3235-0695 Rule 17Ad-22 Supporting Statement (2023 Resilience and RWP Proposal)

SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission for
Rule 17Ad-22
OMB Control No. 3235-0695
Proposed Partial Revision
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
Current Regulatory Framework for Clearing Agencies
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

1

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”).
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. 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. 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.

5

See 15 U.S.C. 78q-1(b)(3)(A)–(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 regarding the requirements of Section 17A. See Exchange Act

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. Further, Section 17A of the Exchange Act 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
Commission with authority to initiate and conduct investigations to determine if there have been

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).

7

Upon registration, registered clearing agencies are SROs under Section 3(a)(26) of the Exchange Act. See
15 U.S.C. 78c(a)(26).
8

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.
9

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).
10

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

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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,
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

11

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

12

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

13

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).
14

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. See 12 U.S.C. 5464(b).
15

See 12 U.S.C. 5462(6).

16

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). The
following registered clearing agencies have been designated as systemically important by the FSOC: 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
(“OCC”).

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(“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
the existing framework by establishing enhanced requirements for registered clearing agencies
that meet the definition of a “covered clearing agency.”24 In 2020, the Commission adopted
amendments to 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

17

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. 67286 (June 28,
2012), 77 FR 41602 (July 13, 2012).
18

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

19

See 12 U.S.C. 5466.

20

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).
21

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

22

See 17 CFR 240.17Ad-22; see also 2012 Adopting Release, supra note 3, at 66225–26.

23

See 2012 Adopting Release, supra note 3, at 66225–26.

24

See Standards for Covered Clearing Agencies, Exchange Act Release No. 78961 (Sept. 28, 2016), 81 FR
70786 (Oct. 13, 2016) (“2016 Adopting Release”).
25

See Definition of Covered Clearing Agency, Exchange Act Release No. 88616 (April 9, 2020), 85 FR
28853 (May 14, 2020) (“2020 Adopting Release”).

4

There are a number of collections of information contained in Rules 17Ad-22(b), (c), (d),
and (e). The information collected in these provisions is necessary to carry out the mandates of
the Exchange Act, as amended by the Dodd-Frank Act, as well as the Clearing Supervision Act.
2022 Proposed Amendments
This Proposed Partial Revision of OMB Control No. 3235-0695 proposes to add two
new information collections arising out of the Commission’s May 2023 proposal to amend
Rule 17Ad-22(e)(6).26 The proposed new information collections are titled “IC 53 – 17Ad22(e)(6).” The Proposed Partial Revision would not change any of the other information
collections in this control number.
First, the Commission proposes to amend 17 CFR 240.17Ad-22(e)(6)(ii) (“Rule 17Ad22(e)(6)(ii)”). The proposal would build upon and strengthen the existing requirement that a
covered clearing agency have policies and procedures reasonably designed to cover its credit
exposures to its participants by establishing a risk-based margin system that, among other things,
includes the authority and operational capacity to make intraday margin calls in defined
circumstances. Specifically, the proposed amendments to this rule would require that the covered
clearing agency have policies and procedures to establish a risk-based margin system that
includes the authority and operational capacity to monitor intraday exposure on an ongoing basis
and to make intraday margin calls as frequently as circumstances warrant, including when risk
thresholds specified by the covered clearing agency are breached or when the products cleared or
markets served display elevated volatility.27
Second, the proposal would amend and expand the requirements of 17 CFR 240.17Ad22(e)(6)(iv) (“Rule 17Ad-22(e)(6)(iv)”) to provide that a covered clearing agency have policies
and procedures that would apply in the event that the covered clearing agency relies on
substantive inputs from third parties to calculate margin using a risk-based margin system and,
specifically, when such inputs are not readily available or reliable. This proposal would require
that the procedures used in such circumstances must include substantive inputs from an alternate
source or, if it does not use an alternate source, the use of an alternate risk-based margin system
that does not similarly rely on the unavailable or unreliable substantive inputs.28
The proposed changes would amend the existing information collections under Rule
17Ad-22(e).
The statutory basis for Rule 17Ad-22 is as follows: Exchange Act Section 3C, 15 U.S.C.
78c-3; Exchange Act Section 17A; 15 U.S.C. 78q-1; and Section 805 of the Clearing Supervision
Act, 12 U.S.C. 5464(a)(2).
2. Purpose and Use of Information Collection

26

See Covered Clearing Agency Resilience and Recovery and Wind-Down Plans, Exchange Act Release No.
97516 (May 17, 2023), 88 FR 34708 (May 30, 2023) (“2023 Proposing Release”).
27

See id., 88 FR at 34709.

28

See id.

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i.

Measurement and Management of Credit Exposures

Rule 17Ad-22(b)(1) requires a registered clearing agency that performs CCP services to
establish, implement, maintain, and enforce written policies and procedures reasonably designed
to measure its credit exposures to its participants at least once each day and limit its exposures to
potential losses from defaults by its participants in normal market conditions so that the
operations of the clearing agency would not be disrupted and non-defaulting participants would
not be exposed to losses that they cannot anticipate or control. The purpose of the collection of
information is to enable the registered clearing agency to monitor and limit its exposures to its
participants.
ii.

Margin Requirements

Rule 17Ad-22(b)(2) requires a registered clearing agency that performs CCP services to
establish, implement, maintain, and enforce written policies and procedures reasonably designed
to: (i) use margin requirements to limit its credit exposures to participants in normal market
conditions; (ii) use risk-based models and parameters to set margin requirements; and (iii) review
the models and parameters at least monthly. The purpose of the collection of information is to
enable the clearing agency to maintain sufficient collateral or margin.
iii.

Financial Resources

Rule 17Ad-22(b)(3) requires a registered clearing agency that performs CCP services to
establish, implement, maintain, and enforce written policies and procedures reasonably designed
to maintain sufficient financial resources to withstand, at a minimum, a default by the participant
family to which it has the largest exposure in extreme but plausible market conditions, provided
that a registered clearing agency acting as a central counterparty for security-based swaps shall
maintain additional financial resources sufficient to withstand, at a minimum, a default by the
two participant families to which it has the largest exposures in extreme but plausible market
conditions, in its capacity as a central counterparty for security-based swaps. The purpose of the
collection of information is to enable the clearing agency to satisfy all of its settlement
obligations in the event of a participant default.
iv.

Model Valuation

Rule 17Ad-22(b)(4) requires a registered clearing agency that performs CCP services to
establish, implement, maintain, and enforce written policies and procedures reasonably designed
to provide for an annual model validation consisting of evaluating the performance of the
clearing agency’s margin models and the related parameters and assumptions associated with
such models by a qualified person who is free from influence from the persons responsible for
the development or operation of the models being validated. The purpose of the collection of
information is to enable the clearing agency to obtain an assessment of its margin model by a
qualified, independent person.
v.

Non-Dealer Access

Rule 17Ad-22(b)(5) requires a registered clearing agency that performs CCP services to
establish, implement, maintain, and enforce written policies and procedures reasonably designed
to provide the opportunity for a person that does not perform any dealer or security-based swap
dealer services to obtain membership at the clearing agency to clear securities for itself or on

6

behalf of other persons. The purpose of the collection of information is to enable more market
participants to obtain indirect access to clearing agencies.
vi.

Portfolio Size and Transaction Volume Restrictions

Rule 17Ad-22(b)(6) requires a registered clearing agency that performs CCP services to
establish, implement, maintain, and enforce written policies and procedures reasonably designed
to have membership standards that do not require that participants maintain a portfolio of any
minimum size or that participants maintain a minimum transaction volume. The purpose of the
collection of information is to remove unnecessary barriers to participation in clearing agencies
that perform CCP services.
vii.

Net Capital Restrictions

Rule 17Ad-22(b)(7) requires a registered clearing agency that performs CCP services to
establish, implement, maintain, and enforce written policies and procedures reasonably designed
to provide a person that maintains net capital equal to or greater than $50 million with the ability
to obtain membership at the clearing agency, provided that such persons are able to comply with
other reasonable membership standards, with any net capital requirements being scalable so that
they are proportional to the risks posed by the participant’s activities to the clearing agency. The
rule also permits a clearing agency to provide for a higher net capital requirement (i.e., higher
than $50 million) as a condition for membership at the clearing agency if the clearing agency
demonstrates to the Commission that such a requirement is necessary to mitigate risks that could
not otherwise be effectively managed by other measures, such as scalable limitations on the
transactions that the participants may clear through the clearing agency, and the Commission
approves the higher net capital requirement as part of a rule filing or clearing agency registration
application. The purpose of the collection of information is to remove unnecessary barriers to
clearing access by market participants with a net capital level above $50 million, while at the
same time facilitating sound risk management practices by clearing agencies by encouraging
them to examine and articulate the benefits that higher net capital requirements would create
through having clearing agencies develop scalable membership standards that links the activities
any participants could potentially engage in with the potential risks posed by the participant.
viii.

Record of Financial Resources

Rule 17Ad-22(c)(1) requires that each fiscal quarter (based on calculations made as of the
last business day of the clearing agency’s fiscal quarter), or at any time upon Commission
request, a registered clearing agency that performs CCP services shall calculate and maintain a
record of the financial and qualifying liquid resources necessary to meet the requirements, as
applicable, in Rules 17Ad-22(b)(3), (e)(4), and (e)(7), and sufficient documentation to explain
the methodology it uses to compute such financial resource requirement. The purpose of the
collection of information is to enable the Commission to monitor the financial resources of
clearing agencies that perform CCP services.
ix.

Annual Audited Financial Statements

Rule 17Ad-22(c)(2) requires a registered clearing agency to post on its website an annual
audited financial statement that must (i) be a complete set of financial statements of the clearing
agency for the most recent two fiscal years of the clearing agency and be prepared in accordance
with U.S. generally accepted accounting principles (“U.S. GAAP”), except that for a clearing
7

agency that is a corporation or other organization incorporated or organized under the laws of
any foreign country, the financial statements may be prepared according to U.S. GAAP or
International Financial Reporting Standards as issued by the International Accounting Standards
Board (“IFRS”); (ii) be audited in accordance with standards of the Public Company Accounting
Oversight Board by a registered public accounting firm that is qualified and independent in
accordance with Rule 2-01 of Regulation S-X (17 CFR 210.2-01); and (iii) include a report of
the registered public accounting firm that complies with paragraphs (a)–(d) of Rule 2-02 of
Regulation S-X (17 CFR 210.2-02). The purpose of the collection of information is to enable the
Commission to monitor the financial resources of clearing agencies that perform CCP services.
x.

Transparent and Enforceable Rules and Procedures

Rule 17Ad-22(d)(1) requires a registered clearing agency that is not a covered clearing
agency to establish, implement, maintain, and enforce written policies and procedures reasonably
designed to provide for a well-founded, transparent, and enforceable legal framework for each
aspect of its activities in all relevant jurisdictions. The purpose of the collection of information is
to help ensure that a clearing agency’s 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.
xi.

Participation Requirements

Rule 17Ad-22(d)(2) requires a registered clearing agency that is not a covered clearing
agency to 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. The purpose of the
collection of information is to enable clearing agencies to ensure that only persons with sufficient
financial and operational capacity are direct participants.
Rule 17Ad-22(d)(2) also requires a registered clearing agency that is not a covered
clearing agency to establish, implement, maintain, and enforce written policies and procedures
reasonably designed to have procedures in place to monitor that participation requirements are
met on an ongoing basis. The purpose of the collection of information is to help clearing
agencies identify a participant experiencing financial difficulties before the participant fails to
meet its settlement obligations.
Rule 17Ad-22(d)(2) also requires a registered clearing agency that is not a covered
clearing agency to establish, implement, maintain, and enforce written policies and procedures
reasonably designed to have participation requirements that are objective, publicly disclosed, and
permit fair and open access. The purpose of the collection of information is to ensure that all
qualified persons can access a clearing agency’s services on an equivalent basis.
xii.

Custody of Assets and Investment Risk

Rule 17Ad-22(d)(3) requires a registered clearing agency that is not a covered clearing
agency to establish, implement, maintain, and enforce written policies and procedures reasonably
designed to hold assets in a manner that minimizes risk of loss or delay in access to them, and to
invest assets in instruments with minimal credit, market, and liquidity risks. The purpose of the
collection of information is to enable clearing agencies to access their financial resources quickly
so that they settle securities transactions on time and at the agreed upon terms.
8

xiii.

Identification and Mitigation of Operational Risk

Rule 17Ad-22(d)(4) requires a registered clearing agency that is not a covered clearing
agency to establish, implement, maintain, and enforce written policies and procedures reasonably
designed to identify sources of operational risk and minimize them through the development of
appropriate systems, controls, and procedures; implement systems that are reliable, resilient and
secure, and have adequate, scalable capacity; and have business continuity plans that allow for
timely recovery of operations and fulfillment of a clearing agency’s obligations. The purpose of
the collection of information is to ensure that clearing agencies can maintain operations in the
event of an operational problem, natural disaster or other similar event.
xiv.

Money Settlements Risks

Rule 17Ad-22(d)(5) requires a registered clearing agency that is not a covered clearing
agency to establish, implement, maintain, and enforce written policies and procedures reasonably
designed to employ money settlement arrangements that eliminate or strictly limit the clearing
agency’s settlement bank risks, that is, its credit and liquidity risks from the use of banks to
effect money settlements with its participants, and require funds transfers to the clearing agency
to be final when effected. The purpose of the collection of information is to promote reliability in
a clearing agency's settlement operations.
xv.

Cost-Effectiveness

Rule 17Ad-22(d)(6) requires a registered clearing agency that is not a covered clearing
agency to establish, implement, maintain, and enforce written policies and procedures reasonably
designed to be cost-effective in meeting the requirements of participants while maintaining safe
and secure operations. The purpose of the collection of information is to help ensure that the
services of clearing agencies do not become too expensive.
xvi.

Links

Rule 17Ad-22(d)(7) requires a registered clearing agency that is not a covered clearing
agency to establish, implement, maintain, and enforce written policies and procedures reasonably
designed to evaluate the potential sources of risks that can arise when the clearing agency
establishes links either cross-border or domestically to clear trades, and ensure that the risks are
managed prudently on an ongoing basis. The purpose of the collection of information is to help
ensure that clearing agencies adequately assess the risks associated with establishing a link with
another clearing organization.
xvii.

Governance

Rule 17Ad-22(d)(8) requires a registered clearing agency that is not a covered clearing
agency to establish, implement, maintain, and enforce written policies and procedures reasonably
designed to have governance arrangements that are clear and transparent to fulfill the public
interest requirements in Section 17A of the Exchange Act applicable to clearing agencies; to
support the objectives of owners and participants; and to promote the effectiveness of the
clearing agency’s risk management procedures. The purpose of the collection of information is to
promote boards of directors that exercise sufficient oversight of the clearing agency’s
management and appropriately represent the interests of relevant stakeholders.
xviii. Information on Services
9

Rule 17Ad-22(d)(9) requires a registered clearing agency that is not a covered clearing
agency to establish, implement, maintain, and enforce written policies and procedures reasonably
designed to provide market participants with sufficient information for them to identify and
evaluate the risks and costs associated with using their services. The purpose of the collection of
information is to help market participants identify the risks and costs associated with using the
clearing agency and would allow market participants to make informed decisions about the use
of the clearing agency and take appropriate actions to mitigate their risks and costs associated
with the use of the clearing agency.
xix.

Immobilization and Dematerialization of Stock Certificates

Rule 17Ad-22(d)(10) requires a registered clearing agency that is not a covered clearing
agency that perform central securities depository services to establish, implement, maintain, and
enforce written policies and procedures reasonably designed to immobilize or dematerialize
securities certificates and transfer them by book entry to the greatest extent possible. The
purpose of the collection of information is to enable clearing agencies to promote greater
efficiency in the settlement of securities transactions and reduce risk by transferring securities by
book entry movements.
xx.

Default Procedures

Rule 17Ad-22(d)(11) requires a registered clearing agency that is not a covered clearing
agency to establish, implement, maintain, and enforce written policies and procedures reasonably
designed to make key aspects of its default procedures publicly available and to establish default
procedures that ensure that the clearing agency can take timely action to contain losses and
liquidity pressures and to continue meeting its obligations in the event of a participant default.
The purpose of the collection of information is to foster a greater understanding by market
participants of possible steps a clearing agency may take when a participant defaults and possibly
reduce the likelihood of market participants taking actions based on incorrect information.
xxi.

