82 FR 27044 - Commission Statement Concerning a Request for an Interpretation as to Whether a Particular Agreement Is a Swap, Security-Based Swap, or Mixed Swap

COMMODITY FUTURES TRADING COMMISSION

Federal Register Volume 82, Issue 112 (June 13, 2017)

Page Range		27044-27045
FR Document		2017-12141

The Commodity Futures Trading Commission (the ``Commission'') is publishing this statement concerning a request for an interpretation as to whether a particular agreement is a swap, security-based swap, or mixed swap.

Federal Register, Volume 82 Issue 112 (Tuesday, June 13, 2017)

[Federal Register Volume 82, Number 112 (Tuesday, June 13, 2017)]
[Notices]
[Pages 27044-27045]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-12141]


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COMMODITY FUTURES TRADING COMMISSION


Commission Statement Concerning a Request for an Interpretation 
as to Whether a Particular Agreement Is a Swap, Security-Based Swap, or 
Mixed Swap

AGENCY: Commodity Futures Trading Commission.

ACTION: Commission statement.

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SUMMARY: The Commodity Futures Trading Commission (the ``Commission'') 
is publishing this statement concerning a request for an interpretation 
as to whether a particular agreement is a swap, security-based swap, or 
mixed swap.

FOR FURTHER INFORMATION CONTACT: Eileen T. Flaherty, Director, (202) 
418-5326, [email protected]; Frank Fisanich, Chief Counsel, (202) 418-
5949, [email protected]; or Jacob Chachkin, Special Counsel, (202) 
418-5496, [email protected], Division of Swap Dealer and Intermediary 
Oversight, Commodity Futures Trading Commission, 1155 21st Street NW., 
Washington, DC 20581.

SUPPLEMENTARY INFORMATION:

Statement

    On February 7, 2017, Commission staff received a letter from 
Breakaway Courier Corporation (``Breakaway''), through its counsel, 
requesting a joint interpretation from the Commission and the 
Securities and Exchange Commission (``SEC'', and, together with the 
Commission, the ``Commissions'') pursuant to Commission regulation 1.8 
as to whether a particular agreement is a swap, security-based swap, or 
mixed swap.\1\ Breakaway's request relates to a contract labeled as a 
Reinsurance Participation Agreement (``RPA''), which it has previously 
executed with Applied Underwriters Captive Risk Assurance Company, Inc. 
(``AUCRA'').\2\ According to Breakaway's submission, it entered into 
two RPAs with AUCRA, one of which has a stated effective date of July 
1, 2009, and the other of July 1, 2012.
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    \1\ See 17 CFR 1.8.
    \2\ A copy of Breakaway's submission may be found at: http://www.cftc.gov/LawRegulation/DoddFrankAct/Dodd-FrankFinalRules/index.htm.
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    The Commission and the SEC jointly adopted Commission regulation 
1.8 and Securities Exchange Act of 1934 (``Exchange Act'') \3\ Rule 
3a68-2 in 2012 \4\ pursuant to Section 712(d)(4) of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act (``Dodd-Frank Act'').\5\ The 
rules established a process for parties to request a joint 
interpretation as to whether a particular agreement, contract, or 
transaction (or class thereof) is a swap, security-based swap, or mixed 
swap. Among other things, the rules set forth the information required 
to be included in a request and a process for withdrawing a request. 
Commission regulation 1.8 also includes requirements governing the 
manner and timing by which the two agencies must act after the receipt 
of a complete submission under the rule, if they determine to issue 
such joint interpretation. In addition, paragraph (e)(5) of Commission 
regulation 1.8 provides that ``[i]f the Commission and the [SEC] do not 
issue a joint interpretation within the time period described in 
paragraph (e)(1) or (e)(3) [of the rule], each of the Commission and 
the [SEC] shall publicly provide the reasons for not issuing such a 
joint interpretation within the applicable timeframes.'' \6\
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    \3\ 15 U.S.C. 78 et seq.
    \4\ See Further Definition of ``Swap,'' ``Security-Based Swap,'' 
and ``Security-Based Swap Agreement''; Mixed Swaps; Security-Based 
Swap Agreement Recordkeeping, 77 FR 48207 (Aug. 13, 2012) (``Product 
Definitions Adopting Release'').
    \5\ See Dodd-Frank Act, Public Law 111-203, 124 Stat. 1376 
(2010). All references to ``Title VII'' in this statement shall 
refer to Title VII of the Dodd-Frank Act, which established a 
comprehensive new regulatory framework for swaps and security-based 
swaps.
    \6\ Paragraph (e)(5) of SEC Rule 3a68-2 contains identical 
language (other than reversing the references to the two 
commissions). See 17 CFR 240.3a68-2.
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    Pursuant to paragraph (e)(5) of Commission regulation 1.8, the 
Commission is declining to issue a joint interpretation with the SEC in 
connection with Breakaway's request.\7\ The Commission understands that 
the status of the RPAs is already subject to ongoing private litigation 
and that the petitioners' request may bear directly on that litigation. 
We believe that the Commission regulation 1.8 process is not an 
appropriate vehicle for litigants such as Breakaway to obtain the views 
of the Commission in connection with issues in ongoing litigation, and 
we therefore decline Breakaway's request that we state an interpretive 
position as to the proper characterization of the RPAs.\8\
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    \7\ Commission staff has consulted and coordinated with SEC 
staff and understands that the SEC will be issuing a separate 
statement on this matter.
    \8\ As we and the SEC explained when we jointly adopted 
Commission regulation 1.8 in 2012 (as well as the corresponding rule 
under the Exchange Act), the purpose of Commission regulation 1.8 is 
to ``afford market participants with the opportunity to obtain 
greater certainty from the Commissions regarding the regulatory 
status of particular Title VII instruments under the Dodd-Frank Act. 
This provision should decrease the possibility that market 
participants inadvertently might fail to meet the regulatory 
requirements applicable to a particular Title VII instrument.'' See 
Product Definitions Adopting Release, 77 FR at 48295. We and the SEC 
also noted our belief that ``it is essential that the 
characterization of an instrument be established prior to any party 
engaging in the transactions so that the appropriate regulatory 
schemes apply.'' See Product Definitions Adopting Release, 77 FR at 
48297.

