\110\ 15 U.S.C. 78s(b)(2)(E).
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    The Commission requests comment on all aspects of the proposed
amendments to Rule 19b-4 relating to Section 916 of the Dodd-Frank Act.
In addition, the Commission requests comments on the following specific
issues:
     Should the Commission specify the manner and form by which
the SRO should inform the Commission of the date on which it posted the
proposed rule change on its Web site? If so, what manner and form
should the notification take?

F. New Requirements Under Exchange Act Section 3C and Section 806(e)
and the Existing Filing Requirement in Exchange Act Section 19(b)

    The proposed amendments to Rule 19b-4 and Form 19b-4 incorporate
two new requirements under the Dodd-Frank Act that are similar to the
existing filing requirement for proposed rule changes under Exchange
Act Section 19(b). The first is the requirement to file Security-Based
Swap Submissions under new Exchange Act Section 3C. The second is the
requirement to file Advance Notices under new Section 806(e). As
discussed previously, the Commission anticipates that in many cases a
clearing agency may take an action that would trigger more than one of
these filing requirements \111\ and it seeks to streamline the filing
processes for Exchange Act Section 3C, Section 806(e) and Exchange Act
Section 19(b) by proposing that all such filings be made electronically
on Form 19b-4.
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    \111\ Title VII contains a clause, which provides in pertinent
part, that ``[u]nless otherwise provided by its terms, [Subtitle B]
does not divest * * * the Securities and Exchange Commission * * *
of any authority derived from any other provision of applicable
law.'' See Section 771 of the Dodd-Frank Act. Similarly, Section 811
of the Dodd-Frank Act provides that ``[u]nless otherwise provided by
its terms, this title does not divest any appropriate financial
regulator, any Supervisory Agency, or any other Federal or State
agency, of any authority derived from any other applicable law,
except that any [risk management] standards prescribed by the
[Board] under section 805 shall supersede any less stringent
requirements established under other authority to the extent of any
conflict.'' Accordingly the new requirements under Titles VII and
VIII do not supersede the existing requirements under the Exchange
Act that would require clearing agencies (which are all SROs) to
file a proposed rule change when the change proposed in a Security-
Based Swap Submission or Advance Notice also meets the criteria for
a proposed rule change.
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    The amendments to Rule 19b-4 and to Form 19b-4 are being proposed
to avoid duplicative filings and to streamline the process and burden
on clearing agencies and the Commission. However, the filing
requirements of Exchange Act Section 3C, Section 806(e) and Exchange
Act Section 19(b) are distinct from each other and subject to different
statutory standards for Commission review. As a result, a clearing
agency that files a proposal pursuant to more than one of these
sections must meet the requirements of each applicable regulatory
scheme before the applicable change may become effective.
    Accordingly, it is likely that many proposals made by clearing
agencies may be filed and require review under more than one of the
three Commission review procedures discussed herein. For example, a
designated clearing agency may be required to submit an Advance Notice
in connection with its Security-Based Swap Submission if the
requirement to clear the security-based swap described in the
submission would materially affect the nature or level of risks
presented by the designated clearing agency. Moreover, if the
designated clearing agency did not have existing authority under its
rules to clear the relevant security-based swap, such action likely
also would require a proposed rule change filing under Exchange Act
Section 19(b).
    In other cases, only one of the three Commission-review procedures
may apply because the scope of proposals requiring review under each of
Section 806(e) and Exchange Act Section 3C is in some ways broader and
in other ways narrower in comparison to Exchange Act Section 19(b).
There is, for example, the potential that certain changes to the
operations of a designated clearing agency may not require a proposed
rule change filing under Exchange Act Section 19(b) or a Security-Based
Swap Submission under Exchange Act Section 3C, but may trigger a
requirement to file an Advance Notice under Section 806(e). By
contrast, because the notice requirement under Section 806(e) applies
only to matters that materially affect the nature or level of risk
presented by a designated clearing agency, it is also possible that a
rule change filing would be required under Exchange Act Section 19(b)
but not trigger the advance notice requirement under Section 806(e).
    When a clearing agency submits a filing for more than one purpose
(i.e., proposed rule change, Security-Based Swap Submission and/or
Advance Notice), the Commission will endeavor to evaluate such filings
in tandem as part of a parallel process. Although the timing for review
under each of Exchange Act Section 3C, Section 806(e) and Exchange Act
Section 19(b) is different,\112\ all three processes contain some
degree of flexibility, and the Commission will attempt to streamline
the review processes to avoid any unnecessary delays or duplicative
requests for information.
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    \112\ Assuming the Commission utilizes its maximum allotment of
time under Exchange Act Section 19(b)(2), including with respect to
any extensions of time requiring the consent of the SRO, the
Commission must either approve, disapprove or institute proceedings
with respect to a proposed rule change filing within approximately
105 days after receipt. See Public Law 111-203, section 916
(amending Exchange Act Section 19(b)(2)). 15 U.S.C. 78s(b)(2).
Similarly, the Commission must make its determination on a Security-
Based Swap Submission within 90 days after receipt, unless the
clearing agency agrees to an extension of this time limitation. See
Public Law 111-203, section 763(a) (adding Exchange Act Section
3C(b)(3)). The Commission is not required to approve affirmatively a
proposed change filed as an Advance Notice under Section 806(e), but
it must notify the designated clearing agency of any objection to
the proposed change within 60 days after receiving the notice
filing, unless the Commission requests additional information in
consideration of the notice, in which case the 60-day period will
recommence on the date such information is received by the
Commission. 12 U.S.C. 5465(e)(1)(G).
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    However, each of the three processes would remain distinct from the
other processes. Each proposed rule change filing, Security-Based Swap
Submission and Advance Notice would be reviewed and evaluated
independently by the Commission in accordance with the applicable
statute and regulatory authority. Moreover, the proposed imposition of
new requirements to file Advance Notices with the Commission and to
make Security-Based Swap Submissions would not replace Exchange Act
Section 19(b) notice process provision, nor will a filing made under
one of the two new requirements eliminate the need to satisfy the
requirements of the other process to the extent they are applicable.
The Commission review required by Exchange Act Section 3C is different
from the review required under Section 806(e), which in turn is
different from the review required under Exchange Act Section 19(b).
    Section 806(e) requires an analysis of the risk management issues
that may impact the clearing agency, its participants, or the market.
Exchange Act Section 19(b), by contrast, requires a broader evaluation
and an analysis as to whether the proposed rule change meets the
requirements of the Exchange Act and the rules thereunder. Finally,
Exchange Act Section 3C only applies when a clearing agency plans to
accept for clearing a security-based swap (or a group, category, type
or class of security-based swaps), and the standard

for review is based on a number of specified factors, including but not
limited to: (i) How the submission is consistent with Exchange Act
Section 17A and (ii) the factors specified in Exchange Act Section 3C
relating to the security-based swap, the market for the security-based
swaps, and the clearing agency.
    The Commission preliminarily believes that these distinct reviews
make it possible for a submission made on Form 19b-4 to be acceptable
under the standards for review for one of the three purposes but not
under the others.\113\ Accordingly, under the proposal, where a
proposed change is required to be filed pursuant to more than one
filing requirement, the change would not become effective until
determinations are obtained under each of the other applicable
statutory provisions. In cases where only the requirements of one of
Exchange Act Section 19(b), Exchange Act Section 3C or Section 806(e)
are implicated, only the applicable process would need to be completed
before the proposal could become effective.
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    \113\ For example, a rule proposal may provide for sound risk
management practices but have an anticompetitive aspect that would
not satisfy the requirements of the Exchange Act.
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III. General Request for Comment

    The Commission seeks comment generally on all aspects of the
proposed amendments to Rule 19b-4 and Form 19b-4 and proposed Rules
3Ca-1 and 3Ca-2. Commenters are encouraged to provide empirical data or
economic studies to support their views and arguments related to the
proposed rules. In addition to the questions above, commenters are
welcome to offer their views on any other matter raised by the proposed
rules. With respect to any comments, we note that they are of greatest
assistance to the Commission if accompanied by supporting data and
analysis of the issues addressed in those comments and if accompanied
by alternative suggestions to our proposal where appropriate.
    In addition, Title VII requires that the Commission consult and
coordinate to the extent possible with the CFTC for the purposes of
assuring regulatory consistency and comparability, to the extent
possible,\114\ and states that in adopting rules, the CFTC and
Commission shall treat functionally or economically similar products or
entities in a similar manner.\115\
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    \114\ Public Law 111-203, section 712(a)(7).
    \115\ Id.
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    The CFTC is required to adopt rules related to the process for
review of swaps for mandatory clearing as required under Section 723 of
the Dodd-Frank Act.\116\ Understanding that the Commission and the CFTC
regulate different products and markets, and as such, appropriately may
be proposing alternative regulatory requirements, we request comments
on the impact of any differences between the Commission and CFTC
approaches to the process for submissions for review of security-based
swaps and swaps for mandatory clearing. Specifically, do the regulatory
approaches under the Commission's proposed rulemaking pursuant to
Exchange Act Section 3C and the CFTC's proposed rulemaking pursuant to
Section 723 of the Dodd-Frank Act result in duplicative or inconsistent
efforts on the part of market participants subject to both regulatory
regimes or result in gaps between those regimes? If so, in what ways do
commenters believe that such duplication, inconsistencies, or gaps
should be minimized? Do commenters believe the approaches proposed by
the Commission and the CFTC to regulate the process for review of
security-based swaps and swaps for mandatory clearing are comparable?
If not, why not? Do commenters believe there are approaches that would
make the regulation of the process for review of security-based swaps
for mandatory clearing more comparable? If so, what are they? Do
commenters believe that it would be appropriate for us to adopt an
approach proposed by the CFTC that differs from our proposal? Is so,
which one? We request commenters to provide data, to the extent
possible, supporting any such suggested approaches.
---------------------------------------------------------------------------

    \116\ See Public Law 111-203, section 723 (amending Section 2 of
the Commodity Exchange Act). See also supra note 55 discussing the
CFTC's proposed rules pursuant to Section 723 of the Dodd-Frank Act.
---------------------------------------------------------------------------

    Similarly, the CFTC is required to adopt rules related to the
process, pursuant to Section 806(e), by which any financial market
utility designated by the Council as systemically important (and for
which the CFTC is the Supervisory Agency) will be required to provide
advance notice to the CFTC of changes to its rules, procedures or
operations that could materially affect the nature or level of risks
presented by such financial market utility.\117\ The Commission
requests comments on the impact of any differences between the
Commission and CFTC approaches to the process for submitting proposed
changes to rules, procedures or operations for review pursuant to
Section 806(e). Specifically, do the regulatory approaches under the
Commission's proposed rulemaking and the CFTC's proposed rulemaking
pursuant to Section 806(e) result in duplicative or inconsistent
efforts on the part of market participants subject to both regulatory
regimes or result in gaps between those regimes? If so, in what ways do
commenters believe that such duplication, inconsistencies, or gaps
should be minimized? Do commenters believe the approaches proposed by
the Commission and the CFTC with respect to the process for submitting
advance notice of proposed changes to rules, procedures or operations
for review pursuant to Section 806(e) are comparable? If not, why not?
Do commenters believe there are approaches that would make the
regulation of the process for submitting for advance review notices of
proposed changes to rules, procedures or operations pursuant to Section
806(e) more comparable? If so, what are they? Do commenters believe
that it would be appropriate for us to adopt an approach proposed by
the CFTC that differs from our proposal? Is so, which one? We request
commenters to provide data, to the extent possible, supporting any such
suggested approaches.
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    \117\ 75 FR 67282 (November 2, 2010).
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IV. Paperwork Reduction Act

    Rule 19b-4, Form 19b-4 and Rule 3Ca-1 contain ``collection of
information requirements'' within the meaning of the Paperwork
Reduction Act of 1995 (``PRA'').\118\ Accordingly, the Commission has
submitted the information to the Office of Management and Budget
(``OMB'') for review in accordance with 44 U.S.C. 3507 and 5 CFR
1320.11. The Commission is proposing to submit the current collection
of information titled ``Rule 19b-4 Filings with Respect to Proposed
Rule Changes by Self-Regulatory Organizations'' (OMB Control No. 3235-
0045). The Commission is proposing to submit the current collection of
information titled ``Form 19b-4 under the Securities Exchange Act of
1934'' (OMB Control No. 3235-0045). The Commission also is proposing to
submit a new collection of information titled ``Rule 3Ca-1 Stay of
Clearing Requirement and Review by the Commission under the Securities
Exchange Act of 1934''. An agency may not conduct or sponsor, and a
person is not required to respond to, a collection of information
unless it displays a currently valid control number. Any information
submitted to the Commission will be made publicly available.
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    \118\ 44 U.S.C. 3501 et seq.

