Supporting Statement for Reg SE (New Request-- Proposed Rule)

SUPPORTING STATEMENT for the Paperwork Reduction Act Information Collection
Submission for Rules Relating to Security-Based Swap Execution and Registration and
Regulation of Security-Based Swap Execution Facilities
New Request—Proposed Rule
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

The Securities and Exchange Commission (“Commission”) is proposing a set of rules
(“Regulation SE”) and forms under Section 3D of the Securities Exchange Act of 1934 (“SEA”)
that would create a regime for the registration and regulation of security-based swap execution
facilities (“SBSEFs”) and address other issues relating to security-based swap (“SBS”) execution
generally. 1 Key rules within Regulation SE would include Rule 803, which would establish a
process for SBSEF registration; Rules 804 to 810, which would establish procedures for rule and
product filings by SBSEFs; Rules 818 to 831, which would implement the 14 Core Principles for
SBSEFs set forth in Section 3D(d) of the SEA; Rules 832 to 833, which would address crossborder matters relating to SBS execution; and Rule 834, which would impose requirements
addressing conflicts of interest involving SBSEFs and SBS exchanges, as required by Section
765 of the Dodd-Frank Act.
In addition to the rules described above, the Commission is also proposing: Form
SBSEF, 2 which is the form that an entity would use to register with the Commission as an
SBSEF; a submission cover sheet, 3 which would be required to accompany filings with the
Commission made by SBSEFs for rule and rule amendments and for product listings;
amendments to existing Rule 3a1-1 under the SEA 4 to exempt from the SEA definition of
“exchange” registered SBSEFs that provide a market place for no securities other than SBS and
certain registered clearing agencies; new Rule 15a-12 under the SEA 5 that, while affirming that
an SBSEF also would be a broker under the SEA, would exempt a registered SBSEF from
certain broker requirements; to sunset an existing exemption from the requirement to register as a
clearing agency for entities performing the functions of an SBSEF but that are not yet registered
1

See Rules Relating to Security-Based Swap Execution and Registration and Regulation of
Security-Based Swap Execution Facilities, SEA Release No. 34-94615 (April 6, 2022),
87 FR 28872 (May 11, 2022) (“Regulation SE Proposing Release”).

2

See 17 CFR 249.2001.

3

See 17 CFR 249.2002.

4

See 17 CFR 240.3a1-1.

5

See 17 CFR 240.15a-12.

as such; and new rules and amendments to the Commission’s Rules of Practice, 6 to allow
persons who are aggrieved by certain determinations by an SBSEF to apply for review by the
Commission.
The Commission also is withdrawing all previously proposed rules regarding these
subjects in view of the length of time that has passed since they were issued and significant
changes to the swap and SBS markets that have taken place during that time.
The proposed rules and rule amendments would include a collection of information
within the meaning of the PRA for SBSEFs that would be required to comply with Regulation
SE and file a Form SBSEF with the Commission. In addition, proposed Rule 833 would include
a collection of information within the meaning of the PRA for persons that wish to seek an
exemption order under that rule, and proposed Rule 834 would include a collection of
information within the meaning of the PRA for SBS exchanges (in addition to SBSEFs).
Many of the proposed rules that comprise Regulation SE are modelled after analogous
CFTC rules already in force, with only minor edits to reflect differences between the statutory
regimes of the two agencies. Entities that are most likely to register with the Commission as
SBSEFs are those already registered with the CFTC as SEFs. Such entities have made
substantial investments in systems, policies, and procedures to comply with and adapt to the
regulatory system developed by the CFTC. Harmonization would allow such dually-registered
entities to utilize their existing systems, policies, and procedures to comply with the
Commission’s SBSEF rules, and SEF members would likely face only marginal additional
burdens to trade SBS as well as swaps on dually registered platforms. In light of these factors,
the Commission has based many of its paperwork burden estimates on CFTC burden estimates
calculated for analogous CFTC rules. The CFTC estimated PRA burdens by aggregating the
burdens produced by a group of related rules. In most cases, the Commission has modelled its
methodology, assumptions, and calculations on those of the CFTC, while making adjustments
that reflect differences between the scale of the market for swaps relative to the market for SBS,
such as the estimated number of SBSEFs, number of SBS market participants, and number of
SBS transactions, as necessary.
2.

Purpose and Use of the Information Collection
a.

Registration requirements and Form SBSEF

Proposed Regulation SE would impose various requirements relating to SBSEF
registration, which are set forth in proposed Rule 803. 7 The information collected pursuant to
these proposed rules would enhance the ability of the Commission to determine whether to
approve the registration of an entity as an SBSEF; to monitor and oversee SBSEFs; to determine
that SBSEFs initially comply, and continue to operate in compliance, with the SEA, including
the Core Principles applicable to SBSEFs; to carry out its statutorily mandated oversight
6

See 17 CFR Part 201.

