Document ID: SEC-2016-1566-0001
Agency: sec
Document Type: Rule
Title: Access to Data Obtained by Security-Based Swap Data Repositories
Posted Date: 2016-09-02T04:00Z

[Federal Register Volume 81, Number 171 (Friday, September 2, 2016)]
[Rules and Regulations]
[Pages 60585-60608]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-21137]

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 240

[Release No. 34-78716; File No. S7-15-15]
RIN 3235-AL74

Access to Data Obtained by Security-Based Swap Data Repositories

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: Pursuant to section 763(i) of Title VII (``Title VII'') of the 
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 
(``Dodd-Frank Act''), the Securities and Exchange Commission 
(``Commission'') is adopting amendments to rule 13n-4 under the 
Securities Exchange Act of 1934 (``Exchange Act'') related to 
regulatory access to security-based swap data held by security-based 
swap data repositories. The rule amendments would implement the 
conditional Exchange Act requirement that security-based swap data 
repositories make data available to certain regulators and other 
authorities.

DATES: Effective November 1, 2016.

FOR FURTHER INFORMATION CONTACT: Carol McGee, Assistant Director, 
Joshua Kans, Senior Special Counsel, or Kateryna Imus, Special Counsel, 
at (202) 551-5870; Division of Trading and Markets, Securities and 
Exchange Commission, 100 F Street NE., Washington, DC 20549-7010.

SUPPLEMENTARY INFORMATION: The Commission is adding paragraphs (b)(9) 
and (b)(10) to Exchange Act rule 13n-4 to implement the statutory 
requirement that security-based swap data repositories conditionally 
provide data to certain regulators and other authorities. The 
Commission also is adding paragraph (d) to rule 13n-4 to specify the 
method to be used to comply with the associated statutory notification 
requirement.

I. Background

A. Statutory Requirements for Access to Security-Based Swap Data 
Repository Information, as Amended

    Title VII of the Dodd-Frank Act amended the Exchange Act to provide 
a comprehensive regulatory framework for security-based swaps, 
including the regulation of security-based swap data repositories.\1\
---------------------------------------------------------------------------

    \1\ Public Law 111-203, section 761(a) (adding Exchange Act 
section 3(a)(75) (defining ``security-based swap data repository'')) 
and section 763(i) (adding Exchange Act section 13(n) (establishing 
a regulatory regime for security-based swap data repositories)).
    References in this release to the terms ``data repository,'' 
``trade repository,'' ``repository'' or ``SDR'' generally address 
security-based swap data repositories unless stated otherwise.
---------------------------------------------------------------------------

    Those amendments, among other things, require that security-based 
swap data repositories make data available to certain regulators and 
other entities. In particular, the amendments conditionally require 
that security-based swap data repositories ``on a confidential basis 
pursuant to section 24, upon request, and after notifying the 
Commission of the request, make available security-based swap data 
obtained by the security-based swap data repository, including 
individual counterparty trade and position data'' to specified 
recipients.\2\ As provided by the statute, these recipients include 
``each appropriate prudential regulator'' \3\; the Financial Stability 
Oversight Council (``FSOC''); the Commodity Futures Trading Commission 
(``CFTC''); the Department of Justice; and ``any other person that the 
Commission determines to be appropriate,'' including foreign financial 
supervisors (including foreign futures authorities), foreign central 
banks, foreign ministries and other foreign authorities.\4\
---------------------------------------------------------------------------

    \2\ Exchange Act section 13(n)(5)(G), 15 U.S.C. 78m(n)(5)(G). 
The confidentiality requirements addressed by Exchange Act section 
24, 15 U.S.C. 78x, are addressed below. See note 83, infra. As 
initially adopted, this provision addressed access to ``all'' data 
obtained by the security-based swap data repository. As amended by 
Congress in 2015, the reference to ``all'' was replaced by a 
reference to ``security-based swap'' data. See Public Law 114-94, 
section 86011(c)(1)(A) (striking ``all'' and adding ``security-based 
swap'' in the introductory part of Exchange Act section 
13(n)(5)(G)).
    \3\ As discussed below, the term ``prudential regulator'' 
encompasses the Board of Governors of the Federal Reserve System and 
certain other regulators, with regard to certain categories of 
regulated entities. See note 26, infra.
    \4\ Exchange Act section 13(n)(5)(G), 15 U.S.C. 78m(n)(5)(G). As 
initially adopted this provision did not reference ``other foreign 
authorities.'' That provision was added by Congress in December 
2015. See Public Law 114-94, section 86011(c)(1)(B) (adding 
paragraph (G)(v)(IV) to Exchange Act section 13(n)(5)).
---------------------------------------------------------------------------

    Access to data pursuant to these provisions is conditioned on the 
repository receiving ``a written agreement from each entity stating 
that the entity shall abide by the confidentiality requirements 
described in section 24 relating to the information on security-based 
swap transactions that is provided.'' \5\
---------------------------------------------------------------------------

    \5\ Exchange Act section 13(n)(5)(H), 15 U.S.C. 78m(n)(5)(H).
---------------------------------------------------------------------------

    As enacted in 2010, moreover, the data access provisions stated 
that before such data is shared, ``each entity shall agree to indemnify 
the security-based swap data repository and the Commission for any 
expenses arising from litigation relating to the information provided 
under section 24.'' \6\ Congress repealed the indemnification 
requirement in December 2015.\7\
---------------------------------------------------------------------------

    \6\ See Dodd Frank Act section 763(i) (adding former Exchange 
Act section 13(n)(5)(H)(ii)).
    \7\ See Public Law 114-94, section 86011(c)(2).
---------------------------------------------------------------------------

B. Proposed Rule Amendments

    In 2015, prior to the legislative revision of the data access 
provisions, the Commission proposed rule amendments to implement the 
data access provisions.\8\ This proposal built upon two earlier 
Commission proposals,\9\ and specifically set forth proposed amendments 
to Exchange Act rule 13n-4--which the Commission previously adopted as 
part of a series of rules governing the registration process, duties 
and core principles applicable to security-based swap data 
repositories.\10\ Key elements of the proposal were:
---------------------------------------------------------------------------

    \8\ See Exchange Act Release No. 75845 (Sept. 4, 2015), 80 FR 
55182 (Sept. 14, 2015) (``Proposing Release'').
    \9\ See generally Proposing Release, 80 FR at 55182-84 
(discussing relevant provisions of 2010 proposed rules regarding 
security-based swap data repositories, and 2013 proposed rules 
regarding cross-border application of Title VII).
    \10\ See Exchange Act Release No. 74246 (Feb. 11, 2015), 80 FR 
14438 (Mar. 19, 2015) (``SDR Adopting Release''). Those rules did 
not address the data access requirements applicable to data 
repositories, and the Commission stated that final resolution of the 
issue would benefit from further consideration and public comment. 
See SDR Adopting Release, 80 FR at 14487-88.
---------------------------------------------------------------------------

     Designation of entities eligible to access data. The 
proposal: (i) Specifically identified each of the five applicable 
prudential regulators as being eligible to access data under these

[[Page 60586]]

provisions \11\; (ii) identified the Federal Reserve Banks and the 
Office of Financial Research (``OFR'') as being able to access data 
\12\; and (iii) stated that the Commission would consider the presence 
of certain confidentiality-related protections in determining whether 
to permit other entities to access data pursuant to these provisions, 
and that the associated determination orders typically would 
incorporate conditions that ``specify the scope of a relevant 
authority's access to data, and that limit this access in a manner that 
reflects the relevant authority's regulatory mandate or legal 
responsibility or authority.'' \13\
---------------------------------------------------------------------------

    \11\ See Proposing Release, 80 FR at 55185-86. The Commission 
proposed those provisions so the ability of those regulators to 
access data would not vary depending on the registration status of 
the regulated entity, and on whether the regulator was acting in a 
``prudential'' capacity. See id.
    \12\ See Proposing Release, 80 FR at 55186-87. The Commission 
preliminarily concluded that access by these entities would be 
appropriate given the mandates of the Federal Reserve Banks and the 
OFR. See id.
    \13\ See Proposing Release, 80 FR at 55187-88. The Commission 
noted that limiting access in this manner may help minimize the risk 
of unauthorized disclosure, misappropriation or misuse. See id.
---------------------------------------------------------------------------

     Confidentiality condition. To implement the statutory 
confidentiality condition, the proposal stated that before a repository 
could provide access, there would have to be in effect an arrangement 
between the Commission and the entity (in the form of a memorandum of 
understanding (``MOU'') or otherwise) to address the confidentiality of 
the information made available. This arrangement would be deemed to 
satisfy the statutory requirement that the repository receive a written 
confidentiality agreement from the recipient entity.\14\
---------------------------------------------------------------------------

    \14\ See Proposing Release, 80 FR at 55189-90. The Commission 
stated that this proposed approach would: build upon the 
Commission's experience in negotiating MOUs with other regulators 
with regard to enforcement and supervision, help avoid the 
possibility of uneven and potentially inconsistent application of 
confidentiality protections, and appropriately implement the 
statutory reference to Exchange Act section 24. See id.
---------------------------------------------------------------------------

     Notification requirement. To implement the statutory 
requirement that the Commission be notified of data access requests, 
the proposal provided that a repository must notify the Commission of 
the first request for data from a particular entity, and must maintain 
records of all information related to the initial and all subsequent 
request for data access from that entity.\15\
---------------------------------------------------------------------------

    \15\ See Proposing Release, 80 FR at 55188-89. The Commission 
stated that this approach should place the Commission on notice that 
an entity has the ability to access data, and place the Commission 
in a position to examine such access as appropriate, while avoiding 
the inefficiencies that would accompany an approach that requires a 
repository to direct to the Commission information regarding each 
instance of access. See id.
---------------------------------------------------------------------------

     Limitation to security-based swap data. The proposal 
specified that data access under the rules would apply only to 
``security-based swap data.'' \16\
---------------------------------------------------------------------------

    \16\ See Proposing Release, 80 FR at 55189.
---------------------------------------------------------------------------

     Scope of application of data access provisions. The 
proposal stated that the data access provisions and its associated 
conditions would not apply in certain circumstances, including when 
information is received directly from the Commission.\17\
---------------------------------------------------------------------------

    \17\ See Proposing Release, 80 FR at 55193.
---------------------------------------------------------------------------

     Indemnification exemption. The proposal set forth a 
conditional exemption to the then-extant indemnification requirement. 
The proposed exemption was conditioned in part on the applicable 
security-based swap information relating to persons or activities being 
within the recipient entity's ``regulatory mandate, or legal 
responsibility or authority.'' \18\
---------------------------------------------------------------------------

    \18\ See Proposing Release, 80 FR at 55191-93. The 
indemnification exemption further would have been conditioned on 
there being one or more arrangements (in the form of an MOU or 
otherwise) between the Commission and the recipient entity that 
addressed the confidentiality of the security-based swap information 
provided and any other matters as determined by the Commission, and 
that also specified the types of information that would relate to 
persons or activities within the recipient entity's ``regulatory 
mandate, legal responsibility or authority.'' See id.
---------------------------------------------------------------------------

C. Commenter Views

    A commenter criticized the inclusion of a notification 
requirement,\19\ suggesting that the scope of certain regulators' 
access to security-based swap data should be determined on a case-by-
case basis,\20\ and supported elimination of the statutory 
indemnification requirement.\21\
---------------------------------------------------------------------------

    \19\ See Depository Trust & Clearing Corp. comment dated Oct. 
29, 2015 (``DTCC comment'') at 4 (requesting that rulemaking not 
include a notification requirement; stating that requiring notice to 
the Commission of data access requests may cause other regulators to 
hesitate to make such requests, particularly in connection with 
investigations, and that a notice requirement could impede the real-
time flow of information among regulators; adding that if any 
notification requirement is included, it should not require a 
repository to submit the identity of the requesting party).
    \20\ See DTCC comment at 5 (stating that for requests by 
entities other than the prudential regulators, ``the Commission 
should determine on a case-by-case basis whether an SB SDR should 
make available confidential swap data based on the unique set of 
facts and circumstances of that request for information and address 
permissible uses and disclosures of such data, such as for research 
or publications,'' and adding that such an approach would help 
ensure that ``data access is granted based on an entity's regulatory 
mandate, responsibly balanc[ing] the need for efficient, timely 
information sharing, and avoid[ing] overly expansive access to 
confidential information'').
    \21\ See DTCC comment at 5-6.
    One comment submitted to the comment file did not address the 
substance of the Commission's proposal. See Zeba Gomez comment dated 
Sept. 19, 2015. The public comments that the Commission received on 
the Proposing Release are available on the Commission's Web site at 
http://www.sec.gov/comments/s7-15-15/s71515.shtml.
---------------------------------------------------------------------------

    The Commission reopened the comment period earlier this year to 
allow the public the opportunity to comment on the remainder of the 
proposal in light of the statutory changes, including removal of the 
statutory indemnification requirement.\22\ That release recognized that 
Congress eliminated the indemnification requirement discussed above, 
making unnecessary paragraph (d) of proposed rule 13n-4. The Commission 
received two additional comments in response.\23\
---------------------------------------------------------------------------

    \22\ See Exchange Act Release No. 76922 (Jan. 15, 2016), 81 FR 
3354 (Jan. 21, 2016) (``Comment Reopening Release'').
    \23\ See Depository Trust & Clearing Corp. comment dated Feb. 
22, 2016 (``DTCC 2016 comment''); Suzanne Shatto comment dated Jan. 
20, 2016 (``Shatto comment'').
---------------------------------------------------------------------------

II. Final Data Access Rules

    For the reasons discussed below, and after considering commenter 
concerns, the Commission is adopting final rules to implement the data 
access statutory provisions. The final rules largely are the same as 
those that were proposed, apart from eliminating the proposed 
indemnification exemption in response to the removal of the underlying 
statutory provision.\24\
---------------------------------------------------------------------------

    \24\ As discussed below, the Commission also has revised the 
proposal regarding the designation of additional entities that may 
access data, for consistency with the statute as amended. See part 
II.C.2, infra.
---------------------------------------------------------------------------

    Accordingly, should the confidentiality condition to data access be 
satisfied, security-based swap data repositories would be legally 
obligated to provide relevant authorities with access to security-based 
swap data, consistent with the parameters of any Commission orders, 
MOUs or other arrangements that are relevant to the availability and 
scope of access.\25\
---------------------------------------------------------------------------

    \25\ We believe that the approach taken by the final rule is 
generally consistent with the principles expressed by a commenter 
that supported access, while also putting into effect the statutory 
conditions to data access for persons identified by statute or 
subject to a determination by the Commission. See Shatto comment.
---------------------------------------------------------------------------

A. Application to Prudential Regulators and Federal Reserve Banks

1. Proposed Approach
    As noted above, the Exchange Act provides that a repository is 
conditionally obligated to make information available to, among others, 
``each appropriate prudential

[[Page 60587]]

regulator.'' \26\ To implement this, the proposed rules identified, as 
being eligible to access data, each of the entities encompassed within 
the statutory ``prudential regulator'' definition: The Board of 
Governors of the Federal Reserve System (``Board''), the Office of the 
Comptroller of the Currency, the Federal Deposit Insurance Corporation 
(``FDIC''), the Farm Credit Administration, and the Federal Housing 
Finance Agency.\27\ The proposed rules also included ``any Federal 
Reserve Bank'' among the entities conditionally eligible to access 
data,\28\ in accordance with the Exchange Act provision that extends 
data access to ``any other person that the Commission determines to be 
appropriate.'' \29\
---------------------------------------------------------------------------

    \26\ See Exchange Act section 13(n)(5)(G)(i), 15 U.S.C. 
78m(n)(5)(G)(i). Exchange Act section 3(a)(74), 15 U.S.C. 
78c(a)(74), defines ``prudential regulator'' by reference to the 
Commodity Exchange Act (``CEA''). The CEA, in turn, defines 
``prudential regulator'' to encompass: (a) The Board, (b) the Office 
of the Comptroller of the Currency, (c) the FDIC, (d) the Farm 
Credit Administration or (e) the Federal Housing Finance Agency--in 
each case with respect to swap dealers, major swap participants, 
security-based swap dealers or major security-based swap 
participants (cumulatively, ``dealers'' or ``major participants'') 
that fall within the regulator's authority. See CEA section 1a(39); 
7 U.S.C. 1a(39).
    For example, the definition provides that the Board is a 
prudential regulator with regard to, among others, certain dealers 
and major participants that are: State-chartered banks and agencies, 
foreign banks that do not operate insured branches, or members of 
bank holding companies. Also, for example, the definition provides 
that the Office of the Comptroller of the Currency is a prudential 
regulator with regard to, among others, certain dealers or major 
participants that are national banks, federally chartered branches 
or agencies of foreign banks or federal saving associations.
    \27\ See proposed Exchange Act rule 13n-4(b)(9)(i)-(v).
    \28\ See proposed Exchange Act rule 13n-4(b)(9)(i).
    \29\ See Exchange Act section 13(n)(5)(G)(v), 15 U.S.C. 
78m(n)(5)(G)(v).
---------------------------------------------------------------------------

    No commenter addressed the proposal to specifically identify the 
prudential regulators or the Federal Reserve Banks as being eligible to 
access such data.\30\
---------------------------------------------------------------------------

    \30\ As noted, one commenter suggested that data access by 
recipients other than the prudential regulators should be more 
circumscribed than the access afforded the prudential regulators, in 
that the access of the other recipients should be subject to case-
by-case review by the Commission. See note 20, supra. As discussed 
below the Commission will have the ability to tailor access in 
accordance with each entity's regulatory mandate or legal 
responsibility or authority. See parts II.C.2.a and II.F.2, infra.
---------------------------------------------------------------------------

2. Final Rule
    The final rule incorporates the elements of proposed Exchange Act 
rule 13n-4(b)(9)(i)-(v), as discussed below, without change.\31\
---------------------------------------------------------------------------

    \31\ See Proposing Release, 80 FR at 55185-86; Exchange Act rule 
13n-4(b)(9)(i)-(v).
---------------------------------------------------------------------------

    The final rule accordingly identifies each of the five prudential 
regulators as being able to access data. Consistent with the discussion 
in the proposal, this is to specify that those regulators' ability to 
access security-based swap data would not vary depending on whether 
entities regulated by the regulators are acting as security-based swap 
dealers, as major security-based swap participants, or in some other 
capacity,\32\ or vary depending on whether the regulator acts in a 
``prudential'' capacity in connection with the information, so long as 
the prerequisites to data access, including the confidentiality 
condition, have been met.\33\
---------------------------------------------------------------------------

    \32\ This particularly addresses the fact that the statutory 
``prudential regulator'' definition noted above specifically refers 
to those regulators in connection with dealers and major 
participants that fall within their authority. The Commission 
concludes that application of the data access provision should not 
vary depending on whether an entity regulated by the regulator is 
acting as a dealer or major participant, or in some other capacity. 
Such a reading would not further the purposes of Title VII, and the 
Dodd-Frank Act more generally, including facilitating regulator 
access to security-based swap information to help address the risks 
associated with those instruments.
    \33\ Those regulators' ability to access security-based swap 
data accordingly would not be limited to situations in which they 
act in the capacity of a prudential supervisor. Thus, for example, 
the FDIC is conditionally authorized to access security-based swap 
data from a repository in connection with all of its statutory 
capacities, including its prudential supervisory capacity as well as 
other capacities such as the FDIC's resolution authority pursuant to 
the Federal Deposit Insurance Act and the Orderly Liquidation 
Authority provisions of Title II of the Dodd-Frank Act.
---------------------------------------------------------------------------

