20848 Federal Register / Vol. 78, No. 67 / Monday, April 8, 2013 / Proposed Rules 

1The Commission’s regulations are found at 17 

CFR Ch. I (2012) and can be accessed through the 

Commission’s Web site, www.cftc.gov. 

2See Dodd-Frank Wall Street Reform and 

Consumer Protection Act, Public Law 111–203, 124 

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

can also be accessed through the Commission’s Web 

site. 

3 7 U.S.C. 1 et seq. The CEA also can be accessed 

through the Commission’s Web site. 

4See 77 FR 2613 (Jan. 19, 2012). 

5See also CEA Section 4k(1), which excludes 

from associated person registration a person who, 

in a clerical or ministerial capacity, solicits or 

accept customer orders for a futures commission 

merchant or an introducing broker. 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 23 

RIN 3038–AE00 

Swap Dealers and Major Swap 

Participants; Clerical or Ministerial 

Employees 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Proposed rule. 

SUMMARY: The Commodity Futures 

Trading Commission (Commission or 

CFTC) is proposing to amend its 

regulations (Proposal) to clarify certain 

responsibilities of a swap dealer (SD) or 

major swap participant (MSP) regarding 

its employees who solicit, accept or 

effect swaps in a clerical or ministerial 

capacity. 

DATES: Comments must be received on 

or before June 7, 2013. 

ADDRESSES: You may submit comments, 

identified by RIN number 3038–AE00, 

by any of the following methods: 

• Agency Web site: http:// 

www.cftc.gov. 

• Mail: 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 

instructions for submitting comments. 

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. You 

should submit only information that 

you wish to make available publicly. If 

you wish the Commission to consider 

information that is exempt from 

disclosure under the Freedom of 

Information Act, a petition for 

confidential treatment of the exempt 

information may be submitted according 

to the procedure established in CFTC 

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 and other 

applicable laws, and may be accessible 

under the Freedom of Information Act. 

FOR FURTHER INFORMATION CONTACT: 

Christopher W. Cummings, Special 

Counsel, (202) 418–6700, 

ccummings@cftc.gov, or Barbara S. 

Gold, Associate Director, (202) 418– 

6700, bgold@cftc.gov, Division of Swap 

Dealer and Intermediary Oversight, 

Commodity Futures Trading 

Commission, 1155 21st Street NW., 

Washington, DC 20581. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Dodd-Frank Wall Street Reform 

and Consumer Protection Act (DoddFrank Act) 2 was signed into law July 21, 

2010. The Dodd-Frank Act amended the 

Commodity Exchange Act (CEA or Act) 3

to require the registration of SDs and 

MSPs, and to establish a comprehensive 

new regulatory framework for swaps. 

One such amendment was new CEA 

Section 4s(b)(6), which states: that 

except to the extent otherwise 

specifically provided by rule, 

regulation, or order, it shall be unlawful 

for a swap dealer or a major swap 

participant to permit any person 

associated with a swap dealer or a major 

swap participant who is subject to a 

statutory disqualification to effect or be 

involved in effecting swaps on behalf of 

the swap dealer or major swap 

participant, if the swap dealer or major 

swap participant knew, or in the 

exercise of reasonable care should have 

known, of the statutory disqualification 

[‘‘Prohibition’’]. 

A related amendment that the DoddFrank Act made was to add a definition 

of ‘‘associated person of a swap dealer 

or major swap participant’’ in new CEA 

Section 1a(4), which states that the term 

‘‘associated person of a swap dealer or 

major swap participant’’ means a person 

who is associated with a swap dealer or 

major swap participant as a partner, 

officer, employee, or agent (or any 

person occupying a similar status or 

performing similar functions), in any 

capacity that involves the solicitation or 

acceptance of swaps; or the supervision 

of any person or persons so engaged. 

Other than for purposes of CEA section 

4s(b)(6), the term ‘‘associated person of 

a swap dealer or major swap 

participant’’ does not include any 

person associated with a swap dealer or 

major swap participant the functions of 

which are solely clerical or ministerial. 

