80898 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Proposed Rules 

1 5 U.S.C. 552. 2 17 CFR 145.9. 

3See Dodd-Frank Wall Street Reform and 

Consumer Protection Act, Public Law 111–203, 124 

Stat. 1376 (2010), available at http://www.cftc.gov/ 

LawRegulation/OTCDERIVATIVES/index.htm. 

4Pursuant to Section 701 of the Dodd-Frank Act, 

Title VII may be cited as the ‘‘Wall Street 

Transparency and Accountability Act of 2010.’’ 

5 7 U.S.C. 1, et seq. 

6Section 721 of the Dodd-Frank Act amends 

Section 1a of the CEA to add the definition of SDR. 

Section 1a provides that 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.’’ 7 U.S.C. 1a(48). 

Currently there are global trade repositories for 

credit, interest rate, and equity swaps. Since 2009, 

all G–14 dealers have submitted credit swap data 

to the Depository Trust & Clearing Corporation’s 

(‘‘DTCC’’) Trade Information Warehouse. In January 

2010, TriOptima launched the Global OTC 

Derivatives Interest Rate Trade Reporting 

Repository after selection by the Rates Steering 

Committee of the International Swaps and 

Derivatives Association to provide a trade 

repository to collect information on trades in 

interest rate swaps. In August 2010, DTCC also 

launched the Equity Derivatives Reporting 

Repository for equity swaps and other equity 

derivatives. Other entities may also perform trade 

repository functions on a regional or more localized 

basis. In addition, a variety of firms also provide 

ancillary services and functions essential to the 

efficient operation of trade reporting of swaps. 

Trade repositories for other asset classes such as 

commodities and foreign currency have yet to be 

formally established but are expected to be 

developed in the near future in connection with the 

effective date of the Dodd-Frank Act. 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 49 

RIN 3038–AD20 

Swap Data Repositories 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Commodity Futures 

Trading Commission (‘‘CFTC’’ or 

‘‘Commission’’) is proposing rules to 

implement new statutory provisions 

introduced by Title VII of the DoddFrank Wall Street Reform and Consumer 

Protection Act (‘‘Dodd-Frank Act’’). 

Section 728 of the Dodd-Frank Act 

amends the Commodity Exchange Act 

(‘‘CEA’’ or the ‘‘Act’’) by adding new 

Section 21, which establishes 

registration requirements, statutory 

duties, core principles and certain 

compliance obligations for registered 

swap data repositories (‘‘SDRs’’) and 

directs the Commission to adopt rules 

governing persons that are registered, as 

such, under this Section. 

DATES: Comments must be received by 

February 22, 2011. 

ADDRESSES: You may submit comments, 

identified by RIN 3038–AC20, 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. 

• Federal eRulemaking Portal: http:// 

www.Regulations.gov. Follow the 

instructions for submitting comments. 

Please submit your comments using 

only one method. 

All comments must be submitted in 

English, or if not, accompanied by an 

English translation. Comments will be 

posted as received to 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 

(‘‘FOIA’’),1 a petition for confidential 

treatment of the exempt information 

may be submitted according to the 

established procedures in § 145.9 of the 

Commission’s regulations.2 The 

Commission reserves the right, but shall 

have no obligation, to review, prescreen, 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 FOIA. 

FOR FURTHER INFORMATION CONTACT: 

Jeffrey P. Burns, Assistant General 

Counsel, Office of the General Counsel, 

at (202) 418–5101, jburns@cftc.gov; 

Susan Nathan, Senior Special Counsel, 

Division of Market Oversight, at (202) 

418–5133, snathan@cftc.gov and 

Adedayo Banwo, Counsel, Office of the 

General Counsel, at (202) 418–6249, 

abanwo@cftc.gov, Commodity Futures 

Trading Commission, Washington, DC 

20581. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Background 

II. The Proposed Regulations: Part 49 

A. Requirements of Registration 

B. Duties of Registered SDRs 

1. Acceptance of Data 

2. Confirmation of Data Accuracy 

3. Recordkeeping Requirements 

4. Direct Electronic Access by the 

Commission 

5. Monitoring, Screening and Analyzing 

Swap Data 

6. Maintenance of Data Privacy 

7. Access to SDR Data 

8. Emergency Procedures 

C. Designation of Chief Compliance Officer 

D. Core Principles Applicable to SDRs 

1. Antitrust Considerations (Core Principle 

1) 

2. Introduction—Governance 

Arrangements (Core Principle 2) and 

Conflicts of Interest (Core Principle 3) 

3. Governance Arrangements (Core 

Principle 2) 

4. Conflicts of Interest (Core Principle 3) 

E. Additional Duties 

1. System Safeguards 

2. Financial Resources 

3. Disclosure Requirements of Swap Data 

Repositories 

4. Non-Discriminatory Access and Fees 

F. Real Time Reporting 

G. Procedures for Implementing Swap Data 

Repository Rules 

III. Effectiveness and Transition Period 

IV. General Request for Comments 

V. Related Matters 

A. Paperwork Reduction Act 

B. Cost-Benefit Analysis 

C. Antitrust Considerations 

D. Regulatory Flexibility Act 

VI. List of Subjects 

I. Background 

On July 21, 2010, President Obama 

signed into law the Dodd-Frank Act.3

Title VII of the Dodd-Frank Act 4

amended the CEA 5 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 (‘‘SDs’’) and major swap 

participants (‘‘MSPs’’); (2) imposing 

clearing and trade execution 

requirements on standardized derivative 

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. 

To enhance transparency, promote 

standardization and reduce systemic 

risk, Section 728 of the Dodd-Frank Act 

establishes a newly-created registered 

entity—the SDR6—to collect and 

maintain data and information related to 

swap transactions as prescribed by the 

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7Regulations governing the SDRs’ data collection 

and recordkeeping responsibilities are the subject of 

a separate proposed rulemaking under part 45 of the 

Commission’s regulations. See 17 CFR part 45. 

8The Dodd-Frank Act mandates that the 

Commission promulgate rules to implement these 

provisions by July 15, 2011. See Section 712 of the 

Dodd-Frank Act. 

9 If a DCO so registers, then to the extent that final 

rules on governance and conflicts of interest, 

discussed infra Section II.D.2, differ between a DCO 

and an SDR, the DCO must meet the more stringent 

set of rules. 

10Section 21(f)(4)(A) of the CEA, added by the 

Dodd-Frank Act, authorizes the Commission to 

develop one or more additional duties applicable to 

SDRs. 7 U.S.C. 24a(f)(4). 

11Section 8 of the CEA, 7 U.S.C. 12(e), establishes 

among other things the conditions under which the 

Commission may furnish information obtained in 

connection with the administration of the CEA to 

any department or agency of the United States; such 

information shall not be disclosed by such 

department or agency except in any action or 

proceeding under the laws of the United States to 

which it, the Commission or the United States is a 

party. Similarly, the Commission may furnish such 

information to a foreign futures authority if the 

Commission is satisfied that the information will 

not be disclosed by such foreign futures authority 

except in connection with an adjudicatory action or 

proceeding brought under the laws of such foreign 

government or political subdivision, or foreign 

futures authority, is a party. 

12See Section 21(f)(4) of the CEA, 7 U.S.C. 

24a(f)(4). 

13See CPSS–IOSCO Consultative Report, 

Considerations for Trade Repositories in the OTC 

Derivatives (May 2010), available at http:// 

www.bis.org/publ/cpss90.pdf. 

14 Id. 

15The Dodd-Frank Act provides: 

In order to promote effective and consistent 

global regulation of swaps and security-based 

swaps, the Commodity Futures Trading 

Commission, the Securities and Exchange 

Commission, and the prudential regulators (as that 

term is defined in Section 1a(39) of the Commodity 

Exchange Act), as appropriate, shall consult and 

coordinate with foreign regulatory authorities on 

the establishment of consistent international 

standards with respect to the regulation (including 

fees) of swaps, security-based swaps, swap entities, 

and security-based swap entities and may agree to 

such information-sharing arrangements as may be 

deemed to be necessary or appropriate in the public 

interest or for the protection of investors, swap 

counterparties, and security-based swap 

counterparties. 

Section 752(a) of the Dodd-Frank Act. 

Commission 7 and to make such data 

and information directly and 

electronically available to regulators. 

Section 2(a)(13)(G) of the CEA, adopted 

by Section 727 of the Dodd-Frank Act, 

requires all swaps—cleared or 

uncleared—to be reported to an SDR. 

Section 728 of the Dodd-Frank Act 

added to the CEA new Section 21 

governing registration and regulation of 

SDRs, and directed the Commission to 

adopt regulations governing SDR duties 

and responsibilities specified in the 

legislation. Section 21 requires that 

SDRs be registered with the 

Commission,8 allows a derivatives 

clearing organization (‘‘DCO’’) to register 

as an SDR, and specifies that persons 

required to be registered as SDRs must 

register with the Commission whether 

or not they are also licensed as a bank 

or registered as a security-based swap 

data repository with the Securities and 

Exchange Commission (‘‘SEC’’).9 To 

register with the Commission and 

maintain registration, SDRs are required 

to comply with the duties and core 

principles set forth in Section 21 of the 

CEA as well as other requirements that 

the Commission may prescribed by 

rule.10

Pursuant to the specific duties 

outlined in Section 21(c) of the CEA, 

SDRs must (1) accept data; (2) confirm 

with both counterparties to the swap the 

accuracy of the data that was submitted; 

(3) maintain data according to standards 

prescribed by the Commission; (4) 

provide direct electronic access to the 

Commission or any designee of the 

Commission; (5) provide public 

reporting of swap data in the form and 

frequency as the Commission may 

require; (6) establish automated systems 

for monitoring and analyzing data 

(including the use of end-user clearing 

exemptions) at the direction of the 

Commission; (7) maintain user privacy; 

(8) on a confidential basis, pursuant to 

Section 8 of the CEA,11 upon request 

and after notifying the Commission, 

make data available to other specified 

regulators; and (9) establish and 

maintain emergency procedures. As a 

separate matter, prior to sharing 

information with specified entities, the 

SDR must, pursuant to Section 21(d) of 

the CEA, receive a written agreement 

from each such entity stating that it will 

abide by the confidentiality provisions 

of Section 8 of the CEA and agree to 

indemnify the SDR and the Commission 

for any litigation expenses relating to 

information provided under Section 8. 

Section 21(e) of the CEA requires that 

each SDR have a chief compliance 

officer (‘‘CCO’’) and specifies the duties 

of the CCO. Section 21(f) of the CEA 

establishes four core principles for 

SDRs. First, an SDR is prohibited from 

adopting any rule or taking any action 

that results in any unreasonable 

restraint of trade or imposing any 

material anticompetitive burden on the 

trading, clearing or reporting of 

transactions. Second, each SDR must 

establish governance arrangements that 

are transparent to fulfill the public 

interest requirements and to support the 

objectives of the federal government, 

owners and participants. Third, each 

SDR must establish and enforce rules to 

minimize conflicts of interest in the 

SDR’s decision-making processes and 

establish a process for resolving 

conflicts of interest. Lastly, a fourth core 

principle provides that the Commission 

must establish additional duties for 

registered SDRs to minimize conflicts of 

interest, protect data, ensure compliance 

and guarantee the safety and security of 

the SDR and may develop additional 

duties taking into account evolving 

standards of the United States and the 

international community.12

The Commission notes that in May 

2010, a working group jointly 

established by the Committee on 

Payment and Settlement Systems 

(‘‘CPPS’’) of the Bank of International 

Settlements (‘‘BIS’’) and the Technical 

Committee of the International 

Organization of Securities Commissions 

(‘‘IOSCO’’) published a consultative 

report entitled ‘‘Considerations for Trade 

Repositories in the OTC Derivatives 

Markets’’(‘‘Working Group Report’’).13

The Working Group Report presents a 

set of factors to consider in connection 

with the design, operation and 

regulation of SDRs. A significant 

consideration of the Working Group 

Report is access to SDR data by 

appropriate regulators. As noted in this 

Working Group Report, a trade 

repository ‘‘should support market 

transparency by making data available 

to relevant authorities and the public in 

line with their respective information 

needs.’’ 14 The Commission believes that 

the Dodd-Frank Act and proposed part 

49 of the Commission’s Regulations are 

consistent with the goals of the Working 

Group Report. Unless inconsistent with 

the statutory framework set forth in 

Section 21 of the CEA and related 

provisions, the Commission proposes 

that SDRs will largely follow the 

recommendations in the Working Group 

Report to enhance transparency, 

promote standardization and reduce 

systemic risk in the swaps market. 

Additionally, Section 752(a) of the 

Dodd-Frank Act directs the Commission 

to consult and coordinate with foreign 

regulatory authorities regarding the 

establishment of consistent 

international standards for the 

regulation of swaps and various ‘‘swap 

entities.’’ 15 Consistent with this 

directive, the Commission believes that 

the data maintained by SDRs must be 

available to all appropriate foreign 

regulators consistent with their 

regulatory responsibilities and the 

Dodd-Frank Act. Accordingly, in 

support of its cooperative international 

approach to the regulation of SDRs, the 

Commission has consulted with various 

foreign regulatory authorities in 

promulgating the proposed rules. 

The Commission also notes the recent 

issuance by the European Commission 

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16See Proposal for a Regulation of the European 

Parliament and of the Council on OTC Derivatives, 

Central Counterparties, and Trade Depositories (the 

‘‘European Commission Proposal’’), COM (2010) 

484/5. 

17Section 2(i) of the CEA, as amended by Section 

722(d) of the Dodd-Frank Act, provides: 

(i) APPLICABILITY.—The provisions of this Act 

relating to swaps that were enacted by the Wall 

Street Transparency and Accountability Act of 2010 

(including any rule prescribed or regulation 

promulgated under that Act), shall not apply to 

activities outside the United States unless those 

activities— 

(1) have a direct and significant connection with 

activities in, or effect on, commerce of the United 

States; or 

(2) contravene such rules or regulations as the 

Commission may prescribe or promulgate as are 

necessary or appropriate to prevent the evasion of 

any provision of this Act that was enacted by the 

Wall Street Transparency and Accountability Act of 

2010. 

7 U.S.C. 2(i)(1)–(2). 

18See Commission, Notice of Proposed 

Rulemaking: Revisions to part 40 (Provisions 

Common to Registered Entities), 75 FR 67282 (Nov. 

2, 2010). 

of its regulatory proposal related to OTC 

derivatives, central counterparties and 

trade depositories.16 It is the 

Commission’s intention to harmonize its 

approach with that of the European 

Commission to the extent possible 

consistent with the statutory provisions 

of Dodd-Frank Act relating to SDRs. 

The Commission submits further that 

Section 21 of the CEA does not provide 

the Commission with the authority to 

exempt any entity performing the 

functions of an SDR from the 

registration requirements or any other 

regulatory duties established by the 

Dodd-Frank Act. However, swap 

activity that is strictly of a ‘‘non-U.S.’’ 

nature would be excluded from 

Commission registration and regulation. 

Specifically, Section 2(i) of the CEA, as 

amended by Section 722 of the DoddFrank Act, excludes from U.S. 

jurisdiction all swap activity that does 

not have a ‘‘direct and significant 

connection with activities in, or effect 

on, commerce of the United States’’, or 

which contravene regulations necessary 

to prevent evasion.17

II. The Proposed Regulations: Part 49 

As discussed above, part 49 will 

contain the provisions that apply to 

registration and regulation of SDRs. 

Proposed § 49.3 will establish the 

procedures and substantive 

requirements for registration as an SDR. 

Compliance with the statutory duties 

described in Section 21(c) of the CEA is 

described in proposed § 49.9 and 

detailed in proposed §§ 49.10 through 

49.18. Core principles applicable to 

SDRs as outlined in Section 21(f) are set 

forth in proposed §§ 49.19 through 

49.22. The additional duties 

promulgated pursuant to Section 

21(f)(4) of the CEA (Core Principle 4) are 

set forth in proposed §§ 49.23 through 

49.27. 

A. Requirements of Registration 

Proposed §§ 49.3–49.4 and 49.6–49.7 

provide the substantive requirements 

and framework for SDR registration. The 

Proposed Regulations include 

provisions relating to: (1) Procedures for 

registration; (2) provisional registration; 

(3) an annual filing requirement; (4) 

withdrawal of application for 

registration; (5) reinstatement of 

dormant registration; (6) withdrawal of 

registration; (7) registration of successor 

entities; and (8) SDRs located in foreign 

jurisdictions. Each of the proposed 

Regulations is discussed below in turn. 

1. Procedures for Registration— 

Proposed § 49.3 

To implement the requirements of 

Section 21(a) of the CEA, as amended by 

Section 728 of the Dodd-Frank Act, and 

to ensure the Commission’s ability to 

administer part 49 of the Commission’s 

Regulations generally, the Commission 

proposes in § 49.3 to establish 

application and approval procedures for 

any entity seeking registration as a SDR. 

The Commission, in connection with 

proposed § 49.3, is proposing to require 

each SDR applicant to file for 

registration on proposed Form SDR. 

(a) Proposed Form SDR. Proposed 

§ 49.3(a) provides that applications for 

registration as an SDR must be filed 

electronically with the Commission on 

new Form SDR. Proposed Form SDR 

will be used for an initial or provisional 

registration as an SDR as well as any 

updates or amendments to registration. 

Each applicant will be required to 

provide the Commission with 

documents and descriptions pertaining 

to the (i) business organization, (ii) 

financial resources, (iii) technological 

capabilities and (iv) accessibility of 

services of the SDR. 

SDR applicants will be required to 

provide documents describing the 

applicant’s legal status, including a 

copy of the constitution, articles of 

incorporation or association with all 

amendments, existing by-laws, rules or 

instruments corresponding with, and a 

description of the organizational and 

governance structure. SDRs must also 

submit copies of any applicable rules 

and regulations (as defined in revised 

§ 40.1),18 disclose any affiliates along 

with a brief description of the nature of 

the affiliation, and submit copies of any 

agreements between the SDR and third 

parties that will assist the SDR in 

complying with the duties set forth in 

Section 21(c) and the core principles 

specified in Section 21(f). If the 

applicant is a foreign entity, the entity 

is required to certify and provide an 

opinion of counsel that the SDR, as a 

matter of law, is able to provide the 

Commission with prompt access to the 

books and records of the SDR and that 

the SDR can submit to onsite inspection 

and examination by the Commission. 

Financial information filed as part of 

Form SDR would include (i) a balance 

sheet, (ii) statement of income and 

expenses, (iii) statement of sources and 

application of revenues and (iv) all 

notes or schedules, as of the most recent 

fiscal year. A balance sheet and an 

income and expense statement for each 

affiliate, as of the end of the most recent 

fiscal year, will also be required for 

those affiliates of the SDR that provide 

SDR regulatory services. If the applicant 

is a newly-created entity without 

sufficient time in operation, the 

applicant should provide pro forma 

financial statements for the most recent 

six months, or since inception of the 

entity, whichever occurs first. Except for 

pro forma financial statements prepared 

for newly-created entities, financial 

statements shall be prepared in 

conformity with generally accepted 

accounting principles (‘‘GAAP’’) applied 

on a basis consistent with that of the 

preceding financial statement. 

Applicants will be required to 

demonstrate operational capability 

through documentation such as 

technical manuals and/or third party 

service provider agreements that will be 

employed to provide services to the 

SDR. Applicants will also be required to 

set forth practices and procedures for 

accepting swap data and providing 

services to market participants. As 

required by proposed § 49.27, access 

must be fair, open and nondiscriminatory. 

(b) 180–Day Review Procedures. An 

entity that seeks to register as a SDR is 

required to electronically file Form SDR 

with the Commission in accordance 

with the instructions contained in Form 

SDR. The Commission will review Form 

SDR and, at or prior to the conclusion 

of a 180-day period, by order either (i) 

grant registration; (ii) extend the 180- 

day review period for good cause; or (ii) 

deny the application for registration. If 

deemed appropriate, the Commission 

may grant registration as a SDR subject 

to conditions. The 180-day review 

period will commence once a completed 

submission on Form SDR is submitted 

to the Commission, as determined solely 

in the discretion of the Commission. If 

the Commission denies an application 

for registration, it will specify the 

grounds for such denial. In the event the 

Commission denies an applicant 

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19An SDR applicant that is denied registration 

based on an incomplete application would be 

permitted to re-file an application with the 

Commission. 

20The Commission would deny the registration of 

a SDR applicant that is unable to demonstrate 

compliance with the statutory duties set forth in 

Section 21(c) of the CEA, 7 U.S.C. 24a(c) and 

proposed § 49.9 as well as the core principles set 

forth in Section 21(f) of the CEA, 7 U.S.C. 24a(f), 

and proposed § 49.19. 

21This provision is comparable to the designated 

contract market (‘‘DCM’’) and DCO applications set 

forth in Section 6 of the CEA, 7 U.S.C. 8. 22See proposed § 49.3(a)(5). 

23See Provisions Common to Registered Entities, 

supra note 18. 

registration, such person may request an 

opportunity for a hearing before the 

Commission. 

(c) Standard for Approval. The 

Commission, in reviewing applications 

for SDR registration, will review 

whether SDR applicants are properly 

organized and have the capacity to 

assure the prompt, accurate and reliable 

performance of the SDR duties in 

Section 21(c), core principles in Section 

21(f) and additional duties of Section 

21(f)(4). Subject to the ability of the 

Commission to extend the 180-day 

period as noted above, the Commission 

would deny registration if it appears at 

the end of the 180-day period that the 

application (i) is materially 

incomplete; 19 (ii) fails in form or 

substance to meet the requirements of 

Section 21 of the CEA and proposed 

part 49 of the Commission’s 

Regulations; 20 and/or (iii) is amended 

or supplemented in a manner that is 

inconsistent with proposed § 49.3. The 

Commission, in each instance of the 

denial of an application for registration, 

will provide notification setting forth 

the deficiencies in the application, or 

the manner in which the application 

fails to meet the requirements of 

proposed part 49 of the Commission’s 

Regulations.21

(d) Amendments and Annual Filing. 

Proposed § 49.3(a)(3) provides that if 

any information reported on Form SDR 

or any subsequent amendment becomes 

inaccurate, the SDR is required to 

promptly file an amendment on Form 

SDR updating such information. This 

requirement is applicable regardless of 

whether the information becomes 

inaccurate before or after an application 

for registration has been granted. 

Proposed § 49.3(a)(3) also requires that 

each registered SDR annually file an 

amendment on Form SDR within 60 

days after the end of each calendar year. 

(e) Service of Process. The 

Commission is proposing in proposed 

§ 49.3(a)(5) to require each SDR to 

designate and authorize on Form SDR 

an agent in the United States, other than 

a Commission official, to accept any 

notice or service of process, pleadings, 

or other documents in any action or 

proceedings against the SDR to enforce 

the CEA and related Regulations. If an 

SDR appoints another agent to accept 

such notice or service of process, then 

the SDR would be required to file 

promptly an amendment on Form SDR 

updating this information.22 Proposed 

§ 49.3(a)(5) is intended to conserve the 

Commission’s resources and to 

minimize any logistical obstacles (e.g., 

locating defendants or respondents 

abroad) that the Commission may 

encounter when attempting to effect 

service. 

(f) Provisional Registration. Proposed 

§ 49.3(b) permits the Commission, upon 

the request of an applicant, to grant a 

provisional registration of an SDR, if 

such applicant is in substantial 

compliance with the standards set forth 

in proposed § 49.3(a)(4). This 

application for provisional registration 

would be filed on proposed Form SDR. 

Such provisional registration will expire 

on the earlier of: (i) The date that the 

Commission grants or denies 

registration of the SDR; or (ii) the date 

that the Commission rescinds the 

provisional registration of the SDR. The 

Commission may rescind such 

provisional registration on the same 

grounds as those set forth in proposed 

§ 49.3(a)(3). 

The proposed provisional registration 

would enable an SDR to comply with 

the Dodd-Frank Act upon its effective 

date (i.e., the later of 360 days after the 

date of its enactment or 60 days after 

publication of the final rule 

implementing Section 21 of the CEA). 

The provisional registration would also 

allow the Commission to implement the 

registration requirements of the DoddFrank Act for SDRs while providing the 

Commission sufficient time to fully 

review the application of an SDR. An 

SDR that is provisionally registered with 

the Commission would be subject to 

Section 21 of the CEA and related 

regulations during the period in which 

the Commission is reviewing the SDR’s 

application of registration. 

The Commission believes that the 

provisional registration should not be a 

permanent provision of part 49. 

Accordingly, proposed § 49.3(b) 

includes a ‘‘sunset’’ provision so that 

provisional registration would terminate 

365 days from the effective date of 

proposed § 49.3(b). 

Notwithstanding the availability of a 

provisional registration, the 

Commission encourages each SDR to 

apply for registration as soon as possible 

following the Commission’s adoption of 

final part 49, to permit sufficient time 

for an SDR to answer any questions that 

the Commission staff may have and to 

provide additional information or 

documentation, if necessary. The 

Commission will review applications in 

the order in which they are received. 

Applications seeking provisional 

registration that are received close to the 

effective date of the SDR registration 

requirement may not be reviewed and 

approved by the effective date. 

(g) Withdrawal of Application for 

Registration. Proposed § 49.3(c) permits 

an applicant for registration as an SDR 

to withdraw its application by filing a 

request with the Commission. Such a 

voluntary withdrawal by the applicant 

SDR will not affect any action taken or 

to be taken by the Commission based 

upon conduct occurring during the time 

that the application for registration was 

pending with the Commission. 

(h) Reinstatement of Dormant 

Registration. Proposed § 49.3(d) 

provides that the Commission must 

affirmatively re-instate the registration 

of a dormant SDR (as defined in revised 

§ 40.1 of the Commission’s 

Regulations) 23 prior to such dormant 

SDR accepting or re-accepting swap 

data. 

(i) Delegation of Authority. Proposed 

§ 49.3(e) delegates authority to the 

Director of the Division of Market 

Oversight (or designee) with the 

consultation of the General Counsel of 

the Commission (or designee) for certain 

matters relating to the sufficiency of the 

application on Form SDR filed with the 

Commission. In particular, the 

Commission in this proposed 

Regulation delegates to the Director of 

the Division of Market Oversight or 

designee, with the consultation of the 

General Counsel or designee, the 

authority to notify an applicant for 

registration as an SDR under Section 21 

of the CEA that such application for 

registration is materially incomplete and 

that the running of the 180-day period 

is stayed. This delegation of authority 

does not prohibit the Commission from 

otherwise exercising its authority that 

would be delegated under this proposed 

Regulation. The Director of the Division 

of Market Oversight may also submit to 

the Commission for its consideration 

any matter which has been delegated 

under this proposed Regulation. 

2. Withdrawal From Registration— 

Proposed § 49.4 

Consistent with Section 7 of the CEA, 

proposed § 49.4 permits a registered 

SDR to withdraw from registration by 

filing a notice of withdrawal with the 

Commission at least 90 days prior to the 

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80902 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Proposed Rules 

24See Provisions Common to Registered Entities, 

supra note 18. 

25The Commission is proposing a 10 percent 

threshold because it believes that a change in 

ownership of such magnitude may have an impact 

on the operations of the SDR. The Commission 

believes that such impact may be present even if the 

change in ownership does not constitute a change 

in control. Given the potential impact that a change 

in ownership might have on the operations of a 

SDR, the Commission believes that it is appropriate 

to require such SDR to certify after such change that 

it continues to comply with all obligations under 

the CEA and Commission regulations. 26See proposed § 49.6(a). 

named withdrawal date. As part of its 

notice of withdrawal, the SDR is 

required to: (1) Designate another SDR 

to serve as the custodian of the 

withdrawing SDR’s books and records; 

(2) specify the location of the data and 

records; and (3) provide an opinion of 

counsel that the SDR is authorized to 

make such data and records available. 

Prior to the filing of a notice of 

withdrawal, a SDR must file an 

amended Form SDR to update any 

inaccurate information. 

The withdrawal of a SDR’s 

registration will be effective on the 60th 

day after receipt by the Commission of 

the notice of withdrawal, unless the 

Commission determines to extend or 

curtail the effectiveness of an SDR’s 

registration by order, deemed necessary 

or appropriate and in the public 

interest. 

Proposed § 49.4(c) provides that after 

an opportunity for hearing, the 

Commission may revoke the registration 

of a registered SDR if the Commission 

finds that any registered SDR has 

obtained its registration by making any 

false and misleading material statements 

or has violated or failed to comply with 

any provision of the CEA and 

Commission Regulations. Pending final 

determination of whether the 

registration of an SDR should be 

revoked, the Commission may suspend 

the registration of the SDR if it appears 

to the Commission, after notice and 

opportunity for hearing, to be necessary 

or appropriate in the public interest. 

3. Equity Interest Transfer 

Notification—Proposed § 49.5 

Proposed § 49.5 would require SDRs 

to file with the Commission a notice of 

the equity interest transfer of ten 

percent or more, no later than the 

business day, as defined in revised 

§ 40.1,24 following the date on which 

the SDR enters into a firm obligation to 

transfer the equity interest.25 The 

notification must include and be 

accompanied by: (i) Any relevant 

agreement(s), including preliminary 

agreements; (ii) any associated changes 

to relevant corporate documents; (iii) a 

chart outlining any new ownership or 

corporate or organizational structure; 

(iv) a brief description of the purpose 

and any impact of the equity interest 

transfer; and (v) a representation from 

the registered SDR that it meets all of 

the requirements of Section 21 of the 

CEA and Commission regulations 

adopted thereunder. The SDR would 

also be required to amend any 

information that is no longer accurate 

on Form SDR consistent with the 

procedures set forth in proposed § 49.3. 

The proposed Regulation requires that 

the registered SDR keep the Commission 

informed of the projected date that the 

transaction resulting in the equity 

interest transfer will be consummated, 

and provide to the Commission any new 

agreements or modifications to the 

original agreement(s) filed pursuant to 

this proposed Regulation. The registered 

SDR is required to notify the 

Commission of the consummation of the 

transaction on the business day in 

which it occurs. The proposed 

Regulation will enable Commission staff 

to consider whether any conditions 

contained in an equity transfer 

agreement(s) are inconsistent with the 

duties, responsibilities and core 

principles of a SDR. 

Proposed § 49.5(c) would require the 

SDR upon a 10% or greater change in 

ownership to certify, within two 

business days following the date on 

which the change in ownership occurs, 

that such SDR meets all of the 

requirements of Section 21 of the CEA 

and proposed Regulations under Part 49 

of the Commission’s regulations. The 

proposed Regulation also requires that 

the SDR include as part of its 

certification whether any aspects of the 

SDR’s operations will change as a result 

of the change in ownership, and if so, 

the SDR must provide a description of 

the changes. Proposed § 49.5(c) also 

provides that the certification may rely 

on, and be supported by, prior materials 

and information submitted as part of an 

application for registration or new 

filings if necessary to update its 

previous filings. 

The Commission notes that there may 

be differences in notification procedures 

for transfers or changes in equity 

ownership of registered entities 

proposed by the Commission. 

Request for Comment. The 

Commission requests comment 

regarding the proposed notification 

procedures as follows: 

• Should there be uniformity or 

differentiation in procedures applied to 

different registered entities? 

4. Registration of Successor Entities— 

Proposed § 49.6 

Proposed § 49.6(a) sets forth the 

process of registering successor entities 

of an SDR as the result of corporate 

change of control or other similar 

events. Specifically, the proposed 

Regulation provides that in the event of 

a corporate reorganization, merger, 

acquisition, bankruptcy or other similar 

corporate event that creates a new 

entity, the SDR is required to request a 

transfer of its registration, rules, and 

other matters, within 30 days of the 

succession. The registration of the 

predecessor SDR entity will be deemed 

to remain effective as the registration of 

the successor if the successor, within 30 

days after such succession, files an 

application for registration on Form 

SDR, and the predecessor files a request 

for withdrawal of registration. The 

proposed Regulation would further 

provide that the registration of the 

predecessor SDR shall cease to be 

effective 90 days after the application 

for registration on Form SDR is filed by 

the successor SDR.26 In other words, the 

90-day period would not begin to run 

until a complete Form SDR has been 

filed by the successor with the 

Commission. 

The following are examples of the 

types of successions that would be 

required to be completed by filing an 

application: (1) An acquisition, through 

which an unregistered entity purchases 

or assumes substantially all of the assets 

and liabilities of the SDR and then 

operates the business of the SDR, (2) a 

consolidation of two or more registered 

entities, resulting in their conducting 

business through a new unregistered 

entity, which assumes substantially all 

of the assets and liabilities of the 

predecessor entities, and (3) dual 

successions, through which one 

registered entity subdivides its business 

into two or more new unregistered 

entities. 

Proposed § 49.6(b) sets forth the 

process of registering successor entities 

of an SDR as the result of a change in 

the predecessor SDR’s date or state of 

incorporation, form of organization, or 

composition of a partnership. In these 

cases, the successor SDR, within 30 

days after the succession, must amend 

the registration of the predecessor SDR 

on Form SDR to reflect the changes. 

Such amendment would be deemed an 

application for registration filed by the 

predecessor and adopted by the 

successor. In all three types of 

successions, the predecessor must cease 

operating as an SDR. The Commission 

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Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Proposed Rules 80903 

27Section 8a(5) of the CEA, 7 U.S.C. 12a(5), 

authorizes the Commission to promulgate such 

rules and regulations as, in the judgment of the 

Commission, are reasonably necessary to effectuate 

any of the provisions or accomplish any of the 

purposes of the CEA. In connection with SDRs, 

Section 21(a)(3)(A)(ii), 7 U.S.C. 24a(a)(3)(A)(ii) 

specifically requires that a SDR to be registered and 

maintain its registration must comply with any 

requirement that the Commission may impose by 

rule or regulation pursuant to Section 8a(5) of the 

CEA. 

28See Commission, Notice of Proposed 

Rulemaking: Swap Data Recordkeeping and 

Continued 

preliminarily believes that it is 

appropriate to allow a successor to file 

an amendment to the predecessor’s 

Form SDR in these types of successions 

because such successions do not 

typically result in a change of control of 

the SDR. The purpose of proposed 

§ 49.6 is to enable a successor SDR to 

operate without an interruption of 

business by relying for a limited period 

of time on the registration of the 

predecessor SDR until the successor’s 

own registration becomes effective. The 

proposed Regulation is intended to 

facilitate the legitimate transfer of 

business between two or more SDRs and 

to be used only where there is a direct 

and substantial business nexus between 

the predecessor and the successor SDR. 

The proposed Regulation would not 

allow a registered SDR to sell its 

registration, eliminate substantial 

liabilities, spin off personnel, or 

facilitate the transfer of the registration 

of a ‘‘shell’’ organization that does not 

conduct any business. No entity would 

be permitted to rely on proposed § 49.6 

unless it is acquiring or assuming 

substantially all of the assets and 

liabilities of the predecessor’s SDR 

business. 

Proposed § 49.6 would not apply to 

reorganizations that involve only 

registered SDRs. In those situations, the 

registered SDRs can continue to rely on 

their existing registrations. The 

proposed rule would also not apply to 

situations in which the predecessor 

intends to continue to engage in SDR 

activities. Otherwise, confusion may 

result as to the identities and 

registration statuses of the parties. 

5. Swap Data Repositories Located in 

Foreign Jurisdictions—Proposed § 49.7 

Proposed § 49.7 relates to those SDR 

applicants that are located outside of the 

United States. This proposed Regulation 

is intended to enable the Commission to 

obtain necessary swap data and related 

books and records maintained by a SDR 

located outside of the United States. 

Proposed § 49.7 would require each SDR 

located outside of the United States to 

provide an opinion of counsel that the 

SDR can, as a matter of law, provide the 

Commission with prompt access to its 

books and records and submit to onsite 

inspection and examination by the 

Commission. The Commission notes 

that each jurisdiction may have a 

different legal framework that may limit 

or restrict the Commission’s ability to 

receive information from an SDR. An 

opinion of counsel regarding prompt 

access to books and records and onsite 

inspection and examination will allow 

the Commission to better evaluate an 

SDR’s capability to meet the 

requirements of registration and ongoing 

supervision. Failure to provide an 

opinion of counsel may be a basis for 

the Commission to deny an application 

for registration. 

Request for Comment. The 

Commission requests comment on the 

questions set forth below regarding 

registration. 

(1) Are the instructions in proposed 

Form SDR clear? If not, identify any 

instructions that should be clarified 

and, if possible, offer alternatives. 

(2) Would any of the requested 

information on proposed Form SDR be 

burdensome for an SDR to supply? If so, 

explain. 

(3) Should the Commission require 

any additional information on proposed 

Form SDR? If so, what information and 

why? 

(4) Are there any items on proposed 

Form SDR that the Commission should 

not request? If so, which items and 

why? 

