6356 Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules 

effective September 15, 2016, is 

amended as follows: 

Paragraph 2004 Jet Routes. 

* * * * * 

J–25 [Amended] 

From INT United States/Mexico 

border and Brownsville, TX, 221° radial; 

Brownsville; INT Brownsville 358° and 

Corpus Christi, TX, 178° radials; Corpus 

Christi; INT Corpus Christi 311° and 

San Antonio, TX, 174° radials; San 

Antonio; Centex, TX; Waco, TX; Ranger, 

TX; Tulsa, OK; Kansas City, MO; Des 

Moines, IA; Mason City, IA; to Gopher, 

MN. 

* * * * * 

Paragraph 6010 Domestic VOR Federal 

Airways. 

* * * * * 

V–55 [Amended] 

From Dayton, OH; Fort Wayne, IN; 

Goshen, IN; Gipper, MI; Keeler, MI; 

Pullman, MI; Muskegon, MI; INT 

Muskegon 327° and Green Bay, WI, 116° 

radials; Green Bay; Stevens Point, WI; 

INT Stevens Point 281° and Eau Claire, 

WI, 107° radials; Eau Claire; to Siren, 

WI. From Park Rapids, MN; Grand 

Forks, ND; INT Grand Forks 239° and 

Bismarck, ND, 067° radials; to Bismarck. 

* * * * * 

V–82 [Amended] 

From Baudette, MN; to INT Baudette 

194° and Park Rapids, MN, 003°T/ 

359°M radials. From Gopher, MN; 

Farmington, MN; Rochester, MN; 

Nodine, MN; to Dells, WI. 

* * * * * 

V–161 [Amended] 

From Three Rivers, TX; Center Point, 

TX; Llano, TX; INT Llano 026° and 

Millsap, TX, 193° radials; Millsap; 

Bowie, TX; Ardmore, OK; Okmulgee, 

OK; Tulsa, OK; Oswego, KS; Butler, MO; 

Napoleon, MO; Lamoni, IA; Des Moines, 

IA; Mason City, IA; Rochester, MN; 

Farmington, MN; to Gopher, MN. From 

International Falls, MN; to Winnipeg, 

MB, Canada, excluding the airspace 

within Canada. 

* * * * * 

V–218 [Amended] 

From International Falls, MN; Grand 

Rapids, MN; Gopher, MN; Waukon, IA; 

to Rockford, IL. From Keeler, MI; to 

Lansing, MI. 

* * * * * 

V–413 [Amended] 

From Gopher, MN; INT Gopher 109° 

and Eau Claire, WI, 269° radials; Eau 

Claire; to Ironwood, MI. 

* * * * * 

Paragraph 6011 United States Area 

Navigation Routes. 

* * * * * 

T–330 Grand Forks, ND (GFK) to Gopher, MN (GEP) [New] 

Grand Forks, ND (GFK) VOR/DME (Lat. 47°57’17.39’’ N., long. 097°11’07.33’’ W.) 

BYZIN, ND WP (Lat. 47°29’03.97’’N., long. 096°13’28.09’’W.) 

TAMMR, MN WP (Lat. 46°53’33.48’’N., long. 095°42’56.42’’W.) 

WATAM, MN FIX (Lat. 46°25’52.91’’N., long. 095°09’06.92’’W.) 

MAFLN, MN WP (Lat. 46°02’22.73’’N., long. 094°37’21.86’’W.) 

DAYLE, MN FIX (Lat. 45°37’24.75’’N., long. 093°55’34.20’’W.) 

Gopher, MN (GEP) VORTAC (Lat. 45°08’44.47’’N., long. 093°22’23.45’’W.) 

* * * * * * * 

T–354 Park Rapids, MN (PKD) to Siren, WI (RZN) [New] 

Park Rapids, MN (PKD) VOR/DME (Lat. 46°53’53.34’’N., long. 095°04’15.21’’W.) 

BRNRD, MN WP (Lat. 46°20’53.81’’N., long. 094°01’33.54’’W.) 

Siren, WI (RZN) VOR/DME (Lat. 45°49’13.60’’N., long. 092°22’28.26’’W.) 

* * * * * * * 

T–383 Gopher, MN (GEP) to BLUOX, MN [New] 

Gopher, MN (GEP) VORTAC (Lat. 45°08’44.47’’N., long. 093°22’23.45’’W.) 

BRNRD, MN WP (Lat. 46°20’53.81’’N., long. 094°01’33.54’’W.) 

BLUOX, MN FIX (Lat. 47°34’33.13’’ N., long. 095°01’29.11’’ W.) 

* * * * * * * 

Issued in Washington, DC, on January 10, 

2017. 

Leslie M. Swann, 

Acting Manager, Airspace Policy Group. 

[FR Doc. 2017–01034 Filed 1–18–17; 8:45 am] 

BILLING CODE 4910–13–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Parts 1 and 23 

RIN 3038–AE36 

Recordkeeping 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Proposed rule. 

SUMMARY: The Commodity Futures 

Trading Commission (the 

‘‘Commission’’) is proposing to amend 

the recordkeeping obligations set forth 

in certain provisions of the 

Commission’s regulations. The 

proposed amendments would permit 

recordkeepers to leverage advances in 

information technology as a means to 

reduce costs associated with the 

retention and production of paper and 

electronic records and to decrease the 

risks of cybersecurity threats, while 

maintaining necessary safeguards to 

ensure the integrity, availability, and 

accessibility of records required to be 

kept pursuant to the Commodity 

Exchange Act (the ‘‘CEA’’) or 

Commission regulations. In addition to 

providing recordkeepers with greater 

flexibility regarding the retention and 

production of regulatory records, the 

proposed amendments would remove 

the requirements for electronic records 

to be kept in their native file format and 

for recordkeepers to enter into an 

arrangement with a third-party technical 

consultant with respect to electronically 

stored information. 

DATES: Comments must be received on 

or before March 20, 2017. 

ADDRESSES: You may submit comments, 

identified by RIN 3038–AE36, by any of 

the following methods: 

• CFTC Web site: https://

comments.cftc.gov. Follow the 

instructions for submitting comments 

through the Comments Online process 

on the Web site. 

• Mail: Christopher Kirkpatrick, 

Secretary of the Commission, 

Commodity Futures Trading 


asabaliauskas on DSK3SPTVN1PROD with PROPOSALS
Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules 6357 

1 17 CFR 145.9. Commission regulations referred 

to herein are found at 17 CFR chapter I. 

2Proposed Rule Requiring that Records Subject to 

Inspection, and Copies Thereof, Be Provided to the 

Commission, 43 FR 50699 (Oct. 31, 1978). 

3 General Regulations; Inspection of Books and 

Records, 46 FR 21–01 (Jan. 2, 1981). 

4Adaptation of Regulations to Incorporate Swaps, 

77 FR 66288 (Nov. 2, 2012) (the ‘‘2012 

Amendment’’). 

5Recordkeeping, 64 FR 28735 (May 27, 1999) (the 

‘‘1999 Amendment’’). 

6Petition for Rulemaking to Amend 1.31, 4.7(b) 

and (c), 4.23 and 4.33, Managed Funds Association, 

Investment Adviser Association, and Alternative 

Investment Management Association, dated July 21, 

2014, and Petition for Rulemaking to Amend CFTC 

Regulations 4.12(c)(3), 4.23 and 4.33 Investment 

Company Institute, dated March 11, 2014 

(collectively, the ‘‘Petitioners’’). Regulations 4.23 

and 4.33 set forth the recordkeeping requirements 

for commodity pool operators (‘‘CPOs’’) and 

commodity trading advisors (‘‘CTAs’’), respectively. 

These regulations require CPOs and CTAs to keep 

certain books and records in accordance with 

§ 1.31. 

Commission, Three Lafayette Centre, 

1155 21st Street NW., Washington, DC 

20581. 

• Hand Delivery/Courier: Same as 

Mail, above. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

Please submit your comments using 

only one method. 

All comments must be submitted in 

English, or if not, accompanied by an 

English translation. Comments will be 

posted as received to www.cftc.gov. You 

should submit only information that 

you wish to make available publicly. If 

you wish 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 § 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 

applicable laws, and may be accessible 

under the FOIA. 

FOR FURTHER INFORMATION CONTACT: 

Eileen T. Flaherty, Director, (202) 418– 

5326, eflaherty@cftc.gov; Frank 

Fisanich, Chief Counsel, (202) 418– 

5949, ffisanich@cftc.gov; Andrew 

Chapin, Associate Chief Counsel, (202) 

418–5465, achapin@cftc.gov; Katherine 

Driscoll, Associate Chief Counsel, (202) 

418–5544, kdriscoll@cftc.gov; C. Barry 

McCarty, Special Counsel, (202) 418– 

6627, cmccarty@cftc.gov; or Jacob 

Chachkin, Special Counsel, (202) 418– 

5496, jchachkin@cftc.gov, Division of 

Swap Dealer and Intermediary 

Oversight, Commodity Futures Trading 

Commission, 1155 21st Street NW., 

Washington, DC 20581. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Regulation 1.31 Recordkeeping 

Requirements 

Commission regulation 1.31 sets forth 

recordkeeping requirements for all 

books and records required to be kept by 

the CEA and Commission regulations, 

and implements the Commission’s 

inspection and examination authority 

over such records.2 Examination of 

books and records is one of the 

Commission’s principal means of 

determining compliance with the CEA 

and Commission regulations.3

Paragraph (a) of § 1.31 describes the 

general requirement that books and 

records must be kept for five years and 

be readily accessible during the first two 

years. Different retention periods apply 

to certain oral communications and 

records of any swap or related cash or 

forward transaction. Paragraph (a) also 

provides that paper records shall be 

kept in their original form and 

electronic records in the format in 

which they were originally created 

(referred to as ‘‘native file format’’), and 

defines the inspection and production 

rights of representatives of the 

Commission and the Department of 

Justice. In particular, § 1.31(a)(2) 

requires that production shall be made 

in a form specified by any 

representative of the Commission upon 

the representative’s request. 

