```

[Federal Register Volume 76, Number 79 (Monday, April 25, 2011)]
[Proposed Rules]
[Pages 22833-22848]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-9446]

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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 46

[3038-AD48]

Swap Data Recordkeeping and Reporting Requirements: Pre-Enactment 
and Transition Swaps

AGENCY: Commodity Futures Trading Commission.

ACTION: Proposed rulemaking.

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SUMMARY: The Commodity Futures Trading Commission (``Commission'' or 
``CFTC'') is proposing rules to implement new statutory provisions 
introduced by Title VII of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (``Dodd-Frank Act''). The Dodd-Frank Act amends 
the Commodity Exchange Act (``CEA'' or ``Act'') directing that rules 
adopted by the Commission shall provide for the reporting of data 
relating to swaps entered into before the date of enactment of the 
Dodd-Frank Act, the terms of which have not expired as of the date of 
enactment of that Act (``pre-enactment swaps'') and data relating to 
swaps entered into on or after the date of enactment of the Dodd-Frank 
Act and prior to the compliance date specified in the Commission's 
final swap data reporting rules (``transition swaps''). This proposal 
would establish recordkeeping and reporting requirements for pre-
enactment swaps and transition swaps.

DATES: Comments must be received by June 9, 2011.

ADDRESSES: You may submit comments, identified by RIN number 3038-AD48, 
by any of the following methods:
     Agency Web site, via its Comments Online process: 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.

[[Page 22834]]

     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    All comments must be submitted in English, or must be accompanied 
by an English translation. Comments will be posted as received to 
http://www.cftc.gov. You should submit only information that you wish 
to make available publicly. If you wish the Commission to consider 
information that may be exempt from disclosure under the Freedom of 
Information Act, you may submit a petition for confidential treatment 
according to the procedures established in CFTC Regulation 145.9.\1\ 
The Commission reserves the right, but shall have no obligation, to 
review, pre-screen, filter, redact, refuse or remove any or all of your 
submission from http://www.cftc.gov that it may deem to be 
inappropriate for publication, such as obscene language. All 
submissions that have been redacted or removed that contain comments on 
the merits of the rulemaking will be retained in the public comment 
file and will be considered as required under the Administrative 
Procedure Act and other applicable laws, and may be accessible under 
the Freedom of Information Act.
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    \1\ Commission regulations referred to herein are found at 17 
CFR Ch. 1.

FOR FURTHER INFORMATION CONTACT: David Taylor, Branch Chief, Market 
Continuity, Division of Market Oversight, 202-418-5488, 
dtaylor@cftc.gov; or Irina Leonova, Financial Economist, Division of 
Market Oversight, 202-418-5646, ileonova@cftc.gov; Commodity Futures 
Trading Commission, Three Lafayette Centre, 1155 21st Street, NW., 
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Washington, DC 20581.

SUPPLEMENTARY INFORMATION: The Commission is proposing rules under its 
part 46 regulations relating to recordkeeping and reporting 
requirements applicable to both pre-enactment and transition swaps, and 
is soliciting comment on all aspects of the proposed rules. These 
rules, when adopted, will supersede interim final rules previously 
adopted by the Commission in part 44 of its regulations.

Table of Contents

I. Background
    A. Swap Data Provisions of the Dodd-Frank Act
    B. The Commission's Proposed Rule on Swap Data Recordkeeping and 
Reporting Requirements
    C. The Interim Final Rules for Pre-Enactment and Transition 
Swaps
II. Proposed New Regulations, Part 46
III. Related Matters
    A. Regulatory Flexibility Act
    B. Paperwork Reduction Act
    C. Cost-Benefit Analysis
IV. Proposed Compliance Date
V. General Solicitation of Comments

I. Background

A. Swap Data Provisions of the Dodd-Frank Act

    On July 21, 2010, President Obama signed into law the Dodd-Frank 
Act.\2\ Title VII of the Dodd-Frank Act \3\ amended the CEA \4\ to 
establish a comprehensive new regulatory framework for swaps and 
security-based swaps. The legislation was enacted to reduce risk, 
increase transparency, and promote market integrity within the 
financial system by, among other things: (1) Providing for the 
registration and comprehensive regulation of swap dealers and major 
swap participants; (2) imposing clearing and trade execution 
requirements on standardized derivatives products; (3) creating robust 
recordkeeping and real-time reporting regimes; and (4) enhancing the 
Commission's rulemaking and enforcement authorities with respect to, 
among others, all registered entities and intermediaries subject to the 
Commission's oversight.
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    \2\ Dodd-Frank Wall Street Reform and Consumer Protection Act, 
Public Law 111-203, 124 Stat. 1376 (2010). The text of the Dodd-
Frank Act may be accessed at http://www.cftc.gov/LawRegulation/OTCDERIVATIVES/index.htm.
    \3\ Pursuant to Section 701 of the Dodd-Frank Act, Title VII may 
be cited as the ``Wall Street Transparency and Accountability Act of 
2010.''
    \4\ 7 U.S.C. 1 et seq.
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    To enhance transparency, promote standardization, and reduce 
systemic risk, Section 728 of the Dodd-Frank Act establishes a newly-
created registered entity--the swap data repository (``SDR'') \5\--to 
collect and maintain data related to swap transactions as prescribed by 
the Commission, and to make such data electronically available to 
regulators.\6\
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    \5\ See also CEA Sec.  1a(40)(E).
    \6\ Regulations governing core principles and registration 
requirements for, and the duties of, SDRs are the subject of a 
separate notice of proposed rulemaking under part 49 of the 
Commission's regulations. See CFTC Swap Data Repositories: Proposed 
Rule, 75 FR 80898 (Dec. 23, 2010).
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    Section 728 directs the Commission to prescribe standards for swap 
data recordkeeping and reporting. Specifically, Section 728 provides 
that:

    The Commission shall prescribe standards that specify the data 
elements for each swap that shall be collected and maintained by 
each registered swap data repository.\7\
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    \7\ CEA Sec.  21(b)(1)(A).

These standards are to apply to both registered entities and 
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counterparties involved with swaps:

    In carrying out [the duty to prescribe data element standards], 
the Commission shall prescribe consistent data element standards 
applicable to registered entities and reporting counterparties.\8\

    \8\ CEA Sec.  21(b)(1)(B).

    Section 727 of the Dodd-Frank Act requires that each swap, either 
cleared or uncleared, shall be reported to a registered SDR. That 
Section also amends Section 1(a) of the CEA to add the definition of 
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swap data repository:

    The term `swap data repository' means any person that collects 
and maintains information or records with respect to transactions or 
positions in, or the terms and conditions of, swaps entered into by 
third parties for the purpose of providing a centralized 
recordkeeping facility for swaps.\9\
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    \9\ CEA Sec.  1a(48).

    Section 728 also directs the Commission to regulate data collection 
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and maintenance by SDRs.

    The Commission shall prescribe data collection and data 
maintenance standards for swap data repositories.\10\
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    \10\ CEA Sec.  21(b)(2).

    Section 729 of the Dodd-Frank Act added to the CEA new Section 4r, 
which addresses reporting and recordkeeping requirements for uncleared 
swaps. Pursuant to this section, each swap not accepted for clearing by 
any derivatives clearing organization (``DCO'') must be reported to an 
SDR (or to the Commission if no SDR will accept the swap).
    Section 729 ensures that at least one counterparty to a swap has an 
obligation to report data concerning that swap. The determination of 
this reporting counterparty depends on the status of the counterparties 
involved. If only one counterparty is a swap dealer (``SD''), the SD is 
required to report the swap. If one counterparty is a major swap 
participant (``MSP''), and the other counterparty is neither an SD nor 
an MSP (``non-SD/MSP counterparty''), the MSP must report. Where the 
counterparties have the same status--two SDs, two MSPs, or two non-SD/
MSP counterparties--the counterparties must select a counterparty to 
report the swap.\11\
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    \11\ See CEA Sec.  4r(a)(3).
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    Section 729 also provides for reporting to the Commission of 
uncleared swaps that are not accepted by any SDR. Under this provision, 
counterparties to such swaps must maintain books and records pertaining 
to their swaps in the manner and for the time required by the 
Commission, and must make these books and records available for 
inspection by the Commission or other specified

[[Page 22835]]

regulators if requested to do so.\12\ It also requires counterparties 
to such swaps to provide reports concerning such swaps to the 
Commission upon its request, in the form and manner specified by the 
Commission.\13\ Such reports must be as comprehensive as the data 
required to be collected by SDRs.\14\
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    \12\ CEA Sec.  4r(c)(2) requires individuals or entities that 
enter into an uncleared swap transaction that is not accepted by an 
SDR to make required books and records open to inspection by any 
representative of the Commission; an appropriate prudential 
regulator; the Securities and Exchange Commission; the Financial 
Stability Oversight Council; and the Department of Justice.
    \13\ CEA Sec.  4r(c).
    \14\ CEA Sec.  4r(d).
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    Section 729 establishes in new CEA Section 4r(a)(2)(A) a 
transitional rule applicable to pre-enactment swaps. Section 
4r(a)(2)(A) provides for the reporting of pre-enactment swaps the terms 
of which have not expired as of the enactment of the Dodd-Frank Act to 
an SDR or the Commission, by a date that the Commission determines to 
be appropriate.\15\ Section 4r(a)(2)(B) directed the Commission to 
promulgate an interim final rule within 90 days of the date of 
enactment of the Dodd-Frank Act providing for the reporting of such 
pre-enactment swaps.\16\
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    \15\ Subsection (A) of CEA Section 4r(a)(2) provides that ``Each 
swap entered into before the date of enactment of the Wall Street 
Transparency and Accountability Act of 2010, the terms of which have 
not expired as of the date of enactment of that Act, shall be 
reported to a registered swap data repository or the Commission by a 
date that is not later than--(i) 30 days after issuance of the 
interim final rule; or (ii) such other period as the Commission 
determines to be appropriate.''
