68148 Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules 

1Commission regulations referred to herein are 

found at 17 CFR Ch. 1 (2012). Commission 

regulations are accessible on the Commission’s Web 

site, www.cftc.gov. 

requirements that records be searchable and 

kept in a form and manner that allows for 

identification of a particular transaction, thus 

those requirements apply to FCMs, RFEDs, 

IBs, and members of DCMs and SEFs that are 

required to register with the Commission, 

such as commodity trading advisors (CTAs). 

Section (a)(6) of the proposal requires 

covered entities to retain Rule 1.35 records in 

accordance with Rule 1.31. Rule 1.31 (which 

applies to all books and records required to 

be kept by the Commodity Exchange Act and 

Commission regulations) contains detailed 

requirements regarding the form and manner 

in which records must be maintained and 

produced. It states, among other things, that 

paper records shall be kept in their original 

form, and that electronic records shall be 

kept in their native file format. See Rule 

1.31(a)(1). It also requires that records be 

produced ‘‘in a form specified by any 

representative of the Commission.’’ Id. Thus, 

Rule 1.35, on the one hand, identifies the 

particular records that must be kept, while 

Rule 1.31, on the other hand, sets the form 

and manner in which such records must be 

maintained and produced. But the proposal 

mixes things up by adding to Rule 1.35 

(where they do not belong) new requirements 

for most covered entities regarding form and 

manner—that the records allow for 

identification of a particular transaction and 

be ‘‘searchable,’’ a term that is not defined. 

While it is likely that electronic records 

kept in their native file format are searchable, 

it is not clear what ‘‘searchable’’ means when 

it comes to paper records such as canceled 

checks, signed account agreements, and 

paper orders. Does the proposal require that 

a record of a wire transfer received by an 

FCM to cover margin for multiple positions 

be kept in a form and manner that allows for 

identification of each potential transaction? 

Will a small FCM embedded in a grain 

elevator have to keep copies of checks 

received from farmers in some sort of 

searchable format tied to specific 

transactions? What if the farmer’s check 

mistakenly references the wrong transactions 

and the FCM doesn’t catch it? Is the FCM 

now in breach of our rules? Will FCMs and 

IBs need to hire a paper records 

‘‘searchability’’ staff just to tie records to 

individual transactions in the event, but not 

the certainty, that someday the CFTC will 

want those records? At what cost to them and 

to American markets and end-users? 

I am also concerned that although the 

proposal provides relief to asset managers, 

such as CTAs, from the oral record keeping 

requirements, its adoption would continue to 

burden them with unnecessary costs and 

potentially discourage them from becoming 

members of SEFs. A comment letter filed by 

SIFMA’s Asset Management Group after the 

public roundtable stated, for example, that a 

requirement similar to Rule 1.31’s 

requirement that any digital storage medium 

or system must ‘‘preserve the records 

exclusively in a non-rewritable, non-erasable 

format,’’ see Rule 1.31(b)(1)(ii)(A), also 

known as ‘‘WORM,’’ was rejected by the 

Securities and Exchange Commission when 

considering amending its own recordkeeping 

requirements for registered investment 

advisers and registered investment 

companies because the costs associated with 

preserving records in that manner 

outweighed the benefits. SIFMA AMG Letter 

(Apr. 17, 2014), available at: http://www.

sifma.org/issues/item.aspx?id=8589948677. 

I encourage all affected parties to give us 

detailed comments on the proposal, with 

emphasis on the intersection between Rule 

1.35 and Rule 1.31, and how the proposed 

searchability and identification by 

transaction requirements will work in 

practice. I encourage the public to make us 

listen once again to their concerns about the 

costs and benefits of this particular rule set. 

I am also interested in answers to the 

following questions: 

1. The proposal excludes unregistered 

exchange members from the requirement to 

retain text messages. Is the scope of this 

exclusion appropriate? Do the impediments 

for storing text messages in a searchable 

format extend to persons beyond 

unregistered members? 

