PRA Supporting Statement for Rule 19b-4 and Form 19b-4 - 7-12-12 6PM

PAPERWORK REDUCTION ACT SUBMISSION
Rule 19b-4, Form 19b-4 and Rule 3Ca-1
SUPPORTING STATEMENT
This submission is being made pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C.
Section 3501 et seq.
A.

JUSTIFICATION
1.

Necessity of Information Collection
A.

Rule 19b-4 and Form 19b-4

The Securities Exchange Act of 1934 (“Exchange Act”) provides a framework for selfregulation within which national securities exchanges, national securities associations, and
registered clearing agencies have primary responsibility for regulating their members or
participants, and the Municipal Securities Rulemaking Board is responsible for establishing rules for
certain transactions in municipal securities. The Exchange Act charges the Commission with
supervising each of these organizations (generally referred to as self-regulatory organizations or
“SROs”) and with assuring that each complies with and advances the policies of the Exchange Act.
As part of its oversight responsibilities, the Commission is required to review changes in the rules of
the various SROs.
Section 19(b) of the Exchange Act, as amended, requires each SRO to file with the
Commission, in accordance with such rules as the Commission may prescribe, copies of any
proposed rule, or any proposed change in, addition to, or deletion from the rules of such SRO
(collectively, a “proposed rule change”) accompanied by a concise general statement of the basis
and purpose of such proposed rule change. Rule 19b-4 currently requires an SRO seeking
Commission approval for a proposed rule change to provide the information stipulated in Form
19b-4. Form 19b-4 currently requires a description of the terms of a proposed rule change, the
proposed rule change’s impact on various market segments, and the relationship between the
proposed rule change and the SRO’s existing rules. Form 19b-4 also requires an accurate
statement of the authority and statutory basis for, and purpose of, the proposed rule change, the
proposal’s impact on competition, and a summary of any written comments received by the SRO
from SRO members. An SRO also is required to submit Form 19b-4 to the Commission
electronically, post a proposed rule change on its public website within two business days of its
filing, and to post and maintain a current and complete set of its rules on its website.
The Commission is required to publish notice in the Federal Register of a proposed rule
change filing together with the terms of substance of the proposed rule change or a description of
the subjects and issues involved, to give interested persons an opportunity to submit written data,
views, and arguments concerning such proposed rule change. The publication must be made by the
Commission within 15 days after an SRO files the proposed rule change with the Commission and
subsequently posts it on its website. The comment period is generally 21 days and the Commission
shall not approve such proposed rule change prior to the 30th day after publication of the notice of

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the filing unless it finds good cause for doing so and publishes its reasons. The Commission must
either approve or disapprove a proposed rule change not later than 45 days after the date of
publication in the Federal Register. The Commission may, with the consent of the SRO, extend the
time period for approval or disapproval by up to an additional 45 days if it determines that a longer
period is appropriate and publishes the reasons for such determination. In order to approve a
proposed rule change, the Commission must make an affirmative finding that the proposed rule
change is consistent with the Exchange Act and the rules thereunder. Section 19(b) also provides
that certain administrative or interpretive proposed rule changes may become effective on filing,
subject to the Commission's authority to temporarily suspend such proposed rule changes within
sixty days of filing.
On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and
Consumer Protection Act (“Dodd-Frank Act”).1 The Dodd-Frank Act was enacted to, among
other purposes, promote the financial stability of the United States by improving accountability
and transparency in the financial system and by providing for enhanced regulation and oversight
of institutions designated as systemically important. 2 Titles VII and VIII of the Dodd-Frank Act
are intended to further these goals and mitigate systemic risk in part by imposing new requirements
with respect to clearing agencies. As noted above, registered clearing agencies are SROs under the
Exchange Act and must file proposed rule changes with the Commission on Form 19b-4.
Section 763(a) of Title VII and Section 806(e) of Title VIII, and the rules adopted by the
Commission to implement Section 763(a) and Section 806(e), impose new collection of
information requirements on registered clearing agencies. The Commission is adopting
amendments to Rule 19b-4 and Form 19b-4 that require that the information be collected on
Form 19b-4 in order to utilize existing resources. These new reporting requirements are in
addition to the information currently required by Rule 19b-4 and Form 19b-4.
Section 763(a) of the Dodd-Frank Act added Section 3C to the Exchange Act (“Exchange
Act Section 3C”), which requires a clearing agency to submit for a Commission determination of
whether such security-based swap is required to be cleared, any security-based swap, or any
group, category, type or class of security-based swaps that the clearing agency plans to accept for
clearing (“Security-Based Swap Submissions”), and provide notice to its members of such
submissions.3 The Commission is adopting new Rule 19b-4(o) to meet the requirements set
forth in Exchange Act Section 3C. Section 806(e) requires that any financial market utility
designated as systemically important by the Financial Stability Oversight Council (“Council”),
file with the Commission advance notices (“Advance Notices”) of proposed changes to its rules,
procedures or operations that could, as defined by the rules of each Supervisory Agency,
1

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. No. 111203, H.R. 4173).

2

See Pub. L. No. 111-203, Preamble.

3

15 U.S.C. 78c-3 et seq.

3
materially affect the nature or level of risk presented by the financial market utility. 4 Clearing
agencies registered with the Commission are financial market utilities as defined in Title VIII of
the Dodd-Frank Act and the Commission may be the Supervisory Agency to a clearing agency
that is designated as systemically important by the Council (“designated clearing agency”). 5 A
designated clearing agency must comply with the notice process as soon as the Council
designates the clearing agency as systemically important. The Commission is adopting new Rule
19b-4(n) to meet the requirements set forth in Section 806(e).
The Commission anticipates that in many cases, a clearing agency will be required to
make a Security-Based Swap Submission under Exchange Act Section 3C or file an Advance
Notice under Section 806(e) when it is already required to file a proposed rule change under
Exchange Act Section 19(b). Clearing Agencies would be able to meet one or more of these
filing requirements by submitting a single Form 19b-4.
Exchange Act Section 3C requires that a clearing agency provide as part of the SecurityBased Swap Submission a statement that includes, but is not limited to: (i) how the submission is
consistent with Section 17A of the Exchange Act; (ii) information that will assist the
Commission in the quantitative and qualitative assessment of the factors specified in Exchange
Act Section 3C; and (iii) how the rules of the clearing agency meet the criteria for open access.
Section 806(e) requires that the Advance Notice include a description of the nature of the
proposed change and the expected effects on risks to the designated clearing agency, its
participants, or the market and it must provide a description of how the designated clearing
agency will manage any identified risks.
The amendments to Rule 19b-4 also will require a clearing agency to post certain
information on its website. 6 Security-Based Swap Submissions and Advance Notices, and any
amendments thereto, will be required to be posted on a clearing agency’s website within two
business days of filing the information with the Commission.7 The information generally shall
4

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

5

Pursuant to Section 803(8) of Title VIII, the Commission is the Supervisory Agency for
any financial market utility that is a Commission-registered clearing agency and the
CFTC is the Supervisory Agency for any financial market utility that is a CFTCregistered derivatives clearing organizations (“DCO”). To the extent that an entity is
both a Commission-registered clearing agency and a CFTC-registered DCO, the statute
requires the two agencies to agree on one agency to act as the Supervisory Agency, and if
the agencies cannot agree on which agency has primary jurisdiction, the Council shall
decide which agency is the Supervisory Agency for purposes of Title VIII. 12 U.S.C.
5462(8).

6

Rule 19b-4(l).