    \16\ Pursuant to Section 4r(a)(2)(B), the Commission on October 
14, 2010 published in part 44 of its regulations an interim final 
rule instructing specified counterparties to pre-enactment swaps to 
report data to a registered SDR or to the Commission by a compliance 
date to be established in reporting rules to be promulgated under 
Section 2(h)(5)(A) of the CEA and advising counterparties of the 
necessity, inherent in the reporting requirement, to retain 
information pertaining to the terms of such swaps until reporting 
can be effectuated under permanent rules. See Pre-Enactment Swaps 
IFR, supra, note 17.
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    Section 723 of the Dodd-Frank Act, which adds to the CEA new 
Section 2(h)(5), addresses the reporting of swap data for both swaps 
executed before the enactment of the Dodd-Frank Act \17\ and swaps 
executed on or after the date of that enactment but before the 
compliance date specified in the Commission's final swap data 
recordkeeping and reporting rules.\18\ In a July 15, 2010 floor 
statement concerning swap data reporting as well as other aspects of 
the Dodd-Frank Act, Senator Blanche Lincoln emphasized that the 
provisions of new CEA Section 4r (added by Section 729 of the Dodd-
Frank Act) and new CEA Section 2(h)(5) (added by Section 723 of the 
Dodd-Frank Act) ``should be interpreted as complementary to one another 
to assure consistency between them. This is particularly true with 
respect to issues such as the effective dates of these reporting 
requirements * * *'' \19\
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    \17\ See CFTC Interim Final Rule for Reporting Pre-Enactment 
Swap Transactions (``Pre-Enactment Swaps IFR''), 75 FR 63080 (Oct. 
14, 2010).
    \18\ See CFTC Interim Final Rule for Reporting Post-Enactment 
Swap Transactions (``Post-Enactment Swaps IFR'' or ``Transition 
Swaps IFR''), 75 FR 78892 (Dec. 17, 2010).
    \19\ Senator Blanche Lincoln, ``Wall Street Transparency and 
Accountability Act,'' Congressional Record, July 15, 2010, at S5923.
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    This proposed rule refers to the two types of swaps addressed in 
CEA Section 2(h)(5) as follows. ``Pre-enactment swap'' means a swap 
executed before date of enactment of the Dodd-Frank Act (i.e., before 
July 21, 2010) the terms of which have not expired as of the date of 
enactment of that Act.\20\ ``Transition swap'' means a swap executed on 
or after the date of enactment of the Dodd-Frank Act (i.e., July 21, 
2010) and before the compliance date specified in the final swap data 
reporting and recordkeeping requirements regulations in part 45 of this 
chapter.\21\ Collectively, the proposed rule refers to pre-enactment 
swaps and transition swaps as ``historical swaps.''
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    \20\ Subsection (A) of CEA Section 2(h)(5) Reporting Transition 
Rules provides that ``Swaps entered into before the date of the 
enactment of this subsection shall be reported to a registered swap 
data repository or the Commission no later than 180 days after the 
effective date of this subsection.''
    \21\ Subsection (B) of CEA Section 2(h)(5) Reporting Transition 
Rules provides that ``Swaps entered into on or after [the] date of 
enactment [of the Dodd-Frank Act] shall be reported to a registered 
swap data repository or the Commission no later than the later of 
(i) 90 days after [the] effective date [of Section 2(h)(5)] or (ii) 
such other time after entering into the swap as the Commission may 
prescribe by rule or regulation.''
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B. The Commission's Proposed Rule on Swap Data Recordkeeping and 
Reporting Requirements

    On December 8, 2010, the Commission published for comment a notice 
of proposed rulemaking concerning swap data (the ``Swap Data NPRM'') 
that would establish swap data recordkeeping and reporting requirements 
applicable to registered SDRs, derivatives clearing organizations 
(``DCOs''), designated contract markets (``DCMs''), swap execution 
facilities (``SEFs''), SDs, major swap participants MSPs, and non-SD/
MSP counterparties.\22\ The latter category of swap counterparties 
would include but not be limited to counterparties who qualify for the 
statutory end user exception with respect to particular swaps.\23\ 
Consistent with the purposes of the Dodd-Frank Act, the Swap Data NPRM 
would require generally that all DCOs, DCMs, SEFs, and swap 
counterparties keep full, complete and systematic records, together 
with all pertinent data and memoranda, of all activities relating to 
the business of such entities or persons with respect to swaps. The 
proposed rules contemplate that swap data reporting should include data 
from each of two important stages in the existence of a swap: the 
creation of the swap, and the continuation of the swap over its 
existence until its final termination or expiration. The proposed rules 
call for reporting of two sets of data generated in connection with the 
creation of the swap: primary economic terms data and confirmation 
data.\24\ Reporting of swap continuation data can follow either of two 
conceptual approaches described in the Swap Data NPRM: The life cycle 
or event flow approach, or the state or snapshot approach.\25\
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    \22\ 75 FR 76574 (Dec. 8, 2010) (``Swap Data NPRM'').
    \23\ CEA Section 2(h)(7).
    \24\ See Swap Data NPRM, supra, note 22 at 76580-76582.
    \25\ Id. at 76583-76584.
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    The Swap Data NPRM did not address CEA Section 2(h)(5)'s mandate 
that the Commission adopt recordkeeping and reporting rules applicable 
to pre-enactment swaps or transition swaps, but instead noted that a 
separate rulemaking to establish requirements for these historical 
swaps would address the records, information and data required to be 
maintained and the timeframe for reporting such information to a 
registered SDR or to the Commission.\26\ This proposal would establish 
recordkeeping and reporting standards applicable to pre-enactment and 
transition swaps.
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    \26\ Id. at 76580 note 37.
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C. The Interim Final Rules for Pre-Enactment and Transition Swaps

    Interim Final Rule for Pre-Enactment Swaps. As described above, 
Title VII of the Dodd-Frank Act added new Section 4r(a)(2) to the CEA, 
which provided for the reporting of pre-enactment swaps and directed 
that the Commission promulgate, within 90 days of enactment of the 
Dodd-Frank Act, an interim final rule (``IFR'') providing for the 
reporting of such swaps. On October 14, 2010, pursuant to the mandate 
of CEA Section 4r(a)(2)(B), the Commission published in new part 44 of 
its regulations an IFR instructing specified counterparties to pre-
enactment swaps to report data to a registered SDR or to the Commission 
by

[[Page 22836]]

a compliance date to be established in reporting rules to be 
promulgated under CEA Section 2(h)(5), and advising such counterparties 
of the necessity, inherent in the reporting requirement, to preserve 
information pertaining to the terms of such swaps until reporting was 
effectuated under permanent rules.\27\ This Pre-Enactment Swaps IFR 
stated that the reporting and recordkeeping provisions established by 
Section 4r and Sec. Sec.  44.00-44.02 of the Commission's regulations 
would remain in effect until the effective date of the permanent 
reporting rules to be adopted by the Commission pursuant to Section 
2(h)(5) of the CEA.\28\ A principal purpose of this IFR was to advise 
counterparties of the need to retain data related to swap transactions 
so that reporting could be effectuated under permanent rules 
subsequently to be adopted.
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    \27\ See Pre-Enactment Swaps IFR, supra note 17, at 63083.
    \28\ See Pre-Enactment Swaps IFR, supra note 17.
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    With respect to the scope and coverage of the Pre-Enactment Swaps 
IFR, the Commission acknowledged inconsistencies between the two Dodd-
Frank provisions governing the Commission's rulemaking. Specifically, 
new CEA Section 4r(a)(2) limits reportable pre-enactment swaps to those 
whose terms have not expired on the date of enactment of the Dodd-Frank 
Act; Section 2(h)(5) does not contain the same qualifying language. As 
discussed in the Pre-Enactment Swaps IFR, the Commission believes that 
failure to limit the term ``pre-enactment swap'' to unexpired swaps 
would require reporting of every swap that has ever been entered into; 
accordingly, the Commission concluded that reportable pre-enactment 
swaps should be limited to those whose terms had not expired at the 
time of enactment.\29\
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    \29\ Id. at 63082.
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    Interim Final Rule for Transition Swaps. Section 4r of the CEA did 
not mandate an IFR establishing reporting provisions for transition 
swaps. The Commission nonetheless believed that such a rule would 
provide clarity and guidance with respect to such swaps, by 
establishing that transition swaps will be subject to Section 
2(h)(5)(B)'s reporting requirements and to Commission regulations to be 
promulgated thereunder. The Commission also believed it was prudent to 
advise potential counterparties to such swaps that implicit in this 
prospective reporting requirement is the need to retain relevant data 
until such time as reporting can be effected. Accordingly, on December 
17, 2010 the Commission published under Part 44 of its regulations 
interim final rules establishing that counterparties to transition 
swaps will be subject to permanent recordkeeping and reporting 
requirements to be adopted by the Commission pursuant to Section 
2(h)(5)(B) of the CEA.\30\
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    \30\ See Transition Swaps IFR, supra note 18.
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    The Commission intended both the Pre-Enactment Swaps IFR and the 
Transition Swaps IFR to put counterparties on notice that swap data 
should be retained pending the adoption of permanent rules for pre-
enactment and transition swaps under proposed part 46 of this chapter. 
