2016 19b-4 Supporting Statement

SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Rule 19b-4 Filings with Respect to Proposed Rule Changes, Securities-Based Swap Submissions,
and Advance Notices by Self-Regulatory Organizations
and the Security-Based Swap Stay of Clearing Requirement
A.

JUSTIFICATION
1.

Information Collection Necessity
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 persons
associated therewith, and the Municipal Securities Rulemaking Board is responsible for establishing
rules for certain transactions in municipal securities. The Exchange Act charges the Securities and
Exchange Commission (“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 requires an SRO to submit each proposed rule change on 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. An SRO is
required to submit Form 19b-4 to the Commission electronically, post a copy of the proposed rule
change on its public website within two business days of its filing, and post and maintain a current
and complete set of its rules on its website. In the event that an SRO does not post its proposal on its
website on the same day that it files the proposal with the Commission, then the SRO must inform the
Commission of the date on which it posted such proposal on its website. This requirement allows the
Commission to comply with Section 19(b)(2)(E) of the Exchange Act, which provides that the
“publication date” of a proposed rule change is the date of Federal Register publication as long as the
Commission sends the notice to the Federal Register for publication within 15 days of the date on
which the SRO publishes the proposal on its website.

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The Commission is required to publish a notice in the Federal Register of each proposed rule
change filing (such notices are prepared by the SROs themselves) to give interested persons an
opportunity to submit written data, views, and arguments concerning such proposed rule
change. Certain proposals are subject to Commission approval before they can become effective (such
proposals are filed under Section 19(b)(2) of the Exchange Act), while others become immediately
effective upon filing with the Commission (such proposals, which are outlined under Rule 19b-4(f),
are filed under Section 19(b)(3)(A) of the Exchange Act). The comment period is generally 21 days.
For those filings that are subject to approval, the Commission may not approve such proposed
rule change prior to 30 days after publication of the notice in the Federal Register unless it finds good
cause for doing so and publishes its reasons. The Commission must either approve or disapprove a
proposed rule change, or institute proceedings to consider whether a proposal should be
disapproved, within 45 days after the date of publication of the notice in the Federal Register. Either
the Commission or the SRO may extend the 45-day period by up to an additional 45 days. The
Commission may extend the period only if the Commission 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 publish a release that makes affirmative findings that the proposed rule
change is consistent with the Exchange Act and the rules thereunder applicable to the SRO. If it
cannot make such findings, then the Commission must publish a release that disapproves the
proposal.
Filings that are not subject to Commission approval instead become effective upon filing
with the Commission, subject to the Commission’s authority to summarily temporarily suspend
such proposed rule changes within 60 days of the filing date. In addition, one category of
immediately effective filings (those submitted pursuant to Rule 19b-4-(f)(6)) is subject to a 30-day
operative delay, which period may be shortened by the Commission if consistent with the
protection of investors and the public interest.
On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“DoddFrank Act”) 1 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 were 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) and Section 806(e) of the Dodd-Frank Act, and the rules adopted by the
Commission to implement Section 763(a) and Section 806(e) of the Dodd-Frank Act, impose
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.

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collection of information requirements on registered clearing agencies. These reporting
requirements are in addition to the information previously required by Rule 19b-4 and Form 19b-4.
In adopting the rules to implement Section 763(a) and Section 806(e) of the Dodd-Frank Act, the
Commission required the information to be collected on Form 19b-4 in order to utilize existing
resources.
Section 763(a) of the Dodd-Frank Act added Section 3C to the Exchange Act (“Exchange
Act Section 3C”). Exchange Act Section 3C requires a clearing agency to submit for Commission
determination whether a security-based swap (or group, category, type or class of security-based
swap) is required to be cleared (“Security-Based Swap Submissions”) and provide notice to its
members of such submissions. 3 The Commission adopted Rule 19b-4(o) in furtherance of the
requirements set forth in Exchange Act Section 3C. 4 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, materially affect the nature or level of risk presented by the financial market utility. 5
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”). 6
A designated clearing agency must comply with the notice process as soon as the Council
designates the clearing agency as systemically important. The Commission adopted Rule 19b-4(n)
in furtherance of 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
3

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

4

With respect to the compliance date for Rule 19b-4(o), the Commission recognized that clearing
agencies would require a transition period, and determined that the compliance date would begin 60
days after the date the Commission issues its first written determination, pursuant to Section
3C(b)(2)(C)(ii) of the Exchange Act, of whether a security-based swap, or group, category, type, or
class of security-based swaps, is required to be cleared. 77 FR 41602, 41626 (July 13, 2012). As of
the date of this publication, the Commission has not yet issued its written determination pursuant to
Section 3C(b)(2)(C)(ii) of Exchange Act.

