35892 Federal Register / Vol. 77, No. 116 / Friday, June 15, 2012 / Proposed Rules 

1Commission regulations referred to herein are 

found at 17 CFR Ch. 1 (2011). They are accessible 

on the Commission’s Web site, http://www.cftc.gov. 

2 5 U.S.C. 500 et seq. 

specified in Diamond Aircraft Industries 

GmbH Mandatory Service Bulletin No. MSB 

42–092 MSB 42NG–022, dated May 20, 2011. 

(2) Within 30 days after the inspection 

required in paragraph (f)(1) of this AD, using 

Appendix A of Diamond Aircraft Industries 

GmbH Work Instruction WI–MSB–42–092 

WI–MSB–42NG–22, dated May 20, 2011, 

report the results of the inspection to 

Diamond Aircraft Industries GmbH at the 

address in paragraph (h) of this AD. 

(3) If, during the inspection required in 

paragraph (f)(1) of this AD, voids are detected 

that exceed the criteria specified in Diamond 

Aircraft Industries GmbH Work Instruction 

WI–MSB–42–092 WI–MSB–42NG–22, dated 

May 20, 2011, before further flight, repair the 

airplane following Diamond Aircraft 

Industries GmbH Work Instruction WI–MSB– 

42–092 WI–MSB–42NG–22, dated May 20, 

2011, as specified in Diamond Aircraft 

Industries GmbH Mandatory Service Bulletin 

No. MSB 42–092 MSB 42NG–022, dated May 

20, 2011. 

(4) For the purpose of compliance with 

paragraph (f)(3) of this AD, a single 

positioning flight is allowed to a location 

where the repair can be done following the 

provisions specified in Section III.1 of 

Diamond Aircraft Industries GmbH Work 

Instruction WI–MSB–42–092 WI–MSB– 

42NG–22, dated May 20, 2011. 

(g) Other FAA AD Provisions 

The following provisions also apply to this 

AD: 

(1) Alternative Methods of Compliance 

(AMOCs): The Manager, Standards Office, 

FAA, has the authority to approve AMOCs 

for this AD, if requested using the procedures 

found in 14 CFR 39.19. Send information to 

ATTN: Mike Kiesov, Aerospace Engineer, 

FAA, Small Airplane Directorate, 901 Locust, 

Room 301, Kansas City, Missouri 64106; 

telephone: (816) 329–4144; fax: (816) 329– 

4090; email: mike.kiesov@faa.gov. Before 

using any approved AMOC on any airplane 

to which the AMOC applies, notify your 

appropriate principal inspector (PI) in the 

FAA Flight Standards District Office (FSDO), 

or lacking a PI, your local FSDO. 

(2) Airworthy Product: For any requirement 

in this AD to obtain corrective actions from 

a manufacturer or other source, use these 

actions if they are FAA-approved. Corrective 

actions are considered FAA-approved if they 

are approved by the State of Design Authority 

(or their delegated agent). You are required 

to assure the product is airworthy before it 

is returned to service. 

(3) Reporting Requirements: For any 

reporting requirement in this AD, a federal 

agency may not conduct or sponsor, and a 

person is not required to respond to, nor 

shall a person be subject to a penalty for 

failure to comply with a collection of 

information subject to the requirements of 

the Paperwork Reduction Act unless that 

collection of information displays a current 

valid OMB Control Number. The OMB 

Control Number for this information 

collection is 2120–0056. Public reporting for 

this collection of information is estimated to 

be approximately 5 minutes per response, 

including the time for reviewing instructions, 

completing and reviewing the collection of 

information. All responses to this collection 

of information are mandatory. Comments 

concerning the accuracy of this burden and 

suggestions for reducing the burden should 

be directed to the FAA at: 800 Independence 

Ave. SW., Washington, DC 20591, Attn: 

Information Collection Clearance Officer, 

AES–200. 

(h) Related Information 

Refer to MCAI European Aviation Safety 

Agency (EASA) AD No. 2011–0100, dated 

May 26, 2011; Diamond Aircraft Industries 

GmbH Mandatory Service Bulletin No. MSB 

42–092 MSB 42NG–022, dated May 20, 2011, 

and Diamond Aircraft Industries GmbH Work 

Instruction WI–MSB–42–092 WI–MSB– 

42NG–22, dated May 20, 2011, for related 

information. For service information related 

to this AD, contact Diamond Aircraft 

Industries GmbH, N.A. Otto-Stra+e 5, A–2700 

Wiener Neustadt, Austria, telephone: +43 

2622 26700; fax: +43 2622 26780; email: 

office@diamond-air.at; Internet: http://www.

diamond-air.at. You may review copies of 

the referenced service information at the 

FAA, Small Airplane Directorate, 901 Locust, 

Kansas City, Missouri 64106. For information 

on the availability of this material at the 

FAA, call (816) 329–4148. 

Issued in Kansas City, Missouri, on May 

11, 2012. 

John Colomy, 

Acting Manager, Small Airplane Directorate, 

Aircraft Certification Service. 

[FR Doc. 2012–14705 Filed 6–14–12; 8:45 am] 

BILLING CODE 4910–13–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Parts 3 and 23 

RIN 3038–AD66 

Dual and Multiple Associations of 

Persons Associated With Swap 

Dealers, Major Swap Participants and 

Other Commission Registrants 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Proposed rules. 

SUMMARY: The Commodity Futures 

Trading Commission (Commission or 

CFTC) is proposing regulations that 

would make clear that each swap dealer 

(SD), major swap participant (MSP), and 

other Commission registrant with whom 

an associated person (AP) is associated 

is required to supervise the AP and is 

jointly and severally responsible for the 

activities of the AP with respect to 

customers common to it and any other 

SD, MSP or other Commission registrant 

(Proposal). 