With respect to both pre-enactment and transition swaps, the Commission 
stated that counterparties to these transactions should retain material 
information about such transactions. The Commission emphasized, 
however, that in the context of the interim rules, no counterparty was 
being required to create new records with respect to transactions that 
occurred in the past; instead, records relating to the terms of such 
transactions could be retained in their existing format to the extent 
and in such form as they presently exist.\31\
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    \31\ See Pre-Enactment Swaps IFR, supra note 17, at 63086, and 
Transition Swaps IFR, supra note 18, at 78894.
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    Comments Received. The Commission received a number of comments in 
response to each of the IFRs. Comments generally fell into one or more 
of several broad categories and in a number of instances were common to 
both IFRs. Some commenters observed that issuance of IFRs in advance of 
regulations further defining the term ``swap'' (or defining other key 
terms in the Dodd-Frank Act) creates legal and regulatory uncertainty 
and increases compliance risk; most of these commenters urged the 
Commission to further detail the record retention aspects of the 
interim final rules.\32\ In this connection, commenters requested that 
the Commission issue guidance clarifying and limiting the information 
that must be retained,\33\ or create a safe harbor for good faith 
compliance efforts.\34\ Energy interests suggested that the Commission 
should ensure that end users need only report basic data in a 
simplified reporting scheme, or should outline categories of 
information that need not be retained by persons who anticipate 
becoming eligible for the end user exemption under the Dodd-Frank 
Act.\35\ One commenter urged greater specificity with respect to the 
Pre-Enactment IFR's requirements, as well as consistency with the 
standards adopted by the Securities and Exchange Commission (``SEC'') 
and international regulators, and proposed alternatives to the 
requirements adopted in the IFR for pre-enactment swaps, particularly 
with respect to reporting protocols, record retention, and 
confidentiality issues (notably, those confidentiality issues arising 
in the context of cross-border transactions).\36\ Another commenter 
urged that U.S. swap data reporting requirements should not apply with 
respect to foreign swaps transactions, where counterparties are non-
U.S. entities.\37\
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    \32\ See, e.g., letters dated November 15, 2010 and January 18, 
2011 from the Working Group of Commercial Energy Firms (``Working 
Group letters''); letter dated November 15, 2010 from Hess 
Corporation (``Hess Corporation letter''); letter dated November 15, 
2010 from the Edison Electric Institute (``EEI letter''); letters 
dated November 15, 2010 and January 18, 2011 from the Not-for-Profit 
Electric End User Coalition (``Coalition letters''); letter dated 
January 18, 2011 from the American Gas Association (``AGA letter'').
    \33\ EEI letter.
    \34\ Working Group letters; EEI letter; Hess Corporation letter.
    \35\ AGA letter; Coalition letters.
    \36\ Letter dated November 12, 2010, from the International 
Swaps and Derivatives Association, Inc. and the Futures Industry 
Association.
    \37\ Letter dated January 11, 2011, from Barclays Bank PLC, BNP 
Paribas S.A., Deutsche Bank AG, Royal Bank of Canada, The Royal Bank 
of Scotland Group PLC, Soci[eacute]t[eacute] G[eacute]n[eacute]rale 
and UBS AG.
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    The Commission is mindful of these concerns and expects to consider 
and address them, as well as all comments received in response to this 
proposed rule, in formulating permanent rules applicable to pre-
enactment and transition swaps.

II. Proposed New Regulations, Part 46

    As provided in the Commission's Swap Data NPRM,\38\ Pre-Enactment 
Swaps IFR,\39\ and Transition Swaps IFR,\40\ this proposed rule 
addresses the records, information, and data that must be retained for 
historical swaps, the timeframe for reporting data to an SDR or the 
Commission concerning such swaps, and the specific data to be reported.
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    \38\ See Swap Data NPRM, supra note 20, at fn. 37.
    \39\ See Pre-Enactment Swaps IFR, supra note 17.
    \40\ See Transition Swaps IFR, supra note 18.
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    Recordkeeping. For historical swaps in existence on or after the 
date of publication of the proposed rule, the rule would impose 
limited, specific recordkeeping obligations. Counterparties to such 
swaps would be required to keep records of an asset class-specific set 
of specified, minimum primary economic terms. The Commission believes 
that counterparties to historical swaps will possess this limited set 
of asset class-specific information as part of their normal

[[Page 22837]]

business practices.\41\ Commission staff have consulted with industry 
representatives, including buy-side counterparties, concerning 
information routinely kept in this connection for swaps in different 
asset classes. Counterparties to historical swaps in existence on or 
after the date of publication of this proposed rule would also be 
required to keep records of a confirmation of their swaps if they have 
that information in their possession on or after the publication date 
(the date from which public notice of this specific proposed 
recordkeeping requirement is available). The Commission requests 
comment concerning the appropriateness of these limited recordkeeping 
requirements, and specifically requests comment concerning whether all 
counterparties to historical swaps will possess the limited set of 
asset class-specific information called for by the proposed rule as 
part of their normal business practices. If there are any 
counterparties to historical swaps who do not possess the limited set 
of asset class-specific information called for by the proposed rule, 
the Commission requests comment from such counterparties concerning 
what information concerning historical swaps such counterparties do 
possess, and concerning what information such counterparties retain 
concerning their swaps in order to meet the requirements of other 
applicable law, such as hedge accounting requirements or the 
requirements of applicable state law.
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    \41\ The Commission understands that the terminology used to 
describe the specific terms and conditions of a swap can vary among 
market participants, and that agreed definitions for certain terms 
could increase consistency among participants in how historical 
swaps are described. The Commission therefore requests comment on 
whether the proposed minimum primary economic terms for each asset 
class are sufficiently clear in terms of what economic data is 
expected to be reported, or whether further clarification is needed 
in this respect.
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    For historical swaps that were in existence as of the date of 
enactment of the Dodd-Frank Act but have expired or been terminated 
prior to the publication date of this proposed rule, a counterparty 
would only be required to keep records as provided in the Commission's 
IFRs concerning pre-enactment and transition swaps: namely, the 
information and documents relating to the terms of the swap that the 
counterparty possessed when the applicable IFR was published, in 
whatever format that information is kept by the counterparty.\42\
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    \42\ As used in the IFRs, ``format'' refers to the method by 
which the information is organized and stored. It does not refer to 
a recording format (i.e., a format for electronic encoding of data).
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    The Commission understands that the minimum primary economic terms 
for a swap can vary widely depending on the asset class of the 
underlying products or on the nature of a particular product within an 
asset class. Consequently, the Commission encourages the industry to 
reach an internal consensus about the appropriate, asset class-
specific, minimum primary economic terms to be reported for pre-
enactment and transition swaps. The Commission welcomes comments from 
industry and market participants in this regard, and will consider them 
in determining the minimum primary economic terms to be specified in 
the final swap data recordkeeping and reporting rules.
    Reporting timeframe. The proposed rule provides that swap data 
reporting for historical swaps would commence on the compliance date 
specified in the Commission's final swap data recordkeeping and 
reporting regulations in part 45 of this chapter.\43\ The Commission 
believes that the purposes of the Dodd-Frank Act can be best served by 
establishing a single date for the commencement of all swap data 
reporting pursuant to that Act. It also believes that the compliance 
date for the final swap data reporting regulations in part 45--the date 
on which reporting must commence--is the most practicable and 
appropriate date for this purpose. The effective date will be set by 
the Commission in its final swap data reporting regulations.\44\ In the 
Swap Data NPRM, the Commission requested comments concerning the time 
needed to prepare automated systems for swap data recordkeeping and 
reporting prior to implementation of the regulations, and it will 
carefully consider the comments received in response to that request. 
The Commission similarly requests comment concerning the proposal to 
specify the same compliance date as the date for initial data reporting 
concerning pre-enactment and transition swaps, and the time needed in 
this connection for preparation of necessary automated systems prior to 
the specified compliance date.
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    \43\ 17 CFR part 45.
    \44\ As provided in CEA Section 2(h)(5)(B), the effective date 
must be no sooner than 90 days after the effective date of CEA 
Section 2(h)(5), but may be a later date set by the Commission.
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    Data to be reported. The proposed rule specifies data to be 
reported for historical swaps. For pre-enactment and transition swaps 
in existence on or after the date of publication of this proposed rule, 
the rule specifies the data elements to be reported. For historical 
swaps in existence as of enactment of the Dodd-Frank Act which expired 
or were terminated prior to publication of this proposed rule, the rule 
provides for reporting of the information relating to the terms of the 
transaction that was in the possession of a reporting counterparty as 
of publication of the applicable Commission IFR regarding pre-enactment 
or transition swaps, in such format as it is kept by the reporting 
counterparty.
    As noted above, the Dodd-Frank Act requires reporting of data 
concerning all swaps in existence as of the legislation's 
enactment.\45\ Data concerning pre-enactment swaps and transition swaps 
will assist achievement of the systemic risk mitigation, market 
transparency, and market supervision purposes for which the Dodd-Frank 
Act was enacted. Such data will be needed to give regulators the 
complete picture of the swap market which the comprehensive regulatory 
framework and reporting requirements of the statute are designed to 
provide. Data concerning historical swaps also is necessary for the 
Commission to prepare the semi-annual reports it is required to provide 
to Congress regarding the swap market.
---------------------------------------------------------------------------

    \45\ CEA Section 4r(a)(2)(A).
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    The Commission is aware that internal swap data retention policies 
are not uniform among swap counterparties, and that the current 
automated systems of market participants vary with respect to their 
suitability for swap data reporting. The Commission believes it is 
appropriate to limit the burden placed on swap counterparties in 
connection with data reporting for historical swaps, to the extent that 
this can be done in a manner consistent with the requirements of the 
Dodd-Frank Act and the Commission's need for such data. The Commission 
has also considered comments received concerning the Pre-Enactment 
Swaps IFR and Transition Swaps IFR which requested that the Commission 
specify clearly what data would be required to be reported concerning 
historical swaps.