5

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

6

Pursuant to Section 803(8) of the Dodd-Frank Act, 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 CFTC-registered derivatives clearing
organization (“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 of the
Dodd-Frank Act. 12 U.S.C. 5462(8).

4
under Section 806(e) of the Dodd-Frank Act when it is already required to file a proposed rule
change under Section 19(b) of the Exchange Act. Clearing Agencies can 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) of the Dodd-Frank Act 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.
In addition, a clearing agency is required to post certain information on its website. 7
Security-Based Swap Submissions and Advance Notices, and any amendments thereto, must be
posted on a clearing agency’s website within two business days of filing the information with the
8
Commission. The information generally shall remain posted on the clearing agency’s website
until a determination is made with respect to the Security-Based Swap Submission or until the
Advance Notice becomes effective. A clearing agency also must 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) of the
Dodd-Frank Act. 9
Under Rule 19b-4, Security-Based Swap Submissions and Advance Notices must be
submitted electronically on Form 19b-4. 10 In addition, a clearing agency must indicate whether it
is filing under Exchange Act Section 3C, Section 806(e) of the Dodd-Frank Act, Section 19(b) of
the Exchange Act, or a combination of the three (in order 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.
Rule 19b-4 provides that proposed rule changes that primarily affect products that are not
securities are eligible to become effective upon filing with the Commission pursuant to Section
19(b)(3)(A) of the Exchange Act. 11 The content of a rule filing made pursuant to Section
7

Rule 19b-4(l). See also supra note 4.

8

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

9

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

10

Rule 19b-4(o)(2). See also supra note 4.
Rule 19b-4(f).

11

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19(b)(3)(A) is virtually identical to that of a filing made pursuant to Section 19(b)(2). A clearing
agency seeking to use the “fair and orderly markets” provision 12 is required to make a separate
filing under Section 19(b)(3)(A) of the Exchange Act in addition to the Section 19(b)(2) filing.
The General Instructions for Form 19b-4 require the respondent clearing agency to cite the
statutory basis for filing a proposed rule change pursuant to Section 19(b)(3)(A) of the Exchange
Act in accordance with Rule 19b-4(f). The Commission does not believe that the reporting and
recordkeeping provisions in Rule 19b-4(f)(4)(ii) contain “collection of information requirements”
within the meaning of the PRA because fewer than ten persons are expected to rely on Rule 19b4(f)(4)(ii).
B.

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. 13 Pursuant to Rule 3Ca-1, 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 Rule 19b-4(o)(3).
2.

Information Collection Purpose and Use
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 electronically on Form 19b-4 14 and by clarifying which
12

See Rule 19b-4(f)(4)(ii), which provides that a proposed rule change may take effect upon filing with
the Commission pursuant to Section 19(b)(3)(A) of the Act if the change affects an existing service of
a registered clearing agency with respect to products that are not securities, and the change
significantly affects the securities clearing operations of the clearing agency or the rights or obligations
of the clearing agency with respect to securities clearing or persons using such securities-clearing
service, but is necessary to maintain fair and orderly markets for products that are not securities.