7

New Rule 19b-4(n)(3) and new Rule 19b-4(o)(5).

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remain posted on the clearing agency’s website until a determination is made with respect to the
Security-Based Swap Submission or the Advance Notice becomes effective. A clearing agency
also will be required to post notice on its website of the effectiveness of any change to its rules,
procedures, or operations filed as an Advance Notice within two business days of the effective
date determined in accordance with Section 806(e). 8
The Commission is amending Rule 19b-4 to require that Security-Based Swap
Submissions and Advance Notices be submitted electronically on Form 19b-4. In addition, the
Commission is amending Form 19b-4 by revising the form and the instructions to the form to
allow a clearing agency to indicate whether it is filing under Exchange Act Section 3C,
Section 806(e), Exchange Act Section 19(b), or a combination of the three. Such amendments
are being adopted to avoid duplicative filings and to streamline the process and burden on
clearing agencies and the Commission. However, each filing requirement is distinct and subject
to different statutory standards for Commission review.
B.

New Rule 3Ca-1

Exchange Act Section 3C states that, after making a determination that a security-based
swap (or group, category, type or class of security-based swap) is required to be cleared, the
Commission, on application of a counterparty to a security-based swap or on the Commission’s
own initiative, may stay the clearing requirement until the Commission completes a review of
the terms of the security-based swap and the clearing arrangement. 9 Pursuant to new Rule 3Ca1, a counterparty to a security-based swap subject to the clearing requirement wishing to apply
for a stay of the clearing requirement is required to submit a written statement to the Commission
that includes: (i) a request for a stay of the clearing requirement, (ii) the identity of the
counterparties to the security-based swap and a contact at the counterparty requesting the stay,
(iii) the identity of the clearing agency clearing the security-based swap, (iv) the terms of the
security-based swap subject to the clearing requirement and a description of the clearing
arrangement, and (v) the reasons a stay should be granted and the security-based swap should not
be subject to a clearing requirement, specifically addressing the same factors a clearing agency
must address in its Security-Based-Swap Submission pursuant to new Rule 19b-4(o)(3).
C.

Amendments to Rule 19b-4 relating to Section 916 of the Dodd-Frank
Act

The Commission is amending Rule 19b-4 and Form 19b-4 to conform to the
requirements specified in Exchange Act Section 19(b), as amended by Section 916 of the Dodd
Frank Act, 10which require an SRO inform the Commission of the date on which it posted a
8

Rule 19b-4(n)(4).

9

See 15 U.S.C. 78c-3(c)(1) (as added by Section 763(a) of the Dodd-Frank Act).

10

15 U.S.C. 78s(b) (as added by Section 916 of the Dodd-Frank Act).

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proposed rule change on its website (if the posting did not occur on the same day that the SRO
filed the proposal with the Commission). Under Exchange Act Section 19(b)(2)(E), 11 as
amended by the Dodd-Frank Act, the Commission is required to send an SRO notice of a
proposed rule change to the Federal Register for publication within 15 days of the date on which
the SRO’s website publication is made. The Commission is amending Rule 19b-4 to provide
that if an SRO does not post a proposed rule change on its website on the same day that it files
the proposal with the Commission, then the SRO shall inform the Commission of the date on
which it posted such proposal on its website.
2.

Purpose and Use of the Information Collection
A.

Proposed Rule Changes Filed by SROs

Rule 19b-4 implements the requirements of Section 19(b) of the Exchange Act by
requiring SROs to file their proposed rule changes on Form 19b-4 12 and by clarifying which
actions taken by SROs are deemed proposed rule changes and so must be filed pursuant to
Section 19(b). Rule 19b- 4 and Form 19b-4 were adopted in 1975 pursuant to Sections 2, 3, 6,
11A, 15A, 15B, 17, 19, and 23 of the Act and were significantly amended in 1980 to clarify and
simplify the filing process. Form 19b-4 is designed to provide the Commission with the
information necessary to determine, as required by the Exchange Act, whether the proposed rule
change is consistent with the Exchange Act and the rules thereunder. The information received is
also made available to members of the public who may wish to comment on a particular
proposed rule change. The information collected by the Commission with respect to the date on
which the SRO posted a proposed rule change on its website (if such posting date is not the same
as the filing date) will be used to inform the Commission of the date by which the Commission
must send the SRO notice to the Federal Register for publication.
The federal securities laws generally require that, before an SRO's proposed rule change
may be approved, the Commission must make certain required findings. Also, if the Commission
determines that a proposed rule change, which became effective on filing, does not meet the
statutory standards, it may summarily temporarily suspend such proposed rule change.

B.

Security-Based Swap Submissions and Advance Notices Filed by Certain
Clearing Agencies

The information to be provided by clearing agencies pursuant to the amendments to Rule
19b-4 and Form 19b-4 will be used by the Commission to evaluate Security-Based Swap
Submissions and Advance Notices. The Commission will use the information filed on Form
11

15 U.S.C. 78s(b)(2)(E).

12

17 CFR 249.819.

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19b-4 as a Security-Based Swap Submission to determine whether the security-based swap or
any group, category, type or class of security-based swaps described in the Security-Based Swap
Submission should be required to be cleared pursuant to Exchange Act Section 3C(1).
The Commission will use the information on Form 19b-4 as an Advance Notice to
determine the effect on the nature or level of risks that would be presented by a designated
clearing agency based on a proposed change to its rules, procedures or operations, and the
expected effects on risk to the designated clearing agency, its participants and the market and to
determine whether the Commission should make an objection to the proposed change. The new
rules provide that clearing agencies would be required to provide copies of all Advance Notices
and any additional information relating to the Advance Notice to the Board of Governors of the
Federal Reserve System (“Board”).
The information to be filed on Form 19b-4 relating to Exchange Act Section 3C and
Section 806(e) will, with certain exceptions, be published for notice and comment. In addition,
pursuant to Exchange Act Section 3C, a clearing agency will be required to provide its members
with notice of the Security-Based Swap Submission. Interested parties could use the information
to comment on the Security-Based Swap Submission or Advance Notice.
The information provided as required by new Rule 3Ca-1 will be used by the
Commission to determine whether to grant the stay of the clearing requirement sought by a
counterparty and to review whether the clearing requirement will continue to apply to such
security-based swap, or group, category, type, or class of security-based swaps.
3.

Consideration Given to Information Technology

The Commission and the SROs continue to improve their systems for information
gathering, storage, and retrieval through increasing use of computer technology. Some of these
improvements, such as increased use of e-mail in correspondence between the Commission and
the SROs, have improved the efficiency of the Commission’s oversight role. However, the
process of compiling, preparing, and filing of the data required for review of each proposed rule
change reflects the complexity of the SROs' business. The Commission believes that use of
improved technology, specifically electronic filing of proposed rule changes, and posting of
proposed rule changes and SRO rules on SRO web sites has and will continue to reduce the
respondents’ burden in making these filings. Currently, the Electronic Form 19b-4 Filing System
(“EFFS”) is used by SROs to file proposed rule changes electronically with the Commission
pursuant to Exchange Act Section 19(b), and SRTS is the internal Commission system used to
manage SRO proposed rule changes.
The amendments to Rule 19b-4 and Form 19b-4 are designed to facilitate the SecurityBased Swap Submission and Advance Notice filing processes and make the processes efficient
by utilizing the existing information technology for filing of proposed rule changes, thereby
conserving both clearing agency and Commission resources. The Commission is using the
Electronic Form 19b-4 Filing System (“EFFS”) and Form 19b-4 for Security-Based Swap
Submissions and Advance Notice filings. Currently, EFFS is used by SROs, which include

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registered clearing agencies, to file proposed rule changes electronically with the Commission
pursuant to Exchange Act Section 19(b). As amended, Form 19b-4 will enable clearing agencies
to electronically submit to the Commission Security-Based Swap Submissions, Advance Notices
and any amendments thereto.
4.