Timing of Settlement Finality

Rule 17Ad-22(d)(12) requires a registered clearing agency that is not a covered clearing
agency to establish, implement, maintain, and enforce written policies and procedures reasonably
designed to ensure that final settlement occurs no later than the end of the settlement day and
require that intraday or real-time finality be provided where necessary to reduce risks. The
purpose of the collection of information is to promote consistent standards of timing and
reliability in the settlement process.
xxii.

Delivery Versus Payment

Rule 17Ad-22(d)(13) requires a registered clearing agency that is not a covered clearing
agency to establish, implement, maintain, and enforce written policies and procedures reasonably
designed to eliminate principal risk by linking securities transfers to funds transfers in a way that
achieves delivery versus payment. The purpose of the collection of information is to eliminate
principal risk in the transfer of securities and funds.
xxiii. Risk Controls to Address Participants’ Failure to Settle
Rule 17Ad-22(d)(14) requires a registered clearing agency that is not a covered clearing
agency that performs central securities depository services and extends intraday credit to
10

participants to establish, implement, maintain, and enforce written policies and procedures
reasonably designed to institute risk controls, including collateral requirements and limits to
cover the clearing agency’s credit exposure to each participant fully, and ensure timely
settlement in the event that the participant with the largest payment obligation is unable to settle.
The purpose of the collection of information is to enable clearing agencies to satisfy their
settlement obligations on time and for the agreed upon terms.
xxiv. Identification and Management of Physical Delivery Risks
Rule 17Ad-22(d)(15) requires a registered clearing agency that is not a covered clearing
agency to establish, implement, maintain, and enforce written policies and procedures reasonably
designed to state to their participants the clearing agency’s obligations with respect to physical
deliveries and to identify and manage the risks that arise in connection with these obligations.
The purpose of the collection of information is to provide the clearing agency’s participants with
sufficient information to evaluate the risks and costs associated with participation in the clearing
agency.
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

Rule 17Ad-22(e)(2)(i)–(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
11

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
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

12

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)–(iii), as
applicable. Rule 17Ad-22(e)(4)(v) requires a covered clearing agency to establish, implement,
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)–(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)–(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
13

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
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 17Ad22(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 17Ad22(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
14

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.
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.
2022Proposed Rulemaking

15

As proposed to be amended, Rule 17Ad-22(e)(22)(6) would add additional requirements
to covered clearing agencies that perform central counterparty (“CCP”) services.29 First, the
proposed amendment to Rule 17Ad-22(e)(6)(ii) would require that a covered clearing agency
have policies and procedures to establish a risk-based margin system that includes the authority
and operational capacity to monitor intraday exposure on an ongoing basis and to make intraday
margin calls as frequently as circumstances warrant, including when risk thresholds specified by
the covered clearing agency are breached or when the products cleared or markets served display
elevated volatility. The purpose of this collection of information is to enable a covered clearing
agency to have the authority and operational capacity to monitor intraday exposures on an
ongoing basis and to collect intraday margin in certain specified circumstances.
Second, the proposed amendment to Rule 17Ad-22(e)(6)(iv) would amend and expand
the requirement of a covered clearing agency to have policies and procedures that would apply in
the event that the covered clearing agency relies on substantive inputs from third parties to
calculate margin using a risk-based margin system and, specifically, when such inputs are not
readily available or reliable. This proposal would require that the procedures used in such
circumstances must include substantive inputs from an alternate source or, if it does not use an
alternate source, the use of an alternate risk-based margin system that does not similarly rely on
the unavailable or unreliable substantive inputs. The purpose of this collection of information is
to ensure that a covered clearing agency can continue to meet its requirements under Rule 17Ad22(e)(6)(iv) when specific substantive inputs to the margin system used by the covered clearing
agency are not readily available or reliable.
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
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

29

See 2023 Proposing Release, supra note 26.

16

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)–(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
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.

17

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
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

18

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
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

19

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

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
20

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,
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,

21

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
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

22

each applicable standard set forth in Rules 17Ad-22(e)(1)–(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 a general matter, the collections of information contemplated by Rule 17Ad-22
depend 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. The Commission is not aware of any technical or legal obstacles to reducing the
burdens through the use of improved information technology.
4. Duplication
The collections of information contained in Rule 17Ad-22 do 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 proposed Rule 17Ad25, a small entity includes, when used with reference to a clearing agency, a clearing agency that
(i) 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.30
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. Accordingly, Rule 17Ad-22 does not affect any small entities.

30

See 17 CFR 240.0-10(d).

23

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.
2022 Proposed Rulemaking
With respect to the proposed amendments, the Commission believes that the changes
proposed to Rule 17Ad-22(e)(6)(ii) should ensure that the covered clearing agency develops
policies and procedures to determine when it considers volatility to be elevated above typical
levels, and potentially necessitating the collection of additional margin, in a manner specific to
the products cleared and markets served; should ensure that the covered clearing agency
considers ex ante the degree of exposure that necessitates additional margin to take into account
new cleared positions and current market prices, in a manner specific to the products cleared and
market served; could improve participants’ ability to understand when they may be subject to
additional margin calls and, therefore, to be able to prepare accordingly to provide additional
financial resources in anticipation of additional margin calls; and would make clear to
participants when they may be subject to additional margin calls and recognizes that intraday
exposures may occur more frequently in volatile markets.
The Commission believes that the changes proposed to Rule 17Ad-22(e)(6)(iv) should
help ensure that the covered clearing agency can continue to calculate and collect margin
commensurate with, the risks and particular attributes of each relevant product, portfolio, and
market, as required under Rule 17Ad22(e)(6)(i), in such circumstances where substantive inputs
from third parties are not available or reliable.
If these changes were not made, then these identified benefits likely would not accrue.
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 the Agency
The Commission has issued a proposing release soliciting comments on the proposed
amendment’s requirements and associated paperwork burdens.31 Comments on Commission
releases are generally received from industry groups, 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 will be posted on the Commissions public
website and made available through www.sec.gov/rules/proposed.shtml. The Commission will

31

See 2023 Proposing Release, supra note 26.

24

consider all comments received prior to publishing the final rule and explain in any adopting
release how the final rule responds to such comments, in accordance with 5 C.F.R. 1320.11(f).
9. Payment or Gift
No payment or gift will be provided to any respondents.
10. Confidentiality
Although none of the information collections in Rule 17Ad-22 require disclosure of
information to the Commission, the Commission may request that certain records be provided,
such as during the investigation or examination of a respondent. When the Commission requests
that records be provided, a respondent can request confidential treatment for the records pursuant
to Section 24(b) of the Exchange Act and Rule 24b-2 thereunder.32
The following information collections in Rule 17Ad-22 are subject to public availability:
i.

The collection of information relating to the requirement under Rule 17Ad22(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;

ii.

The collection of information relating to the requirement under Rule 17Ad22(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;

iii.

The collection of information relating to the requirement under Rule 17Ad22(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

iv.

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
The information collection does not collect information about individuals. The agency
has determined that the information collection does not require a PIA, SORN, or PAS.
12. Information Collection Burden
i.

32

Number of Respondents

See 17 CFR 240.24b-2.

25

The Commission staff estimates that Rules 17Ad-22(b) and (c)(1) have nine respondents
because these rules apply only to registered clearing agencies that perform CCP services.33 The
Commission staff also estimates that Rule 17Ad-22(c)(2) has ten respondents because it applies
to all registered clearing agencies. These estimates appear in the PRA analysis that was
submitted in connection with the 2020 Adopting Release and remain unchanged. Since the
submission of the PRA analysis in the 2020 Adopting Release, one respondent clearing agency
that was subject to Rule 17Ad-22(d) became subject to Rule 17Ad-22(e) under the amended
definition of “covered clearing agency.”34 As such, the Commission staff estimates that Rule
17Ad-22(d) now has two (rather than three) respondents because while the rule applies to all
types of registered clearing agencies, it does not apply to covered clearing agencies.
Consistent with the PRA analysis submitted in connection with the 2020 Adopting
Release, the Commission staff continues to estimate that the majority of the requirements under
Rule 17Ad-22(e) would have eight respondents, of which (i) seven would be CCPs and one
would be a CSD, and (ii) three would be security-based swap clearing agencies. The
Commission staff also continues to estimate that Rule 17Ad-22(e)(6) would have seven
respondents because it applies to CCPs, Rule 17Ad-22(e)(11) would have only one respondent
because it applies to CSDs, and Rule 17Ad-22(e)(14) would have three respondents because it
applies to security-based swap clearing agencies.
While the Commission staff’s estimates regarding the number of respondents subject to
the provisions of Rule 17Ad-22(e) remain unchanged from the Commission’s estimates in the
2020 Adopting Release, the Commission staff’s estimates for Rules 17Ad-22(e)(1)–(5), (e)(7)–
(10), (e)(12)–(13), and (e)(15)–(23) now includes seven (rather than six) respondents that are
already registered with the Commission and are covered clearing agencies. Similarly, the
Commission staff’s estimate for Rule 17Ad-22(e)(6) now includes six (rather than five)
respondents that are already registered with the Commission and are covered clearing agencies
that provide CCP services. Lastly, the Commission staff’s estimate for Rule 17Ad-22(e)(14) now
includes three (rather than two) respondents that are already registered with the Commission and
are covered clearing agencies that provide CCP services for security-based swaps.
2022 Proposed Rulemaking
The proposed amendments to Rule 17Ad-22(e)(6) apply to covered clearing agencies that
provide CCP services. Currently, there are six such covered clearing agencies. The Commission
anticipates that one additional entity may seek to register as a clearing agency to provide CCP

33

This estimate includes the possibility that two dormant registered clearing agencies—the Stock Clearing
Corporation of Philadelphia (“SCCP”) and the Boston Stock Exchange Clearing Corporation (“BSECC”)—would
resume operations in the future and would remain subject to the requirements in Rules 17Ad-22(b)–(d). The
Commission staff also estimates that one additional entity may register as a clearing agency to perform CCP
services.
34

The PRA analysis submitted in connection with the 2020 Adopting Release estimated that three respondent
clearing agencies would be subject to the PRA burdens associated with Rule 17Ad-22(d). In the 2020 Adopting
Release, the Commission noted that the one additional respondent clearing agency subject to Rule 17Ad-22(e) under
the amended definition of “covered clearing agency” was a registered clearing agency subject to Rule 17Ad-22(d).
Accordingly, with the adoption of the amendments to Rule 17Ad-22(e), the Commission staff believes that only two
respondent clearing agencies will remain subject to the PRA burdens associated with Rule 17Ad-22(d).

26

services in the next three years, and so for purposes of this proposal the Commission has
assumed seven respondents.
ii.

Source of Estimates, Annual Hour Burden, and Explanation of Estimates

The total estimated annual hour burden associated with Rule 17Ad-22 is 9,428 hours
calculated as described below:
Requirements in Rules 17Ad-22(b)(1)–(3) that Impose a PRA Burden
Rules 17Ad-22(b)(1)–(3) impose a recordkeeping PRA burden and apply to nine
respondent clearing agencies that perform CCP services. The Commission staff estimates that the
rules require one response per entity annually. The estimate of nine respondents includes eight
clearing agencies that are already registered to provide CCP services and are subject to Rules
17Ad-22(b)(1)–(3), and the Commission staff estimates that one additional entity could register
as a clearing agency that provides CCP services and become subject to these rules during the
three-year period covered by the prospective PRA extension.
At the time Rules 17Ad-22(b)(1)–(3) were adopted, respondent clearing agencies already
had written policies and procedures meeting the standards set forth in those rules as part of their
usual and customary business practice. However, the Commission estimated that these registered
clearing agencies would incur a one-time incremental burden associated with reviewing existing
policies and procedures for compliance and updating existing policies and procedures. Based on
the Commission staff’s experience reviewing the policies and procedures of the currently
registered CCPs, the staff believes that each respondent that is currently registered as a clearing
agency has already incurred such a burden, and therefore will not incur an initial burden during
the period covered by the prospective PRA extension. The Commission staff estimates that one
additional entity may seek to register as a clearing agency that provides CCP services during the
period covered by the prospective PRA extension. If such an entity does in fact register, the
Commission staff believes that such entity would also already have established policies and
procedures that comply with these rules before becoming registered and subject to the rule
requirements. Accordingly, the Commission staff estimates that Rules 17Ad-22(b)(1)–(3) would
not impose an initial burden on such respondent. However, all nine of the respondent clearing
agencies will incur ongoing burdens associated with reviewing existing policies and procedures
for compliance and updating existing policies and procedures where appropriate.
Based on the Commission staff’s experience reviewing changes to policies and
procedures submitted to the Commission by respondent clearing agencies, the Commission staff
estimates that Rules 17Ad-22(b)(1)–(3) impose on each respondent an ongoing burden of 10
hours per year.35 Therefore, the total estimated industry burden associated with Rules 17Ad22(b)(1)–(3) is 90 hours per year.36

35

This figure was calculated as follows: Compliance Attorney for 10 hours x 1 annual response per
respondent = 10 annual ongoing burden hours per respondent.
36

This figure was calculated as follows: 10 hours per year x 9 respondent clearing agencies = 90 hours per

year.

27

Assuming an average hourly rate of $424 for a Compliance Attorney,37 the Commission
staff estimates that each respondent clearing agency would incur an annual internal compliance
cost of
approximately $4,240 for the ongoing hourly burden imposed by Rules 17Ad-22(b)(1)–(3).38
Requirements in Rule 17Ad-22(b)(4) that Impose a PRA Burden
Rule 17Ad-22(b)(4) imposes a recordkeeping PRA burden and applies to nine respondent
clearing agencies that perform CCP services. The Commission staff estimates that the rule
requires one response per respondent annually. The estimate of nine respondents includes eight
clearing agencies that are already registered to provide CCP services and are subject to Rule
17Ad-22(b)(4). The Commission staff believes that these eight respondents have already
established and implemented policies and procedures in order to comply with the rule. As such,
the Commission staff believes that the rule will not impose any initial PRA burdens on these
respondents. The Commission staff estimates that one additional entity could register with the
Commission as a clearing agency that provides CCP services and, as such, become subject to the
requirements under Rule 17Ad-22(b)(4). If such an entity does in fact register, the Commission
staff believes that such entity would also already have established policies and procedures that
comply with the requirements under Rule 17Ad-22(b)(4) before becoming registered and subject
to the rule requirements. Accordingly, the Commission staff estimates that Rule 17Ad-22(b)(4)
would not impose an initial burden on such respondent.
Based on the Commission staff’s experience reviewing changes to policies and
procedures submitted to the Commission by respondent clearing agencies, the Commission staff
estimates that Rule 17Ad-22(b)(4) imposes on each respondent an ongoing burden of 60 hours
per year.39 Therefore, the total estimated industry burden associated with Rule 17Ad22(b)(4) is 540 hours per year.40
Assuming an average hourly rate of $424 for a Compliance Attorney,41 the Commission
staff estimates that each respondent clearing agency would incur an annual internal compliance
cost of approximately $25,440 for the ongoing hourly burden imposed by Rule 17Ad-22(b)(4).42

The per hour cost is from SIFMA’s Management and Professional Earnings in the Securities Industry 2013,
modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
37

38

This figure was calculated as follows: $424 per hour x 10 hours = $4,240.

39

This figure was calculated as follows: Compliance Attorney for 60 hours x 1 annual response per
respondent = 60 annual ongoing burden hours per respondent.
40

This figure was calculated as follows: 60 hours per year x 9 respondent clearing agencies = 540 hours per

year.
The per hour cost is from SIFMA’s Management and Professional Earnings in the Securities Industry 2013,
modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
41

42

This figure was calculated as follows: $424 per hour x 60 hours = $25,440.

