81_FR_1366 81 FR 1359 - Alternative to Fingerprinting Requirement for Foreign Natural Persons

81 FR 1359 - Alternative to Fingerprinting Requirement for Foreign Natural Persons

COMMODITY FUTURES TRADING COMMISSION

Federal Register Volume 81, Issue 7 (January 12, 2016)

Page Range1359-1364
FR Document2016-00045

The Commodity Futures Trading Commission (``Commission'' or ``CFTC'') is proposing to amend existing Commission regulations to establish an alternative to fingerprinting to evaluate the fitness of natural persons who are required to submit fingerprints under the Commission's regulations and who have not resided in the United States since reaching 18 years of age (``Proposal'').

Federal Register, Volume 81 Issue 7 (Tuesday, January 12, 2016) 
[Federal Register Volume 81, Number 7 (Tuesday, January 12, 2016)]
[Proposed Rules]
[Pages 1359-1364]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-00045]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 3

RIN 3038-AE16


Alternative to Fingerprinting Requirement for Foreign Natural 
Persons

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commodity Futures Trading Commission (``Commission'' or 
``CFTC'') is proposing to amend existing Commission regulations to 
establish an alternative to fingerprinting to evaluate the fitness of 
natural persons who are required to submit fingerprints under the 
Commission's regulations and who have not resided in the United States 
since reaching 18 years of age (``Proposal'').

DATES: Comments must be received on or before February 11, 2016.

ADDRESSES: You may submit comments, identified by RIN 3038-AE16, by any 
of the following methods:
     Agency Web site: Via its Comments Online process: http://comments.cftc.gov. Follow the instructions on the Web site for 
submitting comments.
     Mail: Send to Christopher Kirkpatrick, Secretary, 
Commodity Futures Trading Commission, 1155 21st Street NW., Washington, 
DC 20581.
     Hand delivery/Courier: Same as Mail above.
     Federal eRulemaking Portal: at http://www.regulations.gov/. Follow the instructions for submitting comments.
    All comments must be submitted in English, or if not, accompanied 
by an English translation. Comments will be posted as received to 
http://www.cftc.gov. You should submit only information that you wish 
to make available publicly. If you wish the Commission to consider 
information that is exempt from disclosure under the Freedom of 
Information Act,\1\ a petition for confidential treatment of the exempt 
information may be submitted according to the procedures set forth in 
Sec.  145.9 of the Commission's regulations.\2\
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    \1\ 5 U.S.C. 552.
    \2\ Commission regulations referred to herein are found at 17 
CFR chapter. 1. Commission regulations are accessible on the 
Commission's Web site,  http://www.cftc.gov.
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    The Commission reserves the right, but shall have no obligation, to 
review, pre-screen, filter, redact, refuse or remove any or all of your 
submission from http://www.cftc.gov that it may deem to be 
inappropriate for publication, such as obscene language. All 
submissions that have been redacted or removed that contain comments on 
the merits of the rulemaking will be retained in the public comment 
file and will be considered as required under the Administrative 
Procedure Act and other applicable laws, and may be accessible under 
the Freedom of Information Act.

FOR FURTHER INFORMATION CONTACT: Katherine Driscoll, Associate Chief 
Counsel, 202-418-5544, [email protected]; Jacob Chachkin, Special 
Counsel, 202-418-5496, [email protected]; or Adam Kezsbom, Special 
Counsel, 202-418-5372, [email protected], Division of Swap Dealer and 
Intermediary Oversight, Commodity Futures Trading Commission, Three 
Lafayette Centre, 1155 21st Street NW., Washington, DC 20581.

SUPPLEMENTARY INFORMATION:

I. Background

    Subject to certain exceptions and exclusions, persons engaging in 
specified activities involving commodity interests \3\ are required 
pursuant to the Commodity Exchange Act (``CEA'' or ``Act'') and/or 
Commission regulations \4\ to register with the Commission in certain 
registration categories. These include registration as a futures 
commission merchant (``FCM''), retail foreign exchange dealer 
(``RFED''), introducing broker (``IB''), commodity pool operator 
(``CPO''), commodity trading advisor (``CTA''), swap dealer (``SD''), 
major

[[Page 1360]]

swap participant (``MSP''), leverage transaction merchant (``LTM''), 
floor broker (``FB''), and floor trader (``FT'').\5\ One of the 
critically important functions of registration is to allow the 
Commission to ensure that all futures and swaps industry professionals 
who deal with the public meet minimum standards of fitness and 
competency.\6\ The fitness investigations that are part of the 
registration process permit the Commission and/or its delegatees to (a) 
uncover past misconduct that may disqualify an individual or entity 
from registration and (b) help determine if such persons have disclosed 
all matters required to be disclosed in their applications to become 
registered with the Commission.\7\
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    \3\ A commodity interest is (1) any contract for the purchase or 
sale of a commodity for future delivery; (2) any contract, agreement 
or transaction subject to a Commission regulation under section 4c 
or 19 of the Commodity Exchange Act; (3) any contract, agreement or 
transaction subject to Commission jurisdiction under section 2(c)(2) 
of such Act; and (4) Any swap as defined in such Act, by the 
Commission, or jointly by the Commission and the Securities and 
Exchange Commission. 17 CFR 1.3(yy).
    \4\ See, e.g., Commission regulation 3.4(a). 17 CFR 3.4(a).
    \5\ For the definitions of these registration categories (other 
than RFED), see Section 1a of the CEA and Commission regulation 1.3. 
7 U.S.C. 1a and 17 CFR 1.3. For the definition of RFED, see 
Commission regulation 5.1(h). 17 CFR 5.1(h).
    \6\ See, e.g., Commodity Futures Trading Comm'n, Division of 
Clearing and Intermediary Oversight, Public Report on the 
Registration Program of the National Futures Association, June 2010, 
at 1 (citing H.R. REP. NO. 97-565(I), at 48 (1982), reprinted in 
1982 U.S.C.C.A.N. 3871, 3897-3899).
    \7\ See http://www.nfa.futures.org/NFA-registration/index.HTML 
(last visited Dec. 22, 2015), stating that ``[t]he primary purposes 
of registration are to screen an applicant's fitness to engage in 
business as a futures professional and to identify those individuals 
and organizations whose activities are subject to federal 
regulation.''
    Pursuant to Commission regulation 3.60, the Commission may, 
subject to some limitations, deny, grant with conditions, suspend, 
revoke, or restrict registration to an applicant if the Commission 
alleges and is prepared to prove that the registrant or applicant is 
subject to one or more of the statutory disqualifications set forth 
in section 8a(2), 8a(3) or 8a(4) of the Act. 17 CFR 3.60. Sections 
8a(2) and 8a(3) of the Act contain an extensive list of matters that 
provide grounds for refusing or conditioning an applicant's 
registration, including, without limitation, felony convictions, 
commodities or securities law violations, bars or other adverse 
actions taken by financial regulators, and willfully omitting to 
state any material fact in an application. See 7 U.S.C. 12a(2) and 
(3). See also Interpretative Statement With Respect to Section 
8a(2)(C) and (E) and Section 8a(3)(J) and (M) of the Commodity 
Exchange Act, Appendix A to part 3 of the Commission's regulations.
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    Pursuant to the registration process for determining a registrant's 
fitness in part 3 of the Commission's regulations, natural persons \8\ 
that wish to be principals \9\ or associated persons \10\ of Commission 
registrants, or who are responsible for entry of orders from an FB's or 
FT's own account, are required to submit their fingerprints \11\ (the 
``Fingerprinting Requirement'').\12\
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    \8\ As used herein, the terms ``natural person'' and 
``individual'' have the same meaning.
    \9\ See the definition of principal in Commission regulation 
3.1(a). 17 CFR 3.1(a).
    \10\ An ``associated person'' is any natural person who is 
associated in certain capacities with an FCM, RFED, IB, CPO, CTA, 
SD, MSP, or LTM. 17 CFR 1.3(aa).
    \11\ Currently, the Commission may, directly or indirectly, 
require fingerprinting pursuant to Commission regulations 
3.10(a)(2); 3.11(a)(1); 3.12(c)(3), d(2), f(3), or (i)(3); 
3.40(a)(1), (a)(2), or (b); 3.44(a)(5) or (c); or 3.46(a)(3). 17 CFR 
3.10(a)(2); 3.11(a)(1); 3.12(c)(3), d(2), f(3), and (i)(3); 
3.40(a)(1), (a)(2), and (b); 3.44(a)(5) and (c); and 3.46(a)(3).
    \12\ In support of its initial promulgation of the 
fingerprinting requirements, the Commission stated that these 
requirements ``are necessary to permit improvements in the 
Commission's background checking of applicants for registration, to 
permit positive identification of certain individuals with common 
names, to reduce the number of applications filed by individuals who 
are unfit for registration, and to facilitate fitness reviews of 
registrants on a spot and periodic basis.'' See Revision of 
Registration Regulations; Final Rules; Designation of New Part, 45 
FR 80485, 80485 (Dec. 5, 1980).
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    The Commission has delegated to National Futures Association 
(``NFA''), a registered futures association under Section 17 of the 
CEA, the registration functions set forth in subparts A, B, and C of 
part 3 of the Commission's regulations, including the collection and 
review of a completed Form 8-R \13\ and related fingerprint submissions 
from each natural person completing a Form 8-R.\14\ NFA, working with 
law enforcement agencies, uses these fingerprints to conduct background 
checks on these natural persons to assist in determining their fitness.
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    \13\ Generally, Form 8-R is the Commission's application for 
natural persons that are associated persons or principals of a 
registrant.
    \14\ See 17 CFR 3.2(a).
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    In December 2012, the Commission's Division of Swap Dealer and 
Intermediary Oversight (``DSIO''), in response to concerns raised by 
industry participants that the Fingerprinting Requirement was unduly 
burdensome to foreign natural persons and after considering those 
concerns in light of the continued need to evaluate the fitness of 
those persons, issued a no-action letter, CFTC Staff Letter No. 12-
49.\15\ CFTC Staff Letter No. 12-49 provides an alternative to 
complying with the Fingerprinting Requirement for principals of LTMs, 
FCMs, RFEDs, IBs, CPOs, CTAs, SDs, and MSPs that have not resided in 
the United States since reaching 18 years of age. Subject to certain 
conditions specified in the letter, DSIO staff stated that it would not 
recommend that the Commission commence an enforcement action against 
any such firm based solely upon that firm's failure to submit with its 
registration application a fingerprint card for each such principal.
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    \15\ CFTC Staff Letter No. 12-49 (Dec. 11, 2012), available at 
http://www.cftc.gov/ucm/groups/public/@lrlettergeneral/documents/letter/12-49.pdf.
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    To rely on the relief provided in CFTC Staff Letter No. 12-49, DSIO 
staff required that any such firm submit, for each principal, either a 
fingerprint card (as required under Commission regulation 3.10(a)(2)) 
or a certification, signed by a person with authority to bind such 
firm, stating that: (1) A reasonable criminal history background check 
using a reputable commercial service had been conducted; (2) such 
criminal history background check did not reveal any matters that 
constitute a disqualification under Sections 8a(2) or 8a(3) of the 
CEA,\16\ other than those disclosed; and (3) such firm would maintain, 
in accordance with Commission regulation 1.31, records documenting that 
such criminal history background check was performed and the results of 
such background check.\17\
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    \16\ 7 U.S.C. 12a(2) and (3).
    \17\ CFTC Staff Letter No. 12-49, at 2.
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    After issuing CFTC Staff Letter No. 12-49, DSIO staff issued 
similar no-action relief from the Fingerprinting Requirement for 
associated persons of FCMs, RFEDs, IBs, CTAs, CPOs, and LTMs that have 
not resided in the United States since reaching 18 years of age in CFTC 
Staff Letter No. 13-29 \18\ (CFTC Staff Letter No. 13-29, together with 
CFTC Staff Letter No. 12-49, are the ``DSIO No-Action Letters'' and the 
relief provided by such letters is the ``DSIO No-Action Relief'').
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    \18\ CFTC Staff Letter No. 13-29 (Jun. 21, 2013), available at 
http://www.cftc.gov/ucm/groups/public/@lrlettergeneral/documents/letter/13-29.pdf.
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II. Proposal