Duplication

Each proposed rule change by an SRO must be treated on an individual basis. In the case
of SROs that are clearing agencies, a clearing agency may also be required to file a proposed
change as a Security-Based Swap Submission under Exchange Act Section 3C or an Advance
Notice under Section 806(e). The Commission seeks to streamline the filing processes for these
filings by requiring that all such filings be made electronically on Form 19b-4. The amendments
to Rule 19b-4 and to Form 19b-4 will avoid duplicative filings and will streamline the process
and burden on clearing agencies and the Commission. However, the filing requirements of
Exchange Act Section 3C, Section 806(e) and Exchange Act Section 19(b) are distinct from each
other and subject to different statutory standards for Commission review.
5.

Effect on Small Entities

Not applicable. None of the SROs subject to the collection of information is a small entity,
as that term applies to this Item 5.
6.

Consequences of Not Conducting the Collection

The collection of information is required with respect to any proposed rule change, SecurityBased Swap Submission, Advance Notice, or stay of clearing application. Any less frequent
collection would deprive the Commission of the information on proposed rule changes, SecurityBased Swap Submissions, Advance Notices or stay of clearing applications it needs to comply with
its statutory obligations under the Exchange Act and Title VII and Title VIII of the Dodd-Frank Act.
7.

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

There are no special circumstances. This collection is consistent with the guidelines in 5
CFR 1320.5(d)2.
8.

Consultations Outside the Agency

With respect to Rule 19b-4 and Form 19b-4, the Commission issued a Proposing Release
soliciting public comment on the then existing and new “collection of information” requirements
and associated paperwork burdens. 13 No comments were received in connection with the
“collection of information” requirements and associated paperwork burdens. The Commission
has consulted with the Commodity Futures Trading Commission, the Board of Governors of the
13

See Securities Exchange Act Release No 34-63557 (December 15, 2010) 75 FR 82490
(December 30, 2010).

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Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller
of the Currency, the Farm Credit Administration and the Federal Housing Finance Agency.
9.

Payment or Gift to Respondents

Not applicable.
10.

Confidentiality

Not applicable to proposed rule changes of SROs. An SRO’s proposed rule change when
filed with the Commission is public information. With respect to SROs that are clearing agencies,
except for any information contained in an Advance Notice for which a designated clearing agency
has requested confidential treatment following the procedures set forth in §240.24b-2, a clearing
agency’s Security-Based Swap Submission or Advance Notice when filed with the Commission, is
public information. While there is a general requirement that information be made publicly
available, SROs may request confidential treatment of certain information in accordance with the
Freedom of Information Act. 5 U.S.C. 552.
11.

Sensitive Questions

Not applicable. No questions of a sensitive nature are involved.
12.

Burden of Information Collection
A.

Rule 19b-4 and Form 19b-4
I.

Electronic Filing of Proposed Rule Changes

An SRO rule change proposal is generally filed with the Commission after an SRO's staff
has obtained approval by its board of directors. The time required to complete a filing varies
significantly and is difficult to separate from the time an SRO spends in developing internally the
proposed rule change.
In a PRA analysis conducted in 2004 in connection with amendments to Rule 19b-4 and
Form 19b-4 (“2004 PRA”), the Commission estimated that 34 hours is the amount of time that
would be required to complete an average proposed rule change filing and 129 hours is the
amount of time required to complete a novel or complex proposed rule change filing. 14 The
Commission stated in the Proposing Release that it preliminarily believed that these estimates
remained valid based on the Commission’s experience with the filings currently received from
SROs and relied on these figures to prepare the analysis in the Proposing Release.
14

See Securities Exchange Act Release No. 50486 (October 4, 2004), 69 FR 60287
(October 8, 2004).

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In 2011, the Commission submitted to OMB a request for approval of an extension of the
existing collection of information provided for in Rule 19b-4 and Form 19b-4 (“2011 PRA”). 15
The 2011 PRA used the 2004 PRA estimates to determine the amount of time required to
complete proposed rule change filings. Consistent with the 2011 PRA, (and in light of the
changes made to Exchange Act Section 19(b) pursuant to Section 916 of the Dodd-Frank Act,
which provide for new deadlines by which the Commission must publish and act upon proposed
rule change filings), the Commission has used the figures contained in the 2011 PRA analysis in
calculating the PRA estimates in the rules as adopted.
In fiscal year 2011, 25 SRO respondents filed 1,606 rule change proposals subject to the
current collection of information. Of this total, and based on the Commission’s staff experience
in reviewing SRO proposed rule change filings and past estimates for Rule 19b-4 and Form 19b4, the Commission estimates that 80 proposed rule changes could be characterized as novel or
complex and 1,526 proposed rule changes could be characterized as average. The Commission
estimates that the total annual reporting burden for filing proposed rule changes with the
Commission pursuant to Rule 19b-4 and Form 19b-4 will be 87,086 hours ((35 respondents 16 X
61.0417 average proposed rule change filings per respondent per year X 34 hours) + (35
respondents X 3.218 complex proposed rule change filings per respondent per year X 129
hours)). Thus, on average, the reporting burden for filing proposed rule changes is 38.74 hours
(87,086 hours/(2,136 average rule change proposals + 112 complex rule change proposals)). The
Commission made similar estimates in the Proposing Release, but used fiscal year 2009 data for
the number of average and complex proposed rule change filings, and did not receive any
comments on those estimates. Accordingly, the Commission believes the modified estimates
with fiscal year 2011 data is appropriate and are using these estimates for the rules as adopted.
This is an ongoing reporting burden.
II.

SRO Website Posting of Proposed Rule Change Filings

The Commission previously estimated that an SRO would take four hours to post
15

See Submissions for OMB review; comment requests, 76 FR 22740 (Apr. 22, 2011) and
76 FR 37161 (June 24, 2011).

16

This figure includes the 32 SROs registered with the Commission as of June 15, 2012
plus the additional clearing agencies that the Commission has estimated could potentially
register in the future to clear security-based swaps.

17

This figure is calculated as follows: 1,526 average proposed rule change filings divided
by 25 SROs resulting in an average of 61.04 average proposed rule change filings per
respondent per year.

18

This figure is calculated as follows: 80 complex proposed rule change filings divided by
25 SROs resulting in an average of 3.2 complex proposed rule change filings per
respondent per year.

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proposed rule change proposals, and amendments under Exchange Act Section 19(b) on its
website and four hours to update the posted SRO rules on its website once the proposed rules
become effective. 19 The Commission believes that these estimates remain valid. In addition, of
the 1,606 proposed rule changes filed in fiscal year 2011, 1,180 were approved or nonabrogated. 20 Accordingly, the total annual reporting burden for SROs to post proposed rule
change proposals on their websites will be approximately 8,994 hours (35 SRO respondents X
64.24 21 proposed rule change filings per respondent per year X four hours per filing to update
SRO website). This is an ongoing third party disclosure burden.
III.

SRO Website Posting of Approved Proposed Rule Change Filings

The total annual reporting burden for SROs to update their posted rules on their websites
once the proposed rules become effective will be approximately 6,608 hours (35 SRO
respondents X 47.2 22 approved proposed rule change filings per respondent per year X four
hours per filing to update SRO website). This is an ongoing third party disclosure burden.
B.

