Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Rules and Regulations 7637 

1 15 U.S.C. 78c–4(a) (setting forth the registration 

requirement for security-based swap execution 

facilities). The Commission has not yet adopted 

rules regarding the registration of security-based 

swap execution facilities. The Commission has 

granted a temporary exemption from the 

registration requirement for security-based swap 

execution facilities. See Release No. 34–64678 (June 

15, 2011), 76 FR 36287, 36292–93, 36306 (June 22, 

2011). This exemption will expire on the earliest 

compliance date set forth in any of the final rules 

regarding registration of security-based swap 

execution facilities. See id. at 36292–93, 36306. 

2 15 U.S.C. 78o–10(a)(1); see also Release No. 34– 

75611 (Aug. 5, 2015), 80 FR 48964, 48988 (Aug. 14, 

2015). A security-based swap market participant 

that meets the definition of ‘‘security-based swap 

dealer’’ as of August 6, 2021 is required to register 

with the Commission no later than November 1, 

2021. See Release No. 34–87780 (Dec. 18, 2019), 85 

FR 6270, 6345–46 (Feb. 4, 2020). 

3 In contrast to the definition of ‘‘dealer’’ in 

Section 3(a)(5) of the Exchange Act, Section 

3(a)(71)(D) of the Exchange Act and 17 CFR 

240.3a71–2(a) thereunder contain an exception 

from the definition of ‘‘security-based swap dealer’’ 

for any entity that engages in a de minimis quantity 

of security-based swap dealing in connection with 

transactions with or on behalf of its customers. See 

15 U.S.C. 78c(a)(71)(D); 17 CFR 240.3a71–2(a). In 

addition, 17 CFR 240.3a71–2(b) provides that a 

person that has not registered as a security-based 

swap dealer by virtue of satisfying the requirements 

of paragraph (a) of the rule, but that no longer can 

take advantage of the de minimis exception, will be 

deemed not to be a security-based swap dealer 

under section 3(a)(71) of the Act (15 U.S.C. 

78c(a)(71)) and subject to the requirements of 

section 15F of the Act (15 U.S.C. 78o–10) and the 

rules, regulations and interpretations issued 

thereunder until the earlier of the date on which it 

submits a complete application for registration 

pursuant to section 15F(b) (15 U.S.C. 78o–10(b)) or 

two months after the end of the month in which 

that person becomes no longer able to take 

advantage of the exception. 

4Specifically, the term ‘‘clearing agency’’ 

includes, among other things, any person who acts 

as an intermediary in making payments or 

deliveries or both in connection with transactions 

in securities or that provides the facilities for 

comparison of data respecting the terms of 

settlement of securities transactions, to reduce the 

number of settlements of securities transactions, or 

for the allocation of securities settlement 

responsibilities. The definition also includes any 

person, such as a securities depository, who (i) acts 

as a custodian of securities in connection with a 

system for the central handling of securities 

whereby all securities of a particular class or series 

of any issuer deposited within the system are 

treated as fungible and may be transferred, loaned, 

or pledged by bookkeeping entry without physical 

delivery of securities certificates, or (ii) otherwise 

permits or facilitates the settlement of securities 

transactions or the hypothecation or lending of 

securities without physical delivery of securities 

certificates. 15 U.S.C. 78c(a)(23)(A); see also Release 

Nos. 34–71699 (Mar. 12, 2014), 79 FR 16865 (Mar. 

26, 2014), corrected at 79 FR 29507, 29510–11 (May 

22, 2014); 34–68080 (Oct. 22, 2012), 77 FR 66219, 

66221–22 (Nov. 2, 2012) (‘‘Clearing Agency 

Standards adopting release’’) (discussing the same). 

PART 2636—LIMITATIONS ON 

OUTSIDE EARNED INCOME, 

EMPLOYMENT AND AFFILIATIONS 

FOR CERTAIN NONCAREER 

EMPLOYEES 

■ 5. The authority citation for part 2636 

continues to read as follows: 

Authority: 5 U.S.C. App. (Ethics in 

Government Act of 1978); Pub. L. 101–410, 

104 Stat. 890, 28 U.S.C. 2461 note (Federal 

Civil Penalties Inflation Adjustment Act of 

1990), as amended by Sec. 31001, Pub. L. 

104–134, 110 Stat. 1321 (Debt Collection 

Improvement Act of 1996) and Sec. 701, Pub. 

L. 114–74 (Federal Civil Penalties Inflation 

Adjustment Act Improvements Act of 2015); 

E.O. 12674, 54 FR 15159, 3 CFR, 1989 Comp., 

p. 215, as modified by E.O. 12731, 55 FR 

42547, 3 CFR, 1990 Comp., p. 306. 

■ 6. Section 2636.104 is amended by 

revising paragraph (a) to read as follows: 

§ 2636.104 Civil, disciplinary and other 

action. 

(a) Civil action. Except when the 

employee engages in conduct in good 

faith reliance upon an advisory opinion 

issued under § 2636.103, an employee 

who engages in any conduct in violation 

of the prohibitions, limitations and 

restrictions contained in this part may 

be subject to civil action under 5 U.S.C. 

app. 504(a) and a civil monetary penalty 

of not more than the amounts set in 

Table 1 to this section, as adjusted in 

accordance with the inflation 

adjustment procedures prescribed in the 

Federal Civil Penalties Inflation 

Adjustment Act of 1990, as amended, or 

the amount of the compensation the 

individual received for the prohibited 

conduct, whichever is greater. 

TABLE 1 TO § 2636.104 

Date of violation Penalty 

Violation occurring between Sept. 29, 

1999 and Nov. 2, 2015 .......................... $11,000 

Violation occurring after Nov. 2, 2015 ...... 20,731 

* * * * * 

[FR Doc. 2021–00714 Filed 1–29–21; 8:45 am] 

BILLING CODE 6345–03–P 

SECURITIES AND EXCHANGE 

COMMISSION 

17 CFR Part 240 

[Release No. 34–90667; File No. S7–08–11] 

RIN 3235–AK74 

Exemption From the Definition of 

‘‘Clearing Agency’’ for Certain 

Activities of Security-Based Swap 

Dealers and Security-Based Swap 

Execution Facilities 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Final rule. 

SUMMARY: The Securities and Exchange 

Commission (‘‘Commission’’) is 

adopting a rule pursuant to Section 36 

of the Securities Exchange Act of 1934 

(‘‘Exchange Act’’) to exempt from the 

definition of ‘‘clearing agency’’ in 

Section 3(a)(23) of the Exchange Act 

certain activities of a registered securitybased swap dealer, a registered securitybased swap execution facility, and a 

person engaging in dealing activity in 

security-based swaps that is eligible for 

an exception from registration as a 

security-based swap dealer because the 

quantity of dealing activity is de 

minimis. 

