use of the SBS transaction information that it receives. As outlined
above, the Commission estimates a total of 10 respondents for this
requirement. Based on the Commission's estimates regarding Regulation
NMS,\246\ it estimates that on average these two requirements will
require 420 hours to create and 120 hours to administer per year per
respondent, for a total burden of 4200 hours initially and 1200 hours
on average annually.\247\ Also based on the Regulation NMS estimates,
the Commission estimates that a total of $40,000 in initial outside
legal costs will be incurred as a result of this burden per respondent
for a total outside cost burden of $400,000.\248\
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    \246\ See Exchange Act Release No. 51808 (June 9, 2005); 70 FR
37496 (June 29, 2005).
    \247\ The 420 hour figure is the result of the estimated average
hour burden to create one policy and procedure (210) times the 2
policies and procedures required by these provisions. The 120 hour
figure is the result of the estimated average hour burden to
administer one policy and procedure (60) times the 2 policies and
procedures required by these provisions. The 4200 hour figure is the
result of the estimated average hour burden per respondent to create
these policies and procedures (420) times the number of SDRs (10).
The 1200 hour figure is the result of the estimated average hour
burden per respondent to maintain these policies and procedures
(120) times the number of SDRs (10).
    \248\ This $400,000 figure is the result of an estimated $400 an
hour cost for outside legal services (as noted above) times 50
hours, times 2 policies and procedures, times the number of SDRs
(10).
---------------------------------------------------------------------------

    Proposed Rule 13n-5(b)(6) would require that SDRs establish
procedures and provide facilities reasonably designed to effectively
resolve disputes over the accuracy of the transaction data and
positions that are recorded in the SDR. For PRA purposes only, the
Commission believes that this would be a greater burden than that for
written policies and procedures alone. Thus, the Commission estimates
that this requirement will require 315 hours to create.\249\ There
would likely be a need for a respondent to consult with outside legal
counsel which the Commission estimates to cost $30,000 per
respondent.\250\ In total, the Commission estimates an initial burden
for all respondents of 3150 hours and $300,000 in outside costs. The
Commission estimates the ongoing average annual burden of this
requirement to be 90 hours per respondent for a total of 900 hours for
the estimated total annual burden for all respondents.\251\ The
Commission believes that this ongoing work will be conducted
internally. The Commission solicits comment as to the accuracy of this
information.
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    \249\ This number is 150% of the 210 hour estimate to create one
set of written policies and procedures under Regulation NMS for non-
SRO trading centers. See Exchange Act Release No. 51808 (June 9,
2005); 70 FR 37496 (June 29, 2005). This is based on an estimate
that this requirement will create 150% of the burden of creating
written policies and procedures under Regulation NMS.
    \250\ This number is 150% of the estimate of outside legal costs
(50 hours) to create one set of written policies and procedures
under Regulation NMS for non-SRO trading centers, at an estimate of
$400 per hour. See Exchange Act Release No. 51808 (June 9, 2005); 70
FR 37496 (June 29, 2005). This is based on an estimate that this
requirement will create 150% of the burden of creating written
policies and procedures under Regulation NMS.
    \251\ These numbers are based on 150% of the 60 hour estimate of
the ongoing burden regarding one set of written policies and
procedures under Regulation NMS for non-SRO trading centers. See
Exchange Act Release No. 51808 (June 9, 2005); 70 FR 37496 (June 29,
2005). This is based on an estimate that this requirement will
create 150% of the ongoing burden of written policies and procedures
under Regulation NMS.
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    Proposed Rule 13n-9 relates to the privacy requirements that would
be required of SDRs. Proposed Rule 13n-9(b)(1) would require SDRs to
establish, maintain, and enforce written policies and procedures
reasonably designed to protect the privacy of any and all SBS
transaction information that the SDR receives from any SBS dealer,
counterparty, or any registered entity. As outlined above, the
Commission estimates a total of 10 respondents for this requirement.
Based on the Commission's estimates regarding Regulation NMS,\252\ it
estimates that on average these two requirements will require 420 hours
to create and 120 hours to administer per year per respondent, for a
total burden of 4200 hours initially and 1200 hours on average,
annually.\253\ Also based on the Regulation NMS estimates, the
Commission estimates that a total of $40,000 in initial outside legal
costs will be incurred as a result of this burden per respondent for a
total outside cost burden of $400,000.\254\
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    \252\ See Exchange Act Release No. 51808 (June 9, 2005); 70 FR
37496 (June 29, 2005).
    \253\ The 420 hour figure is the result of the estimated average
hour burden to create one policy and procedure (210) times the 2
policies and procedures required by these provisions. The 120 hour
figure is the result of the estimated average hour burden to
administer one policy and procedure (60) times the 2 policies and
procedures required by these provisions. The 4200 hour figure is the
result of the estimated average hour burden per respondent to create
these policies and procedures (420) times the number of SDRs (10).
The 1200 hour figure is the result of the estimated average hour
burden per respondent to maintain these policies and procedures
(120) times the number of SDRs (10).
    \254\ This $400,000 figure is the result of an estimated $400 an
hour cost for outside legal services (as noted above) times 50
hours, times 2 policies and procedures, times the number of SDRs
(10).
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    Proposed Rule 13n-9(b)(2) would require SDRs to establish and
maintain safeguards, policies, and procedures reasonably designed to
prevent the misappropriation or misuse of any confidential data
received by the SDR, material, nonpublic information, or intellectual
property. At a minimum, this program must limit access to such
information, include standards that control persons associated with the
SDR in trading for their personal benefit or the benefit of others, and
adequate oversight. As outlined above, the Commission estimates a total
of 10 respondents for this requirement. Based on the Commission's
estimates regarding Regulation NMS,\255\ it estimates that on average
this requirement will require 210 hours to create and 60 hours to
administer per year per respondent, for a total burden of 2100 hours
initially and 600 hours on average, annually. Also based on the
Regulation NMS estimates, the Commission estimates that a total of
$20,000 in initial outside legal costs will be incurred as a result of
this burden per respondent for a total outside cost burden of
$200,000.\256\
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    \255\ See Exchange Act Release No. 51808 (June 9, 2005); 70 FR
37496 (June 29, 2005).
    \256\ This figure is the result of an estimated $400 an hour
cost for outside legal services (as noted above) times 50 hours, for
10 respondents.

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E. Collection of Information Is Mandatory

1. Registration Requirements and Form SDR
    The collection of information relating to registration requirements
and Form SDR is mandatory for all SDRs when registering with the
Commission or amending their registration.
2. SDR Duties, Data Collection and Maintenance, Automated Systems, and
Direct Electronic Access
    The collection of information relating to SDR duties, data
collection and maintenance, automated systems, and direct electronic
access is mandatory for all SDRs.
3. Recordkeeping
    The collection of information relating to recordkeeping is
mandatory for all SDRs.
4. Reports and Reviews
    The collection of information relating to reports and reviews is
mandatory for all SDRs.
5. Disclosure
    The collection of information relating to disclosure is mandatory
for all SDRs.
6. Chief Compliance Officers
    The collection of information relating to CCOs is mandatory for all
SDRs.
7. Other Provisions Relevant to the Collection of Information
    The collection of information relating to other relevant provisions
is mandatory for all SDRs.

F. Confidentiality

1. Registration Requirements and Form SDR
    The collection of information relating to registration requirements
and Form SDR, including attachments thereto, would generally not be
kept confidential. However, confidential treatment can be requested by
the applicant pursuant to the FOIA and the rules of the Commission
thereunder.\257\
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    \257\ ``The information will be used for the principal purpose
of determining whether the Commission should grant or deny
registration to an applicant. Except in cases where confidential
treatment is requested by the applicant and granted by the
Commission pursuant to the Freedom of Information Act and the rules
of the Commission thereunder, information supplied on this form will
be included routinely in the public files of the Commission and will
be available for inspection by any interested person.'' General
instruction 5 of Form SDR.
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2. SDR Duties, Data Collection and Maintenance, Automated Systems, and
Direct Electronic Access
    Under the Commission's proposed rules, SDRs would provide
participants access to their own SBS data submitted to SDRs. The
policies and procedures required under proposed Rules 13n-5(b)(1), (2),
(3), and (5) would be made publicly available, as attachments to Form
SDR, unless confidential treatment is requested, as explained above. A
description of the SDR's policies and procedures regarding its
safeguarding of data and operational reliability to protect the
confidentiality and security of such data, as described in proposed
Rule 13n-6, would be required to be disclosed to a market participant
by the SDR pursuant to proposed Rule 13n-10(b)(3) and would be made
publicly available, as exhibits to Form SDR, unless confidential
treatment is requested, as explained above.
    Upon the request of certain entities described in Exchange Act
Section 13(n)(5)(G), information would be made available upon request
if the entity making the request agrees to keep that information
confidential. Pursuant to proposed Rule 13n-6(d), SDRs may request
confidential treatment in connection with the documents provided to the
Commission pursuant to proposed Rule 13n-6, and the Commission will
accord confidential treatment to those documents to the extent
permitted by law. Other than these items, all elements to the
collection of data identified above relating to SDR duties, data
collection and maintenance, automated systems, and direct electronic
access may be provided to Commission staff, but would not be subject to
public availability.
3. Recordkeeping
    The collection of information relating to recordkeeping would be
provided to Commission staff, but not subject to public availability.
4. Reports and Reviews
    The collection of information relating to reports and reviews would
be provided to Commission staff, but not subject to public
availability.
5. Disclosure
    The collection of information relating to disclosure would be
provided to the party entitled to the disclosure and to Commission
staff, but not subject to public availability.
6. Chief Compliance Officer
    The financial report required to be provided to the Commission
pursuant to proposed Rules 13n-11(f) and (g) may be provided as an
exhibit to Form SDR. If this is done, that report would be made
publicly available, as an attachment to Form SDR, unless confidential
treatment is requested, as explained above. Regarding all other
elements of the collection of information relating to the CCO, the
collection of information would not be confidential and would be made
publicly available.
7. Other Provisions Relevant to the Collection of Information
    A list of instances of prohibiting or limiting access to the
services of the SDR or the data maintained by an SDR would be required
as an exhibit to Form SDR and, as such, would be made publicly
available unless confidential treatment is requested as explained
above. The policies and procedures that must be reasonably designed to
review any prohibition or limitation of any person with respect to
access to services offered or data maintained by the SDR as would be
required in proposed Rule 13n-4(c)(1)(vi) would be made publicly
available, as attachments to Form SDR, unless confidential treatment is
requested, as explained above.
    The policies and procedures regarding skills and expertise of
senior management and certain board or committee members that would be
required under proposed Rule 13n-4(c)(2)(iv), conflicts of interest
that would be required under proposed Rule 13n-4(c)(3), and privacy
under proposed Rule 13n-9(b)(1) would be made publicly available as
attachments to Form SDR unless confidential treatment is requested, as
explained above. The procedures and a description of the facilities of
the SDR for resolving disputes, which would be required pursuant to
proposed Rule 13n-5(b)(6), would be made publicly available, as
exhibits to Form SDR, unless confidential treatment is requested, as
explained above. A description of the SDR's policies relating to misuse
of information, which would be required pursuant to proposed Rule 13n-
9(b)(2), would be made publicly available, as an exhibit to Form SDR,
unless confidential treatment is requested, as explained above.
Pursuant to proposed Rule 13n-10(b), the SDR would disclose to market
participants its policies and procedures described in proposed Rules
13n-5(b)(6) and 13n-9(b)(1).
    Regarding all other elements of the collection of information
relating to

other relevant provisions, the collection of information would be
provided to Commission staff, but not subject to public availability.

G. Retention Period of Recordkeeping Requirements

    With regards to proposed Rule 13n-5, proposed Rule 13n-5(b)(4)
would require that SDRs maintain the transaction data for not less than
five years after the applicable SBS expires and historical positions
for not less than five years. This data would be required to be
maintained in a place and format that is readily accessible to the
Commission and other persons with authority to access or view the
information and would also be required to be maintained in an
electronic format that is non-rewritable and non-erasable.
    Pursuant to proposed Rule 13n-7(b) an SDR would be required to
preserve at least one copy of all documents as shall be made by it in
the course of its business as such, including all records that would be
required under the Exchange Act and the rules and regulations
thereunder. These records would be required to be kept for a period of
not less than five years, the first two years in a place immediately
available to Commission staff for inspection and examination.

