessels are able to request permission to demonstrate to the District Commander or his designated representative that such discharge would be biologically sound on a case-by-case basis.
Public comments also requested that inadvertent leakage not be held as a violation of this rule because such a provision would be inconsistent with the Coast Guard's ballast water regulation. Again, the Coast Guard finds that the prohibitions against the discharge of non-potable water in this rule are consistent with the Coast Guard's ballast water regulations. Title 33 CFR Part 151 requires vessels to retain ballast water on board or use an environmentally sound method of ballast water management approved by the Commandant. The Coast Guard's interpretation of retaining ballast water on board does not allow for inadvertent leakage. Therefore, there is no inconsistency between the regulations. Furthermore, for those vessels that cannot avoid inadvertent leakage of non-potable water, they may be permitted to pass the safety zone if they can demonstrate through testing that the water does not contain potential Silver or Asian carp or viable eggs or gametes from these carp.
These restrictions are necessary for safe navigation of the RNA and to ensure the safety of vessels and their personnel as well as the public's safety due to the electrical discharges noted during safety tests conducted by the USACE. They are also necessary to protect from the harms presented by a potential invasion of Asian carp in Lake Michigan. Deviation from this temporary final rule is prohibited unless specifically authorized by the Commander, Ninth Coast Guard District or his designated representatives. The Commander, Ninth Coast Guard District designates Captain of the Port Sector Lake Michigan and Commanding Officer, Marine Safety Unit Chicago, as his designated representatives for the purposes of the RNA.
If, for any reason, the safety zone or RNA is at any time suspended, the Commander, Ninth Coast Guard District or the Captain of the Port Lake Michigan will cause notice of the enforcement of the safety zone and/or RNA to be made by all appropriate means to effect the widest publicity among the affected segments of the public.
We developed this temporary interim rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on 13 of these statutes or executive orders.
This temporary interim rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order.
This rule will affect commercial traffic transiting the electrical dispersal fish barrier system and surrounding waters. The USACE maintains data about the commercial vessels using the Lockport Lock and Dam, which provides access to the proposed RNA. According to USACE data, the commercial traffic through the Lockport Lock consisted of 147 towing vessels and 13,411 barges during 2007. Of those, 96 towing vessels and 2,246 barges were handling red flag cargo (
Recreational vessels will also be affected under this rule. According to USACE data, recreational vessels made up 66 percent of the usage of the Lockport Lock and Dam in 2007. Operation and maintenance of the USACE fish barrier will continue to affect recreational vessels as they have in the past. The majority of these vessels will still be able to transit the RNA under this rule. The potential cost
We expect some provisions in this rule will not result in additional costs. These include loitering, mooring and PFD requirements. Similar to prior temporary rules, vessels are prohibited from mooring or loitering in the RNA and all personnel in the RNA on open decks are required to wear a Coast Guard approved Type I personal flotation device. Most commercial and recreational operators will have required flotation devices on board as a result of other requirements and common safe boating practices. Based on the past temporary rules, we observed no information and received no data to confirm there were additional costs as a result of these provisions.
In addition, the initial test results at the current operating parameters of two volts per inch indicate that the majority of commercial and recreational vessels that regularly transit the CSSC will be permitted to enter the regulated navigation area and safety zone under certain conditions. Those vessels that will not be permitted to pass through the barrier may be permitted, on a case by case basis, to pass via a dead ship tow by a commercial vessel that is able to transit.
We expect the benefits of this rule will mitigate marine safety risks as a result of the operation and maintenance of the fish barriers by the USACE. This rule will allow commerce to continue through the waters adjacent to and over these barriers. This rule will also mitigate the possibility of an Asian Carp introduction into Lake Michigan, and the Great Lakes system, as a result of commerce through the CSSC.
At this time, based on available information from past temporary rules, we anticipate that this rule will not be economically significant under Executive Order 12866 (
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612) requires agencies to consider whether regulatory actions would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. An RFA analysis is not required when a rule is exempt from notice and comment rulemaking under 5 U.S.C. 553(b). The Coast Guard determined that this rule is exempt from notice and comment rulemaking pursuant to 5 U.S.C. 553(b)(B). Therefore, an RFA analysis is not required for this rule.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offer to assist small entities in understanding the rule so that they can better evaluate its effects on them and participate in the rulemaking process.
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism.
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or Tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
This rule will not effect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.
This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.
We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children.
This rule does not have Tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.
We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office
The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (
This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.
We have analyzed this temporary rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that this action is one of the category of actions which do not individually or cumulatively have significant effect on the human environment. Therefore, this rule is categorically excluded, under section 2.B.2 Figure 2-1, paragraph (34)(g), as well as paragraph (27) of the Instruction and neither an environmental assessment nor an environmental impact statement is required. This rule involves the establishing, disestablishing, or changing of regulated navigation areas and security or safety zones. This temporary rule will assist the aforementioned multi-agency effort to research and manage the possible impact of the Asian carp on the Great Lakes. An environmental analysis checklist and a categorical exclusion determination are available in the docket where indicated under
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
33 U.S.C. 1226, 1231; 46 U.S.C. Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Pub. L. 107-295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1.
(a)
(1) The following area is a temporary safety zone: All waters of the CSSC located between mile marker 296.1 (approximately 958 feet south of the Romeo Road Bridge) and mile marker 296.7 (aerial pipeline arch located approximately 2,693 feet north east of Romeo Road Bridge).
(2)
(i) All vessels are prohibited from transiting the safety zone with any non-potable water on board if they intend to release that water in any form within, or on the other side of the safety zone. Non-potable water includes but is not limited to any water taken on board to control or maintain trim, draft, stability or stresses of the vessel, or taken on board due to free communication between the hull of the vessel and exterior water. Potable water is water treated and stored aboard the vessel that is suitable for human consumption.
(ii) Vessels with non-potable water onboard are permitted to transit the safety zone if they have taken steps to prevent the release of that water in any form, in or on the other side of, the safety zone, or alternatively if they have plans to dispose of the water in a biologically sound manner.
(iii) Vessels with non-potable water aboard that intend to discharge on the other side of the zone must contact the COTP, her designated representative or her on-scene representative and obtain permission to transit and discharge prior to transit. Examples of discharges that may be approved by the COTP include plans to dispose of the water in a biologically sound manner or demonstrate through testing that the non-potable water does not contain potential live Silver or Asian carp, or viable eggs or, gametes from these carp.
(iv) In accordance with the general regulations in § 165.23 of this part, entry into, transiting, or anchoring within this safety zone by vessels with non-potable water on board is prohibited unless authorized by the Captain of the Port Lake Michigan, her designated representative, or her on-scene representative.
(v) The “on-scene representative” of the Captain of the Port is any Coast Guard commissioned, warrant or petty officer who has been designated by the Captain of the Port Lake Michigan to act on her behalf. The on-scene representative of the Captain of the Port Lake Michigan will be aboard a Coast Guard, Coast Guard Auxiliary, or other designated vessel or will be on shore and will communicate with vessels via VHF-FM radio or loudhailer. The Captain of the Port Lake Michigan or her on-scene representative may also be contacted via VHF-FM radio Channel 16 or through the Coast Guard Sector Lake Michigan Command Center at 414-747-7182.
(b)
(2)
(i) The general regulations contained in 33 CFR 165.13 apply.
(ii) Vessels that comply with the following restrictions are permitted to transit the RNA:
(A) All up-bound and down-bound barge tows that consist of barges carrying flammable liquid cargos (Grade A through C, flashpoint below 140 degrees Fahrenheit, or heated to within 15 degrees Fahrenheit of flash point) must engage the services of a bow boat at all times until the entire tow is clear of the RNA.
(B) Vessels engaged in commercial service, as defined in 46 U.S.C. 2101(5), may not pass (meet or overtake) in the RNA and must make a SECURITE call when approaching the RNA to announce intentions and work out passing arrangements.
(C) Commercial tows transiting the RNA must be made up with only wire rope to ensure electrical connectivity between all segments of the tow.
(D) All vessels are prohibited from loitering in the RNA.
(E) Vessels may enter the RNA for the sole purpose of transiting to the other side and must maintain headway throughout the transit. All vessels and persons are prohibited from dredging, laying cable, dragging, fishing, conducting salvage operations, or any other activity, which could disturb the bottom of the RNA.
(F) Except for law enforcement and emergency response personnel, all personnel on vessels transiting the RNA should remain inside the cabin, or as inboard as practicable. If personnel must be on open decks, they must wear a Coast Guard approved personal flotation device.
(G) Vessels may not moor or lay up on the right or left descending banks of the RNA.
(H) Towboats may not make or break tows if any portion of the towboat or tow is located in the RNA.
(I) Persons on board any vessel transiting this RNA in accordance with this rule or otherwise are advised they do so at their own risk.
(J) Vessels must be greater than twenty feet in length.
(K) Vessels must not be a personal watercraft of any kind (
(c)
(d)
(e)
(f)
Postal Service
Final rule.
The Postal Service will revise
Effective January 2, 2011.
Obataiye B. Akinwole at 202-268-2260.
On July 9, 2010, the Postal Service published a proposed rule
This minor classification change was required to be filed with the Postal Regulatory Commission (PRC). The Postal Service did so as part of its request for an exigent price increase on July 6, 2010. Although the PRC rejected the exigent price filing, it invited the Postal Service to file separately the classification changes incorporated in the exigent price request. On November 3, 2010, the Postal Service filed such a request to implement the change to Israel's Price Group for First-Class Mail International. The Commission concurred with the notice on November 22, 2010.
Foreign relations, International postal services.
5 U.S.C. 552(a); 13 U.S.C. 301-307; 18 U.S.C. 1692-1737; 39 U.S.C. 101, 401, 403, 404, 407, 414, 416, 3001-3011, 3201-3219, 3403-3406, 3621, 3622, 3626, 3632, 3633, and 5001.
We will publish an amendment to 39 CFR Part 20 to reflect these changes.
Fish and Wildlife Service, Interior.
Final rule.
We, the U.S. Fish and Wildlife Service, change the regulations governing control of depredating blackbirds, cowbirds, grackles, crows, and magpies at 50 CFR 21.43. Because of long-term evidence of population declines throughout much of their ranges, we remove the Rusty Blackbird (
This regulation will be effective on January 3, 2011.
Dr. George T. Allen, Division of Migratory Bird Management, U.S. Fish and Wildlife Service, Division of Migratory Bird Management, 4401 North Fairfax Drive, Mail Stop 4107, Arlington, VA 22203-1610, Phone: (703) 358-1825.
The U.S. Fish and Wildlife Service is the Federal agency delegated the primary responsibility for managing migratory birds. This delegation is authorized by the Migratory Bird Treaty Act (MBTA) (16 U.S.C. 703
We remove the Rusty Blackbird (
After the effective date of this final rule (
We also require the use of nontoxic ammunition for all take of migratory birds under this depredation order to prevent toxicity hazards to other wildlife. Further, we require reporting of control actions taken under the order to give us data on the number of each species taken each year to better monitor the effects of such take on populations of those species. We expect the respondents to be mostly State and Federal wildlife damage management personnel who undertake blackbird control to protect crops. We also make the list of species to which the depredation order applies more precise by listing each species that may be controlled under the order.
“WS [U.S.D.A. Wildlife Services] is notorious for indiscriminate regimes that have resulted in the mortality of uncountable millions of birds * * * and will continue to pose a real risk to the rusty blackbird and Tamaulipas crow despite the proposed rule change. We therefore request that 50 CFR § 21.43 not only be narrowed in scope, but withdrawn completely.”
“Currently, 50 CFR § 21.43 allows for such a broad exemption from the normal MBTA permitting process that some migratory birds are afforded virtually no protections—especially given the enormous amount of land conversion to agriculture and other uses.”
“We are also convinced that FWS should finalize its proposal to end the use of toxic shot for killing blackbirds, crows, and grackles, and thus also commend that portion of the proposed change to 50 CFR § 21.43 concerning this point. Lead shot can have detrimental effects on scavengers and the environment.”
“I am writing to express my support for * * * the requirement to use nontoxic shot or bullets when a firearm is used to control any species listed under the order.”
“WS recommends eliminating the non-toxic requirement for all ammunition in all situations involving blackbirds unless: (1) Further analysis by the FWS provides definitive evidence that lead ammunition has impacted rusty blackbird populations and (2) evidence is provided that lead ammunition used under the authority of the blackbird depredation order has impacted other wildlife species.” (USDA Wildlife Services)
“Supporting documentation and analysis is needed for all claims of lead toxicosis in songbirds. The use of unsupported claims of lead toxicosis in songbirds should be discarded since there is not any information from
“The requirement to use non-toxic shot to take crows for depredation management is inconsistent with hunting regulations that allow the use of lead shot to hunt crows. This would represent an unequal application of the Migratory Bird Treaty Act. More lead shot will likely be used to take crows while hunting than non-toxic shot to take crows for depredation purposes.” (Wildlife Services)
The requirement for nontoxic shot in depredation control or in hunting is already applied unevenly; nontoxic shot is not required for all migratory bird hunting. However, we are concerned about lead poisoning of migratory birds, and will seek to apply nontoxic shot requirement more evenly by implementing the use of nontoxic shot as we consider revisions to the current regulations.
In the proposed rule, we asserted no effects of lead shot from bird control under the depredation order on any particular wildlife taxon. However, wildlife professionals have recognized that lead shot and lead in bullets are hazardous in the environment, and have recommended that wildlife managers “Advocate the replacement of lead-based ammunition and fishing tackle with nontoxic products, while recognizing that complete replacement may not be possible in specific circumstances” (The Wildlife Society Final Position Statement on lead in ammunition and fishing tackle).
We recognize that nontoxic shot is not required in all hunting in locations in which control under this order might take place. Nevertheless, we are taking a step toward eliminating the use of lead shot and lead ammunition in wildlife damage control.
“WS recommends the FWS continue to use the existing reporting requirement already established to the greatest extent possible, and that no additional requirements be enacted.” (Wildlife Services)
“We have concerns about the paperwork requirements of this DEA. We question if non-biologists will collect this data. As stated before, Wildlife Services does the vast majority of blackbird control work in the United States and is already collecting this data. We are concerned that this DEA subjects our constituents to prosecution when the potential for valuable data acquisition is questionable.” (Mississippi Flyway)
The Office of Management and Budget (OMB) has determined that this Final rule is not significant under Executive Order 12866. OMB bases its determination upon the following four criteria:
(a) Whether the rule will have an annual effect of $100 million or more on the economy or adversely affect an economic sector, productivity, jobs, the environment, or other units of the government.
(b) Whether the rule will create inconsistencies with other Federal agencies' actions.
(c) Whether the rule will materially affect entitlements, grants, user fees, loan programs, or the rights and obligations of their recipients.
(d) Whether the rule raises novel legal or policy issues.
Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq., as amended by the
SBREFA amended the Regulatory Flexibility Act to require Federal agencies to provide a statement of the factual basis for certifying that a rule would not have a significant economic impact on a substantial number of small entities. We have examined this rule's potential effects on small entities as required by the Regulatory Flexibility Act, and have determined that this action will not have a significant economic impact on a substantial number of small entities because neither the Rusty Blackbird nor the Tamaulipas Crow are species that frequently cause depredation problems and, where they might do so, we can issue depredation permits to alleviate the problems. There are no costs associated with this regulations change except that persons needing a depredation permit to take Rusty Blackbirds or Tamaulipas Crows will have to pay the $100 application fee for a depredation permit. We estimate the number of people likely to apply for such a permit to be no more than 25 per year. We certify that because this Final rule will not have a significant economic effect on a substantial number of small entities, a regulatory flexibility analysis is not required.
This rule is not a major rule under the SBREFA (5 U.S.C. 804(2)).
a. This rule will not have an annual effect on the economy of $100 million or more.
b. This rule will not cause a major increase in costs or prices for consumers; individual industries; Federal, State, Tribal, or local government agencies; or geographic regions.
c. This rule will not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises.
In accordance with the Unfunded Mandates Reform Act (2 U.S.C. 1501
a. This rule will not “significantly or uniquely” affect small governments. A small government agency plan is not required. Actions under the regulation will not affect small government activities in any significant way.
b. This rule will not produce a Federal mandate of $100 million or greater in any year. It will not be a “significant regulatory action” under the Unfunded Mandates Reform Act.
In accordance with Executive Order 12630, this rule does not have significant takings implications. A takings implication assessment is not required. This rule does not contain a provision for taking of private property.
This rule does not have sufficient Federalism effects to warrant preparation of a Federalism assessment under Executive Order 13132. It will not interfere with the ability of States to manage themselves or their funds. No significant economic impacts are expected to result from the change in the depredation order.
In accordance with Executive Order 12988, the Office of the Solicitor has determined that the rule does not unduly burden the judicial system and meets the requirements of sections 3(a) and3(b)(2) of E.O. 12988.
This rule contains new information collection requirements that require approval by the Office of Management and Budget. The OMB has approved these requirements and assigned OMB Control Number 1018-0146, which expires November 30, 2013. We have addressed all comments received on the proposed rule above in this preamble.
Any person or agency acting under this depredation order must provide an annual report to the appropriate Regional Migratory Bird Permit Office. You must provide your name, address, phone number, and email address and the following information for each species taken:
(1) Species and number of birds taken;
(2) Months in which the birds were taken;
(3) State(s) and county(ies) in which the birds were taken; and
(4) General purpose for which the birds were taken (such as for protection of agriculture, human health and safety, property, or natural resources).
We collect this information so that we will be able to determine how many birds of each species are taken each year and whether the control actions are likely to affect the populations of those species.
An agency may not conduct or sponsor and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The public may comment, at any time, on the accuracy of the information collection requirements in this rule and may submit comments to the Information Collection Clearance Officer, Fish and Wildlife Service, Department of the Interior, 1849 C Street, NW., (Mailstop 222-ARLSQ), Washington, DC 20240.
We have completed a Final Environmental Assessment (FEA) on this regulations change. The FEA is a part of the administrative record for this rule. In accordance with the National Environmental Policy Act (NEPA, 42 U.S.C. 4332(C)) and Part 516 of the U.S. Department of the Interior Manual (516 DM), removal of the Rusty Blackbird and Tamaulipas Crow from the depredation order and adding requirements for nontoxic shot or bullets will not have a significant effect on the quality of the human environment, nor will it involve unresolved conflicts concerning alternative uses of available resources. There will be a positive environmental effect because take of the two removed species as a result of control actions will be significantly reduced or eliminated.
In accordance with the President's memorandum of April 29, 1994, “Government-to-Government Relations with Native American Tribal Governments” (59 FR 22951), Executive Order 13175, and 512 DM 2, we have evaluated potential effects on federally recognized Indian Tribes and have determined that there are no potential effects. This rule will apply to Tribes and any control actions that Tribes carry out on their lands, but it will not
On May 18, 2001, the President issued Executive Order 13211 addressing regulations that significantly affect energy supply, distribution, and use. E.O. 13211 requires agencies to prepare Statements of Energy Effects when undertaking certain actions. This rule change will not be a significant regulatory action under E.O. 12866, nor will it significantly affect energy supplies, distribution, or use. This action will not be a significant energy action and no Statement of Energy Effects is required.
Section 7 of the Endangered Species Act (ESA) of 1973, as amended (16 U.S.C. 1531
Exports, Hunting, Imports, Reporting and recordkeeping requirements, Transportation, Wildlife.
Migratory Bird Treaty Act, 40 Stat. 755 (16 U.S.C. 703); Pub. L. 95-616, 92 Stat. 3112 (16 U.S.C. 712(2)); Pub. L. 106-108, 113 Stat. 1491, Note following 16 U.S.C. 703.
You do not need a Federal permit to control the species listed in the table below if they are committing or about to commit depredations on ornamental or shade trees, agricultural crops, livestock, or wildlife, or when concentrated in such numbers and manner that they are a health hazard or other nuisance:
(a) You must attempt to control depredation by species listed under this depredation order using non-lethal methods before you may use lethal control.
(b) In most cases, if you use a firearm to kill migratory birds under the provisions of this section, you must use nontoxic shot or nontoxic bullets to do so. See § 20.21(j) of this chapter for a listing of approved nontoxic shot types. However, this prohibition does not apply if you use an air rifle, an air pistol, or a 22 caliber rimfire firearm for control of depredating birds under this order.
(c) If you exercise any of the privileges granted by this section, you must allow any Federal, State, tribal, or territorial wildlife law enforcement officer unrestricted access at all reasonable times (including during actual operations) over the premises on which you are conducting the control. You must furnish the officer whatever information he or she may require about your control operations.
(d) You may kill birds under this order only in a way that complies with all State, tribal, or territorial laws or regulations. You must have any State, tribal, or territorial permit required to conduct the activity.
(e) You may not sell, or offer to sell, any bird, or any part thereof, killed under this section, but you may possess, transport, and otherwise dispose of the bird or its parts.
(f) Any person or agency acting under this depredation order must provide to the appropriate Regional Migratory Bird Permit Office an annual report for each species taken. You can find the addresses for the Regional Migratory Bird Permit Offices in § 2.2 of subchapter A of this chapter. You must submit your report by January 31st of the following year, and you must include the following information:
(1) Your name, address, phone number, and e-mail address;
(2) The species and number of birds taken;
(3) The months in which the birds were taken;
(4) The State(s) and county(ies) in which the birds were taken; and
(5) The general purpose for which the birds were taken (such as for protection of agriculture, human health and safety, property, or natural resources).
(g) The Office of Management and Budget has approved the information collection requirements associated with this depredation order and assigned OMB Control No. 1018-0146. We may not conduct or sponsor and you are not required to respond to a collection of information unless it displays a currently valid OMB control number. You may send comments on the information collection requirements to the Service's Information Collection Clearance Officer, U.S. Fish and Wildlife Service, MS 222-ARLSQ, 1849 C Street, NW., Washington, DC 20240.
Animal and Plant Health Inspection Service, USDA.
Proposed rule.
We are proposing to amend the regulations for the importation of unmanufactured wood articles to remove the exemption that allows wood packaging material from Canada to enter the United States without first meeting the treatment and marking requirements of the regulations that apply to wood packaging material from all other countries. This action is necessary in order to prevent the dissemination and spread of pests via wood packaging material from Canada.
We will consider all comments that we receive on or before January 31, 2011.
You may submit comments by either of the following methods:
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•
Mr. John Tyrone Jones, II, Trade Director, Forestry Products, Phytosanitary Issues Management, PPQ, APHIS, 4700 River Road Unit 140, Riverdale, MD 20737-1231; (301) 734-8860.
The regulations in Subpart—Logs, Lumber, and Other Unmanufactured Wood Articles (7 CFR 319.40-1 through 319.40-11, referred to below as the regulations) restrict the importation of many types of wood articles, including items such as pallets, crates, boxes, and pieces of wood used to support and brace cargo. These types of articles are known as wood packaging materials (WPM). Introductions into the United States of exotic plant pests such as the pine shoot beetle (
The variety of woods and lumber qualities used in the construction of WPM make it susceptible to infestation by a wide range of wood pests and diseases. WPM is frequently constructed from lower grade lumber derived from an assortment of woods. Additionally, lumber used in WPM construction may be fresh cut and may not have undergone sufficient processing or treatment to kill pests. Furthermore, WPM is very often reused, recycled, or remanufactured, and the true origin of any specific piece of WPM is difficult to determine, which means that its phytosanitary status cannot be fully ascertained.
Currently, § 319.40-3(a) provides a general permit that authorizes the importation of certain unmanufactured wood articles, including WPM, into the United States from Canada.
In contrast, WPM that is not from Canada is subject to the more rigorous requirements of the regulations for importing wood articles from all other countries except Canada. In a final rule published in the
The less restrictive importation requirements for WPM imported into the United States from Canada are based on the premise that the forests in the United States share a common forested boundary with Canada and, therefore, share, to a reasonable degree, the same forest pests. However, in a pest risk analysis (PRA) entitled “Risk analysis for the movement of wood packaging material (WPM) from Canada into the United States,” we examined the pest risks associated with the movement of WPM into the United States from Canada. We determined that many North American forest pests, both indigenous and nonindigenous, occur in
Since the implementation of ISPM 15, the USDA and the Canadian Food Inspection Agency (CFIA) officials have participated jointly in the North American Perimeter Approach Wood and Wood Products Steering Committee to develop a harmonization plan that would entail both countries removing the exemption that allows wood packaging material to move from Canada into the United States and from the United States into Canada under general permit and not ISPM 15 guidelines. Coordination of this plan will take place though USDA and CFIA's participation in the North American Plant Protection Organization's Forestry Panel.
Based on the information contained in the PRA, and in keeping with our harmonization efforts with Canada relative to the regulation of WPM, we are proposing to amend the regulations in order to require that WPM from Canada meet the same conditions for importation as WPM from all other countries. This action is necessary in order to provide more consistent regulation of WPM from Canada as well as to reduce the risk of the introduction of dangerous plant pests on WPM moving from Canada into the United States.
This proposed rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget.
In accordance with 5 U.S.C. 603, we have performed an initial regulatory flexibility analysis, which is summarized below, regarding the economic effects of this proposed rule on small entities. Copies of the full analysis are available from the person listed under
The analysis concludes that the proposed removal of the treatment and marking exemption would have a direct effect on Canadian manufacturers of pallets, which may affect importers and final consumers of goods transported on pallets imported from Canada. Because the cost of a pallet is a very small share of the bundle of goods transported on pallets, cost increases due to the treatment requirements are not expected to significantly affect domestic consumers and thus would not have a measurable impact on the flow of trade. The proposed changes are not expected to reduce the amount of goods shipped from Canada, as is evident from observing trends in imports from all other origins since implementation of the treatment standards in 2005.
The vast majority of potentially affected entities would be considered small. However, because the cost of a pallet is a very small share of the bundle of goods transported on pallets, cost increases due to treatment requirements for Canadian producers are not expected to significantly affect domestic consumers.
This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. If this proposed rule is adopted: (1) All State and local laws and regulations that are inconsistent with this rule will be preempted; (2) no retroactive effect will be given to this rule; and (3) administrative proceedings will not be required before parties may file suit in court challenging this rule.
To provide the public with documentation of APHIS' review and analysis of any potential environmental impacts associated with the importation of wood packaging material from Canada, we have prepared an environmental assessment. The environmental assessment was prepared in accordance with: (1) The National Environmental Policy Act of 1969 (NEPA), as amended (42 U.S.C. 4321
The environmental assessment may be viewed on the Regulations.gov Web site or in our reading room. (A link to Regulations.gov and information on the location and hours of the reading room are provided under the heading
This proposed rule contains no new information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Coffee, Cotton, Fruits, Imports, Logs, Nursery stock, Plant diseases and pests, Quarantine, Reporting and recordkeeping requirements, Rice, Vegetables.
Accordingly, we propose to amend 7 CFR part 319 as follows:
1. The authority citation for part 319 continues to read as follows:
7 U.S.C. 450, 7701-7772, and 7781-7786; 21 U.S.C. 136 and 136a; 7 CFR 2.22, 2.80, and 371.3.
2. In § 319.40-3, paragraph (a) is amended by adding a new paragraph (a)(1)(i)(D) to read as follows:
(a) * * *
(1) * * *
(i) * * *
(D) Regulated wood packaging material, whether in actual use as packing for regulated or nonregulated articles or imported as cargo.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for the products listed above that would supersede an existing AD. This proposed AD results from mandatory continuing airworthiness information (MCAI) originated by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as:
During a routine inspection, cracks have been found on an aeroplane at the lower wing panel rear trailing edge inboard of flap lever arm 1 (rib 5). A subsequent inspection of the other aeroplanes in that operator's fleet revealed several more aeroplanes with cracks at the same location. This condition, if not corrected, could lead to structural failure of the affected wing panel, possibly resulting in the wing separating from the airplane with consequent loss of control.
The proposed AD would require actions that are intended to address the unsafe condition described in the MCAI.
We must receive comments on this proposed AD by January 18, 2011.
You may send comments by any of the following methods:
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•
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For service information identified in this proposed AD, contact 328 Support Services GmbH, Global Support Center, P.O. Box 1252, D-82231 Wessling, Federal Republic of Germany; telephone +49 8153 88111 6666; fax +49 8153 88111 6565; e-mail
You may examine the AD docket on the Internet at
Tom Rodriguez, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone (425) 227-1137; fax (425) 227-1149.
We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the
We will post all comments we receive, without change, to
On June 3, 2008, we issued AD 2008-10-51, Amendment 39-15535 (73 FR 30752, May 29, 2008). That AD required actions intended to address an unsafe condition on the products listed above.
Since we issued AD 2008-10-51, additional inspections and a modification have been developed to address the onset of cracks in the affected wing panel. The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued Airworthiness Directive 2009-0194, dated September 1, 2009 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:
During a routine inspection, cracks have been found on an aeroplane at the lower wing panel rear trailing edge inboard of flap lever arm 1 (rib 5). A subsequent inspection of the other aeroplanes in that operator's fleet revealed several more aeroplanes with cracks at the same location. This condition, if not corrected, could lead to structural failure of the affected wing panel, possibly resulting in the wing separating from the airplane with consequent loss of control.
To correct this unsafe condition, EASA issued Emergency AD 2008-0087-E [dated May 8, 2008] to require detailed visual inspections (DVI) of both the left (LH) and right (RH) wing panel rear trailing edge around rib 3 and rib 5 and a subsequent Eddy Current inspection (NDI) [non-destructive inspection] of the same area to detect cracks, follow-up repair actions when cracks are found, and the reporting of all findings. The TC [type certificate] holder has now developed a modification, consisting of the cold expansion of the former lower wing panel CAMLOC holes together with the installation of new attachment material that will prevent the onset of cracks in the affected wing panel.
For the reasons described above, this [EASA] AD retains the inspection and repair requirements of AD 2008-0087-E, which is superseded, adds repetitive inspections and a requirement to modify both the LH and RH wing panel rear trailing edges from rib 3 to rib 9. Modification does not constitute terminating action for the new repetitive inspection requirements of this AD.
The new inspections are repetitive eddy current inspections. The modification includes cold expansion of the former lower wing panel CAMLOC holes and installation of new attachment material. You may obtain further information by examining the MCAI in the AD docket.
328 Support Services GmbH has issued Alert Service Bulletins ASB-328-57-037 and ASB-328J-57-015, both Revision 2, both dated May 20, 2008. 328 Support Services GmbH has also issued Service Bulletins SB-328-57-481 and SB-328J-57-230, both Revision 1, both dated October 15, 2009. The actions described in this service information are intended to correct the unsafe condition identified in the MCAI.
This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of the same type design.
We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information.
We might also have proposed different actions in this AD from those in the MCAI in order to follow FAA policies. Any such differences are highlighted in a NOTE within the proposed AD.
Based on the service information, we estimate that this proposed AD would affect about 49 products of U.S. registry.
The actions that are required by AD 2008-10-51 and retained in this proposed AD take about 2 work-hours per product, at an average labor rate of $85 per work hour. Required parts cost about $0 per product. Based on these figures, the estimated cost of the currently required actions is $170 per product.
We estimate that it would take about 8 work-hours per product to comply with the new basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Required parts would cost about $11,600 per product. Where the service information lists required parts costs that are covered under warranty, we have assumed that there will be no charge for these costs. As we do not control warranty coverage for affected parties, some parties may incur costs higher than estimated here. Based on these figures, we estimate the cost of the proposed AD on U.S. operators to be $601,720, or $12,280 per product.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
1. Is not a “significant regulatory action” under Executive Order 12866;
2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and
3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
We prepared a regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
1. The authority citation for part 39 continues to read as follows:
49 U.S.C. 106(g), 40113, 44701.
2. The FAA amends § 39.13 by removing Amendment 39-15535 (73 FR 30752, May 29, 2008) and adding the following new AD:
(a) We must receive comments by January 18, 2011.
(b) This AD supersedes AD 2008-10-51, Amendment 39-15535.
(c) This AD applies to 328 Support Services GmbH (Type Certificate previously held by AvCraft Aerospace GmbH; Fairchild Dornier GmbH; Dornier Luftfahrt GmbH) Model 328-100 and -300 airplanes; all serial numbers; certificated in any category.
(d) Air Transport Association (ATA) of America Code 57: Wings.
(e) The mandatory continuing airworthiness information (MCAI) states:
During a routine inspection, cracks have been found on an aeroplane at the lower wing panel rear trailing edge inboard of flap lever arm 1 (rib 5). A subsequent inspection of the other aeroplanes in that operator's fleet revealed several more aeroplanes with cracks at the same location. This condition, if not corrected, could lead to structural failure of the affected wing panel, possibly resulting in the wing separating from the airplane with consequent loss of control.
The new inspections are repetitive eddy current inspections. The modification includes cold expansion of the former lower wing panel CAMLOC holes and installation of new attachment material.
(f) You are responsible for having the actions required by this AD performed within the compliance times specified, unless the actions have already been done.
(g) Within 10 flight cycles, or 10 flight hours, or 7 days, whichever occurs first, after June 3, 2008 (the effective date of AD 2008-10-51): Accomplish a detailed visual inspection of both the left-hand (LH) and right-hand (RH) lower wing panel inboard and outboard of flap lever arm 1 (rib 5) for cracks, in accordance with the Accomplishment Instructions of Dornier Alert Service Bulletin ASB-328J-57-015 or
(h) Within 400 flight hours or 3 months after June 3, 2008, whichever occurs first: Accomplish an eddy current inspection of both the LH and RH lower wing panel in the vicinity of rib 3 and inboard and outboard of flap lever arm 1 (rib 5) for cracks, in accordance with the Accomplishment Instructions of Dornier Alert Service Bulletin ASB-328J-57-015 or ASB-328-57-037, both Revision 1, both dated May 8, 2008; or 328 Support Services Alert Service Bulletin ASB-328J-57-015 or ASB-328-57-037, both Revision 2, both dated May 20, 2008; as applicable. After the effective date of this AD, use only 328 Support Services Alert Service Bulletin ASB-328J-57-015 or ASB-328-57-037, both Revision 2, both dated May 20, 2008. Repeat the eddy current inspection thereafter at intervals not to exceed 400 flight cycles until the inspection required by paragraph (i) of this AD is accomplished. Accomplishment of the eddy current inspection terminates the detailed visual inspection required by paragraph (g) of this AD.
(i) Within 800 flight cycles after the last eddy current inspection required in paragraph (h) of this AD is done, or within 60 days after the effective date of this AD, whichever occurs later, do an eddy current inspection for cracking of the lower wing panel (outside) around the flap lever arm 1 (rib 5); in accordance with the Accomplishment Instructions of 328 Support Services Alert Service Bulletin ASB-328-57-037 (for Model 328-100 airplanes) or ASB-328J-57-015 (for Model 328-300 airplanes), both Revision 2, both dated May 20, 2008. Repeat the inspection thereafter at intervals not to exceed 800 flight cycles. Doing this inspection terminates the repetitive inspection requirements of paragraph (h) of this AD.
(j) Within 24 months after the effective date of this AD, do an eddy current inspection of the lower wing panel (outside) around the flap lever arm 1 (rib 5). If no cracking is found, modify the lower wing panel by doing a cold expansion of the CAMLOC holes and installing new attachment material from rib 9 LH to rib 9 RH. Do all actions required by this paragraph in accordance with the Accomplishment Instructions of 328 Support Services Service Bulletin SB-328-57-481 (for Model 328-100 airplanes) or SB-328J-57-230 (for Model 328-300 airplanes), both Revision 1, both dated October 15, 2009. Doing the modification does not end the repetitive inspection requirements of paragraph (i) of this AD.
(k) If any cracking is found during any inspection required by this AD, before further flight contact 328 Support Services GmbH for repair instructions and do the repair using a method approved by either the Manager, International Branch, ANM 116, Transport Airplane Directorate, FAA; or European Aviation Safety Agency (EASA) (or its delegated agent).
(l) Inspections accomplished before the effective date of this AD according to Dornier Alert Service Bulletin ASB-328-57-037 or Dornier Alert Service Bulletin ASB 328J-57-015, both Revision 1, both dated May 8, 2008, as applicable, are considered acceptable for compliance with the inspection requirements of paragraphs (i) and (j) of this AD.
(m) At the applicable time specified in paragraph (m)(1) and (m)(2) of this AD: Send 328 Support Services GmbH a report of findings (both positive and negative) found during each inspection required by paragraphs (g), (h), and (i) of this AD. The report must include the inspection results, a description of any cracks found, the airplane serial number, and the number of landings and flight hours on the airplane. Send the report to 328 Support Services GmbH, Global Support Center, P.O. Box 1252, D-82231 Wessling, Federal Republic of Germany; Telephone +49 8153 88111 6666; fax 49 8153 88111 6565; e-mail:
(1)
(2)
This AD differs from the MCAI and/or service information as follows:
EASA AD 2009-0194 gives credit for eddy current inspections conducted in accordance with the maintenance review board tasks. We are not giving credit for those inspections.
(n) The following provisions also apply to this AD:
(1)
(2)
(3)
(4)
(i) The initial inspection required by paragraph (g) of this AD must be accomplished.
(ii) If a crack indication exceeds 12.5 mm (0.49 inch), the Manager, International Branch, ANM-116, concurs with issuance of the special flight permits.
(o) Refer to MCAI EASA Airworthiness Directive 2009-0194, dated September 1, 2009, and the service bulletins listed in Table 1 of this AD, for related information.
Commodity Futures Trading Commission.
Advanced notice of proposed rulemaking; request for comments.
The Commodity Futures Trading Commission (the “CFTC” or “Commission”) seeks comment on possible models for implementing new statutory provisions enacted by Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) concerning the protection of collateral posted by customers clearing swaps.
Submit comments on or before January 18, 2011.
You may submit comments, identified by RIN number 3038-AD99, by any of the following methods:
•
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All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to
The Commission reserves the right, but shall have no obligation, to review, pre-screen, filter, redact, refuse or remove any or all of your submission from
Robert B. Wasserman, Associate Director, Division of Clearing and Intermediary Oversight (DCIO), at 202-418-5092 or
This Advanced Notice of Proposed Rulemaking (“ANPR”) is intended to obtain comment from interested parties concerning the appropriate model for protecting the margin collateral posted by customers clearing swaps transactions. As discussed in more detail below, the statutory language in Dodd-Frank concerning the protection of swaps customer margin is substantially similar, though not identical, to analogous provisions in Section 4d(a) of the Commodity Exchange Act (“CEA”)
Section 4d(f)(2) of the CEA,
The provisions applicable to the margin posted by exchange-traded futures customers are similar, but not identical. Section 4d(a)(2) provides that “property received [by a futures commission merchant] to margin, guarantee or secure the [exchange-traded] contracts of any customer of such [futures commission merchant] * * * shall not be commingled with the funds of such commission merchant or be used to guarantee the trades or contracts * * * of any person other than the one for whom the same are held.”
Commission Regulation (“Reg. § ”) 1.22
Thus, if a futures customer suffers sufficient losses that the customer's debit balance exceeds the FCM's available capital, and such customer (the “defaulting customer”) fails to promptly pay such loss, the FCM may, as a practical matter, be unable to “top up” the loss, and the FCM may be unable to make a required payment to a DCO with respect to that FCM's customer account. Such an FCM would then be a defaulter to the DCO (a “Defaulting FCM”). In case of such an FCM default in the futures customer account, the DCO is permitted to use the collateral of all customers of the Defaulting FCM to meet the net customer obligation of the Defaulting FCM to the DCO (including the use of any customer gains to meet customer losses), without regard to which customers gained or lost, or which customers defaulted or made full payment.
In such a case, customers of the Defaulting FCM other than the defaulting customer may lose collateral they have posted with the Defaulting FCM, and/or gains on their positions. The risk these other customers face shall be referred to as “fellow-customer risk.”
In considering how to implement Section 4d(f) of the Dodd-Frank Act, the Commission and its staff have heard countervailing concerns from various stakeholders. Some customers have noted that, in the context of uncleared swaps that they currently engage in—and may be obligated to clear under Dodd-Frank
FCMs and DCOs, on the other hand, point out that models of protecting swaps customer collateral that are different from the current model for protecting futures customer collateral would bring significant added costs, which they aver would ultimately be borne by the customers. Moreover, the use of fellow-customer collateral is included in existing DCO models for dealing with member defaults. The Commission has proposed to require DCOs to maintain default resources sufficient to
[e]nable the derivatives clearing organization to meet its financial obligations to its clearing members notwithstanding a default by the clearing member creating the largest financial exposure for the derivatives clearing organization in extreme but plausible market conditions.
Typically, DCOs use a variety of resources in addressing defaults arising from a member's customer account.
If the collateral of non-defaulting swaps customers is not available as a default resource, DCOs will need to change their models for sizing their default waterfalls, and/or the size of the components of those default waterfalls. One means to do this would be to increase the collateral required to margin each customer's positions. One DCO estimated that it might need to increase collateral from a 99% confidence level to a 99.99% confidence level, which would cause an increase in required collateral of approximately 60%.
An alternative approach to reacting to changes in the model for sizing default waterfalls would be to increase clearing members' default fund contributions. FCMs note that if they are required to commit added capital to clearing, they would pass such costs on to customers. Certain models for protecting collateral posted by customers clearing swaps could also cause significant added administrative costs, in requiring more transactions per customer every day, which costs would also be passed on to customers.
The Commission is seeking to achieve two basic goals: Protection of customers and their collateral, and minimization of costs imposed on customers and on the industry as a whole. It is considering four models of achieving these goals with respect to cleared swaps. These are listed in order below, from most protective of customer collateral to least protective of customer collateral.
Each of these various models would potentially impose different levels of costs upon the various parties—
The Commission seeks comment on each of the following four potential models, as well as any additional models that may be proposed by commenters:
(1)
a.
b.
(2)
a.
b.
i. The FCM may post the total required customer margin on an omnibus basis, without regard to the customer to whom any particular item of collateral (
ii. If the FCM loans to a customer any portion of the property necessary to margin that customer's positions, that collateral is treated at the DCO as belonging to the customer, and at the FCM as a debt from the customer to the FCM.
iii. The DCO may require an FCM to post its own capital as collateral for its guarantee of its customers.
c.
d.
e.
f.
(3)
a. The DCO may use the remaining
b. Before using the remaining
c.
d.
(4)
a.
b.
The Commission seeks comment on all of the following questions from all members of the public, but will direct specific questions to three particular groups of stakeholders:
(1) Cleared Swaps Customers, including asset management firms and others who may act on their behalf.
(2) FCMs who currently intermediate swaps on behalf of customers, or who intend to do so in the future, or trade organizations with FCM members.
(3) DCOs.
a. What are the benefits of
b. What costs would you expect to incur for each of the models relative to the baseline model? Please provide a detailed basis for that estimate.
c. How should the Commission balance such costs and benefits?
For Each Model (Other Than the Baseline Model)
a. Compliance:
i. What compliance activities (including gathering of information) would you need to perform as a result of that model that you do not perform now (
ii. What is a reasonable estimate of the initial and annualized ongoing cost of
iii. How can such costs be estimated industry-wide? Please provide a detailed basis for that estimate?
b. Risk environment:
i. How do you see the industry adapting to the risk changes attendant to the model?
ii. What types of costs would you expect your institution to incur if the industry adapts to that model in the most efficient manner feasible? How are these costs different from the costs you would incur under the baseline model?
iii. What is a reasonable estimate of the initial and annualized ongoing incremental cost incurred by your institution? Are these costs the same for each FCM clearing member, or a function of activity level? Please provide a detailed basis for that estimate.
iv. How can such costs be estimated industry-wide? Please provide a detailed basis for that estimate?
c. What benefits does the model present relative to the baseline model, and relative to other models?
a. Compliance (internal):
i. What compliance activities (including gathering of information) would you need to perform as a result of that model that you do not perform now (
ii. What is a reasonable estimate of the initial and annualized ongoing cost of such incremental activities (relative to the baseline model) for your DCO? Please provide a detailed basis for that estimate.
b. Compliance (members):
i. What compliance activities (including gathering of information) would you expect each of your members to perform as a result of that model that they do not perform now (
ii. What is a reasonable estimate of the initial and annualized ongoing cost of such incremental activities (relative to the baseline model) for each such member? Do these costs vary with the member's level of activity? How? Please provide a detailed basis for your estimates.
iii. What is a reasonable estimate of the initial and ongoing costs of such activities across your membership? May there be some members who do not incur these costs? Please provide a detailed basis for these estimates.
c. Changes to default management structure:
i. What changes to your default management structure (relative to the baseline model) would the model require?
ii. Costs to the DCO
1. What types of costs would these changes impose on the DCO if the industry adapts to that model in the most efficient manner feasible? How are these costs different from the costs the DCO would incur under the baseline model?
2. What is a reasonable estimate of the initial and annualized ongoing incremental cost to the DCO? Please provide a detailed basis for that estimate.
iii. Costs to members
1. What types of costs would these changes to the DCO's default management impose on members if the industry adapts to that model in the most efficient manner feasible? How are these costs different from the costs the members would incur under the baseline model?