Paragraph (b) of § 1.31 allows books 

and records to be stored on electronic 

storage or micrographic media, such as 

microfiche, provided that the 

recordkeeper complies with various 

technical requirements designed to 

ensure the integrity, availability, and 

accessibility of the electronically stored 

information. For example, this 

paragraph provides that any digital 

storage or medium or system must 

preserve the records exclusively in a 

non-rewritable, non-erasable format, 

known more commonly as the ‘‘write 

once, read-many,’’ or ‘‘WORM’’ 

requirement. In addition, paragraph (b) 

requires a recordkeeper utilizing 

electronic storage media to develop and 

maintain an audit system to provide 

accountability over both the initial entry 

and the entry of each change to any 

original or duplicate record. Further, 

any person who uses only electronic 

storage media to preserve some or all of 

its required records shall enter into an 

arrangement with a third-party technical 

consultant (‘‘Technical Consultant’’) 

capable of furnishing to the Commission 

or its representative any information 

stored electronically promptly upon 

request. 

Paragraph (c) of § 1.31 requires 

recordkeepers to provide notice and a 

representation to the Commission prior 

to the initial use of an electronic storage 

system that the electronic storage 

system satisfies the requirements set 

forth in § 1.31(b). Lastly, paragraph (d) 

of § 1.31 requires certain paper records, 

such as trading cards and documents 

with written trading information, to be 

maintained in hard-copy for the 

applicable retention period. 

The Commission recognizes that the 

most recent substantive amendments to 

§ 1.31 were made in 2012 4 and, prior to 

that, in 1999.5 The 2012 Amendment 

clarified the retention period for records 

of oral communications leading to the 

execution of any swap or related cash or 

forward transaction for swap dealers 

and major swap participants, and to 

require that electronic records be 

retained in their native file format. The 

1999 Amendment implemented all of 

the technical provisions regarding the 

use of electronic storage media in 

§ 1.31(b) and (c), including the 

requirement to retain a Technical 

Consultant. 

B. Petitions for Rulemaking 

The Commission has received 

petitions for rulemaking from various 

industry groups requesting that the 

Commission amend § 1.31.6 Generally, 

the Petitioners state that certain 

requirements set forth in § 1.31 that 

were reasonable and prudent when 

adopted have become outdated and 

irrelevant. Absent any change, the 

Petitioners stated that recordkeepers 

must choose between accepted 

electronic distributed storage systems, 

which are essential for disaster recovery 

and privacy protection, and compliance 

with the letter of the law. 

Specifically, the Petitioners have 

requested the following changes to 

§ 1.31: 

1. Amend § 1.31(a) to no longer 

require electronic records to be kept in 

their native file format; 

2. Amend § 1.31(b) to eliminate the 

WORM requirement for electronic 

records; and 


asabaliauskas on DSK3SPTVN1PROD with PROPOSALS
6358 Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules 

7See Electronic Recordkeeping by Investment 

Companies and Investment Advisers, 66 FR 29224 

(May 30, 2001). Given that intermediaries may 

engage in both securities and derivatives 

transactions, operators of investment companies 

may be required to register with the Commission as 

CPOs, and investment advisers similarly may be 

required to register as CTAs. 

8 64 FR at 28735. 

9See Harmonization of Compliance Obligations 

for Registered Investment Companies Required to 

Register as Commodity Pool Operators, 78 FR 52308 

at 52309 (Aug. 22, 2013). 

10 64 FR at 28736. 

11 Id. 

3. Amend § 1.31(b) to eliminate the 

requirement to enter into an agreement 

with a Technical Consultant. 

With respect to native file format, the 

Petitioners note that programs used to 

store records electronically routinely 

become outdated and obsolete, and/or 

are no longer supported by information 

technology manufacturers. As a result, 

as represented by the Petitioners, 

recordkeepers must bear the burden of 

retaining these electronic records while 

updating to other, advanced systems for 

newly created records. Accordingly, the 

Petitioners request that the Commission 

amend § 1.31 in a manner that does not 

specify the format of any particular 

electronic record, so long as there is 

demonstrable and auditable integrity 

and fidelity in the preservation of the 

underlying data and contents. 

With respect to the WORM 

requirement, the Petitioners assert that 

it is based on a concept that was state 

of the art nearly twenty years ago. 

Records are no longer stored 

electronically on optical disks or CD– 

ROMs. Currently, state of the art 

information technology relies on storage 

subject to restricted access and includes 

storage logs that reflect every single 

change to a file, in addition to archived 

copies. Absent any change, the 

Petitioners state that recordkeepers will 

be required to maintain dual systems 

that preserve the WORM requirement 

but also permit them to more properly 

secure and manage electronic records. 

Accordingly, the Petitioners request that 

the Commission amend § 1.31 to remove 

the WORM requirement. 

With respect to the Technical 

Consultant, the Petitioners state that the 

need to retain and train a third-party to 

serve as a surrogate for access and 

production to electronic records is no 

longer necessary given the in-house 

technical expertise regarding 

information technology throughout the 

industry. In addition to the increased 

costs associated with retaining a 

Technical Consultant, the Petitioners 

also note that providing additional third 

parties with access to sensitive, 

confidential, and proprietary 

information greatly increases the risk of 

cybersecurity intrusions. Accordingly, 

the Petitioners request that the 

Commission amend § 1.31 to remove the 

requirement to retain a Technical 

Consultant. 

In support of their request, Petitioners 

note that the Securities and Exchange 

Commission (‘‘SEC’’) adopted a 

recordkeeping rule for investment 

companies and investment advisers 

consistent with the changes they 

propose.7 Rule 204–2(g) under the 

Investment Advisers Act of 1940 sets 

forth general principles that investment 

advisers must follow when arranging, 

accessing and reproducing their records. 

Similar provisions apply to the 

operators of investment companies 

pursuant to Rule 31a–2. In particular, 

Rule 204–2(g) does not tether advisers to 

any particular format, i.e., native file 

format, nor does it require the use of 

Technical Consultants. The Petitioners 

note that in the 1999 Amendment the 

Commission expressly stated its intent 

to track existing recordkeeping 

provisions similar to those adopted by 

the SEC,8 and that, more recently in 

2013, the Commission acknowledged 

that there are certain advantages to 

crafting regulations that ‘‘allow the 

Commission to fulfill its regulatory 

mandate while, at the same time, 

avoiding unnecessary regulatory 

burdens on dually-regulated [entities] 

with respect to . . . Commission 

recordkeeping requirements.’’ 9

Accordingly, the Petitioners request that 

the Commission amend § 1.31 in a 

manner consistent with SEC Rule 204– 

2(g). 

II. The Proposal 

The Commission noted in the 1999 

Amendment the importance of 

conducting an ongoing review of the 

standards articulated in the 

recordkeeping regulation to ensure that 

the requirements reflect to the extent 

possible the reality of established 

technological innovation.10 At the same 

time, the Commission recognized the 

value of consultation with the 

derivatives industry and its participants 

to determine how to best use available 

information technology that also is 

responsive to the Commission’s 

legitimate need to have access to 

complete and accurate records when 

necessary.11

As the Petitioners highlighted, the 

Commission recognizes that 

recordkeeping has evolved significantly 

in the time since the last major revision 

to § 1.31 in 1999 from a paper-based 

system to electronically stored 

information systems that leverage 

computers, databases, and even cloud 

computing. Back then, most records 

were created and maintained on paper, 

but recordkeepers began to explore 

better ways to store information 

electronically. Now the paradigm has 

shifted, and most information is 

produced and stored electronically on 

complex systems tailored to the needs of 

a given recordkeeper. These advances in 

information technology may have 

rendered certain technical elements of 

§ 1.31 obsolete or outdated. 

Accordingly, the Commission 

proposes to amend § 1.31 to reorganize 

and update the existing recordkeeping 

regulation, eliminating certain outdated 

provisions while still maintaining the 

ability of the Commission to examine 

and inspect required records. The 

Proposal is intended to be technology 

neutral so as technology develops the 

regulation should withstand such 

changes. The updates include new 

definitions, deletion of outdated terms, 

and revision of certain provisions to 

reflect advances in information 

technology. The Commission notes that 

many of the existing provisions and 

principles in § 1.31 have been retained, 

albeit in a revised format. The proposed 

regulation is divided into five 

subsections: (a) Definitions; (b) 

regulatory records policies and 

procedures; (c) duration of retention; (d) 

form and manner of retention; and (e) 

inspection and production of regulatory 

records. 

A. Regulation 1.31(a): Definitions 

The Commission proposes to 

reorganize § 1.31 by revising paragraph 

(a) to define certain terms to be 

referenced elsewhere within the revised 

regulation. Specifically, the Commission 

proposes to define the terms ‘‘electronic 

regulatory records’’, ‘‘records entity’’, 

and ‘‘regulatory records’’. The 

Commission believes that defining these 

terms will provide greater clarity 

regarding the recordkeeping obligations 

applicable to all persons subject to 

§ 1.31, particularly for those obligations 

related to electronic records. 