H. Request for Comment

    The Commission invites comment on these estimates. Pursuant to 44
U.S.C. 3506(c)(2)(B), the Commission requests comment in order to: (a)
Evaluate whether the collection of information is necessary for the
proper performance of our functions, including whether the information
will have practical utility; (b) evaluate the accuracy of our estimate
of the burden of the collection of information; (c) determine whether
there are ways to enhance the quality, utility, and clarity of the
information to be collected; and (d) evaluate whether there are ways to
minimize the burden of the collection of information on those who
respond, including through the use of automated collection techniques
or other forms of information technology.
    Persons submitting comments on the collection of information
requirements should direct them to the Office of Management and Budget,
Attention: Desk Officer for the Securities and Exchange Commission,
Office of Information and Regulatory Affairs, Washington, DC 20503, and
should also send a copy of their comments to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090, with reference to File No. S7-35-10.
Requests for materials submitted to OMB by the Commission with regard
to this collection of information should be in writing, with reference
to File No. S7-35-10, and be submitted to the Securities and Exchange
Commission, Records Management, Office of Filings and Information
Services, 100 F Street, NE., Washington, DC 20549-1090. As OMB is
required to make a decision concerning the collections of information
between 30 and 60 days after publication, a comment to OMB is best
assured of having its full effect if OMB receives it within 30 days of
publication.

VI. Consideration of Costs and Benefits

    Earlier this year, Congress passed the Dodd-Frank Act in response
to the recent financial crisis. Among other things, the Dodd-Frank Act
is designed to strengthen oversight, improve consumer protections, and
reduce systemic risks throughout the financial system. Title VII of the
Dodd-Frank Act specifically addresses the OTC derivatives markets,
including the market for SBSs. Pursuant to Subtitle B of Title VII, the
Commission is the designated regulator for SBSs.
    The swap markets have been described as being opaque \258\ and
transaction-level data is not publicly available. One of the purposes
of the Dodd-Frank Act is to improve the transparency of the OTC
derivatives market.\259\ In order to shed light on the SBS market,
Title VII requires the Commission to undertake a number of rulemakings
to implement the regulatory framework for SBSs that is set forth in the
legislation, including the reporting of SBS transactions.
---------------------------------------------------------------------------

    \258\ With respect to CDS, for example, the Government
Accountability Office found that ``comprehensive and consistent data
on the overall market have not been readily available,'' that
``authoritative information about the actual size of the CDS market
is generally not available,'' and that regulators currently are
unable ``to monitor activities across the market.'' Government
Accountability Office, ``Systemic Risk: Regulatory Oversight and
Recent Initiatives to Address Risk Posed by Credit Default Swaps,''
GAO-09-397T (March 2009), at 2, 5, 27. See Robert E. Litan, ``The
Derivatives Dealers' Club and Derivatives Market Reform,'' Brookings
Institution (April 7, 2010) at 15-20. See also Michael Mackenzie,
June 25, 2010, Era of an opaque swaps market ends, Fin. Times, June
25, 2010.
    \259\ See, e.g., 156 Cong. Rec. S5915 (daily ed. July 15, 2010)
(statement of Sen. Reed) (``A major problem with derivatives is that
they have not been regulated nor well-understood by even those
buying and selling them. The legislation changes that and brings
transparency to the marketplace for swaps * * * by requiring the
reporting of the terms of these contracts to regulators and market
participants.'').
---------------------------------------------------------------------------

    The Commission views the process of implementing SBS data reporting
as incremental. On October 13, 2010, the Commission adopted an interim
final temporary rule that requires certain SBS dealers and other
parties to report any SBSs entered into prior to the July 21 passage of
the Dodd-Frank Act as the first step in that process.\260\ The interim
final temporary rule provides for the reporting of pre-enactment SBSs
and enables the Commission to obtain data on pre-enactment SBSs until
registered SDRs are operating and able to accept the reports.
---------------------------------------------------------------------------

    \260\ Reporting of Security-Based Swap Transaction Data,
Exchange Act Release No. 63094 (Oct. 13, 2010), 75 FR 64643 (Oct.
20, 2010).
---------------------------------------------------------------------------

    Today, the Commission is proposing new rules and a new form that
provide for the registration of SDRs and establish and expand upon the
core principles and duties applicable to registered SDRs. SDRs are
intended to play a critical role in enhancing transparency in the SBS
market, bolstering market efficiency and liquidity, promoting
standardization, and reducing systemic risks. In conjunction with
recordkeeping and reporting rules to be proposed with respect to other
SBS market entities, such as SB SEFs, SBS exchanges, SBS dealers, and
major SBS participants, the proposed SDR rules will lead to a more
robust, transparent environment for the market for SBSs.\261\
---------------------------------------------------------------------------

    \261\ See, e.g., 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.'').
---------------------------------------------------------------------------

    Proposed Rules 13n-1 through 13n-3 and proposed Form SDR establish
the mechanism by which entities meeting the definition of a ``security-
based swap data repository'' must register as such pursuant to Exchange
Act Section 13(n). Proposed Rules 13n-4 through 13n-10 prescribe the
duties and core principles for SDRs and provide further guidance with
respect to compliance with such duties and core principles. Finally,
proposed Rule 13n-11 provides for the designation of and imposes
obligations on SDR CCOs.
    The Commission is sensitive to the costs and benefits imposed by
its rules, and it has identified the following costs and benefits. In
particular, the Commission focuses our discussion below on the costs
and benefits of the decisions made by the Commission to fulfill the
mandates of the Dodd-Frank Act within the permitted discretion, rather
than the mandates of the Dodd-Frank Act. However, to the extent that
the Commission's discretion is aligned to take full advantage of the
benefits intended by the Dodd-Frank Act, the

two types of benefits are not entirely separable. The Commission
requests that commenters provide data and any other information or
statistics that the commenters relied on to reach any conclusions on
such estimates.

A. Registration Requirements and Form SDR

    The Commission is proposing Rule 13n-1 to set forth the information
that must be submitted by a person on new Form SDR to register as an
SDR and also provides for amendments to Form SDR, including interim
amendments and required annual amendments that must be filed within 60
days after the end of each fiscal year. Each non-resident SDR would be
required to certify on Form SDR and provide an opinion of counsel that
the SDR can, as a matter of law, provide the Commission with access to
the books and records of such SDR and can submit to onsite inspection
and examination by the Commission. Proposed Rule 13n-2 sets forth the
process by which a registered SDR would withdraw its registration and
proposed Rule 13n-3 sets forth the process for a succession of
registration for SDRs.\262\ The proposed rules and form are in response
to the mandate of the Dodd-Frank Act, which, among other things,
requires the Commission to prescribe, by rule, the process for
registration to be used by SDRs. The proposed rules and form prescribe
information and documents to be submitted by SDRs in order to register
with the Commission.
---------------------------------------------------------------------------

    \262\ See supra Sections III.A--III.C.
---------------------------------------------------------------------------

1. Benefits
    The proposed rules and form described in this section provide for
the registration of SDRs, and the withdrawal from registration and/or
successor registration of SDRs. Congress enacted the new registration
requirements as part of the Dodd-Frank Act in order to bring
transparency to the SBS market. The registration process is intended to
assist the Commission in overseeing and regulating the SBS market. The
requirement that a non-resident SDR certify and provide an opinion of
counsel that it can provide the Commission with access to its books and
records and submit to inspection and examination will allow the
Commission to better evaluate an SDR's ability to meet the requirements
for registration and ongoing supervision.
    The proposed rules and form described in this section would be
issued pursuant to specific grants of rulemaking authority in the Dodd-
Frank Act \263\ and are designed to further the legislation's goals by
enhancing the Commission's ability to oversee the marketplace for SBSs,
which is critical to the continued integrity of our markets. The
information to be provided in Form SDR is necessary in order to enable
the Commission to assess whether an applicant has the capacity to
perform the duties of an SDR and to comply with the duties, core
principles, and other requirements imposed on registered SDRs pursuant
to Exchange Act Section 13(n) and the rules and regulations promulgated
thereunder.
---------------------------------------------------------------------------

    \263\ See Public Law 111-203, Sec.  763(i) (adding Exchange Act
Section 13(n)(1)).
---------------------------------------------------------------------------

    The Commission solicits comment on the benefits associated with the
registration-related rules and new Form SDR. The Commission
specifically requests comment on whether it should require different
and/or additional information to be provided on the form and the
frequency with which routine amendments should be filed. Please
describe and, to the extent practicable, quantify the benefits
associated with any comments that are submitted.
2. Costs
    The Commission preliminarily anticipates that the primary costs to
SDRs from the proposed registration-related rules and form result from
the requirement to complete Form SDR and any amendments thereto.
    As discussed above, the Commission estimates that the average
initial paperwork cost of SDR registration would be 400 hours per SDR
and the average ongoing paperwork cost of interim and annual updated
Form SDR would be 36 hours for each registered SDR.\264\ Assuming a
maximum of ten SDRs, the aggregate one-time estimated dollar cost would
be $584,000 \265\ and the aggregate ongoing estimated dollar cost per
year would be $49,080 \266\ to comply with the proposed rule.
---------------------------------------------------------------------------

    \264\ See supra Section V.D.1.
    \265\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Attorney and a Compliance Clerk.
Data from SIFMA's Management & Professional Earnings in the
Securities Industry 2009, modified by Commission staff to account
for an 1800-hour work-year and multiplied by 5.35 to account for
bonuses, firm size, employee benefits, and overhead, suggest that
the cost of a Compliance Attorney is $291 per hour and the cost of a
Compliance Clerk is $59 per hour. Thus, the total one-time estimated
dollar cost of complying with the initial registration-related
requirements is $58,400 per SDR and $584,000 for all SDRs,
calculated as follows: (Compliance Attorney at $291 per hour for 150
hours) + (Compliance Clerk at $59 per hour for 250 hours) x (10
registrants) = $584,000.
    \266\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Attorney and a Compliance Clerk.
Data from SIFMA's Management & Professional Earnings in the
Securities Industry 2009, modified by Commission staff to account
for an 1800-hour work-year and multiplied by 5.35 to account for
bonuses, firm size, employee benefits, and overhead, suggest that
the cost of a Compliance Attorney is $291 per hour and the cost of a
Compliance Clerk is $59 per hour. Thus, the total ongoing estimated
dollar cost of complying with the registration amendment
requirements is $4,908 per year per SDR and $49,080 per year for all
SDRs, calculated as follows: (Compliance Attorney at $291 per hour
for 12 hours) + (Compliance Clerk at $59 per hour for 24 hours) x
(10 registrants) = $49,080.
---------------------------------------------------------------------------

    As discussed above, the Commission estimates that the average
initial paperwork cost for each non-resident SDR to provide an opinion
of counsel that the SDR can, as a matter of law, provide the Commission
with prompt access to its books and records and submit to onsite
inspection and examination would be 3 hours and $900 per SDR. Assuming
a maximum of three non-resident SDRs,\267\ the aggregate one-time
estimated dollar cost would be $5,544.\268\
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    \267\ See supra Section V.C.1.
    \268\ The Commission estimates that an SDR will assign these
responsibilities to an Attorney. Data from SIFMA's Management &
Professional Earnings in the Securities Industry 2009, modified by
Commission staff to account for an 1800-hour work-year and
multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of an Attorney is $316
per hour. Thus, the total ongoing estimated dollar cost of complying
with the registration amendment requirements is $1,848 per year per
SDR and $5,544 per year for all SDRs, calculated as follows: ($900
for outside legal services + (Attorney at $316 per hour for 3
hours)) x (3 non-resident registrants) = $5,544.
---------------------------------------------------------------------------

    The Commission solicits comment on the costs associated with the
registration-related rules and new Form SDR. The Commission
specifically requests comment on the estimated number of respondents
that would be filing proposed Form SDR and the initial costs associated
with completing the registration form and the ongoing annual costs of
completing the required annual amendments. Please describe and, to the
extent practicable, quantify the costs associated with any comments
that are submitted.
    The Commission does not expect these initial costs to have any
significant effect on how SDRs conduct business because such costs
would not be so large as to result in a change in how such SDRs conduct
business, create a barrier to entry, or otherwise alter the competitive
landscape among SDRs.\269\
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    \269\ The Commission notes that industry representatives have
indicated that, based on their knowledge of existing SEC
registration forms for other types of registrants, such as clearing
agencies, they do not believe that completion of registration forms
would impose a significant cost.
---------------------------------------------------------------------------