7

See, e.g., proposed Rule 803(b)(1) (requiring an entity that wishes to register with the
Commission as an SBSEF to submit a Form SBSEF).
2

functions; and to maintain accurate and updated information regarding SBSEFs. Because the
registration information would be publicly available, it could also be useful to an SBSEF’s
members, other market participants, other regulators, and the public generally.
b.

Requirements for SBSEFs to establish rules

Various provisions of proposed Regulation SE would require SBSEFs to establish certain
rules, policies, and procedures to comply with applicable requirements of the SEA and the
Commission’s rules thereunder. 8 The rules also would help an SBSEF’s members to understand
and comply with requirements of the SBSEF.
c.

Reporting requirements for SBSEFs

Various provisions of proposed Regulation SE would require SBSEFs and certain other
persons to submit reports or provide specified information. 9 This information generally would
be used by the Commission in its oversight of SBSEFs and the SBS markets; certain of the
information to be collected could be used by market participants to confirm their SBS
transactions.
d.

Recordkeeping required under Regulation SE

Proposed Regulation SE would require an SBSEF to keep specified records. 10 The audit
trail information required to be maintained under proposed Regulation SE would aid the SBSEF
in detecting and deterring fraudulent and manipulative acts with respect to trading on its market,
as well as help it to fulfill the statutory requirement in Core Principle 4 that an SBSEF monitor
trading in SBS, including through comprehensive and accurate trade reconstructions. In
addition, Commission access to these records would provide a valuable tool to help the
Commission carry out its oversight responsibility over SBSEFs and the SBS markets in general.
e.

Timely publication of trading information requirement for SBSEFs

Proposed Regulation SE would impose certain publication burdens on SBSEFs in
proposed Rule 825. 11 The requirement contained in proposed Rule 825 that an SBSEF have the
capacity to electronically capture, transmit, and disseminate information on price, trading
8

See, e.g., proposed Rule 819(a)(2) (requiring an SBSEF to establish and enforce trading,
trade processing, and participation rules).

9

See, e.g., proposed Rule 829 (requiring an SBSEF, quarterly or upon Commission
request, to provide the Commission a report that includes the amount of financial
resources necessary to meet the requirements of Rule 829).

10

See proposed Rule 826 (requiring an SBSEF to maintain records of all activities relating
to the business of the facility, including a complete audit trail, and to report information
to the Commission upon request).

11

See proposed Rule 825 (requiring an SBSEF to make publicly available a “Daily Market
Data Report”).
3

volume, and other trading data on all SBS executed on or through the SBSEF would assist the
SBSEF in carrying out its regulatory responsibilities under the SEA and enable the SBSEF to
comply with reasonable requests to provide information to others. Furthermore, proposed Rule
825 would require an SBSEF to publish a Daily Market Data Report that is designed to provide
market observers with a daily snapshot of market activity on the SBSEF.
f.

Rule filing and product filing processes for SBSEFs

Proposed Regulation SE would establish various filing requirements applicable to
SBSEFs. Proposed Rules 804 and 805 would provide mechanisms for an SBSEF to submit
filings for new products that they seek to list either through a self-certification process or by
voluntarily requesting approval of the Commission, respectively. Proposed Rules 806 and 807
would require an SBSEF to submit new rule or rule amendments either through a selfcertification process or by voluntarily requesting approval of the Commission, respectively.
Proposed Rule 808 would address confidential treatment of filings made under the selfcertification procedures or pursuant to Commission review and approval. Proposed Rule 809
would establish procedures for addressing the situation where an SBSEF wishes to list a product
and it is unclear whether the product properly falls under the jurisdiction of the SEC or the
CFTC. Proposed Rule 810 would provide that an applicant for registration as an SBSEF may
submit for Commission review and approval an SBS’s terms and conditions or rules prior to
listing the product as part of its application for registration.
The information that would be collected under proposed Rules 804 and 805 would help
the Commission assess whether an SBS listed by an SBSEF complies with relevant provisions of
the SEA. In addition, this information would assist the Commission in overseeing the SBSEF’s
compliance with its regulatory obligations generally and to learn about developments in the SBS
product market. Proposed Rules 804 and 805 also would provide a mechanism whereby market
participants, other SBSEFs, other regulators, and the public generally could learn what products
an SBSEF intends to list, and to obtain information regarding such products. The information
that would be collected under proposed Rules 806 and 807 would help the Commission assess
whether a new rule or rule amendment of an SBSEF complies with relevant provisions of the
SEA, and assist the Commission in overseeing the SBSEF’s compliance with its regulatory
obligations generally. Proposed Rules 806 and 807 also would provide a mechanism whereby an
SBSEF’s members (and prospective members) could learn what new rules or rule amendments
the SBSEF intends to apply in its market.
The information collected under proposed Rules 809 and 810 would help the
Commission assess an SBSEF’s compliance with relevant provisions of the SEA, and assist the
Commission in overseeing the SBSEF’s compliance with its regulatory obligations. This
information also would be useful to the SBSEF’s members, because they would be subject to
such new or amended rules or products and thus would have an interest in learning about those
rules or products. Other market participants, other SBSEFs, and other regulators, as well as the
public generally, may find information about proposed new or amended rules or products useful.
g.

