2025 Supporting Statement 3038-0094

SUPPORTING STATEMENT FOR NEW AND

REVISED INFORMATION COLLECTIONS

OMB CONTROL NUMBER 3038-0094

(Clearing Member Risk Management)

Justification

1. Explain the circumstances that make the collection of information necessary. Identify any legal or administrative requirements that necessitate the collection. Attach a copy of the appropriate section of each statute and regulation mandating or authorizing the collection of information.

Section 3(b) of the Commodity Exchange Act (“CEA or Act”) provides that one of the purposes of the Act is to ensure the financial integrity of all transactions subject to the Act and to avoid systemic risks. Section 8a(5) of the Act authorizes the Commodity Futures Trading Commission (“Commission”) to promulgate such regulations that it believes are reasonably necessary to effectuate any of the provisions or to accomplish any of the purposes of the Act. Risk management systems are critical to the avoidance of systemic risks.

Section 4d of the Act requires futures commission merchants (“FCMs”) to register with the Commission. It further requires FCMs to segregate customer funds. Section 4f of the Act requires FCMs to maintain certain levels of capital. Section 4g of the Act establishes reporting and recordkeeping requirements for FCMs.

Section 4s(j)(2) requires each swap dealer (“SD”) and major swap participant (“MSP”) to have risk management systems adequate for managing its day-to-day business. Section 4s(j)(4) requires each SD and MSP to have internal systems and procedures to obtain any necessary information to perform any of the functions set forth in Section 4s.

Pursuant to these provisions, the Commission adopted Commission regulation 1.73 which applies to clearing members that are FCMs and Commission regulation 23.609 which applies to clearing members that are SDs or MSPs. These provisions require these clearing members to have procedures to limit the financial risks they incur as a result of clearing trades and to maintain sufficient liquid resources to meet obligations.

The regulations require clearing members, who are FCMs, SDs, or MSPs, to:

(1) establish risk-based limits based on position size, order size, margin requirements, or similar factors, and for FCMs, risk-based limits must be established for the proprietary account and in each customer account;

(2) screen orders for compliance with the risk-based limits;

(3) monitor for adherence to the risk-based limits intra-day and overnight;

(4) conduct stress tests under extreme but plausible conditions of all positions at least once per week, and for FCMs, the stress tests must be conducted for all positions in the proprietary account and in each customer account that could pose material risk to the FCM;

(5) evaluate its ability to meet initial margin requirements at least once per week;

(6) evaluate its ability to meet variation margin requirements in cash at least once per week;

(7) evaluate its ability to liquidate the positions it clears, in an orderly manner, and estimate the cost of the liquidation, and for FCMs, the evaluation must be done at least once per quarter and conducted for all positions in the proprietary and customer accounts; and

(8) test all lines of credit at least once per year.

Each of these items has been observed by Commission staff as an element of an existing sound risk management program at an FCM, SD, or MSP. The Commission regulations require each FCM, SD, or MSP clearing member to establish written procedures to comply with these regulations and to keep records documenting its compliance.

As discussed further below, the additional information collection burden arising from the regulations primarily is restricted to the costs associated with the affected registrants’ obligation to maintain records related to clearing documentation between the customer and the customer’s clearing member.

The information collection obligations imposed by these regulations are necessary to implement certain provisions of the CEA, including ensuring that registrants exercise effective risk management and for the efficient operation of clearing member risk management at FCMs, SDs, and MSPs that are clearing members, in order to maintain financial stability at derivatives clearing organizations (“DCOs”).

2. Indicate how, by whom, and for what purpose the data would be used. Except for a new collection, indicate the actual use the agency has made of the information received from the current collection.

The regulations are an important part of the Commission’s regulatory program for FCMs, SDs, MSPs, and DCOs. The information required to be collected and preserved is used by representatives of the Commission to ensure compliance with the CEA and applicable Commission regulations.

3. Describe whether, and to what extent, the collection of information involves the use of automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g. permitting electronic submission of responses, and the basis for the decision for adopting this means of collection. Also describe any consideration of using information technology to reduce burden.

The regulations require that recordkeeping generally be performed in accordance with Commission regulation 1.31, which permits the use of electronic regulatory records.

4. Describe efforts to identify duplication. Show specifically why any similar information already available cannot be used or modified for use for the purposes described in Item 2 above.