13

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

14

17 CFR 249.819.

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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 Exchange 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 and to provide information
sufficient to elicit meaningful public comment on each proposal. The information received is 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, for those proposals that are subject to
Commission approval, an SRO’s proposed rule change must be approved by the Commission
before it may take effect. With respect to these types of filings, the Commission has two
options: (1) it may approve or disapprove a proposed rule change or (2) it may institute
proceedings to determine whether a proposed rule change should be disapproved. The legal
standard the Commission must use to approve a proposal is set forth in Section 19(b)(2) of the
Exchange Act. Section 19(b)(3)(A) of the Exchange Act provides that, notwithstanding the
provisions of Section 19(b)(2) of the Exchange Act, a proposed rule change may take effect upon
filing with the Commission if appropriately designated by the SRO as meeting the criteria set forth
in Section 19(b)(3)(A) of the Exchange Act, as expanded in Rule 19b-4(f). If the Commission
believes that an immediately effective proposed rule change may not meet the statutory standards,
it summarily may temporarily suspend the proposal and institute proceedings to determine whether
a proposed rule change should be disapproved.
B.

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

The information provided by clearing agencies pursuant to Rule 19b-4 and Form 19b-4 is
used by the Commission to evaluate Security-Based Swap Submissions and Advance Notices. The
Commission uses the information filed on Form 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(a)(1).
The Commission uses the information on Form 19b-4 relating to Advance Notices 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 rules provide that clearing
agencies are 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”).

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The information filed on Form 19b-4 relating to Exchange Act Sections 3C and 806(e) of
the Dodd-Frank Act is, with certain exceptions, published for notice and comment. In addition,
pursuant to Exchange Act Section 3C, a clearing agency is required to provide its members with
notice of the Security-Based Swap Submission. Interested parties can use the information to
comment on the Security-Based Swap Submission or Advance Notice.
The information required by 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 use of email 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 information required for review of each proposed rule
change reflects the complexity of the SROs’ businesses. The Commission believes that use of
technology, specifically electronic filing of proposed rule changes, and posting of proposed rule
changes and SRO rules on SRO websites 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 the SRO Rule Tracking System (“SRTS”) is the internal Commission system
used to process and manage SRO proposed rule changes.
In 2013, the Commission began using EFFS and Form 19b-4 for Security-Based Swap
Submissions and Advance Notice filings, which utilizes the existing information technology for
filing of proposed rule changes, and thereby conserves both clearing agency and Commission
resources. 15
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 Security-Based
Swap Submission under Exchange Act Section 3C or an Advance Notice under Section 806(e) of the
Dodd-Frank Act. The Commission sought to avoid duplicative filings and to streamline the filing
processes and burden on clearing agencies and the Commission for these filings by requiring that all
such filings be made electronically on Form 19b-4. However, the filing requirements of Exchange
Act Section 3C, Section 806(e) of the Dodd-Frank Act, and Section 19(b) of the Exchange Act are
distinct from each other and subject to different statutory standards for Commission review.
15

See 77 FR 73302 (December 10, 2012) and Items 12B(IV) and (V) below.

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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 Collection

As explained in Section A.1, by statute, the collection of information is required with respect to
any proposed rule change, Security-Based Swap Submission, Advance Notice, or stay of clearing
application. Commission regulations facilitate the implementation of these statutory requirements by
requiring the information to be submitted on Form 19b-4. Therefore, the Commission is obligated to
collect this information, and not conducting the collection would violate federal statutes and
Commission regulations.
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 required Federal Register notice with a 60-day comment period soliciting comments on this
collection of information was published. No public comments were received.
9.

Payment or Gift

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. 16

16

5 U.S.C. 552.

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11.

Sensitive Questions

No questions of a sensitive nature are asked. The information collection does not collect any
Personally Identifiable Information (“PII”).
12.

Information Collection Burden
A.

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

Electronic Filing of Proposed Rule Changes

An SRO rule change proposal is filed with the Commission after an SRO’s staff has
obtained approval from its board of directors or otherwise after any persons delegated by the board
of directors with such authority have approved of the filing of the proposal. 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. 17 The Commission
used these estimates in subsequent requests for approval to extend the existing collection of
information provided for in Rule 19b-4 and Form 19b-4 in 2011 and 2013. 18
In calendar year 2015, 34 SRO respondents filed a total of 1,935 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 19b-4, the Commission estimates that 97 proposed rule changes could be characterized as
novel or complex and 1,838 (1,935 proposed rule changes – 97 proposed rule changes that could be
characterized as novel or complex) proposed rule changes could be characterized as average. The
average number of proposed rule changes filed in 2015, per SRO, was 57. 19 For calendar year
2016, 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 86,697 hours (39
17

