Source: http://www.scribd.com/doc/160696786/2013-19791a
Timestamp: 2015-10-07 17:57:11
Document Index: 345102772

Matched Legal Cases: ['art39', 'ART 39', 'art 39', '§39', '§39', 'art 39', 'art 39', '§39', '§39', 'art 39', 'art 39']

P. 12013-19791a2013-19791aRatings: (0)|Views: 47|Likes: 1Published by MarketsWikiMore info:Published by: MarketsWiki on Aug 16, 2013Copyright:Attribution Non-commercialAvailability:Read on Scribd mobile: iPhone, iPad and Android.download as PDF, TXT or read online from ScribdFlag for inappropriate content|Add to collectionSee moreSee lesshttps://www.scribd.com/doc/160696786/2013-19791a07/02/2014pdftextoriginal 49663
/Vol. 78, No. 158/Thursday, August 15, 2013/Rules and Regulations
protective film detachment is no longerconsidered probable. Consequently,PIAGGIO AERO INDUSTRIES S.p.A.issued Mandatory Service Bulletin No.SB 80–0101, Rev. N. ZZ, dated February19, 2013, to cancel the previous revisionof this service bulletin.Refer to MCAI European AviationSafety Agency (EASA) AD No.: ADCancellation Notice No.: 2013–0085–CN, dated April 8, 2013, and EnteNazionale per l’Aviazione Civile(ENAC) AD No. 98–208, dated June 9,1998, for related information; both may be found in the AD docket on theInternet at
http://www.regulations.gov. You may also refer to Piaggio ServiceBulletin (Mandatory) No.: SB 80 0101,Original Issue: May 6, 1998, for relatedinformation. For service informationrelated to this AD, contact Piaggio AeroIndustries S.p.A Airworthiness Office;Via Luigi Cibrario, 4–16154 Genova–Italy; telephone: +39 010 6481353; fax:+39 010 6481881; email:
airworthiness@piaggioaero.it; Internet:
www.piaggioaero.com/#/en/after-sales/ service-support. You may review copiesof the referenced service information atthe FAA, Small Airplane Directorate,901 Locust, Kansas City, Missouri64106. For information on theavailability of this material at the FAA,call (816) 329–4148.
We gave the public the opportunity toparticipate in developing this AD. Wereceived no comments on the NPRM (78FR 32363, May 30, 2013).
We reviewed the relevant data anddetermined that rescinding the AD willnot affect air safety and will reduce the burden on the public. We will rescindthe AD as proposed except for minoreditorial changes. We have determinedthat these minor changes:
Are consistent with the intent thatwas proposed in the NPRM (78 FR32363, May 30, 2013) for correcting theunsafe condition; and
Do not add any additional burdenupon the public than was alreadyproposed in the NPRM (78 FR 32363,May 30, 2013).
Title 49 of the United States Codespecifies the FAA’s authority to issuerules on aviation safety. Subtitle I,section 106, describes the authority of the FAA Administrator. ‘‘Subtitle VII:Aviation Programs,’’ describes in moredetail the scope of the Agency’sauthority.We are issuing this rulemaking underthe authority described in ‘‘Subtitle VII,Part A, Subpart III, Section 44701:General requirements.’’ Under thatsection, Congress charges the FAA withpromoting safe flight of civil aircraft inair commerce by prescribing regulationsfor practices, methods, and proceduresthe Administrator finds necessary forsafety in air commerce. This regulationis within the scope of that authority because it addresses an unsafe conditionthat is likely to exist or develop onproducts identified in this rulemakingaction.
We determined that this AD will nothave federalism implications underExecutive Order 13132. This AD willnot have a substantial direct effect onthe States, on the relationship betweenthe national Government and the States,or on the distribution of power andresponsibilities among the variouslevels of government.For the reasons discussed above, Icertify this regulation:(1) Is not a ‘‘significant regulatoryaction’’ under Executive Order 12866,(2) Is not a ‘‘significant rule’’ underthe DOT Regulatory Policies andProcedures (44 FR 11034, February 26,1979),(3) Will not affect intrastate aviationin Alaska, and(4) Will not have a significanteconomic impact, positive or negative,on a substantial number of small entitiesunder the criteria of the RegulatoryFlexibility Act.
Air transportation, Aircraft, Aviationsafety, Incorporation by reference,Safety.