DATES: Effective date: April 2, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Matthew Lee, Assistant Director, or 

Jesse Capelle, Special Counsel, Office of 

Clearance and Settlement, Division of 

Trading and Markets, Securities and 

Exchange Commission, 100 F Street NE, 

Washington, DC 20549–7010, at (202) 

551–5710. 

SUPPLEMENTARY INFORMATION: The 

Commission is adopting 17 CFR 

240.17Ad–24 (‘‘Rule 17Ad–24’’) to 

exempt certain activities of a registered 

security-based swap execution facility,1

a registered security-based swap dealer,2

and an entity that is eligible for an 

exception under 17 CFR 240.3a71–2(a) 

(or subject to the period set forth in 17 

CFR 240.3a71–2(b)) 3 from the definition 

of ‘‘clearing agency.’’ 

Table of Contents 

I. Background 

II. New Rule 17Ad–24 

A. Proposed Rule Text 

B. Comment Received 

C. Final Rule 

III. Economic Analysis 

A. Baseline 

B. Consideration of Benefits, Costs, and the 

Effect on Competition, Efficiency, and 

Capital Formation 

IV. Paperwork Reduction Act 

V. Regulatory Flexibility Act Certification 

VI. Other Matters 

VII. Statutory Authority 

I. Background 

The term ‘‘clearing agency’’ is broadly 

defined in Section 3(a)(23)(A) of the 

Exchange Act and includes a variety of 

functions.4 Section 3(a)(23)(B) of the 

Exchange Act excludes a number of 

7638 Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Rules and Regulations 

5See 15 U.S.C. 78c(a)(23)(B). 

6Release No. 34–64017 (Mar. 3, 2011), 76 FR 

14472, 14531 (Mar. 16, 2011) (‘‘proposing release’’). 

7See 15 U.S.C. 78q–1(b)(1). 

8 15 U.S.C. 78c(a)(23)(B). 

9The Exchange Act definition of ‘‘security-based 

swap execution facility’’ states that a security-based 

swap execution facility is not a national securities 

exchange. 15 U.S.C. 78c(a)(77). 

10A registered security-based swap execution 

facility may facilitate trade processing of any 

security-based swap. See 15 U.S.C. 78c–4(b)(2). 

11 15 U.S.C. 78c(a)(23)(B). 

12See 15 U.S.C. 78c(a)(5) (defining ‘‘dealer’’ to 

exclude a dealer for security-based swaps, other 

than security-based swaps with or for persons that 

are not eligible contract participants); see also, 

supra, note 3 (discussing the same). 

13 15 U.S.C. 78c(a)(71). In 2012, the Commission 

and the Commodity Futures Trading Commission 

further defined a number of terms defining the 

intermediaries in the swap and security-based swap 

markets, including ‘‘security-based swap dealer.’’ 

See Release No. 34–66868 (Apr. 27, 2012), 77 FR 

30596 (May 23, 2012) (‘‘Entity Definitions adopting 

release’’). Among other things, the release adopted 

17 CFR 240.3a71–1 through 3a71–5, which further 

define ‘‘security-based swap dealer.’’ Furthermore, 

the definition of ‘‘dealer’’ in Section 3(a)(5) of the 

Exchange Act provides that an entity transacting as 

a dealer in security-based swaps would not need to 

separately register with the Commission as a brokerdealer so long as its security-based swap 

transactions are solely with persons that satisfy the 

definition of ‘‘eligible contract participant.’’ See 17 

U.S.C. 78c(a)(5) (defining ‘‘dealer’’); 17 U.S.C. 

78(a)(65) (defining ‘‘eligible contract participant’’ by 

reference to Section 1a(18) of the Commodity 

Exchange Act (7 U.S.C. 1a(18)). 

14See supra note 3 (noting that, in contrast to the 

definition of ‘‘dealer’’ in Section 3(a)(5) of the 

Exchange Act, Section 3(a)(71)(D) of the Exchange 

Act and 17 CFR 240.3a71–2(a) thereunder contain 

an exception from the definition of ‘‘security-based 

swap dealer’’ for any entity that engages in a de 

minimis quantity of security-based swap dealing in 

connection with transactions with or on behalf of 

its customers). 

15See supra note 2 (noting the adoption of final 

rules for security-based swap dealers in 2019 and 

the compliance date for registration of November 1, 

2021). 

16See proposing release, supra note 6. 

17 Id. at 14531. 

18See id. at 14494–95. 

19Compare 15 U.S.C. 78c(a)(71) with 15 U.S.C. 

78c(a)(23). 

entities and activities from the 

definition of ‘‘clearing agency,’’ 

including certain activities of, among 

other types of market intermediaries, 

national securities exchanges and 

securities dealers that are also clearing 

agency functions.5 These exclusions are 

designed to limit the potential for 

overlapping or duplicative requirements 

that may otherwise be imposed on these 

regulated entities.6

Title VII of the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act of 2010 (‘‘Dodd-Frank Act’’) created 

new categories of entities in the 

security-based swap market that may 

perform clearing agency functions 

similar to the functions performed by 

entities excluded from the definition of 

‘‘clearing agency’’ in Section 3(a)(23)(B) 

of the Exchange Act in the traditional 

securities markets. However, Title VII 

did not amend the scope of the term 

‘‘clearing agency’’ to address these new 

types of financial intermediaries for the 

security-based swap markets or their 

potential clearing agency functions, 

even if those new intermediaries 

perform similar functions as entities 

excluded from the ‘‘clearing agency’’ 

definition, such as a national securities 

exchange or a securities dealer. As a 

result, certain activities performed for 

security-based swaps by security-based 

swap dealers and security-based swap 

execution facilities are also clearing 

agency functions that trigger the 

requirement to either register as a 

clearing agency or obtain an exemption 

from registration as a clearing agency, 

while the same activities performed for 

securities that are not security-based 

swaps do not carry the same legal and 

regulatory implications.7

Specifically, Section 3(a)(23)(B)(ii) of 

the Exchange Act provides that the term 

‘‘clearing agency’’ does not include, 

among other things, any national 

securities exchange solely by reason of 

its providing facilities for comparison of 

data respecting the terms of settlement 

of securities transactions effected on 

such exchange.8 As noted above, the 

Dodd-Frank Act did not amend the 

Exchange Act definition of ‘‘clearing 

agency’’ to provide a comparable 

exclusion for a registered security-based 

swap execution facility. A securitybased swap execution facility is a 

trading system or platform in which 

multiple participants have the ability to 

execute or trade security-based swaps 

by accepting bids and offers made by 

multiple participants in the facility or 

system.9 This function, similar to that 

provided by a national securities 

exchange, facilitates the execution of a 

security-based swap transaction 

between two counterparties by 

providing facilities for the comparison 

of data respecting the terms of 

settlement of that transaction.10

Accordingly, although a national 

securities exchange performing this 

clearing agency function is excluded 

under Section 3(a)(23)(B)(ii) from the 

definition of ‘‘clearing agency,’’ a 

registered security-based swap 

execution facility performing this 

function is not. 

