[Federal Register Volume 81, Number 171 (Friday, September 2, 2016)]
[Rules and Regulations]
[Pages 60585-60608]
[FR Doc No: 2016-21137]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 240

[Release No. 34-78716; File No. S7-15-15]
RIN 3235-AL74

Access to Data Obtained by Security-Based Swap Data Repositories

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: Pursuant to section 763(i) of Title VII (``Title VII'') of the
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
(``Dodd-Frank Act''), the Securities and Exchange Commission
(``Commission'') is adopting amendments to rule 13n-4 under the
Securities Exchange Act of 1934 (``Exchange Act'') related to
regulatory access to security-based swap data held by security-based
swap data repositories. The rule amendments would implement the
conditional Exchange Act requirement that security-based swap data
repositories make data available to certain regulators and other
authorities.

DATES: Effective November 1, 2016.

FOR FURTHER INFORMATION CONTACT: Carol McGee, Assistant Director,
Joshua Kans, Senior Special Counsel, or Kateryna Imus, Special Counsel,
at<PHONE_NUMBER>; Division of Trading and Markets, Securities and
Exchange Commission, 100 F Street NE., Washington, DC 20549-7010.

SUPPLEMENTARY INFORMATION: The Commission is adding paragraphs (b)(9)
and (b)(10) to Exchange Act rule 13n-4 to implement the statutory
requirement that security-based swap data repositories conditionally
provide data to certain regulators and other authorities. The
Commission also is adding paragraph (d) to rule 13n-4 to specify the
method to be used to comply with the associated statutory notification
requirement.

I. Background

A. Statutory Requirements for Access to Security-Based Swap Data
Repository Information, as Amended

    Title VII of the Dodd-Frank Act amended the Exchange Act to provide
a comprehensive regulatory framework for security-based swaps,
including the regulation of security-based swap data repositories.\1\
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    \1\ Public Law 111-203, section 761(a) (adding Exchange Act
section 3(a)(75) (defining ``security-based swap data repository''))
and section 763(i) (adding Exchange Act section 13(n) (establishing
a regulatory regime for security-based swap data repositories)).
    References in this release to the terms ``data repository,''
``trade repository,'' ``repository'' or ``SDR'' generally address
security-based swap data repositories unless stated otherwise.
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    Those amendments, among other things, require that security-based
swap data repositories make data available to certain regulators and
other entities. In particular, the amendments conditionally require
that security-based swap data repositories ``on a confidential basis
pursuant to section 24, upon request, and after notifying the
Commission of the request, make available security-based swap data
obtained by the security-based swap data repository, including
individual counterparty trade and position data'' to specified
recipients.\2\ As provided by the statute, these recipients include
``each appropriate prudential regulator'' \3\; the Financial Stability
Oversight Council (``FSOC''); the Commodity Futures Trading Commission
(``CFTC''); the Department of Justice; and ``any other person that the
Commission determines to be appropriate,'' including foreign financial
supervisors (including foreign futures authorities), foreign central
banks, foreign ministries and other foreign authorities.\4\
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    \2\ Exchange Act section 13(n)(5)(G), 15 U.S.C. 78m(n)(5)(G).
The confidentiality requirements addressed by Exchange Act section
24, 15 U.S.C. 78x, are addressed below. See note 83, infra. As
initially adopted, this provision addressed access to ``all'' data
obtained by the security-based swap data repository. As amended by
Congress in 2015, the reference to ``all'' was replaced by a
reference to ``security-based swap'' data. See Public Law 114-94,
section 86011(c)(1)(A) (striking ``all'' and adding ``security-based
swap'' in the introductory part of Exchange Act section
13(n)(5)(G)).
    \3\ As discussed below, the term ``prudential regulator''
encompasses the Board of Governors of the Federal Reserve System and
certain other regulators, with regard to certain categories of
regulated entities. See note 26, infra.
    \4\ Exchange Act section 13(n)(5)(G), 15 U.S.C. 78m(n)(5)(G). As
initially adopted this provision did not reference ``other foreign
authorities.'' That provision was added by Congress in December
2015. See Public Law 114-94, section 86011(c)(1)(B) (adding
paragraph (G)(v)(IV) to Exchange Act section 13(n)(5)).
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    Access to data pursuant to these provisions is conditioned on the
repository receiving ``a written agreement from each entity stating
that the entity shall abide by the confidentiality requirements
described in section 24 relating to the information on security-based
swap transactions that is provided.'' \5\
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    \5\ Exchange Act section 13(n)(5)(H), 15 U.S.C. 78m(n)(5)(H).
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    As enacted in 2010, moreover, the data access provisions stated
that before such data is shared, ``each entity shall agree to indemnify
the security-based swap data repository and the Commission for any
expenses arising from litigation relating to the information provided
under section 24.'' \6\ Congress repealed the indemnification
requirement in December 2015.\7\
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    \6\ See Dodd Frank Act section 763(i) (adding former Exchange
Act section 13(n)(5)(H)(ii)).
    \7\ See Public Law 114-94, section 86011(c)(2).
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B. Proposed Rule Amendments

    In 2015, prior to the legislative revision of the data access
provisions, the Commission proposed rule amendments to implement the
data access provisions.\8\ This proposal built upon two earlier
Commission proposals,\9\ and specifically set forth proposed amendments
to Exchange Act rule 13n-4--which the Commission previously adopted as
part of a series of rules governing the registration process, duties
and core principles applicable to security-based swap data
repositories.\10\ Key elements of the proposal were:
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    \8\ See Exchange Act Release No. 75845 (Sept. 4, 2015), 80 FR
55182 (Sept. 14, 2015) (``Proposing Release'').
    \9\ See generally Proposing Release, 80 FR at 55182-84
(discussing relevant provisions of 2010 proposed rules regarding
security-based swap data repositories, and 2013 proposed rules
regarding cross-border application of Title VII).
    \10\ See Exchange Act Release No. 74246 (Feb. 11, 2015), 80 FR
14438 (Mar. 19, 2015) (``SDR Adopting Release''). Those rules did
not address the data access requirements applicable to data
repositories, and the Commission stated that final resolution of the
issue would benefit from further consideration and public comment.
See SDR Adopting Release, 80 FR at 14487-88.
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     Designation of entities eligible to access data. The
proposal: (i) Specifically identified each of the five applicable
prudential regulators as being eligible to access data under these

provisions \11\; (ii) identified the Federal Reserve Banks and the
Office of Financial Research (``OFR'') as being able to access data
\12\; and (iii) stated that the Commission would consider the presence
of certain confidentiality-related protections in determining whether
to permit other entities to access data pursuant to these provisions,
and that the associated determination orders typically would
incorporate conditions that ``specify the scope of a relevant
authority's access to data, and that limit this access in a manner that
reflects the relevant authority's regulatory mandate or legal
responsibility or authority.'' \13\
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    \11\ See Proposing Release, 80 FR at 55185-86. The Commission
proposed those provisions so the ability of those regulators to
access data would not vary depending on the registration status of
the regulated entity, and on whether the regulator was acting in a
``prudential'' capacity. See id.
    \12\ See Proposing Release, 80 FR at 55186-87. The Commission
preliminarily concluded that access by these entities would be
appropriate given the mandates of the Federal Reserve Banks and the
OFR. See id.
    \13\ See Proposing Release, 80 FR at 55187-88. The Commission
noted that limiting access in this manner may help minimize the risk
of unauthorized disclosure, misappropriation or misuse. See id.
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     Confidentiality condition. To implement the statutory
confidentiality condition, the proposal stated that before a repository
could provide access, there would have to be in effect an arrangement
between the Commission and the entity (in the form of a memorandum of
understanding (``MOU'') or otherwise) to address the confidentiality of
the information made available. This arrangement would be deemed to
satisfy the statutory requirement that the repository receive a written
confidentiality agreement from the recipient entity.\14\
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    \14\ See Proposing Release, 80 FR at 55189-90. The Commission
stated that this proposed approach would: build upon the
Commission's experience in negotiating MOUs with other regulators
with regard to enforcement and supervision, help avoid the
possibility of uneven and potentially inconsistent application of
confidentiality protections, and appropriately implement the
statutory reference to Exchange Act section 24. See id.
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     Notification requirement. To implement the statutory
requirement that the Commission be notified of data access requests,
the proposal provided that a repository must notify the Commission of
the first request for data from a particular entity, and must maintain
records of all information related to the initial and all subsequent
request for data access from that entity.\15\
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    \15\ See Proposing Release, 80 FR at 55188-89. The Commission
stated that this approach should place the Commission on notice that
an entity has the ability to access data, and place the Commission
in a position to examine such access as appropriate, while avoiding
the inefficiencies that would accompany an approach that requires a
repository to direct to the Commission information regarding each
instance of access. See id.
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     Limitation to security-based swap data. The proposal
specified that data access under the rules would apply only to
``security-based swap data.'' \16\
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    \16\ See Proposing Release, 80 FR at 55189.
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     Scope of application of data access provisions. The
proposal stated that the data access provisions and its associated
conditions would not apply in certain circumstances, including when
information is received directly from the Commission.\17\
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    \17\ See Proposing Release, 80 FR at 55193.
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     Indemnification exemption. The proposal set forth a
conditional exemption to the then-extant indemnification requirement.
The proposed exemption was conditioned in part on the applicable
security-based swap information relating to persons or activities being
within the recipient entity's ``regulatory mandate, or legal
responsibility or authority.'' \18\
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    \18\ See Proposing Release, 80 FR at 55191-93. The
indemnification exemption further would have been conditioned on
there being one or more arrangements (in the form of an MOU or
otherwise) between the Commission and the recipient entity that
addressed the confidentiality of the security-based swap information
provided and any other matters as determined by the Commission, and
that also specified the types of information that would relate to
persons or activities within the recipient entity's ``regulatory
mandate, legal responsibility or authority.'' See id.
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C. Commenter Views

    A commenter criticized the inclusion of a notification
requirement,\19\ suggesting that the scope of certain regulators'
access to security-based swap data should be determined on a case-by-
case basis,\20\ and supported elimination of the statutory
indemnification requirement.\21\
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    \19\ See Depository Trust & Clearing Corp. comment dated Oct.
29, 2015 (``DTCC comment'') at 4 (requesting that rulemaking not
include a notification requirement; stating that requiring notice to
the Commission of data access requests may cause other regulators to
hesitate to make such requests, particularly in connection with
investigations, and that a notice requirement could impede the real-
time flow of information among regulators; adding that if any
notification requirement is included, it should not require a
repository to submit the identity of the requesting party).
    \20\ See DTCC comment at 5 (stating that for requests by
entities other than the prudential regulators, ``the Commission
should determine on a case-by-case basis whether an SB SDR should
make available confidential swap data based on the unique set of
facts and circumstances of that request for information and address
permissible uses and disclosures of such data, such as for research
or publications,'' and adding that such an approach would help
ensure that ``data access is granted based on an entity's regulatory
mandate, responsibly balanc[ing] the need for efficient, timely
information sharing, and avoid[ing] overly expansive access to
confidential information'').
    \21\ See DTCC comment at 5-6.
    One comment submitted to the comment file did not address the
substance of the Commission's proposal. See Zeba Gomez comment dated
Sept. 19, 2015. The public comments that the Commission received on
the Proposing Release are available on the Commission's Web site at
http://www.sec.gov/comments/s7-15-15/s71515.shtml.
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    The Commission reopened the comment period earlier this year to
allow the public the opportunity to comment on the remainder of the
proposal in light of the statutory changes, including removal of the
statutory indemnification requirement.\22\ That release recognized that
Congress eliminated the indemnification requirement discussed above,
making unnecessary paragraph (d) of proposed rule 13n-4. The Commission
received two additional comments in response.\23\
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    \22\ See Exchange Act Release No. 76922 (Jan. 15, 2016), 81 FR
3354 (Jan. 21, 2016) (``Comment Reopening Release'').
    \23\ See Depository Trust & Clearing Corp. comment dated Feb.
22, 2016 (``DTCC 2016 comment''); Suzanne Shatto comment dated Jan.
20, 2016 (``Shatto comment'').
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II. Final Data Access Rules

