58176 Federal Register / Vol. 76, No. 182 / Tuesday, September 20, 2011 / Proposed Rules 

1See Dodd-Frank Wall Street Reform and 

Consumer Protection Act, Public Law 111–203, 124 

Stat. 1376 (2010). 

2 7 U.S.C. 1 et seq. 

3See Reopening and Extension of Comment 

Periods for Rulemakings Implementing the DoddFrank Wall Street Reform and Consumer Protection 

Act, 76 FR 25274, May 4, 2011. 

4The transcripts from the roundtable are 

available at http://www.cftc.gov/ucm/groups/

public/@newsroom/documents/file/csjac_transcript

050311.pdf (‘‘Day 1 Roundtable Tr.’’) and http:// 

www.cftc.gov/ucm/groups/public/@newsroom/

documents/file/csjac_transcript050211.pdf (‘‘Day 2 

Roundtable Tr.’’). 

5See ‘‘CFTC Staff Concepts and Questions 

Regarding Phased Implementation of Effective Dates 

for Final Dodd-Frank Rules,’’ available at http:// 

cftc.gov/ucm/groups/public/@newsroom/

documents/file/staffconcepts050211.pdf. 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 23 

RIN 3038–AC96; 3038–AC97 

Swap Transaction Compliance and 

Implementation Schedule: Trading 

Documentation and Margining 

Requirements Under Section 4s of the 

CEA 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Further notice of proposed 

rulemaking. 

SUMMARY: The Commodity Futures 

Trading Commission (Commission or 

CFTC) is proposing regulations that 

would establish a schedule to phase in 

compliance with previously proposed 

requirements, including the swap 

trading relationship documentation 

requirement under proposed 17 CFR 

23.504, 76 FR 6715 (Feb. 8, 2011) and 

the margin requirements for uncleared 

swaps under proposed 17 CFR 23.150 

through 23.158, 76 FR 23732 (Apr. 28, 

2011). This release is a continuation of 

those rulemakings. The proposed 

schedules would provide relief in the 

form of additional time for compliance 

with these requirements. This relief is 

intended to facilitate the transition to 

the new regulatory regime established 

by the Dodd-Frank Act in an orderly 

manner that does not unduly disrupt 

markets and transactions. The 

Commission is requesting comment on 

the proposed compliance schedules, 

§§ 23.175 and 23.575, described in this 

release. 

DATES: Submit comments on or before 

November 4, 2011. 

ADDRESSES: For comments on proposed 

compliance schedule § 23.175, you may 

submit comments identified by RIN 

number 3038–AC97 and Swap 

Transaction Compliance and 

Implementation Schedule: Trading 

Documentation and Margining 

Requirements under Section 4s of the 

Commodity Exchange Act (CEA). For 

comments on proposed compliance 

schedule § 23.575, you may submit 

comments identified by RIN number 

3038–AC96 and Swap Transaction 

Compliance and Implementation 

Schedule: Trading Documentation and 

Margining Requirements under Section 

4s of the CEA. Comments may be 

submitted by any of the following 

methods: 

• Agency Web site, via its Comments 

Online process at http:// 

comments.cftc.gov. Follow the 

instructions for submitting comments 

through the Web site. 

• Mail: David A. Stawick, Secretary of 

the Commission, Commodity Futures 

Trading Commission, Three Lafayette 

Centre, 1155 21st Street, NW., 

Washington, DC 20581. 

• Hand Delivery/Courier: Same as 

mail above. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. 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, 

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, 17 CFR 

145.9. 

The Commission reserves the right, 

but shall have no obligation, to review, 

pre-screen, filter, redact, refuse or 

remove any or all of your submission 

from http://www.cftc.gov that it may 

deem to be inappropriate for 

publication, such as obscene language. 

All submissions that have been redacted 

or removed that contain comments on 

the merits of the rulemaking will be 

retained in the public comment file and 

will be considered as required under the 

Administrative Procedure Act and other 

applicable laws, and may be accessible 

under the Freedom of Information Act. 

FOR FURTHER INFORMATION CONTACT: 

Mark D. Higgins, Counsel, Office of the 

General Counsel, 202–418–5864, 

mhiggins@cftc.gov; or Camden Nunery, 

Office of the Chief Economist, 

cnunnery@cftc.gov, 202–418–5723, 

Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1155 21st Street, NW., Washington, DC 

20581. 

SUPPLEMENTARY INFORMATION:

I. Background 

On July 21, 2010, President Obama 

signed the Dodd-Frank Wall Street 

Reform and Consumer Protection Act 

(Dodd-Frank Act).1 Title VII of the 

Dodd-Frank Act amends the CEA 2 to 

establish a comprehensive new 

regulatory framework for swaps. The 

legislation was enacted to reduce risk, 

increase transparency, and promote 

market integrity within the financial 

system by, among other things: (1) 

Providing for the registration and 

comprehensive regulation of swap 

dealers and major swap participants; (2) 

imposing clearing and trade execution 

requirements on standardized derivative 

products; (3) creating robust 

recordkeeping and real-time reporting 

regimes; and (4) enhancing the 

rulemaking and enforcement authorities 

of the Commission with respect to, 

among others, all registered entities and 

intermediaries subject to the 

Commission’s oversight. 

To implement the Dodd-Frank Act, 

the Commission has to-date issued 55 

advance notices of proposed rulemaking 

or notices of proposed rulemaking, two 

interim final rules, 12 final rules, and 

one proposed interpretive order. By the 

beginning of May 2011, the Commission 

had published in the Federal Register a 

significant number of notices of 

proposed rulemaking, which 

represented a substantially complete 

mosaic of the Commission’s proposed 

regulatory framework under Title VII. In 

recognition of that fact and with the goal 

of giving market participants additional 

time to comment on the proposed new 

regulatory framework for swaps, either 

in part or as a whole, the Commission 

reopened or extended the comment 

period of many of its proposed 

rulemakings through June 3, 2011.3 In 

total, the Commission has received over 

20,000 comments in response to its 

Dodd-Frank Act rulemaking proposals. 

To give the public an opportunity to 

comment further on implementation 

phasing, on May 2–3, 2011, the 

Commission, along with the Securities 

and Exchange Commission (SEC), held 

a joint, two-day roundtable on issues 

related to implementation.4 In 

connection with this roundtable, 

Commission staff proposed thirteen 

concepts to be considered regarding 

implementation phasing, and staff asked 

a series of questions based on the 

concepts outlined.5 The Commission 

has received numerous comments in 

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Federal Register / Vol. 76, No. 182 / Tuesday, September 20, 2011 / Proposed Rules 58177 

6Such comments are available at http:// 

comments.cftc.gov/PublicComments/

CommentList.aspx?id=1000. 

7CFTC Docket 3038–AC96. 

8CFTC Docket 3038–AC97. 

9E.g., Letter from Electric Trade Association, 

dated May 4, 2011 at 5; Letter from John R. Gidman, 

Association of Institutional Investors, dated June 

10, 2011 at 3–4. 

10Letter from the Coalition of Physical Energy 

Companies, dated Mar. 14, 2011 at 4. 

11Letter from the Futures Industry Association, 

the Financial Services Forum, the International 

Swaps and Derivatives Association and the 

Securities Industry and Financial Markets 

Association, dated May 4, 2011 at 5. 

12Letter from the Bank of Tokyo-Mitsubishi UFJ, 

Ltd., et al., dated May 6, 2011 at 6. 

13Letter from the Financial Services Roundtable, 

dated May 12, 2011 at 4. 

14These comments are more fully discussed later 

in the preamble. 

15The Commission also is proposing Swap 

Transaction Compliance and Implementation 

Schedule: Clearing and Trade Execution 

Requirements under Section 2(h) of the CEA. 

16This release should be considered to be a 

continuation of the rulemaking undertaken by 

CFTC Dockets 3038–AC96 and 3038–AC97. Only 

comments pertaining to the proposed compliance 

schedule will be considered as part of this Further 

Notice. 

17Section 712(f) of the Dodd-Frank Act states: 

‘‘Beginning on the date of enactment of this Act and 

notwithstanding the effective date of any provision 

of this Act, the [Commission] * * * may, in order 

to prepare for the effective dates of the provisions 

of this Act—(1) promulgate rules, regulations, or 

orders permitted or required by this Act * * *.’’ 