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A. Summary of Collection of Information

1. Proposed Amendments to Rule 19b-4 and Form 19b-4
    Rule 19b-4 currently requires an SRO seeking Commission approval
for a proposed rule change to provide the information stipulated in
Form 19b-4. Form 19b-4 currently requires a description of the terms of
a proposed rule change, the proposed rule change's impact on various
market segments and the relationship between the proposed rule change
and the SRO's existing rules. Form 19b-4 also requires an accurate
statement of the authority and statutory basis for, and purpose of, the
proposed rule change, the proposal's impact on competition and a
summary of any written comments received by the SRO from SRO members.
An SRO also is required to submit Form 19b-4 to the Commission
electronically, post a proposed rule change on its Web site within two
business days of its filing, and to post and maintain a current and
complete set of its rules on its Web site.
    The Commission is proposing to require two new collections of
information on Form 19b-4 related to new filing requirements applicable
to clearing agencies under the Dodd-Frank Act. The proposed amendments
would not otherwise change the collection of information requirements
currently in Rule 19b-4 and Form 19b-4. These new reporting
requirements are in addition to the information currently required by
Rule 19b-4 and Form 19b-4.
    The proposed rule would require clearing agencies to file
information with the Commission under Exchange Act Section 3C and
Section 806(e) on Form 19b-4. Exchange Act Section 3C requires clearing
agencies to submit for a Commission determination of whether mandatory
clearing applies, any security-based swap, or any group, category, type
or class of security-based swaps, that the clearing agency plans to
accept for clearing and provide notice to its members of such
submission. Section 806(e) requires that a clearing agency designated
as systemically important by the Council file with the Commission
advance notice of proposed changes to its rules, procedures or
operations that could materially affect the nature or level of risk
presented by the designated clearing agency.
    The Commission anticipates that in many cases, a clearing agency
would be required to file a proposal under Exchange Act Section 3C or
Section 806(e) when it is already required to file a proposed rule
change under Exchange Act Section 19(b). Accordingly, clearing agencies
would be able to submit on a Form 19b-4, proposals under Exchange Act
Section 3C or Section 806(e) that they are already required to submit
under Exchange Act Section 19(b). In some cases, however, a clearing
agency would be required to file a proposal under Exchange Act Section
3C or Section 806(e) and not under Exchange Act Section 19(b), for
example where a proposal materially affects the nature or level of
risks presented by the clearing agency but does not change the rules of
the clearing agency.
    In addition, Exchange Act Section 3C and Section 806(e) each
require information to be provided as part of the filing that is in
addition to the information required to be filed with a proposed rule
change under Exchange Act Section 19(b). A clearing agency would be
required to include as part of the Security-Based Swap Submission a
statement that includes, but is not limited to: (i) How the submission
is consistent with Exchange Act Section 17A; (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) provides 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. A designated clearing
agency also would be required to provide any additional information
requested by the Commission necessary to assess the effect the proposed
change would have on the nature or level of risks associated with the
designated clearing agency's payment, clearing or settlement activities
and the sufficiency of any proposed risk management techniques.
    The proposed amendments to Rule 19b-4 also would require a clearing
agency to post certain information on its Web site, and require a SRO
that does not post a proposed rule change on its Web site on the same
day that it filed the proposal with the Commission to inform the
Commission of the date on which it posted such proposal on its Web
site.\119\ Security-Based Swap Submissions and Advance Notices, and any
amendments thereto, would be required to be posted on the clearing
agency's Web site within two business days of filing the information
with the Commission. The information generally shall remain posted on
the clearing agency's Web site until a determination is made with
respect to the Security-Based Swap Submission or the Advance Notice
becomes effective. A clearing agency also would be required to post
notice on its Web site of the effectiveness of any change to its rules,
procedures, or operations referred to in an Advance Notice within two
business days of the effective date determined in accordance with
Section 806(e).
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    \119\ Proposed Rule 19b-4(l).
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2. Stay of Clearing Requirement
    Proposed Rule 3Ca-1 provides that 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 (or group,
category, type, or class of security-based swaps) and the clearing of
the security-based swap (or group, category, type, or class of
security-based swaps) that the clearing agency has accepted for
clearing. A counterparty to a security-based swap that applies for a
stay of the clearing requirement for a security-based swap, or any
group, category, type, or class of security-based swaps, would be
required to submit to the Commission the information set forth in
proposed Rule 3Ca-1(b).
    Any clearing agency that has accepted for clearing a security-based
swap, or any group, category, type or class of security-based swaps,
that is subject to the stay of the clearing requirement would be
required to provide information requested by the Commission as it
determines to be necessary and appropriate to assess any of the factors
in the course of the Commission's review. The Commission preliminarily
believes such information would likely include updates to the
information the clearing agency provided in the Security-Based Swap
Submission relating to the security-based swap then subject to the stay
under review.

B. Proposed Use of Information

1. Proposed Amendments to Rule 19b-4 and Form 19b-4
    The information currently required under Rule 19b-4 and reported on
Form 19b-4 is used by the Commission to review rule change proposals
filed by SROs pursuant to Exchange Act Section 19(b)(1) \120\ and to
provide notice of the proposals to the general public. The Commission
relies upon the information received in SRO filings, as well as public
comment regarding the information, in reviewing and reaching

decisions about whether to approve a proposed rule change.
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    \120\ 15 U.S.C. 78s(b)(1).
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    The information to be provided by clearing agencies pursuant to the
proposed amendments to Rule 19b-4 and Form 19b-4 would be used by the
Commission to evaluate Security-Based Swap Submissions and Advance
Notices. The Commission would use the information filed on Form 19b-4
related to Security-Based Swap Submissions 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 is
required to be cleared pursuant to Exchange Act Section 3C(1).
    The Commission would use the information on Form 19b-4 related to
Advance Notices filed under Section 806(e) 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. In
addition, the information on the form would be provided to the Board
because the Commission is required to provide copies of all Advance
Notices and any additional information provided by the designated
clearing agency relating to the Advance Notice and to consult with the
Board before taking any action on or completing its review of the
Advance Notice.\121\ In some instances, the Commission also may use the
information on the form to determine whether to allow a proposed change
to take effect in less than 60 days following the receipt of the
Advance Notice and to determine whether a change made on an emergency
basis is warranted or whether it should be modified or rescinded.
---------------------------------------------------------------------------

    \121\ 12 U.S.C. 5465(e)(3) and (4).
---------------------------------------------------------------------------

    The information proposed to be filed on Form 19b-4 relating to
Exchange Act Section 3C and Section 806(e) also would be used by
participants of the clearing agency, market participants, other
clearing agencies, or the general public to comment on the proposal, as
the Commission is proposing to require that a clearing agency post the
information on its Web site. In addition, pursuant to Exchange Act
Section 3C, a clearing agency would be required to provide its members
with notice of the Security-Based Swap Submission. As with proposed
rule changes under Exchange Act Section 19(b), the Commission would
solicit comment from interested parties on proposals filed under
Exchange Act Section 3C and Section 806(e). Interested parties could
use the information to comment on the proposed change and to provide
feedback on the development of the clearing agency's service offerings
and the rules, procedures and operations of the clearing agency.
    The information collected by the Commission with respect to the
date on which the SRO posted a proposed rule change on its Web site (if
such posting date is not the same as the filing date) would be used to
inform the Commission of the date by which the Commission must send the
SRO notice to the Federal Register for publication.
2. Stay of Clearing Requirement
    The information provided as required by proposed Rule 3Ca-1 would
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 would continue to apply to such security-based
swap, or any group, category, type, or class of security-based swaps.

C. Respondents

1. Proposed Amendments to Rule 19b-4 and Form 19b-4
    There are currently 25 SROs subject to the collection of
information under Rule 19b-4 and Form 19b-4, although that number may
vary owing to the consolidation of SROs or the introduction of new
entities. In fiscal year 2009, these SRO respondents filed 1,405 rule
change proposals subject to the current collection of information, of
which 1,071 proposed rule changes ultimately became effective.
    Although Rule 19b-4 and Form 19b-4 apply to all SROs, the new
collection of information requirements in the proposed rules would
apply to clearing agencies and, in certain limited circumstances, to
other SROs. The proposed amendments relating to Exchange Act Section 3C
would apply to clearing agencies that clear security-based swaps.
Currently, four clearing agencies are authorized to clear credit
default swaps, which include security-based swaps,\122\ pursuant to
temporary conditional exemptions under Exchange Act Section 36.\123\
The obligation to centrally clear security-based swap transactions is a
new requirement under Title VII, and it is anticipated that clearing
agencies operating under temporary conditional exemptions will register
or will become registered security-based swap clearing agencies.\124\
Based on the fact that there are currently four clearing agencies
authorized to clear security-based swaps and that there could
conceivably be a few more in the foreseeable future,\125\ the
Commission preliminarily estimates that four to six clearing agencies
may plan to centrally clear security-based swaps and be subject to the
information collection requirements in the proposed rules relating to
Exchange Act Section 3C. The Commission is using the higher estimate
(six) for the PRA analysis.
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    \122\ The Commission authorized five entities to clear credit
default swaps. See Securities Exchange Act Release Nos. 60372 (July
23, 2009), 74 FR 37748 (July 29, 2009) and 61973 (April 23, 2010),
75 FR 22656 (April 29, 2010) (CDS clearing by ICE Clear Europe
Limited); 60373 (July 23, 2009), 74 FR 37740 (July 29, 2009) and
61975 (April 23, 2010), 75 FR 22641 (April 29, 2010) (CDS clearing
by Eurex Clearing AG); 59578 (March 13, 2009), 74 FR 11781 (March
19, 2009), 61164 (December 14, 2009), 74 FR 67258 (December 18,
2009) and 61803 (March 30, 2010), 75 FR 17181 (April 5, 2010) (CDS
clearing by Chicago Mercantile Exchange Inc.); 59527 (March 6,
2009), 74 FR 10791 (March 12, 2009), 61119 (December 4, 2009), 74 FR
65554 (December 10, 2009) and 61662 (March 5, 2010), 75 FR 11589
(March 11, 2010) (CDS clearing by ICE Trust US LLC); 59164 (December
24, 2008), 74 FR 139 (January 2, 2009) (temporary CDS clearing by
LIFFE A&M and LCH.Clearnet Ltd.) (collectively, ``CDS Clearing
Exemption Orders''). LIFFE A&M and LCH.Clearnet Ltd. allowed their
order to lapse without seeking renewal.
    \123\ 15 U.S.C. 78mm. Of the four clearing agencies granted
temporary exemptions from registration, only three have cleared
products that likely are classified as security-based swaps under
Title VII.
    \124\ See Public Law 111-203, section 763(b).
    \125\ The Commission does not expect there to be a large number
of clearing agencies that clear security-based swaps, based on the
significant level of capital and other financial resources necessary
for the formation of a clearing agency.
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    The amendments to Rule 19b-4 and Form 19b-4 relating to the Section
806(e) advance notice requirement of changes to rules, procedures or
operations would only apply to clearing agencies that are registered
with the Commission, designated by the Council as systemically
important, and for which the Commission is the Supervisory Agency.
There are currently six clearing agencies registered with the
Commission; however, only four of these clearing agencies are currently
clearing securities transactions. In addition, it is anticipated that
several more clearing agencies will be registered with the Commission
following the effectiveness of Title VII to clear security-based swaps.
For purposes of the PRA analysis, the Commission estimates that the
four registered securities clearing agencies that are currently
clearing securities and the six estimated clearing agencies that may
clear security-based swaps would be subject to the applicable
collection of information requirements.