(5) Is the Commission’s proposed 

registration process appropriate and 

sufficiently clear? If not, why not and 

what would be a better alternative? 

(6) If a SDR located outside of the 

United States is registered, should the 

registration process for the foreign SDR 

be any different than the Commission’s 

proposed registration process? 

(7) Are there any factors that the 

Commission should take into 

consideration to ensure that a SDR 

located outside the United States 

seeking to register as an SDR can, in 

compliance with applicable foreign 

laws, provide the Commission with 

access to the SDR’s books and records 

that are required pursuant to proposed 

§ 49.7 and can submit to onsite 

inspection and examination by the 

Commission? 

(8) Should the Commission consider 

any other factors relating to a SDR 

located outside of the United States 

with respect to the Commission’s 

registration rules or in general? 

(9) Is the Commission’s proposed rule 

regarding provisional registration 

appropriate? If not, why not? 

(10) What conditions should apply to 

the granting of a provisional 

registration? What criteria should the 

Commission consider for approving 

provisional registration applications? 

(11) Are the timeframes in the 

proposed registration process 

appropriate? If not, why not and what 

would be more appropriate timeframes? 

(12) Are the proposed factors in 

determining whether the Commission 

should grant or deny an application for 

registration appropriate and sufficiently 

clear? If not, why not? Should the 

Commission take into consideration any 

other factors in determining whether to 

grant or deny an SDR’s application for 

registration? 

B. Duties of Registered SDRs 

Section 21(c) of the CEA sets forth the 

minimum duties that a SDR is required 

to perform to become registered and to 

maintain registration. These statutory 

duties require that SDRs (i) accept swap 

data as prescribed by the Commission; 

(ii) confirm with both counterparties to 

a swap the accuracy of the data; (iii) 

maintain the data submitted; (iv) 

provide the Commission or its designee 

with direct electronic access to the swap 

data; (v) provide the necessary 

information as prescribed by the 

Commission to comply with the public 

reporting requirements set forth in 

Section 2(a)(13) of the CEA; (vi) 

establish automated systems for 

monitoring, screening, and analyzing 

swap data; (vii) maintain the privacy or 

confidentiality of any and all swap data 

that the SDR receives; (viii) provide 

access to the swap data to certain 

‘‘appropriate’’ domestic and foreign 

regulators; and (ix) adopt and 

implement emergency procedures. In 

addition, the Commission pursuant to 

its authority under Sections 21(f)(4) and 

8a(5) 27 of the CEA also proposes to add 

by regulation four additional duties 

which would require that registered 

SDRs (i) adopt and implement system 

safeguards, including business 

continuity and disaster recovery (‘‘BC– 

DR’’) plans; (ii) maintain sufficient 

financial resources; (iii) furnish market 

participant with a disclosure document 

setting forth the risks and costs 

associated with using the services of the 

SDR; and (iv) provide fair and open 

access and fees and charges that are 

equitable and non-discriminatory. 

The following subsections describe in 

detail the Regulations proposed by the 

Commission to implement SDR 

statutory duties set forth in Section 

21(c) of the CEA. 

1. Acceptance of Data—Section 21(c)(1) 

of the CEA 

The Commission in a companion 

release 28 is proposing in new part 45 to 

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80904 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Proposed Rules 

Reporting Requirements, 75 FR 76574 (Dec. 8, 2010) 

(the ‘‘Data NPRM’’). 

29Proposed § 48.1 defines a FBOT as ‘‘any board 

of trade, exchange or market located outside of the 

United States, its territories or possessions, whether 

incorporated or unincorporated, where foreign 

agreements, contracts or transactions are entered 

into.’’ See Commission, Notice of Proposed 

Rulemaking: Registration of Foreign Boards of 

Trade, 75 FR 70974 (Nov. 19, 2010) (expected to be 

codified at 17 CFR part 48). Since 1996, FBOT 

requests to provide direct access to their electronic 

trading and order matching systems (trading 

systems) from within the U.S. have been addressed 

by Commission staff via the no-action process set 

forth in Commission Regulation 140.99. See, e.g., 

Deutsche Terminborse, CFTC No-Action Letter, 

1994–1996 Transfer Binder], Comm. Fut. L. Rep. 

(CCH) ¶ 26,669 (Feb. 29, 1996), available at 

http://www.cftc.gov/ucm/groups/public/ 

@lrlettergeneral/documents/letter/96-28.pdf. 

30As detailed in the Data NPRM, SDRs will also 

be required by proposed § 45.4(a) to issue unique 

swap identifiers (‘‘USIs’’), used to identify each 

particular swap transaction, when both 

counterparties to a swap are not SDs or MSPs. The 

SDR would be required to transmit the USI to each 

counterparty and DCO (if applicable) involved in 

the swap as soon as technologically practicable. 

31See proposed § 45.3(b) detailed in the Data 

NPRM, supra note 28. 

32Proposed § 45.5 establishes a mechanism for 

counterparties to follow in choosing the 

counterparty to report in situations where both 

counterparties have the same hierarchical status, in 

order to prevent confusion or delay concerning this 

choice. Where both counterparties are SDs, or both 

are MSPs, or both are non-SD/MSP counterparties, 

the proposed regulations require the counterparties 

to agree as one term of their swap transaction which 

counterparty will fulfill reporting obligations with 

respect to that swap. In addition, and 

notwithstanding the other provisions in proposed 

§ 45.5, where only one counterparty to a swap is a 

U.S. person, the proposed Regulation would require 

the U.S. person to be the reporting counterparty. 

33The Commission in proposed § 45.6 permits 

registered entities and counterparties to contract 

with third-party service providers to facilitate their 

reporting obligations. However, registered entities 

and counterparties remain fully responsible for 

their reporting obligations. 

34Proposed § 45.7 would require that all swap 

data for a given swap must be reported to the SDR 

to which required primary economic terms data for 

that swap is first reported. The SDR receiving the 

initial report must transmit its own identity, 

together with the USI for the swap to each 

counterparty to the swap, to the SEF or DCM, if any, 

on which the swap was executed, and to the DCO, 

if any, to which the swap is submitted for clearing. 

Thereafter, the proposed Regulation requires that all 

data reported for the swap by any registered entity 

or any counterparty to the swap, and all corrections 

of errors and omissions in previously reported data, 

must be reported to that same SDR (or to its 

successor in the event that it ceases to operate). 

35See Section 21(c)(1) of the CEA, 7 U.S.C. 

24a(c)(1). 

36Section 1a(47)(iii) of the CEA states: 

Notwithstanding a written determination by the 

Secretary under clause (i), all foreign exchange 

swaps and foreign exchange forwards shall be 

reported to either a swap data repository, or, if there 

is no swap data repository that would accept such 

swaps or forwards, to the Commission pursuant to 

section 4r within such time period as the 

Commission may by rule or regulation prescribe. 

7 U.S.C. 1a(47)(E)(iii). Clause (i) of Section 

1a(47)(E) provides: 

Foreign exchange swaps and foreign exchange 

forwards shall be considered swaps under this 

paragraph unless the Secretary makes a written 

determination under section 1b that either foreign 

exchange swaps or foreign exchange forwards or 

both— 

(I) should be not be regulated as swaps under this 

Act; and 

(II) are not structured to evade the Dodd-Frank 

Wall Street Reform and Consumer Protection Act in 

violation of any rule promulgated by the 

Commission pursuant to section 721(c) of that Act. 

7 U.S.C. 1a(47)(E)(iii). 

See also, Department of the Treasury, Notice and 

Request for Comments: Determination of Foreign 

Exchange Swaps and Forwards, 75 FR 66829 (Oct. 

29, 2010) and 75 FR 66426 (Oct. 28, 2010). 

37As detailed in proposed § 49.27, SDRs would 

be required to provide fair and open access to their 

services. The Commission submits that SDRs would 

not be permitted to discriminate in connection with 

the access to their services. As a result, market 

participants with sufficient technology resources for 

connectivity and the payment of fees would be 

granted access to the services of the SDR. 

38This category does not encompass the 

underlying of a derivatives contract that is based on 

an instrument of indebtedness solely in connection 

with the swap’s financing leg. 

the Commission’s Regulations the data 

elements that must be reported and 

applicable to DCMs, DCOs, swap 

execution facilities (‘‘SEFs’’), foreign 

boards of trade (‘‘FBOTs’’),29 SDs, MSPs 

and/or end-users in connection with the 

reporting of such swap data to SDRs.30

These data elements and standards 

would include the reporting of 

continuation data throughout the life of 

the swap.31 In addition, the Data NPRM 

provides specific requirements for SDRs 

relating to (i) determining which 

counterparty must report to the SDR; 32

(ii) third party facilitation of swap data 

reporting; 33 (iii) reporting to a single 

SDR in connection with the reporting of 

swap data; 34 (iv) required data 

standards; and (v) the reporting of errors 

and omissions. 

As part of proposed § 49.10, market 

participants will be required to fulfill 

their reporting obligations to SDRs in a 

reliable, secure, and efficient manner. 

Proposed § 49.10 specifically requires 

that SDRs adopt policies and procedures 

that will enable the SDR to 

electronically accept data and other 

regulatory information.35 These policies 

and procedures must provide specific 

technological protocols for market 

participants in submitting swaps data to 

the SDR. 

Proposed § 49.10 will also require 

SDRs to accept all swaps in an asset 

classes for which they have registered. 

The requirement is intended to 

minimize the number of swaps that are 

not accepted by any SDR by enabling 

market participants to easily identify a 

SDR that accepts particular asset 

classes. As described in proposed § 49.3 

relating to registration, each SDR 

applying for registration on Form SDR 

will be required to specify the specific 

asset classes for which it will accept 

swap data. Proposed § 49.2(a)(2) defines 

the term ‘‘asset class’’ as those swaps in 

a particular broad category of goods, 

services or commodities underlying a 

swap. The asset classes include credit, 

equity, interest rates, currency,36 other 

commodities and such other asset 

classes as may be determined by the 

Commission.37 In proposing these five 

major asset categories, the Commission 

considered market statistics that 

distinguish between those general types 

of underlying instruments, as well as 

market infrastructures that have been 

established for these five types of 

instruments. The first category would 

encompass the underlying of any swap 

which is based, in whole or in part, on 

one or more reference rates, such as 

swaps of payments determined by fixed 

and floating rates. The second category 

would encompass the underlying of any 

swap that is based, in whole or in part, 

on rates of exchange between different 

currencies, changes in such rates or 

other aspects of such rates, including a 

foreign exchange option. The currency 

asset class includes foreign exchange 

swaps, as defined in Section 1a(25) of 

the CEA. The third category would 

encompass the underlying of any swap 

that is based, in whole or in part, on one 

or more broad-based indices related to 

instruments of indebtedness, including 

but not limited to any swap that is an 

index credit default swap or a total 

return swap on one or more indices of 

debt instruments.38 The fourth category 

would encompass the underlying of any 

swap that is based, in whole or in part, 

on one or more broad-based indices of 

equity securities, such as a total return 

swap on one or more equity indices. 

The fifth category would encompass the 

underlying of any swap not included in 

the interest rate, currency, credit or 

equity asset class categories, including, 

without limitation, any swap for which 

the primary underlying notional item is 

a physical commodity or the price or 

any other aspect of a physical 

commodity. 

In addition, part 43 of the 

Commission’s proposed regulations 

states that SDRs acting as ‘‘real-time 

disseminators’’ for the purposes of realtime reporting may require additional 

information to (1) match the real-time 

swap transaction and pricing data to 

data reported to the SDR; and/or (2) 

confirm that parties to a swap have 

reported in a timely manner pursuant to 

Section 2(a)(13)(F) of the CEA. Such 

additional information requested by an 

SDR acting as a real-time disseminator 

may include a transaction identification 

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Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Proposed Rules 80905 

39See proposed § 43.4(c) set forth in Notice of 

Proposed Rulemaking: Real Time Public Reporting 

of Swap Transaction Data, 75 FR 76140 (Dec. 7, 

2010) (the ‘‘Real Time NPRM’’). 

40Section 21(c)(2) of the CEA, 7 U.S.C. 24a(c)(2). 

41The Data NPRM details and defines 

‘‘confirmation’’ and ‘‘confirmation data.’’ The term 

confirmation is proposed in § 45.1(b) to mean ‘‘the 

full, signed legal confirmation by the counterparties 

of all of the terms of a swap.’’ The term 

‘‘confirmation data’’ is proposed in § 45.1(c) to mean 

‘‘all of the terms of a swap matched and agreed 

upon by the counterparties in confirming the swap.’’ 

See Data NPRM, supra note 28. 

42This requirement does not apply to real-time 

public reporting. See proposed § 43.3(f), supra note 

39. 

43See proposed Regulations 43.3(f)(3)–(4), supra 

note 39. 

44See Data NPRM, supra note 28. 

45The Commission in the Data NPRM is 

requesting comment relating to the time period in 

which an SDR should be required to maintain 

archival storage of swap data records. 

code, the names of the parties to the 

swap, or such other additional 

information as may be necessary.39

Additionally, part 43 of the 

Commission’s proposed regulations will 

also require registered SDRs to calculate 

the appropriate minimum block size for 

swaps for purposes of real-time 

reporting. 

Proposed § 49.10(c) would also 

require an SDR to establish sufficient 

policies and procedures to prevent a 

valid swap from being invalidated, 

altered or modified through the 

confirmation or recording process of the 

SDR. The Commission is concerned that 

a validly executed swap may, through 

contractual provisions or other practices 

of an SDR, be improperly invalidated. 

To this end, the Commission submits 

that SDRs should not be in a position to 

alter, amend or invalidate otherwise 

valid swaps of counterparties through 

the reporting process. In addition, 

proposed § 49.10(d) would also require 

SDRs to establish procedures and 

provide facilities for effectively 

resolving disputes over the accuracy of 

the swap data and positions that are 

recorded in the SDR. In this manner, 

disputes can be resolved quickly and 

efficiently so that the integrity and 

reliability of SDR data reporting and 

recordkeeping is facilitated. 

Request for Comment. The 

Commission requests comment on the 

question set forth below on acceptance 

of data: 

(1) Should the Commission require an 

SDR to accept all swaps of a given asset 

class? If not, what other mechanism 

should the Commission use to prevent 

‘‘orphaned’’ swaps (i.e., those swaps not 

accepted by an SDR)? 

(2) How should the Commission 

address swaps that do not clearly belong 

to a particular asset class or that could 

arguably belong to more than one asset 

class? Should the Commission allow an 

SDR that accepts swaps in one asset 

class to accept any swap that arguably 

belongs to that asset class, but which 

could also belong to a second asset 

class, without requiring the SDR to then 

accept all swaps in the second asset 

class? 

(3) Are there any circumstances under 

which a validly, executed swap should 

be modified or altered other than by the 

express agreement of the counterparties? 

What should be the role of the SDR in 

these circumstances? Should the SDR be 

able to alter or modify an existing swap 

based on a contractual arrangement with 

a reporting party? 

2. Confirmation of Data Accuracy— 

Section 21(c)(2) of the CEA 

Section 21(c)(2) of the CEA, as 

adopted by Section 728 of the DoddFrank Act, requires SDRs to ‘‘confirm 

with both counterparties to the swap the 

accuracy of the data that was 

submitted.’’ 40 Proposed § 49.11 provides 

that an SDR must establish and adopt 

policies and procedures to ensure the 

accuracy of swap data that is reported 

to an SDR by DCMs, DCOs, SEFs, 

FBOTs, SDs, MSPs and/or end-users or 

certain third party service providers 

such as confirmation or matching 

service providers acting on their behalf. 

The specific form and content of the 

swaps data will be established by the 

Commission in proposed part 45 of the 

Commission’s regulations relating to 

data elements and standards. In 

particular, proposed § 49.11 requires 

that the SDR confirm with both 

counterparties to the swap the accuracy 

of the data and information submitted.41

Proposed § 49.11 provides that in 

connection with the required 

confirmation, the SDR must confirm 

with each counterparty to the swap and 

receive acknowledgement of all data 

submitted as well as corrections of any 

errors.42 The acknowledgement and 

correction of errors must pertain to all 

information submitted by either 

counterparty or entity that has been 

delegated the reporting obligation. The 

SDR must keep a record of corrected 

errors and make that record available 

upon request to the Commission. 

Confirmation is unnecessary when the 

reporting obligation is borne by a SEF, 

DCM, DCO or a confirmation or 

matching service provider to whom the 

swap counterparty has delegated its 

reporting obligation. In these situations, 

the SDR must still ensure that the data 

and information it receives from such 

entity is accurate. 

In addition, proposed part 43 of the 

Commission’s regulations relating to 

real-time reporting requires that 

registered SDRs which accept and 

publicly disseminate swap transaction 

and pricing data to also disseminate any 

cancellations and corrections to such 

data.43

3. Recordkeeping Requirements— 

Section 21(c)(3) of the CEA 

Proposed § 49.12, which implements 

Section 21(c)(3) of the CEA, requires 

SDRs to, in accordance with the 

requirements of proposed § 45.2(f), 

maintain the books and records of all 

activity and data relating to swaps 

reported to the SDR.44 Proposed 

§ 45.2(f), relating to swap data 

recordkeeping requirements, requires 

that SDRs maintain reported swap data, 

consistent with the data elements 

described in proposed § 45.9, 

throughout the life of such swap 

transaction plus an additional five year 

period, during which time the swap 

data must be readily accessible by the 

SDR and available to the Commission 

via real-time electronic access. In 

addition, proposed § 45.2(f) would also 

require the SDR to provide subsequent 

archival storage.45 This archival storage 

would require the SDR to be able to 

retrieve such swap data within three 

business days. 

Consistent with proposed § 45.2(g), 

proposed § 49.12(c) would also require 

the books and records maintained by a 

SDR to be open to inspection upon 

request by any representative of the 

Commission, the United States 

Department of Justice, the SEC or by any 

representative of a prudential regulator 

as authorized by the Commission. The 

SDR would be required to provide 

copies to the Commission, either by 

electronic means, in hard copy, or both, 

as requested by the Commission. 

Proposed § 49.12(d) would require 

each SDR that publicly disseminates 

swap data in real time to comply with 

the real time public reporting and 

recordkeeping requirements prescribed 

in part 43. In connection with real-time 

reporting, proposed § 49.2(a)(9) defines 

‘‘position’’ to mean the gross and net 

notional amounts of open swap 

transactions aggregated by one or more 

attributes, including, but not limited to, 

the (i) underlying instrument, index, or 

reference entity; (ii) counterparty; 

(iii) asset class; (iv) long risk of the 

underlying instrument, index, or 

reference entity; and (v) short risk of the 

underlying instrument, index, or 

reference entity. Position data is 

required to be provided by SDRs to 

certain entities pursuant to Section 

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80906 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Proposed Rules 

46See Section 727 of the Dodd-Frank Act. 

47See Commission, Notice of Proposed 

Rulemaking: Position Reports for Physical 

Commodity Swaps, 75 FR 67258 (November 2, 

2010). The Commission in this proposal would 

require position data for not only futures and option 

contracts but also for economically equivalent 

swaps. 

48See Data NPRM, supra note 28. 

49The term ‘‘registered entity’’ is defined in 

Section 1a(40) of the CEA to include (i) a board of 

trade designated as a contract market under Section 

5 of the CEA; (ii) a DCO registered under Section 

5b of the CEA; (iii) a SEF registered under Section 

5h of the CEA; (iv) a SDR registered under Section 

21 of the CEA; and (v) with respect to a contract 

that the Commission determines is a significant 

price discovery contract, any electronic trading 

facility on which the contract is executed or traded. 

7 U.S.C. 1a(40). 

50See proposed § 49.17(b)(3). 

51Section 21(c)(5) of the CEA reads: ‘‘A swap data 

repository shall— * * * at the direction of the 

Commission, establish automated systems for 

monitoring, screening, and analyzing swap data, 

including compliance and frequency of end user 

clearing exemption claims by individual and 

affiliated entities.’’ 

7 U.S.C. 24a(c)(5). 

2(a)(13) of the CEA.46 The proposed 

term is designed to be sufficiently 

specific so that SDRs are aware of the 

types of positions that regulators may 

require an SDR to provide, while at the 

same time, provide enough flexibility to 

encompass the types of positions that 

regulators and the industry will find 

important as new types of swaps are 

developed. 

The Dodd-Frank Act specifically 

directs the Commission to issue 

regulations to limit the amount of 

positions, other than bona fide hedge 

positions, that may be held by any 

person with respect to commodity 

futures and option contracts in exempt 

and agricultural commodities.47 The 

Data NPRM accordingly has proposed 

data reporting requirements that would 

require all persons reporting to SDRs to 

include futures contract equivalents for 

each swap transaction.48 As set forth 

below, the Commission requests 

comment on position data and how it 

should be maintained and monitored. 

Request for Comment. The 

Commission requests comment on the 

questions set forth below on data 

maintenance: 

(1) Is the appropriate time period for 

readily accessible access to the 

transaction data the life of the particular 

swap plus at least five years after 

expiration of the swap? Should the 

Commission provide different 

recordkeeping requirements for 

transaction data and position data? For 

transaction data, would ten years after 

expiration of the applicable swap be 

more appropriate and why? What would 

be the benefits and burdens associated 

with each of these time periods? Are 

there other retention periods that would 

be more appropriate? 

(2) What is the appropriate time 

period for archival storage of SDR data 

and records? 

(3) What are the costs/benefits of 

requiring longer data retention 

requirements? 

(4) Should position data be 

maintained and monitored by SDRs? If 

not, in what manner should the 

Commission monitor speculative 

position limits that may include swaps? 

What would be the proper role of an 

SDR? What entity or entities should 

have the responsibility to aggregate and 

maintain the position data for regulatory 

purposes? 

(5) Should the Commission specify 

particular standards or procedures for 

calculating positions? 

4. Direct Electronic Access to SDR by 

the Commission—Section 21(c)(4) of the 

CEA 

A critical function and responsibility 

of an SDR as set forth in Section 

21(c)(4)(A) of the CEA is to provide 

‘‘direct electronic access’’ to the 

Commission or its designee, which 

could include another registered 

entity.49 For purposes of proposed 

§ 49.17, ‘‘direct electronic access’’ is 

defined as ‘‘an electronic system, 

platform or framework that provides 

internet or web-based access to real-time 

swap transaction data.’’ 50

Proposed § 49.17 provides for two 

requirements in connection with ‘‘direct 

electronic access’’ that each SDR must 

develop. First, proposed § 49.17 would 

require a SDR to provide the 

Commission or its designee with 

connectivity and access to the SDR’s 

database of swap data and web-based 

services. Connectivity access and webbased services will allow the 

Commission or its designee to receive 

any and all information regarding a 

swap transaction that may be required 

for regulatory, examination and/or 

enforcement purposes on a real-time 

basis. Second, proposed § 49.17 would 

also require the SDR to electronically 

deliver to the Commission or its 

designee, certain data in the form and 

manner prescribed by the Commission. 

Section 21(c)(5) of the CEA requires a 

registered SDR, at the direction of the 

Commission, to establish automated 

systems for monitoring, screening, and 

analyzing swap data. Pursuant to 

proposed § 49.17,51 registered SDRs in 

connection with providing ‘‘direct 

electronic access’’ will also be required 

to provide the Commission with 

monitoring tools, capable of screening 

and analyzing swap data, identical to 

those provided to compliance staff and 

the CCO of the registered SDR, 

including, but not limited to, access to 

the staff of the registered SDR and/or 

third party service providers or agents 

familiar with the operations of the 

registered SDR, who can provide 

assistance to the Commission regarding 

data structure and content, web-based 

services and various software. 

Proposed § 49.17 further provides that 

the swap data provided to the 

Commission by a registered SDR will be 

accessible only by authorized persons. 

The Commission will provide registered 

SDRs with a list of authorized users on 

a quarterly basis so that proper security 

protocols may be efficiently 

implemented. 

Request for Comment. The 

Commission requests comment on the 

following issues related to swap data 

access. 

(1) What are the advantages and 

disadvantages of requiring SDRs to 

provide a direct streaming of the data to 

the Commission or its designee? Should 

the Commission require periodic 

electronic transfer of data as an 

alternative? If so, how often should such 

transfer occur (e.g., hourly, a few times 

a day, every few days, once a week)? 

(2) What are the advantages and 

disadvantages of requiring SDRs to 

provide a user interface that permits the 

Commission or its designee access to the 

data maintained by the SDR and that 

provides the Commission or its designee 

with the ability to query or analyze the 

data in the same manner that is 

available to the SDR? 

(3) What would be the most feasible 

and cost-effective method for an SDR to 

provide direct electronic access to the 

Commission or its designee? 

(4) Are there other methods of 

providing direct electronic access to the 

Commission or its designee that the 

Commission should consider? 

(5) Are there specific reports or sets of 

data that the Commission should 

consider obtaining from SDRs to 

monitor risk exposures of individual 

counterparties to swap transactions, to 

monitor concentrations of risk 

exposures, or for other purposes? 

(6) In addition to the data already 

subject to the Commission’s request, are 

there additional reports or sets of data 

that the Commission should consider 

obtaining from SDRs to evaluate 

systemic risk or that could be used for 

prudential supervision? 

(7) Are there any other reports or sets 

of data that the Commission should 

consider obtaining from SDRs? 

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52Section 2(h)(7) of the CEA, 7 U.S.C. 2(h)(7) 

provides that the clearing requirement of Section 

2(h)(1)(A) shall not apply to a swap if one of the 

counterparties (i) is not a financial entity; (ii) is 

using swaps to hedge or mitigate commercial risk; 

and (iii) notifies the Commission, in a manner set 

forth by the Commission, how it generally meets the 

financial obligations associated with entering into 

non-cleared swaps. 

53 Id. 

54See 17 CFR 38, Appendix B, Core Principle 

2(a)(1)–(2). See also Notice of Proposed Rulemaking 

Relating to Core Principle and Other Requirements 

for Designated Contract Markets approved for 

publication by the Commission at an open meeting 

on Dec. 1, 2010 and expected to be published 

shortly in the Federal Register (to be codified at 17 

CFR part 38). 

55See Section 2(h)(1)(A) of the CEA, 7 U.S.C. 

2(h)(1)(A). 

56See Section 2(h)(7)(A)(i) of the CEA, 7 U.S.C. 

2(h)(7)(A)(i). 

57See Section 2(h)(7)(A)(ii) of the CEA, 7 U.S.C. 

2(h)(7)(A)(ii). 

58See Section 2(h)(7)(A)(iii) of the CEA., 7 U.S.C. 

2(h)(7)(A)(iii). 

59See Section 2(h)(7)(F) of the CEA, 7 U.S.C. 

2(h)(7)(F). 

5. Monitoring, Screening and Analyzing 

Swap Data—Section 21(c)(5) of the CEA 

Section 21(c)(5) of the CEA, as 

amended by Section 728 of the Dodd 

Frank Act, requires SDRs to implement 

such automated systems for 

‘‘monitoring, screening, and analyzing 

swap data’’ as the Commission may 

direct. In addition, Section 21(c)(5) also 

requires SDRs to establish automated 

systems to monitor, screen, and analyze 

data for end-user clearing exemption 

claims by individuals and affiliated 

entities.’’ The Commission proposes to 

implement the requirements of Section 

21(c)(5) through proposed §§ 49.13 and 

49.14, which closely resembles the 

statutory text, by requiring SDRs to 

monitor, screen, and analyze swap data 

in their possession, as directed by the 

Commission, including data related to 

end-user clearing exemptions claims.52

Proposed § 49.13 also requires SDRs to 

establish and maintain sufficient 

information technology, staff, and other 

resources to fulfill these tasks. Section 

21 of the CEA reflects SDRs’ significant 

responsibilities in the new swaps 

market regulatory structure established 

by the Dodd-Frank Act. SDRs will 

function not only as warehouses for all 

swap transaction data, but also as 

potential sources of regulatory 

information for the Commission and 

other appropriate regulators. 

By its terms, Section 21(c)(5), requires 

that such automated systems be 

established ‘‘at the direction of the 

Commission,’’ but does not provide for 

specific functions which SDRs should 

undertake with respect to the swap 

transaction data in their possession.53

Similarly, while suggesting a role for 

SDRs in monitoring end-user clearing 

exemption claims, the only specific 

requirement of Section 21(c)(5) is that 

SDRs have systems in place capable of 

fulfilling such requirements as the 

Commission may assign. The 

Commission proposes to implement the 

requirements of Section 21(c)(5) via 

proposed § 49.13 which, as summarized 

below, requires that SDRs: (1) Monitor, 

screen, and analyze all swap data in 

their possession as the Commission may 

require; (2) develop systems and 

resources as necessary to execute any 

monitoring, screening, or analyzing 

functions assigned by the Commission; 

and (3) monitor, screen, and analyze 

swap transactions which are reported to 

the SDR as exempt from clearing 

pursuant to Section 2(h)(7) of the CEA 

(i.e., end-user clearing exemption). 

(a) Proposed § 49.13(a) 

Proposed § 49.13(a) requires SDRs to 

monitor, screen, and analyze all swap 

data in their possession in such a 

manner as the Commission may require. 

An SDR’s duties in this respect include 

routine monitoring, screening, and 

analysis to accomplish any swap 

surveillance objectives established by 

the Commission, and specific 

monitoring, screening, and analysis 

tasks based on ad hoc requests by the 

Commission. The Commission expects 

that SDRs will be required to compile, 

extract, filter, and report information 

necessary to assist the Commission in 

the fulfillment of its regulatory 

obligations with respect to swap 

markets. However proposed § 49.13(b) 

only requires that SDRs undertake these 

functions at the Commission’s request. 

The Commission will consider specific 

tasks to be performed by SDRs at a later 

date, as its knowledge of the regulatory 

oversight needs with respect to the swap 

markets increases. 

(b) Proposed § 49.13(b) 

Proposed § 49.13(b) obligates SDRs to 

maintain sufficient information 

technology, staff, and other resources as 

necessary to fulfill any requirements 

that may arise through proposed 

§ 49.13(a). It also requires SDRs to 

monitor their resources at least 

annually, and to make adjustments as 

needed to remain in regulatory 

compliance. Proposed § 49.13(b) is 

modeled on existing and proposed 

Commission requirements applicable to 

other registered entities. For example, 

part 38 of the Commission’s Regulations 

requires DCMs to have ‘‘arrangements 

and resources for effective trade practice 

surveillance’’ and ‘‘arrangements, 

resources and authority for effective rule 

enforcement.’’ 54 With respect to SDRs, 

the Commission also recognizes the 

necessity for adequate resource 

requirements given its expectation that 

SDRs may play a significant role in 

assisting the Commission to fulfill its 

regulatory mandate. 

(c) Proposed § 49.14 

Pursuant to Section 2(h)(7) of the 

CEA, the Dodd-Frank Act creates a 

framework by which certain swap 

transactions may be exempt from the 

mandatory clearing requirement.55

Swap transactions may be exempt from 

clearing if one of the counterparties to 

a swap is (i) not a financial entity; 56 (ii) 

is using swaps to hedge or mitigate 

commercial risk; 57 and (iii) notifies the 

Commission as to how it generally 

meets its financial obligations 

associated with entering into noncleared swaps (the so-called ‘‘end-user’’ 

clearing exemption).58 The Commission 

is expected in a subsequent proposed 

rulemaking to require that swap 

counterparties claiming the clearing 

exemption submit supplemental 

information along with transaction data 

and notification for any swap 

transaction claimed under the clearing 

exception. Counterparties may be 

required to answer entity-related 

identification questions, identify how 

they generally expect to meet their 

financial obligations associated with the 

non-cleared swaps, identify whether the 

swap claimed under the exemption is 

being used to hedge or mitigate 

commercial risk, and identify whether 

the transaction was approved by a 

governing body of the entity. 

Section 2(h)(7) of the CEA—and more 

specifically Section 2(h)(7)(F) of the 

CEA—also enables the Commission to 

monitor the use of clearing exemption 

claims and to prevent abuses by 

prescribing rules, issuing 

interpretations, or requesting 

information from persons claiming the 

clearing exemption.59 Although exempt 

from clearing, counterparties claiming 

the clearing exemption must 

nonetheless report the swap transaction 

to an SDR, and must provide the 

notification required pursuant to 

Section 2(h)(7)(A)(iii) of the CEA, 

including information regarding how 

the counterparty generally meets its 

financial obligations associated with 

non-cleared swaps, and any additional 

information which the Commission 

deems necessary to prevent abuse 

pursuant to Section 2(h)(7)(F) of the 

CEA. 

Proposed § 49.14 is designed to 

implement the Commission’s program 

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80908 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Proposed Rules 

60See Commission, Notice of Proposed 

Rulemaking: Regulations Establishing and 

Governing Duties of Swap Dealers and Major Swap 

Participants, 75 FR 71397 (Nov. 23, 2010). 

61See Section 21(c)(6) of the CEA, 7 U.S.C. 

24a(c)(6). 

62See Section 21(f)(3) of the CEA, 7 U.S.C. 

24a(f)(3). 

63According to such ‘‘core principle,’’ each SDR 

shall ‘‘establish and enforce rules to minimize 

conflicts of interest in [its] decision-making process 

***’’ and ‘‘establish a process for resolving 

conflicts of interest * * *’’ Id. 

64The term ‘‘SDR Information’’ is defined in 

proposed § 49.2(a)(15) to mean ‘‘any information 

that the swap data repository maintains.’’ Proposed 

§ 49.17(f) and (g) contain more specific prohibitions 

on access or use of SDR Information. 

65The term ‘‘market participant’’ is defined in 

proposed § 49.2(a)(6) to mean any person 

participating in the swap market, including, but not 

limited to, DCMs, DCOs, SEFs, SDs, MSPs, and any 

other counterparties to a swap transaction. 

66The term ‘‘affiliate’’ is defined in proposed 

§ 49.2(a)(1) to mean a person that ‘‘directly, or 

indirectly, controls, is controlled by, or is under 

common control with, the swap data repository.’’ 

67The term ‘‘non-affiliated third party’’ is defined 

in proposed § 49.2(a)(7) to mean ‘‘any person except 

(i) swap data repository, (ii) the swap data 

repository’s affiliate, or (iii) a person employed by 

a swap data repository and any entity that is not 

the swap data repository’s affiliate (and ‘‘nonaffiliated third party’’ includes such entity that 

jointly employs the person).’’ 

68The term ‘‘Section 8 Material’’ is defined in 

proposed § 49.2(a)(13) as ‘‘the business transactions, 

trade data, or market positions of any person and 

trade secrets or names of customers.’’ The legislative 

history of Section 8 of the CEA reflects substantial 

Congressional concern with protecting the 

legitimate interests of certain market participants. 

In particular, Congressional members were 

concerned that ‘‘bona fide hedging transactions’’ and 

‘‘legitimate’’ or ‘‘necessary’’ speculative transactions 

would be impracticable if disclosure of positions or 

transactions was permitted. Congress was also 

concerned that publication of the names and market 

positions of large traders would facilitate 

manipulation and place traders at a competitive 

disadvantage. Section 8(e) generally provides that 

‘‘upon request,’’ the CFTC may furnish ‘‘any 

information’’ in its possession. 7 U.S.C. 12(e). See 

generally 61 Cong. Rec. 1321 (1921); Regulation of 

Grain Exchanges, Hearing on H.R. 8829 Before the 

H. Comm. on Agriculture, 73rd Cong. (1934). 

69Section 8(a) of the CEA outlines the scope and 

authority of the Commission to publish or 

otherwise publicly disclose information that is 

gathered in the course of its investigative and 

market surveillance activities. While the Section 

authorizes the Commission to publish or disclose 

the information obtained through the use of its 

powers, it expressly provides that, except in 

specifically prescribed circumstances, the 

Commission may not lawfully: 

publish data and information that would 

separately disclose the business transactions or 

market positions of any person and trade secrets or 

names of customers * * *. 7 U.S.C. 12(a). 

The statutory bar to disclosure of ‘‘business 

transactions, market positions and trade secrets’’ is 

qualified by several narrowly-defined exceptions 

set forth in Section 8(e) of the CEA. 7 U.S.C. 12(e). 

Section 8(e) generally provides that ‘‘upon request,’’ 

to monitor and prevent abuse of enduser clearing exemption claims. It 

requires SDRs to have automated 

systems capable of identifying, 

aggregating, sorting and filtering all 

swap transactions reported to an SDR 

that are exempt from clearing pursuant 

to Section 2(h)(7) of the CEA. Such 

systems are also required for 

information provided by end-users to 

the SDR regarding how an end-user 

meets the requirements of Sections 

2(h)(7)(A)(i)–(iii) of the CEA and any 

regulations promulgated by the 

Commission thereunder. The 

Commission believes it is important to 

monitor the use and claims of end user 

exemptions to prevent abuse and assure 

compliance with the required 

disclosures. At this time the 

Commission is only requiring that SDRs 

establish the infrastructure to fulfill the 

requirements of this rule, and any 

requirements for specific data 

processing will be set forth at a later 

time. 