Accordingly, under the authoritydelegated to me by the Administrator,the FAA proposes to amend 14 CFR part39 as follows:
PART 39—AIRWORTHINESSDIRECTIVES
1. The authority citation for part 39continues to read as follows:
§39.13[Amended]
2. The FAA amends §39.13 byremoving AD 99–07–10, Amendment39–11095 (64 FR 14824, March 29,1999), and adding the following newAD:
AD 99–07–10R1 PIAGGIO AEROINDUSTRIES S.p.A:
Amendment 39–17538; Docket No. FAA–2013–0472;Directorate Identifier 98–CE–097–AD.
This airworthiness directive (AD) becomeseffective September 19, 2013.
This AD rescinds AD 99–07–10,Amendment 39–11095 (64 FR 14824, March29, 1999).
This AD applies to PIAGGIO AEROINDUSTRIES S.p.A Model P–180 airplanes,all serial numbers, certificated in anycategory.
Joint Aircraft System Component (JASC)/Air Transport Association (ATA) of AmericaCode 54; Nacelles/Pylons.Issued in Kansas City, Missouri, on July 25,2013.
[FR Doc. 2013–19816 Filed 8–14–13; 8:45 am]
COMMODITY FUTURES TRADINGCOMMISSION17 CFR Part 39
RIN 3038–AC98
Enhanced Risk ManagementStandards for Systemically ImportantDerivatives Clearing Organizations
The Commodity FuturesTrading Commission (‘‘Commission’’ or‘‘CFTC’’) is adopting final regulations toimplement enhanced risk managementstandards for systemically importantderivatives clearing organizations thatinclude increased financial resourcesrequirements for systemically importantderivatives clearing organizations thatare involved in activities with a morecomplex risk profile or that aresystemically important in multiplejurisdictions, the prohibited use of assessments by systemically importantderivatives clearing organizations incalculating their available defaultresources, and enhanced systemsafeguards for systemically importantderivatives clearing organizations for business continuity and disasterrecovery (‘‘BC–DR’’). This final rule alsoimplements special enforcementauthority over systemically importantderivatives clearing organizationsgranted to the Commission undersection 807(c) of the Dodd-Frank WallStreet Reform and Consumer ProtectionAct (‘‘Dodd-Frank Act’’).
VerDate Mar<15>2010 16:08 Aug 14, 2013Jkt 229001PO 00000Frm 00009Fmt 4700Sfmt 4700E:\FR\FM\15AUR1.SGM15AUR1
Dodd-Frank Wall Street Reform andConsumer Protection Act, Public Law 111–203, 124Stat. 1376 (2010). The text of the Dodd-Frank Actmay be accessed at http://www.cftc.gov/ucm/ groups/public/@swaps/documents/file/ hr4173
Section 701 of the Dodd-Frank Act.
Commodity Futures Modernization Act of 2000, Public Law 106–554, 114 Stat. 2763 (2000).
A New Regulatory Framework for ClearingOrganizations, 66 FR 45604 (Aug. 29, 2001) (finalrule) (adopting 17 CFR part 39, app. A).
section 725(c) of the Dodd-Frank Act(explicitly giving the Commission authority topromulgate rules regarding the core principlespursuant to its rulemaking authority under section8a(5) of the CEA, 7 U.S.C. 12a(5)).
Derivatives Clearing Organization GeneralProvisions and Core Principles, 76 FR 69334 (Nov.8, 2011) (final rule).
at 69335.
Core Principle B also expressly requires DCOsto ‘‘possess financial resources that,
exceed the total amount that would (I) enable theorganization to meet its financial obligations to itsmembers and participants notwithstanding adefault by the member or participant creating thelargest financial exposure for that organization inextreme but plausible market conditions; and (II)enable the [DCO] to cover operating costs of the[DCO] for a period of 1 year (as calculated on arolling basis).’’ Section 5b(c)(2)(B) of the CEA, 7U.S.C. 7a–1(c)(2)(B) (emphasis added).
17 CFR 39.11(a)(1) (implementing CorePrinciple B pertaining to financial resources).
17 CFR 39.11(d)(2)(iii) (requiring a DCO toapply a 30 percent haircut to the value of potentialassessments);
17 CFR 39.11(d)(2)(iv)(permitting a DCO to count the value of assessments, after the 30 percent haircut, to meetup to 20 percent of its default obligations).
Core Principle I also requires DCOs to‘‘establish and maintain a program of risk analysisand oversight to identify and minimize sources of operational risk through the development of appropriate controls and procedures, andautomated systems, that are reliable, secure, andhave adequate scalable capacity,’’ and ‘‘periodicallyconduct tests to verify that the backup resources of the [DCO] are sufficient to ensure daily processing,clearing, and settlement.’’ Section 5b(c)(2)(I) of theCEA, 7 U.S.C. 7a–1(c)(2)(I).
