Regulation 23.154(b) will require SDs
and MSPs that do not have a prudential regulator (“CSEs”) that are
using a model to compute initial margin requirements to submit the
model for review and approval by the Commission or a registered
futures association (“RFA”). CSEs must also notify the Commission
upon making certain changes to the model, including modifying
material modeling assumptions and extending the model to additional
product types. CSEs must also meet various other requirements,
including validating and demonstrating the reasonableness of the
process for modeling and measuring hedging benefits. The
collections of information that are proposed by this rulemaking are
necessary to implement Section 4s(e) of the CEA, which expressly
requires the Commission to adopt rules governing margin
requirements for covered swap entities. The information required
for the prior written approval of the margin model is needed to
demonstrate that the model satisfied all of the requirements of
Regulation 23.154(b). The initial margin requirements for models
are designed to ensure that CSEs collect sufficient amounts of
collateral from their counterparties to protect them in the case of
a possible default by their counterparty. The soundness and
adequacy of margin models help ensure the safety and soundness of a
CSE and the stability of the U.S. financial market.
The regulations associated with
Collection 3038-0024 are designed to enhance the safety and
soundness of the markets which the Commission oversees and to
enable the Commission to evaluate the soundness of the participants
in those markets. Section 731 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act ("Dodd-Frank Act"), P.L. 111-023, 124
stat. 1376, amended the Commodity Exchange Act ("CEA"), 7 U.S.C. §§
1 et seq., to add, as section 4s(e) thereof, provisions concerning
the setting of initial and variation margin requirements for swap
dealers ("SDs") and major swap participants ("MSPs"). The
Commission is proposing the margin rule to implement this section
4s of the CEA to require CSEs that are using a model to compute
initial margin requirements to submit the model for review and
approval by the Commission. This collection of information will add
additional burdens on an estimated 54 entities for a total of
12,960 hours annually. This reflects a reduction from the proposal
of six (6) CSEs that are no longer subject to the Commission’s
jurisdiction and margin requirements.
On behalf of this Federal agency, I certify that
the collection of information encompassed by this request complies
with 5 CFR 1320.9 and the related provisions of 5 CFR
1320.8(b)(3).
The following is a summary of the topics, regarding
the proposed collection of information, that the certification
covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a
benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control
number;
If you are unable to certify compliance with any of
these provisions, identify the item by leaving the box unchecked
and explain the reason in the Supporting Statement.
Form 1-FR-FCM Regulations and Forms Pertaining to Financial Integrity of the Market Place
Uncleared Margin PRA Supporting Statement 3038-0024 12-16-15.docx
Regulations and Forms Pertaining to Financial Integrity of the Market Place