28

Requirements in Rule 17Ad-22(b)(5)–(7) that Impose a PRA Burden
Rules 17Ad-22(b)(5)–(7) impose a recordkeeping PRA burden and apply to nine
respondent clearing agencies that perform CCP services. The Commission staff estimates that the
rules require one response per respondent annually. The Commission staff believes that CCPs are
more likely to implement the changes to policies and procedures required by Rules 17Ad22(b)(5)–(7) in an integrated, not piecemeal, review and drafting process. Therefore, the PRA
burden estimates do not account for each rule as a separate burden. The estimate of nine
respondents includes eight clearing agencies that are already registered to provide CCP services
and are subject to Rules 17Ad-22(b)(5)–(7), and the Commission staff estimates that one
additional entity could register as a clearing agency that provides CCP services and become
subject to these rules during the three-year period covered by the prospective PRA extension.
The Commission staff believes that the respondent clearing agencies that are subject to Rules
17Ad-22(b)(5)–(7) have already adopted policies and procedures in order to comply with the
rules. As such, the Commission staff believes that the rules will not impose any initial PRA
burdens on the respondent clearing agencies. These respondent clearing agencies will, however,
incur incremental burdens associated with reviewing existing policies and procedures for
compliance and updating existing policies and procedures where appropriate.
Based on the Commission staff’s experience reviewing changes to relevant policies and
procedures submitted to the Commission by respondent clearing agencies, the Commission staff
estimates that Rules 17Ad-22(b)(5)–(7) impose on each respondent an ongoing burden of 60
hours per year.43 Therefore, the total estimated industry burden associated with Rules 17Ad22(b)(5)–(7) is 540 hours per year.44
Assuming an average hourly rate of $424 for a Compliance Attorney,45 the Commission
staff estimates that each respondent clearing agency would incur an annual internal compliance
cost of approximately $25,440 for the ongoing hourly burden imposed by Rules 17Ad-22(b)(5)–
(7).46
Requirements in Rule 17Ad-22(c)(1) that Impose a PRA Burden
Rule 17Ad-22(c)(1) imposes a recordkeeping PRA burden and applies to nine respondent
clearing agencies that perform CCP services. The Commission staff estimates that the rule
requires four responses per respondent annually. The estimate of nine respondents includes eight
clearing agencies that are already registered to provide CCP services and are subject to Rules
17Ad-22(b)(5)–(7), and the Commission staff estimates that one additional entity could register
as a clearing agency that provides CCP services and become subject to these rules during the

43

This figure was calculated as follows: Compliance Attorney for 60 hours x 1 annual response per
respondent = 60 annual ongoing burden hours per respondent.
44

This figure was calculated as follows: 60 hours per year x 9 respondent clearing agencies = 540 hours per

year.
The per hour cost is from SIFMA’s Management and Professional Earnings in the Securities Industry 2013,
modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
45

46

This figure was calculated as follows: $424 per hour x 60 hours = $25,440.

29

three-year period covered by the prospective PRA extension. The Commission staff estimates
that the rule will not impose any initial PRA burdens on the respondent clearing agencies.
Accordingly, the Commission staff estimates that Rule 17Ad-22(c)(1) imposes on each
respondent an ongoing burden of 12 hours per year (including the first year), or 3 hours per
response.47 Therefore, the total estimated industry burden associated with Rule 17Ad22(c)(1) is 108 hours per year.48
Assuming an average hourly rate of $424 for a Compliance Attorney and $511 for a
Computer Operations Department Manager,49 the Commission staff estimates that each
respondent clearing agency would incur an annual internal compliance cost of approximately
$5,784 for the ongoing hourly burden imposed by Rule 17Ad-22(c)(1).50
Requirements in Rule 17Ad-22(c)(2) that Impose a PRA Burden
Rule 17Ad-22(c)(2) imposes a third-party reporting PRA burden and applies to all
registered clearing agencies, a total of ten respondents. The Commission staff estimates that the
rule requires one response per respondent annually.
The 2012 Adopting Release stated that the Commission expected that the exact burden of
collecting information relating to administering policies and procedures for facilitating an annual
audited financial statement of the respondent clearing agency and posting that annual audited
financial statement to the clearing agency’s website would vary depending on how frequently
each respondent clearing agency may need to update its financial statements. The Commission
also estimated that, based on its experience with entities of similar size to the respondents, the
initial burden of generating annual audited financial statements would generally require on
average 500 hours per respondent clearing agency.51 However, as most registered clearing
agencies were already implementing this requirement as part of their usual and customary
practices, the Commission estimated that the rule, as an initial burden, would only affect a total
of four entities—three potential new entrants and one clearing agency that currently does not
have two years of annual audited financial statements prepared in accordance with U.S. GAAP
or IFRS posted on its website and, therefore, would be required to incur the costs of paying for
an independent audit for two years of financial statements. In addition, based on analogous

47

These figures were calculated as follows: Compliance Attorney for 1 hour + Computer Operations
Department Manager for 2 hours = 3 hours per response x 4 annual responses per respondent = 12 annual ongoing
burden hours per respondent.
48

This figure was calculated as follows: 12 hours per year x 9 respondent clearing agencies = 108 hours per

year.
The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
49

50

This figure was calculated as follows: ($424 per hour x 4 hours) = $1,696 + ($511 per hour x 8 hours) =
$4,088 = $5,784.
51

This figure was calculated as follows: Senior Accountant for 500 hours = 500 initial burden hours per
respondent.

30

policies and procedures requirements and the corresponding burden estimates in Regulation
NMS, the Commission estimated that Rule 17Ad-22(c)(2) would impose on each respondent
clearing agency an ongoing burden of 250 hours per year (including the first year).52
With respect to the nine respondents that are currently registered as clearing agencies, the
Commission staff believes that these respondents have already incurred the one-time initial
burden associated with the requirements in Rule 17Ad-22(c)(2). As such, the Commission staff
believes that the rule will not impose any initial PRA burdens on these respondent clearing
agencies. However, the Commission staff estimates that Rule 17Ad-22(c)(2) will continue to
impose ongoing burdens on these nine respondents that are identical to the ongoing burden
estimates provided in the 2012 Adopting Release (250 hours per respondent per year).
As noted above, the Commission staff believes that only one new respondent may
become registered with the Commission as a clearing agency during the three-year period
covered by the prospective PRA extension. Based on the Commission staff’s experience with
entities of similar size to the respondents, the Commission staff estimates that Rule 17Ad22(c)(2) will impose on the one respondent that is not currently registered with the Commission
as a clearing agency initial and ongoing burdens that are identical to the initial and ongoing
burden estimates provided in the 2012 Adopting Release (500 hours per respondent and 250
hours per respondent, respectively).
Accordingly, for the one respondent that is not currently registered with the Commission
as a clearing agency, this results in an estimated initial burden of 500 hours per year, or 166.67
hours per year when annualized over three years,53 and an estimated total annual burden of 417
hours.54 For the nine respondents that are currently registered with the Commission as clearing
agencies, the estimated total annual burden is 2,250 hours.55 Therefore, the total aggregate
industry burden associated with Rule 17Ad-22(c)(2) is approximately 2,667 hours per
year.56
Assuming an average hourly rate of $251 for a Senior Accountant,57 the Commission
staff estimates that the one respondent that is not currently registered as a clearing agency would
incur a one-time internal compliance cost of approximately $125,500 for the initial hourly

52

This figure was calculated as follows: Senior Accountant for 250 hours x 1 annual response per respondent
= 250 ongoing burden hours per year per respondent.
53

This figure was calculated as follows: 500 initial burden hours ÷ 3 years = 166.67 annualized initial burden
hours per respondent.
54

This figure was calculated as follows: 166.67 hours per year + 250 ongoing burden hours per year = 416.67
total annual burden hours per respondent rounded up to 417.
55

This figure was calculated as follows: 250 hours per year x 9 respondent clearing agencies = 2,250 hours

per year.
56

This figure was calculated as follows: 2,250 hours + 416.67 hours = 2,666.67 hours rounded up to 2,667.

The per hour cost is from SIFMA’s Management and Professional Earnings in the Securities Industry 2013,
modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
57

31

burden imposed by Rule 17Ad-22(c)(2).58 The Commission staff also estimates that each
respondent clearing agency would incur an annual internal compliance cost of approximately
$62,750 for the ongoing hourly burden imposed by Rule 17Ad-22(c)(2).59
Requirements in Rule 17Ad-22(d)(1)–(15) that Impose a PRA Burden
Rules 17Ad-22(d)(1)–(15) impose a recordkeeping PRA burden and apply to two
respondents. Each of these two respondents are clearing agencies that are currently registered
with the Commission and are not covered clearing agencies. The Commission staff does not
expect any additional clearing agencies to become subject to these rules in the three-year period
covered by the prospective PRA extension.60 The Commission staff estimates that the rules each
require one response per respondent annually.
At the time Rules 17Ad-22(d)(1)–(15) were adopted, respondent clearing agencies
already had written policies and procedures meeting the standards set forth in those rules as part
of their usual and customary business practice. Accordingly, the Commission believed that the
respondent clearing agencies would not need to build new infrastructure or modify operations to
meet the requirements of Rule 17Ad-22(d)(1)–(15). The Commission believed that these
respondent clearing agencies would incur incremental burdens associated with reviewing
existing policies and procedures for compliance and updating existing policies and procedures
where appropriate. In order to estimate the one-time burden and annual burden for ongoing
activities, the Commission looked to the burdens imposed by similar policies and procedures
requirements in Regulation NMS as a guide and adapted those figures to these rules.61
Accordingly, the Commission estimated that Rules 17Ad-22(d)(1)–(15) would impose on each
respondent clearing agency an initial burden of 146 hours in the first year62 and an ongoing
burden of 50 hours per year (including the first year).63 However, for purposes of the prospective
PRA extension, because the two respondent clearing agencies are already subject to the
requirements in Rules 17Ad-22(d)(1)–(15), the Commission staff believes that these rules will
not impose any initial PRA burdens on these two respondents.
Based on the Commission staff’s experience reviewing the relevant policies and
procedures of respondent clearing agencies, the Commission staff estimates that Rules 17Ad22(d)(1)–(15) impose on each respondent an ongoing burden of 50 hours per year (including the

58

This figure was calculated as follows: $251 per hour x 500 hours = $125,500.

59

This figure was calculated as follows: $251 per hour x 250 hours = $62,750.

60

While the Commission staff estimates that one additional clearing agency could become registered with the
Commission during the three-year period covered by this prospective PRA extension, the staff believes that such a
registrant would likely be a covered clearing agency and, therefore, would not be subject to Rules 17Ad-22(d)(1)–
(15).
61

See Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496 (June 29, 2005).

62

This figure was calculated as follows: Assistant General Counsel for 50 hours + Compliance Attorney for
71 hours + Computer Operations Manager for 12.5 hours + Senior Business Analyst for 12.5 hours = 146 initial
burden hours per respondent.
63

This figure was calculated as follows: Compliance Attorney for 50 hours x 1 annual response per
respondent = 50 ongoing burden hours per year per respondent.

32

first year). Therefore, the total estimated industry burden associated with Rules 17Ad22(d)(1)–(15) is 100 hours per year.64
Assuming an average hourly rate of $424 for a Compliance Attorney,65 the Commission
staff estimates that each respondent clearing agency would incur an annual internal compliance
cost of approximately $21,200 for the ongoing hourly burden imposed by Rules 17Ad-22(d)(1)–
(15).66
Requirements in Rule 17Ad-22(e)(1) that Impose a PRA Burden
Rule 17Ad-22(e)(1) imposes a recordkeeping PRA burden and applies to eight
respondent clearing agencies. The estimate of eight respondents includes seven covered clearing
agencies that are already registered with the Commission, and the Commission staff estimates
that one additional respondent may register with the Commission as a clearing agency and
become subject to the rule. The Commission staff estimates that the rule requires one response
per respondent 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 staff believes that a respondent clearing agency has in
place written rules, policies and procedures substantially similar to those required by Rule 17Ad22(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 staff estimates that Rule 17Ad-22(e)(1)
imposes on each new respondent an initial burden of 8 hours in the first year,67 or 2.67 hours per
year when annualized over three years.68 In addition, the Commission staff estimates that the rule
imposes on each respondent an ongoing burden of 3 hours per year (including the first year).69
For the one respondent that is not currently registered with the Commission as a clearing agency,

64

This figure was calculated as follows: 50 hours per year x 2 respondent clearing agencies = 100 hours per

year.
The per hour cost is from SIFMA’s Management and Professional Earnings in the Securities Industry 2013,
modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
65

66

This figure was calculated as follows: $424 per hour x 50 hours = $21,200.

67

This figure was calculated as follows: Assistant General Counsel for 2 hours + Compliance Attorney for 6
hours = 8 initial burden hours per new respondent.
68

This figure was calculated as follows: 8 initial burden hours ÷ 3 years = 2.67 annualized initial burden
hours per new respondent.
69

This figure was calculated as follows: Compliance Attorney for 3 hours = 3 ongoing burden hours per year
per respondent.

33

this results in an estimated total annual burden of 6 hours.70 For the seven respondents that are
currently registered with the Commission as clearing agencies, the estimated total annual burden
is 21 hours.71 Therefore, the total aggregate industry burden associated with Rule 17Ad22(e)(1) for the eight respondents is approximately 27 hours per year.72
Assuming an average hourly rate of $540 for an Assistant General Counsel and $424 for
a Compliance Attorney,73 the Commission staff estimates that the one respondent that is not
currently registered as a clearing agency would incur a one-time internal cost of approximately
$3,624 for the initial hourly burden imposed by Rule 17Ad-22(e)(1).74 The Commission staff
also estimates that each respondent clearing agency would incur an annual internal compliance
cost of approximately $1,272 for the ongoing hourly burden imposed by Rule 17Ad-22(e)(1).75
Requirements in Rule 17Ad-22(e)(2) that Impose a PRA Burden
Rule 17Ad-22(e)(2) imposes a recordkeeping PRA burden and applies to eight
respondent clearing agencies. The estimate of eight respondents includes seven covered clearing
agencies that are already registered with the Commission, and the staff estimates that one
additional respondent may register with the Commission and become subject to the rule. The
Commission staff estimates that the rule requires one response per respondent annually.
Rule 17Ad-22(e)(2) continues to contain some provisions that are similar to Rule 17Ad22(d)(8) while also adding requirements that do not appear in Rules 17Ad-22(b), (c), or (d). As a
result, the Commission staff believes that a respondent clearing agency has in place some written
rules, policies and procedures substantially similar to those required by Rule 17Ad-22(e)(2) and
would only need to establish and implement a limited number of new policies and procedures.
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)(8), the Commission staff estimates that Rule 17Ad-22(e)(2)
imposes on each new respondent an initial burden of 25 hours in the first year,76 or 8.33 hours

70

This figure was calculated as follows: 2.67 hours per year + 3 ongoing burden hours per year = 5.67 total
annual burden hours per new respondent rounded up to 6.
71

This figure was calculated as follows: 3 ongoing burden hours per year x 7 respondent clearing agencies =
21 hours per year.
72

This figure was calculated as follows: 21 hours + 5.67 hours = 26.67 hours rounded up to 27.

The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
73

74

This figure was calculated as follows: ($540 per hour x 2 hours) = $1,080 + ($424 per hour x 6 hours) =
$2,544 = $3,624.
75

This figure was calculated as follows: $424 per hour x 3 hours = $1,272.

76

This figure was calculated as follows: Assistant General Counsel for 14 hours + Compliance Attorney for
11 hours = 25 initial burden hours per new respondent.

34

per year when annualized over three years.77 In addition, the Commission staff estimates that the
rule imposes on each respondent an ongoing burden of 5 hours per year (including the first
year).78 For the one respondent that is not currently registered with the Commission as a clearing
agency, this results in a total estimated annual burden of 13 hours.79 For the seven respondents
that are currently registered with the Commission as clearing agencies, the total estimated annual
burden is 35 hours.80 Therefore, the total aggregate industry burden associated with Rule
17Ad-22(e)(2) for the eight respondents is approximately 48 hours per year.81
Assuming an average hourly rate of $540 for an Assistant General Counsel and $424 for
a Compliance Attorney,82 the Commission staff estimates that the one respondent that is not
currently registered as a clearing agency would incur a one-time internal cost of approximately
$12,224 for the initial hourly burden imposed by Rule 17Ad-22(e)(2).83 The Commission staff
also estimates that each respondent clearing agency would incur an annual internal cost of
approximately $2,120 for the ongoing hourly burden imposed by Rule 17Ad-22(e)(2).84
Requirements in Rule 17Ad-22(e)(3) that Impose a PRA Burden
Rule 17Ad-22(e)(3) imposes a recordkeeping PRA burden and applies to eight
respondent clearing agencies. The estimate of eight respondents includes seven covered clearing
agencies that are already registered with the Commission, and the staff estimates that one
additional respondent that may register with the Commission and become subject to the rule. The
Commission staff estimates that the rule requires one response per respondent 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

77

This figure was calculated as follows: 25 initial burden hours ÷ 3 years = 8.33 annualized initial burden
hours per new respondent.
78

This figure was calculated as follows: Compliance Attorney for 5 hours = 5 ongoing burden hours per year.