2. What is a reasonable estimate of the initial and annualized ongoing incremental cost to each member? Are these costs the same for each member, or are they a function of activity level? Please provide a detailed basis for that estimate.
3. What is a reasonable estimate of the initial and ongoing costs of such activities across your membership? May there be some members who do not incur these costs? Please provide a detailed basis for these estimates.
iv. To what extent do the costs identified above represent increased costs to the system as a whole (
b. What benefits does the model present relative to the baseline model, and relative to other models?
For all commenters:
2.
A point frequently raised is that individual customer protection should be made available on an optional basis. There are questions as to how such a model could be implemented, and how the costs imposed by a customer obtaining individual protection could be attributed to—and charged to—that customer. For example, in the “Full Physical Segregation” and “Legal Segregation with Commingling” models discussed above, a significant portion of the marginal costs may arise from the fact that the collateral posted by the opting-out customer would not be available in the event of a default caused by other customers of the same FCM. How could a payment by the opting-out customer be used to address the changes to the DCO's default management structure that would be attributable to that opting out? Considered from another perspective, how much cost would be avoided from an optional as contrasted to a mandatory implementation of each of the models above? Also, what would be the effect on customers of an FCM in bankruptcy if different DCOs of which the FCM was a member adopted different voluntary models? If a marketplace in which varying models were in use was otherwise desirable, what changes to the Regulation Part 190 rules regarding bankruptcy account classes could or should be made to accommodate such variety?
3.
Another point frequently raised is that customers should risk-manage their FCMs, and provide market discipline by doing business with FCMs that pose less risk. DCOs already monitor the eligibility of their members, supervising the member's risk relative to collateral and capital, and considering members' risk management.
a. To what extent would each model lead to moral hazard concerns? How, if at all, could such concerns be addressed?
b. Are the capital requirements currently imposed by the Commission on FCMs and by DCOs on their clearing members sufficient? If not, what steps should DCOs or the Commission take to address this insufficiency?
c. Do the rules and procedures of DCOs currently provide adequate tools and incentives for DCOs to supervise their clearing members so as to mitigate the risk of default? If not, what steps should DCOs or the Commission take to address this inadequacy?
In analyzing costs, the Commission needs to consider the additional cost incurred by customers risk-managing their FCMs on an initial and ongoing
d. What information would each customer need, on an initial and an ongoing basis, to effectively manage the risk posed by fellow-customers at an FCM?
e. What information should be provided to each customer regarding the FCM's risk management policies, and how those policies are, in fact, implemented with respect to other customers, on both an initial and ongoing basis?
f. What information should be provided to each customer regarding fellow-customer risk, on both an initial and ongoing basis?
g. What is or would be the cost, per customer, on an annualized basis, of conducting this risk management?
h. What is or would be the cost to the industry as a whole, on an annualized basis, of customer-conducted FCM risk management?
1. Did Congress evince an intent as to whether the Commission should adopt any one or more of these models?
How do commenters view Interpretation 85-3, and how should it inform the rulemaking on segregation of collateral for cleared swaps customers? (A copy of this interpretation is attached as an appendix to this Request for Comment.)
Use of Segregated Funds by Clearing Organizations Upon Defaults By Member Firms
The rights of a clearing organization to make use of margin funds deposited by a clearing member firm that has defaulted on an obligation to the clearing organization are defined by the rules and by-laws of the clearing organization subject to limitations imposed by the Commodity Exchange Act (“Act”) and the rules and regulations promulgated thereunder, 17 CFR 1,
Section 4d(2) of the Act, 7 U.S.C. 6d, defines the manner in which futures commission merchants (“FCMs”), clearing organizations, and other depositories of funds deposited by commodity customers to margin or settle futures transactions, or accruing to customers as the result of such trades, must deal with such funds. Section 4d(2) requires that FCMs “treat and deal with” funds deposited by a customer to margin or settle trades or contracts or accruing as the result of such trades or contracts “as belonging to such customer,” separately account for such funds, and refrain from using such funds “to margin or guarantee the trades or contracts, or to secure or extend the credit, of any customer or person other than the one for whom the same are held.” Section 4d(2) specifically authorizes FCMs to commingle such funds, for purposes of convenience, in the same account or accounts with any bank, trust company or clearing organization of a contract market. This provision also authorizes withdrawals from such funds of “such share thereof as in the normal course of business shall be necessary” to margin, guarantee, secure, transfer, adjust, or settle trades or contracts, “including the payment of commissions, brokerage, interest, taxes, storage and other charges, lawfully accruing in connection with such contracts and trades.”
The final sentence of Section 4d(2) defines the obligations of clearing organizations, depositories and all other recipients of customer margin funds and property in the following terms:
It shall be unlawful for any person, including but not limited to any clearing agency of a contract market and any depository, that has received any money, securities, or property for deposit in a separate account as provided in paragraph (2) of this section, to hold, dispose of or use any such money, securities, or property as belonging to the depositing futures commission merchant or any person other than the customers of such futures commission merchant.
This provision prohibits clearing organizations and all other depositories of customer funds from using such funds to discharge proprietary obligations of the depositing FCM or for any purpose other than to margin, guarantee, secure, transfer, adjust, or settle trades or contracts of the depositing firm's customers, including the payment of commissions and other charges “lawfully accruing in connection with” such contracts and trades.
In our view, Section 4d(2)'s provisions with respect to clearing organizations' treatment of customer funds must be construed in light of the fact that clearing organizations' direct customers are, generally, clearing firms, not the ultimate “customers” who entered into the futures contracts and options positions accepted for clearance by the clearing organization. Margin deposits posted with clearing organizations by their member firms normally consist, at least in part, of funds belonging to clearing firm customers, whose margin deposits were posted with the clearing firm and subsequently drawn upon by the clearing firm to satisfy its margin obligations to the clearing organization. The clearing organization normally has no direct dealings with such customers and has knowledge neither of their specific identities nor of the extent of their respective ownership interests in margin funds posted by its clearing firms. Consequently, to the extent that Section 4d(2) of the Act requires that clearing organizations use margin deposits on behalf of the “customers of such [depositing] futures commission merchant,” we are of the view that it requires only that the clearing organization use such funds as the property of the clearing firm's customers collectively, but does not require the clearing organization to treat such funds as the property of the particular customers who deposited them or to whose positions they have accrued.
This view accords with the legislative history of Section 4d(2) of the Act. The Act did not specifically govern the treatment of commodity customer funds by clearing organizations and other depositories of customer margin funds until the enactment of Section 4d(2)'s final paragraph, quoted above, in 1968. The legislative history of this provision reflects Congress's intention to ensure that customer funds would not be used to discharge the general obligations of the FCM or otherwise diverted from their lawful purposes. According to the Senate Report, for example, the amendment was proposed “to prohibit expressly customers' funds from being used to offset liabilities of the futures commission merchants or otherwise being misappropriated.” S. Rep. No. 947, 90th Cong. 2d Sess. 7 (1968).
The Commodity Exchange Authority's Administrator described the 1968 amendment as one which would afford additional protection against a situation presented in the De Angelis salad oil case “in which one of the banks actually took over funds of customers of one of the brokerage firms to offset liabilities of the firm.”
Our conclusion that Section 4d(2) generally allows clearing organizations to treat customer funds as the property of the depositing firm's customers, collectively, without regard to the respective interests of particular customers, also finds support in the legislative history of the Bankruptcy Reform Act of 1978. In recommending new provisions to govern bankruptcy liquidations of commodity firms, the Commission described the clearing house system then (and now) operant in the futures market as one in which “a clearing house deals only with its clearing members” and thus “does not know the specific customer on whose behalf a particular contract was entered into by one of its clearing members.”
The Commission's regulations are also consistent with the view that the clearing organization's direct obligations under Section 4d(2) include an obligation to treat customer funds as the property of the depositing FCM's customers but do not include a duty to separately account for or to employ such funds as the property of particular customers. Regulation 1.20(b), 17 CFR 1.20(b) (1984), for example, requires that a clearing organization separately account for and segregate all customers' funds received from a member of the clearing organization to purchase, margin, guarantee, secure or settle the trades, contracts or commodity options of the clearing member's customers and all money accruing to such customers as the result of such trades, contracts, or commodity options “as belonging to such commodity or option customers,” and specifies that a clearing organization shall not hold, use or dispose of such customer funds “except as belonging to such commodity or option customers.” 17 CFR 1.20(b) (1984).
Regulation 1.22, 17 CFR 1.22 (1984), which precludes FCMs from using or permitting the use of “the customer funds of one commodity and/or option customer to purchase, margin, or settle the trades, contracts, or commodity options of, or to secure or extend the credit of, any person other than such customer or option customer,” refers only to FCMs and, hence, does not govern clearing organizations or other depositories of customer funds.
Our conclusion that Section 4d(2) does not preclude a clearing organization from using all margin funds deposited by a clearing member firm to satisfy obligations arising from the account for which such funds were deposited reflects the essential function of margin deposits in the futures markets' clearing system. Clearing organizations generally stand as guarantors of the net futures and options obligations of the member firms and require margin deposits as security for the performance of obligations which, in the event of a member's default, the clearing organization must discharge. Margin deposits at the clearing level thus facilitate the clearing organization's performance of its guarantee obligations, serving to confine losses stemming from a clearing firm default to the defaulting firm and preventing their spread to the market as a whole.
In sum, we conclude that clearing organization rules and by-laws awarding clearing organizations the right to apply all customer margin funds within their custody to satisfy nonproprietary obligations of defaulting clearing firms are not inconsistent with Section 4d(2) of the Act or the Commission's regulations. Clearing organizations' rights with regard to the use of customer margin deposits of their member firms are not, however, wholly unlimited. A clearing organization may not use the margin deposits of one clearing member firm to satisfy obligations of another clearing firm or of any other person. In addition, as noted above, the final paragraph of Section 4d(2) of the Act was enacted to present use of customer funds to satisfy the FCM's own obligations. Consequently, customer margin funds deposited by a member FCM may not be used to margin, guarantee or settle the futures or options transactions or to satisfy any other proprietary obligation of the depositing firm. Such funds must be used to margin, guarantee, secure, or settle trades or contracts of the depositing FCM's customers or for charges “lawfully accruing in connection with” such contracts and not for any other purpose.
I support the advance notice of proposed rulemaking concerning protection of collateral of customers entering into cleared swaps. There has been much public input into these matters, but I think it is appropriate to have a formal ANPR soliciting input on a number of options and questions on how best to protect customers' collateral in the event of another customer's default. This is particularly important as we move forward to implement Congress's mandate that for the first time standardized swaps
Animal and Plant Health Inspection Service, USDA.
Extension of approval of an information collection; comment request.
In accordance with the Paperwork Reduction Act of 1995, this notice announces the Animal and Plant Health Inspection Service's intention to request extension of approval of an information collection associated with regulations for the importation of nursery stock into the United States.
We will consider all comments that we receive on or before January 31, 2011.
You may submit comments by either of the following methods:
•
•
For information on regulations for the importation of nursery stock into the United States, contact Mr. Alex Belano, Branch Chief, Risk Management and Plants for Planting Policy, PPQ, APHIS, 4700 River Road Unit 133, Riverdale, MD 20737; (301) 734-0627. For copies of more detailed information on the information collection, contact Mrs. Celeste Sickles, APHIS' Information Collection Coordinator, at (301) 851-2908.
In accordance with these regulations, individuals who are involved in growing, exporting, and importing nursery stock must provide information to APHIS about the commodities they wish to bring into the United States. This information serves as the supporting documentation needed to issue required forms and documents, and is vital to help ensure that plant pests are not introduced into the United States.
We are asking the Office of Management and Budget (OMB) to approve our use of these information collection activities for an additional 3 years.
The purpose of this notice is to solicit comments from the public (as well as affected agencies) concerning our information collection. These comments will help us:
(1) Evaluate whether the collection of information is necessary for the proper performance of the functions of the Agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of our estimate of the burden of the collection of information, including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, through use, as appropriate, of automated, electronic, mechanical, and other collection technologies;
All responses to this notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record.
Animal and Plant Health Inspection Service, USDA.
Notice.
The Animal and Plant Health Inspection Service charges user fees, as authorized by law, to recover the costs of providing certain services. This notice announces the availability of a Web site that contains information about the Agency's user fees.
The Agency's user fee Web site is located at:
For information about the Web site, contact Ms. Cindy Howard, Assistant Deputy Administrator for Regulatory Coordination, Policy and Program Development, APHIS, 4700 River Road Unit 20, Riverdale, MD 20737; (301) 734-5957. For information about APHIS' user fees, contact Mrs. Kris Caraher, Section Head, User Fees Section, Financial Services Branch, FMD, MRPBS, APHIS, 4700 River Road Unit 54, Riverdale, MD 20737; (301) 734-0882.
A user fee is a charge to identifiable recipients (
APHIS charges a user fee to recover the costs of providing the following goods and services:
• Agricultural quarantine and inspection (AQI) services
• Export certification of plants and plant products
• Veterinary services for imports and exports of live animals and products
• Veterinary diagnostic goods and services
For each of these user fee programs, the Web site provides a description of the services or goods for which a fee is charged, the statutory authority for APHIS to collect and retain the fees, the current rates, how APHIS determined the amount of the fees, any scheduled rate changes, and other information pertinent to that user fee program. In the near future, we plan to add information on the status of collections and expenditures in each user fee program.
The Web site also answers general questions about APHIS' user fees, including:
• Why does APHIS charge user fees for some activities and not others?
• What happens to the money that APHIS collects through user fees?
• How does APHIS determine the amount of its fees?
• How reliable are the projections upon which the fees are based?
• What happens when variable factors fluctuate?
• How often will user fees be adjusted?
• How often are the fees reviewed?
• What is the process for changing the fees?
APHIS developed the user fee Web site to enhance transparency and predictability regarding its user fee programs. The Web site will include a way in the near future for the public to submit comments or questions to APHIS on either the Web page itself (
Rural Utilities Service, USDA.
Notice of availability of Record of Decision.
The Rural Utilities Service, hereinafter referred to as RUS and/or the Agency, has issued a Record of Decision (ROD) for the Environmental Impact Statement (EIS) for the proposed Bemidji to Grand Rapids 230 kV Transmission Line Project (Project) in Beltrami, Hubbard, Itasca, and Cass counties, Minnesota. The Administrator of RUS has signed the ROD, which is effective upon signing. The RUS, U.S. Forest Service Chippewa National Forest (CNF), U.S. Army Corps of Engineers (USACE), and Leech Lake Band of Ojibwe Division of Resource Management (LLBO DRM) cooperated in the development of a Final Environmental Impact Statement (Final EIS) prepared pursuant to the National Environmental Policy Act of 1969 (NEPA) (U.S.C. 4231
To obtain copies of the ROD, or for further information, contact: Ms. Stephanie Strength, Environmental Protection Specialist, USDA, Rural Utilities Service, 1400 Independence Avenue, SW., Stop 1571, Room 2244-S, Washington, DC 20250-1571,
Minnkota's proposed Project is to construct a 230 kilovolt (kV) transmission line between the Wilton Substation near Bemidji, Minnesota and the Boswell Substation near Grand Rapids, Minnesota, which will cross portions of Beltrami, Hubbard, Itasca, and Cass counties. The Project involves modifying the Wilton and Boswell substations, constructing a new 115 kV breaker station at Nary Junction, Minnesota, and depending on the route alternative selected, upgrading the existing or constructing a new substation in the Cass Lake, Minnesota area. The purpose of the Project is for the Applicants to meet projected future electric demand and to maintain electric transmission reliability standards in accordance with the requirements of the North American Electric Reliability Corporation (NERC). The Project as proposed provides increased voltage support not only to the Bemidji to Grand Rapids area, including the Leech Lake Reservation, but is also required to improve the regional transmission reliability throughout the Red River Valley and north central Minnesota. Refer to Final EIS, pp. 2-3, and the Alternative Evaluation Study, Section 1.2, for additional detail.
In accordance with NEPA, the CEQ regulations for implementing the procedural provisions of NEPA, and applicable agency NEPA implementing regulations, RUS, CNF, USACE, and LLBO DRM cooperated in the development of a Final EIS to assess the potential environmental impacts associated with the proposed Project. The decision being documented in RUS's ROD is that the Agency agrees to consider, subject to loan approval, funding the proposed Project (Route Alternative 4). Because of the distinct federal actions being proposed, RUS, USACE and CNF decided to issue separate RODs. LLBO DRM's decision will be through a Tribal Resolution.
On July 18, 2008, RUS published in the
After considering various ways to meet these future needs, Minnkota identified construction of the proposed Project (Route Alternative 4) as its best course of action.
The Final EIS considered 11 alternatives to meet the Project need, including five alternative route locations. These alternatives were evaluated in terms of cost-effectiveness, technical feasibility, and environmental factors (
The Final EIS analyzes in detail the No Action Alternative and Route Alternatives 1, 2, 3, and 4.
Based on an evaluation of the information and impact analyses presented in the EIS, including the evaluation of all alternatives, and in consideration of the Agency's NEPA implementing regulations, Environmental Policies and Procedures, as amended (7 CFR Part 1794), RUS finds that the evaluation of reasonable alternatives is consistent with NEPA. The Agency has selected the Route Alternative 4 as its preferred alternative.
Because the proposed Project may involve action in floodplains or wetlands, this Notice also serves as a final notice of action in floodplains and wetlands (in accordance with Executive Orders 11988 and 11990). This Notice concludes RUS's compliance with NEPA and the Agency's “Environmental Policies and Procedures.”
The Department of Commerce will submit to the Office of Management and Budget (OMB) for clearance the following proposal for collection of information under the provisions of the Paperwork Reduction Act (44 U.S.C. chapter 35).
This request is for a continuation of a currently approved collection and will cover the 2010 through 2012 ACES (conducted in fiscal years 2011 through 2013). Changes from the previous ACES authorization are the elimination of detailed capital expenditures by type of structure and type of equipment. These data, collected every five years, were collected in the 2008 ACES and will not be collected again until the 2013 ACES.
The ACES is an integral part of the Federal Government's effort to improve the quality and usefulness of National economic statistics. Federal agencies, including the Census Bureau, use these data to improve and supplement ongoing statistical programs:
The Census Bureau uses the data to improve the quality of monthly economic indicators of investment. The Bureau's Value of New Construction Put in Place survey currently uses the ACES data to benchmark its industrial buildings data. The Bureau of Economic Analysis (BEA) uses the data in refining and evaluating annual estimates of investment in structures and equipment
In addition, industry analysts use the data for market analysis, economic forecasting, product development, and business planning.
The Title 13 U.S.C., Sections 182, 224, and 225.
Copies of the above information collection proposal can be obtained by calling or writing Diana Hynek, Departmental Paperwork Clearance Officer, (202) 482-0266, Department of Commerce, Room 6616, 14th and Constitution Avenue, NW., Washington, DC 20230 (or via the Internet at
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to Brian Harris-Kojetin, OMB Desk Officer either by fax (202-395-7245) or e-mail (
Import Administration, International Trade Administration, Department of Commerce.
Alan Ray, AD/CVD Operations, Office 9, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230;
The antidumping duty order on diamond sawblades from the People's Republic of China (“PRC”) was published in the
Section 751(a)(2)(B)(iv) of the Act provides that the Department will issue the preliminary results of a new shipper review of an antidumping duty order within 180 days after the day on which the review was initiated.
The Department determines that this new shipper review involves extraordinarily complicated methodological issues such as the examination of importer information and the evaluation of the
We are issuing and publishing this notice in accordance with sections 751(a)(2)(B)(iv) and 777(i) of the Act.
Import Administration, International Trade Administration, Department of Commerce.
On August 16, 2010, the Department of Commerce (the Department) published the preliminary results of the administrative review of the antidumping duty order on polyethylene terephthalate film, sheet, and strip (PET film) from Brazil for the period November 6, 2008, through October 31, 2009. We gave interested parties an opportunity to comment on the preliminary results and received no comments. We have made no changes to Terphane, Inc.'s (Terphane's) margin for the final results of this review. The final weighted-average margin is listed below in the “Final Results of Review” section of this notice.
Deborah Scott or Robert James, AD/CVD Operations, Office 7, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-2657 or (202) 482-0649, respectively.
On August 16, 2010, the Department published the preliminary results of the administrative review of the antidumping duty order covering PET film from Brazil and invited interested parties to comment.
In the
The period of review (POR) is November 6, 2008, through October 31, 2009.
The products covered by this order are all gauges of raw, pre-treated, or primed PET film, whether extruded or co-extruded. Excluded are metallized films and other finished films that have had at least one of their surfaces modified by the application of a performance-enhancing resinous or inorganic layer more than 0.00001 inches thick. Also excluded is roller transport cleaning film which has at least one of its surfaces modified by application of 0.5 micrometers of SBR latex. Tracing and drafting film is also excluded. PET film is classifiable under subheading 3920.62.00.90 of the Harmonized Tariff Schedule of the United States (HTSUS). While HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of these orders is dispositive.
The Department has determined that the following antidumping duty margin exists for the period November 6, 2008, through October 31, 2009:
The Department shall determine, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries. Because we are relying on total adverse facts available to establish the dumping margin for Terphane, we will instruct CBP to apply a dumping margin of 44.36 percent on all entries of PET film from Brazil that were produced and/or exported by Terphane and entered, or withdrawn from warehouse, for consumption during the POR. The Department intends to issue appropriate assessment instructions for Terphane to CBP 15 days after the date of publication of these final results of review.
Furthermore, the following cash deposit requirements will be effective upon publication of these final results for all shipments of PET film from Brazil entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(1) of the Tariff Act of 1930, as amended (the Act): (1) The cash deposit rate for Terphane will be the rate established in the final results of this review; (2) for other previously reviewed or investigated companies, the cash deposit rate will continue to be the company-specific rate published for the most recent period; (3) if the exporter is not a firm covered in this review or the LTFV investigation but the manufacturer is, the cash-deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; (4) if neither the exporter nor the manufacturer has its own rate, the cash-deposit rate will be 28.72 percent, the all-others rate established in the
This notice also serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this POR. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
This notice also serves as a reminder to parties subject to administrative protective order (APO) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a violation which is subject to sanction.
This administrative review and notice are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.
Environmental Protection Agency.
Notice of Charter Renewal.
Notice is hereby given that the Environmental Protection Agency (EPA) has determined that in accordance with the provisions of the Federal Advisory Committee Act (FACA), 5 U.S.C. App. 2, the Gulf of Mexico Executive Council (GMEC) is a necessary committee which is in the public interest. Accordingly, GMEC will be renewed for an additional two year period. The purpose of the GMEC is to provide advice and recommendations to the Administrator of EPA on issues associated with plans to improve and protect the water quality and living resources of the Gulf of Mexico.
Gloria Car, Designated Federal Officer, Gulf of Mexico Program Office (Mail Code: EPA/GMPO), Stennis Space Center, MS, 39529, Telephone (228) 688-2421, or
The notificants listed below have applied under the Change in Bank Control Act (12 U.S.C. 1817(j)) and § 225.41 of the Board's Regulation Y (12 CFR 225.41) to acquire shares of a bank or bank holding company. The factors that are considered in acting on the
The notices are available for immediate inspection at the Federal Reserve Bank indicated. The notices also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing to the Reserve Bank indicated for that notice or to the offices of the Board of Governors. Comments must be received not later than December 17, 2010.
A. Federal Reserve Bank of Philadelphia (Michael E. Collins, Senior Vice President) 100 North 6th Street, Philadelphia, Pennsylvania 19105-1521:
B. Federal Reserve Bank of Minneapolis (Jacqueline G. King, Community Affairs Officer) 90 Hennepin Avenue, Minneapolis, Minnesota 55480-0291:
C. Federal Reserve Bank of San Francisco (Kenneth Binning, Vice President, Applications and Enforcement) 101 Market Street, San Francisco, California 94105-1579:
The companies listed in this notice have given notice under section 4 of the Bank Holding Company Act (12 U.S.C. 1843) (BHC Act) and Regulation Y, (12 CFR Part 225) to engage
Each notice is available for inspection at the Federal Reserve Bank indicated. The notice also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the question whether the proposal complies with the standards of section 4 of the BHC Act.
Unless otherwise noted, comments regarding the applications must be received at the Reserve Bank indicated or the offices of the Board of Governors not later than December 17, 2010.
A. Federal Reserve Bank of Dallas (E. Ann Worthy, Vice President) 2200 North Pearl Street, Dallas, Texas 75201-2272:
The Family and Youth Services Bureau (FYSB) is accepting applications from States and Territories for the development and implementation of the State Abstinence Program. The purpose of this program is to support decisions to abstain from sexual activity by providing abstinence programming as
States are encouraged to develop flexible, medically accurate and effective abstinence-based plans responsive to their specific needs. These plans must provide abstinence education, and at the option of the State, where appropriate, mentoring, counseling, and adult supervision to promote abstinence from sexual activity, with a focus on those groups which are most likely to bear children out-of-wedlock. An expected outcome for all programs is to promote abstinence from sexual activity.
OMB approval is requested to solicit comments from the public on paperwork reduction as it relates to ACYF's receipt of the following documents from applicants and awardees:
Estimated Total Annual Burden Hours: 7,316
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing that a collection of information entitled “Procedures for the Safe and Sanitary Processing and Importing of Fish and Fishery Products” has been approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995.
Denver Presley, Jr., Office of Information Management, Food and Drug Administration, 1350 Piccard Dr., PI50-400B, Rockville, MD 20850, 301-796-3793.
In the
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing an opportunity for public comment on the proposed collection of certain information by the Agency. Under the Paperwork Reduction Act of 1995 (the PRA), Federal Agencies are required to publish notice in the
Submit either electronic or written comments on the collection of information by January 31, 2011.
Submit electronic comments on the collection of information to
Johnny Vilela, Office of Information Management,Food and Drug Administration, 1350 Piccard Dr., PI50-400B, Rockville, MD 20850, 301-796-7651,
Under the PRA (44 U.S.C. 3501-3520), Federal Agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) 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
With respect to the following collection of information, FDA invites comments on these topics: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
Enacted on November 18, 2003, the Animal Drug User Fee Act (ADUFA) (Pub. L. 108-130) amended the Federal Food, Drug, and Cosmetic Act and requires FDA to assess and collect user fees for certain applications, products, establishments, and sponsors. It also requires the Agency to grant a waiver from, or a reduction of those fees in certain circumstances. Thus, to implement this statutory provision of ADUFA, FDA developed a guidance entitled “Guidance for Industry: Animal Drug User Fees and Fee Waivers and Reductions.” It provides guidance on the types of fees FDA is authorized to collect under ADUFA, and on how to request waivers and reductions from FDA's animal drug user fees. The guidance also describes the types of fees and fee waivers and reductions, the information FDA recommends respondents submit in support of a request for a fee waiver or reduction, how respondents may submit such a request, and FDA's process for reviewing requests.
Respondents to this collection of information are new animal drug sponsors. Requests for waivers or reductions may be submitted by a person paying any of the animal drug user fees assessed—application fees, product fees, establishment fees, or sponsor fees.
FDA estimates the burden of this collection of information as follows:
Based on FDA's database system, there are an estimated 250 sponsors of products subject to ADUFA. However, not all sponsors will have any submissions in a given year and some may have multiple submissions. The total number of waiver requests is based on the number of submission types received by FDA in fiscal year 2008.
Food and Drug Administration, HHS.
Notice.
This notice announces a forthcoming meeting of a public advisory committee
FDA intends to make background material available to the public no later than 2 business days before the meeting. If FDA is unable to post the background material on its Web site prior to the meeting, the background material will be made publicly available at the location of the advisory committee meeting, and the background material will be posted on FDA's Web site after the meeting. Background material is available at
Persons attending FDA's advisory committee meetings are advised that the Agency is not responsible for providing access to electrical outlets.
FDA welcomes the attendance of the public at its advisory committee meetings and will make every effort to accommodate persons with physical disabilities or special needs. If you require special accommodations due to a disability, please contact Kristine T. Khuc at least 7 days in advance of the meeting.
FDA is committed to the orderly conduct of its advisory committee meetings. Please visit our Web site at
Notice of this meeting is given under the Federal Advisory Committee Act (5 U.S.C. app. 2).
National Institutes of Health, Public Health Service, HHS.
Notice.
The inventions listed below are owned by an agency of the U.S. Government and are available for licensing in the U.S. in accordance with 35 U.S.C. 207 to achieve expeditious commercialization of results of Federally-funded research and development. Foreign patent applications are filed on selected inventions to extend market coverage for companies and may also be available for licensing.
Licensing information and copies of the U.S. patent applications listed below may be obtained by writing to the indicated licensing contact at the Office of Technology Transfer, National Institutes of Health, 6011 Executive Boulevard, Suite 325, Rockville, Maryland 20852-3804; telephone: 301/496-7057; fax: 301/402-0220. A signed Confidential Disclosure Agreement will be required to receive copies of the patent applications.
Researchers at the National Cancer Institute (NCI) have identified two novel molecular targets, annexin 1 (Anx A1) and its receptor formyl peptide receptor 1 (FPR1), for new anti-glioblastoma therapies. Anx A1 and FPR1 mediate growth, invasion, production of angiogenic factors, tumor formation, and are abnormally expressed by more highly malignant glioblastomas. Depletion of Anx A1 in glioblastoma cells resulted in their reduced capacity to form tumors; additional depletion of FPR1 further reduced this capacity. Further, the NCI researchers have found a correlation between Anx A1 expression and the degree of malignancy of human gliomas.
Novel anti-glioblastoma therapies encompassed by this invention include neutralizing antibodies against Anx A1 and FPR1, small compound agonists of Anx A1 and FPR1, small interference RNAs (siRNAs) that deplete Anx A1 and FPR1 from glioblastoma cells, as well as delivery methods to effectively administer the Anx A1 and FPR1 targeting drugs into brain tissues.
• Treatment of glioblastoma multiforme and other brain tumors.
• Treatments for inhibiting neoplastic cell growth.
• Treatments for inhibiting tumor progression and metastasis.
• Treatments for inhibiting angiogenesis in a tumor.
• High specificity.
• Does not require radiation.
• A correlation between expression of the molecular target and the degree of tumor malignancy is known.
• Wide-range/flexibility of potential therapies and approaches.
T cell receptors (TCRs) are proteins that recognize antigens in the context of infected or transformed cells and activate T cells to mediate an immune response and destroy abnormal cells. TCRs consist of two domains, one variable domain that recognizes the antigen and one constant region that helps the TCR anchor to the membrane and transmit recognition signals by interacting with other proteins. When a TCR is stimulated by an antigen, such as a tumor antigen, some signaling pathways activated in the cell lead to the production of cytokines, which mediate the immune response.
Scientists at the National Institutes of Health (NIH) have developed T cells genetically engineered to recognize synovial sarcoma X breakpoint-2 (SSX-2) peptide antigens. SSX proteins, including SSX-2, are expressed primarily by tumor cells from a variety of cancers, including pancreatic cancer where very few treatment options exist. Other than germ cells of the testis, normal cells do not express SSX proteins and, thus, should not be targeted by therapies directed against these proteins. Therefore, SSX proteins represent a promising target for cancer immunotherapy. There are ten (10) known members of the SSX protein family designated SSX-1 through SSX-10. The T cell receptors (TCRs) developed by these NIH scientists have specificity for SSX-2 and deliver a robust immune response when they encounter SSX-2 expressing cells. However, these TCRs also recognize five (5) other SSX family members, including SSX-3, SSX-4, SSX-5, SSX-9, and/or SSX-10, and deliver a productive, intermediate immune response in the context of target cells expressing these antigens. This versatile antigen coverage could allow these SSX-specific TCRs to be utilized in the treatment of multiple types of cancer in a wide array of cancer patients. Infusing cancer patients with SSX-2 specific T cells via adoptive immunotherapy could prove to be a powerful approach for selectively attacking tumors without generating toxicity against noncancerous cells.
• Immunotherapeutics to treat and/or prevent the recurrence of a variety of human cancers, including pancreatic cancer and melanoma, by adoptively transferring the gene-modified T cells into patients whose tumors express a SSX family member protein recognized by this TCR.
• A drug component of a combination immunotherapy regimen aimed at targeting specific tumor-associated antigens, including SSX-2, SSX-3, SSX-4, SSX-5, SSX-9, and/or SSX-10 expressed by cancer cells within individual patients.
• A research tool to investigate signaling pathways in SSX-2 expressing cancer cells.
• An
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1. N Chinnasamy,
2. D Valmori,
3. G Bricard,
National Institutes of Health, Public Health Service, HHS.
Notice.
The inventions listed below are owned by an agency of the U.S. Government and are available for licensing in the U.S. in accordance with 35 U.S.C. 207 to achieve expeditious commercialization of results of Federally-funded research and development. Foreign patent applications are filed on selected inventions to extend market coverage for companies and may also be available for licensing.
Licensing information and copies of the U.S. patent applications listed below may be obtained by writing to the indicated licensing contact at the Office of Technology Transfer, National Institutes of Health, 6011 Executive Boulevard, Suite 325, Rockville, Maryland 20852-3804; telephone: 301/496-7057; fax: 301/402-0220. A signed Confidential Disclosure Agreement will be required to receive copies of the patent applications.
• Developing cancer biomarker.
• Developing cell sorting assays (
• Immunofluorescence, Western Blotting, and Immunohistochemistry for CEA.
• Developing prognostic assays for cancer.
1. D. Colcher
2. D. Stramignoni
Investigators at the NIH previously identified novel compounds with the ability to kill multi-drug resistant cancer cells while leaving normal cells relatively unharmed. These “MDR-selective compounds” were not inhibitors of ABC transporters because they killed multi-drug resistant cells without affecting the activity of ABC transporters. Furthermore, their activity was dependent directly on the level of expression of ABC transporters, thus increasing their selectivity for diseased cells. As a result, the undesirable side-effects that have prevented the use of inhibitors of ABC transporters as therapeutics should not affect the therapeutic application of the MDR-selective compounds.
The inventors have now generated third generation MDR-selective compounds with further improved solubility, selectivity and killing activity toward MDR cells. The new MDR-selective compounds selectively kill MDR cancer cells, and their efficacy correlates directly with the level of ABC transporter expression. This suggests that the third generation MDR-selective compounds represent a powerful strategy for treating MDR cancers.
• Treatment of cancers associated with MDR, either alone or in combination with other therapeutics.
• Development of a pharmacophore for improved MDR-selective compounds.
• MDR-selective compounds capitalize on one of the most common drawbacks to cancer therapies (MDR) by using it as an advantage for treating cancer.
• The compositions do not inhibit the activity of ABC transporters, thereby reducing the chance of undesired side-effects during treatment.
• The effects of MDR-selective compounds correlate with the level of ABC transporter expression, allowing healthy cells to better survive treatments.
• Increased specificity and solubility of the new MDR-inverse compounds allows greater access to MDR cells, thereby increasing therapeutic effectiveness.
• Hall, MD
• PCT Publication WO 2009/102433 (PCT Patent Application PCT/US2009/000861).
The researchers at the NIH have developed a human melanoma cell line designated 2633, which harbors the IDH1 R132C mutation. The inventors used low passage cell lines derived from a panel of confirmed metastatic melanoma tumor resections, paired with apheresis-collected peripheral blood mononuclear cells to identify IDH1 mutations. Sequencing of IDH1 in this panel allowed them to discover a melanoma cell line with the IDH1 R132C mutation. Until now no such cell line has been found and this has hindered the understanding of the effects mutated IDH1 has on cancer progression as well as the development of drugs that would be specific for cells that harbor this mutation. Use of this cell line will allow researchers to decipher the biology of this gene as well as aid in the development of specific inhibitors of its mutated form.
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• Research tool for testing the activity of inhibitors to IDH1, where such inhibitors could be used as a therapeutic drug to treat particular cancers including potentially glioma, AML and melanoma.
• Research tool to generate cell lines where the R132C mutation is knocked out or the wild type gene is knocked in using an adeno-associated virus. These resulting cells can be used to understand the underlying biology of IDH1 phenotypes or to identify candidate small molecule and other therapeutic drugs.
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Available for licensing are several melanoma cell lines that harbor ERBB4 mutations. These cell lines provide methods of identifying specific inhibitors to ERBB4 that could be used to treat patients with ERBB4 mutations as well as methods to further understand the role of ERBB4 mutations in melanoma. Given the recent success of small molecule protein kinase inhibitors and specifically inhibitors to epidermal growth factor receptor (EGFR) (such as gefinitib and erlotinib), these reagents could be used to further the development of specific inhibitors to ERBB4 and improve existing melanoma treatments for patients with these mutations.
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• High throughput drug screening to test for ERBB4 inhibitors that could be used to treat particular cancers, such as melanoma.
• Diagnostic array for the detection of ERBB4 mutations.
• Research tool to generate cell lines where the ERBB4 mutation is knocked out or the wild type gene is knocked in using an adeno-associated virus. These resulting cells can be used to understand the underlying biology of ERBB4 phenotypes or to identify candidate small molecule and other therapeutic drugs.
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Accordingly, the researchers at the NIH have developed cyclic NGR and RGD pentapeptide analogs efficiently synthesized on resin via click chemistry. These cyclic peptides are potentially useful in targeted delivery of drugs, antibodies, or nanoparticles to the site of angiogenic blood vessels and tumors. By allowing for targeted drug delivery, these peptides can minimize general cytotoxicity and improve bioavailability. The cyclic peptides described are novel, synthetic analogs of RGD and NGR cyclic peptides. Therefore, their inherent cyclic structure and the cyclization strategy will make these compounds stable from hydrolytic degradation, thereby prolonging their half life in circulation.
• These cyclic peptides contain a triazole unit that would be less likely to be attacked by hydrolytic enzymes and esterases, thus making them ideal candidates for
• The RGD and NGR cyclic peptides are amenable to large scale synthesis, chemical modification and are non-immunogenic, while the linear RGD peptide counterparts are prone to protease degradation making them much less stable and limiting their use in
• Both linear and disulfide-bridged cyclic peptides containing the NGR motif have been used to deliver various anti-tumor compounds and viral particles to tumor vessels, with the cyclic versions showing more than a 10 fold higher binding affinity than their linear counterparts.
Researchers at the National Institutes of Health have developed novel hydrazone and diacyl hydrazine compounds that are inhibitors of the endoplasmic reticulum-associated protein degradation (ERAD) pathway. These compounds preferentially target the proteasome assistant ATPase p97/VCP at a site independent of nucleotide binding. The researchers have shown that these ERAD inhibitors can induce cancer cell death and can also synergize with bortezomib in cytotoxic activity. In addition to treating diseases or disorders in which inhibition of the ERAD pathway is an effective therapy, these novel compounds may also be useful in the study of protein degradation.
• Development of therapies against tumors that are resistant to bortezomib.
• Use in therapies in combination with proteasome inhibitors.
• Development of immunosuppressive therapies that target the ubiquitin proteasome system.
• Studies of the mechanism of protein degradation and other biological processes that involve the p97 ATPase.
• Bioprobes to detect endoplasmic reticulum (ER) structures in live cells.
• Potent anti-tumor activity.
• Simpler chemical structure makes synthesis easier and more cost-effective than previous ERAD inhibitors.
• Retain activity against bortezomib-resistant cells and can synergize with bortezomib.
• Fluorescent.
• High affinity for the ER.
Researchers at Columbia University and the National Cancer Institute (NCI) have developed compositions and methods of useful in the treatment of cancer and in the sensitization of cancer cells to cancer therapy. The compositions target the MRE11-RAD50-NBS1 (MRN) complex, a DNA repair complex essential for sensing and responding to DNA damage.
Given the dependency of cancer cells on DNA repair systems, they are susceptible to compositions that inhibit DNA damage repair. Thus, cancers that already have one or more defects in DNA repair systems, such as those from patients with chromosomal instability syndromes, are effectively treated with the present compositions.
• U.S. Provisional Application No. 61/203,377 filed 22 Dec 2008 (HHS Reference No. E-154-2009/0-US-01).
• International Application No. PCT/US09/69171 filed 22 Dec 2009, which published as WO 2010/075372 on 01 Jul 2010 (HHS Reference No. E-154-2009/0-PCT-02).
30-Day Notice of Information Collection under Review: Form I-914 and Supplements A and B, Application for T Nonimmigrant Status; Application for Immediate Family Member of T-1 Recipient; and Declaration of Law Enforcement Officer for Victim of
The Department of Homeland Security, U.S. Citizenship and Immigration Services (USCIS) will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995. The information collection was previously published in the
The purpose of this notice is to allow an additional 30 days for public comments. Comments are encouraged and will be accepted until January 3, 2011. This process is conducted in accordance with 5 CFR 1320.10.
Written comments and/or suggestions regarding the item(s) contained in this notice, especially regarding the estimated public burden and associated response time, should be directed to the Department of Homeland Security (DHS), and to the Office of Management and Budget (OMB) USCIS Desk Officer. Comments may be submitted to: USCIS, Chief, Regulatory Products Division, 20 Massachusetts Avenue, Washington, DC 20529-2020. Comments may also be submitted to DHS via facsimile to 202-272-0997 or via e-mail at
(1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of the agencies estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
(1)
(2)
(3)
(4)
(5)
(6)
If you need a copy of the information collection instrument, please visit the Web site at:
We may also be contacted at: USCIS, Regulatory Products Division, 20 Massachusetts Avenue, NW., Washington, DC 20529-2020; Telephone 202-272-8377.
Bureau of Land Management, Interior.
Notice.
The Forest Service (FS) has filed an application with the Bureau of Land Management (BLM) requesting the Assistant Secretary of the Interior for Land and Minerals Management to withdraw 10 acres of public land adjacent to the Clearwater National Forest from mining to protect the Lenore Tree Improvement Area near Orofino, Idaho and adjacent to the Clearwater River. This notice segregates the land for up to 2 years from settlement, sale, location or entry under the United States mining laws. The land will remain open to mineral leasing and to all activities currently consistent with applicable Forest plans and those related to the exercise of valid existing rights. This parcel of land has been withdrawn for FS use since 1990 for genetic seedling testing purposes. This proposed withdrawal covers the same 10 acres that were withdrawn for FS use under Public Land Order (PLO) No. 6799, BLM Serial Number IDI-26701, published on Friday, September 14, 1990 in the
Comments and request for a public meeting must be received by March 2, 2011.
Comments and meeting requests should be sent to the Forest Supervisor, Clearwater National Forest, 12730 Highway 12, Orofino, Idaho 83544.
Laura Summers, BLM Idaho State Office, 208-373-3866 or Scott Bixler, Forest Service, (406) 329-3655.
The FS has filed an application to withdraw the following described public land from settlement, sale, location and entry under the United States mining laws, subject to valid existing rights:
The area described contains 10.00 acres in Nez Perce County, Idaho.
For a period of 2 years from December 2, 2010, the land will be segregated from settlement, sale, location and entry under the United States mining laws unless the application is denied or canceled or the withdrawal is approved prior to that date. The temporary land uses which may be permitted during this segregative period include activities currently consistent with applicable plans and those related to the exercise of valid existing rights, including public recreation and other activities compatible with preservation of the character of the area.
The application will be processed in accordance with the regulations set forth in 43 CFR 2300.
For a period of 90 days from the date of publication of this notice, all persons who wish to submit comments, suggestions, or objections in connection with the proposed withdrawal may present their views in writing to the Forest Supervisor, Clearwater National Forest, at the address indicated above.
The use of a right-of-way, interagency agreement, cooperative agreement or surface management under 43 CFR 3809 would not adequately constrain non-discretionary uses that could irrevocably affect the use of the lands for mining purposes.
No water rights would be needed to fulfill the purpose of the requested withdrawal.
Notice is hereby given that an opportunity for a public meeting is afforded in connection with the proposed withdrawal. All interested persons who desire a public meeting for the purpose of being heard on the proposed withdrawal must submit a written request to the Forest Supervisor at the address indicated above by March 2, 2011. Upon determination by the authorized officer that a public meeting will be held, a notice of the time and place will be published in the
Records relating to the application may be examined by interested parties at the address of the Clearwater National Forest Office stated above.
Comments, including names and street addresses for respondents, will be available for public review at the Clearwater National Forest Office during regular business hours, 7:30 a.m. to 4 p.m., Monday through Friday, except holidays. Before including your address, telephone number, e-mail address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
43 U.S.C. 1714.
U.S. International Trade Commission.
Notice.
Notice is hereby given that the U.S. International Trade Commission is requesting briefing on remedy, the public interest, and bonding with respect to two respondents previously found in default in the above-captioned investigation.