B. SDR Duties, Data Collection and Maintenance, Automated Systems, and
Direct Electronic Access

    Proposed Rules 13n-4(b)(2)--(7), (9), and (10), 13n-5, and 13n-6
include

various requirements relating to SDRs' information technology systems.
Proposed Rules 13n-4(b)(2)--(7), 13n-5, and 13n-6 are intended to
codify and elucidate the statutorily mandated duties and core
principles relating to an SDR's collection, maintenance, and analysis
of transaction data and other records, including upon an SDR's
cessation of business.\270\
---------------------------------------------------------------------------

    \270\ See supra Section III.D--III.F.
---------------------------------------------------------------------------

    Under proposed Rule 13n-4(b)(2) and (4), an SDR would be required
to accept and maintain transaction data as required by proposed Rule
13n-5.\271\ Proposed Rule 13n-4(b)(5) states that each SDR must provide
direct electronic access to the Commission or any designee of the
Commission. Proposed Rule 13n-4(b)(9) would require an SDR to make
available all data obtained by the SDR upon the request of certain
government bodies, such as the CFTC and the Department of Justice, on a
confidential basis and after notification to the Commission.
---------------------------------------------------------------------------

    \271\ See Public Law 111-203, Sec.  763(i) (adding Exchange Act
Section 13(n)(5)(D)(i)).
---------------------------------------------------------------------------

    Proposed Rule 13n-5 would establish requirements for transaction
data collection and maintenance. Proposed Rule 13n-5(b), among other
things, would require an SDR to promptly record transaction data, and
to establish, maintain, and enforce written policies and procedures (1)
reasonably designed to calculate positions for all persons with open
SBSs for which the SDR maintains records; (2) reasonably designed to
ensure that the transaction data and positions that it maintains are
accurate; and (3) reasonably designed to prevent any provision in a
valid SBS from being invalidated or modified through the procedures or
operations of the SDR. Proposed Rule 13n-5(b)(4) would establish
requirements related to the time periods for which an SDR must
preserve, maintain, and make accessible transaction data. Proposed Rule
13n-5(b)(7) would require an SDR that ceases doing business to
preserve, maintain, and make accessible the data and records described
above for the remainder of the time period required by proposed Rule
13n-5. Proposed Rule 13n-5(b)(8) would require SDRs to make and keep
current a plan to ensure that the transaction data and positions that
are recorded in the SDR continue to be maintained in accordance with
proposed Rule 13n-5(b)(7).
    Proposed Rule 13n-6(b) would require SDRs to establish policies and
procedures relating to the SDRs' system capacity, resiliency, and
security. Such policies and procedures must include periodic capacity
stress tests, reviews of system vulnerability, and adequate contingency
and disaster recovery plans. SDRs would be required to promptly notify
the Commission of material systems outages and submit a description and
analysis of the outages within five business days, and notify the
Commission in writing at least thirty calendar days before planned
material systems changes.
1. Benefits
    The SDR provisions in the Dodd-Frank Act depend on the accuracy of
the data maintained by registered SDRs. Exchange Act Section 13(n)
specifically instructs the Commission to ``prescribe data collection
and maintenance standards for'' SDRs. The proposed rules related to an
SDR's information technology and related policies and procedures are
designed to facilitate accurate data collection and retention with
respect to SBSs in order to promote transparency with respect to the
market for SBSs, as well as facilitate orderly execution and
confirmation of SBS transactions and standardization of such
transactions.
    The proposed rules discussed in this section would be issued
pursuant to specific grants of rulemaking authority in the Dodd-Frank
Act \272\ and are designed to further the legislation's goals by
enhancing the Commission's ability to oversee the marketplace for SBSs,
which is critical to the continued integrity of our markets. The
ability of the Commission and other regulators to monitor risk and
detect fraudulent activity depends on having access to market data. In
particular, the direct electronic access requirement described in
proposed Rule 13n-4(b)(5) will permit the Commission, its designees,
and other regulators to carry out these responsibilities in an
effective and efficient manner. The proposed requirement that each SDR
make and keep current a plan to ensure that SBS data recorded in such
SDR continues to be maintained is essential to ensure that regulators
will continue to have access to and the ability to analyze SBS data in
the event that the SDR ceases to do business. The proposed provisions
relating to material systems outages are important to ensure that the
Commission is apprised when an SDR's ability to accept, maintain, and
provide access to regulators and market participants to accurate and
timely transaction data may be impaired.
---------------------------------------------------------------------------

    \272\ See Public Law 111-203, Sec.  763(i) (adding Exchange Act
Sections 13(n)(4) and (5)).
---------------------------------------------------------------------------

    The requirements in the proposed rules are likely to create various
benefits including increased transparency and reduction of systemic
risk by providing the Commission and other regulators to access SBS
market information. In addition, this data will enhance the
Commission's ability to detect and deter fraudulent and manipulative
activity and other trading abuses in connection with the derivatives
markets, conduct inspections and examinations to monitor the financial
responsibility and soundness of market participants, and verify
compliance with the statutory requirements and duties of SDRs. For
systemic risk monitoring, it is necessary that the Commission and other
regulators have access to information regarding all cleared and
uncleared trades of market participants and their positions. Pursuant
to the proposed rules, in conjunction with Regulation SBSR,\273\ SDRs
will receive and maintain systemically important information from
multiple trade execution facilities, SBS clearing agencies, and other
market participants. The resulting benefit will derive from the
increased transparency on where exposures to risk reside in financial
markets, which will allow regulators to monitor and act before the
risks become systematically relevant. Therefor, SDRs will help achieve
systemic risk monitoring.
---------------------------------------------------------------------------

    \273\ See Regulation SBSR Release, supra note 9.
---------------------------------------------------------------------------

    Benefits also may accrue from the Commission's and other
regulators' ability to use SBS data in order to oversee the SBS market
for illegal conduct. Proposed Rule 13n-5 requires SDRs to satisfy
itself of the accuracy of transaction data and preserve such data for a
sufficient period so that transaction level data is available to assist
regulators in analyzing data to detect market abuse. The proposed rule
also requires SDRs to accept data regarding all SBSs in an asset class
if the SDR accepts data on any SBS in that particular asset class.
These requirements may help the Commission and other regulators to
identify fraudulent or other predatory market activity.
    The richness of data collected by SDRs also will facilitate market
analysis studies by regulators. Periodic reviews of market behavior
through the study of SBS transactions will help identify the costs and
benefits of Commission rules that can be used to evaluate the overall
efficiency of market regulation. Such studies can inform the Commission
and other regulators on potential changes to the rules to improve their
efficiency.
    Central repositories of information also may create benefits from
non-core duties, such as facilitating the reporting of life cycle
events, asset servicing, or payment calculations. These activities

may be less costly to perform when SBS market transaction data is
centrally located and accessible.
    Since Exchange Act Section 13(n) and the rules and regulations
promulgated thereunder allow for multiple SDRs to register with the
Commission, potentially within the same asset class, with each
collecting data from a subset of market participants, proposed Rule
13n-4(b)(2) requires all SDRs to accept data as prescribed by
Regulation SBSR \274\ and proposed Rule 13n-5(b)(1) requires all SDRs
to maintain the transaction data in a format that is readily accessible
to the Commission and other persons with authority to access or view
such information. The effect of these provisions, in conjunction with
the requirements of Regulation SBSR,\275\ is that the same transaction
data will be accepted across SBS market entities (including exchanges,
SB SEFs, clearing agencies, SBS dealers, and major SBS participants)
and service providers and each SDR will maintain the transaction data
in a manner that allows the Commission and others with authority to
access and view such data. Thus, the rule both attempts to maintain
benefits of competition and allow proper aggregation of market-wide SBS
data.
---------------------------------------------------------------------------

    \274\ See Regulation SBSR Release, supra note 9.
    \275\ See id.
---------------------------------------------------------------------------

    The reliability of the aggregation of market-wide SBS data depends
upon data integrity and consistent structuring across all service
providers. The proposed rule requires an SDR to create policies and
procedures such that all transactions are recorded accurately.
Aggregating data across SDRs by regulators and other users of such data
will benefit to the extent that policies and procedures result in more
accurate data reporting.
    The Commission solicits comment on the benefits related to Rules
13n-4(b)(2)--(7), (9), and (10), 13n-5, and 13n-6. The Commission
specifically requests comment on whether any additional benefits would
accrue if the Commission imposed further, more specific technology-
related requirements. Are there alternatives that the Commission should
consider? Please describe and, to the extent practicable, quantify the
benefits associated with any comments that are submitted.
2. Costs
    The Commission anticipates that the primary costs to SDRs from the
proposed rules described in this section would relate to the cost of
developing and maintaining systems to collect and store SBS transaction
data. Registered SDRs also would need to develop, maintain, and ensure
compliance with related policies and procedures and provide applicable
training.
    As discussed above, the Commission estimates that the average
initial paperwork cost associated with creating the SDR information
technology systems would be 42,000 hours and $10,000,000 for each SDR
and the average ongoing paperwork cost would be 25,200 hours and
$6,000,000 per year for each SDR.\276\ Assuming a maximum of ten SDRs,
the aggregate one-time estimated dollar cost would be $200,020,000
\277\ and the aggregate ongoing estimated dollar cost per year would be
$120,012,000 \278\ to comply with the proposed rules. Based on
conversations with industry representatives, the Commission estimates
that the cost imposed on SDRs to provide direct electronic access to
the Commission should be minimal as SDRs likely have or will establish
comparable electronic access mechanisms to enable market participants
to provide data to SDRs and review transactions to which such
participants are parties.
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    \276\ See supra Section V.D.2.
    \277\ The Commission estimates that an SDR will assign these
responsibilities to an Attorney, a Compliance Manager, a Programmer
Analyst, and a Senior Business Analyst. Data from SIFMA's Management
& Professional Earnings in the Securities Industry 2009, modified by
Commission staff to account for an 1800-hour work-year and
multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of an Attorney is $316
per hour, a Compliance Manager is $294 per hour, a Programmer
Analyst is $190 per hour, and a Senior Business Analyst is $234 per
hour. Thus, the total initial estimated dollar cost would be
$20,002,000 per SDR and $200,020,000 for all SDRs, calculated as
follows: ($10,000,000 for information technology systems + (Attorney
at $316 per hour for 7,000 hours) + (Compliance Manager at $294 per
hour for 8,000 hours) + (Programmer Analyst at $190 per hour for
20,000 hours) + (Senior Business Analyst at $234 per hour for 7,000
hours)) x 10 registrants = $200,020,000.
    \278\ The Commission estimates that an SDR will assign these
responsibilities to an Attorney, a Compliance Manager, a Programmer
Analyst, and a Senior Business Analyst. Data from SIFMA's Management
& Professional Earnings in the Securities Industry 2009, modified by
Commission staff to account for an 1800-hour work-year and
multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of an Attorney is $316
per hour, a Compliance Manager is $294 per hour, a Programmer
Analyst is $190 per hour, and a Senior Business Analyst is $234 per
hour. Thus, the total ongoing estimated dollar cost would be
$12,001,200 per SDR and $120,012,000 for all SDRs, calculated as
follows: ($6,000,000 for information technology systems + (Attorney
at $316 per hour for 4,200 hours) + (Compliance Manager at $294 per
hour for 4,800 hours) + (Programmer Analyst at $190 per hour for
12,000 hours) + (Senior Business Analyst at $234 per hour for 4,200
hours)) x 10 registrants = $120,012,000.
---------------------------------------------------------------------------

    As discussed above, the Commission estimates that the average
initial paperwork cost associated with proposed Rule 13n-4(b)(10) would
be $1,600 for each SDR and the average ongoing paperwork cost would be
3 hours for each SDR.\279\ Assuming a maximum of ten SDRs, the
aggregate one-time estimated dollar cost would be $16,000 \280\ and the
aggregate ongoing estimated dollar cost per year would be $9,480 \281\
to comply with the proposed rule.
---------------------------------------------------------------------------