2. Stay of Clearing Requirement
    The Commission preliminarily estimates that six security-based swap
clearing agencies' activities associated with security-based swap
clearing requirements would potentially be subject to the collection of
information under proposed Rule 3Ca-1 in connection with any
counterparty requesting a stay of clearing requirement.

D. Total Annual Reporting and Recordkeeping Burden

1. Background
    The proposed amendments to Rule 19b-4 and Form 19b-4 are designed
to facilitate the processes for providing the Commission with Security-
Based Swap Submissions and Advance Notices and to make these processes
efficient by utilizing the existing infrastructure for proposed rule
changes, thereby conserving both clearing agency and Commission
resources. When amended, Form 19b-4 would enable clearing agencies to
submit Security-Based Swap Submissions and Advance Notices
electronically with the Commission. The proposed amendments to Rule
19b-4 also would require a clearing agency to post on its Web site any
Security-Based Swap Submissions and any Advance Notices, and any
amendments thereto, submitted to the Commission within two business
days of submission. A further amendment to Rule 19b-4 would require an
SRO that filed a proposed rule change with the Commission to inform the
Commission of the date on which it posted such proposal on its Web site
if the posting did not occur on the same day that the SRO filed the
proposal with the Commission. Finally, proposed Rule 3Ca-1 would
specify the process for a security-based swap counterparty to apply to
the Commission for a stay of the clearing requirement.
2. Rule 19b-4 and Form 19b-4
    In order to estimate the collection of information, the Commission
received informal comments from a few clearing agencies that would be
subject to the new requirements in the proposed amendments to Rule 19b-
4 and Form 19b-4. Clearing agencies would have to train personnel and
develop policies and procedures to implement the proposed new filing
requirements under Rule 19b-4 and Form 19b-4 in connection with
Security-Based Swap Submissions and Advance Notices. In addition,
clearing agencies indicated they would have to submit additional
information to the Commission, either as separate filings or as part of
filings also submitted as proposed rule changes under Exchange Act
Section 19(b).
    The clearing agencies emphasized that the estimated burdens would
depend in large part on the rules ultimately adopted by the Commission
to define and determine how frequently Security-Based Swap Submissions
and Advance Notices would be required to be filed and the nature and
extent of information that would be required with each filing. In
addition, the clearing agencies stated that the burden per filing could
vary widely, depending on the complexity of each individual filing. For
example, some clearing agency proposals may require more information or
analysis to be submitted as part of the filing. The clearing agencies
also stated that the annual burden also could vary widely from year to
year depending on the number of new proposals the clearing agency makes
in a particular year. As a result, the estimates provided as part of
the survey are preliminary and may change after clearing agencies have
the opportunity to review and closely evaluate the proposed rules.
    The estimates varied among clearing agencies, which may reflect the
different internal processes, training programs, and review procedures
for new projects currently in place at the different clearing agencies.
In addition, some clearing agencies are currently registered with the
Commission while others are not. Clearing agencies registered with the
Commission already file proposed rule changes under Exchange Act
Section 19(b) and have more familiarity with the collection of
information requirements related to Rule 19b-4 and Form 19b-4, while
clearing agencies that are not registered with the Commission are not
as familiar with these requirements and may incur a greater burden in
connection with learning EFFS and training personnel.
    The Commission heard from staff of eight clearing agencies. The
estimates varied among clearing agencies, and therefore the Commission
is using conservative numbers in developing its estimates for the PRA.
In addition, in order to provide a conservative estimate, the
Commission has calculated the burden for the requirements related to
Advance Notices assuming that they would apply to all ten clearing
agencies and the burden for the requirements related to Security-Based
Swap Submissions assuming they would apply to six clearing agencies.
    Finally, the Commission recognizes that there would likely to be
some substantive and procedural overlap with respect to the processes
for preparing and submitting Security-Based Swap Submissions, Advance
Notices and proposed rule changes that relate to the same subject
matter. For example, in connection with a decision to clear a new type
of security-based swap that was not previously permitted under the
clearing agency's rules, a clearing agency could be required to make a
filing as a Security-Based Swap Submission, an Advance Notice and a
proposed rule change. In this case, because these submissions all
relate to the same underlying issue, the amount of time required to
prepare a single Form 19b-4 for all three purposes is likely to be less
than the aggregate amount of time ordinarily required to prepare and
submit an unrelated Security-Based Swap Submission, Advance Notice and
proposed rule change. Nevertheless, the Commission is calculating the
PRA burden for each process individually without accounting for any
reduction due to the anticipated overlap. The Commission has decided to
calculate the burdens in this manner in order to provide the most
conservative estimates possible. Additionally, the estimates of each of
the following burdens are derived from discussions between the
Commission's staff and personnel of the clearing agencies, as described
above.
a. Internal Policies and Procedures
    The Commission preliminarily believes that newly-registered
clearing agencies could incur some one-time costs associated with
training their personnel about the procedures for submitting Security-
Based Swap Submissions and/or Advance Notices in electronic format
through EFFS. Based on staff discussions with the clearing agencies,
the Commission preliminarily estimates that each newly registered
clearing agency will 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 estimates that the total one-time burden of
training staff members of newly-registered clearing agencies to use
EFFS will be 120 hours (six clearing agencies x 20 hours).
    Going forward, the Commission preliminarily estimates that each
existing SRO (including currently-registered clearing agencies) will
spend approximately 10 hours annually training new staff members and
updating the training of existing staff members to use EFFS, resulting
in a total annual burden of 310 hours ((six newly-registered clearing
agencies x 10 hours) + (25 SROs x 10 hours)). The Commission
preliminarily believes that only a minimal amount of EFFS training

will be submission-specific and that training a person to submit either
a proposed rules 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.
    Based on staff discussions with the clearing agencies, the
Commission preliminarily estimates that there would be a one-time
paperwork burden of 130 hours for each newly-registered clearing agency
to draft and implement internal policies and procedures relating to
using EFFS to submit Security-Based Swap Submissions, Advance Notices
and proposed rule changes with the Commission, for a total of 780 hours
(130 hours x six newly-registered clearing agencies). In addition, the
Commission preliminarily estimates that there will be a one-time
paperwork burden of 30 hours for each currently-registered clearing
agency to draft and implement modifications to existing internal
policies and procedures for using EFFS in order to update them for
submitting Security-Based Swap Submissions and/or Advance Notices with
the Commission for a total of 120 hours (30 hours x four currently-
registered clearing agencies).
b. Proposed Rule Changes
    An SRO rule change proposal is generally filed with the Commission
after an SRO's staff has obtained approval of its board of directors.
The time required to complete a filing varies significantly and is
difficult to separate from the time an SRO spends in developing
internally the proposed rule change. In a PRA analysis conducted in
2004 in connection with amendments to Rule 19b-4 and Form 19b-4, 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.\126\ Based on the filings it currently
receives from SROs, the Commission preliminarily believes that these
estimates remain valid and has relied on these figures to prepare the
analysis discussed below.\127\
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    \126\ See Exchange Act Release No. 50486, 69 FR 60287, supra
note 51.
    \127\ In 2008, the Commission submitted to OMB a request for
approval of an extension of the existing collection of information
provided for in Rule 19b-4 and Form 19b-4. 73 FR 5245 (January 29,
2008) (Submission for OMB review; comment request). The PRA analysis
conducted in 2008 estimated that the average time to complete a
proposed rule change filing was 23.22 hours, without differentiating
between average and complex rule filings. In light of the changes
made to Exchange Act Section 19(b) pursuant to Section 916 of Dodd-
Frank, which provides for new deadlines by which the Commission must
publish and act upon proposed rule changes, the Commission has
decided to revert to the figures contained in the PRA analysis
conducted in 2004. Specifically, the shortened time period by which
proposed rule changes will be reviewed by the Commission is likely
to cause the SROs to spend additional time preparing and checking
the filing, as there will be less time for them to correct a filing
after it has been made, justifying the use of the more conservative
estimates.
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    In fiscal year 2009, 25 SRO respondents filed 1,405 rule change
proposals subject to the current collection of information. Of this
total, the Commission estimates that 60 proposed rule changes could be
characterized as novel or complex and 1,345 proposed rule changes could
be characterized as average. The Commission preliminarily estimates
that the total annual reporting burden for filing proposed rule changes
with the Commission under the proposed amendments to Rule 19b-4 and
Form 19b-4 will be 66,303 hours (((1,345/25) x 31\128\ average rule
change proposals x 34 hours) + ((60/25) x 31 complex rule change
proposals x 129 hours)). Thus, on average, the reporting burden for
filing proposed rule changes is 38.06 hours (66,303 hours/(1668 average
rule change proposals + 74 complex rule change proposals)).
---------------------------------------------------------------------------

    \128\ The number of projected SROs is equal to 31 (25 currently
registered SROs + six newly-registered clearing agencies).
---------------------------------------------------------------------------

c. Security-Based Swap Submissions
    The time required by clearing agencies to prepare, review and
submit Security-Based Swap Submissions to comply with proposed Rule
19b-4(o)(1) likely will vary significantly based on the unique
characteristics of each Security-Based Swap Submission and the
submitting clearing agency. Based on staff discussions with the
clearing agencies, the Commission preliminarily estimates that the
amount of time that a clearing agency would require to internally
prepare, review and submit a Security-Based Swap Submission is 140
hours. The Commission also estimates that each clearing agency will
submit 20 Security-Based Swap Submissions annually. Accordingly, the
Commission estimates that the total annual reporting burden for
clearing agencies submitting Security-Based Swap Submissions
electronically with the Commission under the proposed amendments to
Rule 19b-4 and Form 19b-4 will be 16,800 hours (20 Security-Based Swap
Submissions x 140 hours x six respondents).
    The Commission also preliminarily estimates that a clearing agency
would require 60 hours of outside legal work to prepare, review and
submit a Security-Based Swap Submission, based on staff discussions
with the clearing agencies. Assuming an hourly cost of $354 for an
outside attorney,\129\ the total annual cost in the aggregate for the
six respondent clearing agencies to meet these requirements would be
$2,548,800 (60 hours x $354 per hour for an outside attorney x 20
Security-Based Swap Submissions x six respondent clearing agencies).
---------------------------------------------------------------------------

    \129\ The hourly rate for an attorney is from SIFMA's Management
& Professional Earnings in the Securities Industry 2010, modified by
the Commission's staff to account for an 1,800-hour work-year and
multiplied by 5.35 to account for bonuses, firm size, employee
benefits and overhead.
---------------------------------------------------------------------------

d. Advance Notices
    With respect to Advance Notices, the Commission preliminarily
estimates that the amount of time that designated clearing agency
representatives will require to internally prepare, review and
electronically file each Advance Notice with the Commission to comply
with proposed Rule 19b-4(n)(1) is 90 hours. This figure is based on the
staff's discussions with the clearing agencies. The Commission also
estimates that two hours should be added to the time required to
prepare each Advance Notice to comply with the requirement contained in
proposed 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. The
Commission preliminarily estimates that each designated clearing agency
will submit 35 Advance Notices to the Commission annually. Accordingly,
the Commission estimates that the total annual reporting burden on
designated clearing agencies submitting Advance Notices electronically
with the Commission under the proposed amendments to Rule 19b-4 and
Form 19b-4 will be 32,200 hours (35 Advance Notices x 92 hours x ten
respondents).
    Based on staff discussions with the clearing agencies, the
Commission also preliminarily 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.
Assuming an hourly cost of $354 for an outside attorney,\130\ the total
annual cost in the aggregate for the ten respondent clearing agencies
to meet these requirements would be $4,956,000 (40 hours x $354 per
hour for an outside attorney x 35 Advance Notices x ten respondents).
---------------------------------------------------------------------------

    \130\ See id.