    The Commission is proposing to amend the Fingerprinting Requirement 
by adding a new sub-section (e) to the existing list of exemptions from 
the Fingerprinting Requirement in Sec.  3.21 \19\ to codify and clarify 
the DSIO No-Action Relief.
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    \19\ Commission regulation 3.21 provides exemptions to the 
Fingerprinting Requirement, subject to certain conditions, for 
persons whose fingerprints have recently been identified and 
processed by the Federal Bureau of Investigation, for persons whose 
application for initial registration with the Commission in any 
capacity was recently granted, for persons that have a current Form 
8-R on file with the Commission or NFA, and for principals that are 
outside directors. 17 CFR 3.21.
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    This Proposal differs from the DSIO No-Action Relief. First, this 
Proposal would extend the relief to certain natural persons connected 
to FBs and FTs. Second, the Proposal would include all requirements to 
provide a fingerprint card under Part 3 of the Commission's 
regulations, whereas the DSIO No-Action Relief is more limited.\20\ As 
a result, this Proposal broadens the availability of the alternative to 
fingerprinting provided in

[[Page 1361]]

the DSIO No-Action Letters; however, the Commission believes that the 
rationale for providing the alternative to fingerprinting described 
above is equally applicable to natural persons connected to FBs and FTs 
and to all other requirements to provide a fingerprint card under Part 
3 of the Commission's regulations, as explained further below.
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    \20\ The DSIO No-Action Letters provide an alternative solely to 
the requirements of Commission regulations 3.10(a)(2) and 
3.12(c)(3). See DSIO No-Action Letters.
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    Proposed sub-section (e)(2) of Sec.  3.21 would provide that the 
obligation to provide a fingerprint card for a Foreign Natural Person 
under part 3 of the Commission's regulations would be deemed satisfied 
for a Certifying Firm (each, as defined below) if: (a) Such Certifying 
Firm causes a criminal history background check of such Foreign Natural 
Person to be performed; (b) such criminal history background check does 
not reveal any matters that constitute a disqualification under 
Sections 8a(2) or 8a(3) of the CEA,\21\ other than those disclosed to 
NFA; and (c) a person authorized by such Certifying Firm submits, in 
reliance on such criminal history background check, a certification by 
such Certifying Firm to NFA.
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    \21\ 7 U.S.C. 12a(2) and (3).
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    The certification must: (i) State that the conditions described 
above have been satisfied; and (ii) be signed by a person authorized by 
such Certifying Firm to make such certification. In addition, each 
criminal history background check must: (a) Be of a type that would 
reveal all matters listed under Sections 8a(2)(D) or 8a(3)(D), (E), or 
(H) of the CEA \22\ relating to the Foreign Natural Person and (b) be 
completed not more than one calendar year prior to the date that such 
Certifying Firm submits the certification to NFA described in the 
proposed rule.
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    \22\ 7 U.S.C. 12a(2)(D) and 12a(3)(D), (E), and (H). These 
provisions of Sections 8a(2) and (3) of the CEA generally relate to 
criminal convictions.
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    In terms of definitions, proposed paragraph 3.21(e)(1)(i) would 
define Foreign Natural Person, solely for purposes of paragraph (e), as 
any natural person who has not resided in the United States since 
reaching the age of 18 years. Also, proposed paragraph 3.21(e)(1)(ii) 
would define Certifying Firm, also solely for purposes of paragraph 
(e), with respect to natural persons acting in certain specified 
capacities in relation to the firm.
    By way of recordkeeping, proposed paragraph 3.21(e)(3) would 
require that the Certifying Firm maintain, in accordance with 
Commission regulation 1.31, records documenting each criminal history 
background check and the results thereof.
    The Commission believes the proposal, in providing certainly to 
market participants by way of Commission regulation, will make the 
commodity interest markets it oversees more liquid, competitive, and 
accessible by enabling Foreign Natural Persons to demonstrate that they 
meet the minimum standards for fitness and competency without undue 
burden. The alternative to fingerprinting proposed will remove an 
impediment to participation in United States' markets by persons 
located outside of the United States while also ensuring the continued 
protection of market participants and the public. Further, the 
Commission believes that, by providing an alternative for persons 
outside the United States, this Proposal is consistent with the 
principles of international comity.
    As discussed above, in an attempt to provide greater clarity to 
market participants, this Proposal is slightly different than the DSIO 
No-Action Letters. In particular, where the No-Action Relief required 
that ``a reasonable criminal history background check using a reputable 
commercial service'' be performed, this Proposal does not include the 
terms ``reasonable'' or ``reputable.'' Instead, this Proposal requires 
that the background check meet the objective standard described above, 
which relies on the clearly-stated matters under Sections 8a(2)(D) and 
8a(3)(D), (E), and (H) of the CEA. The Commission believes that using 
such an objective standard (one that does not require a market 
participant to make a subjective determination of what is 
``reasonable'' or ``reputable'' for purposes of the alternative) 
furthers its goal of providing certainty to market participants while 
allowing the Commission to continue to ensure the fitness of its 
registrants.
    If adopted, the proposed rule would supersede the DSIO No-Action 
Letters without prejudice to those who are relying on either of the 
DSIO No-Action Letters and have satisfied the requirements thereof 
prior to the date hereof.

III. Request for Comments

    The Commission requests comment generally on all aspects of this 
Proposal. In particular, the Commission requests comment on the 
following:
    1. Should the Commission promulgate a final rule in relation to 
this Proposal to provide an alternative to the Fingerprinting 
Requirement for Foreign Natural Persons?
    2. Please describe the burdens that Foreign Natural Persons face in 
complying with the Fingerprinting Requirement. How are these burdens 
different from those faced by natural persons that are not Foreign 
Natural Persons?
    3. Is the criminal history background check as set forth in the 
Proposal sufficient to reveal the existence of all matters listed under 
Sections 8a(2)(D) or 8a(3)(D), (E), or (H) of the CEA, if any such 
matter existed? If not, please provide specific additional or 
alternative requirements for the criminal history background check.
    4. This Proposal is limited to Foreign Natural Persons (i.e., 
individuals who have not resided in the United States since reaching 18 
years of age). Should the Commission use another measure to determine 
whether an individual should be eligible for the proposed alternative 
to the Fingerprinting Requirement?
    5. This Proposal requires that a background check be completed not 
more than one calendar year prior to the date of a Certifying Firm's 
related certification. Should the Commission require that the 
background check be completed within a different period?
    6. Are persons eligible for the DSIO No-Action Relief currently 
availing themselves of that alternative to the Fingerprinting 
Requirement? To the extent that such persons are not, please provide 
reasons as to why they are not.
    7. Are there any other matters that the Commission should consider 
in determining whether to adopt this Proposal?