Similarly, Section 3(a)(23)(B)(iii) 

provides that the term ‘‘clearing agency’’ 

does not include, among other things, 

any dealer if such dealer would be 

deemed to be a clearing agency solely by 

reason of functions performed by such 

institution as part of customary 

brokerage or dealing activities, or solely 

by reason of acting on behalf of a 

clearing agency or a participant therein 

in connection with the furnishing by the 

clearing agency of services to its 

participants or the use of services of the 

clearing agency by its participants.11 As 

with security-based swap execution 

facilities, the Exchange Act definition of 

‘‘clearing agency’’ does not provide an 

exclusion for a registered security-based 

swap dealer.12 Section 3(a)(71) of the 

Exchange Act defines ‘‘security-based 

swap dealer’’ as any person that: (i) 

Holds itself out as a dealer in securitybased swaps; (ii) makes a market in 

security-based swaps; (iii) regularly 

enters into security-based swaps with 

counterparties as an ordinary course of 

business for its own account; or (iv) 

engages in any activity causing it to be 

commonly known in the trade as a 

dealer or market maker in securitybased swaps.13 These functions are 

similar to those provided by a dealer for 

securities that are not security-based 

swaps.14 Accordingly, although a dealer 

performing these functions is excluded 

from the definition of ‘‘clearing agency,’’ 

a registered security-based swap dealer 

performing the same functions is not.15

To address the disparate treatment of 

similarly situated entities performing 

potential clearing agency functions, the 

Commission proposed Rule 17Ad–24 in 

2011.16 The Commission explained that 

the rule would avoid imposing 

overlapping or duplicative requirements 

on these entities with marginal or no 

benefit to safeguarding securities and 

funds and protecting investors.17 As 

described in the proposing release,18

Rule 17Ad–24 would provide 

exemptions from the Exchange Act term 

‘‘clearing agency’’ for certain activities 

of registered security-based swap 

dealers and registered security-based 

swap execution facilities that are also 

clearing agency functions, mirroring the 

exclusions from the definition described 

above for national securities exchanges 

and dealers. A person acting as a 

security-based swap dealer may make 

payments or deliveries or both in 

connection with transactions in 

securities, in a manner that could 

require that person to register as a 

clearing agency under the Exchange 

Act.19 In particular, over the life of a 

security-based swap transaction, a 

security-based swap dealer may 

facilitate the transfer of collateral, 

periodic fixed amount payments, or 

termination payments between the 

counterparties to a transaction, which 

would constitute making payments or 

deliveries or both in connection with 

transactions in securities under the 

‘‘clearing agency’’ definition. Similarly, 

Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Rules and Regulations 7639 

20Compare 15 U.S.C. 78c(a)(77) with 15 U.S.C. 

78c(a)(23). 

21See Letter from Jeff Gooch, Chief Executive 

Officer, MarkitSERV (Apr. 29, 2011) (‘‘MarkitSERV 

Letter’’). The comment letter is available on the 

Commission’s website at https://www.sec.gov/ 

comments/s7-08-11/s70811.shtml. 

22See MarkitSERV Letter. 

23See id. at 6. 24This approach is consistent with the approach 

that applies to a national securities exchange when 

performing the same activity for transactions in 

securities that are not security-based swaps. 

25See proposing release, supra note 6, at 14495. 

26See id. For example, with respect to 

transactions in securities that are not security-based 

swaps, the Commission has explained that 

‘‘matching’’ is a clearing agency function. Release 

No. 34–39829 (Apr. 6, 1998), 63 FR 17943 (Apr. 13, 

1998). 

27 15 U.S.C. 78mm. Section 36 of the Exchange 

Act authorizes the Commission to conditionally or 

unconditionally exempt any person, security, or 

transaction, or any class of classes of persons, 

securities, or transactions, from any provision or 

provisions of the Exchange Act or any rule or 

regulation thereunder, by rule, regulation, or order, 

to the extent that such exemption is necessary or 

appropriate in the public interest, and is consistent 

with the protection of investors. 

28See supra notes 3 and 14 and accompanying 

text. 

29See Entity Definitions adopting release, supra 

note 13, at 30626. 

30See proposing release, supra note 6, at 14531. 

31See supra note 3 (providing the text of 17 CFR 

240.3a71–2(a) and (b)). Accordingly, an entity 

subject to the period set forth in 17 CFR 240.3a71– 

2(b) will continue to be exempt from inclusion in 

the term ‘‘clearing agency’’ during the period after 

it is no longer able to able to rely on the de minimis 

exception but before it is deemed to be a securitybased swap dealer. 

a security-based swap execution facility 

that provides a trading system or 

platform in which multiple participants 

have the ability to execute or trade 

security-based swaps by accepting bids 

and offers made by multiple 

participants in the facility or system 

also may provide facilities for 

comparison of data respecting the terms 

of settlement of securities transactions, 

to reduce the number of settlements of 

securities transactions, or for the 

allocation of securities settlement 

responsibilities, in a manner that could 

require that entity to register as a 

clearing agency.20

The Commission received one 

comment regarding the proposed rule,21

as discussed in Part II.B below. The 

Commission is now adopting Rule 

17Ad–24, as discussed in Part II.C 

below. 

II. New Rule 17Ad–24 

A. Proposed Rule Text 

Proposed Rule 17Ad-24 provided that 

a registered security-based swap dealer 

and a registered security-based swap 

execution facility shall be exempt from 

inclusion in the term ‘‘clearing agency,’’ 

as defined in section 3(a)(23)(A) of the 

Act, where such registered securitybased swap dealer or registered securitybased swap execution facility would be 

deemed to be a clearing agency solely by 

reason of functions performed by such 

institution as part of customary dealing 

activities or providing facilities for 

comparison of data respecting the terms 

of settlement of securities transactions 

effected on such registered securitybased swap execution facility, 

respectively, or acting on behalf of a 

clearing agency or participant therein in 

connection with the furnishing by the 

clearing agency of services to its 

participants or the use of services of the 

clearing agency by its participants. 

