Final Rule Supporting Statement (Amends 3235-0695) May 2020

SUPPORTING STATEMENT for the Paperwork Reduction Act Information Collection
Submission for Definition of “Covered Clearing Agency” under Rule 17Ad-22
Partial Revision to 3235-0695
This submission is being made pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C.
3501 et seq.
A.

JUSTIFICATION
1. Necessity of Information Collection
Legal Requirements
i.

Exchange Act

Section 17A of the Securities Exchange Act of 1934 (“Exchange Act”) directs the
Securities and Exchange Commission (“Commission”) to facilitate the establishment of (i) a
national system for the prompt and accurate clearance and settlement of securities transactions
and (ii) linked or coordinated facilities for clearance and settlement of securities transactions. 1 In
facilitating the establishment of the national clearance and settlement system, the Commission
must have due regard for the public interest, the protection of investors, the safeguarding of
securities and funds, and maintenance of fair competition among brokers and dealers, clearing
agencies, and transfer agents. 2
Clearing agencies are broadly defined in the Exchange Act and undertake a variety of
functions. 3 Under Section 17A of the Exchange Act and Rule 17Ab2-1 under the Exchange Act,
an entity that meets the definition of a clearing agency is required to register with the
Commission or obtain from the Commission an exemption from registration prior to performing
the functions of a clearing agency. 4 To grant registration to a clearing agency, the Exchange Act
requires the Commission to determine that the rules and operations of the applicant clearing
agency meet the standards set forth in Section 17A of the Exchange Act. 5 Specifically, Section

See 15 U.S.C. 78q-1(a)(2); see also Report of the Senate Committee on Banking, Housing & Urban Affairs,
S. Rep. No. 94-75, at 4 (1975) (urging that “[t]he Committee believes the banking and security industries must move
quickly toward the establishment of a fully integrated national system for the prompt and accurate processing and
settlement of securities transactions”).
1

2

See 15 U.S.C. 78q-1(a)(2)(A).

See 15 U.S.C. 78c(a)(23)(A) (providing the definition of “clearing agency”); see also Exchange Act
Release No. 34-71699 (Mar. 12, 2014), 79 FR 16865 (Mar. 26, 2014), corrected at 79 FR 29507, 29510–11 (May
22, 2014) (“2014 Proposing Release”); Exchange Act Release No. 34-68080 (Oct. 22, 2012), 77 FR 66219, 66221–
22 (Nov. 2, 2012) (discussing the same) (“2012 Adopting Release”).
3

4

See 15 U.S.C. 78q-1; 17 CFR 240.17Ab2-1.

See 15 U.S.C. 78q-1(b)(3)(A) through(I) (identifying nine determinations that the Commission must make
regarding the rules and structure of a clearing agency to grant registration). In 1980, the Commission published a
statement of the views and positions of Commission staff regarding the requirements of Section 17A. See Exchange
5

1

17A(b)(3) provides that a clearing agency shall not be registered unless the Commission
determines that the clearing agency’s rules are consistent with the Exchange Act. In so doing,
the Commission must determine that, among other things, (i) the clearing agency is so organized
and has the capacity to be able to facilitate the prompt and accurate clearance and settlement of
securities transactions and to safeguard securities or funds in its custody or control, (ii) the rules
of the clearing agency assure a fair representation of its members and participants in the selection
of its directors and administration of its affairs, (iii) the rules of the clearing agency provide for
the equitable allocation of reasonable dues and fees, and (iv) the rules of the clearing agency are
designed to promote the prompt and accurate clearance and settlement of securities transactions. 6
Following this registration process, the Commission supervises registered clearing
agencies using various tools. One of these tools is the rule filing process for self-regulatory
organizations (“SROs”), set forth in Section 19(b) of the Exchange Act and rules and regulations
thereunder. 7 A registered clearing agency is required to file with the Commission any proposed
rule or proposed change in, addition to, or deletion from the registered clearing agency’s rules. 8
The Commission publishes all proposed rule changes for comment and reviews them. Proposed
rule changes are generally required to be approved by the Commission prior to going into effect. 9
When reviewing a proposed rule change, the Commission considers the submissions of the
clearing agency together with any comments received on the proposed rule change in making a
determination of whether the proposed rule change is consistent with the requirements of the
Exchange Act. In addition, Section 17A of the Exchange Act further provides the Commission
with authority to adopt rules as necessary or appropriate in the public interest, for the protection
of investors, or otherwise in furtherance of the purposes of the Exchange Act and prohibits a
clearing agency from engaging in any activity in contravention of such rules and regulations. 10
In addition, Commission staff conducts examinations of registered and exempt clearing
agencies to assess, among other things, existing and emerging risks, compliance with applicable
statutory and regulatory requirements (including any terms and conditions set forth in an order
granting registration or an exemption from registration), and a clearing agency’s oversight of
compliance by its participants with its rules. Section 21(a) of the Exchange Act provides the
Act Release No. 16900 (June 17, 1980), 45 FR 41920 (June 23, 1980).
6

See 15 U.S.C. 78q-1(b)(3)(A), (C), (D), (F).

Upon registration, registered clearing agencies are SROs under Section 3(a)(26) of the Exchange Act. See
15 U.S.C. 78c(a)(26).
7

An SRO must submit proposed rule changes to the Commission for review and approval pursuant to Rule
19b-4 under the Exchange Act. A stated policy, practice, or interpretation of an SRO, such as its written policies
and procedures, would generally be deemed to be a proposed rule change. See 15 U.S.C. 78s(b)(1); 17 CFR
240.19b-4.
8

See 15 U.S.C. 78s(b)(3)(A) (setting forth the types of proposed rule changes that take effect upon filing
with the Commission). The Commission may temporarily suspend those rule changes within 60 days of filing and
institute proceedings to determine whether to approve or disapprove the rule changes. See 15 U.S.C. 78s(b)(3)(C).
9

10

See 15 U.S.C. 78q-1(d).

2

Commission with authority to initiate and conduct investigations to determine if there have been
violations of the federal securities laws. 11 Section 19(h) of the Exchange Act also provides the
Commission with authority to institute civil actions seeking injunctive and other equitable
remedies and/or administrative proceedings arising out of such investigations. 12
ii.

Dodd-Frank Act

Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“DoddFrank Act”) provides the Commission with authority to regulate certain over-the-counter
(“OTC”) derivatives. Specifically, Title VII added provisions to the Exchange Act that (i)
require entities performing the functions of a clearing agency with respect to security-based
swaps (“security-based swap clearing agencies”) to register with the Commission, and (ii) direct
the Commission to adopt rules with respect to security-based swap clearing agencies. 13
In addition, the Payment, Clearing, and Settlement Supervision Act of 2010 (“Clearing
Supervision Act”), enacted in Title VIII of the Dodd-Frank Act, provides for the enhanced
regulation of certain financial market utilities (“FMUs”). 14 FMUs include clearing agencies that
manage or operate a multilateral system for the purpose of transferring, clearing, or settling
payments, securities, or other financial transactions among financial institutions or between
financial institutions and the FMU. 15 The Financial Stability Oversight Council (“FSOC”) has
designated certain FMUs as systemically important or likely to become systemically important
(“SIFMUs”). 16 The Commission is the supervisory agency for four SIFMUs: DTC, FICC,
11

See 15 U.S.C. 78u(a).

12

See 15 U.S.C. 78s(h).

See 15 U.S.C. 78q-1(i), (j); Dodd-Frank Act, Sec. 763(b), 124 Stat. at 1768–69 (adding paragraphs (i) and
(j) to Section 17A of the Exchange Act).
13

The objectives and principles for the risk management standards prescribed under the Clearing Supervision
Act shall be to (i) promote robust risk management; (ii) promote safety and soundness; (iii) reduce systemic risks;
and (iv) support the stability of the broader financial system. Further, the Clearing Supervision Act states that the
standards may address areas such as risk management policies and procedures; margin and collateral requirements;
participant or counterparty default policies and procedures; the ability to complete timely clearing and settlement of
financial transactions; capital and financial resources requirements for designated FMUs; and other areas that are
necessary to achieve the objectives and principles described above. See 12 U.S.C. 5464(b), (c).

14

See 12 U.S.C. 5462(6). The definition of “financial market utility” in Section 803(6) of the Clearing
Supervision Act contains a number of exclusions that include, but are not limited to, certain designated contract
markets, registered futures associations, swap data repositories, swap execution facilities, national securities
exchanges, national securities associations, alternative trading systems, security-based swap data repositories,
security-based swap execution facilities, brokers, dealers, transfer agents, investment companies, and futures
commission merchants. See 12 U.S.C. 5462(6)(B).
15

See 12 U.S.C. 5463. An FMU is systemically important if the failure of or a disruption to the functioning
of such FMU could create or increase the risk of significant liquidity or credit problems spreading among financial
institutions or markets and thereby threaten the stability of the U.S. financial system. See 12 U.S.C. 5462(9). On
July 18, 2012, the FSOC designated as systemically important the following then-registered clearing agencies: CME
Group (“CME”), The Depository Trust Company (“DTC”), Fixed Income Clearing Corporation (“FICC”), ICE
Clear Credit (“ICC”), National Securities Clearing Corporation (“NSCC”), and The Options Clearing Corporation
16

3

NSCC, and OCC. The Commission jointly regulates ICC and OCC with the Commodity Futures
Trading Commission (“CFTC”). The Commission also jointly regulates ICE Clear Europe and
LCH SA, which have not been designated as systemically important by FSOC, with various
other regulators, including the CFTC and the Bank of England.
SIFMUs are required to file 60-days advance notice of changes to rules, procedures, and
operations that could materially affect the nature or level of risk presented by the SIFMU
(“advance notice”). 17 The Clearing Supervision Act authorizes the Commission to object to
changes proposed in such an advance notice, which would prevent the clearing agency from
implementing the change. 18 The Clearing Supervision Act also provides for enhanced
coordination between the Commission and Board of Governors of the Federal Reserve System
(“FRB”) by allowing for regular on-site examinations and information sharing. 19 The Clearing
Supervision Act further provides that the Commission and CFTC shall coordinate with the FRB
to jointly develop risk management supervision programs for SIFMUs. 20 In addition, the
Clearing Supervision Act provides that the Commission and CFTC may each prescribe risk
management standards governing the operations related to payment, clearing, and settlement
activities of SIFMUs for which each is the supervisory agency, in consultation with the FSOC
and FRB and taking into consideration relevant international standards and existing prudential
requirements. 21
iii.

Rule 17Ad-22

In 2012, the Commission adopted Rule 17Ad-22 under the Exchange Act to strengthen
the substantive regulation of clearing agencies, promote the safe and reliable operation of
covered clearing agencies, and improve efficiency, transparency, and access to covered clearing
agencies. 22 At that time, the Commission noted that the implementation of Rule 17Ad-22 would
be an important first step in developing the regulatory changes contemplated by Titles VII and
VIII of the Dodd-Frank Act. 23 In 2016, the Commission adopted Rule 17Ad-22(e), building on

(“OCC”).
See 12 U.S.C. 5465(e)(1)(A); 17 CFR 240.19b-4(n). The Commission published a final rule concerning
the filing of advance notices for designated clearing agencies in 2012. See Exchange Act Release No. 34-67286
(June 28, 2012), 77 FR 41602 (July 13, 2012).
17

18

See 12 U.S.C. 5465(e).

19

See 12 U.S.C. 5466.

See 12 U.S.C. 5472; see also Risk Management Supervision of Designated Clearing Entities (July 2011),
https://www.federalreserve.gov/publications/other-reports/files/risk-management-supervision-report-201107.pdf
(describing the joint supervisory framework of the Commission, CFTC, and FRB).
20

21

See 12 U.S.C. 5464(a)(2).

22

See 17 CFR 240.17Ad-22; see also 2012 Adopting Release at 66225–26.

23

See 2012 Adopting Release at 66225–26.

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the existing framework by establishing enhanced requirements for registered clearing agencies
that meet the definition of a “covered clearing agency.” 24
iv.

2020 Rule Amendments

The Commission adopted a final rule on May 14, 2020, to amend the definition of
“covered clearing agency” and certain other definitions under Rule 17Ad-22, so that the
definitions encompass all registered clearing agencies performing the functions of a central
counterparty (“CCP”) or central securities depository (“CSD”). 25
The Commission believes that the amendment to the “covered clearing agency”
definition, which takes into account the specific functions performed by registered clearing
agencies, leads to greater regulatory consistency among all registered clearing agencies that
perform these critical functions of a CCP and CSD. 26 Additionally, by focusing on these
functions, the amended definition of “covered clearing agency” ensures that all clearing agencies
performing these critical functions are subject to enhanced requirements that address the
particular services provided by and risks inherent in these critical functions.
The amendments only affect collections of information in paragraph (e) of Rule
17Ad-22. Specifically, the amendments would increase the number of respondents, and therefore
some of the burdens and costs in paragraph (e). The burdens for paragraph (e) have been
separated into two categories: (1) respondents already registered, and (2) respondent not
registered. The burden estimates for category (1) respondents do not include initial, one-time
burdens because those have already been incurred. The burden estimates for category (2)
respondents, however, do include initial, one-time burdens because this category covers one
“potential” respondent and-- as a result of the amendments in the final rule-- one new additional
respondent. Only the estimated burdens in category (2) of paragraph (e) of Rule 17Ad-22 are
changing as a result of the amendments.
The amendments otherwise do not affect the information collection as described in
previous supporting statements for this information collection.
2. Purpose and Use of the Information Collection

See Standards for Covered Clearing Agencies, Final Rules; Exchange Act Release No. 78961 (Sept. 28,
2016), 81 Fr 70786 (Oct. 13, 2016) (“2016 Adopting Release”).
24

See Definition of Covered Clearing Agency, Final Rules; Exchange Act Release No. 88616 (April 9, 2020),
85 FR 28853 (May 14, 2020) (“2020 Adopting Release”); Definition of Covered Clearing Agency, Proposed Rules;
Exchange Act Release No. 78963 (Sept. 28, 2016), 81 FR 70744 (Oct. 13, 2016) (“2016 Proposing Release”).
25

In the 2016 Proposing Release, the Commission proposed to define a securities settlement system (“SSS”)
and to amend the definition of covered clearing agency to cover providers of SSS services. See 2016 Adopting
Release at 70754. The Commission did not adopt the proposed definition of SSS. See 2020 Adopting Release.
Neither historically nor at this time has a registered clearing agency provided only the services of an SSS. The
Commission believes that the amended definition of covered clearing agency being adopted without inclusion of the
services of an SSS will cover substantially the same scope of clearing agency activity as the proposed definition.
26

5

Standards for Covered Clearing Agencies; Rule 17Ad-22(e)
i.