Clint Gerdine, Esq., Office of the General Counsel, U.S. International Trade Commission, 500 E Street, SW., Washington, DC 20436, telephone (202) 708-2310. Copies of non-confidential documents filed in connection with this investigation are or will be available for inspection during official business hours (8:45 a.m. to 5:15 p.m.) in the Office of the Secretary, U.S. International Trade Commission, 500 E Street, SW., Washington, DC 20436, telephone (202) 205-2000. General information concerning the Commission may also be obtained by accessing its Internet server at
The Commission instituted this investigation on June 17, 2010, based on a complaint filed by Chrysler Group LLC (“Chrysler”) of Auburn Hills, Michigan. 75 FR 34483-84 (June 17, 2010). The complaint alleges violations of section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. **1337, in the importation into the United States, the sale for importation, and the sale within the United States after importation of certain automotive vehicles and designs therefor by reason of infringement of U.S. Patent No. D513,395. The complaint further alleges the existence of a domestic industry. The Commission's notice of investigation named several respondents including Vehicles Online, Inc. (“Vehicles”) of Charlotte, North Carolina; Boat N RV Supercenter (“Boat N RV”) of Rockwood, Tennessee; and Shanghai Tandem Industrial Co., Ltd. (“Shanghai Tandem”) of China.
On July 7, 2010, Chrysler moved, pursuant to 19 CFR 210.16, for: (1) An order directing respondents Vehicles and Boat N RV to show cause why they should not be found in default for failure to respond to the complaint and notice of investigation as required by § 210.13; and (2) the issuance of an initial determination (“ID”) finding Vehicles and Boat N RV in default upon their failure to show cause. On July 19, 2010, the ALJ issued Order No. 8 which required Vehicles and Boat N RV to show cause no later than August 2, 2010, as to why they should not be held in default and judgment rendered against them pursuant to § 210.16. Boat N RV responded to Order No. 8, but no response was received from Vehicles.
The presiding administrative law judge (“ALJ”) issued an ID on August 11, 2010, finding Vehicles in default, pursuant to §§ 210.13, 210.16, because Vehicles did not respond to the complaint and notice of investigation, or to Order No. 8 to show cause. On September 9, 2010, the Commission issued notice of its determination not to review the ALJ's ID finding Vehicles in default.
On August 19, 2010, Chrysler moved, pursuant to 19 CFR 210.16, for: (1) An order directing respondent Shanghai Tandem to show cause why it should not be found in default for failure to respond to the complaint and notice of investigation as required by § 210.13; and (2) the issuance of an ID finding Shanghai Tandem in default upon its failure to show cause. On August 31, 2010, the ALJ issued Order No. 12 which required Shanghai Tandem to show cause no later than September 14, 2010, as to why it should not be held in default and judgment rendered against it pursuant to § 210.16.
The ALJ issued an ID on September 22, 2010, finding Shanghai Tandem in default, pursuant to §§ 210.13, 210.16, because Shanghai Tandem did not respond to the complaint and notice of investigation, or to Order No. 12 to show cause. On October 14, 2010, the Commission issued notice of its determination not to review the ALJ's ID finding Shanghai Tandem in default.
On October 29, 2010, complainant Chrysler filed declarations requesting immediate relief against the defaulting respondents. On November 15, 2010, the Commission determined not to review an ID (Order No. 17) terminating the last remaining respondents, including Boat N RV, on the basis of a consent order.
Section 337(g)(1) (19 U.S.C. **1337(g)(1)) and Commission Rule 210.16(c) (19 CFR **210.16(c)) authorize the Commission to order limited relief against a respondent found in default, unless after consideration of the public interest factors, it finds that such relief should not issue. The Commission may (1) issue an order that could result in the exclusion of the subject articles from entry into the United States, and/or (2) issue one or more cease and desist orders that could result in the respondent being required to cease and desist from engaging in unfair acts in the importation and sale of such articles. Accordingly, the Commission is interested in receiving written submissions that address the form of remedy, if any, that should be ordered. If a party seeks exclusion of an article from entry into the United States for purposes other than entry for consumption, the party should so indicate and provide information establishing that activities involving other types of entry are either adversely affecting it or likely to do so. For background,
If the Commission contemplates some form of remedy, it must consider the effects of that remedy upon the public interest. The factors the Commission will consider include the effect that an exclusion order and/or cease and desist order would have on (1) the public health and welfare, (2) competitive conditions in the U.S. economy, (3) U.S. production of articles that are like or directly competitive with those that are subject to investigation, and (4) U.S. consumers. The Commission is therefore interested in receiving written submissions that address the aforementioned public interest factors in the context of this investigation.
If the Commission orders some form of remedy, the President has 60 days to approve or disapprove the Commission's action. During this period, the subject articles would be entitled to enter the United States under bond, in an amount determined by the Commission and prescribed by the Secretary of the Treasury. The Commission is therefore interested in receiving submissions concerning the amount of the bond that should be imposed if a remedy is ordered.
Persons filing written submissions must file the original document and 12 true copies thereof on or before the deadlines stated above with the Office of the Secretary. Any person desiring to submit a document (or portion thereof) to the Commission in confidence must request confidential treatment unless the information has already been granted such treatment during the proceedings. All such requests should be directed to the Secretary of the Commission and must include a full statement of the reasons why the Commission should grant such treatment.
The authority for the Commission's determination is contained in section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and in sections 210.16 and 210.50 of the Commission's Rules of Practice and Procedure (19 CFR 210.16 and 210.50).
By order of the Commission.
United States International Trade Commission.
Change in date for transmitting recommendations to the President.
The Commission has changed the date on which it intends to report its recommendations to the President in this matter from November 29, 2010, to December 13, 2010, to allow more time to complete the report, including its recommendations.
All Commission offices, including the Commission's hearing rooms, are located in the United States International Trade Commission Building, 500 E Street, SW., Washington, DC. The public record for this collection of proposals may be viewed on the Commission's electronic docket (EDIS) at
David Beck, Director, Office of Tariff Affairs and Trade Agreements (202-205-2603, fax 202-205-2616,
By order of the Commission.
National Institute of Justice.
Notice of Request for Proposals for Certification and Testing Expertise.
The National Institute of Justice (NIJ) is in the process of developing a new Interview Room Video System Standard and corresponding certification program requirements. This work is being performed by a Special Technical Committee (STC), comprised of practitioners from the field, researchers, testing experts, certification experts, and representatives from stakeholder organizations. It is anticipated that the STC members will participate in six 2-day meetings over a 12-month time period with the goal of completing development of the standard and certification program requirements. It is anticipated that STC meetings will begin in January 2011. Travel expenses and per diem will be reimbursed for all STC meetings; however, participation time will not be funded. NIJ is seeking representatives from (1) certification bodies and (2) test laboratories with experience in programs for similar types of electronic equipment. Additional preferred knowledge includes experience with video systems or experience with law enforcement operations. There are up to four positions to be filled on the STC, and NIJ will accept the first 20 submissions for review.
Interested parties are requested to nominate individuals from their organizations and submit no more than two pages describing the nominee's applicable experience, preferred knowledge, and affiliations with standards development organizations. This information shall be submitted to Frances Scott at
Frances Scott by telephone at 202-305-9950 [
National Institute of Justice.
Request for Proposals for Certification and Testing Expertise.
The National Institute of Justice (NIJ) is in the process of developing a new License Plate Reader Standard and corresponding certification program requirements. This work is being performed by a Special Technical Committee (STC), comprised of practitioners from the field, researchers, testing experts, certification experts, and representatives from stakeholder organizations. It is anticipated that the STC members will participate in six 2-day meetings over a 12-month time period with the goal of completing development of the standard and certification program requirements. It is anticipated that STC meetings will begin in January 2011. Travel expenses and per diem will be reimbursed for all STC meetings; however, participation time will not be funded. NIJ is seeking representatives from (1) certification bodies and (2) test laboratories with experience in programs for similar types of electronic equipment. Additional preferred knowledge includes experience with video systems or experience with law enforcement operations. There are up to four positions to be filled on the STC, and NIJ will accept the first 20 submissions for review.
Interested parties are requested to nominate individuals from their organizations and submit no more than two pages describing the nominee's applicable experience, preferred knowledge, and affiliations with standards development organizations. This information shall be submitted to Frances Scott at
Frances Scott by telephone at 202-305-9950 [
National Transportation Safety Board (NTSB).
Notice.
The NTSB is announcing that it is submitting an Information Collection Request (ICR) to the Office of Management and Budget (OMB) for approval, in accordance with the Paperwork Reduction Act. This ICR describes a form that the NTSB plans to use to obtain the contact information of family members and friends of those persons who have been involved in transportation accidents, as well as the survivors of those accidents, who seek to receive periodic updates from the NTSB's Office of Transportation Disaster Assistance. This Notice informs the public that they may submit comments concerning the proposed use of this form to the NTSB Desk Officer at the OMB.
Submit written comments regarding this proposed collection of information by January 3, 2011.
Respondents may submit written comments on the collection of information to the Office of Information and Regulatory Affairs of the Office of Management and Budget,
Max Green, NTSB Office of Transportation Disaster Assistance, at (202) 314-6611.
In accordance with OMB regulations that require this Notice for proposed ICRs, the NTSB herein notifies the public that it may submit comments on this proposed ICR to OMB. 5 CFR 1320.10(a).
The NTSB will use the form to collect e-mail and mailing addresses, as well as telephone contact information in order
The NTSB notes that completion of the form is voluntary. In addition, the NTSB will accept forms that are only partially completed; for example, some individuals may not wish to include their telephone numbers, but will include their e-mail addresses. The NTSB accepts all forms that contain any type of contact information, as the NTSB is committed to providing information to and coordinating services for family members, friends, and survivors of transportation accidents. Once a person completes the form, the NTSB will add their name to a list of individuals whom the NTSB will contact to provide information and coordinate services.
The NTSB has carefully reviewed the form to ensure that it has used plain, coherent, and unambiguous terminology in its request for information. The form is not duplicative of other agencies' collections of information. The NTSB believes this proposed form, given its brevity, will impose a minimal burden on respondents: the NTSB estimates that respondents will spend, at most, 10 minutes in completing the form. The NTSB estimates that approximately 50 respondents per year will complete the form, but notes that this number may vary, given the unpredictable nature of the frequency of transportation accidents.
Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Public Law 94-409, that the Securities and Exchange Commission will hold its second field hearing to examine the municipal securities markets on Tuesday, December 7, 2010 at 9 a.m.
The hearing will include panel discussions focusing on market stability and liquidity, investor impact, self-regulation, accounting and Build America Bonds.
The panel discussion and presentations will take place in the Auditorium of the Commission's headquarters at 100 F Street, NE., Washington, DC and will be open to the public with seating on a first-come, first-served basis. Visitors will be subject to security checks. The hearing also will be webcast live at
For further information, please contact the Office of the Secretary at (202) 551-5400.
Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Public Law 94-409, that the Securities and Exchange Commission will hold an Open Meeting on December 3, 2010 at 10 a.m., in the Auditorium, Room L-002.
The subject matter of the Open Meeting will be:
The Commission will consider a recommendation to propose joint rules with the Commodity Futures Trading Commission relating to the definitions of “Swap Dealer,” “Security-Based Swap Dealer,” “Major Swap Participant,” Major Security-Based Swap Participant,” and “Eligible Contract Participant.”
Commissioner Aguilar, as duty officer, determined that no earlier notice thereof was possible.
At times, changes in Commission priorities require alterations in the scheduling of meeting items.
For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact:
The Office of the Secretary at (202) 551-5400.
U.S. Small Business Administration.
Notice of open Federal Interagency Task Force Meeting.
The SBA is issuing this notice to announce the location, date, time, and agenda for the second public meeting of the Interagency Task Force on Veterans Small Business Development. The meeting will be open to the public.
Friday, December 10, 2010, from 9 a.m. to 12 Noon in the Eisenhower Conference Room, Side A & B, located on the 2nd floor.
U.S. Small Business Administration, 409 3rd Street, SW., Washington, DC 20416.
Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (5 U.S.C., Appendix 2), SBA announces the meeting of the Interagency Task Force on Veterans Small Business Development. The Task Force is established pursuant to Executive Order 13540 and focused on coordinating the efforts of Federal agencies to improve capital, business development opportunities and pre-established Federal contracting goals for small business concerns owned and controlled by veterans (VOB's) and service-disabled veterans (SDVOSB'S). Moreover, the Task Force shall coordinate administrative and regulatory activities and develop proposals relating to “six focus areas”: (1) Access to capital (loans, surety bonding and franchising); (2) Ensure achievement of pre-established contracting goals, including mentor protégé and matching with contracting opportunities; (3) Increase the integrity of certifications of status as a small business; (4) Reducing paperwork and administrative burdens in accessing business development and entrepreneurship opportunities; (5) Increasing and improving training and counseling services; and (6) Making other improvements to support veterans' business development by the Federal government.
The Interagency Task Force on Veterans Small Business Development shall submit to the President, no later than one year after its first meeting, a report on the performance of its functions and any proposals developed pursuant to the “six focus areas” identified above. The purpose of the meeting is scheduled as a full Task Force meeting. The agenda will include presentations and discussion from the Task Force Subcommittees on their progress regarding the “six focus areas” of the Task Force. In addition, the Task Force will allow time to obtain public comment from individuals and representatives of organizations regarding the areas of focus.
The meeting is open to the public; however, advance notice of attendance is requested. Anyone wishing to attend and/or make a presentation to the Task Force must contact Raymond B. Snyder by December 7, 2010, by e-mail in order to be placed on the agenda. Comments for the Record should be applicable to the “six focus areas” of the Task Force and e-mailed prior to the meeting for inclusion in the public record; verbal presentations, however, will be limited to five minutes in the interest of time and to accommodate as many presenters as possible. Written comments should be e-mailed to Raymond B. Snyder, Deputy Associate Administrator, Office of Veterans Business Development, U.S. Small Business Administration, 409 3rd Street, SW., Washington, DC 20416, e-mail address:
Additionally, if you need accommodations because of a disability or require additional information, please contact Raymond B. Snyder, Designated Federal Official for the Task Force, at (202) 205-6773; or by e-mail at:
U.S. Council of CIOs, SSA.
Notice of meeting.
On behalf of the Accessibility Committee of the U.S. Council of CIOs 29 U.S.C. 794d.
This notice announces a listening session being conducted in response to a memo dated July 19, 2010, from the Office of Management and Budget (OMB) on “Improving the Accessibility of Government Information.” Section 508 of the Rehabilitation Act (29 U.S.C. 794d) requires Federal agencies to buy and use electronic and information technology (EIT) that is accessible. The July memo directs agencies to take stronger steps toward improving the acquisition and implementation of accessible technology. In order to better understand the needs of diverse communities and provide better solutions, the U.S. Council of CIOs, in collaboration with the Chief Acquisition Officers Council, the GSA Office of Governmentwide Policy and the U.S. Access Board, is holding the second in a series of listening sessions to engage citizens and employees in expressing concerns and proposing ideas. Persons with disabilities, their advocates, technology companies, government employees and other interested parties are invited to participate.
The listening session will be held on Tuesday, December 14, 2010, from 2 p.m. to 5 p.m. Eastern Standard Time (EST).
Persons wishing to address the panel at the listening session can pre-register by contacting Emily Koo at (410) 965-4472 or
In 1998, Congress amended the Rehabilitation Act of 1973 to require Federal agencies to make their electronic and information technology (EIT) accessible to people with disabilities. Inaccessible technology interferes with an ability to obtain and use information quickly and easily. Section 508 was enacted to eliminate barriers in information technology, open new opportunities for people with disabilities, and encourage development of technologies that will help achieve these goals. The law applies to all Federal agencies when they develop, procure, maintain, or use electronic and information technology. Under Section 508 (29 U.S.C. `794 d), agencies must give disabled employees and members of the public access to information that is comparable to access available to others.
Effective implementation of Section 508 is an essential element of President Obama's principles of open government, requiring that all government and data be accessible to all citizens. In order for the goal of open government to be meaningful for persons with disabilities, technology must also be accessible, including digital content. In July 2010, the OMB took steps to assure that the Federal government's progress in implementing Section 508 is stronger and achieves results more quickly.
Section 508 requires the GSA to provide technical assistance to agencies on Section 508 implementation. GSA has created a number of tools, available at
• The BuyAccessible Wizard,
• The Quick Links site,
• The BuyAccessible Products and Services Directory,
• The Section 508 blog
The OMB has directed that several actions be taken to improve 508 performance:
• By Mid-January 2011, the GSA Office of Governmentwide Policy (OGP) will provide updated guidance on making government EIT accessible. This guidance will build upon existing
• By Mid-January 2011, the GSA OGP will update its general Section 508 training to offer refreshed continuous learning modules that can be used by contracting officers, program/project managers (especially those managing IT programs), and contracting officer technical representatives (COTRs) as they fulfill their Federal Acquisition Certification requirements.
• In 2010, the GSA OGP and the Department of Justice (DOJ) will issue a survey to allow agencies to assess their implementation of Section 508, including accessibility of Web sites and other technology used by the agencies. This information will be used by the DOJ in preparing its next assessment of agency compliance as required by the Rehabilitation Act. The CIOC Accessibility Committee will also use this information to identify best practices and lessons learned.
• In the spring of 2011, the DOJ will issue a progress report on Federal agency compliance with Section 508, the first since 2004. Going forward, DOJ will meet its obligation to issue a report biennially.
• Beginning in FY 2011, the GSA OGP will begin providing OMB a quarterly summary report containing results of Section 508 reviews of a sample of solicitations posted on FedBizOpps.gov. GSA will provide the agencies a summary of the sampling results to facilitate sharing of best practices and successes, and to address common challenges.
This listening session will focus on what other steps the Federal government can take to increase the accessibility and usability of government information and data for persons with disabilities. Input is sought on the following questions:
• What can technology do to improve things for people with disabilities?
• What can the Federal government do to use technology better or in new ways?
• What can the Federal government do to make technology more accessible?
• What emerging technologies are being used by the Federal government that you are left out of?
• What technologies should the Federal government use that would enhance your interactions with the Federal government?
• What are State and local governments doing that the Federal government should follow?
• What can the Federal government do to influence technology accessibility?
• From the perspective of Federal employees, how has Section 508 improved your ability to do your job? How can implementation of Section 508 be improved?
• From the perspective of vendors, how can implementation of Section 508 be improved?
• What could the Federal government ask that would allow vendors to better show that their products meet accessibility needs?
• What improvements could be made to VPATs?
• Do you believe the IT industry would benefit from a professional certification or credential that denotes a company's expertise in accessibility? How could that be implemented and managed; and should the government play a role in making that happen?
• Feedback from the listening session will be used by, and shared across, agencies to improve accessibility and usability.
Notice of request for public comments.
The Department of State is seeking Office of Management and Budget (OMB) approval for the information collection described below. The purpose of this notice is to allow 30 days for public comment in the
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Submit comments to the Office of Management and Budget (OMB) for up to 30 days from December 2, 2010.
Direct comments and questions to Katherine Astrich, the Department of State Desk Officer in the Office of Information and Regulatory Affairs at the Office of Management and Budget (OMB), who may be reached at 202-395-4718. You may submit comments by any of the following methods: E-mail:
Direct requests for additional information regarding the collection listed in this notice, including requests for copies of the proposed information collection and supporting documents, to Barbara Mahoney, Department of State, Office of Medical Clearances, SA-15 Room 400, 1800 North Kent St., Rosslyn, VA 22209. PHONE 703-875-5413 and FAX 703-875-4850.
We are soliciting public comments to permit the Department to:
• Evaluate whether the proposed information collection is necessary for the proper performance of our functions.
• Evaluate the accuracy of our estimate of the burden of the proposed collection, including the validity of the methodology and assumptions used.
• Enhance the quality, utility, and clarity of the information to be collected.
• Minimize the reporting burden on those who are to respond, including the use of automated collection techniques or other forms of technology.
Form DS-3057 is designed to collect medical information to provide medical providers with current and adequate information to base decisions on whether a federal employee and family members will have sufficient medical resources at a diplomatic mission abroad to maintain the health and fitness of the individual and family members.
The information collected will be collected through the use of an
Proposals may address multiple countries, but all the countries must then be in the same region. Please
Exchanges funded under this theme will focus on aiding youth and secondary school coaches in the target countries in the development and implementation of appropriate training methodologies. The goal is to ensure the optimal technical proficiency among the coaches participating in the program, while also emphasizing the role sports can play in the long-term well-being of youth.
Exchanges funded under this theme will enable American and foreign youth sport coaches, administrators, and sport association officials to share their experiences in managing and organizing youth sports activities. These exchanges should advance cross-cultural understanding of the role of sports as a significant factor in educational success.
Exchanges funded under this theme are designed to promote and sponsor sports, recreation, fitness, and leisure events for children and adults with disabilities. Project goals include improving the quality of life for people with disabilities by providing affordable, inclusive sports experiences that build self-esteem and confidence, enhancing active participation in community life, and making a significant contribution to the physical and psychological health of people with disabilities. Proposals under this theme aim to demonstrate that people with a disability can be included in sports opportunities in their communities, and will develop opportunities for them to do so.
Exchanges funded under this theme will focus on effective and practical ways to use sports personalities and sports health professionals to increase awareness among young people of the importance of following a healthy lifestyle to reduce illness, prevent injuries and speed rehabilitation and recovery. Emphasis will be on the responsibility of the broader community to support healthy behavior. The project goals are to promote and integrate scientific research, education, and practical applications of sports medicine and exercise science to maintain and enhance physical performance, fitness, health, and quality of life. (Actual medical training and dispensing of medications are outside the purview of this theme.)
The pursuit of academic degrees from U.S. institutions is not an acceptable focus of this program. Please
No guarantee is made or implied that grants will be awarded in all themes or for all countries listed.
• A U.S. grantee identifies U.S. citizens to conduct a multi-location, in-country program overseas that includes clinics and training sessions for: male and female athletes; government officials (Ministry of Sports and Ministry of Education); coaches (adult
• An in-country partner overseas (a local university, government agency or other appropriate organization, such as a relevant sports federation) co-hosts an activity with the U.S. grantee institution, and participates in the selection of participants for a U.S. program.
• A U.S. program that includes site visits designed to provide participants with exposure to American youth and coaches, sports education in the United States, background information on U.S. approaches to the themes listed in the announcement, relevant cultural activities, and a debriefing and evaluation.
• U.S. experts who worked with participants from overseas implement an in-country program.
• Participants in the U.S. program design in-country projects and serve as co-presenters.
• Materials are translated into the relevant language for use in future projects.
• Small grants are dispersed for projects designed to expand the exchange experience.
• All participants are encouraged to enroll in the Bureau of Education and Cultural Affairs' alumni Web site
Projects under this competition may range in length from one to three years depending on the number of project components, the country/region targeted and the extent of the evaluation plan proposed by the applicant. The Office of Citizen Exchanges strongly encourages applicant organizations to plan enough time after project activities are completed to measure project outcomes. Please refer to the Program Monitoring and Evaluation section, item IV.3d.3 below, for further guidance on evaluation.
Applications may be submitted by public and private non-profit organizations meeting the provisions described in Internal Revenue Code section 26 U.S.C. 501(c)(3).
There is no minimum or maximum percentage required for this competition. However, the Bureau encourages applicants to provide maximum levels of cost sharing and funding in support of its programs.
When cost sharing is offered, it is understood and agreed that the applicant must provide the amount of cost sharing as stipulated in its proposal and later included in an approved agreement. Cost sharing may be in the form of allowable direct or indirect costs. For accountability, you must maintain written records to support all costs which are claimed as your contribution, as well as costs to be paid by the Federal government. Such records are subject to audit. The basis for determining the value of cash and in-kind contributions must be in accordance with OMB Circular A-110, (Revised), Subpart C.23—Cost Sharing and Matching. In the event you do not provide the minimum amount of cost sharing as stipulated in the approved budget, ECA's contribution will be reduced in like proportion.
(a) Grants awarded to eligible organizations with less than four years of experience in conducting international exchange programs will be limited to $60,000. Organizations that only qualify for the $60,000 level may choose to conduct a one-way exchange, but must explain how the objectives of Americans interacting with foreign participants will still be achieved.
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• Applicants may not submit more than one (1) proposal for this competition. Organizations that submit proposals that exceed these limits will result in having all of their proposals deemed technically ineligible.
• Proposals for countries that are not designated in the RFGP or that address more than one region will be deemed technically ineligible.
• Proposals for themes not listed above will be deemed technically ineligible.
• The Office of Citizen Exchanges does not support proposals limited to conferences or seminars (
• The Office of Citizen Exchanges does not support academic research or faculty or student fellowships. Proposals that have only an academic focus will be deemed technically ineligible.
Before submitting a proposal, all applicants are strongly encouraged to consult with the Washington, DC-based Department of State contact for the themes/regions listed in this solicitation.
Please read the complete announcement before sending inquiries or submitting proposals. Once the RFGP deadline has passed, Bureau staff may not discuss this competition with applicants until the proposal review process has been completed.
Alternatively, an electronic application package may be obtained from
The Solicitation Package contains the Proposal Submission Instruction (PSI) document which consists of required application forms, and standard guidelines for proposal preparation.
Please specify Ryan Murphy and refer to the Funding Opportunity Number ECA/PE/C/SU-11-15 located at the top of this announcement on all other inquiries and correspondence.
The entire Solicitation Package may be downloaded from the Bureau's Web site at:
Please read all information before downloading.
Applicants must follow all instructions in the Solicitation Package. The application should be submitted per the instructions under IV.3f. “Application Deadline and Methods of Submission” section below.
IV.3a. You are required to have a Dun and Bradstreet Data Universal Numbering System (DUNS) number to apply for a grant or cooperative agreement from the U.S. Government. This number is a nine-digit identification number, which uniquely identifies business entities. Obtaining a DUNS number is easy and there is no charge. To obtain a DUNS number, access
IV.3b. All proposals must contain an executive summary, proposal narrative, detailed timeline and detailed budget. Please Refer to the Solicitation Package. It contains the mandatory Proposal Submission Instructions (PSI) document for additional formatting and technical requirements.
IV.3.c. All Federal award recipients and sub-recipients must maintain current registrations in the Central Contractor Registration (CCR) database and have a Dun and Bradstreet Data Universal Numbering System (DUNS) number. Recipients and sub-recipients must maintain accurate and up-to-date information in the CCR until all program and financial activity and reporting have been completed. All entities must review and update the information at least annually after the initial registration and more frequently if required information changes or another award is granted.
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(1) Those who file Internal Revenue Service Form 990, “Return of Organization Exempt From Income Tax,” must include a copy of relevant portions of this form.
(2) Those who do not file IRS Form 990 must submit information above in the format of their choice.
In addition to final program reporting requirements, award recipients will also be required to submit a one-page document, derived from their program reports, listing and describing their grant activities. For award recipients, the names of directors and/or senior executives (current officers, trustees, and key employees), as well as the one- page description of grant activities, will be transmitted by the State Department to OMB, along with other information required by the Federal Funding Accountability and Transparency Act (FFATA), and will be made available to the public by the Office of Management and Budget on its USASpending.gov Web site as part of ECA's FFATA reporting requirements.
If your organization is a private non-profit which has not received a grant or cooperative agreement from ECA in the past three years, or if your organization received non-profit status from the IRS within the past four years, you must submit the necessary documentation to verify non-profit status as directed in the PSI document. Failure to do so will cause your proposal to be deemed technically ineligible.
IV.3d. Please take into consideration the following information when preparing your proposal narrative:
The Office of Citizen Exchanges of the Bureau of Educational and Cultural Affairs is the official program sponsor of the exchange program covered by this RFGP, and an employee of the Bureau will be the “Responsible Officer” for the program under the terms of 22 CFR 62, which covers the administration of the Exchange Visitor Program (J visa program). Under the terms of 22 CFR 62, organizations receiving awards (either a grant or cooperative agreement) under this RFGP will be third parties “cooperating with or assisting the sponsor in the conduct of the sponsor's program.” The actions of recipient organizations shall be “imputed to the sponsor in evaluating the sponsor's compliance with” 22 CFR 62. Therefore, the Bureau expects that any organization receiving an award under this competition will render all
The Bureau of Educational and Cultural Affairs places critically important emphases on the secure and proper administration of Exchange Visitor (J visa) Programs and adherence by recipient organizations and program participants to all regulations governing the J visa program status. Therefore, proposals should
The Office of Citizen Exchanges of ECA will be responsible for issuing DS-2019 forms to participants in this program.
A copy of the complete regulations governing the administration of Exchange Visitor (J) programs is available at
Pursuant to the Bureau's authorizing legislation, programs must maintain a non-political character and should be balanced and representative of the diversity of American political, social, and cultural life. “Diversity” should be interpreted in the broadest sense and encompass differences including, but not limited to ethnicity, race, gender, religion, geographic location, socio-economic status, and disabilities. Applicants are strongly encouraged to adhere to the advancement of this principle both in program administration and in program content. Please refer to the review criteria under the ‘Support for Diversity' section for specific suggestions on incorporating diversity into your proposal. Public Law 104-319 provides that “in carrying out programs of educational and cultural exchange in countries whose people do not fully enjoy freedom and democracy,” the Bureau “shall take appropriate steps to provide opportunities for participation in such programs to human rights and democracy leaders of such countries.” Public Law 106-113 requires that the governments of the countries described above do not have inappropriate influence in the selection process. Proposals should reflect advancement of these goals in their program contents, to the full extent deemed feasible.
Proposals must include a plan to monitor and evaluate the project's success, both as the activities unfold and at the end of the program. The Bureau recommends that your proposal include a draft survey questionnaire or other technique plus a description of a methodology to use to link outcomes to original project objectives. The Bureau expects that the recipient organization will track participants or partners and be able to respond to key evaluation questions, including satisfaction with the program, learning as a result of the program, changes in behavior as a result of the program, and effects of the program on institutions (institutions in which participants work or partner institutions). The evaluation plan should include indicators that measure gains in mutual understanding as well as substantive knowledge.
Successful monitoring and evaluation depend heavily on setting clear goals and outcomes at the outset of a program. Your evaluation plan should include a description of your project's objectives, your anticipated project outcomes, and how and when you intend to measure these outcomes (performance indicators). The more that outcomes are “smart” (specific, measurable, attainable, results-oriented, and placed in a reasonable time frame), the easier it will be to conduct the evaluation. You should also show how your project objectives link to the goals of the program described in this RFGP.
Your monitoring and evaluation plan should clearly distinguish between program
We encourage you to assess the following four levels of outcomes, as they relate to the program goals set out in the RFGP (listed here in increasing order of importance):
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Consideration should be given to the appropriate timing of data collection for each level of outcome. For example, satisfaction is usually captured as a short-term outcome, whereas behavior and institutional changes are normally considered longer-term outcomes. Overall, the quality of your monitoring and evaluation plan will be judged on how well it: (1) Specifies intended outcomes; (2) gives clear descriptions of how each outcome will be measured; (3) identifies when particular outcomes will be measured; and (4) provides a clear description of the data collection strategies for each outcome (
Recipient organizations will be required to provide reports analyzing their evaluation findings to the Bureau in their regular program reports. All data collected, including survey responses and contact information, must be maintained for a minimum of three years and provided to the Bureau upon request.
All recipients of ECA grants or cooperative agreements should be prepared to state in any announcement or publicity where it is not inappropriate that activities are assisted financially by the Bureau of Educational and Cultural Affairs of the U.S. Department of State under the authority of the Fulbright-Hays Act of 1961, as amended. In any contact with the media
Please refer to the Proposal Submissions Instruction (PSI) document for additional guidance.
IV.3e. Please take the following information into consideration when preparing your budget:
IV.3e.1. Applicants must submit SF-424A—“Budget Information—Non-Construction Programs” along with a comprehensive budget for the entire program. For this competition, requests should not exceed $225,000. There must be a summary budget as well as breakdowns reflecting both administrative and program budgets. Applicants may provide separate sub-budgets for each program component, phase, location, or activity to provide clarification. Please note that the Bureau of Educational and Cultural Affairs does not fund programs that involve building of structures of any kind, including playing fields, recreation centers, or stadiums.
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Please refer to the Solicitation Package for complete budget guidelines and formatting instructions.
Applications may be submitted in one of two ways:
(1) In hard-copy, via a nationally recognized overnight delivery service (
(2) Electronically through
Along with the Project Title, all applicants must enter the above
Applications must be shipped no later than the above deadline. Delivery services used by applicants must have in-place, centralized shipping identification and tracking systems that may be accessed via the Internet and delivery people who are identifiable by commonly recognized uniforms and delivery vehicles. Proposals shipped on or before the above deadline but received at ECA more than seven days after the deadline will be ineligible for further consideration under this competition. Proposals shipped after the established deadlines are ineligible for consideration under this competition. ECA will
When preparing your submission please make sure to include one extra copy of the completed SF-424 form and place it in an envelope addressed to “ECA/EX/PM”.
The original and eight (8) copies of the application should be sent to:U.S. Department of State,Program Management Division,ECA-IIP/EX/PM,Ref.: ECA/PE/C/SU-11-15,SA-5, Floor 4,Department of State,2200 C Street, NW.,Washington, DC 20037.
Applicants submitting hard-copy applications must also submit the “Executive Summary” and “Proposal Narrative” sections of the proposal in text (.txt) or Microsoft Word format on CD-ROM. The Bureau will provide these files electronically to the appropriate Public Affairs Section(s) at the U.S. Embassy/ies for their review.
Applicants have the option of submitting proposals electronically through Grants.gov
Please follow the instructions available in the `Get Started' portion of the site (
Several of the steps in the Grants.gov registration process could take several weeks. Therefore, applicants should check with appropriate staff within their organizations immediately after reviewing this RFGP to confirm or determine their registration status with Grants.gov.
Once registered, the amount of time it can take to upload an application will vary depending on a variety of factors including the size of the application and the speed of your Internet connection. In addition, validation of an electronic submission via Grants.gov can take up to two business days.
The Grants.gov Web site includes extensive information on all phases/aspects of the Grants.gov process, including an extensive section on frequently asked questions, located under the “For Applicants” section of the Web site. ECA strongly recommends that all potential applicants review thoroughly the Grants.gov Web site, well in advance of submitting a proposal through the Grants.gov system. ECA bears no responsibility for data errors resulting from transmission or conversion processes.
Direct all questions regarding Grants.gov registration and submission to:Grants.gov Customer Support.
Applicants have until midnight (12 a.m.), Washington, DC time of the closing date to ensure that their entire application has been uploaded to the Grants.gov site.
Please refer to the Grants.gov Web site, for definitions of various “application statuses” and the difference between a submission receipt and a submission validation. Applicants will receive a validation e-mail from grants.gov upon the successful submission of an application. Again, validation of an electronic submission via Grants.gov can take up to two business days.
It is the responsibility of all applicants submitting proposals via the Grants.gov Web portal to ensure that proposals have been received by Grants.gov in their entirety, and ECA bears no responsibility for data errors resulting from transmission or conversion processes.
Executive Order 12372 does not apply to this program.
The Bureau will review all proposals for technical eligibility. Proposals will be deemed ineligible if they do not fully adhere to the guidelines stated herein and in the Solicitation Package. All eligible proposals will be reviewed by the program office, as well as the Public Diplomacy section of the relevant Embassy, where appropriate. Eligible proposals will be subject to compliance with Federal and Bureau regulations and guidelines and forwarded to Bureau grant panels for advisory review. Proposals may also be reviewed by the Office of the Legal Adviser or by other Department elements. Final funding decisions are at the discretion of the Department of State's Assistant Secretary for Educational and Cultural Affairs. Final technical authority for grants resides with the Bureau's Grants Officer.
Technically eligible applications will be competitively reviewed according to the criteria stated below. These criteria are not rank ordered and all carry equal weight in the proposal evaluation:
1.
Program objectives should be stated clearly and should reflect the applicant's expertise in the subject area and region. Objectives should respond to the topics in this announcement and should relate to the current conditions in the target country/countries. A detailed agenda and relevant work plan should explain how objectives will be achieved and should include a timetable for completion of major tasks. The substance of workshops, internships, seminars and/or consulting should be described in detail. Sample training schedules should be outlined. Responsibilities of proposed in-country partners should be clearly described. A discussion of how the applicant intends to address language issues should be included, if needed.
2.
3.
4.
5.
6.
Final awards cannot be made until funds have been appropriated by Congress, allocated and committed through internal Bureau procedures. Successful applicants will receive a Federal Assistance Award (FAA) from the Bureau's Grants Office. The FAA and the original proposal with subsequent modifications (if applicable) shall be the only binding authorizing document between the recipient and the U.S. Government. The FAA will be signed by an authorized Grants Officer, and mailed to the recipient's responsible officer identified in the application.
Unsuccessful applicants will receive notification of the results of the application review from the ECA program office coordinating this competition.
For assistance awards involving the Palestinian Authority, West Bank, and Gaza:
All awards made under this competition must be executed according to all relevant U.S. laws and policies regarding assistance to the Palestinian Authority, and to the West Bank and Gaza. Organizations must consult with relevant Public Affairs Offices before entering into any formal arrangements or agreements with Palestinian organizations or institutions.
To assure that planning for the inclusion of the Palestinian Authority complies with requirements, please contact (Ryan Murphy, ECA/PE/C/SU, tel: (202) 632-6058,
All Recipient personnel deploying to areas of combat operations, as designated by the Secretary of Defense (currently Iraq and Afghanistan), under assistance awards over $100,000 or performance over 14 days must register in the Department of Defense maintained Synchronized Pre-deployment and Operational Tracker (SPOT) system. Recipients of Federal assistance awards shall register in SPOT before deployment, or if already in the designated operational area, register upon becoming an employee under the assistance award, and maintain current data in SPOT. Information on how to register in SPOT will be available from your Grants Officer or Grants Officer Representative during the final negotiation and approval stages in the Federal assistance awards process. Recipients of Federal assistance awards are advised that adherence to this policy and procedure will be a requirement of all final Federal assistance awards issued by ECA.
Recipient performance may require the use of armed private security personnel. To the extent that such private security contractors (PSCs) are required, grantees are required to ensure they adhere to Chief of Mission (COM) policies and procedures regarding the operation, oversight, and accountability of PSCs.
Terms and Conditions for the Administration of ECA agreements include the following:
Please reference the following Web sites for additional information:
You must provide ECA with a hard copy original plus two copies of the following reports:
(1) A final program and financial report no more than 90 days after the expiration of the award;
(2) A concise, one-page final program report summarizing program outcomes no more than 90 days after the expiration of the award. This one-page report will be transmitted to OMB, and be made available to the public via OMB's USAspending.gov Web site—as part of ECA's Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
(3) A SF-PPR, “Performance Progress Report” Cover Sheet with all program reports.
(4) Quarterly program and financial reports which should include the activities completed during that quarter, information about any participants of the activities, and any adjustments in the program timeline.
Award recipients will be required to provide reports analyzing their evaluation findings to the Bureau in their regular program reports. (Please refer to IV. Application and Submission Instructions (IV.3.d.3) above for Program Monitoring and Evaluation information.
All data collected, including survey responses and contact information, must be maintained for a minimum of three years and provided to the Bureau upon request.
All reports must be sent to the ECA Grants Officer and ECA Program Officer listed in the final assistance award document.
Award recipients will be required to maintain specific data on program participants and activities in an electronically accessible database format that can be shared with the Bureau as required. As a minimum, the data must include the following:
(1) Name, address, contact information and biographic sketch of all persons who travel internationally on funds provided by the agreement or who benefit from the award funding but do not travel.
(2) Itineraries of international and domestic travel, providing dates of travel and cities in which any exchange experiences take place. Final schedules for in-country and U.S. activities must be received by the ECA Program Officer at least three weeks prior to the official opening of the activity.
For questions about this announcement, contact: Ryan Murphy, U.S. Department of State, Bureau of Educational and Cultural Affairs, SportsUnited Division, ECA/PE/C/SU, SA-5, Floor 3, 2200 C Street, NW., Washington, DC 20037, tel: (202) 632-6058, fax: (202) 632-6492,
All correspondence with the Bureau concerning this RFGP should reference the above title and reference number ECA/PE/C/SU-11-15.
Please read the complete announcement before sending inquiries or submitting proposals. Once the RFGP deadline has passed, Bureau staff may not discuss this competition with applicants until the proposal review process has been completed.
The terms and conditions published in this RFGP are binding and may not be modified by any Bureau representative. Explanatory information provided by the Bureau that contradicts published language will not be binding. Issuance of the RFGP does not constitute an award commitment on the part of the Government. The Bureau reserves the right to reduce, revise, or increase proposal budgets in accordance with the needs of the program and the availability of funds. Awards made will be subject to periodic reporting and evaluation requirements per section VI.3 above.
The Office of Citizen Exchanges, Youth Programs Division, of the Bureau of Educational and Cultural Affairs (ECA) announces an open competition for the Youth Ambassadors Program with South America. Public and private non-profit organizations meeting the provisions described in Internal Revenue Code section 26 U.S.C. 501(c)(3) may submit proposals to recruit and select youth and adult participants, to provide the participants with three-week exchanges focused on civic education, community service, and youth leadership development, and to support follow-on projects in their home communities. Exchange delegations will travel from 10 South American countries to the United States, and U.S. exchange delegations will travel to select countries. ECA anticipates awarding multiple cooperative agreements that cover the administration of this program for two years. The awards will be contingent upon the availability of FY-2011 funds.
Overall grant making authority for this program is contained in the Mutual Educational and Cultural Exchange Act of 1961, Public Law 87-256, as amended, also known as the Fulbright-Hays Act. The purpose of the Act is “to enable the Government of the United States to increase mutual understanding between the people of the United States and the people of other countries * * *; to strengthen the ties which unite us with other nations by demonstrating the educational and cultural interests, developments, and achievements of the people of the United States and other nations * * * and thus to assist in the development of friendly, sympathetic and peaceful relations between the United States and the other countries of the world.” The funding authority for the program above is provided through legislation.
The Youth Ambassadors Program is a three-week exchange for high school youth (ages 15-18) and adult educators focused on civic education, community service, and youth leadership development. Subthemes that explore these overarching themes may be added,
The FY2011 Youth Ambassadors Program will focus on the following countries: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru, Uruguay, Venezuela, and the United States. It is anticipated that foreign participants will travel from all of these countries to the United States, and that American participants will travel to select countries.
The goals of the program are to:
(1) Promote mutual understanding between the people of the United States and the people of South America;
(2) Prepare youth leaders to become responsible citizens and contributing members of their communities;
(3) Influence the attitudes of the leaders of a new generation; and
(4) Foster relationships among youth from different ethnic, religious, and national groups and create hemispheric networks of youth leaders, both within the participating countries and internationally.
The objectives of the program are for participants to:
(1) Demonstrate a better understanding of the elements of a participatory democracy as practiced in the United States;
(2) Demonstrate critical thinking and leadership skills; and
(3) Demonstrate skill at developing project ideas and planning a course of action to bring the projects to fruition.
The primary themes of the program are:
(1) Civic Education (Citizen Participation, Grassroots Democracy and Rule of Law);
(2) Community Service; and
(3) Youth Leadership Development.
For each project, applicant organizations must focus on these primary themes. Secondary themes, such as the environment or business and entrepreneurship, will serve to illustrate the more abstract concepts of the primary themes. For example, the secondary theme of the environment can be used to examine how a group of individuals with an idea can start a recycling campaign in their community.
Using these goals, objectives, and themes, applicant organizations should identify their own specific and measurable outputs and outcomes based on the project specifications provided in this solicitation. ECA does not anticipate award recipients achieving these overarching goals throughout one project; however, proposals should indicate how these objectives will be reached through these themes, and how they will contribute to the achievement of the stated goals.
The total amount of funding available is $3,000,000, pending availability of funds. ECA anticipates awarding multiple cooperative agreements for the management of the Youth Ambassadors Program with South America that together will cover all 10 countries. The Bureau reserves the right to reduce, revise, or increase proposal project configurations, budgets, and participant numbers in accordance with the needs of the program and the availability of funds. In addition, the Bureau reserves the right to adjust the participating countries should conditions change in the partner country or if other countries are identified as Department priorities. Organizations may apply for one, two, or three of the options outlined below, but must submit only one proposal under this competition. Multiple submissions will be declared technically ineligible and will not be considered further in the review process. These options will allow applicants the flexibility to propose working with the countries in which they have the best infrastructure. The Bureau strongly urges organizations to focus their applications on countries where they have the strongest organizational capacity. This capacity must be thoroughly described in the proposal. Please note the total approximate funding for each option.
A project conducted in English for participants from Argentina, Bolivia, Chile, Paraguay, Peru, Uruguay, and/or Venezuela. Approximately 15-20 participants from each country will travel to the United States each year. Award recipients are encouraged to send delegations that include participants from several countries; however not all delegations must travel to the United States at the same time. It is suitable to break them down into smaller single country or sub-regional groups. Applicants who plan to send a large delegation to the United States at one time must propose a plan to break it into smaller cohorts for most of the exchange activities. In addition to the South American participants, 10-15 participants from the United States will travel to Paraguay and/or Uruguay each year. Delegations of American participants may alternate between specified countries and travel to Uruguay the first year and Paraguay the following year, or delegations may travel to both countries each year. The American participants should have conversational Spanish skills. Applicants are encouraged to be creative and flexible in making arrangements that will help meet our program goals.