    Data reporting for historical swaps in existence as of or after 
publication of this proposed rule. For each pre-enactment or transition 
swap in existence as of or after publication of this proposed rule, the 
rule calls (a) for an initial data report on the compliance date for 
data reporting, and (b), if such a historical swap has not expired or 
been terminated as of the compliance date specified in the final part 
45 swap data reporting regulations, for ongoing reporting of required 
swap continuation data (as defined in the Commission's final part 45 
swap data reporting

[[Page 22838]]

regulations) during the remaining existence of the swap.
    The proposed rule calls for the initial data report for historical 
swaps in existence as of or after publication of this proposed rule to 
include the transaction terms included in the swap confirmation if the 
confirmation was in the reporting counterparty's possession on or after 
the publication date of this proposed rule,\46\ and in any event to 
include all of the minimum primary economic terms for a pre-enactment 
or transition swap specified in the appropriate table in the Appendix 
to the proposed rule.
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    \46\ The Commission understands that counterparties may use 
either a short-form or a long-form confirmation. Either form can be 
used to satisfy this requirement.
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    The Commission understands that industry definitions used in 
documenting some swap transactions, for instance in some master 
agreements or confirmations, may not match exactly the asset class 
definitions included in this proposed rule, which are the same as the 
asset class definitions in the Commission's part 45 proposed rules 
regarding swap data recordkeeping and reporting requirements. The 
Commission requests comment on how the proposed asset class definitions 
in this proposed rule and the overall swap classification scheme 
embodied in them might most appropriately be aligned with current swap 
instrument classifications used by the industry, and with definitions 
employed by, e.g., the International Swaps and Derivatives Association 
(``ISDA''), the Edison Electric Institute, the North American Energy 
Standards Board, and others.
    In addition, the Commission anticipates that some swaps subject to 
its jurisdiction may belong to two other swap categories: mixed swaps, 
and multi-asset swaps. Generally, a mixed swap is in part a security-
based swap subject to the jurisdiction of the SEC and in part a swap 
belonging to one of the swap asset classes subject to the jurisdiction 
of the Commission.\47\ Multi-asset swaps are those that do not have one 
easily identifiable primary underlying notional item within the 
Commission's jurisdiction. The Dodd-Frank Act defines ``mixed swap'' as 
follows: ``The term `security-based swap' includes any agreement, 
contract, or transaction that is as described in section 3(a)(68)(A) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(68)(A)) and is 
also based on the value of 1 [sic] or more interest or other rates, 
currencies, commodities, instruments of indebtedness, indices, 
quantitative measures, other financial or economic interest or property 
of any kind (other than a single security or a narrow-based security 
index), or the occurrence, non-occurrence, or the extent of the 
occurrence of an event or contingency associated with a potential 
financial, economic, or commercial consequence (other than an event 
described in subparagraph (A)(iii).'' \48\ The Commission requests 
comment concerning how such swaps should be treated with respect to 
swap data reporting for historical swaps, and concerning the category 
or categories under which swap data for such swaps should be reported 
to SDRs and maintained by SDRs.
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    \47\ See Swap Data NPRM, supra note 20, at 76586.
    \48\ Dodd-Frank Act Sec.  721(21), CEA Sec.  1a(47)(D).
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    The initial data report for historical swaps in existence as of or 
after publication of this proposed rule would also be required to 
include the Unique Counterparty Identifier of the reporting 
counterparty (as defined in part 45),\49\ and the reporting 
counterparty's internal system identifiers for the non-reporting 
counterparty and the particular swap transaction in question.
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    \49\ The Commission intends to take the need for reporting 
counterparties to obtain Unique Counterparty Identifiers into 
account in setting the effective date for the data reporting rules 
in part 45.
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    The proposed rule would give non-reporting counterparties an 
additional 180 days after the compliance date specified in the 
Commission's final part 45 rules for data reporting before they would 
be required to obtain and use a Unique Counterparty Identifier in 
connection with pre-enactment and transition swaps. The Commission is 
proposing this additional time because it understands that the majority 
of non-reporting counterparties are likely to be non-SD/MSP 
counterparties. While SDs and MSPs are likely to have infrastructure in 
place that can incorporate and track Unique Counterparty Identifiers, 
non-SD-MSP counterparties could need to acquire new automated systems 
or undertake modifications of existing systems in order to incorporate 
identifiers. The Commission requests comment concerning the 
appropriateness of this additional time, concerning the length of the 
additional time provided, and concerning whether the Commission should 
differentiate further between SD and MSP counterparties versus non-SD/
MSP counterparties with respect to use of Unique Counterparty 
Identifiers for non-reporting counterparties to pre-enactment and 
transition swaps.
    The proposed rule also requires the reporting counterparty to 
report the master agreement identifier (if any) used by the reporting 
counterparty's automated systems to identify the master agreement 
governing a pre-enactment or transition swap. This information would 
allow the Commission and other regulators to aggregate transactional 
data to calculate net or gross exposure of a particular counterparty. 
The Commission requests comment concerning whether its final swap data 
recordkeeping and reporting regulations for pre-enactment and 
transition swaps should require such reporting of a master agreement 
identifier.
    The Commission requests comment concerning the appropriateness and 
adequacy of these initial data report requirements. Additionally, the 
Commission requests comment on the appropriate method for identifying 
the association of an individual swap transaction with a particular 
master agreement or with a swap portfolio, in order to identify 
individual swaps that may be subject to close-out netting and other 
provisions typical in portfolio compression.\50\ Identifying this 
association could be a necessary means of enabling regulators to 
determine a counterparty's net exposure (current or future) on the 
basis of transactional data reported to SDRs. In particular, the 
Commission requests comment on whether reporting of a master agreement 
identifier as provided in this proposed rule is needed in this 
connection and would provide a workable means of achieving this goal.
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    \50\ The Commission's proposed rule regarding confirmation, 
portfolio reconciliation and portfolio compression requirements for 
SDs and MSPs, 17 CFR part 23, defines portfolio compression as a 
mechanism whereby substantially similar transactions among two or 
more counterparties are terminated and replaced with a smaller 
number of transactions of decreased notional value, in an effort to 
reduce the risk, cost, and inefficiency of maintaining unnecessary 
transactions on the counterparties' books. See CFTC Notice of 
Proposed Rulemaking: Confirmation, Portfolio Reconciliation and 
Portfolio Compression Requirements for Swap Dealers and Major Swap 
Participants, 75 FR 81519 (Dec. 28, 2010).
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    The Commission has chosen to propose limited requirements for 
recordkeeping and initial data reports concerning pre-enactment and 
transition swaps because it understands that the current recordkeeping 
and reporting systems that some counterparties to such swaps have at 
present might not be able to fulfill, with respect to historical swaps, 
recordkeeping and reporting requirements as extensive as those proposed 
in part 45. In these circumstances, the Commission believes it is 
appropriate to limit the burden imposed on such counterparties, to the 
extent that this can be done in a way

[[Page 22839]]

that is consistent with the requirements of the Dodd-Frank Act and the 
Commission's need for data concerning historical swaps. The Commission 
believes, however, that the limited set of minimum primary economic 
terms data set forth in this proposed rule with respect to historical 
swaps is the minimum necessary to give regulators a picture of the risk 
exposures and counterparty participation in such swaps at the minimum 
level necessary for the Commission and other regulators to fulfill 
their regulatory responsibilities. The Commission requests comment 
concerning the appropriateness of this approach to initial data 
reporting for pre-enactment and transition swaps.
    Regarding ongoing reporting of required swap continuation data 
during the remaining existence of a pre-enactment or transition swap 
after the compliance date, the proposed rule follows the life cycle 
approach for credit swaps and equity swaps, and the state or snapshot 
approach for interest rate swaps, currency swaps, and other commodity 
swaps. This same distinction is made in the Commission's Swap Data 
NPRM, which sets forth the Commission's reasons for making this 
distinction, reasons which also apply with respect to part 46. The 
Commission believes that this unified approach to swap data reporting 
rules for pre-enactment, transition, and post-compliance-date swaps 
will minimize recordkeeping and swap data reporting burdens for 
industry and provide a coherent and consistent picture of the overall 
swap market to regulators. Since the proposed part 45 continuation data 
reporting requirements are aligned with the approach taken in the SEC's 
proposed rules for security-based credit and equity swaps, this also 
serves to avoid differing requirements for security-based swaps and 
swaps. The Commission requests comment concerning whether required 
reporting of the same swap continuation data for pre-enactment and 
transition credit swaps and equity swaps, in line with the requirements 
of proposed part 45 and of the SEC's proposed rules, is appropriate in 
this connection.
    For pre-enactment or transition interest rate swaps, currency 
swaps, and other commodity swaps, this proposed rule also limits 
continuation data reporting obligations for non-SD/MSP reporting 
counterparties. Specifically, the proposal requires that SD or MSP 
reporting counterparties must meet continuation data reporting 
requirements for pre-enactment and transition swaps in those asset 
classes that are the same as the continuation data reporting 
requirements of proposed part 45 for swaps in those asset classes. 
While non-SD/MSP reporting counterparties for such swaps are required 
to report the state data \51\ necessary to provide a daily snapshot 
view of the primary economic terms of the swap, the state data that 
must be reported by non-SD/MSP reporting counterparties for such swaps 
is limited to the state data available to the non-SD/MSP reporting 
counterparty on the compliance date. This may consist of only the data 
elements contained in the table of minimum primary economic terms for 
various swap asset classes, as set forth in Appendix 1 to part 46, if 
that is all that was available to the non-SD/MSP reporting counterparty 
on that date. This approach is designed to avoid placing undue 
recordkeeping and reporting burdens on non-SD/MSP counterparties, who 
are the reporting counterparties least likely to have the automated 
systems needed for more extensive reporting with respect to pre-
enactment or transition swaps. The Commission requests comment 
concerning the appropriateness of this approach to continuation data 
reporting for pre-enactment and transition swaps.