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

18

See Submissions for OMB review; comment requests, 76 FR 22740 (April 22, 2011) and 76 FR 37161
(June 24, 2011); Submissions for OMB review; comment requests, 78 FR 11701 (February 19, 2013)
and 78 FR 24443 (April 25, 2013).
This figure is calculated as follows: 1,935 proposed rule change filings divided by 34 SROs in 2015
resulting in an average of 56.91 proposed rule change filings per respondent per year (rounded to 57).
Of these 57 average rule changes, 2.85 were, on average, novel or complex rule changes (97 novel or
complex proposed rule changes ÷ 34 SROs), while 54.06 were average (1,838 average proposed rule
changes ÷ 34 SROs).

19

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respondents 20 × 57 proposed rule changes per SRO per year × 39 hours per filing). 21 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 proposed
rule change proposals and amendments under Section 19(b) of the Exchange Act on its website and
four hours to update the posted SRO rules on its website once the proposed rules became
effective. 22 Accordingly, the total annual reporting burden for SROs to post proposed rule change
proposals on their websites will be approximately 8,892 hours (39 SRO respondents × 57 proposed
rule change filings per respondent per year × four hours per filing to update SRO website). This is
an ongoing third-party disclosure burden.
III.

SRO Website Posting of Rules and Rule Amendments

The total annual reporting burden for SROs to update their posted rules on their websites
once the proposed rules become effective will be approximately 7,764 hours (39 SRO respondents
× 49.77 23 effective proposed rule change filings per respondent per year × four hours per filing to
update SRO website). This is an ongoing third-party disclosure burden.

20

In 2015, there were 34 SROs. Effective December 17, 2015, the Chicago Mercantile Exchange Inc.’s
registration as a clearing agency under Section 17A of the Exchange Act was withdrawn. Securities
Exchange Act Release No. 76678 (December 17, 2015), 80 FR 79983 (December 23, 2015). In
January 2016, an additional SRO registered with the Commission (as a national securities exchange).
The Commission expects five additional respondents to register during the three-year period for which
this Paperwork Reduction Act extension is applicable (three as registered clearing agencies and two as
national securities exchanges), bringing the total number of respondents to 39.

21

As noted above, “average” filings are estimated to take 34 hours to prepare, while “novel and
complex” filings are estimated to take 129 hours to prepare. Using the numbers provided in footnote
19 that estimate 2.85 filings out of 57 are novel or complex while the rest are “average”, the estimated
burden for 57 filings per year is 38.7 hours per filing (((2.85 × 129) + (54.06 x 34)) ÷ 57)) (rounded to
39 hours).

22

See supra note 18.

23

This figure is calculated as follows: (2,223 effective proposed rule change filings per year – 275
withdrawn filings – 7 disapproved filings) divided by 39 SROs resulting in an average of 49.77
effective proposed rule change filings per respondent per year. For 34 SROs, 240 withdrawn filings
in 2015 is approximately 7.06 filings per SRO. For 39 SROs, the figure would increase to 275
withdrawn filings. For 34 SROs, six disapproved filings in 2015 is approximately 0.18 filings per
SRO. For 39 SROs, the figure would increase to seven disapproved filings.

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B.

Clearing Agencies

Currently, two clearing agencies are registered to clear security-based swaps. The
Commission estimates that one additional clearing agency will clear security-based swaps in the
future, resulting in a total of three clearing agencies that will be respondents to the applicable
collection of information requirements.
The Commission estimates that four clearing agencies, which currently clear non-securitybased swap securities, will be respondents to the applicable collection of information requirements
with respect to Advance Notices. The Commission calculated the burden for the requirements
related to Advance Notices assuming that they will apply to four clearing agencies and the burden
for the requirements related to Security-Based Swap Submissions assuming they will apply to three
clearing agencies.
I.