Request for Comment. The 

Commission requests comment on the 

following issue relating to the 

monitoring of margin. 

• Should the Commission require 

SDRs to establish automated systems for 

monitoring, screening, and analyzing 

the reporting of margin required, and of 

margin on deposit, as proposed in new 

part 23 of the Commissions 

Regulations? 60

6. Maintenance of Data Privacy— 

Section 21(c)(6) of the CEA 

Proposed § 49.16 would implement 

the statutory requirements of Section 

21(c)(6) of the CEA as adopted by 

Section 728 of the Dodd-Frank Act to 

maintain the privacy and confidentiality 

of swap data provided to the SDR. In 

particular, Section 21(c)(6) of the CEA 

provides that an SDR shall ‘‘maintain 

the privacy of any and all swap 

transaction information that the swap 

data repository receives from a SD, 

counterparty, or any other registered 

entity’’.61 Proposed § 49.16 would also 

partially implement Section 21(f)(3) of 

the CEA, as adopted by Section 728 of 

the Dodd-Frank Act.62 Such section sets 

forth a conflicts of interest ‘‘core 

principle’’ applicable to an SDR.63 As 

detailed further below, the Commission 

has identified certain conflicts that may 

implicate access, disclosure, or use of 

SDR Information.64 SDR Information 

includes any information that an SDR 

receives from a reporting entity (i.e., the 

submitter(s) of the data, including, 

without limitation, market 

participants 65 such as DCMs, DCOs, 

SEFs, SDs, MSPs, end-users and/or any 

other counterparties). The Commission 

emphasizes that SDRs will receive two 

separate ‘‘streams’’ of data: (i) data 

related to real-time public reporting 

which by its nature is publicly available 

and (ii) core data that is intended for use 

by the Commission and other regulators 

which is subject to statutory 

confidential treatment. Accordingly, 

pursuant to Sections 21(c)(6) and 

21(f)(3) (Core Principle 3—Conflicts of 

Interest) of the CEA, SDR information 

that is not subject to real-time public 

reporting should be treated as nonpublic and strictly confidential, so that 

it may not be accessed, disclosed, or 

used for purposes not related to SDR 

responsibilities under the CEA or the 

regulations thereunder, unless such use 

is explicitly agreed to by the reporting 

entities (i.e., the submitter(s) of the 

data). However, aggregated data that 

cannot be attributed to individual 

transactions or market participants may 

be made publicly available by SDRs. 

Request for Comment. The 

Commission requests comment on the 

questions set forth below regarding the 

limitations on the use of SDR 

Information. 

(1) Has the Proposal correctly defined 

‘‘SDR Information’’? 

(2) Are there any other concerns 

regarding the use of SDR Information 

that the Commission should consider? 

(3) Would public availability of 

aggregated swap data be consistent with 

an SDR’s obligation to keep swap data 

confidential? 

Proposed § 49.16 would require the 

SDR to establish, maintain, and enforce 

specific policies and procedures to 

protect the privacy or confidentiality of 

any and all SDR Information. This 

would also include privacy or 

confidentiality policies and procedures 

for the sharing of SDR Information with 

SDR affiliates 66 as well as certain nonaffiliated third parties.67 As noted 

above, swap data that is publicly 

disseminated in real-time by SDRs 

pursuant to proposed part 43 of the 

Commission’s Regulation would not be 

subject to the privacy and 

confidentiality requirements set forth in 

proposed § 49.16. 

Proposed § 49.16 would also require 

the SDR to establish and maintain 

safeguards, policies, and procedures 

that would, at a minimum, address the 

misappropriation or misuse of swap 

data that the Commission is prohibited 

(save for limited exceptions) from 

disclosing pursuant to Section 8 of the 

CEA (‘‘Section 8 Material’’).68 Section 8 

Material is that information or material 

described in Section 8(a) of the CEA that 

the Commission is prohibited from 

publishing if it ‘‘would separately 

disclose the business transactions or 

market positions of any person and 

trade secrets or names of customers.’’ 69

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the CFTC may furnish ‘‘any information’’ in its 

possession ‘‘obtained in connection with its 

administration of the [CEA]’’ to another U.S. 

government department or agency, individual 

states, foreign futures authorities and foreign 

governments and any committee of the U.S. 

Congress that is ‘‘acting within the scope of its 

jurisdiction.’’ Id. In addition, Section 8(e) also 

provides an exception for information that was 

previously disclosed publicly and Section 8(b) 

permits disclosure of Section 8 Material in 

connection with congressional, administrative or 

judicial proceedings. Id. 

70Section 21(c)(7) of the CEA reads: 

A swap data repository shall— * * * on a 

confidential basis pursuant to Section 8, upon 

request, and after notifying the Commission of the 

request, make available all data obtained by the 

swap data repository, including individual 

counterparty trade and position data, to—(A) each 

appropriate prudential regulator; (B) the Financial 

Stability Oversight Council; (C) the Securities and 

Exchange Commission; (D) the Department of 

Justice; and (E) any other person that the 

Commission determines to be appropriate * * *. 

7 U.S.C. 24a(c)(7). Included in the definition of 

Appropriate Domestic Regulators are all domestic 

entities listed in Section 21(c)(7) and other persons 

that the Commission has determined to be 

appropriate. 

71The sharing of data with an Appropriate 

Domestic Regulator by a registered SDR is subject 

to the confidentiality and indemnification 

restrictions in Section 21(d) of the CEA, 7 U.S.C. 

24a(d). 

72FSOC consists of the Department of the 

Treasury (‘‘Treasury’’), the Board of Governors of the 

Federal Reserve System (the ’’Fed’’), the Office of the 

Comptroller of the Currency (‘‘OCC’’), the Bureau of 

Consumer Financial Protection, the SEC, the 

Commission, the Federal Deposit Insurance 

Corporation (‘‘FDIC’’), the Federal Housing 

Financial Agency, National Credit Union 

Administration Board and an independent member 

appointed by the President, by and with the advice 

and consent of the Senate, having insurance 

expertise. 

73Under Section 152 of the Dodd-Frank Act, OFR 

will be established within the Department of the 

Treasury. OFR is intended to help facilitate 

improved financial market data gathering and 

analyses for financial regulators, including the new 

FSOC, which is responsible for monitoring the 

financial system as a whole in order to promote 

financial stability. OFR will support the FSOC and 

its member agencies by providing them with better 

financial data, information, and analysis so that 

policymakers and market participants have a more 

complete understanding of risk in the financial 

system. The data and analysis provided by the OFR 

will enhance the ability to identify emerging threats 

in financial markets, and will help ensure that the 

government has the information and analytical tools 

it needs to respond appropriately to future crises. 

74The definition of ‘‘Appropriate Domestic 

Regulator’’ set forth above specifically includes 

those federal agencies or departments that are 

identified as prudential regulators in Section 1a(39) 

of the CEA. Each prudential regulator will have 

access to all data related to any of its statutory 

authorities, without limitation to the activities 

listed for each regulator in Section 1a(39). 

75The FRBNY oversees the Second Federal 

Reserve District, which includes the state of New 

York, the 12 northern counties of the state of New 

Jersey, Fairfield County in the state of Connecticut, 

Puerto Rico and the U.S. Virgin Islands. Though it 

serves a geographically small area compared with 

those of other Federal Reserve Banks, the FRBNY 

is the largest Reserve Bank as measured by assets 

and volume of activity. 

76The term ‘‘foreign regulator’’ is defined in 

proposed § 49.2(a)(4) to mean ‘‘a foreign futures 

authority as defined in Section 1a(26) of the 

Commodity Exchange Act, foreign financial 

supervisors, foreign central banks and foreign 

ministries.’’ 

77The form and manner of this filing will be 

prescribed by the Commission. 

Such information would typically 

include trade data, position data, 

business transactions, trade secrets and 

any other non-public personal 

information about a market participant 

or any of its customers. Moreover, 

proposed § 49.16 would require an SDR 

to also protect SDR information that is 

not Section 8 Material as well as 

intellectual property that may include 

trading strategies. 

The Commission submits that the 

abovementioned SDR safeguards, 

policies, and procedures addressing 

privacy and confidentiality—as well as 

misuse and misappropriation—of data 

should provide (i) limitations on access 

related to Section 8 Material and other 

SDR Information; (ii) standards related 

to controlling persons associated with 

the SDR trading for their personal 

benefit or the benefit of others; and (iii) 

adequate oversight to ensure SDR 

compliance with proposed § 49.17. As 

set forth in proposed § 49.17 discussed 

below in the section entitled ‘‘Access to 

SDR Data,’’ the SDR may share swap 

data and information with certain 

appropriate domestic and foreign 

regulators. Commercial use of the data 

maintained by an SDR—exclusive of 

real-time reporting data—would be 

strictly circumscribed as provided in 

proposed § 49.17. 

7. Access to SDR Data—Section 21(c)(7) 

of the CEA 

Section 21(c)(7) 70 of the CEA requires 

a registered SDR, on a confidential basis 

pursuant to Section 8 of the CEA, upon 

request and after notifying the 

Commission, to make available all 

data 71 obtained by the registered SDR, 

to ‘‘Appropriate Domestic Regulators’’ 

and ‘‘Appropriate Foreign Regulators.’’ 

(a) Appropriate Domestic Regulator. 

An ‘‘Appropriate Domestic Regulator’’ is 

defined in proposed § 49.17 as (i) the 

SEC; (ii) each prudential regulator 

identified in Section 1a(39) of the CEA 

with respect to requests related to any 

of such regulator’s statutory authorities, 

without limitation to the activities listed 

for each regulator in Section 1a(39); (iii) 

the Financial Stability Oversight 

Council (‘‘FSOC’’); 72 (iv) the Department 

of Justice; (v) the Federal Reserve Bank 

of New York (‘‘FRBNY’’); (vi) the Office 

of Financial Research (‘‘OFR’’) 73 and 

(vii) any other person the Commission 

deems appropriate.74

Although Section 21(c)(7) of the CEA 

does not specifically provide for the 

sharing of information between an SDR 

and the FRBNY or OFR, the 

Commission in proposed § 49.17 is 

proposing to deem the FRBNY and OFR 

as ‘‘appropriate’’ persons under Section 

21(c)(7) of the CEA. The FRBNY is one 

of 12 regional Federal Reserve Banks, 

which together with the Board of 

Governors of the Federal Reserve 

System comprise the Federal Reserve 

System. Each of the Federal Reserve 

Banks has features and/or 

characteristics of private corporations 

and quasi-public federal agencies.75

OFR will be an office within the 

Department of the Treasury with the 

primary function to support the FSOC 

in the monitoring and containment of 

systemic risk. OFR will also be a 

resource for the FSOC and all of its 

member agencies. In particular, OFR 

will support the agencies in their efforts 

to supervise financial institutions and 

the financial system as well as in their 

work to implement the Act. In addition, 

regulatory agencies will have access to 

new data collected by the OFR, which 

will improve regulators’ ability to 

monitor risks within their respective 

focus areas. 

(b) Appropriate Foreign Regulator. An 

‘‘Appropriate Foreign Regulator’’ is 

defined in proposed § 49.17 and 

contains a two-part analysis. First, 

proposed § 49.17 defines as an 

Appropriate Foreign Regulator as those 

‘‘foreign regulators’’ 76 with an existing 

memorandum of understanding 

(‘‘MOU’’) or other similar type of 

information sharing arrangement 

executed with the Commission. Second, 

proposed § 49.17 provides that foreign 

regulators without an MOU with the 

Commission may be deemed 

‘‘Appropriate Foreign Regulators’’ as 

determined on a case-by-case basis by 

the Commission. 

Proposed § 49.17 details the filing 

procedures for foreign regulators who 

do not currently have an MOU with the 

Commission to obtain the status of an 

‘‘Appropriate Foreign Regulator.’’ The 

foreign regulator in its application 77

filed with the Commission is required to 

provide sufficient facts and details to 

permit the Commission to analyze 

whether the foreign regulator has 

appropriate confidentiality procedures 

and whether the foreign regulator is 

otherwise subject to local laws, 

regulations and/or customs that would 

require disclosure of information in 

contravention of the CEA. 

In its review of applications filed by 

foreign regulators seeking the status of 

an ‘‘Appropriate Regulator’’ under 

proposed § 49.17, the Commission must 

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78See supra text accompanying note 69. 

79Any other Foreign Regulator that would require 

access to SDR data would need to be specifically 

approved and deemed ‘‘appropriate’’ by the 

Commission as set forth in proposed § 49.17. 

80Section 21(d) of the CEA provides: 

Before the swap data repository may share 

information with any entity described in subsection 

(c)(7)–(1) the swap data repository shall receive a 

written agreement from each entity stating that the 

entity shall abide by the confidentiality 

requirements described in Section 8 relating to the 

information on swap transactions that is provided; 

and (2) each entity shall agree to indemnify the 

swap data repository and the Commission for any 

expenses arising from litigation related to the 

information provided under section 8. 

See 7 U.S.C. 24a(d). 

81See 7 U.S.C. 12(e). 

be satisfied that any information 

potentially provided by a registered SDR 

will not be disclosed except in limited 

circumstances such as an adjudicatory 

action or proceeding involving the 

foreign regulator.78 In addition, the 

Commission on an ongoing basis, 

reserves the right in connection with 

any determination of an ‘‘Appropriate 

Foreign Regulator’’ to revisit or reassess 

a prior determination consistent with 

the CEA. 

(c) Procedure for Gaining Access to an 

SDR. Pursuant to proposed § 49.17, an 

Appropriate Domestic Regulator or 

Appropriate Foreign Regulator will be 

required to request access with the 

registered SDR. The request will set 

forth in sufficient detail the basis for 

such request. The Appropriate Domestic 

Regulator or Appropriate Foreign 

Regulator must also certify (i) its 

statutory authority and (ii) that it is 

acting within the scope of its 

jurisdiction. 

A registered SDR must notify the 

Commission promptly by electronic 

means of any request received from an 

Appropriate Domestic Regulator or 

Appropriate Foreign Regulator. The 

registered SDR will then provide access 

to the requested swap data if satisfied 

that the Appropriate Domestic or 

Appropriate Foreign Regulator is acting 

within the scope of its authority. 

Request for Comment. The 

Commission requests the following 

comments relating to regulator access of 

data maintained by SDRs. 

(1) What mechanisms or other 

processes should the Commission 

consider in connection with 

Appropriate Domestic Regulators and/or 

Appropriate Foreign Regulators access 

to the data maintained by SDRs? 

(2) Should the Commission provide 

that Appropriate Domestic Regulators 

and Appropriate Foreign Regulators 

specifically request access from an SDR 

for each individual data request? Or, 

should the Commission provide for a 

single prospective data access request to 

SDRs by Appropriate Domestic and 

Foreign Regulators followed up by a 

certification at intervals determined by 

the Commission? For each specific 

instance of access or regulatory use of 

an SDR’s data by Appropriate Domestic 

Regulators and Appropriate Foreign 

Regulators, should the Commission be 

notified in each case by the SDR? 

(3) Given the regulatory outlines set 

forth by the Dodd-Frank Act, what 

would be an appropriate way for 

regulators to access the swap data held 

by SDRs for the purpose of fulfilling 

their regulatory responsibilities? 

(d) Confidentiality and 

Indemnification Agreement. Consistent 

with proposed § 49.18, the Appropriate 

Domestic Regulator or Appropriate 

Foreign Regulator prior to receipt of any 

requested data or information from a 

registered SDR must execute a 

‘‘Confidentiality and Indemnification 

Agreement’’ with the registered SDR. 

This requirement is mandated by 

Section 21(d) of the CEA and applies to 

those entities set forth in Section 

21(c)(7) of the CEA. Upon execution of 

a Confidentiality and Indemnification 

Agreement with a registered SDR, the 

Appropriate Domestic Regulator or 

Appropriate Foreign Regulator is 

required to notify and provide a copy of 

the Confidentiality and Indemnification 

Agreement to the Commission. 

The specific entities identified in 

Section 21(c)(7) include: (i) Each 

appropriate prudential regulator 

specified in Section 1a(39) of the; (ii) 

FSOC; (iii) SEC; (iv) Department of 

Justice; and (v) any other person the 

Commission deems appropriate, 

including foreign financial supervisors, 

foreign central banks and foreign 

ministries. Pursuant to the general 

authority of the Commission as set forth 

in Section 21(c)(7)(E) of the CEA to 

deem any other person ‘‘appropriate,’’ 

the Commission proposes, for purposes 

of this Regulation, to deem 

‘‘appropriate’’ the FRBNY, OFR and 

those foreign regulators with an existing 

MOU or other similar type of 

information sharing arrangement 

executed with the Commission.79

Proposed § 49.18 implementing 

Section 21(d) of the CEA requires that 

the Confidentiality and Indemnification 

Agreement executed with each 

Appropriate Domestic Regulator and/or 

Appropriate Foreign Regulator provide 

that such entity abide by the 

confidentiality requirements set forth in 

Section 8 of the CEA relating to the 

swap data that is to be provided by the 

registered SDR. Moreover, the 

Confidentiality and Indemnification 

Agreement must also provide that each 

Section 21(c)(7) entity agree to 

indemnify the registered SDR and the 

Commission for any expenses arising 

from litigation relating to the 

information provided under Section 8 of 

the CEA. 

The Commission is mindful of the 

potential difficulty that certain domestic 

and foreign regulators may have in 

executing a Confidentiality and 

Indemnification Agreement with an 

SDR pursuant to Section 21(d) of the 

CEA80 due to various statutory laws, 

regulations and/or customs. This 

provision could have the unintended 

effect of inhibiting access to the data 

maintained by SDRs, and, possibly 

hindering the ability of certain foreign 

regulators to fulfill their corresponding 

statutory mandates. To promote and 

ensure international harmonization as 

envisioned in Section 752 of the DoddFrank Act, the Commission continues to 

coordinate with its foreign regulatory 

counterparts on pending and proposed 

regulatory initiatives. To the extent 

consistent with the regulatory 

framework set forth in the Dodd-Frank 

Act, and the CEA generally, the 

Commission will endeavor to provide 

sufficient access to SDR data to 

appropriate domestic and foreign 

regulatory authorities. 

The Commission believes that access 

to the swap data maintained by SDR 

will assist regulators to, among other 

things, monitor risk exposures of 

individual counterparties to swap and 

swap transactions, monitor 

concentrations of risk exposures, and 

evaluate systemic risks. The 

Commission notes that, pursuant to 

Section 8(e) of the CEA, the Commission 

may share confidential information in 

its possession obtained in connection 

with its administration of the CEA to 

‘‘any foreign futures authority, 

department or agency of any foreign 

government or any political subdivision 

thereof’’ acting within the scope of their 

jurisdiction.81

Request for Comment: The 

Commission requests comment from 

those regulators that may be affected by 

Section 21(d) of the CEA and the 

proposed related Regulations. In 

particular, the Commission requests 

comment on the following questions: 

• Are the proposed time frames for 

Commission response relating to access 

to swap data maintained by a SDR by 

Appropriate Domestic and Appropriate 

Foreign Regulators reasonable? Should 

the Commission provide for an 

expedited or emergency procedure? 

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82Section 21(c)(3) reads: ‘‘A swap data repository 

shall— * * * maintain the data described in 

paragraph (1) in such form, in such manner, and for 

such period as may be required by the 

Commission.’’ 7 U.S.C. 24a(c)(3). 

83Section 21(c)(6) reads: ‘‘A swap data repository 

shall— * * * maintain the privacy of any and all 

swap transaction information that the swap data 

repository receives from a swap dealer, 

counterparty, or any other registered entity.’’ 7 

U.S.C. 24a(c)(6). 

84See supra text accompanying notes 62–63. 

85 7 U.S.C. 24a(c)(6)–(7). 

86See Data NPRM, supra note 28. 

87Section 21(c)(8) of the CEA. 7 U.S.C. 24a(c)(8). 

88Former Section 5(d)(6) of the CEA, 7 U.S.C. 

7(d)(6). 

89 17 CFR part 38, App. B, Application Guidance 

for former Core Principle 6. 

(e) Access to SDRs by Third Party 

Service Providers. Section 21(c)(3) 82 of 

the CEA directs registered SDRs to 

maintain data in such form and manner 

as may be required by the Commission. 

Section 21(c)(6) 83 of the CEA requires 

registered SDRs to maintain the privacy 

of any and all swap data that the 

registered SDR receives from a SD, 

counterparty, or any other registered 

entity. The operations of registered 

SDRs may require them to provide 

occasional access to data and 

information to third party service 

providers for the purpose of obtaining 

certain technology and SDR 

infrastructure services. Proposed § 49.17 

permits such access provided these 

third party service providers have 

implemented strict confidentiality 

procedures that protect data and 

information from improper disclosure. 

Prior to swap data access, third party 

service providers will be required to 

execute a ‘‘Confidentiality Agreement’’ 

setting forth minimum confidentiality 

procedures and permissible uses of data 

received. 

(f) Access to SDRs by Market 

Participants. Section 21(c)(6) of the CEA 

requires registered SDRs to maintain the 

privacy and confidentiality of any and 

all swap transaction information that 

the registered SDR receives from a SD, 

counterparty, or any other registered 

entity. As mentioned above, Section 

21(f)(3) 84 of the CEA requires an SDR to 

establish and enforce rules to mitigate 

conflicts of interest, among other things. 

As detailed further below, the 

Commission has identified certain 

conflicts that may implicate access to 

SDR Information. Consequently, in 

partial implementation of Sections 

21(c)(6) and 21(f)(3) of the CEA, 

proposed § 49.17 generally prohibits 

access to swaps data maintained by a 

registered SDR by market participants, 

such as commercial end-users, SDs and 

MSPs unless the specific data was 

originally submitted by such party. 

(g) Commercial Use of Data 

Maintained by the SDR. As outlined by 

Sections 21(c)(6) and (c)(7) of the CEA, 

Congress in the Dodd-Frank Act was 

concerned with maintaining the 

confidentiality of information provided 

to registered SDRs by SDs, 

counterparties or any other 

Commission-registered entity.85

Furthermore, as outlined in Section 

21(f)(3) of the CEA, Congress in the 

Dodd-Frank Act was concerned that 

conflicts of interest may affect SDR 

operations. As detailed below, the 

Commission has identified certain 

conflicts of interest that may implicate 

commercial use of SDR Information 

(other than swap data subject to realtime public dissemination). In response 

to concerns reflected in Sections 

21(c)(6), 21(c)(7), and 21(f)(3), the 

Commission believes that ‘‘commercial 

use’’ of any data submitted and 

maintained by an SDR must be severely 

restricted. The privacy and 

confidentiality concerns set forth in 

Section 21(c)(6) of the CEA do not apply 

to the swap data subject to proposed 

part 43 of the Commission’s 

Regulations, which set forth the 

requirements for real-time public 

reporting of swap data by SDRs. 

Therefore, in partial implementation 

of Sections 21(c)(6), 21(c)(7), and 

21(f)(3), proposed § 49.17 generally 

provides that SDR Information (as 

defined in proposed § 49.2(a)(13)) may 

not be used for commercial or business 

purposes by the registered SDR or any 

of its affiliated entities. In connection 

with its obligation to maintain the 

privacy and confidentiality of SDR 

Information as outlined in Sections 

21(c)(6), 21(c)(7), and 21(f)(3) of the 

CEA, registered SDRs are required to 

adopt and implement adequate 

‘‘firewalls’’ to protect the swaps data 

required to be maintained under 

proposed § 45.2 86 and Section 21(c)(3) 

of the CEA from any improper, 

commercial use. 

Proposed § 49.17 permits a limited 

exception to the commercial use 

restrictions for market participants, such 

as end-users, SDs and MSPs, who 

submit SDR Information maintained by 

the registered SDR. The exception 

requires that the registered SDR must 

receive the express written consent of 

the counterparties to the swap. The 

Commission is concerned that a 

registered SDR may attempt to use this 

limited ‘‘commercial use’’ exception as a 

condition for the reporting of end-users, 

SDs and/or MSPs swap transactions. 

Accordingly, in proposed § 49.27 the 

Commission submits that a registered 

SDR must be equitable and must not 

discriminate against submitters of data 

regardless of whether such a submitter 

has agreed to any ‘‘commercial use’’ of 

its data. 

8. Emergency Procedures—Section 

21(c)(8) of the CEA 

Section 21(c)(8) of the CEA, as 

amended by Section 728 of the DoddFrank Act, provides that a ‘‘swap data 

repository shall establish and maintain 

emergency procedures, backup 

facilities, and a plan for disaster 

recovery that allows for the timely 

recovery and resumption of operations 

and the fulfillment of the 

responsibilities and obligations of the 

organization.’’ 87 Section 21(c)(8) of the 

CEA reflects SDRs’ critical role as 

central storehouses of information in the 

new swap market structure established 

by the Dodd-Frank Act. In particular, it 

recognizes that SDRs must be available 

to meet their statutory obligations in all 

circumstances, and that swap data must 

be readily accessible to the Commission 

and other regulators even in emergency 

situations. To effectuate the purposes of 

Section 21(c)(8) of the CEA, the 

Commission proposes § 49.23, which 

requires SDRs to adopt specific policies 

and procedures for the responsible 

exercise of emergency authority in the 

event of natural, man-made, information 

technology, and other, emergencies. 

While SDRs are a new type of 

registered entity created by Dodd-Frank, 

proposed § 49.23 applies existing 

emergency procedure concepts 

borrowed from analogues in the 

Commission’s regulatory experience. 

For example, prior to the enactment of 

the Dodd-Frank Act, DCMs were subject 

to former DCM Core Principle 6, which 

contemplated exigent circumstances 

that might justify the exercise of 

emergency authority by a DCM.88 The 

application guidance for former DCM 

Core Principle 6 set forth the 

Commission’s requirements for 

emergency procedures. It stated, in part, 

that a DCM ‘‘should have clear 

procedures and guidelines for contract 

market decision-making regarding 

emergency intervention in the market, 

including procedures and guidelines to 

avoid conflicts of interest while carrying 

out such decision making.’’ 89 The 

application guidance also stated that a 

DCM’s procedures and guidelines for 

the exercise of emergency authority 

should include ‘‘notifying the 

Commission of the exercise of 

[emergency authority], explaining how 

conflicts of interest are minimized, and 

documenting the contract market’s 

decision-making process and the 

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90 Id. 

91The Commission notes that former DCM Core 

Principle 6, and its successor Core Principle 6 

pursuant to Section 735 of the Dodd-Frank Act, 

both incorporate market-specific emergencies and 

responses into their statutory requirements. For 

example, under both core principles, a DCM’s 

emergency authority must include the authority to 

liquidate or transfer open positions in any contract; 

the authority to suspend or curtail trading in any 

contract; and the authority to require market 

participants in any contract to meet special margin 

requirements. The emergency policies and 

procedures required of SDRs pursuant to proposed 

§ 49.23 do not incorporate these market-specific 

concepts as they are not relevant to SDRs. 

92The new DCM emergency procedures core 

principle is also enumerated as DCM Core Principle 

6 and codified in Section 5(d)(6) of the CEA, 7 

U.S.C. 7(d)(6); it is substantively similar to its 

predecessor. The new SEF emergency procedures 

core principle is enumerated as SEF Core Principle 

8 and codified in Section 5h(f)(8) of the CEA, 7 

U.S.C. 7b–3(f)(8). 

93Section 21(e) of the CEA, 7 U.S.C. 24a(e) creates 

the position of CCO and prescribes detailed 

responsibilities to CCOs. Section 21(e)(2)(C) tasks 

CCOs with ‘‘resolv[ing] any conflicts of interest that 

may arise’’ in consultation with the SDR’s board of 

directors, a body performing a similar function as 

the board, or the senior officer of the SDR. Proposed 

§ 49.26 specifically implements new Section 21(e). 

7 U.S.C. 24a(2)(C). 

94See Section 21(e)(1) of the CEA, 7 U.S.C. 

24a(e)(1). 

95See Section 21(e)(2) of the CEA, adopted as part 

of the Dodd-Frank Act, providing that a CCO shall: 

(A) report directly to the board or to the senior 

officer of the swap data repository; (B) review the 

compliance of the swap data repository with respect 

to the requirements and core principles described 

in this section; (C) in consultation with the board 

of the swap data repository, a body performing a 

function similar to the board of the swap data 

repository, or the senior officer of the swap data 

repository, resolve any conflicts of interest that may 

arise; (D) be responsible for administering each 

policy and procedure that is required to be 

established pursuant to this section; (E) ensure 

reasons for using its emergency 

authority.’’ 90

The Commission has generally found 

that procedures implemented by DCMs 

in response to former DCM Core 

Principle 6 allowed for adequate 

responses in the event of emergencies.91

Accordingly, the Commission is 

proposing new application guidance 

and acceptable practices to implement 

emergency procedures core principles 

for both DCMs and SEFs that are 

modeled on former DCM Core Principle 

6 and its application guidance.92

Similarly, the Commission’s proposed 

§ 49.23 for SDR emergency procedures 

is modeled on relevant provisions of the 

statutory text, application guidance, and 

acceptable practices, as applicable, for 

the former and current DCM and SEF 

emergency procedures core principles. 

(a) Emergency Policies and Procedures 

Required—Proposed § 49.23(a) 

Proposed § 49.23(a) requires that an 

SDR establish policies and procedures 

for the exercise of emergency authority 

in the event of any emergency, 

including but not limited to, natural, 

man-made, and information technology 

emergencies. Proposed § 49.23(a) will 

mirror language in the application 

guidance for former DCM Core Principle 

6, which states that DCMs must ‘‘have 

clear procedures and guidelines for 

contract market decision-making 

regarding emergency intervention. 

*** ’’ Similar language is also 

proposed in the guidance and 

acceptable practices for new DCM Core 

Principle 6 and new SEF Core Principle 

8. Proposed § 49.23(a) and the new DCM 

Core Principle 6 and new SEF Core 

Principle 8 reflect the Commission’s 

view that these policies must be 

transparent to the Commission and to 

market participants whose transaction 

data resides at the SDR. 

(b) Invocation of Emergency Authority— 

Proposed § 49.23(b) 

Proposed § 49.23(b) requires an SDR 

to enumerate the circumstances under 

which it is authorized to invoke its 

emergency authority, and the 

procedures that it must follow to declare 

an emergency. Such policies and 

procedures must also address the range 

of measures that an SDR is authorized 

to take when exercising emergency 

authority. 

Proposed § 49.23(b) helps ensure that 

an SDR can respond quickly to an 

emergency but reduces the possibility 

that SDRs will exercise such authority 

arbitrarily. Similar to the Commission’s 

view on the development of emergency 

policies and procedures, proposed 

§ 49.23(b) reflects the Commission’s 

view that the use of emergency 

authority should be governed by 

transparent standards and be 

predictable to the Commission and to 

swap market participants. 

(c) Designation of Persons Authorized to 

Act in an Emergency—Proposed 

§ 49.23(c) 

Proposed § 49.23(c) requires an SDR 

to designate, and notify the Commission 

of, one or more persons authorized to 

exercise emergency authority on its 

behalf. In the event that such designated 

persons are unavailable, an SDR must 

also establish a chain of command. The 

Commission believes that the proposed 

regulation reduces the possibility that 

emergency situations will be 

exacerbated by a lack of leadership and 

inadequate line of decisional authority. 

(d) Conflicts of Interest—Proposed 

§ 49.23(d) 

Proposed § 49.23(d) requires that SDR 

policies and procedures include 

provisions to avoid conflicts of interest 

in any decision made pursuant to 

emergency authority. SDR policies and 

procedures must also require that the 

SDR’s CCO be consulted in any 

emergency decision that may raise 

potential conflicts of interest.93 The 

Commission believes that specific 

policies and procedures designed to 

avoid conflicts in the exercise of 

emergency authority will focus SDR 

decision-makers’ attention and guide 

their decisions in ways that minimize 

the risk for actual or perceived conflicts 

of interest. 

(e) Notification to the Commission— 

Proposed § 49.23(e) 

Proposed § 49.23(e) requires that an 

SDR’s policies and procedures include 

provisions for the exercise of emergency 

authority to notify the Commission as 

soon as reasonably practicable regarding 

any invocation of emergency authority 

by the SDR. When notifying the 

Commission of an exercise of emergency 

authority, an SDR must explain the 

reasons for taking such emergency 

action, explain how conflicts of interest 

were minimized, and document the 

decision-making process. In addition, 

any underlying documentation must be 

made available to the Commission upon 

request. These proposed provisions will 

help keep the Commission informed of 

emergency situations, allow the 

Commission to participate as necessary, 

and facilitate any review that the 

Commission may wish to conduct at a 

later date. 

Request for Comment. The 

Commission requests comment on the 

questions set forth below on SDR duties: 

(1) Should the Commission impose 

any additional duties on SDRs? For 

example, should SDRs be required to 

provide downstream processing services 

or ancillary services (e.g., managing lifecycle events and asset servicing)? 

(2) Should the Commission establish 

more specific requirements to avoid 

contract invalidation by an SDR? 

C. Designation of Chief Compliance 

Officer 

Section 21(e) of the CEA, as amended 

by Section 728 of the Dodd-Frank Act, 

creates an internal regulatory framework 

for all SDRs, with the position of CCO 

serving as a focal point for compliance 

with the CEA and applicable 

Commission Regulations. The three-part 

structure of Section 21(e) requires, first, 

that every SDR designate an individual 

to serve as CCO.94 Second, it 

enumerates specific duties for CCOs and 

establishes their responsibilities within 

an SDR.95 Third, it outlines the 

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compliance with this Act (including regulations) 

relating to agreements, contracts, or transactions, 

including each rule prescribed by the Commission 

under this section; (F) establish procedures for the 

remediation of noncompliance issues identified by 

the chief compliance officer through any—(i) 

compliance office review; (ii) look-back; (iii) 

internal or external audit finding; (iv) self-reported 

error; or (v) validated complaint; and (G) establish 

and follow appropriate procedures for the handling, 

management response, remediation, retesting, and 

closing of noncompliance issues. 

7 U.S.C. 24a(e)(2). 

96See Section 21(e)(3)(A) of the CEA, adopted as 

part of the Dodd-Frank Act, providing that a CCO 

shall:[A]nnually prepare and sign a report that 

contains a description of—(i) the compliance of the 

swap data repository of the chief compliance officer 

with respect to this Act (including regulations); and 

(ii) each policy and procedure of the swap data 

repository of the chief compliance officer (including 

the code of ethics and conflict of interest policies 

of the swap data repository). (B) REQUIREMENTS.

—A compliance report under subparagraph (A) 

shall—(i) accompany each appropriate financial 

report of the swap data repository that is required 

to be furnished to the Commission pursuant to this 

section; and (ii) include a certification that, under 

penalty of law, the compliance report is accurate 

and complete. 

7 U.S.C. 24a(e)(3)(A)–(B). 

97 7 U.S.C. 24a(e)(2). 

98 7 U.S.C. 24a(e)(3)(B)(ii). 

requirements of a mandatory annual 

report from SDRs to the Commission, 

which must be prepared and signed by 

an SDR’s CCO.96 The Commission 

proposes to implement Section 21(e) of 

the CEA through proposed § 49.22, 

which further develops the already 

robust CCO requirements enacted by the 

Dodd-Frank Act. Section 21(e) of the 

CEA and proposed § 49.22 are 

summarized below. 

The first provision of Section 21(e)– 

21(e)(1)—provides only for the selfexplanatory requirement that each SDR 

designate an individual to serve as its 

CCO. The second provision of Section 

21(e) offers a detailed description of a 

CCO’s role within an SDR. Specifically, 

Section 21(e)(2) includes seven 

enumerated duties incumbent upon all 

CCOs, and thereby outlines the internal 

regulatory structure of an SDR as 

contemplated by the Dodd-Frank Act. 

The enumerated duties of CCOs include: 

(1) Reporting directly to the SDR’s board 

of directors or to its senior officer; (2) 

reviewing an SDR’s compliance with the 

requirements and core principles 

described in Section 21; (3) resolving 

any conflicts of interest that may arise, 

in consultation with the board of 

directors or the senior officer of the 

SDR; (4) administering any policy or 

procedure that is required to be 

established by an SDR pursuant to 

Section 21; (5) ensuring compliance 

with the CEA and Commission 

Regulations as they pertain to 

agreements, contracts, or transactions 

entered into by an SDR; (6) establishing 

procedures for the remediation of 

noncompliance issues identified by the 

CCO; and (7) establishing and following 

appropriate procedures for the handling, 

management response, remediation, 

retesting, and closing of noncompliance 

issues.97

Finally, the third provision of Section 

21(e)–21(e)(3)—requires CCOs to 

prepare and sign annual compliance 

reports on behalf of their SDRs. The 

annual compliance reports must 

describe an SDR’s compliance with the 

CEA and Commission Regulations. They 

must also describe the policies and 

procedures of the SDR, including the 

code of ethics and conflict of interest 

policies. In addition, the annual 

compliance reports must include ‘‘a 

certification that, under penalty of law, 

the report is accurate and complete.’’ 98

The annual compliance report must be 

furnished to the Commission as it may 

prescribe. 

