SBS Entity Registration PRA SS

SBS Entity Registration PRA SS.pdf

Registration Requirements for Security-based Swap Dealers and Major Security-based Swap Participants

OMB: 3235-0696

⚠️ Notice: This form may be outdated. More recent filings and information on OMB 3235-0696 can be found here:

2022-01-03 - Extension without change of a currently approved collection

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SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission
for Registration Requirements for Security-based Swap Dealers and Major Security-based
Swap Participants
A.

JUSTIFICATION
1.

Information Collection Necessity

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “DoddFrank Act”) added Section 15F to the Securities Exchange Act of 1934 (“Exchange Act”) to
create a regulatory structure to allow the Securities and Exchange Commission (the
“Commission”) to regulate security-based swap dealers and major security-based swap
participants (collectively, “SBS Entities”).
On August 5, 2015, the Commission adopted Rules 15Fb1-1 through 15Fb6-2 and
Forms SBSE, SBSE-A, SBSE-BD, SBSE-C, and SBSE-W to create a process to register SBS
Entities. 1
When it adopted Rules 15Fb1-1 through 15Fb6-2 and the associated Forms, the
Commission recognized that firms would require time, before the registration rules required
that they register, to review rules not yet adopted that would be applicable to SBS Entities
before they could make informed decisions regarding whether they would continue to conduct
a security-based swap business in the U.S., and to determine which of their associated persons
may be subject to the statutory prohibition provision. Due to this, the Commission made
compliance with the registration requirements contingent on its future adoption of certain rules
that would be applicable to SBS Entities. More specifically, the “Registration Compliance
Date” is “the later of: six months after the date of publication in the Federal Register of a final
rule release adopting rules establishing capital, margin and segregation requirements for SBS
Entities; the compliance date of final rules establishing recordkeeping and reporting
requirements for SBS Entities; the compliance date of final rules establishing business conduct
requirements under Exchange Act Sections 15F(h) and 15F(k); or the compliance date for final
rules establishing a process for a registered SBS Entity to make an application to the
Commission to permit an associated person who is subject to a statutory disqualification to
effect or be involved in effecting security-based swaps on its behalf.”
The Commission has not yet adopted rules establishing capital, margin and segregation
requirements, or recordkeeping and reporting requirements for SBS Entities, nor has it
established a process for a registered SBS Entity to make an application to the Commission to
permit an associated person who is subject to a statutory disqualification. As a consequence,
no firm is yet required to comply with Rules 15Fb1-1 through 15Fb6-2, or file any of the
associated Forms.
1

See Registration of Security-Based Swap Dealers and Major Security-Based Swap Participants, Securities
Exchange Act Release No. 75611 (Aug. 5, 2015), 80 FR 48964 (Aug. 12, 2015). The OMB control
number is 3235-0696.

Registration
Rule 15Fb2-1(a) 2 requires a firm to file an application for registration as an SBS Entity with
the Commission on Form SBSE, 3 Form SBSE-A, 4 or Form SBSE-BD, 5 as applicable. These
Forms were designed to elicit information concerning, among other things, the nature of an SBS
Entity’s business, the identity of its principals and controlling persons, and whether it has been
sanctioned for investment-related violations. Paragraphs (a) and (b) of Rule 15Fb2-1 also require
that each SBS Entity provide the Commission with a certification on Form SBSE-C to facilitate the
Commission’s review of each firm’s application for ongoing registration. 6 Rule 15Fb2-3 7 requires
a registered SBS Entity to promptly update its Form SBSE, SBSE-A, or SBSE- BD, as applicable,
when information contained in those Forms changes or becomes materially inaccurate. Rule
15Fb2-4 8 requires nonresident SBS Entities to (1) file an additional schedule to Form SBSE, Form
SBSE-A, or Form SBSE-BD, as appropriate, to inform the Commission of the identity and location
of its U.S. agent for service of process and to certify that it can, as a matter of law, and will provide
the Commission with access to its books and records and submit to onsite inspection and
examination by the Commission, and (2) obtain an opinion of counsel stating that the nonresident
SBS Entity can, as a matter of law, provide the Commission with access to its books and records
submit to onsite inspection and examination by the Commission. Rule 15Fb6-2 9 requires SBS
Entities to certify, on Form SBSE-C, that it neither knows, nor in the exercise of reasonable care
should have known, that any person associated with it who effects or is involved in effecting securitybased swaps on its behalf is subject to a statutory disqualification, unless otherwise specifically
2

17 CFR 240.15Fb2-1(a).

17 C.F.R. 249.1600. The rules require SBS Entities that are not already registered as broker-dealers or
registered or registering with the CFTC as a swap dealer or major swap participant to use Form SBSE to
register with the Commission. Form SBSE elicits all the information the Commission needs to evaluate the
applicant’s request for registration.

17 C.F.R. 249.1600a. The rules allow SBS Entities that are registered or registering with the CFTC as a
swap dealer or major swap participant to use Form SBSE-A instead of Form SBSE to register with the
Commission to register with the Commission. Form SBSE-A is shorter than Form SBSE and was
designed to elicit information the staff needs to evaluate an SBS Entity’s registration that is not already
elicited through the CFTC registration form, which these firms would also be required to provide to the
Commission.

17 C.F.R. 249.1600b. The rules allow SBS Entities that are also registered broker-dealers to use Form
SBSE-BD instead of Form SBSE to register with the Commission. Form SBSE-BD is a shorter form in
recognition of the fact that the Commission already has, through Form BD, much of the information elicited
through Form SBSE that the staff would need to evaluate the applicant’s request for registration.