2. While unregistered members would not 

be required under the proposal to keep 

records in a searchable format, or in a form 

and manner that allows for identification of 

a particular transaction, they still would be 

required to keep all Rule 1.35 records, 

including all written communications 

(except text messages) provided or received 

concerning quotes, solicitations, bids, offers, 

instructions, trading, and prices that lead to 

the execution of a transaction in a 

commodity interest and related cash or 

forward transactions. FCMs, IBs, RFEDs and 

registered exchange members must keep such 

records (including text messages) in a 

searchable format. What are the costs 

associated with keeping such records in 

accordance with Rule 1.31? Is leading to the 

execution of a transaction the appropriate 

scope of this particular recordkeeping 

requirement? Should the scope be narrowed 

or broadened? If so, why? 

3. Are there any technological 

impediments to the oral recordkeeping 

requirements of Rule 1.35(a)? 

4. Is there a need to revise Rule 1.31 given 

advancements in technology and current 

business practices? 

Although I do not support today’s 

proposal, I am hopeful that after thoughtful 

consideration of the comments, the 

Commission will promulgate a final rule that 

is precise in its meaning and terms and that 

appropriately balances compliance costs with 

the need to effectively regulate the markets 

we oversee. 

[FR Doc. 2014–26983 Filed 11–13–14; 8:45 am] 

BILLING CODE 6351–01–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 1 

RIN 3038–AE22 

Residual Interest Deadline for Futures 

Commission Merchants 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Commodity Futures 

Trading Commission (‘‘Commission’’ or 

‘‘CFTC’’) is proposing to revise the 

Residual Interest Deadline in 

Commission Rule 1.22. The amendment 

would remove the December 31, 2018 

termination date for the phased-in 

compliance schedule for futures 

commission merchants (‘‘FCMs’’) and 

provide assurance that the Residual 

Interest Deadline would only be revised 

through a separate Commission 

rulemaking. 

DATES: Comments must be received on 

or before January 13, 2015. 

ADDRESSES: You may submit comments, 

identified by RIN 3038–AE22, by any of 

the following methods: 

• Agency Web site, via its Comments 

Online process: http://

comments.cftc.gov. Follow the 

instructions for submitting comments 

through the Web site. 

• Mail: Send to Christopher 

Kirkpatrick, 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 of these methods. 

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 procedures 

set forth in § 145.9 of the Commission’s 

regulations.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 and other 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules 68149 

2Enhancing Protections Afforded Customers and 

Customer Funds Held by Futures Commission 

Merchants and Derivatives Clearing Organizations, 

Final Rule, 78 FR 68506 (Nov. 14, 2013) (amending 

17 CFR Parts 1, 3, 22, 30 and 140). 

3See 17 CFR 1.22(c)(3)(i). As defined in 

Regulation 1.22(c)(1), a customer’s account is 

‘‘undermargined,’’ when the value of the customer 

funds for a customer’s account is less than the total 

amount of collateral required by derivatives 

clearing organizations for that account’s contracts. 

See 78 FR 68513, n.30. 

4See 17 CFR 1.22(c)(3)(i). The term ‘‘Residual 

Interest Deadline’’ is defined in Regulation 

1.22(c)(5). 

5See 17 CFR 1.22(c)(5)(ii)(A); see 78 FR 68578. 

6See 17 CFR 1.22(c)(5)(iii)(A). 

7 Id. 

8 Id. 

9 Id. 

10See 17 CFR 1.22(c)(5)(iii)(B). 

11See 17 CFR 1.22(c)(5)(iii)(C). 12 7 U.S.C. 19(a). 

applicable laws, and may be accessible 

under the Freedom of Information Act. 