ECA may award more than one cooperative agreement from this option. Applicants must include at least two South American countries, and may include up to all seven countries, in their proposals. Applicants should apply for those countries where they have a strong organizational capacity with their in-country partner.
A regional project conducted in Spanish for participants from Colombia and Ecuador. Approximately 15-20 participants from each country will travel to the United States each year. This regional project should include activities where participants from both countries interact to share ideas and work on program themes during the exchange in the United States. Delegations may be broken up into smaller sub-groups, but should keep a mix of participants from both countries. Special emphasis should be placed on recruiting participants from underserved communities. Spanish language interpreters should be provided for U.S. programming. In addition to the South American participants, 10-15 participants from the United States may travel to Ecuador. The American participants should have conversational Spanish skills.
A single country, reciprocal project conducted in English for participants from Brazil and the United States. The total number of participants each year will be 37 Brazilians (35 youth, 2 adults) and 10-15 Americans. For the Brazil project only, the U.S. Embassy in
Both the youth and adult participants must meet the following eligibility requirements:
(1) Be citizens of the country from which they are applying;
(2) Be selected through a merit-based competition;
(3) Represent the diversity of their home country; and
(4) Demonstrate an interest in the partner country and the project themes.
Criteria for selection of the participants will include leadership skills, an interest in service to the community, strong academic and social skills, openness and flexibility. To reach beyond the elite, participants should be recruited from underserved or disadvantaged populations of youth in these countries, including public high schools. Geographic, socio-economic, and ethnic diversity is important, including outreach to indigenous and Afro-descendent populations. It is desirable that a few participants live in the same community to facilitate future collaboration upon their return to their home country.
The youth participants must be high school students aged 15 to 18 years old, with at least one semester of high school remaining. The adult participants may be teachers, trainers, school administrators, and/or community leaders who work with youth. They will have the dual role of both exchange participant and chaperone. The ratio of youth to adults should be approximately 10:1, depending on the size of the exchange delegation.
Except for participants from Colombia and Ecuador, all South American participants must have sufficient English language proficiency to participate fully in interactions with their host families and their peers and in educational activities. A similar level of Spanish language ability is required for the American participants traveling to Ecuador, Paraguay and Uruguay. Portuguese is not required for the Americans traveling to Brazil. For the U.S.-based activities that will be conducted in Spanish, the award recipient must provide interpretation and place the participants in host families where at least one member speaks Spanish.
Applicant organizations must demonstrate their capacity for conducting international youth exchanges, focusing on three areas of competency: (1) Provision of projects that address the goals, objectives, and themes outlined in this document; (2) age-appropriate programming for youth; and (3) previous experience working on programs in the region. Organizations must demonstrate their capacity to manage a complex, multi-phase program with several separate exchange projects.
In addition to their U.S. presence, applicants must have the organizational capacity in the relevant countries through their own offices or through a partner organization or institution to recruit and select participants for the project, to provide follow-on activities, and to organize a content-rich program for the U.S. participants, if specified. The importance of a viable, experienced in-country partner cannot be over-emphasized. Applicants should consult with their partners and involve them in the preparation of the proposal. Before submitting a proposal, applicants may consult with Public Affairs Sections in U.S. Embassies for suggested partner organizations or concerning the selection and reliability of in-country partner organizations. Please e-mail ECA Program Officer Jennifer Phillips (
It is important that the proposal narrative clearly state the applicant's commitment to consult closely with the Public Affairs Section of the U.S. Embassy in the host country to develop plans for project implementation, including recruitment, selection and orientation of participants, publicity events, and follow-on activities, once a cooperative agreement is awarded. In countries where there is a reciprocal component involving U.S. citizen minors, the U.S. Embassy will provide oversight and monitoring; concur on housing arrangements, including host family locations (regions, neighborhoods); represent the U.S. Government while the exchange activities are taking place in the host country; and assist program staff and participants in the event of an emergency. At the same time, the cooperative agreement requires that the administering organization must be able to manage the program in the host country in its entirety, with little reliance on embassy staff for support. For the Brazil project only, the U.S. Embassy in Brasilia will serve as the in-country partner.
Pending the availability of funds, it is anticipated that the cooperative agreement will begin on or about July 1, 2011. The award period will span approximately two years, and will cover all aspects of the programming in South America and the United States—recruitment, selection, and orientation of the participants, three weeks of exchange activities, and support of follow-on activities. Planning and preparation will start in 2011, and the exchanges will take place at various points throughout 2012 and 2013. Applicants should propose the period of the exchange(s) in their proposals, but the exact timing of the project may be altered through the mutual agreement of the Department of State and the recipient. In addition, while the second year of the award period may build on lessons learned from the first year, proposals should include a plan for keeping the essential elements of the exchange, from project themes to regional groupings, the same in the second year.
The award recipient will be responsible for the following:
In a cooperative agreement, the Department of State is substantially involved in program activities above and beyond routine grant monitoring. The Department's activities and responsibilities for the Youth Ambassadors Program are as follows:
(1) Provide advice and assistance in the execution of all program components.
(2) Facilitate interaction within the Department of State, to include ECA, the regional bureaus, and overseas posts.
(3) Arrange meetings with Department of State officials in Washington, DC and the partner countries.
(4) Approve the final candidate selection and alternates.
(5) Issue DS-2019 forms and J-1 visas for the foreign participants. All foreign participants will travel on a U.S. Government designation for the J Exchange Visitor Program.
(6) Approve applications, publicity materials, and final calendar of exchange activities.
(7) Approve housing arrangements, including the host families location (in South America only).
(8) Monitor and evaluate the program, through regular communication with the award recipient and possibly one or more site visits.
(9) In Brazil only, the U.S. Embassy will serve as the in-country partner and manage the recruitment and selection of the Brazilian participants, cover their in-country expenses, arrange and purchase the international travel, oversee their follow-on activities, and administer the Brazil-based exchange activities for the U.S. participants.
Award recipients will retain the name “Youth Ambassadors Program” to identify their project. All materials, publicity, and correspondence related to the program will acknowledge this as a program of the Bureau of Educational and Cultural Affairs of the U.S. Department of State. The Bureau will retain copyright use of and be allowed to distribute materials related to this program as it sees fit.
The organization must inform the ECA Program Officer of their progress at each stage of the project's implementation in a timely fashion, and will be required to obtain approval of any significant program changes in advance of their implementation.
Proposals must demonstrate how the stated objectives will be met. The proposal narrative should provide detailed information on the major project activities, and applicants should explain and justify their programmatic choices. Projects must comply with J-1 visa regulations for the International Visitor and Government Visitor category. Please be sure to refer to the complete Solicitation Package—this RFGP, the Project Objectives, Goals, and Implementation (POGI), and the Proposal Submission Instructions (PSI)—for further information.
Applications may be submitted by public and private non-profit organizations meeting the provisions described in Internal Revenue Code section 26 U.S.C. 501(c)(3).
There is no minimum or maximum percentage required for this competition. However, the Bureau encourages applicants to provide maximum levels of cost sharing and funding in support of its programs.
When cost sharing is offered, it is understood and agreed that the
(a.) Bureau grant guidelines require that organizations with less than four years experience in conducting international exchanges be limited to $60,000 in Bureau funding. ECA anticipates making multiple awards in amounts exceeding $60,000 to support program and administrative costs required to implement this exchange program. Therefore, organizations with less than four years experience in conducting international exchanges are ineligible to apply under this competition. The Bureau encourages applicants to provide maximum levels of cost sharing and funding in support of its programs.
(b.) Proposed sub-award recipients are also limited to grant funding of $60,000 or less if they do not have four years of experience in conducting international exchanges.
(c.) The Bureau encourages applicants to provide maximum levels of cost sharing and funding in support of its programs.
(d.) Organizations may submit only one proposal (total) under this competition. If multiple proposals are received from the same applicant, all submissions will be declared technically ineligible and will be given no further consideration in the review process. Please note: Applicant organizations are defined by their legal name, and EIN number as stated on their completed SF-424 and additional supporting documentation outlined in the Proposal Submission Instructions (PSI) document.
Please read the complete announcement before sending inquiries or submitting proposals. Once the RFGP deadline has passed, Bureau staff may not discuss this competition with applicants until the proposal review process has been completed.
Please contact the Youth Programs Division, ECA/PE/C/PY, SA-5, 3rd Floor, U.S. Department of State, 2200 C Street, NW., Washington, DC 20037, by telephone (202) 632-9352, fax (202) 632-9355, or e-mail
Alternatively, an electronic application package may be obtained from grants.gov. Please
The Solicitation Package contains the Proposal SubmissionInstruction (PSI) document which consists of required application forms, and standard guidelines for proposal preparation. It also contains the Project Objectives, Goals and Implementation (POGI) document, which provides specific information, award criteria and budget instructions tailored to this competition.
Please specify Program Officer Jennifer Phillips and refer to the Funding Opportunity Number ECA/PE/C/PY-11-18 located at the top of this announcement on all other inquiries and correspondence.
The entire Solicitation Package may be downloaded from the Bureau's Web site at
Please read all information before downloading.
Applicants must follow all instructions in the Solicitation Package. The application should be submitted per the instructions under IV.3f. “Application Deadline and Methods of Submission” section below.
IV.3a. You are required to have a Dun and Bradstreet Data Universal Numbering System (DUNS) number to apply for a grant or cooperative agreement from the U.S. Government. This number is a nine-digit identification number, which uniquely identifies business entities. Obtaining a DUNS number is easy and there is no charge. To obtain a DUNS number, access
IV.3b. All proposals must contain an executive summary, proposal narrative and budget.
Please Refer to the Solicitation Package. It contains the mandatory Proposal Submission Instructions (PSI) document and the Project Objectives, Goals and Implementation (POGI) document for additional formatting and technical requirements.
IV.3c. You must have nonprofit status with the IRS at the time of application.
(1) Those who file Internal Revenue Service Form 990, “Return of Organization Exempt From Income Tax,” must include a copy of relevant portions of this form.
(2) Those who do not file IRS Form 990 must submit information above in the format of their choice.
In addition to final program reporting requirements, award recipients will also be required to submit a one-page document, derived from their program reports, listing and describing their grant activities. For award recipients, the names of directors and/or senior executives (current officers, trustees, and key employees), as well as the one- page description of grant activities, will be transmitted by the State Department to OMB, along with other information required by the Federal Funding Accountability and Transparency Act (FFATA), and will be made available to the public by the Office of Management and Budget on its USASpending.gov Web site as part of ECA's FFATA reporting requirements.
If your organization is a private nonprofit which has not received a grant or cooperative agreement from ECA in the past three years, or if your organization received nonprofit status from the IRS within the past four years, you must submit the necessary documentation to verify nonprofit status as directed in the PSI document. Failure to do so will cause your proposal to be declared technically ineligible.
IV.3d. Please take into consideration the following information when preparing your proposal narrative:
The Office of Citizen Exchanges of the Bureau of Educational and Cultural Affairs is the official program sponsor of the exchange program covered by this RFGP, and an employee of the Bureau will be the “Responsible Officer” for the program under the terms of 22 CFR 62, which covers the administration of the Exchange Visitor Program (J visa program). Under the terms of 22 CFR 62, organizations receiving awards (either a grant or cooperative agreement) under this RFGP will be third parties “cooperating with or assisting the sponsor in the conduct of the sponsor's program.” The actions of recipient organizations shall be “imputed to the sponsor in evaluating the sponsor's compliance with” 22 CFR 62. Therefore, the Bureau expects that any organization receiving an award under this competition will render all assistance necessary to enable the Bureau to fully comply with 22 CFR 62
The Bureau of Educational and Cultural Affairs places critically important emphases on the secure and proper administration of Exchange Visitor (J visa) Programs and adherence by recipient organizations and program participants to all regulations governing the J visa program status. Therefore, proposals should
The Office of Citizen Exchanges of ECA will be responsible for issuing DS-2019 forms to participants in this program.
A copy of the complete regulations governing the administration of Exchange Visitor (J) programs is available at
Pursuant to the Bureau's authorizing legislation, programs must maintain a non-political character and should be balanced and representative of the diversity of American political, social, and cultural life. “Diversity” should be interpreted in the broadest sense and encompass differences including, but not limited to ethnicity, race, gender, religion, geographic location, socio-economic status, and disabilities. Applicants are strongly encouraged to adhere to the advancement of this principle both in program administration and in program content. Please refer to the review criteria under the ‘Support for Diversity' section for specific suggestions on incorporating diversity into your proposal. Public Law 104-319 provides that “in carrying out programs of educational and cultural exchange in countries whose people do not fully enjoy freedom and democracy,” the Bureau “shall take appropriate steps to provide opportunities for participation in such programs to human rights and democracy leaders of such countries.” Public Law 106-113 requires that the governments of the countries described above do not have inappropriate influence in the selection process. Proposals should reflect advancement of these goals in their program contents, to the full extent deemed feasible.
Proposals must include a plan to monitor and evaluate the project's success, both as the activities unfold and at the end of the program. The Bureau recommends that your proposal include a draft survey questionnaire or other technique plus a description of a methodology to use to link outcomes to original project objectives. The Bureau expects that the recipient organization will track participants or partners and be able to respond to key evaluation questions, including satisfaction with the program, learning as a result of the program, changes in behavior as a result of the program, and effects of the program on institutions (institutions in which participants work or partner institutions). The evaluation plan should include indicators that measure gains in mutual understanding as well as substantive knowledge.
Successful monitoring and evaluation depend heavily on setting clear goals and outcomes at the outset of a program. Your evaluation plan should include a description of your project's objectives, your anticipated project outcomes, and how and when you intend to measure these outcomes (performance indicators). The more that outcomes are “smart” (specific, measurable, attainable, results-oriented, and placed in a reasonable time frame), the easier it will be to conduct the evaluation. You should also show how your project objectives link to the goals of the program described in this RFGP.
Your monitoring and evaluation plan should clearly distinguish between program
We encourage you to assess the following four levels of outcomes, as they relate to the program goals set out in the RFGP (listed here in increasing order of importance):
1.
2.
3.
4.
Consideration should be given to the appropriate timing of data collection for each level of outcome. For example, satisfaction is usually captured as a short-term outcome, whereas behavior and institutional changes are normally considered longer-term outcomes.
Overall, the quality of your monitoring and evaluation plan will be judged on how well it (1) specifies intended outcomes; (2) gives clear descriptions of how each outcome will be measured; (3) identifies when
Recipient organizations will be required to provide reports analyzing their evaluation findings to the Bureau in their regular program reports. All data collected, including survey responses and contact information, must be maintained for a minimum of three years and provided to the Bureau upon request.
IV.3e. Please take the following information into consideration when preparing your budget:
IV.3e.1. Applicants must submit SF-424A—“Budget Information—Non-Construction Programs” along with a comprehensive budget for the entire program. There must be a summary budget as well as breakdowns reflecting both administrative and program budgets. Applicants may provide separate sub-budgets for each program component, phase, location, or activity to provide clarification. Please refer to the Solicitation Package (POGI and PSI) for complete budget guidelines and formatting instructions.
Applications may be submitted in one of two ways:
(1.) In hard-copy, via a nationally recognized overnight delivery service (
(2.) electronically through
Along with the Project Title, all applicants must enter the above Reference Number in Box 11 on the SF-424 contained in the mandatory Proposal Submission Instructions (PSI) of the solicitation document.
Applications must be shipped no later than the above deadline. Delivery services used by applicants must have in-place, centralized shipping identification and tracking systems that may be accessed via the Internet and delivery people who are identifiable by commonly recognized uniforms and delivery vehicles. Proposals shipped on or before the above deadline but received at ECA more than seven days after the deadline will be ineligible for further consideration under this competition. Proposals shipped after the established deadlines are ineligible for consideration under this competition. ECA will
When preparing your submission please make sure to include one extra copy of the completed SF-424 form and place it in an envelope addressed to “ECA/EX/PM”.
The original and six (6) copies of the application should be sent to: Program Management Division, ECA-IIP/EX/PM, Ref.: ECA/PE/C/PY-11-18, SA-5, Floor 4, Department of State, 2200 C Street, NW., Washington, DC 20037.
With the submission of the proposal package, please also e-mail the Executive Summary, Proposal Narrative, and Budget sections of the proposal, as well as any attachments essential to understanding the program, in Microsoft Word, Excel, and/or PDF, to the program officer at
Applicants have the option of submitting proposals electronically through Grants.gov (
ECA bears no responsibility for applicant timeliness of submission or data errors resulting from transmission or conversion processes for proposals submitted via Grants.gov.
Please follow the instructions available in the `Get Started' portion of the site (
Several of the steps in the Grants.gov registration process could take several weeks. Therefore, applicants should check with appropriate staff within their organizations immediately after reviewing this RFGP to confirm or determine their registration status with Grants.gov. Once registered, the amount of time it can take to upload an application will vary depending on a variety of factors including the size of the application and the speed of your Internet connection. In addition, validation of an electronic submission via Grants.gov can take up to two business days.
The Grants.gov Web site includes extensive information on all phases/aspects of the Grants.gov process, including an extensive section on frequently asked questions, located under the “For Applicants” section of the Web site. ECA strongly recommends that all potential applicants review thoroughly the Grants.gov Web site, well in advance of submitting a proposal through the Grants.gov system. ECA bears no responsibility for data errors resulting from transmission or conversion processes.
Direct all questions regarding Grants.gov registration and submission to:
Applicants have until midnight (12 a.m.), Washington, DC time of the closing date to ensure that their entire application has been uploaded to the Grants.gov site.
Applicants will receive a validation e-mail from grants.gov upon the successful submission of an application. Again, validation of an electronic submission via Grants.gov can take up to two business days.
It is the responsibility of all applicants submitting proposals via the Grants.gov Web portal to ensure that proposals have been received by Grants.gov in their entirety, and ECA bears no responsibility for data errors resulting from transmission or conversion processes.
Executive Order 12372 does not apply to this program.
The Bureau will review all proposals for technical eligibility. Proposals will be deemed ineligible if they do not fully adhere to the guidelines stated herein and in the Solicitation Package. All eligible proposals will be reviewed by the program office, as well as the Public Diplomacy section overseas, where appropriate. Eligible proposals will be subject to compliance with Federal and Bureau regulations and guidelines and forwarded to Bureau grant panels for advisory review. Proposals may also be reviewed by the Office of the Legal Adviser or by other Department elements. Final funding decisions are at the discretion of the Department of State's Assistant Secretary for Educational and Cultural Affairs. Final technical authority for assistance awards (cooperative agreements) resides with the Bureau's Grants Officer.
Technically eligible applications will be competitively reviewed according to the criteria stated below.
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Final awards cannot be made until funds have been appropriated by Congress, allocated and committed through internal Bureau procedures. Successful applicants will receive a Federal Assistance Award (FAA) from the Bureau's Grants Office. The FAA and the original proposal with subsequent modifications (if applicable) shall be the only binding authorizing document between the recipient and the U.S. Government. The FAA will be signed by an authorized Grants Officer, and mailed to the recipient's responsible officer identified in the application.
Unsuccessful applicants will receive notification of the results of the application review from the ECA program office coordinating this competition.
Terms and Conditions for the Administration of ECA agreements include the following:
Office of Management and Budget Circular A-122, “Cost Principles for Nonprofit Organizations.”
Office of Management and Budget Circular A-21, “Cost Principles for Educational Institutions.”
OMB Circular A-87, “Cost Principles for State, Local and Indian Governments”.
OMB Circular No. A-110 (Revised), Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and other Nonprofit Organizations.
OMB Circular No. A-102, Uniform Administrative Requirements for Grants-in-Aid to State and Local Governments.
OMB Circular No. A-133, Audits of States, Local Government, and Non-profit Organizations
Please reference the following Web sites for additional information:
You must provide ECA with a hard copy original plus one copy of the following reports:
(1) A final program and financial report no more than 90 days after the expiration of the award;
(2) A concise, one-page final program report summarizing program outcomes no more than 90 days after the expiration of the award. This one-page report will will be transmitted to OMB, and be made available to the public via OMB's USAspending.gov Web site—as part of ECA's Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
(3) A SF-PPR, “Performance Progress Report” Cover Sheet with all program reports, including the SF-PPR-E and SF-PPR-F.
(4) Quarterly or interim reports, as required in the Bureau cooperative agreement.
Award recipients will be required to provide reports analyzing their evaluation findings to the Bureau in their regular program reports. (Please refer to IV.3.d.3 Application and Submission Instructions above for Program Monitoring and Evaluation information.)
All data collected, including survey responses and contact information, must be maintained for a minimum of three years and provided to the Bureau upon request.
All reports must be sent to the ECA Grants Officer and ECA Program Officer listed in the final assistance award document.
For questions about this announcement, contact: Jennifer Phillips, Youth Programs Division, ECA/PE/C/PY, SA-5, 3rd Floor, U.S. Department of State, 2200 C Street, NW., Washington, DC 20522-0503, by telephone 202-632-9352, fax 202-632-9355, or e-mail
All correspondence with the Bureau concerning this RFGP should reference the above title and reference number ECA/PE/C/PY-11-18.
Please read the complete announcement before sending inquiries or submitting proposals. Once the RFGP deadline has passed, Bureau staff may not discuss this competition with applicants until the proposal review process has been completed.
The terms and conditions published in this RFGP are binding and may not be modified by any Bureau representative. Explanatory information provided by the Bureau that contradicts published language will not be binding. Issuance of the RFGP does not constitute an award commitment on the part of the Government. The Bureau reserves the right to reduce, revise, or increase proposal budgets in accordance with the needs of the program and the availability of funds. Awards made will be subject to periodic reporting and evaluation requirements per section VI.3 above.
Pursuant to a written trackage rights agreement dated February 5, 2005,
The transaction may be consummated on or after December 16, 2010, the effective date of the exemption (30 days after the exemption is filed). The trackage rights will allow RJCC to move certain commodities between RJCC's main line across Kentucky and the Water Street Lead in Louisville, which RJCC leases from CSXT.
As a condition to this exemption, any employees affected by the trackage rights will be protected by the conditions imposed in
This notice is filed under 49 CFR 1180.2(d)(7). If the notice contains false or misleading information, the exemption is void
An original and 10 copies of all pleadings, referring to Docket No. FD 35442, must be filed with the Surface Transportation Board, 395 E Street, SW., Washington, DC 20423-0001. In addition, a copy of each pleading must be served on Thomas J. Litwiler, 29 North Wacker Drive, Suite 920, Chicago, IL 60606.
Board decisions and notices are available on our Web site at “
By the Board, Joseph H. Dettmar, Acting Director, Office of Proceedings.
Securities and Exchange Commission.
Proposed rules.
In accordance with Section 763 (“Section 763”) and Section 766 (“Section 766”) of Title VII (“Title VII”) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Securities and Exchange Commission (“SEC” or “Commission”) is proposing Regulation SBSR—Reporting and Dissemination of Security-Based Swap Information (“Regulation SBSR”) under the Securities Exchange Act of 1934 (“Exchange Act”).
Comments should be received on or before January 18, 2011.
Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an e-mail to
• Use the Federal eRulemaking Portal (
• Send paper comments in triplicate to Elizabeth Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
Michael Gaw, Assistant Director, at (202) 551-5602, David Michehl, Senior Special Counsel, at (202) 551-5627, Sarah Albertson, Special Counsel, at (202) 551-5647, Natasha Cowen, Special Counsel, at (202) 551-5652, Yvonne Fraticelli, Special Counsel, at (202) 551-5654, Geoffrey Pemble, Special Counsel, at (202) 551-5628, Brian Trackman, Special Counsel, at (202) 551-5616, Mia Zur, Special Counsel, at (202) 551-5638, Kathleen Gray, Attorney, at (202) 551-5305, Division of Trading and Markets, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-7010.
The Commission is proposing Regulation SBSR under the Exchange Act providing for the reporting of security-based swap information to registered security-based swap data repositories or the Commission, and the public dissemination of security-based swap transaction, volume, and pricing information. The Commission is soliciting comments on all aspects of the proposed rules and will carefully consider any comments received.
On July 21, 2010, the President signed the Dodd-Frank Act into law.
The Dodd-Frank Act provides that the CFTC will regulate “swaps,” the Commission will regulate “security-based swaps” (“SBSs”), and the CFTC and the Commission will jointly regulate “mixed swaps.”
In a separate release, the Commission is today proposing new rules under the Exchange Act governing the security-based swap data repository registration process, duties, and core principles.
Taken together, the rules that the Commission proposes today would establish comprehensive regulation of SBS data and thus provide transparency for SBSs to regulators and the markets. The proposed rules would require SBS transaction information to be (1) provided to registered SDRs in accordance with uniform data standards; (2) verified and maintained by registered SDRs, which would serve as secure, centralized recordkeeping facilities that are accessible by regulators and relevant authorities; and (3) publicly disseminated in a timely fashion by registered SDRs. In combination, these proposed rules are designed to promote transparency and efficiency in the SBS markets and create an infrastructure to assist the Commission and other regulators in performing their market oversight functions.
In proposing these rules, the Commission is mindful that there may be differences between the SBS market and the other securities markets that the Commission regulates. For example, though the marketplace has developed standardized terms for various types of SBSs, contracts are nevertheless customizable. Furthermore, unlike bonds or equity securities, SBSs are not today readily fungible. The liquidity characteristics of SBSs also may differ in comparison with other markets. Relative to the overall equity markets, SBSs trade much less frequently, though the trading frequency of some illiquid equities would be comparable to that of some SBSs. The liquidity of SBSs compared to the bond market depends on the specifics of the SBS and the bond (
Another notable distinction is that the SBS market does not generally have the equivalent of a “retail” segment characterized by a high-volume of small-sized trades. Though some swaps on some interest rates, indices, and currencies may support high volumes, many SBSs trade infrequently. For example, an analysis by the staff of trading in single-name credit default swaps (“CDS”) show that approximately 90% of single-name CDS on corporate issuers trade at an average of five times or less per day, with an average trade size of over $5 million.
The Commission also is mindful that, both over time and as a result of Commission proposals to implement the Dodd-Frank Act, the further development of the SBS market may alter some of the specific calculus for future regulation of reporting and real-time public dissemination of SBS transaction information. During the process of implementing the Dodd-Frank Act and beyond, the Commission will therefore closely monitor developments in the SBS market.
The Dodd-Frank Act adds several provisions to the Exchange Act that require the reporting of information relating to SBSs. Section 3C(e) of the Exchange Act
In addition, Section 13A(a)(1) of the Exchange Act
Section 13(n)(4)(A)(i) of the Exchange Act
Section 13(m)(1)(B) of the Exchange Act
(1) With respect to those SBSs that are subject to the mandatory clearing requirement described in Section 3C(a)(1) of the Exchange Act (including those SBSs that are excepted from the requirement pursuant to Section 3C(g) of the Exchange Act), the Commission shall require real-time public reporting for such transactions;
(2) With respect to those SBSs that are not subject to the mandatory clearing requirement described in Section 3C(a)(1) of the Exchange Act, but are cleared at a registered clearing agency, the Commission shall require real-time public reporting for such transactions;
(3) With respect to SBSs that are not cleared at a registered clearing agency and which are reported to a SDR or the Commission under Section 3C(a)(6),
(4) With respect to SBSs that are determined to be required to be cleared under Section 3C(b) of the Exchange Act but are not cleared, the Commission shall require real-time public reporting for such transactions.
Section 13(m)(1)(A) of the Exchange Act
With respect to SBSs that are subject to Sections 13(m)(1)(C)(i) and (ii) of the Exchange—
Section 13(m)(1)(D) of the Exchange Act
In general, proposed Regulation SBSR would provide for the reporting of three broad categories of SBS information: (1) Information that would be required to be reported to a registered SDR in real
In addition, proposed Regulation SBSR would require a registered SDR to publicly disseminate the SBS information that would be required to be reported in real time. Proposed Regulation SBSR also would require a registered SDR to register with the Commission as a securities information processor (“SIP”) on existing Form SIP.
Section 13(m)(1)(F) of the Exchange Act
• With respect to a SBS in which only one counterparty is a security-based swap dealer (“SBS dealer”) or major security-based swap participant (“major SBS participant”),
• With respect to a SBS in which one counterparty is a SBS dealer and the other counterparty is a major SBS participant, the SBS dealer shall be the reporting party; and
• With respect to any other SBS not described in the first two cases, the counterparties to the SBS shall select a counterparty to be the reporting party.
The Exchange Act, as modified by the Dodd-Frank Act, does not explicitly specify which counterparty should be the reporting party for those SBSs that are cleared by a clearing agency or derivative clearing organization. The Commission preliminarily believes that, for the sake of uniformity and ease of applicability, the duty to report a SBS should attach to the same counterparty regardless of whether the SBS is cleared or uncleared. In addition, the Commission preliminarily believes that SBS dealers and major SBS participants generally should have the responsibility to report SBS transactions, as they are more likely than other counterparties to have appropriate systems in place to facilitate reporting.
Accordingly, with respect to a SBS where both counterparties are U.S. persons,
• With respect to a SBS in which only one counterparty is a SBS dealer or major SBS participant, the SBS dealer or major SBS participant would be the reporting party;
• With respect to a SBS in which one counterparty is a SBS dealer and the other counterparty is a major SBS participant, the SBS dealer would be the reporting party; and
• With respect to any other SBS not described in the first two cases, the counterparties to the SBS would select a counterparty to be the reporting party.
Proposed Rule 901(a)(1) would provide that, where only one counterparty to a SBS is a U.S. person, the U.S. person would be the reporting party. The Commission preliminarily believes that, where only one counterparty is a U.S. person, assigning the reporting duty to the counterparty that is a U.S. person would help to assure compliance with the reporting requirements of proposed Regulation SBSR.
In addition, it is possible that a SBS executed in the United States or through any means of interstate commerce, or that is cleared through a clearing agency having its principal place of business in the United States, could be executed between two counterparties neither of which is a U.S. person. Proposed Rule 901(a)(3) would provide that, if neither party is a U.S. person but the SBS is executed in the United States or through any means of interstate commerce, or is cleared through a clearing agency having its principal place of business in the United States,
To comply with the duty to report in real time itself, a reporting party likely would need to develop and maintain an internal order management system (“OMS”) capable of capturing all relevant SBS data and sending it in real time. The Commission further believes that each reporting party likely would need to establish and maintain an appropriate compliance program and support for the operation of the OMS and reporting mechanism, which could include transaction verification and validation protocols, and necessary technical, administrative, and legal support. However, proposed Rule 901(a) would not prevent a reporting party to a SBS from entering into an agreement with a third party to report the transaction on behalf of the reporting party. For example, for a SBS executed on a security-based swap execution facility (“SB SEF”)
The Commission requests comment on all aspects of the proposal as to who would be responsible for reporting SBSs to a registered SDR.
1. Do any entities currently have the functionality to report SBSs, as proposed, to data repositories? If so, who? Do commenters think it is likely that entities other than SBS counterparties will develop the functionality to report SBSs to registered SDRs? If so, what are these entities and how will they operate?
2. Should the Commission
3. In practice, would reporting parties employ agents? Should the Commission encourage this?
4. Are the obligations assigned in proposed Rule 901(a) sufficiently clear?
5. For SBSs executed on a SB SEF or national securities exchange, would the counterparties to the SBS have the information necessary to know which counterparty would incur the reporting obligation? For example, for an anonymous SBS executed on a SB SEF and cleared by a clearing agency, would the counterparties know each other's identities? If not, what steps could they take to obtain enough information to be able to ascertain which party has the reporting obligation? Could the SB SEF provide that information to the counterparties? Alternatively, should the reporting obligation be assigned to the SB SEF or other trading venue?
6. In cases where counterparties would be required to select which counterparty would report the transaction, is additional Commission guidance likely to be necessary? Should the Commission adopt a default mechanism to allocate the reporting obligation in such cases? For example, if a SBS is between two SBS dealers, should the Commission mandate that the “seller” always have the responsibility for reporting?
7. Do commenters agree with the Commission's proposed approach for reporting for SBSs where only one counterparty is a U.S. person? If not, how should it be revised?
8. Do commenters agree with the Commission's proposed approach for reporting for SBSs where neither counterparty is a U.S. person? If not, how should it be revised?
9. To what extent would reporting parties have to obtain new or update existing OMSs and establish appropriate compliance programs to satisfy the real-time reporting obligations of proposed Rule 901(c)? Would current systems be able to handle this responsibility? Could current systems be upgraded or would they have to be replaced completely?
Proposed Rule 901(b) would require a reporting party to report the information required under proposed Regulation SBSR to a registered SDR or, if there is no registered SDR that would accept the information, to the Commission. The Commission believes that it would be very unlikely that there would be a situation where a reporting party would be required to report to the Commission rather than a registered SDR. Proposed Rule 13n-5(b)(1)(ii) under the Exchange Act would require a registered SDR that accepts reports for any SBS in a particular asset class to accept reports for all SBSs in that asset class.
10. Is the Commission's belief that it would be unlikely to have a situation where a reporting party must report to the Commission rather than a registered SDR reasonable?
11. Do commenters believe that there will be at least one registered SDR in each SBS asset class?
12. Are there any SBS asset classes for which there might not be a registered SDR?
Proposed Rule 901 divides the SBS information that would be required to be reported into three broad categories: (1) Information that would be required to be reported in real time pursuant to proposed Rule 901(c)
The Commission notes that, although only the information specified in proposed Rule 901(c) would be required to be reported in real time, proposed Rule 901(c) would not prevent a reporting party from reporting some or all of the additional information required under proposed Rule 901(d)(1) at the same time that it reports the information required under proposed Rule 901(c). In other words, proposed Rule 901 would not mandate separate reports for the SBS information required under paragraphs (c) and (d) of proposed Rule 901; if a reporting party wished to provide all of the information required under proposed Rule 901 in a single transaction report, it would be free to do so—provided it could provide all of the information within the timeframe required by proposed Rule 901(c).
Proposed Rule 901(c) would set forth the categories of information pertaining to a SBS transaction that a reporting party would be required to report to a registered SDR in real time. For the reasons discussed below, the Commission preliminarily believes that the SBS information required to be reported under proposed Rule 901(c)—which the registered SDR would publicly disseminate pursuant to
The Commission recognizes that the SBS market involves complex instruments and that reporting conventions continue to evolve. Consequently, in developing proposed Rule 901, the Commission explored various alternative approaches, including mandating by rule an enumerated list of all specific data elements to be reported. The Commission believes that such a list likely would have to vary by asset class (
A Commission rule that attempted to identify each data element for each SBS asset class or sub-asset type could be less flexible in responding to changes in the marketplace, including the introduction of new types of SBSs, because it would be necessary for the Commission to amend its rules each time it sought to require the reporting of additional or different data elements. Accordingly, rather than enumerating each data element for each SBS asset class or sub-asset type that would be required to be reported, proposed Rule 901(c) would instead specify the categories of information that would be required to be reported for each SBS transaction. Furthermore, proposed Rule 907, discussed more fully below, would require each registered SDR to establish, maintain, and make publicly available policies and procedures that, among other things, specify the data elements of a SBS (or a life cycle event) that a reporting party would be required to report. These data elements would be required to include, at a minimum, the data elements required under proposed Rule 901(c) (for information that will be publicly disseminated) and proposed Rule 901(d) (for non-disseminated regulatory information). The Commission preliminarily believes that proposed Rule 901(c), together with these policies and procedures, would promote the reporting of uniform, material information for each SBS, while providing flexibility to account for changes to the SBS market over time.
The Commission discusses below the SBS data that would be required to be reported in real time, and which would be publicly disseminated.
Proposed Rule 901(c)(1) would require the reporting party to report the asset class of the SBS and, if the SBS is an equity derivative, whether the SBS is a total return swap or is otherwise designed to offer risks and returns proportional to a position in the equity security or securities on which the SBS is based. Proposed Rule 900 would define “asset class” to mean those SBSs in a particular broad category, including, but not limited to, credit derivatives, equity derivatives, and loan-based derivatives. The Commission believes that identifying the asset class would provide market participants with basic information about the SBS transaction to identify the type of SBS being publicly reported. In addition, requiring the reporting party to indicate whether the SBS is an equity total return swap or is otherwise designed to offer risks and returns proportional to a position in the equity security or securities on which the SBS is based would enable a registered SDR to know if the SBS was excluded from being a block trade.
Proposed Rule 901(c)(4) would require the reporting party to report the date and time, to the second, of execution of a SBS, so that prices of transactions that are disseminated in real time can be properly ordered, and so the Commission can have a detailed record of when any given SBS was executed. In the absence of this information, market participants and regulators would not know whether transaction reports they are seeing reflect the current state of the market.
The Commission preliminarily believes that the time at which the SBS transaction has been executed should be the point at which the counterparties to a SBS become irrevocably bound under applicable law.
The Commission is proposing that the date and time of execution be expressed using Coordinated Universal Time (“UTC”), a slight variation on Greenwich Mean Time.
Proposed Rule 901(c)(7) would require the reporting of the price of a SBS transaction, expressed in terms of the commercial conventions used in that asset class.
The Commission preliminarily believes that, because these quoting conventions are widely used and understood by SBS market participants, requiring the price of a SBS to be reported in terms of one of these existing quoting conventions would be consistent with the mandate in Section 13(m)(1)(B) of the Exchange Act to enhance price discovery. As discussed further below, however, proposed Rule 907(a)(1) would require a registered SDR to establish, maintain, and make publicly available policies and procedures that specify the data elements of a SBS that a reporting party must report, which would include the elements that constitute the price. The Commission preliminarily believes that, because of the many different conventions that exist to express the price in various SBS markets and the new conventions that might arise in the future, some flexibility should be given to registered SDRs to select appropriate conventions for denoting the price of different asset classes of SBSs.
Proposed Rule 901(c) would require the reporting of, among other things, information that identifies the SBS instrument
For example, some types of SBSs are contractual agreements that generally involve the periodic exchange of cash flows from specified assets over a defined time period. These cash flows are based on the notional amount(s) of the SBS—
The Commission anticipates that, for at least some standardized instruments, conventions about how a SBS instrument is referred to can become so well known that certain terms of the underlying contract can be assumed, and thus would not need to be specifically provided pursuant to other provisions of proposed Rule 901(c).
Proposed Rule 901(c)(9) would require the reporting party to indicate whether or not the SBS will be cleared by a clearing agency. This factor can impact the price of the SBS. If a SBS is not cleared, one counterparty might charge a higher price to do the trade because of the counterparty credit risk it would incur (which might be significantly diminished if the SBS were centrally cleared). Because the use of a clearing agency to clear a SBS would thus impact price, knowing whether a SBS will be cleared should provide market participants with additional information that would be useful in assessing the reported price for a SBS, thus enhancing price discovery. Therefore, the Commission is proposing to require that this data element be reported in real time and publicly disseminated.
Proposed Rule 901(c)(10) would require the reporting party to indicate if both counterparties to the SBS are SBS dealers. The Commission preliminarily believes that such an indication would enhance market transparency and provide more accurate information about the pricing of the SBS transaction, and thus about trading activity in the SBS market. Prices of transactions involving a dealer and non-dealer are typically “all-in” prices that include a mark-up or mark-down, while interdealer transaction prices typically do not. Thus, the Commission believes that requiring an indication of whether a SBS was an interdealer transaction or a transaction between a dealer and a non-dealer counterparty would enhance transparency by allowing market participants to more accurately assess the reported price for a SBS.
In some instances, a SBS transaction might not reflect the current state of the market. Thus, publicly disseminating a report of that transaction without an indication to that effect could mislead market participants and other observers. The Commission does not expect that a registered SDR would be able to identify such cases. Therefore, proposed Rule 901(c)(11) would require the reporting party to alert the registered SDR in such cases. This could occur, for example, if the reporting party were reporting the transaction late (
The Commission further notes that a registered SDR would be required to have policies and procedures that, among other things, describe how reporting parties shall report SBS transactions that, in the estimation of the registered SDR, do not accurately reflect the market.
Proposed Rule 901(c)(12) would provide that the reporting party must indicate if the SBS is customized to the extent that the other information provided pursuant to proposed Rule 901(c) does not provide all of the material information necessary to identify such customized SBS or does not contain the data elements necessary to calculate the price of the SBS. The Commission believes that reporting highly customized SBS in this manner would promote transparency by providing market participants with knowledge of the transaction in a given asset class and on certain reference securities or issuers while, at the same time, making clear that the reported data elements would not, and would not be required to, provide sufficient information to fully understand all aspects of the customized transaction. The Commission preliminarily believes that requiring public dissemination of more detailed information about customized SBSs would be of limited utility in facilitating price discovery because of the unique nature of such transactions.
The Commission requests comment generally on all aspects of the categories of information that would be required to be reported in real time for public dissemination.
13. Do commenters agree with the proposed categories of information that would be required to be reported in real time for public dissemination? If not, what additional specific categories of information should be required to be reported in real time for public dissemination, and why? How would public dissemination of such additional information enhance price discovery or market liquidity?
14. What categories of information, if any, should not be required to be reported in real time for public dissemination, and why? Would the public dissemination of certain information materially reduce market liquidity? If so, how, specifically, would dissemination of the particular information affect liquidity? Please supply data to support your answer.
15. Does proposed Rule 901(c) provide adequate guidance with respect to the information that must be reported? If not, what additional guidance do commenters believe is necessary?
16. Would the real-time dissemination of the categories of information specified in proposed Rule 901(c) serve the objectives of Section 13(m) of the Exchange Act by enhancing price discovery in the SBS market? If so, how? Would disclosure of certain categories of information not further price discovery? If so, why not? Please provide examples.
17. Is it necessary to require dissemination of the date of execution, unless it is a date other than the current date?
18. Do commenters agree that it would be feasible to require SBSs agreed to by phone to be entered into an electronic system that assigns a time stamp? Why or why not?
19. Do commenters agree that the time of execution should be reported to the second? Why or why not? Should it be reported in a finer increment?
20. Would requiring the reporting and dissemination of price in terms of the existing quoting conventions provide adequate information regarding the price of a SBS? Where more than one quoting or pricing convention exists within an asset class, what convention should be used? Should proposed Regulation SBSR require specific conventions to be used?
21. Are there specific data elements that should be required to be reported to help understand the price of a SBS? If so, what are they, and do they vary by asset class? Or by some further categorization?
22. Are there categories of SBSs that do not have an existing quoting convention? If so, how should “price” be expressed for those SBSs? What data elements should be required to be reported and disseminated to capture the price of such SBSs?
23. Would information regarding whether a SBS is cleared impact the price of the SBS? If not, why not? Would the reporting party in all cases know whether the SBS transaction will be cleared?
24. Would information concerning whether a SBS is a transaction between two SBS dealers enhance transparency and provide more accurate information about the pricing of the SBS? If not, why not?
25. In a SBS executed on a SB SEF or national securities exchange, would a counterparty know in real time the category of its counterparty,
26. Do commenters agree that it would be appropriate for reporting parties to report whether a SBS transaction accurately reflects the market? How should such “off-market” transactions be defined? Could public dissemination of potential off-market transactions (
27. Do commenters agree with the proposed approach for real-time reporting and public dissemination with respect to customized SBSs? Should the Commission require that additional information be reported and publicly disseminated for these SBSs? How practical would it be to report and publicly disseminate sufficient details about a customized SBSs in real time? Is there sufficient agreement over which SBSs should be considered customized for this purpose or is additional guidance needed? Is there a risk that this rule could be applied inconsistently by counterparties or across asset classes? Would public dissemination of information concerning customized SBSs materially reduce market liquidity? If so, why?
28. Would real-time transaction reports of customized SBSs have price discovery value? If so, in what way and how much? If not, why not? Would price discovery be enhanced by
29. Would any of the data elements specified in proposed Rule 901(c), if reported in real time, reveal the trading strategies or positions of any person? If so, how?
30. What do commenters believe would be the costs of reporting and publicly disseminating the proposed categories of information for SBSs? Or the benefits? Please be specific in your responses, and quantify your answers to the extent possible.
Proposed Rule 900 would define “real time” to mean, with respect to the reporting of SBS transaction information, “as soon as technologically practicable, but in no event later than 15 minutes after the time of execution of the SBS transaction.”
The Commission recognizes that, in other cases, a SBS transaction might be negotiated orally, and some manual data entry might be necessary before a transaction report could be sent. At the same time, however, the Commission believes it is appropriate to encourage market participants to take steps to minimize manual handling of such transactions, because the Dodd-Frank Act requires price and volume information of all SBS transactions to be disseminated publicly as soon as technologically practicable after the time of execution. Furthermore, the Commission notes that real-time reporting under proposed Rule 901(c) would require only certain elements of the trade to be systematized and reported, not all of the data elements that are required for full regulatory reporting under proposed Rule 901(d). The Commission is, therefore, proposing a 15-minute outer boundary for real-time public reporting of the data elements specified in proposed Rule 901(c) following the SBS's time of execution.