DATES: Comments must be received on 

or before August 14, 2012. 

ADDRESSES: You may submit comments, 

identified by RIN 3038–AD66 and ‘‘Dual 

and Multiple Associations of Persons 

Associated with Swap Dealers, Major 

Swap Participants and other 

Commission Registrants,’’ by any of the 

following methods: 

• Agency Web Site, via its Comments 

Online process: http:// 

comments.cftc.gov. Follow the 

instructions on the Web site for 

submitting comments. 

• Mail: Send to David A. Stawick, 

Secretary, Commodity Futures Trading 

Commission, 1155 21st Street NW., 

Washington, DC 20581. 

• Hand delivery/Courier: Same as 

Mail above. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov/search/index.jsp. 

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 

www.cftc.gov and the information you 

submit will be publicly available. If, 

however, you submit information that 

ordinarily is exempt from disclosure 

under the Freedom of Information Act, 

you may submit a petition for 

confidential treatment of the exempt 

information according to the procedures 

set forth in Commission Regulation 

145.9.1 The Commission reserves the 

right, but shall have no obligation, to 

review, pre-screen, filter, redact, refuse 

or remove any or all of your submission 

from 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 2 and 

other applicable laws, and may be 

accessible under the Freedom of 

Information Act. 

FOR FURTHER INFORMATION CONTACT: 

Israel J. Goodman, Attorney-Advisor, or 

Barbara S. Gold, Associate Director, 

Division of Swap Dealer and 

Intermediary Oversight, 1155 21st Street 

NW., Washington, DC 20581. Telephone 

number: 202–418–6700 and electronic 

mail: igoodman@cftc.gov or 

bgold@cftc.gov. 

SUPPLEMENTARY INFORMATION: 


srobinson on DSK4SPTVN1PROD with PROPOSALS
Federal Register / Vol. 77, No. 116 / Friday, June 15, 2012 / Proposed Rules 35893 

3See Dodd-Frank Wall Street Reform and 

Consumer Protection Act, Public Law 111–203, 124 

Stat. 1376 (2010). The text of the Dodd-Frank Act 

also may be accessed on the Commission’s Web 

site, http://www.cftc.gov. 

4 7 U.S.C. 1 et seq. 

5CEA Sections 4s(a). 

6CEA Section 4s(b). 

7 75 FR 71379. 

8 77 FR 2613. Additionally, through a separate 

Notice and Order, the Commission delegated to the 

National Futures Association (NFA) the authority to 

perform the full range of registration functions with 

respect to SDs and MSPs. 77 FR 2708 (Jan. 19, 

2012). 

9See 77 FR at 2613 (noting that CEA Section 4s 

does not direct the Commission to adopt regulations 

that provide for the registration of APs of SDs or 

MSPs). 

10See, e.g., CEA Section 4k and Commission 

Regulation 3.12(a). 

11As is the case for other categories of 

Commission registrants, the term ‘‘associated 

person,’’ when used with respect to an SD or MSP, 

means a natural person (as opposed to an entity, 

such as a partnership or corporation). See 77 FR 

2614–15, whereby the Commission adopted in new 

Regulation 1.3(aa)(6) a definition of the term 

‘‘associated person’’ of an SD or MSP to mean a 

natural person who is associated with an SD or 

MSP as: 

[A] partner, officer, employee, agent (or any 

natural person occupying a similar status or 

performing similar functions), in any capacity that 

involves: 

(i) The solicitation or acceptance of swaps (other 

than in a clerical or ministerial capacity); or 

(ii) The supervision of any person or persons so 

engaged. 

12See CEA Section 4s(b)(6) and Regulation 

23.22(b). 

13Comment letter from the National Futures 

Association at page 10 (Jan. 24, 2011). 

14 77 FR at 2616. 

15Section 3.12(f)(1)(i) provides that a person who 

is already registered as an AP in any capacity may 

become associated with another sponsor if the new 

sponsor files with the NFA a Form 8–R, as 

discussed below. 

16 57 FR 23136 (June 2, 1992) (the 1992 

Amendments). The Commission first adopted a 

prohibition on dual and multiple associations in 

1980, with respect to APs of futures commission 

merchants (FCMs), explaining that it was necessary 

‘‘[i]n view of the obvious difficulties of supervision 

in such a situation and in view of the inherent 

possibilities for conflicts of interest that might arise 

if an AP were to have more than one sponsor.’’ 45 

FR 80485, 80489 (Dec. 5, 1980) (footnote omitted). 

The Commission subsequently amended and 

broadened the scope of Regulation 3.12(f) such that, 

prior to the 1992 Amendments, Regulation 3.12(f) 

prohibited a person from associating as an AP with: 

(1) More than one FCM or more than one 

introducing broker (IB); (2) an FCM and an IB or 

a leverage transaction merchant (LTM); and (3) an 

IB and an LTM. Subject to certain exceptions, the 

regulations also prohibited a person from 

associating as an AP with: (1) An FCM and a 

commodity trading advisor (CTA); (2) an FCM and 

a commodity pool operator (CPO); (3) an IB and a 

CTA; and (4) an IB and a CPO. See 56 FR 37026, 

37033 (Aug. 2, 1991). In proposing to eliminate 

most of these restrictions, the Commission 

explained that, in its experience, these regulations 

had been ‘‘difficult to understand and follow, even 

for experienced practitioners’’ and that, in certain 

cases, they could have perverse effects, such as 

limiting the choice of which FCM a customer could 

use to carry his managed account. Id. Moreover, the 

Commission explained, the concerns raised by dual 

and multiple associations could be better addressed 

through an alternative approach, as further 

discussed below. Id. 