B. Comment Received 

One commenter agreed with the 

Commission’s proposed approach that a 

security-based swap execution facility 

not be required to register as a clearing 

agency solely because it performs trade 

data comparison as part of the trade 

execution process for security-based 

swaps.22 However, the commenter also 

stated that a security-based swap 

execution facility should not have a 

blanket exemption from clearing agency 

registration for activities related to 

matching or trade verification services 

because, in the commenter’s view, such 

an approach would result in the rule 

applying differently to third-party 

providers of such services than it would 

to a security-based swap execution 

facility.23

By its terms, proposed Rule 17Ad–24 

would not provide a blanket exemption 

from clearing agency registration to a 

security-based swap execution facility 

to provide matching or trade verification 

services that otherwise are clearing 

agency functions as defined in the 

Exchange Act. Rather, the Commission’s 

approach under Rule 17Ad–24 specifies 

that a registered security-based swap 

execution facility would not be required 

to register as a clearing agency solely 

based upon the fact that such an entity 

provides facilities for comparison of 

data respecting the terms of settlement 

of securities transactions effected on 

such registered security-based swap 

execution facility.24 As noted in the 

proposing release and restated here,25

were a security-based swap execution 

facility to engage in activity that is 

outside the scope of the exemption 

provided in Rule 17Ad–24 and that falls 

within the definition of ‘‘clearing 

agency’’ under the Exchange Act, it 

would be required to register as a 

clearing agency or obtain a separate 

exemption from clearing agency 

registration.26

C. Final Rule 

Pursuant to the Commission’s 

authority under Section 36 of the 

Exchange Act,27 the Commission is 

adopting Rule 17Ad–24, and the 

Commission is making two 

modifications from the proposal. First, 

since the Commission proposed Rule 

17Ad–24, the Commission adopted 17 

CFR 240.3a71–2 to provide an exception 

from the definition of ‘‘security-based 

swap dealer’’ to any entity that engages 

in a de minimis quantity of securitybased swap dealing activity in 

connection with transactions with or on 

behalf of its customers.28 In adopting 

the de minimis exception, the 

Commission explained that the 

exception should be interpreted to 

address amounts of dealing activity that 

are sufficiently small that they do not 

warrant registration to address concerns 

implicated by the regulations governing 

swap dealers and security-based swap 

dealers.29 The Commission similarly 

noted in proposing Rule 17Ad–24 that 

the exemptions in the rule are intended 

to avoid imposing requirements with 

marginal or no benefit to safeguarding 

securities and funds and protecting 

investors.30 Accordingly, the 

Commission is adding persons eligible 

for this exception under 17 CFR 

240.3a71–2 to the exemption in Rule 

17Ad–24 because imposing clearing 

agency registration on persons solely to 

regulate functions performed by such 

persons as part of customary dealing 

activity for security-based swaps, and 

where that dealing activity is 

sufficiently small that it does not 

warrant registration as a security-based 

swap dealer, would present only 

marginal or no benefit to safeguarding 

securities and funds and protecting 

investors. Second, to improve clarity 

and readability, the Commission is 

dividing the rule text into 

subparagraphs (a) and (b). 

Accordingly, new Rule 17Ad–24 

provides that a registered security-based 

swap dealer, a registered security-based 

swap execution facility, or an entity 

engaging in dealing activity in securitybased swaps that is eligible for an 

exception under 17 CFR 240.3a71–2(a) 

(or subject to the period set forth in 17 

CFR 240.3a71–2(b)) 31 is exempt from 

inclusion in the term ‘‘clearing agency,’’ 

as defined in Section 3(a)(23)(A) of the 

Exchange Act, where such registered 

security-based swap dealer, registered 

security-based swap execution facility, 

or entity engaging in dealing activity in 

security-based swaps that is eligible for 

an exception under 17 CFR 240.3a71– 

2(a) (or subject to the period set forth in 

17 CFR 240.3a71–2(b)) would be 

deemed to be a clearing agency solely by 

7640 Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Rules and Regulations 

32See supra note 1. 

33See Release No. 34–64796 (July 1, 2011), 76 FR 

39963, 39964 (July 7, 2011). 

34See 15 U.S.C. 78c(f). 

35See 15 U.S.C. 78w(a)(2). 

36See supra Part II.C (setting forth the final rule 

text). For purposes of this economic analysis, 

‘‘entities engaging in dealing activity in securitybased swaps’’ includes both registered securitybased swap dealers and entities engaging in dealing 

activity in security-based swaps that are eligible for 

an exception under 17 CFR 240.3a71–2(a) (or 

subject to the period set forth in 17 CFR 240.3a71– 

2(b)). 

37See supra note 5 and accompanying text. 

38See, e.g., infra note 40; supra note 13. 

39See Release No. 34–75611 (Aug. 14, 2015), 80 

FR 48963, 49000 (Aug. 14, 2015). The estimate has 

been updated for data for calendar year 2019. 

40See Entity Definitions adopting release, supra 

note 13, at 30636. To identify dealing activity, the 

Commission counted the number of entities that 

had three or more counterparties in a calendar year 

that were not recognized as dealers by the 

International Swaps and Derivatives Association. 

The estimate has been updated with data for 

calendar year 2019. 

41CFTC, Trading Organizations—Swap Execution 

Facilities (SEF), https://sirt.cftc.gov/SIRT/ 

SIRT.aspx?Topic=SwapExecutionFacilities. 

reason of: (a) Functions performed by 

such institution as part of customary 

dealing activities or providing facilities 

for comparison of data respecting the 

terms of settlement of securities 

transactions effected on such registered 

security-based swap execution facility, 

respectively, or (b) acting on behalf of a 

clearing agency or participant therein in 

connection with the furnishing by the 

clearing agency of services to its 

participants or the use of services of the 

clearing agency by its participants. 

In addition, as noted above, the 

Commission has granted a temporary 

exemption from the registration 

requirement for security-based swap 

execution facilities. The temporary 

exemption from the registration 

requirement for security-based swap 

execution facilities will expire on the 

earliest compliance date set forth in any 

of the final rules regarding registration 

of security-based swap execution 

facilities.32 To the extent an entity 

relying on the temporary exemption 

from the registration requirement for 

security-based swap execution facilities 

also performs the activities of a 

registered security-based swap 

execution facility as described in Rule 

17Ad–24, the Commission notes that it 

has provided a separate, temporary 

exemption from clearing agency 

registration for entities providing certain 

clearing services for security-based 

swaps, including trade matching 

services.33

III. Economic Analysis 

The Commission is sensitive to the 

economic consequences and effects of 

the adopted amendments, including 

their benefits and costs. Under Section 

3(f) of the Exchange Act, whenever the 

Commission engages in rulemaking 

under the Exchange Act and is required 

to consider or determine whether an 

action is necessary or appropriate in the 

public interest, it must consider, in 

addition to the protection of investors, 

whether the action will promote 

efficiency, competition, and capital 

formation.34 Section 23(a)(2) of the 

Exchange Act also prohibits the 

Commission from adopting any rule that 

would impose a burden on competition 

not necessary or appropriate in 

furtherance of the purposes of the 

Exchange Act.35

The Commission is exempting entities 

engaging in dealing activity in securitybased swaps and registered securitybased swap execution facilities from 