79

This figure was calculated as follows: 5 hours + 8.33 hours = 13.33 hours rounded down to 13.

80

This figure was calculated as follows: 5 ongoing burden hours x 7 respondent clearing agencies = 35 hours

per year.
81

This figure was calculated as follows: 13.33 hours + 35 hours = 48.33 hours rounded down to 48.

The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
82

83

This figure was calculated as follows: ($540 per hour x 14 hours) = $7,560 + ($424 per hour x 11 hours) =
$4,664 = $12,224.
84

This figure was calculated as follows: $424 per hour x 5 hours = $2,120.

35

framework that includes a periodic review thereof and a plan for orderly recovery and winddown of the covered clearing agency.
Based on similar policies and procedures requirements and the corresponding burden
estimates for Rule 17Ad-22(d), the Commission staff estimates that the rule imposes on each
new respondent an initial burden of 57 hours in the first year,85 or 19 hours per year when
annualized over three years.86 In addition, the Commission staff estimates that the rule imposes
on each respondent an ongoing burden of 49 hours per year (including the first year).87 For the
one respondent that is not currently registered with the Commission as a clearing agency, this
results in a total estimated annual burden of 68 hours.88 For the seven respondents that are
currently registered with the Commission as clearing agencies, the total estimated annual burden
is 343 hours.89 Therefore, the total aggregate industry burden associated with Rule 17Ad22(e)(3) for the eight respondents is approximately 411 hours per year.90
Assuming an average hourly rate of $540 for an Assistant General Counsel, $424 for a
Compliance Attorney, $415 for a Senior Risk Management Specialist, $231 for a Risk
Management Specialist, $511 for a Computer Operations Manager, $318 for a Senior Business
Analyst, and $94 for an Administrative Assistant,91 the Commission staff estimates that the one
respondent that is not currently registered as a clearing agency would incur a one-time internal
compliance cost of approximately $27,614 for the initial hourly burden imposed by Rule 17Ad22(e)(3).92 The Commission staff also estimates that each respondent clearing agency would
incur an annual internal compliance cost of approximately $12,887 for the ongoing hourly
burden imposed by Rule 17Ad-22(e)(3).93

85

This figure was 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 initial
burden hours per new respondent.
86

This figure was calculated as follows: 57 initial burden hours ÷ 3 years = 19 annualized initial burden hours
per new respondent.
87

This figure was calculated as follows: Compliance Attorney for 8 hours + Administrative Assistant for 3
hours + Senior Business Analyst for 5 hours + Risk Management Specialist for 33 hours = 49 ongoing burden hours
per year.
88

This figure was calculated as follows: 49 hours + 19 hours = 68 hours.

89

This figure was calculated as follows: 49 ongoing burden hours x 7 respondent clearing agencies = 343
hours per year.
90

This figure was calculated as follows: 68 hours + 343 hours = 411 hours.

The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
91

92

This figure was calculated as follows: ($540 per hour x 25 hours) = $13,500 + ($424 per hour x 18 hours) =
$7,632 + ($415 per hour x 7 hours) = $2,905 + ($511 per hour x 7 hours) = $3,577 = $27,614.
93

This figure was calculated as follows: ($424 per hour x 8 hours) = $3,392 + ($94 per hour x 3 hours) =
$282 + ($318 per hour x 5 hours) = $1,590 + ($231 per hour x 33 hours) = $7,623 = $12,887.

36

Requirements in Rule 17Ad-22(e)(4) that Impose a PRA Burden
Rule 17Ad-22(e)(4) imposes a recordkeeping PRA burden and applies to eight
respondent clearing agencies. The estimate of eight respondents includes seven covered clearing
agencies that are already registered with the Commission, and the staff estimates that one
additional respondent may register with the Commission and become subject to the rule. The
Commission staff estimates that the rule requires one response per respondent annually.
The Commission staff estimates 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.
Based on the Commission staff’s experience reviewing relevant policies and procedures
of respondent clearing agencies, the Commission staff estimates that Rule 17Ad-22(e)(4)
imposes on each new respondent an initial burden of 219 hours in the first year,94 or 73 hours per
year when annualized over three years.95 In addition, the Commission staff estimates that the rule
imposes on each respondent an ongoing burden of 62 hours per year (including the first year).96
For the one respondent that is not currently registered with the Commission as a clearing agency,
this results in a total estimated annual burden of 135 hours.97 For the seven respondents that are
currently registered with the Commission as clearing agencies, the total estimated annual burden
is 434 hours.98 Therefore, the total aggregate industry burden associated with Rule 17Ad22(e)(4) for the eight respondents is approximately 569 hours per year.99
Assuming an average hourly rate of $540 for an Assistant General Counsel, $424 for a
Compliance Attorney, $415 for a Senior Risk Management Specialist, $231 for a Risk
Management Specialist, $511 for a Computer Operations Manager, $615 for a Chief Compliance
Officer, $384 for a Senior Programmer, $94 for an Administrative Assistant, and $318 for a

94

This figure was 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 initial burden hours per new respondent.
95

This figure was calculated as follows: 219 initial burden hours ÷ 3 years = 73 annualized initial burden
hours per new respondent.
96

This figure was calculated as follows: Compliance Attorney for 26 hours + Administrative Assistant for 3
hours + Senior Business Analyst for 3 hours + Risk Management Specialist for 30 hours = 62 ongoing burden hours
per year.
97

This figure was calculated as follows: 62 hours + 73 hours = 135 hours.

98

This figure was calculated as follows: 62 ongoing burden hours x 7 respondent clearing agencies = 434
hours per year.
99

This figure was calculated as follows: 135 hours + 434 hours = 569 hours.

37

Senior Business Analyst,100 the Commission staff estimates that the one respondent that is not
currently registered as a clearing agency would incur a one-time internal compliance cost of
approximately $107,550 for the initial hourly burden imposed by Rule 17Ad-22(e)(4).101 The
Commission staff also estimates that each respondent clearing agency would incur an annual
internal compliance cost of approximately $19,190 for the ongoing hourly burden imposed by
Rule 17Ad-22(e)(4).102
Requirements in Rule 17Ad-22(e)(5) that Impose a PRA Burden
Rule 17Ad-22(e)(5) imposes a recordkeeping PRA burden and applies to eight
respondent clearing agencies. The estimate of eight respondents includes seven covered clearing
agencies that are already registered with the Commission, and the staff estimates that one
additional respondent may register with the Commission and become subject to the rule. The
Commission staff estimates that the rule requires one response per respondent annually.
The Commission staff believes that respondent clearing agencies subject to Rule 17Ad22(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 staff believes 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 similar policies and procedures requirements and the corresponding burden
estimates for Rule 17Ad-22(d)(3), the Commission staff estimates that Rule 17Ad-22(e)(5)
imposes on each new respondent an initial burden of 42 hours in the first year,103 or 14 hours per
year when annualized over three years.104 In addition, the Commission continues to estimate that
the rule imposes on each respondent an ongoing burden of 36 hours per year (including the first
year).105 For the one respondent that is not currently registered with the Commission as a
clearing agency, this results in a total estimated annual burden of 50 hours.106 For the seven

The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
100

101

This figure was calculated as follows: ($540 per hour x 74 hours) = $39,960 + ($424 per hour x 45 hours) =
$19,080 + ($415 per hour x 30 hours) = $12,450 + ($511 per hour x 45 hours) = $22,995 + ($615 per hour x 15
hours) = $9,225 + ($384 per hour x 10 hours) = $3,840 = $107,550.
102

This figure was calculated as follows: ($424 per hour x 26 hours) = $11,024 + ($94 per hour x 3 hours) =
$282 + ($318 per hour x 3 hours) = $954 + ($231 per hour x 30 hours) = $6,930 = $19,190.
103

This figure was 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 initial
burden hours per new respondent.
104

This figure was calculated as follows: 42 initial burden hours ÷ 3 years = 14 annualized initial burden hours
per new respondent.
105

This figure was calculated as follows: Compliance Attorney for 6 hours + Risk Management Specialist for
30 hours = 36 ongoing burden hours per year.
106

This figure was calculated as follows: 36 hours + 14 hours = 50 hours.

38

respondents that are currently registered with the Commission as clearing agencies, the total
estimated annual burden is 252 hours.107 Therefore, the total aggregate industry burden
associated with Rule 17Ad-22(e)(5) for the eight respondents is approximately 302 hours
per year.108
Assuming an average hourly rate of $540 for an Assistant General Counsel, $424 for a
Compliance Attorney, $415 for a Senior Risk Management Specialist, $231 for a Risk
Management Specialist, and $511 for a Computer Operations Manager,109 the Commission staff
estimates that the one respondent that is not currently registered as a clearing agency would incur
a one-time internal compliance cost of approximately $20,210 for the initial hourly burden
imposed by Rule 17Ad-22(e)(5).110 The Commission staff also estimates that each respondent
clearing agency would incur an annual internal compliance cost of approximately $9,474 for the
ongoing hourly burden imposed by Rule 17Ad-22(e)(5).111
Requirements in Rule 17Ad-22(e)(6) that Impose a PRA Burden
Rule 17Ad-22(e)(6) imposes a recordkeeping PRA burden and applies to seven
respondent clearing agencies that provide CCP services. The estimate of seven respondents
includes six covered clearing agencies that provide CCP services and are already registered with
the Commission, and the staff estimates that one additional respondent may register with the
Commission and become subject to the rule. The Commission staff estimates that the rule
requires one response per respondent annually.
The Commission staff believes 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 system
adjustments related to the capability to perform daily backtesting and monthly (or more frequent
than monthly) sensitivity analyses.
Accordingly, the Commission staff estimates that Rule 17Ad-22(e)(6) imposes on each
new respondent an initial burden of 180 hours in the first year,112 or 60 hours per year when

107

This figure was calculated as follows: 36 ongoing burden hours x 7 respondent clearing agencies = 252
hours per year.
108

This figure was calculated as follows: 50 hours + 252 hours = 302 hours.

109

The per hour costs ($540 for an Assistant General Counsel and $424 for a Compliance Attorney) are from
SIFMA’s Management and Professional Earnings in the Securities Industry 2013, modified by Commission staff to
account for an 1800-hour work year and inflation, and multiplied by 5.35 to account for bonuses, firm size,
employee benefits, and overhead.
110

This figure was calculated as follows: ($540 per hour x 16 hours) = $8,640 + ($424 per hour x 12 hours) =
$5,088 + ($511 per hour x 7 hours) = $3,577 + ($415 per hour x 7 hours) = $2,905 = $20,210.
111

This figure was calculated as follows: ($424 per hour x 6 hours) = $2,544 + ($231 per hour x 30 hours) =
$6,930 = $9,474.
112

This figure was 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 initial burden hours per new respondent.

39

annualized over three years.113 In addition, the Commission continues to estimate that the rule
imposes on each respondent an ongoing burden of 60 hours per year (including the first year).114
For the one respondent that is not currently registered with the Commission as a clearing agency,
this results in a total estimated annual burden of 120 hours.115 For the six respondents that are
currently registered with the Commission as clearing agencies, the total estimated annual burden
is 360 hours.116 Therefore, the total aggregate industry burden associated with Rule 17Ad22(e)(6) for the seven respondents is approximately 480 hours per year.117
Assuming an average hourly rate of $540 for an Assistant General Counsel, $424 for a
Compliance Attorney, $415 for a Senior Risk Management Specialist, $231 for a Risk
Management Specialist, $511 for a Computer Operations Manager, $615 for a Chief Compliance
Officer, $384 for a Senior Programmer, $318 for a Senior Business Analyst, and $94 for an
Administrative Assistant,118 the Commission staff estimates that the one respondent that is not
currently registered as a clearing agency would incur a one-time internal compliance cost of
approximately $87,840 for the initial hourly burden imposed by Rule 17Ad-22(e)(6).119 The
Commission staff also estimates that each respondent clearing agency would incur an annual
internal compliance cost of approximately $18,342 for the ongoing hourly burden imposed by
Rule 17Ad-22(e)(6).120
2022 Proposed Rulemaking
Proposed Enhanced Margin Requirements in Rule 17Ad-22(e)(6) that Impose a PRA
Burden
The amendments to Rule 17Ad-22(e)(6) would impose a new information collection
recordkeeping PRA burden. The title of the new information collection is “17Ad-22(e)(6)
(Enhanced Margin).” The proposed amendments to Rule 17Ad-22(e)(6) would require a
covered clearing agency to establish, implement, maintain, and enforce written policies and

113

This figure was calculated as follows: 180 initial burden hours ÷ 3 years = 60 annualized initial burden
hours per new respondent.
114

Compliance Attorney for 24 hours + Administrative Assistant for 3 hours + Senior Business Analyst for 3
hours + Risk Management Specialist for 30 hours = 60 ongoing burden hours per year.
115

This figure was calculated as follows: 60 hours + 60 hours = 120 hours.

116

This figure was calculated as follows: 60 ongoing burden hours x 6 respondent clearing agencies = 360
hours per year.
117

This figure was calculated as follows: 120 hours + 360 hours = 480 hours.

The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
118

119

This figure was calculated as follows: ($540 per hour x 50 hours) = $27,000 + ($424 per hour x 40 hours) =
$16,960 + ($415 per hour x 25 hours) = $10,375 + ($511 per hour x 40 hours) = $20,440 + ($615 per hour x 15
hours) = $9,225 + ($384 per hour x 10 hours) = $3,840 = $87,840.
120

This figure was calculated as follows: ($424 per hour x 24 hours) = $10,176 + ($94 per hour x 3 hours) =
$282 + ($318 per hour x 3 hours) = $954 + ($231 per hour x 30 hours) = $6,930 = $18,342.

40

procedures. The proposed rule amendment contains similar provisions to existing covered
clearing agency rules (i.e., Rules 17Ad-22(e)(6)(ii) and (iv)) but would also impose additional
requirements that do not appear in the existing Rule 17Ad-22. As a result, the Commission
preliminarily believes that a respondent covered clearing agency would incur burdens of
reviewing and updating existing policies and procedures to consider whether they comply with
the proposed amendment to Rule 17Ad-22(e)(6) and, in some cases, may need to create new
policies and procedures to comply with the proposed amendments to Rule 17Ad-22(e)(6). For
example, a covered clearing agency likely would need to review its existing margin methodology
and consider whether any additional changes are necessary to ensure that it can meet the
strengthened requirements of the proposed rule.
The Commission preliminarily believes that the estimated PRA burdens for the proposed
amendment to Rule 17Ad-22(e)(6) may require a respondent covered clearing agency to make
fairly substantial changes to its policies and procedures. Based on the similar policies and
procedures requirements and the corresponding burden estimates previously made by the
Commission for several rules in the Covered Clearing Agency Standards where the Commission
anticipated similar burdens,121 the Commission preliminarily estimates that the proposed
amendment to Rule 17Ad-22(e)(6) would impose on each respondent covered clearing agency an
initial burden of 129 hours in the first year, 122 or 43 hours per year when annualized over three
years.123
In addition, the proposed amendments to Rule 17Ad-22(e)(6) would impose new
information collection “17Ad-22(e)(6) (Enhanced Margin)” with respect to ongoing burdens on a
respondent covered clearing agency. The proposed rule would require ongoing monitoring and
compliance activities with respect to the written policies and procedures created in response to
the proposed rule. Based on the similar reporting requirements and the corresponding burden
estimates previously made by the Commission for several rules in the Covered Clearing Agency
Standards where the Commission anticipated similar burdens,124 the Commission preliminarily
estimates that the ongoing activities required by the proposed amendments to Rule 17Ad22(e)(6) would impose an ongoing burden of 85 hours per year (including the first year).125

121

See 2016 Adopting Release, supra note 24, 81 FR at 70895-97 (discussing Rules 17Ad-22(e)(13), (15), and
(18)). Although the proposed rule amendment is with respect to Rule 17Ad-22(e)(6), the Commission believes that
these Rules present the best overall comparison to the current proposed rule amendment, in light of the nature of the
changes needed to implement the proposal here and what was proposed in the Covered Clearing Agency Standards.
122

This figure was calculated as follows: (Assistant General Counsel for 20 hours) + (Compliance Attorney
for 40 hours) + (Computer Operations Manager for 12 hours) + (Senior Programmer for 20 hours) + (Senior Risk
Management Specialist for 25 hours) + (Senior Business Analyst for 12 hours) = 129 hours.
123

This figure was calculated as follows: 129 initial burden hours ÷ 3 years = 43 annualized initial burden
hours per respondent.
124

See 2016 Adopting Release, supra note 24, 81 FR at 70893 and 70895-96 (discussing Rules 17Ad-22(e)(6)
and (13)).
125

This figure was calculated as follows: (Compliance Attorney for 25 hours + Business Risk Analyst for 40
hours + Senior Risk Management Specialist for 20 hours) = 85 hours.

