21330 Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Proposed Rules 

1 5 U.S.C. 552. 

2 17 CFR 145.9. Commission regulations referred 

to herein are found at 17 CFR chapter I. 

(d) Subject 

Air Transport Association of America 

(ATA) Code 27: Flight Controls. 

(e) Reason 

This AD was prompted by mandatory 

continuing airworthiness information (MCAI) 

originated by an aviation authority of another 

country to identify and correct an unsafe 

condition on an aviation product. The MCAI 

describes the unsafe condition as the flight 

control wheel traveling beyond normal roll 

control limits. We are issuing this AD to 

prevent the flight control wheel from 

becoming jammed and leading to reduced or 

loss of control. 

(f) Actions and Compliance 

Unless already done, do the following 

actions in paragraphs (f)(1) through (3) of this 

AD: 

(1) Within the next 100 hours time-inservice (TIS) after October 29, 2002 (the 

effective date retained from AD 2002–19–01) 

and repetitively thereafter every time the 

flight control system undergoes maintenance, 

perform a test of the pilot and right-hand 

(RH) station control wheels to determine if 

either control wheel becomes jammed 

following SOCATA TBM Aircraft Mandatory 

Service Bulletin (SB) 70–095 27, dated 

November 2001. 

(2) If any jamming is found during any test 

required by paragraph (f)(1) of this AD, before 

further flight, adjust the roll control stops on 

either the pilot control wheel or the RH 

station control wheel following SOCATA 

TBM Aircraft Mandatory SB 70–095 27, 

dated November 2001. 

(3) To terminate the repetitive inspections 

required in paragraph (f)(1) of this AD either 

of the following actions may be done: 

(i) Replace the rivets in the roll primary 

stops of both control wheels following the 

Accomplishment Instructions in DAHER 

SOCATA Mandatory SB 70–095, Revision 2, 

dated October 2016; or 

(ii) Install a roll control emergency stop on 

each control wheel following the 

Accomplishment Instructions of EADS 

SOCATA SB 70–114–27, dated December 

2004. 

(g) Credit for Actions Done Following 

Previous Service Information 

This AD allows credit for replacement of 

the roll primary stop rivets on an airplane as 

required in the option in paragraph (f)(3)(i) 

of this AD before the effective date of this AD 

following the instructions of SOCATA TBM 

Mandatory SB 70–095, original issue or 

revision 1. 

(h) Other FAA AD Provisions 

The following provisions also apply to this 

AD: 

(1) Alternative Methods of Compliance 

(AMOCs): The Manager, Standards Office, 

FAA, has the authority to approve AMOCs 

for this AD, if requested using the procedures 

found in 14 CFR 39.19. Send information to 

ATTN: Albert Mercado, Aerospace Engineer, 

901 Locust, Room 301, Kansas City, Missouri 

64106; telephone: (816) 329–4119; fax: (816) 

329–4090; email: albert.mercado@faa.gov. 

Before using any approved AMOC on any 

airplane to which the AMOC applies, notify 

your appropriate principal inspector (PI) in 

the FAA Flight Standards District Office 

(FSDO), or lacking a PI, your local FSDO. 

(2) Airworthy Product: For any requirement 

in this AD to obtain corrective actions from 

a manufacturer or other source, use these 

actions if they are FAA-approved. Corrective 

actions are considered FAA-approved if they 

are approved by the State of Design Authority 

(or their delegated agent). You are required 

to assure the product is airworthy before it 

is returned to service. 

(i) Related Information 

Refer to MCAI EASA AD No.: 2017–0018, 

dated February 3, 2017; SOCATA TBM 

Aircraft Mandatory SB 70–095 27, dated 

November 2001, DAHER SOCATA 

Mandatory SB 70–095, Revision 2, dated 

October 2016; and EADS SOCATA SB 70– 

114–27, dated December 2004; for related 

information. You may examine the MCAI on 

the Internet at http://www.regulations.gov by 

searching for and locating Docket No. FAA– 

2017–0417. For service information related to 

this AD, contact SOCATA, Direction des 

services, 65921 Tarbes Cedex 9, France; 

phone: +33 (0) 5 62 41 73 00; fax: +33 (0) 5 

62 41 76 54; email: info@socata.daher.com; 

Internet: https://www.mysocata.com/login/ 

accueil.php. You may review copies of the 

referenced service information at the FAA, 

Small Airplane Directorate, 901 Locust, 

Kansas City, Missouri 64106. For information 

on the availability of this material at the 

FAA, call (816) 329–4148. 

Issued in Kansas City, Missouri, on April 

27, 2017. 

Pat Mullen, 

Acting Manager, Small Airplane Directorate, 

Aircraft Certification Service. 

[FR Doc. 2017–09042 Filed 5–5–17; 8:45 am] 

BILLING CODE 4910–13–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 3 

RIN 3038–AE56 

Chief Compliance Officer Duties and 

Annual Report Requirements for 

Futures Commission Merchants, Swap 

Dealers, and Major Swap Participants; 

Amendments 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Proposed rule. 

SUMMARY: The Commodity Futures 

Trading Commission (‘‘Commission’’ or 

‘‘CFTC’’) is proposing to amend its 

regulations regarding certain duties of 

chief compliance officers (‘‘CCOs’’) of 

swap dealers (‘‘SDs’’), major swap 

participants (‘‘MSPs’’), and futures 

commission merchants (‘‘FCMs’’) 

(collectively, ‘‘Registrants’’); and certain 

requirements for preparing and 

furnishing to the Commission an annual 

report containing an assessment of the 

Registrant’s compliance activities. 

DATES: Comments must be received on 

or before July 7, 2017. 

ADDRESSES: You may submit comments, 

identified by RIN 3038–AE56, 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 

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 is exempt from 

disclosure under the Freedom of 

Information Act (‘‘FOIA’’),1 a petition 

for confidential treatment of the exempt 

information may be submitted according 

to the procedures set forth in § 145.9 of 

the Commission’s regulations.2

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; Erik Remmler, 

Deputy Director, 202–418–7630, 

eremmler@cftc.gov; Laura Gardy, 

Associate Director, 202–418–7645, 

lgardy@cftc.gov; Pamela M. Geraghty, 

Special Counsel, 202–418–5634, 

pgeraghty@cftc.gov; or Fern B. 


pmangrum on DSK3GDR082PROD with PROPOSALS
Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Proposed Rules 21331 

3See Dodd-Frank Act, Public Law 111–203, 124 

Stat. 1376 (2010). 

4 7 U.S.C. 6d(d) and 6s(k)(1). 

5 7 U.S.C. 6s(k)(2) and (3). 

6 7 U.S.C. 6d(d). 

7 17 CFR 3.3(d)–(f). See Swap Dealer and Major 

Swap Participant Recordkeeping, Reporting, and 

Duties Rules, 77 FR 20128 (Apr. 3, 2012) (‘‘CCO 

Rules Adopting Release’’). For purposes of this 

release, these rules will be referred to as the ‘‘CCO 

Rules.’’ 

8 15 U.S.C. 78o–10(k). 