---------------------------------------------------------------------------

e. Summary
    The Commission preliminarily estimates that the total annual
reporting burden for clearing agencies to internally prepare, file and
submit Security-Based Swap Submissions, proposed rule changes and
Advance Notices electronically with the Commission under the Rule 19b-4
and Form 19b-4 will be 115,303 hours (16,800 hours for Security-Based
Swap Submissions + 32,200 hours for Advance Notices + 66,303 hours for
proposed rule changes). The Commission also preliminarily estimates
that the total annual cost in the aggregate for the respondent clearing
agencies to internally prepare, file and submit Security-Based Swap
Submissions, proposed rule changes and Advance Notices electronically
with the Commission under the Rule 19b-4 and Form 19b-4 will be
$7,504,800 ($2,548,800 for Security-Based Swap Submissions + $4,956,000
for Advance Notices).
3. Posting of Security-Based Swap Submissions, Advance Notices and
Proposed Rule Changes on Clearing Agency Web Sites
    The Commission preliminarily believes that newly-registered
clearing agencies could incur some one-time costs associated with
posting Security-Based Swap Submissions, Advance Notices and proposed
rule changes on their Web sites. The Commission preliminarily estimates
that each newly-registered clearing agency will spend approximately 15
hours creating or updating its existing Web site in order to provide
the capability to post these submissions online resulting in a total
one-time burden of 90 hours (six clearing agencies x 15 hours).
    With respect to annual burdens, the Commission preliminarily
estimates that four hours would be required by a clearing agency to
post a Security-Based Swap Submission on its Web site to comply with
proposed Rule 19b-4(o)(5). This figure is based on the staff's
discussions with the clearing agencies. The Commission estimates that
the total annual reporting burden for clearing agencies to post
Security-Based Swap Submissions on their Web sites will be 480 hours
(20 Security-Based Swap Submissions x four hours x six respondents).
    The Commission preliminarily estimates that four hours would be
required by a designated clearing agency to post an Advance Notice on
its Web site to comply with proposed Rule 19b-4(n)(3). The Commission
preliminarily estimates that the total annual reporting burden for
designated clearing agencies to post Advance Notices on their Web sites
will be 1,400 hours (35 Advance Notices x four hours x 10 respondents).
    To comply with proposed Rule 19b-4(n)(4), the Commission estimates
that four hours would be required by a designated clearing agency to
post notice on its Web site of any change to its rules, procedures or
operations referred to in an Advance Notice once it has been permitted
to take effect. The Commission therefore estimates that the total
annual reporting burden for designated clearing agencies to post notice
on their Web sites of any changes to their rules, procedures or
operations referred to in Advance Notices would be 1,400 hours (35
Advance Notices x four hours x 10 respondents).
    The Commission previously estimated that an SRO would take four
hours to post proposed rule change proposals under Exchange Act Section
19(b) and amendments on its Web site and four hours to update the
posted SRO rules on its Web site once the proposed rules become
effective.\131\ The Commission preliminarily believes that these
estimates remain valid. In addition, of the 1,405 proposed rule changes
filed in fiscal year 2009, 1,071 were approved or non-abrogated.
Accordingly, the total annual reporting burden for SROs to post
proposed rule change proposals on their Web sites and to update their
posted rules on their Web sites once the proposed rules become
effective will be 12,280 hours ((1,071/25) x 31 SRO respondents)
approved or non-abrogated rules x four hours) + ((1,405/25) x 31 SRO
respondents) rule change proposals x four hours)).
---------------------------------------------------------------------------

    \131\ See supra note 127.
---------------------------------------------------------------------------

    In summary, the Commission preliminarily estimates that the total
annual reporting burden for all clearing agencies to post submitted
Security-Based Swap Submissions, Advance Notices, notices of changes to
rules, procedures or operations referred to in Advance Notices once
they take effect and proposed rule changes on their Web sites under
Rule 19b-4 and Form 19b-4 will be 15,560 hours (480 hours for Security-
Based Swap Submissions + 1,400 hours for Advance Notices + 1,400 hours
for posting notices of changes to rules, procedures or operations
referred to in Advance Notices + 12,280 hours for proposed rule
changes). The Commission requests comment on all of the above
estimates.
4. Rule 3Ca-1
    Commission staff communicated with certain clearing agencies that
likely would be subject to a stay of the clearing requirement and
related review under proposed Rule3Ca-1 in order to estimate the
collection of information. 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.
    The Commission staff communicated with staff of three entities,
representing four clearing agencies total, as two clearing agencies are
subsidiaries of the same holding company. As the responses varied among
clearing agencies, the Commission has generally used conservative
responses in developing its estimates for the PRA.
    Based on staff discussions with the clearing agencies, the
Commission preliminarily 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
preliminarily 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,
resulting in a total annual reporting burden of 540 hours (five stay
applications x 18 hours to retrieve, review and submit the information
x six clearing agencies). The Commission also preliminarily 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. This figure is based on the staff's
discussions with the clearing agencies. Assuming an hourly cost of $354
for an outside attorney,\132\ the total estimated annual cost in the
aggregate for the six respondent clearing agencies to meet these
requirements would be $74,340 (seven hours x $354 per hour for an
outside attorney x five stay of clearing applications x six
respondents). The Commission requests comment on these estimates.
---------------------------------------------------------------------------

    \132\ See supra note 129.
---------------------------------------------------------------------------

    Finally, based on its estimates with respect to the preparation
Security-Based Swap Submissions, the Commission preliminarily estimates
that 100 hours 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 preliminarily estimates that
counterparties to security-based swaps transactions will submit 30
applications requesting stays of the clearing

requirement. Assuming an hourly cost of $354 for an outside
attorney,\133\ the total annual cost in the aggregate for the
respondent counterparties to meet these requirements would be
$1,062,000 (100 hours x $354 per hour for an outside attorney x 30 stay
of clearing applications).
---------------------------------------------------------------------------

    \133\ See supra note 129.
---------------------------------------------------------------------------

    The Commission requests comment on all of the above estimates.
4. Amendment To Conform to Section 916 of the Dodd-Frank Act
    The Commission preliminarily estimates that the requirement that an
SRO inform the Commission of the date on which it posted a proposed
rule change on its Web site (if the posting did not occur on the same
day that the SRO filed the proposal with the Commission) will impose
only a minimal burden, if any, on an SRO. The Commission preliminarily
believes that SROs currently post their proposed rule changes on their
Web site on the same day on which they file them with the Commission.
Further, it is in the interest of an SRO to continue to do so, since
prompt Web site posting triggers the requirement on the Commission to
publish notice of the proposal. The new notice requirement would only
be applicable in a situation where the SRO is unable to post its
proposed rule change on the same day that it files with the Commission,
which the Commission expects would be an unlikely occurrence. However,
because the deadline applicable to Commission publication is tied to
SRO Web site posting, and the Commission has no means of ascertaining
when Web site posting was made other than receiving that information
from the SRO itself, the Commission is proposing this requirement to
capture necessary information to allow it to comply with Exchange Act
Section 19, as amended by Section 916 of the Dodd-Frank Act.
    Based on its experience receiving and reviewing proposed rule
changes filed by SROs, the Commission preliminarily estimates that SROs
will fail to post proposed rule changes on their Web sites on the same
day as the filing was made with the Commission in 1% of all cases, or
14 times each year. Further, the Commission preliminarily 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 Web site, resulting in a total annual
burden of 14 hours.
    Thus, the Commission preliminarily estimates that the total annual
reporting burden under Rule 19b-4 and Form 19b-4 will be 131,987 hours
in the initial year and 131,187 hours thereafter.\134\ Additionally,
the Commission preliminarily estimates that the total annual reporting
burden under proposed Rule 3Ca-1 will be 540 hours. The Commission
requests comment on all of the above estimates.
---------------------------------------------------------------------------

    \134\ In the initial year, the paperwork burden is calculated as
follows: 120 Hours (one-time paperwork burden to train newly-
registered clearing agency staff members to use EFFS) + 780 hours
(one-time paperwork burden for each newly-registered clearing agency
to draft and implement policies and procedures relating to using
EFFS to submit proposed rule changes, Security-Based Swap
Submissions and Advance Notices) + 120 hours (one-time paperwork
burden for each currently-registered clearing agency to draft and
implement policies and procedures relating to using EFFS to submit
Security-Based Swap Submissions and/or Advance Notices) + 90 hours
(one-time paperwork burden for each newly-registered clearing agency
to create or update their existing Web sites in order to provide the
capability to post proposed rule changes, Security-Based Swap
Submissions and Advance Notices online) + 115,303 hours (the total
annual reporting burden for all SROs to prepare, review and submit
Security-Based Swap Submissions, proposed rule changes and Advance
Notices with the Commission) + 15,560 hours (the total annual burden
for all SROs to post Security-Based Swap Submissions, Advance
Notices, notices of changes to rules, procedures or operations
referred to in Advance Notices and proposed rule changes (including
updates to the posted SRO rules) on their Web sites + 14 hours for
SROs to notify the Commission of the date on which it posted a
proposed rule change on its Web site = 131,987 hours. After the
initial year, the paperwork burden is calculated as follows: 115,303
Hours (the total annual reporting burden for all SROs to prepare,
review and submit Security-Based Swap Submissions, proposed rule
changes and Advance Notices with the Commission) + 15,560 hours (the
total annual burden for all SROs to post Security-Based Swap
Submissions, Advance Notices, notices of changes to rules,
procedures or operations referred to in Advance Notices and on their
Web sites) + 310 hours (the total annual burden of training new
staff members and updating the training of existing staff members to
use EFFS) + 14 hours for SROs to notify the Commission of the date
on which it posted a proposed rule change on its Web site = 131,187
hours.
---------------------------------------------------------------------------

E. Retention Period of Recordkeeping Requirements

    Clearing agencies will be required to retain records of the
collection of information (the manually signed signature page of the
Form 19b-4, a file available to interested persons for public
inspection and copying, of all Security-Based Swap Submissions, Advance
Notices and proposed rule changes made pursuant to Rule 19b-4) and all
correspondence and other communications reduced to writing (including
comment letters) to and from such SROs concerning any Security-Based
Swap Submissions, Advance Notices and proposed rule changes, for a
period of not less than five years, the first two years in an easily
accessible place, according to the current recordkeeping requirements
set forth in Exchange Act Rule 17a-1.\135\
---------------------------------------------------------------------------

    \135\ SROs may also destroy or otherwise dispose of such records
at the end of five years according to Rule 17a-6 of the Act. 17 CFR
240.17a-6.
---------------------------------------------------------------------------

    The Commission preliminarily believes that maintaining the physical
signature page, Security-Based Swap Submissions, Advance Notices,
proposed rule changes and all related correspondence and other
communications would enable interested parties, including the
Commission, to access a record of the authority under which a
particular Security-Based Swap Submission, Advance Notice or proposed
rule change was made. The Commission notes that the retention of the
physical signature page is an existing maintenance requirement for
SROs.\136\ The Commission further notes that a similar manual signature
retention requirement exists for EDGAR filers.\137\
---------------------------------------------------------------------------

    \136\ Rule 19b-4(j) currently requires SROs to sign Form 19b-4
electronically in connection with filing a proposed rule change and
to retain a copy of the signature page in accordance with Rule 17a-
1. Under the proposed rules, Rule 19b-4(j) would be modified such
that it would apply also to Security-Based Swap Submissions and
Advance Notices.
    \137\ 17 CFR 232.302(b).
---------------------------------------------------------------------------

F. Collection of Information Is Mandatory

    Any collection of information pursuant to Rule 19b-4 and Form 19b-4
to require electronic submission of security-based swaps, Advance
Notices and proposed rule changes with the Commission is a mandatory
collection of information. Any collection of information pursuant to
Rule 19b-4 to require Web site posting by clearing agencies of their
Security-Based Swap Submissions, Advance Notices and proposed rules
changes also is a mandatory collection of information. Any collection
of information pursuant to the proposed Rule 3Ca-1 in connection with
the application for the stay of the clearing requirement is a mandatory
collection of information. Any collection of information pursuant to
Rule 19b-4 to require SROs to inform the Commission of the date on
which it posted a proposed rule change on its Web site (if such date is
not the same day that it filed the proposal with the Commission) also
is a mandatory collection of information.