FOR FURTHER INFORMATION CONTACT: 

Division of Swap Dealer and 

Intermediary Oversight: Thomas Smith, 

Deputy Director, 202–418–5495, 

tsmith@cftc.gov; Jennifer Bauer, Special 

Counsel, 202–418–5472, jbauer@

cftc.gov; Joshua Beale, AttorneyAdvisor, 202–418–5446, jbeale@

cftc.gov, Three Lafayette Centre, 1155 

21st Street NW., Washington, DC 20581. 

Division of Clearing and Risk: M. 

Laura Astrada, Associate Chief Counsel, 

202–418–7622, lastrada@cftc.gov, or 

Kirsten V. K. Robbins, Special Counsel, 

202–418–5313, krobbins@cftc.gov, 

Three Lafayette Centre, 1155 21st Street 

NW., Washington, DC 20581. 

Office of the Chief Economist: 

Stephen Kane, Research Economist, 

skane@cftc.gov, 202–418–5911, Three 

Lafayette Centre, 1155 21st Street NW., 

Washington, DC 20581. 

SUPPLEMENTARY INFORMATION: 

I. Background 

On October 30, 2013, the Commission 

amended Regulation 1.22 to enhance the 

safety of funds deposited by customers 

with FCMs as margin for futures 

transactions.2 The amendments require 

an FCM to maintain its own capital 

(hereinafter referred to as the FCM’s 

‘‘Residual Interest’’) in customer 

segregated accounts in an amount equal 

to or greater than its customers’ 

aggregate undermargined amounts.3

If an FCM is required to increase its 

Residual Interest as a result of customer 

undermargined accounts, the FCM must 

deposit additional funds into the 

customer segregated accounts by the 

specified Residual Interest Deadline.4

The Commission established a phasedin compliance schedule for Regulation 

1.22 with an initial Residual Interest 

Deadline of 6:00 p.m. Eastern Time on 

the date of the settlement referenced in 

Regulation 1.22(c)(2)(i) (the ‘‘Settlement 

Date’’), beginning November 14, 2014.5

In addition, the Commission directed 

staff to publish for public comment a 

report (the ‘‘Report’’) addressing, to the 

extent information is practically 

available, the practicability (for both 

FCMs and customers) of moving the 

Residual Interest Deadline from 6:00 

p.m. Eastern Time on the Settlement 

Date, to the time of settlement or to 

some other time of day.6 The Report is 

also to address whether and on what 

schedule it would be feasible to move 

the Residual Interest Deadline, and the 

costs and benefits of such potential 

requirements.7 The Commission further 

directed staff to solicit public comment 

and conduct a public roundtable 

regarding specific issues to be covered 

by the Report.8 The Report is to be 

completed by May 16, 2016.9

Within nine months after the 

publication of the Report, the 

Commission may, by Order, terminate 

the phase-in period, or determine that it 

is necessary or appropriate in the public 

interest to propose through a separate 

rulemaking a different Residual Interest 

Deadline.10 Finally, absent Commission 

action, the phased-in compliance period 

for the Residual Interest Deadline will 

terminate on December 31, 2018, and 

the Residual Interest Deadline will 

change to the time of settlement on the 

Settlement Date.11

II. Discussion 

As noted above, absent Commission 

action, the phase-in of the compliance 

period for the Residual Interest Deadline 

will automatically terminate on 

December 31, 2018, and change to the 

time of settlement on the Settlement 

Date. The Commission is proposing to 

revise Regulation 1.22 to remove the 

December 31, 2018 automatic 

termination of the phase-in compliance 

period. The proposal would instead 

provide that the Residual Interest 

Deadline would remain at 6:00 p.m. 

Eastern Time, unless the Commission 

takes further action via publication of a 

new rule. 

The Commission is proposing to 

amend Regulation 1.22 in order to 

provide the Commission with a greater 

degree of flexibility to assess the issues 

and all relevant data associated with 

revising the Residual Interest Deadline. 