Proposed § 49.22 develops each of 

these statutory provisions in greater 

detail and grants CCOs the regulatory 

authority necessary to fulfill 

responsibilities in each regard. 

1. Definition of Board of Directors— 

Proposed § 49.22(a) 

Proposed § 49.22(a) defines ‘‘board of 

directors’’ as ‘‘the board of directors of a 

swap data repository or for those swap 

data repositories whose organizational 

structure does not include a board of 

directors, a body performing a function 

similar to a board of directors.’’ The 

proposed definition reflects the various 

forms of business associations which an 

SDR could conceivably take, including 

forms which do not include a corporate 

board of directors. It also reflects the 

flexibility in Section 728 of the DoddFrank Act, which refers, for example, to 

‘‘a body performing a function similar to 

a board’’ in discussing the duties of a 

CCO pursuant to Section 21(e)(2)(C) of 

the CEA. 

Request for Comment. The 

Commission requests comment on the 

following. 

(1) Should the Commission develop 

additional rules around the types of 

bodies which may perform board-like 

functions at an SDR, depending on their 

business form? 

(2) Should the proposed definition of 

board of directors appropriately address 

issues related to parent companies, 

subsidiaries, affiliates, and SDRs located 

in foreign jurisdictions? Does the 

proposed rule allow for sufficient 

flexibility with regard to an SDR’s 

business structure? 

2. Designation and qualifications of 

Chief Compliance Officer—Proposed 

§ 49.22(b) 

Proposed § 49.22(b)(1) requires an 

SDR to establish the position of CCO, 

designate an individual to serve in that 

capacity and provide that individual 

with the authority and resources to 

develop and enforce policies and 

procedures necessary to fulfill the 

duties set forth for CCOs in the DoddFrank Act and Commission regulations. 

In addition, proposed § 49.22(b)(1) 

provides that CCOs must have 

supervisory authority over all staff 

acting in furtherance of the CCO’s 

statutory and regulatory obligations. In 

short, proposed § 49.22(b)(1) establishes 

CCOs as the focal-point of an SDR’s 

regulatory compliance functions. 

Proposed § 49.22(b)(2) details 

minimum competency standards for 

CCOs. It requires that CCOs have the 

background and skills necessary to 

fulfill the responsibilities of the 

position, and prohibits anyone who 

would be disqualified from registration 

under Sections 8a(2) or 8a(3) of the CEA 

from serving as a CCO. Although the 

CCO would not be required to register 

with the Commission, as the primary 

individual with responsibility for 

ensuring an SDR’s legal compliance, the 

Commission believes that CCOs should 

meet the same standard as those 

individuals who are required to register, 

as set forth in the list of statutory 

disqualifications under Sections 8a(2) 

and (3) of the CEA. These standards 

largely consist of a high degree of 

responsibility and requirements relating 

to integrity and honesty in financial and 

business dealings. 

The Commission is seeking comment 

on whether additional limitations 

should be placed on persons who may 

be designated as a CCO. For example, 

the function of the CCO and in-house or 

general counsel may have inherent 

tension between, for example, the duty 

to defend the swap data repository and 

duties as a CCO. 

Request for Comment. 

(1) The Commission requests 

comment on whether the provisions of 

proposed § 49.22(b)(1) are sufficient to 

ensure that a CCO has the authority and 

resources necessary to fulfill his or her 

statutory and regulatory obligations. 

(2) The Commission also requests 

comment regarding the qualifications 

that should be required of a CCO, and 

whether the requirements expressed in 

proposed § 49.22(b)(2) are sufficient. 

(3) Should there be additional 

restrictions placed on who is qualified 

to be designated as a CCO? The 

Commission requests comment on 

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80914 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Proposed Rules 

99Upon the removal or voluntary departure of a 

CCO, proposed § 49.22(c)(3) requires and SDR to 

appoint an interim CCO immediately and a 

permanent replacement as soon as practicable. See 

proposed § 49.22(c)(3). 

whether restricting a CCO from serving 

as the General Counsel or other attorney 

within the legal department of a SDR 

would address conflict of interest 

concerns. 

3. Appointment, Supervision, and 

Removal of Chief Compliance Officer— 

Proposed § 49.22(c) 

Taken together, proposed 

§§ 49.22(c)(1), 49.22(c)(2), and 

49.22(c)(3) provide the supervisory 

regime applicable to CCOs. Proposed 

§ 49.22(c)(1) requires that a CCO be 

appointed by a majority of the SDR’s 

board of directors or senior officer, and 

that a majority of the board or senior 

officer be responsible for approving the 

CCO’s compensation. An SDR must 

notify the Commission within two 

business days of appointing a new CCO. 

The proposed regulation also requires 

the CCO to meet at least annually with 

the board of directors to discuss the 

effectiveness of the CCO’s 

administration of the compliance 

policies adopted by the registrant. The 

meeting or meetings would create an 

opportunity for a CCO and the directors 

to speak freely about any sensitive 

issues of concern to any of them, 

including any reservations about the 

cooperativeness or compliance practices 

of the registrant’s management. Finally, 

proposed § 49.22(c)(1) also provides that 

the senior officer of a SDR may assume 

responsibility for appointing the CCO 

and approving his or her compensation. 

Proposed § 49.22(c)(2) addresses 

routine oversight of an SDR’s CCO. It 

allows an SDR with a board of directors 

to grant oversight authority to either its 

board or to its senior officer. The 

proposed regulation is modeled on the 

terms of Section 21(e)(2)(A) of the CEA, 

which requires a CCO to ‘‘report directly 

to the board or to the senior officer of 

the swap data repository.’’ 

Request for Comment. The 

Commission requests comment 

regarding the appropriate reporting 

relationship for the CCO of an SDR that 

has both a senior officer and a board of 

directors. 

(1) In such cases, should a CCO report 

to the SDR’s board rather than to its 

senior officer? 

(2) What potential conflicts of interest 

might arise if a CCO reports to the 

senior officer rather than to the board, 

and how might those conflicts be 

mitigated? 

(3) In addition, the Commission 

requests comment regarding whether 

‘‘senior officer’’ of an SDR should be a 

defined term, and if so, how the term 

should be defined. 

4. Removal of CCO—Proposed 

§ 49.22(c)(3) 

Proposed § 49.22(c)(3) requires 

approval of a majority of an SDR’s board 

of directors to remove a CCO. The 

Commission believes that these removal 

provisions will help insulate CCOs and 

their decision-making from day-to-day 

commercial pressures that they may 

otherwise experience. If an SDR does 

not have a board, the proposed 

regulation provides that the CCO may be 

removed by its senior officer. Proposed 

§ 49.22(c)(3) also requires an SDR to 

notify the Commission in writing within 

two business days of the removal or 

voluntary departure of its CCO by 

providing a statement describing the 

circumstances surrounding his or her 

departure.99 The Commission believes 

that this provision will help protect 

CCOs from undue influence or 

retaliatory termination by the board or 

the senior officer of the SDR. 

Proposed §§ 49.22(c)(1) and 

49.22(c)(3) seek to provide an SDR’s 

CCO with a measure of independence 

from management in the performance of 

his or her duties, and to ensure that 

such duties are executed in the most 

effective and impartial manner possible. 

Request for Comment. The 

Commission requests comment on any 

additional measures that should be 

required to adequately protect CCOs 

from undue influence in the 

performance of their duties. The 

Commission is particularly interested in 

how it might offer such protection to a 

CCO who reports to his or her senior 

officer, either at the SDR’s choosing or 

because the SDR does not have a board 

of directors. In addition, the 

Commission also requests comment on 

whether the provision that would 

require a majority of a board of directors 

to remove the CCO is sufficiently 

specific. 

5. Duties of the Chief Compliance 

Officer—Proposed § 49.22(d) 

Proposed § 49.22(d) details the duties 

of a CCO, as well as his or her authority 

within an SDR. The proposed regulation 

codifies and expands upon the CCO 

duties already set forth in Section 

21(e)(2) of the CEA. These duties 

include overseeing and reviewing 

compliance with the CEA and 

Commission regulations, as well as 

resolving, in consultation with the 

board of directors or the senior officer, 

any conflicts of interest that may arise. 

The proposed Regulation also lists a 

number of potential conflicts that may 

confront a CCO. The list of conflicts of 

interest indicates the types of conflicts 

that the Commission believes an SDR’s 

CCOs should be aware of, but it is not 

exhaustive. 

Proposed § 49.22(d) also requires that 

the CCO establish and administer a 

written code of ethics and policies and 

procedures designed to prevent 

violations of the CEA and Commission 

regulations. The Commission believes 

that such written documentation will 

serve as a useful guide for the SDR’s 

management and staff, as well as for 

swap participants who will be 

submitting data to the SDR. It will also 

help the Commission to evaluate the 

SDR’s compliance and adherence to its 

own internal standards. Finally, 

proposed § 49.22(d) requires that a CCO 

establish and follow procedures for the 

remediation and closing of any 

noncompliance issues that are 

identified. To assist the CCO in meeting 

this responsibility, proposed 

§ 49.22(b)(1), summarized above, grants 

a CCO oversight authority over all 

compliance functions and staff acting in 

furtherance of those compliance 

functions. The CCO’s authority would 

also extend to any activities performed 

by the SDR to verify that other entities 

are in compliance with applicable laws 

and regulations, such as the verification 

of the timeliness of certain swap data, 

pursuant to proposed § 49.15. The 

Commission recognizes that the staff 

that assists a CCO may not be dedicated 

to the CCO full-time; however, the 

proposed regulation would ensure that 

a CCO has authority over any staff and 

resources while they are acting in 

furtherance of compliance functions. 

Request for Comment. The 

Commission requests comment 

regarding proposed § 49.22(d). 

Comments should address any 

additional CCO duties which the 

Commission should include in the 

proposed regulation. In addition, they 

should specifically address a CCO’s role 

in managing conflicts of interest within 

an SDR, the types of conflicts which 

commenters believe might arise within 

an SDR, and how and by whom those 

conflicts should be resolved. 

6. Preparation and Submission of 

Annual Compliance Report—Proposed 

§§ 49.22(e) and 49.22(f) 

Section 21(e)(3) of the CEA requires a 

CCO to prepare an annual compliance 

report. As discussed above, the 

Commission believes that this annual 

compliance report should give the 

Commission a complete and accurate 

picture of an SDR’s compliance 

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Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Proposed Rules 80915 

100See 5 U.S.C. 552. 

101See 5 U.S.C. 552b(b). 

102Section 21(f)(4), 7 U.S.C. 24a(f)(4), establishes 

a fourth core principle which authorizes the 

Commission to establish additional duties for 

registered SDRs. The Commission is proposing to 

add several additional duties pursuant to this 

authority; these proposed duties are discussed in 

Section E, below. 

program. Proposed § 49.22(e) details the 

information that must be included in 

the annual compliance report. The 

report must include: (i) A description of 

the SDR’s written policies and 

procedures, code of ethics and conflicts 

of interest policies; (ii) a detailed review 

of the SDR compliance with Section 21 

of the CEA, including an assessment by 

the CCO of the effectiveness of the 

SDR’s policies and procedures in 

ensuring compliance with Section 21 of 

the CEA and a discussion of areas for 

improvement; (iii) a description of any 

material changes to the policies and 

procedures that were made to these 

since the last annual compliance report; 

(iv) a description of the financial, 

managerial, operational, and staffing 

resources set aside for the SDR’s 

compliance program; (v) a description of 

any material compliance matters, 

including instances of noncompliance, 

that were identified in the year prior to 

the filing of the report; and (vi) any 

objections to the annual compliance 

report by the board or senior officer of 

the SDR. In addition to the above 

information, proposed § 49.22(e) also 

requires the annual report to include a 

certification by the CCO that, under 

penalty of law, the compliance report is 

accurate and complete. 

Proposed § 49.22(f)(1) sets forth the 

procedures for the review of the annual 

compliance report by the board of 

directors of the SDR or senior officer, 

prior to submission to the Commission. 

While the board or senior officer has a 

chance to review the annual compliance 

report before submission, the report is 

not subject to their approval. Proposed 

§ 49.22(f)(1) explicitly prohibits the 

board or senior officer from forcing the 

CCO to make any material changes to 

the report. The purpose of this review 

is to permit the members of the board 

or the senior officer to provide the 

Commission with any objections they 

might have to the report. The 

Commission believes that the 

prohibition against the board and senior 

officer making changes to the annual 

compliance report will allow the CCO to 

make a complete and accurate 

assessment of the SDR’s compliance 

program. 

Proposed § 49.22(f)(2) describes the 

process for submission of the report to 

the Commission. The proposed 

Regulation requires that the annual 

compliance report be electronically 

provided to the Commission not more 

than 60 days after the end of the 

calendar year. If a CCO determines that 

an annual compliance report filed with 

the Commission has a material error or 

if material non-compliance is identified 

after filing, proposed § 49.22(f)(3) would 

require a SDR to promptly file an 

amended report. This amended report 

must also include the certification by 

the CCO as to the accuracy and 

completeness made in the initial 

submission of the report. If a CCO is 

unable to file an annual compliance 

report within 60 days of the end of the 

calendar year, proposed § 49.22(f)(4) 

would permit a CCO to request the 

Commission to grant an extension of 

time to file its compliance report based 

on substantial undue hardship. 

Extensions for the filing deadline would 

be granted at the discretion of the 

Commission. Additionally, to protect 

the trade secrets of the SDR and the 

security of the data held by the SDR, the 

proposed Regulation requires that 

annual compliance reports filed 

pursuant to § 49.22 be treated as exempt 

from mandatory public disclosure for 

purposes of FOIA 100 and the Sunshine 

Act 101 and parts 145 and 147 of 

Commission Regulations. 

Request for Comment. The 

Commission request comment on its 

proposed regulations regarding the 

preparation and submission of an SDR’s 

annual compliance report. 

(1) Should the annual compliance 

report contain additional content 

beyond what is proposed in § 49.22(e)? 

Are additional provisions necessary to 

ensure that an SDR’s board of directors 

cannot adversely influence the content 

of an annual compliance report as 

drafted by the CCO? 

(2) In the alternative, are additional 

provisions necessary to insure that 

individual directors or other SDR 

employees have an adequate 

opportunity to register any concerns or 

objections they might have to the 

contents of an annual compliance 

report? 

The Commission also requests 

comment relating to insulating an SDR’s 

CCO from undue influence or coercion. 

(1) Should the Commission adopt a 

regulation that prohibits an officer, 

director or employee of the SDR or 

related person to coerce, manipulate, 

mislead, or fraudulently influence the 

CCO in performing his or her duties? 

(2) Is it necessary to adopt regulations 

to address potential conflicts between 

and among an SDR’s compliance, 

commercial, and ownership interests? 

(3) If so, what should such regulations 

entail, and what specific conflicts of 

interest should they address? 

7. Recordkeeping—Proposed § 49.22(g) 

Proposed § 49.22(g) details SDRs’ 

recordkeeping requirements for records 

relating to a CCO’s areas of 

responsibility. This proposed regulation 

requires an SDR to maintain: (i) A copy 

of its written policies and procedures, 

including its code of ethics and conflicts 

of interest policies; (ii) copies of all 

materials, including written reports 

provided to the board of directors in 

connection with review of the annual 

report, as well as the board minutes or 

other similar written records, that 

record the submission of the annual 

compliance report to an SDR’s board of 

directors or its senior officer; and (iii) 

any other records relevant to an SDR’s 

annual report. The records required to 

be maintained pursuant to this section 

are designed to provide Commission 

staff with a basis to determine whether 

an SDR has complied with the CEA and 

applicable Commission Regulations. 

The Commission also wants to preserve 

its ability to reconstruct why certain 

information was included or excluded 

in an annual report, in the event that 

such reconstruction becomes necessary 

under a future audit or investigation. 

The SDR would be required to 

maintain these records in accordance 

with § 1.31 of the Commission’s 

Regulations. Following § 1.31, all 

records must be kept for a period of five 

years. 

Request for Comment. The 

Commission requests comment 

regarding whether the requirements of 

proposed § 49.22(g) are sufficient to 

create a complete and easily auditable 

record of a board of directors’ or senior 

officer’s review of an annual compliance 

report to ensure that the report, as 

drafted by the CCO, was not altered. 

D. Core Principles Applicable to SDRs 

Section 21(f) of the CEA details the 

‘‘core principles’’ that are applicable to 

SDRs. These core principles include (i) 

antitrust considerations; (ii) governance 

arrangements; and (iii) conflicts of 

interest.102

Registered SDRs will be required to 

comply with the core principles as 

described in proposed § 49.19. Unless 

otherwise determined by the 

Commission by order, rule or regulation, 

an SDR would have reasonable 

discretion in establishing the manner in 

which it complies with the core 

principles described in proposed 

§ 49.19. The following subsections 

describe in detail the Regulations 

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80916 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Proposed Rules 

103Section 15(b) of the CEA provides: 

The Commission shall take into consideration the 

public interest to be protected by the antitrust laws 

and endeavor to take the least anticompetitive 

means of achieving the objectives of this chapter, 

as well as the policies and purposes of this chapter, 

in issuing any order or adopting any Commission 

rule or regulation (including any exemption under 

Section 6(c) or 6c(b) of this title), or in requiring or 

approving any bylaw, rule, or regulation of a 

contract market or registered futures association 

established pursuant to Section 21 of this title. 

7 U.S.C. 19. 

104See Section 21(f)(2) of the CEA, 7 U.S.C. 

24a(f)(2) as added by Section 728 of the Dodd-Frank 

Act. 

105See Section 21(f)(3) of the CEA, 7 U.S.C. 

24a(f)(3) as added by Section 728 of the Dodd-Frank 

Act. 

106 In Section 4(a), the Commission identifies 

potential conflicts of interest in the operation of a 

registered SDR. Such conflicts may implicate (i) 

SDR access, pricing, and provision of services and 

(ii) disclosure or use of SDR Information. As further 

discussed, such conflicts of interest may originate 

in the control of an SDR by one reporting entity or 

a small subset of reporting entities (a ‘‘control 

group’’). Such control may result from 

representation on SDR governing bodies, whether 

through (i) ownership of voting equity or the 

exercise of voting rights or (ii) other direct or 

indirect means. The existence of such conflicts may 

frustrate the public interest, as well as the 

objectives of the Federal Government, certain 

owners, and participants, in facilitating the 

reporting of swap transactions. Therefore, in 

establishing governance arrangements that are 

transparent as to (i) the sources of such control and 

(ii) the decisions resulting from such control, the 

SDR may be satisfying Core Principles 2 and 3 

simultaneously. 

107The Commission notes that entities dually 

registered with the Commission and the SEC would 

be required to comply with both sets of rules. 

108See Press Release, Commission, CFTC, SEC 

Announce Panelists, Room Update and Webcast 

Address for September 15 Public Roundtable to 

Discuss Swap Execution Facilities and SecurityBased Swap Execution Facilities (Sept. 14, 2010), 

http://www.cftc.gov/PressRoom/PressReleases/ 

pr5895–10.html; Press Release, Commission, CFTC, 

SEC Announce Panelists for September 14 Public 

Roundtable to Discuss Swap and Security-Based 

Swap Data, Swap and Security-Based Swap Data 

Repositories and Real Time Reporting (Sept. 13, 

2010), http://www.cftc.gov/PressRoom/ 

PressReleases/pr5892–10.html; Press Release, 

Commission, CFTC, SEC to host public roundtable 

to discuss swap data, swap data repositories and 

real time reporting (Sept. 7, 2010), available at 

http://www.cftc.gov/PressRoom/PressReleases/ 

pr5886–10.html. See also Transcript, Public 

Roundtable to Discuss Swap Data, Swap Data 

Repositories and Real Time Reporting (Sept. 14, 

2010), available at http://www.cftc.gov/ucm/groups/ 

public/@swaps/documents/file/ 

derivative18sub091410.pdf (the ‘‘SDR Roundtable 

Tr.’’). 

109Although SDRs are new entities created 

pursuant to the Dodd-Frank Act, similarlyfunctioning entities called trade repositories have 

been in existence for quite some time. 

110Commission staff circulated the informal 

survey to five entities and received answers to 

certain questions. See http://www.cftc.gov/ 

LawRegulation/DoddFrankAct/ 

OTC_9_DCOGovernance.html (last visited Nov. 1, 

2010). 

111See European Commission Proposal, supra 

note 16. 

112See Working Group Report, supra note 13. 

113 Id. 

114See proposed §§ 49.16 regarding maintenance 

of data privacy, discussed in section II.B.6 of this 

proposed rulemaking; 49.17 regarding access to 

SDR data, discussed in section II.B.7. of this 

proposed rulemaking; and 49.27 regarding equitable 

and non-discriminatory access and fees, discussed 

in section II.E.4 of this proposed rulemaking. 

115 In addition, the Commission proposes to 

require each registered SDR to establish governance 

arrangements that are well defined and include a 

clear organizational structure with consistent lines 

of responsibility and effective internal controls. As 

the SDR must have such arrangements to (i) 

properly identify the sources of potential conflicts 

of interest and (ii) establish an appropriate process 

for resolving such conflicts, such arrangements also 

satisfy Core Principle 3. 

116Such information includes: (i) The registered 

SDR mission statement; (ii) the mission statement 

and/or charter of the registered SDR Board of 

Directors and certain committees; (iii) the board of 

directors nominations process of the registered 

SDR, as well as the process for assigning members 

of the board of directors or other persons to certain 

committees; (iv) names of all members of (a) the 

board of directors and (b) certain committees; (v) a 

description of how the board of directors and 

certain committees consider an independent 

perspective in their decision-making processes; (vi) 

the lines of responsibility and accountability for 

each operational unit of the registered SDR; and 

(vii) summaries of significant decisions implicating 

the public interest, the rationale for such decisions, 

and the process for reaching such decisions. These 

significant decisions include decisions relating to 

pricing of repository services, the offering of 

ancillary services, access to data, and the use of 

SDR Information. 

proposed by the Commission to 

implement the ‘‘core principles.’’ 

1. Antitrust Considerations (Core 

Principle 1) 

Consistent with Section 15(a) of the 

CEA,103 the Commission in proposing 

§ 49.19 believes that an SDR should 

(unless necessary or appropriate to 

achieve the purposes of the CEA) avoid 

adopting any rule, regulation or policy, 

or taking any action that results in an 

unreasonable restraint of trade or 

imposing any material anticompetitive 

burden on the trading, clearing, 

reporting and/or processing of swaps 

(‘‘Core Principle 1’’). 

2. Introduction—Governance 

Arrangements (Core Principle 2) and 

Conflicts of Interest (Core Principle 3) 

Section 21(f)(2) of the CEA requires 

that each SDR establish governance 

arrangements that are transparent to 

fulfill public interest requirements and 

to support the objectives of the Federal 

Government, owners, and participants 

(‘‘Core Principle 2’’).104 Section 21(f)(3) 

of the CEA provides that each SDR must 

establish and enforce rules to minimize 

conflicts of interest in the decisionmaking process of the SDR and to 

establish a process for resolving such 

conflicts (‘‘Core Principle 3’’).105 In 

many respects, Core Principles 2 and 3 

are interrelated, although each provides 

a separate source of authority for the 

Commission.106

In order to ensure proper 

implementation of Core Principles 2 and 

3, respectively, the Commission 

proposes regulations regarding (i) the 

transparency of SDR governance 

arrangements and (ii) SDR identification 

and mitigation of existing and potential 

conflicts of interest.107 The proposed 

rules reflect consultation with staff of 

the following agencies: (i) The SEC; (ii) 

the Fed; (iii) OCC; (iv) FDIC; and (v) the 

Treasury Department. Additionally, the 

proposed rules were informed by: (1) 

The joint public roundtable that 

Commission and SEC staff conducted on 

September 14, 2010 (the ‘‘SDR 

Roundtable’’); 108 and (2) answers to a 

survey that the Commission informally 

circulated to existing trade 

repositories 109 and other companies 

that may be interested in registering as 

SDRs in the future (the ‘‘SDR 

Survey’’).110 Finally, mindful of the 

importance of international 

harmonization, the proposed rules 

incorporate certain elements of the 

European Commission Proposal 111 and 

the Working Group Report.112 The 

Commission intends for the proposed 

rules, as well as the final rules, to meet 

or exceed the standards set forth by the 

Working Group Report relating to trade 

repositories.113

3. Governance Arrangements (Core 

Principle 2) 

In addition to proposed Regulations 

discussed in sections II.B.6, II.B.7 and 

II.E.4,114 the Commission proposes to 

impose, pursuant to proposed § 49.20 

(implementing Core Principle 2), certain 

minimum standards for the 

transparency of SDR governance 

arrangements. 

(a) Transparency of Governance 

Arrangements 

The Commission proposes to mandate 

minimum standards for the 

transparency of SDR governance 

arrangements.115 Pursuant to such 

standards, an SDR must: 

• Include a statement in its charter 

documents regarding the transparency 

of its governance arrangements, and the 

manner in which such transparency 

supports the objectives of the Federal 

Government; 

• Make available certain information 

to the public and relevant 

authorities; 116

• Ensure that the information made 

available is current, accurate, clear and 

readily accessible; and 

• Disclose summaries of significant 

decisions in a sufficiently 

comprehensive and detailed fashion so 

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117See 75 FR 63732, 63737–38 (Oct. 18, 2010) 

(regarding the importance of the independent 

perspective in mitigating conflicts of interest). 

that the public and relevant authorities 

would have the ability to discern the 

SDR policies or procedures implicated 

and the manner in which SDR decisions 

implement or amend such policies or 

procedures. 

In addition, although a registered SDR 

is not required to disclose minutes of 

board of directors or committee 

meetings to the public, it must furnish 

this information to the Commission 

upon request. 

Request for Comment. The 

Commission requests comment on the 

questions set forth below. 

(1) Are the requirements described 

above sufficiently clear? If not, why not? 

What would be a better alternative? 

(2) Should the Commission require 

the SDR to make any other information 

available to the public? To the relevant 

authorities? Conversely, should the 

Commission permit the SDR to maintain 

the confidentiality of any information 

that the Commission currently 

contemplates making public? 

(3) Should the Commission prescribe 

more detailed standards on the manner 

in which an SDR must ensure that its 

information is ‘‘current, accurate, clear, 

and readily accessible’’? If so, which 

standards? 

(4) Should the Commission require 

the SDR to disclose summaries of 

significant decisions? Why or why not? 

Has the Commission correctly identified 

which decisions should be considered 

significant? It not, what would be a 

better alternative? In what manner 

should these decisions be disclosed? 

(5) Are the requirements described 

above necessary or appropriate to 

implement Core Principle 2? If not, why 

not? 

(6) What other measures should the 

Commission consider to implement 

Core Principle 2? Should such measures 

supplement or replace the requirements 

described above? Why? 

(b) Consideration of an Independent 

Perspective 

Proposed § 49.20(c) would require 

each registered SDR to establish, 

maintain, and enforce policies and 

procedures to ensure that (i) its board of 

directors, as well as (ii) any SDR 

committee that has the authority to (A) 

act on behalf of the board of directors 

or (B) amend or constrain the action 

thereof, adequately considers a 

perspective independent of competitive, 

commercial, or industry interests in its 

deliberations.117 The Commission 

believes that the board of directors, as 

well as each abovementioned 

committee, would be more likely to 

contemplate the manner in which a 

decision might affect all constituencies, 

and less likely to concentrate on the 

manner in which a decision affects the 

interests of the control group, if it 

integrates an independent perspective 

in its deliberations. Hence, in 

counterbalancing the perspective of 

certain reporting entities controlling an 

SDR, the integration of an independent 

perspective would aid in addressing the 

conflicts of interest identified herein. 

The Commission believes that it is 

particularly important for an 

independent perspective to be reflected 

in the nominations process for the board 

of directors, as well as the process for 

assigning members of the board of 

directors or other persons to the 

abovementioned committees. Therefore, 

proposed § 49.20(c) would also require 

each registered SDR to establish, 

maintain, and enforce policies and 

procedures to ensure that such 

nominations and assignment processes 

adequately incorporates an independent 

perspective. 

Along with the requirements noted 

above, the Commission is proposing that 

a registered SDR meet certain reporting 

requirements relating to its board of 

directors, as well as each SDR 

committee that has the authority to (i) 

act on behalf of its board of directors or 

(ii) amend or constrain the action 

thereof. Specifically, the Commission 

proposes to require an SDR to submit 

the following within thirty (30) days 

after an election of the board of 

directors: (i) For the board of directors, 

as well as each such committee, a list of 

all members; (ii) a description of the 

relationship, if any, between such 

members and the SDR or its affiliates; 

and (iii) any amendments to the policies 

and procedures that the SDR maintains 

with respect to consideration of the 

independent perspective. The 

Commission believes that such 

disclosure promotes the transparency of 

governance arrangements and improves 

the detection and prevention of conflicts 

of interest, and which may actually 

deter such conflicts in the first instance. 

Request for Comment. The 

Commission requests comment on the 

questions set forth below. 

Consideration of an Independent 

Perspective 

(1) To ensure the consideration of an 

independent perspective, should the 

Commission require a registered SDR to 

have public directors on (i) its board of 

directors and (ii) any committee that has 

the authority to (A) act on behalf of the 

board of directors or (B) amend or 

constrain the action of the board of 

directors? 

a. If not, why not and what would be 

a better alternative to improve 

governance and mitigate conflicts of 

interest? 

b. If so, what should be the required 

composition of the board of directors 

and each such committee? Should there 

be a minimum requirement on the 

number or percentage of public 

directors? If so, what should the 

minimum requirement be and why? 

c. How should the Commission define 

‘‘public director’’ for registered SDRs? 

d. Would providing for fair 

representation on an SDR board of 

directors and each such committee be 

preferable to, or complementary to, 

mandating a specific number or 

percentage of public directors? 

(2) Should the Commission require a 

registered SDR to establish a nominating 

committee? Is the nominating 

committee necessary or appropriate for 

the mitigation of the conflicts of interest 

identified herein, or of any other 

conflict of interest? If not, why not and 

what would be a better alternative? If so, 

should the nominating committee have 

a certain percentage, minimum number, 

or be comprised solely of public 

directors? Why? 

(3) Should the Commission require a 

registered SDR to establish any other 

committees to mitigate conflicts of 

interest? If so, what would be the 

responsibilities of such a committee? 

Should the Commission require such a 

committee to have a certain percentage, 

a minimum number, or be comprised 

solely of public directors? Why? 

Limitations on Ownership of Voting 

Equity and the Exercise of Voting Rights 

(4) Should the Commission impose 

limitations on the ownership of voting 

or non-voting equity and the exercise of 

voting rights on reporting entities or 

other market participants? If so, what 

should the required ownership and 

voting limitations be? Are such limits 

necessary or appropriate for mitigating 

the conflicts of interest identified 

herein, or any other conflicts of interest? 

(5) Would SDR compositional 

requirements be more or less effective 

than ownership or voting limitations at 

addressing conflicts of interest? Would 

SDR compositional requirements, on 

their own, be sufficient to address 

conflicts of interest concerns (assuming 

that such restrictions are necessary for 

this purpose) or are both restrictions on 

governance and ownership needed? 

(6) If the Commission were to require 

ownership and voting limitations, 

should the Commission permit the SDR 

board of directors to waive the 

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80918 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Proposed Rules 

118See proposed §§ 49.16, 49.17 and 49.27. 

119See Section 2(a)(13)(G) of the CEA, as 

amended by Section 727 of the Dodd-Frank Act. 

120For example, such data would enable 

regulatory authorities, such as the Commission, to 

ascertain the exposure of reporting entities and 

their counterparties to swap transactions. See 

generally 7 U.S.C. 24a(c)(7). See also SDR 

Roundtable Tr., supra note108, at 55–56 (Comments 

from Jiro Okochi, CEO and Co-Founder, Reval, 

stating ‘‘In terms of the actual data itself, I think one 

of the goals of the reform is to allow more 

transparency and efficiency in the marketplace 

***’’). 

limitations for a person who is not an 

SDR participant (and its related persons) 

provided that certain conditions are 

met? If so, under what conditions? 

Should the waiver be subject to the 

review of the Commission? 

(7) Would an aggregate limit on the 

ownership of voting equity and the 

exercise of voting rights be appropriate 

for SDRs? If so, should such aggregate 

limit be applied only to reporting 

entities? Which reporting entities? What 

should such aggregate limit be? Why? 

(8) Should any ownership and voting 

limitations be extended to the parent 

company of an SDR? 

(9) If the Commission were to impose 

ownership or voting limitations, should 

the Commission require remediation by 

an SDR of any interest that a reporting 

entity or a related person holds or 

exercises in excess of the limitations? 

(10) If the Commission were to 

impose ownership or voting limits, 

should the limitations be phased-in for 

SDRs to provide a grace period for those 

entities that would not meet the limits 

at the outset, but that could potentially 

meet them at a later date, e.g., one or 

two years after SDR registration with the 

Commission? 

(11) If the Commission were to 

impose ownership and voting 

limitations, how might such limitations 

influence the competitive dynamics of 

the SDR market? 

(12) If the Commission were to 

impose ownership or voting limitations, 

how might such limitations address 

changes in conflicts of interest resulting 

from the evolution of the regulated 

swaps market? 

(13) Are there potential ways to more 

narrowly target voting and ownership 

limitations? 

(14) Should the Commission require 

parent companies of SDRs to comply 

with the substantive requirements 

applicable to SDR boards of directors? 

(15) Should the Commission require 

parent companies’ officers, directors, 

employees and agents to be subject to 

Commission authority? 

(16) Should the Commission require 

that the books and records of SDR 

parent companies be open to inspection 

by the Commission? 

(c) Substantive Requirements for SDR 

Boards of Directors (and Certain SDR 

Committees) 

(i) Expertise 

The Commission is proposing a 

number of substantive requirements for 

SDR boards of directors and certain SDR 

committees to mitigate existing and 

potential conflicts of interest. Proposed 

§ 49.20(c)(5) would require that the SDR 

board of directors, SDR senior 

management, and members of any SDR 

committee that has the authority to (i) 

act on behalf of the board of directors 

or (ii) amend or constrain the actions 

thereof, in each case, have (A) 

sufficiently good reputations, (B) the 

requisite skills and expertise to fulfill 

their responsibilities in the management 

and governance of the registered SDR, 

(C) a clear understanding of such 

responsibilities, and (D) the ability to 

exercise sound judgment about SDR 

affairs. 

(ii) Other Substantive Requirements 

In addition to the expertise 

requirement, the Commission in 

proposed § 49.20(c) proposes the 

following requirements, which aim to 

enhance the accountability of SDR 

boards of directors to the Commission, 

with respect to the manner in which 

such boards of directors cause the 

registered SDRs to discharge all 

statutory and regulatory 

responsibilities118 under the DoddFrank Act, as it amends the CEA: 

• The roles and responsibilities of 

SDR boards of directors must be clearly 

articulated, especially in respect of the 

manner in which each such board of 

directors ensures that the registered SDR 

complies with all statutory and 

regulatory responsibilities under the 

Dodd-Frank Act, as it amends the CEA. 

• Each SDR board of directors shall 

review its performance and that of its 

individual members annually. It should 

consider periodically using external 

facilitators for such reviews. 

• A registered SDR must have 

procedures to remove a member from its 

board of directors, where the conduct of 

such member is likely to be prejudicial 

to the sound and prudent management 

of the SDR. 

Request for Comment. The 

Commission requests comment on the 

questions set forth below. 

(1) Are the proposed substantive 

requirements for board of directors (and 

certain SDR committees) necessary or 

appropriate to mitigate SDR conflicts of 

interest, in light of the proposed 

minimum standards on (A) 

transparency, (B) identification and 

resolution of conflicts of interest, and 

(C) access, use, or disclosure of SDR 

Information? If not, why not? 

(2) How might the proposed 

substantive requirements influence the 

competitive dynamics of the SDR 

market? 

(3) How might the proposed 

substantive requirements address 

changes in conflicts of interest resulting 

from the evolution of the regulated 

swaps market? 

(4) What other substantive 

requirements should the Commission 

consider imposing on an SDR board of 

directors? How might such requirements 

affect the competitive dynamics of the 

SDR market? 

(5) Should the Commission focus on 

ensuring fair representation? If so, 

should the Commission view fair 

representation as complementing or 

replacing an independent perspective? 