    \279\ See supra Section V.D.2.
    \280\ $1,600 for outside legal services x 10 registrants =
$16,000.
    \281\ The Commission estimates that an SDR will assign these
responsibilities to an Attorney. Data from SIFMA's Management &
Professional Earnings in the Securities Industry 2009, modified by
Commission staff to account for an 1800-hour work-year and
multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of an Attorney is $316
per hour. Thus, the total ongoing estimated dollar cost would be
$948 per SDR and $9,480 for all SDRs, calculated as follows:
(Compliance Attorney at $316 per hour for 3 hours) x 10 registrants
= $9,480.
---------------------------------------------------------------------------

    As discussed above, the Commission estimates that the average
initial paperwork cost associated with developing policies and
procedures necessary to comply with Rules 13n-5(b)(1), (2), (3), and
(5) and 13n-6(b)(1) would be 1,050 hours and $100,000 for each SDR and
the average ongoing paperwork cost would be 300 hours per year for each
SDR.\282\ Assuming a maximum of ten SDRs, the aggregate one-time
estimated dollar cost would be $3,926,250 \283\ and the aggregate
ongoing estimated dollar cost per year would be $908,400 \284\ to
comply with the proposed rules.
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    \282\ See supra Section V.D.2.
    \283\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Manager, an Attorney, a Senior
Systems Analyst, and an Operations Specialist. Data from SIFMA's
Management & Professional Earnings in the Securities Industry 2009,
modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of a Compliance
Manager is $294 per hour, the cost of an Attorney is $316 per hour,
the cost of a Senior Systems Analyst is $251 per hour, and the cost
of an Operation Specialist is $114 per hour. Thus, the total initial
estimated dollar cost would be $392,625 per SDR and $3,926,250 for
all SDRs, calculated as follows: ($100,000 for outside legal
services + (Compliance Manager at $294 per hour for 385 hours) +
(Attorney at $316 per hour for 435 hours) + (Senior Systems Analyst
at $251 per hour for 115 hours) + (Operations Specialist at $114 per
hour for 115 hours)) x 10 registrants = $3,926,250.
    \284\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Manager and an Attorney. Data from
SIFMA's Management & Professional Earnings in the Securities
Industry 2009, modified by Commission staff to account for an 1800-
hour work-year and multiplied by 5.35 to account for bonuses, firm
size, employee benefits, and overhead, suggest that the cost of a
Compliance Manager is $294 per hour and the cost of an Attorney is
$216 per hour. Thus, the total ongoing estimated dollar cost would
be $90,840 per SDR and $908,400 for all SDRs, calculated as follows:
((Compliance Manager at $294 per hour for 180 hours) + (Attorney at
$316 per hour for 120 hours)) x 10 registrants = $908,400.

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

    As discussed above, the Commission estimates that the average
ongoing paperwork cost associated with the proposed Rules 13n-6(b)(3)
and (4) would be 135.4 hours for each SDR.\285\ Assuming a maximum of
ten SDRs, the aggregate ongoing estimated dollar cost per year would be
$368,965 to comply with the proposed rules.\286\
---------------------------------------------------------------------------

    \285\ See supra Section V.D.2.
    \286\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Manager and a Senior Systems
Analyst. Data from SIFMA's Management & Professional Earnings in the
Securities Industry 2009, modified by Commission staff to account
for an 1800-hour work-year and multiplied by 5.35 to account for
bonuses, firm size, employee benefits, and overhead, suggest that
the cost of a Compliance Manager is $294 per hour and the cost of a
Senior Systems Analyst is $251 per hour. Thus, the total ongoing
estimated dollar cost would be $36,896.50 per SDR and $368,965 for
all SDRs, calculated as follows: ((Compliance Manager at $294 per
hour for 67.7 hours) + (Senior Systems Analyst at $251 per hour for
67.7 hours)) x 10 registrants = $368,965.
---------------------------------------------------------------------------

    The Commission believes that persons currently operating as SDRs
may have developed and implemented aspects of the proposed rules
already. However, such persons currently are not subject to regulation
by the Commission and may not be subject to regulation or oversight by
other regulatory bodies and may need to enhance their information
technology systems and related policies and procedures to comply with
the proposed rules. However, the Commission does not believe that the
one-time cost of such changes will be significant. The ongoing annual
costs for persons currently operating as SDRs likely will be consistent
with the estimates provided above.
    Exchange Act Section 13(n) and the proposed rules and regulations
promulgated thereunder allow for multiple SDRs to register with the
Commission, potentially within the same asset class, with each SDR
collecting data from a subset of market participants. While multiple
SDRs per asset class will allow for market competition to decide how
data is collected, it may hinder market-wide data aggregation due to
coordination costs, particularly if market participants adopt
incompatible reporting standards and practices. The proposed rules do
not specify a particular reporting format or structure, which may
create the possibility that entities reporting to SDRs, and regulators
or other market participants accessing transaction data, will have to
accommodate different data standards and develop different systems to
accommodate each. This may result in increased costs for reporting
entities and users of transaction data.
    The costs associated with aggregating data across multiple SDRs by
regulators and other users of such data will increase to the extent
that SDRs choose to use different identifying information for
transactions, counterparties, and products. Data aggregation costs also
could accrue to the extent that there is variation in the quality of
data maintained across SDRs. Each SDR has discretion over how to
implement its policies and procedures in the recording of reportable
data, and variations in quality may result. Since aggregated data used
for surveillance and risk monitoring requires that the underlying
components are provided with the same level of accuracy, variations in
the quality of data could be costly if subsequent interpretations of
analysis based on the data suffer from issues of integrity. To the
extent that market competition among SDRs impacts profit margins and
the level of resources devoted to collecting and maintaining
transaction data, there is an increased likelihood of variations in the
quality of reported data and aggregation of data across multiple SDRs
may be difficult.
    The Commission solicits comment on the costs related to proposed
Rules 13n-4(b)(2)--(7), (9), and (10), 13n-5, and 13n-6. The Commission
specifically requests comment on the initial and ongoing costs
associated with establishing and maintaining the technology systems and
related policies and procedures. Are there additional costs to creating
an SDR that the Commission should consider? Are there alternatives that
the Commission should consider? Do the estimates accurately reflect the
cost of storing data in a convenient and usable electronic format for
the required retention period? Please describe and, to the extent
practicable, quantify the costs associated with any comments that are
submitted.
    The Commission does not expect the initial and ongoing costs
necessary to comply with these proposed rules to have any significant
effect on how SDRs conduct business because such costs would not be so
large as to result in a change in how such SDRs conduct business,
create a barrier to entry, or otherwise alter the competitive landscape
among SDRs.

C. Recordkeeping

    Proposed Rule 13n-7 would require an SDR to make and keep certain
records relating to its business and retain a copy of records made by
the SDR in the course of its business for a period of not less than
five years, the first two years in a place that is immediately
available to the staff of the Commission for inspection and
examination. The proposed rule also would require an SDR that ceases
doing business to preserve, maintain, and make accessible the records
required to be made and kept pursuant to the rule for the remainder of
the time period required by proposed Rule 13n-7.\287\
---------------------------------------------------------------------------

    \287\ See supra Section III.G.
---------------------------------------------------------------------------

1. Benefits
    The rule discussed in this section is designed to further the Dodd-
Frank Act's goals by enhancing the Commission's ability to oversee
SDRs, which are critical components of the new regulatory scheme
governing SBS. The proposed rule will assist the Commission in
monitoring whether an SDR is complying with Exchange Act Section 13(n)
and the rules and regulations promulgated thereunder. In addition, the
rule is designed to reduce systemic risks by requiring the making and
keeping of records pertaining to the day-to-day business of SDRs.
Finally, the legislative goals of Title VII depend on the ongoing
operation of SDRs as the source for transaction data, and the
recordkeeping requirements contained in the proposed rule will enhance
the ability of the Commission and other regulators to monitor the
financial responsibility and soundness of SDRs.
    To the extent that the proposed rule standardizes the business
recordkeeping practices of SDRs, regulators will benefit by being able
to perform more efficient, targeted inspections and examinations with
an increased likelihood of identifying improper conduct at earlier
stages in the inspection or examination. In addition, SDRs should
benefit from standardized recordkeeping requirements by having their
operations interrupted by inspections or examinations for shorter time
periods. Both regulators and SDRs should benefit from standardized
recordkeeping requirements to the extent that uniform records will
enable regulators and SDRs to know what records the SDRs should have on
hand.
    The Commission solicits comment on the benefits related to proposed
Rule 13n-7. Would additional benefits accrue if the Commission imposed
different or additional recordkeeping requirements and, if so, what
would these requirements entail? Please describe and, to the extent
practicable, quantify the benefits associated with any comments that
are submitted.
2. Costs
    The Commission anticipates that the primary costs to SDRs from
proposed

Rule 13n-7 would relate to the cost of making and keeping current a
list of officers, managers, or persons performing similar functions who
are responsible for policies and procedures and developing and
maintaining information technology systems to collect and store the
various records created in the course of an SDR's business.
    As discussed above, the Commission estimates that the average
initial paperwork cost associated with making and keeping a list of
responsible officer, manager, or persons performing similar functions
and developing and maintaining information technology systems to ensure
compliance with the proposed recordkeeping requirements would be 346
hours and $1,800 for each SDR and the average ongoing paperwork cost
associated with developing policies and procedures to ensure compliance
with the proposed recordkeeping requirements would be 279.17 hours per
year for each SDR.\288\ Assuming a maximum of ten SDRs, the aggregate
one-time estimated dollar cost would be $1,015,460 \289\ and the
aggregate ongoing estimated dollar cost per year would be $820,760
\290\ to comply with the proposed rule.
---------------------------------------------------------------------------

    \288\ See supra Section V.D.3.
    \289\ The Commission estimates that an SDR will assign these
responsibilities primarily to a Compliance Manager as well as a
Senior Systems Analyst. Data from SIFMA's Management & Professional
Earnings in the Securities Industry 2009, modified by Commission
staff to account for an 1800-hour work-year and multiplied by 5.35
to account for bonuses, firm size, employee benefits, and overhead,
suggest that the cost of a Compliance Manager is $294 per hour and
the cost of a Senior Systems Analyst is $251 per hour. Thus, the
total initial estimated dollar cost would be $101,546 per SDR and
$1,015,460 for all SDRs, calculated as follows: ($1,800 in
information technology costs + (Compliance Manager at $294 per hour
for 300 hours) + (Senior Systems Analyst at $251 per hour for 46
hours)) x 10 registrants = $1,015,460.
    \290\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Manager. Data from SIFMA's
Management & Professional Earnings in the Securities Industry 2009,
modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of a Compliance
Manager is $294 per hour. Thus, the total ongoing estimated dollar
cost would be $82,076 per SDR and $820,760 for all SDRs, calculated
as follows: (Compliance Manager at $294 per hour for 279.17 hours) x
10 registrants = $820,760.
---------------------------------------------------------------------------

    The Commission does not believe that persons currently operating as
SDRs will be subject to significant additional recordkeeping costs as a
result of proposed Rule 13n-7 because such persons already maintain
business records as part of their day-to-day operations. However, the
proposed rule provides specific parameters relating to the retention
and maintenance of these records and the proposed requirements may be
more extensive than current market practices.
    The Commission solicits comment on the costs related to proposed
Rule 13n-7. The Commission specifically requests comment on the initial
and ongoing costs associated with establishing and maintaining the
recordkeeping systems and related policies and procedures, including
whether currently-operating SDRs would incur different recordkeeping
costs. Are there additional costs related to recordkeeping that the
Commission should consider? Are there alternatives that the Commission
should consider? Please describe and, to the extent practicable,
quantify the costs associated with any comments that are submitted.
    The Commission does not expect the initial and ongoing costs
necessary to comply with the proposed rule to have any significant
effect on how SDRs conduct business because such costs would not be so
large as to result in a change in how such SDRs conduct business,
create a barrier to entry, or otherwise alter the competitive landscape
among SDRs.