For the ease of understanding and 

applying the proposed amendments to 

§ 1.31, the Commission proposes to 

define ‘‘records entity’’ to mean ‘‘any 

person required by the Act or 

Commission regulations to keep 

regulatory records.’’ The Commission 

notes that numerous Commission 

regulations set forth particular 

requirements for CEA Section 1a(40) 

‘‘registered entities’’—such as 

derivatives clearing organizations, 

designated contract markets, swap 

execution facilities, and swap data 


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Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules 6359 

12For example, Part 18 of the Commission’s 

regulations requires every trader who owns, holds 

or controls a reportable futures or option to ‘‘keep 

books and records showing all details concerning 

all positions and transactions in the commodity 

swap. . . .’’ 17 CFR 18.05. Traders are not limited 

to any Commission registrant or registered entity. 

13See Supplemental notice of proposed 

rulemaking, Regulation Automated Trading, 81 FR 

85334 (Nov. 25, 2016). 

14Records entities who are currently in 

compliance with current § 1.31 will continue to be 

in compliance with proposed § 1.31, provided that 

they have written policies and procedures that meet 

the requirements of the Proposal. 

15See 36 FR 22286 (Nov. 24, 1971) (permitted the 

use of microfilm as a medium for maintaining 

certain records); 58 FR 27458 (May 10, 1993) 

(permitted the use of optical disk and CD–ROM); 64 

FR 28735 (May 27, 1999) (permitted the use of other 

micrographic and electronic storage media). 

16See § 1.31(b)(1)(ii)(A). 

17Each version of a record must be retained for 

the applicable retention period which is based off 

the most recent version. For example, the initial 

record is created on Day 1 and the amended record 

is created on Year 4, Day 359. The amended record 

resets the retention period clock to Day 1 for both 

the initial record and amended record to ensure a 

comprehensive audit trail. 

18The Commission publishes the CFTC Data 

Delivery Standards on its Web site at: http://

www.cftc.gov/idc/groups/public/@

lrenforcementactions/documents/file/ 

enfdatadeliverystandards052716.pdf. The 

Commission notes that other federal agencies, such 

as the SEC (https://www.sec.gov/divisions/enforce/ 

datadeliverystandards.pdf), the Department of 

Justice (https://www.justice.gov/atr/case-document/ 

file/494686/download) and the Department of 

Treasury Office of Foreign Asset Control (https://

www.treasury.gov/resource-center/sanctions/OFACEnforcement/Documents/ofac_data_delivery.pdf) 

have similar data delivery standards. 

repositories—and for registrants—such 

as futures commission merchants, 

introducing brokers, CPOs, CTAs, floor 

brokers, floor traders, retail foreign 

exchange dealers, swap dealers, and 

major swap participants—to keep 

certain books and records in accordance 

with § 1.31. The Commission notes, 

however, that certain persons that are 

neither a registered entity nor a 

registrant may be required to keep 

certain books and records in accordance 

with § 1.31, as well.12

The Commission also proposes to 

replace existing references to ‘‘books 

and records’’ within § 1.31 with the 

term ‘‘regulatory records’’ and to 

differentiate between electronic and 

paper regulatory records. The 

Commission proposes to define 

‘‘regulatory records’’ to mean ‘‘all books 

and records required to be kept by the 

Act or Commission regulations.’’ As a 

subset, the Commission proposes to 

define within § 1.31(a) ‘‘electronic 

regulatory records’’ to mean ‘‘all 

regulatory records other than paper 

regulatory records exclusively created 

and maintained by a records entity on 

paper.’’ The Commission has separately 

proposed Regulation Automated 

Trading and certain requirements 

regarding source code and manner of 

production of source code.13 This 

proposal does not address source code 

or the production of source code. 

The Commission recognizes that 

certain regulatory records are not 

created electronically and that certain 

records entities may elect not to convert 

any paper regulatory records into an 

electronic format. By differentiating 

between paper and electronic regulatory 

records, the Commission can better 

preserve existing recordkeeping 

obligations applicable solely to records 

entities that do not create anything other 

than paper regulatory records.14

The Commission also believes that the 

term ‘‘books and records’’ in the 

traditional sense may no longer 

adequately convey that § 1.31 

recordkeeping obligations extend to all 

associated electronic data. However, 

contrary to prior revisions to § 1.31 

where the Commission specifically 

delineated the types of allowable media 

for electronic records storage,15 the 

Commission believes it is now 

appropriate to focus the recordkeeping 

obligations on the scope of required 

records, rather than a specific storage 

medium. Accordingly, the Commission 

proposes to further define the term 

‘‘regulatory records’’ by adding the 

following descriptive language to 

include: Any record of any correction or 

other amendment to such books and 

records, provided that, with respect to 

such books and records stored 

electronically, regulatory records shall 

also include: (i) All data produced and 

stored electronically that describes, 

directly or indirectly, the characteristics 

of such books and records, including, 

without limitation, data that describes 

how, when, and, if relevant, by whom 

such electronically stored information 

was collected, created, accessed, 

modified, or formatted; and (ii) any data 

necessary to access, search, or display 

any such books and records. 

The proposed language would more 

clearly state the existing requirement to 

maintain all prior versions of any 

regulatory record, no matter how 

modified. This is not a new 

recordkeeping obligation. Since 1993 

the Commission has required electronic 

records to be created and maintained in 

a non-erasable, non-rewritable format 

for the retention period.16 Because the 

existing regulation requires electronic 

records be preserved exclusively in a 

non-rewritable, non-erasable format, it 

follows that each version of an 

electronic record must be created and 

maintained in a non-erasable, nonrewritable format. Therefore, the 

Commission is confirming that both the 

initial record and all subsequent 

versions are records within the 

definition and must be created, 

maintained, accessible, and produced 

consistent with the regulation.17

The proposed language also would 

clarify that electronically stored 

regulatory records are not limited to the 

data within a particular database or 

application, for example, but includes 

the electronic information that identifies 

the manner in which any regulatory 

record is altered. The Commission 

understands that this information is 

more commonly known as ‘‘metadata,’’ 

and, at its core, is data about data. 

Regardless of the label, the Commission 

understands that metadata generally 

refers to any hidden text, formatting 

codes, formulae, history, tracking, and 

other information associated with an 

electronic file or data. Metadata is 

integral to the Commission’s ability to 

carry out both the inspection and 

investigation functions it is charged 

with under the CEA. To fully 

understand the data within a database, 

for example, requires knowledge of data 

relationships, what the information 

represents, and how it was generated. 

Once properly assembled and formatted 

in the form of a report, data within a 

database is readily understandable. 

The Commission does not find it 

necessary at this time to define specific, 

technical terms related to information 

technology and electronically stored 

information, such as metadata or 

databases, as these technical terms may 

change over time. The Commission 

believes these are terms generally 

understood by practitioners 

notwithstanding a lack of a universal 

agreement on exact definitions. 

The Commission notes that the 

requirement to provide data about data 

is not new. As set forth in current 

§ 1.31(a)(2), production of any books 

and records shall be made ‘‘in a form 

specified by any representative of the 

Commission.’’ For the purpose of 

facilitating production requests 

pursuant § 1.31(a)(2), the Commission’s 

Division of Enforcement has developed 

and continually updates a document 

entitled ‘‘CFTC Data Delivery 

Standards.’’ 18 Such standards describe 

the technical requirements for electronic 

document production to the 

Commission and specifically provides 

for the production of metadata 

associated with electronic records. 

Finally, the Commission further 

proposes not to retain within the 

definition section certain definitions in 

the existing regulation, such as ‘‘native 


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6360 Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules 

19SEC Rule 204–2(a)(17) requires each 

investment adviser to maintain as part of its 

recordkeeping obligations, among other things, a 

copy of the adviser’s policies and procedures, and 

any records documenting the adviser’s annual 

review of those policies and procedures. 

20 66 FR 53510 (Oct. 23, 2001) (‘‘Rules Relating 

to Intermediaries of Commodity Interest 

Transactions’’). With respect to mandatory ethics 

training, the Commission replaced prescriptive 

requirements set forth in § 3.34 with a Statement of 

Acceptable Practices. 

21SEC Rule 204–2(e) states that all books and 

records shall be maintained and preserved in an 

easily accessible place for a period of not less than 

five years from the end of the fiscal year during 

which the last entry was made on such record, the 

first two years in an appropriate office of the 

investment adviser. SEC Rule 31a–2 similarly 

requires the operator of an investment company to 

retain records for a minimum of six years the first 

two years in an easily accessible place. 

file format’’, ‘‘micrographic media’’ and 

‘‘electronic storage media.’’ The 

Commission believes that the proposed 

revisions to § 1.31, described in greater 

detail below, obviate the need to retain 

these defined terms. 

Request for comment: The 

Commission requests comment from all 

interested parties and the general public 

regarding the proposed definitions in 

§ 1.31(a). The Commission encourages 

all comments including background 

information, actual market examples, 

best practice principles, and estimates 

of any asserted costs and expenses. 

Regarding the proposed definitions, the 

Commission specifically requests 

comment on the following questions: 

• Should any of the proposed 

definitions be revised? If yes, please 

provide alternative suggestions. 

• Should any of the proposed 

definitions be deleted? 

• Should any previous definitions 

proposed for deletion, e.g., 

‘‘micrographic media,’’ be included in 

the revised regulation? 

• Should other definitions be added, 

such as ‘‘metadata’’, or ‘‘database’’, or 

‘‘paper regulatory records’’? 