Legal Risk

Rule 17Ad-22(e)(1) requires a covered clearing agency to establish, implement, maintain,
and enforce written policies and procedures reasonably designed to provide for a well-founded,
clear, transparent, and enforceable legal basis for each aspect of its activities in all relevant
jurisdictions. The purpose of the collection of information is to help ensure that covered clearing
agencies’ policies and procedures do not cause confusion or legal uncertainty among their
participants because they are unclear, incomplete or conflict with other applicable laws or
judicial precedent.
ii.

Governance

Rules 17Ad-22(e)(2)(i) through (iii) require a covered clearing agency to establish,
implement, maintain, and enforce written policies and procedures reasonably designed to provide
for governance arrangements that are clear and transparent, clearly prioritize the safety and
efficiency of the covered clearing agency, and support the public interest requirements of Section
17A of the Exchange Act, and the objectives of owners and participants. Rules 17Ad22(e)(2)(iv) and (v) require a covered clearing agency to establish, implement, maintain, and
enforce written policies and procedures reasonably designed to establish that the board of
directors and senior management have appropriate experience and skills to discharge their duties
and responsibilities and to specify clear and direct lines of responsibility. Rule 17Ad22(e)(2)(vi) requires a covered clearing agency to establish, implement, maintain, and enforce
written policies and procedures reasonably designed to consider the interests of participants’
customers, securities issuers and holders, and other relevant stakeholders of the clearing agency.
The purpose of this collection of information is to prioritize the safety and efficiency of
covered clearing agencies, to help ensure that each covered clearing agency’s governance
arrangements consider the interests of relevant stakeholders, to promote the establishment of
boards of directors at covered clearing agencies that are composed of qualified members with
clear and direct lines of responsibility, and to promote accountability of the board of directors
and senior management.
iii.

Comprehensive Risk Management Framework

Rule 17Ad-22(e)(3) requires a covered clearing agency to establish, implement, maintain,
and enforce written policies and procedures reasonably designed to maintain a sound risk
management framework for comprehensively managing legal, credit, liquidity, operational,
general business, investment, custody, and other risks that arise in or are borne by the covered
clearing agency. Rule 17Ad-22(e)(3)(i) requires a covered clearing agency to establish,
implement, maintain, and enforce written policies and procedures reasonably designed to provide
for risk management policies, procedures, and systems designed to identify, measure, monitor,
and manage the range of risks that arise in or are borne by the covered clearing agency, and
subject them to review on a specified periodic basis and approval by the board of directors
annually. Rule 17Ad-22(e)(3)(ii) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to ensure it
establishes plans for the recovery and orderly wind-down of the covered clearing agency

6

necessitated by credit losses, liquidity shortfalls, losses from general business risk, or any other
losses. Rule 17Ad-22(e)(iii) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to provide risk
management and internal audit personnel with sufficient authority, resources, independence from
management, and access to the board of directors. Rule 17Ad-22(e)(3)(iv) requires a covered
clearing agency to establish, implement, maintain, and enforce written policies and procedures
reasonably designed to provide risk management and internal audit personnel with oversight by
and a direct reporting line to a risk management committee and an independent audit committee
of the board of directors, respectively. Rule 17A-22(e)(3)(v) requires a covered clearing agency
to establish, implement, maintain, and enforce written policies and procedures reasonably
designed to provide for an independent audit committee.
The purpose of this information collection is to enhance each covered clearing agency’s
ability to identify, monitor, and manage the risks that covered clearing agencies face, including
by subjecting the relevant policies and procedures to regular review, and to facilitate an orderly
recovery and wind-down process in the event that a covered clearing agency is unable to
continue operating as a going concern.
iv.

Credit Risk

Rule 17Ad-22(e)(4) requires a covered clearing agency to establish, implement, maintain,
and enforce written policies and procedures reasonably designed to effectively identify, measure,
monitor, and manage its credit exposures to participants and those exposures arising from its
payment, clearing, and settlement processes.
Rule 17Ad-22(e)(4)(i) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to maintain sufficient
financial resources to cover its credit exposure to each participant fully with a high degree of
confidence. Rule 17Ad-22(e)(4)(ii) requires a covered clearing agency that provides CCP
services, and that is “systemically important in multiple jurisdictions” or “a clearing agency
involved in activities with a more complex risk profile,” to establish, implement, maintain, and
enforce written policies and procedures reasonably designed to maintain additional financial
resources, to the extent not already maintained pursuant to Rule 17Ad-22(e)(4)(i), at a minimum
level necessary to enable it to cover a wide range of foreseeable stress scenarios, including but
not limited to the default of the two participant families that would potentially cause the largest
aggregate credit exposure for the covered clearing agency in extreme but plausible market
conditions. Meanwhile, Rule 17Ad-22(e)(4)(iii) requires a covered clearing agency that is not
subject to Rule 17Ad-22(e)(4)(ii) to establish, implement, maintain, and enforce written policies
and procedures reasonably designed to maintain additional financial resources, to the extent not
already maintained pursuant to Rule 17Ad-22(e)(4)(i), at the minimum to enable it to cover a
wide range of foreseeable stress scenarios, including the default of the participant family that
would potentially cause the largest aggregate credit exposure for the covered clearing agency in
extreme but plausible market conditions. Rule 17Ad-22(e)(4)(iv) requires a covered clearing
agency to establish, implement, maintain, and enforce written policies and procedures reasonably
designed to include prefunded financial resources, exclusive of assessments for additional
guaranty fund contributions or other resources that are not prefunded, when calculating the
financial resources available to meet the standards under Rules 17Ad-22(e)(4)(i) through (iii), as
applicable. Rule 17Ad-22(e)(4)(v) requires a covered clearing agency to establish, implement,
7

maintain, and enforce written policies and procedures reasonably designed to maintain the
financial resources required under Rules 17Ad-22(e)(4)(ii) and (iii), as applicable, in combined
or separately maintained clearing or guaranty funds.
Rule 17Ad-22(e)(4)(vi) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to test the sufficiency
of its total financial resources available to meet the minimum financial resource requirements
under Rules 17Ad-22(e)(4)(i) through (iii), as applicable, by conducting stress testing of its total
financial resources at least once each day using standard predetermined parameters and
assumptions. Rule 17Ad-22(e)(4)(vi) also requires a covered clearing agency to establish,
implement, maintain, and enforce written policies and procedures reasonably designed to
conduct a comprehensive analysis on at least a monthly basis of the existing stress testing
scenarios, models, and underlying parameters and assumptions, and consider modifications to
ensure they are appropriate for determining the covered clearing agency’s required level of
default protection in light of current market conditions. When the products cleared or markets
served by a covered clearing agency display high volatility or become less liquid, or when the
size or concentration of positions held by the entity’s participants increases significantly, the rule
requires a covered clearing agency to have policies and procedures for conducting
comprehensive analyses of stress testing scenarios, models, and underlying parameters and
assumptions more frequently than monthly. Rule 17Ad-22(e)(4)(vi) also requires a covered
clearing agency to establish, implement, maintain, and enforce written policies and procedures
reasonably designed to provide for the reporting of the results of this analysis to the appropriate
decision makers at the covered clearing agency, including its risk management committee or
board of directors, and to require the use of the results to evaluate the adequacy of and to adjust
its margin methodology, model parameters, and any other relevant aspects of its credit risk
management policies and procedures, in supporting compliance with the minimum financial
resources requirements in Rules 17Ad-22(e)(4)(i) through (iii), as applicable.
Rule 17Ad-22(e)(4)(vii) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to require a model
validation for its credit risk models not less than annually or more frequently as may be
contemplated by the covered clearing agency’s risk management policies and procedures.
Rule 17Ad-22(e)(4)(viii) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to address allocation
of credit losses the covered clearing agency may face if its collateral and other resources are
insufficient to fully cover its credit exposures, including the repayment of any funds the covered
clearing agency may borrow from liquidity providers.
Rule 17Ad-22(e)(4)(ix) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to describe the
covered clearing agency’s process to replenish any financial resources it may use following a
default or other event in which use of such resources is contemplated.
The purpose of this information collection is to identify and limit credit exposures to
participants and to satisfy all of its settlement obligations in the event of a participant default, to
address the allocation of credit losses if collateral and other resources are insufficient to fully

8

cover its credit exposures following a participant default, and to describe the covered clearing
agency’s process to replenish financial resources following such a default.
v.

Collateral

Rule 17Ad-22(e)(5) requires a covered clearing agency to establish, implement, maintain,
and enforce written policies and procedures reasonably designed to limit the assets it accepts as
collateral to those with low credit, liquidity, and market risks, and also require policies that set
and enforce appropriately conservative haircuts and concentration limits if the covered clearing
agency requires collateral to manage its own or its participants’ credit exposures. In addition,
Rule 17Ad-22(e)(5) requires a covered clearing agency to establish, implement, maintain, and
enforce written policies and procedures reasonably designed to include a not-less-than-annual
review of the sufficiency of a covered clearing agency’s collateral haircuts and concentration
limits. The purpose of the information collection is to enable a covered clearing agency to be
able to maintain sufficient collateral by using appropriately conservative haircuts and
concentration limits.
vi.

Margin

Rule 17Ad-22(e)(6) requires a covered clearing agency that provides CCP services to
establish, implement, maintain, and enforce written policies and procedures reasonably designed
to cover its credit exposures to its participants by establishing a risk-based margin system that is
monitored by management on an ongoing basis and regularly reviewed, tested, and verified.
Rule 17Ad-22(e)(6)(i) requires a covered clearing agency that provides CCP services to
establish, implement, maintain, and enforce written policies and procedures reasonably designed
to result in a margin system that, at a minimum, considers and produces margin levels
commensurate with the risks and particular attributes of each relevant product, portfolio, and
market. Rule 17Ad-22(e)(6)(ii) requires a covered clearing agency that provides CCP services to
establish implement, maintain, and enforce written policies and procedures reasonably designed
to ensure that the margin system would mark participant positions to market and collect margin,
including variation margin or equivalent charges if relevant, at least daily, and include the
authority and operational capacity to make intraday margin calls in defined circumstances. Rule
17Ad-22(e)(6)(iii) requires a covered clearing agency that provides CCP services to establish,
implement, maintain, and enforce written policies and procedures reasonably designed to
calculate margin sufficient to cover its potential future exposure to participants in the interval
between the last margin collection and the close out of positions following a participant default.
Rule 17Ad-22(e)(6)(iv) requires a covered clearing agency that provides CCP services to
establish, implement, maintain, and enforce written policies and procedures reasonably designed
to ensure that it uses reliable sources of timely price data and uses procedures and sound
valuation models for addressing circumstances in which pricing data are not readily available or
reliable. Rule 17Ad-22(e)(6)(v) requires a covered clearing agency that provides CCP services
to establish, implement, maintain, and enforce written policies and procedures reasonably
designed to ensure the use of an appropriate method for measuring credit exposure that accounts
for relevant product risk factors and portfolio effects across products.
Rule 17Ad-22(e)(6)(vi) requires a covered clearing agency that provides CCP services to
establish, implement, maintain, and enforce written policies and procedures reasonably designed
to establish a risk-based margin system that is monitored by management on an ongoing basis.
9

Rule 17Ad-22(e)(6)(vi) also requires a covered clearing agency that provides CCP services to
establish, implement, maintain, and enforce written policies and procedures reasonably designed
to regularly review, test, and verify its risk-based margin system by conducting backtests of its
margin model at least once each day using standard predetermined parameters and assumptions.
Rule 17Ad-22(e)(6)(vi) also requires a covered clearing agency that provides CCP services to
establish, implement, maintain, and enforce written policies and procedures reasonably designed
to regularly review, test, and verify its risk-based margin system by conducting a sensitivity
analysis of its margin model and a review of its parameters and assumptions for backtesting on at
least a monthly basis, and considering modifications to ensure the backtesting practices are
appropriate for determining the adequacy of the covered clearing agency’s margin resources.
Rule 17Ad-22(e)(6)(vi) also requires a covered clearing agency that provides CCP services to
establish, implement, maintain, and enforce written policies and procedures reasonably designed
to regularly review, test, and verify its risk-based margin system by conducting a sensitivity
analysis of its margin model and a review of its parameters and assumptions for backtesting
more frequently than monthly during periods of time when the products cleared or markets
served display high volatility or become less liquid, and when the size or concentration of
positions held by the covered clearing agency’s participants increases or decreases significantly.
Rule 17Ad-22(e)(6)(vi) also requires a covered clearing agency that provides CCP services to
establish, implement, maintain, and enforce written policies and procedures reasonably designed
to regularly review, test, and verify its risk-based margin system by reporting the results of its
analyses above to appropriate decision makers at the covered clearing agency, including but not
limited to, its risk management committee or board of directors, and using these results to
evaluate the adequacy of and adjust its margin methodology, model parameters, and any other
relevant aspects of its credit risk management framework.
Finally, Rule 17Ad-22(e)(6)(vii) requires a covered clearing agency that provides CCP
services to establish, implement, maintain, and enforce written policies and procedures
reasonably designed to requires a model validation for the covered clearing agency’s margin
system and related models to be performed not less than annually, or more frequently as may be
contemplated by the covered clearing agency’s risk management framework established pursuant
to Rule 17Ad-22(e)(3).
The purpose of the information collection is to enable a covered clearing agency to be
able to collect sufficient margin subject to regular sensitivity analysis, monthly backtesting, and
an annual model validation.
vii.