D. Reports and Reviews

    Proposed Rule 13n-6(b)(2) would require an SDR to submit an annual
review of its systems that support or integrally relate to its
performance as an SDR to the Commission.\291\ Proposed Rule 13n-8 would
require an SDR to comply with certain reporting requirements, including
promptly providing reports or information upon request by the
Commission.\292\
---------------------------------------------------------------------------

    \291\ See supra Section III.F.
    \292\ See supra Section III.H.
---------------------------------------------------------------------------

1. Benefits
    Title VII of the Dodd-Frank Act establishes a regulatory framework
for the OTC derivatives market that depends on the Commission's and
other regulators' access to information regarding the current and
historical operation of the SBS market to verify compliance with the
statute and effective monitoring for market risk and abuse. In
addition, specific provisions of Title VII require routine, targeted
monitoring of certain types of events. The rules discussed in this
section would be issued pursuant to specific grants of rulemaking
authority in the Dodd-Frank Act \293\ and are designed to further the
legislation's goals by (a) ensuring that each SDR's systems provide
adequate levels of capacity, resiliency, and security, and (b)
facilitating access by the Commission and other regulators to
information necessary to achieve their legislative mandates and to
establish mechanisms by which SDRs will provide routine reports to the
Commission. Access to such information will enhance regulators' ability
to oversee the SBS market, which is critical to the continued integrity
of our markets, and detect and deter fraudulent and manipulative
activity and other trading abuses in connection with the derivatives
markets.
---------------------------------------------------------------------------

    \293\ See Public Law 111-203, Sec.  763(i) (adding Exchange Act
Section 13(n)).
---------------------------------------------------------------------------

    The Commission solicits comment on the benefits related to the
requirements contained in proposed Rules 13n-6(b)(2) and 13n-8. Please
describe and, to the extent practicable, quantify the benefits
associated with any comments that are submitted.
2. Costs
    The Commission anticipates that the primary costs to an SDR from
proposed Rule 13n-6(b)(2) would relate to the cost of conducting an
annual review of the SDR's systems and, if the review is performed by
an internal department, the cost associated with hiring an objective,
external firm to assess the internal department's objectivity,
competency, and work performance. The Commission anticipates that the
primary costs to SDRs from proposed Rule 13n-8 would relate to the cost
of developing and maintaining systems to respond to requests for
information and provide the necessary reports and establishing related
policies and procedures. In addition, SDRs will need to maintain staff
to respond to the requests and provide the reports required under the
proposed rules.\294\
---------------------------------------------------------------------------

    \294\ The Commission understands some currently-existing SDRs
may have dedicated personnel who are responsible for responding to
and providing ad hoc report requests from regulators, including the
Commission. To the extent that proposed Rule 13n-8 may result in
more automated reporting, the need for such dedicated personnel
resources may be reduced.
---------------------------------------------------------------------------

    As discussed above, the Commission estimates that the average
ongoing paperwork cost associated with proposed Rule 13n-6(b)(2) would
be 825 hours and $90,000.\295\ Assuming a maximum of ten SDRs, the
aggregate ongoing estimated dollar cost per year would be $2,845,750 to
comply with the proposed rule.\296\
---------------------------------------------------------------------------

    \295\ See supra Section V.D.4.
    \296\ The Commission estimates that an SDR will assign these
responsibilities to an Attorney, a Manager Internal Audit, and a
Senior Internal Auditor. Data from SIFMA's Management & Professional
Earnings in the Securities Industry 2009, modified by Commission
staff to account for an 1800-hour work-year and multiplied by 5.35
to account for bonuses, firm size, employee benefits, and overhead,
suggest that the cost of an Attorney is $316 per hour, the cost of a
Manager Internal Audit is $291 per hour, and the cost of a Senior
Internal Auditor is $195 per hour. Thus, the total ongoing estimated
dollar cost would be $284,575 per SDR and $2,845,750 for all SDRs,
calculated as follows: ($90,000 for external audit firm + (Attorney
at $316 per hour for 100 hours) + (Manager Internal Auditor at $291
per hour for 225 hours) + (Senior Systems Analyst at $251 per hour
for 500 hours)) x 10 registrants = $2,845,750.

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

    As discussed above, the Commission estimates that the average
ongoing paperwork cost associated with proposed Rule 13n-8 would be 1
hour per year for each SDR.\297\ Assuming a maximum of ten SDRs, the
aggregate ongoing estimated dollar cost per year would be $2,340 to
comply with the proposed rule.\298\
---------------------------------------------------------------------------

    \297\ See supra Section V.D.4.
    \298\ The Commission estimates that an SDR will assign these
responsibilities to a Senior Business Analyst. Data from SIFMA's
Management & Professional Earnings in the Securities Industry 2009,
modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of a Senior Business
Analyst is $234 per hour. Thus, the total ongoing estimated dollar
cost would be $234 per SDR and $2,340 for all SDRs, calculated as
follows: (Senior Business Analyst at $234 per hour for 1 hour) x 10
registrants = $2,340.
---------------------------------------------------------------------------

    The Commission solicits comment on the costs related to proposed
Rules 13n-6(b)(2) and 13n-8. The Commission specifically requests
comment on the initial and ongoing costs associated with establishing
and providing the reports required under the proposed rules. Are there
additional costs associated with supplying the required reports that
the Commission should consider? Are there alternatives that the
Commission should consider? Please describe and, to the extent
practicable, quantify the costs associated with any comments that are
submitted.
    The Commission does not expect the initial and ongoing costs
necessary to comply with proposed Rules 13n-6(b)(2) and 13n-8 to have
any significant effect on how SDRs conduct business because such costs
would not be so large as to result in a change in how such SDRs conduct
business, create a barrier to entry, or otherwise alter the competitive
landscape among SDRs.

E. Disclosure

    Under proposed Rule 13n-10, before collecting any transaction data
from a market participant or upon the market participant's request,
each SDR would be required to furnish the market participant a
disclosure document containing certain information that reasonably will
enable the market participant to identify and evaluate the risks and
costs associated with using the services of the SDR.\299\ An SDR's
disclosure document must include, among other things, the SDR's
criteria for providing others with access to services offered and data
maintained by the SDR; the SDR's criteria for those seeking to connect
to or link with the SDR; a description of the SDR's policies and
procedures regarding safeguarding of data and operational reliability,
and privacy; the SDR's policies and procedures regarding its non-
commercial and/or commercial use of transaction data; dispute
resolution procedures; description of all services, including ancillary
services; schedule of dues, unbundled prices, and discounts or rebates;
and a description of the SDR's governance arrangements.
---------------------------------------------------------------------------

    \299\ See supra Section III.J.
---------------------------------------------------------------------------

1. Benefits
    Proposed Rule 13n-10 is intended to provide certain information
regarding an SDR to market participants prior to entering into an
agreement to provide transaction data to the SDR. Although the
Commission anticipates that there may be only one SDR for any given
asset class, to the extent that multiple SDRs accept data for the same
asset class, the disclosure document would enable market participants
to make an informed choice among SDRs. Even if only one SDR serves a
given asset class, the disclosure document is necessary to inform
market participants of the nature of the services provided by the SDR
and the conditions and obligations that are imposed on market
participants in order for the participants to submit data to the SDR.
    The rule discussed in this section is designed to further the Dodd-
Frank Act's goals by providing market participants with applicable
information regarding the operation of SDRs. The Commission solicits
comment on the benefits related to proposed Rule 13n-10. Should the
Commission narrow or broaden the scope of the information to be
included in the disclosure document? Should the Commission adjust the
frequency with which the disclosure document is provided to market
participants? Please describe and, to the extent practicable, quantify
the benefits associated with any comments that are submitted.
2. Costs
    As discussed above, the Commission estimates that the average
initial paperwork cost associated with developing the disclosure
document and related policies and procedures would be 97.5 hours and
$9,400 for each SDR and the average ongoing paperwork cost would be 1
hour per year for each SDR.\300\ Assuming a maximum of ten registered
SDRs, the aggregate one-time estimated dollar cost would be $266,087.50
\301\ and the aggregate ongoing estimated dollar cost per year would be
$1,765 \302\ to comply with the proposed rule.
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    \300\ See supra Section V.D.5.
    \301\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Manager and a Compliance Clerk.
Data from SIFMA's Management & Professional Earnings in the
Securities Industry 2009, modified by Commission staff to account
for an 1800-hour work-year and multiplied by 5.35 to account for
bonuses, firm size, employee benefits, and overhead, suggest that
the cost of a Compliance Manager is $294 per hour and a Compliance
Clerk is 59 per hour. Thus, the total initial estimated dollar cost
would be $26,608.75 per SDR and $266,087.50 for all SDRs, calculated
as follows: ($4,400 for external legal costs + $5,000 for external
compliance consulting costs + (Compliance Manager at $294 per hour
for 48.75 hours) + (Compliance Clerk at $59 per hour for 48.75
hours)) x 10 registrants = $266,087.50.
    \302\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Manager and a Compliance Clerk.
Data from SIFMA's Management & Professional Earnings in the
Securities Industry 2009, modified by Commission staff to account
for an 1800-hour work-year and multiplied by 5.35 to account for
bonuses, firm size, employee benefits, and overhead, suggest that
the cost of a Compliance Manager is $294 per hour and a Compliance
Clerk is 59 per hour. Thus, the total ongoing estimated dollar cost
would be $176.50 per SDR and $1,765 for all SDRs, calculated as
follows: ((Compliance Manager at $294 per hour for 0.5 hours) +
(Compliance Clerk at $59 per hour for 0.5 hours)) x 10 registrants =
$1,765.
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    The Commission solicits comment on the costs related to proposed
Rule 13n-10. The Commission specifically requests comment on the
initial and ongoing costs associated with drafting, reviewing,
printing, and providing the required disclosure document. Are there
alternatives that the Commission should consider? Please describe and,
to the extent practicable, quantify the costs associated with any
comments that are submitted.
    The Commission does not expect the initial and ongoing costs
necessary to comply with proposed Rule 13n-10 to have any significant
effect on how SDRs conduct business because such costs would not be so
large as to result in a change in how such SDRs conduct business,
create a barrier to entry, or otherwise alter the competitive landscape
among SDRs.

F. Chief Compliance Officer and Compliance Functions

    Proposed Rules 13n-4(b)(11) and 13n-11 would require each
registered SDR to designate on Form SDR a CCO whose duties include
preparing an annual compliance report, which would be submitted to the
Commission annually along with an annual financial report.\303\ The CCO
would be appointed

by the SDR's board and would report directly to the chief executive
officer of the SDR or the board. The CCO would be responsible for
reviewing the compliance of the SDR with the duties and core principles
contained in Exchange Act Section 13(n) and the rules promulgated
thereunder and reviewing and administering, and ensuring compliance
with, the SDR's policies and procedures reasonably designed to achieve
compliance with the federal securities laws. The CCO also would resolve
any conflicts of interest, in consultation with the board or the SDR's
chief executive officer, and establish procedures for the remediation
of noncompliance issues. The CCO would be required to prepare and sign
an annual compliance report and submit the report to the board for its
review prior to the submission of the report to the Commission.
Finally, the annual compliance report must be included with the annual
financial report that must be prepared and filed with the Commission
pursuant to the requirements of proposed Rule 13n-11(f). The compliance
report must be filed in a tagged data format in accordance with the
instructions contained in the EDGAR Filer Manual,\304\ and the
financial report must be provided in XBRL as required in Rules
405(a)(1), (a)(3), (b), (c), (d), and (e) of Regulation S-T.\305\
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    \303\ See supra Sections III.D and III.K.
    \304\ See 17 CFR 232.301.
    \305\ See 17 CFR 232.405 (imposing content, format, submission
and Web site posting requirements for an interactive data file, as
defined in Rule 11 of Regulation S-T).
---------------------------------------------------------------------------

1. Benefits
    Proposed Rules 13n-4(b)(11) and 13n-11 would be issued pursuant to
specific grants of rulemaking authority in the Dodd-Frank Act \306\ and
are designed to further the legislation's goals by enhancing the
Commission's ability to oversee the marketplace for SBS, which is
critical to the continued integrity of our markets. The proposed rules
are designed to ensure that SDRs comply with the Federal securities
laws, including Exchange Act Section 13(n) and the rules and
regulations promulgated thereunder. Although persons currently
operating as SDRs already may have CCOs in place, the proposed rules
would make this standard practice for all registered SDRs, as mandated
by the Dodd-Frank Act.
---------------------------------------------------------------------------

    \306\ See Public Law 111-203, Sec.  763(i) (adding Exchange Act
Section 13(n)(6)).
---------------------------------------------------------------------------