B. Regulation 1.31(b): Regulatory 

Records Policies and Procedures 

The Commission proposes to revise 

and re-state in new § 1.31(b) ongoing 

compliance obligations regarding 

written regulatory records policies and 

procedures currently set forth in 

§ 1.31(b)(3). Specifically, the 

Commission proposes in revised 

§ 1.31(b) to require all records entities to 

establish, maintain, and implement 

written policies and procedures 

reasonably designed to ensure that the 

records entity complies with its 

obligations under § 1.31, including 

without limitation, appropriate training 

of officers and personnel of the records 

entity regarding their responsibility for 

ensuring compliance with the 

obligations of the records entity under 

this section, and regular monitoring for 

such compliance.19

The Commission believes that the 

proposed obligations regarding written 

policies and procedures are generally 

consistent with the existing regulation 

and accepted industry practices. 

Currently, § 1.31(b)(3) requires anyone 

using electronic storage media to 

develop and maintain written 

operational procedures and controls (an 

‘‘audit system’’) designed to provide 

accountability over both the initial entry 

of required records to the electronic 

storage media and the entry of each 

change made to any original or 

duplicate record maintained on the 

electronic storage media. Moreover, the 

written operational procedures and 

controls must be made available for 

examination at all times by any 

representative of the Commission. 

With respect to training, the 

Commission does not find it necessary 

to prescribe specific requirements 

regarding the frequency and format of 

any training. Consistent with its 

approach towards mandatory ethics 

training for registrants, the Commission 

views the training on written policies 

and procedures as an ongoing 

responsibility rather than an episodic 

one.20 The obligation to remain current 

on the legal requirements regarding 

compliance with § 1.31 is one that a 

records entity ignores at its peril. The 

Commission takes a similar view 

towards the proposed obligation for 

each records entity to monitor 

compliance with the entity’s policies 

and procedures on a ‘‘regular’’ basis. 

Request for comment: The 

Commission requests comment from all 

interested parties and the general public 

regarding the proposed obligations 

regarding regulatory records policies 

and procedures in proposed § 1.31(b). 

The Commission encourages all 

comments including background 

information, actual market examples, 

best practice principles, and estimates 

of any asserted costs and expenses. 

Regarding the written policies and 

procedures requirements, the 

Commission specifically requests 

comment on the following questions: 

• Should the training requirement be 

scaled down, phased-in, or eliminated 

depending on the number of employees, 

or depending on the nature of the 

entity’s business? 

C. Regulation 1.31(c): Duration of 

Retention 

The Commission proposes to re-state 

and clarify in revised § 1.31(c) the 

existing retention period requirements 

for categories of regulatory records 

currently set forth in § 1.31(a). 

Specifically, proposed § 1.31(c)(1) 

would state that a records entity shall 

keep regulatory records of any swap or 

related cash or forward transaction (as 

defined in § 23.200(i)), other than 

regulatory records of oral 

communications, from the date the 

regulatory record was created until the 

termination, maturity, expiration, 

transfer, assignment, or novation date of 

the transaction and for a period of not 

less than five years after such date. The 

Commission proposes to incorporate by 

reference the definition of the term 

‘‘related cash or forward transaction’’ in 

§ 23.200(i). 

Similarly, proposed § 1.31(c)(2) would 

state that a records entity that is 

required to retain oral communications 

shall keep regulatory records of such 

oral communications for a period of not 

less than one year from the date of such 

communication. This is consistent with 

the existing standard. The Commission 

proposes, however, to eliminate 

references to §§ 1.35(a) and 23.202(a)(1) 

and (b)(1) with respect to ‘‘oral 

communications’’ as future changes to 

those regulations, or the promulgation 

of new types of oral communications 

requirements, would require the 

Commission to contemporaneously 

amend § 1.31. Based on the foregoing 

proposed amendments, the Commission 

believes that the existing provision in 

§ 23.203(b)(2) regarding the retention 

period of swaps-related information for 

swap dealers and major swap 

participants is redundant and therefore 

should be repealed. For all other 

regulatory records not addressed in 

proposed § 1.31(c)(1) and (2), proposed 

§ 1.31(c)(3) would require a records 

entity to keep such records for a period 

of not less than five years from the date 

on which such record was created. 

However, proposed § 1.31(c)(4) would 

retain the existing retention period for 

regulatory records exclusively created 

and maintained on paper, i.e., records 

must be readily accessible for no less 

than two years. This standard is 

consistent with the SEC’s standard 

applicable to investment advisers and 

operators of investment companies.21

Consistent with this change, the 

Commission proposes to remove the 

duplicative language from 

§ 23.203(b)(1). 

Request for comment: The 

Commission requests comment from all 

interested parties and the general public 

regarding the proposed retention 

periods in § 1.31(c). The Commission 

encourages all comments including 

background information, actual market 


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22Section 1a(40) of the Act defines a ‘‘registered 

entity’’ to mean: (a) A board of trade designated as 

a contract market under section 5; (b) a derivatives 

clearing organization registered under section 5b; 

(c) a board of trade designated as a contract market 

under section 5f; (d) a swap execution facility 

registered under 5h; (e) a swap data repository 

registered under section 21; and (f) with respect to 

a contract that the Commission determines is a 

significant price discovery contract, any electronic 

trading facility on which the contract is executed 

or traded. 

23For example, part 20 of the Commission’s 

regulations sets forth requirements regarding large 

trader reporting for physical commodity swaps. 

Regulation 20.1 defines a ‘‘reporting entity’’ to 

mean a clearing member of a clearing organization 

or a swap dealer in one or more paired swaps or 

swaptions. Pursuant to § 20.6, only clearing 

organizations and reporting entities must keep all 

books and records in accordance with § 1.31. Any 

other person who exceeds the reportable level in 

any contract ‘‘shall keep books and records . . . 

in the record retention format that such person has 

developed in the normal course of its business 

operations.’’ All books and records kept pursuant to 

§ 20.6, however, shall be furnished upon request to 

any Commission representative. 

24With respect to electronic storage media, SEC 

Rule 204–2(g)(3) requires investment advisers to 

establish written procedures that: (1) Maintain and 

preserve the records, so as to reasonably safeguard 

them from loss, alteration, or destruction; (2) limit 

access to the records to properly authorized 

personnel and the SEC; and (3) reasonably ensure 

that any reproduction of a non-electronic original 

record on electronic storage media is complete, 

true, and legible when retrieved. SEC Rule 31a–2(f) 

sets forth similar requirements for the operators of 

investment companies. 

examples, best practice principles, and 

estimates of any asserted costs and 

expenses. Regarding the proposed 

retention periods, the Commission 

specifically requests comment on the 

following questions: 

• Are the proposed recordkeeping 

retention periods appropriate? If not, 

what modifications to the retention 

periods should be made? 

• Given the advances in information 

technology, such as cloud storage, 

should the Commission extend the 

standard five year retention period? 

• Is there a longer or shorter period of 

retention that would be appropriate for 

some records, and if so please specify 

which records and such time-frames? 

D. Regulation 1.31(d): Form and Manner 

of Retention 

The Commission proposes to revise 

§ 1.31(d) to describe recordkeeping 

requirements regarding the form and 

manner in which regulatory records are 

retained by records entities. These 

proposed revisions are designed to 

ensure the integrity and availability of 

all regulatory records. The Commission 

is cognizant that other provisions of the 

Act and Commission regulations 

distinguish between different classes of 

records entities. In particular, the 

Commission recognizes that records 

entities that are not registered or 

required to be registered with the 

Commission in any capacity, nor are 

one of the enumerated ‘‘registered 

entities’’ defined in Section 1a(40) of the 

CEA or so required to be registered or 

designated,22 currently are not required 

to comply with the full panoply of 

recordkeeping requirements.23 It is the 

Commission’s goal to preserve this 

distinction, especially in those cases 

where a records entity exclusively 

maintains paper regulatory records. 

The Commission proposes to re-state 

and revise in new § 1.31(d) certain 

requirements for regulatory records 

currently set forth in § 1.31(b)(1) 

through (3). In doing so, the 

Commission proposes to adopt a general 

standard in § 1.31(d)(1) to require each 

records entity to retain all regulatory 

records in a form and manner necessary 

to ensure the records’ and 

recordkeeping systems’ authenticity and 

reliability. This general requirement 

would not distinguish between paper 

and non-paper regulatory records. 

With respect to electronic regulatory 

records, the Commission proposes to set 

forth in new § 1.31(d)(2)(i) through (iii) 

additional controls for records entities 

retaining electronic regulatory records. 

In particular, each records entity would 

be required to: 

(A) Have systems that maintain 

security, signature, chain of custody 

elements, and data as necessary to 

ensure the authenticity of the 

information contained in regulatory 

records and to monitor compliance with 

the Act and Commission regulations; 

(B) Have systems that ensure the 

records entity is able to produce 

regulatory records in accordance with 

this section, and ensure the availability 

of regulatory records in the event of an 

emergency or other disruption of the 

records entity’s record retention 

systems; and 

(C) Create and maintain an up-to-date 

inventory that identifies and describes 

each system that maintains information 

necessary for accessing or producing 

regulatory records. 

The Commission believes that these 

requirements are not new and are 

consistent with certain SEC 

requirements.24 Currently, 

§ 1.31(b)(1)(ii)(B) mandates that 

electronic storage media verifies 

automatically the quality and accuracy 

of the storage media recording process. 

Existing rules require any records entity 

that utilizes electronic storage media to 

organize and maintain an accurate index 

of all information such that the location 

of any record may be immediately 

ascertained. Among other requirements, 

existing § 1.31(b)(3) requires any records 

entity that utilizes electronic storage 

media to keep current a copy of the 

physical and logical format of the 

electronic storage media, the file format 

of all different information types 

maintained, documentation and 

information necessary to access records 

and indexes maintained on the 

electronic media. 