Requirements relating to the CCO

4

Proposed Regulation SE includes Rule 831 that would set out requirements relating to an
SBSEF’s CCO. The information that would be collected under proposed Rule 831 would help
ensure compliance by SBSEFs with relevant provisions of the SEA and assist the Commission in
overseeing SBSEFs generally. The Commission could use the annual compliance report to help
it evaluate whether an SBSEF is carrying out its statutorily-mandated regulatory obligations and,
among other things, to discern the scope of any denials of access or refusals to grant access by
the SBSEF and to obtain information on the status of the SBSEF’s regulatory compliance
program. The SBSEF’s fourth-quarter financial report would provide the Commission with
important information on the financial health of the SBSEF.
h.

Surveillance systems requirements for SBSEFs

The proposed rules that would require an SBSEF to maintain surveillance systems and to
monitor trading 12 are designed to promote compliance by an SBSEF with its obligations under
the SEA to oversee trading on its market, and to prevent manipulation and other unlawful
activity or disruption of its market
3.

Consideration Given to Improved Information Technology

Under, the proposed rule, various provisions would require registered SBSEFs (or
SBSEF applicants) to file specified information electronically with the Commission, in a form
and manner required by the Commission. The Commission is proposing to require such filings
to be made electronically through its EDGAR system using a structured data language.
Requiring SBSEFs to file this information in EDGAR would provide the Commission and the
public with a centralized, publicly accessible electronic database for the information, thereby
facilitating its use. EDGAR would also enable technical validation of the disclosures, thus
potentially reducing the incidence of non-discretionary errors (e.g., including text for a
disclosure that should contain only numbers). Moreover, requiring Inline XBRL tagging of the
reported disclosures would facilitate retrieval, aggregation, and comparison of the reported
information across different SBSEFs and time periods.
4.

Duplication

The proposed amendments would not result in, or require the collection of, duplicate
information that is otherwise available in a similar form.
5.

Effects on Small Entities

Most of proposed Regulation SE, and the related rules and rule amendments, would apply
to registered SBSEFs (or entities that are seeking to register with the Commission as SBSEFs).
In the Dodd-Frank Act, Congress defined SBSEFs as a new type of trading venue for SBS and
mandated the registration of these entities. The Commission preliminarily believes that most, if
not all, SBSEFs would be large business entities or subsidiaries of large business entities, and
12

See, e.g., proposed Rule 819(d)(3) (requiring an SBSEF to establish and maintain
sufficient compliance staff and resources).
5

that every SBSEF (or its parent entity) would have assets in excess of $5 million and annual
receipts in excess of $41,500,000. Therefore, the Commission preliminarily believes that none
of the potential SBSEFs would be considered small entities.
Proposed Rule 833 would describe how foreign SBS trading venues could become
exempt from the SEA definitions of “exchange,” “security-based swap execution facility,” and
“broker” and how SBS executed on a foreign trading venue could become exempt from the
SEA’s trade execution requirement. These requests would likely be submitted by foreign SBS
trading venues, foreign authorities that license and regulate those trading venues, or covered
persons (as defined in proposed Rule 832) who are members of such trading venues. Based on
the Commission’s existing information about the SBS market, the Commission preliminarily
believes that no person likely to request an exemption order pursuant to proposed Rule 833
would be considered a small entity. The Commission preliminarily believes that most, if not all,
of the persons requesting exemptions would be large business entities or subsidiaries of large
business entities, and on its own, or through its parent entity, would have assets in excess of $5
million (or in the case of a broker-dealer, total capital of less than $500,000) and annual receipts
in excess of $41,500,000.
Certain rules proposed in Regulation SE would apply to SBS exchanges. Based on the
Commission’s existing information about national securities exchanges, the Commission
preliminarily believes that the entities likely to be considered SBS exchanges would not be
considered small entities. The Commission preliminarily believes that any SBS exchange would
have annual receipts in excess of $41,500,000.
6.

Consequences of Not Conducting Collection

As mentioned above, the information collected pursuant to these proposed rules would
enhance the ability of the Commission to determine whether to approve the registration of an
entity as an SBSEF; to monitor and oversee SBSEFs; to determine that SBSEFs initially comply,
and continue to operate in compliance, with the SEA, including the Core Principles applicable to
SBSEFs; to carry out its statutorily mandated oversight functions; and to maintain accurate and
updated information regarding SBSEFs. Because the registration information would be publicly
available, it could also be useful to an SBSEF’s members, other market participants, other
regulators, and the public generally. Absent the collection, these goals would become much
more difficult if not impossible to accomplish.
7.