9Public Law 111–203, 124 Stat. 1376, 1641–1642 

(codified at 15 U.S.C. 8302(a)(1)–(2)). 

10See Business Conduct Standards for SecurityBased Swap Dealers and Major Security-Based 

Swap Participants, 76 FR 42396 (proposed Jul. 18, 

2011). 

11See Reopening of Comment Periods for Certain 

Rulemaking Releases and Policy Statement 

Applicable to Security-Based Swaps, 78 FR 30800 

(May 23, 2013). 

12 Id. at 30802. 

13Business Conduct Standards for Security-Based 

Swap Dealers and Major Security-Based Swap 

Participants, 81 FR 29960, 29964 (May 13, 2016) 

(‘‘SEC Adopting Release’’). 

14 Id. at 29964 n.31. 

15 Id. 

16 17 CFR 240.15Fk–1. See SEC Adopting Release, 

81 FR at 29960. 

17SEC Adopting Release, 81 FR at 29964. 

18See, e.g., CCO Rules Adopting Release, 77 FR 

at 20161–2. 

19 7 U.S.C. 6s(k)(2)(A); 17 CFR 3.3(a)(1). 

20See CCO Rules Adopting Release, 77 FR at 

20160. As noted in the release, reporting to a senior 

officer of a division of a larger company would be 

appropriate only when that division is registered as 

a swap dealer (i.e., a limited swap dealer 

designation under 17 CFR 1.3(ggg)(3)). Id. 

Simmons, Special Counsel, 202–418– 

5901, fsimmons@cftc.gov, Division of 

Swap Dealer and Intermediary 

Oversight, Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1155 21st Street NW., Washington, DC 

20581. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Statutory and Regulatory Background 

As amended by the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act (‘‘Dodd-Frank Act’’),3 sections 4d(d) 

and 4s(k) of the Commodity Exchange 

Act (‘‘CEA’’ or ‘‘Act’’) require each 

Registrant to designate an individual to 

serve as its CCO.4 Sections 4s(k)(2) and 

(3) set forth certain requirements and 

duties for CCOs of SDs and MSPs, 

including the requirement to prepare 

and sign an annual compliance report 

(‘‘CCO Annual Report’’).5 CEA section 

4d(d) requires CCOs of FCMs to 

‘‘perform such duties and 

responsibilities’’ as are established by 

Commission regulation or the rules of a 

registered futures association.6 In 2012, 

the Commission adopted regulations 

3.3(d) through (f) implementing the 

duties described in CEA sections 4d(d) 

and 4s(k).7

B. Consistency With SEC Rules 

Using language identical to CEA 

section 4s(k), the Dodd-Frank Act 

amended the Securities Exchange Act of 

1934 (‘‘Exchange Act’’) by adding 

section 15F(k) to establish the same 

CCO requirements for security-based 

swap dealers and major security-based 

swap participants (collectively, ‘‘SEC 

Registrants’’).8 In compliance with 

sections 712(a)(1)–(2) of the Dodd-Frank 

Act, the Commission and SEC staffs 

consulted and coordinated together and 

with prudential regulators in developing 

the respective CCO rules for purposes of 

regulatory consistency and 

comparability.9

The SEC initially proposed rule 15Fk– 

1 to implement CCO requirements and 

duties for SEC Registrants in July 

2011.10 In May 2013, after the CFTC 

adopted the CCO Rules, the SEC reopened the comment period for its 

outstanding Dodd-Frank Act Title VII 

rulemakings, including rule 15Fk–1.11

In its reopening release, the SEC sought 

comment on, among other things: (1) 

The relationship of the proposed SEC 

rules to any parallel CFTC requirements; 

and (2) the extent to which the SEC 

should emphasize consistency with the 

CFTC rules or should tailor its rules to 

the security-based swap market.12

Comments received by the SEC largely 

urged the SEC to harmonize its business 

conduct rules, including rule 15Fk–1, 

with those of the CFTC because the 

industry had already implemented the 

CFTC’s regulations.13 Specifically, with 

respect to supervision and CCO 

obligations, commenters urged that the 

SEC’s final rules ‘‘be informed by 

industry experience complying with 

. . . the CFTC internal business conduct 

standards’’ among others.14 A number of 

comments also suggested specific 

conforming modifications to the SEC’s 

proposed rules.15

SEC staff continued to consult with 

CFTC staff leading up to adoption of the 

SEC’s business conduct standards rules, 

which became effective July 12, 2016.16

As explained in the SEC Adopting 

Release, the SEC modified the proposed 

rules ‘‘to harmonize with CFTC 

requirements to create efficiencies for 

entities that have already established 

infrastructure for compliance with 

analogous CFTC requirements’’ where 

such modifications ‘‘will continue to 

provide the protections (as explained in 

the context of the particular rule) that 

the rules were intended to 

accomplish.’’ 17

C. Further Harmonization 

Although the SEC’s CCO rules are 

largely harmonized with the CFTC’s 

corresponding regulations, rule 15Fk–1 

as adopted differs in several respects. 

Based on CFTC staff experience in 

implementing the CCO Rules, review of 

the comments to the proposed SEC rule 

15Fk–1, and discussions with SEC staff, 

the Commission believes that some of 

the differences adopted by the SEC are 

beneficial for market participants and 

regulatory oversight. 

The CCO Rules, among other things, 

seek to ensure that the CCO is actively 

engaged in compliance activities with 

the appropriate authority, resources, 

and access to the board of directors or 

senior officer to administer the firm’s 

compliance activities.18 As described 

below, the proposed amendments to the 

CCO Rules preserve these objectives and 

should increase efficiencies, reduce 

regulatory burden, particularly for dual 

registrants, and further clarify the scope 

of CCO duties. 

II. The Proposal 

A. Regulation 3.1—Definitions 

The Commission proposes to add a 

definition of ‘‘senior officer’’ to § 3.1 to 

provide greater clarity regarding the 

CCO reporting line required by CEA 

section 4s(k)(2)(A) and § 3.3(a)(1) of the 

Commission’s regulations.19 The 

Commission has not previously formally 

defined this term for purposes of the 

CCO Rules. However, Commission staff 

has generally interpreted this term to 

refer to a Registrant’s most senior 

officer, typically the chief executive 

officer or the equivalent. This 

interpretation is consistent with the 

SEC’s definition of ‘‘senior officer’’ in 

SEC rule 15Fk–1(e)(2). Accordingly, the 

Commission is proposing to define 

‘‘senior officer’’ in new paragraph (j) to 

§ 3.1 as ‘‘the chief executive officer or 

other equivalent officer of a registrant.’’ 

This definition is in keeping with the 

Commission’s continued belief that, as 

stated in the CCO Rules Adopting 

Release, a ‘‘direct reporting line’’ from 

the CCO to the board of directors or 

highest executive officer ensures CCO 

independence.20 The ‘‘chief executive 

officer’’ is typically the highest 

executive level, but the definition 

includes the phrase ‘‘other equivalent 

officer’’ to acknowledge that a firm may 

have a different title for the highest 

executive officer. 