Liquidity Risk

Rule 17Ad-22(e)(7) requires a covered clearing agency to establish, implement, maintain,
and enforce written policies and procedures reasonably designed to effectively measure, monitor,
and manage the liquidity risk that arises in or is borne by it, by meeting, at a minimum, the ten
requirements specified in the rule.
Rule 17Ad-22(e)(7)(i) requires that a covered clearing agency’s policies and procedures
be reasonably designed to ensure that it maintains sufficient liquid resources in all relevant
currencies to effect same-day and, where appropriate, intraday and multiday settlement of
payment obligations with a high degree of confidence under a wide range of potential stress

10

scenarios that includes the default of the participant family that would generate the largest
aggregate payment obligation for it in extreme but plausible market conditions.
Rule 17Ad-22(e)(7)(ii) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to ensure that it holds
qualifying liquid resources sufficient to meet the minimum liquidity resource requirement in
each relevant currency for which the covered clearing agency has payment obligations owed to
clearing members.
Rule 17Ad-22(e)(7)(iii) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to ensure it uses
accounts and services at a Federal Reserve Bank, pursuant to Section 806(a) of the Clearing
Supervision Act, or other relevant central bank, when available and where determined to be
practical by the board of directors of the covered clearing agency, to enhance its management of
liquidity risk.
Rule 17Ad-22(e)(7)(iv) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to ensure it
undertakes due diligence to confirm that it has a reasonable basis to believe each of its liquidity
providers, whether or not such liquidity provider is a clearing member, has sufficient information
to understand and manage the liquidity provider’s liquidity risks, and the capacity to perform as
required under its commitments to provide liquidity.
Rule 17Ad-22(e)(7)(v) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to ensure that the
covered clearing agency maintains and, on at least an annual basis, tests with each liquidity
provider, to the extent practicable, its procedures and operational capacity for accessing each
type of relevant liquidity resource.
Rule 17Ad-22(e)(7)(vi)(A) through (C) requires a covered clearing agency to establish,
implement, maintain, and enforce written policies and procedures reasonably designed to
determine the amount and regularly test the sufficiency of the liquid resources held for purposes
of meeting the minimum liquid resource requirement of Rule 17Ad-22(e)(7)(i) by (A)
conducting stress testing of its liquidity resources at least once each day using standard and
predetermined parameters and assumptions; (B) conducting a comprehensive analysis of the
existing stress testing scenarios, models, and underlying parameters and assumptions used in
evaluating liquidity needs and resources, and considering modifications to ensure they are
appropriate for determining the covered clearing agency’s identified liquidity needs and
resources in light of current and evolving market conditions at least once each month; and (C)
conducting a comprehensive analysis of the existing stress testing scenarios, models, and
underlying parameters and assumptions used in evaluating liquidity needs and resources more
frequently when products cleared or markets served display high volatility or become less liquid,
when the size or concentration of positions held by participants increases significantly, or in
other circumstances described in the covered clearing agency’s policies and procedures. Rule
17Ad-22(e)(7)(vi)(D) also requires a covered clearing agency to establish, implement, maintain,
and enforce written policies and procedures reasonably designed to result in reporting the results
of the analyses performed under Rules 17Ad-22(e)(7)(vi)(B) and (C) to appropriate decision
makers, including the risk management committee or board of directors, at the covered clearing
11

agency for use in evaluating the adequacy of and adjusting its liquidity risk management
framework.
Rule 17Ad-22(e)(7)(vii) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to result in
performing an annual or more frequent model validation of its liquidity risk models.
Rule 17Ad-22(e)(7)(viii) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to address foreseeable
liquidity shortfalls that would not be covered by its liquid resources and seek to avoid
unwinding, revoking, or delaying the same-day settlement of payment obligations.
Rule 17Ad-22(e)(7)(ix) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to describe its process
for replenishing any liquid resources that it may employ during a stress event.
Rule 17Ad-22(e)(7)(x) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to ensure that it, at
least once a year, evaluates the feasibility of maintaining sufficient liquid resources at a
minimum in all relevant currencies to effect same-day and, where appropriate, intraday and
multiday settlement of payment obligations with a high degree of confidence under a wide range
of foreseeable stress scenarios that includes, but is not limited to, the default of the two
participant families that would potentially cause the largest aggregate credit exposure for the
covered clearing agency in extreme but plausible market conditions if the covered clearing
agency provides CCP services and is either systemically important in multiple jurisdictions or a
clearing agency involved in activities with a more complex risk profile.
The purpose of this information collection is to identify and limit liquidity risk so that a
covered clearing agency can satisfy its settlement obligations on an ongoing and timely basis by
holding a sufficient amount of qualifying liquid resources and performing regular stress testing
of its liquid resources. It is also to help ensure that a covered clearing agency addresses
foreseeable liquidity shortfalls and can replenish any liquid resources that it may employ in a
stress event. It is also to help ensure that a covered clearing agency manages the risks posed by
its liquidity providers.
viii.

Settlement Finality

Rule 17Ad-22(e)(8) requires a covered clearing agency to establish, implement, maintain,
and enforce written policies and procedures reasonably designed to define the point at which
settlement is final to be no later than the end of the day on which the payment or obligation is
due and, where necessary or appropriate, either intraday or in real time. The purpose of this
information collection is to promote consistent standards of timing and reliability in the
settlement process.
ix.

Money Settlements

Rule 17Ad-22(e)(9) requires a covered clearing agency to establish, implement, maintain,
and enforce written policies and procedures reasonably designed to conduct its money
settlements in central bank money, where available and determined to be practical by the board
12

of directors of the covered clearing agency, and minimizes and manages credit and liquidity risk
arising from conducting its money settlements in commercial bank money if central bank money
is not used by the covered clearing agency. The purpose of this information collection is to
promote reliability in a covered clearing agency’s settlement operations.
x.

Physical Delivery Risks

Rule 17Ad-22(e)(10) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to establish and
maintain transparent written standards that state its obligations with respect to the delivery of
physical instruments and operational practices that identify, monitor, and manage the risk
associated with such physical deliveries. The purpose of this information collection is to provide
a covered clearing agency’s participants with the information necessary to evaluate the risks and
costs associated with participation in the covered clearing agency.
xi.

Central Securities Depositories

Rule 17Ad-22(e)(11)(i) requires a covered clearing agency that provides CSD services to
establish, implement, maintain, and enforce written policies and procedures reasonably designed
to maintain securities in an immobilized or dematerialized form for their transfer by book entry,
ensure the integrity of securities issues, and minimize and manage the risks associated with the
safekeeping and transfer of securities. Rule 17Ad-22(e)(11)(ii) requires a covered clearing
agency that provides CSD services to establish, implement, maintain, and enforce written
policies and procedures reasonably designed to implement internal auditing and other controls to
safeguard the rights of securities issuers and holders and prevent the unauthorized creation or
deletion of securities, and conduct periodic and at least daily reconciliation of securities issues it
maintains. Rule 17Ad-22(e)(11)(iii) requires a covered clearing agency that provides CSD
services to establish, implement, maintain, and enforce written policies and procedures
reasonably designed to protect assets against custody risk through appropriate rules and
procedures consistent with relevant laws, rules, and regulations in jurisdictions where it operates.
The purpose of this information collection is to reduce securities transfer processing costs
and the risks associated with securities settlement and custody, as well as increase the speed and
efficiency of the settlement process.
xii.

Exchange-of-Value Settlement Systems

Rule 17Ad-22(e)(12) requires a covered clearing agency, for transactions that involve the
settlement of two linked obligations, to establish, implement, maintain, and enforce written
policies and procedures reasonably designed to eliminate principal risk by conditioning the final
settlement of one obligation upon the final settlement of the other, regardless of whether the
covered clearing agency settles on a gross or net basis and when finality occurs. The purpose of
this information collection is to promote the elimination of principal risk in transactions with
linked obligations.
xiii.

Participant Default

Rule 17Ad-22(e)(13) requires a covered clearing agencies providing CCP services to
establish, implement, maintain, and enforce written policies and procedures reasonably designed
13

to ensure that the covered clearing agency has the authority and operational capacity to take
timely action to contain losses and liquidity demands and continue to meet its obligations by, at a
minimum, requiring the covered clearing agency’s participants and, when practicable, other
stakeholders to participate in the testing and review of its default procedures, including any
close-out procedures, at least annually and following material changes thereto. The purpose of
this information collection is to facilitate the functioning of a covered clearing agency in the
event that a participant fails to meet its obligations, as well as limit the extent to which a
participant’s failure can spread to other participants or the covered clearing agency itself.
xiv.

Segregation and Portability

Rule 17Ad-22(e)(14) requires a covered clearing agency that is a security-based swap
clearing agency or a complex risk profile clearing agency to establish, implement, maintain, and
enforce written policies and procedures reasonably designed to enable the segregation and
portability of positions of a member’s customers and the collateral provided to the covered
clearing agency with respect to those positions, and effectively protect such positions and related
collateral from the default or insolvency of that member. The purpose of this information
collection is to facilitate the safe and effective holding and transfer of customers’ positions and
collateral in the event of a participant’s default or insolvency.
xv.

General Business Risk

Rule 17Ad-22(e)(15) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to identify, monitor,
and manage its general business risk and hold sufficient liquid net assets funded by equity to
cover potential general business losses so that the covered clearing agency can continue
operations and services as a going concern if those losses materialize. Rule 17Ad-22(e)(15)(i)
requires a covered clearing agency to establish, implement, maintain, and enforce written
policies and procedures reasonably designed to determine the amount of liquid net assets funded
by equity based upon its general business risk profile and the length of time required to achieve a
recovery or orderly wind-down, as appropriate, of its critical operations and services if such
action is taken. Rule 17Ad-22(e)(15)(ii) requires a clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to provide for holding
liquid net assets funded by equity equal to the greater of either six months of its current operating
expenses or the amount determined by the board of directors to be sufficient to ensure a recovery
or orderly wind-down of critical operations and services of the covered clearing agency, as
contemplated by the plans established under Rule 17Ad-22(e)(3)(ii). Rule 17Ad-22(e)(15)(ii)
also requires a covered clearing agency to establish, implement, maintain, and enforce written
policies and procedures reasonably designed to provide for monitoring its business operations
and reducing the likelihood of losses. Rule 17Ad-22(e)(15)(iii) requires a covered clearing
agency to establish, implement, maintain, and enforce written policies and procedures reasonably
designed to provide for maintaining a viable plan, approved by the board of directors and
updated at least annually, for raising additional equity should its equity fall close to or below the
amount required by the rule, as discussed above. The purpose of this information collection is to
mitigate the potential impairment of a covered clearing agency as a result of a decline in
revenues or increase in expenses.
xvi.

Custody and Investment Risks
14

Rule 17Ad-22(e)(16) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to safeguard its own
and its participants’ assets and minimize the risk of loss and delay in access to these assets. Rule
17Ad-22(e)(16) also requires a covered clearing agency to establish, implement, maintain, and
enforce written policies and procedures reasonably designed to invest such assets in instruments
with minimal credit, market, and liquidity risks. The purpose of this information collection is to
improve the ability of a covered clearing agency to meet its settlement obligations.
xvii.

Operational Risk Management

Rule 17Ad-22(e)(17) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to manage the
covered clearing agency’s operational risk. Rule 17Ad-22(e)(17)(i) requires a covered clearing
agency to establish, implement, maintain, and enforce written policies and procedures reasonably
designed to identify the plausible sources of operational risk, both internal and external, and
mitigate their impact through the use of appropriate systems, policies, procedures, and controls.
Rule 17Ad-22(e)(17)(ii) requires a covered clearing agency to establish, implement, maintain,
and enforce written policies and procedures reasonably designed to ensure that systems have a
high degree of security, resiliency, operational reliability, and adequate, scalable capacity.
Finally, Rule 17Ad-22(e)(17)(iii) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to provide for a
business continuity plan that addresses events posing a significant risk of disrupting operations.
The purpose of this information collection is to limit operational disruptions that may impede the
proper functioning of a covered clearing agency.
xviii.

Access and Participation Requirements

Rule 17Ad-22(e)(18) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to establish objective,
risk-based, and publicly disclosed criteria for participation, which permit fair and open access by
direct and, where relevant, indirect participants and other FMUs. Rule 17Ad-22(e)(18) also
requires that a covered clearing agency establish, implement, maintain, and enforce written
policies and procedures reasonably designed to require participants to have sufficient financial
resources and robust operational capacity to meet obligations arising from participation in the
clearing agency and to monitor compliance with participation requirements on an ongoing basis.
The purpose of this information collection is to enable a covered clearing agency to
ensure that only entities with sufficient financial and operational capacity are direct participants
in the covered clearing agency, while still ensuring that all qualified persons can access a
covered clearing agency’s services. The purpose of this information collection is also to enable a
covered clearing agency to monitor that participation requirements are met on an ongoing basis
and to identify a participant experiencing financial difficulties before the participant fails to meet
its settlement obligations.
xix.

Tiered Participation Agreements

Rule 17Ad-22(e)(19) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to identify, monitor,

15

and manage the material risks to the covered clearing agency arising from arrangements in which
firms that are indirect participants in the covered clearing agency rely on the services provided
by direct participants in the covered clearing agency to access the covered clearing agency’s
payment, clearing, or settlement facilities. In addition, Rule 17Ad-22(e)(19) also requires that a
covered clearing agency establish, implement, maintain, and enforce written policies and
procedures reasonably designed to regularly review the material risks to the covered clearing
agency arising from such tiered participation arrangements. The purpose of this information
collection is to enable a covered clearing agency to identify and manage risks posed by nonmember entities, such as the customers of clearing members.
xx.

Links

Rule 17Ad-22(e)(20) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to identify, monitor,
and manage risks related to any link with one or more other clearing agencies, FMUs, or trading
markets. The purpose of this information collection is to enable a covered clearing agency to
identify and manage risks posed by linkages to other entities, such as other clearing agencies,
FMUs, or trading markets.
xxi.

Efficiency and Effectiveness

Rule 17Ad-22(e)(21) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to require the covered
clearing agency to be efficient and effective in meeting the requirements of its participants and
the markets it serves. Additionally, the rule requires a covered clearing agency to establish,
implement, maintain, and enforce written policies and procedures reasonably designed to have
the management of a covered clearing agency regularly review the efficiency and effectiveness
of the covered clearing agency’s (i) clearing and settlement arrangement; (ii) operating structure,
including risk management policies, procedures, and systems; (iii) scope of products cleared or
settled; and (iv) use of technology and communications procedures. The purpose of this
information collection is to ensure that the services provided by a covered clearing agency do not
become inefficient and to promote the sound operation of a covered clearing agency.
xxii.