The regulations were designed to require FCMs, SDs, and MSPs to collect and preserve certain information as part of the new compliance regime established for new categories of registrants under the Dodd-Frank Act. Accordingly, the required information is not already collected by the Commission for any other purpose. It also is not collected by any other agency or available for public disclosure through any other source.

5. If the collection of information involves small business or other small entities (Item 5 of OMB From 83-I), describe the methods used to minimize burden.

The collection of the required information does not involve any small businesses or small entities.

6. Describe the consequence to the Federal Program or policy activities if the collection were conducted less frequently as well as any technical or legal obstacles to reducing burden.

Failure to maintain the records required by these regulations would adversely affect the Commission’s ability to ensure that FCMs, SDs, MSPs, and DCOs comply with their recordkeeping and documentation obligations under the CEA and Commission regulations. Failure to comply with these recordkeeping and documentation requirements would prevent the Commission from ensuring that registrants exercise effective clearing member risk management at FCMs, SDs, MSPs, and DCOs.

7. Explain any special circumstances that require the collection to be conducted in a manner:

• requiring respondents to report information to the agency more often than quarterly;

This question does not apply. The regulations do not require respondents to report information to the agency more often than quarterly.

• requiring respondents to prepare a written response to a collection of information in fewer than 30 days after receipt of it:

This question does not apply. The regulations do not require respondents to prepare a written response in fewer than 30 days after receipt.

• requiring respondents to submit more that an original and two copies of any document;

This question does not apply. The regulations do not require the submission of multiple copies of required documents.

• requiring respondents to retain records other than health, medical, government contract, grant-in-aid, or tax records, for more than three years;

Commission Regulation 1.31(b) expressly requires that books and records required to be kept by the CEA or Commission regulations be retained for certain specific periods. Other than with respect to oral communications, the shortest of these periods is five years from the date of creation. All such books and records shall be open to inspection by any representative of the Commission or the U.S. Department of Justice.

• in connection with a statistical survey, that is not designed to produce valid and reliable results that can be generalized to the universe of study;

This question does not apply. The regulation does not require nor involve any statistical surveys.

• requiring the use of a statistical data classification that has not been reviewed and approved by OMB;

This question does not apply. The regulation does not require nor involve the use of any statistical data classification.

• that includes a pledge of confidentiality that is not supported by authority established in statue or regulation, that is not supported by disclosure and data security policies that are consistent with the pledge, or which unnecessarily impedes sharing of data with other agencies for compatible confidential use; or

This question does not apply. The regulation does not require a pledge of confidentiality.

• requiring respondents to submit proprietary trade secrets, or other confidential information unless the agency can demonstrate that it has instituted procedures to protect the information's confidentiality to the extent permitted by law.

This question does not apply. In any event, the Commission has procedures to protect the confidentiality of an applicant’s or registrant’s data. These are set forth in Commission regulations at parts 145 and 147 of title 17 of the Code of Federal Regulations.

8. If applicable, provide a copy and identify the date and page number of publication in the Federal Register of the agency's notice required by 5 CFR 1320.8(d), soliciting comments on the information collection prior to submission to OMB. Summarize public comments received in response to that notice and describe actions taken by the agency in response to these comments. Specifically address comments received on cost and hour burden. Describe efforts to consult with persons outside the agency to obtain their views on the availability of data, frequency of collection, the clarity of instructions and recordkeeping disclosure, or reporting format (if any, and on the data elements to be recorded, disclosed, or reported).

The Commission published a Notice of Intent to Extend Collection 3038-0094: Clearing Member Risk Management. See 90 FR 8927 (Feb. 4, 2025). The notice provided a 60-day period during which the public was invited to comment on the information collection and the burdens imposed by it. The Commission did not receive any relevant comments on the 60-day Federal Register notice.

9. Explain any decision to provide any payment or gift to respondents, other than renumeration of contractors or grantees.

This question does not apply. The Commission has neither considered nor made any payment or gift to a respondent.

10. Describe any assurance of confidentiality provided to respondents and the basis for the assurance in statute, regulations, or agency policy.

The Commission does not provide respondents with an assurance of confidentiality beyond that provided by applicable law. The Commission fully complies with section 8(a)(1) of the CEA, which strictly prohibits the Commission, unless specifically authorized by the CEA, from making public “data and information that would separately disclose the business transactions or market positions of any person and trade secrets or names of customers.” The Commission has procedures to protect the confidentiality of an applicant’s or registrant’s data set forth in parts 145 and 147 of the Code of Federal Regulations.