In this regard, the proposal would afford 

the Commission the opportunity to fully 

and carefully consider the views 

expressed during the public roundtable, 

the views and issues raised during the 

solicitation of public comments, and the 

results of the staff’s Report, regarding 

the practicability and costs and benefits 

of revising the Residual Interest 

Deadline without the constraints of an 

established regulatory deadline for 

Commission action. The Commission is 

also proposing to revise Regulation 1.22 

to make clear that any subsequent 

revision to the Residual Interest 

Deadline may only be effected through 

a separate rulemaking. 

The Commission notes that this 

proposal does not alter the requirement 

in Regulation 1.22(c)(3)(i) that, 

commencing November 14, 2014, all 

FCMs maintain the requisite Residual 

Interest in customer accounts by no later 

than 6:00 p.m. Eastern Time on the 

Settlement Date. 

The Commission invites comments on 

all aspects of the proposed amendments 

to the phase-in compliance period, 

including the costs and benefits of this 

proposed change. For example, does the 

automatic termination of the phase-in 

compliance period serve any useful 

purposes, such as focusing attention on 

the Report, that the Commission should 

consider? At this time, are there 

indications that issues regarding the 

practicability and costs and benefits of 

revising the Residual Interest Deadline 

will require significant time to consider, 

such that the automatic termination of 

the phase-in compliance period would 

hamper consideration of those issues? 

What are the particular concerns, if any, 

suggesting that the automatic 

termination of the phase-in compliance 

period is inappropriate in the specific 

context of Regulation 1.22? 

III. Cost-Benefit Considerations 

Section 15(a) of the Commodity 

Exchange Act (‘‘CEA’’) requires the 

Commission to consider the costs and 

benefits of its actions before 

promulgating a regulation under the 

CEA or issuing certain orders.12 Section 

15(a) further specifies that the costs and 

benefits shall be evaluated in light of 

five broad areas of market and public 

concern: (1) Protection of market 

participants and the public; (2) 

efficiency, competitiveness, and 

financial integrity of futures markets; (3) 

price discovery; (4) sound risk 

management practices; and (5) other 

public interest considerations. The 

Commission considers the costs and 

benefits resulting from its discretionary 

determinations with respect to the 

section 15(a) factors. 

The proposed rule and the status quo 

baseline with which the costs and 

benefits are compared are similar. The 

baseline for this costs and benefits 

consideration is the status quo, in which 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

68150 Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules 

13 5 U.S.C. 601 et seq. 

14 47 FR 18618 (Apr. 30, 1982). 

15 Id. at 18619. 

16 Id. 

the 6:00 p.m. Eastern Time on the 

Settlement Date would apply until the 

Commission takes further action or, in 

the absence of further action, December 

31, 2018. Inasmuch as the proposed rule 

would not change the settlement date, 

but would eliminate the December 31, 

2018 deadline requiring FCMs to 

maintain sufficient Residual Interest in 

its customer accounts by the time of 

settlement on the Settlement Date, the 

Commission believes that there is not 

likely to be any material difference 

between this proposed rulemaking and 

the status quo baseline in terms of the 

first four section 15(a) factors. 

With respect to the fifth section 15(a) 

factor, ‘‘other public interest 

considerations,’’ the Commission has 

considered that the presence of an 

automatic termination of the phase-in 

compliance period in the regulation 

may have beneficial effects. For 

example, the automatic termination of 

the phase-in compliance period may 

focus attention on the results of the 

Report and provide a timeline for the 

Commission’s consideration of issues 

about the Residual Interest requirement. 

On the other hand, the Commission has 

considered that time will be required to 

consider the Report and related 

roundtable and public comments, prior 

to any change in the Residual Interest 

Deadline. As it does not have relevant 

data to quantify a monetary value of the 

public interest considerations likely to 

be implicated by the proposed 

elimination of the December 31, 2018 

deadline, the Commission has 

considered them qualitatively in 

reaching its preliminary decision to 

propose the elimination of the 

regulatory deadline. The Commission 

invites comment on the cost and benefit 

implications of all of the public interest 

considerations that are relevant to its 

proposal, as well as on the other section 

15(a) factors. 