Communication Procedures and Standards

Rule 17Ad-22(e)(22) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to use, or at a
minimum, accommodate, relevant internationally accepted communication procedures and
standards in order to facilitate efficient payment, clearing, and settlement. The purpose of this
information collection is to ensure the prompt and accurate clearance and settlement of securities
transactions by enabling participants to communicate with a clearing agency in a timely, reliable,
and accurate manner.
xxiii.

Disclosure of Rules, Key Procedures, and Market Data

Rule 17Ad-22(e)(23) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to (i) publicly
disclose all relevant rules and material procedures, including key aspects of its default rules and
procedures; (ii) provide sufficient information to enable participants to identify and evaluate the
16

risks, fees, and other material costs they incur by participating in the covered clearing agency;
and (iii) publicly disclose relevant basic data on transaction volume and values.
Rule 17Ad-22(e)(23)(iv) requires a covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably designed to maintain clear and
comprehensive rules and procedures that provide for a comprehensive public disclosure that
describes the covered clearing agency’s material rules, policies, and procedures regarding its
legal, governance, risk management, and operating framework, accurate in all material respects
at the time of publication, including (i) a general background of the covered clearing agency,
including its function and the market it serves, basic data and performance statistics on its
services and operations, such as basic volume and value statistics by product type, average
aggregate intraday exposures to its participants, and statistics on the covered clearing agency’s
operational reliability, and a description of its general organization, legal and regulatory
framework, and system design and operations; (ii) a standard-by-standard summary narrative for
each applicable standard set forth in Rules 17Ad-22(e)(1) through (23) with sufficient detail and
context to enable the reader to understand its approach to controlling the risks and addressing the
requirements in each standard; (iii) a summary of material changes since the last update of the
disclosure; and (iv) an executive summary of the key points regarding each. Rule 17Ad22(e)(23)(v) also requires a covered clearing agency to establish, implement, maintain, and
enforce written policies and procedures reasonably designed to ensure the comprehensive public
disclosure required under Rule 17Ad-22(e)(23)(iv) is updated not less than every two years, or
more frequently following changes to its system or the environment in which it operates to the
extent necessary, to ensure statements previously provided remain accurate in all material
respects.
The purpose of this information collection is to ensure that participants and prospective
participants in a covered clearing agency are provided with a complete picture of the covered
clearing agency’s operations and risk management so that they can understand the risks and
responsibilities of participation in the covered clearing agency.
3. Consideration Given to Information Technology
As noted above, the amendments increase the number of respondents under Rule 17Ad22(e), and therefore the use of information technology contemplated under this information
collection is unchanged. As a general matter, the collection of information contemplated by Rule
17Ad-22 depends on the use of technologies and systems that a clearing agency already
maintains to conduct its business, including its risk management and recordkeeping functions.
Improvements to these technologies and systems may, over time, reduce the burdens
contemplated under Rule 17Ad-22.
4. Duplication
Rule 17Ad-22 does not duplicate information required to be collected by other
Commission rules or regulations.
5. Effect on Small Entities
For the purposes of Commission rulemaking and as applicable to Rule 17Ad-22, a small
entity includes, when used with reference to a clearing agency, a clearing agency that (i)
17

compared, cleared, and settled less than $500 million in securities transactions during the
preceding fiscal year, (ii) had less than $200 million of funds and securities in its custody or
control at all times during the preceding fiscal year (or at any time that it has been in business, if
shorter), and (iii) is not affiliated with any person (other than a natural person) that is not a small
business or small organization. 27
Based on the Commission’s existing information about the clearing agencies currently
registered with the Commission, the Commission believes that all such registered clearing
agencies exceed the thresholds defining “small entities” set out above. While other clearing
agencies may emerge and seek to register as clearing agencies with the Commission, the
Commission does not believe that any such entities would be “small entities” as defined in
Exchange Act Rule 0-10.
6. Consequences of Not Conducting Collection
The Dodd-Frank Act enacted sweeping reforms in the financial system, including with
respect to FMUs such as clearing agencies. It also charged the Commission with significant
duties to carry out these reforms. The consequences of not conducting collections of information
or any less frequent collections of information pursuant to Rule 17Ad-22 would significantly
impair the Commission’s ability to carry out its statutory obligations under the Exchange Act as
amended by the Dodd-Frank Act.
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).
8. Consultations Outside of the Agency
The Commission issued the 2016 Proposing Release to solicit comment on the amended
collection of information requirements and associated paperwork burdens. 28
Comments on Commission releases are generally received from registrants, investors, and other
market participants. In addition, the Commission and staff participate in ongoing dialogue with
representatives of various market participants through public conferences, meetings, and
informal exchanges. Any comments received on this proposed rulemaking are posted on the
Commission’s public website, and made available through
http://www.sec.gov/rules/proposed.shtml. The Commission received seven comments on the
proposed amendments. None of the comments concerned the Commission’s PRA analysis. The
Commission considers all comments received prior to publishing a final rule, and explains in any
adopting release how the final rule responds to such comments, in accordance with 5 C.F.R.
1320.11(f).

27

See 17 CFR 240.0-10(d).

Definition of Covered Clearing Agency, Proposed Rules; Exchange Act Release No. 78963 (Sept. 28,
2016), 81 FR 70744 (Oct. 13, 2016).

28

18

In addition, Section 712(a)(2) of the Dodd-Frank Act provides that, before commencing
any rulemaking regarding, among other things, clearing agencies for security-based swaps, the
Commission must consult and coordinate with the Commodity Futures Trading Commission
(“CFTC”) and other prudential regulators for the purposes of assuring regulatory consistency and
comparability, to the extent possible. The Commission staff and the CFTC staff have consulted
and coordinated with one another regarding their respective Commissions’ rules regarding
clearing agencies as mandated by the Dodd-Frank Act. The Commission staff has also consulted
and coordinated with the relevant prudential regulators, including FRB staff.
9. Payment or Gift
No payment or gift will be provided to any respondents.
10. Confidentiality
While the recordkeeping burdens under this information collection need not be submitted
to the Commission, the Commission may request that the records be provided, such as during an
inspection or examination of a respondent. When the Commission requests that records be
provided, a respondent can request confidential treatment pursuant to Section 24(b) of the
Exchange Act and 17 CFR 240.24b-2.
The following information collections in Rule 17Ad-22 are subject to public availability:
•
•

•

•

The collection of information relating to the requirement under Rule 17Ad-22(c)(2) that,
within 60 days after the end of its fiscal year, each clearing agency must post on its
website its annual audited financial statement;
The collection of information relating to the requirement under Rule 17Ad-22(d)(2) that a
clearing agency that is not a covered clearing agency establish, implement, maintain, and
enforce written policies and procedures reasonably designed to have participation
requirements that are objective and publicly disclosed;
The collection of information relating to the requirement under Rule 17Ad-22(d)(11) that
a clearing agency that is not a covered clearing agency establish, implement, maintain,
and enforce written policies and procedures reasonably designed to make key aspects of
its default procedures publicly available; and
The collection of information relating to the public disclosure by a covered clearing
agency of all relevant rules and material procedures, basic data on transaction volumes
and values, and providing comprehensive public disclosure of information related to
governance arrangements, and legal, financial, and operational risk management under
Rule 17Ad-22(e)(23).

11. Sensitive Questions
Rule 17Ad-22 does not expressly require the collection of Personally Identifiable
Information (“PII”). While there may be instances when certain information (including, but not
limited to, a person’s name, email, phone number, or address) could be retained in response to
one of the collections of information, Commission staff cannot envision any circumstance in
which a social security number would be provided pursuant to any of the collections of
information.

19

Furthermore, any information would not be collected or stored by the Commission, nor
would it be retrievable on a Commission system or database. As such, we believe that the
treatment of any PII with the collection of information associated with the proposed and adopted
rules is not likely to implicate the Federal Information Security Management Act of 2002 or the
Privacy Act of 1974.
12. Burden of Information Collection
As previously discussed, the amendments increase the number of respondents under Rule
17Ad-22(e), and therefore the overall burdens and costs for paragraph (e), but otherwise do not
change the information collection for Rule 17Ad-22. The burden estimates for Rules 17Ad22(b), (c), and (d) have not changed, and are not summarized here. 29
Below is a summary of the burden estimates for Rule 17Ad-22(e), as modified by the
amendments.
i.

Number of Respondents for Rule 17Ad-22(e)

In the 2016 Adopting Release, the Commission estimated that Rule 17Ad-22(e) would
generally apply to seven respondent clearing agencies, of which (i) six would be CCPs and one
would be a CSD and (ii) two would be security-based swap clearing agencies. The Commission
then further clarified that Rule 17Ad–22(e)(6) would only have six respondents because it only
applies to CCPs, Rule 17Ad–22(e)(11) would only have one respondent because it only applies
to CSDs, and Rule 17Ad–22(e)(14) would only have two respondents because it only applies to
security-based swap clearing agencies. 30 The Commission re-submitted these estimates as part
of the PRA extension filed with OMB in 2020, except for the estimated number of CCPs that
would be security-based swap clearing agencies. 31 In the PRA extension, the Commission

The total burden per entity per year previously approved for Rule 17Ad-22(b)(1)–(3) was 10 hours of
ongoing burden. Accordingly, the total estimated industry burden is 90 hours.
29

The total burden per entity per year previously approved for Rule 17Ad-22(b)(4) was 60 hours of ongoing
burden. Accordingly, the total estimated industry burden is 540 hours.
The total burden per entity per year previously approved for Rule 17Ad-22(b)(5)–(7) was 60 hours of
ongoing burden. Accordingly, the total estimated industry burden is 540 hours.
The total burden per entity per year previously approved for Rule 17Ad-22(c)(1) was 12 hours of ongoing
burden. Accordingly, the total estimated industry burden is 108 hours.
The total burden per entity per year previously approved for Rule 17Ad-22(c)(2) was 250 hours of ongoing
burden. Accordingly, the total estimated industry burden is 2,250 hours.
The total burden per entity per year previously approved for Rule 17Ad-22(d)(1)–(15) was 150 hours of
ongoing burden. Accordingly, the total estimated industry burden is 450 hours.
30

See 2016 Adopting Release, 81 FR at 70890.

31

See “Clearing Agency Standards for Operation and Governance,” OMB Control No. 3235-0695.

20

estimated that three (rather than two) CCPs would be security-based swap clearing agencies,
resulting in Rule 17Ad-22(e)(14) having three (rather than two) respondents.
Nonetheless, in the 2016 Proposing Release, the Commission estimated that, under the
proposed amendment to the definition of “covered clearing agency,” a majority of the
requirements under Rule 17Ad-22(e) would have eight (rather than seven) respondents, of which
(i) seven (rather than six) would be CCPs and one would be a CSD and (ii) two would be
security-based swap clearing agencies. The Commission also noted that, under the proposal,
Rule 17Ad-22(e)(6) would have seven (rather than six) respondents because it applies to CCPs,
Rule 17Ad-22(e)(11) would continue to only have one respondent because it applies to CSDs,
and Rule 17Ad-22(e)(14) would continue to only have two respondents because it applies to
security-based swap clearing agencies.
In the 2020 Adopting Release, the Commission estimates that the majority of the
requirements under Rule 17Ad-22(e) would have eight (rather than seven) respondents, of which
(i) seven (rather than six) would be CCPs and one would be a CSD and (ii) three would be
security-based swap clearing agencies. 32 The Commission also noted that Rule 17Ad-22(e)(6)
would have seven (rather than six) respondents because it applies to CCPs, Rule 17Ad-22(e)(11)
would continue to only have one respondent because it applies to CSDs, and Rule 17Ad22(e)(14) would have three respondents because it applies to security-based swap clearing
agencies.
As stated in the 2020 Adopting Release, the PRA analysis for seven of the eight
respondents already appears in the 2016 Adopting Release and remains unchanged. In the
attached adopting release, the Commission therefore provides a PRA analysis for the one
additional respondent subject to Rule 17Ad-22(e) under the amended definition of “covered
clearing agency,” thereby reflecting the incremental annual reporting and recordkeeping burdens
resulting from the amended definition.
In sum, the following analysis estimates the burdens of eight respondents in total. Six of
the respondents are already registered with the Commission and are covered clearing agencies.
The initial burden period for those six respondents has passed (as described in the PRA extension
submitted in 2020), and the respondents now only incur the ongoing burdens of the applicable
requirements of Rule 17Ad-22(e). Pursuant to the amendments adopted in the 2020 Adopting
Release, one of the respondents that is already registered with the Commission will become a
covered clearing agency. This respondent will incur the initial and ongoing burdens associated
with the applicable rules for CCPs. Lastly, one potential future respondent, including in the
analysis in the 2016 Adopting Release, remains possible and therefore would incur both the
initial and ongoing burdens of Rule 17Ad-22(e). In the following analysis, the six respondents
that are already covered clearing agencies are referred to as “original respondents,” and the
remaining two respondents are referred to as “new respondents.”
ii.

32

Source of Estimates, Annual Hour Burden, and Explanation of Estimates
for Rule 17Ad-22(e)

See 2020 Adopting Release.

21

The Commission preliminarily expects that the sources of estimates and annual hour
burdens for Rule 17Ad-22(e) would not change as a result of the amendments.
Requirements in Rule 17Ad-22(e)(1) that Impose a PRA Burden
Rule 17Ad-22(e)(1) imposes a recordkeeping PRA burden and, under the amendments,
would apply to eight respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
Rule 17Ad-22(e)(1) continues to require policies and procedures that provide for a wellfounded, clear, transparent, and enforceable legal basis substantially the same as Rule 17Ad22(d)(1). As a result, the Commission continues to expect that a respondent has in place written
rules, policies and procedures substantially similar to those required by Rule 17Ad-22(e)(1) and,
therefore, the PRA burden imposed by the rule continues to be minimal and likely limited to
reviewing and updating current policies and procedures, where appropriate, to ensure
compliance.
Based on similar policies and procedures requirements and the corresponding burden
estimates for Rule 17Ad-22(d)(1), the Commission continues to estimate that the rule imposes on
each new respondent an initial burden of 8 hours in the first year and an ongoing burden of 3
hours per year (including the first year). 33 This results in an estimated initial burden of 2.67
hours per new respondent when annualized over three years, 34 or a total annual burden of 5.67
hours per year per new respondent. 35
Accordingly, the six original respondents have an estimated total annual burden of 18
hours, the two new respondents have an estimated total annual burden of 11.33 hours, 37
and the estimated total annual industry burden is 29.34 hours. 38
36

Requirements in Rule 17Ad-22(e)(2) that Impose a PRA Burden
Rule 17Ad-22(e)(2) imposes a recordkeeping PRA burden and, under the amendments,
would apply to eight respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
Rule 17Ad-22(e)(2) continues to contain some provisions that are similar to Rule 17Ad22(d)(8) while adding requirements that do not appear in Rules 17Ad-22(b), (c) or (d). As a
These figures were calculated as follows: Assistant General Counsel for 2 hours + Compliance Attorney for
6 hours = 8 hours of initial burden; Compliance Attorney for 3 hours = 3 hours of ongoing burden.