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

Based on staff discussions with the clearing agencies prior to issuing the proposing release
(“Proposing Release”) 24, the Commission estimated that each newly-registered clearing agency
would spend approximately 20 hours training all staff members who will use EFFS to submit
Security-Based 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 20 hours (one anticipated clearing
agency × 20 hours), or 6.7 hours annualized over three years. The Commission did not receive any
comments on the burden estimates in the Proposing Release and used such estimates for the rules as
adopted and this PRA analysis. 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, the Commission estimates that there
will 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 SecurityBased Swap Submissions and proposed rule changes with the Commission, for a total of 130 hours
(one anticipated clearing agency × 130 hours) or 43.3 hours annualized over three years. This is a
one-time recordkeeping burden.
III.

Annual Training to Update SRO Staff on Use of EFFS

The Commission estimates that each SRO will spend approximately 10 hours annually
training new compliance staff members and updating the training of existing compliance staff
members to use EFFS. The Commission believes that only a minimal amount of EFFS training
24

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

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will be submission-specific and that training a person to submit either a proposed rule change,
Security-Based Swap Submission, or Advance Notice will generally be sufficient to allow such
person to make one or more of the other types of submissions. The Commission estimates that the
total annual burden will be 390 hours (39 respondent SROs × 10 hours). This is an ongoing
recordkeeping burden.
IV.

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

The Commission estimates based on previous discussions with staff from clearing agencies
that the amount of time that a clearing agency will require to internally prepare, review, and submit
a Security-Based Swap Submission to comply with Rule 19b-4(o)(1) will be 140 hours. The
Commission also estimates that each clearing agency will submit 20 Security-Based Swap
Submissions annually based on previous discussions with staff from clearing agencies.
Accordingly, the Commission estimates that the total annual reporting burden for clearing agencies
submitting Security-Based Swap Submissions electronically with the Commission under Rule 19b4(o)(1) will be 8,400 hours (three respondent clearing agencies × 20 Security-Based Swap
Submissions per year × 140 hours per response). This is an ongoing reporting burden.
V.

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

The Commission estimates that the amount of time that designated clearing agency
representatives require to internally prepare, review, and electronically file each Advance Notice
with the Commission will be 90 hours. This estimate is based on the staff’s previous discussions
with staff from the clearing agencies.
The Commission estimates that each designated clearing agency submitting Advance
Notices will submit five Advance Notices to the Commission annually. 25 Accordingly, the
Commission estimates that the total annual reporting burden on designated clearing agencies
submitting Advance Notices electronically with the Commission will be 1,800 hours (four
designated clearing agencies × 5 Advance Notices per year × 90 hours per response). This is an
ongoing reporting burden.
VI.

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

The Commission estimates 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 four designated clearing agencies will submit five Advance Notices to the
Commission annually. Accordingly, the Commission estimates that the total annual reporting
burden on designated clearing agencies to comply with the requirement to provide to the Board
25

This figure is calculated as follows: 20 Advance Notice filings in 2015 divided by 4 respondents in
2015 resulting in an average of 5 Advance Notice filings per respondent per year.

13
copies of all materials submitted to the Commission relating to an Advance Notice
contemporaneously with such submission to the Commission will be 40 hours (four designated
clearing agencies × 5 Advance Notices per year × 2 hours per response). This is an ongoing
reporting burden.
VII.

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

The Commission believes that clearing agencies could incur some one-time costs associated
with posting Security-Based Swap Submissions, Advance Notices, and/or proposed rule changes on
their websites. The Commission estimates that each clearing agency that makes Security-Based
Swaps Submissions, Advance Notices, or proposed rule changes will spend approximately 15 hours
creating or updating its existing website in order to provide the capability to post these submissions
online. Because the Commission anticipates three additional registered clearing agencies, the
Commission estimates a one-time total burden of 45 hours (3 anticipated clearing agencies × 15
hours per website update) or 15 hours annualized over three years for the three future clearing
agencies to update their websites to enable them to post Security-Based Swaps Submissions,
Advance Notices, or proposed rule changes. This is a one-time third-party disclosure burden.
VIII. Rule 19b-4(o)(5) Posting of Security-Based Swap Submissions on SecurityBased Swap Clearing Agency Websites
The Commission estimates that four hours are required by a clearing agency to post a
Security-Based Swap Submission on its website. 26 This figure is 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 estimates that the total annual
reporting burden for clearing agencies to post Security-Based Swap Submissions on their websites
will be 240 hours (three clearing agencies × 20 Security-Based Swap Submissions per year × four
hours per website posting). This is an ongoing third-party disclosure burden.
IX. Rule 19b-4(n)(3) Posting of Advance Notices on Designated Clearing
Agency Websites
The Commission estimates that four hours are required by a designated clearing agency to
post an Advance Notice on its website. This figure is based on the current estimate for the
requirement that SROs post proposed rule changes on their websites under Rule 19b-4(l) given the

26

See supra note 4.