inclusion in the term ‘‘clearing agency’’ 

under the Exchange Act for the 

following functions: (a) Performing 

customary dealing activities or 

providing facilities for the comparison 

of data respecting the settlement of 

securities transactions; or (b) acting on 

behalf of a clearing agency or 

participant in connection with the 

furnishing of clearing services.36

Section 3(a)(23)(B) of the Exchange Act 

excludes national securities exchanges 

and securities dealers from the 

definition of ‘‘clearing agency,’’ to limit 

the potential for overlapping or 

duplicative requirements that may 

otherwise be imposed on these 

regulated entities. Entities engaging in 

dealing activity in security-based swaps 

and security-based swap execution 

facilities perform similar functions for 

the security-based swap market as 

securities dealers and national securities 

exchanges perform for the general 

securities industry. Accordingly, new 

Rule 17Ad–24 is intended to avoid 

imposing requirements on these entities 

with marginal or no benefit to 

safeguarding securities and funds and 

protecting investors by mirroring the 

existing exemption from the definition 

of ‘‘clearing agency’’ for entities 

engaging in dealing activity in securitybased swaps and security-based swap 

execution facilities.37 Under new Rule 

17Ad–24, these entities will not have to 

expend additional resources 

determining their registration 

requirements, registering as a clearing 

agency, or meeting the standards 

required of registered clearing agencies 

as long as their activities do not fall 

outside the scope of the exemption in 

new Rule 17Ad–24. Excluding either 

entities engaging in dealing activity in 

security-based swaps or security-based 

swap execution facilities from the 

requirements applicable to clearing 

agencies should not hinder the DoddFrank Act’s goals of greater transparency 

and financial stability of the securitybased swap market because the 

Commission has or will have a 

regulatory framework for these entities 

targeted to dealing activity in securitybased swaps or the functions performed 

by security-based swap execution 

facilities, rather than incidental 

functions that may be similar to those 

performed by a clearing agency. Just as 

de minimis amounts of dealing activity 

are sufficiently small so as not to 

warrant registration to address concerns 

implicated by the regulations governing 

security-based swap dealers, they are 

also sufficiently small such that they do 

not implicate the concerns 

underpinning the regulations governing 

clearing agencies. 

A. Baseline 

To assess the economic impact of new 

Rule 17Ad–24, the Commission is using 

as its baseline the security-based swap 

market as it exists at the time of this 

release. This analysis uses existing 

Commission analyses of security-based 

swap market in rules adopted pursuant 

to Title VII of the Dodd-Frank Act, 

updated using data from the DTCC 

Derivatives Repository Limited Trade 

Information Warehouse (‘‘TIW’’) to 

calendar year 2019.38 The data available 

to the Commission from TIW do not 

encompass those transactions that both: 

(i) Do not involve U.S. counterparties, 

and (ii) are based on non-U.S. reference 

entities. 

The Commission estimates, based on 

an analysis of TIW data that out of more 

than 4,000 entities engaged in single 

name CDS activity worldwide in 2019, 

potentially 50 entities may engage in 

dealing activity that would exceed the 

de minimis threshold, and thus 

ultimately have to register as securitybased swap dealers.39 Ten entities that 

engaged in dealing activity had less than 

$3 billion of notional transacted in 

single-name credit default swaps, so 

they could use the de minimis 

exception for the definition of ‘‘securitybased swap dealer.’’ 40

In addition, eighteen swap execution 

facilities have permanent or temporary 

registration with the Commodity 

Futures Trading Commission.41 Of 

those, nine allow trading of credit 

default swap indices; if these nine allow 

trading of single-name credit default 

swaps, they would be required to 

register as security-based swap 

Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Rules and Regulations 7641 

42Compare BGC Swap Execution Facility, http:// 

www.bgcsef.com/; Bloomberg Professional Swap 

Execution Facility Historical Data, https://

data.bloombergsef.com/; GFI Swaps Exchange 

Trade Data, http://www.gfigroup.com/markets/gfisef/trade-data/; ICE Swap Trade, https://

www.theice.com/swap-trade; MarketAxess Credit 

Default Swaps, https://www.marketaxess.com/ 

trade/credit-default-swaps; tpSEF CDS Data, 

https://www.tpinformation.com/In-Depth-Data/ 

Credit/Credit-Default-Swaps; Tradeweb and 

Dealerweb Swap Execution Facilities, https://

www.tradeweb.com/our-markets/market-regulation/ 

sef/; TraditionSEF Daily Activity, http://

www.traditionsef.com/market-activity/ (which 

allow trading of credit default swap indices), with 

360T Swap Execution Facilitiy, https://

www.360t.com/trading-solutions/sef/; Cboe Swap 

Execution Facility, https://markets.cboe.com/ 

global/fx/sef/; Clearmarkets CM–SEF Center, 

https://www.clear-markets.com/cm-sef-centre/; 

LatAmSEF Market Activity, http://latamsef.com/ 

marketactivity.phtml; LedgerX, https://

www.ledgerx.com/; NEX SEF Data, http://

www.nexsef.com/; Refinitiv SEF Volumes, https://

www.refinitiv.com/en/products/sef-swap-executionfacility#sef-volumes; SwapEx, http://

www.swapex.com/swapex/market-data/NDF/; 

TeraExchange Instruments, https://

teraexchange.com/Home/Instruments (which do 

not host trading of credit default swap indices). 

43 Id. 

44See Release Nos. 34–756711 (Aug. 5, 2015), 80 

FR 48963 (Aug. 14, 2015) (‘‘Security-Based Swap 

Entity Registration’’); 34–87782 (Dec. 18, 2019), 85 

FR 6270 (Feb. 4, 2020) (‘‘Risk Mitigation 

Techniques’’); 34–87005 (Sep. 19, 2019), 84 FR 

68550 (Dec. 16, 2019) (‘‘Security-Based Swap 

Recordkeeping and Reporting’’); 34–86175 (Jun. 21, 

2019), 84 FR 43872 (Aug. 22, 2019) (‘‘SecurityBased Swap Capital, Margin, and Segregation’’); 34– 

77617 (Apr. 14, 2016), 81 FR 29959 (May 13, 2016) 

(‘‘Security-Based Swap Business Conduct 

Standards’’). 

45See Entity Definitions adopting release, supra 

note 13, at 30639. 

46See 15 U.S.C. 78c–4. 

47See supra notes 44, 46, and accompanying text. 