    The final rules also include ``any Federal Reserve Bank'' among the 
entities conditionally eligible to access security-based swap data from 
repositories,\34\ in accordance with the Exchange Act provision that 
extends data access to ``any other person that the Commission 
determines to be appropriate.'' \35\ The Commission believes that it is 
appropriate for the Federal Reserve Banks to be able to access 
security-based swap data, subject to the confidentiality condition and 
other applicable prerequisites. In part, this conclusion is based on 
the Commission's understanding that the Federal Reserve Banks occupy 
important oversight roles under delegated authority from the Board, 
including supervision of banks that are under the Board's authority, 
and gathering and analyzing information to inform the Federal Open 
Market Committee regarding financial conditions.\36\ The Commission 
further understands that the Federal Reserve Banks, as well as the 
Board, would use data from security-based swap data repositories to 
fulfill statutory responsibilities related to prudential supervision 
and financial stability.\37\ The Commission accordingly concludes that 
the Federal Reserve Banks should conditionally have access to the 
security-based swap data.\38\
---------------------------------------------------------------------------

    \34\ See Exchange Act rule 13n-4(b)(9)(i).
    \35\ See Exchange Act section 13(n)(5)(G)(v), 15 U.S.C. 
78m(n)(5)(G)(v). The CFTC has identified the Federal Reserve Banks 
as being ``appropriate domestic regulators'' that may access swap 
data from swap data repositories. See Proposing Release, 80 FR at 
55184 n.29. See 17 CFR 49.17(b)(1).
    \36\ Section 11(k) of the Federal Reserve Act grants the Board 
authority ``to delegate, by published order or rule . . . any of its 
functions, other than those relating to rulemaking or pertaining to 
monetary and credit policies to . . . members or employees of the 
Board, or Federal Reserve banks.'' 12 U.S.C. 248(k). The Federal 
Reserve Banks carry out the Board's activities including the 
supervision, examination and regulation of financial institutions as 
directed by the Board and under its supervision. See the Board's 
Rules of Organization, section 3(j) FRRS 8-008 (providing that the 
Director of the Board's Division of Banking Supervision and 
Regulation ``coordinates the System's supervision of banks and bank 
holding companies and oversees and evaluates the Reserve Banks' 
examination procedures''). The Board further has delegated extensive 
authority to the Reserve Banks with respect to numerous supervisory 
matters. See 12 CFR 265.11 (functions delegated by the Board to the 
Federal Reserve Banks).
    \37\ We understand that the Board and the Federal Reserve Banks 
jointly would use the data in support of the prudential supervision 
of institutions under the Board's jurisdiction, such as state member 
banks, bank holding companies, and Edge Act corporations. See, e.g., 
section 9 of the Federal Reserve Act, 12 U.S.C. 321-338a 
(supervision of state member banks); the Bank Holding Company Act, 
12 U.S.C. 1841-1852 (supervision of bank holding companies); the 
Edge Act, 12 U.S.C. 610 et seq. (supervision of Edge Act 
corporations). We also understand that the Board and the Federal 
Reserve Banks would use the data in support of the implementation of 
monetary policy, such as through market surveillance and research. 
See, e.g., section 12A of the Federal Reserve Act, 12 U.S.C. 263 
(establishing the Federal Open Market Committee); and section 2A of 
the Federal Reserve Act, 12 U.S.C. 225a (setting monetary policy 
objectives). In addition, we understand that the Board and the 
Federal Reserve Banks would use the data in fulfilling the Board's 
responsibilities with respect to assessing, monitoring and 
mitigating systemic risk, such as supervision of systemically 
important institutions. See, e.g., section 113 of the Dodd-Frank 
Act, 12 U.S.C. 5323 (SIFIs); and section 807 of the Dodd-Frank Act, 
12 U.S.C. 5466 (designated FMUs).
    \38\ In permitting the Federal Reserve Banks to access security-
based swap information pursuant to the data access provisions, the 
Commission concludes that the Federal Reserve Banks' access should 
not be limited to information regarding security-based swap 
transactions entered into by banks supervised by the Board, but 
should be available more generally with regard to security-based 
swap transaction data, subject to the confidentiality condition and 
other applicable prerequisites. This is consistent with the fact 
that Title VII does not limit the Board's access to data in such a 
way. This view also reflects the breadth of the Federal Reserve 
Banks' responsibilities regarding prudential supervision and 
financial stability, as addressed above. Their access, however, 
would be subject to the confidentiality condition, including all 
access limits incorporated as part of implementing that condition.
---------------------------------------------------------------------------

    A Federal Reserve Bank's ability to access such data would be 
subject to

[[Page 60588]]

conditions related to confidentiality, as would the ability of any 
other entity that is identified by statute or determined by the 
Commission to access such data.\39\ As discussed below, the Commission 
may consider the recipient entity's regulatory mandate or legal 
responsibility or authority, and tailor the entity's access in 
accordance with that regulatory mandate or legal responsibility or 
authority.\40\
---------------------------------------------------------------------------

    \39\ In this regard, the Commission notes that personnel of the 
Board and the Reserve Banks already are subject to a number of 
confidentiality requirements. See 18 U.S.C. 1905 (imposing criminal 
sanctions on U.S. government personnel who disclose non-public 
information except as provided by law), 18 U.S.C. 641 (imposing 
criminal sanctions on the unauthorized transfer of records), 5 CFR 
2635.703 (Office of Government Ethics regulations prohibiting 
unauthorized disclosure of nonpublic information); see also Federal 
Reserve Bank Code of Conduct section 3.2 (requiring Reserve Bank 
employees to maintain the confidentiality of nonpublic information).
    \40\ See part II.F.2, infra.
---------------------------------------------------------------------------

B. FSOC, CFTC, Department of Justice and Office of Financial Research

1. Proposed Approach
    The Exchange Act also states that FSOC, CFTC, and the Department of 
Justice may access security-based swap data,\41\ and the proposed rules 
accordingly identified those entities as being conditionally authorized 
to access such data.\42\ The proposed rules further stated that the OFR 
conditionally would be eligible to access such data,\43\ in accordance 
with the Exchange Act provision that extends data access to ``any other 
person that the Commission determines to be appropriate.'' \44\
---------------------------------------------------------------------------

    \41\ See Exchange Act sections 13(n)(5)(G)(ii)-(iv), 15 U.S.C. 
78m(n)(5)(G)(ii)-(iv).
    \42\ See proposed Exchange Act rule 13n-4(b)(9)(vi)-(viii).
    \43\ See proposed Exchange Act rule 13n-4(b)(9)(ix).
    \44\ See Exchange Act section 13(n)(5)(G)(v), 15 U.S.C. 
78m(n)(5)(G)(v).
---------------------------------------------------------------------------

    No commenter addressed these aspects of the proposal.
2. Final Rule
    The final rule incorporates these elements of the proposal without 
change.\45\ As discussed in the Proposing Release, the rule includes 
the FSOC, CFTC, and the Department of Justice among the entities that 
may access data.
---------------------------------------------------------------------------

    \45\ See Exchange Act rule 13n-4(b)(9)(vi)-(ix).
---------------------------------------------------------------------------

    Moreover, the Commission believes that such access by the OFR is 
appropriate in light of the OFR's regulatory mandate and legal 
responsibility and authority.\46\ The OFR was established by Title I of 
the Dodd-Frank Act to support FSOC and FSOC's member agencies by 
identifying, monitoring and assessing potential threats to financial 
stability through the collection and analysis of financial data 
gathered from across the public and private sectors.\47\ In connection 
with this statutory mandate to monitor and assess potential threats to 
financial stability, the OFR's access to security-based swap 
transaction data may be expected to help assist it in examining the 
manner in which derivatives exposures and counterparty risks are 
distributed through the financial system, and in otherwise assessing 
those risks. The Commission accordingly concludes that the OFR should 
conditionally have access to the security-based swap data.\48\
---------------------------------------------------------------------------

    \46\ See Exchange Act rule 13n-4(b)(9)(ix). We note that the 
CFTC has identified the OFR as being an ``appropriate domestic 
regulator'' that may access swap data from swap data repositories. 
See Proposing Release, 80 FR at 55184 n.29; see also 17 CFR 
49.17(b)(1).
    \47\ See Dodd-Frank Act section 153(a) (identifying the purpose 
of the OFR as: (1) Collecting data on behalf of FSOC and providing 
such data to FSOC and its member agencies; (2) standardizing the 
types and formats of data reported and collected; (3) performing 
applied research and essential long-term research; (4) developing 
tools for risk measurement and monitoring; (5) performing other 
related services; (6) making the results of the activities of the 
Office available to financial regulatory agencies; and (7) assisting 
those member agencies in determining the types and formats of data 
authorized by the Dodd-Frank Act to be collected by the member 
agencies); Dodd-Frank Act section 154(c) (requiring that OFR's 
Research and Analysis Center, on behalf of FSOC, develop and 
maintain independent analytical capabilities and computing resources 
to: (A) Develop and maintain metrics and reporting systems for risks 
to U.S. financial stability; (B) monitor, investigate, and report on 
changes in systemwide risk levels and patterns to FSOC and Congress; 
(C) conduct, coordinate, and sponsor research to support and improve 
regulation of financial entities and markets; (D) evaluate and 
report on stress tests or other stability-related evaluations of 
financial entities overseen by FSOC member agencies; (E) maintain 
expertise in such areas as may be necessary to support specific 
requests for advice and assistance from financial regulators; (F) 
investigate disruptions and failures in the financial markets, 
report findings and make recommendations to FSOC based on those 
findings; (G) conduct studies and provide advice on the impact of 
policies related to systemic risk; and (H) promote best practices 
for financial risk management).
    The OFR is also required to report annually to Congress its 
analysis of any threats to the financial stability of the United 
States. See Dodd-Frank Act section 154(d).
    \48\ As discussed below, the proposed confidentiality condition 
could limit an entity's access to data by linking the scope of the 
access to information that related to persons or activities within 
an entity's regulatory mandate or legal responsibility or authority, 
as could be specified in an MOU or other arrangement between the 
Commission and the entity. See part II.F.2, infra.
---------------------------------------------------------------------------

    As with the other entities that may access data pursuant to the 
data access provision, the OFR's ability to access such data would be 
subject to conditions related to confidentiality.\49\
---------------------------------------------------------------------------

    \49\ Also, as U.S. government personnel, OFR personnel are 
subject to the same general confidentiality requirements that are 
addressed above in the context of the Board and the Federal Reserve 
Banks. See note 39, supra. In addition, the OFR is required to keep 
data collected and maintained by the OFR data center secure and 
protected against unauthorized disclosure. See Dodd-Frank Act 
section 154(b)(3); see also 12 CFR 1600.1 (ethical conduct standards 
applicable to OFR employees, including post-employment restrictions 
linked to access to confidential information); 31 CFR 0.206 
(Treasury Department prohibition on employees disclosing official 
information without proper authority).
---------------------------------------------------------------------------

C. Future Commission Determination of Additional Entities

1. Proposed Approach
    As noted, the Dodd-Frank Act amended the Exchange Act to provide 
that data access under these provisions would be available to ``any 
other person that the Commission'' determines to be appropriate, 
including foreign financial supervisors (including foreign futures 
authorities), foreign central banks and foreign ministries.\50\ To 
implement that requirement, the proposed rule provided that data access 
would be available to any other person that the Commission determines 
to be appropriate, conditionally or unconditionally, by order, 
including but not limited to foreign financial supervisors, foreign 
central banks and foreign ministries.\51\ The Commission noted that one 
or more self-regulatory organizations potentially may seek such access 
under this provision.\52\
---------------------------------------------------------------------------

    \50\ See Exchange Act section 13(n)(5)(G)(v). As discussed 
below, the 2015 legislative change added to that provision. See note 
58, infra.
    \51\ See proposed Exchange Act rule 13n-4(b)(9)(x).
    \52\ See Proposing Release, 80 FR at 55187.
---------------------------------------------------------------------------

    In the proposal, the Commission further stated that in connection 
with making such a determination, it would consider the presence of a 
confidentiality-related MOU or other arrangement between the Commission 
and a relevant authority, and whether the information would be subject 
to robust confidentiality safeguards. The Commission added that it 
would consider an authority's interest in access to security-based swap 
data based on the relevant authority's regulatory mandate or legal 
responsibility or authority, and that the Commission preliminarily 
expected that determination orders typically would incorporate 
conditions that specify the scope of a relevant authority's access to 
data, and that limit such access in a manner that reflects the relevant 
authority's regulatory mandate or legal responsibility or 
authority.\53\ In addition, the Commission anticipated that it would 
take into account any other factors appropriate to the determination, 
including whether the determination was in the public

[[Page 60589]]

interest, and whether the relevant authority agrees to provide the 
Commission and other U.S. authorities with reciprocal assistance in 
matters within their jurisdiction.\54\
---------------------------------------------------------------------------

    \53\ See Proposing Release, 80 FR at 55187-88.
    \54\ See id. at 55188.
---------------------------------------------------------------------------

    As part of the proposal, the Commission noted that it may issue 
determination orders of a limited duration, and that the Commission may 
revoke a determination at any time.\55\ The Commission also stated the 
preliminary belief that it is not necessary to prescribe by rule 
specific processes to govern a repository's treatment of requests for 
access.\56\
---------------------------------------------------------------------------

    \55\ See id.
    \56\ See id.
---------------------------------------------------------------------------

    As discussed below, one commenter addressed the Commission's future 
determination orders regarding data access.\57\
---------------------------------------------------------------------------

    \57\ See text accompanying notes 62 through 64.
---------------------------------------------------------------------------

2. Final Rule
    To implement its determination authority the Commission largely is 
adopting these provisions as proposed, except that the final rule, 
consistent with the recent statutory change, also identifies ``other 
foreign authorities'' within the nonexclusive list of the types of 
entities that may be subject to a determination pursuant to this 
authority.\58\ The Commission will make such determinations through the 
issuance of Commission orders, and such determinations may be 
conditional or unconditional.\59\
---------------------------------------------------------------------------

    \58\ See Exchange Act rule 13n-4(b)(9)(x). The 2015 statutory 
amendment added the term ``other foreign authorities'' to the 
entities identified in Exchange Act section 13(n)(5)(G)(v). See note 
7, supra. The addition of that term to the rule is consistent with 
the proposal, which, like the final rule, uses the phrase 
``including, but not limited to'' when identifying the types of 
authorities that may be subject to a Commission determination.
    \59\ See Exchange Act rule 13n-4(b)(9)(x).
---------------------------------------------------------------------------

a. Determination Factors and Conditions
    As stated in the proposal, the Commission expects that it would 
consider a variety of factors in connection with making such a 
determination, and that it may impose associated conditions in 
connection with the determination. In part, given the importance of 
maintaining the confidentiality of security-based swap data, the 
Commission expects to consider whether there is an MOU or other 
arrangement between the Commission and the relevant authority that is 
designed to protect the confidentiality of the security-based swap data 
provided to the authority.\60\ The Commission also expects to consider 
whether such data would be subject to robust confidentiality 
safeguards, such as safeguards set forth in the relevant jurisdiction's 
statutes, rules or regulations with regard to disclosure of 
confidential information by an authority or its personnel, and/or 
safeguards set forth in the authority's internal policies and 
procedures.
---------------------------------------------------------------------------

    \60\ Such an MOU or other arrangement will also satisfy the 
statutory requirement that a security-based swap data repository 
obtain a confidentiality agreement from the authority. See part 
II.F.2, infra. To the extent that a relevant authority needs access 
to additional information, the relevant authority may request that 
the Commission consider revising its determination order, and MOU or 
other arrangement, as applicable. See Proposing Release, 80 FR at 
55187-88.
---------------------------------------------------------------------------

    In addition, the Commission may consider the relevant authority's 
interest in access to security-based swap data based on the relevant 
authority's regulatory mandate or legal responsibility or authority. 
Consistent with that factor, the Commission expects that such 
determination orders typically would incorporate conditions that 
specify the scope of a relevant authority's access to data, and that 
limit this access in a manner that reflects the relevant authority's 
regulatory mandate or legal responsibility or authority.\61\ Depending 
on the nature of the relevant authority's interest in the data, such 
conditions could address factors such as the domicile of the 
counterparties to the security-based swap, and the domicile of the 
underlying reference entity. Limiting the amount of information 
accessed by an authority in this manner should be expected to help 
minimize the risk of unauthorized disclosure, misappropriation or 
misuse of security-based swap data, as each relevant authority will 
only have access to information within its regulatory mandate, or legal 
responsibility or authority.\62\
---------------------------------------------------------------------------

    \61\ See Proposing Release, 80 FR at 55187-88. To appropriately 
limit a relevant authority's access to only security-based swap data 
that is consistent with the designation order, a repository may, for 
example, need to customize permissioning parameters to reflect each 
relevant authority's designated access to security-based swap data. 
See generally note 140, infra (discussing access criteria currently 
used by DTCC in connection with current voluntary disclosure 
practices).
    \62\ As discussed below, the Commission will consider similar 
issues in connection with implementing the confidentiality 
condition. See also part II.F.2, infra.
---------------------------------------------------------------------------

    The Commission continues to anticipate taking into account any 
other factors that are appropriate to the determination, including 
whether such a determination would be in the public interest, and 
whether the relevant authority agrees to provide the Commission and 
other U.S. authorities with reciprocal assistance in matters within 
their jurisdiction.
    One commenter suggested that the ability of authorities (other than 
prudential regulators) to access data pursuant to these provisions 
should be subject to request-by-request Commission determinations that 
address permissible uses and disclosures of such data, to balance the 
need for information sharing against ``overly expansive access to 
confidential information.'' \63\ That commenter subsequently expressed 
the view that the Commission should simplify its proposal to allow 
access to data by certain named entities, consistent with their 
interest based on their regulatory mandate or legal responsibility or 
authority, ``without further action needed to be taken by the 
requesting body or the [repository].'' The commenter added that trade 
repositories needed ``clear and specific guidance''--such as that 
expressed in the CPMI-IOSCO guidance regarding access to trade 
repository data--regarding the type of data that should be made 
accessible to each of the different requesting entities.'' \64\
---------------------------------------------------------------------------

    \63\ See note 20, supra.
    \64\ See DTCC 2016 comment at 2 (citing the Committee on 
Payments and Market Infrastructure (``CPMI'') and the International 
Organization of Securities Commissions' (``IOSCO'') guidance on 
authorities access to trade repository data as an example of such 
guidance).
---------------------------------------------------------------------------

    The Commission has considered these suggestions, but has determined 
not to change the approach of the proposal, either by implementing a 
request-by-request approach toward access for some entities, or by 
allowing data access to other entities without further action. The 
Commission concludes that a request-by-request approach for access 
generally would be impracticable in terms of resources and operational 
delays, as well as unnecessary in light of the final rule's approach of 
linking access under the Commission's determination authority in a 
manner that reflects an entity's regulatory mandate or legal 
responsibility or authority. In our view, this approach reasonably 
achieves the goal of providing clear and specific guidance to 
repositories, as suggested by the commenter, in a manner that 
appropriately balances the benefits of information sharing with the 
need to protect the confidentiality of information. Moreover, with 
respect to the suggestion that data access may be allowed for certain 
entities without further action by these entities or the repository, in 
our view such an approach would not achieve the confidentiality 
benefits that will flow from using MOUs or other arrangements. The 
final rule's approach of using MOUs or other arrangements between the 
Commission and recipient

