[Title 17 CFR ]
[Code of Federal Regulations (annual edition) - April 1, 2017 Edition]
[From the U.S. Government Publishing Office]



[[Page i]]

          
          
          Title 17

Commodity and Securities Exchanges


________________________

Parts 41 to 199

                         Revised as of April 1, 2017

          Containing a codification of documents of general 
          applicability and future effect

          As of April 1, 2017
                    Published by the Office of the Federal Register 
                    National Archives and Records Administration as a 
                    Special Edition of the Federal Register

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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 17:
          Chapter I--Commodity Futures Trading Commission 
          (Continued)                                                3
  Finding Aids:
      Table of CFR Titles and Chapters........................     511
      Alphabetical List of Agencies Appearing in the CFR......     531
      List of CFR Sections Affected...........................     541

[[Page iv]]





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

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 17 CFR 41.1 refers 
                       to title 17, part 41, 
                       section 1.

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

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

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noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

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EFFECTIVE AND EXPIRATION DATES

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OMB CONTROL NUMBERS

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Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
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This material, like any other properly issued regulation, has the force 
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this volume.

[[Page vii]]

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    Oliver A. Potts,
    Director,
    Office of the Federal Register.
    April 1, 2017.







[[Page ix]]



                               THIS TITLE

    Title 17--Commodity and Securities Exchanges is composed of four 
volumes. The first two volumes containing parts 1--40, and 41--199 
comprise Chapter I--Commodity Futures Trading Commission. The third 
volume contains Chapter II--Securities and Exchange Commission, parts 
200--239. The fourth volume, comprising part 240 to end, contains the 
remaining regulations of the Securities and Exchange Commission, and 
Chapter IV--Department of the Treasury. The contents of these volumes 
represent all current regulations issued by the Commodity Futures 
Trading Commission, the Securities and Exchange Commission, and the 
Department of the Treasury as of April 1, 2017.

    The OMB control numbers for the Securities and Exchange Commission 
appear in Sec.  200.800 of chapter II. For the convenience of the user, 
Sec.  200.800 is reprinted in the Finding Aids section of the volume 
containing part 240 to end.

    For this volume, Ann Worley was Chief Editor. The Code of Federal 
Regulations publication program is under the direction of John Hyrum 
Martinez, assisted by Stephen J. Frattini.

[[Page 1]]



              TITLE 17--COMMODITY AND SECURITIES EXCHANGES




                  (This book contains parts 41 to 199)

  --------------------------------------------------------------------
                                                                    Part

chapter i--Commodity Futures Trading Commission (Continued).          41

[[Page 3]]



       CHAPTER I--COMMODITY FUTURES TRADING COMMISSION (CONTINUED)




  --------------------------------------------------------------------
Part                                                                Page
41              Security futures products...................           5
42              Anti-money laundering, terrorist financing..          29
43              Real-time public reporting..................          29
44              Interim final rule for pre-enactment swap 
                    transactions............................          68
45              Swap data recordkeeping and reporting 
                    requirements............................          70
46              Swap data recordkeeping and reporting 
                    requirements: pre-enactment and 
                    transition swaps........................         102
48              Registration of foreign boards of trade.....         119
49              Swap data repositories......................         152
50              Clearing requirement and related rules......         188
75              Proprietary trading and certain interests in 
                    and relationships with covered funds....         198
100             Delivery period required....................         241
140             Organization, functions, and procedures of 
                    the Commission..........................         241
141             Salary offset...............................         268
142             Indemnification of CFTC employees...........         272
143             Collection of claims owed the United States 
                    arising from activities under the 
                    Commission's jurisdiction...............         273
144             Procedures regarding the disclosure of 
                    information and the testimony of present 
                    or former officers and employees in 
                    response to subpoenas or other demands 
                    of a court..............................         278
145             Commission records and information..........         280
146             Records maintained on individuals...........         294
147             Open Commission meetings....................         303
148             Implementation of the Equal Access to 
                    Justice Act in covered adjudicatory 
                    proceedings before the Commission.......         310
149             Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by the Commodity 
                    Futures Trading Commission..............         317

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150             Limits on positions.........................         323
151             Position limits for futures and swaps.......         331
155             Trading standards...........................         355
156             Broker Associations.........................         359
160             Privacy of consumer financial information 
                    under Title V of the Gramm-Leach-Bliley 
                    Act.....................................         360
162             Protection of consumer information under the 
                    Fair Credit Reporting Act...............         389
165             Whistleblower rules.........................         406
166             Customer protection rules...................         436
170             Registered futures associations.............         439
171             Rules relating to review of National Futures 
                    Association decisions in disciplinary, 
                    membership denial, registration and 
                    member responsibility actions...........         443
180             Prohibition against manipulation............         457
190             Bankruptcy..................................         458
191-199

[Reserved]

[[Page 5]]



PART 41_SECURITY FUTURES PRODUCTS--Table of Contents



                      Subpart A_General Provisions

Sec.
41.1 Definitions.
41.2 Required records.
41.3 Application for an exemptive order pursuant to section 4f(a)(4)(B) 
          of the Act.
41.4-41.9 [Reserved]

                 Subpart B_Narrow-Based Security Indexes

41.11 Method for determining market capitalization and dollar value of 
          average daily trading volume; application of the definition of 
          narrow-based security index.
41.12 Indexes underlying futures contracts trading for fewer than 30 
          days.
41.13 Futures contracts on security indexes trading on or subject to the 
          rules of a foreign board of trade.
41.14 Transition period for indexes that cease being narrow-based 
          security indexes.
41.15 Exclusion from definition of narrow-based security index for 
          indexes composed of debt securities.

   Subpart C_Requirements and Standards for Listing Security Futures 
                                Products

41.21 Requirements for underlying securities.
41.22 Required certifications.
41.23 Listing of security futures products for trading.
41.24 Rule amendments to security futures products.
41.25 Additional conditions for trading for security futures products.
41.27 Prohibition of dual trading in security futures products by floor 
          brokers.

    Subpart D_Notice_Designated Contract Markets in Security Futures 
                                Products

41.31 Notice-designation requirements.
41.32 Continuing obligations.
41.33 Applications for exemptive orders.
41.34 Exempt provisions.

           Subpart E_Customer Accounts and Margin Requirements

41.41 Security futures products accounts.
41.42 Customer margin requirements for security futures--authority, 
          purpose, interpretation, and scope.
41.43 Definitions.
41.44 General provisions.
41.45 Required margin.
41.46 Type, form and use of margin.
41.47 Withdrawal of margin.
41.48 Undermargined accounts.
41.49 Filing proposed margin rule changes with the Commission.

    Authority: Sections 206, 251 and 252, Pub. L. 106-554, 114 Stat. 
2763, 7 U.S.C. 1a, 2, 6f, 6j, 7a-2, 12a; 15 U.S.C. 78g(c)(2).

    Source: 66 FR 44511, Aug. 23, 2001, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  41.1  Definitions.

    For purposes of this part:
    (a) Alternative trading system shall have the meaning set forth in 
section 1a(1) of the Act.
    (b) Board of trade shall have the meaning set forth in section 1a(2) 
of the Act.
    (c) Broad-based security index means a group or index of securities 
that does not constitute a narrow-based security index.
    (d) Foreign board of trade means a board of trade located outside of 
the United States, its territories or possessions, whether incorporated 
or unincorporated, where foreign futures or foreign options are entered 
into.
    (e) Narrow-based security index has the same meaning as in section 
1a(35) of the Commodity Exchange Act.
    (f) National securities association means a board of trade 
registered with the Securities and Exchange Commission pursuant to 
section 15A(a) of the Securities Exchange Act of 1934.
    (g) National securities exchange means a board of trade registered 
with the Securities and Exchange Commission pursuant to section 6(a) of 
the Securities Exchange Act of 1934.
    (h) Rule shall have the meaning set forth in Commission regulation 
40.1.
    (i) Security futures product shall have the meaning set forth in 
section 1a(32) of the Act.
    (j) Opening price means the price at which a security opened for 
trading, or a price that fairly reflects the price at which a security 
opened for trading, during the regular trading session of the national 
securities exchange or national securities association that lists the 
security. If the security is not listed on a national securities 
exchange or a national securities association, then opening price shall 
mean the price at which a security opened for trading, or a price that 
fairly reflects the price at

[[Page 6]]

which a security opened for trading, on the primary market for the 
security.
    (k) Regular trading session of a security means the normal hours for 
business of a national securities exchange or national securities 
association that lists the security.
    (l) Regulatory halt means a delay, halt, or suspension in the 
trading of a security, that is instituted by the national securities 
exchange or national securities association that lists the security, as 
a result of:
    (1) A determination that there are matters relating to the security 
or issuer that have not been adequately disclosed to the public, or that 
there are regulatory problems relating to the security which should be 
clarified before trading is permitted to continue; or
    (2) The operation of circuit breaker procedures to halt or suspend 
trading in all equity securities trading on that national securities 
exchange or national securities association.

[66 FR 44511, Aug. 23, 2001, as amended at 66 FR 44965, Aug. 27, 2001; 
67 FR 36761, May 24, 2002; 77 FR 66344, Nov. 2, 2012]



Sec.  41.2  Required records.

    A designated contract market that trades a security index or 
security futures product shall maintain in accordance with the 
requirements of Sec.  1.31 of this chapter books and records of all 
activities related to the trading of such products, including: Records 
related to any determination under subpart B of this part whether or not 
a futures contract on a security index is a narrow-based security index 
or a broad-based security index.

[77 FR 66344, Nov. 2, 2012]



Sec.  41.3  Application for an exemptive order pursuant to 
section 4f(a)(4)(B) of the Act.

    (a) Any futures commission merchant or introducing broker registered 
in accordance with the notice registration provisions of Sec.  3.10 of 
this chapter, or any broker or dealer exempt from floor broker or floor 
trader registration pursuant to section 4f(a)(3) of the Act, may apply 
to the Commission for an order pursuant to section 4f(a)(4)(B) of the 
Act granting exemption to such person from any provision of the Act or 
the Commission's regulations other than sections 4c(b), 4c(d), 4c(e), 
4c(g), 4d, 4e, 4h, 4f(b), 4f(c), 4j, 4k(1), 4p, 6d, 8(d), 8(g), and 16 
of the Act and the rules thereunder.
    (b) An application pursuant to this section must set forth in 
writing or in an electronic mail message the following information:
    (1) The name, main business address and main business telephone 
number of the person applying for an order;
    (2) The capacity in which the person is registered with the 
Securities and Exchange Commission and the person's CRD number (if a 
member of the National Association of Securities Dealers, Inc.) or 
equivalent self-regulatory organization identification, together with a 
certification, if true, that the person's registration is not suspended 
pursuant to an order of the Securities and Exchange Commission;
    (3) The particular section(s) of the Act and/or provision(s) of the 
Commission's regulations with respect to which the person seeks 
exemption;
    (4) Any provision(s) of the securities laws or rules, or of the 
rules of a securities self-regulatory organization analogous to the 
provision(s);
    (5) A clear explanation of the facts and circumstances under which 
the person believes that the requested exemptive relief is necessary or 
appropriate in the public interest; and
    (6) A clear explanation of the extent to which the requested 
exemptive relief is consistent with the protection of investors.
    (c) A national securities exchange or other securities industry 
self-regulatory organization may submit an application for an order 
pursuant to this section on behalf of its members.
    (d) An application for an order must be submitted to the Director of 
the Division of Swap Dealer and Intermediary Oversight, Commodity 
Futures Trading Commission, 1155 21st Street, NW., Washington, DC 20581, 
if in paper form, or to [email protected] if submitted via electronic mail.
    (e) The Commission may, in its sole discretion, grant the 
application, deny the application, decline to entertain

[[Page 7]]

the application, or grant the application subject to one or more 
conditions.

[66 FR 43086, Aug. 17, 2001. Redesignated at 67 FR 53171, Aug. 14, 2002, 
as amended at 67 FR 62352, Oct. 7, 2002; 78 FR 22419, Apr. 16, 2013]



Sec. Sec.  41.4-41.9  [Reserved]



                 Subpart B_Narrow-Based Security Indexes



Sec.  41.11  Method for determining market capitalization and dollar 
value of average daily trading volume; application of the definition 
of narrow-based security index.

    (a) Market capitalization. For purposes of section 1a(35)(B) of the 
Act (7 U.S.C. 1a(35)(B)):
    (1) On a particular day, a security shall be 1 of 750 securities 
with the largest market capitalization as of the preceding 6 full 
calendar months when it is included on a list of such securities 
designated by the Commission and the SEC as applicable for that day.
    (2) In the event that the Commission and the SEC have not designated 
a list under paragraph (a)(1) of this section:
    (i) The method to be used to determine market capitalization of a 
security as of the preceding 6 full calendar months is to sum the values 
of the market capitalization of such security for each U.S. trading day 
of the preceding 6 full calendar months, and to divide this sum by the 
total number of such trading days.
    (ii) The 750 securities with the largest market capitalization shall 
be identified from the universe of all NMS securities as defined in 
Sec.  242.600 that are common stock or depositary shares.
    (b) Dollar value of ADTV. (1) For purposes of section 1a(35)(A) and 
(B) of the Act (7 U.S.C. 1a(35)(A) and (B)):
    (i)(A) The method to be used to determine the dollar value of ADTV 
of a security is to sum the dollar value of ADTV of all reported 
transactions in such security in each jurisdiction as calculated 
pursuant to paragraphs (b)(1)(ii) and (iii) of this section.
    (B) The dollar value of ADTV of a security shall include the value 
of all reported transactions for such security and for any depositary 
share that represents such security.
    (C) The dollar value of ADTV of a depositary share shall include the 
value of all reported transactions for such depositary share and for the 
security that is represented by such depositary share.
    (ii) For trading in a security in the United States, the method to 
be used to determine the dollar value of ADTV as of the preceding 6 full 
calendar months is to sum the value of all reported transactions in such 
security for each U.S. trading day during the preceding 6 full calendar 
months, and to divide this sum by the total number of such trading days.
    (iii)(A) For trading in a security in a jurisdiction other than the 
United States, the method to be used to determine the dollar value of 
ADTV as of the preceding 6 full calendar months is to sum the value in 
U.S. dollars of all reported transactions in such security in such 
jurisdiction for each trading day during the preceding 6 full calendar 
months, and to divide this sum by the total number of trading days in 
such jurisdiction during the preceding 6 full calendar months.
    (B) If the value of reported transactions used in calculating the 
ADTV of securities under paragraph (b)(1)(iii)(A) is reported in a 
currency other than U.S. dollars, the total value of each day's 
transactions in such currency shall be converted into U.S. dollars on 
the basis of a spot rate of exchange for that day obtained from at least 
one independent entity that provides or disseminates foreign exchange 
quotations in the ordinary course of its business.
    (iv) The dollar value of ADTV of the lowest weighted 25% of an index 
is the sum of the dollar value of ADTV of each of the component 
securities comprising the lowest weighted 25% of such index.
    (2) For purposes of section 1a(35)(B)(III)(cc) of the Act (7 U.S.C. 
1a(35)(B)(III)(cc)):
    (i) On a particular day, a security shall be 1 of 675 securities 
with the largest dollar value of ADTV as of the preceding 6 full 
calendar months when it is included on a list of such securities 
designated by the Commission and the SEC as applicable for that day.

[[Page 8]]

    (ii) In the event that the Commission and the SEC have not 
designated a list under paragraph (b)(2)(i) of this section:
    (A) The method to be used to determine the dollar value of ADTV of a 
security as of the preceding 6 full calendar months is to sum the value 
of all reported transactions in such security in the United States for 
each U.S. trading day during the preceding 6 full calendar months, and 
to divide this sum by the total number of such trading days.
    (B) The 675 securities with the largest dollar value of ADTV shall 
be identified from the universe of all NMS securities as defined in 
Sec.  242.600 that are common stock or depositary shares.
    (c) Depositary Shares and Section 12 Registration. For purposes of 
section 1a(35)(B)(III)(aa) of the Act (7 U.S.C. 1a(35)(B)(III)(aa)), the 
requirement that each component security of an index be registered 
pursuant to section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 
78l) shall be satisfied with respect to any security that is a 
depositary share if the deposited securities underlying the depositary 
share are registered pursuant to section 12 of the Securities Exchange 
Act of 1934 and the depositary share is registered under the Securities 
Act of 1933 (15 U.S.C. 77a et seq.) on Form F-6 (17 CFR 239.36).
    (d) Definitions. For purposes of this section:
    (1) SEC means the Securities and Exchange Commission.
    (2) Closing price of a security means:
    (i) If reported transactions in the security have taken place in the 
United States, the price at which the last transaction in such security 
took place in the regular trading session of the principal market for 
the security in the United States.
    (ii) If no reported transactions in a security have taken place in 
the United States, the closing price of such security shall be the 
closing price of any depositary share representing such security divided 
by the number of shares represented by such depositary share.
    (iii) If no reported transactions in a security or in a depositary 
share representing such security have taken place in the United States, 
the closing price of such security shall be the price at which the last 
transaction in such security took place in the regular trading session 
of the principal market for the security. If such price is reported in a 
currency other than U.S. dollars, such price shall be converted into 
U.S. dollars on the basis of a spot rate of exchange relevant for the 
time of the transaction obtained from at least one independent entity 
that provides or disseminates foreign exchange quotations in the 
ordinary course of its business.
    (3) Depositary share has the same meaning as in Sec.  240.12b-2.
    (4) Foreign financial regulatory authority has the same meaning as 
in Section 3(a)(52) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)(52)).
    (5) Lowest weighted 25% of an index. With respect to any particular 
day, the lowest weighted component securities comprising, in the 
aggregate, 25% of an index's weighting for purposes of section 
1a(35)(A)(iv) of the Act (7 U.S.C. 1a(35)(A)(iv)) (``lowest weighted 25% 
of an index'') means those securities:
    (i) That are the lowest weighted securities when all the securities 
in such index are ranked from lowest to highest based on the index's 
weighting methodology; and
    (ii) For which the sum of the weight of such securities is equal to, 
or less than, 25% of the index's total weighting.
    (6) Market capitalization of a security on a particular day:
    (i) If the security is not a depositary share, is the product of:
    (A) The closing price of such security on that same day; and
    (B) The number of outstanding shares of such security on that same 
day.
    (ii) If the security is a depositary share, is the product of:
    (A) The closing price of the depositary share on that same day 
divided by the number of deposited securities represented by such 
depositary share; and
    (B) The number of outstanding shares of the security represented by 
the depositary share on that same day.
    (7) Outstanding shares of a security means the number of outstanding 
shares of such security as reported on the most recent Form 10-K, Form 
10-Q, Form 10-KSB, Form 10-QSB, or Form 20-F (17 CFR 249.310, 249.308a, 
249.310b,

[[Page 9]]

249.308b, or 249.220f) filed with the Securities and Exchange Commission 
by the issuer of such security, including any change to such number of 
outstanding shares subsequently reported by the issuer on a Form 8-K (17 
CFR 249.308).
    (8) Preceding 6 full calendar months means, with respect to a 
particular day, the period of time beginning on the same day of the 
month 6 months before and ending on the day prior to such day.
    (9) Principal market for a security means the single securities 
market with the largest reported trading volume for the security during 
the preceding 6 full calendar months.
    (10) Reported transaction means:
    (i) With respect to securities transactions in the United States, 
any transaction for which a transaction report is collected, processed, 
and made available pursuant to an effective transaction reporting plan, 
or for which a transaction report, last sale data, or quotation 
information is disseminated through an automated quotation system as 
described in Section 3(a)(51)(A)(ii) of the Securities Exchange Act of 
1934 (15 U.S.C. 78c(a)(51)(A)(ii)); and
    (ii) With respect to securities transactions outside the United 
States, any transaction that has been reported to a foreign financial 
regulatory authority in the jurisdiction where such transaction has 
taken place.
    (11) U.S. trading day means any day on which a national securities 
exchange is open for trading.
    (12) Weighting of a component security of an index means the 
percentage of such index's value represented, or accounted for, by such 
component security.

[66 FR 44511, Aug. 23, 2001, as amended at 70 FR 43750, July 29, 2005; 
77 FR 66344, Nov. 2, 2012]



Sec.  41.12  Indexes underlying futures contracts trading for fewer than 30 days.

    (a) An index on which a contract of sale for future delivery is 
trading on a designated contract market or foreign board of trade is not 
a narrow-based security index under section 1a(35) of the Act (7 U.S.C. 
1a(35)) for the first 30 days of trading, if:
    (1) Such index would not have been a narrow-based security index on 
each trading day of the preceding 6 full calendar months with respect to 
a date no earlier than 30 days prior to the commencement of trading of 
such contract;
    (2) On each trading day of the preceding 6 full calendar months with 
respect to a date no earlier than 30 days prior to the commencement of 
trading such contract:
    (i) Such index had more than 9 component securities;
    (ii) No component security in such index comprised more than 30 
percent of the index's weighting;
    (iii) The 5 highest weighted component securities in such index did 
not comprise, in the aggregate, more than 60 percent of the index's 
weighting; and
    (iv) The dollar value of the trading volume of the lowest weighted 
25% of such index was not less than $50 million (or in the case of an 
index with 15 or more component securities, $30 million); or
    (3) On each trading day of the 6 full calendar months preceding a 
date no earlier than 30 days prior to the commencement of trading such 
contract:
    (i) Such index had at least 9 component securities;
    (ii) No component security in such index comprised more than 30 
percent of the index's weighting; and
    (iii) Each component security in such index was:
    (A) Registered pursuant to Section 12 of the Securities Exchange Act 
of 1934 (15 U.S.C. 78) or was a depositary share representing a security 
registered pursuant to Section 12 of the Securities Exchange Act of 
1934;
    (B) 1 of 750 securities with the largest market capitalization that 
day; and
    (C) 1 of 675 securities with the largest dollar value of trading 
volume that day.
    (b) An index that is not a narrow-based security index for the first 
30 days of trading pursuant to paragraph (a) of this section, shall 
become a narrow-based security index if such index has been a narrow-
based security index for more than 45 business days over 3 consecutive 
calendar months.
    (c) An index that becomes a narrow-based security index solely 
because it was a narrow-based security index for

[[Page 10]]

more than 45 business days over 3 consecutive calendar months pursuant 
to paragraph (b) of this section shall not be a narrow-based security 
index for the following 3 calendar months.
    (d) Definitions. For purposes of this section:
    (1) Market capitalization has the same meaning as in Sec.  
41.11(d)(6) of this chapter.
    (2) Dollar value of trading volume of a security on a particular day 
is the value in U.S. dollars of all reported transactions in such 
security on that day. If the value of reported transactions used in 
calculating dollar value of trading volume is reported in a currency 
other than U.S. dollars, the total value of each day's transactions 
shall be converted into U.S. dollars on the basis of a spot rate of 
exchange for that day obtained from at least one independent entity that 
provides or disseminates foreign exchange quotations in the ordinary 
course of its business.
    (3) Lowest weighted 25% of an index has the same meaning as in Sec.  
41.11(d)(5) of this chapter.
    (4) Preceding 6 full calendar months has the same meaning as in 
Sec.  41.11(d)(8) of this chapter.
    (5) Reported transaction has the same meaning as in Sec.  
41.11(d)(10) of this chapter.

[66 FR 44511, Aug. 23, 2001, as amended at 77 FR 66344, Nov. 2, 2012]



Sec.  41.13  Futures contracts on security indexes trading on or 
subject to the rules of a foreign board of trade.

    When a contract of sale for future delivery on a security index is 
traded on or subject to the rules of a foreign board of trade, such 
index shall not be a narrow-based security index if it would not be a 
narrow-based security index if a futures contract on such index were 
traded on a designated contract market.

[77 FR 66344, Nov. 2, 2012]



Sec.  41.14  Transition period for indexes that cease being 
narrow-based security indexes.

    (a) Forty-five day tolerance provision. An index that is a narrow-
based security index that becomes a broad-based security index for no 
more than 45 business days over 3 consecutive calendar months shall be a 
narrow-based security index.
    (b) Transition period for indexes that cease being narrow-based 
security indexes for more than forty-five days. An index that is a 
narrow-based security index that becomes a broad-based security index 
for more than 45 business days over 3 consecutive calendar months shall 
continue to be a narrow-based security index for the following 3 
calendar months.
    (c) Trading in months with open interest following transition 
period. After the transition period provided for in paragraph (b) of 
this section ends, a national securities exchange may continue to trade 
only in those months in the security futures product that had open 
interest on the date the transition period ended.
    (d) Definition of calendar month. Calendar month means, with respect 
to a particular day, the period of time beginning on a calendar date and 
ending during another month on a day prior to such date.



Sec.  41.15  Exclusion from definition of narrow-based security index 
for indexes composed of debt securities.

    (a) An index is not a narrow-based security index if:
    (1)(i) Each of the securities of an issuer included in the index is 
a security, as defined in section 2(a)(1) of the Securities Act of 1933 
and section 3 (a)(10) of the Securities Exchange Act of 1934 and the 
respective rules promulgated thereunder, that is a note, bond, 
debenture, or evidence of indebtedness;
    (ii) None of the securities of an issuer included in the index is an 
equity security, as defined in section 3(a)(11) of the Securities 
Exchange Act of 1934 and the rules promulgated thereunder;
    (iii) The index is comprised of more than nine securities that are 
issued by more than nine non-affiliated issuers;
    (iv) The securities of any issuer included in the index do not 
comprise more than 30 percent of the index's weighting;
    (v) The securities of any five non-affiliated issuers included in 
the index do not comprise more than 60 percent of the index's weighting;

[[Page 11]]

    (vi) Except as provided in paragraph (a)(1)(viii) of this section, 
for each security of an issuer included in the index one of the 
following criteria is satisfied:
    (A) The issuer of the security is required to file reports pursuant 
to section 13 or section 15(d) of the Securities Exchange Act of 1934;
    (B) The issuer of the security has a worldwide market value of its 
outstanding common equity held by non-affiliates of $700 million or 
more;
    (C) The issuer of the security has outstanding securities that are 
notes, bonds, debentures, or evidences of indebtedness having a total 
remaining principal amount of at least $1 billion;
    (D) The security is an exempted security as defined in section 
3(a)(12) of the Securities Exchange Act of 1934 and the rules 
promulgated thereunder; or
    (E) The issuer of the security is a government of a foreign country 
or a political subdivision of a foreign country; and
    (vii) Except as provided in paragraph (a)(1)(viii) of this section, 
for each security of an issuer included in the index one of the 
following criteria is satisfied:
    (A) The security has a total remaining principal amount of at least 
$250,000,000; or
    (B) The security is a municipal security (as defined in section 
3(a)(29) of the Securities Exchange Act of 1934 and the rules 
promulgated thereunder) that has a total remaining principal amount of 
at least $200,000,000 and the issuer of such municipal security has 
outstanding securities that are notes, bonds, debentures, or evidences 
of indebtedness having a total remaining principal amount of at least $1 
billion; and
    (viii) Paragraphs (a)(1)(vi) and (a)(1)(vii) of this section will 
not apply to securities of an issuer included in the index if:
    (A) All securities of such issuer included in the index represent 
less than five percent of the index's weighting; and
    (B) Securities comprising at least 80 percent of the index's 
weighting satisfy the provisions of paragraphs (a)(1)(vi) and 
(a)(1)(vii) of this section.
    (2)(i) The index includes exempted securities, other than municipal 
securities as defined in section 3(a)(29) of the Securities Exchange Act 
of 1934 and the rules promulgated thereunder, that are:
    (A) Notes, bonds, debentures, or evidences of indebtedness; and
    (B) Not equity securities, as defined in section 3(a)(11) of the 
Securities Exchange Act of 1934 and the rules promulgated thereunder; 
and
    (ii) Without taking into account any portion of the index composed 
of such exempted securities, other than municipal securities, the 
remaining portion of the index would not be a narrow-based security 
index meeting all the conditions under paragraph (a)(1) of this section.
    (b) For purposes of this section:
    (1) An issuer is affiliated with another issuer if it controls, is 
controlled by, or is under common control with, that issuer.
    (2) For purposes of this section, ``control'' means ownership of 20 
percent or more of an issuer's equity, or the ability to direct the 
voting of 20 percent or more of the issuer's voting equity.
    (3) The term ``issuer'' includes a single issuer or group of 
affiliated issuers.

[71 FR 39541, July 13, 2006]



   Subpart C_Requirements and Standards for Listing Security Futures 
                                Products

    Source: 66 FR 55083, Nov. 1, 2001, unless otherwise noted.



Sec.  41.21  Requirements for underlying securities.

    (a) Security futures products based on a single security. A futures 
contract on a single security is eligible to be traded as a security 
futures product only if:
    (1) The underlying security is registered pursuant to section 12 of 
the Securities Exchange Act of 1934;
    (2) The underlying security is:
    (i) Common stock,
    (ii) Such other equity security as the Commission and the SEC 
jointly deem appropriate, or
    (iii) A note, bond, debenture, or evidence of indebtedness; and

[[Page 12]]

    (3) The underlying security conforms with the listing standards for 
the security futures product that the designated contract market has 
filed with the SEC under section 19(b) of the Securities Exchange Act of 
1934.
    (b) Security futures product based on two or more securities. A 
futures contract on an index of two or more securities is eligible to be 
traded as a security futures product only if:
    (1) The index is a narrow-based security index as defined in section 
1a(35) of the Act;
    (2) The securities in the index are registered pursuant to section 
12 of the Securities Exchange Act of 1934;
    (3) The securities in the index are:
    (i) Common stock,
    (ii) Such other equity securities as the Commission and the SEC 
jointly deem appropriate, or
    (iii) A note, bond, debenture, or evidence of indebtedness; and
    (4) The index conforms with the listing standards for the security 
futures product that the designated contract market has filed with the 
SEC under section 19(b) of the Securities Exchange Act of 1934.

[66 FR 55083, Nov. 1, 2001, as amended at 71 FR 39542, July 13, 2006; 77 
FR 66344, Nov. 2, 2012]



Sec.  41.22  Required certifications.

    It shall be unlawful for a designated contract market to list for 
trading or execution a security futures product unless the designated 
contract market has provided the Commission with a certification that 
the specific security futures product or products and the designated 
contract market meet, as applicable, the following criteria:
    (a) The underlying security or securities satisfy the requirements 
of Sec.  41.21;
    (b) If the security futures product is not cash settled, 
arrangements are in place with a clearing agency registered pursuant to 
section 17A of the Securities Exchange Act of 1934 for the payment and 
delivery of the securities underlying the security futures product;
    (c) Common clearing. [Reserved]
    (d) Only futures commission merchants, introducing brokers, 
commodity trading advisors, commodity pool operators or associated 
persons subject to suitability rules comparable to those of a national 
securities association registered pursuant to section 15A(a) of the 
Securities Exchange Act of 1934 and the rules and regulations 
thereunder, except to the extent otherwise permitted under the 
Securities Exchange Act of 1934 and the rules and regulations 
thereunder, may solicit, accept any order for, or otherwise deal in any 
transaction in or in connection with security futures products;
    (e) If the board of trade is a designated contract market pursuant 
to section 5 of the Act, dual trading in these security futures products 
is restricted in accordance with Sec.  41.27;
    (f) Trading in the security futures products is not readily 
susceptible to manipulation of the price of such security futures 
product, nor to causing or being used in the manipulation of the price 
of any underlying security, option on such security, or option on a 
group or index including such securities, consistent with the conditions 
for trading of Sec.  41.25;
    (g) Procedures are in place for coordinated surveillance among the 
board of trade, any market on which any security underlying a security 
futures product is traded, and other markets on which any related 
security is traded to detect manipulation and insider trading. A board 
of trade that is an alternative trading system does not need to make 
this certification, provided that:
    (1) The alternative trading system is a member of a national 
securities association registered pursuant to section 15A(a) of the 
Securities Exchange Act of 1934 or national securities exchange 
registered pursuant to section 6(a) of the Securities Exchange Act of 
1934; and
    (2) The national securities association or national securities 
exchange of which the alternative trading system is a member has in 
place such procedures;
    (h) An audit trail is in place to facilitate coordinated 
surveillance among the board of trade, any market on which any security 
underlying a security futures product is traded, and any market on which 
any related security is traded. A board of trade that is an alternative 
trading system does not need to make this certification, provided that:

[[Page 13]]

    (1) The alternative trading system is a member of a national 
securities association registered pursuant to section 15A(a) of the 
Securities Exchange Act of 1934 or national securities exchange 
registered pursuant to section 6(a) of the Securities Exchange Act of 
1934; and
    (2) The national securities association or national securities 
exchange of which the alternative trading system is a member has in 
place such procedures;
    (i) Procedures are in place to coordinate regulatory trading halts 
between the board of trade and markets on which any security underlying 
the security futures product is traded and other markets on which any 
related security is traded. A board of trade that is an alternative 
trading system does not need to make this certification, provided that:
    (1) The alternative trading system is a member of a national 
securities association registered pursuant to section 15A(a) of the 
Securities Exchange Act of 1934 or national securities exchange 
registered pursuant to section 6(a) of the Securities Exchange Act of 
1934; and
    (2) The national securities association or national securities 
exchange of which the alternative trading system is a member has in 
place such procedures; and
    (j) The margin requirements for the security futures product will 
comply with the provisions specified in Sec.  41.43 through Sec.  41.48.

[66 FR 44511, Aug. 23, 2001, as amended at 77 FR 66344, Nov. 2, 2012]



Sec.  41.23  Listing of security futures products for trading.

    (a) Initial listing of products for trading. To list new security 
futures products for trading, a designated contract market shall submit 
to the Commission at its Washington, DC headquarters, either in 
electronic or hard-copy form, to be received by the Commission no later 
than the day prior to the initiation of trading, a filing that:
    (1) Is labeled ``Listing of Security Futures Product;''
    (2) Includes a copy of the product's rules, including its terms and 
conditions;
    (3) Includes the certifications required by Sec.  41.22;
    (4) Includes a certification that the terms and conditions of the 
contract comply with the additional conditions for trading of Sec.  
41.25;
    (5) If the board of trade is a designated contract market pursuant 
to section 5 of the Act, it includes a certification that the security 
futures product complies with the Act and rules thereunder; and
    (6) Includes a copy of the submission cover sheet in accordance with 
the instructions in appendix D of part 40.
    (7) Includes a request for confidential treatment as permitted under 
the procedures of Sec.  40.8.
    (b) Voluntary submission of security futures products for Commission 
approval. A designated contract market may request that the Commission 
approve any security futures product under the procedures of Sec.  40.5 
of this chapter, provided however, that the registered entity shall 
include the certification required by Sec.  41.22 with its submission 
under Sec.  40.5 of this chapter. Notice designated contract markets may 
not request Commission approval of security futures products.

[66 FR 55083, Nov. 1, 2001, as amended at 69 FR 67507, Nov. 18, 2004; 74 
FR 17394, Apr. 15, 2009; 77 FR 66344, Nov. 2, 2012]



Sec.  41.24  Rule amendments to security futures products.

    (a) Self-certification of rules and rule amendments by designated 
contract markets and registered derivatives clearing organizations. A 
designated contract market or registered derivatives clearing 
organization may implement any new rule or rule amendment relating to a 
security futures product by submitting to the Commission at its 
Washington, DC headquarters, either in electronic or hard-copy form, to 
be received by the Commission no later than the day prior to the 
implementation of the rule or rule amendment, a filing that:
    (1) Is labeled ``Security Futures Product Rule Submission;'
    (2) Includes a copy of the new rule or rule amendment;

[[Page 14]]

    (3) Includes a certification that the designated contract market or 
registered derivatives clearing organization has filed the rule or rule 
amendment with the Securities and Exchange Commission, if such a filing 
is required;
    (4) If the board of trade is a designated contract market pursuant 
to section 5 of the Act or is a registered derivatives clearing 
organization pursuant to section 5b of the Act, it includes the 
documents and certifications required to be filed with the Commission 
pursuant to Sec.  40.6 of this chapter, including a certification that 
the security futures product complies with the Act and rules thereunder; 
and
    (5) Includes a copy of the submission cover sheet in accordance with 
the instructions in appendix D of part 40.
    (6) Includes a request for confidential treatment as permitted under 
the procedures of Sec.  40.8.
    (b) Voluntary submission of rules for Commission review and 
approval. A designated contract market or a registered derivatives 
clearing organization clearing security futures products may request 
that the Commission approve any rule or proposed rule or rule amendment 
relating to a security futures product under the procedures of Sec.  
40.5 of this chapter, provided however, that the registered entity shall 
include the certifications required by Sec.  41.22 with its submission 
under Sec.  40.5 of this chapter. Notice designated contract markets may 
not request Commission approval of rules.

[66 FR 55083, Nov. 1, 2001, as amended at 69 FR 67507, Nov. 18, 2004; 74 
FR 17394, Apr. 15, 2009; 77 FR 66344, Nov. 2, 2012]



Sec.  41.25  Additional conditions for trading for security futures products.

    (a) Common provisions--(1) Reporting of data. The designated 
contract market shall comply with part 16 of this chapter requiring the 
daily reporting of market data.
    (2) Regulatory trading halts. The rules of a designated contract 
market that lists or trades one or more security futures products must 
include the following provisions:
    (i) Trading of a security futures product based on a single security 
shall be halted at all times that a regulatory halt has been instituted 
for the underlying security; and
    (ii) Trading of a security futures product based on a narrow-based 
security index shall be halted at all times that a regulatory halt has 
been instituted for one or more underlying securities that constitute 50 
percent or more of the market capitalization of the narrow-based 
security index.
    (3) Speculative position limits. The designated contract market 
shall have rules in place establishing position limits or position 
accountability procedures for the expiring futures contract month. The 
designated contract market shall:
    (i) Adopt a net position limit no greater than 13,500 (100-share) 
contracts applicable to positions held during the last five trading days 
of an expiring contract month; except where,
    (A) For security futures products where the average daily trading 
volume in the underlying security exceeds 20 million shares, or exceeds 
15 million shares and there are more than 40 million shares of the 
underlying security outstanding, the designated contract market may 
adopt a net position limit no greater than 22,500 (100-share) contracts 
applicable to positions held during the last five trading days of an 
expiring contract month; or
    (B) For security futures products where the average daily trading 
volume in the underlying security exceeds 20 million shares and there 
are more than 40 million shares of the underlying security outstanding, 
the designated contract market may adopt a position accountability rule. 
Upon request by the designated contract market, traders who hold net 
positions greater than 22,500 (100-share) contracts, or such lower level 
specified by exchange rules, must provide information to the exchange 
and consent to halt increasing their positions when so ordered by the 
exchange.
    (ii) For a security futures product comprised of more than one 
security, the criteria in paragraphs (a)(3)(i)(A) and (a)(3)(i)(B) of 
this section must apply to the security in the index with the lowest 
average daily trading volume.

[[Page 15]]

    (iii) Exchanges may approve exemptions from these position limits 
pursuant to rules that are consistent with Sec.  150.3 of this chapter.
    (iv) For purposes of this section, average daily trading volume 
shall be calculated monthly, using data for the most recent six-month 
period. If the data justify a higher or lower speculative limit for a 
security future, the designated contract market may raise or lower the 
position limit for that security future effective no earlier than the 
day after it has provided notification to the Commission and to the 
public under the submission requirements of Sec.  41.24. If the data 
require imposition of a reduced position limit for a security future, 
the designated contract market may permit any trader holding a position 
in compliance with the previous position limit, but in excess of the 
reduced limit, to maintain such position through the expiration of the 
security futures contract; provided, that the designated contract market 
does not find that the position poses a threat to the orderly expiration 
of such contract.
    (b) Final settlement prices for security futures products. (1) The 
final settlement price of a cash-settled security futures product must 
fairly reflect the opening price of the underlying security or 
securities;
    (2) Notwithstanding paragraph (b)(1) of this section, if an opening 
price for one or more securities underlying a security futures product 
is not readily available, the final settlement price of the security 
futures product shall fairly reflect:
    (i) The price of the underlying security or securities during the 
most recent regular trading session for such security or securities; or
    (ii) The next available opening price of the underlying security or 
securities.
    (3) Notwithstanding paragraphs (b)(1) or (b)(2) of this section, if 
a derivatives clearing organization registered under Section 5b of the 
Act or a clearing agency exempt from registration pursuant to Section 
5b(a)(2) of the Act, to which the final settlement price of a security 
futures product is or would be reported determines, pursuant to its 
rules, that such final settlement price is not consistent with the 
protection of customers and the public interest, taking into account 
such factors as fairness to buyers and sellers of the affected security 
futures product, the maintenance of a fair and orderly market in such 
security futures product, and consistency of interpretation and 
practice, the clearing organization shall have the authority to 
determine, under its rules, a final settlement price for such security 
futures product.
    (c) Special requirements for physical delivery contracts. For 
security futures products settled by actual delivery of the underlying 
security or securities, payment and delivery of the underlying security 
or securities must be effected through a clearing agency that is 
registered pursuant to section 17A of the Securities Exchange Act of 
1934.
    (d) The Commission may exempt a designated contract market from the 
provisions of paragraphs (a)(2) and (b) of this section, either 
unconditionally or on specified terms and conditions, if the Commission 
determines that such exemption is consistent with the public interest 
and the protection of customers. An exemption granted pursuant to this 
paragraph shall not operate as an exemption from any Securities and 
Exchange Commission rules. Any exemption that may be required from such 
rules must be obtained separately from the Securities and Exchange 
Commission.

[66 FR 55083, Nov. 1, 2001, as amended at 67 FR 36761, May 24, 2002; 77 
FR 66345, Nov. 2, 2012]



Sec.  41.27  Prohibition of dual trading in security futures products
by floor brokers.

    (a) Definitions. For purposes of this section:
    (1) Trading session means hours during which a designated contract 
market is scheduled to trade continuously during a trading day, as set 
forth in its rules, including any related post settlement trading 
session. A designated contract market may have more than one trading 
session during a trading day.
    (2) Member shall have the meaning set forth in section 1a(24) of the 
Act.
    (3) Broker association includes two or more designated contract 
market members with floor trading privileges

[[Page 16]]

of whom at least one is acting as a floor broker who:
    (i) Engage in floor brokerage activity on behalf of the same 
employer;
    (ii) Have an employer and employee relationship which relates to 
floor brokerage activity;
    (iii) Share profits and losses associated with their brokerage or 
trading activity; or
    (iv) Regularly share a deck of orders.
    (4) Customer means an account owner for which a trade is executed 
other than:
    (i) An account in which such floor broker has any interest;
    (ii) An account for which a floor broker has discretion;
    (iii) An account controlled by a person with whom a floor broker has 
a relationship through membership in a broker association;
    (iv) A house account of the floor broker's clearing member; or
    (v) An account for another member present on the floor of a 
designated contract market or an account controlled by such other 
member.
    (5) Dual trading means the execution of customer orders by a floor 
broker through open outcry during the same trading session in which the 
floor broker executes directly or by initiating and passing to another 
member, either through open outcry or through a trading system that 
electronically matches bids and offers pursuant to a predetermined 
algorithm, a transaction for the same security futures product on the 
same designated contract market for an account described in paragraphs 
(a)(4)(i) through (v) of this section.
    (b) Dual Trading Prohibition. (1) No floor broker shall engage in 
dual trading in a security futures product on a designated contract 
market, except as otherwise provided under paragraphs (d), (e), and (f) 
of this section.
    (2) A designated contract market operating an electronic market or 
electronic trading system that provides market participants with a time 
or place advantage or the ability to override a predetermined algorithm 
must submit an appropriate rule proposal to the Commission consistent 
with the procedures set forth in Sec.  40.5. The proposed rule must 
prohibit electronic market participants with a time or place advantage 
or the ability to override a predetermined algorithm from trading a 
security futures product for accounts in which these same participants 
have any interest during the same trading session that they also trade 
the same security futures product for other accounts. This paragraph, 
however, is not applicable with respect to execution priorities or 
quantity guarantees granted to market makers who perform that function, 
or to market participants who receive execution priorities based on 
price improvement activity, in accordance with the rules governing the 
designated contract market.
    (c) Rules Prohibiting Dual Trading--(1) Designated contract markets. 
Prior to listing a security futures product for trading on a trading 
floor where bids and offers are executed through open outcry, a 
designated contract market:
    (i) Must submit to the Commission in accordance with Sec.  40.6, a 
rule prohibiting dual trading, together with a written certification 
that the rule complies with the Act and the regulations thereunder, 
including this section; or
    (ii) Must obtain Commission approval of such rule pursuant to Sec.  
40.5.
    (2) [Reserved]
    (d) Specific Permitted Exceptions. Notwithstanding the applicability 
of a dual trading prohibition under paragraph (b) of this section, dual 
trading may be permitted on a designated contract market pursuant to one 
or more of the following specific exceptions:
    (1) Correction of errors. To offset trading errors resulting from 
the execution of customer orders, provided, that the floor broker must 
liquidate the position in his or her personal error account resulting 
from that error through open outcry or through a trading system that 
electronically matches bids and offers as soon as practicable, but, 
except as provided herein, not later than the close of business on the 
business day following the discovery of error. In the event that a floor 
broker is unable to offset the error trade because the daily price 
fluctuation limit is reached, a trading halt is imposed by the 
designated contract market, or an emergency is declared pursuant to the

[[Page 17]]

rules of the designated contract market, the floor broker must liquidate 
the position in his or her personal error account resulting from that 
error as soon as practicable thereafter.
    (2) Customer consent. To permit a customer to designate in writing 
not less than once annually a specifically identified floor broker to 
dual trade while executing orders for such customer's account. An 
account controller acting pursuant to a power of attorney may designate 
a dual trading broker on behalf of its customer, provided, that the 
customer explicitly grants in writing to the individual account 
controller the authority to select a dual trading broker.
    (3) Spread transactions. To permit a broker who unsuccessfully 
attempts to leg into a spread transaction for a customer to take the 
executed leg into his or her personal account and to offset such 
position, provided, that a record is prepared and maintained to 
demonstrate that the customer order was for a spread.
    (4) Market emergencies. To address emergency market conditions 
resulting in a temporary emergency action as determined by a designated 
contract market.
    (e) Rules Permitting Specific Exceptions--(1) Designated contract 
markets. Prior to permitting dual trading under any of the exceptions 
provided in paragraphs (d)(1)-(4) of this section, a designated contract 
market:
    (i) Must submit to the Commission in accordance with Sec.  40.6, a 
rule permitting the exception(s), together with a written certification 
that the rule complies with the Act and the regulations thereunder, 
including this section; or
    (ii) Must obtain Commission approval of such rule pursuant to Sec.  
40.5.
    (2) [Reserved]
    (f) Unique or Special Characteristics of Agreements, Contracts or 
Transactions, or of Designated Contract Markets. Notwithstanding the 
applicability of a dual trading prohibition under paragraph (b) of this 
section, dual trading may be permitted on a designated contract market 
to address unique or special characteristics of agreements, contracts, 
or transactions, or of the designated contract market as provided 
herein. Any rule of a designated contract market that would permit dual 
trading when it would otherwise be prohibited, based on a unique or 
special characteristic of agreements, contracts, or transactions, or of 
the designated contract market must be submitted to the Commission for 
prior approval under the procedures set forth in Sec.  40.5. The rule 
submission must include a detailed demonstration of why an exception is 
warranted.

[67 FR 11227, Mar. 13, 2002, as amended at 77 FR 66345, Nov. 2, 2012]



    Subpart D_Notice-Designated Contract Markets in Security Futures 
                                Products

    Source: 66 FR 44965, Aug. 27, 2001, unless otherwise noted.



Sec.  41.31  Notice-designation requirements.

    (a) Any board of trade that is a national securities exchange, a 
national securities association, or an alternative trading system, and 
that seeks to operate as a designated contract market in security 
futures products under section 5f of the Act, shall so notify the 
Commission. Such notification shall be filed with the Secretary of the 
Commission at its Washington, D.C. headquarters, in either electronic or 
hard copy form, shall be labeled as ``Notice of Designation as a 
Contract Market in Security Futures Products,'' and shall include:
    (1) The name and address of the board of trade;
    (2) The name and telephone number of a contact person designated to 
receive communications from the Commission on behalf of the board of 
trade;
    (3) A description of the security futures products that the board of 
trade intends to make available for trading, including an identification 
of all facilities that would clear transactions in security futures 
products on behalf of the board of trade;
    (4) A copy of the current rules of the board of trade; and
    (5) A certification that the board of trade--
    (i) Will not list or trade any contracts of sale for future 
delivery, except for security futures products;

[[Page 18]]

    (ii) Is registered with the Securities and Exchange Commission as a 
national securities exchange, national securities association, or 
alternative trading system, and such registration is not suspended 
pursuant to an order by the Securities and Exchange Commission;
    (iii) Will meet the criteria specified in subclauses (I) through 
(XI) of section 2(a)(1)(D)(i) of the Act, except as otherwise provided 
in section 2(a)(1)(D)(vi) of the Act, for each specific security futures 
product that the board of trade intends to make available for trading;
    (iv) Will comply with the conditions for designation under this 
section and section 5f of the Act, including a specific representation 
by any alternative trading system that it is a member of a futures 
association registered under section 17 of the Act; and
    (v) Will comply with the continuing obligations of regulation 41.32.
    (b) A board of trade which files notice with the Commission under 
this section shall be deemed a designated contract market in security 
futures products upon the Commission's receipt of such notice. 
Accordingly, the Commission shall send prompt acknowledgment of receipt 
to the filer.
    (c) Designation as a contract market in security futures products 
pursuant to this section shall be deemed suspended if the board of 
trade:
    (1) Lists or trades any contracts of sale for future delivery, 
except for security futures products; or
    (2) Has its registration as a national securities exchange, national 
securities association, or alternative trading system suspended pursuant 
to an order by the Securities and Exchange Commission.



Sec.  41.32  Continuing obligations.

    (a)(1) A board of trade designated as a contract market in security 
futures products pursuant to Sec.  41.31 of this chapter shall:
    (i) Notify the Commission of any change in its regulatory status 
with the Securities and Exchange Commission or with a futures 
association registered under section 17 of the Act;
    (ii) Comply with the filing requirements of section 2(a)(1)(D)(vii) 
of the Act each time the board of trade lists a security futures product 
for trading;
    (iii) Provide the Commission with any new rules or rule amendments 
that relate to the trading of security futures products, including both 
operational rules and the terms and conditions of products listed for 
trading on the facility, promptly after final implementation of such 
rules or rule amendments; and
    (iv) Upon request, file promptly with the Commission--
    (A) Such information related to its business as a designated 
contract market in security futures products as the Commission may 
request; and
    (B) A written demonstration, containing such supporting data and 
other information and documents as the Commission may specify, that the 
board of trade is in compliance with one or more applicable provisions 
of the Act or regulations thereunder as specified in the request.
    (2) Any information filed pursuant to paragraph (a) of this section 
shall be addressed to the Secretary of the Commission at its Washington, 
D.C. headquarters, shall be labeled ``SFPCM Continuing Obligations,'' 
and may be transmitted in either electronic or hard copy form.
    (b) Except as exempted under section 5f(b) of the Act or under 
Sec. Sec.  41.33 and 41.34 of this chapter, any board of trade 
designated as a contract market in security futures products pursuant to 
Sec.  41.31 of this chapter shall be subject to all applicable 
requirements of the Act and regulations thereunder. Failure to comply 
shall subject the board of trade to Commission action under, among other 
provisions, sections 5e and 6(b) of the Act.



Sec.  41.33  Applications for exemptive orders.

    (a) Any board of trade designated as a contract market in security 
futures products pursuant to Sec.  41.31 of this chapter may apply to 
the Commission for an exemption from any provision of the Act or 
regulations thereunder. Except as provided in sections 5f(b)(1) and 
5f(b)(2) of the Act, the Commission shall have sole discretion to exempt 
a board of trade, conditionally or unconditionally, from any provision 
of the

[[Page 19]]

Act or regulations thereunder pursuant to this section. The Commission 
may issue such an exemptive order in response to an application only to 
the extent it finds, after review, that the issuance of an exemptive 
order is necessary or appropriate in the public interest and is 
consistent with the protection of investors.
    (b) Each application for exemptive relief must comply with the 
requirements of this section. The Commission may, in its sole 
discretion, decline to entertain any application for an exemptive order 
under this section without explanation; provided, however, that the 
Commission shall notify the board of trade of such a decision in 
writing.
    (c) Application requirements. (1) Each application for an exemptive 
order made pursuant to this section must include:
    (i) The name and address of the board of trade requesting relief, 
and the name and telephone number of a person whom Commission staff may 
contact to obtain additional information regarding the request;
    (ii) A certification that the registration of the board of trade is 
not suspended pursuant to an order of the Securities and Exchange 
Commission;
    (iii) The provision(s) of the Act or regulations thereunder from 
which the board of trade seeks relief and, if applicable, whether the 
board of trade is otherwise subject to similar provisions as a result of 
Securities and Exchange Commission jurisdiction; and
    (iv) The type of relief requested and the order sought; an 
explanation of the need for relief, including all material facts and 
circumstances giving rise to the request; and the extent to which such 
relief is necessary or appropriate in the public interest and consistent 
with the protection of investors.
    (2) Each application must be filed with the Secretary of the 
Commission at its Washington, D.C. headquarters, in either electronic or 
hard copy form, signed by an authorized representative of the board of 
trade, and labeled ``Application for an Exemptive Order pursuant to 
Commission regulation 41.33.''
    (d) Review Period. (1) The Commission shall have 90 days upon 
receipt of an application for an exemptive order in which to make a 
determination as to whether such relief should be granted or denied.
    (2) The Commission may request additional information from the 
applicant at any time prior to the end of the review period.
    (3) The Commission may stay the review period if it determines that 
an application is materially incomplete; provided, however, that this 
paragraph (d) does not limit the Commission's authority, under paragraph 
(b) of this section, to decline to entertain an application.
    (e) Upon conclusion of the review period, the Commission shall issue 
an order granting or denying relief, or granting relief subject to 
conditions; provided, however, that the Commission's obligations under 
this paragraph shall not limit its authority, under paragraph (b) of 
this section, to decline to entertain an application. The Commission 
shall notify the board of trade in writing of its decision to grant or 
deny relief under this paragraph.
    (f) An application for an exemptive order may be withdrawn by the 
applicant at any time, without explanation, by filing with the Secretary 
of the Commission a written request for withdrawal, signed by an 
authorized representative of the board of trade.
    (g) The Commission hereby delegates, until it orders otherwise, to 
the Director of the Division of Division of Market Oversight, with the 
concurrence of the General Counsel, authority to make determinations on 
applications for exemptive orders pursuant to this section; provided, 
however, that:
    (1) The Director of the Division of Market Oversight may submit to 
the Commission for its consideration any matter which has been delegated 
pursuant to paragraph (g) of this section; and
    (2) Nothing in this section shall be deemed to prohibit the 
Commission, at its election, from exercising the authority delegated to 
the Director of the Division of Market Oversight under paragraph (g) of 
this section.

[66 FR 44511, Aug. 23, 2001, as amended at 67 FR 62352, Oct. 7, 2002]

[[Page 20]]



Sec.  41.34  Exempt Provisions.

    Any board of trade notice-designated as a contract market in 
security futures products pursuant to Sec.  41.31 also shall be exempt 
from:
    (a) The following provisions of the Act, pursuant to section 
5f(b)(1) of the Act:
    (1) Section 4(c)(c);
    (2) Section 4(c)(e);
    (3) Section 4(c)(g);
    (4) Section 4j;
    (5) Section 5;
    (6) Section 5c;
    (7) Section 6a;
    (8) Section 8(d);
    (9) Section 9(f);
    (10) Section 16 and;
    (b) The following provisions, pursuant to section 5f(b)(4) of the 
Act:
    (1) Section 6(a);
    (2) Part 38 of this chapter;
    (3) Part 40 of this chapter; and
    (4) Section 41.27.

[67 FR 11229, Mar. 13, 2002]



           Subpart E_Customer Accounts and Margin Requirements

    Source: 67 FR 53171, Aug. 14, 2002, unless otherwise noted.



Sec.  41.41  Security futures products accounts.

    (a) Where security futures products may be held. (1) A person 
registered with the Commission as a futures commission merchant pursuant 
to section 4f(a)(1) of the Commodity Exchange Act (``CEA'') and 
registered with the Securities and Exchange Commission (``SEC'') as a 
broker or dealer pursuant to section 15(b)(1) of the Securities Exchange 
Act of 1934 (``Securities Exchange Act'') (``Full FCM/Full BD'') may 
hold all of a customer's security futures products in a futures account, 
all of a customer's security futures products in a securities account, 
or some of a customer's security futures products in a futures account 
and other security futures products of the same customer in a securities 
account. A person registered with the Commission as a futures commission 
merchant pursuant to section 4f(a)(2) of the CEA (a notice-registered 
FCM) may hold a customer's security futures products only in a 
securities account. A person registered with the SEC as a broker or 
dealer pursuant to section 15(b)(11) of the Securities Exchange Act (a 
notice-registered broker-dealer) may hold a customer's security futures 
products only in a futures account.
    (2) A Full FCM/Full BD shall establish written policies or 
procedures for determining whether customer security futures products 
will be placed in a futures account and/or a securities account and, if 
applicable, the process by which a customer may elect the type or types 
of account in which security futures products will be held (including 
the procedure to be followed if a customer fails to make an election of 
account type).
    (b) Disclosure requirements. (1) Except as provided in paragraph 
(b)(2), before a futures commission merchant accepts the first order for 
a security futures product from or on behalf of a customer, the firm 
shall furnish the customer with a disclosure document containing the 
following information:
    (i) A description of the protections provided by the requirements 
set forth under section 4d of the CEA applicable to a futures account;
    (ii) A description of the protections provided by the requirements 
set forth under Securities Exchange Act Rule 15c3-3 and the Securities 
Investor Protection Act of 1970 applicable to a securities account;
    (iii) A statement indicating whether the customer's security futures 
products will be held in a futures account and/or a securities account, 
or whether the firm permits customers to make or change an election of 
account type; and
    (iv) A statement that, with respect to holding the customer's 
security futures products in a securities account or a futures account, 
the alternative regulatory scheme is not available to the customer in 
connection with that account.
    (2) Where a customer account containing an open security futures 
product position is transferred to a futures commission merchant, that 
futures commission merchant may instead provide the statements described 
in paragraphs (b)(1)(iii) and (b)(1)(iv) above no later than ten 
business days after the date the account is transferred.

[[Page 21]]

    (c) Changes in account type. A Full FCM/Full BD may change the type 
of account in which a customer's security futures products will be held; 
provided, that:
    (1) The firm creates a record of each change in account type, 
including the name of the customer, the account number, the date the 
firm received the customer's request to change the account type, if 
applicable, and the date the change in account type became effective; 
and
    (2) The firm, at least ten business days before the customer's 
account type is changed:
    (i) Notifies the customer in writing of the date that the change 
will become effective; and
    (ii) Provides the customer with the disclosures described in 
paragraph (b)(1) above.
    (d) Recordkeeping requirements. The Commission's recordkeeping rules 
set forth in Sec. Sec.  1.31, 1.32, 1.35, 1.36, 1.37, 4.23, 4.33, 18.05 
and 190.06 of this chapter shall apply to security futures product 
transactions and positions in a futures account (as that term is defined 
in Sec.  1.3(vv) of this chapter). These rules shall not apply to 
security futures product transactions and positions in a securities 
account (as that term is defined in Sec.  1.3(ww) of this chapter); 
provided, that the SEC's recordkeeping rules apply to those transactions 
and positions.
    (e) Reports to customers. The Commission's reporting requirements 
set forth in Sec. Sec.  1.33 and 1.46 of this chapter shall apply to 
security futures product transactions and positions in a futures account 
(as that term is defined in Sec.  1.3(vv) of this chapter). These rules 
shall not apply to security futures product transactions and positions 
in a securities account (as that term is defined in Sec.  1.3(ww) of 
this chapter); provided, that the SEC's rules set forth in Sec. Sec.  
240.10b-10 and 240.15c3-2 of this chapter regarding delivery of 
confirmations and account statements apply to those transactions and 
positions.
    (f) Segregation of customer funds. All money, securities, or 
property held to margin, guarantee or secure security futures products 
held in a futures account, or accruing to customers as a result of such 
products, are subject to the segregation requirements of section 4d of 
the CEA and the rules thereunder.

[67 FR 58297, Sept. 13, 2002]



Sec.  41.42  Customer margin requirements for security futures--authority, 
purpose, interpretation, and scope.

    (a) Authority and purpose. Subpart E, Sec. Sec.  41.42 through 
41.49, and 17 CFR 242.400 through 242.406 (``this Regulation'') are 
issued by the Commodity Futures Trading Commission (``Commission'') 
jointly with the Securities and Exchange Commission (``SEC''), pursuant 
to authority delegated by the Board of Governors of the Federal Reserve 
System under section 7(c)(2)(A) of the Securities Exchange Act of 1934 
(``Exchange Act''). The principal purpose of this Regulation (Subpart E, 
Sec. Sec.  41.42 through 41.49) is to regulate customer margin collected 
by brokers, dealers, and members of national securities exchanges, 
including futures commission merchants required to register as brokers 
or dealers under section 15(b)(11) of the Exchange Act, relating to 
security futures.
    (b) Interpretation. This Regulation (Subpart E, Sec. Sec.  41.42 
through 41.49) shall be jointly interpreted by the SEC and the 
Commission, consistent with the criteria set forth in clauses (i) 
through (iv) of section 7(c)(2)(B) of the Exchange Act and the 
provisions of Regulation T (12 CFR part 220).
    (c) Scope. (1) This Regulation (Subpart E, Sec. Sec.  41.42 through 
41.49) does not preclude a self-regulatory authority, under rules that 
are effective in accordance with section 19(b)(2) of the Exchange Act or 
section 19(b)(7) of the Exchange Act and, as applicable, section 5c(c) 
of the Commodity Exchange Act (``Act''), or a security futures 
intermediary from imposing additional margin requirements on security 
futures, including higher initial or maintenance margin levels, 
consistent with this Regulation (Subpart E, Sec. Sec.  41.42 through 
41.49), or from taking appropriate action to preserve its financial 
integrity.
    (2) This Regulation (Subpart E, Sec. Sec.  41.42 through 41.49) does 
not apply to:

[[Page 22]]

    (i) Financial relations between a customer and a security futures 
intermediary to the extent that they comply with a portfolio margining 
system under rules that meet the criteria set forth in section 
7(c)(2)(B) of the Exchange Act and that are effective in accordance with 
section 19(b)(2) of the Exchange Act and, as applicable, section 5c(c) 
of the Act;
    (ii) Financial relations between a security futures intermediary and 
a foreign person involving security futures traded on or subject to the 
rules of a foreign board of trade;
    (iii) Margin requirements that clearing agencies registered under 
section 17A of the Exchange Act or derivatives clearing organizations 
registered under section 5b of the Act impose on their members;
    (iv) Financial relations between a security futures intermediary and 
a person based on a good faith determination by the security futures 
intermediary that such person is an exempted person; and
    (v) Financial relations between a security futures intermediary and, 
or arranged by a security futures intermediary for, a person relating to 
trading in security futures by such person for its own account, if such 
person:
    (A) Is a member of a national securities exchange or national 
securities association registered pursuant to section 15A(a) of the 
Exchange Act; and
    (B) Is registered with such exchange or such association as a 
security futures dealer pursuant to rules that are effective in 
accordance with section 19(b)(2) of the Exchange Act and, as applicable, 
section 5c(c) of the Act, that:
    (1) Require such member to be registered as a floor trader or a 
floor broker with the Commission under section 4f(a)(1) of the Act, or 
as a dealer with the SEC under section 15(b) of the Exchange Act;
    (2) Require such member to maintain records sufficient to prove 
compliance with this paragraph (c)(2)(v) and the rules of the exchange 
or association of which it is a member;
    (3) Require such member to hold itself out as being willing to buy 
and sell security futures for its own account on a regular or continuous 
basis; and
    (4) Provide for disciplinary action, including revocation of such 
member's registration as a security futures dealer, for such member's 
failure to comply with this Regulation (Subpart E, Sec. Sec.  41.42 
through 41.49) or the rules of the exchange or association.
    (d) Exemption. The Commission may exempt, either unconditionally or 
on specified terms and conditions, financial relations involving any 
security futures intermediary, customer, position, or transaction, or 
any class of security futures intermediaries, customers, positions, or 
transactions, from one or more requirements of this Regulation (Subpart 
E, Sec. Sec.  41.42 through 41.49), if the Commission determines that 
such exemption is necessary or appropriate in the public interest and 
consistent with the protection of customers. An exemption granted 
pursuant to this paragraph shall not operate as an exemption from any 
SEC rules. Any exemption that may be required from such rules must be 
obtained separately from the SEC.



Sec.  41.43  Definitions.

    (a) For purposes of this Regulation (Subpart E, Sec. Sec.  41.42 
through 41.49) only, the following terms shall have the meanings set 
forth in this section.
    (1) Applicable margin rules and margin rules applicable to an 
account mean the rules and regulations applicable to financial relations 
between a security futures intermediary and a customer with respect to 
security futures and related positions carried in a securities account 
or futures account as provided in Sec.  41.44(a) of this subpart.
    (2) Broker shall have the meaning provided in section 3(a)(4) of the 
Exchange Act.
    (3) Contract multiplier means the number of units of a narrow-based 
security index expressed as a dollar amount, in accordance with the 
terms of the security future contract.
    (4) Current market value means, on any day:
    (i) With respect to a security future:
    (A) If the instrument underlying such security future is a stock, 
the product of the daily settlement price of such security future as 
shown by any regularly published reporting or quotation

[[Page 23]]

service, and the applicable number of shares per contract; or
    (B) If the instrument underlying such security future is a narrow-
based security index, as defined in section 1a(35)(A) of the Act, the 
product of the daily settlement price of such security future as shown 
by any regularly published reporting or quotation service, and the 
applicable contract multiplier.
    (ii) With respect to a security other than a security future, the 
most recent closing sale price of the security, as shown by any 
regularly published reporting or quotation service. If there is no 
recent closing sale price, the security futures intermediary may use any 
reasonable estimate of the market value of the security as of the most 
recent close of business.
    (5) Customer excludes an exempted person and includes:
    (i) Any person or persons acting jointly:
    (A) On whose behalf a security futures intermediary effects a 
security futures transaction or carries a security futures position; or
    (B) Who would be considered a customer of the security futures 
intermediary according to the ordinary usage of the trade;
    (ii) Any partner in a security futures intermediary that is 
organized as a partnership who would be considered a customer of the 
security futures intermediary absent the partnership relationship; and
    (iii) Any joint venture in which a security futures intermediary 
participates and which would be considered a customer of the security 
futures intermediary if the security futures intermediary were not a 
participant.
    (6) Daily settlement price means, with respect to a security future, 
the settlement price of such security future determined at the close of 
trading each day, under the rules of the applicable exchange, clearing 
agency, or derivatives clearing organization.
    (7) Dealer shall have the meaning provided in section 3(a)(5) of the 
Exchange Act.
    (8) Equity means the equity or margin equity in a securities or 
futures account, as computed in accordance with the margin rules 
applicable to the account and subject to adjustment under Sec.  
41.46(c), (d) and (e) of this subpart.
    (9) Exempted person means:
    (i) A member of a national securities exchange, a registered broker 
or dealer, or a registered futures commission merchant, a substantial 
portion of whose business consists of transactions in securities, 
commodity futures, or commodity options with persons other than brokers, 
dealers, futures commission merchants, floor brokers, or floor traders, 
and includes a person who:
    (A) Maintains at least 1000 active accounts on an annual basis for 
persons other than brokers, dealers, persons associated with a broker or 
dealer, futures commission merchants, floor brokers, floor traders, and 
persons affiliated with a futures commission merchant, floor broker, or 
floor trader that are effecting transactions in securities, commodity 
futures, or commodity options;
    (B) Earns at least $10 million in gross revenues on an annual basis 
from transactions in securities, commodity futures, or commodity options 
with persons other than brokers, dealers, persons associated with a 
broker or dealer, futures commission merchants, floor brokers, floor 
traders, and persons affiliated with a futures commission merchant, 
floor broker, or floor trader; or
    (C) Earns at least 10 percent of its gross revenues on an annual 
basis from transactions in securities, commodity futures, or commodity 
options with persons other than brokers, dealers, persons associated 
with a broker or dealer, futures commission merchants, floor brokers, 
floor traders, and persons affiliated with a futures commission 
merchant, floor broker, or floor trader.
    (ii) For purposes of paragraph (a)(9)(i) of this section only, 
persons affiliated with a futures commission merchant, floor broker, or 
floor trader means any partner, officer, director, or branch manager of 
such futures commission merchant, floor broker, or floor trader (or any 
person occupying a similar status or performing similar functions), any 
person directly or indirectly controlling, controlled by, or under 
common control with such futures commission merchant, floor broker, or 
floor

[[Page 24]]

trader, or any employee of such a futures commission merchant, floor 
broker, or floor trader.
    (iii) A member of a national securities exchange, a registered 
broker or dealer, or a registered futures commission merchant that has 
been in existence for less than one year may meet the definition of 
exempted person based on a six-month period.
    (10) Exempted security shall have the meaning provided in section 
3(a)(12) of the Exchange Act.
    (11) Floor broker shall have the meaning provided in section 1a(16) 
of the Act.
    (12) Floor trader shall have the meaning provided in section 1a(17) 
of the Act.
    (13) Futures account shall have the meaning provided in Sec.  
1.3(vv) of this chapter.
    (14) Futures commission merchant shall have the meaning provided in 
section 1a(20) of the Act.
    (15) Good faith, with respect to making a determination or accepting 
a statement concerning financial relations with a person, means that the 
security futures intermediary is alert to the circumstances surrounding 
such financial relations, and if in possession of information that would 
cause a prudent person not to make the determination or accept the 
notice or certification without inquiry, investigates and is satisfied 
that it is correct.
    (16) Listed option means a put or call option that is:
    (i) Issued by a clearing agency that is registered under section 17A 
of the Exchange Act or cleared and guaranteed by a derivatives clearing 
organization that is registered under section 5b of the Act; and
    (ii) Traded on or subject to the rules of a self-regulatory 
authority.
    (17) Margin call means a demand by a security futures intermediary 
to a customer for a deposit of cash, securities or other assets to 
satisfy the required margin for security futures or related positions or 
a special margin requirement.
    (18) Margin deficiency means the amount by which the required margin 
in an account is not satisfied by the equity in the account, as computed 
in accordance with Sec.  41.46 of this subpart.
    (19) Margin equity security shall have the meaning provided in 
Regulation T.
    (20) Margin security shall have the meaning provided in Regulation 
T.
    (21) Member shall have the meaning provided in section 3(a)(3) of 
the Exchange Act, and shall include persons registered under section 
15(b)(11) of the Exchange Act that are permitted to effect transactions 
on a national securities exchange without the services of another person 
acting as executing broker.
    (22) Money market mutual fund means any security issued by an 
investment company registered under section 8 of the Investment Company 
Act of 1940 that is considered a money market fund under Sec.  270.2a-7 
of this title.
    (23) Persons associated with a broker or dealer shall have the 
meaning provided in section 3(a)(18) of the Exchange Act.
    (24) Regulation T means Regulation T promulgated by the Board of 
Governors of the Federal Reserve System, 12 CFR part 220, as amended 
from time to time.
    (25) Regulation T collateral value, with respect to a security, 
means the current market value of the security reduced by the percentage 
of required margin for a position in the security held in a margin 
account under Regulation T.
    (26) Related position, with respect to a security future, means any 
position in an account that is combined with the security future to 
create an offsetting position as provided in Sec.  41.45(b)(2) of this 
subpart.
    (27) Related transaction, with respect to a position or transaction 
in a security future, means:
    (i) Any transaction that creates, eliminates, increases or reduces 
an offsetting position involving a security future and a related 
position, as provided in Sec.  41.45(b)(2) of this subpart; or
    (ii) Any deposit or withdrawal of margin for the security future or 
a related position, except as provided in Sec.  41.47(b) of this 
subpart.
    (28) Securities account shall have the meaning provided in Sec.  
1.3(ww) of this chapter.
    (29) Security futures intermediary means any creditor as defined in 
Regulation T with respect to its financial

[[Page 25]]

relations with any person involving security futures, including:
    (i) Any futures commission merchant;
    (ii) Any partner, officer, director, or branch manager (or person 
occupying a similar status or performing similar functions) of a futures 
commission merchant;
    (iii) Any person directly or indirectly controlling, controlled by, 
or under common control with (except for business entities controlling 
or under common control with) a futures commission merchant; and
    (iv) Any employee of a futures commission merchant (except an 
employee whose functions are solely clerical or ministerial).
    (30) Self-regulatory authority means a national securities exchange 
registered under section 6 of the Exchange Act, a national securities 
association registered under section 15A of the Exchange Act, or a 
contract market registered under section 5 of the Act or section 5f of 
the Act.
    (31) Special margin requirement shall have the meaning provided in 
Sec.  41.46(e)(1)(ii) of this subpart.
    (32) Variation settlement means any credit or debit to a customer 
account, made on a daily or intraday basis, for the purpose of marking 
to market a security future or any other contract that is:
    (i) Issued by a clearing agency that is registered under section 17A 
of the Exchange Act or cleared and guaranteed by a derivatives clearing 
organization that is registered under section 5b of the Act; and
    (ii) Traded on or subject to the rules of a self-regulatory 
authority.
    (b) Terms used in this Regulation (Subpart E, Sec. Sec.  41.42 
through 41.49) and not otherwise defined in this section shall have the 
meaning set forth in the margin rules applicable to the account.
    (c) Terms used in this Regulation (Subpart E, Sec. Sec.  41.42 
through 41.49) and not otherwise defined in this section or in the 
margin rules applicable to the account shall have the meaning set forth 
in the Exchange Act and the Act; if the definitions of a term in the 
Exchange Act and the Act are inconsistent as applied in particular 
circumstances, such term shall have the meaning set forth in rules, 
regulations, or interpretations jointly promulgated by the SEC and the 
Commission.

[67 FR 53171, Aug. 14, 2002, as amended at 77 FR 66346, Nov. 2, 2012]



Sec.  41.44  General provisions.

    (a) Applicable margin rules. Except to the extent inconsistent with 
this Regulation (Subpart E, Sec. Sec.  41.42 through 41.49):
    (1) A security futures intermediary that carries a security future 
on behalf of a customer in a securities account shall record and conduct 
all financial relations with respect to such security future and related 
positions in accordance with Regulation T and the margin rules of the 
self-regulatory authorities of which the security futures intermediary 
is a member.
    (2) A security futures intermediary that carries a security future 
on behalf of a customer in a futures account shall record and conduct 
all financial relations with respect to such security future and related 
positions in accordance with the margin rules of the self-regulatory 
authorities of which the security futures intermediary is a member.
    (b) Separation and consolidation of accounts. (1) The requirements 
for security futures and related positions in one account may not be met 
by considering items in any other account, except as permitted or 
required under paragraph (b)(2) of this section or applicable margin 
rules. If withdrawals of cash, securities or other assets deposited as 
margin are permitted under this Regulation (Subpart E, Sec. Sec.  41.42 
through 41.49), bookkeeping entries shall be made when such cash, 
securities, or assets are used for purposes of meeting requirements in 
another account.
    (2) Notwithstanding paragraph (b)(1) of this section, the security 
futures intermediary shall consider all futures accounts in which 
security futures and related positions are held that are within the same 
regulatory classification or account type and are owned by the same 
customer to be a single account for purposes of this Regulation (Subpart 
E, Sec. Sec.  41.42 through 41.49). The security futures intermediary 
may combine such accounts with other futures accounts that are within 
the

[[Page 26]]

same regulatory classification or account type and are owned by the same 
customer for purposes of computing a customer's overall margin 
requirement, as permitted or required by applicable margin rules.
    (c) Accounts of partners. If a partner of the security futures 
intermediary has an account with the security futures intermediary in 
which security futures or related positions are held, the security 
futures intermediary shall disregard the partner's financial relations 
with the firm (as shown in the partner's capital and ordinary drawing 
accounts) in calculating the margin or equity of any such account.
    (d) Contribution to joint venture. If an account in which security 
futures or related positions are held is the account of a joint venture 
in which the security futures intermediary participates, any interest of 
the security futures intermediary in the joint account in excess of the 
interest which the security futures intermediary would have on the basis 
of its right to share in the profits shall be margined in accordance 
with this Regulation (Subpart E, Sec. Sec.  41.42 through 41.49).
    (e) Extensions of credit. (1) No security futures intermediary may 
extend or maintain credit to or for any customer for the purpose of 
evading or circumventing any requirement under this Regulation (Subpart 
E, Sec. Sec.  41.42 through 41.49).
    (2) A security futures intermediary may arrange for the extension or 
maintenance of credit to or for any customer by any person, provided 
that the security futures intermediary does not willfully arrange credit 
that would constitute a violation of Regulation T, U or X of the Board 
of Governors of the Federal Reserve System (12 CFR parts 220, 221, and 
224) by such person.
    (f) Change in exempted person status. Once a person ceases to 
qualify as an exempted person, it shall notify the security futures 
intermediary of this fact before entering into any new security futures 
transaction or related transaction that would require additional margin 
to be deposited under this Regulation (Subpart E, Sec. Sec.  41.42 
through 41.49). Financial relations with respect to any such 
transactions shall be subject to the provisions of this Regulation 
(Subpart E, Sec. Sec.  41.42 through 41.49).



Sec.  41.45  Required margin.

    (a) Applicability. Each security futures intermediary shall 
determine the required margin for the security futures and related 
positions held on behalf of a customer in a securities account or 
futures account as set forth in this section.
    (b) Required margin--(1) General rule. The required margin for each 
long or short position in a security future shall be twenty (20) percent 
of the current market value of such security future.
    (2) Offsetting positions. Notwithstanding the margin levels 
specified in paragraph (b)(1) of this section, a self-regulatory 
authority may set the required initial or maintenance margin level for 
an offsetting position involving security futures and related positions 
at a level lower than the level that would be required under paragraph 
(b)(1) of this section if such positions were margined separately, 
pursuant to rules that meet the criteria set forth in section 7(c)(2)(B) 
of the Exchange Act and are effective in accordance with section 
19(b)(2) of the Exchange Act and, as applicable, section 5c(c) of the 
Act.
    (c) Procedures for certain margin level adjustments. An exchange 
registered under section 6(g) of the Exchange Act, or a national 
securities association registered under section 15A(k) of the Exchange 
Act, may raise or lower the required margin level for a security future 
to a level not lower than that specified in this section, in accordance 
with section 19(b)(7) of the Exchange Act.



Sec.  41.46  Type, form and use of margin.

    (a) When margin is required. Margin is required to be deposited 
whenever the required margin for security futures and related positions 
in an account is not satisfied by the equity in the account, subject to 
adjustment under paragraph (c) of this section.
    (b) Acceptable margin deposits. (1) The required margin may be 
satisfied by a deposit of cash, margin securities (subject to paragraph 
(b)(2) of this section), exempted securities, any other asset

[[Page 27]]

permitted under Regulation T to satisfy a margin deficiency in a 
securities margin account, or any combination thereof, each as valued in 
accordance with paragraph (c) of this section.
    (2) Shares of a money market mutual fund may be accepted as a margin 
deposit for purposes of this Regulation (Subpart E, Sec. Sec.  41.42 
through 41.49), Provided that:
    (i) The customer waives any right to redeem the shares without the 
consent of the security futures intermediary and instructs the fund or 
its transfer agent accordingly;
    (ii) The security futures intermediary (or clearing agency or 
derivatives clearing organization with which the shares are deposited as 
margin) obtains the right to redeem the shares in cash, promptly upon 
request; and
    (iii) The fund agrees to satisfy any conditions necessary or 
appropriate to ensure that the shares may be redeemed in cash, promptly 
upon request.
    (c) Adjustments--(1) Futures accounts. For purposes of this section, 
the equity in a futures account shall be computed in accordance with the 
margin rules applicable to the account, subject to the following:
    (i) A security future shall have no value;
    (ii) Each net long or short position in a listed option on a 
contract for future delivery shall be valued in accordance with the 
margin rules applicable to the account;
    (iii) Except as permitted in paragraph (e) of this section, each 
margin equity security shall be valued at an amount no greater than its 
Regulation T collateral value;
    (iv) Each other security shall be valued at an amount no greater 
than its current market value reduced by the percentage specified for 
such security in Sec.  240.15c3-1(c)(2)(vi) of this title;
    (v) Freely convertible foreign currency may be valued at an amount 
no greater than its daily marked-to-market U.S. dollar equivalent;
    (vi) Variation settlement receivable (or payable) by an account at 
the close of trading on any day shall be treated as a credit (or debit) 
to the account on that day; and
    (vii) Each other acceptable margin deposit or component of equity 
shall be valued at an amount no greater than its value under Regulation 
T.
    (2) Securities accounts. For purposes of this section, the equity in 
a securities account shall be computed in accordance with the margin 
rules applicable to the account, subject to the following:
    (i) A security future shall have no value;
    (ii) Freely convertible foreign currency may be valued at an amount 
no greater than its daily mark-to-market U.S. dollar equivalent; and
    (iii) Variation settlement receivable (or payable) by an account at 
the close of trading on any day shall be treated as a credit (or debit) 
to the account on that day.
    (d) Satisfaction restriction. Any transaction, position or deposit 
that is used to satisfy the required margin for security futures or 
related positions under this Regulation (Subpart E, Sec. Sec.  41.42 
through 41.49), including a related position, shall be unavailable to 
satisfy the required margin for any other position or transaction or any 
other requirement.
    (e) Alternative collateral valuation for margin equity securities in 
a futures account. (1) Notwithstanding paragraph (c)(1)(iii) of this 
section, a security futures intermediary need not value a margin equity 
security at its Regulation T collateral value when determining whether 
the required margin for the security futures and related positions in a 
futures account is satisfied, provided that:
    (i) The margin equity security is valued at an amount no greater 
than the current market value of the security reduced by the lowest 
percentage level of margin required for a long position in the security 
held in a margin account under the rules of a national securities 
exchange registered pursuant to section 6(a) of the Exchange Act;
    (ii) Additional margin is required to be deposited on any day when 
the day's security futures transactions and related transactions would 
create or increase a margin deficiency in the account if the margin 
equity securities were valued at their Regulation T collateral value, 
and shall be for the

[[Page 28]]

amount of the margin deficiency so created or increased (a ``special 
margin requirement''); and
    (iii) Cash, securities, or other assets deposited as margin for the 
positions in an account are not permitted to be withdrawn from the 
account at any time that:
    (A) Additional cash, securities, or other assets are required to be 
deposited as margin under this section for a transaction in the account 
on the same or a previous day; or
    (B) The withdrawal, together with other transactions, deposits, and 
withdrawals on the same day, would create or increase a margin 
deficiency if the margin equity securities were valued at their 
Regulation T collateral value.
    (2) All security futures transactions and related transactions on 
any day shall be combined to determine the amount of a special margin 
requirement. Additional margin deposited to satisfy a special margin 
requirement shall be valued at an amount no greater than its Regulation 
T collateral value.
    (3) If the alternative collateral valuation method set forth in 
paragraph (e) of this section is used with respect to an account in 
which security futures or related positions are carried:
    (i) An account that is transferred from one security futures 
intermediary to another may be treated as if it had been maintained by 
the transferee from the date of its origin, if the transferee accepts, 
in good faith, a signed statement of the transferor (or, if that is not 
practicable, of the customer), that any margin call issued under this 
Regulation (Subpart E, Sec. Sec.  41.42 through 41.49) has been 
satisfied; and
    (ii) An account that is transferred from one customer to another as 
part of a transaction, not undertaken to avoid the requirements of this 
Regulation (Subpart E, Sec. Sec.  41.42 through 41.49), may be treated 
as if it had been maintained for the transferee from the date of its 
origin, if the security futures intermediary accepts in good faith and 
keeps with the transferee account a signed statement of the transferor 
describing the circumstances for the transfer.
    (f) Guarantee of accounts. No guarantee of a customer's account 
shall be given any effect for purposes of determining whether the 
required margin in an account is satisfied, except as permitted under 
applicable margin rules.



Sec.  41.47  Withdrawal of margin.

    (a) By the customer. Except as otherwise provided in Sec.  
41.46(e)(1)(ii) of this subpart, cash, securities, or other assets 
deposited as margin for positions in an account may be withdrawn, 
provided that the equity in the account after such withdrawal is 
sufficient to satisfy the required margin for the security futures and 
related positions in the account under this Regulation (Subpart E, 
Sec. Sec.  41.42 through 41.49).
    (b) By the security futures intermediary. Notwithstanding paragraph 
(a) of this section, the security futures intermediary, in its usual 
practice, may deduct the following items from an account in which 
security futures or related positions are held if they are considered in 
computing the balance of such account:
    (1) Variation settlement payable, directly or indirectly, to a 
clearing agency that is registered under section 17A of the Exchange Act 
or a derivatives clearing organization that is registered under section 
5b of the Act;
    (2) Interest charged on credit maintained in the account;
    (3) Communication or shipping charges with respect to transactions 
in the account;
    (4) Payment of commissions, brokerage, taxes, storage and other 
charges lawfully accruing in connection with the positions and 
transactions in the account;
    (5) Any service charges that the security futures intermediary may 
impose; or
    (6) Any other withdrawals that are permitted from a securities 
margin account under Regulation T, to the extent permitted under 
applicable margin rules.



Sec.  41.48  Undermargined accounts.

    (a) Failure to satisfy margin call. If any margin call required by 
this Regulation (Subpart E, Sec. Sec.  41.42 through 41.49) is not met 
in full, the security futures intermediary shall take the deduction 
required with respect to an undermargined account in computing its net

[[Page 29]]

capital under SEC or Commission rules.
    (b) Accounts that liquidate to a deficit. If at any time there is a 
liquidating deficit in an account in which security futures are held, 
the security futures intermediary shall take steps to liquidate 
positions in the account promptly and in an orderly manner.
    (c) Liquidation of undermargined accounts not required. 
Notwithstanding Sec.  41.44(a)(1) of this subpart, Sec.  220.4(d) of 
Regulation T (12 CFR 220.4(d)) respecting liquidation of positions in 
lieu of deposit shall not apply with respect to security futures carried 
in a securities account.



Sec.  41.49  Filing proposed margin rule changes with the Commission.

    (a) Notification requirement for notice-designated contract markets. 
Any self-regulatory authority that is registered with the Commission as 
a designated contract market under section 5f of the Act shall, when 
filing a proposed rule change regarding customer margin for security 
futures with the SEC for approval in accordance with section 19(b)(2) of 
the Exchange Act, concurrently provide to the Commission a copy of such 
proposed rule change and any accompanying documentation filed with the 
SEC.
    (b) Filing requirements under the Act. Any self-regulatory authority 
that is registered with the Commission as a designated contract market 
under section 5 of the Act shall, when filing a proposed rule change 
regarding customer margin for security futures with the SEC for approval 
in accordance with section 19(b)(2) of the Exchange Act, submit such 
proposed rule change to the Commission as follows:
    (1) If the self-regulatory authority elects to request the 
Commission's prior approval for the proposed rule change pursuant to 
section 5c(c)(2) of the Act, it shall concurrently file the proposed 
rule change with the Commission in accordance with Sec.  40.5 of this 
chapter.
    (2) If the self-regulatory authority elects to implement a proposed 
rule change by written certification pursuant to section 5c(c)(1) of the 
Act, it shall concurrently provide to the Commission a copy of the 
proposed rule change and any accompanying documentation filed with the 
SEC. Promptly after obtaining SEC approval for the proposed rule change, 
such self-regulatory authority shall file its written certification with 
the Commission in accordance with Sec.  40.6 of this chapter.

[67 FR 53171, Aug. 14, 2002, as amended at 77 FR 66346, Nov. 2, 2012]



PART 42_ANTI-MONEY LAUNDERING, TERRORIST FINANCING--Table of Contents



                      Subpart A_General Provisions

Sec.
42.1 [Reserved]
42.2 Compliance with Bank Secrecy Act

    Authority: 7 U.S.C. 1a, 2, 5, 6, 6b, 6d, 6f, 6g, 7, 7a, 7a-1, 7a-2, 
7b, 7b-1, 7b-2, 9, 12, 12a, 12c, 13a, 13a-1, 13c, 16 and 21; 12 U.S.C. 
1786(q), 1818, 1829b and 1951-1959; 31 U.S.C. 5311-5314 and 5316-5332; 
title III, secs. 312-314, 319, 321, 326, 352, Pub. L. 107-56, 115 Stat. 
307.

    Source: 68 FR 25159, May 9, 2003, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  42.1  [Reserved]



Sec.  42.2  Compliance with Bank Secrecy Act.

    Every futures commission merchant and introducing broker shall 
comply with the applicable provisions of the Bank Secrecy Act and the 
regulations promulgated by the Department of the Treasury under that Act 
at 31 CFR chapter X, and with the requirements of 31 U.S.C. 5318(l) and 
the implementing regulation jointly promulgated by the Commission and 
the Department of the Treasury at 31 CFR 1026.220, which require that a 
customer identification program be adopted as part of the firm's Bank 
Secrecy Act compliance program.

[79 FR 2371, Jan. 14, 2014]



PART 43_REAL-TIME PUBLIC REPORTING--Table of Contents



Sec.
43.1 Purpose, scope, and rules of construction.
43.2 Definitions.
43.3 Method and timing for real-time public reporting.

[[Page 30]]

43.4 Swap transaction and pricing data to be publicly disseminated in 
          real-time.
43.5 Time delays for public dissemination of swap transaction and 
          pricing data.
43.6 Block trades and large notional off-facility swaps.
43.7 Delegation of authority.

Appendix A to Part 43--Data Fields for Public Dissemination
Appendix B to Part 43--Enumerated Physical Commodity Contracts and Other 
          Contracts
Appendix C to Part 43--Time Delays for Public Dissemination
Appendix D to Part 43--Other Commodity Swap Categories
Appendix E to Part 43--Other Commodity Geographic Identification for 
          Public Dissemination Pursuant to Sec.  43.4(d)(4)(iii)
Appendix F to Part 43--Initial Appropriate Minimum Block Sizes by Asset 
          Class for Block Trades and Large Notional Off-Facility Swaps

    Authority: 7 U.S.C. 2(a), 12a(5) and 24a, as amended by Pub. L. 111-
203, 124 Stat. 1376 (2010).

    Source: 76 FR 1243, Jan. 9, 2012, unless otherwise noted.



Sec.  43.1  Purpose, scope, and rules of construction.

    (a) Purpose. This part implements rules relating to the reporting 
and public dissemination of certain swap transaction and pricing data to 
enhance transparency and price discovery pursuant to the Dodd-Frank Wall 
Street Reform and Consumer Protection Act of 2010, Pub. L. 111-203, 124 
Stat. 1376 (2010).
    (b)(1) Scope. The provisions of this part shall apply to all swaps 
as defined in Section 1a(47) of the Act and any implementing regulations 
thereunder, including:
    (i) Swaps subject to the mandatory clearing requirement described in 
Section 2(h)(1) of the Act, including those swaps that are excepted from 
the requirement pursuant to Section 2(h)(7) of the Act;
    (ii) Swaps that are not subject to the mandatory clearing 
requirement described in Section 2(h)(1) of the Act, but are cleared at 
a registered derivatives clearing organization;
    (iii) Swaps that are not cleared at a registered derivatives 
clearing organization and are reported to a registered swap data 
repository that accepts and publicly disseminates swap transaction and 
pricing data in real-time; and
    (iv) Swaps that are required to be cleared under Section 2(h)(2) of 
the Act, but are not cleared.
    (2) This part also shall apply to registered entities as defined in 
the Act, as well as to parties to a swap including swap dealers, major 
swap participants and U.S.-based market participants in a manner as the 
Commission may determine.
    (c) Rules of construction. The examples in this part and in appendix 
A to this part are not exclusive. Compliance with a particular example 
or application of a sample clause, to the extent applicable, shall 
constitute compliance with the particular portion of the rule to which 
the example relates.
    (d) Severability. If any provision of this part, or the application 
thereof to any person or circumstance, is held invalid, such invalidity 
shall not affect other provisions or application of such provision to 
other persons or circumstances which can be given effect without the 
invalid provision or application.



Sec.  43.2  Definitions.

    As used in this part:
    Act means the Commodity Exchange Act, as amended, 7 U.S.C. 1 et seq.
    Affirmation means the process by which parties to a swap verify 
(orally, in writing, electronically or otherwise) that they agree on the 
primary economic terms of a swap (but not necessarily all terms of the 
swap). Affirmation may constitute ``execution'' of the swap or may 
provide evidence of execution of the swap, but does not constitute 
confirmation (or confirmation by affirmation) of the swap.
    Appropriate minimum block size means the minimum notional or 
principal amount for a category of swaps that qualifies a swap within 
such category as a block trade or large notional off-facility swap.
    As soon as technologically practicable means as soon as possible, 
taking into consideration the prevalence, implementation and use of 
technology by comparable market participants.

[[Page 31]]

    Asset class means a broad category of commodities including, without 
limitation, any ``excluded commodity'' as defined in Section 1a(19) of 
the Act, with common characteristics underlying a swap. The asset 
classes include interest rate, foreign exchange, credit, equity, other 
commodity and such other asset classes as may be determined by the 
Commission.
    Block trade means a publicly reportable swap transaction that:
    (1) Involves a swap that is listed on a registered swap execution 
facility or designated contract market;
    (2) Occurs away from the registered swap execution facility's or 
designated contract market's trading system or platform and is executed 
pursuant to the registered swap execution facility's or designated 
contract market's rules and procedures;
    (3) Has a notional or principal amount at or above the appropriate 
minimum block size applicable to such swap; and
    (4) Is reported subject to the rules and procedures of the 
registered swap execution facility or designated contract market and the 
rules described in this part, including the appropriate time delay 
requirements set forth in Sec.  43.5 of this part.
    Business day means the twenty-four hour day, on all days except 
Saturdays, Sundays and legal holidays, in the location of the reporting 
party or registered entity reporting data for the swap.
    Business hours means the consecutive hours of one or more 
consecutive business days.
    Cap size means, for each swap category, the maximum notional or 
principal amount of a publicly reportable swap transaction that is 
publicly disseminated.
    Confirmation means the consummation (electronic or otherwise) of 
legally binding documentation (electronic or otherwise) that 
memorializes the agreement of the parties to all terms of a swap. A 
confirmation shall be in writing (electronic or otherwise) and shall 
legally supersede any previous agreement (electronic or otherwise) 
relating to the swap.
    Confirmation by affirmation means the process by which one party to 
a swap acknowledges its assent to the complete swap terms submitted by 
the other party to the swap. If the parties to a swap are using a 
confirmation service vendor, complete swap terms may be submitted 
electronically by a party to such vendor's platform and the other party 
may affirm such terms on such platform.
    Economically related means a direct or indirect reference to the 
same commodity at the same delivery location or locations, or with the 
same or a substantially similar cash market price series.
    Embedded option means any right, but not an obligation, provided to 
one party of a swap by the other party to the swap that provides the 
party holding the option with the ability to change any one or more of 
the economic terms of the swap as those terms previously were 
established at confirmation (or were in effect on the start date).
    Executed means the completion of the execution process.
    Execution means an agreement by the parties (whether orally, in 
writing, electronically, or otherwise) to the terms of a swap that 
legally binds the parties to such swap terms under applicable law. 
Execution occurs simultaneous with or immediately following the 
affirmation of the swap.
    Futures-related swap means a swap (as defined in section 1a(47) of 
the Act and as further defined by the Commission in implementing 
regulations) that is economically related to a futures contract.
    Large notional off-facility swap means an off-facility swap that has 
a notional or principal amount at or above the appropriate minimum block 
size applicable to such publicly reportable swap transaction and is not 
a block trade as defined in Sec.  43.2 of the Commission's regulations.
    Major currencies means the currencies, and the cross-rates between 
the currencies, of Australia, Canada, Denmark, New Zealand, Norway, 
South Africa, South Korea, Sweden, and Switzerland.
    Non-major currencies means all other currencies that are not super-
major currencies or major currencies.

[[Page 32]]

    Novation means the process by which a party to a swap transfers all 
of its rights, liabilities, duties and obligations under the swap to a 
new legal party other than the counterparty to the swap. The transferee 
accepts all of the transferor's rights, liabilities, duties and 
obligations under the swap. A novation is valid as long as the 
transferor and the remaining party to the swap are given notice, and the 
transferor, transferee and remaining party to the swap consent to the 
transfer.
    Off-facility swap means any publicly reportable swap transaction 
that is not executed on or pursuant to the rules of a registered swap 
execution facility or designated contract market.
    Other commodity means any commodity that is not categorized in the 
other asset classes as may be determined by the Commission.
    Physical commodity swap means a swap in the other commodity asset 
class that is based on a tangible commodity.
    Public dissemination and publicly disseminate means to publish and 
make available swap transaction and pricing data in a non-discriminatory 
manner, through the Internet or other electronic data feed that is 
widely published and in machine-readable electronic format.
    Publicly reportable swap transaction means:
    (1) Unless otherwise provided in this part--
    (i) Any executed swap that is an arm's-length transaction between 
two parties that results in a corresponding change in the market risk 
position between the two parties; or
    (ii) Any termination, assignment, novation, exchange, transfer, 
amendment, conveyance, or extinguishing of rights or obligations of a 
swap that changes the pricing of the swap.
    (2) Examples of executed swaps that do not fall within the 
definition of publicly reportable swap may include:
    (i) Internal swaps between one-hundred percent owned subsidiaries of 
the same parent entity; and
    (ii) Portfolio compression exercises.
    (3) These examples represent swaps that are not at arm's length and 
thus are not publicly reportable swap transactions, notwithstanding that 
they do result in a corresponding change in the market risk position 
between two parties.
    Real-time public reporting means the reporting of data relating to a 
swap transaction, including price and volume, as soon as technologically 
practicable after the time at which the swap transaction has been 
executed.
    Reference price means a floating price series (including derivatives 
contract prices and cash market prices or price indices) used by the 
parties to a swap or swaption to determine payments made, exchanged or 
accrued under the terms of a swap contract.
    Remaining party means a party to a swap that consents to a 
transferor's transfer by novation of all of the transferor's rights, 
liabilities, duties and obligations under such swap to a transferee.
    Reporting party means the party to a swap with the duty to report a 
publicly reportable swap transaction in accordance with this part and 
section 2(a)(13)(F) of the Act.
    Super-major currencies means the currencies of the European Monetary 
Union, Japan, the United Kingdom, and United States.
    Swaps with composite reference prices means swaps based on reference 
prices that are composed of more than one reference price from more than 
one swap category.
    Transferee means a party to a swap that accepts, by way of novation, 
all of a transferor's rights, liabilities, duties and obligations under 
such swap with respect to a remaining party.
    Transferor means a party to a swap that transfers, by way of 
novation, all of its rights, liabilities, duties and obligations under 
such swap, with respect to a remaining party, to a transferee.
    Trimmed data set means a data set that has had extraordinarily large 
notional transactions removed by transforming the data into a logarithm 
with a base of 10, computing the mean, and excluding transactions that 
are beyond four standard deviations above the mean.
    Unique product identifier means a unique identification of a 
particular level of the taxonomy of the product in an asset class or 
sub-asset class in question, as further described in

[[Page 33]]

Sec.  43.4(f) and appendix A to this part. Such unique product 
identifier may combine the information from one or more of the data 
fields described in appendix A.
    Widely published means to publish and make available through 
electronic means in a manner that is freely available and readily 
accessible to the public.

[76 FR 1243, Jan. 9, 2012, as amended at 78 FR 32937, May 31, 2013]



Sec.  43.3  Method and timing for real-time public reporting.