41

Therefore, the total aggregate industry burden associated with the proposed
amendments to Rule 17Ad-22(e)(6) for the seven respondents is approximately 896 hours
per year.126
The Commission preliminarily estimates that respondent covered clearing agencies
would incur an aggregate internal one-time cost of approximately $397,985 to review existing
policies and procedures and create new policies and procedures.127 The proposed rule would also
require ongoing monitoring and compliance activities with respect to the written policies and
procedures created in response to the proposed rule. The Commission preliminarily estimates
that the ongoing activities required by proposed amendments to Rule 17Ad-22(e)(6) would
impose an aggregate ongoing cost on respondent covered clearing agencies of approximately
$200,620 per year.128
Requirements in Rule 17Ad-22(e)(7) that Impose a PRA Burden
Rule 17Ad-22(e)(7) imposes a recordkeeping PRA burden and applies to eight
respondent clearing agencies. The estimate of eight respondents includes seven covered clearing
agencies that are already registered with the Commission, and the staff estimates that one
additional respondent may register with the Commission and become subject to the rule. The
Commission staff estimates that the rule requires one response per respondent annually.
The Commission staff believes 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.
Accordingly, the Commission staff estimates that Rule 17Ad-22(e)(7) imposes on each
new respondent an initial burden of 330 hours in the first year,129 or 110 hours per year when
annualized over three years.130 In addition, the Commission staff estimates that the rule imposes

126

This figure was calculated as follows: (43 hours + 85 hours) x 7 respondent covered clearing agencies =
896 hours.
127

This figure was calculated as follows: (Assistant General Counsel for 20 hours at $551 per hour) +
(Compliance Attorney for 40 hours at $432 per hour) + (Computer Operations Manager for 12 hours at $521 per
hour) + (Senior Programmer for 20 hours at $392 per hour) + (Senior Risk Management Specialist for 25 hours at
$423 per hour) + (Senior Business Analyst for 12 hours at $324 per hour) = $56,855 x 7 respondent covered clearing
agencies = $397,985. See 2023 Proposing Release, supra note 26, 88 FR at 34736-37.
128

This figure was calculated as follows: (Compliance Attorney for 25 hours at $432 per hour) + (Business
Risk Analyst for 40 hours at $235 per hour) + (Senior Risk Management Specialist for 20 hours at $423 per hour) =
$28,660 x 7 respondent covered clearing agencies = $200,620. See 2023 Proposing Release, supra note 26, 88 FR at
34737 (the 2023 Proposing Release incorrectly stated the figure was $214,620. The correct estimate is $200,620).
129

This figure was 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 initial burden hours per new respondent.
130

This figure was calculated as follows: 330 initial burden hours ÷ 3 years = 110 annualized initial burden
hours per new respondent.

42

on each respondent an ongoing burden of 128 hours per year (including the first year).131 For the
one respondent that is not currently registered with the Commission as a clearing agency, this
results in a total estimated annual burden of 238 hours.132 For the seven respondents that are
currently registered with the Commission as clearing agencies, the total estimated annual burden
is 896 hours.133 Therefore, the total aggregate industry burden associated with Rule 17Ad22(e)(7) for the eight respondents is approximately 1,134 hours per year.134
Assuming an average hourly rate of $540 for an Assistant General Counsel, $424 for a
Compliance Attorney, $415 for a Senior Risk Management Specialist, $231 for a Risk
Management Specialist, $511 for a Computer Operations Manager, $615 for a Chief Compliance
Officer, $384 for a Senior Programmer, $318 for a Senior Business Analyst, and $94 for an
Administrative Assistant,135 the Commission staff estimates that the one respondent that is not
currently registered as a clearing agency would incur a one-time internal compliance cost of
approximately $160,885 for the initial hourly burden imposed by Rule 17Ad-22(e)(7).136 The
Commission staff also estimates that each respondent clearing agency would incur an annual
internal compliance cost of approximately $40,422 for the ongoing hourly burden imposed by
Rule 17Ad-22(e)(7).137
Requirements in Rule 17Ad-22(e)(8) that Impose a PRA Burden
Rule 17Ad-22(e)(8) imposes a recordkeeping PRA burden and applies to eight
respondent clearing agencies. The estimate of eight respondents includes seven covered clearing
agencies that are already registered with the Commission, and the staff estimates that one
additional respondent may register with the Commission and become subject to the rule. The
Commission staff estimates that the rule requires one response per respondent annually.
Rule 17Ad-22(e)(8) contains substantially similar provisions to Rule 17Ad- 22(d)(12). As
a result, the Commission staff believes that a respondent clearing agency would already have
written rules, policies, and procedures substantially similar to those required by Rule 17Ad-

131

This figure was calculated as follows: 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 ongoing burden hours per year.
132

This figure was calculated as follows: 110 hours + 128 hours = 238 hours.

133

This figure was calculated as follows: 128 ongoing burden hours x 7 respondent clearing agencies = 896
hours per year.
134

This figure was calculated as follows: 238 hours + 896 hours = 1,134 hours.

The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
135

136

This figure was calculated as follows: ($540 per hour x 95 hours) = $51,300 + ($424 per hour x 85 hours) =
$36,040 + ($415 per hour x 45 hours) = $18,675 + ($511 per hour x 60 hours) = $30,660 + ($615 per hour x 30
hours) = $18,450 + ($384 per hour x 15 hours) = $5,760 = $160,885.
137

This figure was calculated as follows: ($424 per hour x 48 hours) = $20,352 + ($94 per hour x 5 hours) =
$470 + ($318 per hour x 5 hours) = $1,590 + ($231 per hour x 60 hours) = $13,860 + ($415 per hour x 10 hours) =
$4,150 = $40,422.

43

22(e)(8). In this regard, the Commission staff believes that respondent clearing agencies would
incur only the incremental burdens of reviewing and updating existing policies and procedures as
necessary.
Based on similar policies and procedures requirements and the corresponding burden
estimates for Rule 17Ad-22(d)(12), the Commission staff estimates that Rule 17Ad-22(e)(8)
imposes on each new respondent an initial burden of 12 hours in the first year,138 or 4 hours per
year when annualized over three years.139 In addition, the Commission staff estimates that the
rule imposes on each respondent an ongoing burden of 5 hours per year (including the first
year).140 For the one respondent that is not currently registered with the Commission as a
clearing agency, this results in a total estimated annual burden of 9 hours.141 For the seven
respondents that are currently registered with the Commission as clearing agencies, the total
estimated annual burden is 35 hours.142 Therefore, the total aggregate industry burden
associated with Rule 17Ad-22(e)(8) for the eight respondents is approximately 44 hours per
year.143
Assuming an average hourly rate of $540 for an Assistant General Counsel, $424 for a
Compliance Attorney, $511 for a Computer Operations Manager, and $318 for a Senior Business
Analyst,144 the Commission staff estimates that the one respondent that is not currently registered
as a clearing agency would incur a one-time internal compliance cost of approximately $5,282
for the initial hourly burden imposed by Rule 17Ad-22(e)(8).145 The Commission staff also
estimates that each respondent clearing agency would incur an annual internal compliance cost
of approximately $2,120 for the ongoing hourly burden imposed by Rule 17Ad-22(e)(8).146
Requirements in Rule 17Ad-22(e)(9) that Impose a PRA Burden
Rule 17Ad-22(e)(9) imposes a recordkeeping PRA burden and applies to eight
respondent clearing agencies. The estimate of eight respondents includes seven covered clearing

138

This figure was 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 initial burden hours
per new respondent.
139

This figure was calculated as follows: 12 initial burden hours ÷ 3 years = 4 annualized initial burden hours
per new respondent.
140

This figure was calculated as follows: Compliance Attorney for 5 hours = 5 ongoing burden hours per year.

141

This figure was calculated as follows: 5 hours + 4 hours = 9 hours.

142

This figure was calculated as follows: 5 ongoing burden hours x 7 respondent clearing agencies = 35 hours

per year.
143

This figure was calculated as follows: 9 hours + 35 hours = 44 hours.

The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
144

145

This figure was calculated as follows: ($540 per hour x 2 hours) = $1,080 + ($424 per hour x 6 hours) =
$2,544 + ($511 per hour x 2 hours) = $1,022 + ($318 per hour x 2 hours) = $636 = $5,282.
146

This figure was calculated as follows: $424 per hour x 5 hours = $2,120.

44

agencies that are already registered with the Commission, and the staff estimates that one
additional respondent may register with the Commission and become subject to the rule. The
Commission staff estimates that the rule requires one response per respondent annually.
Rule 17Ad-22(e)(9) contains substantially similar provisions to Rule 17Ad- 22(d)(5). As
a result, the Commission staff believes that a respondent clearing agency already has written
rules, policies, and procedures substantially similar to those required by Rule 17Ad-22(e)(9). In
this regard, the Commission staff believes that respondent clearing agencies would incur only the
incremental burdens of reviewing and updating existing policies and procedures as necessary.
Based on similar policies and procedures requirements and the corresponding burden
estimates for Rule 17Ad-22(d)(5), the Commission staff estimates that Rule 17Ad-22(e)(9)
imposes on each new respondent an initial burden of 12 hours in the first year,147 or 4 hours per
year when annualized over three years.148 In addition, the Commission staff estimates that the
rule imposes on each respondent an ongoing burden of 5 hours per year (including the first
year).149 For the one respondent that is not currently registered with the Commission as a
clearing agency, this results in a total estimated annual burden of 9 hours.150 For the seven
respondents that are currently registered with the Commission as clearing agencies, the total
estimated annual burden is 35 hours.151 Therefore, the total aggregate industry burden
associated with Rule 17Ad-22(e)(9) for the eight respondents is approximately 44 hours per
year.152
Assuming an average hourly rate of $540 for an Assistant General Counsel, $424 for a
Compliance Attorney, $511 for a Computer Operations Manager, and $318 for a Senior Business
Analyst,153 the Commission staff estimates that the one respondent that is not currently registered
as a clearing agency would incur a one-time internal compliance cost of approximately $5,282
for the initial hourly burden imposed by Rule 17Ad-22(e)(9).154 The Commission staff also

147

This figure was 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 initial burden hours
per new respondent.
148

This figure was calculated as follows: 12 initial burden hours ÷ 3 years = 4 annualized initial burden hours
per new respondent.
149

This figure was calculated as follows: Compliance Attorney for 5 hours = 5 ongoing burden hours per year.

150

This figure was calculated as follows: 5 hours + 4 hours = 9 hours.

151

This figure was calculated as follows: 5 ongoing burden hours x 7 respondent clearing agencies = 35 hours

per year.
152

This figure was calculated as follows: 9 hours + 35 hours = 44 hours.

The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
153

154

This figure was calculated as follows: ($540 per hour x 2 hours) = $1,080 + ($424 per hour x 6 hours) =
$2,544 + ($511 per hour x 2 hours) = $1,022 + ($318 per hour x 2 hours) = $636 = $5,282.

45

estimates that each respondent clearing agency would incur an annual internal compliance cost
of approximately $2,120 for the ongoing hourly burden imposed by Rule 17Ad-22(e)(9).155
Requirements in Rule 17Ad-22(e)(10) that Impose a PRA Burden
Rule 17Ad-22(e)(10) imposes a recordkeeping PRA burden and applies to eight
respondent clearing agencies. The estimate of eight respondents includes seven covered clearing
agencies that are already registered with the Commission, and the staff estimates that one
additional respondent may register with the Commission and become subject to the rule. The
Commission staff estimates that the rule requires one response per respondent annually.
Rule 17Ad-22(e)(10) contains substantially similar provisions to Rule 17Ad- 22(d)(15).
As a result, the Commission staff believes that a respondent clearing agency would already have
written rules, policies, and procedures substantially similar to those required by Rule 17Ad22(e)(10). In this regard, the Commission staff believes that a respondent clearing agency would
incur only the incremental burdens of reviewing and updating existing policies and procedures as
necessary.
Based on similar policies and procedures requirements and the corresponding burden
estimates for Rule 17Ad-22(d)(15), the Commission staff estimates that Rule 17Ad-22(e)(10)
imposes on each new respondent an initial burden of 12 hours in the first year,156 or 4 hours per
year when annualized over three years.157 In addition, the Commission staff estimates that the
rule imposes on each respondent an ongoing burden of 5 hours per year (including the first
year).158 For the one respondent that is not currently registered with the Commission as a
clearing agency, this results in a total estimated annual burden of 9 hours.159 For the seven
respondents that are currently registered with the Commission as clearing agencies, the total
estimated annual burden is 35 hours.160 Therefore, the total aggregate industry burden
associated with Rule 17Ad-22(e)(10) for the eight respondents is approximately 44 hours
per year.161
Assuming an average hourly rate of $540 for an Assistant General Counsel, $424 for a
Compliance Attorney, $511 for a Computer Operations Manager, and $318 for a Senior Business

155

This figure was calculated as follows: $424 per hour x 5 hours = $2,120.

156

This figure was 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 initial burden hours
per new respondent.
157

This figure was calculated as follows: 12 initial burden hours ÷ 3 years = 4 annualized initial burden hours
per new respondent.
158

This figure was calculated as follows: Compliance Attorney for 5 hours = 5 ongoing burden hours per year.

159

This figure was calculated as follows: 5 hours + 4 hours = 9 hours.

160

This figure was calculated as follows: 5 ongoing burden hours x 7 respondent clearing agencies = 35 hours

per year.
161

This figure was calculated as follows: 9 hours + 35 hours = 44 hours.

46

Analyst,162 the Commission staff estimates that the one respondent that is not currently registered
as a clearing agency would incur a one-time internal compliance cost of approximately $5,282
for the initial hourly burden imposed by Rule 17Ad-22(e)(10).163 The Commission also
estimates that each respondent clearing agency would incur an annual internal compliance cost
of approximately $2,120 for the ongoing hourly burden imposed by Rule 17Ad-22(e)(10).164
Requirements in Rule 17Ad-22(e)(11) that Impose a PRA Burden
Rule 17Ad-22(e)(11) imposes a recordkeeping PRA burden and applies to one
respondent clearing agency that provides CSD services. The Commission staff estimates that the
rule requires one response per respondent annually.
Rule 17Ad-22(e)(11) contains similar provisions to Rule 17Ad-22(d)(10). As a result, the
Commission staff believes that a respondent clearing agency providing CSD services would
already have written rules, policies, and procedures similar to those required by Rule 17Ad22(e)(11). Rule 17Ad-22(e)(10) also imposes requirements that do not appear in Rule 17Ad22(d)(10). Accordingly, the Commission staff believes 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 similar policies and procedures requirements and the corresponding burden
estimates for Rule 17Ad-22(d)(10), the Commission staff estimates that Rule 17Ad-22(e)(11)
imposes on each new respondent an initial burden of 55 hours in the first year.165 In addition, the
Commission staff estimates that the rule imposes on each respondent an ongoing burden of 8
hours per year (including the first year).166 For the one respondent that is currently registered
with the Commission as a clearing agency and has already incurred the initial burdens
imposed by the rule, this results in a total estimated annual burden associated with Rule
17Ad-22(e)(11) of 8 hours.167
Assuming an average hourly rate of $424 for a Compliance Attorney,168 the Commission
staff estimates that the one respondent clearing agency that provides CSD services would incur

The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
162

163

This figure was calculated as follows: ($540 per hour x 2 hours) = $1,080 + ($424 per hour x 6 hours) =
$2,544 + ($511 per hour x 2 hours) = $1,022 + ($318 per hour x 2 hours) = $636 = $5,282.
164

This figure was calculated as follows: $424 per hour x 5 hours = $2,120.

165

This figure was 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 initial burden hours per new respondent.
166

This figure was calculated as follows: Compliance Attorney for 8 hours = 8 ongoing burden hours per year.