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    \51\ For purposes of this proposed rule, ``state data'' has the 
meaning defined in part 45 of this chapter. See Swaps Data NPRM, 
supra note 20, at 76599.
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    Data reporting for historical swaps in existence as of enactment of 
the Dodd-Frank Act but expired or terminated prior to publication of 
this proposed rule. For historical swaps in existence as of enactment 
of the Dodd-Frank Act which expired or were terminated prior to 
publication of this proposed rule, only an initial data report would be 
required.\52\ For such swaps, the proposed rule would require that the 
reporting counterparty report such information relating to the terms of 
the transaction as was in that counterparty's possession as of issuance 
of the relevant Commission IFR.\53\ This information would be permitted 
to be reported in the format in which it was kept by the reporting 
counterparty.\54\
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    \52\ By its nature, continuation data reporting occurs during 
the continuation of a swap prior to its expiration or termination.
    \53\ Pre-Enactment Swaps IFR, supra note 15, and Transition 
Swaps IFR, supra note 18.
    \54\ This could include submission of a PDF file.
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    Selection of reporting counterparty. This proposed rule provides 
that determination of which counterparty to a pre-enactment or 
transition swap is the reporting counterparty for that swap shall be 
made according to Dodd-Frank Act's hierarchy of counterparty types for 
reporting obligation purposes, in which SDs outrank MSPs, who outrank 
non-SD/MSP counterparties. Where both counterparties are at the same 
hierarchical level, the statute calls for them to select the 
counterparty obligated to report. The proposed rule establishes a 
mechanism for counterparties to follow in choosing the counterparty to 
report in situations where both counterparties have the same 
hierarchical status. Where both counterparties are SDs, or both are 
MSPs, or both are non-SD/MSP counterparties, the proposed rule requires 
the counterparties to agree as on term of their swap transaction which 
counterparty will fulfill reporting obligations. The proposed rule also 
provides that, where only one counterparty to a swap is a U.S. person, 
the U.S. person should be the reporting counterparty. The Commission 
believes, preliminarily, that this approach may be necessary in order 
to ensure compliance with reporting requirements in such situations. In 
these respects, the proposed rule mirrors the provision of the part 45 
Swap NPRM regarding selection of the reporting counterparty.
    The proposed rule also provides that determination of the reporting 
counterparty shall be made with respect to the current counterparties 
to the swap as of the compliance date (for historical swaps in 
existence as of that date) or as of the prior expiration or termination 
of the swap (for historical swaps expired or terminated prior to the 
compliance date), regardless of who the counterparties to the swap were 
when it was originally executed.
    As noted above, where both counterparties have the same 
hierarchical status, the proposed rule calls for the counterparties to 
agree as one term of their swap transaction which counterparty will 
fulfill reporting obligations. In the case of a historical swap 
executed prior to publication of this proposed rule, for which the 
agreement to enter into the swap has already been made, agreement by 
the counterparties on selection of the reporting counterparty would 
require negotiation occurring after the agreement to enter into the 
swap was made, and could require amendment of the agreement to enter 
into the swap in this respect. The Commission requests comment 
concerning how two SD counterparties, two MSP counterparties, or two 
non-SD/MSP counterparties should select the reporting counterparty for 
a pre-enactment or transition swap which was executed prior to the 
publication date of this proposed rule, and thus does not include an 
agreement term selecting the reporting counterparty. The Commission 
also requests comment concerning whether its final data recordkeeping 
and

[[Page 22840]]

reporting rules for historical swaps should prescribe a method for 
selecting a reporting counterparty in such circumstances. The 
Commission may include such a method in the final data recordkeeping 
and reporting rules for historical swaps.
    The Commission has received comments regarding the part 45 Swap 
NPRM suggesting that, where only one counterparty to a swap is a U.S. 
person, the counterparty designated as the reporting counterparty under 
the hierarchical approach based on the Dodd-Frank Act and discussed 
above should be applied in the same way as for a swap where both 
counterparties are U.S. persons. This would mean, for example, that for 
a swap between a non-U.S. SD and a U.S. non-SD/MSP counterparty, the 
non-U.S. SD would be the reporting counterparty. The Commission 
requests comment concerning how the reporting counterparty for a 
historical swap should be selected when one counterparty is a non-U.S. 
person.
    Non-duplication of previous reporting. The Commission is aware that 
in some instances, reporting counterparties may have reported data 
concerning pre-enactment or transition swaps to a presently-existing 
trade repository prior to the compliance date. If such a repository is 
registered with the Commission as an SDR as of the compliance date, the 
Commission would not require reporting counterparties to report 
duplicate information to the SDR, although it would require reporting 
on the compliance date of any information required by this proposed 
rule that had not already been reported to the SDR.

III. Related Matters

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA'') \55\ requires that 
agencies consider whether the rules they propose will have a 
significant economic impact on a substantial number of small entities 
and, if so, provide a regulatory flexibility analysis respecting the 
impact.\56\ The regulations proposed by the Commission would affect 
SDs, MSPs, and non-SD/MSP counterparties who are counterparties to one 
or more pre-enactment or transition swaps. The Commission has 
previously established certain definitions of ``small entities'' to be 
used by the Commission in evaluating the impact of its regulations on 
small entities in accordance with the RFA.\57\
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    \55\ 5 U.S.C. 601 et seq.
    \56\ 5 U.S.C. 601 et seq.
    \57\ 47 FR 18618 (Apr. 30, 1982).
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    The Commission hereby determines that SDs and MSPs should not be 
considered small entities for purposes of the RFA. SDs and MSPs will 
play a central role in the national regulatory scheme overseeing the 
trading of swaps. With respect to SDs, the Commission previously has 
determined that Futures Commission Merchants (``FCMs'') should not be 
considered to be small entities for purposes of the RFA.\58\ Like FCMs, 
SDs will be subject to minimum capital and margin requirements and are 
expected to comprise the largest global financial firms.\59\ Similarly, 
with respect to MSPs, the Commission has previously determined that 
large traders are not ``small entities'' for RFA purposes.\60\ Like 
large traders, MSPs will maintain substantial positions, creating 
substantial counterparty exposure that could have serious adverse 
effects on the financial stability of the U.S. banking system or 
financial markets.
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    \58\ 47 FR 18618 (Apr. 30, 1982).
    \59\ Additionally, the Commission is required to exempt from 
designation entities that engage in a de minimis level of swaps. Id. 
at 18619.
    \60\ 47 FR at 18620.
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    With respect to non-SD/MSP counterparties, the Commission believes 
that the proposed regulations will not create a significant economic 
impact on a substantial number of small entities. The proposed rule 
sets forth recordkeeping and reporting requirements with respect to 
pre-enactment and transition swaps. The Commission believes that the 
records the proposed rule would require to be kept are already kept by 
swap counterparties in their normal course of business. The proposed 
rule would require limited swap data reporting for pre-enactment or 
transition swaps, and would require such reporting by non-SD/MSP 
counterparties only with respect to such swaps in which neither 
counterparty is an SD or MSP. The considerable majority of swaps 
involve at least one SD or MSP. In addition, most end users and other 
non-SD/MSP counterparties who are regulated by the Employee Retirement 
Income Security Act of 1974 (``ERISA''), such as pension funds, which 
are among the most active participants in the swap market, are 
prohibited from transacting directly with other ERISA-regulated 
participants.\61\ For these reasons, the Commission does not believe 
that the regulations would have a significant economic impact on a 
substantial number of small entities.
---------------------------------------------------------------------------

    \61\ 29 U.S.C. 1106.
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    Accordingly, the Chairman, on behalf of the Commission, hereby 
certifies pursuant to 5 U.S.C. 605(b) that the proposed rule will not 
have a significant economic impact on a substantial number of small 
entities. Nonetheless, the Commission specifically requests comment on 
the impact this proposed rule may have on small entities.

B. Paperwork Reduction Act

    Introduction. Provisions of the proposed rule would result in new 
collection of information requirements within the meaning of the 
Paperwork Reduction Act (``PRA'').\62\ The Commission therefore is 
submitting this proposal to the Office of Management and Budget (OMB) 
for review in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. The 
title for this collection of information is ``Regulations 46.2 and 
46.3--Swap Data Recordkeeping and Reporting: Pre-Enactment and 
Transition Swaps,'' OMB control number 3038-NEW. If adopted, responses 
to this new collection of information would be mandatory. The 
Commission will protect proprietary information according to the 
Freedom of Information Act and 17 CFR part 145, ``Commission Records 
and Information.'' In addition, section 8(a)(1) of the Act strictly 
prohibits the Commission, unless specifically authorized by the Act, 
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.'' The Commission also is 
required to protect certain information contained in a government 
system of records according to the Privacy Act of 1974, 5 U.S.C. 552a.
---------------------------------------------------------------------------

    \62\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

    Information Provided by Reporting Entities/Persons. The proposed 
rule sets forth recordkeeping and reporting requirements for SDs, MSPs, 
and non-SD/MSP counterparties.
    Recordkeeping Burdens. Under proposed Regulation 46.2, all 
counterparties to pre-enactment or transition swaps would be required 
to keep records relating to such swaps. For swaps that are in existence 
as of or after the enactment of the Dodd-Frank Act, but are expired as 
of the publication of the proposed rule, the proposed Regulation 46.2 
requires that parties simply maintain the swap records already in their 
possession, in the form in which they are already maintained. For 
purposes of the PRA, the Commission will not calculate the burden for 
this requirement; the Commission has previously calculated the burden 
for this requirement in the

[[Page 22841]]

PRA analyses for the interim final rules for pre-enactment and 
transition swaps.