17 CFR 240.15Fb2-1(b).

17 CFR 240.15Fb2-3.

17 CFR 240.15Fb2-4.

17 CFR 240.15Fb6-2. Exchange Act Section 15F(b)(6) specifically prohibits SBS Entities from permitting
any of their associated persons who are subject to a “statutory disqualification” (as described in paragraphs (A)
through (F) of Exchange Act Section 3(a)(39)) to effect or be involved in effecting security-based swaps on
behalf of the SBS Entity if the SBS Entity knew, or in the exercise of reasonable care should have known, of
the statutory disqualification.

provided by rule, regulation or order of the Commission. That rule also requires that, to support this
certification, an SBS Entity’s CCO (or his or her designee) must review and sign the questionnaire or
application for employment obtained in compliance with other rules 10 executed by each associated
person who is a natural person and who effects or is involved in effecting security based swaps
on the SBS Entity’s behalf. As these Forms are filed electronically, Rule 15Fb1-1 11 requires that
an SBS Entity retain a copy of manually signed signature pages to assure that they are available
for review by examiners.
The collections of information included in these rules and forms are necessary to allow
the Commission to effectively determine whether the applicant meets the statutory
requirements to engage in the security-based swap business. In addition, these collections of
information are necessary to allow the Commission to adequately supervise the activities of
these SBS Entities on an ongoing basis.
Withdrawal
Rule 15Fb3-2 12 allows a registered SBS Entity to withdraw from registration with the
Commission by filing Form SBSE-W. 13 The collection of information included in Rule
15Fb3-2 and Form SBSE-W is necessary to allow the Commission to determine whether it is
in the public interest to allow the SBS Entity to withdraw from registration.
2.

Information Collection Purpose and Use

Registration
The Commission uses the information disclosed by applicants through the SBS Entity
registration rules and forms, including the re-proposed forms to: (1) determine whether an
applicant meets the standards for registration set forth in the provisions of the Exchange Act;
and (2) develop an information resource regarding SBS Entities where members of the public
may obtain relevant, up-to-date information about SBS Entities, and where the Commission
may obtain information for examination and enforcement purposes. Without the information
provided through these SBS Entity registration rules and forms, the Commission could not
effectively determine whether the applicant meets the standards for registration or implement
policy objectives of the Exchange Act.
Withdrawal
The information collected pursuant to Rule 15Fb3-2 and Form SBSE-W allows the
Commission to determine whether it is appropriate to allow an SBS Entity to withdraw from
registration and to facilitate that withdrawal. Without this information, the Commission would
10

See e.g., Exchange Act Rule 17a-3(a)(12)(i) and proposed Rule 18a-5(a)(8)(i).

17 CFR 240.15Fb1-1.

17 CFR 240.15Fb3-2.

17 CFR 249.1601.

be unable to effectively determine whether it was appropriate to allow an SBS Entity to
withdraw. In addition, it would be more difficult for the Commission to properly regulate SBS
Entities if it were unable to quickly identify those that have withdrawn from the security-based
swap business.
3.

Consideration Given to Information Technology

SBS Entity applicants must file Form SBSE, Form SBSE-A, or Form SBSE-BD, as
appropriate, and attachments thereto (including the appropriate Schedules, opinions of counsel,
and Form SBSE-C) electronically. The Commission believes that this method of collecting
information reduces the regulatory burden upon SBS Entities.
4.

Duplication

This is the only registration requirement for SBS Entities. While an SBS Entity may
otherwise be registered because it engages in other types of business (e.g., as a swap dealer or
major swap participant or as a broker-dealer), these rules and Forms reduce the possibility of
duplication by requiring that SBS Entities otherwise registered because of other lines of
business may file a shorter Form (e.g., Form SBSE-A or Form SBSE-BD).
5.

Effect on Small Entities

Based on the Commission’s existing information about the security-based swap market,
the Commission believes that no entities that will qualify as SBS Entities will be “small
entities.”
6.

Consequences of Not Conducting Collection

Paragraphs (a) and (b) of Rule 15Fb2-1 require that an SBS Entity file Form SBSE,
Form SBSE-A, or Form SBSE-BD (including the additional schedules required to comply with
Rules 15Fb2-4), as applicable, and Form SBSE-C only once to register. Rule 15Fb2-3 would
require an SBS Entity to file amendments to Forms SBSE, SBSE-A, and SBSE-BD, as
applicable, only when information contained therein becomes inaccurate. Less frequent
collection of information pursuant to these rules and forms would impair the accuracy of the
information available to the Commission, which could impede its decision-making regarding,
and oversight of, these entities.
Rule 15Fb3-2 requires that an SBS Entity file Form SBSE-W to withdraw from
registration only once. Less frequent collection of this information would limit the
Commission’s understanding of whether registered SBS Entities continue to engage in
business and could result in a misallocation of Commission resources to oversee SBS Entities
that are no longer engaged in this business.
7.

Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)

There are no special circumstances. This collection is consistent with the guidelines in
5 CFR 1320.5(d)(2).
4

Consultations Outside the Agency

The required Federal Register notice with a 60-day comment period soliciting
comments on this collection of information was published. No public comments were
received.
9.
Payment or Gift
Not applicable.
10.

Confidentiality

The Commission intends to make the information submitted to the Commission
pursuant to Rules 15Fb1-1 through 15Fb6-2 and Forms SBSE-C and SBSE-W, along with
Forms SBSE, SBSE-A, SBSE-BD, public. Information firms are required to create and
maintain at their offices pursuant to Rules 15Fb1-1 through 15Fb6-2 would generally only be
accessed by the Commission staff during examinations and, to the extent the Commission
obtains copies of those records, they will be kept confidential (subject to applicable law).
11.

Sensitive Questions

The information collection collects basic Personally Identifiable Information (“PII”) that
may include Name, Criminal/Civil History, Occupation, Job Title, Work Address, Telephone
Number, Email Address, Certificate/License Number, and Business Associates. However, the
agency has determined that the information collection does not constitute a system of record for
purposes of the Privacy Act. Information is not retrieved by a personal identifier. In accordance
with Section 208 of the E-Government Act of 2002, the agency has conducted a Privacy Impact
Assessment (“PIA”) of the EDGAR system, in connection with this collection of information.
The EDGAR PIA, published on January 29, 2016, is provided as a supplemental document and
is also available at https://www.sec.gov/privacy.
12.

Information Collection Burden
a.