17See 56 FR at 37033; see, e.g., In Re Global 

Telecom, et al., [2005–2007 Transfer Binder] Comm. 

Fut. L. Rep. (CCH) ¶ 30,143 (CFTC Oct. 4, 2005) 

(holding an FCM liable for the activities of its APs 

who were also APs of a CTA, and noting that 

holding otherwise would ‘‘bring about the very 

situation the rule is aimed at preventing—one in 

which a futures customer who contracts with two 

entities to receive two products or services is left 

with nobody minding the store’’). 

In connection with the 1992 Amendments, the 

Commission also amended Regulation 3.12(f) to 

require that the new sponsor file with the NFA a 

Form 3–R signed by the AP’s existing sponsor and 

that included, among other things, an 

acknowledgement by each sponsor that, in addition 

to each sponsor’s responsibility to supervise the AP, 

each sponsor was jointly and severally responsible 

for the conduct of the AP with respect to customers 

common to it and any other sponsor. 57 FR at 

23146. By signing the Form 3–R, each sponsor 

would make clear that it was aware of the new 

association and that it was jointly and severally 

responsible for the AP’s conduct. Id. at 23141. As 

Continued 

I. Introduction 

A. Background 

On July 21, 2010, President Obama 

signed the Dodd-Frank Act.3 Section 

731 of the Dodd-Frank Act amended the 

Commodity Exchange Act (CEA) 4 by 

adding Section 4s, which, among other 

things, prohibits any person from acting 

as a ‘‘swap dealer’’ or ‘‘major swap 

participant’’ unless the person is 

registered with the Commission.5 To 

effectuate the Congressional directive 

that an SD or MSP apply for registration 

in such form and manner as prescribed 

by the Commission,6 on November 23, 

2010, the Commission proposed 

regulations to establish a registration 

process for SDs and MSPs (Proposed 

Registration Regulations),7 and on 

January 19, 2012, the Commission 

adopted regulations that establish a 

registration process for SDs and MSPs 

(Final Registration Regulations).8

However, Section 731 did not direct 

the Commission to adopt regulations 

that provide for the registration of APs 

of SDs and MSPs.9 Thus, unlike APs of 

other Commission registrants, who are 

generally required to register with the 

Commission,10 APs of SDs and MSPs 

are not required to register as such.11

Although APs of SDs and MSPs are not 

subject to registration with the 

Commission, an SD or MSP is 

prohibited from permitting any person 

associated with it to effect or be 

involved in effecting swaps on its behalf 

if such person is subject to a statutory 

disqualification.12

The Commission adopted the Final 

Registration Regulations after 

considering the comments it received 

from the public on the Proposed 

Registration Regulations. One 

commenter recommended that the 

Commission expand the scope of the 

provisions on dual and multiple 

associations currently found in 

Regulation 3.12(f), or adopt a new 

regulation, ‘‘to address the situations in 

which an individual conducts swapsrelated activity on behalf of more than 

one Swap Entity [SD and/or MSP] or 

conducts swaps activity on behalf of a 

Swap Entity and is also registered as an 

AP of a different firm.’’ 13 When 

adopting the Final Registration 

Regulations, the Commission stated that 

‘‘[w]hile the Commission agrees with 

the commenter’s recommendation, it 

anticipates promptly addressing this 

issue in a future rulemaking.’’ 14 The 

Proposal addresses this issue. 

B. Regulation 3.12(f) 

Regulation 3.12 concerns the 

registration of those persons who must 

register as an AP of a Commission 

registrant. Regulation 3.12(c) provides 

that application is made through the 

filing of a Form 8–R, accompanied by a 

specified certification from the 

registrant who will be employing the 

AP—i.e., the AP’s ‘‘sponsor.’’ The term 

‘‘sponsor’’ is defined in Regulation 

3.1(c) to mean ‘‘the futures commission 

merchant, retail foreign exchange 

dealer, introducing broker, commodity 

trading advisor, commodity pool 

operator or leverage transaction 

merchant which makes the certification 

required by § 3.12 of [Part 3] for the 

registration of an associated person of 

such sponsor.’’ 

Regulation 3.12(f)(1)(i) permits dual 

and multiple associations of a person 

registered as an AP.15 Regulation 

3.12(f)(1)(iii) provides that each sponsor 

of the AP is required to supervise the 

AP, and that each sponsor is jointly and 

severally responsible for the AP’s 

activities with respect to any customers 

common to it and any other sponsor 

with which the AP is associated. The 

Commission adopted this joint and 

several responsibility provision in 1992 

in connection with amendments to 

Regulation 3.12(f) that eliminated thenexisting restrictions on dual and 

multiple associations in many 

circumstances.16 The provision was 

intended to address concerns that 

permitting dual and multiple 

associations would lead to situations 

where each sponsor might disclaim 

responsibility for the AP’s activities— 

that is, that each sponsor would claim 

that the dually associated AP was not 

acting on its behalf but, rather, for the 

other sponsor, and therefore the other 

sponsor should be held responsible for 

the conduct in question.17


srobinson on DSK4SPTVN1PROD with PROPOSALS
35894 Federal Register / Vol. 77, No. 116 / Friday, June 15, 2012 / Proposed Rules 

further discussed in Part II.B of this Federal 

Register release, the Commission subsequently 

amended Regulation 3.12(f) to eliminate the 

requirement for each sponsor to sign a Form 3–R 

and to specifically acknowledge joint and several 

responsibility therein. 