What entities should be included in fair 

representation? Would the value of fair 

representation differ depending on the 

organizational structure of the SDR (e.g., 

an at-cost utility or a for-profit entity)? 

The Commission particularly welcomes 

factual examples. 

(6) If the Commission decides to focus 

on ensuring fair representation as either 

an alternative to, or a complement of, an 

independent perspective, what changes 

should the Commission make to the 

proposed substantive requirements? 

(7) In what ways can a SDR board of 

directors incorporate an independent 

perspective into its decision-making 

process? 

(8) Should the nominations process 

require the right to petition for 

alternative candidates? If so, to whom 

should such right be granted (e.g., 

certain groups of market participants)? 

4. Conflicts of Interest (Core Principle 3) 

(a) Conflicts of Interest 

Based on discussions at the SDR 

Roundtable, as well as answers to the 

SDR Survey, the Commission has 

identified several potential conflicts of 

interest, including but not limited to, 

discrimination against certain reporting 

entities and unfair or anticompetitive 

disclosure. A control group may 

compete with other reporting entities in 

the execution or clearing of swap 

transactions and may have an incentive 

to leverage its influence over the 

registered SDR to gain a competitive 

advantage in relation to other reporting 

entities. Additionally, because the 

Dodd-Frank Act requires all swaps 

(whether cleared or uncleared) to be 

reported to a registered SDR,119 swap 

data120 and SDR analyses of SDR 

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Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Proposed Rules 80919 

121Warehouse Trust Response to the SDR Survey, 

at p. 4, available at http://www.cftc.gov/ucm/ 

groups/public/@swaps/documents/file/ 

derivative9sub100510-wt.pdf (stating that ‘‘SDR data 

is extremely valuable and could be sold either stand 

alone or enhanced with other market data and 

analysis’’). 

122See Commission, Notice of Proposed 

Rulemaking: Business Continuity and Disaster 

Recovery, 75 FR 42,633 (July 22, 2010); Interagency 

Paper on Sound Practices to Strengthen the 

Resilience of the U.S. Financial System issued by 

the Board of Governors of the Federal Reserve 

System, the Department of the Treasury and the 

SEC, 68 FR 17,809 (Apr. 11, 2003); SEC, Policy 

Statement Relating to Business Continuity Planning 

for Trading Markets, Exchange Act Release No. 

48,545 (Sept. 25, 2003), 68 FR 56,656 (Oct. 1, 2003). 

Information could have great 

commercial value.121 A control group 

may have an incentive to (i) limit or 

burden access to such analyses on a 

discriminatory basis or (ii) disclose or 

use the data of other reporting entities 

for its own competitive purposes (e.g., 

front-running). The control group may 

also have an incentive to cause the SDR 

to provide such data to an affiliate for 

derivative applications or ancillary 

services (especially if such applications 

or services are bundled). 

Request for Comment. The 

Commission requests comment on the 

questions set forth below on potential 

conflicts of interest. 

(1) Has the Proposal correctly 

identified the conflicts of interest that a 

registered SDR may confront? Has the 

Proposal accurately specified the 

possible effects of such conflicts of 

interest on SDR operations? What are 

other possible effects? 

(2) What other conflicts of interest 

may exist? What are the effects of such 

conflicts? 

(3) How might conflicts of interest 

change as registered SDRs become more 

established? 

(4) How might conflicts of interest 

change as the swaps market evolves 

under regulation? 

(b) Mitigation of Conflicts of Interest 

To mitigate conflicts of interest, the 

Commission proposes to mandate, 

pursuant to proposed § 49.21, that each 

registered SDR maintain and enforce 

rules (i) that would identify, on an 

ongoing basis, existing and potential 

conflicts of interest, and (ii) that would 

enable the SDR to make decisions if a 

conflict exists. Such rules would 

complement the abovementioned 

provisions. 

(c) Policies and Procedures to Identify 

and Mitigate Conflicts of Interest 

To ensure that the mitigation in Core 

Principle 3 is effected, the Commission 

proposes to require each registered SDR 

to establish, maintain and enforce rules 

to identify existing and potential 

conflicts of interest in its decisionmaking process. As discussed above, a 

control group can dominate an SDR to 

further its economic interests to the 

detriment of other reporting entities. 

Therefore, the Commission believes that 

it is critical for a registered SDR to 

establish, maintain and enforce policies 

and procedures to mitigate such a 

conflict. Moreover, the Commission 

believes that an SDR should engage in 

the identification and mitigation of 

conflicts of interest on an ongoing basis 

since conflicts can arise or change at 

any time. Further, the Commission 

proposes to require such SDR to have 

rules for making decisions in the event 

of a conflict of interest. The Commission 

believes such rules should require, at a 

minimum, the recusal of any person 

involved in the conflict from such 

decision-making. Such recusal rules 

will alleviate certain concerns regarding 

the impartiality of the SDR decisionmaking process. 

Request for Comment. The 

Commission requests comment on the 

questions set forth below. 

(1) Are the requirements described 

above sufficiently clear? If not, why not? 

What would be a better alternative? 

(2) Should the Commission prescribe 

more detailed standards for SDR rules 

on identifying conflicts of interest? If so, 

which standards? 

(3) Should the Commission prescribe 

more detailed standards for SDR rules 

on decision-making in the event of a 

conflict of interest? If so, which 

standards? 

E. Additional Duties 

In addition to the ‘‘core principles’’ set 

forth above in section D, Section 21(f)(4) 

of the CEA established a fourth core 

principle under which the Commission 

may prescribe additional duties for 

SDRs for the purpose of minimizing 

conflicts of interest, protecting data, 

ensuring compliance and guaranteeing 

the safety and security of the SDR. In 

this regard, pursuant to its authority 

under Sections 21(f)(4) and 8a(5) of the 

CEA the Commission proposes to 

require four additional duties that 

would require an SDR to (i) adopt and 

implement system safeguards, including 

business continuity and disaster 

recovery plans; (ii) maintain sufficient 

financial resources; (iii) furnish to 

market participants a disclosure 

document setting forth the risks and 

costs associated with using the services 

of the SDR; and (iv) provide fair and 

open access to the SDR and fees that are 

equitable and non-discriminatory. These 

additional duties are discussed in turn 

below. 

1. System Safeguards 

Proposed § 49.24 would require SDRs 

to (1) establish and maintain a program 

of risk oversight to identify and 

minimize sources of operational risk 

through the development of appropriate 

controls and procedures and the 

development of automated systems that 

are reliable, secure, and have adequate 

scalable capacity; (2) establish and 

maintain emergency procedures, backup 

facilities, and a plan for disaster 

recovery that allow for the timely 

recovery and resumption of operations 

and the fulfillment of the 

responsibilities and obligations of the 

SDR, i.e., BC–DR Plans; and (3) 

periodically conduct tests to verify that 

backup resources are sufficient to 

ensure continued fulfillment of all 

duties of the SDR established by the 

CEA or the Commission’s regulations. 

The proposed regulation would 

require an SDR’s program of risk 

analysis and oversight to address six 

categories of risk analysis and oversight, 

including information security; BC–DR 

planning and resources; capacity and 

performance planning; systems 

operations; systems development and 

quality assurance; and physical security 

and environmental controls. It would 

require each SDR to maintain a BC–DR 

plan and have BC–DR resources 

sufficient to enable recovery and 

resumption of its operations and 

resumption of its ongoing fulfillment of 

its duties and obligations as an SDR 

during the next business day following 

any disruption of its operations, either 

through sufficient infrastructure and 

personnel resources of its own or 

through sufficient contractual 

arrangements with other SDRs or 

disaster recovery service providers.122

The proposed regulation would require 

each SDR to notify Commission staff of 

various security-related events and 

provide relevant documents to the 

Commission; and to conduct regular, 

periodic, objective testing and review of 

its automated systems. It would also 

require each SDR, to the extent 

practicable, to coordinate its BC–DR 

plan with SEFs, DCMs, DCOs, SDs, and 

MSPs who report swap data to the SDR, 

as well as initiate coordinated testing of 

such plans, and to take into account in 

its own BC–DR plan, the BC–DR plans 

of relevant telecommunications, power, 

water, and other essential service 

providers. 

Because automated systems play a 

central and critical role in today’s 

financial markets, oversight of these 

systems will be an essential part of the 

effective regulatory oversight of swaps. 

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80920 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Proposed Rules 

123An entity that operates as both a SDR and DCO 

would also be required to comply with the financial 

resource requirements of Core Principle B set forth 

in Section 5b(c)(2)(B) of the CEA, 7 U.S.C. 7a– 

1(c)(2)(B). 

124The financial resources allocated by the swap 

data repository to meet these requirements must 

include unencumbered, liquid financial assets (i.e., 

cash and/or highly liquid securities) equal to at 

least six months’ operating costs. If any portion of 

such financial resources is not sufficiently liquid, 

the SDR may take into account a committed line of 

credit or similar facility for the purpose of meeting 

this requirement. 

125The SDR shall have reasonable discretion in 

determining the methodology used to compute such 

projected operating costs. The Commission may 

review the methodology and require changes as 

appropriate. 

Prompt and adequate notice to the 

Commission concerning systems 

malfunctions, systems security 

incidents, or any events leading to the 

activation of an SDR’s BC–DR plan will 

assist the Commission’s oversight and 

its ability to assess systemic risk levels. 

Additionally and because SDRs will 

hold data needed by financial regulators 

from multiple jurisdictions, 

safeguarding such systems will be 

essential to mitigation of systemic risk 

world-wide. The ability of SDRs to 

recover and resume operations promptly 

in the event of a disruption of their 

operations will be highly important to 

the U.S. and world economy. It would 

present unacceptable risks to the U.S. 

and world financial system if SDRs that 

hold data concerning swaps and thus 

comprise critical components of the 

world financial system were to become 

unavailable for an extended period of 

time for any reason. Adequate system 

safeguards are crucial to mitigation of 

such risks. 

Request for Comment. The 

Commission requests comment on 

whether the time periods specified in 

proposed § 49.24 with respect to 

submission of annual reviews and 

written notices of material system 

outages and material systems changes 

the correct time periods to use? Should 

any of the proposed time periods be 

shortened or lengthened? If so, please 

explain your reasoning. 

2. Financial Resources 

Proposed § 49.25 would require an 

SDR to maintain financial resources 

sufficient to enable it to perform its 

functions in compliance with the duties 

set forth in proposed § 49.9 and the core 

principles set forth in proposed 

§ 49.19.123 The Commission believes 

that requiring SDRs to maintain 

sufficient financial resources will help 

to ensure the protection of the swap 

data maintained by the SDR as well as 

the safety and security of the SDR. 

Proposed § 49.25 (a)(3) provides that 

financial resources 124 will be 

considered sufficient for an SDR if their 

value is at least equal to the total 

amount that would enable the SDR, or 

applicant for SDR registration, to cover 

its operating costs for a period of at least 

one year, calculated on a rolling basis. 

The types of financial resources to meet 

this obligation would include the SDR’s 

own capital and any other financial 

resource acceptable to the Commission. 

The financial resources required in 

proposed § 49.25 must be the 

independent or dedicated resources of 

the SDR and may not be resources used 

for other purposes or by affiliated 

entities, i.e., the same assets or capital 

may not be used for multiple purposes. 

Proposed § 49.25(c) provides that 

SDRs, in computing its financial 

resource requirement, may make a 

reasonable calculation of its projected 

operating costs over a 12-month 

period.125 This would be performed on 

a quarterly basis. Financial resources of 

a SDR would also be valued under 

proposed § 49.25(d) on at least a 

quarterly basis. 

Proposed § 49.25(f) sets forth the 

reporting requirements to the 

Commission. Specifically, no later than 

17 business days after the close of each 

fiscal quarter or at any time upon 

Commission request, a SDR is required 

to report the amount of financial 

resources required by proposed 

§ 49.25(a) together with financial 

statements, including the balance sheet, 

income statement, and statement of cash 

flows of the SDR or of its parent 

company. 

Request for Comment. The 

Commission requests comment on 

whether the methodology set forth 

above for determining sufficient 

financial resources would provide the 

necessary resources to ensure the 

financial integrity of the SDR. If not, 

please provide a different methodology 

or manner for calculating sufficient SDR 

financial resources. 

3. Disclosure Requirements of Swap 

Data Repositories 

Proposed § 49.26 would require an 

SDR furnish to market participants a 

disclosure document (‘‘SDR Disclosure 

Document’’) setting forth the risks and 

costs associated with using the services 

of the SDR. The Commission believes 

that this requirement will benefit market 

participants and the swap market 

generally by helping to (i) minimize 

conflicts of interest and (ii) ensure SDR 

compliance with its statutory 

responsibilities and duties. 

The Commission in proposed § 49.26 

would require that each SDR Disclosure 

Document contain the following 

information: 

• The SDR’s criteria for providing 

others with access to services offered 

and data maintained by the SDR; 

• The SDR’s criteria for those seeking 

to connect to or link with the SDR; 

• A description of the SDR’s policies 

and procedures regarding its 

safeguarding of data and operational 

reliability, as described in proposed 

§ 49.24; 

• The SDR’s policies and procedures 

designed to protect the privacy and 

confidentiality of any and all swap 

transaction information that the SDR 

receives from market participants, as 

described in proposed § 49.16; 

• The SDR’s policies and procedures 

regarding its non-commercial and/or 

commercial use of the swap data; 

• The SDR’s dispute resolution 

procedures involving market 

participant; 

• A description of all the SDR’s 

services, including any ancillary 

services; 

• The SDR’s updated schedule of any 

fees, rates, dues, unbundled prices, or 

other charges for all of its services, 

including any ancillary services; any 

discounts or rebates offered; and the 

criteria to benefit from such discounts 

or rebates; and 

• A description of the SDR’s 

governance arrangements. 

Request for Comment. The 

Commission requests comment on the 

following questions: 

(1) How should the SDR Disclosure 

Document be furnished to market 

participants? Would public availability 

on a SDR’s Web site be sufficient? Any 

other available alternatives? 

(2) How useful would the SDR 

Disclosure Document be for market 

participants? 

4. Non-Discriminatory Access and Fees 

Proposed § 49.27 is intended to 

establish non-discriminatory access to 

the services provided by SDRs because 

all swap transactions must be reported 

to a SDR pursuant to Section 2(a)(13)(G) 

of the CEA. The Commission believes 

that the intent and purpose of Section 

21 of the CEA is for SDRs to provide 

open and equal access to its services. 

Consistent with open and equal access 

to SDR services, the Commission further 

believes that fees or charges adopted by 

an SDR must be equitable and otherwise 

non-discriminatory. 

(a) Access. Proposed § 49.27(a) would 

require that the services provided by 

SDRs be available to all market 

participants, such as DCMs, SEFs, 

DCOs, SDs, MSPs and any other 

counterparty, on a fair, open and equal 

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Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Proposed Rules 80921 

126See proposed § 43.3(i), supra note 39. 

127As explained below, proposed § 49.15 applies 

to off-facility swap transactions. See proposed 

§ 49.15. 

128Section 2(a)(13)(A) of the CEA, 7 U.S.C. 

2(a)(13)(A). 

129See Section 2(a)(13)(C) of the CEA, 7 U.S.C. 

2(a)(13)(C) (authorizing and requiring the 

Commission to provide, by rule, for the real-time 

public availability of swap transaction and pricing 

data for four types of swap transactions: (1) Swaps 

that are subject to the mandatory clearing 

requirement, including those swaps that may 

qualify for an exemption; (2) swaps that are not 

subject to the mandatory clearing requirement but 

are cleared at a registered derivatives clearing 

organization; (3) bilateral swap transactions 

between two counterparties that are reported to a 

registered swap data repository or the Commission 

in accordance with Section 2(h)(6) of the Act; and 

(4) swaps that are determined to be required to be 

cleared but are not cleared.). Pursuant to section 

2(a)(13)(F) parties to a swap are required to report 

to a registered entity in a timely manner as 

prescribed by the Commission. Timeliness 

standards are prescribed in part 43. See supra note 

39. 

130See supra note 39. 

131Proposed § 43.2(z) defines ‘‘swap market’’ as 

‘‘any registered swap execution facility or registered 

designated contract market that makes swaps 

available for trading.’’ See supra note 39. 

132Proposed § 43.2(p) defines ‘‘off-facility’’ swaps 

as ‘‘any reportable swap transaction that is not 

Continued 

basis. SDRs that register and agree to 

accept swap data in a particular asset 

class (such as interest rates or 

commodities) could not offer their 

services on a discriminatory basis to 

select market participants or select 

categories of market participants. The 

Commission believes, pursuant to 

Section 21 of the CEA, that access 

should be fair, open and equitable. As 

a component of fair, open and equal 

access, the Commission submits that 

SDRs must ensure that they have the 

necessary operational capability to 

provide services to market participants 

that would seek access for the reporting 

of swap transactions consistent with 

Section 21 of the CEA. 

(b) Fees. Proposed § 49.27(b) would 

ensure that fees or other charges 

established by a SDR are not used as a 

means to deny access to some market 

participants by employing disparate 

and/or discriminatory pricing. The 

Commission is especially concerned 

that SDRs could attempt to adopt 

disparate pricing for performing their 

statutory duties and obligations set forth 

in Section 21 of the CEA. The 

Commission believes that such action 

would be inconsistent with Core 

Principle 3 discussed above, the CEA 

generally and the guiding principles set 

forth in the Dodd-Frank Act. 

The Commission recognizes that the 

ability to receive swap data in the form 

and manner proposed by part 45 of the 

Commission’s regulations and the 

ongoing maintenance of such data may 

involve significant costs, including, but 

not limited to, technology, personnel, 

technical support and appropriate BC– 

DR plans. The Commission in this 

proposed § 49.27(b) seeks to ensure that 

the fees charged to DCMs, DCOs, SEFs, 

SDs, MSPs, and any other 

counterparties are equitable and do not 

become an artificial barrier to access, 

thereby potentially reducing 

competition for SDR services. 

The Commission submits that an 

equitable fee would be a uniform and 

non-discriminatory set of fees for both 

‘‘core’’ regulatory services provided by 

the SDR as well as any ‘‘ancillary’’ or 

‘‘supplemental’’ services such as lifecycle analysis, confirmation, 

compression, dispute resolution, and 

mark-to-market valuation. 

Any preferential pricing such as 

volume discounts or reductions would 

not be generally viewed as equitable by 

the Commission. Proposed § 49.27(b) 

provides that SDRs shall not offer 

preferential pricing arrangements to any 

market participant, including volume 

discounts or reductions unless such 

discounts or reductions apply to all 

market participants uniformly and are 

not otherwise established in a manner 

that would effectively limit the 

application of such discount or 

reduction to a select number of market 

participants. Proposed § 49.27 also 

would require SDRs to provide fee 

transparency to market participants. At 

a minimum, the proposed § 49.27 would 

require SDRs to set forth on its Web site 

a schedule of fees and charges as well 

as in the Disclosure Document 

discussed above in proposed § 49.26. 

In addition, part 43 of the 

Commission’s proposed regulations 

relating to real-time reporting would 

prohibit a registered SDR from offering 

a discount based on the volume of swap 

transaction and pricing data reported to 

the registered SDR for public 

dissemination, unless such discount is 

offered to all reporting parties and swap 

markets.126

Request for Comment. The 

Commission requests comment on the 

questions set forth below on fees: 

(1) Are there circumstances in which 

it would be fair or reasonable for an SDR 

to charge a counterparty to a swap a fee 

to satisfy itself that the swap data 

submitted to the SDR by the other 

counterparty to the swap is accurate? 

(2) In what instances would an SDR 

differentiate among its users with 

respect to fees, dues, other charges, 

discounts, and rebates? Should any of 

those instances be explicitly prohibited 

or restricted? 

(3) Are there any other requirements 

that the Commission should impose on 

an SDR that would promote 

competition? 

F. Real Time Reporting 

Proposed § 49.15 details SDRs’ ability 

to accept and publicly disseminate swap 

transaction and pricing data for public 

reporting of swap transactions executed 

on a DCM as well as those executed offexchange.127 The Dodd-Frank Act’s realtime public reporting requirements and 

the text of proposed § 49.15 are 

summarized below. 

Section 727 of the Dodd-Frank Act 

establishes certain public reporting 

requirements for all swap transactions 

and participants, and identifies the 

purpose of such public reporting as ‘‘to 

make swap transaction and pricing data 

available to the public in such form and 

at such times as the Commission 

determines appropriate to enhance price 

discovery.’’ 128 Section 2(a)(13)(B) 

establishes the reporting requirements 

pursuant to which the Commission is 

authorized to promulgate regulations 

mandating the public availability of 

swap transaction and pricing data in 

‘‘real-time.’’ 129 By its terms, Section 

2(a)(13)(A) of the CEA defines real-time 

public reporting to mean ‘‘as soon as 

technologically practicable after the 

time at which the swap transaction has 

been executed.’’ Section 2(a)(13)(D) of 

the CEA permits the Commission to 

require registered entities to publicly 

disseminate swap transaction and 

pricing data. 

To implement Section 2(a)(13) of the 

CEA, the Commission is proposing a 

real-time public reporting framework for 

swap transaction and pricing data in a 

new part 43 of the Commission’s 

regulations that is subject to a separate 

rulemaking.130 Proposed Section 43.2(v) 

defines ‘‘reportable swap transaction’’ to 

mean any executed swap, novation, 

swap unwind, partial novation, partial 

swap unwind or such other postexecution events that affect the price of 

the swap. A reportable swap transaction 

includes not only the execution of a 

swap contract, but also certain priceaffecting events that occur over the ‘‘life’’ 

of a swap. The proposed regulations in 

part 43 require registered SDRs to 

publicly disseminate ‘‘off-facility’’ swap 

data and allows SDRs to choose to 

disseminate publicly for swaps executed 

on a swap market. The proposed 

regulations in part 43 organize swap 

transactions into a number of distinct 

categories for purposes of real-time 

public reporting, including (1) swap 

transactions executed on a ‘‘swap 

market’’ as defined in proposed 

§ 43.2(z) 131, and (2) ‘‘off-facility’’ swaps 

as defined in proposed § 43.2(p).132

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80922 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Proposed Rules 

executed on or subject to the rules of a swap 

market.’’ See supra note 39. 

133The proposed part 43 Regulations will provide 

that a swap market may fulfill its public 

dissemination requirement by either (i) sending the 

required data to a registered SDR that accepts and 

publicly disseminates such data; or (ii) by utilizing 

a third-party service provider to perform this 

function. See supra note 39. 

134The Commission is proposing this provision to 

address the concern that a registered SDR may flash 

real-time swap transaction and pricing data to 

selected market participants before making such 

information available to the public and all market 

participants. Requiring registered SDRs to allow 

market participants and the public to download, 

save and/or analyze the real-time swap transaction 

and pricing data upon public dissemination, 

ensures equal access to real-time swap transaction 

and pricing data. See proposed § 43.3(e), supra note 

39. 

135The Commission notes that proposed § 43.3(b) 

also provides for an alternative method of reporting 

by using a third-party service provide for public 

dissemination. Reporting entities electing to satisfy 

their real-time reporting requirements through a 

third-party service provider would not need to 

report through an SDR. See supra note 39. 

136Proposed § 40.3 is amended to require 

additional information to be provided by registered 

entities submitting new products for the 

Commission’s review and approval. Proposed 

§ 40.5(b) codifies a new standard for the review of 

new rules or rule amendments as established under 

the Dodd-Frank Act. See supra note 18. 

137 Id. 

Proposed § 49.15 applies to off-facility 

swap transactions and to all swap 

transactions executed on a SEF or DCM 

that fulfill their public dissemination 

requirement 133 by reporting to a 

registered SDR. 

Under proposed part 43, registered 

SDRs that disseminate swap transaction 

and pricing data to the public in realtime, must make the data available and 

accessible in an electronic format that is 

capable of being downloaded, saved 

and/or analyzed.134 Proposed § 43.3(i) 

requires registered SDRs who 

disseminate publicly to retain all data 

related to a reportable swap transaction 

(including large notional swaps and 

block trades) for a period of not less 

than five years following the time at 

which such reportable swap transaction 

is publicly disseminated. 

Proposed part 43 of the Commission’s 

Regulations also reflects the 

Commission’s belief in the economic 

utility of real-time swap data that is 

promptly reported to the public. 

Accordingly, proposed § 43.3(a) 

proposes specific timeliness standards 

that must to be met for each subcategory 

of swap transaction. 

As noted above, proposed § 49.15 

applies to off-facility swap transactions 

and all transactions executed on a SEF 

or DCM that fulfill their public 

dissemination requirement by reporting 

to a registered SDR that has undertaken 

to accept and publicly disseminate swap 

transaction and pricing data in real 

time. For these transactions, the 

proposed regulations in part 43 will 

require that one party to the swap 

transaction report specified real-time 

data to such a registered SDR, which, in 

turn, will be required to disseminate 

such data to the public.135 In 

coordination with proposed part 43, 

proposed § 49.15(b) requires SDRs to 

‘‘establish such electronic systems as are 

necessary to receive real-time swap 

transaction data,’’ and specifies that 

such systems must be capable of 

publicly disseminating all data fields 

specified by the Commission in 

proposed part 43. 

Proposed § 49.15(c) requires SDRs 

who disseminate swap transaction and 

pricing data in real time to promptly 

notify the Commission when real-time 

swap data is not timely reported. This 

proposed regulation also specifies the 

information that must be included in 

any notification to the Commission of 

untimely reporting. The notification 

must include all of the real-time swap 

data submitted; identify the party to the 

swap that submitted the real-time swap 

data; and contain the date and time the 

real-time swap transaction data was 

received by the SDR. The Commission 

will take appropriate regulatory action 

against the delinquent reporting party 

based on these notifications. 

Request for Comment. The 

Commission request comment on the 

following questions relating to real-time 

reporting of swap transactions. 

(1) Should any party that receives 

swaps data pursuant to proposed part 43 

of the Commission’s Regulations for the 

purpose of performing a real-time 

reporting function be required to 

register as a swap data repository? 

(2) Should additional regulatory 

conditions and requirements apply to a 

party receiving swaps data pursuant to 

proposed part 43 of the Commission’s 

Regulations for the purpose of 

performing a real-time reporting 

function if such a party is not required 

to register as a swap data repository? 

G. Procedures for Implementing Swap 

Data Repository Rules 

Proposed § 49.8 is largely intended to 

conform to the proposed changes to 

existing § 40.5(b) (Voluntary submission 

of rules for Commission review and 

approval).136 The proposed 

amendments to § 40.5(b) are set forth in 

a separate rulemaking pertaining to 

‘‘Provisions Common to Registered 

Entities.’’ 137

1. Request for Approval 

Proposed § 49.8 provides that an 

applicant for registration as a SDR may 

request that the Commission approve 

under Section 5c(c) of the CEA, any or 

all of its rules and subsequent 

amendments, prior to implementation 

or, notwithstanding the provisions of 

Section 5c(c)(2) of the CEA, at anytime 

thereafter, under the procedures set 

forth in § 40.5 of the Commission’s 

Regulations. SDRs that submit operating 

rules to the Commission for approval at 

the same time as an application for 

registration pursuant to proposed § 49.3 

on Form SDR to reinstate the 

registration of a dormant registered SDR, 

as defined in § 40.1, or while one of the 

foregoing is pending, will be deemed 

approved by the Commission no earlier 

than when the swap data repository is 

deemed to be registered or reinstated. 

2. Self-certification of Rules 

Rules of a registered swap data 

repository not voluntarily submitted for 

prior Commission approval as described 

above must be submitted to the 

Commission with a certification that the 

rule or rule amendment complies with 

the CEA and Commission Regulations 

pursuant to the procedures set forth in 

§ 40.6. 

III. Effectiveness and Transition Period 

The statutory deadline for final rules 

is July 15, 2011. Final rules will become 

effective sixty (60) days after the 

Federal Register publication of the final 

rules. The Commission expects all SDR 

applicants to fully comply with the final 

rules. The Commission requests 

comment on the nature and length of 

implementation and phase-in periods 

that would be appropriate to allow 

potential SDRs and market participants 

time to adapt to the new swaps 

regulatory structure and implement the 

Proposal in an efficient and orderly 

manner. 

Request for Comment. The 

Commission requests comment on the 

questions set forth below. 

(1) Is a phase-in period appropriate 

(especially for existing trade repositories 

that may seek SDR registration)? If so, 

how long should such phase-in period 

be? 

(2) Conversely, should all applicants 

for SDR registration have to demonstrate 

compliance with the final rules to 

receive registration? Why or why not? 

IV. General Request For Comments 

In addition to any specific request for 

comment included above, the 

Commission generally requests 

comment on all aspects of the Proposal. 

Interested persons are invited to submit 

written presentations of views, data, and 

arguments concerning the Proposal. 

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Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Proposed Rules 80923 

138 44 U.S.C. 3501 et seq. 

139The Securities and Exchange Commission 

(‘‘SEC’’) calculated in 2008 that Form SIP takes 400 

hours to complete. Submission for OMB Review; 

Comment Request, 73 FR 34060 (June 16, 2008) 

(outlining the most recent SEC calculations 

regarding the PRA burdens for Form SIP). While the 

requirements of Form SIP and Form SDR are not 

identical, the Commission believes that there is 

sufficient similarity for PRA purposes that the 

burden would be roughly equivalent. 

140An amendment to Form SDR may occur 

pending SDR registration. 

141Prior to filing a notice to withdraw or vacate 

an application to register or filing for withdrawal 

of registration status, an SDR shall file an amended 

Form SDR to update any inaccurate information on 

the registration form (such burden hours associated 

with amendments to Form SDR are calculated 

above). 

142The initial burden hours imposed will 

increase for SDRs located outside the United States. 

V. Related Matters 

A. Paperwork Reduction Act 

Provisions of proposed part 49 would 

result in new ‘‘collection of information’’ 

requirements within the meaning of the 

Paperwork Reduction Act of 1995 

(‘‘PRA’’).138 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 Office of Management 

and Budget (OMB) control number. The 

Commission therefore is submitting this 

proposal to 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 ‘‘Part 49— 

Swap data repositories; registration and 

regulatory requirements,’’ 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 pursuant to the Privacy Act of 

1974, 5 U.S.C. 552a. 

1. Summary of the Proposed 

Requirements 

The proposed regulations would 

establish a new registered entity called 

a swap data repository (‘‘SDR’’), which 

would gather swap data and make such 

data available to the Commission and 

other regulators. The Commission 

believes there will be approximately 15 

entities seeking registration as SDRs. 

2. Information Provided by Reporting 

Entities 

As noted above, proposed part 49 will 

impose multiple new collections of 

information requirements within the 

meaning of the PRA. First, proposed 

part 49 would impose a registration 

requirement on all SDRs. This 

registration requirement is composed of 

a one-time initial registration as well as 

amendments to registration documents 

previously submitted to the Commission 

by an SDR. Second, proposed part 49 

imposes a reporting requirement on 

registered SDRs. As part of this 

reporting requirement, SDRs are 

required to provide access to the swap 

data it holds to either the Commission 

or one of the Commission’s designees. 

Additionally, an annual compliance 

report must be submitted by an SDR’s 

CCO. Third, proposed part 49 imposes 

a recordkeeping requirement for 

registered SDRs whereby a registered 

SDR is required to maintain records of 

all swap transaction data for a period of 

at least five years after a swap expires 

and must maintain a written copy of 

written policies and procedures, 

including the code of ethics and 

conflicts of interest policies in 

furtherance of compliance with the Act 

and Commission regulations and any 

records relevant to the annual 

compliance report. Lastly, proposed part 

49 imposes a disclosure requirement 

whereby registered SDRs must provide 

written disclosures before accepting any 

swap data from a reporting entity or 

upon a reporting entity’s request. 

Registration Requirement. Under 

proposed § 49.3, SDRs would be 

required to demonstrate compliance 

with specified registration requirements 

on Form SDR. The proposed collection 

for this one-time initial registration is 

estimated to involve 400 burden hours 

per SDR. The Commission bases this 

estimate on consultation with other 

regulators involving similar 

collections.139 As noted above, the 

Commission believes 15 entities will be 

subject to this burden. Accordingly, the 

Commission estimates that the one-time 

initial registration burden for all SDRs 

will be approximately 6,000 annual 

burden hours. 

Additionally, under proposed § 49.3, 

registered SDRs must amend Form SDR 

annually (i.e., within 60 days after the 

end of each calendar year of such SDR) 

as well as when certain information 

specified on the Form SDR becomes 

inaccurate.140 The Commission 

estimates that the hourly burden for 

complying with each amendment 

requirement will be 15 burden hours per 

amendment for each SDR. The 

Commission estimates that respondents 

will be required to file, on average, 

including the mandatory annual 

amendment, three amendments per 

year, for an ongoing annualized burden 

of approximately 45 hours per SDR and 

approximately 675 burden hours for all 

SDRs. 

In addition to amending Form SDR, 

the following filing requirements may 

be imposed on an SDR in the following 

circumstances.141 Under proposed 

§ 49.3, a SDR may withdraw its 

registration application by filing an 

electronic request with the Secretary of 

the Commission at the Commission’s 

Washington, DC office. In the event an 

SDR is registered and seeks to withdraw 

from registration, proposed § 49.4 would 

require such SDR to give notice to the 

Commission, in writing, requesting that 

its registration as an SDR be withdrawn. 

Such notice must be made at least 90 

days prior to the date named therein as 

the date when the withdrawal of 

registration shall take effect. The 

Commission estimates the burden hours 

associated with these filings, which are 

in addition to and separate from the 

requirement to amend Form SDR, to be 

10 hours per filing. Additionally, the 

Commission estimates that such filings 

will occur once over a period of two 

years for all registered SDRs. Therefore, 

the average burden hours annualized for 

all SDRs are expected to be 5 burden 

hours. 

If an SDR is located outside of the 

United States and is seeking to register, 

proposed § 49.7 requires such SDR to, in 

addition to filing a Form SDR, provide 

the Commission with an opinion of 

counsel that the SDR, as a matter of law, 

is able to provide the Commission with 

prompt access to the book and records 

of such SDR and that the SDR can 

submit to onsite inspection and 

examination by the Commission. The 

Commission estimates that the hourly 

burden for complying with each opinion 

of counsel will be 20 burden hours per 

opinion for each SDR. The Commission 

estimates that five SDRs will be located 

outside the United States and therefore 

the aggregate burden hours associated 

with this requirement is estimated to be 

100 annual burden hours for those 

SDRs. 

Therefore, the total number of annual 

burden hours estimated to be required 

by the proposed regulations for 

purposes of registration is 6,000 hours 

initially (Form SDR) 142 and 680 hours 

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80924 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Proposed Rules 

on an ongoing basis for any additional 

filings. 

Reporting Requirements. Under 

proposed § 49.22, chief compliance 

officers (‘‘CCOs’’) of registered SDRs 

would be required to submit an annual 

compliance report that contains a 

description of the SDR’s written policies 

and procedures, including those related 

to the code of ethics, conflicts of 

interest, and compliance with Section 

21(c) core principles. If any material 

error is discovered in the annual 

compliance report, the CCO must 

promptly file an amendment with the 

Commission to correct such material 

error or omission. An amendment shall 

contain the oath or certification required 

by proposed § 49.22(e)(7) that, to the 

best of the CCO’s knowledge and 

reasonable belief, and under penalty of 

law, the annual compliance report is 

accurate and complete. Based on the 

Commission’s discussions with industry 

and other regulators, the Commission 

estimates that these reports (and any 

amendments which may be necessary) 

are estimated to involve an average of 5 

annual burden hours per respondent per 

year, for an aggregate of 75 aggregate 

annual burden hours. 

A CCO would also be responsible 

under proposed § 49.22 for, among other 

things, establishing procedures for the 

remediation of noncompliance issues, 

and establishing and following 

appropriate procedures for the handling, 

management response, remediation, 

retesting, and closing of noncompliance 

issues. The Commission estimates that 

these two requirements will require 520 

hours to create and 120 hours to 

administer per year per respondent, for 

a total burden of 7800 hours initially 

and 1800 hours on average, annually. 