18See Swap Trading Relationship Documentation 

Requirements for Swap Dealers and Major Swap 

Participants, 76 FR 6715, Feb. 8, 2011. 

response to both its roundtable and the 

staff concepts and questions.6

These comments have come from a 

variety of existing and potential market 

infrastructures, such as clearinghouses, 

trading platforms, and swap data 

repositories. Comments also have come 

from entities that may potentially be 

swap dealers (SDs) or major swap 

participants (MSPs), as well as those 

financial entities that may not be 

required to register with the 

Commission, but whose swap 

transactions may have to be conducted 

in compliance with certain 

requirements under Section 4s of the 

CEA by virtue of their trading with 

registered SDs or MSPs. For example, 

the swap transactions between SDs or 

MSPs and their counterparties will be 

subject to certain documentation of 

trading and margining requirements as 

proposed by the Commission in ‘‘Swap 

Trading Relationship Documentation 

Requirements for Swap Dealers and 

Major Swap Participants,’’ 76 FR 6715 

(Feb. 8, 2011),7 (hereinafter ‘‘Trading 

Documentation’’) and ‘‘Margin 

Requirements for Uncleared Swaps for 

Swap Dealers and Major Swap 

Participants,’’ 76 FR 23732 (Apr. 28, 

2011) (hereinafter ‘‘Margin 

Requirements’’).8

One of the key themes to emerge from 

the comments received by the 

Commission is that some market 

participants may require more time to 

ensure that their swap transactions 

comply with certain new regulatory 

requirements that will apply when they 

enter into swap transactions with 

registered SDs and MSPs.9 For example, 

one commenter requested a 

‘‘meaningful’’ period after finalization of 

the suite of rulemakings that is 

applicable to it before actual compliance 

will be required.10 Similarly, several 

trade associations recommended the 

Commission allow ‘‘sufficient’’ time for 

infrastructure and business practices to 

develop before requiring compliance 

with the new requirements.11 A group of 

international banks commented that the 

Commission should defer compliance 

until December 31, 2012, at which point 

the regulatory timetable as per the 

September 2009 G20 Pittsburgh 

statement will have reached a 

conclusion.12 Another commenter noted 

that some entities may be able to 

comply relatively quickly with certain 

documentation requirements that are 

largely consistent with current business 

practices while other requirements may 

need a longer implementation period.13

Although commenters varied in their 

recommendations regarding the time it 

would take to bring their swaps into 

compliance with the new regulatory 

requirements, many commenters agreed 

on phasing in compliance with these 

requirements by type of market 

participant based on a variety of factors, 

including a market participant’s 

experience, resources, and the size and 

complexity of its transactions.14 The 

Commission has taken these comments 

into consideration in developing these 

proposed compliance schedules. 

The swap transaction compliance 

requirements that are the focus of this 

proposed rulemaking include 

compliance with certain provisions of 

the Trading Documentation and Margin 

Requirements under Section 4s of the 

CEA.15 The Commission’s proposed 

compliance schedules are designed to 

afford affected market participants a 

reasonable amount of time to bring their 

transactions into compliance with such 

requirements. The proposed schedules 

also would provide relief in the form of 

additional time for compliance with 

these transaction compliance 

requirements and are further explained 

below. This relief is intended to 

facilitate the transition to the new 

regulatory regime established by the 

Dodd-Frank Act in an orderly manner 

that does not unduly disrupt markets 

and transactions. 

Under this further notice of proposed 

rulemaking, the Commission is seeking 

additional public comment on proposed 

compliance schedules that ultimately 

would be included in final rules 

regarding Trading Documentation and 

Margin Requirements.16 The proposed 

schedules would be finalized and 

become effective at such time as the 

final Trading Documentation and 

Margin Requirement rules were 

published in the Federal Register. 

II. Proposed Regulation 

A. Authority To Implement Proposed 

Regulations 

In this further notice of proposed 

rulemaking, the Commission relies on 

its general authority to phase in 

compliance with the rules and 

regulations enacted pursuant to the 

Dodd-Frank Act. Section 712(f) of Title 

VII also authorizes the Commission to 

promulgate rules to prepare for the 

effective dates of the provisions of the 

Dodd-Frank Act.17 In addition, the 

Commission relies on Section 8(a)(5) of 

the CEA, which authorizes the 

Commission to promulgate such 

regulations as, in the judgment of the 

Commission, are reasonably necessary 

to effectuate any of the provisions or to 

accomplish any of the purposes of the 

CEA. In accordance with this authority, 

the proposed regulations would amend 

part 23 of the Commission’s regulations 

to phase compliance with previously 

proposed rules related to Trading 

Documentation and Margin 

Requirements under Section 4s of the 

CEA. 

B. Implementation Phasing of Trading 

Documentation Under Section 4s(i) of 

the CEA 

1. Background on the Trading 

Documentation Requirement 

Section 731 of the Dodd-Frank Act 

added a new Section 4s(i)(2) to the CEA 

that requires the Commission to adopt 

rules governing documentation 

standards for SDs and MSPs. As 

described in Section 4s(i)(1), these 

documentation standards, as prescribed 

by the Commission, ‘‘relate to the timely 

and accurate confirmation, processing, 

netting, documentation, and valuation 

of all swaps.’’ On January 13, 2011, the 

Commission proposed regulations 

related to the Trading Documentation 

that SDs and MSPs must enter into with 

their counterparties in order to establish 

a swap trading relationship and 

document the swap transactions that 

occur pursuant to that relationship.18

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58178 Federal Register / Vol. 76, No. 182 / Tuesday, September 20, 2011 / Proposed Rules 

19 76 FR at 6725. 

20 76 FR at 6726. In large part, proposed 

§ 23.504(b)(1) reflects existing trading relationship 

documentation between counterparties, such as the 

widely-used ISDA Master Agreement, but does 

propose additional documentation requirements. 

21 76 FR at 6717 and 6726. In particular, under 

proposed § 23.504(b)(2) parties must document the 

confirmation of their swap transactions. The 

Commission proposed the timing requirements for 

confirmation under § 23.501 in Confirmation, 

Portfolio Reconciliation, and Portfolio Compression 

Requirements for Swap Dealers and Major Swap 

Participants, 75 FR 81519, Dec. 28, 2010. However, 

the writing necessary for confirmation is required 

pursuant to § 23.504(b)(2) and was proposed under 

the Trading Documentation rules. 

22See section II.C below for further discussion of 

Margin Requirements. Proposed § 23.504(b)(3)(i)– 

(iii) is intended to work together with, and serve as 

a cross-reference to, rules proposed by the 

Commission in its Margin Requirements proposal, 

§ 23.151 (76 FR at 23744), as well as rules proposed 

by the prudential regulators related to initial and 

variation margin requirements for SDs and MSPs 

that are banks. See Margin and Capital 

Requirements for Covered Swap Entities, 76 FR 

27564, 27589, May 11, 2011 (proposing § _.5 

relating to documentation of margin matters). While 

proposed § 23.504 would apply to all SDs and MSPs 

registered with the Commission, the specific initial 

and variation margin requirements for SDs or MSPs 

would depend on whether the entity has a 

prudential regulator as that term is defined under 

Section 1a(39) of the CEA. 

23As explained in the preamble to the Trading 

Documentation proposal, proposed 

§ 23.504(b)(3)(iii) and (iv) are intended to work 

together with rules proposed under section 4s(l) of 

the CEA. 76 FR at 6718 (citing Protection of 

Collateral of Counterparties to Uncleared Swaps; 

Treatment of Securities in a Portfolio Margining 

Account in a Commodity Broker Bankruptcy, 75 FR 

75432, Dec. 3, 2010). Accordingly, documentation 

of the collateral arrangements required under 

proposed § 23.601–603 would be included in the 

trading documentation required under § 23.504. 

Previously proposed § 23.601 requires that the SD 

and MSP notify each counterparty of the 

counterparty’s right to elect for segregation of the 

collateral it supplies as initial margin. Previously 

proposed § 23.602 sets forth requirements for the 

treatment of segregated margin, including the use of 

an independent custodian and the requirement for 

a written agreement that includes the custodian as 

a party, and also allows for the SD or MSP to agree 

in writing with its counterparty that variation 

margin may also be held in a segregated account. 

Previously proposed § 23.603 relates to the 

investment and use of collateral. 

24 76 FR at 6719. The valuation that would be 

established under § 23.504(b)(4) is relied upon in 

the Margin Requirements rule § 23.156(b)(1) as the 

basis for calculating variation margin. Similar 

valuation provisions also were included by the 

prudential regulators in their Margin and Capital 

Requirements proposal. See 76 FR 27589. 

25Orderly Liquidation Termination Provision in 

Swap Trading Relationship Documentation for 

Swap Dealers and Major Swap Participants, 76 FR 

6708, Feb. 8, 2011. 

26 76 FR at 6709. 

27While the compliance schedule proposed in 

this release would not apply to these provisions, the 

compliance dates for SDs and MSPs to come into 

compliance with these provisions will be taken up 

when the Commission adopts final rules. 

28Confirmation, Portfolio Reconciliation, and 

Portfolio Compression Requirements for Swap 

Dealers and Major Swap Participants, 75 FR 81519, 

Dec. 28, 2010. The Commission notes that rules 

related to portfolio reconciliation (§ 23.502) and 

portfolio compression (§ 23.503) were not crossreferenced in the Trading Documentation rule and 

would not be required to be included in the 

counterparties’ primary trading relationship 

documentation. However, if the Commission 

finalizes those requirements at the same time as the 

Trading Documentation rule parties may, in their 

discretion, include documentation establishing 

compliance with such provisions in their primary 

documentation, if applicable. 

29Protection of Collateral of Counterparties to 

Uncleared Swaps; Treatment of Securities in a 

Portfolio Margining Account in a Commodity 

Broker Bankruptcy, 75 FR 75432, Dec. 3, 2010. 

30 In promulgating final rules regarding the timing 

of confirmation by SDs, MSPs, and their 

counterparties, the Commission will ensure that 

compliance with the final confirmation 

requirements work together with the compliance 

schedule as proposed under this release. 