Respondents:

Based on a current review of available data, the Commission continues to estimate that
approximately 50 entities may fit within the definition of SBS Dealer and up to five entities
may fit within the definition of major security-based swap participant. 14 All of these entities
will need to register within the first year of the Registration Compliance Date.
Of the 55 entities likely to be either security-based swap dealers or major security-based
swap participants, the Commission staff continues to estimate that approximately 22 entities will

Based on an analysis of 2017 DTCC’s Trade Information Warehouse data.

be registered foreign security-based swap dealers or foreign major security-based swap
participants (collectively, “Nonresident SBS Entities”). 15
The staff further estimates, based on its experience and understanding of the
unregulated swaps and security-based swaps markets, that the majority of firms that may
register as SBS Entities (30) also will be engaged in the swaps business and will register with
the CFTC as swap dealers or major swap participants. In addition, persons holding securities
positions may find it beneficial to hedge those positions with security-based swaps, so it may
be beneficial for a broker-dealer to become an SBS Entity so that it can provide this option to
its customers. Thus, Commission staff estimate that approximately 16 broker-dealers will seek
to register as SBS Entities.
Finally, given the costs of registration, it may be less likely for an entity that is not
otherwise registered with the CFTC or the Commission to register as an SBS Entity.
Consequently, the Commission staff estimate that only nine firms not otherwise registered with
the CFTC or the Commission will seek to become an SBS Entity (four as security-based swap
dealers and five as major security-based swap participants). 16
b.

Description of Burdens:
i.

Burden Associated with Filing Application Forms

Rule 15Fb2-1 requires that each SBS Entity register with the Commission by filing an
application. The Commission has attempted to reduce the burden associated with the
application process by providing multiple forms for SBS Entities to use to register (Form SBSE,
Form SBSE-A, or Form SBSE-BD). Each SBS Entity will only need to research, complete, and
file one form.
While it is likely that the time necessary to complete these forms will vary depending on
the nature and complexity of the entity’s business, the Commission staff estimated in the SBS
Entity Registration Proposing Release (based on its experience with Form BD) that the average
time necessary for an SBS Entity to research the questions, and complete and file proposed
Form SBSE (including the Schedules 17 and disclosure reporting pages (“DRPs”)) will be
approximately 42 hours. As discussed above, the Commission estimates that approximately
nine firms will need to register using Form SBSE. Consequently, we estimate that the total
burden associated with filing Form SBSE is approximately 378 hours. 18
In summary, the Commission estimates that, over a three-year period, the total
reporting burden associated with Filing Form SBSE will be approximately 378 hours, or
15

Id.

Except Schedule F, which is dealt with separately below.

42 hours x 9 SBS Entities = 378 hours.

126 hours per year 19 when annualized over three years. The average estimated burden
per SBS Entity will be 42 hours, or 14 hours per year 20 when annualized over three years.
As Form SBSE-A is shorter than the Form SBSE, Commission staff estimates that it
should take an SBS Entity approximately 34 hours to research, complete, and file a Form
SBSE (including the Schedules and DRPs). The Commission estimates that approximately 30
firms need to register using Form SBSE-A because they will also be registered with the CFTC
and will not otherwise be able to register using Form SBSE-BD. Consequently, we estimate
the total burden associated with filing Form SBSE-A to be approximately 1,020 hours. 21
In summary, the Commission estimates that, over a three-year period, the total
reporting burden associated with Filing Form SBSE-A will be approximately 1,020 hours,
or 340 hours per year 22 when annualized over three years. The average estimated burden
per SBS Entity will be 34 hours, or 11.3333 hours per year 23 when annualized over three
years.
The Commission staff estimates that, as Form SBSE-BD is shorter than either Form
SBSE or Form SBSE-A and broker-dealers who will be filing Form SBSE-BD are familiar with
Commission terminology and forms, researching, completing, and filing a Form SBSE-BD
should take an SBS Entity approximately 10½ hours to research, complete, and file a Form SBSE
(including the Schedules). As discussed above, the Commission estimates that approximately 16
SBS Entities will need to register using Form SBSE-BD. Consequently, we estimate that the
total burden associated with filing Forms SBSE-BD is approximately 168 hours. 24
In summary, the Commission estimates that, over a three-year period, the total
reporting burden associated with Filing Form SBSE-BD will be approximately 168 hours,
or 56 per year 25 when annualized over three years. The average estimated burden per
SBS Entity will be 10.5 hours, or 3.5 hours per year 26 when annualized over three years.

378 hours ÷ 3 years = 126 hours per year.

378 hours ÷ 9 (estimated number of SBS Entities) = 42 hours per respondent ÷ 3 years = 14 hours per
respondent per year.

34 hours x 30 SBS Entities = 1,020 hours.

1,020 hours ÷ 3 years = 340 hours per year.

1,020 hours ÷ 30 (estimated number of SBS Entities) = 34 hours per respondent ÷ 3 years = 11.3333
hours per respondent per year.

10.5 hours x 16 SBS Entities = 168 hours.

168 hours ÷ 3 years = 56 hours per year.

168 ÷ 16 (estimated number of SBS Entities) = 10.5 hours per respondent ÷ 3 years = 3.5 hours per
respondent per year.

ii.

Burden Associated with Amending Application Forms

Rule 15Fb2-3 requires that each SBS Entity amend its Form SBSE, SBSE-A, or SBSEBD, as applicable, if it finds that the information contained therein has become inaccurate.
While Rule 15Fb2-3 will requires SBS Entities to update their Forms periodically, each firm
will only need to amend that aspect of the Form that has become inaccurate. Consequently, it
likely will not take a significant amount of time to make such changes. Based on the number of
amendments the Commission receives annually on Form BD, 27 the Commission estimates
that each SBS Entity will file approximately three amendments annually, and that it likely will
take an SBS Entity approximately one hour to amend its application each time it files an
amendment.28 Consequently, the total burden associated with amending Forms SBSE, SBSEA, and SBSE-BD, as applicable, is approximately 165 hours. 29
In summary, the Commission estimates that, over a three-year period, the total
reporting burden associated with amending Forms SBSE, SBSE-A, or SBSE-BD, as
appropriate, will be approximately 495 hours, or 165 per year 30 when annualized over
three years. The average estimated burden per SBS Entity over a three-year period will
be 9 hours, or 3 hours per year 31 when annualized over three years.
iii.