IV. Related Matters

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA'') \23\ requires Federal 
agencies, in promulgating regulations, to consider whether the rules 
they propose will have a significant economic impact on a substantial 
number of small entities and, if so, to provide a regulatory 
flexibility analysis regarding the economic impact on those entities. 
This Proposal would affect certain FCMs, RFEDs, IBs, CPOs, CTAs, SDs, 
MSPs, LTMs, FBs, and FTs that wish to take advantage of the alternative 
to fingerprinting to evaluate the fitness of their Foreign Natural 
Persons for which fingerprints must be submitted to NFA.\24\ The 
Commission has previously determined that FCMs, RFEDS, CPOs, SDs, MSPs, 
and LTMs are not small

[[Page 1362]]

entities for purposes of the RFA.\25\ Therefore, the requirements of 
the RFA do not apply to those entities. With respect to CTAs, FBs, FTs, 
and IBs, the Commission has found it appropriate to consider whether 
such registrants should be deemed small entities for purposes of the 
RFA on a case-by-case basis, in the context of the particular 
Commission regulation at issue.\26\ As certain of these registrants may 
be small entities for purposes of the RFA, the Commission considered 
whether this rulemaking would have a significant economic impact on 
such registrants. This Proposal will solely provide an optional 
alternative to complying with the Fingerprinting Requirement, which 
already applies to such registrants, and would, therefore, not impose 
any new regulatory obligations on affected registrants. This Proposal 
is not expected to impose any new burdens on market participants. 
Rather, to the extent that this Proposal provides an alternative means 
to comply with the Fingerprinting Requirement and is elected by a 
market participant, the Commission believes it is reasonable to infer 
that the alternative is less burdensome to such participant. The 
Commission does not, therefore, expect small entities to incur any 
additional costs as a result of this Proposal. Consequently, the 
Commission finds that no significant economic impact on small entities 
will result from this Proposal.
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    \23\ 5 U.S.C. 601 et seq.
    \24\ This Proposal will also directly affect certain of such 
individuals; however, the Commission has noted that the RFA, by its 
terms, does not apply to individuals. See 48 FR 14933, 14954 n.115 
(Apr. 6, 1983). Therefore, no analysis on the economic impact of 
this rule on individuals is provided.
    \25\ See Policy Statement and Establishment of Definitions of 
``Small Entities'' for Purposes of the Regulatory Flexibility Act, 
47 FR 18618 (Apr. 30, 1982) (FCMs and CPOs); Leverage Transactions, 
54 FR 41068 (Oct. 5, 1989) (LTMs); Regulation of Off-Exchange Retail 
Foreign Exchange Transactions and Intermediaries, 75 FR 55410, 55416 
(Sept. 10, 2010) (RFEDs); and Registration of Swap Dealers and Major 
Swap Participants, 77 FR 2613, 2620 (Jan. 19, 2012) (SDs and MSPs).
    \26\ See 47 FR at 18620 (CTAs and FBs); Registration of Floor 
Traders; Mandatory Ethics Training for Registrants; Suspension of 
Registrants Charged With Felonies, 58 FR 19575, 19588 (Apr. 15, 
1993) (FTs); and Introducing Brokers and Associated Persons of 
Introducing Brokers, Commodity Trading Advisors and Commodity Pool 
Operators; Registration and Other Regulatory Requirements, 48 FR 
35248, 35276 (Aug. 3, 1983) (IBs).
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    Accordingly, the Chairman, on behalf of the Commission, hereby 
certifies pursuant to 5 U.S.C. 605(b) that this Proposal will not have 
a significant economic impact on a substantial number of small 
entities.

B. Paperwork Reduction Act

1. Background
    The Paperwork Reduction Act of 1995 (``PRA'') \27\ imposes certain 
requirements on Federal agencies (including the Commission) in 
connection with conducting or sponsoring any collection of information 
as defined by the PRA. This Proposal would result in a collection of 
information within the meaning of the PRA, as discussed below. The 
Commission therefore is submitting this Proposal to the Office of 
Management and Budget (``OMB'') for review.
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    \27\ 44 U.S.C. 3501 et seq.
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    This Proposal contains collections of information for which the 
Commission has previously received control numbers from OMB. The titles 
for these collections of information are ``Commodity Pool Operators and 
Commodity Trading Advisors: Amendments to Compliance Obligations, OMB 
control number 3038-0023'' \28\ and ``Registration of Swap Dealers and 
Major Swap Participants, OMB control number 3038-0072.'' \29\
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    \28\ See OMB Control No. 3038-0023, http://www.reginfo.gov/public/do/PRAOMBHistory?ombControlNumber=3038-0023# (last visited 
Dec. 22, 2015). The collection is being retitled ``Registration 
Under the Commodity Exchange Act.''
    \29\ See OMB Control No. 3038-0072, http://www.reginfo.gov/public/do/PRAOMBHistory?ombControlNumber=3038-0072# (last visited 
Dec. 22, 2015).
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    The responses to these collections of information are mandatory. An 
agency may not conduct or sponsor, and a person is not required to 
respond to, a collection of information unless it displays a currently 
valid control number issued by OMB.
    The collection of information in this Proposal would provide an 
optional alternative to complying with the Fingerprinting Requirement 
(as described above). Eligible persons would have the option to elect 
the certification process, but no obligation to do so. For this reason, 
except to the extent that the Commission is amending the subject OMB 
control numbers for PRA purposes to reflect the alternative 
certification process, this Proposal is not expected to impose any new 
burdens on market participants. Rather, to the extent that this 
Proposal provides an alternative means to comply with the 
Fingerprinting Requirement and is elected by market participants, it is 
reasonable for the Commission to infer that the alternative is less 
burdensome to such participants.
2. Revisions to Collections 3038-0023 and 3038-0072
    Collections 3038-0023 and 3038-0072 are currently in force with 
their control numbers having been provided by OMB.
    As discussed above, this Proposal would add a new exemption that 
would incorporate an alternative to fingerprinting to evaluate the 
fitness of certain Foreign Natural Persons. In order to qualify for 
this alternative, the Certifying Firm must take the steps required 
pursuant to this Proposal, including submitting the required 
certification to NFA and maintaining records of the criminal history 
background check and the results thereof. Requiring such actions would 
result in revisions to collections 3038-0023 and 3038-0072. Therefore, 
the Commission proposes to revise each of collections 3038-0023 and 
3038-0072.
    The Commission understands that NFA has received approximately 110 
requests in each of 2014 and 2015 from market participants asking to 
avail themselves of the DSIO No-Action Relief. However, as discussed 
above, the relief provided by this Proposal is broader than the DSIO 
No-Action relief in that it extends the relief to certain natural 
persons connected to FBs and FTs. Therefore, the Commission estimates 
that Certifying Firms will submit 200 certifications per year to take 
advantage of the alternative provided in this Proposal.
    As of November 23, 2015, there were (i) 9,259 Commission-registered 
FCMs, RFEDs, IBs, CPOs, CTAs, LTMs, FBs, and FTs and (ii) 103 
Commission-registered SDs and MSPs, making an aggregate total of 9,362 
registrants.\30\ Of these registrants, SDs and MSPs make up 
approximately 1% and the other registrants make up approximately 99%. 
Based on the assumption that there is an equal distribution of 
certifications among the Certifying Firms eligible to provide them, the 
Commission estimates that approximately 198 \31\ FCMs, RFEDs, IBs, 
CPOs, CTAs, LTMs, FBs, and FTs and 2 \32\ SDs and MSPs will submit the 
required certification.
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    \30\ These numbers are slightly overstated, as certain 
registrants are registered as SDs or MSPs and as an FCM, RFED, IB, 
CPO, CTA, LTM, FB, or FT.
    \31\ 198 was calculated by multiplying the number of estimated 
requests per year (200) by the proportion of registrants discussed 
above that are FCMs, RFEDs, IBs, CPOs, CTAs, LTMs, FBs, or FTs 
(approximately 99%).
    \32\ 2 was calculated by multiplying the number of estimated 
requests per year (200) by the proportion of registrants discussed 
above that are SDs or MSPs (approximately 1%).
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a. Estimated Additional Hour Burden for Collection 3038-0023
    Collection 3038-0023 relates to collections of information from 
FCMs, RFEDs, IBs, CPOs, CTAs, LTMs, FBs, and FTs. Based on the above, 
the estimated additional hour burden for collection 3038-0023 of 495 
hours is calculated as follows:
    Number of registrants: 198.

[[Page 1363]]

    Frequency of collection: As needed.
    Estimated annual responses per registrant: 1.
    Estimated aggregate number of annual responses: 198.
    Estimated annual hour burden per registrant: 2.5.\33\
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    \33\ This collection's burdens are restricted to (i) registrants 
providing necessary information to commercial service provider(s) to 
conduct a criminal history background check for a Foreign Natural 
Person; (ii) registrants preparing and submitting the certification 
described herein; and (iii) registrants maintaining, in accordance 
with Commission regulation 1.31, records documenting that the 
criminal history background check was completed and the results 
thereof. To the extent that a market participant instead elects to 
conduct the background check internally, it is reasonable for the 
Commission to infer that doing so is less burdensome to such 
participant.
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    Estimated aggregate annual hour burden: 495 (198 registrants x 2.5 
hours per registrant).
b. Estimated Additional Hour Burden for Collection 3038-0072
    Collection 3038-0072 relates to collections of information from SDs 
and MSPs. Based on the above, the estimated additional hour burden for 
collection 3038-0072 of 5 hours is calculated as follows:
    Number of registrants: 2.
    Frequency of collection: As needed.
    Estimated annual responses per registrant: 1.
    Estimated aggregate number of annual responses: 2.
    Estimated annual hour burden per registrant: 2.5.\34\
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    \34\ See n.33, supra.
---------------------------------------------------------------------------

    Estimated aggregate annual hour burden: 5 (2 registrants x 2.5 
hours per registrant).
3. Information Collection Comments
    The Commission invites the public and other Federal agencies to 
comment on any aspect of the proposed information collection 
requirements discussed above. Pursuant to 44 U.S.C. 3506(c)(2)(B), the 
Commission solicits comments in order to: (1) Evaluate whether the 
proposed collection of information is necessary for the proper 
performance of the functions of the Commission, including whether the 
information will have practical utility; (2) evaluate the accuracy of 
the Commission's estimate of the burden of the proposed collection of 
information; (3) determine whether there are ways to enhance the 
quality, utility, and clarity of the information to be collected; and 
(4) minimize the burden of the collection of information on those who 
are to respond, including through the use of automated collection 
techniques or other forms of information technology.
    Comments may be submitted directly to the Office of Information and 
Regulatory Affairs, by fax at (202) 395-6566, or by email at 
[email protected]. Please provide the Commission with a copy 
of submitted comments so that all comments can be summarized and 
addressed in the final rule preamble. Refer to the ADDRESSES section of 
this notice of proposed rulemaking for comment submission instructions 
to the Commission. A copy of the supporting statements for the 
collection of information discussed above may be obtained by visiting  
http://RegInfo.gov. OMB is required to make a decision concerning the 
collection of information between 30 and 60 days after publication of 
this document in the Federal Register. Therefore, a comment is best 
assured of having its full effect if OMB receives it within 30 days of 
publication.