Specifically, previously proposed 

§ 23.504(a) would require SDs and MSPs 

to establish, maintain, and enforce 

written policies and procedures 

designed to ensure that each SD or MSP 

and its counterparty agree in writing to 

all terms of their swap trading 

relationship and have executed all 

agreements required by the rules.19 The 

proposal also would address the 

essential documentation needed to 

establish a trading relationship with a 

registered SD or MSP. Proposed 

§ 23.504(b)(1) would require that the 

trading documentation include written 

agreement by the parties on terms 

relating to payment obligations, netting 

of payments, events of default or other 

termination events, netting of 

obligations upon termination, transfer of 

rights and obligations, governing law, 

valuation, and dispute resolution 

procedures.20 Proposed § 23.504(b)(2) 

would establish that all confirmations of 

swap transactions, as required under 

proposed § 23.501, would be considered 

to be part of the required swap trading 

relationship documents.21

Proposed § 23.504(b)(3) would require 

that the trading documentation include 

documentation of the credit support 

arrangements between the 

counterparties. These arrangements 

would include the counterparties’ 

agreement on initial and variation 

margin requirements,22 the types of 

assets that may be used as margin, and 

the investment and rehypothecation 

terms for those assets. The proposal also 

would include the custodial 

arrangements for margin assets, 

including whether margin assets are to 

be segregated with an independent third 

party in accordance with Section 4s(l) of 

the CEA.23

Proposed § 23.504(b)(4) would require 

that a SD or MSP and its counterparty 

agree on how they will value each swap 

transaction into which they enter from 

the point of execution until the 

termination, maturity, or expiration of 

the swap.24 Proposed § 23.504(b)(6) 

would establish certain documentation 

requirements for bilaterally-executed 

swaps that are subsequently submitted 

for clearing to a DCO. Finally, proposed 

§ 23.504(b)(5), the subject of a separate 

notice of proposed rulemaking,25 would 

require that a SD or MSP and its 

counterparty include in their Trading 

Documentation ‘‘a provision that 

confirms both parties’ understanding of 

how the new orderly liquidation 

authority under the Title II of the DoddFrank Act and the Federal Deposit 

Insurance Act may affect their portfolios 

of uncleared, bilateral swaps.’’ 26

The audit, recordkeeping, and 

reporting provisions of proposed 

§ 23.504(c), (d), and (e) that were 

proposed by the Commission at the 

same time as proposed § 23.504(a) and 

(b) would not be subject to the 

compliance schedule proposed below 

because the Commission believes that 

compliance with those requirements 

rests solely with registered SDs and 

MSPs and would not require that SDs or 

MSPs work with their non-registrant 

counterparties to comply with these 

requirements.27 The Commission 

solicits comment on whether the 

compliance schedule should be applied 

to these provisions as well. The 

Commission also solicits comment 

regarding whether the compliance 

schedule should be applied to proposed 

§ 23.505, which relates to end-user 

exception documentation. 

The Commission observes that before 

swap dealers and major swap 

participants could be required to 

comply with § 23.504, the Commission 

must adopt final rules related to 

confirmation of swap transactions 28 and 

the protection of collateral for uncleared 

swaps.29 This is because the substance 

of the required documentation under 

proposed § 23.504 is found in those two 

rulemakings. For this reason, the 

Commission anticipates that it will 

finalize the confirmation and protection 

of collateral proposals at approximately 

the same time that it finalizes the 

Trading Documentation rule. 

Consequently, the compliance 

schedules proposed under this release 

would not become effective until the 

Commission finalizes those two 

proposals in addition to the Trading 

Documentation rule.30

In addition, the Commission 

recognizes that the swap transaction 

compliance schedules that are the 

subject of this proposal reference terms 

such as ‘‘swap,’’ ‘‘swap dealer,’’ and 

‘‘major swap participant’’ that are the 

subject of rulemaking under sections 

712(d)(1) and 721(c) of the Dodd-Frank 

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31Section 712(d)(1) provides: ‘‘Notwithstanding 

any other provision of this title and subsections (b) 

and (c), the Commodity Futures Trading 

Commission and the Securities and Exchange 

Commission, in consultation with the Board of 

Governors [of the Federal Reserve System], shall 

further define the terms ‘swap’, ‘security-based 

swap’, ‘swap dealer’, ‘security-based swap dealer’, 

‘major swap participant’, ‘major security-based 

swap participant’, and ‘security-based swap 

agreement’ in section 1a(47)(A)(v) of the 

Commodity Exchange Act (7 U.S.C. 1a(47)(A)(v)) 

and section 3(a)(78) of the Securities Exchange Act 

of 1934 (15 U.S.C. 78c(a)(78)).’’ Section 721(c) 

provides: ‘‘To include transactions and entities that 

have been structured to evade this subtitle (or an 

amendment made by this subtitle), the Commodity 

Futures Trading Commission shall adopt a rule to 

further define the terms ‘swap’, ‘swap dealer’, 

‘major swap participant’, and ‘eligible contract 

participant’.’’ 

32Further Definition of ‘‘Swap Dealer,’’ 

‘‘Security-Based Swap Dealer,’’ ‘‘Major Swap 

Participant,’’ ‘‘Major Security-Based Swap 

Participant,’’ and ‘‘Eligible Contract Participant’’; 

Proposed Rule, 75 FR 80174, Dec. 21, 2010 and 

Further Definition of ‘‘Swap,’’ ‘‘Security-Based 

Swap,’’ and ‘‘Security-Based Swap Agreement’’; 

Mixed Swaps; Security-Based Swap Agreement 

Recordkeeping, 76 FR 29818, May 23, 2011. 

33See Effective Date for Swap Regulation, 76 FR 

42508, Jul. 19, 2011. 

34Registration of Swap Dealers and Major Swap 

Participants, 75 FR 71379, Nov. 23, 2010. 

35The Section 4s Requirements include capital 

and margin, reporting and recordkeeping, daily 

trading records, business conduct standards, 

documentation standards, risk management and 

trading duties, designation of a chief compliance 

officer, and segregation with regard to uncleared 

swaps. 75 FR at 71380. 

36 In accordance with the preamble to the 

Registration proposal, the Commission anticipates 

finalizing other Section 4s Requirements, such as 

those rules proposed under Section 4s(e) (capital 

requirements), Section 4s(f) (reporting and 

recordkeeping), Section 4s(g) (daily trading 

records), Section 4s(h) (business conduct 

standards), Section 4s(j) (duties, including trading, 

risk management, disclosure of information, 

conflicts of interest, and antitrust considerations), 

and Section 4s(k) (designation of a chief compliance 

officer), and providing for specific compliance 

deadlines in the respective final implementing 

rulemakings based on the extensive public 

comment already received. 

37 75 FR 80638, Dec. 22, 2010. 

38Recognizing this reality, the Commission 

previously proposed rules under which SDs and 

MSPs would have policies and procedures to bring 

their transactions with all their counterparties into 

compliance with the requirements of Section 4s(i) 

of the CEA. 

39Section 4s(e) applies a bifurcated approach that 

requires each SD and MSP for which there is a 

prudential regulator to meet margin requirements 

established by the applicable prudential regulator, 

Continued 

Act.31 The Commission and the SEC 

have proposed rules that would further 

define each of these terms.32 As such, 

and in a manner consistent with the 

temporary relief provided in the 

Commission’s Effective Date Order,33

the Commission must adopt final rules 

regarding the further definitions in 

question prior to requiring compliance 

with the Trading Documentation rule. 

Lastly, the Commission must adopt 

final rules relating to the registration, 

including procedures for the provisional 

registration, of SDs and MSPs.34 The 

finalization of these rules would enable 

SDs and MSPs to register with the 

Commission. As explained in the 

preamble to the proposed registration 

rule for SDs and MSPs, the Commission 

would afford SDs and MSPs an overall 

phased implementation approach with 

regard to the specific requirements 

under Section 4s (the ‘‘Section 4s 

Requirements’’).35 In other words, SDs 

and MSPs would be able to 

provisionally register with the 

Commission and come into compliance 

with the Section 4s Requirements 

within the compliance deadlines set 

forth in the respective final 

implementing rulemakings.36 The 

specific compliance schedules proposed 

in this release comport with the 

approach discussed in the proposed 

registration rules. 

Another proposed rule under Section 

4s of the CEA indicated that certain 

requirements could be met through the 

use of swap trading relationship 

documentation (e.g., in the ISDA master 

agreement). The disclosure and 

documentation requirements proposed 

under the ‘‘Business Conduct Standards 

for Swap Dealers and Major Swap 

Participants With Counterparties’’ 

rulemaking 37 could be included in 

Trading Documentation at the discretion 

of the SD or MSP and its counterparty. 

However, there is no express 

requirement under either the proposed 

Business Conduct Standards with 

Counterparties rules or proposed 

§ 23.504 that the proposed disclosure 

and documentation requirements be 

included in the Trading Documentation. 

For that reason, issues related to 

compliance dates for the Business 

Conduct Standards with Counterparties 

rules will be taken up when finalizing 

that proposal. 

2. Compliance Schedule for 

Documentation Requirements—§ 23.575 

As stated above, the Commission is 

proposing a compliance schedule, 

§ 23.575, that is specific to the 

documentation requirements of 

proposed § 23.504. Under the proposed 

compliance schedule in § 23.575, an SD 

or MSP would be afforded ninety (90), 

one hundred eighty (180), or two 

hundred and seventy (270) days to bring 

its Trading Documentation with its 

various counterparties into compliance 

with the requirements of proposed 

§ 23.504, depending on the identity of 

each such counterparty. The 

categorization by type of counterparty is 

discussed further below. 

As a practical matter, in order for SDs 

and MSPs to comply with the 

requirements of proposed § 23.504, they 

will need to work with each of their 

counterparties, including nonregistrants, to review, negotiate, execute, 

and deliver the documentation required 

by proposed § 23.504. Because every 

bilateral swap transaction has two 

counterparties, if a non-registrant is 

trading with a registered SD or MSP, the 

swap transactions entered into by those 

two parties would be subject to the new 

regulatory regime established by Section 

4s of CEA.38 For this reason, the 

Commission is focusing on phasing 

swap transaction compliance. 