Under the proposed approach, a reporting party would not be permitted to delay submission of a transaction report required by proposed Rule 901(c) while preparing the information necessary to provide a transaction report under proposed Rule 901(d), even if the reporting party could prepare the latter in under 15 minutes. Assume, for example, that two counterparties execute a SBS on an electronic trading platform, which permits the collection and transmission of all information required by proposed Rule 901(c) in one second, and all other details of the SBS can be confirmed in eight minutes. The reporting party would not be permitted to wait eight minutes to send a single transaction report containing the information required under proposed Rules 901(c) and (d) to a registered SDR. Instead, the reporting party would be required to send the information required by proposed Rule 901(c) in one second—because one second in this example is as soon as technologically practicable—and to send the information required by proposed Rule 901(d) in eight minutes. The Commission preliminarily believes that this approach is most conducive to price discovery. Collecting data elements that have less bearing on price discovery (such as those required by proposed Rule 901(d)) should not slow down the public dissemination of data elements that would facilitate price discovery (
31. Do commenters agree with the proposed definition of “real time”? Would it be technologically practicable in all cases to report the information that would be required under proposed Rule 901(c) within 15 minutes? If not, why not? Would it be technologically practicable for some, but not all, SBSs? Or some, but not all, of the data elements? If so, what are the differentiating factors?
32. Should the Commission require shorter reporting time frames for certain SBS transactions? For example, should electronically executed SBSs be
33. Should the Commission require longer reporting time frames for orally executed SBS transactions (such as 30 minutes)? If so, what should that longer period be, and why?
34. If there were a longer reporting time frame for orally executed SBSs, would the potential benefits of real-time public reporting be compromised? If so, how? If not, why not? Would this create an incentive for market participants to prefer oral negotiation of SBSs to delay real-time reporting of their transactions?
35. In the context of real-time reporting of SBS transactions, what is “technologically practicable”? Should the Commission define that term specifically? What systems and processes would be necessary to report orally concluded SBSs as soon as technologically practicable? Does this imply a requirement that all such SBSs must be immediately systematized?
36. What do commenters believe would be the costs of reporting the proposed data elements within 15 minutes? What would be the benefits? Please be specific in your response, and quantify the costs and benefits to the extent possible.
Proposed Rule 901(d) would require the reporting, within specified timeframes, of certain SBS transaction information that would not be publicly disseminated, in addition to the information required to be reported in real time pursuant to proposed Rule 901(c) that would be publicly disseminated. The Commission believes that the information that would be reported pursuant to proposed Rule 901(d) would facilitate regulatory oversight and monitoring of the SBS market by providing comprehensive information regarding SBS transactions and trading activity.
The data elements that would be required to be reported by the reporting party for each SBS pursuant to proposed Rule 901(d) are discussed below.
Proposed Rule 901(d) would require the reporting of a participant ID of each counterparty and, as applicable, the broker ID, desk ID, and trader ID of the reporting party. The Commission preliminarily believes that reporting of this information would help promote effective oversight, enforcement, and surveillance of the SBS market by the Commission and other regulators. For example, activity could be tracked by a particular participant, a particular desk, or a particular trader. Regulators could observe patterns and connections in trading activity, or examine whether a trader had engaged in questionable activity across different SBS instruments. These identifiers also would facilitate aggregation and monitoring of the positions of SBS counterparties, which could be of significant benefit for systemic risk management.
The Commission understands that some efforts have been undertaken—in both the private and public sectors, both domestically and internationally—to establish a comprehensive and widely accepted system for identifying entities that participate not just in the SBS market, but in the financial markets generally. Such a system could be of significant benefit to regulators worldwide, as each market participant could readily be identified using a single reference code regardless of the jurisdiction or product market in which the market participant was engaging. Such a system also could be of significant benefit to the private sector, as market participants would have a common identification system for all counterparties and reference entities, and would no longer have to use multiple identification systems. The enactment of the Dodd-Frank Act and the establishment of a comprehensive system for reporting and dissemination of SBSs—and for reporting and dissemination of swaps, under the jurisdiction of the CFTC—offer a unique opportunity to facilitate the establishment of a comprehensive and widely accepted system for identifying entities that participate not just in the SBS market, but in the financial markets generally.
The Commission preliminarily believes that a registered SDR must have a systematic means to identify and track all products and all persons involved in SBS transactions captured and recorded by the registered SDR. Therefore, the Commission is requiring that a “unique identification code” (“UIC”) be assigned to each such product or person (or unit thereof, such as a branch or desk of a financial institution). Thus, under proposed Regulation SBSR, the “participant ID” would mean the UIC assigned to a participant.
Under the definition of “unique identification code” in proposed Rule 900, a UIC would have to be assigned by or on behalf of an internationally recognized standards-setting body (“IRSB”) that imposes fees and usage restrictions that are fair and reasonable and not unreasonably discriminatory. The Commission seeks to avoid requiring market participants to participate in a system that would require them to pay unreasonable fees, or that would permit discrimination among potential users of the system. Thus, the definition of “UIC” would further provide that, if no standards-setting body meets these criteria, a
The Commission preliminarily believes that, if an IRSB meets these criteria, the UICs employed by a registered SDR must come from the IRSB, and participants of that registered SDR must take necessary steps to obtain UICs from that IRSB. However, it could take an extended period for an IRSB to assign, or establish protocols for assigning, UICs for all entities participating in the SBS market. A registered SDR would be required to use the UICs available from the IRSB's system, while using its own methodology to assign the rest. In addition, the definition of “UIC” would provide that, if a standards-setting body meets these criteria but has not assigned a UIC to a particular person, unit of a person, or product, a registered security-based swap data repository would be required to assign a UIC to that person, unit of a person, or product using its own methodology.
The proposed definition of “UIC” would not require that a UIC be assigned “by” a IRSB itself. Rather, the proposed definition would provide only that the UIC be assigned “by or on behalf of” the IRSB. This is designed to preserve flexibility in how UICs may be assigned. An IRSB might establish the general protocols under which UICs are assigned, while another entity operating as an agent on behalf of the IRSB might assign the UICs pursuant to the protocols established by the IRSB. The proposed definition would allow for that possibility.
Proposed Rule 901(d) would require identification of the amount(s) and currenc(ies) of any up-front payment(s) and a description of the terms and contingencies of the payment streams of each counterparty to the other;
The Commission believes that each of these data elements would facilitate regulatory oversight of counterparties and the SBS market generally by providing information concerning counterparty obligations and risk exposures. For example, the reporting of data elements necessary to calculate the market value of a transaction would allow regulators to value an entity's SBS positions and calculate the exposure resulting from those positions. The Commission understands, based on discussions with industry participants, that market participants currently provide this information regarding SBSs to data repositories.
Proposed Rule 901(d) would require the reporting of the name of the clearing agency, if the SBS is cleared. The Commission believes that the identity of the clearing agency that cleared a SBS is fundamental information regarding a cleared SBS. This information would allow regulators to verify, if necessary, that a SBS was cleared, and to easily identify the clearing agency that cleared the transaction.
Proposed Rule 901(d) also would require the reporting party to report, if the SBS is not cleared, whether the exception provided in Section 3C(g) of the Exchange Act was invoked. Section 3C(g)(1) of the Exchange Act provides that the requirements of Section 3C(a)(1) will not apply to a SBS if one of the counterparties to the SBS: (1) Is not a financial entity; (2) is using SBSs to hedge or mitigate commercial risk; and (3) notifies the Commission, in a manner set forth by the Commission, how it generally meets its financial obligations associated with entering into non-cleared SBSs. The application of the clearing exception in Section 3C(g)(1) of the Exchange Act is solely at the discretion of the SBS counterparty that satisfies these conditions.
Proposed Rule 901(d) would require the reporting party to report the venue where the SBS was executed, or whether the SBS was executed bilaterally in the OTC market. The venue where a SBS is executed is necessary for investigating any potential improper behavior relating to the transaction. For example, regulators investigating a suspected abuse or other impropriety would need to know the execution venue in order to obtain records from the venue to assist in their investigation.
The Commission requests comment on all aspects of the proposed additional information that would be required to be reported pursuant to proposed Rule 901(d).
37. Do commenters agree with the information that the Commission has proposed to be required to be reported pursuant to proposed Rule 901(d)? Should additional information be reported? If so, what information, and why?
38. Are there any data elements proposed to be reported that commenters believe should not be reported? If so, why not?
39. Should proposed Rule 901(d) also require reporting of the purpose of the SBS transaction (such as market making, directional trade, or asset hedge)? If so, what categories of purposes should be established, and why?
40. Is it possible that inconsistencies in pricing conventions among SBS market participants could result in uninformative prices being reported to a registered SDR? Could a reporting party use variation in pricing conventions to obscure pricing information? Do commenters believe that proposed Regulation SBSR should prescribe the
41. Does proposed Rule 901(d) provide adequate guidance with respect to the information that must be reported?
42. Do commenters agree that the information described above regarding the material terms of a SBS would be useful for monitoring risk exposure and for other regulatory purposes? Why or why not?
43. Would it be difficult or cost prohibitive for reporting parties to report such information? If so, why?
44. Do SBS counterparties employ transaction-level collateral arrangements? If so, what specific information on transaction-level collateral information should be reported to a registered SDR?
45. Do commenters agree that the participant ID of each counterparty, and, as applicable, the broker ID, desk ID, and trader ID of the reporting party or its broker would be useful information to be reported? Why or why not? Would these identifiers be helpful for conducting regulatory oversight, including measuring risk exposure? How costly would it be for participants to report this information for each SBS?
46. Are there other entities that may play some part in the execution or reporting of a SBS transaction? If so, what are they? Should their identification information be reported to a registered SDR?
47. Are there additional subunits of a legal person, besides the desk, that should be identified by a UIC? If so, what are those subunits and how should they be defined?
48. Would the reporting party be in a position to know, in all cases, the participant ID of its counterparty? If a SBS is executed on a SB SEF, would the SB SEF be able to provide the reporting party the participant ID of the counterparty? If not, what alternative would be available to have this information reported?
49. Does an IRSB currently exist or will one exist in the near future that could carry out the functions envisioned by proposed Regulation SBSR? What additional steps would need to be taken for that entity to carry out these functions?
50. Who would own the intellectual property underlying the UICs assigned by or on behalf of an IRSB? Would a registered SDR have to pay fees to obtain UICs from an IRSB? If so, how much? What usage restrictions might the owners of the relevant intellectual property impose on registered SDRs or on consumers of the market data feed? Are any fees and usage restrictions imposed by an IRSB (or any entity that might become an IRSB) fair and reasonable and not unreasonably discriminatory? If not, in what way are they not?
51. Are there any issues that could result from the Commission requiring that UICs only be assigned by or on behalf of an IRSB that imposes fees and usage restrictions that are fair and reasonable and not unreasonably discriminatory? Would imposing such a standard allow for any activity that could undermine the ability of market participants to effectively obtain or use the UICs as anticipated? In the alternative, should the Commission require that there be no fees related to the use of UICs?
52. Would any end users of SBS market data disseminated by a registered SDR have to pay fees relating to an IRSB? If so, why? How much would these fees be?
53. How do data repositories currently identify participants and products? If UICs cannot be assigned by or on behalf of an IRSB, would the current methodologies of data repositories be adequate for assigning UICs pursuant to proposed Regulation SBSR? What would be the likely costs to a registered SDR of assigning such UICs itself?
54. What would be the potential impact on market participants and registered SDRs if no IRSB emerges and there are multiple SDRs per asset class assigning UICs?
55. What additional steps can or should the Commission take to promote internationally recognized standards for UICs?
56. Are there any other factors not already discussed that the Commission should take into account when considering voluntary consensus standards for UICs?
The Dodd-Frank Act does not specify the timeframes under which SBS transaction information, beyond that necessary to support real-time public dissemination for enhancing price discovery, must be reported to a registered SDR or to the Commission for regulatory purposes. However, the Commission preliminarily believes that, to further the objectives of the Dodd-Frank Act, SBS transaction information should be reported within a reasonable time following the time of execution—
The Commission recognizes that the amount of time required for counterparties to report the data elements that would be required to be reported under proposed Rule 901(d)(1) could vary depending upon, among other things, the extent to which the SBS is customized and whether the SBS is executed or confirmed electronically or manually. The Commission believes that the extent to which a SBS is executed or confirmed electronically is an indication of the degree to which the SBS is or could be systematized, and thus could directly impact the amount of time needed to report such SBS. For example, the Commission believes, based on discussions with industry participants, that the required information would be available relatively quickly for a SBS that is executed and confirmed electronically because most of the information required to be reported would already be in an electronic format. On the other hand, the Commission recognizes that, for those SBSs that are not executed or confirmed electronically, additional time may be needed to systematize the information required to be reported under proposed Rule 901(d) and put it into an acceptable format. Accordingly, proposed Rule 901(d)(2) would obligate a reporting party to report the regulatory, non-real-time information required to be reported under proposed Rule 901(d)(1) promptly, but in no event later than:
• 15 minutes after the time of execution for a SBS that is executed and confirmed electronically;
• 30 minutes after the time of execution for a SBS that is confirmed
• 24 hours after execution for a SBS that is not executed or confirmed electronically.
The Commission preliminarily believes that requiring a SBS that is executed and confirmed electronically to be reported promptly, but in no event later than 15 minutes after the time of execution, is appropriate because such SBS could be easily systematized (if it is not already), thus allowing the SBS to be reported within a time period similar to that required for real-time reporting. The Commission further believes that, for a SBS that is confirmed electronically but not executed electronically, additional time would be needed to report such SBS. However, the Commission preliminarily believes that 30 minutes would be a sufficient amount of time because such SBS already would be put into electronic form for confirmation, and thus likely could be easily systematized and would not require a significant amount of manual handling.
Finally, since a SBS that is not executed or confirmed electronically would likely not already be systematized and could require a significant amount of manual intervention, the proposed rules would allow additional time for reporting. For this group of SBSs, the Commission seeks to balance the need to allow market participants sufficient time to determine the terms of their trade, with the need for regulators to have current and complete information about positions in the SBS market.
The Commission requests general comments on the proposed reporting times and the basis for the proposed reporting times.
57. Do commenters believe that there should be different reporting times based on whether a SBS is executed or confirmed manually or electronically? If so, why? If not, what other basis should be used to distinguish reporting timeframes, and why? Should all SBSs be reported in the same time frame? If so, what should the timeframe be, and why?
58. Do commenters agree that the reporting time for a SBS that is executed and confirmed electronically should be 15 minutes after the time of execution? Should that period be shorter, for example, 30 seconds, one minute, or five minutes? Why or why not?
59. Do commenters agree that the reporting time for a SBS that is confirmed electronically but not executed electronically should be 30 minutes after the time of execution? Should that period be shorter, for example, one minute, five minutes, or 15 minutes? Why or why not?
60. Do commenters agree that the reporting time for a SBS that is not executed or confirmed electronically should be 24 hours? Should that period be shorter—perhaps eight hours? 12 hours? Should that period be longer—perhaps 36 hours? 48 hours? Why or why not? If the time period were greater than 24 hours, how significant would be the risks that regulators would not know of SBS positions recently taken by counterparties engaging in SBSs that are not executed or confirmed electronically?
61. Do commenters agree with the proposed timeframes for reporting information required to be reported pursuant to proposed Rule 901(d)(1)? Would the timeframes in proposed Rule 901(d)(2) provide adequate time for reporting the information that would be required to be reported under proposed Rule 901(d)(1)? If not, why not? Should the time frame for reporting be shorter or longer? Why or why not?
62. Would public dissemination of information in the proposed timeframes materially reduce market liquidity? If so, for what types of SBSs? Why? What timeframe(s) would balance the concerns about market liquidity with the requirement for real-time reporting?
63. Are there customized SBSs for which it would be too difficult or burdensome to report within 24 hours? How long do those SBS transactions currently take to report to a SDR? What steps would have to be taken to accelerate reporting for such SBS transactions?
Proposed Rule 901(e) would require the reporting of certain “life cycle event” information. Proposed Rule 900 would define a “life cycle event” to mean, with respect to a SBS, any event that would result in a change in the information reported to a registered SDR pursuant to proposed Rule 901, including a counterparty change resulting from an assignment or novation; a partial or full termination of the SBS; a change in the cash flows originally reported; for a SBS that is not cleared, any change to the collateral agreement; or a corporate action affecting a security or securities on which the SBS is based (
For any life cycle event that results in a change to information previously reported, proposed Rule 901(e) would require the reporting party to promptly provide updated information reflecting such change to the entity to which it reported the original transaction, using the transaction ID, except that:
(1) If a reporting party ceases to be a counterparty to a SBS due to an assignment or novation, the new counterparty would be the reporting party following such assignment or novation, if the new counterparty is a U.S. person; and
(2) If, following an assignment or novation, the new counterparty is not a U.S. person, the counterparty that is a U.S. person would be the reporting party following such assignment or novation.
As discussed in greater detail below, proposed Rule 907(a)(1) would require the policies and procedures of a registered SDR to specify the data elements of a life cycle event that a reporting party would be required to report, which would include, at a minimum, the data elements specified in proposed Rules 901(c) and (d). Proposed Rule 901(g) would require a registered SDR to assign a transaction ID to each SBS reported by a reporting party. The assignment of a transaction ID, which would be included in a life cycle event report, would facilitate the reporting of life cycle event information by identifying the particular SBS transaction to which the life cycle event pertained.
The reporting of life cycle event information would provide regulators with access to information about significant changes that occur over the duration of a SBS, including, for example, a counterparty change resulting from an assignment or novation, a change in the data elements necessary to calculate the value of the SBS, a partial or full termination of the SBS prior to the scheduled termination date of the SBS, or a modification of the periodic cash flows originally reported. The Commission preliminarily believes that the reporting of life cycle event information would help to assure that regulators have accurate and up-to-date information concerning outstanding SBSs and the current obligations and exposures of SBS counterparties.
The Commission requests comment on all aspects of the proposed life cycle event reporting requirements.
64. Do participants agree with the proposed definition of life cycle event? What life cycle event information should be reported? Should changes to all information that would be required to be reported under proposed Rules 901(c) and (d) be updated, or only specific items? If so, which items, and why?
65. Should a life cycle event report be formatted to include only the transaction ID and the updated information, or should it include the transaction ID, the updated information, and the other information that would be required to be reported under proposed Rules 901(c) and (d)? Should the Commission prescribe the format of a life cycle event report, or allow a registered SDR to determine the format of the report?
66. Does the proposed rule provide adequate guidance concerning the life cycle events that would be required to be reported? If not, what areas require further guidance? Does the proposed rule provide adequate guidance regarding what information would be required to be reported for each life cycle event?
67. What benefits would result from the reporting of life cycle events? What would be the costs of such reporting?
68. Is it appropriate to require that life cycle events be reported promptly? If not, what should be the appropriate timeframe for reporting such events?
Proposed Rule 901(f) would require a registered SDR to time stamp, to the second, receipt of any information required to be submitted pursuant to proposed Rule 901(c), (d), or (e). The Commission believes that this requirement would help regulators to evaluate certain trading activity. For example, a reporting party's pattern of submitting late transaction reports could be an indicator of weaknesses in the reporting party's internal compliance processes. Accordingly, the Commission believes that the ability to compare the time of execution reported with the time of receipt of the report by the registered SDR could be an important component of surveillance activity conducted by regulators.
Proposed Rule 901(g) would require a registered SDR to assign a transaction ID to each SBS transaction reported to it. Proposed Rule 900 would define “transaction ID” to mean the unique identification code assigned by a registered SDR to a specific SBS. The Commission preliminarily believes that, because each transaction is unique, it is not necessary or appropriate to look to an IRSB for assigning such identifiers. Accordingly, a registered SDR would be required to use its own methodology for assigning transaction IDs.
The Commission preliminarily believes that a unique transaction ID would allow registered SDRs, regulators, and counterparties to more easily track a SBS over its duration and facilitate the reporting of life cycle events and the correction of errors in previously reported SBS information. The transaction ID of the original SBS would allow for the linking of the original report to a report of a life cycle event. Similarly, the transaction ID would be required to be included on an error report to identify the transaction to which the error report pertained.
As discussed above, proposed Rule 901(d) would require the reporting of a participant ID of each counterparty and, as applicable, the broker ID, desk ID, and trader ID of the reporting party or its broker.
Proposed Rule 901(d) would require the reporting party, for each SBS for which it is a reporting party, to report the participant ID of itself and its counterparty, and (as applicable) the reporting party's broker ID, desk ID, and trader ID. The reporting party would not be required to report the broker ID, desk ID, and trader ID for its counterparty. However, nothing in proposed Regulation SBSR would prevent a reporting party from reporting, or providing for the reporting to a registered SDR, of its counterparty's applicable UICs. For example, orders entered into an electronic trading system could be coded to include all relevant UICs. When the system matches two orders, it could bundle information about both orders (including the UICs) into a transaction report for the reporting party to report to a registered SDR, or the execution venue could provide the UICs directly to the registered SDR on behalf of the reporting party. Further, in a bilateral negotiated SBS, the counterparties could agree to have the non-reporting-party participant provide the applicable UICs to the reporting party for reporting to the registered SDR.
The Commission preliminarily believes that, to the extent that it is not feasible or desirable in a particular SBS transaction for the reporting party to report UICs, proposed Regulation SBSR should contain some means for the registered SDR to obtain the applicable UICs from the counterparty that is not the reporting party. Accordingly, proposed Rule 906(a) would set forth a procedure designed to ensure that a registered SDR obtains applicable UICs for both counterparties to a SBS, not just the reporting party. Proposed Rule 906(a) would require a registered SDR to identify any SBS reported to it for which the registered SDR did not have a participant ID and (if applicable), the broker ID, desk ID, and trader ID of each counterparty. Proposed Rule 906(a) would further require the registered SDR, once a day, to send a report to each participant identifying, for each SBS to which that participant is a counterparty, the SBS(s) for which the registered SDR lacks participant ID and (if applicable) broker ID, desk ID, and trader ID. Finally, under proposed Rule 906(a), a participant that receives such a report would be required to provide the missing UICs to the registered SDR within 24 hours of receipt of the report.
The Commission preliminarily believes that the registered SDR would be in the best position to know whether the reporting party had reported the UICs for its counterparty, and to request the missing UICs from any participant as necessary. In addition, the Commission recognizes that some reasonable period should be afforded to the registered SDR to determine what UICs have not been reported, to provide the report to each participant requesting such information, and for the participant to complete and return the report. The Commission preliminarily believes that it would be reasonable to require a registered SDR to produce only one such report per day, and to allow a participant up to 24 hours to complete
The Commission also preliminarily believes that, to be able to effectively report on participant positions to assist the Commission and other regulators in monitoring systemic risk, a registered SDR should be able to identify all SBS positions within the same ownership group. Therefore, the Commission is proposing Rule 906(b), which would require each participant of a registered SDR to provide to the registered SDR information sufficient to identify its ultimate parent(s)
The Commission requests comment on all aspects of the proposed time stamp and identifier requirements.
69. Would it be feasible for a registered SDR to time stamp, to the second, information that would be submitted pursuant to proposed Rule 901? Would some other time increment be appropriate? If so, why?
70. Would requiring a transaction ID for each reported SBS help facilitate reporting of all events related to that SBS? If not, what alternative method should be required to allow for tracking of all events related to a SBS throughout its life?
71. Would transaction IDs be helpful to counterparties? If so, how?
72. Should registered SDRs have the sole responsibility to assign transaction IDs? Would it be feasible for other registered entities (
73. Do existing SDRs that accept reports of SBSs assign transaction IDs or an equivalent identifier? If so, how?
74. Do commenters agree that the applicable UICs for both counterparties to a SBS would be useful to regulators? Why or why not?
75. Is the method set forth in proposed Rule 906(a) a practical way for the registered SDR to obtain the applicable UICs from the other counterparty if necessary? Why or why not? If not, what better mechanism should be required to ensure that a registered SDR has applicable UICs for both counterparties for any SBSs for which it acts as a repository?
76. Do commenters agree with the proposal to require participants to provide the required UICs within 24 hours? If not, why not? How long should the counterparty be given to complete the report?
77. Would it be more practicable and less burdensome to require a registered SDR to post on its Web site (in an area accessible only to participants) reports identifying missing UICs and requiring participants to check these reports daily, rather than requiring the registered SDR to send these reports to participants each day, as provided in proposed Rule 906(a)?
78. Would it be unduly burdensome to require a registered SDR to periodically obtain information from each participant that identifies the participant's ultimate parent(s) and any other participant(s) with which the counterparty is affiliated? If so, why? Would there be an easier method for assuring that such information is readily available to regulators? If so, what is it?
79. How much information about its counterparty should a reporting party be expected to obtain? Would it be practical to require the reporting party to report applicable UICs on behalf of its counterparty? If not, what alternative do commenters propose? For example, should the Commission directly require each counterparty to report applicable UICs for each SBS?
80. For SBSs executed on a SB SEF or on a national securities exchange where a reporting party might not know the identity of its counterparty, how should the reporting of counterparty UICs be addressed? Should the Commission require the SB SEF or national securities exchange to report to the registered SDR, at a minimum, the participant ID of the counterparty?
81. Do commenters agree with the need for, and the goal of, having parent and affiliate information reported to a registered SDR?
82. What difficulties do commenters envision in establishing and implementing a UIC system for ultimate parents and affiliates of participants of a registered SDR?
To develop a meaningful reporting and dissemination regime for SBSs, the Commission believes that it is essential that all required information for all SBS transactions be reported in a uniform electronic format.
The Commission recognizes that this likely would require some change in existing practice, particularly with respect to highly customized transactions that may not be electronically executed or confirmed currently. However, the Commission
The Commission requests comment on all aspects of the proposed rules regarding the electronic submission of information required under proposed Rule 901 and the formatting of information that would be required to be reported to a registered SDR.
83. Are there different standard data formats currently in use depending on the type or class of SBS?
84. Should the registered SDR have the flexibility to specify acceptable data formats, connectivity requirements, and other protocols for submitting information? Are there disadvantages to this approach? If so, what are they and how should they be addressed?
85. Are there concerns with a registered SDR requiring use of FpML to report SBSs? If so, what are they? Are there any licensing fees associated with use of FpML? If so, what actions should the Commission take, if any, to help ensure wide availability of a common data format by all participants?
86. Are commenters concerned that varying reporting formats would develop if there were more than one registered SDR in each asset class? If so, should there be a uniform reporting format across all registered SDRs? How would commenters recommend that the Commission achieve this goal? Should the Commission require all registered SDRs to use the same format and the same data elements?
The Commission understands that there are—or could be developed—industry conventions for identifying SBSs or reference entities on which SBS are based through readily available reference codes comparable to the CUSIP identifier used for debt, equity, and certain derivative securities.
The Commission preliminarily believes that it is appropriate for the information required to interpret any codes used for reporting SBSs be widely available on a non-fee basis. If the information necessary to interpret such codes were not widely available, or available only for a fee, SBS transaction and pricing data might not be meaningfully available to the public. In the absence of proposed Rule 903, a registered SDR potentially could use proprietary code information, thereby requiring all consumers of its SBS market data to purchase from the code creator information necessary to interpret the codes.
The Commission requests comment on all aspects of the proposed rules regarding the use of reference codes.
87. Do commenters agree it would be useful to permit the use of codes in place of specific data elements? Why or why not?
88. Are such codes currently in use? How would proposed Rule 903 affect how market participants employ any existing codes? Should the Commission permit registered SDRs to publicly disseminate SBS information using existing codes? Are market participants able to understand the codes without having to pay licensing or other usage fees?
89. Who might in the future develop any codes to be used in place of specific data elements? Would it be costly to develop these codes?
90. Is it feasible for information necessary to interpret these codes to be widely available on a non-fee basis? If not, why not? Would codes be developed if developers were not able to charge fees for the information necessary to interpret the codes? How would permitting developers of codes to charge fees for information necessary to interpret the codes affect SBS market participants? Would SBS market participants effectively be compelled to purchase this information?
91. If fees are necessary to protect the investment in intellectual property, what standards should be established to assure that such fees are fair and reasonable and not unreasonably discriminatory?
92. Do commenters believe a better approach would be to permit the use of fee-based codes for reporting information to a registered SDR, provided that SBS transaction reports are disseminated by the registered SDR without the codes, or with codes that are widely available on a non-fee basis? Should a registered SDR be expected to pay any fees or be subject to any usage restrictions imposed by the code creator? Would these fees and usage restrictions impact the public's access to the registered SDR's market data feed?
Section 3C(e)(1) of the Exchange Act requires the Commission, no later than 180 days after the effective date of Section 3C, to adopt rules providing for the reporting to a registered SDR or to the Commission of SBSs entered into before the date of enactment of Section 3C. Section 3C(e)(2) of the Exchange Act requires the Commission to adopt rules that provide for the reporting of SBSs entered into on or after the date of enactment of Section 3C no later than the later of (1) 90 days after the effective date of Section 3C, or (2) such other time after entering into the SBS as the Commission may prescribe by rule or regulation.
The statutory provision applicable to the reporting of SBSs entered into prior to the date of enactment does not limit the SBSs subject to the reporting. In contrast, the statutory provision requiring the Commission to adopt an interim final rule for the reporting of SBSs entered into prior to the effective date of the Dodd-Frank Act does limit the applicability of that rule to such SBSs that had “not expired as of the date of enactment.”
The Commission acknowledges that reporting parties will not necessarily possess all of the information required by proposed Rule 901(c) and (d) with respect to pre-enactment SBSs or SBSs executed on or after July 21, 2010, and before the effective reporting date
By requiring reporting of pre-enactment SBS transactions, proposed Rule 901(i) would provide the Commission with insight as to outstanding notional size, number of transactions, and number and type of participants in the SBS market. This would provide a starting benchmark against which to assess the development of the SBS market over time and, thus, represent a first step toward a more transparent and well regulated market for SBSs. The data reported pursuant to proposed Rule 901(i) also could help the Commission prepare the reports that it is required to provide to Congress. Further, proposed Rule 901(i) would require market participants to inventory their positions in SBS to determine what information needs to be reported, which could benefit market participants by encouraging management review of their internal procedures and controls.
The Commission notes that, especially with respect to CDSs, reporting parties may already have reported SBS information about historical SBSs to a data repository. Should such a data repository become registered with the Commission, the Commission would not require reporting parties to submit duplicate information to the registered SDR, except to the extent the reporting party has information in its possession that satisfies the provisions of proposed Rules 901(c) and (d) that had not previously been reported to the registered SDR.
The Commission requests comment on all aspects of the proposed rules relating to pre-enactment SBSs and transitional SBSs.
93. Do commenters agree with the proposed reporting requirements for historical SBSs? Should the Commission extend the reporting requirement to include SBSs that were entered into prior to the date of enactment of the Dodd-Frank Act that had expired as of that date? If so, what information should be reported with respect to these SBSs? Would this approach be feasible? What would be the benefits of such an approach? Who would use this information, and for what purpose(s)? What would be the costs of this approach?
94. Would data concerning expired SBSs be of use to anyone? If so, who would use this information, and for what purpose?
95. Should the proposed rule “grandfather” all SBSs previously reported to a SDR regardless of whether the reporting party has information in its possession that satisfies the provisions of proposed Rule 901(c) and (d) that had not previously been reported to the registered SDR?
In seeking to carry out Congress's mandate to require real-time public reporting for all SBSs, the Commission is mindful of Congress's statement in Section 13(m)(1)(B) of the Exchange Act
By reducing information asymmetries, post-trade transparency has the potential to lower transaction costs, improve confidence in the market, encourage participation by a larger number of market participants, and increase liquidity in the SBS market. The current market is opaque. Market participants, even dealers, lack an effective mechanism to learn the prices at which other market participants transact. In the absence of post-trade transparency, market participants do not know whether the prices they are paying or would pay are higher or lower than what others are paying for the same SBS instruments. Currently, market participants resort to “screen-scraping” e-mails containing indicative quotation information to develop a sense of the market. Supplementing that effort with prompt last-sale information would provide all market participants with more extensive and more accurate information on which to make trading and valuation determinations.
SBSs are complex derivative instruments, and there exists no single accepted way to model a SBS for pricing purposes. Post-trade pricing and volume information could allow valuation models to be adjusted to reflect how other market participants have valued a SBS instrument at a specific moment in time. Public, real-time dissemination of
In other markets, greater post-trade transparency has increased competition among market participants and reduced transaction costs. A number of studies of the corporate bond market, for example, have found that post-trade transparency, resulting from the introduction of TRACE, has reduced transaction costs.
However, the structure of the SBS market and the way in which participants manage risk in this market might be sufficiently different from other financial markets to warrant different approaches to post-trade transparency. The SBS market is almost wholly institutional, unlike other securities markets where there is substantial retail participation. Moreover, the SBS market has many fewer market participants, fewer transactions, and larger trade sizes relative to other securities markets. It could be argued that post-trade transparency in the SBS market might not have the same effects as in other securities markets. Indeed, one study of TRACE stated that “[o]ur evidence suggests that the availability of last sale price information may have little impact on spreads for less active bonds” and that “[w]e do not find any effect (positive or negative) of transparency for very thinly traded bonds.”
It could be argued that post-trade transparency in the SBS market, particularly for large-sized trades, might even adversely impact liquidity by increasing the costs of dealers to hedge. In a typical SBS, one party (the “natural long”) either has a risk position that it wishes to offset (because, for example, it is long the bonds of a reference company) or it wishes to establish a risk position. The natural long typically would approach one or more dealers to take the other side of the trade. If a dealer were to enter into a SBS with the natural long, the dealer typically would seek to lay off that risk as much as possible, perhaps with another dealer. Eventually, however, the risk would typically be assumed by a market participant (the “natural short”) who is willing to assume the risk being laid off by the natural long. In the SBS market, dealers generally are not natural longs or natural shorts, because they do not seek to profit by taking long or short risk positions. Dealers profit, rather, by collecting spreads between the price at which they buy risk and the price at which they sell risk, and by charging commissions.
The larger the natural long's initial risk position, the more difficult it would likely be for a dealer that enters into an SBS with the natural long to lay off the risk. All other things being equal, it would likely be easier for the dealer to find another dealer or a natural short willing to take on a small risk than a larger one. This is the case even in an opaque market, such as the SBS market as it exists today. The difficulties in transferring the risk could be even greater if the transaction details of the initial SBS between the natural long and the dealer were publicly disseminated in real time. A dealer trying to engage in hedging transactions following an initial, large SBS trade could be put in a weaker bargaining position relative to subsequent counterparties, who could anticipate the structure of the hedge.
In an opaque market, market participants have to rely primarily on their understanding of the market's fundamentals to arrive at a price at which they would be willing to assume risk. With immediate real-time public dissemination of a block trade, however, market participants who might be willing to offset that risk—
Under this view of the SBS market, real-time public dissemination of SBS block trades could result in market inefficiencies, as evidenced by fewer transactions or less liquidity. If the natural long were unable or unwilling to assume higher costs for the initial SBS transaction, it might be left with an undesired level of risk, because the market has been unable to relocate the risk to others who are more willing or able to assume it. Furthermore, higher overall transaction costs could hurt dealers, even though they can pass on to the natural long the higher costs to hedge. This is because post-trade transparency could cause overall transaction volumes to decline, thereby reducing profits accruing to dealers, whether in the form of spreads or commissions. Furthermore, to the extent natural shorts are able under a post-trade transparency regime without a block trade exception to extract rents from natural longs (albeit indirectly), there could be a wealth transfer from natural longs to natural shorts. This could be viewed as inefficient, because the prices charged (and presumably obtained) by the natural shorts are not based solely on economic fundamentals, but also are impacted by the predicament of the natural longs (or dealers that have traded with the natural longs), where all market participants
On the other hand, fully and immediately disseminating SBS transactions to the public—even those of large notional size—could incentivize additional market participants to compete to purchase the risk that the natural long is trying to acquire or offset. In other words, the desire by natural shorts to extract rents from natural longs might be offset by more natural shorts competing to acquire the risk. In this view, greater post-trade transparency would result in lower rather than higher costs for natural longs to offset or acquire their risk positions. In the existing, opaque market for SBSs, any individual market participant possesses only incomplete knowledge of when transactions occur, and thus when opportunities arise to enter the market by offering to offset risk. Moreover, any individual market participant possesses only incomplete information about where others view the price of risk. Real-time public dissemination of both the price and full size of all SBS transactions, including block trades, could cause more market participants to bid to take on risk after seeing a report of the block trade. Moreover, full post-trade transparency of block trades would allow natural shorts to know the prices at which natural longs transacted, which would enable natural shorts to bid more efficiently to accept the risk, particularly if natural shorts used the post-trade information as an input to, rather than as a substitute for, their own independent valuation and pricing decisions. Currently, a natural short—without knowledge of the price at which the natural long transacted—could underprice its willingness to acquire the risk, resulting in a windfall profit for the dealer, who can capture a greater spread.
Discussed in greater detail below are the provisions in proposed Regulation SBSR relating to post-trade transparency. In particular, the Commission is proposing Rules 907(b) and 902(b) relating to block trades, and is thereby taking into account the possibility that public disclosure required under the Dodd-Frank Act could materially reduce market liquidity for SBSs of large notional size.
The Commission acknowledges that it would be difficult at this stage to accurately predict how post-trade transparency in general, or the particular methods of post-trade transparency discussed in this release, would affect the SBS market. The Commission is mindful that there are similarities and differences between the SBS market and the other securities markets that the Commission regulates, and that these similarities and differences may impact how post-trade transparency could affect the SBS market, in contrast to how post-trade transparency affects other securities markets. Moreover, the effects of immediate real-time dissemination could differ between the near term and the long term, particularly as the SBS market evolves in response to other regulatory actions. The Commission expects that, as post-trade transparency is implemented in the SBS market, new data will come to light that will inform the discussion and could cause subsequent revision of Regulation SBSR. Whatever approach is ultimately adopted, the Commission will study the development of the market closely, particularly with regard to block trades, and make subsequent revisions to the rules relating to post-trade transparency in the SBS market as necessary or appropriate.
The Commission requests comment generally on how the Commission should address Congress's instruction in Section 13(m)(1)(E)(iv) of the Exchange Act that, with respect to certain SBSs, the rule promulgated by the Commission to carry out the real-time reporting mandate shall contain provisions that take into account whether the public disclosure will materially reduce market liquidity. In particular:
96. Would post-trade transparency have an effect on the SBS market similar to its effect in other securities markets? Why or why not?
97. Academic studies of other securities markets generally have found that post-trade transparency reduces transaction costs and has not reduced market liquidity. How do those markets differ or compare to the SBS market? How would those similarities or differences affect post-trade transparency in the SBS market?
98. The SBS market currently is almost wholly institutional. Would this characteristic impact the effect of post-trade transparency on the SBS market? If so, how and how much? Are the needs of market participants in the SBS market for access to transaction information different than the needs of market participants in other securities markets for access to transaction information?
99. A significant amount of trading in the SBS market is currently carried out by only a limited number of market participants. Would this characteristic impact the effect of post-trade transparency on the SBS market? If so, how and how much? For example, is there a concern that it would be easier to determine the identity of the counterparties to a SBS transaction in certain instances based on the real-time transaction report? If so, what would be the harm, if any, of such knowledge? Would the answer differ depending upon the liquidity of the SBS instrument, or whether it was a customized SBS or not?
100. Overall, the SBS market is significantly more illiquid than other securities markets that have post-trade transparency regimes. How would this characteristic impact, if at all, the effect of post-trade transparency on the SBS market? Do commenters believe that post-trade transparency could materially reduce market liquidity in the SBS market, or particular subsets thereof? Why and how? Please be specific in your response and provide data to the extent possible.
101. In an illiquid market (such as the CDS market for smaller reference entities), there will likely be fewer last-sale prints than in a more liquid market (such as the CDS market for large corporate debt issuers). Would these few last-sale prints in the illiquid market have more, less, or the same value as prints in the more liquid market? Why or why not?
102. How would a post-trade transparency regime in SBSs affect the liquidity of the underlying securities? For example, how, if at all, would the post-trade transparency regime affect liquidity in the corporate bond market?
103. Should there be exceptions other than a block trading exception to post-trade transparency to avoid unnecessarily reducing market liquidity,
104. As noted above, Section 13(m)(1)(E)(iv) of the Exchange Act provides that, with respect to real-time public dissemination of information about SBSs that are subject to mandatory clearing or that are not subject to mandatory clearing but are cleared regardless, the rule promulgated by the Commission regarding such
The Dodd-Frank Act identifies four types of SBSs and states, with respect to each, that the Commission shall require real-time public reporting for such transactions.
Multiple uniquely formatted data feeds could impair the ability of market participants to receive, understand, or compare SBS transaction data and thus undermine its value. The Commission is cognizant of this potential and seeks public comment on means to address this issue. One way to address that issue would be to dictate the exact format and mode of providing required SBS transaction data to the public. Although this approach could promote consistency, the Commission preliminarily believes that such an approach could inhibit innovation and the development of best practices, and could inadvertently omit key elements to a successful SBS transaction reporting system. The Commission also preliminarily believes that such an approach may be difficult to administer over time.
The Commission understands that existing SDRs that accept SBS data do not currently have the functionality to publicly disseminate data in real time. The Commission notes that nothing in the proposal would prohibit a registered SDR from contracting with a vendor to carry out the dissemination function. Over time, as registered SDRs and SBS transaction reporting become more established, it is possible that alternative approaches for reporting and disseminating SBS transaction information could develop. Thus, the proposal would not prohibit registered SDRs that cover the same asset classes from acting together to create a central consolidator that would disseminate information for all SBSs in that asset class. Allowing registered SDRs to satisfy their dissemination obligation by providing information to a third party that would consolidate and disseminate information for all SBSs in an asset class might provide an economic incentive for registered SDRs to create, fund, and operate a single central consolidator.
The Commission is sensitive to the possibility that there could emerge multiple registered SDRs in an asset class. Should this occur, the Commission and the markets would be confronted with the possibility that different registered SDRs could adopt different dissemination protocols, potentially creating fragmentation in SBS market data. Based on conversations with market participants, however, the Commission preliminarily believes that the most likely outcome is for the market to have only a few registered SDRs (although nothing in the Dodd-Frank Act prevents more from being established). Furthermore, even if multiple registered SDRs were to be established in an asset class, it is unclear whether market participants would have an incentive to spread their business across those multiple registered SDRs. The Commission seeks comment on the likelihood of multiple registered SDRs per asset class emerging; how that would likely affect market participant behavior; and what steps, if any, that the Commission should take to address any attendant regulatory issues that could arise.
One step that the Commission could take would be to require one consolidated reporting entity to disseminate all SBS transaction data for that asset class, by requiring each registered SDR in an asset class to provide all of its SBS data to a “central processor” that would also be a registered SDR. There is substantial precedent for this approach in the equity markets, where market participants may access a consolidated quote for national markets system securities and a consolidated tape reporting executed transactions. A central processor could receive a data feed from each registered SDR, consolidate the information, and then publicly disseminate the consolidated data. However, this approach likely would take more time to implement and may not be warranted given the present SBS market structure. Furthermore, as noted above, the proposal would not prohibit registered SDRs that cover the same asset classes from determining on their own to act together to create a central processor.
Another approach would be to require public dissemination pursuant to a “first touch” or “modified first touch” approach. For a first touch approach, a SBS dealer or major SBS participant that is a party to the SBS would be responsible for dissemination, and for SBSs in which no SBS dealer or major SBS participant is a party, the SDR would be responsible for dissemination. Under a modified first touch approach, a SB SEF or national securities exchange would be required to disseminate the information for those SBSs executed on the SB SEF or national securities exchange. In connection with either of these approaches, the Commission could allow a party required to disseminate to satisfy its obligation if it provided the information to a third-party consolidator that would disseminate the information for all SBSs in that asset class. However, if that did not occur in a timely manner—if, for example, the reporting parties could not agree on the practicalities of such an undertaking, or if not all reporting parties wanted to join—it would result
The Commission requests comment on all aspects of the proposed rules requiring registered SDRs to disseminate SBS information.
105. Would requiring registered SDRs to disseminate SBS information be an effective means of dissemination? Why or why not? Would another approach be more effective? What would be the advantages, or disadvantages, of requiring different registered entities, in addition to or instead of registered SDRs, to disseminate SBS information?
106. Would the presence of multiple disseminators increase the need for a consolidated data feed? Why or why not?
107. Should the Commission require consolidation of data feeds now? Or over time if multiple registered SDRs begin to operate in an asset class?
108. What are the costs and benefits of requiring registered SDRs to disseminate SBS data? Would this approach have an impact on an entity's desire to become a registered SDR? Are other entities, such as SB SEFs, better suited to disseminate SBS data? How should the Commission balance the costs to particular entities with the benefits of greater consolidation of publicly disseminated SBS data?