Burden Associated with Certifications

Paragraph (a) of Rule 15Fb2-1 requires that each SBS Entity file Form SBSE-C, which
includes two separate certifications, as part of its application to register as an SBS Entity. One
of the certifications, required by Rule 15Fb2-1(b), requires a senior officer of the applicant to
certify that, after due inquiry, the senior officer has reasonably determined that the applicant has
developed and implemented written policies and procedures reasonably designed to prevent
violations of the federal securities laws and the rules thereunder. The other certification,
required by Rule 15Fb6-2, requires that the SBS Entity’s CCO certify that none of its associated
persons that effects or is involved in effecting security-based swaps on its behalf is subject to
statutory disqualification, unless otherwise specifically provided by rule, regulation or order of
the Commission. Each SBS Entity will need to file Form SBSE-C only once.
27

On September 1, 2018 there were 3,820 broker-dealers registered with the Commission (based on Form
BD data). The Commission received 12,902, 14,330, 10,835, 11,583, and 11,703 amended Forms BD
during the fiscal years ending 9/30/2013, 9/30/2014, 9/30/2015, 9/30/2016 and 9/30/2017, respectively.
((12,902 + 14,330 + 10,835 + 11,583 + 11,703) ÷ 5 years) ÷ 3,820 broker-dealers = 3.2 amendments per
broker-dealer per year.

The time necessary to file an amendment to Form SBSE, Form SBSE-A, or Form SBSE-BD, as applicable
may vary depending on the nature and complexity of the information to be amended.

1 hour x three amendments per year x 55 SBS Entities = 165 hours.

(165 hours Y1 burden for 55 SBS Entities to file Form SBSE, SBSE-A, or SBSE-BD) + (165 hours Y2
burden for 55 SBS Entities to file Form SBSE, SBSE-A, or SBSE-BD) + (165 hours Y3 burden for 55 SBS
Entities to file Form SBSE, SBSE-A, or SBSE-BD) = 495 hours per respondent ÷ 3 years = a total of 165
hours per year for all respondents.

495 hours (total burden to file Forms SBSE, SBSE-A, and SBSE-BD, collectively) ÷ 55 (estimated number
of SBS Entities) = 9 hours ÷ 3 = 3 hours per respondent per year.

With respect to the burdens associated with the first certification, the Commission
estimates that it will take a senior officer approximately 20 hours to review an SBS Entity’s
written policies and procedures and take whatever other actions he or she deems necessary to
gain comfort to sign the Senior Officer Certification. We further estimate that the burden
associated with having a senior officer sign a certification likely will be approximately five
hours. Consequently, we estimate that the total burden associated with having a senior officer
review an SBS Entity’s written policies and procedures and or taking whatever other actions he
or she deems necessary to gain comfort necessary to sign the Senior Officer Certification and to
then sign the certification on Form SBSE-C will be approximately 1,375 hours for all entities. 32
The Commission estimates that it will take a CCO approximately one hour to certify on
Schedule G that no associated that is a natural person who effects or is involved in effecting
security-based swaps on behalf of the SBS Entity is subject to a statutory disqualification. 33
We further estimate that each SBS Entity may have, on average 10 associated persons that are
not natural persons effecting or involved in effecting security-based swaps on their behalf, 34
and that it will likely take, on average, approximately five hours for a CCO to collect
information from its legal or other internal departments or its holding company to determine
whether each of its associated persons that is not a natural person is subject to statutory
disqualification. Thus, the Commission estimates that the total burden to all SBS Entities to
complete the CCO Certification Regarding Associated Persons on Form SBSE-C will be
approximately 2,805 hours. 35
In summary, the Commission estimates that the total reporting burden associated
with filing Form SBSE-C will be approximately 4,180 hours, or 1,393.33 per year 36 when
annualized over three years. The average estimated burden per SBS Entity over a three32

(5 hours + 20 hours) x 55 SBS Entities = 1,375 hours.

Registration Proposing Release at 65811.

Rule 15Fb6-1 limits the scope of the prohibition in Exchange Act Section 15F(b)(6) so that unless
otherwise ordered by the Commission, an SBS Entity that files an application with the Commission to
register as an SBS Entity on or before 180 days after the Registration Compliance Date may permit a
person associated with it that is not a natural person and that is subject to statutory disqualification to effect
or be involved in effecting security-based swaps on its behalf, provided that the statutory
disqualification(s), described in Sections 3(a)(39)(A) through (F) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)(39)(A) – (F)), occurred prior to the Registration Compliance Date. In addition, Rule
15Fb6-2(b) clarifies that an SBS Entity’s CCO is only required to review and sign questionnaires and
applications of natural persons, because those are the only types of persons that would generally submit
such a questionnaire or application. Based on the fact that the statutory prohibition is limited to persons
who effect or are involved in effecting security-based swaps on an SBS Entity’s behalf (and not all
associated persons), as well as staff experience and observations, we estimate that each SBS Entity could
have approximately 10 affected associated persons that are entities.

(10 associated persons that are not natural persons x 5 hours to gain comfort that the entity is not subject to
statutory disqualification x 55 SBS Entities) + (1 hour for CCO to sign certification x 55 SBS Entities) =
2,805 hours.

1,375 hours + 2,805 hours = 4,180 hours ÷ 3 years = 1,393.33 hours per year.

year period will be 76 hours, or 25.3333 hours per year 37 when annualized over three
years.
iv.