C. Cost-Benefit Considerations

    Section 15(a) of the Act \35\ requires the Commission to consider 
the costs and benefits of its actions before issuing a regulation under 
the Act. Section 15(a) further specifies that the costs and benefits 
shall be evaluated in light of the following five broad areas of market 
and public concern: (i) Protection of market participants and the 
public; (ii) efficiency, competitiveness and financial integrity of 
futures markets; (iii) price discovery; (iv) sound risk management 
practices; and (v) other public interest considerations. The Commission 
considers the costs and benefits resulting from its discretionary 
determinations with respect to the Section 15(a) considerations.
---------------------------------------------------------------------------

    \35\ 7 U.S.C. 19(a).
---------------------------------------------------------------------------

1. Costs
a. Costs to FCMs, RFEDs, IBs, CPOs, CTAs, SDs, MSPs, LTMs, FBs, FTs, 
Associated Persons, and Other Foreign Natural Persons
    Because this Proposal will solely provide an optional alternative 
to complying with the Fingerprinting Requirement, which alternative no 
FCM, RFED, IB, CPO, CTA, SD, MSP, LTM, FB, FT, associated person, or 
other Foreign Natural Person is required to elect, the Commission 
believes that this Proposal will not impose any costs on such persons.
b. Other Costs
    Because the amendment to Commission regulation will allow FCMs, 
RFEDs, IBs, CPOs, CTAs, SDs, MSPs, LTMs, FBs, and FTs to submit, 
subject to the terms and conditions herein, a certification in lieu of 
a fingerprint card for Foreign Natural Persons, NFA will need to 
develop a process to review and retain such certifications and consider 
amending its applications and/or other forms to reflect the 
availability of this exception from the Fingerprinting Requirement. The 
Commission expects that the costs of such activities will not be 
significant.
2. Benefits
    The Commission believes that, by establishing an alternative method 
for evaluating the fitness of Foreign Natural Persons for whom a 
fingerprint card must currently be submitted, this Proposal would help 
keep the United States' commodity interest markets accessible and 
competitive with other markets around the world by removing an 
impediment to participation in United States' markets by persons 
located outside of the United States while also ensuring the continued 
protection of market participants and the public. Further, the 
Commission believes that, by providing an alternative for persons 
outside the United States, this Proposal is consistent with the 
principles of international comity.
3. Section 15(a) Factors
    Section 15(a) of the CEA requires the Commission to consider the 
costs and benefits of its actions before promulgating a regulation 
under the CEA or issuing certain orders. CEA Section 15(a) further 
specifies that the costs and benefits shall be evaluated in light of 
five broad areas of market and public concern: (i) Protection of market 
participants and the public; (ii) efficiency, competitiveness, and 
financial integrity of futures markets; (iii) price discovery; (iv) 
sound risk management practices; and (v) other public interest 
considerations.
i. Protection of Market Participants and the Public
    This Proposal will continue to protect the public by ensuring that 
persons who are currently subject to the Fingerprinting Requirement, 
whether or not they reside in the United States, must have their 
fitness reviewed through the completion of a background check.
ii. Efficiency, Competitiveness, and Financial Integrity of Markets
    This Proposal may increase the efficiency and competitiveness of 
the markets by encouraging more participation in United States markets 
by persons located outside of the United States. The Commission does 
not believe that the integrity of financial

[[Page 1364]]

markets would be harmed, because this proposal requires that the 
background check meet the objective standards which rely on the 
clearly-stated matters under Sections 8a(2)(D) and 8a(3)(D), (E), and 
(H) of the CEA.
iii. Price Discovery
    The Commission generally believes that providing an alternative 
means of ensuring the fitness of a person who resides outside the 
United States for purposes of Commission registration, by reducing the 
burden that the Fingerprinting Requirement could impose on such 
persons, could reduce impediments to transact on a cross-border basis.
iv. Sound Risk Management Practices
    As explained above, one of the critically important functions of 
registration is to allow the Commission to ensure that all futures and 
swaps industry professionals who deal with the public meet minimum 
standards of fitness and competency.\36\ The fitness investigations 
that are part of the registration process permit the Commission and/or 
its delegatees to (a) uncover past misconduct that may disqualify an 
individual or entity from registration and (b) help determine if such 
persons have disclosed all matters required to be disclosed in their 
applications to become registered with the Commission.\37\ Having 
futures and swaps market participants that are not subject to any of 
the matters that would lead to a disqualification of registration under 
Sections 8a(2) or (3) of the CEA is one way to help ensure that a 
Commission registrant will not be a risk to its customers or to the 
market in general.
---------------------------------------------------------------------------

    \36\ See n.6, supra.
    \37\ See n.7, supra.
---------------------------------------------------------------------------

v. Other Public Interest Considerations
    The Commission believes that, by providing an alternative for 
persons outside the United States, this Proposal is consistent with the 
principles of international comity.
vi. Request for Comments
    The Commission invites public comment on its cost-benefit 
considerations, including the Section 15(a) factors described above. 
Commenters are also invited to submit any data or other information 
that they may have quantifying or qualifying the costs and benefits of 
this Proposal with their comment letters.

List of Subjects in 17 CFR Part 3

    Associated persons, Brokers, Commodity futures, Commodity pool 
operators, Commodity trading advisors, Customer protection, 
Fingerprinting, Foreign exchange, Futures commission merchants, 
Introducing brokers, Leverage transaction merchants, Leverage 
transactions, Major swap participants, Principals, Registration, 
Reporting and recordkeeping requirements, Retail foreign exchange 
dealers, Swap dealers, Swaps.

    For the reasons set forth in the preamble, the Commodity Futures 
Trading Commission proposes to amend part 3 as follows:

PART 3--REGISTRATION

0
1. The authority citation for part 3 continues to read as follows:

    Authority:  5 U.S.C. 552, 552b; 7 U.S.C. 1a, 2, 6, 6a, 6b, 6b-1, 
6c, 6d, 6e, 6f, 6g, 6h, 6i, 6k, 6m, 6n, 6o, 6p, 6s, 8, 9, 9a, 12, 
12a, 13b, 13c, 16a, 18, 19, 21, 23.

0
2. In Sec.  3.21, add paragraph (e) to read as follows:


Sec.  3.21  Exemption from fingerprinting requirement in certain cases.

* * * * *
    (e) Foreign Natural Persons. (1) For purposes of this paragraph 
(e):
    (i) The term foreign natural person means any natural person who 
has not resided in the United States since reaching the age of 18 
years.
    (ii) The term certifying firm means:
    (A) For any natural person that is a principal or associated person 
of a futures commission merchant, retail foreign exchange dealer, swap 
dealer, major swap participant, introducing broker, commodity pool 
operator, commodity trading advisor, leverage transaction merchant, 
floor broker, or floor trader, such futures commission merchant, retail 
foreign exchange dealer, swap dealer, major swap participant, 
introducing broker, commodity pool operator, commodity trading advisor, 
leverage transaction merchant, floor broker, or floor trader; and
    (B) For any natural person that is responsible for, or directs, the 
entry of orders from a floor broker's or floor trader's own account, 
such floor broker or floor trader.
    (2) Any obligation in this part to provide a fingerprint card for a 
foreign natural person shall be deemed satisfied with respect to a 
certifying firm if:
    (i) Such certifying firm causes a criminal history background check 
of such foreign natural person to be performed; and
    (ii) The criminal history background check:
    (A) Is of a type that would reveal all matters listed under 
Sections 8a(2)(D) or 8a(3)(D), (E), or (H) of the Act relating to such 
foreign natural person;
    (B) Does not reveal any matters that constitute a disqualification 
under Sections 8a(2) or 8a(3) of the Act, other than those disclosed to 
the National Futures Association; and
    (C) Is completed not more than one calendar year prior to the date 
that such certifying firm submits the certification described in 
paragraph (e)(2)(iii) of this section;
    (iii) A person authorized by such certifying firm submits, in 
reliance on such criminal history background check, a certification by 
such certifying firm to the National Futures Association, that:
    (A) States that the conditions of paragraphs (e)(2)(i) and (ii) of 
this section have been satisfied; and
    (B) Is signed by a person authorized by such certifying firm to 
make such certification.
    (3) The certifying firm shall maintain, in accordance with Sec.  
1.31 of this chapter, records documenting that the criminal history 
background check performed pursuant to paragraph (e)(2)(i) of this 
section was completed and the results thereof.

    Issued in Washington, DC, on January 4, 2016, by the Commission.
Robert N. Sidman,
Deputy Secretary of the Commission.

    Note: The following appendix will not appear in the Code of 
Federal Regulations.

Appendix to Alternative to Fingerprinting Requirement for Foreign 
Natural Persons--Commission Voting Summary

    On this matter, Chairman Massad and Commissioners Bowen and 
Giancarlo voted in the affirmative. No Commissioner voted in the 
negative.