167

This figure was calculated as follows: 8 ongoing burden hours x 1 respondent clearing agency = 8 hours per

year.
168

The per hour cost is from SIFMA’s Management and Professional Earnings in the Securities Industry 2013,

47

an annual internal compliance cost of approximately $3,392 for the ongoing hourly burden
imposed by Rule 17Ad-22(e)(11).169
Requirements in Rule 17Ad-22(e)(12) that Impose a PRA Burden
Rule 17Ad-22(e)(12) imposes a recordkeeping PRA burden and applies to eight
respondent clearing agencies. The estimate of eight respondents includes seven covered clearing
agencies that are already registered with the Commission, and the staff estimates that one
additional respondent may register with the Commission and become subject to the rule. The
Commission staff estimates that the rule requires one response per respondent annually.
Rule 17Ad-22(e)(12) contains substantially similar provisions to Rule 17Ad- 22(d)(13).
As a result, the Commission staff believes that a respondent clearing agency would already have
written rules, policies, and procedures substantially similar to those required by Rule 17Ad22(e)(12). In this regard, the Commission staff believes that a respondent clearing agency would
incur only the incremental burdens of reviewing and updating existing policies and procedures as
necessary.
Based on similar policies and procedures requirements and the corresponding burden
estimates for Rule 17Ad-22(d)(13), the Commission staff estimates that Rule 17Ad-22(e)(12)
imposes on each new respondent an initial burden of 12 hours in the first year,170 or 4 hours per
year when annualized over three years.171 In addition, the Commission staff estimates that the
rule imposes on each respondent an ongoing burden of 5 hours per year (including the first
year).172 For the one respondent that is not currently registered with the Commission as a
clearing agency, this results in a total estimated annual burden of 9 hours.173 For the seven
respondents that are currently registered with the Commission as clearing agencies, the total
estimated annual burden is 35 hours.174 Therefore, the total aggregate industry burden for the
eight respondents associated with Rule 17Ad-22(e)(12) is approximately 44 hours per
year.175

modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
169

This figure was calculated as follows: $424 per hour x 8 hours = $3,392.

170

This figure was 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 initial burden hours
per new respondent.
171

This figure was calculated as follows: 12 initial burden hours ÷ 3 years = 4 annualized initial burden hours
per new respondent.
172

This figure was calculated as follows: Compliance Attorney for 5 hours = 5 ongoing burden hours per year.

173

This figure was calculated as follows: 5 hours + 4 hours = 9 hours.

174

This figure was calculated as follows: 5 ongoing burden hours x 7 respondent clearing agencies = 35 hours

per year.
175

This figure was calculated as follows: 9 hours + 35 hours = 44 hours.

48

Assuming an average hourly rate of $540 for an Assistant General Counsel, $424 for a
Compliance Attorney, $511 for a Computer Operations Manager, and $318 for a Senior Business
Analyst,176 the Commission staff estimates that the one respondent that is not currently registered
as a clearing agency would incur a one-time internal compliance cost of approximately $5,282
for the initial hourly burden imposed by Rule 17Ad-22(e)(12).177 The Commission staff also
estimates that each respondent clearing agency would incur an annual internal compliance cost
of approximately $2,120 for the ongoing hourly burden imposed by Rule 17Ad-22(e)(12).178
Requirements in Rule 17Ad-22(e)(13) that Impose a PRA Burden
Rule 17Ad-22(e)(13) imposes a recordkeeping PRA burden and applies to eight
respondent clearing agencies. The estimate of eight respondents includes seven covered clearing
agencies that are already registered with the Commission, and the staff estimates that one
additional respondent may register with the Commission and become subject to the rule. The
Commission staff estimates that the rule requires one response per respondent annually.
Rule 17Ad-22(e)(13) contains 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 staff believes that a respondent clearing agency would incur burdens of reviewing
and updating existing policies and procedures in order to comply with the provisions of Rule
17Ad-22(e)(13) and, in some cases, would need to create new policies and procedures.
Based on similar policies and procedures requirements and the corresponding burden
estimates for Rule 17Ad-22(d)(11), the Commission staff estimates that Rule 17Ad-22(e)(13)
imposes on each new respondent an initial burden of 41 hours in the first year,179 or 13.67 hours
per year when annualized over three years.180 In addition, the Commission staff estimates that the
rule imposes on each respondent an ongoing burden of 7 hours per year (including the first
year).181 For the one respondent that is not currently registered with the Commission as a
clearing agency, this results in a total estimated annual burden of 21 hours.182 For the seven
respondents that are currently registered with the Commission as clearing agencies, the total

The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
176

177

This figure was calculated as follows: ($540 per hour x 2 hours) = $1,080 + ($424 per hour x 6 hours) =
$2,544 + ($511 per hour x 2 hours) = $1,022 + ($318 per hour x 2 hours) = $636 = $5,282.
178

This figure was calculated as follows: $424 per hour x 5 hours = $2,120.

179

This figure was 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 initial burden
hours per new respondent.
180

This figure was calculated as follows: 41 initial burden hours ÷ 3 years = 13.67 annualized initial burden
hours per new respondent.
181

This figure was calculated as follows: Compliance Attorney for 7 hours = 7 ongoing burden hours per year.

182

This figure was calculated as follows: 7 hours + 13.67 hours = 20.67 hours rounded up to 21.

49

estimated annual burden is 49 hours.183 Therefore, the total aggregate industry burden
associated with Rule 17Ad-22(e)(13) for the eight respondents is approximately 70 hours
per year.184
Assuming an average hourly rate of $540 for an Assistant General Counsel, $424 for a
Compliance Attorney, $511 for a Computer Operations Manager, and $318 for a Senior Business
Analyst,185 the Commission staff estimates that the one respondent that is not currently registered
as a clearing agency would incur a one-time internal compliance cost of approximately $17,852
for the initial hourly burden imposed by Rule 17Ad-22(e)(13).186 The Commission staff also
estimates that each respondent clearing agency would incur an annual internal compliance cost
of approximately $2,968 for the ongoing hourly burden imposed by Rule 17Ad-22(e)(13).187
Requirements in Rule 17Ad-22(e)(14) that Impose a PRA Burden
Rule 17Ad-22(e)(14) imposes a recordkeeping PRA burden and applies to three
respondent clearing agencies currently registered with the Commission. The Commission staff
estimates that the rule requires one response per respondent 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.188 As a result, the Commission staff believes that respondent clearing agencies
providing CCP services for security-based swaps would incur only the burdens of reviewing and
updating existing policies and procedures as necessary in order to comply with Rule 17Ad22(e)(14).
Accordingly, the Commission staff estimates that Rule 17Ad-22(e)(14) imposes on each
new respondent an initial burden of 36 hours in the first year.189 In addition, the Commission
continues to estimate that the rule imposes on each respondent an ongoing burden of 6 hours per

183

This figure was calculated as follows: 7 ongoing burden hours x 7 respondent clearing agencies = 49 hours

per year.
184

This figure was calculated as follows: 20.67 hours + 49 hours = 69.67 hours rounded up to 70.

The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
185

186

This figure was calculated as follows: ($540 per hour x 6 hours) = $3,240 + ($424 per hour x 11 hours) =
$4,664 + ($511 per hour x 12 hours) = $6,132 + ($318 per hour x 12 hours) = $3,816 = $17,852.
187

This figure was calculated as follows: $424 per hour x 7 hours = $2,968.

188

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).
189

This figure was calculated as follows: Assistant General Counsel for 12 hours + Compliance Attorney for
10 hours + Computer Operations Manager for 7 hours + Senior Business Analyst for 7 hours = 36 initial burden
hours per new respondent.

50

year (including the first year).190 There are no new respondents. For the three respondents that
are currently registered with the Commission as clearing agencies and have already
incurred the initial burdens imposed by the rule, this results in a total estimated industry
burden associated with Rule 17Ad-22(e)(14) of 18 hours per year.191
Assuming an average hourly rate of $424 for a Compliance Attorney,192 the Commission
staff estimates that each respondent clearing agency would incur an annual internal compliance
cost of approximately $2,544 for the ongoing hourly burden imposed by Rule 17Ad-22(e)(14).193
Requirements in Rule 17Ad-22(e)(15) that Impose a PRA Burden
Rule 17Ad-22(e)(15) imposes a recordkeeping PRA burden and applies to eight
respondent clearing agencies. The estimate of eight respondents includes seven covered clearing
agencies that are already registered with the Commission, and the staff estimates that one
additional respondent may register with the Commission and become subject to the rule. The
Commission staff estimates that the rule requires one response per respondent annually.
Rule 17Ad-22(e)(15) requires 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 17Ad- 22(b), (c), or (d),
and, as a result, the Commission staff believes that the estimated PRA burdens associated with
Rule 17Ad-22(e)(15) are more significant and would require a respondent clearing agency to
make substantial changes to its policies and procedures.
Accordingly, the Commission staff estimates that Rule 17Ad-22(e)(15) imposes on each
new respondent an initial burden of 210 hours in the first year,194 or 70 hours per year when
annualized over three years.195 In addition, the Commission staff estimates that the rule imposes
on each respondent an ongoing burden of 48 hours per year (including the first year).196 For the
one respondent that is not currently registered with the Commission as a clearing agency, this

190

This figure was calculated as follows: Compliance Attorney for 6 hours = 6 ongoing burden hours per year.

191

This figure was calculated as follows: 6 ongoing burden hours x 3 respondent clearing agencies = 18 hours

per year.
The per hour cost is from SIFMA’s Management and Professional Earnings in the Securities Industry 2013,
modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
192

193

This figure was calculated as follows: $424 per hour x 6 hours = $2,544.

194

This figure was 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 initial burden hours per new respondent.
195

This figure was calculated as follows: 210 initial burden hours ÷ 3 years = 70 annualized initial burden
hours per new respondent.
196

This figure was calculated as follows: Compliance Attorney for 42 hours + Administrative Assistant for 3
hours + Senior Business Analyst for 3 hours = 48 ongoing burden hours per year.

51

results in a total estimated annual burden of 118 hours.197 For the seven respondents that are
currently registered with the Commission as clearing agencies, the total estimated annual burden
is 336 hours.198 Therefore, the total aggregate industry burden associated with Rule 17Ad22(e)(15) for the eight respondents is approximately 454 hours per year.199
Assuming an average hourly rate of $540 for an Assistant General Counsel, $424 for a
Compliance Attorney, $511 for a Computer Operations Manager, $318 for a Senior Business
Analyst, $318 for a Financial Analyst, $1,238 for a Chief Financial Officer, and $94 for an
Administrative Assistant,200 the Commission staff estimates that the one respondent that is not
currently registered as a clearing agency would incur a one-time internal compliance cost of
approximately $126,770 for the initial hourly burden imposed by Rule 17Ad-22(e)(15).201 The
Commission staff also estimates that each respondent clearing agency would incur an annual
internal compliance cost of approximately $19,044 for the ongoing hourly burden imposed by
Rule 17Ad-22(e)(15).202
Requirements in Rule 17Ad-22(e)(16) that Impose a PRA Burden
Rule 17Ad-22(e)(16) imposes a recordkeeping PRA burden and applies to eight
respondent clearing agencies. The estimate of eight respondents includes seven covered clearing
agencies that are already registered with the Commission, and the staff estimates that one
additional respondent may register with the Commission and become subject to the rule. The
Commission staff estimates that the rule requires one response per respondent 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 staff believes 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 for Rule 17Ad-22(d)(3), the Commission staff estimates that Rule 17Ad-22(e)(16)

197

This figure was calculated as follows: 48 hours + 70 hours = 118 hours.

198

This figure was calculated as follows: 48 ongoing burden hours x 7 respondent clearing agencies = 336
hours per year.
199

This figure was calculated as follows: 118 hours + 336 hours = 454 hours.

The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead. The Commission staff separately estimated an
hourly rate for a Chief Financial Officer by using the website www.salary.com, which reports a median salary of
$416,649, and dividing by an 1800-hour work year and multiplying by 5.35 to account for bonuses, firm size,
employee benefits, and overhead. The result is $1,238 per hour.
200

201

This figure was calculated as follows: ($540 per hour x 40 hours) = $21,600 + ($424 per hour x 30 hours) =
$12,720 + ($511 per hour x 10 hours) = $5,110 + ($318 per hour x 10 hours) = $3,180 + ($318 per hour x 70 hours)
= $22,260 + ($1,238 per hour x 50 hours) = $61,900 = $126,770.
202

This figure was calculated as follows: ($424 per hour x 42 hours) = $17,808 + ($94 per hour x 3 hours) =
$282 + ($318 per hour x 3 hours) = $954 = $19,044.

52

imposes on each new respondent an initial burden of 20 hours in the first year,203 or 6.67 hours
per year when annualized over three years.204 In addition, the Commission staff estimates that the
rule imposes on each respondent an ongoing burden of 6 hours per year (including the first
year).205 For the one respondent that is not currently registered with the Commission as a
clearing agency, this results in a total estimated annual burden of 13 hours.206 For the seven
respondents that are currently registered with the Commission as clearing agencies, the total
estimated annual burden is 42 hours.207 Therefore, the total aggregate industry burden
associated with Rule 17Ad-22(e)(16) for the eight respondents is approximately 55 hours
per year.208
Assuming an average hourly rate of $540 for an Assistant General Counsel, $424 for a
Compliance Attorney, $511 for a Computer Operations Manager, and $318 for a Senior Business
Analyst,209 the Commission staff estimates that the one respondent that is not currently registered
as a clearing agency would incur a one-time internal compliance cost of approximately $8,868
for the initial hourly burden imposed by Rule 17Ad-22(e)(16).210 The Commission staff also
estimates that each respondent clearing agency would incur an annual internal compliance cost
of approximately $2,544 for the ongoing hourly burden imposed by Rule 17Ad-22(e)(16).211
Requirements in Rule 17Ad-22(e)(17) that Impose a PRA Burden
Rule 17Ad-22(e)(17) imposes a recordkeeping PRA burden and applies to eight
respondent clearing agencies. The estimate of eight respondents includes seven covered clearing
agencies that are already registered with the Commission, and the staff estimates that one
additional respondent may register with the Commission and become subject to the rule. The
Commission staff estimates that the rule requires one response per respondent annually.
Rule 17Ad-22(e)(17) contains similar requirements to those in Rule 17Ad- 22(d)(4) but
would also impose additional requirements that do not appear in Rule 17Ad- 22(d)(4). As a

203

This figure was 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 initial burden hours
per new respondent.
204

This figure was calculated as follows: 20 initial burden hours ÷ 3 years = 6.67 annualized initial burden
hours per new respondent.
205

This figure was calculated as follows: Compliance Attorney for 6 hours = 6 ongoing burden hours per year.

206

This figure was calculated as follows: 6 hours + 6.67 hours = 12.67 hours rounded up to 13.

207

This figure was calculated as follows: 6 ongoing burden hours x 7 respondent clearing agencies = 42 hours

per year.
208

This figure was calculated as follows: 12.67 hours + 42 hours = 54.67 hours rounded up to 55.

The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
209

210

This figure was calculated as follows: ($540 per hour x 4 hours) = $2,160 + ($424 per hour x 8 hours) =
$3,392 + ($511 per hour x 4 hours) = $2,044 + ($318 per hour x 4 hours) = $1,272 = $8,868.
211

This figure was calculated as follows: $424 per hour x 6 hours = $2,544.

53

result, the Commission staff believes 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 similar policies and procedures requirements and the corresponding burden
estimates for Rule 17Ad-22(d)(4), the Commission staff estimates that Rule 17Ad-22(e)(17)
imposes on each new respondent an initial burden of 28 hours in the first year,212 or 9.33 hours
per year when annualized over three years,213 In addition, the Commission staff estimates that the
rule imposes on each respondent an ongoing burden of 6 hours per year (including the first
year).214 For the one respondent that is not currently registered with the Commission as a
clearing agency, this results in a total estimated annual burden of 15 hours.215 For the seven
respondents that are currently registered with the Commission as clearing agencies, the total
estimated annual burden is 42 hours.216 Therefore, the total aggregate industry burden
associated with Rule 17Ad-22(e)(17) for the eight respondents is approximately 57 hours
per year.217
Assuming an average hourly rate of $540 for an Assistant General Counsel, $424 for a
Compliance Attorney, $511 for a Computer Operations Manager, $318 for a Senior Business
Analyst, $615 for a Chief Compliance Officer, and $384 for a Senior Programmer,218 the
Commission staff estimates that the one respondent that is not currently registered as a clearing
agency would incur a one-time internal compliance cost of approximately $13,118 for the initial
hourly burden imposed by Rule 17Ad-22(e)(17).219 The Commission staff also estimates that
each respondent clearing agency would incur an annual internal compliance cost of
approximately $2,544 for the ongoing hourly burden imposed by Rule 17Ad-22(e)(17).220

212

This figure was calculated as follows: Assistant General Counsel for 4 hours + Compliance Attorney for 8
hours + Senior Business Analyst for 4 hours + Computer Operations Manager for 6 hours + Chief Compliance
Officer for 4 hours + Senior Programmer for 2 hours = 28 initial burden hours per new respondent.
213

This figure was calculated as follows: 28 initial burden hours ÷ 3 years = 9.33 annualized initial burden
hours per new respondent.
214

This figure was calculated as follows: Compliance Attorney for 6 hours = 6 ongoing burden hours per year.