48Though a registered clearing agency may be 

affiliated with a security-based swap execution 

facility, none of the registered clearing agencies are 

either a registered security-based swap dealer or 

security-based swap execution facility. 

49See Clearing Agency Standards adopting 

release, supra note 4, at 66273. The estimates were 

updated on a per entity basis using SIFMA’s 

Management & Professional Earnings in the 

Securities Industry 2013, modified to account for an 

1,800-hour work year; multiplied by 5.35 to account 

for bonuses, firm size, employee benefits and 

overhead. 

Because the exempted activities are not among 

the core central counterparty or central securities 

depository functions of a clearing agency, securitybased swap execution facilities and security-based 

swap dealers would not unduly benefit from 

avoiding the higher standards of a ‘‘covered clearing 

agency.’’ See generally Release No. 34–78961 (Apr 

9, 2020), 85 FR 28853 (May 14, 2020) (adopting an 

amendment to the definition of ‘‘covered clearing 

agency’’ such that ‘‘covered clearing agency’’ means 

a clearing agency that provides the services of a 

central counterparty or central securities 

depository). 

50See Clearing Agency Standards adopting 

release, supra note 4, at 66274. 

51However, many of the clearing agency 

requirements would not apply to entities engaging 

in dealing activity and security-based swap 

execution facilities because these entities are not 

likely to provide central counterparty or central 

securities depository services, which are the focus 

of the compliance costs associated with the SEC’s 

regulatory framework for registered clearing 

agencies. 

52The Commission has exempted entities that 

engage in security-based swap dealing activity 

below the de minimis threshold from these 

requirements since these entities do not implicate 

the concerns that these requirements address. 

execution facilities with the 

Commission.42

Security-based swap dealers must 

register with the Commission and 

comply with prudential and conduct 

standards of the Dodd-Frank Act.43

Security-based swap dealers are subject 

to a registration and regulatory 

framework that is tailored to the 

functions they serve and risks they pose. 

These risks, and the corresponding 

Commission analysis of costs and 

benefits of the ensuring requirements, 

are discussed in the Security-Based 

Swap Entity Registration, SecurityBased Swap Recordkeeping and 

Reporting, Security-Based Swap Capital, 

Margin, and Segregation, and SecurityBased Swap Business Conduct 

Standards releases.44 Entities that 

engage in dealing activity in securitybased swaps below the de minimis 

threshold of $3 billion of notional 

activity in a twelve-month period are 

excepted from the definition of 

‘‘security-based swap dealer.’’ 45 The 

Dodd-Frank Act also requires securitybased swap-execution facilities, as 

therein defined, to be registered with 

and comply with prudential and 

conduct standards to be set forth by the 

Commission.46

B. Consideration of Benefits, Costs, and 

the Effect on Competition, Efficiency, 

and Capital Formation 

The exemption in new Rule 17Ad–24 

is designed to avoid imposing 

requirements with marginal or no 

benefit to safeguarding securities and 

funds and protecting investors on 

entities engaging in dealing activity in 

security-based swaps and security-based 

swap execution facilities, which will 

benefit these entities since they will not 

be required to register as a clearing 

agency or comply with the 

Commission’s requirements for clearing 

agencies. Since these types of entities 

also each have their own registration 

and regulatory frameworks or are 

exempt due to a de minimis level of 

activity,47 the Commission does not 

expect new Rule 17Ad–24 to impose 

substantial costs, and there should be 

minimal impacts on transparency and 

financial stability. Lastly, new Rule 

17Ad–24 may improve competition and 

efficiency in the security-based swap 

dealer and security-based swap 

execution facility markets. 

The cost savings to both entities 

engaging in dealing activity in securitybased swaps and security-based swap 

execution facilities under new Rule 

17Ad–24 are likely to be significant. 

New Rule 17Ad–24 will benefit entities 

engaging in dealing activity in securitybased swaps and security-based swap 

execution facilities to the extent that 

additional clarity regarding registration 

requirements reduces the costs they may 

incur to determine which requirements 

apply to their activities. Furthermore, 

although no entities engaging in dealing 

activity in security-based swaps or 

security-based swap execution facilities 

are currently registered as clearing 

agencies with the Commission, 

exempted entities engaging in dealing 

activity in security-based swaps and 

future exempted security-based swap 

execution facilities and security-based 

swap dealers will not have to incur 

registration and compliance costs for 

clearing agencies.48 Many of the costs of 

complying with requirements for 

clearing agencies involve collecting 

information, and the Commission has 

estimated the monetized burden of these 

standards per clearing agency at $0.5 

million in initial costs and $1.2 million 

in annual ongoing costs, adjusted to 

2020 dollars.49 Absent the exemption, 

entities engaging in dealing activity in 

security-based swaps and security-based 

swap execution facilities may have to 

incur these costs. However, as existing 

clearing agencies follow the Principles 

for Financial Market Infrastructures, 

many of the Commission’s requirements 

for clearing agencies had minimal 

additional per-entity costs.50 Since these 

requirements are not common practice 

for entities engaging in dealing activity 

in security-based swaps and securitybased swap execution facilities, 

applying the Commission’s clearing 

agency requirements to these entities 

would likely have higher per-entity 

costs than the Commission’s past 

estimates for clearing agencies.51 The 

Commission does not expect either 

security-based swap execution facilities 

or security-based swap dealers will face 

new costs from relying on new Rule 

17Ad–24. 

The Commission also does not expect 

new Rule 17Ad–24 to impose costs on 

security-based swap markets. Many of 

the requirements that apply to registered 

security-based swap dealers, such as 

recordkeeping, governance, margin, and 

capital requirements, cover risks that 

overlap with those facing clearing 

agencies.52 Other aspects of clearing 

agency regulation, such as standards 

addressing settlement risk or 

participation requirements, are either 

not applicable to entities engaging in 

7642 Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Rules and Regulations 

53See Clearing Agency Standards adopting 

release, supra note 4, at 66242–43. In particular, 

security-based swap dealers do not have members 

like clearing agencies do. Requiring that they accept 

any participant that has net capital above $50 

million may unduly restrict their ability to mitigate 

risks and function as a dealer. 

54See, e.g., Risk Mitigation Techniques adopting 

release, supra note 44, at 6390 (requiring certain 

risk mitigation techniques for registered securitybased swap dealers who hold uncleared swaps 

because ‘‘the risks of the counterparties’ failure to 

manage credit risk adequately may not become 

apparent until the onset of a financial crisis,’’ as 

well as discussing the rule’s burden on competition 

and promotion of efficiency, competition, and 

capital formation). 

55See 15 U.S.C. 78c–4. 

56See 44 U.S.C. 3501 et seq.; 44 U.S.C. 3502(3). 

57See 44 U.S.C. 3507(a)(1)(D); see also 5 CFR 

1320.5(a)(1)(iv). 