33

34

8 hours of initial burden ÷ 3 years = 2.67 hours per year.

35

2.67 hours + 3 hours of ongoing burden per year = 5.67 hours.

36

3 hours x 6 respondents = 18 hours.

37

5.67 hours x 2 respondents = 11.34 hours.

38

18 hours + 11.33 hours = 29.34 hours.

22

result, a respondent clearing agency already had some written rules, policies, and procedures
substantially similar to those required by Rule 17Ad-22(e)(2) and would have needed to establish
and implement a limited number of new policies and procedures. The PRA burden therefore
continues to include reviewing current policies and procedures and updating those policies and
procedures or establishing new policies and procedures, where appropriate, to ensure compliance
with the rule.
Based on similar policies and procedures requirements and the corresponding burden
estimates previously made by the Commission for Rule 17Ad-22(d)(8), the Commission
continues to estimate that the rule imposes on each new respondent an initial burden of 25 hours
in the first year and an ongoing burden of 5 hours per year (including the first year). 39 This
results in an estimated initial burden of 8.33 hours per new respondent when annualized over
three years, 40 or a total annual burden of 13.33 hours per year per new respondent. 41
Accordingly, the six original respondents have an estimated total annual burden of 30
hours, 42 the two new respondents have an estimated total annual burden of 26.66 hours, 43
and the estimated total annual industry burden is 56.66 hours. 44
Requirements in Rule 17Ad-22(e)(3) that Impose a PRA Burden
Rule 17Ad-22(e)(3) imposes a recordkeeping PRA burden and, under the amendments,
would apply to eight respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
Rule 17Ad-22(e)(3) continues to require policies and procedures that provide for a sound
risk management framework. Under Rule 17Ad-22(d), registered clearing agencies were
already required to have policies and procedures to manage certain risks, but this rule requires a
comprehensive framework for risk management that requires risk management policies and
procedures be designed holistically, be consistent with each other, and work effectively together.
Accordingly, the rule continues to impose a PRA burden that requires respondent clearing
agencies to update current policies and procedures in order to develop a more comprehensive
framework that includes a periodic review thereof and a plan for orderly recovery and winddown of the covered clearing agency.

These figures were calculated as follows: Assistant General Counsel for 14 hours + Compliance Attorney
for 11 hours = 25 hours of initial burden; Compliance Attorney for 5 hours = 5 hours of ongoing burden.

39

40

25 hours of initial burden ÷ 3 years = 8.33 hours per year.

41

8.33 hours + 5 hours of ongoing burden per year = 13.33 hours.

42

5 hours x 6 respondents = 30 hours.

43

13.33 hours x 2 respondents = 22.66 hours.

44

30 hours + 13.33 hours = 56.66 hours.

23

The Commission continues to estimate that the rule imposes on each new respondent an
initial burden of 57 hours in the first year and an ongoing burden of 49 hours per year (including
the first year). 45 This results in an estimated initial burden of 19 hours per new respondent when
annualized over three years, 46 or a total annual burden of 68 hours per year per new
respondent. 47
Accordingly, the six original respondents have an estimated total annual burden of 294
hours, 48 the two new respondents have an estimated total annual burden of 136 hours, 49 and
the estimated total annual industry burden is 430 hours. 50
Requirements in Rule 17Ad-22(e)(4) that Impose a PRA Burden
Rule 17Ad-22(e)(4) imposes a recordkeeping PRA burden and, under the amendments,
would apply to eight respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
The Commission continues to estimate that the PRA burdens for Rule 17Ad-22(e)(4) are
significant, as changes to existing policies and procedures for the rule involve more than
adjustments and may require a respondent to make substantial changes. In addition, Rule 17Ad22(e)(4) requires one-time systems adjustments related to the capability to test the sufficiency of
financial resources and to perform an annual conforming model validation.
The Commission continues to estimate that the rule imposes on each new respondent an
initial burden of 219 hours in the first year and an ongoing burden of 62 hours per year
(including the first year). 51 This results in an estimated initial burden of 73 hours per new

These figures were calculated as follows: Assistant General Counsel for 25 hours + Compliance Attorney
for 18 hours + (Senior Risk Management Specialist for 7 hours + Computer Operations Manager for 7 hours = 57
hours of initial burden; Compliance Attorney for 8 hours + Administrative Assistant for 3 hours + Senior Business
Analyst for 5 hours + Risk Management Specialist for 33 hours = 49 hours of ongoing burden.
45

46

57 hours of initial burden ÷ 3 years = 19 hours per year.

47

19 hours + 49 hours of ongoing burden per year = 68 hours.

48

49 hours x 6 respondents = 294 hours.

49

68 hours x 2 respondents = 136 hours.

50

294 hours + 136 hours = 430 hours.

These figures were calculated as follows: Assistant General Counsel for 74 hours + Compliance Attorney
for 45 hours + Senior Risk Management Specialist for 30 hours + Computer Operations Manager for 45 hours +
Chief Compliance Officer for 15 hours + Senior Programmer for 10 hours = 219 hours of initial burden; Compliance
Attorney for 26 hours + Administrative Assistant for 3 hours + Senior Business Analyst for 3 hours + Risk
Management Specialist for 30 hours = 62 hours of ongoing burden.

51

24

respondent when annualized over three years, 52 or a total annual burden of 135 hours per year
per new respondent. 53
Accordingly, the six original respondents have an estimated total annual burden of 372
hours, 54 the two new respondents have an estimated total annual burden of 270 hours, 55 and
the estimated total annual industry burden is 642 hours. 56
Requirements in Rule 17Ad-22(e)(5) that Impose a PRA Burden
Rule 17Ad-22(e)(5) imposes a recordkeeping PRA burden and, under the amendments,
would apply to eight respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
The Commission continues to expect that respondent clearing agencies subject to Rule
17Ad-22(e)(5) would already have some written policies and procedures designed to address the
collateral risks borne by these entities. As a result, the Commission continues to believe that a
respondent clearing agency would have needed to review and update existing policies and
procedures as necessary and would have needed to adopt new policies and procedures with
respect to an annual review of the sufficiency of collateral haircuts and concentration limits.
Based on the similar policies and procedures requirements in and the Commission’s
previous corresponding burden estimates for Rule 17Ad-22(d)(3), the Commission continues to
estimate that the rule imposes on each new respondent an initial burden of 42 hours in the first
year and an ongoing burden of 36 hours per year (including the first year). 57 This results in an
estimated initial burden of 14 hours per new respondent when annualized over three years, 58 or a
total annual burden of 50 hours per year per new respondent. 59

52

219 hours of initial burden ÷ 3 years = 73 hours per year.

53

73 hours + 62 hours of ongoing burden per year = 135 hours.

54

62 hours x 6 respondents = 372 hours.

55

135 hours x 2 respondents = 270 hours.

56

372 hours + 270 hours = 642 hours.

These figures were calculated as follows: Assistant General Counsel for 16 hours + Compliance Attorney
for 12 hours + Senior Risk Management Specialist for 7 hours + Computer Operations Manager for 7 hours = 42
hours of initial burden; Compliance Attorney for 6 hours + Risk Management Specialist for 30 hours = 36 hours of
ongoing burden.

57

58

42 hours of initial burden ÷ 3 years = 14 hours per year.

59

14 hours + 36 hours of ongoing burden per year = 50 hours.

25

Accordingly, the six original respondents have an estimated total annual burden of 216
hours, the two new respondents have an estimated total annual burden of 100 hours, 61 and
the estimated total annual industry burden is 316 hours. 62
60

Requirements in Rule 17Ad-22(e)(6) that Impose a PRA Burden
Rule 17Ad-22(e)(6) imposes a recordkeeping PRA burden and, under the amendments,
would apply to seven respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
The Commission continues to expect that the PRA burdens for Rule 17Ad-22(e)(6) are
more significant and would require a respondent clearing agency to make substantial changes to
its policies and procedures. In addition, Rule 17Ad-22(e)(6) continues to require one-time
systems adjustments related to the capability to perform daily backtesting and monthly (or more
frequent than monthly) sensitivity analyses.
The Commission continues to estimate that the rule imposes on each new respondent an
initial burden of 180 hours in the first year and an ongoing burden of 60 hours per year
(including the first year). 63 This results in an estimated initial burden of 60 hours per new
respondent when annualized over three years, 64 or a total annual burden of 120 hours per year
per new respondent. 65
Accordingly, the five original respondents have an estimated total annual burden of 300
hours, the two new respondents have an estimated total annual burden of 240 hours, 67 and
the estimated total annual industry burden is 540 hours. 68
66

Requirements in Rule 17Ad-22(e)(7) that Impose a PRA Burden

60

36 hours x 6 respondents = 216 hours.

61

50 hours x 2 respondents = 100 hours.

62

216 hours + 100 hours = 316 hours.

These figures were calculated as follows: Assistant General Counsel for 50 hours + Compliance Attorney
for 40 hours + Senior Risk Management Specialist for 25 hours + Computer Operations Manager for 40 hours +
Chief Compliance Officer for 15 hours + Senior Programmer for 10 hours = 180 hours of initial burden; Compliance
Attorney for 24 hours + Administrative Assistant for 3 hours + Senior Business Analyst for 3 hours + Risk
Management Specialist for 30 hours = 60 hours of ongoing burden.
63

64

180 hours of initial burden ÷ 3 years = 60 hours.

65

60 hours + 60 hours of ongoing burden per year = 120 hours.

66

60 hours x 5 respondents = 300 hours.

67

120 hours x 2 respondents = 240 hours.

68

300 hours + 240 hours = 540 hours.

26

Rule 17Ad-22(e)(7) imposes a recordkeeping PRA burden and, under the amendments,
would apply to eight respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
The Commission continues to expect that the PRA burdens for Rule 17Ad-22(e)(7) are
more significant and would require a respondent clearing agency to make substantial changes to
its policies and procedures. In addition, Rule 17Ad-22(e)(7) continues to require one-time
systems adjustments related to the capability to perform an annual conforming model validation,
the testing of sufficiency of liquid resources and the testing of access to liquidity providers.
The Commission continues to estimate that the rule imposes on each new respondent an
initial burden of 330 hours in the first year and an ongoing burden of 128 hours per year
(including the first year). 69 This results in an estimated initial burden of 110 hours per new
respondent when annualized over three years, 70 or a total annual burden of 238 hours per year
per new respondent. 71
Accordingly, the six original respondents have an estimated total annual burden of 768
hours, 72 the two new respondents have an estimated total annual burden of 476 hours, 73 and
the estimated total annual industry burden is 1,244 hours. 74
Requirements in Rule 17Ad-22(e)(8) that Impose a PRA Burden
Rule 17Ad-22(e)(8) imposes a recordkeeping PRA burden and, under the amendments,
would apply to eight respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
Rule 17Ad-22(e)(8) continues to contain substantially similar provisions to Rule 17Ad22(d)(12). As a result, the Commission continues to expect that a respondent clearing agency
would already have written rules, policies, and procedures substantially similar to those required
by Rule 17Ad-22(e)(8). The Commission continues to believe that respondent clearing agencies

These figures were calculated as follows: Assistant General Counsel for 95 hours + Compliance Attorney
for 85 hours + Senior Risk Management Specialist for 45 hours + Computer Operations Manager for 60 hours +
Chief Compliance Officer for 30 hours + Senior Programmer for 15 hours = 330 hours of initial burden; Compliance
Attorney for 48 hours + Administrative Assistant for 5 hours + Senior Business Analyst for 5 hours + Risk
Management Specialist for 60 hours + Senior Risk Management Specialist for 10 hours = 128 hours of ongoing
burden.

69

70

330 hours of initial burden ÷ 3 years = 110 hours per year.

71

110 hours + 128 hours of ongoing burden per year = 238 hours.

72

128 hours x 6 respondents = 768 hours.

73

238 hours x 2 respondents = 476 hours.

74

768 hours + 476 hours = 1,244 hours.

27

would incur only the incremental burdens of reviewing and updating existing policies and
procedures as necessary.
Based on the similar policies and procedures requirements and the corresponding burden
estimates previously made by the Commission for Rule 17Ad-22(d)(12), the Commission
continues to estimate that the rule imposes on each new respondent an initial burden of 12 hours
in the first year and an ongoing burden of 5 hours per year (including the first year). 75 This
results in an estimated initial burden of 4 hours per new respondent when annualized over three
years, 76 or a total annual burden of 9 hours per year per new respondent. 77
Accordingly, the six original respondents have an estimated total annual burden of 30
hours, 78 the two new respondents have an estimated total annual burden of 18 hours, 79 and
the estimated total annual industry burden is 48 hours. 80
Requirements in Rule 17Ad-22(e)(9) that Impose a PRA Burden
Rule 17Ad-22(e)(9) imposes a recordkeeping PRA burden and, under the amendments,
would apply to eight respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
Rule 17Ad-22(e)(9) continues to contain substantially similar provisions to Rule 17Ad22(d)(5). As a result, the Commission continues to expect that a respondent clearing agency
already has written rules, policies, and procedures substantially similar to those required by Rule
17Ad-229(e)(9). Therefore, the Commission continues to believe that respondent clearing
agencies would incur incremental burdens of reviewing and updating existing policies and
procedures as necessary.
Based on the similar policies and procedures requirements and the corresponding burden
estimates previously made by the Commission for Rule 17Ad-22(d)(5), the Commission
continues to estimate that the rule imposes on each new respondent an initial burden of 12 hours
in the first year and an ongoing burden of 5 hours per year (including the first year). 81 This

These figures were calculated as follows: Assistant General Counsel for 2 hours + Compliance Attorney for
6 hours + Senior Business Analyst for 2 hours + Computer Operations Manager for 2 hours = 12 hours of initial
burden; Compliance Attorney for 5 hours = 5 hours of ongoing burden.
75

76

12 hours in the first year ÷3 years = 4 hours per year.