215

This figure was calculated as follows: 6 hours + 9.33 hours = 15.33 hours rounded down to 15.

216

This figure was calculated as follows: 6 ongoing burden hours x 7 respondent clearing agencies = 42 hours

per year.
217

This figure was calculated as follows: 15.33 hours + 42 hours = 57.33 hours rounded down to 57.

The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
218

219

This figure was calculated as follows: ($540 per hour x 4 hours) = $2,160 + ($424 per hour x 8 hours) =
$3,392 + ($511 per hour x 6 hours) = $3,066 + ($318 per hour x 4 hours) = $1,272 + ($615 per hour x 4 hours) =
$2,460 + ($384 per hour x 2 hours) = $768 = $13,118.
220

This figure was calculated as follows: $424 per hour x 6 hours = $2,544.

54

Requirements in Rule 17Ad-22(e)(18) that Impose a PRA Burden
Rule 17Ad-22(e)(18) imposes a third-party reporting PRA burden and applies to eight
respondent clearing agencies. The estimate of eight respondents includes seven covered clearing
agencies that are already registered with the Commission, and the staff estimates that one
additional respondent may register with the Commission and become subject to the rule. The
Commission staff estimates that the rule requires one response per respondent annually.
Rule 17Ad-22(e)(18) contains similar requirements to those in Rules 17Ad- 22(b)(5)–(7)
and (d)(2). As a result, the Commission staff believes 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 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 similar policies and procedures requirements and the corresponding burden
estimates for Rules 17Ad-22(b)(5)–(7) and 17Ad-22(d)(2), the Commission staff estimates that
Rule 17Ad-22(e)(18) imposes on each new respondent an initial burden of 44 hours in the first
year,221 or 14.67 hours per year when annualized over three years.222 In addition, the
Commission staff estimates that the rule imposes on each respondent an ongoing burden of 7
hours per year (including the first year).223 For the one respondent that is not currently registered
with the Commission as a clearing agency, this results in a total estimated annual burden of 22
hours.224 For the seven respondents that are currently registered with the Commission as clearing
agencies, the total estimated annual burden is 49 hours.225 Therefore, the total aggregate
industry burden for the eight respondents associated with Rule 17Ad-22(e)(18 is
approximately 71 hours per year.226
Assuming an average hourly rate of $540 for an Assistant General Counsel, $424 for a
Compliance Attorney, $511 for a Computer Operations Manager, $318 for a Senior Business
Analyst, $615 for a Chief Compliance Officer, and $384 for a Senior Programmer,227 the
Commission staff estimates that the one respondent that is not currently registered as a clearing

221

This figure was calculated as follows: Assistant General Counsel for 10 hours + Compliance Attorney for 7
hours + Senior Business Analyst for 5 hours + Computer Operations Manager for 15 hours + Chief Compliance
Officer for 5 hours + Senior Programmer for 2 hours = 44 initial burden hours per new respondent.
222

This figure was calculated as follows: 44 initial burden hours ÷ 3 years = 14.67 annualized initial burden
hours per new respondent.
223

This figure was calculated as follows: Compliance Attorney for 7 hours = 7 ongoing burden hours per year.

224

This figure was calculated as follows: 7 hours + 14.67 hours = 21.67 hours rounded up to 22.

225

This figure was calculated as follows: 7 ongoing burden hours x 7 respondent clearing agencies = 49 hours

per year.
226

This figure was calculated as follows: 21.67 hours + 49 hours = 70.67 hours ropunded up to 71.

The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
227

55

agency would incur a one-time internal compliance cost of approximately $21,466 for the initial
hourly burden imposed by Rule 17Ad-22(e)(18).228 The Commission staff also estimates that
each respondent clearing agency would incur an annual internal compliance cost of
approximately $2,968 for the ongoing hourly burden imposed by Rule 17Ad-22(e)(18).229
Requirements in Rule 17Ad-22(e)(19) that Impose a PRA Burden
Rule 17Ad-22(e)(19) imposes a recordkeeping PRA burden and applies to eight
respondent clearing agencies. The estimate of eight respondents includes seven covered clearing
agencies that are already registered with the Commission, and the staff estimates that one
additional respondent may register with the Commission and become subject to the rule. The
Commission staff estimates that the rule requires one response per respondent annually.
Rule 17Ad-22(e)(19) includes requirements that have not been previously included in
Rules 17Ad-22(b), (c) or (d) and, therefore, the Commission staff believes that a respondent
clearing agency would need to create new policies and procedures to address the requirements of
Rule 17Ad-22(e)(19).
Accordingly, the Commission staff estimates that Rule 17Ad-22(e)(19) imposes on each
new respondent an initial burden of 44 hours in the first year,230 or 14.67 hours per year when
annualized over three years.231 In addition, the Commission continues to estimate that the rule
imposes on each respondent an ongoing burden of 7 hours per year (including the first year).232
For the one respondent that is not currently registered with the Commission as a clearing agency,
this results in a total estimated annual burden of 22 hours.233 For the seven respondents that are
currently registered with the Commission as clearing agencies, the total estimated annual burden
is 49 hours.234 Therefore, the total aggregate industry burden associated with Rule 17Ad22(e)(19 for the eight respondents is approximately 71 hours per year.235
Assuming an average hourly rate of $540 for an Assistant General Counsel, $424 for a
Compliance Attorney, $511 for a Computer Operations Manager, $318 for a Senior Business

228

This figure was calculated as follows: ($540 per hour x 10 hours) = $5,400 + ($424 per hour x 7 hours) =
$2,968 + ($511 per hour x 15 hours) = $7,665 + ($318 per hour x 5 hours) = $1,590 + ($615 per hour x 5 hours) =
$3,075 + ($384 per hour x 2 hours) = $768 = $21,466.
229

This figure was calculated as follows: $424 per hour x 7 hours = $2,968.

230

This figure was 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 initial burden hours per new respondent.
231

This figure was calculated as follows: 44 initial burden hours ÷ 3 years = 14.67 annualized initial burden
hours per new respondent.
232

This figure was calculated as follows: Compliance Attorney for 7 hours = 7 ongoing burden hours per year.

233

This figure was calculated as follows: 7 hours + 14.67 hours = 21.67 hours rounded up to 22.

234

This figure was calculated as follows: 7 ongoing burden hours x 7 respondent clearing agencies = 49 hours

per year.
235

This figure was calculated as follows: 21.67 hours + 49 hours = 70.67 hours rounded up to 71.

56

Analyst, $615 for a Chief Compliance Officer, and $384 for a Senior Programmer,236 the
Commission staff estimates that the one respondent that is not currently registered as a clearing
agency would incur a one-time internal compliance cost of approximately $21,466 for the initial
hourly burden imposed by Rule 17Ad-22(e)(19).237 The Commission staff also estimates that
each respondent clearing agency would incur an annual internal compliance cost of
approximately $2,968 for the ongoing hourly burden imposed by Rule 17Ad-22(e)(19).238
Requirements in Rule 17Ad-22(e)(20) that Impose a PRA Burden
Rule 17Ad-22(e)(20) imposes a recordkeeping PRA burden and applies to eight
respondent clearing agencies. The estimate of eight respondents includes seven covered clearing
agencies that are already registered with the Commission, and the staff estimates that one
additional respondent may register with the Commission and become subject to the rule. The
Commission staff estimates that the rule requires one response per respondent 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 staff believes 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 similar policies and procedures requirements and the corresponding burden
estimates for Rule 17Ad-22(d)(7), the Commission staff estimates that Rule 17Ad-22(e)(20)
imposes on each new respondent an initial burden of 44 hours in the first year,239 or 14.67 hours
per year when annualized over three years.240 In addition, the Commission staff estimates that the
rule imposes on each respondent an ongoing burden of 7 hours per year (including the first
year).241 For the one respondent that is not currently registered with the Commission as a
clearing agency, this results in a total estimated annual burden of 22 hours.242 For the seven
respondents that are currently registered with the Commission as clearing agencies, the total

The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
236

237

This figure was calculated as follows: ($540 per hour x 10 hours) = $5,400 + ($424 per hour x 7 hours) =
$2,968 + ($511 per hour x 15 hours) = $7,665 + ($318 per hour x 5 hours) = $1,590 + ($615 per hour x 5 hours) =
$3,075 + ($384 per hour x 2 hours) = $768 = $21,466.
238

This figure was calculated as follows: $424 per hour x 7 hours = $2,968.

239

This figure was calculated as follows: Assistant General Counsel for 10 hours + Compliance Attorney for 7
hours + Senior Business Analyst for 5 hours + Computer Operations Manager for 15 hours + Chief Compliance
Officer for 5 hours + Senior Programmer for 2 hours = 44 initial burden hours per new respondent.
240

This figure was calculated as follows: 44 initial burden hours ÷ 3 years = 14.67 annualized initial burden
hours per new respondent.
241

This figure was calculated as follows: Compliance Attorney for 7 hours = 7 ongoing burden hours per year.

242

This figure was calculated as follows: 7 hours + 14.67 hours = 21.67 hours rounded up to 22.

57

estimated annual burden is 49 hours.243 Therefore, the total aggregate industry burden for the
eight respondents associated with Rule 17Ad-22(e)(20) is approximately 71 hours per
year.244
Assuming an average hourly rate of $540 for an Assistant General Counsel, $424 for a
Compliance Attorney, $511 for a Computer Operations Manager, $318 for a Senior Business
Analyst, $615 for a Chief Compliance Officer, and $384 for a Senior Programmer,245 the
Commission staff estimates that the one respondent that is not currently registered as a clearing
agency would incur a one-time internal compliance cost of approximately $21,466 for the initial
hourly burden imposed by Rule 17Ad-22(e)(20).246 The Commission staff also estimates that
each respondent clearing agency would incur an annual internal compliance cost of
approximately $2,968 for the ongoing hourly burden imposed by Rule 17Ad-22(e)(20).247
Requirements in Rule 17Ad-22(e)(21) that Impose a PRA Burden
Rule 17Ad-22(e)(21) imposes a recordkeeping PRA burden and applies to eight
respondent clearing agencies. The estimate of eight respondents includes seven covered clearing
agencies that are already registered with the Commission, and the staff estimates that one
additional respondent may register with the Commission and become subject to the rule. The
Commission staff estimates that the rule requires one response per respondent annually.
Rule 17Ad-22(e)(21) contains requirements similar to those in Rule 17Ad- 22(d)(6), but
also imposes new requirements. As a result, the Commission staff believes 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 similar policies and procedures requirements and the corresponding burden
estimates for Rule 17Ad-22(d)(6), the Commission staff estimates that Rule 17Ad-22(e)(21)
imposes on each new respondent an initial burden of 32 hours in the first year,248 or 10.67 hours
per year when annualized over three years.249 In addition, the Commission staff estimates that the

243

This figure was calculated as follows: 7 ongoing burden hours x 7 respondent clearing agencies = 49 hours

per year.
244

This figure was calculated as follows: 21.67 hours + 49 hours = 70.67 hours rounded up to 71.

The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
245

246

This figure was calculated as follows: ($540 per hour x 10 hours) = $5,400 + ($424 per hour x 7 hours) =
$2,968 + ($511 per hour x 15 hours) = $7,665 + ($318 per hour x 5 hours) = $1,590 + ($615 per hour x 5 hours) =
$3,075 + ($384 per hour x 2 hours) = $768 = $21,466.
247

This figure was calculated as follows: $424 per hour x 7 hours = $2,968.

248

This figure was calculated as follows: Assistant General Counsel for 10 hours + Compliance Attorney for 7
hours + Senior Business Analyst for 5 hours + Computer Operations Manager for 10 hours = 32 initial burden hours
per new respondent.
249

This figure was calculated as follows: 32 initial burden hours ÷ 3 years = 10.67 annualized initial burden
hours per new respondent.

58

rule imposes on each respondent an ongoing burden of 11 hours per year (including the first
year).250 For the one respondent that is not currently registered with the Commission as a
clearing agency, this results in a total estimated annual burden of 22 hours.251 For the seven
respondents that are currently registered with the Commission as clearing agencies, the total
estimated annual burden is 77 hours.252 Therefore, the total aggregate industry burden
associated with Rule 17Ad-22(e)(21) for the eight respondents is approximately 99 hours
per year.253
Assuming an average hourly rate of $540 for an Assistant General Counsel, $424 for a
Compliance Attorney, $511 for a Computer Operations Manager, $318 for a Senior Business
Analyst, and $94 for an Administrative Assistant,254 the Commission staff estimates that the one
respondent that is not currently registered as a clearing agency would incur a one-time internal
compliance cost of approximately $15,068 for the initial hourly burden imposed by Rule 17Ad22(e)(21).255 The Commission staff also estimates that each respondent clearing agency would
incur an annual internal compliance cost of approximately $3,356 for the ongoing hourly burden
imposed by Rule 17Ad-22(e)(21).256
Requirements in Rule 17Ad-22(e)(22) that Impose a PRA Burden
Rule 17Ad-22(e)(22) imposes a recordkeeping PRA burden and applies to eight
respondent clearing agencies. The estimate of eight respondents includes seven covered clearing
agencies that are already registered with the Commission, and the staff estimates that one
additional respondent may register with the Commission and become subject to the rule. The
Commission staff estimates that the rule requires one response per respondent annually.
Rule 17Ad-22(e)(22) requires 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 staff believes that respondent clearing agencies
already use the relevant internationally accepted communication procedures and standards and

250

This figure was calculated as follows: Compliance Attorney for 5 hours + Administrative Assistant for 3
hours + Senior Business Analyst for 3 hours = 11 ongoing burden hours per year.
251

This figure was calculated as follows: 11 hours + 10.67 hours = 21.67 hours rounded up to 22.

252

This figure was calculated as follows: 11 ongoing burden hours x 7 respondent clearing agencies = 77
hours per year.
253

This figure was calculated as follows: 21.67 hours + 77 hours = 98.67 hours rounded up to 99.

The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
254

255

This figure was calculated as follows: ($540 per hour x 10 hours) = $5,400 + ($424 per hour x 7 hours) =
$2,968 + ($511 per hour x 10 hours) = $5,110 + ($318 per hour x 5 hours) = $1,590 = $15,068.
256

This figure was calculated as follows: ($424 per hour x 5 hours) = $2,120 + ($94 per hour x 3 hours) =
$282 + ($318 per hour x 3 hours) = $954 = $3,356.

59

continues to expect that a respondent clearing agency would need to make only limited changes
to satisfy the requirements under the Rule 17Ad-22(e)(22).
Accordingly, the Commission staff estimates that Rule 17Ad-22(e)(22) imposes on each
new respondent an initial burden of 24 hours in the first year,257 or 8 hours per year when
annualized over three years.258 In addition, the Commission staff estimates that the rule imposes
on each respondent an ongoing burden of 5 hours per year (including the first year).259 For the
one respondent that is not currently registered with the Commission as a clearing agency, this
results in a total estimated annual burden of 13 hours.260 For the seven respondents that are
currently registered with the Commission as clearing agencies, the total estimated annual burden
is 35 hours.261 Therefore, the total aggregate industry burden associated with Rule 17Ad22(e)(22) for the eight respondents is approximately 48 hours per year.262
Assuming an average hourly rate of $540 for an Assistant General Counsel, $424 for a
Compliance Attorney, $511 for a Computer Operations Manager, $318 for a Senior Business
Analyst, $615 for a Chief Compliance Officer, and $384 for a Senior Programmer,263 the
Commission staff estimates that the one respondent that is not currently registered as a clearing
agency would incur a one-time internal compliance cost of approximately $11,680 for the initial
hourly burden imposed by Rule 17Ad-22(e)(22).264 The Commission staff also estimates that
each respondent clearing agency would incur an annual internal compliance cost of
approximately $2,120 for the ongoing hourly burden imposed by Rule 17Ad-22(e)(22).265
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 applies to eight
respondent clearing agencies. The estimate of eight respondents includes seven covered clearing
agencies that are already registered with the Commission, and the staff estimates that one

257

This figure was 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 initial burden hours per new respondent.
258

This figure was calculated as follows: 24 initial burden hours ÷ 3 years = 8 annualized initial burden hours
per new respondent.
259

This figure was calculated as follows: Compliance Attorney for 5 hours = 5 ongoing burden hours per year.