[[Page 60590]]

entities to satisfy the confidentiality condition, in any event, 
addresses the commenter's suggestion in part by obviating the need for 
the repository (as opposed to the recipient entities) to take further 
action with respect to satisfying the confidentiality condition. In 
addition, this approach will provide a vehicle for the Commission to 
provide the type of ``clear and specific guidance'' requested by the 
commenter. Moreover, the use of the Commission-negotiated 
confidentiality arrangements will eliminate the need for each recipient 
entity to negotiate separate confidentiality arrangements with each 
trade repository.
b. Additional Matters Related to the Determinations
    Consistent with the proposal, the Commission may take various 
approaches in deciding whether to impose additional conditions in 
connection with its consideration of requests for determination orders. 
For example, the Commission may issue a determination order that is of 
a limited duration. In addition, the Commission further may revoke a 
determination at any time, such as, for example, if a relevant 
authority fails to comply with the MOU or other arrangement by failing 
to keep confidential security-based swap data provided to it by a 
repository. Even absent such a revocation, an authority's access to 
data pursuant to these provisions also would cease upon the termination 
of the MOU or other arrangement used to satisfy the confidentiality 
condition.\65\
---------------------------------------------------------------------------

    \65\ See part II.F.2, infra.
---------------------------------------------------------------------------

    The Commission continues to expect that repositories will provide 
relevant authorities with access to security-based swap data in 
accordance with the determination orders, and the Commission generally 
does not expect to be involved in reviewing, signing-off on or 
otherwise approving relevant authorities' requests for security-based 
swap data from repositories that are made in accordance with a 
determination order. The final rule also does not prescribe any 
specific processes to govern a repository's treatment of requests for 
access.\66\
---------------------------------------------------------------------------

    \66\ See Proposing Release, 80 FR at 55188.
---------------------------------------------------------------------------

    Finally, consistent with the proposal, the Commission notes that 
when it designates an authority to receive direct electronic access to 
data under section 13(n)(5)(D)--which states that a repository must 
provide such access to the Commission ``or any designee of the 
Commission, including another registered entity''--the Commission may 
elect to apply these determination factors and consider applying 
protections similar to those in the data access provisions of Exchange 
Act sections 13(n)(5)(G) and (H).\67\
---------------------------------------------------------------------------

    \67\ See Proposing Release, 80 FR at 55188. In practice, the 
Commission expects that security-based swap data repositories may 
satisfy their obligation to make available data pursuant to sections 
13(n)(5)(G) and (H) by providing direct electronic access to 
appropriate authorities. To the extent a repository were to satisfy 
those requirements by some method other than electronic access, 
however, the Commission separately may consider whether to also 
designate particular authorities as being eligible for direct 
electronic access to the repository pursuant to section 13(n)(5)(D). 
In making such assessments under section 13(n)(5)(D), the Commission 
will have the ability to consider factors similar to the above 
determination factors, including the presence of confidentiality 
safeguards, and the authority's interest in the information based on 
its regulatory mandate or legal responsibility or authority.
---------------------------------------------------------------------------

D. Notification Requirement

1. Proposed Approach
    The Exchange Act states that a repository must notify the 
Commission when an entity requests the repository to make available 
security-based swap data.\68\ The Commission proposed to implement that 
notification requirement by requiring that the repository inform the 
Commission upon its receipt of the first request for data from a 
particular entity (which may include any request that the entity be 
provided ongoing online or electronic access to the data), and to 
maintain records of all information related to the initial and all 
subsequent requests for data access requests from that entity, 
including records of all instances of online or electronic access, and 
records of all data provided in connection with such requests or 
access.\69\
---------------------------------------------------------------------------

    \68\ See Exchange Act section 13(n)(5)(G), 15 U.S.C. 
78m(n)(5)(G). As discussed below, see part III, infra, the 
notification requirement does not apply to circumstances in which 
the Commission provides security-based swap data to an entity.
    \69\ See proposed Exchange Act rule 13n-4(e).
---------------------------------------------------------------------------

    In making this proposal, the Commission noted that one commenter 
had opposed any requirement that the Commission receive notice of a 
recipient's initial request, on the grounds that such notice may cause 
other authorities to hesitate to make such requests. The Commission 
explained, however, that it is necessary for the Commission to be 
informed of the initial request from a particular entity, and that 
commenter's concerns that other regulators may be reluctant to place 
the Commission on notice of such initial requests are mitigated by the 
Commission's long history of cooperation with other authorities in 
supervisory and enforcement matters.\70\ As discussed below, one 
commenter addressed the notification requirement.\71\
---------------------------------------------------------------------------

    \70\ See Proposing Release, 80 FR at 55189.
    \71\ See text accompanying notes 78 through 80, infra.
---------------------------------------------------------------------------

2. Final Rule
    The Commission is adopting as proposed the approach for 
implementing the notification requirement.\72\ Accordingly, a security-
based swap data repository would be required to inform the Commission 
upon its receipt of the first request for data from a particular entity 
(which may include any request that the entity be provided ongoing 
online or electronic access to the data).\73\ A repository must keep 
such notifications and any related requests confidential.\74\
---------------------------------------------------------------------------

    \72\ See Exchange Act rule 13n-4(d). This provision has been 
redesignated as paragraph (d) in light of the elimination of the 
proposed indemnification exemption.
    \73\ The rule does not require the repository to inform the 
Commission of subsequent requests.
    \74\ Exchange Act section 13(n)(5)(G), 15 U.S.C. 78m(n)(5)(G), 
and rule 13n-4(b)(9) both require that a repository must make data 
available ``on a confidential basis.'' Failure by a repository to 
treat such notifications and requests as confidential could have 
adverse effects on the underlying basis for the requests. If, for 
example, a regulatory use of the data is improperly disclosed, such 
disclosure could signal a pending investigation or enforcement 
action, which could have detrimental effects.
---------------------------------------------------------------------------

    Under the final rule, the repository also must maintain records of 
all information related to the initial and all subsequent requests for 
data access requests from that entity, including records of all 
instances of online or electronic access, and records of all data 
provided in connection with such requests or access.\75\ For these 
purposes, we believe that ``all information related to'' such requests 
would likely include, among other things: The identity of the requestor 
or person accessing the data; the date, time and substance of the 
request or access; date and time access is provided; and copies of all 
data reports or other aggregations of data provided in connection with 
the request or access.\76\
---------------------------------------------------------------------------

    \75\ We note that Exchange Act rule 13n-7(b)(1) requires 
security-based swap data repositories to maintain copies of ``all 
documents and policies and procedures required by the Act and the 
rules and regulations thereunder, correspondence, memoranda, papers, 
books, notices, accounts and other such records as shall be made or 
received by it in the course of its business as such.'' See also SDR 
Adopting Release, 80 FR at 14501 (``This rule includes all 
electronic documents and correspondence, such as data dictionaries, 
emails and instant messages, which should be furnished in their 
original electronic format.''). Exchange Act rule 13n-4(d) 
identifies specific types of records that must be maintained in the 
specific context of access requests to repositories.
    \76\ Cf. Proposing Release, 80 FR at 55189.
---------------------------------------------------------------------------

    Consistent with the discussion accompanying the proposal, the 
Commission concludes that the final

[[Page 60591]]

rule regarding the notification requirement appropriately accounts for 
the way in which entities are likely to access such data from 
repositories, by distinguishing steps that an entity takes to arrange 
access from subsequent electronic instructions and other means by which 
the recipient obtains data. By making relevant data available to the 
Commission in this manner, the approach would place the Commission on 
notice that a recipient has the ability to access security-based swap 
data, and place the Commission in a position to examine such access as 
appropriate, while avoiding the inefficiencies that would accompany an 
approach whereby a repository must direct to the Commission information 
regarding each instance of access by each recipient. The approach of 
the final rule accordingly is more consistent with the manner in which 
the Commission examines the records of other regulated entities under 
the Commission's authority.\77\
---------------------------------------------------------------------------

    \77\ See Proposing Release, 80 FR at 55189.
---------------------------------------------------------------------------

    In response to the proposal, one commenter reiterated its 
opposition to the Commission being provided notice of a recipient's 
initial request, on the grounds that such notice might cause other 
authorities to hesitate to make such requests.\78\ As we discussed at 
the time of the proposal, the Commission believes that it is necessary 
that it be informed of the initial request from a particular entity so 
that the Commission may assess whether the initial conditions to data 
access (i.e., MOUs or other arrangements as needed to satisfy the 
confidentiality condition \79\) have been met at the time the 
repository first is requested to provide the entity with information 
pursuant to the data access provisions, and, more generally, to 
facilitate the Commission's ongoing assessment of the repository's 
compliance with the data access provisions. Also, as previously stated, 
the Commission believes that commenter concerns that other regulators 
may be reluctant to place the Commission on notice of such initial 
requests are mitigated by the Commission's long history of cooperation 
with other authorities in supervisory and enforcement matters.\80\ For 
the same reasons, we decline to follow that commenter's suggestion that 
a repository may comply with the notification requirement without 
submitting the identity of the requesting party to the Commission.
---------------------------------------------------------------------------

    \78\ See note 19, supra.
    \79\ See part II.F.2, infra.
    \80\ See Proposing Release, 80 FR at 55189. As noted in 
conjunction with the proposal, moreover, data repositories can 
provide direct electronic access to relevant authorities under this 
approach. The requirement that the repository inform the Commission 
when the relevant authority first requests access to security-based 
swap data maintained by the repository, and to retain records of 
subsequent access, is designed to facilitate such direct electronic 
access. See Proposing Release, 80 FR at 55189 n.80.
---------------------------------------------------------------------------

E. Limitation to ``Security-Based Swap Data''

1. Proposed Approach
    The proposed rule amendments specifically addressed access to 
``security-based swap data'' obtained by a security-based swap data 
repository.\81\ In taking that approach, the Commission recognized that 
repositories that obtain security-based swap data may also obtain data 
regarding other types of financial instruments, such as swaps under the 
CFTC's jurisdiction,\82\ but preliminarily concluded that the relevant 
data access provisions should not be read to require a repository to 
make available data that does not involve security-based swaps.\83\
---------------------------------------------------------------------------

    \81\ See proposed Exchange Act rule 13n-4(b)(9).
    \82\ Specifically, the Dodd-Frank Act provides that the CFTC 
will regulate ``swaps,'' the Commission will regulate ``security-
based swaps,'' and both the CFTC and the Commission will regulate 
``mixed swaps.'' See Dodd-Frank Act section 712.
    \83\ See Proposing Release, 80 FR at 55189 (noting that those 
data access provisions were added by Subtitle B of Title VII, which 
focused on the regulatory treatment of security-based swaps, to the 
Exchange Act, which generally addresses the regulation of securities 
such as security-based swaps; also addressing the significance of 
language in the confidentiality condition).
---------------------------------------------------------------------------

    No commenter addressed this limitation on the type of data made 
available by repositories.
2. Final Rule
    The 2015 amendment to the data access provisions under the Exchange 
Act clarified that those provisions specifically addressed the 
disclosure of security-based swap data.\84\ This clarification is 
consistent with the proposal. The Commission accordingly is adopting 
this part of the rule as proposed.
---------------------------------------------------------------------------

    \84\ See note 7, supra.
---------------------------------------------------------------------------

F. Confidentiality Condition

1. Proposed Approach
    As noted, the Exchange Act provides that, prior to providing data, 
a repository ``shall receive a written agreement from each entity 
stating that the entity shall abide by the confidentiality requirements 
described in section 24 relating to the information on security-based 
swap transactions that is provided.'' \85\
---------------------------------------------------------------------------

    \85\ See Exchange Act section 13(n)(5)(H)(i), 15 U.S.C. 
78m(n)(5)(H)(i).
    Exchange Act section 24, 15 U.S.C. 78x, generally addresses 
disclosures of information by the Commission and its personnel. In 
relevant part it provides that the Commission may, ``in its 
discretion and upon a showing that such information is needed,'' 
provide all records and other information ``to such persons, both 
domestic and foreign, as the Commission by rule deems appropriate if 
the person receiving such records or information provides such 
assurances of confidentiality as the Commission deems appropriate.'' 
See Exchange Act section 24(c), 15 U.S.C 78x(c); see also Exchange 
Act rule 24c-1(b) (providing that the Commission may, upon ``such 
assurances of confidentiality as the Commission deems appropriate,'' 
provide non-public information to persons such as domestic and 
foreign governments or their political subdivisions, authorities, 
agencies or instrumentalities, self-regulatory organizations and 
foreign financial authorities).
---------------------------------------------------------------------------

    The proposed rule implementing this condition would require that, 
before a repository provides information to an entity pursuant to the 
data access provisions, the Commission and the entity shall have 
entered into an MOU or other arrangement addressing confidentiality. 
This arrangement would be deemed to satisfy the statutory requirement 
that the repository receive a written confidentiality agreement from 
the entity.\86\
---------------------------------------------------------------------------

    \86\ See proposed Exchange Act rule 13n-4(b)(10).
---------------------------------------------------------------------------

    As discussed below, one commenter addressed the Commission's future 
determination orders regarding data access in response to the Comment 
Reopening Release.\87\
---------------------------------------------------------------------------

    \87\ See text accompanying note 92, infra.
---------------------------------------------------------------------------

2. Final Rule
    The Commission is adopting as proposed the approach for 
implementing the confidentiality requirement. Accordingly, the final 
rule provides that ``there shall be in effect an arrangement between 
the Commission and the entity (in the form of a memorandum of 
understanding or otherwise) to address the confidentiality of the 
security-based swap information made available to the entity,'' and 
that this arrangement between the Commission and a regulator or other 
recipient entity will satisfy the statutory confidentiality condition. 
\88\
---------------------------------------------------------------------------

    \88\ See Exchange Act rule13n-4(b)(10). As discussed below, see 
part III, infra, the confidentiality condition in Exchange Act 
sections 13(n)(5)(G) and (H) does not apply to circumstances in 
which the Commission provides security-based swap data to an entity.
---------------------------------------------------------------------------

    As discussed in the proposal, in the Commission's view this 
approach should help obviate the need for each individual repository to 
negotiate and enter into multiple agreements and help avoid the 
possibility of uneven and potentially inconsistent application of 
confidentiality protections across data repositories and recipient 
entities. \89\

[[Page 60592]]

This approach also should appropriately implement the statutory 
reference to the ``confidentiality requirements described in section 
24'' of the Exchange Act, which articulates an approach whereby the 
Commission determines standards for confidentiality assurances.\90\
---------------------------------------------------------------------------

    \89\ As discussed in the proposal, see Proposing Release, 80 FR 
at 55190 n. 87, the Commission notes that the Exchange Act does not 
require that the security-based swap data repository ``agree'' with 
the entity, ``enter into'' an agreement or otherwise be a party to 
the confidentiality agreement. The Exchange Act merely states that 
the repository ``receive'' such an agreement. See Exchange Act 
section 13(n)(5)(H)(i), 15 U.S.C. 78m(n)(5)(H)(i). Accordingly, we 
believe that, at a minimum, the statutory language is ambiguous as 
to whether the data repository must itself be a party to the 
confidentiality agreement. In light of this ambiguity, we read the 
statute to permit the Commission to enter into confidentiality 
agreements with the entity, with the repository receiving the 
benefits of the agreement. The Commission further concludes that it 
is appropriate to view a security-based swap data repository as 
having received a confidentiality agreement when the entity enters 
into a confidentiality arrangement with the Commission and the 
arrangement runs to the benefit of the repository.
    \90\ See Proposing Release, 80 FR at 55190.
---------------------------------------------------------------------------

    Consistent with the importance of protecting confidentiality of the 
security-based swap data provided, MOUs or other arrangements may 
include a variety of means of safeguarding confidentiality. These may 
include, for example, restrictions regarding the personnel who may 
access the data provided, and limits on the distribution of that data 
to third parties. Moreover, such MOUs or other arrangements may 
incorporate conditions that specify the scope of the relevant 
authority's access to data, and that limit this access in a manner that 
reflects the relevant authority's regulatory mandate or legal 
responsibility or authority.
    One commenter expressed the view that an MOU should help determine 
a regulatory body's interest in security-based swap data, notify the 
Commission of the intent to access the data and provide the Commission 
with ``confirmation that an appropriate confidentiality agreement has 
been made by the requesting regulatory authority or that statutory 
confidentiality requirements are applicable to such requesting 
authority.'' The commenter further requested that the rule permit 
repositories to require entities to certify their ability to keep such 
data confidential.\91\ Consistent with that commenter's view, we 
anticipate that, as appropriate, each MOU or other arrangement will set 
forth access provisions that reflect a recipient's interest in 
security-based swap data. We decline to adopt the commenter's 
suggestion that the MOU or other arrangement should be deemed to 
provide the Commission with notification of an entity's intent to 
access data, given that we are adopting separately a requirement with 
respect to notification from the repository to the Commission.\92\ 
While an SDR may seek additional confidentiality certifications from 
other regulatory authorities, consistent with the statute, an SDR may 
not decline the regulatory authority access to the data based on 
another regulatory authority's refusal to agree to these 
certifications. Allowing repositories to require additional 
confidentiality certifications, moreover, could lead to an uneven 
application of the data access provisions, potentially undermining the 
benefits of using arrangements between the Commission and recipient 
entities to satisfy the statutory confidentiality condition.
---------------------------------------------------------------------------

    \91\ See DTCC 2016 comment.
    \92\ See part II.D.2, infra.
---------------------------------------------------------------------------

III. Applicability of Exchange Act Data Access Provisions

    In the Proposing Release, the Commission discussed how Exchange Act 
sections 13(n)(5)(G) and (H) \93\ do not provide the exclusive means by 
which regulators or other authorities might access security-based swap 
data. In part, the Proposing Release suggested that regulators and 
other authorities may separately access security-based swap data 
directly from the Commission.\94\ The Commission preliminarily stated 
that the conditions associated with the data access provisions of 
sections 13(n)(5)(G) and 13(n)(5)(H) should not govern access in those 
circumstances. The Commission received no comments on that proposed 
interpretation.\95\
---------------------------------------------------------------------------

    \93\ 15 U.S.C. 78m(n)(5)(G) and (H).
    \94\ See Proposing Release, 80 FR at 55193.
    \95\ In the Proposing Release, the Commission also discussed the 
application of data access provisions to access that is authorized 
by foreign law. In light of the repeal of the indemnification 
requirement, the Commission is not addressing data access in such 
circumstances.
---------------------------------------------------------------------------

    The Exchange Act provides that relevant authorities may obtain 
security-based swap data from the Commission, rather than directly from 
data repositories.\96\ First, Exchange Act section 21(a)(2) \97\ states 
that, upon request of a foreign securities authority, the Commission 
may provide assistance in connection with an investigation the foreign 
securities authority is conducting to determine whether any person has 
violated, is violating or is about to violate any laws or rules 
relating to securities matters that the requesting authority 
administers or enforces.\98\ That section further provides that, as 
part of this assistance, the Commission in its discretion may conduct 
an investigation to collect information and evidence pertinent to the 
foreign securities authority's request for assistance.\99\ In addition, 
the Commission may share ``nonpublic information in its possession'' 
with, among others, any ``federal, state, local, or foreign government, 
or any political subdivision, authority, agency or instrumentality of 
such government . . . [or] a foreign financial regulatory authority,'' 
subject to the recipient providing ``such assurances of confidentiality 
as the Commission deems appropriate.'' \100\ Consistent with the 
Commission practice for many years, these sections provide the 
Commission with separate, additional authority to assist a domestic or 
a foreign authority in certain circumstances, such as, for example, by 
providing security-based swap data directly to the authority. At those 
times, the foreign authority would receive information not from the 
data repository, but instead from the Commission.
---------------------------------------------------------------------------

    \96\ See Proposing Release, 80 FR at 55193.
    \97\ 15 U.S.C. 78u(a)(2).
    \98\ Exchange Act section 3(a)(50), 15 U.S.C. 78c(a)(50), 
broadly defines ``foreign securities authority'' to include ``any 
foreign government, or any governmental body or regulatory 
organization empowered by a foreign government to administer or 
enforce its laws as they relate to securities matters.''
    \99\ Exchange Act section 21(a)(2), 15 U.S.C. 78u(a)(2), also 
states that the Commission may provide such assistance without 
regard to whether the facts stated in the request also would 
constitute a violation of U.S. law. That section further states that 
when the Commission decides whether to provide such assistance to a 
foreign securities authority, the Commission shall consider whether 
the requesting authority has agreed to provide reciprocal assistance 
in securities matters to the United States, and whether compliance 
with the request would prejudice the public interest of the United 
States.
    \100\ See Exchange Act rule 24c-1(c) (implementing Exchange Act 
section 24(c), 15 U.S.C. 78x(c), which states that the Commission 
may, ``in its discretion and upon a showing that such information is 
needed,'' provide records and other information ``to such persons, 
both domestic and foreign, as the Commission by rule deems 
appropriate,'' subject to assurances of confidentiality).
---------------------------------------------------------------------------

IV. Effective Date

    These amendments to Exchange Act rule 13n-4 to implement the data 
access requirements will become effective 60 days following publication 
of the rule amendments in the Federal Register.
    The obligation of a security-based swap data repository to provide 
data pursuant to the rules will be conditioned on the Commission and a 
relevant authority entering into an MOU or other arrangement addressing 
the confidentiality of the security-based swap information that is made 
available.