    For the reasons discussed below, and after considering commenter
concerns, the Commission is adopting final rules to implement the data
access statutory provisions. The final rules largely are the same as
those that were proposed, apart from eliminating the proposed
indemnification exemption in response to the removal of the underlying
statutory provision.\24\
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    \24\ As discussed below, the Commission also has revised the
proposal regarding the designation of additional entities that may
access data, for consistency with the statute as amended. See part
II.C.2, infra.
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    Accordingly, should the confidentiality condition to data access be
satisfied, security-based swap data repositories would be legally
obligated to provide relevant authorities with access to security-based
swap data, consistent with the parameters of any Commission orders,
MOUs or other arrangements that are relevant to the availability and
scope of access.\25\
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    \25\ We believe that the approach taken by the final rule is
generally consistent with the principles expressed by a commenter
that supported access, while also putting into effect the statutory
conditions to data access for persons identified by statute or
subject to a determination by the Commission. See Shatto comment.
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A. Application to Prudential Regulators and Federal Reserve Banks

1. Proposed Approach
    As noted above, the Exchange Act provides that a repository is
conditionally obligated to make information available to, among others,
``each appropriate prudential

regulator.'' \26\ To implement this, the proposed rules identified, as
being eligible to access data, each of the entities encompassed within
the statutory ``prudential regulator'' definition: The Board of
Governors of the Federal Reserve System (``Board''), the Office of the
Comptroller of the Currency, the Federal Deposit Insurance Corporation
(``FDIC''), the Farm Credit Administration, and the Federal Housing
Finance Agency.\27\ The proposed rules also included ``any Federal
Reserve Bank'' among the entities conditionally eligible to access
data,\28\ in accordance with the Exchange Act provision that extends
data access to ``any other person that the Commission determines to be
appropriate.'' \29\
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    \26\ See Exchange Act section 13(n)(5)(G)(i), 15 U.S.C.
78m(n)(5)(G)(i). Exchange Act section 3(a)(74), 15 U.S.C.
78c(a)(74), defines ``prudential regulator'' by reference to the
Commodity Exchange Act (``CEA''). The CEA, in turn, defines
``prudential regulator'' to encompass: (a) The Board, (b) the Office
of the Comptroller of the Currency, (c) the FDIC, (d) the Farm
Credit Administration or (e) the Federal Housing Finance Agency--in
each case with respect to swap dealers, major swap participants,
security-based swap dealers or major security-based swap
participants (cumulatively, ``dealers'' or ``major participants'')
that fall within the regulator's authority. See CEA section 1a(39);
7 U.S.C. 1a(39).
    For example, the definition provides that the Board is a
prudential regulator with regard to, among others, certain dealers
and major participants that are: State-chartered banks and agencies,
foreign banks that do not operate insured branches, or members of
bank holding companies. Also, for example, the definition provides
that the Office of the Comptroller of the Currency is a prudential
regulator with regard to, among others, certain dealers or major
participants that are national banks, federally chartered branches
or agencies of foreign banks or federal saving associations.
    \27\ See proposed Exchange Act rule 13n-4(b)(9)(i)-(v).
    \28\ See proposed Exchange Act rule 13n-4(b)(9)(i).
    \29\ See Exchange Act section 13(n)(5)(G)(v), 15 U.S.C.
78m(n)(5)(G)(v).
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    No commenter addressed the proposal to specifically identify the
prudential regulators or the Federal Reserve Banks as being eligible to
access such data.\30\
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    \30\ As noted, one commenter suggested that data access by
recipients other than the prudential regulators should be more
circumscribed than the access afforded the prudential regulators, in
that the access of the other recipients should be subject to case-
by-case review by the Commission. See note 20, supra. As discussed
below the Commission will have the ability to tailor access in
accordance with each entity's regulatory mandate or legal
responsibility or authority. See parts II.C.2.a and II.F.2, infra.
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2. Final Rule
    The final rule incorporates the elements of proposed Exchange Act
rule 13n-4(b)(9)(i)-(v), as discussed below, without change.\31\
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    \31\ See Proposing Release, 80 FR at 55185-86; Exchange Act rule
13n-4(b)(9)(i)-(v).
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    The final rule accordingly identifies each of the five prudential
regulators as being able to access data. Consistent with the discussion
in the proposal, this is to specify that those regulators' ability to
access security-based swap data would not vary depending on whether
entities regulated by the regulators are acting as security-based swap
dealers, as major security-based swap participants, or in some other
capacity,\32\ or vary depending on whether the regulator acts in a
``prudential'' capacity in connection with the information, so long as
the prerequisites to data access, including the confidentiality
condition, have been met.\33\
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    \32\ This particularly addresses the fact that the statutory
``prudential regulator'' definition noted above specifically refers
to those regulators in connection with dealers and major
participants that fall within their authority. The Commission
concludes that application of the data access provision should not
vary depending on whether an entity regulated by the regulator is
acting as a dealer or major participant, or in some other capacity.
Such a reading would not further the purposes of Title VII, and the
Dodd-Frank Act more generally, including facilitating regulator
access to security-based swap information to help address the risks
associated with those instruments.
    \33\ Those regulators' ability to access security-based swap
data accordingly would not be limited to situations in which they
act in the capacity of a prudential supervisor. Thus, for example,
the FDIC is conditionally authorized to access security-based swap
data from a repository in connection with all of its statutory
capacities, including its prudential supervisory capacity as well as
other capacities such as the FDIC's resolution authority pursuant to
the Federal Deposit Insurance Act and the Orderly Liquidation
Authority provisions of Title II of the Dodd-Frank Act.
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    The final rules also include ``any Federal Reserve Bank'' among the
entities conditionally eligible to access security-based swap data from
repositories,\34\ in accordance with the Exchange Act provision that
extends data access to ``any other person that the Commission
determines to be appropriate.'' \35\ The Commission believes that it is
appropriate for the Federal Reserve Banks to be able to access
security-based swap data, subject to the confidentiality condition and
other applicable prerequisites. In part, this conclusion is based on
the Commission's understanding that the Federal Reserve Banks occupy
important oversight roles under delegated authority from the Board,
including supervision of banks that are under the Board's authority,
and gathering and analyzing information to inform the Federal Open
Market Committee regarding financial conditions.\36\ The Commission
further understands that the Federal Reserve Banks, as well as the
Board, would use data from security-based swap data repositories to
fulfill statutory responsibilities related to prudential supervision
and financial stability.\37\ The Commission accordingly concludes that
the Federal Reserve Banks should conditionally have access to the
security-based swap data.\38\
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    \34\ See Exchange Act rule 13n-4(b)(9)(i).
    \35\ See Exchange Act section 13(n)(5)(G)(v), 15 U.S.C.
78m(n)(5)(G)(v). The CFTC has identified the Federal Reserve Banks
as being ``appropriate domestic regulators'' that may access swap
data from swap data repositories. See Proposing Release, 80 FR at
55184 n.29. See 17 CFR 49.17(b)(1).
    \36\ Section 11(k) of the Federal Reserve Act grants the Board
authority ``to delegate, by published order or rule . . . any of its
functions, other than those relating to rulemaking or pertaining to
monetary and credit policies to . . . members or employees of the
Board, or Federal Reserve banks.'' 12 U.S.C. 248(k). The Federal
Reserve Banks carry out the Board's activities including the
supervision, examination and regulation of financial institutions as
directed by the Board and under its supervision. See the Board's
Rules of Organization, section 3(j) FRRS 8-008 (providing that the
Director of the Board's Division of Banking Supervision and
Regulation ``coordinates the System's supervision of banks and bank
holding companies and oversees and evaluates the Reserve Banks'
examination procedures''). The Board further has delegated extensive
authority to the Reserve Banks with respect to numerous supervisory
matters. See 12 CFR 265.11 (functions delegated by the Board to the
Federal Reserve Banks).
    \37\ We understand that the Board and the Federal Reserve Banks
jointly would use the data in support of the prudential supervision
of institutions under the Board's jurisdiction, such as state member
banks, bank holding companies, and Edge Act corporations. See, e.g.,
section 9 of the Federal Reserve Act, 12 U.S.C. 321-338a
(supervision of state member banks); the Bank Holding Company Act,
12 U.S.C. 1841-1852 (supervision of bank holding companies); the
Edge Act, 12 U.S.C. 610 et seq. (supervision of Edge Act
corporations). We also understand that the Board and the Federal
Reserve Banks would use the data in support of the implementation of
monetary policy, such as through market surveillance and research.
See, e.g., section 12A of the Federal Reserve Act, 12 U.S.C. 263
(establishing the Federal Open Market Committee); and section 2A of
the Federal Reserve Act, 12 U.S.C. 225a (setting monetary policy
objectives). In addition, we understand that the Board and the
Federal Reserve Banks would use the data in fulfilling the Board's
responsibilities with respect to assessing, monitoring and
mitigating systemic risk, such as supervision of systemically
important institutions. See, e.g., section 113 of the Dodd-Frank
Act, 12 U.S.C. 5323 (SIFIs); and section 807 of the Dodd-Frank Act,
12 U.S.C. 5466 (designated FMUs).
    \38\ In permitting the Federal Reserve Banks to access security-
based swap information pursuant to the data access provisions, the
Commission concludes that the Federal Reserve Banks' access should
not be limited to information regarding security-based swap
transactions entered into by banks supervised by the Board, but
should be available more generally with regard to security-based
swap transaction data, subject to the confidentiality condition and
other applicable prerequisites. This is consistent with the fact
that Title VII does not limit the Board's access to data in such a
way. This view also reflects the breadth of the Federal Reserve
Banks' responsibilities regarding prudential supervision and
financial stability, as addressed above. Their access, however,
would be subject to the confidentiality condition, including all
access limits incorporated as part of implementing that condition.
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    A Federal Reserve Bank's ability to access such data would be
subject to

conditions related to confidentiality, as would the ability of any
other entity that is identified by statute or determined by the
Commission to access such data.\39\ As discussed below, the Commission
may consider the recipient entity's regulatory mandate or legal
responsibility or authority, and tailor the entity's access in
accordance with that regulatory mandate or legal responsibility or
authority.\40\
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    \39\ In this regard, the Commission notes that personnel of the
Board and the Reserve Banks already are subject to a number of
confidentiality requirements. See 18 U.S.C. 1905 (imposing criminal
sanctions on U.S. government personnel who disclose non-public
information except as provided by law), 18 U.S.C. 641 (imposing
criminal sanctions on the unauthorized transfer of records), 5 CFR
2635.703 (Office of Government Ethics regulations prohibiting
unauthorized disclosure of nonpublic information); see also Federal
Reserve Bank Code of Conduct section 3.2 (requiring Reserve Bank
employees to maintain the confidentiality of nonpublic information).
    \40\ See part II.F.2, infra.
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B. FSOC, CFTC, Department of Justice and Office of Financial Research