Finally, based on the foregoing 

proposed amendments, the Commission 

believes that the existing provision in 

§ 1.35(a)(5)(i) regarding the form and 

manner in which records of commodity 

interest and cash forward transactions 

should be maintained is redundant and 

therefore should be repealed. 

Request for comment: The 

Commission requests comment from all 

interested parties and the general public 

regarding the proposed standards for 

form and manner of retention of 

regulatory records in § 1.31(d). The 

Commission encourages all comments 

including background information, 

actual market examples, best practice 

principles, and estimates of any asserted 

costs and expenses. With respect to the 

authenticity and reliability of regulatory 

records and recordkeeping systems, the 

Commission specifically requests 

comment on the following questions: 

• Should the Commission routinely 

publish guidelines regarding the 

technical standards for electronic 

regulatory records? 

With respect to potential impacts of 

the Proposal, the Commission 

specifically requests comment on the 

following questions: 

• Would the Proposal require market 

participants to change their existing 

recordkeeping procedures under the 

Proposal? What, if any, transition or 

ongoing costs would result from such 

changes? Please provide details and 

estimates regarding any asserted costs. 

• For entities who maintain digitized 

copies of paper records, what costs or 

other impacts would result under the 

Proposal? 

E. Regulation 1.31(e): Inspection and 

Production of Regulatory Records 

1. Inspection 

The Commission proposes to re-state 

in revised § 1.31(e)(1) the right of 

inspection of the Commission and the 

United States Department of Justice 

(‘‘DOJ’’) in existing § 1.31(a)(1). 

Specifically, the Commission proposes 

§ 1.31(e)(1) to state that all regulatory 

records shall be open to inspection by 

any representative of the Commission or 

the DOJ. The Commission previously 

determined that production of records is 

part of the Commission’s inspection 


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25See 46 FR 21 (Jan. 3, 1981); see also, CFTC 

Letter 77–4 (Apr. 14, 1977). 

26See § 1.31(b)(2)(i) and (ii). In addition, persons 

using electronic storage media must be ready at all 

times to provide, and immediately provide at the 

expense of the person required to keep such 

records, copies of such records on such compatible 

data processing media as defined in Commission 

regulation 15.00(d) which any representative of the 

Commission or the Department of Justice may 

request. Records must use a format and coding 

structure specified in the request. See § 1.31(b)(3)(i). 

27See § 1.31(a)(2). 

28FIA comment regarding proposed amendments 

to § 1.31. 64 FR 28735 at 28739 (May 27, 1999). 

29SEC Rule 17a–1 similarly requires national 

securities exchanges and registered clearing 

agencies to ‘‘promptly furnish’’ records to any 

representative of the SEC upon request. 

30See 77 FR at 66298 (referring to the 1999 

Amendment). 

powers.25 Accordingly, the Commission 

has determined to limit reference to the 

DOJ in § 1.31 to a single reference in this 

paragraph. Any requirement for a 

records entity to produce regulatory 

records extends to DOJ as is currently 

the requirement. 

Request for comment: The 

Commission requests comment from all 

interested parties and the general public 

regarding the proposed regulations set 

forth in § 1.31(e)(1). The Commission 

encourages all comments including 

background information, actual market 

examples, best practice principles, and 

estimates of any asserted costs and 

expenses. 

2. Production 

The Commission proposes to revise 

and re-state in new § 1.31(e)(2) the 

existing production requirement 

currently set forth in § 1.31(a)(2) and (b). 

Currently, a records entity is required to 

produce regulatory records in a form 

specified by any representative of the 

Commission, including the DOJ, upon 

the representative’s request. If the 

requested book or record is stored either 

on micrographic media or electronic 

storage media, production shall be 

immediate.26 Otherwise, all copies or 

originals shall be provided promptly.27

The Commission proposes to amend 

this requirement in new § 1.31(e)(i) and 

(ii) to differentiate between the 

production of paper and electronic 

regulatory records, particularly with 

respect to the form and medium of 

requested electronic regulatory records. 

With respect to the production of 

regulatory records exclusively created 

and maintained on paper, proposed 

§ 1.31(e)(2) would require a records 

entity to produce such regulatory 

records promptly upon request. With 

respect to regulatory records other than 

paper regulatory records, proposed 

§ 1.31(e)(3) would set forth the process 

by which a records entity must respond 

to a request from a Commission 

representative. In particular, 

§ 1.31(e)(3)(i) would require a 

Commission representative to specify a 

reasonable form and medium in which 

a records entity must produce such 

regulatory records. Proposed 

§ 1.31(e)(3)(ii) would require a records 

entity, at its own expense, to produce 

such regulatory records in the form and 

medium requested promptly, upon 

request, unless otherwise directed by 

the Commission representative. 

The Commission recognizes that 

production, depending on the records, 

may require the records entity to engage 

multiple employees, officers, or 

directors in order to satisfy the 

production request, depending upon its 

size and scope. Historically, 

Commission staff has exercised broad 

discretion regarding production 

schedules and ‘‘typically exhibits 

flexibility. . . .’’ 28 However, timely 

production is a Commission priority 

and the proposed ‘‘prompt’’ standard 

should not be interpreted as sanctioning 

any unnecessary delay. It is the 

Commission’s understanding that most 

registrants maintain records 

electronically and therefore would be 

required under existing § 1.31 to 

produce said records immediately, 

subject to the discretion of Commission 

staff. The prompt production standard is 

therefore consistent with the existing 

standard. The Commission notes that 

the standard ‘‘promptly upon request’’ 

is also consistent with SEC Rule 17a–4 

applicable to broker-dealers thereby 

maintaining a harmonized standard for 

entities that may be dually registered 

with the SEC and the CFTC.29

In adopting this revised regulation, 

the Commission is cognizant of the need 

to balance the opportunities for 

recordkeepers to reduce costs and 

improve efficiencies regarding 

recordkeeping systems with the 

Commission’s need for prompt access to 

complete and accurate records in a 

format that the Commission can process, 

i.e., a useable format.30 For the purposes 

of production, the Commission 

continues to believe that it is not 

sufficient to simply reduce electronic 

records to a paper format, i.e., printing 

out data from a database and saving into 

a portable document file, or PDF. This 

type of production detracts from the 

Commission’s ability to properly 

evaluate the integrity of the electronic 

records by accessing the associated 

metadata, for example. Based upon 

these principles, the Commission 

proposes to revise § 1.31 to permit a 

records entity that cannot promptly 

produce electronic regulatory records in 

the form and medium requested by the 

Commission the opportunity to produce 

records in an alternative manner 

sufficient for the Commission to 

adequately inspect the records. The 

ultimate goal is not necessarily to obtain 

records in their ‘‘native file format,’’ but 

rather in the most useable form and 

medium. 

Finally, the Commission further 

proposes to adopt new § 1.31(e)(4) to 

preserve the existing right of a records 

entity to provide a representative of the 

Commission with an original regulatory 

record for reproduction by the 

representative in lieu of a copy 

currently set forth in § 1.31(a)(2). As 

with the existing provision, the 

Commission proposes to require the 

Commission representative to issue a 

receipt for the original regulatory record 

to the records entity upon request. 

Request for comment: The 

Commission requests comment from all 

interested parties and the general public 

regarding the proposed inspection and 

production of regulatory records in 

§ 1.31(e). The Commission encourages 

all comments including background 

information, actual market examples, 

best practice principles, and estimates 

of any asserted costs and expenses. 

Regarding the production of regulatory 

records, the Commission specifically 

requests comment on the following 

questions: 

• Should the Commission impose a 

different standard with respect to the 

production of paper regulatory records 

or other regulatory records? 

• Are there records entities that retain 

only paper regulatory records? 

F. Other Matters 

1. § 1.31(b)(4)—Technical Consultant 

Consistent with the foregoing 

amendments and in response to the 

Petitioners’ request, the Commission 

proposes to amend § 1.31(b)(4)(i) to 

remove the requirement for a records 

entity to enter into an arrangement with 

a Technical Consultant and provide the 

Technical Consultant with access to and 

the ability to download information 

from the records entity’s electronic 

storage media to any acceptable 

medium. Further, the Commission 

proposes to remove the requirement set 

forth in § 1.31(b)(4)(ii) which requires 

the Technical Consultant to file with the 

Commission an acceptable undertaking 

regarding its ability and willingness to 

provide the Commission and DOJ with 

access to the information contained on 

the record entity’s electronic storage 

media. The Commission concurs with 

the position taken by Petitioners that the 

information technology expertise within 


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31 5 U.S.C. 601 et seq. 

32See, e.g., Policy Statement and Establishment of 

Definitions of ‘‘Small Entities’’ for Purposes of the 

Regulatory Flexibility Act, 47 FR 18618 (Apr. 30, 

1982) (futures commission merchants and 

commodity pool operators); Leverage Transactions, 

54 FR 41068 (Oct. 5, 1989) (leverage transaction 

merchants); Regulation of Off-Exchange Retail 

Foreign Exchange Transactions and Intermediaries, 

75 FR 55410, 55416 (Sept. 10, 2010) (retail foreign 

exchange dealers); and Registration of Swap Dealers 

and Major Swap Participants, 77 FR 2613, 2620 

(Jan. 19, 2012) (swap dealers and major swap 

participants). 