Request for comment: The 

Commission requests comment 

regarding the proposed definition in 

§ 3.1. The Commission specifically 

requests comment on the following 

questions: 


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21See CCO Rules Adopting Release, 77 FR at 

20161–2. 

22 7 U.S.C. 6s(k)(2)(D). 

23 17 CFR 3.3(d)(1). 

24CCO Rules Adopting Release, 77 FR at 20158. 

(‘‘[T]he Commission is clarifying in the final rules 

that the CCO’s duties extend only to the activities 

of the registrant that are regulated by the 

Commission, namely swaps activities of SDs and 

MSPs and the derivatives activities included in the 

definition of FCM under section 1(a)(28) of the 

CEA.’’). 

25 17 CFR 240.15Fk–1(b)(4). 

26The CEA and Exchange Act require CCO’s to 

‘‘in consultation with the board of directors, a body 

performing a function similar to the board, or the 

senior officer of the organization, resolve any 

conflicts of interest that may arise.’’ 7 U.S.C. 

6s(k)(2)(C) and 15 U.S.C. 78o–10(k)(2)(C). 

27See 7 U.S.C. 6s(k)(3)(A)(ii) (requiring policies 

and procedures to include conflicts of interest 

policies). 

28See SEC Adopting Release, 81 FR at 30057 

(stating that ‘‘the primary responsibility for the 

resolution of conflicts generally lies with the 

business units . . . .’’). 

29 7 U.S.C. 6s(k)(2)(E) imposes a duty on CCOs to 

‘‘ensure compliance with this Act [CEA] (including 

regulations) relating to swaps, including each rule 

prescribed by the Commission under this section.’’ 

30 17 CFR 3.3(d)(3). 

31 17 CFR 240.15Fk–1(b)(2). 

32See CCO Rules Adopting Release, 77 FR at 

20162. 

33 In making this modification, the Commission 

considered the SEC’s similar interpretation of the 

duty to ensure compliance in its proposed rule 

effectuating identical statutory language. See id. 

• Should the proposed definition for 

‘‘senior officer’’ be revised? If yes, 

please provide alternative suggestions. 

• Should other definitions be added? 

B. Regulation 3.3(d)—Chief Compliance 

Officer Duties 

Paragraph (d) of § 3.3 implements the 

CCO duties required by CEA section 

4s(k). Generally, paragraph (d) requires 

the CCO to: (1) Establish and administer 

policies and procedures, including 

those related to ensuring compliance 

and remediating noncompliance issues; 

(2) resolve any conflicts of interest; and 

(3) prepare the CCO Annual Report. 

Based on the practical experience 

gained from four years of 

implementation, the Commission has 

determined that certain CCO Rules 

could be revised to more accurately 

convey the Commission’s intent with 

respect to the scope of the CCO’s duties 

and to further harmonize with the SEC’s 

recently finalized CCO rules. In this 

regard, the proposed amendments are 

intended to maintain and clarify the 

underlying goal of the CCO’s active 

engagement in compliance monitoring 

while reducing regulatory burdens that 

provide limited corresponding benefit.21

1. Regulation 3.3(d)(1)—Duty To 

Administer Compliance Policies and 

Procedures 

Paragraph (d)(1) of § 3.3 implements 

CEA section 4s(k)(2)(D), which requires 

a CCO to ‘‘be responsible for 

administering each policy and 

procedure that is required to be 

established pursuant to this section.’’ 22

The current text of § 3.3(d)(1) states that 

the CCO’s duties include ‘‘administering 

the registrant’s policies and procedures 

reasonably designed to ensure 

compliance with the Act and 

Commission regulations.’’ 23 The 

Commission is proposing to amend 

§ 3.3(d)(1) to require the CCO to 

administer ‘‘each of the registrant’s 

policies and procedures relating to its 

business as a futures commission 

merchant, swap dealer, or major swap 

participant that are required to be 

established pursuant to the Act and 

Commission regulations.’’ 

The proposed change clarifies that the 

CCO is responsible for administering the 

policies and procedures specifically 

related to the Registrant’s business as a 

SD, MSP, or FCM, as applicable, not all 

of the Registrant’s business that may 

otherwise be subject to CFTC regulation. 

Further, the proposed change more 

closely tracks the language of CEA 

section 4s(k)(2)(D) and is consistent 

with the Commission’s stated intent 

when finalizing the CCO Rules.24

Finally, the amended rule text more 

closely tracks the language of the SEC’s 

parallel rule 25 and should alleviate 

concerns regarding consistency with the 

SEC’s interpretation of identical 

statutory language as it applies to dual 

CFTC Registrants and SEC Registrants. 

2. Regulation 3.3(d)(2)—Resolving 

Conflicts of Interest 

Paragraph (d)(2) of § 3.3 requires the 

CCO to, in consultation with the board 

of directors or the senior officer, resolve 

any conflicts of interest that may arise. 

The Commission is proposing to modify 

§ 3.3(d)(2) to clarify that the CCO must 

take ‘‘reasonable steps’’ to resolve 

conflicts. This proposed change makes 

explicit an implied reasonableness 

standard and recognizes that resolution 

of non-material conflicts need not 

always require the CCO’s direct 

expertise or directly involve the board 

of directors or senior officer.26

The Commission is of the view that a 

CCO’s duty to resolve conflicts of 

interest should not be interpreted to 

require the CCO to personally resolve 

every potential conflict of interest that 

may arise or require consultation with 

the board of directors or senior office. If 

strictly interpreted, the current rule text 

creates an undue burden on CCOs, 

likely taking them away from more 

important compliance activities. The 

proposed changes are intended to clarify 

that routinely encountered conflicts 

could be resolved in the normal course 

of business consistent with the CCO’s 

general administration of internal 

policies and procedures, which must 

include conflicts of interest policies.27

With this amendment, the CCO and his 

or her resources may more effectively 

engage in working to resolve conflicts 

practically and within normal business 

operations procedures. 

Similarly, the SEC in its adopting 

release noted that the CCO’s role in 

resolving conflicts of interest would 

likely include the recommendation of 

actions to resolve the conflict, as well as 

the escalation and reporting of issues 

related to resolution, but not executing 

the business decisions to ultimately 

resolve the conflict.28 The SEC 

articulated this understanding in its 

final rule 15Fk–1(b)(3) by requiring a 

CCO to ‘‘take reasonable steps’’ to 

resolve conflicts of interests. The 

Commission believes it is appropriate to 

incorporate this language into § 3.3(d)(2) 

to more accurately reflect its 

interpretation of the statutory 

requirement. 