1. Proposed Approach
    The Exchange Act also states that FSOC, CFTC, and the Department of
Justice may access security-based swap data,\41\ and the proposed rules
accordingly identified those entities as being conditionally authorized
to access such data.\42\ The proposed rules further stated that the OFR
conditionally would be eligible to access such data,\43\ in accordance
with the Exchange Act provision that extends data access to ``any other
person that the Commission determines to be appropriate.'' \44\
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    \41\ See Exchange Act sections 13(n)(5)(G)(ii)-(iv), 15 U.S.C.
78m(n)(5)(G)(ii)-(iv).
    \42\ See proposed Exchange Act rule 13n-4(b)(9)(vi)-(viii).
    \43\ See proposed Exchange Act rule 13n-4(b)(9)(ix).
    \44\ See Exchange Act section 13(n)(5)(G)(v), 15 U.S.C.
78m(n)(5)(G)(v).
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    No commenter addressed these aspects of the proposal.
2. Final Rule
    The final rule incorporates these elements of the proposal without
change.\45\ As discussed in the Proposing Release, the rule includes
the FSOC, CFTC, and the Department of Justice among the entities that
may access data.
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    \45\ See Exchange Act rule 13n-4(b)(9)(vi)-(ix).
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    Moreover, the Commission believes that such access by the OFR is
appropriate in light of the OFR's regulatory mandate and legal
responsibility and authority.\46\ The OFR was established by Title I of
the Dodd-Frank Act to support FSOC and FSOC's member agencies by
identifying, monitoring and assessing potential threats to financial
stability through the collection and analysis of financial data
gathered from across the public and private sectors.\47\ In connection
with this statutory mandate to monitor and assess potential threats to
financial stability, the OFR's access to security-based swap
transaction data may be expected to help assist it in examining the
manner in which derivatives exposures and counterparty risks are
distributed through the financial system, and in otherwise assessing
those risks. The Commission accordingly concludes that the OFR should
conditionally have access to the security-based swap data.\48\
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    \46\ See Exchange Act rule 13n-4(b)(9)(ix). We note that the
CFTC has identified the OFR as being an ``appropriate domestic
regulator'' that may access swap data from swap data repositories.
See Proposing Release, 80 FR at 55184 n.29; see also 17 CFR
49.17(b)(1).
    \47\ See Dodd-Frank Act section 153(a) (identifying the purpose
of the OFR as: (1) Collecting data on behalf of FSOC and providing
such data to FSOC and its member agencies; (2) standardizing the
types and formats of data reported and collected; (3) performing
applied research and essential long-term research; (4) developing
tools for risk measurement and monitoring; (5) performing other
related services; (6) making the results of the activities of the
Office available to financial regulatory agencies; and (7) assisting
those member agencies in determining the types and formats of data
authorized by the Dodd-Frank Act to be collected by the member
agencies); Dodd-Frank Act section 154(c) (requiring that OFR's
Research and Analysis Center, on behalf of FSOC, develop and
maintain independent analytical capabilities and computing resources
to: (A) Develop and maintain metrics and reporting systems for risks
to U.S. financial stability; (B) monitor, investigate, and report on
changes in systemwide risk levels and patterns to FSOC and Congress;
(C) conduct, coordinate, and sponsor research to support and improve
regulation of financial entities and markets; (D) evaluate and
report on stress tests or other stability-related evaluations of
financial entities overseen by FSOC member agencies; (E) maintain
expertise in such areas as may be necessary to support specific
requests for advice and assistance from financial regulators; (F)
investigate disruptions and failures in the financial markets,
report findings and make recommendations to FSOC based on those
findings; (G) conduct studies and provide advice on the impact of
policies related to systemic risk; and (H) promote best practices
for financial risk management).
    The OFR is also required to report annually to Congress its
analysis of any threats to the financial stability of the United
States. See Dodd-Frank Act section 154(d).
    \48\ As discussed below, the proposed confidentiality condition
could limit an entity's access to data by linking the scope of the
access to information that related to persons or activities within
an entity's regulatory mandate or legal responsibility or authority,
as could be specified in an MOU or other arrangement between the
Commission and the entity. See part II.F.2, infra.
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    As with the other entities that may access data pursuant to the
data access provision, the OFR's ability to access such data would be
subject to conditions related to confidentiality.\49\
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    \49\ Also, as U.S. government personnel, OFR personnel are
subject to the same general confidentiality requirements that are
addressed above in the context of the Board and the Federal Reserve
Banks. See note 39, supra. In addition, the OFR is required to keep
data collected and maintained by the OFR data center secure and
protected against unauthorized disclosure. See Dodd-Frank Act
section 154(b)(3); see also 12 CFR 1600.1 (ethical conduct standards
applicable to OFR employees, including post-employment restrictions
linked to access to confidential information); 31 CFR 0.206
(Treasury Department prohibition on employees disclosing official
information without proper authority).
---------------------------------------------------------------------------

C. Future Commission Determination of Additional Entities

1. Proposed Approach
    As noted, the Dodd-Frank Act amended the Exchange Act to provide
that data access under these provisions would be available to ``any
other person that the Commission'' determines to be appropriate,
including foreign financial supervisors (including foreign futures
authorities), foreign central banks and foreign ministries.\50\ To
implement that requirement, the proposed rule provided that data access
would be available to any other person that the Commission determines
to be appropriate, conditionally or unconditionally, by order,
including but not limited to foreign financial supervisors, foreign
central banks and foreign ministries.\51\ The Commission noted that one
or more self-regulatory organizations potentially may seek such access
under this provision.\52\
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    \50\ See Exchange Act section 13(n)(5)(G)(v). As discussed
below, the 2015 legislative change added to that provision. See note
58, infra.
    \51\ See proposed Exchange Act rule 13n-4(b)(9)(x).
    \52\ See Proposing Release, 80 FR at 55187.
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    In the proposal, the Commission further stated that in connection
with making such a determination, it would consider the presence of a
confidentiality-related MOU or other arrangement between the Commission
and a relevant authority, and whether the information would be subject
to robust confidentiality safeguards. The Commission added that it
would consider an authority's interest in access to security-based swap
data based on the relevant authority's regulatory mandate or legal
responsibility or authority, and that the Commission preliminarily
expected that determination orders typically would incorporate
conditions that specify the scope of a relevant authority's access to
data, and that limit such access in a manner that reflects the relevant
authority's regulatory mandate or legal responsibility or
authority.\53\ In addition, the Commission anticipated that it would
take into account any other factors appropriate to the determination,
including whether the determination was in the public

interest, and whether the relevant authority agrees to provide the
Commission and other U.S. authorities with reciprocal assistance in
matters within their jurisdiction.\54\
---------------------------------------------------------------------------

    \53\ See Proposing Release, 80 FR at 55187-88.
    \54\ See id. at 55188.
---------------------------------------------------------------------------

    As part of the proposal, the Commission noted that it may issue
determination orders of a limited duration, and that the Commission may
revoke a determination at any time.\55\ The Commission also stated the
preliminary belief that it is not necessary to prescribe by rule
specific processes to govern a repository's treatment of requests for
access.\56\
---------------------------------------------------------------------------

    \55\ See id.
    \56\ See id.
---------------------------------------------------------------------------

    As discussed below, one commenter addressed the Commission's future
determination orders regarding data access.\57\
---------------------------------------------------------------------------

    \57\ See text accompanying notes 62 through 64.
---------------------------------------------------------------------------

2. Final Rule
    To implement its determination authority the Commission largely is
adopting these provisions as proposed, except that the final rule,
consistent with the recent statutory change, also identifies ``other
foreign authorities'' within the nonexclusive list of the types of
entities that may be subject to a determination pursuant to this
authority.\58\ The Commission will make such determinations through the
issuance of Commission orders, and such determinations may be
conditional or unconditional.\59\
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    \58\ See Exchange Act rule 13n-4(b)(9)(x). The 2015 statutory
amendment added the term ``other foreign authorities'' to the
entities identified in Exchange Act section 13(n)(5)(G)(v). See note
7, supra. The addition of that term to the rule is consistent with
the proposal, which, like the final rule, uses the phrase
``including, but not limited to'' when identifying the types of
authorities that may be subject to a Commission determination.
    \59\ See Exchange Act rule 13n-4(b)(9)(x).
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a. Determination Factors and Conditions
    As stated in the proposal, the Commission expects that it would
consider a variety of factors in connection with making such a
determination, and that it may impose associated conditions in
connection with the determination. In part, given the importance of
maintaining the confidentiality of security-based swap data, the
Commission expects to consider whether there is an MOU or other
arrangement between the Commission and the relevant authority that is
designed to protect the confidentiality of the security-based swap data
provided to the authority.\60\ The Commission also expects to consider
whether such data would be subject to robust confidentiality
safeguards, such as safeguards set forth in the relevant jurisdiction's
statutes, rules or regulations with regard to disclosure of
confidential information by an authority or its personnel, and/or
safeguards set forth in the authority's internal policies and
procedures.
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    \60\ Such an MOU or other arrangement will also satisfy the
statutory requirement that a security-based swap data repository
obtain a confidentiality agreement from the authority. See part
II.F.2, infra. To the extent that a relevant authority needs access
to additional information, the relevant authority may request that
the Commission consider revising its determination order, and MOU or
other arrangement, as applicable. See Proposing Release, 80 FR at
55187-88.
---------------------------------------------------------------------------

    In addition, the Commission may consider the relevant authority's
interest in access to security-based swap data based on the relevant
authority's regulatory mandate or legal responsibility or authority.
Consistent with that factor, the Commission expects that such
determination orders typically would incorporate conditions that
specify the scope of a relevant authority's access to data, and that
limit this access in a manner that reflects the relevant authority's
regulatory mandate or legal responsibility or authority.\61\ Depending
on the nature of the relevant authority's interest in the data, such
conditions could address factors such as the domicile of the
counterparties to the security-based swap, and the domicile of the
underlying reference entity. Limiting the amount of information
accessed by an authority in this manner should be expected to help
minimize the risk of unauthorized disclosure, misappropriation or
misuse of security-based swap data, as each relevant authority will
only have access to information within its regulatory mandate, or legal
responsibility or authority.\62\
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    \61\ See Proposing Release, 80 FR at 55187-88. To appropriately
limit a relevant authority's access to only security-based swap data
that is consistent with the designation order, a repository may, for
example, need to customize permissioning parameters to reflect each
relevant authority's designated access to security-based swap data.
See generally note 140, infra (discussing access criteria currently
used by DTCC in connection with current voluntary disclosure
practices).
    \62\ As discussed below, the Commission will consider similar
issues in connection with implementing the confidentiality
condition. See also part II.F.2, infra.
---------------------------------------------------------------------------

    The Commission continues to anticipate taking into account any
other factors that are appropriate to the determination, including
whether such a determination would be in the public interest, and
whether the relevant authority agrees to provide the Commission and
other U.S. authorities with reciprocal assistance in matters within
their jurisdiction.
    One commenter suggested that the ability of authorities (other than
prudential regulators) to access data pursuant to these provisions
should be subject to request-by-request Commission determinations that
address permissible uses and disclosures of such data, to balance the
need for information sharing against ``overly expansive access to
confidential information.'' \63\ That commenter subsequently expressed
the view that the Commission should simplify its proposal to allow
access to data by certain named entities, consistent with their
interest based on their regulatory mandate or legal responsibility or
authority, ``without further action needed to be taken by the
requesting body or the [repository].'' The commenter added that trade
repositories needed ``clear and specific guidance''--such as that
expressed in the CPMI-IOSCO guidance regarding access to trade
repository data--regarding the type of data that should be made
accessible to each of the different requesting entities.'' \64\
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    \63\ See note 20, supra.
    \64\ See DTCC 2016 comment at 2 (citing the Committee on
Payments and Market Infrastructure (``CPMI'') and the International
Organization of Securities Commissions' (``IOSCO'') guidance on
authorities access to trade repository data as an example of such
guidance).
---------------------------------------------------------------------------