18Two separate regulations addressing dual and 

multiple associations of APs of SDs and MSPs are 

necessary because, as noted above, the term 

‘‘sponsor’’ and the provisions of current Regulation 

3.12(f) do not, by their terms, apply to SDs and 

MSPs with respect to their APs (who are not subject 

to a registration requirement). 

19Thus, for example, proposed Regulation 

3.12(f)(5)(i)(B) provides that where an AP of an SD 

or MSP seeks to register an as AP of another 

Commission registrant, the new sponsor must meet 

the requirements of Regulation 3.60(b)(2)(i)(A) and 

(B), as is required of a new sponsor under current 

Regulation 3.12(f)(1). However, proposed 

Regulation 3.12(f)(5)(i)(A) provides that an SD or 

MSP seeking to associate with an already registered 

AP must meet the requirements of Regulation 

3.60(b)(2)(i)(A), but not also the requirements of 

Regulation 3.60(b)(2)(i)(B). This is because the 

requirements of the former regulation concern 

specified adjudicatory proceedings which would be 

applicable to SDs and MSPs while the requirements 

of the latter regulation concern financial 

requirements which are not applicable to SDs and 

MSPs. 

20See 67 FR 38869 (June 6, 2002). The 

Commission adopted Regulation 3.12(f)(1)(ii) in 

2002, in connection with other amendments to 

Regulation 3.12 to accommodate NFA’s 

implementation of an online registration system. 

Prior to that time, a potential sponsor of an already 

registered AP was required to file a Form 3–R that 

included a certification signed by it and any 

existing sponsor acknowledging their supervisory 

obligations and their joint and several responsibility 

with respect to the AP’s activities. In eliminating 

these requirements, the Commission explained that 

continuing to require a signature from each sponsor 

would result in unnecessary costs and delays under 

the new electronic filing system, and that the 

acknowledgment was not needed because 

Commission regulations make clear that each 

sponsor is required to supervise the AP and is 

jointly and severally responsible for his or her 

conduct. Instead, as adopted, Regulation 

3.12(f)(1)(ii) requires NFA to notify existing 

sponsors of the AP of the application. Id. at 38870– 

71. 

21 5 U.S.C. 601 et seq. 

22 47 FR 18618 (Apr. 30, 1982). 

23To the extent the Proposal (specifically, 

proposed Regulation 3.12(f)(5)) would have an 

impact on CPOs, it would only impact registered 

CPOs, since Regulation 3.12(f), by its terms, would 

not apply where an AP’s new or existing association 

is with a person who is not registered with the 

Commission. 

24See 47 FR at 18619–20 (discussing FCMs and 

CPOs); 54 FR 19556, 19557 (May 8, 1989) 

(discussing LTMs); 75 FR 55410, 55416 (Sept. 19, 

2010) (discussing RFEDs). 

25See 77 FR at 2620 (adopting the Final 

Registration Regulations). 

26See 47 FR at 18619 (discussing CTAs); 48 FR 

35248, 35276–77 (Aug. 3, 1983) (discussing IBs). 

However, and, as explained above, the 

Dodd-Frank Act does not direct the 

Commission to provide for—and, thus, 

the Commission has not adopted 

regulations requiring—the registration 

of APs of SDs and MSPs. As a result, the 

provisions of current Regulation 

3.12(f)(1), which apply to a sponsoring 

registrant with respect to its APs who 

are required to register as such, do not 

apply to SDs and MSPs and their APs. 

II. The Proposed Regulations 

A. Proposed Regulations 3.12(f)(5) and 

23.22(c) 

The Proposal would provide for dual 

and multiple associations of persons 

associated with SDs, MSPs and other 

Commission registrants (i.e., FCMs, 

retail foreign exchange dealers (RFEDs), 

IBs, CTAs, CPOs, and LTMs). 

Specifically, proposed Regulation 

3.12(f)(5)(i)(A) would apply where a 

person associated as a registered AP of 

one or more (other) Commission 

registrants seeks to become associated as 

an AP of one or more SDs or MSPs; 

proposed Regulation 3.12(f)(5)(i)(B) 

would apply where a person associated 

as an AP of one or more SDs or MSPs 

seeks to become associated as a 

registered AP of one or more other 

Commission registrants; and proposed 

Regulation 23.22(c) would apply where 

a person associated as an AP of an SD 

or MSP seeks to become associated as an 

AP of one or more other SDs or MSPs.18

The Proposal would make clear that 

each SD, MSP and other Commission 

registrant with whom the AP is 

associated is required to supervise the 

AP and is jointly and severally 

responsible for the activities of the AP 

with respect to customers common to it 

and any other SD, MSP or other 

Commission registrant. These proposed 

regulations are based on the form and 

text of current Regulation 3.12(f)(1).19

B. Request for Comments 

The Commission requests comments 

on all aspects of the Proposal. In 

particular, the Commission is requesting 

comment on whether it should adopt a 

provision (in both Regulation 3.12(f)(5) 

and Regulation 23.22(c)) that would 

provide a mechanism to notify SDs, 

MSPs and existing sponsors of 

registered APs when one of their APs 

seeks to become associated with another 

SD or MSP (or, in the case of an AP of 

an SD or MSP, seeks to register as an AP 

of another Commission registrant). 