3. Regulation 3.3(d)(3)—Ensuring 

Compliance 

The Commission proposes to amend 

paragraph (d)(3) of § 3.3 to incorporate 

further guidance regarding the extent of 

a CCO’s compliance duties. Current 

§ 3.3(d)(3) effectuates CEA section 

4s(k)(2)(E) 29 by requiring CCOs to take 

‘‘reasonable steps to ensure compliance 

with the Act and Commission 

regulations relating to the swap dealer’s 

or major swap participant’s swaps 

activities, or to the futures commission 

merchant’s business as a futures 

commission merchant.’’ 30 The 

Commission proposes to amend 

§ 3.3(d)(3) by clarifying that the CCO’s 

duty in this subsection includes 

‘‘ensuring the registrant establishes, 

maintains and reviews written policies 

and procedures reasonably designed to 

achieve compliance’’ with the Act and 

Commission regulations. This change is 

consistent with the SEC’s parallel rule.31

When finalizing § 3.3(d)(3), the 

Commission intended to address 

commenter concerns that fully 

‘‘ensuring compliance’’ with the CEA 

could be an impracticable standard for 

CCOs and that the regulatory 

responsibility for ensuring compliance 

is ultimately borne by the registrant.32

The Commission modified the proposal 

in the final rule by limiting the CCO 

duties to taking ‘‘reasonable steps to 

ensure compliance’’ rather than simply 

‘‘ensure compliance.’’ 33


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34See Designation of a Chief Compliance Officer; 

Required Compliance Policies; and Annual Report 

of a Futures Commission Merchant, Swap Dealer, 

or Major Swap Participant, 75 FR 70881, 70883 

(proposed Nov. 19, 2010) (‘‘Underlying all of these 

duties are two fundamental acknowledgements: The 

chief compliance officer can only ensure the 

registrant’s compliance to the full capacity of an 

individual person, and the duties of the chief 

compliance officer do not elevate the position above 

the board of directors, or otherwise contradict basic 

and well-established tenets of law regarding the 

allocation of responsibility within a business 

association.’’). 

35 In finalizing its rules for SEC Registrants, the 

SEC departed from its proposed language and 

similarly concluded that, ‘‘it is the responsibility of 

the SBS Entity, not the CCO in his or her personal 

capacity, to establish and enforce required policies 

and procedures.’’ See SEC Adopting Release, 81 FR 

at 30056. 

36 17 CFR 3.3(d)(4) and (5). 

37See SEC Adopting Release, 81 FR at 30056. 

38 7 U.S.C. 6s(k)(3) and 17 CFR 3.3(e) and (f). 

39 75 FR at 70883. 

40See CCO Rules Adopting Release, 77 FR at 

20193 (‘‘The annual compliance report will help 

FCMs, SDs, MSPs, and the Commission to assess 

whether the registrant has mechanisms in place to 

address adequately compliance problems that could 

lead to a failure of the registrant. It also will assist 

the Commission in determining whether the 

registrant remains in compliance with the CEA and 

the Commission’s regulations . . . . ’’). 

41See 17 CFR 3.3(e)(2)(i)–(iii). 

42To alleviate some of this burden, Commission 

staff indicated in guidance that a chart may provide 

an appropriate mechanism for efficiently addressing 

the requirements of § 3.3(e)(2) for purposes of the 

CCO Annual Report. CFTC Staff Advisory No. 14– 

153 at 6 (Dec. 22, 2014) (‘‘CCO Annual Report 

Advisory’’). However, the Commission believes that 

while use of a chart may streamline the 

presentation of information, it does not 

fundamentally change the burden of the underlying 

review and assessment. 

Notwithstanding the change made to 

the final CCO Rules, during the more 

than four years of implementing 

§ 3.3(d)(3), CCOs and their 

representatives have expressed concern 

about the uncertainty as to the breadth 

of their required authority under the 

rule. Accordingly, by amending 

§ 3.3(d)(3), the Commission intends to 

address uncertainty caused by the 

current text of § 3.3(d)(3) by specifically 

identifying the CCO’s duties with regard 

to compliance policies and 

procedures.34 The amended language 

also will further harmonize with the 

SEC’s final interpretation of the role of 

the CCO.35

4. Regulations 3.3(d)(4) and (5)— 

Remediation of Noncompliance Issues 

Paragraphs (d)(4) and (5) currently 

require a CCO to establish procedures, 

in consultation with the board of 

directors or the senior officer, for (1) the 

remediation of noncompliance issues 

identified by the CCO and (2) the 

handling, management response, 

remediation, retesting, and closing of 

noncompliance issues.36 The 

Commission proposes to remove the 

consultation requirement in paragraphs 

(d)(4) and (5) as superfluous and clarify 

that the policies and procedures be 

‘‘reasonably designed’’ to achieve the 

stated purpose. In removing the 

consultation requirement, the 

Commission acknowledges that in 

carrying out their duties, a CCO should 

manage and remediate compliance 

issues by consulting, as appropriate, 

with business lines, senior management, 

the board of directors, and independent 

review groups. 

Furthermore, the Commission is 

proposing to amend § 3.3(d)(4) to 

include remediating matters identified 

‘‘through any means’’ by the chief 

compliance officer in addition to the 

specific detection methods listed in the 

rule text. This change addresses a 

concern discussed in the SEC Adopting 

Release that the list of specific methods 

in the current regulatory text could be 

viewed as a limit on noncompliance 

event discovery methods.37 The 

flexibility added by this change is 

particularly meaningful given advances 

in automated compliance monitoring 

technology. 

Request for comment: The 

Commission requests comment 

regarding the proposed amendments to 

the CCO duties in § 3.3(d). The 

Commission specifically requests 

comment on the following questions: 

• Are the proposed revisions to the 

CCO duties appropriate? If not, what 

modifications to the duties should be 

made? 

• Do the proposed amendments 

create added efficiencies for dual CFTC 

and SEC Registrants? 

• To what extent do the proposed 

amendments reduce burdens and costs 

for Registrants? 

• Do any of the proposed 

amendments create any additional 

burdens or costs for Registrants? 

• Should the Commission revise any 

other requirements under § 3.3(d)? If so, 

which ones and why? 

• Should the Commission seek to 

further harmonize the requirements 

under § 3.3(d) with parallel SEC 

requirements? 

C. Proposed Amendments to 

Regulations 3.3(e) and (f)—CCO Annual 

Reporting 

CEA section 4s(k)(3) requires the CCO 

to annually prepare and sign the CCO 

Annual Report and Commission § 3.3(e) 

and (f) implement this requirement.38

The Commission proposes to revise, 

reorganize, and clarify § 3.3(e) and (f) to 

further reduce burdens to Registrants, 

incorporate related proposed 

amendments to § 3.3(d), and further 

harmonize with the SEC’s parallel rules. 

When the Commission proposed § 3.3(e) 

and (f), it stated that the intended 

purposes for these rules were to: (1) 

Promote compliance behavior through 

periodic self-evaluation; and (2) inform 

the Commission of possible compliance 

weaknesses.39 Further, in the adopting 

release, the Commission noted that the 

rules will assist the Registrant and the 

Commission in determining whether the 

Registrant remains in compliance with 

the CEA and Commission regulations.40

The Commission is reaffirming these 

stated purposes and believes that the 

proposed revisions will more effectively 

further these goals. 