    The Commission has considered these suggestions, but has determined
not to change the approach of the proposal, either by implementing a
request-by-request approach toward access for some entities, or by
allowing data access to other entities without further action. The
Commission concludes that a request-by-request approach for access
generally would be impracticable in terms of resources and operational
delays, as well as unnecessary in light of the final rule's approach of
linking access under the Commission's determination authority in a
manner that reflects an entity's regulatory mandate or legal
responsibility or authority. In our view, this approach reasonably
achieves the goal of providing clear and specific guidance to
repositories, as suggested by the commenter, in a manner that
appropriately balances the benefits of information sharing with the
need to protect the confidentiality of information. Moreover, with
respect to the suggestion that data access may be allowed for certain
entities without further action by these entities or the repository, in
our view such an approach would not achieve the confidentiality
benefits that will flow from using MOUs or other arrangements. The
final rule's approach of using MOUs or other arrangements between the
Commission and recipient

entities to satisfy the confidentiality condition, in any event,
addresses the commenter's suggestion in part by obviating the need for
the repository (as opposed to the recipient entities) to take further
action with respect to satisfying the confidentiality condition. In
addition, this approach will provide a vehicle for the Commission to
provide the type of ``clear and specific guidance'' requested by the
commenter. Moreover, the use of the Commission-negotiated
confidentiality arrangements will eliminate the need for each recipient
entity to negotiate separate confidentiality arrangements with each
trade repository.
b. Additional Matters Related to the Determinations
    Consistent with the proposal, the Commission may take various
approaches in deciding whether to impose additional conditions in
connection with its consideration of requests for determination orders.
For example, the Commission may issue a determination order that is of
a limited duration. In addition, the Commission further may revoke a
determination at any time, such as, for example, if a relevant
authority fails to comply with the MOU or other arrangement by failing
to keep confidential security-based swap data provided to it by a
repository. Even absent such a revocation, an authority's access to
data pursuant to these provisions also would cease upon the termination
of the MOU or other arrangement used to satisfy the confidentiality
condition.\65\
---------------------------------------------------------------------------

    \65\ See part II.F.2, infra.
---------------------------------------------------------------------------

    The Commission continues to expect that repositories will provide
relevant authorities with access to security-based swap data in
accordance with the determination orders, and the Commission generally
does not expect to be involved in reviewing, signing-off on or
otherwise approving relevant authorities' requests for security-based
swap data from repositories that are made in accordance with a
determination order. The final rule also does not prescribe any
specific processes to govern a repository's treatment of requests for
access.\66\
---------------------------------------------------------------------------

    \66\ See Proposing Release, 80 FR at 55188.
---------------------------------------------------------------------------

    Finally, consistent with the proposal, the Commission notes that
when it designates an authority to receive direct electronic access to
data under section 13(n)(5)(D)--which states that a repository must
provide such access to the Commission ``or any designee of the
Commission, including another registered entity''--the Commission may
elect to apply these determination factors and consider applying
protections similar to those in the data access provisions of Exchange
Act sections 13(n)(5)(G) and (H).\67\
---------------------------------------------------------------------------

    \67\ See Proposing Release, 80 FR at 55188. In practice, the
Commission expects that security-based swap data repositories may
satisfy their obligation to make available data pursuant to sections
13(n)(5)(G) and (H) by providing direct electronic access to
appropriate authorities. To the extent a repository were to satisfy
those requirements by some method other than electronic access,
however, the Commission separately may consider whether to also
designate particular authorities as being eligible for direct
electronic access to the repository pursuant to section 13(n)(5)(D).
In making such assessments under section 13(n)(5)(D), the Commission
will have the ability to consider factors similar to the above
determination factors, including the presence of confidentiality
safeguards, and the authority's interest in the information based on
its regulatory mandate or legal responsibility or authority.
---------------------------------------------------------------------------

D. Notification Requirement

1. Proposed Approach
    The Exchange Act states that a repository must notify the
Commission when an entity requests the repository to make available
security-based swap data.\68\ The Commission proposed to implement that
notification requirement by requiring that the repository inform the
Commission upon its receipt of the first request for data from a
particular entity (which may include any request that the entity be
provided ongoing online or electronic access to the data), and to
maintain records of all information related to the initial and all
subsequent requests for data access requests from that entity,
including records of all instances of online or electronic access, and
records of all data provided in connection with such requests or
access.\69\
---------------------------------------------------------------------------

    \68\ See Exchange Act section 13(n)(5)(G), 15 U.S.C.
78m(n)(5)(G). As discussed below, see part III, infra, the
notification requirement does not apply to circumstances in which
the Commission provides security-based swap data to an entity.
    \69\ See proposed Exchange Act rule 13n-4(e).
---------------------------------------------------------------------------

    In making this proposal, the Commission noted that one commenter
had opposed any requirement that the Commission receive notice of a
recipient's initial request, on the grounds that such notice may cause
other authorities to hesitate to make such requests. The Commission
explained, however, that it is necessary for the Commission to be
informed of the initial request from a particular entity, and that
commenter's concerns that other regulators may be reluctant to place
the Commission on notice of such initial requests are mitigated by the
Commission's long history of cooperation with other authorities in
supervisory and enforcement matters.\70\ As discussed below, one
commenter addressed the notification requirement.\71\
---------------------------------------------------------------------------

    \70\ See Proposing Release, 80 FR at 55189.
    \71\ See text accompanying notes 78 through 80, infra.
---------------------------------------------------------------------------

2. Final Rule
    The Commission is adopting as proposed the approach for
implementing the notification requirement.\72\ Accordingly, a security-
based swap data repository would be required to inform the Commission
upon its receipt of the first request for data from a particular entity
(which may include any request that the entity be provided ongoing
online or electronic access to the data).\73\ A repository must keep
such notifications and any related requests confidential.\74\
---------------------------------------------------------------------------

    \72\ See Exchange Act rule 13n-4(d). This provision has been
redesignated as paragraph (d) in light of the elimination of the
proposed indemnification exemption.
    \73\ The rule does not require the repository to inform the
Commission of subsequent requests.
    \74\ Exchange Act section 13(n)(5)(G), 15 U.S.C. 78m(n)(5)(G),
and rule 13n-4(b)(9) both require that a repository must make data
available ``on a confidential basis.'' Failure by a repository to
treat such notifications and requests as confidential could have
adverse effects on the underlying basis for the requests. If, for
example, a regulatory use of the data is improperly disclosed, such
disclosure could signal a pending investigation or enforcement
action, which could have detrimental effects.
---------------------------------------------------------------------------

    Under the final rule, the repository also must maintain records of
all information related to the initial and all subsequent requests for
data access requests from that entity, including records of all
instances of online or electronic access, and records of all data
provided in connection with such requests or access.\75\ For these
purposes, we believe that ``all information related to'' such requests
would likely include, among other things: The identity of the requestor
or person accessing the data; the date, time and substance of the
request or access; date and time access is provided; and copies of all
data reports or other aggregations of data provided in connection with
the request or access.\76\
---------------------------------------------------------------------------

    \75\ We note that Exchange Act rule 13n-7(b)(1) requires
security-based swap data repositories to maintain copies of ``all
documents and policies and procedures required by the Act and the
rules and regulations thereunder, correspondence, memoranda, papers,
books, notices, accounts and other such records as shall be made or
received by it in the course of its business as such.'' See also SDR
Adopting Release, 80 FR at 14501 (``This rule includes all
electronic documents and correspondence, such as data dictionaries,
emails and instant messages, which should be furnished in their
original electronic format.''). Exchange Act rule 13n-4(d)
identifies specific types of records that must be maintained in the
specific context of access requests to repositories.
    \76\ Cf. Proposing Release, 80 FR at 55189.
---------------------------------------------------------------------------

    Consistent with the discussion accompanying the proposal, the
Commission concludes that the final

rule regarding the notification requirement appropriately accounts for
the way in which entities are likely to access such data from
repositories, by distinguishing steps that an entity takes to arrange
access from subsequent electronic instructions and other means by which
the recipient obtains data. By making relevant data available to the
Commission in this manner, the approach would place the Commission on
notice that a recipient has the ability to access security-based swap
data, and place the Commission in a position to examine such access as
appropriate, while avoiding the inefficiencies that would accompany an
approach whereby a repository must direct to the Commission information
regarding each instance of access by each recipient. The approach of
the final rule accordingly is more consistent with the manner in which
the Commission examines the records of other regulated entities under
the Commission's authority.\77\
---------------------------------------------------------------------------

    \77\ See Proposing Release, 80 FR at 55189.
---------------------------------------------------------------------------

    In response to the proposal, one commenter reiterated its
opposition to the Commission being provided notice of a recipient's
initial request, on the grounds that such notice might cause other
authorities to hesitate to make such requests.\78\ As we discussed at
the time of the proposal, the Commission believes that it is necessary
that it be informed of the initial request from a particular entity so
that the Commission may assess whether the initial conditions to data
access (i.e., MOUs or other arrangements as needed to satisfy the
confidentiality condition \79\) have been met at the time the
repository first is requested to provide the entity with information
pursuant to the data access provisions, and, more generally, to
facilitate the Commission's ongoing assessment of the repository's
compliance with the data access provisions. Also, as previously stated,
the Commission believes that commenter concerns that other regulators
may be reluctant to place the Commission on notice of such initial
requests are mitigated by the Commission's long history of cooperation
with other authorities in supervisory and enforcement matters.\80\ For
the same reasons, we decline to follow that commenter's suggestion that
a repository may comply with the notification requirement without
submitting the identity of the requesting party to the Commission.
---------------------------------------------------------------------------

    \78\ See note 19, supra.
    \79\ See part II.F.2, infra.
    \80\ See Proposing Release, 80 FR at 55189. As noted in
conjunction with the proposal, moreover, data repositories can
provide direct electronic access to relevant authorities under this
approach. The requirement that the repository inform the Commission
when the relevant authority first requests access to security-based
swap data maintained by the repository, and to retain records of
subsequent access, is designed to facilitate such direct electronic
access. See Proposing Release, 80 FR at 55189 n.80.
---------------------------------------------------------------------------

E. Limitation to ``Security-Based Swap Data''

1. Proposed Approach
    The proposed rule amendments specifically addressed access to
``security-based swap data'' obtained by a security-based swap data
repository.\81\ In taking that approach, the Commission recognized that
repositories that obtain security-based swap data may also obtain data
regarding other types of financial instruments, such as swaps under the
CFTC's jurisdiction,\82\ but preliminarily concluded that the relevant
data access provisions should not be read to require a repository to
make available data that does not involve security-based swaps.\83\
---------------------------------------------------------------------------

    \81\ See proposed Exchange Act rule 13n-4(b)(9).
    \82\ Specifically, the Dodd-Frank Act provides that the CFTC
will regulate ``swaps,'' the Commission will regulate ``security-
based swaps,'' and both the CFTC and the Commission will regulate
``mixed swaps.'' See Dodd-Frank Act section 712.
    \83\ See Proposing Release, 80 FR at 55189 (noting that those
data access provisions were added by Subtitle B of Title VII, which
focused on the regulatory treatment of security-based swaps, to the
Exchange Act, which generally addresses the regulation of securities
such as security-based swaps; also addressing the significance of
language in the confidentiality condition).
---------------------------------------------------------------------------

    No commenter addressed this limitation on the type of data made
available by repositories.
2. Final Rule
    The 2015 amendment to the data access provisions under the Exchange
Act clarified that those provisions specifically addressed the
disclosure of security-based swap data.\84\ This clarification is
consistent with the proposal. The Commission accordingly is adopting
this part of the rule as proposed.
---------------------------------------------------------------------------

    \84\ See note 7, supra.
---------------------------------------------------------------------------

