Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules
Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules
Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules
Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules
SUMMARY:
DATES:
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CFR 1.35(a)(1).
U.S.C. 1a(34). The CEA can be accessed
through the Commissions Web site.
5 As stated in the Final Rule, the oral
recordkeeping requirement in Regulation 1.35(a)
does not apply to: (i) Oral communications that lead
solely to the execution of a related cash or forward
transaction; (ii) oral communications provided or
received by a floor broker that do not lead to the
purchase or sale for any person other than the floor
broker of any commodity for future delivery,
security futures product, swap, or commodity
option authorized under section 4c of the
Commodity Exchange Act; (iii) an introducing
broker that has generated over the preceding three
years $5 million or less in aggregate gross revenues
from its activities as an introducing broker; (iv) a
floor trader; (v) a commodity pool operator; (vi) a
swap dealer; (vii) a major swap participant; or (viii)
a member of a DCM or SEF that is not registered
or required to be registered with the Commission
in any capacity. 17 CFR 1.35(a)(1).
6 17 CFR 1.35(a)(1).
7 Id.
8 Final Rule Adopting Release at 75524.
47
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at 55.
id.
21 See id.
22 See id. at 1416.
23 Id. at 6465.
24 Id.
25 See SIFMA AMG and MFA Letter, Request for
Interpretive Guidance on Application of Rule
1.35(a) to Asset Managers (Dec. 10, 2013), available
at http://www.sifma.org/issues/item.aspx
?id=8589946605 and CFTC Staff Letter No. 1377.
20 See
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28 Id.
29 See SIFMA AMG Letter, CFTC Staff Public
Roundtable to Discuss Dodd-Frank End-User Issues
and Request for Interpretative Guidance and Relief
on Application of Rule 1.35(a) to Asset Managers
(Apr. 17, 2014), available at: http://www.sifma.org/
issues/item.aspx?id=8589948677, and CFTC Staff
Letter No. 1460.
30 Id.
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Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules
requests from market participants for
guidance on how to comply with this
requirement. The Commission is now
proposing that all required records must
be searchable, but not searchable by
transaction. The current rule also states
that all required records be identifiable
by transaction. The Commission is
clarifying that this means records must
be kept in a form and manner that
allows for identification of a particular
transaction, with certain exception, as
described below.
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CFR 1.35(a)(1).
U.S.C. 1a(34).
39 See CFTC Letter 1472 and End-User
Roundtable Transcript at 55.
40 See End-User Roundtable Transcript.
38 7
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CFR 1.35(a)(1).
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3. Benefits
The Commission believes that the
Proposal will have a tangible benefit for
those market participants and end-users
that are excluded from some of the
regulatory burdens and associated costs
of Regulation 1.35(a) under the
Proposal. The Commission
preliminarily believes that it may be
difficult to quantify what other benefits
the Proposal may have for other market
participants, the markets themselves, or
the general public. Comments are
sought regarding these benefits and any
other benefits resulting from adoption of
the Proposal, and to the extent they can
be quantified, estimates of the monetary
or other value thereof.
4. Section 15(a)
Section 15(a) of the CEA requires the
Commission to consider the effects of its
actions in light of the following five
factors:
a. Protection of Market Participants and
the Public
The proposed amendments to Rule
1.35(a) are intended, in part, to reduce
some of the regulatory burdens on
certain market participants and endusers. The Commission recognizes that
there may be a trade-off between
reducing regulatory burdens while at
the same time ensuring that the
recordkeeping obligations Rule 1.35(a)
imposes upon market participants and
end users are sufficient to support the
effort by the Commission to fulfill its
regulatory mission. Are the scope and
reach of the proposed amendments
appropriate to achieve these goals?
Under the proposed amendments to
Rule 1.35(a) certain market participants
and end-users will no longer be required
to create and maintain certain types of
records that would be useful for the
Commission in exercising its oversight
of the markets, including for market
surveillance, enforcement, and ensuring
market integrity. What effect, if any, will
the proposed amendments have on the
ability of the Commission to obtain
information necessary to effectively
oversee the markets and investigate and
prosecute misconduct?
b. Efficiency, Competitiveness, and
Integrity of Markets
The proposed amendments to Rule
1.35(a) are intended, in part, to reduce
some of the regulatory burdens on
certain market participants and endusers. Will the proposed amendments
actually decrease the regulatory burdens
on certain market participants and endusers? If so, will this result in increased
efficiency and competition among end-
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representative of the Commission or the
United States Department of Justice.
(7) (i) The Commission may in its
discretion establish an alternative
compliance schedule for the
requirement to record oral
communications under paragraph (a)(1)
of this section that is found to be
technologically or economically
impracticable for an affected entity that
seeks, in good faith, to comply with the
requirement to record oral
communications under paragraph (a)(1)
of this section within a reasonable time
period beyond the date on which
compliance by such affected entity is
otherwise required.
(ii) A request for an alternative
compliance schedule under paragraph
(a)(7)(i) of this section shall be acted
upon within 30 days from the time such
a request is received, or it shall be
deemed approved.
(iii) The Commission hereby delegates
to the Director of the Division of Swap
Dealer and Intermediary Oversight or
such other employee or employees as
the Director may designate from time to
time, the authority to exercise the
discretion. Notwithstanding such
delegation, in any case in which a
Commission employee delegated
authority under this paragraph believes
it appropriate, he or she may submit to
the Commission for its consideration the
question of whether an alternative
compliance schedule should be
established. The delegation of authority
in this paragraph shall not prohibit the
Commission, at its election, from
exercising the authority set forth in
paragraph (a)(7)(i) of this section.
(iv) Relief granted under paragraph
(a)(7)(i) of this section shall not cause an
affected entity to be out of compliance
or deemed in violation of any
recordkeeping requirements.
*
*
*
*
*
Issued in Washington, DC, on November 4,
2014, by the Commission.
Christopher J. Kirkpatrick,
Secretary of the Commission.
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