Thus, except to the extent that the 

Commission specifically provided by 

rule, regulation, or order, an SD or MSP 

would be subject to the prohibition 

against permitting a person associated 

with the SD or MSP (including a person 

employed in a clerical or ministerial 

capacity) to effect or be involved in 

effecting swaps if the associated person 

were subject to a statutory 

disqualification. 

On January 19, 2012, the Commission 

published in the Federal Register 

regulations that provide for the 

registration of SDs and MSPs.4 Among 

these new regulations were Regulation 

1.3(aa)(6), which amended the existing 

definition of ‘‘associated person’’ in the 

Commission’s regulations to include 

associated persons of SDs and MSPs, 

and Regulation 23.22, which 

incorporated the prohibition set forth in 

CEA Section 4s(b)(6). Specifically, 

Regulation 1.3(aa)(6) (17 CFR 1.3(aa)(6) 

provides that the term ‘‘associated 

person’’ means any natural person who 

is associated in any of the following 

capacities with a swap dealer or major 

swap participant as a partner, officer, 

employee, agent (or any natural person 

occupying a similar status or performing 

similar functions), in any capacity that 

involves the solicitation or acceptance 

of swaps (other than in a clerical or 

ministerial capacity); or the supervision 

of any person or persons so engaged. 

The exclusion in Regulation 1.3(aa)(6) 

from the definition of associated person 

of an SD or MSP for persons who act in 

a clerical or ministerial capacity is 

consistent with the definition (and 

exclusion for clerical or ministerial 

activity) in the other provisions in 

Regulation 1.3(aa) that define the term 

‘‘associated person’’ in the context of 

other Commission registrants.5

II. The Proposal 

Regulation 23.22, by its terms, applies 

to an associated person of an SD or MSP 

‘‘as defined in section 1a(4) of the Act 

and [Regulation] 1.3(aa).’’ Because 

Regulation 1.3(aa)(6) contains a general 

exclusion from the associated person 

definition for a person employed in a 

clerical or ministerial capacity, and the 

exclusion in CEA Section 1a(4) must be 

read in conjunction with CEA Section 

4s(b)(6), the National Futures 

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Federal Register / Vol. 78, No. 67 / Monday, April 8, 2013 / Proposed Rules 20849 

6Letter from Thomas W. Sexton, Senior Vice 

President and General Counsel, NFA, to Gary 

Barnett, Director of the Division of Swap Dealer and 

Intermediary Oversight, dated November 12, 2012. 

NFA is a registered futures association (and the sole 

association so registered) under CEA Section 17. 

7 In this regard, the Commission notes that 

pursuant to this authority in CEA Section 4s(b)(6), 

it previously adopted an exception from the 

Prohibition for a person already listed as a principal 

of, or already registered as an associated person of, 

another Commission registrant, notwithstanding a 

statutory disqualification. See Regulation 23.22(b), 

proviso. 

8 5 U.S.C. 601 et seq. (2006). 

9By its terms, the RFA does not apply to 

‘‘individuals.’’ See 48 FR 14933, n. 115 (Apr. 6, 

1983). 

10See 77 FR 2613, 2620 (Jan. 19, 2012). 

11 44 U.S.C. 3501 et seq. 

Association (NFA) 6 has recommended 

that the Commission clarify that the 

prohibition in CEA Section 4s(b)(6) does 

not bar association with an SD or MSP 

by employees who are employed in a 

clerical or ministerial capacity. 