G. Responses to Collection of Information Will Not Be Kept Confidential

    The collection of information pursuant to Rule 19b-4, Form 19b-4
and proposed Rule 3Ca-1 would not be

kept confidential.\138\ The posting of Security-Based Swap Submissions,
Advance Notices and proposed rule changes would be publicly available
on the SRO's Web site.
---------------------------------------------------------------------------

    \138\ While there is a general requirement that information be
made publicly available, SROs may request confidential treatment of
certain information in accordance with the provisions of the Freedom
of Information Act. 5 U.S.C. 552.
---------------------------------------------------------------------------

H. Request for Comment

    Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits
comments to:
    (1) Evaluate whether the proposed collection of information is
necessary for the performance of the functions of the agency, including
whether the information shall have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden of
the proposed collection of information;
    (3) Enhance the quality, utility and clarity of the information to
be collected; and
    (4) Minimize the burden of collection of information on those who
are to respond, including through the use of automated collection
techniques or other forms of information technology.
    Persons wishing to submit comments on the collection of information
requirements should direct them to the following persons: (1) Desk
Officer for the Securities and Exchange Commission, Office of
Information and Regulatory Affairs, Office of Management and Budget,
Room 3208, New Executive Office Building, Washington, DC 20503; and (2)
Elizabeth Murphy, Secretary, Securities and Exchange Commission,
Station Place, 100 F Street, NE., Washington, DC 20549-1090 with
reference to File No. S7-44-10. OMB is required to make a decision
concerning the collection of information between 30 and 60 days after
publication, so a comment to OMB is best assured of having its full
effect if OMB receives it within 30 days of publication. The Commission
has submitted the proposed collection of information to OMB for
approval. Requests for the materials submitted to OMB by the Commission
with regard to this collection of information should be in writing,
refer to File No. S7-44-10, and be submitted to the Securities and
Exchange Commission, Records Management, Office of Investor Education
and Advocacy, Station Place, 100 F Street, NE., Washington, DC 20549-
0213.

V. Consideration of Costs and Benefits

A. Processes for Security-Based Swap Submissions for Review and Staying
a Clearing Requirement While the Clearing of the Security-Based Swap Is
Reviewed

    Under Exchange Act Section 3C, Congress mandated that the
Commission adopt rules: (i) For a clearing agency's submission for
review of any security-based swap, or a group, category, type or class
of security-based swaps, that the clearing agency seeks to accept for
clearing, and the manner of notice the clearing agency must provide to
its members of such submission; and (ii) for the procedure by which the
Commission may stay a clearing requirement while the clearing of a
security-based swap is reviewed. The proposed rule relating to
Security-Based Swap Submissions specifies the content of Security-Based
Swap Submissions, how such Security-Based Swap Submissions shall be
submitted, and the manner of notice the clearing agency must provide to
its members regarding such submissions. The Commission also is
proposing a rule to specify the procedure for staying the clearing
requirement applicable to a security-based swap, based either on an
application of a counterparty to a security-based swap or on the
Commission's own initiative, until the Commission completes a review of
the terms of the security-based swap and the clearing arrangement. The
Commission is sensitive to the costs and benefits that would result
from the proposed rules and has identified certain costs and benefits
of the proposal, which are discussed more fully below.
1. Processes for Security-Based Swap Submissions for Review
    Pursuant to Exchange Act Section 3C, a clearing agency must submit
to the Commission each security-based swap, or any group, category,
type or class of security-based swaps, that the clearing agency plans
to accept for clearing. The Commission is required to review each
Security-Based Swap Submission and determine whether the security-based
swap, or any group, category, type or class of security-based swaps,
described in the submission is required to be cleared. In reviewing a
Security-Based Swap Submission, the Commission is required to review
whether the Security-Based Swap Submission is consistent with Exchange
Act Section 17A, and must take into account the following factors:
    (i) The existence of significant outstanding notional exposures,
trading liquidity and adequate pricing data.
    (ii) The availability of a rule framework, capacity, operational
expertise and resources, and credit support infrastructure to clear the
contract on terms that are consistent with the material terms and
trading conventions on which the contact is then traded.
    (iii) The effect on the mitigation of systemic risk, taking into
account the size of the market for such contract and the resources of
the clearing agency available to clear the contract.
    (iv) The effect on competition, including appropriate fees and
charges applied to clearing.
    (v) The existence of reasonable legal certainty in the event of the
insolvency of the relevant clearing agency or one or more of its
clearing members with regard to the treatment of customer and security-
based swap counterparty positions, funds, and property.
    Additionally, Exchange Act Section 3C requires, in general, that
the rules of a clearing agency provide for open access, specifically
requiring that the rules:
    (a) Prescribe that all security-based swaps submitted to the
clearing agency with the same terms and conditions are economically
equivalent within the clearing agency and may be offset with each other
within the clearing agency; and
    (b) Provide for non-discriminatory clearing of a security-based
swap executed bilaterally or on or through the rules of an unaffiliated
national securities exchange or security-based swap execution facility.
    Pursuant to Exchange Act Section 3C, the Commission is required to
make available to the public any Security-Based Swap Submission and
provide at least a 30-day public comment period. The Commission is
required to make its determination not later than 90 days after
receiving the Security-Based Swap Submission, unless the submitting
clearing agency agrees to an extension.
    The proposed rule would require that the clearing agency include in
each Security-Based Swap Submission information that will assist the
Commission in reviewing the Security-Based Swap Submission for
consistency with Section 17A and meeting the statutory requirements set
forth above in items (i)-(v). Additionally, the proposed rule would
require that the clearing agency specify how the clearing agency's
rules for open access (set forth in items (a) and (b) above) are
applicable to the security-based swap described in the Security-Based
Swap Submission.

The proposed rule would specify that a clearing agency submit security-
based swaps to the Commission for review by group, category, type or
class to the extent reasonable and practicable to do so.
    In addition, the Commission is proposing how Security-Based Swap
Submissions shall be submitted by clearing agencies. Because the
Commission preliminarily believes that there likely will be significant
overlap between filings under Exchange Act Section 19(b) and Rule 19b-4
regarding proposed rule changes and Security-Based Swap Submissions,
the Commission is proposing that Security-Based Swap Submissions be
filed on Form 19b-4. In many cases, a Security-Based Swap Submission
also will be a proposed rule change for purposes of Exchange Act
Section 19(b).\139\
---------------------------------------------------------------------------

    \139\ As discussed in section II.A.1 of this release, the
Commission anticipates that registered clearing agencies, as SROs,
often will be required to file a proposed rule change pursuant to
Exchange Act Section 19(b) in connection with clearing a security-
based swap, or any group, type, category or class of security-based
swaps, and, at the same time, will be required to make a related
Security-Based Swap Submission for a determination by the Commission
of whether such security-based swap (or group, category, type or
class of security-based swaps) is required to be cleared. A proposed
rule change constitutes a change in a ``stated policy, practice, or
interpretation'' of an SRO rule. The definition of a ``stated
policy, practice, or interpretation'' in Exchange Act Section 19(b)
includes, among other things, ``any material aspect of the operation
of the facilities of the SRO; or any statement made generally
available to the membership of, to all participants in, or to
persons having or seeking access * * * to facilities of, the self-
regulatory organization (``specified persons''), or to a group or
category of specified persons, that establishes or changes any
standard, limit, or guideline with respect to (1) the rights,
obligations, or privileges of specified persons * * *; or (2) the
meaning, administration, or enforcement of an existing rule.'' 17
CFR 240.19b-4(b). In cases where accepting a security-based swap (or
group, category, type or class of security-based swaps) for clearing
constitutes a change in a ``stated policy, practice, or
interpretation'' of the clearing agency, the clearing agency also
would be required to file a proposed rule change.
---------------------------------------------------------------------------

    The proposed rule provides that a clearing agency must provide
notice to its members of a Security-Based Swap Submission and any
amendments thereto, by posting the submission on its Web site within
two business days. The proposed rule further requires the clearing
agency to maintain this information on its Web site until the
Commission makes a determination regarding the Security-Based Swap
Submission, the clearing agency withdraws the submission, or the
clearing agency is notified that the submission was not properly filed.
a. Benefits
    The proposed rule is designed to implement the submission and
notice requirements in Exchange Act Section 3C. The Commission
anticipates that the proposed rule would further the purposes of
Exchange Act Section 3C by facilitating the filing and regulatory
review of Security-Based Swap Submissions and reduce costs to filers by
utilizing a format that clearing agencies may be familiar with or, as
they become registered clearing agencies, that they will be required to
use for all proposed rule changes, Form 19b-4. In addition, the
proposed rule would further reduce costs to filers by avoiding a
duplication of efforts in providing notice to members of the clearing
agency, as well as other interested persons, such as counterparties to
security-based swaps, through requiring posting of the Security-Based
Swap Submission on the clearing agency's Web site within two business
days of filing with the Commission. The Commission anticipates this
prompt notice would provide the clearing agency members and other
interested persons with the opportunity to comment on the submission
with the potential for providing new information about the suitability
of the security-based swap for clearing.
    The Commission anticipates the proposed rule requiring the clearing
agency to provide information the Commission requires to review
Security-Based Swap Submissions would reduce the cost of acquiring
necessary information. Requiring the clearing agency to provide
necessary information would ensure that the information used by the
Commission to evaluate the security-based swap for mandatory clearing
is correct and complete, reducing the likelihood that further
information requests will be required.
    Proposed Rule 19b-4(o)(4) requires a clearing agency to submit
security-based swaps to the Commission for review by group, category,
type or class of security-based swaps, to the extent reasonable and
practicable to do so. The Commission preliminarily believes a broad
interpretation of what constitutes a group, category, type or class of
security-based swaps is likely to provide benefits to clearing agencies
and the Commission. Specifically, it would likely lower the costs
associated with the Security-Based Swap Submission process since
clearing agencies would be burdened with preparing fewer Security-Based
Swap Submissions, and the Commission would be required to process and
review fewer submissions.
b. Costs
    Form 19b-4 is currently used by registered clearing agencies to
file notice of proposed rule changes under Exchange Act Section 19(b)
and any clearing agency that becomes registered will be required to use
Form 19b-4 for all proposed rule changes. Accordingly, clearing
agencies would be familiar with the electronic filing process in place
for Form 19b-4 and their staffs would not be required to learn a new
filing system. In addition, clearing agencies would be able to submit a
change that is both a proposed rule change under Exchange Act Section
19(b) and a Security-Based Swap Submission in the same filing. Although
there are additional information requirements for a Security-Based Swap
Submission, clearing agencies would be able to provide the required
information as part of the Form 19b-4 submission.
    More importantly, the Commission preliminarily believes much of the
information the clearing agency provides in a Security-based Swap
Submission would be the same as information the clearing agency
collected and analyzed in making its business decision to plan to
accept the security-based swap, or any group, category, type, or class
of security-based swaps, for clearing. The Commission preliminarily
believes that the clearing agency may incur costs in presenting this
information in a clear and coherent manner in the format as required
under the proposed rule.
    As previously discussed in the PRA analysis in Section IV, the
proposed amendments to Rule 19b-4 and Form 19b-4 will require a
clearing agency to submit for a Commission determination, any security-
based swap, or any group, category, type or class of security-based
swaps that the clearing agency plans to accept for clearing. The
Commission preliminarily estimates that the total annual reporting
burden for clearing agencies to internally prepare, review and submit
Security-Based Swap Submissions electronically with the Commission
under the proposed amendments to Rule 19b-4 and Form 19b-4 will be
24,000 hours; this figure includes 7,200 hours of outside legal work.
Assuming an hourly cost of $320 for an in-house compliance
attorney,\140\ and an hourly cost of $354 for an outside attorney,\141\
these requirements

would result in a total annual cost of $7,924,800 in the aggregate for
the six respondent clearing agencies (16,800 hours x $320 per hour for
a compliance attorney) + (7,200 hours x $354 per hour for an outside
attorney).
---------------------------------------------------------------------------

