2012-20123

Federal Register, Volume 77 Issue 159 (Thursday, August 16, 2012)[Federal Register Volume 77, Number 159 (Thursday, August 16, 2012)]

[Notices]

[Pages 49428-49430]

From the Federal Register Online via the Government Printing Office [www.gpo.gov]

[FR Doc No: 2012-20123]

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COMMODITY FUTURES TRADING COMMISSION

Agency Information Collection Activities; Proposed Collection,

Comment Request: Further Definition of ``Swap,'' ``Security-Based

Swap,'' and ``Security-Based Swap Agreement''; Mixed Swaps; Security-

Based Swap Agreement Recordkeeping: Book-out Agreement Confirmation

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice.

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SUMMARY: The Commodity Futures Trading Commission (``Commission'' or

``CFTC'') is announcing an opportunity for public comment on the

proposed collection of certain information by the agency. Under the

Paperwork Reduction Act (``PRA''), 44 U.S.C. 3501 et seq., Federal

agencies are required to publish notice in the Federal Register

concerning each proposed collection of information and to allow 60 days

for public comment. The Commission recently adopted a final rule and

interpretations, as required by the Dodd-Frank Wall Street Reform and

Consumer Protection Act (``Dodd-Frank Act''), requiring that oral book-

out agreements must be followed in a commercially reasonable timeframe

by a confirmation in some type of written or electronic form. This

notice solicits comments on the recordkeeping requirement that is

embedded in the final interpretation's reporting requirement.

DATES: Comments must be submitted on or before October 15, 2012.

ADDRESSES: You may submit comments, regarding the burden estimated or

any other aspect of the information collection, including suggestions

for reducing the burden, by any of the following methods:

Office of Information and Regulatory Affairs, Office of

Management and Budget, Attention: Desk Officer for CFTC, 725 17th

Street, Washington, DC 20503.

Comments may also be submitted by any of the following methods:

The Agency's Web site, at http://comments.cftc.gov/.

Follow the instructions for submitting comments through the Web site.

Mail: David A. Stawick, Secretary of the Commission,

Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st

Street NW., Washington, DC 20581.

Hand Delivery/Courier: Same as mail above.

Federal eRulemaking Portal: http://www.regulations.gov.

Please submit your comments using only one method.

All comments must be submitted in English, or if not, accompanied

by an English translation. Comments will be posted as received to

www.cftc.gov. If you wish the Commission to consider information that

you believe is exempt from disclosure under the Freedom of Information

Act, a petition for confidential treatment of the exempt information

may be submitted according to the procedures established in Sec. 145.9

of the Commission's regulations.\1\

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\1\ See 17 CFR 145.9.

FOR FURTHER INFORMATION CONTACT: Julian E. Hammar, Assistant General

Counsel, at 202-418-5118, jhammar@cftc.gov; Lee Ann Duffy, Assistant

General Counsel, at 202-418-6763, lduffy@cftc.gov; or David E. Aron,

Counsel, at 202-418-6621, daron@cftc.gov, Office of General Counsel,

Commodity Futures Trading

[[Page 49429]]

Commission, Three Lafayette Centre, 1155 21st Street NW., Washington,

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DC 20581.

SUPPLEMENTARY INFORMATION: Under the PRA, Federal agencies must obtain

approval from the Office of Management and Budget (``OMB'') for each

collection of information they conduct or sponsor. ``Collection of

Information'' is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3 and

includes agency requests or requirements that members of the public

submit reports, keep records, or provide information to a third party.

Section 3506(c)(2)(A) of the PRA, 44 U.S.C. 3506(c)(2)(A), requires

Federal agencies to provide a 60-day notice in the Federal Register

concerning each proposed collection of information before submitting

the collection to OMB for approval. An agency may not conduct or

sponsor, and a person is not required to respond to, a collection of

information unless it displays a currently valid control number. To

comply with this requirement, the CFTC is publishing the notice of the

proposed collection of information listed below.

Abstract: In accordance with section 712(a)(8), section 712(d)(1),

sections 712(d)(2)(B) and (C), sections 721(b) and (c), and section

761(b) of the Dodd-Frank Act, on July 10, 2012, the Commodity Futures

Trading Commission (``CFTC'') and the Securities and Exchange

Commission (``SEC'') (collectively, ``Commissions''), in consultation

with the Board of Governors of the Federal Reserve System (``Board''),

jointly adopted new rules and interpretations under the Commodity

Exchange Act (``CEA'') and the Securities Exchange Act of 1934

(``Exchange Act'') to further define the terms ``swap,'' ``security-

based swap,'' and ``security-based swap agreement'' (collectively,

``Product Definitions''); regarding ``mixed swaps;'' and governing

books and records with respect to ``security-based swap agreements''

(collectively, ``Adopting Release'').\2\

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\2\ 77 FR 48207, August 13, 2012 (``Product Definitions'').