    The reliability of the aggregation of market-wide transaction data
depends upon data integrity and consistent structuring across all
service providers. As a result of the proposed rule, the accuracy,
reliability, integrity, and consistency of data and other records
maintained by each SDR would be less likely to be harmed by violations
of the securities laws because experience has shown that strong
internal compliance programs lower the likelihood of securities laws
violations and enhance the likelihood that any violations that do occur
will be detected and corrected. The designation of a CCO, who will,
among other things, monitor the application of the rules proposed
herein and the relevant SDR policies and procedures, will help ensure
that each SDR complies with the policies and procedures that it adopts.
The ability of regulators and other users of transaction data to
aggregate such data across SDRs will improve to the extent that
compliance with applicable policies and procedures result in more
accurate data reporting.
    Proposed Rule 13n-11(f) would require SDRs to submit annual
financial reports to the Commission. This rule would enhance Commission
oversight by facilitating the Commission's monitoring of an SDR's
financial and managerial resources. The financial reports also would
assist the Commission in monitoring potential conflicts of interests of
a financial nature arising from the operation of an SDR.
    Benefits also will accrue from requiring SDRs to submit the filings
required by the proposed rules using the interactive data format. This
requirement would enable regulators to analyze the reported information
more quickly, more accurately, and at a lower cost. In particular, the
tagged data will make it easier to aggregate information collected from
SDRs and compare across entities and over time, which the Commission
believes is important for regulators to perform their duties under the
Dodd-Frank Act.
    The Commission solicits comment on the benefits related to Rules
13n-4(b)(11) and 13n-11. The Commission specifically requests comment
on the benefits that would accrue from designating a CCO who would be
responsible for preparing and certifying as accurate an annual
compliance report and reporting annually to the board. Are there
alternative reporting structures that could be established? Should the
Commission consider additional provisions related to the annual
compliance report? The Commission also requests comment on the benefits
associated with the annual financial reports. Please describe and, to
the extent practicable, quantify the benefits associated with any
comments that are submitted.
2. Costs
    The establishment of a designated CCO and compliance with the
accompanying responsibilities of a CCO would impose certain costs on
registered SDRs. As discussed above, the Commission estimates that the
average initial paperwork cost associated with establishing procedures
for the remediation of noncompliance issues identified by the CCO and
establishing and following appropriate procedures for the handling,
management response, remediation, retesting, and closing of
noncompliance issues would be 420 hours and $40,000 for each registered
SDR and the average ongoing paperwork cost would be 120 hours for each
registered SDR.\307\ In addition, each SDR would be required to hire a
CCO in order to comply with the proposed rules, at an annual cost of
$703,800.\308\ Assuming a maximum of ten SDRs, the aggregate initial
estimated dollar cost per year would be $1,622,200 \309\ and the
aggregate ongoing estimated dollar cost per year would be $7,387,200
\310\ to comply with the proposed rules.
---------------------------------------------------------------------------

    \307\ See supra Section V.D.6.
    \308\ Data from SIFMA's Management & Professional Earnings in
the Securities Industry 2009, modified by Commission staff to
account for an 1800-hour work-year and multiplied by 5.35 to account
for bonuses, firm size, employee benefits, and overhead, suggest
that the cost of a CCO is $391 per hour.
    \309\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Attorney. Data from SIFMA's
Management & Professional Earnings in the Securities Industry 2009,
modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of a Compliance
Attorney is $291 per hour. Thus, the total initial estimated dollar
cost would be $162,220 per SDR and $1,622,200 for all SDRs,
calculated as follows: ($40,000 for outside legal services +
(Compliance Attorney at $291 per hour for 420 hours)) x 10
registrants = $1,622,200.
    \310\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Attorney. Data from SIFMA's
Management & Professional Earnings in the Securities Industry 2009,
modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of a Compliance
Attorney is $291 per hour. Thus, the total ongoing estimated dollar
cost would be $738,720 per SDR and $7,387,200 for all SDRs,
calculated as follows: ($703,800 for a CCO + (Compliance Attorney at
$291 per hour for 120 hours)) x 10 registrants = $7,387,200.
---------------------------------------------------------------------------

    As discussed above, the Commission estimates that the average
ongoing paperwork cost associated with preparing and submitting annual
compliance reports to the SDR's board pursuant to proposed Rule 13n-
11(d)

and (g) would be 5 hours.\311\ Assuming a maximum of ten SDRs, the
aggregate ongoing estimated dollar cost per year would be $14,550 to
comply with the proposed rule.\312\
---------------------------------------------------------------------------

    \311\ See supra Section V.D.6.
    \312\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Attorney. Data from SIFMA's
Management & Professional Earnings in the Securities Industry 2009,
modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of a Compliance
Attorney is $291 per hour. Thus, the total ongoing estimated dollar
cost would be $1,455 per SDR and $14,550 for all SDRs, calculated as
follows: (Compliance Attorney at $291 per hour for 5 hours) x 10
registrants = $14,550.
---------------------------------------------------------------------------

    As discussed above, the Commission estimates that the average
ongoing paperwork cost associated with preparing annual financial
reports pursuant to proposed Rule 13n-11(f) and (g) would be 500 hours
and $500,000 for each registered SDR.\313\ Assuming a maximum of ten
SDRs, the aggregate ongoing estimated dollar cost per year would be
$5,915,000 to comply with the proposed rules.\314\
---------------------------------------------------------------------------

    \313\ See supra Section V.D.6.
    \314\ The Commission estimates that an SDR will assign these
responsibilities to a Senior Accountant. Data from SIFMA's
Management & Professional Earnings in the Securities Industry 2009,
modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of a Senior Accountant
is $183 per hour. Thus, the total ongoing estimated dollar cost
would be $591,500 per SDR and $5,915,000 for all SDRs, calculated as
follows: ($500,000 for independent public accounting services
(Senior Accountant at $183 per hour for 500 hours)) x 10 registrants
= $5,915,000.
---------------------------------------------------------------------------

    As discussed above, the Commission estimates that the average
ongoing paperwork cost associated with submitting annual compliance and
financial reports to the Commission pursuant to proposed Rule 13n-
11(d), (f), and (g) would be 54 hours and $22,772 for each registered
SDR.\315\ Assuming a maximum of ten SDRs, the aggregate ongoing
estimated dollar cost per year would be $363,260 to comply with the
proposed rules.\316\
---------------------------------------------------------------------------

    \315\ See supra Section V.D.6.
    \316\ The Commission estimates that an SDR will assign these
responsibilities to a Senior Systems Analyst. Data from SIFMA's
Management & Professional Earnings in the Securities Industry 2009,
modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of a Senior Systems
Analyst is $251 per hour. Thus, the total ongoing estimated dollar
cost would be $36,236 per SDR and $363,260 for all SDRs, calculated
as follows: ($22,772 for information technology services (Senior
Systems Analyst at $251 per hour for 54 hours)) x 10 registrants =
$363,260.
---------------------------------------------------------------------------

    The Commission believes that currently-existing SDRs already
maintain compliance programs that are overseen by a CCO or an
individual who effectively serves as a CCO. In addition, such SDRs may
prepare compliance reports presented to senior management and/or the
SDRs' boards as part of their current business practice. Therefore, the
Commission expects that SDRs with substantial commitments to compliance
would incur only minimal costs in connection with the adoption of the
proposed rule. However, the preparation of annual compliance and
financial reports and implementation of related policies and procedures
may require a staff beyond just a CCO, and therefore the proposed rules
may result in additional direct costs to entities that register as
SDRs.
    The Commission believes that currently-existing SDRs already
prepare financial reports similar to those that would be prepared in
accordance with proposed Rule 13n-1(f). Therefore, the Commission
expects that most SDRs would incur only minimal costs in connection
with the adoption of the proposed financial reporting requirement.
    The Commission solicits comment on the costs related to Rules 13n-
4(b)(11) and 13n-11. The Commission specifically requests comment on
the initial and ongoing costs associated with designating a CCO and the
costs associated with any personnel that may be necessary to support
the CCO and create the annual compliance and financial reports. Are
there additional costs that the Commission should consider? Are there
alternatives that the Commission should consider? Do the estimates
accurately reflect the cost of preparing annual compliance and
financial reports? Please describe and, to the extent practicable,
quantify the costs associated with any comments that are submitted.
    The Commission does not expect the costs necessary to comply with
proposed Rules 13n-4(b)(11) and 13n-11 to have any significant effect
on how SDRs conduct business because such costs would not be so large
as to result in a change in how such SDRs conduct business, create a
barrier to entry, or otherwise alter the competitive landscape among
SDRs.

G. Other Policies and Procedures Relating to an SDR's Business

    The proposed rules explicitly and implicitly will require
registered SDRs to develop and maintain various policies and
procedures.\317\ Proposed Rule 13n-9 will require each SDR to comply
with certain duties and core principles pertaining to confidentiality,
disclosure, and use of information.\318\ Proposed Rule 13n-4(c) would
require each SDR to comply with certain core principles pertaining to
market access to services and data, governance arrangements, and
conflicts of interest, including developing policies and procedures
related to fees, operational reliability, and objective access and
participation criteria.\319\ Proposed Rule 13n-5(b)(6) would require
SDRs to develop dispute resolution mechanisms.\320\
---------------------------------------------------------------------------

    \317\ See supra Section VI.B for a discussion of the cost and
benefits associated with the policies and procedures SDRs must
develop and maintain with respect to their information systems.
    \318\ See supra Section III.I.
    \319\ See supra Section III.D.
    \320\ See supra Section III.E.
---------------------------------------------------------------------------

1. Benefits
    The proposed rules described in this section would be issued
pursuant to specific grants of rulemaking authority in the Dodd-Frank
Act \321\ and are designed to further the legislation's goals by
specifying the obligations of registered SDRs necessary to comply with
the goals of the Dodd-Frank Act. The proposed privacy requirement is
intended to safeguard transaction data provided to SDRs by market
participants. Privacy is necessary in order to ensure that market
participants will utilize the services of registered SDRs.
---------------------------------------------------------------------------

    \321\ See Public Law 111-203, Sec.  763(i) (adding Exchange Act
Sections 13(n)(5)(F)-(H) and (7)(A)-(C)).
---------------------------------------------------------------------------

    The proposed rule relating to market access to services and data is
designed to further the legislation's goals by ensuring that SDRs
impose fair, reasonable, and consistently applied fees and maintain
objective access and participation criteria. As with the privacy
requirement, this rule would encourage market participants to make use
of SDRs' services.
    The proposed governance requirements are designed to reduce the
conflicts of interest relating to SDRs. In addition, by requiring fair
representation of market participants on the board with the opportunity
to participate in the process for nominating directors and the right to
petition for alternative candidates, the proposed rule will help reduce
the likelihood that an incumbent SBS market participant could exert
undue influence on the board.
    While the above requirements will serve to prevent and constrain
potential conflicts of interest, proposed Rule 13n-4(c)(3) directly
addresses conflicts of interest through targeted policies and
procedures and an obligation to establish a process for resolving
conflicts of interest. This rule would

help mitigate the possibility that SDRs' business practices and
internal structures might disadvantage market participants and provide
a mechanism through which conflicts may be resolved once identified.
    The proposed dispute resolution requirements also serve the
legislative purpose of maintaining accurate records relating to SDRs.
In addition to ensuring the accuracy of data contained in SDRs, the
dispute resolution requirement would provide a forum in which market
participants could correct inaccuracies in transaction data regarding
transactions to which they are parties, thereby fostering increased
confidence from market participants in SDRs and the transaction records
such SDRs maintain.
    Collectively, the rules described in this section would help ensure
that SDRs operate consistently with the objectives set forth in the
Exchange Act by providing fair, open, and not unreasonably
discriminatory access to all market participants without taking
advantage of the SDRs' access to transaction data that market
participants are required to submit to the SDRs.
    The Commission solicits comment on the benefits related to Rules
13n-4(c), 13n-5(b)(6), and 13n-9. Would additional benefits accrue if
the Commission imposed further requirements related to the policies and
procedures that SDRs must maintain and, if so, what would these
additional requirements be? Please describe and, to the extent
practicable, quantify the benefits associated with any comments that
are submitted.
2. Costs
    The Commission anticipates that the primary costs to SDRs from
proposed Rules 13n-4(c), 13n-5(b)(6), and 13n-9 will derive from
developing, maintaining, and ensuring compliance with the required
policies and procedures.
    The governance requirements could impose costs resulting from
educating senior management and each director about SBS trading and
reporting and the new regulatory structure that will govern SBS, which
could slow management or board processes at least initially.
    The dispute resolution requirement also would impose costs on
registered SDRs because SDRs would be required to develop and implement
processes through which market participants could challenge the
validity of the transaction data relating to agreements to which such
participant is a counterparty.
    As discussed above, the Commission estimates that the average
initial paperwork cost associated with proposed Rule 13n-4(c)(1) would
be 367.5 hours and $35,000 and the average ongoing cost would be 105
hours per year for each SDR.\322\ Assuming a maximum of ten SDRs, the
aggregate one-time estimated dollar cost would be $1,374,800 \323\ and
the aggregate ongoing estimated dollar cost per year would be $294,070
\324\ to comply with the proposed rule.
---------------------------------------------------------------------------