[[Page 60593]]

A repository accordingly will have no disclosure obligation pursuant to 
these rules until such MOUs or other arrangements have been entered 
into and become effective.\101\
---------------------------------------------------------------------------

    \101\ The Commission anticipates that any such MOU or other 
arrangement would not become immediately effective after the 
agreement of the parties, to allow repositories an appropriate 
amount of time to make any technical arrangements needed to provide 
access, potentially including electronic access, to the recipient.
---------------------------------------------------------------------------

V. Paperwork Reduction Act

    Certain provisions of the final rules contain ``collection of 
information'' requirements within the meaning of the Paperwork 
Reduction Act of 1995 (``PRA'').\102\ The Commission has submitted them 
to the Office of Management and Budget (``OMB'') for review in 
accordance with 44 U.S.C. 3507 and 5 CFR 1320.11. The title of the new 
collection of information is ``Security-Based Swap Data Repository Data 
Access Requirements.'' An agency may not conduct or sponsor, and a 
person is not required to respond to, a collection of information 
unless it displays a currently valid OMB control number. OMB has not 
yet assigned a control number to the new collection of information.
---------------------------------------------------------------------------

    \102\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

    In the Proposing Release, the Commission solicited comment on the 
collection of information requirements and the accuracy of the 
Commission's statements.\103\ Although, as discussed above, one 
commenter addressed certain substantive issues with regard to the 
proposal,\104\ that commenter did not address the burden estimates in 
the Proposing Release related to the collection of information.
---------------------------------------------------------------------------

    \103\ See Proposing Release, 80 FR at 55196.
    \104\ See notes 19 through 21, supra, and accompanying text.
---------------------------------------------------------------------------

    Although the final rules have been changed from the proposal to 
reflect the removal of the proposed indemnification exemption, in the 
Commission's view this change does not alter the estimates from the 
Proposing Release. In particular, although the conditions to the 
proposed indemnification exemption would have caused the Commission and 
a relevant authority to enter into an MOU or other arrangement to 
address confidentiality, and to address the types of activities that 
would be within the regulatory mandate or legal responsibility or 
authority of that relevant authority, the Commission would still expect 
to enter into that type of MOU or other arrangement with the relevant 
authority in connection with the confidentiality condition. 
Accordingly, the Commission's estimates remain unchanged from the 
Proposing Release.

A. Summary of Collection of Information

    The final rules would require security-based swap data repositories 
to make security-based swap data available to other parties, including 
certain government bodies. This data access obligation would be 
conditioned on a confidentiality requirement. The final rules further 
would require such repositories to create and maintain information 
regarding such data access.

B. Use of Information

    The data access requirement and associated conditions would provide 
the regulators and other authorities that receive the relevant 
security-based swap data with tools to assist with the oversight of the 
security-based swap market and of dealers and other participants in the 
market, and to assist with the monitoring of risks associated with that 
market.

C. Respondents

    The data access requirement will apply to every person required to 
be registered with the Commission as a security-based swap data 
repository--that is, every U.S. person performing the functions of a 
security-based swap data repository, and to every non-U.S. person 
performing the functions of a security-based swap data repository 
within the United States absent an exemption. The Commission continues 
to estimate, for PRA purposes, that ten persons might register with the 
Commission as security-based swap data repositories.\105\
---------------------------------------------------------------------------

    \105\ See Proposing Release, 80 FR 55194. The Commission used 
the same estimate when adopting final rules to implement statutory 
provisions related to the registration process, duties and core 
principles applicable to security-based swap data repositories. See 
SDR Adopting Release, 80 FR at 14521.
---------------------------------------------------------------------------

    The conditions to data access under these rules further will affect 
all persons that may seek access to security-based swap data pursuant 
to these provisions. As discussed below, these may include up to 30 
domestic entities.

D. Total Annual Reporting and Recordkeeping Burden

1. Data Access Generally
    The data access provisions may implicate various types of PRA 
burdens and costs: (i) Burdens and costs that regulators and other 
authorities incur in connection with negotiating MOUs or other 
arrangements with the Commission in connection with the data access 
provisions; (ii) burdens and costs that certain authorities that have 
not been determined by statute or Commission rule may incur in 
connection with requesting that the Commission grant them access to 
repository data; \106\ (iii) burdens and costs associated with 
information technology systems that repositories develop in connection 
with providing data to regulators and other authorities; and (iv) 
burdens and costs associated with the requirement that repositories 
notify the Commission of requests for access to security-based swap 
data, including associated recordkeeping requirements.
---------------------------------------------------------------------------

    \106\ These include MOUs and other arrangements in connection 
with: the determination of additional entities that may access 
security-based swap data (see part II.C.2.a, supra), and the 
confidentiality condition (see part II.F.2, supra). Although under 
the proposal these also would have included MOUs and other 
arrangements in connection with the indemnification exemption, as 
noted above we believe that the original PRA estimates associated 
with such MOUs or other arrangements remain appropriate.
---------------------------------------------------------------------------

a. MOUs and Other Arrangements
    As discussed above, entities that access security-based swap data 
pursuant to these data access provisions would be required to enter 
into MOUs or other arrangements with the Commission to address the 
confidentiality condition. In some cases, any such entity also would 
enter into an MOU or other arrangement in connection with the 
Commission's determination of the entity as authorized to access such 
data (to the extent that the entity's access is not already determined 
by statute or by the final rules). For purposes of the PRA 
requirements, the Commission estimates that up to 30 domestic entities 
potentially might enter into such MOUs or other arrangements, 
reflecting the nine entities specifically identified by statute or the 
final rules, and up to 21 additional domestic governmental entities or 
self-regulatory organizations that may seek access to such data. Based 
on the Commission's experience in negotiating similar MOUs that address 
regulatory cooperation, including confidentiality issues associated 
with regulatory cooperation, the Commission believes that each 
regulator on average would expend 500 hours in negotiating such MOUs 
and other arrangements.\107\
---------------------------------------------------------------------------

    \107\ It may be expected that the initial MOU or other 
arrangement that is entered into between the Commission and another 
regulator may take up to 1,000 hours for that regulator to 
negotiate. In practice, however, subsequent MOUs and other 
arrangements involving other recipient entities would be expected to 
require significantly less time on average, by making use of the 
prior MOUs as a basis for negotiation. Based on these principles, 
the Commission estimates that the average amount of time that 
domestic and foreign recipients of data would incur in connection 
with negotiating these arrangements would be 500 hours.
    To the extent that each of those 30 domestic entities were to 
seek to access data pursuant to these provisions, and each of the 
applicable MOUs or other arrangements were to take 500 hours on 
average, the total burden would amount to 15,000 hours.

---------------------------------------------------------------------------

[[Page 60594]]

b. Requests for Access
    Separately, certain entities that are not identified by statute 
and/or the final rules may request that the Commission determine that 
they may access such security-based swap data. For those entities, in 
light of the relevant information that the Commission may consider in 
connection with such determinations (apart from the MOU issues 
addressed above)--including information regarding how the entity would 
be expected to use the information, information regarding the entity's 
regulatory mandate or legal responsibility or authority, and 
information regarding reciprocal access--the Commission estimates that 
each such entity would expend 40 hours in connection with such request. 
As noted above, the Commission estimates that 21 domestic entities not 
encompassed in the final rule may seek access to the data. Accordingly, 
to the extent that 21 domestic entities were to request access (apart 
from the nine entities identified by statute or the final rule), the 
Commission estimates a total burden of 840 hours for these entities to 
prepare and submit requests for access.
c. Systems Costs
    The Commission previously addressed the PRA costs associated with 
the Exchange Act's data access requirement in 2010, when the Commission 
initially proposed rules to implement those data access requirements in 
conjunction with other rules to implement the duties applicable to 
security-based swap data repositories. At that time, based on 
discussions with market participants, the Commission estimated that a 
series of proposed rules to implement duties applicable to security-
based swap data repositories--including the proposed data access rules 
as well as other rules regarding repository duties (e.g., proposed 
rules requiring repositories to accept and maintain data received from 
third parties, to calculate and maintain position information, and to 
provide direct electronic access to the Commission and its designees)--
together would result in an average one-time start-up burden per 
repository of 42,000 hours and $10 million in information technology 
costs for establishing systems compliant with all of those 
requirements. The Commission further estimated that the average per-
repository ongoing annual costs of such systems would be 25,200 hours 
and $6 million.\108\
---------------------------------------------------------------------------

    \108\ See Proposing Release, 80 FR at 55194-95 (citing Exchange 
Act Release No. 63347 (Nov. 19, 2010), 75 FR 77306, 77348-49 (Dec. 
10, 2010) (``SDR Proposing Release'')). The Commission further 
estimated, for PRA purposes, that ten persons may register with the 
Commission as security-based swap data repositories. Based on the 
estimate of ten respondents, the Commission estimated total one-time 
costs of 420,000 hours and $100 million, and total annual ongoing 
systems costs of 252,000 and $60 million. See Proposing Release, 80 
FR at 55195 n. 120 (citing SDR Adopting Release, 75 FR at 14523).
---------------------------------------------------------------------------

    The Commission incorporated those same burden estimates in 2015, 
when the Commission adopted final rules to implement the duties 
applicable to security-based swap data repositories, apart from the 
data access requirement.\109\
---------------------------------------------------------------------------

    \109\ See Proposing Release, 80 FR at 55194-95 (citing SDR 
Adopting Release, 80 FR at 14523).
---------------------------------------------------------------------------

    Subject to the connectivity issues addressed below, the Commission 
believes that the burden estimates associated with the 2010 proposed 
repository rules encompassed the costs and burdens associated with the 
data access requirements in conjunction with other system-related 
requirements applicable to security-based swap dealers. To comply with 
those other system-related requirements--including in particular 
requirements that repositories provide direct electronic access to the 
Commission and its designees--we believe that it is reasonable to 
expect that repositories may use the same systems as they would use to 
comply with the data access requirements at issue here, particularly 
given that both types of access requirements would require repositories 
to provide security-based swap information to particular recipients 
subject to certain parameters.\110\ As a result, subject to per-
recipient connectivity burdens addressed below, the Commission believes 
that there would be no additional burdens associated with information 
technology costs to implement the data access requirements of the final 
rule.
---------------------------------------------------------------------------

    \110\ The Commission also anticipates that repositories would 
use the same systems in connection with the Exchange Act data access 
requirements as they use in connection with the corresponding 
requirements under the CEA.
---------------------------------------------------------------------------

    The Commission also recognizes, however, that once the relevant 
systems have been set up, repositories may be expected to incur 
additional incremental burdens and costs associated with setting up 
access to security-based swap data consistent with the recipient's 
regulatory mandate or legal responsibility or authority.\111\ The 
Commission believes that, for any particular recipient, security-based 
swap data repositories on average would incur a burden of 26 
hours.\112\ As discussed below, and consistent with our estimates in 
the Proposing Release, based on the estimate that approximately 300 
relevant authorities may make requests for data from security-based 
swap data repositories,\113\ the Commission estimates that each 
repository would incur a one-time burden of 7,800 hours in connection 
with providing that connectivity.\114\
---------------------------------------------------------------------------

    \111\ In addressing those burdens, the Commission expects that 
the determination order will set forth objective criteria that 
delimit the scope of a recipient's ability to access security-based 
swap data. The Commission may also consider the recipient entity's 
regulatory mandate or legal responsibility or authority, and tailor 
the entity's access in accordance with that regulatory mandate or 
legal responsibility or authority, when entering into MOUs or other 
arrangements with recipient entities. The Commission further expects 
that repositories would use those criteria to program their data 
systems to reflect the scope of the recipient's access to repository 
data. Absent such objective and programmable criteria, repositories 
would be expected to incur greater burdens to assess whether an 
authority's request satisfies the relevant conditions, particularly 
with regard to whether particular information relates to persons or 
activities within the entity's regulatory mandate or legal 
responsibility or authority.
    \112\ This estimate is based on the view that, for each 
recipient requesting data, a repository would incur a 25 hour burden 
associated with programming or otherwise inputting the relevant 
parameters, encompassing 20 hours of programmer analyst time and 
five hours of senior programmer time. The estimate also encompasses 
one hour of attorney time in connection with each such recipient.
    \113\ See note 195, infra.
    \114\ Across an estimated ten repositories, accordingly, the 
Commission estimates that repositories cumulatively would incur a 
one-time burden of 78,000 hours in connection with providing such 
connectivity.
---------------------------------------------------------------------------

d. Providing Notification of Requests, and Associated Records 
Requirements
    Under the final rules, repositories would be required to inform the 
Commission when it receives the first request for security-based swap 
data from a particular entity.\115\ As discussed below, based on the 
estimate that approximately 300 relevant authorities may make requests 
for data from security-based swap data repositories, the Commission 
estimates that each repository would provide the Commission with actual 
notice approximately 300 times.\116\ Moreover, based on the estimate 
that ten persons may register with the Commission as security-based 
swap data repositories,

[[Page 60595]]

the Commission estimates that repositories in the aggregate would 
provide the Commission with actual notice a total of 3,000 times. The 
Commission estimates that each such notice would take no more than one-
half hour to make on average, leading to a cumulative estimate of 1,500 
hours associated with the notice requirement.
---------------------------------------------------------------------------

    \115\ See Exchange Act rule 13n-4(d).
    \116\ See part VI.C.3.a.ii, infra; see also Proposing Release, 
80 FR at 55195.
---------------------------------------------------------------------------

    The final rules further require that repositories must maintain 
records of all information related to the initial and all subsequent 
requests for data access, including records of all instances of online 
or electronic access, and records of all data provided in connection 
with such access.\117\ Consistent with our estimates in the Proposing 
Release, the Commission estimates that there cumulatively may be 
360,000 subsequent data requests or instances of direct electronic 
access per year across all security-based swap data repositories, for 
which repositories must maintain records as required by the final 
rule.\118\ Based on its experience with recordkeeping costs associated 
with security-based swaps generally, the Commission estimates that for 
each repository this requirement would create an initial burden of 
roughly 360 hours, and an annual burden of roughly 280 hours and 
$40,000 in information technology costs.\119\
---------------------------------------------------------------------------

    \117\ See Exchange Act rule 13n-4(d).
    \118\ See part VI.C.3.a.ii, infra; see also Proposing Release, 
80 FR at 55195.
    \119\ Across an estimated ten repositories, accordingly, the 
Commission preliminarily estimates that repositories cumulatively 
will incur an initial burden of roughly 3,600 hours in information 
technology costs, and an annual burden of roughly 2,800 hours and 
$400,000 in information technology costs.
---------------------------------------------------------------------------

2. Confidentiality Condition
    The Commission does not believe that the confidentiality provision 
of the final rule will be associated with collections of information 
that would result in a reporting or recordkeeping burden for security-
based swap data repositories. This is because, under the final rule, 
the confidentiality condition will be satisfied by an MOU or other 
arrangement between the Commission and the recipient entity (i.e., 
another regulatory authority) addressing confidentiality. We expect 
that repositories accordingly will not be involved in the drafting or 
negotiation of confidentiality agreements.
    As discussed above, however, the confidentiality condition is 
expected to impose burdens on authorities that seek to access data 
pursuant to these provisions, as a result of the need to negotiate 
confidentiality MOUs or other arrangements.\120\
---------------------------------------------------------------------------

    \120\ See part V.D.1.a, supra.
---------------------------------------------------------------------------

E. Collection of Information is Mandatory

    The conditional data access requirements of Exchange Act sections 
13(n)(5)(G) and (H) and the underlying rules are mandatory for all 
security-based swap data repositories. The confidentiality condition is 
mandatory for all entities that seek access to data under those 
requirements.

F. Confidentiality

    The Commission will make public requests for a determination that 
an authority is appropriate to conditionally access security-based swap 
data, as well as Commission determinations issued in response to such 
requests. The Commission expects that it will make publicly available 
the MOUs or other arrangements with the Commission used to satisfy the 
confidentiality condition.\121\
---------------------------------------------------------------------------

    \121\ The Commission provides a list of MOUs and most other 
arrangements with foreign authorities on its public Web site, which 
are available at: http://www.sec.gov/about/offices/oia/oia_cooparrangements.shtml.
---------------------------------------------------------------------------

    Initial notices of requests for access provided to the Commission 
by repositories will be kept confidential, subject to the provisions of 
applicable law. To the extent that the Commission obtains subsequent 
requests for access that would be required to be maintained by the 
repositories, such as in connection with an examination or 
investigation, the Commission also will keep those records 
confidential, subject to the provisions of applicable law.