These provisions would serve the 

purpose of putting any other SD, MSP 

or other registrant associated with the 

AP on notice that it is (or will become) 

subject to the supervisory and joint and 

several responsibility requirements of 

Regulation 3.12(f) that would be 

applicable to it as a result of the 

regulations proposed herein. Under 

current Regulation 3.12(f)(1), which 

does not address dual and multiple 

associations with SDs and MSPs, a 

person registered as an AP may become 

an AP of another sponsor if the new 

sponsor files a Form 8–R with NFA, and 

NFA, in turn, is required to notify any 

existing sponsor of the AP that the 

person has applied to become associated 

with another sponsor. Thus, the current 

regulations provide a mechanism 

through which sponsors are put on 

notice that their registered APs will 

subject them to additional supervisory 

and joint and several responsibility 

requirements under Regulation 3.12(f).20

Employment as an AP of an SD or MSP, 

however, does not require registration 

with the Commission and, thus, the 

filing of a Form 8–R with NFA. 

Therefore, NFA would not otherwise be 

aware of a particular person’s current or 

planned association with an SD or MSP 

and would not be in a position to notify 

other SDs, MSPs or existing sponsors. 

To the extent commenters believe it is 

necessary to adopt regulations aimed at 

providing such notice, the Commission 

also is seeking comment specifically on 

how to do so. One potential mechanism 

would be to require any SD, MSP or 

other Commission registrant seeking to 

associate with an AP who is also 

associated with another SD or MSP to 

notify the other SD or MSP that the AP 

is or intends to become associated with 

the SD, MSP or other Commission 

registrant. 

III. Related Matters 

A. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(RFA) 21 requires Federal agencies, in 

promulgating regulations, to consider 

the impact of those regulations on small 

entities. The Commission has 

previously established certain 

definitions of ‘‘small entities’’ to be used 

by the Commission in evaluating the 

impact of its rules on small entities in 

accordance with the RFA.22 The 

Commission previously has determined 

that FCMs, registered CPOs,23 LTMs and 

RFEDs are not small entities for 

purposes of the RFA, and, thus, the 

requirements of the RFA do not apply 

to those entities.24 In addition, in 

connection with its adoption of the 

Final Registration Regulations, the 

Commission determined that SDs and 

MSPs are not small entities for purposes 

of the RFA.25 Therefore, the 

requirements of the RFA do not apply 

to SDs and MSPs. With respect to CTAs 

and IBs, the Commission previously has 

stated that it would evaluate within the 

context of a particular rule proposal 

whether all or some of the affected 

CTAs and IBs would be considered to be 

small entities and, if so, the economic 

impact on them of the particular 

regulation.26 The Commission notes that 

the Proposal would only impact, 


srobinson on DSK4SPTVN1PROD with PROPOSALS
Federal Register / Vol. 77, No. 116 / Friday, June 15, 2012 / Proposed Rules 35895 

27This is because, as noted above, Regulation 

3.12(f) would not apply where an AP’s new or 

existing association is with a person (e.g., a CTA or 

an IB) who is not registered with the Commission. 28See Amendments to Commodity Pool Operator 

and Commodity Trading Advisor Regulations 

Resulting from the Dodd-Frank Act, 76 FR 11701, 

11703 (Mar. 3, 2011) (noting with regard to RFA 

considerations that the regulations proposed therein 

would only impact registered CTAs). As of February 

7, 2011, less than three percent of all registered APs 

(or less than 1500 APs) were associated on a dual 

or multiple basis with Commission registrants. 

29 44 U.S.C. 3501 et seq. 

30See 44 U.S.C. 3502(2) and (3). 

31 7 U.S.C. 19(a). 

32As noted above, these requirements, which are 

set forth in existing Regulation 3.12(f)(1)(iii), apply 

to the activities of such APs with respect to the 

common customers of the APs’ employing 

registrants. 

33Similarly, and as noted above, these proposed 

requirements would apply to the activities of such 

APs with respect to the common customers of the 

APs’ employing SDs, MSPs and/or other 

Commission registrants. 

potentially, registered CTAs and 

registered IBs,27 and the number of such 

impacted entities, if any, should likely 

be very small.28 Accordingly, the 

Chairman, on behalf of the Commission, 

hereby certifies pursuant to 5 U.S.C. 

605(b) that the Proposal will not have a 

significant economic impact on a 

substantial number of small entities. 

B. Paperwork Reduction Act 

The Paperwork Reduction Act 

(PRA) 29 imposes certain requirements 

on federal agencies (including the 

Commission) in connection with their 

conducting or sponsoring any collection 

of information as defined by the PRA. 

The Proposal would expressly obligate 

each SD, MSP and other Commission 

registrant to supervise their APs who 

have dual and multiple associations and 

make each SD, MSP and other 

Commission registrant jointly and 

severally responsible for the activities of 

such APs with respect to customers 

common to it and any other SD, MSP or 

other Commission registrant. The 

Proposal contains no provision that 

would impose a ‘‘burden’’ or ‘‘collection 

of information’’ as those terms are 

defined in the PRA.30

C. Cost-Benefit Considerations 

In response to the Proposed 

Registration Regulations, a commenter 

requested that the Commission address 

‘‘situations in which an individual 

conducts swaps-related activity on 

behalf of more than one Swap Entity 

[SD and/or MSP] or conducts swaps 

activity on behalf of a Swap Entity and 

is also registered as an AP of a different 

firm.’’ The Proposal addresses that 

issue, and in the following paragraphs, 

the Commission is considering the costs 

and benefits of the proposal in 

accordance with CEA section 15(a).31

As described in the text above, the 

Commission is proposing to specify the 

responsibilities applicable with respect 

to dual and multiple associations of APs 

of SDs and MSPs, and particularly, that 

such associations are permitted, but that 

they implicate the joint and several 

supervisory and responsibility 

provisions applicable with respect to 

such associations under existing 

Regulation 3.12(f). 

