Core Principles & Other Requirements for DCMs

Forms and Documents

Document Name	Status
(2020) NPRM Supporting Statement 3038-0052 (07-15-2020).docx Supporting Statement A	2020-07-15

IC Document Collections

IC ID	Document Title	Status
29100	Part 38 - Designated Contract Markets	Modified
219525	System Safeguards Testing Requirements	Unchanged
209110	Enhancing Protections Afforded Customers and Customer Funds Held by Futures Commission Merchants and Derivatives Clearing Organizations	Unchanged

ICR Details

OMB Control No: 3038-0052	ICR Reference No: 202007-3038-001
Status: Historical Inactive	Previous ICR Reference No: 201906-3038-007
Agency/Subagency: CFTC	Agency Tracking No:
Title: Core Principles & Other Requirements for DCMs
Type of Information Collection: Revision of a currently approved collection	Common Form ICR:  No
Type of Review Request: Regular
OIRA Conclusion Action: Comment filed on proposed rule and continue	Conclusion Date: 09/17/2020
	Date Received in OIRA: 07/15/2020
Terms of Clearance: At the final rule stage, Appendix A of the supporting statement should include responses and burden hour estimates for all information collections under this control number, indicating what changes have been made as a result of the rulemaking. Also, Appendix A should include a summary table that shows the total of reporting and recordkeeping burdens being requested for each information collection under this OMB control number.

	Inventory as of this Action	Requested	Previously Approved
Expiration Date	08/31/2022	36 Months From Approved	08/31/2022
Responses	98	0	98
Time Burden (Hours)	6,853	0	6,853
Cost Burden (Dollars)	0	0	0

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Abstract: In January 2018, the Commission adopted regulation 9.11(b)(3)(ii) requiring a designated contract market (DCM) or swap execution facility (SEF) (collectively, “exchange”) to include two additional elements in the disciplinary or access denial notice action provided to the National Futures Association. First, an exchange must include the type of product (as applicable) involved in the adverse action. Requiring an exchange to provide this information in the disciplinary or access denial notice will provide the Commission, market participants, the public, and other exchanges with greater transparency concerning where market abuses originate and whether the abuses are concentrated among certain product types. Second, an exchange must indicate in its notice of disciplinary or access denial actions whether the violation underlying the notice resulted in financial harm to any customers. The Commission believes that the inclusion of customer harm is essential because it cannot effectively perform its regulatory and oversight functions without knowledge of those instances in which brokers violate their fiduciary duty to customers by taking advantage of customer orders and engaging in fraudulent activity. The Commission concluded that the additional burden for an exchange to add the two additional elements in the contents of the disciplinary or access denial notice is de minimis and will not change the burden hours for the collection. In addition, The Commission has recently amended its regulation 1.52 to revise the scope and potential frequency of a third-party expert’s evaluation of SROs’ financial surveillance programs. The evaluation report requirement is a portion of the existing information collection of requirements for SROs under Commission regulation 1.52, including Designated Contract Markets and the National Futures Association. The Commission is eliminating the requirement that the examinations expert must review the SRO’s ongoing application of its supervisory program during periodic reviews and the analysis of the supervisory program’s design to detect material weaknesses in internal controls during both periodic reviews and the initial review prior to the program’s initial use. The Commission also is revising the frequency of when an SRO must engage an examinations expert. The changes to the examinations expert reviews impact the resulting expert reports information collection burden. The information collection is necessary to enhance the ability of the Commission and the designated self-regulatory organization to identify problematic financial matters in time to avoid market disruptions when an FCM may fail, particularly with respect to the tie-up of customer funds that may result. (2020 NPRM) In Electronic Trading Risk Principles, the Commission seeks to update designated contract market (DCM) rules in response to the evolution from pit trading to electronic trading. The market disruption and integrity principles proposed in the NPRM are focused on electronic trading and routing by market participants and DCMs. The proposed collection would require designated contract markets (DCMs) to promptly notify Commission staff of a significant disruption to its electronic trading platform(s) and provide timely information on the cause and remediation. The notification requirement under proposed regulation 38.251(g) will assist the Commission’s oversight and its ability to monitor and assess market disruptions across all DCMs.