    Issued in Washington, DC, on June 7, 2017, by the Commission.
Christopher J. Kirkpatrick,
Secretary of the Commission.

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


[[Page 27045]]



Appendix to Commission Statement Concerning a Request Made Pursuant to 
Commission Regulation 1.8--Commission Voting Summary

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

[FR Doc. 2017-12141 Filed 6-12-17; 8:45 am]
 BILLING CODE 6351-01-P

27044 Federal Register / Vol. 82, No. 112 / Tuesday, June 13, 2017 / Notices

makers, including enterprises and end FOR FURTHER INFORMATION CONTACT: also includes requirements governing
consumers? Eileen T. Flaherty, Director, (202) 418– the manner and timing by which the
Instructions for Commenters: NTIA 5326, eflaherty@cftc.gov; Frank two agencies must act after the receipt
invites comment on the full range of Fisanich, Chief Counsel, (202) 418– of a complete submission under the
issues that may be presented by this 5949, ffisanich@cftc.gov; or Jacob rule, if they determine to issue such
inquiry, including issues that are not Chachkin, Special Counsel, (202) 418– joint interpretation. In addition,
specifically raised in the above 5496, jchachkin@cftc.gov, Division of paragraph (e)(5) of Commission
questions. Commenters are encouraged Swap Dealer and Intermediary regulation 1.8 provides that ‘‘[i]f the
to address any or all of the above Oversight, Commodity Futures Trading Commission and the [SEC] do not issue
questions. Comments that contain Commission, 1155 21st Street NW., a joint interpretation within the time
references to studies, research, and Washington, DC 20581. period described in paragraph (e)(1) or
other empirical data that are not widely SUPPLEMENTARY INFORMATION: (e)(3) [of the rule], each of the
published should include copies of the
Statement Commission and the [SEC] shall
referenced materials with the submitted
comments. publicly provide the reasons for not
On February 7, 2017, Commission
Comments submitted by email should issuing such a joint interpretation
staff received a letter from Breakaway
be machine-readable and should not be Courier Corporation (‘‘Breakaway’’), within the applicable timeframes.’’ 6
copy-protected. Comments submitted by through its counsel, requesting a joint Pursuant to paragraph (e)(5) of
mail may be in hard copy (paper) or interpretation from the Commission and Commission regulation 1.8, the
electronic (on CD–ROM or disk). the Securities and Exchange Commission is declining to issue a joint
Responders should include the name of Commission (‘‘SEC’’, and, together with interpretation with the SEC in
the person or organization filing the the Commission, the ‘‘Commissions’’) connection with Breakaway’s request.7
comment, as well as a page number on pursuant to Commission regulation 1.8 The Commission understands that the
each page of their submissions. All as to whether a particular agreement is status of the RPAs is already subject to
comments received are a part of the a swap, security-based swap, or mixed ongoing private litigation and that the
public record and will generally be swap.1 Breakaway’s request relates to a petitioners’ request may bear directly on
posted on the NTIA Web site, https:// contract labeled as a Reinsurance that litigation. We believe that the
www.ntia.doc.gov, without change. All Participation Agreement (‘‘RPA’’), Commission regulation 1.8 process is
personal identifying information (for which it has previously executed with not an appropriate vehicle for litigants
example, name, address) voluntarily Applied Underwriters Captive Risk such as Breakaway to obtain the views
submitted by the commenter may be Assurance Company, Inc. (‘‘AUCRA’’).2
publicly accessible. Do not submit of the Commission in connection with
According to Breakaway’s submission, it
confidential business information or issues in ongoing litigation, and we
entered into two RPAs with AUCRA,
otherwise sensitive or protected therefore decline Breakaway’s request
one of which has a stated effective date
information. NTIA will accept of July 1, 2009, and the other of July 1, that we state an interpretive position as
anonymous comments. 2012. to the proper characterization of the
The Commission and the SEC jointly RPAs.8
Dated: June 8, 2017.
Leonard Bechtel, adopted Commission regulation 1.8 and Issued in Washington, DC, on June 7, 2017,
Chief Financial Officer and Director of Securities Exchange Act of 1934 by the Commission.
Administration, Performing the Non- (‘‘Exchange Act’’) 3 Rule 3a68–2 in Christopher J. Kirkpatrick,
Exclusive Duties of the Assistant Secretary 2012 4 pursuant to Section 712(d)(4) of Secretary of the Commission.
for Communications and Information, the Dodd-Frank Wall Street Reform and
National Telecommunications and Consumer Protection Act (‘‘Dodd-Frank Note: The following appendix will not
Information Administration. Act’’).5 The rules established a process appear in the Code of Federal Regulations.
[FR Doc. 2017–12192 Filed 6–12–17; 8:45 am] for parties to request a joint
BILLING CODE 3510–60–P interpretation as to whether a particular
6 Paragraph (e)(5) of SEC Rule 3a68–2 contains
agreement, contract, or transaction (or
identical language (other than reversing the
class thereof) is a swap, security-based references to the two commissions). See 17 CFR
COMMODITY FUTURES TRADING swap, or mixed swap. Among other 240.3a68–2.
COMMISSION things, the rules set forth the 7 Commission staff has consulted and coordinated

information required to be included in with SEC staff and understands that the SEC will
Commission Statement Concerning a a request and a process for withdrawing be issuing a separate statement on this matter.
8 As we and the SEC explained when we jointly
Request for an Interpretation as to a request. Commission regulation 1.8
adopted Commission regulation 1.8 in 2012 (as well
Whether a Particular Agreement Is a as the corresponding rule under the Exchange Act),
Swap, Security-Based Swap, or Mixed 1 See 17 CFR 1.8. the purpose of Commission regulation 1.8 is to
2A copy of Breakaway’s submission may be
Swap ‘‘afford market participants with the opportunity to
found at: http://www.cftc.gov/LawRegulation/ obtain greater certainty from the Commissions
AGENCY: Commodity Futures Trading DoddFrankAct/Dodd-FrankFinalRules/index.htm. regarding the regulatory status of particular Title VII
3 15 U.S.C. 78 et seq.
Commission. instruments under the Dodd-Frank Act. This
4 See Further Definition of ‘‘Swap,’’ ‘‘Security- provision should decrease the possibility that
ACTION: Commission statement. Based Swap,’’ and ‘‘Security-Based Swap market participants inadvertently might fail to meet
Agreement’’; Mixed Swaps; Security-Based Swap
nlaroche on DSK30NT082PROD with NOTICES