    (a) Responsibilities of parties to a swap to report swap transaction 
and pricing data in real-time--(1) In general. A reporting party shall 
report any publicly reportable swap transaction to a registered swap 
data repository as soon as technologically practicable after such 
publicly reportable swap transaction is executed. For purposes of this 
part, a registered swap data repository includes any swap data 
repository provisionally registered with the Commission pursuant to part 
49 of this chapter.
    (2) Swaps executed on or pursuant to the rules of a registered swap 
execution facility or designated contract market. A party to a publicly 
reportable swap transaction shall satisfy its reporting requirement 
under this section by executing a publicly reportable swap transaction 
on or pursuant to the rules of a registered swap execution facility or 
designated contract market.
    (3) Off-facility swaps. All off-facility swaps shall be reported by 
the reporting party as soon as technologically practicable following 
execution, to a registered swap data repository for the appropriate 
asset class in accordance with the rules set forth in this part. Unless 
otherwise agreed to by the parties prior to the execution of the 
publicly reportable swap transaction, the following persons shall be 
reporting parties for off-facility swaps:
    (i) If only one party is a swap dealer or major swap participant, 
then the swap dealer or major swap participant shall be the reporting 
party;
    (ii) If one party is a swap dealer and the other party is a major 
swap participant, then the swap dealer shall be the reporting party;
    (iii) If both parties are swap dealers, then the swap dealers shall 
designate which party shall be the reporting party;
    (iv) If both parties are major swap participants, then the major 
swap participants shall designate which party shall be the reporting 
party;
    (v) If neither party is a swap dealer or a major swap participant, 
then the parties shall designate which party (or its agent) shall be the 
reporting party.
    (b) Public dissemination of swap transaction and pricing data--(1) 
Publicly reportable swap transactions executed on or pursuant to the 
rules of a registered swap execution facility or designated contract 
market. A registered swap execution facility or designated contract 
market shall satisfy the requirements of this subparagraph by 
transmitting swap transaction and pricing data to a registered swap data 
repository, as soon as technologically practicable after the publicly 
reportable swap transaction has been executed on or pursuant to the 
rules of such trading platform or facility.
    (2) Public dissemination of swap transaction and pricing data by 
registered swap data repositories. A registered swap data repository 
shall ensure that swap transaction and pricing data is publicly 
disseminated, as soon as technologically practicable after such data is 
received from a registered swap execution facility, designated contract 
market or reporting party, unless such publicly reportable swap 
transaction is subject to a time delay described in Sec.  43.5 of this 
part, in which case the publicly reportable swap transaction shall be 
publicly disseminated in the manner described in Sec.  43.5.
    (3) Prohibitions on disclosure of data. (i) If there is a registered 
swap data repository for an asset class, a registered swap execution 
facility or designated contract market shall not disclose swap 
transaction and pricing data relating to publicly reportable swap 
transactions in such asset class, prior to the public dissemination of 
such data by a registered swap data repository unless:
    (A) Such disclosure is made no earlier than the transmittal of such 
data to a registered swap data repository for public dissemination;

[[Page 34]]

    (B) Such disclosure is only made to market participants on such 
registered swap execution facility or designated contract market;
    (C) Market participants are provided advance notice of such 
disclosure; and
    (D) Any such disclosure by the registered swap execution facility or 
designated contract market is non-discriminatory.
    (ii) If there is a registered swap data repository for an asset 
class, a swap dealer or major swap participant shall not disclose swap 
transaction and pricing data relating to publicly reportable swap 
transactions in such asset class, prior to the public dissemination of 
such data by a registered swap data repository unless:
    (A) Such disclosure is made no earlier than the transmittal of such 
data to a registered swap data repository for public dissemination;
    (B) Such disclosure is only made to the customer base of such swap 
dealer or major swap participant, including parties who maintain 
accounts with or have been swap counterparties with such swap dealer or 
major swap participant;
    (C) Swap counterparties are provided advance notice of such 
disclosure; and
    (D) Any such disclosure by the swap dealer or major swap participant 
is non-discriminatory.
    (c) Requirements for registered swap data repositories in providing 
the public dissemination of swap transaction and pricing data in real-
time--(1) Compliance with 17 CFR part 49. Any registered swap data 
repository that accepts and publicly disseminates swap transaction and 
pricing data in real-time shall comply with part 49 of this chapter and 
shall publicly disseminate swap transaction and pricing data in 
accordance with this part as soon as technologically practicable upon 
receipt of such data, except as otherwise provided in this part.
    (2) Acceptance and public dissemination of all swaps in an asset 
class. Any registered swap data repository that accepts and publicly 
disseminates swap transaction and pricing data in real-time for swaps in 
its selected asset class shall accept and publicly disseminate swap 
transaction and pricing data in real-time for all publicly reportable 
swap transactions within such asset class, unless otherwise prescribed 
by the Commission.
    (3) Annual independent review. Any registered swap data repository 
that accepts and publicly disseminates swap transaction and pricing data 
in real-time shall perform, on an annual basis, an independent review in 
accordance with established audit procedures and standards of the 
registered swap data repository's security and other system controls for 
the purposes of ensuring compliance with the requirements in this part.
    (d) Availability of swap transaction and pricing data to the public. 
(1) Registered swap data repositories shall publicly disseminate swap 
transaction and pricing data in a consistent, usable and machine-
readable electronic format that allows the data to be downloaded, saved 
and analyzed.
    (2) Data that is publicly disseminated pursuant to this part shall 
be available from an Internet Web site in a format that is freely 
available and readily accessible to the public.
    (3) Registered swap data repositories shall provide to the 
Commission a hyperlink to the Internet Web site where publicly 
disseminated swap transaction and pricing data can be accessed by the 
public.
    (e) Errors or omissions--(1) In general. Any errors or omissions in 
swap transaction and pricing data that were publicly disseminated in 
real-time shall be corrected or cancelled in the following manner:
    (i) If a party to the swap becomes aware of an error or omission in 
the swap transaction and pricing data reported with respect to such 
swap, such party shall promptly notify the other party of the error and/
or correction.
    (ii) If a reporting party to a swap becomes aware of an error or 
omission in the swap transaction or pricing data which it reported to a 
registered swap data repository or which was reported by a registered 
swap execution facility or designated contract market with respect to 
such swap, either through its own initiative or through notice by the 
other party to the swap, the reporting party shall promptly submit 
corrected data to the same registered swap execution facility, 
designated contract

[[Page 35]]

market or registered swap data repository.
    (iii) If the registered swap execution facility or designated 
contract market becomes aware of an error or omission in the swap 
transaction or pricing data reported with respect to such swap, or 
receives notification from the reporting party, the registered swap 
execution facility or designated contract market shall promptly submit 
corrected data to the same registered swap data repository.
    (iv) Any registered swap data repository that accepts and publicly 
disseminates swap transaction and pricing data in real-time shall 
publicly disseminate any cancellations or corrections to such data, as 
soon as technologically practicable after receipt or discovery of any 
such cancellation or correction.
    (2) Improper cancellation or correction. Reporting parties, 
registered swap execution facilities, designated contract markets and 
registered swap data repositories shall not submit or agree to submit a 
cancellation or correction for the purpose of re-reporting swap 
transaction and pricing data in order to gain or extend a delay in 
public dissemination of accurate swap transaction or pricing data or to 
otherwise evade the reporting requirements in this part.
    (3) Cancellation. A registered swap data repository shall cancel any 
incorrect data that had been publicly disseminated by publicly 
disseminating a cancellation of such data, as soon as technologically 
practicable, in the manner described in appendix A to this part.
    (4) Correction. A registered swap data repository shall correct any 
incorrect data that had been publicly disseminated by publicly 
disseminating a cancellation of the incorrect swap transaction and 
pricing data and then publicly disseminating the correct data, as soon 
as technologically practicable, in the manner described in appendix A to 
this part.
    (f) Hours of operation of registered swap data repositories. Unless 
otherwise provided in this subsection, a registered swap data repository 
shall have systems in place to continuously receive and publicly 
disseminate swap transaction and pricing data in real-time pursuant to 
this part.
    (1) A registered swap data repository may declare closing hours to 
perform system maintenance.
    (2) A registered swap data repository shall, to the extent 
reasonably possible, avoid scheduling closing hours when, in its 
estimation, the U.S. market and major foreign markets are most active.
    (3) A registered swap data repository shall comply with the 
requirements under part 40 of this chapter in setting closing hours and 
shall provide advance notice of its closing hours to market participants 
and the public.
    (g) Acceptance of data during closing hours. During closing hours, a 
registered swap data repository shall have the capability to receive and 
hold in queue any data regarding publicly reportable swap transactions 
pursuant to this part.
    (1) Upon any reopening after closing hours, a registered swap data 
repository shall promptly and publicly disseminate the swap transaction 
and pricing data of swaps held in queue, in accordance with the 
requirements of this part.
    (2) If at any time during closing hours a registered swap data 
repository is unable to receive and hold in queue swap transaction and 
pricing data pursuant to this part, then the registered swap data 
repository shall immediately upon reopening issue notice that it has 
resumed normal operations. Any registered swap execution facility, 
designated contract market or reporting party that is obligated under 
this section to report data to the registered swap data repository shall 
report the data to the registered swap data repository immediately after 
receiving such notice.
    (h) Timestamp requirements. In addition to the execution timestamp 
described in appendix A to this part, registered entities, swap dealers 
and major swap participants shall have the following timestamp 
requirements with respect to real-time public reporting of swap 
transaction and pricing data for all publicly reportable swap 
transactions:
    (1) A registered swap execution facility or designated contract 
market shall

[[Page 36]]

timestamp swap transaction and pricing data relating to a publicly 
reportable swap transaction with the date and time, to the nearest 
second of when such registered swap execution facility or designated 
contract market:
    (i) Receives data from a swap counterparty (if applicable); and
    (ii) Transmits such data to a registered swap data repository for 
public dissemination.
    (2) A registered swap data repository shall timestamp swap 
transaction and pricing data relating to a publicly reportable swap 
transaction with the date and time, to the nearest second when such 
registered swap data repository:
    (i) Receives data from a registered swap execution facility, 
designated contract market or reporting party; and
    (ii) Publicly disseminates such data.
    (3) A swap dealer or major swap participant shall timestamp swap 
transaction and pricing data relating to an off-facility swap with the 
date and time, to the nearest second when such swap dealer or major swap 
participant transmits such data to a registered swap data repository for 
public dissemination.
    (4) Records of all timestamps required by this subsection shall be 
maintained for a period of at least five years from the execution of the 
publicly reportable swap transaction.
    (i) Fees. Any fees or charges assessed on a reporting party, 
registered swap execution facility or designated contract market by a 
registered swap data repository that accepts and publicly disseminates 
swap transaction and pricing data in real-time for the collection of 
such data shall be equitable and non-discriminatory. If such registered 
swap data repository allows a fee discount based on the volume of data 
reported to it for public dissemination, then such discount shall be 
made available to all reporting parties, registered swap execution 
facilities and designated contract markets in an equitable and non-
discriminatory manner.



Sec.  43.4  Swap transaction and pricing data to be publicly 
disseminated in real-time.

    (a) In general. Swap transaction and pricing information shall be 
reported to a registered swap data repository so that the registered 
swap data repository can publicly disseminate swap transaction and 
pricing data in real-time in accordance with this part, including the 
manner described in this section and appendix A to this part.
    (b) Public dissemination of data fields. Any registered swap data 
repository that accepts and publicly disseminates swap transaction and 
pricing data in real-time shall publicly disseminate the information 
described in appendix A to this part, as applicable, for any publicly 
reportable swap transaction.
    (c) Additional swap information. A registered swap data repository 
that accepts and publicly disseminates swap transaction and pricing data 
in real-time may require reporting parties, registered swap execution 
facilities and designated contract markets to report to such registered 
swap data repository, such information that is necessary to compare the 
swap transaction and pricing data that was publicly disseminated in 
real-time to the data reported to a registered swap data repository 
pursuant to Section 2(a)(13)(G) of the Act or to confirm that parties to 
a swap have reported in a timely manner pursuant to Sec.  43.3 of this 
part. Such additional information shall not be publicly disseminated by 
the registered swap data repository.
    (d) Anonymity of the parties to a publicly reportable swap 
transaction--(1) In general. Swap transaction and pricing data that is 
publicly disseminated in real-time shall not disclose the identities of 
the parties to the swap or otherwise facilitate the identification of a 
party to a swap. A registered swap data repository that accepts and 
publicly disseminates swap transaction and pricing data in real-time 
shall not publicly disseminate such data in a manner that discloses or 
otherwise facilitates the identification of a party to a swap.
    (2) Actual product description reported to registered swap data 
repository. Reporting parties, registered swap execution facilities and 
designated contract

[[Page 37]]

markets shall provide a registered swap data repository with swap 
transaction and pricing data that includes an actual description of the 
underlying asset(s). This requirement is separate from the requirement 
that a reporting party, registered swap execution facility or designated 
contract market shall report swap data to a registered swap data 
repository pursuant to Section 2(a)(13)(G) of the Act and the 
Commission's regulations.
    (3) Public dissemination of the actual description of underlying 
asset(s). Notwithstanding the anonymity protection for certain swaps in 
the other commodity asset class in Sec.  43.4(d)(4)(ii), a registered 
swap data repository shall publicly disseminate the actual underlying 
asset(s) of all publicly reportable swap transactions in the interest 
rate, credit, equity and foreign exchange asset classes.
    (4) Public dissemination of the underlying asset(s) for certain 
swaps in the other commodity asset class. A registered swap data 
repository shall publicly disseminate swap transaction and pricing data 
in the other commodity asset class as described in this subsection.
    (i) A registered swap data repository shall publicly disseminate 
swap transaction and pricing data for publicly reportable swap 
transactions in the other commodity asset class in the manner described 
in paragraphs (d)(4)(ii) and (d)(4)(iii) of this section.
    (ii) The actual underlying asset(s) shall be publicly disseminated 
for the following publicly reportable swap transactions in the other 
commodity asset class:
    (A) Any publicly reportable swap transaction that references one of 
the contracts described in appendix B to this part;
    (B) Any publicly reportable swap transaction that is economically 
related to one of the contracts described in appendix B of this part; or
    (iii) The underlying assets of swaps in the other commodity asset 
class that are not described in paragraph (d)(4)(ii) of this section 
shall be publicly disseminated by limiting the geographic detail of the 
underlying assets. The identification of any specific delivery point or 
pricing point associated with the underlying asset of such other 
commodity swap shall be publicly disseminated pursuant to appendix E of 
this part.
    (C) Any publicly reportable swap transaction executed on or pursuant 
to the rules of a registered swap execution facility or designated 
contract market.
    (e) Unique product identifier. If a unique product identifier is 
developed that sufficiently describes one or more of the swap 
transaction and pricing data fields for real-time reporting described in 
appendix A to this part, then such unique product identifier may be 
publicly disseminated in lieu of the data fields that it describes.
    (f) Reporting of notional or principal amounts to a registered swap 
data repository--(1) Off-facility swaps. The reporting party shall 
report the actual notional or principal amount of any off-facility swap 
to a registered swap data repository that accepts and publicly 
disseminates such data pursuant to part 43.
    (2) Swaps executed on or pursuant to the rules of a registered swap 
execution facility or designated contract market. (i) A registered swap 
execution facility or designated contract market shall transmit the 
actual notional or principal amount for all swaps executed on or 
pursuant to the rules of such registered swap execution facility or 
designated contract market, to a registered swap data repository that 
accepts swaps in the asset class.
    (ii) The actual notional or principal amount for any block trade 
executed pursuant to the rules of a registered swap execution facility 
or designated contract market shall be reported to the registered swap 
execution facility or designated contract market pursuant to the rules 
of the registered swap execution facility or designated contract market.
    (g) Public dissemination of rounded notional or principal amounts. 
The notional or principal amount of a publicly reportable swap 
transaction, as described in appendix A to this part, shall be rounded 
and publicly disseminated by a registered swap data repository as 
follows:
    (1) If the notional or principal amount is less than one thousand, 
round to nearest five, but in no case

[[Page 38]]

shall a publicly disseminated notional or principal amount be less than 
five;
    (2) If the notional or principal amount is less than ten thousand 
but equal to or greater than one thousand, round to nearest one hundred;
    (3) If the notional or principal amount is less than 100 thousand 
but equal to or greater than ten thousand, round to nearest one 
thousand;
    (4) If the notional or principal amount is less than one million but 
equal to or greater than 100 thousand, round to nearest ten thousand;
    (5) If the notional or principal amount is less than 100 million but 
equal to or greater than one million, round to the nearest one million;
    (6) If the notional or principal amount is less than 500 million but 
equal to or greater than 100 million, round to the nearest ten million;
    (7) If the notional or principal amount is less than one billion but 
equal to or greater than 500 million, round to the nearest 50 million;
    (8) If the notional or principal amount is less than 100 billion but 
equal to or greater than one billion, round to the nearest one billion;
    (9) If the notional or principal amount is greater than 100 billion, 
round to the nearest 50 billion.
    (h) Cap sizes--(1) Initial cap sizes. Prior to the effective date of 
a Commission determination to establish an applicable post-initial cap 
size for a swap category as determined pursuant to paragraph (h)(2) of 
this section, the initial cap sizes for each swap category shall be 
equal to the greater of the initial appropriate minimum block size for 
the respective swap category in appendix F of this part or the 
respective cap sizes in paragraphs (h)(1)(i) through (h)(1)(v) of this 
section. If appendix F of this part does not provide an initial 
appropriate minimum block size for a particular swap category, the 
initial cap size for such swap category shall be equal to the 
appropriate cap size as set forth in paragraphs (h)(1)(i) through 
(h)(1)(v) of this section.
    (i) For swaps in the interest rate asset class, the publicly 
disseminated notional or principal amount for a swap subject to the 
rules in this part shall be:
    (A) USD 250 million for swaps with a tenor greater than zero up to 
and including two years;
    (B) USD 100 million for swaps with a tenor greater than two years up 
to and including ten years; and
    (C) USD 75 million for swaps with a tenor greater than ten years.
    (ii) For swaps in the credit asset class, the publicly disseminated 
notional or principal amount for a swap subject to the rules in this 
part shall be USD 100 million.
    (iii) For swaps in the equity asset class, the publicly disseminated 
notional or principal amount for a swap subject to the rules in this 
part shall be USD 250 million.
    (iv) For swaps in the foreign exchange asset class, the publicly 
disseminated notional or principal amount for a swap subject to the 
rules in this part shall be USD 250 million.
    (v) For swaps in the other commodity asset class, the publicly 
disseminated notional or principal amount for a swap subject to the 
rules in this part shall be USD 25 million.
    (2) Post-initial cap sizes. Pursuant to the process described in 
Sec.  43.6(f)(1), the Commission shall establish post-initial cap sizes 
using reliable data collected by registered swap data repositories, as 
determined by the Commission, based on the following:
    (i) A one-year window of swap transaction and pricing data 
corresponding to each relevant swap category recalculated no less than 
once each calendar year; and
    (ii) The 75-percent notional amount calculation described in Sec.  
43.6(c)(3) applied to the swap transaction and pricing data described in 
paragraph (h)(2)(i) of this section.
    (3) Commission publication of post-initial cap sizes. The Commission 
shall publish post-initial cap sizes on its Web site at http://
www.cftc.gov.
    (4) Effective date of post-initial cap sizes. Unless otherwise 
indicated on the Commission's Web site, the post-initial cap sizes shall 
be effective on the first day of the second month following the date of 
publication.

[76 FR 1243, Jan. 9, 2012, as amended at 78 FR 32937, May 31, 2013]

[[Page 39]]



Sec.  43.5  Time delays for public dissemination of swap transaction 
and pricing data.

    (a) In general. The time delay for the real-time public reporting of 
a block trade or large notional off-facility swap begins upon execution, 
as defined in Sec.  43.2 of this part. It is the responsibility of the 
registered swap data repository that accepts and publicly disseminates 
swap transaction and pricing data in real-time to ensure that the block 
trade or large notional off-facility swap transaction and pricing data 
is publicly disseminated pursuant to this part upon the expiration of 
the appropriate time delay described in Sec.  43.5(d) through (h).
    (b) Public dissemination of publicly reportable swap transactions 
subject to a time delay. A registered swap data repository shall 
publicly disseminate swap transaction and pricing data that is subject 
to a time delay pursuant to this paragraph, as follows:
    (1) No later than the prescribed time delay period described in this 
paragraph;
    (2) No sooner than the prescribed time delay period described in 
this paragraph; and
    (3) Precisely upon the expiration of the time delay period described 
in this paragraph.
    (c) Interim time delay--(1) In general. The public dissemination of 
swap transaction and pricing data relating to any publicly reportable 
swap transaction shall receive the same time delays for block trades and 
large notional off-facility swaps, as described in this subsection, 
until such time as an appropriate minimum block size is established with 
respect to such publicly reportable swap transaction.
    (2) Swaps executed on or pursuant to the rules of a registered swap 
execution facility or designated contract market. Any publicly 
reportable swap transaction that does not have an appropriate minimum 
block size and that is executed on or pursuant to the rules of a 
registered swap execution facility or designated contract market shall 
follow the time delays set forth in Sec.  43.5(d) until such time that 
an appropriate minimum block size is established for such publicly 
reportable swap transaction.
    (3) Off-facility swaps subject to the mandatory clearing 
requirement. Any off-facility swap that does not have an appropriate 
minimum block size and that is subject to the mandatory clearing 
requirement described in Section 2(h)(1) of the Act and Commission 
regulations, with the exception of those off-facility swaps that are 
either excepted from the mandatory clearing requirement pursuant to 
Section 2(h)(7) of the Act and Commission regulations or that are 
required to be cleared under Section 2(h)(2) of the Act and Commission 
regulations but are not cleared, shall follow the time delays set forth 
in Sec.  43.5(e) until such time that an appropriate minimum block size 
is established for such off-facility swap.
    (4) Off-facility swaps in the interest rate, credit, foreign 
exchange and equity asset classes not subject to the mandatory clearing 
requirement with at least one swap dealer or major swap participant 
counterparty. Any off-facility swap in the interest rate, credit, 
foreign exchange or equity asset classes, where at least one party is a 
swap dealer or major swap participant, that is not subject to the 
mandatory clearing requirement or is excepted from such mandatory 
clearing requirement and that does not have an appropriate minimum block 
size shall follow the time delays set forth in Sec.  43.5(f) until such 
time that an appropriate minimum block size is established for such off-
facility swap.
    (5) Off-facility swaps in the other commodity asset class not 
subject to the mandatory clearing requirement with at least one swap 
dealer or major swap participant counterparty. Any off-facility swap in 
the other commodity asset class, where at least one party is a swap 
dealer or major swap participant, that is not subject to the mandatory 
clearing requirement or is excepted from such mandatory clearing 
requirement and that does not have an appropriate minimum block size 
shall follow the time delays set forth in Sec.  43.5(g) until such time 
that an appropriate minimum block size is established for such off-
facility swap.
    (6) Off-facility swaps in all asset classes not subject to the 
mandatory clearing requirement in which neither counterparty

[[Page 40]]

is a swap dealer or major swap participant. Any off-facility swap, in 
all asset classes, where neither party is a swap dealer or major swap 
participant, that is not subject to the mandatory clearing requirement 
or is excepted from such mandatory clearing requirement and that does 
not have an appropriate minimum block size shall follow the time delays 
set forth in Sec.  43.5(h) until such time that an appropriate minimum 
block size is established for such off-facility swap.
    (7) Time delays for public dissemination upon establishment of an 
appropriate minimum block size. After an appropriate minimum block size 
is established for a particular swap or category of swaps, all publicly 
reportable swap transactions that are below the appropriate minimum 
block size shall be publicly disseminated as soon as technologically 
practicable after execution pursuant to Sec.  43.3 of this part.
    (d) Time delay for block trades executed pursuant to the rules of a 
registered swap execution facility or designated contract market. Any 
block trade that is executed pursuant to the rules of a registered swap 
execution facility or designated contract market shall receive a time 
delay in the public dissemination of swap transaction and pricing data 
as follows:
    (1) Time delay during Year 1. For one year beginning on the 
compliance date of this part, the time delay for public dissemination of 
swap transaction and pricing data for all publicly reportable swap 
transactions described in Sec.  43.5(d) shall be 30 minutes immediately 
after execution of such publicly reportable swap transaction.
    (2) Time delay after Year 1. Beginning on the first anniversary of 
the compliance date of this part, the time delay for public 
dissemination of swap transaction and pricing data for all publicly 
reportable swap transactions described in Sec.  43.5(d) shall be 15 
minutes immediately after execution of such publicly reportable swap 
transaction.
    (e) Time delay for large notional off-facility swaps subject to the 
mandatory clearing requirement--(1) In general. This subsection shall 
not apply to off-facility swaps that are excepted from the mandatory 
clearing requirement pursuant to Section 2(h)(7) of the Act and 
Commission regulations, and this subsection shall not apply to those 
swaps that are required to be cleared under Section 2(h)(2) of the Act 
and Commission regulations but are not cleared.
    (2) Swaps subject to the mandatory clearing requirement where at 
least one party is a swap dealer or major swap participant. Any large 
notional off-facility swap that is subject to the mandatory clearing 
requirement described in Section 2(h)(1) of the Act and Commission 
regulations, in which at least one party is a swap dealer or major swap 
participant, shall receive a time delay as follows:
    (i) Time delay during Year 1. For one year beginning on the 
compliance date of this part, the time delay for public dissemination of 
swap transaction and pricing data for all swaps described in Sec.  
43.5(e)(2) shall be 30 minutes immediately after execution of such swap.
    (ii) Time delay after Year 1. Beginning on the first anniversary of 
the compliance date of this part, the time delay for public 
dissemination of swap transaction and pricing data for all swaps 
described in Sec.  43.5(e)(2) shall be 15 minutes immediately after 
execution of such swap.
    (3) Swaps subject to the mandatory clearing requirement where 
neither party is a swap dealer or major swap participant. Any large 
notional off-facility swap that is subject to the mandatory clearing 
requirement described in Section 2(h)(1) of the Act and Commission 
regulations, in which neither party is a swap dealer or major swap 
participant, shall receive a time delay as follows:
    (i) Time delay during Year 1. For one year beginning on the 
compliance date of this part, the time delay for public dissemination of 
swap transaction and pricing data for all swaps described in Sec.  
43.5(e)(3) shall be four hours immediately after execution of such swap.
    (ii) Time delay during Year 2. For one year beginning on the first 
anniversary of the compliance date of this part, the time delay for 
public dissemination of swap transaction and pricing data for all swaps 
described in Sec.  43.5(e)(3) shall be two hours immediately after 
execution of such swap.
    (iii) Time delay after Year 2. Beginning on the second anniversary 
of the compliance date of this part, the time

[[Page 41]]

delay for public dissemination of swap transaction and pricing data for 
all swaps described in Sec.  43.5(e)(3) shall be one hour immediately 
after execution of such swap.
    (f) Time delay for large notional off-facility swaps in the interest 
rate, credit, foreign exchange or equity asset classes not subject to 
the mandatory clearing requirement with at least one swap dealer or 
major swap participant counterparty. Any large notional off-facility 
swap in the interest rate, credit, foreign exchange or equity asset 
classes where at least one party is a swap dealer or major swap 
participant, that is not subject to the mandatory clearing requirement 
or is excepted from such mandatory clearing requirement, shall receive a 
time delay in the public dissemination of swap transaction and pricing 
data as follows:
    (1) Time delay during Year 1. For one year beginning on the 
compliance date of this part, the time delay for public dissemination of 
swap transaction and pricing data for all swaps described in Sec.  
43.5(f) shall be one hour immediately after execution of such swap; 
however, any large notional off-facility swap in the interest rate, 
credit, foreign exchange or equity asset classes in which one party is 
not a swap dealer or major swap participant and such party is not a 
financial entity as defined in Section 2(h)(7)(C) of the Act and 
Commission regulations, shall receive a time delay of one hour 
immediately after execution of such swap; or if such swap transaction or 
pricing data is received by the registered swap data repository later 
than one hour immediately after execution, the registered swap data 
repository shall publicly disseminate such data as soon as 
technologically practicable after the data is received.
    (2) Time delay during Year 2. For one year beginning on the first 
anniversary of the compliance date of this part, the time delay for 
public dissemination of swap transaction and pricing data for all swaps 
described in Sec.  43.5(f) shall be 30 minutes immediately after 
execution of such swap; however, any large notional off-facility swap in 
the interest rate, credit, foreign exchange or equity asset classes in 
which one party is not a swap dealer or major swap participant and such 
party is not a financial entity as defined in Section 2(h)(7)(C) of the 
Act and Commission regulations, shall receive a time delay of 30 minutes 
immediately after execution of such swap; or if such swap transaction or 
pricing data is received by the registered swap data repository later 
than 30 minutes immediately after execution, the registered swap data 
repository shall publicly disseminate such data as soon as 
technologically practicable after the data is received.
    (3) Time delay after Year 2. Beginning on the second anniversary of 
the compliance date of this part, the time delay for public 
dissemination of swap transaction and pricing data for all swaps 
described in Sec.  43.5(f) shall be 30 minutes immediately after 
execution of such swap.
    (g) Time delay for large notional off-facility swaps in the other 
commodity asset class not subject to the mandatory clearing requirement 
with at least one swap dealer or major swap participant counterparty. 
Any large notional off-facility swap in the other commodity asset class 
where at least one party is a swap dealer or major swap participant, 
that is not subject to the mandatory clearing requirement or is exempt 
from such mandatory clearing requirement, shall receive a time delay in 
the public dissemination of swap transaction and pricing data as 
follows:
    (1) Time delay during Year 1. For one year beginning on the 
compliance date of this part, the time delay for public dissemination of 
swap transaction and pricing data for all swaps described in Sec.  
43.5(g) shall be four hours immediately after execution of such swap; 
however, any large notional off-facility swap in the other commodity 
asset class in which only one party is not a swap dealer or major swap 
participant and such party is not a financial entity as defined in 
Section 2(h)(7)(C) of the Act and Commission regulations, shall receive 
a time delay of four hours immediately after execution of such swap, or 
if such swap transaction or pricing data is received by the registered 
swap data repository later than four hours immediately after execution 
of such swap, the registered swap data repository shall publicly 
disseminate such data as soon as technologically practicable after the 
data is received.

[[Page 42]]

    (2) Time delay during Year 2. For one year beginning on the first 
anniversary of the compliance date of this part, the time delay for 
public dissemination of swap transaction and pricing data for all swaps 
described in Sec.  43.5(g) shall be two hours immediately after 
execution of such swap; however, any large notional off-facility swap in 
the other commodity asset class in which only one party is not a swap 
dealer or major swap participant and such party is not a financial 
entity as defined in Section 2(h)(7)(C) of the Act and Commission 
regulations, shall receive a time delay of two hours immediately after 
execution of such swap, or if such swap transaction or pricing data is 
received by the registered swap data repository later than two hours 
immediately after execution, the registered swap data repository shall 
publicly disseminate such data as soon as technologically practicable 
after the data is received.
    (3) Time delay after Year 2. Beginning on the second anniversary of 
the compliance date of this part, the time delay for public 
dissemination of swap transaction and pricing data for all swaps 
described in Sec.  43.5(g) shall be two hours after the execution of 
such swap.
    (h) Time delay for large notional off-facility swaps in all asset 
classes not subject to the mandatory clearing requirement in which 
neither counterparty is a swap dealer or a major swap participant. Any 
large notional off-facility swap in which neither party is a swap dealer 
or a major swap participant, which is not subject to the mandatory 
clearing requirement or is exempt from such mandatory clearing 
requirement, shall receive a time delay in the public dissemination of 
swap transaction and pricing data as follows:
    (1) Time delay during Year 1. For one year beginning on the 
compliance date of this part, the time delay for public dissemination of 
swap transaction and pricing data for all swaps described in Sec.  
43.5(h) shall be 48 business hours immediately after execution of such 
swap.
    (2) Time delay during Year 2. For one year beginning on the first 
anniversary of the compliance date of this part, the time delay for 
public dissemination of swap transaction and pricing data for all swaps 
described in Sec.  43.5(h) shall be 36 business hours immediately after 
the execution of such swap.
    (3) Time delay after Year 2. Beginning on the second anniversary of 
the compliance date of this part, the time delay for public 
dissemination transaction and pricing data for all swaps described in 
Sec.  43.5(h) shall be 24 business hours immediately after the execution 
of such swap.



Sec.  43.6  Block trades and large notional off-facility swaps.

    (a) Commission determination. The Commission shall establish the 
appropriate minimum block size for publicly reportable swap transactions 
based on the swap categories set forth in paragraph (b) of this section 
in accordance with the provisions set forth in paragraphs (c), (d), (e), 
(f) or (h) of this section, as applicable.
    (b) Swap categories. Swap categories shall be established for all 
swaps, by asset class, in the following manner:
    (1) Interest rates asset class. Interest rate asset class swap 
categories shall be based on unique combinations of the following:
    (i) Currency by:
    (A) Super-major currency;
    (B) Major currency; or
    (C) Non-major currency; and
    (ii) Tenor of swap as follows:
    (A) Zero to 46 days;
    (B) Greater than 46 days to three months (47 to 107 days);
    (C) Greater than three months to six months (108 to 198 days);
    (D) Greater than six months to one year (199 to 381 days);
    (E) Greater than one to two years (382 to 746 days);
    (F) Greater than two to five years (747 to 1,842 days);
    (G) Greater than five to ten years (1,843 to 3,668 days);
    (H) Greater than ten to 30 years (3,669 to 10,973 days); or
    (I) Greater than 30 years (10,974 days and above).
    (2) Credit asset class. Credit asset class swap categories shall be 
based on unique combinations of the following:
    (i) Traded Spread rounded to the nearest basis point (0.01) as 
follows:
    (A) 0 to 175 points;
    (B) 176 to 350 points; or
    (C) 351 points and above;

[[Page 43]]

    (ii) Tenor of swap as follows:
    (A) Zero to two years (0-746 days);
    (B) Greater than two to four years (747-1,476 days);
    (C) Greater than four to six years (1,477-2,207 days);
    (D) Greater than six to eight-and-a-half years (2,208-3,120 days);
    (E) Greater than eight-and-a-half to 12.5 years (3,121-4,581 days); 
and
    (F) Greater than 12.5 years (4,582 days and above).
    (3) Equity asset class. There shall be one swap category consisting 
of all swaps in the equity asset class.
    (4) Foreign exchange asset class. Swap categories in the foreign 
exchange asset class shall be grouped as follows:
    (i) By the unique currency combinations of one super-major currency 
paired with one of the following:
    (A) Another super major currency;
    (B) A major currency; or
    (C) A currency of Brazil, China, Czech Republic, Hungary, Israel, 
Mexico, Poland, Russia, and Turkey; or
    (ii) By unique currency combinations not included in paragraph 
(b)(4)(i) of this section.
    (5) Other commodity asset class. Swap contracts in the other 
commodity asset class shall be grouped into swap categories as follows:
    (i) For swaps that are economically related to contracts in appendix 
B of this part, by the relevant contract as referenced in appendix B of 
this part; or
    (ii) For swaps that are not economically related to contracts in 
appendix B of this part, by the following futures-related swaps--
    (A) CME Cheese;
    (B) CBOT Distillers' Dried Grain;
    (C) CBOT Dow Jones-UBS Commodity Index;
    (D) CBOT Ethanol;
    (E) CME Frost Index;
    (F) CME Goldman Sachs Commodity Index (GSCI), (GSCI Excess Return 
Index);
    (G) NYMEX Gulf Coast Sour Crude Oil;
    (H) CME Hurricane Index;
    (I) CME Rainfall Index;
    (J) CME Snowfall Index;
    (K) CME Temperature Index;
    (L) CME U.S. Dollar Cash Settled Crude Palm Oil; or
    (iii) For swaps that are not covered in paragraphs (b)(5)(i) and 
(b)(5)(ii) of this section, the relevant product type as referenced in 
appendix D of this part.
    (c) Methodologies to determine appropriate minimum block sizes and 
cap sizes. In determining appropriate minimum block sizes and cap sizes 
for publicly reportable swap transactions, the Commission shall utilize 
the following statistical calculations--
    (1) 50-percent notional amount calculation. The Commission shall use 
the following procedure in determining the 50-percent notional amount 
calculation:
    (i) Select all of the publicly reportable swap transactions within a 
specific swap category using a one-year window of data beginning with a 
minimum of one year's worth of data;
    (ii) Convert to the same currency or units and use a trimmed data 
set;
    (iii) Determine the sum of the notional amounts of swaps in the 
trimmed data set;
    (iv) Multiply the sum of the notional amount by 50 percent;
    (v) Rank order the observations by notional amount from least to 
greatest;
    (vi) Calculate the cumulative sum of the observations until the 
cumulative sum is equal to or greater than the 50-percent notional 
amount calculated in paragraph (c)(1)(iv) of this section;
    (vii) Select the notional amount associated with that observation;
    (viii) Round the notional amount of that observation to two 
significant digits, or if the notional amount associated with that 
observation is already significant to two digits, increase that notional 
amount to the next highest rounding point of two significant digits; and
    (ix) Set the appropriate minimum block size at the amount calculated 
in paragraph (c)(1)(viii) of this section.
    (2) 67-percent notional amount calculation. The Commission shall use 
the following procedure in determining the 67-percent notional amount 
calculation:
    (i) Select all of the publicly reportable swap transactions within a 
specific swap category using a one-year

[[Page 44]]

window of data beginning with a minimum of one year's worth of data;
    (ii) Convert to the same currency or units and use a trimmed data 
set;
    (iii) Determine the sum of the notional amounts of swaps in the 
trimmed data set;
    (iv) Multiply the sum of the notional amount by 67 percent;
    (v) Rank order the observations by notional amount from least to 
greatest;
    (vi) Calculate the cumulative sum of the observations until the 
cumulative sum is equal to or greater than the 67-percent notional 
amount calculated in paragraph (c)(2)(iv) of this section;
    (vii) Select the notional amount associated with that observation;
    (viii) Round the notional amount of that observation to two 
significant digits, or if the notional amount associated with that 
observation is already significant to two digits, increase that notional 
amount to the next highest rounding point of two significant digits; and
    (ix) Set the appropriate minimum block size at the amount calculated 
in paragraph (c)(2)(viii) of this section.
    (3) 75-percent notional amount calculation. The Commission shall use 
the following procedure in determining the 75-percent notional amount 
calculation:
    (i) Select all of the publicly reportable swap transactions within a 
specific swap category using a one-year window of data beginning with a 
minimum of one year's worth of data;
    (ii) Convert to the same currency or units and use a trimmed data 
set;
    (iii) Determine the sum of the notional amounts of swaps in the 
trimmed data set;
    (iv) Multiply the sum of the notional amount by 75 percent;
    (v) Rank order the observations by notional amount from least to 
greatest;
    (vi) Calculate the cumulative sum of the observations until the 
cumulative sum is equal to or greater than the 75-percent notional 
amount calculated in paragraph (c)(3)(iv) of this section;
    (vii) Select the notional amount associated with that observation;
    (viii) Round the notional amount of that observation to two 
significant digits, or if the notional amount associated with that 
observation is already significant to two digits, increase that notional 
amount to the next highest rounding point of two significant digits; and
    (ix) Set the appropriate minimum block size at the amount calculated 
in paragraph (c)(3)(viii) of this section.
    (d) No appropriate minimum block sizes for swaps in the equity asset 
class. Publicly reportable swap transactions in the equity asset class 
shall not be treated as block trades or large notional off-facility 
swaps.
    (e) Initial appropriate minimum block sizes. Prior to the Commission 
making a determination as described in paragraph (f)(1) of this section, 
the following initial appropriate minimum block sizes shall apply:
    (1) Prescribed appropriate minimum block sizes. Except as otherwise 
provided in paragraph (e)(1) of this section, for any publicly 
reportable swap transaction that falls within the swap categories 
described in paragraphs (b)(1), (b)(2), (b)(4)(i), (b)(5)(i) or 
(b)(5)(ii) of this section, the initial appropriate minimum block size 
for such publicly reportable swap transaction shall be the appropriate 
minimum block size that is in appendix F of this part.
    (2) Certain swaps in the foreign exchange and other commodity asset 
classes. All swaps or instruments in the swap categories described in 
paragraphs (b)(4)(ii) and (b)(5)(iii) of this section shall be eligible 
to be treated as a block trade or large notional off-facility swap, as 
applicable.
    (3) Exception. Publicly reportable swap transactions described in 
paragraph (b)(5)(i) of this section that are economically related to a 
futures contract in appendix B of this part shall not qualify to be 
treated as block trades or large notional off-facility swaps (as 
applicable), if such futures contract is not subject to a designated 
contract market's block trading rules.
    (f) Post-initial process to determine appropriate minimum block 
sizes--(1) Post-initial period. After a registered swap data repository 
has collected at least one year of reliable data for a particular asset 
class, the Commission shall establish, by swap categories, the

[[Page 45]]

post-initial appropriate minimum block sizes as described in paragraphs 
(f)(2) through (f)(5) of this section. No less than once each calendar 
year thereafter, the Commission shall update the post-initial 
appropriate minimum block sizes.
    (2) Post-initial appropriate minimum block sizes for certain swaps. 
The Commission shall determine post-initial appropriate minimum block 
sizes for the swap categories described in paragraphs (b)(1), (b)(2), 
(b)(4)(i) and (b)(5) of this section by utilizing a one-year window of 
swap transaction and pricing data corresponding to each relevant swap 
category reviewed no less than once each calendar year, and by applying 
the 67-percent notional amount calculation to such data.
    (3) Certain swaps in the foreign exchange asset class. All swaps or 
instruments in the swap category described in paragraph (b)(4)(ii) of 
this section shall be eligible to be treated as a block trade or large 
notional off-facility swap, as applicable.
    (4) Commission publication of post-initial appropriate minimum block 
sizes. The Commission shall publish the appropriate minimum block sizes 
determined pursuant to paragraph (f)(1) of this section on its Web site 
at http://www.cftc.gov.
    (5) Effective date of post-initial appropriate minimum block sizes. 
Unless otherwise indicated on the Commission's Web site, the post-
initial appropriate minimum block sizes described in paragraph (f)(1) of 
this section shall be effective on the first day of the second month 
following the date of publication.
    (g) Required notification--(1) Block trade election. (i) The parties 
to a publicly reportable swap transaction that has a notional amount at 
or above the appropriate minimum block size shall notify the registered 
swap execution facility or designated contract market, as applicable, 
pursuant to the rules of such registered swap execution facility or 
designated contract market, of its election to have the publicly 
reportable swap transaction treated as a block trade.
    (ii) The registered swap execution facility or designated contract 
market, as applicable, pursuant to the rules of which a block trade is 
executed shall notify the registered swap data repository of such a 
block trade election when transmitting swap transaction and pricing data 
to such swap data repository in accordance with Sec.  43.3(b)(1).
    (2) Large notional off-facility swap election. A reporting party who 
executes an off-facility swap that has a notional amount at or above the 
appropriate minimum block size shall notify the applicable registered 
swap data repository that such swap transaction qualifies as a large 
notional off-facility swap concurrent with the transmission of swap 
transaction and pricing data in accordance with this part.
    (h) Special provisions relating to appropriate minimum block sizes 
and cap sizes. The following special rules shall apply to the 
determination of appropriate minimum block sizes and cap sizes--
    (1) Swaps with optionality. The notional amount of a swap with 
optionality shall equal the notional amount of the component of the swap 
that does not include the option component.
    (2) Swaps with composite reference prices. The parties to a swap 
transaction with composite reference prices may elect to apply the 
lowest appropriate minimum block size or cap size applicable to one 
component reference price's swap category of such publicly reportable 
swap transaction.
    (3) Notional amounts for physical commodity swaps. Unless otherwise 
specified in this part, the notional amount for a physical commodity 
swap shall be based on the notional unit measure utilized in the related 
futures contract market or the predominant notional unit measure used to 
determine notional quantities in the cash market for the relevant, 
underlying physical commodity.
    (4) Currency conversion. Unless otherwise specified in this part, 
when the appropriate minimum block size or cap size for a publicly 
reportable swap transaction is denominated in a currency other than U.S. 
dollars, parties to a swap and registered entities may use a currency 
exchange rate that is widely published within the preceding two business 
days from the date of execution of the swap transaction in order to 
determine such qualification.

[[Page 46]]

    (5) Successor currencies. For currencies that succeed a super-major 
currency, the appropriate currency classification for such currency 
shall be based on the corresponding nominal gross domestic product 
classification (in U.S. dollars) as determined in the most recent World 
Bank, World Development Indicator at the time of succession. If the 
gross domestic product of the country or nation utilizing the successor 
currency is:
    (i) Greater than $2 trillion, then the successor currency shall be 
included among the super-major currencies;
    (ii) Greater than $500 billion but less than $2 trillion, then the 
successor currency shall be included among the major currencies; or
    (iii) Less than $500 billion, then the successor currency shall be 
included among the non-major currencies.
    (6) Aggregation. Except as otherwise stated in this paragraph, the 
aggregation of orders for different accounts in order to satisfy the 
minimum block trade size or the cap size requirement is prohibited. 
Aggregation is permissible on a designated contract market or swap 
execution facility if done by a person who:
    (i)(A) Is a commodity trading advisor registered pursuant to Section 
4n of the Act, or exempt from registration under the Act, or a principal 
thereof, who has discretionary trading authority or directs client 
accounts,
    (B) Is an investment adviser who has discretionary trading authority 
or directs client accounts and satisfies the criteria of Sec.  
4.7(a)(2)(v) of this chapter, or
    (C) Is a foreign person who performs a similar role or function as 
the persons described in paragraphs (h)(6)(i)(A) or (h)(6)(i)(B) of this 
section and is subject as such to foreign regulation; and,
    (ii) Has more than $25,000,000 in total assets under management.
    (i) Eligible Block Trade Parties. (1) Parties to a block trade must 
be ``eligible contract participants,'' as defined in Section 1a(18) of 
the Act and the Commission's regulations. However, a designated contract 
market may allow:
    (i) A commodity trading advisor registered pursuant to Section 4n of 
the Act, or exempt from registration under the Act, or a principal 
thereof, who has discretionary trading authority or directs client 
accounts,
    (ii) An investment adviser who has discretionary trading authority 
or directs client accounts and satisfies the criteria of Sec.  
4.7(a)(2)(v) of this chapter, or
    (iii) a foreign person who performs a similar role or function as 
the persons described in paragraphs (i)(1)(i) or (ii) of this section 
and is subject as such to foreign regulation, to transact block trades 
for customers who are not eligible contract participants if such 
commodity trading advisor, investment adviser or foreign person has more 
than $25,000,000 in total assets under management.
    (2) A person transacting a block trade on behalf of a customer must 
receive prior written instruction or consent from the customer to do so. 
Such instruction or consent may be provided in the power of attorney or 
similar document by which the customer provides the person with 
discretionary trading authority or the authority to direct the trading 
in its account.

[78 FR 32938, May 31, 2013]



Sec.  43.7  Delegation of authority.

    (a) Authority. The Commission hereby delegates, until it orders 
otherwise, to the Director of the Division of Market Oversight or such 
other employee or employees as the Director may designate from time to 
time, the authority:
    (1) To determine whether swaps fall within specific swap categories 
as described in Sec.  43.6(b);
    (2) To determine and publish post-initial, appropriate minimum block 
sizes as described in Sec.  43.6(f); and
    (3) To determine post-initial cap sizes as described in Sec.  
43.4(h).
    (b) Submission for Commission consideration. The Director of the 
Division of Market Oversight may submit to the Commission for its 
consideration any matter that has been delegated pursuant to this 
section.
    (c) Commission reserves authority. Nothing in this section prohibits 
the

[[Page 47]]

Commission, at its election, from exercising the authority delegated in 
this section.

[78 FR 32940, May 31, 2013]



    Sec. Appendix A to Part 43--Data Fields for Public Dissemination

    The data fields described in Table A1 and Table A2, to the extent 
applicable for a particular publicly reportable swap transaction, shall 
be publicly disseminated pursuant to part 43. Table A1 and Table A2 
provide guidance for compliance with the reporting and public 
dissemination of each data field. Reporting parties, registered swap 
execution facilities and designated contract markets shall report swap 
transaction and pricing data necessary to publicly disseminate such 
data, pursuant to part 43 and this appendix A to part 43, to a 
registered swap data repository as soon as technologically practicable 
after execution of the publicly reportable swap transaction. A 
registered swap data repository shall publicly disseminate the 
information in Table A1 and A2 in a consistent form and manner for swaps 
within the same asset class.

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Sec. Appendix B to Part 43--Enumerated Physical Commodity Contracts and 
                             Other Contracts

                 Enumerated Physical Commodity Contracts

                               Agriculture

ICE Futures U.S. Cocoa
ICE Futures U.S. Coffee C
Chicago Board of Trade Corn
ICE Futures U.S. Cotton No. 2
ICE Futures U.S. FCOJ-A
Chicago Mercantile Exchange Live Cattle
Chicago Board of Trade Oats
Chicago Board of Trade Rough Rice
Chicago Board of Trade Soybeans
Chicago Board of Trade Soybean Meal
Chicago Board of Trade Soybean Oil
ICE Futures U.S. Sugar No. 11
ICE Futures U.S. Sugar No. 16
Chicago Board of Trade Wheat
Minneapolis Grain Exchange Hard Red Spring Wheat
Kansas City Board of Trade Hard Winter Wheat
Chicago Mercantile Exchange Class III Milk
Chicago Mercantile Exchange Feeder Cattle
Chicago Mercantile Exchange Lean Hogs

[[Page 62]]

                                 Metals

Commodity Exchange, Inc. Copper
New York Mercantile Exchange Palladium
New York Mercantile Exchange Platinum
Commodity Exchange, Inc. Gold
Commodity Exchange, Inc. Silver

                                 Energy

New York Mercantile Exchange Light Sweet Crude Oil
New York Mercantile Exchange New York Harbor Gasoline Blendstock
New York Mercantile Exchange Henry Hub Natural Gas
New York Mercantile Exchange New York Harbor Heating Oil
ICE Futures SP-15 Day-Ahead Peak Fixed Price
ICE Futures SP-15 Day-Ahead Off-Peak Fixed Price
ICE Futures PJM Western Hub Real Time Peak Fixed Price
ICE Futures PJM Western Hub Real Time Off-Peak Fixed Price
ICE Futures Mid-Columbia Day-Ahead Peak Fixed Price
ICE Futures Mid-Columbia Day-Ahead Off-Peak Fixed Price
Chicago Basis
HSC Basis
Socal Border Basis
Waha Basis
ICE Futures AB NIT Basis
NWP Rockies Basis
PG&E Citygate Basis

                             Other Contracts

Brent Crude Oil (ICE)

[76 FR 1243, Jan. 9, 2012, as amended at 78 FR 32940, May 31, 2013]



    Sec. Appendix C to Part 43--Time Delays for Public Dissemination

    The tables below provide clarification of the time delays for public 
dissemination set forth in Sec.  43.5. The first row of each table 
describes the asset classes to which each chart applies. The column 
entitled ``Yearly Phase-In'' indicates the periods beginning on the 
compliance date of this part and beginning on the anniversary of the 
compliance date thereafter. The column entitled ``Time Delay for Public 
Dissemination'' indicates the precise length of time delay, starting 
upon execution, for the public dissemination of such swap transaction 
and pricing data by a registered swap data repository.

    Table C1. Block Trades Executed on or Pursuant to the Rules of a 
    Registered Swap Execution Facility or Designated Contract Market 
             (Illustrating Sec. Sec.  43.5(d)(1) and (d)(2))

    Table C1 also designates the interim time delays for swaps described 
in Sec.  43.5(c)(2).

                                                All Asset Classes
----------------------------------------------------------------------------------------------------------------
                         Yearly phase-in                                Time delay for public dissemination
----------------------------------------------------------------------------------------------------------------
Year 1...........................................................  30 minutes.
After Year 1.....................................................  15 minutes.
----------------------------------------------------------------------------------------------------------------

  Table C2. Large Notional Off-Facility Swaps Subject to the Mandatory 
    Clearing Requirement With at Least One Swap Dealer or Major Swap 
  Participant Counterparty (Illustrating Sec. Sec.  43.5(e)(2)(A) and 
                               (e)(2)(B))

    Table C2 excludes off-facility swaps that are excepted from the 
mandatory clearing requirement pursuant to Section 2(h)(7) of the Act 
and Commission regulations and those off-facility swaps that are 
required to be cleared under Section 2(h)(2) of the Act and Commission 
regulations but are not cleared.
    Table C2 also designates the interim time delays for swaps described 
in Sec.  43.5(c)(3).

                                                All Asset Classes
----------------------------------------------------------------------------------------------------------------
                         Yearly phase-in                                Time delay for public dissemination
----------------------------------------------------------------------------------------------------------------
Year 1...........................................................  30 minutes.
After Year 1.....................................................  15 minutes.
----------------------------------------------------------------------------------------------------------------


[[Page 63]]

  Table C3. Large Notional Off-Facility Swaps Subject to the Mandatory 
 Clearing Requirement in Which Neither Counterparty Is a Swap Dealer or 
     Major Swap Participant (Illustrating Sec. Sec.  43.5(e)(3)(A), 
                        (e)(3)(B), and (e)(3)(C))

    Table C3 excludes off-facility swaps that are excepted from the 
mandatory clearing requirement pursuant to Section 2(h)(7) of the Act 
and Commission regulations and those swaps that are required to be 
cleared under Section 2(h)(2) of the Act and Commission regulations but 
are not cleared.
    Table C3 also designates the interim time delays for swaps described 
in Sec.  43.5(c)(3).

                                                All Asset Classes
----------------------------------------------------------------------------------------------------------------
                         Yearly phase-in                                Time delay for public dissemination
----------------------------------------------------------------------------------------------------------------
Year 1...........................................................  4 hours.
Year 2...........................................................  2 hours.
After Year 2.....................................................  1 hour.
----------------------------------------------------------------------------------------------------------------

Table C4. Large Notional Off-Facility Swaps Not Subject to the Mandatory 
    Clearing Requirement With at Least One Swap Dealer or Major Swap 
Participant Counterparty (Illustrating Sec. Sec.  43.5(f)(1), (f)(2) and 
                                 (f)(3))

    Table C4 includes large notional off-facility swaps that are not 
subject to the mandatory clearing requirement or are exempt from such 
mandatory clearing requirement pursuant to Section 2(h)(7) of the Act 
and Commission regulations.
    Table C4 also designates the interim time delays for swaps described 
in Sec.  43.5(c)(4).

                         Interest Rates, Credit, Foreign Exchange, Equity Asset Classes
----------------------------------------------------------------------------------------------------------------
                         Yearly phase-in                                Time delay for public dissemination
----------------------------------------------------------------------------------------------------------------
Year 1...........................................................  1 hour.
                                                                   However, if such swap includes a non-swap
                                                                    dealer/non-major swap participant
                                                                    counterparty that is not a financial entity
                                                                    as defined in Section 2(h)(7)(C) of the Act
                                                                    and Commission regulations, then one hour
                                                                    immediately after execution; or if received
                                                                    later than one hour by the registered swap
                                                                    data repository, then public dissemination
                                                                    shall occur as soon as technologically
                                                                    practicable after the data is received.
Year 2...........................................................  30 minutes.
                                                                   However, if such swap includes a non-swap
                                                                    dealer/non-major swap participant
                                                                    counterparty that is not a financial entity
                                                                    as defined in Section 2(h)(7)(C) of the Act
                                                                    and Commission regulations, then 30 minutes
                                                                    immediately after execution; or if received
                                                                    later than 30 minutes by the registered swap
                                                                    data repository, then public dissemination
                                                                    shall occur as soon as technologically
                                                                    practicable after the data is received.
After Year 2.....................................................  30 minutes.
----------------------------------------------------------------------------------------------------------------

Table C5. Large Notional Off-Facility Swaps Not Subject to the Mandatory 
    Clearing Requirement With at Least One Swap Dealer or Major Swap 
 Participant Counterparty (Illustrating Sec. Sec.  43.5(g)(1), (g)(2), 
                               and (g)(3))

    Table C5 includes large notional off-facility swaps that are not 
subject to the mandatory clearing requirement or are excepted from such 
mandatory clearing requirement pursuant to Section 2(h)(7) of the Act 
and Commission regulations.
    Table C5 also designates the interim time delays for swaps described 
in Sec.  43.5(c)(5).

                                           Other Commodity Asset Class
----------------------------------------------------------------------------------------------------------------
                         Yearly phase-in                                Time delay for public dissemination
----------------------------------------------------------------------------------------------------------------
Year 1...........................................................  4 hours.
                                                                   However, if such swap includes a non-swap
                                                                    dealer/non-major swap participant
                                                                    counterparty that is not a financial entity
                                                                    as defined in Section 2(h)(7)(C) of the Act
                                                                    and Commission regulations, then four hours
                                                                    immediately after execution; or if received
                                                                    later than four hours by the registered swap
                                                                    data repository, then public dissemination
                                                                    shall occur as soon as technologically
                                                                    practicable after the data is received.

[[Page 64]]

 
Year 2...........................................................  2 hours.
                                                                   However, if such swap includes a non-swap
                                                                    dealer/non-major swap participant
                                                                    counterparty that is not a financial entity
                                                                    as defined in Section 2(h)(7)(C) of the Act
                                                                    and Commission regulations, then two hours
                                                                    immediately after execution; or if received
                                                                    later than two hours by the registered swap
                                                                    data repository, then public dissemination
                                                                    shall occur as soon as technologically
                                                                    practicable after the data is received.
After Year 2.....................................................  2 hours.
----------------------------------------------------------------------------------------------------------------

Table C6. Large Notional Off-Facility Swaps Not Subject to the Mandatory 
 Clearing Requirement in Which Neither Counterparty Is a Swap Dealer or 
 Major Swap Participant (Illustrating Sec. Sec.  43.5(h)(1), (h)(2) and 
                                 (h)(3))

    Table C6 includes large notional off-facility swaps that are not 
subject to the mandatory clearing requirement or are exempt from such 
mandatory clearing requirement pursuant to Section 2(h)(7) of the Act 
and Commission regulations.
    Table C6 also designates the interim time delays for swaps described 
in Sec.  43.5(c)(6).

                            All Asset Classes
------------------------------------------------------------------------
                                                       Time delay for
                  Yearly phase-in                   public dissemination
------------------------------------------------------------------------
Year 1............................................  48 business hours.
Year 2............................................  36 business hours.
After Year 2......................................  24 business hours.
------------------------------------------------------------------------



       Sec. Appendix D to Part 43--Other Commodity Swap Categories

                          Other Commodity Group

                       Individual Other Commodity

Grains
    Oats
    Wheat
    Corn
    Rice
    Grains--Other
Livestock/Meat Products
    Live Cattle
    Pork Bellies
    Feeder Cattle
    Lean Hogs
    Livestock/Meat Products--Other
Dairy Products
    Milk
    Butter
    Cheese
    Dairy Products--Other
Oilseed and Products
    Soybean Oil
    Soybean Meal
    Soybeans
    Oilseed and Products--Other
Fiber
    Cotton
    Fiber--Other
Foodstuffs/Softs
    Coffee
    Frozen Concentrated Orange Juice
    Sugar
    Cocoa
    Foodstuffs/Softs--Other
Petroleum and Products
    Jet Fuel
    Ethanol
    Biodiesel
    Fuel Oil
    Heating Oil
    Gasoline
    Naphtha
    Crude Oil
    Diesel
    Petroleum and Products--Other
Natural Gas and Related Products
    Natural Gas Liquids
    Natural Gas
    Natural Gas and Related Products--Other
Electricity and Sources
    Coal
    Electricity
    Uranium
    Electricity and Sources--Other
Precious Metals
    Palladium
    Platinum
    Silver
    Gold
    Precious Metals--Other
Base Metals
    Steel
    Copper
    Base Metals--Other
Wood Products
    Lumber
    Pulp

[[Page 65]]

    Wood Products--Other
Real Estate
    Real Estate
Chemicals
    Chemicals
Plastics
    Plastics
Emissions
    Emissions
Weather
    Weather
Multiple Commodity Index
    Multiple Commodity Index
Other Agricultural
    Other Agricultural
Other Non-Agricultural
    Other Non-Agricultural

[78 FR 32941, May 31, 2013]



 Sec. Appendix E to Part 43--Other Commodity Geographic Identification 
       for Public Dissemination Pursuant to Sec.  43.4(d)(4)(iii)

    Registered swap data repositories are required by Sec.  
43.4(d)(4)(iii) to publicly disseminate any specific delivery point or 
pricing point associated with publicly reportable swap transactions in 
the ``other commodity'' asset class pursuant to Tables E1 and E2 in this 
appendix. If the underlying asset of a publicly reportable swap 
transaction described in Sec.  43.4(d)(4)(iii) has a delivery or pricing 
point that is located in the United States, such information shall be 
publicly disseminated pursuant to the regions described in Table E1 in 
this appendix. If the underlying asset of a publicly reportable swap 
transaction described in Sec.  43.4(d)(4)(iii) has a delivery or pricing 
point that is not located in the United States, such information shall 
be publicly disseminated pursuant to the countries or sub-regions, or if 
no country or sub-region, by the other commodity region, described in 
Table E2 in this appendix.

                Table E1. U.S. Delivery or Pricing Points

Other Commodity Group
    Region
Natural Gas and Related Products
    Midwest
    Northeast
    Gulf
    Southeast
    Western
    Other--U.S.
Petroleum and Products
    New England (PADD 1A)
    Central Atlantic (PADD 1B)
    Lower Atlantic (PADD 1C)
    Midwest (PADD 2)
    Gulf Coast (PADD 3)
    Rocky Mountains (PADD 4)
    West Coast (PADD 5)
    Other--U.S.
Electricity and Sources
    Florida Reliability Coordinating Council (FRCC)
    Midwest Reliability Organization (MRO)
    Northeast Power Coordinating Council (NPCC)
    Reliability First Corporation (RFC)
    SERC Reliability Corporation (SERC)
    Southwest Power Pool, RE (SPP)
    Texas Regional Entity (TRE)
    Western Electricity Coordinating Council (WECC)
    Other--U.S.
All Remaining Other Commodities (Publicly disseminate the region. If 
pricing or delivery point is not region-specific, indicate ``U.S.'')
    Region 1--(Includes Connecticut, Maine, Massachusetts, New 
Hampshire, Rhode Island, Vermont)
    Region 2--(Includes New Jersey, New York)
    Region 3--(Includes Delaware, District of Columbia, Maryland, 
Pennsylvania, Virginia, West Virginia)
    Region 4--(Includes Alabama, Florida, Georgia, Kentucky, 
Mississippi, North Carolina, South Carolina, Tennessee)
    Region 5--(Includes Illinois, Indiana, Michigan, Minnesota, Ohio, 
Wisconsin)
    Region 6--(Includes Arkansas, Louisiana, New Mexico, Oklahoma, 
Texas)
    Region 7--(Includes Iowa, Kansas, Missouri, Nebraska)
    Region 8--(Includes Colorado, Montana, North Dakota, South Dakota, 
Utah, Wyoming)
    Region 9--(Includes Arizona, California, Hawaii, Nevada)
    Region 10--(Includes Alaska, Idaho, Oregon, Washington)

              Table E2. Non-U.S. Delivery or Pricing Points

Other Commodity Regions
    Country or Sub-Region
North America (Other than U.S.)
    Canada
    Mexico
Central America
South America
    Brazil
    Other South America
Europe
    Western Europe
    Northern Europe
    Southern Europe
    Eastern Europe (excluding Russia)
Russia
Africa
    Northern Africa
    Western Africa
    Eastern Africa
    Central Africa
    Southern Africa
Asia-Pacific
    Northern Asia (excluding Russia)
    Central Asia
    Eastern Asia
    Western Asia
    Southeast Asia

[[Page 66]]

    Australia/New Zealand/Pacific Islands

[78 FR 32941, May 31, 2013]



 Sec. Appendix F to Part 43--Initial Appropriate Minimum Block Sizes by 
   Asset Class for Block Trades and Large Notional Off-Facility Swaps

------------------------------------------------------------------------
                 Currency group                         Currencies
------------------------------------------------------------------------
Super-Major Currencies..........................  United States dollar
                                                   (USD), European Union
                                                   Euro Area euro (EUR),
                                                   United Kingdom pound
                                                   sterling (GBP), and
                                                   Japan yen (JPY).
Major Currencies................................  Australia dollar
                                                   (AUD), Switzerland
                                                   franc (CHF), Canada
                                                   dollar (CAD),
                                                   Republic of South
                                                   Africa rand (ZAR),
                                                   Republic of Korea won
                                                   (KRW), Kingdom of
                                                   Sweden krona (SEK),
                                                   New Zealand dollar
                                                   (NZD), Kingdom of
                                                   Norway krone (NOK),
                                                   and Denmark krone
                                                   (DKK).
Non-Major Currencies............................  All other currencies.
------------------------------------------------------------------------


                                               Interest Rate Swaps
----------------------------------------------------------------------------------------------------------------
                                                                           Tenor less than or   50% Notional (in
                 Currency group                    Tenor greater than           equal to            millions)
----------------------------------------------------------------------------------------------------------------
Super-Major....................................  ......................  46 days..............             6,400
Super-Major....................................  46 days...............  Three months (107                 2,100
                                                                          days).
Super-Major....................................  Three months (107       Six months (198 days)             1,200
                                                  days).
Super-Major....................................  Six months (198 days).  One year (381 days)..             1,100
Super-Major....................................  One year (381 days)...  Two years (746 days).               460
Super-Major....................................  Two years (746 days)..  Five years (1,842                   240
                                                                          days).
Super-Major....................................  Five years (1,842       Ten years (3,668                    170
                                                  days).                  days).
Super-Major....................................  Ten years (3,668 days)  30 years (10,973                    120
                                                                          days).
Super-Major....................................  30 years (10,973 days)  .....................                67
Major..........................................  ......................  46 days..............             2,200
Major..........................................  46 days...............  Three months (107                   580
                                                                          days).
Major..........................................  Three months (107       Six months (198 days)               440
                                                  days).
Major..........................................  Six months (198 days).  One year (381 days)..               220
Major..........................................  One year (381 days)...  Two years (746 days).               130
Major..........................................  Two years (746 days)..  Five years (1,842                    88
                                                                          days).
Major..........................................  Five years (1,842       Ten years (3,668                     49
                                                  days).                  days).
Major..........................................  Ten years (3,668 days)  30 years (10,973                     37
                                                                          days).
Major..........................................  30 years (10,973 days)  .....................                15
Non-Major......................................  ......................  46 days..............               230
Non-Major......................................  46 days...............  Three months (107                   230
                                                                          days).
Non-Major......................................  Three months (107       Six months (198 days)               150
                                                  days).
Non-Major......................................  Six months (198 days).  One year (381 days)..               110
Non-Major......................................  One year (381 days)...  Two years (746 days).                54
Non-Major......................................  Two years (746 days)..  Five years (1,842                    27
                                                                          days).
Non-Major......................................  Five years (1,842       Ten years (3,668                     15
                                                  days).                  days).
Non-Major......................................  Ten years (3,668 days)  30 years (10,973                     16
                                                                          days).
Non-Major......................................  30 years (10,973 days)  .....................                15
----------------------------------------------------------------------------------------------------------------


                                                  Credit Swaps
----------------------------------------------------------------------------------------------------------------
                                                                     Traded tenor less than or  50% Notional (in
      Spread group (basis points)         Traded tenor greater than           equal to              millions)
----------------------------------------------------------------------------------------------------------------
Less than or equal to 175..............  ..........................  Two years (746 days).....               320
Less than or equal to 175..............  Two years (746 days)......  Four years (1,477 days)..               200
Less than or equal to 175..............  Four years (1,477 days)...  Six years (2,207 days)...               110
Less than or equal to 175..............  Six years (2,207 days)....  Eight years and six                     110
                                                                      months (3,120 days).
Less than or equal to 175..............  Eight years and six months  Twelve years and six                    130
                                          (3,120 days).               months (4,581 days).
Less than or equal to 175..............  Twelve years and six        .........................                46
                                          months (4,581 days).
Greater than 175 and less than or equal  ..........................  Two years (746 days).....               140
 to 350.
Greater than 175 and less than or equal  Two years (746 days)......  Four years (1,477 days)..                82
 to 350.
Greater than 175 and less than or equal  Four years (1,477 days)...  Six years (2,207 days)...                32
 to 350.
Greater than 175 and less than or equal  Six years (2,207 days)....  Eight years and six                      20
 to 350.                                                              months (3,120 days).

[[Page 67]]

 
Greater than 175 and less than or equal  Eight years and six months  Twelve years and six                     26
 to 350.                                  (3,120 days).               months (4,581 days).
Greater than 175 and less than or equal  Twelve years and six        .........................                63
 to 350.                                  months (4,581 days).
Greater than 350.......................  ..........................  Two years (746 days).....                66
Greater than 350.......................  Two years (746 days)......  Four years (1,477 days)..                41
Greater than 350.......................  Four years (1,477 days)...  Six years (2,207 days)...                26
Greater than 350.......................  Six years (2,207 days)....  Eight years and six                      13
                                                                      months (3,120 days).
Greater than 350.......................  Eight years and six months  Twelve years and six                     13
                                          (3,120 days.                months (4,581 days).
Greater than 350.......................  Twelve years and six        .........................                41
                                          months (4,581 days).
----------------------------------------------------------------------------------------------------------------


                                             Foreign Exchange Swaps
----------------------------------------------------------------------------------------------------------------
                                                                  Super-major currencies
                                         -----------------------------------------------------------------------
                                                              GBP (British      JPY (Japanese       USD (U.S.
                                             EUR (Euro)          pound)             yen)             dollar)
----------------------------------------------------------------------------------------------------------------
Super-major currencies......  EUR.......  ................         6,250,000         6,250,000        18,750,000
                              GBP.......       * 6,250,000  ................         6,250,000         6,250,000
                              JPY.......       * 6,250,000       * 6,250,000  ................     1,875,000,000
                              USD.......      * 18,750,000       * 6,250,000   * 1,875,000,000  ................
Major currencies............  AUD.......       * 6,250,000                 0        10,000,000        10,000,000
                              CAD.......       * 6,250,000                 0        10,000,000        10,000,000
                              CHF.......       * 6,250,000       * 6,250,000        12,500,000        12,500,000
                              DKK.......                 0                 0                 0                 0
                              KRW.......                 0                 0                 0     6,250,000,000
                              SEK.......       * 6,250,000                 0                 0       100,000,000
                              NOK.......       * 6,250,000                 0                 0       100,000,000
                              NZD.......                 0                 0                 0         5,000,000
                              ZAR.......                 0                 0                 0        25,000,000
Non-major currencies........  BRL.......                 0                 0                 0         5,000,000
                              CZK.......       200,000,000                 0                 0       200,000,000
                              HUF.......     1,500,000,000                 0                 0     1,500,000,000
                              ILS.......                 0                 0                 0        50,000,000
                              MXN.......                 0                 0                 0        50,000,000
                              PLN.......        25,000,000                 0                 0        25,000,000
                              RMB.......        50,000,000                 0        50,000,000        50,000,000
                              RUB.......                 0                 0                 0       125,000,000
                              TRY.......       * 6,250,000                 0                 0      * 10,000,000
----------------------------------------------------------------------------------------------------------------
All values that do not have an asterisk are denominated in the currency of the left hand side.
All values that have an asterisk (*) are denominated in the currency indicated on the top of the table.


                          Other Commodity Swaps
------------------------------------------------------------------------
                                    Initial
                                  appropriate
   Related futures contract      minimum block            Units
                                     size
------------------------------------------------------------------------
AB NIT Basis (ICE)...........  62,500..........  MMBtu.
Brent Crude (ICE and NYMEX)..  25,000..........  bbl.
Cheese (CME).................  400,000.........  lbs.
Class III Milk (CME).........  NO BLOCKS.        .......................
Cocoa (ICE and NYSE LIFFE and  1,000...........  metric tons.
 NYMEX).
Coffee (ICE and NYMEX).......  3,750,000.......  lbs.
Copper (COMEX)...............  625,000.........  lbs.
Corn (CBOT)..................  NO BLOCKS.......  bushels.
Cotton No. 2 (ICE and NYMEX).  5,000,000.......  lbs.
Distillers' Dried Grain        1,000...........  short tons.
 (CBOT).
Dow Jones-UBS Commodity Index  30,000 times      dollars.
 (CBOT).                        index.
Ethanol (CBOT)...............  290,000.........  gallons.
Feeder Cattle (CME)..........  NO BLOCKS.        .......................
Frost Index (CME)............  200,000 times     euros.
                                index.
Frozen Concentrated Orange     NO BLOCKS.        .......................
 Juice (ICE).
Gold (COMEX and NYSE Liffe)..  2,500...........  troy oz.

[[Page 68]]

 
Goldman Sachs Commodity Index  5,000 times       dollars.
 (GSCI), GSCI Excess Return     index.
 Index (CME).
Gulf Coast Sour Crude Oil      5,000...........  bbl.
 (NYMEX).
Hard Red Spring Wheat (MGEX).  NO BLOCKS.        .......................
Hard Winter Wheat (KCBT).....  NO BLOCKS.        .......................
Henry Hub Natural Gas (NYMEX)  500,000.........  MMBtu.
HSC Basis (ICE and NYMEX)....  62,500..........  MMBtu.
Hurricane Index (CME)........  20,000 times      dollars.
                                index.
Chicago Basis (ICE and NYMEX)  62,500..........  MMBtu.
Lean Hogs (CME)..............  NO BLOCKS.        .......................
Light Sweet Crude Oil (NYMEX)  50,000..........  bbl.
Live Cattle (CME)............  NO BLOCKS.        .......................
Mid-Columbia Day-Ahead Off-    625.............  Mwh.
 Peak Fixed Price (ICE).
Mid-Columbia Day-Ahead Peak    4,000...........  Mwh.
 Fixed Price (ICE).
New York Harbor RBOB           1,050,000.......  gallons.
 (Blendstock) Gasoline
 (NYMEX).
New York Harbor No. 2 Heating  1,050,000.......  gallons.
 Oil (NYMEX).
NWP Rockies Basis (ICE and     62,500..........  MMBtu.
 NYMEX).
Oats (CBOT)..................  NO BLOCKS.        .......................
Palladium (NYMEX)............  1,000...........  troy oz.
PG&E Citygate Basis (ICE and   62,500..........  MMBtu.
 NYMEX).
PJM Western Hub Real Time Off- 3,900...........  Mwh.
 Peak Fixed Price (ICE).
PJM Western Hub Real Time      8,000...........  Mwh.
 Peak Fixed Price (ICE).
Platinum (NYMEX).............  500.............  troy oz.
Rainfall Index (CME).........  10,000 times      dollars.
                                index.
Rough Rice (CBOT)............  NO BLOCKS.        .......................
Silver (COMEX and NYSE Liffe)  125,000.........  troy oz.
Snowfall Index (CME).........  10,000 times      dollars.
                                index.
Socal Border Basis (ICE and    62,500..........  MMBtu.
 NYMEX).
Soybean (CBOT)...............  NO BLOCKS.        .......................
Soybean Meal (CBOT)..........  NO BLOCKS.        .......................
Soybean Oil (CBOT)...........  NO BLOCKS.        .......................
SP-15 Day-Ahead Peak Fixed     4,000...........  Mwh.
 Price (ICE).
SP-15 Day-Ahead Off-Peak       625.............  Mwh.
 Fixed Price (ICE).
Sugar 11 (ICE and     5,000...........  metric tons.
 NYMEX).
Sugar 16 (ICE)......  NO BLOCKS.        .......................
Temperature Index (CME)......  400 times index.  currency units.
U.S. Dollar Cash Settled       250.............  metric tons.
 Crude Palm Oil (CME).
Waha Basis (ICE and NYMEX)...  62,500..........  MMBtu.
Wheat (CBOT).................  NO BLOCKS.        .......................
------------------------------------------------------------------------


[78 FR 32942, May 31, 2013; 78 FR 42436, July 16, 2013]



PART 44_INTERIM FINAL RULE FOR PRE-ENACTMENT SWAP TRANSACTIONS--Table of Contents



Sec.
44.00 Definition of terms used in part 44 of this chapter.
44.01 Effective date.
44.02 Reporting pre-enactment swaps to a swap data repository or the 
          Commission.
44.03 Reporting transition swaps to a swap data repository or to the 
          Commission.

    Authority: 7 U.S.C. 2(h)(5), 4r, and 12a(5), as amended by Title VII 
of the Wall Street Reform and Consumer Protection Act (Dodd-Frank Act of 
2010), Pub. L. 111-203, 124 Stat. 1376 (2010).

    Source: 75 FR 63084, Oct. 14, 2010, unless otherwise noted.



Sec.  44.00  Definition of terms used in part 44 of this chapter.

    (a) Major swap participant shall have the meaning provided in 
Section 1a(33) of the Commodity Exchange Act, as

[[Page 69]]

amended, and any rules or regulations thereunder.
    (b) Pre-enactment unexpired swap means any swap entered into prior 
to the enactment of the Dodd-Frank Act of 2010 (July 21, 2010) the terms 
of which had not expired as of the date of enactment of that Act;
    (c) Transition swap means any swap entered into after the enactment 
of the Dodd-Frank Act of 2010 (July 21, 2010) and prior to the effective 
date of the swap data reporting and recordkeeping rule implemented under 
Section 2(h)(5)(B) of the CEA.
    (d) Reporting entity, when used in this part, means any counterparty 
referenced or identified in Section 4r(a)(3)(A)-(C) of the Commodity 
Exchange Act, as amended;
    (e) Swap Data Repository shall have the meaning provided in Section 
1a(48) of the Commodity Exchange Act, as amended, and any rules or 
regulations thereunder;
    (f) Swap Dealer shall have the meaning provided in Section 1(a)(49) 
of the Commodity Exchange Act, as amended, and any rules or regulations 
thereunder;

[75 FR 63084, Oct. 14, 2010, as amended at 75 FR 78896, Dec. 17, 2010]



Sec.  44.01  Effective date.

    The provisions of this part are effective immediately on publication 
in the Federal Register.



Sec.  44.02  Reporting pre-enactment swaps to a swap data repository or 
the Commission.

    (a) A counterparty to a pre-enactment unexpired swap transaction 
shall:
    (1) Report to a registered swap data repository or the Commission by 
the compliance date established in the reporting rules required under 
Section 2(h)(5) of the Commodity Exchange Act, or within 60 days after a 
swap data repository becomes registered with the Commission and 
commences operations to receive and maintain data related to such swap, 
whichever occurs first, the following information with respect to the 
swap transaction:
    (i) A copy of the transaction confirmation, in electronic form if 
available, or in written form if there is no electronic copy; and
    (ii) The time, if available, that the transaction was executed; and
    (2) Report to the Commission on request, in a form and manner 
prescribed by the Commission, any information relating to the swap 
transaction.

    Note to paragraphs (a)(1) and (a)(2):
    In order to comply with the reporting requirements contained in 
paragraph (a)(1) and (a)(2) of this section, each counterparty to a pre-
enactment unexpired swap transaction that may be required to report such 
transaction should retain, in its existing format, all information and 
documents, to the extent and in such form as they presently exist, 
relating to the terms of a swap transaction, including but not limited 
to any information necessary to identify and value the transaction; the 
date and time of execution of the transaction; information relevant to 
the price of the transaction; whether the transaction was accepted for 
clearing and, if so, the identity of such clearing organization; any 
modification(s) to the terms of the transaction; and the final 
confirmation of the transaction.

    (b) Reporting party. The counterparties to a swap transaction shall 
report the information required under paragraph (a) of this section as 
follows:
    (1) Where only one counterparty to a swap transaction is a swap 
dealer or a major swap participant, the swap dealer or major swap 
participant shall report the transaction;
    (2) Where one counterparty to a swap transaction is a swap dealer 
and the other counterparty is a major swap participant, the swap dealer 
shall report the transaction; and
    (3) Where neither counterparty to a swap transaction is a swap 
dealer or a major swap participant, the counterparties to the 
transaction shall select the counterparty who will report the 
transaction.



Sec.  44.03  Reporting transition swaps to a swap data repository 
or to the Commission.

    (a) A counterparty to a post-enactment pre-effective swap 
transaction shall:
    (1) As required by the reporting rules required to be adopted 
pursuant to Section 2(h)(5)(B) of the Commodity Exchange Act, report 
data related to a transition swap to a registered swap data repository 
or the Commission by the compliance date established in such reporting 
rules or within 60 days

[[Page 70]]

after an appropriate swap data repository becomes registered with the 
Commission and commences operations to receive and maintain data related 
to such swap, whichever occurs first, the following information with 
respect to the swap transaction:
    (i) A copy of the transaction confirmation, in electronic form if 
available, or in written form if there is no electronic copy;
    (ii) The time, if available, that the transaction was executed; and
    (2) Report to the Commission on request, in the form and manner 
prescribed by the Commission, any information relating to the swap 
transaction.

    Note to paragraph (a).
    In order to comply with the reporting requirements contained in 
paragraphs (a)(1) and (a)(2) of this section, each counterparty to a 
post-enactment pre-effective swap transaction that may be required to 
report such transaction should retain, in its existing format, all 
information and documents, to the extent and in such form as they exist 
on the effective date of this section, relating to: the terms of a swap 
transaction, including but not limited to any information necessary to 
identify and value the transaction (e.g., underlying asset and tenor); 
the date and time of execution of the transaction; volume (e.g., 
notional or principal amount); information relevant to the price and 
payment for the transaction until the swap is terminated, reaches 
maturity or is novated; whether the transaction was accepted for 
clearing and, if so, the identity of such clearing organization; any 
modification(s) to the terms of the transaction; and the final 
confirmation of the transaction.

    (b) Reporting party. The counterparties to a swap transaction shall 
report the information required under paragraph (a) of this section as 
follows:
    (1) Where only one counterparty to a swap transaction is a swap 
dealer or a major swap participant, the swap dealer or major swap 
participant shall report the transaction;
    (2) Where one counterparty to a swap transaction is a swap dealer 
and the other counterparty is a major swap participant, the swap dealer 
shall report the transaction; and
    (3) Where neither counterparty to a swap transaction is a swap 
dealer or a major swap participant, the counterparties to the 
transaction shall select the counterparty who will report the 
transaction.

[75 FR 78896, Dec. 17, 2010]



PART 45_SWAP DATA RECORDKEEPING AND REPORTING REQUIREMENTS--Table of Contents



Sec.
45.1 Definitions.
45.2 Swap recordkeeping.
45.3 Swap data reporting: Creation data.
45.4 Swap data reporting: Continuation data.
45.5 Unique swap identifiers.
45.6 Legal entity identifiers.
48.7 Unique product identifiers.
45.8 Determination of which counterparty must report.
45.9 Third-party facilitation of data reporting.
45.10 Reporting to a single swap data repository.
45.11 Data reporting for swaps in a swap asset class not accepted by any 
          swap data repository.
45.12 Voluntary supplemental reporting.
45.13 Required data standards.
45.14 Reporting of errors and omissions in previously reported data.

Appendix 1 to Part 45--Tables of Minimum Primary Economic Terms Data

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

    Source: 77 FR 2197, Jan. 13, 2012, unless otherwise noted.



Sec.  45.1  Definitions.

    As used in this part:
    Asset class means the broad category of goods, services or 
commodities, including any ``excluded commodity'' as defined in CEA 
section 1a(19), with common characteristics underlying a swap. The asset 
classes include credit, equity, foreign exchange (excluding cross-
currency), interest rate (including cross-currency), other commodity, 
and such other asset classes as may be determined by the Commission.
    Business day means the twenty-four hour day, on all days except 
Saturdays, Sundays, and legal holidays, in the location of the reporting 
counterparty or registered entity reporting data for the swap.

[[Page 71]]

    Business hours means consecutive hours during one or more 
consecutive business days.
    Clearing swap means a swap created pursuant to the rules of a 
derivatives clearing organization that has a derivatives clearing 
organization as a counterparty, including any swap that replaces an 
original swap that was extinguished upon acceptance of such original 
swap by the derivatives clearing organization for clearing.
    Compliance date means the applicable date on which a registered 
entity or swap counterparty subject to the jurisdiction of the 
Commission is required to commence full compliance with all provisions 
of this part, as set forth in the preamble to this part.
    Confirmation (``confirming'') means the consummation (electronically 
or otherwise) of legally binding documentation (electronic or otherwise) 
that memorializes the agreement of the parties to all terms of a swap. A 
confirmation must be in writing (whether electronic or otherwise) and 
must legally supersede any previous agreement (electronically or 
otherwise).
    Confirmation data means all of the terms of a swap matched and 
agreed upon by the counterparties in confirming the swap. For cleared 
swaps, confirmation data also includes the internal identifiers assigned 
by the automated systems of the derivatives clearing organization to the 
two transactions resulting from novation to the clearing house.
    Credit swap means any swap that is primarily based on instruments of 
indebtedness, including, without limitation: Any swap primarily based on 
one or more broad-based indices related to instruments of indebtedness; 
and any swap that is an index credit swap or total return swap on one or 
more indices of debt instruments.
    Derivatives clearing organization means a derivatives clearing 
organization, as defined by Sec.  1.3(d) of this chapter, that is 
registered with the Commission.
    Designated contract market has the meaning set forth in CEA section 
5, and any Commission regulation implementing that Section.
    Electronic confirmation (confirmation ``occurs electronically'') 
means confirmation that is done by means of automated electronic 
systems.
    Electronic reporting (``report electronically'') means the reporting 
of data normalized in data fields as required by the data standard or 
standards used by the swap data repository to which the data is 
reported. Except where specifically otherwise provided in this chapter, 
electronic reporting does not include submission of an image of a 
document or text file.
    Electronic verification (verification ``occurs electronically'') 
means verification that is done by means of automated electronic 
systems.
    Financial entity has the meaning set forth in CEA section 
2(h)(7)(C).
    Foreign exchange forward has the meaning set forth in CEA section 
1a(24).
    Foreign exchange instrument means an instrument that is both defined 
as a swap in part 1 of this chapter and included in the foreign exchange 
asset class. Instruments in the foreign exchange asset class include: 
Any currency option, foreign currency option, foreign exchange option, 
or foreign exchange rate option; any foreign exchange forward as defined 
in CEA section 1a(24); any foreign exchange swap as defined in CEA 
section 1a(25); and any non-deliverable forward involving foreign 
exchange.
    Foreign exchange swap has the meaning set forth in CEA section 
1a(25). It does not include swaps primarily based on rates of exchange 
between different currencies, changes in such rates, or other aspects of 
such rates (sometimes known as ``cross-currency swaps'').
    Interest rate swap means any swap which is primarily based on one or 
more interest rates, such as swaps of payments determined by fixed and 
floating interest rates; or any swap which is primarily based on rates 
of exchange between different currencies, changes in such rates, or 
other aspects of such rates (sometimes known as ``cross-currency 
swaps'').
    International swap means a swap required by U.S. law and the law of 
another jurisdiction to be reported both

[[Page 72]]

to a swap data repository and to a different trade repository registered 
with the other jurisdiction.
    Life cycle event means any event that would result in either a 
change to a primary economic term of a swap or to any primary economic 
terms data previously reported to a swap data repository in connection 
with a swap. Examples of such events include, without limitation, a 
counterparty change resulting from an assignment or novation; a partial 
or full termination of the swap; a change to the end date for the swap; 
a change in the cash flows or rates originally reported; availability of 
a legal entity identifier for a swap counterparty previously identified 
by name or by some other identifier; or a corporate action affecting a 
security or securities on which the swap is based (e.g., a merger, 
dividend, stock split, or bankruptcy).
    Life cycle event data means all of the data elements necessary to 
fully report any life cycle event.
    Major swap participant has the meaning set forth in CEA section 
1a(33) and in part 1 of this chapter.
    Mixed swap has the meaning set forth in CEA section 1a(47)(D), and 
refers to an instrument that is in part a swap subject to the 
jurisdiction of the Commission, and in part a security-based swap 
subject to the jurisdiction of the SEC.
    Multi-asset swap means a swap that does not have one easily 
identifiable primary underlying notional item, but instead involves 
multiple underlying notional items within the Commission's jurisdiction 
that belong to different asset classes.
    Non-electronic confirmation (confirmation ``does not occur 
electronically'') means confirmation that is done manually rather than 
by means of automated electronic systems.
    Non-electronic verification (verification ``does not occur 
electronically'') means verification that is done manually rather than 
by means of automated electronic systems.
    Non-SD/MSP counterparty means a swap counterparty that is neither a 
swap dealer nor a major swap participant.
    Off-facility swap means a swap not executed on or pursuant to the 
rules of a swap execution facility or designated contract market.
    Original swap means a swap that has been accepted for clearing by a 
derivatives clearing organization.
    Other commodity swap means any swap not included in the credit, 
equity, foreign exchange, or interest rate asset classes, including, 
without limitation, any swap for which the primary underlying item is a 
physical commodity or the price or any other aspect of a physical 
commodity.
    Primary economic terms means all of the terms of a swap matched or 
affirmed by the counterparties in verifying the swap, including at a 
minimum each of the terms included in the most recent Federal Register 
release by the Commission listing minimum primary economic terms for 
swaps in the swap asset class in question. The Commission's current 
lists of minimum primary economic terms for swaps in each swap asset 
class are found in appendix 1 to part 45.
    Primary economic terms data means all of the data elements necessary 
to fully report all of the primary economic terms of a swap in the swap 
asset class of the swap in question.
    Quarterly reporting (``reported quarterly'') means reporting four 
times each fiscal year, following the end of each fiscal year quarter, 
making each quarterly report within 30 calendar days of the end of the 
fiscal year quarter.
    Reporting counterparty means the counterparty required to report 
swap data pursuant to this part, selected as provided in Sec.  45.8.
    Required swap continuation data means all of the data elements that 
must be reported during the existence of a swap to ensure that all data 
concerning the swap in the swap data repository remains current and 
accurate, and includes all changes to the primary economic terms of the 
swap occurring during the existence of the swap. For this purpose, 
required swap continuation data includes:
    (1) All life cycle event data for the swap if the swap is reported 
using the life cycle reporting method, or all state data for the swap if 
the swap is reported using the snapshot reporting method; and

[[Page 73]]

    (2) All valuation data for the swap.
    Required swap creation data means all primary economic terms data 
for a swap in the swap asset class in question, and all confirmation 
data for the swap.
    State data means all of the data elements necessary to provide a 
snapshot view, on a daily basis, of all of the primary economic terms of 
a swap in the swap asset class of the swap in question, including any 
change to any primary economic term or to any previously-reported 
primary economic terms data since the last snapshot. At a minimum, state 
data must include each of the terms included in the most recent Federal 
Register release by the Commission listing minimum primary economic 
terms for swaps in the swap asset class in question. The Commission's 
current lists of minimum primary economic terms for swaps in each swap 
asset class are found in appendix 1 to part 45.
    Swap data repository has the meaning set forth in CEA section 
1a(48), and in part 49 of this chapter.
    Swap dealer has the meaning set forth in CEA section 1a(49), and in 
part 1 of this chapter.
    Swap execution facility has the meaning set forth in CEA section 
1a(50) and in part 37 of this chapter.
    Valuation data means all of the data elements necessary to fully 
describe the daily mark of the transaction, pursuant to CEA section 
4s(h)(3)(B)(iii), and to Sec.  23.431 of this chapter if applicable.
    Verification (``verify,'' ``verified,'' or ``verifying'') means the 
matching by the counterparties to a swap of each of the primary economic 
terms of a swap, at or shortly after the time the swap is executed.

[77 FR 2197, Jan. 13, 2012, as amended at 81 FR 41772, June 27, 2016]



Sec.  45.2  Swap recordkeeping.

    (a) Recordkeeping by swap execution facilities, designated contract 
markets, derivatives clearing organizations, swap dealers, and major 
swap participants. Each swap execution facility, designated contract 
market, derivatives clearing organization, swap dealer, and major swap 
participant subject to the jurisdiction of the Commission shall keep 
full, complete, and systematic records, together with all pertinent data 
and memoranda, of all activities relating to the business of such entity 
or person with respect to swaps, as prescribed by the Commission. Such 
records shall include, without limitation, the following:
    (1) For swap execution facilities, all records required by part 37 
of this chapter.
    (2) For designated contract markets, all records required by part 38 
of this chapter.
    (3) For derivatives clearing organizations, all records required by 
part 39 of this chapter.
    (4) For swap dealers and major swap participants, all records 
required by part 23 of this chapter, and all records demonstrating that 
they are entitled, with respect to any swap, to elect the clearing 
requirement exception pursuant to CEA section 2(h)(7).
    (b) Recordkeeping by non-SD/MSP counterparties. All non-SD/MSP 
counterparties subject to the jurisdiction of the Commission shall keep 
full, complete, and systematic records, together with all pertinent data 
and memoranda, with respect to each swap in which they are a 
counterparty, including, without limitation, all records demonstrating 
that they are entitled, with respect to any swap, to elect the clearing 
requirement exception in CEA section 2(h)(7).
    (c) Record retention. All records required to be kept pursuant to 
this section shall be retained with respect to each swap throughout the 
life of the swap and for a period of at least five years following the 
final termination of the swap.
    (d) Retention form. Records required to be kept pursuant to this 
section must be kept as required by paragraph (d)(1) or (2) of this 
section, as applicable.
    (1) Records required to be kept by swap execution facilities, 
designated contract markets, derivatives clearing organizations, swap 
dealers, or major swap participants may be kept in electronic form, or 
kept in paper form if originally created and exclusively maintained in 
paper form, so long as they are retrievable, and information

[[Page 74]]

in them is reportable, as required by this section.
    (2) Records required to be kept by non-SD/MSP counterparties may be 
kept in either electronic or paper form, so long as they are 
retrievable, and information in them is reportable, as required by this 
section.
    (e) Record retrievability. Records required to be kept by swap 
execution facilities, designated contract markets, derivatives clearing 
organizations, or swap counterparties pursuant to this section shall be 
retrievable as provided in paragraphs (e)(1) and (2) of this section, as 
applicable.
    (1) Each record required by this section or any other section of the 
CEA to be kept by a swap execution facility, designated contract market, 
derivatives clearing organization, swap dealer, or major swap 
participant shall be readily accessible via real time electronic access 
by the registrant throughout the life of the swap and for two years 
following the final termination of the swap, and shall be retrievable by 
the registrant within three business days through the remainder of the 
period following final termination of the swap during which it is 
required to be kept.
    (2) Each record required by this section or any other section of the 
CEA to be kept by a non-SD/MSP counterparty shall be retrievable by that 
counterparty within five business days throughout the period during 
which it is required to be kept.
    (f) Recordkeeping by swap data repositories. Each swap data 
repository registered with the Commission shall keep full, complete, and 
systematic records, together with all pertinent data and memoranda, of 
all activities relating to the business of the swap data repository and 
all swap data reported to the swap data repository, as prescribed by the 
Commission. Such records shall include, without limitation, all records 
required by part 49 of this chapter.
    (g) Record retention and retrievability by swap data repositories. 
All records required to be kept by a swap data repository pursuant to 
this section must be kept by the swap data repository both:
    (1) Throughout the existence of the swap and for five years 
following final termination of the swap, during which time the records 
must be readily accessible by the swap data repository and available to 
the Commission via real time electronic access; and
    (2) Thereafter, for a period of at least ten additional years in 
archival storage from which they are retrievable by the swap data 
repository within three business days.
    (h) Record inspection. All records required to be kept pursuant to 
this section by any registrant or its affiliates or by any non-SD/MSP 
counterparty subject to the jurisdiction of the Commission shall be open 
to inspection upon request by any representative of the Commission, the 
United States Department of Justice, or the Securities and Exchange 
Commission, or by any representative of a prudential regulator as 
authorized by the Commission. Copies of all such records shall be 
provided, at the expense of the entity or person required to keep the 
record, to any representative of the Commission upon request. Copies of 
records required to be kept by any registrant shall be provided either 
by electronic means, in hard copy, or both, as requested by the 
Commission, with the sole exception that copies of records originally 
created and exclusively maintained in paper form may be provided in hard 
copy only. Copies of records required to be kept by any non-SD/MSP 
counterparty subject to the jurisdiction of the Commission that is not a 
Commission registrant shall be provided in the form, whether electronic 
or paper, in which the records are kept.



Sec.  45.3  Swap data reporting: Creation data.