Burden Relating to Associated Persons

Rule 15Fb6-2 requires an SBS Entity’s CCO certify, on Form SBSE-C, that no
associated person that effects or is involved in effecting security-based swaps on behalf of the
SBS Entity is subject to a statutory disqualification, except as otherwise provided by rule,
regulation, or order of the Commission.38 The rule further provides that to support this
certification the CCO, or his or her designee, must review and sign a questionnaire or
application for employment executed by each of its associated persons who is a natural person
and who effects or is involved in effecting security based swaps on the SBS Entity’s behalf.
SBS Entities will only need to fulfill these obligations for associated persons that effect or are
involved in effecting security based swaps on behalf of the SBS Entity. 39 In addition, this is a
one-time certification provided as part of the registration process.
In the adopting release, the Commission staff estimated that each SBS Dealer will have
423 associated persons that are natural who effect or are involved in effecting security-based
swaps on their behalf. 40 The Commission further estimated that, as Major SBS Participants are
more likely to resemble hedge funds and investment advisors, each Major SBS Participant will
have of 63 associated persons that are natural persons who effect or are involved in effecting
security-based swaps on their behalf. 41 The staff continues to believe these estimates are
appropriate.
The Commission estimates that it will take a CCO (or the CCO’s designee)
approximately one hour to review and sign a relevant employee’s employment record to
37

4,180 (total burden associated with Form SBSE-C) ÷ 55 (estimated number of SBS Entities) = 76 hours per
respondent ÷ 3 years = 25.3333 hours per respondent per year.

Rule 15Fb6-2 requires that an SBS Entity’s CCO, or his or her designee, review and sign the
questionnaire or application for employment obtained in compliance with the applicable recordkeeping
rule.

15 U.S.C. 78c(a)(70) generally defines the term “person associated with” an SBS Entity to include: (i)
any partner, officer, director, or branch manager of an SBS Entity (or any person occupying a similar
status or performing similar functions); (ii) any person directly or indirectly controlling, controlled by, or
under common control with an SBS Entity; or (iii) any employee of an SBS Entity. However, it
generally excludes persons whose functions are solely clerical or ministerial.
The Commission believes that associated persons “involved in effecting” security-based swaps would
include, but not be limited to, persons involved in drafting and negotiating master agreements and
confirmations, persons recommending security-based swap transactions to counterparties, persons involved
in executing security-based swap transactions, persons pricing security-based swap positions and managing
collateral for the SBS Entity, and persons directly supervising persons engaged in these activities. In
short, the term would encompass persons engaged in functions necessary to facilitate the SBS Entity’s
security-based swap business.

See 80 FR 48964 (Aug. 14, 2015), at 48993.

Id.

determine that associated persons who effect or are involved in effecting security-based swaps
on their behalf are not subject to statutory disqualification. 42 If the SBS Entity has not already
performed a background check of the employee, we estimate that it may take the CCO (or the
CCO’s designee) an additional hour to conduct whatever additional review may be necessary. 43
Consequently, the Commission estimates that the hourly burden for each SBS Dealer that is
registered or registering with the Commission or the CFTC will be 423 hours, 44 and the burden
for each other SBS Dealer will be 846 hours. 45 We have no basis to determine whether Major
SBS Participants will already be registered or registering with the Commission or the CFTC, but
we assume that all five will be dually-registered. Thus, the hourly burden for each Major SBS
Participant will be approximately 63 hours. 46 We therefore estimate that the total initial burden
to all SBS Entities to have their CCOs (or designees) review and sign the employment
application or questionnaire for each associated person who is a natural person and who effects
or is involved in effecting security-based swaps on their behalf and/or conduct whatever review
may be necessary to assure that each such associated person is not subject to statutory
disqualification will be approximately 23,157 hours. 47
In summary, the Commission estimates that the total recordkeeping burden for
SBS dealers that are registered or registering with the CFTC or the Commission
associated with the requirement in Rule 15Fb6-2 to review and sign employment
questionnaires or applications, will be approximately 19,458 hours, or 6,486 per year 48
when annualized over three years. The average estimated burden per SBS Entity over a
three-year period will be 423 hours, or 141 hours per year 49 when annualized over three
years.

Registration Proposing Release at 65810. We received no comments on this estimate, and continue to
believe it is appropriate.

The Commission believes that SBS Entities that are registered with the Commission or the CFTC must
already conduct a review to determine if their associated persons are statutorily disqualified persons in the
CEA and the Exchange Act. See 15 U.S.C. 78f(c)(2), 78o-3(g)(2), and 78q(f)(2), and 7 U.S.C. 6k(5) and
12a(1).

423 associated persons x 1 hour = 423 hours.

423 associated persons x 2 hours = 846 hours.

63 associated persons x 1 hour = 63 hours.

(One hour x 423 associated persons that are natural persons x (30 SBS Dealers that are registered or
registering with the CFTC + 16 SBS Dealers that are registered or registering with the Commission as
broker-dealers)) = 19,458 hours for SBS Dealers already registered or registering with the Commission or
CFTC) + ((Two hours x 423 associated persons x 4 SBS dealers that are not otherwise registered or
registering with the Commission or the CFTC) = 3,384 hours) + ((One hour x 63 associated persons x 5
Major SBS Participants) = 315 hours for Major SBS Participants) = 23,157 hours.

One hour x 423 associated persons that are natural persons x (30 SBS Dealers that are registered or
registering with the CFTC + 16 SBS Dealers that are registered or registering with the Commission as
broker-dealers)) = 19,458 hours ÷ 3 = 6,486 hours per year.

19,458 hours ÷ 46 SBS Entities = 423 hours per respondent ÷ 3 = 141 hours annually per respondent.

In summary, the Commission estimates that the total recordkeeping burden for
SBS dealers that are not otherwise registered or registering with the Commission or the
CFTC associated with the requirement in Rule 15Fb6-2 to review and sign employment
questionnaires or applications, will be approximately 3,384 hours, or 1,128 per year 50
when annualized over three years. The average estimated burden per SBS Entity over a
three-year period will be 846 hours, or 282 hours per year 51 when annualized over three
years.
In summary, the Commission estimates that the total recordkeeping burden for
Major SBS Participants associated with the requirement in Rule 15Fb6-2 to review and
sign employment questionnaires or applications, will be approximately 315 hours, or 105
per year 52 when annualized over three years. The average estimated burden per SBS
Entity over a three-year period will be 63 hours, or 21 hours per year 53 when annualized
over three years.
v.