77

4 hours + 5 hours of ongoing burden per year = 9 hours.

78

5 hours x 6 respondents = 30 hours.

79

9 hours x 2 respondents = 18 hours.

80

30 hours + 18 hours = 48 hours.

These figures were calculated as follows: Assistant General Counsel for 2 hours + Compliance Attorney for
6 hours + Senior Business Analyst for 2 hours + Computer Operations Manager for 2 hours = 12 hours of initial
burden; Compliance Attorney for 5 hours = 5 hours of ongoing burden.

81

28

results in an estimated initial burden of 4 hours per new respondent when annualized over three
years, 82 or a total annual burden of 9 hours per year per new respondent. 83
Accordingly, the six original respondents have an estimated total annual burden of 30
hours, 84 the two new respondents have an estimated total annual burden of 18 hours, 85 and
the estimated total annual industry burden is 48 hours. 86
Requirements in Rule 17Ad-22(e)(10) that Impose a PRA Burden
Rule 17Ad-22(e)(10) imposes a recordkeeping PRA burden and, under the amendments,
would apply to eight respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
Rule 17Ad-22(e)(10) continues to contain substantially similar provisions to Rule 17Ad22(d)(15). As a result, the Commission continues to expect that a respondent clearing agency
would already have written rules, policies, and procedures substantially similar to those required
by Rule 17Ad-22(e)(10). The Commission continues to believe that a respondent clearing
agency would incur the incremental burdens of reviewing and updating existing policies and
procedures as necessary.
Based on the similar policies and procedures requirements and the corresponding burden
estimates previously made by the Commission for Rule 17Ad-22(d)(15), the Commission
continues to estimate that the rule imposes on each new respondent an initial burden of 12 hours
in the first year and an ongoing burden of 5 hours per year (including the first year). 87 This
results in an estimated initial burden of 4 hours per new respondent when annualized over three
years, 88 or a total annual burden of 9 hours per year per new respondent. 89

82

12 hours in the first year ÷3 years = 4 hours per year.

83

4 hours + 5 hours of ongoing burden per year = 9 hours.

84

5 hours x 6 respondents = 30 hours.

85

9 hours x 2 respondents = 18 hours.

86

30 hours + 18 hours = 48 hours.

These figures were calculated as follows: Assistant General Counsel for 2 hours + Compliance Attorney for
6 hours + Senior Business Analyst for 2 hours + Computer Operations Manager for 2 hours = 12 hours of initial
burden; Compliance Attorney for 5 hours = 5 hours of ongoing burden.

87

88

12 hours in the first year ÷3 years = 4 hours per year.

89

4 hours + 5 hours of ongoing burden per year = 9 hours.

29

Accordingly, the six original respondents have an estimated total annual burden of 30
hours, the two new respondents have an estimated total annual burden of 18 hours, 91 and
the estimated total annual industry burden is 48 hours. 92
90

Requirements in Rule 17Ad-22(e)(11) that Impose a PRA Burden
Rule 17Ad-22(e)(11) imposes a recordkeeping PRA burden and, under the amendments,
would continue to apply to one respondent clearing agency. The Commission continues to
estimate that the rule requires one response per entity annually.
Rule 17Ad-22(e)(11) continues to contain similar provisions to Rule 17Ad-22(d)(10). As
a result, the Commission continues to expect that a respondent clearing agency providing CSD
services would already have written rules, policies, and procedures similar to those required by
Rule 17Ad-22(e)(11). Rule 17Ad-22(e)(10) also continues to impose requirements that do not
appear in Rule 17Ad-22(d)(10). Accordingly, the Commission continues to expect that a
covered clearing agency providing CSD services may need to update or amend existing policies
and procedures, as necessary, to satisfy the requirements and may also need to create new
policies and procedures.
Based on the similar policies and procedures requirements and the corresponding burden
estimates previously made by the Commission for Rule 17Ad-22(d)(10), the Commission
continues to estimate that the rule imposes on each new respondent an initial burden of 55 hours
in the first year and an ongoing burden of 8 hours per year (including the first year). 93 This
results in an estimated initial burden of 18.33 hours per new respondent when annualized over
three years, 94 or a total annual burden of 26.33 hours per year per new respondent. 95
Accordingly, with only one respondent, the industry has an estimated total burden of 8
hours, and this estimated burden is unchanged.
96

Requirements in Rule 17Ad-22(e)(12) that Impose a PRA Burden

90

5 hours x 6 respondents = 30 hours.

91

9 hours x 2 respondents = 18 hours.

92

30 hours + 18 hours = 48 hours.

These figures were calculated as follows: Assistant General Counsel for 20 hours + Compliance Attorney
for 10 hours + Intermediate Accountant for 15 hours + Senior Business Analyst for 5 hours + Computer Operations
Manager for 5 hours = 55 hours of initial burden; Compliance Attorney for 8 hours = 8 hours of ongoing burden.

93

94

55 hours of initial burden ÷ 3 years = 18.33 hours per year.

95

18.33 hours + 8 hours of ongoing burden per year = 26.33 hours.

96

8 hours x 1 respondent = 8 hours.

30

Rule 17Ad-22(e)(12) imposes a recordkeeping PRA burden and, under the amendments,
would apply to eight respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
Rule 17Ad-22(e)(12) continues to contain substantially similar provisions to Rule 17Ad22(d)(13). As a result, the Commission continues to expect that a respondent clearing agency
would already have written rules, policies, and procedures substantially similar to those required
by Rule 17Ad-22(e)(12). The Commission continues to believe that a respondent clearing
agency would incur the incremental burdens of reviewing and updating existing policies and
procedures as necessary.
Based on the similar policies and procedures requirements and the corresponding burden
estimates previously made by the Commission for Rule 17Ad-22(d)(13), the Commission
continues to estimate that the rule imposes on each new respondent an initial burden of 12 hours
in the first year and an ongoing burden of 5 hours per year (including the first year). 97 This
results in an estimated initial burden of 4 hours per new respondent when annualized over three
years, 98 or a total annual burden of 9 hours per year per new respondent. 99
Accordingly, the six original respondents have an estimated total annual burden of 30
hours, the two new respondents have an estimated total annual burden of 18 hours,101 and
the estimated total annual industry burden is 48 hours. 102
100

Requirements in Rule 17Ad-22(e)(13) that Impose a PRA Burden
Rule 17Ad-22(e)(13) imposes a recordkeeping PRA burden and, under the amendments,
would apply to eight respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
Rule 17Ad-22(e)(13) continues to contain similar provisions to Rule 17Ad-22(d)(11) but
would also impose additional requirements that do not appear in Rule 17Ad-22(d)(11). As a
result, the Commission continues to believe that a respondent clearing agency would incur
burdens of reviewing and updating existing policies and procedures in order to comply with the

These figures were calculated as follows: Assistant General Counsel for 2 hours + Compliance Attorney for
6 hours + Senior Business Analyst for 2 hours + Computer Operations Manager for 2 hours = 12 hours of initial
burden; Compliance Attorney for 5 hours = 5 hours of ongoing burden.

97

98

12 hours in the first year ÷3 years = 4 hours per year.

99

4 hours + 5 hours of ongoing burden per year = 9 hours.

100

5 hours x 6 respondents = 30 hours.

101

9 hours x 2 respondents = 18 hours.

102

30 hours + 18 hours = 48 hours.

31

provisions of Rule 17Ad-22(e)(13) and, in some cases, would need to create new policies and
procedures.
Based on the similar policies and procedures requirements and the corresponding burden
estimates previously made by the Commission for Rule 17Ad-22(d)(11), the Commission
continues to estimate that the rule imposes on each new respondent an initial burden of 41 hours
in the first year and an ongoing burden of 7 hours per year (including the first year). 103 This
results in an estimated initial burden of 13.67 hours per new respondent when annualized over
three years, 104 or a total annual burden of 20.67 hours per year per new respondent. 105
Accordingly, the six original respondents have an estimated total annual burden of 42
hours, 106 the two new respondents have an estimated total annual burden of 41.34 hours, 107
and the estimated total annual industry burden is 83.34 hours. 108
Requirements in Rule 17Ad-22(e)(14) that Impose a PRA Burden
Rule 17Ad-22(e)(14) imposes a recordkeeping PRA burden and, under the amendments,
would apply to three respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
Though not required by Rules 17Ad-22(b), (c), or (d), respondent clearing agencies that
provide CCP services for security-based swaps generally have written policies and procedures
regarding the segregation and portability of customer positions and collateral as a result of other
regulations. 109 Consequently, the Commission continues to expect that respondent clearing
agencies providing CCP services for security-based swaps would incur the burdens of reviewing
and updating existing policies and procedures as necessary in order to comply with Rule 17Ad22(e)(14).
The Commission continues to estimate that the rule imposes on each respondent an initial
burden of 36 hours in the first year and an ongoing burden of 6 hours per year (including the first
year). 110 This results in an estimated initial burden of 12 hours per new respondent when

These figures were calculated as follows: Assistant General Counsel for 6 hours + Compliance Attorney for
11 hours + Senior Business Analyst for 12 hours + Computer Operations Manager for 12 hours = 41 hours of initial
burden; Compliance Attorney for 7 hours = 7 hours of ongoing burden.

103

104

41 hours of initial burden ÷ 3 years = 13.67 hours per year.

105

13.67 hours + 7 hours of ongoing burden per year = 20.67 hours per year.

106

7 hours x 6 respondents = 42 hours.

107

20.67 hours x 2 respondents = 41.34 hours.

108

42 hours + 41.34 hours = 83.34 hours.

See, e.g., 77 FR 6336 (Feb. 7, 2012) (CFTC adopting rules imposing a legal separation with operational
commingling (“LSOC”) model on DCOs for cleared swaps).
109

110

These figures were calculated as follows: Assistant General Counsel for 12 hours + Compliance Attorney

32

annualized over three years, 111 or a total annual burden of 18 hours per year per new
respondent. 112
Accordingly, the two original respondents have an estimated total annual burden of 12 hours, 113
the one new respondent has an estimated total annual burden of 18 hours, 114 and the estimated
total annual industry burden is 30 hours, 115 and this estimated burden is unchanged.
Requirements in Rule 17Ad-22(e)(15) that Impose a PRA Burden
Rule 17Ad-22(e)(15) imposes a recordkeeping PRA burden and, under the amendments,
would apply to eight respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
Rule 17Ad-22(e)(15) continues to require policies and procedures that identify and
manage general business risks borne by the clearing agency. Policies and procedures governing
the identification and mitigation of general business risk were not required under Rule 17Ad22(b), (c), or (d), and, as a result, the Commission continues to believe that the estimated PRA
burdens associated with Rule 17Ad-22(e)(15) were significant and would require a respondent
clearing agency to make substantial changes to its policies and procedures.
The Commission continues to estimate that the rule imposes on each new respondent an
initial burden of 210 hours in the first year and an ongoing burden of 48 hours per year
(including the first year). 116 This results in an estimated initial burden of 70 hours per
respondent when annualized over three years, 117 or a total annual burden of 118 hours per year
per new respondent. 118

for 10 hours + Computer Operations Manager for 7 hours + Senior Business Analyst for 7 hours = 36 hours of initial
burden; Compliance Attorney for 6 hours = 6 hours of ongoing burden.
111

36 hours of initial burden ÷ 3 years = 12 hours per year.

112

12 hours + 6 hours of ongoing burden per year = 18 hours.

113

6 hours x 2 respondents = 12 hours.

114

18 hours x 1 respondent = 18 hours.

115

12 hours + 18 hours = 30 hours.

These figures were calculated as follows: Assistant General Counsel for 40 hours + Compliance Attorney
for 30 hours + Computer Operations Manager for 10 hours + Senior Business Analyst for 10 hours + Financial
Analyst for 70 hours + Chief Financial Officer for 50 hours = 210 hours of initial burden; Compliance Attorney for
42 hours + Administrative Assistant for 3 hours + Senior Business Analyst for 3 hours = 48 hours of ongoing
burden.
116

117

210 hours of initial burden ÷ 3 years = 70 hours per year.

118

70 hours + 48 hours of ongoing burden per year = 118 hours per year.

33

Accordingly, the six original respondents have an estimated total annual burden of 288
hours, the two new respondents have an estimated total annual burden of 236 hours, 120
and the estimated total annual industry burden is 524 hours. 121
119

Requirements in Rule 17Ad-22(e)(16) that Impose a PRA Burden
Rule 17Ad-22(e)(16) imposes a recordkeeping PRA burden and, under the amendments,
would apply to eight respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
Respondent clearing agencies were already required to have written policies and
procedures reasonably designed to address the safeguarding of the assets of the clearing agency
and its participants. As a result, the Commission continues to expect that a respondent clearing
agency would need to conduct a review of, and update as necessary, current policies and
procedures in order to ensure compliance with the rule.
Based on similar policies and procedures requirements and the corresponding burden
estimates previously made by the Commission for Rule 17Ad-22(d)(3), the Commission
continues to estimate that the rule imposes on each new respondent an initial burden of 20 hours
in the first year and an ongoing burden of 6 hours per year (including the first year). 122 This
results in an estimated initial burden of 6.67 hours per new respondent when annualized over
three years, 123 or a total annual burden of 12.67 hours per year per new respondent. 124
Accordingly, the six original respondents have an estimated total annual burden of 36
hours, 125 the two new respondents have an estimated total annual burden of 25.34 hours, 126
and the estimated total annual industry burden is 61.34 hours. 127
Requirements in Rule 17Ad-22(e)(17) that Impose a PRA Burden

119

48 hours x 6 respondents = 288 hours.

120

118 hours x 2 respondents = 236 hours.

121

288 hours + 236 hours = 524 hours.

These figures were calculated as follows: Assistant General Counsel for 4 hours + Compliance Attorney for
8 hours + Senior Business Analyst for 4 hours + Computer Operations Manager for 4 hours = 20 hours of initial
burden; Compliance Attorney for 6 hours = 6 hours of ongoing burden.