27

See Securities and Exchange Commission, Submission for OMB Review, Comment Request, 76 FR
37161 (June 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.

14
similarities between the two requirements. 28 The Commission estimates that the total annual
reporting burden for designated clearing agencies to post Advance Notices on their websites will be
80 hours (4 designated clearing agencies × 5 Advance Notices per year × 4 hours per website
posting). This is an ongoing third-party disclosure burden.
X.

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 estimates that four hours are 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 is 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 Accordingly, the Commission
estimates that the total annual reporting burden for designated clearing agencies to post Advance
Notices on their websites will be 80 hours (4 designated clearing agencies × 5 Advance Notices per
year × 4 hours per website posting). This is an ongoing third-party disclosure burden.
XI.

Rule 3Ca-1 Stay of Clearing Requirement Information

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. 30 This figure would represent one quarter of the estimated number of
Security-Based Swap Submissions from each clearing agency per year.
The Commission estimates that a clearing agency will spend approximately 18 hours to
retrieve, review, and submit the information associated with the stay of the clearing requirement.
The Commission also estimates that each clearing agency will be required to provide information
28

See id.

29

See id.

30

Prior to issuing the Proposing Release, Commission staff contacted eight clearing agencies that could
be subject to a stay of the clearing requirement and related review under Rule 3Ca-1. The Commission used
those discussions to estimate the collection of information for this rule. 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.

15
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 270 hours (3 clearing agencies × 5 stay
of clearing applications per year × 18 hours to retrieve, review, and submit the stay of clearing
information). This is an ongoing reporting burden.
C.

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

Based on its experience receiving and reviewing proposed rule changes filed by SROs, the
Commission estimates 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 19 times each year
based on the 1,935 proposed rule change filings submitted by SROs in 2015. For 2016, the
Commission estimates that SROs will file 2,223 proposed rule change filings (39 respondents x 57
proposed rule change filings per respondent). The Commission estimates that each SRO will spend
approximately one hour preparing and submitting notice to the Commission of the date on which it
posted the proposed rule change on its website, resulting in a total annual burden of 22 hours (22
amendments × 1 hour per amendment). This is an ongoing reporting burden.
D. Summary of Hourly Burdens
The table below summarizes, the Commission’s estimates of the total hourly reporting
burden for all SROs, including clearing agencies, under 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

86,697

SRO website posting of proposed rule change filings

8,892

SRO website posting of effective proposed rule
change filings

7,764

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

6.7

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

43.3

Annual training to update SRO staff on use of EFFS

390

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

8,400

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

1,800

16
Rule 19b-4(n)(5) submission of copies of Advance
Notices to the Board

40

Updating clearing agencies websites to provide
capability to post Security-Based Swap Submissions,
Advance Notices, and proposed rule changes

15

Rule 19b-4(o)(5) posting of Security-Based Swap
Submissions on security-based swap clearing agency
websites

240

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

80

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

80

Rule 3Ca-1 stay of clearing requirement information

270

Amendment to conform to Section 916 of the DoddFrank Act

22

TOTAL

13.

114,740

Costs to Respondents
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

17
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 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 estimates that a clearing agency will 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. 31 The Commission also estimates that each
clearing agency will submit 20 Security-Based Swap Submissions annually. Assuming an hourly
cost of $406.80 for an outside attorney, 32 the total annual cost in the aggregate for the three
clearing agencies to meet these requirements will be $1,464,480 (3 respondent clearing agencies ×
20 Security-Based Swap Submissions per year × 60 hours per response × $406.80 per hour for an
outside attorney).

31

See supra note 4.

