83 FR 56828 - Agency Information Collection Activities: Notice of Intent To Extend Collection 3038-0094; Clearing Member Risk Management

COMMODITY FUTURES TRADING COMMISSION

Federal Register Volume 83, Issue 220 (November 14, 2018)

The Commodity Futures Trading Commission (CFTC) is announcing an opportunity for public comment on the extension of a collection of certain information by the agency. Under the Paperwork Reduction Act (``PRA''), Federal agencies are required to publish notice in the Federal Register concerning each proposed collection of information and to allow 60 days for public comment. This notice solicits comments on the obligation to maintain records related to clearing documentation between the customer and the customer's clearing member.

[Federal Register Volume 83, Number 220 (Wednesday, November 14, 2018)]
[Notices]
[Pages 56828-56830]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-24761]


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

COMMODITY FUTURES TRADING COMMISSION


Agency Information Collection Activities: Notice of Intent To 
Extend Collection 3038-0094; Clearing Member Risk Management

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice.

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

SUMMARY: The Commodity Futures Trading Commission (CFTC) is announcing 
an opportunity for public comment on the extension of a collection of 
certain information by the agency. Under the Paperwork Reduction Act 
(``PRA''), Federal agencies are required to publish notice in the 
Federal Register concerning each proposed collection of information and 
to allow 60 days for public comment. This notice solicits comments on 
the obligation to maintain records related to clearing documentation 
between the customer and the customer's clearing member.

DATES: Comments must be submitted on or before January 14, 2019.

ADDRESSES: You may submit comments, identified by OMB Control No. 3038-
0094, by any of the following methods:

[[Page 56829]]

     The Agency's website, at http://comments.cftc.gov/. Follow 
the instructions for submitting comments through the website.
     Mail: Christopher Kirkpatrick, Secretary of the 
Commission, Commodity Futures Trading Commission, Three Lafayette 
Centre, 1155 21st Street NW, Washington, DC 20581.
     Hand Delivery/Courier: Same as Mail above. Please submit 
your comments using only one method. 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.

FOR FURTHER INFORMATION CONTACT: Jocelyn Partridge, Special Counsel, 
Division of Clearing and Risk, Commodity Futures Trading Commission, 
(202) 418-5926; email: [email protected].