122

123

20 hours of initial burden ÷ 3 years = 6.67 hours per year.

124

6.67 hours + 6 hours of ongoing burden per year = 12.67 hours per year.

125

6 hours x 6 respondents = 36 hours.

126

12.67 hours x 2 respondents = 25.34 hours.

127

36 hours + 25.34 hours = 61.34 hours.

34

Rule 17Ad-22(e)(17) imposes a recordkeeping PRA burden and, under the amendments,
would apply to eight respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
Rule 17Ad-22(e)(17) continues to contain similar requirements to those in Rule 17Ad22(d)(4) but would also impose additional requirements that do not appear in Rule 17Ad22(d)(4). As a result, the Commission continues to expect that a respondent clearing agency
would already have some written rules, policies, and procedures required by the rule, but it
would also need to review and update existing policies and procedures, where necessary, and
would need to create policies and procedures to address the additional requirements.
Based on the similar policies and procedures requirements and the corresponding burden
estimates previously made by the Commission for Rule 17Ad-22(d)(4), the Commission
continues to estimate that the rule imposes on each new respondent an initial burden of 28 hours
in the first year and an ongoing burden of 6 hours per year (including the first year). 128 This
results in an initial estimated burden of 9.33 hours per new respondent when annualized over
three years, 129 or a total burden of 15.33 hours per year per new respondent. 130
Accordingly, the six original respondents have an estimated total annual burden of 36
hours, the two new respondents have an estimated total annual burden of 30.66 hours, 132
and the estimated total annual industry burden is 66.66 hours. 133
131

Requirements in Rule 17Ad-22(e)(18) that Impose a PRA Burden
Rule 17Ad-22(e)(18) imposes a recordkeeping PRA burden and, under the amendments,
would apply to eight respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
Rule 17Ad-22(e)(18) continues to contain similar requirements to those in Rules 17Ad22(b)(5) through (7) and (d)(2). As a result, the Commission continues to expect that a
respondent clearing agency would already have written rules, policies, and procedures containing
provisions similar to those required by the rule. Rule 17Ad-22(e)(18) also continues to impose

These figures were calculated as follows: Assistant General Counsel for 4 hours + Compliance Attorney for
8 hours + Computer Operations Manager for 6 hours + Senior Business Analyst for 4 hours + Chief Compliance
Officer for 4 hours + Senior Programmer for 2 hours = 28 hours of initial burden; Compliance Attorney for 6 hours
= 6 hours of ongoing burden.

128

129

28 hours of initial burden ÷ 3 years = 9.33 hours per year.

130

9.33 hours + 6 hours of ongoing burden per year = 15.33 hours per year.

131

6 hours x 6 respondents = 36 hours.

132

15.33 hours x 2 respondents = 30.66 hours.

133

36 hours + 30.66 hours = 66.66 hours.

35

additional requirements that do not appear in Rules 17Ad-22(b) or (d), however, necessitating
the creation of new policies and procedures to address these additional requirements.
Based on the similar policies and procedures requirements and the corresponding burden
estimates previously made by the Commission for Rules 17Ad-22(b)(5) through (7) and (d)(2),
the Commission continues to estimate that the rule imposes on each new respondent an initial
burden of 44 hours in the first year and an ongoing burden of 7 hours per year (including the first
year). 134 This results in an initial estimated burden of 14.67 hours per new respondent when
annualized over three years, 135 or a total annual burden of 21.67 hours per year per new
respondent. 136
Accordingly, the six original respondents have an estimated total annual burden of 42
hours, the two new respondents have an estimated total annual burden of 43.34 hours, 138
and the estimated total annual industry burden is 85.34 hours. 139
137

Requirements in Rule 17Ad-22(e)(19) that Impose a PRA Burden
Rule 17Ad-22(e)(19) imposes a recordkeeping PRA burden and, under the amendments,
would apply to eight respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
Rule 17Ad-22(e)(19) continues to include requirements that have not been previously
included in Rules 17Ad-22(b), (c) or (d), and therefore the Commission continues to expect that
a respondent clearing agency would need to create new policies and procedures to address the
requirements of Rule 17Ad-22(e)(19).
The Commission estimates that the rule imposes on each new respondent an initial
burden of 44 hours in the first year and an ongoing burden of 7 hours per year (including the first
year). 140 This results in an initial estimated burden of 14.67 hours per new respondent when

134
These figures were calculated as follows: Assistant General Counsel for 10 hours + Compliance Attorney
for 7 hours + Computer Operations Manager for 15 hours + Senior Business Analyst for 5 hours + Chief
Compliance Officer for 5 hours + Senior Programmer for 2 hours = 44 hours of initial burden; Compliance Attorney
for 7 hours = 7 hours of ongoing burden.
135

44 hours of initial burden ÷ 3 years = 14.67 hours per year.

136

14.67 hours + 7 hours of ongoing burden per year = 21.67 hours per year.

137

7 hours x 6 respondents = 42 hours.

138

21.67 hours x 2 respondents = 43.34 hours.

139

42 hours + 43.34 hours = 85.34 hours.

These figures were calculated as follows: Assistant General Counsel for 10 hours + Compliance Attorney
for 7 hours + Computer Operations Manager for 15 hours + Senior Business Analyst for 5 hours + Chief
Compliance Officer for 5 hours + Senior Programmer for 2 hours = 44 hours of initial burden; Compliance Attorney
for 7 hours = 7 hours of ongoing burden.

140

36

annualized over three years, 141 or a total annual burden of 21.67 hours per year per new
respondent. 142
Accordingly, the six original respondents have an estimated total annual burden of 42
hours, 143 the two new respondents have an estimated total annual burden of 43.34 hours, 144
and the estimated total annual industry burden is 85.34 hours. 145
Requirements in Rule 17Ad-22(e)(20) that Impose a PRA Burden
Rule 17Ad-22(e)(20) imposes a recordkeeping PRA burden and, under the amendments,
would apply to eight respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
Under Rule 17Ad-22(d)(7), registered clearing agencies were already required to have
written policies and procedures similar to the requirements of Rule 17Ad-22(e)(20). As a result,
the Commission continues to expect that a respondent clearing agency would need to review and
update existing policies and procedures, as necessary, to satisfy the requirements of Rule 17Ad22(e)(20).
Based on the similar policies and procedures requirements and the corresponding burden
estimates previously made by the Commission for Rule 17Ad-22(d)(7), the Commission
continues to estimate that the rule imposes on each new respondent an initial burden of 44 hours
in the first year and an ongoing burden of 7 hours per year (including the first year). 146 This
results in an initial estimated burden of 14.67 hours per new respondent when annualized over
three years, 147 or a total annual burden of 21.67 hours per year per new respondent. 148

141

44 hours of initial burden ÷ 3 years = 14.67 hours per year.

142

14.67 hours + 7 hours of ongoing burden per year = 21.67 hours per year.

143

7 hours x 6 respondents = 42 hours.

144

21.67 hours x 2 respondents = 43.34 hours.

145

42 hours + 43.34 hours = 85.34 hours.

These figures were calculated as follows: Assistant General Counsel for 10 hours + Compliance Attorney
for 7 hours + Computer Operations Manager for 15 hours + Senior Business Analyst for 5 hours + Chief
Compliance Officer for 5 hours + Senior Programmer for 2 hours = 44 hours of initial burden; Compliance Attorney
for 7 hours = 7 hours of ongoing burden.
146

147

44 hours of initial burden ÷ 3 years = 14.67 hours per year.

148

14.67 hours + 7 hours of ongoing burden per year = 21.67 hours per year.

37

Accordingly, the six original respondents have an estimated total annual burden of 42
hours, the two new respondents have an estimated total annual burden of 43.34 hours, 150
and the estimated total annual industry burden is 85.34 hours. 151
149

Requirements in Rule 17Ad-22(e)(21) that Impose a PRA Burden
Rule 17Ad-22(e)(21) imposes a recordkeeping PRA burden and, under the amendments,
would apply to eight respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
Rule 17Ad-22(e)(21) continues to contain requirements similar to those in Rule 17Ad22(d)(6) but also imposes new requirements. As a result, the Commission continues to expect
that a respondent clearing agency is likely to incur the burdens of reviewing and updating
existing policies and procedures and would need to create new policies and procedures to satisfy
the rule, as necessary.
Based on the similar policies and procedures requirements and the corresponding burden
estimates previously made by the Commission for Rule 17Ad-22(d)(6), the Commission
continues to estimate that the rule imposes on each new respondent an initial burden of 32 hours
in the first year and an ongoing burden of 11 hours per year (including the first year). 152 This
results in an estimated burden of 10.67 hours per new respondent when annualized over three
years, 153 or a total annual burden of 21.67 hours per year per new respondent. 154
Accordingly, the six original respondents have an estimated total annual burden of 66
hours, 155 the two new respondents have an estimated total annual burden of 43.34 hours, 156
and the estimated total annual industry burden is 109.34 hours. 157
Requirements in Rule 17Ad-22(e)(22) that Impose a PRA Burden

149

7 hours x 6 respondents = 42 hours.

150

21.67 hours x 2 respondents = 43.34 hours.

151

42 hours + 43.34 hours = 85.34 hours.

These figures were calculated as follows: Assistant General Counsel for 10 hours + Compliance Attorney
for 7 hours + Computer Operations Manager for 15 hours + Senior Business Analyst for 5 hours + Chief
Compliance Officer for 5 hours + Senior Programmer for 2 hours = 32 hours of initial burden; Compliance Attorney
for 11 hours = 11 hours of ongoing burden.

152

153

32 hours of initial burden ÷ 3 years = 10.67 hours per year.

154

10.67 hours + 11hours of ongoing burden = 21.67 hours per year.

155

11 hours x 6 respondents = 66 hours.

156

21.67 hours x 2 respondents = 43.34 hours.

157

66 hours + 43.34 hours = 109.34 hours.

38

Rule 17Ad-22(e)(22) imposes a recordkeeping PRA burden and, under the amendments,
would apply to eight respondent clearing agencies. The Commission continues to estimate that
the rule requires one response per entity annually.
Rule 17Ad-22(e)(22) continues to require a respondent clearing agency to have written
policies and procedures regarding the use of relevant internationally accepted communication
procedures and standards. While respondent clearing agencies are not subject to similar
requirements under Rules 17Ad-22(b), (c) or (d), the Commission understands that respondent
clearing agencies already use the relevant internationally accepted communication procedures
and standards and continues to expect a respondent clearing agency would need to make only
limited changes to satisfy the requirements under the Rule 17Ad-22(e)(22).
The Commission continues to estimate that the rule imposes on each new respondent an
initial burden of 24 hours in the first year and an ongoing burden of 5 hours per year (including
the first year). 158 This results in an estimated initial burden of 8 hours per new respondent when
annualized over three years, 159 or a total annual burden of 13 hours per year per new
respondent. 160
Accordingly, the six original respondents have an estimated total annual burden of 30
hours, the two new respondents have an estimated total annual burden of 26 hours,162 and
the estimated total annual industry burden is 56 hours. 163
161

Requirements in Rule 17Ad-22(e)(23) that Impose a PRA Burden
Rule 17Ad-22(e)(23) imposes a third-party reporting PRA burden and, under the
amendments, would apply to eight respondent clearing agencies. The Commission continues to
estimate that the rule requires one response per entity annually.
Rule 17Ad-22(e)(23) continues to contain similar requirements to Rule 17Ad-22(d)(9)
but also continues to impose substantial new requirements. As a result, although a respondent
clearing agency has been required to have written rules, policies and procedures containing
provisions similar to some of the requirements in Rule 17Ad-22(e)(23), a respondent clearing

These figures were calculated as follows: Assistant General Counsel for 2 hours + Compliance Attorney for
6 hours + Computer Operations Manager for 7 hours + Senior Business Analyst for 2 hours + Chief Compliance
Officer for 5 hours + Senior Programmer for 2 hours = 24 hours of initial burden; Compliance Attorney for 5 hours
= 5 hours of ongoing burden.

158

159

24 hours of initial burden ÷ 3 years = 8 hours per year.

160

8 hours + 5 hours of ongoing burden per year = 13 hours per year.

161

5 hours x 6 respondents = 30 hours.

162

13 hours x 2 respondents = 26 hours.

163

30 hours + 26 hours = 56 hours.

39

agency would also need to establish new policies and procedures to address additional
requirements.
Based on the similar policies and procedures requirements and the corresponding burden
estimates previously made by the Commission for Rule 17Ad-22(d)(9), the Commission
continues to estimate that the rule imposes on each new respondent an initial burden of 138 hours
in the first year and an ongoing burden of 34 hours per year (including the first year). 164 This
results in an estimated initial burden of 46 hours per new respondent when annualized over three
years, 165 or a total annual burden of 80 hours per year per new respondent. 166
Accordingly, the six original respondents have an estimated total annual burden of 204
hours, 167 the two new respondents have an estimated total annual burden of 160 hours, 168
and the estimated total annual industry burden is 364 hours. 169
iii.

Table Summary of Hourly Burdens for Rules 17Ad-22(b), (c), and (d)

The table below summarizes the Commission’s estimates of the total hourly reporting burden for
all respondents under Rules 17Ad-22(b), (c) and (d). These burdens are unchanged.

These figures were calculated as follows: Assistant General Counsel for 38 hours + Compliance Attorney
for 24 hours + Computer Operations Manager for 32 hours + Senior Business Analyst for 18 hours + Chief
Compliance Officer for 18 hours + Senior Programmer for 8 hours = 138 hours of initial burden; Compliance
Attorney for 34 hours = 34 hours of ongoing burden.

164

165

138 hours of initial burden ÷ 3 years = 46 hours per year.

166

46 hours + 34 hours of ongoing burden per year = 80 hours.

167

34 hours x 6 respondents = 204 hours.

168

80 hours x 2 respondents = 160 hours.

169

204 hours + 160 hours = 364 hours.