Clearing Agencies

The obligation to centrally clear security-based swap transactions is a new requirement
under Title VII, and three clearing agencies that had previously operated under temporary
conditional exemptions under Exchange Act Section 36 are now registered security-based swap
clearing agencies. 23 These three clearing agencies currently clear or plan to clear 24 security19

See supra note 14.

20

Previously, the Commission was able to “abrogate” an immediately effective proposed
rule change filing filed under Section 19(b)(3)(a) of the Exchange Act, and require an
SRO to re-file the proposal for consideration, notice, and public comment pursuant to
Section 19(b)(2) of the Exchange Act. The Dodd-Frank Act eliminated the concept of
“abrogation.” Instead, an immediately effective proposed rule change filing may be
temporarily suspended, in which case the Commission would be required to institute
proceedings to determine whether to disapprove the proposed rule change.

21

This figure is calculated as follows: 1,606 proposed rule change filings per year divided
by 25 SROs resulting in an average of 64.24 proposed rule change filings per respondent
per year.

22

This figure is calculated as follows: 1,180 approved proposed rule change filings per year
divided by 25 SROs resulting in an average of 47.2 approved proposed rule change
filings per respondent per year.

23

Chicago Mercantile Exchange Inc., ICE Clear Credit LLC (formerly ICE Trust US LLC),
and ICE Clear Europe Limited are registered with the Commission to clear security-based
swaps. The Commission previously authorized five entities to clear credit default swaps,
which are security-based swaps. See CDS clearing by ICE Clear Europe Limited,

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based swaps and there could conceivably be a few more in the foreseeable future. 25 The
Commission estimates that three additional clearing agencies will clear security-based swaps in
the future, resulting in a total of six clearing agencies that would be respondents to the applicable
collection of information requirements.
With respect to Advance Notices, for purposes of estimating the collection of information
burdens on respondents, the Commission estimates that the four securities clearing agencies that
are currently clearing non-security-based swap securities and the six estimated clearing agencies
that either currently clear or may clear security-based swaps in the future, for a total of 10
clearing agencies that would be respondents to the applicable collection of information
requirements.
In order to estimate the collection of information burdens on the respondents, the
Commission conducted a survey and received informal comments from the staff of eight clearing
agencies that will be respondents to certain of the new requirements in the amendments to Rule
19b-4, Form 19b-4, and Rule 3Ca-1. These comments were received prior to the publication of
the Proposing Release and the Commission did not receive any additional comments from
clearing agencies or any other parties on these estimates after the Proposing Release was
published.

Securities Exchange Act Release Nos. 60372 (July 23, 2009), 74 FR 37748 (July 29,
2009) and 61973 (Apr. 23, 2010), 75 FR 22656 (Apr. 29, 2010); CDS clearing by Eurex
Clearing AG, Securities Exchange Act Release Nos. 60373 (July 23, 2009), 74 FR 37740
(July 29, 2009) and 61975 (Apr. 23, 2010), 75 FR 22641 (Apr. 29, 2010); CDS clearing
by Chicago Mercantile Exchange Inc., Securities Exchange Act Release Nos. 59578
(Mar. 13, 2009), 74 FR 11781 (Mar. 19, 2009), 61164 (Dec. 14, 2009), 74 FR 67258
(Dec. 18, 2009) and 61803 (Mar. 30, 2010), 75 FR 17181 (Apr. 5, 2010); CDS clearing
by ICE Clear Credit LLC (formerly ICE Trust US LLC), Securities Exchange Act
Release Nos. 59527 (Mar. 6, 2009), 74 FR 10791 (Mar. 12, 2009), 61119 (Dec. 4, 2009),
74 FR 65554 (Dec. 10, 2009) and 61662 (Mar. 5, 2010), 75 FR 11589 (Mar. 11, 2010);
Temporary CDS clearing by LIFFE A&M and LCH.Clearnet Ltd. Securities Exchange
Act Release No. 59164 (Dec. 24, 2008), 74 FR 139 (Jan. 2, 2009). Eurex Clearing AG,
LIFFE A&M, and LCH.Clearnet Ltd. are not currently registered with the Commission to
clear security-based swaps.
24

By referring to a clearing agency that plans to clear security-based swaps, the
Commission means a clearing agency that is permitted to do so under its rules but that
has not yet begun clearing security-based swaps.

25

Based on the significant level of capital and other financial resources necessary for the
formation of a clearing agency, the Commission does not expect there to be a large
number of clearing agencies that seek to clear security-based swaps.

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The clearing agencies emphasized that the estimated burdens would depend in large part
on the rules ultimately adopted by the Commission to define and determine how frequently
Security-Based Swap Submissions and Advance Notices would be required to be filed and the
nature and extent of information that would be required with each filing. In addition, these
clearing agencies stated that the burden per filing could vary widely, depending on the
complexity of each individual filing. For example, some clearing agency proposals may require
more information or analysis to be submitted as part of the filing. These clearing agencies also
stated that the annual burden also could vary widely from year to year depending on the number
of new proposals the clearing agency makes in a particular year. The Commission noted in the
Proposing Release that the estimates provided in that release were preliminary and could change
after clearing agencies had the opportunity to review and closely evaluate the rules. However, the
Commission did not receive any comments on these estimates, from clearing agencies or from
other parties and, as a result, has not adjusted these estimates. The estimates of the burden per
filing also varied among clearing agencies, which may reflect the different internal processes,
training programs, and review procedures for new projects currently in place at the different
clearing agencies. In addition, prior to the effective date of the Dodd-Frank Act some clearing
agencies were registered with the Commission (“pre-Dodd–Frank Act clearing agencies”) while
others were not. Pre-Dodd-Frank Act clearing agencies file proposed rule changes under
Exchange Act Section 19(b) and have more familiarity with the collection of information
requirements related to Rule 19b-4 and Form 19b-4, while the newly registered 26 clearing
agencies may not be as familiar with these requirements and may incur a greater burden in
connection with using EFFS and training personnel.
The Commission used the more conservative numbers estimated by the clearing agencies
for its estimates for the PRA. The Commission believed the more conservative estimate was
appropriate because the estimates of the burden per filing varied among clearing agencies and
could vary among the filings submitted (i.e., some proposals may be more complex and require
more time for the clearing agency to prepare a Security-Based Swap Submission or an Advance
Notice). In addition, the Commission calculated the burden for the requirements related to
Advance Notices assuming that they would apply to all ten clearing agencies and the burden for
the requirements related to Security-Based Swap Submissions assuming they would apply to six
clearing agencies.
Finally, the Commission recognized that there will likely to be some substantive and
procedural overlap with respect to the processes for preparing and submitting Security-Based
Swap Submissions, Advance Notices and proposed rule changes that relate to the same subject
matter. For example, in connection with a decision to clear a new type of security-based swap
that was not previously permitted under the clearing agency’s rules, a clearing agency could be
required to make a filing as a Security-Based Swap Submission, an Advance Notice and a
proposed rule change. In this case, because these submissions all relate to the same underlying
26

Newly-registered clearing agencies refers to clearing agencies registered with the
Commission to clear security-based swaps after the effective date of the Dodd-Frank Act.