As noted above, existing regulations 

addressing dual and multiple 

associations of APs do not address APs 

of SDs and MSPs and the obligations of 

those persons with whom they are 

associated concerning common 

customers. Thus, the primary benefits of 

the Proposal include the same benefits 

noted by the Commission when it 

adopted the supervisory and joint and 

several responsibility provisions under 

current Regulation 3.12(f), namely, the 

prevention of circumstances where an 

SD, MSP or other Commission registrant 

seeks to avoid responsibility for the 

activities of an AP who has dual or 

multiple associations by asserting the 

conduct in question was not within the 

purview of its supervisory 

responsibilities with respect to the AP. 

Therefore, the Commission believes the 

Proposal will provide protection to 

market participants and the public by 

ensuring that such APs will be 

adequately supervised, and those 

charged with supervising them will be 

held responsible for failing to do so. The 

Commission does not believe that 

compliance with the Proposal will 

impose any significant, new cost on SDs 

or MSPs but, as discussed below, the 

Commission seeks comment on the 

same, including the potential insurance 

and litigation costs associated with joint 

and several responsibility for APs of 

SDs and MSPs with dual and multiple 

associations. 

Consideration of Costs and Benefits 

Relative to the Alternative of Not Taking 

Any Action 

Under current Commission 

regulations, SDs and MSPs are not 

subject to the joint supervisory and 

responsibility requirements applicable 

to other Commission registrants with 

respect to the activities of their APs who 

have dual or multiple associations.32

This current situation provides a 

reference point from which to compare 

the costs and benefits of the proposed 

regulations to the alternative of not 

taking any action—that is, where SDs 

and MSPs, though required to register, 

would not be subject to the supervisory 

or joint and several responsibility 

provisions under (proposed) Regulation 

3.12(f) or Regulation 23.22(c), as 

applicable, for the activities of their APs 

that are also APs of other SDs, MSPs, or 

other Commission registrants.33 Under 

such a scenario, the costs to the public 

of inaction would, in qualitative terms, 

be that: (1) APs of SDs and MSPs that 

have dual or multiple associations 

would not be subject to the same 

regulatory regime as APs of other 

Commission registrants that have dual 

or multiple associations; and (2) SDs 

and MSPs (or other Commission 

registrants) employing an AP with dual 

or multiple associations would not be 

prevented from attempting to disclaim 

responsibility for the activities of the AP 

by asserting that the AP was not acting 

on its behalf, but rather on behalf of 

another SD or MSP with whom the AP 

was associated (with respect to their 

common customers). In contrast, the 

amendment to Regulation 3.12(f) and 

the adoption of Regulation 23.22(c) 

would yield a substantial if 

unquantifiable benefit to the public 

relative to inaction by preventing SDs, 

MSPs and other Commission registrants 

from seeking to avoid supervision of 

and responsibility for the activities of 

their APs who have dual or multiple 

associations with respect to the common 

customers of the SDs, MSPs and other 

Commission registrants. 

Section 15(a) Factors 

Section 15(a) specifies that the costs 

and benefits shall be evaluated in light 

of the following five broad areas of 

market and public concern: (1) 

Protection of market participants and 

the public; (2) efficiency, 

competitiveness, and financial integrity 

of the futures markets; (3) price 

discovery; (4) sound risk management 

practices; and (5) other public interest 

considerations. 

(1) The protection of market 

participants and the public. 

As discussed above, the Commission 

believes the Proposal will provide 

protection to market participants and 

the public by expressly obligating each 

SD, MSP or other Commission registrant 

to supervise its APs who have dual or 

multiple associations and by subjecting 

each SD, MSP and other Commission 

registrant to joint and several 

responsibility for the activities of such 

APs with respect to customers common 

to it and any other SD, MSP or other 

Commission registrants. More 

specifically, the Proposal will prevent 

SDs, MSPs and other Commission 

registrants from disclaiming 

responsibility for the activities of their 


srobinson on DSK4SPTVN1PROD with PROPOSALS
35896 Federal Register / Vol. 77, No. 116 / Friday, June 15, 2012 / Proposed Rules 

APs who have dual and multiple 

associations. 

(2) The efficiency, competitiveness, 

and financial integrity of the futures 

markets. 

The Commission does not expect the 

Proposal to have an impact on the 

efficiency, competitiveness and 

financial integrity of the futures market. 

(3) The market’s price discovery 

functions. 

The Commission does not expect the 

Proposal to have an impact on the 

market’s price discovery functions. 

(4) Sound risk management practices. 

The Commission does not expect the 

Proposal to have an impact on risk 

management practices by SDs, MSPs 

and other Commission registrants. 

(5) Other public interest 

considerations. 

The Commission has not identified 

any other public interest considerations 

in light of which it should consider the 

costs and benefits of the Proposal. The 

Commission specifically requests 

comment on its cost and benefit 

considerations of the Proposal, as 

discussed above. 

The Commission requests comment 

on all aspects of its proposed 

consideration of costs and benefits, 

including identification and assessment 

of any costs and benefits not discussed 

above, such as costs associated with 

determining if a potential AP is already 

associated with another SD, MSP or 

other Commission registrant. In 

addition, the Commission requests that 

commenters provide data and any other 

information or statistics that the 

commenters relied on to reach any 

conclusions on the Commission’s 

proposed considerations of costs and 

benefits. 

List of Subjects 

17 CFR Part 3 

Associated persons, Brokers, 

Commodity futures, Customer 

protection, Major swap participants, 

Registration, Swap dealers. 

17 CFR Part 23 

Associated persons, Commodity 

futures, Customer protection, Major 

swap participants, Registration, 

Reporting and recordkeeping 

requirements, Swap dealers. 