IV. Related Matters 

A. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(‘‘RFA’’) 13 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.14 The 

proposed regulations would affect 

FCMs. The Commission previously has 

determined that FCMs are not small 

entities for purposes of the RFA, and, 

thus, the requirements of the RFA do 

not apply to FCMs.15 The Commission’s 

determination was based, in part, upon 

the obligation of FCMs to meet the 

minimum financial requirements 

established by the Commission to 

enhance the protection of customers’ 

segregated funds and protect the 

financial condition of FCMs generally.16

Accordingly, the Chairman, on behalf of 

the Commission, hereby certifies 

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

proposed regulations will not have a 

significant economic impact on a 

substantial number of small entities. 

The Commission invites comments on 

the impact of this proposed regulation 

on small entities. 

B. Paperwork Reduction Act 

The Paperwork Reduction Act 

(‘‘PRA’’) provides that a Federal agency 

may not conduct or sponsor, and a 

person is not required to respond to, a 

collection of information unless it 

displays a currently valid control 

number issued by the Office of 

Management and Budget (‘‘OMB’’). This 

proposed rulemaking amends 

requirements that contain a collection of 

information for which the Commission 

has previously received a control 

number from OMB. The title for this 

collection of information is 

‘‘Regulations and Forms Pertaining to 

Financial Integrity of the MarketPlace, 

OMB control number 3038–0024’’. This 

collection of information is not expected 

to be impacted by the rule amendment 

proposed herein, as the calculations 

which are already reflected in the 

burden estimate are not expected to 

change, but the phase-in period for 

assessing compliance relative to such 

calculations is solely proposed to be 

altered. The PRA burden hours 

associated with this collection of 

information are therefore not expected 

to be increased or reduced as a result of 

the amendment proposed. 

Accordingly, for purposes of the PRA, 

these proposed rule amendments, if 

promulgated in final form, would not 

impose any new reporting or 

recordkeeping requirements. The 

Commission invites public comment on 

the accuracy of its estimate that no 

additional information collection 

requirements or changes to existing 

collection requirements would result 

from the rules proposed herein. 

List of Subjects in 17 CFR Part 1 

Brokers, Commodity futures, 

Consumer protection, Reporting and 

recordkeeping requirements. 

For the reasons discussed in the 

preamble, the Commodity Futures 

Trading Commission proposes to amend 

17 CFR chapter I as set forth below: 

PART 1—GENERAL REGULATIONS 

UNDER THE COMMODITY EXCHANGE 

ACT 

■ 1. The authority citation for part 1 

continues to read as follows: 

Authority: 7 U.S.C. 1a, 2, 5, 6, 6a, 6b, 6c, 

6d, 6e, 6f, 6g, 6h, 6i, 6k, 6l, 6m, 6n, 6o, 6p, 

6r, 6s, 7, 7a–1, 7a–2, 7b, 7b–3, 8, 9, 10a, 12, 

12a, 12c, 13a, 13a–1, 16, 16a, 19, 21, 23, and 

24 (2012). 

■ 2. In § 1.22, revise paragraphs 

(c)(5)(iii)(B) and (C) to read as follows: 

§ 1.22 Use of futures customer funds 

restricted. 

* * * * * 

(c) * * * 

(5) * * * 

(iii) * * * 

(B) Nine months after publication of 

the report required by paragraph 

(c)(5)(iii)(A) of this section, the 

Commission may (but shall not be 

required to) do either of the following: 

(1) Terminate the phase-in period 

through rulemaking, in which case the 

phase-in period shall end as of a date 

established by a final rule published in 

the Federal Register, which date shall 

be no less than one year after the date 

such rule is published; or 

(2) Determine that it is necessary or 

appropriate in the public interest to 

propose through rulemaking a different 

Residual Interest Deadline. In that 

event, the Commission shall establish, if 

necessary, a phase-in schedule in the 

final rule published in the Federal 

Register. 