260

This figure was calculated as follows: 5 hours + 8 hours = 13 hours.

261

This figure was calculated as follows: 5 ongoing burden hours x 7 respondent clearing agencies = 35 hours

per year.
262

This figure was calculated as follows: 13 hours + 35 hours = 48 hours.

The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
263

264

This figure was calculated as follows: ($540 per hour x 2 hours) = $1,080 + ($424 per hour x 6 hours) =
$2,544 + ($511 per hour x 7 hours) = $3,577 + ($318 per hour x 2 hours) = $636 + ($615 per hour x 5 hours) =
$3,075 + ($384 per hour x 2 hours) = $768 = $11,680.
265

This figure was calculated as follows: $424 per hour x 5 hours = $2,120.

60

additional respondent may register with the Commission and become subject to the rule. The
Commission staff estimates that the rule requires one response per respondent annually.
Rule 17Ad-22(e)(23) contains similar requirements to Rule 17Ad-22(d)(9), but also
imposes substantial new requirements. As a result, the Commission staff believes that, although a
respondent clearing agency was already 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 agency would also need to establish new policies and procedures to address additional
requirements.
Based on similar policies and procedures requirements and the corresponding burden
estimates for Rule 17Ad-22(d)(9), the Commission staff estimates that Rule 17Ad-22(e)(23)
imposes on each new respondent an initial burden of 138 hours in the first year,266 or 46 hours
per year when annualized over three years.267 In addition, the Commission staff estimates that the
rule imposes on each respondent an ongoing burden of 34 hours per year (including the first
year).268 For the one respondent that is not currently registered with the Commission as a
clearing agency, this results in a total estimated annual burden of 80 hours.269 For the seven
respondents that are currently registered with the Commission as clearing agencies, the total
estimated annual burden is 238 hours.270 Therefore, the total aggregate industry burden
associated with Rule 17Ad-22(e)(23) for the eight respondents is approximately 318 hours
per year.271
Assuming an average hourly rate of $540 for an Assistant General Counsel, $424 for a
Compliance Attorney, $511 for a Computer Operations Manager, $318 for a Senior Business
Analyst, $615 for a Chief Compliance Officer, and $384 for a Senior Programmer,272 the
Commission staff estimates that the one respondent that is not currently registered as a clearing
agency would incur a one-time internal compliance cost of approximately $66,914 for the initial
hourly burden imposed by Rule 17Ad-22(e)(23).273 The Commission staff also estimates that

266

This figure was calculated as follows: Assistant General Counsel for 38 hours + Compliance Attorney for
24 hours + Senior Business Analyst for 18 hours + Computer Operations Manager for 32 hours + Chief Compliance
Officer for 18 hours + Senior Programmer for 8 hours = 138 initial burden hours per new respondent.
267

This figure was calculated as follows: 138 initial burden hours ÷ 3 years = 46 annualized initial burden
hours per new respondent.
268

This figure was calculated as follows: Compliance Attorney for 34 hours = 34 ongoing burden hours per

year.
269

This figure was calculated as follows: 34 hours + 46 hours = 80 hours.

270

This figure was calculated as follows: 34 ongoing burden hours x 7 respondent clearing agencies = 238
hours per year.
271

This figure was calculated as follows: 80 hours + 238 hours = 318 hours.

The per hour costs are from SIFMA’s Management and Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead.
272

273

This figure was calculated as follows: ($540 per hour x 38 hours) = $20,520 + ($424 per hour x 24 hours) =

61

each respondent clearing agency would incur an annual internal compliance cost of
approximately $14,416 for the ongoing hourly burden imposed by Rule 17Ad-22(e)(23).274
In sum, the total aggregate annual time burden for all respondent clearing agencies
under Rules 17Ad-22(b), (c), (d), and (e) is approximately 9,428 hours, as reflected in the
table below.
iii.

Table Summary of Hourly Burdens for Rule 17Ad-22

The table below summarizes the Commission staff’s estimates of the total hourly burden
for all respondents under Rules 17Ad-22(b), (c), (d), and (e). For certain information collections,
the table includes more than one row for the information collection (i.e., for the same rule). In
such cases, the top row is intended to reflect the burden estimates for the respondents that are
currently registered with the Commission as clearing agencies, and the next row is intended to
reflect the estimates for the respondent that is not currently registered as a clearing agency.275 A
third row provides the subtotals from the two rows above.

Type of
Burden

Number
of
Entities
Impacted

Number of
Annual
Responses
Per Entity

Initial
Burden Per
Entity Per
Response

Annualized
Initial
Burden Per
Entity Per
Response

Ongoing
Burden
Per Entity
Per
Response

Total
Annual
Burden
Per
Entity

Total
Annual
Industry
Burden

17Ad-22(b)(1)–(3)

Recordkeeping

9

1

0

0

10

10

90

2

17Ad-22(b)(4)

Recordkeeping

9

1

0

0

60

60

540

3

17Ad-22(b)(5)–(7)

Recordkeeping

9

1

0

0

60

60

540

4

17Ad-22(c)(1)

Recordkeeping

9

4

0

0

3

12

108

5

17Ad-22(c)(2)

Third-Party
Reporting

9

1

0

0

250

250

2,250

IC

Name of
Information
Collection

1

$10,176 + ($511 per hour x 32 hours) = $16,352 + ($318 per hour x 18 hours) = $5,724 + ($615 per hour x 18
hours) = $11,070 + ($384 per hour x 8 hours) = $3,072 = $66,914.
274

This figure was calculated as follows: $424 per hour x 34 hours = $14,416.

275

The use of “RNR” in the table below stands for “Respondent Not Registered.”

62

6

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

Third-Party
Reporting

Subtotal

1

1

500

166.67

250

417

10

417
2,667

7

17Ad-22(d)(1)–(15)

Recordkeeping

2

1

0

0

50

50

100

8

17Ad-22(e)(1)

Recordkeeping

7

1

0

0

3

3

21

9

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

Recordkeeping

1

1

8

2.67

3

6

6

Subtotal

8

27

10

17Ad-22(e)(2)

Recordkeeping

7

1

0

0

5

5

35

11

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

Recordkeeping

1

1

25

8.33

5

13

13

Subtotal

8

48

12

17Ad-22(e)(3)

Recordkeeping

7

1

0

0

49

49

343

13

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

Recordkeeping

1

1

57

19

49

68

68

Subtotal

8

411

14

17Ad-22(e)(4)

Recordkeeping

7

1

0

0

62

62

434

15

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

Recordkeeping

1

1

219

73

62

135

135

Subtotal

8

569

16

17Ad-22(e)(5)

Recordkeeping

7

1

0

0

36

36

252

17

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

Recordkeeping

1

1

42

14

36

50

50

Subtotal
18
19
53

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

8

302

Recordkeeping

6

1

0

0

60

60

360

Recordkeeping

1

1

180

60

60

120

120

Recordkeeping

6

1

129

43

85

128

768

1

1

129

43

85

128

128

54
Subtotal

14

1,376

20

17Ad-22(e)(7)

Recordkeeping

7

1

0

0

128

128

896

21

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

Recordkeeping

1

1

330

110

128

238

238

Subtotal

8

1,134

22

17Ad-22(e)(8)

Recordkeeping

7

1

0

0

5

5

35

23

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

Recordkeeping

1

1

12

4

5

9

9

63

Subtotal

8

44

24

17Ad-22(e)(9)

Recordkeeping

7

1

0

0

5

5

35

25

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

Recordkeeping

1

1

12

4

5

9

9

Subtotal

8

44

26

17Ad-22(e)(10)

Recordkeeping

7

1

0

0

5

5

35

27

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

Recordkeeping

1

1

12

4

5

9

9

Subtotal

8

44

28

17Ad-22(e)(11)

Recordkeeping

1

1

0

0

8

8

8

29

17Ad-22(e)(12)

Recordkeeping

7

1

0

0

5

5

35

30

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

Recordkeeping

1

1

12

4

5

9

9

Subtotal

8

44

31

17Ad-22(e)(13)

Recordkeeping

7

1

0

0

7

7

49

32

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

Recordkeeping

1

1

41

13.67

7

21

21

Subtotal

8

70

33/
34

17Ad-22(e)(14)

Recordkeeping

3

1

0

0

6

6

18

35

17Ad-22(e)(15)

Recordkeeping

7

1

0

0

48

48

336

36

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

Recordkeeping

1

1

210

70

48

118

118

Subtotal

8

454

37

17Ad-22(e)(16)

Recordkeeping

7

1

0

0

6

6

42

38

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

Recordkeeping

1

1

20

6.67

6

13

13

Subtotal

8

55

39

17Ad-22(e)(17)

Recordkeeping

7

1

0

0

6

6

42

40

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

Recordkeeping

1

1

28

9.33

6

15

15

Subtotal
41

17Ad-22(e)(18)

42

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

8
Third-Party
Reporting
Third-Party
Reporting

Subtotal
43

17Ad-22(e)(19)

57

7

1

0

0

7

7

49

1

1

44

14.67

7

22

22

8
Recordkeeping

7

71
1

0

64

0

7

7

49

44

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

Recordkeeping

Subtotal

1

1

44

14.67

7

22

8

22
71

45

17Ad-22(e)(20)

Recordkeeping

7

1

0

0

7

7

49

46

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

Recordkeeping

1

1

44

14.67

7

22

22

Subtotal

8

71

47

17Ad-22(e)(21)

Recordkeeping

7

1

0

0

11

11

77

48

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

Recordkeeping

1

1

32

10.67

11

22

22

Subtotal

8

99

49

17Ad-22(e)(22)

Recordkeeping

7

1

0

0

5

5

35

50

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

Recordkeeping

1

1

24

8

5

13

13

Subtotal
51

17Ad-22(e)(23)

52

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

8
Third-Party
Recordkeeping
Third-Party
Recordkeeping

48

7

1

0

0

34

34

238

1

1

138

46

34

80

80

8

318

Total Aggregate Burden for All Respondents

13. Costs to Respondents
The total estimated annual cost burden associated with Rule 17Ad-22 is $14,041,280
calculated as described below:
Requirements in Rule 17Ad-22(b)(4) that Impose Costs on Registered Clearing Agencies
Based on its oversight of registered clearing agencies, the Commission staff estimates
that Rule 17Ad-22(b)(4) will impose an annual cost on all respondent clearing agencies for work
on model validation. The Commission staff believes that respondent clearing agencies will hire a
consulting firm that will dedicate two consultants to the project for a total period of 12 weeks.
The Commission staff estimates that should respondent clearing agencies decide to hire
external consultants to provide for the annual model validation required under Rule 17Ad22(b)(4) through written policies and procedures, the aggregate ongoing cost associated
with hiring such consultants will be approximately $3,888,000 per year.276

276

This figure was calculated as follows: 2 Consultants for 30 hours per week at $600 per hour = $36,000 per
week x 12 weeks = $432,000 per respondent clearing agency x 9 respondents = $3,888,000. The $600 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.

65

9,428

Requirements in Rule 17Ad-22(c)(2) that Impose Costs on Registered Clearing Agencies
Rule 17Ad-22(c)(2) requires each registered clearing agency to post on its website annual
audited financial statements. To satisfy this requirement, respondent clearing agencies will need
to use the services of a registered public accounting firm. The Commission staff estimates that
such services will on average cost approximately $500,000 each year.277 Accordingly, to meet
the ongoing requirements of Rule 17Ad-22(c)(2), the Commission staff estimates a total
annual cost of approximately $5,000,000 in the aggregate for all respondent clearing
agencies. 278
Requirements in Rule 17Ad-22(e) that Impose Costs on Covered Clearing Agencies
Rules 17Ad-22(e)(4) and (e)(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 staff believes that covered clearing agencies may choose to hire
external consultants for the purpose of performing the ongoing model validation required under
Rules 17Ad-22(e)(4) and (e)(7). If each respondent clearing agency chose to hire external
consultants, the Commission staff estimates that the ongoing cost associated with hiring such
consultants is $322,080 per respondent.279 The total estimated industry-wide cost burden
associated with Rules 17Ad-22(e)(4) and (e)(7) would therefore be $2,576,640 per rule.280
In sum, the total aggregate cost to all respondents under Rules 17Ad-22(b)(4), (c)(2),
(e)(4), and (e)(7) is approximately $14,041,280,281 as reflected in the table below.
Table of Costs for Rule 17Ad-22 (costs in thousands of dollars)
The table below summarizes the Commission staff’s estimates for the ongoing external
costs imposed on respondent clearing agencies by Rules 17Ad-22(b)(4), (c)(2), (e)(4), and (e)(7).
The cost estimates included in the prospective PRA extension are unchanged from those

277

A precise estimate of audit costs for clearing agencies cannot be made and, therefore, the Commission staff
examined a number of existing surveys (e.g., surveys by CFO.com studying large and small public companies).
While the costs may vary depending on the circumstances, the Commission staff is using an estimate of $500,000,
which is on the upper range for an average cost.
278

This figure was calculated as follows: $500,000 estimated cost of registered public accounting firm x 10
respondents = $5,000,000.
279

This figure was calculated as follows: 2 Consultants for 40 hours per week at $671 per hour = $53,680 per
week x 12 weeks = $644,160 per respondent clearing agency ÷ 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. In order to estimate a PRA cost on a per-rule basis, the Commission staff has divided the total cost for
Rules 17Ad-22(e)(4) and (e)(7) evenly between the two rules.
280

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

281

This figure was calculated as follows: $3,888,000 (total annual cost for Rule 17Ad-22(b)(4)) + $5,000,000
(total annual cost for Rule 17Ad-22(c)(2)) + $2,576,640 (total annual cost for Rule 17Ad-22(e)(4)) + $2,576,640
(total annual cost for Rule 17Ad-22(e)(7)) = $14,041,280.

66

provided in the PRA analysis that was submitted in connection with the 2020 Adopting Release
and partial revision.

IC

Name of
Information
Collection

Type of
Burden

Number of
Entities
Impacted

Number of
Annual
Responses
Per Entity

Initial Cost
Per Entity
Per
Response

Annualized
Initial Cost
Per Entity
Per Response

Ongoing
Cost Per
Entity Per
Response

Total
Annual
Cost Per
Entity

Total
Annual
Industry
Cost

2

17Ad-22(b)(4)

Recordkeeping

9

1

0

0

432

432

3,888

5

17Ad-22(c)(2)

9

1

0

0

500

500

4,500

6

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

1

1

0

0

500

500

500

Third-Party
Reporting
Third-Party
Reporting

Subtotal

10

5,000

14

17Ad-22(e)(4)

Recordkeeping

7

1

0

0

322.08

322.08

2,254.56

15

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

Recordkeeping

1

1

0

0

322.08

322.08

322.08

Subtotal

8

2,576.64

20

17Ad-22(e)(7)

Recordkeeping

7

1

0

0

322.08

322.08

2,254.56

21

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

Recordkeeping

1

1

0

0

322.08

322.08

322.08

Subtotal

8

2,576.64

Total Aggregate Cost for All Respondents (in thousands of dollars)

14,041.28

14. Costs to Federal Government
Not applicable. No cost to the federal government is anticipated.
15. Changes in Burden
The change in total estimated hour burden from 8,532 hours to 9,428 hours is due to the
2023 Proposing Release to amend Rule 17Ad-22(e)(6).282 As described more fully above, these
proposed changes would impose a new information collection (“IC-53 17Ad-22(e)(6) (Enhanced
Margin)”). The proposed changes would impose PRA recordkeeping burdens on respondent
covered clearing agencies.
Summary of Changes in Burden Hours
Name of
Information
Collection

282

Annual
Industry
Burden

Annual Industry
Burden Previously
Approved

Change in
Burden

See, 2023 Proposing Release, surpa note 26.

67

Reason for Change

17Ad-22(e)(6)
(Enhanced Margin)

896

0

896

TOTAL CHANGE

New IC in connection with 2023 Proposing
Release.

896

16. Information Collection Planned for Statistical Purposes
Not applicable. The information collection is not used for statistical purposes.
17. Approval to Omit OMB Expiration Date
The Commission is not seeking approval to omit the expiration date.
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 does not involve statistical methods.

68