F. Confidentiality Condition

1. Proposed Approach
    As noted, the Exchange Act provides that, prior to providing data,
a repository ``shall receive a written agreement from each entity
stating that the entity shall abide by the confidentiality requirements
described in section 24 relating to the information on security-based
swap transactions that is provided.'' \85\
---------------------------------------------------------------------------

    \85\ See Exchange Act section 13(n)(5)(H)(i), 15 U.S.C.
78m(n)(5)(H)(i).
    Exchange Act section 24, 15 U.S.C. 78x, generally addresses
disclosures of information by the Commission and its personnel. In
relevant part it provides that the Commission may, ``in its
discretion and upon a showing that such information is needed,''
provide all records and other information ``to such persons, both
domestic and foreign, as the Commission by rule deems appropriate if
the person receiving such records or information provides such
assurances of confidentiality as the Commission deems appropriate.''
See Exchange Act section 24(c), 15 U.S.C 78x(c); see also Exchange
Act rule 24c-1(b) (providing that the Commission may, upon ``such
assurances of confidentiality as the Commission deems appropriate,''
provide non-public information to persons such as domestic and
foreign governments or their political subdivisions, authorities,
agencies or instrumentalities, self-regulatory organizations and
foreign financial authorities).
---------------------------------------------------------------------------

    The proposed rule implementing this condition would require that,
before a repository provides information to an entity pursuant to the
data access provisions, the Commission and the entity shall have
entered into an MOU or other arrangement addressing confidentiality.
This arrangement would be deemed to satisfy the statutory requirement
that the repository receive a written confidentiality agreement from
the entity.\86\
---------------------------------------------------------------------------

    \86\ See proposed Exchange Act rule 13n-4(b)(10).
---------------------------------------------------------------------------

    As discussed below, one commenter addressed the Commission's future
determination orders regarding data access in response to the Comment
Reopening Release.\87\
---------------------------------------------------------------------------

    \87\ See text accompanying note 92, infra.
---------------------------------------------------------------------------

2. Final Rule
    The Commission is adopting as proposed the approach for
implementing the confidentiality requirement. Accordingly, the final
rule provides that ``there shall be in effect an arrangement between
the Commission and the entity (in the form of a memorandum of
understanding or otherwise) to address the confidentiality of the
security-based swap information made available to the entity,'' and
that this arrangement between the Commission and a regulator or other
recipient entity will satisfy the statutory confidentiality condition.
\88\
---------------------------------------------------------------------------

    \88\ See Exchange Act rule13n-4(b)(10). As discussed below, see
part III, infra, the confidentiality condition in Exchange Act
sections 13(n)(5)(G) and (H) does not apply to circumstances in
which the Commission provides security-based swap data to an entity.
---------------------------------------------------------------------------

    As discussed in the proposal, in the Commission's view this
approach should help obviate the need for each individual repository to
negotiate and enter into multiple agreements and help avoid the
possibility of uneven and potentially inconsistent application of
confidentiality protections across data repositories and recipient
entities. \89\

This approach also should appropriately implement the statutory
reference to the ``confidentiality requirements described in section
24'' of the Exchange Act, which articulates an approach whereby the
Commission determines standards for confidentiality assurances.\90\
---------------------------------------------------------------------------

    \89\ As discussed in the proposal, see Proposing Release, 80 FR
at 55190 n. 87, the Commission notes that the Exchange Act does not
require that the security-based swap data repository ``agree'' with
the entity, ``enter into'' an agreement or otherwise be a party to
the confidentiality agreement. The Exchange Act merely states that
the repository ``receive'' such an agreement. See Exchange Act
section 13(n)(5)(H)(i), 15 U.S.C. 78m(n)(5)(H)(i). Accordingly, we
believe that, at a minimum, the statutory language is ambiguous as
to whether the data repository must itself be a party to the
confidentiality agreement. In light of this ambiguity, we read the
statute to permit the Commission to enter into confidentiality
agreements with the entity, with the repository receiving the
benefits of the agreement. The Commission further concludes that it
is appropriate to view a security-based swap data repository as
having received a confidentiality agreement when the entity enters
into a confidentiality arrangement with the Commission and the
arrangement runs to the benefit of the repository.
    \90\ See Proposing Release, 80 FR at 55190.
---------------------------------------------------------------------------

    Consistent with the importance of protecting confidentiality of the
security-based swap data provided, MOUs or other arrangements may
include a variety of means of safeguarding confidentiality. These may
include, for example, restrictions regarding the personnel who may
access the data provided, and limits on the distribution of that data
to third parties. Moreover, such MOUs or other arrangements may
incorporate conditions that specify the scope of the relevant
authority's access to data, and that limit this access in a manner that
reflects the relevant authority's regulatory mandate or legal
responsibility or authority.
    One commenter expressed the view that an MOU should help determine
a regulatory body's interest in security-based swap data, notify the
Commission of the intent to access the data and provide the Commission
with ``confirmation that an appropriate confidentiality agreement has
been made by the requesting regulatory authority or that statutory
confidentiality requirements are applicable to such requesting
authority.'' The commenter further requested that the rule permit
repositories to require entities to certify their ability to keep such
data confidential.\91\ Consistent with that commenter's view, we
anticipate that, as appropriate, each MOU or other arrangement will set
forth access provisions that reflect a recipient's interest in
security-based swap data. We decline to adopt the commenter's
suggestion that the MOU or other arrangement should be deemed to
provide the Commission with notification of an entity's intent to
access data, given that we are adopting separately a requirement with
respect to notification from the repository to the Commission.\92\
While an SDR may seek additional confidentiality certifications from
other regulatory authorities, consistent with the statute, an SDR may
not decline the regulatory authority access to the data based on
another regulatory authority's refusal to agree to these
certifications. Allowing repositories to require additional
confidentiality certifications, moreover, could lead to an uneven
application of the data access provisions, potentially undermining the
benefits of using arrangements between the Commission and recipient
entities to satisfy the statutory confidentiality condition.
---------------------------------------------------------------------------

    \91\ See DTCC 2016 comment.
    \92\ See part II.D.2, infra.
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III. Applicability of Exchange Act Data Access Provisions

    In the Proposing Release, the Commission discussed how Exchange Act
sections 13(n)(5)(G) and (H) \93\ do not provide the exclusive means by
which regulators or other authorities might access security-based swap
data. In part, the Proposing Release suggested that regulators and
other authorities may separately access security-based swap data
directly from the Commission.\94\ The Commission preliminarily stated
that the conditions associated with the data access provisions of
sections 13(n)(5)(G) and 13(n)(5)(H) should not govern access in those
circumstances. The Commission received no comments on that proposed
interpretation.\95\
---------------------------------------------------------------------------

    \93\ 15 U.S.C. 78m(n)(5)(G) and (H).
    \94\ See Proposing Release, 80 FR at 55193.
    \95\ In the Proposing Release, the Commission also discussed the
application of data access provisions to access that is authorized
by foreign law. In light of the repeal of the indemnification
requirement, the Commission is not addressing data access in such
circumstances.
---------------------------------------------------------------------------

    The Exchange Act provides that relevant authorities may obtain
security-based swap data from the Commission, rather than directly from
data repositories.\96\ First, Exchange Act section 21(a)(2) \97\ states
that, upon request of a foreign securities authority, the Commission
may provide assistance in connection with an investigation the foreign
securities authority is conducting to determine whether any person has
violated, is violating or is about to violate any laws or rules
relating to securities matters that the requesting authority
administers or enforces.\98\ That section further provides that, as
part of this assistance, the Commission in its discretion may conduct
an investigation to collect information and evidence pertinent to the
foreign securities authority's request for assistance.\99\ In addition,
the Commission may share ``nonpublic information in its possession''
with, among others, any ``federal, state, local, or foreign government,
or any political subdivision, authority, agency or instrumentality of
such government . . . [or] a foreign financial regulatory authority,''
subject to the recipient providing ``such assurances of confidentiality
as the Commission deems appropriate.'' \100\ Consistent with the
Commission practice for many years, these sections provide the
Commission with separate, additional authority to assist a domestic or
a foreign authority in certain circumstances, such as, for example, by
providing security-based swap data directly to the authority. At those
times, the foreign authority would receive information not from the
data repository, but instead from the Commission.
---------------------------------------------------------------------------

    \96\ See Proposing Release, 80 FR at 55193.
    \97\ 15 U.S.C. 78u(a)(2).
    \98\ Exchange Act section 3(a)(50), 15 U.S.C. 78c(a)(50),
broadly defines ``foreign securities authority'' to include ``any
foreign government, or any governmental body or regulatory
organization empowered by a foreign government to administer or
enforce its laws as they relate to securities matters.''
    \99\ Exchange Act section 21(a)(2), 15 U.S.C. 78u(a)(2), also
states that the Commission may provide such assistance without
regard to whether the facts stated in the request also would
constitute a violation of U.S. law. That section further states that
when the Commission decides whether to provide such assistance to a
foreign securities authority, the Commission shall consider whether
the requesting authority has agreed to provide reciprocal assistance
in securities matters to the United States, and whether compliance
with the request would prejudice the public interest of the United
States.
    \100\ See Exchange Act rule 24c-1(c) (implementing Exchange Act
section 24(c), 15 U.S.C. 78x(c), which states that the Commission
may, ``in its discretion and upon a showing that such information is
needed,'' provide records and other information ``to such persons,
both domestic and foreign, as the Commission by rule deems
appropriate,'' subject to assurances of confidentiality).
---------------------------------------------------------------------------

IV. Effective Date

    These amendments to Exchange Act rule 13n-4 to implement the data
access requirements will become effective 60 days following publication
of the rule amendments in the Federal Register.
    The obligation of a security-based swap data repository to provide
data pursuant to the rules will be conditioned on the Commission and a
relevant authority entering into an MOU or other arrangement addressing
the confidentiality of the security-based swap information that is made
available.

A repository accordingly will have no disclosure obligation pursuant to
these rules until such MOUs or other arrangements have been entered
into and become effective.\101\
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    \101\ The Commission anticipates that any such MOU or other
arrangement would not become immediately effective after the
agreement of the parties, to allow repositories an appropriate
amount of time to make any technical arrangements needed to provide
access, potentially including electronic access, to the recipient.
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V. Paperwork Reduction Act

    Certain provisions of the final rules contain ``collection of
information'' requirements within the meaning of the Paperwork
Reduction Act of 1995 (``PRA'').\102\ The Commission has submitted them
to the Office of Management and Budget (``OMB'') for review in
accordance with 44 U.S.C. 3507 and 5 CFR 1320.11. The title of the new
collection of information is ``Security-Based Swap Data Repository Data
Access Requirements.'' 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 OMB control number. OMB has not
yet assigned a control number to the new collection of information.
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    \102\ 44 U.S.C. 3501 et seq.
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    In the Proposing Release, the Commission solicited comment on the
collection of information requirements and the accuracy of the
Commission's statements.\103\ Although, as discussed above, one
commenter addressed certain substantive issues with regard to the
proposal,\104\ that commenter did not address the burden estimates in
the Proposing Release related to the collection of information.
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    \103\ See Proposing Release, 80 FR at 55196.
    \104\ See notes 19 through 21, supra, and accompanying text.
---------------------------------------------------------------------------

    Although the final rules have been changed from the proposal to
reflect the removal of the proposed indemnification exemption, in the
Commission's view this change does not alter the estimates from the
Proposing Release. In particular, although the conditions to the
proposed indemnification exemption would have caused the Commission and
a relevant authority to enter into an MOU or other arrangement to
address confidentiality, and to address the types of activities that
would be within the regulatory mandate or legal responsibility or
authority of that relevant authority, the Commission would still expect
to enter into that type of MOU or other arrangement with the relevant
authority in connection with the confidentiality condition.
Accordingly, the Commission's estimates remain unchanged from the
Proposing Release.