[FR Doc. 2016-00045 Filed 1-11-16; 8:45 am]
BILLING CODE 6351-01-P

Federal Register / Vol. 81, No. 7 / Tuesday, January 12, 2016 / Proposed Rules 1359 applying mountings and other ornaments, tongues. In addition, the following available publicly. If you wish the which mountings or ornaments shall be of exemptions are recognized for products Commission to consider information the quality marked. marked in accordance with § 23.6(b)(5) of that is exempt from disclosure under the Note: Exemptions recognized in the these Guides (i.e., products that are less than Freedom of Information Act,1 a petition industry and not to be considered in any 500 parts per thousand platinum): pin tongues, joints, catches, lapel button backs for confidential treatment of the exempt assay for quality of a karat gold optical and the posts to which they are attached, information may be submitted according product include: the hinge assembly (barrel or other special types such as are customarily scarf-pin stems, hat pin sockets, shirt-stud to the procedures set forth in § 145.9 of used in plastic frames); washers, bushings, backs, vest-button backs, and ear screw the Commission’s regulations.2 and nuts of screw assemblies; dowels; backs, provided such parts are made of the The Commission reserves the right, springs for spring shoe straps; metal parts same quality platinum as is used in the but shall have no obligation, to review, permanently encased in a non-metallic balance of the article. pre-screen, filter, redact, refuse or covering; and for oxfords,8 coil and joint By direction of the Commission. remove any or all of your submission springs. from http://www.cftc.gov that it may (b) Exemptions recognized in the industry Donald S. Clark, deem to be inappropriate for and not to be considered in any assay for Secretary. publication, such as obscene language. quality of a gold filled, gold overlay and [FR Doc. 2016–00107 Filed 1–11–16; 8:45 am] rolled gold plate industry product, other than All submissions that have been redacted BILLING CODE 6750–01–P or removed that contain comments on watchcases, include joints, catches, screws, pin stems, pins of scarf pins, hat pins, etc., the merits of the rulemaking will be field pieces and bezels for lockets, posts and retained in the public comment file and separate backs of lapel buttons, bracelet and COMMODITY FUTURES TRADING will be considered as required under the necklace snap tongues, springs, and metallic COMMISSION Administrative Procedure Act and other parts completely and permanently encased in applicable laws, and may be accessible a nonmetallic covering. 17 CFR Part 3 under the Freedom of Information Act. Note: Exemptions recognized in the RIN 3038–AE16 FOR FURTHER INFORMATION CONTACT: industry and not to be considered in any Katherine Driscoll, Associate Chief assay for quality of a gold filled, gold overlay Alternative to Fingerprinting and rolled gold plate optical product include: Counsel, 202–418–5544, kdriscoll@ Requirement for Foreign Natural cftc.gov; Jacob Chachkin, Special screws; the hinge assembly (barrel or other special types such as are customarily used in Persons Counsel, 202–418–5496, jchachkin@ plastic frames); washers, bushings, tubes and AGENCY: Commodity Futures Trading cftc.gov; or Adam Kezsbom, Special nuts of screw assemblies; dowels; pad Commission. Counsel, 202–418–5372, akezsbom@ inserts; springs for spring shoe straps, cores cftc.gov, Division of Swap Dealer and and/or inner windings of comfort cable ACTION: Notice of proposed rulemaking. Intermediary Oversight, Commodity temples; metal parts permanently encased in Futures Trading Commission, Three a nonmetallic covering; and for oxfords, the SUMMARY: The Commodity Futures Trading Commission (‘‘Commission’’ or Lafayette Centre, 1155 21st Street NW., handle and catch. ‘‘CFTC’’) is proposing to amend existing Washington, DC 20581. (c) Exemptions recognized in the industry and not to be considered in any assay for Commission regulations to establish an SUPPLEMENTARY INFORMATION: quality of a silver industry product include alternative to fingerprinting to evaluate I. Background screws, rivets, springs, spring pins for wrist the fitness of natural persons who are watch straps; posts and separable backs of required to submit fingerprints under Subject to certain exceptions and lapel buttons; wire pegs, posts, and nuts used the Commission’s regulations and who exclusions, persons engaging in for applying mountings or other ornaments, have not resided in the United States specified activities involving which mountings or ornaments shall be of since reaching 18 years of age commodity interests 3 are required the quality marked; pin stems (e.g., of badges, pursuant to the Commodity Exchange brooches, emblem pins, hat pins, and scarf (‘‘Proposal’’). Act (‘‘CEA’’ or ‘‘Act’’) and/or pins, etc.); levers for belt buckles; blades and DATES: Comments must be received on Commission regulations 4 to register skeletons of pocket knives; field pieces and or before February 11, 2016. bezels for lockets; bracelet and necklace snap with the Commission in certain ADDRESSES: You may submit comments, registration categories. These include tongues; any other joints, catches, or screws; and metallic parts completely and identified by RIN 3038–AE16, by any of registration as a futures commission permanently encased in a nonmetallic the following methods: merchant (‘‘FCM’’), retail foreign covering. • Agency Web site: Via its Comments exchange dealer (‘‘RFED’’), introducing (d) Exemptions recognized in the industry Online process: http:// broker (‘‘IB’’), commodity pool operator and not to be considered in any assay for comments.cftc.gov. Follow the (‘‘CPO’’), commodity trading advisor quality of an industry product of silver in instructions on the Web site for (‘‘CTA’’), swap dealer (‘‘SD’’), major combination with gold include joints, submitting comments. catches, screws, pin stems, pins of scarf pins, • Mail: Send to Christopher 15 U.S.C. 552. hat pins, etc., posts and separable backs of lapel buttons, springs, and metallic parts Kirkpatrick, Secretary, Commodity 2 Commission regulations referred to herein are Futures Trading Commission, 1155 21st found at 17 CFR chapter. 1. Commission regulations completely and permanently encased in a are accessible on the Commission’s Web site, nonmetallic covering. Street NW., Washington, DC 20581. http://www.cftc.gov. (e) Exemptions recognized in the industry • Hand delivery/Courier: Same as 3 A commodity interest is (1) any contract for the and not to be considered in any assay for Mail above. purchase or sale of a commodity for future delivery; quality of a platinum industry product • Federal eRulemaking Portal: at (2) any contract, agreement or transaction subject to a Commission regulation under section 4c or 19 of tkelley on DSK3SPTVN1PROD with PROPOSALS include springs, winding bars, sleeves, crown http://www.regulations.gov/. Follow the cores, mechanical joint pins, screws, rivets, the Commodity Exchange Act; (3) any contract, instructions for submitting comments. agreement or transaction subject to Commission dust bands, detachable movement rims, hat All comments must be submitted in jurisdiction under section 2(c)(2) of such Act; and pin stems, and bracelet and necklace snap English, or if not, accompanied by an (4) Any swap as defined in such Act, by the English translation. Comments will be Commission, or jointly by the Commission and the 8 Oxfords are a form of eyeglasses where a flat Securities and Exchange Commission. 17 CFR spring joins the two eye rims and the tension it posted as received to http:// 1.3(yy). exerts on the nose serves to hold the unit in place. www.cftc.gov. You should submit only 4 See, e.g., Commission regulation 3.4(a). 17 CFR Oxfords are also referred to as pince nez. information that you wish to make 3.4(a). VerDate Sep<11>2014 20:16 Jan 11, 2016 Jkt 238001 PO 00000 Frm 00024 Fmt 4702 Sfmt 4702 E:\FR\FM\12JAP1.SGM 12JAP1

1360 Federal Register / Vol. 81, No. 7 / Tuesday, January 12, 2016 / Proposed Rules swap participant (‘‘MSP’’), leverage to submit their fingerprints 11 (the each principal, either a fingerprint card transaction merchant (‘‘LTM’’), floor ‘‘Fingerprinting Requirement’’).12 (as required under Commission broker (‘‘FB’’), and floor trader (‘‘FT’’).5 The Commission has delegated to regulation 3.10(a)(2)) or a certification, One of the critically important functions National Futures Association (‘‘NFA’’), a signed by a person with authority to of registration is to allow the registered futures association under bind such firm, stating that: (1) A Commission to ensure that all futures Section 17 of the CEA, the registration reasonable criminal history background and swaps industry professionals who functions set forth in subparts A, B, and check using a reputable commercial deal with the public meet minimum C of part 3 of the Commission’s service had been conducted; (2) such regulations, including the collection and criminal history background check did standards of fitness and competency.6 review of a completed Form 8–R 13 and not reveal any matters that constitute a The fitness investigations that are part related fingerprint submissions from disqualification under Sections 8a(2) or of the registration process permit the each natural person completing a Form 8a(3) of the CEA,16 other than those Commission and/or its delegatees to (a) 8–R.14 NFA, working with law disclosed; and (3) such firm would uncover past misconduct that may enforcement agencies, uses these maintain, in accordance with disqualify an individual or entity from fingerprints to conduct background Commission regulation 1.31, records registration and (b) help determine if checks on these natural persons to assist documenting that such criminal history such persons have disclosed all matters in determining their fitness. background check was performed and required to be disclosed in their In December 2012, the Commission’s the results of such background check.17 applications to become registered with Division of Swap Dealer and After issuing CFTC Staff Letter No. the Commission.7 Intermediary Oversight (‘‘DSIO’’), in 12–49, DSIO staff issued similar no- Pursuant to the registration process response to concerns raised by industry action relief from the Fingerprinting for determining a registrant’s fitness in participants that the Fingerprinting Requirement for associated persons of Requirement was unduly burdensome to FCMs, RFEDs, IBs, CTAs, CPOs, and part 3 of the Commission’s regulations, foreign natural persons and after LTMs that have not resided in the natural persons 8 that wish to be considering those concerns in light of United States since reaching 18 years of principals 9 or associated persons 10 of the continued need to evaluate the age in CFTC Staff Letter No. 13–29 18 Commission registrants, or who are fitness of those persons, issued a no- (CFTC Staff Letter No. 13–29, together responsible for entry of orders from an action letter, CFTC Staff Letter No. 12– with CFTC Staff Letter No. 12–49, are FB’s or FT’s own account, are required 49.15 CFTC Staff Letter No. 12–49 the ‘‘DSIO No-Action Letters’’ and the provides an alternative to complying relief provided by such letters is the 5 For the definitions of these registration with the Fingerprinting Requirement for ‘‘DSIO No-Action Relief’’). categories (other than RFED), see Section 1a of the principals of LTMs, FCMs, RFEDs, IBs, CEA and Commission regulation 1.3. 7 U.S.C. 1a CPOs, CTAs, SDs, and MSPs that have II. Proposal and 17 CFR 1.3. For the definition of RFED, see Commission regulation 5.1(h). 17 CFR 5.1(h). not resided in the United States since The Commission is proposing to 6 See, e.g., Commodity Futures Trading Comm’n, reaching 18 years of age. Subject to amend the Fingerprinting Requirement Division of Clearing and Intermediary Oversight, certain conditions specified in the letter, by adding a new sub-section (e) to the Public Report on the Registration Program of the DSIO staff stated that it would not existing list of exemptions from the National Futures Association, June 2010, at 1 (citing recommend that the Commission Fingerprinting Requirement in § 3.21 19 H.R. REP. NO. 97–565(I), at 48 (1982), reprinted in 1982 U.S.C.C.A.N. 3871, 3897–3899). commence an enforcement action to codify and clarify the DSIO No- 7 See http://www.nfa.futures.org/NFA- against any such firm based solely upon Action Relief. registration/index.HTML (last visited Dec. 22, that firm’s failure to submit with its This Proposal differs from the DSIO 2015), stating that ‘‘[t]he primary purposes of registration application a fingerprint No-Action Relief. First, this Proposal registration are to screen an applicant’s fitness to card for each such principal. would extend the relief to certain engage in business as a futures professional and to To rely on the relief provided in CFTC identify those individuals and organizations whose natural persons connected to FBs and activities are subject to federal regulation.’’ Staff Letter No. 12–49, DSIO staff FTs. Second, the Proposal would Pursuant to Commission regulation 3.60, the required that any such firm submit, for include all requirements to provide a Commission may, subject to some limitations, deny, fingerprint card under Part 3 of the 11 Currently, the Commission may, directly or grant with conditions, suspend, revoke, or restrict Commission’s regulations, whereas the registration to an applicant if the Commission indirectly, require fingerprinting pursuant to Commission regulations 3.10(a)(2); 3.11(a)(1); DSIO No-Action Relief is more alleges and is prepared to prove that the registrant or applicant is subject to one or more of the 3.12(c)(3), d(2), f(3), or (i)(3); 3.40(a)(1), (a)(2), or (b); limited.20 As a result, this Proposal statutory disqualifications set forth in section 8a(2), 3.44(a)(5) or (c); or 3.46(a)(3). 17 CFR 3.10(a)(2); broadens the availability of the 8a(3) or 8a(4) of the Act. 17 CFR 3.60. Sections 8a(2) 3.11(a)(1); 3.12(c)(3), d(2), f(3), and (i)(3); 3.40(a)(1), alternative to fingerprinting provided in and 8a(3) of the Act contain an extensive list of (a)(2), and (b); 3.44(a)(5) and (c); and 3.46(a)(3). 12 In support of its initial promulgation of the matters that provide grounds for refusing or 16 7 U.S.C. 12a(2) and (3). conditioning an applicant’s registration, including, fingerprinting requirements, the Commission stated 17 CFTC Staff Letter No. 12–49, at 2. without limitation, felony convictions, commodities that these requirements ‘‘are necessary to permit 18 CFTC Staff Letter No. 13–29 (Jun. 21, 2013), or securities law violations, bars or other adverse improvements in the Commission’s background checking of applicants for registration, to permit available at http://www.cftc.gov/ucm/groups/ actions taken by financial regulators, and willfully positive identification of certain individuals with public/@lrlettergeneral/documents/letter/13-29.pdf. omitting to state any material fact in an application. common names, to reduce the number of 19 Commission regulation 3.21 provides See 7 U.S.C. 12a(2) and (3). See also Interpretative applications filed by individuals who are unfit for exemptions to the Fingerprinting Requirement, Statement With Respect to Section 8a(2)(C) and (E) registration, and to facilitate fitness reviews of subject to certain conditions, for persons whose and Section 8a(3)(J) and (M) of the Commodity registrants on a spot and periodic basis.’’ See fingerprints have recently been identified and Exchange Act, Appendix A to part 3 of the Revision of Registration Regulations; Final Rules; processed by the Federal Bureau of Investigation, tkelley on DSK3SPTVN1PROD with PROPOSALS Commission’s regulations. Designation of New Part, 45 FR 80485, 80485 (Dec. for persons whose application for initial registration 8 As used herein, the terms ‘‘natural person’’ and 5, 1980). with the Commission in any capacity was recently ‘‘individual’’ have the same meaning. 13 Generally, Form 8–R is the Commission’s granted, for persons that have a current Form 8–R 9 See the definition of principal in Commission application for natural persons that are associated on file with the Commission or NFA, and for regulation 3.1(a). 17 CFR 3.1(a). persons or principals of a registrant. principals that are outside directors. 17 CFR 3.21. 10 An ‘‘associated person’’ is any natural person 14 See 17 CFR 3.2(a). 20 The DSIO No-Action Letters provide an who is associated in certain capacities with an 15 CFTC Staff Letter No. 12–49 (Dec. 11, 2012), alternative solely to the requirements of FCM, RFED, IB, CPO, CTA, SD, MSP, or LTM. 17 available at http://www.cftc.gov/ucm/groups/ Commission regulations 3.10(a)(2) and 3.12(c)(3). CFR 1.3(aa). public/@lrlettergeneral/documents/letter/12-49.pdf. See DSIO No-Action Letters. VerDate Sep<11>2014 20:16 Jan 11, 2016 Jkt 238001 PO 00000 Frm 00025 Fmt 4702 Sfmt 4702 E:\FR\FM\12JAP1.SGM 12JAP1