17 CFR 39.18(e)(3) (implementing CorePrinciple I pertaining to system safeguards).
Section 801 of the Dodd-Frank Act.
The rules will become effectiveOctober 15, 2013. Systemicallyimportant derivatives clearingorganizations must comply with §39.29and §39.30 no later than December 31,2013.
Ananda Radhakrishnan, Director, 202–418–5188,
aradhakrishnan@cftc.gov, Robert B. Wasserman, Chief Counsel,202–418–5092,
rwasserman@cftc.gov, M. Laura Astrada, Associate Chief Counsel, 202–418–7622,
lastrada@cftc.gov, or Tracey Wingate,Special Counsel, 202–418–5319,
twingate@cftc.gov, Division of Clearingand Risk, Commodity Futures TradingCommission, Three Lafayette Centre,1155 21st Street NW., Washington, DC20581.
I. BackgroundA. Core Principles for DCOsB. Designation of Systemically ImportantDerivatives Clearing OrganizationsUnder Title VIII of the Dodd-Frank ActC. Standards for SIDCOs Under Title VIIIof the Dodd-Frank ActD. Principles for Financial MarketInfrastructuresE. Existing Prudential RequirementsF. Risk Management Standards for SIDCOsII. Regulation 39.29A. Regulation 39.29(a)B. Regulation 39.29(b)III. Regulation 39.30IV. Regulation 39.31V. Compliance DatesVI. Consideration of Costs and BenefitsA. IntroductionB. BackgroundC. Benefits and Costs of the Final RuleD. Section 15(a) FactorsVII. Related MattersA. Paperwork Reduction ActB. Regulatory Flexibility ActVIII. Text of Final Rules
On July 21, 2010, President Obamasigned the Dodd-Frank Act.
Title VII of the Dodd-Frank Act, entitled the ‘‘WallStreet Transparency and AccountabilityAct of 2010,’’
amended the CommodityExchange Act (‘‘CEA’’ or the ‘‘Act’’)
toestablish a comprehensive regulatoryframework for over-the-counter (‘‘OTC’’)derivatives, including swaps. Thelegislation was enacted to reduce risk,increase transparency, and promotemarket integrity within the financialsystem by, among other things: (1)Providing for the registration andcomprehensive regulation of swapdealers and major swap participants; (2)imposing mandatory clearing and tradeexecution requirements on clearableswap contracts; (3) creating rigorousrecordkeeping and real-time reportingregimes; and (4) enhancing theCommission’s rulemaking andenforcement authorities with respect to,among others, all registered entities andintermediaries subject to theCommission’s oversight.Section 725(c) of the Dodd-Frank Actamended section 5b(c)(2) of the CEA,which sets forth core principles that aderivatives clearing organization(‘‘DCO’’) must comply with to registerand maintain registration with theCommission. The core principles wereoriginally added to the CEA by theCommodity Futures Modernization Actof 2000 (‘‘CFMA’’),
and in 2001, theCommission issued guidance on DCOcompliance with these core principles.
However, in furtherance of the goals of the Dodd-Frank Act to reduce risk,increase transparency, and promotemarket integrity, the Commission,pursuant to the Commission’s enhancedrulemaking authority,
withdrew the2001 guidance and adopted regulationsestablishing standards for compliancewith the DCO core principles.
As noted in the preamble to theadopting release for subparts A and B of part 39 of the Commission’s regulations,the regulations that implement the DCOcore principles, the Commission soughtto provide legal certainty for marketparticipants, strengthen the riskmanagement practices of DCOs, andincrease overall confidence in thefinancial system by assuring the publicthat DCOs are meeting minimum riskmanagement standards.
These riskmanagement standards include, in part:(1) With respect to financialresources, (a) Core Principle B, whichrequires DCOs to have ‘‘adequatefinancial, operational, and managerialresources, as determined by theCommission, to discharge eachresponsibility of the [DCO],’’
and (b)Commission regulation 39.11, whichrequires a DCO to maintain sufficientfinancial resources to meet its financialobligations to its clearing membersnotwithstanding a default by theclearing member creating the largestfinancial exposure for the DCO inextreme but plausible marketconditions,
and permits the inclusionof assessment powers to meet a limitedportion of the DCO’s default resourcesrequirement;
and(2) with respect to businesscontinuity, (a) Core Principle I, whichrequires DCOs to ‘‘establish andmaintain emergency procedures, backupfacilities, and a plan for disasterrecovery that allows for (I) the timelyrecovery and resumption of operationsof the [DCO], and (II) the fulfillment of each obligation and responsibility of the[DCO],’’
and (b) Commissionregulation 39.18, which requires a DCOto maintain a BC–DR plan, emergencyprocedures, and physical, technological,and personnel resources sufficient toenable the DCO to resume dailyprocessing, clearing, and settlement nolater than the next business dayfollowing the disruption of itsoperations.