the regulatory requirements applicable to a
SUMMARY: The Commodity Futures Agreement Recordkeeping, 77 FR 48207 (Aug. 13, particular Title VII instrument.’’ See Product
Trading Commission (the 2012) (‘‘Product Definitions Adopting Release’’). Definitions Adopting Release, 77 FR at 48295. We
‘‘Commission’’) is publishing this 5 See Dodd-Frank Act, Public Law 111–203, 124 and the SEC also noted our belief that ‘‘it is
statement concerning a request for an Stat. 1376 (2010). All references to ‘‘Title VII’’ in essential that the characterization of an instrument
this statement shall refer to Title VII of the Dodd- be established prior to any party engaging in the
interpretation as to whether a particular Frank Act, which established a comprehensive new transactions so that the appropriate regulatory
agreement is a swap, security-based regulatory framework for swaps and security-based schemes apply.’’ See Product Definitions Adopting
swap, or mixed swap. swaps. Release, 77 FR at 48297.

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Federal Register / Vol. 82, No. 112 / Tuesday, June 13, 2017 / Notices 27045

Appendix to Commission Statement presentation, please send an email, call, highest-priority consumer product
Concerning a Request Made Pursuant to or write Todd A. Stevenson, Office of safety risks; (2) continuing to support
Commission Regulation 1.8— the Secretary, U.S. Consumer Product import surveillance by incrementally
Commission Voting Summary Safety Commission, 4330 East-West developing the Risk Assessment
On this matter, Acting Chairman Giancarlo
Highway, Bethesda, MD 20814; email: Methodology (RAM) system to identify
and Commissioner Bowen voted in the cpsc-os@cpsc.gov; telephone: (301) 504– and stop noncompliant imported
affirmative. No Commissioner voted in the 7923; facsimile: (301) 504–0127. An products from entering the U.S.
negative. electronic copy of the CPSC’s budget marketplace; (3) emphasizing outreach
[FR Doc. 2017–12141 Filed 6–12–17; 8:45 am] request for fiscal year 2018 and the and education by engaging all
CPSC’s 2016–2020 Strategic Plan can be stakeholders through forums and
BILLING CODE 6351–01–P
found at: www.cpsc.gov/about-cpsc/ workshops; and (4) expanding the
agency-reports/performance-and- sources and types of data analysis used
budget. to identify and assess product safety
CONSUMER PRODUCT SAFETY risks and inform compliance decisions.
COMMISSION SUPPLEMENTARY INFORMATION:
The Commission requests comments on
Commission Agenda and Priorities; I. Background the priorities as presented in the FY
2018 Budget Request. The CPSC’s
Notice of Hearing Section 4(j) of the Consumer Product
Budget Request for fiscal year 2018 can
Safety Act (CPSA) (15 U.S.C. 2053(j))
AGENCY: U.S. Consumer Product Safety be found at: www.cpsc.gov/about-cpsc/
requires the Commission to establish an
Commission. agency-reports/performance-and-
agenda for action under the laws the
ACTION: Notice of public hearing. budget. The Commission also requests
Commission administers, and to the
comments on whether the Commission
SUMMARY: The U.S. Consumer Product extent feasible, select priorities for
should consider making any changes or
Safety Commission (Commission) will action at least 30 days before the
adjustments to the agency’s proposed or
conduct a public hearing to receive beginning of each fiscal year. Section
ongoing safety standards activities,
views from all interested parties about 4(j) of the CPSA provides further that
regulation and enforcement efforts in
the Commission’s agenda and priorities before establishing its agenda and
fiscal years 2018 and 2019, keeping in