33See 47 FR at 18620 (commodity trading 

advisors and floor brokers); Registration of Floor 

Traders; Mandatory Ethics Training for Registrants; 

Suspension of Registrants Charged With Felonies, 

58 FR 19575, 19588 (Apr. 15, 1993) (floor traders); 

and Introducing Brokers and Associated Persons of 

Introducing Brokers, Commodity Trading Advisors 

and Commodity Pool Operators; Registration and 

Other Regulatory Requirements, 48 FR 35248, 

35276 (Aug. 3, 1983) (introducing brokers). 

the derivatives industry obviates the 

need for the Commission to require 

those records entities electing to store 

information electronically to engage a 

third party to ensure compliance with 

all applicable electronic recordkeeping 

obligations. However, to the extent that 

a records entity chose to use a third 

party or Technical Consultant, the 

records entity would remain responsible 

for compliance with the CEA and 

Commission regulations thereunder. 

2. § 1.31(c)—Representation to the 

Commission 

Consistent with the foregoing 

amendments and in response to the 

Petitioners’ request, the Commission 

proposes to amend § 1.31 by removing 

existing § 1.31(c). This provision 

requires any person utilizing electronic 

storage media to provide a written 

representation to the Commission prior 

to the use of the system certifying that 

the system satisfies the requirements in 

existing paragraph (b)(1)(ii) and, where 

applicable, if the system will be using 

storage media other than optical disk or 

CD–ROM. Further, the written 

representation must include an 

affirmation from an individual 

consistent with § 1.10(d)(4), i.e., the 

information provided is true and correct 

to the best knowledge and belief of the 

affirming individual. The Commission 

believes that the requirement set forth in 

proposed § 1.31(c)(2) regarding written 

policies and procedures for regulatory 

records obviates the need for any 

records entity to provide notice to the 

Commission regarding its compliance 

with § 1.31. Moreover, the Commission 

recognizes that references to optical 

disks and CD–ROM are outdated. 

3. § 1.31(d)—Other Paper Regulatory 

Records 

Consistent with the foregoing 

amendments, the Commission proposes 

to amend § 1.31 by removing current 

§ 1.31(d). This provision states that 

certain paper records, such as trading 

cards and paper copies of electronically 

filed certified forms, must be retained in 

hard-copy for the required time period. 

The Commission believes that revised 

§ 1.31 provides records entities with 

sufficient flexibility on how to retain 

regulatory records while maintaining 

the Commission’s ability to access 

reliable regulatory information. Having 

eliminated the requirement for a records 

entity to retain regulatory records in a 

specific form and manner, the 

Commission believes that § 1.31(d) no 

longer serves any regulatory purpose. 

Request for comment: The 

Commission requests comment from all 

interested parties and the general public 

regarding the proposed deletion of 

existing provisions in § 1.31(b)(4), (c) 

and (d); and § 1.35(a)(5)(i). The 

Commission encourages all comments 

including background information, 

actual market examples, best practice 

principles, and estimates of any asserted 

costs and expenses. 

4. Potential Technical Amendments 

In conjunction with the Proposal, the 

Commission is reviewing its regulations 

for potential technical amendments 

related to § 1.31, including those part 4 

regulations cited by Petitioners. This 

review may or may not result in a new 

proposed rulemaking. 

Request for comment: The 

Commission requests comment from all 

interested parties and the general public 

regarding potential technical 

amendments to Commission regulations 

related to § 1.31. The Commission 

specifically requests comment whether 

the proposed changes to § 1.31 will 

resolve all outstanding issues regarding 

compliance with part 4 of the 

Commission’s regulations identified by 

Petitioners. The Commission encourages 

all comments including background 

information, actual market examples, 

best practice principles, and estimates 

of any asserted costs and expenses. 

III. Related Matters 

A. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(‘‘RFA’’) 31 requires Federal agencies, in 

promulgating regulations, to consider 

whether the rules they propose will 

have a significant economic impact on 

a substantial number of small entities 

and, if so, to provide a regulatory 

flexibility analysis regarding the 

economic impact on those entities. 

As discussed above, because the 

Proposal relates to most recordkeeping 

obligations under the CEA and the 

Commission’s regulations, it may affect 

the full spectrum of Commission 

registrants, all persons required to 

register but not registered with the 

Commission, and certain persons that 

are neither registered nor required to 

register with the Commission. The 

Commission has previously determined 

that certain registrants are not small 

entities for purposes of the RFA and, 

therefore, the requirements of the RFA 

do not apply to those entities.32 For 

other registrants, however, the 

Commission has found it appropriate to 

consider whether such registrants 

should be deemed small entities for 

purposes of the RFA on a case-by-case 

basis, in the context of the particular 

Commission regulation at issue.33 As 

certain persons affected by the Proposal, 

including Commission registrants, may 

be small entities for purposes of the 

RFA, the Commission considered 

whether this rulemaking would have a 

significant economic impact on any 

such persons. 

As discussed above, the Proposal 

generally updates and simplifies 

existing Commission regulation 1.31 

with new provisions that safeguard the 

same statutory-based principles 

previously identified by the 

Commission. It accomplishes this by 

deleting outdated terms and revising 

provisions to reflect advances in 

information technology, allowing 

records entities to benefit from evolving 

technological developments while 

maintaining necessary safeguards to 

ensure the reliability of the 

recordkeeping process. 

The Commission believes that the 

proposed rules would impose only 

limited additional costs on small 

entities related to the requirement that 

they establish written recordkeeping 

policies and procedures. However, this 

new requirement is replacing existing 

requirements applicable to such persons 

in many cases, including the existing 

similar requirements discussed above to 

(i) Maintain an audit system and (ii) 

under certain circumstances, retain a 

Technical Consultant. Further, as part of 

the Proposal, the Commission is 

proposing to remove existing 

requirements that are expected to lower 

costs for all records entities, including 

small entities, by removing 

requirements that certain records be 

kept in paper form. 

In light of the limited scope of the 

proposed changes and the added 

flexibility and expected cost-savings 

provided to small entities thereby, the 

Commission does not expect small 

entities that are records entities to incur 


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34 44 U.S.C. 3501 et seq. 

35See OMB Control No. 3038–0090, http://

www.reginfo.gov/public/do/PRAOMBHistory?omb

ControlNumber=3038-0090# (last visited Sep. 20, 

2016). 

36With respect to registrants and registered 

entities, these numbers are based on the number of 

such persons so registered with the Commission as 

of November 2, 2016. With respect to the number 

of unregistered members of designated contract 

markets or swap execution facilities, see Agency 

Information Collection Activities: Proposed 

Collection Revision, Comment Request: Final Rule 

for Records of Commodity Interest and Related Cash 

or Forward Transactions, 80 FR 80327 (Dec. 24, 

2015). 

37This burden hour estimate reflects the 

Commission’s assumption that many records 

entities already have policies and procedures that, 

in whole or in part, satisfy the proposed 

recordkeeping policies and procedures requirement. 

38The Commission will also submit to OMB 

revisions to Collection 3038–0090 to reflect the 

Proposal’s replacement of the audit system 

requirements in current Commission regulation 

1.31. 39 7 U.S.C. 19(a). 

new costs, on a net basis, as a result of 

the Proposal. Consequently, the 

Commission finds that no significant 

economic impact on small entities will 

result from the Proposal. 

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 

1. Background 

The Paperwork Reduction Act of 1995 

(‘‘PRA’’) 34 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 result in a collection of 

information within the meaning of the 

PRA, as discussed below. The 

Commission therefore is submitting the 

Proposal to the Office of Management 

and Budget (‘‘OMB’’) for review. 

The Proposal contains a collection of 

information for which the Commission 

has previously received a control 

number from OMB. The title for this 

collection of information is ‘‘Adaptation 

of Regulations to Incorporate SwapsRecords of Transactions, OMB control 

number 3038–0090’’.35 Collection 3038– 

0090 is currently in force with its 

control number having been provided 

by OMB. 

The responses to the Proposal’s 

collection of information are mandatory. 

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 control 

number issued by OMB. 

As discussed above, in respect of 

collections of information, the Proposal 

would replace the existing audit system 

requirements with a requirement that 

records entities establish written 

recordkeeping policies and procedures. 

Such changes would result in revisions 

to collection 3038–0090. Therefore, the 

Commission proposes to revise 

collection 3038–0090 as described 

below. 

2. Modification of Collection 3038– 

0090—Recordkeeping Policies and 

Procedures 

The Commission estimates that the 

Proposal will require approximately 

15,000 persons to develop and maintain 

recordkeeping policies and procedures. 

This estimate includes approximately 

8,792 registrants, 15 designated contract 

markets, 23 swap execution facilities, 4 

swap data repositories, 15 designated 

clearing organizations, and 3,200 

unregistered members of designated 

contract markets or swap execution 

facilities, with the balance reflecting the 

Commission’s estimate of those persons 

that are required to register with the 

Commission, but have not so registered, 

and other persons neither registered nor 

required to register with the 

Commission.36

Based on the above, the estimated 

additional hour burden for 

recordkeeping policies and procedures 

of 150,000 hours is calculated as 

follows: 

Number of affected persons: 15,000. 

Frequency of collection: Annually. 

Estimated annual responses per 

registrant: 1. 

Estimated aggregate number of 

annual responses: 15,000. 

Estimated annual hour burden per 

registrant: 10.37

Estimated aggregate annual hour 

burden: 150,000 (15,000 registrants × 10 

hours per registrant).38

3. Information Collection Comments 

The Commission invites the public 

and other Federal agencies to comment 

on any aspect of the proposed 

information collection requirements 

discussed above. Pursuant to 44 U.S.C. 