32

The hourly rate for an outside attorney is an adjusted estimate used by the Commission for these
services in the “Exemptions for Advisers to Venture Capital Funds, Private Fund Advisers with Less
Than $150 Million Under Management, and Foreign Private Advisers” final rule. See Release No. IA3222 (June 22, 2011), 76 FR 39646 (July 6, 2011). Based on information from the Commission’s
Division of Economic and Risk Analysis, the adjustment factor from 2013 to 2016 is 1.7%.

18
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 four designated clearing
agencies will submit five Advance Notices to the Commission annually. Assuming an hourly cost
of $406.80 for an outside attorney, 33 the total annual cost for the four clearing agencies to meet
these requirements will be $325,440 (4 designated clearing agencies × 5 Advance Notice filings per
year × 40 hours per response × $406.80 per hour for an outside attorney).
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 Security-Based 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.

33

Id.

19
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

The Commission estimates that a clearing agency will 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 estimates 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 $406.80 for
an outside attorney, 34 the total estimated annual cost in the aggregate for the three clearing agencies
to meet these requirements will be $42,714 (3 respondent clearing agencies × 5 stay of clearing
applications per year × 7 hours per response × $406.80 per hour for an outside attorney).
ii. Counterparties
The Commission estimates 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 will take
for a clearing agency to prepare a Security-Based Swap Submission and the amount of time it will
take a counterparty to prepare an application of a stay of a clearing requirement, given that each
filing will 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 will take for a clearing agency to prepare a Security-Based Swap
Submission because the Commission believes that an application for a stay will 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 will have already been provided with the Security-Based Swap Submission
when it was published for notice and comment. The Commission estimates that counterparties to
security-based swaps transactions will submit 15 35 applications requesting stays of the clearing
requirement. Assuming an hourly cost of $406.80 for an outside attorney, 36 the total annual cost in
34

Id.

35

This figure is calculated as follows: 3 respondent clearing agencies multiplied by 5 stay of clearing
applications per year equals 15 stay of clearing applications per year.

36

See supra note 32.

20
the aggregate for the respondent counterparties to meet these requirements will be $610,200 (15
stay of clearing applications × 100 hours per response × $406.80 per hour for an outside attorney).
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 Rule
19b-4, Form 19b-4, and Rule 3Ca-1. The table below summarizes the Commission’s estimates of
the reporting burdens for the clearing agencies under Rule 19b-4 and Form 19b-4 and Rule 3Ca-1.
Nature of Information Collection Burden
Rule 19b-4(o)(1) Security-Based Swap
Submissions

Burden Estimate in Dollars
$1,464,480

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

$325,440

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

$42,714

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

$610,200

TOTAL

$2,442,834

21
14.

Costs to 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

60

720

43,200

Advance Notice

20

480

9,600

Average Proposed Rule
Change 37

2,108

20

42,160

Complex Proposed Rule
Change 38

111

600

66,600

TOTAL
Related cost (161,560 hours of review time at $100.34/hour) 39
Printing costs (Federal Register)
Total Estimated Recurring Annual Cost to the Federal
Government

161,560

$16,210,930.40
$300,000.00

$16,510,930.40

37

This figure is calculated as follows: 54.06 average proposed rule change filings per SRO in 2015
multiplied by 39 projected respondents in 2016. See supra notes 20-21.

38

This figure is calculated as follows: 2.85 novel or complex rule changes per SRO in 2015
multiplied by 39 projected respondents in 2016. See supra notes 20-21.

39

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

22

Therefore, the total estimated annual cost to the Federal Government for reviewing
Security-Based Swap Submissions, Advance Notice, and proposed rule change filings is
$16,510,930.40.
15.

Changes in Burden

The Commission staff has revised its estimate of the total annual reporting burden for filing
proposed rule changes and Advance Notices based on the number of proposed rule changes and
Advance Notices it has received. The Commission has revised the number of respondents based
on deregistrations of previously existing SROs, new registrations of SROs, and expected new
registrations of SROs. The Commission has revised the number of security based swap clearing
agencies based on the number of clearing agencies currently clearing security based swaps and an
expected new registration of a security based swap clearing agency. The Commission has revised
the number of clearing agencies subject to Advance Notice filing requirements based on the
current number of designated clearing agencies.
16.

Information Collections 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.

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