    \140\ The hourly rate for a compliance attorney is from SIFMA's
Management & Professional Earnings in the Securities Industry 2010,
modified by the Commission's staff to account for an 1800-hour work-
year and multiplied by 5.35 to account for bonuses, firm size,
employee benefits and overhead.
    \141\ See supra note 129.
---------------------------------------------------------------------------

    The Commission preliminarily estimates that there would be a one-
time burden of 780 hours for all newly-registered clearing agencies to
draft and implement internal policies and procedures related to using
EFFS to submit Security-Based Swap Submissions, Advance Notices and
proposed rule changes with the Commission. Assuming an hourly cost of
$320 for an in-house compliance attorney,\142\ these requirements would
result in a total one-time cost of $249,600 in the aggregate for the
six respondent clearing agencies (780 hours x $320 per hour for an in-
house compliance attorney).
---------------------------------------------------------------------------

    \142\ See supra note 140.
---------------------------------------------------------------------------

    The Commission also preliminarily estimates that there would be a
one-time burden of 120 hours for all currently-registered clearing
agencies to draft and implement modifications to existing internal
policies and procedures for using EFFS in order to update them for the
submission of Security-Based Swap Submissions and/or Advance Notices
with the Commission. Assuming an hourly cost of $320 for an in-house
compliance attorney,\143\ these requirements would result in a one-time
cost of $38,400 in the aggregate for the four respondent clearing
agencies (120 hours x $320 per hour for an in-house compliance
attorney).
---------------------------------------------------------------------------

    \143\ See supra note 140.
---------------------------------------------------------------------------

    The Commission preliminarily believes that newly-registered
clearing agencies could incur some one-time costs associated with
training their personnel about the procedures for submitting Security-
Based Swap Submissions and/or Advance Notices in electronic format
through EFFS. The Commission preliminarily estimates that six newly-
registered clearing agencies would incur a one-time upfront burden of
120 hours to train clearing agency staff members to use EFFS to submit
Security-Based Swap Submissions, Advance Notices and/or proposed rule
changes electronically. The Commission preliminarily estimates that
after the initial year, existing SROs (including currently-registered
clearing agencies) would spend approximately 290 hours annually
training new staff members and updating the training of existing staff
members to use EFFS. Assuming an hourly cost of $259 for a senior
systems analyst,\144\ these requirements would result in an overall
estimated initial annual cost of $31,080 in the aggregate for the six
newly-registered clearing agencies (120 hours x $259 per hour for a
senior systems analyst) and an annual cost after the initial year of
$75,110 thereafter in the aggregate for all SROs (290 hours x $259 per
hour for a senior systems analyst).
---------------------------------------------------------------------------

    \144\ The hourly rate for a senior systems analyst is from
SIFMA's Management & Professional Earnings in the Securities
Industry 2010, modified by the Commission's staff to account for an
1800-hour work-year and multiplied by 5.35 to account for bonuses,
firm size, employee benefits and overhead.
---------------------------------------------------------------------------

    Pursuant to existing Rule 19b-4(l), each SRO is required to post on
its Web site a copy of any proposed rule change the SRO filed with the
Commission and any amendments thereto. The proposed rule to implement
the submission and notice requirements in Exchange Act Section 3C
includes a similar posting requirement for Security-Based Swap
Submissions. The Commission preliminary estimates that the total annual
reporting burden for clearing agencies to post Security-Based Swap
Submissions on their Web sites would be 480 hours. Assuming an hourly
cost of $225 for a Webmaster,\145\ these requirements would result in a
total estimated annual cost of $108,000 in the aggregate for the six
respondent clearing agencies (480 hours x $225 per hour for a
Webmaster).
---------------------------------------------------------------------------

    \145\ The hourly rate for a Webmaster is from SIFMA's Management
& Professional Earnings in the Securities Industry 2010, modified by
the Commission's staff to account for an 1800-hour work-year and
multiplied by 5.35 to account for bonuses, firm size, employee
benefits and overhead.
---------------------------------------------------------------------------

    Some Security-Based Swap Submissions would be required to be filed
only as Security-Based Swap Submissions under Exchange Act Section 3C
and not as proposed rule changes under Exchange Act Section 19(b), for
example where a clearing agency's rules already permit it to clear the
security-based swap in question. As a result, clearing agencies would
incur additional costs by filing a greater number of forms than they do
currently under Exchange Act Section 19(b).
2. Staying a Clearing Requirement While the Clearing of the Security-
Based Swap Is Reviewed
    Under Exchange Act Section 3C, after making a determination that a
security-based swap (or group, category, type or class of security-
based swaps) 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.\146\ In connection with a stay of the clearing
requirement, the Commission is required to adopt rules for reviewing a
clearing agency's clearing of a security-based swap, or any group,
category, type or class of security-based swaps, that the clearing
agency has accepted for clearing.
---------------------------------------------------------------------------

    \146\ See Public Law 111-203, section 763(a) (adding Exchange
Act Section 3C(c)(1)).
---------------------------------------------------------------------------

    Under proposed Rule 3Ca-1, a counterparty to a security-based swap
subject to the clearing requirement who applies for a stay of the
clearing requirement would be required to submit a written statement to
the Commission that includes a request for a stay of the clearing
requirement; the identity of the counterparties to the security-based
swap and a contact at the counterparty requesting the stay; the
identity of the clearing agency clearing the security-based swap; the
terms of the security-based swap subject to the clearing requirement
and a description of the clearing arrangement; and the reasons why a
stay should be granted and why 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 proposed Rule 19b-4(o).\147\ The proposed rule
also provides that any clearing agency that has accepted for clearing a
security-based swap that is subject to the stay shall provide
information requested by the Commission necessary to assess any of the
factors it determines to be appropriate in the course of its review.
---------------------------------------------------------------------------

    \147\ Proposed Rule 3Ca-1(b).
---------------------------------------------------------------------------

a. Benefits
    The Commission preliminarily believes that the proposed rule
provides benefits in creating an efficient mechanism for collecting
information to be used in the Commission's determination to grant the
requested stay and subsequent review of the clearing requirement.
Specifically, the counterparty will provide information specifically
within its possession--reasons why the stay should be granted and why
the security-based swap should not be subject to a clearing
requirement. Additionally, any information requested from the clearing
agency likely will include information unique to the clearing agency
and will facilitate the Commission's review of the clearing requirement
subject to the stay.

b. Costs
    The proposed rule requires a counterparty requesting a stay provide
basic identifying information and information supporting its request
for a stay and its position that the security-based swap should not be
subject to a clearing requirement. With respect to the proposed rule's
requirement that a clearing agency shall provide information requested
by the Commission necessary to assess any of the factors it determines
to be appropriate in the course of its review, the Commission
preliminarily believes this information will likely be information the
clearing agency has in its possession, including updates of information
provided in the related Security-Based Swap Submission. The Commission
preliminarily estimates that each clearing agency would receive five
applications per annum to stay the clearing requirement. The Commission
also preliminarily estimates that the total annual reporting burden for
the six respondent clearing agencies to compile and provide the
information requested by the Commission in connection with the review
of the stay of clearing applications would be 750 hours; this figure
includes 210 hours of outside legal work. Assuming an hourly cost of
$320 for an in-house compliance attorney,\148\ and an hourly cost of
$354 for an outside attorney,\149\ these requirements would result in a
total estimated annual cost of $247,140 in the aggregate for the six
respondent clearing agencies (540 hours x $320 per hour for a
compliance attorney) + (210 hours x $354 per hour for an attorney).
---------------------------------------------------------------------------

    \148\ See supra note 140.
    \149\ See supra note 129.
---------------------------------------------------------------------------

    Finally, the Commission preliminarily estimates that 100 hours
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 also preliminarily estimates that
counterparties to security-based swaps transactions would submit 30
applications requesting stays of the clearing requirement. Assuming an
hourly cost of $354 for an outside attorney, the total annual cost in
the aggregate for the respondent counterparties to meet these
requirements would be $1,062,000 (100 hours x $354 per hour for an
outside attorney x 30 stay of clearing applications).
    The Commission requests that commenters provide views and
supporting information regarding the costs and benefits associated with
the proposed rules relating to Security-Based Swap submissions and stay
of the clearing requirement and related review. The Commission seeks
estimates of these costs and benefits, as well as any costs and
benefits not already identified. The Commission also requests comment
on whether other provisions of the Dodd-Frank Act for which Commission
rulemaking is required are likely to have an effect on the costs and
benefits of the proposed rules.

B. Advance Notices Required Under Section 806(e)

    Congress has mandated that the Commission adopt rules to define
when proposed changes to a designated clearing agency's rules,
procedures or operations could materially affect the nature or level of
risks presented by the clearing agency. The proposed rule would
determine when notice of such changes must be filed with the Commission
and would prescribe how such notices shall be filed. The Commission is
sensitive to the costs and benefits that would result from the proposed
rule and has identified certain costs and benefits of the proposal,
which are discussed more fully below.
1. Benefits
    Pursuant to Section 806(e), any registered clearing agency
designated as a systemically important financial market utility and for
which the Commission is the Supervisory Agency will be required to file
with the Commission advance notice of proposed changes to its rules,
procedures or operations that could materially affect the nature or
level of risks presented by the clearing agency. The proposed rule
would reduce regulatory uncertainty pertaining to the filing
requirement in Section 806(e) by defining the term ``materially affect
the nature or level of risks presented'' with respect to a change to
rules, procedures, or operations. The term would be defined as a matter
as to which there is a reasonable possibility that the change could
affect the performance of essential clearing and settlement functions
or the overall nature or level of risk presented by the designated
clearing agency. Such changes would include, but are not limited to,
changes that materially affect participant and product eligibility,
risk management, daily or intraday settlement procedures, default
procedures, system safeguards, governance or financial resources of the
designated financial market utility. However, such changes generally
would exclude changes to an existing procedure, control, or service
that do not modify the rights or obligations of the designated
financial market utility or persons using its payment, clearing, or
settlement services and that do not adversely affect the safeguarding
of securities, collateral, or funds in the custody or control of the
designated financial market utility or for which it is responsible, or
changes concerned solely with the administration of the designated
financial market utility or related to the routine, daily
administration, direction, and control of employees.\150\
---------------------------------------------------------------------------

    \150\ Proposed Rule 19b-4(n)(2)(iii).
---------------------------------------------------------------------------

    The Commission also is proposing to facilitate the compliance with
the filing requirement in Section 806(e) by prescribing how Advance
Notices of proposed changes to rules, procedures or operations shall be
filed by designated clearing agencies. Because the requirement to file
notice under Section 806(e) is similar to the filing requirement for
proposed rule changes under Exchange Act Section 19(b), the Commission
is proposing that Advance Notices be filed on Form 19b-4. In many
cases, it is likely that a proposed change for purposes of Section
806(e) will also be a proposed rule change for purposes of Exchange Act
Section 19(b), reducing costs associated with multiple filings.
    The proposed rule is designed to implement the filing requirement
in Section 806(e) and to establish criteria for designated clearing
agencies regarding when notices shall be filed and the method for
filing such notices. The Commission preliminarily believes that the
proposed rule would lower the costs of filing and regulatory review of
proposed changes that could materially affect the nature or level of
risks presented by systemically important clearing institutions. In
addition, the proposed rule is intended to provide the public with the
opportunity to comment on such proposals by designated clearing
agencies. The Commission preliminarily believes the proposed rule would
help to assure that the additional information required under Section
806(e) is provided through amendments to the existing Form 19b-4.
However, a filing submitted under both Section 806(e) and Exchange Act
Section 19(b) would be required to satisfy the standards under both
sections in order to become effective.
2. Costs
    The Commission preliminarily believes the costs associated with the
proposed rule should not be significant for designated clearing
agencies. Form 19b-4 is currently used by registered clearing agencies
to file notice of

proposed rule changes under Exchange Act Section 19(b). Accordingly,
designated clearing agencies would be familiar with the filing process
in Form 19b-4, and staffs would not be required to learn a new filing
system. In addition, clearing agencies would be able to submit a change
that is both a proposed rule change under Exchange Act Section 19(b)
and a proposed change under Section 806(e) in the same filing. Although
there are additional information requirements for a Section 806(e)
filing, designated clearing agencies would be able to provide the
required information as part of the Form 19b-4 submission.
    Some proposed changes may be required to be filed only as Advance
Notices under Section 806(e) and not as proposed rule changes under
Exchange Act Section 19(b). As a result, the Commission preliminarily
believes clearing agencies will incur additional costs by filing a
greater number of forms than they do currently under Exchange Act
Section 19(b). Based on informal comments from clearing agencies, the
Commission preliminarily estimates that each designated clearing agency
will file 35 Advance Notices with the Commission annually at a cost of
$3,200 per submission (10 hours x compliance attorney at $320 per hour)
or $1,120,000 ($3200 x 35 Advance Notices x 10 respondent clearing
agencies) in the aggregate for the ten respondent clearing agencies.
    Proposed Rule 19b-4(n)(3) requires designated clearing agencies to
post copies of Advance Notices filed with the Commission on their Web
sites. The Commission estimates that the total annual reporting burden
for designated clearing agencies to post Advance Notices on their Web
sites would be 1400 hours. Assuming an hourly cost of $225 for a
Webmaster,\151\ these requirements would result in an estimated annual
cost of $315,000 in the aggregate for the ten respondent clearing
agencies (1400 hours x $225 per hour for a Webmaster).
---------------------------------------------------------------------------