    Registered entities and swap counterparties must report required 
swap creation data electronically to a swap data repository as set forth 
in this section and in the manner provided in Sec.  45.13(b). The rules 
governing acceptance and recording of such data by a swap data 
repository are set forth in Sec.  49.10 of this chapter. The reporting 
obligations of swap counterparties with respect to swaps executed prior 
to the applicable compliance date and in existence on or after July 21, 
2010, the date of enactment of the Dodd-Frank Act, are set forth in part 
46 of this

[[Page 75]]

chapter. This section and Sec.  45.4 establish the general swap data 
reporting obligations of swap dealers, major swap participants, non-SD/
MSP counterparties, swap execution facilities, designated contract 
markets, and derivatives clearing organizations to report swap data to a 
swap data repository. In addition to the reporting obligations set forth 
in this section and in Sec.  45.4, registered entities and swap 
counterparties are subject to other reporting obligations set forth in 
this chapter, including, without limitation, the following: Swap 
dealers, major swap participants, and non-SD/MSP counterparties are also 
subject to the reporting obligations with respect to corporate 
affiliations reporting set forth in Sec.  45.6; swap execution 
facilities, designated contract markets, swap dealers, major swap 
participants, and non-SD/MSP counterparties are subject to the reporting 
obligations with respect to real time reporting of swap data set forth 
in part 43 of this chapter; counterparties to a swap for which an 
exception to, or an exemption from, the clearing requirement has been 
elected under part 50 of this chapter are subject to the reporting 
obligations set forth in part 50 of this chapter; and, where applicable, 
swap dealers, major swap participants, and non-SD/MSP counterparties are 
subject to the reporting obligations with respect to large traders set 
forth in parts 17 and 18 of this chapter. Paragraphs (a) through (d) of 
this section apply to all swaps except clearing swaps, while paragraph 
(e) applies only to clearing swaps.
    (a) Swaps executed on or pursuant to the rules of a swap execution 
facility or designated contract market. For each swap executed on or 
pursuant to the rules of a swap execution facility or designated 
contract market, the swap execution facility or designated contract 
market must report all primary economic terms data for the swap, as 
defined in Sec.  45.1, as soon as technologically practicable after 
execution of the swap. If the swap is not intended to be submitted to a 
derivatives clearing organization for clearing at the time of execution, 
the swap execution facility or designated contract market must report 
all confirmation data for the swap, as defined in Sec.  45.1, as soon as 
technologically practicable after execution of the swap.
    (b) Off-facility swaps subject to the clearing requirement. For all 
off-facility swaps subject to the clearing requirement under part 50 of 
this chapter, except for those off-facility swaps for which an exception 
to, or exemption from, the clearing requirement has been elected under 
part 50 of this chapter, and those off-facility swaps covered by CEA 
section 2(a)(13)(C)(iv), required swap creation data must be reported as 
provided in paragraph (b) of this section.
    (1) The reporting counterparty, as determined pursuant to Sec.  
45.8, must report all primary economic terms data for the swap, within 
the applicable reporting deadline set forth in paragraph (b)(1)(i) or 
(ii) of this section.
    (i) If the reporting counterparty is a swap dealer or a major swap 
participant, the reporting counterparty must report all primary economic 
terms data for the swap as soon as technologically practicable after 
execution, but no later than 15 minutes after execution.
    (ii) If the reporting counterparty is a non-SD/MSP counterparty, the 
reporting counterparty must report all primary economic terms data for 
the swap as soon as technologically practicable after execution, but no 
later than one business hour after execution.
    (2) [Reserved]
    (c) Off-facility swaps not subject to the clearing requirement, with 
a swap dealer or major swap participant reporting counterparty. For all 
off-facility swaps not subject to the clearing requirement under part 50 
of this chapter, all off-facility swaps for which an exception to, or an 
exemption from, the clearing requirement has been elected under part 50 
of this chapter, and all off-facility swaps covered by CEA section 
2(a)(13)(C)(iv), for which a swap dealer or major swap participant is 
the reporting counterparty, required swap creation data must be reported 
as provided in paragraph (c) of this section.
    (1) Credit, equity, foreign exchange, and interest rate swaps. For 
each such credit swap, equity swap, foreign exchange instrument, or 
interest rate swap:

[[Page 76]]

    (i) The reporting counterparty, as determined pursuant to Sec.  
45.8, must report all primary economic terms data for the swap, within 
the applicable reporting deadline set forth in paragraph (c)(1)(i)(A) or 
(B) of this section.
    (A) If the non-reporting counterparty is a swap dealer, a major swap 
participant, or a non-SD/MSP counterparty that is a financial entity as 
defined in CEA section 2(h)(7)(C), or if the non-reporting counterparty 
is a non-SD/MSP counterparty that is not a financial entity as defined 
in CEA section 2(h)(7)(C) and verification of primary economic terms 
occurs electronically, then the reporting counterparty must report all 
primary economic terms data for the swap as soon as technologically 
practicable after execution, but no later than 30 minutes after 
execution.
    (B) If the non-reporting counterparty is a non-SD/MSP counterparty 
that is not a financial entity as defined in CEA section 2(h)(7)(C), and 
if verification of primary economic terms does not occur electronically, 
then the reporting counterparty must report all primary economic terms 
data for the swap as soon as technologically practicable after 
execution, but no later than 30 minutes after execution.
    (ii) If the swap is not intended to be submitted to a derivatives 
clearing organization for clearing at the time of execution, the 
reporting counterparty must report all confirmation data for the swap, 
as defined in Sec.  45.1, as soon as technologically practicable after 
confirmation, but no later than: 30 minutes after confirmation if 
confirmation occurs electronically; or 24 business hours after 
confirmation if confirmation does not occur electronically.
    (2) Other commodity swaps. For each such other commodity swap:
    (i) The reporting counterparty, as determined pursuant to Sec.  
45.8, must report all primary economic terms data for the swap, within 
the applicable reporting deadline set forth in paragraph (c)(2)(i)(A) or 
(B) of this section.
    (A) If the non-reporting counterparty is a swap dealer, a major swap 
participant, or a non-SD/MSP counterparty that is a financial entity as 
defined in CEA section 2(h)(7)(C), or if the non-reporting counterparty 
is a non-SD/MSP counterparty that is not a financial entity as defined 
in CEA section 2(h)(7)(C) and verification of primary economic terms 
occurs electronically, then the reporting counterparty must report all 
primary economic terms data for the swap as soon as technologically 
practicable after execution, but no later than two hours after 
execution.
    (B) If the non-reporting counterparty is a non-SD/MSP counterparty 
that is not a financial entity as defined in CEA section 2(h)(7)(C), and 
if verification of primary economic terms does not occur electronically, 
then the reporting counterparty must report all primary economic terms 
data for the swap as soon as technologically practicable after 
execution, but no later than two hours after execution.
    (ii) If the swap is not intended to be submitted to a derivatives 
clearing organization for clearing at the time of execution, the 
reporting counterparty must report all confirmation data for the swap, 
as defined in Sec.  45.1, as soon as technologically practicable after 
confirmation, but no later than: 30 Minutes after confirmation if 
confirmation occurs electronically; or 24 business hours after 
confirmation if confirmation does not occur electronically.
    (d) Off-facility swaps not subject to the clearing requirement, with 
a non-SD/MSP reporting counterparty. For all off-facility swaps not 
subject to the clearing requirement under part 50 of this chapter, all 
off-facility swaps for which an exception to, or an exemption from, the 
clearing requirement has been elected under part 50 of this chapter, and 
all off-facility swaps covered by CEA section 2(a)(13)(C)(iv), in all 
asset classes, for which a non-SD/MSP counterparty is the reporting 
counterparty, required swap creation data must be reported as provided 
in paragraph (d) of this section.
    (1) The reporting counterparty, as determined pursuant to Sec.  
45.8, must report all primary economic terms data for the swap, as soon 
as technologically practicable after execution, but no later than 24 
business hours after execution.
    (2) If the swap is not intended to be submitted to a derivatives 
clearing organization for clearing at the time of execution, the 
reporting counterparty must report all confirmation data for

[[Page 77]]

the swap, as defined in Sec.  45.1, as soon as technologically 
practicable after confirmation, but no later than 24 business hours 
after confirmation.
    (e) Clearing swaps. As soon as technologically practicable after 
acceptance of an original swap by a derivatives clearing organization 
for clearing, or as soon as technologically practicable after execution 
of a clearing swap that does not replace an original swap, the 
derivatives clearing organization, as reporting counterparty, must 
report all required swap creation data for the clearing swap. Required 
swap creation data for clearing swaps must include all confirmation data 
and all primary economic terms data, as those terms are defined in Sec.  
45.1 and as included in appendix 1 to this part.
    (f) Allocations. For swaps involving allocation, required swap 
creation data shall be reported to a single swap data repository as 
follows.
    (1) Initial swap between reporting counterparty and agent. The 
initial swap transaction between the reporting counterparty and the 
agent shall be reported as required by Sec.  45.3(a) through (d). A 
unique swap identifier for the initial swap transaction must be created 
as provided in Sec.  45.5.
    (2) Post-allocation swaps--(i) Duties of the agent. In accordance 
with this section, the agent shall inform the reporting counterparty of 
the identities of the reporting counterparty's actual counterparties 
resulting from allocation, as soon as technologically practicable after 
execution, but not later than eight business hours after execution.
    (ii) Duties of the reporting counterparty. The reporting 
counterparty must report all required swap creation data for each swap 
resulting from allocation to the same swap data repository to which the 
initial swap transaction is reported as soon as technologically 
practicable after it is informed by the agent of the identities of its 
actual counterparties. The reporting counterparty must create a unique 
swap identifier for each such swap as required in Sec.  45.5.
    (iii) Duties of the swap data repository. The swap data repository 
to which the initial swap transaction and the post-allocation swaps are 
reported must map together the unique swap identifiers of the initial 
swap transaction and of each of the post-allocation swaps.
    (g) Multi-asset swaps. For each multi-asset swap, required swap 
creation data and required swap continuation data shall be reported to a 
single swap data repository that accepts swaps in the asset class 
treated as the primary asset class involved in the swap by the swap 
execution facility, designated contract market, or reporting 
counterparty making the first report of required swap creation data 
pursuant to this section. The registered entity or reporting 
counterparty making the first report of required swap creation data 
pursuant to this section shall report all primary economic terms for 
each asset class involved in the swap.
    (h) Mixed swaps. (1) For each mixed swap, required swap creation 
data and required swap continuation data shall be reported to a swap 
data repository registered with the Commission and to a security-based 
swap data repository registered with the Securities and Exchange 
Commission. This requirement may be satisfied by reporting the mixed 
swap to a swap data repository or security-based swap data repository 
registered with both Commissions.
    (2) The registered entity or reporting counterparty making the first 
report of required swap creation data pursuant to this section shall 
ensure that the same unique swap identifier is recorded for the swap in 
both the swap data repository and the security-based swap data 
repository.
    (i) International swaps. For each international swap, the reporting 
counterparty shall report as soon as practicable to the swap data 
repository the identity of the non-U.S. trade repository not registered 
with the Commission to which the swap is also reported and the swap 
identifier used by the non-U.S. trade repository to identify the swap. 
If necessary, the reporting counterparty shall obtain this information 
from the non-reporting counterparty.
    (j) Choice of SDR. The entity with the obligation to choose the swap 
data repository to which all required swap creation data for the swap is 
reported shall be the entity that is required to

[[Page 78]]

make the first report of all data pursuant to this section, as follows:
    (1) For swaps executed on or pursuant to the rules of a swap 
execution facility or designated contract market, the swap execution 
facility or designated contract market shall choose the swap data 
repository;
    (2) For all other swaps, the reporting counterparty, as determined 
in Sec.  45.8, shall choose the swap data repository.

[81 FR 41772, June 27, 2016]



Sec.  45.4  Swap data reporting: Continuation data.

    Registered entities and swap counterparties must report required 
swap continuation data electronically to a swap data repository as set 
forth in this section and in the manner provided in Sec.  45.13(b). The 
rules governing acceptance and recording of such data by a swap data 
repository are set forth in Sec.  49.10 of this chapter. The reporting 
obligations of registered entities and swap counterparties with respect 
to swaps executed prior to the applicable compliance date and in 
existence on or after July 21, 2010, the date of enactment of the Dodd-
Frank Act, are set forth in part 46 of this chapter. This section and 
Sec.  45.3 establish the general swap data reporting obligations of swap 
dealers, major swap participants, non-SD/MSP counterparties, swap 
execution facilities, designated contract markets, and derivatives 
clearing organizations to report swap data to a swap data repository. In 
addition to the reporting obligations set forth in this section and in 
Sec.  45.3, registered entities and swap counterparties are subject to 
other reporting obligations set forth in this chapter, including, 
without limitation, the following: Swap dealers, major swap 
participants, and non-SD/MSP counterparties are also subject to the 
reporting obligations with respect to corporate affiliations reporting 
set forth in Sec.  45.6; swap execution facilities, designated contract 
markets, swap dealers, major swap participants, and non-SD/MSP 
counterparties are subject to the reporting obligations with respect to 
real time reporting of swap data set forth in part 43 of this chapter; 
and, where applicable, swap dealers, major swap participants, and non-
SD/MSP counterparties are subject to the reporting obligations with 
respect to large traders set forth in parts 17 and 18 of this chapter.
    (a) Continuation data reporting method generally. For each swap, 
regardless of asset class, reporting counterparties and derivatives 
clearing organizations required to report swap continuation data must do 
so in a manner sufficient to ensure that all data in the swap data 
repository concerning the swap remains current and accurate, and 
includes all changes to the primary economic terms of the swap occurring 
during the existence of the swap. Reporting entities and counterparties 
fulfill this obligation by reporting either life cycle event data or 
state data for the swap within the applicable deadlines set forth in 
this section. Reporting counterparties and derivatives clearing 
organizations required to report swap continuation data for a swap may 
fulfill their obligation to report either life cycle event data or state 
data by reporting:
    (1) Life cycle event data to a swap data repository that accepts 
only life cycle event data reporting;
    (2) State data to a swap data repository that accepts only state 
data reporting; or
    (3) Either life cycle event data or state data to a swap data 
repository that accepts both life cycle event data and state data 
reporting.
    (b) Continuation data reporting for clearing swaps. For all clearing 
swaps, required continuation data must be reported as provided in this 
section.
    (1) Life cycle event data or state data reporting. The derivatives 
clearing organization, as reporting counterparty, must report to the 
swap data repository either:
    (i) All life cycle event data for the swap, reported on the same day 
that any life cycle event occurs with respect to the swap; or
    (ii) All state data for the swap, reported daily.
    (2) Valuation data reporting. Valuation data for the swap must be 
reported by the derivatives clearing organization, as reporting 
counterparty, daily.
    (c) Continuation data reporting for original swaps. For all original 
swaps, required continuation data, including terminations, must be 
reported to the

[[Page 79]]

swap data repository to which the swap that was accepted for clearing 
was reported pursuant to Sec.  45.3(a) through (d) in the manner 
provided in Sec.  45.13(b) and in this section, and must be accepted and 
recorded by such swap data repository as provided in Sec.  49.10 of this 
chapter.
    (1) Life cycle event data or state data reporting. The derivatives 
clearing organization that accepted the swap for clearing must report to 
the swap data repository either:
    (i) All life cycle event data for the swap, reported on the same day 
that any life cycle event occurs with respect to the swap; or
    (ii) All state data for the swap, reported daily.
    (2) In addition to all other necessary continuation data fields, 
life cycle event data and state data must include all of the following:
    (i) The legal entity identifier of the swap data repository to which 
all required swap creation data for each clearing swap was reported by 
the derivatives clearing organization pursuant to Sec.  45.3(e);
    (ii) The unique swap identifier of the original swap that was 
replaced by the clearing swaps; and
    (iii) The unique swap identifier of each clearing swap that replaces 
a particular original swap.
    (d) Continuation data reporting for uncleared swaps. For all swaps 
that are not cleared by a derivatives clearing organization, including 
swaps executed on or pursuant to the rules of a swap execution facility 
or designated contract market, the reporting counterparty must report 
all required swap continuation data as provided in this section.
    (1) Life cycle event data or state data reporting. The reporting 
counterparty for the swap must report to the swap data repository either 
all life cycle event data for the swap or all state data for the swap, 
within the applicable deadline set forth in paragraphs (d)(1)(i) or (ii) 
of this section.
    (i) If the reporting counterparty is a swap dealer or major swap 
participant:
    (A) Life cycle event data must be reported on the same day that any 
life cycle event occurs, with the sole exception that life cycle event 
data relating to a corporate event of the non-reporting counterparty 
must be reported no later than the second business day after the day on 
which such event occurs.
    (B) State data must be reported daily.
    (ii) If the reporting counterparty is a non-SD/MSP counterparty:
    (A) Life cycle event data must be reported no later than the end of 
the first business day following the date of any life cycle event; with 
the sole exception that life cycle event data relating to a corporate 
event of the non-reporting counterparty must be reported no later than 
the end of the second business day following such event.
    (B) State data must be reported daily.
    (2) Valuation data reporting. Valuation data for the swap must be 
reported by the reporting counterparty for the swap as follows:
    (i) If the reporting counterparty is a swap dealer or major swap 
participant, the reporting counterparty must report all valuation data 
for the swap, daily.
    (ii) If the reporting counterparty is a non-SD/MSP counterparty, the 
reporting counterparty must report the current daily mark of the 
transaction as of the last day of each fiscal quarter. This report must 
be transmitted to the swap data repository within 30 calendar days of 
the end of each fiscal quarter. If a daily mark of the transaction is 
not available for the swap, the reporting counterparty satisfies this 
requirement by reporting the current valuation of the swap recorded on 
its books in accordance with applicable accounting standards.

[81 FR 41774, June 27, 2016]



Sec.  45.5  Unique swap identifiers.

    Each swap subject to the jurisdiction of the Commission shall be 
identified in all recordkeeping and all swap data reporting pursuant to 
this part by the use of a unique swap identifier, which shall be 
created, transmitted, and used for each swap as provided in paragraphs 
(a) through (f) of this section.
    (a) Swaps executed on or pursuant to the rules of a swap execution 
facility or designated contract market. For each swap executed on or 
pursuant to the rules of a swap execution facility or

[[Page 80]]

designated contract market, the swap execution facility or designated 
contract market shall create and transmit a unique swap identifier as 
provided in paragraphs (a)(1) and (2) of this section.
    (1) Creation. The swap execution facility or designated contract 
market shall generate and assign a unique swap identifier at, or as soon 
as technologically practicable following, the time of execution of the 
swap, and prior to the reporting of required swap creation data. The 
unique swap identifier shall consist of a single data field that 
contains two components:
    (i) The unique alphanumeric code assigned to the swap execution 
facility or designated contract market by the Commission for the purpose 
of identifying the swap execution facility or designated contract market 
with respect to unique swap identifier creation; and
    (ii) An alphanumeric code generated and assigned to that swap by the 
automated systems of the swap execution facility or designated contract 
market, which shall be unique with respect to all such codes generated 
and assigned by that swap execution facility or designated contract 
market.
    (2) Transmission. The swap execution facility or designated contract 
market shall transmit the unique swap identifier electronically as 
follows:
    (i) To the swap data repository to which the swap execution facility 
or designated contract market reports required swap creation data for 
the swap, as part of that report;
    (ii) To each counterparty to the swap, as soon as technologically 
practicable after execution of the swap;
    (iii) To the derivatives clearing organization, if any, to which the 
swap is submitted for clearing, as part of the required swap creation 
data transmitted to the derivatives clearing organization for clearing 
purposes.
    (b) Off-facility swaps with a swap dealer or major swap participant 
reporting counterparty. For each off-facility swap where the reporting 
counterparty is a swap dealer or major swap participant, the reporting 
counterparty shall create and transmit a unique swap identifier as 
provided in paragraphs (b)(1) and (2) of this section.
    (1) Creation. The reporting counterparty shall generate and assign a 
unique swap identifier as soon as technologically practicable after 
execution of the swap and prior to both the reporting of required swap 
creation data and the transmission of data to a derivatives clearing 
organization if the swap is to be cleared. The unique swap identifier 
shall consist of a single data field that contains two components:
    (i) The unique alphanumeric code assigned to the swap dealer or 
major swap participant by the Commission at the time of its registration 
as such, for the purpose of identifying the swap dealer or major swap 
participant with respect to unique swap identifier creation; and
    (ii) An alphanumeric code generated and assigned to that swap by the 
automated systems of the swap dealer or major swap participant, which 
shall be unique with respect to all such codes generated and assigned by 
that swap dealer or major swap participant.
    (2) Transmission. The reporting counterparty shall transmit the 
unique swap identifier electronically as follows:
    (i) To the swap data repository to which the reporting counterparty 
reports required swap creation data for the swap, as part of that 
report;
    (ii) To the non-reporting counterparty to the swap, as soon as 
technologically practicable after execution of the swap; and
    (iii) To the derivatives clearing organization, if any, to which the 
swap is submitted for clearing, as part of the required swap creation 
data transmitted to the derivatives clearing organization for clearing 
purposes.
    (c) Off-facility swaps with a non-SD/MSP reporting counterparty. For 
each off-facility swap for which the reporting counterparty is a non-SD/
MSP counterparty, the swap data repository to which primary economic 
terms data is reported shall create and transmit a unique swap 
identifier as provided in paragraphs (c)(1) and (2) of this section.
    (1) Creation. The swap data repository shall generate and assign a 
unique swap identifier as soon as technologically practicable following 
receipt of the first report of required swap creation data concerning 
the swap. The

[[Page 81]]

unique swap identifier shall consist of a single data field that 
contains two components:
    (i) The unique alphanumeric code assigned to the swap data 
repository by the Commission at the time of its registration as such, 
for the purpose of identifying the swap data repository with respect to 
unique swap identifier creation; and
    (ii) An alphanumeric code generated and assigned to that swap by the 
automated systems of the swap data repository, which shall be unique 
with respect to all such codes generated and assigned by that swap data 
repository.
    (2) Transmission. The swap data repository shall transmit the unique 
swap identifier electronically as follows:
    (i) To the counterparties to the swap, as soon as technologically 
practicable following creation of the unique swap identifier; and
    (ii) To the derivatives clearing organization, if any, to which the 
swap is submitted for clearing, as soon as technologically practicable 
following creation of the unique swap identifier.
    (d) Clearing swaps. For each clearing swap, the derivatives clearing 
organization that is a counterparty to such swap shall create and 
transmit a unique swap identifier as provided in paragraphs (d)(1) and 
(2) of this section.
    (1) Creation. The derivatives clearing organization shall generate 
and assign a unique swap identifier upon, or as soon as technologically 
practicable after, acceptance of an original swap by the derivatives 
clearing organization for clearing or execution of a clearing swap that 
does not replace an original swap, and prior to the reporting of 
required swap creation data for the clearing swap. The unique swap 
identifier shall consist of a single data field that contains two 
components:
    (i) The unique alphanumeric code assigned to the derivatives 
clearing organization by the Commission for the purpose of identifying 
the derivatives clearing organization with respect to unique swap 
identifier creation; and
    (ii) An alphanumeric code generated and assigned to that clearing 
swap by the automated systems of the derivatives clearing organization, 
which shall be unique with respect to all such codes generated and 
assigned by that derivatives clearing organization.
    (2) Transmission. The derivatives clearing organization shall 
transmit the unique swap identifier electronically as follows:
    (i) To the swap data repository to which the derivatives clearing 
organization reports required swap creation data for the clearing swap, 
as part of that report; and
    (ii) To its counterparty to the clearing swap, as soon as 
technologically practicable after acceptance of a swap by the 
derivatives clearing organization for clearing or execution of a 
clearing swap that does not replace an original swap.
    (e) Allocations. For swaps involving allocation, unique swap 
identifiers shall be created and transmitted as follows.
    (1) Initial swap between reporting counterparty and agent. The 
unique swap identifier for the initial swap transaction between the 
reporting counterparty and the agent shall be created as required by 
paragraphs (a) through (c) of this section, and shall be transmitted as 
follows:
    (i) If the unique swap identifier is created by a swap execution 
facility or designated contract market, the swap execution facility or 
designated contract market must include the unique swap identifier in 
its swap creation data report to the swap data repository, and must 
transmit the unique identifier to the reporting counterparty and to the 
agent.
    (ii) If the unique swap identifier is created by the reporting 
counterparty, the reporting counterparty must include the unique swap 
identifier in its swap creation data report to the swap data repository, 
and must transmit the unique identifier to the agent.
    (2) Post-allocation swaps. The reporting counterparty must create a 
unique swap identifier for each of the individual swaps resulting from 
allocation, as soon as technologically practicable after it is informed 
by the agent of the identities of its actual counterparties, and must 
transmit each such unique swap identifier to:
    (i) The non-reporting counterparty for the swap in question.
    (ii) The agent.

[[Page 82]]

    (iii) The derivatives clearing organization, if any, to which the 
swap is submitted for clearing, as part of the required swap creation 
data transmitted to the derivatives clearing organization for clearing 
purposes.
    (f) Use. Each registered entity or swap counterparty subject to the 
jurisdiction of the Commission shall include the unique swap identifier 
for a swap in all of its records and all of its swap data reporting 
concerning that swap, from the time it creates or receives the unique 
swap identifier as provided in this section, throughout the existence of 
the swap and for as long as any records are required by the CEA or 
Commission regulations to be kept by that registered entity or 
counterparty concerning the swap, regardless of any life cycle events or 
any changes to state data concerning the swap, including, without 
limitation, any changes with respect to the counterparties to or the 
ownership of the swap. This requirement shall not prohibit the use by a 
registered entity or swap counterparty in its own records of any 
additional identifier or identifiers internally generated by the 
automated systems of the registered entity or swap counterparty, or the 
reporting to a swap data repository, the Commission, or another 
regulator of such internally generated identifiers in addition to the 
reporting of the unique swap identifier.

[81 FR 41775, June 27, 2016]



Sec.  45.6  Legal entity identifiers

    Each counterparty to any swap subject to the jurisdiction of the 
Commission shall be identified in all recordkeeping and all swap data 
reporting pursuant to this part by means of a single legal entity 
identifier as specified in this section.
    (a) Definitions. As used in this section:
    Control (``controlling,'' ``controlled by,'' ``under common control 
with'') means, for the purposes of Sec.  45.6, the possession, direct or 
indirect, of the power to direct or cause the direction of the 
management and policies of a person, whether through the ownership of 
voting interest, by contract, or otherwise. A person is presumed to 
control another person if the person: is a director, general partner or 
officer exercising executive responsibility (or having similar status or 
functions); directly or indirectly has the right to vote 25 percent or 
more of a class of voting interest or has the power to sell or direct 
the sale of 25 percent or more of a class of voting interest; or, in the 
case of a partnership, has the right to receive upon dissolution, or has 
contributed, 25 percent or more of the capital.
    Legal identifier system means an LEI utility conforming with the 
requirements of this section that issues or is capable of issuing an LEI 
conforming with the requirements of this section, and is capable of 
maintaining LEI reference data as required by this section.
    Level one reference data means the minimum information needed to 
identify, on a verifiable basis, the legal entity to which a legal 
entity identifier is assigned. Level one reference data shall include, 
without limitation, all of the data elements included in ISO Standard 
17442. Examples of level one reference data include, without limitation, 
a legal entity's official legal name, its place of incorporation, and 
the address and contact information of its corporate headquarters.
    Level two reference data means information concerning the corporate 
affiliations or company hierarchy relationships of the legal entity to 
which a legal entity identifier is assigned. Examples of level two 
reference data include, without limitation, the identity of the legal 
entity's ultimate parent.
    Parent means, for the purposes of Sec.  45.6, a legal person that 
controls a counterparty to a swap required to be reported pursuant to 
this section, or that controls a legal entity identified or to be 
identified by a legal entity identifier provided by the legal identifier 
system designated by the Commission pursuant to this section.
    Self-registration means submission by a legal entity of its own 
level one or level two reference data, as applicable.
    Third-party registration means submission of level one or level two 
reference data, as applicable, for a legal entity that is or may become 
a swap counterparty, made by an entity or organization other than the 
legal entity identified by the submitted reference

[[Page 83]]

data. Examples of third-party registration include, without limitation, 
submission by a swap dealer or major swap participant of level one or 
level two reference data for its swap counterparties, and submission by 
a national numbering agency, national registration agency, or data 
service provider of level one or level two reference data concerning 
legal entities with respect to which the agency or service provider 
maintains information.
    Ultimate parent means, for the purposes of Sec.  45.6, a legal 
person that controls a counterparty to a swap required to be reported 
pursuant to this section, or that controls a legal entity identified or 
to be identified by a legal entity identifier provided by the legal 
identifier system designated by the Commission pursuant to this section, 
and that itself has no parent.
    (b) International standard for the legal entity identifier. The 
legal entity identifier used in all recordkeeping and all swap data 
reporting required by this part, following designation of the legal 
entity identifier system as provided in paragraph (c)(2) of this 
section, shall be issued under, and shall conform to, ISO Standard 
17442, Legal Entity Identifier (LEI), issued by the International 
Organisation for Standardisation.
    (b) Technical principles for the legal entity identifier. The legal 
entity identifier used in all recordkeeping and all swap data reporting 
required by this part shall conform to the technical principles set 
forth in paragraphs (b)(1) through (6) of this section.
    (1) Uniqueness. Only one legal entity identifier shall be assigned 
to any legal entity, and no legal entity identifier shall ever be 
reused. Each entity within a corporate organization or group structure 
that acts as a counterparty in any swap shall have its own legal entity 
identifier.
    (2) Neutrality. To ensure the persistence of the legal entity 
identifier, it shall have a format consisting of a single data field, 
and shall contain either no embedded intelligence or as little embedded 
intelligence as practicable. Entity characteristics of swap 
counterparties identified by legal entity identifiers shall constitute 
separate elements within a reference data system as set forth in 
paragraphs (a), (c)(2), (d), and (e) of this section.
    (3) Reliability. The legal entity identifier shall be supported by a 
trusted and auditable method of verifying the identity of the legal 
entity to which it is assigned, both initially and at appropriate 
intervals thereafter. The issuer of legal entity identifiers shall 
maintain minimum reference or identification data sufficient to verify 
that a user has been correctly identified. Issuance and maintenance of 
the legal entity identifier, and storage and maintenance of all 
associated data, shall involve robust quality assurance practices and 
system safeguards. At a minimum, such system safeguards shall include 
the system safeguards applied to swap data repositories by part 49 of 
this chapter.
    (4) Open Source. The schema for the legal entity identifier shall 
have an open standard that ensures to the greatest extent practicable 
that the legal entity identifier is compatible with existing automated 
systems of financial market infrastructures, market participants, and 
regulators.
    (5) Extensibility. The legal entity identifier shall be capable of 
becoming the single international standard for unique identification of 
legal entities across the financial sector on a global basis. Therefore, 
it shall be sufficiently extensible to cover all existing and potential 
future legal entities of all types that may be counterparties to swap, 
OTC derivative, or other financial transactions; that may be involved in 
any aspect of the financial issuance and transactions process; or that 
may be subject to required due diligence by financial sector entities.
    (6) Persistence. The legal entity identifier assigned to an entity 
shall persist despite all corporate events. When a corporate event 
results in a new entity, the new entity shall receive a new legal entity 
identifier, while the previous legal entity identifier or identifiers 
continue to identify the predecessor entity or entities in the record.
    (c) Governance principles for the legal entity identifier. The legal 
entity identifier used in all recordkeeping and all swap data reporting 
required by this part shall conform to the governance

[[Page 84]]

principles set forth in paragraphs (c)(1) through (4) of this section.
    (1) International governance. The issuance of the legal entity 
identifier used pursuant to this section, and any legal entity 
identifier utility formed for the purpose of issuing legal entity 
identifiers that are used pursuant to this section, shall be subject to 
international supervision as follows:
    (i) With respect to operations, by a governance structure that 
includes the Commission and other financial regulators in any 
jurisdiction requiring use of the legal entity identifier pursuant to 
applicable law. The governance structure shall have authority sufficient 
to ensure, and shall ensure, that issuance and maintenance of the legal 
entity identifier system adheres on an ongoing basis to the principles 
set forth in this section.
    (ii) With respect to adherence to ISO Standard 17442, by the 
International Organisation for Standardisation.
    (2) Reference data access. Access to reference data associated with 
the legal entity identifier shall enable use of the legal entity 
identifier as a public good, while respecting applicable law regarding 
data confidentiality. Accordingly:
    (i) Reference data associated with the legal entity identifier that 
is public under applicable law shall be available publicly and free of 
charge. Such data shall include, without limitation, level one reference 
data (i.e., the minimum reference data needed to verify the identity of 
the legal entity receiving each legal entity identifier), and a current 
directory of all issued legal entity identifiers.
    (ii) Collection and maintenance of, and access to, reference data 
associated with the legal entity identifier shall comply with applicable 
laws on data protection and confidentiality.
    (3) Non-profit operation and funding. Funding of both start-up and 
ongoing operation of the legal entity identifier system, including, 
without limitation, any legal entity identifier utility formed for the 
purpose of issuing legal entity identifiers that are used pursuant to 
this section, shall be conducted on a non-profit, reasonable cost-
recovery basis, and shall be subject to international governance as 
provided in paragraph (c)(1) of this section.
    (4) Unbundling and non-restricted use. Issuance of the legal entity 
identifier shall not be tied to other services, if any, offered by the 
issuer, and information concerning the issuance process for new legal 
entity identifiers must be available publicly and free of charge. 
Restrictions shall not be imposed on use of the legal entity identifier 
by any person in its own products and services, or on use of the legal 
entity identifier and associated reference data by any financial 
regulator. Any intellectual property created as part of the legal entity 
identifier system shall be treated in a manner consistent with open 
source principles.
    (5) Commercial advantage prohibition. The legal entity identifier 
utility providing legal entity identifiers for use in compliance with 
this part shall not make any commercial or business use (other than the 
operation of the utility) of any reference data associated with the 
legal entity identifier that is not available to the public free of 
charge. This restriction shall also apply to any entity or person that 
participates in the utility, that is legally or otherwise affiliated or 
associated with the utility, or that provides third-party services to 
the utility or to any component, partner, affiliate, or associate 
thereof.
    (e) Designation of the legal entity identifier system. (1) The 
Commission shall determine, as provided in paragraphs (e)(1)(i) through 
(iii) of this section, whether a legal entity identifier system that 
satisfies the requirements set forth in this section is available to 
provide legal entity identifiers for registered entities and swap 
counterparties required to comply with this part.
    (i) In making this determination, the Commission shall consider, 
without limitation, the following factors:
    (A) Whether the LEI provided by the LEI utility is issued under, and 
conforms to, ISO Standard 17442, Legal Entity Identifier (LEI).
    (B) Whether the LEI provided by the LEI utility complies with all of 
the technical principles set forth in this rule.

[[Page 85]]

    (C) Whether the LEI utility complies with all of the governance 
principles set forth in this rule.
    (D) Whether the LEI utility has demonstrated that it in fact can 
provide LEIs complying with this section for identification of swap 
counterparties in swap data reporting commencing as of the compliance 
dates set forth in Sec.  45.5.
    (E) The acceptability of the LEI utility to industry participants 
required to use the LEI in complying with this part.
    (ii) In making this determination, the Commission shall consider all 
candidates meeting the criteria set forth in paragraph (e)(1)(i) of this 
section, but shall not consider any candidate that does not demonstrate 
that it in fact can provide LEIs for identification of swap 
counterparties in swap data reporting commencing as of the compliance 
dates set forth in this part.
    (iii) The Commission shall make this determination at a time it 
believes is sufficiently prior to the compliance dates set forth this 
part to enable issuance of LEIs far enough in advance of those 
compliance dates to enable compliance with this part.
    (2) If the Commission determines pursuant to paragraph (e)(1) of 
this section that such a legal entity identifier system is available, 
the Commission shall designate the legal entity identifier system as the 
provider of legal entity identifiers to be used in recordkeeping and 
swap data reporting pursuant to this part, by means of a Commission 
order that is published in the Federal Register and on the Web site of 
the Commission, as soon as practicable after such determination is made. 
The order shall include notice of this designation, the contact 
information of the LEI utility, and information concerning the procedure 
and requirements for obtaining legal entity identifiers.
    (3) If the Commission determines pursuant to paragraph (e)(1) of 
this section that such a legal entity identifier system is not yet 
available, the Commission shall publish notice of the determination in 
the Federal Register and on the Web site of the Commission, as soon as 
practicable after the determination is made. If the Commission later 
determines, pursuant to paragraphs (e)(1)(i) and (ii) of this section, 
that such a legal entity identifier system has become available, the 
Commission shall designate the legal entity identifier system as the 
provider of legal entity identifiers to be used in recordkeeping and 
swap data reporting pursuant to this part, by means of a Commission 
order that is published in the Federal Register and on the Web site of 
the Commission, as soon as practicable after such determination is made. 
The order shall include notice of this designation, the contact 
information of the LEI utility, and information concerning the procedure 
and requirements for obtaining legal entity identifiers.
    (e) Reference data reporting--(1) Reporting of level one reference 
data. Level one reference data for each counterparty to any swap subject 
to the jurisdiction of the Commission shall be reported, by means of 
self-registration, third-party registration, or both, into a public 
level one reference database maintained by the issuer of the legal 
entity identifier designated by the Commission pursuant to paragraph (d) 
of this section. Such level one reference data shall be reported at a 
time sufficient to ensure that the counterparty's legal entity 
identifier is available for inclusion in recordkeeping and swap data 
reporting as required by this section. All subsequent changes and 
corrections to level one reference data previously reported shall be 
reported to the issuer, by means of self-registration, third-party 
registration, or both, as soon as technologically practicable following 
occurrence of any such change or discovery of the need for a correction.
    (2) Reporting of level two reference data. (i) Level two reference 
data for each counterparty to any swap subject to the jurisdiction of 
the Commission, consisting of the identity of the counterparty's 
ultimate parent, shall be reported, by means of self-registration, 
third-party registration, or both, into a level two reference database. 
Where applicable law forbids such reporting, that fact and the citation 
of the law in question shall be reported in place of the data to which 
such law applies.

[[Page 86]]

    (ii) All non-public level two reference data reported to the level 
two reference database shall be confidential, non-public, and available 
only to financial regulators in any jurisdiction requiring use of the 
legal entity identifier pursuant to applicable law.
    (iii) The Commission shall determine the location of the level two 
reference database by means of a Commission order that is published in 
the Federal Register and on the Web site of the Commission, as soon as 
practicable after such determination is made. The order shall include 
notice of the location of the level two reference database, and 
information concerning the procedure and requirements for reporting 
level two reference data to the database.
    (iv) The obligation to report level two reference data does not 
apply until the Commission has determined the location of the level two 
reference database as provided in paragraph (e)(2)(iii) of this section.
    (v) After the Commission determines the location of the level two 
reference database pursuant to paragraph (e)(2)(iii) of this section, 
required level two reference data shall be reported at a time sufficient 
to ensure that it is included in the database when the counterparty's 
legal entity identifier is included in recordkeeping and swap data 
reporting as required by this section.
    (vi) All subsequent changes and corrections to required level two 
reference data previously reported shall be reported into the level two 
reference database, by means of self-registration, third-party 
registration, or both, as soon as technologically practicable following 
occurrence of any such change or discovery of the need for a correction.
    (f) Use of the legal entity identifier system by registered entities 
and swap counterparties. (1) When a legal entity identifier system has 
been designated by the Commission pursuant to paragraph (e) of this 
section, each registered entity and swap counterparty shall use the 
legal entity identifier provided by that system in all recordkeeping and 
swap data reporting pursuant to this part.
    (2) Before a legal entity identifier system has been designated by 
the Commission, each registered entity and swap counterparty shall use a 
substitute counterparty identifier created and assigned by a swap data 
repository in all recordkeeping and swap data reporting pursuant to this 
part, as follows:
    (i) When a swap involving one or more counterparties for which no 
substitute counterparty identifier has yet been created and assigned is 
reported to a swap data repository, the swap data repository shall 
create a substitute counterparty identifier for each such counterparty 
as provided in paragraph (f)(2)(ii) of this section, and assign the 
substitute counterparty identifier to that counterparty, as soon as 
technologically practicable after that swap is first reported to the 
swap data repository. In lieu of creating a substitute identifier as 
provided in paragraph (f)(2)(ii), the swap data repository may assign a 
unique substitute identifier provided by a third party service provider, 
if such identifier complies with all of the principles for LEIs set 
forth in this part.
    (ii) Each such substitute counterparty identifier created by a swap 
data repository shall consist of a single data field that contains two 
components, including:
    (A) The unique alphanumeric code assigned to the swap data 
repository by the Commission for the purpose of identifying the swap 
data repository; and
    (B) An alphanumeric code generated and assigned to that counterparty 
by the automated systems of the swap data repository, which shall be 
unique with respect to all such substitute counterparty identifier codes 
generated and assigned by that swap data repository.
    (iii) The swap data repository shall transmit each substitute 
counterparty identifier thus created to each counterparty to the swap, 
to each other registered entity associated with the swap, to each 
registered entity or swap counterparty who has made any report of any 
swap data to the swap data repository, and to each swap data

[[Page 87]]

repository registered with the Commission, as soon as technologically 
practicable after creation and assignment of the substitute counterparty 
identifier.
    (iv) Once any swap data repository has created and assigned such a 
substitute counterparty identifier to a swap counterparty and has 
transmitted it as required by paragraph (f)(2)(iii) of this section, all 
registered entities and swap counterparties shall use that substitute 
counterparty identifier to identify that counterparty in all swap data 
recordkeeping and reporting, until such time as the Commission 
designates a legal entity identifier system pursuant to paragraph (e) of 
this section.
    (3) For swaps reported pursuant to this part prior to Commission 
designation of a legal entity identifier system, after such designation 
each swap data repository shall map the legal entity identifiers for the 
counterparties to the substitute counterparty identifiers in the record 
for each such swap.
    (4) Prior to October 15, 2012, if a legal entity identifier system 
has been designated by the Commission as provided in this section, but a 
reporting counterparty's automated systems are not yet prepared to 
include legal entity identifiers in recordkeeping and swap data 
reporting pursuant to this part, the counterparty shall be excused from 
complying with paragraph (f)(1) of this section, and shall instead 
comply with paragraph (f)(2) of this section, until its automated 
systems are prepared with respect to legal entity identifiers, at which 
time it must commence compliance with paragraph (f)(1) of this section. 
This paragraph shall have no effect on or after October 15, 2012.



Sec.  45.7  Unique product identifiers.

    Each swap subject to the jurisdiction of the Commission shall be 
identified in all recordkeeping and all swap data reporting pursuant to 
this part by means of a unique product identifier and product 
classification system as specified in this section. Each swap 
sufficiently standardized to receive a unique product identifier shall 
be identified by a unique product identifier. Each swap not sufficiently 
standardized for this purpose shall be identified by its description 
using the product classification system.
    (a) Requirements for the unique product identifier and product 
classification system. The unique product identifier and product 
classification system shall identify and describe the swap asset class 
and the sub-type within that asset class to which the swap belongs, and 
the underlying product for the swap, with sufficient distinctiveness and 
specificity to enable the Commission and other financial regulators to 
fulfill their regulatory responsibilities and to assist in real time 
reporting of swaps as provided in the Act and part 43 of this chapter. 
The level of distinctiveness and specificity which the unique product 
identifier will provide shall be determined separately for each swap 
asset class.
    (b) Designation of the unique product identifier and product 
classification system. (1) The Commission shall determine when a unique 
product identifier and product classification system that is acceptable 
to the Commission and satisfies the requirements set forth in this 
section is available for use in compliance with this section.
    (2) When the Commission determines that such a unique product 
identifier and product classification system is available, the 
Commission shall designate the unique product identifier and product 
classification system to be used in recordkeeping and swap data 
reporting pursuant to this part, by means of a Commission order that is 
published in the Federal Register and on the Web site of the Commission, 
as soon as practicable after such determination is made. The order shall 
include notice of this designation, the contact information of the 
issuer of such unique product identifiers, and information concerning 
the procedure and requirements for obtaining unique product identifiers 
and using the product classification system.
    (c) Use of the unique product identifier and product classification 
system by registered entities and swap counterparties. (1) When a unique 
product identifier and product classification system has been designated 
by the Commission pursuant to paragraph (b) of this section, each 
registered entity and swap

[[Page 88]]

counterparty shall use the unique product identifier and product 
classification system in all recordkeeping and swap data reporting 
pursuant to this part.
    (2) Before a unique product identifier and product classification 
system has been designated by the Commission, each registered entity and 
swap counterparty shall use the internal product identifier or product 
description used by the swap data repository to which a swap is reported 
in all recordkeeping and swap data reporting pursuant to this part.



Sec.  45.8  Determination of which counterparty must report.

    The determination of which counterparty is the reporting 
counterparty for all swaps, except clearing swaps, shall be made as 
provided in paragraphs (a) through (h) of this section. The 
determination of which counterparty is the reporting counterparty for 
all clearing swaps shall be made as provided in paragraph (i) of this 
section.
    (a) If only one counterparty is a swap dealer, the swap dealer shall 
be the reporting counterparty.
    (b) If neither counterparty is a swap dealer, and only one 
counterparty is a major swap participant, the major swap participant 
shall be the reporting counterparty.
    (c) If both counterparties are non-SD/MSP counterparties, and only 
one counterparty is a financial entity as defined in CEA section 
2(h)(7)(C), the counterparty that is a financial entity shall be the 
reporting counterparty.
    (d) If both counterparties are swap dealers, or both counterparties 
are major swap participants, or both counterparties are non-SD/MSP 
counterparties that are financial entities as defined in CEA section 
2(h)(7)(C), or both counterparties are non-SD/MSP counterparties and 
neither counterparty is a financial entity as defined in CEA section 
2(h)(7)(C):
    (1) For a swap executed on or pursuant to the rules of a swap 
execution facility or designated contract market, the counterparties 
shall agree which counterparty shall be the reporting counterparty.
    (2) For an off-facility swap, the counterparties shall agree as one 
term of their swap which counterparty shall be the reporting 
counterparty.
    (e) Notwithstanding the provisions of paragraphs (a) through (d) of 
this section, if both counterparties to a swap are non-SD/MSP 
counterparties and only one counterparty is a U.S. person, that 
counterparty shall be the reporting counterparty.
    (f) Notwithstanding the provisions of paragraphs (a) through (e) of 
this section, if neither counterparty to a swap is a U.S. person, but 
the swap is executed on or pursuant to the rules of a swap execution 
facility or designated contract market or otherwise executed in the 
United States, or is cleared by a derivatives clearing organization:
    (1) For such a swap executed on or pursuant to the rules of a swap 
execution facility or designated contract market, the counterparties 
shall agree which counterparty shall be the reporting counterparty.
    (2) For an off-facility swap, the counterparties shall agree as one 
term of their swap which counterparty shall be the reporting 
counterparty.
    (g) If a reporting counterparty selected pursuant to paragraphs (a) 
through (f) of this section ceases to be a counterparty to a swap due to 
an assignment or novation, the reporting counterparty for reporting of 
required swap continuation data following the assignment or novation 
shall be selected from the two current counterparties as provided in 
paragraphs (g)(1) through (4) of this section.
    (1) If only one counterparty is a swap dealer, the swap dealer shall 
be the reporting counterparty and shall fulfill all counterparty 
reporting obligations.
    (2) If neither counterparty is a swap dealer, and only one 
counterparty is a major swap participant, the major swap participant 
shall be the reporting counterparty and shall fulfill all counterparty 
reporting obligations.
    (3) If both counterparties are non-SD/MSP counterparties, and only 
one counterparty is a U.S. person, that counterparty shall be the 
reporting counterparty and shall fulfill all counterparty reporting 
obligations.

[[Page 89]]

    (4) In all other cases, the counterparty that replaced the previous 
reporting counterparty by reason of the assignment or novation shall be 
the reporting counterparty, unless otherwise agreed by the 
counterparties.
    (h) For all swaps executed on or pursuant to the rules of a swap 
execution facility or designated contract market, the rules of the swap 
execution facility or designated contract market must require each swap 
counterparty to provide sufficient information to the swap execution 
facility or designated contract market to enable the swap execution 
facility or designated contract market to report all swap creation data 
as provided in this part.
    (1) To achieve this, the rules of the swap execution facility or 
designated contract market must require each market participant placing 
an order with respect to any swap traded on the swap execution facility 
or designated contract market to include in the order, without 
limitation:
    (i) The legal entity identifier of the market participant placing 
the order.
    (ii) A yes/no indication of whether the market participant is a swap 
dealer with respect to the product with respect to which the order is 
placed.
    (iii) A yes/no indication of whether the market participant is a 
major swap participant with respect to the product with respect to which 
the order is placed.
    (iv) A yes/no indication of whether the market participant is a 
financial entity as defined in CEA section 2(h)(7)(C).
    (v) A yes/no indication of whether the market participant is a U.S. 
person.
    (vi) If applicable, an indication that the market participant will 
elect an exception to, or an exemption from, the clearing requirement 
under part 50 of this chapter for any swap resulting from the order.
    (vii) If the swap will be allocated:
    (A) An indication that the swap will be allocated.
    (B) The legal entity identifier of the agent.
    (C) An indication of whether the swap is a post-allocation swap.
    (D) If the swap is a post-allocation swap, the unique swap 
identifier of the initial swap transaction between the reporting 
counterparty and the agent.
    (2) To achieve this, the swap execution facility or designated 
contract market must use the information obtained pursuant to paragraph 
(h)(1) of this section to identify the counterparty that is the 
reporting counterparty pursuant to the CEA and this section.
    (i) Clearing swaps. Notwithstanding the provisions of paragraphs (a) 
through (h) of this section, if the swap is a clearing swap, the 
derivatives clearing organization that is a counterparty to such swap 
shall be the reporting counterparty and shall fulfill all reporting 
counterparty obligations for such swap.

[81 FR 41777, June 27, 2016]



Sec.  45.9  Third-party facilitation of data reporting.

    Registered entities and swap counterparties required by this part to 
report required swap creation data or required swap continuation data, 
while remaining fully responsible for reporting as required by this 
part, may contract with third-party service providers to facilitate 
reporting.



Sec.  45.10  Reporting to a single swap data repository.

    All swap data for a given swap, which shall include all swap data 
required to be reported pursuant to parts 43 and 45 of this chapter, 
must be reported to a single swap data repository, which shall be the 
swap data repository to which the first report of required swap creation 
data is made pursuant to this part.
    (a) Swaps executed on or pursuant to the rules of a swap execution 
facility or designated contract market. To ensure that all swap data, 
including all swap data required to be reported pursuant to parts 43 and 
45 of this chapter, for a swap executed on or pursuant to the rules of a 
swap execution facility or designated contract market is reported to a 
single swap data repository:
    (1) The swap execution facility or designated contract market that 
reports required swap creation data as required by Sec.  45.3 shall 
report all such data to a single swap data repository. As soon as 
technologically practicable

[[Page 90]]

after execution, the swap execution facility or designated contract 
market shall transmit to both counterparties to the swap, and to the 
derivatives clearing organization, if any, that will clear the swap, 
both:
    (i) The identity of the swap data repository to which required swap 
creation data is reported by the swap execution facility or designated 
contract market; and
    (ii) The unique swap identifier for the swap, created pursuant to 
Sec.  45.5.
    (2) Thereafter, all required swap creation data and all required 
swap continuation data reported for the swap reported by any registered 
entity or counterparty shall be reported to that same swap data 
repository (or to its successor in the event that it ceases to operate, 
as provided in part 49 of this chapter).
    (b) Off-facility swaps with a swap dealer or major swap participant 
reporting counterparty. To ensure that all swap data, including all swap 
data required to be reported pursuant to parts 43 and 45 of this 
chapter, for off-facility swaps with a swap dealer or major swap 
participant reporting counterparty is reported to a single swap data 
repository:
    (1) If the reporting counterparty reports primary economic terms 
data to a swap data repository as required by Sec.  45.3:
    (i) The reporting counterparty shall report primary economic terms 
data to a single swap data repository.
    (ii) As soon as technologically practicable after execution, but no 
later than as required pursuant to Sec.  45.3, the reporting 
counterparty shall transmit to the other counterparty to the swap both 
the identity of the swap data repository to which primary economic terms 
data is reported by the reporting counterparty, and the unique swap 
identifier for the swap created pursuant to Sec.  45.5.
    (iii) If the swap will be cleared, the reporting counterparty shall 
transmit to the derivatives clearing organization at the time the swap 
is submitted for clearing both the identity of the swap data repository 
to which primary economic terms data is reported by the reporting 
counterparty, and the unique swap identifier for the swap created 
pursuant to Sec.  45.5.
    (2) Thereafter, all required swap creation data and all required 
swap continuation data reported for the swap, by any registered entity 
or counterparty, shall be reported to the swap data repository to which 
swap data has been reported pursuant to paragraph (b)(1) or (2) of this 
section (or to its successor in the event that it ceases to operate, as 
provided in part 49 of this chapter).
    (c) Off-facility swaps with a non-SD/MSP reporting counterparty. To 
ensure that all swap data, including all swap data required to be 
reported pursuant to parts 43 and 45 of this chapter, for such swaps is 
reported to a single swap data repository:
    (1) If the reporting counterparty reports primary economic terms 
data to a swap data repository as required by Sec.  45.3:
    (i) The reporting counterparty shall report primary economic terms 
data to a single swap data repository.
    (ii) As soon as technologically practicable after execution, but no 
later than as required pursuant to Sec.  45.3, the reporting 
counterparty shall transmit to the other counterparty to the swap the 
identity of the swap data repository to which primary economic terms 
data was reported by the reporting counterparty.
    (iii) If the swap will be cleared, the reporting counterparty shall 
transmit to the derivatives clearing organization at the time the swap 
is submitted for clearing the identity of the swap data repository to 
which primary economic terms data was reported by the reporting 
counterparty.
    (2) The swap data repository to which the swap is reported as 
provided in paragraph (c) of this section shall transmit the unique swap 
identifier created pursuant to Sec.  45.5 to both counterparties and to 
the derivatives clearing organization, if any, as soon as 
technologically practicable after creation of the unique swap 
identifier.
    (3) Thereafter, all required swap creation data and all required 
swap continuation data reported for the swap, by any registered entity 
or counterparty, shall be reported to the swap data repository to which 
swap data has been reported pursuant to paragraph (c)(1) of this section 
(or to

[[Page 91]]

its successor in the event that it ceases to operate, as provided in 
part 49 of this chapter).
    (d) Clearing swaps. To ensure that all swap data for a given 
clearing swap, and for clearing swaps that replace a particular original 
swap or that are created upon execution of the same transaction and that 
do not replace an original swap, is reported to a single swap data 
repository:
    (1) The derivatives clearing organization that is a counterparty to 
such clearing swap shall report all required swap creation data for that 
clearing swap to a single swap data repository. As soon as 
technologically practicable after acceptance of an original swap by a 
derivatives clearing organization for clearing or execution of a 
clearing swap that does not replace an original swap, the derivatives 
clearing organization shall transmit to the counterparty to each 
clearing swap the legal entity identifier of the swap data repository to 
which the derivatives clearing organization reported the required swap 
creation data for that clearing swap.
    (2) Thereafter, all required swap creation data and all required 
swap continuation data reported for that clearing swap shall be reported 
by the derivatives clearing organization to the swap data repository to 
which swap data has been reported pursuant to paragraph (d)(1) of this 
section (or to its successor in the event that it ceases to operate, as 
provided in part 49 of this chapter).
    (3) For clearing swaps that replace a particular original swap, and 
for equal and opposite clearing swaps that are created upon execution of 
the same transaction and that do not replace an original swap, the 
derivatives clearing organization shall report all required swap 
creation data and all required swap continuation data for such clearing 
swaps to a single swap data repository.

[81 FR 41778, June 27, 2016]



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

    (a) Should there be a swap asset class for which no swap data 
repository registered with the Commission currently accepts swap data, 
each registered entity or counterparty required by this part to report 
any required swap creation data or required swap continuation data with 
respect to a swap in that asset class must report that same data to the 
Commission.
    (b) Data reported to the Commission pursuant to this section shall 
be reported at times announced by the Commission and in an electronic 
file in a format acceptable to the Commission.
    (c) Delegation of authority to the Chief Information Officer: The 
Commission hereby delegates to its Chief Information Officer, until the 
Commission orders otherwise, the authority set forth in paragraph (c) of 
this section, to be exercised by the Chief Information Officer or by 
such other employee or employees of the Commission as may be designated 
from time to time by the Chief Information Officer. The Chief 
Information Officer may submit to the Commission for its consideration 
any matter which has been delegated in this paragraph. Nothing in this 
paragraph prohibits the Commission, at its election, from exercising the 
authority delegated in this paragraph. The authority delegated to the 
Chief Information Officer by paragraph (c) of this section shall 
include:
    (1) The authority to determine the manner, format, coding structure, 
and electronic data transmission standards and procedures acceptable to 
the Commission for the purposes of paragraphs (a) and (b) of this 
section.
    (2) The authority to determine whether the Commission may permit or 
require use by reporting entities or counterparties in reporting 
pursuant to this section of one or more particular data standards (such 
as FIX, FpML, ISO 20022, or some other standard), in order to 
accommodate the needs of different communities of users.
    (3) The dates and times at which required swap creation data or 
required swap continuation data shall be reported pursuant to this 
section.
    (d) The Chief Information Officer shall publish from time to time in 
the Federal Register and on the Web site of the Commission the format, 
data schema, electronic data transmission methods and procedures, and 
dates and times for reporting acceptable to the

[[Page 92]]

Commission with respect to swap data reporting pursuant to this section.



Sec.  45.12  Voluntary supplemental reporting

    (a) For purposes of this section, the term voluntary, supplemental 
report means any report of swap data to a swap data repository that is 
not required to be made pursuant to this part or any other part in this 
chapter.
    (b) A voluntary, supplemental report may be made only by a 
counterparty to the swap in connection with which the voluntary, 
supplemental report is made, or by a third-party service provider acting 
on behalf of a counterparty to the swap.
    (c) A voluntary, supplemental report may be made either to the swap 
data repository to which all required swap creation data and all 
required swap continuation data is reported for the swap pursuant to 
Sec. Sec.  45.3 and 45.10, or to a different swap data repository.
    (d) A voluntary, supplemental report must contain:
    (1) An indication that the report is a voluntary, supplemental 
report.
    (2) The unique swap identifier created pursuant to Sec. Sec.  45.5 
and 45.9. Therefore, no voluntary, supplemental report may be made until 
after the unique swap identifier has been created pursuant to Sec. Sec.  
45.5 and 45.9 and has been transmitted to the counterparty making the 
voluntary, supplemental report.
    (3) The identity of the swap data repository to which all required 
swap creation data and all required swap continuation data is reported 
for the swap pursuant to Sec. Sec.  45.3 and 45.10, if the voluntary 
supplemental report is made to a different swap data repository.
    (4) The legal entity identifier (or substitute identifier) required 
by Sec.  45.6 for the counterparty making the voluntary, supplemental 
report.
    (5) If applicable, an indication that the voluntary, supplemental 
report is made pursuant to the laws or regulations of any jurisdiction 
outside the United States.
    (e) If a counterparty that has made a voluntary, supplemental report 
discovers any errors in the swap data included in the voluntary, 
supplemental report, the counterparty must report a correction of each 
such error to the swap data repository to which the voluntary, 
supplemental report was made, as soon as technologically practicable 
after discovery of any such error.



Sec.  45.13  Required data standards.

    (a) Data maintained and furnished to the commission by swap data 
repositories. A swap data repository shall maintain all swap data 
reported to it in a format acceptable to the Commission, and shall 
transmit all swap data requested by the Commission to the Commission in 
an electronic file in a format acceptable to the Commission.
    (b) Data reported to swap data repositories. In reporting swap data 
to a swap data repository as required by this part, each reporting 
entity or counterparty shall use the facilities, methods, or data 
standards provided or required by the swap data repository to which the 
entity or counterparty reports the data. A swap data repository may 
permit reporting entities and counterparties to use various facilities, 
methods, or data standards, provided that its requirements in this 
regard enable it to meet the requirements of paragraph (a) of this 
section with respect to maintenance and transmission of swap data.
    (c) Delegation of authority to the Chief Information Officer. The 
Commission hereby delegates to its Chief Information Officer, until the 
Commission orders otherwise, the authority set forth in this paragraph 
(c), to be exercised by the Chief Information Officer or by such other 
employee or employees of the Commission as may be designated from time 
to time by the Chief Information Officer. The Chief Information Officer 
may submit to the Commission for its consideration any matter which has 
been delegated in this paragraph (c). Nothing in this paragraph 
prohibits the Commission, at its election, from exercising the authority 
delegated in this paragraph. The authority delegated to the Chief 
Information Officer by this paragraph (c) shall include:
    (1) The authority to determine the manner, format, coding structure, 
and electronic data transmission standards and procedures acceptable to 
the Commission for the purposes of paragraph (a) of this section.

[[Page 93]]

    (2) The authority to determine whether the Commission may permit or 
require use by reporting entities or counterparties, or by swap data 
repositories, of one or more particular data standards (such as FIX, 
FpML, ISO 20022, or some other standard), in order to accommodate the 
needs of different communities of users, or to enable swap data 
repositories to comply with paragraph (a) of this section.
    (d) The Chief Information Officer shall publish from time to time in 
the Federal Register and on the Web site of the Commission the format, 
data schema, and electronic data transmission methods and procedures 
acceptable to the Commission.



Sec.  45.14  Reporting of errors and omissions in previously reported data.

    (a) Each registered entity and swap counterparty required by this 
part to report swap data to a swap data repository, to any other 
registered entity or swap counterparty, or to the Commission shall 
report any errors and omissions in the data so reported. Corrections of 
errors or omissions shall be reported as soon as technologically 
practicable after discovery of any such error or omission. With respect 
to swaps for which required swap continuation data is reported using the 
snapshot reporting method, reporting counterparties fulfill the 
requirement to report errors or omissions in state data previously 
reported by making appropriate corrections in their next daily report of 
state data as required by this part.
    (b) Each counterparty to a swap that is not the reporting 
counterparty as determined pursuant to Sec.  45.8, and that discovers 
any error or omission with respect to any swap data reported to a swap 
data repository for that swap, shall promptly notify the reporting 
counterparty of each such error or omission. Upon receiving such notice, 
the reporting counterparty shall report a correction of each such error 
or omission to the swap data repository as provided in paragraph (a) of 
this section.
    (c) Unless otherwise approved by the Commission, or by the Chief 
Information Officer pursuant to Sec.  45.13, each registered entity or 
swap counterparty reporting corrections to errors or omissions in data 
previously reported as required by this section shall report such 
corrections in the same format as it reported the erroneous or omitted 
data. Unless otherwise approved by the Commission, or by the Chief 
Information Officer pursuant to Sec.  45.13, a swap data repository 
shall transmit corrections to errors or omission in data previously 
transmitted to the Commission in the same format as it transmitted the 
erroneous or omitted data.



  Sec. Appendix 1 to Part 45--Tables of Minimum Primary Economic Terms 
                                  Data

 Exhibit A--Minimum Primary Economic Terms Data--Credit Swaps and Equity
                                  Swaps
             [Enter N/A for fields that are not applicable]
------------------------------------------------------------------------
   Data categories and fields for all
                 swaps                               Comment
------------------------------------------------------------------------
Asset Class............................  Field values: Credit, equity,
                                          FX, interest rates, other
                                          commodities.
The Unique Swap Identifier for the swap  As provided in Sec.   45.5.
The Legal Entity Identifier of the       As provided in Sec.   45.6, or
 reporting counterparty.                  substitute identifier for a
                                          natural person.
An indication of whether the reporting   Yes/No.
 counterparty is a swap dealer with
 respect to the swap.
An indication of whether the reporting   Yes/No.
 counterparty is a major swap
 participant with respect to the swap.
If the reporting counterparty is not a   Yes/No.
 swap dealer or a major swap
 participant with respect to the swap,
 an indication of whether the reporting
 counterparty is a financial entity as
 defined in CEA section 2(h)(7)(C).
An indication of whether the reporting   Yes/No.
 counterparty is a derivatives clearing
 organization with respect to the swap.
An indication of whether the reporting   Yes/No.
 counterparty is a U.S. person.
An indication that the swap will be      Yes/No.
 allocated.
If the swap will be allocated, or is a   As provided in Sec.   45.6, or
 post-allocation swap, the Legal Entity   substitute identifier for a
 Identifier of the agent.                 natural person.

[[Page 94]]

 
An indication that the swap is a post-   Yes/No.
 allocation swap.
If the swap is a post-allocation swap,   As provided in Sec.   45.5.
 the unique swap identifier of the
 initial swap transaction between the
 reporting counterparty and the agent.
The Legal Entity Identifier of the non-  As provided in Sec.   45.6, or
 reporting party.                         substitute identifier for a
                                          natural person.
An indication of whether the non-        Yes/No.
 reporting counterparty is a swap
 dealer with respect to the swap.
An indication of whether the non-        Yes/No.
 reporting counterparty is a major swap
 participant with respect to the swap.
If the non-reporting counterparty is     Yes/No.
 not a swap dealer or a major swap
 participant with respect to the swap,
 an indication of whether the non-
 reporting counterparty is a financial
 entity as defined in CEA section
 2(h)(7)(C).
An indication of whether the non-        Yes/No.
 reporting counterparty is a U.S.
 person.
The Unique Product Identifier assigned   As provided in Sec.   45.7.
 to the swap.
If no Unique Product Identifier is
 available for the swap because the
 swap is not sufficiently standardized,
 the taxonomic description of the swap
 pursuant to the CFTC-approved product
 classification system.
If no CFTC-approved UPI and product
 classification system is yet
 available, the internal product
 identifier or product description used
 by the swap data repository.
An indication that the swap is a multi-  Field values: Yes, Not
 asset swap.                              applicable.
For a multi-asset class swap, an         Generally, the asset class
 indication of the primary asset class.   traded by the desk trading the
                                          swap for the reporting
                                          counterparty. Field values:
                                          Credit, equity, FX, interest
                                          rates, other commodities.
For a multi-asset class swap, an         Field values: Credit, equity,
 indication of the secondary asset        FX, interest rates, other
 class(es).                               commodities.
An indication that the swap is a mixed   Field values: Yes, Not
 swap.                                    applicable.
For a mixed swap reported to two non-    Field value: LEI of the other
 dually- registered swap data             SDR to which the swap is or
 repositories, the identity of the        will be reported.
 other swap data repository (if any) to
 which the swap is or will be reported.
An indication of the counterparty        Field values: LEI, or
 purchasing protection.                   substitute identifier for a
                                          natural person.
An indication of the counterparty        Field values: LEI, or
 selling protection.                      substitute identifier for a
                                          natural person.
Information identifying the reference    The entity that is the subject
 entity.                                  of the protection being
                                          purchased and sold in the
                                          swap. Field values: LEI, or
                                          substitute identifier for a
                                          natural person.
Contract type..........................  E.g., swap, swaption, forward,
                                          option, basis swap, index
                                          swap, basket swap.
Block trade indicator..................  Indication (Yes/No) of whether
                                          the swap qualifies as a block
                                          trade or large notional swap.
Execution timestamp....................  The date and time of the trade,
                                          expressed using Coordinated
                                          Universal Time (``UTC'').
Execution venue........................  The swap execution facility or
                                          designated contract market on
                                          or pursuant to the rules of
                                          which the swap was executed.
                                          Field values: LEI of the swap
                                          execution facility or
                                          designated contract market, or
                                          ``off-facility'' if not so
                                          executed.
Start date.............................  The date on which the swap
                                          starts or goes into effect.
Maturity, termination or end date......  The date on which the swap
                                          expires.
The price..............................  E.g., strike price, initial
                                          price, spread.
The notional amount, and the currency
 in which the notional amount is
 expressed.
The amount and currency (or currencies)
 of any up-front payment
Payment frequency of the reporting       A description of the payment
 counterparty.                            stream of the reporting
                                          counterparty, e.g., coupon.
Payment frequency of the non-reporting   A description of the payment
 counterparty.                            stream of the non-reporting
                                          counterparty, e.g., coupon.
Timestamp for submission to swap data    Time and date of submission to
 repository.                              the swap data repository,
                                          expressed using UTC, as
                                          recorded by an automated
                                          system where available, or as
                                          recorded manually where an
                                          automated system is not
                                          available.
Clearing indicator.....................  Yes/No indication of whether
                                          the swap will be submitted for
                                          clearing to a derivatives
                                          clearing organization.
Clearing venue.........................  LEI of the derivatives clearing
                                          organization.

[[Page 95]]

 
If the swap will not be cleared, an      Yes/No.
 indication of whether an exception to,
 or an exemption from, the clearing
 requirement has been elected with
 respect to the swap under part 50 of
 this chapter.
The identity of the counterparty         Field values: LEI, or
 electing an exception or exemption to    substitute identifier for
 the clearing requirement under part 50   natural person.
 of this chapter.
Clearing exception or exemption type...  The type of clearing exception
                                          or exemption being claimed.
                                          Field values: End user, Inter-
                                          affiliate or Cooperative.
Indication of collateralization........  Is the swap collateralized, and
                                          if so to what extent? Field
                                          values: Uncollateralized,
                                          partially collateralized, one-
                                          way collateralized, fully
                                          collateralized.
Any other term(s) of the swap matched    Use as many fields as required
 or affirmed by the counterparties in     to report each such term.
 verifying the swap.
------------------------------------------------------------------------


 Exhibit A--Minimum Primary Economic Terms Data--Credit Swaps and Equity
                                  Swaps
             [Enter N/A for fields that are not applicable]
------------------------------------------------------------------------
 Additional data categories and fields
           for clearing swaps                        Comment
------------------------------------------------------------------------
Clearing swap USIs.....................  The USIs of each clearing swap
                                          that replaces the original
                                          swap that was submitted for
                                          clearing to the DCO, other
                                          than the USI for which the PET
                                          data is currently being
                                          reported (as ``USI'' field
                                          above).
Original swap USI......................  The USI of the original swap
                                          submitted for clearing to the
                                          DCO that is replaced by
                                          clearing swaps.
Original swap SDR......................  LEI of SDR to which the
                                          original swap was reported.
Clearing member LEI....................  LEI of Clearing member.
Clearing member client account.........  Clearing member client account
                                          number.
Origin (house or customer).............  An indication whether the
                                          clearing member acted as
                                          principal for a house trade or
                                          agent for a customer trade.
Clearing receipt timestamp.............  The date and time at which the
                                          DCO received the original swap
                                          for clearing, expressed using
                                          UTC.
Clearing acceptance timestamp..........  The date and time at which the
                                          DCO accepted the original swap
                                          for clearing, expressed using
                                          UTC.
------------------------------------------------------------------------


    Exhibit B--Minimum Primary Economic Terms Data--Foreign Exchange
             Transactions (Other Than Cross-Currency Swaps)
             [Enter N/A for fields that are not applicable]
------------------------------------------------------------------------
       Data fields for all swaps                     Comment
------------------------------------------------------------------------
Asset Class............................  Field values: Credit, equity,
                                          FX, interest rates, other
                                          commodities.
The Unique Swap Identifier for the swap  As provided in Sec.   45.5.
The Legal Entity Identifier of the       As provided in Sec.   45.6, or
 reporting counterparty.                  substitute identifier for a
                                          natural person.
An indication of whether the reporting   Yes/No.
 counterparty is a swap dealer with
 respect to the swap.
An indication of whether the reporting   Yes/No.
 counterparty is a major swap
 participant with respect to the swap.
If the reporting counterparty is not a   Yes/No.
 swap dealer or a major swap
 participant with respect to the swap,
 an indication of whether the reporting
 counterparty is a financial entity as
 defined in CEA section 2(h)(7)(C).
An indication of whether the reporting   Yes/No.
 counterparty is a derivatives clearing
 organization with respect to the swap.
An indication of whether the reporting   Yes/No.
 counterparty is a U.S. person.
An indication that the swap will be      Yes/No.
 allocated.
If the swap will be allocated, or is a   As provided in Sec.   45.6, or
 post-allocation swap, the Legal Entity   substitute identifier for a
 Identifier of the agent.                 natural person.
An indication that the swap is a post-   Yes/No.
 allocation swap.
If the swap is a post-allocation swap,   As provided in Sec.   45.5.
 the unique swap identifier of the
 initial swap transaction between the
 reporting counterparty and the agent.

[[Page 96]]

 
The Legal Entity Identifier of the non-  As provided in Sec.   45.6, or
 reporting party.                         substitute identifier for a
                                          natural person.
An indication of whether the non-        Yes/No.
 reporting counterparty is a swap
 dealer with respect to the swap.
An indication of whether the non-        Yes/No.
 reporting counterparty is a major swap
 participant with respect to the swap.
If the non-reporting counterparty is     Yes/No.
 not a swap dealer or a major swap
 participant with respect to the swap,
 an indication of whether the non-
 reporting counterparty is a financial
 entity as defined in CEA section
 2(h)(7)(C).
An indication of whether the non-        Yes/No.
 reporting counterparty is a U.S.
 person.
The Unique Product Identifier assigned   As provided in Sec.   45.7.
 to the swap.
If no Unique Product Identifier is
 available for the swap because the
 swap is not sufficiently standardized,
 the taxonomic description of the swap
 pursuant to the CFTC-approved product
 classification system.
If no CFTC-approved UPI and product
 classification system is yet
 available, the internal product
 identifier or product description used
 by the swap data repository.
An indication that the swap is a multi-  Field values: Yes, Not
 asset swap.                              applicable.
For a multi-asset class swap, an         Generally, the asset class
 indication of the primary asset class.   traded by the desk trading the
                                          swap for the reporting
                                          counterparty. Field values:
                                          Credit, equity, FX, interest
                                          rates, other commodities.
For a multi-asset class swap, an         Field values: Credit, equity,
 indication of the secondary asset        FX, interest rates, other
 class(es).                               commodities.
An indication that the swap is a mixed   Field values: Yes, Not
 swap.                                    applicable.
For a mixed swap reported to two non-    Field value: LEI of the other
 dually-registered swap data              SDR to which the swap is or
 repositories, the identity of the        will be reported.
 other swap data repository (if any) to
 which the swap is or will be reported.
Contract type..........................  E.g., forward, non-deliverable
                                          forward (NDF), non-
                                          deliverable option (NDO),
                                          vanilla option, simple exotic
                                          option, complex exotic option.
Block trade indicator..................  Indication (Yes/No) of whether
                                          the swap qualifies as a block
                                          trade or large notional swap.
Execution timestamp....................  The date and time of the trade,
                                          expressed using Coordinated
                                          Universal Time (``UTC'').
Execution venue........................  The swap execution facility or
                                          designated contract market on
                                          or pursuant to the rules of
                                          which the swap was executed.
                                          Field values: LEI of the swap
                                          execution facility or
                                          designated contract market, or
                                          ``off-facility'' if not so
                                          executed.
Currency 1.............................  ISO code.
Currency 2.............................  ISO code.
Notional amount 1......................  For currency 1.
Notional amount 2......................  For currency 2.
Exchange rate..........................  Contractual rate of exchange of
                                          the currencies.
Delivery type..........................  Physical (deliverable) or cash
                                          (non-deliverable).
Settlement or expiration date..........  Settlement date, or for an
                                          option the contract expiration
                                          date.
Timestamp for submission to swap data    Time and date of submission to
 repository.                              the swap data repository,
                                          expressed using Coordinated
                                          Universal Time (``UTC''), as
                                          recorded by an automated
                                          system where available, or as
                                          recorded manually where an
                                          automated system is not
                                          available.
Clearing indicator.....................  Yes/No indication of whether
                                          the swap will be submitted for
                                          clearing to a derivatives
                                          clearing organization.
Clearing venue.........................  LEI of the derivatives clearing
                                          organization.
If the swap will not be cleared, an      Yes/No.
 exception to, or an exemption from,
 the clearing requirement has been
 elected with respect to the swap under
 part 50 of this chapter.
The identity of the counterparty         Field values: LEI, or
 electing an exception or exemption to    substitute identifier, for a
 the clearing requirement under part 50   natural person.
 of this chapter.
Clearing exception or exemption type...  The type of clearing exception
                                          or exemption being claimed.
                                          Field values: End user, Inter-
                                          affiliate or Cooperative.
Indication of collateralization........  Is the trade collateralized,
                                          and if so to what extent?
                                          Field values:
                                          Uncollateralized, partially
                                          collateralized, one-way
                                          collateralized, fully
                                          collateralized.

[[Page 97]]

 
Any other term(s) of the trade matched   E.g., for options, premium,
 or affirmed by the counterparties in     premium currency, premium
 verifying the trade.                     payment date; for non-
                                          deliverable trades, settlement
                                          currency, valuation (fixing)
                                          date; indication of the
                                          economic obligations of the
                                          counterparties. Use as many
                                          fields as required to report
                                          each such term.
------------------------------------------------------------------------


    Exhibit B--Minimum Primary Economic Terms Data--Foreign Exchange
             Transactions (Other Than Cross-Currency Swaps)
             [Enter N/A for fields that are not applicable]
------------------------------------------------------------------------
 Additional data categories and fields
           for clearing swaps                        Comment
------------------------------------------------------------------------
Clearing swap USIs.....................  The USIs of each clearing swap
                                          that replaces the original
                                          swap that was submitted for
                                          clearing to the DCO, other
                                          than the USI for which the PET
                                          data is currently being
                                          reported (as ``USI'' field
                                          above).
Original swap USI......................  The USI of the original swap
                                          submitted for clearing to the
                                          DCO that is replaced by
                                          clearing swaps.
Original swap SDR......................  LEI of SDR to which the
                                          original swap was reported.
Clearing member LEI....................  LEI of Clearing member.
Clearing member client account.........  Clearing member client account
                                          number.
Origin (house or customer).............  An indication whether the
                                          clearing member acted as
                                          principal for a house trade or
                                          agent for a customer trade.
Clearing receipt timestamp.............  The date and time at which the
                                          DCO received the original swap
                                          for clearing, expressed using
                                          UTC.
Clearing acceptance timestamp..........  The date and time at which the
                                          DCO accepted the original swap
                                          for clearing, expressed using
                                          UTC.
------------------------------------------------------------------------


   Exhibit C--Minimum Primary Economic Terms Data--Interest Rate Swaps
                    (Including Cross-Currency Swaps)
             [Enter N/A for fields that are not applicable]
------------------------------------------------------------------------
       Data fields for all swaps                     Comment
------------------------------------------------------------------------
Asset Class............................  Field values: Credit, equity,
                                          FX, interest rates, other
                                          commodities.
The Unique Swap Identifier for the swap  As provided in Sec.   45.5.
The Legal Entity Identifier of the       As provided in Sec.   45.6, or
 reporting counterparty.                  substitute identifier for a
                                          natural person.
An indication of whether the reporting   Yes/No.
 counterparty is a swap dealer with
 respect to the swap.
An indication of whether the reporting   Yes/No.
 counterparty is a major swap
 participant with respect to the swap.
If the reporting counterparty is not a   Yes/No.
 swap dealer or a major swap
 participant with respect to the swap,
 an indication of whether the reporting
 counterparty is a financial entity as
 defined in CEA section 2(h)(7)(C).
An indication of whether the reporting   Yes/No.
 counterparty is a derivatives clearing
 organization with respect to the swap.
An indication of whether the reporting   Yes/No.
 counterparty is a U.S. person.
An indication that the swap will be      Yes/No.
 allocated.
If the swap will be allocated, or is a   As provided in Sec.   45.6, or
 post-allocation swap, the Legal Entity   substitute identifier for a
 Identifier of the agent.                 natural person.
An indication that the swap is a post-   Yes/No.
 allocation swap.
If the swap is a post-allocation swap,   As provided in Sec.   45.5.
 the unique swap identifier of the
 initial swap transaction between the
 reporting counterparty and the agent.
The Legal Entity Identifier of the non-  As provided in Sec.   45.6, or
 reporting counterparty.                  substitute identifier for a
                                          natural person.
An indication of whether the non-        Yes/No.
 reporting counterparty is a swap
 dealer with respect to the swap.
An indication of whether the non-        Yes/No.
 reporting counterparty is a major swap
 participant with respect to the swap.

[[Page 98]]

 
If the non-reporting counterparty is     Yes/No.
 not a swap dealer or a major swap
 participant with respect to the swap,
 an indication of whether the non-
 reporting counterparty is a financial
 entity as defined in CEA section
 2(h)(7)(C).
An indication of whether the non-        Yes/No.
 reporting counterparty is a U.S.
 person.
The Unique Product Identifier assigned   As provided in Sec.   45.7.
 to the swap.
If no Unique Product Identifier is
 available for the swap because the
 swap is not sufficiently standardized,
 the taxonomic description of the swap
 pursuant to the CFTC-approved product
 classification system.
If no CFTC-approved UPI and product
 classification system is yet
 available, the internal product
 identifier or product description used
 by the swap data repository.
An indication that the swap is a multi-  Field values: Yes, Not
 asset swap.                              applicable.
For a multi-asset class swap, an         Generally, the asset class
 indication of the primary asset class.   traded by the desk trading the
                                          swap for the reporting
                                          counterparty. Field values:
                                          Credit, equity, FX, interest
                                          rates, other commodities.
For a multi-asset class swap, an         Field values: Credit, equity,
 indication of the secondary asset        FX, interest rates, other
 class(es).                               commodities.
An indication that the swap is a mixed   Field values: Yes, Not
 swap.                                    applicable.
For a mixed swap reported to two non-    Field value: LEI of the other
 dually-registered swap data              SDR to which the swap is or
 repositories, the identity of the        will be reported.
 other swap data repository (if any) to
 which the swap is or will be reported.
Contract type..........................  E.g., swap, swaption, option,
                                          basis swap, index swap.
Block trade indicator..................  Indication (Yes/No) of whether
                                          the swap qualifies as a block
                                          trade or large notional swap.
Execution timestamp....................  The date and time of the trade,
                                          expressed using Coordinated
                                          Universal Time (``UTC'').
Execution venue........................  The swap execution facility or
                                          designated contract market on
                                          or pursuant to the rules of
                                          which the swap was executed.
                                          Field values: LEI of the swap
                                          execution facility or
                                          designated contract market, or
                                          ``off-facility'' if not so
                                          executed.
Start date.............................  The date on which the swap
                                          starts or goes into effect.
Maturity, termination or end date......  The date on which the swap
                                          expires or ends.
Day count convention...................
Notional amount (leg 1)................  The current active notional
                                          amount.
Notional currency (leg 1)..............  ISO code.
Notional amount (leg 2)................  The current active notional
                                          amount.
Notional currency (leg 2)..............  ISO code.
Payer (fixed rate).....................  Is the reporting party a fixed
                                          rate payer? Yes/No/Not
                                          applicable.
Payer (floating rate leg 1)............  If two floating legs, the payer
                                          for leg 1.
Payer (floating rate leg 2)............  If two floating legs, the payer
                                          for leg 2.
Direction..............................  For swaps: Whether the
                                          principal is paying or
                                          receiving the fixed rate. For
                                          float-to-float and fixed-to-
                                          fixed swaps: Indicate N/A.
                                         For non-swap instruments and
                                          swaptions: Indicate the
                                          instrument that was bought or
                                          sold.
Option type............................  E.g., put, call, straddle.
Fixed rate.............................
Fixed rate day count fraction..........  E.g., actual 360.
Floating rate payment frequency........
Floating rate reset frequency..........
Floating rate index name/rate period...  E.g., USD-Libor-BBA.
Timestamp for submission to swap data    Time and date of submission to
 repository.                              the swap data repository,
                                          expressed using UTC, as
                                          recorded by an automated
                                          system where available, or as
                                          recorded manually where an
                                          automated system is not
                                          available.
Clearing indicator.....................  Yes/No indication of whether
                                          the swap will be submitted for
                                          clearing to a derivatives
                                          clearing organization.
Clearing venue.........................  LEI of the derivatives clearing
                                          organization.
If the swap will not be cleared, an      Yes/No.
 indication of whether an exception to,
 or an exemption from, the clearing
 requirement has been elected with
 respect to the swap under part 50 of
 this chapter.
The identity of the counterparty         Field values: LEI, or
 electing an exception or exemption to    substitute identifier, for a
 the clearing requirement under part 50   natural person.
 of this chapter.

[[Page 99]]

 
Clearing exception or exemption type...  The type of clearing exception
                                          or exemption being claimed.
                                          Field values: End user, Inter-
                                          affiliate or Cooperative.
Indication of collateralization........  Is the swap collateralized, and
                                          if so to what extent? Field
                                          values: Uncollateralized,
                                          partially collateralized, one-
                                          way collateralized, fully
                                          collateralized.
Any other term(s) of the swap matched    E.g., early termination option
 or affirmed by the counterparties in     clause. Use as many fields as
 verifying the swap.                      required to report each such
                                          term.
------------------------------------------------------------------------


   Exhibit C--Minimum Primary Economic Terms Data--Interest Rate Swaps
                    (Including Cross-Currency Swaps)
             [Enter N/A for fields that are not applicable]
------------------------------------------------------------------------
 Additional data categories and fields
           for clearing swaps                        Comment
------------------------------------------------------------------------
Clearing swap USIs.....................  The USIs of each clearing swap
                                          that replaces the original
                                          swap that was submitted for
                                          clearing to the DCO, other
                                          than the USI for which the PET
                                          data is currently being
                                          reported (as ``USI'' field
                                          above).
Original swap USI......................  The USI of the original swap
                                          submitted for clearing to the
                                          DCO that is replaced by
                                          clearing swaps.
Original swap SDR......................  LEI of SDR to which the
                                          original swap was reported.
Clearing member LEI....................  LEI of Clearing member.
Clearing member client account.........  Clearing member client account
                                          number.
Origin (house or customer).............  An indication whether the
                                          clearing member acted as
                                          principal for a house trade or
                                          agent for a customer trade.
Clearing receipt timestamp.............  The date and time at which the
                                          DCO received the original swap
                                          for clearing, expressed using
                                          UTC.
Clearing acceptance timestamp..........  The date and time at which the
                                          DCO accepted the original swap
                                          for clearing, expressed using
                                          UTC.
------------------------------------------------------------------------


  Exhibit D--Minimum Primary Economic Terms Data--Other Commodity Swaps
             [Enter N/A for fields that are not applicable]
------------------------------------------------------------------------
        Data field for all swaps                     Comment
------------------------------------------------------------------------
Asset Class............................  Field values: Credit, equity,
                                          FX, interest rates, other
                                          commodities.
The Unique Swap Identifier for the swap  As provided in Sec.   45.5.
The Legal Entity Identifier of the       As provided in Sec.   45.6, or
 reporting counterparty.                  substitute identifier for a
                                          natural person.
An indication of whether the reporting   Yes/No.
 counterparty is a swap dealer with
 respect to the swap.
An indication of whether the reporting   Yes/No.
 counterparty is a major swap
 participant with respect to the swap.
If the reporting counterparty is not a   Yes/No.
 swap dealer or a major swap
 participant with respect to the swap,
 an indication of whether the reporting
 counterparty is a financial entity as
 defined in CEA section 2(h)(7)(C).
An indication of whether the reporting   Yes/No.
 counterparty is a derivatives clearing
 organization with respect to the swap.
An indication of whether the reporting   Yes/No.
 counterparty is a U.S. person.
An indication that the swap will be      Yes/No.
 allocated.
If the swap will be allocated, or is a   As provided in Sec.   45.6, or
 post-allocation swap, the Legal Entity   substitute identifier for a
 Identifier of the agent.                 natural person.
An indication that the swap is a post-   Yes/No.
 allocation swap.
If the swap is a post-allocation swap,   As provided in Sec.   45.5.
 the unique swap identifier of the
 initial swap transaction between the
 reporting counterparty and the agent.
The Legal Entity Identifier of the non-  As provided in Sec.   45.6, or
 reporting party.                         substitute identifier for a
                                          natural person.
An indication of whether the non-        Yes/No.
 reporting counterparty is a swap
 dealer with respect to the swap.
An indication of whether the non-        Yes/No.
 reporting counterparty is a major swap
 participant with respect to the swap.

[[Page 100]]

 
If the non-reporting counterparty is     Yes/No.
 not a swap dealer or a major swap
 participant with respect to the swap,
 an indication of whether the non-
 reporting counterparty is a financial
 entity as defined in CEA section
 2(h)(7)(C).
An indication of whether the non-        Yes/No.
 reporting counterparty is a U.S.
 person.
The Unique Product Identifier assigned   As provided in Sec.   45.7.
 to the swap.
If no Unique Product Identifier is
 available for the swap because the
 swap is not sufficiently standardized,
 the taxonomic description of the swap
 pursuant to the CFTC-approved product
 classification system.
If no CFTC-approved UPI and product
 classification system is yet
 available, the internal product
 identifier or product description used
 by the swap data repository.
An indication that the swap is a multi-  Field values: Yes, Not
 asset swap.                              applicable.
For a multi-asset class swap, an         Generally, the asset class
 indication of the primary asset class.   traded by the desk trading the
                                          swap for the reporting
                                          counterparty. Field values:
                                          Credit, equity, FX, interest
                                          rates, other commodities.
For a multi-asset class swap, an         Field values: Credit, equity,
 indication of the secondary asset        FX, interest rates, other
 class(es).                               commodities.
An indication that the swap is a mixed   Field values: Yes, Not
 swap.                                    applicable.
For a mixed swap reported to two non-    Field value: LEI of the other
 dually- registered swap data             SDR to which the swap is or
 repositories, the identity of the        will be reported.
 other swap data repository (if any) to
 which the swap is or will be reported.
Contract type..........................  E.g., swap, swaption, option,
                                          basis swap, index swap.
Block trade indicator..................  Indication (Yes/No) of whether
                                          the swap qualifies as a
                                          ``block trade'' or ``large
                                          notional off-facility swap''
                                          as defined in part 43 of the
                                          CFTC's regulations.
Execution timestamp....................  The date and time of the trade,
                                          expressed using Coordinated
                                          Universal Time (``UTC''), as
                                          recorded by an automated
                                          system where available, or as
                                          recorded manually where an
                                          automated system is not
                                          available.
Execution venue........................  The swap execution facility or
                                          designated contract market on
                                          or pursuant to the rules of
                                          which the swap was executed.
                                          Field values: LEI of the swap
                                          execution facility or
                                          designated contract market, or
                                          ``off-facility'' if not so
                                          executed.
Timestamp for submission to swap data    Time and date of submission to
 repository.                              the swap data repository,
                                          expressed using UTC, as
                                          recorded by an automated
                                          system where available, or as
                                          recorded manually where an
                                          automated system is not
                                          available.
Start date.............................  The date on which the swap
                                          commences or goes into effect
                                          (e.g., in physical oil, the
                                          pricing start date).
Maturity, termination, or end date.....  The date on which the swap
                                          expires or ends (e.g., in
                                          physical oil, the pricing end
                                          date).
Buyer..................................  The counterparty purchasing the
                                          product: (E.g., the payer of
                                          the fixed price (for a swap),
                                          or the payer of the floating
                                          price on the underlying swap
                                          (for a put swaption), or the
                                          payer of the fixed price on
                                          the underlying swap (for a
                                          call swaption). Field values:
                                          LEI, if available, or
                                          substitute identifier, for a
                                          natural person.
Seller.................................  The counterparty offering the
                                          product: (E.g., the payer of
                                          the floating price (for a
                                          swap), the payer of the fixed
                                          price on the underlying swap
                                          (for a put swaption), or the
                                          payer of the floating price on
                                          the underlying swap (for a
                                          call swaption). Field values:
                                          LEI, or substitute identifier,
                                          for a natural person.
Quantity unit..........................  The unit of measure applicable
                                          for the quantity on the swap.
                                          E.g., barrels, bushels,
                                          gallons, pounds, tons.
Quantity...............................  The amount of the commodity
                                          (the number of quantity units)
                                          quoted on the swap.
Quantity frequency.....................  The rate at which the quantity
                                          is quoted on the swap. E.g.,
                                          hourly, daily, weekly,
                                          monthly.
Total quantity.........................  The quantity of the commodity
                                          for the entire term of the
                                          swap.
Settlement method......................  Physical delivery or cash.
Price..................................  The price of the swap. For
                                          options, the strike price.
Price unit.............................  The unit of measure applicable
                                          for the price of the swap.
Price currency.........................  ISO code.
Buyer pay index........................  The published price as paid by
                                          the buyer (if applicable). For
                                          swaptions, applies to the
                                          underlying swap.
Buyer pay averaging method.............  The averaging method used to
                                          calculate the index of the
                                          buyer pay index. For
                                          swaptions, applies to the
                                          underlying swap.

[[Page 101]]

 
Seller pay index.......................  The published price as paid by
                                          the seller (if applicable).
                                          For swaptions, applies to the
                                          underlying swap.
Seller pay averaging method............  The averaging method used to
                                          calculate the index of the
                                          seller pay index. For
                                          swaptions, applies to the
                                          underlying swap.
Grade..................................  If applicable, the grade of the
                                          commodity to be delivered,
                                          e.g., the grade of oil or
                                          refined product.
Option type............................  Descriptor for the type of
                                          option transaction. E.g., put,
                                          call, straddle.
Option style...........................  E.g., American, European,
                                          European Daily, European
                                          Monthly, Asian.
Option premium.........................  The total amount paid by the
                                          option buyer.
Hours from through.....................  For electric power, the hours
                                          of the day for which the swap
                                          is effective.
Hours from through time zone...........  For electric power, the time
                                          zone prevailing for the hours
                                          during which electricity is
                                          transmitted.
Days of week...........................  For electric power, the profile
                                          applicable for the delivery of
                                          power.
Load type..............................  For electric power, the load
                                          profile for the delivery of
                                          power.
Clearing indicator.....................  Yes/No indication of whether
                                          the swap will be submitted for
                                          clearing to a derivatives
                                          clearing organization.
Clearing venue.........................  LEI of the derivatives clearing
                                          organization.
If the swap will not be cleared, an      Yes/No.
 indication of whether an exception to,
 or an exemption from, the clearing
 requirement has been elected with
 respect to the swap under part 50 of
 this chapter.
The identity of the counterparty         Field values: LEI, or
 electing an exception or exemption to    substitute identifier, for a
 the clearing requirement under part 50   natural person.
 of this chapter.
Clearing exception or exemption type...  The type of clearing exception
                                          or exemption being claimed.
                                          Field values: End user, Inter-
                                          affiliate or Cooperative.
Indication of collateralization........  Is the swap collateralized, and
                                          if so to what extent? Field
                                          values: Uncollateralized,
                                          partially collateralized, one-
                                          way collateralized, fully
                                          collateralized.
Any other term(s) of the swap matched    Use as many fields as required
 or affirmed by the counterparties in     to report each such term.
 verifying the swap.
------------------------------------------------------------------------


  Exhibit D--Minimum Primary Economic Terms Data--Other Commodity Swaps
             [Enter N/A for fields that are not applicable]
------------------------------------------------------------------------
 Additional data categories and fields
           for clearing swaps                        Comment
------------------------------------------------------------------------
Clearing swap USIs.....................  The USIs of each clearing swap
                                          that replaces the original
                                          swap that was submitted for
                                          clearing to the DCO, other
                                          than the USI for which the PET
                                          data is currently being
                                          reported (as ``USI'' field
                                          above).
Original swap USI......................  The USI of the original swap
                                          submitted for clearing to the
                                          DCO that is replaced by
                                          clearing swaps.
Original swap SDR......................  LEI of SDR to which the
                                          original swap was reported.
Clearing member LEI....................  LEI of Clearing member.
Clearing member client account.........  Clearing member client account
                                          number.
Origin (house or customer).............  An indication whether the
                                          clearing member acted as
                                          principal for a house trade or
                                          agent for a customer trade.
Clearing receipt timestamp.............  The date and time at which the
                                          DCO received the original swap
                                          for clearing, expressed using
                                          UTC.
Clearing acceptance timestamp..........  The date and time at which the
                                          DCO accepted the original swap
                                          for clearing, expressed using
                                          UTC.
------------------------------------------------------------------------


[81 FR 41778, June 27, 2016]

[[Page 102]]



PART 46_SWAP DATA RECORDKEEPING AND REPORTING REQUIREMENTS: PRE-ENACTMENT AND 
TRANSITION SWAPS--Table of Contents



Sec.
46.1 Definitions.
46.2 Recordkeeping for pre-enactment swaps and transition swaps.
46.3 Swap data reporting for pre-enactment swaps and transition swaps.
46.4 Unique identifiers.
46.5 Determination of which counterparty must report.
46.6 Third-party facilitation of data reporting.
46.7 Reporting to a single swap data repository.
46.8 Data reporting for swaps in a swap asset class not accepted by any 
          swap data repository.
46.9 Voluntary supplemental reporting
46.10 Required data standards.
46.11 Reporting of errors and omissions in previously reported data.

Appendix 1 to Part 46--Tables of Minimum Primary Economic Terms Data for 
          Pre-Enactment and Transition Swaps

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

    Source: 77 FR 35226, June 12, 2012, unless otherwise noted.



Sec.  46.1  Definitions.

    Terms used in this part are defined as follows:
    Asset class means the broad category of goods, services or 
commodities, including any ``excluded commodity'' as defined in CEA 
section 1a(19), with common characteristics underlying a swap. The asset 
classes include credit, equity, foreign exchange (excluding cross-
currency), interest rate (including cross-currency), other commodity, 
and such other asset classes as may be determined by the Commission.
    Compliance date means the applicable date, as specified in part 45 
of this chapter, on which a registered entity or swap counterparty 
subject to the jurisdiction of the Commission is required to commence 
full compliance with all provisions of this part and with all applicable 
provisions of part 45 of this chapter, as set forth in the preamble to 
this part.
    Confirmation (confirming) means the consummation (electronically or 
otherwise) of legally binding documentation (electronic or otherwise) 
that memorializes the agreement of the parties to all terms of a swap. A 
confirmation must be in writing (whether electronic or otherwise) and 
must legally supersede any previous agreement (electronically or 
otherwise).
    Confirmation data means all of the terms of a swap matched and 
agreed upon by the counterparties in confirming the swap.
    Credit swap means any swap that is primarily based on instruments of 
indebtedness, including, without limitation: any swap primarily based on 
one or more broad-based indices related to instruments of indebtedness; 
and any swap that is an index credit swap or total return swap on one or 
more indices of debt instruments.
    Electronic reporting (``report electronically'') means the reporting 
of data normalized in data fields as required by the data standard or 
standards used by the swap data repository to which the data is 
reported. Except where specifically otherwise provided in this chapter, 
electronic reporting does not include submission of an image of a 
document or text file.
    Equity swap means any swap that is primarily based on equity 
securities, including, without limitation: any swap primarily based on 
one or more broad-based indices of equity securities; and any total 
return swap on one or more equity indices.
    Financial entity has the meaning set forth in CEA section 
2(h)(7)(C).
    Foreign exchange forward has the meaning set forth in CEA section 
1a(24).
    Foreign exchange instrument means an instrument that is both defined 
as a swap in part 1 of this chapter and included in the foreign exchange 
asset class. Instruments in the foreign exchange asset class include: 
any currency option, foreign currency option, foreign exchange option, 
or foreign exchange rate option; any foreign exchange forward as defined 
in CEA section 1a(24); any foreign exchange swap as defined in CEA 
section 1a(25); and any non-deliverable forward involving foreign 
exchange.
    Foreign exchange swap has the meaning set forth in CEA section 
1a(25). It does not include swaps primarily based

[[Page 103]]

on rates of exchange between different currencies, changes in such 
rates, or other aspects of such rates (sometimes known as ``cross-
currency swaps'').
    Interest rate swap means any swap which is primarily based on one or 
more interest rates, such as swaps of payments determined by fixed and 
floating interest rates; or any swap which is primarily based on rates 
of exchange between different currencies, changes in such rates, or 
other aspects of such rates (sometimes known as ``cross-currency 
swaps'').
    International swap means a swap required by U.S. law and the law of 
another jurisdiction to be reported both to a swap data repository and 
to a different trade repository registered with the other jurisdiction.
    Major swap participant has the meaning set forth in CEA section 
1a(33) and in part 1 of this chapter.
    Minimum primary economic terms means, with respect to a historical 
swap, the terms included in the list of minimum primary economic terms 
for swaps in each swap asset class found in appendix 1 to this part.
    Minimum primary economic terms data means all of the data elements 
necessary to fully report all of the minimum primary economic terms 
required by this part to be reported for a swap in the swap asset class 
of the swap in question.
    Mixed swap has the meaning set forth in CEA section 1a(47)(D), and 
refers to an instrument that is in part a swap subject to the 
jurisdiction of the Commission, and in part a security-based swap 
subject to the jurisdiction of the SEC.
    Multi-asset swap means a swap that does not have one easily 
identifiable primary underlying notional item, but instead involves 
multiple underlying notional items within the Commission's jurisdiction 
that belong to different asset classes.
    Non-SD/MSP counterparty means a swap counterparty that is neither a 
swap dealer nor a major swap participant.
    Other commodity swap means any swap not included in the credit, 
equity, foreign exchange, or interest rate asset classes, including, 
without limitation, any swap for which the primary underlying item is a 
physical commodity or the price or any other aspect of a physical 
commodity.
    Pre-enactment swap means any swap entered into prior to enactment of 
the Dodd-Frank Act of 2010 (July 21, 2010), the terms of which have not 
expired as of the date of enactment of that Act.
    Reporting counterparty means the counterparty required to report 
swap data pursuant to this part, selected as provided in Sec.  46.5.
    Required swap continuation data means all of the data elements that 
must be reported during the existence of a swap as required by part 45 
of this chapter.
    Swap data repository has the meaning set forth in CEA section 
1a(48), and in part 49 of this chapter.
    Swap dealer has the meaning set forth in CEA section 1a(49), and in 
part 1 of this chapter.
    Transition swap means any swap entered into on or after the 
enactment of the Dodd-Frank Act of 2010 (July 21, 2010) and prior to the 
applicable compliance date on which a registered entity or swap 
counterparty subject to the jurisdiction of the Commission is required 
to commence full compliance with all provisions of this part, as set 
forth in the preamble to this part.



Sec.  46.2  Recordkeeping for pre-enactment swaps and transition swaps.