For the reasons presented above, the 

Commission proposes to amend Chapter 

I of Title 17 of the Code of Federal 

Regulations as follows: 

PART 3—REGISTRATION 

1. The authority citation for part 3 

continues to read as follows: 

Authority: 5 U.S.C. 522, 522b; 7 U.S.C. 1a, 

2, 6, 6a, 6b, 6c, 6d, 6e, 6f, 6g, 6h, 6i, 6k, 6m, 

6n, 6o, 6p, 6s, 8, 9, 9a, 12, 12a, 13b, 13c, 16a, 

18, 19, 21, and 23, as amended by Title VII 

of the Dodd-Frank Wall Street Reform and 

Consumer Protection Act, Pub. L. 111–203, 

124 Stat. 1376 (July 21, 2010). 

2. Section 3.12 is amended by adding 

new paragraph (f)(5) to read as follows: 

§ 3.12 Registration of associated persons 

of futures commission merchants, retail 

foreign exchange dealers, introducing 

brokers, commodity trading advisors, 

commodity pool operators and leverage 

transaction merchants. 

* * * * * 

(f) * * * 

(5)(i)(A) A person who is already 

registered as an associated person in any 

capacity whose registration is not 

subject to conditions or restrictions may 

become associated as an associated 

person of a swap dealer or major swap 

participant if the swap dealer or major 

swap participant meets the 

requirements set forth in 

§ 3.60(b)(2)(i)(A) of this part. 

(B) A person who is already 

associated as an associated person of a 

swap dealer or major swap participant 

may become registered as an associated 

person of a futures commission 

merchant, retail foreign exchange 

dealer, introducing broker, commodity 

trading advisor, commodity pool 

operator, or leverage transaction 

merchant if the futures commission 

merchant, retail foreign exchange 

dealer, introducing broker, commodity 

trading advisor, commodity pool 

operator, or leverage transaction 

merchant with which the person 

intends to associate meets the 

requirements set forth in 

§ 3.60(b)(2)(i)(A) and (B) of this part. 

(ii) Each sponsor and each swap 

dealer and/or major swap participant 

with whom the person is associated 

shall supervise that associated person, 

and each sponsor and each swap dealer 

and/or major swap participant is jointly 

and severally responsible for the 

conduct of the associated person with 

respect to the: 

(A) Solicitation or acceptance of 

customer orders, 

(B) Solicitation of funds, securities or 

property for a participation in a 

commodity pool, 

(C) Solicitation of a client’s or 

prospective client’s discretionary 

account, 

(D) Solicitation or acceptance of 

leverage customers’ orders for leverage 

transactions, 

(E) Solicitation or acceptance of 

swaps, and 

(F) Associated person’s supervision of 

any person or persons engaged in any of 

the foregoing solicitations or 

acceptances, with respect to any 

customers common to it and any futures 

commission merchant, retail foreign 

exchange dealer, introducing broker, 

commodity trading advisor, commodity 

pool operator, leverage transaction 

merchant, swap dealer, or major swap 

participant with which the associated 

person is associated. 

* * * * * 

PART 23—SWAP DEALERS AND 

MAJOR SWAP PARTICIPANTS 

3. The authority citation for Part 23 

continues to read as follows: 

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

6s, 9, 9a, 13b, 13c, 16a, 18, 19, 21 as amended 

by Title VII of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act, Pub. L. 

111–203, 124 Stat. 1376 (July 21, 2010). 

4. Section 23.22 is amended by 

adding paragraph (c) to read as follows: 

§ 23.22 Associated persons of swap 

dealers and major swap participants. 

* * * * * 

(c) Dual and multiple associations. 

(1) A person who is already associated 

as an associated person of a swap dealer 

or major swap participant may become 

associated as an associated person of 

another swap dealer or major swap 

participant if the other swap dealer or 

major swap participant meets the 

requirements set forth in 

§ 3.60(b)(2)(i)(A) of this chapter. 

(2) Each swap dealer and major swap 

participant associated with such 

associated person shall supervise that 

associated person, and each swap dealer 

and major swap participant is jointly 

and severally responsible for the 

conduct of the associated person with 

respect to the: 

(i) Solicitation or acceptance of 

customer orders, 

(ii) Solicitation of funds, securities or 

property for a participation in a 

commodity pool, 

(iii) Solicitation of a client’s or 

prospective client’s discretionary 

account, 

(iv) Solicitation or acceptance of 

leverage customers’ orders for leverage 

transactions, 

(v) Solicitation or acceptance of 

swaps, and 

(vi) Associated person’s supervision 

of any person or persons engaged in any 

of the foregoing solicitations or 

acceptances, with respect to any 

customers common to it and any other 

swap dealer or major swap participant. 


srobinson on DSK4SPTVN1PROD with PROPOSALS
Federal Register / Vol. 77, No. 116 / Friday, June 15, 2012 / Proposed Rules 35897 

Issued in Washington, DC, on June 11, 

2012, by the Commission. 

David A. Stawick, 

Secretary of the Commission. 

[FR Doc. 2012–14654 Filed 6–14–12; 8:45 am] 

BILLING CODE 6351–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 117 

[Docket No. USCG–2011–0926] 

RIN 1625–AA09 

Drawbridge Operation Regulation; 

Lafourche Bayou, LA 

AGENCY: Coast Guard, DHS. 

ACTION: Notice reopening comment 

period. 

SUMMARY: The U.S. Coast Guard is 

reopening the comment period to solicit 

additional comments concerning its 

Notice of Proposed Rulemaking to 

change the regulation governing the six 

bridges across Bayou Lafourche, south 

of the Gulf Intracoastal Waterway 

(GIWW). 