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

The proposed rule require an SBSEF to maintain records of all activities relating to the
business of the facility, including a complete audit trail, in a form and manner acceptable to the
Commission for a period of five years. This time period is consistent with existing requirements
for national securities exchanges and national securities associations pursuant to Rule 17a-1
under the SEA. 13 There are no other special circumstances, and this collection is otherwise
consistent with the guidelines in 5 CFR 1320.5(d)(2).
13

See 17 CFR 242.17a-1.
6

8.

Consultations Outside the Agency

In developing this proposal, the Commission has consulted and coordinated with the
CFTC, in accordance with the consultation mandate of the Dodd-Frank Act. 14 The Commission
has issued a release soliciting comment on the proposed rules and associated paperwork burdens.
A copy of the release is attached. Comments on Commission releases are generally received
from registrants, investors, and other market participants. In addition, the Commission and staff
participate in ongoing dialogue with representatives of various market participants through
public conferences, meetings, and informal exchanges. Any comments received on this
proposed rulemaking will be posted on the Commission’s public website and made available
through http://www.sec.gov/rules/proposed.shtml. The Commission will consider all comments
received prior to publishing the final rule, and will explain in any adopting release how the final
rule responds to such comments, in accordance with 5 CFR 1320.11(f).
9.

Payment or Gift

No payment or gift is provided to respondents.
10.

Confidentiality

The information collection does not collect personally identifiable information. The
agency has determined that neither a PIA nor a SORN are required in connection with the
collection of information.
11.

Sensitive Questions

Under the proposed rule, certain submissions will require the name and title of a duly
authorized person to make submissions for the respondents. The name and title are the only
personally identifiable information to be collected. Therefore, a SORN and a PIA are not
required for this information collection.

14

Section 712(a)(2) of the Dodd-Frank Act provides in relevant part that the Commission
shall “consult and coordinate to the extent possible with the Commodity Futures Trading
Commission and the prudential regulators for the purposes of assuring regulatory
consistency and comparability, to the extent possible.” In addition, Section 752(a) of the
Dodd-Frank Act provides in relevant part that “[i]n order to promote effective and
consistent global regulation of swaps and security-based swaps, the Commodity Futures
Trading Commission, the Securities and Exchange Commission, and the prudential
regulators . . . as appropriate, shall consult and coordinate with foreign regulatory
authorities on the establishment of consistent international standards with respect to the
regulation (including fees) of swaps.”
7

12.

Burden of Information Collection

The proposed amendment would establish 12 new collections of information, which are
listed in the chart below. The proposed new hour burdens would be a program change due to
agency discretion as they would result from Commission rules proposed under the Exchange
Act. Each of the collections of information is explained further in the discussion following the
chart.
Small
Business
Entities
Affected

Initial
Burden
Annualized
per Entity
per
Response

Ongoing
Burden per
Entity per
Response

Response
per Year

Total Annual
Burden Per
Entity

Total
Annual
Industry
Burden

Name of Information
Collection

Type of
Burden 15

Number
of
Entities
Impacted

Registration (Rule 803,
Form SBSEF)

Reporting

5

0

98.33 16

0

1

98.33

491.67

Rules modelled on
CFTC Part 37 (other
than registration)

Reporting

5

0

0

387

1

387

1,935

Rule and product filing
processes including
cover sheet (Rules
804-807) modelled on
CFTC Part 40

Reporting

5

0

0

60

60

300

Proposed Rule 809

Reporting

5

0

0

0.25

0.25

1.25 17

Proposed Rule 811(d)

Reporting

5

0

0

0.2

0.2

1

Proposed Rule 819(i)

Reporting

5

0

0

79.83

79.83

399.15

Proposed Rule 819(j)

Reporting

5

0

0

.5

.5

2.5 18

5

0

0

.4

.4

2

Reporting

7

0

26.66

0

26.66

186.67

Proposed Rule 834(b)(c)

Recordkeeping

8

0

5 19

0

1

5

40

Proposed Rule 834(d)(g)

Reporting

8

0

0

3.25

1

3.25

26

Proposed Rule 835

Reporting

5

0

0

0.75

9

45

Proposed Rule 826(f)
Proposed Rule 833

Recordkeeping

1

1
1
1
1
1
1

12

15

The Commission notes that certain collections can contain characteristics of reporting,
third-party disclosure, and/or recordkeeping. In such instances, Commission staff made a
determination as to which is the predominant characteristics and classified the collection
as such.

16

This represents an initial burden of 295 hours discussed in the Regulation SE Proposing
Release, supra note 1, at 28964, divided by three for the length of the three year renewal
period.