(C) If the phase-in schedule has not 

been terminated or revised pursuant to 

paragraph (c)(5)(iii)(B) of this section, 

then the Residual Interest Deadline shall 

remain 6:00 p.m. Eastern Time on the 

date of the settlement referenced in 

paragraph (c)(2)(i) or, as appropriate, 

(c)(4) of this section until such time that 

the Commission takes further action 

through rulemaking. 

Issued in Washington, DC, on November 3, 

2014, by the Commission. 

Christopher J. Kirkpatrick, 

Secretary of the Commission. 

Note: The following appendices will not 

appear in the Code of Federal Regulations. 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules 68151 

1Petition of the United States Postal Service for 

the Initiation of a Proceeding to Consider Proposed 

Changes in Analytical Principles (Proposal Eleven), 

November 4, 2014 (Petition). 

2Notice of Filing of USPS–RM2015–4/NP1 and 

Application for Nonpublic Treatment, November 4, 

2014 (Notice of Filing). The Notice of Filing 

incorporates by reference the Application for NonPublic Treatment of Materials contained in 

Attachment Two to the December 27, 2013 United 

States Postal Service Fiscal Year 2013 Annual 

Compliance Report. Notice of Filing at 1. See 39 

CFR part 3007 for information on access to nonpublic material. 

Appendices to Residual Interest Deadline for 

Futures Commission Merchants— 

Commission Voting Summary and 

Chairman’s Statement Appendix 1— 

Commission Voting Summary 

On this matter, Chairman Massad and 

Commissioners Wetjen, Bowen, and 

Giancarlo voted in the affirmative. No 

Commissioner voted in the negative. 

Appendix 2—Statement of Chairman 

Timothy G. Massad 

I support the Staff’s recommendation. One 

of my priorities has been to fine-tune our 

rules to make sure they work as intended and 

do not impose undue burdens or unintended 

consequences, particularly for the 

nonfinancial commercial businesses that use 

these markets to hedge commercial risks. The 

proposed amendment is consistent with that 

goal. It is designed to help ensure that the 

funds deposited by customers with Futures 

Commission Merchants, or FCMs, remain 

safe. It is not a major change, but it is 

significant in making sure that 

manufacturers, farmers, ranchers, and other 

companies that rely on the derivatives 

markets to hedge routine business risks can 

continue to use them efficiently and 

effectively. 

The rule prohibits an FCM from using 

customer funds of one customer for the 

benefit of another customer. Last fall, the 

Commission amended Regulation 1.22 to 

further enhance the safety of such funds by 

making sure that customer accounts have 

sufficient margin. On any day when a 

customer is required to post additional 

margin but has not yet done so, the FCM 

must maintain its own capital—often referred 

to as the FCM’s ‘‘Residual Interest’’—in 

customer segregated accounts to make up the 

difference. The amendments provided that 

the FCM must deposit the additional funds 

by a specified deadline. Specifically, the 

amendments said that as of November 14, 

2014, the deadline would be 6:00 p.m. 

Eastern Time on the settlement date. The 

deadline for the FCMs to post their capital 

affects the deadline for customers to increase 

their own funds. 

The amendments passed last fall also 

provide that the Commission will conduct a 

study, and solicit public comment— 

including by way of a public roundtable— 

concerning the practicability, for both FCMs 

and their customers, of moving that deadline 

from 6:00 p.m. to the morning daily clearing 

settlement cycle or the time of settlement, 

which I will refer to as 9:00 a.m. for 

convenience. The amendments said the 

Commission would decide, within nine 

months after publication of the report, 

whether to move the deadline to 9:00 a.m. 

Finally, the amendments said that if the 

Commission failed to take any action, the 

deadline would automatically move to 9:00 

a.m. as of December 31, 2018. 

Today, we are making a minor, but 

important, change. We are proposing to 

eliminate the provision that says the deadline 

will automatically move to 9:00 a.m. as of 

December 31, 2018. The deadline will still 

move to 6:00 p.m. as of November 14 of this 

year, and we will still conduct a study of the 

practicability of making the deadline earlier. 