Federal Register / Vol. 81, No. 7 / Tuesday, January 12, 2016 / Proposed Rules 1361 the DSIO No-Action Letters; however, The Commission believes the Requirement. How are these burdens the Commission believes that the proposal, in providing certainly to different from those faced by natural rationale for providing the alternative to market participants by way of persons that are not Foreign Natural fingerprinting described above is Commission regulation, will make the Persons? equally applicable to natural persons commodity interest markets it oversees 3. Is the criminal history background connected to FBs and FTs and to all more liquid, competitive, and accessible check as set forth in the Proposal other requirements to provide a by enabling Foreign Natural Persons to sufficient to reveal the existence of all fingerprint card under Part 3 of the demonstrate that they meet the matters listed under Sections 8a(2)(D) or Commission’s regulations, as explained minimum standards for fitness and 8a(3)(D), (E), or (H) of the CEA, if any further below. competency without undue burden. The such matter existed? If not, please Proposed sub-section (e)(2) of § 3.21 alternative to fingerprinting proposed provide specific additional or would provide that the obligation to will remove an impediment to alternative requirements for the criminal provide a fingerprint card for a Foreign participation in United States’ markets history background check. Natural Person under part 3 of the by persons located outside of the United 4. This Proposal is limited to Foreign Commission’s regulations would be States while also ensuring the continued Natural Persons (i.e., individuals who deemed satisfied for a Certifying Firm protection of market participants and have not resided in the United States (each, as defined below) if: (a) Such the public. Further, the Commission since reaching 18 years of age). Should Certifying Firm causes a criminal believes that, by providing an the Commission use another measure to history background check of such alternative for persons outside the determine whether an individual should Foreign Natural Person to be performed; United States, this Proposal is be eligible for the proposed alternative (b) such criminal history background consistent with the principles of to the Fingerprinting Requirement? check does not reveal any matters that international comity. As discussed above, in an attempt to 5. This Proposal requires that a constitute a disqualification under provide greater clarity to market background check be completed not Sections 8a(2) or 8a(3) of the CEA,21 participants, this Proposal is slightly more than one calendar year prior to the other than those disclosed to NFA; and different than the DSIO No-Action date of a Certifying Firm’s related (c) a person authorized by such Letters. In particular, where the No- certification. Should the Commission Certifying Firm submits, in reliance on Action Relief required that ‘‘a require that the background check be such criminal history background reasonable criminal history background completed within a different period? check, a certification by such Certifying Firm to NFA. check using a reputable commercial 6. Are persons eligible for the DSIO The certification must: (i) State that service’’ be performed, this Proposal No-Action Relief currently availing the conditions described above have does not include the terms ‘‘reasonable’’ themselves of that alternative to the been satisfied; and (ii) be signed by a or ‘‘reputable.’’ Instead, this Proposal Fingerprinting Requirement? To the person authorized by such Certifying requires that the background check meet extent that such persons are not, please Firm to make such certification. In the objective standard described above, provide reasons as to why they are not. addition, each criminal history which relies on the clearly-stated 7. Are there any other matters that the background check must: (a) Be of a type matters under Sections 8a(2)(D) and Commission should consider in that would reveal all matters listed 8a(3)(D), (E), and (H) of the CEA. The determining whether to adopt this under Sections 8a(2)(D) or 8a(3)(D), (E), Commission believes that using such an Proposal? or (H) of the CEA 22 relating to the objective standard (one that does not IV. Related Matters Foreign Natural Person and (b) be require a market participant to make a completed not more than one calendar subjective determination of what is A. Regulatory Flexibility Act year prior to the date that such ‘‘reasonable’’ or ‘‘reputable’’ for purposes of the alternative) furthers its The Regulatory Flexibility Act Certifying Firm submits the certification (‘‘RFA’’) 23 requires Federal agencies, in to NFA described in the proposed rule. goal of providing certainty to market participants while allowing the promulgating regulations, to consider In terms of definitions, proposed whether the rules they propose will paragraph 3.21(e)(1)(i) would define Commission to continue to ensure the fitness of its registrants. have a significant economic impact on Foreign Natural Person, solely for a substantial number of small entities purposes of paragraph (e), as any natural If adopted, the proposed rule would supersede the DSIO No-Action Letters and, if so, to provide a regulatory person who has not resided in the flexibility analysis regarding the United States since reaching the age of without prejudice to those who are relying on either of the DSIO No-Action economic impact on those entities. This 18 years. Also, proposed paragraph Proposal would affect certain FCMs, 3.21(e)(1)(ii) would define Certifying Letters and have satisfied the requirements thereof prior to the date RFEDs, IBs, CPOs, CTAs, SDs, MSPs, Firm, also solely for purposes of LTMs, FBs, and FTs that wish to take paragraph (e), with respect to natural hereof. advantage of the alternative to persons acting in certain specified III. Request for Comments fingerprinting to evaluate the fitness of capacities in relation to the firm. their Foreign Natural Persons for which By way of recordkeeping, proposed The Commission requests comment generally on all aspects of this Proposal. fingerprints must be submitted to paragraph 3.21(e)(3) would require that In particular, the Commission requests NFA.24 The Commission has previously the Certifying Firm maintain, in comment on the following: determined that FCMs, RFEDS, CPOs, accordance with Commission regulation tkelley on DSK3SPTVN1PROD with PROPOSALS 1. Should the Commission promulgate SDs, MSPs, and LTMs are not small 1.31, records documenting each a final rule in relation to this Proposal criminal history background check and to provide an alternative to the 23 5U.S.C. 601 et seq. the results thereof. Fingerprinting Requirement for Foreign 24 ThisProposal will also directly affect certain of Natural Persons? such individuals; however, the Commission has 21 7 U.S.C. 12a(2) and (3). noted that the RFA, by its terms, does not apply to 22 7 U.S.C. 12a(2)(D) and 12a(3)(D), (E), and (H). 2. Please describe the burdens that individuals. See 48 FR 14933, 14954 n.115 (Apr. 6, These provisions of Sections 8a(2) and (3) of the Foreign Natural Persons face in 1983). Therefore, no analysis on the economic CEA generally relate to criminal convictions. complying with the Fingerprinting impact of this rule on individuals is provided. VerDate Sep<11>2014 20:16 Jan 11, 2016 Jkt 238001 PO 00000 Frm 00026 Fmt 4702 Sfmt 4702 E:\FR\FM\12JAP1.SGM 12JAP1