13
proposal, the amount of time required to prepare a single Form 19b-4 for all three purposes is
likely to be less than the aggregate amount of time ordinarily required to prepare and submit
three separate filings. Nevertheless, in the Proposing Release the Commission calculated the
PRA burden for each process individually without accounting for any reduction due to the
anticipated overlap in order to assure it did not underestimate the burdens. Additionally, the
estimates in the Proposing Release were derived from discussions between the Commission’s
staff and staff of the clearing agencies, as described above.
I.

Training of Security-Based Swap Clearing Agency Staff to use EFFS

At the time it issued the Proposing Release, the Commission believed that the six
estimated clearing agencies that were either going to be deemed registered to clear securitybased swaps pursuant to Section 17A(l) or that could on their own initiative seek to be regulated
by the Commission in the future in order to clear security-based swaps could incur some onetime costs associated with training their personnel about the procedures for submitting SecurityBased Swap Submissions, Advance Notices, and/or proposed rule changes in electronic format
through EFFS. Based on staff discussions with the clearing agencies prior to issuing the
Proposing Release, the Commission estimated that each newly-registered clearing agency would
spend approximately 20 hours training all staff members who will use EFFS to submit SecurityBased Swap Submissions, Advance Notices and/or proposed rule changes electronically.
Accordingly, the Commission estimated that the total one-time burden of training staff members
of security-based swap clearing agencies to use EFFS will be 120 hours (six respondent clearing
agencies X 20 hours) or 40 hours annualized over three years. The Commission did not receive
any comments on the burden estimates in the Proposing Release and is using such estimates for
the rules as adopted. This is a one-time recordkeeping burden.
II.

Drafting and Implementing Internal Policies and Procedures for Using
EFFS by Newly-Registered Security-Based Swap Clearing Agencies

Based on staff discussions with the clearing agencies prior to issuing the
Proposing Release, the Commission estimated in the Proposing Release that there would be a
one-time paperwork burden of 130 hours for each newly-registered clearing agency to draft and
implement internal policies and procedures relating to using EFFS to submit Security-Based
Swap Submissions, Advance Notices, and proposed rule changes with the Commission, for a
total of 780 hours (130 hours X six clearing agencies) or 260 hours annualized over three years.
The Commission did not receive any comments on the burden estimates in the Proposing
Release and is using such estimates for the rules as adopted. This is a one-time recordkeeping
burden.
III.

Drafting and Implementing Modifications to Existing Internal Policies and
Procedures for Using EFFS for Security-Based Swap Submissions and/or
Advance Notices

Based on conversations with staff from the clearing agencies prior to issuing the
Proposing Release, the Commission estimated that there would be a one-time paperwork burden

14
of 30 hours for each pre-Dodd-Frank Act clearing agency to draft and implement modifications
to existing internal policies and procedures for using EFFS in order to update them for
submitting Security-Based Swap Submissions and/or Advance Notices with the Commission for
a total of 120 hours (30 hours X four pre-Dodd-Frank Act clearing agencies), or 40 hours
annualized over three years. Based on experience with clearing agencies, the Commission
believes that such internal policies and procedures will be drafted and updated by the in-house
counsel at the clearing agencies. The Commission did not receive any comments on the burden
estimates in the Proposing Release and is using such estimates for the rules as adopted. This is a
one-time recordkeeping burden.
IV.

Annual Training to Update SRO Staff on Use of EFFS

In the Proposing Release, the Commission estimated that after the initial training
was completed, each SRO would spend approximately 10 hours annually training new
compliance staff members and updating the training of existing compliance staff members to use
EFFS. The Commission believed that only a minimal amount of EFFS training would be
submission-specific and that training a person to submit either a proposed rule change, SecurityBased Swap Submission or Advance Notice would generally be sufficient to allow such person
to make one or more of the other types of submissions. The Commission did not receive any
comments on these estimates in the Proposing Release and is using them for the rules as adopted,
resulting in a total annual burden of 350 hours (35 respondent SROs X 10 hours). This is an
ongoing recordkeeping burden.
V.

Rule 19b-4(o)(1) Security-Based Swap Submissions

The Commission stated in the Proposing Release that the time required by
clearing agencies to prepare, review and submit Security-Based Swap Submissions to comply
with proposed Rule 19b-4(o)(1) likely would vary significantly based on the unique
characteristics of each Security-Based Swap Submission and the submitting clearing agency.
The Commission estimated based on previous discussions with staff from clearing agencies that
the amount of time that a clearing agency would require to internally prepare, review, and submit
a Security-Based Swap Submission would be 140 hours. The Commission also estimated that
each clearing agency would submit 20 Security-Based Swap Submissions annually based on
previous discussions with staff from clearing agencies. The Commission did not receive any
comments on these estimated burdens in the Proposing Release and is using such estimates for
the rules as adopted. The Commission is modifying Rule 19b-4(o)(2) from the proposal to
provide that clearing agencies that file a Security-Based Swap Submission before December 10,
2012 shall file such submission with the Commission by email. However, the Commission does
not believe the requirement to submit Security-Based Swap Submissions electronically by email
instead of on EFFS for a limited period of time would change the estimated amount of time for
clearing agencies to prepare, review, and file these submissions since the information to be
provided in the filing remains the same and the filing method would still be electronic.
Accordingly, the Commission estimates that the total annual reporting burden for clearing

15
agencies submitting Security-Based Swap Submissions electronically with the Commission
under proposed Rule 19b-4(o)(1) will be 16,800 hours (six respondent clearing agencies X 20
Security-Based Swap Submissions per year X 140 hours per response). This is an ongoing
reporting burden.
VI.

Rule 19b-4(n)(1) Advance Notice Filings

In the Proposing Release, the Commission estimated that the amount of time that
designated clearing agency representatives will require to internally prepare, review and
electronically file each Advance Notice with the Commission would be 90 hours. This estimate
in the Proposing Release was based on the staff’s previous discussions with staff from the
clearing agencies. The Commission did not receive any comments on this estimate and is using
such estimate for the rules as adopted. The Commission modified Rule 19b-4(n)(1) from the
proposal to provide that designated clearing agencies that file an Advance Notice before
December 10, 2012 shall file such notice with the Commission by email. However, the
Commission does not believe the requirement to submit Advance Notices by email for a limited
period of time would change the estimated amount of time for clearing agencies to prepare,
review, and electronically file the notices since the material required to be provided in the filing
remains the same and the method for submitting the filing remains electronic. This figure is
based on the staff’s discussions with the clearing agencies.
The Commission estimated in the Proposing Release that each designated clearing
agency would submit 35 Advance Notices to the Commission annually. The Commission did
not receive any comments on these estimated burdens in the Proposing Release and is using such
estimates for the rules as adopted. Accordingly, the Commission estimates that the total annual
reporting burden on designated clearing agencies submitting Advance Notices electronically with
the Commission under the amendments to Rule 19b-4 and Form 19b-4 will be 31,500 hours (ten
clearing agencies X 35 Advance Notices per year X 90 hours per response). This is an ongoing
reporting burden.
VII.

Rule 19b-4(n)(5) Submission of Copies of Advance Notices to the Board

The Commission estimated in the Proposing Release that two hours should be
added to the time required to prepare each Advance Notice to comply with the requirement
contained in Rule 19b-4(n)(5) to provide to the Board copies of all materials submitted to the
Commission relating to an Advance Notice contemporaneously with such submission to the
Commission. As noted above, the Commission estimates that each designated clearing agency
will submit 35 Advance Notices to the Commission annually. The Commission did not receive
any comments on these estimated burdens in the Proposing Release and is using such estimates
for the rules as adopted. Accordingly, the Commission estimates that the total annual reporting
burden on designated clearing agencies to comply with the requirement to provide to the Board
copies of all materials submitted to the Commission relating to an Advance Notice
contemporaneously with such submission to the Commission will be 700 hours (ten respondent
clearing agencies X 35 Advance Notices per year X 2 hours per response). This is an ongoing
reporting burden.