Under proposed § 49.10, SDRs would 

be required to establish, maintain, and 

enforce policies and procedures for the 

reporting of swap data of the SDR and 

shall accept and promptly record all 

swap data in its selected asset class and 

other regulatory information that is 

required to be reported pursuant to part 

45. Once such swap data is accepted, 

proposed § 49.17 would require an SDR 

to provide direct electronic access to the 

Commission or its designees and, 

pursuant to proposed § 49.17(d), make 

such data available to other parties, 

including other regulators (i.e., 

Appropriate Domestic Regulators and 

Appropriate Foreign Regulators). In the 

event an Appropriate Domestic 

Regulator or Appropriate Foreign 

Regulator files a request to gain access 

to the swaps data maintained by an 

SDR, proposed § 49.17 provides that the 

registered SDR must notify the 

Commission electronically and in a 

format specified by the Secretary of the 

Commission. Under proposed § 49.16, 

SDRs would be required to develop 

written policies and procedures to 

protect the confidentiality of data, and, 

under proposed § 49.11, ensure that 

submitted data is accurate. Prior to an 

Appropriate Domestic Regulator or 

Appropriate Foreign Regulator receiving 

the data, proposed § 49.17 requires that 

a ‘‘Confidentiality and Indemnification 

Agreement’’ between the Appropriate 

Domestic Regulator or Appropriate 

Foreign Regulator and the registered 

SDR be executed. Proposed §§ 49.23 and 

49.24 specify the reporting requirements 

for a registered SDR’s emergency 

policies and procedures and system 

safeguards. Proposed § 49.23 would 

require registered SDRs to establish 

procedures for the exercise of 

emergency authority in the event of an 

emergency. A registered SDR policies 

and procedures shall include provisions 

to notify the Commission as soon as 

reasonably practicable of any exercise of 

emergency authority. When notifying 

the Commission of any exercise of 

emergency authority, a SDR shall 

explain the reasons for taking such 

emergency action, explain how conflicts 

of interest were minimized, and 

document the decision-making process. 

Underlying documentation shall be 

made available to the Commission upon 

request. Proposed § 49.24 provides that 

a registered SDR must maintain a BC– 

DR plan which can be invoked in the 

case of an emergency. A registered SDR 

shall provide to the Commission, upon 

request, current copies of its BC–DR 

plan and other emergency procedures, 

its assessments of its operational risk 

and other documents requested by 

Commission staff for purpose of 

maintaining a current profile of the 

SDR’s automated systems. Proposed 

§ 49.24 also requires a registered SDR to 

notify the Commission staff of: (1) All 

system malfunction; (2) cyber security 

incidents or targeted threats that 

actually or potentially jeopardize 

automated system operation, reliability, 

security, or capacity; and (3) any 

activation of the SDR’s BD–DR plan. 

Additionally, an SDR shall give the 

Commission staff timely notice of all (1) 

planned changes to automated systems 

that may impact the reliability, security, 

or adequate scalable capacity of such 

systems; and (2) planned changes to the 

SDR’s program of risk analysis and 

oversight. The Commission estimates 

that the start-up burden associated with 

the reporting requirements in this 

paragraph will be 40,000 hours per 

respondent for a total of 600,000 

aggregate burden hours for all 

respondents. The Commission further 

estimates that the total ongoing annual 

burden of these systems to be 15,000 

hours per respondent for a total of 

225,000 aggregate burden hours for all 

respondents. 

Proposed § 49.25 would require a 

registered SDR to report to the 

Commission (and provide sufficient 

documentation to substantiate the 

calculations made therein) the amount 

of financial resources available to the 

SDR to meet the requirements set forth 

in proposed § 49.25, the value of each 

financial resource available, and 

provide a financial statement, including 

the balance sheet, income statement, 

and statement of cash flows of the 

registered SDR. In addition to providing 

documentation of the methodology used 

to compute its financial requirement, a 

registered SDR must also provide copies 

of any agreement establishing or 

amending a credit facility, insurance 

coverage, or other arrangement 

evidencing or otherwise supporting the 

SDR’s conclusions. The Commission 

estimates the financial statement will 

result in 200 annual burden hours per 

SDR for 3000 aggregate annual burden 

hours. 

Recordkeeping Requirement. Under 

proposed § 49.12, registered SDRs, 

which are estimated to be 

approximately 15 entities, would be 

required to maintain the swap 

transaction data it receives for a period 

of not less than five (5) years after the 

applicable swap expires, during which 

time the records must be readily 

available by the SDR and available to 

the Commission via real-time electronic 

access. Thereafter, the swap data must 

be archived and retrievable by the SDR 

within 3 business days. In addition to 

requiring SDRs to maintain records of 

swap transaction and pricing data, the 

proposed Regulations impose an 

additional recordkeeping requirement 

on SDRs whereby they must maintain: 

(a) A copy of written policies and 

procedures, including the code of ethics 

and conflicts of interest policies in 

furtherance of compliance with the Act 

and Commission regulations, and (b) 

any records relevant to the annual 

compliance report. These proposed 

recordkeeping obligations are estimated 

to involve, initially, 300 burden hours, 

for an aggregate of 4500 annual burden 

hours. The Commission further 

estimates that the ongoing annual 

burden would be 254 hours per 

respondent for a total ongoing annual 

burden of 3810 hours. 

Disclosure Requirements. Proposed 

§ 49.26 provides that before accepting 

any swap data from a reporting entity or 

upon a reporting entity’s request, a 

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143 7 U.S.C. 19(a). 144 7 U.S.C. 19. 

registered SDR shall furnish to the 

reporting entity a disclosure document. 

This disclosure document must contain 

written information which reasonably 

enables the reporting entity to identify 

and accurately evaluate the risks and 

costs associated with using the services 

of the SDR. The proposed disclosure 

obligation is estimated to involve a onetime initial burden of 100 hours per 

respondent (i.e., preparation of template 

disclosure document), for a total initial 

burden of 1,500 hours. The Commission 

expects this requirement will result in 

an ongoing annual burden of one hour 

per respondent, for a total annual 

burden of 15 hours for all registered 

SDRs. 

3. 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 

collection of information is 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 collection 

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 collection 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 OMB’s 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 

concerning the collection of information 

between 30 and 60 days after 

publication of this release in the Federal 

Register. 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. Nothing in the foregoing 

affects the deadline enumerated above 

for public comment to the Commission 

on the proposed rules. 

B. Cost-Benefit Analysis 

Section 15(a) of the CEA 143 requires 

that the Commission, before 

promulgating a regulation or issuing an 

order, to consider the costs and benefits 

of its action. By its terms, Section 15(a) 

of the CEA does not require the 

Commission to quantify the costs and 

benefits of a new regulation or to 

determine whether the benefits of the 

regulation outweigh its costs. Rather, 

Section 15(a) of the CEA simply requires 

the Commission to ‘‘consider the costs 

and benefits’’ of its action. 

Section 15(a) of the CEA further 

specifies that costs and benefits shall be 

evaluated in light of the following 

considerations: (1) Protection of market 

participants and the public; (2) 

efficiency and competition; (3) financial 

integrity of the futures markets and 

price discovery; (4) sound risk 

management practices; and (5) other 

public interest considerations. 

Accordingly, the Commission could, in 

its discretion, give greater weight to any 

one of the five considerations and could 

determine that, notwithstanding its 

costs, a particular regulation was 

necessary or appropriate to protect the 

public interest or to effectuate any of the 

provisions or to accomplish any of the 

purposes of the Act. 

1. Costs 

The Commission has determined that 

if the proposed regulations are not 

enacted, there will be a continued lack 

of transparency in the swaps market for 

both market participants and regulators. 

Increased costs to market participants 

will result from inefficiencies in the 

market related to price discovery and 

risk management and the inability of 

regulators to monitor systemic risk. This 

will ultimately result in greater market 

risk for all market participants and 

greater systemic risk for the larger 

economy. 

2. Benefits 

The Commission has determined that 

the proposed regulations would benefit 

market participants and the public by 

improving governance arrangements to 

prevent conflicts of interests that if not 

addressed, would serve the interests of 

one group of constituents over other 

groups, including market participants 

and the public. Additionally, the 

proposed regulations will improve 

efficiency and competition by 

identifying and mitigating conflicts of 

interests, which will lead to improved 

efficiency in decision-making on the 

one hand, and benefit competition by 

increasing open access to markets, on 

the other hand. The proposed 

regulations will also spur competition 

in the data and trade repository industry 

by setting forth clear registration 

guidelines and requirements for 

becoming SDRs and requiring more 

transparency and access for existing 

repositories. Enhanced transparency in 

the markets will also facilitate price 

discovery, which will decrease risk and, 

in turn, increase financial integrity. The 

increased transparency resulting from 

the proposed rules will lead to 

improved risk management practices, 

and the new governance arrangements 

more effectively balance different 

interests so that the risks presented by 

a ‘‘control group’’ or other interests will 

not dominate decision-making in the 

organization. Lastly, the proposed rules 

will give the Commission and other 

federal regulators access to data 

accepted by registered SDRs. Such 

access will promote greater risk 

management and give regulators a better 

measure of systematic risk throughout 

the financial markets. The proposed 

rules, for the reasons cited above, 

operate in the best interests of the 

public. 

3. Public Comment 

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 this proposal with their 

comment letters. 

C. Antitrust Considerations 

Section 15(b) of the Act requires ‘‘[t]he 

Commission [to] take into consideration 

the public interest to be protected by the 

antitrust laws and endeavor to take the 

least anticompetitive means of 

achieving the objectives of this Act, as 

well as the policies and purposes of this 

Act, in issuing any order or adopting 

any Commission rule or regulation 

***’’ 144

The Commission does not anticipate 

that these proposed regulations will 

result in anticompetitive behavior. 

However, because these proposed 

regulations are creating a new registered 

entity for a new market (i.e., swaps 

market), the Commission encourages 

comments from the public on this 

regulation’s potential anticompetitive 

nature. 

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145 5 U.S.C. 601 et seq. 

146 5 U.S.C. 601 et seq. 

147Policy Statement and Establishment of 

Definitions of ‘‘Small Entities’’ for Purposes of the 

Regulatory Flexibility Act, 47 FR 18,618 (Apr. 30, 

1982). 

148 Id. 

149 Id. at note 3. 

D. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(‘‘RFA’’) 145 requires that agencies 

consider whether the regulations 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.146 The proposed 

Regulations by the Commission will 

affect only SDRs, which will comprise 

a new category of registered entity. 

Accordingly, the Commission has not 

previously addressed the question of 

whether SDRs are, in fact, small entities 

for purposes of the RFA. 

The Commission has previously 

established certain definitions of ‘‘small 

entities’’ to be used in evaluating the 

impact of its rules under the RFA.147

The Commission previously determined 

that derivatives clearing organizations 

(‘‘DCOs’’) are not small entities because 

they clear contracts executed on 

contract markets such as designated 

contract markets (‘‘DCMs’’). The 

Commission’s decision was based in 

part on its previous determination that 

DCMs are not small entities because of 

‘‘the central role’’ they play in ‘‘the 

regulatory scheme concerning futures 

trading.’’ 148 Because of the ‘‘importance 

of futures trading in the national 

economy,’’ to register as a DCM, a board 

of trade has to meet stringent 

requirements set forth in Section 5 of 

the Act, 7 U.S.C. 7.149 DCOs are subject 

to similar stringent requirements, 

including substantial financial resource 

requirements, set forth in Section 5b of 

the Act, 7 U.S.C. 7a–1. 

The Dodd-Frank Act defines a SDR as 

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. Similar to DCOs and 

DCMs, SDRs will play a central role 

both in the regulatory scheme for swaps 

trading and in the overall market for 

swap transactions. Additionally, the 

amount and complexity of swap 

transaction data expected to be reported, 

maintained and disseminated by SDRs 

is expected to require significant 

financial resources to build the systems 

necessary to comply with the statutory 

mandates set forth in the Dodd-Frank 

Act. SDRs will receive data from DCOs 

and DCMs, amongst others. 

Additionally, SDRs will be required to 

maintain certain minimum financial 

resources to perform its statutory duties 

set forth in proposed § 49.9 and the core 

principles set forth in proposed § 49.19. 

Although the financial requirements 

will vary for SDRs (i.e., an SDR’s 

financial resources shall be considered 

sufficient if their value is at least equal 

to a total amount that would enable the 

SDR, or applicant for registration, to 

cover its operating costs for a period of 

at least one year, calculated on a rolling 

basis), for the basic purpose of the 

financial integrity of the swaps market, 

the Commission can make no size 

distinction among registered SDRs. The 

Commission believes that the financial 

resources required to be registered as an 

SDR and to meet the statutory 

obligations of an SDR would essentially 

prohibit ‘‘small entities.’’ Therefore, for 

purposes of the RFA, the Commission is 

hereby determining that SDRs, like 

DCOs and DCMs, are not ‘‘small 

entities.’’ 

Thus, the Chairman, on behalf of the 

Commission, hereby certifies pursuant 

to 5 U.S.C. 605(b) that the proposed 

rules, will not have a significant impact 

on a substantial number of small 

entities. 

VI. List of Subjects 

List of Subjects in 17 CFR Part 49 

Swap data repositories; registration 

and regulatory requirements. 

In consideration of the foregoing, and 

pursuant to the authority in the 

Commodity Exchange Act, as amended, 

and in particular Sections 8a(5) and 21 

of the Act, the Commission hereby 

proposes to amend Chapter I of Title 17 

of the Code of Federal Regulation by 

adding a new part 49 as follows: 

PART 49—SWAP DATA 

REPOSITORIES 

Sec 

49.1 Scope. 

49.2 Definitions. 

49.3 Procedures for registration. 

49.4 Withdrawal from registration. 

49.5 Equity interest transfers. 

49.6 Registration of successor entities. 

49.7 Swap data repositories located in 

foreign jurisdictions. 

49.8 Procedures for implementing 

registered swap data repository rules. 

49.9 Duties of registered swap data 

repositories. 

49.10 Acceptance of data. 

49.11 Confirmation of data accuracy. 

49.12 Swap data repository recordkeeping 

requirements. 

49.13 Monitoring, screening and analyzing 

swap data. 

49.14 Monitoring, screening and analyzing 

end-user clearing exemption claims by 

individual and affiliated entities. 

49.15 Real-time public reporting of swap 

data. 

49.16 Privacy and confidentiality 

requirements of swap data repositories. 

49.17 Access to SDR data. 

49.18 Confidentiality and indemnification 

agreement. 

49.19 Core principles applicable to 

registered swap data repositories. 

49.20 Governance arrangements (Core 

Principle 2). 

49.21 Conflicts of interest (Core Principle 

3). 

49.22 Chief compliance officer. 

49.23 Emergency policies and procedures. 

49.24 System safeguards. 

49.25 Financial resources. 

49.26 Disclosure requirements of swap data 

repositories. 

49.27 Access and fees. 

Appendix A to part 49—Form SDR 

Authority: 7 U.S.C. 12a and 24a, as 

amended by Title VII of the Wall Street 

Reform and Consumer Protection Act, Pub. L. 

111–203, 124 Stat. 1376 (2010), unless 

otherwise noted. 

§ 49.1 Scope. 

The provisions of this part apply to 

any swap data repository as defined 

under Section 1a(48) of the Act which 

is registered or is required to register as 

such with the Commission pursuant to 

Section 21(a) of the Act. 

§ 49.2 Definitions. 

(a) As used in this part: 

(1) Affiliate. The term ‘‘affiliate’’ 

means a person that directly, or 

indirectly, controls, is controlled by, or 

is under common control with, the swap 

data repository. 

(2) Asset Class. The term ‘‘asset class’’ 

means the particular broad category of 

goods, services or commodities 

underlying a swap. The asset classes 

include credit, equity, interest rates, 

currency, other commodities, and such 

other asset classes as may be determined 

by the Commission. 

(3) Control. The term ‘‘control’’ 

(including the terms ‘‘controlled by’’ and 

‘‘under common control with’’) means 

the possession, direct or indirect, of the 

power to direct or cause the direction of 

the management and policies of a 

person, whether through the ownership 

of voting securities, by contract, or 

otherwise. 

(4) Foreign Regulator. The term 

‘‘Foreign Regulator’’ means a foreign 

futures authority as defined in Section 

1a(26) of the Act, foreign financial 

supervisors, foreign central banks and 

foreign ministries. 

(5) Commercial Use. The term 

‘‘commercial use’’ means the use of swap 

data held and maintained by a 

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registered swap data repository for a 

profit or business purposes. The use of 

swap data for regulatory purposes and/ 

or responsibilities by a registered swap 

data repository would not be considered 

a commercial use regardless of whether 

the registered swap data repository 

charges a fee for reporting such swap 

data. 

(6) Market Participant. The term 

‘‘market participant’’ means any person 

participating in the swap market, 

including, but not limited to, designated 

contract markets, derivatives clearing 

organizations, swaps execution 

facilities, swap dealers, major swap 

participants, and any other 

counterparties to a swap transaction. 

(7) Non-affiliated third party. The 

term ‘‘non-affiliated third party’’ means 

any person except: 

(i) The swap data repository, 

(ii) The swap data repository’s 

affiliate, or 

(iii) A person employed by a swap 

data repository and any entity that is not 

the swap data repository’s affiliate (and 

‘‘non-affiliated third party’’ includes 

such entity that jointly employs the 

person). 

(8) Person Associated with a Swap 

Data Repository. The term ‘‘person 

associated with a swap data repository’’ 

means: 

(i) Any partner, officer, or director of 

such swap data repository (or any 

person occupying a similar status or 

performing similar functions); 

(ii) Any person directly or indirectly 

controlling, controlled by, or under 

common control with such swap data 

repository; 

(iii) Or any employee of such swap 

data repository. 

(9) Position. The term ‘‘position’’ 

means the gross and net notional 

amounts of open swap transactions 

aggregated by one or more attributes, 

including, but not limited to, the: 

(i) Underlying instrument; 

(ii) Index, or reference entity; 

(iii) Counterparty; 

(iv) Asset class; 

(v) Long risk of the underlying 

instrument, index, or reference entity; 

and 

(vi) Short risk of the underlying 

instrument, index, or reference entity. 

(10) Reporting Entity. The term 

‘‘reporting entity’’ means those entities 

that are required to report swap data to 

a registered swap data repository. These 

reporting entities include designated 

contract markets, swaps execution 

facilities, derivatives clearing 

organizations, swap dealers, major swap 

participants and certain end-users. 

(11) Section 8 Material. The term 

‘‘Section 8 Material’’ means the business 

transactions, trade data, or market 

positions of any person and trade 

secrets or names of customers. 

(12) Swap Data. The term ‘‘swap data’’ 

means the specific data elements and 

information set forth in part 45 of this 

chapter that is required to be reported 

by a reporting entity to a registered 

swap data repository. 

(13) SDR Information. The term ‘‘SDR 

Information’’ means any information 

that the swap data repository maintains. 

(14) Registered Swap Data Repository. 

The term ‘‘registered swaps data 

repository’’ means a swaps data 

repository that is registered under 

Section 21 of the Act. 

(15) Independent Perspective. The 

term ‘‘independent perspective’’ means a 

viewpoint that is impartial regarding 

competitive, commercial, or industry 

concerns and contemplates the effect of 

a decision on all constituencies 

involved. 

(b) Defined Terms. Capitalized terms 

not defined in this part shall have the 

meanings assigned to them in § 1.3 of 

this chapter. 

§ 49.3 Procedures for registration. 

(a) Application Procedures. (1) An 

applicant, person or entity desiring to be 

registered as a swap data repository 

shall file electronically an application 

for registration on Form SDR provided 

in appendix A to this part, with the 

Secretary of the Commission at its 

headquarters in Washington, DC at 

submissions@cftc.gov in accordance 

with the instructions contained therein. 

(2) The application shall include 

information sufficient to demonstrate 

compliance with core principles 

specified in Section 21 of the Act and 

the regulations thereunder. Form SDR 

consists of instructions, general 

questions and a list of Exhibits 

(documents, information and evidence) 

required by the Commission in order to 

determine whether an applicant is able 

to comply with the core principles. An 

application will not be considered to be 

materially complete unless the 

applicant has submitted, at a minimum, 

the exhibits as required in Form SDR. If 

the application is not materially 

complete, the Commission shall notify 

the applicant that the application will 

not be deemed to have been submitted 

for purposes of the 180-day review 

procedures. 

(3) 180–Day Review Procedures. The 

Commission will review the application 

for registration as a swap data repository 

within 180 days of the date of the filing 

of such application. At or prior to the 

conclusion of the 180-day period, the 

Commission will either by order grant 

registration; extend, by order, the 180- 

day review period for good cause; or 

deny the application for registration as 

a swap data repository. The 180-day 

review period shall commence once a 

completed submission on Form SDR is 

submitted to the Commission. The 

determination of when such submission 

on Form SDR is complete shall be at the 

sole discretion of the Commission. If 

deemed appropriate, the Commission 

may grant registration as a swap data 

repository subject to conditions. If the 

Commission denies an application for 

registration as a swap data repository, it 

shall specify the grounds for such 

denial. In the event of a denial of 

registration for a swap data repository, 

any person so denied shall be afforded 

an opportunity for a hearing before the 

Commission. 

(4) Standard for Approval. The 

Commission shall grant the registration 

of a swap data repository if the 

Commission finds that such swap data 

repository is appropriately organized, 

and has the capacity, to ensure the 

prompt, accurate and reliable 

performance of its functions as a swap 

data repository, comply with any 

applicable provisions of the Act and 

regulations thereunder, carry out its 

functions in a manner consistent with 

the purposes of Section 21 of the Act 

and the regulations thereunder, and 

operate in a fair, equitable and 

consistent manner. The Commission 

shall deny registration of a swap data 

repository if it appears that the 

application is materially incomplete; 

fails in form or substance to meet the 

requirements of Section 21 of the Act 

and part 49; or is amended or 

supplemented in a manner that is 

inconsistent with this § 49.3. The 

Commission shall notify the applicant 

seeking registration that the 

Commission is denying the application 

setting forth the deficiencies in the 

application, and/or the manner in 

which the application fails to meet the 

requirements of this part. 

(5) Amendments and Annual Filing. If 

any information reported on Form SDR 

or in any amendment thereto is or 

becomes inaccurate for any reason, 

whether before or after the application 

for registration has been granted, the 

swap data repository shall promptly file 

an amendment on Form SDR updating 

such information. In addition, the swap 

data repository shall annually file an 

amendment on Form SDR within 60 

days after the end of each calendar year 

of such swap data repository. 

(6) Service of Process. Each swap data 

repository shall designate and authorize 

on Form SDR an agent in the United 

States, other than a Commission official, 

who shall accept any notice or service 

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of process, pleadings, or other 

documents in any action or proceedings 

brought against the swap data repository 

to enforce the Act and the regulations 

thereunder. 

(b) Provisional Registration. The 

Commission, upon the request of an 

applicant, may grant provisional 

registration of a swap data repository if 

such applicant is in substantial 

compliance with the standards set forth 

in paragraph (a)(4) of this section. Such 

provisional registration of a swap data 

repository shall expire on the earlier of: 

the date that the Commission grants or 

denies registration of the swap data 

repository; or the date that the 

Commission rescinds the temporary 

registration of the swap data repository. 

This paragraph (b) of this section shall 

terminate within 365 days of the 

effectiveness of this Regulation. A 

provisional registration granted by the 

Commission does not affect the right of 

the Commission to grant or deny 

permanent registration as provided 

under paragraph (a)(3) of this section. 

(c) Withdrawal of Application for 

Registration. An applicant for 

registration may withdraw its 

application submitted pursuant to 

paragraph (a) of this section by filing 

with the Commission such a request. 

Withdrawal of an application for 

registration shall not affect any action 

taken or to be taken by the Commission 

based upon actions, activities, or events 

occurring during the time that the 

application for registration was pending 

with the Commission, and shall not 

prejudice the filing of a new application 

by such applicant. 

(d) Reinstatement of Dormant 

Registration. Before accepting or reaccepting swap transaction data, a 

dormant registered swap data repository 

as defined in § 40.1(e) of this chapter 

shall reinstate its registration under the 

procedures set forth in paragraph (a) of 

this section; provided, however, that an 

application for reinstatement may rely 

upon previously submitted materials 

that still pertain to, and accurately 

describe, current conditions. 

(e) Delegation of Authority. (1) The 

Commission hereby delegates, until it 

orders otherwise, to the Director of the 

Division of Market Oversight or the 

Director’s delegates, with the 

consultation of the General Counsel or 

the General Counsel’s delegates, the 

authority to notify an applicant seeking 

registration as a swap data repository 

pursuant to Section 21 of the Act that 

the application is materially incomplete 

and the 180-day period review period is 

extended. 

(2) The Director of the Division of 

Market Oversight may submit to the 

Commission for its consideration any 

matter which has been delegated in this 

paragraph. 

(3) Nothing in this paragraph 

prohibits the Commission, at its 

election, from exercising the authority 

delegated in paragraph (e)(1) of this 

section. 

(f) Request for Confidential 

Treatment. An applicant for registration 

may request confidential treatment for 

materials submitted in its application as 

set forth in § 145.9 of this chapter. The 

applicant shall identify with 

particularity information in the 

application that will be subject to a 

request for confidential treatment. 

§ 49.4 Withdrawal from registration. 

(a)(1) A registered swap data 

repository may withdraw its registration 

by giving notice in writing to the 

Commission requesting that its 

registration as a swap data repository be 

withdrawn, which notice shall be 

served at least ninety days prior to the 

date named therein as the date when the 

withdrawal of registration shall take 

effect. The request to withdraw shall be 

made by a person duly authorized by 

the registrant and shall specify: 

(i) The name of the registrant for 

which withdrawal of registration is 

being requested; 

(ii) The name, address and telephone 

number of the swap data repository that 

will have custody of data and records of 

the registrant; 

(iii) The address where such data and 

records will be located; and 

(iv) A statement that the custodial 

swap data repository is authorized to 

make such data and records available in 

accordance with § 1.44. 

(2) Prior to filing a request to 

withdraw, a registered swap data 

repository shall file an amended Form 

SDR to update any inaccurate 

information. A withdrawal of 

registration shall not affect any action 

taken or to be taken by the Commission 

based upon actions, activities or events 

occurring during the time that the 

facility was designated by the 

Commission. 

(b) A notice of withdrawal from 

registration filed by a swap data 

repository shall become effective for all 

matters (except as provided in this 

paragraph (b)) on the 60th day after the 

filing thereof with the Commission, 

within such longer period of time as to 

which such swap data repository 

consents or which the Commission, by 

order, may determine as necessary or 

appropriate in the public interest. 

(c) Revocation of Registration for 

False Application. If, after notice and 

opportunity for hearing, the 

Commission finds that any registered 

swap data repository has obtained its 

registration by making any false and 

misleading statements with respect to 

any material fact or has violated or 

failed to comply with any provision of 

the Act and regulations thereunder, the 

Commission, by order, may revoke the 

registration. Pending final 

determination whether any registration 

shall be revoked, the Commission, by 

order, may suspend such registration, if 

such suspension appears to the 

Commission, after notice and 

opportunity for hearing, to be necessary 

or appropriate and in the public 

interest. 

§ 49.5 Equity interest transfers. 

(a) Equity transfer notification. Upon 

entering into any agreement(s) that 

could result in an equity interest 

transfer of ten percent or more in the 

swap data repository, the swap data 

repository shall file a notification of the 

equity interest transfer with the 

Secretary of the Commission at its 

Washington, DC headquarters at 

submissions@cftc.gov and the Division 

of Market Oversight at 

DMOSubmissions@cftc.gov, no later 

than the business day, as defined in 

§ 40.1 of this chapter, following the date 

on which the swap data repository 

enters into a firm obligation to transfer 

the equity interest. The swap data 

repository shall also amend any 

information that is no longer accurate 

on Form SDR consistent with the 

procedures set forth in § 49.3 of this 

part. 

(b) Required information. The 

notification must include and be 

accompanied by: any relevant 

agreement(s), including any preliminary 

agreements; any associated changes to 

relevant corporate documents; a chart 

outlining any new ownership or 

corporate or organizational structure; a 

brief description of the purpose and any 

impact of the equity interest transfer; 

and a representation from the swap data 

repository that it meets all of the 

requirements of Section 21 of the Act 

and Commission regulations adopted 

thereunder. The swap data repository 

shall keep the Commission apprised of 

the projected date that the transaction 

resulting in the equity interest transfer 

will be consummated, and must provide 

to the Commission any new agreements 

or modifications to the original 

agreement(s) filed pursuant to this 

section. The swap data repository shall 

notify the Commission of the 

consummation of the transaction on the 

day in which it occurs. 

(c) Certification. (1) Upon a transfer of 

an equity interest of ten percent or more 

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in a registered swap data repository, the 

registered swap data repository shall file 

with the Secretary of the Commission at 

its Washington DC headquarters, at 

submissions@cftc.gov, and the Division 

of Market Oversight, at 

DMOSubmissions@cftc.gov, a 

certification that the registered swap 

data repository meets all of the 

requirements of Section 21 of the Act 

and Commission regulations adopted 

thereunder, no later than two business 

days, as defined in § 40.1 of this 

chapter, following the date on which the 

equity interest of ten percent or more 

was acquired. Such certification shall 

state whether changes to any aspects of 

the swap data repository’s operations 

were made as a result of such change in 

ownership, and include a description of 

any such change(s). 

(2) The certification required under 

this paragraph may rely on and be 

supported by reference to an application 

for registration as a swap data repository 

or prior filings made pursuant to a rule 

submission requirement, along with any 

necessary new filings, including new 

filings that provide any and all material 

updates of prior submissions. 

§ 49.6 Registration of successor entities. 

(a) In the event of a corporate 

transaction, such as a re-organization, 

merger, acquisition, bankruptcy or other 

similar corporate event, that creates a 

new entity, in which the swap data 

repository continues to operate, the 

swap data repository shall request a 

transfer of the registration, rules, and 

other matters, no later than 30 days after 

the succession. The registration of the 

predecessor shall be deemed to remain 

effective as the registration of the 

successor if the successor, within 30 

days after such succession, files an 

application for registration on Form 

SDR, and the predecessor files a request 

for vacation of registration on Form SDR 

provided, however, that the registration 

of the predecessor swap data repository 

shall cease to be effective 90 days after 

the application for registration on Form 

SDR is filed by the successor swap data 

repository. 

(b) If the succession is based solely on 

a change in the predecessor’s date or 

state of incorporation, form of 

organization, or composition of a 

partnership, the successor may, within 

30 days after the succession, amend the 

registration of the predecessor swap 

data repository on Form SDR to reflect 

these changes. This amendment shall be 

an application for registration filed by 

the predecessor and adopted by the 

successor. 

§ 49.7 Swap data repositories located in 

foreign jurisdictions. 

Any swap data repository located 

outside of the United States applying for 

registration pursuant to § 49.3 of this 

part shall certify on Form SDR and 

provide an opinion of counsel that the 

swap data repository, as a matter of law, 

is able to provide the Commission with 

prompt access to the books and records 

of such swap data repository and that 

the swap data repository can submit to 

onsite inspection and examination by 

the Commission. 

§ 49.8 Procedures for implementing 

registered swap data repository rules. 

(a) Request for Commission approval 

of rules. An applicant for registration as 

a swap data repository may request that 

the Commission approve under Section 

5c(c) of the Act, any or all of its rules 

and subsequent amendments thereto, 

prior to their implementation or, 

notwithstanding the provisions of 

Section 5c(c)(2) of the Act, at anytime 

thereafter, under the procedures of 

§ 40.5 of this chapter. 

(b) Notwithstanding the timeline 

under § 40.5(c) of this chapter, the rules 

of a swap data repository that have been 

submitted for Commission approval at 

the same time as an application for 

registration under § 49.3 of this part to 

reinstate the registration of a dormant 

registered swap data repository, as 

defined in § 40.1 of this chapter, will be 

deemed approved by the Commission 

no earlier than when the swap data 

repository is deemed to be registered or 

reinstated. 

(c) Self-certification of rules. Rules of 

a registered swap data repository not 

voluntarily submitted for prior 

Commission approval pursuant to 

paragraph (a) of this section must be 

submitted to the Commission with a 

certification that the rule or rule 

amendment complies with the Act or 

rules thereunder pursuant to the 

procedures of § 40.6 of this chapter, as 

applicable. 

§ 49.9 Duties of registered swap data 

repositories. 

(a) Duties. To be registered, and 

maintain registration, as a swap data 

repository, a registered swap data 

repository shall: 

(1) Accept data as prescribed in 

§ 49.10 for each swap; 

(2) Confirm, as prescribed in § 49.11, 

with both counterparties to the swap the 

accuracy of the data that was submitted; 

(3) Maintain, as prescribed in § 49.12, 

the data described in part 45 of the 

Commission’s Regulations in such form 

and manner as provided therein and in 

the Act and the rules and regulations 

thereunder; 

(4) Provide direct electronic access to 

the Commission (or any designee of the 

Commission, including another 

registered entity) as prescribed in 

§ 49.17; 

(5) Provide the information set forth 

in § 49.15 to comply with the public 

reporting requirements set forth in 

Section 2(a)(13) of the Act; 

(6) Establish automated systems for 

monitoring, screening, and analyzing 

swap data as prescribed in § 49.13; 

(7) Establish automated systems for 

the monitoring, screening and analyzing 

end-user clearing exemption claims as 

prescribed in § 49.14; 

(8) Maintain the privacy of any and all 

swap data and any other related 

information that the swap data 

repository receives from a reporting 

entity as prescribed in § 49.16; 

(9) Upon request of certain 

appropriate domestic and foreign 

regulators, provide access to swap data 

and information held and maintained by 

the swap data repository as prescribed 

in § 49.17; 

(10) Adopt and establish appropriate 

emergency policies and procedures as 

prescribed in § 49.23. 

(11) Designate an individual to serve 

as a chief compliance officer who shall 

comply with § 49.22; and 

(12) Subject itself to inspection and 

examination by the Commission. 

(b) This Regulation is not intended to 

limit, or restrict, the applicability of 

other provisions of the Act, including, 

but not limited to, Section 2(a)(13) of 

the Act and rules and regulations 

promulgated thereunder. 

§ 49.10 Acceptance of data. 

(a) A registered swap data repository 

shall establish, maintain, and enforce 

policies and procedures for the 

reporting of swap data to the registered 

swap data repository and shall accept 

and promptly record all swap data in its 

selected asset class and other regulatory 

information that is required to be 

reported pursuant to part 45 of this 

chapter by designated contract markets, 

derivatives clearing organizations, swap 

execution facilities, swap dealers, major 

swap participants and/or end-users. 

(1) Electronic Connectivity. For the 

purpose of accepting all swap data as 

required by part 45, the registered swap 

data repository shall adopt policies and 

procedures, including technological 

protocols, which provide for electronic 

connectivity between the swap data 

repository and designated contract 

markets, derivatives clearing 

organizations, swaps execution 

facilities, swap dealers, major swap 

participants and/or end-users who 

report such data. The technological 

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protocols established by a swap data 

repository shall provide for the receipt 

of swap creation data, swap 

continuation data, real-time public 

reporting data, and all other data and 

information required to be reported to 

such swap data repository. The swap 

data repository shall ensure that its 

mechanisms for data acceptance are 

reliable and secure. 

(b) A registered swap data repository 

shall set forth in its application for 

registration as described in § 49.3 the 

specific asset class or classes for which 

it will accept swaps data. If a swap data 

repository accepts swap data of a 

particular asset class, then it shall 

accept data from all swaps of that asset 

class. 

(c) A registered swap data repository 

shall establish policies and procedures 

reasonably designed to prevent any 

provision in a valid swap from being 

invalidated or modified through the 

confirmation or recording process of the 

swap data repository. 

(d) A registered swap data repository 

shall establish procedures and provide 

facilities for effectively resolving 

disputes over the accuracy of the swap 

data and positions that are recorded in 

the registered swap data repository. 

§ 49.11 Confirmation of data accuracy. 

(a) A registered swap data repository 

shall establish policies and procedures 

to ensure the accuracy of swap data and 

other regulatory information required to 

be reported by this part 49 that it 

receives from reporting entities or 

certain third party service providers 

such as confirmation or matching 

service providers acting on their behalf. 

(b) With respect to data and other 

regulatory information submitted by a 

reporting entity or certain third party 

service providers acting on a reporting 

entity’s behalf, the swap data repository 

shall confirm with both counterparties 

to the swap the accuracy of the data and 

information submitted. This 

requirement applies to all reported swap 

data except for data reported for 

purposes of real-time public reporting. 

(c) A registered swap data repository 

in connection with the process of 

confirming the accuracy of the data and 

information submitted shall 

communicate with both counterparties 

to the swap and receive 

acknowledgement of the data and 

information submitted as well as any 

correction of any errors. The 

acknowledgement and correction of 

errors shall pertain to all information 

submitted by either counterparty and 

any entity that has been delegated the 

reporting obligation. The swap data 

repository shall keep a record of 

corrected errors that is available upon 

request to the Commission. 

§ 49.12 Swap data repository 

recordkeeping requirements. 

(a) A registered swap data repository 

shall maintain its books and records in 

accordance with the requirements of 

§ 45.2 of this chapter regarding the swap 

data required to be reported to the swap 

data repository. 