A. Summary of Collection of Information

    The final rules would require security-based swap data repositories
to make security-based swap data available to other parties, including
certain government bodies. This data access obligation would be
conditioned on a confidentiality requirement. The final rules further
would require such repositories to create and maintain information
regarding such data access.

B. Use of Information

    The data access requirement and associated conditions would provide
the regulators and other authorities that receive the relevant
security-based swap data with tools to assist with the oversight of the
security-based swap market and of dealers and other participants in the
market, and to assist with the monitoring of risks associated with that
market.

C. Respondents

    The data access requirement will apply to every person required to
be registered with the Commission as a security-based swap data
repository--that is, every U.S. person performing the functions of a
security-based swap data repository, and to every non-U.S. person
performing the functions of a security-based swap data repository
within the United States absent an exemption. The Commission continues
to estimate, for PRA purposes, that ten persons might register with the
Commission as security-based swap data repositories.\105\
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    \105\ See Proposing Release, 80 FR 55194. The Commission used
the same estimate when adopting final rules to implement statutory
provisions related to the registration process, duties and core
principles applicable to security-based swap data repositories. See
SDR Adopting Release, 80 FR at 14521.
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    The conditions to data access under these rules further will affect
all persons that may seek access to security-based swap data pursuant
to these provisions. As discussed below, these may include up to 30
domestic entities.

D. Total Annual Reporting and Recordkeeping Burden

1. Data Access Generally
    The data access provisions may implicate various types of PRA
burdens and costs: (i) Burdens and costs that regulators and other
authorities incur in connection with negotiating MOUs or other
arrangements with the Commission in connection with the data access
provisions; (ii) burdens and costs that certain authorities that have
not been determined by statute or Commission rule may incur in
connection with requesting that the Commission grant them access to
repository data; \106\ (iii) burdens and costs associated with
information technology systems that repositories develop in connection
with providing data to regulators and other authorities; and (iv)
burdens and costs associated with the requirement that repositories
notify the Commission of requests for access to security-based swap
data, including associated recordkeeping requirements.
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    \106\ These include MOUs and other arrangements in connection
with: the determination of additional entities that may access
security-based swap data (see part II.C.2.a, supra), and the
confidentiality condition (see part II.F.2, supra). Although under
the proposal these also would have included MOUs and other
arrangements in connection with the indemnification exemption, as
noted above we believe that the original PRA estimates associated
with such MOUs or other arrangements remain appropriate.
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a. MOUs and Other Arrangements
    As discussed above, entities that access security-based swap data
pursuant to these data access provisions would be required to enter
into MOUs or other arrangements with the Commission to address the
confidentiality condition. In some cases, any such entity also would
enter into an MOU or other arrangement in connection with the
Commission's determination of the entity as authorized to access such
data (to the extent that the entity's access is not already determined
by statute or by the final rules). For purposes of the PRA
requirements, the Commission estimates that up to 30 domestic entities
potentially might enter into such MOUs or other arrangements,
reflecting the nine entities specifically identified by statute or the
final rules, and up to 21 additional domestic governmental entities or
self-regulatory organizations that may seek access to such data. Based
on the Commission's experience in negotiating similar MOUs that address
regulatory cooperation, including confidentiality issues associated
with regulatory cooperation, the Commission believes that each
regulator on average would expend 500 hours in negotiating such MOUs
and other arrangements.\107\
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    \107\ It may be expected that the initial MOU or other
arrangement that is entered into between the Commission and another
regulator may take up to 1,000 hours for that regulator to
negotiate. In practice, however, subsequent MOUs and other
arrangements involving other recipient entities would be expected to
require significantly less time on average, by making use of the
prior MOUs as a basis for negotiation. Based on these principles,
the Commission estimates that the average amount of time that
domestic and foreign recipients of data would incur in connection
with negotiating these arrangements would be 500 hours.
    To the extent that each of those 30 domestic entities were to
seek to access data pursuant to these provisions, and each of the
applicable MOUs or other arrangements were to take 500 hours on
average, the total burden would amount to 15,000 hours.

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b. Requests for Access
    Separately, certain entities that are not identified by statute
and/or the final rules may request that the Commission determine that
they may access such security-based swap data. For those entities, in
light of the relevant information that the Commission may consider in
connection with such determinations (apart from the MOU issues
addressed above)--including information regarding how the entity would
be expected to use the information, information regarding the entity's
regulatory mandate or legal responsibility or authority, and
information regarding reciprocal access--the Commission estimates that
each such entity would expend 40 hours in connection with such request.
As noted above, the Commission estimates that 21 domestic entities not
encompassed in the final rule may seek access to the data. Accordingly,
to the extent that 21 domestic entities were to request access (apart
from the nine entities identified by statute or the final rule), the
Commission estimates a total burden of 840 hours for these entities to
prepare and submit requests for access.
c. Systems Costs
    The Commission previously addressed the PRA costs associated with
the Exchange Act's data access requirement in 2010, when the Commission
initially proposed rules to implement those data access requirements in
conjunction with other rules to implement the duties applicable to
security-based swap data repositories. At that time, based on
discussions with market participants, the Commission estimated that a
series of proposed rules to implement duties applicable to security-
based swap data repositories--including the proposed data access rules
as well as other rules regarding repository duties (e.g., proposed
rules requiring repositories to accept and maintain data received from
third parties, to calculate and maintain position information, and to
provide direct electronic access to the Commission and its designees)--
together would result in an average one-time start-up burden per
repository of 42,000 hours and $10 million in information technology
costs for establishing systems compliant with all of those
requirements. The Commission further estimated that the average per-
repository ongoing annual costs of such systems would be 25,200 hours
and $6 million.\108\
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    \108\ See Proposing Release, 80 FR at 55194-95 (citing Exchange
Act Release No. 63347 (Nov. 19, 2010), 75 FR 77306, 77348-49 (Dec.
10, 2010) (``SDR Proposing Release'')). The Commission further
estimated, for PRA purposes, that ten persons may register with the
Commission as security-based swap data repositories. Based on the
estimate of ten respondents, the Commission estimated total one-time
costs of 420,000 hours and $100 million, and total annual ongoing
systems costs of 252,000 and $60 million. See Proposing Release, 80
FR at 55195 n. 120 (citing SDR Adopting Release, 75 FR at 14523).
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    The Commission incorporated those same burden estimates in 2015,
when the Commission adopted final rules to implement the duties
applicable to security-based swap data repositories, apart from the
data access requirement.\109\
---------------------------------------------------------------------------

    \109\ See Proposing Release, 80 FR at 55194-95 (citing SDR
Adopting Release, 80 FR at 14523).
---------------------------------------------------------------------------

    Subject to the connectivity issues addressed below, the Commission
believes that the burden estimates associated with the 2010 proposed
repository rules encompassed the costs and burdens associated with the
data access requirements in conjunction with other system-related
requirements applicable to security-based swap dealers. To comply with
those other system-related requirements--including in particular
requirements that repositories provide direct electronic access to the
Commission and its designees--we believe that it is reasonable to
expect that repositories may use the same systems as they would use to
comply with the data access requirements at issue here, particularly
given that both types of access requirements would require repositories
to provide security-based swap information to particular recipients
subject to certain parameters.\110\ As a result, subject to per-
recipient connectivity burdens addressed below, the Commission believes
that there would be no additional burdens associated with information
technology costs to implement the data access requirements of the final
rule.
---------------------------------------------------------------------------

    \110\ The Commission also anticipates that repositories would
use the same systems in connection with the Exchange Act data access
requirements as they use in connection with the corresponding
requirements under the CEA.
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    The Commission also recognizes, however, that once the relevant
systems have been set up, repositories may be expected to incur
additional incremental burdens and costs associated with setting up
access to security-based swap data consistent with the recipient's
regulatory mandate or legal responsibility or authority.\111\ The
Commission believes that, for any particular recipient, security-based
swap data repositories on average would incur a burden of 26
hours.\112\ As discussed below, and consistent with our estimates in
the Proposing Release, based on the estimate that approximately 300
relevant authorities may make requests for data from security-based
swap data repositories,\113\ the Commission estimates that each
repository would incur a one-time burden of 7,800 hours in connection
with providing that connectivity.\114\
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    \111\ In addressing those burdens, the Commission expects that
the determination order will set forth objective criteria that
delimit the scope of a recipient's ability to access security-based
swap data. The Commission may also consider the recipient entity's
regulatory mandate or legal responsibility or authority, and tailor
the entity's access in accordance with that regulatory mandate or
legal responsibility or authority, when entering into MOUs or other
arrangements with recipient entities. The Commission further expects
that repositories would use those criteria to program their data
systems to reflect the scope of the recipient's access to repository
data. Absent such objective and programmable criteria, repositories
would be expected to incur greater burdens to assess whether an
authority's request satisfies the relevant conditions, particularly
with regard to whether particular information relates to persons or
activities within the entity's regulatory mandate or legal
responsibility or authority.
    \112\ This estimate is based on the view that, for each
recipient requesting data, a repository would incur a 25 hour burden
associated with programming or otherwise inputting the relevant
parameters, encompassing 20 hours of programmer analyst time and
five hours of senior programmer time. The estimate also encompasses
one hour of attorney time in connection with each such recipient.
    \113\ See note 195, infra.
    \114\ Across an estimated ten repositories, accordingly, the
Commission estimates that repositories cumulatively would incur a
one-time burden of 78,000 hours in connection with providing such
connectivity.
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d. Providing Notification of Requests, and Associated Records
Requirements
    Under the final rules, repositories would be required to inform the
Commission when it receives the first request for security-based swap
data from a particular entity.\115\ As discussed below, based on the
estimate that approximately 300 relevant authorities may make requests
for data from security-based swap data repositories, the Commission
estimates that each repository would provide the Commission with actual
notice approximately 300 times.\116\ Moreover, based on the estimate
that ten persons may register with the Commission as security-based
swap data repositories,

the Commission estimates that repositories in the aggregate would
provide the Commission with actual notice a total of 3,000 times. The
Commission estimates that each such notice would take no more than one-
half hour to make on average, leading to a cumulative estimate of 1,500
hours associated with the notice requirement.
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    \115\ See Exchange Act rule 13n-4(d).
    \116\ See part VI.C.3.a.ii, infra; see also Proposing Release,
80 FR at 55195.
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    The final rules further require that repositories must maintain
records of all information related to the initial and all subsequent
requests for data access, including records of all instances of online
or electronic access, and records of all data provided in connection
with such access.\117\ Consistent with our estimates in the Proposing
Release, the Commission estimates that there cumulatively may be
360,000 subsequent data requests or instances of direct electronic
access per year across all security-based swap data repositories, for
which repositories must maintain records as required by the final
rule.\118\ Based on its experience with recordkeeping costs associated
with security-based swaps generally, the Commission estimates that for
each repository this requirement would create an initial burden of
roughly 360 hours, and an annual burden of roughly 280 hours and
$40,000 in information technology costs.\119\
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    \117\ See Exchange Act rule 13n-4(d).
    \118\ See part VI.C.3.a.ii, infra; see also Proposing Release,
80 FR at 55195.
    \119\ Across an estimated ten repositories, accordingly, the
Commission preliminarily estimates that repositories cumulatively
will incur an initial burden of roughly 3,600 hours in information
technology costs, and an annual burden of roughly 2,800 hours and
$400,000 in information technology costs.
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2. Confidentiality Condition
    The Commission does not believe that the confidentiality provision
of the final rule will be associated with collections of information
that would result in a reporting or recordkeeping burden for security-
based swap data repositories. This is because, under the final rule,
the confidentiality condition will be satisfied by an MOU or other
arrangement between the Commission and the recipient entity (i.e.,
another regulatory authority) addressing confidentiality. We expect
that repositories accordingly will not be involved in the drafting or
negotiation of confidentiality agreements.
    As discussed above, however, the confidentiality condition is
expected to impose burdens on authorities that seek to access data
pursuant to these provisions, as a result of the need to negotiate
confidentiality MOUs or other arrangements.\120\
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    \120\ See part V.D.1.a, supra.
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E. Collection of Information is Mandatory

    The conditional data access requirements of Exchange Act sections
13(n)(5)(G) and (H) and the underlying rules are mandatory for all
security-based swap data repositories. The confidentiality condition is
mandatory for all entities that seek access to data under those
requirements.