16
VIII.

Updating Clearing Agencies Websites to Provide Capability to Post
Security-Based Swap Submissions, Advance Notices, and Proposed Rule
Changes

In the Proposing Release, the Commission stated that it believes clearing agencies
that were to be deemed registered under Section 17A(l) or that might be regulated by the
Commission in the future to clear security-based swaps could incur some one-time costs
associated with posting Security-Based Swap Submissions, Advance Notices, and proposed rule
changes on their websites. The Commission estimated that each clearing agency that makes
Security-Based Swaps Submissions would spend approximately 15 hours creating or updating its
existing website in order to provide the capability to post these submissions online resulting in a
total one-time burden of 90 hours (six respondent clearing agencies X 15 hours per website
update), or 30 hours annualized over three years. Three of those clearing agencies were deemed
registered under Section 17A(l) in July 2012 and were required to begin posting proposed rule
changes on their websites pursuant to existing Rule 19b-4(l). Because new Rules 19b-4(o)(5)
and (n)(3) will require Security-Based Swap Submissions and Advance Notices to be posted on
designated clearing agencies’ websites in the same manner as is required for proposed rule
changes, the Commission does not believe these three clearing agencies would incur any
additional costs to create or update their websites to post Security-Based Swap Submissions or
Advance Notices pursuant to the new rules. Accordingly, the Commission is modifying the
number of respondent clearing agencies to the three clearing agencies it estimated may be
regulated by the Commission in the future in order to clear security-based swaps. The
Commission did not receive any comments on the estimated burden in the proposed release
regarding the number of hours to create or update a website and is using this estimated hours
burden for the rules as adopted. The revised estimate is a one-time total burden of 45 hours
(three respondent clearing agencies X 15 hours per website update) or 15 hours annualized over
three years. This is a one-time third party disclosure burden.
IX. Rule 19b-4(o)(5) Posting of Security-Based Swap Submissions on SecurityBased Swap Clearing Agency Websites
The Commission estimated in the Proposing Release that four hours would be
required by a clearing agency to post a Security-Based Swap Submission on its website. This
figure was based on the current estimate for the requirement that SROs post proposed rule
changes on their websites under Rule 19b-4(l) given the similarities between the two
requirements. 27 The Commission estimated that the total annual reporting burden for clearing
agencies to post Security-Based Swap Submissions on their websites would be 480 hours (six
respondent clearing agencies X 20 Security-Based Swap Submissions per year X four hours per
27

See Securities and Exchange Commission, Submission for OMB Review, Comment
Request, 76 FR 37161 (Jun. 24, 2011). The Supporting Statement containing the detailed
estimates for Rule 19b-4 and Form 19b-4 is available at:
http://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=201104-3235-013.

17
website posting). The Commission did not receive any comments on these estimated burdens in
the Proposing Release and is using them for the rule as adopted. This is an ongoing third party
disclosure burden.
X.

Rule 19b-4(n)(3) Posting of Advance Notices on Designated Clearing
Agency Websites.

The Commission also estimated in the Proposing Release that four hours would
be required by a designated clearing agency to post an Advance Notice on its website. This
figure was based on the current estimate for the requirement that SROs post proposed rule
changes on their websites under Rule 19b-4(l) given the similarities between the two
requirements. 28 The Commission estimated that the total annual reporting burden for designated
clearing agencies to post Advance Notices on their websites would be 1,400 hours (ten
respondent clearing agencies X 35 Advance Notices per year X four hours per website posting).
The Commission did not receive any comments on these estimated burdens in the Proposing
Release and is using them for the rule as adopted. This is an ongoing third party disclosure
burden.
XI. Rule 19b-4(n)(4) Designated Clearing Agency Website Posting of Notice of
Change to Rules, Procedures, or Operations Referred to in Advance Notices.
The Commission estimated in the Proposing Release that four hours would be
required by a designated clearing agency to post notice on its website of any change to its rules,
procedures or operations referred to in an Advance Notice once it has been permitted to take
effect. This figure was based on the current estimate for the requirement that SROs post
proposed rule changes on their websites under Rule 19b-4(l) given the similarities between the
two requirements. 29 The Commission estimated that the total annual reporting burden for
designated clearing agencies to post Advance Notices on their websites would be 1,400 hours
(ten respondent clearing agencies X 35 Advance Notices per year X four hours per website
posting). The Commission did not receive any comments on these estimated burdens in the
Proposing Release and is using them for the rule as adopted. This is an ongoing third party
disclosure burden.
XII.

Rule 3Ca-1 Stay of Clearing Requirement Information

Prior to issuing the Proposing Release, Commission staff contacted eight clearing
agencies, including four that likely would clear security-based swaps, and would therefore be
subject to a stay of the clearing requirement and related review under Rule 3Ca-1. The
28

See Securities and Exchange Commission, Submission for OMB Review, Comment
Request, 76 FR 37161 (Jun. 24, 2011). The Supporting Statement containing the detailed
estimates for Rule 19b-4 and Form 19b-4 is available at:
http://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=201104-3235-013.

29

Id.

18
Commission used these discussions to estimate the collection of information for this rule in the
Proposing Release. Those estimates are discussed below; however, the clearing agencies
emphasized that the estimated burdens would depend in large part on the number of stays
requested annually and the scope of the information requested by the Commission in the course
of the related review.
Pursuant to Section 3C(c)(1) of the Exchange Act, the Commission on its own
initiative or on the application of a counterparty may stay the clearing requirement in Section
3C(a)(1) of the Exchange Act until it completes a review of the terms of the security-based swap
and the clearing arrangement. The Commission is unable to estimate accurately the number of
times it may stay a clearing requirement pursuant to Section 3C(c)(1) of the Exchange Act
because it has not yet made any mandatory clearing determinations and it does not know what
counterparties may object to a determination or when they would make an application for a stay.
However, the Commission recognizes that there will likely be some applications for stays from
any clearing requirements made pursuant to a Commission determination and, for purposes of
the Proposing Release, the Commission estimated there would be five applications for stays of a
clearing requirement per clearing agency per year. This figure would represent one quarter of
the estimated number of Security-Based Swap Submissions from each clearing agency per year.
The Commission did not receive any comments on this estimate in the Proposing Release and is
using the same estimate for the rule as adopted.
Based on staff discussions with the clearing agencies, the Commission estimated
in the Proposing Release that a clearing agency would spend approximately 18 hours to retrieve,
review, and submit the information associated with the stay of the clearing requirement. The
Commission also estimated that each clearing agency would be required to provide information
requested by the Commission in the course of its reviews of five requests for a stay of the
clearing requirement, resulting in a total annual reporting burden of 540 hours (six respondent
clearing agencies X five stay of clearing applications per year X 18 hours to retrieve, review, and
submit the stay of clearing information). The Commission did not receive any comments on this
estimate in the Proposing Release and is using the same estimate for the rule as adopted. This is
an ongoing reporting burden.
C.