    (a) Recordkeeping for pre-enactment and transition swaps in 
existence on or after April 25, 2011. Each counterparty subject to the 
jurisdiction of the Commission that is a counterparty to any pre-
enactment swap or transition swap that is in existence on or after April 
25, 2011 shall keep the following records concerning each such swap:
    (1) Minimum records required. Each counterparty shall keep records 
of all of the minimum primary economic terms data specified in appendix 
1 to this part.
    (2) Additional records required to be kept if possessed by a 
counterparty. In addition to the minimum records required pursuant to 
paragraph (a)(1) of this part, a counterparty that is in possession at 
any time on or after April 25, 2011 of any of the following 
documentation shall keep copies thereof:

[[Page 104]]

    (i) Any confirmation of the swap executed by the counterparties.
    (ii) Any master agreement governing the swap, and any modification 
or amendment thereof.
    (iii) Any credit support agreement, or other agreement between the 
counterparties having the same function as a credit support agreement, 
relating to the swap, and any modification or amendment thereof.
    (3) Records created or available after the compliance date. In 
addition to the records required to be kept pursuant to paragraphs 
(a)(1) and (2) of this section, each counterparty to any pre-enactment 
swap or transition swap that remains in existence on the compliance date 
shall keep for each such swap, from the compliance date forward, all of 
the records required to be kept by section 45.2 of this chapter, to the 
extent that any such records are created by or become available to the 
counterparty on or after the compliance date.
    (4) Retention form. Records required to be kept pursuant to this 
section with respect to historical swaps in existence on or after April 
25, 2011, must be kept as required by paragraph (a)(4)(i) or (ii) of 
this section, as applicable.
    (i) Records required to be kept by swap dealers or major swap 
participants may be kept in electronic form, or kept in paper form if 
originally created and exclusively maintained in paper form, so long as 
they are retrievable, and information in them is reportable as required 
by this part.
    (ii) Records required to be kept by non-SD/MSP counterparties may be 
kept in either electronic or paper form, so long as they are 
retrievable, and information in them is reportable, as required by this 
part.
    (b) Recordkeeping for pre-enactment and transition swaps expired or 
terminated prior to April 25, 2011. Each counterparty subject to the 
jurisdiction of the Commission that is a counterparty to any pre-
enactment swap or transition swap that is expired or terminated prior to 
April 25, 2011 shall keep the following records concerning each such 
swap:
    (1) Pre-enactment swaps expired prior to April 25, 2011. Each 
counterparty to any pre-enactment swap that expired or was terminated 
prior to April 25, 2011 shall retain the information and documents 
relating to the terms of the transaction that were possessed by the 
counterparty on or after October 14, 2010 (17 CFR 44.00 through 44.02). 
Such information may be retained in the format in which it existed on or 
after October 14, 2010, or in such other format as the counterparty 
chooses to retain it. This paragraph (b)(1) does not require the 
counterparty to create or retain records of information not in its 
possession on or after October 14, 2010, or to alter the format, i.e., 
the method by which the information is organized and stored.
    (2) Transition swaps expired prior to April 25, 2011. Each 
counterparty to any transition swap that expired or was terminated prior 
to April 25, 2011 shall retain the information and documents relating to 
the terms of the transaction that were possessed by the counterparty on 
or after December 17, 2010 (17 CFR 44.03). Such information may be 
retained in the format in which it existed on or after December 17, 
2010, or in such other format as the counterparty chooses to retain it. 
This paragraph (b)(2) does not require the counterparty to create or 
retain records of information not in its possession on or after December 
17, 2010, or to alter the format, i.e., the method by which the 
information is organized and stored.
    (c) Retention period. All records required to be kept by this 
section shall be kept from the applicable dates specified in paragraphs 
(a) or (b) of this section through the life of the swap, and for a 
period of at least five years from the final termination of the swap.
    (d) Retrieval. Records required to be kept pursuant to this section 
shall be retrievable as follows.
    (1) Retrieval for pre-enactment and transition swaps in existence on 
or after April 25, 2011. Records concerning pre-enactment and transition 
swaps in existence on or after April 25, 2011, shall be retrievable as 
follows:
    (i) Each record required to be kept by a counterparty that is a swap 
dealer or major swap participant shall be readily accessible via real 
time electronic access by the counterparty throughout

[[Page 105]]

the life of the swap and for two years following the final termination 
of the swap, and shall be retrievable by the registrant or its 
affiliates within three business days through the remainder of the 
period following final termination of the swap during which it is 
required to be kept.
    (ii) Each record required to be kept by a non-SD/MSP counterparty 
shall be retrievable by the counterparty within five business days 
throughout the period during which it is required to be kept.
    (2) Retrieval for pre-enactment and transition swaps expired or 
terminated prior to April 25, 2011. Records concerning pre-enactment and 
transition swaps expired or terminated prior to April 25, 2011, shall be 
retrievable by the counterparty within five business days throughout the 
period during which they are required to be kept.
    (e) Inspection. All records required to be kept pursuant to this 
section by any registrant or its affiliates or by any counterparty 
subject to the jurisdiction of the Commission shall be open to 
inspection upon request by any representative of the Commission, the 
United States Department of Justice, or the Securities and Exchange 
Commission, or by any representative of a prudential regulator as 
authorized by the Commission. Copies of all such records shall be 
provided, at the expense of the entity or person required to keep the 
record, to any representative of the Commission upon request. With 
respect to historical swaps in existence on or after April 25, 2011, 
copies of records required to be kept by any swap dealer or major swap 
participant shall be provided either by electronic means, in hard copy, 
or both, as requested by the Commission, with the sole exception that 
copies of records originally created and exclusively maintained in paper 
form may be provided in hard copy only; and copies of records required 
to be kept by any non-SD/MSP counterparty shall be provided in the form, 
whether electronic or paper, in which the records are kept. With respect 
to historical swaps expired or terminated prior to April 25, 2011, 
records shall be provided in the form, whether electronic or paper, in 
which the records are kept.



Sec.  46.3  Swap data reporting for pre-enactment swaps and transition swaps.

    (a) Reporting for pre-enactment and transition swaps in existence on 
or after April 25, 2011--(1) Initial data report. For each pre-enactment 
swap or transition swap in existence on or after April 25, 2011, the 
reporting counterparty shall report electronically to a swap data 
repository (or to the Commission if no swap data repository for swaps in 
the asset class in question is available), on the compliance date, the 
following:
    (i) All of the minimum primary economic terms data specified in 
appendix 1 to this part that were in the possession of the reporting 
counterparty on or after April 25, 2011;
    (ii) The legal entity identifier of the reporting counterparty 
required pursuant to Sec.  46.4; and
    (iii) The following additional identifiers:
    (A) The internal counterparty identifier or legal entity identifier 
used by the reporting counterparty to identify the non-reporting 
counterparty; and
    (B) The internal transaction identifier used by the reporting 
counterparty to identify the swap.
    (2) Reporting of required swap continuation data. (i) For each 
uncleared pre-enactment or transition swap in existence on or after 
April 25, 2011, throughout the existence of the swap following the 
compliance date, the reporting counterparty must report all required 
swap continuation data required to be reported pursuant to part 45 of 
this chapter, with the exception that when a reporting counterparty 
reports changes to minimum primary economic terms for a pre-enactment or 
transition swap, the reporting counterparty is required to report only 
changes to the minimum primary economic terms listed in appendix 1 to 
this part and reported in the initial data report made pursuant to 
paragraph (a)(1) of this section, rather than changes to all minimum 
primary economic terms listed in appendix 1 to part 45.
    (ii) Swap continuation data reporting is not required for a pre-
enactment or transition swap in existence on or after April 25, 2011, 
that has been cleared by a designated clearing organization.

[[Page 106]]

    (3) Data reporting for multi-asset swaps and mixed swaps. (i) For 
each pre-enactment or transition swap in existence on or after April 25, 
2011, that is a multi-asset swap, all data required to be reported by 
this part shall be reported to a single swap data repository that 
accepts swaps in the asset class treated as the primary asset class 
involved in the swap by the reporting counterparty making the first 
report of required swap creation data pursuant to this section.
    (ii) For each pre-enactment or transition swap in existence on or 
after April 25, 2011, that is a mixed swap, all data required to be 
reported pursuant to this part shall be reported to a swap data 
repository registered with the Commission and to a security-based swap 
data repository registered with the Securities and Exchange Commission. 
This requirement may be satisfied by reporting the mixed swap to a swap 
data repository or security-based swap data repository registered with 
both Commissions.
    (b) Reporting for pre-enactment and transition swaps expired or 
terminated prior to April 25, 2011--(1) Pre-enactment swaps expired or 
terminated prior to April 25, 2011. For each pre-enactment swap which 
expired or was terminated prior to April 25, 2011, the reporting 
counterparty shall report to a swap data repository (or to the 
Commission if no swap data repository for swaps in the asset class in 
question is available), on the compliance date, such information 
relating to the terms of the transaction as was in the reporting 
counterparty's possession on or after October 14, 2010 (17 CFR 44.00 
through 44.02). This information may be reported via any method selected 
by the reporting counterparty.
    (2) Transition swaps expired or terminated prior to April 25, 2011. 
For each transition swap which expired or was terminated prior to April 
25, 2011, the reporting counterparty shall report to a swap data 
repository (or to the Commission if no swap data repository for swaps in 
the asset class in question is available), on the compliance date, such 
information relating to the terms of the transaction as was in the 
reporting counterparty's possession on or after December 17, 2010 (17 
CFR 44.03). This information may be reported via any method selected by 
the reporting counterparty.
    (c) Voluntary early submission of initial data report. For all pre-
enactment and transition swaps required to be reported pursuant to this 
part, the reporting counterparty may make the initial data report 
required by paragraph (a)(1) of this section, or the data report 
required by paragraph (b) of this section, prior to the applicable 
compliance date, if a swap data repository accepting swaps in the asset 
class in question is prepared to accept the report. The obligation to 
report continuation data as required by paragraph (a)(2) of this section 
with respect to a swap for which a voluntary early submission is made 
commences on the applicable compliance date. However, the reporting 
counterparty may submit continuation data at any time after a voluntary 
early submission made pursuant to this paragraph, if the swap data 
repository is prepared to accept such continuation data, and if that 
repository has registered with the Commission as a swap data repository 
as of the applicable compliance date.
    (d) Non-duplication of previous reporting. If the reporting 
counterparty for a pre-enactment or transition swap has reported any of 
the information required as paragraphs (a) or (b) of this section to a 
trade repository prior to the compliance date, and if as of the 
compliance date that repository has registered with the Commission as a 
swap data repository, then:
    (1) The counterparty shall not be required to report such previously 
reported information to the swap data repository again;
    (2) The counterparty shall be required to report to the swap data 
repository on the compliance date any information required as part of 
the initial data report by paragraph (a) of this section that has not 
been reported prior to the compliance date: and
    (3) In the case of pre-enactment and transition swaps in existence 
on or after April 25, 2011, the initial data report required by 
paragraph (a) of this section and all subsequent data reporting 
concerning the swap shall be made to the same swap data repository to 
which data concerning the swap was

[[Page 107]]

first reported prior to the compliance date (or to its successor in the 
event that it ceases to operate, as provided in part 49 of this 
chapter).



Sec.  46.4  Unique identifiers.

    The unique identifier requirements for swap data reporting with 
respect to pre-enactment or transition swaps shall be as follows:
    (a) By the compliance date, the reporting counterparty (as defined 
by part 45 of this chapter) for each pre-enactment or transition swap in 
existence on or after April 25, 2011, for which an initial data report 
is required by this part 46, shall obtain for itself a legal entity 
identifier as provided in Sec.  45.6 of this chapter (or if the 
Commission has not yet designated a legal entity identifier system, a 
substitute counterparty identifier as provided in Sec.  45.6(f) of this 
chapter), and shall include its own legal entity identifier (or 
substitute counterparty identifier) in the initial data report 
concerning the swap. With respect to the legal entity identifier (or 
substitute counterparty identifier) of the reporting counterparty, the 
reporting counterparty and the swap data repository to which the swap is 
reported shall comply thereafter with all unique identifier requirements 
of Sec.  45.6 of this chapter.
    (b) Within 180 days after the compliance date, the non-reporting 
counterparty for each pre-enactment or transition swap in existence on 
or after April 25, 2011, for which an initial data report is required by 
this part 46, shall obtain a legal entity identifier as provided in 
Sec.  45.6 of this chapter (or if the Commission has not yet designated 
a legal entity identifier system, a substitute counterparty identifier 
as provided in Sec.  45.6(f) of this chapter), and shall provide its 
legal entity identifier (or substitute counterparty identifier) to the 
reporting counterparty. Upon receipt of the non-reporting counterparty's 
legal entity identifier (or substitute counterparty identifier), the 
reporting counterparty shall provide it to the swap data repository to 
which swap data for the swap was reported. Thereafter, with respect to 
the legal entity identifier (or substitute counterparty identifier) of 
the non-reporting counterparty, the counterparties to the swap and the 
swap data repository to which it is reported shall comply with all 
requirements of Sec.  45.6 of this chapter.
    (c) The legal entity identifier requirements of parts 46 and 45 of 
this chapter shall not apply to pre-enactment or transition swaps 
expired or terminated prior to April 25, 2011.
    (d) The unique swap identifier and unique product identifier 
requirements of part 45 of this chapter shall not apply to pre-enactment 
or transition swaps.



Sec.  46.5  Determination of which counterparty must report.

    (a) Determination of which counterparty must report swap data 
concerning each pre-enactment or transition swap shall be made as 
follows:
    (1) If only one counterparty is a swap dealer, the swap dealer shall 
fulfill all counterparty reporting obligations.
    (2) If neither party is an swap dealer, and only one counterparty is 
an major swap participant, the major swap participant shall fulfill all 
counterparty reporting obligations.
    (3) If both counterparties are non-SD/MSP counterparties, and only 
one counterparty is a financial entity as defined in CEA section 
2(h)(7)(C), the counterparty that is a financial entity shall be the 
reporting counterparty.
    (4) For each pre-enactment swap or transition swap for which both 
counterparties are swap dealers, or both counterparties are major swap 
participants, or both counterparties are non-SD/MSP counterparties that 
are financial entities as defined in CEA section 2(h)(7)(C), or both 
counterparties are non-SD/MSP counterparties and neither counterparty is 
a financial entity as defined in CEA section 2(h)(7)(C), the 
counterparties shall agree which counterparty shall fulfill reporting 
obligations with respect to that swap; and the counterparty so selected 
shall fulfill all counterparty reporting obligations.
    (5) Notwithstanding the provisions of paragraphs (a)(1) through (3) 
of this section, for pre-enactment or transition swaps for which both 
counterparties are non-SD/MSP counterparties, if

[[Page 108]]

only one counterparty is a U.S. person, that counterparty shall be the 
reporting counterparty and shall fulfill all counterparty reporting 
obligations.
    (b) For pre-enactment and transition swaps in existence as of the 
compliance date, determination of the reporting counterparty shall be 
made by applying the provisions of paragraph (a) of this section with 
respect to the current counterparties to the swap as of the compliance 
date, regardless of whether either or both were original counterparties 
to the swap when it was first executed.
    (c) For pre-enactment and transition swaps for which reporting is 
required, but which have expired or been terminated prior to the 
compliance date, determination of the reporting counterparty shall be 
made by applying the provisions of paragraph (a) of this section to the 
counterparties to the swap as of the date of its expiration or 
termination (except for determination of a counterparty's status as an 
SD or MSP, which shall be made as of the compliance date), regardless of 
whether either or both were original counterparties to the swap when it 
was first executed.
    (d) After the initial report required by Sec.  46.3 is made, if a 
reporting counterparty selected pursuant to this section ceases to be a 
counterparty to a swap due to an assignment or novation, the reporting 
counterparty for reporting of required swap continuation data following 
the assignment or novation shall be selected from the two current 
counterparties as provided in paragraphs (d)(1) through (4) of this 
section.
    (1) If only one counterparty is a swap dealer, the swap dealer shall 
be the reporting counterparty and shall fulfill all counterparty 
reporting obligations.
    (2) If neither counterparty is a swap dealer, and only one 
counterparty is a major swap participant, the major swap participant 
shall be the reporting counterparty and shall fulfill all counterparty 
reporting obligations.
    (3) If both counterparties are non-SD/MSP counterparties, and only 
one counterparty is a U.S. person, that counterparty shall be the 
reporting counterparty and shall fulfill all counterparty reporting 
obligations.
    (4) In all other cases, the counterparty that replaced the previous 
reporting counterparty by reason of the assignment or novation shall be 
the reporting counterparty, unless otherwise agreed by the 
counterparties.



Sec.  46.6  Third-party facilitation of data reporting.

    Counterparties required by this part 46 to report swap data for any 
pre-enactment or transition swap, while remaining fully responsible for 
reporting as required by this part 46, may contract with third-party 
service providers to facilitate reporting.



Sec.  46.7  Reporting to a single swap data repository.

    All data reported for each pre-enactment or transition swap pursuant 
to this part 46, and all corrections of errors and omissions in 
previously reported data for the swap, shall be reported to the same 
swap data repository to which the initial data report concerning the 
swap is made (or to its successor in the event that it ceases to 
operate, as provided in part 49 of this chapter).



Sec.  46.8  Data reporting for swaps in a swap asset class not accepted by
any swap data repository.

    (a) Should there be a swap asset class for which no swap data 
repository registered with the Commission currently accepts swap data, 
each registered entity or counterparty required by this part to report 
any required swap creation data or required swap continuation data with 
respect to a swap in that asset class must report that same data to the 
Commission.
    (b) Data reported to the Commission pursuant to this section shall 
be reported at times announced by the Commission. Data reported to the 
Commission pursuant to this section with respect to pre-enactment and 
transition swaps in existence on or after April 25, 2011 shall be 
reported in an electronic format acceptable to the Commission.
    (c) Delegation of authority to the Chief Information Officer: The 
Commission hereby delegates to its Chief Information Officer, until the 
Commission orders otherwise, the authority

[[Page 109]]

set forth in paragraph (c) of this section, to be exercised by the Chief 
Information Officer or by such other employee or employees of the 
Commission as may be designated from time to time by the Chief 
Information Officer. The Chief Information Officer may submit to the 
Commission for its consideration any matter which has been delegated in 
this paragraph. Nothing in this paragraph prohibits the Commission, at 
its election, from exercising the authority delegated in this paragraph. 
The authority delegated to the Chief Information Officer by paragraph 
(c) of this section shall include:
    (1) With respect to all pre-enactment and transition swaps required 
to be reported by this part, the authority to determine the dates and 
times at which data concerning such swaps shall be reported pursuant to 
this part.
    (2) With respect to all pre-enactment swaps or transition swaps in 
existence on or after April 25, 2011:
    (i) The authority to determine the manner, format, coding structure, 
and electronic data transmission standards and procedures acceptable to 
the Commission for the purposes of paragraphs (a) and (b) of this 
section; and
    (ii) The authority to determine whether the Commission may permit or 
require use by reporting entities or counterparties in reporting pre-
enactment or transition swaps in existence on or after April 25, 2011, 
of one or more particular data standards (such as FIX, FpML, ISO 20022, 
or some other standard), in order to accommodate the needs of different 
communities of users.
    (d) The Chief Information Officer shall publish from time to time in 
the Federal Register and on the Web site of the Commission the dates and 
times, format, data schema, and electronic data transmission methods and 
procedures for reporting acceptable to the Commission with respect to 
swap data reporting pursuant to this section.



Sec.  46.9  Voluntary supplemental reporting.

    (a) For purposes of this section, the term voluntary, supplemental 
report means any report of swap data for a pre-enactment or transition 
swap to a swap data repository that is not required to be made pursuant 
to this part or any other part in this chapter.
    (b) A voluntary, supplemental report for a pre-enactment or 
transition swap may be made only by a counterparty to the swap in 
connection with which the voluntary, supplemental report is made, or by 
a third-party service provider acting on behalf of a counterparty to the 
swap.
    (c) A voluntary, supplemental report for a pre-enactment or 
transition swap may be made only after the initial data report for the 
swap required by section 46.3(a) or the report required by section 
46.3(b), as applicable, has been made.
    (d) A voluntary, supplemental report for a pre-enactment or 
transition swap may be made either to the swap data repository to which 
the initial data report for the swap required by section 46.3(a) or the 
report required by section 46.3(b), as applicable, has been made, or to 
a different swap data repository.
    (e) A voluntary, supplemental report for a pre-enactment or 
transition swap must contain:
    (1) An indication that the report is a voluntary, supplemental 
report.
    (2) The swap data repository identifier created for the swap by the 
automated systems of the swap data repository to which the initial data 
report required by section 46.3(a) or the report required by section 
46.3(b), as applicable, has been made.
    (3) An indication of the identity of the swap data repository to 
which the initial data report required by section 46.3(a) or the report 
required by section 46.3(b), as applicable, has been made, if the 
voluntary supplemental report is made to a different swap data 
repository.
    (4) If the pre-enactment or transition swap was in existence on or 
after April 25, 2011, the legal entity identifier (or substitute 
identifier) of the counterparty making the voluntary, supplemental 
report.
    (5) If applicable, an indication that the voluntary, supplemental 
report is made pursuant to the laws or regulations of any jurisdiction 
outside the United States.
    (f) If a counterparty that has made a voluntary, supplemental report 
discovers any errors in the swap data included in the voluntary, 
supplemental

[[Page 110]]

report, the counterparty must report a correction of each such error to 
the swap data repository to which the voluntary, supplemental report was 
made, as soon as technologically practicable after discovery of any such 
error.



Sec.  46.10  Required data standards.

    In reporting swap data to a swap data repository as required by this 
part 46, each reporting counterparty shall use the facilities, methods, 
or data standards provided or required by the swap data repository to 
which counterparty reports the data.



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

    (a) Each swap counterparty required by this part 46 to report swap 
data shall report any errors and omissions in the data so reported. 
Corrections of errors or omissions shall be reported as soon as 
technologically practicable after discovery of any such error or 
omission.
    (b) For pre-enactment or transition swaps for which this part 
requires reporting of continuation data, reporting counterparties 
reporting state data as provided in part 45 of this chapter may fulfill 
the requirement to report errors or omissions by making appropriate 
corrections in their next daily report of state data pursuant to part 45 
of this chapter.
    (c) Each counterparty to a pre-enactment or transition swap that is 
not the reporting counterparty as determined pursuant to Sec.  46.5, and 
that discovers any error or omission with respect to any swap data 
reported to a swap data repository for that swap, shall promptly notify 
the reporting counterparty of each such error or omission. As soon as 
technologically practicable after receiving such notice, the reporting 
counterparty shall report a correction of each such error or omission to 
the swap data repository.
    (d) Each swap counterparty reporting corrections to errors or 
omissions in data previously reported as required by this part shall 
report such corrections in the same format as it reported the erroneous 
or omitted data.

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  Sec. Appendix 1 to Part 46--Tables of Minimum Primary Economic Terms 
               Data For Pre-Enactment and Transition Swaps
               
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PART 48_REGISTRATION OF FOREIGN BOARDS OF TRADE--Table of Contents



Sec.
48.1 Scope.
48.2 Definitions.
48.3 Registration required.
48.4 Registration eligibility and scope.
48.5 Registration procedures.
48.6 Foreign boards of trade providing direct access pursuant to 
          existing no-action relief.
48.7 Requirements for registration.
48.8 Conditions of registration.
48.9 Revocation of registration.
48.10 Additional contracts.

Appendix to Part 48--Form FBOT

    Authority: 7 U.S.C. 5, 6 and 12a, unless otherwise noted.

    Source: 76 FR 80698, Dec. 23, 2011, unless otherwise noted.



Sec.  48.1  Scope.

    The provisions of this part apply to any foreign board of trade that 
is registered, required to be registered, or applying to become 
registered with the Commission in order to provide its identified 
members or other participants located in the United States with direct 
access to its electronic trading and order matching system.



Sec.  48.2  Definitions.

    For purposes of this part:
    (a) Foreign board of trade. Foreign board of trade means any board 
of trade, exchange or market located outside the United States, its 
territories or possessions, whether incorporated or unincorporated.
    (b) Foreign board of trade eligible to be registered. A foreign 
board of trade eligible to be registered means a foreign board of trade 
that satisfies the requirements for registration specified in Sec.  48.7 
and:
    (1) Possesses the attributes of an established, organized exchange,

[[Page 120]]

    (2) Adheres to appropriate rules prohibiting abusive trading 
practices,
    (3) Enforces appropriate rules to maintain market and financial 
integrity,
    (4) Has been authorized by a regulatory process that examines 
customer and market protections, and
    (5) Is subject to continued oversight by a regulator that has power 
to intervene in the market and the authority to share information with 
the Commission.
    (c) Direct access. Direct access means an explicit grant of 
authority by a foreign board of trade to an identified member or other 
participant located in the United States to enter trades directly into 
the trade matching system of the foreign board of trade.
    (d) Linked contract. Linked contract means a futures, option or swap 
contract that is made available for trading by direct access by a 
registered foreign board of trade that settles against any price 
(including the daily or final settlement price) of one or more contracts 
listed for trading on a registered entity as defined in section 1a(40) 
of the Act.
    (e) Communications. Communications means any written or electronic 
documentation or correspondence issued by or on behalf of the 
Commission, the United States Department of Justice, or the National 
Futures Association.
    (f) Material change. Material change means a material change in the 
information provided to the Commission in support of an application for 
registration under this part. Subsequent to registration, material 
change also includes a material change in the operations of the foreign 
board of trade or its clearing organization and, without limitation, a 
change in any of the following: The membership or participant criteria 
of the foreign board of trade or its clearing organization; the location 
of the management, personnel or operations of the foreign board of trade 
or its clearing organization; the structure, nature, or operation of the 
trading or clearing systems; the regulatory or self-regulatory regime 
applicable to the foreign board of trade, its clearing organization, or 
their respective members and other participants; the authorization, 
licensure, registration or recognition of the foreign board of trade or 
clearing organization; and the ability of the clearing organization to 
observe the Recommendations for Central Counterparties.
    (g) Clearing organization. Clearing organization means the foreign 
board of trade, affiliate of the foreign board of trade or any third 
party clearing house, clearing association, clearing corporation or 
similar entity, facility or organization that, with respect to any 
agreement, contract or transaction executed on or through the foreign 
board of trade, would be:
    (1) Defined as a derivatives clearing organization under section 
1a(15) of the Act; or
    (2) Defined as a central counterparty by the Recommendations for 
Central Counterparties.
    (h) Existing no-action relief. Existing no-action relief means a no-
action letter issued by a division of the Commission to the foreign 
board of trade in which the division informs the foreign board of trade 
that it will not recommend that the Commission institute enforcement 
action against the foreign board of trade if the foreign board of trade 
does not seek designation as either a designated contract market 
pursuant to section 5 of the Act or a derivatives transaction execution 
facility pursuant to section 5a of the Act in connection with the 
granting of direct access.
    (i) Swap. Swap means a swap as defined in section 1a(47) of the Act 
and any Commission regulation further defining the term adopted 
thereunder.
    (j) Recommendations for Central Counterparties. Recommendations for 
Central Counterparties means:
    (1) The current Recommendations for Central Counterparties issued 
jointly by the Committee on Payment and Settlement Systems and the 
Technical Committee of the International Organization of Securities 
Commissions as updated, revised or otherwise amended; or
    (2) Successor standards, principles and guidance for central 
counterparties or financial market infrastructures adopted jointly by 
the Technical Committee of the International Organization of Securities 
Commissions and the Committee on Payment and Settlement Systems.

[[Page 121]]

    (k) Affiliate. An affiliate of a registered foreign board of trade 
member or other participant means any person, as that term is defined in 
section 1a(38) of the Act, that:
    (1) Owns 50% or more of the member or other participant;
    (2) Is owned 50% or more by the member or other participant; or
    (3) Is owned 50% or more by a third person that also owns 50% or 
more of the member or other participant.
    (l) Member or other participant. Member or other participant means a 
member or other participant of a foreign board of trade that is 
registered under this part and any affiliate thereof that has been 
granted direct access by the foreign board of trade.



Sec.  48.3  Registration required.

    (a) Except as specified in this part, it shall be unlawful for a 
foreign board of trade to permit direct access to its electronic trading 
and order matching system unless and until the Commission has issued a 
valid and current Order of Registration to the foreign board of trade 
pursuant to the provisions of this part.
    (b) It shall be unlawful for a foreign board of trade or the 
clearing organization to make false or misleading statements in or in 
connection with any application for registration under this part.



Sec.  48.4  Registration eligibility and scope.

    (a) Only foreign boards of trade eligible to be registered, as 
defined in Sec.  48.2(b) of this part, are eligible for registration 
with the Commission pursuant to this part.
    (b) A foreign board of trade may apply for registration under this 
part in order to permit the members and other participants of the 
foreign board of trade that are located in the United States to enter 
trades directly into the trading and order matching system of the 
foreign board of trade, to the extent that such members or other 
participants are:
    (1) Entering orders for the member's or other participant's 
proprietary accounts;
    (2) Registered with the Commission as futures commission merchants 
and are submitting customer orders to the trading system for execution; 
or
    (3) Registered with the Commission as a commodity pool operator or 
commodity trading advisor, or are exempt from such registration pursuant 
to Sec.  4.13 or Sec.  4.14 of this chapter, and are submitting orders 
for execution on behalf of a United States pool that the member or other 
participant operates or an account of a United States customer for which 
the member or other participant has discretionary authority, 
respectively, provided that a futures commission merchant or a firm 
exempt from such registration pursuant to Sec.  30.10 of this chapter 
acts as clearing firm and guarantees, without limitation, all such 
trades of the commodity pool operator or commodity trading advisor 
effected through submission of orders to the trading system.



Sec.  48.5  Registration procedures.

    (a) A foreign board of trade seeking registration with the 
Commission pursuant to this part must electronically file an application 
for registration with the Secretary of the Commission at its Washington 
DC headquarters at [email protected]
    (b) A complete application for registration must include:
    (1) A completed Form FBOT and Form Supplement S-1, as set forth in 
the appendix to this part, or any successor forms, and all information 
and documentation described in such forms; and
    (2) Any additional information and documentation necessary, in the 
discretion of the Commission, to supplement the application including, 
but not limited to, documentation and information provided during the 
course of an on-site visit, as applicable, to the foreign board of 
trade, the clearing organization and the regulatory authority or 
authorities, to effectively demonstrate that the foreign board of trade 
and its clearing organization satisfy the registration requirements set 
forth in Sec.  48.7.
    (c) An applicant for registration must identify with particularity 
any information in the application that will be subject to a request for 
confidential treatment and must provide

[[Page 122]]

support for any request for confidential treatment pursuant to the 
procedures set forth in Sec.  145.9 of this chapter.
    (d) If, upon review, the Commission finds the application for 
registration to be complete, the Commission may approve or deny the 
application. In reviewing the application, the Commission will consider, 
among other things:
    (1) Whether the foreign board of trade is eligible to be registered 
as defined in Sec.  48.2(b) and;
    (2) Whether the foreign board of trade and its clearing organization 
are subject to comprehensive supervision and regulation by the 
appropriate governmental authorities in their home country or countries 
that is comparable to the comprehensive supervision and regulation to 
which designated contract markets and derivatives clearing organizations 
are respectively subject under the Act, Commission regulations, and 
other applicable United States laws and regulations, if any, and;
    (3) Any previous Commission findings that the foreign board of trade 
and its clearing organization are subject to comprehensive supervision 
and regulation by the appropriate government authorities in their home 
country or countries that is comparable to the comprehensive supervision 
and regulation to which designated contract markets and derivatives 
clearing organizations are subject under the Act, Commission 
regulations, and other applicable United States laws and regulations, if 
any; and
    (4) Whether the foreign board of trade and its clearing organization 
have adequately demonstrated that they meet the requirements for 
registration specified in Sec.  48.7.
    (5) The Commission's determination that the foreign board of trade 
and its clearing organization are subject to comprehensive supervision 
and regulation by the appropriate government authorities in their home 
country or countries that is comparable to the comprehensive supervision 
and regulation to which designated contract markets and derivatives 
clearing organizations are subject will be based upon a principles-based 
review conducted in a manner consistent with this part 48 pursuant to 
which the Commission will look to determine if the government 
authorities support and enforce regulatory objectives in the oversight 
of the foreign board of trade and the clearing organization that are 
substantially equivalent to the regulatory objectives supported and 
enforced by the Commission in its oversight of designated contract 
markets and derivatives clearing organizations.
    (e) If the Commission approves the application, the Commission will 
issue an Order of Registration. If the Commission does not approve the 
application, the Commission will, after appropriate notice and an 
opportunity to respond, issue a Notice of Action specifying that the 
application was not approved and setting forth the reasons therefor. The 
Commission, in its discretion, may impose conditions in the Order of 
Registration and may, after appropriate notice and an opportunity to 
respond, amend, suspend, or otherwise restrict the terms of an issued 
Order of Registration or issue an Order revoking registration.
    (f) A foreign board of trade whose application is not approved may 
reapply for registration 360 days after the issuance of the Notice of 
Action if the foreign board of trade has addressed any deficiencies in 
its original application or facts and circumstances relevant to the 
Commission's review of the application have changed.



Sec.  48.6  Foreign boards of trade providing direct access pursuant 
to existing no-action relief.

    (a) A foreign board of trade operating pursuant to existing no-
action relief as of the effective date of this part 48 must register 
with the Commission pursuant to this part in order to continue to 
provide direct access to its electronic trading and order matching 
system from the United States.
    (b)(1) The application of a foreign board of trade operating 
pursuant to existing no-action relief must include a complete Form FBOT 
and Supplement S-1, as set forth in the appendix to this part. If the 
foreign board of trade, as part of its application for registration, 
wishes to rely on information and documentation previously submitted 
electronically in connection with its request for no-action relief in 
order to

[[Page 123]]

demonstrate that it satisfies the registration requirements set forth in 
Sec.  48.7, (limited application) the foreign board of trade must:
    (i) Specifically identify the information or documentation 
previously submitted;
    (ii) Identify the specific registration requirements set forth in 
Sec.  48.7 that are satisfied by such information or documentation; and
    (iii) Certify that the information remains accurate and current.
    (2) If the foreign board of trade wishes to rely on information and 
documentation previously submitted in hard copy in connection with its 
application for no-action relief, the foreign board of trade must also 
resubmit the identified information or documentation. A foreign board of 
trade that has submitted a complete application for no-action relief 
that is pending as of February 21, 2012 may also apply for registration 
pursuant to these limited application procedures.
    (c) A foreign board of trade operating pursuant to existing no-
action relief must submit a limited application for registration, 
determined in good faith by the applicant to be complete, within 180 
days of February 21, 2012. If, at any time after August 20, 2012 but 
before a limited application is approved or disapproved, the Commission 
determines that the application is materially incomplete, the Commission 
may, after providing the foreign board of trade with notice and an 
opportunity to respond to the determination of incompleteness, withdraw 
the existing no-action relief if the Commission determines that the 
application cannot be made complete in a timely manner. The foreign 
board of trade may continue to operate pursuant to the existing no-
action relief, subject to the terms and conditions contained therein, 
August 20, 2012, while the Commission is reviewing its application, and 
until the Commission approves or disapproves the application or 
otherwise withdraws the existing no-action relief. The no-action relief 
is automatically withdrawn upon issuance of an Order of Registration or 
upon disapproval.



Sec.  48.7  Requirements for registration.

    An applicant for registration must demonstrate that it and, where 
applicable, its clearing organization meet the following requirements. 
The registration requirements applicable to clearing organizations may 
alternatively be met by demonstrating that the clearing organization is 
registered and in good standing with the Commission as a derivatives 
clearing organization. The Commission, in its discretion, may request 
additional information and documentation in connection with an 
application for registration and an applicant for registration must 
provide promptly any such additional information or documentation. The 
Commission, in its discretion, also may impose additional registration 
requirements that the Commission deems necessary after appropriate 
notice and opportunity to respond.
    (a) Foreign Board of Trade and Clearing Membership:
    (1) The members and other participants of the foreign board of trade 
and its clearing organization are fit and proper and meet appropriate 
financial and professional standards;
    (2) The foreign board of trade and its clearing organization have 
and enforce provisions to minimize and resolve conflicts of interest; 
and
    (3) The foreign board of trade and its clearing organization have 
and enforce rules prohibiting the disclosure, both during and subsequent 
to service on a board or committee, of material non-public information 
obtained as a result of a member's or other participant's performance of 
duties as a member of their respective governing boards and significant 
committees.
    (b) The Automated Trading System:
    (1) The trading system complies with Principles for the Oversight of 
Screen-Based Trading Systems for Derivative Products developed by the 
Technical Committee of the International Organization of Securities 
Commissions,
    (2) The trade matching algorithm matches trades fairly and timely,
    (3) The audit trail captures all relevant data, including changes to 
orders, and audit trail data is securely maintained and available for an 
adequate time period,

[[Page 124]]

    (4) Adequate and appropriate trade data is made available to users 
and the public,
    (5) The trading system has demonstrated reliability,
    (6) Access to the trading system is secure and protected,
    (7) There are adequate provisions for emergency operations and 
disaster recovery,
    (8) Trading data is backed up to prevent loss of data, and
    (9) Only those futures, option or swap contracts that have been 
identified to the Commission in the foreign board of trade's application 
for registration or permitted to be made available for trading by direct 
access pursuant to the procedures set forth in Sec.  48.10 of this part 
are made available for trading by direct access.
    (c) Terms and Conditions of Contracts to Be Made Available in the 
United States.
    (1) Contracts must meet the following standards:
    (i) Contracts must be futures, option or swap contracts that would 
be eligible to be traded on a designated contract market;
    (ii) Contracts must be cleared;
    (iii) Contracts must not be prohibited from being traded by United 
States persons; and
    (iv) Contracts must not be readily susceptible to manipulation.
    (2) Foreign futures and option contracts on non-narrow-based 
security indexes must have been certified by the Commission pursuant to 
the procedures set forth in Sec.  30.13 of this chapter.
    (3) Contracts that have the following characteristics must be 
specifically identified as having such characteristics:
    (i) Contracts that are linked to a contract listed for trading on a 
registered entity as defined in section 1a(40) of the Act, and
    (ii) Contracts that have any other relationship with a contract 
listed for trading on a registered entity (for example, if both the 
foreign board of trade's and the registered entity's contract settle to 
the price of the same third party-constructed index).
    (d) Settlement and Clearing:
    (1) The clearing organization observes the Recommendations for 
Central Counterparties or is registered with the Commission as a 
derivatives clearing organization, and
    (2) The clearing organization is in good regulatory standing in its 
home country jurisdiction.
    (e) The Regulatory Regimes Governing the Foreign Board of Trade and 
the Clearing Organization:
    (1) The regulatory authorities provide comprehensive supervision and 
regulation of the foreign board of trade, the clearing organization, and 
the type of contracts to be made available through direct access that is 
comparable to the comprehensive supervision and regulation provided by 
the Commission to designated contract markets, derivatives clearing 
organizations and such contracts. That is, the regulatory authorities 
support and enforce regulatory objectives in the oversight of the 
foreign board of trade, clearing organization and the type of contracts 
that the foreign board of trade wishes to make available through direct 
access that are substantially equivalent to the regulatory objectives 
supported and enforced by the Commission in its oversight of designated 
contract markets, derivatives clearing organizations, and such products.
    (2) The regulatory authorities engage in ongoing regulatory 
supervision and oversight of the foreign board of trade and its trading 
system, the clearing organization and its clearing system, and the 
members, intermediaries and other participants of the foreign board of 
trade and clearing organization, with respect to, among other things, 
market integrity, customer protection, clearing and settlement and the 
enforcement of the rules of the foreign board of trade and the clearing 
organization.
    (3) The regulatory authorities have the power to share information 
directly with the Commission, upon request, including information 
necessary to evaluate the continued eligibility of the foreign board of 
trade for registration and to audit for compliance with the terms and 
conditions of the registration.
    (4) The regulatory authorities have the power to intervene in the 
market.
    (f) The Rules of the Foreign Board of Trade and the Clearing 
Organization and Enforcement Thereof:

[[Page 125]]

    (1) The foreign board of trade and its clearing organization have 
implemented and enforce rules to ensure compliance with the requirements 
of registration contained in this part;
    (2) The foreign board of trade and its clearing organization have 
the capacity to detect, investigate, and sanction persons who violate 
their respective rules;
    (3) The foreign board of trade and the clearing organization (or 
their respective regulatory authorities) have implemented and enforce 
disciplinary procedures that empower them to recommend and prosecute 
disciplinary actions for suspected rule violations, impose adequate 
sanctions for such violations, and provide adequate protections to 
charged parties pursuant to fair and clear standards;
    (4) The foreign board of trade and its clearing organization are 
authorized by rule or by contractual agreement to obtain, from members 
and other participants, any information and cooperation necessary to 
conduct investigations, to effectively enforce their respective rules, 
and to ensure compliance with the conditions of registration;
    (5) The foreign board of trade and its clearing organization have 
sufficient compliance staff and resources, including by delegation and/
or outsourcing to a third party, to fulfill their respective regulatory 
responsibilities, including appropriate trade practice surveillance, 
real time market monitoring, market surveillance, financial 
surveillance, protection of customer funds, enforcement of clearing and 
settlement provisions and other compliance and regulatory 
responsibilities;
    (6) The foreign board of trade has implemented and enforces rules 
with respect to access to the trading system and the means by which the 
connection thereto is accomplished;
    (7) The foreign board of trade's audit trail captures and retains 
sufficient order and trade-related data to allow its compliance staff to 
detect trading and market abuses and to reconstruct all transactions 
within a reasonable period of time;
    (8) The foreign board of trade has implemented and enforces rules 
prohibiting fraud and abusive trading practices including, but not 
limited to, wash sales and trading ahead;
    (9) The foreign board of trade has the capacity to detect and deter, 
and has implemented and enforces rules relating to, market manipulation, 
attempted manipulation, price distortion, and other disruptions of the 
market; and
    (10) The foreign board of trade has and enforces rules and 
procedures that ensure a competitive, open and efficient market and 
mechanism for executing transactions.
    (g) Information Sharing:
    (1) The regulatory authorities governing the activities of the 
foreign board of trade and the clearing organization are signatories to 
the International Organization of Securities Commissions Multilateral 
Memorandum of Understanding, or otherwise ensure that substitute 
information sharing arrangements that are satisfactory to the Commission 
are in place;
    (2) The regulatory authorities governing the activities of the 
foreign board of trade and the clearing organization are signatories to 
the Declaration on Cooperation and Supervision of International Futures 
Exchanges and Clearing Organizations or otherwise commit, in writing, to 
share the types of information contemplated by the International 
Information Sharing Memorandum of Understanding and Agreement with the 
Commission;
    (3) The foreign board of trade has executed the International 
Information Sharing Memorandum of Understanding and Agreement; and
    (4) Pursuant to the conditions described in Sec.  48.8(a)(6), the 
foreign board of trade and clearing organization agree to provide 
directly to the Commission, upon request, any information necessary, in 
the discretion of the Commission, to evaluate the continued eligibility 
and appropriateness of the foreign board of trade and the clearing 
organization, or their respective members or other participants for 
registration, to audit for and enforce compliance with the requirements 
and conditions of the registration, or to enable the Commission to carry 
out its duties under the Act and Commission regulations.

[[Page 126]]



Sec.  48.8  Conditions of registration.

    Upon registration under this part, and on an ongoing basis 
thereafter, the foreign board of trade and the clearing organization 
shall comply with the applicable conditions of registration set forth in 
this section and any additional conditions that the Commission deems 
necessary and may impose, in its discretion, and after appropriate 
notice and opportunity to respond. Such conditions could include, but 
are not limited to, additional conditions applicable to the listing of 
swap contracts. Continued registration is expressly conditioned upon 
satisfaction of these conditions.
    (a) Specified Conditions for Maintaining Registration
    (1) Registration Requirements: The foreign board of trade and its 
clearing organization shall continue to satisfy all of the requirements 
for registration set forth in Sec.  48.7.
    (2) Regulatory Regime:
    (i) The foreign board of trade will continue to satisfy the criteria 
for a regulated market or licensed exchange pursuant to the regulatory 
regime described in its application and will continue to be subject to 
oversight by the regulatory authorities described in its application.
    (ii) The clearing organization will continue to satisfy the criteria 
for a regulated clearing organization pursuant to the regulatory regime 
described in the application for registration and will continue to be in 
good standing with the relevant regulatory authority.
    (iii) The laws, systems, rules, and compliance mechanisms of the 
regulatory regime applicable to the foreign board of trade will continue 
to require the foreign board of trade to maintain fair and orderly 
markets; prohibit fraud, abuse, and market manipulation and other 
disruptions of the market; and provide that such requirements are 
subject to the oversight of appropriate regulatory authorities.
    (3) Satisfaction of International Standards:
    (i) The foreign board of trade will continue to comply with the 
Principles for the Oversight of Screen-Based Trading Systems for 
Derivative Products developed by the Technical Committee of the 
International Organization of Securities Commissions, as updated, 
revised, or otherwise amended, to the extent such principles do not 
contravene United States law.
    (ii) The clearing organization will continue to:
    (A) Be registered with the Commission as a derivatives clearing 
organization and be in compliance with the laws and regulations related 
thereto; or
    (B) Observe the Recommendations for Central Counterparties.
    (4) Restrictions on Direct Access:
    (i) Only the foreign board of trade's identified members or other 
participants will have direct access to the foreign board of trade's 
trading system from the United States and the foreign board of trade 
will not provide, and will take reasonable steps to prevent, third 
parties from providing direct access to persons other than the 
identified members or other participants.
    (ii) All orders that are transmitted to the foreign board of trade's 
trading system by a foreign board of trade's identified member or other 
participant that is operating pursuant to the foreign board of trade's 
registration will be solely for the member's or trading participant's 
own account unless such member or other participant is registered with 
the Commission as a futures commission merchant or such member or other 
participant is registered with the Commission as a commodity pool 
operator or commodity trading advisor, or is exempt from such 
registration pursuant to Sec.  4.13 or Sec.  4.14 of this chapter, 
provided that a futures commission merchant or a firm exempt from such 
registration pursuant to Sec.  30.10 of this chapter acts as clearing 
firm and guarantees, without limitation, all such trades of the 
commodity pool operator or commodity trading advisor effected through 
submission of orders on the trading system.
    (5) Submission to Commission Jurisdiction:
    (i) Prior to operating pursuant to registration under this part and 
on a continuing basis thereafter, a registered foreign board of trade 
will require that each current and prospective member or other 
participant that is granted direct access to the foreign board of 
trade's trading system and

[[Page 127]]

that is not registered with the Commission as a futures commission 
merchant, a commodity trading advisor or a commodity pool operator, file 
with the foreign board of trade a written representation, executed by a 
person with the authority to bind the member or other participant, 
stating that as long as the member or other participant is authorized to 
enter orders directly into the trade matching system of the foreign 
board of trade, the member or other participant agrees to and submits to 
the jurisdiction of the Commission with respect to activities conducted 
pursuant to the registration.
    (ii) The foreign board of trade and its clearing organization will 
file with the Commission a valid and binding appointment of an agent for 
service of process in the United States pursuant to which the agent is 
authorized to accept delivery and service of communications, as defined 
in Sec.  48.2(e) issued by or on behalf of the Commission, the United 
States Department of Justice, or the National Futures Association.
    (iii) The foreign board of trade, clearing organization, and each 
current and prospective member or other participant that is granted 
direct access to the foreign board of trade's trading system and that is 
not registered with the Commission as a futures commission merchant, a 
commodity trading advisor, or a commodity pool operator will maintain 
with the foreign board of trade written representations, executed by 
persons with the authority to bind the entity making them, stating that 
as long as the foreign board of trade is registered under this 
regulation, the foreign board of trade, the clearing organization or 
member of either or other participant granted direct access pursuant to 
this regulation will provide, upon the request of the Commission, the 
United States Department of Justice and, if appropriate, the National 
Futures Association, prompt access to the entity's, member's, or other 
participant's original books and records or, at the election of the 
requesting agency, a copy of specified information containing such books 
and records, as well as access to the premises where the trading system 
is available in the United States.
    (iv) The foreign board of trade will maintain all representations 
required pursuant to Sec.  48.8(a)(5) as part of its books and records 
and make them available to the Commission upon request.
    (6) Information Sharing:
    (i) Information-sharing arrangements satisfactory to the Commission, 
including but not limited to those set forth in Sec.  48.7(g), are in 
effect between the Commission and the regulatory authorities that govern 
the activities of both the foreign board of trade and the clearing 
organization.
    (ii) The Commission is, in fact, able to obtain sufficient 
information regarding the foreign board of trade, the clearing 
organization, their respective members and participants and the 
activities related to the foreign board of trade's registration.
    (iii) The foreign board of trade and its clearing organization, as 
applicable, will provide directly to the Commission any information 
necessary to evaluate the continued eligibility and appropriateness of 
the foreign board of trade for registration, the capability and 
determination to enforce compliance with the requirements and conditions 
of the registration, or to enable the Commission to carry out its duties 
under the Act and Commission regulations and to provide adequate 
protection to the public or United States registered entities.
    (iv) In the event that the foreign board of trade and the clearing 
organization are separate entities, the foreign board of trade will 
require the clearing organization to enter into a written agreement in 
which the clearing organization is contractually obligated to promptly 
provide any and all information and documentation that may be required 
of the clearing organization under this regulation and such agreement 
shall be made available to the Commission, upon request.
    (7) Monitoring for Compliance: The foreign board of trade and the 
clearing organization will employ reasonable procedures for monitoring 
and enforcing compliance with the specified conditions of its 
registration.
    (8) On-Site Visits: The foreign board of trade and the clearing 
organization will permit and will cooperate with

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Commission staff with respect to on-site visits for the purpose of 
overseeing ongoing compliance of the foreign board of trade and the 
clearing organization with registration requirements and conditions of 
registration.
    (9) Conditions Applicable to Swap Trading:
    (i) The foreign board of trade will ensure that all transaction data 
relating to each swap transaction, including price and volume, are 
reported as soon as technologically practicable after execution of the 
swap transaction to a swap data repository that is either registered 
with the Commission or has an information sharing arrangement with the 
Commission.
    (ii) The foreign board of trade will agree to coordinate with the 
Commission with respect to arrangements established to address cross 
market oversight issues involving swap trading, including surveillance, 
emergency actions and the monitoring of trading.
    (b) Other Continuing Obligations.
    (1) Registered foreign boards of trade and their clearing 
organizations will continue to comply with the following obligations on 
an ongoing basis:
    (i) The foreign board of trade will maintain the following updated 
information and submit such information to the Commission on at least a 
quarterly basis, not later than 30 days following the end of the 
quarter, and at any time promptly upon the request of a Commission 
representative, computed based upon separating buy sides and sell sides, 
in a format as determined by the Commission:
    (A) For each contract available to be traded through the foreign 
board of trade's trading system;
    (1) The total trade volume originating from electronic trading 
devices providing direct access;
    (2) The total trade volume for such contracts traded through the 
trading system worldwide;
    (3) The total trade volume for such contracts traded on the foreign 
board of trade generally; and
    (B) A listing of the names, National Futures Association 
identification numbers (if applicable), and main business addresses in 
the United States of all members and other participants that have direct 
access.
    (ii) The foreign board of trade will promptly provide to the 
Commission written notice of the following:
    (A) Any material change to the information provided in the foreign 
board of trade's registration application.
    (B) Any material change in the rules of the foreign board of trade 
or clearing organization or the laws, rules, or regulations in the home 
country jurisdictions of the foreign board of trade or clearing 
organization relevant to futures, option or swap contracts made 
available by direct access.
    (C) Any matter known to the foreign board of trade, the clearing 
organization or its representatives that, in the judgment of the foreign 
board of trade or clearing organization, may affect the financial or 
operational viability of the foreign board of trade or its clearing 
organization with respect to contracts traded by direct access, 
including, but not limited to, any significant system failure or 
interruption.
    (D) Any default, insolvency, or bankruptcy of any foreign board of 
trade member or other participant that is or should be known to the 
foreign board of trade or its representatives or the clearing 
organization or its representatives that may have a material, adverse 
impact upon the condition of the foreign board of trade as it relates to 
trading by direct access, its clearing organization or upon any United 
States customer or firm or any default, insolvency or bankruptcy of any 
member of the foreign board of trade's clearing organization.
    (E) Any violation of any specified conditions of the foreign board 
of trade's registration or failure to satisfy the requirements for 
registration under this part that is known or should be known by the 
foreign board of trade, the clearing organization or any of their 
respective members or participants.
    (F) Any disciplinary action by the foreign board of trade or its 
clearing organization, or any regulatory authority that governs their 
respective activities, taken against any of their respective members or 
participants with respect to any contract available to be traded by 
direct access that involves any market manipulation,

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abuse, fraud, deceit, or conversion or that results in suspension or 
expulsion.
    (iii) The foreign board of trade and the clearing organization, or 
their respective regulatory authorities, as applicable, will provide the 
following to the Commission annually as of June 30 and not later than 
July 31.
    (A) A certification from the foreign board of trade's regulatory 
authority confirming that the foreign board of trade retains its 
authorization, licensure or registration, as applicable, as a regulated 
market and/or exchange under the authorization, licensing, recognition 
or other registration methodology used by the foreign board of trade's 
regulatory authority and that the foreign board of trade is in continued 
good standing.
    (B) If the clearing organization is not a derivatives clearing 
organization registered with the Commission, a certification from the 
clearing organization's regulatory authority confirming that the 
clearing organization retains its authorization, licensure or 
registration, as applicable, as a clearing organization under the 
authorization, licensing or other registration methodology used by the 
clearing organization's regulatory authority and is in continued good 
standing.
    (C) If the clearing organization is not a derivatives clearing 
organization registered with the Commission, a recertification of the 
clearing organization's observance of the Recommendations for Central 
Counterparties.
    (D) A certification that affiliates, as defined in Sec.  48.2(k), 
continue to be required to comply with the rules of the foreign board of 
trade and clearing organization and that the members or other 
participants to which they are affiliated remain responsible to the 
foreign board of trade for ensuring their affiliates' compliance.
    (E) A description of any material changes regarding the foreign 
board of trade or clearing organization that have not been previously 
disclosed, in writing, to the Commission, or a certification that no 
such material changes have occurred.
    (F) A description of any significant disciplinary or enforcement 
actions that have been instituted by or against the foreign board of 
trade or the clearing organization or the senior officers of either 
during the prior year.
    (G) A written description of any material changes to the regulatory 
regime to which the foreign board of trade or the clearing organization 
are subject that have not been previously disclosed, in writing, to the 
Commission, or a certification that no material changes have occurred.
    (2) The above-referenced annual reports must be signed by an officer 
of the foreign board of trade or the clearing organization who maintains 
the authority to bind the foreign board of trade or clearing 
organization, as applicable, and must be based on the officer's personal 
knowledge.
    (c) Additional Specified Conditions for Foreign Boards of Trade with 
Linked Contacts. If a registered foreign board of trade grants members 
or other participants direct access and makes available for trading a 
linked contract, the following additional conditions apply:
    (1) Statutory Conditions.
    (i) The foreign board of trade will make public daily trading 
information regarding the linked contract that is comparable to the 
daily trading information published by the registered entity for the 
contract to which the foreign board of trade's contract is linked, and
    (ii) The foreign board of trade (or its regulatory authority) will:
    (A) Adopt position limits (including related hedge exemption 
provisions) applicable to all market participants for the linked 
contract that are comparable to the position limits (including related 
hedge exemption provisions) adopted by the registered entity for the 
contract to which it is linked;
    (B) Have the authority to require or direct any market participant 
to limit, reduce, or liquidate any position the foreign board of trade 
(or its regulatory authority) determines to be necessary to prevent or 
reduce the threat of price manipulation, excessive speculation as 
described in section 4a of the Act, price distortion, or disruption of 
delivery on the cash settlement process;
    (C) Agree to promptly notify the Commission, with regard to the 
linked contract, of any change regarding--

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    (1) The information that the foreign board of trade will make 
publicly available,
    (2) The position limits that foreign board of trade or its 
regulatory authority will adopt and enforce,
    (3) The position reductions required to prevent manipulation, 
excessive speculation as described in section 4a of the Act, price 
distortion, or disruption of delivery or the cash settlement process, 
and
    (4) Any other area of interest expressed by the Commission to the 
foreign board of trade or its regulatory authority;
    (D) Provide information to the Commission regarding large trader 
positions in the linked contract that is comparable to the large trader 
position information collected by the Commission for the contract to 
which it is linked; and
    (E) Provide the Commission such information as is necessary to 
publish reports on aggregate trader positions for the linked contract 
that are comparable to such reports on aggregate trader positions for 
the contract to which it is linked.
    (2) Other Conditions on Linked Contracts.
    (i) The foreign board of trade will inform the Commission in a 
quarterly report of any member that had positions in a linked contract 
above the applicable foreign board of trade position limit, whether a 
hedge exemption was granted, and if not, whether a disciplinary action 
was taken.
    (ii) The foreign board of trade will provide the Commission, either 
directly or through its agent, with trade execution and audit trail data 
for the Commission's Trade Surveillance System on a trade-date plus one 
basis and in a form, content and manner acceptable to the Commission for 
all linked contracts.
    (iii) The foreign board of trade will provide to the Commission, at 
least one day prior to the effective date thereof, except in the event 
of an emergency market situation, copies of, or hyperlinks to, all 
rules, rule amendments, circulars and other notices published by the 
foreign board of trade with respect to all linked contracts.
    (iv) The foreign board of trade will provide to the Commission 
copies of all reports of disciplinary action involving the foreign board 
of trade's linked contracts upon closure of the action. Such reports 
should include the reason the action was undertaken, the results of the 
investigation that led to the disciplinary action, and any sanctions 
imposed.
    (v) In the event that the Commission, pursuant to its emergency 
powers authority, directs that the registered entity which lists the 
contract to which the foreign board of trade's contract is linked to 
take emergency action with respect to a linked contract (for example, to 
cease trading in the contract), the foreign board of trade, subject to 
information-sharing arrangements between the Commission and its 
regulatory authority, will promptly take similar action with respect to 
the its linked contract.



Sec.  48.9  Revocation of registration.

    (a) Failure to Satisfy Registration Requirements or Conditions:
    (1) If the Commission determines that a registered foreign board of 
trade or the clearing organization has failed to satisfy any 
registration requirements or conditions for registration, the Commission 
shall notify the foreign board of trade of such determination, including 
the particular requirements or conditions that are not being satisfied, 
and shall afford the foreign board of trade or clearing organization an 
opportunity to make appropriate changes to bring it into compliance.
    (2) If, not later than 30 days after receiving a notification under 
paragraph (a)(1) of this section, the foreign board of trade or clearing 
organization fails to make changes that, in the opinion of the 
Commission, are necessary to comply with the registration requirements 
or conditions of registration, the Commission may revoke the foreign 
board of trade's registration, after appropriate notice and an 
opportunity to respond, by issuing an Order Revoking Registration which 
sets forth the reasons therefor.
    (3) A foreign board of trade whose registration has been revoked for 
failure to satisfy a registration requirement or condition of 
registration may

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apply for re-registration 360 days after the issuance of the Order 
Revoking Registration if the deficiency causing the revocation has been 
cured or relevant facts and circumstances have changed.
    (b) Other Events that Could Result in Revocation. Notwithstanding 
Sec.  48.9(a), revocation under these circumstances will be handled by 
the Commission as relevant facts or circumstances warrant.
    (1) The Commission may revoke a foreign board of trade's 
registration, after appropriate notice and an opportunity to respond, if 
the Commission determines that a representation made in the foreign 
board of trade's application for registration is found to be untrue or 
materially misleading or if the foreign board of trade failed to include 
information in the application that would have been material to the 
Commission's determination as to whether to issue an Order of 
Registration.
    (2) The Commission may revoke a foreign board of trade's 
registration, after appropriate notice and an opportunity to respond, if 
there is a material change in the regulatory regime applicable to the 
foreign board of trade or clearing organization such that the regulatory 
regime no longer satisfies any registration requirement or condition for 
registration applicable to the regulatory regime.
    (3) The Commission may revoke a foreign board of trade's 
registration in the event of an emergency or in a circumstance where the 
Commission determines that revocation would be necessary or appropriate 
in the public interest. Following revocation, the Commission will 
provide notice and an opportunity to respond.
    (4) The Commission may revoke a foreign board of trade's 
registration in the event the foreign board of trade or the clearing 
organization is no longer authorized, licensed or registered, as 
applicable, as a regulated market and/or exchange or clearing 
organization or ceases to operate as a foreign board of trade or 
clearing organization, subject to notice and an opportunity to respond.
    (c) Upon request by the Commission, a registered foreign board of 
trade must file with the Commission a written demonstration, containing 
such supporting data, information, and documents, in such form and 
manner and within such timeframe as the Commission may specify, that the 
foreign board of trade or clearing organization is in compliance with 
the registration requirements and/or conditions for registration.



Sec.  48.10  Additional contracts.

    (a) Generally. A registered foreign board of trade that wishes to 
make an additional futures, option or swap contract available for 
trading by identified members or other participants located in the 
United States with direct access to its electronic trading and order 
matching system must submit a written request prior to offering the 
contracts from within the United States. Such a written request must 
include the terms and conditions of the additional futures, option or 
swap contracts and a certification that the additional contracts meet 
the requirements of Sec.  48.8(c), if applicable, and that the foreign 
board of trade and the clearing organization continue to satisfy the 
requirements and conditions of registration. The foreign board of trade 
can make available for trading by direct access the additional contracts 
ten business days after the date of receipt by the Commission of the 
written request, unless the Commission notifies the foreign board of 
trade that additional time is needed to complete its review of policy or 
other issues pertinent to the additional contracts. A registered foreign 
board of trade may list for trading by direct access an additional 
futures or option contract on a non-narrow-based security index pursuant 
to the Commission certification procedures set forth in Sec.  30.13(d) 
and appendix D to part 30 of this chapter.
    (b) Option contracts on previously approved futures contracts. (1) 
If the option is on a futures contract that is not a linked contract, 
the option contract may be made available for trading by direct access 
by filing with the Commission no later than the business day preceding 
the initial listing of the contract:
    (i) A copy of the terms and conditions of the additional contract 
and

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    (ii) A certification that the foreign board of trade and the 
clearing organization continue to satisfy the conditions of its 
registration.
    (2) If the option is on a futures contract that is a linked 
contract, the option contract may be made available for trading by 
direct access by filing with the Commission no later than the business 
day preceding the initial listing of the contract:
    (i) A copy of the terms and conditions of the additional contract; 
and
    (ii) A certification that the foreign board of trade and the 
clearing organization continue to satisfy the conditions of its 
registration, including the conditions specifically applicable to linked 
contracts set forth in Sec.  48.8(c).
    (3) If the option is on a non-narrow-based security index futures 
contract which may be offered or sold in the United States pursuant to a 
Commission certification issued pursuant to Sec.  30.13 of this chapter, 
the option contract may be listed for trading by direct access without 
further action by either the registered foreign board of trade or the 
Commission.



                   Sec. Appendix to Part 48--Form FBOT

                  COMMODITY FUTURES TRADING COMMISSION

                                FORM FBOT

FOREIGN BOARD OF TRADE APPLICATION FOR REGISTRATION (IN ORDER TO PERMIT 
            DIRECT ACCESS TO MEMBERS AND OTHER PARTICIPANTS)

                        APPLICATION INSTRUCTIONS

                               DEFINITIONS

    1. Unless the context requires otherwise, all terms used in this 
application have the same meaning as in the Commodity Exchange Act, as 
amended (CEA or Act),\1\ and in the regulations of the Commodity Futures 
Trading Commission (Commission or CFTC).\2\
---------------------------------------------------------------------------

    \1\ 7 U.S.C. 1 et seq.
    \2\ 17 CFR chapter I.
---------------------------------------------------------------------------

    2. For the purposes of this Form FBOT, the term ``applicant'' refers 
to the foreign board of trade applying for registration pursuant to CEA 
section 4(b) and part 48 of the Commission's regulations. The term 
``clearing organization'' refers to the clearing organization that will 
be clearing trades executed on the trading system of such foreign board 
of trade.

                          GENERAL INSTRUCTIONS

    1. A Form FBOT (including exhibits) shall be completed by any 
foreign board of trade applying for registration with the Commission 
pursuant to CEA section 4(b) and part 48 of the Commission's 
regulations.
    2. Form FBOT (including exhibits and any supplement thereto) 
(collectively, the ``application'' or ``application for registration'') 
must be filed electronically with the Secretary of the Commission at 
[email protected] Applicants may prepare their own Form FBOT, 
but must follow the format prescribed herein.
    3. The name of any individual listed in Form FBOT shall be provided 
in full (Last Name, First Name and Middle Name or Initial).
    4. Form FBOT must be signed by the Chief Executive Officer (or the 
functional equivalent) of the foreign board of trade who must possess 
the authority to bind the foreign board of trade.
    5. If this Form FBOT is being filed as a new application for 
registration, all applicable items on the Form FBOT must be answered in 
full. Non-applicable items should be indicated by marking ``none'' or 
``N/A.''
    6. Submission of a complete Form FBOT (including all information, 
documentation and exhibits requested therein, and any required 
supplement) is mandatory and must be received by the Commission before 
it will begin to process a foreign board of trade's application for 
registration. The information provided with a Form FBOT (including 
exhibits and any supplement thereto) will be used to determine whether 
the Commission should approve or deny registration to an applicant. 
Pursuant to its regulations, the Commission may determine that 
information and/or documentation in addition to that requested in the 
Form FBOT is required from the applicant in order to process the 
application for registration or to determine whether registration is 
appropriate.
    7. Pursuant to Commission regulations, an applicant or its clearing 
organization must identify with particularity any information in the 
application (including, but not limited to, any information contained in 
this Form FBOT) that will be the subject of a request for confidential 
treatment and must provide support for any request for confidential 
treatment pursuant to the procedures set forth in Commission regulation 
145.9.\3\ Except in cases where confidential treatment is granted by the 
Commission pursuant to the Freedom of Information Act and Commission 
regulations, information supplied in the Form FBOT (including exhibits 
and any supplement thereto) will be included routinely in the public 
files of the Commission and

[[Page 133]]

will be available for inspection and comment by any interested person.
---------------------------------------------------------------------------

    \3\ 17 CFR 145.9.
---------------------------------------------------------------------------

    8. A Form FBOT that is not prepared and executed in compliance with 
applicable requirements and instructions may be returned as not 
acceptable for filing.\4\ Acceptance of a Form FBOT by the Commission, 
however, shall not constitute a finding that the Form FBOT has been 
filed as required or that the information submitted is verified to be 
true, current, or complete. The Commission may revoke a foreign board of 
trade's registration, after appropriate notice and an opportunity to 
respond, if the Commission determines that a representation made in this 
Form FBOT is found to be untrue or materially misleading or if the 
foreign board of trade failed to include information in this Form FBOT 
that would have been material to the Commission's determination as to 
whether to issue an Order of Registration.
---------------------------------------------------------------------------

    \4\ Applicants and their clearing organizations are encouraged to 
correspond with the Commission's Division of Market Oversight regarding 
any content, procedural, or formatting questions encountered in 
connection with the preparation of a Form FBOT, or any exhibits or 
supplements thereto, prior to formally submitting those documents to the 
Commission. When appropriate, potential applicants and clearing 
organizations, as applicable, may provide a complete draft Form FBOT 
(including exhibits and any required supplement) to the Division of 
Market Oversight for early review to minimize the risk of having a 
submission returned or otherwise denied as not acceptable for filing. 
Review of draft submissions by any division of the Commission and any 
comments provided by a division of the Commission are for consultation 
purposes only and do not bind the Commission. To obtain instructions for 
submitting drafts, please contact the Division of Market Oversight.
---------------------------------------------------------------------------

    9. In addition to this Form FBOT, the clearing organization 
associated with the foreign board of trade must complete and submit 
Supplement S-1 to this Form FBOT in accordance with the instructions 
thereto. To the extent a single document or description is responsive to 
more than one request for the same information in either the Form FBOT 
or the Supplement S-1, the document or description need only be provided 
once and may be cross-referenced elsewhere.
    10. All documents submitted as part of this Form FBOT (or exhibits 
thereto) must be written in English or accompanied by a certified 
English translation.

                  UPDATING INFORMATION ON THE FORM FBOT

    Pursuant to the Commission's regulations, if any information or 
documentation contained in this Form FBOT (including exhibits or any 
supplement or amendment thereto) is or becomes inaccurate for any reason 
prior to the issuance of an Order of Registration, an amendment 
correcting such information must be filed promptly with the Commission. 
A registered foreign board of trade also may submit an amendment to this 
Form FBOT to correct information that has become inaccurate subsequent 
to the receipt of an Order of Registration.

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                 INSTRUCTIONS FOR EXHIBITS TO FORM FBOT

    1. The following exhibits must be filed with the Commission by any 
foreign board of trade (1) seeking registration for purposes of granting 
direct access to its members and other participants or (2) amending a 
previously submitted application, pursuant to

[[Page 138]]

CEA section 4(b) and part 48 of the Commission's regulations. The 
information and documentation requested relates to the activities of the 
foreign board of trade, unless otherwise stated.
    2. The exhibits should be filed in accordance with the General 
Instructions to this Form FBOT and labeled as specified herein. If any 
exhibit is not applicable, please specify the exhibit letter and number 
and indicate by marking ``none'' or ``N/A.'' If any exhibit may be 
satisfied by documentation or information submitted in a different 
exhibit, the documentation or information need not be submitted more 
than once--please use internal cross-references where appropriate.

                          GENERAL REQUIREMENTS

    A foreign board of trade applying for registration must submit 
sufficient information and documentation to successfully demonstrate to 
Commission staff that the foreign board of trade and its clearing 
organization satisfy all of the requirements of Commission regulation 
48.7. With respect to its review of the foreign board of trade, the 
Commission anticipates that such information and documentation would 
necessarily include, but not be limited to, the following:

            EXHIBIT A--GENERAL INFORMATION AND DOCUMENTATION

    Attach, as Exhibit A-1, a description of the following for the 
foreign board of trade: Location, history, size, ownership and corporate 
structure, governance and committee structure, current or anticipated 
presence of offices or staff in the United States, and anticipated 
volume of business emanating from members and other participants that 
will be provided direct access to the foreign board of trade's trading 
system.
    Attach, as Exhibit A-2, the following:
    Articles of association, constitution, or other similar 
organizational documents.
    Attach, as Exhibit A-3, the following:
    (1) Membership and trading participant agreements.
    (2) Clearing agreements.
    Attach, as Exhibit A-4, the following:
    Terms and conditions of contracts to be available through direct 
access (as specified in Exhibit E).
    Attach, as Exhibit A-5, the following:
    The national statutes, laws and regulations governing the activities 
of the foreign board of trade and its respective participants.
    Attach, as Exhibit A-6, the following:
    The current rules, regulations, guidelines and bylaws of the foreign 
board of trade.
    Attach, as Exhibit A-7, the following:
    Evidence of the authorization, licensure or registration of the 
foreign board of trade pursuant to the regulatory regime in its home 
country jurisdiction and a representation by its regulator(s) that it is 
in good regulatory standing in the capacity in which it is authorized, 
licensed or registered.
    Attach, as Exhibit A-8, the following document:
    A summary of any disciplinary or enforcement actions or proceedings 
that have been brought against the foreign board of trade, or any of the 
senior officers thereof, in the past five years and the resolution of 
those actions or proceedings.
    Attach, as Exhibit A-9, the following document:
    An undertaking by the chief executive officer(s) (or functional 
equivalent[s]) of the foreign board of trade to notify Commission staff 
promptly if any of the representations made in connection with or 
related to the foreign board of trade's application for registration 
cease to be true or correct, or become incomplete or misleading.

                     EXHIBIT B--MEMBERSHIP CRITERIA

    Attach, as Exhibit B, the following, separately labeling each 
description:
    (1) A description of the categories of membership and participation 
in the foreign board of trade and the access and trading privileges 
provided by the foreign board of trade. The description should include 
any restrictions applicable to members and other participants to which 
the foreign board of trade intends to grant direct access to its trading 
system.
    (2) A description of all requirements for each category of 
membership and participation on the trading system and the manner in 
which members and other participants are required to demonstrate their 
compliance with these requirements. The description should include, but 
not be limited to, the following:
    (i) Professional Qualification. A description of the specific 
professional requirements, qualifications, and/or competencies required 
of members or other participants and/or their staff and a description of 
the process by which the foreign board of trade confirms compliance with 
such requirements.
    (ii) Authorization, Licensure and Registration. A description of any 
regulatory and self-regulatory authorization, licensure or registration 
requirements that the foreign board of trade imposes upon, or enforces 
against, its members and other participants including, but not limited 
to any authorization, licensure or registration requirements imposed by 
the regulatory regime/authority in the home country jurisdiction(s) of 
the foreign board of trade. Please also include a description of the 
process by which the foreign board of trade confirms compliance with 
such requirements.
    (iii) Financial Integrity. A description of the following:

[[Page 139]]

    (A) The financial resource requirements, standards, guides or 
thresholds required of members and other participants.
    (B) The manner in which the foreign board of trade evaluates the 
financial resources/holdings of its members or participants.
    (C) The process by which applicants demonstrate compliance with 
financial requirements for membership or participation including, as 
applicable:
    (i) Working capital and collateral requirements, and
    (ii) Risk management mechanisms for members allowing customers to 
place orders.
    (iv) Fit and Proper Standards. A description of how the foreign 
board of trade ensures that potential members/other participants meet 
fit and proper standards.

              EXHIBIT C--BOARD AND/OR COMMITTEE MEMBERSHIP

    Attach, as Exhibit C, the following:
    (1) A description of the requirements applicable to membership on 
the governing board and significant committees of the foreign board of 
trade.
    (2) A description of the process by which the foreign board of trade 
ensures that potential governing board and committee members/other 
participants meet these standards.
    (3) A description of the provisions to minimize and resolve 
conflicts of interest with respect to membership on the governing board 
and significant committees of the foreign board of trade.
    (4) A description of the rules with respect to the disclosure of 
material non-public information obtained as a result of a member's or 
other participant's performance on the governing board or significant 
committee.

                 EXHIBIT D--THE AUTOMATED TRADING SYSTEM

    Attach, as Exhibit D-1, a description of (or where appropriate, 
documentation addressing) the following, separately labeling each 
description:
    (1) The order matching/trade execution system, including a complete 
description of all permitted ways in which members or other participants 
(or their customers) may connect to the trade matching/execution system 
and the related requirements (for example, authorization agreements).
    (2) The architecture of the systems, including hardware and 
distribution network, as well as any pre- and post-trade risk-management 
controls that are made available to system users.
    (3) The security features of the systems.
    (4) The length of time such systems have been operating.
    (5) Any significant system failures or interruptions.
    (6) The nature of any technical review of the order matching/trade 
execution system performed by the foreign board of trade, the home 
country regulator, or a third party.
    (7) Trading hours.
    (8) Types and duration of orders accepted.
    (9) Information that must be included on orders.
    (10) Trade confirmation and error trade procedures.
    (11) Anonymity of participants.
    (12) Trading system connectivity with clearing system.
    (13) Response time.
    (14) Ability to determine depth of market.
    (15) Market continuity provisions.
    (16) Reporting and recordkeeping requirements.
    Attach, as Exhibit D-2, a description of the manner in which the 
foreign board of trade assures the following with respect to the trading 
system, separately labeling each description:
    (1) Algorithm. The trade matching algorithm matches trades fairly 
and timely.
    (2) IOSCO Principles. The trading system complies with the 
Principles for the Oversight of Screen-Based Trading Systems for 
Derivative Products developed by the Technical Committee of the 
International Organization of Securities Commissions (IOSCO Principles). 
Provide a copy of any independent certification received or self-
certification performed and identify any system deficiencies with 
respect to the IOSCO Principles.
    (3) Audit Trail.
    (i) The audit trail timely captures all relevant data, including 
changes to orders.
    (ii) Audit trail data is securely maintained and available for an 
adequate time period.
    (4) Public Data. Adequate and appropriate trade data is available to 
users and the public.
    (5) Reliability. The trading system has demonstrated reliability.
    (6) Secure Access. Access to the trading system is secure and 
protected.
    (7) Emergency Provisions. There are adequate provisions for 
emergency operations and disaster recovery.
    (8) Data Loss Prevention. Trading data is backed up to prevent loss 
of data.
    (9) Contracts Available. Mechanisms are available to ensure that 
only those futures, option or swap contracts that have been identified 
to the Commission as part of the application or permitted to be made 
available for trading by direct access pursuant to the procedures set 
forth in Sec.  48.10 are made available for trading by direct access.
    (10) Predominance of the Centralized Market. Mechanisms are 
available that ensure a competitive, open, and efficient market and 
mechanism for executing transactions.

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  EXHIBIT E--THE TERMS AND CONDITIONS OF CONTRACTS PROPOSED TO BE MADE 
                     AVAILABLE IN THE UNITED STATES

    Attach, as Exhibit E-1, a description of the terms and conditions of 
futures, option or swap contracts intended to be made available for 
direct access. With respect to each contract, indicate whether the 
contract is regulated or otherwise treated as a futures, option or swap 
contract in the regulatory regime(s) of the foreign board of trade's 
home country.
    As Exhibit E-2, demonstrate that the contracts are not prohibited 
from being traded by United States persons, i.e., the contracts are not 
prohibited security futures or single stock contracts or narrow-based 
index contracts. For non-narrow based stock index futures contracts, 
demonstrate that the contracts have received Commission certification 
pursuant to the procedures set forth in Sec.  30.13 and appendix D to 
part 30 of this chapter.
    As Exhibit E-3, demonstrate that the contracts are required to be 
cleared.
    As Exhibit E-4, identify any contracts that are linked to a contract 
listed for trading on a United States-registered entity, as defined in 
section 1a(40) of the Act. A linked contract is a contract that settles 
against any price (including the daily or final settlement price) of one 
or more contracts listed for trading on such registered entity.
    As Exhibit E-5, identify any contracts that have any other 
relationship with a contract listed for trading on a registered entity, 
i.e., both the foreign board of trade's and the registered entity's 
contract settle to the price of the same third party-constructed index.
    As Exhibit E-6, demonstrate that the contracts are not readily 
susceptible to manipulation. In addition, for each contract to be 
listed, describe each investigation, action, proceeding or case 
involving manipulation and involving such contract in the three years 
preceding the application date, whether initiated by the foreign board 
of trade, a regulatory or self-regulatory authority or agency or other 
government or prosecutorial agency. For each such action, proceeding or 
case, describe the alleged manipulative activity and the current status 
or resolution thereof.

EXHIBIT F--THE REGULATORY REGIME GOVERNING THE FOREIGN BOARD OF TRADE IN 
                    ITS HOME COUNTRY \5\ OR COUNTRIES

    With respect to each relevant regulatory regime or authority 
governing the foreign board of trade, attach, as Exhibit F, the 
following (including, where appropriate, an indication as to whether the 
applicable regulatory regime is dependent on the home country's 
classification of the product being traded on the foreign board of trade 
as a future, option, swap, or otherwise, and a description of any 
difference between the applicable regulatory regime for each product 
classification type):
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    \5\ Where multiple foreign boards of trade subject to the same 
regulatory regime/authority and are similarly regulated are applying for 
registration at the same time, a single Exhibit E-1 may be submitted as 
part of the application for all such foreign boards of trade either by 
one of the applicant foreign boards of trade or by the regulatory 
regime/authority with responsibility to oversee each of the multiple 
foreign boards of trade applying for registration. Where an FBOT 
applying for registration is located in the same jurisdiction and 
subject to the same regulatory regime as a registered FBOT, the FBOT 
applying for registration may include by reference, as part of its 
application, information about the regulatory regime that is posted on 
the Commission's Web site. The FBOT applying for registration must 
certify that the information thus included in the application is 
directly applicable to it and remains current and valid.
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    (1) A description of the regulatory regime/authority's structure, 
resources, staff, and scope of authority; the regulatory regime/
authority's authorizing statutes, including the source of its authority 
to supervise the foreign board of trade; the rules and policy statements 
issued by the regulator with respect to the authorization and continuing 
oversight of markets, electronic trading systems, and clearing 
organizations; and the financial protections afforded customer funds.
    (2) A description of and, where applicable, copies of the laws, 
rules, regulations and policies applicable to: \6\
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    \6\ To the extent that any such laws, rules, regulations or policies 
were provided as part of Exhibit A-5, they need not be duplicated. They 
may be cross-referenced.
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    (i) The authorization, licensure or registration of the foreign 
board of trade.
    (ii) The regulatory regime/authority's program for the ongoing 
supervision and oversight of the foreign board of trade and the 
enforcement of its trading rules.
    (iii) The financial resource requirements applicable to the 
authorization, licensure or registration of the foreign board of trade 
and the continued operations thereof.
    (iv) The extent to which the IOSCO Principles are used or applied by 
the regulatory regime/authority in its supervision and oversight of the 
foreign board of trade or are incorporated into its rules and 
regulations and the extent to which the regulatory regime/authority 
reviews the applicable trading systems for compliance therewith.

[[Page 141]]

    (v) The extent to which the regulatory regime/authority reviews and/
or approves the trading rules of the foreign board of trade prior to 
their implementation.
    (vi) The extent to which the regulatory regime/authority reviews 
and/or approves futures, option or swap contracts prior to their being 
listed for trading.
    (vii) The regulatory regime/authority's approach to the detection 
and deterrence of abusive trading practices, market manipulation, and 
other unfair trading practices or disruptions of the market.
    (3) A description of the laws, rules, regulations and policies that 
govern the authorization and ongoing supervision and oversight of market 
intermediaries who may deal with members and other participants located 
in the United States participants, including:
    (i) Recordkeeping requirements.
    (ii) The protection of customer funds.
    (iii) Procedures for dealing with the failure of a market 
intermediary in order to minimize damage and loss to investors and to 
contain systemic risk.
    (4) A description of the regulatory regime/authority's inspection, 
investigation and surveillance powers; and the program pursuant to which 
the regulatory regime/authority uses those powers to inspect, 
investigate, and enforce rules applicable to the foreign board of trade.
    (5) For both the foreign board of trade and the clearing 
organization (unless addressed in Supplement S-1), a report confirming 
that the foreign board of trade and clearing organization are in 
regulatory good standing, which report should be prepared subsequent to 
consulting with the regulatory regime/authority governing the activities 
of the foreign board of trade and any associated clearing organization. 
The report should include:
    (i) Confirmation of regulatory status (including proper 
authorization, licensure and registration) of the foreign board of trade 
and clearing organization.
    (ii) Any recent oversight reports generated by the regulatory 
regime/authority that are, in the judgment of the regulatory regime/
authority, relevant to the foreign board of trade's status as a 
registered foreign board of trade.
    (iii) Disclosure of any significant regulatory concerns, inquiries 
or investigations by the regulatory regime/authority, including any 
concerns, inquiries or investigations with regard to the foreign board 
of trade's arrangements to monitor trading by members or other 
participants located in the United States or the adequacy of the risk 
management controls of the trading or of the clearing system.
    (iv) A description of any investigations (formal or informal) or 
disciplinary actions initiated by the regulatory regime/authority or any 
other self-regulatory, regulatory or governmental entity against the 
foreign board of trade, the clearing organization or any of their 
respective senior officers during the past year.
    (6) For both the foreign board of trade and the clearing 
organization (unless addressed in Supplement S-1), a confirmation that 
the regulatory regime/authority governing the activities of the foreign 
board of trade and the clearing organization agree to cooperate with a 
Commission staff visit subsequent to submission of the application on an 
``as needed basis,'' the objectives of which will be to, among other 
things, familiarize Commission staff with supervisory staff of the 
regulatory regime/authority; discuss the laws, rules and regulations 
that formed the basis of the application and any changes thereto; 
discuss the cooperation and coordination between the authorities, 
including, without limitation, information sharing arrangements; and 
discuss issues of concern as they may develop from time to time (for 
example, linked contracts or unusual trading that may be of concern to 
Commission surveillance staff).

   EXHIBIT G--THE RULES OF THE FOREIGN BOARD OF TRADE AND ENFORCEMENT 
                                 THEREOF

    Attach, as Exhibit G-1, the following:
    A description of the foreign board of trade's regulatory or 
compliance department, including its size, experience level, 
competencies, duties and responsibilities.
    Attach, as Exhibit G-2, the following:
    A description of the foreign board of trade's trade practice rules, 
including but not limited to rules that address the following--
    (1) Capacity of the foreign board of trade to detect, investigate, 
and sanction persons who violate foreign board of trade rules.
    (2) Prohibition of fraud and abuse, as well as abusive trading 
practices including, but not limited to, wash sales and trading ahead, 
and other market abuses.
    (3) A trade surveillance system appropriate to the foreign board of 
trade and capable of detecting and investigating potential trade 
practice violations.
    (4) An audit trail that captures and retains sufficient order and 
trade-related data to allow the compliance staff to detect trading and 
market abuses and to reconstruct all transactions within a reasonable 
period of time.
    (5) Appropriate resources to conduct real-time supervision of 
trading.
    (6) Sufficient compliance staff and resources, including those 
outsourced or delegated to third parties, to fulfill regulatory 
responsibilities.
    (7) Rules that authorize compliance staff to obtain, from market 
participants, information and cooperation necessary to conduct effective 
rule enforcement and investigations.

[[Page 142]]

    (8) Staff investigations and investigation reports demonstrating 
that the compliance staff investigates suspected rule violations and 
prepares reports of their finding and recommendations.
    (9) Rules determining access requirements with respect to the 
persons that may trade on the foreign board of trade, and the means by 
which they connect to it.
    (10) The requirement that market participants submit to the foreign 
board of trade's jurisdiction as a condition of access to the market.
    Attach, as Exhibit G-3, the following:
    A description of the foreign board of trade's disciplinary rules, 
including but not limited to rules that address the following--
    (1) Disciplinary authority and procedures that empower staff to 
recommend and prosecute disciplinary actions for suspected rule 
violations and that provide the authority to fine, suspend, or expel any 
market participant pursuant to fair and clear standards.
    (2) The issuance of warning letters and/or summary fines for 
specified rule violations.
    (3) The review of investigation reports by a disciplinary panel or 
other authority for issuance of charges or instructions to investigate 
further, or findings that an insufficient basis exists to issue charges.
    (4) Disciplinary committees of the foreign board of trade that take 
disciplinary action via formal disciplinary processes.
    (5) Whether and how the foreign board of trade articulates its 
rationale for disciplinary decisions.
    (6) The sanctions for particular violations and a discussion of the 
adequacy of sanctions with respect to the violations committed and their 
effectiveness as a deterrent to future violations.
    Attach, as Exhibit G-4, the following:
    A description of the market surveillance program (and any related 
rules), addressing the following--
    The dedicated market surveillance department or the delegation or 
outsourcing of that function, including a general description of the 
staff; the data collected on traders' market activity; data collected to 
determine whether prices are responding to supply and demand; data on 
the size and ownership of deliverable supplies; a description of the 
manner in which the foreign board of trade detects and deters market 
manipulation; for cash-settled contracts, methods of monitoring the 
settlement price or value; and any foreign board of trade position 
limit, position management, large trader or other position reporting 
system.

  EXHIBIT H--INFORMATION SHARING AGREEMENTS AMONG THE COMMISSION, THE 
    FOREIGN BOARD OF TRADE, THE CLEARING ORGANIZATION, AND RELEVANT 
                         REGULATORY AUTHORITIES

    Attach, as Exhibit H, the following:
    (1) A description of the arrangements among the Commission, the 
foreign board of trade, the clearing organization, and the relevant 
foreign regulatory authorities that govern the sharing of information 
regarding the transactions that will be executed pursuant to the foreign 
board of trade's registration with the Commission and the clearing and 
settlement of those transactions. This description should address or 
identify whether and how the foreign board of trade, clearing 
organization, and the regulatory authorities governing the activities of 
the foreign board of trade and clearing organization agree to provide 
directly to the Commission information and documentation requested by 
Commission staff that Commission staff determines is needed:
    (i) To evaluate the continued eligibility of the foreign board of 
trade for registration.
    (ii) To enforce compliance with the specified conditions of the 
registration.
    (iii) To enable the CFTC to carry out its duties under the Act and 
Commission regulations and to provide adequate protection to the public 
or registered entities.
    (iv) To respond to potential market abuse associated with trading by 
direct access on the registered foreign board of trade.
    (v) To enable Commission staff to effectively accomplish its 
surveillance responsibilities with respect to a registered entity where 
Commission staff, in its discretion, determines that a contract traded 
on a registered foreign board of trade may affect such ability.
    (2) A statement as to whether and how the foreign board of trade has 
executed the International Information Sharing Memorandum of 
Understanding and Agreement.
    (3) A statement as to whether the regulatory authorities governing 
the activities of the foreign board of trade and clearing organization 
are signatories to the International Organization of Securities 
Commissions Multilateral Memorandum of Understanding. If not, describe 
any substitute information-sharing arrangements that are in place.
    (4) A statement as to whether the regulatory authorities governing 
the activities of the foreign board of trade and clearing organization 
are signatories to the Declaration on Cooperation and Supervision of 
International Futures Exchanges and Clearing Organizations. If not, a 
statement as to whether and how they have committed to share the types 
of information contemplated by the International Information Sharing

[[Page 143]]

Memorandum of Understanding and Agreement with the Commission, whether 
pursuant to an existing memorandum of understanding or some other 
arrangement.

           EXHIBIT I--ADDITIONAL INFORMATION AND DOCUMENTATION

    Attach, as Exhibit I, any additional information or documentation 
necessary to demonstrate that the requirements for registration 
applicable to the foreign board of trade set forth in Commission 
regulation 48.7 are satisfied.

    Continuation of Appendix to Part 48--Supplement S-1 to Form FBOT

                  COMMODITY FUTURES TRADING COMMISSION

                       SUPPLEMENT S-1 to FORM FBOT

 CLEARING ORGANIZATION SUPPLEMENT TO FOREIGN BOARD OF TRADE APPLICATION 
                            FOR REGISTRATION

                         SUPPLEMENT INSTRUCTIONS

                               DEFINITIONS

    1. Unless the context requires otherwise, all terms used in this 
supplement have the same meaning as in the Commodity Exchange Act, as 
amended (CEA or Act),\7\ and in the regulations of the Commodity Futures 
Trading Commission (Commission or CFTC).\8\
---------------------------------------------------------------------------

    \7\ 7 U.S.C. 1 et seq.
    \8\ 17 CFR chapter I.
---------------------------------------------------------------------------

    2. For the purposes of this Supplement S-1, the term ``applicant'' 
refers to the foreign board of trade applying for registration pursuant 
to CEA section 4(b) and part 48 of the Commission's regulations. The 
term ``clearing organization'' refers to the clearing organization that 
will be clearing trades executed on the trading system of such foreign 
board of trade.

                          GENERAL INSTRUCTIONS

    1. A Supplement S-1 (including exhibits) shall be completed by each 
clearing organization that will be clearing trades executed on the 
trading system of a foreign board of trade applying for registration 
with the Commission pursuant to CEA section 4(b) and part 48 of the 
Commission's regulations. Each clearing organization shall submit a 
separate Supplement S-1.
    2. In the event that the clearing functions of the foreign board of 
trade applying for registration will be performed by the foreign board 
of trade itself, the foreign board of trade shall complete this 
Supplement S-1, but need not duplicate information provided on its Form 
FBOT. Specific reference to or incorporation of information or 
documentation (including exhibits) on the associated Form FBOT, where 
appropriate, is acceptable. To the extent a singular document or 
description is responsive to more than one request for information in 
this Supplement S-1, the document or description need only be provided 
once and may be cross-referenced elsewhere.
    3. Supplement S-1, including exhibits, should accompany the foreign 
board of trade's Form FBOT and must be filed electronically with the 
Secretary of the Commission at [email protected] Clearing 
organizations may prepare their own Supplement S-1, but must follow the 
format prescribed herein.
    4. The name of any individual listed in Supplement S-1 shall be 
provided in full (Last Name, First Name and Middle Name or Initial).
    5. Supplement S-1 must be signed by the Chief Executive Officer (or 
the functional equivalent) of the clearing organization who must possess 
the authority to bind the clearing organization.
    6. If this Supplement S-1 is being filed in connection with a new 
application for registration, all applicable items must be answered in 
full. If any item is not applicable, indicate by marking ``none'' or 
``N/A.''
    7. Submission of a complete Form FBOT and Supplement S-1 (including 
all information, documentation and exhibits requested therein) is 
mandatory and must be received by the Commission before it will begin to 
process a foreign board of trade's application for registration. The 
information provided with a Form FBOT and Supplement S-1 will be used to 
determine whether the Commission should approve or deny registration to 
an applicant. Pursuant to its regulations, the Commission may determine 
that information and/or documentation in addition to that requested in 
the Form FBOT and Supplement S-1 is required from the applicant and/or 
its clearing organization(s) in order to process the application for 
registration or to determine whether registration is appropriate.
    8. Pursuant to Commission regulations, an applicant or its clearing 
organization must identify with particularity any information in the 
application (including, but not limited to, any information contained in 
this Supplement S-1), that will be the subject of a request for 
confidential treatment and must provide support for any request for 
confidential treatment pursuant to the procedures set forth in 
Commission regulation 145.9.\9\ Except in cases where confidential 
treatment is granted by the Commission, pursuant to the Freedom of 
Information Act and Commission regulations, information supplied in the 
Supplement S-1 will be included

[[Page 144]]

routinely in the public files of the Commission and will be available 
for inspection by any interested person.
---------------------------------------------------------------------------

    \9\ 17 CFR 145.9.
---------------------------------------------------------------------------

    9. A Supplement S-1 that is not prepared and executed in compliance 
with applicable requirements and instructions may be returned as not 
acceptable for filing.\10\ Acceptance of either a Form FBOT or 
Supplement S-1 by the Commission, however, shall not constitute a 
finding that the either have been filed as required or that the 
information submitted is verified to be true, current, or complete. The 
Commission may revoke a foreign board of trade's registration, after 
appropriate notice and an opportunity to respond, if the Commission 
determines that a representation made in this Supplement S-1 is found to 
be untrue or materially misleading or if the foreign board of trade and/
or clearing organization failed to include information in this 
Supplement S-1 that would have been material to the Commission's 
determination as to whether to issue an Order of Registration.
---------------------------------------------------------------------------

    \10\ Applicants and their clearing organizations are encouraged to 
correspond with the Commission's Division of Market Oversight regarding 
any content, procedural, or formatting questions encountered in 
connection with the preparation of a Form FBOT, Supplement S-1, or 
exhibits thereto prior to formally submitting those documents to the 
Commission. When appropriate, potential applicants and clearing 
organizations, as applicable, may provide a complete draft Form FBOT and 
Supplement S-1 to the Division of Market Oversight for early review to 
minimize the risk of having a submission returned or otherwise denied as 
not acceptable for filing. Review of draft submissions by any division 
of the Commission and any comments provided by a division of the 
Commission are for consultation purposes only and do not bind the 
Commission. To obtain instructions for submitting drafts, please contact 
the Division of Market Oversight.
---------------------------------------------------------------------------

    10. All documents submitted as part of this Supplement S-1 (or 
exhibits thereto) must be written in English or accompanied by a 
certified English translation.

                          UPDATING INFORMATION

    Pursuant to the Commission's regulations, if any information or 
documentation contained in this Supplement S-1 (including exhibits) is 
or becomes inaccurate for any reason prior to the issuance of an Order 
of Registration, an amendment correcting such information must be filed 
promptly with the Commission. A clearing organization also may submit an 
amendment to this Supplement S-1 to correct information that has become 
inaccurate subsequent to the issuance of an Order of Registration.

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               INSTRUCTIONS FOR EXHIBITS TO SUPPLEMENT S-1

    1. The following exhibits must be filed with the Commission by the 
clearing organization(s) that will be clearing trades executed on the 
trading system of a foreign board of trade applying for registration 
with the Commission pursuant to CEA section 4(b) and part 48 of 
Commission's regulations. The information and documentation requested 
relates to the activities of the clearing organization.

[[Page 150]]

    2. The exhibits should be filed in accordance with the General 
Instructions to this Supplement S-1 and labeled as specified herein. If 
any exhibit is not applicable, please specify the exhibit letter and 
number and indicate by marking ``none'' or ``N/A.'' If any exhibit may 
be satisfied by documentation or information submitted in a different 
exhibit, the documentation or information need not be submitted more 
than once--please use internal cross-references where appropriate.

                          GENERAL REQUIREMENTS

    A foreign board of trade applying for registration must submit 
sufficient information and documentation to successfully demonstrate to 
Commission staff that the foreign board of trade and its clearing 
organization satisfy all of the requirements of Commission regulation 
48.7. With respect to its review of the foreign board of trade's 
clearing organization, the Commission anticipates that such information 
and documentation would necessarily include, but not be limited to, the 
following:

            EXHIBIT A--GENERAL INFORMATION AND DOCUMENTATION

    Attach, as Exhibit A-1, a description of the following for the 
clearing organization:
    Location, history, size, ownership and corporate structure, 
governance and committee structure, and current or anticipated presence 
of staff in the United States.
    Attach, as Exhibit A-2, the following:
    Articles of association, constitution, or other similar 
organizational documents.
    Attach, as Exhibit A-3, the following:
    (1) Membership and participation agreements.
    (2) Clearing agreements.
    Attach, as Exhibit A-4, the following:
    The national statutes, laws and regulations governing the activities 
of the clearing organization and its members.
    Attach, as Exhibit A-5, the following:
    The current rules, regulations, guidelines and bylaws of the 
clearing organization.
    Attach, as Exhibit A-6, the following:
    Evidence of the authorization, licensure or registration of the 
clearing organization pursuant to the regulatory regime in its home 
country jurisdiction(s) and a representation by its regulator(s) that it 
is in good regulatory standing in the capacity in which it is 
authorized, licensed or registered.
    Attach, as Exhibit A-7, the following document:
    A summary of any disciplinary or enforcement actions or proceedings 
that have been brought against the clearing organization, or any of the 
senior officers thereof, in the past five years and the resolution of 
those actions or proceedings.
    Attach, as Exhibit A-8, the following document:
    An undertaking by the chief executive officer(s) (or functional 
equivalent[s]) of the clearing organization to notify Commission staff 
promptly if any of the representations made in connection with this 
supplement cease to be true or correct, or become incomplete or 
misleading.

                     EXHIBIT B--MEMBERSHIP CRITERIA

    Attach, as Exhibit B, the following, separately labeling each 
description:
    (1) A description of the categories of membership and participation 
in the clearing organization and the access and clearing privileges 
provided to each by the clearing organization.
    (2) A description of all requirements for each category of 
membership and participation and the manner in which members and other 
participants are required to demonstrate their compliance with these 
requirements. The description should include, but not be limited to, the 
following:
    (i) Professional Qualification. A description of the specific 
professional requirements, qualifications, and/or competencies required 
of members or other participants and/or their staff and a description of 
the process by which the clearing organization confirms compliance with 
such requirements.
    (ii) Authorization, Licensure and Registration. A description of any 
regulatory or self-regulatory authorization, licensure or registration 
requirements that the clearing organization imposes upon, or enforces 
against, its members and other participants including, but not limited 
to any authorization, licensure or registration requirements imposed by 
the regulatory regime/authority in the home country jurisdiction(s) of 
the clearing organization, and a description of the process by which the 
clearing organization confirms compliance with such requirements.
    (iii) Financial Integrity. A description of the following:
    (A) The financial resource requirements, standards, guides or 
thresholds required of members and other participants.
    (B) The manner in which the clearing organization evaluates the 
financial resources/holdings of its members or other participants.
    (C) The process by which applicants for clearing membership or 
participation demonstrate compliance with financial requirements 
including:
    (1) Working capital and collateral requirements, and
    (2) Risk management mechanisms.
    (iv) Fit and Proper Standards. A description of any other ways in 
which the clearing

[[Page 151]]

organization ensures that potential members/other participants meet fit 
and proper standards.

              EXHIBIT C--BOARD AND/OR COMMITTEE MEMBERSHIP

    Attach, as Exhibit C, the following:
    (1) A description of the requirements applicable to membership on 
the governing board and significant committees of the clearing 
organization.
    (2) A description of how the clearing organization ensures that 
potential governing board and committee members meet these standards.
    (3) A description of the clearing organization's provisions to 
minimize and resolve conflicts of interest with respect to membership on 
the governing board and significant committees of the clearing 
organization.
    (4) A description of the clearing organization's rules with respect 
to the disclosure of material non-public information obtained as a 
result of a member's performance on the governing board or on a 
significant committee.

                   EXHIBIT D--SETTLEMENT AND CLEARING

    Attach, as Exhibit D-1, the following:
    A description of the clearing and settlement systems, including, but 
not limited to, the manner in which such systems interface with the 
foreign board of trade's trading system and its members and other 
participants.
    Attach, as Exhibit D-2, the following:
    A certification, signed by the chief executive offer (or functional 
equivalent) of the clearing organization, that the clearing system 
observes (1) the current Recommendations for Central Counterparties that 
have been issued jointly by the Committee on Payment and Settlement 
Systems and the Technical Committee of the International Organization of 
Securities Commissions, as updated, revised or otherwise amended, or (2) 
successor standards, principles and guidance for central counterparties 
or financial market infrastructures adopted jointly by the Committee on 
Payment and Settlement Systems or the International Organization of 
Securities Commissions (RCCPs).
    Attach, as Exhibit D-3, the following:
    A detailed description of the manner in which the clearing 
organization observes each of the RCCPs or successor standards and 
documentation supporting the representations made, including any 
relevant rules or written policies or procedures of the clearing 
organization. Each RCCP should be addressed separately within the 
exhibit.

EXHIBIT E--THE REGULATORY REGIME GOVERNING THE CLEARING ORGANIZATION IN 
                      ITS HOME COUNTRY OR COUNTRIES

    With respect to each relevant regulatory regime or authority 
governing the clearing organization, attach, as Exhibit E, the 
following:
    (1) A description of the regulatory regime/authority's structure, 
resources, staff and scope of authority.
    (2) The regulatory regime/authority's authorizing statutes, 
including the source of its authority to supervise the clearing 
organization.
    (3) A description of and, where applicable, copies of the laws, 
rules, regulations and policies applicable to: \11\
---------------------------------------------------------------------------

    \11\ To the extent that any such laws, rules, regulations or 
policies were provided as part of Exhibit A-4, they need not be 
duplicated. They may be cross-referenced.
---------------------------------------------------------------------------

    (i) The authorization, licensure or registration of the clearing 
organization.
    (ii) The financial resource requirements applicable to the 
authorization, licensure or registration of the clearing organization 
and the continued operations thereof.
    (iii) The regulatory regime/authority's program for the ongoing 
supervision and oversight of the clearing organization and the 
enforcement of its clearing rules.
    (iv) The extent to which the current RCCPs are used or applied by 
the regulatory regime/authority in its supervision and oversight of the 
clearing organization or are incorporated into its rules and regulations 
and the extent to which the regulatory regime/authority reviews the 
clearing systems for compliance therewith.
    (v) The extent to which the regulatory regime/authority reviews and/
or approves the rules of the clearing organization prior to their 
implementation.
    (vi) The regulatory regime/authority's inspection, investigation and 
surveillance powers; and the program pursuant to which the regulatory 
regime/authority uses those powers to inspect, investigate, sanction, 
and enforce rules applicable to the clearing organization.
    (vii) The financial protection afforded customer funds.

