DGL REVISED 2019 13n-4 Supporting Statement - 7.22.19 draft

SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission
for Amendments to Rule 13n-4 in Connection with
Access to Data Obtained by Security-Based Swap Data Repositories
This submission is being made pursuant to the Paperwork Reduction Act of 1995, 44
U.S.C. Section 3501 et seq.
A.

Justification
1.

Necessity of Information Collection

Title VII of the Dodd-Frank Act provides for a comprehensive regulatory framework for
security-based swaps (“SBSs”), including the regulation of security-based swap data repositories
(“SDRs”).1 These include requirements that SDRs make SBS data conditionally available to
certain regulators and other authorities.2
On August 29, 2016, the Commission adopted rules 13n-4(b)(9), (b)(10) and (d) to
implement that data access requirement.3 Under those rules, SDRs would be required to provide
SBS data to certain entities, subject to a confidentiality condition. The rules further would
require SDRs to create and maintain information regarding such data access.
To satisfy the statutory confidentiality condition associated with the data access
requirements,4 regulators and other authorities will enter into a memorandum of understanding
(“MOU”) or other arrangement to address the confidentiality of the SBS information made
available to the entity.
Also, in connection with the Commission’s statutory authority to determine other persons
to be appropriate to access data pursuant to these provisions,5 certain regulators or other
authorities not designated by statute may submit applications to the Commission requesting that
they be deemed eligible to obtain such SBS data.
2.

Purpose and Use of Information Collection

By allowing certain U.S. and non-U.S. regulators and other authorities to access securitybased swap data from SDRs, implementation of the statutory data access provisions – including
1

Pub. L. No. 111-203, § 761(a) (adding Exchange Act Section 3(a)(75) (defining SDR))
and § 763(i) (adding Exchange Act Section 13(n) (establishing a regulatory regime for SDRs)).
2

See Exchange Act sections 13(n)(5)(G), (H). This summary describes the collection of
information associated with the data access provisions adopted by the Dodd-Frank Act, as
modified by section 86001(b) of Public Law 114-94, enacted in 2015.
3

See Access to Data Obtained by Security-Based Swap Data Repositories, Exchange Act Release
No. 78716 (Aug. 29, 2016), 81 FR 60585 (Sept. 2, 2016).

4

See Exchange Act sections 13(n)(5)(H).

5

See Exchange Act sections 13(n)(5)(G)(v).

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the confidentiality condition and the Commission’s authority to designate entities to access such
information – will facilitate regulatory oversight of the SBS market and its participants,
including oversight of systemic and other risks associated with the market. Implementation of
those provisions also will promote compliance with applicable laws and regulations, including
but not limited to compliance with the antifraud provisions of the federal securities laws.
3.

Consideration Given to Information Technology

The rules are drafted in a flexible manner that does not mandate the method by which
data is provided, and hence will facilitate the ability of regulators and other authorities to access
such information. In particular, the rules related to the statutory requirement that the
Commission be notified of data requests states that an SDR can satisfy that requirement by
informing the Commission of the first instance of a request, and maintaining records of other
requests. This approach is designed to account for the way the Commission expects entities are
likely to access data from SDRs.
4.

Duplication

Section 712(a)(2) of the Dodd-Frank Act provides that, before commencing any
rulemaking regarding, among other things, SBSs or SDRs, the Commission must consult and
coordinate with the Commodity Futures Trading Commission (“CFTC”) and prudential
regulators for the purposes of assuring regulatory consistency and comparability, to the extent
possible. Any person that is required to be registered as an SDR under Exchange Act Section
13(n) must register with the Commission (absent an exemption), regardless of whether that
person is also registered with the CFTC under the Commodities Exchange Act as a swap data
repository. The Commission believes that a person that registers with the Commission as an
SDR is likely to also register with the CFTC as a swap data repository. Prior to the
Commission’s 2016 adoption of the rules at issue, and as mandated by Section 712 of the DoddFrank Act, the Commission staff and CFTC staff consulted and coordinated with one another
regarding their respective Commissions’ rules regarding SDRs and swap data repositories.
Commission staff also consulted and coordinated with other prudential regulators.
5.