58See 5 U.S.C. 601 et seq. 

59 5 U.S.C. 603(a). 

60Section 601(b) of the RFA permits agencies to 

formulate their own definitions of ‘‘small entities.’’ 

See 5 U.S.C. 601(b). The Commission has adopted 

definitions for the term ‘‘small entity’’ for the 

purposes of rulemaking in accordance with the 

RFA. These definitions, as relevant to this 

rulemaking, are set forth in 17 CFR 240.0–10. 

61See 5 U.S.C. 605(b). 

62See supra Part III. 

63 5 U.S.C. 801 et seq. 

dealing activity in security-based swaps 

or may place an undue burden on access 

to this market.53 In crafting the securitybased swap dealer requirements, the 

Commission has considered the benefits 

for financial stability as well as the 

burden on competition and the 

promotion of efficiency, competition, 

and capital formation.54 As such, in the 

Commission’s view, applying 

requirements for clearing agencies to 

entities engaging in dealing activity in 

security-based swaps for performing 

customary dealing activity is not 

necessary to achieve the goals of the 

Dodd-Frank Act. 

Similarly, security-based swap 

execution facilities will have to register 

with the Commission and abide by the 

standards listed in the Dodd-Frank Act, 

as implemented by future Commission 

rules.55 Providing data to participants to 

compare settlement terms or acting on 

behalf of a clearing agency to facilitate 

clearing services to the security-based 

swap execution facilities’ customers, 

while related to clearing and settlement, 

does not expose the security-based swap 

execution facility to market volatility, so 

the Commission does not believe that 

these activities alone justify requiring 

security-based swap execution facilities 

to adopt the risk management practices 

required of clearing agencies. 

The cost savings associated with new 

Rule 17Ad–24 may promote 

competition among entities engaging in 

dealing activity in security-based swaps 

and security-based swap execution 

facilities. For example, new Rule 17Ad– 

24 may lower barriers to entry for 

entities engaging in dealing activity in 

security-based swaps, promoting 

competition among liquidity providers 

in the security-based swap market. 

Similarly, lower costs for security-based 

swap execution facilities that provide 

trade processing services should 

increase competition in providing these 

services, which may reduce the price 

and/or increase the quality of these 

services. To the extent that new Rule 

17Ad–24 increases the availability of 

and competition between either 

liquidity providers or trade execution 

services, it may marginally improve 

efficiency of these services. The 

Commission does not anticipate new 

Rule 17Ad–24 to have a substantial 

impact on capital formation. 

IV. Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(‘‘PRA’’) imposes certain requirements 

on Federal agencies in connection with 

the conducting or sponsoring of any 

‘‘collection of information.’’ 56 An 

agency may not conduct or sponsor, and 

a person is not required to respond to, 

a collection of information unless it 

displays a currently valid control 

number. Further, 44 U.S.C. 3507(a) 

provides that, before adopting or 

revising a collection of information 

requirement, an agency must, among 

other things, publish notice in the 

Federal Register stating that the agency 

has submitted the proposed collection 

of information to the Office of 

Management and Budget (‘‘OMB’’) and 

setting forth certain required 

information, including (i) a title for the 

collection of information; (ii) a summary 

of the collection of information; (iii) a 

brief description of the need for the 

information and the proposed use of the 

information; (iv) a description of the 

likely respondents and proposed 

frequency of response to the collection 

of information; (v) an estimate of the 

paperwork burden that shall result from 

the collection of information; and (vi) 

notice that comments may be submitted 

to the agency and director of OMB.57

The proposing release provided notice 

that Rule 17Ad–24 does not impose 

recordkeeping or information collection 

requirements and would not be a 

‘‘collection of information’’ within the 

meaning of the PRA. The Commission 

received no comments in response, and 

the Commission continues to believe 

that Rule 17Ad-24 does not impose a 

recordkeeping burden. 

V. Regulatory Flexibility Act 

Certification 

The Regulatory Flexibility Act 

(‘‘RFA’’) requires the Commission, in 

promulgating rules, to consider the 

impact of those rules on small entities.58

Section 603(a) of the Administrative 

Procedure Act,59 as amended by the 

RFA, generally requires the Commission 

to undertake a regulatory flexibility 

analysis of all proposed rules to 

determine the impact of such 

rulemaking on ‘‘small entities.’’ 60 The 

Commission certified in the proposing 

release, pursuant to Section 605(b) of 

the RFA, that Rule 17Ad–24 would not, 

if adopted, have a significant impact on 

a substantial number of small entities.61

The Commission received no comments 

on this certification. 

Because the exemptions provided in 

Rule 17Ad–24 ensure that certain 

activities of registered security-based 

swap dealers, registered security-based 

swap execution facilities, and entities 

engaging in dealing activity in securitybased swaps that are eligible for an 

exception under 17 CFR 240.3a71–2(a) 

(or subject to the period set forth in 17 

CFR 240.3a71–2(b)) do not trigger the 

requirement to register as a clearing 

agency,62 the Commission certifies that 

Rule 17Ad–24 will not have a 

significant economic impact on a 

substantial number of small entities. 

VI. Other Matters 

If any of the provisions of this rule, or 

the application thereof to any person or 

circumstance, is held to be invalid, such 

invalidity shall not affect other 

provisions or application of such 

provisions to other persons or 

circumstances that can be given effect 

without the invalid provision or 

application. 

Pursuant to the Congressional Review 

Act,63 the Office of Information and 

Regulatory Affairs has designated these 

rules as not a ‘‘major rule,’’ as defined 

by 5 U.S.C. 804(2). 

VII. Statutory Authority 

Pursuant to the Exchange Act, 

particularly Sections 17A and 36 

thereof, 15 U.S.C. 78q–1 and 15 U.S.C. 

78mm, the Commission is adopting Rule 

17Ad–24. 

List of Subjects in 17 CFR Part 240 

Reporting and recordkeeping 

requirements, Securities. 

Text of Amendment 

In accordance with the foregoing, title 

17, chapter II of the Code of Federal 

Regulations is amended as follows: 

Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Rules and Regulations 7643 

1 Limiting Authorizations to Proceed with 

Construction Activities Pending Rehearing, Order 

No. 871, 85 FR 40113 (July 6, 2020), 171 FERC 

¶ 61,201 (2020). 

2The Kinder Morgan Gas Entities include: 

Natural Gas Pipeline Company of America LLC; 

Tennessee Gas Pipeline Company, L.L.C.; Southern 

Natural Gas Company, L.L.C.; Colorado Interstate 

Gas Company, L.L.C.; Wyoming Interstate 

Company, L.L.C.; El Paso Natural Gas Company, 

L.L.C.; Mojave Pipeline Company, L.L.C.; Bear 

Creek Storage Company, L.L.C.; Cheyenne Plains 

Gas Pipeline Company, LLC; Elba Express 

Company, L.L.C.; Kinder Morgan Louisiana 

Pipeline LLC; Southern LNG Company, L.L.C.; and 

TransColorado Gas Transmission Company LLC. 