11. Provide additional justification for any questions of a sensitive nature, such as sexual behavior and attitudes, religious beliefs, and other matters that are commonly considered private. This justification should include the reasons why the agency considers the questions necessary, the specific uses to be made of the information, the explanation to be given to persons from whom the information is requested, and any steps to be taken to obtain their consent.

This question does not apply. The regulations do not request nor require the provision of sensitive information, as that term is used in question 11.

12. Provide estimates of the hour burden of the collection of information. The Statement should:

• Indicate the number of respondents, frequency of response, annual hour burden and an explanation of how the burden was estimated. Unless directed to do so, agencies should not conduct special surveys to obtain information on which to base hour burden estimates. Consultation with a sample (fewer than ten) of potential respondents is desirable. If the hour burden on respondents is expected to vary widely because of differences in activity, size or complexity, show the range of estimated hour burden, and explain the reasons for the variance. Generally, estimates should not include burden hours for customary and usual business practices.

• If the request for approval covers more than one form, provide separate hour burden estimates for each form and aggregate the hour burdens in Item 13 of OMB Form 83-I.

• Provide estimates of annualized cost to respondents for the hours burdens for collections of information, identifying and using appropriate wage rate categories. The cost of contracting out or paying outside parties for information collection activities should not be included here. Instead, this cost should be included in Item 13.

See Attachment A.

The annual burden associated with these regulations is estimated to be 504 hours, at an annual cost of $50,400 for each FCM, SD, and MSP. In total, the Commission estimates that there are 167 registrants/respondents, and the aggregate total annual burden hours will equal 84,168. Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, disclose, or provide information to or for a federal agency.

Regulations 1.73 and 23.609 require each FCM, SD, and MSP to ensure compliance with these regulations. Maintenance of contracts is prudent business practice, and the Commission anticipates that SDs and MSPs already maintain some form of this documentation. Additionally, the Commission believes that much of the existing customer clearing documentation already complies with these rules, and therefore that compliance will require a minimal burden.

The annualized costs per affected registrant and in the aggregate were determined using an average salary of $100.00 per hour. The Commission believes that this is an appropriate salary estimate for purposes of this regulation.

In support of this determination, the Commission notes that the salary estimate is based upon May 2024 Bureau of Labor Statistics’ findings of National Occupation Employment and Wage Estimates, United States (“BLS wage data”), including the mean hourly wage of an employee under occupation code-23-1011, “Lawyers” that is employed by the “Securities and Commodity Contracts Intermediation and Brokerage Industry,” which is $128.34; the mean hourly wage of an employee under occupation code 11-3031, “Financial Managers,” in the same industry, which is $126.19; and the mean hourly wage of an employee under occupation code-13-1041, “Compliance Officers” in the same industry, which is $49.34.¹

The Commission also notes that, the Commission took the foregoing data and then estimated its hourly wage in recognition of the fact that some respondents may be large financial institutions whose employees’ salaries may exceed the mean wage. The Commission recognizes that some respondents may hire outside counsel with expertise in the various regulatory areas covered by the combined final regulations and that outside counsel may be able to leverage its expertise to substantially reduce the number of hours needed to fulfill a requested assignment. While the Commission is uncertain about the billing rates that these respondents may pay for outside counsel, the Commission believes that such counsel may bill at a rate of several hundred dollars per hour. Any determination to use outside counsel, however, is at the discretion of the respondent.

Accordingly, the estimated hour burden was calculated as follows:

Position Risk Management Procedures for clearing FCMs:

Number of registrants/respondents: 61

Frequency of collection: As needed

Estimated number of annual responses per registrant: 252 [252 trading days]

Estimated aggregate number of annual responses: 15,372 [61 registrants × 252 trading days]

Estimated annual hour burden per registrant: 504 hours [252 trading days × 2 hours per record]

Estimated aggregate annual hour burden: 30,744 burden hours [61 registrants × 504 hours per registrant]

Position Risk Management Procedures for clearing SDs and MSPs:

Number of registrants/respondents: 106

Frequency of collection: As needed

Estimated number of annual responses per registrant: 252 [252 trading days per year, on average]

Estimated aggregate number of annual responses: 26,712 [106 registrants × 252 trading days]

Estimated annual hour burden per registrant: 504 hours [252 trading days × 2 hours per record]

Estimated aggregate annual hour burden: 53,424 burden hours [106 registrants × 504 hours per registrant]

13. Provide an estimate of the total annual cost burden to respondents or recordkeepers resulting from the collection of information. (Do not include the cost of any hour burden shown in Items 12 and 14).