DATES: The comment period for the 

proposed rule published April 16, 2012, 

at 77 FR 22520, is reopened. Comments 

and related material must be received by 

July 5, 2012. 

ADDRESSES: You may submit comments 

identified by docket number USCG– 

2011–0926 using any one of the 

following methods: 

(1) Federal eRulemaking Portal: 

http://www.regulations.gov. 

(2) Fax: 202–493–2251. 

(3) Mail: Docket Management Facility 

(M–30), U.S. Department of 

Transportation, West Building Ground 

Floor, Room W12–140, 1200 New Jersey 

Avenue SE., Washington, DC 20590– 

0001. 

(4) Hand delivery: Same as mail 

address above, between 9 a.m. and 

5 p.m., Monday through Friday, except 

Federal holidays. The telephone number 

is 202–366–9329. 

To avoid duplication, please use only 

one of these four methods. See the 

‘‘Public Participation and Request for 

Comments’’ portion of the 

SUPPLEMENTARY INFORMATION section 

below for instructions on submitting 

comments. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this rule, call or 

email Mr. Jim Wetherington; Bridge 

Administration Branch, Eighth Coast 

Guard District; telephone 504–671– 

2128, email 

james.r.wetherington@uscg.mil. If you 

have questions on viewing or submitting 

material to the docket, call Renee V. 

Wright, Program Manager, Docket 

Operations, telephone 202–366–9826. 

SUPPLEMENTARY INFORMATION: 

A. Public Participation and Request for 

Comments 

We encourage you to participate in 

this rulemaking by submitting 

comments and related materials. All 

comments received will be posted, 

without change to http:// 

www.regulations.gov and will include 

any personal information you have 

provided. 

1. Submitting Comments 

If you submit a comment, please 

include the docket number for this 

rulemaking (USCG–2011–0926), 

indicate the specific section of this 

document to which each comment 

applies, and provide a reason for each 

suggestion or recommendation. You 

may submit your comments and 

material online (http:// 

www.regulations.gov), or by fax, mail or 

hand delivery, but please use only one 

of these means. If you submit a 

comment online via http:// 

www.regulations.gov, it will be 

considered received by the Coast Guard 

when you successfully transmit the 

comment. If you fax, hand deliver, or 

mail your comment, it will be 

considered as having been received by 

the Coast Guard when it is received at 

the Docket Management Facility. We 

recommend that you include your name 

and a mailing address, an email address, 

or a phone number in the body of your 

document so that we can contact you if 

we have questions regarding your 

submission. 

To submit your comment online, go to 

http://www.regulations.gov, click on the 

‘‘submit a comment’’ box, which will 

then become highlighted in blue. In the 

‘‘Document Type’’ drop down menu 

select ‘‘Proposed Rules’’ and insert 

‘‘USCG–2011–0926’’ in the ‘‘Keyword’’ 

box. Click ‘‘Search’’ then click on the 

balloon shape in the ‘‘Actions’’ column. 

If you submit your comments by mail or 

hand delivery, submit them in an 

unbound format, no larger than 81⁄2 by 

11 inches, suitable for copying and 

electronic filing. If you submit them by 

mail and would like to know that they 

reached the Facility, please enclose a 

stamped, self-addressed postcard or 

envelope. We will consider all 

comments and material received during 

the comment period and may change 

the rule based on your comments. 

2. Viewing Comments and Documents 

To view comments, as well as 

documents mentioned in this preamble 

as being available in the docket, go to 

http://www.regulations.gov, click on the 

‘‘read comments’’ box, which will then 

become highlighted in blue. In the 

‘‘Keyword’’ box insert ‘‘USCG–2011– 

0926’’ and click ‘‘Search.’’ Click the 

‘‘Open Docket Folder’’ in the ‘‘Actions’’ 

column. You may also visit the Docket 

Management Facility in Room W12–140 

on the ground floor of the Department 

of Transportation West Building, 1200 

New Jersey Avenue SE., Washington, 

DC 20590, between 9 a.m. and 5 p.m., 

Monday through Friday, except Federal 

holidays. We have an agreement with 

the Department of Transportation to use 

the Docket Management Facility. 

3. Privacy Act 

Anyone can search the electronic 

form of comments received into any of 

our dockets by the name of the 

individual submitting the comment (or 

signing the comment, if submitted on 

behalf of an association, business, labor 

union, etc.). You may review a Privacy 

Act notice regarding our public dockets 

in the January 17, 2008, issue of the 

Federal Register (73 FR 3316). 

4. Public Meeting 

We do not now plan to hold a public 

meeting. But you may submit a request 

for one to the docket using one of the 

four methods specified under 

ADDRESSES. Please explain why one 

would be beneficial. If we determine 

that one would aid this rulemaking, we 

will hold one at a time and place 

announced by a later notice in the 

Federal Register. 

B. Background and Purpose 

On April 16, 2012, we published a 

notice of proposed rulemaking (NPRM) 

entitled, ‘‘Drawbridge Operation 

Regulation; Lafourche Bayou, LA,’’ in 

the Federal Register (77 FR 22520). The 

original comment period closed on May 

16, 2012. The NPRM proposed the 

initial changes to the regulation 

governing six bridges that cross 

Lafourche Bayou and contains useful 

background and analysis related to the 

initial proposed change to accommodate 

traffic during the local school year 

schedule change. The public is 

encouraged to review the NPRM. We 

received one comment in support of the 

proposed change. We also received a 

request for an additional change specific 

to the operating schedule for the Tarpon 

Bridge, at Galliano, Lafourche Parish, 

LA, one of the six bridges under the 

regulation. The one comment received 

and the request for an additional change 


srobinson on DSK4SPTVN1PROD with PROPOSALS