    \322\ See supra Section V.D.7.
    \323\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Manager, an Attorney, a Senior
Systems Analyst, and an Operations Specialist. Data from SIFMA's
Management & Professional Earnings in the Securities Industry 2009,
modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of a Compliance
Manager is $294 per hour, the cost of an Attorney is $316 per hour,
the cost of a Senior Systems Analyst is $251 per hour, and the cost
of an Operation Specialist is $114 per hour. Thus, the total initial
estimated dollar cost would be $137,480 per SDR and $1,374,800 for
all SDRs, calculated as follows: ($35,000 for outside legal services
+ (Compliance Manager at $294 per hour for 135 hours) + (Attorney at
$316 per hour for 152.5 hours) + (Senior Systems Analyst at $251 per
hour for 40 hours) + (Operations Specialist at $114 per hour for 40
hours)) x 10 registrants = $1,374,800.
    \324\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Manager, an Attorney, a Senior
Systems Analyst, and an Operations Specialist. Data from SIFMA's
Management & Professional Earnings in the Securities Industry 2009,
modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of a Compliance
Manager is $294 per hour, the cost of an Attorney is $316 per hour,
the cost of a Senior Systems Analyst is $251 per hour, and the cost
of an Operation Specialist is $114 per hour. Thus, the total ongoing
estimated dollar cost would be $29,407 per SDR and $294,070 for all
SDRs, calculated as follows: ((Compliance Manager at $294 per hour
for 38 hours) + (Attorney at $316 per hour for 45 hours) + (Senior
Systems Analyst at $251 per hour for 11 hours) + (Operations
Specialist at $114 per hour for 11 hours)) x 10 registrants =
$294,070.
---------------------------------------------------------------------------

    As discussed above, the Commission estimates that the average
initial paperwork cost associated with proposed Rule 13n-4(c)(2) would
be 210 hours and $20,000 for each SDR and the average ongoing paperwork
cost would be 60 hours per year for each SDR.\325\ Assuming a maximum
of ten SDRs, the aggregate one-time estimated dollar cost would be
$811,100 \326\ and the aggregate ongoing estimated dollar cost per year
would be $174,600 \327\ to comply with the proposed rule.
---------------------------------------------------------------------------

    \325\ See supra Section V.D.7.
    \326\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Attorney. Data from SIFMA's
Management & Professional Earnings in the Securities Industry 2009,
modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of a Compliance
Attorney is $291 per hour. Thus, the total initial estimated dollar
cost would be $81,110 per SDR and $811,100 for all SDRs, calculated
as follows: ($20,000 for outside legal services + (Compliance
Attorney at $291 per hour for 210 hours)) x 10 registrants =
$811,100.
    \327\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Attorney. Data from SIFMA's
Management & Professional Earnings in the Securities Industry 2009,
modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of a Compliance
Attorney is $291 per hour. Thus, the total ongoing estimated dollar
cost would be $17,460 per SDR and $174,600 for all SDRs, calculated
as follows: (Compliance Attorney at $291 per hour for 120 hours) x
10 registrants = $174,600.
---------------------------------------------------------------------------

    As discussed above, the Commission estimates that the average
initial paperwork cost associated with proposed Rule 13n-4(c)(3) would
be 420 hours and $40,000 for each SDR and the average ongoing paperwork
cost would be 120 hours per year for each SDR.\328\ Assuming a maximum
of ten SDRs, the aggregate one-time estimated dollar cost would be
$1,622,200 \329\ and the aggregate ongoing estimated dollar cost per
year would be $349,200 \330\ to comply with the proposed rule.
---------------------------------------------------------------------------

    \328\ See supra Section V.D.7.
    \329\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Attorney. Data from SIFMA's
Management & Professional Earnings in the Securities Industry 2009,
modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of a Compliance
Attorney is $291 per hour. Thus, the total initial estimated dollar
cost would be $162,220 per SDR and $1,622,200 for all SDRs,
calculated as follows: ($40,000 for outside legal services +
(Compliance Attorney at $291 per hour for 420 hours)) x 10
registrants = $1,622,200.
    \330\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Attorney. Data from SIFMA's
Management & Professional Earnings in the Securities Industry 2009,
modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of a Compliance
Attorney is $291 per hour. Thus, the total ongoing estimated dollar
cost would be $34,920 per SDR and $349,200 for all SDRs, calculated
as follows: (Compliance Attorney at $291 per hour for 120 hours) x
10 registrants = $349,200.
---------------------------------------------------------------------------

    As discussed above, the Commission estimates that the average
initial paperwork cost associated with proposed Rule 13n-5(b)(6) would
be 315 hours and $30,000 for each SDR and the average ongoing paperwork
cost would be 90 hours per year for each SDR.\331\ Assuming a maximum
of ten SDRs, the aggregate one-time estimated dollar cost would be
$1,216,650 \332\ and

the aggregate ongoing estimated dollar cost per year would be $261,900
\333\ to comply with the proposed rule.
---------------------------------------------------------------------------

    \331\ See supra Section V.D.7.
    \332\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Attorney. Data from SIFMA's
Management & Professional Earnings in the Securities Industry 2009,
modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of a Compliance
Attorney is $291 per hour. Thus, the total initial estimated dollar
cost would be $121,665 per SDR and $1,216,650 for all SDRs,
calculated as follows: ($30,000 for outside legal services +
(Compliance Attorney at $291 per hour for 315 hours)) x 10
registrants = $1,216,650.
    \333\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Attorney. Data from SIFMA's
Management & Professional Earnings in the Securities Industry 2009,
modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of a Compliance
Attorney is $291 per hour. Thus, the total initial estimated dollar
cost would be $26,190 per SDR and $261,900 for all SDRs, calculated
as follows: (Compliance Attorney at $291 per hour for 90 hours) x 10
registrants = $261,900.
---------------------------------------------------------------------------

    As discussed above, the Commission estimates that the average
initial paperwork cost associated with proposed Rule 13n-9 would be 630
hours and $60,000 for each SDR and the average ongoing paperwork cost
would be 180 hours per year for each SDR.\334\ Assuming a maximum of
ten SDRs, the aggregate one-time estimated dollar cost would be
$2,433,300 \335\ and the aggregate ongoing estimated dollar cost per
year would be $523,800 \336\ to comply with the proposed rule.
---------------------------------------------------------------------------

    \334\ See supra Section V.D.7.
    \335\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Attorney. Data from SIFMA's
Management & Professional Earnings in the Securities Industry 2009,
modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of a Compliance
Attorney is $291 per hour. Thus, the total initial estimated dollar
cost would be $243,330 per SDR and $2,433,300 for all SDRs,
calculated as follows: ($60,000 for outside legal services +
(Compliance Attorney at $291 per hour for 630 hours)) x 10
registrants = $2,433,300.
    \336\ The Commission estimates that an SDR will assign these
responsibilities to a Compliance Attorney. Data from SIFMA's
Management & Professional Earnings in the Securities Industry 2009,
modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, suggest that the cost of a Compliance
Attorney is $291 per hour. Thus, the total ongoing estimated dollar
cost would be $52,380 per SDR and $523,800 for all SDRs, calculated
as follows: (Compliance Attorney at $291 per hour for 180 hours) x
10 registrants = $523,800.
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    The Commission solicits comment on the costs related to proposed
Rules 13n-4(c), 13n-5(b)(6), and 13n-9. The Commission specifically
requests comment on the initial and ongoing costs associated with
establishing and maintaining the policies and procedures required by
the proposed rules, particularly as the costs apply to entities
currently operating as SDRs. Are there additional costs implicated by
the proposed rules related to policies and procedures that the
Commission should consider? Are there alternatives that the Commission
should consider? Do the estimates accurately reflect the cost of
maintaining, implementing, and revising the required policies and
procedures? Please describe and, to the extent practicable, quantify
the costs associated with any comments that are submitted.
    The Commission does not expect the initial and ongoing costs
necessary to comply with the rules relating to policies and procedures
to have any significant effect on how SDRs conduct business because
such costs would not be so large as to result in a change in how such
SDRs conduct business, create a barrier to entry, or otherwise alter
the competitive landscape among SDRs.

H. Total Costs

    Based on the analyses described above, the Commission preliminarily
estimates that proposed Rules 13n-1 through 13n-11 and proposed Form
SDR would impose on registered SDRs an aggregate total initial one-time
estimated dollar cost of approximately $214,913,592.\337\ The
Commission further preliminarily estimates that proposed Rules 13n-1
through 13n-11 and proposed Form SDR would impose on registered SDRs a
total ongoing annualized aggregate dollar cost of approximately
$140,302,120.\338\ Altogether, the Commission preliminarily estimates
that proposed Rules 13n-1 through 13n-11, proposed Form SDR, and
proposed Regulation SBSR \339\ would impose on registered SDRs
aggregate initial estimated dollar costs of approximately $295,891,852
\340\ and aggregate ongoing annualized dollar costs of approximately
$245,428,520.\341\
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    \337\ The Commission derived its estimate from the following:
($589,544 ($584,000 + $5,544) for Registration Requirements and Form
SDR) + ($203,962,250 ($200,020,000 + $16,000 + $3,926,250) for SDR
Duties, Data Collection and Maintenance, Automated Systems, and
Direct Electronic Access) + ($1,015,460 for Recordkeeping) +
($266,088 for Disclosure) + ($1,622,200 for Chief Compliance Officer
and Compliance Functions) + ($7,458,050 ($1,374,800 + $811,100 +
$1,622,200 + $1,216,650 + $2,433,300) for Other Policies and
Procedures Relating to an SDR's Business) = $214,913,592.
    \338\ The Commission derived its estimate from the following:
($49,080 for Registration Requirements and Form SDR) + ($121,298,845
($120,012,000 + $9,480 + $908,400 + $368,965) for SDR Duties, Data
Collection and Maintenance, Automated Systems, and Direct Electronic
Access) + ($820,760 for Recordkeeping) + ($2,848,090 ($2,845,750 +
$2,340) for Reports and Reviews) + ($1,765 for Disclosure) +
($13,680,010 ($7,387,200 + $14,550 + $5,915,000 + $363,260) for
Chief Compliance Officer and Compliance Functions) + ($1,603,570
($294,070 + $174,600 + $349,200 + $261,900 + $523,800) for Other
Policies and Procedures Relating to an SDR's Business) =
$140,302,120.
    \339\ See Regulation SBSR Release, supra note 9.
    \340\ The Commission derived its estimate from the following:
($214,913,592 for proposed Rules 13n-1 through 13n-11 and proposed
Form SDR) + ($80,978,260 for proposed Regulation SBSR) =
$295,891,852.
    \341\ The Commission derived its estimate from the following:
($140,302,120 for proposed Rules 13n-1 through 13n-11 and proposed
Form SDR) + ($105,126,400 for proposed Regulation SBSR) =
$245,428,520.
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I. Request for Comment

    The Commission requests data to quantify the costs and the value of
the benefits above. The Commission seeks estimates of these costs and
benefits, as well as any costs and benefits not already defined, which
may result from the adoption of the proposed rules and Form SDR.
Commenters should provide analysis and empirical data to support their
views on the costs and benefits associated with the proposals.