1. Regulation 3.3(e)—Annual Report 

Paragraph (e)(1) of § 3.3 implements 

CEA section 4s(k)(3)(A)(ii) and requires 

the CCO Annual Report to include a 

description of the Registrant’s written 

policies and procedures (‘‘WPPs’’), 

including the code of ethics and 

conflicts of interest policies. The 

Commission is proposing to amend 

§ 3.3(e)(1) to further clarify which WPPs 

must be described in the CCO Annual 

Report by referencing the WPPs 

described in paragraph (d), as amended. 

Paragraphs (e)(2)(i), (ii), and (iii) of 

§ 3.3 currently require the CCO Annual 

Report to identify the Registrant’s WPPs 

designed to reasonably comply with the 

CEA and Commission regulations, 

assess the effectiveness of the WPPs, 

and discuss any areas of improvement 

and recommended changes or 

improvements to the Registrant’s 

compliance program.41 The current 

language of § 3.3(e)(2) applies these 

three requirements to each applicable 

CFTC regulatory requirement to which 

the Registrant is subject. In other words, 

for each applicable CFTC requirement 

the CCO Annual Report must identify a 

WPP, assess the WPP, and discuss 

related areas of improvement. 

After adoption of the rule, 

Commission staff received industry 

feedback indicating that the amount of 

time and resources needed for the 

review described above makes the 

process burdensome when compared to 

the intrinsic value of this portion of the 

report, particularly given that many of 

the WPPs do not change from year to 

year.42 Commission staff has also 

observed that many of the CCO Annual 

Reports provide the detail required in a 

rote manner, but contain limited 

substantive discussion regarding areas 

of improvement and recommended 

changes to the compliance program, 

especially where such modifications 

may relate to the remediation of 


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21334 Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Proposed Rules 

43See 17 CFR 3.3(e)(5). 44Although the requirement to identify WPPs that 

are reasonably designed to ensure compliance is 

being deleted, the Commission notes that it can gain 

access to each of the Registrant’s policies and 

procedures through the Commission’s authority to 

request the production of books and records under 

§ 1.31, 17 CFR 1.31. 

45Consistent with the CCO Annual Report 

Advisory, Registrants may continue to use a chart 

to present assessment and review findings, as well 

as other information required by § 3.3(e). However, 

the use of a chart does not alleviate the requirement 

to provide meaningful, substantive discussion 

where required. CCO Annual Report Advisory at 9– 

11. 

46See SEC Adopting Release, 81 FR at 30058; 17 

CFR 240.15Fk–1(c)(2)(A). 

47Per its longstanding position, the Commission 

is reiterating that in the event a Registrant does not 

have a board of directors, under the proposed 

amendment, the CCO Annual Report would be 

furnished to the senior officer and audit committee, 

or other equivalent body or group performing the 

auditing function. 

48SEC Adopting Release, 81 FR at 30059. 

49 5 U.S.C. 601 et seq. 

50See Policy Statement and Establishment of 

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

Regulatory Flexibility Act, 47 FR 18618, 18619 

(Apr. 30, 1982) (FCMs); Further Definition of ‘‘Swap 

Dealer,’’ ‘‘Security-Based Swap Dealer,’’ ‘‘Major 

Swap Participant,’’ ‘‘Major Security-Based Swap 

Participant’’ and ‘‘Eligible Contract Participant,’’ 77 

FR 30596, 30701 (May 23, 2012) (SDs and MSPs). 

material noncompliance issues.43 This 

observation raises concerns as to 

whether the CCO Annual Report 

requirements are promoting an active, 

on-going self-evaluation or, instead, 

encouraging a more limited, ‘‘check-thebox’’ appraisal. 

Based on the foregoing, the 

Commission is proposing to amend 

§ 3.3(e)(2) to eliminate the requirement 

to address ‘‘each applicable requirement 

under the Act and Commission 

regulations’’ and make other conforming 

edits. In addition, § 3.3(e)(2)(i) is being 

deleted because Registrants are already 

required by § 3.3(e)(1) to describe their 

WPPs.44 The Commission believes that 

the intent of CEA section 4s(k)(3)(A) and 

the purpose of the CCO Annual Report 

may be met where Registrants provide 

summaries of their WPPs coupled with 

a detailed discussion of their annual 

assessment and recommended 

improvements.45

As a related change, § 3.3(f) 

specifically contains the full 

requirements regarding delivery of the 

CCO Annual Report. To eliminate 

confusion and unnecessary duplication, 

the Commission proposes to amend 

§ 3.3(e) to remove the duplicative text 

regarding the duty to furnish the CCO 

Annual Report. 

The Commission is also proposing to 

amend § 3.3(e)(4), which requires that 

the Registrant describe in the CCO 

Annual Report its financial, managerial, 

operational, and staffing resources set 

aside for compliance with the Act and 

Commission regulations. Commission 

staff has received a number of questions 

regarding whether the description need 

only cover resources for the activities 

for which the Registrant is registered or 

must also address other activities 

covered by the Act and Commission 

regulations. The Commission is 

proposing to amend § 3.3(e)(4) to clarify 

that the discussion is limited to 

resources allocated to the specific 

activities for which the Registrant is 

registered. It is the Commission’s view 

that the CCO Annual Report is meant to 

be a report regarding a Registrant’s 

business as an FCM, SD, or MSP, and 

therefore information need only be 

included in the CCO Annual Report to 

the extent it is related to, or impacts, 

that part of the Registrant’s business. 

The changes to § 3.3(e)(2) in this 

proposal closely parallel SEC rule 15Fk– 

1(c)(2).46 The Commission believes that 

greater efficiencies can be achieved for 

dual CFTC and SEC Registrants when 

the structure and content requirements 

for both CCO Annual Reports is 

consistent. 

Finally, to fully implement the 

amendments to § 3.3(e), the Commission 

is proposing to renumber current 

§ 3.3(e)(3) as § 3.3(e)(6), to account for 

the proposed renumbering of the other 

content requirements in current 

§ 3.3(e)(2). 

2. Regulation 3.3(f)—Furnishing the 

Annual Report to the Commission 

CEA section 4s(k)(3)(B) requires the 

CCO Annual Report to, among other 

things, be furnished to the Commission 

and include a certification that the 

report is accurate and complete. 

Paragraph (f) of § 3.3 implements this 

requirement. 

Section 3.3(f)(1) only requires 

delivery of the CCO Annual Report to 

the board of directors or the senior 

officer of the Registrant in addition to 

the Commission. The Commission is 

proposing to amend § 3.3(f)(1) to require 

a Registrant to provide its CCO Annual 

Report to its audit committee (or 

equivalent body), the board of directors, 

and the senior officer prior to furnishing 

it to the Commission.47 This 

amendment would align this 

requirement with that of the SEC’s 

corresponding rule, 15Fk–1(c)(2)(ii)(B). 

In requiring the SEC CCO Annual 

Report to be delivered to the audit 

committee, the SEC stated that requiring 

submission to the audit committee, in 

addition to the board and the senior 

officer, further ensures that all groups 

with overall responsibility for 

governance and internal controls remain 

informed of the SEC Registrant’s 

compliance program.48 The Commission 

agrees with this policy goal and also 

believes that further aligning our rules 

provides for greater efficiency. 