Proposed Rule 902(a) would require a registered SDR to publicly disseminate a transaction report of a SBS, other than a block trade,
The Commission recognizes that there may be circumstances when a registered SDR's systems might be unavailable for publicly disseminating transaction data. In such cases, as provided in proposed Rule 902, the registered SDR would be required to disseminate the transaction data immediately upon its re-opening.
The Commission proposes to establish criteria for what constitutes a block trade and for specifying a time delay for disseminating certain information about a block trade to the public, for all SBSs except those that are determined to be required to be cleared under Section 3C(b) of the Exchange Act but are not cleared.
Proposed Rule 900 would define “block trade” to mean a large notional SBS transaction that meets the criteria set forth in proposed Rule 907(b). Proposed Rule 907(b)(1) would require a registered SDR to establish and maintain written policies and procedures for calculating and publicizing block trade thresholds for all SBS instruments reported to the registered SDR in accordance with the criteria and formula for determining block size as specified by the Commission. In determining block trade thresholds, a registered SDR would be performing mechanical, non-subjective calculations.
The Commission preliminarily believes that requiring a registered SDR to calculate and publicize block trade thresholds pursuant to its written policies and procedures would allow for a more streamlined and accurate process, as registered SDRs would have more ready access to the data necessary to make block trade calculations. Further, placing the responsibility on registered SDRs rather than reporting parties would eliminate the burden on reporting parties for making block trade calculations, and should provide greater uniformity in what constitutes a block trade.
As noted above, Section 13m(1)(E)(ii) of the Exchange Act
The Commission preliminarily believes that the general criteria for what constitutes a large notional SBS transaction must be specified in a way that takes into account whether public disclosure of such transactions would materially reduce market liquidity, but presumably should be balanced by the general mandate of Section 13(m)(1) of the Exchange Act, which provides that data on SBS transactions must be publicly disseminated in real time, and in a form that enhances price discovery. In considering criteria for what constitutes a large notional SBS, the Commission notes that there are mechanisms by which reporting data on any SBS might impact liquidity. If the intent to trade were publicly reported prior to a transaction taking place (
However, this effect could not manifest itself directly via post-trade transparency, since the transaction has already taken place. For post-trade transparency to have a negative impact on liquidity, market participants would need to be affected in a way that either: (1) Impacted their desire to engage in subsequent transactions unrelated to the first, or (2) impacted their ability to follow through with further actions after the reported transaction has been completed that they feel are a necessary consequence of the reported transaction. In instance (1), post-trade dissemination of transaction prices, without necessarily any reference to notional size, could impact the desire for certain market participants to trade if spreads narrowed, because price transparency led to an increased negotiating ability for market participants who otherwise would not have been privy to such information. But this same transparency also could lead to an increase in liquidity if other market participants increase their trading as a result of having access to new information or of narrower spreads. It may not be possible to estimate with any certainty which of these factors will outweigh the other as the SBS market continues to evolve. Analogs to other markets (such as fixed income or equities) may provide guidance; however, those markets each have structures and instruments that differ significantly from the SBS market.
In determining whether there should be a delay in the disclosure of prices of SBS block trades, without necessarily any reference to notional size, the Commission is guided by the general mandate of Section 13(m)(1) of the Exchange Act, which provides that transaction information should be disseminated in a form that enhances price discovery. Nonetheless, the Commission recognizes that mandating disclosure of trades below a certain size would essentially signal to the market that a trade was at or above that size—that is to say, would signal that the trade was “of size”—even when there is no disclosure of the precise size of the trade if it is above some threshold size. The Commission preliminarily believes that even in very illiquid markets transaction prices form the foundation of price discovery. Past transactions may not be indicative of those in the future, and may not themselves accurately reflect fundamental value, but they provide an objective starting point for participants to consider. Moreover, in an illiquid market, the low frequency of transactions and potentially wide variation of past prices inform participants as to uncertainty in pricing that they may expect in the future, which may not only influence trading decisions, but could also play a role in mark-to-market valuations and risk management. There does not seem to be a reason that post-trade price disclosure for large notional SBS transactions would be less relevant for price discovery than similar disclosure for other SBSs. Therefore, as described further below, the Commission is proposing that prices for block trades be disseminated in the same fashion as prices for non-block-trade transactions.
In contrast, instance (2) above considers that disclosure that a block trade has taken place, with or without the exact size of the trade, may lead to a reduction in liquidity if one or both of the parties engaged in such a transaction need to take further actions in the marketplace after the reported transaction was completed and disseminated, and dissemination would inhibit their ability to take such action. In this situation, one or both of the parties might choose not to have participated in the original transaction.
One reason an SBS counterparty might desire to take further action after an initial transaction is completed would be for hedging purposes. This hedge may take the form of re-entering the SBS market on the contra side, or hedging the exposure underlying the initial SBS by taking a contra position in the cash security market. Whether or not one or more parties to a transaction will be subsequently hedging its exposure after the transaction is complete cannot be discerned from data about the transaction. However, if a transaction is to be hedged, the size of the transaction would be a factor in how readily the hedge can be executed.
For transactions that are sufficiently small, disseminating the exact size of the transaction would likely not provide other market participants with information that could be used to the detriment of the hedging party, since the hedging transaction would be indistinguishable from other market activity. However, for transactions that are sufficiently large, it may be the case that disseminating the size of such a transaction would provide a signal to other market participants that there is the potential, though not certainty, that a large transaction could take place in an SBS or a related security. Market participants might be able to use this information to their advantage in a way that disadvantages the hedging party and disincents that party from engaging in such types of SBS transactions. In this fashion, post-trade transparency for one transaction is transformed into pre-trade signaling for another.
To address this issue, the Commission preliminarily believes that the size of an SBS transaction that is sufficiently large to signal other market participants that there is the
There are a variety of metrics that can be used to determine the criteria for whether or not a SBS transaction should be considered a block trade. These include the absolute size of the transaction, the size of the transaction relative to other similar transactions, the size of the transaction relative to some measure of overall volume for that SBS instrument, and the size of the transaction relative to some measure of overall volume for the security or securities underlying the SBS. The most relevant metric would depend on the specific nature and timing of the hedging, which cannot be discerned from data about the transaction. However, if the goal of not publicly disseminating the size of a large notional SBS transaction is to prevent inadvertent signaling to the market of potential large subsequent transactions, then criteria should be chosen in a way that minimizes such signaling.
This suggests the use of one or more metrics that can help distinguish ordinary transaction sizes from extraordinary transaction sizes. An ordinary transaction size would be one in which the size of subsequent hedging transactions (if any) would be indistinguishable from the rest of the market. Extraordinary transaction sizes would be those in which subsequent transactions could be distinguished from the rest of the market.
One possibility could be to order the sizes of all transactions for a given SBS instrument and identify the top N-percent as large. However, it is not
A second possibility would be to examine trade size data to determine if the distribution of trade sizes suggests thresholds that could be used to discern ordinary versus extraordinary trade size. The figure below plots the distribution of trade sizes, bucketed in bins of $5 million, for over 370,000 single name corporate CDS transactions.
These data would suggest two possible thresholds—$15 million or $30 million. A cutoff of $15 million would have resulted in about 8% of trades executed over this time period being considered large notional, and a cutoff of $30 million would have resulted in about 1% of trades being considered large notional.
The second figure below presents similar data for over 20,000 sovereign CDS transactions from the same source over the same time period. The plot suggests similar cutoff points, although there are notably many more transactions in the tail for sovereign CDS than there were for single-name corporate CDS. A cutoff of $15 million would result in about 26% of all trades being considered large notional, and a cutoff of $30 million would result in about 7.5% of all trades being considered large notional.
Splitting the universe of transactions into single-name corporate CDS and sovereign CDS would not provide for potential differences between individual corporates or sovereigns that may have unique distributions or liquidity profiles. As a further consideration, the Commission notes that some SBSs may trade very infrequently, such as only a few times per month. Under these conditions, it would not be obvious how to distinguish an ordinary sized transaction from an extraordinary size. However, if a market were that illiquid it would most likely not be the case that subsequent hedging would be done in that same market. In such case, it is somewhat harder to see how the post-trade reporting of size would
The Commission also notes that this criterion considers only typical trade sizes within the CDS market without regard to overall daily, weekly, or monthly volume. This criterion also does not consider liquidity or volume in the underlying cash markets. Inclusion of volume metrics may be helpful in defining the criteria for what constitutes a block trade. For example, a single trade that is equivalent in size to a full- or half-day's average volume may be considered out-sized. On the other hand, if a particular SBS trades only once or twice per day then every trade would be equivalent to a full or half-day's average size. The Commission invites comment on if and how volume considerations should be included in the criteria for setting block trade thresholds.
For the reasons discussed above, a simple metric based on recent trade sizes of SBSs designed to help distinguish ordinary from extraordinary trade sizes could address the issue of inadvertently signaling market participants that a potential large transaction in a specific SBS or underlying security may be forthcoming as the result of one or more participants hedging a just-completed large notional transaction. On the other hand, the Commission recognizes that requiring disclosure of the fact that a block trade took place may raise some of the same concerns as requiring disclosure of the exact size of the large trade, and that to mandate disclosure of trades below a certain size is tantamount to mandating disclosure that a large trade occurred, even if the precise size of the trade is not disclosed. The Commission is interested in and invites comment on whether there are other means by which the dissemination protocol for block trades could effectively not reveal the size of a block trade or mitigate the potential effects of revealing that a block trade took place, while still offering the price component in real time. For example, could the block trade be disseminated with a “proxy” size, such as the size of the block trade threshold or a randomized size, with no identifier showing that the trade is a block trade?
Finally, the Commission preliminarily believes that it would not be appropriate to establish different block trade thresholds for similar instruments with different maturities. This is reflected in the proposed definition of “security-based swap instrument,” which would mean “each security-based swap in the same asset class, with the same underlying reference asset, reference issuer, or reference index.”
Proposed Rule 907(b)(2)(i) would provide that a registered SDR shall not designate as a block trade any SBS that is an equity total return swap or is otherwise designed to offer risks and returns proportional to a position in the equity security or securities on which the security-based swap is based.
Proposed Rule 907(b)(2)(ii) would provide that a registered SDR shall not designate as a block trade any SBS contemplated by Section 13(m)(1)(C)(iv) of the Exchange Act,
Proposed Rule 902(b) would provide that a registered SDR shall publicly disseminate a transaction report of an SBS that constitutes a block trade immediately upon receipt of information about the block trade from the reporting party. The transaction report would be required to consist of all the information reported by the reporting party pursuant to proposed Rule 901(c), except for the notional size, plus the transaction ID and an indicator that the report represents a block trade. The Commission proposes that the registered SDR would be required to publicly disseminate a complete transaction report for such block trade (including the transaction ID and the full notional size) as follows:
• Proposed Rule 902(b)(1) would provide that, if the SBS was executed on or after 05:00 UTC and before 23:00 UTC of the same day (which corresponds to 12 midnight and 6 p.m. EST), the transaction report (including the transaction ID and the full notional size) shall be disseminated at 07:00 UTC of the following day (which corresponds to 2 a.m. EST of the following day).
• Proposed Rule 902(b)(2) would provide that, if the SBS was executed on or after 23:00 UTC and up to 05:00 UTC of the following day (which corresponds to 6 p.m. until midnight EST), the transaction report (including the transaction ID and the full notional size) shall be disseminated at 13:00 UTC of that following day (which corresponds to 8 a.m. EST of the following day).
Under proposed Rule 902(b), market participants would learn the price of an SBS block trade in real time, although not the notional size. The Commission preliminarily believes that this approach promotes the public's interest in price discovery without subjecting the block trade counterparties to undue risk of a significant change in the price necessary to hedge the market risk created by entering into the block trade. Other market participants would know the SBS transaction was above a certain size, and it may be possible to infer the size or direction of a large trade before the size is publicly disseminated, based on the liquidity premium inferred from the reported trade price. The Commission recognizes that the disclosure that a block trade took place, even without disclosure of the exact size, can still implicate some of the concerns regarding subsequent hedging that were previously discussed. On the other hand, there would still be substantial risk for any other market participant that seeks to take long or short market positions solely to profit from the information that a block trade occurred, due to the uncertainty regarding the true size of the trade. Moreover, disseminating the price in real time could allow all market participants to obtain useful information about the block trade for valuation purposes, even though they would not learn about the full size of the block trade until later.
Unlike TRACE, however, the Commission is proposing a second wave of transaction reporting, which would include the full notional size of the
The Commission preliminarily believes that disseminating the full size of a block trade, albeit with a delay, would further promote price transparency while having only minimal costs. The ability to view the full notional size, although with a delay of between eight and 26 hours,
Finally, proposed Rule 907(b)(3) would provide that, if a registered SDR is in normal closing hours or special closing hours
Because the registered SDR, rather than the reporting party, would have the responsibility to determine whether a transaction qualifies as a block trade, the reporting party would be required to report a SBS to a registered SDR or the Commission pursuant to the time frames set forth in Rules 901(c) and (d), regardless of whether the reporting party believes the transaction qualifies for block trade treatment.
Proposed Rule 907(b)(1) would provide that a registered SDR shall establish and maintain written policies and procedures for calculating and publicizing block trade thresholds for all SBS instruments reported to the registered SDR. At a minimum, a registered SDR would be required to establish written policies and procedures reasonably designed to: (1) Immediately determine whether a SBS reported to the registered SDR constitutes a block trade and, if so, (2) disseminate information about the block trade in a manner consistent with proposed Rule 902(b).
As noted above, the specific threshold that a registered SDR would have to apply to make the block trade calculations will be established in a future Commission rulemaking.
The Commission requests comment generally on all aspects of the proposed rules regarding block trades, including the proposed criteria and the proposed exclusions. In particular, the Commission specifically requests comment on the following issues:
109. Do commenters agree with the approach of having a registered SDR calculate and publicize block size thresholds, in accordance with the criteria established by the Commission? Why or why not? If not, what would be an alternative approach?
110. If there is more than one registered SDR for an asset class, how would the Commission ensure that all registered SDRs calculated the same block trade thresholds for the same SBS instrument? How should the Commission address this issue? Is it feasible to expect multiple registered SDRs in the same asset class to obtain each others' market data feeds to obtain the data with which to calculate block trade thresholds?
111. If commenters believe that there would be adverse price impact for traders if all information on block trades was made available in real time, do commenters have any studies or empirical evidence to support that assertion? What would be the long-term effects on the market if all market participants knew the full transaction details of all SBSs in real time? Would this impact liquidity? If so, how?
112. Some participants in the Market Data Roundtable referred to the likelihood of “front running” if all information on block trades were made available in real time. How would front running occur in the SBS market if all the details of block trades were disseminated in real time?
113. How do counterparties hedge large SBS trades? At what notional trade size does it become difficult to hedge a SBS such that a dissemination delay is necessary? How does this vary by asset class? How long does it take to complete a hedge? What characteristics of a SBS instrument or asset class affect the length of time needed to deploy the hedge?
114. Does a counterparty's ability to hedge a trade increase or decrease depending on market characteristics such as trading volume and trading frequency? Does this depend on asset class, and within an asset class does it depend on maturity or other contract characteristics?
115. Do commenters agree that the criteria for determining whether or not a SBS transaction is considered a block trade should be based on a distribution
116. Should block trade thresholds be determined with more granularity, such as on a SBS instrument by instrument basis?
117. How often should thresholds be updated? What should be the appropriate look back period for data used to determine thresholds?
118. Is there a preferred formulaic way of computing the thresholds from trade size or other distributions? Should a simple percentile cut-off be chosen? If so, how? Would a standard deviation metric be appropriate?
119. How might trading change as a result of the chosen threshold? Could these provisions be gamed? Would market participants change their trading patterns to purposely skew the distribution to alter the threshold when they are next updated?
120. For any criterion that takes into account trading activity in the SBS instrument, should inter-affiliate transactions or trades resulting from portfolio compressions be excluded? If so, why? Are there other types of SBSs that should be excluded? If so, why? How could those exclusions be defined so as to prevent market participants from inappropriately deeming a SBS as qualifying for an exclusion?
121. Should there be a fixed minimum notional size threshold below which no SBS could be considered a block trade? If so, what should that threshold be and why? Should there be a different fixed minimum threshold for different asset classes or SBS instruments? If so, why? What would those different thresholds be?
122. Do commenters agree with the proposed exclusions from the block trade determination? If so, why or why not? Should other kinds of transactions be prevented from having a block trade exception?
123. Do commenters believe that block trades (however defined) should be treated differently from other trades for purposes of public dissemination? If so, why? If not, why not?
124. What would be the effect of having no or only a short dissemination delay for a block trade report that includes the full notional size? Would it enhance or slow the speed of price discovery and the level of price efficiency in the market? Would it increase or decrease competition among market participants in general, or SBS dealers in particular? Would any short-term increases in the cost of hedging be offset by reductions in the cost of hedging in the longer term?
125. Do commenters agree with the proposed two-step process for public dissemination of a block trade?
126. How likely is it that market participants would be able to infer the size or direction of a large trade before the size is publicly disseminated, based on the liquidity premium inferred from the reported traded price? Is it feasible to remove the liquidity premium component from the price of a large trade, leaving only a normalized price for a standard (non-block) size trade to be reported in real time, with the actual price including the liquidity premium component being reported only at the time that actual trade size is revealed?
127. Would it be preferable to have a single transaction report for a block trade that contains all transaction details, including the notional size, but with a delay in dissemination of the complete trade report? If so, why? What should that delay be? Five minutes? Ten minutes? An hour? Three hours? At the end of the day? Why would this length of time be appropriate?
128. Are there other means by which the dissemination protocol for block trades could effectively not reveal the size of the block trade while still offering the price component in real time? For example, could the block trade be disseminated with a “proxy” size, such as the size of the block trade threshold or a randomized size, with no identifier showing that the trade is a block trade? Even if that approach were to effectively not reveal the true size of the block, would it do so at the cost of creating misinformation in the market?
129. Do commenters believe it is important for market participants to have pricing information from block trades to set end-of-day marks? When are these marks typically set? How valuable would it be in setting end-of-day marks to know the price of a SBS block trade, even without the full size?
130. If the Commission were to adopt a requirement that the price and size of a block trade must be publicly disseminated before the time that market participants typically set marks, would that cause SBS counterparties to avoid executing block trades near that time? For example, assume the Commission were to require that the full transaction details of block trades had to be publicly disseminated by a registered SDR at 21:00 UTC/4:00 p.m. EST, and that even a block trade executed at 3:55 p.m. EST had to be disseminated at 4 p.m. EST. Would this cause market participants to shift block trading earlier or later in the day? If so, would there be any harm in such movement?
131. Do commenters agree with the Commission's proposed times for disseminating the full notional size of block trades? If not, what other times would be appropriate, and why? Would counterparties be able to effectively hedge large SBSs executed toward the end of the day during the time allowed by the proposed rules (
132. Do commenters believe it would be more appropriate for a registered SDR to disseminate the notional size of each block trade after a fixed period after the trade report for that SBS transaction is disseminated without the notional size, rather than requiring the registered SDR to disseminate the full trade reports in two “batches” during the day? If so, what would be an appropriate delay for disseminate the full notional size, and why?
133. Under the Commission's proposal, there would be at least an eight-hour delay between the time of execution of a block trade and when the full notional size is required to be disseminated by a registered SDR. Is an eight-hour minimum appropriate? Should that period be longer or shorter? Why?
134. Would the Commission's proposed times for disseminating block trade information with the full notional size included cause any disruptive change in trading patterns or activity for large SBS trades, for example by providing market participants the incentive to move block trading toward the very beginning of the day, or by prompting market participants to avoid trading around the release of block trade information at 07:00 UTC/2 a.m. EST and 13:00 UTC/8 a.m. EST?
135. Would the public dissemination of block trades as proposed allow some market participants to infer the identity of the parties to the transaction or materially reduce market liquidity? If so, how? Can or should there be another means of suppressing the exact size of a block trade?
The Commission is proposing Rule 902(c)(1), which would prohibit a registered SDR from disseminating the identity of either counterparty to a SBS, and Rule 902(c)(2), which would prohibit a registered SDR from disseminating, with respect to a SBS that is not cleared at a registered clearing agency and that is reported to a registered SDR, any information disclosing the business transactions and market positions of any person.
In addition, proposed Rule 902(c)(3) would prohibit a registered SDR from publicly disseminating any information regarding a SBS reported pursuant to proposed Rule 901(i), which would require participants to report pre-enactment and transitional SBSs.
136. Do commenters believe that information that would be disseminated pursuant to proposed Regulation SBSR would disclose the business transactions, identities, or market positions of any person?
137. If so, what revisions to proposed Regulation SBSR do commenters believe would be necessary to avoid disclosing the business transactions, identities, or market positions of any person?
The Dodd-Frank Act does not explicitly address or prescribe the hours of operation of the real-time reporting and dissemination regime. However, to serve the goals of transparency and price discovery, the Commission believes that it is appropriate to implement a system of real-time reporting and dissemination that, in general, operates continuously.
The Commission believes there are compelling reasons to adopt this approach. First, the market for SBSs is global, and the Commission believes the public interest is served by requiring continuous real-time dissemination of any SBS transactions that would be required to be reported to a registered SDR, no matter when they are executed. Second, a continuous dissemination regime would reduce the incentive for market participants to defer execution of SBS transactions until after regular business hours to avoid real-time post-trade transparency. Third, the Commission believes that this continuous dissemination regime would be “technologically practicable,” and thus consistent with the Dodd-Frank definition of what constitutes real-time dissemination.
Although the Commission believes that continuous operation of a real-time reporting and dissemination regime should be the goal, the Commission recognizes the potential need for a registered SDR to establish normal closing hours to perform necessary system maintenance. Such normal closing hours should occur only when, in the estimation of the registered SDR, the U.S. markets and major foreign markets are inactive. Consequently, proposed Rule 904(a) would allow a registered SDR to establish normal closing hours during periods when, in its estimation, the U.S. market and major foreign markets are inactive. A registered SDR would be required to provide reasonable advance notice to participants and to the public of its normal closing hours.
Further, the Commission recognizes that unexpected circumstances could arise that would require a registered SDR to temporarily make unavailable its systems for processing transaction reports and publicly disseminating transaction data. Consequently, proposed Rule 904(b) would permit a registered SDR to declare, on an
Paragraphs (c) to (e) of proposed Rule 904 would specify requirements for handling and disseminating reported data during a registered SDR's normal and special closing hours. During normal closing hours and, to the extent reasonably practicable, during special closing hours, a registered SDR would be required to have the capability to receive and hold in queue transaction data it receives. Immediately upon system re-opening following normal closing hours (or opening following special closing hours, if it were able to hold incoming data in queue), the registered SDR would be required to publicly disseminate any transaction data required to be reported under proposed Rule 901(c) that it received and held in queue. If the registered SDR could not, while it was closed, receive and hold in queue information required to be reported, it would be required, immediately upon resuming normal operations, to send a notice to all participants that it had resumed normal operations but could not, while closed, receive and hold in queue such transaction information. Thereafter, any participant that had an obligation to report information, but was unable to do so because of the registered SDR's inability to receive and hold data in queue, would be required to immediately report the information to the registered SDR.
Regardless of the current operating status of a registered SDR, reporting parties would be required to submit information to the registered SDR under the same standards and permissible timing detailed in proposed Rule 901. If a party that has an obligation to report the transaction data is unable to do so because the registered SDR's system is unable to receive and hold in queue such data, the reporting party would be required to report any information that it was obligated to report immediately after it received a notice that it was possible to do so.
The Commission requests comment on all aspects of the proposed operating hours for registered SDRs.
138. Do commenters agree with the provisions that would allow registered SDRs to have normal and special closing hours and the proposed process for receipt and dissemination of data during and after such hours?
139. Is it reasonable for the Commission to provide registered SDRs with flexibility to set specific closing
140. Are there alternatives to allowing registered SDRs to close during normal and special closing hours? Would it be feasible for registered SDRs to operate without normal and special closing hours?
Proposed Rule 905 would establish procedures to correct errors in reported and disseminated SBS information. The Commission recognizes that any system for transaction reporting must accommodate the possibility that certain data elements may be incorrectly reported. Proposed Rule 905 would establish error reporting procedures for counterparties and for registered SDRs.
Proposed Rule 905(a) would apply where a counterparty discovers an error after a SBS transaction has been reported. A counterparty that was not the reporting party would be required to promptly notify the reporting party of the error. A reporting party that discovers an error or receives notification of an error from its counterparty would be required to promptly submit to the entity to which it provided the original transaction report an amended report pertaining to the original transaction report. If the reporting party reported the initial transaction to a registered SDR, the reporting party must submit an amended report to the registered SDR in a manner consistent with the policies and procedures contemplated by proposed Rule 907(a)(3).
Proposed Rule 905(b) outlines the duties of registered SDRs in correcting information and re-disseminating corrected information.
Proposed Rule 907(a)(3) would require a registered SDR to, among other things, establish and maintain written policies and procedures for determining how participants would be required to report corrections of prior reports. The registered SDR would have flexibility to specify the modifiers or indicators to allow reporting parties to submit reports distinguishing corrected trades from new trades and indicating the actual execution date and time.
For example: Counterparty B (the reporting party) notices that there is an error in the reported notional amount of a SBS transaction. Counterparty B then would be required under proposed Rule 905(a) to promptly notify the registered SDR to which it originally reported the trade of the error in the notional amount. Because the notional amount is one of the data elements that must be reported in real time under proposed Rule 901(c), the registered SDR would be required to immediately disseminate a corrected transaction report to the public, with a notation indicating that it is a corrected trade report.
The Commission requests comment on all aspects of the proposed rules relating to procedures for correcting errors in reported and disseminated SBS information.
141. Are the proposed obligations for submitting error reports sufficiently clear?
142. Are additional requirements necessary? Are the proposed requirements adequate to assure that errors are corrected promptly and corrections are promptly disseminated as appropriate? If not, what additional procedures should be required?
143. Do commenters agree with the proposed approach? Why or why not?
144. Do commenters agree that error reports should be publicly disseminated? Why or why not?
In designing a comprehensive system of transaction reporting and post-trade transparency for all SBS—involving a constantly evolving market, thousands of participants, and potentially millions of transactions—the Commission preliminarily believes that it is not necessary or appropriate for it to specify by rule every detail of how this system should operate. On some matters, there may not be a single correct approach for maximizing transparency and price discovery; rather, it might be more important that there be a coordinated approach that all market participants understand and adhere to.
The Commission believes that registered SDRs could play an important role in developing, operating, and improving the system for transaction reporting and post-trade transparency in SBS, as laid out by Congress in the Dodd-Frank Act. Registered SDRs are placed at the center of the market infrastructure, as the Dodd-Frank Act requires all SBSs, whether cleared or uncleared, to be reported to them.
As discussed more fully below, a registered SDR would be required to establish and maintain certain policies and procedures, including policies and procedures to: (1) Enumerate the specific data elements of SBS or life cycle event that a reporting party must report; (2) specify one or more acceptable data formats, connectivity requirements, and other protocols for submitting information; (3) promptly correct information in its records that is discovered to be erroneous; (4) determine whether and how life cycle events and other SBSs that may not accurately reflect the market should be
A registered SDR also would be required to make its policies and procedures required by proposed Regulation SBSR publicly available on its Web site.
Proposed Rule 907(a)(1) of Regulation SBSR would require a registered SDR to establish and maintain written policies and procedures that enumerate the specific data elements of a SBS or a life cycle event that a reporting party must report. These data elements would be required to include, at a minimum, those specified in proposed Rules 901(c) and (d). The Commission expects that the policies and procedures adopted under proposed Rule 907(a)(1) would explain to reporting parties how to report if all the SBS transaction data required by Rules 901(c) and (d) is being reported simultaneously, and how to report if responsive data are being provided at separate times.
Proposed Rule 907(a)(2) would require a registered SDR to establish and maintain written policies and procedures that specify one or more acceptable data formats (each of which must be an open-source structured data format that is widely used by participants), connectivity requirements, and other protocols for submitting information. The Commission preliminarily believes that a registered SDR should have reasonable flexibility to design its systems and develop ways for participants to input information into those systems.
Proposed Rule 907(a)(3) would require a registered SDR to establish and maintain written policies and procedures for specifying how reporting parties are to report corrections to previously submitted information, making corrections to information in its records that is subsequently discovered to be erroneous, and applying an appropriate indicator to any report required to be disseminated by proposed Rule 905(b)(2), which would denote that the report relates to a previously disseminated transaction. There could be a number of acceptable ways to carry out the general directive to correct erroneous information, and reasonable flexibility should be afforded a registered SDR in this regard. Use of transaction IDs assigned by the registered SDR would facilitate this process, as this would offer a clear way for participants and the registered SDR to refer to an earlier transaction.
Finally, the policies and procedures required by proposed Rule 907(a)(3) would have to address applying an appropriate indicator to any new transaction report required by proposed Rule 905(b)(2) that the report relates to a previously disseminated transaction. It is essential that market observers understand that the transaction report triggered by proposed Rule 905 does not represent a new transaction, but merely a correction to a previous transaction. Without some kind of indication to that effect, market observers could misunderstand the true state of the market. Therefore, the Commission preliminarily believes that the registered SDR must apply an appropriate indication to the publicly disseminated transaction report.
Proposed Rule 907(a)(4) would require a registered SDR to establish and maintain written policies and procedures describing how reporting parties shall report—and, consistent with the enhancement of price discovery, how the registered SDR shall publicly disseminate—reports of, and adjustments due to, life cycle events; SBS transactions that do not involve an opportunity to negotiate any material terms, other than the counterparty; and any other SBS transactions that, in the estimation of the registered SDR, do not accurately reflect the market. As noted above, all SBS transactions must be reported to a registered SDR, pursuant to proposed Rules 901(c) and (d). However, some SBSs might not involve arm's-length negotiations that reflect competitive price discovery.
Finally, the policies and procedures required by proposed Rule 907(a)(4) would be required to address applying an appropriate indicator to reports of, and adjustments due to, life cycle events. As with corrected transaction reports, it is essential that market observers understand that the transaction report triggered by a life cycle event does not represent a new transaction, but merely a change to the terms of a previously executed SBS. Without an indicator to that effect, market observers could misunderstand the true state of the market. Therefore, the Commission preliminarily believes that the registered SDR must apply an appropriate indicator to the publicly disseminated transaction report.
Proposed Rule 907(a)(5) would require a registered SDR to establish and maintain written policies and procedures for assigning: (1) A transaction ID to each SBS that is reported to it; and (2) UICs established by or on behalf of an IRSB (or, if such UICs are not yet able to be so assigned, for assigning UICs in a consistent manner using its own methodology). Proposed Rule 907(a)(6) would require a registered SDR to establish and maintain written policies and procedures for periodically obtaining from each participant information that identifies the participant's ultimate parent(s) and any other participant(s) with which the counterparty is affiliated, using ultimate parent IDs and participant IDs. The Commission expects that the registered SDR's policies and procedures would address the relationship between itself and an IRSB, and how UICs could be obtained from the IRSB or an agent or other person acting on its behalf. Furthermore, the Commission expects that, if an IRSB exists and the registered SDR is using UICs assigned by that IRSB or on its behalf, the registered SDR's policies and procedures should explain how a participant could obtain applicable UICs from the IRSB. To the extent that the IRSB cannot provide certain UICs required of a participant by proposed Regulation SBSR, the registered SDR's policies and procedures would be required to explain the process by which a participant could obtain such UICs from the registered SDR.
Proposed Rule 907(d) would require a registered SDR to review and, as necessary, update its policies and procedures required by proposed Regulation SBSR at least annually, and to indicate the date on which they were last reviewed. Periodic review should help ensure that a registered SDR's policies and procedures remain well-functioning over time. Indicating the date on which the policies and procedures were last reviewed would allow regulators and market participants to understand which version of the policies and procedures are current. The Commission is proposing recordkeeping and retention rules for registered SDRs in a separate rulemaking.
Proposed Rule 907(e) would require a registered SDR to have the capacity to provide to the Commission, upon request, information or reports related to the timeliness, accuracy, and completeness of data reported to it pursuant to proposed Regulation SBSR and the registered SDR's policies and procedures thereunder.
The Commission requests comment on all aspects of the proposed policies and procedures for registered SDRs.
145. Do commenters agree, overall, with the proposed policies and procedures for registered SDRs? Why or why not?
146. Should proposed Rule 907 specify more detailed elements to be included in the required policies and procedures? If so, what should those elements be? Or, are the proposed policies and procedures too prescriptive? If so, in what way(s)?
147. Should a registered SDR have flexibility to specify acceptable data formats, connectivity requirements, and other protocols for submitting information? Why or why not? Are there disadvantages to this approach? If so, how should they be addressed?
148. Should all acceptable data formats be open-source structured data formats? What data formats are currently in use by SDRs? Would they qualify as open-source structured data formats?
149. Assuming special indicators on certain publicly disseminated trade reports may be necessary, do commenters agree that a registered SDR should have the flexibility to determine and apply those indicators? If not, can commenters suggest another system for assigning relevant indicators?
150. What kinds of special circumstances would warrant indicators for public dissemination? What should those indicators be? How should they be reflected on the publicly disseminated trade report?
151. Should inter-affiliate transactions be publicly disseminated with an indicator? Should they be disseminated at all? Why or why not?
152. Should portfolio compressions and terminations be publicly disseminated with an indicator? Should they be disseminated at all? Why or why not?
153. Should a registered SDR have the flexibility to determine whether a SBS transaction does not accurately reflect the market or would not enhance price discovery if disseminated? If so, how should the registered SDR exercise such flexibility? What criteria should it use? What are examples of transactions that commenters believe should be reported to a registered SDR but should not be publicly disseminated? Why should they not be publicly disseminated?
154. Multi-lateral netting and portfolio compression are post-trade processes designed to reduce gross exposure and leave only net exposure. These processes typically entail the termination of open contracts and the establishment of new contracts representing only the net position. How, if at all, should SBSs related to multi-lateral netting and portfolio compression be reported to and disseminated by a registered SDR? What if the netting involves a payment that is determined by market value?
155. How should a registered SDR's policies and procedures address the use of UICs assigned under the auspices of a voluntary consensus standards body?
156. What are the costs for registered SDRs to adopt and implement the proposed policies and procedures? What are the benefits of requiring registered SDRs to adopt and implement these policies and procedures?
157. Should a data repository seeking to register with the Commission be
For the proposed SBS reporting requirements established by the Dodd-Frank Act to achieve the objective of enhancing price transparency and providing regulators with access to data to help carry out their oversight responsibilities, the information that participants provide to registered SDRs must be reliable. Accordingly, proposed Rule 906(c) would require a participant that is a SBS dealer or major SBS participant to establish, maintain, and enforce written policies and procedures that are reasonably designed to ensure compliance with the SBS transaction reporting obligations set forth in proposed Regulation SBSR and the policies and procedures of any registered SDR in which it is a participant. Such policies and procedures are intended to provide a system of controls that facilitate complete and accurate reporting of SBS information by these participants, consistent with their obligations under the Dodd-Frank Act and proposed Regulation SBSR.
The Commission believes that proposed Rule 906(c) should result in greater accuracy and completeness of reported SBS transaction data. Without written policies and procedures, compliance with reporting obligations may depend too heavily on key individuals or unreliable processes. The Commission believes that requiring participants that are SBS dealers or major SBS participants to establish written policies and procedures should promote clear, reliable reporting that can continue independent of any specific individuals. The Commission further believes that requiring such participants to adopt and maintain policies and procedures relevant to their reporting responsibilities, as required under proposed Rule 906(c), would help to improve the degree and quality of overall compliance with the reporting requirements set out in proposed Regulation SBSR.
The policies and procedures required by proposed Rule 906(c) should be designed to foster compliance with the real-time reporting requirements specified in proposed Rule 901(c), as well as the additional reporting requirements specified in proposed Rules 901(d) and (e). These policies and procedures, among other things, should address: (1) The reporting process and designation of responsibility for reporting SBS transactions; (2) the process for systematizing orally negotiated SBS transactions; (3) OMS outages or malfunctions, and when and how backup systems are to be used in connection with required reporting; (4) verification and validation of all information relating to SBS transactions reported to a registered SDR; (5) a training program for employees responsible for SBS transaction reporting; (6) control procedures relating to SBS transaction reporting and designation of personnel responsible for testing and verifying such policies and procedures; and (7) reviewing and assessing the performance and operational capability of any third party that carries out any duty required by proposed Regulation SBSR on behalf of the entity.
Each participant that is a SBS dealer or major SBS participant also would be required to review and, as needed, update its policies and procedures at least annually.
The value of requiring policies and procedures in promoting regulatory compliance is well-established. For example, internal control systems have long been used to strengthen the integrity of financial reporting. Congress recognized the importance of internal control systems in the Foreign Corrupt Practices Act, which requires public companies to maintain a system of internal accounting controls.
The Commission requests comment on all aspects of the proposed requirement that participants that are SBS dealers or major SBS participants establish policies and procedures.
158. Do commenters think proposed Rule 906(c) is necessary? Would SBS dealers and major SBS participants otherwise implement written policies and procedures to ensure compliance with the reporting obligations in proposed Regulation SBSR?
159. Should proposed Rule 906(c) specify elements to be included in the required policies and procedures, such as those discussed above? If so, what elements should be included in the proposed rule, and why?
Proposed Rule 908 is designed to clarify the application of proposed Regulation SBSR to cross-border SBS transactions and to non-U.S. persons.
Proposed Rule 908(a) would require a SBS to be reported if the SBS: (1) Has at least one counterparty that is a U.S. person; (2) was executed in the United States or through any means of interstate commerce; or (3) was cleared through a registered clearing agency having its principal place of business in the United States. In addition, any SBS that is required to be reported to a registered SDR pursuant to proposed Rule 908(a) also would be required to be publicly disseminated by the registered SDR. The Commission preliminarily believes that, if there are sufficient jurisdictional ties to the United States to warrant reporting of the SBS, other market participants should have knowledge of the SBS transaction.
The Commission preliminarily believes that, if a U.S. person executes a SBS anywhere in the world, that SBS should be reported to a registered SDR, pursuant to proposed Regulation SBSR. Because the U.S. person is assuming risk, U.S. regulators have an interest in ensuring that they have appropriate knowledge of the transaction. The Commission notes that it is proposing to define “U.S. person” in proposed Rule 900 to mean “a natural person that is a U.S. citizen or U.S. resident or a legal person that is organized under the corporate laws of any part of the United States or has its principal place of
A SBS also would have to be reported if the SBS were executed in the United States or through any means of interstate commerce. For example, even if both counterparties are not U.S. persons, U.S. regulators have a strong interest in having knowledge of and being able to regulate any activity conducted within the United States or through any means of interstate commerce.
Under proposed Rule 908(a)(3), a SBS would have to be reported pursuant to proposed Regulation SBSR—even if both counterparties are not U.S. persons—if the SBS were cleared through a clearing agency having its principal place of business in the United States. It is possible that two counterparties, neither of whom is a U.S. person, could execute a SBS outside the United States, but clear the SBS through a clearing agency having its principal place of business in the United States. The Commission preliminarily believes that such SBS should be reported to a registered SDR. If a SBS is cleared by a clearing agency having its principal place of business in the United States, U.S. regulators should have access to information regarding the SBS through a registered SDR.
It is possible that there could be a clearing agency registered with the Commission under Section 17A of the Exchange Act
It should be noted that a registered SDR could receive reports of foreign SBS transactions that are not required to be reported pursuant to proposed Rule 908(a). The registered SDR may determine to publicly disseminate reports of such foreign SBS transactions, but would not be required to do so by proposed Regulation SBSR.
Proposed Rule 908(b) would provide that, notwithstanding any other provision of Regulation SBSR, no counterparty to a SBS would incur any obligation under Regulation SBSR unless it is: (1) A U.S. person; (2) a counterparty to a SBS executed in the United States or through any means of interstate commerce; or (3) a counterparty to a SBS cleared through a clearing agency having its principal place of business in the United States. For the reasons discussed above, the Commission preliminarily believes that, if a U.S. person executes a SBS anywhere in the world, that U.S. person should become subject to Regulation SBSR.
Non-U.S. persons who are counterparties to U.S. persons could, therefore, have SBSs to which they are counterparties reported to and held by a registered SDR. If none of these SBSs were executed in the United States or through any means of interstate commerce, however, the non-U.S. person would not become a “participant” of the registered SDR and would not become subject to proposed Regulation SBSR.
Assume that X (a U.S. bank) enters into an SBS with Y (a Japanese bank). The SBS is effected in Japan, involves no means of interstate commerce, and is not cleared by a clearing agency having its principal place of business in the United States. Because the SBS has at least one counterparty that is a U.S. person, proposed Rule 908(a)—which describes when an SBS is
As noted above, the Commission preliminarily believes that post-trade transparency could spur significant improvements in the SBS market. Some of the benefits could include greater price competition, lower transaction
In a separate rulemaking proposal regarding the registration and regulation of SDRs being issued today, the Commission is proposing rules that would require SDRs to comply with certain core principles. To comply with these core principles, an SDR would be required, among other things, to establish and enforce clearly stated and objective criteria that would permit fair, open, and not unreasonably discriminatory access to services offered and data that would be disseminated by the SDR, as well as fair, open, and not unreasonably discriminatory participation by market participants, market infrastructures, venues from which data could be submitted to the SDR, and third-party service providers that seek to connect or link with the SDR.
A registered SDR also would become subject to certain provisions of Section 11A of the Exchange Act
Section 11A(b)(1) of the Exchange Act
The Commission preliminarily believes that the additional authority over a registered SDR/SIP provided by Sections 11A(b)(5) and 11A(b)(6) of the Exchange Act would help ensure that these entities offer their SBS market data on terms that the Commission believes would be fair and reasonable and not unreasonably discriminatory. Therefore, the Commission preliminarily believes that the registration of SDRs as SIPs would be necessary or appropriate in the public interest, for the protection of investors, or for the achievement of the purposes of Section 11A of the Exchange Act. Section 11A of the Exchange Act establishes broad goals for the development of the securities markets and charges the Commission with establishing rules and policies that are designed to further these objectives. Section 11A(a) states, among other things, that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure economically efficient execution of securities transactions; the availability to brokers, dealers, and investors of information with respect to quotations for and transactions in securities; and an opportunity for investors' orders to be executed without the participation of a dealer. SIP registration could assist in achieving these objectives in the still-developing SBS market. Therefore, the Commission preliminarily believes that the registration of SDRs as SIPs would be necessary or appropriate in the public interest, for the protection of investors, or for the achievement of the purposes of Section 11A. Accordingly, the Commission is proposing Rule 909, which would require a registered SDR to register with the Commission as a SIP.
The measures described above are designed to ensure that SBS market data
Nevertheless, other private sources of market data reflecting subsets of the SBS market could arise.
Under proposed Rule 902(d), the temporary restriction on other market participants that may wish to disseminate information relating to a SBS transaction would last no longer than 15 minutes. Under proposed Regulation SBSR, a transaction report of a SBS would be expected to be publicly disseminated within 15 minutes of execution. The Commission preliminarily believes that it is not necessary or appropriate to require other sources of market data to withhold dissemination of a transaction report beyond 15 minutes if a registered SDR is not able to do so in a timely fashion. Proposed Rule 902(d) would, however, permit the transfer of information of a SBS before dissemination by a registered SDR to a counterparty to that SBS. Therefore, one counterparty would be permitted to pass details of the SBS to the other counterparty, or a SB SEF on which the SBS was executed could pass details of the SBS to either or both of the counterparties.
By proposing Rule 902(d), the Commission seeks to balance the goal of promoting robust and fair competition among all market participants—by allowing them to view the same comprehensive source of SBS market data at the same time—with that of allowing market participants to devise new value-added market data products.
The Commission requests comment on all aspects of its proposal relating to fair and non-discriminatory access to SBS market data. In particular:
160. Do commenters have any potential concerns with market participants' access to data disseminated by registered SDRs? If so, what steps should the Commission do to address them?
161. Do commenters agree with the proposal to require registered SDRs to register with the Commission as SIPs? Why or why not?
162. Would SIP registration entail costs and burdens that are unreasonable or unnecessary in light of the requirements associated with SDR registration? What additional burdens, if any, would be associated with SIP registration?
163. In the SDR Registration Proposing Release, the Commission is proposing a Form SDR that is similar to but separate from existing Form SIP. Should the Commission combine Forms SIP and Form SDR such that an SDR would register as a SIP and SDR using only one form? Or should the elements necessary for registration as an SDR be a supplement to Form SIP? Are there any specific items on Form SIP that should be added to Form SDR that would help to facilitate the registration process?
164. Would it be beneficial for aggrieved persons to have the ability to request that the Commission review a registered SDR's prohibition or limitation on access its services, as contemplated by Section 11A(b)(5) of the Exchange Act? Are there any concerns with applying Section 11A(b)(5) to registered SDRs?