Effect on Small Entities

The rules will not have a significant economic impact on a substantial number of small
entities.
6.

Consequences of Less Frequent Collection

The rules are intended to permit U.S. and non-U.S. regulators and other authorities to
access SBS information in connection with overseeing the SBS markets and its participants,
monitoring and controlling of risks including systemic risks, and promoting compliance with
applicable requirements. A less frequent collection of information would impinge upon the
ability of regulators and other authorities to see current information regarding the SBS market
and its participants, and hence would conflict with all of those goals.

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7.

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

Because rule 13n-4(b)(9), consistent with the Exchange Act, requires SDRs to make SBS
information available “upon request” of a regulator or other authority, it is to be expected that
SDRs will make available such information more often than quarterly. This collection of
information is necessary, however, to ensure that regulators and other authorities have timely
access to information in connection with the oversight of the SBS market and its participants.
8.

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

SBS data provided by an SDR to a regulator or other authority pursuant to this provision
will be subject to the confidentiality protections specified in an MOU or other arrangement
between the Commission and the recipient entity.
The Commission will make public the requests for a determination that an authority is
appropriate to conditionally access security-based swap data, as well as Commission
determinations issued in response to such requests. The Commission expects that it will make
publicly available the MOUs or other arrangements with the Commission used to satisfy the
confidentiality and indemnification conditions.
Initial notices of requests for access provided to the Commission by repositories will be
kept confidential, subject to the provisions of applicable law. To the extent that the Commission
obtains subsequent requests for access that would be required to be maintained by the
repositories, the Commission also will keep those records confidential, subject to the provisions
of applicable law.
11.

Sensitive Questions

No information of a sensitive nature, including social security numbers, will be required
under this collection of information. The collection of information implements the statutory
requirement that certain domestic and foreign authorities may access security-based swap data
from security-based swap data repositories (SDRs) registered with the Commission. No form is
associated with this rule nor is information provided to the Commission pursuant to this Rule.
The information, consisting of security-based swap transaction and position data, will be
provided by SDRs to domestic and foreign authorities that have entered into a confidentiality
arrangement with the Commission. The relevant rules are drafted in a flexible manner that does
not mandate the method by which security-based swap data is provided by SDRs to the relevant

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authorities. The agency has determined that a system of records notice (SORN) and privacy
impact assessment (PIA) are not required in connection with the collection of information.
12.

Information Collection Burden

The total reporting for the rules for all respondents is 35,780 hours annually. This burden
is broken down by collection of information below.
a.

MOUs and other arrangements

Rule 13n-4(b)(10) provides that entities that access security-based swap data pursuant to
these data access provisions would be required to enter into MOUs or other arrangements with
the Commission to address the confidentiality of the information provided. In some cases, those
entities also would enter into MOUs or other arrangements in connection with the Commission’s
determination of the entity as authorized to access such data (to the extent that the entity’s access
is already determined by statute or by the rules). Commission staff estimates a total of 30
respondents for those provisions. Commission staff estimates that on average, recipients of data
would expend 500 hours in connection with negotiating these MOUs or other arrangements, for a
one-time burden of 15,000 hours. This equates to 5,000 hours per year where when annualized
over three years, or 166.67 hours per respondent when annualized over three years. Commission
staff estimates no ongoing burdens associated with this requirement. This collection is a
reporting type of collection.
b.

Requests for Access

Rule 13n-4(b)(9)(x) provides that the Commission may determine that certain entities
that are not identified by statute and/or the rules may request that they may access such securitybased swap data. Commission staff estimates a total of 21 respondents may make requests for
such determination. Commission staff estimates that on average such entities would expend 40
hours in connection with such requests, for a one-time burden of 840 hours. This equates to 280
hours per year where annualized over three years, or 13.33 hours per respondent when
annualized over three years. Commission staff estimates no ongoing burdens associated with
this requirement. This collection is a reporting type of collection.
c.