   EXHIBIT F--THE RULES OF THE CLEARING ORGANIZATION AND ENFORCEMENT 
                                 THEREOF

    Attach, as Exhibit F-1, the following:
    A description of the clearing organization's regulatory or 
compliance department, including its size, experience level, 
competencies, duties and responsibilities of staff.
    Attach, as Exhibit F-2, the following:

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    A description of the clearing organization's rules and how they are 
enforced, with reference to any rules provided as part of Exhibit A-5 
that require the clearing organization to comply with one or more of the 
RCCPs.
    Attach, as Exhibit F-3, the following, to the extent not included in 
Exhibit F-2:
    A description of the clearing organization's disciplinary rules, 
including but not limited to rules that address the following--
    (1) Disciplinary authority and procedures that empower staff to 
recommend and prosecute disciplinary actions for suspected rule 
violations and that provide the authority to fine, suspend, or expel any 
clearing participant pursuant to fair and clear standards.
    (2) The issuance of warning letters and/or summary fines for 
specified rule violations.
    (3) The review of investigation reports by a disciplinary panel or 
other authority for issuance of charges or instructions to investigate 
further, or findings that an insufficient basis exists to issue charges.
    (4) Disciplinary committees of the clearing organization that take 
disciplinary action via formal disciplinary processes.
    (5) Whether and how the clearing organization articulates its 
rationale for disciplinary decisions.
    (6) The sanctions for particular violations and a discussion of the 
adequacy of sanctions with respect to the violations committed and their 
effectiveness as deterrents to future violations.
    Attach, as Exhibit F-4, the following, to the extent not provided in 
Exhibit F-2:
    A demonstration that the clearing organization is authorized by rule 
or contractual agreement to obtain, from members and other participants, 
any information and cooperation necessary to conduct investigations, to 
effectively enforce its rules, and to ensure compliance with the 
conditions of registration.

  EXHIBIT G--INFORMATION SHARING AGREEMENTS AMONG THE COMMISSION, THE 
    FOREIGN BOARD OF TRADE, THE CLEARING ORGANIZATION, AND RELEVANT 
                         REGULATORY AUTHORITIES

    Attach, as Exhibit G, the following:
    (1) A description of the arrangements among the Commission, the 
foreign board of trade, the clearing organization, and the relevant 
foreign regulatory authorities that govern the sharing of information 
regarding the transactions that will be executed pursuant to the foreign 
board of trade's registration with the Commission and the clearing and 
settlement of those transactions. This description should address or 
identify whether and how the foreign board of trade, clearing 
organization, and the regulatory authorities governing the activities of 
the foreign board of trade and clearing organization agree to provide 
directly to the Commission information and documentation requested by 
Commission staff that Commission staff determines is needed:
    (i) To evaluate the continued eligibility of the foreign board of 
trade for registration.
    (ii) To enforce compliance with the specified conditions of the 
registration.
    (iii) To enable the CFTC to carry out its duties under the Act and 
Commission regulations and to provide adequate protection to the public 
or registered entities.
    (iv) To respond to potential market abuse associated with trading by 
direct access on the registered foreign board of trade.
    (v) To enable Commission staff to effectively accomplish its 
surveillance responsibilities with respect to a registered entity where 
Commission staff, in its discretion, determines that a contract traded 
on a registered foreign board of trade may affect such ability.
    (2) A statement as to whether the regulatory authorities governing 
the activities of the foreign board of trade and clearing organization 
are signatories to the International Organization of Securities 
Commissions Multilateral Memorandum of Understanding. If not, describe 
any substitute information-sharing arrangements that are in place.
    (3) A statement as to whether the regulatory authorities governing 
the activities of the foreign board of trade and clearing organization 
are signatories to the Declaration on Cooperation and Supervision of 
International Futures Exchanges and Clearing Organizations. If not, a 
statement as to whether and how they have committed to share the types 
of information contemplated by the International Information Sharing 
Memorandum of Understanding and Agreement with the Commission, whether 
pursuant to an existing memorandum of understanding or some other 
arrangement.

           EXHIBIT H--ADDITIONAL INFORMATION AND DOCUMENTATION

    Attach, as EXHIBIT H, any additional information or documentation 
necessary to demonstrate that the requirements for registration 
applicable to the clearing organization or clearing system set forth in 
Commission regulation 48.7 are satisfied.



PART 49_SWAP DATA REPOSITORIES--Table of Contents



Sec.
49.1 Scope.
49.2 Definitions.
49.3 Procedures for registration.
49.4 Withdrawal from registration.
49.5 Equity interest transfers.
49.6 Registration of successor entities.
49.7 Swap data repositories located in foreign jurisdictions.

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49.8 Procedures for implementing registered swap data repository rules.
49.9 Duties of registered swap data repositories.
49.10 Acceptance of data.
49.11 Confirmation of data accuracy.
49.12 Swap data repository recordkeeping requirements.
49.13 Monitoring, screening and analyzing swap data.
49.14 Monitoring, screening and analyzing end-user clearing exemption 
          claims by individual and affiliated entities.
49.15 Real-time public reporting of swap data.
49.16 Privacy and confidentiality requirements of swap data 
          repositories.
49.17 Access to SDR data.
49.18 Confidentiality and indemnification agreement.
49.19 Core principles applicable to registered swap data repositories.
49.20 Governance arrangements (Core Principle 2).
49.21 Conflicts of interest (Core Principle 3).
49.22 Chief compliance officer.
49.23 Emergency policies and procedures.
49.24 System safeguards.
49.25 Financial resources.
49.26 Disclosure requirements of swap data repositories.
49.27 Access and fees.

Appendix A to Part 49--Form SDR

    Authority: 7 U.S.C. 12a and 24a, as amended by Title VII of the Wall 
Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 
Stat. 1376 (2010), unless otherwise noted.

    Source: 76 FR 54575, Sept. 1, 2011, unless otherwise noted.



Sec.  49.1  Scope.

    The provisions of this part apply to any swap data repository as 
defined under Section 1a(48) of the Act which is registered or is 
required to register as such with the Commission pursuant to Section 
21(a) of the Act.



Sec.  49.2  Definitions.

    (a) As used in this part:
    (1) Affiliate. The term ``affiliate'' means a person that directly, 
or indirectly, controls, is controlled by, or is under common control 
with, the swap data repository.
    (2) Asset Class. The term ``asset class'' means the particular broad 
category of goods, services or commodities underlying a swap. The asset 
classes include credit, equity, interest rates, foreign exchange, other 
commodities, and such other asset classes as may be determined by the 
Commission.
    (3) Commercial Use. The term ``commercial use'' means the use of 
swap data held and maintained by a registered swap data repository for a 
profit or business purposes. The use of swap data for regulatory 
purposes and/or responsibilities by a registered swap data repository 
would not be considered a commercial use regardless of whether the 
registered swap data repository charges a fee for reporting such swap 
data.
    (4) Control. The term ``control'' (including the terms ``controlled 
by'' and ``under common control with'') means the possession, direct or 
indirect, of the power to direct or cause the direction of the 
management and policies of a person, whether through the ownership of 
voting securities, by contract, or otherwise.
    (5) Foreign Regulator. The term ``foreign regulator'' means a 
foreign futures authority as defined in Section 1a(26) of the Act, 
foreign financial supervisors, foreign central banks and foreign 
ministries.
    (6) Independent Perspective. The term ``independent perspective'' 
means a viewpoint that is impartial regarding competitive, commercial, 
or industry concerns and contemplates the effect of a decision on all 
constituencies involved.
    (7) Market Participant. The term ``market participant'' means any 
person participating in the swap market, including, but not limited to, 
designated contract markets, derivatives clearing organizations, swaps 
execution facilities, swap dealers, major swap participants, and any 
other counterparties to a swap transaction.
    (8) Non-affiliated third party. The term ``non-affiliated third 
party'' means any person except:
    (i) The swap data repository;
    (ii) The swap data repository's affiliate; or
    (iii) A person employed by a swap data repository and any entity 
that is not the swap data repository's affiliate (and ``non-affiliated 
third party'' includes such entity that jointly employs the person).
    (9) Person Associated with a Swap Data Repository. The term ``person 
associated with a swap data repository'' means:

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    (i) Any partner, officer, or director of such swap data repository 
(or any person occupying a similar status or performing similar 
functions);
    (ii) Any person directly or indirectly controlling, controlled by, 
or under common control with such swap data repository; or
    (iii) Any person employed by such swap data repository.
    (10) Position. The term ``position'' means the gross and net 
notional amounts of open swap transactions aggregated by one or more 
attributes, including, but not limited to, the:
    (i) Underlying instrument;
    (ii) Index, or reference entity;
    (iii) Counterparty;
    (iv) Asset class;
    (v) Long risk of the underlying instrument, index, or reference 
entity; and
    (vi) Short risk of the underlying instrument, index, or reference 
entity.
    (11) Registered Swap Data Repository. The term ``registered swap 
data repository'' means a swap data repository that is registered under 
Section 21 of the Act.
    (12) Reporting Entity. The term ``reporting entity'' means those 
entities that are required to report swap data to a registered swap data 
repository. These reporting entities include designated contract 
markets, swaps execution facilities, derivatives clearing organizations, 
swap dealers, major swap participants and certain non-swap dealers/non-
major swap participant counterparties.
    (13) SDR Information. The term ``SDR Information'' means any 
information that the swap data repository receives or maintains.
    (14) Section 8 Material. The term ``Section 8 Material'' means the 
business transactions, trade data, or market positions of any person and 
trade secrets or names of customers.
    (15) Swap Data. The term ``swap data'' means the specific data 
elements and information set forth in part 45 of this chapter that is 
required to be reported by a reporting entity to a registered swap data 
repository.
    (b) Defined Terms. Capitalized terms not defined in this part shall 
have the meanings assigned to them in Sec.  1.3 of this chapter.



Sec.  49.3  Procedures for registration.

    (a) Application procedures. (1) An applicant, person or entity 
desiring to be registered as a swap data repository shall file 
electronically an application for registration on Form SDR provided in 
appendix A to this part, with the Secretary of the Commission at its 
headquarters in Washington, DC in a format and in the manner specified 
by the Secretary of the Commission in accordance with the instructions 
contained therein.
    (2) The application shall include information sufficient to 
demonstrate compliance with core principles specified in Section 21 of 
the Act and the regulations thereunder. Form SDR consists of 
instructions, general questions and a list of Exhibits (documents, 
information and evidence) required by the Commission in order to 
determine whether an applicant is able to comply with the core 
principles. An application will not be considered to be materially 
complete unless the applicant has submitted, at a minimum, the exhibits 
as required in Form SDR. If the application is not materially complete, 
the Commission shall notify the applicant that the application will not 
be deemed to have been submitted for purposes of the 180-day review 
procedures.
    (3) 180-Day review procedures. The Commission will review the 
application for registration as a swap data repository within 180 days 
of the date of the filing of such application. In considering an 
application for registration as a swap data repository, the staff of the 
Commission shall include in its review, an applicant's past relevant 
submissions and compliance history. At or prior to the conclusion of the 
180-day period, the Commission will either by order grant registration; 
extend, by order, the 180-day review period for good cause; or deny the 
application for registration as a swap data repository. The 180-day 
review period shall commence once a completed submission on Form SDR is 
submitted to the Commission. The determination of when such submission 
on Form SDR is complete shall be at the sole discretion of the 
Commission. If deemed appropriate, the Commission may grant registration 
as a swap data repository subject to conditions. If the Commission

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denies an application for registration as a swap data repository, it 
shall specify the grounds for such denial. In the event of a denial of 
registration for a swap data repository, any person so denied shall be 
afforded an opportunity for a hearing before the Commission.
    (4) Standard for approval. The Commission shall grant the 
registration of a swap data repository if the Commission finds that such 
swap data repository is appropriately organized, and has the capacity: 
to ensure the prompt, accurate and reliable performance of its functions 
as a swap data repository; comply with any applicable provisions of the 
Act and regulations thereunder; carry out its functions in a manner 
consistent with the purposes of Section 21 of the Act and the 
regulations thereunder; and operate in a fair, equitable and consistent 
manner. The Commission shall deny registration of a swap data repository 
if it appears that the application is materially incomplete; fails in 
form or substance to meet the requirements of Section 21 of the Act and 
part 49; or is amended or supplemented in a manner that is inconsistent 
with this Sec.  49.3. The Commission shall notify the applicant seeking 
registration that the Commission is denying the application setting 
forth the deficiencies in the application, and/or the manner in which 
the application fails to meet the requirements of this part.
    (5) Amendments and annual filing. If any information reported on 
Form SDR or in any amendment thereto is or becomes inaccurate for any 
reason, whether before or after the application for registration has 
been granted, the swap data repository shall promptly file an amendment 
on Form SDR updating such information. In addition, the swap data 
repository shall annually file an amendment on Form SDR within 60 days 
after the end of each fiscal year.
    (6) Service of process. Each swap data repository shall designate 
and authorize on Form SDR an agent in the United States, other than a 
Commission official, who shall accept any notice or service of process, 
pleadings, or other documents in any action or proceedings brought 
against the swap data repository to enforce the Act and the regulations 
thereunder.
    (b) Provisional registration. The Commission, upon the request of an 
applicant, may grant provisional registration of a swap data repository 
if such applicant is in substantial compliance with the standards set 
forth in paragraph (a)(4) of this section and is able to demonstrate 
operational capability, real-time processing, multiple redundancy and 
robust security controls. Such provisional registration of a swap data 
repository shall expire on the earlier of: the date that the Commission 
grants or denies registration of the swap data repository; or the date 
that the Commission rescinds the temporary registration of the swap data 
repository. This paragraph (b) shall terminate within such time as 
determined by the Commission. A provisional registration granted by the 
Commission does not affect the right of the Commission to grant or deny 
permanent registration as provided under paragraph (a)(3) of this 
section.
    (c) Withdrawal of application for registration. An applicant for 
registration may withdraw its application submitted pursuant to 
paragraph (a) of this section by filing with the Commission such a 
request. Withdrawal of an application for registration shall not affect 
any action taken or to be taken by the Commission based upon actions, 
activities, or events occurring during the time that the application for 
registration was pending with the Commission, and shall not prejudice 
the filing of a new application by such applicant.
    (d) Reinstatement of dormant registration. Before accepting or re-
accepting swap transaction data, a dormant registered swap data 
repository as defined in Sec.  40.1(e) of this chapter shall reinstate 
its registration under the procedures set forth in paragraph (a) of this 
section; provided, however, that an application for reinstatement may 
rely upon previously submitted materials that still pertain to, and 
accurately describe, current conditions.
    (e) Delegation of authority. (1) The Commission hereby delegates, 
until it orders otherwise, to the Director of the

[[Page 156]]

Division of Market Oversight or the Director's delegates, with the 
consultation of the General Counsel or the General Counsel's delegates, 
the authority to notify an applicant seeking registration as a swap data 
repository pursuant to Section 21 of the Act that the application is 
materially incomplete and the 180-day period review period is extended.
    (2) The Director of the Division of Market Oversight may submit to 
the Commission for its consideration any matter which has been delegated 
in this paragraph.
    (3) Nothing in this paragraph prohibits the Commission, at its 
election, from exercising the authority delegated in paragraph (e)(1) of 
this section.
    (f) Request for confidential treatment. An applicant for 
registration may request confidential treatment for materials submitted 
in its application as set forth in Sec. Sec.  40.8 and 145.9 of this 
chapter. The applicant shall identify with particularity information in 
the application that will be subject to a request for confidential 
treatment.



Sec.  49.4  Withdrawal from registration.

    (a)(1) A registered swap data repository may withdraw its 
registration by giving notice in writing to the Commission requesting 
that its registration as a swap data repository be withdrawn, which 
notice shall be served at least sixty days prior to the date named 
therein as the date when the withdrawal of registration shall take 
effect. The request to withdraw shall be made by a person duly 
authorized by the registrant and shall specify:
    (i) The name of the registrant for which withdrawal of registration 
is being requested;
    (ii) The name, address and telephone number of the swap data 
repository that will have custody of data and records of the registrant;
    (iii) The address where such data and records will be located; and
    (iv) A statement that the custodial swap data repository is 
authorized to make such data and records available in accordance with 
Sec.  1.44.
    (2) Prior to filing a request to withdraw, a registered swap data 
repository shall file an amended Form SDR to update any inaccurate 
information. A withdrawal of registration shall not affect any action 
taken or to be taken by the Commission based upon actions, activities or 
events occurring during the time that the facility was designated by the 
Commission.
    (b) A notice of withdrawal from registration filed by a swap data 
repository shall become effective for all matters (except as provided in 
this paragraph (b)) on the 60th day after the filing thereof with the 
Commission, within such longer period of time as to which such swap data 
repository consents or which the Commission, by order, may determine as 
necessary or appropriate in the public interest.
    (c) Revocation of Registration for False Application. If, after 
notice and opportunity for hearing, the Commission finds that any 
registered swap data repository has obtained its registration by making 
any false or misleading statements with respect to any material fact or 
has violated or failed to comply with any provision of the Act and 
regulations thereunder, the Commission, by order, may revoke the 
registration. Pending final determination whether any registration shall 
be revoked, the Commission, by order, may suspend such registration, if 
such suspension appears to the Commission, after notice and opportunity 
for hearing, to be necessary or appropriate and in the public interest.



Sec.  49.5  Equity interest transfers.

    (a) Equity transfer notification. Upon entering into any 
agreement(s) that could result in an equity interest transfer of ten 
percent or more in the swap data repository, the swap data repository 
shall file a notification of the equity interest transfer with the 
Secretary of the Commission at its headquarters in Washington, DC in a 
format and in the manner specified by the Secretary of the Commission, 
no later than the business day, as defined in Sec.  40.1 of this 
chapter, following the date on which the swap data repository enters 
into a firm obligation to transfer the equity interest. The swap data 
repository shall also amend any information that is no longer accurate 
on Form SDR consistent with the procedures set forth in Sec.  49.3 of 
this part.

[[Page 157]]

    (b) Required information. The notification must include and be 
accompanied by: any relevant agreement(s), including any preliminary 
agreements; any associated changes to relevant corporate documents; a 
chart outlining any new ownership or corporate or organizational 
structure; a brief description of the purpose and any impact of the 
equity interest transfer; and a representation from the swap data 
repository that it meets all of the requirements of Section 21 of the 
Act and Commission regulations adopted thereunder. The swap data 
repository shall keep the Commission apprised of the projected date that 
the transaction resulting in the equity interest transfer will be 
consummated, and must provide to the Commission any new agreements or 
modifications to the original agreement(s) filed pursuant to this 
section. The swap data repository shall notify the Commission of the 
consummation of the transaction on the day in which it occurs.
    (c) Certification. (1) Upon a transfer of an equity interest of ten 
percent or more in a registered swap data repository, the registered 
swap data repository shall file with the Secretary of the Commission at 
its headquarters in Washington, DC in a format and in the manner 
specified by the Secretary of the Commission, a certification that the 
registered swap data repository meets all of the requirements of Section 
21 of the Act and Commission regulations adopted thereunder, no later 
than two business days, as defined in Sec.  40.1 of this chapter, 
following the date on which the equity interest of ten percent or more 
was acquired. Such certification shall state whether changes to any 
aspects of the swap data repository's operations were made as a result 
of such change in ownership, and include a description of any such 
change(s).
    (2) The certification required under this paragraph may rely on and 
be supported by reference to an application for registration as a swap 
data repository or prior filings made pursuant to a rule submission 
requirement, along with any necessary new filings, including new filings 
that provide any and all material updates of prior submissions.



Sec.  49.6  Registration of successor entities.

    (a) In the event of a corporate transaction, such as a re-
organization, merger, acquisition, bankruptcy or other similar corporate 
event, that creates a new entity, in which the swap data repository 
continues to operate, the swap data repository shall request a transfer 
of the registration, rules, and other matters, no later than 30 days 
after the succession. The registration of the predecessor shall be 
deemed to remain effective as the registration of the successor if the 
successor, within 30 days after such succession, files an application 
for registration on Form SDR, and the predecessor files a request for 
vacation of registration on Form SDR provided, however, that the 
registration of the predecessor swap data repository shall cease to be 
effective 90 days after the application for registration on Form SDR is 
filed by the successor swap data repository.
    (b) If the succession is based solely on a change in the 
predecessor's date or state of incorporation, form of organization, or 
composition of a partnership, the successor may, within 30 days after 
the succession, amend the registration of the predecessor swap data 
repository on Form SDR to reflect these changes. This amendment shall be 
an application for registration filed by the predecessor and adopted by 
the successor.



Sec.  49.7  Swap data repositories located in foreign jurisdictions.

    Any swap data repository located outside of the United States 
applying for registration pursuant to Sec.  49.3 of this part shall 
certify on Form SDR and provide an opinion of counsel that the swap data 
repository, as a matter of law, is able to provide the Commission with 
prompt access to the books and records of such swap data repository and 
that the swap data repository can submit to onsite inspection and 
examination by the Commission.



Sec.  49.8  Procedures for implementing registered swap data 
repository rules.

    (a) Request for Commission approval of rules. An applicant for 
registration as a swap data repository may request that

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the Commission approve under Section 5c(c) of the Act, any or all of its 
rules and subsequent amendments thereto, prior to their implementation 
or, notwithstanding the provisions of Section 5c(c)(2) of the Act, at 
anytime thereafter, under the procedures of Sec.  40.5 of this chapter.
    (b) Notwithstanding the timeline under Sec.  40.5(c) of this 
chapter, the rules of a swap data repository that have been submitted 
for Commission approval at the same time as an application for 
registration under Sec.  49.3 of this part or to reinstate the 
registration of a dormant registered swap data repository, as defined in 
Sec.  40.1 of this chapter, will be deemed approved by the Commission no 
earlier than when the swap data repository is deemed to be registered or 
reinstated.
    (c) Self-certification of rules. Rules of a registered swap data 
repository not voluntarily submitted for prior Commission approval 
pursuant to paragraph (a) of this section must be submitted to the 
Commission with a certification that the rule or rule amendment complies 
with the Act or rules thereunder pursuant to the procedures of Sec.  
40.6 of this chapter, as applicable.



Sec.  49.9  Duties of registered swap data repositories.

    (a) Duties. To be registered, and maintain registration, as a swap 
data repository, a registered swap data repository shall:
    (1) Accept swap data as prescribed in Sec.  49.10 for each swap;
    (2) Confirm, as prescribed in Sec.  49.11, with both counterparties 
to the swap the accuracy of the swap data that was submitted;
    (3) Maintain, as prescribed in Sec.  49.12, the swap data described 
in part 45 of the Commission's Regulations in such form and manner as 
provided therein and in the Act and the rules and regulations 
thereunder;
    (4) Provide direct electronic access to the Commission (or any 
designee of the Commission, including another registered entity) as 
prescribed in Sec.  49.17;
    (5) Provide the information set forth in Sec.  49.15 to comply with 
the public reporting requirements set forth in Section 2(a)(13) of the 
Act;
    (6) Establish automated systems for monitoring, screening, and 
analyzing swap data as prescribed in Sec.  49.13;
    (7) Establish automated systems for monitoring, screening and 
analyzing end-user clearing exemption claims as prescribed in Sec.  
49.14;
    (8) Maintain the privacy of any and all swap data and any other 
related information that the swap data repository receives from a 
reporting entity as prescribed in Sec.  49.16;
    (9) Upon request of certain appropriate domestic and foreign 
regulators, provide access to swap data and information held and 
maintained by the swap data repository as prescribed in Sec.  49.17;
    (10) Adopt and establish appropriate emergency policies and 
procedures, including business continuity and disaster recovery plans, 
as prescribed in Sec. Sec.  49.23 and 49.24.
    (11) Designate an individual to serve as a chief compliance officer 
who shall comply with Sec.  49.22; and
    (12) Subject itself to inspection and examination by the Commission.
    (b) This Regulation is not intended to limit, or restrict, the 
applicability of other provisions of the Act, including, but not limited 
to, Section 2(a)(13) of the Act and rules and regulations promulgated 
thereunder.



Sec.  49.10  Acceptance of data.

    (a) A registered swap data repository shall establish, maintain, and 
enforce policies and procedures for the reporting of swap data to the 
registered swap data repository and shall accept and promptly record all 
swap data in its selected asset class and other regulatory information 
that is required to be reported pursuant to part 45 and part 43 of this 
chapter by designated contract markets, derivatives clearing 
organizations, swap execution facilities, swap dealers, major swap 
participants and/or non-swap dealer/non-major swap participant 
counterparties.
    (1) Electronic connectivity. For the purpose of accepting all swap 
data as required by part 45 and part 43, the registered swap data 
repository shall adopt policies and procedures, including technological 
protocols, which provide for electronic connectivity between the swap 
data repository and

[[Page 159]]

designated contract markets, derivatives clearing organizations, swaps 
execution facilities, swap dealers, major swap participants and/or 
certain other non-swap dealer/non-major swap participant counterparties 
who report such data. The technological protocols established by a swap 
data repository shall provide for the receipt of swap creation data, 
swap continuation data, real-time public reporting data, and all other 
data and information required to be reported to such swap data 
repository. The swap data repository shall ensure that its mechanisms 
for swap data acceptance are reliable and secure.
    (b) A registered swap data repository shall set forth in its 
application for registration as described in Sec.  49.3 the specific 
asset class or classes for which it will accept swaps data. If a swap 
data repository accepts swap data of a particular asset class, then it 
shall accept data from all swaps of that asset class, unless otherwise 
prescribed by the Commission.
    (c) A registered swap data repository shall establish policies and 
procedures reasonably designed to prevent any provision in a valid swap 
from being invalidated or modified through the confirmation or recording 
process of the swap data repository. The policies and procedures must 
ensure that the swap data repository's user agreements are designed to 
prevent any such invalidation or modification.
    (d) A registered swap data repository shall establish procedures and 
provide facilities for effectively resolving disputes over the accuracy 
of the swap data and positions that are recorded in the registered swap 
data repository.



Sec.  49.11  Confirmation of data accuracy.

    (a) A registered swap data repository shall establish policies and 
procedures to ensure the accuracy of swap data and other regulatory 
information required to be reported by part 45 that it receives from 
reporting entities or certain third-party service providers acting on 
their behalf, such as confirmation or matching service providers.
    (b) A registered swap data repository shall confirm the accuracy of 
all swap data that is submitted pursuant to part 45.
    (1) Confirmation of data accuracy for swap creation data as defined 
in part 45. (i) A registered swap data repository has confirmed the 
accuracy of swap creation data that was submitted directly by a 
counterparty if the swap data repository has notified both 
counterparties of the data that was submitted and received from both 
counterparties acknowledgement of the accuracy of the swap data and 
corrections for any errors.
    (ii) A registered swap data repository has confirmed the accuracy of 
swap creation data that was submitted by a swap execution facility, 
designated contract market, derivatives clearing organization, or third-
party service provider who is acting on behalf of a counterparty, if the 
swap data repository has complied with each of the following:
    (A) The swap data repository has formed a reasonable belief that the 
swap data is accurate;
    (B) The swap data that was submitted, or any accompanying 
information, evidences that both counterparties agreed to the data; and
    (C) The swap data repository has provided both counterparties with a 
48 hour correction period after which a counterparty is assumed to have 
acknowledged the accuracy of the swap data.
    (2) Confirmation of data accuracy for swap continuation data as 
defined in part 45. (i) A registered swap data repository has confirmed 
the accuracy of the swap continuation data that was submitted directly 
by a counterparty if the swap data repository has notified both 
counterparties of the data that was submitted and provided both 
counterparties with a 48 hour correction period after which a 
counterparty is assumed to have acknowledged the accuracy of the data.
    (ii) A registered swap data repository has confirmed the accuracy of 
swap continuation data that was submitted by a swap execution facility, 
designated contract market, derivatives clearing organization, or third-
party service provider who is acting on behalf of a counterparty, if the 
swap data repository has complied with each of the following:

[[Page 160]]

    (A) The swap data repository has formed a reasonable belief that the 
swap data is accurate; and
    (B) The swap data repository has provided both counterparties with a 
48 hour correction period after which a counterparty is assumed to have 
acknowledged the accuracy of the swap data.
    (c) A registered swap data repository shall keep a record of 
corrected errors that is available upon request to the Commission.



Sec.  49.12  Swap data repository recordkeeping requirements.

    (a) A registered swap data repository shall maintain its books and 
records in accordance with the requirements of part 45 of this chapter 
regarding the swap data required to be reported to the swap data 
repository.
    (b) A registered swap data repository shall maintain swap data 
(including all historical positions) throughout the existence of the 
swap and for five years following final termination of the swap, during 
which time the records must be readily accessible by the swap data 
repository and available to the Commission via real-time electronic 
access; and in archival storage for which such swap data is retrievable 
by the swap data repository within three business days.
    (c) All records required to be kept pursuant to this Regulation 
shall be open to inspection upon request by any representative of the 
Commission and the United States Department of Justice. Copies of all 
such records shall be provided, at the expense of the swap data 
repository or person required to keep the record, to any representative 
of the Commission upon request, either by electronic means, in hard 
copy, or both, as requested by the Commission.
    (d) A registered swap data repository shall comply with the real 
time public reporting and recordkeeping requirements prescribed in Sec.  
49.15 and part 43 of this chapter.
    (e) A registered swap data repository shall establish policies and 
procedures to calculate positions for position limits and any other 
purpose as required by the Commission, for all persons with swaps that 
have not expired maintained by the registered swap data repository.



Sec.  49.13  Monitoring, screening and analyzing swap data.

    (a) Duty to monitor, screen and analyze data. A registered swap data 
repository shall monitor, screen, and analyze all swap data in its 
possession in such a manner as the Commission may require. A swap data 
repository shall routinely monitor, screen, and analyze swap data for 
the purpose of any standing swap surveillance objectives which the 
Commission may establish as well as perform specific monitoring, 
screening, and analysis tasks based on ad hoc requests by the 
Commission.
    (b) Capacity to monitor, screen and analyze data. A registered swap 
data repository shall establish and maintain sufficient information 
technology, staff, and other resources to fulfill the requirements in 
this Sec.  49.13 in a manner prescribed by the Commission. A swap data 
repository shall monitor the sufficiency of such resources at least 
annually, and adjust its resources as its responsibilities, or the 
volume of swap transactions subject to monitoring, screening, and 
analysis, increase.



Sec.  49.14  Monitoring, screening and analyzing end-user clearing exemption 
claims by individual and affiliated entities.

    A registered swap data repository shall have automated systems 
capable of identifying, aggregating, sorting, and filtering all swap 
transactions that are reported to it which are exempt from clearing 
pursuant to Section 2(h)(7) of the Act. Such capabilities shall be 
applicable to any information provided to a swap data repository by or 
on behalf of an end user regarding how such end user meets the 
requirements of Sections 2(h)(7)(A)(i), 2(h)(7)(A)(ii), and 
2(h)(7)(A)(iii) of the Act and any Commission regulations thereunder.



Sec.  49.15  Real-time public reporting of swap data.

    (a) Scope. The provisions of this Sec.  49.15 apply to real-time 
public reporting of swap data, as defined in part 43 of this chapter.

[[Page 161]]

    (b) Systems to accept and disseminate swap data in connection with 
real-time public reporting. A registered swap data repository shall 
establish such electronic systems as are necessary to accept and 
publicly disseminate real-time swap data submitted to meet the real-time 
public reporting obligations of part 43 of this chapter. Any electronic 
systems established for this purpose must be capable of accepting and 
ensuring the public dissemination of all data fields required by part 43 
of this chapter.
    (c) Duty to notify the commission of untimely data. A registered 
swap data repository must notify the Commission of any swap transaction 
for which the real-time swap data was not received by the swap data 
repository in accordance with part 43 of this chapter.



Sec.  49.16  Privacy and confidentiality requirements of swap data repositories.

    (a) Each swap data repository shall:
    (1) Establish, maintain, and enforce written policies and procedures 
reasonably designed to protect the privacy and confidentiality of any 
and all SDR Information that is not subject to real-time public 
reporting set forth in part 43 of this chapter. Such policies and 
procedures shall include, but are not limited to, policies and 
procedures to protect the privacy and confidentiality of any and all SDR 
Information (except for swap data disseminated under part 43) that the 
swap data repository shares with affiliates and non-affiliated third 
parties; and
    (2) Establish and maintain safeguards, policies, and procedures 
reasonably designed to prevent the misappropriation or misuse, directly 
or indirectly, of:
    (i) Section 8 Material;
    (ii) Other SDR Information; and/or
    (iii) Intellectual property, such as trading strategies or portfolio 
positions, by the swap data repository or any person associated with the 
swap data repository. Such safeguards, policies, and procedures shall 
include, but are not limited to,
    (A) limiting access to such Section 8 Material, other SDR 
Information, and intellectual property,
    (B) standards controlling persons associated with the swap data 
repository trading for their personal benefit or the benefit of others, 
and
    (C) adequate oversight to ensure compliance with this subparagraph.
    (b) Swap data repositories shall not, as a condition of accepting 
swap data from reporting entities, require the waiver of any privacy 
rights by such reporting entities.
    (c) Subject to Section 8 of the Act, swap data repositories may 
disclose aggregated swap data on a voluntary basis or as requested, in 
the form and manner, prescribed by the Commission.



Sec.  49.17  Access to SDR data.

    (a) Purpose. This Section provides a procedure by which the 
Commission, other domestic regulators and foreign regulators may obtain 
access to the swaps data held and maintained by registered swap data 
repositories. Except as specifically set forth in this Regulation, the 
Commission's duties and obligations regarding the confidentiality of 
business transactions or market positions of any person and trade 
secrets or names of customers identified in Section 8 of the Act are not 
affected.
    (b) Definitions. For purposes of this Sec.  49.17, the following 
terms shall be defined as follows:
    (1) Appropriate Domestic Regulator. The term ``Appropriate Domestic 
Regulator'' shall mean:
    (i) The Securities and Exchange Commission;
    (ii) Each prudential regulator identified in Section 1a(39) of the 
Act with respect to requests related to any of such regulator's 
statutory authorities, without limitation to the activities listed for 
each regulator in Section 1a(39);
    (iii) The Financial Stability Oversight Council;
    (iv) The Department of Justice;
    (v) Any Federal Reserve Bank;
    (vi) The Office of Financial Research; and
    (vii) Any other person the Commission deems appropriate.
    (2) Appropriate Foreign Regulator. The term ``Appropriate Foreign 
Regulator'' shall mean those Foreign Regulators

[[Page 162]]

with an existing memorandum of understanding or other similar type of 
information sharing arrangement executed with the Commission and/or 
Foreign Regulators without an MOU as determined on a case-by-case basis 
by the Commission.
    (i) Filing requirements. For those Foreign Regulators who do not 
currently have a memorandum of understanding with the Commission, the 
Commission has determined to provide the following filing process for 
those Foreign Regulators that may require swap data or information 
maintained by a registered swap data repository. The filing requirement 
set forth in this Sec.  49.17 will assist the Commission in its analysis 
of whether a specific Foreign Regulator should be considered 
``appropriate'' for purposes of Section 21(c)(7) of the Act.
    (A) The Foreign Regulator is required to file an application in the 
form and manner prescribed by the Commission.
    (B) The Foreign Regulator in its application is required to provide 
sufficient facts and procedures to permit the Commission to analyze 
whether the Foreign Regulator employs appropriate confidentiality 
procedures and to satisfy itself that the information will be disclosed 
only as permitted by Section 8(e) of the Act.
    (ii) The Commission in its analysis of Foreign Regulator 
applications shall be satisfied that any information potentially 
provided by a registered swap data repository will not be disclosed 
except in limited circumstances, such as an adjudicatory action or 
proceeding involving the Foreign Regulator, as identified in Section 8 
of the Act.
    (iii) The Commission reserves the right in connection with any 
determination of an ``Appropriate Foreign Regulator'' to revisit or 
reassess a prior determination consistent with the Act.
    (3) Direct electronic access. For the purposes of this regulation, 
the term ``direct electronic access'' shall mean an electronic system, 
platform or framework that provides Internet or Web-based access to 
real-time swap transaction data and also provides scheduled data 
transfers to Commission electronic systems.
    (c) Commission access--(1) Direct electronic access. A registered 
swap data repository shall provide direct electronic access to the 
Commission or the Commission's designee, including another registered 
entity, in order for the Commission to carry out its legal and statutory 
responsibilities under the Act and related regulations.
    (2) Monitoring tools. A registered swap data repository is required 
to provide the Commission with proper tools for the monitoring, 
screening and analyzing of swap transaction data, including, but not 
limited to, Web-based services, services that provide automated transfer 
of data to Commission systems, various software and access to the staff 
of the swap data repository and/or third-party service providers or 
agents familiar with the operations of the registered swap data 
repository, which can provide assistance to the Commission regarding 
data structure and content. These monitoring tools shall be 
substantially similar in analytical capability as those provided to the 
compliance staff and the Chief Compliance Officer of the swap data 
repository.
    (3) Authorized users. The swap transaction data provided to the 
Commission by a registered swap data repository shall be accessible only 
by authorized users. The swap data repository shall maintain and provide 
a list of authorized users in the manner and frequency determined by the 
Commission.
    (d) Other regulators--(1) General Procedure for Gaining Access to 
Registered Swap Data Repository Data. Appropriate Domestic Regulators 
and Appropriate Foreign Regulators seeking to gain access to the swap 
data maintained by a swap data repository are required to apply for 
access by filing a request for access with the registered swap data 
repository and certifying that it is acting within the scope of its 
jurisdiction.
    (2) Appropriate domestic regulator with regulatory responsibility 
over a swap data repository. An Appropriate Domestic Regulator that has 
regulatory jurisdiction over a swap data repository registered with it 
pursuant to a separate statutory authority that is also registered with 
the Commission pursuant to this chapter is not subject to this

[[Page 163]]

paragraph (d) and Sec.  49.18(b) as long as the following conditions are 
met:
    (i) The appropriate domestic regulator executes a memorandum of 
understanding or similar information sharing arrangement with the 
Commission; and
    (ii) The Commission, consistent with Section 21(c)(4)(A) of the Act, 
designates the Appropriate Domestic Regulator to receive direct 
electronic access.
    (3) Appropriate foreign regulator with regulatory responsibility 
over a swap data repository. An Appropriate Foreign Regulator that has 
supervisory authority over a swap data repository registered with it 
pursuant to foreign law and/or regulation that is also registered with 
the Commission pursuant to this chapter is not otherwise subject to this 
paragraph (d) and Sec.  49.18(b).
    (4) Obligations of the registered swap data repository in connection 
with appropriate domestic regulator or appropriate foreign regulator 
requests for data access.
    (i) A registered swap data repository shall promptly notify the 
Commission regarding any request received by an Appropriate Domestic 
Regulator or Appropriate Foreign Regulator to gain access to the swaps 
transaction data maintained by such swap data repository.
    (ii) The registered swap data repository shall notify the Commission 
electronically in a format specified by the Secretary of the Commission.
    (5) Timing. Once the swap data repository provides the Commission 
with notification of a request for data access by an Appropriate 
Domestic Regulator or Appropriate Foreign Regulator as required by 
paragraph (d)(2) of this section, such swap data repository shall 
provide access to the requested swap data.
    (6) Confidentiality and indemnification agreement. Consistent with 
Sec.  49.18 of this part, the Appropriate Domestic Regulator or 
Appropriate Foreign Regulator prior to receipt of any requested data or 
information shall execute a ``Confidentiality and Indemnification 
Agreement'' with the registered swap data repository as set forth in 
Section 21(d) of the Act.
    (e) Third-party service providers to a registered swap data 
repository. Access to the data and information maintained by a 
registered swap data repository may be necessary for certain third 
parties that provide various technology and data-related services to a 
registered swap data repository. Third-party access to the swap data 
maintained by a swap data repository is permissible subject to the 
following conditions:
    (1) Both the registered swap data repository and the third party 
service provider shall have strict confidentiality procedures that 
protect data and information from improper disclosure.
    (2) Prior to swap data access, the third-party service provider and 
the registered swap data repository shall execute a ``Confidentiality 
Agreement'' setting forth minimum confidentiality procedures and 
permissible uses of the information maintained by the swap data 
repository that are equivalent to the privacy procedures for swap data 
repositories outlined in Sec.  49.16.
    (f) Access by market participants--(1) General. Access of swap data 
maintained by the registered swap data repository to market participants 
is generally prohibited.
    (2) Exception. Data and information related to a particular swap 
that is maintained by the registered swap data repository may be 
accessed by either counterparty to that particular swap. However, the 
data and information maintained by the registered swap data repository 
that may be accessed by either counterparty to a particular swap shall 
not include the identity or the legal entity identifier (as such term is 
used in part 45 of this chapter) of the other counterparty to the swap, 
or the other counterparty's clearing member for the swap, if the swap is 
executed anonymously on a swap execution facility or designated contract 
market, and cleared in accordance with Commission regulations in 
Sec. Sec.  1.74, 23.610, and 37.12(b)(7) of this chapter.
    (g) Commercial uses of data accepted and maintained by the 
registered swap data repository prohibited. Swap data accepted and 
maintained by the swap data repository generally may not be used for 
commercial or business purposes by the swap data repository or any of 
its affiliated entities.

[[Page 164]]

    (1) The registered swap data repository is required to adopt and 
implement adequate ``firewalls'' or controls to protect the reported 
swap data required to be maintained under Sec.  49.12 of this part and 
Section 21(b) of the Act from any improper commercial use.
    (2) Exception. (A) The swap dealer, counterparty or any other 
registered entity that submits the swap data maintained by the 
registered swap data repository may permit the commercial or business 
use of that data by express written consent.
    (B) Swap data repositories shall not as a condition of the reporting 
of swap transaction data require a reporting party to consent to the use 
of any reported data for commercial or business purposes.
    (3) Swap data repositories responsible for the public dissemination 
of real-time swap data shall not make commercial use of such data prior 
to its public dissemination.

[76 FR 54575, Sept. 1, 2011, as amended at 79 FR 16675, Mar. 26, 2014]



Sec.  49.18  Confidentiality and indemnification agreement.

    (a) Purpose. This section sets forth the obligations of registered 
swap data repositories to execute a ``Confidentiality and 
Indemnification Agreement'' in connection with providing access to swap 
data to certain domestic and foreign regulators.
    (b) Confidentiality and indemnification agreement. Prior to the 
registered swap data repository providing access to the swap data with 
any Appropriate Domestic Regulator or Appropriate Foreign Regulator as 
defined in Sec.  49.17(b), the swap data repository shall receive a 
written agreement from each such entity stating that the entity shall 
abide by the confidentiality requirements described in Section 8 of the 
Act relating to the swap data that is provided; and each such entity 
shall agree to indemnify the swap data repository and the Commission for 
any expenses arising from litigation relating to the information 
provided under Section 8 of the Act.
    (c) Certain appropriate domestic and foreign regulators with 
regulatory responsibility over a swap data repository. The requirements 
set forth above in paragraph (b) shall not apply to certain Appropriate 
Domestic and Foreign Regulators with regulatory responsibility over a 
swap data repository as described in Sec.  49.17(d)(2) and (3). The swap 
data repository and such Appropriate Domestic or Foreign Regulator in 
each case is required to comply with Section 8 of the Act and any other 
relevant statutory confidentiality provisions.



Sec.  49.19  Core principles applicable to registered swap data repositories.

    (a) Compliance with core principles. To be registered, and maintain 
registration, a swap data repository shall comply with the core 
principles as described in this paragraph. Unless otherwise determined 
by the Commission by rule or regulation, a swap data repository shall 
have reasonable discretion in establishing the manner in which the swap 
data repository complies with the core principles described in this 
paragraph.
    (b) Antitrust considerations (Core Principle 1). Unless necessary or 
appropriate to achieve the purposes of the Act, a registered swap data 
repository shall avoid adopting any rule or taking any action that 
results in any unreasonable restraint of trade; or imposing any material 
anticompetitive burden on trading, clearing or reporting swaps.
    (c) Governance arrangements (Core Principle 2). Registered swap data 
repositories shall establish governance arrangements as set forth in 
Sec.  49.20.
    (d) Conflicts of interest (Core Principle 3). Registered swap data 
repositories shall manage and minimize conflicts of interest and 
establish processes for resolving such conflicts of interest as set 
forth in Sec.  49.21.
    (e) Additional duties (Core Principle 4). Registered swap data 
repositories shall also comply with the following additional duties:
    (1) Financial resources. Registered swap data repositories shall 
maintain sufficient financial resources as set forth in Sec.  49.25;
    (2) Disclosure requirements of registered swap data repositories. 
Registered swap data repositories shall furnish an appropriate 
disclosure document setting forth the risks and costs of swap data 
repository services as detailed in Sec.  49.26; and

[[Page 165]]

    (3) Access and Fees. Registered swap data repositories shall adhere 
to Commission requirements regarding fair and open access and the 
charging of any fees, dues or other similar type charges as detailed in 
Sec.  49.27.



Sec.  49.20  Governance arrangements (Core Principle 2).

    (a) General. (1) Each registered swap data repository shall 
establish governance arrangements that are transparent to fulfill public 
interest requirements, and to support the objectives of the Federal 
Government, owners, and participants.
    (2) Each registered swap data repository shall establish governance 
arrangements that are well-defined and include a clear organizational 
structure with consistent lines of responsibility and effective internal 
controls, including with respect to administration, accounting, and the 
disclosure of confidential information. Sec.  49.22 of this part 
contains rules on internal controls applicable to administration and 
accounting. Sec.  49.16 of this part contains rules on internal controls 
applicable to the disclosure of confidential information.
    (b) Transparency of Governance Arrangements. (1) Each registered 
swap data repository shall state in its charter documents that its 
governance arrangements are transparent to support, among other things, 
the objectives of the Federal Government pursuant to Section 21(f)(2) of 
the Act.
    (2) Each registered swap data repository shall, at a minimum, make 
the following information available to the public and relevant 
authorities, including the Commission:
    (i) The mission statement of the registered swap data repository;
    (ii) The mission statement and/or charter of the board of directors, 
as well as of each committee of the registered swap data repository that 
has:
    (A) The authority to act on behalf of the board of directors or
    (B) The authority to amend or constrain actions of the board of 
directors;
    (iii) The board of directors nomination process for the registered 
swap data repository, as well as the process for assigning members of 
the board of directors or other persons to any committee referenced in 
paragraph (b)(2)(ii) of this section;
    (iv) For the board of directors and each committee referenced in 
paragraph (b)(2)(ii) of this section, the names of all members;
    (v) A description of the manner in which the board of directors, as 
well as any committee referenced in paragraph (b)(2)(ii) of this 
section, considers an Independent Perspective in its decision-making 
process, as Sec.  49.2(a)(14) of this part defines such term;
    (vi) The lines of responsibility and accountability for each 
operational unit of the registered swap data repository to any committee 
thereof and/or the board of directors; and
    (vii) Summaries of significant decisions implicating the public 
interest, the rationale for such decisions, and the process for reaching 
such decisions. Such significant decisions shall include decisions 
relating to pricing of repository services, offering of ancillary 
services, access to swap data, and use of Section 8 Material, other SDR 
Information, and intellectual property (as referenced in Sec.  49.16 of 
this part). Such summaries of significant decisions shall not require 
the registered swap data repository to disclose Section 8 Material or, 
where appropriate, information that the swap data repository received on 
a confidential basis from a reporting entity.
    (3) The registered swap data repository shall ensure that the 
information specified in paragraph (b)(2)(i) to (vii) of this section is 
current, accurate, clear, and readily accessible, for example, on its 
Web site. The swap data repository shall set forth such information in a 
language commonly used in the commodity futures and swap markets and at 
least one of the domestic language(s) of the jurisdiction in which the 
swap data repository is located.
    (4) Furthermore, the registered swap data repository shall disclose 
the information specified in paragraph (b)(2)(vii) of this section in a 
sufficiently comprehensive and detailed fashion so as to permit the 
public and relevant authorities, including the Commission, to understand 
the policies or procedures of the swap data repository implicated and 
the manner in which the decision implements or

[[Page 166]]

amends such policies or procedures. A swap data repository shall not 
disclose minutes from meetings of its board of directors or committees 
to the public, although it shall disclose such minutes to the Commission 
upon request.
    (c) The board of directors--(1) General. (i) Each registered swap 
data repository shall establish, maintain, and enforce (including, 
without limitation, pursuant to paragraph (c)(4) of this Regulation) 
written policies or procedures:
    (A) To ensure that its board of directors, as well as any committee 
that has:
    (1) Authority to act on behalf of its board of directors or
    (2) Authority to amend or constrain actions of its board of 
directors, adequately considers an Independent Perspective in its 
decision-making process;
    (B) To ensure that the nominations process for such board of 
directors, as well as the process for assigning members of the board of 
directors or other persons to such committees, adequately incorporates 
an Independent Perspective; and
    (C) To clearly articulate the roles and responsibilities of such 
board of directors, as well as such committees, especially with respect 
to the manner in which they ensure that a registered swap data 
repository complies with all statutory and regulatory responsibilities 
under the Act and the regulations promulgated thereunder.
    (ii) Each registered swap data repository shall submit to the 
Commission, within thirty days after each election of its board of 
directors:
    (A) For the board of directors, as well as each committee referenced 
in paragraph (c)(1)(i)(A) of this section, a list of all members;
    (B) A description of the relationship, if any, between such members 
and the registered swap data repository or any reporting entity thereof 
(or, in each case, affiliates thereof, as Sec.  49.2(a)(1) of this part 
defines such term); and
    (C) Any amendments to the written policies and procedures referenced 
in paragraph (c)(1)(i) of this section.
    (2) Compensation. The compensation of non-executive members of the 
board of directors of a registered swap data repository shall not be 
linked to the business performance of such swap data repository.
    (3) Annual self-review. The board of directors of a registered swap 
data repository shall review its performance and that of its individual 
members annually. It should consider periodically using external 
facilitators for such reviews.
    (4) Board member removal. A registered swap data repository shall 
have procedures to remove a member from the board of directors, where 
the conduct of such member is likely to be prejudicial to the sound and 
prudent management of the swap data repository.
    (5) Expertise. Each registered swap data repository shall ensure 
that members of its board of directors, members of any committee 
referenced in paragraph (c)(1)(i)(A) of this Regulation, and its senior 
management, in each case, are of sufficiently good repute and possess 
the requisite skills and expertise to fulfill their responsibilities in 
the management and governance of the swap data repository, to have a 
clear understanding of such responsibilities, and to exercise sound 
judgment about the affairs of the swap data repository.
    (d) Compliance with core principle. The chief compliance officer of 
the registered swap data repository shall review the compliance of the 
swap data repository with this core principle.



Sec.  49.21  Conflicts of interest (Core Principle 3).

    (a) General. (1) Each registered swap data repository shall 
establish and enforce rules to minimize conflicts of interest in the 
decision-making process of the swap data repository, and establish a 
process for resolving such conflicts of interest.
    (2) Nothing in this section shall supersede any requirement 
applicable to the swap data repository pursuant to Sec.  49.20 of this 
part.
    (b) Policies and procedures. (1) Each registered swap data 
repository shall establish, maintain, and enforce written procedures to:
    (i) Identify, on an ongoing basis, existing and potential conflicts 
of interest; and

[[Page 167]]

    (ii) Make decisions in the event of a conflict of interest. Such 
procedures shall include rules regarding the recusal, in applicable 
circumstances, of parties involved in the making of decisions.
    (2) As further described in Sec.  49.20 of this part, the chief 
compliance officer of the registered swap data repository shall, in 
consultation with the board of directors or a senior officer of the swap 
data repository, as applicable, resolve any such conflicts of interest.
    (c) Compliance with core principle. The chief compliance officer of 
the registered swap data repository shall review the compliance of the 
swap data repository with this core principle.



Sec.  49.22  Chief compliance officer.

    (a) Definition of Board of Directors. For purposes of this part 49, 
the term ``board of directors'' means the board of directors of a 
registered swap data repository, or for those swap data repositories 
whose organizational structure does not include a board of directors, a 
body performing a function similar to that of a board of directors.
    (b) Designation and qualifications of chief compliance officer--(1) 
Chief Compliance Officer required. Each registered swap data repository 
shall establish the position of chief compliance officer, and designate 
an individual to serve in that capacity.
    (i) The position of chief compliance officer shall carry with it the 
authority and resources to develop and enforce policies and procedures 
necessary to fulfill the duties set forth for chief compliance officers 
in the Act and Commission regulations.
    (ii) The chief compliance officer shall have supervisory authority 
over all staff acting at the direction of the chief compliance officer.
    (2) Qualifications of Chief Compliance Officer. The individual 
designated to serve as chief compliance officer shall have the 
background and skills appropriate for fulfilling the responsibilities of 
the position and shall be subject to the following requirements:
    (i) No individual disqualified from registration pursuant to 
Sections 8a(2) or 8a(3) of the Act may serve as a chief compliance 
officer.
    (ii) The chief compliance officer may not be a member of the swap 
data repository's legal department or serve as its general counsel.
    (c) Appointment, supervision, and removal of chief compliance 
officer--(1) Appointment and Compensation of Chief Compliance Officer 
Determined by Board of Directors. A registered swap data repository's 
chief compliance officer shall be appointed by its board of directors. 
The board of directors shall also approve the compensation of the chief 
compliance officer and shall meet with the chief compliance officer at 
least annually. The appointment of the chief compliance officer and 
approval of the chief compliance officer's compensation shall require 
the approval of the board of directors. The senior officer of the swap 
data repository may fulfill these responsibilities. A swap data 
repository shall notify the Commission of the appointment of a new chief 
compliance officer within two business days of such appointment.
    (2) Supervision of chief compliance officer. A registered swap data 
repository's chief compliance officer shall report directly to the board 
of directors or to the senior officer of the swap data repository, at 
the swap data repository's discretion.
    (3) Removal of chief compliance officer by board of directors. (i) 
Removal of a registered swap data repository's chief compliance officer 
shall require the approval of the swap data repository's board of 
directors. If the swap data repository does not have a board of 
directors, then the chief compliance officer may be removed by the 
senior officer of the swap data repository;
    (ii) The swap data repository shall notify the Commission of such 
removal within two business days; and
    (iii) The swap data repository shall notify the Commission within 
two business days of appointing any new chief compliance officer, 
whether interim or permanent.
    (d) Duties of chief compliance officer. The chief compliance 
officer's duties shall include, but are not limited to, the following:
    (1) Overseeing and reviewing the swap data repository's compliance 
with Section 21 of the Act and any related rules adopted by the 
Commission;

[[Page 168]]

    (2) In consultation with the board of directors, a body performing a 
function similar to the board, or the senior officer of the swap data 
repository, resolving any conflicts of interest that may arise 
including:
    (i) Conflicts between business considerations and compliance 
requirements;
    (ii) Conflicts between business considerations and the requirement 
that the registered swap data repository provide fair and open access as 
set forth in Sec.  49.27 of this part; and
    (iii) Conflicts between a registered swap data repository's 
management and members of the board of directors;
    (3) Establishing and administering written policies and procedures 
reasonably designed to prevent violation of the Act and any rules 
adopted by the Commission;
    (4) Taking reasonable steps to ensure compliance with the Act and 
Commission regulations relating to agreements, contracts, or 
transactions, and with Commission regulations under Section 21 of the 
Act, including confidentiality and indemnification agreements entered 
into with foreign or domestic regulators pursuant to Section 21(d) of 
the Act;
    (5) Establishing procedures for the remediation of noncompliance 
issues identified by the chief compliance officer through a compliance 
office review, look-back, internal or external audit finding, self-
reported error, or validated complaint;
    (6) Establishing and following appropriate procedures for the 
handling, management response, remediation, retesting, and closing of 
noncompliance issues; and
    (7) Establishing and administering a written code of ethics designed 
to prevent ethical violations and to promote honesty and ethical 
conduct.
    (e) Annual compliance report prepared by chief compliance officer. 
The chief compliance officer shall, not less than annually, prepare and 
sign an annual compliance report, that at a minimum, contains the 
following information covering the time period since the date on which 
the swap data repository became registered with the Commission or since 
the end of the period covered by a previously filed annual compliance 
report, as applicable:
    (1) A description of the registered swap data repository's written 
policies and procedures, including the code of ethics and conflict of 
interest policies;
    (2) A review of applicable Commission regulations and each 
subsection and core principle of Section 21 of the Act, that, with 
respect to each:
    (i) Identifies the policies and procedures that are designed to 
ensure compliance with each subsection and core principle, including 
each duty specified in Section 21(c);
    (ii) Provides a self-assessment as to the effectiveness of these 
policies and procedures; and
    (iii) Discusses areas for improvement, and recommends potential or 
prospective changes or improvements to its compliance program and 
resources;
    (3) A list of any material changes to compliance policies and 
procedures since the last annual compliance report;
    (4) A description of the financial, managerial, and operational 
resources set aside for compliance with respect to the Act and 
Commission regulations;
    (5) A description of any material compliance matters, including 
noncompliance issues identified through a compliance office review, 
look-back, internal or external audit finding, self-reported error, or 
validated complaint, and explains how they were resolved; and
    (6) A certification by the chief compliance officer that, to the 
best of his or her knowledge and reasonable belief, and under penalty of 
law, the annual compliance report is accurate and complete.
    (f) Submission of annual compliance report by chief compliance 
officer to the commission. (1) Prior to submission of the annual 
compliance report to the Commission, the chief compliance officer shall 
provide the annual compliance report to the board of the registered swap 
data repository for its review. If the swap data repository does not 
have a board, then the annual compliance report shall be provided to the 
senior officer for their review. Members of the board and the senior 
officer may not require the chief compliance

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officer to make any changes to the report. Submission of the report to 
the board or senior officer, and any subsequent discussion of the 
report, shall be recorded in board minutes or similar written record, as 
evidence of compliance with this requirement.
    (2) The annual compliance report shall be provided electronically to 
the Commission not more than 60 days after the end of the registered 
swap data repository's fiscal year, concurrently with the filing of the 
annual amendment to Form SDR that must be submitted to the Commission 
pursuant to Sec.  49.3(a)(5) of this part.
    (3) Promptly upon discovery of any material error or omission made 
in a previously filed compliance report, the chief compliance officer 
shall file an amendment with the Commission to correct any material 
error or omission. An amendment shall contain the oath or certification 
required under paragraph (e)(67) of this section.
    (4) A registered swap data repository may request the Commission for 
an extension of time to file its compliance report based on substantial, 
undue hardship. Extensions for the filing deadline may be granted at the 
discretion of the Commission.
    (g) Recordkeeping. (1) The registered swap data repository shall 
maintain:
    (i) A copy of the written policies and procedures, including the 
code of ethics and conflicts of interest policies adopted in furtherance 
of compliance with the Act and Commission regulations;
    (ii) Copies of all materials, including written reports provided to 
the board of directors or senior officer in connection with the review 
of the annual compliance report under paragraph (f)(1) of this section 
and the board minutes or similar written record of such review, that 
record the submission of the annual compliance report to the board of 
directors or senior officer; and
    (iii) Any records relevant to the registered swap data repository's 
annual compliance report, including, but not limited to, work papers and 
other documents that form the basis of the report, and memoranda, 
correspondence, other documents, and records that are:
    (A) Created, sent or received in connection with the annual 
compliance report and
    (B) Contain conclusions, opinions, analyses, or financial data 
related to the annual compliance report.
    (2) The registered swap data repository shall maintain records in 
accordance with Sec.  1.31 of this chapter.



Sec.  49.23  Emergency authority policies and procedures.

    (a) Emergency policies and procedures required. A registered swap 
data repository shall establish policies and procedures for the exercise 
of emergency authority in the event of any emergency, including but not 
limited to natural, man-made, and information technology emergencies. 
Such policies and procedures shall also require a swap data repository 
to exercise its emergency authority upon request by the Commission. A 
swap data repository's policies and procedures for the exercise of 
emergency authority shall be transparent to the Commission and to market 
participants whose swap transaction data resides at the swap data 
repository.
    (b) Invocation of emergency authority. A registered swap data 
repository's policies and procedures for the exercise of emergency 
authority shall enumerate the circumstances under which the swap data 
repository is authorized to invoke its emergency authority and the 
procedures that it shall follow to declare an emergency. Such policies 
and procedures shall also address the range of measures that it is 
authorized to take when exercising such emergency authority.
    (c) Designation of persons authorized to act in an emergency. A 
registered swap data repository shall designate one or more officials of 
the swap data repository as persons authorized to exercise emergency 
authority on its behalf. A swap data repository shall also establish a 
chain of command to be used in the event that the designated person(s) 
is unavailable. A swap data repository shall notify the Commission of 
the person(s) designated to exercise emergency authority.
    (d) Conflicts of interest. A registered swap data repository's 
policies and procedures for the exercise of emergency authority shall 
include provisions to

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avoid conflicts of interest in any decisions made pursuant to emergency 
authority. Such policies and procedures shall also include provisions to 
consult the swap data repository's chief compliance officer in any 
emergency decision that may raise potential conflicts of interest.
    (e) Notification to the commission. A registered swap data 
repository's policies and procedures for the exercise of emergency 
authority shall include provisions to notify the Commission as soon as 
reasonably practicable regarding any invocation of emergency authority. 
When notifying the Commission of any exercise of emergency authority, a 
swap data repository shall explain the reasons for taking such emergency 
action, explain how conflicts of interest were minimized, and document 
the decision-making process. Underlying documentation shall be made 
available to the Commission upon request.



Sec.  49.24  System safeguards.

    (a) Each registered swap data repository shall, with respect to all 
swap data in its custody:
    (1) Establish and maintain a program of risk analysis and oversight 
to identify and minimize sources of operational risk through the 
development of appropriate controls and procedures and the development 
of automated systems that are reliable, secure, and have adequate 
scalable capacity;
    (2) Establish and maintain emergency procedures, backup facilities, 
and a business continuity-disaster recovery plan that allow for the 
timely recovery and resumption of operations and the fulfillment of the 
duties and obligations of the swap data repository; and
    (3) Periodically conduct tests to verify that backup resources are 
sufficient to ensure continued fulfillment of all duties of the swap 
data repository established by the Act or the Commission's regulations.
    (b) A swap data repository's program of risk analysis and oversight 
with respect to its operations and automated systems shall address each 
of the following categories of risk analysis and oversight:
    (1) Enterprise risk management and governance. This category 
includes, but is not limited to: Assessment, mitigation, and monitoring 
of security and technology risk; security and technology capital 
planning and investment; board of directors and management oversight of 
technology and security; information technology audit and controls 
assessments; remediation of deficiencies; and any other elements of 
enterprise risk management and governance included in generally accepted 
best practices.
    (2) Information security. This category includes, but is not limited 
to, controls relating to: Access to systems and data (including least 
privilege, separation of duties, account monitoring and control); user 
and device identification and authentication; security awareness 
training; audit log maintenance, monitoring, and analysis; media 
protection; personnel security and screening; automated system and 
communications protection (including network port control, boundary 
defenses, encryption); system and information integrity (including 
malware defenses, software integrity monitoring); vulnerability 
management; penetration testing; security incident response and 
management; and any other elements of information security included in 
generally accepted best practices.
    (3) Business continuity-disaster recovery planning and resources. 
This category includes, but is not limited to: Regular, periodic testing 
and review of business continuity-disaster recovery capabilities, the 
controls and capabilities described in paragraph (a), (d), (e), (f), and 
(k) of this section; and any other elements of business continuity-
disaster recovery planning and resources included in generally accepted 
best practices.
    (4) Capacity and performance planning. This category includes, but 
is not limited to: Controls for monitoring the swap data repository's 
systems to ensure adequate scalable capacity (including testing, 
monitoring, and analysis of current and projected future capacity and 
performance, and of possible capacity degradation due to planned 
automated system changes); and any

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other elements of capacity and performance planning included in 
generally accepted best practices.
    (5) Systems operations. This category includes, but is not limited 
to: System maintenance; configuration management (including baseline 
configuration, configuration change and patch management, least 
functionality, inventory of authorized and unauthorized devices and 
software); event and problem response and management; and any other 
elements of system operations included in generally accepted best 
practices.
    (6) Systems development and quality assurance. This category 
includes, but is not limited to: Requirements development; pre-
production and regression testing; change management procedures and 
approvals; outsourcing and vendor management; training in secure coding 
practices; and any other elements of systems development and quality 
assurance included in generally accepted best practices.
    (7) Physical security and environmental controls. This category 
includes, but is not limited to: Physical access and monitoring; power, 
telecommunication, and environmental controls; fire protection; and any 
other elements of physical security and environmental controls included 
in generally accepted best practices.
    (c) In addressing the categories of risk analysis and oversight 
required under paragraph (b) of this section, a swap data repository 
shall follow generally accepted standards and best practices with 
respect to the development, operation, reliability, security, and 
capacity of automated systems.
    (d) A swap data repository shall maintain a business continuity-
disaster recovery plan and business continuity-disaster recovery 
resources, emergency procedures, and backup facilities sufficient to 
enable timely recovery and resumption of its operations and resumption 
of its ongoing fulfillment of its duties and obligations as a swap data 
repository following any disruption of its operations. Such duties and 
obligations include, without limitation: The duties set forth in Sec.  
49.19, and maintenance of a comprehensive audit trail. The swap data 
repository's business continuity-disaster recovery plan and resources 
generally should enable resumption of the swap data repository's 
operations and resumption of ongoing fulfillment of the swap data 
repository's duties and obligations during the next business day 
following the disruption. A swap data repository shall update its 
business continuity-disaster recovery plan and emergency procedures at a 
frequency determined by an appropriate risk analysis, but at a minimum 
no less frequently than annually.
    (e) Registered swap data repositories determined by the Commission 
to be critical swap data repositories are subject to more stringent 
requirements as set forth below.
    (1) Each swap data repository that the Commission determines is 
critical must maintain a disaster recovery plan and business continuity 
and disaster recovery resources, including infrastructure and personnel, 
sufficient to enable it to achieve a same-day recovery time objective in 
the event that its normal capabilities become temporarily inoperable for 
any reason up to and including a wide-scale disruption.
    (2) A same-day recovery time objective is a recovery time objective 
within the same business day on which normal capabilities become 
temporarily inoperable for any reason up to and including a wide-scale 
disruption.
    (3) To ensure its ability to achieve a same-day recovery time 
objective in the event of a wide-scale disruption, each swap data 
repository that the Commission determines is critical must maintain a 
degree of geographic dispersal of both infrastructure and personnel such 
that:
    (i) Infrastructure sufficient to enable the swap data repository to 
meet a same-day recovery time objective after interruption is located 
outside the relevant area of the infrastructure the entity normally 
relies upon to conduct activities necessary to the reporting, 
recordkeeping and/or dissemination of swap data, and does not rely on 
the same critical transportation, telecommunications, power, water, or 
other critical infrastructure components the entity normally relies upon 
for such activities; and
    (ii) Personnel sufficient to enable the swap data repository to meet 
a same-day recovery time objective, after

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interruption of normal swap data reporting, recordkeeping and/or 
dissemination by a wide-scale disruption affecting the relevant area in 
which the personnel the entity normally relies upon to engage in such 
activities are located, live and work outside that relevant area.
    (4) Each swap data repository that the Commission determines is 
critical must conduct regular, periodic tests of its business continuity 
and disaster recovery plans and resources and its capacity to achieve a 
same-day recovery time objective in the event of a wide-scale 
disruption. The swap data repository shall keep records of the results 
of such tests, and make the results available to the Commission upon 
request.
    (f) A registered swap data repository that is not determined by the 
Commission to be a critical swap data repository satisfies the 
requirement to be able to resume operations and resume ongoing 
fulfillment of the swap data repository's duties and obligations during 
the next business day following a disruption by maintaining either:
    (1) Infrastructure and personnel resources of its own that are 
sufficient to ensure timely recovery and resumption of its operations, 
duties and obligations as a registered swap data repository following 
any disruption of its operations; or
    (2) Contractual arrangements with other registered swap data 
repositories or disaster recovery service providers, as appropriate, 
that are sufficient to ensure continued fulfillment of all of the swap 
data repository's duties and obligations following any disruption of its 
operations, both with respect to all swaps reported to the swap data 
repository and with respect to all swap data contained in the swap data 
repository.
    (g) A registered swap data repository shall notify Commission staff 
promptly of all:
    (1) Systems malfunctions;
    (2) Cyber security incidents or targeted threats that actually or 
potentially jeopardize automated system operation, reliability, 
security, or capacity; and
    (3) Any activation of the swap data repository's business 
continuity-disaster recovery plan.
    (h) A registered swap data repository shall give Commission staff 
timely advance notice of all:
    (1) Planned changes to automated systems that may impact the 
reliability, security, or adequate scalable capacity of such systems; 
and
    (2) Planned changes to the swap data repository's program of risk 
analysis and oversight.
    (i) As part of a swap data repository's obligation to produce books 
and records in accordance with Sec. Sec.  1.31 and 45.2 of this chapter, 
and Sec.  49.12, a swap data repository shall provide to the Commission 
the following system safeguards-related books and records, promptly upon 
the request of any Commission representative:
    (1) Current copies of its business continuity-disaster recovery 
plans and other emergency procedures;
    (2) All assessments of its operational risks or system safeguards-
related controls;
    (3) All reports concerning system safeguards testing and assessment 
required by this chapter, whether performed by independent contractors 
or by employees of the swap data repository; and
    (4) All other books and records requested by Commission staff in 
connection with Commission oversight of system safeguards pursuant to 
the Act or Commission regulations, or in connection with Commission 
maintenance of a current profile of the swap data repository's automated 
systems.
    (5) Nothing in paragraph (i) of this section shall be interpreted as 
reducing or limiting in any way a swap data repository's obligation to 
comply with Sec. Sec.  1.31 and 45.2 of this chapter, or with Sec.  
49.12.
    (j) A swap data repository shall conduct regular, periodic, 
objective testing and review of its automated systems to ensure that 
they are reliable, secure, and have adequate scalable capacity. It shall 
also conduct regular, periodic testing and review of its business 
continuity-disaster recovery capabilities. Such testing and review shall 
include, without limitation, all of the types of testing set forth in 
this paragraph.
    (1) Definitions. As used in this paragraph (j):

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    Controls means the safeguards or countermeasures employed by the 
swap data repository in order to protect the reliability, security, or 
capacity of its automated systems or the confidentiality, integrity, and 
availability of its data and information, and in order to enable the 
swap data repository to fulfill its statutory and regulatory duties and 
responsibilities.
    Controls testing means assessment of the swap data repository's 
controls to determine whether such controls are implemented correctly, 
are operating as intended, and are enabling the swap data repository to 
meet the requirements established by this section.
    Enterprise technology risk assessment means a written assessment 
that includes, but is not limited to, an analysis of threats and 
vulnerabilities in the context of mitigating controls. An enterprise 
technology risk assessment identifies, estimates, and prioritizes risks 
to swap data repository operations or assets, or to market participants, 
individuals, or other entities, resulting from impairment of the 
confidentiality, integrity, and availability of data and information or 
the reliability, security, or capacity of automated systems.
    External penetration testing means attempts to penetrate the swap 
data repository's automated systems from outside the systems' boundaries 
to identify and exploit vulnerabilities. Methods of conducting external 
penetration testing include, but are not limited to, methods for 
circumventing the security features of an automated system.
    Internal penetration testing means attempts to penetrate the swap 
data repository's automated systems from inside the systems' boundaries, 
to identify and exploit vulnerabilities. Methods of conducting internal 
penetration testing include, but are not limited to, methods for 
circumventing the security features of an automated system.
    Key controls means those controls that an appropriate risk analysis 
determines are either critically important for effective system 
safeguards or intended to address risks that evolve or change more 
frequently and therefore require more frequent review to ensure their 
continuing effectiveness in addressing such risks.
    Security incident means a cyber security or physical security event 
that actually jeopardizes or has a significant likelihood of 
jeopardizing automated system operation, reliability, security, or 
capacity, or the availability, confidentiality or integrity of data.
    Security incident response plan means a written plan documenting the 
swap data repository's policies, controls, procedures, and resources for 
identifying, responding to, mitigating, and recovering from security 
incidents, and the roles and responsibilities of its management, staff 
and independent contractors in responding to security incidents. A 
security incident response plan may be a separate document or a business 
continuity-disaster recovery plan section or appendix dedicated to 
security incident response.
    Security incident response plan testing means testing of a swap data 
repository's security incident response plan to determine the plan's 
effectiveness, identify its potential weaknesses or deficiencies, enable 
regular plan updating and improvement, and maintain organizational 
preparedness and resiliency with respect to security incidents. Methods 
of conducting security incident response plan testing may include, but 
are not limited to, checklist completion, walk-through or table-top 
exercises, simulations, and comprehensive exercises.
    Vulnerability testing means testing of a swap data repository's 
automated systems to determine what information may be discoverable 
through a reconnaissance analysis of those systems and what 
vulnerabilities may be present on those systems.
    (2) Vulnerability testing. A swap data repository shall conduct 
vulnerability testing of a scope sufficient to satisfy the requirements 
set forth in paragraph (l) of this section.
    (i) A swap data repository shall conduct such vulnerability testing 
at a frequency determined by an appropriate risk analysis, but no less 
frequently than quarterly.
    (ii) Such vulnerability testing shall include automated 
vulnerability scanning, which shall follow generally accepted best 
practices.

[[Page 174]]

    (iii) A swap data repository shall conduct vulnerability testing by 
engaging independent contractors or by using employees of the swap data 
repository who are not responsible for development or operation of the 
systems or capabilities being tested.
    (3) External penetration testing. A swap data repository shall 
conduct external penetration testing of a scope sufficient to satisfy 
the requirements set forth in paragraph (l) of this section.
    (i) A swap data repository shall conduct such external penetration 
testing at a frequency determined by an appropriate risk analysis, but 
no less frequently than annually.
    (ii) A swap data repository shall engage independent contractors to 
conduct the required annual external penetration test. The swap data 
repository may conduct other external penetration testing by using 
employees of the swap data repository who are not responsible for 
development or operation of the systems or capabilities being tested.
    (4) Internal penetration testing. A swap data repository shall 
conduct internal penetration testing of a scope sufficient to satisfy 
the requirements set forth in paragraph (l) of this section.
    (i) A swap data repository shall conduct such internal penetration 
testing at a frequency determined by an appropriate risk analysis, but 
no less frequently than annually.
    (ii) A swap data repository shall conduct internal penetration 
testing by engaging independent contractors, or by using employees of 
the swap data repository who are not responsible for development or 
operation of the systems or capabilities being tested.
    (5) Controls testing. A swap data repository shall conduct controls 
testing of a scope sufficient to satisfy the requirements set forth in 
paragraph (l) of this section.
    (i) A swap data repository shall conduct controls testing, which 
includes testing of each control included in its program of risk 
analysis and oversight, at a frequency determined by an appropriate risk 
analysis. Such testing may be conducted on a rolling basis. A swap data 
repository shall conduct testing of its key controls no less frequently 
than every three years. The swap data repository may conduct testing of 
its key controls on a rolling basis over the course of three years or 
the period determined by such risk analysis, whichever is shorter.
    (ii) A swap data repository shall engage independent contractors to 
test and assess the key controls included in its program of risk 
analysis and oversight no less frequently than every three years. The 
swap data repository may conduct any other controls testing required by 
this section by using independent contractors or employees of the swap 
data repository who are not responsible for development or operation of 
the systems or capabilities being tested.
    (6) Security incident response plan testing. A swap data repository 
shall conduct security incident response plan testing sufficient to 
satisfy the requirements set forth in paragraph (l) of this section.
    (i) A swap data repository shall conduct such security incident 
response plan testing at a frequency determined by an appropriate risk 
analysis, but no less frequently than annually.
    (ii) A swap data repository's security incident response plan shall 
include, without limitation, the swap data repository's definition and 
classification of security incidents, its policies and procedures for 
reporting security incidents and for internal and external communication 
and information sharing regarding security incidents, and the hand-off 
and escalation points in its security incident response process.
    (iii) A swap data repository may coordinate its security incident 
response plan testing with other testing required by this section or 
with testing of its other business continuity-disaster recovery and 
crisis management plans.
    (iv) A swap data repository may conduct security incident response 
plan testing by engaging independent contractors or by using employees 
of the swap data repository.
    (7) Enterprise technology risk assessment. A swap data repository 
shall conduct enterprise technology risk assessment of a scope 
sufficient to satisfy the requirements set forth in paragraph (l) of 
this section.

[[Page 175]]

    (i) A swap data repository shall conduct an enterprise technology 
risk assessment at a frequency determined by an appropriate risk 
analysis, but no less frequently than annually. A swap data repository 
that has conducted an enterprise technology risk assessment that 
complies with this section may conduct subsequent assessments by 
updating the previous assessment.
    (ii) A swap data repository may conduct enterprise technology risk 
assessments by using independent contractors or employees of the swap 
data repository who are not responsible for development or operation of 
the systems or capabilities being assessed.
    (k) To the extent practicable, a swap data repository shall:
    (1) Coordinate its business continuity-disaster recovery plan with 
those of swap execution facilities, designated contract markets, 
derivatives clearing organizations, swap dealers, and major swap 
participants who report swap data to the swap data repository, and with 
those regulators identified in Section 21(c)(7) of the Act, in a manner 
adequate to enable effective resumption of the registered swap data 
repository's fulfillment of its duties and obligations following a 
disruption causing activation of the swap data repository's business 
continuity and disaster recovery plan;
    (2) Participate in periodic, synchronized testing of its business 
continuity--disaster recovery plan and the business continuity--disaster 
recovery plans of swap execution facilities, designated contract 
markets, derivatives clearing organizations, swap dealers, and major 
swap participants who report swap data to the registered swap data 
repository, and the business continuity--disaster recovery plans 
required by the regulators identified in Section 21(c)(7) of the Act; 
and
    (3) Ensure that its business continuity--disaster recovery plan 
takes into account the business continuity--disaster recovery plans of 
its telecommunications, power, water, and other essential service 
providers.
    (l) Scope of testing and assessment. The scope for all system 
safeguards testing and assessment required by this part shall be broad 
enough to include the testing of automated systems and controls that the 
swap data repository's required program of risk analysis and oversight 
and its current cybersecurity threat analysis indicate is necessary to 
identify risks and vulnerabilities that could enable an intruder or 
unauthorized user or insider to:
    (1) Interfere with the swap data repository's operations or with 
fulfillment of its statutory and regulatory responsibilities;
    (2) Impair or degrade the reliability, security, or adequate 
scalable capacity of the swap data repository's automated systems;
    (3) Add to, delete, modify, exfiltrate, or compromise the integrity 
of any data related to the swap data repository's regulated activities; 
or
    (4) Undertake any other unauthorized action affecting the swap data 
repository's regulated activities or the hardware or software used in 
connection with those activities.
    (m) Internal reporting and review. Both the senior management and 
the Board of Directors of a swap data repository shall receive and 
review reports setting forth the results of the testing and assessment 
required by this section. A swap data repository shall establish and 
follow appropriate procedures for the remediation of issues identified 
through such review, as provided in paragraph (n) of this section, and 
for evaluation of the effectiveness of testing and assessment protocols.
    (n) Remediation. A swap data repository shall identify and document 
the vulnerabilities and deficiencies in its systems revealed by the 
testing and assessment required by this section. The swap data 
repository shall conduct and document an appropriate analysis of the 
risks presented by such vulnerabilities and deficiencies, to determine 
and document whether to remediate or accept the associated risk. When 
the swap data repository determines to remediate a vulnerability or 
deficiency, it must remediate in a timely manner given the nature and 
magnitude of the associated risk.

[76 FR 54575, Sept. 1, 2011, as amended at 81 FR 64315, Sept. 19, 2016]

[[Page 176]]



Sec.  49.25  Financial resources.

    (a) General rule. (1) A registered swap data repository shall 
maintain sufficient financial resources to perform its statutory duties 
set forth in Sec.  49.9 and the core principles set forth in Sec.  
49.19.
    (2) An entity that operates as both a swap data repository and a 
derivatives clearing organization shall also comply with the financial 
resource requirements applicable to derivatives clearing organizations 
under Sec.  39.11 of this chapter.
    (3) Financial resources shall be considered sufficient if their 
value is at least equal to a total amount that would enable the swap 
data repository, or applicant for registration, to cover its operating 
costs for a period of at least one year, calculated on a rolling basis.
    (4) The financial resources described in this paragraph (a) must be 
independent and separately dedicated to ensure that assets and capital 
are not used for multiple purposes.
    (b) Types of financial resources. Financial resources available to 
satisfy the requirements of paragraph (a) of this section may include:
    (1) The swap data repository's own capital; and
    (2) Any other financial resource deemed acceptable by the 
Commission.
    (c) Computation of financial resource requirement. A registered swap 
data repository shall, on a quarterly basis, based upon its fiscal year, 
make a reasonable calculation of its projected operating costs over a 
12-month period in order to determine the amount needed to meet the 
requirements of paragraph (a) of this section. The swap data repository 
shall have reasonable discretion in determining the methodology used to 
compute such projected operating costs. The Commission may review the 
methodology and require changes as appropriate.
    (d) Valuation of financial resources. At appropriate intervals, but 
not less than quarterly, a registered swap data repository shall compute 
the current market value of each financial resource used to meet its 
obligations under paragraph (a) of this section. Reductions in value to 
reflect market and credit risk (haircuts) shall be applied as 
appropriate.
    (e) Liquidity of financial resources. The financial resources 
allocated by the registered swap data repository to meet the 
requirements of paragraph (a) shall include unencumbered, liquid 
financial assets (i.e., cash and/or highly liquid securities) equal to 
at least six months' operating costs. If any portion of such financial 
resources is not sufficiently liquid, the swap data repository may take 
into account a committed line of credit or similar facility for the 
purpose of meeting this requirement.
    (f) Reporting requirements. (1) Each fiscal quarter, or at any time 
upon Commission request, a registered swap data repository shall report 
to the Commission the amount of financial resources necessary to meet 
the requirements of paragraph (a), the value of each financial resource 
available, computed in accordance with the requirements of paragraph 
(d); and provide the Commission with a financial statement, including 
the balance sheet, income statement, and statement of cash flows of the 
swap data repository or of its parent company. Financial statements 
shall be prepared in conformity with generally accepted accounting 
principles (GAAP) applied on a basis consistent with that of the 
preceding financial statement.
    (2) The calculations required by this paragraph shall be made as of 
the last business day of the swap data repository's fiscal quarter.
    (3) The report shall be filed not later than 17 business days after 
the end of the swap data repository's fiscal quarter, or at such later 
time as the Commission may permit, in its discretion, upon request by 
the swap data repository.



Sec.  49.26  Disclosure requirements of swap data repositories.

    Before accepting any swap data from a reporting entity or upon a 
reporting entity's request, a registered swap data repository shall 
furnish to the reporting entity a disclosure document that contains the 
following written information, which shall reasonably enable the 
reporting entity to identify and evaluate accurately the risks and costs 
associated with using the services of the swap data repository:

[[Page 177]]

    (a) The registered swap data repository's criteria for providing 
others with access to services offered and swap data maintained by the 
swap data repository;
    (b) The registered swap data repository's criteria for those seeking 
to connect to or link with the swap data repository;
    (c) A description of the registered swap data repository's policies 
and procedures regarding its safeguarding of swap data and operational 
reliability to protect the confidentiality and security of such data, as 
described in Sec.  49.24;
    (d) The registered swap data repository's policies and procedures 
reasonably designed to protect the privacy of any and all swap data that 
the swap data repository receives from a reporting entity, as described 
in Sec.  49.16;
    (e) The registered swap data repository's policies and procedures 
regarding its non-commercial and/or commercial use of the swap data that 
it receives from a market participant, any registered entity, or any 
other person;
    (f) The registered swap data repository's dispute resolution 
procedures;
    (g) A description of all the registered swap data repository's 
services, including any ancillary services;
    (h) The registered swap data repository's updated schedule of any 
fees, rates, dues, unbundled prices, or other charges for all of its 
services, including any ancillary services; any discounts or rebates 
offered; and the criteria to benefit from such discounts or rebates; and
    (i) A description of the registered swap data repository's 
governance arrangements.



Sec.  49.27  Access and fees.

    (a) Fair, open and equal access. (1) A registered swap data 
repository, consistent with Section 21 of the Act, shall provide its 
services to market participants, including but not limited to designated 
contract markets, swap execution facilities, derivatives clearing 
organizations, swap dealers, major swap participants and any other 
counterparties, on a fair, open and equal basis. For this purpose, a 
swap data repository shall not provide access to its services on a 
discriminatory basis but is required to provide its services to all 
market participants for swaps it accepts in an asset class.
    (2) Consistent with the principles of open access set forth in 
paragraph (a)(1) of this Regulation, a registered swap data repository 
shall not tie or bundle the offering of mandated regulatory services 
with other ancillary services that a swap data repository may provide to 
market participants.
    (b) Fees. (1) Any fees or charges imposed by a registered swap data 
repository in connection with the reporting of swap data and any other 
supplemental or ancillary services provided by such swap data repository 
shall be equitable and established in a uniform and non-discriminatory 
manner. Fees or charges shall not be used as an artificial barrier to 
access to the swap data repository. Swap data repositories shall not 
offer preferential pricing arrangements to any market participant on any 
basis, including volume discounts or reductions unless such discounts or 
reductions apply to all market participants uniformly and are not 
otherwise established in a manner that would effectively limit the 
application of such discount or reduction to a select number of market 
participants.
    (2) All fees or charges are to be fully disclosed and transparent to 
market participants. At a minimum, the registered swap data repository 
shall provide a schedule of fees and charges that is accessible by all 
market participants on its Web site.
    (3) The Commission notes that it will not specifically approve the 
fees charged by registered swap data repositories. However, any and all 
fees charged by swap data repositories must be consistent with the 
principles set forth in paragraph (b)(1) of this section.



                  Sec. Appendix A to Part 49--Form SDR

                  COMMODITY FUTURES TRADING COMMISSION

                                FORM SDR

    SWAP DATA REPOSITORY APPLICATION OR AMENDMENT TO APPLICATION FOR

                 REGISTRATION REGISTRATION INSTRUCTIONS

Intentional misstatements or omissions of material fact may constitute 
federal criminal violations (7 U.S.C. Sec.  13 and 18 U.S.C. Sec.  1001) 
or grounds for disqualification from registration.

[[Page 178]]

                               DEFINITIONS

    Unless the context requires otherwise, all terms used in this Form 
SDR have the same meaning as in the Commodity Exchange Act, as amended, 
and in the Regulations of the Commission thereunder.
    For the purposes of this Form SDR, the term ``Applicant'' shall 
include any applicant for registration as a swap data repository or any 
registered swap data repository that is amending Form SDR.

                          GENERAL INSTRUCTIONS

    1. Form SDR and Exhibits thereto are to be filed with the Commodity 
Futures Trading Commission by Applicants for registration as a swap data 
repository, or by a registered swap data repository amending such 
registration, pursuant to Section 21 of the Commodity Exchange Act and 
the regulations thereunder. Upon the filing of an application for 
registration, the Commission will publish notice of the filing and 
afford interested persons an opportunity to submit written data, views 
and arguments concerning such application. No application for 
registration shall be effective unless the Commission, by order, grants 
such registration.
    2. Individuals' names shall be given in full (Last Name, First Name, 
Middle Name).
    3. Signatures must accompany each copy of the Form SDR filed with 
the Commission. If this Form SDR is filed by a corporation, it must be 
signed in the name of the corporation by a principal officer duly 
authorized; if filed by a limited liability company, this Form SDR must 
be signed in the name of the limited liability company by a member duly 
authorized to sign on the limited liability company's behalf; if filed 
by a partnership, this Form SDR must be signed in the name of the 
partnership by a general partner authorized; if filed by an 
unincorporated organization or association which is not a partnership, 
it must be signed in the name of the organization or association by the 
managing agent, i.e., a duly authorized person who directs, manages or 
who participates in the directing or managing of its affairs.
    4. If Form SDR is being filed as an initial application for 
registration, all applicable items must be answered in full. If any item 
is not applicable, indicate by ``none,'' ``not applicable,'' or ``N/A'' 
as appropriate.
    5. Under Section 21 of the Commodity Exchange Act and the 
regulations thereunder, the Commission is authorized to solicit the 
information required to be supplied by this form from Applicants for 
registration as a swap data repository and from registered swap data 
repositories amending their registration. Disclosure of the information 
specified on this form is mandatory prior to processing of an 
application for registration as a swap data repository. The information 
will be used for the principal purpose of determining whether the 
Commission should grant or deny registration to an Applicant. The 
Commission may determine that additional information is required from 
the Applicant in order to process its application. An Applicant is 
therefore encouraged to supplement this Form SDR with any additional 
information that may be significant to its operation as a swap data 
repository and to the Commission's review of its application. A Form SDR 
which is not prepared and executed in compliance with applicable 
requirements and instructions may be returned as not acceptable for 
filing. Acceptance of this Form SDR, however, shall not constitute any 
finding that the Form SDR has been filed as required or that the 
information submitted is true, current or complete.
    6. Except in cases where confidential treatment is requested by the 
Applicant and granted by the Commission pursuant to the Freedom of 
Information Act and Commission Regulation Sec.  145.9, information 
supplied on this form will be included routinely in the public files of 
the Commission and will be available for inspection by any interested 
person. The Applicant must identify with particularity the information 
in these exhibits that will be subject to a request for confidential 
treatment and supporting documentation for such request pursuant to 
Commission Regulations Sec.  40.8, and Sec.  145.9.

                  UPDATING INFORMATION ON THE FORM SDR

    1. Section 21 requires that if any information contained in Items 1 
through 17, 23, 29, and Item 53 of this application, or any supplement 
or amendment thereto, is or becomes inaccurate for any reason, an 
amendment must be filed promptly, unless otherwise specified, on Form 
SDR correcting such information.
    2. Registrants filing Form SDR as an amendment (other than an annual 
amendment) need file only the first page of Form SDR, the signature page 
(Item 13), and any pages on which an answer is being amended, together 
with such exhibits as are being amended. The submission of an amendment 
represents that all unamended items and exhibits remain true, current 
and complete as previously filed.

                    ANNUAL AMENDMENT ON THE FORM SDR

    Annual amendments on the Form SDR shall be submitted within 60 days 
of the end of the Applicant's fiscal year. Applicants must complete the 
first page and provide updated information or exhibits.
    An Applicant may request an extension of time for submitting the 
annual amendment with the Secretary of the Commission based on 
substantial, undue hardship. Extensions

[[Page 179]]

for filing annual amendments may be granted at the discretion of the 
Commission.

                              WHERE TO FILE

    File registration application and appropriate exhibits 
electronically with the Commission at the Washington, D.C. headquarters 
in a format and in the manner specified by the Secretary of the 
Commission.

[[Page 180]]

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PART 50_CLEARING REQUIREMENT AND RELATED RULES--Table of Contents



             Subpart A_Definitions and Clearing Requirement

Sec.
50.1 Definitions.
50.2 Treatment of swaps subject to a clearing requirement.
50.3 Notice to the public.
50.4 Classes of swaps required to be cleared.
50.5 Swaps exempt from a clearing requirement.
50.6 Delegation of authority.
50.7-50.9 [Reserved]
50.10 Prevention of evasion of the clearing requirement and abuse of an 
          exception or exemption to the clearing requirement.
50.11-50.24 [Reserved]

                      Subpart B_Compliance Schedule

50.25 Clearing requirement compliance schedule.
50.26-50.49 [Reserved]

       Subpart C_Exceptions and Exemptions to Clearing Requirement

50.50 Exceptions to the clearing requirement.
50.51 Exemption for cooperatives.
50.52 Exemption for swaps between affiliates.

    Authority: 7 U.S.C. 2(h) and 7a-1 as amended by Pub. L. 111-203, 124 
Stat. 1376.

    Source: 77 FR 44455, July 30, 2012, unless otherwise noted.



             Subpart A_Definitions and Clearing Requirement

    Source: 77 FR 74335, Dec. 13, 2012, unless otherwise noted.



Sec.  50.1  Definitions.

    For the purposes of this part,
    Business day means any day other than a Saturday, Sunday, or legal 
holiday.
    Day of execution means the calendar day of the party to the swap 
that ends latest, provided that if a swap is:
    (1) Entered into after 4:00 p.m. in the location of a party; or
    (2) Entered into on a day that is not a business day in the location 
of a party, then such swap shall be deemed to have been entered into by 
that party on the immediately succeeding business day of that party, and 
the day of

[[Page 189]]

execution shall be determined with reference to such business day.



Sec.  50.2  Treatment of swaps subject to a clearing requirement.

    (a) All persons executing a swap that:
    (1) Is not subject to an exception under section 2(h)(7) of the Act 
or Sec.  50.50 of this part; and
    (2) Is included in a class of swaps identified in Sec.  50.4 of this 
part, shall submit such swap to any eligible derivatives clearing 
organization that accepts such swap for clearing as soon as 
technologically practicable after execution, but in any event by the end 
of the day of execution.
    (b) Each person subject to the requirements of paragraph (a) of this 
section shall undertake reasonable efforts to verify whether a swap is 
required to be cleared.
    (c) For purposes of paragraph (a) of this section, persons that are 
not clearing members of an eligible derivatives clearing organization 
shall be deemed to have complied with paragraph (a) of this section upon 
submission of such swap to a futures commission merchant or clearing 
member of a derivatives clearing organization, provided that submission 
occurs as soon as technologically practicable after execution, but in 
any event by the end of the day of execution.



Sec.  50.3  Notice to the public.

    (a) In addition to its obligations under Sec.  39.21(c)(1), each 
derivatives clearing organization shall make publicly available on its 
Web site a list of all swaps that it will accept for clearing and 
identify which swaps on the list are required to be cleared under 
section 2(h)(1) of the Act and this part.
    (b) The Commission shall maintain a current list of all swaps that 
are required to be cleared and all derivatives clearing organizations 
that are eligible to clear such swaps on its Web site.



Sec.  50.4  Classes of swaps required to be cleared.

    (a) Interest rate swaps. Swaps that have the following 
specifications are required to be cleared under section 2(h)(1) of the 
Act, and shall be cleared pursuant to the rules of any derivatives 
clearing organization eligible to clear such swaps under Sec.  39.5(a) 
of this chapter.

                                                                        Table 1a
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Specification                                                                  Fixed-to-floating swap class
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. Currency.....................  Australian Dollar   Canadian Dollar     Euro (EUR)........  Hong Kong Dollar    Mexican Peso (MXN)  Norwegian Krone
                                   (AUD).              (CAD).                                  (HKD).                                  (NOK).
2. Floating Rate Indexes........  BBSW..............  CDOR..............  EURIBOR...........  HIBOR.............  TIIE-BANXICO......  NIBOR.
3. Stated Termination Date Range  28 days to 30       28 days to 30       28 days to 50       28 days to 10       28 days to 21       28 days to 10
                                   years.              years.              years.              years.              years.              years.
4. Optionality..................  No................  No................  No................  No................  No................  No.
5. Dual Currencies..............  No................  No................  No................  No................  No................  No.
6. Conditional Notional Amounts.  No................  No................  No................  No................  No................  No.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                                        Table 1b
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Specification                                                                 Fixed-to-floating swap class
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. Currency..................  Polish Zloty      Singapore Dollar  Swedish Krona     Swiss Franc       Sterling (GBP).  U.S. Dollar      Yen (JPY).
                                (PLN).            (SGD).            (SEK).            (CHF).                             (USD).
2. Floating Rate Indexes.....  WIBOR...........  SOR-VWAP........  STIBOR..........  LIBOR...........  LIBOR..........  LIBOR..........  LIBOR.
3. Stated Termination Date     28 days to 10     28 days to 10     28 days to 15     28 days to 30     28 days to 50    28 days to 50    28 days to 30
 Range.                         years.            years.            years.            years.            years.           years.           years.
4. Optionality...............  No..............  No..............  No..............  No..............  No.............  No.............  No.

[[Page 190]]

 
5. Dual Currencies...........  No..............  No..............  No..............  No..............  No.............  No.............  No.
6. Conditional Notional        No..............  No..............  No..............  No..............  No.............  No.............  No.
 Amounts.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                                         Table 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Specification                                                                          Basis swap class
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. Currency........................  Australian Dollar       Euro (EUR)............  Sterling (GBP).......  U.S. Dollar (USD)....  Yen (JPY).
                                      (AUD).
2. Floating Rate Indexes...........  BBSW..................  EURIBOR...............  LIBOR................  LIBOR................  LIBOR.
3. Stated Termination Date Range...  28 days to 30 years...  28 days to 50 years...  28 days to 50 years..  28 days to 50 years..  28 days to 30 years.
4. Optionality.....................  No....................  No....................  No...................  No...................  No.
5. Dual Currencies.................  No....................  No....................  No...................  No...................  No.
6. Conditional Notional Amounts....  No....................  No....................  No...................  No...................  No.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                                         Table 3
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Specification                                                                 Forward rate agreement class
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. Currency..................  Euro (EUR)......  Polish Zloty      Norwegian Krone   Swedish Krona     Sterling (GBP).  U.S. Dollar      Yen (JPY).
                                                  (PLN).            (NOK).            (SEK).                             (USD).
2. Floating Rate Indexes.....  EURIBOR.........  WIBOR...........  NIBOR...........  STIBOR..........  LIBOR..........  LIBOR..........  LIBOR.
3. Stated Termination Date     3 days to 3       3 days to 2       3 days to 2       3 days to 3       3 days to 3      3 days to 3      3 days to 3
 Range.                         years.            years.            years.            years.            years.           years.           years.
4. Optionality...............  No..............  No..............  No..............  No..............  No.............  No.............  No.
5. Dual Currencies...........  No..............  No..............  No..............  No..............  No.............  No.............  No.
6. Conditional Notional        No..............  No..............  No..............  No..............  No.............  No.............  No.
 Amounts.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                                         Table 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Specification                                                                     Overnight index swap class
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. Currency........................  Australian Dollar       Canadian Dollar (CAD).  Euro (EUR)...........  Sterling (GBP).......  U.S. Dollar (USD).
                                      (AUD).
2. Floating Rate Indexes...........  AONIA-OIS.............  CORRA-OIS.............  EONIA................  SONIA................  FedFunds.
3. Stated Termination Date Range...  7 days to 2 years.....  7 days to 2 years.....  7 days to 3 years....  7 days to 3 years....  7 days to 3 years.
4. Optionality.....................  No....................  No....................  No...................  No...................  No.
5. Dual Currencies.................  No....................  No....................  No...................  No...................  No.
6. Conditional Notional Amounts....  No....................  No....................  No...................  No...................  No.
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 191]]

    (b) Credit default swaps. Swaps that have the following 
specifications are required to be cleared under section 2(h)(1) of the 
Act, and shall be cleared pursuant to the rules of any derivatives 
clearing organization eligible to clear such swaps under Sec.  39.5(a) 
of this chapter.

----------------------------------------------------------------------------------------------------------------
                          Specification                             North American untranched CDS indices class
----------------------------------------------------------------------------------------------------------------
Reference Entities...............................................  Corporate.
Region...........................................................  North America.
Indices..........................................................  CDX.NA.IG; CDX.NA.HY.
Tenor............................................................  CDX.NA.IG: 3Y, 5Y, 7Y, 10Y; CDX.NA.HY: 5Y.
Applicable Series................................................  CDX.NA.IG 3Y: Series 15 and all subsequent
                                                                    Series, up to and including the current
                                                                    Series.
                                                                   CDX.NA.IG 5Y: Series 11 and all subsequent
                                                                    Series, up to and including the current
                                                                    Series.
                                                                   CDX.NA.IG 7Y: Series 8 and all subsequent
                                                                    Series, up to and including the current
                                                                    Series.
                                                                   CDX.NA.IG 10Y: Series 8 and all subsequent
                                                                    Series, up to and including the current
                                                                    Series.
                                                                   CDX.NA.HY 5Y: Series 11 and all subsequent
                                                                    Series, up to and including the current
                                                                    Series.
Tranched.........................................................  No.
----------------------------------------------------------------------------------------------------------------


 
                          Specification                                European untranched CDS indices class
----------------------------------------------------------------------------------------------------------------
Reference Entities...............................................  Corporate.
Region...........................................................  Europe.
Indices..........................................................  iTraxx Europe.
                                                                   iTraxx Europe Crossover.
                                                                   iTraxx Europe HiVol.
Tenor............................................................  iTraxx Europe: 5Y, 10Y.
                                                                   iTraxx Europe Crossover: 5Y.
                                                                   iTraxx Europe HiVol: 5Y.
Applicable Series................................................  iTraxx Europe 5Y: Series 10 and all
                                                                    subsequent Series, up to and including the
                                                                    current Series.
                                                                   iTraxx Europe 10Y: Series 7 and all
                                                                    subsequent Series, up to and including the
                                                                    current Series.
                                                                   iTraxx Europe Crossover 5Y: Series 10 and all
                                                                    subsequent Series, up to and including the
                                                                    current Series.
                                                                   iTraxx Europe HiVol 5Y: Series 10 and all
                                                                    subsequent Series, up to and including the
                                                                    current Series.
Tranched.........................................................  No.
----------------------------------------------------------------------------------------------------------------


[77 FR 74335, Dec. 13, 2012, as amended at 81 FR 71239, Oct. 14, 2016]



Sec.  50.5  Swaps exempt from a clearing requirement.