F. Confidentiality

    The Commission will make public requests for a determination that
an authority is appropriate to conditionally access security-based swap
data, as well as Commission determinations issued in response to such
requests. The Commission expects that it will make publicly available
the MOUs or other arrangements with the Commission used to satisfy the
confidentiality condition.\121\
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    \121\ The Commission provides a list of MOUs and most other
arrangements with foreign authorities on its public Web site, which
are available at: http://www.sec.gov/about/offices/oia/oia_cooparrangements.shtml.
---------------------------------------------------------------------------

    Initial notices of requests for access provided to the Commission
by repositories will be kept confidential, subject to the provisions of
applicable law. To the extent that the Commission obtains subsequent
requests for access that would be required to be maintained by the
repositories, such as in connection with an examination or
investigation, the Commission also will keep those records
confidential, subject to the provisions of applicable law.

VI. Economic Analysis

    As discussed above, the Commission is adopting final rules to
implement data access requirements for relevant authorities other than
the Commission that the Dodd-Frank Act imposes on security-based swap
repositories. To carry out their regulatory mandate, or legal
responsibility or authority, certain relevant entities other than the
Commission may periodically need access to security-based swap data
collected and maintained by SEC-registered security-based swap data
repositories, and the final rules are intended to facilitate such
access.
    Although the final rules have been changed from the proposal to
reflect the removal of the proposed indemnification exemption, in the
Commission's view this change does not significantly alter the economic
costs and benefits from the Proposing Release. In particular, although
the conditions to the proposed indemnification exemption would have
caused the Commission and a relevant authority to enter into an MOU or
other arrangement to address confidentiality, and to address the types
of activities that would be within the regulatory mandate or legal
responsibility or authority of that relevant authority, such MOU or
other arrangement will still be necessary in connection with the
confidentiality condition. Accordingly, the Commission's assessment of
the costs and benefits remain largely unchanged from the Proposing
Release.
    The Commission is sensitive to the economic effects of its rules,
including the costs and benefits and the effects of its rules on
efficiency, competition and capital formation. Section 3(f) \122\ of
the Exchange Act requires the Commission, whenever it engages in
rulemaking pursuant to the Exchange Act and is required to consider or
determine whether an action is necessary or appropriate in the public
interest, to also consider, in addition to the protection of investors,
whether the action would promote efficiency, competition, and capital
formation. In addition, section 23(a)(2) \123\ of the Exchange Act
requires the Commission, when promulgating rules under the Exchange
Act, to consider the impact such rules would have on competition.
Exchange Act section 23(a)(2) also provides that the Commission shall
not adopt any rule which would impose a burden on competition that is
not necessary or appropriate in furtherance of the purposes of the
Exchange Act.
---------------------------------------------------------------------------

    \122\ 15 U.S.C. 78c(f).
    \123\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------

A. Economic Considerations

1. Title VII Transparency Framework
    The security-based swap market prior to the passage of the Dodd-
Frank Act has been described as being opaque, in part because
transaction-level data were not widely available to market participants
or to regulators.\124\ To

increase the transparency of the over-the-counter derivatives market to
both market participants and regulatory authorities, Title VII requires
the Commission to undertake a number of rulemakings, including rules
the Commission adopted last year to address the registration process,
duties and core principles applicable to security-based swap data
repositories,\125\ and to address regulatory reporting and public
dissemination of security-based swap information.\126\ Among other
matters, those rules address market transparency by requiring security-
based swap data repositories, absent an exemption, to collect and
maintain accurate security-based swap transaction data, and address
regulatory transparency by requiring security-based swap data
repositories to provide the Commission with direct electronic access to
such data.\127\
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    \124\ With respect to one type of security-based swap, credit
default swaps (``CDS''), the Government Accountability Office found
that ``comprehensive and consistent data on the overall market have
not been readily available,'' ``authoritative information about the
actual size of the [CDS] market is generally not available'' and
regulators currently are unable ``to monitor activities across the
market.'' Government Accountability Office, GAO-09-397T, Systemic
Risk: Regulatory Oversight and Recent Initiatives to Address Risk
Posed by Credit Default Swaps, at 2, 5, 27, (2009) available at:
http://www.gao.gov/new.items/d09397t.pdf; see also Robert E. Litan,
The Derivatives Dealers' Club and Derivatives Market Reform: A Guide
for Policy Makers, Citizens and Other Interested Parties, Brookings
Institution (Apr. 7, 2010), http://www.brookings.edu/~/media/
research/files/papers/2010/4/07%20derivatives%20litan/
0407_derivatives_litan.pdf; Michael Mackenzie, Era of an Opaque
Swaps Market Ends, Financial Times, June 25, 2010, available at:
http://www.ft.com/intl/cms/s/0/f49f635c-8081-11df-be5a-00144feabdc0.html.
    \125\ See SDR Adopting Release.
    \126\ See Regulation SBSR--Reporting and Dissemination of
Security-Based Swap Information, Exchange Act Release No. 74244
(Jan. 14, 2015), 80 FR 14564 (Mar. 19, 2015) (``Regulation SBSR
Adopting Release''). In July 2016, the Commission adopted amendments
and guidance to Regulation SBSR. See Exchange Act Release No. 78321
(Jul. 14, 2016), 81 FR 53546 (Aug. 12, 2016).
    \127\ See Exchange Act rule 13n-5 (requiring repositories to
comply with data collection and data maintenance standards related
to transaction and position data); Exchange Act rule 13n-4(b)(5)
(requiring repositories to provide direct electronic access to the
Commission and its designees).
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    Consistent with the goal of increasing transparency to regulators,
the data access provisions at issue here set forth a framework for
security-based swap data repositories to provide access to security-
based swap data to relevant authorities other than the Commission. The
final rules implement that framework for repositories to provide data
access to other relevant entities in order to fulfill their regulatory
mandate, or legal responsibility or authority.
2. Transparency in the Market for Security-Based Swaps
    The data access rules, in conjunction with the transparency-related
requirements generally applicable to security-based swap data
repositories, are designed, among other things, to make available to
the Commission and other relevant authorities data that will provide a
broad view of the security-based swap market and help monitor for
pockets of risk and potential market abuses that might not otherwise be
observed by those authorities.\128\ Unlike many other types of
securities transactions, security-based swaps involve ongoing financial
obligations between counterparties during the life of transactions that
typically span several years. Counterparties to a security-based swap
rely on each other's creditworthiness and bear this credit risk and
market risk until the security-based swap terminates or expires. If a
large market participant, such as a security-based swap dealer, major
security-based swap participant, or central counterparty were to become
financially distressed, a general lack of information about market
participants' exposures to the distressed entity could contribute to
uncertainty and ongoing market instability. In addition, the default of
a large market participant could introduce the potential for sequential
counterparty failure; the resulting uncertainty could reduce the
willingness of market participants to extend credit, and substantially
reduce liquidity and valuations for particular types of financial
instruments.\129\
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    \128\ See, e.g., Exchange Act section 13(n)(5)(D), 15 U.S.C.
78m(n)(5)(D), and rule 13n-4(b)(5) (requiring SDRs to provide direct
electronic access to the Commission and its designees). See also 156
Cong. Rec. S5920 (daily ed. July 15, 2010) (statement of Sen.
Lincoln) (``These new `data repositories' will be required to
register with the CFTC and the SEC and be subject to the statutory
duties and core principles which will assist the CFTC and the SEC in
their oversight and market regulation responsibilities.'').
    \129\ See, e.g., Markus K. Brunnermeier and Lasse Heje Pedersen,
Market Liquidity and Funding Liquidity, 22 Review of Financial
Studies 2201 (2009); Denis Gromb and Dimitri Vayanos, A Model of
Financial Market Liquidity Based on Intermediary Capital, 8 Journal
of the European Economic Association 456 (2010).
---------------------------------------------------------------------------

    A broad view of the security-based swap market, including
information regarding aggregate market exposures to particular
reference entities (or securities), positions taken by individual
entities or groups, and data elements necessary to determine the market
value of the transaction, may be expected to provide the Commission and
other relevant authorities with a better understanding of the actual
and potential risks in the market and promote better risk monitoring
efforts. The information provided by security-based swap data
repositories also may be expected to help the Commission and other
relevant authorities investigate market manipulation, fraud and other
market abuses.
3. Global Nature of the Security-Based Swap Market
    As highlighted in more detail in the Economic Baseline below, the
security-based swap market is a global market. Based on market data in
the Depository Trust and Clearing Corporation's Trade Information
Warehouse (``DTCC-TIW''), the Commission estimates that only 12 percent
of the global transaction volume that involves either a U.S.-domiciled
counterparty or a U.S-domiciled reference entity (as measured by gross
notional) between 2008 and 2015 was between two U.S.-domiciled
counterparties, compared to 48 percent entered into between one U.S.-
domiciled counterparty and a foreign-domiciled counterparty and 40
percent entered into between two foreign-domiciled counterparties.\130\
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    \130\ The data the Commission receives from DTCC-TIW does not
include transactions between two non-U.S. domiciled counterparties
that reference a non-U.S. entity or security. This is approximately
19 percent of global transaction volume. See note 143, infra.
Therefore, factoring in these transactions, approximately 10 percent
of global transaction volume involves two U.S.-domiciled
counterparties, 39 percent involve one U.S.-domiciled counterparty
and one foreign counterparty, and 51 percent are between two
foreign-domiciled counterparties.
---------------------------------------------------------------------------