Burdens on Nonresident SBS Entities

As indicated previously, the Commission staff continues to estimate that 22 entities will
be Nonresident SBS Entities. 54 Rule 15Fb2-4 requires that each nonresident SBS Entity file an
additional schedule (Schedule F) with their Form SBSE, Form SBSE-A, or Form SBSE-BD, as
appropriate, to identify its U.S. agent for service of process and to certify that the firm can, as a
matter of law, and will provide the Commission with access to its books and records and can, as
a matter of law, and will submit to onsite inspection and examination by the Commission.
Commission staff estimates that the total burden for all nonresident SBS Entities to
complete and file Schedule F will be approximately 33 hours. 55
In summary, the Commission estimates that the total reporting burden associated
with the requirements for nonresident SBS Entities in Rule 15Fb2-4 to complete and file
Schedule F will be approximately 33 hours, or 11 hours per year 56 when annualized over
three years. The average estimated burden per nonresident SBS Entity over a three-year
period will be 1.5 hours, or .5 hours (or 30 minutes) per year 57 when annualized over three
years.
50

Two hours x 423 associated persons x 4 SBS dealers that are not otherwise registered or registering with
the Commission or the CFTC = 3,384 hours ÷ 3 = 1,128 hours per year.

3,384 hours ÷ 4 SBS Entities = 846 hours per respondent ÷ 3 = 282 hours annually per respondent.

One hour x 63 associated persons x 5 Major SBS Participants = 315 hours ÷ 3 = 105 hours per year.

315 hours ÷ 5 SBS Entities = 63 hours per respondent ÷ 3 = 21 hours annually per respondent.

See text accompanying footnote 15.

1.5 hours x 22 nonresident SBS Entities = 33 hours.

(Y1 initial burden 33 hours) + (Y2 initial burden 0 hours) + (Y3 initial burden 0 hours) = 33 hours ÷ 3 years
= 11 hours per year.

33 hours ÷ 22 SBS Entities = 1.5 hours per respondent ÷ 3 = .5 hours annually per respondent.

Non-resident entities must also amend Schedule F to inform the Commission if they
replace their agent for service of process or if information regarding their existing agent for
service of process changes. We do not believe this will occur frequently, and therefore estimate
that ten percent of the non-residents may need to amend their Schedule F to reflect these types
of changes annually. Consequently, we estimate that the total annual burden for SBS Entities to
amend Schedule F to reflect changes in information regarding their agent for service of process
will be approximately 3 hours. 58
In summary, the Commission estimates that the total reporting burden associated
with the requirements for nonresident SBS Entities in Rule 15Fb2-4 to amend Schedule F
for changes to the agent for service of process will be approximately 9 hours, or 3 hours
per year 59 when annualized over three years. The average estimated burden per
nonresident SBS Entity over a three-year period will be 4.5 hours, or 1.5 hours (or 90
minutes) per year 60 when annualized over three years.
An SBS Entity must also re-certify on Schedule F of such Forms within 90-days after
any changes in the legal or regulatory framework that would impact the SBS Entity’s ability to
provide, or manner in which it provides, the Commission with prompt access to its books and
records or that impacts the Commission’s ability to inspect and examine the SBS Entity. We do
not believe this will occur frequently, and therefore estimate that one non-resident entity may
need to recertify annually. Thus, the total ongoing burden associated with this requirement will
be approximately 1½ hours annually.
In summary, the Commission estimates that the total reporting burden associated
with the requirements for nonresident SBS Entities in Rule 15Fb2-4 to amend Schedule F
for changes to foreign law will be approximately 4.5 hours, or 1.5 hours per year 61 when
annualized over three years. The average estimated burden per nonresident SBS Entity
over a three-year period will be 4.5 hours, or 1.5 hours (or 90 minutes) per year 62 when
annualized over three years.
vi.

Burden Related to Retention of Manually Signed Signature Pages

Pursuant to Rule 15Fb1-1, SBS Entities must create manually signed signature pages
and retain them until at least three years after the form or certification has been replaced or is no
longer effective. It is likely that each SBS Entity will need to maintain at least two pages with
manually signed signatures (the execution page of Form SBSE, SBSE-A, or SBSE-BD, as
58

22 non-resident SBS Entities x 10% = approximately 2 SBS Entities. 2 SBS Entities x 1.5 hours = 3 hours.

(Y1 ongoing burden 3 hours) + (Y2 ongoing burden 3 hours) + (Y3 ongoing burden 3 hours) = 9 hours ÷ 3
years = 3 hours per year.

9 hours ÷ 2 SBS Entities = 4.5 hours per respondent ÷ 3 = 1.5 hours annually per respondent.

(Y1 ongoing burden 1.5 hours) + (Y2 ongoing burden 1.5 hours) + (Y3 ongoing burden 1.5 hours) = 4.5
hours ÷ 3 years = 1.5 hours per year.

4.5 hours ÷ 1 SBS Entity = 4.5 hours per respondent ÷ 3 = 1.5 hours annually per respondent.

applicable, and the Form SBSE-C certifications). In addition, nonresident SBS Entities also
will need to retain a manually signed copy of Schedule F. As so few pages will need to be
retained, the staff believes the burden associated with retaining them will not be significant.
Thus, the Commission estimates that it will take each SBS Entity approximately 10 minutes
annually to assure that these pages are retained, or a total of approximately 9.17 hours annually
for all SBS Entities. 63
In summary, the Commission estimates that the total recordkeeping burden
associated with the requirement, in Rule 15Fb1-1, for SBS Entities to retain manually
signed signature pages will be approximately 27.51 hours, or 9.17 hours per year 64 when
annualized over three years. The average estimated burden per SBS Entity over a threeyear period will be .50 hours, or .1667 hours (10 minutes) per year 65 when annualized
over three years.
vii.