B. Designation of Systemically Important Derivatives Clearing Organizations Under Title VIII of theDodd-Frank Act Title VIII of the Dodd-Frank Act,entitled ‘‘Payment, Clearing, andSettlement Supervision Act of 2010,’’
VerDate Mar<15>2010 16:08 Aug 14, 2013Jkt 229001PO 00000Frm 00010Fmt 4700Sfmt 4700E:\FR\FM\15AUR1.SGM15AUR1
Section 802(b) of the Dodd-Frank Act.
The Council was established by section 111 of the Dodd-Frank Act. In general, the Council istasked with identifying ‘‘risks to the financialstability of the United States that could arise fromthe material financial distress or failure, or ongoingactivities, of large, interconnected bank holdingcompanies or nonbank financial companies, or thatcould arise outside the financial servicesmarketplace,’’ promoting ‘‘market discipline, byeliminating expectations on the part of shareholders, creditors, and counterparties of suchcompanies that the Government will shield themfrom losses in the event of failure,’’ and responding‘‘to emerging threats to the stability of the UnitedStates financial system.’’ Section 112(a)(1) of theDodd-Frank Act.
Section 804(a)(1) of the Dodd-Frank Act. Theterm ‘‘systemically important’’ means ‘‘a situationwhere the failure of or a disruption to thefunctioning of a financial market utility ... couldcreate, or increase, the risk of significant liquidityor credit problems spreading among financialinstitutions or markets and thereby threaten thestability of the financial system of the UnitedStates.’’ Section 803(9) of the Dodd-Frank Act;
Authority to Designate Financial MarketUtilities as Systemically Important, 76 FR 44763,44774 (July 27, 2011) (final rule).
Section 803(6)(A) of the Dodd-Frank Act. Insection 803(6)(B) of the Dodd-Frank Act, the termexpressly excludes designated contract markets,registered futures associations, swap datarepositories, and swap execution facilitiesregistered under the Commodity Exchange Act (7U.S.C. 1 et seq.), or national securities exchanges,national securities associations, alternative tradingsystems, security-based swap data repositories, andswap execution facilities registered under theSecurities Exchange Act of 1934 (15 U.S.C. 78a etseq.), solely by reason of their providing facilitiesfor comparison of data respecting the terms of settlement of securities or futures transactionseffected on such exchange or by means of anyelectronic system operated or controlled by suchentities, provided that the exclusions in this clauseapply only with respect to the activities that requirethe entity to be so registered; and any broker,dealer, transfer agent, or investment company, orany futures commission merchant, introducing broker, commodity trading advisor, or commoditypool operator, solely by reason of functionsperformed by such institution as part of brokerage,dealing, transfer agency, or investment companyactivities, or solely by reason of acting on behalf of a financial market utility or a participant therein inconnection with the furnishing by the financialmarket utility of services to its participants or theuse of services of the financial market utility by itsparticipants, provided that services performed bysuch institution do not constitute critical riskmanagement or processing functions of thefinancial market utility.
76 FR at 44763.
Under section 804(a)(2) of the Dodd-Frank Act,in determining whether an FMU is or is likely to become systemically important, the Council musttake into consideration the following: (A) Theaggregate monetary value of transactions processed by the FMU; (B) the aggregate exposure of an FMUto its counterparties; (C) the relationship,interdependencies, or other interactions of the FMUwith other FMUs or payment, clearing, orsettlement activities; (D) the effect that the failureof or a disruption to the FMU would have oncritical markets, financial institutions, or the broader financial system; and (E) any other factorsthe Council deems appropriate.
76 FR at 44766.
Press Release, Financial Stability OversightCouncil, Financial Stability Oversight CouncilMakes First Designations in Effort to Protect AgainstFuture Financial Crises (July 18, 2012), available at
http://www.treasury.gov/press-center/press-releases/Pages/tg1645.aspx. 23
Chicago Mercantile Exchange, Inc. (‘‘CME’’)and ICE Clear Credit LLC (‘‘ICE Clear Credit’’) arethe CFTC-registered DCOs that were designatedsystemically important by the Council, for whichCFTC is the Supervisory Agency. While TheOptions Clearing Corporation (‘‘OCC’’), a CFTC-registered DCO, was designated systemicallyimportant by the Council, the Securities andExchange Commission (‘‘SEC’’) serves as OCC’sSupervisory Agency.
section 803(8)(A) of the Dodd-Frank Act(defining ‘‘Supervisory Agency’’ as ‘‘the Federalagency that has primary jurisdiction over adesignated [FMU] under Federal banking,securities, or commodity futures laws’’).