40

Initial
Burden
Annualized
per Entity
Per
Response

Ongoing
Burden Per
Entity Per
Response

Annual
Burden Per
Entity Per
Response

Total
Annual
Burden Per
Entity

Total
Annual
Industry
Burden

IC

Name of Information
Collection

Type of Burden

Number of
Entities
Impacted

Annual
Responses
Per Entity

Initial
Burden Per
Entity Per
Response

1

17Ad-22(b)(1)–(3)

Recordkeeping

9

1

0

0

10

10

10

90

2

17Ad-22(b)(4)

Recordkeeping

9

1

0

0

60

60

60

540

3

17Ad-22(b)(5)–(7)

Recordkeeping

9

1

0

0

60

60

60

540

4

17Ad-22(c)(1)

Recordkeeping

9

4

0

0

3

12

12

108

5

17Ad-22(c)(2)

Third-Party
Reporting

9

1

0

0

250

250

250

2,250

6

17Ad-22(c)(2)

Third-Party
Reporting

1

1

500

166.67

250

416.67

416.67

416.67

7

17Ad-22(d)(1)–(15)

Recordkeeping

3

1

0

0

50

50

50

150

iv.

Table Summary of Hourly Burdens for Rule 17Ad-22(e)

The table below summarizes the Commission’s estimates of the total hourly reporting
burden for all respondents under Rules 17Ad-22(e)(1)–(23). Only the bolded entries are being
modified by the new final rule. The other burdens in paragraph (e) are unchanged.
Type of
Burden

Number of
Entities
Impacted

Annual
Responses
Per Entity

Initial
Burden Per
Entity Per
Response

Initial
Burden
Annualized
per Entity
Per
Response

Ongoing
Burden Per
Entity Per
Response

Annual
Burden Per
Entity Per
Response

Total
Annual
Burden Per
Entity

Total
Annual
Industry
Burden

IC

Name of
Information
Collection

8

17Ad-22(e)(1)

Recordkeeping

6

1

0

0

3

3

3

18

9

17Ad-22(e)(1)
(RNR) 170

Recordkeeping

2

1

8

2.67

3

5.67

5.67

11.34

10

17Ad-22(e)(2)

Recordkeeping

6

1

0

0

5

5

5

30

11

17Ad-22(e)(2)
(RNR)

Recordkeeping

2

1

25

8.33

5

13.33

13.33

26.66

12

17Ad-22(e)(3)

Recordkeeping

6

1

0

0

49

49

49

294

13

17Ad-22(e)(3)
(RNR)

Recordkeeping

2

1

57

19

49

68

68

136

14

17Ad-22(e)(4)

Recordkeeping

6

1

0

0

62

62

62

372

15

17Ad-22(e)(4)
(RNR)

Recordkeeping

2

1

219

73

62

135

135

270

170

RNR stands for “Respondent Not Registered.”

41

16

17Ad-22(e)(5)

Recordkeeping

6

1

0

0

36

36

36

216

17

17Ad-22(e)(5)
(RNR)

Recordkeeping

2

1

42

14

36

50

50

100

18

17Ad-22(e)(6)

Recordkeeping

5

1

0

0

60

60

60

300

19

17Ad-22(e)(6)
(RNR)

Recordkeeping

2

1

180

60

60

120

120

240

20

17Ad-22(e)(7)

Recordkeeping

6

1

0

0

128

128

128

768

21

17Ad-22(e)(7)
(RNR)

Recordkeeping

2

1

330

110

128

238

238

476

22

17Ad-22(e)(8)

Recordkeeping

6

1

0

0

5

5

5

30

23

17Ad-22(e)(8)
(RNR)

Recordkeeping

2

1

12

4

5

9

9

18

24

17Ad-22(e)(9)

Recordkeeping

6

1

0

0

5

5

5

30

25

17Ad-22(e)(9)
(RNR)

Recordkeeping

2

1

12

4

5

9

9

18

26

17Ad-22(e)(10)

Recordkeeping

6

1

0

0

5

5

5

30

27

17Ad-22(e)(10)
(RNR)

Recordkeeping

2

1

12

4

5

9

9

18

28

17Ad-22(e)(11)

Recordkeeping

1

1

0

0

8

8

8

8

29

17Ad-22(e)(12)

Recordkeeping

6

1

0

0

5

5

5

30

30

17Ad-22(e)(12)
(RNR)

Recordkeeping

2

1

12

4

5

9

9

18

31

17Ad-22(e)(13)

Recordkeeping

6

1

0

7

7

7

42

32

17Ad-22(e)(13)
(RNR)

Recordkeeping

2

1

41

13.67

7

20.67

20.67

41.34

33

17Ad-22(e)(14)

Recordkeeping

2

1

0

0

6

6

6

12

34

17Ad-22(e)(14)
(RNR)

Recordkeeping

1

1

36

12

6

18

18

18

35

17Ad-22(e)(15)

Recordkeeping

6

1

0

0

48

48

48

288

36

17Ad-22(e)(15)
(RNR)

Recordkeeping

2

1

210

70

48

118

118

236

37

17Ad-22(e)(16)

Recordkeeping

6

1

0

0

6

12.67

12.67

36

38

17Ad-22(e)(16)
(RNR)

Recordkeeping

2

1

20

6.67

6

12.67

12.67

25.34

39

17Ad-22(e)(17)

Recordkeeping

6

1

0

0

6

6

6

36

40

17Ad-22(e)(17)
(RNR)

Recordkeeping

2

28

9.33

6

15.33

15.33

30.66

41

17Ad-22(e)(18)

Third Party
Reporting

6

1

0

0

7

7

7

42

42

17Ad-22(e)(18)
(RNR)

Third-Party
Reporting

2

1

44

14.67

7

21.67

21.67

43.34

43

17Ad-22(e)(19)

Recordkeeping

6

1

0

0

7

7

7

42

44

17Ad-22(e)(19)
(RNR)

Recordkeeping

2

1

44

14.67

7

21.67

21.67

43.34

42

45

17Ad-22(e)(20)

Recordkeeping

6

1

0

0

7

7

7

42

46

17Ad-22(e)(20)
(RNR)

Recordkeeping

2

1

44

14.67

7

21.67

21.67

43.34

47

17Ad-22(e)(21)

Recordkeeping

6

1

0

0

11

11

11

66

48

17Ad-22(e)(21)
(RNR)

Recordkeeping

2

1

32

10.67

11

21.67

21.67

43.34

49

17Ad-22(e)(22)

Recordkeeping

6

1

0

0

5

5

5

30

50

17Ad-22(e)(22)
(RNR)

Recordkeeping

2

1

24

8

5

13

13

26

51

17Ad-22(e)(23)

Third-Party
Reporting

6

1

0

0

34

34

34

204

52

17Ad-22(e)(23)
(RNR)

Third-Party
Reporting

2

1

138

46

34

80

80

160

13. Costs to Respondents
Table of Costs for Registered Clearing Agencies (costs in thousands of dollars)
The costs to respondents under Rules 17Ad-22(b) and (c) remain unchanged, as
reflected in the chart below.

Type of Burden

Number
of Entities
Impacted

Annual
Responses
Per Entity

Initial
Cost Per
Entity Per
Response

Initial Cost
Annualized
per Entity
Per
Response

Ongoing
Cost Per
Entity Per
Response

Annual
Cost Per
Entity Per
Response

Total
Annual
Cost Per
Entity

Total
Industry
Cost (in
thousands)

17Ad-22(b)(4)

Recordkeeping

9

1

0

0

432

432

432

3,888

5

17Ad-22(c)(2)

Third-Party

9

1

0

0

500

500

500

4,500

6

17Ad-22(c)(2)
(RNR)

Third-Party

1

1

0

0

500

500

500

500

IC

Name of
Information
Collection

2

Because the amendments add one respondent under Rule 17Ad-22(e), Rules 17Ad22(e)(4) and (7) would have eight, rather than seven, respondents.
Rules 17Ad-22(e)(4) and (7) include requirements for covered clearing agencies to have
policies and procedures reasonably designed to test and validate models related to measuring
financial risks. Based on its supervisory experience and discussions with industry participants,
the Commission expected that covered clearing agencies may choose to hire external consultants
for the purposes of performing ongoing model validation required under Rules 17Ad-22(e)(4)
and (e)(7). If each covered clearing agency chose to hire external consultants, the Commission
estimates that the ongoing cost associated with hiring such consultants is $322,080 per

43

respondent. 171 The total estimated burden associated with Rules 17Ad-22(e)(4) and (7) would
therefore be $ 2,576.64 per rule, 172 as reflected in the chart below. Only the bolded entries are
being modified by the new final rule. The other burdens in paragraph (e) are unchanged.
Table of Total Costs for Covered Clearing Agencies (costs in thousands of dollars)

Type of Burden

Number
of Entities
Impacted

Annual
Responses
Per Entity

Initial
Cost Per
Entity Per
Response

Initial Cost
Annualized
per Entity
Per
Response

Ongoing
Cost Per
Entity Per
Response

Annual
Cost Per
Entity Per
Response

Total
Annual
Cost Per
Entity

Total
Annual
Industry
Cost (in
thousands)

17Ad-22(e)(4)

Recordkeeping

6

1

0

0

322.08

322.08

322.08

1,932.48

15

17Ad-22(e)(4)(RNR)

Recordkeeping

2

1

0

0

322.08

322.08

322.08

644.16

20

17Ad-22(e)(7)

Recordkeeping

6

1

0

0

322.08

322.08

322.08

1,932.48

21

17Ad-22(e)(7)(RNR)

Recordkeeping

2

1

0

0

322.08

322.08

322.08

644.16

IC

Name of
Information
Collection

14

14. Cost to Federal Government
No cost to the federal government is anticipated.
15. Changes in Burden
As previously discussed, only the number of respondents for Rule 17Ad-22(e) has
changed. Specifically, in the 2020 Adopting Release, the Commission estimates that, under the
amendment to the definition of “covered clearing agency,” a majority of the requirements under
Rule 17Ad-22(e) would have eight (rather than seven) respondents, of which (i) seven (rather
than six) would be CCPs and one would be a CSD and (ii) three would be security-based swap
clearing agencies. In addition, Rule 17Ad-22(e)(6) now has seven (rather than six) respondents
because it applies to CCPs, Rule 17Ad-22(e)(11) continues to only have one respondent because
it applies to CSDs, and Rule 17Ad-22(e)(14) continues to have three respondents because it
applies to security-based swap clearing agencies.

This figure was calculated as follows: 2 Consultants for 40 hours per week at $671 per hour = $53,680 x 12
weeks = $644,160 per respondent ÷ 2 (Rules 17Ad-22(e)(4) and (e)(7)) = $322,080. The $671 per hour figure for a
consultant was calculated using www.payscale.com, modified by Commission staff to account for an 1800-hour
work-year and multiplied by 5.35 to account for bonuses, firm size, employee benefits, and overhead. For the
purposes of estimating a PRA cost on a per-rule basis, we have divided the total cost for Rules 17Ad-22(e)(4) and
(e)(7) evenly between the two rules.
171

This figure was calculated as follows: $322,080 annual cost per entity x 8 respondents = $2,576,640 total
industry cost.

172

44

Separately, also as previously discussed, for the number of respondents for Rules 17Ad22(b), (c), and (d) has not changed. 173 The Commission anticipates no other changes in burden
under Rule 17Ad-22 as a result of the amendments.

Summary of Changes in Hour Burdens
Name of Information
Collection

Annual Industry
Burden

Annual Industry
Burden Previously
Approved

Change in
Burden

Reason for Change

17Ad-22(e)(1) (RNR)

11.34

5.67

5.67

Respondents increased from 1 to 2

17Ad-22(e)(2) (RNR)

26.66

13.33

13.33

Respondents increased from 1 to 2

17Ad-22(e)(3) (RNR)

136

68

68

Respondents increased from 1 to 2

17Ad-22(e)(4) (RNR)

270

135

135

Respondents increased from 1 to 2

17Ad-22(e)(5) (RNR)

100

50

50

Respondents increased from 1 to 2

17Ad-22(e)(6) (RNR)

240

120

120

Respondents increased from 1 to 2

17Ad-22(e)(7) (RNR)

476

238

238

Respondents increased from 1 to 2

17Ad-22(e)(8) (RNR)

18

9

9

Respondents increased from 1 to 2

17Ad-22(e)(9) (RNR)

18

9

9

Respondents increased from 1 to 2

17Ad-22(e)(10) (RNR)

18

9

9

Respondents increased from 1 to 2

17Ad-22(e)(12) (RNR)

18

9

9

Respondents increased from 1 to 2

17Ad-22(e)(13) (RNR)

41.34

20.67

20.67

Respondents increased from 1 to 2

17Ad-22(e)(15) (RNR)

236

118

118

Respondents increased from 1 to 2

17Ad-22(e)(16) (RNR)

25.34

12.67

12.67

Respondents increased from 1 to 2

17Ad-22(e)(17) (RNR)

30.66

15.33

15.33

Respondents increased from 1 to 2

17Ad-22(e)(18) (RNR)

43.34

21.67

21.67

Respondents increased from 1 to 2

17Ad-22(e)(19) (RNR)

43.34

21.67

21.67

Respondents increased from 1 to 2

17Ad-22(e)(20) (RNR)

43.34

21.67

21.67

Respondents increased from 1 to 2

17Ad-22(e)(21) (RNR)

43.34

21.67

21.67

Respondents increased from 1 to 2

17Ad-22(e)(22) (RNR)

26

13

13

Respondents increased from 1 to 2

17Ad-22(e)(23) (RNR)

160

80

80

Respondents increased from 1 to 2

TOTAL CHANGE

173

174

1,012.35 174

See supra note 29 (explaining the remaining burdens for Rules 17Ad-22(b), (c), and (d)).

Due to rounding differences, the total change is shown in ROCIS as 1,009 hours.

45

Summary of Changes in Cost Burdens
Name of Information
Collection

Annual Industry
Burden

Annual Industry
Burden Previously
Approved

Change in
Burden (in
thousands)

Reason for Change

17Ad-22(e)(4) (RNR)

644.16

322.08

322.08

Respondents increased from 1 to 2

17Ad-22(e)(7) (RNR)

644.16

322.08

322.08

Respondents increased from 1 to 2

TOTAL CHANGE

644.16

16. Information Collection Planned for Statistical Purposes
This is not an information collection planned for statistical purposes.
17. OMB Expiration Date Display Approval
date.

The Commission is not seeking approval to not display the OMB approval expiration

18. Exceptions to Certification for Paperwork Reduction Act Submissions
This collection complies with the requirements in 5 CFR 1320.9.
B.

COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS
This collection of information does not involve statistical methods.

46