The Commission recognizes that a 

number of new regulations under 

Section 4s will apply to swap 

transactions where the counterparty to 

an SD or MSP is not registered with the 

Commission. In such cases, the 

Commission is affording more time for 

those transactions to be brought into 

compliance with the new regulations. 

Moreover, registered SDs or MSPs may 

require additional time to bring their 

transactions into compliance with 

respect to non-registrant counterparties 

that have hundreds or thousands of 

managed accounts, referred to as thirdparty subaccounts for the purposes of 

this proposal. 

In many instances, as noted in the 

proposing release for § 23.504, 

counterparties already will have in 

place industry standard documentation 

in the form of the widely-used ISDA 

master agreement, definitions, 

schedules, confirmations, and credit 

support annex to document their trades. 

The Commission anticipates that some 

of this existing documentation will meet 

some of the requirements of proposed 

§ 23.504. However, it may be necessary 

for parties to negotiate certain 

amendments or additional 

documentation to comply with the new 

rules. In these instances, and in 

instances where counterparties have not 

previously documented their trading 

relationship and/or individual 

transactions, the Commission proposes 

to afford relief in the form of additional 

time to comply. 

C. Implementation Phasing of the 

Margin Documentation Requirements 

Under Section 4s(e) of the CEA 

1. Background on the Margin for 

Uncleared Swaps Requirements 

Section 731 of the Dodd-Frank Act 

added a new Section 4s(e) to the CEA 

that explicitly requires the Commission 

to adopt rules establishing margin 

requirements for all registered SDs and 

MSPs that are not banks.39 Under 

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and each SD and MSP for which there is no 

prudential regulator to comply with Commission’s 

regulations governing margin. 

40Margin Requirements for Uncleared Swaps for 

Swap Dealers and Major Swap Participants, 75 FR 

23732, Apr. 28, 2011. 

41 76 FR at 23734. 

42 In some instances this SD or MSP counterparty 

may be subject to regulation by a prudential 

regulator. The margin rules proposed by the 

Commission and those proposed by the prudential 

authorities require any CSE to collect margin, but 

do require a CSE to post margin. Under this 

approach, a non-bank SD or MSP will look to the 

Commission’s rules when calculating the margin 

that should be collected from its counterparty, and 

a bank SD or MSP will look to the prudential 

regulators’ rules when calculating the margin that 

should be collected from its counterparty. As a 

result, in a trade between a bank SD and a non-bank 

SD, the initial margin amounts collected by each 

side could differ depending on the applicable rules. 

43The Commission’s proposed capital rules for 

SDs and MSPs are related to the proposed Margin 

Requirements rules, but the margin rules are not 

dependent on implementation of the capital rule in 

order to take effect. 

44 76 FR 23734. As stated in the proposal, 

margining requirements would also apply to swaps 

where one side of the trade is not registered with 

the Commission. 76 FR 23732–36. 

45Letter from Karrie McMillan, Investment 

Company Institute, dated June 10, 2011at 9–10. 

46See Letter from Financial Services Forum, 

Futures Industry Association, International Swaps 

and Derivatives Association, and Securities 

Industry Association, dated May 4, 2011; Letter 

from Karrie McMillan, Investment Company 

Institute, dated June 10, 2011 at 10–11. 

Section 4s(e)(2)(B), the Commission is 

required to adopt rules for non-bank 

SDs and MSPs imposing ‘‘both initial 

and variation margin requirements on 

all swaps that are not cleared by a 

registered derivatives clearing 

organization.’’ 

On April 28, 2011, the Commission 

issued proposed regulations to 

implement the margin requirements for 

uncleared swaps for SDs and MSPs for 

which there is no prudential regulator 

(referred to as ‘‘covered swap entities’’ 

or ‘‘CSEs’’ under the proposal).40 The 

proposed Margin Requirements 

recognized that specific margin 

requirements would vary by the type of 

counterparty entering into a swap with 

a CSE. For instance, the proposed rules 

would not impose any margin 

requirements on swaps between CSEs 

and non-financial end users.41

The provisions of the proposed 

Margin Requirements include 

definitions (§ 23.150), documentation 

regarding credit support arrangements 

(§ 23.151), the specific margin 

requirements between CSEs and their 

counterparties (§§ 23.152–23.154), 

provisions for the calculation of initial 

margin (§ 23.155), provisions for the 

calculation of variation margin 

(§ 23.156), requirements for the forms of 

margin (§ 23.157), and custodial 

arrangement requirements (§ 23.158). 

Specific margin requirements vary by 

the type of counterparty with which a 

CSE is trading—another SD or MSP 42

(§ 23.152), a financial entity (§ 23.153), 

or a non-financial entity (§ 23.154). 

As explained above with regard to the 

Trading Documentation rules, the 

Commission observes that no CSE could 

be required to comply with final Margin 

Requirements rules until (1) the 

Commission adopts further definitions 

of ‘‘swap,’’ ‘‘swap dealer,’’ and ‘‘major 

swap participant’’; and (2) the 

Commission adopts registration rules for 

SDs and MSPs. As noted above, the 

proposed Margin Requirements crossreference certain provisions in the 

Trading Documentation rule. As a 

result, the final Trading Documentation 

rule would have to be published in the 

Federal Register prior to requiring 

compliance with the final Margin 

Requirements.43

2. Compliance Schedule for Margin 

Requirements Documentation—§ 23.175 

In this further notice of proposed 

rulemaking, the Commission is 

proposing a compliance schedule, 

§ 23.175, that is specific to the Margin 

Requirements of proposed § 23.150 

through § 23.158. Under the proposed 

Margin Requirements, an SD or MSP for 

which there is no prudential regulator, 

is defined as a ‘‘covered swap entity.’’ 

For consistency, this term also would be 

used in the proposed compliance 

schedule. In order to achieve 

compliance with the Margin 

Requirement, a CSE would be required 

to execute documentation regarding 

credit support arrangements and 

custodial arrangements with its 

counterparties. This documentation, 

required by proposed § 23.151 and 

§ 23.158, would specify in advance 

material terms such as how margin 

would be calculated, what types of 

assets would be permitted to be posted, 

what margin thresholds, if any, would 

apply, and where margin would be held. 

As stated in the proposal, having 

comprehensive documentation in place 

at the time of transaction execution 

would allow each party to a swap to 

manage its risks more effectively 

throughout the life of the swap and to 

avoid disputes regarding issues such as 

valuation.44

Under the proposed compliance 

schedule, a covered swap entity would 

be afforded ninety (90), one hundred 

eighty (180), or two hundred and 

seventy (270) days (depending on the 

identity of its counterparty) to come into 

compliance with all of the Margin 

Requirements. The categorization by 

type of counterparty is discussed further 

below. 

D. Three-Part Implementation Phasing 

The Commission believes that it is in 

the public interest to afford SDs and 

MSPs over which the Commission has 

jurisdiction relief in the form of 

additional time to comply with 

proposed rules related to Trading 

Documentation (§ 23.504) and Margin 

Requirements (§ 23.150–23.158), 

depending on the type of counterparty 

with which the SD or MSP is trading. 

These proposed compliance 

schedules, §§ 23.575 and 23.175, seek to 

achieve the best balance among several 

goals. First, the Commission believes 

that SDs or MSPs may require 

additional time to work with certain 

market participants to bring their swaps 

into compliance with the new 

requirements of proposed Trading 

Documentation (§ 23.504) and Margin 

Requirements (§ 23.150–23.158). This is 

particularly true for those market 

participants that have hundreds or 

thousands of managed accounts, 

referred to as third-party subaccounts 

for the purposes of this proposal. 

As one commenter noted, ‘‘[i]n the 

context of asset managers, the account 

set up process has to be multiplied over 

hundreds of subaccounts. Processing all 

of these subaccounts will take time even 

for the largest and most technologically 

advanced asset managers.’’ 45 In light of 

this, the Commission is proposing to 

afford SDs and MSPs with additional 

time to come into compliance with the 

requirements of Trading Documentation 

(§ 23.504) and Margin Requirements 

(§ 23.150–23.158) for swaps involving 

entities that are defined as ‘‘third-party 

subaccounts’’ because of the additional 

burden associated with documenting 

such accounts. 

Moreover, several commentators 

emphasized the need to have adequate 

time to educate their clients regarding 

the new regulatory requirements.46 For 

instance, market participants that may 

not be registered with the Commission 

would be less familiar with the new 

regulatory requirements. In addition, 

market participants with third-party 

subaccounts would have to educate 

additional clients. Accordingly, swaps 

involving either type of participant 

should be given additional time to 

comply with the new requirements. 

Another goal of the proposed 

compliance schedule is derived from 

the Commission’s belief that it is 

important to have a cross-section of 

market participants involved at the 

outset of implementing the 

requirements under Trading 

Documentation (§ 23.504) and Margin 

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47 If a security-based swap dealer or a major 

security-based swap participant is not yet required 

to register with the SEC at such time as the 

Commission issues final rules § 23.504 or 

§§ 23.150–23.158, then the security-based swap 

dealer or a major security-based swap participant 

would be treated as a Category 2 Entity. 

48 It should be noted that many commodity pools 

meet the definition of private fund under section 

202(a) of the Investment Advisors Act of 1940. Such 

a commodity pool would only be a Category 1 

Entity if it met the other criteria of an active fund. 

49The Commission is unaware of any positionlevel or transaction-level data on private fund swap 

activity in a publicly available form. In order to 

determine private fund activity levels the 

Commission consulted with academics focusing 

their research in this area, with industry 

participants, and with groups that represent the 

industry. 

Requirements (§§ 23.150–23.158). 