Specifically, under Commission regulations, asystemically important derivatives clearingorganization is a ‘‘financial market utility that is aderivatives clearing organization registered underSection 5b of the Act, which has been designated by the Financial Stability Oversight Council to besystemically important and for which theCommission acts as the Supervisory Agencypursuant to Section 803(8) of the [Dodd-FrankAct].’’
17 CFR 39.2.
section 805(a)(2) of the Dodd-Frank Act.The Commission notes that it also has the authorityto prescribe risk management standards governingthe operations related to payment, clearing, andsettlement activities for FMUs that are designatedas systemically important by the Council and thatare engaged in activities for which the Commissionis the appropriate financial regulator. Furthermore,section 805 establishes a review mechanism bywhich the Council may intervene if the Board of Governors of the Federal Reserve System (the‘‘Board’’) determines that the existing riskmanagement standards set by the Commission ‘‘areinsufficient to prevent or mitigate significantliquidity, credit, operational, or other risks to thefinancial markets or to the financial stability of theUnited States.’’ Section 805(a)(2)(B) of the Dodd-Frank Act.
Section 805(b) of the Dodd-Frank Act.
was enacted to mitigate systemic risk inthe financial system and promotefinancial stability.
Section 804 of theDodd-Frank Act requires the FinancialStability Oversight Council(‘‘Council’’)
to designate thosefinancial market utilities (‘‘FMUs’’) thatthe Council determines are, or are likelyto become, systemically important.
AnFMU includes ‘‘any person thatmanages or operates a multilateralsystem for the purpose of transferring,clearing, or settling payments,securities, or other financialtransactions among financialinstitutions or between financialinstitutions and the person.’’
As noted by the Council,
FMUs form a critical part of the nation’sfinancial infrastructure. They exist in manymarkets to support and facilitate the transfer,clearing or settlement of financialtransactions, and their smooth operation isintegral to the soundness of the financialsystem and the overall economy. However,their function and interconnectedness alsoconcentrate a considerable amount of risk inthe financial system due, in large part, to theinterdependencies, either directly throughoperational, contractual or affiliationlinkages, or indirectly through payment,clearing, and settlement processes. In otherwords, problems at one FMU could triggersignificant liquidity and credit disruptions atother FMUs or financial institutions.
In determining whether an FMU issystemically important, the Counciluses a two-stage designation process,applying certain statutoryconsiderations
and other metrics toassess, among other things, ‘‘whetherpossible disruptions [to the functioningof an FMU] are potentially severe, notnecessarily in the sense that theythemselves might trigger damage to theU.S. economy, but because suchdisruptions might reduce the ability of financial institutions or markets toperform their normal intermediationfunctions.’’
On July 18, 2012, theCouncil designated eight FMUs assystemically important under TitleVIII.
Two of these designated FMUsare CFTC-registered DCOs
for whichthe Commission is the SupervisoryAgency.
Such designated CFTC-registered DCOs are also known assystemically important derivativesclearing organizations (‘‘SIDCOs’’).
C. Standards for SIDCOs Under TitleVIII of the Dodd-Frank Act Section 805 of the Dodd-Frank Actdirects the Commission to considerrelevant international standards andexisting prudential requirements whenprescribing risk management standardsgoverning the operations related topayment, clearing, and settlementactivities for FMUs that are (1)designated as systemically important bythe Council, and (2) engaged inactivities for which the Commission isthe Supervisory Agency.
Under TitleVIII, the objectives and principles forthese risk management standards are to:(1) Promote risk management; (2)promote safety and soundness; (3)reduce systemic risks; and (4) supportthe stability of the broader financialsystem.
As outlined in section 805(c),these standards may address such areasas: ‘‘(1) Risk management policies andprocedures; (2) margin and collateralrequirements; (3) participant orcounterparty default policies andprocedures; (4) the ability to completetimely clearing and settlement of financial transactions; (5) capital andfinancial resources requirements fordesignated [FMUs]; and (6) other areasthat are necessary to achieve theobjectives and principles in [section805(b) of the Dodd-Frank Act].’’The Commission has reviewed therisk management standards set forth inpart 39 of the Commission’s regulationsin light of recently promulgated relevantinternational standards and existingprudential requirements to identify
VerDate Mar<15>2010 16:08 Aug 14, 2013Jkt 229001PO 00000Frm 00011Fmt 4700Sfmt 4700E:\FR\FM\15AUR1.SGM15AUR1