for fiscal year 2018, which begins on priorities, the Commission conduct a
mind the CPSC’s existing policy on
October 1, 2017, and for fiscal year public hearing and provide an
establishing priorities for Commission
2019, which begins on October 1, 2018. opportunity for the submission of
action (16 CFR 1009.8). Comments are
We invite members of the public to comments.
welcome on whether particular action
participate. Written comments and oral II. Oral Presentations and Submission items should be higher priority than
presentations concerning the of Written Comments others, should not be included, or
Commission’s agenda and priorities for should be added to the fiscal year 2018
The Commission is in the process of
fiscal years 2018 and 2019 will become and/or fiscal year 2019 agendas.
preparing the agency’s fiscal year 2018
part of the public record. Persons who desire to make oral
Operating Plan and fiscal year 2019
DATES: The hearing will begin at 10 a.m. Congressional Budget Request. Fiscal presentations at the hearing on July 26,
on July 26, 2017, and will conclude the year 2018 begins on October 1, 2017, 2017 should send an email, call, or
same day. Requests to make oral and fiscal year 2019 begins on October write Todd A. Stevenson, Office of the
presentations and the written text of any 1, 2018. Through this notice, the Secretary, U.S. Consumer Product
oral presentations must be received by Commission invites the public to Safety Commission, 4330 East-West
the Office of the Secretary not later than comment on the following questions: Highway, Bethesda, MD 20814; email:
5 p.m. Eastern Daylight Time (EDT) on 1. What are the priorities the cpsc-os@cpsc.gov; telephone: (301) 504–
July 12, 2017. The Commission will Commission should consider 7923; facsimile (301) 504–0127 not later
accept written comments as well. These emphasizing and dedicating resources than 5 p.m. EDT on July 12, 2017.
also must be received by the Office of toward in the fiscal year 2018 Operating Requests to make oral presentations and
the Secretary not later than 5 p.m. EDT Plan and/or the fiscal year 2019 texts of the presentation must be
on July 12, 2017. Congressional Budget Request? received not later than 5 p.m. EDT on
ADDRESSES: The hearing will be in the 2. What activities should the July 12, 2017. Presentations should be
Hearing Room, 4th Floor of the Bethesda Commission consider deemphasizing in limited to approximately 10 minutes.
Towers Building, 4330 East-West the fiscal year 2018 Operating Plan and/ The Commission reserves the right to
Highway, Bethesda, MD 20814. or the fiscal year 2019 Congressional impose further time limitations on all
Requests to make oral presentations, Budget Request? presentations and further restrictions to
and texts of oral presentations and 3. What retrospective review of rules avoid duplication of presentations.
written comments should be captioned, If you do not want to make an oral
should the Commission consider in the
‘‘Agenda and Priorities FY 2018 and/or presentation, but would like to provide
fiscal year 2018 Operating Plan and/or
2019,’’ and sent by electronic mail written comments, you may do so.
the fiscal year 2019 Congressional
(email) to: cpsc-os@cpsc.gov, or mailed Please submit written comments in the
Budget Request, consistent with the
or delivered to the Office of the manner described in the previous
Plan for Retrospective Review of
Secretary, U.S. Consumer Product paragraph. Written comments must be
Existing Rules adopted by the
Safety Commission, 4330 East-West received no later than 5 p.m. EDT on
Commission on April 1, 2016?
July 12, 2017.
nlaroche on DSK30NT082PROD with NOTICES