1362 Federal Register / Vol. 81, No. 7 / Tuesday, January 12, 2016 / Proposed Rules entities for purposes of the RFA.25 (including the Commission) in fingerprinting to evaluate the fitness of Therefore, the requirements of the RFA connection with conducting or certain Foreign Natural Persons. In do not apply to those entities. With sponsoring any collection of order to qualify for this alternative, the respect to CTAs, FBs, FTs, and IBs, the information as defined by the PRA. This Certifying Firm must take the steps Commission has found it appropriate to Proposal would result in a collection of required pursuant to this Proposal, consider whether such registrants information within the meaning of the including submitting the required should be deemed small entities for PRA, as discussed below. The certification to NFA and maintaining purposes of the RFA on a case-by-case Commission therefore is submitting this records of the criminal history basis, in the context of the particular Proposal to the Office of Management background check and the results Commission regulation at issue.26 As and Budget (‘‘OMB’’) for review. thereof. Requiring such actions would certain of these registrants may be small This Proposal contains collections of result in revisions to collections 3038– entities for purposes of the RFA, the information for which the Commission 0023 and 3038–0072. Therefore, the Commission considered whether this has previously received control Commission proposes to revise each of rulemaking would have a significant numbers from OMB. The titles for these collections 3038–0023 and 3038–0072. economic impact on such registrants. collections of information are The Commission understands that This Proposal will solely provide an ‘‘Commodity Pool Operators and NFA has received approximately 110 optional alternative to complying with Commodity Trading Advisors: requests in each of 2014 and 2015 from the Fingerprinting Requirement, which Amendments to Compliance market participants asking to avail already applies to such registrants, and Obligations, OMB control number 3038– themselves of the DSIO No-Action would, therefore, not impose any new 0023’’ 28 and ‘‘Registration of Swap Relief. However, as discussed above, the regulatory obligations on affected Dealers and Major Swap Participants, relief provided by this Proposal is registrants. This Proposal is not OMB control number 3038–0072.’’ 29 broader than the DSIO No-Action relief expected to impose any new burdens on The responses to these collections of in that it extends the relief to certain market participants. Rather, to the information are mandatory. An agency natural persons connected to FBs and extent that this Proposal provides an may not conduct or sponsor, and a FTs. Therefore, the Commission alternative means to comply with the person is not required to respond to, a estimates that Certifying Firms will Fingerprinting Requirement and is collection of information unless it submit 200 certifications per year to elected by a market participant, the displays a currently valid control take advantage of the alternative Commission believes it is reasonable to number issued by OMB. provided in this Proposal. infer that the alternative is less The collection of information in this As of November 23, 2015, there were burdensome to such participant. The Proposal would provide an optional (i) 9,259 Commission-registered FCMs, Commission does not, therefore, expect alternative to complying with the RFEDs, IBs, CPOs, CTAs, LTMs, FBs, small entities to incur any additional Fingerprinting Requirement (as and FTs and (ii) 103 Commission- costs as a result of this Proposal. described above). Eligible persons registered SDs and MSPs, making an Consequently, the Commission finds would have the option to elect the aggregate total of 9,362 registrants.30 Of that no significant economic impact on certification process, but no obligation these registrants, SDs and MSPs make small entities will result from this to do so. For this reason, except to the up approximately 1% and the other Proposal. extent that the Commission is amending registrants make up approximately 99%. Accordingly, the Chairman, on behalf the subject OMB control numbers for Based on the assumption that there is an of the Commission, hereby certifies PRA purposes to reflect the alternative equal distribution of certifications pursuant to 5 U.S.C. 605(b) that this certification process, this Proposal is not among the Certifying Firms eligible to Proposal will not have a significant expected to impose any new burdens on provide them, the Commission economic impact on a substantial market participants. Rather, to the estimates that approximately 198 31 number of small entities. extent that this Proposal provides an FCMs, RFEDs, IBs, CPOs, CTAs, LTMs, alternative means to comply with the FBs, and FTs and 2 32 SDs and MSPs B. Paperwork Reduction Act Fingerprinting Requirement and is will submit the required certification. 1. Background elected by market participants, it is reasonable for the Commission to infer a. Estimated Additional Hour Burden The Paperwork Reduction Act of 1995 that the alternative is less burdensome for Collection 3038–0023 (‘‘PRA’’) 27 imposes certain to such participants. Collection 3038–0023 relates to requirements on Federal agencies 2. Revisions to Collections 3038–0023 collections of information from FCMs, 25 See and 3038–0072 RFEDs, IBs, CPOs, CTAs, LTMs, FBs, Policy Statement and Establishment of Definitions of ‘‘Small Entities’’ for Purposes of the and FTs. Based on the above, the Collections 3038–0023 and 3038– estimated additional hour burden for Regulatory Flexibility Act, 47 FR 18618 (Apr. 30, 1982) (FCMs and CPOs); Leverage Transactions, 54 0072 are currently in force with their collection 3038–0023 of 495 hours is FR 41068 (Oct. 5, 1989) (LTMs); Regulation of Off- control numbers having been provided calculated as follows: Exchange Retail Foreign Exchange Transactions and by OMB. Number of registrants: 198. Intermediaries, 75 FR 55410, 55416 (Sept. 10, 2010) As discussed above, this Proposal (RFEDs); and Registration of Swap Dealers and Major Swap Participants, 77 FR 2613, 2620 (Jan. 19, would add a new exemption that would 30 These numbers are slightly overstated, as 2012) (SDs and MSPs). incorporate an alternative to certain registrants are registered as SDs or MSPs 26 See 47 FR at 18620 (CTAs and FBs); and as an FCM, RFED, IB, CPO, CTA, LTM, FB, or Registration of Floor Traders; Mandatory Ethics 28 See OMB Control No. 3038–0023, http:// FT. tkelley on DSK3SPTVN1PROD with PROPOSALS Training for Registrants; Suspension of Registrants www.reginfo.gov/public/do/ 31 198 was calculated by multiplying the number Charged With Felonies, 58 FR 19575, 19588 (Apr. PRAOMBHistory?ombControlNumber=3038-0023# of estimated requests per year (200) by the 15, 1993) (FTs); and Introducing Brokers and (last visited Dec. 22, 2015). The collection is being proportion of registrants discussed above that are Associated Persons of Introducing Brokers, retitled ‘‘Registration Under the Commodity FCMs, RFEDs, IBs, CPOs, CTAs, LTMs, FBs, or FTs Commodity Trading Advisors and Commodity Pool Exchange Act.’’ (approximately 99%). Operators; Registration and Other Regulatory 29 See OMB Control No. 3038–0072, http:// 32 2 was calculated by multiplying the number of Requirements, 48 FR 35248, 35276 (Aug. 3, 1983) www.reginfo.gov/public/do/ estimated requests per year (200) by the proportion (IBs). PRAOMBHistory?ombControlNumber=3038-0072# of registrants discussed above that are SDs or MSPs 27 44 U.S.C. 3501 et seq. (last visited Dec. 22, 2015). (approximately 1%). VerDate Sep<11>2014 20:16 Jan 11, 2016 Jkt 238001 PO 00000 Frm 00027 Fmt 4702 Sfmt 4702 E:\FR\FM\12JAP1.SGM 12JAP1