VI. Economic Analysis

    As discussed above, the Commission is adopting final rules to 
implement data access requirements for relevant authorities other than 
the Commission that the Dodd-Frank Act imposes on security-based swap 
repositories. To carry out their regulatory mandate, or legal 
responsibility or authority, certain relevant entities other than the 
Commission may periodically need access to security-based swap data 
collected and maintained by SEC-registered security-based swap data 
repositories, and the final rules are intended to facilitate such 
access.
    Although the final rules have been changed from the proposal to 
reflect the removal of the proposed indemnification exemption, in the 
Commission's view this change does not significantly alter the economic 
costs and benefits from the Proposing Release. In particular, although 
the conditions to the proposed indemnification exemption would have 
caused the Commission and a relevant authority to enter into an MOU or 
other arrangement to address confidentiality, and to address the types 
of activities that would be within the regulatory mandate or legal 
responsibility or authority of that relevant authority, such MOU or 
other arrangement will still be necessary in connection with the 
confidentiality condition. Accordingly, the Commission's assessment of 
the costs and benefits remain largely unchanged from the Proposing 
Release.
    The Commission is sensitive to the economic effects of its rules, 
including the costs and benefits and the effects of its rules on 
efficiency, competition and capital formation. Section 3(f) \122\ of 
the Exchange Act requires the Commission, whenever it engages in 
rulemaking pursuant to the Exchange Act and is required to consider or 
determine whether an action is necessary or appropriate in the public 
interest, to also consider, in addition to the protection of investors, 
whether the action would promote efficiency, competition, and capital 
formation. In addition, section 23(a)(2) \123\ of the Exchange Act 
requires the Commission, when promulgating rules under the Exchange 
Act, to consider the impact such rules would have on competition. 
Exchange Act section 23(a)(2) also provides that the Commission shall 
not adopt any rule which would impose a burden on competition that is 
not necessary or appropriate in furtherance of the purposes of the 
Exchange Act.
---------------------------------------------------------------------------

    \122\ 15 U.S.C. 78c(f).
    \123\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------

A. Economic Considerations

1. Title VII Transparency Framework
    The security-based swap market prior to the passage of the Dodd-
Frank Act has been described as being opaque, in part because 
transaction-level data were not widely available to market participants 
or to regulators.\124\ To

[[Page 60596]]

increase the transparency of the over-the-counter derivatives market to 
both market participants and regulatory authorities, Title VII requires 
the Commission to undertake a number of rulemakings, including rules 
the Commission adopted last year to address the registration process, 
duties and core principles applicable to security-based swap data 
repositories,\125\ and to address regulatory reporting and public 
dissemination of security-based swap information.\126\ Among other 
matters, those rules address market transparency by requiring security-
based swap data repositories, absent an exemption, to collect and 
maintain accurate security-based swap transaction data, and address 
regulatory transparency by requiring security-based swap data 
repositories to provide the Commission with direct electronic access to 
such data.\127\
---------------------------------------------------------------------------

    \124\ With respect to one type of security-based swap, credit 
default swaps (``CDS''), the Government Accountability Office found 
that ``comprehensive and consistent data on the overall market have 
not been readily available,'' ``authoritative information about the 
actual size of the [CDS] market is generally not available'' and 
regulators currently are unable ``to monitor activities across the 
market.'' Government Accountability Office, GAO-09-397T, Systemic 
Risk: Regulatory Oversight and Recent Initiatives to Address Risk 
Posed by Credit Default Swaps, at 2, 5, 27, (2009) available at: 
http://www.gao.gov/new.items/d09397t.pdf; see also Robert E. Litan, 
The Derivatives Dealers' Club and Derivatives Market Reform: A Guide 
for Policy Makers, Citizens and Other Interested Parties, Brookings 
Institution (Apr. 7, 2010), http://www.brookings.edu/~/media/
research/files/papers/2010/4/07%20derivatives%20litan/
0407_derivatives_litan.pdf; Michael Mackenzie, Era of an Opaque 
Swaps Market Ends, Financial Times, June 25, 2010, available at: 
http://www.ft.com/intl/cms/s/0/f49f635c-8081-11df-be5a-00144feabdc0.html.
    \125\ See SDR Adopting Release.
    \126\ See Regulation SBSR--Reporting and Dissemination of 
Security-Based Swap Information, Exchange Act Release No. 74244 
(Jan. 14, 2015), 80 FR 14564 (Mar. 19, 2015) (``Regulation SBSR 
Adopting Release''). In July 2016, the Commission adopted amendments 
and guidance to Regulation SBSR. See Exchange Act Release No. 78321 
(Jul. 14, 2016), 81 FR 53546 (Aug. 12, 2016).
    \127\ See Exchange Act rule 13n-5 (requiring repositories to 
comply with data collection and data maintenance standards related 
to transaction and position data); Exchange Act rule 13n-4(b)(5) 
(requiring repositories to provide direct electronic access to the 
Commission and its designees).
---------------------------------------------------------------------------

    Consistent with the goal of increasing transparency to regulators, 
the data access provisions at issue here set forth a framework for 
security-based swap data repositories to provide access to security-
based swap data to relevant authorities other than the Commission. The 
final rules implement that framework for repositories to provide data 
access to other relevant entities in order to fulfill their regulatory 
mandate, or legal responsibility or authority.
2. Transparency in the Market for Security-Based Swaps
    The data access rules, in conjunction with the transparency-related 
requirements generally applicable to security-based swap data 
repositories, are designed, among other things, to make available to 
the Commission and other relevant authorities data that will provide a 
broad view of the security-based swap market and help monitor for 
pockets of risk and potential market abuses that might not otherwise be 
observed by those authorities.\128\ Unlike many other types of 
securities transactions, security-based swaps involve ongoing financial 
obligations between counterparties during the life of transactions that 
typically span several years. Counterparties to a security-based swap 
rely on each other's creditworthiness and bear this credit risk and 
market risk until the security-based swap terminates or expires. If a 
large market participant, such as a security-based swap dealer, major 
security-based swap participant, or central counterparty were to become 
financially distressed, a general lack of information about market 
participants' exposures to the distressed entity could contribute to 
uncertainty and ongoing market instability. In addition, the default of 
a large market participant could introduce the potential for sequential 
counterparty failure; the resulting uncertainty could reduce the 
willingness of market participants to extend credit, and substantially 
reduce liquidity and valuations for particular types of financial 
instruments.\129\
---------------------------------------------------------------------------

    \128\ See, e.g., Exchange Act section 13(n)(5)(D), 15 U.S.C. 
78m(n)(5)(D), and rule 13n-4(b)(5) (requiring SDRs to provide direct 
electronic access to the Commission and its designees). See also 156 
Cong. Rec. S5920 (daily ed. July 15, 2010) (statement of Sen. 
Lincoln) (``These new `data repositories' will be required to 
register with the CFTC and the SEC and be subject to the statutory 
duties and core principles which will assist the CFTC and the SEC in 
their oversight and market regulation responsibilities.'').
    \129\ See, e.g., Markus K. Brunnermeier and Lasse Heje Pedersen, 
Market Liquidity and Funding Liquidity, 22 Review of Financial 
Studies 2201 (2009); Denis Gromb and Dimitri Vayanos, A Model of 
Financial Market Liquidity Based on Intermediary Capital, 8 Journal 
of the European Economic Association 456 (2010).
---------------------------------------------------------------------------

    A broad view of the security-based swap market, including 
information regarding aggregate market exposures to particular 
reference entities (or securities), positions taken by individual 
entities or groups, and data elements necessary to determine the market 
value of the transaction, may be expected to provide the Commission and 
other relevant authorities with a better understanding of the actual 
and potential risks in the market and promote better risk monitoring 
efforts. The information provided by security-based swap data 
repositories also may be expected to help the Commission and other 
relevant authorities investigate market manipulation, fraud and other 
market abuses.
3. Global Nature of the Security-Based Swap Market
    As highlighted in more detail in the Economic Baseline below, the 
security-based swap market is a global market. Based on market data in 
the Depository Trust and Clearing Corporation's Trade Information 
Warehouse (``DTCC-TIW''), the Commission estimates that only 12 percent 
of the global transaction volume that involves either a U.S.-domiciled 
counterparty or a U.S-domiciled reference entity (as measured by gross 
notional) between 2008 and 2015 was between two U.S.-domiciled 
counterparties, compared to 48 percent entered into between one U.S.-
domiciled counterparty and a foreign-domiciled counterparty and 40 
percent entered into between two foreign-domiciled counterparties.\130\
---------------------------------------------------------------------------

    \130\ The data the Commission receives from DTCC-TIW does not 
include transactions between two non-U.S. domiciled counterparties 
that reference a non-U.S. entity or security. This is approximately 
19 percent of global transaction volume. See note 143, infra. 
Therefore, factoring in these transactions, approximately 10 percent 
of global transaction volume involves two U.S.-domiciled 
counterparties, 39 percent involve one U.S.-domiciled counterparty 
and one foreign counterparty, and 51 percent are between two 
foreign-domiciled counterparties.
---------------------------------------------------------------------------

    In light of the security-based swap market's global nature there is 
the possibility that regulatory data may be fragmented across 
jurisdictions, particularly because a large fraction of transaction 
volume includes at least one counterparty that is not a U.S. person 
\131\ and the applicable U.S. regulatory reporting rules depend on the 
U.S. person status of the counterparties.\132\ As discussed further 
below, fragmentation of data can increase the difficulty in 
consolidating and interpreting security-based swap market data from 
repositories, potentially reducing the general economic benefits 
derived from transparency of the security-based swap market to 
regulators. Absent a framework for the cross-border sharing of data 
reported pursuant to regulatory requirements in various jurisdictions, 
the relevant authorities responsible for monitoring the security-based 
swap market may not be able to access data consistent with their 
regulatory mandate or legal responsibility or authority.
---------------------------------------------------------------------------

    \131\ This statement is based on staff analysis of voluntarily 
reported CDS transaction data to DTCC-TIW, which includes self-
reported counterparty domicile. See note 154, infra. The Commission 
notes that DTCC-TIW entity domicile may not be completely consistent 
with the Commission's definition of ``U.S. person'' in all cases but 
believes that these two characteristics have a high correlation.
    \132\ See Regulation SBSR rule 908(a) (generally requiring 
regulatory reporting and public dissemination of a security-based 
swap transaction when at least one direct or indirect counterparty 
is a U.S. person). Note that current voluntary reporting considers 
the self-reported domicile of the counterparty but Regulation SBSR 
considers the counterparty's status as a U.S. person.
---------------------------------------------------------------------------

4. Economic Purposes of the Rulemaking
    The data access requirements are designed to increase the quality 
and

[[Page 60597]]

quantity of transaction and position information available to relevant 
authorities about the security-based swap market while helping to 
maintain the confidentiality of that information. The increased 
availability of security-based swap information may be expected to help 
relevant authorities act in accordance with their regulatory mandate, 
or legal responsibility or authority, and to respond to market 
developments.
    Moreover, by facilitating access to security-based swap data for 
relevant authorities, including non-U.S. authorities designated by the 
Commission, the Commission anticipates an increased likelihood that the 
Commission itself will have commensurate access to security-based swap 
data stored in trade repositories located in foreign 
jurisdictions.\133\ This may be particularly important in identifying 
transactions in which the Commission has a regulatory interest (e.g., 
transactions involving a U.S. reference entity or security) but may not 
have been reported to a registered security-based swap data repository 
due to the transactions occurring outside of the U.S. between two non-
U.S. persons.\134\ This should assist the Commission in fulfilling its 
regulatory mandate and legal responsibility and authority, including by 
facilitating the Commission's ability to detect and investigate market 
manipulation, fraud and other market abuses, and by providing the 
Commission with greater access to security-based swap information than 
that provided under the current voluntary reporting regime.\135\
---------------------------------------------------------------------------

    \133\ For example, EU law conditions the ability of non-EU 
authorities to access data from EU repositories on EU authorities 
having ``immediate and continuous'' access to the information they 
need. See EU regulation 648/2012 (``EMIR''), art. 75(2).
    As discussed above, the Commission anticipates considering 
whether the relevant authority requesting access agrees to provide 
the Commission and other U.S. authorities with reciprocal assistance 
in matters within their jurisdiction when making a determination 
whether the requesting authority shall be granted access to 
security-based swap data held in registered SDRs. See part II.C.1 
supra.
    \134\ For example, it is possible to replicate the economic 
exposure of either a long or short position in a debt security that 
trades in U.S. markets by trading in U.S. treasury securities and 
CDS that reference that debt security. Transactions between two non-
U.S. persons on a U.S. reference entity or novations between two 
non-U.S. persons that reduce exposure to a U.S. registrant may 
provide information to the Commission about the market's views 
concerning the financial stability or creditworthiness of the 
registered entity.
    \135\ See part VI.B, supra, for a description of the data the 
Commission receives from DTCC-TIW under the current voluntary 
reporting regime.
---------------------------------------------------------------------------

    Such data access may be especially critical during times of market 
turmoil, by giving the Commission and other relevant authorities 
information to examine risk exposures incurred by individual entities 
or in connection with particular reference entities. Increasing the 
available data about the security-based swap market should further give 
the Commission and other relevant authorities better insight into how 
regulations are affecting or may affect the market, which may allow the 
Commission and other regulators to better craft regulations to achieve 
desired goals, and therefore increase regulatory effectiveness.

B. Economic Baseline

    To assess the economic impact of the data access rules adopted 
herein, the Commission is using as a baseline the security-based swap 
market as it exists today, including applicable rules that have already 
been adopted and excluding rules that have been proposed but not yet 
finalized. Thus we include in the baseline the rules that the 
Commission adopted to govern the registration process, duties and core 
principles applicable to security-based swap data repositories, and to 
govern regulatory reporting and public dissemination of security-based 
swap transactions.\136\
---------------------------------------------------------------------------

    \136\ See SDR Adopting Release and Regulation SBSR Adopting 
Release.
---------------------------------------------------------------------------

    There are not yet any registered security-based swap data 
repositories; therefore, the Commission does not yet have access to 
regulatory reporting data.\137\ Hence, our characterization of the 
economic baseline, including the quantity and quality of security-based 
swap data available to the Commission and other relevant authorities 
and the extent to which data are fragmented, considers the anticipated 
effects of the rules that govern the registration process, duties and 
core principles applicable to SDRs and Regulation SBSR. The Commission 
acknowledges limitations in the degree to which it can quantitatively 
characterize the current state of the security-based swap market. As 
described in more detail below, because the available data on security-
based swap transactions do not cover the entire market, the Commission 
has developed an understanding of market activity using a sample that 
includes only certain portions of the market.
---------------------------------------------------------------------------

    \137\ See note 157, infra.
---------------------------------------------------------------------------

1. Regulatory Transparency in the Security-Based Swap Market
    There currently is no robust, widely accessible source of 
information about individual security-based swap transactions. In 2006, 
a group of major dealers expressed their commitment in support of 
DTCC's initiative to create a central ``industry utility trade contract 
warehouse'' for credit derivatives.\138\ Moreover, in 2009, the leaders 
of the G20--whose members include the United States, 18 other 
countries, and the European Union--addressed global improvements in the 
over-the-counter (``OTC'') derivatives markets. They expressed their 
view on a variety of issues relating to OTC derivatives contracts, 
including, among other things, that OTC derivatives contracts should be 
reported to trade repositories.\139\ A single repository, DTCC-TIW, 
makes the data reported to it under the voluntary reporting regime 
available to the Commission and other relevant authorities in 
accordance with the guidance from the OTC Derivatives Regulatory Forum 
(``ODRF''), of which the Commission is a member, and similar subsequent 
guidance.\140\ Although many jurisdictions have implemented rules 
concerning reporting of security-based swaps to trade 
repositories,\141\ the Commission understands that many market 
participants continue to report voluntarily to DTCC-TIW.
---------------------------------------------------------------------------

    \138\ See Letter to Timothy Geithner, President, Federal Reserve 
Bank of New York, Mar. 10, 2006, available at: https://www.newyorkfed.org/medialibrary/media/newsevents/news/markets/2006/industryletter2.pdf.
    \139\ See G20 Leaders Statement from the 2009 Pittsburgh Summit, 
available at: http://www.g20.utoronto.ca/2009/2009communique0925.html.
    \140\ See Proposing Release, 80 FR 55181, note 71. See also DTCC 
2016 comment at 2 (``DTCC is strongly supportive of the work of the 
[CPMI], [IOSCO] and the Financial Stability Board (`FSB') to improve 
regulatory access to OTC derivatives data, including CPMI-IOSCO's 
guidance on authorities' access to trade repository data'').
    \141\ See OTC Derivatives Market Reforms: Tenth Progress Report 
on Implementation (Nov. 2015), available at: http://www.fsb.org/wp-content/uploads/OTC-Derivatives-10th-Progress-Report.pdf.
---------------------------------------------------------------------------

    The data that the Commission receives from DTCC-TIW do not 
encompass CDS transactions that both: (i) Do not involve any U.S. 
counterparty, and (ii) are not based on a U.S. reference entity.\142\ 
Based on a comparison of weekly transaction volume publicly 
disseminated by DTCC-TIW with data provided to the Commission under the 
voluntary arrangement, we estimate that the transaction data provided 
to the Commission covers approximately 81 percent of the global single-
name CDS market.\143\
---------------------------------------------------------------------------

    \142\ The Commission notes that the identification of entity 
domicile in the voluntary data reported to DTCC-TIW may not be 
consistent with the Commission's definition of ``U.S. person'' in 
all cases. See note 154, infra.
    \143\ In 2015, DTCC-TIW reported on its Web site new trades in 
single-name CDS with gross notional of $11.8 trillion. During the 
same period, data provided to the Commission by DTCC-TIW, which 
include only transactions with a U.S. counterparty or transactions 
written on a U.S. reference entity or security, included new trades 
with gross notional equaling $9.6 trillion, or 81% of the total 
reported by DTCC-TIW.

---------------------------------------------------------------------------

[[Page 60598]]

    While DTCC-TIW generally provides detailed data on positions and 
transactions to regulators that are members of the ODRF, DTCC-TIW makes 
only summary information available to the public.\144\
---------------------------------------------------------------------------

    \144\ DTCC-TIW publishes weekly transaction and position reports 
for single-name CDS. In addition, ICE Clear Credit provides 
aggregated volumes of clearing activity, and large multilateral 
organizations periodically further report measures of market 
activity. For example, the Bank for International Settlements 
(``BIS'') reports gross notional outstanding for single-name CDS and 
equity forwards and swaps semiannually.
---------------------------------------------------------------------------

2. Current Security-Based Swap Market
    The Commission's understanding of the market is informed in part by 
available data on security-based swap transactions, though the 
Commission acknowledges that limitations in the data prevent the 
Commission from quantitatively characterizing certain aspects of the 
market.\145\ Because these data do not cover the entire market, the 
Commission has developed an understanding of market activity using a 
sample of transaction data that includes only certain portions of the 
market. The Commission believes, however, that the data underlying its 
analysis here provide reasonably comprehensive information regarding 
single-name CDS transactions and the composition of participants in the 
single-name CDS market.
---------------------------------------------------------------------------

    \145\ The Commission also relies on qualitative information 
regarding market structure and evolving market practices provided by 
commenters, both in letters and in meetings with Commission staff, 
and knowledge and expertise of Commission staff.
---------------------------------------------------------------------------

    Specifically, the Commission's analysis of the state of the current 
security-based swap market is based on data obtained from the DTCC-TIW, 
especially data regarding the activity of market participants in the 
single-name CDS market during the period from 2008 to 2015. According 
to data published by the Bank for International Settlements (``BIS''), 
the global notional amount outstanding in single-name CDS was 
approximately $7.18 trillion,\146\ in multi-name index CDS was 
approximately $4.74 trillion, and in multi-name, non-index CDS was 
approximately $373 billion. The total gross market value outstanding in 
single-name CDS was approximately $284 billion, and in multi-name CDS 
instruments was approximately $137 billion.\147\ The global notional 
amount outstanding in equity forwards and swaps as of December 2015 was 
$3.32 trillion, with total gross market value of $147 billion.\148\ As 
these figures show (and as the Commission has previously noted), 
although the definition of security-based swap is not limited to 
single-name CDS, single-name CDS make up a majority of security-based 
swaps in terms of notional amount, and the Commission believes that the 
single-name CDS data are sufficiently representative of the market to 
inform the Commission's analysis of the state of the current security-
based swap market.\149\
---------------------------------------------------------------------------