Burden Associated with Filing Withdrawal Form

Given that the cost and effort to register as an SBS Entity will be significant, the
Commission believes that entities will not enter and exit this business regularly. As the Form
SBSE-W is only one page and consists of information readily available to SBS Entities, the
staff estimates that it likely will take an SBS Entity, on average, approximately one hour to
complete and file a Form SBSE-W. 66 While the Commission believes it is unlikely that any
SBS Entity will withdraw from registration often or within the first year, solely for purposes of
this PRA the Commission estimates that one SBS Entity may file Form SBSE-W to withdraw
from registration annually and the total burden associated with completing and filing Form
SBSE-W will be approximately one hour each year. 67
In summary, the Commission estimates that the total reporting burden associated
with the requirement, in Rule 15Fb3-2 and Form SBSE-W, for SBS Entities to file Form
SBSE-W to withdraw from registration will be approximately 3 hours, or 1 hour per
year 68 when annualized over three years. The average estimated burden per SBS Entity
over a three-year period will be 3 hours, or 1 hour per year 69 when annualized over three
years.

(10 minutes x 55 SBS Entities) ÷ 60 minutes = 9.17 hours.

(Y1 ongoing burden 9.17 hours) + (Y2 ongoing burden 9.17 hours) + (Y3 ongoing burden 9.17 hours) =
27.51 hours ÷ 3 years = 9.17 hours per year.

27.51 hours ÷ 55 = .50 hours per respondent ÷ 3 = .1667 hours annually per respondent.

The Commission included this estimate in the Registration Proposing Release, and received no comment
on it. Consequently, we continue to believe this is a good estimate.

(1 hour x 1 SBS Entity) = 1 hour.

(Y1 ongoing burden 1 hour) + (Y2 ongoing burden 1 hour) + (Y3 ongoing burden 1 hour) = 3 hours ÷ 3
years = 1 hour per year.

3 hours ÷ 1 = 3 hours per respondent ÷ 3 = 1 hour annually per respondent.

Summary of Hourly Burdens
SBS Entity Registration Hourly Burdens

Type of
Burden

Number of
Respondents

Number of
Responses Per
Year

Initial Burden
Per Response
Per Year Per
Respondent

Rule 15Fb2-1 and Form SBSE: Complete and File
Application Form

Reporting

Rule 15Fb2-1 and Form SBSE-A: Complete and
File Application Form

Reporting

11.3333

Rule 15Fb2-1 and Form SBSE-BD: Complete and
File Application Form

Reporting

ii.

Rule 15Fb2-3: Complete and File Amendments
to Application Forms

Reporting

iii.

Rule 15Fb2-1 and Form SBSE-C: Complete and
File Certifications

Reporting

iv.

Burdens Relating to Associated Persons
Rule 15Fb6-2: Review and Sign Employment
Questionnaires - SBS Dealers registered or
registering with the SEC or the CFTC

Ongoing
Burden Per
Response Per
Year Per
Respondent

Annualized
Burden
Estimate Per
Respondent

Annualized
Hourly Burden
Estimate
Industry-Wide

Small Business
Entities
Affected

126

11.3333

340

3.5

165

25.3333

1,393.33

Recordkeeping

141

6,486

Rule 15Fb6-2: Review and Sign Employment
Questionnaires - SBS Dealers not registered or
registering with the SEC or the CFTC

Recordkeeping

282

1128

Rule 15Fb6-2: Review and Sign Employment
Questionnaires - Major SBS Participants
registered or registering with the SEC or the
CFTC

Recordkeeping

105

Rule 15Fb2-4 and Schedule F: Complete and File
by Nonresident SBS Entities

Reporting

0.5

Rule 15Fb2-4 and Schedule F: Amendments by
Nonresident Entities to change Agent for
Service of Process

Reporting

1.5

Rule 15Fb2-4 and Schedule F: Amendments by
Nonresident Entities for changes to Foreign Law

Reporting

1.5

vi.

Rule 15Fb1-1: Retain Manually Signed Signature
Pages

Recordkeeping

0.1667

9.17

vii.

15Fb3-2 and Form SBSE-W: Complete and File
Withdrawal Form

Reporting

Nature of Information Collection Burden

Burden Associated with Filing Application
Forms

Burdens on Non-Resident SBS Entities

9,825

13.

Costs to Respondents

There may be some costs associated with these rules, including the cost to nonresident
SBS Entities to establish and maintain a relationship with a U.S. agent for service of process,
and for nonresident SBS Entities to obtain an opinion of counsel indicating that it can, as a
matter of law, provide the Commission with access to its books and records and submit to
Commission examinations.
The Commission estimates, based on internet research, 70 that it will cost each
nonresident SBS Entity approximately $176 annually to appoint and maintain a relationship
with a U.S. agent for service of process. Consequently, the total cost for all nonresident SBS
Entities to appoint and maintain relationships with U.S. agents for service of process is
approximately $3,872 per year. 71
Non-resident SBS Entities also will incur outside legal costs associated with obtaining
an opinion of counsel. The Commission estimates that each nonresident SBS Entity will incur,
on average, approximately $25,000 in outside legal costs to obtain the necessary opinion of
counsel, and that the total cost for all nonresident SBS Entities to obtain this opinion of counsel
will be approximately $550,000. 72
In summary, the Commission estimates that the total reporting cost associated with
the requirements for nonresident SBS Entities in Rule 15Fb2-4 to establish a relationship
with an agent for service of process and obtain an opinion of counsel will be approximately
$561,616 or $187,205 when annualized over three years. 73 The average estimated cost per
nonresident SBS Entity over a three-year period will be $25,528 or $8,509 per year. 74
An SBS Entity must also re-certify on Schedule F of such Forms within 90-days after
any changes in the legal or regulatory framework that will impact the SBS Entity’s ability to
provide, or manner in which it provides, the Commission with prompt access to its books and
records or that impacts the Commission’s ability to inspect and examine the SBS Entity. The
SBS Entity’s re-certification must be accompanied by a revised opinion of counsel regarding
70

See, e.g., http://www.incorp.com/registered-agent-resident-agent-services.aspx (as of September 21, 2018,
$99 per state per year), https://ct.wolterskluwer.com/registered-agentservices?mm_campaign=Enter_Campaign_Code_Here&keyword=registered%20agent&utm_source=Google
&utm_medium=CPC&utm_campaign=RegisteredAgent&jadid=69563123457&jap=1t3&jk=registered%20a
gent&jkId=gc:a8a8ae4cd4a6542cf014a97541e8d183e:t1_p:k_registered%20agent:pl_&jp=&js=1&jsid=3567
2&jt=1 (as of September 21, 2018, $279 per year), and https://www.ailcorp.com/services/registered-agent
(as of September 21, 2018, $149 per year). The staff sought websites that provided pricing information and
a comprehensive description of their registered agent services. We calculated our estimate by averaging
the costs provided on these three websites – ($99 + $279 + $149) ÷ 3 = $176.