In light of NFA’s recommendation, 

and in accordance with the language in 

CEA Section 4s(b)(6) that qualifies the 

Prohibition (‘‘Except to the extent 

otherwise specifically provided by rule, 

regulation, or order’’), the Commission 

is proposing to amend paragraph (a) of 

Regulation 23.22 to clarify that the 

Prohibition does not apply to an 

individual employed by an SD or MSP 

in a clerical or ministerial capacity.7

III. Related Matters 

A. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 8

requires that agencies, in proposing 

regulations, consider the impact of those 

regulations on small businesses.9 The 

Commission previously has determined 

that SDs and MSPs are not ‘‘small 

entities’’ for RFA purposes.10 Moreover, 

as is explained below, if adopted, the 

Proposal will not have a significant 

economic impact on any person who 

would be affected thereby, because it 

will not impose any additional 

operational requirements or otherwise 

direct or confine the activities of 

affected persons. Accordingly, the 

Chairman 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 of 1995 

(PRA) 11 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 Commission believes that the 

Proposal will not impose new 

recordkeeping or information collection 

requirements that require approval by 

the Office of Management and Budget 

under 44 U.S.C. 3501, et seq. 

Accordingly, the PRA does not apply to 

this rulemaking. 

C. Cost-Benefit Considerations 

CEA Section 15(a) requires the 

Commission to consider the costs and 

benefits of its actions before issuing a 

rulemaking under the CEA. CEA 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. 

Summary of the Proposal. As is 

explained above, the Proposal would 

make a clarifying change to the text of 

one of the Commission’s regulations 

that were adopted to reflect changes 

made to the CEA by the Dodd-Frank 

Act, by specifying that the prohibition 

against an SD or MSP permitting a 

statutorily disqualified person to 

associate with it does not include a 

person employed in a clerical or 

ministerial capacity. 

Costs. With respect to costs, the 

Commission believes that the Proposal 

will not impose any costs. This is 

because the Proposal would clarify that 

an SD or MSP need not consider 

whether CEA section 4s(b)(6) applies to 

employees performing clerical or 

ministerial duties. Thus the 

Commission proposes that there will be 

little (if any) costs to persons who will 

be affected by the Proposal. 

Benefits. With respect to benefits, the 

Commission proposes that the Proposal 

will benefit SDs and MSPs by reducing 

the search costs associated with 

determining whether a clerical or 

ministerial employee is statutorily 

disqualified. This, in turn, mitigates the 

cost of compliance with CEA Section 

4s(b)(6). 

Public Comment. 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 

Associated persons, Commodity 

futures, Major swap participants, 

Ministerial or clerical employees, 

Registration, Statutory disqualification, 

Swap dealers, Swaps. 

For the reasons presented above, the 

Commission hereby proposes to amend 

chapter I of title 17 of the Code of 

Federal Regulations 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, 6b– 

1, 6c, 6p, 6r, 6s, 6t, 9, 9a, 12, 12a, 13b, 13c, 

16a, 18, 19, and 21. 

■ 2. Section 23.22 is amended by 

revising the section heading and 

paragraph (a) to read as follows: 

§ 23.22 Prohibition against statutory 

disqualification in the case of an associated 

person of a swap dealer or major swap 

participant. 

(a) Definition. For purposes of this 

section, the term ‘‘person’’ means an 

‘‘associated person of a swap dealer or 

major swap participant’’ as defined in 

section 1a(4) of the Act and § 1.3(aa)(6) 

of this chapter, but does not include an 

individual employed in a clerical or 

ministerial capacity. 

* * * * * 

Issued in Washington, DC, on March 27, 

2013, by the Commission. 

Christopher J. Kirkpatrick, 

Deputy Secretary of the Commission. 

[FR Doc. 2013–07538 Filed 4–5–13; 8:45 am] 

BILLING CODE 6351–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 100 

[Docket No. USCG–2013–0156] 

RIN 1625–AA08 

Special Local Regulations; Marine 

Events, Potomac River; National 

Harbor Access Channel, MD 

AGENCY: Coast Guard, DHS. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Coast Guard proposes to 

establish special local regulations 

during the ‘‘Swim Across the Potomac’’ 

swimming competition, to be held on 

the waters of the Potomac River on June 

2, 2013. These special local regulations 

are necessary to provide for the safety of 

life on navigable waters during the 

event. This action is intended to 

temporarily restrict vessel traffic in a 

portion of the Potomac River during the 

event. 

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