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

    Exchange Act Section 23(a) \342\ requires the Commission, when
making rules and regulations under the Exchange Act, to consider the
impact a new rule would have on competition. Exchange Act Section
23(a)(2) prohibits the Commission from adopting any rule that would
impose a burden on competition not necessary or appropriate in
furtherance of the purposes of the Exchange Act. Securities Act Section
2(b) \343\ and Exchange Act Section 3(f) \344\ require the Commission,
when engaging in rulemaking that requires it to consider whether an
action is necessary or appropriate in the public interest, to consider,
in addition to the protection of investors, whether the action would
promote efficiency, competition, and capital formation. Below, the
Commission addresses these issues for the proposed rules regarding data
collection and maintenance and recordkeeping by SDRs and books and
records relating to SBS. The Commission focuses on the effects of the
discretion used by the Commission rather than the mandates of the Dodd-
Frank Act. However, to the extent that the discretion is used to take
full advantage of the benefits intended by the Dodd-Frank Act, the two
types of benefits are not entirely separable.
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    \342\ 15 U.S.C. 78w(a).
    \343\ 15 U.S.C. 77b(b).
    \344\ 15 U.S.C. 78c(f).
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    The economic effects of the proposed rules were discussed in detail
in the

costs and benefits section. These economic benefits encompassed effects
on economic efficiency, competition, and capital formation.
    To reiterate, by allowing multiple SDRs to provide data collection,
maintenance, and recordkeeping services, the rules are intended to
promote competition among SDRs. We do not preliminarily believe that
the provisions would give undue market influence to any potential
market participants. We believe that non-resident SDRs generally can
take steps to comply with their home country requirements and the
Commission's supervisory requirements, and therefore can register with
the Commission. We recognize that there potentially could be instances
in which a non-resident SDR is unable to register because, for example,
they cannot make the certification or provide the opinion of counsel
required by proposed Rule 13n-1(g). We believe, however, that these
requirements are necessary and appropriate in furtherance of the
purpose of the Exchange Act.
    However, by allowing multiple SDRs, the proposed rules may result
in inefficiencies as explained in the benefits and costs section of
this release. In particular, the potential reporting of transaction
data to multiple SDRs would create a need to aggregate those data by
regulators and other interested parties. From a systemic risk
perspective, monitoring costs increase if identifiers or data field
definitions used by different SDRs are not compatible with each other
and aggregation is difficult. The complications associated with
aggregation could be particularly costly when aggregation is required
across the same asset class and different legs of the same transaction
reside in different SDRs. However, the current market structure
essentially consists of only one SDR per asset class, and it is likely
that the market would, under competitive forces, ultimately converge to
an efficient outcome that does not present compatibility problems or
that entails fewer, rather than many, SDRs.
    The Commission believes that the proposed rules use the discretion
that the Dodd-Frank Act permits the Commission to use to promote data
collection, maintenance, and recordkeeping according to existing best
practices that are used in similar capital market institutions. This is
likely to positively affect transparency in credit markets. Therefore,
the proposed rules would help capital formation in the broader capital
markets whose participants rely on SBS markets to meet their hedging
objectives.
    The practices that are proposed in the rules would also help
regulators perform their supervisory functions in an effective manner.
The resulting increase in market integrity is likely to affect capital
formation in our capital markets positively. In addition, regulators
would be better equipped to perform their duties in the management and
mitigation of systemic risk.

VIII. Initial Regulatory Flexibility Act Certification

    Section 603(a) of the Regulatory Flexibility Act \345\ (``RFA'')
requires the Commission to undertake an initial regulatory flexibility
analysis of the impact of proposed Rules 13n-1 through 13n-11 on small
entities, unless the Commission certifies that the proposed rules, if
adopted, would not have significant economic impact on a substantial
number of small entities.\346\
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    \345\ 5 U.S.C. 603(a).
    \346\ 5 U.S.C. 605(b).
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A. SDRs

    Proposed Rules 13n-1 through 13n-11 would apply to all SDRs. In the
Dodd-Frank Act, Congress defined for the first time what activity would
constitute an SDR and mandated the registration of these new entities.
The Commission does not know exactly how many entities may seek to
register as SDRs and become subject to the requirements of the proposed
rules. However, based on its understanding of the market and
conversations with industry sources, the Commission preliminarily
believes that likely no more than ten SDRs could be subject to the
requirements of proposed Rules 13n-1 through 13n-11.
    For purposes of Commission rulemaking in connection with the RFA,
an issuer or person, other than an investment company, is a small
business if its total assets on the last day of its most recent fiscal
year were $5 million or less.\347\ The Commission preliminarily
believes that the entities likely to register as SDRs will not be
considered small entities. The Commission preliminarily believes that
most, if not all, of the SDRs will be part of large business entities,
and that all SDRs will have assets in excess of $5 million and total
capital in excess of $500,000.\348\ Therefore, the Commission
preliminarily believes that none of the SDRs will be considered small
entities.
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    \347\ 17 CFR 230.157. See also 17 CFR 240.0-10(a).
    \348\ Commission staff based this determination on its review of
public sources of financial information about the current
repositories that are providing services in the OTC derivatives
market.
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B. Certification

    In the Commission's preliminary view, the proposed rules would not
have a significant economic impact on a substantial number of small
entities, including national securities exchanges, clearing agencies,
or other small businesses or small organizations. For the above
reasons, the Commission certifies that the proposed rules would not
have a significant economic impact on a substantial number of small
entities. The Commission requests comment regarding this certification.
The Commission requests that commenters describe the nature of any
impact on small entities, including national securities exchanges,
clearing agencies, or other small businesses or small organizations
that may register as SDRs, and provide empirical data to support the
extent of the impact.

IX. Consideration of Impact on the Economy

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996, or ``SBREFA,'' \349\ the Commission must advise the OMB as
to whether the proposed regulations constitute a ``major'' rule. Under
SBREFA, a rule is considered ``major'' where, if adopted, it results or
is likely to result in: (1) An annual effect on the economy of $100
million or more (either in the form of an increase or a decrease); (2)
a major increase in costs or prices for consumers or individual
industries; or (3) significant adverse effect on competition,
investment or innovation.
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    \349\ Public Law 104-121, Title II, 110 Stat. 857 (1996)
(codified in various sections of 5 U.S.C., 15 U.S.C. and as a note
to 5 U.S.C. 601).
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    The Commission requests comment on the potential impact of the
proposed rules on the economy on an annual basis, on the costs or
prices for consumers or individual industries, and on competition,
investment, or innovation. Commenters are requested to provide
empirical data and other factual support for their views to the extent
possible.

X. Statutory Authority

    Pursuant to the Exchange Act, and particularly Sections 13(n) and
23(a) thereof, 15 U.S.C. 78m(n) and 78w(a), the Commission proposes new
Rules 13n-1 to 13n-11, which would govern SDRs.

List of Subjects in 17 CFR Parts 240 and 249

    Reporting and recordkeeping requirements, Securities.

    In accordance with the foregoing, Title 17, Chapter II of the Code
of

Federal Regulations is proposed to be amended as follows:

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

    1. The authority citation for part 240 continues to read, in part,
as follows:

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

* * * * *
    2. Sections 240.13n-1 through 240-13n-11 are added to read as
follows:

Sec.
240.13n-1 Registration of security-based swap data repository.
240.13n-2 Withdrawal from registration.
240.13n-3 Registration of successor to registered security-based
swap data repository.
240.13n-4 Duties and core principles of security-based swap data
repository.
240.13n-5 Data collection and maintenance.
240.13n-6 Automated systems.
240.13n-7 Recordkeeping of security-based swap data repository.
240.13n-8 Reports to be provided to the Commission.
240.13n-9 Privacy requirements of security-based swap data
repository.
240.13n-10 Disclosure requirements of security-based swap data
repository.
240.13n-11 Designation of chief compliance officer of security-based
swap data repository.

Sec.  240.13n-1  Registration of security-based swap data repository.

    (a) Definition. For purposes of this section--
    (1) EDGAR Filer Manual has the same meaning as set forth in Rule 11
of Regulation S-T (17 CFR 232).
    (2) Non-resident security-based swap data repository means:
    (i) In the case of an individual, one who resides in or has his
principal place of business in any place not in the United States;
    (ii) In the case of a corporation, one incorporated in or having
its principal place of business in any place not in the United States;
or
    (iii) In the case of a partnership or other unincorporated
organization or association, one having its principal place of business
in any place not in the United States.
    (3) Tag (including the term tagged) means an identifier that
highlights specific information submitted to the Commission that is in
the format required by the EDGAR Filer Manual, as described in Rule 301
of Regulation S-T (17 CFR 232.301).
    (b) An application for the registration of a security-based swap
data repository shall be filed electronically in a tagged data format
on Form SDR (17 CFR 249.1500) with the Commission in accordance with
the instructions contained therein. As part of the application process,
each SDR shall provide additional information to the Commission upon
request.
    (c) Within 90 days of the date of the filing of such application
(or within such longer period as to which the applicant consents), the
Commission shall--
    (1) By order grant registration, or
    (2) Institute proceedings to determine whether registration should
be denied. Such proceedings shall include notice of the grounds for
denial under consideration and opportunity for hearing on the record
and shall be concluded not later than 180 days after the date on which
the application for registration is filed with the Commission under
paragraph (b) of this section. At the conclusion of such proceedings,
the Commission, by order, shall grant or deny such registration. The
Commission may extend the time for conclusion of such proceedings for
up to 90 days if it finds good cause for such extension and publishes
its reasons for so finding or for such longer period as to which the
applicant consents.
    (3) The Commission shall grant the registration of a security-based
swap data repository if the Commission finds that such security-based
swap data repository is so organized, and has the capacity, to be able
to assure the prompt, accurate, and reliable performance of its
functions as a security-based swap data repository, comply with any
applicable provision of the federal securities laws and the rules and
regulations thereunder, and carry out its functions in a manner
consistent with the purposes of Section 13(n) of the Act (15 U.S.C.
78m(n)) and the rules and regulations thereunder. The Commission shall
deny the registration of a security-based swap data repository if it
does not make any such finding.
    (d) For any application of registration as a security-based swap
data repository, the Commission, upon the request of a security-based
swap data repository, may grant temporary registration of the security-
based swap data repository that shall expire on the earlier of:
    (1) The date that the Commission grants or denies registration of
the security-based swap data repository; or
    (2) The date that the Commission rescinds the temporary
registration of the security-based swap data repository.
    (e) If any information reported in items 1 through 16, 25, and 44
of Form SDR (17 CFR 249.1500) or in any amendment thereto is or becomes
inaccurate for any reason, whether before or after the registration has
been granted, the security-based swap data repository shall promptly
file an amendment on Form SDR updating such information. In addition,
the security-based swap data repository shall annually file an
amendment on Form SDR within 60 days after the end of each fiscal year
of such security-based swap data repository.
    (f) Each security-based swap data repository shall designate and
authorize on Form SDR an agent in the United States, other than a
Commission member, official, or employee, who shall accept any notice
or service of process, pleadings, or other documents in any action or
proceedings brought against the security-based swap data repository to
enforce the Federal securities laws and the rules and regulations
thereunder.
    (g) Any non-resident security-based swap data repository applying
for registration pursuant to this section shall certify on Form SDR and
provide an opinion of counsel that the security-based swap data
repository can, as a matter of law, provide the Commission with prompt
access to the books and records of such security-based swap data
repository and that the security-based swap data repository can, as a
matter of law, submit to onsite inspection and examination by the
Commission.
    (h) An application for registration or any amendment thereto that
is filed pursuant to this section shall be considered a ``report''
filed with the Commission for purposes of Sections 18(a) and 32(a) of
the Act (15 U.S.C. 78r(a) and 78ff(a)) and the rules and regulations
thereunder and other applicable provisions of the United States Code
and the rules and regulations thereunder.

Sec.  240.13n-2  Withdrawal from registration.

    (a) Definitions. For purposes of this section--
    (1) Control (including the terms controlled by and under common
control with) means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by
contract, or otherwise. A person is presumed to control another person
if the person:

    (i) Is a director, general partner, or officer exercising executive
responsibility (or having similar status or functions);
    (ii) Directly or indirectly has the right to vote 25 percent of
more of a class of voting securities or has the power to sell or direct
the sale of 25 percent or more of a class of voting securities; or
    (iii) In the case of a partnership, has the right to receive, upon