$176 per nonresident SBS Entity x 22 nonresident SBS Entities = $3,872.

$25,000 x 22 SBS Entities = $550,000.

(Y1 initial cost of $550,000 + Y1 ongoing cost of $3,872) + (Y2 initial cost of $0 + Y2 ongoing cost of
$3,872) + (Y3 initial cost of $0 + Y3 ongoing cost of $3,872) = $561,616 ÷ 3 years = $187,205 per year.

$561,616 ÷ 22 non-resident SBS Entities = $25,528 ÷ 3 = $8,509 annually per respondent.

the new regulatory regime. We do not believe this will occur frequently, and therefore estimate
that one non-resident entity may need to recertify annually. Thus, the total ongoing cost
associated with obtaining a revised opinion of counsel regarding the new regulatory regime
will be approximately $25,000 annually. 75
In summary, the Commission estimates that the total reporting cost associated with
the requirements for nonresident SBS Entities in Rule 15Fb2-4 to re-certify on Schedule F
for changes to foreign law will be approximately $75,000 or $25,000 when annualized over
three years. 76 The average estimated cost per nonresident SBS Entity over a three-year
period will be $75,000 or $25,000 per year. 77

$25,000 x 1 SBS Entity = $25,000.

(Y1 ongoing cost of $25,000) + (Y2 ongoing cost of $25,000) + (Y3 ongoing cost of $25,000) = $75,000 ÷
3 years = $25,000 per year.

$75,000 ÷ 1 non-resident SBS Entity = $75,000 ÷ 3 = $25,000 annually per respondent.

Summary of Hourly Costs
SBS Entity Registration Cost Burdens

Type of
Burden

Number of
Respondents

Number of
Responses Per
Year

Initial Cost Per
Response Per
Year Per
Respondent

Ongoing
Burden Per
Response Per
Year Per
Respondent

Annualized
Cost Estimate
Per
Respondent

Annualized
Hourly Cost
Estimate
Industry-Wide

Small Business
Entities
Affected

Rule 15Fb2-1 and Form SBSE: Complete and File
Application Form

Reporting

Rule 15Fb2-1 and Form SBSE-A: Complete and
File Application Form

Reporting

Rule 15Fb2-1 and Form SBSE-BD: Complete and
File Application Form

Reporting

ii.

Rule 15Fb2-3: Complete and File Amendments
to Application Forms

Reporting

iii.

Rule 15Fb2-1 and Form SBSE-C: Complete and
File Certifications

Reporting

iv.

Burdens Relating to Associated Persons
Rule 15Fb6-2: Review and Sign Employment
Questionnaires - SBS Dealers registered or
registering with the SEC or the CFTC

Recordkeeping

Rule 15Fb6-2: Review and Sign Employment
Questionnaires - SBS Dealers not registered or
registering with the SEC or the CFTC

Recordkeeping

Rule 15Fb6-2: Review and Sign Employment
Questionnaires - Major SBS Participants
registered or registering with the SEC or the
CFTC

Recordkeeping

Reporting

$8,333.33

$176

$8,509.33

$187,205.33

Reporting

Rule 15Fb2-4 and Schedule F: Amendments by
Nonresident Entities for changes to Foreign Law

Reporting

$25,000

vi.

Rule 15Fb1-1: Retain Manually Signed Signature
Pages

Recordkeeping

vii.

15Fb3-2 and Form SBSE-W: Complete and File
Withdrawal Form

Reporting

Nature of Information Collection Burden

Burden Associated with Filing Application
Forms

Burdens on Non-Resident SBS Entities
Rule 15Fb2-4 and Schedule F: Complete and File
by Nonresident SBS Entities
Rule 15Fb2-4 and Schedule F: Amendments by
Nonresident Entities to change Agent for
Service of Process

$212,205

14.

Costs to the Federal Government

Commission staff estimates that it will need to hire additional staff when the Registration
Compliance Date occurs. The review and processing of a broker-dealer application filed on Form
BD requires approximately 2 hours of staff time. As Forms SBSE, SBSE-A, and SBSE-BD are
drafted based on Form BD, the Commission believes that review of these documents likely will
take approximately the same amount of staff time. Thus, estimating staff time and related
overhead at $75 per hour, the cost to the Federal government in connection with review and
processing of SBS Entity applications filed on Forms SBSE, SBSE-A, and SBSE-BD, as

applicable will be approximately $8,250. 78 With respect to amended Forms BD, the staff
estimates that it requires approximately 1 hour of staff time to review and process the filings.
15.

Reason for Changes in Burden

There was a net increase of 13 burden hours because we expect that five respondents we
originally thought would be able to file on Form SBSE-A will instead be required to file on Form
SBSE. There was a decrease in cost of $66 because we reduced our estimate of the cost for each
nonresident SBS Entity to appoint and maintain a relationship with a U.S. agent for service of
process from $179 annually to $176 annually.
16.

Information Collections Planned for Statistical Purposes

Not applicable. The information is not used for statistical purposes.
17.

Approval to Omit OMB Approval Date

We request authorization to continue to omit the expiration date on the electronic version
of the forms. Including the expiration date on the electronic version of the forms will result in
increased costs, because the need to make changes to the forms may not follow the application’s
scheduled version release dates. The OMB control number will be displayed.
18.

Exceptions to Certification for Paperwork Reduction Act Submissions

This collection of information complies with the requirements in 5 CFR 1320.9.
B.

COLLECTION OF INFORMATION EMPLOYING STATISTICAL
METHODS
This collection does not involve statistical methods.

55 SBS Entities x 2 hours x $75 = $8,250.

File Type	application/pdf
File Modified	2019-02-05
File Created	2019-02-05