(b) A registered swap data repository 

shall maintain swap data (including all 

historical positions) throughout the 

existence of the swap and for five years 

following final termination of the swap, 

during which time the records must be 

readily accessible by the swap data 

repository and available to the 

Commission via real-time electronic 

access; and in archival storage for which 

such swap data is retrievable by the 

swap data repository within three 

business days. 

(c) All records required to be kept 

pursuant to this Regulation shall be 

open to inspection upon request by any 

representative of the Commission, the 

United States Department of Justice, the 

Securities and Exchange Commission, 

or by any representative of a prudential 

regulator as authorized by the 

Commission. Copies of all such records 

shall be provided, at the expense of the 

swap data repository or person required 

to keep the record, to any representative 

of the Commission upon request, either 

by electronic means, in hard copy, or 

both, as requested by the Commission. 

(d) A registered swap data repository 

that accepts and disseminates swap 

transaction and pricing data shall 

comply with the real time public 

reporting and recordkeeping 

requirements prescribed in part 43 of 

this chapter. 

(e) A registered swap data repository 

shall establish policies and procedures 

to calculate positions for position limits 

and any other purpose as required by 

the Commission, for all persons with 

swaps that have not expired maintained 

by the registered swap data repository. 

§ 49.13 Monitoring, screening and 

analyzing swap data. 

(a) Duty to Monitor, Screen and 

Analyze Data. A registered swap data 

repository shall monitor, screen, and 

analyze all swap data in its possession 

in such a manner as the Commission 

may require. A swap data repository 

shall routinely monitor, screen, and 

analyze swap data for the purpose of 

any standing swap surveillance 

objectives which the Commission may 

establish as well as specific monitoring, 

screening, and analysis tasks based on 

ad hoc requests by the Commission. 

(b) Capacity to Monitor, Screen and 

Analyze Data. A registered swap data 

repository shall establish and maintain 

sufficient information technology, staff, 

and other resources to fulfill the 

requirements in this § 49.13 in a manner 

prescribed by the Commission. A swap 

data repository shall monitor the 

sufficiency of such resources at least 

annually, and adjust its resources as its 

responsibilities, or the volume of swap 

transactions subject to monitoring, 

screening, and analysis, increase. 

§ 49.14 Monitoring, screening and 

analyzing end-user clearing exemption 

claims by individual and affiliated entities. 

A registered swap data repository 

shall have automated systems capable of 

identifying, aggregating, sorting, and 

filtering all swap transactions that are 

reported to it which are exempt from 

clearing pursuant to Section 2(h)(7) of 

the Act. Such capabilities shall be 

applicable to any information provided 

to a swap data repository by or on behalf 

of an end user regarding how such end 

user meets the requirements Sections 

2(h)(7)(A)(i), 2(h)(7)(A)(ii), and 

2(h)(7)(A)(iii) of the Act and any 

Commission regulations thereunder. 

§ 49.15 Real-time public reporting of swap 

data. 

(a) Scope. The provisions of this 

§ 49.15 apply to real-time public 

reporting of swap data for off-facility 

swaps, as defined in part 43 of this 

chapter. 

(b) Systems to Accept and 

Disseminate Swap Data In Connection 

With Real-Time Public Reporting. A 

registered swap data repository shall 

establish such electronic systems as are 

necessary to accept and publicly 

disseminate real-time swap data 

submitted to meet the real-time public 

reporting obligations of part 43 of this 

chapter. Any electronic systems 

established for this purpose must be 

capable of accepting and publicly 

disseminating all data fields required by 

part 43 of this chapter. 

(c) Duty to Notify the Commission of 

Untimely Data. A registered swap data 

repository must notify the Commission 

of any swap transaction for which the 

real-time swap data was not received by 

the swap data repository within the time 

period required by § 43.3(a)(3). This 

notification must be submitted 

electronically to the Commission within 

forty-eight hours of when the swap data 

repository first receives an untimely 

real-time swap data report from one of 

the parties to the swap transaction. The 

notification submitted to the 

Commission must include all real-time 

swap data submitted for the relevant 

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swap transaction; identify the party to 

the swap that submitted the real-time 

swap data; and contain the date and 

time, to the nearest second, the real-time 

swap data was received by the swap 

data repository. 

§ 49.16 Privacy and confidentiality 

requirements of swap data repositories. 

(a) Each swap data repository shall: 

(1) Establish, maintain, and enforce 

written policies and procedures 

reasonably designed to protect the 

privacy and confidentiality of any and 

all SDR Information that is not subject 

to real-time public reporting set forth in 

part 43 of this chapter. Such policies 

and procedures shall include, but are 

not limited to, policies and procedures 

to protect the privacy and 

confidentiality of any and all SDR 

Information (except for data 

disseminated under part 43) that the 

swap data repository shares with 

affiliates and non-affiliated third parties; 

and 

(2) Establish and maintain safeguards, 

policies, and procedures reasonably 

designed to prevent the 

misappropriation or misuse, directly or 

indirectly, of: 

(i) Section 8 Material; 

(ii) Other SDR Information; and/or 

(iii) Intellectual property, such as 

trading strategies or portfolio positions, 

by the swap data repository or any 

person associated with the swap data 

repository. Such safeguards, policies, 

and procedures shall include, but are 

not limited to, 

(A) limiting access to such Section 8 

Material, other SDR Information, and 

intellectual property, 

(B) standards controlling persons 

associated with the swap data repository 

trading for their personal benefit or the 

benefit of others, and 

(C) adequate oversight to ensure 

compliance with this subparagraph. 

§ 49.17 Access to SDR data. 

(a) Purpose. This Section provides a 

procedure by which the Commission, 

other domestic regulators and foreign 

regulators may obtain access to the 

swaps data held and maintained by 

registered swap data repositories. 

Except as specifically set forth in this 

Regulation, the Commission’s duties 

and obligations regarding the 

confidentiality of business transactions 

or market positions of any person and 

trade secrets or names of customers 

identified in Section 8 of the Act are not 

affected. 

(b) Definitions. For purposes of this 

§ 49.17, the following terms shall be 

defined as follows: 

(1) Appropriate Domestic Regulator. 

The term ‘‘Appropriate Domestic 

Regulator’’ shall mean: 

(i) The Securities and Exchange 

Commission; 

(ii) Each prudential regulator 

identified in Section 1a(39) of the Act 

with respect to requests related to any 

of such regulator’s statutory authorities, 

without limitation to the activities listed 

for each regulator in Section 1a(39); 

(iii) The Financial Stability Oversight 

Council; 

(iv) The Department of Justice; 

(v) The Federal Reserve Bank of New 

York; 

(vi) The Office of Financial Research; 

and 

(vii) Any other person the 

Commission deems appropriate. 

(2) Appropriate Foreign Regulator. 

The term ‘‘Appropriate Foreign 

Regulator’’ shall mean those Foreign 

Regulators with an existing 

memorandum of understanding or other 

similar type of information sharing 

arrangement executed with the 

Commission and/or Foreign Regulators 

without an MOU as determined on a 

case-by-case basis by the Commission. 

(i) Filing Requirements. For those 

Foreign Regulators who do not currently 

have a memorandum of understanding 

with the Commission, the Commission 

has determined to provide the following 

filing process for those Foreign 

Regulators that may require data or 

information maintained by a registered 

swap data repository. The filing 

requirement set forth in this § 49.17 will 

assist the Commission in its analysis of 

whether a specific Foreign Regulator 

should be considered ‘‘appropriate’’ for 

purposes of Section 21(c)(7) of the 

Commodity Exchange Act. 

(A) The Foreign Regulator is required 

to file an application in the form and 

manner prescribed by the Commission. 

(B) The Foreign Regulator in its 

application is required to provide 

sufficient facts and procedures to permit 

the Commission to analyze whether the 

Foreign Regulator has appropriate 

confidentiality procedures and whether 

the Foreign Regulator is otherwise 

subject to local laws, regulations and/or 

customs that would require disclosure 

of information in contravention of the 

Act. 

(ii) The Commission in its analysis of 

Foreign Regulator applications shall be 

satisfied that any information 

potentially provided by a registered 

swap data repository will not be 

disclosed except in limited 

circumstances such as an adjudicatory 

action or proceeding involving the 

Foreign Regulator that are identified in 

Section 8 of the Act. 

(iii) The Commission reserves the 

right in connection with any 

determination of an ‘‘Appropriate 

Foreign Regulator’’ to revisit or reassess 

a prior determination consistent with 

the Act. 

(3) Direct Electronic Access. For the 

purposes of this regulation, the term 

‘‘direct electronic access’’ shall mean an 

electronic system, platform or 

framework that provides internet or 

web-based access to real-time swap 

transaction data. 

(c) Commission Access. 

(1) Direct Electronic Access. A 

registered swap data repository shall 

provide direct electronic access to the 

Commission or the Commission’s 

designee, including another registered 

entity, in order for the Commission to 

carry out its legal and statutory 

responsibilities under the Act and 

related regulations. 

(2) Monitoring Tools. A registered 

swap data repository is required to 

provide the Commission with proper 

tools for the monitoring, screening and 

analyzing of swap transaction data, 

including, but not limited to, web-based 

services, various software and access to 

the staff of the swap data repository 

and/or third party service providers or 

agents familiar with the operations of 

the registered swap data repository, 

which can provide assistance to the 

Commission regarding data structure 

and content. These monitoring tools 

shall be identical in analytical 

capability as those provided to the 

compliance staff and the Chief 

Compliance Officer of the swap data 

repository. 

(3) Authorized Users. The swap 

transaction data provided to the 

Commission by a registered swap data 

repository shall be accessible only by 

authorized users. The swap data 

repository shall maintain and provide a 

list of authorized users in the manner 

and frequency determined by the 

Commission. 

(d) Other Regulators—(1) Procedure 

for Gaining Access to Registered Swap 

Data Repository Data. Appropriate 

Domestic Regulators and Appropriate 

Foreign Regulators seeking to gain 

access to the swaps data maintained by 

a swap data repository are required to 

apply for access as follows: 

(i) File a request for access with the 

registered swap data repository setting 

forth in sufficient detail the basis of its 

request; and 

(ii) Certify the statutory authority for 

its request and that it is acting within 

the scope of its jurisdiction; 

(2) Obligations of the Registered Swap 

Data Repository in Connection with 

Appropriate Domestic Regulator or 

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Appropriate Foreign Regulator Requests 

for Data Access. 

(i) A registered swap data repository 

shall promptly notify the Commission 

regarding any request received by an 

Appropriate Domestic Regulator or 

Appropriate Foreign Regulator to gain 

access to the swaps transaction data 

maintained by such swap data 

repository. 

(ii) The registered swap data 

repository shall notify the Commission 

electronically in a format specified by 

the Secretary of the Commission. 

(3) Timing. Once the swaps data 

repository provides the Commission 

with notification of a request for data 

access by an Appropriate Domestic 

Regulator or Appropriate Foreign 

Regulator as required by paragraph 

(d)(2) of this section, such swap data 

repository shall provide access to the 

requested swaps data if satisfied that the 

Appropriate Domestic Regulator or 

Appropriate Foreign Regulator is acting 

within the scope of its authority. 

(4) Confidentiality and 

Indemnification Agreement. Consistent 

with § 49.18 of this part, the 

Appropriate Domestic Regulator or 

Appropriate Foreign Regulator prior to 

receipt of any requested data or 

information shall execute a 

‘‘Confidentiality and Indemnification 

Agreement’’ with the registered swap 

data repository as set forth in Section 

21(d) of the Act. 

(e) Third Party Service Providers to a 

Registered Swap Data Repository. 

Access to the data and information 

maintained by a registered swap data 

repository may be necessary for certain 

third parties that provide various 

technology and data-related services to 

a registered swap data repository. Third 

party access to the swap data 

maintained by a swap data repository is 

permissible subject to the following 

conditions: 

(1) Both the registered swap data 

repository and the third party service 

provider shall have strict confidentiality 

procedures that protect data and 

information from improper disclosure. 

(2) Prior to swaps data access, the 

third party service provider and the 

registered swaps data repository shall 

execute a ‘‘Confidentiality Agreement’’ 

setting forth minimum confidentiality 

procedures and permissible uses of the 

information maintained by the swaps 

data repository. 

(f) Access by Market Participants— 

(1) General. Access of swap data 

maintained by the registered swaps data 

repository to market participants is 

generally prohibited. 

(2) Exception. Data and information 

maintained by the registered swap data 

repository may be accessed by market 

participants if the specific data was 

originally submitted by such party. 

(g) Commercial Uses of Data 

Maintained by the Registered Swap Data 

Repository Prohibited. Data maintained 

by the swap data repository generally 

may not be used for commercial or 

business purposes by the swap data 

repository or any of its affiliated 

entities. 

(1) The registered swap data 

repository is required to adopt and 

implement adequate ‘‘firewalls’’ to 

protect the data required to be 

maintained under § 49.12 of this part 

and Section 21(b) of the Act from any 

improper, commercial use. 

(2) Exception. Market participants 

who submit the data maintained by the 

registered swap data repository may 

permit the commercial or business use 

of that data by express written consent. 

§ 49.18 Confidentiality and indemnification 

agreement. 

(a) Purpose. This section sets forth the 

obligations of registered swap data 

repositories to execute a 

‘‘Confidentiality and Indemnification 

Agreement’’ in connection with 

providing access to swaps data to 

certain domestic regulators and 

‘‘appropriate foreign regulators.’’ 

(b) Confidentiality and 

Indemnification Agreement. Prior to the 

registered swap data repository 

providing access to the swaps data with 

any Appropriate Domestic Regulator or 

Appropriate Foreign Regulator as 

defined in § 49.17(b), the swap data 

repository shall receive a written 

agreement from each such entity stating 

that the entity shall abide by the 

confidentiality requirements described 

in Section 8 of the Act relating to the 

swap data that is provided; and each 

such entity shall agree to indemnify the 

swap data repository and the 

Commission for any expenses arising 

from litigation relating to the 

information provided under Section 8 of 

the Act. 

§ 49.19 Core principles applicable to 

registered swap data repositories. 

(a) Compliance with Core Principles. 

To be registered, and maintain 

registration, a swap data repository shall 

comply with the core principles as 

described in this paragraph. Unless 

otherwise determined by the 

Commission by rule or regulation, a 

swap data repository shall have 

reasonable discretion in establishing the 

manner in which the swap data 

repository complies with the core 

principles described in this paragraph. 

(b) Antitrust Considerations (Core 

Principle 1). Unless appropriate to 

achieve the purposes of the Act, a 

registered swap data repository shall 

avoid adopting any rule or taking any 

action that results in any unreasonable 

restraint of trade; or imposing any 

material anticompetitive burden on 

trading, clearing or reporting swaps. 

(c) Governance Arrangements (Core 

Principle 2). Registered swap data 

repositories shall establish governance 

arrangements as set forth in § 49.20. 

(d) Conflicts of Interest (Core Principle 

3). Registered swap data repositories 

shall manage and minimize conflicts of 

interest and establish processes for 

resolving such conflicts of interest as set 

forth in § 49.21. 

(e) Additional Duties (Core Principle 

4). Registered swap data repositories 

shall also comply with the following 

additional duties: 

(1) System Safeguards. Registered 

swap data repositories shall establish 

and maintain a program of system 

safeguards, including business 

continuity and disaster recovery plans 

as set forth in § 49.24; 

(2) Financial Resources. Registered 

swap data repositories shall maintain 

sufficient financial resources as set forth 

in § 49.25; 

(3) Disclosure Requirements of 

Registered Swap Data Repositories. 

Registered swap data repositories shall 

furnish an appropriate disclosure 

document setting forth the risks and 

costs of swap data repository services as 

detailed in § 49.26; and 

(4) Access and Fees. Registered swap 

data repositories shall adhere to 

Commission requirements regarding fair 

and open access and the charging of any 

fees, dues or other similar type charges 

as detailed in § 49.27. 

§ 49.20 Governance arrangements (Core 

Principle 2). 

(a) General. (1) Each registered swap 

data repository shall establish 

governance arrangements that are 

transparent to fulfill public interest 

requirements, and to support the 

objectives of the Federal Government, 

owners, and participants. 

(2) Each registered swap data 

repository shall establish governance 

arrangements that are well-defined and 

include a clear organizational structure 

with consistent lines of responsibility 

and effective internal controls, 

including with respect to 

administration, accounting, and the 

disclosure of confidential information. 

§ 49.22 of this part contains rules on 

internal controls applicable to 

administration and accounting. § 49.16 

of this part contains rules on internal 

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controls applicable to the disclosure of 

confidential information. 

(b) Transparency of Governance 

Arrangements. (1) Each registered swap 

data repository shall state in its charter 

documents that its governance 

arrangements are transparent to support, 

among other things, the objectives of the 

Federal Government pursuant to Section 

21(f)(2) of the Act. 

(2) Each registered swap data 

repository shall, at a minimum, make 

the following information available to 

the public and relevant authorities, 

including the Commission: 

(i) The mission statement of the 

registered swap data repository; 

(ii) The mission statement and/or 

charter of the board of directors, as well 

as of each committee of the registered 

swap data repository that has: 

(A) The authority to act on behalf of 

the board of directors or 

(B) The authority to amend or 

constrain actions of the board of 

directors; 

(iii) The board of directors 

nomination process for the registered 

swap data repository, as well as the 

process for assigning members of the 

board of directors or other persons to 

any committee referenced in paragraph 

(b)(2)(ii) of this section; 

(iv) For the board of directors and 

each committee referenced in paragraph 

(b)(2)(ii) of this section, the names of all 

members; 

(v) A description of the manner in 

which the board of directors, as well as 

any committee referenced in paragraph 

(b)(2)(ii) of this section, considers an 

Independent Perspective in its decisionmaking process, as § 49.2(a)(14) of this 

part defines such term; 

(vi) The lines of responsibility and 

accountability for each operational unit 

of the registered swap data repository to 

any committee thereof and/or the board 

of directors; and 

(vii) Summaries of significant 

decisions implicating the public 

interest, the rationale for such decisions, 

and the process for reaching such 

decisions. Such significant decisions 

shall include decisions relating to 

pricing of repository services, offering of 

ancillary services, access to data, and 

use of Section 8 Material, other SDR 

Information, and intellectual property 

(as referenced in § 49.16 of this part). 

(3) The registered swap data 

repository shall ensure that the 

information specified in paragraph 

(b)(2)(i) to (vii) of this section is current, 

accurate, clear, and readily accessible, 

for example, on its Web site. The swap 

data repository shall set forth such 

information in a language commonly 

used in the commodity futures and 

swap markets and at least one of the 

domestic language(s) of the jurisdiction 

in which the swap data repository is 

located. 

(4) Furthermore, the registered swap 

data repository shall disclose the 

information specified in paragraph 

(b)(2)(vii) of this section in a sufficiently 

comprehensive and detailed fashion so 

as to permit the public and relevant 

authorities, including the Commission, 

to understand the policies or procedures 

of the swap data repository implicated 

and the manner in which the decision 

implements or amends such policies or 

procedures. A swap data repository 

shall not disclose minutes from 

meetings of its board of directors or 

committees to the public, although it 

shall disclose such minutes to the 

Commission upon request. 

(c) The Board of Directors— 

(1) General. (i) Each registered swap 

data repository shall establish, maintain, 

and enforce (including, without 

limitation, pursuant to paragraph (c)(4) 

of this Regulation) written policies or 

procedures: 

(A) To ensure that its board of 

directors, as well as any committee that 

has: 

(1) Authority to act on behalf of its 

board of directors or 

(2) Authority to amend or constrain 

actions of its board of directors, 

adequately considers an Independent 

Perspective in its decision-making 

process; 

(B) To ensure that the nominations 

process for such board of directors, as 

well as the process for assigning 

members of the board of directors or 

other persons to such committees, 

adequately incorporates an Independent 

Perspective; and 

(C) To clearly articulate the roles and 

responsibilities of such board of 

directors, as well as such committees, 

especially with respect to the manner in 

which they ensure that a registered 

swap data repository complies with all 

statutory and regulatory responsibilities 

under the Act and the regulations 

promulgated thereunder. 

(ii) Each registered swap data 

repository shall submit to the 

Commission, within thirty days after 

each election of its board of directors: 

(A) For the board of directors, as well 

as each committee referenced in 

paragraph (c)(1)(i)(A) of this section, a 

list of all members; 

(B) A description of the relationship, 

if any, between such members and the 

registered swap data repository or any 

reporting entity thereof (or, in each case, 

affiliates thereof, as § 49.2(a)(1) of this 

part defines such term); and 

(C) Any amendments to the written 

policies and procedures referenced in 

paragraph (c)(1)(i) of this section. 

(2) Compensation. The compensation 

of non-executive members of the board 

of directors of a registered swap data 

repository shall not be linked to the 

business performance of such swap data 

repository. 

(3) Annual Self-Review. The board of 

directors of a registered swap data 

repository shall review its performance 

and that of its individual members 

annually. It should consider 

periodically using external facilitators 

for such reviews. 

(4) Board Member Removal. A 

registered swap data repository shall 

have procedures to remove a member 

from the board of directors, where the 

conduct of such member is likely to be 

prejudicial to the sound and prudent 

management of the swap data 

repository. 

(5) Expertise. Each registered swap 

data repository shall ensure that 

members of its board of directors, 

members of any committee referenced 

in paragraph (c)(1)(i)(A) of this 

Regulation, and its senior management, 

in each case, are of sufficiently good 

repute and possess the requisite skills 

and expertise to fulfill their 

responsibilities in the management and 

governance of the swap data repository, 

to have a clear understanding of such 

responsibilities, and to exercise sound 

judgment about the affairs of the swap 

data repository. 

(d) Compliance with Core Principle. 

The chief compliance officer of the 

registered swap data repository shall 

review the compliance of the swap data 

repository with this core principle. 

§ 49.21 Conflicts of interest (Core 

Principle 3). 

(a) General. (1) Each registered swap 

data repository shall establish and 

enforce rules to minimize conflicts of 

interest in the decision-making process 

of the swap data repository, and 

establish a process for resolving such 

conflicts of interest. 

(2) Nothing in this section shall 

supersede any requirement applicable to 

the SDR pursuant to § 49.20 of this part. 

(b) Policies and Procedures. (1) Each 

registered swap data repository shall 

establish, maintain, and enforce written 

procedures to: 

(i) Identify, on an ongoing basis, 

existing and potential conflicts of 

interest; and 

(ii) Make decisions in the event of a 

conflict of interest. Such procedures 

shall include rules regarding the 

recusal, in applicable circumstances, of 

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parties involved in the making of 

decisions. 

(2) As further described in § 49.20 of 

this part, the chief compliance officer of 

the registered swap data repository 

shall, in consultation with the board of 

directors or a senior officer of the swap 

data repository, resolve any such 

conflicts of interest. 

(c) Compliance with Core Principle. 

The chief compliance officer of the 

registered swap data repository shall 

review the compliance of the swap data 

repository with this core principle. 

§ 49.22 Chief compliance officer. 

(a) Definition of Board of Directors. 

For purposes of this part 49, the term 

‘‘board of directors’’ means the board of 

directors of a registered swap data 

repository, or for those swap data 

repositories whose organizational 

structure does not include a board of 

directors, a body performing a function 

similar to a board of directors. 

(b) Designation and qualifications of 

chief compliance officer—(1) Chief 

Compliance Officer Required. Each 

registered swap data repository shall 

establish the position of chief 

compliance officer, and designate an 

individual to serve in that capacity. 

(i) The position of chief compliance 

officer shall carry with it the authority 

and resources to develop and enforce 

policies and procedures necessary to 

fulfill the duties set forth for chief 

compliance officers in the Act and 

Commission regulations. 

(ii) The chief compliance officer shall 

have supervisory authority over all staff 

acting in furtherance of the chief 

compliance officer’s statutory and 

regulatory obligations. 

(2) Qualifications of Chief 

Compliance Officer. The individual 

designated to serve as chief compliance 

officer shall have the background and 

skills appropriate for fulfilling the 

responsibilities of the position. No 

individual disqualified from registration 

pursuant to Sections 8a(2) or 8a(3) of the 

Act may serve as a chief compliance 

officer. 

(c) Appointment, Supervision, and 

Removal of Chief Compliance Officer— 

(1) Appointment and Compensation of 

Chief Compliance Officer Determined by 

Board of Directors. A registered swap 

data repository’s chief compliance 

officer shall be appointed by its board 

of directors. The board of directors shall 

also approve the compensation of the 

chief compliance officer and shall meet 

with the chief compliance officer at 

least annually. The appointment of the 

chief compliance officer and approval of 

the chief compliance officer’s 

compensation shall require the approval 

of a majority of the board of directors. 

The senior officer of the swap data 

repository may fulfill these 

responsibilities. A swap data repository 

shall notify the Commission of the 

appointment of a new chief compliance 

officer within two business days of such 

appointment. 

(2) Supervision of Chief Compliance 

Officer. A registered swap data 

repository’s chief compliance officer 

shall report directly to the board of 

directors or to the senior officer of the 

swap data repository, at the swap data 

repository’s discretion. 

(3) Removal of Chief Compliance 

Officer by Board of Directors. Removal 

of a registered swap data repository’s 

chief compliance officer shall require 

the approval of a majority of the swap 

data repository’s board of directors. If 

the swap data repository does not have 

a board of directors, then the chief 

compliance officer may be removed by 

the senior officer of the swap data 

repository. The swap data repository 

shall notify the Commission within two 

business days of appointing any new 

chief compliance officer, whether 

interim or permanent. 

(d) Duties of Chief Compliance 

Officer. The chief compliance officer’s 

duties shall include, but are not limited 

to, the following: 

(1) Overseeing and reviewing the 

swap data repository’s compliance with 

Section 21 of the Act and any related 

rules adopted by the Commission; 

(2) In consultation with the board of 

directors, a body performing a function 

similar to the board, or the senior officer 

of the swap data repository, resolving 

any conflicts of interest that may arise: 

(i) Conflicts between business 

considerations and compliance 

requirements; 

(ii) Conflicts between business 

considerations and the requirement that 

the registered swap data repository 

provide fair and open access as set forth 

in § 49.27 of this part; and 

(iii) Conflicts between a registered 

swap data repository’s management and 

members of the board of directors; 

(3) Establishing and administering 

written policies and procedures 

reasonably designed to prevent violation 

of the Act and any rules adopted by the 

Commission; 

(4) Ensuring compliance with the Act 

and Commission regulations relating to 

agreements, contracts, or transactions, 

and with Commission regulations under 

Section 21 of the Act, including 

confidentiality and indemnification 

agreements entered into with foreign or 

domestic regulators pursuant to Section 

21(d) of the Act; 

(5) Establishing procedures for the 

remediation of noncompliance issues 

identified by the chief compliance 

officer through a compliance office 

review, look-back, internal or external 

audit finding, self-reported error, or 

validated complaint; 

(6) Establishing and following 

appropriate procedures for the handling, 

management response, remediation, 

retesting, and closing of noncompliance 

issues; and 

(7) Establishing and administering a 

written code of ethics designed to 

prevent ethical violations and to 

promote honesty and ethical conduct. 

(e) Annual Compliance Report 

Prepared by Chief Compliance Officer. 

The chief compliance officer shall, not 

less than annually, prepare an annual 

compliance report, that at a minimum, 

contains the following information 

covering the time period since the date 

on which the swap data repository 

became registered with the Commission 

or since the end of the period covered 

by a previously filed annual compliance 

report, as applicable: 

(1) A description of the registered 

swap data repository’s written policies 

and procedures, including the code of 

ethics and conflict of interest policies; 

(2) A review of applicable 

Commission regulations and each 

subsection and core principle of Section 

21 of the Act, that, with respect to each: 

(i) Identifies the policies and 

procedures that ensure compliance with 

each subsection and the core principle, 

including each duty specified in Section 

21(c); 

(ii) Provides a self-assessment as to 

the effectiveness of these policies and 

procedures; and 

(iii) Discusses areas for improvement, 

and recommends potential or 

prospective changes or improvements to 

its compliance program and resources; 

(3) A list of any material changes to 

compliance policies and procedures 

since the last annual compliance report; 

(4) A description of the financial, 

managerial, and operational resources 

set aside for compliance with respect to 

the Act and Commission regulations; 

(5) A description of any material 

compliance matters, including 

noncompliance issues identified 

through a compliance office review, 

look-back, internal or external audit 

finding, self-reported error, or validated 

complaint, and explains how they were 

resolved; 

(6) Any objections to the annual 

compliance report by those persons who 

have oversight responsibility for the 

chief compliance officer; and 

(7) A certification by the chief 

compliance officer that, to the best of 

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his or her knowledge and reasonable 

belief, and under penalty of law, the 

annual compliance report is accurate 

and complete. 

(f) Submission of Annual Compliance 

Report by Chief Compliance Officer to 

the Commission. (1) Prior to submission 

of the annual compliance report to the 

Commission, the chief compliance 

officer shall provide the annual 

compliance report to the board of the 

registered swap data repository for its 

review. If the swap data repository does 

not have board, then the annual 

compliance report shall be provided to 

the senior officer for their review. 

Members of the board and the senior 

officer may not require the chief 

compliance officer to make any changes 

to the report. Submission of the report 

to the board or senior officer, and any 

subsequent discussion of the report, 

shall be recorded in board minutes or 

similar written record, as evidence of 

compliance with this requirement. 

(2) The annual compliance report 

shall be provided electronically to the 

Commission not more than 60 days after 

the end of the registered swap data 

repository’s fiscal year. 

(3) Promptly upon discovery of any 

material error or omission made in a 

previously filed compliance report, the 

chief compliance officer shall file an 

amendment with the Commission to 

correct any material error or omission. 

An amendment shall contain the oath or 

certification required under paragraph 

(e)(7) of this section. 

(4) A registered swap data repository 

may request the Commission for an 

extension of time to file its compliance 

report based on substantial, undue 

hardship. Extensions for the filing 

deadline may be granted at the 

discretion of the Commission. 

(5) Annual compliance reports filed 

pursuant to this section will be treated 

as exempt from mandatory public 

disclosure for purposes of the Freedom 

of Information Act and the Government 

in the Sunshine Act and parts 145 and 

147 of this chapter, but will be available 

for official use by any official or 

employee of the United States and any 

State, by any self-regulatory 

organization of which the person filing 

the report is a member, and by any other 

person to whom the Commission 

believes disclosure is in the public 

interest. 

(g) Recordkeeping. (1) The registered 

swap data repository shall maintain: 

(i) A copy of the written policies and 

procedures, including the code of ethics 

and conflicts of interest policies 

adopted in furtherance of compliance 

with the Act and Commission 

regulations; 

(ii) Copies of all materials, including 

written reports provided to the board of 

directors or senior officer in connection 

with the review of the annual 

compliance report under paragraph 

(f)(1) of this section and the board 

minutes or similar written record of 

such review, that record the submission 

of the annual compliance report to the 

board of directors or senior officer; and 

(iii) Any records relevant to the 

registered swap data repository’s annual 

compliance report, including, but not 

limited to, work papers and other 

documents that form the basis of the 

report, and memoranda, 

correspondence, other documents, and 

records that are: 

(A) Created, sent or received in 

connection with the annual compliance 

report and 

(B) Contain conclusions, opinions, 

analyses, or financial data related to the 

annual compliance report. 

(2) The registered swap data 

repository shall maintain records in 

accordance with § 1.31 of this chapter. 

§ 49.23 Emergency policies and 

procedures. 

(a) Emergency Policies and 

Procedures Required. A registered swap 

data repository shall establish policies 

and procedures for the exercise of 

emergency authority in the event of any 

emergency, including but not limited to 

natural, man-made, and information 

technology emergencies. Such policies 

and procedures shall also require a 

swap data repository to exercise its 

emergency authority upon request by 

the Commission. A swap data 

repository’s policies and procedures for 

the exercise of emergency authority 

shall be transparent to the Commission 

and to market participants whose swap 

transaction data resides at the swap data 

repository. 

(b) Invocation of Emergency 

Authority. A registered swap data 

repository’s policies and procedures for 

the exercise of emergency authority 

shall enumerate the circumstances 

under which the swap data repository is 

authorized to invoke its emergency 

authority and the procedures that it 

shall follow to declare an emergency. 

Such policies and procedures shall also 

address the range of measures that it is 

authorized to take when exercising such 

emergency authority. 

(c) Designation of Persons Authorized 

to act in an Emergency. A registered 

swap data repository shall designate one 

or more officials of the swap data 

repository as persons authorized to 

exercise emergency authority on its 

behalf. A swap data repository shall also 

establish a chain of command to be used 

in the event that the designated 

person(s) is unavailable. A swap data 

repository shall notify the Commission 

of the person(s) designated to exercise 

emergency authority. 

(d) Conflicts of Interest. A registered 

swap data repository’s policies and 

procedures for the exercise of 

emergency authority shall include 

provisions to avoid conflicts of interest 

in any decisions made pursuant to 

emergency authority. Such policies and 

procedures shall also include provisions 

to consult the swap data repository’s 

chief compliance officer in any 

emergency decision that may raise 

potential conflicts of interest. 

(e) Notification to the Commission. A 

registered swap data repository’s 

policies and procedures for the exercise 

of emergency authority shall include 

provisions to notify the Commission as 

soon as reasonably practicable regarding 

any invocation of emergency authority. 

When notifying the Commission of any 

exercise of emergency authority, a swap 

data repository shall explain the reasons 

for taking such emergency action, 

explain how conflicts of interest were 

minimized, and document the decisionmaking process. Underlying 

documentation shall be made available 

to the Commission upon request. 

§ 49.24 System safeguards. 

(a) Each registered swap data 

repository shall, with respect to all swap 

data in its custody: 

(1) Establish and maintain a program 

of risk analysis and oversight to identify 

and minimize sources of operational 

risk through the development of 

appropriate controls and procedures 

and the development of automated 

systems that are reliable, secure, and 

have adequate scalable capacity; 

(2) Establish and maintain emergency 

procedures, backup facilities, and a 

business continuity-disaster recovery 

plan that allow for the timely recovery 

and resumption of operations and the 

fulfillment of the duties and obligations 

of the swap data repository; and 

(3) Periodically conduct tests to verify 

that backup resources are sufficient to 

ensure continued fulfillment of all 

duties of the swap data repository 

established by the Act or the 

Commission’s regulations. 

(b) A registered swap data repository’s 

program of risk analysis and oversight 

with respect to its operations and 

automated systems shall address each of 

the following categories of risk analysis 

and oversight: 

(1) Information security; 

(2) Business continuity-disaster 

recovery planning and resources; 

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(3) Capacity and performance 

planning; 

(4) Systems operations; 

(5) Systems development and quality 

assurance; and 

(6) Physical security and 

environmental controls. 

(c) In addressing the categories of risk 

analysis and oversight required under 

paragraph (b) above, a registered swap 

data repository should follow generally 

accepted standards and best practices 

with respect to the development, 

operation, reliability, security, and 

capacity of automated systems. 

(d) A registered swap data repository 

shall maintain a business continuitydisaster recovery plan and business 

continuity-disaster recovery resources, 

emergency procedures, and backup 

facilities sufficient to enable timely 

recovery and resumption of its 

operations and resumption of its 

ongoing fulfillment of its duties and 

obligations as a swap data repository 

following any disruption of its 

operations. Such duties and obligations 

include, without limitation, the duties 

set forth in § 49.9 and the core 

principles set forth in § 49.19; and 

maintenance of a comprehensive audit 

trail. The swap data repository’s 

business continuity-disaster recovery 

plan and resources generally should 

enable resumption of the swap data 

repository’s operations and resumption 

of ongoing fulfillment of the swap data 

repository’s duties and obligations 

during the next business day following 

the disruption. 

(e) Swap data repositories determined 

by the Commission to be critical swap 

data repositories are subject to more 

stringent requirements as set forth 

below. 

(1) Each swap data repository that the 

Commission determines is critical must 

maintain a disaster recovery plan and 

business continuity and disaster 

recovery resources, including 

infrastructure and personnel, sufficient 

to enable it to achieve a same-day 

recovery time objective in the event that 

its normal capabilities become 

temporarily inoperable for any reason 

up to and including a wide-scale 

disruption. 

(2) A same-day recovery time 

objective is a recovery time objective 

within the same business day on which 

normal capabilities become temporarily 

inoperable for any reason up to and 

including a wide-scale disruption. 

(3) To ensure its ability to achieve a 

same-day recovery time objective in the 

event of a wide-scale disruption, each 

swap data repository that the 

Commission determines is critical must 

maintain a degree of geographic 

dispersal of both infrastructure and 

personnel such that: 

(i) Infrastructure sufficient to enable 

the swap data repository to meet a sameday recovery time objective after 

interruption is located outside the 

relevant area of the infrastructure the 

entity normally relies upon to conduct 

activities necessary to the reporting, 

recordkeeping and/or dissemination of 

swap data, and does not rely on the 

same critical transportation, 

telecommunications, power, water, or 

other critical infrastructure components 

the entity normally relies upon for such 

activities; and 

(ii) Personnel sufficient to enable the 

swap data repository to meet a same-day 

recovery time objective, after 

interruption of normal swap data 

reporting, recordkeeping and/or 

dissemination by a wide-scale 

disruption affecting the relevant area in 

which the personnel the entity normally 

relies upon to engage in such activities 

are located, live and work outside that 

relevant area. 