    \146\ The global notional amount outstanding represents the 
total face amount of the swap used to calculate payments. The gross 
market value is the cost of replacing all open contracts at current 
market prices.
    \147\ See Semi-annual OTC derivatives statistics (December 
2015), Table D10.1, available at http://stats.bis.org/statx/toc/DER.html (last viewed May 24, 2016). For purposes of this analysis, 
the Commission assumes that multi-name index CDS are not narrow-
based security index CDS, and therefore do not fall within the 
definition of security-based swap. See Exchange Act section 
3(a)(68)(A), 15 U.S.C. 78c(a)(68)(A); see also Further Definition of 
``Swap,'' ``Security-Based Swap,'' and ``Security-Based Swap 
Agreement''; Mixed Swaps; Security-Based Swap Agreement 
Recordkeeping, Exchange Act Release No. 67453 (July 18, 2012), 77 FR 
48207 (Aug. 13, 2012).
    \148\ These totals include both swaps and security-based swaps, 
as well as products that are excluded from the definition of 
``swap,'' such as certain equity forwards. See Semi-annual OTC 
derivatives statistics (December 2015), Table D8, available at 
http://stats.bis.org/statx/toc/DER.html (last viewed May 24, 2016). 
The Commission assumes that instruments reported as equity forwards 
and swaps include instruments such as total return swaps on 
individual equities that fall with the definition of security-based 
swap.
    \149\ See Proposing Release, 80 FR 55199, note 154.
---------------------------------------------------------------------------

    Based on this information, our analysis below indicates that the 
current security-based swap market: (i) Is global in scope, and (ii) is 
concentrated among a small number of dealing entities. Although under 
the voluntary reporting regime discussed above there was a single 
repository, as various jurisdictions have implemented mandatory 
reporting rules in their jurisdictions the number of trade repositories 
holding security-based swap data has grown.\150\
---------------------------------------------------------------------------

    \150\ See, for example, the list of trade repositories 
registered by ESMA, available at: https://www.esma.europa.eu/supervision/trade-repositories/list-registered-trade-repositories. 
As of May 28, 2016, there were six repositories registered by ESMA, 
all of which are authorized to receive data on credit derivatives.
---------------------------------------------------------------------------

a. Security-Based Swap Market Participants
    A key characteristic of security-based swap activity is that it is 
concentrated among a relatively small number of entities that engage in 
dealing activities.\151\ Based on the Commission's analysis of DTCC-TIW 
data, there were 1,957 entities engaged directly in trading CDS between 
November 2006 and December 2015.\152\ Table 1 below highlights that of 
these entities, there were 17, or approximately 0.9 percent, that were 
ISDA-recognized dealers.\153\ ISDA-recognized dealers executed the vast 
majority of transactions (83.7 percent) measured by the number of 
counterparties (each transaction has two counterparties or transaction 
sides). Many of these dealers are regulated by entities other than, or 
in addition to, the Commission. In addition, thousands of other market 
participants appear as counterparties to security-based swap 
transactions, including, but not limited to, investment companies, 
pension funds, private funds, sovereign entities and non-financial 
companies.
---------------------------------------------------------------------------

    \151\ See Exchange Act Release No. 72472 (Jun. 25, 2014), 79 FR 
47278, 47293 (Aug. 12, 2014) (``Cross-Border Definitions Adopting 
Release''). All data in this section cites updated data from the 
Proposing Release. See Proposing Release, 80 FR at 55196-202.
    \152\ These 1,957 transacting agents represent over 10,000 
accounts representing principal risk holders. See Proposing Release, 
80 FR 55199, note 158.
    As noted above, the data provided to the Commission by DTCC-TIW 
includes only transactions that either include at least one U.S.-
domiciled counterparty or reference a U.S. entity or security. 
Therefore, any entity that is not domiciled in the U.S., never 
trades with a U.S.-domiciled entity and never buys or sells 
protection on a U.S. reference entity or security would not be 
included in this analysis.
    \153\ For the purpose of this analysis, the ISDA-recognized 
dealers are those identified by ISDA as a recognized dealer in any 
year during the relevant period. Dealers are only included in the 
ISDA-recognized dealer category during the calendar year in which 
they are so identified. The complete list of ISDA recognized dealers 
during the applicable period was: JP Morgan Chase NA (and Bear 
Stearns), Morgan Stanley, Bank of America NA (and Merrill Lynch), 
Goldman Sachs, Deutsche Bank AG, Barclays Capital, Citigroup, UBS, 
Credit Suisse AG, RBS Group, BNP Paribas, HSBC Bank, Lehman 
Brothers, Soci[eacute]t[eacute] G[eacute]n[eacute]rale, Credit 
Agricole, Wells Fargo, and Nomura. See ISDA, Operations Benchmarking 
Surveys, available at: http://www2.isda.org/functional-areas/research/surveys/operations-benchmarking-surveys.

[[Page 60599]]

Table 1--The Number of Transacting Agents in the Single-Name CDS Market by Counterparty Type and the Fraction of
     Total Trading Activity, From November 2006 Through December 2015, Represented by Each Counterparty Type
----------------------------------------------------------------------------------------------------------------
                                                                                                    Transaction
                       Transacting agents                             Number          Percent       share  (%)
----------------------------------------------------------------------------------------------------------------
Investment Advisers.............................................           1,499            76.6            12.2
--SEC registered................................................             603            30.8             8.1
Banks...........................................................             253            12.9             3.6
Pension Funds...................................................              29             1.5             0.1
Insurance Companies.............................................              39             2.0             0.2
ISDA-Recognized Dealers.........................................              17             0.9            83.7
Other...........................................................             120             6.1             0.2
                                                                 -----------------------------------------------
    Total.......................................................           1,957             100             100
----------------------------------------------------------------------------------------------------------------

    Although the security-based swap market is global in nature, 
approximately 60 percent of the transaction volume reflected in DTCC-
TIW data during the 2008-2015 period included at least one U.S.-
domiciled entity (see Figure 1). Moreover, 48 percent of the single-
name CDS transactions that include at least one U.S.-domiciled 
counterparty or a U.S. reference entity or security were between U.S.-
domiciled entities and foreign-domiciled counterparties.
[GRAPHIC] [TIFF OMITTED] TR02SE16.006

    The fraction of new accounts with transaction activity that are 
domiciled in the United States fell through the 2008-2015 period. 
Figure 2 below is a chart of: (1) The percentage of new accounts with a 
domicile in the United States,\154\ (2) the percentage of new accounts 
with a domicile outside the United States, and (3) the percentage of 
new accounts that are domiciled outside the United States but managed 
by a U.S. entity, foreign accounts that include new accounts of a 
foreign branch of a

[[Page 60600]]

U.S. bank, and new accounts of a foreign subsidiary of a U.S. entity. 
Over time, a greater share of accounts entering DTCC-TIW data either 
have had a foreign domicile or have had a foreign domicile while being 
managed by a U.S. person. The increase in foreign accounts may reflect 
an increase in participation by foreign accountholders, and the 
increase in foreign accounts managed by U.S. persons may reflect the 
flexibility with which market participants can restructure their market 
participation in response to regulatory intervention, competitive 
pressures and other factors. There are, however, alternative 
explanations for the shifts in new account domicile in Figure 2. 
Changes in the domicile of new accounts through time may reflect 
improvements in reporting by market participants to DTCC-TIW. 
Additionally, because the data include only accounts that are domiciled 
in the United States, transact with U.S.-domiciled counterparties or 
transact in single-name CDS with U.S. reference entities or securities, 
changes in the domicile of new accounts may reflect increased 
transaction activity between U.S. and non-U.S. counterparties.
---------------------------------------------------------------------------

    \154\ The domicile classifications in DTCC-TIW are based on the 
market participants' own reporting and have not been verified by 
Commission staff. Prior to enactment of the Dodd-Frank Act, account 
holders did not formally report their domicile to DTCC-TIW because 
there was no systematic requirement to do so. After enactment of the 
Dodd-Frank Act, DTCC-TIW has collected the registered office 
location of the account. This information is self-reported on a 
voluntary basis. It is possible that some market participants may 
misclassify their domicile status because the databases in DTCC-TIW 
do not assign a unique legal entity identifier to each separate 
entity. It is also possible that the domicile classifications may 
not correspond precisely to the definition of ``U.S. person'' under 
the rules defined in Exchange Act rule 3a71-3(a)(4), 17 CFR 
240.3a71-3(a)(4). Notwithstanding these limitations, the Commission 
believes that the cross-border and foreign activity demonstrates the 
nature of the single-name CDS market.
---------------------------------------------------------------------------

    We note that cross-border rules related to regulatory reporting and 
public dissemination of security-based swap transactions depend on, 
among other things, the U.S.-person status of the counterparties.\155\ 
The analyses behind Figures 1 and 2 show that the security-based swap 
market is global, with an increasing share of the market characterized 
by cross-border trade.
---------------------------------------------------------------------------

    \155\ See note 132, supra.
    \156\ Following publication of the Warehouse Trust Guidance on 
CDS data access, DTCC-TIW surveyed market participants, asking for 
the physical address associated with each of their accounts (i.e., 
where the account is organized as a legal entity). This is 
designated the registered office location by DTCC-TIW. When an 
account does not report a registered office location, we have 
assumed that the settlement country reported by the investment 
adviser or parent entity to the fund or account is the place of 
domicile. This treatment assumes that the registered office location 
reflects the place of domicile for the fund or account.
[GRAPHIC] [TIFF OMITTED] TR02SE16.007

b. Security-Based Swap Data Repositories
    No security-based swap data repositories are currently registered 
with the Commission.\157\ The Commission is aware of one entity in the 
market (i.e., DTCC-TIW) that has been accepting voluntary reports of 
single-name and index CDS transactions. In 2015, DTCC-TIW received 
approximately 2.5 million records of single-name CDS transactions, of 
which approximately 798,000 were price-forming transactions.\158\
---------------------------------------------------------------------------

    \157\ ICE Trade Vault, LLC (``ICE Trade Vault'') and DTCC Data 
Repository (U.S.) LLC (``DDR'') filed with the Commission Form SDRs 
seeking registration as a security-based swap data repository under 
Section 13(n) of the Exchange Act and the Commission's rules 
promulgated thereunder. See Notice of Filing of Application for 
Registration as a Security-Based Swap Data Repository, Release No. 
77699 (Apr. 22, 2016), 81 FR 25475 (Apr. 28, 2016) and Notice of 
Filing of Application for Registration as a Security-Based Swap Data 
Repository, Release No. 78216 (Jun. 30, 2016), 81 FR 44379 (July 7, 
2016).
    \158\ Price-forming CDS transactions include new transactions, 
assignments, modifications to increase the notional amounts of 
previously executed transactions and terminations of previously 
executed transactions. Transactions terminated or entered into in 
connection with a compression exercise, and expiration of contracts 
at maturity, are not considered price-forming and are therefore 
excluded, as are replacement trades and all bookkeeping-related 
trades.

---------------------------------------------------------------------------

[[Page 60601]]

    The CFTC has provisionally registered four swap data 
repositories.\159\ These swap data repositories are: BSDR LLC, Chicago 
Mercantile Exchange Inc., DDR, and ICE Trade Vault. The Commission 
believes that some or all of these entities will likely register with 
the Commission as security-based swap data repositories and that other 
persons may seek to register with both the CFTC and the Commission as 
swap data repositories and security-based swap data repositories, 
respectively.\160\
---------------------------------------------------------------------------

    \159\ CFTC rule 49.3(b) provides for provisional registration of 
a swap data repository. 17 CFR 49.3(b).
    \160\ For the purpose of estimating PRA related costs, the 
number of security-based swap data repositories is estimated to be 
as high as ten. See part V.C, supra.
---------------------------------------------------------------------------

    Efforts to regulate the swap and security-based swap markets are 
underway not only in the United States, but also abroad. Consistent 
with the call of the G20 leaders for global improvements in the 
functioning, transparency and regulatory oversight of OTC derivatives 
markets,\161\ substantial progress has been made in establishing the 
trade repository infrastructure to support the reporting of OTC 
derivatives transactions.\162\ Currently, multiple trade repositories 
operate, or are undergoing approval processes to do so, in a number of 
different jurisdictions.\163\ Combined with the fact that the 
requirements for trade reporting differ across jurisdictions, the 
result is that security-based swap data is fragmented across many 
locations, stored in a variety of formats, and subject to many 
different rules for authorities' access. Authorities will be able to 
obtain a comprehensive and accurate view of the global OTC derivatives 
markets to the extent that means exist to aggregate data in these trade 
repositories.
---------------------------------------------------------------------------

    \161\ See note 139, supra, and accompanying text.
    \162\ See OTC Derivatives Market Reforms: Tenth Progress Report 
on Implementation (Nov. 2015), available at: http://www.fsb.org/wp-content/uploads/OTC-Derivatives-10th-Progress-Report.pdf.
    \163\ Id.
---------------------------------------------------------------------------

C. Economic Costs and Benefits, Including Impact on Efficiency, 
Competition and Capital Formation

    As discussed above, the security-based swap market to date largely 
has developed as an opaque OTC market with limited dissemination of 
transaction-level price and volume information.\164\ Accordingly, the 
Commission envisions that registered security-based swap data 
repositories, by maintaining security-based swap transaction data and 
positions, will become an essential part of the infrastructure of the 
market in part by providing the data to relevant authorities in 
accordance with their regulatory mandate, or legal responsibility or 
authority.
---------------------------------------------------------------------------

    \164\ See part VI.B.1, supra (addressing limited information 
currently available to market participants and regulators).
---------------------------------------------------------------------------

    In finalizing these rules to implement the Exchange Act data access 
requirement, the Commission has attempted to balance different goals. 
On the one hand, the Commission believes that these rules will 
facilitate the sharing of information held by repositories with 
relevant authorities, which should assist those authorities in acting 
in accordance with their regulatory mandate, or legal responsibility or 
authority. At the same time, although regulatory access raises 
important issues regarding the confidentiality of the information, the 
Commission believes that the rules should appropriately reduce the risk 
of breaching the confidentiality of the data by providing for a 
reasonable assurance that confidentiality will be maintained before 
access is granted.
    Additionally, we note that the magnitude of the costs and benefits 
of these rules depend in part on the type of access granted to relevant 
authorities. Ongoing, unrestricted direct electronic access by relevant 
authorities may be most beneficial in terms of facilitating efficient 
access to data necessary for those authorities to act in accordance 
with their regulatory mandate, or legal responsibility or authority, 
but at the cost of increasing the risk of improper disclosure of 
confidential information. Restricting each relevant authority's access 
to only that data consistent with that authority's regulatory mandate, 
or legal responsibility or authority, reduces the quantity of data that 
could become subject to improper disclosure. On the other hand, 
restricting a relevant authority's access to data may make it more 
difficult for it to effectively act in accordance with its regulatory 
mandate or legal responsibility or authority.
    The potential economic effects stemming from the final rules can be 
grouped into several categories. In this section, we first discuss the 
general costs and benefits of the final rules, including the benefits 
of reducing data fragmentation, data duplication and enhancing 
regulatory oversight, as well as the risks associated with potential 
breaches of data confidentiality. Next, we discuss the effects of the 
rules on efficiency, competition and capital formation. Finally, we 
discuss specific costs and benefits linked to the final rules.
1. General Costs and Benefits
    As discussed above, the final rules would implement the statutory 
provisions that require a security-based swap data repository to 
disclose information to certain relevant authorities. Access under the 
final rules would be conditioned upon the authority entering into an 
MOU or other arrangement with the Commission addressing the 
confidentiality of the information provided.
a. Benefits
    The final rules should facilitate access to security-based swap 
transaction and position data by entities that require such information 
to fulfill their regulatory mandate or legal responsibility or 
authority. Market participants accordingly should benefit from relevant 
domestic authorities other than the Commission having access to the 
data necessary to fulfill their responsibilities. In particular, such 
access could help promote stability in the security-based swap market 
particularly during periods of market turmoil,\165\ and thus could 
indirectly contribute to improved stability in related financial 
markets, including equity and bond markets.\166\
---------------------------------------------------------------------------

    \165\ See Proposing Release, 80 FR 55202, note 171.
    \166\ See Darrell Duffie, Ada Li, and Theo Lubke, Policy 
Perspectives of OTC Derivatives Market Infrastructure, Federal 
Reserve Bank of New York Staff Report No. 424, dated January 2010, 
as revised March 2010 (``Transparency can have a calming influence 
on trading patterns at the onset of a potential financial crisis, 
and thus act as a source of market stability to a wider range of 
markets, including those for equities and bonds.'').
---------------------------------------------------------------------------

    Moreover, as noted in part II.C.1, the Commission anticipates, when 
making a determination concerning a relevant authority's access to 
security-based swap data, considering whether the relevant authority 
agrees to provide the Commission and other U.S. authorities with 
reciprocal assistance in matters within their jurisdiction. Allowing 
non-U.S. authorities access to security-based swap data held by 
registered security-based swap data repositories may be expected to 
help facilitate the Commission's own ability to access data held by 
repositories outside the United States.\167\ Accordingly, to the extent 
the Commission obtains such access, the rules further may be expected 
to assist the Commission in fulfilling its regulatory responsibilities, 
including by detecting market manipulation, fraud and other market 
abuses by providing the Commission with greater access to global 
security-based swap information.\168\
---------------------------------------------------------------------------

    \167\ See note 133 supra, and accompanying text.
    \168\ See Proposing Release, 80 FR 55203, note 174.