Request for comment: The 

Commission requests comment 

regarding the proposed amendments to 

the CCO Annual Report’s requirements 

in § 3.3(e) and (f). 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 CCO 

Annual Report amendments, the 

Commission specifically requests 

comment on the following questions: 

• Are the proposed amendments to 

the CCO Annual Report’s content 

requirements in § 3.3(e) appropriate? If 

not, what modifications to the content 

requirements should be made? 

• What, if any, transition or ongoing 

costs or savings would result from such 

changes? Please provide details and 

estimates regarding any asserted costs or 

savings. 

• Would the proposed amendments 

to the CCO Annual Report’s submission 

requirements in § 3.3(f)(1) cause undue 

burden? Is it appropriate for the audit 

committee to receive the CCO Annual 

Report? 

• Should the Commission make any 

other changes to § 3.3(f) to further 

harmonize with the SEC? 

III. Related Matters 

A. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(‘‘RFA’’) 49 requires that agencies 

consider whether a proposed rule will 

have a significant economic impact on 

a substantial number of small entities 

and, if so, provide a regulatory 

flexibility analysis of the impact. The 

proposed amendments define the term 

‘‘senior officer;’’ clarify the scope of a 

CCO’s duties and the content 

requirements of the CCO Annual Report; 

and modify the CCO Annual Report 

delivery requirement. The proposed 

amendments would affect FCMs, SDs, 

and MSPs that are required to be 

registered with the Commission. The 

Commission has previously established 

certain definitions of ‘‘small entities’’ to 

be used in evaluating the impact of its 

regulations on small entities in 

accordance with the RFA, and has 

previously determined that FCMs, SDs, 

and MSPs are not small entities for 

purposes of the RFA.50 Therefore, the 

Commission believes that the 

amendments to the CCO Rules would 

not have a significant economic impact 

on a substantial number of small 


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51 44 U.S.C. 3501 et seq. 

52The Commission notes that adding a definition 

of ‘‘senior officer’’ would be effected by amending 

§ 3.1. The Commission believes this addition in and 

of itself has no impact for purposes of determining 

the costs and benefits of the proposal, and, 

therefore, is restricting its analysis of the costs and 

benefits to the proposed amendments to § 3.3. 

Nevertheless, the Commission is seeking public 

comment on whether the definition of ‘‘senior 

officer’’ has any cost and benefit considerations. 

53For example, under the current regulations 

3.3(e) and (f), an assessment of §§ 23.400 through 

23.451, 17 CFR 23.400 through 23.451, governing 

business conduct standards for swap dealers and 

major swap participants with counterparties would 

require a separate assessment of each rule, and in 

many cases, each subsection as a separate 

‘‘requirement.’’ However, because these regulations 

all address external business conduct standards, it 

may be appropriate to address these rules together. 

54 7 U.S.C. 19(a). 

55See, e.g., CCO Rules Adopting Release, 77 FR 

at 20193. 

entities. Accordingly, the Acting 

Chairman, on behalf of the Commission, 

hereby certifies, pursuant to 5 U.S.C. 

605(b), that the proposed amendments 

will not have a significant economic 

impact on a substantial number of small 

entities. 

B. Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(‘‘PRA’’) 51 provides that a federal 

agency may not conduct or sponsor, and 

a person is not required to respond to, 

a collection of information unless it 

displays a currently valid control 

number issued by the Office of 

Management and Budget (‘‘OMB’’). The 

collection of information related to this 

proposed rule is OMB control number 

3038–0080—Annual Report for Chief 

Compliance Officer of Registrants. As a 

general matter, the proposed 

amendments to the CCO Rules: (1) 

Define the term ‘‘senior officer’’; (2) 

clarify the scope of the CCO duties and 

the content requirements of the CCO 

Annual Report; and (3) add the 

Registrant’s audit committee as a party 

that must receive the CCO Annual 

Report. The Commission believes that 

the proposed amendments will not 

impose any new information collection 

requirements that require approval of 

OMB under the PRA. As such, the 

proposed amendments do not impose 

any new burden or any new information 

collection requirements in addition to 

those that already exist in connection 

with the preparation and delivery of the 

CCO Annual Report pursuant to the 

Commission’s regulations. 

C. Cost-Benefit Considerations 

As discussed above, the Commission 

is proposing amendments to the CCO 

Rules that would: (1) Define the term 

‘‘senior officer’’; (2) provide greater 

specificity regarding the scope of the 

CCO’s duties; (3) clarify the content 

requirements for the CCO Annual 

Report; and (4) require a Registrant’s 

audit committee (or equivalent body), 

board of directors, and the senior officer 

to receive the CCO Annual Report. The 

baseline for this cost and benefit 

consideration is existing § 3.3.52

The proposed amendments to § 3.3(d) 

do not change the CCO duties, but 

rather provide greater specificity 

regarding the scope of the CCO’s duties 

and further harmonize with the SEC’s 

security-based swap dealer CCO duties. 

The Commission expects that greater 

clarity concerning CCO responsibilities 

will reduce the potential burdens on 

CCOs and improve the benefits of 

compliance by allowing CCOs to better 

focus on the fundamental compliance 

aspects of their responsibilities. 

Additionally, by further harmonizing 

the CFTC’s and SEC’s CCO duties, CCOs 

of dual registrants should be able to 

fulfill their duties more cost effectively. 

Because the proposed amendments to 

§ 3.3(d) do not expand the CCO duties, 

the Commission preliminarily believes 

that the proposal would not impose any 

additional costs to Registrants, market 

participants, the markets, or the general 

public. The Commission, however, 

invites comment regarding the nature of, 

and the extent to which, costs 

associated with the CCO duties 

described in § 3.3(d) could change as a 

result of the adoption of the proposal 

and, to the extent they can be 

quantified, monetary and other 

numerical estimates thereof. 

As discussed more fully above, in 

implementing § 3.3(e) and (f), the 

Commission received consistent 

feedback from Registrants that the 

exercise of documenting their 

assessment on a requirement-byrequirement basis was creating a 

significant economic burden with 

respect to time and resources. The 

proposed amendments to eliminate the 

requirement-by-requirement assessment 

are intended to reduce the cost to 

Registrants of producing the CCO 

Annual Report while maintaining its 

critical purpose. By reducing the burden 

associated with this aspect of the CCO 

Annual Report, CCO and other 

compliance resources may be better 

focused on other compliance functions. 

In addition, the amendments would 

harmonize certain CFTC and SEC CCO 

Annual Report content requirements in 

an effort to reduce the costs to dual 

registrants of complying with two 

regulatory regimes. The Commission 

believes that the foregoing amendments 

would also provide relief for Registrants 

from resource and time pressures in 

preparing their CCO Annual Reports. 