17

This rounds down to 1 hour in OMB’s ROCIS system.

18

This rounds up to 3 hours in OMB’s ROCIS system.

19

This represents an initial burden of 15 hours discussed in the Regulation SE Proposing
Release, supra note 1, at 28967, divided by three for the length of the three year renewal
period.
8

a.

Registration (Rule 803, Form SBSEF)

A submission by an entity wishing to register with the Commission as an SBSEF would
be required to be made on Form SBSEF, pursuant to proposed Rule 803, on a one-time basis.
The Commission preliminarily estimates that five entities initially would seek to register with the
Commission as SBSEFs. These entities would incur initial, one-time burdens for registration,
because once an entity is registered as an SBSEF, its registration obligations are complete. The
Commission’s estimate regarding the initial burden that an entity would incur to file a Form
SBSEF is informed by the estimates made by the CFTC for the completion of Form SEF and
compliance with § 37.3 of the CFTC regulations (which governs registration of SEFs). Proposed
Form SBSEF would request almost exactly the same information as required by Form SEF.
Proposed Rule 803 is substantially similar to § 37.3. The CFTC has estimated that the initial
compliance burden associated with its registration requirements in § 37.3 and Form SEF to be
295 hours per SEF applicant (or 98.33 hours, i.e., 295 divided by 3 for the three-year renewal
period). 20 For purposes of calculating burden hours, the CFTC considered the entire SEF
application process to constitute a single information collection; the Commission is utilizing the
same approach for SBSEFs.
The Commission preliminarily estimates that each Respondent would incur an
initial one-time annual reporting burden of approximately 98.33 hours, for an aggregate
initial one-time annual industry reporting burden for all five Respondents of
approximately 491.67 hours. 21
b.

Rules modelled on CFTC Part 37 (other than registration)

The CFTC has estimated that the compliance burden for all of the sections of Part 37
combined, other than the initial burden of 295 hours per SEF for registration-related compliance
discussed above, to be an ongoing annual burden of 387 hours per SEF. 22 With exception of
§ 37.600, which implements a CEA Core Principle for SEFs relating to position limits that is not
in the SEA, every other section of Part 37 has an analog in proposed Regulation SE that is
substantively similar. 23 Therefore, the Commission preliminarily estimates that the aggregate
20

See OMB, Supporting Statement for New and Revised Information Collections: Core
Principles and Other Requirements for Swap Execution Facilities, OMB Control Number
3038-0074, Attachment A (July 7, 2021), available at https://omb.report/icr/2021073038-004/doc/113431800.pdf.

21

98.33 hours per respondent x 5 respondents = 491.67 hours.

22

See OMB, Supporting Statement for New and Revised Information Collections, OMB
Control Number 3038-0074, at 8 (estimating that on a net basis the total burden hours
imposed on each SEF will be 387 hours).

23

Portions of the CFTC guidance have been incorporated into certain rules being proposed
by the Commission in Regulation SE. The CFTC guidance clarifies portions of its rules
by suggesting means for compliance and does not fundamentally alter those rules.
9

CFTC estimate of 387 hours per SEF per year serves as a reasonable estimate for the annual
hourly burden on each SBSEF. For reference, the following table lists all sections of Part 37 not
related to registration and the corresponding proposed SBSEF rule.
CFTC Part 37 Section (387
aggregate burden hours per
SEF not including § 37.3
(registration)

Topic

37.1
37.2
37.4

scope
applicable provisions
procedures for listing
products
compliance
enforceability
prohibited use of data
entities operating as SEFs
and DCMs
methods of execution
process to make swaps
available for trade
reserved section
trade execution compliance
schedule
CP 1 (compliance with
Core Principles)
CP 2 (compliance with
rules)
CP 3 (manipulation)
CP 4 (monitoring of
trading and trade
processing)
CP 5 (ability to obtain
information)
CP 6 (position limits)

37.5
37.6
37.7
37.8
37.9
37.10
37.11
37.12
37.100
37.200-37.206
37.300-37.301
37.400-37.408
37.500-37.504
37.600-37.601

Analogous SBSEF Rule #
(387 aggregate burden
hours per SBSEF not
including proposed Rule
803 (registration) and
certain other rules not
modelled on Part 37 rules
(discussed separately in the
following sections)
800
801
810
811
812
813
814
815
816
not applicable
817
818 (CP1)
819 (CP2)
820 (CP3)
821 (CP4)
822 (CP5)
no equivalent requirement
in the SEA; CP numbering
diverges after this point

Therefore, the Commission believes that no adjustments to the CFTC estimates, on which
the Commission is basing its own estimates, would be appropriate despite adapting that
guidance into the Commission’s proposed rules.
10