---------------------------------------------------------------------------

[[Page 60602]]

    The ability of other relevant authorities to access data held in 
trade repositories registered with the Commission, as well as the 
ability of the Commission to access data held in repositories 
registered with other regulators, may be especially crucial during 
times of market turmoil. Increased data sharing should provide the 
Commission and other relevant authorities more-complete information to 
monitor risk exposures taken by individual entities and exposures 
connected to particular reference entities, and should promote global 
stability through enhanced regulatory transparency. Security-based swap 
data repositories registered with the Commission are required to retain 
complete records of security-based swap transactions and maintain the 
integrity of those records.\169\ Based on discussions with other 
regulators, the Commission believes repositories registered with other 
authorities are likely to have analogous requirements with respect to 
the data maintained at the repositories. As a result, rules and 
practices to facilitate regulatory access to those records in line with 
the recipient authorities' regulatory mandate, or legal responsibility 
or authority, are designed to help position the Commission and other 
authorities to: Detect market manipulation, fraud and other market 
abuses; monitor the financial responsibility and soundness of market 
participants; perform market surveillance and macroprudential 
supervision; resolve issues and positions after an institution fails; 
monitor compliance with relevant regulatory requirements; and respond 
to market turmoil.\170\
---------------------------------------------------------------------------

    \169\ See Proposing Release, 80 FR 55293, note 175.
    \170\ See Proposing Release, 80 FR 55203, note 176.
---------------------------------------------------------------------------

    Additionally, improving the availability of data regarding the 
security-based swap market should give the Commission and other 
relevant authorities improved insight into how regulations are 
affecting, or may affect, the market. This may be expected to help 
increase regulatory effectiveness by allowing the Commission and other 
regulators to better craft regulation to achieve desired goals.
    In addition, the Commission believes that providing relevant 
foreign authorities with access to data maintained by repositories may 
help reduce costs to market participants by reducing the potential for 
duplicative security-based swap transaction reporting requirements in 
multiple jurisdictions. The Commission notes that relevant foreign 
authorities have imposed their own reporting requirements on market 
participants within their jurisdictions.\171\ Given the global nature 
of the security-based swap market and the large number of cross-border 
transactions, the Commission recognizes that it is likely that such 
transactions are or may become subject to the reporting requirements of 
at least two jurisdictions.\172\ However, the Commission believes that 
if relevant authorities are able to access security-based swap data in 
trade repositories outside their jurisdiction, such as repositories 
registered with the Commission, as needed, then relevant authorities 
may be more inclined to permit market participants involved in such 
transactions to fulfill their reporting requirements by reporting the 
transactions to a single trade repository.\173\ If market participants 
can satisfy their reporting requirements by reporting transactions to a 
single trade repository rather than to separate trade repositories in 
each applicable jurisdiction, their compliance costs may be reduced. 
Similarly, to the extent that security-based swap data repositories 
provide additional ancillary services,\174\ if market participants 
choose to make use of such services, they would likely find such 
services that make use of all of their data held in a single trade 
repository more useful than services that are applied only to a portion 
of that market participant's transactions. Ancillary services applied 
to only a portion of a participant's transactions could result if data 
were divided across multiple repositories as a result of regulations 
requiring participants to report data to separate trade repositories in 
each applicable jurisdiction.
---------------------------------------------------------------------------

    \171\ For example, EU law requires that counterparties to 
derivatives contracts report the details of the contract to a trade 
repository, registered or recognized in accordance with EU law, no 
later than the working day following the conclusion, modification or 
termination of the contract. See EMIR art. 9; see also EC Delegated 
Regulation no. 148/2013 (regulatory technical standards implementing 
the reporting requirement).
    \172\ For example, as noted above, market data regarding single-
name CDS transactions involving U.S.-domiciled counterparties and/or 
U.S.-domiciled reference entities indicates that 12 percent of such 
transactions involve two U.S.-domiciled counterparties, while 48 
percent involve a U.S.-domiciled counterparty and a foreign-
domiciled counterparty. See note 130, supra, and accompanying text.
    \173\ For example, EU law anticipates the possibility that 
market participants may be able to satisfy their EU reporting 
obligations by reporting to a trade repository established in a 
third country, so long as that repository has been recognized by 
ESMA. See EMIR art. 77; see also Regulation SBSR, rule 908(c) 
(providing that to the extent that the Commission has issued a 
substituted compliance order/determination, compliance with Title 
VII regulatory reporting and public dissemination requirements may 
be satisfied by compliance with the comparable rules of a foreign 
jurisdiction).
    \174\ See Proposing Release, 80 FR 55204, note 181.
---------------------------------------------------------------------------

b. Costs

    The Commission believes that although there are benefits to 
security-based swap data repositories providing access to relevant 
authorities to data maintained by the repositories, such access will 
likely involve certain costs and potential risks. For example, the 
Commission expects that repositories will maintain data that are 
proprietary and highly sensitive \175\ and that are subject to strict 
privacy requirements.\176\ Extending access to such data to anyone, 
including relevant authorities, increases the risk that the 
confidentiality of the data maintained by repositories may not be 
preserved.\177\ A relevant authority's inability to protect the 
confidentiality of data maintained by repositories could erode market 
participants' confidence in the integrity of the security-based swap 
market and increase the overall risks associated with trading.\178\ As 
we discuss below, this may ultimately lead to reduced trading activity 
and liquidity in the market, hindering price discovery and impeding the 
capital formation process.\179\
---------------------------------------------------------------------------

    \175\ See SDR Adopting Release, 80 FR at 14504.
    \176\ See Exchange Act section 13(n)(5)(F), 15 U.S.C. 
78m(n)(5)(F) (requiring an SDR to maintain the privacy of security-
based swap transaction information); Exchange Act rules 13n-4(b)(8) 
and 13n-9 (implementing Exchange Act section 13(n)(5)(F)).
    \177\ See Proposing Release, 80 FR 55204, note 184.
    \178\ For example, should it become generally known by market 
participants that a particular dealer had taken a large position in 
order to facilitate a trade by a customer and was likely to take 
offsetting positions to reduce its exposure, other market 
participants may seek to take positions in advance of the dealer 
attempting to take its offsetting positions.
    \179\ See Proposing Release, 80 FR 55204, note 186.
---------------------------------------------------------------------------

    To help mitigate these risks and potential costs to market 
participants, the Exchange Act and the final data access rules impose 
certain conditions on relevant authorities' access to data maintained 
by repositories.\180\ In part, the Exchange Act and these final rules 
limit the authorities that may access data maintained by a security-
based swap data repository to a specific list of domestic authorities 
and other persons, including foreign authorities, determined by the 
Commission to be appropriate,\181\ and further require that

[[Page 60603]]

a repository notify the Commission when the repository receives an 
authority's initial request for data maintained by the repository.\182\ 
Restricting access to security-based swap data available to relevant 
authorities should reduce the risk of unauthorized disclosure, 
misappropriation or misuse of security-based swap data because each 
relevant authority will only have access to information within its 
regulatory mandate, or legal responsibility or authority.
---------------------------------------------------------------------------

    \180\ Exchange Act sections 13(n)(5)(G) and (H), 15 U.S.C. 
78m(n)(5)(G) and (H); see also Exchange Act rules 13n-4(b)(9) 
(implementing Exchange Act section 13(n)(5)(G)) and 13n-4(b)(10) 
(implementing Exchange Act section 13(n)(5)(H)).
    \181\ As discussed above in part II.C, the Commission 
anticipates that such determinations may be conditioned, in part, by 
specifying the scope of a relevant authority's access to data, and 
may limit this access to reflect the relevant authority's regulatory 
mandate or legal responsibility or authority.
    \182\ See Exchange Act section 13(n)(5)(G), 15 U.S.C. 
78m(n)(5)(G); Exchange Act rule 13n-4(b)(9).
---------------------------------------------------------------------------

    The final rules further require that, before a repository shares 
security-based swap information with a relevant authority, there must 
be an arrangement (in the form of an MOU or otherwise) between the 
Commission and the relevant authority that addresses the 
confidentiality of the security-based swap information provided. The 
arrangement should reduce the likelihood of confidential trade or 
position data being inadvertently made public.
2. Effects on Efficiency, Competition and Capital Formation
    The final rules described in this release are intended to 
facilitate access for relevant authorities to data stored in 
repositories registered with the Commission and therefore affect such 
repositories, but do not directly affect security-based swap market 
participants. As discussed below, access by relevant authorities to 
security-based swap data could indirectly affect market participants 
through the benefits that accrue from the relevant authorities' 
improved ability to fulfill their regulatory mandate or legal 
responsibility or authority as well as the potential impact of 
disclosure of confidential data. However, because these rules will 
condition access to security-based swap data on the agreement of the 
relevant authorities to protect the confidentiality of the data, the 
Commission expects these rules to have little effect on the structure 
or operations of the security-based swap market. Therefore, the 
Commission believes that effects of the final rules on efficiency, 
competition and capital formation will be small.\183\ Nevertheless, 
there are some potential effects, particularly with respect to 
efficiency and capital formation, which flow from efficient collection 
and aggregation of security-based swap data. We describe these effects 
below.
---------------------------------------------------------------------------

    \183\ See part VI.C.1.b supra for a discussion of the potential 
impact on capital formation of inadequate data confidentiality 
protections. The Commission believes that its approach balances the 
need for data confidentiality and the need for regulatory 
transparency.
---------------------------------------------------------------------------

    In part VI.B of this release, the Commission describes the baseline 
used to evaluate the economic impact of the final rules, including the 
impact on efficiency, competition and capital formation. In particular, 
the Commission notes that the security-based swap data currently 
available from DTCC-TIW is the result of a voluntary reporting system 
and access to that data is made consistent with guidelines published by 
the ODRF.
    Under the voluntary reporting regime, CDS transaction data 
involving counterparties and reference entities from most jurisdictions 
is reported to a single entity, DTCC-TIW. DTCC-TIW, using the ODRF 
guidelines, then allows relevant authorities, including the Commission, 
to obtain data necessary to carry out their respective authorities and 
responsibilities with respect to OTC derivatives and the regulated 
entities that use derivatives.\184\ As various regulators implement 
reporting rules within their jurisdictions, counterparties within those 
jurisdictions may or may not continue to report to DTCC-TIW. As a 
result, the ability of the Commission and other relevant authorities to 
obtain the data required consistent with their regulatory mandate, or 
legal responsibility or authority, may require the ability to access 
data held in a trade repository outside of their own jurisdictions. 
That is, because the market is global and interconnected, effective 
regulatory monitoring of the security-based swap market may require 
regulators to have access to information on the global market, 
particularly during times of market turmoil. The data access rules 
should facilitate access of relevant authorities other than the 
Commission to security-based swap data held in repositories, and may 
indirectly facilitate Commission access to data held by trade 
repositories registered with regulators other than the Commission. To 
the extent that the final data access rules facilitate the ability of 
repositories to collect security-based swap information involving 
counterparties across multiple jurisdictions, there may be benefits in 
terms of efficient collection and aggregation of security-based swap 
data.
---------------------------------------------------------------------------

    \184\ See note 140, supra.
---------------------------------------------------------------------------

    To the extent that the final data access provisions increase the 
quantity of transaction and position information available to 
regulatory authorities about the security-based swap market, the 
ability of the Commission and other relevant authorities to respond in 
an appropriate and timely manner to market developments could enhance 
investor protection through improved detection, and facilitate the 
investigation of fraud and other market abuses. Moreover, as noted 
above, we do not anticipate that the final rules will directly affect 
market participants, and such enhancements in investor protections may 
decrease the risks and indirect costs of trading and could therefore 
encourage greater participation in the security-based swap market for a 
wider range of entities seeking to engage in a broad range of hedging 
and trading activities.\185\ While increased participation is a 
possible outcome of the Commission's transparency initiatives, 
including these rules, relative to the level of participation in this 
market if these initiatives were not undertaken, the Commission 
believes that the benefits that flow from improved detection, 
facilitating the investigation of fraud and other market abuses and 
more-efficient data aggregation are the more direct benefits of the 
rules.
---------------------------------------------------------------------------

    \185\ Indirect trading costs refer to costs other than direct 
transaction costs. Front running costs described above provide an 
example of indirect trading costs. In the context of investor 
protection, the risk of fraud represents a cost of trading in a 
market with few investor protections or safeguards.
---------------------------------------------------------------------------

    In addition, the improvement in the quantity of data available to 
regulatory authorities, including the Commission, should improve their 
ability to monitor concentrations of risk exposures and evaluate risks 
to financial stability and could promote the overall stability in the 
capital markets.\186\
---------------------------------------------------------------------------

    \186\ See note 166, supra.
---------------------------------------------------------------------------

    Aside from the effects that the final data access rules may have on 
regulatory oversight and market participation, the Commission expects 
the rules potentially to affect how SDRs are structured. In particular, 
the data access rules could reduce the potential for SDRs to be 
established along purely jurisdictional lines. That is, effective data 
sharing may reduce the need for repositories to be established along 
jurisdictional lines, reducing the likelihood that a single security-
based swap transaction must be reported to multiple swap-data 
repositories. As noted previously by the Commission, due to high fixed 
costs and increasing economies of scale, the total cost of providing 
trade repository services to the market for security-based swaps may be 
lower if the total number of repositories is not increased due to a 
regulatory environment that results in

[[Page 60604]]

trade repositories being established along jurisdictional lines.\187\ 
To the extent that the final rules result in fewer repositories that 
potentially compete across jurisdictional lines, cost savings realized 
by fewer repositories operating on a larger scale could result in 
reduced fees, with the subsequent cost to market participants to comply 
with reporting requirements being lower. At the same time, the 
Commission acknowledges that fewer repositories operating on a larger 
scale could result in those repositories having the ability to take 
advantage of the reduced level of competition to charge higher prices.
---------------------------------------------------------------------------

    \187\ See Proposing Release, 80 FR 55205, note 197.
---------------------------------------------------------------------------

    Furthermore, multiple security-based swap data repositories with 
duplication of reporting requirements for cross-border transactions 
increase data fragmentation and data duplication, both of which 
increase the potential for difficulties in data aggregation. To the 
extent that the data access rules facilitate the establishment of SDRs 
that accept transactions from multiple jurisdictions, there may be 
benefits in terms of efficient collection and aggregation of security-
based swap data. To the extent that these rules allow relevant 
authorities to have better access to the data necessary to form a more 
complete picture of the security-based swap market--including 
information regarding risk exposures and asset valuations--these rules 
should help the Commission and other relevant authorities perform their 
oversight functions in a more effective manner.
    However, while reducing the likelihood of having multiple SDRs 
established along jurisdictional lines would resolve many of the 
challenges involved in aggregating security-based swap data, there may 
be costs associated with having fewer repositories. In particular, the 
existence of multiple repositories may reduce operational risks, such 
as the risk that a catastrophic event or the failure of a repository 
leaves no repositories to which transactions can be reported, impeding 
the ability of the Commission and relevant authorities to obtain 
information about the security-based swap market.
    Finally, as we noted above, a relevant authority's inability to 
protect the privacy of data maintained by repositories could erode 
market participants' confidence in the integrity of the security-based 
swap market. More specifically, confidentiality breaches, including the 
risk that trading strategies may no longer be anonymous due to a 
breach, may increase the overall risks associated with trading or 
decrease the profits realized by certain traders. Increased risks or 
decreased profits may reduce incentives to participate in the security-
based swap markets which may lead to reduced trading activity and 
liquidity in the market. Depending on the extent of confidentiality 
breaches, as well as the extent to which such breaches lead to market 
exits, disclosures of confidential information could hinder price 
discovery and impede the capital formation process.\188\
---------------------------------------------------------------------------

    \188\ See Proposing Release, 80 FR 55206, note 199.
---------------------------------------------------------------------------

3. Additional Costs and Benefits of Specific Rules
    Apart from the general costs and benefits associated with the 
structure of the Exchange Act data access provisions and implementing 
rules, certain discrete aspects of the final rules and related 
interpretation raise additional issues related to economic costs and 
benefits.
a. Benefits
i. Determination of Recipient Authorities
    The Commission is adopting an approach to determining whether an 
authority, other than those expressly identified in the Exchange Act 
and the implementing rules,\189\ should be provided access to data 
maintained by SDRs. The Commission believes that this approach has the 
benefit of appropriately limiting relevant authorities' access to data 
maintained by repositories to protect the confidentiality of the 
data.\190\ The Commission expects that relevant authorities from a 
number of jurisdictions may seek to obtain a determination by the 
Commission that they may appropriately have access to repository data. 
Each of these jurisdictions may have a distinct approach to 
supervision, regulation or oversight of its financial markets or market 
participants and to the protection of proprietary and other 
confidential information. The Commission believes that the approach of 
the final rule--which among other things would consider whether an 
authority has an interest in access to security-based swap data based 
on the relevant authority's regulatory mandate or legal responsibility 
or authority, whether there is an MOU or other arrangement between the 
Commission and the relevant authority that addresses the 
confidentiality of the security-based swap data provided to the 
authority, and whether information accessed by the applicable authority 
would be subject to robust confidentiality safeguards \191\--
appropriately condition an authority's ability to access data on the 
confidentiality protections the authority will afford that data. This 
focus further would be strengthened by the Commission's ability to 
revoke its determination where necessary, including, for example, if a 
relevant authority fails to keep such data confidential.\192\ This 
approach should increase market participants' confidence that their 
confidential trade data will be protected, reducing perceived risks of 
transacting in security-based swaps.
---------------------------------------------------------------------------

    \189\ See parts II.A-B supra for a discussion of specific 
authorities included in the implementing rules.
    \190\ See Proposing Release, 80 FR 55206, note 201.
    \191\ See part II.C.1, supra.
    \192\ See part II.C, supra.
---------------------------------------------------------------------------

    The Commission also believes that its approach in determining the 
appropriate relevant authorities would reduce the potential for 
fragmentation and duplication of security-based swap data among trade 
repositories by facilitating mutual access to the data. Narrower 
approaches such as allowing regulatory access to security-based swap 
data only to those entities specifically identified in the Exchange Act 
\193\ may increase fragmentation and duplication, and hence increase 
the difficulty in consolidating and interpreting security-based swap 
market data from repositories, potentially reducing the general 
economic benefits discussed above.
---------------------------------------------------------------------------

    \193\ See Exchange Act section 3(a)(74), 15 U.S.C. 78c(a)(74).
---------------------------------------------------------------------------

    Furthermore, the Commission believes that its approach in 
conditioning access to security-based swap data held in SDRs by 
requiring there to be in effect an arrangement between the Commission 
and the authority in the form of a MOU or other arrangement would 
promote the intended benefits of access by relevant authorities to data 
maintained by SDRs. Under this approach, rather than requiring 
regulatory authorities to negotiate confidentiality agreements with 
multiple SDRs, a single MOU or other arrangement between the Commission 
and the relevant authority can serve as the confidentiality agreement 
that will satisfy the requirement for a written agreement stating that 
the relevant authority will abide by the confidentiality requirements 
described in section 24 of the Exchange Act relating to the security-
based swap data. The Commission routinely negotiates MOUs or other 
arrangements with relevant authorities to secure mutual assistance or 
for other purposes, and the Commission believes that this approach

[[Page 60605]]

is generally consistent with existing practice.
    The Commission further believes that negotiating a single such 
agreement with the Commission will be less costly for the authority 
requesting data than negotiating directly with each registered SDR. 
This approach is intended to eliminate the need for each SDR to 
negotiate as many as 300 confidentiality agreements with requesting 
authorities. This approach would also avoid the difficulties that may 
be expected to accompany an approach that requires SDRs to enter into 
confidentiality agreements--particularly questions regarding the 
parameters of an adequate confidentiality agreement, and the presence 
of uneven and potentially inconsistent confidentiality protections 
across SDRs and recipient entities.
ii. Notification Requirement
    The Commission is adopting an approach by which an SDR may satisfy 
the notification requirement by notifying the Commission upon the 
initial request for security-based swap data by a relevant authority 
and maintaining records of the initial request and all subsequent 
requests.\194\ The Commission estimates that approximately 300 relevant 
authorities may make requests for data from security-based swap data 
repositories.\195\ Based on the Commission's experience in making 
requests for security-based swap data from trade repositories, the 
Commission estimates that each relevant authority will access security-
based swap data held in SDRs using electronic access. Such access may 
be to satisfy a narrow request concerning a specific counterparty or 
reference entity or security, to create a summary statistic of trading 
activity or outstanding notional or to satisfy a large request for 
detailed transaction and position data. Requests may occur as seldom as 
once per month if the relevant authority is downloading all data to 
which it has access in order to analyze it on its own systems, or may 
occur 100 or more times per month if multiple staff of the relevant 
authority are making specific electronic requests concerning particular 
counterparties or reference entities and associated positions or 
transactions. Therefore, under the Commission's approach to 
notification requirement compliance, the Commission estimates based on 
staff experience that each repository would provide the Commission with 
actual notice as many as 300 times, and that repositories cumulatively 
would maintain records of as many as 360,000 subsequent data requests 
per year.\196\ The final rule is expected to permit repositories to 
respond to requests for data by relevant authorities more promptly and 
at lower cost than if notification was required for each request for 
data access, while helping to preserve the Commission's ability to 
monitor whether the repository provides data to each relevant entity 
consistent with the applicable conditions.
---------------------------------------------------------------------------

    \194\ See Exchange Act rule 13n-4(d).
    \195\ See Exchange Act rules 13n-4(b)(9)(i)-(v) for a list of 
prudential regulators that may request data maintained by SDRs from 
SDRs. The Exchange Act also states that FSOC, the CFTC and the 
Department of Justice may access security-based swap data. See parts 
II.B.1, 2, supra. The rules further state that the OFR may access 
security-based swap data. See parts II.B.1,2, supra. The Commission 
also expects that certain self-regulatory organizations and 
registered futures associations may request security-based swap data 
from repositories. Therefore, the Commission estimates that up to 
approximately 30 relevant authorities in the United States may seek 
to access security-based swap data from repositories. The Commission 
believes that most requests will come from authorities in G20 
countries, and estimates that each of the G20 countries will also 
have no more and likely fewer than 30 relevant authorities that may 
request data from SDRs. Certain authorities from outside the G20 
also may request data. Accounting for all of those entities, the 
Commission estimates that there will likely be a total of no more 
than 300 relevant domestic and foreign authorities that may request 
security-based swap data from repositories.
    \196\ The annual estimate of 360,000 is calculated based on 300 
recipient entities each making 100 requests per month cumulatively 
across all repositories. The estimate of 100 requests per authority 
is based on staff experience with similar data requests in other 
contexts.
---------------------------------------------------------------------------