• The cost estimate should be split into two components; (a) a total capital and start-up cost component (annualized over its expected useful life) and (b) a total operation and maintenance and purchase of services component. The estimates should take into account costs associated with generating, maintaining, and disclosing or providing the information. Include descriptions of methods used to estimate major costs factors including system and technology acquisition, expected useful life of capital equipment, the discount rate(s), and the time period over which costs will be incurred. Capital and start-up costs include, among other items, preparations for collecting information such as purchasing computers and software, monitoring, sampling, drilling and testing equipment, and record storage facilities.

• If cost estimates are expected to vary widely, agencies should present ranges of cost burdens and explain the reasons for the variance. The cost of purchasing or contracting out information collection services should be a part of this cost burden estimate, agencies may consult with a sample of respondents (fewer than ten), utilize the 60-day pre-OMB submission public comment process and use existing economic or regulatory impact analysis associated with the rulemaking containing the information collection, as appropriate.

• Generally, estimates should not include purchases of equipment or services, or portions thereof, made: (1) prior to October 1, 1995, (2) to achieve regulatory compliance with requirements not associated with the information collection, (3) for reasons other than to provide information or keep records for the government, or (4) as part of customary and usual business or private practices.

See response to question 12 and Attachment A. The information collection required by the regulations does not involve any capital or start-up capital or operations or maintenance costs as the Commission anticipates that FCMs, SDs, MSPs, and DCOs already maintain sufficient compliance personnel and systems for the regulatory reporting and recordkeeping that would be required.

14. Provide estimates of the annualized costs to the Federal Government. Also provide a description of the method used to estimate cost, which should include quantification of hours, operational expenses (such as equipment, overhead, printing and support staff), and any other expense that would not have been incurred without this collection of information. Agencies may also aggregate cost estimates from Items 12, 13, and 14 in a single table.

It is not anticipated that the regulations would impose any additional costs to the Federal Government.

15. Explain the reasons for any program changes or adjustments reported in Items 13 or 14 of the OMB Form 83-I.

There are no program changes or adjustments. The total number of respondents has remained the same since the previous renewal. As a result, the Commission’s hourly burden estimates for this collection remain unchanged. There are 167 currently registered respondents. Because there is no change in the total number of respondents, the Commission has retained its estimate of the aggregate annual burden hours for all respondents of 84,168 hours. The Commission has updated its estimate of associated labor costs based upon updated BLS wage data and estimates that the associated annual labor costs are $8,416,800.

16. For collection of information whose results are planned to be published for statistical use, outline plans for tabulation, statistical analysis, and publication. Provide the time schedule for the entire project, including beginning and ending dates of the collection of information, completion of report, publication dates, and other actions.

This question does not apply.

17. If seeking approval to not display the expiration date for OMB approval of the information collection, explain the reasons that display would be inappropriate.

This question does not apply.

18. Explain each exception to the certification statement identified in Item 19, “Certification for Paperwork Reduction Act Submissions,” of OMB Form 83-I.

This question does not apply.

Attachment A

Clearing Member Risk Management

OMB Collection File 3038-0094

Number of Registrants/Respondents: 167

Frequency of Recordkeeping/Reporting: As needed

Estimated Average Burden Hours Per Registrant: 504

Estimated Aggregate Burden Hours: 84,168

Estimated Annual Cost Per Registrant: $50,400

Estimated Aggregate Annual Cost: $8,416,800

% of Responses Collected Electronically: 100%

1. Regulation(s)	2. Estimated Number of Respondents	3. Estimated Number of Reports by Each Respondent	4. Estimated Average Number of Burden Hours per Response	5. Annual Number of Burden Hours per Respondent (3×4)	6. Estimated Average Burden Hour Cost	7. Total Average Hour Burden Cost Per Respondent (5×6)	8. Total Annual Responses (2×3)	9. Total Annual Number of Burden Hours (2×5)	10. Total Annual Burden Hour Cost of All Responses (2×7)
Recordkeeping
Position Risk Management Procedures for clearing FCMs	61	252	2	504	$100	$50,400	15,372	30,744	$ 3,074,400
Position Risk Management Procedures for clearing SDs and MSPs	106	252	2	504	$100	$50,400	26,712	53,424	$5,342,400
TOTALS:	167						42,084	84,168	$8,416,800

1 https://data.bls.gov/oes/#/industry/523000.

5