    In light of the security-based swap market's global nature there is
the possibility that regulatory data may be fragmented across
jurisdictions, particularly because a large fraction of transaction
volume includes at least one counterparty that is not a U.S. person
\131\ and the applicable U.S. regulatory reporting rules depend on the
U.S. person status of the counterparties.\132\ As discussed further
below, fragmentation of data can increase the difficulty in
consolidating and interpreting security-based swap market data from
repositories, potentially reducing the general economic benefits
derived from transparency of the security-based swap market to
regulators. Absent a framework for the cross-border sharing of data
reported pursuant to regulatory requirements in various jurisdictions,
the relevant authorities responsible for monitoring the security-based
swap market may not be able to access data consistent with their
regulatory mandate or legal responsibility or authority.
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    \131\ This statement is based on staff analysis of voluntarily
reported CDS transaction data to DTCC-TIW, which includes self-
reported counterparty domicile. See note 154, infra. The Commission
notes that DTCC-TIW entity domicile may not be completely consistent
with the Commission's definition of ``U.S. person'' in all cases but
believes that these two characteristics have a high correlation.
    \132\ See Regulation SBSR rule 908(a) (generally requiring
regulatory reporting and public dissemination of a security-based
swap transaction when at least one direct or indirect counterparty
is a U.S. person). Note that current voluntary reporting considers
the self-reported domicile of the counterparty but Regulation SBSR
considers the counterparty's status as a U.S. person.
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4. Economic Purposes of the Rulemaking
    The data access requirements are designed to increase the quality
and

quantity of transaction and position information available to relevant
authorities about the security-based swap market while helping to
maintain the confidentiality of that information. The increased
availability of security-based swap information may be expected to help
relevant authorities act in accordance with their regulatory mandate,
or legal responsibility or authority, and to respond to market
developments.
    Moreover, by facilitating access to security-based swap data for
relevant authorities, including non-U.S. authorities designated by the
Commission, the Commission anticipates an increased likelihood that the
Commission itself will have commensurate access to security-based swap
data stored in trade repositories located in foreign
jurisdictions.\133\ This may be particularly important in identifying
transactions in which the Commission has a regulatory interest (e.g.,
transactions involving a U.S. reference entity or security) but may not
have been reported to a registered security-based swap data repository
due to the transactions occurring outside of the U.S. between two non-
U.S. persons.\134\ This should assist the Commission in fulfilling its
regulatory mandate and legal responsibility and authority, including by
facilitating the Commission's ability to detect and investigate market
manipulation, fraud and other market abuses, and by providing the
Commission with greater access to security-based swap information than
that provided under the current voluntary reporting regime.\135\
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    \133\ For example, EU law conditions the ability of non-EU
authorities to access data from EU repositories on EU authorities
having ``immediate and continuous'' access to the information they
need. See EU regulation 648/2012 (``EMIR''), art. 75(2).
    As discussed above, the Commission anticipates considering
whether the relevant authority requesting access agrees to provide
the Commission and other U.S. authorities with reciprocal assistance
in matters within their jurisdiction when making a determination
whether the requesting authority shall be granted access to
security-based swap data held in registered SDRs. See part II.C.1
supra.
    \134\ For example, it is possible to replicate the economic
exposure of either a long or short position in a debt security that
trades in U.S. markets by trading in U.S. treasury securities and
CDS that reference that debt security. Transactions between two non-
U.S. persons on a U.S. reference entity or novations between two
non-U.S. persons that reduce exposure to a U.S. registrant may
provide information to the Commission about the market's views
concerning the financial stability or creditworthiness of the
registered entity.
    \135\ See part VI.B, supra, for a description of the data the
Commission receives from DTCC-TIW under the current voluntary
reporting regime.
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    Such data access may be especially critical during times of market
turmoil, by giving the Commission and other relevant authorities
information to examine risk exposures incurred by individual entities
or in connection with particular reference entities. Increasing the
available data about the security-based swap market should further give
the Commission and other relevant authorities better insight into how
regulations are affecting or may affect the market, which may allow the
Commission and other regulators to better craft regulations to achieve
desired goals, and therefore increase regulatory effectiveness.

B. Economic Baseline

    To assess the economic impact of the data access rules adopted
herein, the Commission is using as a baseline the security-based swap
market as it exists today, including applicable rules that have already
been adopted and excluding rules that have been proposed but not yet
finalized. Thus we include in the baseline the rules that the
Commission adopted to govern the registration process, duties and core
principles applicable to security-based swap data repositories, and to
govern regulatory reporting and public dissemination of security-based
swap transactions.\136\
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    \136\ See SDR Adopting Release and Regulation SBSR Adopting
Release.
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    There are not yet any registered security-based swap data
repositories; therefore, the Commission does not yet have access to
regulatory reporting data.\137\ Hence, our characterization of the
economic baseline, including the quantity and quality of security-based
swap data available to the Commission and other relevant authorities
and the extent to which data are fragmented, considers the anticipated
effects of the rules that govern the registration process, duties and
core principles applicable to SDRs and Regulation SBSR. The Commission
acknowledges limitations in the degree to which it can quantitatively
characterize the current state of the security-based swap market. As
described in more detail below, because the available data on security-
based swap transactions do not cover the entire market, the Commission
has developed an understanding of market activity using a sample that
includes only certain portions of the market.
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    \137\ See note 157, infra.
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1. Regulatory Transparency in the Security-Based Swap Market
    There currently is no robust, widely accessible source of
information about individual security-based swap transactions. In 2006,
a group of major dealers expressed their commitment in support of
DTCC's initiative to create a central ``industry utility trade contract
warehouse'' for credit derivatives.\138\ Moreover, in 2009, the leaders
of the G20--whose members include the United States, 18 other
countries, and the European Union--addressed global improvements in the
over-the-counter (``OTC'') derivatives markets. They expressed their
view on a variety of issues relating to OTC derivatives contracts,
including, among other things, that OTC derivatives contracts should be
reported to trade repositories.\139\ A single repository, DTCC-TIW,
makes the data reported to it under the voluntary reporting regime
available to the Commission and other relevant authorities in
accordance with the guidance from the OTC Derivatives Regulatory Forum
(``ODRF''), of which the Commission is a member, and similar subsequent
guidance.\140\ Although many jurisdictions have implemented rules
concerning reporting of security-based swaps to trade
repositories,\141\ the Commission understands that many market
participants continue to report voluntarily to DTCC-TIW.
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    \138\ See Letter to Timothy Geithner, President, Federal Reserve
Bank of New York, Mar. 10, 2006, available at: https://www.newyorkfed.org/medialibrary/media/newsevents/news/markets/2006/industryletter2.pdf.
    \139\ See G20 Leaders Statement from the 2009 Pittsburgh Summit,
available at: http://www.g20.utoronto.ca/2009/2009communique0925.html.
    \140\ See Proposing Release, 80 FR 55181, note 71. See also DTCC
2016 comment at 2 (``DTCC is strongly supportive of the work of the
[CPMI], [IOSCO] and the Financial Stability Board (`FSB') to improve
regulatory access to OTC derivatives data, including CPMI-IOSCO's
guidance on authorities' access to trade repository data'').
    \141\ See OTC Derivatives Market Reforms: Tenth Progress Report
on Implementation (Nov. 2015), available at: http://www.fsb.org/wp-content/uploads/OTC-Derivatives-10th-Progress-Report.pdf.
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    The data that the Commission receives from DTCC-TIW do not
encompass CDS transactions that both: (i) Do not involve any U.S.
counterparty, and (ii) are not based on a U.S. reference entity.\142\
Based on a comparison of weekly transaction volume publicly
disseminated by DTCC-TIW with data provided to the Commission under the
voluntary arrangement, we estimate that the transaction data provided
to the Commission covers approximately 81 percent of the global single-
name CDS market.\143\
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    \142\ The Commission notes that the identification of entity
domicile in the voluntary data reported to DTCC-TIW may not be
consistent with the Commission's definition of ``U.S. person'' in
all cases. See note 154, infra.
    \143\ In 2015, DTCC-TIW reported on its Web site new trades in
single-name CDS with gross notional of $11.8 trillion. During the
same period, data provided to the Commission by DTCC-TIW, which
include only transactions with a U.S. counterparty or transactions
written on a U.S. reference entity or security, included new trades
with gross notional equaling $9.6 trillion, or 81% of the total
reported by DTCC-TIW.

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    While DTCC-TIW generally provides detailed data on positions and
transactions to regulators that are members of the ODRF, DTCC-TIW makes
only summary information available to the public.\144\
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    \144\ DTCC-TIW publishes weekly transaction and position reports
for single-name CDS. In addition, ICE Clear Credit provides
aggregated volumes of clearing activity, and large multilateral
organizations periodically further report measures of market
activity. For example, the Bank for International Settlements
(``BIS'') reports gross notional outstanding for single-name CDS and
equity forwards and swaps semiannually.
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2. Current Security-Based Swap Market
    The Commission's understanding of the market is informed in part by
available data on security-based swap transactions, though the
Commission acknowledges that limitations in the data prevent the
Commission from quantitatively characterizing certain aspects of the
market.\145\ Because these data do not cover the entire market, the
Commission has developed an understanding of market activity using a
sample of transaction data that includes only certain portions of the
market. The Commission believes, however, that the data underlying its
analysis here provide reasonably comprehensive information regarding
single-name CDS transactions and the composition of participants in the
single-name CDS market.
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    \145\ The Commission also relies on qualitative information
regarding market structure and evolving market practices provided by
commenters, both in letters and in meetings with Commission staff,
and knowledge and expertise of Commission staff.
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    Specifically, the Commission's analysis of the state of the current
security-based swap market is based on data obtained from the DTCC-TIW,
especially data regarding the activity of market participants in the
single-name CDS market during the period from 2008 to 2015. According
to data published by the Bank for International Settlements (``BIS''),
the global notional amount outstanding in single-name CDS was
approximately $7.18 trillion,\146\ in multi-name index CDS was
approximately $4.74 trillion, and in multi-name, non-index CDS was
approximately $373 billion. The total gross market value outstanding in
single-name CDS was approximately $284 billion, and in multi-name CDS
instruments was approximately $137 billion.\147\ The global notional
amount outstanding in equity forwards and swaps as of December 2015 was
$3.32 trillion, with total gross market value of $147 billion.\148\ As
these figures show (and as the Commission has previously noted),
although the definition of security-based swap is not limited to
single-name CDS, single-name CDS make up a majority of security-based
swaps in terms of notional amount, and the Commission believes that the
single-name CDS data are sufficiently representative of the market to
inform the Commission's analysis of the state of the current security-
based swap market.\149\
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    \146\ The global notional amount outstanding represents the
total face amount of the swap used to calculate payments. The gross
market value is the cost of replacing all open contracts at current
market prices.
    \147\ See Semi-annual OTC derivatives statistics (December
2015), Table D10.1, available at http://stats.bis.org/statx/toc/DER.html (last viewed May 24, 2016). For purposes of this analysis,
the Commission assumes that multi-name index CDS are not narrow-
based security index CDS, and therefore do not fall within the
definition of security-based swap. See Exchange Act section
3(a)(68)(A), 15 U.S.C. 78c(a)(68)(A); see also Further Definition of
``Swap,'' ``Security-Based Swap,'' and ``Security-Based Swap
Agreement''; Mixed Swaps; Security-Based Swap Agreement
Recordkeeping, Exchange Act Release No. 67453 (July 18, 2012), 77 FR
48207 (Aug. 13, 2012).
    \148\ These totals include both swaps and security-based swaps,
as well as products that are excluded from the definition of
``swap,'' such as certain equity forwards. See Semi-annual OTC
derivatives statistics (December 2015), Table D8, available at
http://stats.bis.org/statx/toc/DER.html (last viewed May 24, 2016).
The Commission assumes that instruments reported as equity forwards
and swaps include instruments such as total return swaps on
individual equities that fall with the definition of security-based
swap.
    \149\ See Proposing Release, 80 FR 55199, note 154.
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    Based on this information, our analysis below indicates that the
current security-based swap market: (i) Is global in scope, and (ii) is
concentrated among a small number of dealing entities. Although under
the voluntary reporting regime discussed above there was a single
repository, as various jurisdictions have implemented mandatory
reporting rules in their jurisdictions the number of trade repositories
holding security-based swap data has grown.\150\
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    \150\ See, for example, the list of trade repositories
registered by ESMA, available at: https://www.esma.europa.eu/supervision/trade-repositories/list-registered-trade-repositories.
As of May 28, 2016, there were six repositories registered by ESMA,
all of which are authorized to receive data on credit derivatives.
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a. Security-Based Swap Market Participants
    A key characteristic of security-based swap activity is that it is
concentrated among a relatively small number of entities that engage in
dealing activities.\151\ Based on the Commission's analysis of DTCC-TIW
data, there were 1,957 entities engaged directly in trading CDS between
November 2006 and December 2015.\152\ Table 1 below highlights that of
these entities, there were 17, or approximately 0.9 percent, that were
ISDA-recognized dealers.\153\ ISDA-recognized dealers executed the vast
majority of transactions (83.7 percent) measured by the number of
counterparties (each transaction has two counterparties or transaction
sides). Many of these dealers are regulated by entities other than, or
in addition to, the Commission. In addition, thousands of other market
participants appear as counterparties to security-based swap
transactions, including, but not limited to, investment companies,