37.700-37.703
37.800-37.801
37.900-37.901
37.1000-37.1001
37.1100-37.1101
37.1200
37.1300-37.1307
37.1400-37.1401
37.1400-1501
Appendix A (Form SEF)
Appendix B

CP 7 (financial integrity of
transactions)
CP 8 (emergency
authority)
CP 9 (publication of
trading information)
CP 10 (recordkeeping and
reporting)
CP 11 (anti-trust)
CP 12 (conflicts of
interest)
CP 13 (financial resources)
CP 14 (system safeguards)
CP 15 (CCO)
Form SEF
Guidance relating to Core
Principles

823 (CP6)
824 (CP7)
825 (CP 8)
826 (CP 9)
827 (CP10)
828 (CP 11)
829 (CP 12)
830 (CP 13)
831 (CP 14)
Form SBSEF 24
Guidance incorporated
throughout proposed rules
818-831

The Commission preliminarily estimates that each Respondent would incur an
ongoing reporting burden of approximately 387 hours, for an aggregate annual industry
reporting burden for all five Respondents of approximately 1,935 hours. 25
c.

Rule and product filing processes including cover sheet (Rules 804-807)
modelled on CFTC Part 40

A number of rules contained in Proposed Regulation SE are modelled after rules in Part
40 of the CFTC’s rules, including §§ 40.2 (Listing products for trading by certification), 40.3
(Voluntary submission of new products for Commission review and approval), 40.5 (Voluntary
submission of rules for Commission review and approval), and 40.6 (Self-certification of rules).
The Commission is proposing Rules 804, 805, 806, and 807—which are closely modelled on
§§ 40.2, 40.3, 40.5, and 40.6, respectively—in order to harmonize with the procedures that the
CFTC applies to SEFs with respect to establishing new rules and listing products. In addition,
proposed Rule 808 is modelled after § 40.8 and would provide that certain information in a Form
SBSEF application or a rule or product filing would be made publicly available, notwithstanding
the SBSEF’s request for confidential treatment.
The Commission preliminarily estimates that each Respondent would incur an
ongoing reporting burden of approximately 60 hours, for an aggregate annual industry
reporting burden for all five Respondents of approximately 300 hours. 26
24

The burdens of registering using Form SBSEF are discussed in the previous section.

25

387 hours per respondent x 5 respondents = 1,935 hours.

26

60 hours per respondent x 5 respondents = 300 hours.
11

d.

Proposed Rule 809

Proposed Rule 809 is loosely modelled on § 40.12 of the CFTC’s rules and would set
forth a mechanism for addressing a situation where an SBSEF wishes to list a novel derivative
product and it is unclear whether the product properly falls under the jurisdiction of the SEC or
the CFTC. Proposed Rule 809 would provide a mechanism for the staying or tolling of a filing
by an SBSEF relating to a product while the appropriate jurisdictional classification of that
product is determined.
The Commission preliminarily estimates that each Respondent would incur an
ongoing reporting burden of approximately .25 hour, for an aggregate annual industry
reporting burden for all five Respondents of approximately 1.25 hours. 27
e. Proposed Rule 811(d)
§ 1.60 of the CFTC’s rules requires a SEF to provide the CFTC with copies of any legal
proceeding to which it is a party, or to which its property or assets is subject. Paragraph (d) of
proposed Rule 811 would adapt paragraphs (a), (c), and (e) of § 1.60 to apply to SBSEFs.
Subparagraph (d)(1) would require an SBSEF to provide the Commission a copy of the
complaint, any dispositive or partially dispositive decision, any notice of appeal filed concerning
such decision, and such further documents as the Commission may thereafter request filed in any
material legal proceeding to which the SBSEF is a party or its property or assets is subject.
Subparagraph (d)(2) would require an SBSEF to provide notices of similar actions against any
officer, director, or other official of the SBSEF from conduct in such person’s capacity as an
official of the SBSEF alleging violations of certain enumerated actions.
The Commission preliminarily estimates that each Respondent would incur an
ongoing reporting burden of approximately 0.2 hours, for an aggregate annual industry
reporting burden for all five Respondents of approximately 1 hour. 28
f.

Proposed Rule 819(i)

Paragraph (i) of proposed Rule 819 would bar persons with specified disciplinary
histories from serving on the governing board or committees of an SBSEF, and impose certain
other duties on the SBSEF associated with that fundamental requirement. Proposed Rule 819(i)
is modelled on § 1.63 of the CFTC’s rules. The Commission preliminarily estimates that an
SBSEF would provide the information required by proposed Rule 819(i) once per year, and that
each submission would take 79.83 hours. The Commission is basing its estimate on the one that
the CFTC included in its submission to OMB for its adoption of § 1.63, where the CFTC
estimated that each respondent would make, on average, one submission to the CFTC per year.
27

.25 hour per respondent x 5 respondents = 1.25 hours.