Systems Costs

SDRs may be expected to incur systems-related costs associated with setting up access to
security-based swap data for regulators and other authorities. Commission staff estimates a total
of 10 respondents may incur such costs. Commission staff estimates that on average such
entities would expend 7,800 hours in connection with providing such connectivity, for a onetime burden of 78,000 hours. This equates to 26,000 hours per year where annualized over three
years, or 2,600 hours per respondent when annualized over three years. Commission staff
estimates no ongoing burdens associated with this requirement. This collection is a
recordkeeping type of collection.

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d.

Providing Notification of Requests

Rule 13n-4(d) provides that SDRs must inform the Commission when they receive the
first request for security-based swap data from a particular entity. Commission staff estimates a
total of 10 respondents may incur such costs. Commission staff estimates that such entities
would expend 150 hours in connection with this notice requirement (based on each SDR
providing 300 notices, at half-hour per notice), for a one-time burden of 1,500 hours. This
equates to 500 hours per year where annualized over three years, or 50 hours per respondent
when annualized over three years. Commission staff estimates no ongoing burdens associated
with this requirement. This collection is a reporting type of collection.
e.

Records of requests

Rule 13n-4(d) further provides that SDRs must maintain records of all information
related to initial and subsequent requests for data access. Commission staff estimates a total of
10 respondents for these provisions. Commission staff estimates that compliance with this
provision will require 360 hours initially and 280 hours annually per respondent, for a total
burden of 3,600 hours initially and 2,800 hours annually across ten respondents. This equates to
4,000 hours per year when annualized over three years or 400 hours per respondent when
annualized over three years. This collection is a recordkeeping type of collection.

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f.

Summary of Hourly Burdens

The table below summarizes the estimates of the total hourly burden.

Collection of
Information

Type of
Burden

Total Number
of Respondents

Total Number
of Responses
Per Year

Initial Burden Per
Response Per Year
Per Respondent

Ongoing Burden Per
Response Per Year
Per Respondent

Total Annualized
Burden Per Year Per
Year Per Respondent

Total Reporting
Burden For All
Respondents

Regulator MOUs
related to
confidentiality

Reporting

30

1

166.67

0.00

166.67

5,000

Requests for
Commission
determination

Reporting

21

1

13.33

0.00

13.33

280

Systems costs
incurred by SDRs

Recordkeeping

10

1

2,600

0.00

2,600

26,000

Request notification
costs incurred by
SDRs

Reporting

10

300

0.17

0.00

50

500

Records of requests,
maintained by SDRs

Recordkeeping

10

1

120

280

400

4,000

Totals

35,780

13.

Costs to Respondents

The total cost for all of the Rules and Form SDR for all respondents is approximately
$400,000 annually.
These costs arise in connection with rule 13n-4(d), which provides that SDRs must
maintain records of all information related to initial and subsequent requests for data access.
Commission staff estimates a total of ten respondents for these provisions. Commission staff
estimates that compliance with this provision will require $40,000 annually per respondent, for a
total cost of $400,000 annually across ten respondents. This collection is a recordkeeping type of
collection.
The table below summarizes the estimates of the total cost burden.
Collection of
Information

Type of
Burden

Total Number of
Respondents

Total Number
of Responses
Per Year

Initial Cost Per
Response Per Year
Per Respondent

Ongoing Cost Per
Response Per Year
Per Respondent

Total Annualized Cost
Per Year Per Year Per
Respondent

Total Reporting
Cost For All
Respondents

Records of
requests,
maintained by
SDRs

Recordkeeping

10

1

0

$40,000

$40,000

$400,000

14.

Costs to Federal Government

Not applicable.
15.

Changes in Burden

Not applicable.

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16.

Information Collection Planned for Statistical Purpose

Not applicable
17.

Approval to Omit OMB Expiration Date

The Commission is not seeking approval to omit the expiration date.
18.

Exceptions to Certification

Not applicable.
B.

Collection of Information Employing Statistical Methods.
The rules do not employ statistical methods.