    \151\ See supra note 145.
---------------------------------------------------------------------------

    Proposed Rule 19b-4(n)(4) requires a designated clearing agency to
post notice on its Web site of any change to its rules, procedures or
operations referred to in an Advance Notice once it has been permitted
to take effect. The Commission estimates that the total annual
reporting burden for designated clearing agencies to post notice on
their Web sites of any change to their rules, procedures or operations
referred to in Advance Notices once they take effect would be 1400
hours. Assuming an hourly cost of $225 for a Webmaster,\152\ these
requirements would result in an estimated annual cost of $315,000 in
the aggregate for the ten respondent clearing agencies (1400 hours x
$225 per hour for a Webmaster).
---------------------------------------------------------------------------

    \152\ See supra note 145.
---------------------------------------------------------------------------

C. Amendment To Conform to Section 916 of the Dodd-Frank Act

    The Commission preliminarily estimates that the requirement that an
SRO inform the Commission of the date on which it posted a proposed
rule change on its Web site (if the posting did not occur on the same
day that the SRO filed the proposal with the Commission) will impose
only a minimal burden, if any, on an SRO. As discussed in Section
IV.B.4., the Commission preliminarily believes that SROs currently post
their proposed rule changes on their Web site on the same day on which
they file them with the Commission. It would be an unlikely occurrence
for an SRO to fail to post its proposed rule change on the same day
that it files with the Commission, since prompt Web site posting
triggers the requirement on the Commission to publish notice of the
proposed rule change.
    The Commission preliminarily estimates that SROs will fail to post
proposed rule changes on their Web sites on the same day as the filing
was made with the Commission in 1% of all cases, or 14 times each year,
and 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 Web site, resulting in a total annual
burden of 14 hours. Assuming an hourly cost of $320 for an in-house
compliance attorney,\153\ this requirement would result in a total
estimated annual cost of $4,480 in the aggregate for all SROs (14 hours
x $320 per hour for a compliance attorney) in the aggregate for all
SROs.
---------------------------------------------------------------------------

    \153\ See supra note 140.
---------------------------------------------------------------------------

    The Commission requests that commenters provide views and
supporting information regarding the costs and benefits associated with
the proposals. The Commission seeks estimates of these costs and
benefits, as well as any costs and benefits not already identified. The
Commission also requests comment on whether other provisions of the
Dodd-Frank Act for which Commission rulemaking is required are likely
to have an effect on the costs and benefits of the proposed rules.

VI. Consideration of Burden on Competition and Promotion of Efficiency,
Competition and Capital Formation

    Exchange Act Section 23(a) \154\ requires the Commission, when
making rules and regulations under the Exchange Act, to consider the
impact a new rule would have on competition. Exchange Act Section
23(a)(2) prohibits the Commission from adopting any rule that would
impose a burden on competition not necessary or appropriate in
furtherance of the purposes of the Exchange Act. Section 2(b) of the
Securities Act of 1933 \155\ and Exchange Act Section 3(f) \156\
require the Commission, when engaging in rulemaking that requires it to
consider whether an action is necessary or appropriate in the public
interest, to consider, in addition to the protection of investors,
whether the action would promote efficiency, competition, and capital
formation. Below, the Commission addresses these issues for the
amendments to Rule 19b-4 and Form 19b-4 to reflect the use of these
forms for filing Security-Based Swap Submissions and Advance Notices,
and proposed Rule 3Ca-1 to facilitate the process for staying the
clearing requirement applicable to a security-based swap until the
Commission completes a review of the terms of the security-based swap
and the clearing arrangement.
---------------------------------------------------------------------------

    \154\ 15 U.S.C. 78w(a).
    \155\ 15 U.S.C. 77b(b).
    \156\ 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

A. Proposed Amendments to Rule 19b-4 and Form 19b-4

    The proposed amendments to Rule 19b-4 and Form 19b-4 are designed
to facilitate the statutorily mandated processes for submitting
Security-Based Swap Submissions and Advance Notices to the Commission,
and to make each process efficient by utilizing the existing process
and EFFS infrastructure for proposed rule changes. Using an existing
process to accomplish an additional legislative requirement would
conserve both clearing agency and Commission resources. If amended,
Form 19b-4 would enable clearing agencies to submit Security-Based Swap
Submissions, and any amendments thereto, and any Advance Notices
electronically to the Commission. Submitting Security-Based Swap
Submissions and Advance Notices in this manner would impose fewer costs
on clearing agencies and the Commission when compared to requiring
clearing agencies to use new infrastructure or business processes to

make Security-Based Swap Submissions or Advance Notices.
    The proposed requirement that the clearing agency aggregate
security-based swaps into groups, categories, types or classes to the
extent reasonable and practicable to do so, in each Security-Based Swap
Submission likely would appropriately streamline the submission process
for Commission staff and clearing agencies (i.e., such aggregations
would decrease the number of Security-Based Swap Submissions each
clearing agency would prepare and submit, and accordingly, the
Commission would review). This requirement is intended to make the
Security-Based Swap Submission process more efficient.
    The proposed amendments to Rule 19b-4 and Form 19b-4 also are
intended to improve the transparency of security-based swaps
transactions. The proposed amendments to Rule 19b-4 would require a
clearing agency to post on its Web site any Security-Based Swap
Submissions and any amendments thereto, it submitted to the Commission
within two business days of submission to the Commission, to fulfill
the statutory requirement that clearing agencies provide notice to
their members of such submissions. The Commission preliminarily
believes that public Web site posting of Security-Based Swap
Submissions may promote competition among security-based swap clearing
agencies because it will make it easier (and more timely) for clearing
agencies to be able to determine the security-based swaps their
competitors intend to clear and analyze whether they too wish to clear
such security-based swap.
    Similarly, the proposed amendments to Rule 19b-4 would require a
designated clearing agency to post on its Web site proposed changes to
its rules, procedures, or operations that trigger the Section 806(e)
advance notice requirement and a description of the subjects and issues
involved within two business days of the submission of an Advance
Notice to the Commission. A designated clearing agency also will be
required to post a notice on its Web site of the effectiveness of any
change to its rules, procedures, or operations referred to in an
Advance Notice within two business days of the effective date, as
monitored by the designated clearing agency and determined in
accordance with Section 806(e). The Commission preliminarily believes
that public Web site posting of this information may promote
competition and transparency among clearing agencies by giving
interested persons an opportunity to submit written data, views, and
arguments concerning proposed changes that could materially affect the
nature or level of risks presented by a designated clearing agency.
    The proposed amendments to Rule 19b-4 and Form 19b-4 with respect
to the information that clearing agencies are required to provide are
intended to facilitate the Commission's review process for Security-
Based Swap Submissions and Advance Notices and to make the process
efficient by requiring information the clearing agency is uniquely
qualified to provide and likely may already have available.
    The Commission preliminarily believes none of the proposed
amendments to Rule 19b-4 and Form 19b-4 would have an adverse impact on
competition or capital formation, but instead should increase
confidence in the robustness of the security-based swap market,
encouraging participation and allowing better risk management
practices. To the extent that security-based swaps mitigate the risk
associated with capital raising activities, increased investor
confidence and use of security-based swaps should foster more efficient
capital formation and thereby benefit issuers and investors.
    Proposed Rule 3Ca-1 is designed to facilitate the statutorily
mandated process for staying the clearing requirement applicable to a
security-based swap until the Commission completes a review of the
terms of the security-based swap and the clearing arrangement. The
proposed rule is designed to create an efficient mechanism for
collecting information to be used in the Commission's determination to
grant the requested stay and subsequent review of the clearing
requirement.
    The Commission has not identified any effects on competition or
capital formation of the process specified in proposed Rule 3Ca-1. The
Commission preliminarily believes proposed Rule 3Ca-1 would not have an
adverse impact on competition or capital formation.
    The Commission generally requests comment on the competitive or
anticompetitive effects of the proposed amendments to Rule 19b-4 and
Form 19b-4 on any market participants if adopted as proposed. The
Commission also requests comment on what impact the amendments, if
adopted, would have on efficiency and capital formation. The Commission
requests that commenters provide analysis and empirical data, if
available, to support their views regarding any such effects. The
Commission notes that such effects may be difficult to quantify. The
Commission also requests comment regarding the competitive effects of
pursuing alternative regulatory approaches that are consistent with
Exchange Act Section 3C, as added by Section 763(a) of the Dodd-Frank
Act. In addition, the Commission requests comment on how the other
provisions of the Dodd-Frank Act for which Commission rulemaking is
required, will interact with and influence the competitive effects of
the proposed amendments to Rule 19b-4 and Form 19b-4.

VII. Consideration of Impact on the Economy

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996 (``SBREFA''),\157\ the Commission must advise the OMB as to
whether the proposed rule constitutes a ``major'' rule. Under SBREFA, a
rule is considered ``major'' where, if adopted, it results or is likely
to result in: (i) An annual effect on the economy of $100 million or
more (either in the form of an increase or a decrease); (ii) a major
increase in costs or prices for consumers or individual industries; or
(iii) significant adverse effect on competition, investment or
innovation. If a rule is ``major,'' its effectiveness will generally be
delayed for sixty days pending Congressional review.
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    \157\ Public Law 104-121, Title II, 110 Stat. 857 (1996)
(codified in various sections of 5 U.S.C., 15 U.S.C. and as a note
to 5 U.S.C. 601).
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    The Commission requests comment on the potential impact of the
amendments to Rule 19b-4 and Form 19b-4 and new Rules 3Ca-1 and 3Ca-2
on the economy on an annual basis, any potential increase in costs or
prices for consumers or individual industries, and any potential effect
on competition, investment or innovation. Commenters are requested to
provide empirical data and other factual support for their view to the
extent possible.