An earlier residual interest deadline better 

protects customers from one another, in line 

with the statute, but we want to make sure 

we move deliberately so that the model 

works best for customers in light of all of 

their interests, since the deadline will affect 

how much margin customers have to post 

and when. Today’s proposal will make sure 

that customers have an opportunity to not 

only review the study but give us input when 

we consider whether to accelerate the 

deadline. 

[FR Doc. 2014–26978 Filed 11–13–14; 8:45 am] 

BILLING CODE 6351–01–P 

POSTAL REGULATORY COMMISSION 

39 CFR Part 3050 

[Docket Nos. RM2015–4; Order No. 2244] 

Periodic Reporting 

AGENCY: Postal Regulatory Commission. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Commission is noticing a 

recent Postal Service filing concerning a 

Proposed Rulemaking on Analytical 

Principles Used in Periodic Reporting 

(Proposal Eleven). This document 

informs the public of the filing, invites 

public comment, and takes other 

administrative steps. 

DATES: Comments are due: November 

25, 2014. Reply Comments are due: 

December 11, 2014. 

ADDRESSES: Submit comments 

electronically via the Commission’s 

Filing Online system at http://

www.prc.gov. Those who cannot submit 

comments electronically should contact 

the person identified in the FOR FURTHER

INFORMATION CONTACT section by 

telephone for advice on filing 

alternatives. 

FOR FURTHER INFORMATION CONTACT: 

David A. Trissell, General Counsel, at 

202–789–6820. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Introduction 

II. Summary of Proposal 

III. Initial Commission Action 

IV. Ordering Paragraphs 

I. Introduction 

On November 4, 2014, the Postal 

Service filed a petition pursuant to 39 

CFR 3050.11 requesting that the 

Commission initiate an informal 

rulemaking proceeding to consider 

changes to analytical principles relating 

to periodic reports.1 It identifies the 

change filed in this docket as Proposal 

Eleven, Change in the Attribution of 

Debit and Credit Card Fees. Id., 

Attachment at 1. The Postal Service 

concurrently filed one library reference, 

along with an application for nonpublic 

treatment.2

II. Summary of Proposal 

Currently, the Postal Service records 

payments of debit and credit card fees 

in two general ledger accounts, assigns 

the fees to two different cost segments, 

and uses two different keys to distribute 

costs to products and services (total 

postal labor costs and window service 

volume variability). Petition, 

Attachment at 2. This results in 

approximately 42 percent of total debit 

and credit card fees being classified as 

volume variable. Id. The remaining 58 

percent of the fees are classified as 

institutional costs, and are not assigned 

to any products. Id. 

The Postal Service proposes replacing 

this methodology with one based on the 

revenue generated when debit or credit 

cards are used to pay the Postal Service 

for products or services. Id. Reports of 

revenue by product from each of the 

major revenue reporting systems (POS– 

1, etc.) will be combined and grouped 

by product. Each product’s percentage 

of total revenue that is paid with debit 

and credit cards will then be calculated. 

The resulting percentage will serve as 

the distribution for debit and credit card 

fees. Id. The distribution key will be 

applied to the aggregate fee amounts 

from the general ledger accounts. Id. at 

3. All debit and credit card fees will be 

captured in one cost segment (13.3). Id. 

The Postal Service asserts that the 

proposed approach will allow it to more 

accurately assign debit and credit card 

fees to the products that were purchased 

using debit and credit cards. Id. 

Cost impacts. The Postal Service 

states that as a result of no longer using 

window service volume variability, a 

higher percentage of debit and credit 

card fees will be attributed to the 

products or services that caused the 

fees. Id. The Postal Service states the 

current methodology attributed 

approximately $83.3 million of $200 

million in debit and credit card fees to 

products and fees. Id. It states that 

under the proposed methodology, 

approximately $196.9 million would be 

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