The Commission recognizes that the 

CCO Annual Reports may contain less 

content if the proposed amendments are 

adopted because of the removal of the 

process of documenting a review for 

hundreds of individual regulatory 

requirements. However, many of the 

requirements are inter-related and are 

better addressed collectively.53 In 

addition, eliminating this process 

should allow Registrants to focus more 

fully on completing their internal 

review processes and encourage more 

focused discussion of material issues in 

the CCO Annual Report. While the 

proposed amendments may require less 

description and classification, the 

Commission believes that a more 

focused, substantive discussion of the 

Registrant’s assessment and material 

compliance issues will result in a CCO 

Annual Report that is a more effective 

tool for informing both the Registrant’s 

senior management and the Commission 

as to the status of compliance at the 

firm. 

1. 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.54 Section 

15(a) further specifies that the costs and 

benefits shall be evaluated in light of 

five broad areas of market and public 

concern: (1) Protection of market 

participants and the public; (2) 

efficiency, competitiveness, and 

financial integrity of futures markets; (3) 

price discovery; (4) sound risk 

management practices; and (5) other 

public interest considerations. The 

Commission considers the costs and 

benefits resulting from its discretionary 

determinations with respect to the 

section 15(a) factors. 

The Commission believes that the 

CCO Rules reinforce the CEA’s 

protections for swap markets 

participants, futures market 

participants, and the public as more 

fully described in the CCO Rules 

Adopting Release.55 This proposal does 

not seek to diminish either the role of 

the CCO or the value of the CCO Annual 

Report. On the contrary, the 

Commission believes that the proposal 

will provide the CCO with greater 

flexibility in accomplishing their duties 

and focusing compliance resources. 

Further, the proposal should lead to a 

CCO Annual Report that more 

effectively and efficiently focuses the 

Registrant’s board, senior management, 


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21336 Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Proposed Rules 

56See, e.g., 17 CFR 23.600. 

and as proposed, the audit committee, 

as well as the Commission on areas 

requiring change or improvement. 

a. Protection of Market Participants and 

the Public 

The proposed amendments will 

continue to protect market participants 

and the public because they do not 

fundamentally alter the CCO duties or 

the annual compliance reporting 

requirements of § 3.3. While the 

amendment removing the requirementby-requirement reporting may reduce 

the reporting detail, the Commission 

believes that change will allow the CCO 

to focus on identifying and describing in 

the CCO Annual Report material 

compliance matters that deserve greater 

attention. Accordingly, the Commission 

preliminarily believes that the reduction 

in content requirements will not affect 

the protection of market participants 

and the public. 

b. Efficiency, Competitiveness, and 

Financial Integrity of Markets 

The Commission preliminarily 

believes that the proposed amendments 

to the CCO Rules could improve 

resource allocational efficiency for 

Registrants by reducing the burden to 

produce the CCO Annual Reports 

thereby allowing Registrants to allocate 

compliance resources used for report 

preparation more efficiently. 

Furthermore, entities that are dually 

registered with the CFTC and SEC and 

that must comply with the CCO Rules 

are likely to benefit from greater 

efficiencies to the extent the two 

agencies’ parallel regulations are 

consistent. The Commission 

preliminarily believes that the proposed 

amendments to the CCO Rules will not 

have any negative impacts on market 

efficiency, competitiveness, or integrity 

because each CCO Annual Report 

addresses internal compliance programs 

of each Registrant and are not publicly 

available, and the amendments affecting 

CCO duties only clarify those duties and 

do not affect markets. 

c. Price Discovery 

The Commission has not identified a 

specific effect on price discovery as a 

result of the proposal because the 

proposal does not address any pricing 

issues. Nevertheless, the Commission 

seeks public comment on this issue. 

d. Sound Risk Management Practices 

The Commission preliminarily 

believes that the proposed amendments 

to the CCO duties and CCO Annual 

Report requirements would not have a 

meaningful effect on the risk 

management practices of Registrants. 

The proposed amendments relating to 

the CCO’s duties and annual report do 

not directly impact a Registrant’s risk 

management practices because they 

clarify the scope of the CCO’s duties and 

CCO Annual Report contents, and do 

not require changes to a Registrant’s risk 

management program.56 Furthermore, 

the proposed amendments to the 

content requirements do not affect the 

Registrant’s obligation to address 

material noncompliance issues relating 

to its risk management program in the 

CCO Annual Report. Finally, the 

Commission preliminarily believes that 

including the audit committee and both 

the board of directors and the senior 

officer as recipients of the CCO Annual 

Reports may benefit Registrants’ overall 

risk management practices by ensuring 

that all groups with overall 

responsibility for governance and 

internal controls are informed of the 

report contents. 

e. Other Public Interest Considerations 

The Commission has not identified 

any other public interest considerations 

for this rulemaking. 

Request for Comment: The 

Commission invites comment on its 

preliminary consideration of the costs 

and benefits associated with the 

proposal, especially with respect to the 

five factors the Commission is required 

to consider under CEA section 15(a). In 

addressing these areas and any other 

aspect of the Commission’s preliminary 

cost-benefit considerations, the 

Commission encourages commenters to 

submit any data or other information 

they may have quantifying and/or 

qualifying the costs and benefits of the 

proposal. 

List of Subjects in 17 CFR Part 3 

Registration. 

For the reasons stated in the 

preamble, the Commodity Futures 

Trading Commission proposes to amend 

17 CFR part 3 as set forth below: 

PART 3—REGISTRATION 

■ 1. The authority citation for part 3 

continues to read as follows: 

Authority: 5 U.S.C. 552, 552b; 7 U.S.C. 1a, 

2, 6a, 6b, 6b–1, 6c, 6d, 6e, 6f, 6g, 6h, 6i, 6k, 

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

16a, 18, 19, 21, and 23, as amended by Title 

VII of Pub. L. 111–203, 124 Stat. 1376. 

■ 2. In § 3.1, add paragraph (j) to read 

as follows: 

§ 3.1 Definitions. 

* * * * * 

(j) Senior officer. Senior officer means 

the chief executive officer or other 

equivalent officer of a registrant. 

■ 3. In § 3.3, revise paragraphs (d), (e), 

and (f)(1) to read as follows: 

§ 3.3 Chief compliance officer. 

* * * * * 

(d) Chief compliance officer duties. 

The chief compliance officer’s duties 

shall include, but are not limited to: 

(1) Administering each of the 

registrant’s policies and procedures 

relating to its business as a futures 

commission merchant, swap dealer, or 

major swap participant that are required 

to be established pursuant to the Act 

and Commission regulations; 

(2) In consultation with the board of 

directors or the senior officer, taking 

reasonable steps to resolve any conflicts 

of interest that may arise; 

(3) Taking reasonable steps to ensure 

compliance with the Act and 

Commission regulations relating to the 

registrant’s business as a futures 

commission merchant, swap dealer or 

major swap participant, including 

through ensuring that the registrant 

establishes, maintains, and reviews 

written policies and procedures 

reasonably designed to achieve 

compliance; 

(4) Establishing, maintaining, and 

reviewing written policies and 

procedures reasonably designed to 

remediate noncompliance issues 

identified by the chief compliance 

officer through any means, including 

any: Compliance office review, lookback, internal or external audit finding, 

self-reporting to the Commission and 

other appropriate authorities, or 

complaint that can be validated; 

(5) Establishing written procedures 

reasonably designed for the handling, 

management response, remediation, 

retesting, and resolution of 

noncompliance issues; and 

(6) Preparing and signing the annual 

report required under paragraphs (e) 

and (f) of this section. 