Accordingly, the Commission proposes 

that the first phase of implementation 

include SDs, MSPs and ‘‘active funds’’ 

(a term that is defined and discussed 

further below) that are experienced, 

have the resources, and can come into 

compliance more readily than entities 

that trade swaps less frequently. The 

Commission believes that having a 

cross-section of market participants 

involved at the outset will facilitate the 

development of systems necessary for 

SDs and MSPs to achieve compliance 

with the new requirements. 

The Commission proposes a 

compliance schedule that affords 

additional time for SDs and MSPs to 

come into compliance with the 

requirements of Trading Documentation 

(§ 23.504) and Margin Requirements 

(§§ 23.150–23.158) based on the type of 

counterparty with which they are 

trading. Market participants that are 

financial entities, as defined in Section 

2(h)(7)(C) of the CEA, are grouped into 

the following four categories: 

• Category 1 Entities include swap 

dealers, security-based swap dealers, 

major swap participants, major securitybased swap participants, or active 

funds. 

• Category 2 Entities include 

commodity pools; private funds as 

defined in Section 202(a) of the 

Investment Advisors Act of 1940 other 

than active funds; employee benefit 

plans identified in paragraphs (3) and 

(32) of section 3 of the Employee 

Retirement Income and Security Act of 

1974; or persons predominantly engaged 

in activities that are in the business of 

banking, or in activities that are 

financial in nature as defined in Section 

4(k) of the Bank Holding Company Act 

of 1956, provided that the entity is not 

a third-party subaccount. 

• Category 3 Entities include Category 

2 Entities whose positions are held as 

third-party subaccounts. 

• Category 4 Entities includes any 

person not included in Categories 1, 2, 

or 3. 

Phase 1—Category 1 Entities 

Category 1 Entities include those 

dealers and major participants in the 

swap and security-based swap markets 

that will be required to register with the 

Commission or the Securities and 

Exchange Commission (SEC).47 Under 

Title VII, these market participants will 

be required to register with either the 

CFTC or SEC as a result of their swaps 

or security-based swaps activities. Based 

on their level of market experience, and 

based on their status as registrants, the 

Commission believes they should be 

capable of complying with proposed 

Trading Documentation (§ 23.504) and 

Margin Requirements (§§ 23.150– 

23.158) no later than 90 days from the 

date of adoption of final rules. 

The Commission also is proposing to 

include those entities it defines as 

‘‘active funds’’ in the first category of 

market participants. The proposed 

definition of ‘‘active fund’’ would mean 

any private fund as defined in section 

202(a) of the Investment Advisors Act of 

1940, that is not a third-party 

subaccount and that executes 20 or 

more swaps per month based on a 

monthly average over the 12 months 

preceding the publication of either 

§ 23.504 or §§ 23.150–23.158, as 

applicable.48 By including these entities 

in Category 1, the Commission seeks to 

achieve the goal of ensuring a crosssection of market participants are 

included at the outset of trading and 

margining documentation 

implementation. 

The Commission is relying on the 

definition of private fund from Section 

2(h)(7)(C) of the CEA, as well as Section 

402 of the Dodd-Frank Act. However, 

the Commission is limiting the 

definition in two ways. First, the 

definition excludes third-party 

subaccounts, as discussed further 

below. Second, the definition is limited 

to those private funds that execute 20 or 

more swaps per month based on the 

average over the 12 months preceding 

either (1) the Commission’s adoption of 

§ 23.150 through § 23.158 in the case of 

§ 23.175; or (2) the Commission’s 

adoption of § 23.504 in the case of 

§ 23.575. Based on a preliminary 

assessment, the Commission believes 

the proposed numerical threshold for 

active funds is appropriate because a 

private fund that conducts this volume 

of swaps would be likely to have: 

(1) Sufficient resources to enter into 

arrangements that comply with the 

Trading Documentation and Margin 

Requirements earlier than other types of 

market participants; and (2) sufficient 

market experience to contribute 

meaningfully to the ‘‘buy-side’’ 

perspective as industry standards are 

being developed.49 In defining ‘‘active 

fund’’ accordingly, the Commission 

believes it has included those market 

participants that are likely to be among 

the most experienced participants with 

expertise and resources needed to come 

into transaction compliance quickly. 

Phase 2—Category 2 Entities 

Next, the Commission proposes to 

phase in compliance for any swap 

transaction between an SD or MSP and 

a Category 2 Entity. The Commission is 

proposing to afford swap transactions 

between these types of market 

participants 180 days from the dates of 

adoption of Trading Documentation 

(§ 23.504) and Margin Requirements 

(§§ 23.150–23.158) to come into 

compliance. This additional time takes 

into consideration the fact that Category 

2 Entities will not be required to be 

registered with the Commission and 

they may be less experienced and less 

frequent users of the swap markets than 

those in Category 1. Additionally, these 

financial entities may not have the same 

level of resources to review, analyze, 

negotiate, and enter into arrangements 

that comply with the new Trading 

Documentation and Margin 

Requirements as those in Category 1. 

Phase 3—Category 3 and 4 Entities 

Finally, the Commission proposes to 

afford an SD or MSP trading with a 

Category 3 or 4 Entity 270 days from 

adoption of final rules relating to 

Trading Documentation (§ 23.504) and 

Margin Requirements (§§ 23.150– 

23.158) to enter into arrangements that 

comply with the new rules. 

The Commission is proposing to 

afford SDs and MSPs with additional 

time to work with entities that are 

defined as ‘‘third-party subaccounts’’ to 

bring their documentation into 

compliance. Under the proposed 

definition, a third-party subaccount is a 

managed account that requires specific 

approval by the beneficial owner of the 

account to execute documentation 

necessary for executing, confirming, 

margining, or clearing swaps. By way of 

non-exclusive example, if investment 

management firm X manages the assets 

of pension fund Y, and does so in a 

separate account that requires the 

approval of pension fund Y to execute 

necessary documentation, then that 

account would be afforded 270 days to 

come into compliance. On the other 

hand, if pension fund Y manages its 

own assets, it would fall within 

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50 Day-2 Roundtable Tr. at 62. 

51Letter from Adam C. Cooper, Citadel, dated 

June 3, 2011, Appendix B. 

52 5 U.S.C. 601 et seq. 

53 44 U.S.C. 3507(d). 

54 7 U.S.C. 19(a). 

Category 2 and be afforded 180 days to 

come into compliance. Likewise, if 

investment management firm X does not 

manage the assets of third parties, then 

it would fall within Category 2. The 

Commission is proposing to afford 

Category 3 an additional 90 days beyond 

the 180 days proposed for Category 2 

because such entities may have 

documentation obligations for hundreds 

or even thousands of third-party 

subaccounts, and each such account 

must meet the requirements of Trading 

Documentation (§ 23.504) and Margin 

Requirements (§§ 23.150–23.158). For 

example, according to a statement made 

during the Joint SEC–CFTC Roundtable 

by Mr. William DeLeon of the firm 

Pacific Investment Management 

Company, LLC (PIMCO), PIMCO 

manages hundreds of third-party 

subaccounts, as defined above.50

The Commission is proposing to 

afford an SD or MSP trading with any 

other person (defined as a Category 4 

Entity) 270 days to enter into 

arrangements that comply with the new 

rules. 

The Commission stresses that nothing 

would prohibit any person from 

complying in advance of the proposed 

compliance schedule. Indeed, the 

Commission would encourage market 

participants that can come into 

compliance more quickly to do so. 

E. Comment Requested 

The Commission requests comment 

on all aspects of the proposed 

compliance schedules, §§ 23.175 and 

23.575. The Commission may consider 

alternatives to the proposed compliance 

schedules and is requesting comment on 

the following questions: 

• What, if any, other rules should 

have been taken into consideration 

when proposing an implementation 

schedule regarding margin or 

documentation requirements? If 

applicable, how should the 

implementation requirements of those 

other rules be taken into consideration? 

• What factors, if any, would prevent 

an entity in any of the proposed 

categories from adhering to the 

compliance schedules proposed by the 

Commission? How much additional 

time would be needed to address these 

factors? 

• Are there other considerations that 

the Commission should have taken into 

account when designing this tiered 

implementation schedule? Are the 

timeframes outlined in this 

implementation schedule adequate? If 

not, what alternative schedule should 

the Commission consider, and why? 

• What other entities, if any, should 

be included in Category 1, 2, or 3, and 

why? 

• What adjustments to the 

compliance schedule and/or other steps 

could the Commission take to ensure 

there is adequate representation from all 

market participants at the outset of 

implementing the requirements under 

Trading Documentation (§ 23.504) and 

Margin Requirements (§§ 23.150– 

23.158)? 

• Is an entity’s average monthly swap 

transaction activity a useful proxy for 

that entity’s ability to comply with the 

Trading Documentation and Margin 

Requirements? Or whether an entity is 

required to be registered with the 

Commission (rather than whether an 

entity is already registered with the 

Commission)? 

• Is the Commission’s definition of 

‘‘active fund’’ overly inclusive or underinclusive? Should the numerical 

threshold for number of monthly swap 

transactions be higher or lower than 20? 

If so, why? Should the number of 

monthly swap transactions be linked to 

swap activity in a particular asset class? 

• Should the Commission exclude 

from the definition of ‘‘active fund’’ any 

investment advisor of private funds 

acting solely as an advisor to private 

funds with assets under management in 

the United States of less than 

$150,000,000, as provided for in the 

reporting exemption for private funds 

under Section 408 of the Dodd-Frank 

Act? 

