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[Federal Register Volume 90, Number 22 (Tuesday, February 4, 2025)]
[Notices]
[Pages 8927-8928]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-02201]

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COMMODITY FUTURES TRADING COMMISSION

Agency Information Collection Activities: Notice of Intent To 
Extend Collection 3038-0094: Clearing Member Risk Management

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice.

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SUMMARY: The Commodity Futures Trading Commission (``Commission'' or 
``CFTC'') is announcing an opportunity for public comment on the 
proposed renewal of a collection of certain information by the agency. 
Under the Paperwork Reduction Act (``PRA''), Federal agencies are 
required to publish notice in the Federal Register concerning each 
proposed collection of information, including each proposed extension 
of an existing collection of information, and to allow 60 days for 
public comment. This notice solicits comments on the obligation to 
maintain records related to clearing documentation between a customer 
and the customer's clearing member, as required under Commission 
regulations.

DATES: Comments must be submitted on or before April 7, 2025.

ADDRESSES: You may submit comments, identified by ``OMB Control No. 
3038-0094,'' by any of the following methods:
     The Agency's website, at https://comments.cftc.gov/. 
Follow the instructions for submitting comments through the website.
     Mail: 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.
    Please submit your comments using only one method.

FOR FURTHER INFORMATION CONTACT: Catherine Brescia, Attorney Advisor, 
Market Participants Division, Commodity Futures Trading Commission, 
Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581; 
(202) 418-6236; email: [email protected].

SUPPLEMENTARY INFORMATION: Under the PRA, 44 U.S.C. 3501 et seq., 
Federal agencies must obtain approval from the Office of Management and 
Budget (``OMB'') for each collection of information they conduct or 
sponsor. ``Collection of Information'' is defined in 44 U.S.C. 3502(3) 
and 5 CFR 1320.3 and includes agency requests or requirements that 
members of the public submit reports, keep records, or provide 
information to a third party. Section 3506(c)(2)(A) of the PRA, 44 
U.S.C. 3506(c)(2)(A), requires Federal agencies to provide a 60-day 
notice in the Federal Register concerning each proposed collection of 
information, including each proposed extension of an existing 
collection of information, before submitting the collection to OMB for 
approval. To comply with this requirement, the Commission is publishing 
notice of the proposed extension of the existing collection of 
information listed below. An agency may not conduct or sponsor, and a 
person is not required to respond to, a collection of information 
unless it displays a currently valid OMB control number.\1\
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    \1\ The OMB control numbers for the CFTC regulations were 
published on December 30, 1981. See 46 FR 63035 (Dec. 30, 1981).
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    Title: Clearing Member Risk Management (OMB Control No. 3038-0094). 
This is a request for an extension of a currently approved information 
collection.
    Abstract: Section 3(b) of the Commodity Exchange Act (``Act'' or 
``CEA'') provides that one of the purposes of the Act is to ensure the 
financial integrity of all transactions subject to the Act and to avoid 
systemic risks. Section 8a(5) of the CEA authorizes the Commission to 
promulgate such regulations that it believes are reasonably necessary 
to effectuate any of the provisions or to accomplish any of the 
purposes of the CEA. Risk management systems are critical to the 
avoidance of systemic risks.
    Section 4d requires Futures Commission Merchants (``FCMs'') to 
register with the Commission. It further requires FCMs to segregate 
customer funds. Section 4f requires FCMs to maintain certain levels of 
capital. Section 4g establishes reporting and recordkeeping 
requirements for FCMs. Section 4s(j)(2) of the CEA requires each Swap 
Dealer (``SD'') and Major Swap Participant (``MSP'') to have risk 
management systems adequate for managing its day-to-day business. 
Section 4s(j)(4) requires each SD and MSP to have internal systems and 
procedures to obtain any necessary information to perform any of the 
functions set forth in Section 4s.
    Pursuant to these provisions, the Commission adopted Commission 
regulation 1.73 which applies to clearing members that are FCMs and 
Commission regulation 23.609 which applies to clearing members that are 
SDs