28

0.2 hours per respondent x 5 respondents = 1 hour.
12

The CFTC further estimated that the time required to prepare one submission is approximately
79.83 hours. 29
The Commission preliminarily estimates that each Respondent would incur an
ongoing reporting burden of approximately 79.83 hours, for an aggregate annual industry
reporting burden for all five Respondents of approximately 399.15 hours. 30
g.

Proposed Rule 819(j)

Paragraph (j) of proposed Rule 819 is modelled on § 1.67 of the CFTC’s rules. Rule
819(j)(1) would provide that, upon any final disciplinary action in which an SBSEF finds that
a member has committed a rule violation that involved a transaction for a customer, whether
executed or not, and that resulted in financial harm to the customer, the SBSEF must promptly
provide written notice of the disciplinary action to the member.
The Commission preliminarily estimates that an SBSEF would need 0.5 hours to prepare
a notice and provide it to a member. This estimate is based on a previous Commission estimate
for the time that it would take to prepare and submit a simple notice. 31 The Commission
estimates that these notices would occur once per year at each SBSEF. The estimate of once per
year is based on a previous CFTC estimate included in its submission to OMB for § 1.67 along
with other rules.
The Commission preliminarily estimates that each Respondent would incur an
ongoing reporting burden of approximately 0.5 hours, for an aggregate annual industry
reporting burden for all five Respondents of approximately 2.5 hours. 32
h.

Proposed Rule 826(f)

Proposed Rule 826(f) is modelled on CFTC § 1.37(c) and would require an SBSEF to
keep a record in permanent form, which shall show the true name, address, and principal
occupation or business of any non-U.S. member that executes transactions on the SBSEF and
must, upon request, provide to the Commission information regarding the name of any person
29

See CFTC, Service on Self-Regulatory Organization Governing Boards or Committees by
Persons with Disciplinary Histories (February 27, 1990), 55 FR 7884, 7890 (March 6,
1990) (final rule PRA for § 1.63).

30

79.83 hours per respondent x 5 respondents = 399.15 hours.

31

Proposed Rule 819(j) would not address any of the requirements or process concerning
taking final disciplinary actions; it merely would require that a notice be provided. A
provision of Regulation SCI, Rule 1000(b)(4)(i), also requires providing a simple notice
and the Commission estimated that it would take 0.5 hours to prepare and such a notice.
See Regulation Systems Compliance and Integrity; Final Rule, SEA Release No. 73639
(November 19, 2014), 79 FR 72251, 72381 (December 5, 2014).

32

0.5 hours per respondent x 5 respondents = 2.5 hours.
13

guaranteeing such transactions or exercising any control over the trading of such non-U.S.
member.
The Commission preliminarily estimates that each SBSEF would need to update
information required by Rule 826(f) once per year, and that each submission would take 0.4
hours. The Commission is basing its estimate on the estimate included by the CFTC in its
submission to OMB regarding § 1.37(c) of the CFTC’s rules, where the CFTC estimated that it
would take a SEF 0.4 hours to prepare each record in accordance with regulation § 1.37(c).
The Commission preliminarily estimates that each Respondent would incur an
ongoing recordkeeping burden of approximately 0.4 hours, for an aggregate annual
industry recordkeeping burden for all five Respondents of approximately 2 hours. 33
i.

Proposed Rule 833

Proposed Rule 833 would describe how foreign SBS trading venues (or persons acting on
their behalf) could obtain exemptions from the SEA definitions of “exchange,” “security-based
swap execution facility,” and “broker” and how SBS executed on a foreign trading venue could
become exempt from the SEA’s trade execution requirement. Based on the CFTC’s experience
in the SEF market, the Commission preliminarily estimates that there would be three requests for
an exemption order under either or both paragraphs (a) and (b) of Rule 833 in the first year and 2
requests in each subsequent year; and that each submission would require an initial, one-time
burden of 80 hours. 34 Once an exemption has been granted to an applicant, no further action is
required. Therefore, during the renewal period, the Commission estimates 7 respondents (3 in
year 1, 2 in year 2, and 2 in year 3). All 7 respondents will not incur burdens immediately at the
beginning on the renewal period, however, as a conservative estimate, and because it is not
certain when respondents will incur burdens, the Commission is assuming that all 7 respondents
will incur the 80 hour burden (80 hours total, 26.67 hours annualized over the three-year renewal
period).
The Commission preliminarily estimates that each Respondent would incur an
initial one-time annualized reporting burden of approximately 26.67 hours, for an
aggregate initial one-time annualized industry reporting burden for all seven Respondents
of approximately 186.67 hours. 35
j.