Highway, Bethesda, MD 20814. 4. The CPSC’s programs will align
Requests and written comments must be with the strategic goals outlined in the Dated: June 7, 2017.
received no later than 5 p.m. EDT on CPSC’s 2016- 2020 Strategic Plan. The Todd A. Stevenson,
July 12, 2017. CPSC’s fiscal year 2018 Budget Request, Secretary, U.S. Consumer Product Safety
FOR FURTHER INFORMATION CONTACT: For submitted to Congress on May 23, 2017, Commission.
information about the hearing, or to is based on four agency priorities: (1) [FR Doc. 2017–12069 Filed 6–12–17; 8:45 am]
request an opportunity to make an oral Focusing the agency’s resources on the BILLING CODE 6355–01–P

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Document Created: 2017-06-13 00:22:15
Document Modified: 2017-06-13 00:22:15

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
Action		Commission statement.
Contact		Eileen T. Flaherty, Director, (202) 418-5326, [email protected]; Frank Fisanich, Chief Counsel, (202) 418- 5949, [email protected]; or Jacob Chachkin, Special Counsel, (202) 418-5496, [email protected], Division of Swap Dealer and Intermediary Oversight, Commodity Futures Trading Commission, 1155 21st Street NW., Washington, DC 20581.
FR Citation		82 FR 27044