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Authorizing Statute(s): US Code: 7 USC 6, 6a, 6c, 6d, 6f, 6g, 6i, 6j Name of Law: CEA
   US Code: 7 USC 6k, 6l, 6m, 6n 6o 6p 6r 6s Name of Law: CEA
   US Code: 7 USC 7, 7a-s, 7b, 7b-1, 7b-3 Name of Law: CEA
   US Code: 7 USC 8, 9, 10a, 12, 12a, 12c, 15 Name of Law: CEA
   US Code: 7 USC 13a, 13a-1, 15, 16, 16a, 19 Name of Law: CEA
   US Code: 7 USC 21, 23, 24 Name of Law: CEA
   US Code: 7 USC 1a, 2 Name of Law: CEA
   US Code: 7 USC 7(d)(4), 7(d)(7), 7(d)(11) Name of Law: CEA
  

Citations for New Statutory Requirements: None

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Associated Rulemaking Information
RIN:	Stage of Rulemaking:	Federal Register Citation:	Date:
3038-AF04	Proposed rulemaking	85 FR 42761	07/15/2020

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Federal Register Notices & Comments

Did the Agency receive public comments on this ICR? No

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Number of Information Collection (IC) in this ICR: 3

IC Title	Form No.	Form Name
Enhancing Protections Afforded Customers and Customer Funds Held by Futures Commission Merchants and Derivatives Clearing Organizations
Part 38 - Designated Contract Markets
System Safeguards Testing Requirements

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Burden increases because of Program Change due to Agency Discretion: No

Burden Increase Due to:

Burden decreases because of Program Change due to Agency Discretion: Yes

Burden Reduction Due to: Changing Regulations

Short Statement: Burden hours will increase because proposed §38.251(g) will increase the reporting and disclosures that DCMs are currently obligated to make to the Commission under the part 38 regulations. The Commission expects the proposed notification requirement will assist in market oversight and the ability to monitor and assess market disruptions and system anomalies resulting from electronic trading across all DCMs.

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Annual Cost to Federal Government: $0

Does this IC contain surveys, censuses, or employ statistical methods? No

Does this ICR request any personally identifiable information (see OMB Circular No. A-130 for an explanation of this term)? Please consult with your agency's privacy program when making this determination.     No

Does this ICR include a form that requires a Privacy Act Statement (see 5 U.S.C. §552a(e)(3))? Please consult with your agency's privacy program when making this determination.     No

Is this ICR related to the Affordable Care Act [Pub. L. 111-148 & 111-152]? No

Is this ICR related to the Dodd-Frank Wall Street Reform and Consumer Protection Act, [Pub. L. 111-203]? Yes

Is this ICR related to the American Recovery and Reinvestment Act of 2009 (ARRA)? No

Is this ICR related to the Pandemic Response? No

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Common Form ICR:  No

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On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).

The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:

(a) It is necessary for the proper performance of agency functions;

(b) It avoids unnecessary duplication;

(c) It reduces burden on small entities;

(d) It uses plain, coherent, and unambiguous language that is understandable to respondents;

(e) Its implementation will be consistent and compatible with current reporting and recordkeeping practices;

(f) It indicates the retention periods for recordkeeping requirements;

(g) It informs respondents of the information called for under 5 CFR 1320.8 (b)(3) about:

(i) Why the information is being collected;

(ii) Use of information;

(iii) Burden estimate;

(iv) Nature of response (voluntary, required for a benefit, or mandatory);

(v) Nature and extent of confidentiality; and

(vi) Need to display currently valid OMB control number;

(h) It was developed by an office that has planned and allocated resources for the efficient and effective management and use of the information to be collected.

(i) It uses effective and efficient statistical survey methodology (if applicable); and

(j) It makes appropriate use of information technology.

If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.

Certification Date: 07/15/2020

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