3506(c)(2)(B), the Commission solicits 

comments in order to: (1) Evaluate 

whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the 

Commission, including whether the 

information will have practical utility; 

(2) evaluate the accuracy of the 

Commission’s estimate of the burden of 

the proposed collection of information; 

(3) determine whether there are ways to 

enhance the quality, utility, and clarity 

of the information to be collected; and 

(4) minimize the burden of the 

collection of information on those who 

are to respond, including through the 

use of automated collection techniques 

or other forms of information 

technology. 

Comments may be submitted directly 

to the Office of Information and 

Regulatory Affairs, by fax at (202) 395– 

6566, or by email at OIRAsubmissions@

omb.eop.gov. Please provide the 

Commission with a copy of submitted 

comments so that all comments can be 

summarized and addressed in the final 

rule preamble. Refer to the ADDRESSES

section of this notice of proposed 

rulemaking for comment submission 

instructions to the Commission. A copy 

of the supporting statements for the 

collection of information discussed 

above may be obtained by visiting 

www.RegInfo.gov. OMB is required to 

make a decision concerning the 

collection of information between 30 

and 60 days after publication of this 

document in the Federal Register. 

Therefore, a comment is best assured of 

having its full effect if OMB receives it 

within 30 days of publication. 

C. Cost-Benefit Considerations 

Section 15(a) of the CEA39 requires 

the Commission to consider the costs 

and benefits of its actions before issuing 

a regulation under the CEA. Section 

15(a) further specifies that the costs and 

benefits shall be evaluated in light of the 

following five broad areas of market and 

public concern: (i) Protection of market 

participants and the public; (ii) 

efficiency, competitiveness and 

financial integrity of futures markets; 

(iii) price discovery; (iv) sound risk 

management practices; and (v) other 

public interest considerations. The 

Commission considers the costs and 

benefits resulting from its discretionary 

determinations with respect to the 

Section 15(a) considerations. 

1. Costs 

As discussed above in relation to the 

RFA, the Proposal generally updates 

and simplifies existing Commission 

regulation 1.31 by deleting outdated 

terms and revising provisions to reflect 

advances in information technology 

while safeguarding the statutory-based 

principles previously identified by the 

Commission. The Commission 

preliminarily believes that the Proposal 

would impose certain costs on records 

entities. These costs are those necessary 

to establish and maintain required 

written recordkeeping policies and 

procedures. The Commission believes 

that these costs will be quite limited. At 


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Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules 6365 

the same time, the Commission 

preliminarily believes that the Proposal 

would also reduce current 

recordkeeping costs under Commission 

regulation 1.31, because the Proposal 

would increase flexibility provided to 

records entities and also eliminate 

certain requirements as described above 

(e.g., removing the requirements to have 

an audit system, to maintain electronic 

records in limited specified formats, and 

to retain a Technical Consultant). 

2. Benefits 

The Commission is committed to 

reviewing its regulations to ensure they 

keep pace with technological 

developments and industry trends, and 

reduce regulatory burden. The 

Commission believes that the Proposal 

will allow records entities to benefit 

from evolving technology while 

maintaining necessary safeguards to 

ensure the reliability of the 

recordkeeping process. By deleting 

outdated terms and revising provisions 

to reflect advances in information 

technology, the Proposal will allow 

records entities to utilize a wider range 

of currently available technology than 

previously allowed and remove 

requirements that the Commission 

believes are now obsolete, allowing 

records entities to reduce their costs. In 

addition, the Commission believes that 

the flexibility provided by the Proposal 

will, without further Commission 

rulemaking, allow records entities to 

adopt new technologies as such 

technologies evolve, allowing such 

persons to reduce their future costs. 

Moreover, the Commission expects 

that the added flexibility provided by 

the Proposal will encourage records 

entities to utilize electronic storage 

rather than maintain paper regulatory 

records. The Commission expects that 

this conversion will benefit the 

Commission, the DOJ, and the 

commodity interest industry, generally, 

by making the universe of regulatory 

records more accessible and searchable. 

In addition, as a result of the Proposal 

codifying industry practices to require 

recordkeeping policies and procedures 

and, in doing so, providing records 

entities with an opportunity to examine 

their own recordkeeping practices, the 

Commission expects that records 

entities may improve the quality of such 

practices and, thus, the accuracy and 

integrity of their regulatory records. 

3. Section 15(a) Factors 

Section 15(a) of the CEA requires the 

Commission to consider the costs and 

benefits of its actions before 

promulgating a regulation under the 

CEA or issuing certain orders. 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: (i) Protection of market 

participants and the public; (ii) 

efficiency, competitiveness, and 

financial integrity of futures markets; 

(iii) price discovery; (iv) sound risk 

management practices; and (v) other 

public interest considerations. 

i. Protection of Market Participants and 

the Public 

The Proposal will continue to protect 

the public by maintaining necessary 

safeguards to ensure the reliability of 

the recordkeeping process while 

allowing records entities to benefit from 

evolving technology. 

ii. Efficiency, Competitiveness, and 

Financial Integrity of Markets 

As discussed above, the Proposal may 

increase resource allocation efficiency 

by improving the way in which records 

are maintained. Otherwise, the 

Commission anticipates minimal change 

to the efficiency, competitiveness, and 

financial integrity of the markets. 

iii. Price Discovery 

The Commission believes that the 

Proposal may increase confidence and 

participation in the markets for the 

reasons discussed above. Nevertheless, 

the Commission does not anticipate a 

significant increase in liquidity or a 

significant improvement in price 

discovery as a result of this rulemaking. 

iv. Sound Risk Management Practices 

By improving recordkeeping policies 

and procedures, the Proposal may 

encourage records entities to analyze 

their recordkeeping practices and create 

or update policies and procedures 

related thereto. 

v. Other Public Interest Considerations 

The Commission has not identified 

any additional public interest 

considerations. 

4. Request for Comments 

The Commission invites public 

comment on its cost-benefit 

considerations, including the Section 

15(a) factors described above. 

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. 

The Commission specifically seeks 

comment on the following: 

• For those market participants with 

written operational procedures and 

controls that comply with current 

Commission regulation 1.31, what 

transition costs, if any, will the 

Proposal’s requirement for written 

policies and procedures entail? 

• Are there any costs or benefits 

associated with the Proposal that the 

Commission has not considered in the 

Proposal? Please provide details and 

estimates regarding any asserted costs or 

benefits. 

List of Subjects 

17 CFR Part 1 

Commodity futures, Reporting and 

recordkeeping requirements. 

17 CFR Part 23 

Authority delegations (Government 

agencies), Commodity futures, 

Reporting and recordkeeping 

requirements. 

For the reasons stated in the 

preamble, the Commodity Futures 

Trading Commission proposes to amend 

17 CFR chapter I as follows: 

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. Revise § 1.31 to read as follows: 

§ 1.31 Regulatory records; retention and 

production. 

(a) Definitions. For purposes of this 

section: 

Electronic regulatory records means 

all regulatory records other than 

regulatory records exclusively created 

and maintained by a records entity on 

paper. 

Records entity means any person 

required by the Act or Commission 

regulations in this chapter to keep 

regulatory records. 

Regulatory records means all books 

and records required to be kept by the 

Act or Commission regulations in this 

chapter, including any record of any 

correction or other amendment to such 

books and records, provided that, with 

respect to such books and records stored 

electronically, regulatory records shall 

also include: 

(i) All data produced and stored 

electronically that describes, directly or 

indirectly, the characteristics of such 

books and records, including, without 

limitation, data that describes how, 

when, and, if relevant, by whom such 

electronically stored information was 

collected, created, accessed, modified, 

or formatted; and 


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6366 Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules 

(ii) Any data necessary to access, 

search, or display any such books and 

records. 

(b) Regulatory records policies and 

procedures. Each records entity shall 

establish, maintain, and implement 

written policies and procedures 

reasonably designed to ensure that the 

records entity complies with its 

obligations under this section. Such 

policies and procedures shall provide 

for, without limitation, appropriate 

training of officers and personnel of the 

records entity regarding their 

responsibility for ensuring compliance 

with the obligations of the records entity 

under this section, and regular 

monitoring for such compliance. 

(c) Duration of retention. Unless 

specified elsewhere in the Act or 

Commission regulations in this chapter: 

(1) A records entity shall keep 

regulatory records of any swap or 

related cash or forward transaction (as 

defined in § 23.200(i) of this chapter), 

other than regulatory records of oral 

communications, from the date the 

regulatory record was created until the 

termination, maturity, expiration, 

transfer, assignment, or novation date of 

the transaction and for a period of not 

less than five years after such date. 

(2) A records entity that is required to 

retain oral communications, shall keep 

regulatory records of oral 

communications for a period of not less 

than one year from the date of such 

communication. 

(3) A records entity shall keep each 

regulatory record other than the records 

described in paragraph (c)(1) or (2) of 

this section for a period of not less than 

five years from the date on which the 

record was created. 

(4) A records entity shall keep 

regulatory records exclusively created 

and maintained on paper readily 

accessible for no less than two years. A 

records entity shall keep electronic 

regulatory records readily accessible for 

the duration of the required record 

keeping period. 

(d) Form and manner of retention. 

Unless specified elsewhere in the Act or 

Commission regulations in this chapter, 

all regulatory records must be created 

and retained by a records entity in 

accordance with the following 

requirements: 

(1) Generally. Each records entity 

shall retain regulatory records in a form 

and manner that ensures the 

authenticity and reliability of such 

regulatory records in accordance with 

the Act and Commission regulations in 

this chapter. 