Proposed Rule 834(b)-(c)

Proposed Rule 834 would provide that each SBSEF and SBS exchange must create and
maintain rules to mitigate conflicts of interest between SBSEFs and SBS exchanges and their
members, including by prohibiting members from owning 20% or more of the voting rights of an
33

0.4 hours per respondent x 5 respondents = 2 hour.

34

See Regulation SE Proposing Release, supra note 1, at 28968.

35

26.67 hours per respondent x 7 respondents = 186.67 hours.
14

SBSEF or SBS exchange and from exercising disproportionate influence in disciplinary
proceedings. Proposed Rule 834 also would require each SBSEF and SBS exchange to submit to
the Commission after every governing board election a list of each governing board’s members,
the groups they represent, and how the composition of the board complies with the requirements
of Rule 834. Paragraph (b) sets forth details concerning the 20% cap and paragraph (c) would
include requirements designed to reinforce the 20% cap in paragraph (b). The Commission
preliminarily estimates that proposed Rules 834(b) and (c) together would have an initial, onetime paperwork burden of 15 hours per entity, or 5 hours annualized (i.e., 15 hours divided by
three for the three-year renewal period), associated with drafting and implementing any such
rules. The estimated number of entities is 8. 36
The Commission preliminarily estimates that each Respondent would incur an
initial one-time annual recordkeeping burden of approximately 5 hours, for an aggregate
initial one-time annual industry recordkeeping burden for all eight Respondents of
approximately 40 hours. 37
k.

Proposed Rule 834(d)-(g)

Paragraph (d) of proposed Rule 834 is designed to mitigate conflicts of interest in the
disciplinary process of an SBSEF or SBS exchange. Paragraph (e) would require each SBSEF
and SBS exchange to ensure that 20% or more of the persons who are eligible to vote routinely
on matters being considered by the governing board are persons who are knowledgeable of SBS
trading or financial regulation, or otherwise capable of contributing to governing board
deliberations. It would also require each SBSEF and SBS exchange to ensure that membership
of its governing board includes a diversity of groups or classes of its members. Paragraph (f) of
proposed Rule 834 would require each SBSEF and SBS exchange to submit to the Commission,
within 30 days after each governing board election, a list of the governing board’s members, the
groups or classes of members that they represent, and how the composition of the governing
board otherwise meets the requirements of Rule 834. Paragraph (g) of proposed Rule 834 would
requires an SRO to further address the avoidance of conflicts of interest in the execution of its
self-regulatory functions.
The Commission preliminarily estimates that each Respondent would incur an
ongoing l reporting burden of approximately 3.25 hours, for an aggregate annual industry
reporting burden for all eight Respondents of approximately 26 hours. 38
l.

Proposed Rule 835

Proposed Rule 835 would provide that, if an SBSEF issues a final disciplinary action
against a member, or takes final action with respect to a denial or conditioning membership, or
36

These entities consist of 5 SBSEFs and 3 SBS exchanges.

37

15 hours per respondent x 8 respondents = 120 hours.

38

3.25 hours per respondent x 8 respondents = 26 hours.
15

takes final action with respect to a denial or limitation of access of a person to any services
offered by the SBSEF, the SBSEF shall file a notice of such action with the Commission within
30 days and serve a copy on the affected person. The Commission preliminarily estimates that it
would take 0.5 hours to prepare this notice and provide it to the Commission and the affected
person. This estimate is based on a previous Commission estimate for the time that it would take
to prepare and submit a simple notice. 39 The Commission preliminarily believes that it would
take an additional 0.25 hours to create and serve a copy of that notice on the affected person.
The Commission estimates that there would be 5 respondents. The Commission estimates that
each respondent would make a response monthly resulting in 12 response per year per
respondent.
The Commission preliminarily estimates that each Respondent would incur an
ongoing reporting burden of approximately 9 hours, for an aggregate annual industry
reporting burden for all five Respondents of approximately 45 hours. 40
13.

Costs to Respondents

The Commission does not estimate any costs to respondents.
14.

Cost to Federal Government

The federal government would not incur a cost in connection with the collection of this
information.
15.

Changes in Burden

Not applicable.
16.

Information Collection Planned for Statistical Purposes

Not applicable. The information collection is not used for statistical purposes.
17.
date.

OMB Expiration Date Display Approval

The Commission is not seeking approval to not display the OMB approval expiration

39

A provision of Regulation SCI, Rule 1000(b)(4)(i), also requires providing a simple
notice and the Commission estimated that it would take 0.5 hours to prepare and such a
notice. See Regulation Systems Compliance and Integrity; Final Rule, SEA Release No.
73639 (November 19, 2014), 79 FR 72251, 72381 (December 5, 2014).

40

12 responses annually (once per month) per respondent x .75 hours per response x 5
respondents = 45 hours.
16

18.

Exceptions to Certification for Paperwork Reduction Act Submissions

This collection complies with the requirements in 5 CFR 1320.9.
B.

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

17