(4) Each swap data repository that the 

Commission determines is critical must 

conduct regular, periodic tests of its 

business continuity and disaster 

recovery plans and resources and its 

capacity to achieve a same-day recovery 

time objective in the event of a widescale disruption. The swap data 

repository shall keep records of the 

results of such tests, and make the 

results available to the Commission 

upon request. 

(f) A registered swap data repository 

that is not determined by the 

Commission to be a critical swap data 

repository satisfies the requirement to 

be able to resume operations and 

resume ongoing fulfillment of the swap 

data repository’s duties and obligations 

during the next business day following 

a disruption by maintaining either: 

(1) Infrastructure and personnel 

resources of its own that are sufficient 

to ensure timely recovery and 

resumption of its operations, duties and 

obligations as a registered swap data 

repository following any disruption of 

its operations; or 

(2) Contractual arrangements with 

other registered swap data repositories 

or disaster recovery service providers, as 

appropriate, that are sufficient to ensure 

continued fulfillment of all of the swap 

data repository’s duties and obligations 

following any disruption of its 

operations, both with respect to all 

swaps reported to the swap data 

repository and with respect to all swap 

data contained in the swap data 

repository. 

(g) A registered swap data repository 

shall notify Commission staff promptly 

of all: 

(1) Systems malfunctions; 

(2) Cyber security incidents or 

targeted threats that actually or 

potentially jeopardize automated system 

operation, reliability, security, or 

capacity; and 

(3) Any activation of the swap data 

repository’s business continuity-disaster 

recovery plan. 

(h) A registered swap data repository 

shall give Commission staff timely 

advance notice of all: 

(1) Planned changes to automated 

systems that may impact the reliability, 

security, or adequate scalable capacity 

of such systems; and 

(2) Planned changes to the swap data 

repository’s program of risk analysis and 

oversight. 

(i) A registered swap data repository 

shall provide to the Commission upon 

request current copies of its business 

continuity and disaster recovery plan 

and other emergency procedures, its 

assessments of its operational risks, and 

other documents requested by 

Commission staff for the purpose of 

maintaining a current profile of the 

swap data repository’s automated 

systems. 

(j) A registered swap data repository 

shall conduct regular, periodic, 

objective testing and review of its 

automated systems to ensure that they 

are reliable, secure, and have adequate 

scalable capacity. It shall also conduct 

regular, periodic testing and review of 

its business continuity-disaster recovery 

capabilities. Both types of testing should 

be conducted by qualified, independent 

professionals. Such qualified 

independent professionals may be 

independent contractors or employees 

of the swap data repository, but should 

not be persons responsible for 

development or operation of the systems 

or capabilities being tested. Pursuant to 

§§ 1.31, 49.12 and 45.2 of the 

Commission’s Regulations, the swap 

data repository shall keep records of all 

such tests, and make all test results 

available to the Commission upon 

request. 

(k) To the extent practicable, a 

registered swap data repository should: 

(1) Coordinate its business continuitydisaster recovery plan with those of the 

swap execution facilities, designated 

contract markets, derivatives clearing 

organizations, swap dealers, and major 

swap participants who report swap data 

to the swap data repository, and with 

those of regulators identified in Section 

21(c)(7) of the Act, in a manner 

adequate to enable effective resumption 

of the registered swap data repository’s 

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fulfillment of its duties and obligations 

following a disruption causing 

activation of the swap data repository’s 

business continuity and disaster 

recovery plan; 

(2) Participate in periodic, 

synchronized testing of its business 

continuity-disaster recovery plan and 

the business continuity-disaster 

recovery plans of the swap execution 

facilities, designated contract markets, 

derivatives clearing organizations, swap 

dealers, and major swap participants 

who report swap data to the registered 

swap data repository, and the business 

continuity-disaster recovery plans 

required by the regulators identified in 

Section 21(c)(7) of the Act; and 

(3) Ensure that its business 

continuity-disaster recovery plan takes 

into account the business continuitydisaster recovery plans of its 

telecommunications, power, water, and 

other essential service providers. 

§ 49.25 Financial resources. 

(a) General rule. (1) A swap data 

repository shall maintain sufficient 

financial resources to perform its 

statutory duties set forth in § 49.9 and 

the core principles set forth in § 49.19. 

(2) An entity that operates as both a 

swap data repository and a derivatives 

clearing organization shall also comply 

with the financial resource requirements 

of Core Principle B set forth in Section 

5b(c)(2)(B) of the Act. 

(3) Financial resources shall be 

considered sufficient if their value is at 

least equal to a total amount that would 

enable the swap data repository, or 

applicant for registration, to cover its 

operating costs for a period of at least 

one year, calculated on a rolling basis. 

(4) The financial resources described 

in this paragraph (a) must be 

independent and separately dedicated 

to ensure that assets and capital are not 

used for multiple purposes. 

(b) Types of financial resources. 

Financial resources available to satisfy 

the requirements of paragraph (a) of this 

section may include: 

(1) The swap data repository’s own 

capital; and 

(2) Any other financial resource 

deemed acceptable by the Commission. 

(c) Computation of financial resource 

requirement. A swap data repository 

shall, on a quarterly basis, based upon 

its fiscal year, make a reasonable 

calculation of its projected operating 

costs over a 12-month period in order to 

determine the amount needed to meet 

the requirements of paragraph (a) of this 

section. The swap data repository shall 

have reasonable discretion in 

determining the methodology used to 

compute such projected operating costs. 

The Commission may review the 

methodology and require changes as 

appropriate. 

(d) Valuation of financial resources. 

At appropriate intervals, but not less 

than quarterly, a swap data repository 

shall compute the current market value 

of each financial resource used to meet 

its obligations under paragraph (a) of 

this section. Reductions in value to 

reflect market and credit risk (haircuts) 

shall be applied as appropriate. 

(e) Liquidity of financial resources. 

The financial resources allocated by the 

swap data repository to meet the 

requirements of paragraph (a) shall 

include unencumbered, liquid financial 

assets (i.e., cash and/or highly liquid 

securities) equal to at least six months’ 

operating costs. If any portion of such 

financial resources is not sufficiently 

liquid, the swap data repository may 

take into account a committed line of 

credit or similar facility for the purpose 

of meeting this requirement. 

(f) Reporting requirements. (1) Each 

fiscal quarter, or at any time upon 

Commission request, a swap data 

repository shall report to the 

Commission the amount of financial 

resources necessary to meet the 

requirements of paragraph (a), the value 

of each financial resource available, 

computed in accordance with the 

requirements of paragraph (d); and 

provide the Commission with a 

financial statement, including the 

balance sheet, income statement, and 

statement of cash flows of the swap data 

repository or of its parent company. 

Financial statements shall be prepared 

in conformity with generally accepted 

accounting principles (GAAP) applied 

on a basis consistent with that of the 

preceding financial statement. 

(2) The calculations required by this 

paragraph shall be made as of the last 

business day of the swap data 

repository’s fiscal quarter. 

(3) The report shall be filed not later 

than 17 business days after the end of 

the swap data repository’s fiscal quarter, 

or at such later time as the Commission 

may permit, in its discretion, upon 

request by the swap data repository. 

§ 49.26 Disclosure requirements of swap 

data repositories. 

Before accepting any swap data from 

a reporting entity or upon a reporting 

entity’s request, a registered swap data 

repository shall furnish to the reporting 

entity a disclosure document that 

contains the following written 

information, which shall reasonably 

enable the reporting entity to identify 

and evaluate accurately the risks and 

costs associated with using the services 

of the swap data repository: 

(a) The registered swap data 

repository’s criteria for providing others 

with access to services offered and data 

maintained by the swap data repository; 

(b) The registered swap data 

repository’s criteria for those seeking to 

connect to or link with the swap data 

repository; 

(c) A description of the registered 

swap data repository’s policies and 

procedures regarding its safeguarding of 

data and operational reliability to 

protect the confidentiality and security 

of such data, as described in § 49.24; 

(d) The registered swap data 

repository’s policies and procedures 

reasonably designed to protect the 

privacy of any and all swap data that the 

swap data repository receives from a 

reporting entity, as described in § 49.16; 

(e) The registered swap data 

repository’s policies and procedures 

regarding its non-commercial and/or 

commercial use of the swap data that it 

receives from a market participant, any 

registered entity, or any other person; 

(f) The registered swap data 

repository’s dispute resolution 

procedures; 

(g) A description of all the registered 

swap data repository’s services, 

including any ancillary services; 

(h) The registered swap data 

repository’s updated schedule of any 

fees, rates, dues, unbundled prices, or 

other charges for all of its services, 

including any ancillary services; any 

discounts or rebates offered; and the 

criteria to benefit from such discounts 

or rebates; and 

(i) A description of the registered 

swap data repository’s governance 

arrangements. 

§ 49.27 Access and fees. 

(a) Fair, Open and Equal Access. A 

swap data repository, consistent with 

Section 21 of the Act, shall provide its 

services to market participants, 

including but not limited to designated 

contract markets, swap execution 

facilities, derivatives clearing 

organizations, swap dealers, major swap 

participants and any other 

counterparties, on fair, open and equal 

basis. For this purpose, a swap data 

repository shall not provide access to its 

services on a discriminatory basis but is 

required to provide its services to all 

market participants for swaps it accepts 

in an asset class. 

(b) Fees. (1) Any fees or charges 

imposed by a registered swap data 

repository in connection with the 

reporting of swap data and any other 

supplemental or ancillary services 

provided by such swap data repository 

shall be equitable and established in a 

uniform and non-discriminatory 

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manner. Fees or charges shall not be 

used as an artificial barrier to access to 

the swap data repository. Swap data 

repositories shall not offer preferential 

pricing arrangements to any market 

participant on any basis, including 

volume discounts or reductions unless 

such discounts or reductions apply to 

all market participants uniformly and 

are not otherwise established in a 

manner that would effectively limit the 

application of such discount or 

reduction to a select number of market 

participants. 

(2) All fees or charges are to be fully 

disclosed and transparent to market 

participants. At a minimum, the 

registered swap data repository shall 

provide a schedule of fees and charges 

that is accessible by all market 

participants on its Web site. 

(3) The Commission notes that it will 

not specifically approve the fees 

charged by swap data repositories. 

However, any and all fees charged by 

swap data repositories must be 

consistent with the principles set forth 

in paragraph (b)(1) of this section. 

Appendix A to Part 49—Form SDR 

UNITED STATES COMMODITY 

FUTURES TRADING COMMISSION 

FORM SDR 

SWAP DATA REPOSITORY 

APPLICATION OR AMENDMENT TO 

APPLICATION FOR REGISTRATION 

UNDER THE COMMODITY EXCHANGE 

ACT 

REGISTRATION INSTRUCTIONS 

Intentional misstatements or 

omissions of fact may constitute 

federal criminal violations (7 U.S.C. 

§ 13 and 18 U.S.C. § 1001) and/or 

grounds for disqualification from 

registration. 

DEFINITIONS 

Unless the context requires otherwise, 

all terms used in the form have the same 

meaning as in the Commodity Exchange 

Act, as amended, and in the Regulations 

of the Commission thereunder. 

For the purposes of this form, the 

term ‘‘applicant’’ shall include any 

applicant for registration as a swap data 

repository or any registered swap data 

repository that is amending Form SDR. 

GENERAL INSTRUCTIONS 

1. Two (2) copies of Form SDR and 

Exhibits thereto are to be filed with the 

Commodity Futures Trading 

Commission by applicants for 

registration as a swap data repository, or 

by a registered swap data repository 

amending such registration, pursuant to 

Section 21 of the Commodity Exchange 

Act and the regulations thereunder. 

Upon the filing of an application for 

registration, the Commission will 

publish notice of the filing and afford 

interested persons an opportunity to 

submit written data, views and 

arguments concerning such application. 

No application for registration shall be 

effective unless the Commission, by 

order, grants such registration. 

2. Individuals’ names shall be given 

in full (last name, first name, middle 

name). 

3. Signatures must accompany each 

copy of the Form SDR filed with the 

Commission. If this Form SDR is filed 

by a corporation, it must be signed in 

the name of the corporation by a 

principal officer duly authorized; if filed 

by a limited liability company, this 

Form SDR must be signed in the name 

of the limited liability company by a 

member duly authorized to sign on the 

limited liability company’s behalf; if 

filed by a partnership, this Form SDR 

must be signed in the name of the 

partnership by a general partner 

authorized; if filed by an 

unincorporated organization or 

association which is not a partnership, 

it must be signed in the name of the 

organization or association by the 

managing agent, i.e., a duly authorized 

person who directs, manages or who 

participates in the directing or managing 

of its affairs. 

4. If Form SDR is being filed as an 

initial application for registration, all 

applicable items must be answered in 

full. If any item is not applicable, 

indicate by ‘‘none,’’ ‘‘not applicable,’’ or 

‘‘N/A’’ as appropriate. 

5. Under Section 21 of the Commodity 

Exchange Act and the regulations 

thereunder, the Commission is 

authorized to solicit the information 

required to be supplied by this form 

from applicants for registration as a 

swap data repository and from 

registered swap data repositories 

amending their registration. Disclosure 

of the information specified on this form 

is mandatory prior to processing of an 

application for registration as a swap 

data repository. The information will be 

used for the principal purpose of 

determining whether the Commission 

should grant or deny registration to an 

applicant. Except in cases where 

confidential treatment is requested by 

the applicant and granted by the 

Commission pursuant to the Freedom of 

Information Act and the regulations of 

the Commission thereunder, 

information supplied on this form will 

be included routinely in the public files 

of the Commission and will be available 

for inspection by any interested person. 

A Form which is not prepared and 

executed in compliance with applicable 

requirements and instructions may be 

returned as not acceptable for filing. 

Acceptance of this Form SDR, however, 

shall not constitute any finding that the 

Form SDR has been filed as required or 

that the information submitted is true, 

current or complete. 

UPDATING INFORMATION ON THE 

FORM SDR 

1. Section 21 requires that if any 

information contained in Items 1 

through 15, 21, 27, and Item 51 of this 

application, or any supplement or 

amendment thereto, is or becomes 

inaccurate for any reason, an 

amendment must be filed promptly, 

unless otherwise specified, on Form 

SDR correcting such information. 

2. Registrants filing Form SDR as an 

amendment (other than an annual 

amendment) need file only the facing 

page, the signature page (Item 11), and 

any pages on which an answer is being 

amended, together with such exhibits as 

are being amended. The submission of 

an amendment represents that all 

unamended items and exhibits remain 

true, current and complete as previously 

filed. 

ANNUAL AMENDMENT ON THE 

FORM SDR 

Annual amendments on the Form 

SDR shall be submitted within 60 days 

of the end of each calendar year. 

Applicants must complete the facing 

page and provide updated information. 

An applicant may request an 

extension of time for submitting the 

annual amendment with the Secretary 

of the Commission based on substantial, 

undue hardship. Extensions for filing 

annual amendments may be granted at 

the discretion of the Commission. 

WHERE TO FILE 

File registration application and 

appropriate exhibits electronically with 

the Commission at the Washington, D.C. 

headquarters in a format specified by 

the Secretary of the Commission. 

Applications should be sent to the 

attention of the Secretary of the 

Commission at submissions@cftc.gov. 

BILLING CODE 6351–01–P 

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BILLING CODE 6351–01–C 

EXHIBITS INSTRUCTIONS 

The following exhibits must be 

included as part of Form SDR and filed 

with the Commodity Futures Trading 

Commission by applicants for 

registration as a swap data repository, or 

by registered swap data repository 

amending such registration, pursuant to 

Section 21 of the Commodity Exchange 

Act and regulations thereto. Such 

exhibits should be labeled according to 

the items specified in this Form. If any 

exhibit is not applicable, please specify 

the exhibit letter and indicate by ‘‘none,’’ 

‘‘not applicable,’’ or ‘‘N/A’’ as 

appropriate. The applicant must 

identify with particularity the 

information in these exhibits that will 

be subject to a request for confidential 

treatment and supporting 

documentation for such request 

pursuant to Commission Regulation 

§ 145.9. 

If the applicant is a newly formed 

enterprise and does not have the 

financial statements required pursuant 

to Items 25 and 26 of this form, the 

applicant should provide pro forma 

financial statements for the most recent 


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six months or since inception, 

whichever is less. Except for pro forma 

financial statements prepared for newlycreated entities, financial statements 

shall be prepared in conformity with 

generally accepted accounting 

principles (‘‘GAAP’’) applied on a basis 

consistent with that of the preceding 

financial statement. 

EXHIBITS I—BUSINESS 

ORGANIZATION 

12. List as Exhibit A any person who 

owns ten (10) percent or more of 

applicant’s equity or possesses voting 

power of any class, either directly or 

indirectly, through agreement or 

otherwise, or in any other manner, may 

control or direct the management or 

policies of applicant. ‘‘Control’’ for this 

purpose is defined in Commission 

Regulation § 49.2(a)(3). 

State in Exhibit A the full name and 

address of each such person and attach 

a copy of the agreement or, if there is 

none written, describe the agreement or 

basis upon which such person exercises 

or may exercise such control or 

direction. 

13. Attach as Exhibit B to this 

application a narrative that sets forth the 

fitness standards for the board of 

directors. Attach a list of the present 

officers, directors, governors (and, in the 

case of an applicant not a corporation, 

the members of all standing committees 

grouped by committee), or persons 

performing functions similar to any of 

the foregoing, of the swap data 

repository or of the entity identified in 

Item 16 that performs the swap data 

repository activities of the applicant, 

indicating for each: 

a. Name 

b. Title 

c. Date of commencement and, if 

appropriate, termination of present term 

of position 

d. Length of time each present officer, 

director, or governor has held the same 

position 

e. Brief account of the business 

experience of each officer and director 

over the last five (5) years 

f. Any other business affiliations in 

the securities industry or OTC 

derivatives industry 

g. A description of: 

(1) any order of the Commission with 

respect to such person pursuant to 

Section 5e of the Act; 

(2) any conviction or injunction 

within the past 10 years; 

(3) any disciplinary action with 

respect to such person within the last 

five (5) years; 

(4) any disqualification under 

Sections 8b, and 8d of the Act; 

(5) any disciplinary action under 

Section 8c of the Act; 

(6) any violation pursuant to Section 

9 of the Act. 

h. For directors, list any committees 

on which they serve and any 

compensation received by virtue of their 

directorship. 

14. Attach as Exhibit C to this 

application the following information 

about the chief compliance officer who 

has been appointed by the board of 

directors of the swap data repository or 

a person or group performing a function 

similar to such board of directors: 

a. Name 

b. Title 

c. Dates of commencement and 

termination of present term of office or 

position 

d. Length of time the chief 

compliance officer has held the same 

office or position 

e. Brief account of the business 

experience of the chief compliance 

officer over the last five (5) years 

f. Any other business affiliations in 

the derivatives/securities industry or 

swap data repository industry 

g. A description of: 

(1) any order of the Commission with 

respect to such person pursuant to 

Section 5e of the Act; 

(2) any conviction or injunction 

within the past 10 years; 

(3) any disciplinary action with 

respect to such person within the last 

five (5) years; 

(4) any disqualification under 

Sections 8b, and 8d of the Act; 

(5) any disciplinary action under 

Section 8c of the Act; 

(6) any violation pursuant to Section 

9 of the Act. 

15. Attach as Exhibit D a copy of 

documents relating to the governance 

arrangements of the applicant, 

including, but not limited to: 

a. the nomination and selection 

process of the members on the 

applicant’s board of directors, a person 

or group performing a function similar 

to a board of directors (collectively, 

‘‘board’’), or any committee that has the 

authority to act on behalf of the board 

or amend or constrain the action of the 

board, the responsibilities of each of the 

board and such committee, and the 

composition of each board and such 

committee; 

b. the process for assigning members 

of the board or other persons to any 

committees referenced in (a); 

c. a description of the manner in 

which the board and the committees 

referenced in (a) allows the applicant to 

comply with applicable core principles, 

regulations, as well as the policies and 

procedures of the applicant (including 

those involving consideration of an 

Independent Perspective (as 

Commission Regulation § 49.2(a)(14) 

defines such term)); 

d. a description of the manner in 

which the board reviews its 

performance and the performance of its 

members; 

e. a description of the procedures to 

remove a member of the board, where 

the conduct of such member is likely to 

be prejudicial to the sound and prudent 

management of the applicant. 

16. Attach as Exhibit E a narrative or 

graphic description of the organizational 

structure of the applicant. Note: If the 

swap data repository activities are 

conducted primarily by a division, 

subdivision, or other segregable entity 

within the applicant’s corporation or 

organization, describe the relationship 

of such entity within the overall 

organizational structure and attach as 

Exhibit E only such description as 

applies to the segregable entity. 

Additionally, prove any relevant 

jurisdictional information, including 

any and all jurisdictions in which the 

applicant or any affiliated entity is 

doing business and registration status, 

including pending application (e.g., 

country, regulator, registration category, 

date of registration). In addition, include 

a description of the lines of 

responsibility and accountability for 

each operational unit of the applicant to 

(i) any committee thereof and/or (ii) the 

board. 

17. Attach as Exhibit F a copy of the 

conflicts of interest policies and 

procedures implemented by the 

applicant to minimize conflicts of 

interest in the decision-making process 

of the swap data repository and to 

establish a process for the resolution of 

any such conflicts of interest. 

18. Attach as Exhibit G, a list of all 

affiliates of the swap data repository and 

indicate the general nature of the 

affiliation. Provide a copy of any 

agreements entered into or to be entered 

by the swap data repository, including 

partnerships or joint ventures, or its 

participants, that will enable the 

applicant to comply with the 

registration requirements and core 

principles specified in Section 21 of the 

Commodity Exchange Act. 

19. Attach as Exhibit H to this 

application a copy of the constitution, 

articles of incorporation or association 

with all amendments thereto, and 

existing by-laws, rules or instruments 

corresponding thereto, of the applicant. 

A certificate of good standing dated 

within one week of the date of the 

application shall be provided. 

20. Where the applicant is a foreign 

entity seeking registration or filing an 

amendment to an existing registration, 

attach as Exhibit I, an opinion of 

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counsel that the swap data repository, as 

a matter of law, is able to provide the 

Commission with prompt access to the 

books and records of such swap data 

repository and that the swap data 

repository can submit to onsite 

inspection and examination by the 

Commission. 

21. Where the applicant is a foreign 

entity seeking registration, attach as 

Exhibit I–1, to designate and authorize 

an agent in the United States, other than 

a Commission official, to accept any 

notice or service of process, pleadings, 

or other documents in any action or 

proceedings brought against the swap 

data repository to enforce the Act and 

the regulations thereunder. 

22. Attach as Exhibit J, a current copy 

of the applicant’s rules as defined in 

Commission Regulation § 40.1, 

consisting of all the rules necessary to 

carry out the duties as a swap data 

repository. 

23. Attach as Exhibit K, a description 

of the applicant’s internal disciplinary 

and enforcement protocols, tools, and 

procedures. Include the procedures for 

dispute resolution. 

24. Attach as Exhibit L, a brief 

description of any material pending 

legal proceeding(s), other than ordinary 

and routine litigation incidental to the 

business, to which the applicant or any 

of its affiliates is a party or to which any 

of its or their property is the subject. 

Include the name of the court or agency 

in which the proceeding(s) are pending, 

the date(s) instituted, and the principal 

parties thereto, a description of the 

factual basis alleged to underlie the 

proceeding(s) and the relief sought. 

Include similar information as to any 

such proceeding(s) known to be 

contemplated by the governmental 

agencies. 

EXHIBITS II—FINANCIAL 

INFORMATION 

25. Attach as Exhibit M a balance 

sheet, statement of income and 

expenses, statement of sources and 

application of revenues and all notes or 

schedules thereto, as of the most recent 

fiscal year of the applicant. If a balance 

sheet and statements certified by an 

independent public accountant are 

available, such balance sheet and 

statement shall be submitted as Exhibit 

M. Except for pro forma financial 

statements prepared for newly-created 

entities, financial statements shall be 

prepared in conformity with generally 

accepted accounting principles (GAAP) 

applied on a basis consistent with that 

of the preceding financial statement. 

26. Attach as Exhibit N a balance 

sheet and an income and expense 

statement for each affiliate of the swap 

data repository that also engages in 

swap data repository activities as of the 

end of the most recent fiscal year of 

each such affiliate. Except for pro forma 

financial statements prepared for newlycreated entities, financial statements 

shall be prepared in conformity with 

GAAP applied on a basis consistent 

with that of the preceding financial 

statement. 

27. Attach as Exhibit O the following: 

a. A complete list of all dues, fees and 

other charges imposed, or to be 

imposed, by or on behalf of applicant 

for its swap data repository services and 

identify the service or services provided 

for each such due, fee, or other charge. 

b. Furnish a description of the basis 

and methods used in determining the 

level and structure of the dues, fees and 

other charges listed above in paragraph 

a of this item. 

c. If the applicant differentiates, or 

proposes to differentiate, among its 

customers, or classes of customers in the 

amount of any dues, fees, or other 

charges imposed for the same or similar 

services, so state and indicate the 

amount of each differential. In addition, 

identify and describe any differences in 

the cost of providing such services, and 

any other factors, that account for such 

differentiations. 

EXHIBITS III—OPERATIONAL 

CAPABILITY 

28. Attach as Exhibit P copies of all 

material contracts with any swap 

execution facility, clearing agency, 

central counterparty, or third party 

service provider. To the extent that form 

contracts are used by the applicant, 

submit a sample of each type of form 

contract used. In addition, include a list 

of swap execution facilities, clearing 

agencies, central counterparties, and 

third party service providers with whom 

the applicant has entered into material 

contracts. Where swap data repository 

functions are performed by a thirdparty, attach any agreements between or 

among the applicant and such third 

party, and identify the services that will 

be provided. 

29. Attach as Exhibit Q any technical 

manuals, other guides or instructions for 

users of, or participants in, the market. 

30. Attach as Exhibit R a description 

of system test procedures, test 

conducted or test results that will 

enable the applicant to comply, or 

demonstrate the applicant’s ability to 

comply with the core principles for 

swap data repositories. 

31. Attach as Exhibit S a description 

in narrative form or by the inclusion of 

functional specifications, of each service 

or function performed as a swap data 

repository. Include in Exhibit S a 

description of all procedures utilized for 

the collection, processing, distribution, 

publication and retention (e.g., magnetic 

tape) of information with respect to 

transactions or positions in, or the terms 

and conditions of, swaps entered into by 

market participants. 

32. Attach as Exhibit T a list of all 

computer hardware utilized by the 

applicant to perform swap data 

repository functions, indicating where 

such equipment (terminals and other 

access devices) is physically located. 

33. Attach as Exhibit U a description 

of the personnel qualifications for each 

category of professional employees 

employed by the swap data repository 

or the division, subdivision, or other 

segregable entity within the swap data 

repository as described in Item 16. 

34. Attach as Exhibit V a description 

of the measures or procedures 

implemented by applicant to provide for 

the security of any system employed to 

perform the functions of a swap data 

repository. Include a general description 

of any physical and operational 

safeguards designed to prevent 

unauthorized access (whether by input 

or retrieval) to the system. Describe any 

circumstances within the past year in 

which the described security measures 

or safeguards failed to prevent any such 

unauthorized access to the system and 

any measures taken to prevent a 

reoccurrence. Describe any measures 

used to verify the accuracy of 

information received or disseminated by 

the system. 

35. Attach as Exhibit W copies of 

emergency policies and procedures and 

applicant’s business continuity-disaster 

recovery plan. Include a general 

description of any business continuitydisaster recovery resources, emergency 

procedures, and backup facilities 

sufficient to enable timely recovery and 

resumption of its operations and 

resumption of its ongoing fulfillment of 

its duties and obligations as a swap data 

repository following any disruption of 

its operations. 

36. Where swap data repository 

functions are performed by automated 

facilities or systems, attach as Exhibit X 

a description of all backup systems or 

subsystems that are designed to prevent 

interruptions in the performance of any 

swap data repository function as a result 

of technical malfunctions or otherwise 

in the system itself, in any permitted 

input or output system connection, or as 

a result of any independent source. 

Include a narrative description of each 

type of interruption that has lasted for 

more than two minutes and has 

occurred within the six (6) months 

preceding the date of the filing, 

including the date of each interruption, 

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the cause and duration. Also state the 

total number of interruptions that have 

lasted two minutes or less. 

37. Attach as Exhibit Y the following: 

a. For each of the swap data 

repository functions: 

(1) quantify in appropriate units of 

measure the limits on the swap data 

repository’s capacity to receive (or 

collect), process, store or display (or 

disseminate for display or other use) the 

data elements included within each 

function (e.g., number of inquiries from 

remote terminals); and 

(2) identify the factors (mechanical, 

electronic or other) that account for the 

current limitations reported in answer 

to (1) on the swap data repository’s 

capacity to receive (or collect), process, 

store or display (or disseminate for 

display or other use) the data elements 

included within each function. 

b. If the applicant is able to employ, 

or presently employs, the central 

processing units of its system(s) for any 

use other than for performing the 

functions of a swap data repository, 

state the priorities of assignment of 

capacity between such functions and 

such other uses, and state the methods 

used or able to be used to divert 

capacity between such functions and 

such other uses. 

EXHIBITS IV—ACCESS TO SERVICES 

38. Attach as Exhibit Z the following: 

a. As to each swap data repository 

service that the applicant provides, state 

the number of persons who presently 

utilize, or who have notified the 

applicant of their intention to utilize, 

the services of the swap data repository. 

b. For each instance during the past 

year in which any person has been 

prohibited or limited in respect of 

access to services offered by the 

applicant as a swap data repository, 

indicate the name of each such person 

and the reason for the prohibition or 

limitation. 

c. Define the data elements for 

purposes of the swap data repository’s 

real-time public reporting obligation. 

Appendix A to part 43 of the 

Commission’s Regulations (Data 

Elements and Form for Real-Time 

Reporting for Particular Markets and 

Contracts) sets forth the specific data 

elements for real-time public reporting. 

39. Attach as Exhibit AA copies of 

any agreements governing the terms by 

which information may be shared by the 

swap data repository, including with 

market participants. To the extent that 

form contracts are used by the 

applicant, submit a sample of each type 

of form contract used. 

40. Attach as Exhibit BB a description 

of any specifications, qualifications or 

other criteria that limit, are interpreted 

to limit, or have the effect of limiting 

access to or use of any swap data 

repository services furnished by the 

applicant and state the reasons for 

imposing such specifications, 

qualifications, or other criteria, 

including whether such specifications, 

qualifications or other criteria are 

imposed. 

41. Attach as Exhibit CC any 

specifications, qualifications, or other 

criteria required of participants who 

utilize the services of the applicant for 

collection, processing, preparing for 

distribution, or public dissemination by 

the applicant. 

42. Attach as Exhibit DD any 

specifications, qualifications, or other 

criteria required of any person, 

including, but not limited to, regulators, 

market participants, market 

infrastructures, venues from which data 

could be submitted to the applicant, and 

third party service providers who 

request access to data maintained by the 

applicant. 

43. Attach as Exhibit EE policies and 

procedures implemented by the 

applicant to review any prohibition or 

limitation of any person with respect to 

access to services offered or data 

maintained by the applicant and to 

grant such person access to such 

services or data if such person has been 

discriminated against unfairly. 

EXHIBITS—OTHER POLICIES AND 

PROCEDURES 

44. Attach as Exhibit FF, a narrative 

and supporting documents that may be 

provided under other Exhibits herein, 

that describe the manner in which the 

applicant is able to comply with each 

core principle and other requirements 

pursuant to Commission Regulation 

§ 49.17. 

45. Attach as Exhibit GG policies and 

procedures implemented by the 

applicant protect the privacy of any and 

all swap information that the swap data 

repository receives from reporting 

entities. 

46. Attach as Exhibit HH a description 

of safeguards, policies, and procedures 

implemented by the applicant to 

prevent the misappropriation or misuse 

of (a) any confidential information 

received by the applicant, including, but 

not limited to ‘‘Section 8 Material’’ and 

‘‘SDR Information,’’ as those terms are 

defined in Commission Regulation 

§ 49.2, about a market participant or any 

of its customers; and/or (c) intellectual 

property by applicant or any person 

associated with the applicant for their 

personal benefit or the benefit of others. 

47. Attach Exhibit II policies and 

procedures implemented by the 

applicant regarding its use of the SDR 

Information that it receives from a 

market participant, any registered 

entity, or any person for noncommercial and/or commercial 

purposes. 

48. Attach as Exhibit JJ procedures 

and a description of facilities of the 

applicant for effectively resolving 

disputes over the accuracy of the 

transaction data and positions that are 

recorded in the swap data repository. 

49. Attach as Exhibit KK policies and 

procedures relating to the applicant’s 

calculation of positions. 

50. Attach as Exhibit LL policies and 

procedures that are reasonably designed 

to prevent any provision in a valid swap 

from being invalidated or modified 

through the procedures or operations of 

the applicant. 

51. Attach as Exhibit MM a plan to 

ensure that the transaction data and 

position data that are recorded in the 

applicant continue to be maintained 

after the applicant withdraws from 

registration as a swap data repository, 

which shall include procedures for 

transferring the transaction data and 

position data to the Commission or its 

designee (including another registered 

swap data repository). 

Issued in Washington, DC on November 19, 

2010, by the Commission. 

David A. Stawick, 

Secretary of the Commission. 

Note: The following Statement will not 

appear in the Code of Federal Regulations. 

Statement of Chairman Gary Gensler 

Swap Data Repositories 

I support the proposed rulemaking to 

establish registration requirements and 

regulations of swap data repositories. 

This proposal would implement 

Congress’s mandate that all swaps— 

whether cleared or uncleared—be 

reported to a swap data repository 

registered with the Commission. 

Registration will enable the Commission 

to monitor swap data repositories for 

compliance with the Dodd-Frank Act 

and Commission regulations. The 

proposal implements Congress’s 

direction that regulators would have 

direct access to information maintained 

by swap data repositories. The proposal 

requires swap data repositories to verify 

the accuracy and completeness of all of 

the swaps data it accepts. The proposed 

rule also includes a requirement that 

swap data repositories would receive 

notifications with regard to nonfinancial end-users hedging or 

mitigating commercial risk. The 

proposal also includes important 

features where swap data repositories 

will facilitate real time reporting of 

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swaps transactions. Lastly, the proposal 

includes provisions for swap data 

repositories to aggregate certain 

information for regulators and the 

public. 

Dissenting Statement of Commissioner 

Jill E. Sommers 

I disagree with several aspects of the 

proposal the Commission is issuing 

today, but seek public comment on two 

particular areas that I believe are 

important as they relate to the critical 

function of real-time public reporting of 

swap data. 

First, I request public comment on 

whether the Commission should require 

registered swap data repositories (SDRs) 

to perform the real-time reporting duties 

described in section 2(a)(13) of the 

Commodity Exchange Act (CEA), as 

amended by the Dodd-Frank Act. 

Section 21(c) of the CEA sets forth 

specific duties that SDRs must perform. 

It directs, in relevant part, that SDRs 

‘‘shall . . . provide the information 

described in paragraph (1) [i.e., swap 

data] in such form and at such 

frequency as the Commission may 

require to comply with the public 

reporting requirements contained in 

section 2(a)(13) [i.e., real-time 

reporting].’’ Section 21(c)(4)(B). The 

proposal contemplates that SDRs will be 

required to perform real-time reporting 

for off-facility swaps, but can choose not 

to perform this function for swaps 

executed on a swap market, in which 

case the data can be submitted to a 

third-party vendor for real-time 

reporting. 

In my view, real-time reporting is one 

of the core functions that Congress 

intended SDRs to perform. The structure 

the Commission is proposing may 

needlessly fragment the public reporting 

of real-time data and could undermine 

the purpose of real-time reporting, 

which is to make data available to the 

public in a form that enhances price 

transparency. 

Second, I recognize that under 

Section 2(a)(13) of the CEA the 

Commission may also require other 

registered entities to perform real-time 

reporting, but I question the utility of 

allowing third-party vendors to perform 

this important function. As such, I also 

seek public comment on whether thirdparty vendors should be subject to some 

form of regulatory oversight in the event 

the Commission permits them to accept 

data for real-time reporting purposes. 

[FR Doc. 2010–31133 Filed 12–22–10; 8:45 am] 

BILLING CODE 6351–01–P 

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