SUPPLEMENTARY INFORMATION: Under the PRA, 44 U.S.C. 3501 et seq., 
Federal agencies must obtain approval from the Office of Management and 
Budget (OMB) for each collection of information they conduct or 
sponsor. ``Collection of Information'' is defined in 44 U.S.C. 3502(3) 
and 5 CFR 1320.3 and includes agency requests or requirements that 
members of the public submit reports, keep records, or provide 
information to a third party. Section 3506(c)(2)(A) of the PRA, 44 
U.S.C. 3506(c)(2)(A), requires Federal agencies to provide a 60-day 
notice in the Federal Register concerning each proposed collection of 
information before submitting the collection to OMB for approval. To 
comply with this requirement, the CFTC is publishing notice for the 
extension of the collection of information listed below. An agency may 
not conduct or sponsor, and a person is not required to respond to, a 
collection of information unless it displays a currently valid OMB 
control number.
    Title: Clearing Member Risk Management (OMB Control No. 3038-0094). 
This is a request for extension of a currently approved information 
collection.
    Abstract: Section 3(b) of the Commodity Exchange Act (``Act'' or 
``CEA'') provides that one of the purposes of the Act is to ensure the 
financial integrity of all transactions subject to the Act and to avoid 
systemic risk. Section 8a(5) authorizes the Commission to promulgate 
such regulations that it believes are reasonably necessary to 
effectuate any of the provisions or to accomplish any of the purposes 
of the Act. Risk management systems are critical to the avoidance of 
systemic risks.
    Section 4s(j)(2) requires each Swap Dealer (``SD'') and Major Swap 
Participant (``MSP'') to have risk management systems adequate for 
managing its business. Section 4s(j)(4) requires each SD and MSP to 
have internal systems and procedures to perform any of the functions 
set forth in Section 4s.
    Section 4d requires FCMs to register with the Commodity Futures 
Trading Commission (``Commission''). It further requires Futures 
Commission Merchants (``FCMs'') to segregate customer funds. Section 4f 
requires FCMs to maintain certain levels of capital. Section 4g 
establishes reporting and recordkeeping requirements for FCMs.
    Pursuant to these provisions, the Commission adopted Sec.  1.73 
which applies to clearing members that are FCMs and Sec.  23.609 which 
applies to clearing members that are SDs or MSPs. These provisions 
require these clearing members to have procedures to limit the 
financial risks they incur as a result of clearing trades and liquid 
resources to meet the obligations that arise. The regulations require 
clearing members to: (1) Establish credit and market risk-based limits 
based on position size, order size, margin requirements, or similar 
factors; (2) use automated means to screen orders for compliance with 
the risk-based limits; (3) monitor for adherence to the risk-based 
limits intra-day and overnight; (4) conduct stress tests of all 
positions in the proprietary account and all positions in any customer 
account that could pose material risk to the futures commission 
merchant at least once per week; (5) evaluate its ability to meet 
initial margin requirements at least once per week; (6) evaluate its 
ability to meet variation margin requirements in cash at least once per 
week; (7) evaluate its ability to liquidate the positions it clears in 
an orderly manner, and estimate the cost of the liquidation at least 
once per month; and (8) test all lines of credit at least once per 
quarter.
    Each of these items has been observed by Commission staff as an 
element of an existing sound risk management program at an SD, MSP, or 
FCM. The Commission regulations require each clearing member to 
establish written procedures to comply with this regulation and to keep 
records documenting its compliance. The information collection 
obligations imposed by the regulations are necessary to implement 
certain provisions of the CEA, including ensuring that registrants 
exercise effective risk management and for the efficient operation of 
trading venues among SDs, MSPs, and FCMs. An agency may not conduct or 
sponsor, and a person is not required to respond to, a collection of 
information unless it displays a currently valid OMB control number.\1\
---------------------------------------------------------------------------

    \1\ The OMB control numbers for the CFTC's regulations were 
published on December 30, 1981. See 46 FR 63035 (Dec. 30, 1981).
---------------------------------------------------------------------------

    With respect to the collection of information, the CFTC invites 
comments on:
     Whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information will have a practical 
use;
     The accuracy of the Commission's estimate of the burden of 
the proposed collection of information, including the validity of the 
methodology and assumptions used;
     Ways to enhance the quality, usefulness, and clarity of 
the information to be collected; and
     Ways to minimize the burden of collection of information 
on those who are to respond, including through the use of appropriate 
automated electronic, mechanical, or other technological collection 
techniques or other forms of information technology; e.g., permitting 
electronic submission of responses.
    You should submit only information that you wish to make available 
publicly. If you wish the Commission to consider information that you 
believe is exempt from disclosure under the Freedom of Information Act, 
a petition for confidential treatment of the exempt information may be 
submitted according to the procedures established in Sec.  145.9 of the 
Commission's regulations.\2\
---------------------------------------------------------------------------

    \2\ 17 CFR 145.9.
---------------------------------------------------------------------------

    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 ICR 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.
    Burden Statement: The respondent burden for this collection is 
estimated to average 2 hours per response for an estimated annual 
burden of 504 hours per respondent. This estimate includes the total 
time, effort, or financial resources expended by persons to generate, 
maintain, retain, disclose, or

[[Page 56830]]

provide information to or for a federal agency.
    Respondents/Affected Entities: Clearing member Swap Dealers, Major 
Swap Participants, and Futures Commission Merchants.
    Estimated Number of Respondents: 166 (101 Clearing Member Swap 
Dealers and 65 Clearing Member Futures Commission Merchants).
    Estimated Average Burden Hours per Respondent: 504.
    Estimated Total Annual Burden Hours: 83,664 hours.
    Frequency of Collection: As needed.
    There are no capital costs or operating and maintenance costs 
associated with this collection.

    Authority:  44 U.S.C. 3501 et seq.

    Dated: November 8, 2018.
Robert Sidman,
Deputy Secretary of the Commission.
[FR Doc. 2018-24761 Filed 11-13-18; 8:45 am]
 BILLING CODE 6351-01-P