    For pre-enactment or transition swaps that are in existence as of 
or after the publication of the proposed rule, the proposed Regulation 
46.2 would require counterparties to keep records of a minimum set of 
primary economic data relating to such swaps. The Commission believes 
that counterparties already would possess this set of primary economic 
data as part of their normal business practices. The proposed 
regulation provides that counterparties must record certain additional 
information (e.g., information relating to confirmation) only if the 
counterparty is in possession of that information on or after the 
publication date of the proposed rule. After the compliance date 
specified in the Commission's final swap data rules in Part 45, 
proposed Regulation 46.2 provides that counterparties must record 
information required by recordkeeping provisions of those final swap 
rules only if such information is available to the counterparty on or 
after the compliance date specified in those rules.
    For historical swaps that are in existence as of or after the 
publication date of the proposed rule, the rule would require the 
counterparties to keep the records beginning on the publication date of 
the proposed rule and through the life of the swap, and for a period of 
at least five years from the final termination of the swap. In 
calculating the burden of this recordkeeping requirement for purposes 
of the PRA, the Commission will not include the burdens occurring after 
the compliance date specified in the Commission's final swap data rules 
in Part 45; the burden occurring after the compliance date is and will 
be subsumed by the recordkeeping burdens calculated for those final 
rules.\63\ Therefore, for this proposed rule, the Commission will only 
calculate a recordkeeping burden for the time period beginning with the 
publication date of this proposed rule, and ending on the compliance 
date. The Commission estimates this period of time to be approximately 
one year. The Commission estimates that 30,300 SDs, MSPs, and non-SD/
MSP counterparties will be affected by these recordkeeping burdens 
during this time.\64\ With respect to SDs and MSPs (an estimated 300 
entities or persons), which will have higher levels of swap recording 
activity than non-SD/MSP counterparties, the Commission estimates that 
the average one-time burden per entity is 40 hours, excluding customary 
and usual business practices. With respect to non-SD/MSP reporting 
counterparties (an estimated 30,000 entities or persons), who will have 
lower levels of swap recording activity, the Commission estimates that 
the average one-time burden per entity is 10 hours, excluding customary 
and usual business practices. Therefore, the total aggregate one-time 
burden is 312,000 hours. The Commission requests comment on this 
estimate.
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    \63\ The recordkeeping burden for those final rules is 
calculated based on the number of annual counterparties to swaps and 
therefore implicitly includes counterparties to pre-enactment and 
transition swaps that are unexpired after the effective date.
    \64\ As noted, the applicable recordkeeping burden applies 
during a period estimated by the Commission to be one year. The 
Commission has previously estimated that there are annually 30,000 
non-SD/MSP entities who are counterparties to a swap (see, e.g., the 
Commission's Paperwork Reduction Act statement for the Swap Data 
Recordkeeping and Reporting Requirements Proposed Rulemaking). The 
Commission has also previously estimated that there are 250 SDs and 
50 MSPs. Therefore, a total of 30,300 entities would be subject to 
the recordkeeping burdens of the proposed rule.
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    Reporting Burdens. The reporting obligations set forth in proposed 
Regulation 46.3 involve both an initial data report and ongoing 
reporting of required swap continuation data relating to pre-enactment 
and transition swaps. For historical swaps that are in existence as of 
or after the enactment of the Dodd-Frank Act, but expired prior to 
publication of the proposed rule, the rule would require only an 
initial data report.
    The proposed regulation provides that reporting counterparties for 
pre-enactment or transition swaps must make an initial data report 
relating to those swaps. The frequency of the report would be once per 
swap, and the report would occur on the compliance date of the 
Commission's final swap data recordkeeping and reporting regulations in 
Part 45. The report would not be required to be made for historical 
swaps that are expired as of the enactment of the Dodd-Frank Act. The 
Commission estimates that there are 1,800 affected entities who will be 
reporting counterparties for pre-enactment and transition swaps.\65\ 
The Commission estimates that the average one-time reporting burden for 
each affected entity is 24 hours. Therefore, the total aggregate one-
time burden is 43,200 hours. The Commission requests comment on this 
estimate.
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    \65\ The Commission has previously estimated that there are 
annually 1,500 non-SD/MSP counterparties who are a ``reporting 
counterparty'' (see, e.g., the Commission's Paperwork Reduction Act 
statement for the Swap Data Recordkeeping and Reporting Requirements 
Proposed Rulemaking). In addition, the Commission has previously 
estimated that there are 250 SDs and 50 MSPs. The Commission 
believes that the number of entities who are reporting 
counterparties to pre-enactment or transition swaps (that are in 
existence as of or after the enactment of the Dodd-Frank Act) is 
similar to the number of annual reporting counterparties. The 
Commission requests comment on this estimate.
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    The proposed regulation also provides for an ongoing reporting 
obligation that must be fulfilled by reporting counterparties to pre-
enactment and transition swaps that are in existence as of the 
compliance date specified in the Commission's final swap data reporting 
rules in part 45. The burden for this ongoing reporting is and will be 
subsumed by the reporting burden calculated for the Commission's final 
swap data recordkeeping and reporting regulations in part 45.\66\ 
Therefore, for this proposed rulemaking, the Commission will not 
calculate a burden estimate for ongoing reporting.
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    \66\ The reporting burden for those final rules is calculated 
based on the number of annual ``reporting counterparties'' to swaps 
and therefore implicitly include reporting counterparties to pre-
enactment and transition swaps that are unexpired after the 
effective date.
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    Information Collection Comments. The Commission invites the public 
and other federal agencies to comment on any aspect of the reporting 
and recordkeeping burdens discussed above. Pursuant to 44 U.S.C. 
3506(c)(2)(B), the Commission solicits comments in order to: (i) 
evaluate whether the proposed collections of information are necessary 
for the proper performance of the functions of the Commission, 
including whether the information will have practical utility; (ii) 
evaluate the accuracy of the Commission's estimate of the burden of the 
proposed collections of information; (iii) determine whether there are 
ways to enhance the quality, utility, and clarity of the information to 
be collected; and (iv) minimize the burden of the collections of 
information on those who are to respond, including through the use of 
automated collection techniques or other forms of information 
technology.
    Comments may be submitted directly to the Office of Information and 
Regulatory Affairs, by fax at (202) 395-6566 or by e-mail at 
OIRAsubmissions@omb.eop.gov. Please provide the Commission with a copy 
of submitted comments so that all comments can be summarized and 
addressed in the final rule preamble. Refer to the Addresses section of 
this notice of proposed rulemaking for comment submission instructions 
to the Commission. A copy of the supporting statements for the 
collections of information discussed above may be obtained by visiting 
RegInfo.gov. OMB is required to make a decision

[[Page 22842]]

concerning the collection of information between 30 and 60 days after 
publication of this release. Consequently, a comment to OMB is most 
assured of being fully effective if received by OMB (and the 
Commission) within 30 days after publication of this notice of proposed 
rulemaking.

C. Cost-Benefit Analysis

    Introduction. Section 15(a) of the CEA requires the Commission to 
consider the costs and benefits of its actions before issuing a 
rulemaking under the Act. By its terms, section 15(a) does not require 
the Commission to quantify the costs and benefits of the rulemaking or 
to determine whether the benefits of the rulemaking outweigh its costs; 
rather, it requires that the Commission ``consider'' the costs and 
benefits of its actions. Section 15(a) further specifies that the costs 
and benefits shall be evaluated in light of five broad areas of market 
and public concern: (1) Protection of market participants and the 
public; (2) the efficiency, competitiveness and financial integrity of 
markets; (3) price discovery; (4) sound risk management practices; and 
(5) other public interest considerations. The Commission may in its 
discretion give greater weight to any one of the five enumerated areas 
and could in its discretion determine that, notwithstanding its costs, 
a particular rule is necessary or appropriate to protect the public 
interest or to effectuate any of the provisions of or accomplish any of 
the purposes of the Act.
    Summary of Proposed Requirements. The proposed rule provides that 
counterparties to pre-enactment or transition swaps must keep records 
of, and must report, certain information relating to the swaps. The 
proposed reporting requirements involve both an initial report and 
ongoing reporting that continues until the final termination of the 
swap.
    Costs. There are recordkeeping and reporting costs associated with 
the proposed requirements to record and report certain swap 
information. The Commission has crafted the rule to be efficient in 
terms of those costs and has also attempted to minimize the burden on 
non-SD/MSP counterparties. The proposed rule provides that certain 
records must be kept by a counterparty only if the counterparty is in 
possession of that information on or after certain dates as provided in 
the regulations. The proposed rule would require a counterparty to a 
pre-enactment or transition swap in existence as of or after 
publication of this proposed rule to keep, at a minimum, records of a 
specified set of primary economic terms data; however, the Commission 
believes that counterparties already would possess this information as 
part of their normal business practices. For non-SD/MSP reporting 
counterparties for pre-enactment or transition swaps in the interest 
rate, currency, or other commodity asset classes, the proposed rule 
limits the scope of required continuation data reporting to the data 
elements available to the reporting counterparty on the compliance date 
specified in the Commission's final swap data rules in Part 45.
    Benefits. In addition to being mandated by the Dodd-Frank Act, 
reporting of data concerning pre-enactment and transition swaps is 
essential to the fundamental systemic risk mitigation, transparency, 
and market supervision purposes for which the Dodd-Frank Act was 
enacted. This reporting is necessary to give regulators complete 
information regarding the entire swap market. It provides the 
Commission and other financial regulators with necessary insight 
concerning the number of transactions and the number and type of 
participants involved in the swap market, as well as its outstanding 
notional size. Such information provides both a baseline against which 
to assess the development of the swap market over time and a first step 
toward a transparent and well-regulated market for swaps. Data 
concerning pre-enactment and transition swaps also is necessary for the 
Commission to prepare the semi-annual reports it is required to provide 
to Congress.