• Would it be more appropriate for 

the Commission to measure a market 

participant’s level of swap activity by 

measuring notional turnover and/or 

open exposure as suggested by some 

commenters? 51

• Are there any anticompetitive 

implications to the proposed 

compliance schedules? If so, how could 

the proposed rules be implemented to 

achieve the purposes of the CEA in a 

less anticompetitive manner? If so, 

please quantify those costs, if possible, 

and provide underlying data sources, 

assumptions, and calculations. 

• Are there additional costs or 

benefits associated with the current 

proposal that the Commission has not 

already taken into account? Please 

discuss any such costs in detail and 

quantify in dollar terms, if possible. 

• Are there any assumptions, 

including quantitative assumptions, 

underlying the Commission’s cost 

benefit analysis that the Commission 

should consider? 

• Should the Commission consider an 

alternative implementation schedule? 

Would such an alternative schedule 

reduce the costs market participants 

will bear? Please describe any such 

alternative implementation schedule in 

detail, including how it will reduce 

costs and the benefits it will likely 

deliver. If possible, please quantify the 

cost and benefits associated with any 

alternative. If providing dollar values, 

please describe any data sources, 

assumptions, and calculations used to 

generate them. 

• Should a compliance schedule such 

as those proposed herein apply to the 

disclosure and documentation 

requirements proposed in the Business 

Conduct Standards for Counterparties 

proposal? If so, should the compliance 

schedule be adjusted, and in what 

manner? 

III. Related Matters 

A. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

requires that agencies consider whether 

the rules they propose will have a 

significant economic impact on a 

substantial number of small entities 

and, if so, provide a regulatory 

flexibility analysis respecting the 

impact.52 The rules proposed by the 

CFTC provide compliance schedules for 

certain new statutory requirements of 

the Dodd Frank Act and do not by 

themselves impose significant new 

regulatory requirements. Accordingly, 

the Chairman, on behalf of the CFTC, 

hereby certifies pursuant to 5 U.S.C. 

605(b) that the proposed rules will not 

have a significant economic impact on 

a substantial number of small entities. 

The CFTC invites public comment on 

this determination. 

B. Paperwork Reduction Act 

The Paperwork Reduction Act 

(‘‘PRA’’) 53 imposes certain 

requirements on Federal agencies 

(including the Commission) in 

connection with conducting or 

sponsoring any collection of 

information as defined by the PRA. This 

Further Notice of Proposed Rulemaking, 

if approved, would not require a new 

collection of information from any 

persons or entities. 

C. Consideration of Costs and Benefits 

Section 15(a) of the CEA 54 requires 

the Commission to consider the costs 

and benefits of its action before 

promulgating a regulation under the 

CEA. Section 15(a) of the CEA specifies 

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that the costs and benefits shall be 

evaluated in light of five broad areas of 

market and public concern: (1) 

Protection of market participants and 

the public; (2) efficiency, 

competitiveness and financial integrity 

of futures markets; (3) price discovery; 

(4) sound risk management practices; 

and (5) other public interest 

considerations. The Commission may in 

its discretion give greater weight to any 

one of the five enumerated areas and 

could in its discretion determine that, 

notwithstanding its costs, a particular 

regulation is necessary or appropriate to 

protect the public interest or to 

effectuate any of the provisions or 

accomplish any of the purposes of the 

Act. 

The purpose of this proposed rule is 

to afford SDs and MSPs additional time 

to comply with the Trading 

Documentation and the Margin 

Requirements beyond that which is 

provided for in the Dodd-Frank Act. 

Section 754 of the Dodd-Frank Act 

provides that required rulemakings can 

be considered to be effective 60 days 

after publication of the final rule or 

regulation. Without the proposed rule, 

SDs and MSPs could be required to 

comply with Trading Documentation 

(§ 23.504) and Margin Requirements 

(§§ 23.150–23.158) rules without any 

implementation phasing of the sort 

provided for by the proposed 

compliance schedules. 

The Commission recognizes that 

requiring immediate compliance with 

the new requirements could indirectly 

impose costs on market participants that 

may not be registered with the 

Commission and those market 

participants that have hundreds or 

thousands of third-party subaccounts to 

bring into compliance. Accordingly, and 

in an effort to protect the public interest 

by facilitating an orderly transition to a 

new regulatory environment, the 

Commission’s proposed compliance 

schedules would provide a substantial 

benefit in that they would afford SDs 

and MSPs adequate time to modify or 

create the requisite documentation in 

collaboration with their counterparties. 

1. Protection of Market Participants and 

the Public 

The Trading Documentation 

(§ 23.504) and Margin Requirements 

(§§ 23.150–23.158) rules for which the 

Commission has proposed compliance 

schedules would encourage 

transparency in the swap market by 

requiring that SDs, MSPs, and their 

counterparties clarify, in writing, many 

aspects of their trading relationship 

prior to entering into a swap, and also 

that they clarify many specific details 

related to margining their swaps. The 

proposed compliance schedules would 

further the objectives of Sections 4s(e) 

and 4s(i) of the CEA by establishing an 

orderly process for their 

implementation. The proposed 

compliance schedules have several 

benefits that contribute to protection of 

the public as well as market 

participants. 

It is in the public interest that the 

largest and most active participants in 

the swap markets come into compliance 

with Sections 4s(e) and 4s(i) of the CEA 

as soon as possible, in order to facilitate 

an orderly transition to the new 

regulatory environment for swaps. The 

proposed compliance schedules would 

prioritize compliance for Category 1 

Entities because these entities are likely 

responsible for a large portion of the 

swap transactions occurring in this 

market. But the schedule would do so 

in a way that still safeguards the 

interests of the Category 1 Entities by 

providing the additional time that these 

entities need in order to document new 

trading relationship and margining 

arrangements required by Sections 4s(e) 

and 4s(i) of the CEA. 

The additional time provided by the 

proposed compliance schedules would 

create several benefits for the SDs, 

MSPs, and their counterparties. First, if 

market participants were concerned that 

they might not be able to meet statutory 

compliance timelines, it is likely that 

they would incur additional costs 

associated with the potential lack of 

regulatory compliance. Providing 

additional time for compliance through 

the proposed compliance schedule 

would reduce the costs that market 

participants may incur mitigating risks 

during the transition period, and would 

re-direct those resources to achieving 

compliance with the new rules. 

Second, if Category 2, 3, or 4 Entities 

want to come into compliance ahead of 

the timeframes proposed for their SD or 

MSP counterparties through the 

compliance schedules, they may work 

with their SD and MSP counterparties to 

do so. Category 2, 3, or 4 Entities may 

wish to achieve compliance earlier in 

order to achieve the benefits associated 

with greater clarity in their trading 

relationships and margin arrangements 

for non-cleared swaps. They also may 

wish to take advantage of newly 

developed template agreements as they 

develop. Such early compliance by 

market participants would provide 

additional protection for the public by 

decreasing the risks associated with 

failing to document trading 

relationships and swap transactions 

properly, as well as decreasing the risks 

associated with failing to collateralize 

the credit exposure posed by uncleared 

swaps. Additionally, early compliance 

would have the benefit of increasing 

clarity about how margin will be 

handled for non-cleared swaps. 

Category 3 Entities have the 

additional challenge of transitioning 

hundreds, and in some cases, thousands 

of subaccounts into compliance with the 

new documentation requirements for 

trading relationships and margining 

non-cleared swaps. The proposed 

compliance schedules would afford 

Category 3 Entities additional time to 

educate their customers about the new 

requirements, and then negotiate and 

formalize new trading and margining 

agreements between their customers and 

SDs or MSPs. Each of these tasks 

requires time. By giving Category 3 

Entities and their counterparties 270 

days to come into compliance, the 

Commission is attempting to provide 

adequate time for these entities to come 

into compliance without the need for 

significant additional legal assistance. 

The Commission also is attempting to 

avoid the risk of inadequate 

documentation and inappropriate 

margining arrangements that may result 

from a more rushed process. Both of 

these results would tend to reduce costs 

and risk for both SDs and MSPs and 

their Category 3 Entities counterparties. 

As far as costs are concerned, by 

establishing a 3-month, 6-month, and 

9-month compliance schedule for SDs 

and MSPs to achieve compliance with 

their counterparties that are Category 1, 

Category 2, and Category 3 and 4 

Entities, respectively, the proposed 

compliance schedule would delay 

certain benefits that would result from 

more timely and accurate 

documentation by SDs and MSPs, as 

well as timely compliance with Margin 

Requirements for non-cleared swaps. 

Those costs primarily include a delay in 

decreasing the risks associated with the 

failure to document trading 

relationships and swap transactions 

properly, as well as a delay in terms of 

decreasing the risks associated with not 

collateralizing the credit exposure posed 

by uncleared swaps. 

The proposed compliance schedules 

seek to balance the cost to SDs, MSPs, 

and the Category 1 Entities that would 

be associated with bearing a larger 

proportion of the ‘‘start-up’’ costs 

associated with most promptly 

implementing the Trading 

Documentation and Margin 

Requirements. SDs, MSPs, and Category 

1 Entities are the entities likely to 

expend the most resources establishing 

industry standard agreements that can 

then be used by other market 

participants. It is appropriate for the 

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58184 Federal Register / Vol. 76, No. 182 / Tuesday, September 20, 2011 / Proposed Rules 

entities that are likely to be among the 

most active participants in these 

markets to shoulder a larger percentage 

of the relatively fixed start-up costs. 

2. Efficiency, Competitiveness, and 

Financial Integrity of the Markets 

The SDs, MSPs, and Category 1 

Entities that constitute the first phase 

under the proposed compliance 

schedules will be likely to work together 

to establish methods for compliance that 

other market participants may later 

consider. The experience with swaps 

that the first group of market 

participants brings to this process 

should help to ensure the integrity and 

effectiveness of their solutions. These 

solutions will likely be helpful to other 

market participants that comply later. 