    (a) Swaps entered into before July 21, 2010 shall be exempt from the 
clearing requirement under Sec.  50.2 of this part if reported to a swap 
data repository pursuant to section 2(h)(5)(A) of the Act and Sec.  
46.3(a) of this chapter.
    (b) Swaps entered into before the application of the clearing 
requirement for a particular class of swaps under Sec. Sec.  50.2 and 
50.4 of this part shall be exempt from the clearing requirement if 
reported to a swap data repository pursuant to section 2(h)(5)(B) of the 
Act and either Sec.  46.3(a) or Sec. Sec.  45.3 and 45.4 of this 
chapter, as appropriate.



Sec.  50.6  Delegation of Authority.

    (a) The Commission hereby delegates to the Director of the Division 
of Clearing and Risk or such other employee or employees as the Director 
may designate from time to time, with the consultation of the General 
Counsel or such other employee or employees as the General Counsel may 
designate from time to time, the authority:
    (1) After prior notice to the Commission, to determine whether one 
or more swaps submitted by a derivatives clearing organization under 
Sec.  39.5 falls within a class of swaps as described in Sec.  50.4, 
provided that inclusion of such swaps is consistent with the 
Commission's clearing requirement determination for that class of swaps; 
and
    (2) To notify all relevant derivatives clearing organizations of 
that determination.
    (b) The Director of the Division of Clearing and Risk may submit to 
the Commission for its consideration any matter which has been delegated 
in

[[Page 192]]

this section. Nothing in this section prohibits the Commission, at its 
election, from exercising the authority delegated in this section.



Sec.  50.7-50.9  [Reserved]



Sec.  50.10  Prevention of evasion of the clearing requirement and abuse
of an exception or exemption to the clearing requirement.

    (a) It shall be unlawful for any person to knowingly or recklessly 
evade or participate in or facilitate an evasion of the requirements of 
section 2(h) of the Act or any Commission rule or regulation promulgated 
thereunder.
    (b) It shall be unlawful for any person to abuse the exception to 
the clearing requirement as provided under section 2(h)(7) of the Act or 
an exception or exemption under this chapter.
    (c) It shall be unlawful for any person to abuse any exemption or 
exception to the requirements of section 2(h) of the Act, including any 
exemption or exception as the Commission may provide by rule, 
regulation, or order.



Sec.  50.11-50.24  [Reserved]



                      Subpart B_Compliance Schedule



Sec.  50.25  Clearing requirement compliance schedule.

    (a) Definitions. For the purposes of this paragraph:
    Active fund means any private fund as defined in section 202(a) of 
the Investment Advisers Act of 1940, that is not a third-party 
subaccount and that executes 200 or more swaps per month based on a 
monthly average over the 12 months preceding the Commission issuing a 
clearing requirement determination under section 2(h)(2) of the Act.
    Category 1 Entity means a swap dealer, a security-based swap dealer; 
a major swap participant; a major security-based swap participant; or an 
active fund.
    Category 2 Entity means a commodity pool; a private fund as defined 
in section 202(a) of the Investment Advisers Act of 1940 other than an 
active fund; or a person predominantly engaged in activities that are in 
the business of banking, or in activities that are financial in nature 
as defined in section 4(k) of the Bank Holding Company Act of 1956, 
provided that, in each case, the entity is not a third-party subaccount.
    Third-party Subaccount means an account that is managed by an 
investment manager that is independent of and unaffiliated with the 
account's beneficial owner or sponsor, and is responsible for the 
documentation necessary for the account's beneficial owner to clear 
swaps.
    (b) Upon issuing a clearing requirement determination under section 
2(h)(2) of the Act, the Commission may determine, based on the group, 
category, type, or class of swaps subject to such determination, that 
the following schedule for compliance with the requirements of section 
2(h)(1)(A) of the Act shall apply:
    (1) A swap between a Category 1 Entity and another Category 1 
Entity, or any other entity that desires to clear the transaction, must 
comply with the requirements of section 2(h)(1)(A) of the Act no later 
than ninety (90) days from the date of publication of such clearing 
requirement determination in the Federal Register.
    (2) A swap between a Category 2 Entity and a Category 1 Entity, 
another Category 2 Entity, or any other entity that desires to clear the 
transaction, must comply with the requirements of section 2(h)(1)(A) of 
the Act no later than one hundred and eighty (180) days from the date of 
publication of such clearing requirement determination in the Federal 
Register.
    (3) All other swaps for which neither of the parties to the swap is 
eligible to claim the exception from the clearing requirement set forth 
in section 2(h)(7) of the Act and Sec.  39.6, must comply with the 
requirements of section 2(h)(1)(A) of the Act no later than two hundred 
and seventy (270) days from the date of publication of such clearing 
requirement determination in the Federal Register.
    (c) Nothing in this rule shall be construed to prohibit any person 
from voluntarily complying with the requirements of section 2(h)(1)(A) 
of the Act sooner than the implementation schedule provided under 
paragraph (b).

[77 FR 44455, July 30, 2012]

[[Page 193]]



Sec. Sec.  50.26-50.49  [Reserved]



       Subpart C_Exceptions and Exemptions to Clearing Requirement

    Source: 77 FR 74337, Dec. 13, 2012, unless otherwise noted.



Sec.  50.50  Exceptions to the clearing requirement.

    (a) Non-financial entities. (1) A counterparty to a swap may elect 
the exception to the clearing requirement under section 2(h)(7)(A) of 
the Act if the counterparty:
    (i) Is not a ``financial entity'' as defined in section 
2(h)(7)(C)(i) of the Act;
    (ii) Is using the swap to hedge or mitigate commercial risk as 
provided in paragraph (c) of this section; and
    (iii) Provides, or causes to be provided, the information specified 
in paragraph (b) of this section to a registered swap data repository 
or, if no registered swap data repository is available to receive the 
information from the reporting counterparty, to the Commission. A 
counterparty that satisfies the criteria in this paragraph (a)(1) and 
elects the exception is an ``electing counterparty.''
    (2) If there is more than one electing counterparty to a swap, the 
information specified in paragraph (b) of this section shall be provided 
with respect to each of the electing counterparties.
    (b) Reporting. (1) When a counterparty elects the exception to the 
clearing requirement under section 2(h)(7)(A) of the Act, one of the 
counterparties to the swap (the ``reporting counterparty,'' as 
determined in accordance with Sec.  45.8 of this part) shall provide, or 
cause to be provided, the following information to a registered swap 
data repository or, if no registered swap data repository is available 
to receive the information from the reporting counterparty, to the 
Commission, in the form and manner specified by the Commission:
    (i) Notice of the election of the exception;
    (ii) The identity of the electing counterparty to the swap; and
    (iii) The following information, unless such information has 
previously been provided by the electing counterparty in a current 
annual filing pursuant to paragraph (b)(2) of this section:
    (A) Whether the electing counterparty is a ``financial entity'' as 
defined in section 2(h)(7)(C)(i) of the Act, and if the electing 
counterparty is a financial entity, whether it is:
    (1) Electing the exception in accordance with section 
2(h)(7)(C)(iii) or section 2(h)(7)(D) of the Act; or
    (2) Exempt from the definition of ``financial entity'' as described 
in paragraph (d) of this section;
    (B) Whether the swap or swaps for which the electing counterparty is 
electing the exception are used by the electing counterparty to hedge or 
mitigate commercial risk as provided in paragraph (c) of this section;
    (C) How the electing counterparty generally meets its financial 
obligations associated with entering into non-cleared swaps by 
identifying one or more of the following categories, as applicable:
    (1) A written credit support agreement;
    (2) Pledged or segregated assets (including posting or receiving 
margin pursuant to a credit support agreement or otherwise);
    (3) A written third-party guarantee;
    (4) The electing counterparty's available financial resources; or
    (5) Means other than those described in paragraphs 
(b)(1)(iii)(C)(1), (2), (3) or (4) of this section; and
    (D) Whether the electing counterparty is an entity that is an issuer 
of securities registered under section 12 of, or is required to file 
reports under section 15(d) of, the Securities Exchange Act of 1934, and 
if so:
    (1) The relevant SEC Central Index Key number for that counterparty; 
and
    (2) Whether an appropriate committee of that counterparty's board of 
directors (or equivalent body) has reviewed and approved the decision to 
enter into swaps that are exempt from the requirements of sections 
2(h)(1) and 2(h)(8) of the Act.
    (2) An entity that qualifies for an exception to the clearing 
requirement under this section may report the information listed in 
paragraph (b)(1)(iii) of this section annually in anticipation of 
electing the exception for one or

[[Page 194]]

more swaps. Any such reporting under this paragraph shall be effective 
for purposes of paragraph (b)(1)(iii) of this section for swaps entered 
into by the entity for 365 days following the date of such reporting. 
During such period, the entity shall amend such information as necessary 
to reflect any material changes to the information reported.
    (3) Each reporting counterparty shall have a reasonable basis to 
believe that the electing counterparty meets the requirements for an 
exception to the clearing requirement under this section.
    (c) Hedging or mitigating commercial risk. For purposes of section 
2(h)(7)(A)(ii) of the Act and paragraph (b)(1)(iii)(B) of this section, 
a swap is used to hedge or mitigate commercial risk if:
    (1) Such swap:
    (i) Is economically appropriate to the reduction of risks in the 
conduct and management of a commercial enterprise, where the risks arise 
from:
    (A) The potential change in the value of assets that a person owns, 
produces, manufactures, processes, or merchandises or reasonably 
anticipates owning, producing, manufacturing, processing, or 
merchandising in the ordinary course of business of the enterprise;
    (B) The potential change in the value of liabilities that a person 
has incurred or reasonably anticipates incurring in the ordinary course 
of business of the enterprise;
    (C) The potential change in the value of services that a person 
provides, purchases, or reasonably anticipates providing or purchasing 
in the ordinary course of business of the enterprise;
    (D) The potential change in the value of assets, services, inputs, 
products, or commodities that a person owns, produces, manufactures, 
processes, merchandises, leases, or sells, or reasonably anticipates 
owning, producing, manufacturing, processing, merchandising, leasing, or 
selling in the ordinary course of business of the enterprise;
    (E) Any potential change in value related to any of the foregoing 
arising from interest, currency, or foreign exchange rate movements 
associated with such assets, liabilities, services, inputs, products, or 
commodities; or
    (F) Any fluctuation in interest, currency, or foreign exchange rate 
exposures arising from a person's current or anticipated assets or 
liabilities; or
    (ii) Qualifies as bona fide hedging for purposes of an exemption 
from position limits under the Act; or
    (iii) Qualifies for hedging treatment under:
    (A) Financial Accounting Standards Board Accounting Standards 
Codification Topic 815, Derivatives and Hedging (formerly known as 
Statement No. 133); or
    (B) Governmental Accounting Standards Board Statement 53, Accounting 
and Financial Reporting for Derivative Instruments; and
    (2) Such swap is:
    (i) Not used for a purpose that is in the nature of speculation, 
investing, or trading; and
    (ii) Not used to hedge or mitigate the risk of another swap or 
security-based swap position, unless that other position itself is used 
to hedge or mitigate commercial risk as defined by this rule or Sec.  
240.3a67-4 of this title.
    (d) For purposes of section 2(h)(7)(A) of the Act, a person that is 
a ``financial entity'' solely because of section 2(h)(7)(C)(i)(VIII) 
shall be exempt from the definition of ``financial entity'' if such 
person:
    (1) Is organized as a bank, as defined in section 3(a) of the 
Federal Deposit Insurance Act, the deposits of which are insured by the 
Federal Deposit Insurance Corporation; a savings association, as defined 
in section 3(b) of the Federal Deposit Insurance Act, the deposits of 
which are insured by the Federal Deposit Insurance Corporation; a farm 
credit system institution chartered under the Farm Credit Act of 1971; 
or an insured Federal credit union or State-chartered credit union under 
the Federal Credit Union Act; and
    (2) Has total assets of $10,000,000,000 or less on the last day of 
such person's most recent fiscal year.



Sec.  50.51  Exemption for cooperatives.

    Exemption for cooperatives. Exempt cooperatives may elect not to 
clear certain swaps identified in paragraph (b)

[[Page 195]]

of this section that are otherwise subject to the clearing requirement 
of section 2(h)(1)(A) of the Act if the following requirements are 
satisfied.
    (a) For the purposes of this paragraph, an exempt cooperative means 
a cooperative:
    (1) Formed and existing pursuant to Federal or state law as a 
cooperative;
    (2) That is a ``financial entity,'' as defined in section 
2(h)(7)(C)(i) of the Act, solely because of section 2(h)(7)(C)(i)(VIII) 
of the Act; and
    (3) Each member of which is not a ``financial entity,'' as defined 
in section 2(h)(7)(C)(i) of the Act, or if any member is a financial 
entity solely because of section 2(h)(7)(C)(i)(VIII) of the Act, such 
member is:
    (i) Exempt from the definition of ``financial entity'' pursuant to 
Sec.  50.50(d); or
    (ii) A cooperative formed under Federal or state law as a 
cooperative and each member thereof is either not a ``financial 
entity,'' as defined in section 2(h)(7)(C)(i) of the Act, or is exempt 
from the definition of ``financial entity'' pursuant to Sec.  50.50(d).
    (b) An exempt cooperative may elect not to clear a swap that is 
subject to the clearing requirement of section 2(h)(1)(A) of the Act if 
the swap:
    (1) Is entered into with a member of the exempt cooperative in 
connection with originating a loan or loans for the member, which means 
the requirements of Sec.  1.3(ggg)(5)(i), (ii), and (iii) are satisfied; 
provided that, for this purpose, the term ``insured depository 
institution'' as used in those sections is replaced with the term 
``exempt cooperative'' and the word ``customer'' is replaced with the 
word ``member;'' or
    (2) Hedges or mitigates commercial risk, in accordance with Sec.  
50.50(c), related to loans to members or arising from a swap or swaps 
that meet the requirements of paragraph (b)(1) of this section.
    (c) An exempt cooperative that elects the exemption provided in this 
section shall comply with the requirements of Sec.  50.50(b). For this 
purpose, the exempt cooperative shall be the ``electing counterparty,'' 
as such term is used in Sec.  50.50(b), and for purposes of Sec.  
50.50(b)(1)(iii)(A), the reporting counterparty, as determined pursuant 
to Sec.  45.8, shall report that an exemption is being elected in 
accordance with this section.

[78 FR 52307, Aug. 22, 2013]



Sec.  50.52  Exemption for swaps between affiliates.

    (a) Eligible affiliate counterparty status. Subject to the 
conditions in paragraph (b) of this section:
    (1) Counterparties to a swap may elect not to clear a swap subject 
to the clearing requirement of section 2(h)(1)(A) of the Act and this 
part if:
    (i) One counterparty, directly or indirectly, holds a majority 
ownership interest in the other counterparty, and the counterparty that 
holds the majority interest in the other counterparty reports its 
financial statements on a consolidated basis under Generally Accepted 
Accounting Principles or International Financial Reporting Standards, 
and such consolidated financial statements include the financial results 
of the majority-owned counterparty; or
    (ii) A third party, directly or indirectly, holds a majority 
ownership interest in both counterparties, and the third party reports 
its financial statements on a consolidated basis under Generally 
Accepted Accounting Principles or International Financial Reporting 
Standards, and such consolidated financial statements include the 
financial results of both of the swap counterparties.
    (2) For purposes of this section:
    (i) A counterparty or third party directly or indirectly holds a 
majority ownership interest if it directly or indirectly holds a 
majority of the equity securities of an entity, or the right to receive 
upon dissolution, or the contribution of, a majority of the capital of a 
partnership; and
    (ii) The term ``eligible affiliate counterparty'' means an entity 
that meets the requirements of this paragraph.
    (b) Additional conditions. Eligible affiliate counterparties to a 
swap may elect the exemption described in paragraph (a) of this section 
if:
    (1) Both counterparties elect not to clear the swap;
    (2)(i) A swap dealer or major swap participant that is an eligible 
affiliate

[[Page 196]]

counterparty to the swap satisfies the requirements of Sec.  23.504 of 
this chapter; or
    (ii) If neither eligible affiliate counterparty is a swap dealer or 
major swap participant, the terms of the swap are documented in a swap 
trading relationship document that shall be in writing and shall include 
all terms governing the trading relationship between the eligible 
affiliate counterparties;
    (3) The swap is subject to a centralized risk management program 
that is reasonably designed to monitor and manage the risks associated 
with the swap. If at least one of the eligible affiliate counterparties 
is a swap dealer or major swap participant, this centralized risk 
management requirement shall be satisfied by complying with the 
requirements of Sec.  23.600 of this chapter; and
    (4)(i) Each eligible affiliate counterparty that enters into a swap, 
which is included in a class of swaps identified in Sec.  50.4, with an 
unaffiliated counterparty shall:
    (A) Comply with the requirements for clearing the swap in section 
2(h) of the Act and this part;
    (B) Comply with the requirements for clearing the swap under a 
foreign jurisdiction's clearing mandate that is comparable, and 
comprehensive but not necessarily identical, to the clearing requirement 
of section 2(h) of the Act and this part, as determined by the 
Commission;
    (C) Comply with an exception or exemption under section 2(h)(7) of 
the Act or this part;
    (D) Comply with an exception or exemption under a foreign 
jurisdiction's clearing mandate, provided that:
    (1) The foreign jurisdiction's clearing mandate is comparable, and 
comprehensive but not necessarily identical, to the clearing requirement 
of section 2(h) of the Act and this part, as determined by the 
Commission; and
    (2) The foreign jurisdiction's exception or exemption is comparable 
to an exception or exemption under section 2(h)(7) of the Act or this 
part, as determined by the Commission; or
    (E) Clear such swap through a registered derivatives clearing 
organization or a clearing organization that is subject to supervision 
by appropriate government authorities in the home country of the 
clearing organization and has been assessed to be in compliance with the 
Principles for Financial Market Infrastructures.
    (ii)(A) Except as provided in paragraph (b)(4)(ii)(B) of this 
section, if one of the eligible affiliate counterparties is located in 
the European Union, Japan, or Singapore, the following may satisfy the 
requirements of paragraph (b)(4)(i) of this section until March 11, 
2014:
    (1) Each eligible affiliate counterparty, or a third party that 
directly or indirectly holds a majority interest in both eligible 
affiliate counterparties, pays and collects full variation margin daily 
on all swaps entered into between the eligible affiliate counterparty 
located in the European Union, Japan, or Singapore and an unaffiliated 
counterparty; or
    (2) Each eligible affiliate counterparty, or a third party that 
directly or indirectly holds a majority interest in both eligible 
affiliate counterparties, pays and collects full variation margin daily 
on all of the eligible affiliate counterparties' swaps with other 
eligible affiliate counterparties.
    (B) If one of the eligible affiliate counterparties is located in 
the European Union, Japan, or Singapore, the requirements of paragraph 
(b)(4)(i) of this section shall not apply to the eligible affiliate 
counterparty located in the European Union, Japan, or Singapore until 
March 11, 2014, provided that:
    (1) The one counterparty that directly or indirectly holds a 
majority ownership interest in the other counterparty or the third party 
that directly or indirectly holds a majority ownership interest in both 
counterparties is not a ``financial entity'' as defined in section 
2(h)(7)(C)(i) of the Act; and
    (2) Neither eligible affiliate counterparty is affiliated with an 
entity that is a swap dealer or major swap participant, as defined in 
Sec.  1.3.
    (iii) If an eligible affiliate counterparty located in the United 
States enters into swaps, which are included in a class of swaps 
identified in

[[Page 197]]

Sec.  50.4, with eligible affiliate counterparties located in 
jurisdictions other than the United States, the European Union, Japan, 
and Singapore, and the aggregate notional value of such swaps, which are 
included in a class of swaps identified in Sec.  50.4, does not exceed 
five percent of the aggregate notional value of all swaps, which are 
included in a class of swaps identified in Sec.  50.4, in each instance 
the notional value as measured in U.S. dollar equivalents and calculated 
for each calendar quarter, entered into by the eligible affiliate 
counterparty located in the United States, then such swaps shall be 
deemed to satisfy the requirements of paragraph (b)(4)(i) of this 
section until March 11, 2014, provided that:
    (A) Each eligible affiliate counterparty, or a third party that 
directly or indirectly holds a majority interest in both eligible 
affiliate counterparties, pays and collects full variation margin daily 
on all swaps entered into between the eligible affiliate counterparties 
located in jurisdictions other than the United States, the European 
Union, Japan, and Singapore and an unaffiliated counterparty; or
    (B) Each eligible affiliate counterparty, or a third party that 
directly or indirectly holds a majority interest in both eligible 
affiliate counterparties, pays and collects full variation margin daily 
on all of the eligible affiliate counterparties' swaps with other 
eligible affiliate counterparties.
    (c) Reporting requirements. When the exemption described in 
paragraph (a) of this section is elected, the reporting counterparty, as 
determined in accordance with Sec.  45.8 of this chapter, shall provide 
or cause to be provided the following information to a registered swap 
data repository or, if no registered swap data repository is available 
to receive the information from the reporting counterparty, to the 
Commission, in the form and manner specified by the Commission:
    (1) Confirmation that both eligible affiliate counterparties to the 
swap are electing not to clear the swap and that each of the electing 
eligible affiliate counterparties satisfies the requirements in 
paragraph (b) of this section applicable to it;
    (2) For each electing eligible affiliate counterparty, how the 
counterparty generally meets its financial obligations associated with 
entering into non-cleared swaps by identifying one or more of the 
following categories, as applicable:
    (i) A written credit support agreement;
    (ii) Pledged or segregated assets (including posting or receiving 
margin pursuant to a credit support agreement or otherwise);
    (iii) A written guarantee from another party;
    (iv) The electing counterparty's available financial resources; or
    (v) Means other than those described in paragraphs (c)(2)(i), (ii), 
(iii) or (iv) of this section; and
    (3) If an electing eligible affiliate counterparty is an entity that 
is an issuer of securities registered under section 12 of, or is 
required to file reports under section 15(d) of, the Securities Exchange 
Act of 1934:
    (i) The relevant SEC Central Index Key number for that counterparty; 
and
    (ii) Acknowledgment that an appropriate committee of the board of 
directors (or equivalent body) of the eligible affiliate counterparty 
has reviewed and approved the decision to enter into swaps that are 
exempt from the requirements of section 2(h)(1) and 2(h)(8) of the Act.
    (d) Annual reporting. An eligible affiliate counterparty that 
qualifies for the exemption described in paragraph (a) of this section 
may report the information listed in paragraphs (c)(2) and (3) of this 
section annually in anticipation of electing the exemption for one or 
more swaps. Any such reporting by a reporting counterparty under this 
paragraph will be effective for purposes of paragraphs (c)(2) and (3) of 
this section for 365 days following the date of such reporting. During 
the 365-day period, the reporting counterparty shall amend the report as 
necessary to reflect any material changes to the information reported. 
Each reporting counterparty shall have a reasonable basis to believe 
that the eligible affiliate counterparties meet the requirements for the 
exemption under this section.

[78 FR 21783, Apr. 11, 2013]

[[Page 198]]



PART 75_PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS 
WITH COVERED FUNDS--Table of Contents



                   Subpart A_Authority and Definitions

Sec.
75.1 Authority, purpose, scope, and relationship to other authorities.
75.2 Definitions.

                      Subpart B_Proprietary Trading

75.3 Prohibition on proprietary trading.
75.4 Permitted underwriting and market making-related activities.
75.5 Permitted risk-mitigating hedging activities.
75.6 Other permitted proprietary trading activities.
75.7 Limitations on permitted proprietary trading activities.
75.8-75.9 [Reserved]

            Subpart C_Covered Fund Activities and Investments

75.10 Prohibition on acquiring or retaining an ownership interest in and 
          having certain relationships with a covered fund.
75.11 Permitted organizing and offering, underwriting, and market making 
          with respect to a covered fund.
75.12 Permitted investment in a covered fund.
75.13 Other permitted covered fund activities and investments.
75.14 Limitations on relationships with a covered fund.
75.15 Other limitations on permitted covered fund activities.
75.16 Ownership of interests in and sponsorship of issuers of certain 
          collateralized debt obligations backed by trust-preferred 
          securities.
75.17-75.19 [Reserved]

          Subpart D_Compliance Program Requirement; Violations

75.20 Program for compliance; reporting.
75.21 Termination of activities or investments; penalties for 
          violations.

Appendix A to Part 75--Reporting and Recordkeeping Requirements for 
          Covered Trading Activities
Appendix B to Part 75--Enhanced Minimum Standards for Compliance 
          Programs

    Authority: 12 U.S.C. 1851.



                   Subpart A_Authority and Definitions



Sec.  75.1  Authority, purpose, scope, and relationship to other authorities.

    (a) Authority. This part is issued by the Commission under section 
13 of the Bank Holding Company Act of 1956, as amended (12 U.S.C. 1851).
    (b) Purpose. Section 13 of the Bank Holding Company Act establishes 
prohibitions and restrictions on proprietary trading by, and investments 
in or relationships with covered funds by, certain banking entities. 
This part implements section 13 of the Bank Holding Company Act by 
defining terms used in the statute and related terms, establishing 
prohibitions and restrictions on proprietary trading and investments in 
or relationships with covered funds, and further explaining the 
statute's requirements.
    (c) Scope. This part implements section 13 of the Bank Holding 
Company Act with respect to banking entities for which the CFTC is the 
primary financial regulatory agency, as defined in section 2(12) of the 
Dodd-Frank Act.
    (d) Relationship to other authorities. Except as otherwise provided 
under section 13 of the BHC Act, and notwithstanding any other provision 
of law, the prohibitions and restrictions under section 13 of the BHC 
Act shall apply to the activities of an applicable banking entity, even 
if such activities are authorized for the applicable banking entity 
under other applicable provisions of law.



Sec.  75.2  Definitions.

    Unless otherwise specified, for purposes of this part:
    (a) Affiliate has the same meaning as in section 2(k) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1841(k)).
    (b) Bank holding company has the same meaning as in section 2 of the 
Bank Holding Company Act of 1956 (12 U.S.C. 1841).
    (c) Banking entity. (1) Except as provided in paragraph (c)(2) of 
this section, banking entity means:
    (i) Any insured depository institution;
    (ii) Any company that controls an insured depository institution;

[[Page 199]]

    (iii) Any company that is treated as a bank holding company for 
purposes of section 8 of the International Banking Act of 1978 (12 
U.S.C. 3106); and
    (iv) Any affiliate or subsidiary of any entity described in 
paragraphs (c)(1)(i), (ii), or (iii) of this section.
    (2) Banking entity does not include:
    (i) A covered fund that is not itself a banking entity under 
paragraphs (c)(1)(i), (ii), or (iii) of this section;
    (ii) A portfolio company held under the authority contained in 
section 4(k)(4)(H) or (I) of the BHC Act (12 U.S.C. 1843(k)(4)(H), (I)), 
or any portfolio concern, as defined under 13 CFR 107.50, that is 
controlled by a small business investment company, as defined in section 
103(3) of the Small Business Investment Act of 1958 (15 U.S.C. 662), so 
long as the portfolio company or portfolio concern is not itself a 
banking entity under paragraphs (c)(1)(i), (ii), or (iii) of this 
section; or
    (iii) The FDIC acting in its corporate capacity or as conservator or 
receiver under the Federal Deposit Insurance Act or Title II of the 
Dodd-Frank Wall Street Reform and Consumer Protection Act.
    (d) Board means the Board of Governors of the Federal Reserve 
System.
    (e) CFTC or Commission means the Commodity Futures Trading 
Commission.
    (f) Dealer has the same meaning as in section 3(a)(5) of the 
Exchange Act (15 U.S.C. 78c(a)(5)).
    (g) Depository institution has the same meaning as in section 3(c) 
of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)).
    (h) Derivative. (1) Except as provided in paragraph (h)(2) of this 
section, derivative means:
    (i) Any swap, as that term is defined in section 1a(47) of the 
Commodity Exchange Act (7 U.S.C. 1a(47)), or security-based swap, as 
that term is defined in section 3(a)(68) of the Exchange Act (15 U.S.C. 
78c(a)(68));
    (ii) Any purchase or sale of a commodity, that is not an excluded 
commodity, for deferred shipment or delivery that is intended to be 
physically settled;
    (iii) Any foreign exchange forward (as that term is defined in 
section 1a(24) of the Commodity Exchange Act (7 U.S.C. 1a(24)) or 
foreign exchange swap (as that term is defined in section 1a(25) of the 
Commodity Exchange Act (7 U.S.C. 1a(25));
    (iv) Any agreement, contract, or transaction in foreign currency 
described in section 2(c)(2)(C)(i) of the Commodity Exchange Act (7 
U.S.C. 2(c)(2)(C)(i));
    (v) Any agreement, contract, or transaction in a commodity other 
than foreign currency described in section 2(c)(2)(D)(i) of the 
Commodity Exchange Act (7 U.S.C. 2(c)(2)(D)(i)); and
    (vi) Any transaction authorized under section 19 of the Commodity 
Exchange Act (7 U.S.C. 23(a) or (b));
    (2) A derivative does not include:
    (i) Any consumer, commercial, or other agreement, contract, or 
transaction that the CFTC and SEC have further defined by joint 
regulation, interpretation, guidance, or other action as not within the 
definition of swap, as that term is defined in section 1a(47) of the 
Commodity Exchange Act (7 U.S.C. 1a(47)), or security-based swap, as 
that term is defined in section 3(a)(68) of the Exchange Act (15 U.S.C. 
78c(a)(68)); or
    (ii) Any identified banking product, as defined in section 402(b) of 
the Legal Certainty for Bank Products Act of 2000 (7 U.S.C. 27(b)), that 
is subject to section 403(a) of that Act (7 U.S.C. 27a(a)).
    (i) Employee includes a member of the immediate family of the 
employee.
    (j) Exchange Act means the Securities Exchange Act of 1934 (15 
U.S.C. 78a et seq.).
    (k) Excluded commodity has the same meaning as in section 1a(19) of 
the Commodity Exchange Act (7 U.S.C. 1a(19)).
    (l) FDIC means the Federal Deposit Insurance Corporation.
    (m) Federal banking agencies means the Board, the Office of the 
Comptroller of the Currency, and the FDIC.
    (n) Foreign banking organization has the same meaning as in section 
211.21(o) of the Board's Regulation K (12 CFR 211.21(o)), but does not 
include a foreign bank, as defined in section 1(b)(7) of the 
International Banking

[[Page 200]]

Act of 1978 (12 U.S.C. 3101(7)), that is organized under the laws of the 
Commonwealth of Puerto Rico, Guam, American Samoa, the United States 
Virgin Islands, or the Commonwealth of the Northern Mariana Islands.
    (o) Foreign insurance regulator means the insurance commissioner, or 
a similar official or agency, of any country other than the United 
States that is engaged in the supervision of insurance companies under 
foreign insurance law.
    (p) General account means all of the assets of an insurance company 
except those allocated to one or more separate accounts.
    (q) Insurance company means a company that is organized as an 
insurance company, primarily and predominantly engaged in writing 
insurance or reinsuring risks underwritten by insurance companies, 
subject to supervision as such by a state insurance regulator or a 
foreign insurance regulator, and not operated for the purpose of evading 
the provisions of section 13 of the BHC Act (12 U.S.C. 1851).
    (r) Insured depository institution has the same meaning as in 
section 3(c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)), 
but does not include an insured depository institution that is described 
in section 2(c)(2)(D) of the BHC Act (12 U.S.C. 1841(c)(2)(D)).
    (s) Loan means any loan, lease, extension of credit, or secured or 
unsecured receivable that is not a security or derivative.
    (t) Primary financial regulatory agency has the same meaning as in 
section 2(12) of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (12 U.S.C. 5301(12)).
    (u) Purchase includes any contract to buy, purchase, or otherwise 
acquire. For security futures products, purchase includes any contract, 
agreement, or transaction for future delivery. With respect to a 
commodity future, purchase includes any contract, agreement, or 
transaction for future delivery. With respect to a derivative, purchase 
includes the execution, termination (prior to its scheduled maturity 
date), assignment, exchange, or similar transfer or conveyance of, or 
extinguishing of rights or obligations under, a derivative, as the 
context may require.
    (v) Qualifying foreign banking organization means a foreign banking 
organization that qualifies as such under Sec.  211.23(a), (c) or (e) of 
the Board's Regulation K (12 CFR 211.23(a), (c), or (e)).
    (w) SEC means the Securities and Exchange Commission.
    (x) Sale and sell each include any contract to sell or otherwise 
dispose of. For security futures products, such terms include any 
contract, agreement, or transaction for future delivery. With respect to 
a commodity future, such terms include any contract, agreement, or 
transaction for future delivery. With respect to a derivative, such 
terms include the execution, termination (prior to its scheduled 
maturity date), assignment, exchange, or similar transfer or conveyance 
of, or extinguishing of rights or obligations under, a derivative, as 
the context may require.
    (y) Security has the meaning specified in section 3(a)(10) of the 
Exchange Act (15 U.S.C. 78c(a)(10)).
    (z) Security-based swap dealer has the same meaning as in section 
3(a)(71) of the Exchange Act (15 U.S.C. 78c(a)(71)).
    (aa) Security future has the meaning specified in section 3(a)(55) 
of the Exchange Act (15 U.S.C. 78c(a)(55)).
    (bb) Separate account means an account established and maintained by 
an insurance company in connection with one or more insurance contracts 
to hold assets that are legally segregated from the insurance company's 
other assets, under which income, gains, and losses, whether or not 
realized, from assets allocated to such account, are, in accordance with 
the applicable contract, credited to or charged against such account 
without regard to other income, gains, or losses of the insurance 
company.
    (cc) State means any State, the District of Columbia, the 
Commonwealth of Puerto Rico, Guam, American Samoa, the United States 
Virgin Islands, and the Commonwealth of the Northern Mariana Islands.
    (dd) Subsidiary has the same meaning as in section 2(d) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1841(d)).
    (ee) State insurance regulator means the insurance commissioner, or 
a similar official or agency, of a State that is engaged in the 
supervision of insurance companies under State insurance law.

[[Page 201]]

    (ff) Swap dealer has the same meaning as in section 1(a)(49) of the 
Commodity Exchange Act (7 U.S.C. 1a(49)).



                      Subpart B_Proprietary Trading



Sec.  75.3  Prohibition on proprietary trading.

    (a) Prohibition. Except as otherwise provided in this subpart, a 
banking entity may not engage in proprietary trading. Proprietary 
trading means engaging as principal for the trading account of the 
banking entity in any purchase or sale of one or more financial 
instruments.
    (b) Definition of trading account. (1) Trading account means any 
account that is used by a banking entity to:
    (i) Purchase or sell one or more financial instruments principally 
for the purpose of:
    (A) Short-term resale;
    (B) Benefitting from actual or expected short-term price movements;
    (C) Realizing short-term arbitrage profits; or
    (D) Hedging one or more positions resulting from the purchases or 
sales of financial instruments described in paragraphs (b)(1)(i)(A), 
(B), or (C) of this section;
    (ii) Purchase or sell one or more financial instruments that are 
both market risk capital rule covered positions and trading positions 
(or hedges of other market risk capital rule covered positions), if the 
banking entity, or any affiliate of the banking entity, is an insured 
depository institution, bank holding company, or savings and loan 
holding company, and calculates risk-based capital ratios under the 
market risk capital rule; or
    (iii) Purchase or sell one or more financial instruments for any 
purpose, if the banking entity:
    (A) Is licensed or registered, or is required to be licensed or 
registered, to engage in the business of a dealer, swap dealer, or 
security-based swap dealer, to the extent the instrument is purchased or 
sold in connection with the activities that require the banking entity 
to be licensed or registered as such; or
    (B) Is engaged in the business of a dealer, swap dealer, or 
security-based swap dealer outside of the United States, to the extent 
the instrument is purchased or sold in connection with the activities of 
such business.
    (2) Rebuttable presumption for certain purchases and sales. The 
purchase (or sale) of a financial instrument by a banking entity shall 
be presumed to be for the trading account of the banking entity under 
paragraph (b)(1)(i) of this section if the banking entity holds the 
financial instrument for fewer than sixty days or substantially 
transfers the risk of the financial instrument within sixty days of the 
purchase (or sale), unless the banking entity can demonstrate, based on 
all relevant facts and circumstances, that the banking entity did not 
purchase (or sell) the financial instrument principally for any of the 
purposes described in paragraph (b)(1)(i) of this section.
    (c) Financial instrument--(1) Financial instrument means:
    (i) A security, including an option on a security;
    (ii) A derivative, including an option on a derivative; or
    (iii) A contract of sale of a commodity for future delivery, or 
option on a contract of sale of a commodity for future delivery.
    (2) A financial instrument does not include:
    (i) A loan;
    (ii) A commodity that is not:
    (A) An excluded commodity (other than foreign exchange or currency);
    (B) A derivative;
    (C) A contract of sale of a commodity for future delivery; or
    (D) An option on a contract of sale of a commodity for future 
delivery; or
    (iii) Foreign exchange or currency.
    (d) Proprietary trading does not include:--(1) Any purchase or sale 
of one or more financial instruments by a banking entity that arises 
under a repurchase or reverse repurchase agreement pursuant to which the 
banking entity has simultaneously agreed, in writing, to both purchase 
and sell a stated asset, at stated prices, and on stated dates or on 
demand with the same counterparty;
    (2) Any purchase or sale of one or more financial instruments by a 
banking entity that arises under a transaction in which the banking 
entity

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lends or borrows a security temporarily to or from another party 
pursuant to a written securities lending agreement under which the 
lender retains the economic interests of an owner of such security, and 
has the right to terminate the transaction and to recall the loaned 
security on terms agreed by the parties;
    (3) Any purchase or sale of a security by a banking entity for the 
purpose of liquidity management in accordance with a documented 
liquidity management plan of the banking entity that:
    (i) Specifically contemplates and authorizes the particular 
securities to be used for liquidity management purposes, the amount, 
types, and risks of these securities that are consistent with liquidity 
management, and the liquidity circumstances in which the particular 
securities may or must be used;
    (ii) Requires that any purchase or sale of securities contemplated 
and authorized by the plan be principally for the purpose of managing 
the liquidity of the banking entity, and not for the purpose of short-
term resale, benefitting from actual or expected short-term price 
movements, realizing short-term arbitrage profits, or hedging a position 
taken for such short-term purposes;
    (iii) Requires that any securities purchased or sold for liquidity 
management purposes be highly liquid and limited to securities the 
market, credit, and other risks of which the banking entity does not 
reasonably expect to give rise to appreciable profits or losses as a 
result of short-term price movements;
    (iv) Limits any securities purchased or sold for liquidity 
management purposes, together with any other instruments purchased or 
sold for such purposes, to an amount that is consistent with the banking 
entity's near-term funding needs, including deviations from normal 
operations of the banking entity or any affiliate thereof, as estimated 
and documented pursuant to methods specified in the plan;
    (v) Includes written policies and procedures, internal controls, 
analysis, and independent testing to ensure that the purchase and sale 
of securities that are not permitted under Sec.  75.6(a) or (b) are for 
the purpose of liquidity management and in accordance with the liquidity 
management plan described in paragraph (d)(3) of this section; and
    (vi) Is consistent with the Commission's supervisory requirements, 
guidance, and expectations regarding liquidity management;
    (4) Any purchase or sale of one or more financial instruments by a 
banking entity that is a derivatives clearing organization or a clearing 
agency in connection with clearing financial instruments;
    (5) Any excluded clearing activities by a banking entity that is a 
member of a clearing agency, a member of a derivatives clearing 
organization, or a member of a designated financial market utility;
    (6) Any purchase or sale of one or more financial instruments by a 
banking entity, so long as:
    (i) The purchase (or sale) satisfies an existing delivery obligation 
of the banking entity or its customers, including to prevent or close 
out a failure to deliver, in connection with delivery, clearing, or 
settlement activity; or
    (ii) The purchase (or sale) satisfies an obligation of the banking 
entity in connection with a judicial, administrative, self-regulatory 
organization, or arbitration proceeding;
    (7) Any purchase or sale of one or more financial instruments by a 
banking entity that is acting solely as agent, broker, or custodian;
    (8) Any purchase or sale of one or more financial instruments by a 
banking entity through a deferred compensation, stock-bonus, profit-
sharing, or pension plan of the banking entity that is established and 
administered in accordance with the law of the United States or a 
foreign sovereign, if the purchase or sale is made directly or 
indirectly by the banking entity as trustee for the benefit of persons 
who are or were employees of the banking entity; or
    (9) Any purchase or sale of one or more financial instruments by a 
banking entity in the ordinary course of collecting a debt previously 
contracted in good faith, provided that the banking entity divests the 
financial instrument as soon as practicable, and in no

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event may the banking entity retain such instrument for longer than such 
period permitted by the Commission.
    (e) Definition of other terms related to proprietary trading. For 
purposes of this subpart:
    (1) Anonymous means that each party to a purchase or sale is unaware 
of the identity of the other party(ies) to the purchase or sale.
    (2) Clearing agency has the same meaning as in section 3(a)(23) of 
the Exchange Act (15 U.S.C. 78c(a)(23)).
    (3) Commodity has the same meaning as in section 1a(9) of the 
Commodity Exchange Act (7 U.S.C. 1a(9)), except that a commodity does 
not include any security;
    (4) Contract of sale of a commodity for future delivery means a 
contract of sale (as that term is defined in section 1a(13) of the 
Commodity Exchange Act (7 U.S.C. 1a(13)) for future delivery (as that 
term is defined in section 1a(27) of the Commodity Exchange Act (7 
U.S.C. 1a(27))).
    (5) Derivatives clearing organization means:
    (i) A derivatives clearing organization registered under section 5b 
of the Commodity Exchange Act (7 U.S.C. 7a-1);
    (ii) A derivatives clearing organization that, pursuant to CFTC 
regulation, is exempt from the registration requirements under section 
5b of the Commodity Exchange Act (7 U.S.C. 7a-1); or
    (iii) A foreign derivatives clearing organization that, pursuant to 
CFTC regulation, is permitted to clear for a foreign board of trade that 
is registered with the CFTC.
    (6) Exchange, unless the context otherwise requires, means any 
designated contract market, swap execution facility, or foreign board of 
trade registered with the CFTC, or, for purposes of securities or 
security-based swaps, an exchange, as defined under section 3(a)(1) of 
the Exchange Act (15 U.S.C. 78c(a)(1)), or security-based swap execution 
facility, as defined under section 3(a)(77) of the Exchange Act (15 
U.S.C. 78c(a)(77)).
    (7) Excluded clearing activities means:
    (i) With respect to customer transactions cleared on a derivatives 
clearing organization, a clearing agency, or a designated financial 
market utility, any purchase or sale necessary to correct trading errors 
made by or on behalf of a customer provided that such purchase or sale 
is conducted in accordance with, for transactions cleared on a 
derivatives clearing organization, the Commodity Exchange Act, CFTC 
regulations, and the rules or procedures of the derivatives clearing 
organization, or, for transactions cleared on a clearing agency, the 
rules or procedures of the clearing agency, or, for transactions cleared 
on a designated financial market utility that is neither a derivatives 
clearing organization nor a clearing agency, the rules or procedures of 
the designated financial market utility;
    (ii) Any purchase or sale in connection with and related to the 
management of a default or threatened imminent default of a customer 
provided that such purchase or sale is conducted in accordance with, for 
transactions cleared on a derivatives clearing organization, the 
Commodity Exchange Act, CFTC regulations, and the rules or procedures of 
the derivatives clearing organization, or, for transactions cleared on a 
clearing agency, the rules or procedures of the clearing agency, or, for 
transactions cleared on a designated financial market utility that is 
neither a derivatives clearing organization nor a clearing agency, the 
rules or procedures of the designated financial market utility;
    (iii) Any purchase or sale in connection with and related to the 
management of a default or threatened imminent default of a member of a 
clearing agency, a member of a derivatives clearing organization, or a 
member of a designated financial market utility;
    (iv) Any purchase or sale in connection with and related to the 
management of the default or threatened default of a clearing agency, a 
derivatives clearing organization, or a designated financial market 
utility; and
    (v) Any purchase or sale that is required by the rules or procedures 
of a clearing agency, a derivatives clearing organization, or a 
designated financial market utility to mitigate the risk to the clearing 
agency, derivatives clearing organization, or designated financial 
market utility that would result

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from the clearing by a member of security-based swaps that reference the 
member or an affiliate of the member.
    (8) Designated financial market utility has the same meaning as in 
section 803(4) of the Dodd-Frank Act (12 U.S.C. 5462(4)).
    (9) Issuer has the same meaning as in section 2(a)(4) of the 
Securities Act of 1933 (15 U.S.C. 77b(a)(4)).
    (10) Market risk capital rule covered position and trading position 
means a financial instrument that is both a covered position and a 
trading position, as those terms are respectively defined:
    (i) In the case of a banking entity that is a bank holding company, 
savings and loan holding company, or insured depository institution, 
under the market risk capital rule that is applicable to the banking 
entity; and
    (ii) In the case of a banking entity that is affiliated with a bank 
holding company or savings and loan holding company, other than a 
banking entity to which a market risk capital rule is applicable, under 
the market risk capital rule that is applicable to the affiliated bank 
holding company or savings and loan holding company.
    (11) Market risk capital rule means the market risk capital rule 
that is contained in subpart F of 12 CFR part 3, 12 CFR parts 208 and 
225, or 12 CFR part 324, as applicable.
    (12) Municipal security means a security that is a direct obligation 
of or issued by, or an obligation guaranteed as to principal or interest 
by, a State or any political subdivision thereof, or any agency or 
instrumentality of a State or any political subdivision thereof, or any 
municipal corporate instrumentality of one or more States or political 
subdivisions thereof.
    (13) Trading desk means the smallest discrete unit of organization 
of a banking entity that purchases or sells financial instruments for 
the trading account of the banking entity or an affiliate thereof.



Sec.  75.4  Permitted underwriting and market making-related activities.

    (a) Underwriting activities--(1) Permitted underwriting activities. 
The prohibition contained in Sec.  75.3(a) does not apply to a banking 
entity's underwriting activities conducted in accordance with paragraph 
(a) of this section.
    (2) Requirements. The underwriting activities of a banking entity 
are permitted under paragraph (a)(1) of this section only if:
    (i) The banking entity is acting as an underwriter for a 
distribution of securities and the trading desk's underwriting position 
is related to such distribution;
    (ii) The amount and type of the securities in the trading desk's 
underwriting position are designed not to exceed the reasonably expected 
near term demands of clients, customers, or counterparties, and 
reasonable efforts are made to sell or otherwise reduce the underwriting 
position within a reasonable period, taking into account the liquidity, 
maturity, and depth of the market for the relevant type of security;
    (iii) The banking entity has established and implements, maintains, 
and enforces an internal compliance program required by subpart D of 
this part that is reasonably designed to ensure the banking entity's 
compliance with the requirements of paragraph (a) of this section, 
including reasonably designed written policies and procedures, internal 
controls, analysis and independent testing identifying and addressing:
    (A) The products, instruments or exposures each trading desk may 
purchase, sell, or manage as part of its underwriting activities;
    (B) Limits for each trading desk, based on the nature and amount of 
the trading desk's underwriting activities, including the reasonably 
expected near term demands of clients, customers, or counterparties, on 
the:
    (1) Amount, types, and risk of its underwriting position;
    (2) Level of exposures to relevant risk factors arising from its 
underwriting position; and
    (3) Period of time a security may be held;
    (C) Internal controls and ongoing monitoring and analysis of each 
trading desk's compliance with its limits; and
    (D) Authorization procedures, including escalation procedures that 
require review and approval of any trade that

[[Page 205]]

would exceed a trading desk's limit(s), demonstrable analysis of the 
basis for any temporary or permanent increase to a trading desk's 
limit(s), and independent review of such demonstrable analysis and 
approval;
    (iv) The compensation arrangements of persons performing the 
activities described in paragraph (a) of this section are designed not 
to reward or incentivize prohibited proprietary trading; and
    (v) The banking entity is licensed or registered to engage in the 
activity described in paragraph (a) of this section in accordance with 
applicable law.
    (3) Definition of distribution. For purposes of paragraph (a) of 
this section, a distribution of securities means:
    (i) An offering of securities, whether or not subject to 
registration under the Securities Act of 1933, that is distinguished 
from ordinary trading transactions by the presence of special selling 
efforts and selling methods; or
    (ii) An offering of securities made pursuant to an effective 
registration statement under the Securities Act of 1933.
    (4) Definition of underwriter. For purposes of paragraph (a) of this 
section, underwriter means:
    (i) A person who has agreed with an issuer or selling security 
holder to:
    (A) Purchase securities from the issuer or selling security holder 
for distribution;
    (B) Engage in a distribution of securities for or on behalf of the 
issuer or selling security holder; or
    (C) Manage a distribution of securities for or on behalf of the 
issuer or selling security holder; or
    (ii) A person who has agreed to participate or is participating in a 
distribution of such securities for or on behalf of the issuer or 
selling security holder.
    (5) Definition of selling security holder. For purposes of paragraph 
(a) of this section, selling security holder means any person, other 
than an issuer, on whose behalf a distribution is made.
    (6) Definition of underwriting position. For purposes of paragraph 
(a) of this section, underwriting position means the long or short 
positions in one or more securities held by a banking entity or its 
affiliate, and managed by a particular trading desk, in connection with 
a particular distribution of securities for which such banking entity or 
affiliate is acting as an underwriter.
    (7) Definition of client, customer, and counterparty. For purposes 
of paragraph (a) of this section, the terms client, customer, and 
counterparty, on a collective or individual basis, refer to market 
participants that may transact with the banking entity in connection 
with a particular distribution for which the banking entity is acting as 
underwriter.
    (b) Market making-related activities--(1) Permitted market making-
related activities. The prohibition contained in Sec.  75.3(a) does not 
apply to a banking entity's market making-related activities conducted 
in accordance with paragraph (b) of this section.
    (2) Requirements. The market making-related activities of a banking 
entity are permitted under paragraph (b)(1) of this section only if:
    (i) The trading desk that establishes and manages the financial 
exposure routinely stands ready to purchase and sell one or more types 
of financial instruments related to its financial exposure and is 
willing and available to quote, purchase and sell, or otherwise enter 
into long and short positions in those types of financial instruments 
for its own account, in commercially reasonable amounts and throughout 
market cycles on a basis appropriate for the liquidity, maturity, and 
depth of the market for the relevant types of financial instruments;
    (ii) The amount, types, and risks of the financial instruments in 
the trading desk's market-maker inventory are designed not to exceed, on 
an ongoing basis, the reasonably expected near term demands of clients, 
customers, or counterparties, based on:
    (A) The liquidity, maturity, and depth of the market for the 
relevant types of financial instrument(s); and
    (B) Demonstrable analysis of historical customer demand, current 
inventory of financial instruments, and market and other factors 
regarding the amount, types, and risks, of or associated with financial 
instruments in which the trading desk makes a market, including through 
block trades;

[[Page 206]]

    (iii) The banking entity has established and implements, maintains, 
and enforces an internal compliance program required by subpart D of 
this part that is reasonably designed to ensure the banking entity's 
compliance with the requirements of paragraph (b) of this section, 
including reasonably designed written policies and procedures, internal 
controls, analysis and independent testing identifying and addressing:
    (A) The financial instruments each trading desk stands ready to 
purchase and sell in accordance with paragraph (b)(2)(i) of this 
section;
    (B) The actions the trading desk will take to demonstrably reduce or 
otherwise significantly mitigate promptly the risks of its financial 
exposure consistent with the limits required under paragraph 
(b)(2)(iii)(C) of this section; the products, instruments, and exposures 
each trading desk may use for risk management purposes; the techniques 
and strategies each trading desk may use to manage the risks of its 
market making-related activities and inventory; and the process, 
strategies, and personnel responsible for ensuring that the actions 
taken by the trading desk to mitigate these risks are and continue to be 
effective;
    (C) Limits for each trading desk, based on the nature and amount of 
the trading desk's market making-related activities, that address the 
factors prescribed by paragraph (b)(2)(ii) of this section, on:
    (1) The amount, types, and risks of its market-maker inventory;
    (2) The amount, types, and risks of the products, instruments, and 
exposures the trading desk may use for risk management purposes;
    (3) The level of exposures to relevant risk factors arising from its 
financial exposure; and
    (4) The period of time a financial instrument may be held;
    (D) Internal controls and ongoing monitoring and analysis of each 
trading desk's compliance with its limits; and
    (E) Authorization procedures, including escalation procedures that 
require review and approval of any trade that would exceed a trading 
desk's limit(s), demonstrable analysis that the basis for any temporary 
or permanent increase to a trading desk's limit(s) is consistent with 
the requirements of paragraph (b) of this section, and independent 
review of such demonstrable analysis and approval;
    (iv) To the extent that any limit identified pursuant to paragraph 
(b)(2)(iii)(C) of this section is exceeded, the trading desk takes 
action to bring the trading desk into compliance with the limits as 
promptly as possible after the limit is exceeded;
    (v) The compensation arrangements of persons performing the 
activities described in paragraph (b) of this section are designed not 
to reward or incentivize prohibited proprietary trading; and
    (vi) The banking entity is licensed or registered to engage in 
activity described in paragraph (b) of this section in accordance with 
applicable law.
    (3) Definition of client, customer, and counterparty. For purposes 
of paragraph (b) of this section, the terms client, customer, and 
counterparty, on a collective or individual basis refer to market 
participants that make use of the banking entity's market making-related 
services by obtaining such services, responding to quotations, or 
entering into a continuing relationship with respect to such services, 
provided that:
    (i) A trading desk or other organizational unit of another banking 
entity is not a client, customer, or counterparty of the trading desk if 
that other entity has trading assets and liabilities of $50 billion or 
more as measured in accordance with Sec.  75.20(d)(1), unless:
    (A) The trading desk documents how and why a particular trading desk 
or other organizational unit of the entity should be treated as a 
client, customer, or counterparty of the trading desk for purposes of 
paragraph (b)(2) of this section; or
    (B) The purchase or sale by the trading desk is conducted 
anonymously on an exchange or similar trading facility that permits 
trading on behalf of a broad range of market participants.
    (ii) [Reserved]
    (4) Definition of financial exposure. For purposes of paragraph (b) 
of this section, financial exposure means the aggregate risks of one or 
more financial

[[Page 207]]

instruments and any associated loans, commodities, or foreign exchange 
or currency, held by a banking entity or its affiliate and managed by a 
particular trading desk as part of the trading desk's market making-
related activities.
    (5) Definition of market-maker inventory. For the purposes of 
paragraph (b) of this section, market-maker inventory means all of the 
positions in the financial instruments for which the trading desk stands 
ready to make a market in accordance with paragraph (b)(2)(i) of this 
section that are managed by the trading desk, including the trading 
desk's open positions or exposures arising from open transactions.



Sec.  75.5  Permitted risk-mitigating hedging activities.

    (a) Permitted risk-mitigating hedging activities. The prohibition 
contained in Sec.  75.3(a) does not apply to the risk-mitigating hedging 
activities of a banking entity in connection with and related to 
individual or aggregated positions, contracts, or other holdings of the 
banking entity and designed to reduce the specific risks to the banking 
entity in connection with and related to such positions, contracts, or 
other holdings.
    (b) Requirements. The risk-mitigating hedging activities of a 
banking entity are permitted under paragraph (a) of this section only 
if:
    (1) The banking entity has established and implements, maintains and 
enforces an internal compliance program required by subpart D of this 
part that is reasonably designed to ensure the banking entity's 
compliance with the requirements of this section, including:
    (i) Reasonably designed written policies and procedures regarding 
the positions, techniques and strategies that may be used for hedging, 
including documentation indicating what positions, contracts or other 
holdings a particular trading desk may use in its risk-mitigating 
hedging activities, as well as position and aging limits with respect to 
such positions, contracts or other holdings;
    (ii) Internal controls and ongoing monitoring, management, and 
authorization procedures, including relevant escalation procedures; and
    (iii) The conduct of analysis, including correlation analysis, and 
independent testing designed to ensure that the positions, techniques 
and strategies that may be used for hedging may reasonably be expected 
to demonstrably reduce or otherwise significantly mitigate the specific, 
identifiable risk(s) being hedged, and such correlation analysis 
demonstrates that the hedging activity demonstrably reduces or otherwise 
significantly mitigates the specific, identifiable risk(s) being hedged;
    (2) The risk-mitigating hedging activity:
    (i) Is conducted in accordance with the written policies, 
procedures, and internal controls required under this section;
    (ii) At the inception of the hedging activity, including, without 
limitation, any adjustments to the hedging activity, is designed to 
reduce or otherwise significantly mitigate and demonstrably reduces or 
otherwise significantly mitigates one or more specific, identifiable 
risks, including market risk, counterparty or other credit risk, 
currency or foreign exchange risk, interest rate risk, commodity price 
risk, basis risk, or similar risks, arising in connection with and 
related to identified positions, contracts, or other holdings of the 
banking entity, based upon the facts and circumstances of the identified 
underlying and hedging positions, contracts or other holdings and the 
risks and liquidity thereof;
    (iii) Does not give rise, at the inception of the hedge, to any 
significant new or additional risk that is not itself hedged 
contemporaneously in accordance with this section;
    (iv) Is subject to continuing review, monitoring and management by 
the banking entity that:
    (A) Is consistent with the written hedging policies and procedures 
required under paragraph (b)(1) of this section;
    (B) Is designed to reduce or otherwise significantly mitigate and 
demonstrably reduces or otherwise significantly mitigates the specific, 
identifiable risks that develop over time from the risk-mitigating 
hedging activities undertaken under this section and the underlying 
positions, contracts, and

[[Page 208]]

other holdings of the banking entity, based upon the facts and 
circumstances of the underlying and hedging positions, contracts and 
other holdings of the banking entity and the risks and liquidity 
thereof; and
    (C) Requires ongoing recalibration of the hedging activity by the 
banking entity to ensure that the hedging activity satisfies the 
requirements set out in paragraph (b)(2) of this section and is not 
prohibited proprietary trading; and
    (3) The compensation arrangements of persons performing risk-
mitigating hedging activities are designed not to reward or incentivize 
prohibited proprietary trading.
    (c) Documentation requirement. (1) A banking entity must comply with 
the requirements of paragraphs (c)(2) and (c)(3) of this section with 
respect to any purchase or sale of financial instruments made in 
reliance on this section for risk-mitigating hedging purposes that is:
    (i) Not established by the specific trading desk establishing or 
responsible for the underlying positions, contracts, or other holdings 
the risks of which the hedging activity is designed to reduce;
    (ii) Established by the specific trading desk establishing or 
responsible for the underlying positions, contracts, or other holdings 
the risks of which the purchases or sales are designed to reduce, but 
that is effected through a financial instrument, exposure, technique, or 
strategy that is not specifically identified in the trading desk's 
written policies and procedures established under paragraph (b)(1) of 
this section or under Sec.  75.4(b)(2)(iii)(B) as a product, instrument, 
exposure, technique, or strategy such trading desk may use for hedging; 
or
    (iii) Established to hedge aggregated positions across two or more 
trading desks.
    (2) In connection with any purchase or sale identified in paragraph 
(c)(1) of this section, a banking entity must, at a minimum, and 
contemporaneously with the purchase or sale, document:
    (i) The specific, identifiable risk(s) of the identified positions, 
contracts, or other holdings of the banking entity that the purchase or 
sale is designed to reduce;
    (ii) The specific risk-mitigating strategy that the purchase or sale 
is designed to fulfill; and
    (iii) The trading desk or other business unit that is establishing 
and responsible for the hedge.
    (3) A banking entity must create and retain records sufficient to 
demonstrate compliance with the requirements of paragraph (c) of this 
section for a period that is no less than five years in a form that 
allows the banking entity to promptly produce such records to the 
Commission on request, or such longer period as required under other law 
or this part.



Sec.  75.6  Other permitted proprietary trading activities.

    (a) Permitted trading in domestic government obligations. The 
prohibition contained in Sec.  75.3(a) does not apply to the purchase or 
sale by a banking entity of a financial instrument that is:
    (1) An obligation of, or issued or guaranteed by, the United States;
    (2) An obligation, participation, or other instrument of, or issued 
or guaranteed by, an agency of the United States, the Government 
National Mortgage Association, the Federal National Mortgage 
Association, the Federal Home Loan Mortgage Corporation, a Federal Home 
Loan Bank, the Federal Agricultural Mortgage Corporation or a Farm 
Credit System institution chartered under and subject to the provisions 
of the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.);
    (3) An obligation of any State or any political subdivision thereof, 
including any municipal security; or
    (4) An obligation of the FDIC, or any entity formed by or on behalf 
of the FDIC for purpose of facilitating the disposal of assets acquired 
or held by the FDIC in its corporate capacity or as conservator or 
receiver under the Federal Deposit Insurance Act or Title II of the 
Dodd-Frank Wall Street Reform and Consumer Protection Act.
    (b) Permitted trading in foreign government obligations--(1) 
Affiliates of foreign banking entities in the United States. The 
prohibition contained in Sec.  75.3(a) does not apply to the purchase or 
sale of a

[[Page 209]]

financial instrument that is an obligation of, or issued or guaranteed 
by, a foreign sovereign (including any multinational central bank of 
which the foreign sovereign is a member), or any agency or political 
subdivision of such foreign sovereign, by a banking entity, so long as:
    (i) The banking entity is organized under or is directly or 
indirectly controlled by a banking entity that is organized under the 
laws of a foreign sovereign and is not directly or indirectly controlled 
by a top-tier banking entity that is organized under the laws of the 
United States;
    (ii) The financial instrument is an obligation of, or issued or 
guaranteed by, the foreign sovereign under the laws of which the foreign 
banking entity referred to in paragraph (b)(1)(i) of this section is 
organized (including any multinational central bank of which the foreign 
sovereign is a member), or any agency or political subdivision of that 
foreign sovereign; and
    (iii) The purchase or sale as principal is not made by an insured 
depository institution.
    (2) Foreign affiliates of a U.S. banking entity. The prohibition 
contained in Sec.  75.3(a) does not apply to the purchase or sale of a 
financial instrument that is an obligation of, or issued or guaranteed 
by, a foreign sovereign (including any multinational central bank of 
which the foreign sovereign is a member), or any agency or political 
subdivision of that foreign sovereign, by a foreign entity that is owned 
or controlled by a banking entity organized or established under the 
laws of the United States or any State, so long as:
    (i) The foreign entity is a foreign bank, as defined in Sec.  
211.2(j) of the Board's Regulation K (12 CFR 211.2(j)), or is regulated 
by the foreign sovereign as a securities dealer;
    (ii) The financial instrument is an obligation of, or issued or 
guaranteed by, the foreign sovereign under the laws of which the foreign 
entity is organized (including any multinational central bank of which 
the foreign sovereign is a member), or any agency or political 
subdivision of that foreign sovereign; and
    (iii) The financial instrument is owned by the foreign entity and is 
not financed by an affiliate that is located in the United States or 
organized under the laws of the United States or of any State.
    (c) Permitted trading on behalf of customers--(1) Fiduciary 
transactions. The prohibition contained in Sec.  75.3(a) does not apply 
to the purchase or sale of financial instruments by a banking entity 
acting as trustee or in a similar fiduciary capacity, so long as:
    (i) The transaction is conducted for the account of, or on behalf 
of, a customer; and
    (ii) The banking entity does not have or retain beneficial ownership 
of the financial instruments.
    (2) Riskless principal transactions. The prohibition contained in 
Sec.  75.3(a) does not apply to the purchase or sale of financial 
instruments by a banking entity acting as riskless principal in a 
transaction in which the banking entity, after receiving an order to 
purchase (or sell) a financial instrument from a customer, purchases (or 
sells) the financial instrument for its own account to offset a 
contemporaneous sale to (or purchase from) the customer.
    (d) Permitted trading by a regulated insurance company. The 
prohibition contained in Sec.  75.3(a) does not apply to the purchase or 
sale of financial instruments by a banking entity that is an insurance 
company or an affiliate of an insurance company if:
    (1) The insurance company or its affiliate purchases or sells the 
financial instruments solely for:
    (i) The general account of the insurance company; or
    (ii) A separate account established by the insurance company;
    (2) The purchase or sale is conducted in compliance with, and 
subject to, the insurance company investment laws, regulations, and 
written guidance of the State or jurisdiction in which such insurance 
company is domiciled; and
    (3) The appropriate Federal banking agencies, after consultation 
with the Financial Stability Oversight Council and the relevant 
insurance commissioners of the States and foreign jurisdictions, as 
appropriate, have not jointly determined, after notice and comment, that 
a particular law, regulation, or written guidance described in

[[Page 210]]

paragraph (d)(2) of this section is insufficient to protect the safety 
and soundness of the covered banking entity, or the financial stability 
of the United States.
    (e) Permitted trading activities of foreign banking entities. (1) 
The prohibition contained in Sec.  75.3(a) does not apply to the 
purchase or sale of financial instruments by a banking entity if:
    (i) The banking entity is not organized or directly or indirectly 
controlled by a banking entity that is organized under the laws of the 
United States or of any State;
    (ii) The purchase or sale by the banking entity is made pursuant to 
paragraph (9) or (13) of section 4(c) of the BHC Act; and
    (iii) The purchase or sale meets the requirements of paragraph 
(e)(3) of this section.
    (2) A purchase or sale of financial instruments by a banking entity 
is made pursuant to paragraph (9) or (13) of section 4(c) of the BHC Act 
for purposes of paragraph (e)(1)(ii) of this section only if:
    (i) The purchase or sale is conducted in accordance with the 
requirements of paragraph (e) of this section; and
    (ii)(A) With respect to a banking entity that is a foreign banking 
organization, the banking entity meets the qualifying foreign banking 
organization requirements of Sec.  211.23(a), (c) or (e) of the Board's 
Regulation K (12 CFR 211.23(a), (c) or (e)), as applicable; or
    (B) With respect to a banking entity that is not a foreign banking 
organization, the banking entity is not organized under the laws of the 
United States or of any State and the banking entity, on a fully-
consolidated basis, meets at least two of the following requirements:
    (1) Total assets of the banking entity held outside of the United 
States exceed total assets of the banking entity held in the United 
States;
    (2) Total revenues derived from the business of the banking entity 
outside of the United States exceed total revenues derived from the 
business of the banking entity in the United States; or
    (3) Total net income derived from the business of the banking entity 
outside of the United States exceeds total net income derived from the 
business of the banking entity in the United States.
    (3) A purchase or sale by a banking entity is permitted for purposes 
of paragraph (e) of this section only if:
    (i) The banking entity engaging as principal in the purchase or sale 
(including any personnel of the banking entity or its affiliate that 
arrange, negotiate or execute such purchase or sale) is not located in 
the United States or organized under the laws of the United States or of 
any State;
    (ii) The banking entity (including relevant personnel) that makes 
the decision to purchase or sell as principal is not located in the 
United States or organized under the laws of the United States or of any 
State;
    (iii) The purchase or sale, including any transaction arising from 
risk-mitigating hedging related to the instruments purchased or sold, is 
not accounted for as principal directly or on a consolidated basis by 
any branch or affiliate that is located in the United States or 
organized under the laws of the United States or of any State;
    (iv) No financing for the banking entity's purchases or sales is 
provided, directly or indirectly, by any branch or affiliate that is 
located in the United States or organized under the laws of the United 
States or of any State; and
    (v) The purchase or sale is not conducted with or through any U.S. 
entity, other than:
    (A) A purchase or sale with the foreign operations of a U.S. entity 
if no personnel of such U.S. entity that are located in the United 
States are involved in the arrangement, negotiation, or execution of 
such purchase or sale;
    (B) A purchase or sale with an unaffiliated market intermediary 
acting as principal, provided the purchase or sale is promptly cleared 
and settled through a clearing agency or derivatives clearing 
organization acting as a central counterparty; or
    (C) A purchase or sale through an unaffiliated market intermediary 
acting as agent, provided the purchase or sale is conducted anonymously 
on an exchange or similar trading facility and is promptly cleared and 
settled

[[Page 211]]

through a clearing agency or derivatives clearing organization acting as 
a central counterparty,
    (4) For purposes of paragraph (e) of this section, a U.S. entity is 
any entity that is, or is controlled by, or is acting on behalf of, or 
at the direction of, any other entity that is, located in the United 
States or organized under the laws of the United States or of any State.
    (5) For purposes of paragraph (e) of this section, a U.S. branch, 
agency, or subsidiary of a foreign banking entity is considered to be 
located in the United States; however, the foreign bank that operates or 
controls that branch, agency, or subsidiary is not considered to be 
located in the United States solely by virtue of operating or 
controlling the U.S. branch, agency, or subsidiary.
    (6) For purposes of paragraph (e) of this section, unaffiliated 
market intermediary means an unaffiliated entity, acting as an 
intermediary, that is:
    (i) A broker or dealer registered with the SEC under section 15 of 
the Exchange Act or exempt from registration or excluded from regulation 
as such;
    (ii) A swap dealer registered with the CFTC under section 4s of the 
Commodity Exchange Act or exempt from registration or excluded from 
regulation as such;
    (iii) A security-based swap dealer registered with the SEC under 
section 15F of the Exchange Act or exempt from registration or excluded 
from regulation as such; or
    (iv) A futures commission merchant registered with the CFTC under 
section 4f of the Commodity Exchange Act or exempt from registration or 
excluded from regulation as such.



Sec.  75.7  Limitations on permitted proprietary trading activities.

    (a) No transaction, class of transactions, or activity may be deemed 
permissible under Sec. Sec.  75.4 through 75.6 if the transaction, class 
of transactions, or activity would:
    (1) Involve or result in a material conflict of interest between the 
banking entity and its clients, customers, or counterparties;
    (2) Result, directly or indirectly, in a material exposure by the 
banking entity to a high-risk asset or a high-risk trading strategy; or
    (3) Pose a threat to the safety and soundness of the banking entity 
or to the financial stability of the United States.
    (b) Definition of material conflict of interest. (1) For purposes of 
this section, a material conflict of interest between a banking entity 
and its clients, customers, or counterparties exists if the banking 
entity engages in any transaction, class of transactions, or activity 
that would involve or result in the banking entity's interests being 
materially adverse to the interests of its client, customer, or 
counterparty with respect to such transaction, class of transactions, or 
activity, and the banking entity has not taken at least one of the 
actions in paragraph (b)(2) of this section.
    (2) Prior to effecting the specific transaction or class or type of 
transactions, or engaging in the specific activity, the banking entity:
    (i) Timely and effective disclosure. (A) Has made clear, timely, and 
effective disclosure of the conflict of interest, together with other 
necessary information, in reasonable detail and in a manner sufficient 
to permit a reasonable client, customer, or counterparty to meaningfully 
understand the conflict of interest; and
    (B) Such disclosure is made in a manner that provides the client, 
customer, or counterparty the opportunity to negate, or substantially 
mitigate, any materially adverse effect on the client, customer, or 
counterparty created by the conflict of interest; or
    (ii) Information barriers. Has established, maintained, and enforced 
information barriers that are memorialized in written policies and 
procedures, such as physical separation of personnel, or functions, or 
limitations on types of activity, that are reasonably designed, taking 
into consideration the nature of the banking entity's business, to 
prevent the conflict of interest from involving or resulting in a 
materially adverse effect on a client, customer, or counterparty. A 
banking entity may not rely on such information barriers if, in the case 
of any specific

[[Page 212]]

transaction, class or type of transactions or activity, the banking 
entity knows or should reasonably know that, notwithstanding the banking 
entity's establishment of information barriers, the conflict of interest 
may involve or result in a materially adverse effect on a client, 
customer, or counterparty.
    (c) Definition of high-risk asset and high-risk trading strategy. 
For purposes of this section:
    (1) High-risk asset means an asset or group of related assets that 
would, if held by a banking entity, significantly increase the 
likelihood that the banking entity would incur a substantial financial 
loss or would pose a threat to the financial stability of the United 
States.
    (2) High-risk trading strategy means a trading strategy that would, 
if engaged in by a banking entity, significantly increase the likelihood 
that the banking entity would incur a substantial financial loss or 
would pose a threat to the financial stability of the United States.



Sec. Sec.  75.8-75.9  [Reserved]



            Subpart C_Covered Fund Activities and Investments



Sec.  75.10  Prohibition on acquiring or retaining an ownership interest 
in and having certain relationships with a covered fund.

    (a) Prohibition. (1) Except as otherwise provided in this subpart, a 
banking entity may not, as principal, directly or indirectly, acquire or 
retain any ownership interest in or sponsor a covered fund.
    (2) Paragraph (a)(1) of this section does not include acquiring or 
retaining an ownership interest in a covered fund by a banking entity:
    (i) Acting solely as agent, broker, or custodian, so long as;
    (A) The activity is conducted for the account of, or on behalf of, a 
customer; and
    (B) The banking entity and its affiliates do not have or retain 
beneficial ownership of such ownership interest;
    (ii) Through a deferred compensation, stock-bonus, profit-sharing, 
or pension plan of the banking entity (or an affiliate thereof) that is 
established and administered in accordance with the law of the United 
States or a foreign sovereign, if the ownership interest is held or 
controlled directly or indirectly by the banking entity as trustee for 
the benefit of persons who are or were employees of the banking entity 
(or an affiliate thereof);
    (iii) In the ordinary course of collecting a debt previously 
contracted in good faith, provided that the banking entity divests the 
ownership interest as soon as practicable, and in no event may the 
banking entity retain such ownership interest for longer than such 
period permitted by the Commission; or
    (iv) On behalf of customers as trustee or in a similar fiduciary 
capacity for a customer that is not a covered fund, so long as:
    (A) The activity is conducted for the account of, or on behalf of, 
the customer; and
    (B) The banking entity and its affiliates do not have or retain 
beneficial ownership of such ownership interest.
    (b) Definition of covered fund. (1) Except as provided in paragraph 
(c) of this section, covered fund means:
    (i) An issuer that would be an investment company, as defined in the 
Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), but for 
section 3(c)(1) or 3(c)(7) of that Act (15 U.S.C. 80a-3(c)(1) or (7));
    (ii) Any commodity pool under section 1a(10) of the Commodity 
Exchange Act (7 U.S.C. 1a(10)) for which:
    (A) The commodity pool operator has claimed an exemption under Sec.  
4.7 of this chapter; or
    (B) (1) A commodity pool operator is registered with the CFTC as a 
commodity pool operator in connection with the operation of the 
commodity pool;
    (2) Substantially all participation units of the commodity pool are 
owned by qualified eligible persons under Sec.  4.7(a)(2) and (3) of 
this chapter; and
    (3) Participation units of the commodity pool have not been publicly 
offered to persons who are not qualified eligible persons under Sec.  
4.7(a)(2) and (3) of this chapter; or
    (iii) For any banking entity that is, or is controlled directly or 
indirectly by a banking entity that is, located in

[[Page 213]]

or organized under the laws of the United States or of any State, an 
entity that:
    (A) Is organized or established outside the United States and the 
ownership interests of which are offered and sold solely outside the 
United States;
    (B) Is, or holds itself out as being, an entity or arrangement that 
raises money from investors primarily for the purpose of investing in 
securities for resale or other disposition or otherwise trading in 
securities; and
    (C) (1) Has as its sponsor that banking entity (or an affiliate 
thereof); or
    (2) Has issued an ownership interest that is owned directly or 
indirectly by that banking entity (or an affiliate thereof).
    (2) An issuer shall not be deemed to be a covered fund under 
paragraph (b)(1)(iii) of this section if, were the issuer subject to 
U.S. securities laws, the issuer could rely on an exclusion or exemption 
from the definition of ``investment company'' under the Investment 
Company Act of 1940 (15 U.S.C. 80a-1 et seq.) other than the exclusions 
contained in section 3(c)(1) and 3(c)(7) of that Act.
    (3) For purposes of paragraph (b)(1)(iii) of this section, a U.S. 
branch, agency, or subsidiary of a foreign banking entity is located in 
the United States; however, the foreign bank that operates or controls 
that branch, agency, or subsidiary is not considered to be located in 
the United States solely by virtue of operating or controlling the U.S. 
branch, agency, or subsidiary.
    (c) Notwithstanding paragraph (b) of this section, unless the 
appropriate Federal banking agencies, the SEC, and the CFTC jointly 
determine otherwise, a covered fund does not include:
    (1) Foreign public funds. (i) Subject to paragraphs (c)(1)(ii) and 
(iii) of this section, an issuer that:
    (A) Is organized or established outside of the United States;
    (B) Is authorized to offer and sell ownership interests to retail 
investors in the issuer's home jurisdiction; and
    (C) Sells ownership interests predominantly through one or more 
public offerings outside of the United States.
    (ii) With respect to a banking entity that is, or is controlled 
directly or indirectly by a banking entity that is, located in or 
organized under the laws of the United States or of any State and any 
issuer for which such banking entity acts as sponsor, the sponsoring 
banking entity may not rely on the exemption in paragraph (c)(1)(i) of 
this section for such issuer unless ownership interests in the issuer 
are sold predominantly to persons other than:
    (A) Such sponsoring banking entity;
    (B) Such issuer;
    (C) Affiliates of such sponsoring banking entity or such issuer; and
    (D) Directors and employees of such entities.
    (iii) For purposes of paragraph (c)(1)(i)(C) of this section, the 
term public offering means a distribution (as defined in Sec.  
75.4(a)(3)) of securities in any jurisdiction outside the United States 
to investors, including retail investors, provided that:
    (A) The distribution complies with all applicable requirements in 
the jurisdiction in which such distribution is being made;
    (B) The distribution does not restrict availability to investors 
having a minimum level of net worth or net investment assets; and
    (C) The issuer has filed or submitted, with the appropriate 
regulatory authority in such jurisdiction, offering disclosure documents 
that are publicly available.
    (2) Wholly-owned subsidiaries. An entity, all of the outstanding 
ownership interests of which are owned directly or indirectly by the 
banking entity (or an affiliate thereof), except that:
    (i) Up to five percent of the entity's outstanding ownership 
interests, less any amounts outstanding under paragraph (c)(2)(ii) of 
this section, may be held by employees or directors of the banking 
entity or such affiliate (including former employees or directors if 
their ownership interest was acquired while employed by or in the 
service of the banking entity); and
    (ii) Up to 0.5 percent of the entity's outstanding ownership 
interests may be held by a third party if the ownership interest is 
acquired or retained by the third party for the purpose of establishing 
corporate separateness or addressing bankruptcy, insolvency, or similar 
concerns.

[[Page 214]]

    (3) Joint ventures. A joint venture between a banking entity or any 
of its affiliates and one or more unaffiliated persons, provided that 
the joint venture:
    (i) Is comprised of no more than 10 unaffiliated co-venturers;
    (ii) Is in the business of engaging in activities that are 
permissible for the banking entity or affiliate, other than investing in 
securities for resale or other disposition; and
    (iii) Is not, and does not hold itself out as being, an entity or 
arrangement that raises money from investors primarily for the purpose 
of investing in securities for resale or other disposition or otherwise 
trading in securities.
    (4) Acquisition vehicles. An issuer:
    (i) Formed solely for the purpose of engaging in a bona fide merger 
or acquisition transaction; and
    (ii) That exists only for such period as necessary to effectuate the 
transaction.
    (5) Foreign pension or retirement funds. A plan, fund, or program 
providing pension, retirement, or similar benefits that is:
    (i) Organized and administered outside the United States;
    (ii) A broad-based plan for employees or citizens that is subject to 
regulation as a pension, retirement, or similar plan under the laws of 
the jurisdiction in which the plan, fund, or program is organized and 
administered; and
    (iii) Established for the benefit of citizens or residents of one or 
more foreign sovereigns or any political subdivision thereof.
    (6) Insurance company separate accounts. A separate account, 
provided that no banking entity other than the insurance company 
participates in the account's profits and losses.
    (7) Bank owned life insurance. A separate account that is used 
solely for the purpose of allowing one or more banking entities to 
purchase a life insurance policy for which the banking entity or 
entities is beneficiary, provided that no banking entity that purchases 
the policy:
    (i) Controls the investment decisions regarding the underlying 
assets or holdings of the separate account; or
    (ii) Participates in the profits and losses of the separate account 
other than in compliance with applicable supervisory guidance regarding 
bank owned life insurance.
    (8) Loan securitizations--(i) Scope. An issuing entity for asset-
backed securities that satisfies all the conditions of paragraph (c)(8) 
of this section and the assets or holdings of which are comprised solely 
of:
    (A) Loans as defined in Sec.  75.2(s);
    (B) Rights or other assets designed to assure the servicing or 
timely distribution of proceeds to holders of such securities and rights 
or other assets that are related or incidental to purchasing or 
otherwise acquiring and holding the loans, provided that each asset 
meets the requirements of paragraph (c)(8)(iii) of this section;
    (C) Interest rate or foreign exchange derivatives that meet the 
requirements of paragraph (c)(8)(iv) of this section; and
    (D) Special units of beneficial interest and collateral certificates 
that meet the requirements of paragraph (c)(8)(v) of this section.
    (ii) Impermissible assets. For purposes of paragraph (c)(8) of this 
section, the assets or holdings of the issuing entity shall not include 
any of the following:
    (A) A security, including an asset-backed security, or an interest 
in an equity or debt security other than as permitted in paragraph 
(c)(8)(iii) of this section;
    (B) A derivative, other than a derivative that meets the 
requirements of paragraph (c)(8)(iv) of this section; or
    (C) A commodity forward contract.
    (iii) Permitted securities. Notwithstanding paragraph (c)(8)(ii)(A) 
of this section, the issuing entity may hold securities if those 
securities are:
    (A) Cash equivalents for purposes of the rights and assets in 
paragraph (c)(8)(i)(B) of this section; or
    (B) Securities received in lieu of debts previously contracted with 
respect to the loans supporting the asset-backed securities.
    (iv) Derivatives. The holdings of derivatives by the issuing entity 
shall be limited to interest rate or foreign exchange derivatives that 
satisfy all of the following conditions:
    (A) The written terms of the derivative directly relate to the 
loans, the asset-backed securities, or the contractual rights of other 
assets described in

[[Page 215]]

paragraph (c)(8)(i)(B) of this section; and
    (B) The derivatives reduce the interest rate and/or foreign exchange 
risks related to the loans, the asset-backed securities, or the 
contractual rights or other assets described in paragraph (c)(8)(i)(B) 
of this section.
    (v) Special units of beneficial interest and collateral 
certificates. The assets or holdings of the issuing entity may include 
collateral certificates and special units of beneficial interest issued 
by a special purpose vehicle, provided that:
    (A) The special purpose vehicle that issues the special unit of 
beneficial interest or collateral certificate meets the requirements in 
paragraph (c)(8) of this section;
    (B) The special unit of beneficial interest or collateral 
certificate is used for the sole purpose of transferring to the issuing 
entity for the loan securitization the economic risks and benefits of 
the assets that are permissible for loan securitizations under paragraph 
(c)(8) of this section and does not directly or indirectly transfer any 
interest in any other economic or financial exposure;
    (C) The special unit of beneficial interest or collateral 
certificate is created solely to satisfy legal requirements or otherwise 
facilitate the structuring of the loan securitization; and
    (D) The special purpose vehicle that issues the special unit of 
beneficial interest or collateral certificate and the issuing entity are 
established under the direction of the same entity that initiated the 
loan securitization.
    (9) Qualifying asset-backed commercial paper conduits. (i) An 
issuing entity for asset-backed commercial paper that satisfies all of 
the following requirements:
    (A) The asset-backed commercial paper conduit holds only:
    (1) Loans and other assets permissible for a loan securitization 
under paragraph (c)(8)(i) of this section; and
    (2) Asset-backed securities supported solely by assets that are 
permissible for loan securitizations under paragraph (c)(8)(i) of this 
section and acquired by the asset-backed commercial paper conduit as 
part of an initial issuance either directly from the issuing entity of 
the asset-backed securities or directly from an underwriter in the 
distribution of the asset-backed securities;
    (B) The asset-backed commercial paper conduit issues only asset-
backed securities, comprised of a residual interest and securities with 
a legal maturity of 397 days or less; and
    (C) A regulated liquidity provider has entered into a legally 
binding commitment to provide full and unconditional liquidity coverage 
with respect to all of the outstanding asset-backed securities issued by 
the asset-backed commercial paper conduit (other than any residual 
interest) in the event that funds are required to redeem maturing asset-
backed securities.
    (ii) For purposes of this paragraph (c)(9) of this section, a 
regulated liquidity provider means:
    (A) A depository institution, as defined in section 3(c) of the 
Federal Deposit Insurance Act (12 U.S.C. 1813(c));
    (B) A bank holding company, as defined in section 2(a) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1841(a)), or a subsidiary 
thereof;
    (C) A savings and loan holding company, as defined in section 10a of 
the Home Owners' Loan Act (12 U.S.C. 1467a), provided all or 
substantially all of the holding company's activities are permissible 
for a financial holding company under section 4(k) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1843(k)), or a subsidiary thereof;
    (D) A foreign bank whose home country supervisor, as defined in 
Sec.  211.21(q) of the Board's Regulation K (12 CFR 211.21(q)), has 
adopted capital standards consistent with the Capital Accord for the 
Basel Committee on Banking Supervision, as amended, and that is subject 
to such standards, or a subsidiary thereof; or
    (E) The United States or a foreign sovereign.
    (10) Qualifying covered bonds--(i) Scope. An entity owning or 
holding a dynamic or fixed pool of loans or other assets as provided in 
paragraph (c)(8) of this section for the benefit of the holders of 
covered bonds, provided that the assets in the pool are comprised solely 
of assets that meet the conditions in paragraph (c)(8)(i) of this 
section.

[[Page 216]]

    (ii) Covered bond. For purposes of paragraph (c)(10) of this 
section, a covered bond means:
    (A) A debt obligation issued by an entity that meets the definition 
of foreign banking organization, the payment obligations of which are 
fully and unconditionally guaranteed by an entity that meets the 
conditions set forth in paragraph (c)(10)(i) of this section; or
    (B) A debt obligation of an entity that meets the conditions set 
forth in paragraph (c)(10)(i) of this section, provided that the payment 
obligations are fully and unconditionally guaranteed by an entity that 
meets the definition of foreign banking organization and the entity is a 
wholly-owned subsidiary, as defined in paragraph (c)(2) of this section, 
of such foreign banking organization.
    (11) SBICs and public welfare investment funds. An issuer:
    (i) That is a small business investment company, as defined in 
section 103(3) of the Small Business Investment Act of 1958 (15 U.S.C. 
662), or that has received from the Small Business Administration notice 
to proceed to qualify for a license as a small business investment 
company, which notice or license has not been revoked; or
    (ii) The business of which is to make investments that are:
    (A) Designed primarily to promote the public welfare, of the type 
permitted under paragraph (11) of section 5136 of the Revised Statutes 
of the United States (12 U.S.C. 24), including the welfare of low- and 
moderate-income communities or families (such as providing housing, 
services, or jobs); or
    (B) Qualified rehabilitation expenditures with respect to a 
qualified rehabilitated building or certified historic structure, as 
such terms are defined in section 47 of the Internal Revenue Code of 
1986 or a similar State historic tax credit program.
    (12) Registered investment companies and excluded entities. An 
issuer:
    (i) That is registered as an investment company under section 8 of 
the Investment Company Act of 1940 (15 U.S.C. 80a-8), or that is formed 
and operated pursuant to a written plan to become a registered 
investment company as described in Sec.  75.20(e)(3) and that complies 
with the requirements of section 18 of the Investment Company Act of 
1940 (15 U.S.C. 80a-18);
    (ii) That may rely on an exclusion or exemption from the definition 
of ``investment company'' under the Investment Company Act of 1940 (15 
U.S.C. 80a-1 et seq.) other than the exclusions contained in section 
3(c)(1) and 3(c)(7) of that Act; or
    (iii) That has elected to be regulated as a business development 
company pursuant to section 54(a) of that Act (15 U.S.C. 80a-53) and has 
not withdrawn its election, or that is formed and operated pursuant to a 
written plan to become a business development company as described in 
Sec.  75.20(e)(3) and that complies with the requirements of section 61 
of the Investment Company Act of 1940 (15 U.S.C. 80a-60).
    (13) Issuers in conjunction with the FDIC's receivership or 
conservatorship operations. An issuer that is an entity formed by or on 
behalf of the FDIC for the purpose of facilitating the disposal of 
assets acquired in the FDIC's capacity as conservator or receiver under 
the Federal Deposit Insurance Act or Title II of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act.
    (14) Other excluded issuers. (i) Any issuer that the appropriate 
Federal banking agencies, the SEC, and the CFTC jointly determine the 
exclusion of which is consistent with the purposes of section 13 of the 
BHC Act.
    (ii) A determination made under paragraph (c)(14)(i) of this section 
will be promptly made public.
    (d) Definition of other terms related to covered funds. For purposes 
of this subpart:
    (1) Applicable accounting standards means U.S. generally accepted 
accounting principles, or such other accounting standards applicable to 
a banking entity that the Commission determines are appropriate and that 
the banking entity uses in the ordinary course of its business in 
preparing its consolidated financial statements.
    (2) Asset-backed security has the meaning specified in section 
3(a)(79) of the Exchange Act (15 U.S.C. 78c(a)(79)).
    (3) Director has the same meaning as provided in Sec.  215.2(d)(1) 
of the Board's Regulation O (12 CFR 215.2(d)(1)).

[[Page 217]]

    (4) Issuer has the same meaning as in section 2(a)(22) of the 
Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(22)).
    (5) Issuing entity means with respect to asset-backed securities the 
special purpose vehicle that owns or holds the pool assets underlying 
asset-backed securities and in whose name the asset-backed securities 
supported or serviced by the pool assets are issued.
    (6) Ownership interest--(i) Ownership interest means any equity, 
partnership, or other similar interest. An ``other similar interest'' 
means an interest that:
    (A) Has the right to participate in the selection or removal of a 
general partner, managing member, member of the board of directors or 
trustees, investment manager, investment adviser, or commodity trading 
advisor of the covered fund (excluding the rights of a creditor to 
exercise remedies upon the occurrence of an event of default or an 
acceleration event);
    (B) Has the right under the terms of the interest to receive a share 
of the income, gains or profits of the covered fund;
    (C) Has the right to receive the underlying assets of the covered 
fund after all other interests have been redeemed and/or paid in full 
(excluding the rights of a creditor to exercise remedies upon the 
occurrence of an event of default or an acceleration event);
    (D) Has the right to receive all or a portion of excess spread (the 
positive difference, if any, between the aggregate interest payments 
received from the underlying assets of the covered fund and the 
aggregate interest paid to the holders of other outstanding interests);
    (E) Provides under the terms of the interest that the amounts 
payable by the covered fund with respect to the interest could be 
reduced based on losses arising from the underlying assets of the 
covered fund, such as allocation of losses, write-downs or charge-offs 
of the outstanding principal balance, or reductions in the amount of 
interest due and payable on the interest;
    (F) Receives income on a pass-through basis from the covered fund, 
or has a rate of return that is determined by reference to the 
performance of the underlying assets of the covered fund; or
    (G) Any synthetic right to have, receive, or be allocated any of the 
rights in paragraphs (d)(6)(i)(A) through (d)(6)(i)(F) of this section.
    (ii) Ownership interest does not include restricted profit interest, 
which is an interest held by an entity (or an employee or former 
employee thereof) in a covered fund for which the entity (or employee 
thereof) serves as investment manager, investment adviser, commodity 
trading advisor, or other service provider so long as:
    (A) The sole purpose and effect of the interest is to allow the 
entity (or employee or former employee thereof) to share in the profits 
of the covered fund as performance compensation for the investment 
management, investment advisory, commodity trading advisory, or other 
services provided to the covered fund by the entity (or employee or 
former employee thereof), provided that the entity (or employee or 
former employee thereof) may be obligated under the terms of such 
interest to return profits previously received;
    (B) All such profit, once allocated, is distributed to the entity 
(or employee or former employee thereof) promptly after being earned or, 
if not so distributed, is retained by the covered fund for the sole 
purpose of establishing a reserve amount to satisfy contractual 
obligations with respect to subsequent losses of the covered fund and 
such undistributed profit of the entity (or employee or former employee 
thereof) does not share in the subsequent investment gains of the 
covered fund;
    (C) Any amounts invested in the covered fund, including any amounts 
paid by the entity (or employee or former employee thereof) in 
connection with obtaining the restricted profit interest, are within the 
limits of Sec.  75.12; and
    (D) The interest is not transferable by the entity (or employee or 
former employee thereof) except to an affiliate thereof (or an employee 
of the banking entity or affiliate), to immediate family members, or 
through the intestacy, of the employee or former employee, or in 
connection with a sale of the business that gave rise to the restricted 
profit interest by the entity (or employee or former employee thereof) 
to

[[Page 218]]

an unaffiliated party that provides investment management, investment 
advisory, commodity trading advisory, or other services to the fund.
    (7) Prime brokerage transaction means any transaction that would be 
a covered transaction, as defined in section 23A(b)(7) of the Federal 
Reserve Act (12 U.S.C. 371c(b)(7)), that is provided in connection with 
custody, clearance and settlement, securities borrowing or lending 
services, trade execution, financing, or data, operational, and 
administrative support.
    (8) Resident of the United States means a person that is a ``U.S. 
person'' as defined in rule 902(k) of the SEC's Regulation S (17 CFR 
230.902(k)).
    (9) Sponsor means, with respect to a covered fund:
    (i) To serve as a general partner, managing member, or trustee of a 
covered fund, or to serve as a commodity pool operator with respect to a 
covered fund as defined in (b)(1)(ii) of this section;
    (ii) In any manner to select or to control (or to have employees, 
officers, or directors, or agents who constitute) a majority of the 
directors, trustees, or management of a covered fund; or
    (iii) To share with a covered fund, for corporate, marketing, 
promotional, or other purposes, the same name or a variation of the same 
name.
    (10) Trustee. (i) For purposes of paragraph (d)(9) of this section 
and Sec.  75.11, a trustee does not include:
    (A) A trustee that does not exercise investment discretion with 
respect to a covered fund, including a trustee that is subject to the 
direction of an unaffiliated named fiduciary who is not a trustee 
pursuant to section 403(a)(1) of the Employee's Retirement Income 
Security Act (29 U.S.C. 1103(a)(1)); or
    (B) A trustee that is subject to fiduciary standards imposed under 
foreign law that are substantially equivalent to those described in 
paragraph (d)(10)(i)(A) of this section;
    (ii) Any entity that directs a person described in paragraph 
(d)(10)(i) of this section, or that possesses authority and discretion 
to manage and control the investment decisions of a covered fund for 
which such person serves as trustee, shall be considered to be a trustee 
of such covered fund.



Sec.  75.11  Permitted organizing and offering, underwriting, and 
market making with respect to a covered fund.

    (a) Organizing and offering a covered fund in general. 
Notwithstanding Sec.  75.10(a), a banking entity is not prohibited from 
acquiring or retaining an ownership interest in, or acting as sponsor 
to, a covered fund in connection with, directly or indirectly, 
organizing and offering a covered fund, including serving as a general 
partner, managing member, trustee, or commodity pool operator of the 
covered fund and in any manner selecting or controlling (or having 
employees, officers, directors, or agents who constitute) a majority of 
the directors, trustees, or management of the covered fund, including 
any necessary expenses for the foregoing, only if:
    (1) The banking entity (or an affiliate thereof) provides bona fide 
trust, fiduciary, investment advisory, or commodity trading advisory 
services;
    (2) The covered fund is organized and offered only in connection 
with the provision of bona fide trust, fiduciary, investment advisory, 
or commodity trading advisory services and only to persons that are 
customers of such services of the banking entity (or an affiliate 
thereof), pursuant to a written plan or similar documentation outlining 
how the banking entity or such affiliate intends to provide advisory or 
similar services to its customers through organizing and offering such 
fund;
    (3) The banking entity and its affiliates do not acquire or retain 
an ownership interest in the covered fund except as permitted under 
Sec.  75.12;
    (4) The banking entity and its affiliates comply with the 
requirements of Sec.  75.14;
    (5) The banking entity and its affiliates do not, directly or 
indirectly, guarantee, assume, or otherwise insure the obligations or 
performance of the covered fund or of any covered fund in which such 
covered fund invests;
    (6) The covered fund, for corporate, marketing, promotional, or 
other purposes:
    (i) Does not share the same name or a variation of the same name 
with the banking entity (or an affiliate thereof); and

[[Page 219]]

    (ii) Does not use the word ``bank'' in its name;
    (7) No director or employee of the banking entity (or an affiliate 
thereof) takes or retains an ownership interest in the covered fund, 
except for any director or employee of the banking entity or such 
affiliate who is directly engaged in providing investment advisory, 
commodity trading advisory, or other services to the covered fund at the 
time the director or employee takes the ownership interest; and
    (8) The banking entity:
    (i) Clearly and conspicuously discloses, in writing, to any 
prospective and actual investor in the covered fund (such as through 
disclosure in the covered fund's offering documents):
    (A) That ``any losses in [such covered fund] will be borne solely by 
investors in [the covered fund] and not by [the banking entity] or its 
affiliates; therefore, [the banking entity's] losses in [such covered 
fund] will be limited to losses attributable to the ownership interests 
in the covered fund held by [the banking entity] and any affiliate in 
its capacity as investor in the [covered fund] or as beneficiary of a 
restricted profit interest held by [the banking entity] or any 
affiliate'';
    (B) That such investor should read the fund offering documents 
before investing in the covered fund;
    (C) That the ``ownership interests in the covered fund are not 
insured by the FDIC, and are not deposits, obligations of, or endorsed 
or guaranteed in any way, by any banking entity'' (unless that happens 
to be the case); and
    (D) The role of the banking entity and its affiliates and employees 
in sponsoring or providing any services to the covered fund; and
    (ii) Complies with any additional rules of the appropriate Federal 
banking agencies, the SEC, or the CFTC, as provided in section 13(b)(2) 
of the BHC Act, designed to ensure that losses in such covered fund are 
borne solely by investors in the covered fund and not by the covered 
banking entity and its affiliates.
    (b) Organizing and offering an issuing entity of asset-backed 
securities. (1) Notwithstanding Sec.  75.10(a), a banking entity is not 
prohibited from acquiring or retaining an ownership interest in, or 
acting as sponsor to, a covered fund that is an issuing entity of asset-
backed securities in connection with, directly or indirectly, organizing 
and offering that issuing entity, so long as the banking entity and its 
affiliates comply with all of the requirements of paragraphs (a)(3) 
through (a)(8) of this section.
    (2) For purposes of paragraph (b) of this section, organizing and 
offering a covered fund that is an issuing entity of asset-backed 
securities means acting as the securitizer, as that term is used in 
section 15G(a)(3) of the Exchange Act (15 U.S.C. 78o-11(a)(3)) of the 
issuing entity, or acquiring or retaining an ownership interest in the 
issuing entity as required by section 15G of that Act (15 U.S.C. 78o-11) 
and the implementing regulations issued thereunder.
    (c) Underwriting and market making in ownership interests of a 
covered fund. The prohibition contained in Sec.  75.10(a) does not apply 
to a banking entity's underwriting activities or market making-related 
activities involving a covered fund so long as:
    (1) Those activities are conducted in accordance with the 
requirements of Sec.  75.4(a) or (b), respectively;
    (2) With respect to any banking entity (or any affiliate thereof) 
that acts as a sponsor, investment adviser or commodity trading advisor 
to a particular covered fund or otherwise acquires and retains an 
ownership interest in such covered fund in reliance on paragraph (a) of 
this section; acquires and retains an ownership interest in such covered 
fund and is either a securitizer, as that term is used in section 
15G(a)(3) of the Exchange Act (15 U.S.C. 78o-11(a)(3)), or is acquiring 
and retaining an ownership interest in such covered fund in compliance 
with section 15G of that Act (15 U.S.C. 78o-11) and the implementing 
regulations issued thereunder each as permitted by paragraph (b) of this 
section; or, directly or indirectly, guarantees, assumes, or otherwise 
insures the obligations or performance of the covered fund or of any 
covered fund in which such fund invests, then in each such case any 
ownership interests acquired or retained by the banking entity and its 
affiliates in connection with underwriting and market making

[[Page 220]]

related activities for that particular covered fund are included in the 
calculation of ownership interests permitted to be held by the banking 
entity and its affiliates under the limitations of Sec.  75.12(a)(2)(ii) 
and (d); and
    (3) With respect to any banking entity, the aggregate value of all 
ownership interests of the banking entity and its affiliates in all 
covered funds acquired and retained under Sec.  75.11, including all 
covered funds in which the banking entity holds an ownership interest in 
connection with underwriting and market making related activities 
permitted under paragraph (c) of this section, are included in the 
calculation of all ownership interests under Sec.  75.12(a)(2)(iii) and 
(d).