165. Are there additional means by which the Commission can or should attempt to ensure that the market data fees and usage restrictions imposed by registered SDRs are fair and reasonable and not unreasonably discriminatory? If so, please describe.
166. Should market participants other than a registered SDR be prohibited from distributing their SBS market data before transactions are disseminated by a registered SDR? Why or why not?
167. Do commenters anticipate that market participants other than registered SDRs will seek to sell SBS market data? Do commenters have a view as to whether those additional market data products would compete with or complement the required market data feed from registered SDRs?
168. Would proposed Rule 902(d) unnecessarily inhibit competition and innovation in the provision of value-added market data services or products? Please be specific in your response.
169. Are there alternative means to better ensure that all market participants have full and fair access to SBS market data other than placing a restriction on sources other than the registered SDRs? If so, what are they and why would they be preferable to the proposal?
170. Would competitive forces act to ensure that all market participants have full and fair access to SBS market data?
171. If commenters agree with proposed Rule 902(d), is 15 minutes an appropriate length to restrict market participants other than registered SDRs from disseminating SBS transaction data? Do commenters think that period is too long or too short? Please be specific in your response.
172. Should market participants other than registered SDRs that publicly disseminate SBS transaction information be subject to the same requirements regarding dissemination of block trades as registered SDRs?
Proposed Rule 910 is designed to provide clarity as to SBS reporting and dissemination timelines and to establish a phased-in compliance schedule for those subject to proposed Regulation SBSR. The Commission acknowledges that the system for reporting and dissemination described in proposed Regulation SBSR would take a significant amount of time and resources to implement effectively. While the Commission is committed to fully implementing Congress's directive to require real-time public reporting of all SBSs, market participants will need a reasonable period in which to acquire or configure the necessary systems, engage and train the necessary staff, and develop and implement the necessary policies and procedures to implement the proposed rules. The Commission preliminarily believes that the proposed compliance timeframes described below should provide sufficient time for reporting parties and SDRs to make the necessary technological and other preparations needed to begin reporting and disseminating SBS information, respectively, as required under proposed Regulation SBSR.
The Commission is proposing a phased-in compliance schedule, with respect to a SDR that registers with the Commission, as follows:
•
Proposed Rule 910(a) would require reporting parties to report to a registered SDR any pre-enactment SBSs subject to reporting under proposed Rule 901(i) no later than January 12, 2012 (180 days after the effective date of the Dodd-Frank Act).
•
The Commission preliminarily believes that, before reporting parties and other participants could be expected to comply with proposed Regulation SBSR, they must first know the policies and procedures of the registered SDR that would receive and hold transaction information regarding their SBSs.
Also on the effective reporting date, the registered SDR would be required to begin preparing reports to each participant of any missing UICs, and any participant receiving such a report would have to begin providing the missing UICs to the registered SDR. The registered SDR and its participants also would become subject to the error correction requirements of proposed Rule 905 at this time, except that the registered SDR would not yet be required to publicly disseminate any corrected transaction reports (since it would not have disseminated a report of the initial transaction).
Finally, the Commission notes that proposed Rules 901(i) (establishing reporting requirements for pre-enactment and transitional SBSs), 910(a) (requiring the reporting of pre-enactment SBSs by January 12, 2012), and 910(b)(2)(i) (requiring the reporting of transitional SBSs by the effective reporting date) are together designed to assure that a registered SDR would obtain a complete view of each participant's open SBS positions by the time that the registered SDR is about to both receive and publicly disseminate transaction reports of SBSs.
•
Nine months after the registration date and three months after the effective reporting date, the registered SDR would be required to begin disseminating transaction reports as follows: The registered SDR, in consultation with the Commission's staff, would select 50 SBS instruments for which it receives and holds transaction data. Beginning on the date nine months after the registration date and continuing every day thereafter, the registered SDR would be required to publicly disseminate transaction reports in real time for those 50 SBS instruments, including with respect to block trades. The three-month period between the beginning of Phase 2 and the beginning of Phase 3 would allow the registered SDR a sufficient number of days to calculate and publish the block trade levels for those 50 SBS instruments. Also in Phase 2, the registered SDR would be required to begin disseminating any corrected reports required by proposed Rule 905 for those 50 SBS instruments. The Commission preliminarily believes, based on its experience implementing aspects of Regulation NMS, that the public dissemination of transaction reports for 50 SBS instruments is appropriate in Phase 2.
•
Twelve months after the registration date and six months after the effective reporting date, the registered SDR would be required, in consultation with the Commission's staff, to select an additional 200 SBS instruments for which to publicly disseminate transaction reports in real time, apply the block trade exception with respect to those 250 SBS instruments, and disseminate any corrected transaction reports required by proposed Rule 905 for those 250 SBS instruments. The Commission preliminarily believes, based on its experience implementing aspects of Regulation NMS, that the public dissemination of transaction reports for 250 SBS instruments is appropriate in Phase 3.
•
Eighteen months after the registration date, proposed Regulation SBSR would become operative with respect to every SBS transaction reported to and held by the registered SDR. The Commission preliminarily believes, based on its experience implementing aspects of Regulation NMS, that requiring public dissemination of all SBSs reported to the registered SDR is appropriate in Phase 4.
Proposed Rule 911 is designed to prevent evasion of the post-trade transparency rules. The rule would provide that a reporting party shall not report a SBS to a registered SDR in a phase-in period described in proposed Rule 910 during which the registered SDR is not yet required to publicly disseminate transaction reports for that SBS instrument unless: (1) The SBS also is reported to a registered SDR that is disseminating transaction reports for that SBS instrument, consistent with proposed Rule 902; or (2) no other registered SDR is able to receive, hold, and publicly disseminate transaction reports regarding that SBS instrument.
The Commission is concerned that the development of new SDRs not be used to undermine the goal of post-trade transparency for SBSs. This could occur, for example, if a SDR were registered with the Commission, and—pursuant to proposed Rule 910—the SDR were in a phase-in period when it was not yet required to publicly disseminate transactions. Participants in an existing registered SDR could seek to report their SBSs to the second instead of the first registered SDR during the former's phase-in period, to avoid having their SBS transactions publicly disseminated in real time.
Under proposed Rule 911, counterparties would be permitted to report any SBS to the first registered SDR, even though the first registered SDR was in a phase-in period and not yet publicly disseminating transaction reports, because no other registered SDR could do so, either. However, if a later SDR registers and enters a phase-in period, participants would not be permitted to report SBSs exclusively to the subsequent registered SDR before it is required or able under proposed Rule 910 to disseminate transaction reports, if an earlier registered SDR could receive, hold, and publicly disseminate transaction reports for that SBS. Thus, a participant could report the SBS to both registered SDRs: To the newer one, to assist with operational testing; and to the operating one, to ensure that a trade report for that SBS was publicly disseminated in real time.
The Commission requests comment on all aspects of the proposed rules relating to the proposed implementation of proposed Regulation SBSR, as provided in proposed Rules 910 and 911.
173. Are the proposed timeframes for reporting with respect to pre-enactment SBSs sufficiently clear?
174. Are the obligations applicable to registered SDRs, counterparties, and participants in each phase of the proposed phase-in schedule sufficiently clear? If not, what obligations are unclear? Please be specific in your response.
175. Do commenters generally agree with the proposed phase-in approach to implementation of the reporting timeframes contained in proposed Rule 910? Is the proposed phase-in schedule generally appropriate to allow reporting parties and registered SDRs sufficient time to implement the requirements of proposed Regulation SBSR? If not, why not? What period of time would be sufficient?
176. Do commenters believe that registered SDRs would be able to meet the requirements of proposed Phase 1? Why or why not? If three months after the SDR's registration date is not a sufficient amount of time to comply with proposed Rule 907, what amount of time would be sufficient? Do commenters believe that registered SDRs would need additional time to develop and implement certain policies and procedures that would be required under proposed Rule 907? If so, why, and which policies and procedures would require additional time to develop and implement?
177. Do commenters believe that registered SDRs, reporting parties, and participants would be able to satisfy their respective obligations under proposed Phase 2 within the proposed time frame? Why or why not? Would SBS counterparties and participants be able to comply, respectively, with proposed Rules 901 and 906(b) and (c) within the time frame specified in Phase 2? Why or why not? If not, what amount of time would be sufficient? Would counterparties or participants require additional time to comply with certain requirements in proposed Phase 2? If so, which requirement(s), and what additional amount of time would be necessary? Would counterparties and participants have adequate time to make any necessary systems changes to comply with the requirements in proposed Phase 2?
178. Would registered SDRs be able to correct erroneous information and notify counterparties of missing UICs within the time frame specified in Phase 2? Why or why not? If not, what amount of time would be adequate?
179. Do commenters believe that registered SDRs would be able to begin publicly disseminating SBS information, including corrected reports, and publicizing block trade levels, as would be required in proposed Phase 3? Why or why not? Would any specific requirement in proposed Phase 3 require additional time to implement? If so, which requirement(s), and what amount of time would be sufficient?
180. Do commenters believe that real-time public dissemination of SBS transaction reports should be required to commence for 50 SBS instruments nine months after the registration date? Should that period be longer or shorter? For example, should it be 12 months after the registration date? If so, why? Should the first wave of public dissemination be for more SBS instruments—perhaps 100? 200? Why or why not?
181. Do commenters generally agree with the proposed implementation schedule that would require public dissemination of SBSs in three Waves, as provided in proposed Phases 3, 4, and 5? Why or why not? If not, what approach would be more appropriate?
182. Should there be longer periods between Waves? If so, how long?
183. Is 50 SBSs an appropriate number of SBSs to include in proposed Phase 3? Why or why not? If not, what number would be appropriate?
184. Is it appropriate to require public dissemination of an additional 200 SBSs in proposed Phase 4? Why or why not?
185. What criteria should be used to choose the first 50 and second 200 SBSs be publically disseminated?
186. Do commenters believe that registered SDRs would be able to begin publicly disseminating all SBSs reported to the SDR 18 months after registration, as would be required under proposed Phase 5? Why or why not? If 18 months is not a sufficient amount of time, what amount of time would be sufficient?
187. Do commenters agree with the objective of proposed Rule 911? Why or why not?
188. Do commenters agree with the requirements of proposed Rule 911? Why or why not? Please be specific in your response. Do commenters believe that the Commission should take a
189. Under proposed Rule 910, the Commission would require a newly registered SDR to begin publicly disseminating trade reports for 50 SBS instruments beginning nine months after its registration date, and for an additional 200 SBS instruments beginning 12 months after its registration date. The registered SDR would be required at those times to calculate block trade thresholds in accordance with proposed Rule 907(b) and to disseminate reports of block trades in accordance with proposed Rule 902(b) with respect to those initial 50 and subsequent 200 instruments. Under proposed Rule 902(b), the registered SDR would be required to publicly disseminate a transaction report of the block trade with all transaction details other than notional size, and to disseminate the full trade report (including the notional size) at a later time. Should the Commission instead, during the phase-in period, provide for different approaches to publicly disseminating block trades in order to measure their associated cost to market participants? The Commission could require—at least for the phase-in period, but perhaps beyond—that different SBS instruments or transactions be subject to different block trade dissemination rules, to provide the Commission and market participants the opportunity to assess the relative costs and benefits of different approaches. For example, one group of SBS instruments or transactions could be subject to block trade dissemination mechanism described in proposed Rule 902(b). A second group could be subject to a regime where the full details of the transaction (including notional size) were disseminated, but with a one-hour delay, a third group could be subject to a regime where the full details were disseminated with a three-hour delay, and so on. Would commentators support or oppose such an approach? Why? Are there other approaches that should be considered in order to evaluate the impact of different post-trade transparency regimes for block trades on market quality? How long should each portion of the phase-in continue and what variation in the number and type of SBS instruments or transactions would be needed in each group to support a statistical analysis to distinguish between the potentially different effects on the markets resulting from distinct post-trade dissemination requirements?
Section 31(c) of the Exchange Act
Under the Exchange Act, brokers and dealers are required to join a national securities association.
Because the Dodd-Frank Act did not make corresponding changes for SBS brokers, a SBS broker would be considered a broker for purposes of the Exchange Act.
The Commission is proposing to exempt SBSs from the calculation of Section 31 fees.
In addition, the Commission proposes to revise Rule 31(a)(10)(ii) under the Exchange Act
190. Do commenters agree with the proposal to exempt SBSs from Section 31 fees? Why or why not?
191. How much transaction volume in SBSs would the Commission be exempting from Section 31 fees on an annual basis?
192. If the Commission did not exempt SBSs from Section 31 fees, how would a national securities association obtain funds to pay the fees? Would the offsetting fees imposed on members of the national securities association be fairly distributed?
193. Do commenters agree that the proposed exemption would create a more level playing field among SBS market participants? Why or why not?
194. Absent the proposed exemption from Section 31 fees for SBSs, would there be difficulties in collecting Section 31 fees for mixed swaps (which are included with the definition of “security-based swap” and are thus securities)?
Title VII of the Dodd-Frank Act requires the SEC to consult and coordinate to the extent possible with the CFTC for the purposes of assuring regulatory consistency and comparability, to the extent possible,
The CFTC is adopting rules related to the reporting of swaps and the public dissemination of swap transaction, pricing, and volume data, as required under Sections 723, 727, and 729 of the Dodd-Frank Act. Understanding that the Commission and the CFTC regulate different products and markets and, as such, appropriately may be proposing alternative regulatory requirements, the Commission requests comment on the impact of any differences between the Commission and CFTC approaches to the regulation of the reporting of swaps and SBSs and the public dissemination of swap and SBS transaction, pricing, and volume information.
In addition, legislatures and regulators in other jurisdictions are undertaking efforts to improve regulation in the market for OTC derivatives, including security-based swaps. The Commission requests comment generally on the impact of any differences between the Commission's proposed approach to the reporting and public dissemination of SBSs and that of any relevant foreign jurisdictions.
195. Would the regulatory approaches under the Commission's proposed rulemaking pursuant to Sections 763 and 766 of the Dodd-Frank Act and the CFTC's proposed rulemaking pursuant to Sections 723, 727, and 729 of the Dodd-Frank Act result in duplicative or inconsistent efforts on the part of market participants subject to both regulatory regimes or result in gaps between those regimes? If so, in what ways do commenters believe that such duplication, inconsistencies, or gaps should be minimized?
196. Do commenters believe the approaches proposed by the Commission and the CFTC to regulate the reporting of swaps and SBSs, and the public dissemination of swap and SBS transaction, volume, and pricing information, are comparable? If not, why not?
197. Do commenters believe there are approaches that would make the regulation of swap and SBS reporting and the public dissemination of swap and SBS transaction, volume, and pricing information more comparable? If so, what?
198. Do commenters believe that it would be appropriate for the Commission to adopt an approach proposed by the CFTC that differs from our proposal? Is so, which one(s)? We request commenters to provide data, to the extent possible, supporting any such suggested approaches.
199. If registered SDRs would also be assuming real-time reporting obligations under the CEA, should the phase-in schedules for reporting obligations for swaps and SBSs be coordinated?
200. How will proposed Regulation SBSR interact with reporting and public dissemination regimes in other jurisdictions? Will there be significant differences? If so, would those differences result in regulatory arbitrage? If so, what steps, if any, should the Commission take to minimize opportunities for regulatory arbitrage?
Certain provisions of the proposed reporting rules proposed in this release contain “collection of information requirements” within the meaning of the Paperwork Reduction Act of 1995 (“PRA”).
Proposed Rule 900 of Regulation SBSR contains only definitions of relevant terms and, thus, would not be a “collection of information” within the meaning of the PRA.
Proposed Rule 901 of Regulation SBSR contains “collection of information requirements” within the meaning of the PRA. The title of this collection is “Rule 901—Reporting Obligations.”
The Dodd-Frank Act amended the Exchange Act to require the reporting of SBS transactions. Accordingly, the Commission is proposing Rule 901 under the Exchange Act to implement this requirement. Proposed Rule 901 would specify who reports SBS transactions, where such transactions are to be reported, what information is to be reported, and in what format. Counterparties to a SBS would be responsible for reporting the SBS to a registered SDR, or, if there is no registered SDR that would accept the SBS, to the Commission. Proposed Rule 901 generally would divide the SBS information that must be reported into three categories: (1) Information that must be reported in real time pursuant
Proposed Rule 901(i) would require the reporting of all of the information required by proposed Rules 901(c) and (d) for any pre-enactment SBSs or transitional SBSs, to the extent such information is available.
Proposed Rule 901 also would impose certain duties on a registered SDR that receives SBS transaction data. Proposed Rule 901(f) would require a registered SDR to time stamp, to the second, its receipt of any information submitted to it pursuant to proposed Rule 901(c), (d), or (e). Proposed Rule 901(g) would require a registered SDR to assign a transaction ID to each SBS reported by a reporting party.
The SBS transaction information required to be reported pursuant to proposed Rule 901 would be used by registered SDRs, market participants, the Commission, and other regulators. The information reported by reporting parties pursuant to proposed Rule 901 would be used by registered SDRs to publicly disseminate real-time reports of SBS transactions, as well as to offer a resource for regulators to obtain detailed information about the SBS market. Market participants would use the public market data feed to assess the current market for SBSs and for valuation purposes. The Commission and other regulators would use information about SBS transactions reported to and held by registered SDRs for prudential oversight and to monitor potential systemic risks, as well as to examine for improper behavior and to take enforcement actions, as appropriate.
The transaction ID would be used on any subsequent transaction report or information submitted by a reporting party regarding that SBS (
Proposed Rule 901 would apply to reporting parties.
Proposed Rule 901 also would impose certain duties on registered SDRs. Pursuant to Section 13(n) of the Exchange Act, an SDR must register with the Commission.
Pursuant to proposed Rule 901, all SBS transactions must be reported to a registered SDR or to the Commission. Together, sections (a), (b), (c), (d), (e) and (h) of proposed Rule 901 set forth the parameters that market participants must follow to report SBS transactions. Proposed Rule 901(i) addresses the reporting of pre-enactment SBSs. The proposed SBS reporting requirements would impose initial and ongoing burdens on reporting parties. The Commission preliminarily believes that these burdens would be a function of, among other things, the number of reportable SBS transactions and the data elements required to be reported for each SBS transaction.
Based on publicly available information and consultation with industry sources, the Commission preliminarily believes that even the most active participants in the SBS market do not enter into a large number of new SBSs on a daily basis. Rather, most regularly active SBS market
The Commission believes that reporting parties would face three categories of burdens to comply with proposed Rule 901 of Regulation SBSR. First, each reporting party would likely need to develop an internal order and trade management system (“OMS”) capable of capturing relevant SBS transaction information. The OMS would have to include or be connected to a system designed to store SBS transaction information. The Commission understands that it is current industry practice, in many cases, to add SBS transaction details to the transaction record post-execution in a process known as “enrichment.” Accordingly, the OMS would likely need to link both to the trade desk—to permit real-time transaction reporting under proposed Rule 901(c)—and to the back office—to facilitate reporting of complete transactions as required under proposed Rule 901(d).
Second, each reporting party would have to implement a reporting mechanism. This would include a system that “packages” SBS transaction information from the reporting party's OMS, sends such information, and tracks it. The reporting mechanism would also include necessary data transmission lines to the appropriate registered SDR.
Third, each reporting party would have to establish an appropriate compliance program and support for the operation of the OMS and reporting mechanism. Relevant elements of the compliance program would include transaction verification and validation protocols; the ability to identify and correct erroneous transaction reports; and necessary technical, administrative, and legal support. Additional operational support would include new product development, systems upgrades, and ongoing maintenance.
Summing these burdens, the Commission preliminarily estimates that the initial (
This estimate is based on the following factors. First, based on discussions with SBS market participants, the Commission understands that the majority of SBSs are comprised of CDS and equity-based swaps. Accordingly, the Commission preliminarily believes that transactions in these two asset classes would predominate. Moreover, the Commission preliminarily believes that SBS market participants may not all transact in each asset class. Thus, even if each registered SDR accepted transaction reports only for a single SBS asset class, the total number of connections needed by many reporting parties would likely be limited. Next, the Commission also preliminarily believes that, for operational efficiency, a reporting party would seek to use only one registered SDR per asset class for repository services. Accordingly, to the extent that a single registered SDR accepted SBSs in multiple asset classes, a reporting party would need fewer connections. Finally, a reporting party that required a significant number of connections to registered SDRs could engage a third party—for example, a dealer or connectivity services provider—instead of independently establishing its own connections. Accordingly, the Commission preliminarily believes that one connection may suffice for many reporting parties.
On this basis, the Commission preliminarily estimates that the cost to establish and maintain connectivity to a registered SDR to facilitate the reporting required by proposed Rule 901 would impose an annual dollar cost burden of approximately $200,000,000, which corresponds to a dollar cost burden of $200,000 for each reporting party.
Moreover, the Commission believes that establishing a reporting mechanism for SBS transactions would impose internal burdens on each reporting party, including the development of systems necessary to capture and send information from the entity's OMS to the relevant registered SDR, as well as corresponding testing and support. The Commission preliminarily estimates an initial one-time aggregate burden of 172,000 burden hours, which corresponds to a burden of 172 burden hours for each reporting party.
Thus, the Commission preliminarily estimates that the initial (first-year) aggregate annualized burden on reporting parties for reporting under proposed Rule 901 would be 249,300 burden hours, which corresponds to approximately 250 burden hours for each reporting party.
The Commission preliminarily estimates that designing and implementing an appropriate compliance and support program would impose an initial, one-time aggregate burden of approximately 180,000 burden hours, which corresponds to a
The Commission further preliminarily estimates that maintaining a reporting party's compliance and support program would impose an ongoing aggregate burden of approximately 218,000 burden hours, which corresponds to a burden of 218 burden hours for each reporting party.
Therefore, the Commission preliminarily estimates the initial aggregate annualized burden on reporting parties for compliance and ongoing support under proposed Rule 901 would be 398,000 burden hours, which corresponds to 398 burden hours for each reporting party.
Likewise, the Commission estimates that the ongoing aggregate annual burdens on reporting parties associated with proposed Rule 901 would be 731,300 burden hours, which corresponds to 731 burden hours per reporting party.
Proposed Rule 901(f) would require a registered SDR to time-stamp information that it receives. Proposed Rule 901(g) would require a registered SDR to assign a unique transaction ID to each SBS it receives. The Commission preliminarily believes that a registered SDR would need to design its systems to include these capabilities, but that such design elements would not pose additional significant burdens to incorporate in the context of designing and building the technological framework that would be required of a SDR to become registered.
Thus, the Commission preliminarily estimates that the first-year aggregate annualized burden associated with proposed Rules 901(f) and (g) would be 2,820 burden hours, which corresponds to 282 burden hours per registered SDR.
Concurrently with proposed Regulation SBSR, the Commission is issuing the SDR Registration Proposing Release, which includes recordkeeping requirements for SBS transaction data received by a registered SDR pursuant to proposed Regulation SBSR. Specifically, proposed Rule 13n-5(b)(4) would require a registered SDR to maintain the transaction data that it collects for not less than five years after the applicable SBS expires, and historical positions and historical market values for not less than five years.
Each collection of information discussed above would be a mandatory collection of information.
Information collected pursuant to proposed Rule 901(c) would be widely available to the public to the extent it is incorporated into SBS transaction reports that are publicly disseminated by a registered SDR pursuant to
The Commission requests public comment on its burden estimates. The Commission also solicits comment as follows:
201. Is the proposed collection of information necessary for the performance of the functions of the agency? Would the information have practical utility?
202. How accurate are the Commission's preliminary estimates of the burdens of the proposed collection of information associated with proposed Rule 901? In particular, how many entities would incur collection of information burdens pursuant to proposed Rule 901?
203. Would covered entities incur any initial burdens associated with systems design, programming, expanding systems capacity, and establishing compliance programs pursuant to proposed Rule 901?
204. Would there be different or additional burdens associated with the collection of information under proposed Rule 901 that a covered entity would not undertake in the ordinary course of business?
205. Are there additional burdens that the Commission has not addressed in its preliminary burden estimates?
206. Can you suggest any ways to enhance the quality, utility, and clarity of the information to be collected?
207. Can you suggest any ways to minimize the burden of collection of information on those who would be required to respond, including through the use of automated collection techniques or other forms of information technology?
208. What entities may be subject to proposed Rule 901, whether specific classes of entities may be impacted, how many entities may be impacted, and will any such entity or class of entities be impacted differently than others? In addition, the Commission seeks comment on the accuracy of its estimates as to the number of participants in the SBS market that would be required to report information pursuant to proposed Rule 901.
Certain provisions of proposed Rule 902 of Regulation SBSR contain “collection of information requirements” within the meaning of the PRA. The title of this collection is “Rule 902—Public Dissemination of Transaction Reports.”
Proposed Rule 902(a) generally would require that a registered SDR publicly disseminate a transaction report for each SBS transaction immediately upon receipt of information about the SBS submitted by a reporting party pursuant to proposed Rule 901(c), along with any indicator(s) contemplated by the registered SDR's policies and procedures.
Pursuant to Rule 902(b), a registered SDR would be required to publicly disseminate a transaction report of a SBS that constitutes a block trade immediately upon receipt of information about the block trade from the reporting party. The transaction report would consist of all the information reported by the reporting party pursuant to proposed Rule 901(c), except for the notional size, plus the transaction ID and an indicator that the report represents a block trade. The registered SDR would be required to publicly disseminate a complete transaction report for such block trade (including the transaction ID and the full notional size) at a later time.
Proposed Rule 902(c) would prohibit a registered SDR from disseminating: (1) the identity of either counterparty to a SBS; (2) with respect to a SBS that is not cleared at a registered clearing agency and that is reported to a registered SDR, any information disclosing the business transactions and market positions of any person; (3) any information regarding a SBS reported pursuant to proposed Rule 901(i).
The real-time public dissemination requirement contained in proposed Rule 902 would provide post-trade transparency for SBS transactions, as required by the Dodd-Frank Act. Publicly disseminated reports of SBS transactions that are not block trades would include the full notional size. Publicly disseminated reports of SBS transactions that are block trades would occur pursuant to a two-step process. First, a real-time report would be disseminated without the notional size, but with an indication that the trade is a block trade as well as a transaction ID. At a later time, a follow-on report would be disseminated, including the notional size, with the transaction ID used to connect the second report to the first report.
The collection of information associated with the proposed Rule 902 would apply to registered SDRs. As noted above, the Commission preliminarily believes that an estimate of ten registered SDRs is reasonable for purposes of its analysis of potential burdens under the PRA.
Although proposed Rule 902 would not prescribe a manner of public dissemination, the Commission anticipates that a registered SDR would establish a mechanism functionally similar to one established by TRACE, which is a system operated by FINRA for collecting and disseminating to the public reports of trades in corporate and agency debt securities.
Simultaneously with this proposal, the Commission is proposing new Rules 13n-1 through 13n-11 under the Exchange Act relating to the SDR registration process, the duties of SDRs, and their core principles.
The Commission preliminarily believes that a registered SDR would be able to integrate the capability to publicly disseminate real-time SBS transaction reports required under proposed Rule 902 as part of its overall system development for transaction data. Accordingly, the Commission believes that the burdens associated with enabling and maintaining compliance with proposed Rule 902 would, as a practical matter, represent a portion of a registered SDR's overall systems development budget and process. Based on discussions with industry participants, the Commission preliminarily estimates that to implement and comply with the real-time public dissemination requirement of proposed Rule 902, each registered SDR would incur a burden equal to an additional 20% of the first-year and ongoing burdens discussed in the SDR Registration Proposing Release.
On this basis, the Commission preliminarily estimates that the initial one-time aggregate burden imposed by the proposed Rule 902 for development and implementation of the systems needed to disseminate the required transaction information, including the necessary software and hardware, would be approximately 84,000 hours and a dollar cost of $20 million, which would correspond to a burden of 8,400 hours and a dollar cost of $2 million for each registered SDR.
Pursuant to proposed Rule 13n-7(b) under the Exchange Act,
Each collection of information discussed above would be a mandatory collection of information.
Information collected pursuant to proposed Rule 902 would be widely available to the extent that it is incorporated into SBS transaction reports that are publicly disseminated by a registered SDR pursuant to proposed Rules 902(a) and (b). However, a registered SDR would be under an obligation to maintain the confidentiality of any information that is not subject to public dissemination. To the extent that the Commission receives confidential information pursuant to this collection of information, such information would be kept confidential, subject to the provisions of the Freedom of Information Act.
The Commission requests public comment on its burden estimates. The Commission also solicits comment as follows:
209. Is the proposed collection of information necessary for the performance of the functions of the agency? Would the information have practical utility?
210. How accurate are the Commission's preliminary estimates of the burdens of the proposed collection of information associated with proposed Rule 902? In particular, how many entities would incur collection of information burdens pursuant to proposed Rule 902?
211. Would registered SDRs incur any initial burdens associated with systems design, programming, expanding systems capacity, and establishing compliance programs pursuant to proposed Rule 902?
212. Would there be different or additional burdens associated with the collection of information under proposed Rule 902 that a registered SDR would not undertake in the ordinary course of business?
213. Are there additional burdens that the Commission has not addressed in its preliminary burden estimates?
214. Can you suggest any ways to enhance the quality, utility, and clarity of the information to be collected?
215. Can you suggest any ways to minimize the burden of collection of information on those who would be required to respond, including through the use of automated collection techniques or other forms of information technology?
The Commission does not believe that proposed Rule 903 would be a “collection of information” within the meaning of the PRA because the rule would merely permit reporting parties and registered SDRs to use codes in place of certain data elements, subject to
Certain provisions of proposed Rule 904 contain “collection of information requirements” within the meaning of the PRA. The title of this collection is “Rule 904—Operating Hours of Registered Security-Based Swap Data Repositories.”
Proposed Rule 904 would require a registered SDR to operate continuously, subject to two exceptions. First, a registered SDR could establish normal closing hours during periods when, in its estimation, the U.S. market and major foreign markets are inactive. A registered SDR would be required to provide reasonable advance notice to participants and to the public of its normal closing hours. Second, a registered SDR could declare, on an
Paragraphs (c) and (e) of proposed Rule 904 would specify requirements for handling and disseminating reported data during a registered SDR's normal and special closing hours. First, during normal closing hours and, to the extent reasonably practicable, during special closing hours, a registered SDR would be required to have the capability to receive and hold in queue transaction data it receives.
Two of the requirements contained in Rule 904 constitute requirements already contained in other proposed rules. First, the requirement in Rule 904(d) that, immediately upon system re-opening, a registered SDR would be required to publicly disseminate any transaction data required to be reported under proposed Rule 901(c) and held in queue, is also contained in the proposed Rule 902(a). Second, the requirement in proposed Rule 904(e) that, if a reporting party that has an obligation to report transaction data could not to do so because a registered SDR's system was unavailable, it would be required to submit that information immediately after it receives a notice that it is possible to do so, is already implicitly contained in proposed Rule 901.
The information that would be provided pursuant to proposed Rule 904 is necessary to allow participants and the public to know the normal and special closing hours of the registered SDR, and to allow participants to take appropriate action in the event that the registered SDR cannot accept SBS transaction reports from participants.
Proposed Rule 904 would apply to all registered SDRs. As noted above, the Commission preliminarily estimates that there would be ten registered SDRs.
The Commission preliminarily estimates that that the one-time, initial burden, as well as ongoing annualized burden for each registered SDR associated with proposed Rule 904 would be minimal, because registered SDRs would already have undertaken necessary steps in compliance with other proposed rules. First, simultaneously with this proposal, the Commission is proposing the SDR Registration Proposed Rules, including proposed Rules 13n-1 through 240-13n-11.
The Commission preliminarily believes that the requirements for a registered SDR to provide reasonable advance notice to participants and to the public of its normal and special closing hours, as well as to provide a notice to participants that it is possible to report transaction data to a registered SDR after its system was unavailable, would entail a minor burden. On this basis, the Commission preliminarily estimates that the annual aggregate burden (first-year and ongoing) imposed by proposed Rule 904 would be 360 hours, which corresponds to 36 hours per registered SDR.
Concurrently with proposed Regulation SBSR, the Commission is proposing the SDR Registration Proposed Rules.
Each collection of information discussed above would be a mandatory collection of information.
The Commission anticipates that any notices issued by a registered SDR to its participants would be publicly available.
The Commission requests public comment on its burden estimates. The Commission also solicits comment as follows:
216. Is the proposed collection of information necessary for the performance of the functions of the agency? Would the information have practical utility?
217. How accurate are the Commission's preliminary estimates of the burdens of the proposed collection of information associated with proposed Rule 904? In particular, how many
218. Would the burdens imposed under proposed Rule 904 be different or additional to those that a registered SDR would undertake in the ordinary course of business?
219. Are there additional burdens that the Commission has not addressed in its preliminary burden estimates?
220. Can you suggest any ways to enhance the quality, utility, and clarity of the information to be collected?
221. Can you suggest any ways to minimize the burden of collection of information on those who would be required to respond, including through the use of automated collection techniques or other forms of information technology?
Certain provisions of proposed Rule 905 of Regulation SBSR contain “collection of information requirements” within the meaning of the PRA. The title of this collection is “Rule 905—Correction of Errors in Security-Based Swap Information.”
Proposed Rule 905 would establish duties for SBS counterparties and registered SDRs to correct errors in information that previously has been reported.
The SBS transaction information required to be reported pursuant to proposed Rule 905 would be used by registered SDRs, participants, the Commission, and other regulators. Participants would be able to use such information to evaluate and manage their own risk positions and satisfy their duties to report corrected information to a registered SDR. A registered SDR would need the required information to correct its own records, in order to maintain an accurate record of a participant's positions as well as to disseminate corrected information. The Commission and other regulators would need the corrected information to have an accurate understanding of the market for surveillance and oversight purposes.
Proposed Rule 905 would apply to participants of a registered SDR. As noted above, the Commission has estimated that there may be 1,000 entities regularly engaged in the CDS marketplace. In addition, the Commission estimates that there may be up to 4,000 SBS counterparties that transact SBSs much less frequently. The Commission preliminarily believes that these SBS counterparties would not be reporting parties. However, these additional 4,000 counterparties would be “participants” as defined by proposed Rule 900. Accordingly, with respect to burdens applicable to all SBS counterparties, the Commission preliminarily believes that it is reasonable to use the estimate of 5,000 respondents for purposes of estimating collection of information burdens under the PRA.
Proposed Rule 905 also would apply to registered SDRs. As noted above, the Commission preliminarily estimates there would be ten registered SDRs.
The Commission preliminarily believes that promptly submitting an amended transaction report to the appropriate registered SDR after discovery of an error as required under proposed Rule 905(a)(2) would impose a burden on reporting parties. Likewise, the Commission preliminarily believes that promptly notifying the relevant reporting party after discovery of an error as required under proposed Rule 905(a)(1) would impose a burden on non-reporting-party participants.
With respect to reporting parties, the Commission preliminarily believes that proposed Rule 905(a) would impose an initial, one-time burden associated with designing and building the reporting party's reporting system to be capable of submitting amended SBS transactions to a registered SDR. In addition, reporting parties would be required to support and maintain the error reporting function.
The Commission preliminarily believes that designing and building appropriate reporting system functionality to comply with proposed Rule 905(a)(2) would be a component of, and represent an incremental “add-on” to, the cost to build a reporting system and develop a compliance function as required under proposed Rule 901. Based on discussions with industry participants, the Commission preliminarily estimates this incremental burden to be equal to 5% of the one-time and annual burdens associated with designing and building a reporting system that is in compliance with proposed Rule 901,
With regard to non-reporting-party participants, the Commission preliminarily believes that proposed Rule 905(a) would impose an initial and ongoing burden associated with promptly notifying the relevant reporting party after discovery of an error as required under proposed Rule 905(a)(1). The Commission preliminarily estimates that the annual burden would be 2,920,000 hours, which corresponds to 730 burden hours per non-reporting-party participant.
Proposed Rule 905(b) would require a registered SDR to develop protocols regarding the reporting and correction of erroneous information. The Commission preliminarily believes, however, that this duty would represent only a minor extension of other duties for which the Commission is estimating burdens, and consequently, would not impose substantial additional burdens on a registered SDR. A registered SDR would be required to have the ability to collect and maintain SBS transaction reports and update relevant records under the SDR Registration Proposing Release.
Accordingly, the Commission preliminarily estimates that the initial (first-year) aggregate annualized burden on registered SDRs under proposed Rule 905 would be 21,900 burden hours, which corresponds to 2,190 burden hours for each registered SDR.
Concurrently with proposed Regulation SBSR, the Commission is proposing the SDR Registration Proposed Rules, which would include recordkeeping requirements for SBS transaction data received by a registered SDR pursuant to proposed Regulation SBSR.
With respect to information disseminated by a registered SDR in compliance with proposed Rule 905(b)(2), proposed Rule 13n-7(b) under the Exchange Act would require a registered SDR to keep and preserve at least one copy of all documents, including all policies and procedures required by the Exchange Act and the rules or regulations thereunder for a period of not less than five years, the first two years in a place that is immediately available to the staff of the Commission for inspection and examination.
Each collection of information discussed above would be a mandatory collection of information.
Information collected pursuant to proposed Rule 905 would be widely available to the extent that it corrects information previously reported pursuant to proposed Rule 901(c) and incorporated into SBS transaction reports that are publicly disseminated by a registered SDR pursuant to proposed Rule 902. Generally, however, a registered SDR would be under an obligation to maintain the confidentiality of any information collected pursuant to proposed Rule 901, pursuant to Sections 13(n)(5) of the Exchange Act and proposed Rule 13n-9 thereunder.
The Commission requests public comment on its burden estimates. The Commission also solicits comment as follows:
222. Is the proposed collection of information necessary for the performance of the functions of the agency? Would the information have practical utility?
223. How accurate are the Commission's preliminary estimates of the burdens of the proposed collection of information associated with proposed Rule 905? In particular, how many entities would incur collection of information burdens pursuant to proposed Rule 905?
224. Would covered entities incur any initial burdens associated with systems design, programming, expanding systems capacity, and establishing compliance programs pursuant to proposed Rule 905?
225. What entities may be subject to proposed Rule 905? In what ways would these entities be impacted? Would any such entity or class of entities be impacted differently than others?
226. How many entities might be impacted by proposed Rule 905? Are the Commission's preliminary estimates as to the number of participants in the SBS market that would be required to report and retain information pursuant to the proposed rule accurate?
227. Are there additional burdens that the Commission has not addressed in its preliminary burden estimates?
228. Can you suggest any ways to enhance the quality, utility, and clarity of the information to be collected?
229. Can you suggest any ways to minimize the burden of collection of information on those who would be required to respond, including through the use of automated collection techniques or other forms of information technology?
Certain provisions of proposed Rule 906 of Regulation SBSR contain “collection of information requirements” within the meaning of the PRA. The title of this collection is “Rule 906—Duties of All Participants.”
Proposed Rule 906(a) would set forth a procedure designed to ensure that a registered SDR obtains relevant ID information for both counterparties to a SBS, not just the IDs of the reporting party. Proposed Rule 906(a) would require a registered SDR to identify any SBS reported to it for which it does not have participant ID and (if applicable) broker ID, desk ID, and trader ID of each counterparty. Proposed Rule 906(a) would further require the registered SDR, once a day, to send a report to each participant identifying, for each SBS to which that participant is a counterparty, the SBS(s) for which the registered SDR lacks participant ID and (if applicable) broker ID, desk ID, and trader ID. Additionally, under proposed Rule 906(a), a participant that receives such a report would be required to provide the missing ID information to the registered SDR within 24 hours.
Proposed Rule 906(b) would require a participant to provide a registered SDR with information identifying the participant's ultimate parent(s) and affiliate(s) that may also be participants of the registered SDR. Additionally, under proposed Rule 906(b), the participant would be required to promptly notify the registered SDR of any changes to the information provided.
Proposed Rule 906(c) would require each participant that is a SBS dealer or major SBS participant to establish, maintain, and enforce written policies and procedures that are reasonably designed to ensure compliance with any SBS transaction reporting obligations in a manner consistent with proposed Regulation SBSR and the registered SDR's applicable policies and procedures. In addition, proposed Rule 906(c) would require each such participant to review and update its policies and procedures at least annually.
The information required to be provided by participants pursuant to proposed Rule 906(a) would complete missing elements of SBS transaction reports so that the registered SDR would have, and could make available to regulators, accurate and complete records for reported SBS.
Similarly, proposed Rule 906(b) would be used to ensure that the registered SDR would have, and could make available to regulators, accurate and complete records for reported SBS regarding participant parents and affiliates. The Commission would use this information in its ongoing efforts to monitor and enforce compliance with the federal securities laws, including proposed Regulation SBSR.
The policies and procedures required under proposed Rule 906(c) would be used by participants to aid in their compliance with proposed Regulation SBSR, and also used by the Commission as part of its ongoing efforts to monitor and enforce compliance with the federal securities laws, including proposed Regulation SBSR.
Proposed Rules 906(a) and (b) would apply to all participants of registered SDRs. Based on the information currently available to the Commission, the Commission preliminarily estimates that there may be up to 5,000 participants. Proposed Rule 906(c) would apply to participants that are SBS dealers or major SBS participants. The Commission believes that such entities would constitute the majority of reporting parties, so that it is reasonable to use the figure of 1,000 respondents for purposes of estimating collection of information burdens under the PRA.
Proposed Rule 906 also imposes certain duties on registered SDRs. As noted above, the Commission is preliminarily estimating that there would be ten registered SDRs.
Proposed Rule 906(a) would require a registered SDR, once a day, to send a report to each participant identifying, for each SBS to which that participant is a counterparty, the SBS(s) for which the registered SDR lacks participant ID and (if applicable) broker ID, desk ID, and trader ID. The Commission preliminarily estimates that there would be a one-time, initial burden of 112 burden hours for a registered SDR to create a report template and develop the necessary systems and processes to produce a daily report required by proposed Rule 906(a).
Accordingly, the Commission preliminarily estimates that the initial
In addition, proposed Rule 906(a) would require any participant that receives a daily report from a registered SDR to provide the missing UICs to the registered SDR within 24 hours. The Commission preliminarily estimates participants that are reporting parties would bear no initial or ongoing burdens under proposed Rule 906(a). This estimate is based on the Commission's preliminary belief that a reporting party would structure its reporting program to be in compliance with proposed Regulation SBSR, and consequently, would send complete information as relates to itself for each SBS transaction submitted to a registered SDR. The Commission further preliminarily estimates that the initial and ongoing annualized burden under proposed Rule 906(a) to participants that are not reporting parties would be 1,277,500 burden hours, which corresponds to 255.5 burden hours per participant.
Proposed Rule 906(b) would require every participant to provide the registered SDR an initial parent/affiliate report and subsequent reports, as needed. The Commission preliminarily estimates that each participant would submit two reports each year.
Proposed Rule 906(c) would require each participant that is a SBS dealer or major SBS participant to establish, maintain, and enforce written policies and procedures that are reasonably designed to ensure compliance with any SBS transaction reporting obligations in a manner consistent with proposed Regulation SBSR and the registered SDR's applicable policies and procedures. Proposed Rule 906(c) would also require the review and updating of such policies and procedures at least annually. The Commission preliminary estimates that the one-time, initial burden for each covered participant to adopt written policies and procedures as required under proposed Rule 906(c) would be approximately 216 burden hours.
In addition, the Commission preliminarily estimates the burden of maintaining such policies and procedures, including a full review at least annually, as required by proposed Rule 906(c), would be approximately 120 burden hours for each covered participant.
Therefore, the Commission preliminarily estimates that the initial aggregate annualized burden associated with proposed Rule 906 would be 1,518,200 burden hours,
Concurrently with proposed Regulation SBSR, the Commission is issuing the SDR Registration Proposing Release, which would include recordkeeping requirements for SBS transaction data received by a registered SDR pursuant to proposed Regulation SBSR.
With regard to other information that a registered SDR may receive from participants pursuant to proposed Rule 906, proposed Rule 13n-7(b) would require a registered SDR to keep and preserve at least one copy of all documents, including all documents and policies and procedures required by the Exchange Act and the rules or regulations thereunder for a period of not less than five years, the first two years in a place that is immediately available to the staff of the Commission for inspection and examination.
Each collection of information discussed above would be a mandatory collection of information.
A registered SDR would be under an obligation to maintain the confidentiality of any information collected pursuant to proposed Rule 906. To the extent that the Commission receives confidential information pursuant this collection of information, such information would be kept confidential, subject to the provisions of the Freedom of Information Act.
The Commission requests public comment on its burden estimates. The Commission also solicits comment as follows:
230. Is the proposed collection of information necessary for the performance of the functions of the agency? Would the information have practical utility?
231. In what ways would entities covered by Rule 906 be impacted? Would any such entity or class of entities be impacted differently than others?