    The Commission's final rule also is designed to simplify a relevant 
authority's direct access to security-based swap data needed in 
connection with its regulatory mandate or legal responsibility or 
authority, because a repository would not be required to provide the 
Commission with actual notice of every request prior to providing 
access to the requesting relevant authority.
iii. Use of Confidentiality Agreements Between the Commission and 
Recipient Authorities
    The final rules in part would condition regulatory access on there 
being an arrangement between the Commission and the recipient entity, 
in the form of an MOU or otherwise, addressing the confidentiality of 
the security-based swap information made available to the recipient. 
These rules add that those arrangements shall be deemed to satisfy the 
statutory requirement for a written confidentiality agreement.\197\
---------------------------------------------------------------------------

    \197\ See Exchange Act rule 13n-4(b)(10).
---------------------------------------------------------------------------

    As discussed above, the Commission believes that this approach 
reflects an appropriate way to satisfy the interests associated with 
the confidentiality condition. The benefits associated with this 
approach include obviating the need for repositories to negotiate and 
enter into multiple confidentiality agreements, avoiding difficulties 
regarding the parameters of an adequate confidentiality agreement, and 
avoiding uneven and potentially inconsistent confidentiality 
protections. This approach also would build upon the Commission's 
experience in negotiating such agreements.\198\
---------------------------------------------------------------------------

    \198\ See part II.F, supra.
---------------------------------------------------------------------------

b. Costs
    The Commission recognizes that its approach to providing access to 
relevant authorities other than the Commission to security-based swap 
data held in repositories has the potential to involve certain costs 
and risks.
    The relevant authorities requesting security-based swap data would 
incur some costs in seeking a Commission order deeming the authority 
appropriate to receive security-based swap data. These costs would 
include the negotiation of an MOU or other arrangement to address the 
confidentiality of the security-based swap information it seeks to 
obtain and providing information to justify that the security-based 
swap data relates to the entity's regulatory mandate or legal 
responsibility or authority. As discussed above, the Commission 
estimates that up to 300 entities potentially might enter into such 
MOUs or other arrangements.\199\ Based on the Commission staff's 
experience in negotiating MOUs that address regulatory cooperation, the 
Commission estimates the cost to each relevant authority requesting 
data associated with negotiating such an arrangement of approximately 
$208,300 per entity for a total of $62,490,000.\200\
---------------------------------------------------------------------------

    \199\ See part VI.C.3.a.ii, supra.
    \200\ These figures are based on 300 entities each requiring 500 
personnel hours on average to negotiate an MOU or other arrangement. 
See part V.D.1.a, supra. The cost per entity is 400 hours x attorney 
at $386 per hour + 100 hours x deputy general counsel at $539 per 
hour = $208,300, or a total of $62,490,000. We use salary figures 
from SIFMA's Management & Professional Earnings in the Securities 
Industry 2013, modified by Commission staff to account for an 1800-
hour year-week, multiplied by 5.35 to account for bonuses, firm 
size, employee benefits and overhead, and adjusted for inflation 
using the Consumer Price Index (CPI).
---------------------------------------------------------------------------

    In addition, authorities that are not specified by the final rule 
may request that the Commission determine them to be appropriate to 
receive access to such security-based swap data. Given the relevant 
information that the Commission would consider in connection with such 
designations (apart from the MOU issues addressed

[[Page 60606]]

above)--including information regarding how the authority would be 
expected to use the information, information regarding the authority's 
regulatory mandate or legal responsibility or authority, and 
information regarding reciprocal assistance--the Commission estimates 
the cost associated with such a request to be approximately $15,440 per 
requesting entity for a total of $4,632,000.\201\
---------------------------------------------------------------------------

    \201\ These figures are based on roughly 300 entities (noting 
that certain entities designated by statute or rule would not need 
to prepare such requests) requiring 40 personnel hours to prepare a 
request for access. See part V.D.1.b, supra. The cost per entity is 
40 hours x attorney at $386 per hour = $15,440, or a total of 
$4,632,000. We use salary figures from SIFMA's Management & 
Professional Earnings in the Securities Industry 2013, modified by 
Commission staff to account for an 1800-hour year-week, multiplied 
by 5.35 to account for bonuses, firm size, employee benefits and 
overhead, and adjusted for inflation using the Consumer Price Index 
(CPI).
---------------------------------------------------------------------------

    Security-based swap data repositories would incur some costs to 
verify that an entity requesting data entered into the requisite 
agreements concerning confidentiality with the Commission. The 
Commission generally expects that such verification costs would be 
minimal because information regarding such Commission arrangements 
would generally be readily available.\202\
---------------------------------------------------------------------------

    \202\ The Commission provides a list of MOUs and most other 
arrangements on its public Web site, which are available at: http://www.sec.gov/about/offices/oia/oia_cooparrangements.shtml.
---------------------------------------------------------------------------

    To the extent that the security-based swap data repository provides 
the requested data through direct electronic means, the repository may 
incur some cost in providing the requesting authority access to the 
system that provides such access and setting data permissions to allow 
access only to the information that relates to the authority's 
regulatory mandate, or legal responsibility or authority. The 
Commission believes most of the costs associated with providing such 
access would be the fixed costs incurred in designing and building the 
systems to provide the direct electronic access required by rules the 
Commission adopted last year to address the registration process, 
duties and core principles applicable to security-based swap data 
repositories.\203\ The Commission believes the marginal cost of 
providing access to an additional relevant authority and setting the 
associated permissions is approximately $6,406.\204\ Based on an 
estimated 300 entities requesting access to each of ten registered 
SDRs, we estimate the total cost of connecting entities to SDRs to be 
approximately $19,218,000.
---------------------------------------------------------------------------

    \203\ See Proposing Release, 80 FR at 55208, n. 222.
    \204\ This figure is based on the view that, for each recipient 
requesting data, a repository would incur a 25-hour burden 
associated with programming or otherwise inputting the relevant 
parameters, encompassing 20 hours of programmer analyst time and 
five hours of senior programmer time. The estimate also encompasses 
one hour of attorney time in connection with each such recipient. 
See part V.D.1.c, supra. The cost per entity is 20 hours x 
programmer analyst at $224 per hour + 5 hours x senior programmer at 
$308 per hour + 1 hour x attorney at $386 per hour = $6,406. We use 
salary figures from SIFMA's Management & Professional Earnings in 
the Securities Industry 2013, modified by Commission staff to 
account for an 1800-hour year-week, multiplied by 5.35 to account 
for bonuses, firm size, employee benefits and overhead, and adjusted 
for inflation using the Consumer Price Index (CPI).
---------------------------------------------------------------------------

    In addition, under the Commission's notification compliance rule, 
SDRs would be required to notify the Commission of the initial request 
for data but would not have to inform the Commission of all relevant 
authorities' requests for data prior to a SDR fulfilling such requests. 
Based on the estimate that approximately 300 relevant authorities may 
make requests for data from security-based swap data repositories, the 
Commission estimates that a repository would provide the Commission 
with actual notice approximately 300 times.\205\ Moreover, based on the 
estimate that ten persons may register with the Commission as 
SDRs,\206\ this suggests that repositories in the aggregate would 
provide the Commission with actual notice up to a total of 3,000 times. 
The Commission estimates that the total cost of providing such notice 
to be $57,900 per SDR for a total of $579,000 for all SDRs.\207\
---------------------------------------------------------------------------

    \205\ See part VI.C.3.a.ii, supra.
    \206\ See note 105, supra, and accompanying text.
    \207\ These figures are based each of ten SDRs providing notice 
for each of 300 requesting entities. See part V.D.1.d, supra. The 
cost per SDR is 300 requesting entities x 0.5 hours x attorney at 
$386 per hour = $57,900, or a total of $579,000. We use salary 
figures from SIFMA's Management & Professional Earnings in the 
Securities Industry 2013, modified by Commission staff to account 
for an 1800-hour year-week, multiplied by 5.35 to account for 
bonuses, firm size, employee benefits and overhead, and adjusted for 
inflation using the Consumer Price Index (CPI).
---------------------------------------------------------------------------

    Pursuant to the rule, SDRs would be required to maintain records of 
subsequent requests.\208\ Not receiving actual notice of all requests 
may impact the Commission's ability to track such requests, but the 
Commission believes that the benefits of receiving actual notice of 
each request would not justify the additional costs that repositories 
would incur in providing such notices and the potential delay in 
relevant authorities receiving data that they need to fulfill their 
regulatory mandate, or legal responsibility or authority. At the same 
time, providing notice of initial requests will help to preserve the 
Commission's ability to monitor whether the repository provides data to 
each relevant entity consistent with the applicable conditions. As 
discussed above, the Commission estimates that the average initial 
paperwork burden associated with maintaining certain records related to 
data requests or access would be roughly 360 hours, and that the 
annualized burden would be roughly 280 hours and $121,000 for each 
repository.\209\ Assuming a maximum of ten security-based swap data 
repositories, the estimated aggregate one-time dollar cost would be 
roughly $1 million,\210\ and the estimated aggregate annualized dollar 
cost would be roughly $1.21 million.\211\
---------------------------------------------------------------------------

    \208\ See part V.D.1.d, supra. As noted above, existing rules 
require SDRs to maintain copies of all documents they make or 
receive in their course of business, including electronic documents. 
See note 75, supra.
    \209\ See part V.D.1.d, supra.
    \210\ The Commission anticipates that a repository would assign 
the associated responsibilities primarily to a compliance manager 
and a senior systems analyst. The total estimated dollar cost would 
be roughly $102,240 per repository, reflecting the cost of a 
compliance manager at $288 per hour for 300 hours, and a senior 
systems analyst at $264 per hour for 60 hours. Across the estimated 
ten repositories, this equals $1,022,400.
    \211\ The Commission anticipates that a repository would assign 
the associated responsibilities primarily to a compliance manager. 
The total estimated dollar cost would be roughly $121,000 per 
repository, reflecting $40,000 annualized information technology 
costs, as well as a compliance manager at $288 per hour for 280 
hours. Across the estimated ten repositories, this equals $1.21 
million.
---------------------------------------------------------------------------

D. Alternatives

    The Commission considered a number of alternative approaches to 
implementing the Exchange Act data access provisions, but, for the 
reasons discussed below, is not adopting any of them.
1. Use of confidentiality arrangements directly between repositories 
and recipients
    The Commission considered the alternative approach of permitting 
confidentiality agreement between an SDR and the recipient of the 
information to satisfy the confidentiality condition to the data access 
requirement. The Commission believes, however, that the approach taken 
in the final rules, which would instead make use of confidentiality 
arrangements between the Commission and the recipients of the data, 
would avoid difficulties such as questions regarding the parameters of 
the confidentiality agreement, and the presence of uneven and 
inconsistent confidentiality protections.\212\ This also would avoid 
the need for SDRs to negotiate and

[[Page 60607]]

potentially enter into hundreds of confidentiality agreements, as under 
the adopted approach such costs will be borne by the Commission.
---------------------------------------------------------------------------

    \212\ See part II.A, supra.
---------------------------------------------------------------------------

2. Notice of Individual Requests for Data Access
    Finally, the Commission considered requiring repositories to 
provide notice to the Commission of all requests for data prior to 
repositories fulfilling such requests, rather than the approach of 
requiring such notice only of the first request from a particular 
recipient, with the repository maintaining records of all subsequent 
requests.\213\ The Commission believes that the benefits of receiving 
actual notice for each request would not justify the additional costs 
that would be imposed on repositories to provide such notice, and 
providing notice of subsequent requests might not be feasible if data 
is provided by direct electronic access.
---------------------------------------------------------------------------

    \213\ See part II.D, supra.
---------------------------------------------------------------------------

VII. Regulatory Flexibility Act Certification

    Section 3(a) of the Regulatory Flexibility Act of 1980 (``RFA'') 
\214\ requires Federal agencies, in promulgating rules, to consider the 
impact of those rules on small entities. The Commission certified in 
the proposing release, pursuant to Section 605(b) of the RFA,\215\ that 
the proposed rule would not, if adopted, have a significant economic 
impact on a substantial number of ``small entities.'' The Commission 
received no comments on this certification.
---------------------------------------------------------------------------

    \214\ 5 U.S.C. 603(a).
    \215\ 5 U.S.C. 605(b).
---------------------------------------------------------------------------

    For purposes of Commission rulemaking in connection with the RFA, a 
small entity includes: (1) When used with reference to an ``issuer'' or 
a ``person,'' other than an investment company, an ``issuer'' or 
``person'' that, on the last day of its most recent fiscal year, had 
total assets of $5 million or less; \216\ or (2) a broker-dealer with 
total capital (net worth plus subordinated liabilities) of less than 
$500,000 on the date in the prior fiscal year as of which its audited 
financial statements were prepared pursuant to Rule 17a-5(d) under the 
Exchange Act,\217\ or, if not required to file such statements, a 
broker-dealer with total capital (net worth plus subordinated 
liabilities) of less than $500,000 on the last day of the preceding 
fiscal year (or in the time that it has been in business, if shorter); 
and is not affiliated with any person (other than a natural person) 
that is not a small business or small organization.\218\
---------------------------------------------------------------------------

    \216\ See 17 CFR 240.0-10(a).
    \217\ 17 CFR 240.17a-5(d).
    \218\ See 17 CFR 240.0-10(c).
    For purposes of the Regulatory Flexibility Act, the definition 
of ``small entity'' also encompasses ``small governmental 
jurisdictions,'' which in relevant part means governments of locales 
with a population of less than fifty thousand. 5 U.S.C. 601(5), (6). 
Although the Commission anticipates that these final rules may be 
expected to have an economic impact on various governmental entities 
that access data pursuant to Dodd-Frank's data access provisions, 
the Commission does not anticipate that any of those governmental 
entities will be small entities.
---------------------------------------------------------------------------

    In initially proposing rules regarding the registration process, 
duties and core principles applicable to SDRs, the Commission stated 
that it preliminarily did not believe that any persons that would 
register as repositories would be considered small entities.\219\ The 
Commission further stated that it preliminarily believed that most, if 
not all, SDRs would be part of large business entities with assets in 
excess of $5 million and total capital in excess of $500,000, and, as a 
result, the Commission certified that the proposed rules would not have 
a significant impact on a substantial number of small entities and 
requested comments on this certification.\220\ The Commission 
reiterated that conclusion in adopting final rules generally addressing 
repository registration, duties and core principles.\221\
---------------------------------------------------------------------------

    \219\ See 75 FR at 77365.
    \220\ See id. (basing the conclusions on review of public 
sources of financial information about the current repositories that 
are providing services in the OTC derivatives market).
    \221\ See SDR Adopting Release, 80 FR at 14549 (noting that the 
Commission did not receive any comments that specifically addressed 
whether the applicable rules would have a significant economic 
impact on small entities).
---------------------------------------------------------------------------

    In the Proposing Release for these rule amendments, the Commission 
stated that it continued to hold the view that any persons that would 
register as SDRs would not be considered small entities. The Commission 
accordingly certified that the proposed rules would not have a 
significant economic impact on a substantial number of small entities 
for purposes of the RFA.\222\
---------------------------------------------------------------------------

    \222\ See Proposing Release, 80 FR at 55210.
---------------------------------------------------------------------------

    We continue to believe that the entities that will register as SDRs 
will not be small entities. Accordingly, the Commission certifies that 
the final rules will not have a significant economic impact on a 
substantial number of small entities for purposes of the RFA.

Statutory Basis and Text of Final Rules

    Pursuant to the Exchange Act, and particularly sections 3(b), 
13(n), and 23(a) thereof, 15 U.S.C. 78c(b), 78m(n), and 78w(a), and 
section 752(a) of the Dodd-Frank Act, 15 U.S.C 8325, the Commission is 
adopting amendments to rule 13n-4 under the Exchange Act by adding 
paragraphs (b)(9), (b)(10), and (d) to that rule.

List of Subjects in 17 CFR Part 240

    Confidential business information, Reporting and recordkeeping 
requirements, Securities.

Text of Final Rules

    For the reasons stated in the preamble, the Commission is amending 
Title 17, Chapter II, of the Code of Federal Regulations as follows:

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 
1934

0
1. The authority citation for part 240 continues to read, in part, as 
follows:

    Authority:  15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 
78g, 78i, 78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o, 78o-4, 
78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78ll, 78mm, 80a-20, 
80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, 7201 et seq., and 
8302; 7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C. 1350; 
Pub. L. 111-203, 939A, 124 Stat. 1376 (2010); and Pub. L. 112-106, 
sec. 503 and 602, 126 Stat. 326 (2012), unless otherwise noted.
* * * * *

0
2. Amend Sec.  240.13n-4 by removing the ``and'' after the semicolon in 
paragraph (b)(8), and adding paragraphs (b)(9), (b)(10), and (d) to 
read as follows:

Sec.  240.13n-4  Duties and core principles of security-based swap data 
repository.

* * * * *
    (b) * * *
    (9) On a confidential basis, pursuant to section 24 of the Act (15 
U.S.C. 78x), upon request, and after notifying the Commission of the 
request in a manner consistent with paragraph (d) of this section, make 
available security-based swap data obtained by the security-based swap 
data repository, including individual counterparty trade and position 
data, to the following:
    (i) The Board of Governors of the Federal Reserve System and any 
Federal Reserve Bank;
    (ii) The Office of the Comptroller of the Currency;
    (iii) The Federal Deposit Insurance Corporation;
    (iv) The Farm Credit Administration;
    (v) The Federal Housing Finance Agency;
    (vi) The Financial Stability Oversight Council;
    (vii) The Commodity Futures Trading Commission;
    (viii) The Department of Justice;

[[Page 60608]]

    (ix) The Office of Financial Research; and
    (x) Any other person that the Commission determines to be 
appropriate, conditionally or unconditionally, by order, including, but 
not limited to--
    (A) Foreign financial supervisors (including foreign futures 
authorities);
    (B) Foreign central banks;
    (C) Foreign ministries; and
    (D) Other foreign authorities;
    (10) Before sharing information with any entity described in 
paragraph (b)(9) of this section, there shall be in effect an 
arrangement between the Commission and the entity (in the form of a 
memorandum of understanding or otherwise) to address the 
confidentiality of the security-based swap information made available 
to the entity; this arrangement shall be deemed to satisfy the 
requirement, set forth in section 13(n)(5)(H) of the Act (15 U.S.C. 
78m(n)(5)(H)), that the security-based swap data repository receive a 
written agreement from the entity stating that the entity shall abide 
by the confidentiality requirements described in section 24 of the Act 
(15 U.S.C. 78x) relating to the information on security-based swap 
transactions that is provided; and
* * * * *
    (d) Notification requirement compliance. To satisfy the 
notification requirement of the data access provisions of paragraph 
(b)(9) of this section, a security-based swap data repository shall 
inform the Commission upon its receipt of the first request for 
security-based swap data from a particular entity (which may include 
any request to be provided ongoing online or electronic access to the 
data), and the repository shall maintain records of all information 
related to the initial and all subsequent requests for data access from 
that entity, including records of all instances of online or electronic 
access, and records of all data provided in connection with such 
requests or access.
* * * * *

    Dated: August 29, 2016.

    By the Commission.
Brent J. Fields,
Secretary.
[FR Doc. 2016-21137 Filed 9-1-16; 8:45 am]
 BILLING CODE 8011-01-P