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In the Adopting Release, the CFTC clarified that its ``Brent

Interpretation'' regarding book-outs developed in connection with the

forward exclusion from futures applies to the forward exclusion from

the swap definition as well. As noted in the Adopting Release, the

issue of book-outs first arose in 1990 in the CFTC's Brent

Interpretation. Citing to the Brent Interpretation's description of

book-outs, the Adopting Release stated:

It is noteworthy that while such [book-out] agreements may

extinguish a party's delivery obligation, they are separate,

individually negotiated, new agreements, there is no obligation or

arrangement to enter into such agreements, they are not provided for

by the terms of the contracts as initially entered into, and any

party that is in a position in a distribution chain that provides

for the opportunity to book-out with another party or parties in the

chain is nevertheless entitled to require delivery of the commodity

to be made through it, as required under the contracts.\3\

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\3\ Statutory Interpretation Concerning Forward Transactions, 55

FR 39188, 39192 Sept. 25, 1990, (``Brent Interpretation'').

In response to a comment to the proposed rule, the interpretation

included in the Adopting Release clarified that an oral book-out

agreement must be followed in a commercially reasonable timeframe by a

confirmation in some type of written or electronic form. If a party to

a contract elects to enter into such a book-out agreement, the

collection of information would be mandatory to qualify for the Brent

Interpretation Safe Harbor. If the Commission obtains information

required to be kept through this collection, it would protect

proprietary information in accordance with the Freedom of Information

Act and 17 CFR part 145, ``Commission Records and Information.'' In

addition, Section 8(a)(1) of the CEA strictly prohibits the Commission,

unless specifically authorized by the CEA, from making public ``data

and information that would separately disclose the business

transactions or market positions of any person and trade secrets or

names of customers.'' \4\ The Commission is also required to protect

certain information contained in a government system of records

according to the Privacy Act of 1974, 5 U.S.C. 552a.

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\4\ 7 U.S.C. 12(a)(1).

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Burden Statement: The respondent burden for this collection is

estimated to be 10 minutes per response. This estimate includes the

time to prepare the written or electronic confirmation to an oral book-

out agreement. The Commission estimates the average burden of this

collection of information as follows:

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\5\ Cost per response: .166 x $100, Average: 1.5 x .166 x $100.

The Commission estimates that entities will spend $100 per hour. The

$100 per hour estimate was used as the average hourly wage rate in

the PRA section of the Internal Business Conduct Standards for Swap

Dealers and Major Swap Participants final rule (See 77 FR 20128,

20194) and the wage rate for Chief Compliance Officers under the

Derivatives Clearing Organization final rules (See 76 FR 69344,

69428). As the Commission explained in the Internal Business Conduct

Standards final rule, the estimate of $100 per hour was based on

recent Bureau of Labor Statistics findings, including the mean

hourly wage of an employee under occupation code 23-1011,

``Lawyers,'' that is employed by the ``Securities and Commodity

Contracts Intermediation and Brokerage Industry,'' which is $82.22.

The mean hourly wage of an employee under occupation code 11-3031,

``Financial Manager,'' in the same industry is $74.41. Additionally,

SIFMA's ``Report on Management & Professional Earnings in the

Securities Industry--2010'' estimates the average wage of a

compliance attorney and a compliance staffer in the U.S. at only

$46.31 per hour. As in those rules, the Commission is using a $100

per hour wage rate in calculating the cost burdens imposed by this

collection of information and requests comment on the accuracy of

its estimate.

\6\ Total number of hours arrived by multiplying the average

number of responses, [(30,000 + 60,000)/2] x .166 minutes = 7,470

hours.

\7\ 7,470 hours x $100 per hour = $747,000.

Estimated Annual Reporting Burden Hours

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Frequency of Hours per

17 CFR Annual number response per response and Total annual Total hours

of respondents respondent cost responses cost

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17 CFR Part 1............... 30,000 On occasion, 1- 10 minutes per 45,000, 7,470 (average

2 annually. response (.166 (average of 1- of 5,000-

hour), at 2 annually for 10,000 total

$16.60 per a total of hours

response.\5\ 30,000-60,000 annually; \6\

annually). $747,000,

based on $100/

hour.\7\

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Respondents/Affected Entities: 30,000.

Estimated average number of responses: 45,000 [1-2 annually for a

total of 30,000-60,000 annually]

Estimated total average annual burden on respondents: 7,470 [5,000-

10,000] hours.

[[Page 49430]]

Frequency of collection: Occasionally, 1-2 annually.

Average total cost: $747,000.

There are no capital costs or operating and maintenance costs

associated with this collection. The Commission believes that, as part

of customary and usual business practices, most respondents already

create and store book-out agreements in either a written or electronic

format.

The Commission invites comments on:

Whether the proposed collection of information is

necessary for the proper performance of the functions of the

Commission, including whether the information will have a practical

use;

The accuracy of the Commission's estimate of the burden of

the proposed collection of information, including the validity of the

methodology and assumptions used;

Ways to enhance the quality, usefulness, and clarity of

the information to be collected; and

Ways to minimize the burden of collection of information

on those who are to respond, including through the use of appropriate

automated electronic, mechanical, or other technological collection

techniques or other forms of information technology; e.g., permitting

electronic submission of responses.

Dated: August 13, 2012.

Sauntia Warfield,

Assistant Secretary of the Commission.

[FR Doc. 2012-20123 Filed 8-15-12; 8:45 am]

BILLING CODE P

Last Updated: August 16, 2012