Amendment to Conform to Section 916 of the Dodd-Frank Act

The Commission estimated in the Proposing Release that the requirement that an
SRO inform the Commission of the date on which it posted a proposed rule change on its
website (if the posting did not occur on the same day that the SRO filed the proposal with the
Commission) would impose only a minimal burden, if any, on an SRO.
The Commission stated in the Proposing Release that based on its experience
receiving and reviewing proposed rule changes filed by SROs, the Commission estimated that
SROs will fail to post proposed rule changes on their websites on the same day as the filing was
made with the Commission in 1% of all cases, or 16 times each year based on the 1,606 proposed
rule change filings submitted by SROs in 2011. Further, the Commission estimated that each
SRO would spend approximately one hour preparing and submitting notice to the Commission of

19
the date on which it posted the proposed rule change on its website, resulting in a total annual
burden of 16 hours. The Commission did not receive any comments on its estimate in the
Proposing Release on the percentage of cases when SROs will fail to post proposed rule changes
on their websites on the same day as the filing was made and is using the same estimate for the
rule as adopted. This is an ongoing reporting burden.
D. Summary of Hourly Burdens
The table below summarizes, the Commission’s preliminarily estimates of the total
hourly reporting burden for all SROs, including clearing agencies, under the amendments to Rule
19b-4, Form 19b-4 and Rule 3Ca-1.
Nature of Information Collection Burden

Annualized Hourly Burden Estimate

Electronic filing of proposed rule changes

87,086

SRO website posting of proposed rule change filings

8,994

SRO website posting of approved proposed rule
change filings

6,608

Training of Security-Based Swap clearing agency
staff to use EFFS

40

Drafting and implementing procedures for using
EFFS by newly-registered Security-Based Swap
clearing agencies

260

Drafting and implementing modifications to existing
internal policies and procedures for using EFFS for
Security-Based Swap Submissions and/or Advance
Notices

40

Annual training to update SRO staff on use of EFFS

350

Rule 19b-4(o)(1) Security-Based Swap Submissions

16,800

Rule 19b-4(n)(1) Advance Notice Filings

31,500

Rule 19b-4(n)(5) submission of copies of Advance
Notices to the Board

700

Updating clearing agencies websites to provide
capability to post Security-Based Swap Submissions,

15

20
Nature of Information Collection Burden

Annualized Hourly Burden Estimate

Advance Notices, and proposed rule changes
Rule 19b-4(o)(5) posting of Security-Based Swap
Submissions on security-based swap clearing agency
websites

480

Rule 19b-4(n)(3) posting of Advance Notices on
designated clearing agency websites

1400

Rule 19b-4(n)(4) designated clearing agency website
posting of notice of change to rules, procedures, or
operations referred to in Advance Notices

1400

Rule 3Ca-1 stay of clearing requirement information

540

Amendment to conform to Section 916 of the DoddFrank Act

16

TOTAL
13.

156,229
Estimate of Total Annual Cost Burden
A.

Rule 19b-4 and Form 19b-4

Except for the hourly burdens identified in Item 12 above, the Commission does not
expect SROs, including clearing agencies, to incur any additional costs in connection with the
preparation and electronic submission of proposed rule changes.
B.

Clearing Agencies
I.

Training of Security-Based Swap Clearing Agency Staff to use EFFS

Except for the hourly burdens identified in Item 12 above, the Commission does
not expect the clearing agencies to incur any one-time or ongoing additional costs in connection
with training their personnel about the procedures for submitting Security-Based Swap
Submissions and/or Advance Notices in electronic format through EFFS.
II.

Drafting and Implementing Internal Policies and Procedures for Using
EFFS by Newly-Registered Security-Based Swap Clearing Agencies

Except for the hourly burdens identified in Item 12 above, the Commission does
not expect newly-registered clearing agencies to incur any one-time or ongoing additional costs

21
in connection with drafting and implementing internal policies and procedures relating to using
EFFS to submit Security-Based Swap Submissions, Advance Notices, and proposed rule changes
with the Commission.
III.

Drafting and Implementing Modifications to Existing Internal Policies and
Procedures for Using EFFS for Security-Based Swap Submissions and/or
Advance Notices

Except for the hourly burdens identified in Item 12 above, the Commission does
not expect clearing agencies to incur any one-time or ongoing additional costs in connection with
drafting and implementing modifications to existing internal policies and procedures for using
EFFS in order to update them for submitting Security-Based Swap Submissions and/or Advance
Notices with the Commission.
IV.

Annual Training to Update SRO Staff on Use of EFFS

Except for the hourly burdens identified in Item 12 above, the Commission does
not expect clearing agencies to incur any one-time or ongoing additional costs in connection with
the annual training of new compliance staff members or updates to the training of existing
compliance staff members to use EFFS.
V.

Rule 19b-4(o)(1) Security-Based Swap Submissions

The Commission estimated in the Proposing Release that a clearing agency
would require 60 hours of outside legal work to prepare, review, and submit a Security-Based
Swap Submission based on previous discussions with staff from the clearing agencies. The
Commission also estimated in the Proposing Release that each clearing agency would submit 20
Security-Based Swap Submissions annually. Assuming an hourly cost of $354 for an outside
attorney, 30 the total annual cost in the aggregate for the six clearing agencies to meet these
requirements would be $2,548,800 (six respondent clearing agencies X 20 Security-Based Swap
Submissions per year X 60 hours per response X $354 per hour for an outside attorney). The
Commission did not receive any comments on these estimated burdens in the Proposing Release
and is using the estimates for the rule as adopted.
VI.

Rule 19b-4(n)(1) Advance Notice Filings

With respect to Advance Notices, the Commission estimates that a designated
clearing agency will require 40 hours of outside legal work to prepare, review, and electronically
file each Advance Notice with the Commission. The Commission estimates that each designated
30

The hourly rate for an outside attorney is from SIFMA’s Management & Professional
Earnings in the Securities Industry 2010, modified by the Commission’s staff to account
for an 1800-hour work-year and multiplied by 5.35 to account for bonuses, firm size,
employee benefits and overhead.

22
clearing agency will submit 35 Advance Notices to the Commission annually. Assuming an
hourly cost of $354 for an outside attorney, 31 the total annual cost for the ten clearing agencies to
meet these requirements would be $4,956,000 (ten respondent clearing agencies X 35 Advance
Notice filings per year X 40 hours per response X $354 per hour for an outside attorney). The
Commission did not receive any comments on these estimates and is using them for the rule as
adopted.
VII.

Rule 19b-4(n)(5) Submission of Copies of Advance Notices to the Board

The Commission does not expect clearing agencies to incur any additional costs
in connection with the requirement to provide to the Board copies of all materials submitted to
the Commission relating to an Advance Notice contemporaneously with such submission to the
Commission.
VIII.

Updating Clearing Agencies Websites to Provide Capability to Post
Security-Based Swap Submissions, Advance Notices, and Proposed Rule
Changes on Clearing Agencies Websites

Except for the hourly burdens identified in Item 12 above, the Commission does
not expect clearing agencies to incur any additional costs in connection with creating or updating
their existing websites in order to provide the capability to post Security-Based Swap
Submissions, Advance Notices, or proposed rule changes on their websites.
IX.

Rule 19b-4(o)(5) Posting of Security-Based Swap Submissions on
Security-Based Swap Clearing Agency Websites

Except for the hourly burdens identified in Item 12 above, the Commission does
not expect clearing agencies to incur any additional costs in connection with posting SecurityBased Swap Submissions on their websites.

X.