This approach is likely to result in 

benefits for a broad group of market 

participants. 

Moreover, it is critical that a crosssection of market participants is 

involved in developing the solutions 

that become industry conventions in 

order to ensure that those approaches 

promote the efficiency, competitiveness, 

and integrity of participants on both the 

buy-side and sell-side. Category 1 

includes market participants from both 

sides, which helps ensure that the 

interests of both will be represented 

well as the industry identifies and 

solves the problems that are necessary 

for compliance. 

With respect to the activities of 

Category 1 participants, providing them 

90 days to come into compliance after 

the Trading Documentation (§ 23.504) 

and Margin Requirements (§§ 23.150– 

23.158) are published in the Federal 

Register would create some time and 

opportunity for industry coordination as 

multiple participants, representing both 

the sell-side and buy-side of the market, 

identify shared questions and work to 

develop sound answers. This is likely to 

facilitate better compliance systems and 

processes, which reduces the start-up 

costs of implementing new regulations 

for these and other entities, which is 

expected to lower costs to the public by 

promoting standardization. 

Lastly, in the absence of the proposed 

compliance schedules, some entities 

have expressed concern that they would 

be unable to comply with the new 

requirements and would choose to leave 

the swap market altogether or avoid the 

market for some period of time. If this 

occurred, it could reduce liquidity and 

might increase spreads in the market. By 

providing additional time for 

compliance, this rule reduces the 

chance that these adverse effects will 

occur in the swap market and facilitates 

an orderly transition to the new 

regulatory environment. 

As for costs related to the efficiency, 

competitiveness, and financial integrity 

of the markets, the proposed compliance 

schedules would allow for delayed 

compliance dates for new Trading 

Documentation and Margin 

Requirements. The schedules would 

delay the benefits of the new 

requirements that would come from 

more expeditious implementation. 

3. Price Discovery 

As noted above, the Trading 

Documentation rule contains a 

requirement that an SD or MSP and its 

counterparty agree on how they will 

value each swap transaction into which 

they enter from the point of execution 

until the termination, maturity, or 

expiration of the swap. Prompt 

implementation of this requirement 

would facilitate price discovery between 

the counterparties to a swap. Delay in 

implementing this provision may 

inhibit price discovery to the extent that 

counterparties fail to value their swaps 

on a timely and accurate basis. In this 

way, the proposed rule would delay the 

benefits of increased price transparency 

that could flow from a more expeditious 

implementation of the Trading 

Documentation rule. Additionally, a 

disorderly implementation may inhibit 

price discovery to the extent that 

counterparties fail to value their swaps 

on a timely and accurate basis; whereas, 

an orderly implementation process 

would promote communication between 

counterparties, which is essential to 

price discovery. 

4. Sound Risk Management Practices 

To the extent that the proposed 

compliance schedule would delay 

implementation of the Trading 

Documentation (§ 23.504) and Margin 

Requirements (§§ 23.150–23.158) rules, 

the swap market could suffer costs in 

terms of poor risk management resulting 

from a failure to document trading 

relationships and swap transactions 

properly, as well as from failure to 

collateralize the outstanding credit 

exposure posed by uncleared swaps 

through appropriate margining. 

However, there are risk management 

benefits to be gained from the proposed 

compliance schedule. For instance, if 

SDs and MSPs were expected to comply 

with Trading Documentation (§ 23.504) 

and Margin Requirements (§§ 23.150– 

23.158) on timelines that they could not 

meet, it is possible that some firms may 

avoid the swap market for a period of 

time, which could expose them to risks 

they could have otherwise used swaps 

to mitigate. Therefore, by providing a 

timetable for orderly implementation, 

this rule could encourage continued 

participation in the swap markets and 

the continued use of swaps for risk 

mitigation purposes. 

5. Other Public Interest Considerations 

There are public interest benefits to 

phasing in compliance using the 

implementation structure proposed in 

this release. The proposed 

implementation structure generally 

allows market participants to comply 

with the requirements of Dodd-Frank as 

quickly and efficiently as possible and 

thereby provides a sound basis for 

achieving the overarching Dodd-Frank 

goals of risk reduction and increased 

market transparency. 

In sum, the Commission has 

considered the costs and benefits as 

required by Section 15(a) and is 

proposing the compliance schedules 

discussed herein. The Commission 

invites public comment on its costbenefit considerations. Commenters are 

also invited to submit any data or other 

information that they may have 

quantifying or qualifying the costs and 

benefits of the proposal with their 

comment letters. 

List of Subjects in 17 CFR Part 23 

Antitrust, Commodity futures, 

Conduct standards, Conflicts of interest, 

Major swap participants, Reporting and 

recordkeeping, Swap dealers, Swaps. 

For the reasons stated in the 

preamble, 17 CFR part 23 is proposed to 

be amended as follows: 

PART 23—SWAP DEALERS AND 

MAJOR SWAP PARTICIPANTS 

1. The authority citation for part 23 

continues to read as follows: 

Authority: 7 U.S.C. 1a, 2, 6, 6a, 6b–1, 6c, 

6p, 6r, 6s, 6t, 9, 9a, 12, 12a, 13b, 13c, 16a, 

18, 19, 21. 

2. Add § 23.175 to subpart E to read 

as follows: 

§ 23.175 Compliance schedule. 

(a) Definitions. For the purposes of 

this rule: 

Active Fund means any private fund 

as defined in section 202(a) of the 

Investment Advisors Act of 1940, that is 

not a third-party subaccount and that 

executes 20 or more swaps per month 

based on a monthly average over the 12 

months preceding the publication of 

§ 23.150 through § 23.158 in the Federal 

Register. 

Category 1 Entity means (1) A swap 

dealer, (2) a security-based swap dealer; 

(3) a major swap participant; (4) a major 

security-based swap participant; or (5) 

an active fund. 

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Federal Register / Vol. 76, No. 182 / Tuesday, September 20, 2011 / Proposed Rules 58185 

Category 2 Entity means (1) A 

commodity pool; (2) a private fund as 

defined in section 202(a) of the 

Investment Advisors Act of 1940 other 

than an active fund; (3) an employee 

benefit plan as defined in paragraphs (3) 

and (32) of section 3 of the Employee 

Retirement Income and Security Act of 

1974; or (4) a person predominantly 

engaged in activities that are in the 

business of banking, or in activities that 

are financial in nature as defined in 

section 4(k) of the Bank Holding 

Company Act of 1956, provided that, in 

each case, the entity is not a third-party 

subaccount. 

Category 3 Entity means a Category 2 

Entity whose positions are held as a 

third-party subaccount. 

Category 4 Entity means any person 

not included in Categories 1, 2, or 3. 

Covered swap entity means a swap 

dealer or major swap participant for 

which there is no prudential regulator. 

Third-party Subaccount means a 

managed account that requires specific 

approval by the beneficial owner of the 

account to execute documentation 

necessary for executing, confirming, 

margining, or clearing swaps. 

(b) Compliance Schedule. The 

following schedule for compliance with 

the requirements of § 23.150 through 

§ 23.158 shall apply: 

(1) For swap transactions with a 

Category 1 Entity, a covered swap entity 

shall comply with the requirements of 

§ 23.150 through § 23.158 no later than 

ninety (90) days from the date of 

publication of such requirements in the 

Federal Register. 

(2) For swap transactions with a 

Category 2 Entity, a covered swap entity 

shall comply with the requirements of 

§ 23.150 through § 23.158 no later than 

one hundred and eighty (180) days from 

the date of publication of such 

requirements in the Federal Register. 

(3) For swap transactions with a 

Category 3 Entity or a Category 4 Entity, 

a covered swap entity shall comply with 

the requirements of § 23.150 through 

§ 23.158 no later than two hundred and 

seventy (270) days from the date of 

publication of such requirements in the 

Federal Register. 

(c) Nothing in this rule shall prohibit 

any person from complying voluntarily 

with the requirements of § 23.150 

through § 23.158 sooner than the 

compliance schedule provided in 

paragraph (b). 

3. Add new § 23.575 to part 23, 

subpart I, to read as follows: 

§ 23.575 Compliance schedule. 

(a) Definitions. For the purposes of 

this rule: 

Active Fund means any private fund 

as defined in section 202(a) of the 

Investment Advisors Act of 1940, that is 

not a third-party subaccount and that 

executes 20 or more swaps per month 

based on a monthly average over the 12 

months preceding the publication of 

§ 23.504 in the Federal Register. 

Category 1 Entity means (1) A swap 

dealer, (2) a security-based swap dealer; 

(3) a major swap participant; (4) a major 

security-based swap participant; or (5) 

an active fund. 

Category 2 Entity means (1) A 

commodity pool; (2) a private fund as 

defined in section 202(a) of the 

Investment Advisors Act of 1940 other 

than an active fund; (3) an employee 

benefit plan as defined in paragraphs (3) 

and (32) of section 3 of the Employee 

Retirement Income and Security Act of 

1974; or (4) a person predominantly 

engaged in activities that are in the 

business of banking, or in activities that 

are financial in nature as defined in 

section 4(k) of the Bank Holding 

Company Act of 1956, provided that, in 

each case, the entity is not a third-party 

subaccount. 

Category 3 Entity means a Category 2 

Entity whose positions are held as a 

third-party subaccount. 

Category 4 Entity means any person 

not included in Categories 1, 2, or 3. 