    Public Comment. For the reasons set forth above, the Commission 
believes that the benefits of the proposed regulations outweigh their 
costs, and has decided to issue them. The Commission invites public 
comment on its cost-benefit considerations. Commenters are also invited 
to submit any data or other information that they may have quantifying 
or qualifying the costs and benefits of the proposal with their comment 
letters.

IV. Proposed Compliance Date

    The Commission understands that, after the date on which the 
Commission issues final swap data recordkeeping and reporting 
regulations, including its final regulations concerning pre-enactment 
and transition swaps, the industry will need a reasonable period of 
time to implement the requirements of those regulations. Time may be 
required for entities to register as SEFs, DCMs, DCOs, or SDRs (or for 
extant DCMs or DCOs to revise their rules and procedures) pursuant to 
new Commission regulations concerning such entities. Time may also be 
needed for registered entities and potential swap counterparties to 
adapt or create automated systems capable of fulfilling the 
requirements of Commission regulations concerning swap data 
recordkeeping and reporting. Accordingly, it may be appropriate for the 
Commission's final swap data recordkeeping and reporting regulations, 
including those for pre-enactment and transition swaps, to establish a 
compliance date that is later than the date the final regulations are 
issued.
    The Commission requests comment concerning the need for a 
compliance date for its final swap data recordkeeping and reporting 
regulations, including those for pre-enactment and transition swaps, 
that is later than the date of their issuance; concerning the benefits 
or drawbacks of such an approach; concerning the length of time needed 
for registered entities and potential swap counterparties to prepare 
for implementation in the ways discussed above, or otherwise; and 
concerning the compliance date which the Commission should specify in 
its final regulations concerning swap data recordkeeping and reporting.

V. General Solicitation of Comments

    The Commission requests comments concerning all aspects of the 
proposed regulations, including, without limitation, all of the aspects 
of the proposed regulations on which comments have been requested 
specifically herein.

Proposed Rules

List of Subjects in 17 CFR Part 46

    Swaps, Data recordkeeping requirements and Data reporting 
requirements.

    For the reasons set forth in the preamble, and pursuant to the 
authority in the Commodity Exchange Act, as amended, and in particular 
Sections 2(h)(5) and 4r(a), the Commission also hereby proposes to 
amend Chapter 1 of Title 17 of the Code of Federal Regulations by 
adding Part 46 to read as follows:

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

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.

[[Page 22843]]

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 Required data standards.
46.10 Reporting of errors and omissions in previously reported data.
Appendix 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.

Sec.  46.1  Definitions.

    Terms used in this part are defined as follows:
    Asset class means the particular broad category of goods, services 
or commodities underlying a swap. The asset classes include interest 
rate, currency, credit, equity, other commodity, and such other asset 
classes as may be determined by the Commission.
    Compliance date means the compliance date specified in the final 
swap data recordkeeping and reporting regulations in part 45 of this 
chapter as the date on which those regulations will be implemented, 
i.e., the date on which registered entities and swap counterparties 
must begin to comply with those regulations.
    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 support agreement means an International Swaps and 
Derivatives Association, Inc. credit support agreement or equivalent 
agreement.
    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.
    Currency swap means any swap which is primarily based on rates of 
exchange between different currencies, changes in such rates, or other 
aspects of such rates. This category includes foreign exchange swaps as 
defined in Commodity Exchange Act Section 1a(25).
    Electronic reporting or reporting electronically means reporting 
data in compliance with Sec.  46.9 of this part. The obligation to 
report electronically is not satisfied by electronic transmission of an 
image of a document.
    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.
    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.
    Major swap participant has the meaning set forth in Commodity 
Exchange Act, Section 1a(33), and any Commission regulation 
implementing that Section.
    Master agreement means an agreement, signed by the counterparties, 
providing comprehensive documentation of standard terms and conditions 
covering one or more swap transactions between such counterparties.
    Non-swap dealer/major swap participant 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 
swap, currency swap, equity swap, or interest rate swap categories, 
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 Sec.  45.5 of this chapter.
    Swap data repository has the meaning set forth in Commodity 
Exchange Act Section 1a(48), and any Commission regulation implementing 
that Section.
    Swap dealer has the meaning set forth in Commodity Exchange Act, 
Section 1a(49), and any Commission regulation implementing that 
Section.
    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 compliance date specified in the final swap data reporting and 
recordkeeping requirements regulations in part 45 of this chapter.

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 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. The minimum records required to be 
kept concerning each pre-enactment swap and transition swap shall be as 
follows:
    (i) Each counterparty shall keep records of all of the minimum 
primary economic terms data specified in the appendix to this part.
    (ii) If at any time on or after April 25, 2011 a counterparty is in 
possession of a confirmation of the swap executed by the 
counterparties, the counterparty shall keep records of all terms of 
that confirmation.
    (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:
    (i) Any master agreement governing the swap, and any modification 
or amendment thereof.
    (ii) Any credit support agreement or equivalent documentation 
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 Sec.  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.
    (b) Recordkeeping for pre-enactment and transition swaps expired or 
terminated prior to April 25, 2011. Each 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,

[[Page 22844]]

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 Sec.  
46.2 shall be kept from the applicable dates specified in paragraph (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, in a form and 
manner acceptable to the Commission.
    (d) Retrieval. Records required to be kept pursuant to this Sec.  
46.2 shall be retrievable as follows:
    (1) 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 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.
    (2) Each record required to be kept by a non-swap dealer/major swap 
participant counterparty shall be retrievable by the counterparty 
within three business days through the period during which it is 
required to be kept.
    (e) Inspection. All records required to be kept pursuant to this 
section 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. 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, either by electronic 
means, in hard copy, or both, as requested by the Commission.

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 terms of the confirmation that are recorded in the 
automated systems of the reporting counterparty, if the terms so 
reported include all of the minimum primary economic terms data 
specified in the appendix to this part; or all of the minimum primary 
economic terms data specified in the appendix to this part;
    (ii) The Unique Counterparty Identifier required pursuant to Sec.  
46.4 of this part; and
    (iii) The following additional identifiers:
    (A) The internal counterparty identifier used by the automated 
systems of the reporting counterparty to identify the non-reporting 
counterparty;
    (B) The internal transaction identifier used by the automated 
systems of the reporting counterparty to identify the swap; and
    (C) The internal master agreement identifier (if any) used by the 
automated systems of the reporting counterparty to identify the master 
agreement governing the swap.
    (2) Non-duplication of previous reporting. If the reporting 
counterparty for a pre-enactment or transition swap has reported any of 
the information required as part of the initial data report by 
paragraph (a) 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:
    (i) The counterparty shall not be required to report such 
previously reported information to the swap data repository again;
    (ii) 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 Sec.  46.3(a) of this part that has not been 
reported prior to the compliance date; and
    (iii) The initial data report required by paragraph (b)(2) 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 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).
    (3) Reporting of required swap continuation data for a credit swap 
or equity swap. For each pre-enactment or transition swap in either the 
credit swap or equity swap asset class, that is in existence on or 
after April 25, 2011, throughout the existence of the swap following 
the compliance date, the reporting counterparty, as defined in part 45 
of this chapter, shall report all required swap continuation data 
required to be reported for credit swaps or equity swaps under part 45 
of this chapter.
    (4) Reporting of required swap continuation data for an interest 
rate swap, other commodity swap, or currency swap. For each pre-
enactment or transition swap in the interest rate, other commodity, or 
currency asset class, that is in existence on or after April 25, 2011, 
throughout the existence of the swap following the compliance date, the 
reporting counterparty as defined in part 45 shall report required swap 
continuation data as follows:
    (i) Swaps for which the reporting counterparty is a swap dealer or 
major swap participant. For each pre-enactment swap or transition swap 
in existence on or after April 25, 2011, for which the reporting 
counterparty as defined in part 45 is a swap dealer or major swap 
participant, the reporting counterparty shall report to a swap data 
repository electronically all required swap continuation data 
concerning the swap as provided in part 45.
    (ii) Swaps for which the reporting counterparty is a non-swap 
dealer/major swap participant counterparty. For each pre-enactment swap 
or transition swap in existence on or after April 25, 2011, for which 
the reporting counterparty as defined in part 45 is a non-swap dealer/
major swap participant counterparty, the reporting counterparty shall 
report to a swap data repository electronically all required swap 
continuation data concerning the swap as provided in part 45. However, 
notwithstanding any other provision of part 45, the state data reported 
to provide a snapshot view, on a daily basis, of the primary economic 
terms of the swap shall be the greater of the following which is in the 
possession of

[[Page 22845]]

the reporting counterparty on the compliance date:
    (A) The state data, or any part thereof, for the swap as defined in 
part 45 of this chapter; or
    (B) All of the data elements contained in the table of minimum 
primary economic terms for pre-enactment or transition swaps in the 
asset class of the swap in question that is included in the appendix to 
this part.
    (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 can 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 can be reported via any method selected by 
the reporting counterparty.

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 a Unique Counterparty 
Identifier, as provided in part 45, for itself, and shall include its 
own Unique Counterparty Identifier in the initial data report 
concerning the swap. With respect to that Unique Counterparty 
Identifier, the reporting counterparty and the swap data repository to 
which the swap is reported shall comply thereafter with all unique 
identifier requirements of part 45 respecting Unique Counterparty 
Identifiers.