Sec.  75.12  Permitted investment in a covered fund.

    (a) Authority and limitations on permitted investments in covered 
funds. (1) Notwithstanding the prohibition contained in Sec.  75.10(a), 
a banking entity may acquire and retain an ownership interest in a 
covered fund that the banking entity or an affiliate thereof organizes 
and offers pursuant to Sec.  75.11, for the purposes of:
    (i) Establishment. Establishing the fund and providing the fund with 
sufficient initial equity for investment to permit the fund to attract 
unaffiliated investors, subject to the limits contained in paragraphs 
(a)(2)(i) and (a)(2)(iii) of this section; or
    (ii) De minimis investment. Making and retaining an investment in 
the covered fund subject to the limits contained in paragraphs 
(a)(2)(ii) and (a)(2)(iii) of this section.
    (2) Investment limits--(i) Seeding period. With respect to an 
investment in any covered fund made or held pursuant to paragraph 
(a)(1)(i) of this section, the banking entity and its affiliates:
    (A) Must actively seek unaffiliated investors to reduce, through 
redemption, sale, dilution, or other methods, the aggregate amount of 
all ownership interests of the banking entity in the covered fund to the 
amount permitted in paragraph (a)(2)(i)(B) of this section; and
    (B) Must, no later than 1 year after the date of establishment of 
the fund (or such longer period as may be provided by the Board pursuant 
to paragraph (e) of this section), conform its ownership interest in the 
covered fund to the limits in paragraph (a)(2)(ii) of this section;
    (ii) Per-fund limits. (A) Except as provided in paragraph 
(a)(2)(ii)(B) of this section, an investment by a banking entity and its 
affiliates in any covered fund made or held pursuant to paragraph 
(a)(1)(ii) of this section may not exceed 3 percent of the total number 
or value of the outstanding ownership interests of the fund.
    (B) An investment by a banking entity and its affiliates in a 
covered fund that is an issuing entity of asset-backed securities may 
not exceed 3 percent of the total fair market value of the ownership 
interests of the fund measured in accordance with paragraph (b)(3) of 
this section, unless a greater percentage is retained by the banking 
entity and its affiliates in compliance with the requirements of section 
15G of the Exchange Act (15 U.S.C. 78o-11) and the implementing 
regulations issued thereunder, in which case the investment by the 
banking entity and its affiliates in the covered fund may not exceed the 
amount, number, or value of ownership interests of the fund required 
under section 15G of the Exchange Act and the implementing regulations 
issued thereunder.
    (iii) Aggregate limit. The aggregate value of all ownership 
interests of the banking entity and its affiliates in all covered funds 
acquired or retained under this section may not exceed 3 percent of the 
tier 1 capital of the banking entity, as provided under paragraph (c) of 
this section, and shall be calculated as of the last day of each 
calendar quarter.
    (iv) Date of establishment. For purposes of this section, the date 
of establishment of a covered fund shall be:
    (A) In general. The date on which the investment adviser or similar 
entity to the covered fund begins making investments pursuant to the 
written investment strategy for the fund;
    (B) Issuing entities of asset-backed securities. In the case of an 
issuing entity of asset-backed securities, the date on

[[Page 221]]

which the assets are initially transferred into the issuing entity of 
asset-backed securities.
    (b) Rules of construction--(1) Attribution of ownership interests to 
a covered banking entity. (i) For purposes of paragraph (a)(2) of this 
section, the amount and value of a banking entity's permitted investment 
in any single covered fund shall include any ownership interest held 
under Sec.  75.12 directly by the banking entity, including any 
affiliate of the banking entity.
    (ii) Treatment of registered investment companies, SEC-regulated 
business development companies and foreign public funds. For purposes of 
paragraph (b)(1)(i) of this section, a registered investment company, 
SEC-regulated business development companies or foreign public fund as 
described in Sec.  75.10(c)(1) will not be considered to be an affiliate 
of the banking entity so long as the banking entity:
    (A) Does not own, control, or hold with the power to vote 25 percent 
or more of the voting shares of the company or fund; and
    (B) Provides investment advisory, commodity trading advisory, 
administrative, and other services to the company or fund in compliance 
with the limitations under applicable regulation, order, or other 
authority.
    (iii) Covered funds. For purposes of paragraph (b)(1)(i) of this 
section, a covered fund will not be considered to be an affiliate of a 
banking entity so long as the covered fund is held in compliance with 
the requirements of this subpart.
    (iv) Treatment of employee and director investments financed by the 
banking entity. For purposes of paragraph (b)(1)(i) of this section, an 
investment by a director or employee of a banking entity who acquires an 
ownership interest in his or her personal capacity in a covered fund 
sponsored by the banking entity will be attributed to the banking entity 
if the banking entity, directly or indirectly, extends financing for the 
purpose of enabling the director or employee to acquire the ownership 
interest in the fund and the financing is used to acquire such ownership 
interest in the covered fund.
    (2) Calculation of permitted ownership interests in a single covered 
fund. Except as provided in paragraphs (b)(3) or (4) of this section, 
for purposes of determining whether an investment in a single covered 
fund complies with the restrictions on ownership interests under 
paragraphs (a)(2)(i)(B) and (ii)(A) of this section:
    (i) The aggregate number of the outstanding ownership interests held 
by the banking entity shall be the total number of ownership interests 
held under this section by the banking entity in a covered fund divided 
by the total number of ownership interests held by all entities in that 
covered fund, as of the last day of each calendar quarter (both measured 
without regard to committed funds not yet called for investment);
    (ii) The aggregate value of the outstanding ownership interests held 
by the banking entity shall be the aggregate fair market value of all 
investments in and capital contributions made to the covered fund by the 
banking entity, divided by the value of all investments in and capital 
contributions made to that covered fund by all entities, as of the last 
day of each calendar quarter (all measured without regard to committed 
funds not yet called for investment). If fair market value cannot be 
determined, then the value shall be the historical cost basis of all 
investments in and contributions made by the banking entity to the 
covered fund;
    (iii) For purposes of the calculation under paragraph (b)(2)(ii) of 
this section, once a valuation methodology is chosen, the banking entity 
must calculate the value of its investment and the investments of all 
others in the covered fund in the same manner and according to the same 
standards.
    (3) Issuing entities of asset-backed securities. In the case of an 
ownership interest in an issuing entity of asset-backed securities, for 
purposes of determining whether an investment in a single covered fund 
complies with the restrictions on ownership interests under paragraphs 
(a)(2)(i)(B) and (a)(2)(ii)(B) of this section:
    (i) For securitizations subject to the requirements of section 15G 
of the Exchange Act (15 U.S.C. 78o-11), the calculations shall be made 
as of the date

[[Page 222]]

and according to the valuation methodology applicable pursuant to the 
requirements of section 15G of the Exchange Act (15 U.S.C. 78o-11) and 
the implementing regulations issued thereunder; or
    (ii) For securitization transactions completed prior to the 
compliance date of such implementing regulations (or as to which such 
implementing regulations do not apply), the calculations shall be made 
as of the date of establishment as defined in paragraph (a)(2)(iv)(B) of 
this section or such earlier date on which the transferred assets have 
been valued for purposes of transfer to the covered fund, and thereafter 
only upon the date on which additional securities of the issuing entity 
of asset-backed securities are priced for purposes of the sales of 
ownership interests to unaffiliated investors.
    (iii) For securitization transactions completed prior to the 
compliance date of such implementing regulations (or as to which such 
implementing regulations do not apply), the aggregate value of the 
outstanding ownership interests in the covered fund shall be the fair 
market value of the assets transferred to the issuing entity of the 
securitization and any other assets otherwise held by the issuing entity 
at such time, determined in a manner that is consistent with its 
determination of the fair market value of those assets for financial 
statement purposes.
    (iv) For purposes of the calculation under paragraph (b)(3)(iii) of 
this section, the valuation methodology used to calculate the fair 
market value of the ownership interests must be the same for both the 
ownership interests held by a banking entity and the ownership interests 
held by all others in the covered fund in the same manner and according 
to the same standards.
    (4) Multi-tier fund investments--(i) Master-feeder fund investments. 
If the principal investment strategy of a covered fund (the ``feeder 
fund'') is to invest substantially all of its assets in another single 
covered fund (the ``master fund''), then for purposes of the investment 
limitations in paragraphs (a)(2)(i)(B) and (a)(2)(ii) of this section, 
the banking entity's permitted investment in such funds shall be 
measured only by reference to the value of the master fund. The banking 
entity's permitted investment in the master fund shall include any 
investment by the banking entity in the master fund, as well as the 
banking entity's pro-rata share of any ownership interest of the master 
fund that is held through the feeder fund; and
    (ii) Fund-of-funds investments. If a banking entity organizes and 
offers a covered fund pursuant to Sec.  75.11 for the purpose of 
investing in other covered funds (a ``fund of funds'') and that fund of 
funds itself invests in another covered fund that the banking entity is 
permitted to own, then the banking entity's permitted investment in that 
other fund shall include any investment by the banking entity in that 
other fund, as well as the banking entity's pro-rata share of any 
ownership interest of the fund that is held through the fund of funds. 
The investment of the banking entity may not represent more than 3 
percent of the amount or value of any single covered fund.
    (c) Aggregate permitted investments in all covered funds. (1) For 
purposes of paragraph (a)(2)(iii) of this section, the aggregate value 
of all ownership interests held by a banking entity shall be the sum of 
all amounts paid or contributed by the banking entity in connection with 
acquiring or retaining an ownership interest in covered funds (together 
with any amounts paid by the entity (or employee thereof) in connection 
with obtaining a restricted profit interest under Sec.  
75.10(d)(6)(ii)), on a historical cost basis.
    (2) Calculation of tier 1 capital. For purposes of paragraph 
(a)(2)(iii) of this section:
    (i) Entities that are required to hold and report tier 1 capital. If 
a banking entity is required to calculate and report tier 1 capital, the 
banking entity's tier 1 capital shall be equal to the amount of tier 1 
capital of the banking entity as of the last day of the most recent 
calendar quarter, as reported to its primary financial regulatory 
agency; and
    (ii) If a banking entity is not required to calculate and report 
tier 1 capital, the banking entity's tier 1 capital shall be determined 
to be equal to:

[[Page 223]]

    (A) In the case of a banking entity that is controlled, directly or 
indirectly, by a depository institution that calculates and reports tier 
1 capital, be equal to the amount of tier 1 capital reported by such 
controlling depository institution in the manner described in paragraph 
(c)(2)(i) of this section;
    (B) In the case of a banking entity that is not controlled, directly 
or indirectly, by a depository institution that calculates and reports 
tier 1 capital:
    (1) Bank holding company subsidiaries. If the banking entity is a 
subsidiary of a bank holding company or company that is treated as a 
bank holding company, be equal to the amount of tier 1 capital reported 
by the top-tier affiliate of such covered banking entity that calculates 
and reports tier 1 capital in the manner described in paragraph 
(c)(2)(i) of this section; and
    (2) Other holding companies and any subsidiary or affiliate thereof. 
If the banking entity is not a subsidiary of a bank holding company or a 
company that is treated as a bank holding company, be equal to the total 
amount of shareholders' equity of the top-tier affiliate within such 
organization as of the last day of the most recent calendar quarter that 
has ended, as determined under applicable accounting standards.
    (iii) Treatment of foreign banking entities--(A) Foreign banking 
entities. Except as provided in paragraph (c)(2)(iii)(B) of this 
section, with respect to a banking entity that is not itself, and is not 
controlled directly or indirectly by, a banking entity that is located 
or organized under the laws of the United States or of any State, the 
tier 1 capital of the banking entity shall be the consolidated tier 1 
capital of the entity as calculated under applicable home country 
standards.
    (B) U.S. affiliates of foreign banking entities. With respect to a 
banking entity that is located or organized under the laws of the United 
States or of any State and is controlled by a foreign banking entity 
identified under paragraph (c)(2)(iii)(A) of this section, the banking 
entity's tier 1 capital shall be as calculated under paragraphs 
(c)(2)(i) or (ii) of this section.
    (d) Capital treatment for a permitted investment in a covered fund. 
For purposes of calculating compliance with the applicable regulatory 
capital requirements, a banking entity shall deduct from the banking 
entity's tier 1 capital (as determined under paragraph (c)(2) of this 
section) the greater of:
    (1) The sum of all amounts paid or contributed by the banking entity 
in connection with acquiring or retaining an ownership interest 
(together with any amounts paid by the entity (or employee thereof) in 
connection with obtaining a restricted profit interest under Sec.  
75.10(d)(6)(ii)), on a historical cost basis, plus any earnings 
received; and
    (2) The fair market value of the banking entity's ownership 
interests in the covered fund as determined under paragraph (b)(2)(ii) 
or (3) of this section (together with any amounts paid by the entity (or 
employee thereof) in connection with obtaining a restricted profit 
interest under Sec.  75.10(d)(6)(ii)), if the banking entity accounts 
for the profits (or losses) of the fund investment in its financial 
statements.
    (e) Extension of time to divest an ownership interest. (1) Upon 
application by a banking entity, the Board may extend the period under 
paragraph (a)(2)(i) of this section for up to 2 additional years if the 
Board finds that an extension would be consistent with safety and 
soundness and not detrimental to the public interest. An application for 
extension must:
    (i) Be submitted to the Board at least 90 days prior to the 
expiration of the applicable time period;
    (ii) Provide the reasons for application, including information that 
addresses the factors in paragraph (e)(2) of this section; and
    (iii) Explain the banking entity's plan for reducing the permitted 
investment in a covered fund through redemption, sale, dilution or other 
methods as required in paragraph (a)(2) of this section.
    (2) Factors governing Board determinations. In reviewing any 
application under paragraph (e)(1) of this section, the Board may 
consider all the facts and circumstances related to the permitted 
investment in a covered fund, including:

[[Page 224]]

    (i) Whether the investment would result, directly or indirectly, in 
a material exposure by the banking entity to high-risk assets or high-
risk trading strategies;
    (ii) The contractual terms governing the banking entity's interest 
in the covered fund;
    (iii) The date on which the covered fund is expected to have 
attracted sufficient investments from investors unaffiliated with the 
banking entity to enable the banking entity to comply with the 
limitations in paragraph (a)(2)(i) of this section;
    (iv) The total exposure of the covered banking entity to the 
investment and the risks that disposing of, or maintaining, the 
investment in the covered fund may pose to the banking entity and the 
financial stability of the United States;
    (v) The cost to the banking entity of divesting or disposing of the 
investment within the applicable period;
    (vi) Whether the investment or the divestiture or conformance of the 
investment would involve or result in a material conflict of interest 
between the banking entity and unaffiliated parties, including clients, 
customers or counterparties to which it owes a duty;
    (vii) The banking entity's prior efforts to reduce through 
redemption, sale, dilution, or other methods its ownership interests in 
the covered fund, including activities related to the marketing of 
interests in such covered fund;
    (viii) Market conditions; and
    (ix) Any other factor that the Board believes appropriate.
    (3) Authority to impose restrictions on activities or investment 
during any extension period. The Board may impose such conditions on any 
extension approved under paragraph (e)(1) of this section as the Board 
determines are necessary or appropriate to protect the safety and 
soundness of the banking entity or the financial stability of the United 
States, address material conflicts of interest or other unsound banking 
practices, or otherwise further the purposes of section 13 of the BHC 
Act and this part.
    (4) Consultation. In the case of a banking entity that is primarily 
regulated by another Federal banking agency, the SEC, or the CFTC, the 
Board will consult with such agency prior to acting on an application by 
the banking entity for an extension under paragraph (e)(1) of this 
section.



Sec.  75.13  Other permitted covered fund activities and investments.

    (a) Permitted risk-mitigating hedging activities. (1) The 
prohibition contained in Sec.  75.10(a) does not apply with respect to 
an ownership interest in a covered fund acquired or retained by a 
banking entity that is designed to demonstrably reduce or otherwise 
significantly mitigate the specific, identifiable risks to the banking 
entity in connection with a compensation arrangement with an employee of 
the banking entity or an affiliate thereof that directly provides 
investment advisory, commodity trading advisory or other services to the 
covered fund.
    (2) Requirements. The risk-mitigating hedging activities of a 
banking entity are permitted under paragraph (a) of this section only 
if:
    (i) The banking entity has established and implements, maintains and 
enforces an internal compliance program required by subpart D of this 
part that is reasonably designed to ensure the banking entity's 
compliance with the requirements of this section, including:
    (A) Reasonably designed written policies and procedures; and
    (B) Internal controls and ongoing monitoring, management, and 
authorization procedures, including relevant escalation procedures; and
    (ii) The acquisition or retention of the ownership interest:
    (A) Is made in accordance with the written policies, procedures and 
internal controls required under this section;
    (B) At the inception of the hedge, is designed to reduce or 
otherwise significantly mitigate and demonstrably reduces or otherwise 
significantly mitigates one or more specific, identifiable risks arising 
in connection with the compensation arrangement with the employee that 
directly provides investment advisory, commodity trading advisory, or 
other services to the covered fund;
    (C) Does not give rise, at the inception of the hedge, to any 
significant

[[Page 225]]

new or additional risk that is not itself hedged contemporaneously in 
accordance with this section; and
    (D) Is subject to continuing review, monitoring and management by 
the banking entity.
    (iii) The compensation arrangement relates solely to the covered 
fund in which the banking entity or any affiliate has acquired an 
ownership interest pursuant to this paragraph and such compensation 
arrangement provides that any losses incurred by the banking entity on 
such ownership interest will be offset by corresponding decreases in 
amounts payable under such compensation arrangement.
    (b) Certain permitted covered fund activities and investments 
outside of the United States. (1) The prohibition contained in Sec.  
75.10(a) does not apply to the acquisition or retention of any ownership 
interest in, or the sponsorship of, a covered fund by a banking entity 
only if:
    (i) The banking entity is not organized or directly or indirectly 
controlled by a banking entity that is organized under the laws of the 
United States or of one or more States;
    (ii) The activity or investment by the banking entity is pursuant to 
paragraph (9) or (13) of section 4(c) of the BHC Act;
    (iii) No ownership interest in the covered fund is offered for sale 
or sold to a resident of the United States; and
    (iv) The activity or investment occurs solely outside of the United 
States.
    (2) An activity or investment by the banking entity is pursuant to 
paragraph (9) or (13) of section 4(c) of the BHC Act for purposes of 
paragraph (b)(1)(ii) of this section only if:
    (i) The activity or investment is conducted in accordance with the 
requirements of this section; and
    (ii)(A) With respect to a banking entity that is a foreign banking 
organization, the banking entity meets the qualifying foreign banking 
organization requirements of Sec.  211.23(a), (c) or (e) of the Board's 
Regulation K (12 CFR 211.23(a), (c) or (e)), as applicable; or
    (B) With respect to a banking entity that is not a foreign banking 
organization, the banking entity is not organized under the laws of the 
United States or of one or more States and the banking entity, on a 
fully-consolidated basis, meets at least two of the following 
requirements:
    (1) Total assets of the banking entity held outside of the United 
States exceed total assets of the banking entity held in the United 
States;
    (2) Total revenues derived from the business of the banking entity 
outside of the United States exceed total revenues derived from the 
business of the banking entity in the United States; or
    (3) Total net income derived from the business of the banking entity 
outside of the United States exceeds total net income derived from the 
business of the banking entity in the United States.
    (3) An ownership interest in a covered fund is not offered for sale 
or sold to a resident of the United States for purposes of paragraph 
(b)(1)(iii) of this section only if it is sold or has been sold pursuant 
to an offering that does not target residents of the United States.
    (4) An activity or investment occurs solely outside of the United 
States for purposes of paragraph (b)(1)(iv) of this section only if:
    (i) The banking entity acting as sponsor, or engaging as principal 
in the acquisition or retention of an ownership interest in the covered 
fund, is not itself, and is not controlled directly or indirectly by, a 
banking entity that is located in the United States or organized under 
the laws of the United States or of any State;
    (ii) The banking entity (including relevant personnel) that makes 
the decision to acquire or retain the ownership interest or act as 
sponsor to the covered fund is not located in the United States or 
organized under the laws of the United States or of any State;
    (iii) The investment or sponsorship, including any transaction 
arising from risk-mitigating hedging related to an ownership interest, 
is not accounted for as principal directly or indirectly on a 
consolidated basis by any branch or affiliate that is located in the 
United States or organized under the laws of the United States or of any 
State; and

[[Page 226]]

    (iv) No financing for the banking entity's ownership or sponsorship 
is provided, directly or indirectly, by any branch or affiliate that is 
located in the United States or organized under the laws of the United 
States or of any State.
    (5) For purposes of this section, a U.S. branch, agency, or 
subsidiary of a foreign bank, or any subsidiary thereof, is located in 
the United States; however, a foreign bank of which that branch, agency, 
or subsidiary is a part is not considered to be located in the United 
States solely by virtue of operation of the U.S. branch, agency, or 
subsidiary.
    (c) Permitted covered fund interests and activities by a regulated 
insurance company. The prohibition contained in Sec.  75.10(a) does not 
apply to the acquisition or retention by an insurance company, or an 
affiliate thereof, of any ownership interest in, or the sponsorship of, 
a covered fund only if:
    (1) The insurance company or its affiliate acquires and retains the 
ownership interest solely for the general account of the insurance 
company or for one or more separate accounts established by the 
insurance company;
    (2) The acquisition and retention of the ownership interest is 
conducted in compliance with, and subject to, the insurance company 
investment laws, regulations, and written guidance of the State or 
jurisdiction in which such insurance company is domiciled; and
    (3) The appropriate Federal banking agencies, after consultation 
with the Financial Stability Oversight Council and the relevant 
insurance commissioners of the States and foreign jurisdictions, as 
appropriate, have not jointly determined, after notice and comment, that 
a particular law, regulation, or written guidance described in paragraph 
(c)(2) of this section is insufficient to protect the safety and 
soundness of the banking entity, or the financial stability of the 
United States.



Sec.  75.14  Limitations on relationships with a covered fund.

    (a) Relationships with a covered fund. (1) Except as provided for in 
paragraph (a)(2) of this section, no banking entity that serves, 
directly or indirectly, as the investment manager, investment adviser, 
commodity trading advisor, or sponsor to a covered fund, that organizes 
and offers a covered fund pursuant to Sec.  75.11, or that continues to 
hold an ownership interest in accordance with Sec.  75.11(b), and no 
affiliate of such entity, may enter into a transaction with the covered 
fund, or with any other covered fund that is controlled by such covered 
fund, that would be a covered transaction as defined in section 23A of 
the Federal Reserve Act (12 U.S.C. 371c(b)(7)), as if such banking 
entity and the affiliate thereof were a member bank and the covered fund 
were an affiliate thereof.
    (2) Notwithstanding paragraph (a)(1) of this section, a banking 
entity may:
    (i) Acquire and retain any ownership interest in a covered fund in 
accordance with the requirements of Sec.  75.11, Sec.  75.12, or Sec.  
75.13; and
    (ii) Enter into any prime brokerage transaction with any covered 
fund in which a covered fund managed, sponsored, or advised by such 
banking entity (or an affiliate thereof) has taken an ownership 
interest, if:
    (A) The banking entity is in compliance with each of the limitations 
set forth in Sec.  75.11 with respect to a covered fund organized and 
offered by such banking entity (or an affiliate thereof);
    (B) The chief executive officer (or equivalent officer) of the 
banking entity certifies in writing annually to the Commission (with a 
duty to update the certification if the information in the certification 
materially changes) that the banking entity does not, directly or 
indirectly, guarantee, assume, or otherwise insure the obligations or 
performance of the covered fund or of any covered fund in which such 
covered fund invests; and
    (C) The Board has not determined that such transaction is 
inconsistent with the safe and sound operation and condition of the 
banking entity.
    (b) Restrictions on transactions with covered funds. A banking 
entity that serves, directly or indirectly, as the investment manager, 
investment adviser, commodity trading advisor, or sponsor to a covered 
fund, or that organizes and offers a covered fund pursuant to Sec.  
75.11, or that continues to hold an ownership interest in accordance 
with Sec.  75.11(b), shall be subject to section 23B

[[Page 227]]

of the Federal Reserve Act (12 U.S.C. 371c-1), as if such banking entity 
were a member bank and such covered fund were an affiliate thereof.
    (c) Restrictions on prime brokerage transactions. A prime brokerage 
transaction permitted under paragraph (a)(2)(ii) of this section shall 
be subject to section 23B of the Federal Reserve Act (12 U.S.C. 371c-1) 
as if the counterparty were an affiliate of the banking entity.



Sec.  75.15  Other limitations on permitted covered fund activities.

    (a) No transaction, class of transactions, or activity may be deemed 
permissible under Sec. Sec.  75.11 through 75.13 if the transaction, 
class of transactions, or activity would:
    (1) Involve or result in a material conflict of interest between the 
banking entity and its clients, customers, or counterparties;
    (2) Result, directly or indirectly, in a material exposure by the 
banking entity to a high-risk asset or a high-risk trading strategy; or
    (3) Pose a threat to the safety and soundness of the banking entity 
or to the financial stability of the United States.
    (b) Definition of material conflict of interest. (1) For purposes of 
this section, a material conflict of interest between a banking entity 
and its clients, customers, or counterparties exists if the banking 
entity engages in any transaction, class of transactions, or activity 
that would involve or result in the banking entity's interests being 
materially adverse to the interests of its client, customer, or 
counterparty with respect to such transaction, class of transactions, or 
activity, and the banking entity has not taken at least one of the 
actions in paragraph (b)(2) of this section.
    (2) Prior to effecting the specific transaction or class or type of 
transactions, or engaging in the specific activity, the banking entity:
    (i) Timely and effective disclosure. (A) Has made clear, timely, and 
effective disclosure of the conflict of interest, together with other 
necessary information, in reasonable detail and in a manner sufficient 
to permit a reasonable client, customer, or counterparty to meaningfully 
understand the conflict of interest; and
    (B) Such disclosure is made in a manner that provides the client, 
customer, or counterparty the opportunity to negate, or substantially 
mitigate, any materially adverse effect on the client, customer, or 
counterparty created by the conflict of interest; or
    (ii) Information barriers. Has established, maintained, and enforced 
information barriers that are memorialized in written policies and 
procedures, such as physical separation of personnel, or functions, or 
limitations on types of activity, that are reasonably designed, taking 
into consideration the nature of the banking entity's business, to 
prevent the conflict of interest from involving or resulting in a 
materially adverse effect on a client, customer, or counterparty. A 
banking entity may not rely on such information barriers if, in the case 
of any specific transaction, class or type of transactions or activity, 
the banking entity knows or should reasonably know that, notwithstanding 
the banking entity's establishment of information barriers, the conflict 
of interest may involve or result in a materially adverse effect on a 
client, customer, or counterparty.
    (c) Definition of high-risk asset and high-risk trading strategy. 
For purposes of this section:
    (1) High-risk asset means an asset or group of related assets that 
would, if held by a banking entity, significantly increase the 
likelihood that the banking entity would incur a substantial financial 
loss or would pose a threat to the financial stability of the United 
States.
    (2) High-risk trading strategy means a trading strategy that would, 
if engaged in by a banking entity, significantly increase the likelihood 
that the banking entity would incur a substantial financial loss or 
would pose a threat to the financial stability of the United States.

[[Page 228]]



Sec.  75.16  Ownership of interests in and sponsorship of issuers of 
certain collateralized debt obligations backed by trust-preferred securities.

    (a) The prohibition contained in Sec.  75.10(a)(1) does not apply to 
the ownership by a banking entity of an interest in, or sponsorship of, 
any issuer if:
    (1) The issuer was established, and the interest was issued, before 
May 19, 2010;
    (2) The banking entity reasonably believes that the offering 
proceeds received by the issuer were invested primarily in Qualifying 
TruPS Collateral; and
    (3) The banking entity acquired such interest on or before December 
10, 2013 (or acquired such interest in connection with a merger with or 
acquisition of a banking entity that acquired the interest on or before 
December 10, 2013).
    (b) For purposes of this Sec.  75.16, Qualifying TruPS Collateral 
shall mean any trust preferred security or subordinated debt instrument 
issued prior to May 19, 2010 by a depository institution holding company 
that, as of the end of any reporting period within 12 months immediately 
preceding the issuance of such trust preferred security or subordinated 
debt instrument, had total consolidated assets of less than 
$15,000,000,000 or issued prior to May 19, 2010 by a mutual holding 
company.
    (c) Notwithstanding paragraph (a)(3) of this section, a banking 
entity may act as a market maker with respect to the interests of an 
issuer described in paragraph (a) of this section in accordance with the 
applicable provisions of Sec. Sec.  75.4 and 75.11.
    (d) Without limiting the applicability of paragraph (a) of this 
section, the Board, the FDIC and the OCC will make public a non-
exclusive list of issuers that meet the requirements of paragraph (a). A 
banking entity may rely on the list published by the Board, the FDIC and 
the OCC.

[79 FR 5228, Jan. 31, 2014]



Sec. Sec.  75.17-75.19  [Reserved]



          Subpart D_Compliance Program Requirement; Violations



Sec.  75.20  Program for compliance; reporting.

    (a) Program requirement. Each banking entity shall develop and 
provide for the continued administration of a compliance program 
reasonably designed to ensure and monitor compliance with the 
prohibitions and restrictions on proprietary trading and covered fund 
activities and investments set forth in section 13 of the BHC Act and 
this part. The terms, scope and detail of the compliance program shall 
be appropriate for the types, size, scope and complexity of activities 
and business structure of the banking entity.
    (b) Contents of compliance program. Except as provided in paragraph 
(f) of this section, the compliance program required by paragraph (a) of 
this section, at a minimum, shall include:
    (1) Written policies and procedures reasonably designed to document, 
describe, monitor and limit trading activities subject to subpart B of 
this part (including those permitted under Sec. Sec.  75.3 to 75.6), 
including setting, monitoring and managing required limits set out in 
Sec. Sec.  75.4 and 75.5, and activities and investments with respect to 
a covered fund subject to subpart C of this part (including those 
permitted under Sec. Sec.  75.11 through 75.14) conducted by the banking 
entity to ensure that all activities and investments conducted by the 
banking entity that are subject to section 13 of the BHC Act and this 
part comply with section 13 of the BHC Act and this part;
    (2) A system of internal controls reasonably designed to monitor 
compliance with section 13 of the BHC Act and this part and to prevent 
the occurrence of activities or investments that are prohibited by 
section 13 of the BHC Act and this part;
    (3) A management framework that clearly delineates responsibility 
and accountability for compliance with section 13 of the BHC Act and 
this part and includes appropriate management review of trading limits, 
strategies, hedging activities, investments, incentive compensation and 
other matters

[[Page 229]]

identified in this part or by management as requiring attention;
    (4) Independent testing and audit of the effectiveness of the 
compliance program conducted periodically by qualified personnel of the 
banking entity or by a qualified outside party;
    (5) Training for trading personnel and managers, as well as other 
appropriate personnel, to effectively implement and enforce the 
compliance program; and
    (6) Records sufficient to demonstrate compliance with section 13 of 
the BHC Act and this part, which a banking entity must promptly provide 
to the Commission upon request and retain for a period of no less than 5 
years or such longer period as required by the Commission.
    (c) Additional standards. In addition to the requirements in 
paragraph (b) of this section, the compliance program of a banking 
entity must satisfy the requirements and other standards contained in 
appendix B of this part, if:
    (1) The banking entity engages in proprietary trading permitted 
under subpart B of this part and is required to comply with the 
reporting requirements of paragraph (d) of this section;
    (2) The banking entity has reported total consolidated assets as of 
the previous calendar year end of $50 billion or more or, in the case of 
a foreign banking entity, has total U.S. assets as of the previous 
calendar year end of $50 billion or more (including all subsidiaries, 
affiliates, branches and agencies of the foreign banking entity 
operating, located or organized in the United States); or
    (3) The Commission notifies the banking entity in writing that it 
must satisfy the requirements and other standards contained in appendix 
B of this part.
    (d) Reporting requirements under appendix A of this part. (1) A 
banking entity engaged in proprietary trading activity permitted under 
subpart B of this part shall comply with the reporting requirements 
described in appendix A of this part, if:
    (i) The banking entity (other than a foreign banking entity as 
provided in paragraph (d)(1)(ii) of this section) has, together with its 
affiliates and subsidiaries, trading assets and liabilities (excluding 
trading assets and liabilities involving obligations of or guaranteed by 
the United States or any agency of the United States) the average gross 
sum of which (on a worldwide consolidated basis) over the previous 
consecutive four quarters, as measured as of the last day of each of the 
four prior calendar quarters, equals or exceeds the threshold 
established in paragraph (d)(2) of this section;
    (ii) In the case of a foreign banking entity, the average gross sum 
of the trading assets and liabilities of the combined U.S. operations of 
the foreign banking entity (including all subsidiaries, affiliates, 
branches and agencies of the foreign banking entity operating, located 
or organized in the United States and excluding trading assets and 
liabilities involving obligations of or guaranteed by the United States 
or any agency of the United States) over the previous consecutive four 
quarters, as measured as of the last day of each of the four prior 
calendar quarters, equals or exceeds the threshold established in 
paragraph (d)(2) of this section; or
    (iii) The Commission notifies the banking entity in writing that it 
must satisfy the reporting requirements contained in appendix A of this 
part.
    (2) The threshold for reporting under paragraph (d)(1) of this 
section shall be $50 billion beginning on June 30, 2014; $25 billion 
beginning on April 30, 2016; and $10 billion beginning on December 31, 
2016.
    (3) Frequency of reporting. Unless the Commission notifies the 
banking entity in writing that it must report on a different basis, a 
banking entity with $50 billion or more in trading assets and 
liabilities (as calculated in accordance with paragraph (d)(1) of this 
section) shall report the information required by appendix A of this 
part for each calendar month within 30 days of the end of the relevant 
calendar month; beginning with information for the month of January 
2015, such information shall be reported within 10 days of the end of 
each calendar month. Any other banking entity subject to appendix A of 
this part shall report the information required by appendix A of this 
part for each calendar quarter within 30 days of the end of that 
calendar

[[Page 230]]

quarter unless the Commission notifies the banking entity in writing 
that it must report on a different basis.
    (e) Additional documentation for covered funds. Any banking entity 
that has more than $10 billion in total consolidated assets as reported 
on December 31 of the previous two calendar years shall maintain records 
that include:
    (1) Documentation of the exclusions or exemptions other than 
sections 3(c)(1) and 3(c)(7) of the Investment Company Act of 1940 
relied on by each fund sponsored by the banking entity (including all 
subsidiaries and affiliates) in determining that such fund is not a 
covered fund;
    (2) For each fund sponsored by the banking entity (including all 
subsidiaries and affiliates) for which the banking entity relies on one 
or more of the exclusions from the definition of covered fund provided 
by Sec.  75.10(c)(1), (5), (8), (9), or (10), documentation supporting 
the banking entity's determination that the fund is not a covered fund 
pursuant to one or more of those exclusions;
    (3) For each seeding vehicle described in Sec.  75.10(c)(12)(i) or 
(iii) that will become a registered investment company or SEC-regulated 
business development company, a written plan documenting the banking 
entity's determination that the seeding vehicle will become a registered 
investment company or SEC-regulated business development company; the 
period of time during which the vehicle will operate as a seeding 
vehicle; and the banking entity's plan to market the vehicle to third-
party investors and convert it into a registered investment company or 
SEC-regulated business development company within the time period 
specified in Sec.  75.12(a)(2)(i)(B);
    (4) For any banking entity that is, or is controlled directly or 
indirectly by a banking entity that is, located in or organized under 
the laws of the United States or of any State, if the aggregate amount 
of ownership interests in foreign public funds that are described in 
Sec.  75.10(c)(1) owned by such banking entity (including ownership 
interests owned by any affiliate that is controlled directly or 
indirectly by a banking entity that is located in or organized under the 
laws of the United States or of any State) exceeds $50 million at the 
end of two or more consecutive calendar quarters, beginning with the 
next succeeding calendar quarter, documentation of the value of the 
ownership interests owned by the banking entity (and such affiliates) in 
each foreign public fund and each jurisdiction in which any such foreign 
public fund is organized, calculated as of the end of each calendar 
quarter, which documentation must continue until the banking entity's 
aggregate amount of ownership interests in foreign public funds is below 
$50 million for two consecutive calendar quarters; and
    (5) For purposes of paragraph (e)(4) of this section, a U.S. branch, 
agency, or subsidiary of a foreign banking entity is located in the 
United States; however, the foreign bank that operates or controls that 
branch, agency, or subsidiary is not considered to be located in the 
United States solely by virtue of operating or controlling the U.S. 
branch, agency, or subsidiary.
    (f) Simplified programs for less active banking entities--(1) 
Banking entities with no covered activities. A banking entity that does 
not engage in activities or investments pursuant to subpart B or subpart 
C of this part (other than trading activities permitted pursuant to 
Sec.  75.6(a)) may satisfy the requirements of this section by 
establishing the required compliance program prior to becoming engaged 
in such activities or making such investments (other than trading 
activities permitted pursuant to Sec.  75.6(a)).
    (2) Banking entities with modest activities. A banking entity with 
total consolidated assets of $10 billion or less as reported on December 
31 of the previous two calendar years that engages in activities or 
investments pursuant to subpart B or subpart C of this part (other than 
trading activities permitted under Sec.  75.6(a)) may satisfy the 
requirements of this section by including in its existing compliance 
policies and procedures appropriate references to the requirements of 
section 13 of the BHC Act and this part and adjustments as appropriate 
given the activities, size, scope and complexity of the banking entity.

[[Page 231]]



Sec.  75.21  Termination of activities or investments; penalties for violations.

    (a) Any banking entity that engages in an activity or makes an 
investment in violation of section 13 of the BHC Act or this part, or 
acts in a manner that functions as an evasion of the requirements of 
section 13 of the BHC Act or this part, including through an abuse of 
any activity or investment permitted under subparts B or C of this part, 
or otherwise violates the restrictions and requirements of section 13 of 
the BHC Act or this part, shall, upon discovery, promptly terminate the 
activity and, as relevant, dispose of the investment.
    (b) Whenever the Commission finds reasonable cause to believe any 
banking entity has engaged in an activity or made an investment in 
violation of section 13 of the BHC Act or this part, or engaged in any 
activity or made any investment that functions as an evasion of the 
requirements of section 13 of the BHC Act or this part, the Commission 
may take any action permitted by law to enforce compliance with section 
13 of the BHC Act and this part, including directing the banking entity 
to restrict, limit, or terminate any or all activities under this part 
and dispose of any investment.



Sec. Appendix A to Part 75--Reporting and Recordkeeping Requirements for 
                       Covered Trading Activities

                               I. Purpose

    a. This appendix sets forth reporting and recordkeeping requirements 
that certain banking entities must satisfy in connection with the 
restrictions on proprietary trading set forth in subpart B of this part 
(``proprietary trading restrictions''). Pursuant to Sec.  75.20(d), this 
appendix generally applies to a banking entity that, together with its 
affiliates and subsidiaries, has significant trading assets and 
liabilities. These entities are required to (i) furnish periodic reports 
to the Commission regarding a variety of quantitative measurements of 
their covered trading activities, which vary depending on the scope and 
size of covered trading activities, and (ii) create and maintain records 
documenting the preparation and content of these reports. The 
requirements of this appendix must be incorporated into the banking 
entity's internal compliance program under Sec.  75.20 and Appendix B of 
this part.
    b. The purpose of this appendix is to assist banking entities and 
the Commission in:
    (i) Better understanding and evaluating the scope, type, and profile 
of the banking entity's covered trading activities;
    (ii) Monitoring the banking entity's covered trading activities;
    (iii) Identifying covered trading activities that warrant further 
review or examination by the banking entity to verify compliance with 
the proprietary trading restrictions;
    (iv) Evaluating whether the covered trading activities of trading 
desks engaged in market making-related activities subject to Sec.  
75.4(b) are consistent with the requirements governing permitted market 
making-related activities;
    (v) Evaluating whether the covered trading activities of trading 
desks that are engaged in permitted trading activity subject to Sec.  
75.4, 75.5, or 75.6(a) and (b) (i.e., underwriting and market making-
related related activity, risk-mitigating hedging, or trading in certain 
government obligations) are consistent with the requirement that such 
activity not result, directly or indirectly, in a material exposure to 
high-risk assets or high-risk trading strategies;
    (vi) Identifying the profile of particular covered trading 
activities of the banking entity, and the individual trading desks of 
the banking entity, to help establish the appropriate frequency and 
scope of examination by the Commission of such activities; and
    (vii) Assessing and addressing the risks associated with the banking 
entity's covered trading activities.
    c. The quantitative measurements that must be furnished pursuant to 
this appendix are not intended to serve as a dispositive tool for the 
identification of permissible or impermissible activities.
    d. In order to allow banking entities and the Agencies to evaluate 
the effectiveness of these metrics, banking entities must collect and 
report these metrics for all trading desks beginning on the dates 
established in Sec.  75.20. The Agencies will review the data collected 
and revise this collection requirement as appropriate based on a review 
of the data collected prior to September 30, 2015.
    e. In addition to the quantitative measurements required in this 
appendix, a banking entity may need to develop and implement other 
quantitative measurements in order to effectively monitor its covered 
trading activities for compliance with section 13 of the BHC Act and 
this part and to have an effective compliance program, as required by 
Sec.  75.20 and Appendix B of this part. The effectiveness of particular 
quantitative measurements may differ based on the profile of the banking 
entity's businesses in general and, more specifically, of the particular 
trading desk, including types of instruments traded, trading activities 
and strategies, and history and experience (e.g., whether the trading 
desk is an established, successful market maker or a new entrant to a 
competitive

[[Page 232]]

market). In all cases, banking entities must ensure that they have 
robust measures in place to identify and monitor the risks taken in 
their trading activities, to ensure that the activities are within risk 
tolerances established by the banking entity, and to monitor and examine 
for compliance with the proprietary trading restrictions in this part.
    f. On an ongoing basis, banking entities must carefully monitor, 
review, and evaluate all furnished quantitative measurements, as well as 
any others that they choose to utilize in order to maintain compliance 
with section 13 of the BHC Act and this part. All measurement results 
that indicate a heightened risk of impermissible proprietary trading, 
including with respect to otherwise-permitted activities under 
Sec. Sec.  75.4 through 75.6(a) and (b), or that result in a material 
exposure to high-risk assets or high-risk trading strategies, must be 
escalated within the banking entity for review, further analysis, 
explanation to the Commission, and remediation, where appropriate. The 
quantitative measurements discussed in this appendix should be helpful 
to banking entities in identifying and managing the risks related to 
their covered trading activities.

                             II. Definitions

    The terms used in this appendix have the same meanings as set forth 
in Sec. Sec.  75.2 and 75.3. In addition, for purposes of this appendix, 
the following definitions apply:
    Calculation period means the period of time for which a particular 
quantitative measurement must be calculated.
    Comprehensive profit and loss means the net profit or loss of a 
trading desk's material sources of trading revenue over a specific 
period of time, including, for example, any increase or decrease in the 
market value of a trading desk's holdings, dividend income, and interest 
income and expense.
    Covered trading activity means trading conducted by a trading desk 
under Sec.  75.4, 75.5, or 75.6(a) or (b). A banking entity may include 
trading under Sec.  75.3(d) or 75.6(c), (d) or (e).
    Measurement frequency means the frequency with which a particular 
quantitative metric must be calculated and recorded.
    Trading desk means the smallest discrete unit of organization of a 
banking entity that purchases or sells financial instruments for the 
trading account of the banking entity or an affiliate thereof.

      III. Reporting and Recordkeeping of Quantitative Measurements

                     a. Scope of Required Reporting

    General scope. Each banking entity made subject to this part by 
Sec.  75.20 must furnish the following quantitative measurements for 
each trading desk of the banking entity, calculated in accordance with 
this appendix:
     Risk and Position Limits and Usage;
     Risk Factor Sensitivities;
     Value-at-Risk and Stress VaR;
     Comprehensive Profit and Loss Attribution;
     Inventory Turnover;
     Inventory Aging; and
     Customer Facing Trade Ratio

           b. Frequency of Required Calculation and Reporting

    A banking entity must calculate any applicable quantitative 
measurement for each trading day. A banking entity must report each 
applicable quantitative measurement to the Commission on the reporting 
schedule established in Sec.  75.20 unless otherwise requested by the 
Commission. All quantitative measurements for any calendar month must be 
reported within the time period required by Sec.  75.20.

                            c. Recordkeeping

    A banking entity must, for any quantitative measurement furnished to 
the Commission pursuant to this appendix and Sec.  75.20(d), create and 
maintain records documenting the preparation and content of these 
reports, as well as such information as is necessary to permit the 
Commission to verify the accuracy of such reports, for a period of 5 
years from the end of the calendar year for which the measurement was 
taken.

                      IV. Quantitative Measurements

                     a. Risk-Management Measurements

                  1. Risk and Position Limits and Usage

    i. Description: For purposes of this appendix, Risk and Position 
Limits are the constraints that define the amount of risk that a trading 
desk is permitted to take at a point in time, as defined by the banking 
entity for a specific trading desk. Usage represents the portion of the 
trading desk's limits that are accounted for by the current activity of 
the desk. Risk and position limits and their usage are key risk 
management tools used to control and monitor risk taking and include, 
but are not limited, to the limits set out in Sec. Sec.  75.4 and 75.5. 
A number of the metrics that are described below, including ``Risk 
Factor Sensitivities'' and ``Value-at-Risk and Stress Value-at-Risk,'' 
relate to a trading desk's risk and position limits and are useful in 
evaluating and setting these limits in the broader context of the 
trading desk's overall activities, particularly for the market making 
activities under Sec.  75.4(b) and hedging activity under Sec.  75.5. 
Accordingly, the limits required under Sec. Sec.  75.4(b)(2)(iii) and 
75.5(b)(1)(i) must meet the applicable requirements under Sec. Sec.  
75.4(b)(2)(iii) and 75.5(b)(1)(i) and also must include appropriate 
metrics for the trading desk limits including, at a minimum, the ``Risk 
Factor Sensitivities'' and ``Value-at-Risk and Stress Value-at-

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Risk'' metrics except to the extent any of the ``Risk Factor 
Sensitivities'' or ``Value-at-Risk and Stress Value-at-Risk'' metrics 
are demonstrably ineffective for measuring and monitoring the risks of a 
trading desk based on the types of positions traded by, and risk 
exposures of, that desk.
    ii. General Calculation Guidance: Risk and Position Limits must be 
reported in the format used by the banking entity for the purposes of 
risk management of each trading desk. Risk and Position Limits are often 
expressed in terms of risk measures, such as VaR and Risk Factor 
Sensitivities, but may also be expressed in terms of other observable 
criteria, such as net open positions. When criteria other than VaR or 
Risk Factor Sensitivities are used to define the Risk and Position 
Limits, both the value of the Risk and Position Limits and the value of 
the variables used to assess whether these limits have been reached must 
be reported.
    iii. Calculation Period: One trading day.
    iv. Measurement Frequency: Daily.

                      2. Risk Factor Sensitivities

    i. Description: For purposes of this appendix, Risk Factor 
Sensitivities are changes in a trading desk's Comprehensive Profit and 
Loss that are expected to occur in the event of a change in one or more 
underlying variables that are significant sources of the trading desk's 
profitability and risk.
    ii. General Calculation Guidance: A banking entity must report the 
Risk Factor Sensitivities that are monitored and managed as part of the 
trading desk's overall risk management policy. The underlying data and 
methods used to compute a trading desk's Risk Factor Sensitivities will 
depend on the specific function of the trading desk and the internal 
risk management models employed. The number and type of Risk Factor 
Sensitivities that are monitored and managed by a trading desk, and 
furnished to the Commission, will depend on the explicit risks assumed 
by the trading desk. In general, however, reported Risk Factor 
Sensitivities must be sufficiently granular to account for a 
preponderance of the expected price variation in the trading desk's 
holdings.
    A. Trading desks must take into account any relevant factors in 
calculating Risk Factor Sensitivities, including, for example, the 
following with respect to particular asset classes:
     Commodity derivative positions: risk factors with respect 
to the related commodities set out in Sec.  20.2 of this chapter, the 
maturity of the positions, volatility and/or correlation sensitivities 
(expressed in a manner that demonstrates any significant non-
linearities), and the maturity profile of the positions;
     Credit positions: risk factors with respect to credit 
spreads that are sufficiently granular to account for specific credit 
sectors and market segments, the maturity profile of the positions, and 
risk factors with respect to interest rates of all relevant maturities;
     Credit-related derivative positions: risk factor 
sensitivities, for example credit spreads, shifts (parallel and non-
parallel) in credit spreads--volatility, and/or correlation 
sensitivities (expressed in a manner that demonstrates any significant 
non-linearities), and the maturity profile of the positions;
     Equity derivative positions: risk factor sensitivities such 
as equity positions, volatility, and/or correlation sensitivities 
(expressed in a manner that demonstrates any significant non-
linearities), and the maturity profile of the positions;
     Equity positions: risk factors for equity prices and risk 
factors that differentiate between important equity market sectors and 
segments, such as a small capitalization equities and international 
equities;
     Foreign exchange derivative positions: risk factors with 
respect to major currency pairs and maturities, exposure to interest 
rates at relevant maturities, volatility, and/or correlation 
sensitivities (expressed in a manner that demonstrates any significant 
non-linearities), as well as the maturity profile of the positions; and
     Interest rate positions, including interest rate derivative 
positions: risk factors with respect to major interest rate categories 
and maturities and volatility and/or correlation sensitivities 
(expressed in a manner that demonstrates any significant non-
linearities), and shifts (parallel and non-parallel) in the interest 
rate curve, as well as the maturity profile of the positions.
    B. The methods used by a banking entity to calculate sensitivities 
to a common factor shared by multiple trading desks, such as an equity 
price factor, must be applied consistently across its trading desks so 
that the sensitivities can be compared from one trading desk to another.
    iii. Calculation Period: One trading day.
    iv. Measurement Frequency: Daily.

                3. Value-at-Risk and Stress Value-at-Risk

    i. Description: For purposes of this appendix, Value-at-Risk 
(``VaR'') is the commonly used percentile measurement of the risk of 
future financial loss in the value of a given set of aggregated 
positions over a specified period of time, based on current market 
conditions. For purposes of this appendix, Stress Value-at-Risk 
(``Stress VaR'') is the percentile measurement of the risk of future 
financial loss in the value of a given set of aggregated positions over 
a specified period of time, based on market conditions during a period 
of significant financial stress.
    ii. General Calculation Guidance: Banking entities must compute and 
report VaR and Stress VaR by employing generally accepted standards and 
methods of calculation. VaR should reflect a loss in a trading desk that 
is

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expected to be exceeded less than one percent of the time over a one-day 
period. For those banking entities that are subject to regulatory 
capital requirements imposed by a Federal banking agency, VaR and Stress 
VaR must be computed and reported in a manner that is consistent with 
such regulatory capital requirements. In cases where a trading desk does 
not have a standalone VaR or Stress VaR calculation but is part of a 
larger aggregation of positions for which a VaR or Stress VaR 
calculation is performed, a VaR or Stress VaR calculation that includes 
only the trading desk's holdings must be performed consistent with the 
VaR or Stress VaR model and methodology used for the larger aggregation 
of positions.
    iii. Calculation Period: One trading day.
    iv. Measurement Frequency: Daily.

                    b. Source-of-Revenue Measurements

              1. Comprehensive Profit and Loss Attribution

    i. Description: For purposes of this appendix, Comprehensive Profit 
and Loss Attribution is an analysis that attributes the daily 
fluctuation in the value of a trading desk's positions to various 
sources. First, the daily profit and loss of the aggregated positions is 
divided into three categories: (i) Profit and loss attributable to a 
trading desk's existing positions that were also positions held by the 
trading desk as of the end of the prior day (``existing positions''); 
(ii) profit and loss attributable to new positions resulting from the 
current day's trading activity (``new positions''); and (iii) residual 
profit and loss that cannot be specifically attributed to existing 
positions or new positions. The sum of (i), (ii), and (iii) must equal 
the trading desk's comprehensive profit and loss at each point in time. 
In addition, profit and loss measurements must calculate volatility of 
comprehensive profit and loss (i.e., the standard deviation of the 
trading desk's one-day profit and loss, in dollar terms) for the 
reporting period for at least a 30-, 60- and 90-day lag period, from the 
end of the reporting period, and any other period that the banking 
entity deems necessary to meet the requirements of the rule.
    A. The comprehensive profit and loss associated with existing 
positions must reflect changes in the value of these positions on the 
applicable day. The comprehensive profit and loss from existing 
positions must be further attributed, as applicable, to changes in (i) 
the specific Risk Factors and other factors that are monitored and 
managed as part of the trading desk's overall risk management policies 
and procedures; and (ii) any other applicable elements, such as cash 
flows, carry, changes in reserves, and the correction, cancellation, or 
exercise of a trade.
    B. The comprehensive profit and loss attributed to new positions 
must reflect commissions and fee income or expense and market gains or 
losses associated with transactions executed on the applicable day. New 
positions include purchases and sales of financial instruments and other 
assets/liabilities and negotiated amendments to existing positions. The 
comprehensive profit and loss from new positions may be reported in the 
aggregate and does not need to be further attributed to specific 
sources.
    C. The portion of comprehensive profit and loss that cannot be 
specifically attributed to known sources must be allocated to a residual 
category identified as an unexplained portion of the comprehensive 
profit and loss. Significant unexplained profit and loss must be 
escalated for further investigation and analysis.
    ii. General Calculation Guidance: The specific categories used by a 
trading desk in the attribution analysis and amount of detail for the 
analysis should be tailored to the type and amount of trading activities 
undertaken by the trading desk. The new position attribution must be 
computed by calculating the difference between the prices at which 
instruments were bought and/or sold and the prices at which those 
instruments are marked to market at the close of business on that day 
multiplied by the notional or principal amount of each purchase or sale. 
Any fees, commissions, or other payments received (paid) that are 
associated with transactions executed on that day must be added 
(subtracted) from such difference. These factors must be measured 
consistently over time to facilitate historical comparisons.
    iii. Calculation Period: One trading day.
    iv. Measurement Frequency: Daily.

                c. Customer-Facing Activity Measurements

                          1. Inventory Turnover

    i. Description: For purposes of this appendix, Inventory Turnover is 
a ratio that measures the turnover of a trading desk's inventory. The 
numerator of the ratio is the absolute value of all transactions over 
the reporting period. The denominator of the ratio is the value of the 
trading desk's inventory at the beginning of the reporting period.
    ii. General Calculation Guidance: For purposes of this appendix, for 
derivatives, other than options and interest rate derivatives, value 
means gross notional value, for options, value means delta adjusted 
notional value, and for interest rate derivatives, value means 10-year 
bond equivalent value.
    iii. Calculation Period: 30 days, 60 days, and 90 days.
    iv. Measurement Frequency: Daily.

                           2. Inventory Aging

    i. Description: For purposes of this appendix, Inventory Aging 
generally describes a

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schedule of the trading desk's aggregate assets and liabilities and the 
amount of time that those assets and liabilities have been held. 
Inventory Aging should measure the age profile of the trading desk's 
assets and liabilities.
    ii. General Calculation Guidance: In general, Inventory Aging must 
be computed using a trading desk's trading activity data and must 
identify the value of a trading desk's aggregate assets and liabilities. 
Inventory Aging must include two schedules, an asset-aging schedule and 
a liability-aging schedule. Each schedule must record the value of 
assets or liabilities held over all holding periods. For derivatives, 
other than options, and interest rate derivatives, value means gross 
notional value, for options, value means delta adjusted notional value 
and, for interest rate derivatives, value means 10-year bond equivalent 
value.
    iii. Calculation Period: One trading day.
    iv. Measurement Frequency: Daily.

    3. Customer-Facing Trade Ratio--Trade Count Based and Value Based

    i. Description: For purposes of this appendix, the Customer-Facing 
Trade Ratio is a ratio comparing (i) the transactions involving a 
counterparty that is a customer of the trading desk to (ii) the 
transactions involving a counterparty that is not a customer of the 
trading desk. A trade count based ratio must be computed that records 
the number of transactions involving a counterparty that is a customer 
of the trading desk and the number of transactions involving a 
counterparty that is not a customer of the trading desk. A value based 
ratio must be computed that records the value of transactions involving 
a counterparty that is a customer of the trading desk and the value of 
transactions involving a counterparty that is not a customer of the 
trading desk.
    ii. General Calculation Guidance: For purposes of calculating the 
Customer-Facing Trade Ratio, a counterparty is considered to be a 
customer of the trading desk if the counterparty is a market participant 
that makes use of the banking entity's market making-related services by 
obtaining such services, responding to quotations, or entering into a 
continuing relationship with respect to such services. However, a 
trading desk or other organizational unit of another banking entity 
would not be a client, customer, or counterparty of the trading desk if 
the other entity has trading assets and liabilities of $50 billion or 
more as measured in accordance with Sec.  75.20(d)(1) unless the trading 
desk documents how and why a particular trading desk or other 
organizational unit of the entity should be treated as a client, 
customer, or counterparty of the trading desk. Transactions conducted 
anonymously on an exchange or similar trading facility that permits 
trading on behalf of a broad range of market participants would be 
considered transactions with customers of the trading desk. For 
derivatives, other than options, and interest rate derivatives, value 
means gross notional value, for options, value means delta adjusted 
notional value, and for interest rate derivatives, value means 10-year 
bond equivalent value.
    iii. Calculation Period: 30 days, 60 days, and 90 days.
    iv. Measurement Frequency: Daily.



 Sec. Appendix B to Part 75--Enhanced Minimum Standards for Compliance 
                                Programs

                               I. Overview

    Section 75.20(c) requires certain banking entities to establish, 
maintain, and enforce an enhanced compliance program that includes the 
requirements and standards in this Appendix as well as the minimum 
written policies and procedures, internal controls, management 
framework, independent testing, training, and recordkeeping provisions 
outlined in Sec.  75.20. This Appendix sets forth additional minimum 
standards with respect to the establishment, oversight, maintenance, and 
enforcement by these banking entities of an enhanced internal compliance 
program for ensuring and monitoring compliance with the prohibitions and 
restrictions on proprietary trading and covered fund activities and 
investments set forth in section 13 of the BHC Act and this part.
    a. This compliance program must:
    1. Be reasonably designed to identify, document, monitor, and report 
the permitted trading and covered fund activities and investments of the 
banking entity; identify, monitor and promptly address the risks of 
these covered activities and investments and potential areas of 
noncompliance; and prevent activities or investments prohibited by, or 
that do not comply with, section 13 of the BHC Act and this part;
    2. Establish and enforce appropriate limits on the covered 
activities and investments of the banking entity, including limits on 
the size, scope, complexity, and risks of the individual activities or 
investments consistent with the requirements of section 13 of the BHC 
Act and this part;
    3. Subject the effectiveness of the compliance program to periodic 
independent review and testing, and ensure that the entity's internal 
audit, corporate compliance and internal control functions involved in 
review and testing are effective and independent;
    4. Make senior management, and others as appropriate, accountable 
for the effective implementation of the compliance program, and ensure 
that the board of directors and chief executive officer (or equivalent) 
of the banking entity review the effectiveness of the compliance 
program; and

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    5. Facilitate supervision and examination by the Agencies of the 
banking entity's permitted trading and covered fund activities and 
investments.

                     II. Enhanced Compliance Program

                    a. Proprietary Trading Activities

    A banking entity must establish, maintain and enforce a compliance 
program that includes written policies and procedures that are 
appropriate for the types, size, and complexity of, and risks associated 
with, its permitted trading activities. The compliance program may be 
tailored to the types of trading activities conducted by the banking 
entity, and must include a detailed description of controls established 
by the banking entity to reasonably ensure that its trading activities 
are conducted in accordance with the requirements and limitations 
applicable to those trading activities under section 13 of the BHC Act 
and this part, and provide for appropriate revision of the compliance 
program before expansion of the trading activities of the banking 
entity. A banking entity must devote adequate resources and use 
knowledgeable personnel in conducting, supervising and managing its 
trading activities, and promote consistency, independence and rigor in 
implementing its risk controls and compliance efforts. The compliance 
program must be updated with a frequency sufficient to account for 
changes in the activities of the banking entity, results of independent 
testing of the program, identification of weaknesses in the program, and 
changes in legal, regulatory or other requirements.
    1. Trading Desks: The banking entity must have written policies and 
procedures governing each trading desk that include a description of:
    i. The process for identifying, authorizing and documenting 
financial instruments each trading desk may purchase or sell, with 
separate documentation for market making-related activities conducted in 
reliance on Sec.  75.4(b) and for hedging activity conducted in reliance 
on Sec.  75.5;
    ii. A mapping for each trading desk to the division, business line, 
or other organizational structure that is responsible for managing and 
overseeing the trading desk's activities;
    iii. The mission (i.e., the type of trading activity, such as 
market-making, trading in sovereign debt, etc.) and strategy (i.e., 
methods for conducting authorized trading activities) of each trading 
desk;
    iv. The activities that the trading desk is authorized to conduct, 
including (i) authorized instruments and products, and (ii) authorized 
hedging strategies, techniques and instruments;
    v. The types and amount of risks allocated by the banking entity to 
each trading desk to implement the mission and strategy of the trading 
desk, including an enumeration of material risks resulting from the 
activities in which the trading desk is authorized to engage (including 
but not limited to price risks, such as basis, volatility and 
correlation risks, as well as counterparty credit risk). Risk 
assessments must take into account both the risks inherent in the 
trading activity and the strength and effectiveness of controls designed 
to mitigate those risks;
    vi. How the risks allocated to each trading desk will be measured;
    vii. Why the allocated risks levels are appropriate to the 
activities authorized for the trading desk;
    viii. The limits on the holding period of, and the risk associated 
with, financial instruments under the responsibility of the trading 
desk;
    ix. The process for setting new or revised limits, as well as 
escalation procedures for granting exceptions to any limits or to any 
policies or procedures governing the desk, the analysis that will be 
required to support revising limits or granting exceptions, and the 
process for independently reviewing and documenting those exceptions and 
the underlying analysis;
    x. The process for identifying, documenting and approving new 
products, trading strategies, and hedging strategies;
    xi. The types of clients, customers, and counterparties with whom 
the trading desk may trade; and
    xii. The compensation arrangements, including incentive 
arrangements, for employees associated with the trading desk, which may 
not be designed to reward or incentivize prohibited proprietary trading 
or excessive or imprudent risk-taking.
    2. Description of risks and risk management processes: The 
compliance program for the banking entity must include a comprehensive 
description of the risk management program for the trading activity of 
the banking entity. The compliance program must also include a 
description of the governance, approval, reporting, escalation, review 
and other processes the banking entity will use to reasonably ensure 
that trading activity is conducted in compliance with section 13 of the 
BHC Act and this part. Trading activity in similar financial instruments 
should be subject to similar governance, limits, testing, controls, and 
review, unless the banking entity specifically determines to establish 
different limits or processes and documents those differences. 
Descriptions must include, at a minimum, the following elements:
    i. A description of the supervisory and risk management structure 
governing all trading activity, including a description of processes for 
initial and senior-level review of new products and new strategies;
    ii. A description of the process for developing, documenting, 
testing, approving and

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reviewing all models used for valuing, identifying and monitoring the 
risks of trading activity and related positions, including the process 
for periodic independent testing of the reliability and accuracy of 
those models;
    iii. A description of the process for developing, documenting, 
testing, approving and reviewing the limits established for each trading 
desk;
    iv. A description of the process by which a security may be 
purchased or sold pursuant to the liquidity management plan, including 
the process for authorizing and monitoring such activity to ensure 
compliance with the banking entity's liquidity management plan and the 
restrictions on liquidity management activities in this part;
    v. A description of the management review process, including 
escalation procedures, for approving any temporary exceptions or 
permanent adjustments to limits on the activities, positions, 
strategies, or risks associated with each trading desk; and
    vi. The role of the audit, compliance, risk management and other 
relevant units for conducting independent testing of trading and hedging 
activities, techniques and strategies.
    3. Authorized risks, instruments, and products. The banking entity 
must implement and enforce limits and internal controls for each trading 
desk that are reasonably designed to ensure that trading activity is 
conducted in conformance with section 13 of the BHC Act and this part 
and with the banking entity's written policies and procedures. The 
banking entity must establish and enforce risk limits appropriate for 
the activity of each trading desk. These limits should be based on 
probabilistic and non-probabilistic measures of potential loss (e.g., 
Value-at-Risk and notional exposure, respectively), and measured under 
normal and stress market conditions. At a minimum, these internal 
controls must monitor, establish and enforce limits on:
    i. The financial instruments (including, at a minimum, by type and 
exposure) that the trading desk may trade;
    ii. The types and levels of risks that may be taken by each trading 
desk; and
    iii. The types of hedging instruments used, hedging strategies 
employed, and the amount of risk effectively hedged.
    4. Hedging policies and procedures. The banking entity must 
establish, maintain, and enforce written policies and procedures 
regarding the use of risk-mitigating hedging instruments and strategies 
that, at a minimum, describe:
    i. The positions, techniques and strategies that each trading desk 
may use to hedge the risk of its positions;
    ii. The manner in which the banking entity will identify the risks 
arising in connection with and related to the individual or aggregated 
positions, contracts or other holdings of the banking entity that are to 
be hedged and determine that those risks have been properly and 
effectively hedged;
    iii. The level of the organization at which hedging activity and 
management will occur;
    iv. The manner in which hedging strategies will be monitored and the 
personnel responsible for such monitoring;
    v. The risk management processes used to control unhedged or 
residual risks; and
    vi. The process for developing, documenting, testing, approving and 
reviewing all hedging positions, techniques and strategies permitted for 
each trading desk and for the banking entity in reliance on Sec.  75.5.
    5. Analysis and quantitative measurements. The banking entity must 
perform robust analysis and quantitative measurement of its trading 
activities that is reasonably designed to ensure that the trading 
activity of each trading desk is consistent with the banking entity's 
compliance program; monitor and assist in the identification of 
potential and actual prohibited proprietary trading activity; and 
prevent the occurrence of prohibited proprietary trading. Analysis and 
models used to determine, measure and limit risk must be rigorously 
tested and be reviewed by management responsible for trading activity to 
ensure that trading activities, limits, strategies, and hedging 
activities do not understate the risk and exposure to the banking entity 
or allow prohibited proprietary trading. This review should include 
periodic and independent back-testing and revision of activities, 
limits, strategies and hedging as appropriate to contain risk and ensure 
compliance. In addition to the quantitative measurements reported by any 
banking entity subject to Appendix A of this part, each banking entity 
must develop and implement, to the extent appropriate to facilitate 
compliance with this part, additional quantitative measurements 
specifically tailored to the particular risks, practices, and strategies 
of its trading desks. The banking entity's analysis and quantitative 
measurements must incorporate the quantitative measurements reported by 
the banking entity pursuant to Appendix A of this part (if applicable) 
and include, at a minimum, the following:
    i. Internal controls and written policies and procedures reasonably 
designed to ensure the accuracy and integrity of quantitative 
measurements;
    ii. Ongoing, timely monitoring and review of calculated quantitative 
measurements;
    iii. The establishment of numerical thresholds and appropriate 
trading measures for each trading desk and heightened review of trading 
activity not consistent with those thresholds to ensure compliance with 
section 13 of the BHC Act and this part, including analysis of the 
measurement results or other

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information, appropriate escalation procedures, and documentation 
related to the review; and
    iv. Immediate review and compliance investigation of the trading 
desk's activities, escalation to senior management with oversight 
responsibilities for the applicable trading desk, timely notification to 
the Commission, appropriate remedial action (e.g., divesting of 
impermissible positions, cessation of impermissible activity, 
disciplinary actions), and documentation of the investigation findings 
and remedial action taken when quantitative measurements or other 
information, considered together with the facts and circumstances, or 
findings of internal audit, independent testing or other review suggest 
a reasonable likelihood that the trading desk has violated any part of 
section 13 of the BHC Act or this part.
    6. Other Compliance Matters. In addition to the requirements 
specified above, the banking entity's compliance program must:
    i. Identify activities of each trading desk that will be conducted 
in reliance on exemptions contained in Sec. Sec.  75.4 through 75.6, 
including an explanation of:
    A. How and where in the organization the activity occurs; and
    B. Which exemption is being relied on and how the activity meets the 
specific requirements for reliance on the applicable exemption;
    ii. Include an explanation of the process for documenting, approving 
and reviewing actions taken pursuant to the liquidity management plan, 
where in the organization this activity occurs, the securities 
permissible for liquidity management, the process for ensuring that 
liquidity management activities are not conducted for the purpose of 
prohibited proprietary trading, and the process for ensuring that 
securities purchased as part of the liquidity management plan are highly 
liquid and conform to the requirements of this part;
    iii. Describe how the banking entity monitors for and prohibits 
potential or actual material exposure to high-risk assets or high-risk 
trading strategies presented by each trading desk that relies on the 
exemptions contained in Sec. Sec.  75.3(d)(3) and 75.4 through 75.6, 
which must take into account potential or actual exposure to:
    A. Assets whose values cannot be externally priced or, where 
valuation is reliant on pricing models, whose model inputs cannot be 
externally validated;
    B. Assets whose changes in value cannot be adequately mitigated by 
effective hedging;
    C. New products with rapid growth, including those that do not have 
a market history;
    D. Assets or strategies that include significant embedded leverage;
    E. Assets or strategies that have demonstrated significant 
historical volatility;
    F. Assets or strategies for which the application of capital and 
liquidity standards would not adequately account for the risk; and
    G. Assets or strategies that result in large and significant 
concentrations to sectors, risk factors, or counterparties;
    iv. Establish responsibility for compliance with the reporting and 
recordkeeping requirements of subpart B of this part and Sec.  75.20; 
and
    v. Establish policies for monitoring and prohibiting potential or 
actual material conflicts of interest between the banking entity and its 
clients, customers, or counterparties.
    7. Remediation of violations. The banking entity's compliance 
program must be reasonably designed and established to effectively 
monitor and identify for further analysis any trading activity that may 
indicate potential violations of section 13 of the BHC Act and this part 
and to prevent actual violations of section 13 of the BHC Act and this 
part. The compliance program must describe procedures for identifying 
and remedying violations of section 13 of the BHC Act and this part, and 
must include, at a minimum, a requirement to promptly document, address 
and remedy any violation of section 13 of the BHC Act or this part, and 
document all proposed and actual remediation efforts. The compliance 
program must include specific written policies and procedures that are 
reasonably designed to assess the extent to which any activity indicates 
that modification to the banking entity's compliance program is 
warranted and to ensure that appropriate modifications are implemented. 
The written policies and procedures must provide for prompt notification 
to appropriate management, including senior management and the board of 
directors, of any material weakness or significant deficiencies in the 
design or implementation of the compliance program of the banking 
entity.

                b. Covered Fund Activities or Investments

    A banking entity must establish, maintain and enforce a compliance 
program that includes written policies and procedures that are 
appropriate for the types, size, complexity and risks of the covered 
fund and related activities conducted and investments made, by the 
banking entity.
    1. Identification of covered funds. The banking entity's compliance 
program must provide a process, which must include appropriate 
management review and independent testing, for identifying and 
documenting covered funds that each unit within the banking entity's 
organization sponsors or organizes and offers, and covered funds in 
which each such unit invests. In addition to the documentation 
requirements for covered funds, as specified under Sec.  75.20(e), the 
documentation must include information that identifies all pools that 
the banking entity

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sponsors or has an interest in and the type of exemption from the 
Commodity Exchange Act (whether or not the pool relies on Sec.  4.7 of 
the regulations under the Commodity Exchange Act (Sec.  4.7 of this 
chapter)), and the amount of ownership interest the banking entity has 
in those pools.
    2. Identification of covered fund activities and investments. The 
banking entity's compliance program must identify, document and map each 
unit within the organization that is permitted to acquire or hold an 
interest in any covered fund or sponsor any covered fund and map each 
unit to the division, business line, or other organizational structure 
that will be responsible for managing and overseeing that unit's 
activities and investments.
    3. Explanation of compliance. The banking entity's compliance 
program must explain how:
    i. The banking entity monitors for and prohibits potential or actual 
material conflicts of interest between the banking entity and its 
clients, customers, or counterparties related to its covered fund 
activities and investments;
    ii. The banking entity monitors for and prohibits potential or 
actual transactions or activities that may threaten the safety and 
soundness of the banking entity related to its covered fund activities 
and investments; and
    iii. The banking entity monitors for and prohibits potential or 
actual material exposure to high-risk assets or high-risk trading 
strategies presented by its covered fund activities and investments, 
taking into account potential or actual exposure to:
    A. Assets whose values cannot be externally priced or, where 
valuation is reliant on pricing models, whose model inputs cannot be 
externally validated;
    B. Assets whose changes in values cannot be adequately mitigated by 
effective hedging;
    C. New products with rapid growth, including those that do not have 
a market history;
    D. Assets or strategies that include significant embedded leverage;
    E. Assets or strategies that have demonstrated significant 
historical volatility;
    F. Assets or strategies for which the application of capital and 
liquidity standards would not adequately account for the risk; and
    G. Assets or strategies that expose the banking entity to large and 
significant concentrations with respect to sectors, risk factors, or 
counterparties;
    4. Description and documentation of covered fund activities and 
investments. For each organizational unit engaged in covered fund 
activities and investments, the banking entity's compliance program must 
document:
    i. The covered fund activities and investments that the unit is 
authorized to conduct;
    ii. The banking entity's plan for actively seeking unaffiliated 
investors to ensure that any investment by the banking entity conforms 
to the limits contained in Sec.  75.12 or registered in compliance with 
the securities laws and thereby exempt from those limits within the time 
periods allotted in Sec.  75.12; and
    iii. How it complies with the requirements of subpart C of this 
part.
    5. Internal Controls. A banking entity must establish, maintain, and 
enforce internal controls that are reasonably designed to ensure that 
its covered fund activities or investments comply with the requirements 
of section 13 of the BHC Act and this part and are appropriate given the 
limits on risk established by the banking entity. These written internal 
controls must be reasonably designed and established to effectively 
monitor and identify for further analysis any covered fund activity or 
investment that may indicate potential violations of section 13 of the 
BHC Act or this part. The internal controls must, at a minimum require:
    i. Monitoring and limiting the banking entity's individual and 
aggregate investments in covered funds;
    ii. Monitoring the amount and timing of seed capital investments for 
compliance with the limitations under subpart C of this part (including 
but not limited to the redemption, sale or disposition requirements of 
Sec.  75.12), and the effectiveness of efforts to seek unaffiliated 
investors to ensure compliance with those limits;
    iii. Calculating the individual and aggregate levels of ownership 
interests in one or more covered fund required by Sec.  75.12;
    iv. Attributing the appropriate instruments to the individual and 
aggregate ownership interest calculations above;
    v. Making disclosures to prospective and actual investors in any 
covered fund organized and offered or sponsored by the banking entity, 
as provided under Sec.  75.11(a)(8);
    vi. Monitoring for and preventing any relationship or transaction 
between the banking entity and a covered fund that is prohibited under 
Sec.  75.14, including where the banking entity has been designated as 
the sponsor, investment manager, investment adviser, or commodity 
trading advisor to a covered fund by another banking entity; and
    vii. Appropriate management review and supervision across legal 
entities of the banking entity to ensure that services and products 
provided by all affiliated entities comply with the limitation on 
services and products contained in Sec.  75.14.
    6. Remediation of violations. The banking entity's compliance 
program must be reasonably designed and established to effectively 
monitor and identify for further analysis any covered fund activity or 
investment that may indicate potential violations of section 13 of the 
BHC Act or this part and to prevent

[[Page 240]]

actual violations of section 13 of the BHC Act and this part. The 
banking entity's compliance program must describe procedures for 
identifying and remedying violations of section 13 of the BHC Act and 
this part, and must include, at a minimum, a requirement to promptly 
document, address and remedy any violation of section 13 of the BHC Act 
or this part, including Sec.  75.21, and document all proposed and 
actual remediation efforts. The compliance program must include specific 
written policies and procedures that are reasonably designed to assess 
the extent to which any activity or investment indicates that 
modification to the banking entity's compliance program is warranted and 
to ensure that appropriate modifications are implemented. The written 
policies and procedures must provide for prompt notification to 
appropriate management, including senior management and the board of 
directors, of any material weakness or significant deficiencies in the 
design or implementation of the compliance program of the banking 
entity.

    III. Responsibility and Accountability for the Compliance Program

    a. A banking entity must establish, maintain, and enforce a 
governance and management framework to manage its business and employees 
with a view to preventing violations of section 13 of the BHC Act and 
this part. A banking entity must have an appropriate management 
framework reasonably designed to ensure that: Appropriate personnel are 
responsible and accountable for the effective implementation and 
enforcement of the compliance program; a clear reporting line with a 
chain of responsibility is delineated; and the compliance program is 
reviewed periodically by senior management. The board of directors (or 
equivalent governance body) and senior management should have the 
appropriate authority and access to personnel and information within the 
organizations as well as appropriate resources to conduct their 
oversight activities effectively.
    1. Corporate governance. The banking entity must adopt a written 
compliance program approved by the board of directors, an appropriate 
committee of the board, or equivalent governance body, and senior 
management.
    2. Management procedures. The banking entity must establish, 
maintain, and enforce a governance framework that is reasonably designed 
to achieve compliance with section 13 of the BHC Act and this part, 
which, at a minimum, provides for:
    i. The designation of appropriate senior management or committee of 
senior management with authority to carry out the management 
responsibilities of the banking entity for each trading desk and for 
each organizational unit engaged in covered fund activities;
    ii. Written procedures addressing the management of the activities 
of the banking entity that are reasonably designed to achieve compliance 
with section 13 of the BHC Act and this part, including:
    A. A description of the management system, including the titles, 
qualifications, and locations of managers and the specific 
responsibilities of each person with respect to the banking entity's 
activities governed by section 13 of the BHC Act and this part; and
    B. Procedures for determining compensation arrangements for traders 
engaged in underwriting or market making-related activities under Sec.  
75.4 or risk-mitigating hedging activities under Sec.  75.5 so that such 
compensation arrangements are designed not to reward or incentivize 
prohibited proprietary trading and appropriately balance risk and 
financial results in a manner that does not encourage employees to 
expose the banking entity to excessive or imprudent risk.
    3. Business line managers. Managers with responsibility for one or 
more trading desks of the banking entity are accountable for the 
effective implementation and enforcement of the compliance program with 
respect to the applicable trading desk(s).
    4. Board of directors, or similar corporate body, and senior 
management. The board of directors, or similar corporate body, and 
senior management are responsible for setting and communicating an 
appropriate culture of compliance with section 13 of the BHC Act and 
this part and ensuring that appropriate policies regarding the 
management of trading activities and covered fund activities or 
investments are adopted to comply with section 13 of the BHC Act and 
this part. The board of directors or similar corporate body (such as a 
designated committee of the board or an equivalent governance body) must 
ensure that senior management is fully capable, qualified, and properly 
motivated to manage compliance with this part in light of the 
organization's business activities and the expectations of the board of 
directors. The board of directors or similar corporate body must also 
ensure that senior management has established appropriate incentives and 
adequate resources to support compliance with this part, including the 
implementation of a compliance program meeting the requirements of this 
appendix into management goals and compensation structures across the 
banking entity.
    5. Senior management. Senior management is responsible for 
implementing and enforcing the approved compliance program. Senior 
management must also ensure that effective corrective action is taken 
when failures in compliance with section 13 of the BHC Act and this part 
are identified. Senior management and control personnel charged with 
overseeing compliance with section 13 of the BHC Act and this part 
should review the compliance program for the banking entity

[[Page 241]]

periodically and report to the board, or an appropriate committee 
thereof, on the effectiveness of the compliance program and compliance 
matters with a frequency appropriate to the size, scope, and risk 
profile of the banking entity's trading activities and covered fund 
activities or investments, which shall be at least annually.
    6. CEO attestation. Based on a review by the CEO of the banking 
entity, the CEO of the banking entity must, annually, attest in writing 
to the Commission that the banking entity has in place processes to 
establish, maintain, enforce, review, test and modify the compliance 
program established under this appendix and Sec.  75.20 in a manner 
reasonably designed to achieve compliance with section 13 of the BHC Act 
and this part. In the case of a U.S. branch or agency of a foreign 
banking entity, the attestation may be provided for the entire U.S. 
operations of the foreign banking entity by the senior management 
officer of the United States operations of the foreign banking entity 
who is located in the United States.

                         IV. Independent Testing

    a. Independent testing must occur with a frequency appropriate to 
the size, scope, and risk profile of the banking entity's trading and 
covered fund activities or investments, which shall be at least 
annually. This independent testing must include an evaluation of:
    1. The overall adequacy and effectiveness of the banking entity's 
compliance program, including an analysis of the extent to which the 
program contains all the required elements of this appendix;
    2. The effectiveness of the banking entity's internal controls, 
including an analysis and documentation of instances in which such 
internal controls have been breached, and how such breaches were 
addressed and resolved; and
    3. The effectiveness of the banking entity's management procedures.
    b. A banking entity must ensure that independent testing regarding 
the effectiveness of the banking entity's compliance program is 
conducted by a qualified independent party, such as the banking entity's 
internal audit department, compliance personnel or risk managers 
independent of the organizational unit being tested, outside auditors, 
consultants, or other qualified independent parties. A banking entity 
must promptly take appropriate action to remedy any significant 
deficiencies or material weaknesses in its compliance program and to 
terminate any violations of section 13 of the BHC Act or this part.

                               V. Training

    Banking entities must provide adequate training to personnel and 
managers of the banking entity engaged in activities or investments 
governed by section 13 of the BHC Act or this part, as well as other 
appropriate supervisory, risk, independent testing, and audit personnel, 
in order to effectively implement and enforce the compliance program. 
This training should occur with a frequency appropriate to the size and 
the risk profile of the banking entity's trading activities and covered 
fund activities or investments.

                            VI. Recordkeeping

    Banking entities must create and retain records sufficient to 
demonstrate compliance and support the operations and effectiveness of 
the compliance program. A banking entity must retain these records for a 
period that is no less than 5 years or such longer period as required by 
the Commission in a form that allows it to promptly produce such records 
to the Commission on request.



PART 100_DELIVERY PERIOD REQUIRED--Table of Contents



    Authority: 7 U.S.C. 7a(a)(4) and 12a.



Sec.  100.1  Delivery period required with respect to certain grains.

    A period of seven business days is required during which contracts 
for future delivery in the current delivery month of wheat, corn, oats, 
barley, rye, or flaxseed may be settled by delivery of the actual cash 
commodity after trading in such contracts has ceased, for each delivery 
month after May 1938, on all contract markets on which there is trading 
in futures in any of such commodities, and such contract markets, and 
each of them, are directed to provide therefor.

[41 FR 3211, Jan. 21, 1976]



PART 140_ORGANIZATION, FUNCTIONS, AND PROCEDURES OF THE
COMMISSION--Table of Contents



                         Subpart A_Organization

Sec.
140.1 Headquarters office.
140.2 Regional office--regional coordinators.

                           Subpart B_Functions

140.10 The Commission.
140.11 Emergency action by the senior Commissioner available.

[[Page 242]]

140.12 Disposition of business by seriatim Commission consideration.
140.13 Vacancy in position of Chairman.
140.14 Delegation of authority to the Secretary of the Commission.
140.20 Designation of senior official to oversee Commission use of 
          national security information.
140.21 Definitions.
140.22 Procedures.
140.23 General access requirements.
140.24 Control and accountability procedures.
140.61 [Reserved]
140.72 Delegation of authority to disclose confidential information to a 
          registered entity, swap execution facility, swap data 
          repository, registered futures association or self-regulatory 
          organization.
140.73 Delegation of authority to disclose information to United States, 
          States, and foreign government agencies and foreign futures 
          authorities.
140.74 Delegation of authority to issue special calls for Series 03 
          Reports and Form 40.
140.75 Delegation of authority to the Director of the Division of Swap 
          Dealer and Intermediary Oversight.
140.76 Delegation of authority to disclose information in a receivership 
          or bankruptcy proceeding.
140.77 Delegation of authority to determine that applications for 
          contract market designation, swap execution facility 
          registration, or swap data repository registration are 
          materially incomplete.
140.80 Disclosure of information pursuant to a subpoena or summons.
140.81 [Reserved]
140.91 Delegation of authority to the Director of the Division of 
          Clearing and Risk and to the Director of the Division of Swap 
          Dealer and Intermediary Oversight.
140.92 Delegation of authority to grant registrations and renewals 
          thereof.
140.93 Delegation of authority to the Director of the Division of Swap 
          Dealer and Intermediary Oversight.
140.94 Delegation of authority to the Director of the Division of Swap 
          Dealer and Intermediary Oversight and the Director of the 
          Division of Clearing and Risk.
140.95 Delegation of authority with respect to withdrawals from 
          registration.
140.96 Delegation of authority to publish in the Federal Register.
140.97 Delegation of authority regarding requests for classification of 
          positions as bona fide hedging.
140.98 Publication of no-action, interpretative and exemption letters 
          and other written communications.
140.99 Requests for exemptive, no-action and interpretative letters.

  Subpart C_Regulation Concerning Conduct of Members and Employees and 
             Former Members and Employees of the Commission

140.735-1 Authority and purpose.
140.735-2 Prohibited transactions.
140.735-2a Prohibited interests.
140.735-3 Non-governmental employment and other outside activity.
140.735-4 Receipt and disposition of foreign gifts and decorations.
140.735-5 Disclosure of information.
140.735-6 Practice by former members and employees of the Commission.
140.735-7 Statutory violations applicable to conduct of Commission 
          members and employees.
140.735-8 Interpretative and advisory service.

    Authority: 7 U.S.C. 2(a)(12), 12a, 13(c), 13(d), 13(e), and 16(b).



                         Subpart A_Organization



Sec.  140.1  Headquarters office.

    (a) General. The headquarters office of the Commission is located at 
Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581.
    (b) [Reserved]

[48 FR 2734, Jan. 21, 1983, as amended at 60 FR 49335, Sept. 25, 1995]



Sec.  140.2  Regional office--regional coordinators.

    Each of the Regional offices described herein functions as set forth 
in this section under the direction of a Regional Coordinator who, as a 
collateral duty, oversees the administration of the office and 
represents the Commission in negotiations with employee union officials 
and in interactions with external parties. Each regional office has 
delegated authority for the enforcement of the Act and administration of 
the programs of the Commission in the particular regions.
    (a) The Eastern Regional Office is located at 140 Broadway, New 
York, New York, 10005 and is responsible for enforcement of the Act and 
administration of programs of the Commission in the States of Alabama, 
Connecticut, Delaware, Florida, Georgia, Kentucky, Maine, Maryland, 
Massachusetts, Mississippi, New Hampshire, New Jersey,

[[Page 243]]

New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, 
Tennessee, Vermont, Virginia, and West Virginia.
    (b) The Central Regional Office is located at 525 West Monroe 
Street, Suite 1100, Chicago, Illinois 60661 and is responsible for 
enforcement of the Act and administration of programs of the Commission 
in the States of Illinois, Indiana, Michigan, Ohio and Wisconsin.
    (c) The Southwestern Regional Office is located at Two Emanuel 
Cleaver II Blvd., Suite 300, Kansas City, Missouri 64112, and is 
responsible for enforcement of the Act and administration of the 
programs of the Commission in the States of Alaska, Arizona, Arkansas, 
California, Colorado, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, 
Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, 
Oregon, South Dakota, Texas, Utah, Washington, and Wyoming.

[69 FR 41426, July 9, 2004, as amended at 72 FR 16269, Apr. 4, 2007]



                           Subpart B_Functions



Sec.  140.10  The Commission.

    The Commission is composed of a Chairman and four other 
Commissioners, not more than three of whom may be members of the same 
political party, who are appointed by the President, with the advice and 
consent of the Senate, for 5-year terms, one term ending each year. The 
Commission is assisted by a staff, which includes lawyers, economists, 
accountants, investigators and examiners, as well as administrative and 
clerical employees.

[41 FR 28474, July 12, 1976]



Sec.  140.11  Emergency action by the senior Commissioner available.

    (a) Authority of senior Commissioner. When it is not feasible to 
convene a quorum of the Commission, the Senior Commissioner present at 
the principal offices of the Commission (or, during non-business hours, 
available in the Washington, DC area) may take emergency action on 
behalf of and in the name of the Commission in accordance with the 
procedures set forth in this section. Members of the Commission shall be 
considered senior in the following order: The Chairman, the Vice-
Chairman, and other Commissioners in order of their length of service on 
the Commission. Where two or more Commissioners have commenced their 
service on the same date, the Commissioner whose unexpired term in 
office is the longest will be considered senior.
    (b) Exercise of authority. Subject to the right of the Commission to 
review any emergency action taken as hereinafter provided, the Senior 
Commissioner may act on behalf of and in the name of the Commission with 
respect to all of the functions of the Commission except general 
rulemaking functions: Provided, however, That the Senior Commissioner 
shall not exercise any authority on behalf of the Commission (1) without 
consultation with such other member of the Commission as may at the time 
be present at the Commission's offices in Washington, DC, and without a 
reasonable attempt to consult, by telephone, with other members of the 
Commission; and (2) unless, in the opinion of the Senior Commissioner 
(after consulting with the General Counsel or his deputy or associate, 
and such other members of the Commission staff as the Senior 
Commissioner deems appropriate) the public interest requires that action 
be taken prior to the next scheduled meeting of the Commission.
    (c) Report to the Commission. The exercise of Senior Commissioner 
authority shall be reported to the Commission within one business day 
thereafter either by the Senior Commissioner or at his direction, and 
shall be recorded by the Secretariat in the Minute Record of all 
official actions of the Commission. The Secretariat shall promptly 
notify any directly affected person of the action taken and that it was 
the Senior Commissioner available, rather than the Commission as a 
whole, who took the action.
    (d) Review by the Commission. The Commission may, in the following 
circumstances, review any action taken under Senior Commissioner 
authority and may affirm, modify, alter or set aside the decision:
    (1) Upon the request of any member of the Commission, any action 
taken by a Senior Commissioner shall be reviewed by the Commission.

[[Page 244]]

    (2) In the event action by a Senior Commissioner suspends, denies or 
revokes or otherwise directly and adversely affects any license, right 
or privilege of any person, that person may in writing request review by 
the Commission and shall be entitled to have the action of the Senior 
Commissioner reviewed by the Commission.
    (3) The Commission may, in its discretion, review any action taken 
by a Senior Commissioner upon petition by any other person.
    (e) Final effect of action by Senior Commissioner. In any matter, 
the action taken under Senior Commissioner authority shall be deemed the 
action of the Commission unless and until the Commission shall otherwise 
direct.

[41 FR 28474, July 12, 1976]



Sec.  140.12  Disposition of business by seriatim Commission consideration.

    (a) Whenever the Chairman of the Commission is of the opinion that 
joint deliberation among the members of the Commission upon any matter 
is unnecessary in light of the nature of the matter, impracticable, or 
would impede the orderly disposition of agency business, but is of the 
view that such matter should be the subject of a vote of the Commission, 
such matter may be disposed of by circulation of any relevant materials 
concerning the matter. The relevant materials shall be circulated to 
each member of the Commission, unless a member is unavailable or has 
determined not to participate in the matter. A written record of the 
vote of each participating Commission member shall be reported to the 
Secretariat who shall retain it in the records of the Commission.
    (b) Whenever any member of the Commission so requests, any matter 
circulated for disposition pursuant to paragraph (a) of this section 
shall be withdrawn from circulation and scheduled instead for a 
Commission meeting.

[43 FR 43452, Sept. 26, 1978]



Sec.  140.13  Vacancy in position of Chairman.

    At any time that a vacancy exists in the position of Chairman of the 
Commission the remaining members of the Commission shall elect a member 
to serve as acting Chairman who shall exercise the executive and 
administrative functions of the Commission that would otherwise be 
exercised by a Chairman in accordance with section 2(a)(6) of the 
Commodity Exchange Act, as amended, until a new Chairman has been 
appointed by the President and confirmed by the Senate: Provided, 
however, That if the President shall appoint a new Chairman from among 
the existing members of the Commission, that Commissioner shall serve as 
acting Chairman for these purposes until such time as his appointment as 
Chairman has been confirmed or rejected by the Senate.

[43 FR 50167, Oct. 27, 1978]



Sec.  140.14  Delegation of authority to the Secretary of the Commission.

    After the Commission has formally reached a decision or taken other 
action on a matter, has agreed upon the language of the document which 
embodies the Commission decision or other action, including, but not 
limited to, a rule, regulation or order, and has directed that the 
document be issued, the Secretary of the Commission (or a person 
designated in writing by the Secretary) shall sign the document on 
behalf of the Commission. Signature by the Secretary shall be a 
ministerial function and shall not be discretionary. The delegation to 
the Secretary of the authority to sign documents on the Commission's 
behalf shall not affect any other delegation which the Commission has 
made, or may make, which authorizes any other officer or employee of the 
Commission to take action and to sign documents on the Commission's 
behalf. In addition, the Commission reserves the authority to provide 
for signature on its behalf by the Chairman or any other member of the 
Commission in particular circumstances.

[44 FR 33677, June 12, 1979]



Sec.  140.20  Designation of senior official to oversee Commission 
use of national security information.

    (a) The Executive Director is hereby designated to oversee the 
Commission's program to ensure the safeguarding of national security 
information received

[[Page 245]]

by the Commission from other agencies, to chair a Commission committee 
composed of members of the staff selected by him with authority to act 
on all suggestions and complaints with respect to the Commission 
administration of its information security program, and, in conjunction 
with the Security Officer of the Commission, to ensure that practices 
for safeguarding national security information are systematically 
reviewed and that those practices which are duplicative or unnecessary 
are eliminated.
    (b) The Executive Director may submit any matter for which he has 
been designated under paragraph (a) of this section to the Commission 
for its consideration.

[44 FR 65736, Nov. 15, 1979, as amended at 61 FR 21955, May 13, 1996]



Sec.  140.21  Definitions.

    (a) Classified information. Information or material that is:
    (1) Owned by, produced for or by, or under control of the United 
States Government, and
    (2) Determined pursuant to Executive Order 12356 or prior or 
succeeding orders to require protection against unauthorized disclosure, 
and
    (3) So designated.
    (b) Compromise. The disclosure of classified information to persons 
not authorized access thereto.
    (c) Custodians. An individual who has possession of or is otherwise 
charged with the responsibility for safeguarding or accounting for 
classified information.
    (d) Classification levels. Refers to Top Secret ``(TS)'', Secret 
``(S)'', and Confidential ``(C)'' levels used to identify national 
security information. Markings ``For Official Use Only,'' and ``Limited 
Official Use'' shall not be used to identify national security 
information.

[48 FR 15464, Apr. 11, 1983]



Sec.  140.22  Procedures.

    (a) Original classification. The Commodity Futures Trading 
Commission has no original classification authority.
    (b) Derivative classification. Personnel of the Commission shall 
respect the original classification markings assigned to information 
they receive from other agencies.
    (c) Declassification and downgrading. Since the Commission does no 
original classification of material, declassification and downgrading of 
sensitive material is not applicable.
    (d) Dissemination. All classified national security information 
which the Commission receives from any agency will be cared for and 
returned in accordance with the particular agency's policy guidelines 
and may not be disseminated to any other agency without the consent of 
the originating agency.

[48 FR 15464, Apr. 11, 1983]



Sec.  140.23  General access requirements.

    (a) Determination of trustworthiness. No person shall be given 
access to classified information unless a favorable determination has 
been made as to the person's trustworthiness. The determination of 
eligibility, referred to as a security clearance, shall be based on such 
investigations as the Commission may require in accordance with the 
applicable Office of Personnel Management standards and criteria.
    (b) Determination of need-to-know. A person is not entitled to 
receive classified information solely by virtue of having been granted a 
security clearance. A person must also have a need for access to the 
particular classified information sought in connection with the 
performance of official government duties or contractual obligations. 
The determination of that need shall be made by officials having 
responsibility for the classified information.

[48 FR 15464, Apr. 11, 1983]



Sec.  140.24  Control and accountability procedures.

    Persons entrusted with classified information shall be responsible 
for providing protection and accountability for such information at all 
times and for locking classified information in approved security 
equipment whenever it is not in use or under direct supervision of 
authorized persons.

[[Page 246]]

    (a) General safeguards. (1) Classified material must not be left in 
unoccupied rooms or be left inadequately protected in an occupied 
office, or one occupied by other than security cleared employees. Under 
no circumstances shall classified material be placed in desk drawers or 
anywhere other than in approved storage containers.
    (2) Employees using classified material shall take every precaution 
to prevent deliberate or casual inspection of it by unauthorized 
persons. Classified material shall be kept under constant surveillance 
and face down or covered when not in use.
    (3) All copies of classified documents and any informal material 
such as memoranda, rough drafts, shorthand notes, carbon copies, carbon 
paper, typewriter ribbons, recording discs, spools and tapes shall be 
given the same classification and secure handling as the classified 
information they contain.
    (4) Commission personnel authorized to use classified materials will 
obtain them from the Executive Director or his delegee on the day 
required and return them to the Executive Director or his delegee before 
the close of business on the same day.
    (5) Classified information shall not be revealed in telephone or 
telecommunications conversations.
    (6) Any person who has knowledge of the loss or possible compromise 
of classified information shall immediately report the circumstances 
either to the Security Officer or to the Executive Director or his 
delegee. The Executive Director or his delegee shall initiate a 
preliminary inquiry to determine the circumstances surrounding an actual 
or possible compromise, and to determine what corrective measures and 
administrative, disciplinary, or legal action is necessary.
    (b) Reproduction controls. (1) The number of copies of documents 
containing classified information must be kept to the minimum required 
by operational necessity to decrease the risk of compromise and reduce 
storage costs.
    (2) Top Secret documents, except for the controlled initial 
distribution of information processed or received electrically, shall 
not be reproduced without the consent of the originator.
    (3) Unless restricted by the originating agency, Secret and 
Confidential documents may be reproduced to the extent required by 
operational needs.
    (4) Reproduced copies of classified documents shall be subject to 
the same accountability and controls as the original documents.
    (5) Classified reproduction shall be controlled by persons with the 
proper level of security clearance.
    (6) Records shall be maintained to show the number and distribution 
of reproduced copies to all Top Secret documents, of all classified 
documents covered by special access programs distributed outside the 
originating agency, and of all Secret and Confidential documents which 
are marked with special dissemination and reproduction limitations.
    (7) Unauthorized reproduction of classified material will be subject 
to appropriate disciplinary action.
    (c) Storage of classified material. (1) All classified material in 
the custody of the Commission will be stored in accordance with the 
guidelines set forth in 32 CFR 2001.43.
    (2) In addition, the Commission remains subject to the provisions of 
32 CFR part 2001, et seq., insofar as they are applicable to classified 
materials held by the Commission.