Federal Register / Vol. 81, No. 7 / Tuesday, January 12, 2016 / Proposed Rules 1363 Frequency of collection: As needed. Comments may be submitted directly fingerprint card for Foreign Natural Estimated annual responses per to the Office of Information and Persons, NFA will need to develop a registrant: 1. Regulatory Affairs, by fax at (202) 395– process to review and retain such Estimated aggregate number of 6566, or by email at OIRAsubmissions@ certifications and consider amending its annual responses: 198. omb.eop.gov. Please provide the applications and/or other forms to Estimated annual hour burden per Commission with a copy of submitted reflect the availability of this exception registrant: 2.5.33 comments so that all comments can be from the Fingerprinting Requirement. Estimated aggregate annual hour summarized and addressed in the final The Commission expects that the costs burden: 495 (198 registrants × 2.5 hours rule preamble. Refer to the ADDRESSES of such activities will not be significant. per registrant). section of this notice of proposed rulemaking for comment submission 2. Benefits b. Estimated Additional Hour Burden for Collection 3038–0072 instructions to the Commission. A copy The Commission believes that, by of the supporting statements for the establishing an alternative method for Collection 3038–0072 relates to collection of information discussed evaluating the fitness of Foreign Natural collections of information from SDs and above may be obtained by visiting Persons for whom a fingerprint card MSPs. Based on the above, the http://RegInfo.gov. OMB is required to must currently be submitted, this estimated additional hour burden for make a decision concerning the Proposal would help keep the United collection 3038–0072 of 5 hours is collection of information between 30 States’ commodity interest markets calculated as follows: and 60 days after publication of this accessible and competitive with other Number of registrants: 2. document in the Federal Register. markets around the world by removing Frequency of collection: As needed. Therefore, a comment is best assured of an impediment to participation in Estimated annual responses per having its full effect if OMB receives it United States’ markets by persons registrant: 1. within 30 days of publication. located outside of the United States Estimated aggregate number of while also ensuring the continued annual responses: 2. C. Cost-Benefit Considerations Estimated annual hour burden per protection of market participants and Section 15(a) of the Act 35 requires the the public. Further, the Commission registrant: 2.5.34 Commission to consider the costs and Estimated aggregate annual hour believes that, by providing an benefits of its actions before issuing a alternative for persons outside the burden: 5 (2 registrants × 2.5 hours per regulation under the Act. Section 15(a) registrant). United States, this Proposal is further specifies that the costs and consistent with the principles of 3. Information Collection Comments benefits shall be evaluated in light of the international comity. The Commission invites the public following five broad areas of market and public concern: (i) Protection of market 3. Section 15(a) Factors and other Federal agencies to comment on any aspect of the proposed participants and the public; (ii) Section 15(a) of the CEA requires the efficiency, competitiveness and Commission to consider the costs and information collection requirements financial integrity of futures markets; benefits of its actions before discussed above. Pursuant to 44 U.S.C. (iii) price discovery; (iv) sound risk promulgating a regulation under the 3506(c)(2)(B), the Commission solicits management practices; and (v) other CEA or issuing certain orders. CEA comments in order to: (1) Evaluate public interest considerations. The Section 15(a) further specifies that the whether the proposed collection of Commission considers the costs and costs and benefits shall be evaluated in information is necessary for the proper benefits resulting from its discretionary light of five broad areas of market and performance of the functions of the determinations with respect to the public concern: (i) Protection of market Commission, including whether the Section 15(a) considerations. participants and the public; (ii) information will have practical utility; (2) evaluate the accuracy of the 1. Costs efficiency, competitiveness, and Commission’s estimate of the burden of financial integrity of futures markets; a. Costs to FCMs, RFEDs, IBs, CPOs, (iii) price discovery; (iv) sound risk the proposed collection of information; CTAs, SDs, MSPs, LTMs, FBs, FTs, (3) determine whether there are ways to management practices; and (v) other Associated Persons, and Other Foreign public interest considerations. enhance the quality, utility, and clarity Natural Persons of the information to be collected; and i. Protection of Market Participants and (4) minimize the burden of the Because this Proposal will solely the Public collection of information on those who provide an optional alternative to complying with the Fingerprinting This Proposal will continue to protect are to respond, including through the the public by ensuring that persons who use of automated collection techniques Requirement, which alternative no FCM, RFED, IB, CPO, CTA, SD, MSP, are currently subject to the or other forms of information Fingerprinting Requirement, whether or technology. LTM, FB, FT, associated person, or other Foreign Natural Person is required not they reside in the United States, 33 This collection’s burdens are restricted to (i) to elect, the Commission believes that must have their fitness reviewed registrants providing necessary information to this Proposal will not impose any costs through the completion of a background commercial service provider(s) to conduct a on such persons. check. criminal history background check for a Foreign Natural Person; (ii) registrants preparing and b. Other Costs ii. Efficiency, Competitiveness, and submitting the certification described herein; and Financial Integrity of Markets tkelley on DSK3SPTVN1PROD with PROPOSALS (iii) registrants maintaining, in accordance with Because the amendment to Commission regulation 1.31, records documenting Commission regulation will allow This Proposal may increase the that the criminal history background check was FCMs, RFEDs, IBs, CPOs, CTAs, SDs, efficiency and competitiveness of the completed and the results thereof. To the extent MSPs, LTMs, FBs, and FTs to submit, markets by encouraging more that a market participant instead elects to conduct participation in United States markets the background check internally, it is reasonable for subject to the terms and conditions the Commission to infer that doing so is less herein, a certification in lieu of a by persons located outside of the United burdensome to such participant. States. The Commission does not 34 See n.33, supra. 35 7 U.S.C. 19(a). believe that the integrity of financial VerDate Sep<11>2014 20:16 Jan 11, 2016 Jkt 238001 PO 00000 Frm 00028 Fmt 4702 Sfmt 4702 E:\FR\FM\12JAP1.SGM 12JAP1

1364 Federal Register / Vol. 81, No. 7 / Tuesday, January 12, 2016 / Proposed Rules markets would be harmed, because this List of Subjects in 17 CFR Part 3 (ii) The criminal history background proposal requires that the background Associated persons, Brokers, check: check meet the objective standards Commodity futures, Commodity pool (A) Is of a type that would reveal all which rely on the clearly-stated matters operators, Commodity trading advisors, matters listed under Sections 8a(2)(D) or under Sections 8a(2)(D) and 8a(3)(D), Customer protection, Fingerprinting, 8a(3)(D), (E), or (H) of the Act relating (E), and (H) of the CEA. Foreign exchange, Futures commission to such foreign natural person; merchants, Introducing brokers, (B) Does not reveal any matters that iii. Price Discovery constitute a disqualification under Leverage transaction merchants, The Commission generally believes Leverage transactions, Major swap Sections 8a(2) or 8a(3) of the Act, other that providing an alternative means of participants, Principals, Registration, than those disclosed to the National ensuring the fitness of a person who Reporting and recordkeeping Futures Association; and requirements, Retail foreign exchange (C) Is completed not more than one resides outside the United States for dealers, Swap dealers, Swaps. calendar year prior to the date that such purposes of Commission registration, by certifying firm submits the certification reducing the burden that the For the reasons set forth in the described in paragraph (e)(2)(iii) of this Fingerprinting Requirement could preamble, the Commodity Futures section; impose on such persons, could reduce Trading Commission proposes to amend (iii) A person authorized by such impediments to transact on a cross- part 3 as follows: certifying firm submits, in reliance on border basis. such criminal history background PART 3—REGISTRATION iv. Sound Risk Management Practices check, a certification by such certifying ■ 1. The authority citation for part 3 firm to the National Futures As explained above, one of the continues to read as follows: Association, that: critically important functions of (A) States that the conditions of Authority: 5 U.S.C. 552, 552b; 7 U.S.C. 1a, registration is to allow the Commission paragraphs (e)(2)(i) and (ii) of this 2, 6, 6a, 6b, 6b–1, 6c, 6d, 6e, 6f, 6g, 6h, 6i, to ensure that all futures and swaps 6k, 6m, 6n, 6o, 6p, 6s, 8, 9, 9a, 12, 12a, 13b, section have been satisfied; and industry professionals who deal with 13c, 16a, 18, 19, 21, 23. (B) Is signed by a person authorized the public meet minimum standards of by such certifying firm to make such fitness and competency.36 The fitness ■ 2. In § 3.21, add paragraph (e) to read certification. as follows: (3) The certifying firm shall maintain, investigations that are part of the registration process permit the § 3.21 Exemption from fingerprinting in accordance with § 1.31 of this Commission and/or its delegatees to (a) requirement in certain cases. chapter, records documenting that the uncover past misconduct that may * * * * * criminal history background check disqualify an individual or entity from (e) Foreign Natural Persons. (1) For performed pursuant to paragraph registration and (b) help determine if purposes of this paragraph (e): (e)(2)(i) of this section was completed such persons have disclosed all matters (i) The term foreign natural person and the results thereof. required to be disclosed in their means any natural person who has not Issued in Washington, DC, on January 4, applications to become registered with resided in the United States since 2016, by the Commission. the Commission.37 Having futures and reaching the age of 18 years. Robert N. Sidman, swaps market participants that are not (ii) The term certifying firm means: Deputy Secretary of the Commission. subject to any of the matters that would (A) For any natural person that is a lead to a disqualification of registration principal or associated person of a Note: The following appendix will not appear in the Code of Federal Regulations. under Sections 8a(2) or (3) of the CEA futures commission merchant, retail is one way to help ensure that a foreign exchange dealer, swap dealer, Appendix to Alternative to Commission registrant will not be a risk major swap participant, introducing Fingerprinting Requirement for Foreign to its customers or to the market in broker, commodity pool operator, Natural Persons—Commission Voting general. commodity trading advisor, leverage Summary transaction merchant, floor broker, or v. Other Public Interest Considerations On this matter, Chairman Massad and floor trader, such futures commission Commissioners Bowen and Giancarlo voted The Commission believes that, by merchant, retail foreign exchange in the affirmative. No Commissioner voted in dealer, swap dealer, major swap the negative. providing an alternative for persons participant, introducing broker, outside the United States, this Proposal [FR Doc. 2016–00045 Filed 1–11–16; 8:45 am] commodity pool operator, commodity is consistent with the principles of BILLING CODE 6351–01–P trading advisor, leverage transaction international comity. merchant, floor broker, or floor trader; vi. Request for Comments and (B) For any natural person that is DEPARTMENT OF THE TREASURY The Commission invites public responsible for, or directs, the entry of comment on its cost-benefit Internal Revenue Service orders from a floor broker’s or floor considerations, including the Section trader’s own account, such floor broker 15(a) factors described above. 26 CFR Part 1, 20, 25, 26, 31, and 301 or floor trader. Commenters are also invited to submit tkelley on DSK3SPTVN1PROD with PROPOSALS (2) Any obligation in this part to [REG–148998–13] any data or other information that they provide a fingerprint card for a foreign may have quantifying or qualifying the natural person shall be deemed satisfied RIN 1545–BM10 costs and benefits of this Proposal with with respect to a certifying firm if: Definitions of Terms Relating to Marital their comment letters. (i) Such certifying firm causes a Status; Hearing criminal history background check of 36 See n.6, supra. such foreign natural person to be AGENCY: Internal Revenue Service (IRS), 37 See n.7, supra. performed; and Treasury. VerDate Sep<11>2014 20:16 Jan 11, 2016 Jkt 238001 PO 00000 Frm 00029 Fmt 4702 Sfmt 4702 E:\FR\FM\12JAP1.SGM 12JAP1


Document Created: 2016-01-12 01:22:41
Document Modified: 2016-01-12 01:22:41
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionProposed Rules
ActionNotice of proposed rulemaking.
DatesComments must be received on or before February 11, 2016.
ContactKatherine Driscoll, Associate Chief Counsel, 202-418-5544, [email protected]; Jacob Chachkin, Special Counsel, 202-418-5496, [email protected]; or Adam Kezsbom, Special Counsel, 202-418-5372, [email protected], Division of Swap Dealer and Intermediary Oversight, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581.
FR Citation81 FR 1359 
RIN Number3038-AE16
CFR AssociatedAssociated Persons; Brokers; Commodity Futures; Commodity Pool Operators; Commodity Trading Advisors; Customer Protection; Fingerprinting; Foreign Exchange; Futures Commission Merchants; Introducing Brokers; Leverage Transaction Merchants; Leverage Transactions; Major Swap Participants; Principals; Registration; Reporting and Recordkeeping Requirements; Retail Foreign Exchange Dealers; Swap Dealers and Swaps
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