(2) Electronic regulatory records. Each 

records entity maintaining electronic 

regulatory records shall establish 

appropriate systems and controls that 

ensure the authenticity and reliability of 

electronic regulatory records, including, 

without limitation: 

(i) Systems that maintain the security, 

signature, chain of custody elements, 

and data as necessary to ensure the 

authenticity of the information 

contained in electronic regulatory 

records and to monitor compliance with 

the Act and Commission regulations in 

this chapter; 

(ii) Systems that ensure the records 

entity is able to produce electronic 

regulatory records in accordance with 

this section, and ensure the availability 

of such regulatory records in the event 

of an emergency or other disruption of 

the records entity’s electronic record 

retention systems; and 

(iii) The creation and maintenance of 

an up-to-date inventory that identifies 

and describes each system that 

maintains information necessary for 

accessing or producing electronic 

regulatory records. 

(e) Inspection and production of 

regulatory records. Unless specified 

elsewhere in the Act or Commission 

regulations in this chapter, a records 

entity, at its own expense, must produce 

or make accessible for inspection all 

regulatory records in accordance with 

the following requirements: 

(1) Inspection. All regulatory records 

shall be open to inspection by any 

representative of the Commission or the 

United States Department of Justice. 

(2) Production of paper regulatory 

records. A records entity must produce 

regulatory records exclusively created 

and maintained on paper promptly 

upon request of a Commission 

representative. 

(3) Production of electronic regulatory 

records. (i) A request from a 

Commission representative for 

electronic regulatory records will 

specify a reasonable form and medium 

in which a records entity must produce 

such regulatory records. 

(ii) A records entity must produce 

such regulatory records in the form and 

medium requested promptly, upon 

request, unless otherwise directed by 

the Commission representative. 

(4) Production of original regulatory 

records. A records entity may provide 

an original regulatory record for 

reproduction, which a Commission 

representative may temporarily remove 

from such entity’s premises for this 

purpose. Upon request of the records 

entity, the Commission representative 

shall issue a receipt for any original 

regulatory record received. At the 

request of a Commission representative, 

a records entity shall, upon the return 

thereof, issue a receipt for the original 

regulatory record returned by such 

representative. 

■ 3. In § 1.35, revise paragraph (a)(5) to 

read as follows: 

§ 1.35 Records of commodity interest and 

related cash or forward transactions. 

(a) * * * 

(5) Form and manner. All records 

required to be kept pursuant to 

paragraphs (a)(1), (2), (3), and (4) of this 

section, other than pre-trade 

communications, shall be kept in a form 

and manner that allows for the 

identification of a particular transaction. 

* * * * * 

PART 23—SWAP DEALERS AND 

MAJOR SWAP PARTICIPANTS 

■ 4. 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, 21. 

Section 23.160 also issued under 7 U.S.C. 

2(i); Sec. 721(b), Pub. L. 111–203, 124 Stat. 

1641 (2010). 

■ 5. In § 23.203, amend paragraph (b) as 

follows: 

■ a. Revise paragraph (b)(1); and 

■ b. Remove and reserve paragraph 

(b)(2). 

The revisions to read as follows: 

§ 23.203 Records; retention and 

inspection. 

* * * * * 

(b) * * * (1) The records required to 

be maintained by this chapter shall be 

maintained in accordance with the 

provisions of § 1.31 of this chapter, 

except as provided in paragraph (b)(3) of 

this section. All such records shall be 

open to inspection by any representative 

of the Commission, the United States 

Department of Justice, or any applicable 

prudential regulator. Records relating to 

swaps defined in section 1a(47)(A)(v) 

shall be open to inspection by any 

representative of the Commission, the 

United States Department of Justice, the 

Securities and Exchange Commission, 

or any applicable prudential regulator. 

* * * * * 

Issued in Washington, DC, on January 12, 

2017, by the Commission. 

Christopher J. Kirkpatrick, 

Secretary of the Commission. 

NOTE: The following appendices will not 

appear in the Code of Federal Regulations. 


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Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules 6367 

Appendices to Recordkeeping— 

Commission Voting Summary and 

Chairman’s Statement 

Appendix 1—Commission Voting 

Summary 

On this matter, Chairman Massad and 

Commissioners Bowen and Giancarlo 

voted in the affirmative. No 

Commissioner voted in the negative. 

Appendix 2—Statement of Chairman 

Timothy G. Massad 

I have said many times that it is 

important for the CFTC to ensure its 

rules are up-to-date in light of 

technological changes, as outdated rules 

can create unnecessary burdens. That is 

why I’m pleased we are unanimously 

issuing this proposed rulemaking, 

which is in keeping with that goal. 

Today’s proposal will modernize 

recordkeeping and storage obligations 

set forth in CFTC rules, and make them 

technology neutral. By doing so, it will 

reduce costs for businesses and improve 

the quality of record preservation and 

production. Among other things, the 

proposal will provide greater flexibility 

when it comes to how records must be 

retained and produced. In this age 

where terabytes of storage easily fit in 

one’s pocket, our rules should not refer 

to microfiche or require paper records. 

Today’s proposal is also an example 

of how the Commission is focusing on 

issues related to technological change 

generally in our markets. In this regard, 

there is much talk today about 

innovations that may come from 

financial technology. While it is the role 

of the private sector to develop 

innovations, I believe it is our role to 

ensure that the Commission’s rules do 

not stand in the way of their potential. 

Today’s proposal is a way to do just 

that. 

I thank the CFTC staff for their work 

on this proposal and my fellow 

Commissioners for their support. 

[FR Doc. 2017–01148 Filed 1–18–17; 8:45 am] 

BILLING CODE 6351–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Food and Drug Administration 

21 CFR Part 15 

[Docket No. FDA–2016–N–1149] 

Manufacturer Communications 

Regarding Unapproved Uses of 

Approved or Cleared Medical 

Products; Availability of Memorandum; 

Reopening of the Comment Period 

AGENCY: Food and Drug Administration, 

HHS. 

ACTION: Reopening of comment period 

related to public hearing; availability of 

memorandum. 

SUMMARY: The Food and Drug 

Administration (FDA) is reopening the 

comment period for the notification of 

public hearing, published in the Federal 

Register of September 1, 2016 (81 FR 

60299) concerning our comprehensive 

review of our regulations and policies 

governing manufacturer 

communications regarding unapproved 

uses of approved or cleared medical 

products. FDA is also announcing that 

it has added a document to the docket 

for the public hearing entitled 

‘‘Memorandum: Public Health Interests 

and First Amendment Considerations 

Related to Manufacturer 

Communications Regarding 

Unapproved Uses of Approved or 

Cleared Medical Products’’ 

(Memorandum). The Memorandum 

provides additional background on the 

issues FDA is considering as part of its 

comprehensive review, including a 

discussion of First Amendment 

considerations. In addition, elsewhere 

in this issue of the Federal Register, 

FDA is announcing the availability of 

two draft guidance for industry that 

address manufacturer communications, 

one entitled ‘‘Drug and Device 

Manufacturer Communications With 

Payors, Formulary Committees, and 

Similar Entities—Questions and 

Answers,’’ and the other entitled 

‘‘Medical Product Communications That 

Are Consistent With the FDA-Required 

Labeling—Questions and Answers.’’ 

FDA is reopening the comment period 

to provide the public an opportunity to 

review the Memorandum as it relates to 

the specific questions and issues 

identified in the notification of public 

hearing as well as review the two draft 

guidances and provide additional or 

new comments. 

DATES: Submit either electronic or 

written comments by April 19, 2017. 

ADDRESSES: You may submit comments 

as follows: 

Electronic Submissions 

Submit electronic comments in the 

following way: 

• Federal eRulemaking Portal: 

https://www.regulations.gov. Follow the 

instructions for submitting comments. 

Comments submitted electronically, 

including attachments, to https://

www.regulations.gov will be posted to 

the docket unchanged. Because your 

comment will be made public, you are 

solely responsible for ensuring that your 

comment does not include any 

confidential information that you or a 

third party may not wish to be posted, 

such as medical information, your or 

anyone else’s Social Security number, or 

confidential business information, such 

as a manufacturing process. Please note 

that if you include your name, contact 

information, or other information that 

identifies you in the body of your 

comments, that information will be 

posted on https://www.regulations.gov. 

• If you want to submit a comment 

with confidential information that you 

do not wish to be made available to the 

public, submit the comment as a 

written/paper submission and in the 

manner detailed (see ‘‘Written/Paper 

Submissions’’ and ‘‘Instructions’’). 

Written/Paper Submissions 

Submit written/paper submissions as 

follows: 

• Mail/Hand delivery/Courier (for 

written/paper submissions): Division of 

Dockets Management (HFA–305), Food 

and Drug Administration, 5630 Fishers 

Lane, Rm. 1061, Rockville, MD 20852. 

• For written/paper comments 

submitted to the Division of Dockets 

Management, FDA will post your 

comment, as well as any attachments, 

except for information submitted, 

marked and identified, as confidential, 

if submitted as detailed in 

‘‘Instructions.’’ 

Instructions: All submissions received 

must include the Docket No. FDA– 

2016–N–1149 for ‘‘Manufacturer 

Communications Regarding 

Unapproved Uses of Approved or 

Cleared Medical Products; Public 

Hearing; Requests for Comments.’’ 

Received comments will be placed in 

the docket and, except for those 

submitted as ‘‘Confidential 

Submissions,’’ publicly viewable at 

https://www.regulations.gov or at the 

Division of Dockets Management 

between 9 a.m. and 4 p.m., Monday 

through Friday. 

• Confidential Submissions—To 

submit a comment with confidential 

information that you do not wish to be 

made publicly available, submit your 

comments only as a written/paper 


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