Rule 19b-4(n)(3) Posting of Advance Notices on Designated Clearing
Agency Websites

Except for the hourly burdens identified in Item 12 above, the Commission does
not expect designated clearing agencies to incur any additional costs in connection with the
posting of Advance Notices on their websites.
31

The hourly rate for an outside attorney is from SIFMA’s Management & Professional
Earnings in the Securities Industry 2010, modified by the Commission’s staff to account
for an 1800-hour work-year and multiplied by 5.35 to account for bonuses, firm size,
employee benefits and overhead.

23
XI.

Rule 19b-4(n)(4) Designated Clearing Agency Website Posting of Notice
of Changes to Rules, Procedures, or Operations Referred to in Advance
Notices.

Except for the hourly burdens identified in Item 12 above, the Commission does
not expect designated clearing agencies to incur any additional costs in connection with the
posting of notices of changes to rules, procedures or operations referred to in Advance Notices.
XII.

Rule 3Ca-1 Stay of Clearing Requirement Information
i. Security-Based Swap Clearing Agencies

In the Proposing Release, the Commission estimated that a clearing agency
would require seven hours of outside legal work to retrieve, review, and submit the information
associated with the stay of the clearing requirement. The Commission also estimated in the
Proposing Release that each clearing agency will be required to provide information requested
by the Commission in the course of its reviews of five requests for a stay of the clearing
requirement. These figures were based on the Commission’s staff discussions with the clearing
agencies prior to issuing the Proposing Release. Assuming an hourly cost of $354 for an outside
attorney, 32 the total estimated annual cost in the aggregate for the six clearing agencies to meet
these requirements would be $74,340 (six respondent clearing agencies X five stay of clearing
applications per year X seven hours per response X $354 per hour for an outside attorney). The
Commission did not receive any comments on these estimates in the Proposing Release and is
using them for the rule as adopted.
ii. Counterparties
The Commission estimated in the Proposing Release that 100 hours of outside
legal counsel would be required by a counterparty to a security-based swap to prepare and
submit an application requesting a stay of the clearing requirement. The Commission drew a
comparison between the amount of time it would take for a clearing agency to prepare a
Security-Based Swap Submission and the amount of time it would take a counterparty to prepare
an application of a stay of a clearing requirement, given that each filing would likely address
similar issues related to the clearing of the particular security-based swap. This 100 hours
estimated for the application of the stay of clearing requirement is less than the 140 hours the
Commission estimates it would take for a clearing agency to prepare a Security-Based Swap
Submission because the Commission believes that an application for a stay would take less time
to prepare than a new submission, due to the fact that some of the information addressed in the
application for a stay would have already been provided with the Security-Based Swap
Submission when it was published for notice and comment. The Commission estimated in the
32

See supra Note 30.

24
Proposing Release that counterparties to security-based swaps transactions would submit 30 33
applications requesting stays of the clearing requirement. Assuming an hourly cost of $354 for
an outside attorney, 34 the total annual cost in the aggregate for the respondent counterparties to
meet these requirements would be $1,062,000 (100 hours X $354 per hour for an outside
attorney X 30 stay of clearing applications). The Commission did not receive any comments on
these estimates in the Proposing Release and is using them for the rules as adopted.
C.

Amendment to Conform to Section 916 of the Dodd-Frank Act

Except for the hourly burdens identified in Item 12 above, the Commission does
not expect an SRO to incur any additional costs in connection with informing the Commission of
the date on which it posted a proposed rule change on its website (if the posting did not occur on
the same day that the SRO filed the proposal with the Commission).
D.

Summary of Cost Burdens

Except for the hourly burdens identified in Item 12 above, the Commission does not
expect SROs other than clearing agencies to incur any material additional costs in connection
with the amendments to Rule 19b-4 and Form 19b-4 and Rule 3Ca-1. The table below
summarizes, the Commission’s estimates of the reporting burdens for the clearing agencies under
the amendments to Rule 19b-4 and Form 19b-4 and Rule 3Ca-1.

Nature of Information Collection Burden

Burden Estimate in Dollars

Rule 19b-4(o)(1) Security-Based Swap
submissions

$2,548,800

Rule 19b-4(n)(1) Advance Notice filings

$4,956,000

Rule 3Ca-1 stay of clearing requirement
information – Security-Based Swap Clearing
Agencies

$74,340

Rule 3Ca-1 stay of clearing requirement
information – Counterparties

$1,062,000

TOTAL

$8,641,140

33

This figure is calculated as follows: six respondent clearing agencies multiplied by five
stay of clearing applications per year equals 30 stay of clearing applications per year.

34

See supra Note 30.

25
14.

Estimate of Cost to the Federal Government

The Commission’s estimate of the cost to the Federal Government of reviewing SecurityBased Swap Submissions, Advance Notice, and proposed rule change filings for all SROs
pursuant to Section 19(b) and Rule 19b-4 is calculated as follows:
Type of Filing

No. of Filings

Review Time
Per Filing
(Hours)

Total
(Hours)

Security-Based Swap
Submission

120

720

86,400

Advance Notice

350

480

168,000

Average Proposed Rule
Change

2,136

20

42,720

Complex Proposed Rule
Change

60

600

67,200

TOTAL
Related Cost 364,320 hours of review time at $98.66/hour 35
Printing costs (Federal Register)
Total Estimated Recurring Annual Cost to the Federal
Government

364,320
$35,943,811.20
300,000.00
$36,243,811.20

The Commission will incur one-time costs related to programming, testing, and deployment in
order to enhance and modify EFFS and SRTS to enable Security-Based Swap Submissions,
Advance Notice filings, and to conform to Section 916 of the Dodd-Frank Act. Third-party
contractors will perform most of the work except for some testing and project management, which
will be performed by Commission staff. The Commission estimates that the total one-time costs to
enhance and modify EFFS and SRTS to enable Security-Based Swap Submissions, Advance
Notice filings and to conform to Section 916 of the Dodd-Frank Act will be $975,197.99
($899,399.57 for Security-Based Swap Submissions and Advance Notice filings+ $75,798.42 to
conform with Section 916 of the Dodd-Frank Act) or approximately $325,066.00 annualized
35

Based on an attorney at SK-14, as adjusted for special SEC pay rates and fringe benefits.

26
over three years.
Therefore, the total estimated annual cost to the Federal Government for reviewing
Security-Based Swap Submissions, Advance Notice, and proposed rule change filings, and to
enhance and modify EFFS and SRTS is $36,568,877.20 ($36,243,811.20 +$325,066.00).
15.

Explanation of Changes in Burden

As indicated above in Item 12, the Commission staff has revised its estimate of the time to
complete each proposed rule change filing since the collection of information was previously
submitted to OMB for approval due to a change in the proportion of average versus complex
proposed rule change filings.36 The Commission accordingly adjusted the respondent reporting
burden to reflect this change.
As discussed in Items 1 and 14 above, the amendments to Rule 19b-4, Form 19b-4, and rule
3Ca-1 impose new collection of information requirements and information technology costs in
connection with Securities-Based Swaps Submissions, Advance Notices, stay of mandatory clearing
applications, and Section 916 of the Dodd-Frank Act.
16.

Information Collections Planned for Statistical Purposes

Not applicable. The information collections above are not planned for statistical purposes.
17.

Display of OMB Approval Date

The Commission requests authorization to omit the expiration date on the electronic
version of the form for design and IT project scheduling reasons. The OMB control number will
be displayed.
18.

Exceptions to Certification for Paperwork Reduction Act Submissions

This collection complies with the requirements in 5 CFR 1320.9.

B.

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

36

The proportion of average to complex proposed rule change filings since the collection of
information was previously submitted to OMB for approval was revised from 4.27% to
5.00%.