Third-party Subaccount means a 

managed account that requires specific 

approval by the beneficial owner of the 

account to execute documentation 

necessary for executing, confirming, 

margining, or clearing swaps. 

(b) Compliance schedule. The 

following schedule for compliance with 

the requirements of § 23.504 shall apply: 

(1) For swap transactions with a 

Category 1 Entity, a swap dealer or 

major swap participant shall comply 

with the requirements of § 23.504 no 

later than ninety (90) days from the date 

of publication of such requirements in 

the Federal Register. 

(2) For swap transactions with a 

Category 2 Entity, a swap dealer or 

major swap participant shall comply 

with the requirements of § 23.504 no 

later than one hundred and eighty (180) 

days from the date of publication of 

such requirements in the Federal 

Register. 

(3) For swap transactions with a 

Category 3 Entity or a Category 4 Entity, 

a swap dealer or major swap participant 

shall comply with the requirements of 

§ 23.504 no later than two hundred and 

seventy (270) days from the date of 

publication of such requirements in the 

Federal Register. 

(c) Nothing in this rule shall prohibit 

any person from complying voluntarily 

with the requirements of § 23.504 

sooner than the compliance schedule 

provided in paragraph (b). 

Issued in Washington, DC, on September 8, 

2011, by the Commission. 

David A. Stawick, 

Secretary of the Commission. 

Appendices To Swap Transaction 

Compliance and Implementation 

Schedule: Trading Documentation and 

Margining Requirements Under Section 

4s of the CEA—Commissioners Voting 

Summary and Statements of 

Commissioners 

Note: The following appendices will not 

appear in the Code of Federal Regulations 

Appendix 1—Commissioners Voting 

Summary 

On this matter, Chairman Gensler and 

Commissioners Dunn, Sommers, and Chilton 

voted in the affirmative; Commissioner 

O’Malia voted in the negative. 

Appendix 2—Statement of Chairman 

Gary Gensler 

I support this proposal to establish 

schedules to phase in compliance with 

previously proposed requirements, including 

the swap trading relationship documentation 

requirement and the margin requirements for 

uncleared swaps. The proposal would 

provide greater clarity to swap dealers and 

major swap participants regarding the 

timeframe for bringing their swap 

transactions into compliance with new 

documentation and margining rules. The 

proposal also would make the market more 

open and transparent, while giving market 

participants an adequate amount of time to 

comply. The proposal would help facilitate 

an orderly transition to a new regulatory 

environment for swaps. 

Appendix 3—Statement of 

Commissioner Scott O’Malia 

I respectfully dissent from the 

Commission’s decision today to approve for 

Federal Register publication two rule 

proposals related to implementation entitled 

‘‘Swap Transaction Compliance and 

Implementation Schedule: Clearing and 

Trade Execution Requirements under Section 

2(h) of the CEA’’ and ‘‘Swap Transaction 

Compliance and Implementation Schedule: 

Trading Documentation and Margining 

Requirements under Section 4s of the CEA.’’ 

For quite some time, I have been asking that 

the Commission publish for notice and 

comment a comprehensive implementation 

schedule that addresses the entire mosaic of 

rule proposals under the Dodd-Frank Act. I 

believe the Commission should have 

proposed a comprehensive schedule that 

detailed, at a minimum: 

• For each registered entity (e.g., swap 

dealer and major swap participants), 

compliance dates for each of its entityspecific obligations (e.g., all obligations 

under Section 4s of the Commodity Exchange 

Act) under Dodd-Frank; and 

• For each market-wide obligation (e.g., 

the clearing and trading mandates), the 

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58186 Federal Register / Vol. 76, No. 182 / Tuesday, September 20, 2011 / Proposed Rules 

entities affected (whether registered or 

unregistered) along with appropriate 

compliance dates. 

Such a schedule would have 

complemented and informed existing 

proposals and provided structure to future 

determinations. Additionally, a proposal 

regarding such a schedule should have 

adequately analyzed the costs and benefits of 

alternatives, including appropriate 

quantification. Unfortunately, the two rule 

proposals that the Commission approved 

today fail to either propose a comprehensive 

schedule or provide an adequate cost benefit 

analysis. 

The Commission’s proposals also fail to 

request comment on a number of issues that 

I believe are important considerations in 

developing an implementation plan. As a 

result, I am encouraging commenters to 

submit responses to the questions below as 

part of their comments on the two rule 

proposals. 

Swap Transaction Compliance and 

Implementation Schedule: Clearing and 

Trade Execution Requirements under Section 

2(h) of the CEA 

• Should the Commission provide 

guidance on how it will make and 

communicate a mandatory clearing 

determination prior to considering the first 

such determination? If so, what information 

should be included in guidance? 

• As section II(E) of the proposal states: 

‘‘When issuing a mandatory clearing 

determination, the Commission would set an 

effective date by which all market 

participants would have to comply. In other 

words, the proposed compliance schedules 

would be used only when the Commission 

believes that phasing is necessary based on 

the considerations outlined in this release. 

The Commission will provide the public 

with notice of its intent to rely upon the 

compliance schedule pursuant to the process 

outlined in § 39.5(b)(5).’’ To afford more 

certainty to market participants, should the 

Commission instead create a presumption 

that it will rely on the compliance schedule 

for each mandatory clearing determination 

that it issues, unless it finds that the 

compliance schedule is not necessary to 

achieve the benefits set forth in the proposal 

(e.g., facilitating the transition to the new 

regulatory regime established by the DoddFrank Act in an orderly manner that does not 

unduly disrupt markets and transactions)? 

• What, if any, other issues not addressed 

in current proposed or final rulemakings 

should the Commission have taken into 

consideration when proposing the 

compliance schedule? For example, should 

the Commission have considered the extent 

to which its clearing and trade execution 

requirements apply to entities and 

transactions located outside the United 

States? Also, should the Commission have 

considered the extent to which such 

requirements apply to transactions between 

affiliates (whether domestic or cross-border)? 

If applicable, how should the Commission 

adjust the proposed compliance schedule to 

account for such issues? 

• What, if any, adjustments should the 

Commission make to the proposed 

compliance schedule for trade execution 

requirements if the Commission makes a 

determination that a group, category, type, or 

class of swaps, rather than a specific swap, 

is subject to mandatory clearing? Would such 

adjustments vary depending on the manner 

in which the Commission defines group, 

category, type, or class? 

Swap Transaction Compliance and 

Implementation Schedule: Trading 

Documentation and Margining Requirements 

Under Section 4s of the CEA 

• What, if any, other issues not addressed 

in current proposed or final rulemakings 

should the Commission have taken into 

consideration when proposing the 

compliance schedule? For example, should 

the Commission have considered the extent 

to which its documentation and margin 

requirements apply to entities and 

transactions located outside the United 

States? Also, should the Commission have 

considered the extent to which such 

requirements apply to transactions between 

affiliates (whether domestic or cross-border)? 

If applicable, how should the Commission 

adjust the proposed compliance schedule to 

account for such issues? 

Finally, I want to be clear that I support 

completing the final Dodd-Frank rulemakings 

in a reasonable time frame. I believe that the 

timely implementation of such rulemakings 

is important. Knowing when and how the 

markets are required to do what is vital to the 

success of implementing the new market 

structure required under the Dodd-Frank Act. 

When billions of dollars are at stake, you 

simply do not rely on guesses and estimates 

based on vague conditions. 

[FR Doc. 2011–24128 Filed 9–19–11; 8:45 am] 

BILLING CODE 6351–01–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Parts 37, 38, and 39 

RIN 3038–AD60 

Swap Transaction Compliance and 

Implementation Schedule: Clearing 

and Trade Execution Requirements 

under Section 2(h) of the CEA 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Commodity Futures 

Trading Commission (Commission or 

CFTC) is proposing regulations that 

would establish a schedule to phase in 

compliance with certain new statutory 

provisions enacted under Title VII of the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank 

Act). These provisions include the 

clearing requirement under new section 

2(h)(1)(A) of the Commodity Exchange 

Act (CEA or Act), and the trade 

execution requirement under new 

section 2(h)(8)(A) of the CEA. The 

proposed schedules would provide 

relief in the form of additional time for 

compliance with these requirements. 

This relief is intended to facilitate the 

transition to the new regulatory regime 

established by the Dodd-Frank Act in an 

orderly manner that does not unduly 

disrupt markets and transactions. The 

Commission requests comment on the 

proposed compliance schedules for 

these clearing and trade execution 

requirements. 

DATES: Submit comments on or before 

November 4, 2011. 

ADDRESSES: You may submit comments, 

identified by RIN number 3038–AD60 

and Swap Transaction Compliance and 

Implementation Schedule: Clearing and 

Trade Execution Requirements under 

Section 2(h) of the CEA, by any of the 

following methods: 

• Agency Web site, via its Comments 

Online process at http:// 

comments.cftc.gov. Follow the 

instructions for submitting comments 

through the Web site. 

• Mail: David A. Stawick, Secretary of 

the Commission, Commodity Futures 

Trading Commission, Three Lafayette 

Centre, 1155 21st Street, NW., 

Washington, DC 20581. 

• Hand Delivery/Courier: Same as 

mail above. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. 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, 

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, 17 CFR 

145.9. 

The Commission reserves the right, 

but shall have no obligation, to review, 

pre-screen, filter, redact, refuse or 

remove any or all of your submission 

from http://www.cftc.gov that it may 

deem to be inappropriate for 

publication, such as obscene language. 

All submissions that have been redacted 

or removed that contain comments on 

the merits of the rulemaking will be 

retained in the public comment file and 

will be considered as required under the 

Administrative Procedure Act and other 

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