3 964 F.3d 1 (D.C. Cir. 2020) (en banc) 

(Allegheny). 

4 15 U.S.C. 717r(a) (‘‘Until the record in a 

proceeding shall have been filed in a court of 

appeals, as provided in subsection (b), the 

Commission may at any time, upon reasonable 

notice and in such manner as it shall deem proper, 

modify or set aside, in whole or in part, any finding 

or order made or issued by it under the provisions 

of this chapter.’’). 

5Allegheny, 964 F.3d at 16–17. 

PART 240—GENERAL RULES AND 

REGULATIONS, SECURITIES 

EXCHANGE ACT OF 1934 

■ 1. The general authority citation for 

part 240 continues to read, in part, as 

follows: 

Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 

77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn, 

77sss, 77ttt, 78c, 78c–3, 78c–5, 78d, 78e, 78f, 

78g, 78i, 78j, 78j–1, 78k, 78k–1, 78l, 78m, 

78n, 78n–1, 78o, 78o–4, 78o–10, 78p, 78q, 

78q–1, 78s, 78u–5, 78w, 78x, 78dd, 78ll, 

78mm, 80a–20, 80a–23, 80a–29, 80a–37, 80b– 

3, 80b–4, 80b–11, and 7201 et seq., and 8302; 

7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 

U.S.C. 1350; Pub. L. 111–203, 939A, 124 Stat. 

1376 (2010); and Pub. L. 112–106, sec. 503 

and 602, 126 Stat. 326 (2012), unless 

otherwise noted. 

* * * * * 

■ 2. Section 240.17Ad–24 is added to 

read as follows: 

§ 240.17Ad–24 Exemption from clearing 

agency definition for certain registered 

security-based swap dealers, registered 

security-based swap execution facilities, 

and entities engaging in dealing activity in 

security-based swaps that are eligible for 

an exception under § 240.3a71–2(a) (or 

subject to the period set forth in § 240.3a71– 

2(b)). 

A registered security-based swap 

dealer, a registered security-based swap 

execution facility, or an entity engaging 

in dealing activity in security-based 

swaps that is eligible for an exception 

under § 240.3a71–2(a) (or subject to the 

period set forth in § 240.3a71–2(b)) shall 

be exempt from inclusion in the term 

‘‘clearing agency,’’ as defined in section 

3(a)(23)(A) of the Act, where such 

registered security-based swap dealer, 

registered security-based swap 

execution facility, or entity engaging in 

dealing activity in security-based swaps 

that is eligible for an exception under 

§ 240.3a71–2(a) (or subject to the period 

set forth in § 240.3a71–2(b)) would be 

deemed to be a clearing agency solely by 

reason of: 

(a) Functions performed by such 

institution as part of customary dealing 

activities or providing facilities for 

comparison of data respecting the terms 

of settlement of securities transactions 

effected on such registered securitybased swap execution facility, 

respectively; or 

(b) Acting on behalf of a clearing 

agency or participant therein in 

connection with the furnishing by the 

clearing agency of services to its 

participants or the use of services of the 

clearing agency by its participants. 

By the Commission. 

Dated: December 16, 2020. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2020–28194 Filed 1–29–21; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Parts 153 and 157 

[Docket No. RM20–15–001; Order No. 871– 

A] 

Limiting Authorizations To Proceed 

With Construction Activities Pending 

Rehearing 

AGENCY: Federal Energy Regulatory 

Commission. 

ACTION: Order addressing arguments 

raised on rehearing and clarification, 

and providing for additional briefing. 

SUMMARY: On rehearing, the Federal 

Energy Regulatory Commission 

(Commission) modifies Order No. 871, 

which amended its regulations to 

preclude the issuance of authorizations 

to proceed with construction activities 

with respect to natural gas facilities 

authorized by order issued pursuant to 

section 3 or section 7 of the Natural Gas 

Act until either the time for filing a 

request for rehearing of such order has 

passed with no rehearing request being 

filed or the Commission has acted on 

the merits of any rehearing request. The 

Commission provides for further 

briefing on the issues raised in the 

rehearing requests. 

DATES: The effective date of the 

document published on July 6, 2020 (85 

FR 40113) is confirmed: August 5, 2020. 

FOR FURTHER INFORMATION CONTACT: Tara 

DiJohn, Office of the General Counsel, 

Federal Energy Regulatory Commission, 

888 First Street NE, Washington, DC 

20426, (202) 502–8671, tara.dijohn@

ferc.gov. 

SUPPLEMENTARY INFORMATION: 

1. On June 9, 2020, the Federal Energy 

Regulatory Commission (Commission) 

issued Order No. 871, which is a final 

rule that precludes the issuance of 

authorizations to proceed with 

construction activities with respect to a 

Natural Gas Act (NGA) section 3 

authorization or section 7(c) certificate 

order until the Commission acts on the 

merits of any timely-filed request for 

rehearing or the time for filing such a 

request has passed.1 On July 9, 2020, the 

Interstate Natural Gas Association of 

America (INGAA) requested 

clarification or, in the alternative, 

rehearing, and Kinder Morgan, Inc. 

Natural Gas Entities 2 (Kinder Morgan) 

and TC Energy Corporation (TC Energy) 

requested rehearing of Order No. 871. 

2. Pursuant to Allegheny Defense 

Project v. FERC,3 the rehearing requests 

filed in this proceeding may be deemed 

denied by operation of law. However, as 

permitted by section 19(a) of the NGA,4

we are modifying the discussion in 

Order No. 871 and providing for 

additional briefing, as discussed below.5

I. Background 

3. In Order No. 871, the Commission 

explained that historically, due to the 

complex nature of the matters raised on 

rehearing of orders granting 

authorizations under NGA sections 3 

and 7, the Commission had often issued 

an order (known as a tolling order) by 

the thirtieth day following the filing of 

a rehearing request, allowing itself 

additional time to provide thoughtful, 

well-considered attention to the issues 

raised on rehearing. 

4. In order to balance its commitment 

to expeditiously responding to parties’ 

concerns in comprehensive orders on 

rehearing and the serious concerns 

posed by the possibility of construction 

proceeding prior to the completion of 

agency review, the Commission, in 

Order No. 871, exercised its discretion 

by amending its regulations to add new 

§ 157.23, which precludes the issuance 

of authorizations to proceed with 

construction of projects authorized 

under NGA sections 3 and 7 during the 

period for filing request for rehearing of