    (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 Unique Counterparty Identifier, as 
provided in part 45, for itself, and shall provide that Unique 
Counterparty Identifier to the reporting counterparty. Upon receipt of 
the non-reporting counterparty's Unique Counterparty Identifier, the 
reporting counterparty shall provide that Unique Counterparty 
Identifier to the swap data repository to which swap data for the swap 
was reported. Thereafter, with respect to the Unique 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 part 45 respecting Unique Counterparty 
Identifiers.
    (c) The Unique Counterparty 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 an SD, the SD shall fulfill all 
counterparty reporting obligations.
    (2) If neither party is an SD, and only one counterparty is an MSP, 
the MSP shall fulfill all counterparty reporting obligations.
    (3) For each pre-enactment swap or transition swap for which both 
counterparties are SDs, or both counterparties are MSPs, or both 
counterparties are non-SD/MSP counterparties, the counterparties shall 
agree as one term of their swap transaction which counterparty shall 
fulfill reporting obligations with respect to that swap; and the 
counterparty so selected shall fulfill all counterparty reporting 
obligations.
    (4) Notwithstanding the provisions of paragraphs (a)(1) through (3) 
of this section, if only one counterparty to a pre-enactment swap or 
transition swap is a U.S. person, that counterparty shall be the 
reporting counterparty and shall fulfill all counterparty reporting 
obligations.
    (5) If a reporting counterparty selected pursuant to paragraphs 
(a)(1) through (4) of this section ceases to be a counterparty to a 
swap due to an assignment or novation, and the new counterparty is a 
U.S. person, the new counterparty shall be the reporting counterparty 
and fulfill all reporting counterparty obligations following such 
assignment or novation. If a new counterparty to a swap due to an 
assignment or novation is not a U.S. person, the counterparty that is a 
U.S. person shall be the reporting counterparty and fulfill all 
reporting counterparty obligations following such assignment or 
novation.
    (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, regardless of whether either or both were original 
counterparties to the swap when it was first executed.

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, by any registered entity or 
counterparty, 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).

[[Page 22846]]

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

    Should there be a swap asset class for which no swap data 
repository currently accepts swap data, each counterparty required by 
this part 46 to report swap data with respect to a pre-enactment or 
transition swap in that asset class must report that same data at a 
time and in a form and manner determined by the Commission.

Sec.  46.9  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.  46.10  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 interest rate swaps, currency 
swaps, or other commodity swaps in existence as of the compliance date, 
reporting counterparties fulfill the requirement to report errors or 
omissions in state data previously reported as part of required 
continuation data reporting by making appropriate corrections in their 
next daily report of state data as required by this part 46 and 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 part 45, 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 Sec.  45.10(a) and (b) of this chapter.
    (d) Unless otherwise approved by the Commission, or by the Director 
of Market Oversight pursuant to part 45 of this chapter, each swap 
counterparty reporting corrections to errors or omissions in data 
previously reported as required by this part 46 shall report such 
corrections in the same format as it reported the erroneous or omitted 
data.

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

  Minimum Primary Economic Terms Data for Pre-Enactment and Transition
                      Credit Swaps and Equity Swaps
------------------------------------------------------------------------
            Sample category                          Comment
------------------------------------------------------------------------
An indication of the counterparty        E.g., option buyer and option
 purchasing protection and of the         seller; buyer and seller.
 counterparty selling protection.
Information identifying the reference    The entity that is the subject
 entity.                                  of the protection being
                                          purchased and sold in the
                                          swap.
An indication of whether or not both     ...............................
 counterparties are swap dealers.
An indication of whether or not both     ...............................
 counterparties are major swap
 participants.
An indication of whether or not either   ...............................
 counterparty is a swap dealer or major
 swap participant.
The date and time of trade, expressed    ...............................
 using Coordinated Universal Time
 (``CUT'').
The venue where the swap was executed.   ...............................
The effective date for the swap.         ...............................
The expiration date for the swap.        ...............................
The price..............................  E.g., strike, initial price,
                                          spread, etc.
The notional amount, the currency in     ...............................
 which the notional amount is
 expressed, and the equivalent notional
 amount in U.S. dollars.
The amount and currency or currencies    ...............................
 of any up-front payment.
A description of the payment streams of  E.g., coupon.
 each counterparty.
The title of any master agreement        E.g., annex, credit agreement.
 incorporated by reference and the date
 of any such agreement.
If the transaction involved an existing  E.g., assignment.
 swap, an indication that the
 transaction did not involve an
 opportunity to negotiate a material
 term of the contract, other than the
 counterparty.
The data elements necessary for a        ...............................
 person to determine the market value
 of the transaction.
Whether or not the swap will be cleared  ...............................
 by a derivatives clearing
 organization.
The name of the derivatives clearing     ...............................
 organization that will clear the swap,
 if any.
If the swap is not cleared, all of the   ...............................
 settlement terms, including, without
 limitation, whether the swap is cash-
 settled or physically settled, and the
 method for determining the settlement
 value.
Any other primary economic term(s) of    ...............................
 the swap matched by the counterparties
 in verifying the swap.
------------------------------------------------------------------------

  Minimum Primary Economic Terms Data for Pre-Enactment and Transition
                             Currency Swaps
------------------------------------------------------------------------
           Sample data field                         Comments
------------------------------------------------------------------------
1 Contract type........................  E.g., swap, swaption, forwards,
                                          options, basis swap, index
                                          swap, basket swap, other.
2 Swap transaction date................  Date when the swap was entered.

[[Page 22847]]

 
3 Currency 1...........................  International Organization for
                                          Standardization Code.
4 Currency 2...........................  International Organization for
                                          Standardization Code.
5 Notional amount 1....................  For currency one.
6 Notional amount 2....................  For currency two.
7 Settlement agent of the reporting      ID of the settlement agent.
 counterparty.
8 Settlement agent of the non-reporting  ID of the settlement agent.
 counterparty.
9 Settlement currency..................  If applicable.
10 Exchange rate 1.....................  At the moment of trade/
                                          agreement.
11 Exchange rate 2.....................  At the moment of trade/
                                          agreement, if applicable.
12 Swap delivery type..................  Cash or physical.
13 Expiration date.....................  Expiration date of the
                                          contract.
Any other primary economic term(s) of
 the swap matched by the counterparties
 in verifying the swap.
------------------------------------------------------------------------

  Minimum Primary Economic Terms Data for Pre-Enactment and Transition
                           Interest Rate Swaps
------------------------------------------------------------------------
           Sample data field                         Comment
------------------------------------------------------------------------
1 Contract type........................  E.g., swap, swaption, option,
                                          basis swap, index swap, etc.
2 Swap transaction date................  Date when the swap was entered.
3 Swap effective date..................  Effective date of the contract.
4 Swap end-date........................  Expiration date of the
                                          contract.
5 Notional amount one..................  The current active notional in
                                          local currency.
6 Notional currency one................  International Organization for
                                          Standardization code of the
                                          notional currency.
7 Notional amount two..................  The second notional amount
                                          (e.g., receiver leg).
8 Notional currency two................  International Organization for
                                          Standardization code of the
                                          notional currency.
9 Payer (fixed rate)...................  Is the reporting party a fixed
                                          rate payer? Yes/No/Not
                                          applicable.
10 Fixed leg payment frequency.........  How often will the payments on
                                          fixed leg be made.
11 Direction...........................  For swaps--if the principal is
                                          paying or receiving the fixed
                                          rate. For float-to-float and
                                          fixed-to-fixed swaps, it is
                                          unspecified. For non-swap
                                          instruments and swaptions, the
                                          instrument that was bought or
                                          sold.
12 Option type.........................  E.g., put, call, straddle.
13 Fixed rate..........................
14 Fixed rate day count fraction.......
15 Floating rate payment frequency.....
16 Floating rate reset frequency.......
17 Floating rate index name/rate period
18 Leg 1...............................  If two floating legs, report
                                          what is paid.
19 Leg 2...............................  If two floating legs, report
                                          what is received.
Any other primary economic term(s) of
 the swap matched by the counterparties
 in verifying the swap.
------------------------------------------------------------------------

  Minimum Primary Economic Terms Data for Pre-Enactment and Transition
                          Other Commodity Swaps
------------------------------------------------------------------------
           Sample data field                         Comment
------------------------------------------------------------------------
1 Contract type........................  E.g., swap, swaption, option,
                                          etc.
2 Swap transaction date................  Date when the swap was entered.
3 Quantity.............................  The unit of measure applicable
                                          for the quantity on the swap.
4 Start date...........................  Predetermined start date from
                                          which payments will be
                                          exchanged.
5 End-date.............................  Predetermined end date from
                                          which payments will be
                                          exchanged.
6 Buyer pay index......................  The published price as paid by
                                          the buyer.
7 Seller pay index.....................  The published price as paid by
                                          the seller.
8 Buyer................................  Party purchasing product, e.g.
                                          payer of the fixed price (for
                                          swaps), or payer of the
                                          floating price (for put
                                          swaption), or payer of the
                                          fixed price (for call
                                          swaption).
9 Seller...............................  Party offering product, e.g.
                                          payer of the floating price
                                          (for swaps), payer of the
                                          fixed price (for put
                                          swaption), or payer of the
                                          floating price (for call
                                          swaption).
10 Price...............................  E.g., fixed price, the heat
                                          rate value, etc.
11 Price unit..........................  The unit of measure applicable
                                          for the price on the
                                          transaction.
12 Grade...............................  E.g., the grade of oil or
                                          refined product being
                                          delivered.
Any other primary economic term(s) of
 the swap matched by the counterparties
 in verifying the swap.
------------------------------------------------------------------------

[[Page 22848]]

    Issued in Washington, DC, on April 6, 2011, by the Commission.
David A. Stawick,
Secretary of the Commission.

[FR Doc. 2011-9446 Filed 4-22-11; 8:45 am]
BILLING CODE 6351-01-P
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