VIII. Regulatory Flexibility Certification

    The Regulatory Flexibility Act (``RFA'') \158\ requires the
Commission, in promulgating rules, to consider the impact of those
rules on small entities. Section 603(a) \159\ of the Administrative
Procedure Act,\160\ as amended by the RFA, generally requires the
Commission to undertake a regulatory flexibility analysis of all
proposed rules to determine the impact of such rulemaking on ``small
entities.'' \161\

Section 605(b) of the RFA states that this requirement shall not apply
to any proposed rule which, if adopted, would not have a significant
economic impact on a substantial number of small entities.\162\
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    \158\ 5 U.S.C. 601 et seq.
    \159\ 5 U.S.C. 603(a).
    \160\ 5 U.S.C. 551 et seq.
    \161\ Section 601(b) of the RFA permits agencies to formulate
their own definitions of ``small entities.'' The Commission has
adopted definitions for the term ``small entity'' for the purposes
of rulemaking in accordance with the RFA. These definitions, as
relevant to this proposed rulemaking, are set forth in Rule 0-10, 17
CFR 240.0-10.
    \162\ See 5 U.S.C. 605(b).
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A. Clearing Agencies

    The amendments to Rule 19b-4 would apply to (i) all clearing
agencies that clear security-based swaps and (ii) all designated
clearing agencies. Proposed Rules 3Ca-1 and 3Ca-2 would apply to all
security-based swap clearing agencies. Four entities are currently
exempt from registration as a clearing agency under Exchange Act
Section 17A to provide central clearing services for CDS, a class of
security-based swaps.\163\ The Commission preliminarily believes, based
on its understanding of the market, that likely no more than six
security-based swap clearing agencies could be subject to the
requirements of the proposed amendments to Rule 19b-4 and proposed
Rules 3Ca-1 and 3Ca-2. In addition, the Commission preliminarily
believes that approximately ten registered clearing agencies could be
designated by the Council as systemically important (and for which the
Commission will be the Supervisory Agency), which includes the four
existing securities clearing agencies and the six estimated clearing
agencies that may clear security-based swaps.
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    \163\ See CDS Clearing Exemption Orders, supra note 122.
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    For the purposes of Commission rulemaking in connection with the
RFA, a small entity includes, when used with reference to a clearing
agency, a clearing agency that: (i) Compared, cleared and settled less
than $500 million in securities transactions during the preceding
fiscal year; (ii) had less than $200 million of funds and securities in
its custody or control at all times during the preceding fiscal year
(or at any time that it has been in business, if shorter); and (iii) is
not affiliated with any person (other than a natural person) that is
not a small business or small organization.\164\ Under the standards
adopted by the Small Business Administration, small entities in the
finance industry include the following: (i) For entities engaged in
investment banking, securities dealing and securities brokerage
activities, entities with $6.5 million or less in annual receipts; (ii)
for entities engaged in trust, fiduciary and custody activities,
entities with $6.5 million or less in annual receipts; and (iii) funds,
trusts and other financial vehicles with $6.5 million or less in annual
receipts.\165\
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    \164\ 17 CFR 240.0-10(d).
    \165\ 13 CFR 121.201, Sector 52.
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    Based on the Commission's existing information about the entities
likely to register to clear security-based swaps, the Commission
preliminarily believes that such entities will not be small entities,
but rather part of large business entities that exceed the thresholds
defining ``small entities'' set out above. Additionally, while other
clearing agencies may become eligible to operate as central
counterparties for security-based swaps, the Commission preliminarily
does not believe that any such entities would be ``small entities'' as
defined in Exchange Act Rule 0-10.\166\ Furthermore, we believe it is
unlikely that clearing agencies acting as central counterparties for
security-based swaps would have annual receipts of less than $6.5
million. Accordingly, the Commission believes that any clearing
agencies clearing security-based swaps by acting as central
counterparties for such transactions will exceed the thresholds for
``small entities'' set forth in Exchange Act Rule 0-12.
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    \166\ See 17 CFR 240.0-10(d).
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B. Security-Based Swap Counterparties

    Proposed Rule 3Ca-1 would apply to any counterparty to a security-
based swap subject to the clearing requirement that applies for a stay
of the clearing requirement. For the purposes of Commission rulemaking
and as applicable to this proposed Rule 3Ca-1, a small entity includes:
(i) When used with reference to a clearing agency, a clearing agency
that (a) compared, cleared and settled less than $500 million in
securities transactions during the preceding fiscal year, (b) had less
than $200 million of funds and securities in its custody or control at
all times during the preceding fiscal year (or at any time that it has
been in business, if shorter) and (c) is not affiliated with any person
(other than a natural person) that is not a small business or small
organization; \167\ (ii) when used as reference to an ``issuer'' or a
``person,'' other than an investment company, an ``issuer'' or a
``person'' that, on the last day of its most recent fiscal year, had
total assets of $5 million or less; \168\ or (iii) when used as
reference to broker-dealer, a broker-dealer (a) with total capital (net
worth plus subordinated liabilities) of less than $500,000 on the date
in the prior fiscal year as of which its audited financial statements
were prepared pursuant to Rule 17a-5(d) under the Exchange Act, or, if
not required to file such statements, a broker-dealer that had total
capital (net worth plus subordinated liabilities) of less than $500,000
on the last business day of the preceding fiscal year (or in that time
that it has been in business, if shorter) and (b) is not affiliated
with any person (other than a natural person) that is not a small
business or small organization.\169\ Under the standards adopted by the
Small Business Administration, small entities in the finance industry
include the following: (i) For entities engaged in investment banking,
securities dealing and securities brokerage activities, entities with
$6.5 million or less in annual receipts; (ii) for entities engaged in
trust, fiduciary and custody activities, entities with $6.5 million or
less in annual receipts; and (iii) funds, trusts and other financial
vehicles with $6.5 million or less in annual receipts.\170\
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    \167\ 17 CFR 240.0-10(d).
    \168\ 17 CFR 240.0-10(a).
    \169\ 17 CFR 240.0-10(c).
    \170\ 13 CFR 121.201, Sector 52.
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    With regard to security-based swap transactions that have
counterparties that may meet the definition of a ``small entity'' under
Exchange Act Rule 0-10 and, under proposed Rule 3Ca-1, apply to the
Commission for a stay of the clearing requirement, the Commission
believes that it is unlikely that the stay application process of
proposed Rule 3Ca-1 would have a significant economic impact upon such
an entity. Given that the proposed stay application process entails the
submission of a written statement to the Commission setting forth
information about the security-based swap transaction for which the
stay is sought, the Commission believes the impact of the application
process on a counterparty would be minimal. Furthermore, even if the
stay application process were to have a significant economic impact
upon such non-clearing agency counterparty, the Commission believes
that the number of entities so impacted would be no more than 30, based
on the informal discussions between the staff and the clearing
agencies, in terms of number of stay requests and number of small
entities making such requests. Accordingly, in respect of non-clearing
agency counterparties to security-based swap transactions, the
Commission preliminarily believes that proposed Rule 3Ca-1 would not
have a significant economic impact on a substantial number of small
entities.

C. Certification

    For the reasons stated above, the Commission certifies that the
proposed amendments to Rule 19b-4 and proposed Rules 3Ca-1 and 3Ca-2
would not have a significant economic impact on a substantial number of
small entities for the purposes of the RFA. The Commission encourages
written comments regarding this certification. The Commission requests
that commenters describe the nature of any impact on small entities,
including clearing agencies eligible to clear security-based swaps,
designated clearing agencies and counterparties to security-based swap
transactions, and provide empirical data to support the extent of the
impact.

IX. Statutory Authority

    Pursuant to the Exchange Act, and particularly Sections 3C, 17A and
19(b) thereof, 15 U.S.C. 78c-3, 78q-1 and 78s(b) and Section 806(e) of
the Dodd-Frank Act, 12 U.S.C 5465(e), the Commission proposes to amend
Rule 19b-4 and Form 19b-4 and add new Rules 3Ca-1 and 3Ca-2, as set
forth below.

List of Subjects in 17 CFR Parts 240 and 249

    Brokers, Reporting and recordkeeping requirements, Securities.

Text of the Proposed Rule

    In accordance with the foregoing, Title 17, chapter II of the Code
of Federal Regulations is proposed to be amended as follows:

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934

    1. The general authority citation for part 240 is revised to read
as follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78d, 78e, 78f, 78g,
78i, 78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78o, 78o-4, 78p, 78q,
78s, 78u-5, 78w, 78x, 78ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37,
80b-3, 80b-4, 80b-11, and 7201 et seq.; 18 U.S.C. 1350 and 12 U.S.C.
5221(e)(3), unless otherwise noted.
* * * * *
    Section 240.19b-4 is also issued under 12 U.S.C. 5465(e).

    2. Sections 240.3ca-1 and 240.3ca-2 are added following Sec.
240.3b-19 to read as follows:

Sec.  240.3ca-1  Stay of clearing requirement and review by the
Commission.

    (a) After making a determination pursuant to a clearing agency's
security-based swap submission that a security-based swap, or any
group, category, type or class of security-based swaps, 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 (or group, category, type, or class of
security-based swaps) and the clearing of the security-based swap (or
group, category, type, or class of security-based swaps) by the
clearing agency that has accepted it for clearing.
    (b) A counterparty to a security-based swap applying for a stay of
the clearing requirement for a security-based swap (or group, category,
type, or class of security-based swaps) shall submit a written
statement to the Commission that includes:
    (1) A request for a stay of the clearing requirement;
    (2) The identity of the counterparties to the security-based swap
and a contact at the counterparty requesting the stay;
    (3) The identity of the clearing agency clearing the security-based
swap;
    (4) The terms of the security-based swap subject to the clearing
requirement and a description of the clearing arrangement; and
    (5) Reasons why such stay should be granted and why 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 Sec.  240.19b-4(o)(3)
of this chapter.
    (c) A stay of the clearing requirement may be granted with respect
to a security-based swap, or the group, category, type, or class of
security-based swaps, as determined by the Commission.
    (d) The Commission's review shall include, but need not be limited
to, a quantitative and qualitative assessment of the factors specified
in Sec.  240.19b-4(o)(3) of this chapter. Any clearing agency that has
accepted for clearing a security-based swap, or any group, category,
type or class of security-based swaps, that is subject to the stay of
the clearing requirement shall provide information requested by the
Commission necessary to assess any of the factors it determines to be
appropriate in the course of its review.
    (e) Upon completion of its review, the Commission may:
    (1) Determine, subject to any terms and conditions that the
Commission determines to be appropriate in the public interest, that
the security-based swap, or group, category, type, or class of
security-based swaps must be cleared; or
    (2) Determine that the clearing requirement will not apply to the
security-based swap, or group, category, type, or class of security-
based swaps, but clearing may continue on a non-mandatory basis.

Sec.  240.3ca-2  Submission of security-based swaps for clearing.

    Pursuant to section 3C(a)(1) of the Act (15 U.S.C. 78c-3(a)(1)), it
shall be unlawful for any person to engage in a security-based swap
unless that person submits such security-based swap for clearing to a
clearing agency that is registered under this Act or a clearing agency
that is exempt from registration under the Act if the security-based
swap is required to be cleared. The phrase submits such security-based
swap for clearing to a clearing agency in the clearing requirement of
Section 3C(a)(1) of the Act shall mean that the security-based swap
will be submitted for central clearing to a clearing agency that
functions as a central counterparty.
    3. Sec.  240.19b-4 is amended by:
    a. Removing paragraph (b);
    b. Redesignating paragraph (a) as paragraph (b);
    c. Adding new paragraph (a);
    d. In paragraph (i), by revising the phrase ``of all filings made
pursuant to this section'' to read ``of all filings, notices and
submissions made pursuant to this section 240.19b-4'';
    e. In paragraph (i), adding the words ``notice or submission,''
after the phrase ``any such filing,'';
    f. In paragraph (i), removing the phrase ``the filing of the
proposed rule change.'' and adding in its place ``the filing, notice or
submission of the proposed rule change, advance notice or security-
based swap submission, as applicable.'';
    g. In paragraph (j), first sentence, removing the words ``with
respect to proposed rule changes'';
    h. In paragraph (k) adding ``240.19b-4'' after the words ``this
section'';
    i. Revising paragraph (l), introductory paragraph;
    j. In paragraph (l)(4), replacing the phrase ``website'' to read
``Web site'';
    k. In paragraph (m)(1), replacing the phrase ``website'' to read
``Web site'';
    l. In paragraph (m)(2), replacing the phrase ``website'' to read
``Web site'';
    m. In paragraph (m)(3), replacing the phrase ``website'' to read
``Web site'';
    n. Adding paragraph (n); and
    o. Adding paragraph (o).
    3. The additions and revisions read as follows:

Sec.  240.19b-4  Filings with respect to proposed rule changes by self-
regulatory organizations.

* * * * *