[[Page 8928]]

or MSPs.\2\ These provisions require these clearing members to have 
procedures to limit the financial risks they incur as a result of 
clearing trades and liquid resources to meet obligations.
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    \2\ 77 FR 21278 (Apr. 9, 2012).
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    The regulations require clearing members, who are FCMs, SDs, or 
MSPs to: (1) establish risk-based limits based on position size, order 
size, margin requirements, or similar factors, and for FCMs, risk-based 
limits must be established for the proprietary account and in each 
customer account; (2) screen orders for compliance with the risk-based 
limits; (3) monitor for adherence to the risk-based limits intra-day 
and overnight; (4) conduct stress tests under extreme but plausible 
conditions of all positions at least once per week, and for FCMs, the 
stress tests must be conducted for all positions in the proprietary 
account and in each customer account that could pose material risk to 
the FCM; (5) evaluate its ability to meet initial margin requirements 
at least once per week; (6) evaluate its ability to meet variation 
margin requirements in cash at least once per week; (7) evaluate its 
ability to liquidate the positions it clears, in an orderly manner, and 
estimate the cost of the liquidation, and for FCMs, the evaluation must 
be done at least once per quarter and conducted for all positions in 
the proprietary and customer accounts; and (8) test all lines of credit 
at least once per year.
    Each of these items has been observed by Commission staff as an 
element of an existing sound risk management program at an FCM, SD, or 
MSP. The Commission regulations require each FCM, SD, or MSP clearing 
member to establish written procedures to comply with these regulations 
and to keep records documenting its compliance.
    The information collection obligations imposed by the regulations 
are necessary to implement certain provisions of the CEA, including 
ensuring that registrants exercise effective risk management and for 
the efficient operation of trading venues among FCMs, SDs, and MSPs 
that are clearing members, in order to maintain financial stability at 
derivatives clearing organizations (``DCOs'').
    With respect to the collection of information, the CFTC invites 
comments on:
     Whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information will have a practical 
use;
     The accuracy of the Commission's estimate of the burden of 
the proposed collection of information, including the validity of the 
methodology and assumptions used;
     Ways to enhance the quality, usefulness, and clarity of 
the information to be collected; and
     Ways to minimize the burden of collection of information 
on those who are to respond, including through the use of appropriate 
automated electronic, mechanical, or other technological collection 
techniques or other forms of information technology; e.g., permitting 
electronic submission of responses.
    All comments must be submitted in English, or if not, accompanied 
by an English translation. Comments will be posted as received to 
https://www.cftc.gov. You should submit only information that you wish 
to make available publicly. If you wish for the Commission to consider 
information that you believe is exempt from disclosure under the 
Freedom of Information Act (``FOIA''), a petition for confidential 
treatment of the exempt information may be submitted according to the 
procedures established in Sec.  145.9 of the Commission Regulations.\3\
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    \3\ 17 CFR 145.9.
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    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 https://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 Information Collection Request will be retained in 
the public comment file and will be considered as required under the 
Administrative Procedure Act and other applicable laws, and may be 
accessible under FOIA.
    Burden Statement: The Commission is revising its estimate of the 
burden for this collection of information for clearing members of DCOs 
who are FCMs, SDs, and MSPs. The respondent burden for this collection 
is estimated to be as follows:
    Estimated Number of Respondents: 168 (62 Clearing Member FCMs and 
106 Clearing Member SDs).
    Estimated Average Burden Hours per Respondent: 504 hours.
    Estimated Total Annual Burden Hours: 84,672 hours.
    Frequency of Collection: As needed.
    There are no capital costs or operating and maintenance costs 
associated with this collection.

(Authority: 44 U.S.C. 3501 et seq.)

    Dated: January 30, 2025.
Robert Sidman,
Deputy Secretary of the Commission.
[FR Doc. 2025-02201 Filed 2-3-25; 8:45 am]
BILLING CODE 6351-01-P
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