232. What would be the burdens on participants to provide to a registered SDR and keep updated information about their ultimate parents and affiliates that are also participants?
233. How many entities might be impacted by proposed Rule 906? Are the Commission's preliminary estimates as to the number of participants in the SBS market that would be required to report and retain information pursuant to the proposed rule accurate?
234. Can you suggest any ways to enhance the quality, utility, and clarity of the information to be collected?
235. Can you suggest any ways to minimize the burden of collection of information on those who would be required to respond, including through the use of automated collection techniques or other forms of information technology?
236. Would proposed Rule 906 create any additional burdens not discussed here? If so, please identify and quantify these burdens.
Certain provisions of proposed Rule 907 of Regulation SBSR contain “collection of information requirements” within the meaning of the PRA. The title of this collection is “Rule 907—Policies and Procedures of Registered Security-Based Swap Data Repositories.” The Commission is applying for a new OMB Control Number for this collection in accordance with 44 U.S.C. 3507(j) and 5 CFR 1320.13.
Proposed Rule 907 would require a registered SDR to establish and maintain compliance with written policies and procedures: (1) That enumerate the specific data elements of a SBS or a life cycle event that a reporting party would report; (2) that specify data formats, connectivity requirements, and other protocols for submitting information; (3) for specifying how reporting parties are to report corrections to previously submitted information, making corrections to information in its records that is subsequently discovered to be erroneous, and applying an appropriate indicator to any transaction report required to be disseminated by proposed Rule 905(b)(2), which would denote that the report relates to a previously disseminated transaction; (4) describing how reporting parties shall report and, consistent with the enhancement of price discovery, how the registered SDR shall publicly disseminate, reports of, and adjustments due to, life cycle events; SBS transactions that do not involve an opportunity to negotiate any material terms, other than the counterparty; and any other SBS transactions that, in the estimation of the registered SDR, do not accurately reflect the market; (5) for assigning transaction IDs and UICs related to its participants; and (6) for periodically obtaining from each participant information that identifies the participant's ultimate parent(s) and any other participant(s) with which the counterparty is affiliated, using applicable UICs.
In addition, proposed Rule 907(b)(1) would require a registered SDR to establish and maintain written policies and procedures for calculating and publicizing block trade thresholds for all SBS instruments reported to the registered SDR in accordance with the criteria and formula for determining block size as specified by the Commission.
Under proposed Rules 907(c) and (d), a registered SDR would be required to make its policies and procedures publicly available on its website, and review, and update as necessary, its policies and procedures at least annually, indicating the date on which they were last reviewed. Finally, proposed Rule 907(e) would require a registered SDR to have the capacity to provide to the Commission, upon request, information or reports related to the timeliness, accuracy, and completeness of data reported to it pursuant to proposed Regulation SBSR and the registered SDR's policies and procedures thereunder.
The policies and procedures required under proposed Rule 907 would be used by registered SDRs to aid in their compliance with Regulation SBSR, and also used by the Commission as part of its ongoing efforts to monitor and enforce compliance with the federal securities laws, including proposed Regulation SBSR. These policies and procedures also would be used by participants of a registered SDR to understand the specific data elements of SBS transactions that they must report, the specific data formats they would be required to use, and for understanding what constitutes a block trade in a SBS instrument. Furthermore, market participants would use the information about block trades calculated and publicized by a registered SDR to understand the block trade thresholds for specific SBS instruments, and for understanding the registered SDR's dissemination protocols generally. Finally, any information or reports provided to the Commission pursuant to proposed Rule 907(e) would be used by the Commission to assess the timeliness, accuracy, and completeness of data reported pursuant to proposed Regulation SBSR and as part of its general oversight of the SBS markets.
As noted above, the Commission preliminarily estimates that ten registered SDRs would be subject to proposed Rule 907.
The Commission preliminarily estimates that the one-time, initial burden for a registered SDR to adopt written policies and procedures as required under proposed Rule 907 would be approximately 15,000 hours.
The Commission preliminarily believes that, as part of its core functions, a registered SDR would have the capacity to provide to the Commission, upon request, information or reports related to the timeliness, accuracy, and completeness of data reported to it pursuant to proposed Regulation SBSR and the registered SDR's policies and procedures. Proposed Rule 13n-5(b) would require a registered SDR to establish, maintain, and enforce written policies and procedures to satisfy itself by reasonable means that the transaction data that has been submitted to the security-based swap data repository is accurate, and also to ensure that the transaction data and positions that it maintains are accurate.
Based on the Commission's experience and input from self-regulatory organizations, the Commission preliminarily believes that a registered SDR would need to hire 15 full-time staff to fulfill the obligations outlined in proposed Rule 907. Accordingly, the Commission preliminarily estimates that the initial annualized burden associated with proposed Rule 907 would be approximately 45,000 hours per registered SDR, which corresponds to an initial annualized aggregate burden of approximately 450,000 hours.
Concurrently with proposed Regulation SBSR, the Commission is proposing the SDR Proposed Rules.
Each collection of information discussed above would be a mandatory collection of information.
All of the policies and procedures required by proposed Rule 907 would have to be made available by a registered SDR on its website and would not, therefore, be confidential. Any information obtained by the Commission from a registered SDR pursuant to proposed Rule 907(e) relating to the timeliness, accuracy, and completeness of data reported to the registered SDR would be for regulatory purposes and would be kept confidential.
The Commission requests public comment on its burden estimates. The Commission also solicits comment as follows:
1. Is the proposed collection of information necessary for the performance of the functions of the agency? Would the information have practical utility?
2. How many entities might be impacted by proposed Rule 907? Are the Commission's preliminary estimates as to the number of registered SDRs that would be subject to proposed Rule 907 accurate?
3. How accurate are the Commission's preliminary estimates of the burdens of
4. Can you suggest any ways to enhance the quality, utility, and clarity of the information to be collected?
5. Does the Commission's proposed Rule 907 minimize burdens by reserving to registered SDRs the flexibility to develop and implement tailored policies and procedures, or would more specificity in the rule text better minimize associated burdens?
6. Can you suggest any ways to minimize the burden of collection of information on those who would be required to respond, including through the use of automated collection techniques or other forms of information technology?
7. Would proposed Rule 907 create any additional burdens not discussed here? If so, please identify and quantify these burdens.
The Commission preliminarily does not believe that proposed Rule 908 would be a “collection of information” within the meaning of the PRA, as the rule would merely describe the jurisdictional reach of proposed Regulation SBSR. The Commission requests comment on this preliminary assessment of proposed Rule 908. Would proposed Rule 908 impose any collection of information requirements that the Commission has not considered?
Certain provisions of proposed Rule 909 contain “collection of information requirements” within the meaning of the PRA. The title of this collection is “Rule 909—Registration of Security-Based Swap Data Repository as Securities Information Processor.”
Proposed Rule 909 would require a registered SDR to register with the Commission as a SIP. To comply with this requirement, a registered SDR would need to submit a Form SIP.
The information required by proposed Rule 909 would permit the Commission to register a registered SDR as a SIP, and to maintain updated information about the registered SDR/SIP over time.
The Commission preliminarily estimates that there would be ten registered SDRs. Thus, the Commission preliminarily estimates that ten entities would have to register as SIPs as required by proposed Rule 909.
As described in the SDR Registration Proposing Release,
With regard to ongoing burdens, the Commission preliminarily estimates that the aggregate annualized burden for providing amendments to Form SIP would be one-tenth of the burden to complete the initial form or 400 burden hours, which corresponds to 40 burden hours for each registered SDR. This figure is based on a preliminary estimate that each of ten registered SDRs would submit one amendment on Form SIP each year. SIP registration also would require a registered SDR to provide notice to the Commission of prohibitions or limitations on access to its services. The Commission preliminarily believes that the notice would be a simple form, and that prohibitions or limitations on access to information provided by a registered SDR would be not be prevalent. Thus, the Commission does not believe thatproviding such notice would result in any material burden. The Commission solicits comments as to the accuracy of these estimates.
Pursuant to proposed Rule 13n-7(b) under the Exchange Act,
Each collection of information discussed above would be a mandatory collection of information.
Form SIP is not confidential.
The Commission requests public comment on its burden estimates. The Commission also solicits comment as follows:
8. How many entities might be impacted by proposed Rule 909? Are the Commission's preliminary estimates as to the number of registered SDRs that would be subject to proposed Rule 909 accurate?
9. How accurate are the Commission's preliminary estimates of the burdens of the proposed collection of information associated with proposed Rule 909? Given that a SDR would be required to complete Form SDR to register with the Commission, how long would it take to also complete Form SIP?
10. How many amendments per year would a registered SDR/SIP have to file to Form SIP? What would be the average burden per amendment?
11. Can you suggest any ways to enhance the quality, utility, and clarity of the information to be collected?
12. Can you suggest any ways to minimize the burden of collection of information on those who would be required to respond, including through the use of automated collection techniques or other forms of information technology?
13. Would proposed Rule 909 or SIP registration create burdens for registered SDRs or other entities not contemplated here? If so, please identify and quantify these burdens.
The Commission preliminarily does not believe that proposed Rule 910 would be a “collection of information” within the meaning of the PRA. Proposed Rule 910 merely describes when a registered SDR and its participants would be required to comply with the various parts of proposed Regulation SBSR, and would not create any additional collection of information requirements. The Commission requests public comment on its burden estimates. The Commission also solicits comment whether proposed Rule 910 imposes any collection of information requirements that the Commission has not considered.
The Commission preliminarily does not believe that proposed Rule 911 would be a ”collection of information” within the meaning of the PRA. Proposed Rule 911 would restrict the ability of a reporting party to report a SBS to one registered SDR rather than another, but would not otherwise create any duties or impose any collection of information requirements beyond those already required by proposed Rule 901. The Commission requests public comment on its burden estimates. The Commission also solicits comment whether proposed Rule 911 imposes any collection of information requirements that the Commission has not considered.
The proposed amendments to Rule 31 under the Exchange Act do not contain any “collection of information requirements” within the meaning of the PRA. Rule 31(a)(11) sets forth a list of “exempt sales” to which Section 31 fees do not apply. The proposed amendment of Rule 31 would add “security-based swaps” to the list of “exempt sales,” and thereby exempt SBSs from Section 31 fees. The proposed amendment would require no collection of information, nor would it impose any burden on parties to SBS transactions. The Commission requests public comment on its burden estimates. The Commission also solicits comment whether the proposed amendment to Rule 31 imposes any collection of information requirements that the Commission has not considered.
On July 21, 2010, the President signed the Dodd-Frank Act into law. The Dodd-Frank Act was enacted to, among other things, promote the financial stability of the United States by improving accountability and transparency in the financial system.
The OTC derivatives markets, which have been described as opaque,
The Dodd-Frank Act amends the Exchange Act to require the Commission to adopt rules providing for, among other things: (1) The reporting of SBS to a registered SDR or to the Commission; and (2) real-time public dissemination of SBS transaction, volume, and pricing information. To accomplish this mandate, the Commission today is proposing Regulation SBSR, a set of reporting and related rules for SBS transactions.
In general, proposed Regulation SBSR would provide for the reporting of SBS information that falls into three broad categories: (1) Information that must be reported in real time pursuant to proposed Rule 901(c); (2) additional information that must be reported pursuant to proposed Rule 901(d) within specified timeframes, depending on whether the transaction is traded or confirmed electronically or manually; and (3) life cycle events that must be reported pursuant to proposed Rule 901(e). Proposed Regulation SBSR would require registered SDRs to publicly disseminate certain SBS information in real time. Proposed Regulation SBSR would identify the SBS information that would be required to be reported, establish reporting obligations, and specify the timeframes for reporting and disseminating information. Proposed Regulation SBSR would require SBS market participants and registered SDRs to establish appropriate policies and procedures governing the transaction reporting process. In addition, proposed Regulation SBSR would require each registered SDR to register with the Commission as a SIP. Together, Regulation SBSR is designed to provide a more transparent market for SBSs.
Broadly, the Commission anticipates that Regulation SBSR may have several overarching benefits to the SBS markets. These include the following:
Further, proposed Regulation SBSR should facilitate completing the reports the Commission is required to provide to Congress on SBSs and the SBS marketplace.
While the Commission believes that proposed Regulation SBSR would result in significant benefits to SBS market participants, the Commission is cognizant that the proposed rules would entail costs, as more fully discussed below. The proposed rules could, for example, require market participants to begin retaining additional data related to SBS transactions. The rules also could require market participants to modify existing internal processes and systems. The Commission estimates that the rules comprising proposed Regulation SBSR could affect 5,000 participants, including 1,000 reporting parties, and several million SBSs annually.
The Commission is sensitive to the costs and benefits associated with proposed Regulation SBSR. The Commission requests comment on the costs and benefits associated with the individual rules, and its cost-benefit analysis thereof, including identification and assessments of any costs and benefits not discussed in this analysis. The Commission also seeks comment on the accuracy of any of the benefits identified and also welcomes comments on the accuracy of any of the cost estimates. Finally, the Commission encourages commenters to identify, discuss, analyze, and supply relevant data, information, or statistics regarding any such costs or benefits.
By defining key terms, proposed Rule 900 would provide increased clarity about the scope and application of proposed Regulation SBSR. This should help market participants subject to the proposal understand their obligations and make appropriate compliance plans. Clearly defined terms should also help the Commission in its oversight responsibilities.
The Commission preliminarily believes that proposed Rule 900 would not entail any material costs to market participants. Proposed Rule 900 would define terms used in Regulation SBSR. The rule would not impose any obligation or duty.
The Commission requests comment on the costs and benefits of proposed Rule 900 discussed above, as well as any costs and benefits not already described that could result. The Commission also requests data to quantify any potential costs or benefits. In addition, the Commission requests comment on the following:
248. How can the Commission more accurately estimate the costs and benefits of proposed Rule 900?
249. Would proposed Rule 900 create any additional costs or benefits not discussed here?
Pursuant to proposed Rule 901, all SBS transactions must be reported. Together, sections (a), (b), (c), (d), (e), (h), and (i) of proposed Rule 901 set forth the parameters that SBS counterparties must follow to report SBS transactions to a registered SDR or, if there is no registered SDR that would accept the information, to the Commission. Proposed Rule 901(a) would specify which counterparty would be the “reporting party” for a SBS transaction. Proposed Rule 901(b) would require a reporting party to report the information required under proposed Rule 901 to a registered SDR or, if there is no registered SDR that would accept the information, to the Commission. Proposed Rule 901 divides the SBS information that would be required to be reported into three broad categories: (1) Information that would be required to be reported in real time pursuant to proposed Rule 901(c) and publicly disseminated pursuant to proposed Rule 902; (2) additional information that would be required to be reported pursuant to proposed Rule 901(d)(1) within the timeframes specified in proposed Rule 901(d)(2); and (3) life cycle events that must be reported pursuant to proposed Rule 901(e), the timeframes for which would vary depending on whether the transaction was executed and confirmed electronically or manually. The information that would be reported under proposed Rule 901(d)(1) would not be publicly disseminated. Proposed Rule 901(i) would require the reporting of the information detailed in proposed Rules 901(c) and (d), to the extent such information is available, for pre-enactment SBSs and transitional SBSs.
Proposed Rule 901(f) would require a registered SDR to time stamp, to the second, its receipt of any information submitted to it pursuant to proposed Rules 901(c), (d), or (e). Proposed Rule 901(g) would require a registered SDR to assign a transaction ID to each SBS reported by a reporting party.
The SBS transaction information required to be reported pursuant to proposed Rule 901 would benefit market participants and the SBS
To comply with proposed Rule 901, reporting parties—which are the largest and most actively engaged participants in the SBS market—would likely need to establish and maintain OMSs capable of supporting real-time and additional reporting. The Commission anticipates that proposed Rule 901 would have the effect of promoting efforts by reporting parties to inventory their positions in SBSs, as each determines what information needs to be reported. This effect could encourage management review of internal procedures and controls by these reporting parties.
In addition, proposed Rule 901 would provide a means for the Commission to gain a better understanding of the SBS market, including the size and scope of that market, as the Commission would have access to data held by a registered SDR.
The information reported by reporting parties pursuant to proposed Rule 901 would be used by registered SDRs to publicly disseminate real-time reports of SBS transactions, and to retain SBS transaction and position information for use by regulators. The reporting requirements of proposed Rule 901 are designed to ensure that important information about SBSs is reported and, ultimately available to market participants, through the market data feed disseminated by a registered SDR.
The Commission further preliminarily believes that the time stamp and transaction ID required to be added by the registered SDR under proposed Rules 901(f) and (g) would facilitate data management by the registered SDR, as well as market supervision and oversight by the Commission and other regulatory authorities.
Generally, the availability of additional market information, along with the ability of the Commission and other regulators to use information about SBS transactions reported to and held by registered SDRs, would result in more robust prudential and systemic regulation. The Commission and other regulators would use information about SBS transactions reported to and held by registered SDRs to conduct both prudential and systemic regulation, as well as to examine for improper behavior and to take enforcement actions, as appropriate. Specifying general types of information to be reported and publicly disseminated could increase the efficiency and level of standardization in the SBS market.
Proposed Rule 901 would prescribe only broad categories of SBS data to be reported. However, proposed Rule 907(a)(1) would require each registered SDR to enumerate specific data elements to be reported, and to specify acceptable data formats. This approach would provide for the efficient accommodation of evolving industry conventions in the reporting of SBS data. The requirement that all trades be reported to a registered SDR for public dissemination, regardless of trading venue, would reduce the coordination costs that would exist if numerous parties were independently disseminating SBS data. In this way, proposed Rule 901 would increase the uniformity in the SBS data that is disseminated under proposed Rule 902.
Proposed Rule 901(i) would also provide important benefits. By requiring reporting of pre-enactment and transitional SBS transactions, proposed Rule 901(i) would provide the Commission with insight as to outstanding notional size, number of transactions, and number and type of participants in the SBS market. This would provide a starting benchmark against which to assess the development of the SBS market over time and, thus, represents a first step toward a more transparent and well regulated market for SBSs. The data reported pursuant to proposed Rule 901(i) also could help the Commission prepare the reports that it is required to provide to Congress. Further, proposed Rule 901(i) would require market participants to inventory their positions in SBS to determine what information needs to be reported, which could benefit market participants by encouraging management review of their internal procedures and controls.
The transaction ID required by proposed Rule 901(g) also would provide an important benefit by facilitating the reporting of subsequent, related SBS transactions that may be submitted to a registered SDR (
Proposed Rule 901 would require reporting parties, to the extent they do not already possess systems for electronically capturing and transmitting data about their SBS transactions, to build or otherwise obtain such systems. Such systems would be necessary to report data within the timeframes set forth in proposed Rules 901(c) and (d), because it is unlikely that manual processes could capture and report in real time the numerous data elements relating to a SBS. There could be substantial benefits in the form of reduced operational risk in requiring all reporting parties to have such capability. Systematizing all SBS transaction information more quickly would support effective risk management, as counterparties, registered SDRs, clearing agencies (in some cases), and regulators would obtain accurate knowledge of new SBS transactions more quickly. Reporting parties that obtain such systems could see additional benefits in being able to process and risk manage their existing positions more effectively, or use their expanded capability to participate further in the SBS market.
Finally, proposed Rule 901 could result in significant benefits by encouraging the creation and widespread use of generally accepted standards for reference information. Proposed Rule 901 would require the reporting of a participant ID of each counterparty and, as applicable, the broker ID, desk ID, and trader ID of the reporting party or its broker. The Commission preliminarily believes that reporting of this information would help ensure effective oversight, enforcement, and surveillance of the SBS market by the Commission and other regulators. For example, activity could be tracked by a particular participant, a particular desk, or a particular trader. Regulators could observe patterns and connections in trading activity, or examine whether
The Commission understands that some efforts have been undertaken—in both the private and public sectors, both domestically and internationally—to establish a comprehensive and widely accepted system for identifying entities that participate not just in the SBS market, but in the financial markets generally. Such a system would be of significant benefit to regulators worldwide, as each market participant could readily be identified using a single reference code regardless of the jurisdiction or product market in which the market participant was engaging. Such a system also could be of significant benefit to the private sector, as market participants would have a common identification system for all counterparties and reference entities, and would no longer have to use multiple proprietary nomenclature systems. The enactment of the Dodd-Frank Act and the establishment of a comprehensive system for reporting and dissemination of SBSs—and for reporting and dissemination of swaps, under jurisdiction of the CFTC—offer a unique opportunity to facilitate the establishment of a comprehensive and widely accepted system for identifying entities that participate not just in the SBS market, but in the financial markets generally.
The proposed SBS reporting requirements would impose initial and ongoing costs on reporting parties. The Commission preliminarily believes that these costs would be a function of, among other things, the number of reportable SBS transactions and the data elements required to be collected for each SBS transaction.
The Commission obtained information from publicly available sources and consulted with industry participants in an effort to quantify the number of aggregate SBS transactions on an annual basis. According to publicly available data from DTCC, recently, there have been an average of approximately 36,000 CDS transactions per day,
The Commission believes that SBS market participants would face three categories of costs to comply with proposed Rule 901. First, each market participant would have to develop an internal OMS capable of capturing relevant SBS transaction information so that it can be reported. The Commission understands that, because of the manner in which participants transact certain SBSs with certain transaction details being added post-execution, an OMS would likely need to link both to a market participant's trade desk—to permit real-time transaction reporting—and to the market participant's back office—to facilitate reporting of complete transactions as required under proposed Rule 901. The OMS would also have to include or be connected to a system designed to store SBS transaction information.
Second, each reporting party would have to implement a reporting mechanism. This would include a system that “packages” SBS transaction information from the entity's OMS, sends the information, and tracks it. The reporting mechanism would also include necessary data transmission lines to the appropriate registered SDR.
Third, each reporting party would have to establish an appropriate compliance program and support for the operation of the OMS and reporting mechanism. Relevant elements of the compliance program would include transaction verification and validation protocols, the ability to identify and correct erroneous transaction reports, necessary technical, administrative, and legal support. Additional operational support would include new product development, systems upgrades, and ongoing maintenance.
Based on conversations with industry participants, the Commission preliminarily believes that the reporting timeframes mandated by proposed Rules 901(c), (d), and (e) may be costly to achieve for reporting parties that do not currently have the capabilities to perform those functions in those time frames, requiring additional expenditure of resources to satisfy these requirements. For example, reporting parties that do not currently have the capability to capture SBS trade information and provide it to a registered SDR in real time would be required by proposed Regulation SBSR to obtain such capability.
Proposed Rule 901 would not provide an explicit list of data elements. Instead, proposed Regulation SBS would provide a registered SDR with flexibility to determine the specifics of the form and format for data to be reported under proposed Rule 901. Thus, to the extent reported and disseminated SBS transaction data are not uniform, market participants and regulators could face a cost to standardize and interpret them.
Summing these costs, the Commission preliminarily estimates the initial aggregate annualized cost for reporting parties for internal order management under proposed Rule 901 would be $170,794,000, which corresponds to $170,794 for each reporting party.
On this basis, the Commission preliminarily estimates that the cost to establish and maintain connectivity to a registered SDR to facilitate the reporting required by proposed Rule 901 would impose an annual (first-year and ongoing) aggregate cost of approximately $200,000,000, which corresponds to $200,000 for each reporting party.
Moreover, the Commission believes that establishing a reporting mechanism for SBS transactions would impose internal costs on each reporting party, including the development of systems necessary to capture and send information from the entity's OMS to the relevant registered SDR, as well as corresponding testing and support. The Commission preliminarily estimates an initial one-time aggregate cost of $46,657,000, which corresponds to an initial one-time cost of $46,657 for each reporting party.
Thus, the Commission preliminarily estimates the initial, aggregate annualized cost for reporting parties submitting SBS transaction reports under proposed Rule 901 would be $252,057,000, which corresponds to $252,057 for each reporting party.
The Commission preliminarily estimates that designing and implementing an appropriate compliance and support program would impose an initial one-time aggregate cost of approximately $51,590,000, which corresponds to a cost of $51,590 for each reporting party.
Therefore, the Commission preliminarily estimates the initial aggregate annualized costs to reporting parties for compliance and ongoing support under proposed Rule 901 would be $88,162,000, which corresponds to $88,162 for each reporting party.
Summing these costs, the Commission preliminarily estimates that the initial, aggregate annualized costs associated with proposed Rule 901 would be $511,013,000, which corresponds to $511,013 per reporting party.
Finally, the Commission notes that it is possible that the costs associated with required reporting pursuant to proposed Regulation SBSR could represent a barrier to entry for new, smaller firms that might not have the ability or desire to comply with these reporting requirements. To the extent that proposed Regulation SBSR causes new firms not to enter the SBS market, this would be a cost of the proposal. Nevertheless, the Commission preliminarily believes that firms would be able to contract with third-party service providers, which could facilitate their compliance with proposed Regulation SBSR. Accordingly, the Commission preliminarily does not believe it likely that proposed Rule 901 would, as a practical matter, act as a barrier to new entrants. The Commission requests comment on this issue.
Proposed Rule 901(f) would require a registered SDR to time stamp, to the second, its receipt of any information submitted to it pursuant to proposed Rules 901(c), (d), or (e). Proposed Rule 901(g) would require a registered SDR to assign a transaction ID to each SBS reported by a reporting party. The Commission preliminarily believes that these requirements would not be significant in the context of designing and building the technological framework that would be required of an SDR to become registered.
Thus, the Commission preliminarily estimates that the initial aggregate annualized cost associated with proposed Rules 901(f) and (g) would be $778,480, which corresponds to $77,848 per registered SDR.
The Commission requests comment on the costs and benefits of proposed Rule 901 discussed above, as well as any costs and benefits not already described that could result. The Commission also requests data to quantify any potential costs or benefits. In addition, the Commission requests comment on the following:
250. How can the Commission more accurately estimate the costs and benefits?
251. What are the costs currently borne by entities covered by proposed Rule 901 with respect to the retention of records of SBS transactions?
252. How many entities would be affected by the proposed rule? How many transactions would be subject to the proposed rule?
253. Are there additional costs involved in complying with the rule that have not been identified? What are the types, and amounts, of the costs?
254. Would the obligations imposed on reporting parties by proposed Rule 901 be a significant enough barrier to entry to cause some firms not to enter the SBS market? If so, how many firms might decline to enter the market? How can the cost of their not entering the market be tabulated? How should the Commission weigh such costs, if any, against the anticipated benefits from increased transparency to the SBS market from the proposal, as discussed above?
255. Can commenters assess the benefits of having comprehensive and accurate reporting of SBS transactions to registered SDRs, which would provide access to such information to the Commission and other regulators? What would have been the benefits to the SBS market if such regulatory oversight had been in place sooner?
256. What benefits and costs would there be to converting to a reference identification system established by or on behalf of an IRSB? What fees might be charged to support such a system? How much would those fees be? Who would have to pay them?
257. Would there be additional benefits from the proposed rule that have not been identified?
Generally, proposed Rule 902 would require the public dissemination of SBS transaction information. Proposed Rule 902(a) would set out the core requirement that a registered SDR, immediately upon receipt of a SBS transaction report of a SBS, must publicly disseminate information about the SBS, except in the case of a block trade, that must consist of all the information reported by the reporting party pursuant to proposed Rule 901, plus any indicator or indicators contemplated by the registered SDR's policies and procedures that are required by proposed Rule 907.
Proposed Rule 902(b) would require a registered SDR to publicly disseminate a transaction report of a block trade immediately upon receipt of information about the block trade from the reporting party. The transaction report would consist of all the information reported by the reporting party pursuant to proposed Rule 901(c), except for the notional size, plus the transaction ID and an indicator that the report represents a block trade. The registered SDR would be required to publicly disseminate a complete transaction report for such block trade (including the transaction ID and the full notional size) at a later time.
By reducing information asymmetries, post-trade transparency has the potential to lower transaction costs, improve confidence in the market, encourage participation by a larger number of market participants, and increase liquidity in the SBS market. The current market is opaque. Market participants, even dealers, lack an effective mechanism to learn the prices at which other market participants transact. In the absence of post-trade transparency, market participants do not know whether the prices they are paying or would pay are higher or lower than what others are paying for the same SBS instruments. Currently, market participants resort to “screen-scraping” e-mails containing indicative quotation information to develop a sense of the market. Supplementing that effort with prompt last-sale information would provide all market participants with more extensive and more accurate information on which to make trading and valuation determinations.
SBSs are complex derivative instruments, and there exists no single accepted way to model a SBS for pricing purposes. Post-trade pricing and volume information could allow valuation models to be adjusted to reflect how SBS counterparties have valued a SBS instrument at a specific moment in time. Public, real-time dissemination of last-sale information also could aid dealers in deriving better quotations, because they would know the prices at which other market participants have recently traded. This information could aid end users in evaluating current quotations, because they could inquire from dealers why the quotations that the dealers are providing them differ from the prices of recently executed transactions. Furthermore, end users would be afforded the means of testing whether quotations offered by dealers before the last sale were close to the price at which the last sale was executed. In this manner, post-trade transparency could promote price competition and more efficient price discovery, and ultimately lower transaction costs in the SBS market.
Post-trade transparency of SBSs, as required by proposed Rule 902, could benefit the financial markets generally by improving market participants' ability to value SBSs, particularly if the trade information is used as an input to, rather than as a substitute for, independent valuations and pricing decisions by other market participants. In transparent markets with sufficient liquidity, valuations generally can be derived from recent quotations and/or last-sale prices. However, in opaque markets or markets with low liquidity, recent quotations or last-sale prices may not exist or, if they do exist, may not be widely available. Therefore, market participants holding assets that trade in opaque markets or markets with low liquidity frequently rely instead on pricing models. These models might be based on assumptions subject to the evaluator's discretion, and can be imprecise. Thus, market participants holding the same asset but using different valuation models might arrive at significantly different values for the same asset.
Valuation models could be improved to the extent that they consider last-sale reports of the asset to be valued, reports of related assets, or reports of benchmark products that include the asset to be valued or closely related assets, even if those reports are dated. There is evidence to suggest that post-trade transparency helps reduce the range of valuations of assets that trade in illiquid markets.
Furthermore, better valuations could create a benefit in the form of more efficient capital allocation, which is premised on accurate knowledge of asset prices. Asset prices that are too high could result in a misallocation of capital, as investors demand more of an asset that cannot deliver an economic risk-adjusted return. By the same token, assets that are inappropriately undervalued could represent investment opportunities that will likely not receive enough capital because investors do not realize that a good risk-adjusted return is available. To the extent that post-trade transparency of SBS transactions enables asset valuations to move closer to their fundamental value, capital could be more efficiently allocated.
Better valuations resulting from post-trade transparency of SBSs also could reduce prudential and systemic risks. Some financial institutions, including many of the most systemically important financial institutions, have large portfolios of SBSs. The financial system could benefit if the portfolios of these institutions were more accurately valued. To the extent that post-trade transparency affirms the valuation of an institution's portfolio, regulators, the individual firm, and the market as a whole could be more certain as to whether the firm would or would not pose prudential or systemic risks. In some cases, however, post-trade transparency in the SBS market might cause an individual firm to revalue its positions and lower the overall value of its portfolio. The sooner that accurate valuations can be made, the more quickly that regulators and the individual firm could take appropriate steps to minimize the firm's prudential risk profile, and the more quickly that regulators and other market participants could take appropriate steps to address any systemic risk concerns raised by that firm.
In addition, proposed Rule 902 is designed to maximize the availability of information regarding SBS transactions to all market participants in a way that the Commission preliminarily believes “take[s] into account whether the public disclosure will materially reduce market liquidity.”
Finally, real-time public dissemination of SBS transaction reports could have effects on the overall volume of the SBS market, which could have certain benefits. Greater transparency could result in greater confidence in the SBS market, resulting in more market participants being willing to trade, or the same number of market participants being willing to trade more often. These additional transactions could result in better allocation of risk across the financial system. On the other hand, there could be a benefit even if fewer SBS transactions occur because of proposed Regulation SBSR. This could be the case if market participants that are unable or unwilling to properly manage the attendant risks of participation in the SBS market are deterred from participating, or if there were a reduction in the number of SBS transactions where there is a significant information asymmetry between the counterparties. In the latter case, there could be a benefit if uninformed parties are deterred from unwittingly taking on imprudent positions in SBSs.
A potential cost of post-trade transparency that is often cited by market participants, particularly dealers, is that it increases inventory risks. Dealers often enter trades with their customers as a liquidity supplier. A potential consequence of post-trade transparency is that dealers trying to hedge inventory following a trade are put in a weaker bargaining position relative to subsequent counterparties, and will either raise the liquidity fee charged to their clients or refuse to accommodate such trades. Such behavior could lead to lower trading volume and reduce the ability of market participants to manage risk, both of which could have a negative welfare effect on all market participants.
In an opaque market, market participants have to rely primarily on their understanding of the market's fundamentals to arrive at a price at which they would be willing to assume risk. With immediate real-time public dissemination of a block trade, however, market participants who might be willing to offset that risk—
Another potential cost of post-trade transparency in the SBS market, as contemplated by proposed Rule 902, is that last-sale prints, particularly in infrequently traded products, could be the result of unusual conditions that do not reflect the economic fundamentals of the SBS instrument. For instance, if a large market participant failed resulting in the liquidation of its portfolio, fire sale prices could have the effect of requiring other market participants to unduly mark down the value of their portfolios. This could cause additional market stress,
Simultaneously with this proposal, the Commission is proposing new Rules 13n-1 through 13n-11 under the Exchange Act relating to the SDR registration process, the duties of SDRs, and their core principles.
On this basis, the Commission preliminarily estimates that the initial one-time aggregate costs associated with real-time public dissemination for development and implementation of the systems needed to disseminate the required transaction information and for necessary software and hardware would be $40,004,000 million, which corresponds to $4,000,400 per registered SDR.
The SDR Registration Proposed Rules also address additional costs on registered SDRs that are not included here.
The Commission requests comment on the costs and benefits of proposed Rule 902 discussed above, as well as any costs and benefits not already described that could result. The Commission also requests data to quantify any potential costs or benefits. In addition, the Commission requests comment on the following:
258. What would be the costs and benefits of post-trade transparency in the SBS market, both in the long and the short term? How would post-trade transparency alter the existing market structure?
259. How would post-trade transparency in the SBS market affect the ability to hedge? Would hedging become more costly or less costly over time? Why?
260. Would post-trade transparency have the same costs and benefits on the SBS market similar as on other securities markets? Why or why not?
261. The SBS market is currently almost wholly institutional. Would this characteristic impact the costs and benefits of post-trade transparency on the SBS market? If so, how and how much? Are the needs of market participants in the SBS market for access to transaction information different than the needs of market participants in other securities markets for access to transaction information?
262. A significant amount of trading in the SBS market is currently carried out by only a limited number of market participants. Would this characteristic impact the costs and benefits of post-trade transparency on the SBS market? If so, how and how much? For example, is there a concern that it would be easier to determine the identity of the counterparties to a SBS transaction in certain instances based on the real-time transaction report? If so, what would be the harm, if any, of such knowledge? Would the answer differ depending upon the liquidity of the SBS instrument, or whether it was a customized SBS or not?
263. The SBS market is generally more illiquid than other securities markets that have post-trade transparency regimes. How would this characteristic impact, if at all, the effect the costs and benefits of post-trade transparency on the SBS market? Do commenters believe that post-trade transparency could materially reduce market liquidity in the SBS market, or particular subsets thereof? Why and how? Please be specific in your response and provide data to the extent possible.
264. How would a post-trade transparency regime in SBSs affect the costs of trading in the underlying securities? For example, how, if at all, would the post-trade transparency regime affect liquidity in the corporate bond market?
265. Academic studies of other securities markets generally have found that post-trade transparency reduces transaction costs and has not reduced market liquidity. How do those markets differ or compare to the SBS market? How would those similarities or differences affect post-trade transparency in the SBS market?
266. Do commenters believe that post-trade transparency could materially reduce market liquidity in the SBS market, or particular subsets thereof? Why and how?
267. Would proposed Rule 902 create any additional costs or benefits not discussed here?
268. Are there any ways that the Commission can study the costs and benefits of the dissemination delay for the size of a block trade by creating different initial requirements by entities
To facilitate the reporting and dissemination of SBS transactions, as would be required under proposed Rules 901 and 902, the Commission understands that there may—or could be developed—industry conventions for identifying SBSs or reference entities on which SBS are based through readily available reference codes. Proposed Rule 903 addresses this possibility. Specifically, proposed Rule 903 would provide that a reporting party could provide information to a registered SDR pursuant to proposed Rule 901, and a registered SDR could publicly disseminate information pursuant to proposed Rule 902, using codes in place of certain data elements, provided that the information necessary to interpret such codes is widely available on a non-fee basis.
The use of such codes by a registered SDR and its participants could give rise to significant potential benefits. First, the use of codes could greatly improve the efficiency and accuracy of the trade reporting system by streamlining the provision of data to the registered SDR. Reporting just the code could replace several data elements that otherwise would have to be reported separately. Second, the development of a public coding system could also support greater transparency. Coded transaction reports with key identifying information for SBS transactions could facilitate the aggregation of market transactions, particularly when the records are dispersed across different registered SDRs. Third, the aggregation of SBS transaction data through codes would also facilitate more efficient market analysis studies, surveillance activities, and system risk monitoring by regulators by streamlining the presentation of the SBS transaction data. Without robust, common identifying information, the process of aggregating market data across asset classes and entities could be impaired, increasing the effort required for market analysis activities.
Proposed Rule 903 could impose certain costs on current SBS market participants. Some SBS market participants have developed private coding systems.
The Commission preliminarily believes that proposed Rule 903 would not impose any material costs on registered SDRs or their participants. The development and use of a coding system that is widely available on a non-fee basis would instead likely reduce the costs associated with reporting and disseminating SBS transactions as required under proposed Rules 901 and 902, as market participants would not have to incur any fees to use codes.
The Commission requests comment on the costs and benefits of proposed Rule 903 discussed above, as well as any costs and benefits not already described that could result. The Commission also requests data to quantify any potential costs or benefits. In addition, the Commission requests comment on the following:
269. How can the Commission more accurately estimate the costs and benefits?
270. Would proposed Rule 903 entail any benefits or costs not considered by the Commission?
271. Are there costs the Commission has not considered with respect to the use of coding systems that are widely available on a non-fee basis? Would the use of these coding systems in fact reduce the costs associated with the obligations under proposed Rules 901 and 902?
272. Are there coding systems that are widely available on a non-fee basis? What, if any, costs may be associated with requiring the use of a coding system that is widely available on a non-fee basis?
273. What would be the costs and benefits of permitting the use of codes that are available for a fee? Could allowing the use of such codes create a regulatory monopoly in favor of the owner of the code's intellectual property?
Proposed Rule 904 would require a registered SDR to design its systems to allow for continuous receipt and dissemination of SBS data, except that a registered SDR would be permitted to establish “normal closing hours.” Such normal closing hours may occur only when, in the estimation of the registered SDR, the U.S. markets and other major markets are inactive. In addition, a registered SDR would be permitted to declare, on an
The Commission preliminarily believes that it would be beneficial to require a registered SDR to continuously receive and disseminate SBS transaction information. The market for SBS is global, and the Commission believes the public interest would be served by requiring continuous real-time dissemination of any SBS transactions (with a sufficient nexus to the United States to require reporting into a registered SDR), no matter when they are executed. Thus, if U.S. participants execute SBSs in Japan while the U.S. markets are closed, market participants around the word would still be able to view real-time reports of such transactions. Further, the Commission believes a continuous dissemination regime would eliminate the temptation for market participants to defer execution of SBS transactions until after regular business hours to avoid real-time post-trade transparency.
Paragraphs (c) to (e) of proposed Rule 904 would specify requirements for handling and disseminating reported data during a registered SDR's normal and special closing hours. The Commission believes that these provisions would provide benefits in that they clarify how SBSs executed while a registered SDR is in normal or special closing hours would be reported and disseminated.
The Commission believes that a registered SDR would not incur significant costs in connection with proposed Rule 904. The Commission today is also proposing Rules 13n-1 through 13n-11 under the Exchange Act that would deal with SDR registration, duties, data collection and maintenance, automated systems and other issues.
The requirement for a registered SDR to provide reasonable advance notice to participants and to the public of its normal and special closing hours, and to provide notice to participants that the SDR is available to accept transaction data after its system was unavailable would likely entail a only a modest annual cost. The Commission preliminarily estimates that the initial and ongoing aggregate annual cost would be $27,360, which corresponds to $2,736 per registered SDR.
There would be additional costs, but these costs are subsumed in the costs associated with proposed Rules 901 and 902. For example, the requirement for reporting parties to report information to the registered SDR upon receiving a notice that the registered SDR has resumed its normal operations would be part of the reporting parties' reporting obligations under proposed Rule 901. The requirement to disseminate transaction reports held in queue should not present any costs in addition to those already contained in proposed Rule 902.
The Commission requests comment on the costs and benefits of proposed Rule 904 discussed above, as well as any costs and benefits not already described. The Commission also requests data to quantify any potential costs or benefits. In addition, the Commission requests comment on the following:
274. How can the Commission more accurately estimate the costs and benefits for handling and disseminating reported SBS transaction data during a registered SDR's normal and special closing hours?
275. Would proposed Rule 904 create any additional costs or benefits not discussed here?
Proposed Rule 905(a) would establish procedures for correcting errors in reported and disseminated SBS information, recognizing that that any system for transaction reporting must accommodate for the possibility that certain data elements may be incorrectly reported. Proposed Rule 905(b) would set forth the duties of a registered SDR to verify disputed information and make necessary corrections. If the registered SDR either discovers an error in a transaction on its system or receives notice of an error from a counterparty, proposed Rule 905(b)(1) would require the registered SDR to verify the accuracy of the terms of the SBS and, following such verification, promptly correct the erroneous information contained in its system. Proposed Rule 905(b)(2) would further require that, if the erroneous transaction information contained any data that fall into the categories enumerated in proposed Rule 901(c) as information required to be reported in real time, the registered SDR would be required to publicly disseminate a corrected transaction report of the SBS promptly following verification of the trade by the counterparties to the SBS.
The Commission preliminarily believes that proposed Rule 905 would enhance the overall reliability of SBS transaction data that would be required to be reported. Requiring participants to promptly correct erroneous transaction information should help ensure the timeliness, accuracy, and completeness of reported transaction information. Providing more accurate SBS transaction data to a registered SDR could benefit participants by helping them ensure that their books are marked accurately and reduce operational risks that arise when counterparties do not have the same understanding of the details of a SBS transaction. Furthermore, requiring corrected SBS transaction information be reported to a registered SDR helps ensure that the Commission and other regulars have an accurate view of the prudential and systemic risks in the SBS market.
The Commission preliminarily believes that promptly submitting an amended transaction report to the appropriate registered SDR after discovery of an error as required under proposed Rule 905(a)(2) would impose costs on reporting parties. Likewise, the Commission preliminarily believes that promptly notifying the relevant reporting party after discovery of an error as required under proposed Rule 905(a)(1) would impose costs on non-reporting-party participants.
With respect to reporting parties, the Commission preliminarily believes that proposed Rule 905(a) would impose an initial, one-time cost associated with designing and building the reporting party's reporting system to be capable of submitting amended SBS transactions to a registered SDR. In addition, reporting parties would face ongoing costs associated with supporting and maintaining the error reporting function.
The Commission preliminarily believes that designing and building appropriate reporting system functionality to comply with proposed Rule 905(a)(2) would be a component of, and represent an incremental “add-on” to, the cost to build a reporting system and develop a compliance function as required under proposed Rule 901.
Based on discussions with industry participants, the Commission preliminarily estimates this incremental burden to be equal to 5% of the one-time and annual costs associated with designing and building a reporting system that is in compliance with proposed Rule 901,
With regard to non-reporting-party participants, the Commission preliminarily believes that proposed Rule 905(a) would impose an initial and ongoing cost associated with promptly notifying the relevant reporting party after discovery of an error as required under proposed Rule 905(a)(1). The Commission preliminarily estimates that such annual cost would be $172,280,000, which corresponds to $43,070 per non-reporting-party
For registered SDRs, the ability to verify disputed information, process a transaction report cancellation, accept a new SBS transaction report, and update relevant records are all capabilities that the registered SDR would have to implement to comply with its obligations under proposed Regulation SDR.
Accordingly, the Commission preliminarily estimates that the initial aggregate annualized cost on registered SDRs under proposed Rule 905 would be $5,603,700, which corresponds to $560,370 for each registered SDR.
The Commission requests comment on the costs and benefits of proposed Rule 905 discussed above, as well as any costs and benefits not already described that could result. The Commission also requests data to quantify any potential costs or benefits. In addition, the Commission requests comment on the following:
276. How can the Commission more accurately estimate the costs and benefits related to correcting errors in reported and disseminated SBS information?
277. Would proposed Rule 905 create any additional costs or benefits not discussed here?<