(e) Annual report. The chief 

compliance officer annually shall 

prepare a written report that covers the 

most recently completed fiscal year of 

the futures commission merchant, swap 

dealer, or major swap participant. The 

annual report shall, at a minimum, 

contain a description of: 

(1) The written policies and 

procedures of the futures commission 

merchant, swap dealer, or major swap 

participant described in paragraph (d) of 

this section, including the code of ethics 

and conflicts of interest policies; 

(2) The futures commission 

merchant’s, swap dealer’s or major swap 

participant’s assessment of the 


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Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Proposed Rules 21337 

effectiveness of its policies and 

procedures relating to its business as a 

futures commission merchant, swap 

dealer or major swap participant; 

(3) Areas for improvement, and 

recommended potential or prospective 

changes or improvements to its 

compliance program and resources 

devoted to compliance; 

(4) The financial, managerial, 

operational, and staffing resources set 

aside for compliance with respect to the 

Act and Commission regulations 

relating to its business as a futures 

commission merchant, swap dealer or 

major swap participant, including any 

material deficiencies in such resources; 

(5) Any material noncompliance 

issues identified and the corresponding 

action taken; and 

(6) Any material changes to 

compliance policies and procedures 

during the coverage period for the 

report. 

(f) Furnishing the annual report to the 

Commission. (1) Prior to furnishing the 

annual report to the Commission, the 

chief compliance officer shall provide 

the annual report to the board of 

directors, the senior officer, and the 

audit committee (or equivalent body) of 

the futures commission merchant, swap 

dealer, or major swap participant for its 

review. Furnishing the annual report to 

the board of directors, the senior officer, 

and the audit committee (or equivalent 

body) shall be recorded in the board 

minutes or otherwise, as evidence of 

compliance with this requirement. 

* * * * * 

Issued in Washington, DC, on May 3, 2017, 

by the Commission. 

Christopher J. Kirkpatrick, 

Secretary of the Commission. 

Note: The following appendix will not 

appear in the Code of Federal Regulations. 

Appendix to Chief Compliance Officer 

Duties and Annual Report 

Requirements for Futures Commission 

Merchants, Swap Dealers, and Major 

Swap Participants; Amendments— 

Commission Voting Summary 

On this matter, Acting Chairman Giancarlo 

and Commissioner Bowen voted in the 

affirmative. No Commissioner voted in the 

negative. 

[FR Doc. 2017–09229 Filed 5–5–17; 8:45 am] 

BILLING CODE 6351–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 147 

[Docket Number USCG–2017–0110] 

RIN 1625–AA00 

Safety Zone; Stampede TLP, Green 

Canyon 468, Outer Continental Shelf 

on the Gulf of Mexico 

AGENCY: Coast Guard, DHS. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Coast Guard proposes a 

safety zone around the Stampede 

Tension Leg Platform facility located in 

Green Canyon Block 468 on the Outer 

Continental Shelf (OCS) in the Gulf of 

Mexico. The purpose of the safety zone 

is to protect the facility from all vessels 

operating outside the normal shipping 

channels and fairways that are not 

providing services to or working with 

the facility. Placing a safety zone around 

the facility will significantly reduce the 

threat of allisions, collisions, oil spills, 

releases of natural gas, and thereby 

protect the safety of life, property, and 

the environment. We invite your 

comments on this proposed rulemaking. 

DATES: Comments and related material 

must be received by the Coast Guard on 

or before June 7, 2017. 

ADDRESSES: You may submit comments 

identified by docket number USCG– 

2017–0110 using the Federal 

eRulemaking Portal at http://

www.regulations.gov. See the ‘‘Public 

Participation and Request for 

Comments’’ portion of the 

SUPPLEMENTARY INFORMATION section for 

further instructions on submitting 

comments. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions about this proposed 

rulemaking, call or email Mr. Rusty 

Wright, U.S. Coast Guard, District Eight 

Waterways Management Branch; 

telephone 504–671–2138, 

rusty.h.wright@uscg.mil. 

SUPPLEMENTARY INFORMATION: 

I. Table of Abbreviations 

CFR Code of Federal Regulations 

DHS Department of Homeland Security 

FR Federal Register 

NPRM Notice of Proposed Rulemaking 

OCS Outer Continental Shelf 

TLP A Tension Leg Platform 

§ Section 

U.S.C. United States Code 

II. Background, Purpose, and Legal 

Basis 

Under the authority provided in 14 

U.S.C. 85, 43 U.S.C. 1333, and 

Department of Homeland Security 

Delegation No. 0170.1, Title 33, CFR 

147.1 and 147.10 permit the 

establishment of safety zones for 

facilities located on the Outer 

Continental Shelf (OCS) for the purpose 

of protecting life and property on the 

facilities, their appurtenances and 

attending vessels, and on the adjacent 

waters within the safety zones. 

The safety zone proposed by this 

rulemaking is on the OCS in the 

deepwater area of the Gulf of Mexico at 

Green Canyon Block 468. The area for 

the safety zone would be 500 meters 

(1640.4 feet) from each point on the 

facility, which is located at 

27°30′33.3431′′ N., 90°33′22.963′′ W. For 

the purpose of the safety zone, the 

deepwater area is waters of 304.8 meters 

(1,000 feet) or greater depth extending to 

the limits of the Exclusive Economic 

Zone (EEZ) contiguous to the territorial 

sea of the United States and extending 

to a distance up to 200 nautical miles 

from the baseline from which the 

breadth of the sea is measured. 

Navigation in the vicinity of the safety 

zone consists of large commercial 

shipping vessels, fishing vessels, cruise 

ships, tugs with tows and the occasional 

recreational vessels. The deepwater area 

also includes an extensive system of 

fairways. 

III. Discussion of Proposed Rule 

HESS Corporation requested that an 

OCS safety zone extending 500 meters 

from each point on the Stampede 

Tension Leg Platform (TLP) facility 

structure’s outermost edge is required. 

There are safety concerns for both the 

personnel aboard the facility and the 

environment. The District Commander 

has determined that it was highly likely 

that any allision with the facility would 

result in a catastrophic event. Placing a 

safety zone around the facility will 

significantly reduce the threat of 

allisions, oil spills, and releases of 

natural gas, and thereby protect the 

safety of life, property, and the living 

marine resources. 

In evaluating this request, the Coast 

Guard explored relevant safety factors 

and considered several criteria, 

including but not limited to (1) the level 

of the existing and foreseeable shipping 

activity around the facility, (2) safety 

concerns for personnel aboard the 

facility, (3) concerns for the 

environment, (4) the likelihood that an 

allision would result in a catastrophic 

event based on the proximity to 

shipping fairways, offloading 

operations, production levels, and size 

of the crew, (5) the volume of traffic in 

the vicinity of the proposed safety zone, 

(6) the types of vessels navigating in the 


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