[48 FR 15464, Apr. 11, 1983, as amended at 61 FR 21955, May 13, 1996]



Sec.  140.61  [Reserved]



Sec.  140.72  Delegation of authority to disclose confidential 
information to a registered entity, swap execution facility, swap 
data repository, registered futures association or self-regulatory 
organization.

    (a) Pursuant to the authority granted under sections 2(a)(11), 8a(5) 
and 8a(6) of the Act, the Commission hereby delegates, until such time 
as the Commission orders otherwise, to the Executive Director, the 
Deputy Executive Director, the Special Assistant to the Executive 
Director, Director of the Division of Swap Dealer and Intermediary 
Oversight, the Chief Counsel of the Division of Swap Dealer and 
Intermediary Oversight, each Deputy Director of the Division of Swap 
Dealer and Intermediary Oversight, the Director of the Division of 
Clearing and Risk, the

[[Page 247]]

Chief Counsel of the Division of Clearing and Risk, each Deputy Director 
of the Division of Clearing and Risk, the Chief Accountant, the General 
Counsel, each Deputy General Counsel, the Director of the Division of 
Market Oversight, each Deputy Director of the Division of Market 
Oversight, the Deputy Director of the Market and Trade Practice 
Surveillance Branch, the Director of the Division of Enforcement, each 
Deputy Director of the Division of Enforcement, each Associate Director 
of the Division of Enforcement, the Chief Counsel of the Division of 
Enforcement, each Regional Counsel of the Division of Enforcement, each 
of the Regional Administrators, the Chief Economist of the Office of the 
Chief Economist, the Deputy Chief Economist of the Office of the Chief 
Economist, the Director of the Office of International Affairs, and the 
Deputy Director of the Office of International Affairs, the authority to 
disclose to an official of any registered entity, swap execution 
facility, swap data repository, registered futures association, or self-
regulatory organization as defined in section 3(a)(26) of the Securities 
Exchange Act of 1934, any information necessary or appropriate to 
effectuate the purposes of the Act, including, but not limited to, the 
full facts concerning any transaction or market operation, including the 
names of the parties thereto. This authority to disclose shall be based 
on a determination that the transaction or market operation disrupts or 
tends to disrupt any market or is otherwise harmful or against the best 
interests of producers, consumers, or investors or that disclosure is 
necessary or appropriate to effectuate the purposes of the Act. The 
authority to make such a determination is also delegated by the 
Commission to the Commission employees identified in this section. A 
Commission employee delegated authority under this section may exercise 
that authority on his or her own initiative or in response to a request 
by an official of a registered entity, swap execution facility, swap 
data repository, registered futures association or self-regulatory 
organization.
    (b) Disclosure under this section shall only be made to a registered 
entity, swap execution facility, swap data repository, registered 
futures association or self-regulatory organization official who is 
named in a list filed with the Commission by the chief executive officer 
of the registered entity, swap execution facility, swap data repository, 
registered futures association or self-regulatory organization, which 
sets forth the official's name, business address and telephone number. 
The chief executive officer shall thereafter notify the Commission of 
any deletions or additions to the list of officials authorized to 
receive disclosures under this section. The original list and any 
supplemental list required by this paragraph shall be filed with the 
Secretary of the Commission, and a copy thereof shall also be filed with 
the Regional Coordinator for the region in which the registered entity, 
swap execution facility, or swap data repository is located or in which 
the registered futures association or self-regulatory organization has 
its principal office.
    (c) Notwithstanding the provisions of paragraph (a) of this section, 
in any case in which a Commission employee delegated authority under 
this section believes it appropriate, he or she may submit to the 
Commission for its consideration the question of whether disclosure of 
information should be made.
    (d) For purposes of this section, the term ``official'' shall mean 
any officer or member of a committee of a registered entity, swap 
execution facility, swap data repository, registered futures association 
or self-regulatory organization who is specifically charged with market 
surveillance or audit or investigative responsibilities, or their duly 
authorized representative or agent, who is named on the list filed 
pursuant to paragraph (b) of this section or any supplement thereto.
    (e) For the purposes of this section, the term ``self-regulatory 
organization'' shall mean the same as that defined in section 3(a) (26) 
of the Securities Exchange Act of 1934.
    (f) Any registered entity, swap execution facility, swap data 
repository, registered futures association or self-regulatory 
organization receiving information from the Commission under these 
provisions shall not disclose such information except that disclosure 
may be

[[Page 248]]

made in any self-regulatory action or proceeding.

[48 FR 22134, May 17, 1983, as amended at 57 FR 20638, May 14, 1992; 61 
FR 1709, Jan. 23, 1996; 66 FR 1576, Jan. 9, 2001; 67 FR 62352, Oct. 7, 
2002; 73 FR 79609, Dec. 30, 2008; 77 FR 66346, Nov. 2, 2012; 78 FR 
21523, Apr. 11, 2013; 78 FR 22419, Apr. 16, 2013]



Sec.  140.73  Delegation of authority to disclose information to 
United States, States, and foreign government agencies and
foreign futures authorities.

    (a) Pursuant to sections 2(a)(11), 8a(5) and 8(e) of the Act, the 
Commission hereby delegates, until such time as the Commission orders 
otherwise, to the General Counsel or, in his or her absence, to each 
Deputy General Counsel, the Director of the Division of Enforcement, 
each Deputy Director of the Division of Enforcement, the Chief Counsel 
of the Division of Enforcement, each Associate Director of the Division 
of Enforcement, each Regional Counsel of the Division of Enforcement, 
the Director of the Division of Market Oversight or, in his or her 
absence, each Deputy Director of the Division of Market Oversight, the 
Director of the Market Surveillance Section, Director of the Division of 
Swap Dealer and Intermediary Oversight or, in his or her absence, the 
Chief Counsel of the Division of Swap Dealer and Intermediary Oversight, 
each Deputy Director of the Division of Swap Dealer and Intermediary 
Oversight, the Director of the Division of Clearing and Risk or, in his 
or her absence, the Chief Counsel of the Division of Clearing and Risk, 
each Deputy Director of the Division of Clearing and Risk., the Chief 
Economist of the Office of the Chief Economist, the Deputy Chief 
Economist of the Office of the Chief Economist, and the Director of the 
Office of International Affairs or, in his or her absence, the Deputy 
Director of the Office of International Affairs, the authority to 
furnish information in the possession of the Commission obtained in 
connection with the administration of the Act, upon written request, to:
    (1) Any department or agency of the United States, including for 
this purpose an independent regulatory agency, acting within the scope 
of its jurisdiction;
    (2) Any department or agency of any State or any political 
subdivision thereof, acting within the scope of its jurisdiction; or
    (3) Any foreign futures authority, as defined in section 1a(10) of 
the Act, or any department or agency of any foreign government or 
political subdivision thereof, acting within the scope of its 
jurisdiction, provided that the Commission official making the 
disclosure is satisfied that the information will not be disclosed 
except in connection with an adjudicatory action or proceeding brought 
under the laws of such foreign government or political subdivision to 
which such foreign government or political subdivision or any department 
or agency thereof, or foreign futures authority is a party.
    (b) Any disclosure made pursuant to paragraph (a) of this section 
shall be made with the concurrence of the Director of the Division of 
Enforcement or in his or her absence a Deputy Director of the Division 
of Enforcement. Provided, however, that no such concurrence is necessary 
for the Director of the Division of Market Oversight or in his or her 
absence each Deputy Director of the Division or for the Director of the 
Market Surveillance Section to release information under paragraph 
(a)(1) of this section concerning current or on-going market 
transactions or operations.
    (c) In furnishing information under this delegation pursuant to 
paragraphs (a)(1) and (2) of this section, the Commission official 
making the disclosure shall remind the department or agency involved 
that section 8(e) of the Act prohibits the disclosure by such department 
or agency of information that would separately disclose the business 
transactions or market positions of any person and trade secrets or 
names of customers except in an action or proceeding under the laws of 
the United States, the State, or a political subdivision thereof to 
which the department or the agency of either the state or political 
subdivision, the Commission, or the United States is a party.
    (d) This delegation shall not affect any other delegation which the 
Commission has made or may make, which

[[Page 249]]

authorizes any other officer or employee of the Commission to furnish 
information to governmental bodies on the Commission's behalf.
    (e) Notwithstanding the provisions of paragraph (a) of this section, 
in any case in which any employee delegated authority therein believes 
it appropriate the matter may be submitted to the Commission for its 
consideration. Nothing in this section shall prohibit the Commission 
from exercising the authority delegated in paragraph (a) of this 
section.

[48 FR 22135, May 17, 1983, as amended at 57 FR 20638, May 14, 1992; 61 
FR 1709, Jan. 23, 1996; 66 FR 1576, Jan. 9, 2001; 67 FR 62352, Oct. 7, 
2002; 73 FR 79609, Dec. 30, 2008; 78 FR 22419, Apr. 16, 2013]



Sec.  140.74  Delegation of authority to issue special calls for Series
03 Reports and Form 40.

    (a) The Commodity Futures Trading Commission hereby delegates, until 
such time as the Commission orders otherwise, to the Director of the 
Division of Market Oversight, or the Director's designee, the authority 
to issue special calls under Commission Rule 18.00 for series 03 
reports, and under Commission Rule 18.04 for a Form 40.
    (b) The Director of the Division of Market Oversight may submit any 
matter which has been delegated to the Director under paragraph (a) of 
this section to the Commission for its consideration.
    (c) Nothing in this section may prohibit the Commission, at its 
election, from exercising the authority delegated to the Director of the 
Division of Market Oversight under paragraph (a) of this section.

[50 FR 47530, Nov. 19, 1985, as amended at 67 FR 62352, Oct. 7, 2002]



Sec.  140.75  Delegation of authority to the Director of the Division 
of Clearing and Risk and Division of Swap Dealer and Intermediary Oversight.

    Pursuant to sections 2(a)(11), 8a(5) and 8(g) of the Act, the 
Commission hereby delegates to the Director of the Division of Clearing 
and Risk and Division of Swap Dealer and Intermediary Oversight and to 
such members of the Commission's staff acting under his or her direction 
as the Director may designate from time to time, the authority to 
disclose any registration information contained in the registration 
applications filed by Commission registrants or any compilation of such 
information maintained by the Commission to any department or agency of 
any State or any political subdivision thereof. Disclosure under this 
section may be made upon reasonable request made to the Commission or 
without request whenever the Director of Trading and Markets or any 
Commission employee designated by the Director to make disclosures under 
this section determines that such information may be appropriate for use 
by any department or agency of a State or political subdivision thereof. 
Notwithstanding the provisions of this section, in any case in which the 
Director of Division of Clearing and Risk and Division of Swap Dealer 
and Intermediary Oversight deems it appropriate, or in any case in which 
the Commission so requests, the Director may submit matter to the 
Commission for its consideration.

[48 FR 22136, May 17, 1983, as amended at 67 FR 62352, Oct. 7, 2002; 78 
FR 22419, Apr. 16, 2013]



Sec.  140.76  Delegation of authority to disclose information in a
receivership or bankruptcy proceeding.

    (a) Pursuant to sections 2(a)(11) and 8(b) of the Act, the 
Commission hereby delegates, until such time as the Commission orders 
otherwise, to the Director of the Division of Enforcement, the Director 
of the Division of Clearing and Risk and Division of Swap Dealer and 
Intermediary Oversight, the General Counsel or any Commission employee 
under their direction as they may designate, the authority to disclose 
data and information that would separately disclose the business 
transactions or market positions of any person and trade secrets or 
names of customers, when such disclosure is made in any receivership 
proceeding involving a receiver appointed in a judicial proceeding 
brought under the Act, or in any bankruptcy proceeding in which the 
Commission has intervened or in which the Commission has the right to 
appear and be heard under title 11 of the United States Code.

[[Page 250]]

    (b) Notwithstanding the provisions of paragraph (a), in any case in 
which the Director of the Division of Enforcement, the Director of the 
Division of Clearing and Risk and Division of Swap Dealer and 
Intermediary Oversight, the General Counsel, or any employee designated 
by them to make disclosures pursuant to this section believes it 
appropriate, the matter may be submitted to the Commission for 
consideration. In addition, the Commission reserves to itself the 
authority to determine whether to grant a request for information in any 
particular case.

[49 FR 4464, Feb. 7, 1984, as amended at 67 FR 62352, Oct. 7, 2002; 78 
FR 22419, Apr. 16, 2013]



Sec.  140.77  Delegation of authority to determine that applications 
for contract market designation, swap execution facility registration,
or swap data repository registration are materially incomplete.

    (a) The Commodity Futures Trading Commission hereby delegates, until 
such time as the Commission orders otherwise, to the Director of the 
Division of Market Oversight or the Director's designees, the authority 
to determine that an application for contract market designation, swap 
execution facility registration, or swap data repository registration is 
materially incomplete under section 6 of the Commodity Exchange Act and 
to so notify the applicant.
    (b) The Director of the Division of Market Oversight may submit any 
matter which has been delegated to the director under paragraph (a) of 
this section to the Commission for its consideration.
    (c) Nothing in this section may prohibit the Commission, at its 
election, from exercising the authority delegated to the Director of the 
Division of Market Oversight under paragraph (a) of this section.

[48 FR 34946, Aug. 2, 1983, as amended at 57 FR 20638, May 14, 1992; 67 
FR 62353, Oct. 7, 2002; 77 FR 66347, Nov. 2, 2012]



Sec.  140.80  Disclosure of information pursuant to a subpoena or summons.

    The Commission shall provide notice to any person who has submitted 
information to the Commission when a summons or subpoena seeking the 
submitted information is received by the Commission. Notice ordinarily 
will be provided by mailing a copy of the summons or subpoena to the 
last known home or business address of the person who submitted the 
information. However, under circumstances which would make notice by 
mail unduly burdensome or costly, notice of the existence of the summons 
or subpoena may be affected by alternative means such as publication in 
the Federal Register. The Commission will not disclose such information 
until the expiration of at least fourteen days from the date of mailing, 
or such other notice as is given. This section shall not apply to (a) 
Congressional subpoenas or Congressional requests for information, (b) 
information which is considered by the Commission to be public 
information, or (c) information as to which the submitter has waived the 
notice provision of this section.

[49 FR 4464, Feb. 7, 1984]



Sec.  140.81  [Reserved]



Sec.  140.91  Delegation of authority to the Director of the 
Division of Clearing and Risk and to the Director of the Division
of Swap Dealer and Intermediary Oversight.

    (a) The Commission hereby delegates, until such time as the 
Commission orders otherwise, the following functions to the Director of 
the Division of Clearing and Risk and Division of Swap Dealer and 
Intermediary Oversight and to such members of the Commission's staff 
acting under his direction as he may designate from time to time:
    (1) All functions reserved to the Commission in Sec.  1.10 of this 
chapter, except for those relating to nonpublic treatment of reports set 
forth in Sec.  1.10(g) of this chapter;
    (2) All functions reserved to the Commission in Sec.  1.12 of this 
chapter;
    (3) All functions reserved to the Commission in Sec.  1.14 of this 
chapter;
    (4) All functions reserved to the Commission in Sec.  1.15 of this 
chapter;
    (5) All functions reserved to the Commission in Sec.  1.16 of this 
chapter; and
    (6) All functions reserved to the Commission in Sec.  1.17 of this 
chapter, except for those relating to non-enumerated

[[Page 251]]

cover cases set forth in Sec.  1.17(j)(3) of this chapter.
    (7) All functions reserved to the Commission in Sec.  1.20 of this 
chapter.
    (8) All functions reserved to the Commission in Sec.  1.25 of this 
chapter.
    (9) All functions reserved to the Commission in Sec.  1.26 of this 
chapter.
    (10) All functions reserved to the Commission in Sec.  1.52 of this 
chapter.
    (11) All functions reserved to the Commission in Sec.  30.7 of this 
chapter.
    (12) All functions reserved to the Commission in Sec.  41.41 of this 
chapter. Any action taken pursuant to the delegation of authority under 
this paragraph (a)(12) shall be made with the concurrence of the General 
Counsel or, in his or her absence, a Deputy General Counsel.
    (b) The Director of the Division of Clearing and Risk and the 
Director of the Division of Swap Dealer and Intermediary Oversight may 
submit any matter which has been delegated to him or her under paragraph 
(a) of this section to the Commission for its consideration.

[44 FR 13460, Mar. 12, 1979, as amended at 60 FR 8195, Feb. 13, 1995; 66 
FR 43087, Aug. 17, 2001; 66 FR 53523, Oct. 23, 2001; 67 FR 62353, Oct. 
7, 2002; 78 FR 22419, Apr. 16, 2013; 78 FR 68655, Nov. 14, 2013; 79 FR 
44126, July 30, 2014]



Sec.  140.92  Delegation of authority to grant registrations and renewals thereof.

    (a) The Commission hereby delegates, until such time as the 
Commission orders otherwise, to the Director of the Division of Clearing 
and Risk and Division of Swap Dealer and Intermediary Oversight and to 
such members of the Commission's staff acting under his direction as he 
may designate, the authority to grant registrations and renewals 
thereof.
    (b) The Director of the Division of Clearing and Risk and Division 
of Swap Dealer and Intermediary Oversight may submit any matter which 
has been delegated to him under paragraph (a) of this section to the 
Commission for its consideration.
    (c) Nothing in this section may prohibit the Commission, at its 
election, from exercising the authority delegated to the Director of the 
Division of Clearing and Risk and Division of Swap Dealer and 
Intermediary Oversight under paragraph (a) of this section.

[45 FR 20785, Mar. 31, 1980, as amended at 67 FR 62353, Oct. 7, 2002; 78 
FR 22419, Apr. 16, 2013]



Sec.  140.93  Delegation of authority to the Director of the Division 
of Swap Dealer and Intermediary Oversight.

    (a) The Commission hereby delegates, until such time as the 
Commission orders otherwise, the following functions to the Director of 
the Division of Clearing and Risk and Division of Swap Dealer and 
Intermediary Oversight and to such members of the Commission's staff 
acting under his direction as he may designate from time to time:
    (1) All functions reserved to the Commission in Sec.  4.12(a) of 
this chapter.
    (2) All functions reserved to the Commission in Sec.  4.22(g)(3) of 
this chapter.
    (3) All functions reserved to the Commission in Sec.  4.20(a) of 
this chapter.
    (4) All functions reserved to the Commission in Sec.  4.5(c)(2)(ii) 
of this chapter.
    (5) All functions reserved to the Commission in Sec.  4.6(b) of this 
chapter.
    (6) All functions reserved to the Commission in Sec. Sec.  23.150 
through 23.161 of this chapter.
    (b) The Director of the Division of Clearing and Risk and Division 
of Swap Dealer and Intermediary Oversight may submit any matter which 
has been delegated to him under paragraph (a) of this section to the 
Commission for its consideration.
    (c) Nothing in this section may prohibit the Commission, at its 
election, from exercising the authority delegated to the Director of the 
Division of Clearing and Risk and Division of Swap Dealer and 
Intermediary Oversight under paragraph (a) of this section.

[46 FR 26023, May 8, 1981, as amended at 46 FR 34311, July 1, 1981; 50 
FR 15884, Apr. 23, 1985; 52 FR 41986, Nov. 2, 1987; 67 FR 62353, Oct. 7, 
2002; 70 FR 2566, Jan. 14, 2005; 78 FR 22419, Apr. 16, 2013; 81 FR 704, 
Jan. 6, 2016]



Sec.  140.94  Delegation of authority to the Director of the Division 
of Swap Dealer and Intermediary Oversight and the Director of the 
Division of Clearing and Risk.

    (a) The Commission hereby delegates, until such time as the 
Commission orders otherwise, the following

[[Page 252]]

functions to the Director of the Division of Swap Dealer and 
Intermediary Oversight and to such members of the Commission's staff 
acting under his or her direction as he or she may designate from time 
to time:
    (1) All functions reserved to the Commission in Sec.  5.7 of this 
chapter;
    (2) All function reserved to the Commission in Sec.  5.10 of this 
chapter;
    (3) All functions reserved to the Commission in Sec.  5.11 of this 
chapter;
    (4) All functions reserved to the Commission in Sec.  5.12 of this 
chapter, except for those relating to nonpublic treatment of reports set 
forth in Sec.  5.12(i) of this chapter; and
    (5) All functions reserved to the Commission in Sec.  5.14 of this 
chapter.
    (b) The Director of the Division of Swap Dealer and Intermediary 
Oversight may submit any matter which has been delegated to him or her 
under paragraph (a) of this section to the Commission for its 
consideration.
    (c) The Commission hereby delegates, until such time as the 
Commission orders otherwise, the following function to the Director of 
the Division of Clearing and Risk and to such members of the 
Commission's staff acting under his or her direction as he or she may 
designate from time to time:
    (1) All functions reserved to the Commission in Sec. Sec.  
39.3(a)(1), (a)(2), (a)(3), 39.3(b)(1), and 39.3(f)(4) of this chapter;
    (2) All functions reserved to the Commission in Sec.  39.4(a) of 
this chapter;
    (3) All functions reserved to the Commission in Sec.  39.5(b)(2), 
(b)(3)(ix), (c)(1), and (d)(3) of this chapter;
    (4) All functions reserved to the Commission in Sec.  
39.10(c)(4)(iv) of this chapter;
    (5) All functions reserved to the Commission in Sec.  
39.11(b)(1)(vi), (b)(2)(ii), (c)(1), (c)(2), (f)(1), and (f)(4) of this 
chapter;
    (6) All functions reserved to the Commission in Sec.  
39.12(a)(5)(i)(B) of this chapter;
    (7) All functions reserved to the Commission in Sec.  
39.13(g)(8)(ii), (h)(1)(i)(C), (h)(1)(ii), (h)(3)(i), (h)(3)(ii), and 
(h)(5)(i)(A) of this chapter;
    (8) The authority to request additional information in support of a 
rule submission under Sec.  39.15(b)(2)(iii)(A) of this chapter and in 
support of a petition pursuant to section 4d of the Act under Sec.  
39.15(b)(2)(iii)(B) of this chapter;
    (9) All functions reserved to the Commission in Sec.  
39.19(c)(3)(iv), (c)(5)(i), (c)(5)(ii), and (c)(5)(iii) of this chapter;
    (10) All functions reserved to the Commission in Sec.  39.20(a)(5); 
and
    (11) All functions reserved to the Commission in Sec.  39.21(d) of 
this chapter.
    (12) All functions reserved to the Commission in Sec.  39.31 of this 
chapter; and
    (13) The authority to approve the requests described in Sec. Sec.  
39.34(d) and 39.39(f) of this chapter.
    (d) The Director of Clearing and Risk may submit any matter which 
has been delegated to him or her under paragraph (c) of this section to 
the Commission for its consideration.
    (e) Nothing in this section may prohibit the Commission, at its 
election, from exercising the authority delegated to the Director of the 
Division of Swap Dealers and Intermediary Oversight under paragraph (a) 
or to the Director of the Division of Clearing and Risk under paragraph 
(c) of this section.

[78 FR 22420, Apr. 16, 2013, as amended at 78 FR 72514, Dec. 2, 2013]



Sec.  140.95  Delegation of authority with respect to withdrawals 
from registration.

    (a) The Commission hereby delegates, until such time as the 
Commission orders otherwise, to the Director of the Division of Clearing 
and Risk and Division of Swap Dealer and Intermediary Oversight. and to 
such members of the Commission's staff acting under his direction as he 
may designate, the authority to review, postpone, condition, deny, or 
otherwise act upon a request for withdrawal from registration.
    (b) The Director of the Division of Clearing and Risk and Division 
of Swap Dealer and Intermediary Oversight. may submit any matter which 
has been delegated to him under paragraph (a) of this section to the 
Commission for its consideration.
    (c) Nothing in this section shall prohibit the Commission, at its 
election, from exercising the authority delegated to the Director of the 
Division of Clearing and Risk and Division of Swap

[[Page 253]]

Dealer and Intermediary Oversight. under paragraph (a) of this section.

[46 FR 48918, Oct. 5, 1981, as amended at 67 FR 62353, Oct. 7, 2002; 78 
FR 22419, Apr. 16, 2013]



Sec.  140.96  Delegation of authority to publish in the Federal Register.

    (a) The Commodity Futures Trading Commission hereby delegates, until 
such time as the Commission orders otherwise, to the Director of the 
Division of Market Oversight or the Director's designee, with the 
concurrence of the General Counsel or the General Counsel's designee, 
the authority to publish in the Federal Register notice of the 
availability for comment of the proposed terms and conditions of 
applications for contract market designation, swap execution facility 
and swap data repository registration, and to determine to publish, and 
to publish, requests for public comment on proposed exchange, swap 
execution facility, or swap data repository rules, and rule amendments, 
when there exists novel or complex issues that require additional time 
to analyze, an inadequate explanation by the submitting registered 
entity, or a potential inconsistency with the Act, including regulations 
under the Act.
    (b) The Commodity Futures Trading Commission hereby delegates, until 
such time as the Commission orders otherwise, to the Director of the 
Division of Market Oversight or the Director's designee, and to the 
Director of the Director of Swap Dealer and Intermediary Oversight or 
the Director's designee, and to the Director of the Division of Clearing 
and Risk or the Director's designee or the Director's designee, with the 
concurrence of the General Counsel or the General Counsel's designee, 
the authority to determine to publish, and to publish, in the Federal 
Register, requests for public comment on proposed exchange and self-
regulatory organization rule amendments when publication of the proposed 
rule amendment is in the public interest and will assist the Commission 
in considering the views of interested persons.
    (c) The Director of the Division of Market Oversight or the Director 
of the Division of Swap Dealer and Intermediary Oversight or the 
Director of the Division of Clearing and Risk may submit any matter 
which has been delegated to such Director under paragraphs (a) or (b) of 
this section to the Commission for its consideration.
    (d) Nothing in this section may prohibit the Commission, at its 
election, from exercising the authority delegated to the Director of the 
Division of Market Oversight and to the Director of the Division of Swap 
Dealer and Intermediary Oversight or the Director of the Division of 
Clearing and Risk under paragraphs (a) and (b) of this section.

[50 FR 47532, Nov. 19, 1985, as amended at 55 FR 35897, Sept. 4, 1990; 
57 FR 20638, May 14, 1992; 67 FR 62353, Oct. 7, 2002; 7 FR 66347, Nov. 
2, 2012; 78 FR 22419, Apr. 16, 2013]



Sec.  140.97  Delegation of authority regarding requests for 
classification of positions as bona fide hedging.

    (a) The Commodity Futures Trading Commission hereby delegates, until 
such time as the Commission orders otherwise, to the Director of the 
Division of Market Oversight, or the Director's designee, all functions 
reserved to the Commission in Sec. Sec.  1.47 and 1.48 of this chapter.
    (b) The Director of the Division of Market Oversight may submit any 
matter which has been delegated to the Director under paragraph (a) of 
this section to the Commission for its consideration.
    (c) Nothing in this section may prohibit the Commission, at its 
election, from exercising the authority delegated to the Director of the 
Division of Market Oversight under paragraph (a) of this section.

[57 FR 12874, Apr. 14, 1992, as amended at 67 FR 62353, Oct. 7, 2002]



Sec.  140.98  Publication of no-action, interpretative and exemption 
letters and other written communications.

    (a) Except as provided in paragraphs (b) and (c) of this section, 
and except for applications for orders granting exemptions submitted 
pursuant to section 4(c) of the Commodity Exchange Act and any written 
responses thereto, each written response by the Commission or its staff 
to a letter or other written communication requesting:

[[Page 254]]

    (1) Interpretative legal advice with respect to the Commodity 
Exchange Act or any rule, regulation or order issued or adopted by the 
Commission thereunder;
    (2) A statement that, on the basis of the facts stated in such 
letter or other communication, the staff would not recommend that the 
Commission take any enforcement action; or
    (3) An exemption, on the basis of the facts stated in such letter or 
other communication, from the provisions of the Commodity Exchange Act 
or any rules, or regulations or orders issued or adopted by the 
Commission thereunder; shall be made available, together with the letter 
or other written communication making the request, for inspection and 
copying by any person as soon as practicable after the response has been 
sent or given to the person requesting it.
    (b) Any person submitting a letter or other written communication 
making such a request may also submit therewith a request that the 
letter or other written communication, as well as any Commission or 
staff response thereto, be accorded confidential treatment for a 
specified period of time, not exceeding 120 days from the date of the 
response thereto, together with a statement setting forth the 
considerations upon which the request for such treatment is based. If 
the staff determines that the request is reasonable and appropriate it 
will be granted and the letter or other written communication as well as 
the response thereto will not be made available for public inspection or 
copying until the expiration of the specified period. If it appears to 
the staff that the request for confidential treatment should be denied, 
the staff shall so advise the person making the request and such person 
may withdraw the letter or other written communication within 30 days 
thereafter. In such case, no response will be sent or given and the 
letter or other written communication shall remain in the Commission's 
files but will not be made public pursuant to this section. If such 
letter or other written communication is not so withdrawn, it shall be 
deemed to be available for public inspection and copying together with 
any written response thereto.
    (c) Notwithstanding the provisions of paragraphs (a) and (b) of this 
section, no portion of a letter or other written communication received 
by the Commission or its staff of the type described in paragraph (a) of 
this section, or any written response thereto, shall be made available 
for inspection and copying or otherwise published which would separately 
disclose the business transactions or market positions of any person and 
trade secrets or names of customers, except in accordance with the 
provisions of section 8 of the Commodity Exchange Act.

[57 FR 61291, Dec. 24, 1992]



Sec.  140.99  Requests for exemptive, no-action and interpretative letters.

    (a) Definitions. For the purpose of this section:
    (1) Exemptive letter means a written grant of relief issued by the 
staff of a Division of the Commission from the applicability of a 
specific provision of the Act or of a rule, regulation or order issued 
thereunder by the Commission. An exemptive letter may only be issued by 
staff of a Division when the Commission itself has exemptive authority 
and that authority has been delegated by the Commission to the Division 
in question. An exemptive letter binds the Commission and its staff with 
respect to the relief provided therein. Only the Beneficiary may rely 
upon the exemptive letter.
    (2) No-action letter means a written statement issued by the staff 
of a Division of the Commission or of the Office of the General Counsel 
that it will not recommend enforcement action to the Commission for 
failure to comply with a specific provision of the Act or of a 
Commission rule, regulation or order if a proposed transaction is 
completed or a proposed activity is conducted by the Beneficiary. A no-
action letter represents the position only of the Division that issued 
it, or the Office of the General Counsel if issued thereby. A no-action 
letter binds only the issuing Division or the Office of the General 
Counsel, as applicable, and not the Commission or other Commission 
staff. Only the Beneficiary may rely upon the no-action letter.
    (3) Interpretative letter means written advice or guidance issued by 
the staff

[[Page 255]]

of a Division of the Commission or the Office of the General Counsel. An 
interpretative letter binds only the issuing Division or the Office of 
the General Counsel, as applicable, and does not bind the Commission or 
other Commission staff. An interpretative letter may be relied upon by 
persons in addition to the Beneficiary.
    (4) Letter means an exemptive, no-action or interpretative letter.
    (5) Division means the Division of Swap Dealer and Intermediary 
Oversight, the Division of Clearing and Risk or the Division of Market 
Oversight.
    (b) General requirements. (1) Issuance of a Letter is entirely 
within the discretion of Commission staff.
    (2) Each request for a Letter must comply with the requirements of 
this section. Commission staff may reject or decline to respond to a 
request that does not comply with the requirements of this section.
    (3) The request must relate to a proposed transaction or a proposed 
activity. Absent extraordinary circumstances, Commission staff will not 
issue a Letter based upon transactions or activities that have been 
completed or activities that have been conducted prior to the date upon 
which the request is filed with the Commission.
    (4) The request must be made by or on behalf of the person whose 
activities or transactions are the subject of the request. Commission 
staff will not respond to a request for a Letter that is made by or on 
behalf of an unidentified person.
    (5)(i) The request must set forth as completely as possible all 
material facts and circumstances giving rise to the request.
    (ii) Commission staff will not respond to a request based on a 
hypothetical situation. However, a requester may set forth one or more 
alternative structures or fact situations for a proposed transaction or 
activity; Provided, That the request complies with this section with 
respect to each alternative structure or fact situation.
    (c) Information requirements. Each request for a Letter must comply 
with the following information requirements:
    (1)(i) A request made by the person on whose behalf the Letter is 
sought must contain:
    (A) The name, main business address, main telephone number and, if 
applicable, the National Futures Association registration identification 
number of such person; and
    (B) The name and, if applicable, the National Futures Association 
registration identification number of each other person for whose 
benefit the person is seeking the Letter.
    (ii) When made by a requester other than the person on whose behalf 
the Letter is sought, the request must contain:
    (A) The name, main business address and main business telephone 
number of the requester;
    (B) The name and, if applicable, the National Futures Association 
registration identification number of the person on whose behalf the 
Letter is sought; and
    (C) The name and, if applicable, the National Futures Association 
registration identification number of each other person for whose 
benefit the requester is seeking the Letter.
    (iii) The request must provide the name, address and telephone 
number of a contact person from whom Commission staff may obtain 
additional information if necessary.
    (2) The section number of the particular provision of the Act and/or 
Commission rules, regulations or orders to which the request relates 
must be set forth in the upper right-hand corner of the first page of 
the request.
    (3) The request must be accompanied by:
    (i) A certification by a person with knowledge of the facts that the 
material facts as represented in the request are true and complete. The 
following form of certification is sufficient for this purpose:

    I hereby certify that the material facts set forth in the attached 
letter dated -------- are true and complete to the best of my knowledge.
(name and title)________________________________________________________


and
    (ii) An undertaking made by the person on whose behalf the Letter is 
sought or by that person's authorized representative that, if at any 
time

[[Page 256]]

prior to issuance of a Letter, any material representation made in the 
request ceases to be true and complete, the person who made the 
undertaking will ensure that Commission staff is informed promptly in 
writing of all materially changed facts and circumstances. If a material 
change in facts or circumstances occurs subsequent to issuance of a 
Letter, the person on whose behalf the Letter is sought (or that 
person's authorized representative at the time of the change) must 
promptly so inform Commission staff.
    (4) The request must identify the type of relief requested and 
Letter sought and must clearly state why a Letter is needed. The request 
must identify all relevant legal and factual issues and discuss the 
legal and public policy bases supporting issuance of the Letter.
    (5) The request must contain references to all relevant authorities, 
including applicable provisions of the Act, Commission rules, 
regulations and orders, judicial decisions, administrative decisions, 
relevant statutory interpretations and policy statements. Adverse 
authority must be cited and discussed.
    (6) The request must identify prior publicly available Letters 
issued by Commission staff in response to circumstances similar to those 
surrounding the request (including adverse Letters), and must identify 
any conditions imposed by prior Letters as prerequisites for the 
issuance of those Letters. Citation of a representative sample of prior 
Letters is sufficient where a comprehensive recitation of prior Letters 
on a given topic would be repetitious or would not assist the staff in 
considering the request.
    (7) Requests may ask that, if the requested exemptive relief, no-
action position or interpretative guidance is denied, the staff consider 
granting alternative relief or adopting an alternative position.
    (d) Filing requirements. Each request for a Letter must comply with 
the following filing requirements:
    (1) The request must be in writing and signed.
    (2)(i) A request for a Letter relating to the provisions of the Act 
or the Commission's rules, regulations or orders governing designated 
contract markets, registered swap execution facilities, registered swap 
data repositories, registered foreign boards of trade, the nature of 
particular transactions and whether they are exempt or excluded from 
being required to be traded on one of the foregoing entities, made 
available for trading determinations, position limits, hedging 
exemptions, position aggregation treatment or the reporting of market 
positions shall be filed with the Director, Division of Market 
Oversight, Commodity Futures Trading Commission, Three Lafayette Centre, 
1155 21st Street NW., Washington, DC 20581.
    (ii) A request for a Letter relating to the provisions of the Act or 
the Commission's rules, regulations or orders governing or related to 
derivatives clearing organizations and other central counterparties, the 
clearing process, the clearing requirement determination, Commission 
regulation 1.25 jointly with the Director of the Division of Swap Dealer 
and Intermediary Oversight, risk assessment, financial surveillance, the 
end user exemption, and bankruptcy shall be filed with the Director, 
Division of Clearing and Risk, Commodity Futures Trading Commission, 
Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581.
    (iii) A request for a Letter relating to all other provisions of the 
Act or Commission rules, including Commission regulation 1.25 jointly 
with the Director of the Division of Clearing and Risk, shall be filed 
with the Director, Division of Swap Dealer and Intermediary Oversight, 
Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st 
Street NW., Washington, DC 20581.
    (iv) The requests described in paragraphs (d)(2)(i) through (iii) of 
this section must be submitted electronically using the email address 
[email protected] (for a request filed with the Division of Market 
Oversight), [email protected] (for a request filed with the Division 
of Clearing and Risk), or [email protected] (for a request filed with 
the Division of Swap Dealer and Intermediary Oversight), as appropriate, 
and a properly signed

[[Page 257]]

paper copy of the request must be provided to the Division of Market 
Oversight, the Division of Clearing and Risk, or the Division of Swap 
Dealer and Intermediary Oversight, as appropriate, within ten days for 
purposes of verification of the electronic submission.
    (e) Form of staff response. No response to any request governed by 
this section is effective unless it is in writing, signed by appropriate 
Commission staff, and transmitted in final form to the recipient. 
Failure by Commission staff to respond to a request for a Letter does 
not constitute approval of the request. Nothing in this section shall 
preclude Commission staff from responding to a request for a Letter by 
way of endorsement or any other abbreviated, written form of response.
    (f) Withdrawal of requests. (1) A request for a Letter may be 
withdrawn by filing with Commission staff a written request for 
withdrawal, signed by the person on whose behalf the Letter was sought 
or by that person's authorized representative, that states whether the 
person on whose behalf the Letter was sought will proceed with the 
proposed transaction or activity.
    (2) Where a request has been submitted by an authorized 
representative of the person on whose behalf a Letter is sought, the 
authorized representative may withdraw from representation at any time 
without explanation, Provided, That Commission staff is promptly so 
notified.
    (g) Failure to pursue a request. In the event that Commission staff 
requests additional information or analysis from a requester and the 
requester does not provide that information or analysis within thirty 
calendar days, Commission staff generally will issue a denial of the 
request; Provided, however, that Commission staff in its discretion may 
issue an extension of time to provide the information and or analysis.
    (h) Confidential treatment. Confidential treatment of a request for 
a Letter must be requested separately in accordance with Sec.  140.98 or 
Sec.  145.9 of this chapter, as applicable.
    (i) Applicability to other sections. The provisions of this section 
shall not affect the requirements of, or otherwise be applicable to:
    (1) Notice filings required to be made to claim relief from the Act 
or from a Commission rule, regulation, or order including, without 
limitations, Sec. Sec.  4.5, 4.7(a), 4.7(b), 4.12(b), 4.13(b) and 
4.14(a)(8) of this chapter;
    (2) Requests for exemption pursuant to section 4(c) of the Act; or
    (3) Requests for exemption pursuant to Sec.  41.33 of this chapter.

[63 FR 68181, Dec. 10, 1998, as amended at 65 FR 47859, Aug. 4, 2000; 66 
FR 44967, Aug. 27, 2001; 67 FR 62353, Oct. 7, 2002; 69 FR 41426, July 9, 
2004; 77 FR 66347, Nov. 2, 2012; 78 FR 22419, Apr. 16, 2013; 80 FR 
59578, Oct. 2, 2015]



  Subpart C_Regulation Concerning Conduct of Members and Employees and 
             Former Members and Employees of the Commission

    Authority: 7 U.S.C. 4a(f) and (j), 12a(5), and 13, as amended by the 
Commodity Futures Modernization Act of 2000, Appendix E of Pub. L. 106-
554, 114 Stat. 2763 (2000).

    Source: 41 FR 27511, July 2, 1976, unless otherwise noted.



Sec.  140.735-1  Authority and purpose.

    This subpart sets forth specific standards of conduct required of 
Commission members, employees of the Commission, and special government 
employees as well as regulations concerning former Commissioners, 
employees, and special government employees of the Commodity Futures 
Trading Commission. These rules are separate from and in addition to the 
Office of Government Ethics' conduct rules, Standards of Ethical Conduct 
for Employees of the Executive Branch, 5 CFR part 2635. In addition, 
this subpart contains references to various statutes governing employee 
conduct in order to aid Commission members, employees of the Commission 
and others in their understanding of statutory restrictions and 
requirements. \1\ Absent

[[Page 258]]

compelling countervailing reasons, all Commission members and employees 
are subject to all the terms of this section.
---------------------------------------------------------------------------

    \1\ These references, however, do not purport to cover all 
restrictions and requirements, and paraphrased restatements of statutory 
provisions are not intended to be, and should not be construed as, 
verbatim quotations of the law. Statutory text should be consulted in 
any situation in which it might apply.

[67 FR 5939, Feb. 8, 2002]



Sec.  140.735-2  Prohibited transactions.

    (a) Application. This section applies to all transactions effected 
by or on behalf of a Commission member or employee of the Commission, 
including transactions for the account of other persons effected by the 
member or employee, directly or indirectly under a power of attorney or 
otherwise. A member or employee shall be deemed to have a sufficient 
interest in the transactions of his or her spouse, minor child, or other 
relative who is a resident of the immediate household of the member or 
employee so that such transactions must be reported and are subject to 
all the terms of this section.
    (b) Prohibitions. Except as otherwise provided in this subsection, 
no member or employee of the Commission shall:
    (1) Participate, directly or indirectly, in any transaction:
    (i) In swaps;
    (ii) In commodity futures;
    (iii) In retail forex transactions, as that term is defined in Sec.  
5.1(m) of this chapter;
    (iv) Involving any commodity that is of the character of or which is 
commonly known to the trade as an option, privilege, indemnity, bid, 
offer, put, call, advance guaranty, or decline guaranty; or
    (v) For the delivery of any commodity under a standardized contract 
commonly known to the trade as a margin account, margin contract, 
leverage account, or leverage contract, or under any contract, account, 
arrangement, scheme, or device that the Commission determines serves the 
same function or functions as such a standardized contract, or is 
marketed or managed in substantially the same manner as such a 
standardized contract;
    (2) Effect any purchase or sale of a commodity option, futures 
contract, or swap involving a security or group of securities;
    (3) Sell a security which he or she does not own or consummate a 
sale by the delivery of a security borrowed by or for his or her 
account;
    (4) Participate, directly or indirectly, in any investment 
transaction in an actual commodity if:
    (i) Nonpublic information is used in the investment transaction;
    (ii) It is prohibited by rule or regulation of the Commission; or
    (iii) It is effected by means of any instrument regulated by the 
Commission and is not otherwise permitted by an exception under this 
section;
    (5) Purchase or sell any securities of a company which, to his or 
her knowledge, is involved in any:
    (i) Pending investigation by the Commission;
    (ii) Proceeding before the Commission or to which the Commission is 
a party;
    (iii) Other matter under consideration by the Commission that could 
have a direct and predictable effect upon the company; or
    (6) Recommend or suggest to another person any transaction in which 
the member or employee is not permitted to participate in any 
circumstance where the member or employee could reasonably expect to 
benefit or where the member or employee has or may have control or 
substantial influence over such person.
    (c) Exception for farming, ranching, and natural resource 
operations. The prohibitions in paragraphs (b)(1)(i), (ii), and (iv) of 
this section shall not apply to a transaction in connection with any 
farming, ranching, oil and gas, mineral rights, or other natural 
resource operation in which the member or employee has a financial 
interest, if he or she is not involved in the decision to engage in, and 
does not have prior knowledge of, the actual futures, commodity option, 
or swap transaction and has previously notified the General Counsel \2\ 
in writing of the nature of the operation, the extent of the member's or 
employee's interest, the types of

[[Page 259]]

transactions in which the operation may engage, and the identity of the 
person or persons who will make trading decisions for the operation; \3\ 
or
---------------------------------------------------------------------------

    \2\ As used in this subpart, ``General Counsel'' refers to the 
General Counsel in his or her capacity as counselor for the Commission 
and designated agency ethics official for the Commission, and includes 
his or her designee and the alternate designated agency ethics official 
appointed by the agency head pursuant to 5 CFR 2638.202.
    \3\ Although not required, if they choose to do so, members or 
employees may use powers of attorney or other arrangements in order to 
meet the notice requirements of, and to assure that they have no control 
or knowledge of, futures, commodity option, or swap transactions 
permitted under paragraph (c) of this section. A member or employee 
considering such arrangements should consult with the Office of General 
Counsel in advance for approval. Should a member or employee gain 
knowledge of an actual futures, commodity option, or swap transaction 
entered into by an operation described in paragraph (c) of this section 
that has already taken place and the market position represented by that 
transaction remains open, he or she should promptly report that fact and 
all other details to the General Counsel and seek advice as to what 
action, including recusal from any particular matter that will have a 
direct and predictable effect on the financial interest in question, may 
be appropriate.
---------------------------------------------------------------------------

    (d) Other exceptions. The prohibitions in paragraphs (b)(1), (2) and 
(3) of this section shall not apply to:
    (1) A transaction entered into by any publicly-available pooled 
investment vehicle (such as a mutual fund or exchange-traded fund) other 
than one operated by a person who is a commodity pool operator with 
respect to such entity if the direct or indirect ownership interest of 
the member or employee neither exercises control nor has the ability to 
exercise control over the transactions entered into by such vehicle; \4\
---------------------------------------------------------------------------

    \4\ Section 9(c) of the Commodity Exchange Act makes it a felony for 
any member or employee, or agent thereof, to participate, directly or 
indirectly in, inter alia, any transaction in commodity futures, option, 
leverage transaction, or other arrangement that the Commission 
determines serves the same function, unless authorized to do so by 
Commission rule or regulation. 17 CFR 4.5 excludes certain otherwise 
regulated persons from the definition of ``commodity pool operator'' 
with respect to operation of specific investment entities enumerated in 
the regulation.
---------------------------------------------------------------------------

    (2) The acceptance or exercise of any stock option or similar right 
granted by an employer as part of a compensation package to a spouse or 
minor child or other related member of the immediate household of a 
member or employee, or to the exercise of any stock option or similar 
right granted to the member or employee by a previous employer prior to 
commencement of the member's or employee's tenure with the Commission as 
part of such member's or employee's compensation package from such 
previous employer;
    (3) A transaction by any trust or estate of which the member or 
employee or the spouse, minor child, or other related member of the 
immediate household of the member or employee is solely a beneficiary, 
has no power to control, and does not in fact control or advise with 
respect to the investments of the trust or estate;
    (4) The exercise of any privilege to convert or exchange securities, 
of rights accruing unconditionally by virtue of ownership of other 
securities (as distinguished from a contingent right to acquire 
securities not subscribed for by others), or of rights in order to round 
out fractional shares in securities;
    (5) The acceptance of stock dividends on securities already owned, 
the reinvestment of cash dividends on a security already owned, or the 
participation in a periodic investment plan when the original purchase 
was otherwise consistent with this rule; or
    (6) Investment in any fund established pursuant to the Federal 
Employees Retirement System.
    (e) No prohibition on stocks or funds. Nothing in paragraph (b)(1) 
or (2) of this section shall prohibit a member or employee from 
purchasing, selling, or retaining any share that represents ownership of 
a publicly-owned corporation or interest in a publicly-available pooled 
investment vehicle containing any such shares (such as a mutual fund or 
exchange-traded fund) other than one operated by a person who is a 
commodity pool operator with respect to such pooled investment vehicle, 
regardless of whether any security futures product may at any time be or 
have been based upon shares of such corporation or pooled investment 
vehicle, and regardless of whether such pooled investment vehicle may, 
by design or effect, track or follow any group of securities that also 
underlies a futures contract.

[[Page 260]]

    (f) Exception applicable to legally separated employees. This 
section shall not apply to transactions of a legally separated spouse of 
a member or employee, including transactions for the benefit of a minor 
child, if the member or employee has no power to control, and does not, 
in fact, advise or control with respect to such transactions. If the 
member or employee has actual or constructive knowledge of such 
transactions of a legally separated spouse or for the benefit of a minor 
child, the disqualification provisions of Sec.  140.735-2a(d)(2)(i)-
(iii) and 18 U.S.C. 208 are applicable.

[67 FR 5939, Feb. 8, 2002, as amended at 77 FR 66347, Nov. 2, 2012]



Sec.  140.735-2a  Prohibited interests.

    (a) Application. This section applies to all financial interests of 
a Commission member or employee of the Commission, including financial 
interests held by the member or employee for the account of other 
persons. A member or employee shall be deemed to have a sufficient 
interest in the financial interests of his or her spouse, minor child, 
or other relative who is a resident of the immediate household of the 
member or employee, so that such financial interests must be reported 
and are subject to all the terms of this section.
    (b) Prohibitions. Except as otherwise provided in this subsection, 
no member or employee of the Commission shall:
    (1) Have a financial interest, through ownership of securities or 
otherwise, in any person \5\ registered with the Commission (including 
futures commission merchants, associated persons and agents of futures 
commission merchants, floor brokers, commodity trading advisors and 
commodity pool operators, and any other persons required to be 
registered in a fashion similar to any of the above under the Commodity 
Exchange Act or pursuant to any rule or regulation promulgated by the 
Commission), or any contract market, swap execution facility, swap data 
repository, board of trade, or other trading facility, or any 
derivatives clearing organization subject to regulation or oversight by 
the Commission; \6\
---------------------------------------------------------------------------

    \5\ As defined in section 1a(38) of the Commodity Exchange Act and 
17 CFR 1.3(u) thereunder, a ``person'' includes an individual, 
association, partnership, corporation and a trust.
    \6\ Attention is directed to 18 U.S.C. 208.
    \7\ [Reserved]
---------------------------------------------------------------------------

    (c) Exceptions. The prohibitions in paragraph (b) of this section 
shall not apply to:
    (1) A financial interest in any publicly-available pooled investment 
vehicle (such as a mutual fund or exchange-traded fund) other than one 
operated by a person who is a commodity pool operator with respect to 
such entity if such vehicle does not have invested, or indicate in its 
prospectus the intent to invest, ten percent or more of its assets in 
securities of persons described in paragraph (b) of this section and the 
member or employee neither exercises control nor has the ability to 
exercise control over the financial interests held in such vehicle;
    (2) A financial interest in any corporate parent or affiliate of a 
person described in paragraph (b)(1) of this section if the operations 
of such person provide less than ten percent of the gross revenues of 
the corporate parent or affiliate; \8\
---------------------------------------------------------------------------

    \8\ It is the member's or employee's responsibility to monitor his 
or her financial interests and those of a spouse or minor child or other 
related member of his or her immediate household, to promptly report 
relevant changes to the General Counsel in writing, and to seek the 
advice of the General Counsel as to what action may be appropriate. In 
this regard, attention is directed to 18 U.S.C. 208, which bars an 
employee from participating in any particular matter that will have a 
direct and predictable effect on the financial interest in question.
---------------------------------------------------------------------------

    (3) A financial interest in any trust or estate of which the member 
or employee is solely a beneficiary, has no power to control, and does 
not in fact control or advise with respect to the investments of the 
trust or estate; except that such interest is subject to the provisions 
of paragraphs (d) and (f) of this section.
    (d) Retention or passive acquisition of prohibited financial 
interests. Nothing in this section shall prohibit a member or employee, 
or a spouse or minor child or other related member of the immediate 
household of the member or employee, from:

[[Page 261]]

    (1) Retaining a financial interest that was permitted to be retained 
by the member or employee prior to the adoption of this regulation, was 
obtained prior to the commencement of employment with the Commission, or 
was acquired by a spouse prior to marriage to the member or employee; or
    (2) Acquiring, retaining, or controlling an otherwise prohibited 
financial interest, including but not limited to any security or option 
on a security (but not a security futures product), where the financial 
interest was acquired by inheritance, gift, stock split, involuntary 
stock dividend, merger, acquisition, or other change in corporate 
ownership, exercise of preemptive right, or otherwise without specific 
intent to acquire the financial interest, or by a spouse or minor child 
or other related member of the immediate household of the member or 
employee as part of an employment compensation package; provided, 
however, that retention of any interest allowed by paragraph (c)(3) or 
(d) of this section is permitted only where the employee:
    (i) Makes full disclosure of any such interest on his or her annual 
financial disclosure (Standard Form 278 or Standard Form 450);
    (ii) Makes full written disclosure to the General Counsel within 30 
days of commencing employment or, for incumbents, within twenty days of 
his or her receipt of actual or constructive notice that the interest 
has been acquired; \9\ and
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    \9\ Changes in holdings, other than by purchase, which do not affect 
disqualification, such as those resulting from the automatic 
reinvestment of dividends, stock splits, stock dividends or 
reclassifications, may be reported on the annual statement, SF 278 or SF 
450, rather than when notification of the transaction is received. 
Acquisition by, for example, gifts, inheritance, or spinoffs, which may 
result in additional disqualifications pursuant to paragraph (d)(2)(iii) 
of this section and 18 U.S.C. 208 shall be reported to the General 
Counsel within 20 days of the receipt of actual or constructive notice 
thereof.
---------------------------------------------------------------------------

    (iii) Will be disqualified in accordance with 5 CFR part 2635, 
subpart D, and 18 U.S.C. 208 from participating in any particular matter 
that will have a direct and predictable effect on the financial interest 
in question. Any Commission member or employee affected by this section 
may, pursuant to 18 U.S.C. 208(b)(1) and 5 CFR 2640.301-303, request a 
waiver of the disqualification requirement.

    Note: With respect to any financial interest retained under 
paragraph (c)(3) or (d) of this section, Commission members and 
employees are reminded of their obligations under 18 U.S.C. 208 and 5 
CFR part 2635, subpart D, to disqualify themselves from participating in 
any particular matter in which they, their spouses or minor children 
have a financial interest.

    (e) Exception applicable to legally separated employees. This 
section shall not apply to the financial interests of a legally 
separated spouse of a Commission member or employee, including 
transactions for the benefit of a minor child, if the member or employee 
has no power to control and does not, in fact, advise or control with 
respect to such transactions. If the member or employee has actual or 
constructive knowledge of such financial interests held by a legally 
separated spouse or for the benefit of a minor child, the 
disqualification provisions of paragraphs (d)(2)(i)-(iii) of this 
section and 18 U.S.C. 208 are applicable.
    (f) Divestiture. Based upon a determination of substantial conflict 
under 5 CFR 2635.403(b) and 18 U.S.C. 208, the Commission, or its 
designee, may require in writing that a member or employee, or the 
spouse or minor child or other related member of the immediate household 
of a member or employee, divest a financial interest that he or she is 
otherwise authorized to retain under this section. \10\
---------------------------------------------------------------------------

    \10\ Any evidence of a violation of 18 U.S.C. 208 must be reported 
by the General Counsel to the Commission, which may refer the matter to 
the Criminal Division of the Department of Justice and the United States 
Attorney in whose venue the violations lie. See 28 U.S.C. 535.

[67 FR 5940, Feb. 8, 2002, as amended at 67 FR 62353, Oct. 7, 2002; 77 
FR 66348, Nov. 2, 2012]



Sec.  140.735-3  Non-governmental employment and other outside activity.

    A Commission member or employee shall not accept employment or 
compensation from any person, exchange,

[[Page 262]]

swap execution facility, swap data repository or derivatives clearing 
organization subject to regulation by the Commission. For purposes of 
this section, a person subject to regulation by the Commission includes 
but is not limited to a contract market, swap execution facility, swap 
data repository or derivatives clearing organization or member thereof, 
a registered futures commission merchant, any person associated with a 
futures commission merchant or with any agent of a futures commission 
merchant, floor broker, commodity trading advisor, commodity pool 
operator or any person required to be registered in a fashion similar to 
any of the above or file reports under the Act or pursuant to any rule 
or regulation promulgated by the Commission.\11\
---------------------------------------------------------------------------

    \11\ Attention is directed to section 2(a)(8) of the Commodity 
Exchange Act, which provides, among other things, that no Commission 
member or employee shall accept employment or compensation from any 
person, exchange or derivatives clearing organization 
(``clearinghouse'') subject to regulation by the Commission, or 
participate, directly or indirectly, in any contract market operations 
or transactions of a character subject to regulation by the Commission.

[ 77 FR 66348, Nov. 2, 2012]



Sec.  140.735-4  Receipt and disposition of foreign gifts and decorations.

    (a) For purposes of this section only:
    (1) Commission member or employee means any Commission member or any 
person employed by or who occupies an office or a position in the 
Commission; an expert or consultant under contract with the Commission, 
or in the case of an organization performing services under such 
contract, any individual involved in the performance of such service; 
and the spouse, unless the individual and his or her spouse are 
separated, and any dependent, as defined by section 152 of the Internal 
Revenue Code of 1954, of any such person.
    (2) Foreign government means:
    (A) Any unit of foreign governmental authority, including any 
foreign national, state, local, and municipal government;
    (B) Any international or multinational organization whose membership 
is composed of any unit of foreign government described in paragraph 
(a)(2)(A) of this section; and
    (C) Any agent or representative of any such unit or such 
organization, while acting as such.
    (3) Gift means a tangible or intangible present (other than a 
decoration) tendered by, or received from, a foreign government, except 
grants and other forms of assistance to which section 108A of the Mutual 
Educational and Cultural Exchange Act of 1961 applies.
    (4) Decoration means an order, device, medal, badge, insignia, 
emblem, or award tendered by, or received from, a foreign government.
    (5) Minimal value means a retail value in the United States at the 
time of acceptance of $140 or less, except as redefined to reflect 
changes in the consumer price index at three year intervals by the 
Administrator of General Services pursuant to authority granted in 5 
U.S.C. 7342(a)(5)(A).
    (b) Commission members and employees shall not:
    (1) Request or otherwise encourage the tender of a gift or 
decoration;
    (2) Accept a gift of currency, except that which has an historical 
or numismatic value;
    (3) Accept gifts of travel or gifts of expenses for travel, such as 
transportation, food and lodging, from foreign governments, other than 
those authorized in paragraph (c)(5) of this section; or
    (4) Accept any gift or decoration, except as authorized by this 
section.
    (c) Gifts which may be accepted:
    (1) Commission members and employees may accept and retain gifts of 
minimal value tendered or received as a souvenir or mark of courtesy 
from a foreign government without further approval. If the value of a 
gift is uncertain, the recipient shall be responsible for establishing 
that it is of minimal value, as defined in this section. Documentary 
evidence may be required in support of the valuation.
    (2) Commission members and employees may accept, on behalf of the 
United States, gifts of more than minimal value tendered or received 
from a foreign government when it appears that to refuse the gift would 
likely cause offense or embarrassment or otherwise adversely affect the 
foreign relations of

[[Page 263]]

the United States. When a tangible gift of more than minimal value is 
accepted on behalf of the United States, it becomes the property of the 
United States.
    (3) Commission members and employees may accept a gift of more than 
minimal value where such gift is in the nature of an educational 
scholarship or medical treatment.
    (4) Within 60 days after accepting a tangible gift of more than 
minimal value, other than a gift described in paragraph (c)(5) of this 
section, a Commission member or employee shall file a statement with the 
Executive Director of the Commission which shall include the following 
information:
    (A) The name and position of the Commission member or employee;
    (B) A brief description of the gift and the circumstances justify 
acceptance;
    (C) The identity, if known, of the foreign government and the name 
and position of the individual who presented the gift;
    (D) The date of acceptance of the gift;
    (E) The estimated value in the United States of the gift at the time 
of acceptance; and
    (F) The disposition or current location of the gift.
    (5) Commission members and employees are authorized to accept from a 
foreign government gifts of travel or gifts of expenses for travel 
taking place entirely outside the United States, such as transportation, 
food and lodging, of more than minimal value if the acceptance is 
approved by the Executive Director, upon a finding that it is consistent 
with the interests of the Commission. Either prior to or within 30 days 
after accepting each gift of travel or gift of travel expenses pursuant 
to this paragraph, the Commission member or employee concerned shall 
file a statement with the Executive Director containing the following 
information:
    (A) The name and position of the Commission member or employee;
    (B) A brief description of the gift and the circumstances justifying 
acceptance;
    (C) The identity, if known, of the foreign government and the name 
and position of the individual who presented the gift; and
    (D) The date of acceptance.
    (6) Not later than January 31 of each year the Executive Director 
shall compile a listing of all statements filed during the preceding 
year by Commission members and employees pursuant to paragraphs (c)(4) 
and (c)(5) of this section and shall transmit the listing to the 
Secretary of State.
    (d) Commission members or employees may accept, retain and wear 
decorations tendered by a foreign government in recognition of active 
field service in time of combat operations or awarded for other 
outstanding or unusually meritorious performance, subject to the 
approval of the Executive Director. Without this approval, the 
decoration is deemed to have been accepted on behalf of the United 
States, shall become the property of the United States, and shall be 
deposited by the employee, within 60 days of acceptance, with the 
Executive Director for official use or forwarding to the Administrator 
of General Services for disposal in accordance with paragraph (g) of 
this section. Under normal circumstances, it can be expected that a 
Commission member or employee will be notified of the intent of a 
foreign government to award him or her or a spouse or dependent a 
decoration for outstanding or unusually meritorious service sufficiently 
in advance so that the approval required can be sought prior to its 
acceptance. A request for the approval of the Executive Director shall 
be submitted in writing, stating the nature of the decoration and the 
reason why it is being awarded. Whenever possible, the request should 
also be accompanied by a statement from the foreign government, 
preferably in the form of the citation, which shows the basis for the 
tender of the award, whether it is in recognition of active field 
service in time of combat operations or for other outstanding or 
unusually meritorious performance.
    (e) Within 60 days after acceptance of a tangible gift of more than 
minimal value or a decoration for which the Executive Director has not 
given approval, a Commission member or employee shall:
    (1) Deposit the gift or decoration for disposal with the Executive 
Director; or

[[Page 264]]

    (2) Subject to the approval of the Commission, upon the 
recommendation of the Executive Director, deposit the gift or decoration 
with the Commission for official use.

A gift or decoration may be retained for official use if the Commission 
determines that it can be properly displayed in an area accessible to 
employees and members of the public. Within 30 days after termination of 
the official use of a gift, the Executive Director shall forward the 
gift to the Administrator of General Services in accordance with 
paragraph (g) of this section.
    (f) Whenever possible, gifts and decorations that have been 
deposited with the Executive Director for disposal shall be returned to 
the donor. The Executive Director, in coordination with the Office of 
the General Counsel, shall examine the circumstances surrounding the 
donation, assessing whether any adverse effect on the foreign relations 
of the United States might result from the return of the gift or 
decoration to the donor. The appropriate Department of State officials 
shall be consulted if a question of adverse effect on United States 
foreign relations arises.
    (g) Gifts and decorations that have not been returned to the donor, 
retained for official use, or for which official use has terminated, 
shall be forwarded by the Executive Director to the Administrator of 
General Services for transfer, donation, or other disposal in accordance 
with the provisions of the Federal Property and Administrative Services 
Act of 1949, as amended, and 5 U.S.C. 7342.
    (h) In accordance with 5 U.S.C. 7342(h), the U.S. Attorney General 
may bring a civil action in any United States district court against any 
Commission member or employee who knowingly solicits or accepts a gift 
from a foreign government not consented to by the Congress of the United 
States in 5 U.S.C. 7342, or who fails to deposit or report such gift as 
required by 5 U.S.C. 7342. The court may assess a penalty against such 
Commission member or employee in any amount not exceeding the retail 
value of the gift improperly solicited or received plus $5,000.
    (i) A violation of the requirements set forth in this section by a 
Commission employee may be cause for appropriate disciplinary action 
which may be in addition to any penalty prescribed by law.
    (j)(1) The burden of proving minimal value shall be on the 
recipient. In the event of a dispute over the value of a gift, the 
Executive Director shall arrange for an outside appraiser to determine 
whether the gift is of more or less than minimal value.
    (2) When requested by the Administrator of Government Services, the 
Executive Director shall arrange for an appraisal of a gift or 
decoration.
    (k) No appropriated funds of the Commission may be used to buy any 
tangible gift of more than minimal value for any foreign individual, 
unless the gift has been approved by Congress.

[47 FR 24115, June 3, 1982. Redesignated at 58 FR 52658, Oct. 12, 1993; 
63 FR 32733, June 16, 1998]



Sec.  140.735-5  Disclosure of information.

    A Commission employee or former employee shall not divulge, or cause 
or allow to be divulged, confidential or non-public commercial, economic 
or official information to any unauthorized person, or release such 
information in advance of authorization for its release. \9\ Except as 
directed by the Commission or its General Counsel as provided in these 
regulations, no Commission employee or former employee is

[[Page 265]]

authorized to accept service of any subpoena for documentary information 
contained in or relating to the files of the Commission. Any employee or 
former employee who is served with a subpoena requiring testimony 
regarding non-public information or documents shall, unless the 
Commission authorizes the disclosure of such information, respectfully 
decline to disclose the information or produce the documents called for, 
basing his refusal on these regulations. \10\ Any employee or former 
employee who is served with a subpoena calling for information regarding 
the Commission's business shall promptly advise the General Counsel of 
the service of such subpoena, the nature of the information or documents 
sought, and any circumstances which may bear upon the desirability of 
making such information or document available in the public interest. 
\11\ In any proceeding in which the Commission is not a party, no 
employee of the Commission shall testify concerning matters related to 
the business of the Commission unless authorized to do so by the 
Commission.
---------------------------------------------------------------------------

    \9\ Attention is directed to section 9(d) of the Commodity Exchange 
Act, which provides that it shall be a felony punishable by a fine of 
not more than $500,000 or imprisonment for not more than five years, or 
both, together with the costs of prosecution--(1) for any Commissioner 
of the Commission or any employee or agent thereof who, by virtue of his 
employment or position, acquires information which may affect or tend to 
affect the price of any commodity future or commodity and which 
information has not been promptly made public, to impart such 
information with intent to assist another person, directly or 
indirectly, to participate in any transaction in commodity futures, any 
transaction in an actual commodity, or in any transaction of the 
character of or which is commonly known to the trade as an option, 
privilege, indemnity, bid, offer, put, call, advance guaranty or decline 
guaranty, or in any transaction for the delivery of any commodity under 
a standardized contract commonly known to the trade as a margin account, 
margin contract, leverage account or leverage contract, or under any 
contract or other arrangement that the Commission determines to serve 
the same function or is marketed in the same manner as such standardized 
contract, and (2) for any person to acquire such information from any 
Commissioner of the Commission or any employee or agent thereof and to 
use such information in any of the foregoing transactions.
    \10\ No employee shall disclose such information unless directed to 
do so by the Commission.
    \11\ The prohibitions regarding confidential or nonpublic 
information stated above are intended to cover the matters addressed in 
sections 4(c), 8, and 9(d) of the Commodity Exchange Act as well as 
nonpublic information under the Freedom of Information Act, 5 U.S.C. 
552, the rules of the Commission thereunder, 17 CFR part 145, the 
Privacy Act, 5 U.S.C. 552a, the rules of the Commission thereunder, 17 
CFR part 146, and cases where, apart from specific prohibitions in any 
statute or rule, the disclosure or use of such information would be 
unethical.

[58 FR 52658, Oct. 12, 1993]



Sec.  140.735-6  Practice by former members and employees of the Commission.

    (a) Personal and substantial participation or nonpublic knowledge of 
a particular matter. No person who has been a member or employee of the 
Commission shall ever knowingly make, with the intent to influence, any 
communication to or appearance before the Commission in connection with 
any particular matter involving a specific party or parties \12\ in 
which such person, or one participating with him or her in the 
particular matter, participated personally and substantially, or gained 
nonpublic knowledge of facts thereof, while with the Commission. \13\
---------------------------------------------------------------------------

    \12\ The phrase ``particular matter involving a specific party or 
parties'' does not apply to general rulemaking, general policy and 
standards formulation or other similar matters. See Sec.  2637.201(c)(1) 
of the regulations of the Office of Government Ethics, 5 CFR 
2637.201(c)(1); cf., memorandum of the Attorney General dealing with the 
conflict-of-interest provisions prior to amendment by the Ethics in 
Government Act (reproduced following 18 U.S.C. 201).
    \13\ Attention is directed to 18 U.S.C. 207(a)(1), as amended, which 
generally prohibits former Federal officers and employees permanently 
from knowingly making, with the intent to influence, any communication 
to or appearance before any Federal (or District of Columbia) 
department, agency or court, or court martial, or any officer or 
employee thereof, in connection with any particular matter involving a 
specific party or parties in which the United States (or the District of 
Columbia) is a party or has a direct and substantial interest and in 
which the former officer or employee participated personally and 
substantially while with the government.
---------------------------------------------------------------------------

    (b) Particular matter under an individual's official responsibility. 
No person who has been a member or employee of the Commission shall, 
within two years after that employment has ceased, knowingly make, with 
the intent to influence, any communication to or appearance before the 
Commission in connection with a particular matter involving a specific 
party or parties which was actually pending under his official 
responsibility as a member or employee of the Commission at any

[[Page 266]]

time within one year prior to the termination of government service. 
\14\
---------------------------------------------------------------------------

    \14\ Attention is directed to 18 U.S.C. 207(a)(2), as amended. 
Section 207(a)(2) generally prohibits former Federal officers and 
employees, within two years after their Federal employment has ceased, 
from knowingly making, with the intent to influence, any communication 
to or appearance before any Federal (or District of Columbia) 
department, agency or court, or court martial, or any officer or 
employee thereof, in connection with any particular matter involving a 
specific party or parties in which the United States (or the District of 
Columbia) is a party or has a direct and substantial interest and which 
was actually pending under the official responsibility of the former 
officer or employee within one year prior to the termination of 
government service.
    As used in paragraph (b) of this section, the term ``official 
responsibility'' has the meaning assigned to it in 18 U.S.C. 202(b), 
namely, the ``direct administrative or operating authority, whether 
intermediate or final, and either exercisable alone or with others, and 
either personally or through subordinates, to approve, disapprove, or 
otherwise direct Government action.''
---------------------------------------------------------------------------

    (c) Restrictions on former members and senior employees. A former 
member or employee of the Commission who occupied a ``senior'' position 
specified in 18 U.S.C. 207(c)(2), as amended, shall not within one year 
after such ``senior'' employment has ceased, knowingly make, with the 
intent to influence, any communication to or appearance before the 
Commission on behalf of any other person in connection with any matter 
in which such person seeks official action by the Commission. \15\
---------------------------------------------------------------------------

    \15\ Attention is directed to 18 U.S.C. 207(c), as amended, which 
places restrictions on the representational activities of certain senior 
officers and employees after their departure from a senior position. 
Section 207(c) generally makes it unlawful for one year after service in 
a ``senior'' position terminates for a former ``senior'' Federal 
employee to knowingly make, with the intent to influence, any 
communication to or appearance before an employee of a department or 
agency in which he served in any capacity during the one year period 
prior to termination from ``senior'' service, if that communication or 
appearance is on behalf of any other person (except the United States), 
in connection with any matter concerning which he seeks official action 
by that employee.
    Note that the one year period is measured from the date when the 
employee ceases to be a senior employee, not from the termination of 
Government service, unless the two occur simultaneously. This provision 
prohibits communications to or appearances before the Government and 
does not prohibit ``behind-the-scenes'' assistance. The restriction does 
not require that the former employee have ever been in any way involved 
in the matter that is the subject of the communication or appearance. 
The restriction applies with respect to any matter, whether or not 
involving a specific party.
---------------------------------------------------------------------------

    (d) Exceptions. The prohibitions contained in paragraphs (a), (b), 
and (c) of this section do not apply to communications solely for the 
purpose of furnishing scientific or technological information if 
approved by the Commission or generally to giving testimony under oath 
or making a statement which is subject to penalty or perjury. Further, 
the prohibition contained in paragraph (c) of this section does not 
apply to an uncompensated statement in a particular area within the 
special knowledge of the former Commission member or employee. \16\
---------------------------------------------------------------------------

    \16\ Attention is directed to 18 U.S.C. 207(j), as amended (listing 
other exceptions). Self-representation is not prohibited under section 
207.
---------------------------------------------------------------------------

    (e) Reporting requirement. Any former member or employee of the 
Commission who, within two years after ceasing to be such, is employed 
or retained as the representative of any person (except the United 
States) in connection with a matter in which it is contemplated that he 
will appear before or communicate with the Commission shall, within ten 
days of such retainer or employment, or of the time when appearance 
before or communication with the Commission is first contemplated, file 
with the General Counsel of the Commission a statement as to the nature 
thereof together with any desired explanation as to why it is deemed 
consistent with this section. Employment of a recurrent character may be 
covered by a single comprehensive statement. Each such statement should 
include an appropriate caption indicating that it is filed pursuant to 
this section. The reporting requirement of this paragraph does not apply 
to communications incidental to court appearances in litigation 
involving the Commission.
    (f) Definitions. As used in this section, the phrase ``appearance 
before the

[[Page 267]]

Commission'' means any formal or informal appearance on behalf of any 
person (except the United States) before the Commission, or any member 
or employee thereof with an intent to influence. As used in this 
section, the phrase ``communication with the Commission'' means any oral 
or written communication made to the Commission, or any member or 
employee thereof, on behalf of any person (except the United States) 
with an intent to influence.
    (g) Advisory ruling. Persons in doubt as to the applicability of 
this section may apply for an advisory ruling by addressing a letter 
requesting such a ruling to the General Counsel.
    (h) Procedures for administrative enforcement of statutory 
restrictions on post-government employment conflicts of interest \17\--
(1) Scope. The provisions of this paragraph prescribe procedures for 
administrative enforcement of the restrictions which 18 U.S.C. 207 (a), 
(b), and (c), as amended, place on appearances before or communications 
with Federal (and District of Columbia) departments, agencies and 
courts, and other enumerated entities, as well as the officers and 
employees thereof, by former Commission members and employees.
---------------------------------------------------------------------------

    \17\ This section does not apply to employees who leave service 
after December 31, 1990.
---------------------------------------------------------------------------

    (2) Investigations. The General Counsel of the Commission, or his or 
her designee, shall conduct such investigations as he or she deems 
appropriate to determine whether any former Commission member or 
employee have violated 18 U.S.C. 207 (a), (b) or (c), as amended. The 
General Counsel shall report the results of his or her investigations to 
the Commission and shall recommend to the Commission such action as he 
or she deems appropriate.
    (3) Hearings. Hearings required to be held under the provisions of 
this section shall be held before an Administrative Law Judge, utilizing 
the procedures prescribed by the Commission's rules of practice for 
adjudicatory proceedings (17 CFR part 10), except to the extent that 
those rules are inconsistent with the provisions of this section. Any 
proceeding brought under the provisions of this section shall be 
prosecuted by the General Counsel or his or her designee.
    (4) Sanctions. If the Commission finds, after notice and opportunity 
for a hearing, that a former Commission member or employee has violated 
18 U.S.C. 207 (a), (b) or (c), as amended, the Commission may prohibit 
that person from making, on behalf of any other person (except the 
United States), any formal or informal appearance before, or with the 
intent to influence any oral or written communication to, the Commission 
on a pending matter of business for a period not to exceed five years, 
or may take other appropriate disciplinary action.

[58 FR 52658, Oct. 12, 1993; 58 FR 58593, Nov. 2, 1993]



Sec.  140.735-7  Statutory violations applicable to conduct of 
Commission members and employees.

    A violation of section 2(a)(7), 8 or 9 (c) or (d) of the Commodity 
Exchange Act, as amended, shall be deemed to be a violation of this 
subpart as well.

[58 FR 52660, Oct. 12, 1993]



Sec.  140.735-8  Interpretative and advisory service.

    (a) Counselor for the Commission. The General Counsel, or his or her 
designee, will serve as Counselor for the Commission and as the 
Commission's representative to the Office of Government Ethics, on 
matters covered by this subpart. The General Counsel will also serve as 
the Commission's designated agency ethics official to review the 
financial reports filed by high-level Commission officials under title 
II of the Ethics in Government Act, as well as otherwise to coordinate 
and manage the Commission's ethics program.
    (b) Duties of the Counselor. The Counselor shall:
    (1) Coordinate the agency's counseling services and assure that 
counseling and interpretations on questions of conflict of interests and 
other matters covered by the regulations in this subpart are available 
as needed to Regional Deputy Counselors, who shall be appointed by the 
General Counsel, in coordination with the Chairman of the Commission, 
for each Regional Office of the Commission;

[[Page 268]]

    (2) Render authoritative advice and guidance on matters covered by 
the regulations in this subpart which are presented to him or her by 
employees in the Washington, DC headquarters office; and
    (3) Receive information on, and resolve or forward to the Commission 
for consideration, any conflict of interests or apparent conflict of 
interests which appears in the annual financial disclosure (Standard 
Form 278 or Standard Form 450), or is disclosed to the General Counsel 
by a member or employee pursuant to Sec.  140.735-2a(d) of this part, or 
otherwise is made known to the General Counsel.
    (i) A conflict of interests or apparent conflict of interests is 
considered resolved by the General Counsel when the affected member or 
employee has executed an ethics agreement pursuant to 5 CFR 2634.801 et 
seq. to undertake specific actions in order to resolve the actual or 
apparent conflict.
    (ii) If, after advice and guidance from the General Counsel, a 
member or employee does not execute an ethics agreement, the conflict of 
interests is considered unresolved and must be referred to the 
Commission for resolution or further action consistent with 18 U.S.C. 
208 and 28 U.S.C. 535.
    (iii) Where an unresolved conflict of interests or apparent conflict 
of interests is to be forwarded to the Commission by the General 
Counsel, the General Counsel will promptly notify the affected member or 
employee in writing of his or her intent to forward the matter to the 
Commission. Any member or employee so affected will be afforded an 
opportunity to be heard by the Commission through written submission.
    (c) Regional Deputy Counselors. Regional Deputy Counselors shall:
    (1) Give advice and guidance as requested to the employees assigned 
to their respective Regional Offices; and
    (2) Receive information on and refer to the Director of Human 
Resources, any conflict of interests or appearance of conflict of 
interests in Statements of Employment and Financial Interests submitted 
by employees to whom they are required to give advice and guidance.
    (d) Confidentiality of communications. Communications between the 
Counselor and Regional Deputy Counselors and an employee shall be 
confidential, except as deemed necessary by the Commission or the 
Counselor to carry out the purposes of this subpart and of the laws of 
the United States. \18\
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    \18\ No attorney-client privilege, however, attaches to such 
communications since the Counselors are counsel to the Commission, not 
to the employee. Thus, any evidence of criminal law violations divulged 
by an employee to the Counselor must be reported by the latter to the 
Commission, which may refer the matter to the Criminal Division of the 
Department of Justice and the United States Attorney in whose venue the 
violations lie.
---------------------------------------------------------------------------

    (e) Furnishing of conduct regulations. The Director of Human 
Resources shall furnish a copy of this Conduct Regulation to each 
member, employee, and special government employee immediately upon his 
or her entrance on duty and shall thereafter, annually, and at such 
other times as circumstances warrant, bring to the attention of each 
member and employee this Conduct Regulation and all revisions thereof.
    (f) Availability of counseling services. The Director of Human 
Resources shall notify each member, employee, and special government 
employee of the availability of counseling services and of how and where 
these services are available at the time of entrance on duty and 
periodically thereafter.

[58 FR 52660, Oct. 12, 1993, as amended at 61 FR 21955, May 13, 1996; 62 
FR 13302, Mar. 20, 1997; 67 FR 5941, Feb. 8, 2002]



PART 141_SALARY OFFSET--Table of Contents



Sec.
141.1 Purpose and scope.
141.2 Definitions.
141.3 Applicability.
141.4 Notice requirements.
141.5 Hearing.
141.6 Written decision.
141.7 Coordinating offset with another Federal agency.
141.8 Procedures for salary offset.
141.9 Refunds.
141.10 Statute of limitations.
141.11 Non-waiver of rights.
141.12 Interest, penalties, and administrative costs.


[[Page 269]]


    Authority: 5 U.S.C. 5514, E.O. 11609 (redesignated E.O. 12197), 5 
CFR part 550, subpart K, and 7 U.S.C. 4a(j), unless otherwise noted.

    Source: 55 FR 5207, Feb. 14, 1990, unless otherwise noted.



Sec.  141.1  Purpose and scope.

    (a) This regulation provides procedures for the collection by 
administrative offset of a federal employee's salary without his/her 
consent to satisfy certain debts owed to the federal government. These 
regulations apply to employees of other federal agencies and current 
employees of the Commission who owe debts to the Commission and to 
current employees of the Commission who owe debts to other federal 
agencies. This regulation does not apply when the employee consents to 
recovery from his/her current pay account.
    (b) This regulation does not apply to debts or claims arising under:
    (1) The Internal Revenue Code of 1954, as amended, 26 U.S.C. 1 et 
seq.;
    (2) The Social Security Act, 42 U.S.C. 301 et seq.;
    (3) The tariff laws of the United States; or
    (4) Any case where a collection of a debt by salary offset is 
explicitly provided for or prohibited by another statute.
    (c) This regulation does not apply to any adjustment to pay arising 
out of an employee's selection of coverage or a change in coverage under 
a federal benefits program requiring periodic deductions from pay if the 
amount to be recovered was accumulated over four pay periods or less.
    (d) This regulation does not preclude the compromise, suspension, or 
termination of collection action where appropriate under the standards 
implementing the Federal Claims Collection Act, 31 U.S.C. 3711 et seq., 
4 CFR parts 101 through 105, 45 CFR part 1177.
    (e) This regulation does not preclude an employee from requesting 
waiver of an overpayment under 5 U.S.C. 5584, 10 U.S.C. 2774 or 32 
U.S.C. 716 or in any way questioning the amount or validity of the debt 
by submitting a subsequent claim to the General Accounting Office in 
accordance with General Accounting Office procedures. This regulation 
does not preclude an employee from requesting a waiver pursuant to other 
statutory provisions applicable to the particular debt being collected. 
Neither the requesting of a waiver nor the filing of a claim with the 
General Accounting Office will affect the amount or validity of the debt 
being collected until a waiver has been granted or the debt has been 
determined to be for an incorrect amount or invalid.
    (f) Matters not addressed in these regulations should be reviewed in 
accordance with the Federal Claims Collection Standards at 4 CFR 101.1 
et seq.



Sec.  141.2  Definitions.

    For the purposes of this part the following definitions will apply:
    Agency means an executive agency as defined at 5 U.S.C. 105 
including the U.S. Postal Service, the U.S. Postal Commission, a 
military department as defined at 5 U.S.C. 102, an agency or court in 
the judicial branch, an agency of the legislative branch including the 
U.S. Senate and House of Representatives and other independent 
establishments that are entities of the Federal government.
    Creditor agency means the agency to which the debt is owed.
    Debt means an amount owed to the United States from sources which 
include loans insured or guaranteed by the United States and all other 
amounts due the United States from fees, leases, rents, royalties, 
services, sales of real or personal property, overpayments, penalties, 
damages, interests, fines, forfeitures (except those arising under the 
Uniform Code of Military Justice), and all other similar sources.
    Disposable pay means the amount that remains from an employee's 
federal pay after required deductions for social security, federal, 
state or local income tax, health insurance premiums, retirement 
contributions, life insurance premiums, federal employment taxes, and 
any other deductions that are required to be withheld by law.
    Hearing official means an individual responsible for conducting any 
hearing with respect to the existence or amount of a debt claimed, and 
who renders a decision on the basis of such hearing. A hearing official 
shall be an

[[Page 270]]

impartial member of the Office of the Executive Director not under the 
supervision or control of the head of the Commission.
    Paying agency means the agency that employs the individual who owes 
the debt and authorizes the payment of his/her current pay.
    Salary offset means an administrative offset to collect a debt 
pursuant to 5 U.S.C. 5514 by deduction(s) at one or more officially 
established pay intervals from the current pay account of an employee 
without his/her consent.



Sec.  141.3  Applicability.

    These regulations are to be followed when:
    (a) The Commission is owed a debt by an individual currently 
employed by another federal agency;
    (b) The Commission is owed a debt by an individual who is a current 
employee of the Commission;
    (c) The Commission employs an individual who owes a debt to another 
federal agency.



Sec.  141.4  Notice requirements.

    (a) Deductions shall not be made unless the employee is provided 
with written notice of the debt at least 30 days before salary offset 
commences.
    (b) The written notice shall contain:
    (1) A statement that the debt is owed and an explanation of its 
nature, and amount;
    (2) The agency's intention to collect the debt by deducting from the 
employee's current disposable pay account;
    (3) The amount, frequency, proposed beginning date, and duration of 
the intended deduction(s);
    (4) An explanation of interest, penalties, and administrative 
charges, including a statement that such charges will be assessed unless 
excused in accordance with the Federal Claims Collections Standards at 4 
CFR 101.1 et seq.;
    (5) The employee's right to inspect, request, and receive a copy of 
government records relating to the debt;
    (6) The opportunity to establish a written schedule for the 
voluntary repayment of the debt;
    (7) The right to a hearing conducted by an impartial hearing 
official;
    (8) The methods and time period for petitioning for hearings;
    (9) A statement that the timely filing of a petition for a hearing 
will stay the commencement of collection proceedings;
    (10) A statement that a final decision on the hearing will be issued 
not later than 60 days after the filing of the petition requesting the 
hearing unless the employee requests and the hearing official grants a 
delay in the proceedings;
    (11) A statement that knowingly false or frivolous statements, 
representations, or evidence may subject the employee to:
    (i) Disciplinary procedures appropriate under chapter 75 of 5 
U.S.C., 5 CFR part 752, or any other applicable statutes or regulations;
    (ii) Penalties under the False Claims Act, 31 U.S.C. 3729-3731, or 
any other applicable statutory authority; or
    (iii) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002 or 
any other applicable statutory authority.
    (12) A statement of other rights and remedies available to the 
employee under statutes or regulations governing the program for which 
the collection is being made; and
    (13) Unless there are contractual or statutory provisions to the 
contrary, a statement that amounts paid on or deducted for the debt 
which are later waived or found not owed to the United States will be 
promptly refunded to the employee.



Sec.  141.5  Hearing.

    (a) Request for hearing. (1) An employee must file a petition for a 
hearing in accordance with the instructions outlined in the Commission's 
notice to offset.
    (2) A hearing may be requested by filing a written petition 
addressed to the Executive Director stating why the employee disputes 
the existence or amount of the debt. The petition for a hearing must be 
received by the Executive Director no later than fifteen (15) calendar 
days after the date of the notice to offset unless the employee can show 
good cause for failing to meet the deadline date.
    (b) Hearing procedures. (1) The hearing will be presided over by an 
impartial hearing official.

[[Page 271]]

    (2) The hearing shall conform to procedures contained in the Federal 
Claims Collection Standards 4 CFR 102.3(c). The burden shall be on the 
employee to demonstrate that the existence or the amount of the debt is 
in error.



Sec.  141.6  Written decision.

    (a) The hearing official shall issue a written opinion no later than 
60 days after the hearing.
    (b) The written opinion will include a statement of the facts 
presented to demonstrate the nature and origin of the alleged debt; the 
hearing official's analysis, findings and conclusions; the amount and 
validity of the debt, and the repayment schedule.



Sec.  141.7  Coordinating offset with another Federal agency.

    (a) The Commission as the creditor agency. When the Commission 
determines that an employee of another federal agency owes a delinquent 
debt to the Commission, the Commission shall as appropriate:
    (1) Arrange for a hearing upon the proper petitioning by the 
employee;
    (2) Certify to the paying agency in writing that the employee owes 
the debt, the amount and basis of the debt, the date on which payment is 
due, the date the Government's right to collect the debt accrued, and 
that Commission regulations for salary offset have been approved by the 
Office of Personnel Management;
    (3) If collection must be made in installments, the Commission must 
advise the paying agency of the amount or percentage of disposable pay 
to be collected in each installment;
    (4) Advise the paying agency of the actions taken under 5 U.S.C. 
5514(b) and provide the dates on which action was taken unless the 
employee has consented to salary offset in writing or signed a statement 
acknowledging that the Commission has complied with the procedures 
required by law. The written consent or acknowledgment must be sent to 
the paying agency;
    (5) If the employee is in the process of separating, the Commission 
must submit its debt claim to the paying agency as provided in this 
part. The paying agency must certify any amounts already collected, 
notify the employee, and send a copy of the certification and notice of 
the employee's separation to the Commission. If the paying agency is 
aware that the employee is entitled to payments from the Civil Service 
Retirement and Disability Fund or similar payments, it must certify to 
the agency responsible for making such payments the amount of the debt 
and that the provisions of 5 CFR 550.1108 have been followed; and
    (6) If the employee has already separated and all payments due from 
the paying agency have been paid, the Commission may request, unless 
otherwise prohibited, that money payable to the employee from the Civil 
Service Retirement and Disability Fund or other similar funds be 
collected by administrative offset.
    (b) The Commission as the paying agency. (1) Upon receipt of a 
properly certified debt claim from another agency, deductions will be 
scheduled to begin at the next established pay interval. The employee 
must receive written notice from the Commission that the Commission has 
received a certified debt claim from the creditor agency, the amount of 
the debt, the date salary offset will begin, and the amount of the 
deduction(s). The Commission shall not review the merits of the creditor 
agency's determination of the validity or the amount of the certified 
claim.
    (2) If the employee transfers to another agency after the creditor 
agency has submitted its debt claim to the Commission and before the 
debt is collected completely, the Commission must certify the total 
amount collected. One copy of the certification must be furnished to the 
employee. A copy must be furnished the creditor agency with notice of 
the employee's transfer.



Sec.  141.8  Procedures for salary offset.

    (a) Deductions to liquidate an employee's debt will be by the method 
and in the amount stated in the Commission's notice of intention to 
offset as provided in Sec.  141.4. Debts will be collected in one lump 
sum where possible. If the employee is financially unable to pay in one 
lump sum, collection must be made in installments.

[[Page 272]]

    (b) Debts will be collected by deduction at officially established 
pay intervals from an employee's current pay account unless alternative 
arrangements for repayment are made.
    (c) Installment deductions will be made over a period not greater 
than the anticipated period of employment. The size of installment 
deductions must bear a reasonable relationship to the size of the debt 
and the employee's ability to pay. The deduction for the pay intervals 
for any period must not exceed 15% of disposable pay unless the employee 
has agreed in writing to a deduction of a greater amount.
    (d) Unliquidated debts may be offset against any financial payment 
due to a separated employee including but not limited to final salary or 
leave payments in accordance with 31 U.S.C. 3716.



Sec.  141.9  Refunds.

    (a) The Commission will refund promptly any amounts deducted to 
satisfy debts owed to the Commission when the debt is waived, found not 
owed to the Commission or when directed by an administrative or judicial 
order.
    (b) The creditor agency will promptly return any amounts deducted by 
the Commission to satisfy debts owed to the creditor agency when the 
debt is waived, found not owed, or when directed by an administrative or 
judicial order.
    (c) Unless required by law, refunds under this subsection shall not 
bear interest.



Sec.  141.10  Statute of limitations.

    If a debt has been outstanding for more than 10 years after the 
agency's right to collect the debt first accrued, the agency may not 
collect by salary offset unless facts material to the Government's right 
to collect were not known and could not reasonably have been known by 
the official or officials who were charged with the responsibility for 
discovery and collection of such debts.



Sec.  141.11  Non-waiver of rights.

    An employee's involuntary payment of all or any part of a debt 
collected under these regulations will not be construed as a waiver of 
any rights that employee may have under 5 U.S.C. 5514 or any other 
provision of contract or law unless there are statutes or contract(s) to 
the contrary.



Sec.  141.12  Interest, penalties, and administrative costs.

    Charges may be assessed for interest, penalties, and administrative 
costs in accordance with the Federal Claims Collection Standards, 4 CFR 
102.13.




PART 142_INDEMNIFICATION OF CFTC EMPLOYEES--Table of Contents



Sec.
142.1 Purpose and scope.
142.2 Policy.

    Authority: 7 U.S.C. 4a(j).

    Source: 54 FR 25234, June 14, 1989, unless otherwise noted.



Sec.  142.1  Purpose and scope.

    This part sets forth the policy and procedure with respect to the 
indemnification of Commission employees who are sued in their individual 
capacities and suffer an adverse judgment as a result of conduct taken 
within the scope of employment. (For purposes of this part the term 
Commission employees includes all present and former Commissioners and 
employees of the Commission). This part is intended to provide 
indemnification for adverse judgments for constitutional and federal 
statutory torts excepted from the Federal Tort Claims Act exclusive 
remedy provision 28 U.S.C. 2679(b) (as amended by the Federal Employees 
Liability Reform and Tort Compensation Act of 1988 (Pub. L. 100-694)). 
In any lawsuit which is filed against the employee alleging a common law 
tort occurring within the scope of employment, the United States may be 
substituted for the individual employee and any liability which may be 
found will be assessed against the government, pursuant to the Federal 
Employees Liability Reform and Tort Compensation Act of 1988.

[[Page 273]]



Sec.  142.2  Policy.

    (a) The Commission may indemnify its employees by the payment of 
available funds, in whole, or in part, for any verdict, judgment or 
other monetary award which is rendered against any employee, provided 
that the conduct giving rise to the verdict, judgment or award was taken 
within the scope of his or her employment with the Commission and that 
such indemnification is in the interest of the United States, as 
determined by the Commission.
    (b) The Commission may settle or compromise a personal damage claim 
against its employee by the payment of available funds, at any time, 
provided the alleged conduct giving rise to the personal damage claim 
was taken within the scope of employment and that such settlement is in 
the interest of the United States as determined by the Commission in its 
discretion.
    (c) Absent exceptional circumstances, as determined by the 
Commission, the Commission will not entertain a request either to agree 
to indemnify or to settle a personal damage claim before entry of an 
adverse verdict, judgment or monetary award.
    (d) When an employee of the Commission becomes aware that an action 
may be or has been filed against the employee in his or her individual 
capacity as a result of conduct taken within the scope of his or her 
employment, the employee should immediately notify the Commission's 
Office of General Counsel that such an action is pending or threatened.
    (e) The employee may thereafter request either (1) indemnification 
to satisfy a verdict, judgment or award entered against the employee or 
(2) payment to satisfy the requirements of a settlement proposal. The 
employee shall submit a written request, with documentation including 
copies of the verdict, judgment, award or settlement proposal, as 
appropriate, to the head of his or her division or office, who thereupon 
shall submit to the General Counsel, in a timely manner, a recommended 
disposition of the request. The General Counsel shall also seek the 
views of the Department of Justice. The General Counsel shall forward 
the request, the division or office's recommendation and the General 
Counsel's recommendation to the Commission for decision.
    (f) Any payment under this section either to indemnify a Commodity 
Futures Trading Commission employee or to settle a personal damage claim 
shall be contingent upon the availability of appropriated funds of the 
Commodity Futures Trading Commission.




PART 143_COLLECTION OF CLAIMS OWED THE UNITED STATES ARISING FROM ACTIVITIES 
UNDER THE COMMISSION'S JURISDICTION--Table of Contents



Sec.
143.1 Purpose.

                      Subpart A_General Provisions

143.2 Notice of claim.
143.3 Interest, penalty charges, and administrative costs.
143.4 Collection by offset.
143.5 Collection by compromise.
143.6 Referral for litigation.
143.7 Delegation of authority to the Executive Director.
143.8 Inflation-adjusted civil monetary penalties.

                Subpart B_Administrative Wage Garnishment

143.9 Administrative wage garnishment orders.
143.10 Garnishment hearings.

    Authority: 7 U.S.C. 9, 15, 9a, 12a(5), 13a, 13a-1(d), 13(a), 13b; 31 
U.S.C. 3701-3720E; 28 U.S.C. 2461 note.

    Source: 50 FR 5384, Feb. 8, 1985, unless otherwise noted.



Sec.  143.1  Purpose.

    This part provides procedures that the Commission will use to 
collect debts owed the United States arising from activities under the 
Commission's jurisdiction. As applicable, these procedures are based 
upon, and conform to, the Federal Claims Collection Act, as amended, 31 
U.S.C. 3701-3720E; the Federal Claims Collection Standards, 31 CFR Parts 
900-905, issued by the Department of the Treasury and the Department of 
Justice; administrative wage garnishment regulations issued by the 
Department of the Treasury, 31 CFR 285.11; and other laws applicable

[[Page 274]]

to the collection of non-tax debts owed to the United States arising 
from activities under the Commission's jurisdiction. Subpart A describes 
procedures for collection by offset against obligations of the United 
States to the debtor, by compromise, and by referral to the Department 
of Justice for litigation. It also sets forth the Commission's policy on 
collecting interest on unpaid claims, the method used in calculating 
such interest, and the maximum inflation-adjusted civil monetary 
penalties that may be assessed and enforced for each violation of the 
Commodity Exchange Act or regulations or orders of the Commission 
promulgated thereunder. Subpart B describes procedures for collection by 
administrative garnishment of the debtor's wages.

[69 FR 52997, Aug. 31, 2004]



                      Subpart A_General Provisions



Sec.  143.2  Notice of claim.

    (a) The Commission will send a written notice to any person who owes 
payment to the United States under this part, stating the basis for the 
claim, the interest, penalties, and administrative costs that may be 
imposed for non-payment, and the date full payment is due.
    (b) If the claim is disputed, the debtor shall respond to the notice 
in writing and state the reasons for non-payment. If the claim is not 
disputed but full payment is not made by the date indicated in the 
notice, the debtor shall state the reasons for the failure to make full 
payment.
    (c) If no response or an unsatisfactory response is received by the 
date indicated in the notice, the Commission may take further action as 
appropriate under the Commodity Exchange Act or regulations thereunder, 
or under 31 CFR parts 900-905 or the Federal Claims Collection Act as 
amended, 31 U.S.C. 3701-3720E.

[50 FR 5384, Feb. 8, 1985, as amended at 69 FR 52997, Aug. 31, 2004]



Sec.  143.3  Interest, penalty charges, and administrative costs.

    (a) The Commission will assess interest on unpaid claims. The rate 
of interest assessed shall be the rate of the current value of funds to 
the U.S. Treasury (i.e., the Treasury tax and loan account rate) as 
prescribed and published by the Secretary of the Treasury. The 
Commission will charge penalty fees of not more than 6 percent per year 
on any portion of a claim that is delinquent for more than 90 days. The 
Commission will also impose actual administrative costs to cover the 
processing and handling of delinquent claims.
    (b) Interest on claims will be charged and will run from the date 
the notice of claim is mailed if the amount of the claim is not paid 
within 30 days from that date. Interest will be calculated only on the 
principal of the claim. The rate of interest charged is the rate in 
effect on the date from which interest begins to run. The rate will 
remain fixed for the duration of the indebtedness.
    (c) The Commission may waive in whole or in part interest, penalty 
charges or administrative costs if it finds that:
    (1) The debtor is unable to pay any significant sum within a 
reasonable period of time;
    (2) Collection of interest or penalty charges jeopardizes collection 
of the principal of the claim; or
    (3) It is in the best interests of the United States.



Sec.  143.4  Collection by offset.

    (a) Whenever feasible, the Commission will collect claims under this 
part by means of administrative offset against obligations of the United 
States to the debtor.
    (b) The Commission will notify the debtor in writing of its intent 
to use offset procedures to collect the debt unless the debtor agrees to 
repayment. The notice to the debtor shall include the type and amount of 
the claim and an explanation of the debtor's rights for records and 
review under 31 U.S.C. 3716(a).
    (c) The Commission will seek to coordinate administrative offset 
with other federal agencies in accordance with 4 CFR part 102.

[[Page 275]]



Sec.  143.5  Collection by compromise.

    The Commission may settle claims not exceeding $100,000 (excluding 
interest) by compromise at less than the principal amount of the claim 
if--
    (a) The debtor shows an inability to pay the full amount within a 
reasonable period of time;
    (b) The Government would be unable to enforce collection in full 
through litigation or administrative means within a reasonable period of 
time;
    (c) The cost of collecting the claim in full is not justified by the 
amount of the claim; or
    (d) The Commission's enforcement policy would be served by 
settlement of the claim for less than the full amount.

[50 FR 5384, Feb. 8, 1985, as amended at 57 FR 61292, Dec. 24, 1992]



Sec.  143.6  Referral for litigation.

    Claims that cannot be collected by the Commission under this part or 
for which collection action cannot be ended or suspended under 4 CFR 
part 104 will be referred to the Department of Justice for litigation.



Sec.  143.7  Delegation of authority to the Executive Director.

    (a) The Commission hereby delegates, until such time as the 
Commission orders otherwise, to the Executive Director or to any 
Commission employee under the Executive Director's supervision as he or 
she may designate, authority to take action to carry out subp